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Cogdell Spencer Inc. Reports Second Quarter 2009 Financial Results
Date:8/6/2009

CHARLOTTE, N.C., Aug. 6 /PRNewswire-FirstCall/ -- Cogdell Spencer Inc. (NYSE: CSA), a real estate investment trust (REIT) that invests in specialty office buildings, including medical offices and ambulatory surgery and diagnostic centers, and provides strategic planning and design and construction services for the medical profession, announces financial results for the quarter ended June 30, 2009.

Second Quarter 2009 Results

For the second quarter of 2009, Cogdell Spencer Inc. reports Funds from Operations Modified (FFOM) of $6.4 million, or $0.19 per share and operating partnership unit, excluding an after-tax, debt extinguishment and interest rate derivative charge of ($1.5 million), or ($0.05) per share and operating partnership unit, related to a $50.0 million repayment and amendment to the Term Loan (as defined below). FFOM including the debt extinguishment and interest rate derivative charge described above was $4.9 million, or $0.14 per share and operating partnership unit, for the second quarter of 2009. During the same period in 2008, FFOM was $7.3 million, or $0.30 per share and operating partnership unit. FFOM adds back to traditionally defined Funds from Operations (FFO) non-cash amortization of non-real estate related intangible assets associated with purchase accounting.

FFO for the second quarter of 2009 was $5.6 million, or $0.16 per share and operating partnership unit, excluding the debt extinguishment and interest rate derivative charge described above. FFO including the debt extinguishment and interest rate derivative charge described above was $4.1 million, or $0.12 per share and operating partnership unit, for the second quarter of 2009. During the same period in 2008, FFO was $4.8 million, or $0.20 per share and operating partnership unit.

Net income (loss) attributable to Cogdell Spencer Inc. for the second quarter of 2009 was ($1.0 million), or ($0.04) per share, excluding the debt extinguishment and interest rate derivative charge described above. Net income (loss) attributable to Cogdell Spencer Inc. including the debt extinguishment and interest rate derivative charge described above was ($2.3 million), or ($0.09) per share, for the second quarter of 2009. During the same period in 2008, net income (loss) was ($1.8 million), or ($0.12) per share.

As of June 30, 2009, the Company's portfolio consisted of 62 consolidated wholly-owned and joint venture properties, comprising a total of approximately 3.3 million net rentable square feet. The overall percentage of leased space at the Company's 62 in-service, consolidated properties as of June 30, 2009, was 90.9%. In addition, the Company has three unconsolidated joint venture properties comprising a total of approximately 0.2 million net rentable square feet and manages 50 properties for third party clients comprising a total of approximately 2.2 million net rentable square feet.

Results for the Six Months Ended June 30, 2009

FFOM for the six months ended June 30, 2009, was $14.5 million, or $0.47 per share and operating partnership unit, excluding after-tax charges totaling ($103.3 million), or ($3.35) per share and operating partnership unit, related to asset impairment, debt extinguishment and interest rate derivative (see additional description below). FFOM for the six months ended June 30, 2009, including the charges described above, was ($88.8 million), or ($2.88) per share and operating partnership unit. During the same period in 2008, FFOM was $13.1 million, or $0.59 per share and operating partnership unit.

FFO for the six months ended June 30, 2009, was $12.1 million, or $0.39 per share and operating partnership unit, excluding the charges described above. FFO including the charges described above was ($91.2 million), or ($2.96) per share and operating partnership unit, for the six months ended June 30, 2009. During the same period in 2008, FFO was $9.9 million, or $0.45 per share and operating partnership unit.

Net income (loss) attributable to Cogdell Spencer Inc. for the six months ended June 30, 2009, was ($1.4 million), or ($0.06) per share, excluding the charges described above. Net income (loss) attributable to Cogdell Spencer Inc. including the charges described above was ($72.5 million), or ($3.21) per share, for the six months ended June 30, 2009. During the same period in 2008, net income (loss) was ($3.6 million), or ($0.24) per share.

During the six months ended June 30, 2009, the Company recorded a pre-tax, non-cash impairment charge of ($120.9 million), or ($4.47) per share and operating partnership unit, and the Company recognized a non-cash income tax benefit related to the charge of $19.2 million, or $0.71 per share and operating partnership unit, resulting in an after-tax impairment charge of ($101.7 million), or ($3.76) per share and operating partnership unit. The charge was recorded during the first quarter of 2009. No impairment charge was recorded during the second quarter of 2009.

