EX-99.2 4 dex992.txt EXHIBIT 99.2 Immediate Karen L. Widmayer: Media Contact (202) 729-1789 Stephen Walsh: Analyst Contact (202) 729-1764 CARRAMERICA ANNOUNCES SECOND QUARTER 2001 FINANCIAL RESULTS Washington D.C. - August 3, 2001 - CarrAmerica Realty Corporation (NYSE:CRE) today reported second quarter Funds From Operations (FFO) from continuing operations of $58.7 million or $.84 per diluted share, a 13.5% increase over the same period in 2000. Excluding the impact of termination fee revenue, FFO per share increased approximately 18.6% over the same period in 2000. FFO for the six month period ended June 30, 2001 was $113.3 million or $1.61 per diluted share as compared to $108.9 million or $1.47 per diluted share for the same period in 2000, a 9.5% increase. Diluted earnings per share (EPS) from continuing operations were $0.38 for the second quarter of 2001 as compared to $0.31 for the second quarter of 2000, a 22.6% increase. For the first six months of 2001, diluted earnings per share from continuing operations were $0.71 compared to $0.68 for the same period a year ago, a 4.4% increase. CarrAmerica President and Chief Executive Officer, Thomas A. Carr, commented, "The year 2001 continues to be a challenging year for the real estate industry." Mr. Carr continued, "CarrAmerica's second quarter demonstrates strong operating results resulting from the company's focus on occupancy and cost control together with an excellent quarter for our service businesses." Portfolio Recognizes Rental Rate Increases of 42.2% --------------------------------------------------- Performance of operating properties remains strong with an average occupancy of 97.2% at June 30, 2001, up from 97.0% as of March 31, 2001. Same store portfolio operating income during the quarter grew 3.7% on a GAAP basis and 4.1% on a cash basis over the same period in 2000. The occupancy rate for same store properties was 96.8% in the second quarter of 2001 as compared to 97.8% for second quarter 2000. Excluding the impact of termination fee revenue on the same store net operating income, the same store net operating income grew by 7.3% on a GAAP basis and 7.8% on a cash basis over the second quarter 2000. -CONTINUED- CarrAmerica Release of August 3, 2001 Page Two For the second quarter, rental rates increased 42.2% on average on the rolling leases executed during the quarter. Rental rates increased 29.6% on average on the rolling leases executed during the six-month period ended June 30, 2001. Development Update ------------------ As of June 30, 2001, CarrAmerica and its subsidiary, CarrAmerica Development, Inc., had approximately 375,000 square feet under development in three of the Company's markets. Total cost of this development is expected to be approximately $54.7 million, of which $32.5 million had been invested as of June 30, 2001. This development pipeline is currently 68.7% leased or committed and the year-one unleveraged return on CarrAmerica's invested capital is expected to be approximately 11.4%. CarrAmerica and its subsidiary own a partial interest in five development projects totaling approximately 939,000 square feet under development in four markets. The total cost of these projects is expected to be $198.1 million and the projects are currently 52.9% leased or committed. CarrAmerica's share of the total project costs for these developments is expected to be approximately $60.7 million and the year-one unleveraged return on CarrAmerica's invested capital (exclusive of fees) is expected to be approximately 10.4%. During the second quarter, CarrAmerica subsidiary CarrAmerica Urban Development, LLC commenced construction on 1750 H Street, a 112,000 square foot project in downtown Washington, D.C. The project is 35% leased. CarrAmerica Urban Development is acting as a fee developer and CarrAmerica Realty Corporation is a mezzanine lender on the project. Also during the second quarter, CarrAmerica Urban Development, LLC entered into a joint venture with a client of JPMorgan Fleming Asset Management for the development of 575 Seventh Street, a 478,000 square foot office project across from the MCI Arena. The $153 million project is 51% leased to Venable, Baetjer, Howard and Civiletti, LLP and will commence construction in the third quarter. CarrAmerica Urban Development, LLC will also be developing an adjacent 29-unit residential project. During the second quarter, CarrAmerica and its subsidiary placed in service approximately 77,000 square feet of new office space with total project costs of approximately $24.4 million at an expected year-one unleveraged