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0000950123-11-072970.txt : 201108040000950123-11-072970.hdr.sgml : 2011080420110804164815ACCESSION NUMBER:0000950123-11-072970CONFORMED SUBMISSION TYPE:8-KPUBLIC DOCUMENT COUNT:45CONFORMED PERIOD OF REPORT:20110804ITEM INFORMATION:Results of Operations and Financial ConditionITEM INFORMATION:Financial Statements and ExhibitsFILED AS OF DATE:20110804DATE AS OF CHANGE:20110804

FILER:

COMPANY DATA:COMPANY CONFORMED NAME:Cogdell Spencer Inc.CENTRAL INDEX KEY:0001332896STANDARD INDUSTRIAL CLASSIFICATION:REAL ESTATE INVESTMENT TRUSTS [6798]IRS NUMBER:000000000STATE OF INCORPORATION:MDFISCAL YEAR END:1231

FILING VALUES:FORM TYPE:8-KSEC ACT:1934 ActSEC FILE NUMBER:001-32649FILM NUMBER:111011075

BUSINESS ADDRESS:STREET 1:4401 BARCLAY DOWNS DRIVE, SUITE 300CITY:CHARLOTTESTATE:NCZIP:28209-4670BUSINESS PHONE:704-940-2900

MAIL ADDRESS:STREET 1:4401 BARCLAY DOWNS DRIVE, SUITE 300CITY:CHARLOTTESTATE:NCZIP:28209-4670

8-K1c20961e8vk.htmFORM 8-K

Form 8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 4, 2011

Cogdell Spencer Inc.

(Exact name of registrant as specified in its charter)

Maryland001-3264920-3126457

(State or other jurisdiction
of incorporation)

(Commission File Number)

(IRS Employer Identification No.)

4401 Barclay Downs Drive, Suite 300
Charlotte, North Carolina
28209

(Address of principal executive offices)

(Zip Code)

Registrants telephone number, including area code: (704) 940-2900

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

oWritten communications pursuant to Rule425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02 Results of Operations and Financial Condition.

The information in this Current Report, including the exhibits hereto, is being furnished and shallnot be deemed filed for the purpose of Section18 of the Securities Exchange Act of 1934, asamended, or otherwise subject to the liabilities of that Section. The information in this CurrentReport shall not be incorporated by reference into any registration statement or other documentpursuant to the Securities Act of 1933, as amended.

On August4, 2011, Cogdell Spencer Inc. (the Company) issued an earnings release announcing itsfinancial results for the period April1, 2011 to June30, 2011. A copy of the earnings release isattached as Exhibit99.1.

On August4, 2011, the Company posted certain supplemental financial data on its website,www.cogdell.com. That supplemental operating and financial data is attached hereto as Exhibit99.2and is incorporated by reference herein.

ITEM 9.01 Financial Statements and Exhibits.

Exhibit99.1

Earnings Release regarding the period April1, 2011 to June30, 2011.

Exhibit99.2

Supplemental Earnings Package posted August4, 2011.

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly causedthis report to be signed on its behalf by the undersigned hereunto duly authorized.

COGDELL SPENCER INC.

By: /s/ Charles M. Handy

Name: Charles M. Handy

Title: Chief Financial Officer

Date: August4, 2011

3

EXHIBIT INDEX

Exhibit

Number Description

Exhibit99.1

Earnings Release regarding the period April1, 2011 to June30, 2011.

Exhibit99.2

Supplemental Earnings Package posted August4, 2011.

4

EX-99.12c20961exv99w1.htmEXHIBIT 99.1

Exhibit 99.1

Exhibit99.1

Investor and Media Contact: Jaime Buell
Investor Relations Manager
704.940.2929
[email protected]

FOR IMMEDIATE RELEASE
Thursday, August4, 2011

COGDELL SPENCER ANNOUNCES SECOND QUARTER 2011 RESULTS

Recent Highlights

Increased portfolio occupancy to 91.2%

Acquired two buildings with a strategic joint venture partner

Increased contract pipeline

Charlotte, N.C. (August4, 2011) Cogdell Spencer Inc. (the Company or we) (NYSE:CSA),healthcares preferred real estate partner, is a real estate investment trust (REIT) focused onplanning, owning, developing, constructing, and managing medical facilities. Through strategicallymanaged, customized facilities, we help our clients deliver superior healthcare.

Recent highlights will be covered in detail on our Second Quarter 2011 Earnings Call and Webcast.We encourage participants to access the webcast for our slide show presentation.

Conference Call and Webcast

The webcast is accessible live via the Internet at www.cogdell.com through the Second Quarter 2011Earnings Call link on the Investor Relations homepage. In addition to webcast access, you mayattend the Second Quarter 2011 Earnings Call on Friday, August5, 2011 at 10:00a.m. Eastern Time(ET)via teleconference. The number to call is (877)317-6789 (domestic)or +1 (412)317-6789(international). A conference identification number is not required.

An audio playback will be available until September6, 2011 at 9:00 a.m. ET. To access theplayback, please dial (877)344-7529 (domestic)or +1 (412)317-0088 (international)and enter theconference code: 451770. The webcast can also be accessed for one year via the Internet atwww.cogdell.com through the Second Quarter 2011 Earnings Call link on the Investor Relationspage, under Press Releases and News and Audio Archives.

Second Quarter 2011 Financial Results

Results for the three and six months ended June30, 2011

Funds from Operations Modified (FFOM) and FFOM per share and operating partnership unit for thethree and six months ended June30, 2011, and a comparison to our prior year results, are asfollows (in thousands, except per share and operating partnership unit data):

For the Three Months Ended For the Six Months Ended

June 30, 2011 June 30, 2010 June 30, 2011 June 30, 2010

FFOM

$ 2,064 $ (6,847 ) $ 5,724 $ 4,303

Impact of litigation provision, impairment charges, and CEO retirement expense

1,800 13,393 1,800 13,393

FFOM, excluding non-recurring events and impairment charges

$ 3,864 $ 6,546 $ 7,524 $ 17,696

Per share and operating partnership unit data:

FFOM

$ 0.04 $ (0.13 ) $ 0.10 $ 0.08


0.03 0.25 0.26

FFOM, excluding non-recurring events and impairment charges

0.07 0.12 0.10 0.34

FFOM adds back to traditionally defined Funds from Operations (FFO) non-cash amortization ofnon-real estate related intangible assets associated with purchase accounting. A reconciliation ofnet loss to FFOM and FFO for the three and six months ended June30, 2011 and 2010 is set forth inthe tables attached to this press release.

