RICHMOND, Va.--(BUSINESS WIRE)--Feb. 6, 2006--United Dominion
Realty Trust, Inc. (NYSE: UDR) today reported Funds From Operations
("FFO") of $66.3 million, or $0.44 per share (diluted), for the
quarter ended December 31, 2005. This compares to FFO of $57.5
million, or $0.39 per share (diluted), for the same period a year ago.
For the full year, the Company reported Funds From Operations of
$242.0 million, or $1.61 per share (diluted), compared to FFO of
$219.6 million, or $1.51 per share (diluted), for the prior year.
"2005 was an outstanding year for UDR in three key areas," stated
Thomas W. Toomey, President and Chief Executive Officer. "First, we
achieved our best operating performance in over five years as measured
by same store occupancy, revenue growth, and net operating income.
Second, we improved our portfolio with over $850 million in
acquisitions and sales, and by investing $156 million, twice the
amount spent in 2004, in our asset quality and development programs.
Third, we continued to maintain a strong balance sheet and took
advantage of opportunities to reduce interest cost through redemptions
and new financings at lower interest rates. Our focus for 2006 is to
create value by continuing to aggressively pursue these strategies."
Fourth Quarter Highlights
-- Recorded 5.2% same community revenue growth, led by net rent
increases of 4.8%.
-- Registered the eighth consecutive quarter of accelerating
sequential same store revenue growth.
-- Achieved same store occupancy of 94.7%, up from 94.1% in the
fourth quarter of 2004, the highest level in over 5 years.
-- Acquired three apartment communities for $96.8 million at a
blended cap rate of 5.2%.
-- Sold one apartment community in Phoenix, Arizona, for $79.6
million, at a cap rate of 2.7%, realizing a gain of $55.2
million, and one jointly developed community in Houston,
Texas, at a cap rate of 5.1%, for a gain of $3.8 million.
-- Issued $250 million of convertible senior notes due 2035 with
a coupon of 4.0%.
-- Repurchased 3.2 million shares of common stock at an average
purchase price of $23.03 per share.
Portfolio Operating Performance and Same Community Results
During 2005, 58,840 apartment homes, or 79% of total apartment
homes, were classified as Same Community. During the fourth quarter,
63,219 apartment homes, or 84% of total apartment homes, were
classified as Same Community. The Company defines Same Community as
all multifamily communities owned and stabilized for at least five
quarters as of the beginning of the most recent quarter.
Same Community Results, Full Year 2005/Full Year 2004
($ in thousands, except collections and total income
per occupied home)
----------------------------------------------------------------------
YTD05 YTD04 % Change
---------- --------- ---------
Rent and other income $525,096 $509,799 3.0%
Concessions 11,426 14,311 -20.2%
Bad debt 2,016 2,388 -15.6%
Total income 511,654 493,100 3.8%
Expenses 196,859 188,586 4.4%
Net operating income 314,795 304,514 3.4%
Collections per occupied home $734 $713 3.0%
Total income per occupied home $766 $743 3.1%
Avg. physical occupancy 94.5% 93.9% 60bps
Operating margin 61.5% 61.8% -30bps
Resident credit loss, % of effective rent 0.4% 0.5% -10bps
Comparing full year 2005 to full year 2004, on a Same Community
basis, 82% of the portfolio generated positive revenue growth and 65%
of the portfolio generated positive NOI growth.
Same Community Results, 4Q05/4Q04
($ in thousands, except collections and total income
per occupied home)
----------------------------------------------------------------------
4th Qtr '05 4th Qtr '04 % Change
------------ ------------- ----------
Rent and other income $146,065 $140,177 4.2%
Concessions 2,848 3,955 -28.0%
Bad debt 659 741 -11.1%
Total income 142,558 135,481 5.2%
Expenses 54,817 51,044 7.4%
Net operating income 87,741 84,437 3.9%
Collections per occupied home $761 $730 4.3%
Total income per occupied home $794 $760 4.5%
Avg. physical occupancy 94.7% 94.1% 60bps
Operating margin 61.5% 62.3% -80bps
Resident credit loss, % of
effective rent 0.5% 0.5% 0bps
Comparing fourth quarter 2005 to fourth quarter 2004, on a Same
Community basis, 84% of the portfolio generated positive revenue
growth and 69% of the portfolio generated positive NOI growth.
