EX-99.2 4 dex992.txt EXHIBIT 99.2 Exhibit 99.2 Immediate Karen Widmayer: Media Contact (202) 729-1789 Stephen Walsh: Analyst Contact (202) 729-1764 CARRAMERICA ANNOUNCES FOURTH QUARTER AND FULL YEAR 2001 FINANCIAL RESULTS Washington D.C. - February 8, 2002 - CarrAmerica Realty Corporation (NYSE:CRE) today reported fourth quarter Funds From Operations (FFO), excluding the impairment loss of $42.2 million on our investment in HQ Global Workplaces, Inc., of $54.3 million or $0.85 per adjusted share, compared to $55.1 million or $0.75 per adjusted share in the fourth quarter of 2000, a 13.3% increase. FFO per adjusted share including the HQ Global Workplaces, Inc. impairment loss was $0.14 for the fourth quarter of 2001. FFO, excluding the impairment loss, for the twelve month period ended December 31, 2001 was $224.7 million or $3.27 per adjusted share as compared to $220.4 million or $2.96 per adjusted share for the same period in 2000, a 10.5% increase. FFO per adjusted share including the HQ Global Workplaces, Inc. impairment loss was $2.64 for 2001. For the fourth quarter of 2001, loss per share from operations was, including the impairment loss related to HQ Global Workplaces, Inc., $0.38 as compared to diluted earnings per share of $0.38 in the fourth quarter of 2000. Excluding the impairment loss related to HQ Global Workplaces, Inc., diluted earnings per share for the fourth quarter 2001 would have been $0.36. For the twelve months ended December 31, 2001, diluted earnings per share from operations were $0.71 compared to $1.65 for the same period a year ago. Excluding the impairment loss related to HQ Global Workplaces, Inc., diluted earnings per share for 2001 would have been $1.39. Diluted earnings per share in the year 2000 included a significant gain on sales of properties totaling $36.4 million or $0.54 per diluted share, as compared to only $3.0 million or $0.05 per diluted share in 2001. CarrAmerica Announces Dividend Increase on Common Stock ------------------------------------------------------- CarrAmerica's Board of Directors yesterday approved a $.0375, or 8%, increase in the quarterly common stock dividend beginning with the common stock dividend declared yesterday for the fourth quarter 2001. -CONTINUED- CarrAmerica Release of February 8, 2002 Page Two CarrAmerica President and Chief Executive Officer, Thomas A. Carr, commented, "We are pleased that CarrAmerica was able to deliver solid operating results and FFO growth in spite of the challenging office market." Mr. Carr continued, "Our significant dividend increase is intended both to signal our confidence in our ability to deliver solid growth in spite of continued softness in the office market, as well as to demonstrate our commitment to delivering value to our shareholders." Portfolio Report ---------------- Performance of operating properties remains strong in the fourth quarter, with average occupancy of 95.4% at December 31, 2001, down from 96.0% as of September 30, 2001. Same store portfolio operating income during the quarter grew 0.4% on a GAAP basis and 1.5% on a cash basis over the same period in 2000. The occupancy rate for same store properties was 96.0% in the fourth quarter of 2001 as compared to 98.4% for fourth quarter 2000. For the twelve months ended December 31, 2001, same store operating income grew by 1.6% on a GAAP basis and 2.0% on a cash basis over the same period in 2000. Adjusting for termination fees, same store operating income for the twelve months ended December 31, 2001 grew by 2.9%. For the fourth quarter, rental rates decreased 2.7% on average on the rolling leases executed during the quarter. Rental rates increased 18.6% on average on the rolling leases executed during the twelve-month period ended December 31, 2001. Capital Markets Activity ------------------------ In November 2001, CarrAmerica repurchased 9.2 million shares of stock from its major stockholder, Security Capital Group, Incorporated, for a total of $265.4 million or $28.85 per share utilizing funds from the Company's $500 million line of credit. In December 2001, Security Capital Group Incorporated sold the balance of their position in the Company in a $550 million secondary offering and its three designees to the Company's Board of Directors resigned in connection with that sale. CarrAmerica purchased an aggregate of approximately $518.5 million of its common stock to date, inclusive of the 9.2 million shares purchased from Security Capital Group Incorporated. The average price per share has been $28.93. The Company does not