CRT's Q1 Revenues Rise as Profits Dip

Revenue reached almost to $49.3 million in the opening quarter of this year, compared with a little more than $39.5 million in the same quarter a year ago. However, this year's first-quarter operating expenses were just over $31.1 million, compared with nearly $27.6 million in first quarter 2004. Consequently, net income in the most recent earnings report was $2.1 million, compared with $3.2 million for the same quarter of the previous year.

The latest quarter "saw steady growth in occupancy," according to Thomas Crocker, CEO. Overall occupancy in the company's 136-property portfolio was 82.9% at the end of first quarter, he said during a conference call, and he predicted portfolio occupancy of 88.5% by year-end. "We're seeing robust employment," at levels last reached in 2000, he said. Vacancies for the full portfolio dropped from 18% to just below 16% in first quarter, with drops in all of the company's markets except for Memphis, where he said vacancy remained flat.

While CRT made no acquisitions during first quarter, Crocker said, "$200 million is earmarked for acquisition this year. We see JVs as a way to access additional capital," he added. "We're looking at all of South Florida, especially Brickell and Downtown in Miami, and Downtown Fort Lauderdale and Palm Beach along with Atlanta, particularly the Buckhead submarket."

Meanwhile, CRT has issued a proxy statement to shareholders seeking approval to reincorporate from Florida to Maryland and convert to an UpREIT. "We want all the tools our competitors have and more," Crocker said. "This will give up equal footing with our competitors among tax-motivated sellers," he said referring to UpREITS' ability to allow sellers to defer capital gains tax. With shareholder approval, the conversion is expected to take place some time mid-year, according to Terence McNally, SVP and CFO.

In addition, Crocker said, "we think it's a sensible time in the cycle to be in the development business." CRT is in the early stages of actively building a land inventory in South Florida and working on plans for a mixed-use development in Atlanta's Buckhead submarket, Crocker reported.