Debt Extinguishment and Interest Rate Derivative Charge

During the second quarter of 2009, the Company repaid $50.0 million of the $100.0 million outstanding under the Erdman senior secured term loan agreement ("Term Loan"). In connection with this repayment, the Term Loan interest rate and financial covenants were amended. As a result of the amendment, all unamortized Term Loan deferred finance costs and costs paid to the lenders that were party to the amendment were expensed during the second quarter of 2009. The second quarter charge to debt extinguishment and interest rate derivative expense was approximately $0.9 million, before income tax benefit. The Company recorded an income tax benefit of approximately $0.4 million related to this charge.

The Company previously entered into a $100.0 million interest rate swap agreement that fixed the floating rate portion of the $100.0 million Term Loan. Due to the repayment and the amendment to the Term Loan, approximately $1.6 million related to swap derivative hedge ineffectiveness was charged to debt extinguishment and interest rate derivative expense during the second quarter of 2009. The non-cash charge represents the portion of the mark to market fair value liability of the interest rate swap agreement for which there are no more future interest payments under the Term Loan. The Company recorded an income tax benefit of approximately $0.6 million related to this charge, resulting in after-tax charge of approximately $1.0 million.

The Company has not terminated the $100.0 million interest rate swap agreement. The $100.0 million interest rate swap agreement will be used to fix the floating rate portion on $50.0 million outstanding on the Term Loan and $50.0 million outstanding under the secured revolving Credit Facility.

Capital Transactions

In May 2009, the Company refinanced the Roper MOB mortgage note payable. The principal amount was increased from $9.1 million to $9.5 million and the additional proceeds were used for working capital purposes. The note payable matures in June 2019 and requires monthly principal and interest payments based on a 25-year amortization. The interest rate is fixed at 7.1%.

In June 2009, the Company issued 23.0 million shares of common stock, resulting in net proceeds to the Company of $76.5 million. The net proceeds were used to fund the $50.0 million repayment under the Term Loan, to reduce borrowings under the Company's secured revolving credit facility, and for working capital purposes.

In June 2009, the Company obtained mortgage financing for the Lancaster Rehabilitation Hospital property. The $9.7 million note payable matures in June 2014 and requires monthly principal and interest payments based on a 25-year amortization. The interest rate is fixed at 6.71%. Proceeds were used to reduce borrowings under the secured revolving credit facility and for working capital purposes.

Build to Suit Development

The Company began construction on a 50,575 square foot medical office building in Brandon, Mississippi to serve the communities of the Jackson, Mississippi metro area. The $13.9 million University Physicians-Grants Ferry project is 100% pre-leased and scheduled for completion during the second quarter of 2010. The Company will own 100% of the project and the Company's subsidiary, Erdman, will perform the development and design-build services. The Company obtained a $10.4 million construction loan on the medical office building. The loan provides for interest-only payments during the construction period at a rate of one-month LIBOR plus 2.25%. In October 2010, the loan converts to an amortizing loan with monthly payments based on a 25-year amortization schedule at an interest rate of one-month LIBOR plus 2.25%. The Company has entered into a forward starting interest rate swap agreement that effectively fixes the interest rate at 5.95% after the construction period through maturity. The loan matures in April 2019.

The Company began construction on a 60,000 square foot facility in St. Cloud, Minnesota. The $20.2 million HealthPartners Central Minnesota Clinic is 85% pre-leased and scheduled for completion during the second quarter of 2010. The Company will own 100% of the facility and the Company's subsidiary, Erdman, will perform the development and design-build services. The Company obtained a $14.0 million construction loan on the facility. The loan provides for interest-only payments during the construction period at a rate of one-month LIBOR plus 3.25%, but not less than 6.0%. In December 2010, the loan converts to an amortizing loan with monthly payments based on a 22.5-year amortization schedule at an interest rate of one-month LIBOR plus 3.25%, but not less than 6.0%. The loan matures in November 2014.

Dividend

On June 12, 2009, the Company announced that its Board of Directors had declared a quarterly dividend of $0.10 per share and operating partnership unit that was paid in cash on July 22, 2009 to holders of record on June 25, 2009. The dividend covered the Company's second quarter of 2009.