return on invested capital of approximately 15.3%. In addition, 162,000 square feet were placed in service in partially owned projects in which CarrAmerica owns approximately 35% on average, with total project costs of $26.0 million and an average yield of 10.6%. Also during the second quarter, CarrAmerica and its subsidiary announced two new fee development projects in downtown Washington, D.C.: The Freedom Forum selected CarrAmerica Urban Development, LLC, to serve as project manager for the development of The Freedom Forum/Newseum building on Pennsylvania Avenue. This project will relocate The Freedom Forum and the Newseum, the interactive -CONTINUED- CarrAmerica Release of August 3, 2001 Page Three museum of news, from nearby Arlington to the corner of Pennsylvania Avenue and 6th Street, N.W., just west of the Capitol. The project, which encompasses museum exhibit space, office and residential components, will significantly expand and update the Newseum's content and will more than double the exhibit space in the current museum. CarrAmerica Urban Development, LLC was also selected to assist in the development of a second headquarters building for the International Monetary Fund (IMF) to be located on Pennsylvania Avenue adjacent to the IMF's existing headquarters at 700 19th Street in Washington, D.C. CarrAmerica Urban Development will act as Development Manager responsible for the overall management and administration of the project including planning, design, zoning approvals, construction, occupancy and commissioning of IMF's second headquarters building. The building will feature a dramatic atrium, three levels of underground parking, a 450-seat meeting facility, food service and a state-of-the-art training facility. Fee Service Revenue Continues to Grow ------------------------------------- During the second quarter, CarrAmerica and its affiliates generated real estate service revenue of $9.7 million, an increase of 82.7% over the prior year. Fee service revenue continues to grow driven by management and development fees received by CarrAmerica's services businesses in the areas of build-to-suit development, project and construction management, leasing and facility and property management services for third party customers. Acquisitions ------------ During the second quarter, CarrAmerica purchased two buildings totaling 235,000 square feet in Mountain View, California for $51 million. The project has long-term leases with KPMG and AOL-Time Warner. CarrAmerica was previously a lender on the project and exercised an option to purchase the property for an additional $1 million. The purchase was completed as part of a 1031 exchange. In addition, during the second quarter, a partnership in which CarrAmerica is a 49% partner completed the acquisition of 2025 M Street, a 189,000 square foot office building in downtown Washington, D.C. for $37.9 million. The purchase was completed as part of a 1031 exchange. Dispositions ------------ During the second quarter, CarrAmerica sold a $2.2 million land parcel in Austin, Texas. In addition, CarrAmerica has one building in suburban Denver, Colorado under contract for sale at a price of $12 million. The sale is expected to close in the fourth quarter. The Company anticipates the proceeds from the sale of these assets to be used to repay amounts outstanding on the Company's line of credit, to fund future development project costs and for other general corporate purchases. There can be no assurance that any pending disposition will occur on such terms or at all. -CONTINUED- CarrAmerica Release of August 3, 2001 Page Four Capital Markets and Finance --------------------------- In the second quarter, CarrAmerica closed on a new three-year $500 million credit facility with a syndicate of banks arranged by J.P. Morgan Securities Inc. The terms were substantially similar to the previous credit facility. Additionally, Carr Office Park, LLC, a joint venture with New York State Teachers' Retirement System, closed on a ten-year, $225 million financing. The loan was provided by Northwestern Mutual Life Company and the State of Wisconsin Investment Board at an interest rate of 7.13%. This represents an approximately 60% loan on the value of the stabilized assets. Also in the second quarter, Moody's Investor Service upgraded the senior unsecured rating of CarrAmerica to Baa2, from Baa3, and revised the ratings outlook to stable, from positive. CarrAmerica Stock Repurchase Plan Expanded ------------------------------------------ CarrAmerica has purchased approximately $209.4 million of its common