RICHMOND, Va.--(BUSINESS WIRE)--April 18, 2005--United Dominion
Realty Trust, Inc. (NYSE:UDR) today reported Funds From Operations
("FFO") of $57.9 million, or $0.39 per share (diluted), for the
quarter ended March 31, 2005. This compares to FFO of $54.8 million,
or $0.38 per share (diluted), for the same period a year ago.
"Our first quarter results demonstrate a continuation of the
strengthening fundamentals we registered last quarter," stated Thomas
W. Toomey, President and Chief Executive Officer. "We achieved same
store average occupancy of 94.4%, the highest level in over four
years. This is up 1.1% from last year and up 0.3% from last quarter.
All four drivers of revenue improved, helping us record a 3.8%
increase in net operating income. I'm very pleased with our progress
and expect to see continued strength in future quarters."
Highlights from the First Quarter
-- Acquired one apartment community for $106 million
-- Sold 10 apartment communities for $69.1 million
-- Issued $100 million of senior unsecured notes due 2015 at an
effective rate of 5.17%
-- Repaid $110 million of secured debt, reducing our secured debt
ratio from 42% to 37%
-- Received $12.3 million in proceeds from the sale of shares in
Rent.com to eBay
"During the first quarter, we took steps to strengthen the Company
by reinvesting the gain on the sale of our Rent.com shares in areas
having long-term benefits for our investors," stated Mr. Toomey. "We
financed initiatives that continue to strengthen our balance sheet and
we funded incentive programs to benefit our associates. These steps
are consistent with our goal of value creation over time."
Portfolio Operating Performance and Same Community Results
During the first quarter, 63,893 apartment homes, or 82% of total
apartment homes, were classified as Same Community. The Company
defines Same Community as all multifamily communities owned and
stabilized for at least five quarters as of the beginning of the most
recent quarter.
Same Community Results, Year/Year
($ in thousands, except monthly rent)
1st Qtr '05 1st Qtr '04 % Change
----------- ----------- --------
Rent and other income $138,859 $135,704 2.3%
Concessions 3,421 3,645 -6.1%
Bad debt 144 360 -59.9%
Total income 135,294 131,699 2.7%
Expenses 52,307 51,723 1.1%
Net operating income 82,987 79,976 3.8%
Avg. monthly collections per
occupied home $716 $706 1.4%
Avg. monthly reimbursements per
occupied home 31 30 3.3%
Avg. physical occupancy 94.4% 93.3% 110 bps
Operating margin 61.3% 60.7% 60 bps
Annualized resident turnover rate 56.1% 56.6% -50 bps
Resident credit loss, % of effective rent 0.1% 0.3% -20 bps
On a quarter-over-quarter basis, first quarter 2005 Same Community
Net Operating Income ("NOI") improved 3.8% as a result of a 2.7%
increase in revenues from rental and other income and a 1.1% increase
in operating expenses.
Same Community represents 41 markets, of which 28 markets, or 68%,
generated positive Same Community NOI growth first quarter 2005
compared to first quarter 2004.
Same Community Results, Quarter/Quarter
($ in thousands, except monthly rent)
1st Qtr '05 4th Qtr '04 % Change
----------- ----------- --------
Rent and other income $138,859 $138,088 0.6%
Concessions 3,421 4,008 -14.6%
Bad debt 144 733 -80.3%
Total income 135,294 133,347 1.5%
Expenses 52,307 51,099 2.4%
Net operating income 82,987 82,248 0.9%
Avg. monthly collections per
occupied home $716 $709 1.0%
Avg. monthly reimbursements per
occupied home 31 30 3.3%
Avg. physical occupancy 94.4% 94.1% 30 bps
Operating margin 61.3% 61.7% -40 bps
Annualized resident turnover rate 56.1% 57.4% -130 bps
Resident credit loss, % of effective rent 0.1% 0.5% -40 bps
Sequentially, comparing first quarter 2005 to fourth quarter 2004,
Same Community NOI improved 0.9% due to a 1.5% increase in revenues
from rental and other income and a 2.4% increase in expenses.
Same Community represents 41 markets, of which 25 markets, or 61%,
generated positive Same Community NOI growth first quarter 2005 over
fourth quarter 2004.