Outlook

The Company's management team expects that FFOM per share and operating partnership unit, for the year ending December 31, 2009, will be between $0.63 and $0.69, excluding the impairment charges and debt extinguishment charges described above. Management has updated the outlook to reflect a decrease in the debt extinguishment charge estimate from $2.1 million to $1.5 million. The debt extinguishment charge for the second quarter of 2009 is discussed above. A reconciliation of the range of projected net income (loss) to projected FFO and FFOM for the year ending December 31, 2009 is set forth below:

                                                       Guidance Range
                                                    for the Year Ending
                                                     December 31, 2009
                                                    -------------------
                                                     Low           High
                                                     ---           ----

    (In thousands, except per share and
     operating partnership unit data)

      Net loss                                    $(107,900) -- $(105,650)
      Plus real estate related depreciation
       and amortization                              27,500  --    27,500
      Less noncontrolling interests in real
       estate partnerships, before real estate
       related depreciation and amortization           (800) --      (800)
                                                       ----          ----
         Funds from Operations (FFO)                (81,200) --   (78,950)
      Plus amortization of intangibles related
       to purchase accounting, net of income
       tax benefit                                    4,000  --     4,000
                                                      -----         -----
         Funds from Operations Modified (FFOM)      (77,200) --   (74,950)
      Impairment charges, net of income tax
       benefit                                      101,700  --   101,700
                                                    -------       -------
         FFOM, excluding impairment charges          24,500  --    26,750
      Debt extinguishment charge, net of income
       tax benefit                                    1,500  --     1,500
                                                      -----         -----
         FFOM, excluding impairment charges
           and debt extingushment charges           $26,000  --   $28,250
                                                    =======       =======

      FFO per share and unit - diluted               $(1.98) --    $(1.93)
      FFOM per share and unit - diluted              $(1.89) --    $(1.83)
      FFOM per share and unit - diluted,
       excluding impairment charges                   $0.60  --     $0.65
      FFOM per share and unit - diluted,
       excluding impairment charges and debt
       extingushment charges                          $0.63  --     $0.69

      Weighted average shares and units
       outstanding - basic and diluted               40,950  --    40,950

Supplemental operating and financial data are available in the Investor Relations section of the Company's Web site at www.cogdellspencer.com.

The reported results are unaudited and there can be no assurance that the results will not vary from the final information for the three months ended June 30, 2009. In the opinion of management, all adjustments considered necessary for a fair presentation of these reported results have been made.

FFO is a supplemental non-GAAP financial measure used by the real estate industry to measure the operating performance of real estate companies. FFOM adds back to traditionally defined FFO non-cash amortization of non-real estate related intangible assets associated with purchase accounting. The Company presents FFO and FFOM because it considers them important supplemental measures of operational performance. The Company believes FFO is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results. The Company believes that FFOM allows securities analysts, investors and other interested parties in evaluating current period results to results prior to the Erdman transaction. FFO and FFOM are intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO and FFOM excludes depreciation and amortization unique to real estate, gains and losses from property dispositions and extraordinary items, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities and interest costs, providing a perspective not immediately apparent from net income. The Company computes FFO in accordance with standards established by the Board of Governors of NAREIT in its March 1995 White Paper (as amended in November 1999 and April 2002), which may differ from the methodology for calculating FFO utilized by other equity REITs and, accordingly, may not be comparable to such other REITs. The Company adjusts the NAREIT definition to add back noncontrolling interests in consolidated real estate partnerships before real estate related depreciation and amortization. Further, FFO and FFOM do not represent amounts available for management's discretionary use because of needed capital replacement or expansion, debt service obligations, or other commitments and uncertainties. FFO and FFOM should not be considered as an alternative to net income (loss) (computed in accordance with GAAP) as an indicator of the Company's performance, nor are they indicative of funds available to fund its cash needs, including its ability to pay dividends or make distributions. A reconciliation from GAAP net loss to FFO and FFOM is included as an attachment to this press release.

Conference Call

Cogdell Spencer Inc. invites you to attend the Company's Second Quarter 2009 Conference Call on Friday, August 7, 2009 at 10:00 a.m. (Eastern Daylight Time). The number to call for this teleconference is (800) 860-2442 (domestic) or (412) 858-4600 (international), and no passcode is required. In addition, the conference call can be accessed via the Internet at www.cogdellspencer.com through the "Q2 2009 Cogdell Spencer Earnings Conference Call" link on the Investor Relations page.

