DENVER-AmeriVest Properties Inc. reports that its funds from operation for the second quarter was approximately $1.37 million, or 6 cents per share, compared with approximately $2.8 million, or 12 cents per share, for the same period in 2004. The company also reports a net loss for the second quarter of 2005 of approximately $3.09 million, or 13 cents per share, compared with a loss of approximately $547,600, or 2 cents per share, for the same period of 2004.
For the six months ended June 30, FFO totaled approximately $3.77 million, or 16 cents per share, compared to approximately $4.67 million, or 22 cents per share for the same period in 2004. The net loss recognized by the company for the same period was approximately $5.675 million, or 24 cents per share in 2005, compared to approximately $922,600, or 4 cents per share in 2004.
Rental revenue for the second quarter of 2005 increased 11% over the prior year period due primarily to the company's 2004 acquisitions. The second quarter 2005 results include the operating impact resulting from the acquisitions of Hackberry View, Parkway Centre III and Hampton Court, all in the Dallas area. Offsetting that, however, is that property operating expenses for the second quarter of 2005 increased by 18.4% over the same period in 2004 due primarily to the company's growth and increases in property taxes and utility costs.
General and administrative expenses increased approximately $498,500, or 51%, for the second quarter of 2005 compared with the same period in 2004. The second quarter of 2005 included approximately $285,400 in severance for William Atkins, the company's former CEO, and approximately $230,000 in expenses related to the company's compliance with, and the reporting of its compliance with, the control requirements under the Sarbanes-Oxley Act, including increases in audit and consulting fees and related expenses.
During the second quarter of 2005, the company also recognized approximately $124,000 of costs related to the continuing review of strategic alternatives. Interest expense increased approximately $1.2 million, or 43.7%, during the second quarter of 2005 as compared to the same period of 2004, primarily due to increased borrowings for acquisitions and working capital and an increase in interest rates.
The second quarter results continue to reflect the effect of rate roll-downs in several of the company's markets together with the loss of a 37,000-sf tenant at the company's Financial Plaza property, in Mesa, AZ. That was partially offset by new leasing, which commenced during the quarter. Occupancy increased to 89.4% at June 30, with approximately 66,000 sf of leases commencing later in the year. Signed leases do not impact revenues as AmeriVest does not recognize revenue until the tenant has moved in and the lease has commenced, although the leased space is included in the occupancy rate.
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