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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 2, 1997
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WEEKS CORPORATION
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(Exact name of registrant as specified in its charter)
Georgia 011-13254 58-1525322
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(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
4497 Park Drive, Norcross, Georgia 30093
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (770) 923-4076
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This document consists of 10 pages.
The Exhibit Index is at page 4.
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ITEM 5. OTHER EVENTS.
On May 1, 1997, Weeks Corporation released its financial results for
the quarter ended March 31, 1997. A copy of the press release announcing these
results is attached as an exhibit to this Current Report.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
Exhibit # Description
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99.1 Press Release of Weeks Corporation dated May 1, 1997
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WEEKS CORPORATION
Registrant
Date: May 2, 1997 /s/ David P. Stockert
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David P. Stockert
Senior Vice President and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit # Description Page
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99.1 Press Release of Weeks Corporation dated May 1, 1997
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EXHIBIT 99.1
[NEWS RELEASE LETTERHEAD OF WEEKS CORPORATION APPEARS HERE]
CONTACT: A. Ray Weeks, Jr., Chairman and Chief Executive Officer, 770-717-3202
David P. Stockert, Senior Vice President and Chief Financial Officer,
770-717-3204
Cynthia F. Wright, Vice President, Investor Relations, 770-717-3260
WEEKS CORPORATION (WKS) ANNOUNCES 14.3% INCREASE IN PER SHARE FIRST QUARTER
FUNDS FROM OPERATIONS
Atlanta, Georgia (May 1, 1997)--Weeks Corporation (NYSE:WKS) today announced
that for the first quarter ended March 31, 1997, the Company's funds from
operations (FFO) were $7,876,000 compared to $5,508,000 for the first quarter of
1996. The Company had 14,073,000 weighted average common shares outstanding in
the first quarter of 1997, compared to 11,156,000 in the first quarter of 1996.
The Company's payout ratio of FFO was 76.8% for the first quarter of 1997,
compared to 81.0% for the first quarter of 1996.
Compared to the first quarter of 1996, the Company's revenues increased 64.1% to
$19,899,000 and net income increased 23.4% to $3,826,000. On a per share basis,
net income for the first quarter was $0.27 per share compared to $0.28 per share
for the first quarter of 1996.
The Company currently has 27 buildings and one building expansion under
development or in lease up, totaling approximately 3.0 million square feet, with
an estimated development cost of approximately $165 million and an estimated
average unleveraged return of approximately 11.2%. These projects are currently,
on average, 43% leased or pre-leased. The Company also has agreements to acquire
34 buildings totaling approximately 2.0 million square feet for a total
estimated purchase price of approximately $117 million and an estimated average
unleveraged return of approximately 10.4%.
FIRST QUARTER HIGHLIGHTS
. As of March 31, 1997, the Company's in-service properties were, on average,
96.3% leased, slightly higher than the year end 1996 occupancy of 96.2%.
During the first quarter, the Company entered into leases totaling more
than 950,000 square feet. The Company renewed approximately 78% of leases
expiring during the quarter, compared with a renewal rate of 67% for 1996.
In addition to a high level of tenant renewals, 11 expansions totaling
approximately 212,000 square feet were completed for existing tenants (in
comparison, 40 expansions totaling approximately 490,000 square feet were
completed for existing tenants in 1996). Cash basis rents per square foot
for second-generation leases entered into during the first quarter
increased by an average of 8.7%, compared to the last rent paid on the same
space (in comparison, cash basis rents increased 4.2% in 1996).
Weeks Corporation Page 1 of 6
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. The Company's equity in earnings of unconsolidated subsidiaries increased
to $648,000 during the quarter, reflecting the strong performance of the
Company's third-party fee construction and landscape businesses, as well as
gains on sales of land parcels to third parties.
. During the first quarter, the Company stabilized (placed in service)
approximately $22.3 million of industrial development projects totaling
approximately 795,000 square feet with an estimated average unleveraged
return of approximately 10.8%. These projects are currently, on average,
100% leased.
. During the quarter, the Company closed the acquisition of 5 industrial
buildings totaling approximately 448,000 square feet, with a total purchase
price including closing costs of approximately $17.7 million and an
estimated average unleveraged return of approximately 10.0%.
. The Company's debt-to-total market capitalization ratio as of March 31,
1997, was 33%, including debt of the Company's unconsolidated subsidiaries.
OVERVIEW OF ATLANTA INDUSTRIAL AND OFFICE MARKETS
Real estate demand in Atlanta continued to be strong in the first quarter of
1997, with industrial net absorption of 3.2 million square feet. Industrial
occupancy decreased slightly to 93.5% at the end of the first quarter from 93.7%
at year end 1996. According to Jamison Research the level of new industrial
starts in Atlanta in the first quarter of 1997 were 1.5 million square feet,
down from 2.5 million square feet in the fourth quarter of 1996, and the lowest
level since the third quarter of 1994.
