RICHMOND, Va.--(BUSINESS WIRE)--Oct. 27, 2003--United Dominion
Realty Trust, Inc. (NYSE:UDR) today reported Funds From Operations
("FFO") of $53.1 million, or $0.38 per diluted share, for the quarter
ended September 30, 2003, compared to FFO of $38.5 million, or $0.30
per diluted share, for the comparable period a year ago, which
included a charge of $12.6 million, or $0.10 per diluted share for
prepayment penalties on the early retirement of debt. FFO is reported
on a fully diluted basis.
"Our operations are responding to signs from the economy of slow
but positive improvements and we continue to execute our strategy of
portfolio repositioning by acquiring and selling apartment homes at
attractive prices. This quarter also saw continued improvement in our
balance sheet as our Fixed Charge Coverage Ratio increased to 2.4X and
Standard and Poor's Rating Services upgraded our rating to BBB,"
stated Thomas W. Toomey, President and Chief Executive Officer.
Highlights from the Third Quarter
-- FFO met Wall Street consensus estimates
-- Acquired an apartment community for $18.5 million
-- Sold five apartment communities for $66.5 million
-- Issued 4.0 million shares of common stock with net proceeds of
$18.08 per share
-- Standard and Poor's Rating Services upgraded the rating on
senior unsecured debt to BBB, preferred stock to BBB-, and
corporate credit rating to BBB/Stable outlook
Portfolio Operating Performance and Same Community Results
During the third quarter, 70,494 apartment homes, or 94.5% of
total apartment homes, were classified as Same Community. The Company
defines Same Community as all multifamily communities owned and
stabilized for at least one year as of the beginning of the most
recent quarter.
Same Community Results ($ in thousands, except monthly rent)
----------------------------------------------------------------------
3rd Qtr 3rd Qtr
'03 '02 % Change
-----------------------------
Gross potential rent $148,428$152,432 -2.6%
Net rental & other income 141,884 143,607 -1.2%
Expenses 55,297 54,219 2.0%
Net operating income 86,587 89,388 -3.1%
Avg. monthly rent per home $702$721 -2.6%
Avg. monthly rent per square foot 0.79 0.81 -2.6%
Avg. physical occupancy 92.9% 92.6% 0.3%
Operating margin 61.0% 62.2% -1.2%
Rent concessions, % of gross potential
rent 2.9% 3.3% -0.4%
Annualized resident turnover rate 75.5% 82.6% -7.1%
Resident credit loss, % of gross potential
rent 0.7% 0.9% -0.2%
On a quarter-over-quarter basis, third quarter 2003 Same Community
Net Operating Income ("NOI") growth of negative 3.1% was the result of
a 1.2% decrease in revenues from rental and other income and a 2.0%
increase in operating expenses.
Same Community represents 55 markets, of which 23 markets, or
41.8%, generated positive Same Community NOI growth third quarter 2003
over third quarter 2002.
Same Community Results ($ in thousands, except monthly rent)
----------------------------------------------------------------------
3rd Qtr 2nd Qtr
'03 '03 % Change
------------------------------
Gross potential rent $148,428$148,821 -0.3%
Net rental & other income 141,884 143,430 -1.1%
Expenses 55,297 53,640 3.1%
Net operating income 86,587 89,790 -3.6%
Avg. monthly rent per home $702$704 -0.3%
Avg. monthly rent per square foot 0.79 0.79 -0.3%
Avg. physical occupancy 92.9% 93.6% -0.7%
Operating margin 61.0% 62.6% -1.6%
Rent concessions, % of gross potential
rent 2.9% 3.1% -0.2%
Annualized resident turnover rate 75.5% 68.6% 6.9%
Resident credit loss, % of gross potential
rent 0.7% 0.6% 0.1%
Sequentially, comparing third quarter 2003 to the second quarter
2003, Same Community NOI decreased by 3.6% due to a 1.1% decrease in
rental and other income and a 3.1% increase in expenses.
Same Community represents 55 markets, of which 19 markets, or
34.5%, generated positive Same Community NOI growth third quarter 2003
over second quarter 2003.