FFO and FFO per share and operating partnership unit for the three and six months ended June30,2011, and a comparison to our prior year results, are as follows (in thousands, except per shareand operating partnership unit data):



FFO

$ 1,833 $ (7,221 ) $ 5,261 $ 3,555


1,800 13,393 1,800 13,393

FFO, excluding non-recurring events and impairment charges

$ 3,633 $ 6,172 $ 7,061 $ 16,948


FFO

$ 0.03 $ (0.13 ) $ 0.09 $ 0.07


0.03 0.24 0.25

FFO, excluding non-recurring events and impairment charges

0.06 0.11 0.09 0.32

Net loss attributable to our common stockholders and net loss attributable to our commonstockholders per share for the three and six months ended June30, 2011, and a comparison to ourprior year results, are as follows (in thousands, except per share data):



Net loss attributable to Cogdell Spencer Inc. commonshareholders

$ (4,986 ) $ (12,019 ) $ (8,116 ) $ (8,736 )

Litigation provision, impairment charges, and CEO retirement expense attributable to Cogdell Spencer Inc. common stockholders

1,571 11,451 1,571 11,397

Net income (loss) attributable to Cogdell Spencer Inc. common stockholders, excluding litigation provision, impairment charges, and CEO retirement expense

$ (3,415 ) $ (568 ) $ (6,545 ) $ 2,661

Per share data:

Litigation provision, impairment charges, and CEO retirement expense attributable to Cogdell Spencer Inc. common stockholders

$ (0.10 ) $ (0.26 ) $ (0.16 ) $ (0.20 )

Net income (loss) attributable to Cogdell Spencer Inc. common stockholders, excluding litigation provision, impairment charges, and CEO retirement expense

0.03 0.25 0.03 0.26

Net income (loss)attributable to Cogdell Spencer Inc.common shareholders, excluding non-recurring eventsand impairment charges

(0.07 ) (0.01 ) (0.13 ) 0.06

As of June30, 2011, we owned and/or managed 116 medical office buildings and healthcarerelated facilities, totaling approximately 6.1million net rentable square feet. Our portfolioconsists of:

Net Rentable

Number of Square Feet Percentage

Properties (in millions) Leased

Stabilized properties:

Wholly-owned

61 3.33

Consolidated joint ventures

5 0.34

Total stabilized properties

66 3.67 91.2 %

Fill-up properties(1):

3 0.22 82.7 %(2)

Total consolidated properties

69 3.89

Unconsolidated joint venture properties

3 0.21

Properties managed for third parties

44 1.99

Total portfolio

116 6.09

(1)

Fill-up is the time period for a newly available property to attract tenants andreach stabilized occupancy.

(2)

Includes approximately 27,000 net rentable square feet that is leased and underconstruction. Date of occupancy is scheduled for third quarter 2011.

The following table outlines certain charges incurred within the three and six months ended June30, 2011 and 2010, respectively:



Litigation accrual

$ 1,800 $ $ 1,800 $

Goodwill and intangible asset impairment charges, net ofincome tax benefit

10,848 10,848

CEO retirement compensation expense, net of tax expense

2,545 2,545

Litigation Provision

In the three and six months ended June30, 2011, we accrued $1.8million relating to alitigation charge. In the normal course of business, the design-build and development segment issubject to claims, lawsuits, and legal proceedings. While it is not possible to ascertain withcertainty the ultimate outcome of such matters, in managements opinion, the liabilities, if any,in excess of amounts provided or covered by insurance, have a maximum reasonable possible loss ofapproximately $3.1million. We have evaluated exposures related to these matters and have accrueda total reserve of $3.1million as of June30, 2011, the above referenced $1.8million beingrecorded in the three and six months ended June30, 2011.

Property Acquisitions

In June2011, we acquired two buildings totaling approximately 159,000 net rentable square feet fora total approximate investment of $34.8million. St. Elizabeth Covington Medical Center, locatedin Covington, Kentucky, is located on campus with the St. Elizabeth Healthcare hospital system andrepresents the strengthening of that client relationship, created with our January2011acquisition. Doylestown Health & Wellness Center, located in Doylestown, Pennsylvania, is locatedon campus with Doylestown Hospital and represents a new client relationship.

Design-Build Contracts

During the quarter, we signed three new design-build contracts with aggregate design-buildcontract value of $8.0million. Our contract pipeline increased from $104.1million at the end of thefirst quarter to $129.5million at the end of the second quarter. Our contract pipeline is theestimated dollar value of future design-build revenues from Project Design Agreements (PDAs) thatare currently either in project analysis or design development.

Capital Transactions

On August 2nd, we closed on an$80.8million term loan facility and used the proceeds to refinance $58.6millionof certain mortgages that mature in 2011 and 2012 and to pay down $22.2million of oursecured revolving credit facility. The facility is for a three year term with one, one-yearextension option and contains an accordion feature to expand the facility to a total of$130.8million. Covenants for the facility are substantially consistent with those forour $200million secured revolving credit facility with the addition of a debt servicecoverage ratio measured based on net operating income attributable to the underlying property.Repayment is interest only based on our overall leverage ranging from LIBOR plus 3.25% to LIBORplus 4.00%. We expect the initial spread over LIBOR to be 3.50%. Initial security for thefacility is a pledge of our ownership interests in our subsidiaries that own the underlyingproperties; provided however, that we would be required to deliver mortgages over the underlyingproperties if we exceed a specified leverage ratio or fail to meet a specified fixed charge ratio.

Dividends

On June10, 2011, we announced that our Board of Directors had declared a quarterly dividend of$0.10 per share and OP Unit that was paid in cash on July20, 2011 to holders of record on June24,2011. The $5.1million dividend covered our second quarter of 2011.

On August4, 2011, we announced that our Board of Directors declared a quarterly dividend of$0.53125 per share on our SeriesA preferred shares for the period June1, 2011 to August31, 2011.The dividend will be paid on September1, 2011, to holders of record on August18, 2011.

