Exhibit 99.2 |
Associated Estates Realty Corporation
Fourth Quarter 2008
Earnings Release and Supplemental Financial Data |
|
Village at Avon
36550 Chester Road
Avon, OH 44011
Tel: (866) 850-2940
WebSite:www.villageatavonapts.com |
The Village at Avon offers one, two, and three bedroom townhomes and apartments in Avon, Ohio. Located in one of the premier neighborhoods on the west side of Cleveland, this community offers many features that you won't find at other area apartment communities, including attached two-car garages, loft-style floor plans, front porches, sunrooms and more.
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 |
| |
Investor contact: Kimberly Kanary | |
Vice President of Corporate Communications | |
(216) 797-8718 | |
kkanary@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 2009 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; the ability to acquire properties at prices consistent with the Company’s investment criteria; risks associated with property acquisitions such as environmental liabilities, among others; changes in or termination of contracts relating to third party management and advisory business; and 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.
Associated Estates Realty Corporation
Fourth Quarter 2008
Supplemental Financial Data |
Cleveland, Ohio – February 4, 2009 – Associated Estates Realty Corporation (NYSE: AEC) (NASDAQ: AEC) today reported funds from operations (FFO) for the fourth quarter of $0.48 per common share (basic and diluted), compared with $0.39 per common share (basic and diluted), for the fourth quarter ended December 31, 2007, a 23.1 percent increase. FFO as adjusted for the fourth quarter was $0.35 per common share (basic and diluted) after adjusting for net preferred share repurchase discounts of $2.1 million or $0.13 per common share.
Net income available to common shareholders was $298,000 or $0.02 per common share (basic and diluted), which included a net discount on the repurchase of preferred shares of $0.13 per common share for the fourth quarter ended December 31, 2008, compared with net income available to common shareholders of $1.1 million or $0.07 per common share (basic and diluted), which included gains on the disposition of properties of $0.24 per common share, for the fourth quarter ended December 31, 2007.
“We’re very proud of the Company’s 2008 performance,” said Jeffrey I. Friedman, president and chief executive officer. “While 2009 presents a more challenging environment, our management team and properties are well positioned to compete,” he continued.
A reconciliation of net income applicable to common shares to FFO, and to FFO as adjusted, is included on page 10.
Revenue for the quarter was $34.0 million compared with $34.2 million for the fourth quarter of 2007, a decrease of 0.6 percent.
Same Community Portfolio Results
Net operating income (NOI) for the fourth quarter of 2008 from the Company’s same community portfolio increased 0.9 percent as a result of revenue increasing 1.7 percent and property operating expenses increasing 2.8 percent, compared with the fourth quarter of 2007. Physical occupancy was 93.0 percent at the end of the fourth quarter of 2008 compared with 94.1 percent at the end of the fourth quarter of 2007. Average net rent collected per unit for the same community properties increased 2.0 percent to $852 per month. Net rent collected per unit for the Company’s same community Midwest portfolio grew 4.9 percent to $785, while net rent collected per unit for the Company’s same community properties in the Mid-Atlantic/Southeast markets decreased 2.4 percent to $991.
Associated Estates Realty Corporation
Fourth Quarter Earnings |
Year-to-Date Performance
Funds from operations for the twelve months ended December 31, 2008, were $1.35 per share (basic and diluted) and include defeasance and/or prepayment costs of $(2.0) million or approximately $(0.12) per share associated with the repayment of $11.0 million in debt, as well as net preferred share discounts of $2.1 million or approximately $0.13 per share. FFO as adjusted for the twelve months ended December 31, 2008, after adjusting for defeasance costs and the net discount on the repurchase of preferred shares was $1.33 per common share (basic and diluted).
For the twelve months ended December 31, 2008, net income applicable to common shares was $32.1 million or $1.98 per share (basic and diluted) compared to net income applicable to common shares of $5.1 million or $0.30 per share (basic and diluted) for the period ended December 31, 2007. The results for the twelve month period ended December 31, 2008 and December 31, 2007 include gains from property sales of $45.2 million and $20.9 million or $2.78 per share and $1.24 per share, respectively. Additionally, 2008 includes a net discount on the repurchase of preferred shares of $0.13 per share as compared to a net premium on the repurchase of preferred shares of $(0.01) per share in 2007.
A reconciliation of net income applicable to common shares to FFO, and to FFO as adjusted, is included on page 10.
For the year, NOI for the same community portfolio was up 5.4 percent. This increase was driven by a 3.2 percent increase in revenue and a 0.3 percent increase in property operating expenses.
Debt Maturities
The Company has a total of $72.2 million maturing in 2009. The Company has loan commitments to fund $52.5 million of the maturities at a current average rate of 5.22 percent. These seven-year loans will consist of two variable rate loans with an expected initial pay rate of 4.85 percent and one fixed rate loan priced at 5.98 percent. The remaining $19.7 million in maturities relates primarily to a property the Company is currently marketing for sale and is expected to be carried on the Company’s line of credit.
The Company’s $150.0 million line of credit had a balance of $21.5 million on December 31, 2008.
2009 Outlook
The Company said its current FFO expectations for 2009 range between $1.17 to $1.23 per share, excluding defeasance, other prepayment costs and net preferred share repurchase discounts/premiums. Assumptions relating to the Company's earnings guidance can be found on page 25.
Conference Call
A conference call to discuss the results will be held on Thursday, February 5 at 2:00 p.m. Eastern. To participate in the call:
Via Telephone: The dial-in number is 800-860-2442, and the passcode 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. The webcast will be archived through February 19, 2009.