Non-Mature Properties
The composition of the Company's portfolio has changed
significantly over the past three years. Currently, 18% of the
portfolio is considered 'non-mature,' meaning that the communities
have not been owned or stabilized for more than five quarters. In the
coming quarters, the Same Community portfolio will benefit from an
influx of acquired properties currently considered non-mature in
California, Metropolitan Washington D.C. and Florida, which are high
rent and high occupancy markets. These high barrier markets comprise
approximately 85% of non-mature NOI. The overall average monthly
rental rate of our non-mature assets is approximately $1,000 per
month.
Portfolio Repositioning
During the first quarter, the Company acquired one apartment
community in Newport Beach, California, with 715 apartment homes for a
purchase price of $106 million (averaging $148,252 per home.) This
property was acquired at a cap rate of 5.5% using forward twelve
months of operations and a reserve for capital expenditures of $510
per home. This property was one of the two remaining communities to be
purchased in the ESSEX transaction. For more details on this
transaction, see our press release dated September 7, 2004.
The Company also sold 10 older communities in Houston and Phoenix
with 1,855 apartment homes for a total of $69.1 million at a blended
cap rate of 5.5% using trailing twelve months of operations less an
actual capital expenditure reserve of $510 per home and a management
fee of 2.75%. On average, these homes were 24 years old, approximately
900 square feet in size, and generated $629 per month in rent.
Financing Activities
During the first quarter, the Company issued $100 million of
senior unsecured notes with an effective average coupon of 5.17% or a
spread of 92.5 basis points to the benchmark 10 year Treasury yield.
These notes represented a re-opening of the 5.25% coupon notes that
were originally issued on November 1, 2004, which mature on January
15, 2015, bringing the aggregate principal amount outstanding of these
notes to $200 million.
eBay Purchase of Rent.com
In February, eBay (Nasdaq:EBAY) completed its acquisition of
Rent.com, a leading Internet listing web site in the apartment and
rental housing industry, for approximately $415 million in cash, plus
acquisition costs, net of Rent.com's cash on hand. United Dominion
owned shares in Rent.com. As a result of that sale, the Company
recorded a gain of $12.3 million in the first quarter. The Company
utilized approximately $9 million of the proceeds to fund prepayment
penalties and offset the write off of deferred financing costs on
approximately $90 million of single asset secured mortgages and $20
million outstanding debt on a $70 million secured credit facility that
was terminated. These activities plus the issuance of unsecured debt
reduced the Company's secured debt ratio from 42% to 37%. The
remaining proceeds were reserved to fund incentive programs to benefit
our associates.
Earnings Guidance
United Dominion believes that financial results for 2005 will be
affected by international, national and regional economic trends and
events, the acquisition and/or disposition of apartment communities
and other factors. The Company's guidance for the second quarter 2005
FFO is $0.39 to $0.41 per share (diluted) and $1.57 to $1.70 per share
(diluted) for the full year 2005. All guidance is based on the current
expectations and judgment of the Company's management team.
Detailed assumptions for the Company's 2005 guidance can be found
on our website at:
http://media.corporate-ir.net/media_files/irol/11/112440/guidance/
guidance.pdf. (Due to its length, this URL may need to be
copied/pasted into your Internet browser's address field. Remove the
extra space if one exists.)
A reconciliation of the range provided for projected 2005 FFO per
share for the full year to Earnings Per Share ("EPS") for the full
year is as follows:
2005
High-end Low-end
----------------------------------------------------------------------
Funds From Operations(1) $1.70 $1.57
----------------------------------------------------------------------
Conversion to GAAP Share Count (2) 0.22 0.21
----------------------------------------------------------------------
Minority Interest of OP Unit Holders (2) (0.02) (0.04)
----------------------------------------------------------------------
Depreciation (3) (1.58) (1.48)
----------------------------------------------------------------------
Gains (3) 0.15 0.30
----------------------------------------------------------------------
Preferred Dividends (0.07) (0.07)
-------------------------------------------------=====================
Expected Earnings Per Share $0.40 $0.49
----------------------------------------------------------------------
(1) The National Association of Real Estate Investment Trusts
("NAREIT") defines funds from operations ("FFO") (April 2002 White
Paper) as net income (computed in accordance with accounting
principles generally accepted in the United States (GAAP)), excluding
gains (or losses) from sales of depreciable property, plus
depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures. The Company believes
that FFO is helpful to investors as a supplemental measure of the
operating performance of a real estate company because it provides
investors an understanding of the ability of the Company to incur and
service debt and to make capital expenditures. FFO in and of itself
does not represent net income or net cash flows from operating
activities in accordance with GAAP. Therefore, FFO should not be
exclusively considered as an alternative to net income or to net cash
flows from operating activities as determined by GAAP or as a measure
of liquidity.