currently anticipate additional common stock purchases in 2002. In January 2002, CarrAmerica completed a $400 million offering of 7.125% senior unsecured notes, the proceeds of which were primarily used to pay down debt outstanding under its $500 million credit line. -CONTINUED- CarrAmerica Release of February 8, 2002 Page Three Development Update ------------------ As of December 31, 2001, CarrAmerica and its subsidiary, CarrAmerica Development, Inc., had three projects under development in three of the Company's markets with expected total project costs of $43.1 million, of which $19.3 million had been invested as of December 31, 2001. The office development pipeline is currently 35.3% leased or committed and the year-one unleveraged return on CarrAmerica's invested capital is expected to be approximately 10.5%. CarrAmerica and its subsidiary own a partial interest in six development projects totaling approximately 1.2 million square feet under development in four markets. The total cost of these projects is expected to be $314.2 million and the projects are currently 43.7% leased or committed. CarrAmerica's share of the total project costs for these developments is expected to be approximately $89.6 million and the year-one unleveraged return on CarrAmerica's invested capital (exclusive of fees) is expected to be approximately 10.8%. During the fourth quarter, 172,000 square feet of office space were placed in service in two partially owned projects in which CarrAmerica owns an average of 41% with total project costs of $48.4 million and an average yield of 10.7%. For the twelve months ended December 31, 2001, CarrAmerica and its subsidiary placed in service approximately 442,000 square feet of new office space with total project costs of $80.2 million at an average yield of 12.7%. In addition, for the twelve months ended December 31, 2001, 476,000 square feet of new office space were placed in service in five partially owned projects in which CarrAmerica owns an average of 38% with total project costs of $104.9 million and an average yield of 10.8%. CarrAmerica Earnings Estimates ------------------------------ On Monday, February 11, CarrAmerica management will discuss earnings guidance for 2002. Based on management's view of current market conditions and certain assumptions with regard to rental rates and other projections, an expected range of fully diluted FFO per share of $3.55 - $3.62 for 2002 will be discussed. In addition, an expected range of fully diluted FFO per share of $.84 - $.86 for first quarter 2002 will be discussed. CarrAmerica Announces Fourth Quarter Dividend --------------------------------------------- The Board of Directors of CarrAmerica yesterday declared a fourth quarter dividend for its common stock of $.50 per share. The dividends will be payable to common stock shareholders of record as of the close of business on February 22, 2002. CarrAmerica's common stock will begin trading ex-dividend on February 20, 2002 and the dividends will be paid on March 8, 2002. 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 -CONTINUED- CarrAmerica Release of February 8, 2002 Page Four 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 February 18, 2002. Such preferred stock will begin trading ex-dividend on February 16, 2002 and the dividends will be paid on February 28, 2002. The Company also announced that, solely for purposes of satisfying U.S. federal income tax withholding obligations under section 1.1445-8 of the federal income tax regulations with respect to payments to foreign stockholders, CarrAmerica will characterize a portion of each of the fourth quarter dividends described above paid to foreign stockholders as a capital gain dividend to reflect the taxable composition of its aggregate dividend payment to stockholders in 2001. Accordingly, CarrAmerica will characterize as a capital gain dividend $.13956 per share of the dividend for its common stock; $.13956 per share of the dividend for its Series A Cumulative Redeemable preferred stock; $.161624 per share of the dividends for its Series B Cumulative Redeemable preferred stock; $.161254 per share of the dividend for its Series C Redeemable preferred stock; and $.159362 per share of the dividend for its Series D preferred stock. This characterization is relevant only for purposes of withholding on payments to foreign stockholders and has no effects on U.S. stockholders. CarrAmerica Fourth Quarter Webcast and Conference Call ------------------------------------------------------ CarrAmerica will conduct a conference call to discuss 2001 fourth quarter results on Monday, February 11, 2002, at 11:00 am ET. 