Associated Estates Realty Corporation
Financial and Operating Highlights
For the Three and Twelve Months Ended December 31, 2008 and 2007
(Unaudited; in thousands, except per share and ratio data) |
| | Three Months Ended | | Twelve Months Ended |
| | December 31, | | December 31, |
OPERATING INFORMATION | | 2008 | | 2007 | | 2008 | | 2007 |
| | | | | | | | |
Total revenue | | $ | 34,013 | | $ | 34,182 | | $ | 134,883 | | $ | 130,913 |
Property revenue | | $ | 33,468 | | $ | 31,151 | | $ | 132,089 | | $ | 117,705 |
Net income applicable to common shares | | $ | 298 | | $ | 1,106 | | $ | 32,118 | | $ | 5,069 |
Per share - basic and diluted | | $ | 0.02 | | $ | 0.07 | | $ | 1.98 | | $ | 0.30 |
| | | | | | | | |
Funds from Operations (FFO) (1) | | $ | 7,846 | | $ | 6,295 | | $ | 21,893 | | $ | 17,659 |
| | | | | | | | |
FFO as adjusted (1) | | $ | 5,700 | | $ | 6,295 | | $ | 21,706 | | $ | 22,055 |
| | | | | | | | |
FFO per share - basic and diluted | | $ | 0.48 | | $ | 0.39 | | $ | 1.35 | | $ | 1.05 |
| | | | | | | | |
FFO as adjusted per share - basic and diluted | | $ | 0.35 | | $ | 0.39 | | $ | 1.33 | | $ | 1.31 |
| | | | | | | | |
Funds Available for Distribution (FAD) (1) | | $ | 4,733 | | $ | 4,628 | | $ | 15,636 | | $ | 15,526 |
| | | | | | | | |
Dividends per share | | $ | 0.17 | | $ | 0.17 | | $ | 0.68 | | $ | 0.68 |
| | | | | | | | |
Payout ratio - FFO | | 35.4% | | 43.6% | | 50.4% | | 64.8% |
Payout ratio - FFO as adjusted | | 48.6% | | 43.6% | | 51.1% | | 51.9% |
Payout ratio - FAD | | 58.6% | | 58.6% | | 70.8% | | 73.9% |
| | | | | | | | |
General and administrative expense | | $ | 3,390 | | $ | 2,454 | | $ | 13,769 | | $ | 10,327 |
Interest expense (2) | | $ | 8,915 | | $ | 9,219 | | $ | 35,225 | | $ | 34,864 |
Interest coverage ratio (3) | | 1.78:1 | | 1.79:1 | | 1.76:1 | | 1.73:1 |
Fixed charge coverage ratio (4) | | 1.60:1 | | 1.60:1 | | 1.56:1 | | 1.54:1 |
General and administrative expense to property revenue | | 10.1% | | 7.9% | | 10.4% | | 8.8% |
Interest expense to property revenue | | 26.6% | | 29.6% | | 26.7% | | 29.6% |
Property NOI (5) | | $ | 19,757 | | $ | 18,401 | | $ | 76,251 | | $ | 66,026 |
ROA (6) | | 8.2% | | 8.2% | | 8.2% | | 8.2% |
Same community revenue increase | | 1.7% | | 3.9% | | 3.2% | | 4.4% |
Same community expense increase (decrease) | | 2.8% | | (1.1)% | | 0.3% | | 2.9% |
Same community NOI increase | | 0.9% | | 7.7% | | 5.4% | | 5.5% |
Same community operating margins | | 58.6% | | 59.1% | | 56.9% | | 55.7% |
(1) | See page 10 for a reconciliation of net income applicable to common shares to these non-GAAP measurements and page 26 for the Company's definition of these non-GAAP measurements. |
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(2) | Excludes amortization of financing fees of $311 and $1,264 for 2008 and $306 and $1,084 for 2007. Also, it excludes $0 and $4,183 of defeasance and other prepayment costs for 2007. |
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(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 including discounts received and premiums paid. Individual line items in this calculation include results from discontinued operations where applicable. See page 27 for a reconciliation of net income available to common shareholders to EBITDA and for the Company's definition of EBITDA. |
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(4) | Represents interest expense and preferred stock dividend payment coverage, excluding defeasance, other prepayment and/or preferred repurchase costs including discounts received and premiums paid. Individual line items in this calculation include discontinued operations where applicable. |
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(5) | See page 28 for a reconciliation of net (loss) income to this non-GAAP measurement and for the Company's definition of this non-GAAP measurement. |
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(6) | ROA is calculated as trailing twelve month Property NOI divided by average gross real estate assets, excluding held for sale assets. |
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Associated Estates Realty Corporation
Financial and Operating Highlights
Fourth Quarter 2008
(Unaudited; in thousands, except per share and ratio data) |
| | December 31, | | December 31, |
MARKET CAPITALIZATION DATA | | 2008 | | 2007 |
| | | | |
Net real estate assets | | $ | 673,848 | | $ | 659,586 |
Total assets | | $ | 699,896 | | $ | 686,796 |
| | | | |
Debt | | $ | 557,481 | | $ | 556,695 |
Minority interest | | $ | 1,829 | | $ | 1,829 |
Preferred stock - 8.70% Class B Cumulative Redeemable Preferred Shares | | $ | 48,263 | | $ | 55,213 |
Total shareholders' equity | | $ | 105,621 | | $ | 89,786 |
| | | | |
Common shares outstanding | | 16,556 | | 16,354 |
Share price, end of period | | $ | 9.13 | | $ | 9.44 |
| | | | |
Total market capitalization (1) | | $ | 756,900 | | $ | 768,358 |
| | | | |
Undepreciated book value of real estate assets (2) | | $ | 957,061 | | $ | 965,013 |
| | | | |
Debt to undepreciated book value of real estate assets | | 58.2% | | 57.7% |
Debt and preferred stock to undepreciated book value of real estate assets | | 63.3% | | 63.4% |
Debt to total market capitalization (1) | | 73.7% | | 72.7% |
Debt and preferred stock to total market capitalization (1) | | 80.3% | | 79.9% |
| | | | |
Annual dividend | | $ | 0.68 | | $ | 0.68 |
| | | | |
Annual dividend yield based on share price, end of period | | 7.4% | | 7.2% |
(1) | Includes the Company's share of unconsolidated debt of $0 and $2,068 as of December 31, 2008 and December 31, 2007. |
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(2) | Includes 4,338 of undepreciated real estate associated with one property classified as held for sale at December 31, 2008. |
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Associated Estates Realty Corporation
Financial and Operating Highlights
Fourth Quarter 2008 |
| | | | | | Average Age |
| | | | Number | | of Owned |
PORTFOLIO INFORMATION | | Properties | | of Units | | Properties |
| | | | | | |
Company Portfolio: | | | | | | |
Directly owned: | | | | | | |
Same Community Midwest | | 35 | | 8,116 | | 16 |
Same Community Mid-Atlantic/Southeast | | 12 | | 3,924 | | 13 |
Total Same Community | | 47 | | 12,040 | | 15 |
| | | | | | |
Acquisitions | | 2 | | 536 | | 3 |
Held for Sale (1) | | 1 | | 96 | | 18 |
Total directly owned | | 50 | | 12,672 | | 14 |
Third Party Managed: | | | | | | |
Affordable Housing | | 1 | | 85 | | |
Market Rate | | 2 | | 531 | | |