(2) Operating Partnership units are not considered to be common
stock equivalents for GAAP purposes.
(3) Due to the uncertain timing and extent of property
dispositions and acquisitions, actual results could differ materially
from expected EPS.
Supplemental Information
The Company offers 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:
www.udrt.com/resources/files/Investor_Relations/1Q2005.pdf
Conference Call Information
Date: April 19, 2005
Time: 1:00 p.m. Eastern Time
To Participate in the Telephone Conference Call:
Domestic: 800-218-0713
International: 303-262-2075
If you have any questions, please contact:
Karen Droba: 312-640-6770
E-mail: kdroba@financialrelationsboard.com
Conference Call Playback:
Domestic: 800-405-2236
International: 303-590-3000
Passcode: 11027221
The playback can be accessed through April 29, 2005.
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 raised the
dividend each of the last 29 years. United Dominion is included in the
S&P MidCap 400 Index. At March 31, 2005, the Company owned 77,704
apartment homes and had 807 homes under development. 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. You
can identify these forward-looking statements by the Company's use of
words such as "expects," "plans," "estimates," "projects," "intends,"
"believes," and similar expressions that do not relate to historical
matters. 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 not achieving
anticipated results, the expectation that approximately 50% of
projected 2005 net operating income will come from California, Florida
and Metropolitan Washington D.C., 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. All forward-looking
statements in this press release are made as of today, based upon
information known to management as of the date hereof. The Company
assumes no obligation to update or revise any of its forward-looking
statements even if experience or future changes show that indicated
results or events will not be realized.
Attachment 1
------------
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31,
-------------------
In thousands, except per share amounts 2005 2004
----------------------------------------------------------------------
Rental income $171,331 $143,231
Rental expenses:
Real estate taxes and insurance 20,864 17,675
Personnel 17,536 14,950
Utilities 10,363 9,254
Repair and maintenance 10,687 8,486
Administrative and marketing 6,080 5,020
Property management 4,813 4,361
Other operating expenses 290 270
--------- ---------
70,633 60,016
Non-property income:
Sale of technology investment 12,306 -
Other income 668 395
--------- ---------
12,974 395
Other expenses:
Real estate depreciation and amortization 51,715 39,111
Interest 39,160 28,913
General and administrative 7,000 4,754
Loss on early debt retirement 8,464 5
Other depreciation and amortization 671 909
--------- ---------
107,010 73,692
Income before minority interests and discontinued
operations 6,662 9,918
Minority interests of outside partnerships (58) (64)
Minority interests of unitholders in operating
partnerships (162) (209)
--------- ---------
Income before discontinued operations, net of
minority interests 6,442 9,645
Income from discontinued operations, net of
minority interests (including gain on sales) (A) 8,499 5,667
--------- ---------
Net income 14,941 15,312
Distributions to preferred stockholders - Series B (2,911) (2,911)
Distributions to preferred stockholders - Series D
(Convertible) - (1,036)
Distributions to preferred stockholders - Series E
(Convertible) (931) (1,138)
Premium on preferred stock conversions - (1,562)
--------- ---------
Net income available to common stockholders $11,099 $8,665
========= =========
Earnings per weighted average common share - basic
and diluted:
Income from continuing operations available to
common stockholders, net of minority
interests $0.02 $0.02
Income from discontinued operations, net of
minority interests $0.06 $0.05
Net income available to common stockholders $0.08 $0.07
Common distributions declared per share $0.3000 $0.2925
Weighted average number of common shares
outstanding - basic 136,067 126,984
Weighted average number of common shares
outstanding - diluted 137,073 127,953
(A) Discontinued operations represents all properties sold since
January 1, 2002, and properties that are currently classified as
held for disposition at March 31, 2005.
Attachment 2
------------
UNITED DOMINION REALTY TRUST, INC.
