Maryland
|
20-3126457
|
|||
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
|||
incorporation
or organization)
|
Identification
No.)
|
|||
4401
Barclay Downs Drive, Suite 300
|
||||
Charlotte,
North Carolina
|
28209
|
|||
(Address
of principal executive offices)
|
(Zip
code)
|
Large accelerated
filer o
|
Accelerated filer
x
|
Non-accelerated
filer o
|
Smaller
reporting company o.
|
(Do
not check if a smaller reporting company)
|
Page
|
|||
PART
I
|
FINANCIAL
INFORMATION
|
||
Item
1
|
Financial
Statements
|
1
|
|
Item
2
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
18
|
|
Item
3
|
Quantitative
and Qualitative Disclosures about Market Risk
|
32
|
|
Item
4
|
Controls
and Procedures
|
32
|
|
PART
II
|
Other
Information
|
||
Item
1
|
Legal
Proceedings
|
33
|
|
Item
1A
|
Risk
Factors
|
33
|
|
Item
2
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
33
|
|
Item
3
|
Defaults
Upon Senior Securities
|
33
|
|
Item
4
|
Submission
of Matters to a Vote of Security Holders
|
33
|
|
Item
5
|
Other
Information
|
33
|
|
Item
6
|
Exhibits
|
33
|
March
31,
2009
|
December
31,
2008
|
|||||||
Assets
|
||||||||
Real
estate properties:
|
||||||||
Land
|
$ | 30,673 | $ | 30,673 | ||||
Buildings
and improvements
|
502,690 | 501,259 | ||||||
Less:
Accumulated depreciation
|
(75,447 | ) | (69,285 | ) | ||||
Net
operating real estate properties
|
457,916 | 462,647 | ||||||
Construction
in progress
|
21,881 | 15,314 | ||||||
Net
real estate properties
|
479,797 | 477,961 | ||||||
Cash
and cash equivalents
|
12,400 | 34,668 | ||||||
Restricted
cash
|
12,686 | 12,964 | ||||||
Tenant
and accounts receivable, net of allowance of $204 in 2009 and $194 in
2008
|
34,701 | 43,523 | ||||||
Goodwill
|
108,683 | 180,435 | ||||||
Trade
names and trademarks
|
41,240 | 75,969 | ||||||
Intangible
assets, net of accumulated amortization of $41,837 in 2009 and $38,054 in
2008
|
27,144 | 45,363 | ||||||
Other
assets
|
31,484 | 29,207 | ||||||
Total
assets
|
$ | 748,135 | $ | 900,090 | ||||
Liabilities
and equity
|
||||||||
Mortgage
notes payable
|
$ | 243,030 | $ | 240,736 | ||||
Revolving
credit facility
|
112,000 | 124,500 | ||||||
Term
loan
|
100,000 | 100,000 | ||||||
Accounts
payable
|
17,978 | 22,090 | ||||||
Billings
in excess of costs and estimated earnings on uncompleted
contracts
|
19,123 | 17,025 | ||||||
Deferred
income taxes
|
14,510 | 34,176 | ||||||
Payable
to prior Erdman shareholders
|
18,002 | 18,002 | ||||||
Other
liabilities
|
48,481 | 60,567 | ||||||
Total
liabilities
|
573,124 | 617,096 | ||||||
Commitments
and contingencies
|
||||||||
Equity:
|
||||||||
Cogdell
Spencer Inc. stockholders’ equity:
|
||||||||
Preferred
stock, $0.01 par value; 50,000 shares authorized, none issued or
outstanding
|
— | — | ||||||
Common
stock; $0.01 par value; 200,000 shares authorized, 19,488 and 17,699
shares issued and outstanding in 2009 and 2008,
respectively
|
195 | 177 | ||||||
Additional
paid-in capital
|
292,971 | 275,380 | ||||||
Accumulated
other comprehensive loss
|
(5,806 | ) | (5,106 | ) | ||||
Accumulated
deficit
|
(152,042 | ) | (77,438 | ) | ||||
Total
Cogdell Spencer Inc. stockholders’ equity
|
135,318 | 193,013 | ||||||
Noncontrolling
interests:
|
||||||||
Real
estate partnerships
|
4,658 | 4,657 | ||||||
Operating
partnership
|
35,035 | 85,324 | ||||||
Total
noncontrolling interests
|
39,693 | 89,981 | ||||||
Total
equity
|
175,011 | 282,994 | ||||||
Total
liabilities and equity
|
$ | 748,135 | $ | 900,090 |
For
the Three Months Ended
|
||||||||
March
31,
2009
|
March
31,
2008
|
|||||||
Revenues:
|
||||||||
Rental
revenue
|
$ | 19,665 | $ | 18,691 | ||||
Design-Build
contract revenue and other sales
|
46,390 | 23,936 | ||||||
Property
management and other fees
|
850 | 841 | ||||||
Development
management and other income
|
2,799 | 19 | ||||||
Total
revenues
|
69,704 | 43,487 | ||||||
Expenses:
|
||||||||
Property
operating and management
|
7,927 | 7,199 | ||||||
Design-Build
contracts and development management
|
40,165 | 21,043 | ||||||
Selling,
general, and administrative
|
6,667 | 4,306 | ||||||
Depreciation
and amortization
|
10,111 | 9,025 | ||||||
Impairment
charges
|
120,920 | — | ||||||
Total
expenses
|
185,790 | 41,573 | ||||||
Income
(loss) from operations before other income (expense) and income tax
benefit
|
(116,086 | ) | 1,914 | |||||
Other
income (expense):
|
||||||||
Interest
and other income
|
155 | 255 | ||||||
Interest
expense
|
(6,025 | ) | (5,096 | ) | ||||
Equity
in earnings of unconsolidated real estate partnerships
|
6 | 3 | ||||||
Total
other income (expense)
|
(5,864 | ) | (4,838 | ) | ||||
Loss
from operations before income tax benefit
|
(121,950 | ) | (2,924 | ) | ||||
Income
tax benefit
|
19,626 | 358 | ||||||
Net
loss
|
(102,324 | ) | (2,566 | ) | ||||
Net
loss (income) attributable to the noncontrolling interest
in:
|
||||||||
Real
estate partnerships
|
(92 | ) | 13 | |||||
Operating
partnership
|
32,198 | 752 | ||||||
Net
loss attributable to Cogdell Spencer Inc.
