RICHMOND, Va.--(BUSINESS WIRE)--July 25, 2005--United Dominion
Realty Trust, Inc. (NYSE: UDR) today reported Funds From Operations
("FFO") of $59.4 million, or $0.40 per share (diluted), for the
quarter ended June 30, 2005. This compares to FFO of $56.6 million, or
$0.39 per share (diluted), for the same period a year ago.
"Our focus on operations and asset quality, combined with the
repositioning of our portfolio and the execution of enhancement
opportunities within that portfolio, continues to create shareholder
value," stated Thomas W. Toomey, President and Chief Executive
Officer. "Revenue growth is strengthening and both margins and returns
on invested capital are growing, despite a declining cap rate
environment. I'm very pleased with our results and am excited about
the future of our company."
Highlights from the Second Quarter
-- Achieved same store occupancy of 94.4%,up from 93.9% in the
second quarter of 2004
-- Increased same store monthly collections by 2.9% and reduced
concessions by 28.5%, year over year
-- Acquired one apartment community for $37.8 million and one
parcel of land for $2.9 million
-- Sold one apartment community for $100 million, realizing a
gain of $46 million
-- Sold 27 condominiums for $8.3 million, realizing a gain of
$1.9 million
-- Extended the term of our credit facility for an additional two
years and amended the provisions, reducing our cost
-- Issued $50 million of senior unsecured notes through a
re-opening of our 5.25% senior note program, due January 15,
2015
-- Elected to convert a $75 million variable rate debt facility,
currently yielding 3.77%, to a fixed rate of 4.86% for 7
years, effective December 1, 2005
-- Repaid $41.3 million of debt carrying a weighted average
interest rate of 8.0%
Portfolio Operating Performance and Same Community Results
During the second quarter, 62,327 apartment homes, or 81% of total
apartment homes, were classified as Same Community. The Company
defines Same Community as all multifamily communities owned and
stabilized for at least five quarters as of the beginning of the most
recent quarter.
Same Community Results, Quarter/Quarter
($ in thousands, except collections and
reimbursements per occupied home)
---------------------------------------------------------------------
2nd Qtr '05 2nd Qtr '04 % Change
----------- ----------- ---------
Rent and other income $139,674 $136,418 2.4%
Concessions 2,762 3,860 -28.5%
Bad debt 653 833 -21.6%
Total income 136,259 131,725 3.4%
Expenses 51,159 50,203 1.9%
Net operating income 85,100 81,522 4.4%
Avg. monthly collections per
occupied home $741 $720 2.9%
Avg. monthly reimbursements per
occupied home $31 $30 3.3%
Avg. physical occupancy 94.4% 93.9% 50bps
Operating margin 62.5% 61.9% 60bps
Annualized resident turnover rate 64.4% 65.5% -110bps
Resident credit loss, % of
effective rent 0.5% 0.6% -10bps
On a quarter-over-quarter basis, second quarter 2005 Same
Community Net Operating Income ("NOI") improved 4.4% as a result of a
3.4% increase in revenues from rental and other income and a 1.9%
increase in operating expenses.
On a Same Community basis, 83% of the portfolio generated positive
Same Community NOI growth second quarter 2005 compared to second
quarter 2004.
Same Community Results, Quarter/Quarter
($ in thousands, except collections and
reimbursements per occupied home)
----------------------------------------------------------------------
2nd Qtr '05 1st Qtr '05 % Change
------------ ----------- ---------
Rent and other income $139,674 $138,130 1.1%
Concessions 2,762 3,358 -17.8%
Bad debt 653 139 369.8%
Total income 136,259 134,633 1.2%
Expenses 51,159 51,571 -0.8%
Net operating income 85,100 83,062 2.5%
Avg. monthly collections per
occupied home $741 $732 1.2%
Avg. monthly reimbursements per
occupied home $31 $31 0.0%
Avg. physical occupancy 94.4% 94.4% 0bps
Operating margin 62.5% 61.7% 80bps
Annualized resident turnover rate 64.4% 55.7% 870bps
Resident credit loss, % of
effective rent 0.5% 0.1% 40bps
Sequentially, comparing second quarter 2005 to first quarter 2005,
Same Community NOI improved 2.5% due to a 1.2% increase in revenues
from rental and other income and a 0.8% decrease in expenses.
