Exhibit 99.2 |
Associated Estates Realty Corporation
Fourth Quarter 2007
Earnings Release and Supplemental Financial Data |
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The Residence at Barrington
226 Barrington Place
Aurora, Ohio 44202
Tel: (330) 995-5446
WebSite: www.residenceatbarrington.com
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The Residence at Barrington is a premier community offering cathedral ceilings, gas fireplaces, enclosed sunrooms, French doors, private patio/balcony, private entrances and attached garages, as well as 24-hour business and fitness centers, lighted tennis courts, outdoor heated pool with spa, tanning bed, playground and more. The community also provides convenient access to key traffic arteries, major employers, golf, shopping and dining.
Associated Estates Realty Corporation | Phone: (216) 261-5000 |
1 AEC Parkway | Fax: (216) 289-9600 |
Richmond Heights, Ohio 44143-1467 | Web Site: www.aecrealty.com |
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Investor contact: Michael Lawson | |
Vice President of Investor Relations | |
(216) 797-8798 | |
mlawson@aecrealty.com | |
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This news release contains forward-looking statements based on current judgments and knowledge of management, which are subject to certain risks, trends and uncertainties that could cause actual results to vary from those projected, including but not limited to, expectations regarding the Company's 2008 performance, which are based on certain assumptions. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this news release. These forward-looking statements are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words "expects," "projects," "believes," "plans," "anticipates," and similar expressions are intended to identify forward-looking statements. Investors are cautioned that the Company's forward-looking statements involve risks and uncertainty, that could cause actual results to differ from estimates or projections contained in these forward-looking statements, including without limitation the following: changes in the economic climate in the markets in which the Company owns and manages properties, including interest rates, the ability of the Company to consummate the sale of properties pursuant to its current plan, the overall level of economic activity, the availability of consumer credit and mortgage financing, unemployment rates and other factors; the ability of the Company to refinance debt on favorable terms at maturity; the ability of the Company to defease or prepay debt pursuant to its current plan; risks of a lessening of demand for the multifamily units owned or managed by the Company; competition from other available multifamily units and changes in market rental rates; increases in property and liability insurance costs; unanticipated increases in real estate taxes and other operating expenses (e.g., cleaning, utilities, repair and maintenance costs, insurance and administrative costs, security, landscaping, staffing and other general costs); weather conditions that adversely affect operating expenses; expenditures that cannot be anticipated such as utility rate and usage increases, unanticipated repairs, and real estate tax valuation reassessments or millage rate increases; inability of the Company to control operating expenses or achieve increases in revenue; the results of litigation filed or to be filed against the Company; changes in tax legislation; risks of personal injury claims and property damage related to mold claims because of diminished insurance coverage; catastrophic property damage losses that are not covered by the Company's insurance; risks associated with property acquisitions such as environmental liabilities, among others; changes in government regulations affecting our properties, the rents of which are subsidized and certain aspects of which are regulated by the United States Department of Housing and Urban Development ("HUD") and other properties managed by the Company; inability to renew current contracts with HUD for rent subsidized properties at existing rents; changes in or termination of contracts relating to third party management and advisory business; risks related to the Company's joint ventures; risks related to the perception of residents and prospective residents as to the attractiveness, convenience and safety of the Company's properties or the neighborhoods in which they are located; and the Company's ability to acquire properties at prices consistent with our investment criteria.
Associated Estates Realty Corporation
Fourth Quarter 2007
Supplemental Financial Data |
ASSOCIATED ESTATES REALTY CORPORATION REPORTS FOURTH QUARTER RESULTS
Same community NOI up 6.5 percent for the quarter
Company sets expectations for 2008
Cleveland, Ohio - February 7, 2008 - Associated Estates Realty Corporation (NYSE: AEC) today reported net income available to common shareholders of $1.1 million or $0.07 per common share (basic and diluted), for the fourth quarter ended December 31, 2007, compared with net income available to common shareholders of $12.1 million or $0.71 per common share (basic and diluted), for the fourth quarter ended December 31, 2006. The fourth quarter 2007 results included gains from property sales of approximately $0.24 per share and no defeasance costs. Fourth quarter 2006 results included gains from property sales of $0.94 per share and defeasance costs of approximately $0.05 per share.
Funds from operations (FFO) for the quarter were $0.39 per common share (basic and diluted), compared with $0.25 per common share (basic and diluted), for the fourth quarter ended December 31, 2006. FFO for the fourth quarter 2006, adjusted for defeasance costs of $948,000 or approximately $0.05 per share, was $0.30 per share (basic and diluted).
"Our exceptional operating performance in 2007 is directly attributable to the strength of AEC's apartment markets, the competitiveness of each of our properties and our hardworking employees," commented Jeffrey I. Friedman, Chairman, President and CEO.
A reconciliation of net income applicable to common shares to FFO is included on page 11.
Total revenue for the quarter was $38.9 million compared with $34.4 million for the fourth quarter of 2006, an increase of 13.1 percent.
Same Community (Market-Rate) Portfolio Results
Revenues for the quarter from the Company's same community portfolio were up 3.7 percent, and total property operating expenses for the same community portfolio were flat for the period, resulting in a 6.5 percent increase in net operating income (NOI), compared with the fourth quarter of 2006. Physical occupancy was 94.4 percent at the end of the fourth quarter of 2007 compared with 94.8 percent at the end of the fourth quarter of 2006. Average net rent collected per unit for the same community properties for the fourth quarter increased 3.2 percent to $810 per month, as compared with $785 per month average net rent collected for the fourth quarter of 2006. Net rent collected per unit for the Company's same community Midwest portfolio grew 3.8 percent, while net rent collected per unit for the Company's same community properties in the Mid-Atlantic/Southeast markets grew by 1.4 percent.
Additional quarterly financial information, including performance by region for the Company's portfolio, is included on pages 15 through 23.
Associated Estates Realty Corporation
Fourth Quarter Earnings |
Year to Date Performance
For the twelve months ended December 31, 2007, net income applicable to common shares was $5.1 million or $0.30 per share compared to net income applicable to common shares of $22.0 million or $1.29 per share for the period ended December 31, 2006. The results for the twelve month period ended December 31, 2007 include gains from property sales of $1.24 per share as compared to gains from property sales of $3.18 per share for the twelve months ended December 31, 2006. Additionally, the results for 2007 include defeasance and prepayment costs and preferred stock repurchase costs of approximately $0.26 per share as compared to defeasance and prepayment costs of approximately $0.91 per share included in calendar year 2006 results.
Funds from operations for the twelve months ended December 31, 2007 were $1.05 per share and include defeasance and/or prepayment costs of $4.2 million, or approximately $0.25 per share associated with the repayment of $62.9 million in debt and $172,000, or approximately $0.01 per share, of costs associated with the repurchase of 111,500 depositary shares of the Company's Class B Preferred Shares. Excluding these costs, FFO for the period ended December 31, 2007 would have been $1.31 per share. Also, included in the Company's twelve month results was a contribution of $1.6 million or approximately $0.09 per common share related to the settlement of a lawsuit pertaining to the collection of passed due rents in connection with the Company's affordable portfolio.
NOI for the twelve month period ended December 31, 2007 for the Company's same community portfolio was up 5.3 percent compared with 2006. The increase in 2007 NOI was driven by a 4.3 percent increase in revenue net of a 3.1 percent increase in total property operating expenses.
Stock Repurchase
During the year, the Company repurchased 1,021,200 shares of the Company's common stock for $13.6 million, at an average price of $13.30 per share. At the end of the year, $5.9 million remained available under the previously board authorized $50.0 million stock repurchase program.
2007 Acquisitions and Dispositions
In 2007, the Company purchased one property and acquired its joint venture partners' 51% interest in another property for a total of $91.3 million. In 2007, the Company sold three properties for a total of $49.0 million. Net sales proceeds were primarily used to pay down debt, repurchase our common shares and fund capital improvement programs.
2008 Outlook
The Company said its current FFO expectations for the year 2008 are in the range of $1.18 to $1.22 per share, excluding defeasance and other prepayment costs. Assumptions relating to the Company's earnings guidance can be found on page 25.
For its same community, market-rate portfolio, the Company expects revenue growth in 2008 to be in the range of 3.0 to 3.3 percent, with expense growth of between 2.5 and 2.9 percent, resulting in growth in NOI in the range of 3.3 to 3.7 percent.
The Company anticipates the disposition of approximately $100 million of properties and the acquisition of approximately $100 million of properties in 2008.
Conference Call
A conference call to discuss the results will be held today, Thursday, February 7, at 2:00 p.m. (ET). To participate in the call:
Via Telephone: The dial in number is 800-860-2442, and the pass code is "Estates."
Via the Internet (listen only): Access the Company's website at www.aecrealty.com. Please log on at least 15 minutes prior to the scheduled start time in order to register, download, and install any necessary audio software. Select the "Register for AEC's Conference Call" link on the left hand side of the page and follow the brief instructions to register for the event. The webcast will be archived through February 21, 2008.
