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First Potomac Realty Trust Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 8, 2009 04:09PM

First Potomac Realty Trust (FPO) filed Quarterly Report for the period ended 2009-03-31. First Potomac Realty Trust is a self-administered self-managed real estate investment trust that acquires operates and develops industrial and flex properties in Maryland Virginia and the Washington D.C. metropolitan area. First Potomac Realty Trust has a market cap of $274 million; its shares were traded at around $9.98 with a P/E ratio of 5.2 and P/S ratio of 2.3. The dividend yield of First Potomac Realty Trust stocks is 13.6%. First Potomac Realty Trust had an annual average earning growth of 29.5% over the past 5 years.

Highlight of Business Operations:

The Company’s funds from operations (“FFO”) for the first quarter of 2009 were $14.8 million, or $0.53 per diluted share ($0.38 per diluted share, excluding gains on the retirement of debt), compared to $10.8 million, or $0.43 per diluted share ($0.38 per diluted share, excluding gains on the retirement of debt), during the first quarter of 2008. The Company’s net income for the first quarter of 2009 increased to $5.0 million, or $0.18 per diluted share, compared with net income of $1.2 million, or $0.05 per diluted share, for the first quarter of 2008. The implementation of Financial Accounting Standards Board Staff Position APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement) resulted in a reduction in both net income and FFO of $0.9 million, or $0.03 per diluted share, and $1.1 million, or $0.05 million per diluted share, for the three months ended March 31, 2009 and 2008, respectively. During the first quarter of 2009, the Company retired $17.0 million of its Exchangeable Senior Notes at a 30.8% weighted average discount, resulting in a net gain of $4.3 million, or $0.15 per diluted share.

Rental revenue is comprised of contractual rent, the impacts of straight-line revenue and the amortization of intangible assets and liabilities representing above and below market leases. Rental revenue increased $2.4 million for the three months ended March 31, 2009 compared to the same period in 2008, primarily due to the 2008 Acquisitions, which resulted in additional rental revenue of $1.4 million. The Remaining Portfolio contributed $1.0 million of additional rental revenue for the three months ended March 31, 2009 compared to 2008. The increase in rental revenue can also be attributed to an increase in

Property operating expenses increased $1.6 million for the three months ended March 31, 2009 compared to the same period in 2008. The overall increase in property operating expenses is primarily due to higher utility expense, snow and ice removal costs and bad debt expense associated with the Remaining Portfolio, which resulted in $1.1 million of additional property operating expenses during the three months ended March 31, 2009 compared to the same period in 2008. The Company’s 2008 Acquisitions contributed $0.5 million of additional property operating expenses for the three months ended March 31, 2009. The increase in total property operating expenses for the three months ended March 31, 2009 compared to 2008 includes $0.8 million for the Maryland reporting segment, $0.5 million for the Northern Virginia reporting segment and $0.3 million for the Southern Virginia reporting segment.

Real estate taxes and insurance expense increased $0.4 million for the three months ended March 31, 2009 compared to the same period in 2008. The Remaining Portfolio contributed an increase in real estate taxes and insurance expense of $0.3 million for the three months ended March 31, 2009 compared to 2008. The remaining $0.1 million increase in real estate taxes and insurance can be attributed to the 2008 Acquisitions. Real estate taxes and insurance increased $0.1 million for the Maryland reporting segment, $0.2 million for the Northern Virginia reporting segment and $0.1 million for the Southern Virginia reporting segment for the three months ended March 31, 2009 compared to 2008. A larger portion of the increase can be attributed to higher real estate assessments and real estate tax rates, primarily associated with the Northern Virginia properties located in Loudon County, Stafford County and Fairfax County, Virginia.

Interest expense decreased $1.2 million for the three months ended March 31, 2009 compared to the same period in 2008, primarily due to mortgage interest and fair value amortization expense, which decreased $1.1 million for the three months ended March 31, 2009 compared to 2008. In 2008, the Company retired $87.6 million of mortgage debt encumbering Herndon Corporate Center, Norfolk Commerce Park II and the Suburban Maryland Portfolio. The prepayment of the Suburban Maryland Portfolio mortgage loan was primarily financed through the issuance of a $35.0 million term loan, later amended to increase the total commitment to $50.0 million. The term loan resulted in an additional $0.4 million of interest expense during the first quarter of 2009. Interest expense on the Company’s original $50.0 million term loan decreased $0.4 million for the first quarter of 2009 compared to 2008 due to a reduction in interest rates. During 2008, the Company entered into swap agreements to fix the variable interest rates on $85.0 million of its $100.0 million term loans and the mortgage that encumbers RiversPark I and II, which resulted in an additional $0.8 million of interest expense for the three months ended March 31, 2009.

interest rate of 1.8%, compared to $49.0 million with a weighted average interest rate of 5.0% for the three months ended March 31, 2008. The lower weighted average interest rate on the unsecured revolving credit facility resulted in $0.3 million less of interest expense during the first quarter of 2009. The decrease in interest expense was partially offset by a $0.3 million decrease in capitalized interest related to a decrease in development and redevelopment activity in 2009 compared to 2008. Also, the Company recorded Financing Obligation income of $0.2 million as the Company’s consolidated joint venture incurred a loss during the first quarter of 2009.

Read the The complete Report

FPO is in the portfolios of Chris Davis of Davis Selected Advisers, Third Avenue Management.


Stocks Discussed: FPO,
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Re: First Potomac Realty Trust Reports Operating Results (10-Q)
Posted by: janejim76 (IP Logged)
Date: May 9, 2009 01:26AM

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Stocks Discussed: FPO,
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