Republic Property Trust (the �Company�) (NYSE:RPB), a
self-administered and self-managed real estate investment trust,
today announced its results for the three months ended March 31,
2007. Net loss for the three months ended March 31, 2007 was $2.8
million and funds from operations (�FFO�) for the same period was
$2.8 million. Financial statements and exhibits included in this
release reflect the results of the Company for the three months
ended March 31, 2007 and 2006. At March 31, 2007, the Company owned
13 operating properties, comprising 24 buildings, and one
redevelopment project in the Greater Washington, D.C. metropolitan
area, through its approximate 88% ownership in Republic Property
Limited Partnership, its Operating Partnership. Mark R. Keller,
Chief Executive Officer of Republic Property Trust, said, �During
the first quarter of 2007 the Company focused on strengthening core
operations, continuing to lease vacant space, commencing the
redevelopment of 1129 20th Street and moving forward with the
build-out of the XO Communications space at Presidents Park.�
Financial Results Net loss for the 2007 first quarter was $2.8
million, compared to net income of $61,000 for the same period in
2006. Comparability between periods was impacted by changes in the
portfolio during the period. The Company acquired WillowWood I and
II in May 2006, Republic Park 8 in September 2006 and our
redevelopment project, 1129 20th Street, NW in February 2007. The
remaining ten properties in the portfolio were owned at all times
during each of the 2007 and 2006 first quarters. Other significant
changes in results occurred due to the following factors:
Management and development fees are primarily related to the fee
revenue the Company earned from the various management and
development agreements contributed by related parties in connection
with the initial public offering and formation transactions. In
April 2007, the Company received a notice terminating the
development and management services rights to provide fee-based
development and management services with respect to its related
party agreements. As a result of the termination of these
agreements, the Company does not expect to have significant
management and development fees, or the related costs, in the
future. Management and development fees earned with respect to the
contributed agreements amounted to $1.3�million in the first
quarter of 2007. These fees consist of $0.1�million in management
fees from Portals I, II and III, $0.3�million in asset management
fees from Portals Development Associates, $0.5�million in payroll
reimbursements for our employees performing these services and
$0.4�million in development fees from Portals�III and Republic
Square I. Included in management and development fees are $0.5
million relating to the construction and management of the
build-out of a space for one of the tenants located at the Republic
Building during the first quarter of 2007. Costs amounting to $0.4
million relating to this revenue are reflected in cost of
management and development fees. Real estate tax expense increased
due to increased tax assessments across the portfolio. Depreciation
and amortization decreased as a result of tenants that have vacated
several of our properties and, as a result, intangible assets were
fully depreciated in 2006. Further, lower amortization of
intangible management and development contracts occurred in 2007
due to the impairment of the majority of these agreements at the
end of 2006. General and administrative expenses increased
primarily due to the 2007 executive compensation plan that was not
in place in 2006 and increased legal costs related to current
litigation. These litigation costs amount to approximately $0.6
million in the first quarter of 2007. Partially offsetting these
increases are $0.5 million of costs incurred during the first
quarter of 2006, which are reflected in general and administrative
expense, in connection with the termination of the credit facility
commitment with Lehman Brothers. Management and development
agreement write-offs are related to the impairment of development
service agreements contributed to the Company in connection with
the IPO and formation transactions. The Company recorded intangible
assets of $1.9�million for these contracts in connection with the
IPO. In April 2007, the Company received a notice terminating the
development and management services rights to provide fee-based
development and management services with respect to its related
party agreements. Due to the receipt of these termination notices,
in the first quarter 2007 financial close, the Company wrote off to
management and development agreement write-off expense
approximately $0.1 million with respect to the Portals III and
Republic Square I Development Agreements. In addition to the
impairment charges, the Company recorded $0.1�million of
amortization expense during the first quarter of 2007. The Company
has fully written off all intangible assets related to these
agreements as of March 31, 2007. Interest expense increased
primarily due to financing Republic Park 1-7 in September 2006 and
borrowing on the Company�s line of credit related to purchasing
1129 20th Street which were partially offset by savings on the
Presidents Park debt that was paid off during the second quarter of
2006. Net loss for the 2007 first quarter totaled $2.8 million, or
$0.11 per share (basic and diluted). Weighted average shares
outstanding for the quarter were approximately 26.1 million (basic
and diluted). Weighted average shares and units outstanding for the
quarter were approximately 29.6 million (basic and diluted). FFO
for the 2007 first quarter totaled $2.8 million, or $0.09 per
share, compared to $4.5 million, or $0.15 per share, for the
comparable period in 2006. The changes in FFO between periods are
driven by the same factors driving the changes in the Company�s net
results as discussed above. A reconciliation of FFO and FFO per
share to net loss and net loss per share, the comparable GAAP