Associated Estates Realty Corporation
Financial and Operating Highlights
For the Three and Twelve Months Ended December 31, 2007 and 2006
(Unaudited; in thousands, except per share and ratio data) |
| | | | | |
| | Three Months Ended | | Twelve Months Ended |
| | December 31, | | December 31, |
OPERATING INFORMATION | | 2007 | | 2006 | | 2007 | | 2006 |
| | | | | | | | |
Total revenue | | $ | 38,947 | | $ | 34,438 | | $ | 151,356 | | $ | 137,693 |
Property revenue | | $ | 35,916 | | $ | 31,654 | | $ | 138,224 | | $ | 124,926 |
Net income applicable to common shares | | $ | 1,106 | | $ | 12,092 | | $ | 5,069 | | $ | 21,975 |
Per share - basic and diluted | | $ | 0.07 | | $ | 0.71 | | $ | 0.30 | | $ | 1.29 |
| | | | | | | | |
Funds From Operations (FFO) (1) | | $ | 6,295 | | $ | 4,217 | | $ | 17,659 | | $ | 930 |
| | | | | | | | |
FFO as adjusted (1) | | $ | 6,295 | | $ | 5,165 | | $ | 22,055 | | $ | 16,453 |
| | | | | | | | |
FFO per share - basic and diluted | | $ | 0.39 | | $ | 0.25 | | $ | 1.05 | | $ | 0.06 |
| | | | | | | | |
FFO as adjusted per share - basic and diluted | | $ | 0.39 | | $ | 0.30 | | $ | 1.31 | | $ | 0.97 |
| | | | | | | | |
Funds Available for Distribution (FAD) (1) | | $ | 4,628 | | $ | 4,012 | | $ | 15,526 | | $ | 11,906 |
| | | | | | | | |
Dividends per share | | $ | 0.17 | | $ | 0.17 | | $ | 0.68 | | $ | 0.68 |
| | | | | | | | |
Payout ratio - FFO | | 43.6 % | | 68.0 % | | 64.8 % | | 1133.3 % |
Payout ratio - FFO as adjusted | | 43.6 % | | 56.7 % | | 51.9 % | | 70.1 % |
Payout ratio - FAD | | 58.6 % | | 70.8 % | | 73.9 % | | 97.1 % |
| | | | | | | | |
General and administrative expense | | $ | 2,454 | | $ | 2,168 | | $ | 10,327 | | $ | 9,840 |
Interest expense (2) | | $ | 9,632 | | $ | 9,210 | | $ | 36,513 | | $ | 37,316 |
Interest coverage ratio (3) | | 1.79:1 | | 1.68:1 | | 1.73:1 | | 1.54:1 |
Fixed charge coverage ratio (4) | | 1.60:1 | | 1.49:1 | | 1.54:1 | | 1.38:1 |
General and administrative expense to property revenue | | 6.8 % | | 6.8 % | | 7.5 % | | 7.9 % |
Interest expense to property revenue | | 26.8 % | | 29.1 % | | 26.4 % | | 29.9 % |
Property NOI (5) | | $ | 20,671 | | $ | 17,575 | | $ | 76,597 | | $ | 67,336 |
ROA (6) | | 8.2 % | | 8.0 % | | 8.2 % | | 8.0 % |
Same community market-rate revenue increase | | 3.7 % | | 6.3 % | | 4.3 % | | 7.6 % |
Same community market-rate expense increase | | 0.0 % | | 7.0 % | | 3.1 % | | 8.7 % |
Same community market-rate NOI increase | | 6.5 % | | 5.8 % | | 5.3 % | | 6.7 % |
Same community market-rate operating margins | | 57.6 % | | 56.1 % | | 55.0 % | | 54.5 % |
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(1) | See page 11 for a reconciliation of net income to these non-GAAP measurements and page 26 for the Company's definition of these non-GAAP measurements. |
(2) | Excludes amortization of financing fees of $318 and $1,128 for 2007 and $239 and $961 for 2006. Additionally, it excludes $0 and $4,183 of defeasance and other prepayment costs for 2007 and $0 and $12,357 for 2006. |
(3) | Is calculated as EBITDA divided by interest expense, including capitalized interest and amortization of deferred financing costs, and excluding defeasance, other prepayment and/or preferred repurchase costs. See page 27 for a reconciliation of net income available to common shareholders to EBITDA and for the Company's definition of EBITDA. |
(4) | Represents interest expense and preferred stock dividend payment coverage, excluding defeasance, other prepayment and/or preferred repurchase costs. |
(5) | See page 28 for a reconciliation of net income to this non-GAAP measurement and for the Company's definition of this non-GAAP measurement. |
(6) | ROA is calculated as trailing twelve month Property NOI divided by average gross real estate assets. |
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Associated Estates Realty Corporation
Financial and Operating Highlights
Fourth Quarter 2007
(Unaudited; in thousands, except per share and ratio data) |
| | December 31, | | December 31, |
MARKET CAPITALIZATION DATA | | 2007 | | 2006 |
| | | | |
Net real estate assets | | $ | 659,586 | | $ | 591,520 |
Total assets | | $ | 686,796 | | $ | 648,829 |
| | | | |
Debt | | $ | 556,695 | | $ | 498,634 |
Minority interest | | $ | 1,829 | | $ | 1,851 |
Preferred stock - 8.70% Class B Cumulative Redeemable Preferred Shares | | $ | 55,213 | | $ | 58,000 |
Total shareholders' equity | | $ | 89,786 | | $ | 112,051 |
| | | | |
Common shares outstanding | | 16,354 | | 17,261 |
Share price, end of period | | $ | 9.44 | | $ | 13.74 |
| | | | |
Total market capitalization (1) | | $ | 768,358 | | $ | 816,455 |
| | | | |
Undepreciated book value of real estate assets (2) | | $ | 965,013 | | $ | 877,797 |
| | | | |
Debt to undepreciated book value of real estate assets | | 57.7 % | | 56.8 % |
Debt and preferred stock to undepreciated book value of real estate assets | | 63.4 % | | 63.4 % |
Debt to total market capitalization (1) | | 72.7 % | | 63.8 % |
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Annual dividend | | $ | 0.68 | | $ | 0.68 |
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Annual dividend yield based on share price, end of period | | 7.2 % | | 4.9 % |
(1) | Includes the Company's share of unconsolidated debt of $2,068 and $22,655 as of December 31, 2007 and December 31, 2006. |
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(2) | Includes $4,614 of undepreciated real estate associated with one property classified as held for sale at December 31, 2006. |
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Associated Estates Realty Corporation
Financial and Operating Highlights
Fourth Quarter 2007 |
| | | | | | Average Age |
| | | | Number | | of Owned |
PORTFOLIO INFORMATION | | Properties | | of Units | | Properties |
| | | | | | |
Company Portfolio: | | | | | | |
Directly owned Market-Rate: | | | | | | |
"Same Community" Midwest | | 40 | | 9,272 | | 16 |
"Same Community" Mid-Atlantic/Southeast | | 10 | | 2,813 | | 15 |
Total "Same Community" Market-Rate | | 50 | | 12,085 | | 15 |
| | | | | | |
Acquisitions Market-Rate | | 2 | | 1,111 | | 5 |
Total directly owned Market-Rate | | 52 | | 13,196 | | 15 |
Directly owned Affordable Housing | | 11 | | 1,146 | | 29 |
Total directly owned | | 63 | | 14,342 | | 16 |
Joint Ventures: | | | | | | |
Affordable Housing | | 1 | | 108 | | |
Third Party Managed: | | | | | | |
Affordable Housing | | 1 | | 85 | | |
Market-Rate | | 2 | | 531 | | |
Total Third Party Managed | | 3 | | 616 | | |
Total Company Portfolio | | 67 | | 15,066 | | |
| | | | | | |
| | December 31, | | December 31, |
| | 2007 | | 2006 |
ASSETS | | | | |
| | | | |
Real estate assets | | |
Investment in real estate | | $ | 964,292 | | $ | 871,860 |
Construction in progress | | 721 | | 1,323 |
Less: accumulated depreciation | | (305,427) | | (281,994) |
| | 659,586 | | 591,189 |
Real estate associated with property held for sale, net | | - | | 331 |
| | | | |
Real estate, net | | 659,586 | | 591,520 |
Cash and cash equivalents | | 1,549 | | 30,010 |
Restricted cash | | 6,730 | | 7,279 |
Other assets | | 18,931 | | 20,020 |
Total assets | | $ | 686,796 | | $ | 648,829 |
| | | | |
LIABILITIES AND SHAREHOLDERS' EQUITY | | | | |
| | | | |
Mortgage notes payable | | $ | 510,915 | | $ | 472,854 |
Unsecured revolving credit facility | | 20,000 | | - |
Unsecured borrowings | | 25,780 | | 25,780 |
Total debt | | 556,695 | | 498,634 |
Accounts payable, accrued expenses and other liabilities | | 38,486 | | 36,293 |
Total liabilities | | 595,181 | | 534,927 |
| | | | |
Operating partnership minority interest | | 1,829 | | 1,851 |