Total Third Party Managed | | 3 | | 616 | | |
Total Company Portfolio | | 53 | | 13,288 | | |
| | | | | | |
(1) | Effective January 9, 2009, the Company completed the sale of a 96-unit community located in Northeast Ohio. |
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| | December 31, | | December 31, |
| | 2008 | | 2007 |
ASSETS | | | | |
| | | | |
Real estate assets | | |
Investment in real estate | | $ | 951,978 | | $ | 964,292 |
Construction in progress | | 745 | | 721 |
Less: accumulated depreciation | | (280,541) | | (305,427) |
| | 672,182 | | 659,586 |
Real estate associated with property held for sale, net | | 1,666 | | - |
| | | | |
Real estate, net | | 673,848 | | 659,586 |
Cash and cash equivalents | | 3,551 | | 1,549 |
Restricted cash | | 6,873 | | 6,730 |
Other assets | | 15,624 | | 18,931 |
Total assets | | $ | 699,896 | | $ | 686,796 |
| | | | |
LIABILITIES AND SHAREHOLDERS' EQUITY | | | | |
| | | | |
Mortgage notes payable | | $ | 510,201 | | $ | 510,915 |
Unsecured revolving credit facility | | 21,500 | | 20,000 |
Unsecured debt | | 25,780 | | 25,780 |
Total debt | | 557,481 | | 556,695 |
Accounts payable, accrued expenses and other liabilities | | 34,965 | | 38,486 |
Total liabilities | | 592,446 | | 595,181 |
| | | | |
Operating partnership minority interest | | 1,829 | | 1,829 |
| | | | |
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 193,050 and 220,850 outstanding | | | | |
at December 31, 2008 and December 31, 2007, respectively | | 48,263 | | 55,213 |
Common shares, without par value; $.10 stated value; 41,000,000 | | | | |
authorized; 22,995,763 issued and 16,556,221 and 16,353,700 | | | | |
outstanding at December 31, 2008 and December 31, 2007, respectively | | 2,300 | | 2,300 |
Paid-in capital | | 282,501 | | 281,152 |
Accumulated distributions in excess of accumulated net income | | (159,595) | | (180,436) |
Accumulated other comprehensive loss | | (2,899) | | (1,050) |
Less: Treasury shares, at cost, 6,439,542 and 6,642,063 shares | | | | |
at December 31, 2008 and December 31, 2007, respectively | | (64,949) | | (67,393) |
Total shareholders' equity | | 105,621 | | 89,786 |
Total liabilities and shareholders' equity | | $ | 699,896 | | $ | 686,796 |
| | | | |
| | | | | |
| | Three Months Ended | | Twelve Months Ended |
| | December 31, | | December 31, |
| | 2008 | | 2007 | | 2008 | | 2007 |
REVENUE | | | | | | | | |
Property revenue | | $ | 33,468 | | $ | 31,151 | | $ | 132,089 | | $ | 117,705 |
Management and service company revenue: | | | | | | | | |
Fees, reimbursements and other | | 407 | | 2,609 | | 1,784 | | 10,990 |
Painting services | | 138 | | 422 | | 1,010 | | 2,218 |
Total revenue | | 34,013 | | 34,182 | | 134,883 | | 130,913 |
| | | | | | | | |
EXPENSES | | | | | | | | |
Property operating and maintenance | | 13,711 | | 12,750 | | 55,838 | | 51,679 |
Depreciation and amortization | | 9,445 | | 8,477 | | 36,930 | | 30,216 |
Direct property management and service company expense | | 412 | | 3,061 | | 1,624 | | 12,863 |
Painting services and charges | | 240 | | 513 | | 1,338 | | 2,164 |
General and administrative | | 3,390 | | 2,454 | | 13,769 | | 10,327 |
Total expenses | | 27,198 | | 27,255 | | 109,499 | | 107,249 |
Operating income | | 6,815 | | 6,927 | | 25,384 | | 23,664 |
Interest income | | 11 | | 51 | | 135 | | 430 |
Interest expense | | (9,226) | | (9,525) | | (36,489) | | (40,131) |
(Loss) income before equity in net income (loss) of joint ventures, | | | | | | | | |
minority interest and income from discontinued operations | | (2,400) | | (2,547) | | (10,970) | | (16,037) |
Equity in net income (loss) of joint ventures | | 1,574 | | (12) | | 1,502 | | (258) |
Minority interest in operating partnership | | (13) | | (13) | | (53) | | (53) |
(Loss) income from continuing operations | | (839) | | (2,572) | | (9,521) | | (16,348) |
Income from discontinued operations: | | | | | | | | |
Operating income (loss) | | 44 | | 1,058 | | (1,054) | | 5,649 |
Gain on disposition of properties | | - | | 3,821 | | 45,202 | | 20,864 |
Income from discontinued operations | | 44 | | 4,879 | | 44,148 | | 26,513 |
Net (loss) income | | (795) | | 2,307 | | 34,627 | | 10,165 |
Preferred share dividends | | (1,053) | | (1,201) | | (4,655) | | (4,924) |
Preferred share repurchase costs | | (143) | | - | | (143) | | (58) |
Discount/(premium) on preferred share repurchase | | 2,289 | | - | | 2,289 | | (114) |
Net income applicable to common shares | | $ | 298 | | $ | 1,106 | | $ | 32,118 | | $ | 5,069 |
| | | | | | | | |
Earnings per common share - basic and diluted: | | | | | | | | |
Income (loss) from continuing operations applicable to | | | | | | | | |
common shares | | $ | 0.02 | | $ | (0.23) | | $ | (0.74) | | $ | (1.27) |
Income from discontinued operations | | - | | 0.30 | | 2.72 | | 1.57 |
Net income applicable to common shares | | $ | 0.02 | | $ | 0.07 | | $ | 1.98 | | $ | 0.30 |
| | | | | | | | |
Weighted average shares outstanding - basic and diluted | | 16,383 | | 16,153 | | 16,262 | | 16,871 |
| | | | | | | | |
| | | Three Months Ended | | Twelve Months Ended |
| | | December 31, | | December 31, |
| | | 2008 | | 2007 | | 2008 | | 2007 |
CALCULATION OF FFO AND FAD | | | | | | | | |
Net income applicable to common shares | | $ | 298 | | $ | 1,106 | | $ | 32,118 | | $ | 5,069 |
| | | | | | | | | |
Add: | Depreciation - real estate assets | | 8,262 | | 8,233 | | 32,560 | | 31,363 |
| Depreciation - real estate assets - joint ventures | | 23 | | 24 | | 91 | | 529 |
| Amortization of joint venture deferred costs | | - | | - | | - | | 17 |
| Amortization of intangible assets | | 866 | | 753 | | 3,929 | | 1,545 |
Less: | Gain on disposition of joint venture property | | (1,603) | | - | | (1,603) | | - |
| Gain on disposition of properties | | - | | (3,821) | | (45,202) | | (20,864) |
| | | | | | | | | |
| Funds from Operations (FFO) (1) | | 7,846 | | 6,295 | | 21,893 | | 17,659 |
| | | | | | | | | |
Add: | Defeasance and other prepayment costs | | - | | - | | 1,959 | | 4,224 |
Add: | Preferred stock repurchase costs | | 143 | | - | | 143 | | 58 |
Less: | Preferred share repurchase (discount)/premium | | (2,289) | | - | | (2,289) | | 114 |
| | | | | | | | | |
| Funds from Operations as Adjusted (1) | | 5,700 | | 6,295 | | 21,706 | | 22,055 |
| | | | | | | | | |
Add: | Depreciation - other assets | | 362 | | 336 | | 1,378 | | 1,255 |
| Depreciation - other assets - joint ventures | | - | | 1 | | 3 | | 82 |
| Amortization of deferred financing fees | | 311 | | 318 | | 1,296 | | 1,128 |
