OAK BROOK, Ill.,
Highlights
-- For the three months ended December 31, 2005, funds from operations
('FFO') was $22.2 million, an increase of 0.4% compared to the three
months ended December 31, 2004. FFO per common share (basic and
diluted) was $0.33, equal to the three months ended December 31, 2004.
-- For the year ended December 31, 2005, FFO was $89.5 million, an
increase of 8.0% compared to the year ended December 31, 2004. FFO per
common share (basic and diluted) was $1.33, an increase of 6.4%
compared to the year ended December 31, 2004.
-- For the three months ended December 31, 2005, net income was $12.0
million, a decrease of 2.4% compared to the three months ended
December 31, 2004. Net income per common share (basic and diluted) was
$0.18, equal to the three months ended December 31, 2004.
-- For the year ended December 31, 2005, net income was $47.3 million, a
decrease of 4.3% compared to the year ended December 31, 2004. Net
income per common share (basic and diluted) was $0.70, a decrease of
5.4% compared to the year ended December 31, 2004.
-- During the year ended December 31, 2005, 292 new and renewal leases
were executed for the rental of an aggregate of 1.1 million square
feet, of which 53 new and renewal leases were executed for the rental
of 194,600 square feet in the aggregate during the fourth quarter
2005.
Financial Results
The Company reported that FFO, a widely accepted measure of performance
for real estate investment trusts ('REITs'), for the three months ended
The Company also reported that net income for the three months ended
'We are pleased with the Company's consistent and overall strong
performance,' said
'2005 also was the first full year working with our joint venture partner, New York State Teachers' Retirement System,' said Parks. 'Including early first quarter 2006 acquisition activity, we attained the original acquisition targets for the year, and we anticipate that the benefits of this joint venture partnership will more fully accrue in the coming year. We remain committed to a highly disciplined approach to investments and operations in order to provide stable, long-term shareholder returns.'
Portfolio Performance
Total revenues for the three months ended
For the year ended
EBITDA for the three months ended
EBITDA is defined as earnings (or losses) from operations excluding: (1) interest expense; (2) income tax benefit or expenses; (3) depreciation and (4) amortization. A table reconciling EBITDA to income from operations is provided at the end of this press release. The Company uses EBITDA as a supplemental measure of its financial performance because it excludes expenses the Company believes may not be indicative of its operating performance. By excluding interest expense, EBITDA measures the Company's financial performance regardless of how it finances its operations and capital structure. By excluding depreciation and amortization expense, the Company believes it can more accurately assess the performance of its portfolio. Because EBITDA is calculated before recurring cash charges such as interest expense and taxes and is not adjusted for capital expenditures or other recurring cash requirements, it does not reflect the amount of capital needed to maintain the Company's properties nor does it reflect trends in interest costs due to changes in interest rates or increases in borrowing. EBITDA should be considered only as a supplement to net income and may be calculated differently by other REITs.