stock to date under the previously announced $275 million share repurchase program. The average price per share has been $28.94. CarrAmerica also announced that its Board of Directors has authorized an expansion of the existing share repurchase program of up to an additional $50 million of its outstanding shares. In addition its Board of Directors expanded the program to include preferred shares and outstanding debt securities. These additional securities will be purchased under the same terms and conditions as the existing program. CarrAmerica Earnings Estimates ------------------------------ On Monday, August 6, CarrAmerica management will discuss earnings guidance for 2001 and 2002. Based on management's view of current market conditions and certain assumptions with regard to rental rates and other projections (including the impact of the Company's stock repurchase program), a range of fully diluted FFO per share of $3.26 - $3.28 for 2001 will be discussed. In addition, a range of fully diluted FFO per share of $3.55 - $3.57 for 2002 will be discussed. CarrAmerica Announces Second Quarter Dividend --------------------------------------------- The Board of Directors of CarrAmerica yesterday declared a second quarter dividend for its common stock and its Series A Cumulative Convertible Redeemable preferred stock of $.4625 per share. The dividends will be payable to common and Series A preferred shareholders of record as of the close of business on August 17, 2001. CarrAmerica's common stock will begin trading ex-dividend on August 15, 2001, and the dividends payable to common shareholders will be paid on August 31, 2001. Dividends payable to Series A preferred shareholders will be paid on August 31, 2001. -CONTINUED- CarrAmerica Release of August 3, 2001 Page Five The Company also declared a regular dividend for its Series B, Series C, and Series D preferred stock. The Series B Cumulative Redeemable preferred stock dividend was declared to be $.535625 per share, the Series C Cumulative Redeemable preferred stock dividend was declared to be $.534375 per share, and the Series D Cumulative Redeemable preferred stock dividend was declared to be $.528125 per share. The Series B, Series C and Series D preferred stock dividends are payable to shareholders of record as of the close of business on August 17, 2001. Such preferred stock will begin trading ex-dividend on August 15, 2001 and the dividends will be paid on August 31, 2001. CarrAmerica Second Quarter Webcast and Conference Call ------------------------------------------------------ CarrAmerica will conduct a conference call to discuss the second quarter 2001 operations on Monday, August 6, 2001 at 11:00 a.m. EST. A live webcast of the call will be available through a link at CarrAmerica's web site, www.carramerica.com. The phone number for the conference call is 1-800-982- ------------------- 3654; for local Washington, D.C. area and international participants, 703-871- 3021; and 0800-215-1724 for Netherlands participants. The call is open to all interested persons. A taped replay of the conference call can be accessed immediately after the call through August 13, 2001, by dialing 1-888-266-2081 or 703-925-2533 for local Washington, D.C. area and international participants (access code 5373958 for all callers.) A copy of supplemental material on the Company's second quarter operations is available on the Company's web site, www.carramerica.com, or by request from: Stephen Walsh CarrAmerica Realty Corporation 1850 K Street, NW, Suite 500 Washington, D.C. 20016 (Telephone) 202-729-1764 E-Mail) swalsh@carramerica.com ---------------------- CarrAmerica owns, develops and operates office properties in 12 markets throughout the United States. The Company is committed to becoming America's leading office workplace company by meeting the rapidly changing needs of its customers with superior service, a large portfolio of quality office properties, extraordinary development capabilities and land positions. CarrAmerica is a leading office innovator with interests in and strategic relationships with companies including: HQ Global Workplaces, a global leader in executive office suites; essention, the engine behind InfoCentre, a web-based operations and issues management platform and DukeSolutions, a Duke Energy subsidiary providing comprehensive energy management programs. -CONTINUED- CarrAmerica Release of August 3, 2001 Page Six Currently, CarrAmerica and its affiliates own, directly or through joint ventures, interests in a portfolio of 287 operating office properties and have eight