RICHMOND, Va.--(BUSINESS WIRE)--July 28, 2003--United Dominion
Realty Trust, Inc. (NYSE: UDR) today reported Funds From Operations
("FFO") of $52.4 million, or $0.39 per diluted share, for the quarter
ended June 30, 2003, compared to FFO of $53.4 million, or $0.42 per
diluted share, for the comparable period a year ago, which included
$1.0 million in prepayment penalties on the early extinguishment of
debt. FFO is reported on a fully diluted basis.
"The Second Quarter was a success in three key areas. Property
Operations delivered solid results that exceeded Wall Street consensus
and improved on a quarterly sequential basis. We improved the quality
of our earnings by acquiring $244 million of apartment communities,
principally in the highly desirable Southern California market. We
raised $133 million of equity, which strengthened our balance sheet,"
stated Thomas W. Toomey, President and Chief Executive Officer.
Highlights from the Second Quarter
-- FFO exceeded Wall Street consensus estimates
-- Acquired $244 million of apartment communities
-- Issued $57 million of Cumulative Convertible Series E
Preferred Stock
-- Issued 4.6 million shares of common stock and OP units for a
net value of $76 million
-- Converted $50 million of Series D Cumulative Convertible
Preferred Stock
-- Standard and Poor's and Moody's Investor Services raised
outlook from Stable to Positive
Portfolio Operating Performance and Same Community Results
During the second quarter, 68,210 apartment homes, or 90% of total
apartment homes, were classified as Same Community. The Company
defines Same Community as all multifamily communities owned and
stabilized for at least one year as of the beginning of the most
recent quarter.
Same Community Results ($ in thousands, except monthly rent)
----------------------------------------------------------------------
2nd Qtr 2nd Qtr
'03 '02 % Change
---------------------------
Gross potential rent $143,379$146,958 -2.4%
Net rental & other income 138,059 139,723 -1.2%
Expenses 51,696 49,927 3.5%
Net operating income 86,363 89,796 -3.8%
Avg. monthly rent per home $701$718 -2.4%
Avg. monthly rent per square foot 0.79 0.81 -2.4%
Avg. physical occupancy 93.6% 93.3% 0.3%
Operating margin 62.6% 64.3% -1.7%
Rent concessions, % of gross potential rent 3.1% 3.4% -0.3%
Annualized resident turnover rate 69.2% 73.7% -4.5%
Resident credit loss, % of gross potential
rent 0.6% 0.7% -0.1%
On a quarter-over-quarter basis, second quarter 2003 Same
Community Net Operating Income ("NOI") growth of negative 3.8% was the
result of a 1.2% decrease in revenues from rental and other income and
a 3.5% increase in operating expenses.
Same Communities represent 54 markets, of which 21 markets, or
39%, generated positive Same Community NOI growth second quarter 2003
over second quarter 2002.
Same Community Results ($ in thousands, except monthly rent)
----------------------------------------------------------------------
2nd Qtr 1st Qtr
'03 '03 % Change
---------------------------
Gross potential rent $143,379$144,319 -0.7%
Net rental & other income 138,059 138,220 -0.1%
Expenses 51,696 52,556 -1.6%
Net operating income 86,363 85,664 0.8%
Avg. monthly rent per home $701$705 -0.7%
Avg. monthly rent per square foot 0.79 0.80 -0.7%
Avg. physical occupancy 93.6% 93.4% 0.2%
Operating margin 62.6% 62.0% 0.6%
Rent concessions, % of gross potential rent 3.1% 2.9% 0.2%
Annualized resident turnover rate 69.2% 58.0% 11.2%
Resident credit loss, % of gross potential
rent 0.6% 0.5% 0.1%
Sequentially comparing second quarter 2003 to the first quarter
2003, Same Community NOI increased by 0.8% due to a 0.1% decrease in
rental and a 1.6% decrease in other income and expenses.
Same Communities represent 54 markets, of which 29 markets, or
54%, generated positive Same Community NOI growth second quarter 2003
over first quarter 2003.
Financing Activities
In April, the Company issued 3 million shares of its common stock
for net proceeds of $16.41 per share. The net proceeds of the April
offering were used to acquire additional apartment communities.
In May, the Company gave notice of its intent to redeem 2 million
shares of its Series D Cumulative Convertible Redeemable Preferred
Stock, and prior to the redemption date, the holder of the Series D
shares converted the 2 million shares into 3,076,923 shares of common
stock at a price of $16.25 per share. Six million shares of Series D
Preferred Stock remain outstanding.
In May, $53.3 million of interest rate swaps expired at an average
rate of 7.3%. The new interest rate is at Libor plus 90 basis points.
This resulted in 28.5% of the Company's debt at the end of the quarter
being variable rate debt. Approximately 75% of our variable rate debt
is structured such that the Company can convert all or part of the
outstanding balance to a fixed rate in less than one week.
