Market Overview

Gramercy Property Trust Reports Fourth Quarter and Full Year 2015 Financial Results

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NEW YORK--(BUSINESS WIRE)--

Gramercy Property Trust (NYSE: GPT)

Highlights

  • In December 2015, completed merger of Gramercy Property Trust Inc. ("Legacy Gramercy") with and into a subsidiary of Chambers Street Properties ("Legacy Chambers") creating the largest industrial and office net lease real estate investment trust with an enterprise value of approximately $6.0 billion.
  • Generated Core FFO of $36.4 million or $0.16 per diluted common share for the fourth quarter of 2015. For the full year 2015, generated Core FFO of $114.8 million or $0.61 per diluted common share. Core FFO excludes costs related to the merger.
  • Generated NAREIT defined funds from operations ("FFO") of $(22.5) million or $(0.10) per diluted common share for the fourth quarter of 2015. For the full year 2015, generated FFO of $42.1 million or $0.22 per diluted common share.
  • Generated adjusted funds from operations ("AFFO") of $34.6 million or $0.15 per diluted common share for the fourth quarter of 2015. For the full year 2015, generated AFFO of $101.3 million or $0.54 per diluted common share.
  • Reaffirmed Core FFO and AFFO guidance of $0.66 - $0.75 per diluted common share for full year 2016.
  • Subsequent to year end, declared first quarter 2016 dividend of $0.11 per common share.
  • Entered into new financings consisting of a $1.9 billion credit facility, a $175.0 million seven-year senior unsecured term loan and a $150.0 million privately placed senior unsecured note.
  • During the fourth quarter of 2015, acquired seven properties in four separate transactions for a total purchase price of approximately $66.5 million (7.6% initial cap rate; 8.7% annualized straight-line cap rate) with a weighted average lease term of approximately 15.9 years. Exceeded Legacy Gramercy's projected acquisition target of $600.0 to $900.0 million for 2015 acquiring 54 properties in 21 separate transactions for a total purchase price of approximately $1.1 billion.
  • Subsequent to year-end, disposed of three multi-tenant office portfolios in Weston, Florida, Cincinnati, Ohio and Jersey City, New Jersey, for an aggregate sale price of approximately $500.8 million equating to a weighted average cap rate of 5.43%. Aggregate sale price reflects 100% of gross proceeds for the Weston, Florida property, of which the Company owned 80% through a joint venture. The cap rate assumes no Net Operating Income ("NOI") for vacant 70 Hudson and stabilized 2016 cash NOI for 90 Hudson, which is adjusted for free rent credits granted to the buyer.
  • Subsequent to year-end, acquired three properties for an aggregate purchase price of approximately $52.8 million (7.6% initial cap rate; 9.3% annualized straight-line cap rate) with a weighted average lease term of approximately 17.6 years.
  • Subsequent to year-end, announced share repurchase plan to acquire up to $100.0 million of the Company's common shares.

Summary

Gramercy Property Trust (NYSE: GPT) today reported a net loss to common shareholders of $(51.2) million, or $(0.23) per fully diluted common share for the three months ended December 31, 2015 and a net loss to common shareholders of $(54.2) million, or $(0.30) per fully diluted common share for the full year ended December 31, 2015. For the quarter, the Company generated negative FFO of $(22.5) million, or $(0.10) per fully diluted common share, and for the year ended December 31, 2015, FFO was $42.1 million, or $0.22 per fully diluted common share. Negative FFO and net loss to common shareholders in the fourth quarter of 2015 includes acquisitions and merger related costs of $48.3 million or $0.22 per diluted common share and loss on extinguishment of debt of $9.5 million or $0.04 per diluted common share. For the year, acquisition and merger related costs were $62.9 million or $0.34 per diluted common share. For the quarter, the Company generated Core FFO of $36.4 million, or $0.16 per fully diluted common share, and for the year ended December 31, 2015, Core FFO was $114.8 million, or $0.61 per fully diluted common share. For the quarter, the Company generated AFFO of $34.6 million, or $0.15 per fully diluted common share, and for the year ended December 31, 2015, AFFO was $101.3 million, or $0.54 per fully diluted common share. A reconciliation of FFO, Core FFO and AFFO to net income available to common shareholders is included on page 8 of the press release.