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 0800-022-1179 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 February 18, 2002, by dialing 1-888-266-2081 or 703-925-2533 for local Washington, D.C. area and international participants (access code 5761675 for all callers) and 0800-022-1179 for Netherlands participants. A copy of supplemental material on the Company's fourth 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. 20006 (Telephone) 202-729-1764 E-Mail) swalsh@carramerica.com ---------------------- -CONTINUED- CarrAmerica Release of February 8, 2002 Page Five 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 e'ssention, the engine behind InfoCentre, a web-based operations and issues management platform and DukeSolutions, a Duke Energy subsidiary providing comprehensive energy management programs. Currently, CarrAmerica and its affiliates own, directly or through joint ventures, interests in a portfolio of 290 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, dividends, 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, the ability of the general economy to recover timely from the current economic downturn, 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 or companies in which the Company has made investments, our ability to maintain our status as a REIT for federal income tax purposes, 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 on Form 10-K. -CONTINUED- CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets -------------------------------------------------------------------------------- (In thousands)
December 31, December 31, 2001 2000 ------------- ------------ Assets ------ Rental property Land $ 647,747 $ 644,326 Buildings 1,857,775 1,836,214 Tenant improvements 362,736 325,936 Furniture, fixtures and equipment 3,789 6,844 ------------ ------------ 2,872,047 2,813,320 Less: Accumulated depreciation (477,694) (381,260) ------------ ------------ Net rental property 2,394,353 2,432,060 Land held for future development or sale 45,195 47,984 Construction in progress 19,324 48,300 Cash and cash equivalents 5,041 24,704 Restricted deposits 4,596 39,482 Accounts and notes receivable, net 28,551 70,693 Investments in unconsolidated entities 118,479 269,193 Accrued straight-line rents 66,781 54,960 Tenant leasing costs, net 53,894 54,522 Deferred financing costs, net 8,698 11,311 Prepaid expenses and other assets, net 30,688 19,632 ------------ ------------ $ 2,775,600 $ 3,072,841 ============ ============ Liabilities and Stockholders' Equity ------------------------------------ Liabilities: Mortgages and notes payable $ 1,405,382 $ 1,211,158 Accounts payable and accrued expenses 76,692 96,147 Rent received in advance and security deposits 32,326 29,143 ------------ ------------ 1,514,400 1,336,448 Minority interest 83,393 89,687 Stockholders' equity: Preferred stock 89 93 Common stock 520 650 Additional paid in capital 1,356,912 1,755,985 Cumulative dividends in excess of net income (179,714) (110,022) ------------ ------------ 1,177,807 1,646,706 ------------ ------------ Commitments and contingencies $ 2,775,600 $ 3,072,841 ============ ============
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations -------------------------------------------------------------------------------- (In thousands, except per share amounts)
Three Months Ended Twelve Months Ended December 31, December 31, ---------------------- ------------------------ 2001 2000 2001 2000 ---------- --------- ----------- ---------- (unaudited) Revenues: Rental income (1): Minimum base rent $ 109,789 $ 106,583 $ 431,817 $ 448,068 Recoveries from tenants 20,467 14,616 63,906 64,344 Parking and other tenant charges 2,979 3,218 11,886 19,447 --------- --------- --------- --------- Total rental revenue 133,235 124,417 507,609 531,859 Real estate service income 4,515 8,252 31,037 26,172 --------- --------- --------- --------- Total operating revenues 137,750 132,669 538,646 558,031 --------- --------- --------- --------- Operating expenses: Property expenses: Operating expenses 32,856 30,121 123,488 124,027 Real estate taxes 10,952 11,318 39,329 45,864 Interest expense 20,460 21,571 82,547 98,348 General and administrative 12,273 11,384 49,457 42,888 Depreciation and amortization 32,362 29,376 127,084 128,542 --------- --------- --------- --------- Total operating expenses 108,903 103,770 421,905 439,669 --------- --------- --------- --------- Real estate operating income 28,847 28,899 116,741 