| | | | |
Shareholders' equity | | | | |
Preferred shares, without par value; 9,000,000 shares authorized: 8.70% | | | | |
Class B Series II cumulative redeemable, $250 per share liquidation | | | | |
preference, 232,000 issued and 220,850 and 232,000 outstanding at | | | | |
December 31, 2007 and 2006, respectively | | 55,213 | | 58,000 |
Common shares, without par value, $.10 stated value; 41,000,000 | | | | |
authorized; 22,995,763 issued and 16,353,700 and 17,261,224 | | | | |
outstanding at December 31, 2007 and 2006, respectively | | 2,300 | | 2,300 |
Paid-in capital | | 281,152 | | 280,369 |
Accumulated distributions in excess of accumulated net income | | (180,436) | | (173,962) |
Accumulated other comprehensive loss | | (1,050) | | (71) |
Less: Treasury shares, at cost, 6,642,063 and 5,734,539 shares | | | | |
at December 31, 2007 and 2006, respectively | | (67,393) | | (54,585) |
Total shareholders' equity | | 89,786 | | 112,051 |
Total liabilities and shareholders' equity | | $ | 686,796 | | $ | 648,829 |
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| | | | | |
| | | | | |
| | Three Months Ended | | Twelve Months Ended |
| | December 31, | | December 31, |
| | 2007 | | 2006 | | 2007 | | 2006 |
REVENUE | | | | | | | | |
Property revenue | | $ | 35,916 | | $ | 31,654 | | $ | 138,224 | | $ | 124,926 |
Management and service company revenue: | | | | | | | | |
Fees, reimbursements and other | | 2,609 | | 2,516 | | 10,914 | | 11,689 |
Painting services | | 422 | | 268 | | 2,218 | | 1,078 |
Total revenue | | 38,947 | | 34,438 | | 151,356 | | 137,693 |
| | | | | | | | |
EXPENSES | | | | | | | | |
Property operating and maintenance | | 15,245 | | 14,079 | | 61,627 | | 57,590 |
Depreciation and amortization | | 9,281 | | 7,382 | | 33,368 | | 29,894 |
Direct property management and service companies expenses | | 3,061 | | 2,784 | | 12,863 | | 12,695 |
Painting services and charges | | 513 | | 346 | | 2,164 | | 1,367 |
General and administrative | | 2,454 | | 2,168 | | 10,327 | | 9,840 |
Total expenses | | 30,554 | | 26,759 | | 120,349 | | 111,386 |
Operating income | | 8,393 | | 7,679 | | 31,007 | | 26,307 |
Interest income | | 58 | | 95 | | 458 | | 680 |
Interest expense | | (9,950) | | (9,449) | | (41,824) | | (50,634) |
(Loss) income before equity in net loss of joint ventures, | | | | | | | | |
minority interest and income from discontinued operations | | (1,499) | | (1,675) | | (10,359) | | (23,647) |
Equity in net loss of joint ventures | | (12) | | (75) | | (258) | | (462) |
Minority interest in operating partnership | | (13) | | (13) | | (53) | | (61) |
(Loss) income from continuing operations | | (1,524) | | (1,763) | | (10,670) | | (24,170) |
Income from discontinued operations: | | | | | | | | |
Operating income (loss) | | 10 | | (856) | | (29) | | (2,902) |
Gain on disposition of properties | | 3,821 | | 15,972 | | 20,864 | | 54,093 |
Income from discontinued operations | | 3,831 | | 15,116 | | 20,835 | | 51,191 |
Net income | | 2,307 | | 13,353 | | 10,165 | | 27,021 |
Preferred share dividends | | (1,201) | | (1,261) | | (4,924) | | (5,046) |
Preferred share repurchase costs | | - | | - | | (172) | | - |
Net income applicable to common shares | | $ | 1,106 | | $ | 12,092 | | $ | 5,069 | | $ | 21,975 |
| | | | | | | | |
Earnings per common share - basic and diluted: | | | | | | | | |
(Loss) income from continuing operations applicable to | | | | | | | | |
common shares | | $ | (0.17) | | $ | (0.18) | | $ | (0.93) | | $ | (1.72) |
Income from discontinued operations | | 0.24 | | 0.89 | | 1.23 | | 3.01 |
Net income applicable to common shares | | $ | 0.07 | | $ | 0.71 | | $ | 0.30 | | $ | 1.29 |
| | | | | | | | |
Weighted average shares outstanding - basic and diluted | | 16,153 | | 17,043 | | 16,871 | | 17,023 |
| | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | Three Months Ended | | Twelve Months Ended |
| | | December 31, | | December 31, |
| | | 2007 | | 2006 | | 2007 | | 2006 |
CALCULATION OF FFO AND FAD | | | | | | | | |
Net income applicable to common shares | | $ | 1,106 | | $ | 12,092 | | $ | 5,069 | | $ | 21,975 |
| | | | | | | | | |
Add: | Depreciation - real estate assets | | 8,233 | | 7,819 | | 31,363 | | 31,205 |
| Depreciation - real estate assets - joint ventures | | 24 | | 241 | | 529 | | 962 |
| Amortization of joint venture deferred costs | | - | | 9 | | 17 | | 34 |
| Amortization of intangible assets | | 753 | | 28 | | 1,545 | | 847 |
Less: | Gain on disposition of properties | | (3,821) | | (15,972) | | (20,864) | | (54,093) |
| | | | | | | | | |
| Funds From Operations (FFO) (1) | | 6,295 | | 4,217 | | 17,659 | | 930 |
| | | | | | | | | |
Add: | Defeasance and other prepayment costs | | - | | 948 | | 4,224 | | 15,523 |
Add: | Preferred stock repurchase costs | | - | | - | | 172 | | - |
| | | | | | | | | |
| Funds From Operations as Adjusted (1) | | 6,295 | | 5,165 | | 22,055 | | 16,453 |
| | | | | | | | | |
Add: | Depreciation - other assets | | 336 | | 318 | | 1,255 | | 1,337 |
| Depreciation - other assets - joint ventures | | 1 | | 41 | | 82 | | 181 |
| Amortization of deferred financing fees | | 318 | | 243 | | 1,128 | | 1,035 |
| Amortization of deferred financing fees - joint ventures | | - | | 12 | | 24 | | 48 |
| | | | | | | | | |
Less: | Recurring fixed asset additions (2) | | (2,149) | | (1,746) | | (8,819) | | (7,008) |
| Recurring fixed asset additions - joint ventures (2) | | (173) | | (21) | | (199) | | (140) |
| Funds Available for Distribution (FAD) (1) | | $ | 4,628 | | $ | 4,012 | | $ | 15,526 | | $ | 11,906 |
| | | | | | | | | |
Weighted average shares outstanding - basic and diluted (3) | | 16,153 | | 17,043 | | 16,871 | | 17,023 |
| | | | | | | | | |
PER SHARE INFORMATION: | | | | | | | | |
FFO - basic and diluted | | $ | 0.39 | | $ | 0.25 | | $ | 1.05 | | $ | 0.06 |
FFO as adjusted - basic and diluted | | $ | 0.39 | | $ | 0.30 | | $ | 1.31 | | $ | 0.97 |
Dividends | | $ | 0.17 | | $ | 0.17 | | $ | 0.68 | | $ | 0.68 |
| | | | | | | | | |
Payout ratio - FFO | | 43.6 % | | 68.0 % | | 64.8 % | | 1133.3 % |
Payout ratio - FFO as adjusted | 43.6 % | | 56.7 % | | 51.9 % | | 70.1 % |
Payout ratio - FAD | | 58.6 % | | 70.8 % | | 73.9 % | | 97.1 % |
(1) | See page 26 for the Company's definition of these non-GAAP measurements. |
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(2) | Fixed asset additions exclude development, investment and non-recurring capital additions and only reflect the Company's prorata share of recurring joint venture capital additions. |
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(3) | The Company computes the weighted average shares outstanding in accordance with SFAS 128 and accordingly, has excluded 353 and 562 common share equivalents from the three and twelve months ended December 31, 2007 calculation, respectively, and 705 and 502 common share equivalents from the three and twelve months ended December 31, 2006 calculation, respectively, used in the computation of earnings per share and FFO per share, as they would be anti-dilutive to the loss from continuing operations. |
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Associated Estates Realty Corporation
Discontinued Operations (1)
Three Months Ended December 31, 2007 and 2006
(Unaudited; dollar and share amounts in thousands) |
| | Three Months Ended |
| | December 31, |
| | 2007 | | 2006 |
REVENUE | | | | |
Property revenue | | $ | 146 | | $ | 3,530 |
| | | | |
EXPENSES | | | | |
Property operating and maintenance | | 95 | | 2,519 |
Depreciation and amortization | | 41 | | 783 |
Total expenses | | 136 | | 3,302 |
Operating income | | 10 | | 228 |