Outlook

We revised our annual FFOM guidance in the second quarter of 2011 to be in the range of $0.30 to$0.33 per share and operating partnership unit, excluding the litigation charge, for the yearending December31, 2011. Our guidance assumes the following: (i)acquisitions of $41.0million to$60.0million; (ii)no dispositions; (iii)developments of $40.0million to $45.0million; (iv)third party design-build revenue of $80.0million to $95.0million; (v)design-build gross marginsof 12.0% to 14.0%; and (vi)corporate general and administrative expenses of $9.5million to $10.5million. Our guidance excludes any additional capital transaction or impairments.

A reconciliation of the range of projected net income (loss)to projected FFO and FFOM for the yearending December31, 2011 is set forth below:

Guidance Range for the

Year Ending December 31, 2011

(In thousands, except per share and unit data) Low High

Net income (loss)

$ (4,300 ) $ (3,600 )

Plus real estate related depreciation and amortization

28,500 30,000

Less noncontrolling interests in real estate partnerships, before real estaterelated depreciation and amortization

(2,500 ) (2,500 )

Less dividends on preferred stock

(6,300 ) (6,300 )

Funds from Operations (FFO)

15,400 17,600

Plus amortization of intangibles related to purchase accounting, net of income tax benefit

500 500

Funds from Operations Modified (FFOM)

15,900 18,100

Litigation provision

1,800 1,800

FFOM, excluding litigation provision

$ 17,700 $ 19,900

FFO per share and unit diluted

$ 0.26 $ 0.30

FFOM per share and unit diluted

$ 0.27 $ 0.30

FFO per share and unit diluted, excluding litigation provision

$ 0.29 $ 0.33

FFOM per share and unit diluted, excluding litigation provision

$ 0.30 $ 0.33

Weighted average shares and units outstanding basic and diluted

59,500 59,500

Supplemental operating and financial data are available in the Investor Relations section ofour Web site at www.cogdell.com.

FFO is a supplemental non-GAAP financial measure used by the real estate industry to measure theoperating performance of real estate companies. FFOM adds back to traditionally defined FFOnon-cash amortization of non-real estate related intangible assets associated with purchaseaccounting. We present FFO and FFOM because we consider them important supplemental measures ofoperational performance. We believe FFO is frequently used by securities analysts, investors andother interested parties in the evaluation of REITs, many of which present FFO when reporting theirresults. We believe that FFOM allows securities analysts, investors and other interested partiesto evaluate current period results to results prior to the acquisition of MEA Holdings, Inc. FFOand FFOM are intended to exclude GAAP historical cost depreciation and amortization of real estateand related assets, which assumes that the value of real estate assets diminishes ratably overtime. Historically, however, real estate values have risen or fallen with market conditions.Because FFO and FFOM excludes depreciation and amortization unique to real estate, gains and lossesfrom property dispositions and extraordinary items, they provide performance measures that, whencompared year over year, reflect the impact to operations from trends in occupancy rates, rentalrates, operating costs, development activities and interest costs, providing a perspective notimmediately apparent from net income. We compute FFO in accordance with standards established bythe Board of

Governors of NAREIT in its March1995 White Paper(as amended in November1999 andApril2002), which may differ from the methodology for calculating FFO and FFOM utilized by otherequity REITs and, accordingly, may not be comparable to such other REITs. We adjust the NAREITdefinition to add back noncontrolling interests in consolidated real estate partnerships beforereal estate related depreciation and amortization, acquisition-related expenses, and deductdividends on preferred stock. Further, FFO and FFOM do not represent amounts available formanagements discretionary use because of needed capital replacement or expansion, debt serviceobligations, or other commitments and uncertainties. FFO and FFOM should not be considered as analternative to net income (loss) (computed in accordance with GAAP) as an indicator of ourperformance, nor are they indicative of funds available to fund our cash needs, including ourability to pay dividends or make distributions. A reconciliation from GAAP net loss to FFO andFFOM is included as an attachment to this press release.

About Cogdell Spencer Inc.

Charlotte-based Cogdell Spencer Inc. (NYSE:CSA), healthcares preferred real estate partner, is aREIT focused on planning, owning, developing, constructing, and managing medical facilities.Through strategically managed, customized facilities, we help our clients deliver superiorhealthcare. Learn more about Cogdell Spencer Inc. and its subsidiaries at www.cogdell.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the PrivateSecurities Litigation Reform Act of 1995. The forward-looking statements reflect our views aboutfuture events and are subject to risks, uncertainties, assumptions, and changes in circumstancesthat may cause actual results to differ materially. Factors that may contribute to thesedifferences include, but are not limited to the following: our business strategy; our ability tocomply with financial covenants in our debt instruments; our access to capital; our ability toobtain future financing arrangements, including refinancing existing arrangements; estimatesrelating to our future distributions; our understanding of our competition; our ability to renewour ground leases; legislative and regulatory changes (including changes to laws governing thetaxation of REITs and individuals); increases in costs of borrowing as a result of changes ininterest rates and other factors; our ability to maintain our qualification as a REIT due toeconomic, market, legal, tax, or other considerations; changes in the reimbursement available toour tenants by government or private payors; our tenants ability to make rent payments; defaultsby tenants and customers; customers access to financing; delays in project starts andcancellations by customers; our ability to convert design-build project opportunities into newengagements for us; market trends; and projected capital expenditures. For a further list anddescription of such risks and uncertainties, see our reports filed with the Securities and ExchangeCommission, including our Annual Report on Form 10-K for the year ended December31, 2010.Although we believe the expectations reflected in such forward-looking statements are based onreasonable assumptions, it can give no assurance that its expectations will be realized. Wedisclaim any intention or obligation to update or revise any forward-looking statements, whether asa result of new information, future events or otherwise.