| Amortization of deferred financing fees - joint ventures | | - | | - | | 1 | | 24 |
| | | | | | | | | |
Less: | Recurring fixed asset additions (2) | | (1,635) | | (2,149) | | (8,739) | | (8,819) |
| Recurring fixed asset additions - joint ventures (2) | | (5) | | (173) | | (9) | | (199) |
| Funds Available for Distribution (FAD) (1) | | $ | 4,733 | | $ | 4,628 | | $ | 15,636 | | $ | 15,526 |
| | | | | | | | | |
Weighted average shares outstanding - basic and diluted (3) | | 16,383 | | 16,153 | | 16,262 | | 16,871 |
| | | | | | | | | |
PER SHARE INFORMATION: | | | | | | | | |
FFO - basic and diluted | | $ | 0.48 | | $ | 0.39 | | $ | 1.35 | | $ | 1.05 |
FFO as adjusted - basic and diluted | | $ | 0.35 | | $ | 0.39 | | $ | 1.33 | | $ | 1.31 |
Dividends | | $ | 0.17 | | $ | 0.17 | | $ | 0.68 | | $ | 0.68 |
| | | | | | | | | |
Payout ratio - FFO | | 35.4% | | 43.6% | | 50.4% | | 64.8% |
Payout ratio - FFO as adjusted | 48.6% | | 43.6% | | 51.1% | | 51.9% |
Payout ratio - FAD | | 58.6% | | 58.6% | | 70.8% | | 73.9% |
(1) | See page 26 for the Company's definition of these non-GAAP measurements. Individual line items included in FFO and FAD calculation include results from discontinued operations where applicable. |
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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 198 and 442 common share equivalents from the three and twelve months ended December 31, 2008 calculation, and 353 and 562 common share equivalents from the three and twelve months ended December 31, 2007 calculation, 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, 2008 and 2007
(Unaudited; dollar and share amounts in thousands) |
| | Three Months Ended December 31, |
| | 2008 | | 2007 |
| | | | Held | | | | | | Held | | |
| | Sold | | for Sale | | Total | | Sold | | for Sale | | Total |
REVENUE | | | | | | | | | | | | |
Property revenue | | $ | - | | $ | 210 | | $ | 210 | | $ | 4,719 | | $ | 192 | | $ | 4,911 |
| | | | | | | | | | | | |
EXPENSES | | | | | | | | | | | | |
Property operating and maintenance | | - | | 121 | | 121 | | 2,465 | | 125 | | 2,590 |
Depreciation and amortization | | - | | 45 | | 45 | | 802 | | 43 | | 845 |
Total expenses | | - | | 166 | | 166 | | 3,267 | | 168 | | 3,435 |
Operating income | | - | | 44 | | 44 | | 1,452 | | 24 | | 1,476 |
Interest income | | - | | - | | - | | 7 | | - | | 7 |
Interest expense | | - | | - | | - | | (360) | | (65) | | (425) |
Gain on disposition of properties | | - | | - | | - | | 3,821 | | - | | 3,821 |
Income (loss) from discontinued operations | | $ | - | | $ | 44 | | $ | 44 | | $ | 4,920 | | $ | (41) | | $ | 4,879 |
| | | | | | | | | | | | |
Earnings per common share - basic and diluted: | | | | | | | | | | | | |
Income from discontinued operations | | $ | - | | $ | - | | $ | - | | $ | 0.30 | | $ | - | | $ | 0.30 |
| | | | | | | | | | | | |
Weighted average shares outstanding - basic and diluted | | 16,383 | | 16,383 | | 16,383 | | 16,153 | | 16,153 | | 16,153 |
| | | | | | | | | | | | |
(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 as 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 fifteen properties disposed of and one property classified as held for sale in 2008 and three properties disposed of in 2007. |
| | |
Associated Estates Realty Corporation
Discontinued Operations (1)
Twelve Months Ended December 31, 2008 and 2007
(Unaudited; dollar and share amounts in thousands) |
| | Twelve Months Ended December 31, |
| | 2008 | | 2007 |
| | | | Held | | | | | | Held | | |
| | Sold | | for Sale | | Total | | Sold | | for Sale | | Total |
REVENUE | | | | | | | | | | | | |
Property revenue | | $ | 4,083 | | $ | 824 | | $ | 4,907 | | $ | 23,622 | | $ | 798 | | $ | 24,420 |
| | | | | | | | | | | | |
EXPENSES | | | | | | | | | | | | |
Property operating and maintenance | | 2,144 | | 507 | | 2,651 | | 12,629 | | 531 | | 13,160 |
Depreciation and amortization | | 763 | | 174 | | 937 | | 3,781 | | 166 | | 3,947 |
Total expenses | | 2,907 | | 681 | | 3,588 | | 16,410 | | 697 | | 17,107 |
Operating income | | 1,176 | | 143 | | 1,319 | | 7,212 | | 101 | | 7,313 |
Interest income | | 3 | | - | | 3 | | 29 | | - | | 29 |
Interest expense (2) | | (2,326) | | (50) | | (2,376) | | (1,438) | | (255) | | (1,693) |
Gain on disposition of properties | | 45,202 | | - | | 45,202 | | 20,864 | | - | | 20,864 |
Income (loss) from discontinued operations | | $ | 44,055 | | $ | 93 | | $ | 44,148 | | $ | 26,667 | | $ | (154) | | $ | 26,513 |
| | | | | | | | | | | | |
Earnings per common share - basic and diluted: | | | | | | | | | | | | |
Income from discontinued operations | | $ | 2.71 | | $ | 0.01 | | $ | 2.72 | | $ | 1.58 | | $ | (0.01) | | $ | 1.57 |
| | | | | | | | | | | | |
Weighted average shares outstanding - basic and diluted | | 16,262 | | 16,262 | | 16,262 | | 16,871 | | 16,871 | | 16,871 |
| | | | | | | | | | | | |
(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 as 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 fifteen properties disposed of and one property held for sale in 2008 and three properties disposed of in 2007. |
| |
(2) | Included in the 2008 expense is $1,959 of defeasance and other prepayment 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, 2008 |
| | GAAP Useful | | | | Cost Per |
| | Life (Years) | | Amount | | Unit (1) |
OPERATING EXPENSES RELATED TO REPAIRS AND MAINTENANCE | | | | | | |
Repairs and maintenance (2) | | | | $ | 9,826 | | $ | 756 |
Maintenance personnel labor cost (2) | | | | 5,555 | | 427 |
Total Operating Expenses Related to Repairs and Maintenance | | | | 15,381 | | 1,183 |
| | | | | | |
CAPITAL EXPENDITURES | | | | | | |
Recurring Capital Expenditures (3) | | | | | | |
Amenities | | 5 | | 356 | | 28 |
Appliances | | 5 | | 778 | | 60 |
Building improvements | | 14 | | 1,962 | | 151 |
Carpet and flooring | | 5 | | 2,578 | | 198 |
Furnishings | | 5 | | 40 | | 3 |
Office/Model | | 5 | | 5 | | - |
HVAC and mechanicals | | 15 | | 695 | | 53 |
Landscaping and grounds | | 14 | | 2,038 | | 157 |
Suite improvements | | 5 | | 56 | | 4 |
Miscellaneous | | 5 | | 72 | | 6 |
Total Recurring Capital Expenditures - Properties | | | | 8,580 | | 660 |
Corporate capital expenditures (4) | | | | 159 | | 12 |
Total Recurring Capital Expenditures | | | | 8,739 | | 672 |
Total Recurring Capital Expenditures and Repairs and Maintenance | | | | $ | 24,120 | | $ | 1,855 |
| | | | | | |
Total Recurring Capital Expenditures | | | | $ | 8,739 | | |
Investment/Revenue Enhancing Expenditures (5) | | | | | | |
Ground improvements | | Various | | 194 | | |