office buildings under development in six key growth markets. CarrAmerica's markets include Atlanta, Austin, Chicago, Dallas, Denver, Los Angeles/Orange County, Portland, Salt Lake City, San Diego, San Francisco Bay Area, Seattle and metropolitan Washington, D.C. For additional information on CarrAmerica, including space availability, visit our web site at www.carramerica.com. Estimates of FFO per share are by definition, and certain statements in this release may constitute, "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance, achievements or transactions of the Company and its affiliates or industry results to be materially different from any future results, performance, achievements or transactions expressed or implied by such forward-looking statements. Such factors include, among others, the following: national and local economic, business and real estate conditions that will, among other things, affect demand for office properties, availability and creditworthiness of tenants, the level of lease rents and the availability of financing for both tenants and the Company, adverse changes in the real estate markets including, among other things, competition with other companies, risks of real estate acquisition and development (including the failure of pending acquisitions to close and pending developments to be completed on time and within budget), actions, strategies and performance of affiliates that the Company may not control, governmental actions and initiatives, and environmental/safety requirements. For a further discussion of these and other factors that could impact the Company's future results, performance, achievements or transactions, see the documents filed by the Company from time to time with the Securities and Exchange Commission, and in particular the section titled, "The Company - Risk Factors" in the Company's Annual Report of Form 10-K. -CONTINUED- CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets --------------------------------------------------------------------------------
(In thousands) June 30, December 31, 2001 2000 -------------------- -------------------- (unaudited) Assets ------ Rental property Land $ 644,799 $ 644,326 Buildings 1,825,629 1,836,214 Tenant improvements 338,606 325,936 Furniture, fixtures and equipment 3,521 6,844 -------------------- -------------------- 2,812,555 2,813,320 Less: Accumulated depreciation (422,617) (381,260) -------------------- -------------------- Net rental property 2,389,938 2,432,060 Land held for future development or sale 44,599 47,984 Construction in progress 32,549 48,300 Cash and cash equivalents 14,482 24,704 Restricted deposits 7,288 39,482 Accounts and notes receivable 32,374 70,693 Investments in unconsolidated entities 153,468 269,193 Accrued straight-line rents 59,189 54,960 Tenant leasing costs, net 52,030 54,522 Deferred financing costs, net 9,760 11,311 Prepaid expenses and other assets, net 25,495 19,632 -------------------- -------------------- $ 2,821,172 $ 3,072,841 ==================== ==================== Liabilities and Stockholders' Equity ------------------------------------ Liabilties: Mortgages and notes payable $ 1,109,778 $ 1,211,158 Accounts payable and accrued expenses 64,778 96,147 Rent received in advance and security deposits 29,892 29,143 -------------------- -------------------- 1,204,448 1,336,448 Minority interest 85,993 89,687 Stockholders' equity: Preferred stock 89 93 Common stock 621 650 Additional paid in capital 1,653,396 1,755,985 Cumulative dividends in excess of net income (123,375) (110,022) -------------------- -------------------- 1,530,731 1,646,706 -------------------- -------------------- Commitments and contingencies $ 2,821,172 $ 3,072,841 ==================== ====================
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations ----------------------------------------------------------------------
(In thousands, except per share amounts) Three Months Ended Six Months Ended June 30, June 30, ---------------------------- ---------------------------- 2001 2000 2001 2000 ------------- ------------- ------------- ------------- (unaudited) (unaudited) Revenues: Rental income (1): Minimum base rent $ 105,802 $ 115,303 $ 212,012 $ 229,183 Recoveries from tenants 14,683 17,505 28,724 34,339 Parking and other tenant charges 3,338 6,319 6,876 12,230 ----------- ----------- ----------- ----------- Total rental revenue 123,823 139,127 247,612 275,752 Real estate service income 9,703 5,312 19,840 10,253 ----------- ----------- ----------- ----------- Total operating revenues 133,526 144,439 267,452 