A playback will be available until August 24, 2009 at 9:00 a.m (Eastern Daylight Time). To access the playback, please dial (877) 344-7529 (domestic) or (412) 317-0088 (international) and enter the passcode: 432285. The replay can also be accessed via the Internet at www.cogdellspencer.com through the "Q2 2009 Cogdell Spencer Earnings Conference Call" link on the Investor Relations page.

About Cogdell Spencer Inc.

Charlotte-based Cogdell Spencer Inc. (NYSE: CSA) is a fully-integrated, self-administered, and self-managed real estate investment trust that invests in specialty office buildings for the medical profession, including medical offices and ambulatory surgery and diagnostic centers. The Company focuses on the ownership, delivery, acquisition, and management of strategically located medical office buildings and other healthcare related facilities in the United States of America. The Company has been built around understanding and addressing the full range of specialized real estate needs of the healthcare industry. Learn more about Cogdell Spencer Inc. and its subsidiaries at www.cogdellspencer.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements reflect the Company's views about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause actual results to differ materially. Factors that may contribute to these differences include, but are not limited to the following: our business strategy; our ability to comply with financial covenants in our debt instruments; our ability to obtain future financing arrangements; estimates relating to our future distributions; our understanding of our competition; our ability to renew our ground leases; changes in the reimbursement available to our tenants by government or private payors; our tenants' ability to make rent payments; defaults by tenants; Erdman's customers' access to financing; delays in project starts and cancellations by Erdman customers; the timing of capital expenditures by healthcare systems and providers; market trends; and projected capital expenditures.

For a further list and description of such risks and uncertainties, see the reports filed by the Company with the Securities and Exchange Commission, including the Company's Form 10-K for the year ended December 31, 2008. Although the Company believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be realized. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

                              Cogdell Spencer Inc.
                     Condensed Consolidated Balance Sheets
                                 (In thousands)
                                  (unaudited)

                                                June 30,        December 31,
                                                  2009              2008

                    Assets
    Real estate properties:
      Operating real estate properties         $535,291           $531,932
      Less: Accumulated depreciation            (81,612)           (69,285)
                                                -------            -------
        Total operating real estate
         properties, net                        453,679            462,647
      Construction in progress                   36,419             15,314
                                                 ------             ------
          Total real estate properties, net     490,098            477,961
    Cash and cash equivalents                    13,408             34,668
    Restricted cash                              13,082             12,964
    Tenant and accounts receivable, net          30,318             43,523
    Goodwill                                    108,683            180,435
    Trade names and trademarks                   41,240             75,969
    Intangible assets, net                       24,542             45,363
    Other assets                                 29,597             29,207
                                                 ------             ------
      Total assets                             $750,968           $900,090
                                               ========           ========

            Liabilities and equity
    Mortgage notes payable                     $255,622           $240,736
    Revolving credit facility                    80,000            124,500
    Term loan                                    50,000            100,000
    Accounts payable                             17,504             22,090
    Billings in excess of costs and estimated
     earnings on uncompleted contracts           21,556             17,025
    Deferred income taxes                        13,706             34,176
    Payable to prior Erdman shareholders         18,002             18,002
    Other liabilities                            46,069             60,567
                                                 ------             ------
      Total liabilities                         502,459            617,096
    Commitments and contingencies
    Equity:
      Cogdell Spencer Inc. stockholders' equity:
       Preferred stock, $0.01 par value; 50,000
        shares authorized, none issued or
        outstanding                                   -                  -
       Common stock, $0.01 par value, 200,000
        shares authorized, 42,526 and 17,699
        shares issued and outstanding in 2009
        and 2008, respectively                      425                177
       Additional paid-in capital               369,483            275,380
       Accumulated other comprehensive loss      (2,221)            (5,106)
       Accumulated deficit                     (158,598)           (77,438)
                                               --------            -------
         Total Cogdell Spencer Inc.
          stockholders' equity                  209,089            193,013
      Noncontrolling interests:
        Real estate partnerships                  5,442              4,657
        Operating partnership                    33,978             85,324
                                                 ------             ------
          Total noncontrolling interests         39,420             89,981
                                                 ------             ------
    Total equity                                248,509            282,994
                                                -------            -------
      Total liabilities and equity             $750,968           $900,090
                                               ========           ========



