Exhibit 99.1
Cornerstone Realty Income Trust, Inc.
306 East Main Street Richmond, Virginia 23219 (804) 643-1761
Contact: Mark M. Murphy
For Immediate Release | | (804) 643-1761 x231 |
Cornerstone Realty Reports Second Quarter 2003 Results
RICHMOND, Va., August 5, 2003 —- Cornerstone Realty Income Trust, Inc. (NYSE: TCR) today reported operating results for the second quarter and first six months ended June 30, 2003.
Funds From Operations (“FFO”) for the second quarter ended June 30, 2003 were $10.6 million, or $0.20 per common share, compared with $13.3 million, or $0.27 per common share, in the second quarter of 2002. FFO for the first six months of 2003 was $21.1 million, or $0.40 per common share, compared with $26.9 million, or $0.54 per common share, last year. FFO is the generally accepted measure of operating performance for a real estate investment trust (REIT). A reconciliation of net income to FFO is included in the Operating Results table at the end of this news release.
Net loss available to common shareholders for the second quarter ended June 30, 2003 was $2.3 million, or $0.04 per common share basic and diluted, compared with net income available to common shareholders of $1.7 million, or $0.04 per common share basic and diluted, in the second quarter of 2002. For the first six months of 2003, net loss available to common shareholders was $2.7 million, or $0.05 per common share basic and diluted, compared with net income available to common shareholders of $3.9 million, or $0.08 per common share basic and diluted in the first half of 2002.
In the second quarter of 2003, total revenues were $42.0 million compared with $40.7 million last year. Average physical occupancy in the second quarter of 2003 was 91% compared with 92% a year ago, and the average rent per unit in the second quarter of this year was $675 compared with $690 last year. In the first six months of 2003, total revenues were $82.0 million compared with $80.7 million a year ago. Average physical occupancy in the first six months of 2003 was 91% compared with 92% a year ago, and the average rent per unit for the first six months of 2003 was $675 compared with $693 last year.
Commenting on the second quarter and year-to-date results, Glade M. Knight, chairman and chief executive officer, said: “As expected, we continued to experience occupancy weakness in our major markets throughout the first half of this year, which has adversely affected our earnings year to date. We believe that, without meaningful job growth in our major markets, the next several months will continue to be a very challenging period for us and the apartment industry. We are hopeful that the economy will begin to generate employment growth in the months ahead, which in turn will allow us to generate higher occupancy rates and earnings improvement going forward.
“In late May, we completed our merger with Merry Land Properties, Inc. Through the merger, we’ve added nearly 2,000 apartment homes in Savannah and Charleston to our portfolio of assets, along with a third-party property management business, interests in two joint ventures, and two parcels of undeveloped apartment land that we plan to develop into a new apartment community in Charleston with approximately 250 units, and a 110-unit Phase II addition to an existing community in Savannah. We welcome former Merry Land shareholders and employees into the Cornerstone family, and we look forward to Merry Land’s former chairman and CEO Tennent Houston joining our board of directors in the near future,” Knight said.
—- more—-
Cornerstone Realty Income Trust, Inc. —- Page 2
Comparable Property Operations
Comparable property operations is a measure Cornerstone uses to evaluate performance and is not deemed to be an alternative to net income as determined in accordance with generally accepted accounting principles. In addition, this measure as calculated by Cornerstone may not be comparable to similarly entitled measures of other companies.
Cornerstone’s “same-community” portfolio consists of 74 stabilized apartment communities containing 20,101 apartment homes that the company has owned since January 1, 2002, representing 87% of Cornerstone’s 23,189 units. For the second quarter of 2003, same-community property operating income (rental income less property operating expenses) decreased 11% from the second quarter of last year. Second quarter 2003 rental income decreased 4% while property operating expenses increased 8% compared with the second quarter of 2002. For the first six months of 2003, same-community property operating income decreased 10% from the first six months of 2002. Rental income in the first six months of 2003 was down 3% while property operating expenses increased 9% compared with the first six months of last year.