The Company reaffirms its previously announced outlook for 2016 with expected Core FFO and AFFO of $0.66 - $0.75 per diluted common share. This outlook assumes dispositions of properties of $1.0 billion and acquisitions of replacement properties aggregating $1.0 billion prior to December 31, 2016. The outlook also assumes $19.0 million, or $0.04 per share, in combined company reserves for revenue generating capital expenditures and the expenditure of $19.8 million, or $0.05 per share, for revenue maintaining expenditures during calendar 2016, and assumes that the Company does not raise any equity during 2016. Additionally, the 2016 outlook assumes total management, general and administrative expenses of approximately $25.0 million, including non-cash stock compensation expense and excluding such costs associated with the European operations.

For the fourth quarter of 2015, the Company recognized total revenues of approximately $70.0 million, an increase of 7.4% over total revenues of $65.2 million reported in the prior quarter. Total revenues for the year ended December 31, 2015 were approximately $237.3 million as compared to $107.9 million for the prior year, an increase of 119.9%.

Merger with Chambers Street

On December 17, 2015, the Company announced the completion of the previously announced merger of Gramercy Property Trust Inc. ("Legacy Gramercy") with and into a subsidiary of Chambers Street Properties ("Legacy Chambers"). Legacy Gramercy's shareholders and Legacy Chambers shareholders voted to approve the transaction at respective special meetings on December 15, 2015.

The merger, which was first announced on July 1, 2015, created the largest industrial and office net lease real estate investment trust with an enterprise value of approximately $6.0 billion and a portfolio of 323 properties, including properties owned in unconsolidated equity investments, comprising an aggregate 63.0 million square feet. The combined company retained the Gramercy name and trades on the New York Stock Exchange under the symbol, "GPT."

Pursuant to the terms of the definitive merger agreement, the Legacy Gramercy stockholders at the time received 3.1898 common shares of Legacy Chambers common shares for each share of Legacy Gramercy common stock they owned at the time of the merger.

New Financings

The Legacy Gramercy and Legacy Chambers credit facilities were refinanced into a new senior unsecured credit facility for the combined company (the "Facility") consisting of an $850.0 million senior unsecured revolving credit facility (the "Revolving Credit Facility"), a $300.0 million three-year term loan (the "3 Year Facility") and a $750.0 million five-year term loan. The Revolving Credit Facility has an initial term of four years with an option for a one-year extension and the 3 Year Facility has an initial term of three years with an option for a one-year extension. The combined company also entered into a $175.0 million seven-year senior unsecured term loan and issued $150.0 million in a private placement of senior unsecured notes. $100.0 million of the private placement was funded concurrent with the closing of the merger and $50.0 million was funded in January 2016.

Gramercy European Property Fund

During the fourth quarter of 2015, the Company contributed €9.6 million to Gramercy Property Europe plc ("Gramercy Europe"). Gramercy Europe acquired six properties in five separate transactions for a total purchase price of approximately €131.4 million and partially funded with €73.0 million non-recourse mortgage financings in the fourth quarter of 2015. Gramercy Europe contributed a net loss of $0.5 million to the Company's earnings, which is primarily comprised of the Company's pro-rata share of property acquisition costs of $2.6 million.

Since its inception in December 2014, the Company has contributed a total of €23.2 million to Gramercy Europe. Gramercy Europe has acquired 12 properties aggregating approximately 3.5 million square feet in eight separate transactions for a total purchase price of approximately €238.0 million.

Property Acquisitions

In 2015, the Company acquired 54 properties aggregating approximately 8.8 million square feet in 21 transactions for a total purchase price of approximately $1.1 billion with an average cash cap rate of 7.2%, an average annualized straight-lined cap rate of 7.9%, and an average lease term in excess of 11 years.

In the fourth quarter of 2015, the Company acquired seven properties in four separate transactions for a total purchase price of approximately $66.5 million (7.6% initial cap rate; 8.7% annualized straight-line cap rate) with a weighted average lease term of approximately 15.9 years.

