RICHMOND, Va.--(BUSINESS WIRE)--Oct. 24, 2005--United Dominion
Realty Trust, Inc. (NYSE: UDR) today reported Funds From Operations
("FFO") of $58.5 million, or $0.39 per share (diluted), for the
quarter ended September 30, 2005. This compares to FFO of $50.7
million, or $0.35 per share (diluted), for the same period a year ago.
The third quarter 2005 FFO results were $0.02 per share (diluted),
below Wall Street consensus estimates due to the delayed closing of a
development joint venture asset sale. The $0.02 per share (diluted)
FFO gain was booked in October rather than in September as previously
anticipated. Last year's third quarter results included a charge of
$0.04 per share (diluted), related to hurricane damage.
"Our third quarter operating performance demonstrated continuing
strength in apartment market fundamentals," stated Thomas W. Toomey,
President and Chief Executive Officer. "This is our seventh
consecutive quarter of sequential growth in same store revenue. In
fact, the team generated same community revenue growth of 4.1%, the
highest level in over four years. Our 2.3% growth in net operating
income reflects a substantial increase in property taxes, recognizing
significant appreciation in real estate valuations. I am pleased with
our progress and optimistic that positive trends will continue."
Highlights from the Third Quarter
-- Achieved same store occupancy of 94.6%, up from 94.2% in the
third quarter of 2004
-- Increased same store monthly collections and reimbursements by
3.7% and reduced concessions by 18.0%, year-over-year
-- Acquired three apartment communities for $150.4 million
-- Sold ten apartment communities for $138.5 million, realizing a
gain of $21.6 million
-- Issued $100 million of 5.25% medium-term notes due January 15,
2016 under our medium-term note program
Portfolio Operating Performance and Same Community Results
During the third quarter, 62,999 apartment homes, or 84% of total
apartment homes, were classified as Same Community. The Company
defines Same Community as all multifamily communities owned and
stabilized for at least five quarters as of the beginning of the most
recent quarter.
Same Community Results, Year/Year
($ in thousands, except collections and reimbursements
per occupied home)
----------------------------------------------------------------------
3rd Qtr '05 3rd Qtr '04 % Change
------------ ------------ ----------
Rent and other income $143,875 $139,064 3.5%
Concessions 3,191 3,891 -18.0%
Bad debt 675 648 4.2%
Total income 140,009 134,525 4.1%
Expenses 55,223 51,667 6.9%
Net operating income 84,786 82,858 2.3%
Avg. monthly collections per
occupied home $752 $727 3.4%
Avg. monthly reimbursements per
occupied home $31 $28 10.7%
Avg. physical occupancy 94.6% 94.2% 40bps
Operating margin 60.6% 61.6% -100bps
Annualized resident turnover rate 73.0% 70.5% 250bps
Resident credit loss, % of
effective rent 0.5% 0.5% 0bps
On a Same Community basis, 78% of the portfolio generated positive
Same Community revenue growth third quarter 2005 compared to third
quarter 2004.
Same Community Results, Quarter/Quarter
($ in thousands, except collections and reimbursements
per occupied home)
----------------------------------------------------------------------
3rd Qtr '05 2nd Qtr '05 % Change
----------- ----------- ----------
Rent and other income $143,875 $141,792 1.5%
Concessions 3,191 2,730 16.9%
Bad debt 675 689 -2.0%
Total income 140,009 138,373 1.2%
Expenses 55,223 51,808 6.6%
Net operating income 84,786 86,565 -2.1%
Avg. monthly collections per
occupied home $752 $744 1.1%
Avg. monthly reimbursements per
occupied home $31 $31 0.0%
Avg. physical occupancy 94.6% 94.5% 10bps
Operating margin 60.6% 62.6% -200bps
Annualized resident turnover rate 73.0% 64.5% 850bps
Resident credit loss, % of effective
rent 0.5% 0.5% 0bps
On a Same Community basis, 64% of the portfolio generated positive
Same Community revenue growth third quarter 2005 over second quarter
2005, in line with normal seasonal trends.