Merger and Acquisition Activity
The previously announced merger of Merry Land Properties into a subsidiary of Cornerstone became effective during the second quarter of this year. In the merger, Merry Land shareholders received 1.818 Cornerstone common shares and 0.220 Cornerstone Series B convertible preferred shares for each Merry Land common share owned. The Series B Shares are entitled to vote with the common shares, but are not entitled to receive dividends until converted into common shares, which will occur no later than October 1, 2003. The merger also included the assumption by Cornerstone of existing Merry Land debt totaling approximately $94 million. The principal assets of Merry Land include nine apartment communities in Charleston, South Carolina and Savannah, Georgia with nearly 2,000 units, a third-party property management business, undeveloped apartment land, and ownership interests in two joint ventures.
Financing Activity
During the second quarter of 2003, Cornerstone finalized a new $50-million secured, variable-rate credit facility with Wachovia Bank, N.A., and $50 million in secured, variable-rate conduit financing with Wachovia Bank, N.A. In mid-July Cornerstone also placed $38.5 million in secured, variable-rate financing, with a discounted FNMA mortgage-backed security, through ARCS Commercial Mortgage Co., L.P. Net proceeds from the new credit facility and financings have been used to repay the outstanding balance on the company’s $85-million unsecured credit facility with Wachovia Bank, N.A., and to repay outstanding mortgages totaling approximately $23.4 million. The balance of the net proceeds will be used for excess borrowing capacity, to meet working capital requirements of the company, and other corporate purposes.
The new $50-million credit facility has a two-year term and bears an interest rate of 1.575 basis points over LIBOR. The $50-million conduit financing has a five-year term and bears an interest rate of 1.25 basis points over LIBOR. The loan is pre-payable after one year. The $38.5-million financing through ARCS Commercial Mortgage is a five-year, interest-only loan that bears an interest rate of 82 basis points over the FNMA index. The loan is pre-payable after one year with a 1% penalty.
During the second quarter of this year, Cornerstone repurchased approximately $190,000 of its common shares, or 26,550 common shares at an average price of $7.17 per share.
—- more —-
Cornerstone Realty Income Trust, Inc. — Page 3
Dividends
A quarterly dividend of $0.20 per share was paid on July 21, 2003 to common shareholders of record on June 30, 2003. The company also paid a quarterly dividend of $0.5938 per share on July 21, 2003 to record holders of its Series A Convertible Preferred Shares on June 30, 2003.
Conference Call and Webcast
Cornerstone will hold a live conference call and webcast tomorrow August 6, 2003, at 11:00 a.m. EDT to review second quarter and year-to-date results. Individual investors can access the live webcast by visiting the Investor Relations page of the company’s Web site atwww.cornerstonereit.com. Investment professionals and media should call the company’s Investor Relations department at (804) 643-1761 for further information on participating in the conference call. A replay of the conference call and webcast will be available on the company’s Web site shortly after completion of the live event.
Supplemental Information
Additional operational and financial information for the second quarter and year-to-date periods is available in the Investor Relations section of Cornerstone’s Web site atwww.cornerstonereit.com.
Forward Looking Statements
Certain statements contained herein constitute “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the company to be materially different from results expressed or implied by such forward-looking statements. Such factors include, among other things, risks associated with unanticipated adverse business developments affecting the company, adverse changes in the real estate markets, and local as well as general economic and competitive factors. In addition, the timing and amounts of distributions to common shareholders are within the discretion of Cornerstone’s board of directors. There is no assurance that planned events or results will be achieved.
Corporate Profile
Cornerstone Realty Income Trust, Inc. (NYSE:TCR) is a fully integrated, self-managed and self-advised real estate company that has operated as a REIT since 1993. The company focuses on the ownership and management of multifamily communities in select markets in Virginia, North Carolina, South Carolina, Georgia and Texas. Currently Cornerstone owns 89 apartment communities with 23,189 units, a third-party property management business, undeveloped apartment land, and ownership interests in two joint ventures. Cornerstone is headquartered in Richmond, Virginia and its common stock trades on the New York Stock Exchange under the symbol “TCR.” For more information about Cornerstone, visit the company’s web site atwww.cornerstonereit.com.
# # #
CORNERSTONE REALTY INCOME TRUST, INC.