Fourth quarter 2015 property acquisitions are summarized in the chart below:

 
(Dollar amount in thousands)
Acq. Date       Location   MSA   Major Tenants   Property Type  

Square
Feet

  Purchase

Price

  Occupancy   Cash

NOI

  S/L

NOI

11/24/2015     Atlanta, GA Atlanta Deutz Corp Warehouse 142,073 $ 8,050 100 % $ 557 $ 615
11/24/2015 Atlanta, GA Atlanta GranQuartz Warehouse 80,000 4,450 100 % 304 326
12/22/2015 Round Rock, TX(1) Austin ProPortion Food Cold Storage 200,411 28,880 100 % 2,166 2,451
12/24/2015

Hackettstown, NJ

Central
New Jersey

Astrodyne

Light
Manufacturing

150,500 13,130 100 % 978 1,218
12/24/2015

Nashville / La Vergne, TN(2)

Nashville Crowne Group Manufacturing 377,600 12,000 100 % 1,080 1,208
950,584 $ 66,510 100 % $ 5,085 $ 5,819
 
 
(1) NOI is run rate for when ProPortion begins paying rent upon completion of the build-to-suit. The Company entered into a forward purchase contract to acquire the property at the end of redevelopment. The Company has funded $8.1 million of the redevelopment costs at December 31, 2015.
(2) Includes three properties.
 

Subsequent to year-end, the Company acquired three additional properties for a total purchase price of approximately $52.8 million (7.6% initial cap rate; 9.3% annualized straight-line cap rate) with a weighted average lease term of approximately 17.6 years.

 
(Dollar amount in thousands)
Acq. Date       Location   MSA  

Major
Tenants

 

Property
Type

 

Square
Feet

  Purchase
Price
  Occupancy   Cash
NOI
  S/L
NOI
1/28/2016    

Bedford Park,
IL

Chicago

Superior
Manufacturing

Manufacturing 246,060 $ 12,500 100 % $ 923 $ 1,064
1/28/2016 Moselle, MS Other

Superior
Manufacturing

Manufacturing 150,000 3,250 100 % 300 346
2/22/2016

Indianapolis,
IN

Indianapolis

AmeriPlex
Bakery

Cold Storage 225,586   37,000   100 % 2,784   3,482

 

621,646   $ 52,750   100 % $ 4,007   $ 4,891
 

Subsequent to year-end, the Company disposed of three multi-tenant office portfolios in Weston, Florida, Cincinnati, Ohio and Jersey City, New Jersey for an aggregate sale price of approximately $500.8 million equating to a weighted average in place cap rate of 5.43%. Cap rate assumes no NOI for vacant 70 Hudson and stabilized 2016 cash NOI for 90 Hudson, which excludes free rent credits.

 
(Dollar amount in thousands)
Disp Date       Location   MSA   Major Tenants    

Property
Type

 

Square
Feet

  Sale
Price
  Cash
NOI
1/13/2016     Weston, FL(1) South Florida Multi-Tenant   Office 388,113 $ 114,786 $ 7,349
2/8/2016 Blue Ash, OH Cincinnati Multi-Tenant Office 540,867 87,000 7,874
2/25/2016 Jersey City, NJ(2) New York/New Jersey Multi-Tenant Office 857,940   299,000   11,981
1,786,920   $ 500,786   $ 27,204
 
   
(1) Weston metrics represent 100% share of the Joint Venture. The Company's pro-rata share is 80%.
(2) Cash NOI represents stabilized 2016 cash NOI for 90 Hudson, which excludes free rent credits.
 

Gramercy Asset Management

The Company's asset and property management business, which operates under the name Gramercy Asset Management, currently manages for third parties approximately $900.0 million of commercial properties throughout the United States and Europe.

In the fourth quarter 2015, Gramercy Asset Management recognized fee revenues of $4.7 million in property management, asset management, and administrative fees, as compared to $5.2 million at the end of the prior quarter. The decrease in fees for the fourth quarter of 2015 is primarily attributable to changes in incentive and disposition fees earned on properties sold in the managed portfolio. For the year ended December 31, 2015 fee revenue was $22.3 million as compared to $25.0 million in the prior year. The decrease in fee revenue for the year ended December 31, 2015 was attributable to disposition activity.

Corporate

As of December 31, 2015, the Company maintained approximately $681.3 million of liquidity at quarter end, as compared to approximately $268.0 million of liquidity reported in the prior quarter. Liquidity includes $128.0 million of unrestricted cash as compared to approximately $38.1 million reported at the end of the prior quarter. As of December 31, 2015, there were $296.7 million of borrowings outstanding under the Revolving Credit Facility.

