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Real Estate Investment Trust CapLease
May 05, 2010: CapLease, Inc.a real estate investment trust (REIT) focused on single-tenant commercial real estate investments, today announced its results for the first quarter ended March 31, 2010. Net loss to common stockholders was $(2.8) million, and funds from operations, or FFO, was $9.2 million.
First Quarter 2010 Highlights:
– Raised $62.7 Million of New Equity, Increasing Cash to $96 Million at March 31
– Revenues of $41.7 Million
– FFO of $0.18 Per Share Before Items Affecting Comparability, or $0.17 Including Such Items
– Overall Leverage Reduced by Over 5%
Paul McDowell, Chairman and Chief Executive Officer, stated: “We had another quarter of solid execution on our strategy and demonstrated significant access to capital. In 2010, we will be focused on driving increased cash flow through continued debt reduction and the resumption of portfolio growth. Buttressed by the steady performance of our $2 billion high quality single tenant portfolio, we continued to reduce recourse indebtedness during the quarter and raised $62.7 million of additional capital which provides us with significant financial flexibility. We also announced a cash tender offer for our convertible senior notes and continue to make progress on extending our credit facility beyond the scheduled maturity in April 2011.”
First Quarter 2010 Results:
For the quarter ended March 31, 2010, CapLease reported total revenues of $41.7 million, compared to total revenues of $45.1 million in the comparable period in 2009. First quarter 2010 FFO adjusted for items that affect comparability was $9.3 million, or $0.18 per share, compared to $13.2 million, or $0.28 per share, in the comparable period in 2009. Net loss to common stockholders for the first quarter of 2010 was $(2.8) million, or $(0.05) per share, compared to net loss of $(4.6) million, or $(0.10) per share, in the comparable period in 2009.
During the first quarter, CapLease’s portfolio continued to perform well, with no tenant defaults or delinquencies. The decline in revenues from the comparable period in 2009 reflects the previously communicated vacancy of the Company’s Johnston, Rhode Island property during October 2009.
Capital Activity:
Inclusive of amounts raised through the Company’s continuous equity program, CapLease raised $62.7 million of new equity capital during the first quarter of 2010, with the proceeds expected to be used primarily to reduce recourse debt obligations and restart portfolio growth. During the first quarter of 2010, the Company continued to reduce recourse debt obligations, with $16 million of total principal retired during the quarter across the Company’s credit facility and convertible senior notes.
The Company’s capital raising activity during the quarter was highlighted by two transactions closed in late March. The Company re-opened its 8.125% Series A preferred stock and raised about $40 million of total proceeds.
The preferred shares were sold at a price of $23.06 per share, resulting in an effective annual yield of 9.00%. The Company also received a $15 million direct common stock investment from a new high-quality, long-term investor in our Company, at a price of $4.77 per share.
Investment Portfolio:
At March 31, 2010, the Company’s portfolio before depreciation and amortization was approximately $2.0 billion, with 81% invested in owned properties. The weighted average underlying tenant credit rating on the Company’s entire single tenant portfolio is A- from Standard & Poor’s, with an average tenant rating on the single tenant owned property portfolio of A.
Approximately 91% of the overall single tenant portfolio is invested in owned properties and loans on properties where the underlying tenant is rated investment grade and in investment grade rated real estate securities, with about 97% of the single tenant owned property portfolio leased to investment grade tenants.
The weighted average remaining lease term on the Company’s entire single tenant portfolio is approximately nine years, including approximately eight years on the single tenant owned property portfolio and approximately 17 years on the leases underlying the loan portfolio. Our loan portfolio is primarily comprised of seasoned fully amortizing first mortgage loans on properties leased to investment grade tenants. References to the Company’s single tenant portfolio exclude its Johnston, Rhode Island and Omaha, Nebraska properties, as each is no longer leased primarily by a single tenant.
Balance Sheet:
At March 31, 2010, the Company’s assets included $1.6 billion in owned real property investments before depreciation and amortization, $218 million in loan investments, and $152 million in commercial mortgage-backed securities. Most of the Company’s debt is long-term amortizing non-recourse fixed rate debt. Only 11% of the Company’s debt is recourse and must be refinanced through 2012. That debt is comprised of the term credit facility with $110 million currently outstanding maturing in April 2011 and the Company’s convertible senior notes with $50 million of principal currently outstanding maturing in October 2012.
The Company’s overall portfolio leverage, expressed as a percentage of its total debt to total assets before depreciation and amortization on owned properties and with other minor adjustments, was approximately 72% as of
March 31, 2010, down from 76% at December 31, 2009. CapLease expects its leverage level to decrease over time, as a result of one or more of the following factors: scheduled principal amortization on our debt which averages about $40 million annually through 2014, voluntary debt reduction including potentially through selected asset sales, and lower or no leverage on new asset acquisitions. Based purely on the scheduled principal amortization on its debt, the Company expects its leverage level to decline about 1.3 percentage points annually through 2014.
Dividends:
In the first quarter of 2010, the Company declared a cash dividend on its common stock in the amount of $0.06 per share. The level of CapLease’s common dividend will continue to be determined by the operating results of each quarter, economic conditions, capital requirements, and other operating trends.
The Company also declared a cash dividend of $0.5078125 on its 8.125% Series A cumulative redeemable preferred stock.
2010 Guidance:
CapLease is affirming its previously disclosed full year 2010 guidance range of $0.68 to $0.73 of FFO per share, and $(0.22) to $(0.17) of earnings per share (EPS). As a reminder, the guidance assumes the Johnston,
Rhode Island property remains vacant for all of 2010 and estimated carrying costs of the building for 2010 of $1.5 million.CapLease is also affirming its full year 2010 guidance range of $0.72 to $0.77 of cash available for distribution (CAD) per share.
The Company’s guidance estimates assume no asset investment or disposition activity in 2010. Our guidance estimates also assume no gains or losses associated with asset sales or debt extinguishment, no capital raising activities, no portfolio impairments or losses, and no other gains or charges that may occur during the year, and include assumptions with respect to interest rate levels on our floating rate facility, the level of property operating expenses and general and administrative expenses.
The difference between FFO and EPS is primarily depreciation and amortization expense on real property.
The factors described in the Forward-Looking and Cautionary Statements section of this release could cause actual results to differ materially from our guidance.
SOURCE: CapLease, Inc.
This is a blog post for Real Estate Professionals, Investors, Landlord, Property Manager, and Property Management Companies. CapLease Announces First Quarter 2010 Results is brought to you by SimplifyEm Pay Rent Online and Property Management SoftwareYou might also want to read:
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