Catellus Development Corp. said Tuesday its net income for the second three months of the year was $26.1 million, or 24 cents a diluted share, versus $17.8 million, or 16 cents a diluted share, for the second quarter of 1999.

Earnings were well below analyst estimates of 34 cents a share. Catellus stock closed up 12.5 cents at $17.19, after hitting a 52-week high of $17.68 a share in intraday trading on Monday. Despite that, a company spokesman told the company feels Wall Street is under valuing the company.

Capitalizing on its opinion, the company continued a nine-month-old stock buyback program, taking back 796,000 shares in the quarter for a total cost of $11.3 million. Through the end of July, Catellus has purchased 1,979,200 shares of common stock for a total cost of$28.4 million.

Second quarter earnings before depreciation and deferred taxes (EBDDT) were $41.7 million, or 38 cents a diluted share, a 30 percent leap from EBDDT of $32 million, or 29 cents a diluted share, in the second quarter of 1999. The real estate operating company’ s chairman and CEO Nelson Rising said continuing strong economic conditions in core markets and very significant transactions put the company “well ahead” of its goal of growing EBDDT by 15%.

The commercial group was a major factor. Besides starting construction of two million square feet of commercial space in the quarter, the group:

–completed and added approximately 1.4 million square feet of commercial space to the rental portfolio at an approximate cost of $46.7 million. When stabilized, the new space is expected to make an annual contribution to operating income of $5.3 million versus the $800,000 it contributed during the second quarter.

–had five million square feet under construction, 3.9 msf of which the company expects to add to its portfolio. Approximately 90% of this space is pre-leased to tenants, the company reports. When complete and fully leased, the 3.9 msf is expected to cost $143 million and contribute approximately $16.4 million to operating income on an annual basis.

–sold $59.3 million in commercial and other properties (excluding sales of non-strategic assets) during the second quarter. At June 30, an additional $55.8 million of property sales were under contract but not yet closed. Additionally, it owned or controlled industrial/suburban commercial land capable of supporting an estimated 29.4 million square feet of development, including the recently approved space at Pacific Commons in Fremont, Calif.

The company began construction on 260,000 square feet at Pacific Commons in July, including the 74,000 square feet of industrial space leased to Intel Corporation. Negotiations are underway with other Silicon Valley companies for the remaining available space. At June 30, 2000, Catellus’ core portfolio included 26.1 million square feet of industrial, office and retail space that was 95.6% occupied.

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