Management, general and administrative ("MG&A") expenses were $5.5 million for the quarter ended December 31, 2015 compared to $4.7 million in the prior quarter. MG&A expenses were $19.8 million and $18.4 million for the twelve months ended December 31, 2015 and 2014, respectively. The Company's MG&A expenses were related to the following business lines:

                 
(Dollar amount in thousands)
Three Months Ended Twelve Months Ended
December 31,
2015
  September 30,
2015
December 31,
2015
December 31,
2014
Corporate/Investments $ 5,359 $ 4,617 $ 19,215 $ 15,597
Asset Management 136 131 579 2,819
Total $ 5,495 $ 4,748 $ 19,794 $ 18,416
 

MG&A expenses includes non-cash stock compensation costs of approximately $910 thousand and $891 thousand for the three months ended December 31, 2015 and September 30, 2015, respectively. Non-cash compensation cost was $3.2 million and $2.6 million for the year ended December 31, 2015 and 2014, respectively.

Dividends

The combined company's Board of Trustees authorized and the Company declared a "stub period" dividend for the period December 17, 2015 through December 31, 2015 in the amount of $0.0206 per common share. The "stub period" dividend was paid on January 15, 2016 to holders of the combined company's common shares of record as of the close of business on December 31, 2015.  The Legacy Chambers' Board of Trustees paid dividends of $0.0425, $0.0425, and $0.0219 per common share for the month of October 2015, the month of November 2015, and for the period from December 1, 2015 through December 16, 2015, respectively.  The Legacy Gramercy Board of Directors paid a dividend of $0.18413 per common stock for the period from October 1, 2015 through December 16, 2015. 

The Board of Directors also declared a dividend on the 7.125% Series A Cumulative Redeemable Preferred Shares for the quarter ending December 31, 2015 in the amount of $0.44531 per share, paid on December 31, 2015 to preferred shareholders of record as of the close of business on December 16, 2015.

Subsequent to quarter end, the Board of Trustees authorized and the Company declared a first quarter 2016 dividend of $0.11 per common share. The dividend is payable on April 15, 2016 to common shareholders of record as of the close of business on March 31, 2016.

The Board of Trustees also declared a dividend on the 7.125% Series A Cumulative Redeemable Preferred Shares for the quarter ending March 31, 2016 in the amount of $0.44531 per share, payable on March 31, 2016 to preferred shareholders of record as of the close of business on March 15, 2016.

Share Repurchase Plan

The Company's Board of Trustees has approved a share repurchase program authorizing the Company to repurchase up to $100 million of the Company's outstanding common shares. The Company anticipates funding the program primarily through proceeds from non-core asset sales.

Purchases under the program will be made from time to time in the open market or in privately negotiated transactions. The timing, manner, price and amount of any repurchases will be determined by the Company in its discretion and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors. The program may be suspended or discontinued at any time.

Company Profile

Gramercy Property Trust is a leading global investor and asset manager of commercial real estate. The Company specializes in acquiring and managing single-tenant, net-leased industrial and office properties purchased through sale-leaseback transactions or directly from property developers and owners. The Company focuses on income producing properties leased to high quality tenants in major markets in the United States and Europe.

To review the Company's latest news releases and other corporate documents, please visit the Company's website at www.gptreit.com or contact Investor Relations at (212) 297-1000.

Conference Call

The Company's executive management team will host a conference call and audio webcast on Friday, February 26, 2016, at 11:00 AM EST to discuss fourth quarter 2015 financial results. Presentation materials will be posted prior to the call on the Company's website, www.gptreit.com.

Interested parties may access the live call by dialing 1-888-317-6003, or for international participants 1-412-317-6061, using passcode 5997627. Additionally, the live call will be webcast in listen-only mode on the Company's website at www.gptreit.com in the Investor Relations section.

A replay of the call will be available at 2:00 PM EST, February 26, 2016 through midnight, March 11, 2016 by dialing 1-877-344-7529, or for international participants 1-412-317-0088, using the access code 10080465.

Disclaimer

Non GAAP Financial Measures

The Company has used non-GAAP financial measures as defined by SEC Regulation G in this press release. A reconciliation of each non-GAAP financial measure and the comparable GAAP financial measure can be found on page 8 of this release.