On a Same Community basis, 76% of the portfolio generated positive
Same Community NOI growth second quarter 2005 over first quarter 2005.
Non-Mature Properties
The composition of the Company's portfolio has changed
significantly over the past three years. Currently, 19% 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 66% of non-mature NOI. The overall average monthly net
rent per occupied unit of our high barrier non-mature assets is over
$1,100 per month.
Portfolio Repositioning
During the second quarter, the Company acquired one apartment
community in Jacksonville, Florida with 400 apartment homes for a
purchase price of $37.8 million (averaging $94,390 per home.) The
community is 15 years old but underwent an exterior renovation in 2003
and the company intends to implement its kitchen and bath upgrade
program over time. This property was acquired at a cap rate of 5.6%
using forward twelve months of operations and a reserve for capital
expenditures of $510 per home. In addition, the Company paid $2.9
million to purchase one parcel of land adjacent to an existing
community in Plano, Texas.
The Company sold one older community in Anaheim, California with
768 apartment homes for $100 million at a cap rate of 5.4% using
trailing twelve months of operations less an actual capital
expenditure reserve of $510 per home and a management fee of 2.75%.
These homes were 34 years old, approximately 630 square feet in size,
and generated $969 per month in rent. The sale generated a gain of
$46.2 million. In addition, the Company sold 27 condominiums for $8.3
million and an after tax profit of $1.9 million.
Financing Activities
During the second quarter, the Company amended its $500 million
unsecured revolving credit facility and extended the term an
additional two years. Based on the Company's current credit ratings,
the credit facility carries an interest rate equal to LIBOR plus a
spread of 57.5 basis points, which represents a 12.5 basis point
reduction to the previous unsecured revolver, and the facility fee was
reduced from 20 basis points to 15 basis points. Under a competitive
bid feature and for so long as the Company maintains an Investment
Grade Rating, the Company has the right to bid out 100% of the
commitment amount, once per quarter. Recent competitive bid pricing
has been LIBOR plus 14 to19 basis points. The Company has the right to
increase the credit facility to $750 million.
In April, the Company issued $50 million aggregate principal
amount of 5.25% senior unsecured notes due January 2015 under its
medium-term note program. These notes represented a re-opening of the
5.25% senior unsecured notes due January 2015 that were issued in
November 2004, and constitute a single series of notes. The April 2005
issuance brought the aggregate principal amount of the 5.25% senior
unsecured notes to $250 million.
During the quarter, the Company elected to convert a $75 million
variable rate debt placement to a fixed rate of 4.86%. The rate,
currently at 3.77%, will float until December 1, 2005, and then
convert to a 7-year fixed rate of 4.86%.
Earnings Guidance
The Company 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,
portfolio repositioning, financing activities, its ability to prepay
high coupon debt, and other factors. The Company's guidance for the
third quarter 2005 FFO is $0.39 to $0.42 per share (diluted) and $1.59
to $1.65 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) $1.65 $1.59
----------------------------------------------------------------------
Conversion to GAAP Share Count (2) 0.16 0.15
----------------------------------------------------------------------
Minority Interest of OP Unit Holders (2) (0.02) (0.04)
----------------------------------------------------------------------
Depreciation (3) (1.50) (1.45)
----------------------------------------------------------------------
Gains (3) 0.75 0.37
----------------------------------------------------------------------
Preferred Dividends (0.07) (0.07)
------------------------------------------============================
Expected Earnings Per Share $0.97 $0.55
----------------------------------------------------------------------
(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/2Q2005.pdf
Conference Call Information
Date: July 26, 2005
Time: 1:00 p.m. Eastern Time
To Participate in the Telephone Conference Call:
Domestic: 800-240-2134
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: 11033157
The playback can be accessed through August 5, 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 June 30, 2005, the Company owned 77,289
apartment homes and had 1,335 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.