BALANCE SHEET DATA
| | | June 30, 2003
| | | December 31, 2002
| |
| | | In Thousands Except Per Share Amounts | |
Assets | | | | | | | | |
Investment in Rental Property | | | | | | | | |
Land | | $ | 165,195 | | | $ | 152,207 | |
Building and Improvements | | | 1,097,841 | | | | 975,532 | |
Furniture and Fixtures | | | 35,231 | | | | 34,853 | |
| | |
|
|
| |
|
|
|
| | | | 1,298,267 | | | | 1,162,592 | |
Less Accumulated Depreciation | | | (198,018 | ) | | | (176,743 | ) |
| | |
|
|
| |
|
|
|
| | | | 1,100,249 | | | | 985,849 | |
| | |
|
|
| |
|
|
|
Cash and Cash Equivalents | | | 3,377 | | | | 1,380 | |
Prepaid Expenses | | | 3,424 | | | | 4,636 | |
Deferred Financing Costs, Net | | | 5,010 | | | | 4,519 | |
Investment in Joint Ventures | | | 1,478 | | | | — | |
Other Assets | | | 29,898 | | | | 18,463 | |
| | |
|
|
| |
|
|
|
| Total Assets | | $ | 1,143,436 | | | $ | 1,014,847 | |
| | |
|
|
| |
|
|
|
Liabilities and Shareholders’ Equity | | | | | | | | |
Liabilities | | | | | | | | |
Notes Payable-Unsecured | | $ | 10,000 | | | $ | 77,913 | |
Notes Payable-Secured | | | 782,656 | | | | 604,446 | |
Distributions Payable | | | 76 | | | | 76 | |
Accounts Payable and Accrued Expenses | | | 15,687 | | | | 12,953 | |
Rents Received in Advance | | | 416 | | | | 606 | |
Tenant Security Deposits | | | 1,648 | | | | 1,574 | |
| | |
|
|
| |
|
|
|
| Total Liabilities | | | 810,483 | | | | 697,568 | |
Minority Interest of Unitholders in Operating Partnership | | | 19,783 | | | | 30,205 | |
| | |
Shareholders’ Equity | | | | | | | | |
Preferred Stock, No Par Value, Authorized 25,000 Shares; $25 Liquidation Preference, Series A Cumulative Convertible Redeemable; Issued and Outstanding 127 Shares | | | 2,680 | | | | 2,680 | |
Preferred Stock, No Par Value, Authorized 607 Shares; Series B Convertible; Issued and Outstanding 605 Shares | | | 3,922 | | | | — | |
Common Stock, No Par Value, Authorized 100,000 Shares; Issued and Outstanding 54,602 Shares and 48,361 Shares, Respectively | | | 535,503 | | | | 487,303 | |
Deferred Compensation | | | (563 | ) | | | (638 | ) |
Distributions Greater Than Net Income | | | (228,372 | ) | | | (202,271 | ) |
| | |
|
|
| |
|
|
|
Total Shareholders’ Equity | | | 313,170 | | | | 287,074 | |
| | |
|
|
| |
|
|
|
| Total Liabilities and Shareholders’ Equity | | $ | 1,143,436 | | | $ | 1,014,847 | |
| | |
|
|
| |
|
|
|
CORNERSTONE REALTY INCOME TRUST, INC.