Interest income | | - | | 6 |
Interest expense (2) | | - | | (1,090) |
Gain on disposition of properties | | 3,821 | | 15,972 |
Income from discontinued operations | | $ | 3,831 | | $ | 15,116 |
| | | | |
Earnings per common share - basic and diluted: | | | | |
Income from discontinued operations | | $ | 0.24 | | $ | 0.89 |
| | | | |
Weighted average shares outstanding - basic and diluted | | 16,153 | | 17,043 |
| | | | |
(1) | In accordance with SFAS 144, the Company reports the results of operations and gain/loss related to the sale of real estate assets as discontinued operations. Real estate assets that are classified as held for sale are also reported as discontinued operations. The Company generally classifies properties held for sale when all significant contingencies surrounding the closing have been resolved. In many transactions, these contingencies are not satisfied until the actual closing of the transaction. Interest expense included in discontinued operations is limited to interest on mortgage debt specifically associated with properties sold or classified as held for sale. |
| |
| Included in the table above are three properties disposed of in 2007 and eight properties disposed of in 2006. |
| |
(2) | Included in the 2006 expense is $948 of defeasance costs. |
| | |
Associated Estates Realty Corporation
Discontinued Operations (1)
Twelve Months Ended December 31, 2007 and 2006
(Unaudited; dollar and share amounts in thousands) |
| | Twelve Months Ended |
| | December 31, |
| | 2007 | | 2006 |
REVENUE | | | | |
Property revenue | | $ | 3,977 | | $ | 18,307 |
| | | | |
EXPENSES | | | | |
Property operating and maintenance | | 3,212 | | 12,542 |
Depreciation and amortization | | 795 | | 3,495 |
Total expenses | | 4,007 | | 16,037 |
Operating (loss) income | | (30) | | 2,270 |
Interest income | | 1 | | 16 |
Interest expense (2) | | - | | (5,188) |
Gain on disposition of properties | | 20,864 | | 54,093 |
Income from discontinued operations | | $ | 20,835 | | $ | 51,191 |
| | | | |
Earnings per common share - basic and diluted: | | | | |
Income from discontinued operations | | $ | 1.23 | | $ | 3.01 |
| | | | |
Weighted average shares outstanding - basic and diluted | | 16,871 | | 17,023 |
| | | | |
(1) | In accordance with SFAS 144, the Company reports the results of operations and gain/loss related to the sale of real estate assets as discontinued operations. Real estate assets that are classified as held for sale are also reported as discontinued operations. The Company generally classifies properties held for sale when all significant contingencies surrounding the closing have been resolved. In many transactions, these contingencies are not satisfied until the actual closing of the transaction. Interest expense included in discontinued operations is limited to interest on mortgage debt specifically associated with properties sold or classified as held for sale. |
| |
| Included in the table above are three properties disposed of in 2007 and eight properties disposed of in 2006. |
| |
(2) | Included in the 2006 expense is $3,166 of defeasance costs. |
| | |
Associated Estates Realty Corporation
Overview of Operating Expenses Related to Repairs and Maintenance and Capitalized Expenditures
(In thousands, except estimated GAAP useful life and cost per unit) |
| | | | | |
| | | | Twelve Months Ended |
| | Estimated | | December 31, 2007 |
| | GAAP Useful | | | | Cost Per |
| | Life (Years) | | Amount | | Unit (1) |
OPERATING EXPENSES RELATED TO REPAIRS AND MAINTENANCE | | | | | | |
Repairs and maintenance (2) | | | | $ | 11,145 | | $ | 771 |
Maintenance personnel labor cost (2) | | | | 6,817 | | 472 |
Total Operating Expenses Related to Repairs and Maintenance | | | | 17,962 | | 1,243 |
| | | | | | |
CAPITAL EXPENDITURES | | | | | | |
Recurring Capital Expenditures (3) | | | | | | |
Amenities | | 5 | | 672 | | 47 |
Appliances | | 5 | | 741 | | 51 |
Building improvements | | 14 | | 3,271 | | 227 |
Carpet and flooring | | 5 | | 2,849 | | 197 |
Furnishings | | 5 | | 391 | | 27 |
Office/Model | | 5 | | 270 | | 19 |
HVAC and mechanicals | | 15 | | 770 | | 53 |
Landscaping and grounds | | 14 | | 1,636 | | 113 |
Suite improvements | | 5 | | 135 | | 9 |
Miscellaneous | | 5 | | 28 | | 2 |
Total Recurring Capital Expenditures - Properties | | | | 10,763 | | 745 |
Corporate capital expenditures (4) | | | | 256 | | 18 |
Less: Capital to be funded from sale of properties (5) | | | | (2,200) | | (152) |
Total Recurring Capital Expenditures | | | | 8,819 | | 611 |
Total Recurring Capital Expenditures and Repairs and Maintenance | | | | $ | 26,781 | | $ | 1,854 |
| | | | | | |
Total Recurring Capital Expenditures | | | | $ | 8,819 | | |
Investment/Revenue Enhancing Expenditures (6) | | | | | | |
Building improvements - building improvements (7) | | 20 | | 503 | | |
Building improvements - roofs | | 20 | | 591 | | |
Building improvements - siding | | 20 | | 770 | | |
Building improvements - unit upgrades | | 5 | | 16 | | |
Total Investment/Revenue Enhancing Expenditures | | | | 1,880 | | |
Capital to be funded from the sale of properties (5) | | | | 2,200 | | |
Grand Total Capital Expenditures | | | | $ | 12,899 | | |
| | | | | | |
| | | | | | | |
(1) | Calculated using 14,446 units, including 1,146 affordable housing units and 12,189 market-rate units and 1,111 acquired units. |
| |
(2) | Included in property operating and maintenance expense in the Consolidated Statements of Operations. |
| |
(3) | See page 28 for the Company's definition of recurring fixed asset additions. |
| |
(4) | Includes upgrades to computer hardware and software as well as corporate office furniture and fixtures. |
| |
(5) | The Company's practice has been to fund recurring capital expenditures via funds provided by operations and to fund investment/revenues enhancing expenditures either through proceeds from property sales, borrowings on the revolver or property refinancings. For 2007, the Company has budgeted to fund a portion of the recurring capital expenditures through the proceeds from property sales |
| |
(6) | See page 28 for the Company's definition of investment/revenue enhancing additions. |
| |
(7) | Includes exterior painting and elevator renovations. |
Associated Estates Realty Corporation
"Same Community" Market-Rate Data
Operating Results for the Last Five Quarters
(Unaudited, in thousands, except unit totals and per unit amounts) |
| | Quarter Ended |
| | December 31, | | September 30, | | June 30, | | March 31, | | December 31, | |
| | 2007 | | 2007 | | 2007 | | 2007 | | 2006 | |
| | | | | | | | | | | |
Property Revenue | | $ | 30,364 | | $ | 30,544 | | $ | 30,151 | | $ | 29,494 | | $ | 29,290 | |
| | | | | | | | | | | |
Property Operating and | | | | | | | | | | | |
Maintenance Expenses | | | | | | | | | | | |
Personnel | | 3,645 | | 3,655 | | 3,626 | | 3,507 | | 3,309 | |
Advertising | | 455 | | 418 | | 401 | | 392 | | 428 | |
Utilities | | 1,588 | | 1,644 | | 1,474 | | 1,575 | | 1,465 | |
Repairs and maintenance | | 1,926 | | 2,543 | | 2,834 | | 2,162 | | 1,977 | |
Real estate taxes and insurance | | 4,079 | | 4,937 | | 4,628 | | 3,991 | | 4,472 | |
Other operating | | 1,181 | | 1,251 | | 1,224 | | 1,114 | | 1,220 | |
Total Expenses | | 12,874 | | 14,448 | | 14,187 | | 12,741 | | 12,871 | |
| | | | | | | | | | | |
Net Operating Income | | $ | 17,490 | | $ | 16,096 | | $ | 15,964 | | $ | 16,753 | | $ | 16,419 | |
| | | | | | | | | | | |
Operating Margin | | 57.6 % | | 52.7 % | | 52.9 % | | 56.8 % | | 56.1 % | |
| | | | | | | | | | | |
Total Number of Units | | 12,085 | | 12,085 | | 12,085 | | 12,085 | | 12,085 | |