Atlanta's office market recorded net absorption of approximately 1.0 million
square feet during the first quarter. Occupancy declined slightly to 90.5% at
the end of the first quarter from 90.7% at year end 1996.
Weeks had approximately 10.4 million square feet of in-service properties
located in Atlanta at the end of the first quarter, representing 73% of its
total in-service portfolio, and comprised of 94% industrial properties and 6%
suburban office properties. The Company's Atlanta portfolio, and its ongoing
development activities, are concentrated in submarkets that are among the
metropolitan area's strongest. The major submarkets where Weeks focuses its
activities account for less than 50% of Atlanta's almost 400 million square feet
of industrial and office space at December 31, 1996 but captured more than 80%
of the net absorption in the first quarter.
FORWARD-LOOKING INFORMATION
This news release contains forward-looking information that is subject to
certain risks, trends and uncertainties that could cause actual results to
differ materially from those projected. Among those risks, trends and
uncertainties are the general economic climate; the supply of and demand for
industrial and suburban office properties in Atlanta, Georgia; Nashville,
Tennessee; the Research Triangle area of North Carolina; Orlando, Florida;
Spartanburg, South Carolina and the Southeast; interest rate levels; the
availability of financing; and other risks associated with the development and
acquisition of properties, including risks that development or lease-up may not
be completed on schedule, that tenants will not take occupancy or pay rent, that
development or operating costs may be greater than anticipated, and that
acquisitions may fail to close. For further information on factors which could
impact the Company and the statements contained herein, reference is made to the
Company's filings with the Securities and Exchange Commission.
Weeks Corporation Page 2 of 6
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OVERVIEW OF WEEKS CORPORATION
Weeks Corporation is a self-administered real estate investment trust that owns,
develops and acquires industrial and suburban office buildings and business
parks in metropolitan Atlanta, Georgia; Nashville, Tennessee; the Research
Triangle area of North Carolina; Orlando, Florida; and Spartanburg, South
Carolina. The Company's portfolio currently consists of 258 industrial and
suburban office properties totaling approximately 19.1 million square feet,
including properties under development and/or under agreement to acquire. Weeks
Corporation provides leasing, management, development, construction, landscape
and other tenant-related services for its own properties and for properties
owned by others.
To see recent news releases, EDGAR filings, and stock quotes, find Weeks
Corporation on the internet at http://www.businesswire.com/cnn/wks.htm.
Send e-mail correspondence to [email protected].
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WEEKS CORPORATION FINANCIAL HIGHLIGHTS
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Three Months Three Months
Ended Ended
(Unaudited; in thousands, except per share amounts) March 31, 1997 March 31, 1996
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Operating data:
Revenue $ 19,899 $ 12,129
Net income 3,826 3,101
Net income per share $ 0.27 $ 0.28
Weighted average shares outstanding 14,073 11,156
Funds from operations $ 7,876 $ 5,508
Dividends per share $ 0.43 $ 0.40
Dividend payout ratio of funds from operations 76.8% 81.0%
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March 31, 1997 December 31, 1996
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Consolidated balance sheet data:
Real estate assets, net $584,246 $551,372
Total assets 630,092 591,849
Total debt 320,883 296,975
Shareholders' equity 216,544 213,711
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A copy of supplemental materials on the Company's first quarter results is
available by request to:
Cynthia F. Wright
Vice President/Investor Relations
Weeks Corporation
4497 Park Drive
Norcross, Georgia 30093
770-717-3260
Weeks Corporation Page 3 of 6
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WEEKS CORPORATION CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
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Three Months Three Months
Ended Ended
(Unaudited; in thousands, except per share amounts) March 31, 1997 March 31, 1996
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REVENUE
Rental income $17,400 $10,780
Tenant reimbursements 2,157 1,048
Direct financing lease 188 192
Other 154 109
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19,899 12,129
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EXPENSES
Property operating and maintenance 2,223 1,294
Real estate taxes 1,699 1,068
Depreciation and amortization 5,344 2,951
Interest 5,066 2,435
Amortization of deferred financing costs 226 200
General and administrative 1,169 716
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15,727 8,664
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Income before equity in earnings of unconsolidated
subsidiaires and interest income 4,172 3,465
Equity in earnings of unconsolidated subsidiaries 648 266
Interest income 238 83
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Income before minority interests 5,058 3,814
Minority interests (1,232) (713)
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NET INCOME $ 3,826 $ 3,101
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NET INCOME PER SHARE $0.27 $0.28
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WEIGHTED AVERAGE SHARES OUTSTANDING 14,073 11,156
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Weighted average shares outstanding --
Operating Partnership interests
fully converted 18,605 13,723
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Weeks Corporation Page 4 of 6