|
$ | (70,218 | ) | $ | (1,801 | ) | ||
Net
loss per share attributable to Cogdell Spencer Inc. - basic and
diluted
|
$ | (3.90 | ) | $ | (0.13 | ) | ||
Weighted
average common shares - basic and diluted
|
17,995 | 14,364 |
Cogdell
Spencer Inc. Stockholders
|
||||||||||||||||||||||||||||||||
Total
Equity
|
Comprehensive
Loss
|
Accumulated
Deficit
|
Accumulated
Other
Comprehensive
Loss
|
Common
Stock
|
Additional
Paid-in
Capital
|
Noncontrolling
Interests
in
Operating
Partnership
|
Noncontrolling
Interests
in
Real
Estate
Partnerships
|
|||||||||||||||||||||||||
Balance
at December 31, 2008
|
$ | 282,994 | $ | — | $ | (77,438 | ) | $ | (5,106 | ) | $ | 177 | $ | 275,380 | $ | 85,324 | $ | 4,657 | ||||||||||||||
Comprehensive
loss:
|
||||||||||||||||||||||||||||||||
Net
income (loss)
|
(102,324 | ) | (102,324 | ) | (70,218 | ) | — | — | — | (32,198 | ) | 92 | ||||||||||||||||||||
Unrealized
gain (loss) on interest rate swaps, net of tax
|
(164 | ) | (164 | ) | — | (236 | ) | — | — | (108 | ) | 180 | ||||||||||||||||||||
Comprehensive
loss
|
(102,488 | ) | $ | (102,488 | ) | |||||||||||||||||||||||||||
Conversion
of operating partnership units to common stock
|
— | — | 464 | 18 | 17,496 | (17,050 | ) | — | ||||||||||||||||||||||||
Restricted
stock and LTIP unit grants
|
817 | — | — | — | 79 | 738 | — | |||||||||||||||||||||||||
Amortization
of restricted stock grants
|
25 | — | — | — | 16 | 9 | — | |||||||||||||||||||||||||
Dividends
and distributions
|
(6,337 | ) | (4,386 | ) | — | — | — | (1,680 | ) | (271 | ) | |||||||||||||||||||||
Balance
at March 31, 2009
|
$ | 175,011 | $ | (152,042 | ) | $ | (5,806 | ) | $ | 195 | $ | 292,971 | $ | 35,035 | $ | 4,658 |
Cogdell
Spencer Inc. Stockholders
|
||||||||||||||||||||||||||||||||
Total
Equity
|
Comprehensive
Loss
|
Accumulated
Deficit
|
Accumulated
Other
Comprehensive
Loss
|
Common
Stock
|
Additional
Paid-in
Capital
|
Noncontrolling
Interests
in
Operating
Partnership
|
Noncontrolling
Interests
in
Real
Estate
Partnerships
|
|||||||||||||||||||||||||
Balance
at December 31, 2007
|
$ | 162,256 | $ | — | $ | (50,751 | ) | $ | (884 | ) | $ | 119 | $ | 166,901 | $ | 44,437 | $ | 2,434 | ||||||||||||||
Comprehensive
loss:
|
||||||||||||||||||||||||||||||||
Net
loss
|
(2,566 | ) | (2,566 | ) | (1,801 | ) | — | — | — | (752 | ) | (13 | ) | |||||||||||||||||||
Unrealized
loss on interest rate swaps, net of tax
|
(1,772 | ) | (1,772 | ) | — | (1,145 | ) | — | — | (568 | ) | (59 | ) | |||||||||||||||||||
Comprehensive
loss
|
(4,338 | ) | $ | (4,338 | ) | |||||||||||||||||||||||||||
Issuance
of common stock and operating partnership units, net of
costs
|
107,839 | — | — | 35 | 53,698 | 54,106 | — | |||||||||||||||||||||||||
Investment
in real estate costs contributed by partner in a consolidated real estate
partnership
|
135 | — | — | — | — | — | 135 | |||||||||||||||||||||||||
Redemptions
of operating partnership units
|
(120 | ) | — | (120 | ) | — | ||||||||||||||||||||||||||
Restricted
stock and LTIP unit grants
|
728 | — | — | — | 94 | 634 | — | |||||||||||||||||||||||||
Amortization
of restricted stock grants
|
25 | — | — | — | 16 | 9 | — | |||||||||||||||||||||||||
Dividends
and distributions
|
(8,584 | ) | (5,397 | ) | — | — | — | (3,133 | ) | (54 | ) | |||||||||||||||||||||
Adjustment
to record change of interest in the operating partnership due to the
issuance of operating partnership units in excess of book
value
|
14,502 | — | — | — | 14,502 | — | — | |||||||||||||||||||||||||
Balance
at March 31, 2008
|
$ | 272,443 | $ | (57,949 | ) | $ | (2,029 | ) | $ | 154 | $ | 235,211 | $ | 94,613 | $ | 2,443 |
For
the Three Months Ended
|
||||||||
March
31,
2009
|
March
31,
2008
|
|||||||
Operating
activities:
|
||||||||
Net
loss
|
$ | (102,324 | ) | $ | (2,566 | ) | ||
Adjustments