Building improvements - siding | | 20 | | 522 | | |
Building improvements - unit upgrades | | Various | | 2,590 | | |
Building improvements - other | | 20 | | 1,206 | | |
Total Investment/Revenue Enhancing Expenditures | | | | 4,512 | | |
| | | | | | |
Grand Total Capital Expenditures | | | | $ | 13,251 | | |
| | | | | | |
(1) | Calculated using weighted average units owned during the twelve months ended December 31, 2008 of 12,997. |
| |
(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) | See page 28 for the Company's definition of investment/revenue enhancing additions. |
| |
Associated Estates Realty Corporation
Fees, Reimbursements and Other Revenue, Direct Property Management
and Service Company Expense and General Administrative Expense
For the Three and Twelve Months Ended December 31, 2008 and 2007
(In thousands) |
| | | Three Months Ended | | Twelve Months Ended |
| | | December 31, | December 31, |
| | | 2008 | | 2007 | | 2008 | | 2007 |
Fees, Reimbursements and Other Revenue | | | | | | | | |
Property management fees | | $ | 76 | | $ | 501 | | $ | 299 | | $ | 2,141 |
Asset management fees | | 59 | | 87 | | 258 | | 376 |
Other revenue | | - | | 48 | | 165 | | 130 |
Payroll reimbursements(1) | | 272 | | 1,973 | | 1,062 | | 8,343 |
| | | | | | | | | |
Fees, Reimbursements and Other Revenue(2) | | 407 | | 2,609 | | 1,784 | | 10,990 |
| | | | | | | | | |
Direct Property Management and Service Company Expense | | | | | | | | |
Service company allocations | | 140 | | 1,088 | | 562 | | 4,520 |
Payroll reimbursements(1) | | 272 | | 1,973 | | 1,062 | | 8,343 |
Direct Property Management and Service Company Expense(2) | | 412 | | 3,061 | | 1,624 | | 12,863 |
Service Company NOI | | $ | (5) | | $ | (452) | | $ | 160 | | $ | (1,873) |
| | | | | | | | | |
| | | | | | | | | |
General and Administrative and Service Company Expense | | | | | | | | |
General and administrative expense(2) | | $ | 3,390 | | $ | 2,454 | | $ | 13,769 | | $ | 10,327 |
Service company allocations | | 140 | | 1,088 | | 562 | | 4,520 |
General and Administrative and Service Company Expense | | $ | 3,530 | | $ | 3,542 | | $ | 14,331 | | $ | 14,847 |
| | | | | | | | | |
(1) | Salaries and benefits reimbursed in connection with the management of properties for third parties. |
| |
(2) | As reported per the Consolidated Statement of Operations. |
| | |
| | Quarter Ended |
| | December 31, | | September 30, | | June 30, | | March 31, | | December 31, |
| | 2008 | | 2008 | | 2008 | | 2008 | | 2007 |
| | | | | | | | | | |
Property Revenue | | $ | 31,674 | | $ | 32,331 | | $ | 31,851 | | $ | 31,235 | | $ | 31,151 |
| | | | | | | | | | |
Property Operating and | | | | | | | | | | |
Maintenance Expenses | | | | | | | | | | |
Personnel | | 3,696 | | 3,763 | | 3,569 | | 3,695 | | 3,650 |
Advertising | | 381 | | 398 | | 394 | | 389 | | 425 |
Utilities | | 1,780 | | 1,756 | | 1,629 | | 1,694 | | 1,589 |
Repairs and maintenance | | 1,937 | | 2,653 | | 2,499 | | 2,032 | | 1,894 |
Real estate taxes and insurance | | 4,236 | | 4,500 | | 4,522 | | 4,257 | | 4,058 |
Other operating | | 1,082 | | 1,145 | | 1,096 | | 1,037 | | 1,134 |
Total Expenses | | 13,112 | | 14,215 | | 13,709 | | 13,104 | | 12,750 |
| | | | | | | | | | |
Property Net Operating Income | | $ | 18,562 | | $ | 18,116 | | $ | 18,142 | | $ | 18,131 | | $ | 18,401 |
| | | | | | | | | | |
Operating Margin | | 58.6% | | 56.0% | | 57.0% | | 58.0% | | 59.1% |
| | | | | | | | | | |
Total Number of Units | | 12,040 | | 12,040 | | 12,040 | | 12,040 | | 12,040 |
| | | | | | | | | | |
NOI Per Unit | | $ | 1,542 | | $ | 1,505 | | $ | 1,507 | | $ | 1,506 | | $ | 1,528 |
| | | | | | | | | | |
Average Net Rent Collected Per Unit (2) | $ | 852 | | $ | 865 | | $ | 853 | | $ | 838 | | $ | 835 |
| | | | | | | | | | |
Physical Occupancy - End of Period (3) | 93.0% | | 95.8% | | 96.4% | | 94.6% | | 94.1% |
| | | | | | | | | | |
(1) | The results for all quarters include Alexander at Ghent and the Idlewylde Apartments, both of which were acquired by the Company in June 2007. |
| |
(2) | Represents gross potential rents less vacancies and concessions. |
| |
(3) | Is defined as number of units occupied divided by total number of units. |
| | |
Associated Estates Realty Corporation
Same Community Data (1)
Operating Results for the Twelve Months Ended December 31, 2008 and 2007
(Unaudited, in thousands, except unit totals and per unit amounts) |
| | Twelve Months Ended |
| | December 31, |
| | 2008 | | 2007 |
| | | | |
Property Revenue | | $ | 114,773 | | $ | 111,239 |
| | | | |
Property Operating and Maintenance Expenses | | | | |
Personnel | | 13,380 | | 13,077 |
Advertising | | 1,481 | | 1,468 |
Utilities | | 6,123 | | 5,742 |
Repairs and maintenance | | 8,449 | | 8,596 |
Real estate taxes and insurance | | 16,139 | | 16,151 |
Other operating | | 3,912 | | 4,278 |
Total Expenses | | 49,484 | | 49,312 |
| | | | |
Property Net Operating Income | | $ | 65,289 | | $ | 61,927 |
| | | | |
Operating Margin | | 56.9% | | 55.7% |
| | | | |
Total Number of Units | | 10,929 | | 10,929 |
| | | | |
NOI Per Unit | | $ | 5,974 | | $ | 5,666 |
| | | | |
Average Net Rent Collected Per Unit (2) | | $ | 847 | | $ | 822 |
| | | | |
Physical Occupancy - End of Period (3) | | 93.4% | | 94.5% |
| | | | |
(1) | The results shown for both years exclude Alexander at Ghent and the Idlewylde Apartments, both of which were acquired by the Company in June 2007. |
| |
(2) | Represents gross potential rents less vacancies and concessions. |
| |
(3) | Is defined as number of units occupied divided by total number of units. |
| | |
Associated Estates Realty Corporation
Same Community Data
As of December 31, 2008 and 2007
(Unaudited, in thousands, except unit totals and per unit amounts) |
| | | | | | Net Rent Collected | | Net Rents | | Average Rent | | Physical | | Turnover |
| | | | | | per Unit (1) | | per Unit (2) | | per Unit (3) | | Occupancy (4) | | Ratio (5) |
| | No. of | | Average | | Q4 | | Q4 | | % | | Q4 | | Q4 | | % | | Q4 | | Q4 | | % | | Q4 | | Q4 | | Q4 | | Q4 |
| | Units | | Age (6) | | 2008 | | 2007 | | Change | | 2008 | | 2007 | | Change | | 2008 | | 2007 | | Change | | 2008 | | 2007 | | 2008 | | 2007 |
Midwest Properties | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Indiana | | 836 | | 12 | | $ | 790 | | $ | 772 | | 2.3% | | $ | 863 | | $ | 839 | | 2.9% | | $ | 909 | | $ | 903 | | 0.7% | | 93.9% | | 93.8% | | 56.9% | | 47.4% |
Michigan | | 2,888 | | 17 | | 736 | | 716 | | 2.8% | | 776 | | 752 | | 3.2% | | 840 | | 833 | | 0.8% | | 94.5% | | 96.2% | | 54.2% | | 52.2% |