Balance Sheet, Market Value and Liquidity
EBITDA coverage of interest expense was 3.1 times for the three-months
ended
At
Leasing
The Company believes that leasing activity remains strong throughout its
portfolio. For the three-months ended
Acquisitions
In the fourth quarter 2005, the Company acquired a Home Goods Store retail
center for approximately
For the year ended
Year-to-date 2006, the Company has acquired four retail properties, three
direct acquisitions and one with our joint venture partner, totaling
approximately
Algonquin Commons was acquired with our joint venture partner for
The Shoppes at Grayhawk was acquired for approximately
Big Lake Town Square was acquired for approximately
Dispositions
In the fourth quarter 2005, the Company sold one retail center and one
retail parcel. Calumet Square in Calumet City, Illinois and a retail parcel at
Mundelein Plaza in Mundelein, Illinois represent approximately 89,000 square
feet and were sold for approximately
For the year ended
Joint Ventures
In 2005 the Company acquired and closed
'Since the inception of the joint venture, a total of
Dividends
In each of November and
Guidance
The Company expects that its FFO per common share (basic and diluted) for
fiscal year 2006 will be between
Conference Call
The Company will host a management conference call to discuss its
financial results at
The conference call will be recorded and available for replay beginning at
About Inland Real Estate Corporation
Inland Real Estate Corporation is a self-administered and self-managed
publicly traded real estate investment trust that owns interests in 146
neighborhood, community, lifestyle and single-tenant retail centers located
primarily in the midwestern
This press release contains forward-looking statements. Forward-looking
statements are statements that are not historical, including statements
regarding management's intentions, beliefs, expectations, representations,
plans or predictions of the future, and are typically identified by such words
as 'believe,' 'expect,' 'anticipate,' 'intend,' 'estimate,' 'may,' 'will,'
'should' and 'could.' The Company intends that such forward-looking
statements be subject to the safe harbors created by Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
There are numerous risks and uncertainties that could cause actual results to
differ materially from those set forth in the forward-looking statements. For
a more complete discussion of these risks and uncertainties, please see the
Company's Annual Report on Form 10-K for the year ended
INLAND REAL ESTATE CORPORATION
Consolidated Balance Sheets
December 31, 2005 and December 31, 2004
(In thousands except per share data)
Assets
December 31, 2005 December 31, 2004
(audited)
Investment properties:
Land $317,604 318,361
Construction in progress 821 1,326
Building and improvements 878,614 862,647
1,197,039 1,182,334
Less accumulated depreciation 188,483 156,854
Net investment properties 1,008,556 1,025,480
Cash and cash equivalents 26,804 35,508
Investment in securities (net of an
unrealized gain of $294 and $114 at
December 31, 2005 and 2004, respectively) 19,133 5,978
Assets associated with discontinued
operations (net of accumulated
depreciation of $6,402 at December 31, 2004) 36 28,400
Restricted cash 4,049 4,226
Accounts and rents receivable (net of
provision for doubtful accounts of $2,798
and $2,710 at December 31, 2005 and 2004,
respectively) 31,742 29,646
Mortgage receivable 11,406 -
Investment in and advances to
unconsolidated joint ventures 52,889 42,789
Deposits and other assets 2,923 4,433
Acquired above market lease intangibles
(net of accumulated amortization of
$1,856 and $1,648 at December 31, 2005
and 2004, respectively) 3,831 5,966
Acquired in-place lease intangibles
(net of accumulated amortization of
$4,395 and $2,218 at December 31, 2005
and 2004, respectively) 19,942 18,404
Leasing fees (net of accumulated
amortization of $1,387 and $1,189 at
December 31, 2005 and 2004, respectively) 2,795 2,467
Loan fees (net of accumulated amortization
of $2,735 and $4,780 at December 31, 2005
and 2004, respectively) 4,893 3,795
Total assets $1,188,999 1,207,092
INLAND REAL ESTATE CORPORATION
Consolidated Balance Sheets (continued)
December 31, 2005 and December 31, 2004
(In thousands except per share data)
Liabilities and Stockholders' Equity
December 31, 2005 December 31, 2004
(audited)
Liabilities:
Accounts payable and accrued
expenses $4,560 4,341
Acquired below market lease