Financing Activities
In September, the Company issued 4.0 million shares of its common
stock for net proceeds of $18.08 per share. The net proceeds of $72.3
million will be used for general corporate purposes, including funding
future acquisitions and development.
At the end of September, the rating on the Company's senior
unsecured debt was upgraded to BBB by Standard & Poor's Rating
Services, and the Company's corporate credit rating to BBB/Stable
outlook.
"In the beginning of October, we issued $75 million of 5.13%
senior unsecured notes at a spread of 112 basis points with a maturity
of January 2014. After this issuance, and on a pro-forma basis, our
variable rate debt is less than 24% of total debt, of which 80% can be
fixed on one week's notice," stated Ella Neyland, Executive Vice
President and Treasurer.
Portfolio Repositioning
During the third quarter, with the $18.5 million acquisition of
Pacific Palms in Anaheim, California, the Company added 149 apartment
homes at a cost of $124K per home, which is below replacement cost of
$160K per home in that market. This purchase price represents a 7% cap
rate based on forward twelve months operations less a capital
expenditure reserve of $435 per home. The community is located within
one mile of Disneyland and has excellent visibility with easy access
to major freeways. This acquisition increases the Company's apartment
holdings in Southern California to 2,775 homes.
During this same period, the Company sold five apartment
communities with a total of 1,340 homes for a total sales price of
$66.5 million at a blended cap rate of 7.15% based on trailing twelve
months operations less a capital reserve expenditure of $435 per home.
The apartments were located in Indianapolis, Indiana, San Antonio,
Texas (complete exit from these markets), Centreville, Virginia, and
Lakeland, Florida.
"We continue to find opportunities to increase our ownership in
Anaheim, which is the tenth largest city in California, to further
take advantage of our operations platform in this market. We also
exited two more markets that we did not view as core markets at a $7.2
million net gain," stated Mark Wallis, Senior Executive Vice
President.
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 $460 per apartment home, or $0.25 per
share. Given current expectations and judgment, the Company's guidance
for Fourth Quarter 2003 FFO is $.37 per share, and for the full year
2003 is $1.52 per share.
During the conference call on Tuesday, October 28th, management
will review and discuss its guidance for 2004.
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 $1.52 - $1.52
Conversion to GAAP Share Count (A) 0.29 - 0.29
Minority Interest of OP Unit Holders (A) (0.04) - (0.01)
Depreciation (B) (1.42) - (1.46)
Gains (B) 0.51 - 0.07
Preferred Dividends (0.14) - (0.14)
Premium on Preferred Share Repurchases (0.16) - (0.16)
--------- -------
Expected Earnings Per Share $0.56 - $0.11
========= =======
(A) Operating Partnership 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/3Q2003
Conference Call Information
Date: October 28, 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: 800-218-0530
International: 303-262-2171
If you have any questions, please contact: Karen Droba
Phone: 312-640-6770
E-mail: kdroba@webershandwick.com
Conference Call Playback:
Domestic: 800-405-2236
International: 303-590-3000
Passcode: 549493
The playback can be accessed until November 4, 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 74,630 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, the impact of competition and