Same Community Results, 4Q05/3Q05
($ in thousands, except collections and total income
per occupied home)
----------------------------------------------------------------------
4th Qtr '05 3rd Qtr '05 % Change
------------ ------------ ---------
Rent and other income $146,065 $144,791 0.9%
Concessions 2,848 3,239 -12.1%
Bad debt 659 651 1.2%
Total income 142,558 140,901 1.2%
Expenses 54,817 55,537 -1.3%
Net operating income 87,741 85,364 2.8%
Collections per occupied home $761 $754 0.9%
Total income per occupied home $794 $785 1.2%
Avg. physical occupancy 94.7% 94.6% 10bps
Operating margin 61.5% 60.6% 90bps
Resident credit loss, % of
effective rent 0.5% 0.5% 0bps
Comparing fourth quarter 2005 to third quarter 2005, on a Same
Community basis, 65% of the portfolio generated positive revenue
growth and 71% of the portfolio generated positive NOI growth.
Non-Mature Properties
The composition of the Company's portfolio has changed
significantly over the past five years with $3.5 billion in
acquisitions and sales.
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 7,324 homes from acquired
properties currently considered non-mature, located primarily in
California, Metropolitan Washington D.C. and Florida. These high
barrier markets comprise approximately 89% of non-mature NOI, and the
average monthly net rent per occupied home of these assets is $1,233
per month. Net rent per occupied home for these communities registered
sequential growth that is almost triple the growth rate of the same
community portfolio.
In the first quarter of 2006, 6,499 homes with average monthly net
rent per occupied home of $1,127 will be added to the same store pool.
Communities that will be added to same store results are higher rent
and higher occupancy markets than the current same community
portfolio.
Portfolio Repositioning
During the fourth quarter, the Company acquired three apartment
communities with 540 apartment homes for a total purchase price of
$96.8 million (averaging $179,170 per home).
The purchases included 125 homes in Seattle, WA, which generate
$1,502 per month per home in collections. Construction was finished on
this community in October, 2005. This transaction was completed at a
5.0% cap rate, calculated as a year one stabilized return after an
initial lease up period.
The other two acquisitions were in San Mateo, California. The Bay
Terrace community in San Mateo includes a total of 127 town homes
which generate $1,443 per month per home in collections. The Company
will upgrade this property with new kitchens and baths and believes it
is a potential future condo conversion candidate. The other community,
Lake Pines, is adjacent to Bay Terrace. It consists of 288 homes and a
total of 8.9 acres of land. The homes generate $1,180 per month in
collections. They have undergone recent interior and exterior
renovation and the Company will continue to upgrade the property with
additional improvements including new kitchens and baths. The
California transactions represented a blended capitalization rate of
5.2% using forward twelve months of operations and a weighted average
reserve for recurring capital expenditures of $510 per home.
The Company also sold a 17-year-old, 350-home community in Phoenix
to an investor that plans to convert the property to condominiums. The
sales price produced a gain of $55.2 million and represents a 2.7%
capitalization rate based on trailing 12 months NOI less a capital
expenditure reserve of $510 per home and an implied 2.75% management
fee. At the time of sale the average monthly rent was $979 per home.
The company sold a jointly developed 504-home community in
Houston, Texas, for $39.2 million. This represented a 5.1% cap rate
based on projected development pro forma cash flow. The company had a
20% interest in the joint venture and recognized an after-tax gain of
$3.8 million on the sale. In addition, the Company sold 138
condominiums for $36.4 million and an after-tax profit of $9.1
million.
Financing Activities
In December, the Company issued $250 million of convertible senior
notes due 2035 with a coupon of 4.0%. The net proceeds were used for
debt repayment and to repurchase the Company's common stock.
Stock Repurchase
During the fourth quarter, the Company repurchased a total of
3,180,350 shares of common stock at an average purchase price of
$23.03 per share. The Company's Board of Directors previously
authorized a share repurchase program which currently has up to 1.2
million shares available for repurchase.
Earnings Guidance
The Company believes that financial results for 2006 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 first
quarter 2006 FFO is $0.40 to $0.42 per share (diluted) and $1.63 to
$1.73 per share (diluted) for the full year 2006. All guidance is
based on the current expectations and judgment of the Company's
management team.
