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First Potomac Realty Trust Reports Operating Results (10-Q)

May 07, 2010 | About:
10qk

10qk

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First Potomac Realty Trust (FPO) filed Quarterly Report for the period ended 2010-03-31.

First Potomac Realty Trust has a market cap of $565.7 million; its shares were traded at around $15.6 with a P/E ratio of 11.3 and P/S ratio of 4.2. The dividend yield of First Potomac Realty Trust stocks is 5.2%. First Potomac Realty Trust had an annual average earning growth of 13.3% over the past 5 years.FPO is in the portfolios of Third Avenue Management, Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

The Company incurred a net loss attributable to common shareholders of $2.2 million, or $0.08 per diluted share, during the first quarter of 2010 compared with net income attributable to common shareholders of $5.0 million, or $0.18 per diluted share, during the first quarter of 2009. The Companys funds from operations (FFO) for the first quarter of 2010 was $8.0 million, or $0.26 per diluted share, which includes impairment charges related to the April 2010 sale of Deer Park, which is located in the Companys Baltimore submarket, and contingent consideration charges related to Ashburn Center, totaling $1.3 million, compared with FFO of $14.8 million, or $0.53 per diluted share, during the first quarter of 2009, which included a $4.3 million gain on the retirement of debt. 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 available to common shareholders, see Funds From Operations.

Property operating expenses increased $2.0 million for the three months ended March 31, 2010 compared to the same period in 2009. Property operating expenses for the Remaining Portfolio increased $1.8 million for the three months ended March 31, 2010 compared with the same period in 2009, primarily due to an increase in snow and ice removal costs during the first quarter of 2010. The increase in property operating expenses for the three months ended March 31, 2010 compared to 2009 includes $0.7 million for the Maryland reporting segment, $0.8 million for the Northern Virginia reporting segment and $0.5 million for the Southern Virginia reporting segment. The Company expects property operating expenses to decline over the next two quarters due to lower snow and ice removal costs.

Real estate taxes and insurance expense increased $0.1 million for the three months ended March 31, 2010 compared to the same period in 2009. The Non-comparable Properties contributed an increase in real estate taxes and insurance expense of $0.1 million for the three months ended March 31, 2010 compared to 2009. The Remaining Portfolio experienced a slightly increase in real estate taxes and insurance expense for the three months ended March 31, 2010 compared to 2009. Real estate taxes and insurance for the three months ended March 31, 2010 compared to 2009, increased $89 thousand for the Maryland reporting segment and $50 thousand for the Northern Virginia reporting segment. For the Southern Virginia reporting segment, real estate taxes and insurance decreased $25 thousand for the three months ended March 31, 2010 compared to 2009.

Interest expense increased $0.5 million for the three months ended March 31, 2010 compared with the same period in 2009 due to a higher weighted average interest rate on the Companys outstanding debt. In December 2009, the Company extended the maturity on approximately $185.0 million of debt, which included extending the capacity of the Companys unsecured revolving credit facility and using the additional capacity to repay $40.0 million of its secured term loans. The refinancing resulted in a higher effective interest rate on the Companys unsecured revolving credit facility and $0.1 million of additional amortization of deferred financing costs for the three months ended March 31, 2010. The average balance on the Companys unsecured revolving credit facility was $151.6 million with a weighted average interest rate of 3.9% for the three months ended March 31, 2010 compared to $79.6 million with a weighted average interest rate of 1.8% for the three months ended March 31, 2009. The higher weighted average interest rate on the unsecured revolving credit facility resulted in additional interest expense totaling $1.1 million during the three months ended March 31, 2010 compared to 2009. The repayment of the Companys term loans resulted in a decline in interest expense of $0.2 million for the three months ended March 31, 2010. The Company has two interest rate swap agreements that fix LIBOR on $85.0 million of its variable rate debt, which is comprised of its unsecured revolving credit facility and the two term loans. Due to lower interest rates in the first quarter of 2010, the Company incurred an additional $0.1 million in interest expense related to its swap agreements for the three months ended March 31, 2010.

The overall increase in the Companys interest expense for the three months ended March 31, 2010 compared to 2009 was partially offset by a $0.4 million decrease in mortgage interest expense. In 2009, the Company retired $14.2 million of mortgage debt encumbering Glen Dale Business Center, 4200 Tech Court and Park Central and, on January 1, 2010, the Company deconsolidated $9.9 million of variable rate mortgage debt encumbering RiversPark I and a related cash flow hedge agreement. The deconsolidation of RiversPark I also resulted in an increase in interest expense of $0.2 million as, during the three months ended March 31, 2009, the Company recognized a reduction in interest expense related to its Financing Obligation. Also, the Company repurchased $34.5 million of its Senior Exchangeable Notes in 2009, which resulted in a reduction of interest of $0.4 million for the three months ended March 31, 2010.

In March 2010, the Company repaid $82.9 million of its unsecured revolving credit facility with proceeds from the issuance of 6.3 million common shares. At March 31, 2010, the Company had $551.0 million of debt outstanding with a weighted average interest rate of 5.6% compared with $628.3 million of debt outstanding with a weighted average interest rate of 4.9% at March 31, 2009.

Read the The complete Report

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