286,005 ----------- ----------- ----------- ----------- Operating expenses: Property expenses: Operating expenses 28,433 31,930 60,474 64,212 Real estate taxes 10,050 12,572 19,617 24,518 Interest expense 21,136 25,115 41,996 52,005 General and administrative 11,939 12,001 26,340 21,773 Depreciation and amortization 30,820 35,170 61,645 67,319 ----------- ----------- ----------- ----------- Total operating expenses 102,378 116,788 210,072 229,827 ----------- ----------- ----------- ----------- Real estate operating income 31,148 27,651 57,380 56,178 Other income: Interest income 1,023 873 2,127 1,750 Equity in earnings of unconsolidated entities 3,674 1,267 7,028 2,716 ----------- ----------- ----------- ----------- Total other income 4,697 2,140 9,155 4,466 ----------- ----------- ----------- ----------- Income from continuing operations before income taxes, minority interest and (loss) gain on sale of assets and other provisions, net 35,845 29,791 66,535 60,644 Income taxes (187) - (234) - Minority interest (3,076) (2,353) (4,529) (5,408) (Loss) gain on sale of assets and other provisions, net (22) 2,387 1,054 7,741 ----------- ----------- ----------- ----------- Income from continuing operations $ 32,560 $ 29,825 $ 62,826 $ 62,977 Discontinued operations - Income from operations of discontinued Executive Suites subsidiary (less applicable income tax expense) - 1,836 - 456 Discontinued operations - Gain on sale of discontinued operations (less applicable income tax expense of $21,131) - 31,852 - 31,852 ----------- ----------- ----------- ----------- Net income $ 32,560 $ 63,513 $ 62,826 $ 95,285 =========== =========== =========== =========== Basic net income per share: Net income from continuing operations $ 0.39 $ 0.31 $ 0.73 $ 0.68 Discontinued operations - 0.03 - - Gain on discontinued operations - 0.48 - 0.48 ----------- ----------- ----------- ----------- Net income $ 0.39 $ 0.82 $ 0.73 $ 1.16 =========== =========== =========== =========== Diluted net income per share: Net income from continuing operations $ 0.38 $ 0.31 $ 0.71 $ 0.68 Discontinued operations - 0.03 - - Gain on discontinued operations - 0.43 - 0.44 ----------- ----------- ----------- ----------- Net income $ 0.38 $ 0.77 $ 0.71 $ 1.12 =========== =========== =========== ===========
NOTE: (1) Rental income includes $2,897 and $3,465 of accrued straight line rents for the three months periods ended June 30, 2001 and 2000, respectively, and $5,263 and $6,466 of accrued straight line rents for the six months period ended June 30, 2001 and 2000, respectively. CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flow --------------------------------------------------------------------------------
(Unaudited and in thousands) Six Months Ended June 30, -------------------------- 2001 2000 Cash flow from operating activities: Net income $ 62,826 $ 95,285 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 61,645 67,370 Minority interest 4,529 5,408 Equity in earnings of unconsolidated entities (7,028) (2,716) Gain on sale of assets and other provisions, net (1,054) (7,741) Income and gain on sale of discontinued operations - (32,308) Provision for uncollectible accounts 4,703 1,549 Stock based compensation 1,469 1,553 Other 264 (1,140) Change in assets and liabilities: Decrease (increase) in accounts receivable 16,140 (5,689) Increase in accrued straight-line rents (5,417) (6,466) Additions to tenant leasing costs (5,519) (9,059) Increase in prepaid expenses and other assets (7,866) (9,876) Decrease in accounts payable and accrued expenses (32,221) (5,080) Increase in rent received in advance and security deposits 1,279 3,095 ------------ ------------ Total adjustments 30,924 (1,100) ------------ ------------ Net cash provided by operating activities 93,750 94,185 ------------ ------------ Cash flows from investing activities: Acquisition and development of rental property (16,207) (46,825) Additions to land held for development or sale (34,840) (11,071) Additions to construction in progress (19,215) (33,493) Acquisitions and development of executive suites assets - (6,678) Payments on notes receivable 16,539 139 Distributions from unconsolidated entities 89,616 3,568 Investments in unconsolidated entities (10,440) (9,875) Acquisition of minority interest (3,289) (1,478) Decrease (increase) in restricted cash and cash equivalents 32,194 (322) Proceeds from the sale of discontinued operations - 377,310 Proceeds from sales of properties 100,474 62,883 ------------ ------------ Net cash provided by investing activities 154,832 334,158 ------------ ------------ Cash flows from financing activities: Repurchase of common stock (119,210) (28,450) Exercises of stock options 16,082 9,945 Net repayments on unsecured credit facility (86,000) (317,500) Net repayments of mortgages payable (15,502) (7,849) Proceeds from mortgages 26,628 - Dividends and distributions to minority interests (80,802) (85,524) Contributions from minority interests - 1,948 ------------ ------------ Net cash used by financing activities (258,804) (427,430) ------------ ------------ (Decrease) increase in unrestricted cash and cash equivalents (10,222) 913 Unrestricted cash and cash equivalents, beginning of the period 24,704 51,886 ------------ ------------ Unrestricted cash and cash equivalents, end of the period $ 14,482 $ 52,799 ============ ============ Supplemental disclosure of cash flow information: Cash paid for interest (net of capitalized interest of $3,837 and $16,378 for the six months ended June 30, 2001 and 2000, respectively) $ 49,207 $ 60,106 ============ ============
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES Funds From Operations --------------------------------------------------------------------------------
(In thousands, except per share amounts) Three Months Ended Six Months Ended June 30, June 30, ------------------------- --------------------------- 2001 2000 2001 2000 ----------- ------------ ------------ ------------ Net income from continuing operations before minority interest: $ 35,636 $ 32,178 $ 67,355 $ 68,385 Adjustments to derive funds from continuing operations: Add: Depreciation and amortization - REIT properties 29,540 33,351 59,162 64,134 Depreciation and amortization - Equity properties 2,211 1,030 5,295 1,689 Deduct: Minority interests' (non Unitholders) share of depreciation, amortization and net income (219) (218) (501) (473) Loss (gain) on sale of assets and other provisions, net 22 (2,387) (1,054) (7,741) ----------- ------------ ------------ ------------ FFO from continuing operations before allocations to minority Unitholders 67,190 63,954 130,257 125,994 Less: FFO allocable to the minority Unitholders (4,507) (3,794) (8,344) (8,231) ----------- ------------ ------------ ------------ CarrAmerica Realty Corporation's FFO from continuing operations 62,683 60,160 121,913 117,763 Less: Preferred stock dividends (8,746) (8,745) (17,395) (17,522) ----------- ------------ ------------ ------------ CarrAmerica Realty Corporation's FFO from continuing operations attributable to common shares 53,937 51,415 104,518 100,241 Discontinued operations -- 8,473 -- 13,368 Gain on sale of discontinued operations -- 31,852 -- 31,852 ----------- ------------ ------------ ------------ CarrAmerica Realty Corporation's FFO attributable to common shares $ 53,937 $ 91,740 $104,518 $145,461 =========== ============ ============ ============ Weighted average common shares outstanding: Basic 61,840 66,856 62,509 66,912 Diluted 69,494 74,684 70,353 74,292 Basic funds from operations per common share: Funds from continuing operations $ 0.87 $ 0.77 $ 1.67 $ 1.50 Funds from discontinued operations -- 0.13 -- 0.20 Funds from sale of discontinued operations -- 0.48 -- 0.48 ----------- ------------ ------------ ------------ Total funds from operations $ 0.87 $ 1.38 $ 1.67 $ 2.18 =========== ============ ============ ============ Diluted funds from operations per common share: Funds from continuing operations $ 0.84 $ 0.74 $ 1.61 $ 1.47 Funds from discontinued operations -- 0.11 -- 0.18 Funds from sale of discontinued operations -- 0.43 -- 0.43 ----------- ------------ ------------ ------------ Total funds from operations $ 0.84 $ 1.28 $ 1.61 $ 2.08 =========== ============ ============ ============ CarrAmerica Realty Corporation FFO attributed to common share from continuing operations $ 53,937 $ 51,415 $104,518 $100,241 Series A Preferred share dividends 221 221 440 474 Minority interest from convertible partnership units 4,507 3,794 8,344 8,232 ----------- ------------ ------------ ------------ Adjusted FFO attributable to common shares from continuing operations $ 58,665 $ 55,430 $113,302 $108,947 =========== ============ ============ ============ Weighted average common shares outstanding - Basic 61,840 66,856 62,509 66,912 Weighted average conversion of Series A Preferred shares 392 480 436 510 Weighted average conversion of operating partnership units 6,062 6,470 6,068 6,475 Incremental options 1,200 878 1,340 395 ----------- ------------ ------------ ------------ Adjusted weighted average common shares - Diluted 69,494 74,684 70,353 74,292 =========== ============ ============ ============