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 2005 2004 2005 2004
---- ---- ---- ----
Rental income $169,427 $140,651 $334,489 $277,480
Rental expenses:
Real estate taxes and
insurance 19,533 16,849 39,454 33,462
Personnel 17,413 14,231 34,098 28,390
Utilities 9,405 8,014 19,301 16,843
Repair and maintenance 10,543 9,289 20,852 17,436
Administrative and marketing 5,822 4,895 11,586 9,646
Property management 4,844 4,390 9,657 8,751
Other operating expenses 290 291 580 561
------- ------- ------- -------
67,850 57,959 135,528 115,089
Non-property income:
Sale of technology
investment - - 12,306 -
Non-property income 39 1,062 657 1,406
------- ------- ------- -------
39 1,062 12,963 1,406
Other expenses:
Real estate depreciation
and amortization 51,372 39,151 101,530 76,574
Interest 39,079 29,084 78,012 57,770
General and administrative 4,909 4,627 11,908 9,381
Loss on early debt
retirement 18 - 6,785 5
Other depreciation and
amortization 677 810 1,337 1,703
------- ------- ------- -------
96,055 73,672 199,572 145,433
Income before minority
interests and discontinued
operations 5,561 10,082 12,352 18,364
Minority interests of
outside partnerships (54) (50) (112) (115)
Minority interests of
unitholders in operating
partnerships (107) (208) (277) (322)
------- ------- ------- -------
Income before discontinued
operations, net of minority
interests 5,400 9,824 11,963 17,927
Income from discontinued
operations, net of
minority interests
(including gain on sales)(A) 47,041 18,687 55,420 25,896
------- ------- ------- -------
Net income 52,441 28,511 67,383 43,823
Distributions to preferred
stockholders - Series B (2,911) (2,911) (5,822) (5,822)
Distributions to preferred
stockholders - Series D
(Convertible) - (1,045) - (2,080)
Distributions to preferred
stockholders - Series E
(Convertible) (931) (1,138) (1,863) (2,276)
Premium on preferred stock
conversions - (1,562) - (3,125)
------- ------- ------- -------
Net income available to
common stockholders $48,599 $21,855 $59,698 $30,520
======= ======= ======= =======
Earnings per weighted average
common share - basic and
diluted:
Income from continuing
operations available to
common stockholders, net
of minority interests $0.01 $0.02 $0.03 $0.04
Income from discontinued
operations, net of
minority interests $0.35 $0.15 $0.41 $0.20
Net income available to
common stockholders $0.36 $0.17 $0.44 $0.24
Common distributions
declared per share $0.3000 $0.2925 $0.6000 $0.5850
Weighted average number
of common shares
outstanding - basic 136,150 127,150 136,108 127,057
Weighted average number
of common shares
outstanding - diluted 137,051 128,065 137,062 127,996
(A) Discontinued operations represents all properties sold since
January 1, 2002, and properties that are currently classified as
held for disposition at June 30, 2005.