OPERATING RESULTS
| | | Three Months Ended June 30
| | | Six Months Ended June 30
| |
| | | 2003
| | | 2002
| | | 2003
| | | 2002
| |
| | | In Thousands Except Per Share Amounts | |
Revenues | | | | | | | | | | | | | | | | |
Rental Income | | $ | 39,644 | | | $ | 38,699 | | | $ | 78,011 | | | $ | 77,097 | |
Other Property Income | | | 2,374 | | | | 2,044 | | | | 4,005 | | | | 3,613 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total Revenues | | | 42,018 | | | | 40,743 | | | | 82,016 | | | | 80,710 | |
| | | | |
Expenses | | | | | | | | | | | | | | | | |
Property and Maintenance | | | 12,421 | | | | 10,921 | | | | 23,755 | | | | 21,020 | |
Real Estate Taxes and Insurance | | | 5,694 | | | | 4,694 | | | | 11,208 | | | | 9,475 | |
Property Management | | | 1,008 | | | | 884 | | | | 1,986 | | | | 1,825 | |
General and Administrative | | | 871 | | | | 944 | | | | 1,694 | | | | 1,805 | |
Other Depreciation | | | 5 | | | | 5 | | | | 11 | | | | 12 | |
Depreciation of Rental Property | | | 12,883 | | | | 11,215 | | | | 24,926 | | | | 22,248 | |
Other | | | 52 | | | | 56 | | | | 151 | | | | 153 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total Expenses | | | 32,934 | | | | 28,719 | | | | 63,731 | | | | 56,538 | |
| | | | |
Income Before Interest Income (Expense) | | | 9,084 | | | | 12,024 | | | | 18,285 | | | | 24,172 | |
Interest Income | | | 56 | | | | 7 | | | | 62 | | | | 22 | |
Interest Expense | | | (11,417 | ) | | | (10,337 | ) | | | (22,332 | ) | | | (20,384 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Income (Loss) from Continuing Operations before | | | | | | | | | | | | | | | | |
Minority Interest of Unit Holders in Operating Partnership | | | (2,277 | ) | | | 1,694 | | | | (3,985 | ) | | | 3,810 | |
Minority Interest of Unit Holders in Operating Partnership | | | 74 | | | | (78 | ) | | | 86 | | | | (119 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Income (Loss) from Continuing Operations | | | (2,203 | ) | | | 1,616 | | | | (3,899 | ) | | | 3,691 | |
Discontinued Operations | | | | | | | | | | | | | | | | |
Income (Loss) from Discontinued Operations | | | (18 | ) | | | 156 | | | | (7 | ) | | | 365 | |
Gain on Sales of Investments | | | (9 | ) | | | — | | | | 1,391 | | | | — | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Net (Loss) Income | | $ | (2,230 | ) | | $ | 1,772 | | | $ | (2,515 | ) | | $ | 4,056 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Distributions to Preferred Shareholders | | | (75 | ) | | | (76 | ) | | | (151 | ) | | | (152 | ) |
Net (Loss) Income Available to Common Shareholders | | $ | (2,305 | ) | | $ | 1,696 | | | $ | (2,666 | ) | | $ | 3,904 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Funds From Operations | | | | | | | | | | | | | | | | |
Net (Loss) Income Available to Common Shareholders | | $ | (2,305 | ) | | $ | 1,696 | | | $ | (2,666 | ) | | $ | 3,904 | |
Adjustments: | | | | | | | | | | | | | | | | |
Distributions to Preferred Shareholders | | | 75 | | | | 76 | | | | 151 | | | | 152 | |
Minority Interest of Unit Holders in Operating Partnership | | | (74 | ) | | | 78 | | | | (86 | ) | | | 119 | |
Gain on Sales of Investments | | | 9 | | | | — | | | | (1,391 | ) | | | — | |
Depreciation from Discontinued Operations | | | — | | | | 241 | | | | 162 | | | | 462 | |
Depreciation | | | 12,883 | | | | 11,215 | | | | 24,926 | | | | 22,248 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Funds From Operations | | $ | 10,588 | | | $ | 13,306 | | | $ | 21,096 | | | $ | 26,885 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Per Share | | | | | | | | | | | | | | | | |
Weighted Average Shares—Fully Converted* | | | 53,346 | | | | 50,169 | | | | 52,231 | | | | 49,743 | |
Funds From Operations Per Share | | $ | 0.20 | | | $ | 0.27 | | | $ | 0.40 | | | $ | 0.54 | |
Common Share Distributions | | $ | 0.20 | | | $ | 0.28 | | | $ | 0.48 | | | $ | 0.56 | |
Net (Loss) Income from Continuing Operations—Basic and Diluted | | $ | (0.04 | ) | | $ | 0.03 | | | $ | (0.08 | ) | | $ | 0.07 | |
Net Income from Discontinued Operations—Basic and Diluted | | $ | — | | | $ | 0.01 | | | $ | 0.03 | | | $ | 0.01 | |
| | | | | | | | | | | | | | | | | |
Net (Loss) Income Available to Common Shareholders—Basis and Diluted | | $ | (0.04 | ) | | $ | 0.04 | | | $ | (0.05 | ) | | $ | 0.08 | |
Weighted Average Common Shares—Basic and Diluted | | | 51,439 | | | | 47,994 | | | | 50,136 | | | | 47,910 | |
| *Does | | not include non-dividend-paying Series B Convertible Preferred Shares |
