HRP Hrpt Properties Trust

HRPT Properties Trust (NYSE: HRP) today announced financial results for the quarter and year ended December 31, 2009.

Results for the quarter ended December 31, 2009:

Net (loss) income available for common shareholders was ($22.9) million for the quarter ended December 31, 2009, compared to $50.8 million for the same quarter last year. Net (loss) income available for common shareholders per share, basic and diluted, (EPS) for the quarters ended December 31, 2009 and 2008 was ($0.10) and $0.22, respectively. Net loss for the quarter ended December 31, 2009 includes $31.9 million, or $0.14 per share, of loss on asset impairment. Net income for the quarter ended December 31, 2008 includes $39.5 million, or $0.17 per share, of gain on sale of properties.

Funds from operations (FFO) available for common shareholders for the quarter ended December 31, 2009 was $62.6 million, or $0.28 per share basic and $0.27 per share diluted, respectively, compared to FFO available for common shareholders for the quarter ended December 31, 2008 of $62.2 million, or $0.27 per share basic and diluted.

The weighted average number of basic and diluted common shares outstanding totaled 223,860,241 and 253,052,899, respectively, for the quarter ended December 31, 2009, and 227,704,155 and 256,896,813, respectively, for the quarter ended December 31, 2008.

Results for the year ended December 31, 2009:

Net income available for common shareholders was $114.0 million for the year ended December 31, 2009, compared to $194.0 million for the same period last year. Net income available for common shareholders per share, basic and diluted, (EPS) for the year ended December 31, 2009 and 2008 was $0.51 and $0.86, respectively. Net income for the year ended December 31, 2009 includes $79.1 million, or $0.35 per share, of gain on sale of properties, $20.7 million, or $0.09 per share, of gain on early extinguishment of debt, and $31.9 million, or $0.14 per share, of loss on asset impairment. Net income for the year ended December 31, 2008 includes $137.2 million, or $0.61 per share, of gain on sale of properties.

Funds from operations (FFO) available for common shareholders for the year ended December 31, 2009 was $250.1 million, or $1.12 and $1.08 per share basic and diluted, respectively, compared to FFO available for common shareholders for the year ended December 31, 2008 of $251.7 million, or $1.11 and $1.08 per share basic and diluted, respectively.

The weighted average number of basic and diluted common shares outstanding totaled 224,220,360 and 253,413,018, respectively, for the year ended December 31, 2009, and 226,467,736 and 255,660,394, respectively, for the year ended December 31, 2008.

Occupancy and Leasing Results (excluding properties classified in discontinued operations):

As of December 31, 2009, 87.4% of HRP’s total square feet was leased, compared to 88.0% as of September 30, 2009.

HRP signed lease renewals for 789,000 square feet and new leases for 156,000 square feet during the quarter ended December 31, 2009, for weighted average rental rates that were 9% above prior rents for the same space. Average lease terms for leases signed during the fourth quarter of 2009 were 5.1 years. Commitments for tenant improvement and leasing commission (TI/LC) costs for leases signed during the quarter ended December 31, 2009 totaled $9.89 per square foot on a weighted average basis.

Investing Activities:

During the fourth quarter of 2009, HRP acquired one office property and one industrial property totaling a combined 753,000 square feet of space for $182.1 million, excluding closing costs.

Financing Activities:

During the fourth quarter of 2009, HRP issued $125 million of 7.50% unsecured senior notes due 2019 and closed on a mortgage for $175 million with a 10 year term. Interest under the mortgage has been fixed for the first seven years with a cash flow hedge which sets the rate at approximately 5.66% per year (excluding amortization of costs). HRP used the proceeds from these financings to reduce amounts outstanding under its revolving credit facility.

Conference Call:

On Tuesday, February 23, 2010, at 1:00 p.m. Eastern Time, Adam Portnoy, Managing Trustee, and John Popeo, Chief Financial Officer, will host a conference call to discuss the fourth quarter 2009 results. Following the company’s remarks, there will be a short question and answer period.

The conference call telephone number is (800) 289-0496. Participants calling from outside the United States and Canada should dial (913) 312-0643. No pass code is necessary to access either call. Participants should dial in about 15 minutes prior to the scheduled start of the call. A replay of the conference call will be available through 4:00 p.m. Eastern Time on Tuesday, March 2, 2010. To hear the replay, dial (719) 457-0820. The replay pass code is 4509667.

A live audio webcast of the conference call will also be available in a listen only mode on HRP’s web site, which is located at www.hrpreit.com. Participants wanting to access the webcast should visit HRP’s web site about five minutes before the call. The archived webcast will be available for replay on HRP’s web site for about one week after the call. The recording and retransmission in any way of HRP’s fourth quarter and year end conference call is strictly prohibited without the prior written consent of HRP.