to reconcile net loss to cash provided by operating
activities:
|
||||||||
Depreciation
and amortization
|
10,111 | 9,060 | ||||||
Amortization
of acquired above market leases and acquired below market leases,
net
|
(131 | ) | (188 | ) | ||||
Straight
line rental revenue
|
(118 | ) | (113 | ) | ||||
Amortization
of deferred finance costs and debt premium
|
423 | 135 | ||||||
Deferred
income taxes
|
(19,666 | ) | (562 | ) | ||||
Equity-based
compensation
|
842 | 754 | ||||||
Equity
in earnings of unconsolidated real estate partnerships
|
(6 | ) | (3 | ) | ||||
Impairment
of intangible assets
|
120,920 | — | ||||||
Changes
in operating assets and liabilities:
|
||||||||
Tenant
and accounts receivable and other assets
|
7,119 | 1,185 | ||||||
Accounts
payable and other liabilities
|
(17,123 | ) | (12,159 | ) | ||||
Billings
in excess of costs and estimated earnings on uncompleted
contracts
|
2,098 | 1,741 | ||||||
Net
cash provided by (used in) operating activities
|
2,145 | (2,716 | ) | |||||
Investing
activities:
|
||||||||
Business
acquisitions, net of cash acquired
|
— | (124,086 | ) | |||||
Investment
in real estate properties
|
(7,048 | ) | (23,255 | ) | ||||
Purchase
of noncontrolling interests in operating partnership
|
— | (174 | ) | |||||
Proceeds
from sales-type capital lease
|
76 | 77 | ||||||
Purchase
of corporate property, plant and equipment
|
(1,020 | ) | (47 | ) | ||||
Distributions
received from unconsolidated real estate partnerships
|
5 | 5 | ||||||
Decrease
(increase) in restricted cash
|
278 | (21,071 | ) | |||||
Net
cash used in investing activities
|
(7,709 | ) | (168,551 | ) | ||||
Financing
activities:
|
||||||||
Proceeds
from mortgage notes payable
|
3,309 | — | ||||||
Repayments
of mortgage notes payable
|
(997 | ) | (717 | ) | ||||
Proceeds
from revolving credit facility
|
— | 90,500 | ||||||
Repayments
to revolving credit facility
|
(12,500 | ) | (53,700 | ) | ||||
Proceeds
from term loan
|
— | 100,000 | ||||||
Net
proceeds from sale of common stock
|
— | 53,733 | ||||||
Dividends
and distributions
|
(6,022 | ) | (5,737 | ) | ||||
Equity
contribution from noncontrolling interest in real estate
partnerships
|
— | 135 | ||||||
Distributions
to noncontrolling interests in real estate partnerships
|
(271 | ) | (54 | ) | ||||
Payment
of deferred financing costs
|
(223 | ) | (2,867 | ) | ||||
Net
cash provided by (used in) financing activities
|
(16,704 | ) | 181,293 | |||||
Increase
(decrease) in cash and cash equivalents
|
(22,268 | ) | 10,026 | |||||
Balance
at beginning of period
|
34,668 | 3,555 | ||||||
Balance
at end of period
|
$ | 12,400 | $ | 13,581 | ||||
Supplemental
disclosure of cash flow information:
|
||||||||
Cash
paid for interest, net of capitalized interest
|
$ | 5,503 | $ | 4,874 | ||||
Cash
paid for income taxes
|
$ | 1 | $ | — | ||||
Supplemental
cash flow information - noncash investing and financing
activities:
|
||||||||
Operating
Partnership Units converted into common stock
|
$ | 17,514 | $ | — | ||||
Investment
in real estate properties included in accounts payable and other
liabilities
|
898 | 714 | ||||||
Accrued
dividends and distributions
|
6,088 | 8,551 | ||||||
Operating
Partnership Units issued or to be issued in connection with the
acquisition of a business or real estate property
|
— | 81,347 |
1.
|
Business
Description
|
2.
|
Summary
of Significant Accounting
Policies
|
|
·
|
the minimum adjusted consolidated EBITDA covenant will
be
eliminated,
|
|
·
|
the maximum adjusted consolidated
senior indebtedness to adjusted consolidated EBITDA will be modified to
3.50 to 1.00 through March 2011 and 3.00 to 1.00 from April 2011 to final
maturity,
|
|
·
|
the interest rate will increase from LIBOR plus 3.50% to
LIBOR plus 4.50%,
and
|
|
·
|
a payment of a market based
modification fee.