financial measures, can be found later in this release. These
reported results are unaudited, and there can be no assurance that
the results will not vary from the final information for the
quarter ended March 31, 2007. However, in management�s opinion, all
adjustments considered necessary for a fair presentation of these
reported results have been made. Recent Activity On February 16,
2007, the Company acquired a 127,000 square foot office property
located at 1129 20th Street, NW, Washington, D.C., for a purchase
price of $61.75 million, excluding acquisition-related transaction
costs. The property is a Class B office building located in the
Central Business District of Washington, D.C. In connection with
the sale of the building, the seller transferred complete
architectural and engineering plans to totally reposition the
building by, among other things, constructing a new glass fa�ade
and a two-story vertical expansion. The Company currently estimates
that (i) the redevelopment and construction costs will equal
approximately $32 million, excluding loan interest expense and (ii)
redevelopment and construction of the property will be completed in
mid-2008. When completed, the building will comprise a 10-story
Class A office building consisting of approximately 176,000 net
rentable square feet. Also on February 16, 2007, in connection with
the acquisition of 1129 20th Street, NW, the Company entered into a
variable rate construction loan with KeyBank N.A. The maximum
amount of the loan cannot exceed $74 million. The loan matures on
February 16, 2010, subject to a one-year extension option. On
February 28, 2007, the Company entered into a 10-year lease with XO
Communications at its Presidents Park property for 105,000 square
feet. XO Communications is a facilities-based telecommunications
services provider that delivers an array of telecommunications
services to the telecommunications provider, business and
government markets. In April 2007, the Company received a notice
terminating the development and management services rights to
provide fee-based development and management services with respect
to our related party agreements. As a result of the termination of
these agreements, the Company does not expect to have significant
management and development fees, or the related costs, in the
future. Distributions and Other Matters A quarterly cash
distribution of $0.125 per common share for the first quarter of
2007 will be paid on May 21,�2007 to shareholders of record on May
7, 2007. Conference Call Members of the Company's management team
will host a conference call and audio webcast, both open to the
general public, at 11:00 A.M. Eastern Daylight Time on Thursday,
May 3, 2007 to discuss its financial results and provide a Company
update. The conference call can be accessed by dialing
303-262-2125. A passcode is not needed for the live call. The
replay will be available through May 10, 2007 by dialing
303-590-3000, passcode 11088431. The Company will audio webcast the
call, which may be accessed through the Company's own website at
www.rpbtrust.com, in the Investor Relations section. To listen to a
live broadcast, access this site at least 10 minutes prior to the
scheduled start time in order to register, download, and install
any necessary audio software. An audio replay of the webcast will
be archived in the Investor Relations section of the Company's
website under the heading Events & Webcasts for one year.
Supplemental Information The Supplemental Package providing further
information regarding the Company�s results of operations, its
properties and tenants will be available prior to the quarterly
conference call on the Company's website. About Republic Property
Trust Republic Property Trust is a fully-integrated,
self-administered and self-managed real estate investment trust
formed to own, operate, acquire, lease and develop primarily Class
A office properties. The Company's current portfolio is focused in
the Washington, D.C. metropolitan, or Greater Washington, D.C.,
market. Non-GAAP Financial Measures During the quarterly conference
call, the Company may discuss non-GAAP financial measures as
defined by Regulation G. In addition, the Company has used non-GAAP
financial measures in this press release. A reconciliation of each
non-GAAP financial measure and the comparable GAAP financial
measure can be found later in this release and in the Company�s
Supplemental Information. Safe Harbor Various statements in this
press release constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
When used in this press release, the words �strategy�, �plan�,
�project�, �believe�, �anticipate�, �intend�, �should�, �will�,
�expect�, �estimate�, and similar expressions identify these
forward-looking statements. These forward-looking statements
involve known and unknown risks, uncertainties and other factors
that may cause the Company�s actual results to differ materially
from historical results or from any results expressed or implied by
these forward-looking statements, including without limitation:
national and local economic, business, real estate and other market
conditions; the competitive environment in which the Company
operates; financing risks; property management risks; the level and
volatility of interest rates; financial stability of tenants; the
Company's ability to maintain its status as a REIT for federal
income tax purposes; acquisition, disposition, development and
joint venture risks; potential environmental and other liabilities;
the Company�s ability to pay its estimated distribution at its
current rate; the outcome of material litigation; the impact of
potential management changes; the Company�s ability to acquire its
options properties; and other factors affecting the real estate
industry generally. The Company refers you to the documents filed
by it from time to time with the Securities and Exchange
Commission, including the Company�s Annual Report on Form 10-K and
Quarterly Reports on Form 10-Q, each of which discusses these and
other factors that could adversely affect the Company's results.