Supplemental Data:

A copy of HRP’s Fourth Quarter 2009 Supplemental Operating and Financial Data is available for download at HRP’s web site, www.hrpreit.com.

HRPT Properties Trust is a real estate investment trust, or REIT, which primarily owns office and industrial buildings located throughout the United States. As of December 31, 2009, HRP owned 518 operating properties with 66.8 million square feet, including 17.9 million square feet of leased industrial and commercial lands in Oahu, Hawaii. HRP is headquartered in Newton, Massachusetts.

Please see the pages attached hereto for a more detailed statement of our operating results and financial condition and for an explanation of our calculation of FFO. HRP’s web site is not incorporated as part of this press release.

A Maryland Real Estate Investment Trust with transferable shares of beneficial interest listed on the New York Stock Exchange. No shareholder, Trustee or officer is personally liable for any act or obligation of the Trust.

HRPT Properties Trust

Consolidated Statements of Income and Funds from Operations

(amounts in thousands, except per share data)

(unaudited)

        Quarter Ended December 31, Year Ended December 31, 2009   2008   2009   2008   Rental income $213,339   $218,454   $849,722   $835,855     Expenses: Operating expenses 89,266 93,922 356,001 347,968 Depreciation and amortization 49,522 49,029 195,681 185,693 General and administrative 10,508 9,779 39,427 36,828 Acquisition costs (1) 2,011   —   4,298   —   Total expenses 151,307   152,730   595,407   570,489  

Operating income

62,032

65,724

254,315

265,366

  Interest income 355 539 1,194 1,442 Interest expense (including amortization of debt discounts, premiums and deferred financing fees of $1,680, $1,522, $6,782 and $5,479, respectively)

 

(43,546

 

)

 

(45,616

 

)

 

(173,458

 

)

 

(180,193

 

)

Loss on asset impairment (31,882 ) (2,283 ) (31,882 ) (2,283 ) Gain on early extinguishment of debt — — 20,686 — Equity in earnings of equity investments 2,728   —   6,546   —   (Loss) income from continuing operations before income tax expense (10,313 ) 18,364 77,401 84,332 Income tax expense (217 ) (162 ) (735 ) (773 ) (Loss) income from continuing operations (10,530 ) 18,202 76,666 83,559 Discontinued operations: Income from discontinued operations 301 5,712 8,875 23,912 (Loss) gain on sale of properties (24 ) 39,549   79,133   137,174   Net (loss) income (10,253 ) 63,463 164,674 244,645 Preferred distributions (12,667 ) (12,667 ) (50,668 ) (50,668 ) Net (loss) income available for common shareholders ($22,920 ) $50,796   $114,006   $193,977                       Calculation of Funds from Operations, or FFO (2): Net (loss) income ($10,253 ) $63,463 $164,674 $244,645 Plus: depreciation and amortization from continuing operations 49,522 49,029 195,681 185,693 Plus: depreciation and amortization from discontinued operations — (401 ) — 6,912 Plus: acquisition costs (1) 2,011 — 4,298 — Plus: FFO from equity investments 4,840 — 10,625 — Plus: loss on asset impairment 31,882 2,283 31,882 2,283 Less: gain on early extinguishment of debt — — (20,686 ) — Less: (loss) gain on sale of properties 24 (39,549 ) (79,133 ) (137,174 ) Less: equity in earnings of equity investments (2,728 ) —   (6,546 ) —   FFO 75,298 74,825 300,795 302,359 Less: preferred distributions (12,667 ) (12,667 ) (50,668 ) (50,668 ) FFO available for common shareholders $62,631   $62,158   $250,127   $251,691                       Weighted average common shares outstanding – basic 223,860   227,704   224,220   226,468   Weighted average common shares outstanding – diluted (3) 253,053   256,897   253,413   255,661                       Per common share: (Loss) income from continuing operations available for common shareholders – basic and diluted

($0.10

)

$0.02

$0.12

$0.15

Income from discontinued operations – basic and diluted $— $0.20 $0.39 $0.71 Net (loss) income available for common shareholders – basic and diluted

($0.10

)

$0.22

$0.51

$0.86

FFO available for common shareholders – basic $0.28 $0.27 $1.12 $1.11 FFO available for common shareholders – diluted $0.27 $0.27 $1.08 $1.08 Common distributions paid $0.12 $0.21 $0.48 $0.84

HRPT Properties Trust

Consolidated Statements of Income and Funds from Operations

(amounts in thousands, except per share data)

       

(1) Acquisition costs have been expensed under the Business Combinations Topic of The FASB Accounting Standards CodificationTM since January 1, 2009.