|
3.
|
Investments
in Real Estate Partnerships
|
●
|
Cogdell
Spencer Medical Partners LLC, a Delaware limited liability company,
founded in 2008, has no assets as of March 31, 2009, and 20.0% owned by
the Company;
|
|
●
|
BSB
Health/MOB Limited Partnership No. 2, a Delaware limited partnership,
founded in 2002, owns nine medical office buildings, and 2.0% owned by the
Company;
|
|
●
|
Shannon
Health/MOB Limited Partnership No. 1, a Delaware limited partnership,
founded in 2001, owns ten medical office buildings, and 2.0% owned by the
Company; and
|
|
●
|
McLeod
Medical Partners, LLC, a South Carolina limited liability company, founded
in 1982, owns three medical office buildings, and 1.1% owned by the
Company.
|
●
|
Genesis
Property Holdings, LLC, a Florida limited liability company, founded in
2007, has one medical office building under construction, and 40.0% owned
by the Company;
|
●
|
Cogdell
General Health Campus MOB, LP, a Pennsylvania limited partnership, founded
in 2006, owns one medical office building, and 80.9% owned by the
Company;
|
|
●
|
Mebane
Medical Investors, LLC, a North Carolina limited liability company,
founded in 2006, owns one medical office building, and 35.1% owned by the
Company; and
|
|
●
|
Rocky
Mount MOB, LLC, a North Carolina limited liability company, founded in
2002, owns one medical office building, and 34.5% owned by the
Company.
|
|
March
31,
2009
|
December
31,
2008
|
|||||||
Financial
position:
|
|||||||||
Total
assets
|
$ | 56,110 | $ | 56,262 | |||||
Total
liabilities
|
49,631 | 49,831 | |||||||
Members’
equity
|
6,479 | 6,431 |
For
the Three Months Ended
|
|||||||||
|
March
31, 2009
|
March
31, 2008
|
|||||||
Results
of operations:
|
|||||||||
Total
revenues
|
$ | 3,068 | $ | 3,068 | |||||
Operating
and general and administrative expenses
|
1,376 | 1,417 | |||||||
Net
income
|
235 | 225 |
4.
|
Business
Segments
|
Three
months ended March 31, 2009:
|
Property
Operations
|
Design-Build
and
Development
|
Unallocated
and
Other
|
Total
|
||||||||||||
Revenues:
|
||||||||||||||||
Rental
revenue
|
$ | 19,665 | $ | — | $ | — | $ | 19,665 | ||||||||
Design-Build
contract revenue and other sales
|
— | 46,390 | — | 46,390 | ||||||||||||
Property
management and other fees
|
850 | — | — | 850 | ||||||||||||
Development
management and other income
|
— | 2,799 | — | 2,799 | ||||||||||||
Total
revenues
|
20,515 | 49,189 | — | 69,704 | ||||||||||||
Certain
operating expenses:
|
||||||||||||||||
Property
operating and management
|
7,927 | — | — | 7,927 | ||||||||||||
Design-Build
contracts and development management
|
— | 40,165 | — | 40,165 | ||||||||||||
Selling,
general, and administrative
|
— | 4,514 | — | 4,514 | ||||||||||||
Impairment
charges
|
— | 120,920 | — | 120,920 | ||||||||||||
Total
certain operating expenses
|
7,927 | 165,599 | — | 173,526 | ||||||||||||
12,588 | (116,410 | ) | — | (103,822 | ) | |||||||||||
Interest
and other income
|
141 | 1 | 13 | 155 | ||||||||||||
Corporate
general and administrative expenses
|
— | — | (2,153 | ) | (2,153 | ) | ||||||||||
Interest
expense
|
— | — | (6,025 | ) | (6,025 | ) | ||||||||||
Benefit
from income taxes applicable to funds from operations
modified
|
— | — | 18,642 | 18,642 | ||||||||||||
Non-real
estate related depreciation and amortization
|
— | (193 | ) | (54 | ) | (247 | ) | |||||||||
Earnings
from unconsolidated real estate partnerships, before real estate related
depreciation and amortization
|
9 | — | — | 9 | ||||||||||||
Noncontrolling
interests in real estate partnerships, before real estate related
depreciation and amortization
|
(245 | ) | — | — | (245 | ) | ||||||||||
Funds
from operations modified (FFOM)
|
12,493 | (116,602 | ) | 10,423 | (93,686 | ) | ||||||||||
Amortization
of intangibles related to purchase accounting, net of income tax
benefit
|
(42 | ) | (2,482 | ) | 984 | (1,540 | ) | |||||||||
Funds
from operations (FFO)
|
12,451 | (119,084 | ) | 11,407 | (95,226 | ) | ||||||||||
Real
estate related depreciation and amortization
|
(7,343 | ) | — | — | (7,343 | ) | ||||||||||
Noncontrolling
interests in real estate partnerships, before real estate related
depreciation and amortization
|
245 | — | — | 245 | ||||||||||||
Net
income (loss)
|
5,353 | (119,084 | ) | 11,407 | (102,324 | ) | ||||||||||
Net
loss (income) attributable to the noncontrolling interest
in:
|
||||||||||||||||
Real
estate partnerships
|
(92 | ) | — | — | (92 | ) | ||||||||||
Operating
partnership
|
— | — | 32,198 | 32,198 | ||||||||||||
Net
income (loss) attributable to Cogdell Spencer Inc.