       

Gramercy Property Trust

Condensed Consolidated Balance Sheets

(Unaudited, dollar amounts in thousands, except per share data)

 

December 31,
2015

December 31,
2014

Assets:
Real estate investments, at cost:
Land $ 702,557 $ 239,503
Building and improvements 3,313,747 828,117
Less: accumulated depreciation (84,627 ) (27,598 )

Total real estate investments, net

3,931,677 1,040,022
Cash and cash equivalents 128,031 200,069
Restricted cash 17,354 1,244
Investment in unconsolidated equity investments 580,000
Servicing advances receivable 1,382 1,485
Retained CDO bonds 7,471 4,293
Assets held for sale, net 420,485
Tenant and other receivables, net 34,234 15,398
Acquired lease assets, net of accumulated amortization of $54,323 and $15,168 682,174 200,231
Deferred costs, net of accumulated amortization of $3,760 and $1,908 20,339 10,355
Goodwill 3,568 3,840
Other assets 14,192   23,063  
Total assets $ 5,840,907   $ 1,500,000  
Liabilities and Equity:
Liabilities:
Senior unsecured credit facility $ 296,724 $
Exchangeable senior notes, net 109,394 107,836
Mortgage notes payable 532,922 161,642
Unsecured notes 100,000
Senior unsecured term loans 1,225,000   200,000  
Total long term debt 2,264,040 469,478
Accounts payable and accrued expenses 59,808 18,806
Dividends payable 8,980 9,579
Accrued interest payable 4,546 2,357
Deferred revenue 36,031 11,592
Below market lease liabilities, net of accumulated amortization of $17,083 and $3,961 242,456 53,826
Liabilities related to assets held for sale 291,364
Derivative instruments, at fair value 3,442 3,189
Other liabilities 8,271   8,263  
Total liabilities 2,918,938   577,090  
Commitments and contingencies
Noncontrolling interest in operating partnership 10,892 16,129
Equity:

Common shares, par value $0.01, 990,000,000 and 220,000,000 shares authorized, 420,523,153
and 149,079,743 shares issued and outstanding at December 31, 2015 and December 31,
2014, respectively.

4,205 1,491

Series A cumulative redeemable preferred shares, par value $0.01, liquidation preference
$87,500, 3,500,000 shares authorized, issued and outstanding at December 31, 2015.

84,394

Series B cumulative redeemable preferred shares, par value $0.01, liquidation preference
$87,500, 3,500,000 shares authorized, issued and outstanding at December 31, 2014.

84,394
Additional paid-in-capital 3,879,932 1,767,533
Accumulated other comprehensive loss (5,751 ) (3,703 )
Accumulated deficit (1,051,454 ) (942,934 )
Total shareholders' equity 2,911,326 906,781
Noncontrolling interest in other partnerships (249 )  
Total equity 2,911,077   906,781  
Total liabilities and equity $ 5,840,907   $ 1,500,000  
 
           

Gramercy Property Trust

Condensed Consolidated Statements of Operations

         (Unaudited, dollar amounts in thousands, except per share data)

   
Three Months Ended
December 31,
Year Ended
December 31,
2015   2014 2015   2014
Revenues
Rental revenue 51,996 22,567 169,986 60,258
Third-party management fees 4,700 6,166 22,271 25,033
Operating expense reimbursements 12,701 8,266 41,814 20,604
Investment income 555 431 1,763 1,824
Other income 25   (3 ) 1,438   221  
Total revenues 69,977   37,427   237,272   107,940  
Operating Expenses
Property operating expenses 13,070 8,109 42,076 21,027
Management expenses 4,889 4,075 19,446 17,593
Depreciation and amortization 29,120 13,957 97,654 36,408
Management, general and administrative 5,495 4,758 19,794 18,416
Acquisition and merger-related expenses 47,832   2,925   61,340   6,171  
Total operating expenses 100,406   33,824   240,310   99,615  
Operating Income (Loss) (30,429 ) 3,603 (3,038 ) 8,325
Other Income (Expense):
Interest expense (11,438 ) (5,516 ) (34,663 ) (16,586 )
Other-than-temporary impairment (2,414 ) (4,064 )
Portion of impairment recognized in other comprehensive loss   (1,659 )   (752 )
Net impairment recognized in earnings (4,073 ) (4,816 )
Loss on derivative instruments (3,300 )
Equity in net income (loss) of unconsolidated equity investments (133 ) 103 (1,107 ) 1,959
Gain on remeasurement of previously held joint venture 72,345
Loss on extinguishment of debt (9,472 )   (9,472 ) (1,925 )
Income (loss) from continuing operations before provision for taxes (51,472 ) (5,883 ) (48,280 ) 56,002
Provision for taxes (37 ) 162   (2,153 ) (809 )
Income (loss) from continuing operations (51,509 ) (5,721 ) (50,433 ) 55,193
Income (loss) from discontinued operations 858   (2 ) 875   (524 )
Income (loss) before net gains on disposals (50,651 ) (5,723 ) (49,558 ) 54,669
Net gains on disposals 246     839    
Net income (loss) (50,405 ) (5,723 ) (48,719 ) 54,669
Net loss attributable to noncontrolling interest 748   132   791   236  
Net income (loss) attributable to Gramercy Property Trust (49,657 ) (5,591 ) (47,928 ) 54,905
Preferred share redemption costs (2,912 )
Preferred share dividends (1,558 ) (1,576 ) (6,234 ) (7,349 )
Net income (loss) available to common shareholders $ (51,215 ) $ (7,167 ) $ (54,162 ) $ 44,644  
Basic earnings per share:
Net income (loss) from continuing operations, after preferred dividends $ (0.23 ) $ (0.07 ) $ (0.30 ) $ 0.53
Net income (loss) from discontinued operations       (0.01 )
Net income (loss) available to common shareholders $ (0.23 ) $ (0.07 ) $ (0.30 ) $ 0.52  
Diluted earnings per share:
Net income (loss) from continuing operations, after preferred dividends $ (0.23 ) $ (0.07 ) $ (0.30 ) $ 0.52
Net income (loss) from discontinued operations       (0.01 )
Net income (loss) available to common shareholders $ (0.23 ) $ (0.07 ) $ (0.30 ) $ 0.51  
Basic weighted average common shares outstanding 218,638,226   106,746,389   182,096,149   83,582,183  