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WEEKS CORPORATION CONSOLIDATED CONDENSED BALANCE SHEET
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(Unaudited; in thousands, except share amounts) March 31, 1997 December 31, 1996
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ASSETS
Real estate assets
Land $ 82,857 $ 77,233
Buildings and improvements 482,744 450,002
Accumulated depreciation (46,157) (41,469)
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Operating real estate assets 519,444 485,766
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Developments in progress 52,495 56,571
Land held for future development 12,307 9,035
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Net real estate assets 584,246 551,372
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Real estate development loans 11,521 9,455
Cash and cash equivalents 299 260
Direct financing lease, net 5,107 5,136
Receivables 6,300 5,858
Deferred costs, net 11,356 10,286
Investments in and notes receivable
from unconsolidated subsidiaries 8,661 7,760
Other assets 2,602 1,722
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TOTAL ASSETS $630,092 $591,849
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LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgage notes payable $200,768 $197,575
Bank credit facility borrowings 120,115 99,400
Accounts payable and accrued expenses 11,505 9,970
Other liabilities 3,486 2,963
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TOTAL LIABILITIES 335,874 309,908
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Minority interests in Operating Partnership/(1)/ 77,674 68,230
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Commitments and contingencies
Shareholders' equity
Common stock, $0.01 par value; 100,000,000 shares
authorized; 14,097,617 and 14,048,593 shares issued
and outstanding at March 31, 1997, and December 31,
1996, respectively 141 140
Preferred stock, $0.01 par value; 20,000,000 shares
authorized; none issued -- --
Additional paid-in capital 269,085 267,634
Deferred compensation (1,078) --
Accumulated deficit (51,604) (54,063)
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TOTAL SHAREHOLDERS' EQUITY 216,544 213,711
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $630,092 $591,849
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(1) Consists of 5,057,836 units of limited partnership interest in the
Operating Partnership as of March 31, 1997.
Weeks Corporation Page 5 of 6
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WEEKS CORPORATION FUNDS FROM OPERATIONS COMPUTATION
The Company calculates funds from operations under the guidelines issued by the
National Association of Real Estate Investment Trusts (NAREIT), which became
effective for periods beginning in 1996. The Company's calculation of funds
from operations recognizes rental income on the "straight-line" basis consistent
with its treatment in the Company's statement of operations under generally
accepted accounting principles. The "straight-line" rental adjustment increased
rental revenues by $150,000 and $71,000 for the three months ended March 31,
1997 and 1996, respectively.
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Three Months Three Months
Ended Ended
(Unaudited; in thousands, except per share amounts) March 31, 1997 March 31, 1996
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Income before minority interests $ 5,058 $ 3,814
Depreciation and amortization 5,344 2,951
Real estate depreciation at subsidiaries 10 10
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Funds from operations -- Operating Partnership
interests fully converted $10,412 $ 6,775
Company ownership percentage of the Operating
Partnership attributable to shareholders/(1)/ 75.64% 81.30%
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Funds from operations/(2)/ $ 7,876 $ 5,508
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Weighted average shares 14,073 11,156
Dividends per share $ 0.43 $ 0.40
Dividend payout ratio of funds from operations 76.8% 81.0%
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(1) Represents the Company's weighted average ownership of the Operating
Partnership for the period.
(2) The Company believes that funds from operations provides an additional
indicator of the financial performance of the Company. Funds from
operations should not be considered as an alternative to net income
(determined in accordance with generally accepted accounting principles
("GAAP")) as an indication of the Company's financial performance or to
cash flow from operating activities (determined in accordance with GAAP) as
a measure of the Company's liquidity, nor is it necessarily indicative of
sufficient cash flow to fund all of the Company's needs.
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WEEKS CORPORATION SUPPLEMENTAL INFORMATION ON CAPITAL EXPENDITURES AND LEASING COSTS
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Three months Three months
Ended Ended
(Unaudited; in thousands) March 31, 1997 March 31, 1996
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Development and land acquisition activity/(1)/ $20,591 $7,540
Building acquisitions 17,698 --
Non-revenue-generating building improvements 96 157
Tenant improvement and leasing costs
on second-generation leases/(2)/ 933 704
Tenant improvement expenditures to be
reimbursed by tenants -- 206
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$39,318 $ 8,607
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(1) Includes first-generation leasing costs on stabilized development
properties totaling $1,097,000 and $104,000 in the three months ended
March 31, 1997 and 1996, respectively.
(2) Includes second-generation leasing costs totaling $557,000 and $186,000 in
the three months ended March 31, 1997 and 1996, respectively.
Weeks Corporation Page 6 of 6