| | | | | | | | | | | |
NOI Per Unit | | $ | 1,447 | | $ | 1,332 | | $ | 1,321 | | $ | 1,386 | | $ | 1,359 | |
| | | | | | | | | | | |
Average Net Collected Per Unit (1) | | $ | 810 | | $ | 815 | | $ | 805 | | $ | 791 | | $ | 785 | |
| | | | | | | | | | | |
Physical Occupancy - End of Period (2) | 94.4 % | | 95.7 % | | 96.3 % | | 96.0 % | | 94.8 % | |
| | | | | | | | | | | |
(1) | Represents gross potential rents less vacancies and concessions. |
| |
(2) | Is defined as number of units occupied divided by total number of units. |
| | |
Associated Estates Realty Corporation
"Same Community" Market-Rate Data
Operating Results for the Twelve Months Ended December 31, 2007 and 2006
(Unaudited, in thousands, except unit totals and per unit amounts) |
| | Twelve Months Ended |
| | December 31, |
| | 2007 | | 2006 |
| | | | |
Property Revenue | | $ | 120,553 | | $ | 115,567 |
| | | | |
Property Operating and Maintenance Expenses | | | | |
Personnel | | 14,431 | | 13,426 |
Advertising | | 1,666 | | 1,709 |
Utilities | | 6,280 | | 5,969 |
Repairs and maintenance | | 9,468 | | 9,932 |
Real estate taxes and insurance | | 17,634 | | 17,503 |
Other operating | | 4,771 | | 4,067 |
Total Expenses | | 54,250 | | 52,606 |
| | | | |
Net Operating Income | | $ | 66,303 | | $ | 62,961 |
| | | | |
Operating Margin | | 55.0 % | | 54.5 % |
| | | | |
Total Number of Units | | 12,085 | | 12,085 |
| | | | |
NOI Per Unit | | $ | 5,486 | | $ | 5,210 |
| | | | |
Average Net Collected Per Unit (1) | | $ | 805 | | $ | 774 |
| | | | |
Physical Occupancy - End of Period (2) | | 94.4 % | | 94.8 % |
| | | | |
(1) | Represents gross potential rents less vacancies and concessions. |
| |
(2) | Is defined as number of units occupied divided by total number of units. |
| | |
Associated Estates Realty Corporation
"Same Community" Market-Rate Data
As of December 31, 2007 and December 31, 2006
(Unaudited, in thousands, except unit totals and per unit amounts) |
| | | | | | Net Rent | | Average | | | | | | | | |
| | | | | | Collected | | Rent | | Physical | | Turnover |
| | | | | | per Unit (1) | | per Unit (2) | | Occupancy (3) | | Ratio (4) |
| | No. of | | Average | | Q4 | | Q4 | | % | | Q4 | | Q4 | | % | | Q4 | | Q4 | | Q4 | | Q4 |
| | Units | | Age (5) | | 2007 | | 2006 | | Change | | 2007 | | 2006 | | Change | | 2007 | | 2006 | | 2007 | | 2006 |
Midwest Properties | | | | | | | | | | | | | | | | | | | | | | | | |
Indiana | | 836 | | 11 | | $ | 772 | | $ | 735 | | 5.0 % | | $ | 903 | | $ | 891 | | 1.3 % | | 93.8 % | | 94.4 % | | 47.4 % | | 51.7 % |
Michigan | | 2,888 | | 16 | | 716 | | 693 | | 3.3 % | | 833 | | 837 | | (0.5)% | | 96.2 % | | 95.9 % | | 52.2 % | | 53.7 % |
Ohio - Central Ohio | | 2,621 | | 16 | | 724 | | 687 | | 5.4 % | | 819 | | 803 | | 2.0 % | | 94.4 % | | 95.8 % | | 58.8 % | | 56.6 % |
Ohio - Northeastern Ohio | | 1,399 | | 12 | | 859 | | 830 | | 3.5 % | | 987 | | 978 | | 0.9 % | | 93.5 % | | 92.6 % | | 52.0 % | | 52.3 % |
Ohio - Toledo, Ohio | | 1,060 | | 21 | | 645 | | 632 | | 2.1 % | | 768 | | 752 | | 2.1 % | | 93.6 % | | 95.8 % | | 55.5 % | | 63.8 % |
Pennsylvania | | 468 | | 21 | | 686 | | 675 | | 1.6 % | | 816 | | 811 | | 0.6 % | | 92.1 % | | 95.3 % | | 59.8 % | | 51.3 % |
Total Midwest Properties | | 9,272 | | 16 | | 735 | | 708 | | 3.8 % | | 850 | | 843 | | 0.8 % | | 94.6 % | | 95.2 % | | 54.4 % | | 55.2 % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Mid-Atlantic/Southeast | | | | | | | | | | | | | | | | | | | | | | | | |
Properties | | | | | | | | | | | | | | | | | | | | | | | | |
Florida | | 1,272 | | 8 | | 1,154 | | 1,160 | | (0.5)% | | 1,328 | | 1,290 | | 2.9 % | | 93.0 % | | 93.3 % | | 64.5 % | | 63.2 % |
Georgia | | 874 | | 19 | | 803 | | 760 | | 5.7 % | | 937 | | 927 | | 1.1 % | | 94.1 % | | 91.8 % | | 65.0 % | | 67.3 % |
Baltimore/Washington | | 667 | | 21 | | 1,199 | | 1,177 | | 1.9 % | | 1,290 | | 1,241 | | 3.9 % | | 95.1 % | | 95.5 % | | 42.0 % | | 50.4 % |
Total Mid-Atlantic/ | | | | | | | | | | | | | | | | | | | | | | | | |
Southeast Properties | | 2,813 | | 15 | | 1,055 | | 1,040 | | 1.4 % | | 1,198 | | 1,165 | | 2.8 % | | 93.8 % | | 93.4 % | | 59.3 % | | 61.4 % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total/Average "Same | | | | | | | | | | | | | | | | | | | | | | | | |
Community" Market-Rate | 12,085 | | 15 | | $ | 810 | | $ | 785 | | 3.2 % | | $ | 931 | | $ | 918 | | 1.4 % | | 94.4 % | | 94.8 % | | 55.5 % | | 56.6 % |
| | | | | | | | | | | | | | | | | | | | | | | | |
(1) | Represents gross potential rents less vacancies and allowances for all units divided by the number of units in a market. |
| |
(2) | Represents gross potential rents for all units divided by the number of units in a market. |
| |
(3) | Represents physical occupancy at the end of the quarter. |
| |
(4) | Represents the number of units turned over for the quarter divided by the number of units in a market, annualized. |
| |
(5) | Age shown in years. |
| | |
Associated Estates Realty Corporation
Property Revenue
For the Three Months Ended December 31, 2007 and 2006 |
| | | | 2007 | | 2006 | | Q4 | | Q4 | | | | |
| | No. of | | Physical | | Physical | | 2007 | | 2006 | | Increase/ | | % |
Property Revenue | | Units | | Occupancy (1) | | Occupancy (1) | | Revenue | | Revenue | | (Decrease) | | Change |
"Same Community" Market-Rate | | | | | | | | | | | | | | |
Midwest Properties | | | | | | | | | | | | | | |
Indiana | | 836 | | 93.8 % | | 94.4 % | | $ | 2,005 | | $ | 1,897 | | $ | 108 | | 5.7 % |
Michigan | | 2,888 | | 96.2 % | | 95.9 % | | 6,472 | | 6,241 | | 231 | | 3.7 % |
Ohio - Central Ohio | | 2,621 | | 94.4 % | | 95.8 % | | 5,886 | | 5,553 | | 333 | | 6.0 % |
Ohio - Northeastern Ohio | | 1,399 | | 93.5 % | | 92.6 % | | 3,761 | | 3,597 | | 164 | | 4.6 % |
Ohio - Toledo, Ohio | | 1,060 | | 93.6 % | | 95.8 % | | 2,134 | | 2,105 | | 29 | | 1.4 % |
Pennsylvania | | 468 | | 92.1 % | | 95.3 % | | 987 | | 987 | | - | | 0.0 % |
Total Midwest Properties | | 9,272 | | 94.6 % | | 95.2 % | | 21,245 | | 20,380 | | 865 | | 4.2 % |
| | | | | | | | | | | | | | |
Mid-Atlantic/Southeast Properties | | | | | | | | | | | | | | |
Florida | | 1,272 | | 93.0 % | | 93.3 % | | 4,549 | | 4,517 | | 32 | | 0.7 % |
Georgia | | 874 | | 94.1 % | | 91.8 % | | 2,151 | | 2,017 | | 134 | | 6.6 % |
Baltimore/Washington | | 667 | | 95.1 % | | 95.5 % | | 2,419 | | 2,376 | | 43 | | 1.8 % |
Total Mid-Atlantic/ | | | | | | | | | | | | | | |
Southeast Properties | | 2,813 | | 93.8 % | | 93.4 % | | 9,119 | | 8,910 | | 209 | | 2.3 % |
| | | | | | | | | | | | | | |
Total "Same Community" | | | | | | | | | | | | | | |
Market-Rate | | 12,085 | | 94.4 % | | 94.8 % | | 30,364 | | 29,290 | | 1,074 | | 3.7 % |
| | | | | | | | | | | | | | |
Affordable Housing | | | | | | | | | | | | | | |
Ohio | | 1,146 | | 99.0 % | | 99.6 % | | 2,441 | | 2,364 | | 77 | | 3.3 % |
| | | | | | | | | | | | | | |
Acquisitions (2) | | | | | | | | | | | | | | |
Virginia | | 268 | | 98.1 % | | N/A | | 1,025 | | - | | 1,025 | | 100.0 % |
Georgia | | 843 | | 88.0 % | | N/A | | 2,086 | | - | | 2,086 | | 100.0 % |
| | | | | | | | | | | | | | |
Total Property Revenue | | 14,342 | | 94.4 % | | 95.2 % | | $ | 35,916 | | $ | 31,654 | | $ | 4,262 | | 13.5 % |
| | | | | | | | | | | | | | |
(1) | Represents physical occupancy at the end of the quarter. |
| |
(2) | The Company defines acquisition properties as acquired properties which have not yet reached stabilization. A property is considered stabilized when its occupancy rate reaches 93.0% and the Company has owned the property for one year. |
| | |
| | | | 2007 | | 2006 | | Q4 | | Q4 | | | | |
