EXHIBIT 99.1
For details contact: | ||
Monique Elwell Phone (720)283-6135 E-mail: ir@udrt.com www.udrt.com |
PRESS RELEASE
For Immediate Release
UNITED DOMINION REALTY TRUST, INC. FIRST QUARTER RESULTS
EXCEED WALL STREET CONSENSUS
RICHMOND, VA. (April 19, 2004) United Dominion Realty Trust, Inc. (NYSE: UDR) today reported Funds From Operations (“FFO”) of $54.8 million, or $0.38 per share (diluted), for the quarter ended March 31, 2004. This compares to FFO of $49.1 million, or $0.38 per share (diluted), for the same period a year ago. FFO is reported on a fully diluted basis.
“The realization of an economic recovery and its positive impact on our company is visible in our sequential revenue trends, where 71% of our markets have delivered improving revenues, and in our FFO per share, where we delivered sequential growth of a penny,” stated Thomas W. Toomey, President and Chief Executive Officer.
Highlights from the First Quarter
· FFO exceeds Wall Street consensus estimates by $0.01 per share
Portfolio Operating Performance and Same Community Results
During the first quarter, 69,620 apartment homes, or 90% of total apartment homes, were classified as Same Community. The Company defines Same Community as all multifamily communities owned and stabilized for at least one year as of the beginning of the most recent quarter.
Same Community Results, Year/Year
($ in thousands, except monthly collections)
1st Qtr ’04 | 1st Qtr ’03 | % Change | ||||||||||
Rent and other income | $ | 146,702 | 148,116 | -1.0 | % | |||||||
Concessions | 3,913 | 4,357 | -10.2 | % | ||||||||
Bad debt | 461 | 617 | -25.2 | % | ||||||||
Total income | 142,328 | 143,142 | -0.6 | % | ||||||||
Expenses | 56,028 | 53,995 | 3.8 | % |
1
1st Qtr ’04 | 1st Qtr ’03 | % Change | ||||||||||
Net operating income | 86,300 | 89,147 | -3.2 | % | ||||||||
Avg. monthly collections per occupied home | $ | 700 | $ | 709 | -1.3 | % | ||||||
Avg. physical occupancy | 93.1 | % | 93.3 | % | -20 bps | |||||||
Operating margin | 60.6 | % | 62.3 | % | -170 bps | |||||||
Annualized resident turnover rate | 56.1 | % | 57.4 | % | -130 bps | |||||||
Resident credit loss, % of effective rent | 0.3 | % | 0.4 | % | -10 bps |
On a quarter-over-quarter basis, first quarter 2004 Same Community Net Operating Income (“NOI”) declined 3.2% as a result of a 0.6% decrease in revenues from rental and other income and a 3.8% increase in operating expenses.
Same Community represents 52 markets, of which 22 markets, or 42%, generated positive Same Community NOI growth first quarter 2004 compared to first quarter 2003.
Same Community Results, Quarter/Quarter
($ in thousands, except monthly collections)
1st Qtr ’04 | 4th Qtr ’03 | % Change | ||||||||||
Rent and other income | $ | 146,702 | $ | 146,372 | 0.2 | % | ||||||
Concessions | 3,913 | 4,230 | -7.5 | % | ||||||||
Bad debt | 461 | 778 | -40.8 | % | ||||||||
Total income | 142,328 | 141,364 | 0.7 | % | ||||||||
Expenses | 56,028 | 54,365 | 3.1 | % | ||||||||
Net operating income | 86,300 | 86,999 | -0.8 | % | ||||||||
Avg. monthly collections per occupied home | $ | 700 | $ | 700 | — | |||||||
Avg. physical occupancy | 93.1 | % | 92.9 | % | 20 bps | |||||||
Operating margin | 60.6 | % | 61.5 | % | -90 bps | |||||||
Annualized resident turnover rate | 56.1 | % | 60.7 | % | -460 bps | |||||||
Resident credit loss, % of effective rent | 0.3 | % | 0.5 | % | -20 bps |
Sequentially, comparing first quarter 2004 to fourth quarter 2003, Same Community NOI declined 0.8% due to a 0.7% increase in rental and other income offset by a 3.1% increase in expenses.
Same Community represents 52 markets, of which 30 markets, or 58%, generated positive Same Community NOI growth first quarter 2004 over fourth quarter 2003.
