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First Potomac Realty Trust Reports Operating Results (10-K)
Posted by: gurufocus (IP Logged)
Date: February 29, 2012 11:26PM
First Potomac Realty Trust (FPO) filed Annual Report for the period ended 2011-12-31. First Potomac has a market cap of $709.6 million; its shares were traded at around $13.23 with a P/E ratio of 13.1 and P/S ratio of 4.1. The dividend yield of First Potomac stocks is 5.7%. First Potomac had an annual average earning growth of 2.3% over the past 10 years.
Highlight of Business Operations:Approximately 9% of the Companys annualized base rent is scheduled to expire in 2012, excluding month-to-month leases. Current tenants may not renew their leases upon the expiration of their terms. If non-renewals or terminations occur, the Company may not be able to locate qualified replacement tenants and, as a result, could lose a significant source of revenue while remaining responsible for the payment of its financial obligations. Moreover, the terms of a renewal or new lease, including the amount of rent, may be less favorable to the Company than the current lease terms, or the Company may be forced to provide tenant improvements at its expense or provide other concessions or additional services to maintain or attract tenants. We continually strive to increase our portfolio occupancy, and the amount of vacant space in our portfolio at any given time may impact our willingness to reduce rental rates or provide greater concessions to retain existing tenants and attract new tenants. The Companys management continually monitors its portfolio on a regional and per property basis to assess market trends, including vacancy, comparable deals and transactions, and other business and economic factors that may influence our leasing decisions. During 2011, the Company had a 73% retention rate, based on square footage. The weighted average rental rate on the Companys renewed leases in 2011 increased 5.0% compared with the expiring leases. During 2011, the Company executed new leases for 1.1 million square feet, of which 97% (based on square footage) contained rent escalations.
Rental revenue increased $5.8 million in 2010 as compared with 2009 due to increased revenues resulting from the Companys Non-comparable Properties, which contributed $6.5 million of additional rental revenue in 2010 compared with 2009. For the Existing Properties, rental revenue decreased $0.7 million in 2010 compared with 2009 primarily due to an increase in vacancy; however, rental rates increased 9.1% on new leases during 2010. The increase in rental revenue in 2010 compared with 2009 includes $1.3 million for Maryland, $2.8 million for Washington, D.C. and $1.9 million for Northern Virginia. For Southern Virginia, rental revenue decreased $0.2 million in 2010 compared to 2009.
Same Property NOI decreased $0.1 million for the twelve months ended December 31, 2011 compared with the same period in 2010. Same property rental revenue decreased $0.9 million for the twelve months ended December 31, 2011 due to an increase in vacancy. Tenant reimbursements and other revenue decreased $1.4 million for the year ended December 31, 2011 as a result of a decrease in recoverable property operating expenses, primarily, related to snow and ice removal costs. Same property operating expenses decreased $1.8 million for the full year of 2011 due to lower snow and ice removal costs and reserves for anticipated bad debt expense. Real estate taxes and insurance expense decreased $0.4 million for the 2011 compared with 2010 due to lower tax assessments. The Company expects its Same Property NOI to increase in 2012 as it has leased space at several properties that it acquired in 2010 that had high vacancy levels at acquisition.
Same property NOI for the Southern Virginia properties decreased $1.0 million for the twelve months ended December 31, 2011 compared with the same period in 2010. Total same property revenues decreased $1.7 million primarily due to an increase in vacancy and a decrease in recoverable operating expenses. Total same property operating expenses decreased approximately $0.7 million during 2011 compared with 2010 due to a decrease in snow and ice removal costs and real estate taxes.
Same Property NOI decreased $0.3 million, or 0.3%, for the twelve months ended December 31, 2010 as compared with the same period in 2009. Same property rental revenue decreased $0.3 million for the twelve months ended December 31, 2010, primarily due to an increase in vacancy. Tenant reimbursements and other revenue increased $0.1 million for the twelve months ended December 31, 2010 as a result of an increase in recoverable property operating expenses, primarily snow and ice removal costs. Total same property operating expenses decreased slightly for the full year of 2010 due to lower real estate assessments and real estate tax rates on the Companys Northern Virginia properties located in Fairfax County and Prince William County, Virginia. The reduction in real estate tax expense was partially offset by an increase in snow and ice removal costs, which were partially offset by a reduction in reserves for anticipated bad debt expense.
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