Cogdell Spencer Inc.
Condensed Consolidated Balance Sheets
(In thousands)

(unaudited)

June 30, 2011 December 31, 2010

Assets

Real estate properties:

Operating real estate properties

$ 677,880 $ 634,291

Less: Accumulated depreciation

(132,198 ) (119,141 )

Total operating real estate properties, net

545,682 515,150

Construction in progress

45,010 22,243

Total real estate properties, net

590,692 537,393

Cash and cash equivalents

16,383 12,203

Restricted cash

4,241 6,794

Tenant and accounts receivable, net

12,368 11,383

Goodwill

22,882 22,882

Intangible assets, net

22,249 18,601

Other assets

27,551 23,684

Total assets

$ 696,366 $ 632,940

Liabilities and Equity

Mortgage notes payable

$ 325,644 $ 317,303

Revolving credit facility

95,000 45,000

Accounts payable

15,315 11,368

Billings in excess of costs and estimated earnings on uncompleted contracts

2,432 1,930

Other liabilities

52,707 39,819

Total liabilities

491,098 415,420

Commitments and contingencies

Equity:

Cogdell Spencer Inc. stockholders equity:

Preferred stock, $0.01 par value; 50,000shares authorized:

8.5000% SeriesA CumulativeRedeemable Perpetual Preferred Shares (liquidationpreference $25.00 per share), 2,940 and 2,600 shares issued and outstanding in2011 and 2010, respectively

73,500 65,000

Common stock, $0.01 par value, 200,000 shares authorized, 51,080 and 50,870 sharesissued and outstanding in 2011 and 2010, respectively

511 509

Additional paid-in capital

418,553 417,960

Accumulated other comprehensive loss

(3,772 ) (3,339 )

Accumulated deficit

(306,022 ) (287,798 )

Total Cogdell Spencer Inc. stockholders equity

182,770 192,332

Noncontrolling interests:

Real estate partnerships

6,756 6,452

Operating partnership

15,742 18,736

Total noncontrolling interests

22,498 25,188

Total equity

205,268 217,520

Total liabilities and equity

$ 696,366 $ 632,940

Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(unaudited)

For the Three Months Ended For the six Months Ended


Revenues:

Rental revenue

$ 23,136 $ 20,995 $ 46,190 $ 42,240

Design-Build contract revenue and other sales

17,641 15,236 32,881 50,672

Property management and other fees

760 761 1,536 1,578

Development management and other income

41 17 115 120

Total revenues

41,578 37,009 80,722 94,610

Expenses:

Property operating and management

9,824 8,387 19,111 16,585

Design-Build contracts and development management

15,977 11,407 28,990 36,026

Selling, general, and administrative

6,822 9,345 13,029 15,165

Depreciation and amortization

7,986 8,182 15,816 16,266

Impairment charges

13,635 13,635

Total expenses

40,609 50,956 76,946 97,677

Income (loss)from continuing operations before other income (expense)andincome tax benefit (expense)

969 (13,947 ) 3,776 (3,067 )

Other income (expense):

Interest and other income

159 134 337 294

Interest expense

(5,027 ) (5,393 ) (9,877 ) (10,481 )

Interest rate derivative expense

(9 ) (25 )

Equity in earnings of unconsolidated real estate partnerships

5 12 3

Total other income (expense)

(4,863 ) (5,268 ) (9,528 ) (10,209 )

Loss from continuing operations before income tax benefit (expense)

(3,894 ) (19,215 ) (5,752 ) (13,276 )

Income tax benefit (expense)

(19 ) 5,174 (37 ) 3,448

Loss from continuing operations

(3,913 ) (14,041 ) (5,789 ) (9,828 )

Discontinued operations:

Income from discontinued operations

24 6

Gain on sale of dincontinued operations

264 264

Net loss

(3,913 ) (13,753 ) (5,789 ) (9,558 )

Net income attributable to the noncontrolling interests in real estate partnerships

(235 ) (177 ) (435 ) (489 )

Net loss attributable to the noncontrolling interests in operating partnership

724 1,909 1,232 1,311

Dividends on preferred stock

(1,562 ) (3,124 )

Net loss attributable to Cogdell Spencer Inc. common shareholders

$ (4,986 ) $ (12,021 ) $ (8,116 ) $ (8,736 )

Per share data basic and diluted

Loss from continuing operations attributable to Cogdell Spencer Inc.common shareholders

$ (0.10 ) $ (0.27 ) $ (0.16 ) $ (0.20 )

Income from discontinued operations attributable to Cogdell Spencer Inc.common shareholders

0.01

Net loss per common share available to Cogdell Spencer Inc. commonshareholders

$ (0.10 ) $ (0.26 ) $ (0.16 ) $ (0.20 )

Weighted average common shares basic and diluted

51,058 46,111 51,033 44,449

Net income (loss)attributable to Cogdell Spencer Inc. common shareholders:

Continuing operations, net of tax

$ (4,986 ) $ (12,267 ) $ (8,116 ) $ (8,967 )

Discontinued operations

246 231

Net loss attributable to Cogdell Spencer Inc. common shareholders

$ (4,986 ) $ (12,021 ) $ (8,116 ) $ (8,736 )

Business Segment Reporting
(In thousands)
(unaudited)

Design-Build

Property and Intersegment Unallocated

Three months ended June 30, 2011: Operations Development Eliminations and Other Total

Revenues:

Rental revenue

$ 23,136 $ $ $ $ 23,136


31,744 (14,103 ) 17,641


760 760


571 (530 ) 41

Total revenues

23,896 32,315 (14,633 ) 41,578

Certain operating expenses:


9,426 9,426


30,009 (14,032 ) 15,977


4,887 4,887

Total certain operating expenses

9,426 34,896 (14,032 ) 30,290

14,470 (2,581 ) (601 ) 11,288


144 8 7 159

Corporate general and administrative expenses

(1,935 ) (1,935 )

Interest expense

(5,027 ) (5,027 )

Income tax expense applicable to funds from operations modified

(19 ) (19 )

Non-real estate related depreciation and amortization

(278 ) (44 ) (322 )

Earnings from unconsolidated real estate partnerships,before real estate related depreciation and amortization

8 8

Noncontrolling interests in real estate partnerships, beforereal estate related depreciation and amortization

(526 ) (526 )


(1,562 ) (1,562 )

Funds from operations modified (FFOM)

14,096 (2,851 ) (601 ) (8,580 ) 2,064

Amortization of intangibles related to purchase accounting

(42 ) (189 ) (231 )

Funds from operations (FFO)

14,054 (3,040 ) (601 ) (8,580 ) 1,833

Real estate related depreciation and amortization

(7,436 ) (7,436 )


526 526

Acquisition-related expenses

(398 ) (398 )


1,562 1,562

Net income (loss)

$ 6,746 $ (3,040 ) $ (601 ) $ (7,018 ) $ (3,913 )

Business Segment Reporting
(In thousands)
(unaudited)

Design-Build

Property and Intersegment Unallocated

Six months ended June 30, 2011: Operations Development Eliminations and Other Total

Revenues:

Rental revenue

$ 46,190 $ $ $ $ 46,190


55,527 (22,646 ) 32,881


1,536 1,536


1,450 (1,335 ) 115

Total revenues

47,726 56,977 (23,981 ) 80,722



18,629 18,629


51,496 (22,506 ) 28,990


8,663 8,663


18,629 60,159 (22,506 ) 56,282

29,097 (3,182 ) (1,475 ) 24,440


308 16 13 337


(4,366 ) (4,366 )

Interest expense

(9,877 ) (9,877 )

Income tax expense applicable to funds from operations modified

(37 ) (37 )


(556 ) (87 ) (643 )

Earnings from unconsolidated real estate partnerships,before real estate related depreciation and amortization

18 18


(1,024 ) (1,024 )


(3,124 ) (3,124 )


28,399 (3,722 ) (1,475 ) (17,478 ) 5,724


(85 ) (378 ) (463 )


28,314 (4,100 ) (1,475 ) (17,478 ) 5,261


(14,716 ) (14,716 )


1,024 1,024


(482 ) (482 )


3,124 3,124

Net income (loss)

$ 14,140 $ (4,100 ) $ (1,475 ) $ (14,354 ) $ (5,789 )

Reconciliation of Net Loss to Funds from Operations Modified (FFOM) (1)
(In thousands, except per share and unit amounts)
(unaudited)



Net income (loss)

$ (3,913 ) $ (13,753 ) $ (5,789 ) $ (9,558 )

Add:

Real estate related depreciation and amortization:

Wholly-owned and consolidated properties

7,433 7,272 14,710 14,465

Unconsolidated real estate partnerships

3 3 6 6

Acquisiton-related expenses

398 482

Less:

Noncontrolling interests in real estate partnerships,before real estate related depreciation and amortization

(526 ) (479 ) (1,024 ) (1,094 )


(1,562 ) (3,124 )

Gain on sale of real estate property

(264 ) (264 )

Funds from Operations (FFO) (1)

1,833 (7,221 ) 5,261 3,555

Amortization of intangibles related to purchaseaccounting, net of income tax benefit

231 374 463 748

Funds from Operations Modified (FFOM) (1)

$ 2,064 $ (6,847 ) $ 5,724 $ 4,303

FFO per share and unit basic and diluted

$ 0.03 $ (0.13 ) $ 0.09 $ 0.07

FFOM per share and unit basic and diluted

$ 0.04 $ (0.13 ) $ 0.10 $ 0.08

Weighted average shares and units outstanding basic and diluted

58,465 53,913 58,452 52,245

(1)

FFO is a supplemental non-GAAP financial measure used by the real estateindustry to measure the operating performance of real estate companies. FFOM adds back totraditionally defined FFO non-cash amortization of non-real estate related intangible assetsassociated with purchase accounting. We present FFO and FFOM because we consider themimportant supplemental measures of operational performance. We believe FFO is frequently usedby securities analysts, investors and other interested parties in the evaluation of REITs,many of which present FFO when reporting their results. We believe that FFOM allowssecurities analysts, investors and other interested parties to evaluate current period resultsto results prior to the acquisition of MEA Holdings, Inc. FFO and FFOM are intended toexclude GAAP historical cost depreciation and amortization of real estate and related assets,which assumes that the value of real estate assets diminishes ratably over time.Historically, however, real estate values have risen or fallen with market conditions.Because FFO and FFOM excludes depreciation and amortization unique to real estate, gains andlosses from property dispositions and extraordinary items, they provide performance measuresthat, when compared year over year, reflect the impact to operations from trends in occupancyrates, rental rates, operating costs, development activities and interest costs, providing aperspective not immediately apparent from net income. We compute FFO in accordance withstandards established by the Board of Governors of NAREIT in its March1995 White Paper (asamended in November1999 and April2002), which may differ from the methodology forcalculating FFO and FFOM utilized by other equity REITs and, accordingly, may not becomparable to such other REITs. We adjust the NAREIT definition to add back noncontrollinginterests in consolidated real estate partnerships before real estate related depreciation andamortization, acquisition-related expenses, and deduct dividends on preferred stock. Further,FFO and FFOM do not represent amounts available for managements discretionary use because ofneeded capital replacement or expansion, debt service obligations, or other commitments anduncertainties. FFO and FFOM should not be considered as an alternative to net income (loss)(computed in accordance with GAAP) as an indicator of our performance, nor are they indicativeof funds available to fund our cash needs, including our ability to pay dividends or makedistributions.

#####

EX-99.23c20961exv99w2.htmEXHIBIT 99.2

Exhibit 99.2

Exhibit99.2

1. Investor Information

1

2. Summary

2

3. Capitalization

3

4. Results

4

5. Condensed Consolidated Balance Sheets

5

6. Condensed Consolidated Statements of Operations

6

7. Business Segment Reporting

7

8. Reconciliation of Net Loss to FFO and FFOM

9

9. Coverage Ratios

10

10. Reconciliation of Earnings to EBITDA

11

11. Consolidated Debt Analysis

12

12. Property Summary

16

13. Stabilized Property Listing

17

14. Stabilized Property Occupancy Rates

19

15. Tenant Lease Expirations

23

16. Ten Largest Tenants

24

17. Ground & Air Rights Leases

25

18. Pipeline

26

19. Inter-company Profit Elimination Example

27

20. Acquisitions, Completed Developments, & Properties in Lease-up

28

21. Development Construction and Capital Expenditures

29

Board of Directors

Richard C. Neugent

Raymond W. Braun

Chairman

President & CEO

John R. Georgius

Richard B. Jennings

Christopher E. Lee

David J. Lubar

Randolph D. Smoak, Jr. M.D.

Executive Management

Raymond W. Braun

Brian L. Happ

Rex A. Noble

Chief Executive Officer & President

Executive VP & Chief Operating Officer

Executive VP Portfolio Management

Charles M. Handy

Andrea L. Hopkins

Sal G. Parente

Executive VP & Chief Financial Officer

VP Human Resources

Executive VP Business Development

Equity Research Coverage

BMO Capital Markets

Jefferies & Co.