Portfolio Repositioning
During the first quarter, the Company acquired 1,115 apartment homes for a total purchase price of $105 million (averaging $94,200 per home.) These properties were acquired at an average cap rate of 7.0% using forward twelve months of operations and a reserve for capital expenditures that ranged from $450 to $470 per home, depending on the community.
The Company sold one community in Pacific Grove, California, for $12.8 million (averaging $128,350 per home) at a cap rate of 4.9% using trailing twelve months of operations less an actual capital expenditure reserve of $464 per home and a management fee of 2.75%. The
2
community was 87% occupied at closing and is 39 years old. For more details on our acquisitions and disposition, see our press release dated April 5, 2004.
“The cap rates at which we purchased our Plano, Texas, and Baltimore, Maryland properties during the first quarter were very favorable. Further, all four properties are located in our core markets, where we have operational efficiencies. Going forward, we continue to find available communities to buy at prices at or below replacement costs; and we are on track for our goal of $500 million in acquisitions this year,” stated Mark Wallis, Senior Executive Vice President.
Financing Activities
In January, the Company issued $75 million of 5.13% senior unsecured medium-term notes at a spread of 112 basis points that mature January 2014. In March, we issued an additional $50 million tranche of the 5.13% notes at a spread of 105 basis points. These two issues, combined with our $75 million issuance last October, constitute a single series of notes, bringing the aggregate principal amount outstanding of the 5.13% senior unsecured medium-term notes to $200 million.
Additionally in March, we issued $50 million of 3.90% senior unsecured medium-term notes at a spread of 105 basis points that mature March 2010.
“The issuance of these notes not only funded our acquisition pipeline but reduced the outstanding balance on our line of credit, thereby terming out some of that debt. This brings our variable rate debt at the end of the quarter to 25%, which is the range of the guidance we previously provided,” stated Ella S. Neyland, Executive Vice President and Treasurer.
Earnings Guidance
The Company believes that financial results for 2004 will be affected by international, national and regional economic trends and events, the acquisition and/or disposition of apartment communities and other factors. Management estimates that recurring capital expenditures for 2004 will be $470 per apartment home, or $0.25 per share. Given current expectations and judgment, the Company has narrowed the range of guidance for 2004 FFO to a range of $1.50 to $1.58 per share (diluted) from a range of $1.48 to $1.60 per share (diluted). The Company’s guidance for second quarter 2004 FFO ranges from $.39 to $.40 per share (diluted). Detailed assumptions for the Company’s guidance can be found on our website at www.udrt.com.
A reconciliation of the range provided for 2004 FFO per share to Earnings Per Share (“EPS”) for the full year is as follows:
High Range | Low Range | |||||||||||
2004 Funds From Operations | $ | 1.58 | — | $ | 1.50 | |||||||
Conversion to GAAP Share Count (A) | 0.21 | — | 0.20 | |||||||||
Minority Interest of OP Unit Holders (A) | (0.01 | ) | — | (0.04 | ) | |||||||
Depreciation (B) | (1.44 | ) | — | (1.38 | ) | |||||||
Gains (B) | 0.10 | — | 0.55 | |||||||||
Preferred Dividends | (0.07 | ) | — | (0.07 | ) |
3
High Range | Low Range | |||||||||||
Premium on Preferred Share Repurchases | (0.05 | ) | — | (0.05 | ) | |||||||
Expected Earnings Per Share | $ | 0.32 | — | $ | 0.71 | |||||||
(A) Operating Partnership units are not considered to be common stock equivalents for GAAP purposes.
Supplemental Information
The Company provides Supplemental Information that provides information regarding the financial position and operating results of the Company. This Supplemental Information is available on the Company’s website at:
http://www.udrt.com/1Q2004
Conference Call Information
Date: April 20, 2004
Time:1:00 p.m. Eastern Time
To Participate in the Telephone Conference Call:
Dial in at least five minutes prior to start time.
To Participate in the Telephone Conference Call:
Domestic: 800-218-0530
International: 303-262-2125
If you have any questions, please contact: Karen Droba
Phone: 312-640-6770
E-mail: kdroba@financialrelationsboard.com
Conference Call Playback:
Domestic: 800-405-2236
International: 303-590-3000
Passcode: 572869
The playback can be accessed until April 27, 2004 at midnight EST.
Webcast:
About United Dominion Realty Trust, Inc.
United Dominion is the fourth largest apartment REIT, owning and operating apartment communities nationwide. The Company has a 32-year history during which it has raised the dividend each of the last 28 years. United Dominion is included in the S&P MidCap 400 Index.