Non-Mature Properties
The composition of the Company's portfolio has changed
significantly over the past three years. Currently, 16% 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 7,173 homes from acquired properties currently considered
non-mature in California, Metropolitan Washington D.C. and Florida,
which are higher rent and higher occupancy markets than the same
community portfolio. These high barrier markets comprise approximately
86% of non-mature NOI, and the average monthly net rent per occupied
home of these assets is over $1,215 per month. Net rent per occupied
home for these communities registered sequential growth that is almost
double the growth rate of the same community portfolio.
Portfolio Repositioning
During the third quarter, the Company acquired three apartment
communities with 906 apartment homes for a total purchase price of
$150.4 million (averaging $165,950 per home). The purchases included
250 homes in Santa Clara, CA, which are less than one year old and
generate $1,518 per month per home in collections, 372 homes in
metropolitan Washington D.C., which are 18 years old and generate
$1,020 per month per home in collections, and 284 homes in Seattle,
WA, which are two years old and generate $983 per month per home in
collections. The homes in metropolitan Washington D.C. will undergo
minor rehabs and kitchen and bath rehabs in the next 12 months. These
transactions represented a blended capitalization rate of 5.4% using
forward twelve months of operations and a weighted average reserve for
recurring capital expenditures of $375 per home.
The Company also sold a portfolio of ten communities in Texas and
North Carolina, with 3,379 apartment homes for a total of $138.5
million at a market cap rate of 6.2%. These homes were 23 years old,
approximately 815 square feet in size, and generated $573 per month
per home in collections. The purchaser paid the purchase price through
a combination of cash and short-term notes with maturities ranging
from September 2005 to July 2006. As of September 30, 2005, the
outstanding balance on these notes was $90.9 million, bearing interest
at 6.75%. The sales generated a gain of $21.6 million. In addition,
the Company sold 64 condominiums for $20.9 million and an after-tax
profit of $5.3 million.
Financing Activities
In September, the Company issued $100 million aggregate principal
amount of 5.25% medium-term notes due January 2016 under its
medium-term note program. The net proceeds of approximately $100
million were used for debt repayment.
Stock Repurchase
The Board of Directors previously authorized a share repurchase
program of 11 million shares of the Company's common stock which
currently has up to 2.3 million shares available for repurchase. Share
repurchases under this program may be made through open market and
privately negotiated transactions at times and in such amounts as
management deems appropriate. The timing and actual number of shares
repurchased will depend on a variety of factors including price,
corporate and regulatory requirements and other market conditions. The
stock repurchase program does not have an expiration date and may be
limited or terminated at any time without prior notice.
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
fourth quarter 2005 FFO is $0.42 to $0.43 per share (diluted) and
$1.59 to $1.60 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) $1.60 $1.59
----------------------------------------------------------------------
Conversion to GAAP Share Count (2) 0.16 0.15
----------------------------------------------------------------------
Minority Interest of OP Unit Holders (2) (0.05) (0.04)
----------------------------------------------------------------------
Depreciation (3) (1.54) (1.52)
----------------------------------------------------------------------
Gains (3) 0.85 0.48
----------------------------------------------------------------------
Preferred Dividends (0.07) (0.07)
--------------------------------------------==========================
Expected Earnings Per Share $0.95 $0.59
----------------------------------------------------------------------
(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/3Q2005.pdf
Conference Call Information
Date: October 25, 2005
Time: 1:00 p.m. Eastern Time
To Participate in the Telephone Conference Call:
Domestic: 800-218-9073
International: 303-262-2141
If you have any questions, please contact:
Gloria Price: 720-283-6132
E-mail: gprice@udrt.com
Conference Call Playback:
Domestic: 800-405-2236
International: 303-590-3000
Passcode: 11040074#
The playback can be accessed through November 4, 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 September 30, 2005, the Company owned 74,752
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.