intangibles (net of accumulated
amortization of $3,216 and $2,733
at December 31, 2005 and 2004,
respectively) 7,477 7,456
Accrued interest 2,426 2,282
Accrued real estate taxes 22,946 22,520
Dividends payable 5,401 5,537
Security and other deposits 2,423 2,318
Mortgages payable 602,817 596,125
Line of credit 65,000 85,000
Prepaid rents and unearned income 2,752 4,073
Liabilities associated with
discontinued operations 69 4,035
Other liabilities 12,562 971
Total liabilities 728,433 734,658
Minority interest 18,748 19,942
Stockholders' Equity:
Preferred stock, $0.01 par value, 6,000
Shares authorized; none issued and
outstanding at December 31, 2005 and 2004 - -
Common stock, $0.01 par value, 500,000
Shares authorized; 67,502 and 67,025
Shares issued and outstanding at
December 31, 2005 and 2004, respectively 675 670
Additional paid-in capital (net of offering
costs of $58,816) 650,656 644,278
Deferred stock compensation (859) (580)
Accumulated distributions in excess
of net income (208,947) (191,990)
Accumulated other comprehensive income 293 114
Total stockholders' equity 441,818 452,492
Commitments and contingencies
Total liabilities and stockholders'
equity $1,188,999 1,207,092
INLAND REAL ESTATE CORPORATION
Consolidated Statements of Operations
For the three and the year ended December 31, 2005 and 2004 (unaudited)
(In thousands except per share data)
Three Three
months months Year Year
ended ended ended ended
December December December December
31, 31, 31, 31,
2005 2004 2005 2004
Revenues:
Rental income $31,721 34,266 127,835 136,206
Tenant recoveries 11,715 12,009 47,778 50,550
Lease termination income 40 2,182 6,307 2,890
Other property income 126 176 756 720
Total revenues 43,602 48,633 182,676 190,366
Expenses:
Property operating expenses 5,554 5,789 22,623 24,231
Real estate tax expense 7,392 8,064 31,525 32,561
Bad debt expense 456 291 1,187 800
Depreciation and amortization 9,671 9,767 40,140 38,637
Stock exchange listing expenses 5 16 67 839
General and administrative expenses 2,469 2,778 8,909 8,714
Total expenses 25,547 26,705 104,451 105,782
Operating income 18,055 21,928 78,225 84,584
Other income 1,425 578 4,419 2,819
Gain on sale of investment properties - - 68 76
Interest expense (9,364) (10,415) (40,448) (42,673)
Minority interest (194) (265) (850) (906)
Equity in earnings of unconsolidated
joint ventures 1,420 305 4,591 (23)
Income from continuing operations 11,342 12,131 46,005 43,877
Discontinued operations:
Income from discontinued
operations (including gain
on sale of investment
properties of $636 and $0 for
the three months ended December 31,
2005 and 2004, respectively and
$1,117 and $4,465 for the twelve
months ended December 31, 2005
and 2004) 619 208 1,249 5,497
Net income available to common
stockholders 11,961 12,339 47,254 49,374
Other comprehensive income:
Unrealized gain (loss) on
investment securities (381) (115) 179 (1,387)
Comprehensive income $11,580 12,224 47,433 47,987
INLAND REAL ESTATE CORPORATION
Consolidated Statements of Operations
For the three and the year ended December 31, 2005 and 2004 (unaudited)
(In thousands except per share data)
Three Three
months months Year Year
ended ended ended ended
December December December December
31, 31, 31, 31,
2005 2004 2005 2004
Basic and diluted earnings
available to common shares
per weighted average common share:
Income from continuing operations $0.17 0.18 0.68 0.66
Discontinued operations 0.01 - 0.02 0.08
Net income available to common
stockholders per weighted average
common share - basic and diluted $0.18 0.18 0.70 0.74
Weighted average number of common
shares outstanding -basic 67,401 66,961 67,244 66,454
Weighted average number of common
shares outstanding -diluted 67,471 67,011 67,298 66,504
Non-GAAP Financial Measures
We consider Funds From Operations ('FFO') a widely accepted and appropriate measure of performance for a REIT that provides a supplemental measure of a REIT's operating performance because along with cash flows from operating, investing and financing activities, it provides a measure of a REIT's ability to incur and service debt and make capital expenditures and acquisitions. Due to certain unique operating characteristics of real estate companies, the National Association of Real Estate Investment Trusts ('NAREIT'), an industry trade group, has promulgated a standard known as FFO, which it believes more accurately reflects the operating performance of a REIT such as ours. As defined by NAREIT, FFO means net income computed