118,362 Other (expense) income: Interest income 284 2,020 3,052 4,372 Impairment of cost investment (42,249) -- (42,249) -- Equity in earnings of unconsolidated entities 1,065 2,685 9,322 7,596 --------- --------- --------- --------- Total other (expense) income (40,900) 4,705 (29,875) 11,968 --------- --------- --------- --------- (Loss) income from continuing operations before income taxes, minority interest and gain on sale of assets and other provisions, net (12,053) 33,604 86,866 130,330 Income taxes (391) (786) (1,338) (3,393) Minority interest (2,147) (6,994) (9,431) (16,149) Gain on sale of assets and other provisions, net 1,882 8,448 2,964 36,371 --------- --------- --------- --------- (Loss) income from continuing operations (12,709) 34,272 79,061 147,159 Discontinued operations - Income from operations of discontinued Executive Suites subsidiary (less applicable income tax expense) -- -- -- 456 Discontinued operations - Gain on sale of discontinued operations (less applicable income tax expense of $21,131) -- -- -- 31,852 --------- --------- --------- --------- Net(loss) income $ (12,709) $ 34,272 $ 79,061 $ 179,467 ========= ========= ========= ========= Basic net (loss) income per share: Net (loss) income from continuing operations $ (0.38) $ 0.39 $ 0.73 $ 1.69 Discontinued operations -- -- -- 0.01 Gain on discontinued operations -- -- -- 0.48 --------- --------- --------- --------- Net (loss) income $ (0.38) $ 0.39 $ 0.73 $ 2.18 ========= ========= ========= ========= Diluted net (loss) income per share: Net (loss) income from continuing operations $ (0.38) $ 0.38 $ 0.71 $ 1.65 Discontinued operations -- -- -- 0.01 Gain on discontinued operations -- -- -- 0.47 --------- --------- --------- --------- Net (loss) income $ (0.38) $ 0.38 $ 0.71 $ 2.13 ========= ========= ========= =========
NOTE: (1) Rental income includes $4,496 and $3,844 of accrued straight line rents for the three months period ended December 31, 2001 and 2000, respectively, and $12,855 and $13,478 of accrued straight line rents for the twelve months periods ended December 31, 2001 and 2000, respectively. CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flow -------------------------------------------------------------------------------- (In thousands)
Twelve Months Ended December 31, ---------------------- 2001 2000 Cash flow from operating activities: Net income $ 79,061 $ 179,467 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 127,084 128,542 Minority interest 9,431 16,149 Equity in earnings of unconsolidated entities (9,322) (7,596) Impairment loss on investment 42,249 -- Gain on sale of assets and other provisions (2,964) (36,371) Income and gain on sale of discontinued operations -- (32,308) Provision for uncollectible accounts 5,498 (2,879) Stock based compensation 2,630 2,890 Other 330 (2,686) Change in assets and liabilities: Decrease (increase) in accounts receivable 19,737 (22,215) Increase in accrued straight-line rents (13,009) (9,187) Additions to tenant leasing costs (13,418) (17,050) Increase in prepaid expenses and other assets (14,798) (4,332) Decrease in accounts payable and accrued expenses (18,508) (15,796) Increase in rent received in advance and security deposits 3,713 2,426 --------- --------- Total adjustments 138,653 (413) --------- --------- Net cash provided by operating activities 217,714 179,054 --------- --------- Cash flows from investing activities: Acquisition and development of rental property (49,829) (90,475) Additions to land held for development or sale (37,661) (26,157) Additions to construction in progress (32,443) (97,025) Acquisitions and development of executive suites assets -- (6,678) Payments on notes receivable 16,542 -- Issuance of notes receivable (582) (5,518) Distributions from unconsolidated entities 91,167 7,392 Investments in unconsolidated entities (17,194) (29,942) Acquisition of minority interest (5,033) (8,438) Decrease (increase) in restricted cash and cash equivalents 34,886 (27,007) Proceeds from the sale of discontinued operations -- 377,310 Proceeds from sales of properties 101,351 474,015 --------- --------- Net cash provided by investing activities 101,204 567,477 --------- --------- Cash flows from financing activities: Repurchase of common stock (428,275) (90,223) Exercises of stock options 28,477 29,730 Net borrowings (repayments) on unsecured credit facility 281,000 (307,500) Payment of senior unsecured notes -- (150,000) Net repayments of mortgages payable (86,770) (88,811) Proceeds from mortgages 26,628 -- Dividends and distributions to minority interests (159,641) (169,320) Contributions from minority interests -- 2,411 --------- --------- Net cash used by financing activities (338,581) (773,713) --------- --------- Decrease in unrestricted cash and cash equivalents (19,663) (27,182) Unrestricted cash and cash equivalents, beginning of the period 24,704 51,886 --------- --------- Unrestricted cash and cash equivalents, end of the period $ 5,041 $ 24,704 ========= ========= Supplemental disclosure of cash flow information: Cash paid for interest (net of capitalized interest of $6,221 and $12,367 for the twelve months ended December 31, 2001 and 2000, respectively) $ 74,996 $ 99,628 ========= =========