Attachment 1
------------
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
In thousands, except per share
amounts 2005 2004 2005 2004
-------------------------------------------------- -------------------
Rental income $172,514 $142,590 $504,451 $417,448
Rental expenses:
Real estate taxes and
insurance 21,233 15,740 60,387 48,903
Personnel 18,379 15,545 52,206 43,682
Utilities 10,122 8,911 29,263 25,604
Repair and maintenance 11,068 9,611 31,723 26,833
Administrative and
marketing 6,122 5,010 17,653 14,579
Property management 4,771 4,413 14,428 13,163
Other operating
expenses 291 289 870 850
--------- --------- --------- ---------
71,986 59,519 206,530 173,614
Non-property income:
Sale of technology
investment - - 12,306 -
Non-property income 2,319 807 2,976 2,213
--------- --------- --------- ---------
2,319 807 15,282 2,213
Other expenses:
Real estate
depreciation and
amortization 52,791 40,567 153,810 116,556
Interest 41,331 29,780 119,347 87,555
General and
administrative 4,913 3,853 16,822 13,235
Hurricane related
expenses - 5,503 - 5,503
Loss on early debt
retirement - - 6,785 -
Other depreciation and
amortization 706 812 2,042 2,511
--------- --------- --------- ---------
99,741 80,515 298,806 225,360
Income before minority
interests and discontinued
operations 3,106 3,363 14,397 20,687
Minority interests of outside
partnerships 22 (52) (89) (166)
Minority interests of
unitholders in operating
partnerships 55 223 (161) (33)
--------- --------- --------- ---------
Income before discontinued
operations, net of minority
interests 3,183 3,534 14,147 20,488
Income from discontinued
operations, net of minority
interests (including gain on
sales) (A) 11,952 24,282 68,371 51,150
--------- --------- --------- ---------
Net income 15,135 27,816 82,518 71,638
Distributions to preferred
stockholders - Series B (2,911) (2,911) (8,733) (8,733)
Distributions to preferred
stockholders - Series D
(Convertible) - (1,045) - (3,125)
Distributions to preferred
stockholders - Series E
(Convertible) (931) (1,138) (2,794) (3,413)
Premium on preferred stock
conversions - (1,562) - (4,687)
--------- --------- --------- ---------
Net income available to common
stockholders $11,293 $21,160 $70,991 $51,680
========= ========= ========= =========
Earnings per weighted average
common share - basic:
(Loss)/income from
continuing operations
available to common
stockholders, net of
minority interests ($0.01) ($0.02) $0.02 $0.01
Income from discontinued
operations, net of
minority interests $0.09 $0.19 $0.50 $0.40
Net income available to
common stockholders $0.08 $0.17 $0.52 $0.41
Earnings per weighted average
common share - diluted:
(Loss)/income from
continuing operations
available to common
stockholders, net of
minority interests ($0.01) ($0.02) $0.02 $0.00
Income from discontinued
operations, net of
minority interests $0.09 $0.19 $0.50 $0.40
Net income available to
common stockholders $0.08 $0.17 $0.52 $0.40
Common distributions declared
per share $0.3000 $0.2925 $0.9000 $0.8775
Weighted average number of
common shares outstanding -
basic 136,392 127,182 136,231 127,099
Weighted average number of
common shares outstanding -
diluted 136,392 127,182 137,194 128,063
(A) Discontinued operations represents all properties sold since
January 1, 2002 and properties that are currently classified as
held for disposition at September 30, 2005.
Attachment 2
------------
UNITED DOMINION REALTY TRUST, INC.