Diluted weighted average common shares and common
share equivalents outstanding

218,638,226   106,746,389   182,096,149   85,925,509  
 
       

Gramercy Property Trust

Reconciliation of Non-GAAP Financial Measure

(Unaudited, dollar amounts in thousands, except per share data)

   
Three Months Ended
December 31,
Year Ended
December 31,
2015   2014 2015   2014
Net income (loss) attributable to common shareholders and unitholders $ (51,215 ) $ (7,167 ) $ (54,162 ) $ 44,644
Add:
Depreciation and amortization 29,120 13,957 97,654 36,408
FFO adjustments for unconsolidated equity investments 1,642 67 2,019 4,086
Net income (loss) attributed to noncontrolling interest (748 ) (132 ) (791 ) (236 )
Net (income) loss from discontinued operations (858 ) 2 (875 ) 524
Less:
Non real estate depreciation and amortization (217 ) (204 ) (870 ) (784 )
Gain on remeasurement of previously held joint venture (72,345 )
Net gain from disposals (246 )   (839 )  

Funds from operations attributable to common
shareholders and unitholders

$ (22,522 ) $ 6,523   $ 42,136   $ 12,297  
Add:
Acquisition costs 435 2,925 6,395 6,171
Acquisition costs for unconsolidated equity investments 510 1,557
Other-than-temporary impairments on retained bonds 4,073 4,816
Merger related costs 47,397 54,945
Loss on extinguishment of debt 9,472 9,472 1,925
Loss on derivative instruments 3,300
Preferred share redemption costs 2,912
Change in preferred share dividends 564
European Fund setup costs 221
Net income from discontinued operations related to properties 1,106 1,106
Less:
Recovery of servicing advances     (1,071 )  

Core funds from operations attributable to common
shareholders and unitholders

$ 36,398   $ 13,521   $ 114,761   $ 31,985  
Add:
Non-cash share-based compensation expense 1,098 803 3,829 2,901
Amortization of market lease assets 1,145 337 3,777 1,310
Amortization of deferred financing costs and non-cash interest 1,061 520 2,331 2,561
Amortization of lease inducement costs 86 43 269 175
Return on construction advances 358
Non-real estate depreciation and amortization 217 204 870 784
Amortization of free rent received at property acquisition 530 175 3,415 544
Less:
AFFO adjustments for unconsolidated equity investments 378 2 259 (793 )
Straight-lined rent (3,266 ) (1,163 ) (12,206 ) (3,995 )
Change in preferred share dividends (1,325 ) (564 )
Amortization of market lease liabilities (3,029 )   (16,026 ) (3,661 )

Adjusted funds from operations attributable to common
shareholders and unitholders