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES Funds From Operations -------------------------------------------------------------------------------- The National Association of Real Estate Investment Trusts (NAREIT) defines funds from operations ("FFO") as net income (loss) (computed in accordance with generally accepted accounting principles), excluding gains (or losses) from debt restructuring or sales of property, plus depreciation and amortization of assets uniquely significant to the real estate industry and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis. NAREIT's definition for FFO excludes discontinued operations, however, the Company has elected to calculate FFO from discontinued operations, the Company's executive suites business which was sold in 2000. FFO for discontinued operations includes executive suites earnings before depreciation, amortization and deferred taxes ("EBDADT").
(Unaudited and in thousands, except per share amounts) Three Months Ended Twelve Months Ended December 31, December 31, --------------------- ----------------------- 2001 2000 2001 2000 ---------- --------- ----------- ---------- Net income from continuing operations before minority interest: $(10,562) $ 41,266 $ 88,492 $ 163,308 Adjustments to derive funds from continuing operations: Add: Depreciation and amortization - REIT properties 30,633 28,033 121,346 123,036 Depreciation and amortization - Equity properties 2,592 3,267 10,563 5,825 Deduct: Minority interests' (non Unitholders) share of depreciation, amortization and net income (41) (362) (755) (1,084) Gain on sale of assets and other provisions, net (1,882) (8,448) (2,964) (36,371) -------- -------- --------- --------- FFO from continuing operations before allocations to minority Unitholders 20,740 63,756 216,682 254,714 Less: FFO allocable to the minority Unitholders (3,961) (4,112) (16,901) (16,342) -------- -------- --------- --------- CarrAmerica Realty Corporation's FFO from continuing operations 16,779 59,644 199,781 238,372 Less: Preferred stock dividends (8,669) (8,842) (34,719) (35,206) -------- -------- --------- --------- CarrAmerica Realty Corporation's FFO from continuing operations attributable to common shares 8,110 50,802 165,062 203,166 Discontinued operations -- -- -- 13,368 Gain on sale of discontinued operations -- -- -- 31,852 -------- -------- --------- --------- CarrAmerica Realty Corporation's FFO attributable to common shares $ 8,110 $ 50,802 $ 165,062 $ 248,386 ======== ======== ========= ========= Weighted average common shares outstanding: Basic 56,884 65,152 61,010 66,221 Diluted 58,165 73,432 62,698 74,425 Basic funds from operations per common share: $ 0.14 $ 0.78 $ 2.71 $ 3.75 ======== ======== ========= ========= Adjusted funds from operations per common share: $ 0.14 $ 0.75 $ 2.64 $ 3.57 ======== ======== ========= =========
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES Funds From Operations (con't) --------------------------------------------------------------------------------
2001 2001 Funds From Funds From Operations Operations Including Excluding HQ Global HQ Global Impairment Impairment (in thousands, except per share amounts) Loss Loss ---------- ---------- Funds from operations $165,062 $207,311 Series A preferred dividends 529 529 Minority interest from convertible partnership units -- 16,901 -------- -------- Adjusted funds from operations $165,591 $224,741 ======== ======== Weighted average common shares outstanding 61,010 61,010 Weighted average conversion of Series A Preferred Stock 256 256 Weighted average conversion of operating partnership units -- 6,040 Incremental options 1,432 1,432 -------- -------- Adjusted weighted average common shares 62,698 68,738 ======== ======== Adjusted funds from operations attributable to common shares $ 2.64 $ 3.27 ======== ========
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