                              Cogdell Spencer Inc.
                Condensed Consolidated Statements of Operations
                    (In thousands, except per share amounts)
                                  (unaudited)

                                    For the Three         For the Six
                                    Months Ended          Months Ended
                                    -------------      ------------------
                                  June 30,   June 30,   June 30,   June 30,
                                   2009       2008       2009       2008
                                  ---------  ---------  ---------  ---------
    Revenues:
      Rental revenue              $19,662    $19,300    $39,328    $37,991
      Design-Build contract
       revenue and other sales     36,712     78,021     83,101    101,956
      Property management and
       other fees                     863        835      1,713      1,672
      Development management
       and other income               227        110      3,027        129
                                      ---        ---      -----        ---
        Total revenues             57,464     98,266    127,169    141,748

    Expenses:
      Property operating and
       management                   7,884      7,841     15,812     15,040
      Design-Build contracts
       and development
       management                  31,242     66,286     71,407     87,330
      Selling, general, and
       administrative               6,675      8,488     13,342     12,789
      Depreciation and
       amortization                 8,978     12,380     19,089     21,404
      Impairment charges                -          -    120,920          -
                                      ---        ---    -------        ---
        Total expenses             54,779     94,995    240,570    136,563

                                    -----      -----   --------      -----
    Income (loss) from
     operations before other
     income (expense)               2,685      3,271   (113,401)     5,185

    Other income (expense):
      Interest and other income       139        218        295        473
      Interest expense             (5,594)    (6,857)   (11,620)   (11,952)
      Debt extinguishment and
       interest rate derivative
       expense                     (2,490)         -     (2,490)         -
      Equity in earnings of
       unconsolidated
       partnerships                     2          5          8          7
                                      ---        ---        ---        ---
        Total other income
         (expense)                 (7,943)    (6,634)   (13,807)   (11,472)
                                   ------     ------   --------     ------
    Loss from operations
     before income tax benefit     (5,258)    (3,363)  (127,208)    (6,287)

    Income tax benefit              2,208        383     21,834        740
                                    -----        ---     ------        ---
    Net loss                       (3,050)    (2,980)  (105,374)    (5,547)
    Net loss (income)
     attributable to the
      noncontrolling interest in:
      Real estate partnerships        (48)        48       (141)        62
      Operating partnership           783      1,089     32,982      1,841
                                      ---      -----     ------      -----
    Net loss attributable to
     Cogdell Spencer Inc.         $(2,315)   $(1,843)  $(72,533)   $(3,644)
                                  =======    =======   ========    =======

    Net loss per share
     attributable to Cogdell
     Spencer Inc. - basic and
     diluted                       $(0.09)    $(0.12)    $(3.21)    $(0.24)
                                   ======     ======     ======     ======

    Weighted average common
     shares - basic and
     diluted                       27,084     15,393     22,565     14,879
                                   ======     ======     ======     ======



                               Cogdell Spencer Inc.
                            Business Segment Reporting
                                 (In thousands)
                                  (unaudited)

                                      Design-              Un-
                                       Build  Interseg-  allocat-
    Three months ended                  and     ment        ed
     June 30, 2009:        Property   Develop- Elimina-    and
                          Operations   ment     tions     Other   Total
                          ----------  -------  -------   -------  -----
    Revenues:
      Rental revenue      $19,685          $-     $(23)      $-  $19,662
      Design-Build
       contract revenue
       and other
       sales                    -      42,009   (5,297)       -   36,712
      Property management
       and other fees         863           -        -        -      863
      Development
       management and
       other income             -       1,434   (1,207)       -      227
                           ------      ------   ------    -----   ------
        Total revenues     20,548      43,443   (6,527)       -   57,464

    Certain operating expenses:
      Property operating
       and management       7,884           -        -        -    7,884
      Design-Build
       contracts and
       development
       management               -      35,948   (4,706)       -   31,242
      Selling, general,
       and administrative       -       4,122      (23)       -    4,099
                           ------      ------   ------    -----   ------
        Total certain
         operating
         expenses           7,884      40,070   (4,729)       -   43,225
                           ------      ------   ------    -----   ------
                           12,664       3,373   (1,798)       -   14,239