In June, as part of the acquisition of a portfolio of four
communities in Southern California, the Company issued $56.9 million
of a new class of Cumulative Convertible Series E Preferred Stock and
1,617,815 net Operating Partnership Units totaling $26.9 million, each
priced at $16.61 per share. In addition, the Company placed $37
million of secured debt on two of the acquired apartment communities,
at a rate of Libor plus 90 basis points.
"This quarter our Fixed Charge Coverage Ratio increased to 2.38x,
which reflects the continued improvement in our balance sheet. The
conversion of a portion of our Series D reduced the annual dividend
costs by approximately $564,000 in 2003. These improvements in our
balance sheet strength and flexibility resulted in Standard and Poor's
and Moody's Investor Services raising their outlook from Stable to
Positive," stated Ella Neyland, Executive Vice President and
Treasurer.
Portfolio Repositioning
During the Second Quarter the Company added 1,068 apartment homes
in Southern California, purchased its joint venture partner's interest
in another 1,706 apartment homes in Northern California and added 464
apartment homes in Tampa/St. Petersburg, Florida. These acquisition
activities totaled $244 million at an average cap rate of 6.75%,
based on forward twelve months of operations less a capital
expenditure reserve per home of $435.
The acquisition of the California communities expands the
Company's ownership in the fast growing Southern California market to
2,626 apartment homes, and in Northern California to 2,686 apartment
homes; positioning the Company to derive approximately 15% of 2004 NOI
from these growth markets.
"These acquisitions represent a major step in the repositioning of
the Company's portfolio. We are adding homes in highly desirable
growth markets where we already have a significant property management
operation. The portfolio now has 12% of our Annualized Net Operating
Income coming from California. The average effective age of our entire
portfolio is 12 years. We continue to focus on our core strategy of
owning and leasing middle market apartments that most renters can
afford," cites Mark Wallis, Senior Executive Vice President. Mr.
Wallis further stated, "As we continue our progress towards our
repositioning strategy, we may consider establishing joint ventures or
installment sale transactions with financial and industry partners to
sell non-core apartment communities. We believe that such structures
may allow the Company to sell non-core communities at superior pricing
while also controlling dilution by improving the timing of
acquisitions and dispositions."
Earnings Guidance
The Company believes that financial results for 2003 will be
affected by international, national and regional economic trends and
events, the acquisition and/or disposition of apartment communities
and other factors. Management estimates that recurring capital
expenditures for 2003 will be $435 per apartment home, or $0.25 per
share. Given current expectations and judgment, the Company has
tightened its range of guidance for 2003 FFO to $1.52 to $1.57 per
share.
A reconciliation of the range provided for projected FFO per share
for the full year to Earnings Per Share ("EPS") for the full year is
as follows:
Funds From Operations ("FFO") $1.52 - $1.57
Conversion to GAAP Share Count (A) 0.26 - 0.27
Minority Interest of OP Unit Holders (A) (0.08) (0.01)
Depreciation (B) (1.37)- (1.42)
Gains (B) 1.27 - 0.01
Preferred Dividends (0.14)- (0.14)
Premium on Preferred Share Repurchases (0.16)- (0.16)
------ ------
Expected Earnings Per Share ("EPS") 1.30 - 0.12
(A) OP units are not common stock equivalents for GAAP purposes.
(B) Due to the uncertain timing and extent of property
dispositions and acquisitions, actual results could differ
materially from expected EPS.
Supplemental Information
The Company provides Supplemental Information that provides
information regarding the financial position and operating results of
the Company. This supplemental Information is available on the
Company's website at: http://www.udrt.com/2Q2003.
Conference Call Information
-- Date: July 29, 2003
-- Time: 1:00 p.m. Eastern Time
To Participate in the Telephone Conference Call:
-- Dial in at least five minutes prior to start time.
-- Domestic: 800-218-0204
-- International: 303-262-2130
-- If you have any questions, please contact: Elyse Fischler
-- Phone: 312-640-6786
-- E-mail: efischler@webershandwick.com
Conference Call Playback:
-- Domestic: 800-405-2236
-- International: 303-590-3000
-- Passcode: 5540880
-- The playback can be accessed until August 5, 2003 at midnight.
Webcast:
-- The conference call will also be available on UDR's
website at www.udrt.com and at www.ccbn.com. To listen to
a live broadcast, go to one of these sites at least 15
minutes prior to the scheduled start time in order to
register, download, and install any necessary audio
software. A replay will also be available for 90 days on
UDR's website and also on CCBN's website.