$ 34,618   $ 13,117   $ 101,279   $ 31,605  
Funds from operations per share – basic $ (0.10 ) $ 0.06   $ 0.23   $ 0.15  
Funds from operations per share – diluted $ (0.10 ) $ 0.06   $ 0.22   $ 0.14  
Core funds from operations per share – basic $ 0.16   $ 0.12   $ 0.62   $ 0.38  
Core funds from operations per share – diluted $ 0.16   $ 0.12   $ 0.61   $ 0.37  
Adjusted funds from operations per share – basic $ 0.16   $ 0.12   $ 0.55   $ 0.37  
Adjusted funds from operations per share – diluted $ 0.15   $ 0.12   $ 0.54   $ 0.37  
 
Basic weighted average common shares outstanding – EPS 218,638,226 106,746,389 182,096,149 83,582,183
Phantom shares 410,713 410,713
Weighted average non-vested share based payment awards 1,496,016 934,742 1,336,830
Weighted average partnership units held by noncontrolling interest 1,474,712   1,954,375   1,555,007   824,464  
Weighted average common shares and units outstanding 222,019,667   109,635,506   185,398,699   84,406,647  

Diluted weighted average common shares and common
share equivalents outstanding – EPS(1)

218,638,226 106,746,389 182,096,149 85,925,509
Weighted average partnership units held by noncontrolling interest 1,474,712 1,954,375 1,555,007
Weighted average non-vested share based payment awards 2,881,721 1,939,489 2,722,535
Weighted average stock options 38,079 43,674 52,976
Phantom shares 410,713 472,317 410,713
Dilutive effect of Exchangeable Senior Notes     472,154    
Diluted weighted average common shares and units outstanding 223,443,451   111,156,244   187,309,534   85,925,509  
 
 
(1)

For the three months ended December 31, 2015 and 2014 and for year ended December 31, 2015, the diluted weighted average share calculation, which is the denominator in diluted earnings per share, excludes potentially dilutive securities because they would have been anti-dilutive during those periods. The denominators for diluted earnings per share for the year ended December 31, 2015 are the same and include potentially dilutive securities.

 

Disclaimers

Non-GAAP Financial Measures

The Company has used non-GAAP financial measures as defined by SEC Regulation G in this press release. A reconciliation of each non-GAAP financial measure and the comparable GAAP financial measure can be found on page 10 of this release.

Fund from operations ("FFO"): The revised White Paper on FFO approved by the Board of Governors of the National Association of Real Estate Investment Trusts, or NAREIT, defines FFO as net income (loss) (determined in accordance with GAAP), excluding impairment write-downs of investments in depreciable real estate and investments in in-substance real estate investments, gains or losses from debt restructurings and sales of depreciable operating properties, plus real estate-related depreciation and amortization (excluding amortization of deferred financing costs), less distributions to non-controlling interests and gains/losses from discontinued operations and after adjustments for unconsolidated partnerships and joint ventures.

Core FFO and adjusted funds from operations ("AFFO"): Core FFO and AFFO are presented excluding property acquisition costs, other-than-temporary impairments on retained bonds and other one-time charges. AFFO of the Company also excludes non-cash share-based compensation expense, amortization of above and below market leases, amortization of deferred financing costs, amortization of lease inducement costs, non-real estate depreciation and amortization, amortization of free rent received at property acquisition and straight-line rent. The Company believes that Core FFO and AFFO are useful supplemental measures regarding the Company's operating performances as they provide a more meaningful and consistent comparison of the Company's operating performance and allows investors to more easily compare the Company's operating results.

FFO, Core FFO and AFFO do not represent cash generated from operating activities in accordance with GAAP and should not be considered as alternatives to net income (determined in accordance with GAAP), as indications of our financial performance, or to cash flow from operating activities as measures of our liquidity, nor are they entirely indicative of funds available to fund our cash needs, including our ability to make cash distributions. Our calculations of FFO, Core FFO and AFFO may be different from the calculations used by other companies and, therefore, comparability may be limited.

Forward-looking Information

This press release contains forward-looking information based upon the Company's current best judgment and expectations. Actual results could vary from those presented herein. The risks and uncertainties associated with forward-looking information in this release include, but are not limited to, factors that are beyond the Company's control, including the factors listed in the Company's Annual Report on Form 10-K, in the Company's Quarterly Reports on Form 10-Q and in the Company's Current Reports on Form 8-K. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For further information, please refer to the Company's filings with the Securities and Exchange Commission.

Jon W. Clark, 212-297-1000
Chief Financial Officer
or
Brittany A. Sanders, 212-297-1000
Investor Relations

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