    Interest and
     other income             129           2        -        8      139
    Corporate general
     and administrative
     expenses                   -           -        -   (2,576)  (2,576)
    Interest expense            -           -        -   (5,594)  (5,594)
    Debt extinguishment
     and interest rate
     derivative expense         -           -        -   (2,490)  (2,490)
    Benefit from income
     taxes applicable to
     funds from operations
     modified                   -           -        -    1,670    1,670
    Non-real estate
     related depreciation
     and amortization           -        (196)       -      (57)    (253)
    Earnings from
     unconsolidated real
     estate partnerships,
     before real estate
     related depreciation
     and amortization           4           -        -        -        4
    Noncontrolling
     interests in real
     estate partnerships,
     before real estate
     related depreciation
     and amortization        (224)          -        -        -     (224)
                           ------      ------   ------    -----   ------
        Funds from
         operations
         modified
         (FFOM)            12,573       3,179   (1,798)  (9,039)   4,915

    Amortization of
     intangibles related
     to purchase
     accounting, net of
     income tax benefit       (42)     (1,338)       -      538     (842)
                           ------      ------   ------    -----   ------
        Funds from
         operations (FFO)  12,531       1,841   (1,798)  (8,501)   4,073

    Real estate related
     depreciation and
     amortization          (7,347)          -        -        -   (7,347)
    Noncontrolling
     interests in real estate
     partnerships, before
     real estate related
     depreciation and
     amortization             224           -        -        -      224
                           ------      ------   ------    -----   ------
    Net income (loss)       5,408       1,841   (1,798)  (8,501)  (3,050)
    Net loss (income)
     attributable to the
     noncontrolling interest
     in:
      Real estate
       partnerships          (48)          -        -        -      (48)
      Operating
       partnership             -           -        -      783      783
                           ------      ------   ------    -----   ------
    Net income (loss)
     attributable to Cogdell
     Spencer Inc.         $5,360      $1,841  $(1,798) $(7,718) $(2,315)
                          ======      ======  =======  =======  =======



                            Cogdell Spencer Inc.
                        Business Segment Reporting
                             (In thousands)
                              (unaudited)

                                      Design-              Un-
                                       Build  Interseg-  allocat-
    Six months ended                    and     ment        ed
     June 30, 2009:        Property   Develop- Elimina-    and
                          Operations   ment     tions     Other   Total
                          ----------  -------  -------   -------  -----

    Revenues:
      Rental revenue      $39,375         $-     $(47)      $-   $39,328
      Design-Build
       contract revenue
       and other sales                93,169   (10,068)      -    83,101
      Property management
       and other fees       1,713          -         -       -     1,713
      Development
       management and
       other income             -      5,070    (2,043)      -     3,027
                           ------      ------   ------    -----   ------
        Total revenues     41,088     98,239   (12,158)      -   127,169

    Certain operating expenses:
      Property operating
       and management      15,812          -        -        -    15,812
      Design-Build
       contracts and
       development
       management               -      81,066   (9,659)      -    71,407
      Selling, general,
       and administrative       -       8,660      (47)      -     8,613
      Impairment charges        -     120,920        -       -   120,920
                           ------      ------   ------    -----   ------
        Total certain
         operating
         expenses          15,812     210,646   (9,706)      -   216,752
                           ------     -------   ------       -   -------
                           25,276    (112,407)  (2,452)      -   (89,583)

    Interest and
     other income             270           4        -      21       295
    Corporate general
     and administrative
     expenses                   -           -        -   (4,729)  (4,729)
    Interest expense            -           -        -  (11,620) (11,620)
    Debt extinguishment
     and interest rate
     derivative expense         -           -        -   (2,490)   (2,490)
    Benefit from income
     taxes applicable to
     funds from operations
     modified                   -           -        -   20,311    20,311
    Non-real estate
     related depreciation
     and amortization           -        (390)       -     (111)     (501)
    Earnings from
     unconsolidated real
     estate partnerships,
     before real estate
     related depreciation
     and amortization          14           -        -        -        14
    Noncontrolling interests
     in real estate
     partnerships, before
     real estate related
     depreciation and
     amortization            (470)          -        -        -      (470)
                           ------      ------   ------    -----   ------
        Funds from
         operations
         modified
         (FFOM)            25,090    (112,793)  (2,452)   1,382   (88,773)