About United Dominion Realty Trust, Inc. United Dominion is the fourth largest apartment REIT, owning and
operating apartment communities nationwide. The Company has a 31-year
history during which it has raised the dividend each of the last 27
years. United Dominion is included in the S&P MidCap 400 Index. The
Company currently owns 75,854 apartment homes and is the developer of
1,120 homes currently under development. United Dominion's common
stock is traded on the New York Stock Exchange under the symbol UDR.
Additional information about United Dominion may be found on its web
site at www.udrt.com.
Statements contained in this press release, which are not
historical facts, are forward-looking statements, as the term is
defined in the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are subject to risks and uncertainties
which can cause actual results to differ materially from those
currently anticipated, due to a number of factors, which include, but
are not limited to, unfavorable changes in the apartment market,
changing economic conditions, acquisitions or new developments may not
achieve anticipated results, difficulties in selling existing
apartment communities, and other risk factors discussed in documents
filed by the company with the Securities and Exchange Commission from
time to time including the Company's Annual Report on Form 10-K and
the Company's Quarterly Reports on Form 10-Q. The statements in this
press release are made as of today, based upon information currently
known to management, and the company disclaims any duty to update such
statements.
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
In thousands, except per
share amounts 2003 2002 2003 2002
-------------------------------------------------- -------------------
Rental income $149,118$144,353$297,194$286,721
Rental expenses:
Real estate taxes
and insurance 17,106 16,473 34,241 32,629
Personnel 14,699 13,794 29,714 27,866
Utilities 8,760 7,808 17,806 16,101
Repairs and maintenance 9,385 8,349 18,729 16,571
Administrative and
marketing 5,689 4,795 11,137 10,125
Property management 4,201 4,354 8,379 8,716
Other operating expenses 316 322 610 656
--------- --------- --------- ---------
60,156 55,895 120,616 112,664
Other income:
Non-property income 194 400 396 747
Other expenses:
Real estate depreciation 38,944 36,507 77,542 71,473
Interest 29,594 32,569 61,094 64,014
Loss/(gain) on early debt
retirement - 447 (171) 15,389
General and administrative 5,144 4,884 10,594 12,505
Other depreciation and
amortization 765 1,211 1,519 2,266
--------- --------- --------- ---------
74,447 75,618 150,578 165,647
Income before minority
interests and discontinued
operations 14,709 13,240 26,396 9,157
Minority interests of outside
partnerships (239) (266) (614) (721)
Minority interests of
unitholders in operating
partnerships (63) (369) (368) 353
--------- --------- --------- ---------
Income before discontinued
operations 14,407 12,605 25,414 8,789
Income from discontinued
operations, net of minority
interests (A) 1,077 14,783 3,510 16,938
--------- --------- --------- ---------
Net income 15,484 27,388 28,924 25,727
Distributions to preferred
shareholders - Series A (2,911) (2,911) (5,822) (5,822)
Distributions to preferred
shareholders - Series D
(Convertible) (3,393) (3,964) (7,428) (7,929)
Distributions to preferred
shareholders - Series E
(Convertible) (228) - (228) -
Premium on preferred share
repurchases (6,250) - (6,250) -
--------- --------- --------- ---------
Net income available to
common shareholders $2,702$20,513$9,196$11,976
========= ========= ========= =========
Earnings per common share
- basic and diluted:
Income/(loss) before discontinued
operations, net of minority
interests $0.01$0.05$0.05 ($0.05)
Income from discontinued
operations, net of minority
interests $0.01$0.14$0.03$0.16
Net income available to common
shareholders $0.02$0.19$0.08$0.11
Common distributions
declared per share $0.2850 $0.2775 $0.5700 $0.5550
Weighted average number of
common shares
outstanding-basic 112,467 107,016 110,169 105,349
Weighted average number of
common shares outstanding-
diluted 113,439 108,242 111,101 106,454
(A) Discontinued operations represents all properties sold since
January 1, 2002 and properties that are currently classified
as held for disposition at June 30, 2003.
UNITED DOMINION REALTY TRUST, INC.