 

(2) We compute FFO as shown in the calculations above. Our calculations of FFO differ from the National Association of Real Estate Investment Trusts, or NAREIT, definition because we exclude acquisition costs, gain on early extinguishment of debt and loss on early extinguishment of debt unless settled in cash, and loss on asset impairment. We consider FFO to be an appropriate measure of performance for a REIT, along with net income and cash flow from operating, investing and financing activities. We believe that FFO provides useful information to investors because by excluding the effects of certain historical amounts, such as depreciation expense and gains or losses on sales of properties, FFO can facilitate a comparison of operating performance between periods and among REITs. FFO does not represent cash generated by operating activities in accordance with generally accepted accounting principles, or GAAP, and should not be considered an alternative to net income or cash flow from operating activities as a measure of financial performance or liquidity. Also, some REITs may calculate FFO differently than us.

 

(3) As of December 31, 2009, our 15,180 outstanding series D preferred shares were convertible into 29,193 common shares. The effect of a conversion of our series D convertible preferred shares on income from continuing operations available for common shareholders per share is anti-dilutive to income, but dilutive to FFO for the quarters and years ended December 31, 2009 and 2008. Set forth below is the calculation of diluted net income available for common shareholders, diluted FFO available for common shareholders and diluted weighted average common shares outstanding.

 

Quarter Ended December 31,

Year Ended December 31,

2009   2008 2009 2008   Net (loss) income available for common shareholders ($22,920 ) $50,796 $114,006 $193,977 Add - Series D convertible preferred distributions 6,167   6,167 24,668 24,668 Net (loss) income available for common shareholders – diluted

($16,753

)

$56,963

$138,674

$218,645

  FFO available for common shareholders $62,631 $62,158 $250,127 $251,691 Add - Series D convertible preferred distributions 6,167   6,167 24,668 24,668 FFO available for common shareholders – diluted $68,798   $68,325 $274,795 $276,359   Weighted average common shares outstanding – basic 223,860 227,704 224,220 226,468 Effect of dilutive Series D preferred shares 29,193   29,193 29,193 29,193 Weighted average common shares outstanding – diluted 253,053   256,897 253,413 255,661

HRPT Properties Trust

Consolidated Balance Sheets

(amounts in thousands, except share data)

(unaudited)

    December 31, 2009   2008    

ASSETS

Real estate properties: Land $1,237,842 $1,220,554 Buildings and improvements 5,085,839   5,021,703   6,323,681 6,242,257 Accumulated depreciation (884,421 ) (862,958 ) 5,439,260 5,379,299 Properties held for sale 8,263 145,849 Acquired real estate leases, net 166,453 164,308 Equity investments 158,822 — Cash and cash equivalents 18,204 15,518 Restricted cash 11,662 10,837 Rents receivable, net of allowance for doubtful accounts of $10,945 and $8,492, respectively

194,358

196,839

Other assets, net 124,299   103,449   Total assets $6,121,321   $6,016,099    

LIABILITIES AND SHAREHOLDERS’ EQUITY

Revolving credit facility $110,000 $201,000 Senior unsecured debt, net 2,258,466 2,241,225 Mortgage notes payable, net 624,184 447,693 Other liabilities related to properties held for sale 14 3,400 Accounts payable and accrued expenses 103,608 99,285 Acquired real estate lease obligations, net 47,348 47,839 Distributions payable 26,863 — Rent collected in advance 30,366 26,537 Security deposits 23,097 17,935 Due to affiliates 8,309   10,073   Total liabilities 3,232,255   3,094,987     Shareholders’ equity: Preferred shares of beneficial interest, $0.01 par value: 50,000,000 shares authorized; Series B preferred shares; 8 3/4% cumulative redeemable at par on or after September 12, 2007; 7,000,000 shares issued and outstanding, aggregate liquidation preference $175,000

 

169,079

 

169,079

Series C preferred shares; 7 1/8% cumulative redeemable at par on or after February 15, 2011; 6,000,000 shares issued and outstanding, aggregate liquidation preference $150,000

 

145,015

 

145,015

Series D preferred shares; 6 1/2% cumulative convertible; 15,180,000 shares issued and outstanding, aggregate liquidation preference $379,500

 

368,270

 

368,270

Common shares of beneficial interest, $0.01 par value: 350,000,000 shares authorized; 223,860,241 and 227,731,938 shares issued and outstanding, respectively

2,239

2,277

Additional paid in capital 2,924,166 2,937,986 Cumulative net income 2,236,928 2,072,254 Cumulative common distributions (2,576,582 ) (2,441,841 ) Cumulative preferred distributions (382,596 ) (331,928 ) Accumulated other comprehensive income 2,547   —   Total shareholders’ equity 2,889,066   2,921,112   Total liabilities and shareholders’ equity $6,121,321   $6,016,099