|
$ | 5,261 | $ | (119,084 | ) | $ | 43,605 | $ | (70,218 | ) | ||||||
Total
assets
|
$ | 653,839 | $ | 93,351 | $ | 945 | $ | 748,135 |
Three
months ended March 31, 2008:
|
Property
Operations
|
Design-Build
and
Development
|
Unallocated
and
Other
|
Total
|
||||||||||||
Revenues:
|
||||||||||||||||
Rental
revenue
|
$ | 18,691 | $ | — | $ | — | $ | 18,691 | ||||||||
Design-Build
contract revenue and other sales
|
— | 23,936 | — | 23,936 | ||||||||||||
Property
management and other fees
|
841 | — | — | 841 | ||||||||||||
Development
management and other income
|
— | 19 | — | 19 | ||||||||||||
Total
revenues
|
19,532 | 23,955 | — | 43,487 | ||||||||||||
Certain
operating expenses:
|
||||||||||||||||
Property
operating and management
|
7,199 | — | — | 7,199 | ||||||||||||
Desin-Build
conracts and development management
|
— | 21,043 | — | 21,043 | ||||||||||||
Selling,
general, and administrative
|
— | 1,881 | — | 1,881 | ||||||||||||
Total
certain operating expenses
|
7,199 | 22,924 | — | 30,123 | ||||||||||||
12,333 | 1,031 | — | 13,364 | |||||||||||||
Interest
and other income
|
161 | 40 | 54 | 255 | ||||||||||||
Corporate
general and administrative expenses
|
— | — | (2,425 | ) | (2,425 | ) | ||||||||||
Interest
expense
|
— | — | (5,096 | ) | (5,096 | ) | ||||||||||
Provision
for income taxes applicable to funds from operations
modified
|
— | — | (64 | ) | (64 | ) | ||||||||||
Non-real
estate related depreciation and amortization
|
— | (115 | ) | (52 | ) | (167 | ) | |||||||||
Earnings
from unconsolidated real estate partnerships, before real estate related
depreciation and amortization
|
6 | — | — | 6 | ||||||||||||
Noncontrolling
interests in real estate partnerships, before real estate related
depreciation and amortization
|
(78 | ) | — | — | (78 | ) | ||||||||||
Funds
from operations modified (FFOM)
|
12,422 | 956 | (7,583 | ) | 5,795 | |||||||||||
Amortization
of intangibles related to purchase accounting, net of income tax
benefit
|
(42 | ) | (1,028 | ) | 422 | (648 | ) | |||||||||
Funds
from operations (FFO)
|
12,380 | (72 | ) | (7,161 | ) | 5,147 | ||||||||||
Real
estate related depreciation and amortization
|
(7,791 | ) | — | — | (7,791 | ) | ||||||||||
Noncontrolling
interests in real estate partnerships, before real estate related
depreciation and amortization
|
78 | — | — | 78 | ||||||||||||
Net
income (loss)
|
4,667 | (72 | ) | (7,161 | ) | (2,566 | ) | |||||||||
Net
loss (income) attributable to the noncontrolling interest
in:
|
||||||||||||||||
Real
estate partnerships
|
13 | — | — | 13 | ||||||||||||
Operating
partnership
|
— | — | 752 | 752 | ||||||||||||
Net
income (loss) attributable to Cogdell Spencer Inc.
|
$ | 4,680 | $ | (72 | ) | $ | (6,409 | ) | $ | (1,801 | ) | |||||
Total
assets
|
$ | 561,503 | $ | 350,926 | $ | 799 | $ | 913,228 |
5.
|
Contracts
|
March
31,
2009
|
December
31,
2008
|
|||||||
Costs
and estimated earnings on uncompleted contracts
|
$ | 151,752 | $ | 165,891 | ||||
Billings
to date
|
(163,614 | ) | (176,210 | ) | ||||
Net
billings in excess of costs and estimated earnings
|
$ | (11,862 | ) | $ | (10,319 | ) |
March
31,
2009
|
December
31,
2008
|
|||||||
Costs
and estimated earnings in excess of billings (1)
|
$ | 7,261 | $ | 6,706 | ||||
Billings
in excess of costs and estimated earnings
|
(19,123 | ) | (17,025 | ) | ||||
Net
billings in excess of costs and estimated earnings
|
$ | (11,862 | ) | $ | (10,319 | ) |
6.
|
Goodwill
and Intangible Assets
|
Recorded
Value as
of
March 31, 2009
|
Fair
Value Measurement as of March 31, 2009
|
|||||||||||||||||||
Description
|
Level
1
|
Level
2
|
Level
3
|
Total
Losses
|
||||||||||||||||
Goodwill
|
$ | 108,683 | $ | — | $ | — | $ | 108,683 | $ | (71,755 | ) | |||||||||
Trade
names and trademarks
|
41,240 | — | — | 41,240 | (34,728 | ) | ||||||||||||||
Acquired
signed contracts
|
1,398 | — | — | 5,281 | — | |||||||||||||||
Acquired
proposals
|
2,129 | — | — | 2,129 | (1,833 | ) | ||||||||||||||
Acquired
customer relationships
|
1,789 | — | — | 1,789 | (12,604 | ) | ||||||||||||||
$ | 155,239 | $ | — | $ | — | $ | 159,122 | $ | (120,920 | ) |
March
31,
2009
|
December
31,
2008
|
||||||||
Acquired
signed contracts, net of accumulated amortization of $11,855 and $11,389
in 2009 and 2008, respectively.
