CRO Claymore/Zacks Country Rotation

CRT Properties, Inc. (NYSE:CRO), a real estate investment trust, reported results today for the first quarter ended March 31, 2005. Results for the quarter ended March 31, 2005 Funds from operations (FFO) for the quarter ended March 31, 2005 were $14.0 million or $0.44 per share diluted. This compares to FFO for the quarter ended March 31, 2004 of $12.4 million, or $0.47 per share diluted. The weighted average number of diluted shares outstanding totaled 32,083,118, for the quarter ended March 31, 2005 and 26,524,255 for the same quarter last year. Net income available to common shareholders was $2.1 million for the three months ended March 31, 2005, compared to $3.2 million for the same quarter last year. Net income available to common shareholders per share (EPS) for the quarter ended March, 31, 2005 was $0.06 on a diluted basis. This compares to EPS for the fourth quarter of 2004 of $0.12 on a diluted basis. The reported results are unaudited and there can be no assurance that the results will not vary from the final information for the quarter and year end ended December 31, 2005. In the opinion of management, all adjustments considered necessary for a fair presentation of these reported results have been made. As of March 31, 2005, the Company's portfolio consisted of 136 properties comprising approximately 11.4 million square feet. The overall percentage of occupied space as of March 31, 2005 was 82.9%. The Company also holds a 30% interest in an unconsolidated joint venture, a 326,000 square foot office building which was 86% occupied as of March 31, 2005. Significant leasing activity during the quarter includes; -- 715,000 square feet of leases during the quarter resulting in nearly 100,000 square feet of positive absorption, primarily in the Atlanta, Houston, Jacksonville, Tallahassee, Dallas and St. Petersburg markets. -- The company achieved a 61% tenant retention rate during the quarter. -- The weighted average gross rent on a GAAP basis for leases executed during the quarter was $16.50 (excluding first generation space) compared to $17.10 on expiring leases. Significant events during the quarter included; -- Portfolio occupancy increased 80 basis points during the quarter from 82.1% at the end of the fourth quarter, 2004 to 82.9% at the end of the first quarter, 2005. -- The Company was selected as "REIT of the Year" by Institutional Investor, Inc. -- On February 9, 2005 the Company refinanced a $77 million variable interest rate loan secured by the Lakes on Post Oak in Houston, Texas. The retired loan rate was Libor plus 2.87%. The new variable interest rate loan, in the amount of $78 million, is secured by the same property and bears an interest rate of Libor plus 1.25%. EPS and FFO per Share Guidance The Company's guidance for the second quarter of 2005 and the full year 2005 for EPS (diluted) and FFO per share (diluted) is set forth and reconciled below. -0- *T Full Year 2005 Low - High Projected EPS (diluted) $0.53 - $0.57 Preferred dividends (0.20) (0.20) Projected company share of real estate depreciation and amortization 1.48 - 1.48 --------- ---------- Projected FFO per share (diluted) $1.81 - $1.85 *T The forgoing estimates reflect management's view of current and future market conditions, including assumptions with respect to rental rates, occupancy levels and earnings impact of the events referenced in this release. There can be no assurance that the Company's actual results will not differ materially from the estimates set forth above. CRT Properties will host a conference call tomorrow, May 5, 2005 at 9:00 AM (Eastern Time), open to the general public, to discuss the first quarter, the 2005 projections, and other related matters. The number to call for this interactive teleconference is (800) 865-4435. A replay of the conference call will be available through May 19, 2005 by dialing (877) 519-4471 and entering the Passcode 5978871. An audio-webcast will also be archived and may be accessed at http://www.crtproperties.com in the Investors section under the heading "Webcast". Additionally, a copy of CRT Properties' first quarter 2005 "Supplemental Operating and Financial Data" and this press release are available in the Investors section of the Company's website at http://www.crtproperties.com. These materials are also available by contacting Investor Relations at (800) 850-2037 or by written request to: Investor Relations CRT Properties, Inc. 225 NE Mizner Blvd., Suite 200 Boca Raton, FL 33432 Non-GAAP Financial Measures Funds from Operations ("FFO") is a non-GAAP financial measure that is a widely used performance measure for real estate companies and is provided as a supplemental measure of operating performance. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. The National Association of Real Estate Investment Trusts ("NAREIT") adopted the definition of FFO in order to promote an industry standard measure of REIT financial and operating performance. FFO adds back historical cost depreciation, which assumes the value of real estate assets diminishes predictably in the future. NAREIT defines FFO as net income (loss) (computed in accordance with generally accepted accounting principles (GAAP), excluding gains (losses) from sales of property, plus depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. Given the nature of the Company's business as a real estate owner and operator, the Company believes that FFO is helpful to investors as a starting point in measuring its operational performance because in excluding real estate related depreciation and amortization, and gains and losses from sales of property, it provides a supplemental performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs. In addition, since most equity REITs provide FFO information to investors, FFO can also be a useful supplemental measure for comparing the Company's results to other equity REITs. FFO excludes depreciation and amortization, however, and captures neither the changes in the value of our properties that result from use or market conditions, nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact the Company's results from operations, the utility of FFO as a measure of performance is limited. Moreover, while the Company believes its computation of FFO conforms to the NAREIT definition, it may not be comparable to FFO reported by REITs that interpret the definition differently or that do not define FFO in accordance with the NAREIT definition at all. Accordingly, FFO (i) should not be considered as an alternative to net income (determined in accordance with GAAP) as an indicator of the Company's financial performance, (ii) is not