competitive pricing, acquisitions or new developments may not achieve
anticipated results, delays in completing developments and lease-ups
on schedule, 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
forward-looking statements, including its guidance for fourth quarter
2003 FFO and/or full year 2003 guidance.
Attachment 1
------------
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
In thousands, except per 2003 2002 2003 2002
share amounts
----------------------------------------------------------------------
Rental income $152,157$146,857$450,395$434,643
Rental expenses:
Real estate taxes
and insurance 17,092 14,883 51,388 47,604
Personnel 16,296 15,553 46,155 43,551
Utilities 9,610 8,638 27,567 24,839
Repairs and
maintenance 9,779 10,380 28,556 26,942
Administrative and
marketing 5,658 5,693 16,772 15,819
Property management 4,252 4,312 12,631 13,028
Other operating
expenses 302 277 912 931
--------- --------- --------- ---------
62,989 59,736 183,981 172,714
Other income:
Non-property income 307 138 703 885
Other expenses:
Real estate depreciation 41,058 38,341 118,900 110,083
Interest 27,829 34,136 88,921 98,222
Impairment loss on
investments 1,392(A) - 1,392 -
Loss/(gain) on early
debt retirement - 12,104 (169) 28,364
General and
administrative 5,526 2,974 16,133 15,478
Other depreciation
and amortization 807 946 2,327 3,213
--------- --------- --------- ---------
76,612 88,501 227,504 255,360
Income/(loss) before
minority interests and
discontinued operations 12,863 (1,242) 39,613 7,454
Minority interests of
outside partnerships - (377) (614) (1,098)
Minority interests of
unitholders in operating
partnerships (330) 506 (724) 881
--------- --------- --------- ---------
Income/(loss) before
discontinued operations,
net of minority interests 12,533 (1,113) 38,275 7,237
Income from discontinued
operations, net of minority
interests (including
gains/loss on sales) 7,911 21,512 11,094 38,889
--------- --------- --------- ---------
Net income 20,444 20,399 49,369 46,126
Distributions to preferred
shareholders - Series B (2,911) (2,911) (8,733) (8,733)
Distributions to preferred
shareholders - Series D
(Convertible) (3,053) (3,886) (10,482) (11,815)
Distributions to preferred
shareholders - Series E
(Convertible) (1,138) - (1,365) -
Premium on preferred share
repurchases (12,100) - (18,350) -
--------- --------- --------- ---------
Net income available to
common shareholders $1,242$13,602$10,439$25,578
========= ========= ========= =========
Earnings per common share -
basic and diluted:
Loss from continuing
operations available
to common shareholders, net
of minority interests ($0.06) ($0.07) ($0.01) ($0.13)
Income from discontinued
operations, net of
minority interests $0.07$0.20$0.10$0.37
Net income available to
common shareholders $0.01$0.13$0.09$0.24
Common distributions
declared per share $0.2850 $0.2775 $0.8550 $0.8325
Weighted average number of
common shares outstanding-
basic and diluted 116,350 107,148 112,252 106,139
(A) Represents the write-off of the Company's investment in
Realeum, Inc., an unconsolidated development joint venture created to
develop web-based solutions for multi-family property and portfolio
management.
Attachment 2
------------
UNITED DOMINION REALTY TRUST, INC.
FUNDS FROM OPERATIONS
(Unaudited)
Three Months Nine Months
Ended Ended
Sept. 30, Sept. 30,
In thousands, except per share 2003 2002 2003 2002
amounts
----------------------------------------------------------------------
Net income $20,444$20,399$49,369$46,126
Adjustments:
Distributions to preferred
shareholders (7,102) (6,797) (20,580) (20,548)
Real estate depreciation, net of
outside partners' interest 41,058 37,993 118,465 108,948
Minority interests of
unitholders in operating
partnership 330 (506) 724 (881)
Real estate depreciation related
to unconsolidated entities 52 60 137 437
Discontinued Operations:
Real estate depreciation 32 1,137 1,288 8,301
Minority interests of
unitholders in operating
partnership 501 1,422 702 2,570
Net gains on sales of
depreciable property (7,215)(19,128) (8,149) (31,872)
-----------------------------------
Funds from operations ("FFO") -
basic $48,100$34,580$141,956$113,081
===================================
Distribution to preferred
shareholders - Series D and E
(Convertible) 4,191 3,886 11,847 11,815
-----------------------------------
Funds from operations - diluted $52,291$38,466$153,803$124,896
===================================
Gains on the disposition of real
estate developed for sale(A) 812 - 812 -
-----------------------------------
FFO with gains on the disposition
of real estate developed for sale
- diluted $53,103$38,466$154,615$124,896
===================================
Recurring capital expenditures (8,662) (8,069) (25,593) (24,438)
-----------------------------------
Adjusted funds from operations
("AFFO") - diluted $44,441$30,397$129,022$100,458
===================================
Weighted average number of common
shares and OP Units outstanding -
basic 124,979 114,121 119,923 113,149
Weighted average number of common
shares, OP Units, and common stock
equivalents outstanding - diluted 140,424 128,557 134,870 127,534
FFO per common share - basic $0.38$0.30$1.18$1.00
===================================
FFO per common share - diluted $0.37$0.30$1.14$0.98
===================================
FFO per common share with gains on
real estate developed for sale -
diluted $0.38$0.30$1.15$0.98
===================================
(A) See Attachment 2(A) for further discussion.