|
$ | 1,398 | $ | 1,864 | |||||
Acquired
proposals, net of accumulated amortization of $2,206 and $886 in 2009 and
2008, respectively.
|
2,129 | 5,282 | |||||||
Acquired
customer relationships, net of accumulated amortization of $1,339 and $644
in 2009 and 2008, respectively.
|
1,789 | 15,088 | |||||||
Acquired
above market leases, net of accumulated amortization of $799 and $748 in
2009 and 2008, respectively.
|
760 | 811 | |||||||
Acquired
in place lease value and deferred leasing costs, net of accumulated
amortization of $24,749 and $23,573 in 2009 and 2008,
respectively.
|
16,296 | 17,472 | |||||||
Acquired
ground leases, net of accumulated amortization of $420 and $389 in 2009
and 2008, respectively.
|
3,142 | 3,173 | |||||||
Acquired
property management contracts, net of accumulated amortization of $467 and
$425 in 2009 and 2008, respectively.
|
1,630 | 1,673 | |||||||
Total
amortizing intangible assets, net
|
$ | 27,144 | $ | 45,363 |
7.
|
Mortgage
Notes Payable and Borrowing
Agreements
|
For
the period ending:
|
|||||
2009
|
$
|
49,854
|
|||
2010
|
31,781
|
||||
2011
|
238,067
|
||||
2012
|
23,131
|
||||
2013
|
13,855
|
||||
Thereafter
|
98,148
|
||||
454,836
|
|||||
Unamortized
premium
|
194
|
||||
$
|
455,030
|
8.
|
Derivative
Financial Instruments
|
Notional
Amount
as of
March
31, 2009
|
||||||||||||||||||||||||
Effective
Date
|
Expiration
Date
|
March
31, 2009
|
December
31, 2008
|
|||||||||||||||||||||
Entity
|
Receive
Rate
|
Pay
Rate
|
Asset
|
Liability
|
Asset
|
Liability
|
||||||||||||||||||
West
Tennessee Investors, LLC
|
$
|
14,770
|
1
Month LIBOR
|
3.69
|
%
|
9/1/2010
|
3/1/2019
|
$
|
—
|
$
|
609
|
$
|
—
|
$
|
—
|
|||||||||
Genesis
Property Holdings, LLC
|
16,797
|
1
Month LIBOR
|
4.71
|
%
|
4/1/2010
|
10/1/2018
|
—
|
2,069
|
—
|
2,365
|
||||||||||||||
Cogdell
Health Campus MOB, LP
|
10,729
|
1
Month LIBOR
|
4.03
|
%
|
3/14/2008
|
3/2/2015
|
—
|
1,049
|
—
|
1,064
|
||||||||||||||
River
Hills Medical Associates, LLC
|
3,912
|
1
Month LIBOR
|
1.78
|
%
|
1/15/2009
|
1/31/2012
|
—
|
45
|
—
|
25
|
||||||||||||||
East
Jefferson Medical Plaza
|
11,600
|
1
Month LIBOR
|
1.80
|
%
|
1/15/2009
|
12/23/2011
|
—
|
149
|
—
|
81
|
||||||||||||||
Beaufort
Medical Plaza, LLC
|
4,858
|
1
Month LIBOR
|
3.80
|
%
|
8/18/2008
|
8/18/2011
|
—
|
293
|
—
|
296
|
||||||||||||||
St.
Francis Community MOB, LLC
|
7,007
|
1
Month LIBOR
|
3.32
|
%
|
10/15/2008
|
6/15/2011
|
—
|
335
|
—
|
331
|
||||||||||||||
St.
Francis Medical Plaza, LLC
|
7,526
|
1
Month LIBOR
|
3.32
|
%
|
10/15/2008
|
6/15/2011
|
—
|
360
|
—
|
356
|
||||||||||||||
Cogdell
Spencer LP
|
30,000
|
1
Month LIBOR
|
3.11
|
%
|
10/15/2008
|
3/10/2011
|
—
|
1,229
|
—
|
1,218
|
||||||||||||||
MEA
Holdings, LLC
|
100,000
|
1
Month LIBOR
|
2.82
|
%
|
4/1/2008
|
3/1/2011
|
—
|
3,609
|
—
|
3,458
|
||||||||||||||
Indianapolis
MOB LLC
|
30,000
|
1
Month LIBOR
|
4.95
|
%
|
11/2/2006
|
10/31/2009
|
—
|
862
|
—
|
1,106
|
||||||||||||||
Roper
MOB, LLC
|
9,095
|
1
Month LIBOR
|
4.95
|
%
|
11/2/2006
|
7/10/2009
|
—
|
135
|
—
|
221
|
||||||||||||||
$
|
—
|
$
|
10,744
|
$
|
—
|
$
|
10,521
|
Fair Value Measurements as
of
March
31, 2009
|
|||||||||||||||||
Total
|
Level
1
|
Level
2
|
Level
3
|
||||||||||||||
Liabilities
-
|
|||||||||||||||||
Derivative
financial instruments
|
$ | 10,744 | $ | — | $ | 10,744 | $ | — |
9.
