REIT Conversion Affects Catellus' Profit

SAN FRANCISCO-Catellus Development Corp. reported Thursday night a significant drop in fourth quarter and year-end profit. The locally headquartered industrial REIT said fourth quarter net income was $74.6 million, compared to $171.2 million for the same period in 2003. For the year, net income was $171.8 million, compared to $234.8 million for the same period in 2003. Earnings per fully diluted share for the fourth quarter of 2004 was $0.71, compared to $1.65 for the same period in 2003. EPS for the year was $1.64, compared to $2.30 for the same period in 2003.Catellus attributes part of the extraordinary year-over-year decrease in net income to the 2003 reversal of certain deferred taxes associated with the company’s conversion to a REIT. Without the tax reversal effects in 2003, EPS would have increased 44.9% year-over-year as a result of lower income tax expense in 2004–due to the REIT conversion–and higher gains from the sale of discontinued operations.As of Dec. 31, Catellus’ 40.5-million rental portfolio was 94.7% occupied, compared to 94.2% at the end of September and 95.2% at the end of 2003. About 90% of its rental portfolio is industrial space, which was 95.3% leased at the end of the year, 94.8% leased at the end of September and 96.1% leased at the end of 2003.Rental revenue less property operating costs, including equity in earnings from operating joint ventures and before adjustments for discontinued operations, was $55.7 million in the fourth quarter, compared to $52.2 million for the same period in 2003. For the year, rental revenue less property operating costs, including equity in earnings from operating joint ventures and before adjustments for discontinued operations, was $228.7 million, compared to $219.0 million in 2003.On the construction front, the company had 4.3 million sf under construction at the end of the year, of which 2.8 million sf will be added to its rental portfolio upon completion. About 25% of the space has been preleased.