Raymond James & Associates

Richard Anderson 212.885.4180

Tayo Okusanya 212.336.7076

Paul Puryear 727.567.2253

Janney Montgomery Scott

KeyBanc Capital Markets

SmithBarney Citigroup

Dan Donlan 215.665.6476

Karin Ford 917.368.2293

Quentin Velleley 212.816.6981

Company Information

Corporate Headquarters

Trading Symbol

Transfer Agent

4401 Barclay Downs Drive, Suite300

CSA

First Shareholder Services

Charlotte, NC 28209

Tel: 704.940.2900

Stock Exchange Listing

Investor Relations

Fax: 704.940.2959

New York Stock Exchange

Jaime Buell 704.940.2929

www.cogdell.com

This supplemental operating and financial data package contains forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking
statements reflect our views about future events and are subject to risks, uncertainties,
assumptions and changes in circumstances that may cause actual results to differ materially.
Factors that may contribute to these differences include, but are not limited to the following: our
business strategy; our ability to comply with financial covenants in our debt instruments; our
ability to obtain future financing arrangements; estimates relating to our future distributions;
our understanding of our competition; our ability to renew our ground leases; changes in the
reimbursement available to our tenants by government or private payors; our tenants ability to
make rent payments; defaults by tenants; customers access to financing; delays in project starts
and cancellations by customers; market trends; and projected capital expenditures. For a further
list and description of such risks and uncertainties, see our reports filed with the Securities and
Exchange Commission, including our Form10-K for the year ended December31, 2010 and our Quarterly
Report on Form10-Q for the quarter ended June30, 2011. Although we believe the expectations
reflected in such forward-looking statements are based on reasonable assumptions, we can give no
assurance that our expectations will be realized. We disclaim any intention or obligation to update
or revise any forward-looking statements, whether as a result of new information, future events or
otherwise.

1

For 3 Months Ended For 6 Months Ended

(in thousands, except per share amounts and portfolio statistics) June 30, 2011 June 30, 2010 June 30, 2011 June 30, 2010

Revenue

$ 41,578 $ 37,009 $ 80,722 $ 94,610

EBITDA (1)

10,919 11,364 21,741 30,508

Net loss attributable to Cogdell Spencer Inc. common stockholders

(4,986 ) (12,021 ) (8,116 ) (8,736 )

Net loss per share attributable to Cogdell Spencer Inc. common stockholder

$ (0.10 ) $ (0.26 ) $ (0.16 ) $ (0.20 )

FFOM attributable to common stockholders and operating partnership unitholders (2)

$ 2,064 $ (6,847 ) $ 5,724 $ 4,303

FFOM attributable to common stockholders and operating partnership unitholders, excludinglitigation provision, impairment charges, and CEO retirement expense(2)

$ 3,864 $ 6,546 $ 7,524 $ 17,696

Per share and operating partnership unit data:

FFOM attributable to common stockholders and operating partnership unitholders(2)

$ 0.04 $ (0.13 ) $ 0.10 $ 0.08

FFOM attributable to common stockholders and operating partnership unitholders, excludinglitigation provision, impairment charges, and CEO retirement expense (2)

$ 0.07 $ 0.12 $ 0.13 $ 0.34

Debt / Gross Assets(3)

48 % 44 % 48 % 44 %

Portfolio statistics:

Total properties

69 65 69 65

Total square footage

3,889,168 3,603,918 3,889,168 3,603,918

(1)

For a definition and discussion and a quantitative reconciliation of the differencesbetween EBITDA and net loss, see page 11.

(2)

For a definition, discussion, and aquantitative reconciliation of the differences between FFOM and net loss, see page 9.

(3)

Gross Assets represents total assets before accumulated depreciation and amortization.

(4)

Stabilized properties.

2

June 30, 2011

Shares/Units Share Price Value

Common Stock

51,080 $ 5.99 $ 305,969

Common Operating Partnership Units

7,385 $ 5.99 44,236

Preferred Stock

2,940 $ 25.10 73,794

Equity value

423,999

Consolidated debt

420,644

Market capitalization

$ 844,643

3

For the 3 Months Ended For the 6 Months Ended

June 30, 2011 June 30, 2010 June 30, 2011 June 30, 2010

FFOM and FFOM per share and operating partnership unit for the three months and six monthsended June30, 2011, and a comparison to our prior year results:

FFOM(1)

$ 2,064 $ (6,847 ) $ 5,724 $ 4,303


1,800 13,393 1,800 13,393

FFOM, excluding litigation provision, impairment charges, and CEO retirement expense

$ 3,864 $ 6,546 $ 7,524 $ 17,696


FFOM(1)

$ 0.04 $ (0.13 ) $ 0.10 $ 0.08


0.03 0.25 0.03 0.26

FFOM, excluding litigation provision, impairment charges, and CEO retirement expense

0.07 0.12 0.13 0.34



FFO and FFO per share and operating partnership unit for the three months and six monthsended June30, 2011, and a comparison to our prior year results:

FFO(1)

$ 1,833 $ (7,221 ) $ 5,261 $ 3,555


1,800 13,393 1,800 13,393

FFO, excluding litigation provision, impairment charges, and CEO retirement expense

$ 3,633 $ 6,172 $ 7,061 $ 16,948


FFO(1)

$ 0.03 $ (0.13 ) $ 0.09 $ 0.07


0.03 0.24 0.03 0.25

FFO, excluding litigation provision, impairment charges, and CEO retirement expense

0.06 0.11 0.12 0.32



Net loss attributable to Cogdell Spencer Inc. and net loss attributable to Cogdell Spencer Inc.per share for the three and six months ended June30, 2011, and a comparison to our prior yearresults:

Net loss available to Cogdell Spencer Inc. common stockholders

$ (4,986 ) $ (12,019 ) $ (8,116 ) $ (8,736 )

Impact of litigation provision, impairment charges, and CEO retirement expense attributable toCogdell Spencer Inc. common stockholders

1,571 11,451 1,571 11,397

Net income (loss)available to Cogdell Spencer Inc. common stockholders, excluding litigationprovision, impairment charges, and CEO retirement expense

$ (3,415 ) $ (568 ) $ (6,545 ) $ 2,661

Per share data:


$ (0.10 ) $ (0.26 ) $ (0.16 ) $ (0.20 )

Impact of litigation provision, impairment charges, and CEO retirement expense attributableto Cogdell Spencer Inc. common stockholders

0.03 0.25 0.03 0.26

Net income (loss)available to Cogdell Spencer Inc. common stockholders, excludinglitigation provision, impairment charges, and CEO retirement expense

(0.07 ) (0.01 ) (0.13 ) 0.06

(1)

For a definition and discussion and a quantitative reconciliation of the differencesbetween FFO, FFOM, and net loss, see page 9.