|
Equity
|
For the Three Months
Ended
|
||||||||
March 31,
2009
|
March 31,
2008
|
|||||||
Common stock balance at
beginning of period
|
17,699 | 11,948 | ||||||
Issuance of common
stock
|
- | 3,449 | ||||||
Conversion of OP units to
common stock
|
1,776 | - | ||||||
Restricted stock
grants
|
13 | 6 | ||||||
Common stock balance at end
of period
|
19,488 | 15,403 |
2009
|
2008
|
|||||||
Net loss attributable to Cogdell
Spencer Inc.
|
$ | (70,218 | ) | $ | (1,801 | ) | ||
Increase in Cogdell Spencer Inc.
additional paid-in capital for the conversion of OP units into common
stock
|
17,496 | - | ||||||
Change from net loss attributable
to Cogdell Spencer Inc. and transfers from noncontrolling
interests
|
$ | (52,722 | ) | $ | (1,801 | ) |
10.
|
Incentive
and Share-Based Compensation
|
Restricted
Stock
|
LTIP
Units
|
Weighted
Average
Grant
Price
|
|||||||||||
Unvested
balance at December 31, 2008
|
12 | 118 | $ | 15.89 | |||||||||
Granted
|
13 | 112 | 6.10 | ||||||||||
Vested
|
(19 | ) | (111 | ) | 6.87 | ||||||||
Forfeited
|
(1 | ) | — | 17.00 | |||||||||
Unvested
balance at end of the period
|
5 | 119 | $ | 15.43 |
●
|
the
Company’s business strategy;
|
|
●
|
the
Company’s ability to comply with financial covenants in its debt
instruments;
|
|
●
|
the
Company’s access to capital;
|
|
●
|
the
Company’s ability to obtain future financing
arrangements;
|
|
●
|
estimates
relating to the Company’s future distributions;
|
|
●
|
the
Company’s understanding of the Company’s competition;
|
|
●
|
the
Company’s ability to renew the Company’s ground leases;
|
|
●
|
legislative
and regulatory changes (including changes to laws governing the taxation
of REITs and individuals);
|
|
●
|
increases
in costs of borrowing as a result of changes in interest rates and other
factors;
|
|
●
|
the
Company’s ability to maintain its qualification as a REIT due to economic,
market, legal, tax or other considerations;
|
|
●
|
changes
in the reimbursement available to the Company’s tenants by government or
private payors;
|
|
●
|
the
Company’s tenants’ ability to make rent payments;
|
|
●
|
defaults
by tenants;
|
|
●
|
Erdman's customers' access to financing; | |
●
|
delays in project starts and cancellations by Erdman's customers; | |
●
|
the timing of capital expenditures by healthcare systems and providers; | |
●
|
market
trends; and
|
|
●
|
projected
capital
expenditures.
|
Three
Months Ended
|
Year
Ended
December
31, 2008
|
|||||||||||
March
31, 2009
|
March
31, 2008
|
|||||||||||
Properties
at beginning of the period
|
62 | 59 | 59 | |||||||||
Acquisitions
|
— | 2 | 2 | |||||||||
Developments
|
— | — | 1 | |||||||||
Properties
at end of the period
|
62 | 61 | 62 |
2009
|
2008
|
||||||||
FFOM
attributable to:
|
|||||||||
Property
operations
|
$ | 12,493 | $ | 12,422 | |||||
Design-Build
and development, excluding impairment charge
|
4,318 | 956 | |||||||
Unallocated
and other, excluding tax benefit of impairment charge
|
(8,751 | ) | (7,583 | ) | |||||
FFOM,
excluding impairment charge, net of income tax benefit
|
8,060 | 5,795 | |||||||
Impairment
charge, net of income tax benefit
|
(101,746 | ) | — | ||||||
FFOM
|
$ | (93,686 | ) | $ | 5,795 |
2009
|
2008
|
||||||||
Net
loss
|
$ | (102,324 | ) | $ | (2,566 | ) | |||
Add:
|
|||||||||
Real
estate related depreciation and amortization:
|
|||||||||
Wholly-owned
and consolidated properties
|
7,340 | 7,788 | |||||||
Unconsolidated
real estate partnerships
|
3 | 3 | |||||||
Less:
|
|||||||||
Noncontrolling
interests in real estate partnerships, before real estate related
depreciation and amortization
|
(245 | ) | (78 | ) | |||||
FFO
|
(95,226 | ) | 5,147 | ||||||
Amortization
of intangibles related to purchase accounting, net of income tax
benefit
|
1,540 | 648 | |||||||
FFOM
|
$ | (93,686 | ) | 5,795 |
2009
|
2008
|
||||||||
Rental
revenue
|
$ | 19,665 | $ | 18,691 | |||||
Property
management and other fee revenue
|
850 | 841 | |||||||
Property
operating and management expenses
|
(7,927 | ) | (7,199 | ) | |||||
Other
income (expense)
|
141 | 161 | |||||||
Earnings
from unconsolidated real estate partnerships, before real estate related
depreciation and amortization
|
9 | 6 | |||||||
Noncontrolling
interests in real estate partnerships, before real estate related