| | No. of | | Physical | | Physical | | 2007 | | 2006 | | Increase/ | | % |
Property Operating Expenses | | Units | | Occupancy (1) | | Occupancy (1) | | Expenses | | Expenses | | (Decrease) | | Change |
"Same Community" Market-Rate | | | | | | | | | | | | | | |
Midwest Properties | | | | | | | | | | | | | | |
Indiana | | 836 | | 93.8 % | | 94.4 % | | $ | 884 | | $ | 787 | | $ | 97 | | 12.3 % |
Michigan | | 2,888 | | 96.2 % | | 95.9 % | | 3,033 | | 2,875 | | 158 | | 5.5 % |
Ohio - Central Ohio | | 2,621 | | 94.4 % | | 95.8 % | | 2,553 | | 2,623 | | (70) | | (2.7)% |
Ohio - Northeastern Ohio | | 1,399 | | 93.5 % | | 92.6 % | | 1,471 | | 1,401 | | 70 | | 5.0 % |
Ohio - Toledo, Ohio | | 1,060 | | 93.6 % | | 95.8 % | | 1,075 | | 944 | | 131 | | 13.9 % |
Pennsylvania | | 468 | | 92.1 % | | 95.3 % | | 422 | | 426 | | (4) | | (0.9)% |
Total Midwest Properties | | 9,272 | | 94.6 % | | 95.2 % | | 9,438 | | 9,056 | | 382 | | 4.2 % |
| | | | | | | | | | | | | | |
Mid-Atlantic/Southeast Properties | | | | | | | | | | | | | | |
Florida | | 1,272 | | 93.0 % | | 93.3 % | | 1,647 | | 1,987 | | (340) | | (17.1)% |
Georgia | | 874 | | 94.1 % | | 91.8 % | | 1,003 | | 992 | | 11 | | 1.1 % |
Baltimore/Washington | | 667 | | 95.1 % | | 95.5 % | | 786 | | 836 | | (50) | | (6.0)% |
Total Mid-Atlantic/ | | | | | | | | | | | | | | |
Southeast Properties | | 2,813 | | 93.8 % | | 93.4 % | | 3,436 | | 3,815 | | (379) | | (9.9)% |
| | | | | | | | | | | | | | |
Total "Same Community" | | | | | | | | | | | | | | |
Market-Rate | | 12,085 | | 94.4 % | | 94.8 % | | 12,874 | | 12,871 | | 3 | | 0.0 % |
| | | | | | | | | | | | | | |
Affordable Housing | | | | | | | | | | | | | | |
Ohio | | 1,146 | | 99.0 % | | 99.6 % | | 1,304 | | 1,208 | | 96 | | 7.9 % |
| | | | | | | | | | | | | | |
Acquisitions (2) | | | | | | | | | | | | | | |
Virginia | | 268 | | 98.1 % | | N/A | | 304 | | - | | 304 | | 100.0 % |
Georgia | | 843 | | 88.0 % | | N/A | | 763 | | - | | 763 | | 100.0 % |
| | | | | | | | | | | | | | |
Total Property Operating Expenses | 14,342 | | 94.4 % | | 95.2 % | | $ | 15,245 | | $ | 14,079 | | $ | 1,166 | | 8.3 % |
| | | | | | | | | | | | | | |
(1) | Represents physical occupancy at the end of the quarter. |
| |
(2) | The Company defines acquisition properties as acquired properties which have not yet reached stabilization. A property is considered stabilized when its occupancy rate reaches 93.0% and the Company has owned the property for one year. |
| | |
| | | | 2007 | | 2006 | | Q4 | | Q4 | | | | |
| | No. of | | Physical | | Physical | | 2007 | | 2006 | | Increase/ | | % |
Property NOI (1) | | Units | | Occupancy (2) | | Occupancy (2) | | NOI | | NOI | | (Decrease) | | Change |
"Same Community" Market-Rate | | | | | | | | | | | | | | |
Midwest Properties | | | | | | | | | | | | | | |
Indiana | | 836 | | 93.8 % | | 94.4 % | | $ | 1,121 | | $ | 1,110 | | $ | 11 | | 1.0% |
Michigan | | 2,888 | | 96.2 % | | 95.9 % | | 3,439 | | 3,366 | | 73 | | 2.2% |
Ohio - Central Ohio | | 2,621 | | 94.4 % | | 95.8 % | | 3,333 | | 2,930 | | 403 | | 13.8% |
Ohio - Northeastern Ohio | | 1,399 | | 93.5 % | | 92.6 % | | 2,290 | | 2,196 | | 94 | | 4.3% |
Ohio - Toledo, Ohio | | 1,060 | | 93.6 % | | 95.8 % | | 1,059 | | 1,161 | | (102) | | (8.8)% |
Pennsylvania | | 468 | | 92.1 % | | 95.3 % | | 565 | | 561 | | 4 | | 0.7% |
Total Midwest Properties | | 9,272 | | 94.6 % | | 95.2 % | | 11,807 | | 11,324 | | 483 | | 4.3% |
| | | | | | | | | | | | | | |
Mid-Atlantic/Southeast Properties | | | | | | | | | | | | | | |
Florida | | 1,272 | | 93.0 % | | 93.3 % | | 2,902 | | 2,530 | | 372 | | 14.7% |
Georgia | | 874 | | 94.1 % | | 91.8 % | | 1,148 | | 1,025 | | 123 | | 12.0% |
Baltimore/Washington | | 667 | | 95.1 % | | 95.5 % | | 1,633 | | 1,540 | | 93 | | 6.0% |
Total Mid-Atlantic/ | | | | | | | | | | | | | | |
Southeast Properties | | 2,813 | | 93.8 % | | 93.4 % | | 5,683 | | 5,095 | | 588 | | 11.5% |
| | | | | | | | | | | | | | |
Total "Same Community" | | | | | | | | | | | | | | |
Market-Rate | | 12,085 | | 94.4 % | | 94.8 % | | 17,490 | | 16,419 | | 1,071 | | 6.5% |
| | | | | | | | | | | | | | |
Affordable Housing | | | | | | | | | | | | | | |
Ohio | | 1,146 | | 99.0 % | | 99.6 % | | 1,137 | | 1,156 | | (19) | | (1.6)% |
| | | | | | | | | | | | | | |
Acquisitions (3) | | | | | | | | | | | | | | |
Virginia | | 268 | | 98.1 % | | N/A | | 721 | | - | | 721 | | 100.0% |
Georgia | | 843 | | 88.0 % | | N/A | | 1,323 | | - | | 1,323 | | 100.0% |
| | | | | | | | | | | | | | |
Total Property NOI | | 14,342 | | 94.4 % | | 95.2 % | | $ | 20,671 | | $ | 17,575 | | $ | 3,096 | | 17.6% |
| | | | | | | | | | | | | | |
(1) | See page 28 for a reconciliation of net income to this non-GAAP measurement and for the Company's definition of this non-GAAP measurement. |
| |
(2) | Represents physical occupancy at the end of the quarter. |
| |
(3) | The Company defines acquisition properties as acquired properties which have not yet reached stabilization. A property is considered stabilized when its occupancy rate reaches 93.0% and the Company has owned the property for one year. |
Associated Estates Realty Corporation
Property Revenue
For the Twelve Months Ended December 31, 2007 and 2006 |
| | | | 2007 | | 2006 | | YTD | | YTD | | | | |
| | No. of | | Physical | | Physical | | 2007 | | 2006 | | Increase/ | | % |
Property Revenue | | Units | | Occupancy (1) | | Occupancy (1) | | Revenues | | Revenues | | (Decrease) | | Change |
"Same Community" Market-Rate | | | | | | | | | | | | | | |
Midwest Properties | | | | | | | | | | | | | | |
Indiana | | 836 | | 93.8 % | | 94.4 % | | $ | 7,986 | | $ | 7,645 | | $ | 341 | | 4.5% |
Michigan | | 2,888 | | 96.2 % | | 95.9 % | | 25,594 | | 24,506 | | 1,088 | | 4.4% |
Ohio - Central Ohio | | 2,621 | | 94.4 % | | 95.8 % | | 23,110 | | 21,924 | | 1,186 | | 5.4% |
Ohio - Northeastern Ohio | | 1,399 | | 93.5 % | | 92.6 % | | 14,950 | | 14,211 | | 739 | | 5.2% |
Ohio - Toledo, Ohio | | 1,060 | | 93.6 % | | 95.8 % | | 8,514 | | 8,146 | | 368 | | 4.5% |
Pennsylvania | | 468 | | 92.1 % | | 95.3 % | | 3,932 | | 3,824 | | 108 | | 2.8% |
Total Midwest Properties | | 9,272 | | 94.6 % | | 95.2 % | | 84,086 | | 80,256 | | 3,830 | | 4.8% |
| | | | | | | | | | | | | | |
Mid-Atlantic/Southeast Properties | | | | | | | | | | | | | | |
Florida | | 1,272 | | 93.0 % | | 93.3 % | | 18,386 | | 18,174 | | 212 | | 1.2% |
Georgia | | 874 | | 94.1 % | | 91.8 % | | 8,511 | | 7,882 | | 629 | | 8.0% |
Baltimore/Washington | | 667 | | 95.1 % | | 95.5 % | | 9,570 | | 9,255 | | 315 | | 3.4% |
Total Mid-Atlantic/ | | | | | | | | | | | | | | |
Southeast Properties | | 2,813 | | 93.8 % | | 93.4 % | | 36,467 | | 35,311 | | 1,156 | | 3.3% |
| | | | | | | | | | | | | | |
Total "Same Community" | | | | | | | | | | | | | | |
Market-Rate | | 12,085 | | 94.4 % | | 94.8 % | | 120,553 | | 115,567 | | 4,986 | | 4.3% |
| | | | | | | | | | | | | | |
Affordable Housing | | | | | | | | | | | | | | |
Ohio | | 1,146 | | 99.0 % | | 99.6 % | | 11,205 | | 9,359 | | 1,846 | | 19.7% |
| | | | | | | | | | | | | | |
Acquisitions (2) | | | | | | | | | | | | | | |
Virginia | | 268 | | 98.1 % | | N/A | | 2,198 | | - | | 2,198 | | 100.0% |
Georgia | | 843 | | 88.0 % | | N/A | | 4,268 | | - | | 4,268 | | 100.0% |
| | | | | | | | | | | | | | |
Total Property Revenue | | 14,342 | | 94.4 % | | 95.2 % | | $ | 138,224 | | $ | 124,926 | | $ | 13,298 | | 10.6% |
| | | | | | | | | | | | | | |
(1) | Represents physical occupancy at the end of the quarter. |
| |
(2) | The Company defines acquisition properties as acquired properties which have not yet reached stabilization. A property is considered stabilized when its occupancy rate reaches 93.0% and the Company has owned the property for one year. |