Ohio - Central Ohio | | 2,621 | | 17 | | 778 | | 724 | | 7.5% | | 818 | | 777 | | 5.3% | | 834 | | 819 | | 1.8% | | 95.5% | | 94.4% | | 52.5% | | 58.8% |
Ohio - Northeastern Ohio | | 1,303 | | 13 | | 915 | | 875 | | 4.6% | | 969 | | 943 | | 2.8% | | 1,012 | | 1,000 | | 1.2% | | 94.6% | | 93.9% | | 59.2% | | 51.6% |
Pennsylvania | | 468 | | 22 | | 755 | | 686 | | 10.1% | | 794 | | 764 | | 3.9% | | 830 | | 816 | | 1.7% | | 94.0% | | 92.1% | | 61.5% | | 59.8% |
Total Midwest Properties | | 8,116 | | 16 | | 785 | | 748 | | 4.9% | | 831 | | 800 | | 3.9% | | 872 | | 861 | | 1.3% | | 94.8% | | 94.8% | | 55.2% | | 54.2% |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Mid-Atlantic/Southeast | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Properties | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Florida | | 1,272 | | 9 | | 1,121 | | 1,154 | | (2.9)% | | 1,245 | | 1,262 | | (1.3)% | | 1,346 | | 1,328 | | 1.4% | | 90.3% | | 93.0% | | 66.7% | | 64.5% |
Georgia | | 1,717 | | 13 | | 756 | | 801 | | (5.6)% | | 873 | | 875 | | (0.2)% | | 988 | | 983 | | 0.5% | | 86.5% | | 91.1% | | 79.2% | | 65.0% |
Virginia | | 268 | | 2 | | 1,321 | | 1,266 | | 4.3% | | 1,376 | | 1,302 | | 5.7% | | 1,376 | | 1,303 | | 5.6% | | 96.6% | | 98.1% | | 67.2% | | 47.8% |
Baltimore/Washington | | 667 | | 22 | | 1,217 | | 1,199 | | 1.5% | | 1,329 | | 1,272 | | 4.5% | | 1,343 | | 1,290 | | 4.1% | | 92.2% | | 95.1% | | 44.4% | | 42.0% |
Total Mid-Atlantic/ | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Southeast Properties | | 3,924 | | 13 | | 991 | | 1,015 | | (2.4)% | | 1,105 | | 1,097 | | 0.7% | | 1,191 | | 1,169 | | 1.9% | | 89.4% | | 92.9% | | 68.4% | | 59.8% |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total/Average Same | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Community | | 12,040 | | 15 | | $ | 852 | | $ | 835 | | 2.0% | | $ | 920 | | $ | 897 | | 2.6% | | $ | 976 | | $ | 962 | | 1.5% | | 93.0% | | 94.1% | | 59.5% | | 56.0% |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(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 less allowances for all units divided by the number of units in a market. |
| |
(3) | Represents gross potential rents for all units divided by the number of units in a market. |
| |
(4) | Represents physical occupancy at the end of the quarter. |
| |
(5) | Represents the number of units turned over for the quarter, divided by the number of units in a market, annualized. |
| |
(6) | Age shown in years. |
| | |
Associated Estates Realty Corporation
Property Revenue
For the Three Months Ended December 31, 2008 and 2007 |
| | | | 2008 | | 2007 | | Q4 | | Q4 | | | | |
| | No. of | | Physical | | Physical | | 2008 | | 2007 | | Increase/ | | % |
Property Revenue | | Units | | Occupancy (1) | | Occupancy (1) | | Revenue | | Revenue | | (Decrease) | | Change |
Same Community | | | | | | | | | | | | | | |
Midwest Properties | | | | | | | | | | | | | | |
Indiana | | 836 | | 93.9% | | 93.8% | | $ | 2,055 | | $ | 2,005 | | $ | 50 | | 2.5% |
Michigan | | 2,888 | | 94.5% | | 96.2% | | 6,637 | | 6,472 | | 165 | | 2.5% |
Ohio - Central Ohio | | 2,621 | | 95.5% | | 94.4% | | 6,279 | | 5,886 | | 393 | | 6.7% |
Ohio - Northeastern Ohio | | 1,303 | | 94.6% | | 93.9% | | 3,696 | | 3,571 | | 125 | | 3.5% |
Pennsylvania | | 468 | | 94.0% | | 92.1% | | 1,087 | | 987 | | 100 | | 10.1% |
Total Midwest Properties | | 8,116 | | 94.8% | | 94.8% | | 19,754 | | 18,921 | | 833 | | 4.4% |
| | | | | | | | | | | | | | |
Mid-Atlantic/Southeast Properties | | | | | | | | | | | | | | |
Florida | | 1,272 | | 90.3% | | 93.0% | | 4,390 | | 4,549 | | (159) | | (3.5)% |
Georgia | | 1,717 | | 86.5% | | 91.1% | | 3,988 | | 4,237 | | (249) | | (5.9)% |
Virginia | | 268 | | 96.6% | | 98.1% | | 1,078 | | 1,025 | | 53 | | 5.2% |
Baltimore/Washington | | 667 | | 92.2% | | 95.1% | | 2,464 | | 2,419 | | 45 | | 1.9% |
Total Mid-Atlantic/ | | | | | | | | | | | | | | |
Southeast Properties | | 3,924 | | 89.4% | | 92.9% | | 11,920 | | 12,230 | | (310) | | (2.5)% |
| | | | | | | | | | | | | | |
Total Same Community | | 12,040 | | 93.0% | | 94.1% | | 31,674 | | 31,151 | | 523 | | 1.7% |
| | | | | | | | | | | | | | |
Acquisitions (2) | | | | | | | | | | | | | | |
Virginia | | 536 | | 93.8% | | N/A | | 1,794 | | - | | 1,794 | | 100.0% |
| | | | | | | | | | | | | | |
Total Property Revenue | | 12,576 | | 93.1% | | 94.1% | | $ | 33,468 | | $ | 31,151 | | $ | 2,317 | | 7.4% |
| | | | | | | | | | | | | | |
(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. |
| | |
Associated Estates Realty Corporation
Property Operating Expenses
For the Three Months Ended December 31, 2008 and 2007 |
| | | | 2008 | | 2007 | | Q4 | | Q4 | | | | |
| | No. of | | Physical | | Physical | | 2008 | | 2007 | | Increase/ | | % |
Property Operating Expenses | | Units | | Occupancy (1) | | Occupancy (1) | | Expenses | | Expenses | | (Decrease) | | Change |
Same Community | | | | | | | | | | | | | | |
Midwest Properties | | | | | | | | | | | | | | |
Indiana | | 836 | | 93.9% | | 93.8% | | $ | 879 | | $ | 884 | | $ | (5) | | (0.6)% |
Michigan | | 2,888 | | 94.5% | | 96.2% | | 2,944 | | 3,033 | | (89) | | (2.9)% |
Ohio - Central Ohio | | 2,621 | | 95.5% | | 94.4% | | 2,726 | | 2,553 | | 173 | | 6.8% |
Ohio - Northeastern Ohio | | 1,303 | | 94.6% | | 93.9% | | 1,362 | | 1,345 | | 17 | | 1.3% |
Pennsylvania | | 468 | | 94.0% | | 92.1% | | 443 | | 422 | | 21 | | 5.0% |
Total Midwest Properties | | 8,116 | | 94.8% | | 94.8% | | 8,354 | | 8,237 | | 117 | | 1.4% |
| | | | | | | | | | | | | | |
Mid-Atlantic/Southeast Properties | | | | | | | | | | | | | | |
Florida | | 1,272 | | 90.3% | | 93.0% | | 1,780 | | 1,647 | | 133 | | 8.1% |
Georgia | | 1,717 | | 86.5% | | 91.1% | | 1,867 | | 1,774 | | 93 | | 5.2% |
Virginia | | 268 | | 96.6% | | 98.1% | | 297 | | 306 | | (9) | | (2.9)% |
Baltimore/Washington | | 667 | | 92.2% | | 95.1% | | 814 | | 786 | | 28 | | 3.6% |
Total Mid-Atlantic/ | | | | | | | | | | | | | | |
Southeast Properties | | 3,924 | | 89.4% | | 92.9% | | 4,758 | | 4,513 | | 245 | | 5.4% |
| | | | | | | | | | | | | | |
Total Same Community | | 12,040 | | 93.0% | | 94.1% | | 13,112 | | 12,750 | | 362 | | 2.8% |
| | | | | | | | | | | | | | |
Acquisitions (2) | | | | | | | | | | | | | | |
Virginia | | 536 | | 93.8% | | N/A | | 599 | | - | | 599 | | 100.0% |
| | | | | | | | | | | | | | |
Total Property Operating Expenses | 12,576 | | 93.1% | | 94.1% | | $ | 13,711 | | $ | 12,750 | | $ | 961 | | 7.5% |
| | | | | | | | | | | | | | |
(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. |
| | |
