Mixed REIT Results Show Market Flux

In Los Angeles, Kilroy Realty's FFO for 2009 totaled $107.2 million and $2.60 per share, down from 2008, and net income of $21.8 million and 53 cents per share―down from 2008 but still good enough to offset a $3 million loss in the fourth quarter. New York City's Brookfield Properties reported FFO of $648 million and $1.48 per diluted share for the full year, up from 2008, and net income of $317 million, compared with $221 million on a comparative basis with last year―excluding a one-time gain of $479 million associated with the conversion of certain of the company's US properties to a REIT. Also in New York City, SL Green, as noted previously on GlobeSt.com, reported a 12.4% increase in funds from operations for the quarter that ended Dec. 31, with FFO for the quarter of $69.1 million compared to $61.5 million for the same quarter in 2008.

The REIT results, although mixed, generally showed positive trends from this time last year. Boston Properties president Doug Linde capsulized the change in market conditions in the past year during that REIT's earnings conference call. "In some ways the markets really have come a long way over the past 12 months," the Boston Properties president said. Leasing activity "was largely non-existent" when the company held its year-end conference call for 2008, but the company "ended 2009 with significantly more activity than anybody had predictedm including ourselves, particularly in New York city," Linde noted.

Leasing activity has also grown more consistent in other markets as tenants have begun to make decisions, and capital has returned to the markets, as illustrated by the funds that REITs have raised in public offerings, he pointed out.

Kilroy Realty's president and CEO, John B. Kilroy, sounded a similar leasing theme in that comany's year-end summation. "We made tremendous and encouraging progress in our leasing program during the fourth quarter," Kilroy said, "with results that exceeded our efforts through the first three quarters of 2009 combined." Nonetheless, Kilroy added, "We expect real estate markets to remain choppy going forward until job growth resumes."

The general improvement in the markets over the past year has been reflected in the results of non-REIT publicly held real estate companies. For example, along with strategic moves that the company made, the generally improving conditions produced positive results at Los Angeles-based CB Richard Ellis.

CBRE's Brett White opened that company's earnings conference call with the news that the company achieved what he called "a modest increase in total fourth quarter revenues compared to 2008." Said White, "This is the firstyear-over-year increase we've experienced in seven quarters."

CBRE reported fourth-quarter 2009 net income of $64.3 million and diluted earnings per share of 21 cents on revenue of $1.3 billion. The results compared with fourth quarter 2008 revenue of $1.28 billion and a net loss of $1.1 billion, or $4.70 loss per diluted share.