    Amortization of
     intangibles related
     to purchase accounting,
     net of income
     tax benefit              (85)     (3,820)       -    1,523    (2,382)
                           ------      ------   ------    -----   ------
        Funds from
         operations (FFO)  25,005    (116,613)  (2,452)   2,905   (91,155)

    Real estate related
     depreciation and
     amortization         (14,689)          -        -        -   (14,689)
    Noncontrolling
     interests in real
     estate partnerships,
     before real estate
     related depreciation
     and amortization         470           -        -        -       470
                           ------      ------   ------    -----   ------
    Net income (loss)      10,786    (116,613)  (2,452)   2,905  (105,374)
    Net loss (income)
     attributable to the
     noncontrolling interest in:
      Real estate
       partnerships          (141)          -        -        -      (141)
      Operating
       partnership              -           -        -   32,982    32,982
                                -           -        -   ------    ------
    Net income (loss)
     attributable to
     Cogdell Spencer
     Inc.                 $10,645   $(116,613) $(2,452) $35,887  $(72,533)
                          =======   =========  =======  =======  ========



                             Cogdell Spencer Inc.
    Reconciliation of Net Loss to Funds from Operations Modified (FFOM) (1)
                 (In thousands, except per share and unit amounts)
                                   (unaudited)

                          For the Three            For the Six
                           Months Ended            Months Ended
                       --------------------     --------------------
                        June 30,   June 30,      June 30,    June 30,
                          2009       2008          2009        2008
                        --------   --------      --------    --------

    Net loss            $(3,050)   $(2,980)     $(105,374)    $(5,547)
    Add:
      Real estate
       related
       depreciation
       and amortization:
        Wholly-owned and
         consolidated
         properties       7,344      7,826         14,684      15,615
        Unconsolidated
         Real estate
          partnerships        3          3              5           6
    Less:
      Noncontrolling
       interests in real
       estate partnerships,
       before real estate
       related depreciation
       and amortization    (224)       (74)          (470)       (152)
                         ------     ------         ------      ------
    Funds from
     Operations
     (FFO) (1)            4,073      4,775        (91,155)      9,922
      Amortization of
       intangibles
       related to
       purchase accounting,
       net of income
       tax benefit          842      2,551          2,382       3,204
                         ------     ------         ------      ------
    Funds from Operations
     Modified (FFOM)(1)  $4,915     $7,326       $(88,773)    $13,126
                         ======     ======       ========     =======

    FFO per share and
     unit - basic and
     diluted              $0.12      $0.20         $(2.96)      $0.45
    FFOM per share and
     unit -  basic and
     diluted              $0.14      $0.30         $(2.88)      $0.59

    Weighted average
     shares and units
     outstanding - basic
     and diluted         34,653     24,486         30,844      22,234


(1) FFO is a supplemental non-GAAP financial measure used by the real estate industry to measure the operating performance of real estate companies. FFOM adds back to traditionally defined FFO non-cash amortization of non-real estate related intangible assets associated with purchase accounting. The Company presents FFO and FFOM because it considers them important supplemental measures of operational performance. The Company believes FFO is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results. FFO is intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO excludes depreciation and amortization unique to real estate, gains and losses from property dispositions and extraordinary items, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities and interest costs, providing a perspective not immediately apparent from net income. The Company computes FFO in accordance with standards established by the Board of Governors of NAREIT in its March 1995 White Paper (as amended in November 1999 and April 2002), which may differ from the methodology for calculating FFO utilized by other equity REITs and, accordingly, may not be comparable to such other REITs. The Company adjusts the NAREIT definition to add back noncontrolling interests in consolidated real estate partnerships before real estate related depreciation and amortization. Further, FFO and FFOM do not represent amounts available for management's discretionary use because of needed capital replacement or expansion, debt service obligations, or other commitments and uncertainties. FFO and FFOM should not be considered as an alternative to net income (loss) (computed in accordance with GAAP) as an indicator of the Company's performance, nor are they indicative of funds available to fund its cash needs, including its ability to pay dividends or make distributions.


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SOURCE Cogdell Spencer Inc.
Copyright©2009 PR Newswire.
All rights reserved


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