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First Potomac Realty Trust Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 6, 2011 05:20PM

First Potomac Realty Trust (FPO) filed Quarterly Report for the period ended 2011-03-31. First Potomac Realty Trust has a market cap of $803.4 million; its shares were traded at around $16.04 with a P/E ratio of 13.7 and P/S ratio of 5.7. The dividend yield of First Potomac Realty Trust stocks is 5%. First Potomac Realty Trust had an annual average earning growth of 5% over the past 10 years.



Highlight of Business Operations:

The Company incurred a net loss of $3.9 million during the first quarter of 2011 compared with a net loss of $2.2 million during the first quarter of 2010. The Company’s funds from operations (“FFO”) for the first quarter of 2011 was $7.7 million, or $0.15 per diluted share, compared with FFO of $8.0 million, or $0.26 per diluted share, during the first quarter of 2010. FFO is a non-GAAP financial measure. For a description of FFO, including why management believes its presentation is useful and a reconciliation of FFO to net (loss) income attributable to common shareholders, see “Funds From Operations.”

The increase in the Company’s net loss for the quarter ended March 31, 2011 compared with 2010 is primarily due to an increase in acquisition costs and impairment charges, which also caused a decrease in the Company’s FFO. The Company acquired three properties during the three months ended March 31, 2011, incurring $2.2 million in acquisition costs. The Company did not acquire any properties during the three months ended March 31, 2010. In the first quarter of 2011, the Company adjusted its anticipated holding period for its Gateway West property, which is located in the Company’s Maryland reporting segment, and, in April 2011, the Company entered into a contract to sell the property. As a result, the Company recorded a $2.7 million impairment charge in the first quarter of 2011. During the first quarter of 2010, the Company incurred a $0.6 impairment charge on a property in its Maryland region that was sold in the second quarter of 2010.

Rental revenue is comprised of contractual rent, the impacts of straight-line revenue and the amortization of deferred market rent assets and liabilities representing above and below market rate leases at acquisition. Rental revenue increased $5.3 million for the three months ended March 31, 2011 compared to the same period in 2010, which was due to increased revenues from the Company’s recent acquisitions. The Non-comparable Properties contributed $5.3 million of additional rental revenue for the three months ended March 31, 2011. Rental revenue for the Comparable Portfolio remained flat for the three months ended March 31, 2011 compared to 2010, as an increase in rental rates was offset by an increase in vacancy. The weighted average occupancy of the Comparable Portfolio was 83.9% for the quarter ended March 31, 2011 compared with 85.0% for the same period in 2010. The Company expects aggregate rental revenues will increase throughout 2011 due to a full-year of revenues from the properties acquired in 2010 and additional properties acquired in 2011. The increase in rental revenue for the three months ended March 31, 2011 compared to 2010 includes $2.2 million for the Maryland reporting segment, $2.8 million for the Washington, D.C. reporting segment, $0.1 million for the Northern Virginia reporting segment and $0.2 million for the Southern Virginia reporting segment.

Property operating expenses increased $0.9 million for the three months ended March 31, 2011 compared with the same period in 2010. The increase is due to the Non-comparable Properties, which contributed $1.8 million of additional property operating expenses for the three months ended March 31, 2011. For the Comparable Portfolio, property operating expenses decreased $0.9 million for the three months ended March 31, 2011 compared with the same period in 2010 primarily due to a reduction in snow and ice removal costs. The Company expects property operating expenses to increase for the remainder of the year compared with prior year results due primarily to the Company’s new acquisitions. The increase in property operating expenses for the three months ended March 31, 2011 compared with 2010 includes $0.5 million for the Maryland reporting segment and $0.7 million for the Washington, D.C. reporting segment. For the Northern Virginia and Southern Virginia reporting segments, property operating expenses decreased $0.1 million and $0.2 million, respectively.

Real estate taxes and insurance expense increased $0.7 million for the three months ended March 31, 2011 compared with the same period in 2010. The Non-comparable Properties contributed an increase in real estate taxes and insurance expense of $0.9 million for the three months ended March 31, 2011. For the Comparable Portfolio, real estate taxes and insurance expense decreased $0.2 million for the three months ended March 31, 2011 compared with the same period in 2010 primarily due to lower real estate assessments and real estate tax rates. Real estate taxes and insurance for the three months ended March 31, 2011 compared with 2010, increased $0.1 million for the Maryland reporting segment, $0.6 million for the Washington, D.C. reporting segment and $44 thousand for the Northern Virginia reporting segment. For the Southern Virginia reporting segment, real estate taxes and insurance decreased $41 thousand for the three months ended March 31, 2011 compared with 2010.

Depreciation and amortization expense includes depreciation of real estate assets and amortization of intangible assets and leasing commissions. Depreciation and amortization expense increased $2.9 million for the three months ended March 31, 2011 compared with the same period in 2010 primarily due to the Company’s recent acquisitions. The Non-comparable Properties contributed additional depreciation and amortization expense of $2.4 million for the three months ended March 31, 2011. The increase in depreciation and amortization expense was also attributed to the Comparable Portfolio, which contributed additional depreciation and amortization expense of $0.5 million for the three months ended March 31, 2011 compared with the same period in 2010. The Company anticipates depreciation and amortization expense to increase the remainder of 2011 due to recognizing a full-year of depreciation and amortization expense for properties acquired in 2010 and additional properties acquired in 2011.

Read the The complete Report



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