4
The Company currently owns 77,259 apartment homes and has 1,311 homes currently under development. United Dominion’s common stock is traded on the New York Stock Exchange under the symbol UDR. Additional information about United Dominion may be found on its website 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 may not achieve anticipated results, delays in completing developments and lease-ups on schedule, difficulties in selling existing apartment communities, and other risk factors discussed in documents filed by the Company with the Securities and Exchange Commission from time to time including the Company’s Annual Report on Form 10-K and the Company’s Quarterly Reports on Form 10-Q. All forward-looking statements in this press release are made as of today, based upon information known to management as of the date hereof, and 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.
5
Attachment 1
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
In thousands, except per share amounts | 2004 | 2003 | ||||||
Rental income | $ | 154,874 | $ | 144,800 | ||||
Rental expenses: | ||||||||
Real estate taxes and insurance | 18,963 | 16,777 | ||||||
Personnel | 16,324 | 14,628 | ||||||
Utilities | 10,216 | 8,791 | ||||||
Repair and maintenance | 9,297 | 9,062 | ||||||
Administrative and marketing | 5,568 | 5,279 | ||||||
Property management | 4,361 | 4,178 | ||||||
Other operating expenses | 270 | 294 | ||||||
64,999 | 59,009 | |||||||
Non-property income | 395 | 202 | ||||||
Other expenses: | ||||||||
Real estate depreciation and amortization | 41,926 | 37,646 | ||||||
Interest | 28,905 | 31,330 | ||||||
General and administrative | 4,754 | 5,449 | ||||||
Other depreciation and amortization | 941 | 749 | ||||||
76,526 | 75,174 | |||||||
Income before minority interests and discontinued operations | 13,744 | 10,819 | ||||||
Minority interests of outside partnerships | (64 | ) | (375 | ) | ||||
Minority interests of unitholders in operating partnerships | (460 | ) | (251 | ) | ||||
Income before discontinued operations, net of minority interests | 13,220 | 10,193 | ||||||
Income from discontinued operations, net of minority interests (including gain on sales) (A) | 2,092 | 3,248 | ||||||
Net income | 15,312 | 13,441 | ||||||
Distributions to preferred stockholders — Series B | (2,911 | ) | (2,911 | ) | ||||
Distributions to preferred stockholders — Series D (Convertible) | (1,036 | ) | (4,036 | ) | ||||
Distributions to preferred stockholders — Series E (Convertible) | (1,138 | ) | — | |||||
Premium on preferred share repurchases | (1,562 | ) | — | |||||
Net income available to common stockholders | $ | 8,665 | $ | 6,494 | ||||
Earnings per common share — basic and diluted: | ||||||||
Income from continuing operations available to common stockholders, net of minority interests | $ | 0.05 | $ | 0.03 | ||||
Income from discontinued operations, net of minority interests | $ | 0.02 | $ | 0.03 | ||||
Net income available to common stockholders | $ | 0.07 | $ | 0.06 | ||||
Common distributions declared per share | $ | 0.2925 | $ | 0.2850 | ||||
Weighted average number of common shares outstanding — basic | 126,984 | 107,698 | ||||||
Weighted average number of common shares outstanding — diluted | 127,953 | 108,590 |
(A) | Discontinued operations represents all properties sold since January 1, 2002 and properties that are currently classified as held for disposition at March 31, 2004. |
Attachment 2
UNITED DOMINION REALTY TRUST, INC.
FUNDS FROM OPERATIONS
(Unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
In thousands, except per share amounts | 2004 | 2003 | ||||||
Net income | $ | 15,312 | $ | 13,441 | ||||
Adjustments: | ||||||||
Distributions to preferred stockholders | (5,085 | ) | (6,947 | ) | ||||
Real estate depreciation and amortization, net of outside partners’ interest in 2003 | 41,926 | 37,449 | ||||||
Minority interests of unitholders in operating partnership | 460 | 251 | ||||||
Real estate depreciation related to unconsolidated entities | 57 | 33 | ||||||
Discontinued Operations: | ||||||||
Real estate depreciation | 985 | 1,659 | ||||||
Minority interests of unitholders in operating partnership | 146 | 210 | ||||||
Net gains on sales of depreciable property | (1,205 | ) | (1,045 | ) | ||||
Funds from operations (“FFO”) — basic | $ | 52,596 | $ | 45,051 | ||||
Distribution to preferred stockholders — Series D and E (Convertible) | 2,174 | 4,036 | ||||||
Funds from operations — diluted | $ | 54,770 | $ | 49,087 | ||||
Recurring capital expenditures | (8,926 | ) | (8,506 | ) | ||||
Adjusted funds from operations (“AFFO”) — diluted | $ | 45,844 | $ | 40,581 | ||||
Weighted average number of common shares and OP Units outstanding — basic | 135,901 | 114,659 | ||||||
Weighted average number of common shares, OP Units, and common stock equivalents outstanding — diluted | 145,163 | 129,420 | ||||||
FFO per common share — basic | $ | 0.39 | $ | 0.39 | ||||
FFO per common share — diluted | $ | 0.38 | $ | 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 exclude $1.6 million related to a premium on preferred shares repurchased.