FUNDS FROM OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
----------------- -------------------
In thousands, except per share
amounts 2003 2002 2003 2002
-------------------------------------------------- -------------------
Net income $15,484$27,388$28,924$25,727
Adjustments:
Distributions to preferred
shareholders (6,532) (6,875) (13,478) (13,751)
Real estate depreciation, net
of outside partners'
interest 38,706 36,111 77,107 70,686
Minority interests of
unitholders in operating
partnership 63 369 368 (353)
Real estate depreciation
related to unconsolidated
entities 52 206 84 377
Discontinued Operations:
Real estate depreciation 848 3,113 1,555 7,433
Minority interests of
unitholders in operating
partnership 70 984 227 1,127
Impairment loss on real estate - - - 2,301
Loss/(gains) on sales of
depreciable property 111 (11,825) (933) (12,744)
-------- -------- --------- ---------
Funds from operations ("FFO")
- basic $48,802$49,471$93,854$80,803
======== ======== ========= =========
Adjustment:
Distribution to preferred
shareholders - Series D and E
(Convertible) $3,621$3,964$7,656$7,929
-------- -------- --------- ---------
Funds from operations
- diluted $52,423$53,435$101,510$88,732
======== ======== ========= =========
Adjustment:
Recurring capital
expenditures $(7,983) $(8,155) $(15,952) $(16,288)
-------- -------- --------- ---------
Adjusted funds from
operations ("AFFO")
- diluted $44,440$45,280$85,558$72,444
======== ======== ========= =========
Weighted average number of
common shares and OP Units
outstanding - basic 119,754 114,297 117,294 112,655
Weighted average number of
common shares, OP Units, and
common stock equivalents
outstanding - diluted 134,211 128,620 132,048 126,857
FFO per common share-basic $0.41$0.43$0.80$0.72
======== ======== ========= =========
FFO per common share-diluted $0.39$0.42$0.77$0.70
======== ======== ========= =========
FFO is defined as net income (computed in accordance with GAAP),
excluding gains (or losses) from sales of depreciable property, plus
depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures. This definition
conforms with the National Association of Real Estate Investment
Trust's definition issued in October, 1999 which became effective
beginning January 1, 2000. In July of 2000, the Best Financial
Practices Council of NAREIT further concluded that impairment write
downs associated with depreciable operating property should be added
back to GAAP net income to arrive at FFO. United Dominion considers
FFO in evaluating property acquisitions and its operating performance
and believes that FFO should be considered along with, but not as an
alternative to, net income and cash flows as a measure of United
Dominion's activities in accordance with generally accepted accounting
principles and is not necessarily indicative of cash available to fund
cash needs.
AFFO is defined as FFO less recurring capital expenditures for our
stabilized portfolio at $435 per home in 2003 and $425 per home in
2002.
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
In thousands, except per share amounts 2003 2002
----------------------------------------------------------------------
ASSETS
Real estate owned:
Real estate held for investment $4,070,585$3,908,746
Less: accumulated depreciation (810,978) (742,876)
----------- -----------
3,259,607 3,165,870
Real estate under development 38,552 30,624
Real estate held for disposition
(net of accumulated depreciation of
$13,022 and $5,857) 81,299 22,256
----------- -----------
Total real estate owned, net of
accumulated depreciation 3,379,458 3,218,750
Cash and cash equivalents 1,627 3,152
Restricted cash 7,147 11,773
Deferred financing costs, net 23,801 17,548
Investment in unconsolidated development
joint venture 3,581 -
Other assets 30,440 24,870
Real estate held for disposition assets 284 43
----------- -----------
Total assets $3,446,338$3,276,136
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Secured debt $1,045,178$1,015,740
Unsecured debt 1,062,647 1,041,900
Real estate taxes payable 24,032 29,743
Accrued interest payable 11,631 11,908
Security deposits and prepaid rent 20,931 21,379
Distributions payable 38,197 35,141
Accounts payable, accrued expenses, and
other liabilities 42,196 49,634
Real estate held for disposition
liabilities 2,804 204
----------- -----------
Total liabilities 2,247,616 2,205,649
Minority interests 89,227 69,216
Shareholders' equity
Preferred stock, no par value; $25
liquidation preference,
25,000,000 shares authorized;
5,416,009 shares 8.60% Series B
Cumulative Redeemable issued
and outstanding
(5,416,009 shares in 2002) 135,400 135,400
6,000,000 shares 7.50% Series D
Cumulative Convertible Redeemable
issued and outstanding
(8,000,000 shares in 2002) 131,250 175,000
3,425,217 shares of 8.00% Series
E Cumulative Convertible issued
and outstanding (0 shares in 2002) 56,893 -
Common stock, $1 par value;
250,000,000 shares authorized
115,885,074 shares issued and
outstanding (106,605,259 shares
in 2002) 115,885 106,605
Additional paid-in capital 1,280,072 1,140,786
Distributions in excess of net income (596,406) (541,428)
Deferred compensation - unearned
restricted stock awards (6,736) (2,504)
Notes receivable from officer-
shareholders (2,291) (2,630)
Accumulated other comprehensive loss,
net (4,572)(A) (9,958)(A)
----------- -----------
Total shareholders' equity 1,109,495 1,001,271
----------- -----------
Total liabilities and shareholders'
equity $3,446,338$3,276,136
=========== ===========
(A) Represents net unrealized loss on derivative instrument
transactions.
CONTACT: United Dominion Realty Trust, Inc.Ella Neyland, 720-283-6144
ir@udrt.comwww.udrt.com
SOURCE: United Dominion Realty Trust, Inc.