Attachment 2(A)
-------------------------
UNITED DOMINION REALTY TRUST, INC.
FUNDS FROM OPERATIONS (continued)
(Unaudited)
The following is a reconciliation of GAAP gains from the
disposition of real estate developed for sale to gross gains from the
disposition of real estate developed for sale.
Three Months Nine Months
Ended Ended
Sept. 30, Sept. 30,
-------------- --------------
In thousands 2003 2002 2003 2002
----------------------------------------------- ---------------
GAAP gains from the
disposition of real
estate developed for
sale $1,249 $- $1,249 $-
Less: accumulated
depreciation (437) - (437) -
-------- ------- ------- -----
Gains from the
disposition of real
estate developed for
sale $812 $- $812 $-
======== ======= ======= =====
Gains from the disposition of real estate investments developed
for sale is defined as net sales proceeds less a tax provision (such
development by REITs must be conducted in a TRS) and the gross
investment basis of the asset before accumulated depreciation. We
consider FFO with gains/losses on real estate developed for sale to be
a meaningful supplemental measure of performance because of the
short-term use of funds to produce a profit which differs from the
traditional long-term investment in real estate for REITs.
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. United Dominion considers FFO in evaluating
property acquisitions and its operating perfomance 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 $460 per home in 2003 and $425 per home in
2002.
Attachment 3
------------
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
In thousands, except per share amounts Sept. 30, Dec. 31,
2003 2002
-------------------------------------------------------------------
ASSETS
Real estate owned:
Real estate held for investment $4,122,402$3,908,746
Less: accumulated depreciation (854,465) (742,876)
--------------- -----------
3,267,937 3,165,870
Real estate under
development 41,317 30,624
Real estate held for
disposition (net of
accumulated depreciation
of $1,006 and $5,857) 8,387 22,256
--------------- -----------
Total real estate owned,
net of accumulated
depreciation 3,317,641 3,218,750
Cash and cash equivalents 12,940 3,152
Restricted cash 7,006 11,773
Deferred financing costs, net 21,370 17,548
Investment in unconsolidated
development joint venture 2,214 -
Funds held in escrow from
1031 exchanges pending the
acquisition of real estate 14,447 -
Other assets 37,950 24,870
Real estate held for
disposition assets 128 43
--------------- -----------
Total assets $3,413,696$3,276,136
=============== ===========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Secured debt $1,041,476$1,015,740
Unsecured debt 967,251 1,041,900
Real estate taxes payable 32,270 29,743
Accrued interest payable 14,181 11,908
Security deposits and prepaid
rent 21,030 21,379
Distributions payable 39,950 35,141
Accounts payable, accrued
expenses, and other
liabilities 38,895 49,634
Real estate held for
disposition liabilities 1,944 204
-------------- -----------
Total liabilities 2,156,997 2,205,649
Minority interests 88,215 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) 143,350 175,000
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
120,162,717 shares issued and
outstanding (106,605,259 shares in
2002) 120,163 106,605
Additional paid-in capital 1,351,307 1,140,786
Distributions in excess of net income (629,441) (541,428)
Deferred compensation - unearned
restricted stock awards (5,789) (2,504)
Notes receivable from
officer-shareholders (600) (2,630)
Accumulated other comprehensive
loss, net (2,799)(A) (9,958)(A)
------------ -----------
Total shareholders' equity 1,168,484 1,001,271
------------ -----------
Total liabilities and
shareholders' equity $3,413,696$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.com; www.udrt.com
SOURCE: United Dominion Realty Trust, Inc.