in accordance with GAAP, excluding gains (or losses) from sales of property, plus depreciation and amortization and after adjustments for unconsolidated partnership and joint ventures in which the REIT holds an interest. We have adopted the NAREIT definition for computing FFO. Management uses the calculation of FFO for several reasons. We use FFO in conjunction with our acquisition policy to determine investment capitalization strategy and we also use FFO to compare our performance to that of other REITs in our peer group. Additionally, FFO is used in certain employment agreements to determine incentives received based on our performance. The calculation of FFO may vary from entity to entity since capitalization and expense policies tend to vary from entity to entity. Items that are capitalized do not impact FFO whereas items that are expensed reduce FFO. Consequently, our presentation of FFO may not be comparable to other similarly titled measures presented by other REITs. FFO does not represent cash flows from operations as defined by GAAP, it is not indicative of cash available to fund all cash flow needs and liquidity, including our ability to pay distributions and should not be considered as an alternative to net income, as determined in accordance with GAAP, for purposes of evaluating our operating performance. The following table reflects our FFO for the periods presented, reconciled to net income available to common stockholders for these periods:
Three Three Twelve Twelve
months months months months
ended ended ended ended
December December December December
31, 31, 31, 31,
2005 2004 2005 2004
Net income $11,961 12,339 47,254 49,374
Gain on sale of investment properties (636) - (1,185) (4,541)
Gain on non-operating property - - 33 -
Equity in depreciation of
unconsolidated ventures 1,449 96 4,261 96
Amortization on in-place lease
intangibles 604 697 2,826 1,816
Amortization on leasing commissions 186 167 700 870
Depreciation, net of minority interest 8,606 8,808 35,621 35,323
Funds From Operations $22,170 22,107 89,510 82,938
Net income available to common
stockholders per weighted average
common share - basic and diluted $0.18 0.18 0.70 0.74
Funds From Operations, per weighted
average common share -basic and
diluted $0.33 0.33 1.33 1.25
Weighted average number of common
shares outstanding, basic 67,401 66,961 67,244 66,454
Weighted average number of common
shares outstanding, diluted 67,471 67,011 67,298 66,504
EBITDA is defined as earnings (losses) from operations excluding: (1) interest expense; (2) income tax benefit or expenses; (3) depreciation and amortization. We believe EBITDA is useful to us and to an investor as a supplemental measure in evaluating our financial performance because it excludes expenses that we believe may not be indicative of our operating performance. By excluding interest expense, EBITDA measures our financial performance regardless of how we finance our operations and capital structure. By excluding depreciation and amortization expense, we believe we can more accurately assess the performance of our portfolio. Because EBITDA is calculated before recurring cash charges such as interest expense and taxes and is not adjusted for capital expenditures or other recurring cash requirements, it does not reflect the amount of capital needed to maintain our properties nor does it reflect trends in interest costs due to changes in interest rates or increases in borrowing. EBITDA should be considered only as a supplement to net earnings and may be calculated differently by other equity REITs.
Three Three Twelve Twelve
months months months months
ended ended ended ended
December December December December
31, 31, 31, 31,
2005 2004 2005 2004
Income From Continuing Operations $11,342 12,131 46,005 43,877
Gain from operations - - (68) (76)
Income From Discontinued Operations (17) 208 132 1,032
Interest Expense 9,364 10,415 40,448 42,673
Interest Expense Associated with
Discontinued Operations 8 3 67 367
Interest Expense Associated with
Unconsolidated Ventures 2,116 344 6,253 366
Depreciation and Amortization 9,671 9,767 40,140 38,637
Depreciation and Amortization
Associated with Discontinued
Operations 15 3 135 288
Depreciation and Amortization
Associated with Unconsolidated
Ventures 2,905 357 8,542 357
EBITDA $35,404 33,228 141,654 127,521
Total Interest Expense $11,488 10,762 46,768 43,406
EBITDA: Interest Expense Coverage
Ratio 3.1 x 3.1 x 3.0 x 2.9 x
SOURCE Inland Real Estate Corporation