depreciation and amortization
|
(245 | ) | (78 | ) | |||||
FFOM
|
$ | 12,493 | $ | 12,422 |
2009
|
2008
|
||||||||
Design-Build
contract revenue and other sales
|
$ | 46,390 | $ | 23,936 | |||||
Development
management and other income
|
2,799 | 19 | |||||||
Design-Build
contracts and development management expenses
|
(40,165 | ) | (21,043 | ) | |||||
Selling,
general, and administrative expenses
|
(4,514 | ) | (1,881 | ) | |||||
Other
income (expense)
|
1 | 40 | |||||||
Depreciation
and amortization
|
(193 | ) | (115 | ) | |||||
FFOM,
excluding impairment charge
|
4,318 | 956 | |||||||
Impairment
charge
|
(120,920 | ) | — | ||||||
FFOM
|
$ | (116,602 | ) | $ | 956 |
|
2009
|
2008
|
||||||
Net
loss plus non-cash adjustments
|
$ | 10,051 | $ | 6,517 | ||||
Changes
in operating assets and liabilities
|
(7,906 | ) | (9,233 | ) | ||||
Net
cash provided by (used in) operating activities
|
$ | 2,145 | $ | (2,716 | ) |
2009
|
2008
|
|||||||
Development,
redevelopment, and acquisitions
|
$ | 6,321 | $ | 21,786 | ||||
Second
generation tenant improvements
|
671 | 832 | ||||||
Recurring
property capital expenditures
|
56 | 637 | ||||||
Investment
in real estate properties
|
$ | 7,048 | $ | 23,255 |
Property
|
Location
|
Estimated
Completion
Date
|
Net
Rentable
Square
Feet
|
Investment
to
Date
|
Estimated
Total
Investment
|
||||||||||||||
The
Woodlands Center
|
Pensacola,
FL
|
4Q 2009 | 76,000 | $ | 12,958 | $ | 24,769 | ||||||||||||
Medical
Center Physicians Tower
|
Jackson,
TN
|
1Q
2010
|
107,000 | 2,892 | 21,100 | ||||||||||||||
Alamance
Regional Cancer Center
|
Mebane,
NC
|
3Q 2009 | 8,500 | 684 | 1,750 | ||||||||||||||
Land
and pre-construction developments
|
— | 5,347 | — | ||||||||||||||||
191,500 | $ | 21,881 | $ | 47,619 |
Financial
Covenant
|
As
of and for the 12 Months
Ended
March 31, 2009
|
|||
Minimum
adjusted consolidated EBITDA of $22.5 million
|
$28.0
million
|
|||
Minimum
adjusted consolidated EBITDA to consolidated fixed charges (2.00 to
1.00)
|
4.29
to 1.00
|
|||
Maximum
consolidated senior indebtedness to adjusted consolidated EBITDA (4.25 to
1.00 as
of March 31, 2009, decreases to 3.75 to 1.00 on July 1,
2009)
|
3.57
to 1.00
|
|||
Maximum
consolidated indebtedness to adjusted consolidated EBITDA (5.50 to
1.00)
|
3.57
to 1.00
|
·
|
the minimum adjusted consolidated EBITDA
covenant will be
eliminated,
|
·
|
the maximum adjusted consolidated
senior indebtedness to adjusted consolidated EBITDA will be modified to
3.50 to 1.00 through March 2011 and 3.00 to 1.00 from April 2011 to final
maturity,
|
·
|
the interest rate will increase
from LIBOR plus
3.50% to LIBOR plus 4.50%,
and
|
·
|
a payment of a market based
modification fee.
|
Remainder
of
2009
|
2010
|
2011
|
2012
|
2013
|
Thereafter
|
Total
|
||||||||||||||||||||||
Obligation:
|
||||||||||||||||||||||||||||
Long-term
debt principal payments and maturities (1)
|
$ | 49,854 | $ | 31,781 | $ | 238,067 | $ | 23,131 | $ | 13,855 | $ | 98,148 | $ | 454,836 | ||||||||||||||
Standby
letters of credit (2)
|
8,037 | — | — | — | — | — | 8,037 | |||||||||||||||||||||
Interest
payments (3)
|
16,603 | 14,655 | 8,727 | 6,418 | 5,494 | 13,866 | 65,763 | |||||||||||||||||||||
Purchase
commitments (4)
|
25,265 | 8,162 | — | — | — | — | 33,427 | |||||||||||||||||||||
Ground
and air rights leases (5)
|
236 | 314 | 314 | 315 | 315 | 9,631 | 11,125 | |||||||||||||||||||||
Operating
leases (6)
|
3,837 | 4,330 | 3,867 | 3,757 | 2,968 | 24,527 | 43,286 | |||||||||||||||||||||
Total
|
$ | 103,832 | $ | 59,242 | $ | 250,975 | $ | 33,621 | $ | 22,632 | $ | 146,172 | $ | 616,474 |
31.1
|
Certification
of Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act
of 2002.
|
31.2
|
Certification
of Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act
of 2002.
|
32.1
|
Certification
of Chief Executive and Chief Financial Officer pursuant to 18 U.S.C.
Section 1350 as adapted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
|
COGDELL
SPENCER INC.
|
||
Registrant
|
||
Date:
May 11, 2009
|
/s/Frank
C. Spencer
|
|
Frank
C. Spencer
|
||
President
and Chief Executive Officer
|
||
Date:
May 11, 2009
|
/s/Charles
M. Handy
|
|
Charles
M. Handy
|
||
Senior
Vice President and Chief Financial Officer
|