an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of the Company's liquidity, and (iii) is not indicative of funds available to fund the Company's cash needs, including its ability to pay dividends or make distributions, because of needed capital replacement or expansion, debt service obligations, or other cash commitments and uncertainties. About CRT Properties, Inc. CRT Properties, Inc. owns or has interests in 137 office buildings (including one property in which the company holds a 30% interest), containing approximately 11.7 million rentable square feet, located in more than twenty five office projects in twelve metropolitan areas in the Southeastern United States, Texas and Maryland. The Private Securities Litigation Reform Act of 1995 The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for certain forward-looking statements. The forward-looking statements contained in this release, including those that refer to management's plans and expectations for future operations, prospects and financial condition, are subject to certain risks and uncertainties. Actual results could differ materially from current expectations. The words "believe," "expect," "anticipate," "intend," "estimate" and other expressions which are predictions of or indicate future events and trends and which do not relate to historical matters identify forward-looking statements. Reliance should not be placed on these statements because, by their nature, they are subject to known and unknown risks and can be affected by factors that are beyond the control of CRT Properties, Inc. Among the factors that could affect the Company's actual results are changes in general economic conditions, including changes in the economic conditions affecting industries in which its principal tenants compete; its ability to timely lease or re-lease space at current or anticipated rents to creditworthy tenants; changes in interest rates; future demand for its debt and equity securities; and its ability to complete current and future development projects on schedule and on budget. A more detailed discussion of these and other factors is set forth in the "Risk Factors" section of the Company's SEC reports and filings, including its Annual Report on Form 10-K for the year ended December 31, 2004. For forward-looking statements contained or incorporated by reference herein, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events. -0- *T CRT PROPERTIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited and amounts in thousands, except per share data) Three Months Ended March 31, 2005 2004 ----------- ------------ Revenues Base rental revenues $42,836 $34,756 Recoveries from tenants 4,791 3,513 Parking and other 1,458 1,199 Management fees 210 66 ----------- ------------ Total operating revenues 49,295 39,534 ----------- ------------ Expenses Property operations 13,316 10,947 Real estate taxes 5,645 4,589 Depreciation and amortization 12,037 9,220 General and administrative 4,105 2,844 Other 23 52 ----------- ------------ Total operating expenses 35,126 27,652 ----------- ------------ Operating Income 14,169 11,882 ----------- ------------ Other Income and Expense Interest income 115 127 Mortgage and loan interest, including amortization Of deferred loan costs of $988 and $374 (10,642) (7,306) ----------- ------------ Total other income and expense (10,527) (7,179) Income Before Income Taxes, Minority Interest and Equity In Earnings of Unconsolidated Entity 3,642 4,703 Income tax provision 0 0 ----------- ------------ Income Before Minority Interest and Equity in Earnings of Unconsolidated Entity 3,642 4,703 Minority interest (77) 0 ----------- ------------ Income Before Equity in Earnings of Unconsolidated Entity 3,565 4,703 Equity in earnings of Unconsolidated Entity 101 131 ----------- ------------ Net Income 3,666 4,834 Dividends on preferred stock (1,588) (1,588) =========== ============ Net Income Available to Common Shareholders $2,078 $3,246 =========== ============ Earnings Per Share Available to Common Shareholders: Basic $0.07 $0.12 =========== ============ Diluted $0.06 $0.12 =========== ============ Weighted Average Shares: Basic 31,751 26,071 =========== ============ Diluted 32,083 26,524 =========== ============ CRT PROPERTIES, INC. AND SUBSIDIARIES FUNDS FROM OPERATIONS ("FFO") (Unaudited and amounts in thousands, except per share data) Three Months Ended March 31, 2005 2004 ----------- ----------- FFO available to common shareholders: Net income $3,666 $4,834 Dividends on preferred stock (1,588) (1,588) Depreciation - real property 10,860 8,347 Depreciation - unconsolidated affiliate 116 101 Amortization - deferred tenant costs 497 609 Amortization - fair value of acquired leases 454 137 Minority interest share of add-backs 34 0 ----------- ----------- FFO available to common shareholders $14,039 $12,440 =========== =========== CRT PROPERTIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In Thousands) March 31, December 31, 2005 2004 -------------- -------------- ASSETS Real estate investments: Operating properties: Land $162,988 $162,988 Buildings 1,196,340 1,189,658 Furniture and equipment 3,758 3,747 Accumulated depreciation (226,526) (215,587) -------------- -------------- Operating properties, net 1,136,560 1,140,806 Undeveloped land held for investment 14,628 14,628 Cash and cash equivalents 33,730 32,717 Restricted cash 7,095 15,964 Accounts receivable, net of allowance for uncollectible accounts of $1,150 and $1,169 3,421 2,839 Accrued straight line rent receivable 24,673 20,118 Fair value of in place leases 10,241 10,695 Investment in unconsolidated affiliate 3,261 3,217 Other assets 43,086 43,282 -------------- -------------- TOTAL ASSETS $1,276,695 $1,284,266 ============== ============== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Mortgages and loans payable $622,938 $623,467 Accounts payable 5,507 8,584 Accrued real estate taxes payable 5,762 2,414 Other accrued liabilities 24,010 24,259 Dividends payable 11,436 11,365 Advance rents and security deposits 10,170 9,039 -------------- -------------- Total Liabilities 679,823 679,128 -------------- -------------- Minority interest 11,230 11,179 -------------- -------------- Shareholders' equity: Preferred Stock 30 30 Common stock 403 401 Capital in excess of par value 767,267 762,642 Unearned compensation (3,895) 0 Accumulated other comprehensive loss (536) (536) Dividends in excess of net income (46,168) (37,110) Treasury stock, at cost (131,459) (131,468) -------------- -------------- Total Shareholders' Equity 585,642 593,959 -------------- -------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,276,695 $1,284,266 ============== ============== *T