| | |
| | | | 2007 | | 2006 | | YTD | | YTD | | | | |
| | No. of | | Physical | | Physical | | 2007 | | 2006 | | Increase/ | | % |
Property Operating Expenses | | Units | | Occupancy (1) | | Occupancy (1) | | Expenses | | Expenses | | (Decrease) | | Change |
"Same Community" Market-Rate | | | | | | | | | | | | | | |
Midwest Properties | | | | | | | | | | | | | | |
Indiana | | 836 | | 93.8 % | | 94.4 % | | $ | 3,852 | | $ | 3,350 | | $ | 502 | | 15.0% |
Michigan | | 2,888 | | 96.2 % | | 95.9 % | | 12,369 | | 11,917 | | 452 | | 3.8% |
Ohio - Central Ohio | | 2,621 | | 94.4 % | | 95.8 % | | 10,981 | | 10,860 | | 121 | | 1.1% |
Ohio - Northeastern Ohio | | 1,399 | | 93.5 % | | 92.6 % | | 6,352 | | 6,163 | | 189 | | 3.1% |
Ohio - Toledo, Ohio | | 1,060 | | 93.6 % | | 95.8 % | | 4,407 | | 4,194 | | 213 | | 5.1% |
Pennsylvania | | 468 | | 92.1 % | | 95.3 % | | 1,758 | | 1,769 | | (11) | | (0.6)% |
Total Midwest Properties | | 9,272 | | 94.6 % | | 95.2 % | | 39,719 | | 38,253 | | 1,466 | | 3.8% |
| | | | | | | | | | | | | | |
Mid-Atlantic/Southeast Properties | | | | | | | | | | | | | | |
Florida | | 1,272 | | 93.0 % | | 93.3 % | | 7,195 | | 7,362 | | (167) | | (2.3)% |
Georgia | | 874 | | 94.1 % | | 91.8 % | | 4,114 | | 3,906 | | 208 | | 5.3% |
Baltimore/Washington | | 667 | | 95.1 % | | 95.5 % | | 3,222 | | 3,085 | | 137 | | 4.4% |
Total Mid-Atlantic/ | | | | | | | | | | | | | | |
Southeast Properties | | 2,813 | | 93.8 % | | 93.4 % | | 14,531 | | 14,353 | | 178 | | 1.2% |
| | | | | | | | | | | | | | |
Total "Same Community" | | | | | | | | | | | | | | |
Market-Rate | | 12,085 | | 94.4 % | | 94.8 % | | 54,250 | | 52,606 | | 1,644 | | 3.1% |
| | | | | | | | | | | | | | |
Affordable Housing | | | | | | | | | | | | | | |
Ohio | | 1,146 | | 99.0 % | | 99.6 % | | 5,010 | | 4,984 | | 26 | | 0.5% |
| | | | | | | | | | | | | | |
Acquisitions (2) | | | | | | | | | | | | | | |
Virginia | | 268 | | 98.1 % | | N/A | | 732 | | - | | 732 | | 100.0% |
Georgia | | 843 | | 88.0 % | | N/A | | 1,635 | | - | | 1,635 | | 100.0% |
| | | | | | | | | | | | | | |
Total Property Operating Expenses | | 14,342 | | 94.4 % | | 95.2 % | | $ | 61,627 | | $ | 57,590 | | $ | 4,037 | | 7.0% |
| | | | | | | | | | | | | | |
(1) | Represents physical occupancy at the end of the quarter. |
| |
(2) | The Company defines acquisition properties as acquired properties which have not yet reached stabilization. A property is considered stabilized when its occupancy rate reaches 93.0% and the Company has owned the property for one year. |
| | | | 2007 | | 2006 | | YTD | | YTD | | | | |
| | No. of | | Physical | | Physical | | 2007 | | 2006 | | Increase/ | | % |
Property NOI (1) | | Units | | Occupancy (2) | | Occupancy (2) | | NOI | | NOI | | (Decrease) | | Change |
"Same Community" Market-Rate | | | | | | | | | | | | | | |
Midwest Properties | | | | | | | | | | | | | | |
Indiana | | 836 | | 93.8 % | | 94.4 % | | $ | 4,134 | | $ | 4,295 | | $ | (161) | | (3.7)% |
Michigan | | 2,888 | | 96.2 % | | 95.9 % | | 13,225 | | 12,589 | | 636 | | 5.1% |
Ohio - Central Ohio | | 2,621 | | 94.4 % | | 95.8 % | | 12,129 | | 11,064 | | 1,065 | | 9.6% |
Ohio - Northeastern Ohio | | 1,399 | | 93.5 % | | 92.6 % | | 8,598 | | 8,048 | | 550 | | 6.8% |
Ohio - Toledo, Ohio | | 1,060 | | 93.6 % | | 95.8 % | | 4,107 | | 3,952 | | 155 | | 3.9% |
Pennsylvania | | 468 | | 92.1 % | | 95.3 % | | 2,174 | | 2,055 | | 119 | | 5.8% |
Total Midwest Properties | | 9,272 | | 94.6 % | | 95.2 % | | 44,367 | | 42,003 | | 2,364 | | 5.6% |
| | | | | | | | | | | | | | |
Mid-Atlantic/Southeast Properties | | | | | | | | | | | | | | |
Florida | | 1,272 | | 93.0 % | | 93.3 % | | 11,191 | | 10,812 | | 379 | | 3.5% |
Georgia | | 874 | | 94.1 % | | 91.8 % | | 4,397 | | 3,976 | | 421 | | 10.6% |
Baltimore/Washington | | 667 | | 95.1 % | | 95.5 % | | 6,348 | | 6,170 | | 178 | | 2.9% |
Total Mid-Atlantic/ | | | | | | | | | | | | | | |
Southeast Properties | | 2,813 | | 93.8 % | | 93.4 % | | 21,936 | | 20,958 | | 978 | | 4.7% |
| | | | | | | | | | | | | | |
Total "Same Community" | | | | | | | | | | | | | | |
Market-Rate | | 12,085 | | 94.4 % | | 94.8 % | | 66,303 | | 62,961 | | 3,342 | | 5.3% |
| | | | | | | | | | | | | | |
Affordable Housing | | | | | | | | | | | | | | |
Ohio | | 1,146 | | 99.0 % | | 99.6 % | | 6,195 | | 4,375 | | 1,820 | | 41.6% |
| | | | | | | | | | | | | | |
Acquisitions (3) | | | | | | | | | | | | | | |
Virginia | | 268 | | 98.1 % | | N/A | | 1,466 | | - | | 1,466 | | 100.0% |
Georgia | | 843 | | 88.0 % | | N/A | | 2,633 | | - | | 2,633 | | 100.0% |
| | | | | | | | | | | | | | |
Total Property NOI | | 14,342 | | 94.4 % | | 95.2 % | | $ | 76,597 | | $ | 67,336 | | $ | 9,261 | | 13.8% |
| | | | | | | | | | | | | | |
(1) | See page 28 for a reconciliation of net income to this non-GAAP measurement and for the Company's definition of this non-GAAP measurement. |
| |
(2) | Represents physical occupancy at the end of the quarter. |
| |
(3) | The Company defines acquisition properties as acquired properties which have not yet reached stabilization. A property is considered stabilized when its occupancy rate reaches 93.0% and the Company has owned the property for one year. |
| | |
Associated Estates Realty Corporation
Debt Structure
As of December 31, 2007
(Dollar amounts in thousands) |
| Balance | | Percentage | | Weighted |
| Outstanding | | of | | Average |
FIXED RATE DEBT | December 31, 2007 | | Total Debt | | Interest Rate |
| | | | | |
Mortgages payable - CMBS | $ | 200,168 | | 36.0 % | | 7.7 % |
Mortgages payable - other (1) | 275,747 | | 49.5 % | | 5.8 % |
Unsecured borrowings | 25,780 | | 4.6 % | | 7.9 % |
Total fixed rate debt | 501,695 | | 90.1 % | | 6.7 % |
| | | | | |
VARIABLE RATE DEBT | | | | | |
Mortgages payable | 35,000 | | 6.3 % | | 6.2 % |
Revolver | 20,000 | | 3.6 % | | 6.7 % |
Total variable rate debt | 55,000 | | 9.9 % | | 6.4 % |
TOTAL DEBT | $ | 556,695 | | 100.0 % | | 6.7 % |
| | | | | |
Interest coverage ratio (2) | 1.73:1 | | | | |
Fixed charge coverage ratio (3) | 1.54:1 | | | | |
Weighted average maturity | 5.0 years | | | | |
| Fixed Rate | | Fixed Rate | | | | |
SCHEDULED PRINCIPAL MATURITIES | CMBS | | Other | | Variable Rate | | Total |
| | | | | | | |
2008 | $ | 31,935 | | $ | - | | $ | - | | $ | 31,935 |
2009 | 37,802 | | - | | 35,000 | | 72,802 |
2010 (4) | 15,809 | | 63,000 | | 20,000 | | 98,809 |
2011 | 67,563 | | - | | - | | 67,563 |
2012 | 47,059 | | 36,000 | | - | | 83,059 |
Thereafter | - | | 202,527 | | - | | 202,527 |
Total | $ | 200,168 | | $ | 301,527 | | $ | 55,000 | | $ | 556,695 |
| | | | | | | |
(1) | Includes $63,000 of variable rate debt swapped to fixed. |
| |
(2) | Is calculated as EBITDA divided by interest expense, including capitalized interest and amortization of deferred financing costs, and excluding defeasance, other prepayment and/or preferred repurchase costs. See page 27 for a reconciliation of net income available to common shareholders to EBITDA and for the Company's definition of EBITDA. |
| |
(3) | Represents interest expense and preferred stock dividend payment coverage, excluding defeasance, other prepayment and/or preferred repurchase costs. |
| |
(4) | Includes the Company's revolving credit facility. |
| | |
This table includes forward-looking statements based on current judgments and current knowledge of management, which are subject to certain risks, trends and uncertainties that could cause results to vary from those projected. Please see the paragraph on forward-looking statements on the cover of this document for a list of risk factors.