Detailed assumptions for the Company's 2006 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 2006 FFO per
share for the full year to Earnings Per Share ("EPS") for the full
year is as follows:
2006
----
Funds From Operations(1) $1.73 $1.63
Conversion to GAAP Share Count (2) 0.16 0.15
Minority Interest of OP Unit Holders (2) (0.03) (0.05)
Depreciation (3) (1.70) (1.65)
Gains (3) 0.50 0.70
Preferred Dividends (0.09) (0.09)
===============
Expected Earnings Per Share $0.57 $0.69
(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:
http://www.udrt.com/resources/files/Investor_Relations/4Q2005.pdf
Conference Call Information
Date: February 7, 2006
Time: 1:00 p.m. Eastern Time
To Participate in the Telephone Conference Call:
Domestic: 800-218-0204
International: 303-262-2142
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: 11050012#
The playback can be accessed through February 14, 2006.
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 December 31, 2005, the Company owned 74,875
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, 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 Twelve Months
Ended Ended
December 31, December 31,
------------------- -------------------
In thousands, except per share
amounts 2005 2004 2005 2004
-------------------------------------------------- -------------------
Rental income $176,871 $155,978 $680,553 $572,408
Rental expenses:
Real estate taxes and
insurance 20,898 17,595 81,151 66,424
Personnel 17,812 16,350 69,939 59,912
Utilities 10,860 8,840 40,037 34,360
Repair and maintenance 8,924 9,467 40,570 41,689
Administrative and
marketing 6,213 5,470 23,846 20,013
Property management 4,881 4,717 19,309 17,881
Other operating
expenses 308 375 1,178 1,226
--------- --------- --------- ---------
69,896 62,814 276,030 241,505
Non-property income:
Sale of technology
investment - - 12,306 -
Non-property income 1,559 395 4,535 2,608
--------- --------- --------- ---------
1,559 395 16,841 2,608
Other expenses:
Real estate
depreciation and
amortization 56,165 47,053 209,856 163,176
Interest 43,162 35,615 162,508 123,170
General and
administrative 7,997 6,081 24,819 19,316
Loss on early debt
retirement - - 6,662 -
Other depreciation and
amortization 711 794 2,752 3,301
--------- --------- --------- ---------
108,035 89,543 406,597 308,963
Income before minority
interests and discontinued
operations 499 4,016 14,767 24,548
Minority interests of outside
partnerships (18) (15) (108) (182)
Minority interests of
unitholders in operating
partnerships 176 112 45 55
--------- --------- --------- ---------
Income before discontinued
operations, net of minority
interests 657 4,113 14,704 24,421
Income from discontinued
operations, net of minority
interests (including gain on
sales) (A) 71,991 21,400 140,462 72,731
--------- --------- --------- ---------
Net income 72,648 25,513 155,166 97,152
Distributions to preferred
stockholders - Series B (2,911) (2,911) (11,644) (11,644)
Distributions to preferred
stockholders - Series D
(Convertible) - (348) - (3,473)
Distributions to preferred
stockholders - Series E
(Convertible) (931) (1,000) (3,726) (4,414)
Premium on preferred stock
conversions - (1,042) - (5,729)
--------- --------- --------- ---------
Net income available to common
stockholders $68,806 $20,212 $139,796 $71,892
========= ========= ========= =========
Earnings per weighted average
common share - basic and
diluted:
Loss from continuing
operations available to
common stockholders, net
of minority interests ($0.02) ($0.01) ($0.00) ($0.01)
Income from discontinued
operations, net of
minority interests $0.53 $0.16 $1.03 $0.57
Net income available to
common stockholders $0.51 $0.15 $1.03 $0.56
Common distributions declared
per share $0.3000 $0.2925 $1.2000 $1.1700
Weighted average number of
common shares outstanding -
basic 135,875 131,136 136,143 128,097
Weighted average number of
common shares outstanding -
diluted 135,875 131,136 136,143 128,097
(A) Discontinued operations represents all properties sold since
January 1, 2002 and properties that are currently classified as
held for disposition at December 31, 2005.
UNITED DOMINION REALTY TRUST, INC.
