That's the good news. The bad news is such growth can't possibly be sustained through the rest of the year. "As we said in our first quarter earnings release, we made a conscious decision to accelerate development sales into the first half of the year, and we have been successful in achieving our goal," says Nelson Rising, chairman and CEO. "As a result, the rate of earnings growth we have enjoyed in the first half of 2002 will not be sustained in the third and fourth quarters."
Catellus reported net income of $33 million for the second quarter of 2002. In the same, year-earlier period, net income was $22.2 million. "Our guidance for the full year 2002 earnings per share growth is in the range of 15% to 20%, depending on the timing of future sales," says Nelson Rising, chairman and CEO.
Catellus attributes its increase in earnings to changes in its real estate portfolio, including accelerated residential lot sales, a desert land sale, and an increase in the size of the core rental portfolio. Additionally, the company repurchased its own shares in the latter part of 2001, which reduced the number of shares outstanding.
At the end of the quarter, the wholly owned rental portfolio totaled 34.5 million sf, a net increase of 3.2 million square feet from March 31, 2002. Occupancy was 94.2%, as compared with 95.1% at the end of the first quarter 2002 and 94.4% at year-end 2001.
Catellus' construction completions during the second quarter totaled 3.6 million sf in nine buildings, at a total cost if $131.2 million. The expected return on cost is 11.7%. Catellus also sold two industrial properties totaling 398,000-sf for approximately $23.8 million, including a 130,000-sf building sold to a tenant who exercised an option to purchase, and a 268,000-sf building built in 1985.
During the quarter, Catellus completed lease transactions on 1.8 million-sf of space at an average rental rate increase of 3.7% on a GAAP basis, and renewed leases with existing tenants on 72.7% of the space that expired.
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