4

June 30, 2011 March 31, 2011 Dec. 31, 2010 Sept. 30, 2010 June 30, 2010

Assets

Real estate properties:

Operating real estate properties

$ 677,880 $ 641,712 $ 634,291 $ 632,844 $ 616,154

Less: Accumulated depreciation

(132,198 ) (125,610 ) (119,141 ) (112,581 ) (106,004 )


545,682 516,102 515,150 520,263 510,150

Construction in process

45,010 29,985 22,243 15,120 7,951


590,692 546,087 537,393 535,383 518,101

Cash and cash equivalents

16,383 17,235 12,203 16,028 31,196

Restricted cash

4,241 6,784 6,794 11,649 7,888

Tenant and accounts receivable, net

12,368 10,247 11,383 9,656 8,070

Goodwill

22,882 22,882 22,882 102,195 102,195

Trade names and trademarks

34,093 34,093

Intangible assets, net

22,249 18,418 18,601 20,025 18,670

Other assets

27,551 28,162 23,684 23,642 24,018

Total assets

$ 696,366 $ 649,815 $ 632,940 $ 752,671 $ 744,231

Liabilities and Equity

Mortgage notes payable

$ 325,644 $ 319,419 $ 317,303 $ 296,701 $ 291,199

Revolving credit facility

95,000 55,000 45,000 65,000 55,000

Term Loan

50,000 50,000

Accounts payable

15,315 11,628 11,368 11,814 11,081

Billings in excess of costs and estimated earnings on uncompleted contracts

2,432 2,314 1,930 2,145 4,657

Deferred income taxes

11,406 13,543

Other liabilities

52,707 43,558 39,819 51,991 48,123

Total liabilities

491,098 431,919 415,420 489,057 473,603

Commitments and contingencies

Equity:

Cogdell Spencer Inc. stockholders equity:

Preferred stock

73,500 73,500 65,000

Common stock

511 510 509 507 500

Additional paid-in capital

418,553 418,374 417,960 419,439 418,194

Accumulated other comprehensive loss

(3,772 ) (2,712 ) (3,339 ) (6,011 ) (4,843 )

Accumulated deficit

(306,022 ) (295,981 ) (287,798 ) (189,219 ) (182,332 )

Total Cogdell Spencer Inc. stockholders equity

182,770 193,691 192,332 224,716 231,519

Noncontrolling interests:

Real estate partnerships

6,756 6,772 6,452 5,660 3,810

Operating partnership

15,742 17,433 18,736 33,238 35,299

Total noncontrolling interests

22,498 24,205 25,188 38,898 39,109

Total equity

205,268 217,896 217,520 263,614 270,628

Total liabilities and equity

$ 696,366 $ 649,815 $ 632,940 $ 752,671 $ 744,231

5

Three Months Ended


Revenues:

Rental revenue

$ 23,136 $ 23,054 $ 22,799 $ 22,765 $ 20,995


17,641 15,241 24,850 15,734 15,236


760 775 824 809 761


41 74 25 1 17

Total revenues

41,578 39,144 48,498 39,309 37,009

Expenses:


9,824 9,287 8,012 9,067 8,387


15,977 13,013 22,169 13,806 11,407


6,822 6,208 8,561 6,684 9,345

Depreciation and amortization

7,986 7,830 8,283 8,293 8,182

Impairment charges

113,406 13,635

Total expenses

40,609 36,338 160,431 37,850 50,956

Income (loss)from continuing operations before other income (expense)andincome tax benefit (expense)

969 2,806 (111,933 ) 1,459 (13,947 )

Other income (expense):


159 178 210 151 134

Interest expense

(5,027 ) (4,850 ) (5,662 ) (5,851 ) (5,393 )

Debt extinguishment and interest rate derivative expense

(339 ) (7 ) (9 )

Equity in earnings of unconsolidated partnerships

5 8 7 3

Total other income (expense)

(4,863 ) (4,664 ) (5,784 ) (5,704 ) (5,268 )

Loss from continuing operations before income tax benefit (expense)

(3,894 ) (1,858 ) (117,717 ) (4,245 ) (19,215 )

Income tax benefit (expense)

(19 ) (18 ) 10,611 2,294 5,174

Loss from continuing operations

(3,913 ) (1,876 ) (107,106 ) (1,951 ) (14,041 )

Discontinued operations:

Income from discontinued operations

24


264

Total discontinued operations

288

Net loss

(3,913 ) (1,876 ) (107,106 ) (1,951 ) (13,753 )

Net income attributable to the noncontrolling interest in real estate partnerships

(235 ) (200 ) (171 ) (172 ) (177 )

Net loss attributable to the noncontrolling interest in operating partnership

724 508 13,970 285 1,909


(1,562 ) (1,562 ) (208 )


$ (4,986 ) $ (3,130 ) $ (93,515 ) $ (1,838 ) $ (12,021 )

Per share data basic and diluted:

Loss from continuing operations attributable to Cogdell Spencer Inc.common stockholders

$ (0.10 ) $ (0.06 ) $ (1.84 ) $ (0.04 ) $ (0.27 )

Income from discontinued operations attributable to Cogdell Spencer Inc.common stockholders

0.01

Net loss per share available to Cogdell Spencer Inc. common stockholders

$ (0.10 ) $ (0.06 ) $ (1.84 ) $ (0.04 ) $ (0.26 )

Weighted average common shares basic and diluted

51,058 51,009 50,745 50,083 46,111

Net loss available to Cogdell Spencer Inc. common stockholders:

Continuing operations, net of tax

$ (4,986 ) $ (3,130 ) $ (93,515 ) $ (1,838 ) $ (12,267 )

Discontinued operations

246


$ (4,986 ) $ (3,130 ) $ (93,515 ) $ (1,838 ) $ (12,021 )

6

Design-Build

Property and Intersegment Unallocated

Three months ended June 30, 2011 Operations Development Eliminations and Other Total

Revenues:

Rental revenue

$ 23,136 $ $ $ $ 23,136


31,744 (14,103 ) 17,641


760 760


571 (530 ) 41

Total revenues

23,896 32,315 (14,633 ) 41,578



9,426 9,426


30,009 (14,032 ) 15,977


4,887 4,887


9,426 34,896 (14,032 ) 30,290

14,470 (2,581 ) (601 ) 11,288


144 8 7 159


(1,935 ) (1,935 )