AFFO is defined as FFO less recurring capital expenditures for our stabilized portfolio at $470 per home in 2004 and $464 per home in 2003.
Attachment 3
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, | December 31, | |||||||
In thousands, except per share amounts | 2004 | 2003 | ||||||
ASSETS | ||||||||
Real estate owned: | ||||||||
Real estate held for investment | $ | 4,336,423 | $ | 4,215,585 | ||||
Less: accumulated depreciation | (906,743 | ) | (865,701 | ) | ||||
3,429,680 | 3,349,884 | |||||||
Real estate under development | 32,729 | 30,375 | ||||||
Real estate held for disposition (net of accumulated depreciation of $30,856 and $30,929) | 63,121 | 74,662 | ||||||
Total real estate owned, net of accumulated depreciation | 3,525,530 | 3,454,921 | ||||||
Cash and cash equivalents | 1,973 | 4,824 | ||||||
Restricted cash | 7,468 | 7,540 | ||||||
Deferred financing costs, net | 20,541 | 21,425 | ||||||
Investment in unconsolidated development joint venture | 1,206 | 1,673 | ||||||
Funds held in escrow from 1031 exchanges pending the acquisition of real estate | 12,580 | 14,447 | ||||||
Other assets | 35,795 | 38,573 | ||||||
Other assets — real estate held for disposition | 115 | 240 | ||||||
Total assets | $ | 3,605,208 | $ | 3,543,643 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Secured debt | $ | 1,008,520 | $ | 1,018,028 | ||||
Unsecured debt | 1,226,367 | 1,114,009 | ||||||
Real estate taxes payable | 18,166 | 30,513 | ||||||
Accrued interest payable | 17,670 | 12,892 | ||||||
Security deposits and prepaid rent | 21,783 | 23,600 | ||||||
Distributions payable | 41,768 | 40,623 | ||||||
Accounts payable, accrued expenses, and other liabilities | 36,866 | 45,189 | ||||||
Other liabilities — real estate held for disposition | 917 | 1,147 | ||||||
Total liabilities | 2,372,057 | 2,286,001 | ||||||
Minority interests | 91,374 | 94,206 | ||||||
Stockholders’ equity | ||||||||
Preferred stock, no par value; $25 liquidation preference, 25,000,000 shares authorized; | ||||||||
5,416,009 shares 8.60% Series B Cumulative Redeemable issued and outstanding (5,416,009 shares in 2003) | 135,400 | 135,400 | ||||||
2,000,000 shares 7.50% Series D Cumulative Convertible Redeemable issued and outstanding (2,000,000 shares in 2003) | 45,833 | 44,271 | ||||||
3,425,217 shares of 8.00% Series E Cumulative Convertible issued and outstanding (3,425,217 shares in 2003) | 56,893 | 56,893 | ||||||
Common stock, $1 par value; 250,000,000 shares authorized 127,752,838 shares issued and outstanding (127,295,126 shares in 2003) | 127,753 | 127,295 | ||||||
Additional paid-in capital | 1,464,835 | 1,458,983 | ||||||
Distributions in excess of net income | (680,277 | ) | (651,497 | ) | ||||
Deferred compensation — unearned restricted stock awards | (7,520 | ) | (5,588 | ) | ||||
Notes receivable from officer-stockholders | (210 | ) | (459 | ) | ||||
Accumulated other comprehensive loss, net | (930 | )(A) | (1,862 | )(A) | ||||
Total stockholders’ equity | 1,141,777 | 1,163,436 | ||||||
Total liabilities and stockholders’ equity | $ | 3,605,208 | $ | 3,543,643 | ||||
(A) | Represents net unrealized loss on derivative instrument transactions. |