FUNDS FROM OPERATIONS
(Unaudited)
Three Months Ended
March 31,
--------------------
In thousands, except per share amounts 2005 2004
----------------------------------------------------------------------
Net income $14,941 $15,312
Adjustments:
Distributions to preferred stockholders (3,842) (5,085)
Real estate depreciation and amortization 51,715 39,111
Minority interests of unitholders in
operating partnership 162 209
Real estate depreciation related to
unconsolidated entities 62 57
Discontinued Operations:
Real estate depreciation 4 3,800
Minority interests of unitholders in
operating partnership 529 397
Net gain on sale of depreciable property (7,023) (1,205)
---------- ---------
Funds from operations ("FFO") - basic $56,548 $52,596
========== =========
Distribution to preferred stockholders - Series
D and E (Convertible) 931 2,174
---------- ---------
Funds from operations - diluted $57,479 $54,770
========== =========
Gains on the disposition of real estate
developed for sale (A) 459 -
---------- ---------
FFO with gains on the disposition of real estate
developed for sale - diluted $57,938 $54,770
========== =========
Weighted average number of common shares and OP
Units outstanding - basic 144,683 135,901
Weighted average number of common shares, OP
Units, and common stock equivalents
outstanding - diluted 150,187 145,163
FFO per common share - basic $0.39 $0.39
========== =========
FFO per common share - diluted $0.39 $0.38
========== =========
FFO is defined as net income (computed in accordance with GAAP),
excluding gains (or losses) from sales of depreciable property, plus
real estate 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 April 2002. 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.
For the three months ended March 31, 2004, distributions to preferred
stockholders excludes $1.6 million related to premiums on preferred
stock conversions.
(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 Ended
March 31,
---------------------
In thousands 2005 2004
--------------------------------------------- ---------------------
GAAP gains from the disposition of real estate
developed for sale $466 $-
Less: accumulated depreciation (7) -
----------- ---------
Gains from the disposition of real estate
developed for sale $459 $-
=========== =========
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 the
short-term use of funds produce a profit which differs from the
traditional long-term investment in real estate for REITs.
Attachment 3
------------
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
In thousands, except share and
per share amounts March 31, December 31,
2005 2004
----------------------------------------------------------------------
ASSETS
Real estate owned:
Real estate held for investment $5,167,321 $5,029,084
Less: accumulated depreciation (1,021,170) (978,159)
------------ -------------
4,146,151 4,050,925
Real estate under development 74,859 63,729
Real estate held for disposition (net of
accumulated depreciation of $10,328 and
$29,728) 58,655 120,755
------------ -------------
Total real estate owned, net of
accumulated depreciation 4,279,665 4,235,409
Cash and cash equivalents 1,661 7,904
Restricted cash 5,921 6,086
Deferred financing costs, net 23,463 25,151
Investment in unconsolidated development
joint venture 436 458
Funds held in escrow from 1031 exchanges
pending the acquisition of real estate - 17,039
Note receivable 5,000 5,000
Other assets 36,590 34,347
Other assets - real estate held for
disposition 1,280 607
------------ -------------
Total assets $4,354,016 $4,332,001
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Secured debt $1,088,451 $1,197,924
Unsecured debt 1,852,663 1,682,058
Real estate taxes payable 19,330 31,377
Accrued interest payable 24,736 18,773
Security deposits and prepaid rent 26,306 25,168
Distributions payable 45,800 44,624
Accounts payable, accrued expenses, and
other liabilities 46,945 50,217
Other liabilities - real estate held for
disposition 1,115 2,816
------------ -------------
Total liabilities 3,105,346 3,052,957
Minority interests 79,942 83,593
Stockholders' equity
Preferred stock, no par value; $25
liquidation preference,
25,000,000 shares authorized;
5,416,009 shares of 8.60% Series B
Cumulative Redeemable issued and
outstanding
(5,416,009 shares in 2004) 135,400 135,400
2,803,812 shares of 8.00% Series E
Cumulative Convertible issued
and outstanding (2,803,812 shares in
2004) 46,571 46,571
Common stock, $1 par value; 250,000,000
shares authorized
136,940,069 shares issued and outstanding
(136,429,592 shares in 2004) 136,940 136,430
Additional paid-in capital 1,625,479 1,614,916
Distributions in excess of net income (761,905) (731,808)
Deferred compensation - unearned
restricted stock awards (13,757) (6,058)
------------ -------------
Total stockholders' equity 1,168,728 1,195,451
------------ -------------
Total liabilities and
stockholders' equity $4,354,016 $4,332,001
============ =============
CONTACT: United Dominion Realty Trust, Inc.Larry Thede, 720-283-2450
ir@udrt.comwww.udrt.com
SOURCE: United Dominion Realty Trust, Inc.