FUNDS FROM OPERATIONS
(Unaudited)
Three Months Twelve Months
Ended Ended
December 31, December 31,
----------------- -------------------
In thousands, except per share
amounts 2005 2004 2005 2004
-------------------------------------------------- -------------------
Net income $72,648 $25,513 $155,166 $97,152
Adjustments:
Distributions to preferred
stockholders (3,842) (4,259) (15,370) (19,531)
Real estate depreciation and
amortization 56,165 47,053 209,856 163,176
Minority interests of
unitholders in operating
partnership (176) (112) (45) (55)
Real estate depreciation
related to unconsolidated
entities 91 72 311 279
Discontinued Operations:
Real estate depreciation - 2,944 2,568 17,452
Minority interests of
unitholders in operating
partnership 4,497 1,441 8,775 4,898
Net gains on sale of
depreciable property (76,891) (17,664) (143,547) (52,903)
Net incremental gains on the
sale of condominium homes 9,067 1,202 16,717 1,202
Net incremental gain on the
sale of a depreciable asset
related to an unconsolidated
entity 3,823 - 3,823 -
-------- -------- --------- ---------
Funds from operations ("FFO") -
basic $65,382 $56,190 $238,254 $211,670
======== ======== ========= =========
Distribution to preferred
stockholders - Series D and E
(Convertible) 931 1,348 3,726 7,887
-------- -------- --------- ---------
Funds from operations - diluted $66,313$57,538$241,980$219,557
======== ======== ========= =========
Weighted average number of common
shares and OP Units outstanding
- basic 144,528 139,882 144,689 136,852
Weighted average number of
common shares, OP Units, and
common stock equivalents
outstanding - diluted 149,927 148,302 150,141 145,842
FFO per common share - basic $0.45 $0.40 $1.65 $1.55
======== ======== ========= =========
FFO per common share - diluted $0.44 $0.39 $1.61 $1.51
======== ======== ========= =========
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 and the net
incremental gain on the sale of a depreciable asset related to an
unconsolidated entity are 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
sale of condominium homes and gains/losses on the sale of depreciable
assets related to an unconsolidated entity 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.
For the three and twelve months ended December 31, 2004, distributions
to preferred stockholders exclude $1.0 million and $5.7 million,
respectively, related to a premium on preferred stock conversions.
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
In thousands, except share and per share December 31, December 31,
amounts 2005 2004
----------------------------------------------------------------------
ASSETS
Real estate owned:
Real estate held for investment $5,360,106 $4,795,278
Less: accumulated depreciation (1,123,119) (921,805)
------------ -------------
4,236,987 3,873,473
Real estate under development (net of
accumulated depreciation of $140 and $0) 117,328 64,921
Real estate held for disposition (net of
accumulated depreciation of $570 and
$86,082) 34,280 297,015
------------ -------------
Total real estate owned, net of
accumulated depreciation 4,388,595 4,235,409
Cash and cash equivalents 15,543 7,904
Restricted cash 4,583 6,086
Deferred financing costs, net 31,036 25,151
Notes receivable 64,805 5,000
Investment in unconsolidated development
joint venture - 458
Funds held in escrow from 1031 exchanges
pending the acquisition of real estate - 17,039
Other assets 34,011 34,115
Other assets - real estate held for
disposition 3,020 839
------------ -------------
Total assets $4,541,593 $4,332,001
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Secured debt $1,116,259 $1,145,578
Secured debt - real estate held for
disposition - 52,346
Unsecured debt 2,043,518 1,682,058
Real estate taxes payable 24,672 28,380
Accrued interest payable 26,672 18,773
Security deposits and prepaid rent 26,362 24,129
Distributions payable 45,313 44,624
Accounts payable, accrued expenses, and
other liabilities 55,460 49,757
Other liabilities - real estate held for
disposition 11,794 7,312
------------ -------------
Total liabilities 3,350,050 3,052,957
Minority interests 83,819 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 134,012,053 shares issued
and outstanding (136,429,592 shares in
2004) 1,340 136,430
Additional paid-in capital 1,680,115 1,608,858
Distributions in excess of net income (755,702) (731,808)
------------ -------------
Total stockholders' equity 1,107,724 1,195,451
------------ -------------
Total liabilities and stockholders' equity $4,541,593 $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.