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 2005 2004 2005 2004
---- ---- ---- ----
Net income $52,441 $28,511 $67,383 $43,823
Adjustments:
Distributions to preferred
stockholders (3,842) (5,094) (7,685) (10,178)
Real estate depreciation
and amortization 51,372 39,151 101,530 76,574
Minority interests of
unitholders in operating
partnership 107 208 277 322
Real estate depreciation
related to unconsolidated
entities 74 80 136 137
Discontinued Operations:
Real estate depreciation 331 4,082 1,892 9,571
Minority interests of
unitholders in operating
partnership 2,923 1,271 3,444 1,762
Net gain on sale of
depreciable property (46,781) (13,814) (53,804) (15,019)
------- ------- ------- -------
Funds from operations
("FFO") - basic $56,625 $54,395 $113,173 $106,992
======= ======= ======= =======
Distribution to preferred
stockholders - Series D
and E (Convertible) 931 2,183 1,863 4,356
------- ------- ------- -------
Funds from operations -
diluted $57,556 $56,578 $115,036 $111,348
======= ======= ======= =======
Gains on the disposition of
real estate developed for
sale - diluted 1,865 - 2,324 -
------- ------- ------- -------
FFO with gains on the
disposition of real estate
developed for sale
- diluted $59,421 $56,578 $117,360 $111,348
======= ======= ======= =======
Weighted average number of
common shares and OP Units
outstanding - basic 144,657 135,830 144,621 135,740
Weighted average number of
common shares, OP Units,
and common stock
equivalents outstanding -
diluted 150,153 145,038 150,170 144,972
FFO per common share -
basic $0.39 $0.40 $0.78 $0.79
======= ======= ======= =======
FFO per common share -
diluted $0.40 $0.39 $0.78 $0.77
======= ======= ======= =======
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 and six months ended June 30, 2004, distributions to
preferred stockholders exclude $1.6 million and $3.1 million,
respectively, related to a premium on preferred stock conversions.
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 Six Months Ended
June 30, June 30,
------------------ ----------------
In thousands 2005 2004 2005 2004
---- ---- ---- ----
GAAP gains from the
disposition of real estate
developed for sale $1,885 $- $2,351 $-
Less: accumulated
depreciation (20) - (27) -
------- ------- ------- -------
Gains from the disposition
of real estate developed
for sale $1,865 $- $2,324 $-
======= ======= ======= =======
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.
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
In thousands, except share June 30, December 31,
and per share amounts 2005 2004
---- ----
ASSETS
Real estate owned:
Real estate held for investment $5,055,626 $4,845,930
Less: accumulated depreciation (1,025,886) (932,149)
--------- ---------
4,029,740 3,913,781
Real estate under development 90,623 64,921
Real estate held for disposition
(net of accumulated depreciation
of $46,032 and $75,738) 139,811 256,707
--------- ---------
Total real estate owned, net of
accumulated depreciation 4,260,174 4,235,409
Cash and cash equivalents 6,167 7,904
Overnight investment 11,290 -
Restricted cash 4,424 6,086
Deferred financing costs, net 27,626 25,151
Investment in unconsolidated
development joint venture 363 458
Funds held in escrow from 1031 exchanges
pending the acquisition of real estate - 17,039
Note receivable 5,000 5,000
Other assets 41,686 34,266
Other assets - real estate held for
disposition 6,511 688
------- -------
Total assets $4,363,241 $4,332,001
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Secured debt $1,062,873 $1,186,140
Secured debt - real estate held for
disposition 14,946 11,784
Unsecured debt 1,848,668 1,682,058
Real estate taxes payable 24,683 28,394
Accrued interest payable 28,231 18,773
Security deposits and prepaid rent 24,765 24,394
Distributions payable 45,850 44,624
Accounts payable, accrued expenses, and
other liabilities 50,376 49,837
Other liabilities - real estate
held for disposition 3,695 6,953
------- -------
Total liabilities 3,104,087 3,052,957
Minority interests 79,195 83,593
Stockholders' equity
Preferred stock, no par value;
50,000,000 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
137,104,879 shares issued and
outstanding (136,429,592 shares
in 2004) 137,105 136,430
Additional paid-in capital 1,627,639 1,614,916
Distributions in excess of net income (754,438) (731,808)
Deferred compensation - unearned
restricted stock awards (12,318) (6,058)
--------- ---------
Total stockholders' equity 1,179,959 1,195,451
--------- ---------
Total liabilities and stockholders'
equity $4,363,241 $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.