Associated Estates Realty Corporation
Property Net Operating Income (Property NOI)
For the Three Months Ended December 31, 2008 and 2007 |
| | | | 2008 | | 2007 | | Q4 | | Q4 | | | | |
| | No. of | | Physical | | Physical | | 2008 | | 2007 | | Increase/ | | % |
Property NOI (1) | | Units | | Occupancy (2) | | Occupancy (2) | | NOI | | NOI | | (Decrease) | | Change |
Same Community | | | | | | | | | | | | | | |
Midwest Properties | | | | | | | | | | | | | | |
Indiana | | 836 | | 93.9% | | 93.8% | | $ | 1,176 | | $ | 1,121 | | $ | 55 | | 4.9% |
Michigan | | 2,888 | | 94.5% | | 96.2% | | 3,693 | | 3,439 | | 254 | | 7.4% |
Ohio - Central Ohio | | 2,621 | | 95.5% | | 94.4% | | 3,553 | | 3,333 | | 220 | | 6.6% |
Ohio - Northeastern Ohio | | 1,303 | | 94.6% | | 93.9% | | 2,334 | | 2,226 | | 108 | | 4.9% |
Pennsylvania | | 468 | | 94.0% | | 92.1% | | 644 | | 565 | | 79 | | 14.0% |
Total Midwest Properties | | 8,116 | | 94.8% | | 94.8% | | 11,400 | | 10,684 | | 716 | | 6.7% |
| | | | | | | | | | | | | | |
Mid-Atlantic/Southeast Properties | | | | | | | | | | | | | | |
Florida | | 1,272 | | 90.3% | | 93.0% | | 2,610 | | 2,902 | | (292) | | (10.1)% |
Georgia | | 1,717 | | 86.5% | | 91.1% | | 2,121 | | 2,463 | | (342) | | (13.9)% |
Virginia | | 268 | | 96.6% | | 98.1% | | 781 | | 719 | | 62 | | 8.6% |
Baltimore/Washington | | 667 | | 92.2% | | 95.1% | | 1,650 | | 1,633 | | 17 | | 1.0% |
Total Mid-Atlantic/ | | | | | | | | | | | | | | |
Southeast Properties | | 3,924 | | 89.4% | | 92.9% | | 7,162 | | 7,717 | | (555) | | (7.2)% |
| | | | | | | | | | | | | | |
Total Same Community | | 12,040 | | 93.0% | | 94.1% | | 18,562 | | 18,401 | | 161 | | 0.9% |
| | | | | | | | | | | | | | |
Acquisitions (3) | | | | | | | | | | | | | | |
Virginia | | 536 | | 93.8% | | N/A | | 1,195 | | - | | 1,195 | | 100.0% |
| | | | | | | | | | | | | | |
Total Property NOI | | 12,576 | | 93.1% | | 94.1% | | $ | 19,757 | | $ | 18,401 | | $ | 1,356 | | 7.4% |
| | | | | | | | | | | | | | |
(1) | See page 28 for a reconciliation of net (loss) 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. |
| | |
| | | | 2008 | | 2007 | | YTD | | YTD | | | | |
| | No. of | | Physical | | Physical | | 2008 | | 2007 | | Increase/ | | % |
Property Revenue | | Units | | Occupancy (1) | | Occupancy (1) | | Revenues | | Revenues | | (Decrease) | | Change |
Same Community | | | | | | | | | | | | | | |
Midwest Properties | | | | | | | | | | | | | | |
Indiana | | 836 | | 93.9% | | 93.8% | | $ | 8,248 | | $ | 7,986 | | $ | 262 | | 3.3% |
Michigan | | 2,888 | | 94.5% | | 96.2% | | 26,313 | | 25,594 | | 719 | | 2.8% |
Ohio - Central Ohio | | 2,621 | | 95.5% | | 94.4% | | 24,758 | | 23,110 | | 1,648 | | 7.1% |
Ohio - Northeastern Ohio | | 1,303 | | 94.6% | | 93.9% | | 14,812 | | 14,150 | | 662 | | 4.7% |
Pennsylvania | | 468 | | 94.0% | | 92.1% | | 4,240 | | 3,932 | | 308 | | 7.8% |
Total Midwest Properties | | 8,116 | | 94.8% | | 94.8% | | 78,371 | | 74,772 | | 3,599 | | 4.8% |
| | | | | | | | | | | | | | |
Mid-Atlantic/Southeast Properties | | | | | | | | | | | | | | |
Florida | | 1,272 | | 90.3% | | 93.0% | | 18,065 | | 18,386 | | (321) | | (1.7)% |
Georgia | | 874 | | 86.6% | | 94.1% | | 8,441 | | 8,511 | | (70) | | (0.8)% |
Baltimore/Washington | | 667 | | 92.2% | | 95.1% | | 9,896 | | 9,570 | | 326 | | 3.4% |
Total Mid-Atlantic/ | | | | | | | | | | | | | | |
Southeast Properties | | 2,813 | | 89.6% | | 93.8% | | 36,402 | | 36,467 | | (65) | | (0.2)% |
| | | | | | | | | | | | | | |
Total Same Community | | 10,929 | | 93.4% | | 94.5% | | 114,773 | | 111,239 | | 3,534 | | 3.2% |
| | | | | | | | | | | | | | |
Acquisitions (2) | | | | | | | | | | | | | | |
Virginia | | 804 | | 94.8% | | 98.1% | | 9,246 | | 2,198 | | 7,048 | | 320.7% |
Georgia | | 843 | | 86.4% | | 88.0% | | 8,070 | | 4,268 | | 3,802 | | 89.1% |
| | | | | | | | | | | | | | |
Total Property Revenue | | 12,576 | | 93.1% | | 94.1% | | $ | 132,089 | | $ | 117,705 | | $ | 14,384 | | 12.2% |
| | | | | | | | | | | | | | |
(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. |
| | |
Associated Estates Realty Corporation
Property Operating Expenses
For the Twelve Months Ended December 31, 2008 and 2007 |
| | | | 2008 | | 2007 | | YTD | | YTD | | | | |
| | No. of | | Physical | | Physical | | 2008 | | 2007 | | Increase/ | | % |
Property Operating Expenses | | Units | | Occupancy (1) | | Occupancy (1) | | Expenses | | Expenses | | (Decrease) | | Change |
Same Community | | | | | | | | | | | | | | |
Midwest Properties | | | | | | | | | | | | | | |
Indiana | | 836 | | 93.9% | | 93.8% | | $ | 3,889 | | $ | 3,852 | | $ | 37 | | 1.0% |
Michigan | | 2,888 | | 94.5% | | 96.2% | | 12,267 | | 12,369 | | (102) | | (0.8)% |
Ohio - Central Ohio | | 2,621 | | 95.5% | | 94.4% | | 11,296 | | 10,981 | | 315 | | 2.9% |
Ohio - Northeastern Ohio | | 1,303 | | 94.6% | | 93.9% | | 5,709 | | 5,821 | | (112) | | (1.9)% |
Pennsylvania | | 468 | | 94.0% | | 92.1% | | 1,777 | | 1,758 | | 19 | | 1.1% |
Total Midwest Properties | | 8,116 | | 94.8% | | 94.8% | | 34,938 | | 34,781 | | 157 | | 0.5% |
| | | | | | | | | | | | | | |
Mid-Atlantic/Southeast Properties | | | | | | | | | | | | | | |
Florida | | 1,272 | | 90.3% | | 93.0% | | 7,161 | | 7,195 | | (34) | | (0.5)% |
Georgia | | 874 | | 86.6% | | 94.1% | | 4,034 | | 4,114 | | (80) | | (1.9)% |
Baltimore/Washington | | 667 | | 92.2% | | 95.1% | | 3,351 | | 3,222 | | 129 | | 4.0% |
Total Mid-Atlantic/ | | | | | | | | | | | | | | |
Southeast Properties | | 2,813 | | 89.6% | | 93.8% | | 14,546 | | 14,531 | | 15 | | 0.1% |
| | | | | | | | | | | | | | |
Total Same Community | | 10,929 | | 93.4% | | 94.5% | | 49,484 | | 49,312 | | 172 | | 0.3% |
| | | | | | | | | | | | | | |
Acquisitions (2) | | | | | | | | | | | | | | |
Virginia | | 804 | | 94.8% | | 98.1% | | 2,993 | | 732 | | 2,261 | | 308.9% |
Georgia | | 843 | | 86.4% | | 88.0% | | 3,361 | | 1,635 | | 1,726 | | 105.6% |
| | | | | | | | | | | | | | |
Total Property Operating Expenses | | 12,576 | | 93.1% | | 94.1% | | $ | 55,838 | | $ | 51,679 | | $ | 4,159 | | 8.0% |
| | | | | | | | | | | | | | |
(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. |
| | |
| | | | 2008 | | 2007 | | YTD | | YTD | | | | |
| | No. of | | Physical | | Physical | | 2008 | | 2007 | | Increase/ | | % |
Property NOI (1) | | Units | | Occupancy (2) | | Occupancy (2) | | NOI | | NOI | | (Decrease) | | Change |
Same Community | | | | | | | | | | | | | | |
Midwest Properties | | | | | | | | | | | | | | |
Indiana | | 836 | | 93.9% | | 93.8% | | $ | 4,359 | | $ | 4,134 | | $ | 225 | | 5.4% |