Interest expense

(5,027 ) (5,027 )

Income taxes expense applicable to funds from operations modified

(19 ) (19 )


(278 ) (44 ) (322 )

Earnings from unconsolidated real estate partnerships, before real estaterelated depreciation and amortization

8 8

Noncontrolling interests in real estate partnerships, before real estate relateddepreciation and amortization

(526 ) (526 )


(1,562 ) (1,562 )


14,096 (2,851 ) (601 ) (8,580 ) 2,064


(42 ) (189 ) (231 )


14,054 (3,040 ) (601 ) (8,580 ) 1,833


(7,436 ) (7,436 )


526 526


(398 ) (398 )


1,562 1,562

Net income (loss)

$ 6,746 $ (3,040 ) $ (601 ) $ (7,018 ) $ (3,913 )

7

Design-Build

Property and Intersegment Unallocated

Six months ended June 30, 2011 Operations Development Eliminations and Other Total

Revenues:

Rental revenue

$ 46,190 $ $ $ $ 46,190


55,527 (22,646 ) 32,881


1,536 1,536


1,450 (1,335 ) 115

Total revenues

47,726 56,977 (23,981 ) 80,722



18,629 18,629


51,496 (22,506 ) 28,990


8,663 8,663


18,629 60,159 (22,506 ) 56,282

29,097 (3,182 ) (1,475 ) 24,440


308 16 13 337


(4,366 ) (4,366 )

Interest expense

(9,877 ) (9,877 )

Income taxes expense applicable to funds from operations modified

(37 ) (37 )


(556 ) (87 ) (643 )

Earnings from unconsolidated real estate partnerships, before real estaterelated depreciation and amortization

18 18


(1,024 ) (1,024 )


(3,124 ) (3,124 )


28,399 (3,722 ) (1,475 ) (17,478 ) 5,724


(85 ) (378 ) (463 )


28,314 (4,100 ) (1,475 ) (17,478 ) 5,261


(14,716 ) (14,716 )


1,024 1,024


(482 ) (482 )


3,124 3,124

Net income (loss)

$ 14,140 $ (4,100 ) $ (1,475 ) $ (14,354 ) $ (5,789 )

8

Three Months Ended


Net loss

$ (3,913 ) $ (1,876 ) $ (107,106 ) $ (1,951 ) $ (13,753 )

Add:

Real estate related depreciation and amortization(2):

Wholly-owned and consolidated properties

7,433 7,277 7,327 7,372 7,272

Unconsolidated real estate partnerships

3 2 3 3 3


398 84

Less:

Noncontrolling interests in real estate partnerships, before real estaterelated depreciation and amortization

(526 ) (498 ) (472 ) (476 ) (479 )


(1,562 ) (1,562 ) (208 )


(264 )

Funds from Operations (FFO)(1)

1,833 3,427 (100,456 ) 4,948 (7,221 )

Amortization of intangibles related to purchase accounting, net of tax benefit

231 231 374 374 374

Funds from Operations Modified (FFOM)(1)

2,064 3,658 (100,082 ) 5,322 (6,847 )

Non-recurring events and certain other charges:

Litigation provision

1,800

Goodwill and intangible asset impairment charges, net of tax benefit

93,826 10,848

Tax valuation allowance

10,553

Mr.Cogdells employment non-renewal compensation expense

1,493

CEO retirement compensation expense, net of tax benefit

2,545

Impact of non-recurring events and certain other charges

1,800 105,872 13,393

FFOM, excluding non-recurring events and certain other charges

$ 3,864 $ 3,658 $ 5,790 $ 5,322 $ 6,546

FFO per share and unit basic and diluted

$ 0.03 $ 0.06 $ (1.72 ) $ 0.09 $ (0.13 )

FFOM per share and unit basic and diluted

$ 0.04 $ 0.06 $ (1.71 ) $ 0.09 $ (0.13 )

FFOM per share and unit basic and diluted, excluding non-recurring eventsand certain other charges

$ 0.07 $ 0.06 $ 0.10 $ 0.09 $ 0.12

Weighted average shares and units outstanding

58,465 58,438 58,389 57,849 53,913

(1)

FFO is a supplemental non-GAAP financial measure used by the real estate industry tomeasure the operating performance of real estate companies. FFOM adds back to traditionally definedFFO non-cash amortization of non-real estate related intangible assets associated with purchaseaccounting. We present FFO and FFOM because we consider them important supplemental measures ofoperational performance. We believe FFO is frequently used by securities analysts, investors andother interested parties in the evaluation of REITs, many of which present FFO when reporting theirresults. We believe that FFOM allows securities analysts, investors and other interested parties toevaluate current period results to results prior to the acquisition of MEA Holdings, Inc. FFO andFFOM are intended to exclude GAAP historical cost depreciation and amortization of real estate andrelated assets, which assumes that the value of real estate assets diminishes ratably over time.Historically, however, real estate values have risen or fallen with market conditions. Because FFOand FFOM excludes depreciation and amortization unique to real estate, gains and losses fromproperty dispositions and extraordinary items, they provide performance measures that, whencompared year over year, reflect the impact to operations from trends in occupancy rates, rentalrates, operating costs, development activities and interest costs, providing a perspective notimmediately apparent from net income. We compute FFO in accordance with standards established bythe Board of Governors of NAREIT in its March1995 White Paper (as amended in November1999 andApril2002), which may differ from the methodology for calculating FFO and FFOM utilized by otherequity REITs and, accordingly, may not be comparable to such other REITs. We adjust the NAREITdefinition to add back noncontrolling interests in consolidated real estate partnerships beforereal estate related depreciation and amortization, acquisition-related expenses, and deductdividends on preferred stock. Further, FFO and FFOM do not represent amounts available formanagements discretionary use because of needed capital replacement or expansion, debt serviceobligations, or other commitments and uncertainties. FFO and FFOM should not be considered as analternative to net income (loss) (computed in accordance with GAAP) as an indicator of ourperformance, nor are they indicative of funds available to fund our cash needs, including ourability to pay dividends or make distributions.

(2)

Real estate depreciation and amortization consists of depreciation and amortization fromwholly-owned real estate properties and the Companys share of real estate depreciation andamortization from consolidated and unconsolidated real estate partnerships.

9

Three Months Ended


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