The Company does not undertake a duty to update or revise any
forward-looking statement whether as a result of new information,
future events or otherwise. Republic Property Trust Consolidated
Statements of Operations For the Fiscal Quarters Ended March 31,
2007 and 2006 � Fiscal Quarters Ended March 31, (Dollars in
thousands except per share amounts) 2007� 2006� Revenue Rental
income $ 16,408� $ 13,325� Management and development fees and
associated reimbursements � 1,749� � 1,362� Total operating revenue
� 18,157� � 14,687� � Expenses: Real estate taxes 1,826� 1,290�
Property operating costs 3,266� 2,510� Depreciation and
amortization 6,041� 4,699� Cost of management and development fees
and associated reimbursements 1,156� 867� General and
administrative 3,330� 2,331� � � Management and development
agreement write-offs � 142� � �� Total operating expenses � 15,761�
� 11,697� � Operating income 2,396� 2,990� � Other income and
expense: Interest income 84� 314� Interest expense � (5,648) �
(3,235) Total other income and expense � (5,564) � (2,921) � Net
(loss) income before minority interest (3,168) 69� � Minority
interest � 380� � (8) Net (loss) income $ (2,788) $ 61� � Basic and
diluted (loss) earnings per common share $ (0.11) $ �� Weighted
average common shares outstanding basic and diluted (in millions) �
26.1� � 26.0� Distributions declared per common share $ 0.125� $
0.027� Reconciliations of non-GAAP financial measures The Company
calculates FFO pursuant to the definition adopted by the Board of
Governors of the National Association of Real Estate Investment
Trusts ("NAREIT"). NAREIT defines FFO as net income or loss
determined in accordance with GAAP, excluding extraordinary items
as defined under GAAP and gains or losses from sales of previously
depreciated operating real estate assets, plus specified non-cash
items, such as real estate asset depreciation and amortization, and
after adjustments for unconsolidated partnerships and joint
ventures. The Company also adjusts for minority interests in its
operating partnership. Accordingly, the FFO disclosed represents
the operating partnership�s FFO. FFO and FFO per share are used by
management, investors and industry analysts as a supplemental
measure of operating performance of equity REITs. The most directly
comparable GAAP measure for FFO is GAAP net income. Management
believes that FFO and FFO per share are helpful to investors as a
supplemental performance measure because it excludes the effect of
depreciation, amortization and gains or losses from sales of real
estate, all of which are based on historical costs which implicitly
assumes that the value of real estate diminishes predictably over
time. Since real estate values historically rise or fall due to
market conditions, FFO can facilitate comparisons of operating
performance between periods and among other equity REITs. FFO does
not represent cash generated from operating activities in
accordance with GAAP and is not indicative of cash available to
fund cash needs. FFO should not be considered as an alternative to
net income, as an indicator of the Company's operating performance
or as an alternative to cash flows as a measure of liquidity.
Reconciliations of FFO to net loss and FFO per share to net loss
per share are provided below. Reconciliation of Funds From
Operations (FFO) to Net Loss (Dollars in thousands) Fiscal Quarters
endedMarch 31, 2007 (1) 2006 (2) � Net (loss) income $ (2,788) $
61� � Minority interest (380) 8� Real estate depreciation and
amortization 5,978� 4,471� � � � � Funds From Operations $ 2,810� $
4,540� (1) The three months ended March 31, 2007 include management
and development write-offs of $0.1 million and legal costs of $0.6
million related to the litigation adverse to Messrs. Richard Kramer
and Steven Grigg and certain of their affiliated entities. (2) The
three months ended March 31, 2006 include $0.5 million in costs
incurred in connection with the termination of the credit facility
commitment with Lehman Brothers. Reconciliation of FFO per share to
Net Loss per share (Dollars in thousands) FiscalQuarterendedMarch
31,2007 � FiscalQuarterendedMarch 31,2006 Net (loss) income per
share $ (0.11) $ -� Real estate depreciation and amortization �
0.20� � � 0.15� � Funds From Operations per Share $ 0.09� � $ 0.15�
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