FUNDS FROM OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------- -------------------
In thousands, except per share
amounts 2005 2004 2005 2004
-------------------------------------------------- -------------------
Net income $15,135 $27,816 $82,518 $71,638
Adjustments:
Distributions to preferred
stockholders (3,842) (5,094) (11,527) (15,271)
Real estate depreciation and
amortization 52,791 40,567 153,810 116,556
Minority interests of
unitholders in operating
partnership (55) (223) 161 33
Real estate depreciation
related to unconsolidated
entities 84 70 220 207
Discontinued Operations:
Real estate depreciation 234 3,919 2,636 14,076
Minority interests of
unitholders in operating
partnership 743 1,652 4,248 3,480
Net gain on sale of
depreciable property (12,851) (20,220) (66,657) (35,239)
Net incremental gains on the
sale of condominium homes 5,320 - 7,650 -
-------- -------- --------- ---------
Funds from operations ("FFO") -
basic $57,559 $48,487 $173,059 $155,480
======== ======== ========= =========
Distribution to preferred
stockholders - Series D and E
(Convertible) 931 2,183 2,794 6,538
-------- -------- --------- ---------
Funds from operations - diluted $58,490 $50,670 $175,853 $162,018
======== ======== ========= =========
Weighted average number of
common shares and OP Units
outstanding - basic 144,896 135,859 144,741 135,781
Weighted average number of
common shares, OP Units, and
common stock equivalents
outstanding - diluted 150,473 145,168 150,299 145,038
FFO per common share - basic $0.40 $0.36 $1.20 $1.15
======== ======== ========= =========
FFO per common share - diluted $0.39 $0.35 $1.17 $1.12
======== ======== ========= =========
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.
Net incremental gains on the sale of condominium homes is defined as
net sales proceeds less a tax provision and the gross investment basis
of the asset before accumulated depreciation. We consider FFO with
gains/losses on the sales of condominium homes to be a meaningful
supplemental measure of performance because the short-term use of
funds produce a profit which differs from the tradition long-term
investment in real estate for REITs.
For the three and nine months ended September 30, 2004, distributions
to preferred stockholders exclude $1.6 million and $4.7 million,
respectively, related to a premium on preferred stock conversions.
Attachment 3
------------
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
In thousands, except share and per September 30, December 31,
share amounts 2005 2004
----------------------------------------------------------------------
ASSETS
Real estate owned:
Real estate held for investment $5,215,424 $4,805,630
Less: accumulated depreciation (1,069,858) (924,509)
-------------- -------------
4,145,566 3,881,121
Real estate under development 102,982 64,921
Real estate held for disposition (net of
accumulated depreciation of $6,836 and
$83,378) 51,669 289,367
-------------- -------------
Total real estate owned, net of
accumulated depreciation 4,300,217 4,235,409
Cash and cash equivalents 5,480 7,904
Restricted cash 4,418 6,086
Deferred financing costs, net 26,540 25,151
Investment in unconsolidated development
joint venture (124) 458
Funds held in escrow from 1031 exchanges
pending the acquisition of real estate - 17,039
Notes receivable 95,945 5,000
Other assets 45,532 34,127
Other assets - real estate held for
disposition 2,421 827
-------------- -------------
Total assets $4,480,429 $4,332,001
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Secured debt $1,110,855 $1,186,140
Secured debt - real estate held for
disposition - 11,784
Unsecured debt 1,945,672 1,682,058
Real estate taxes payable 36,679 28,410
Accrued interest payable 21,789 18,773
Security deposits and prepaid rent 25,077 24,181
Distributions payable 45,876 44,624
Accounts payable, accrued expenses, and
other liabilities 49,845 49,781
Other liabilities - real estate held for
disposition 16,340 7,206
-------------- -------------
Total liabilities 3,252,133 3,052,957
Minority interests 76,461 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, $0.01 par value ($1.00
par value in 2004); 250,000,000 shares
authorized 137,193,552 shares issued
and outstanding (136,429,592 shares in
2004) 1,372 136,430
Additional paid-in capital 1,764,681 1,614,916
Distributions in excess of net income (784,307) (731,808)
Deferred compensation - unearned
restricted stock awards (11,882) (6,058)
-------------- -------------
Total stockholders' equity 1,151,835 1,195,451
-------------- -------------
Total liabilities and stockholders'
equity $4,480,429 $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.