Earnings Guidance Per Common Share | | |
Expected net income | | $1.27 to $1.31 |
Expected real estate depreciation and amortization | | 2.23 |
Expected adjustments to unconsolidated joint ventures | | 0.01 |
Expected defeasance and other prepayment costs on secured debt | | 0.12 |
Expected gains on disposition of properties | | (2.45) |
Expected Funds from Operations as Adjusted (1) | | $1.18 to $1.22 |
| | |
Same Community Portfolio | | |
Revenue growth | | 3.0% to 3.3% |
Expense growth | | 2.5% to 2.9% |
Property NOI (2) growth | | 3.3% to 3.7% |
Physical occupancy | | 94.0% to 94.5% |
| | |
Transactions | | |
Acquisitions | | $100 million |
Dispositions | | $100 million |
Development | | $0 million |
| | |
Corporate Expenses | | |
General and administrative expense | | $13.5 million |
Service companies expense (3) | | $.5 million |
Total | | $14.0 million |
| | |
Debt | | |
Capitalized interest | | $0 million |
Expensed interest (excluding defeasance/prepayment costs) (4) | | $40.2 million |
Expected defeasance/prepayment costs | | $2.0 million |
| | |
Capital Structure | | |
Common share repurchases | | $0 million |
Preferred share repurchases | | $0 million |
(1) | See page 26 for the Company's definition of this non-GAAP measurement. |
| |
(2) | See page 28 for the Company's definition of this non-GAAP measurement. |
| |
(3) | Excludes salaries and benefits reimbursed in connection with the management of properties for third parties which are grossed up in fees, reimbursements and other and direct property management and service companies expenses in accordance with GAAP. |
| |
(4) | Includes $1.4 million of deferred financing costs. |
| | |
This supplemental includes certain non-GAAP financial measures that the Company believes are helpful in understanding our business, as further described below. The Company's definition and calculation of these non-GAAP financial measures may differ from those of other REITs, and may, therefore, not be comparable.
Funds from Operations ("FFO")
The Company defines FFO as the inclusion of all operating results, both recurring and non-recurring, except those results defined as "extraordinary items" under GAAP, adjusted for depreciation on real estate assets and amortization of intangible assets and gains and losses from the disposition of properties and land. Adjustments for joint ventures are calculated to reflect FFO on the same basis. FFO does not represent cash generated from operating activities in accordance with GAAP and is not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to net income as an indicator of the Company's operating performance or as an alternative to cash flow as a measure of liquidity. The Company generally considers FFO to be a useful measure for reviewing the comparative operating and financial performance of the Company because FFO can help one compare the operating performance of a company's real estate between periods or as compared to different REITs.
Funds from Operations ("FFO") as Adjusted
The Company defines FFO as adjusted as FFO, as defined above, plus the add back of defeasance and other prepayment costs of $4,224 for the twelve months ended December 31, 2007, and $948 and $15,523 for the quarter and twelve months ended December 31, 2006, respectively. In accordance with GAAP, these prepayment costs are included as interest expense in the Company's Consolidated Statement of Operations. Also added back for the twelve months ended December 31, 2007, is $172 of original issuance costs associated with the repurchase of 111,500 depositary shares of the Series B Preferred Shares that had been reclassified in accordance with GAAP. The Company is providing this calculation as an alternative FFO calculation as it considers it a more appropriate measure of comparing the operating performance of a company's real estate between periods or as compared to different REITs.
Funds Available for Distribution ("FAD")
The Company defines FAD as FFO as adjusted, as defined above, plus depreciation-other and amortization of deferred financing fees less recurring fixed asset additions. Fixed asset additions exclude development, investment, revenue enhancing and non-recurring capital additions. Adjustments for joint ventures are calculated to reflect FAD on the same basis. The Company considers FAD to be an appropriate supplemental measure of the performance of an equity REIT because, like FFO and FFO as adjusted, it captures real estate performance by excluding gains or losses from the disposition of properties and land and depreciation on real estate assets and amortization of intangible assets. Unlike FFO and FFO as adjusted, FAD also reflects the recurring capital expenditures that are necessary to maintain the associated real estate.
Associated Estates Realty Corporation
Definitions of Non-GAAP Financial Measures |
Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA")
EBITDA is defined as earnings before interest, taxes, depreciation and amortization. The Company considers EBITDA to be appropriate supplemental measures of our performance because they eliminate depreciation and interest which permits investors to view income from operations unclouded by non-cash depreciation or the cost of debt. Below is a reconciliation of net income available to common shareholders to EBITDA.
| | Three Months Ended | | Twelve Months Ended |
| | December 31, | | December 31, |
| | 2007 | | 2006 | | 2007 | | 2006 |
| | | | | | | | |
Net income available to common shareholders | | $ | 1,106 | | $ | 12,092 | | $ | 5,069 | | $ | 21,975 |
Equity in net loss of joint ventures | | 12 | | 75 | | 258 | | 462 |
Preferred share dividends and repurchase costs | | 1,201 | | 1,261 | | 5,096 | | 5,046 |
Interest income | | (58) | | (101) | | (459) | | (696) |
Interest expense (1) | | 9,950 | | 10,539 | | 41,824 | | 55,822 |
Depreciation and amortization | | 9,322 | | 8,165 | | 34,163 | | 33,389 |
Gain on disposition of properties | | (3,821) | | (15,972) | | (20,864) | | (54,093) |
Taxes | | 70 | | 103 | | 304 | | 259 |
EBITDA | | 17,782 | | 16,162 | | 65,391 | | 62,164 |
EBITDA - Joint Ventures: | | | | | | | | |
Equity in net loss of joint ventures | | (12) | | (75) | | (258) | | (462) |
Interest income | | - | | - | | 1 | | - |
Interest expense | | 10 | | 359 | | 769 | | 1,365 |
Depreciation and amortization | | 25 | | 291 | | 628 | | 1,177 |
EBITDA - Joint Ventures | | 23 | | 575 | | 1,140 | | 2,080 |
| | | | | | | | |
Total EBITDA | | $ | 17,805 | | $ | 16,737 | | $ | 66,531 | | $ | 64,244 |
| | | | | | | | |
| | | | | | | | | |
(1) | 2007 includes defeasance and other prepayment costs of $4,183 for the twelve months, and 2006 includes defeasance and other prepayment costs of $948 and $15,523 for the quarter and twelve months, respectively. |
Net Operating Income ("NOI")
NOI is determined by deducting property operating and maintenance expenses, direct property management and service company expenses and painting service expenses from total revenue. The Company evaluates the performance of its reportable segments based on NOI. The Company considers NOI to be an appropriate supplemental measure of our performance because it reflects the operating performance of our real estate portfolio and management and service company at the property and management service company level and is used to assess regional property and management and service company level performance. NOI should not be considered an alternative to net income as a measure of performance or cash generated from operating activities in accordance with GAAP and, therefore, it should not be considered indicative of cash available to fund cash needs.
Associated Estates Realty Corporation
Definitions of Non-GAAP Financial Measures |
Property Net Operating Income ("Property NOI")
Property NOI is determined by deducting property operating and maintenance expenses from total property revenue. The Company considers Property NOI to be an appropriate supplemental measure of our performance because it reflects the operating performance of our real estate portfolio at the property level and is used to assess regional property level performance. Property NOI should not be considered an alternative to net income as a measure of performance or cash generated from operating activities in accordance with GAAP and, therefore, it should not be considered indicative of cash available to fund cash needs. The following is a reconciliation of Property NOI to total consolidated net income.
| Three Months Ended | | Twelve Months Ended |
| December 31, | | December 31, |
| 2007 | | 2006 | | 2007 | | 2006 |
| | | | | | | |
Property NOI | $ | 20,671 | | $ | 17,575 | | $ | 76,597 | | $ | 67,336 |
Management and service operations NOI | (543) | | (346) | | (1,895) | | (1,295) |
Depreciation and amortization | (9,281) | | (7,382) | | (33,368) | | (29,894) |
General and administrative expense | (2,454) | | (2,168) | | (10,327) | | (9,840) |
Interest income | 58 | | 95 | | 458 | | 680 |
Interest expense (1) | (9,950) | | (9,449) | | (41,824) | | (50,634) |
Equity in net loss of joint ventures | (12) | | (75) | | (258) | | (462) |
Minority interest in operating partnership | (13) | | (13) | | (53) | | (61) |
Income from discontinued operations: | | | | | | | |
Operating income (loss) | 10 | | (856) | | (29) | | (2,902) |
Gain on disposition of properties | 3,821 | | 15,972 | | 20,864 | | 54,093 |
Income from discontinued operations | 3,831 | | 15,116 | | 20,835 | | 51,191 |
| | | | | | | |
Consolidated net income | $ | 2,307 | | $ | 13,353 | | $ | 10,165 | | $ | 27,021 |
| | | | | | | |
| | | | | | | | |
(1) | 2007 includes defeasance and other prepayment costs of $4,183 for the twelve months, and 2006 includes defeasance and other prepayment costs of $12,357 for the twelve months. |
Recurring Fixed Asset Additions
The Company considers recurring fixed asset additions to a property to be capital expenditures made to replace worn out assets so as to maintain the property's value.
Investment/Revenue Enhancing and/or Non-Recurring Fixed Asset Additions
The Company considers investment/revenue enhancing and/or non-recurring fixed assets to be capital expenditures if such improvements increase the value of the property and/or enable the Company to increase rents.
"Same Community" Market-Rate Properties
"Same Community" Market-Rate Properties are conventional multifamily residential apartments, which have reached stabilization and were owned and operational for the entire periods presented. The Company considers a property stabilized when its occupancy rate reaches 93.0% and the Company has owned the property for one year.