Michigan | | 2,888 | | 94.5% | | 96.2% | | 14,046 | | 13,225 | | 821 | | 6.2% |
Ohio - Central Ohio | | 2,621 | | 95.5% | | 94.4% | | 13,462 | | 12,129 | | 1,333 | | 11.0% |
Ohio - Northeastern Ohio | | 1,303 | | 94.6% | | 93.9% | | 9,103 | | 8,329 | | 774 | | 9.3% |
Pennsylvania | | 468 | | 94.0% | | 92.1% | | 2,463 | | 2,174 | | 289 | | 13.3% |
Total Midwest Properties | | 8,116 | | 94.8% | | 94.8% | | 43,433 | | 39,991 | | 3,442 | | 8.6% |
| | | | | | | | | | | | | | |
Mid-Atlantic/Southeast Properties | | | | | | | | | | | | | | |
Florida | | 1,272 | | 90.3% | | 93.0% | | 10,904 | | 11,191 | | (287) | | (2.6)% |
Georgia | | 874 | | 86.6% | | 94.1% | | 4,407 | | 4,397 | | 10 | | 0.2% |
Baltimore/Washington | | 667 | | 92.2% | | 95.1% | | 6,545 | | 6,348 | | 197 | | 3.1% |
Total Mid-Atlantic/ | | | | | | | | | | | | | | |
Southeast Properties | | 2,813 | | 89.6% | | 93.8% | | 21,856 | | 21,936 | | (80) | | (0.4)% |
| | | | | | | | | | | | | | |
Total Same Community | | 10,929 | | 93.4% | | 94.5% | | 65,289 | | 61,927 | | 3,362 | | 5.4% |
| | | | | | | | | | | | | | |
Acquisitions (3) | | | | | | | | | | | | | | |
Virginia | | 804 | | 94.8% | | 98.1% | | 6,253 | | 1,466 | | 4,787 | | 326.5% |
Georgia | | 843 | | 86.4% | | 88.0% | | 4,709 | | 2,633 | | 2,076 | | 78.8% |
| | | | | | | | | | | | | | |
Total Property NOI | | 12,576 | | 93.1% | | 94.1% | | $ | 76,251 | | $ | 66,026 | | $ | 10,225 | | 15.5% |
| | | | | | | | | | | | | | |
(1) | See page 28 for a reconciliation of net (loss) 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, 2008
(Dollar amounts in thousands) |
| Balance | | Percentage | | Weighted |
| Outstanding | | of | | Average |
FIXED RATE DEBT | December 31, 2008 | | Total Debt | | Interest Rate |
| | | | | |
Mortgages payable - CMBS | $ | 154,685 | | 27.7% | | 7.7% |
Mortgages payable - other (1) | 320,516 | | 57.5% | | 5.8% |
Unsecured debt | 25,780 | | 4.6% | | 7.9% |
Total fixed rate debt | 500,981 | | 89.8% | | 6.5% |
| | | | | |
VARIABLE RATE DEBT | | | | | |
Mortgages payable | 35,000 | | 6.3% | | 1.6% |
Revolver | 21,500 | | 3.9% | | 3.7% |
Total variable rate debt | 56,500 | | 10.2% | | 2.4% |
TOTAL DEBT | $ | 557,481 | | 100.0% | | 6.1% |
| | | | | |
Interest coverage ratio (2) | 1.76:1 | | | | |
Fixed charge coverage ratio (3) | 1.56:1 | | | | |
Weighted average maturity | 7.0 years | | | | |
| Fixed Rate | | Fixed Rate | | | | |
SCHEDULED PRINCIPAL MATURITIES | CMBS | | Other | | Variable Rate | | Total |
| | | | | | | |
2009 | $ | 37,163 | | $ | - | | $ | 35,000 | | $ | 72,163 |
2010 | 15,571 | | 63,000 | | - | | 78,571 |
2011(4) | 55,595 | | - | | 21,500 | | 77,095 |
2012 | 46,356 | | 36,000 | | - | | 82,356 |
2013 | - | | 132,209 | | - | | 132,209 |
Thereafter | - | | 115,087 | | - | | 115,087 |
Total | $ | 154,685 | | $ | 346,296 | | $ | 56,500 | | $ | 557,481 |
| | | | | | | |
(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 including discounts received or premiums paid. 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 including discounts received and premiums paid. |
| |
(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 | | $1.46 to $1.52 |
Expected real estate depreciation and amortization | | 2.18 |
Expected net defeasance and other prepayment costs on secured debt | | 0.08 |
Expected gains on disposition of properties | | -2.55 |
Expected Funds from Operations as Adjusted (1) | | $1.17 to $1.23 |
| | |
Same Community Portfolio | | |
Revenue growth | | -0.5% to 0.5% |
Expense growth | | 2.0% to 3.0% |
Property NOI (2) growth | | -3.1% to -0.6% |
Physical occupancy | | 93.0% to 93.5% |
| | |
Transactions | | |
Acquisitions | | $80 million |
Dispositions | | $80 million |
Development (3) | | $7 million |
| | |
Corporate Expenses | | |
General and administrative expense | | $14.0 million |
Service company expense (4) | | $0.5 million |
Total | | $14.5 million |
| | |
Debt | | |
Capitalized interest (3) | | $0.1 million |
Expensed interest (excluding defeasance/prepayment costs) (5) | | $36.2 million |
Expected net defeasance/prepayment costs | | $1.4 million |
| | |
Capital Structure (6) | | |
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) | Reflects development of 60 units on adjacent parcel in Richmond, Virginia, with an expected completion date of December 31, 2009. |
| |
(4) | 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 company expense in accordance with GAAP. |
| |
(5) | Includes $1.3 million of deferred financing costs. |
| |
(6) | Earnings guidance does not take into consideration any share repurchases. |
| | |
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 $2.0 million for the twelve months ended December 31, 2008, and $4.2 million for the twelve months ended December 31, 2007. In accordance with GAAP, these prepayment costs are included as interest expense in the Company's Consolidated Statement of Operations. Additionally, deducted is $2.1 million for the twelve months ended December 31, 2008, while added back is $172,000 for the twelve months ended December 31, 2007 of preferred stock repurchase costs including discounts received in 2008 and premiums paid in 2007. In accordance with GAAP, the Company reclassified from additional paid in capital the original issuance costs associated with the repurchase of 278,000 and 111,500 depositary shares of the Series B Preferred Shares for the twelve months ended December 31, 2008 and 2007, respectively. 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 an appropriate supplemental measure of our performance because it eliminates 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, |
(In thousands) | | 2008 | | 2007 | | 2008 | | 2007 |
| | | | | | | | |
Net income available to common shareholders | | $ | 298 | | $ | 1,106 | | $ | 32,118 | | $ | 5,069 |
Equity in net income (loss) of joint ventures | | (1,574) | | 12 | | (1,502) | | 258 |
Preferred share dividends | | 1,053 | | 1,201 | | 4,655 | | 4,924 |
Preferred share repurchase costs | | 143 | | - | | 143 | | 58 |
Preferred share repurchase (discount)/premium | | (2,289) | | - | | (2,289) | | 114 |
Interest income | | (11) | | (58) | | (138) | | (459) |
Interest expense (1) | | 9,226 | | 9,950 | | 38,865 | | 41,824 |
Depreciation and amortization | | 9,490 | | 9,322 | | 37,867 | | 34,163 |
Gain on disposition of properties | | - | | (3,821) | | (45,202) | | (20,864) |
Taxes | | 79 | | 70 | | 303 | | 304 |
EBITDA | | 16,415 | | 17,782 | | 64,820 | | 65,391 |
EBITDA - Joint Ventures: | | | | | | | | |
Equity in net income (loss) of joint ventures | | 1,574 | | (12) | | 1,502 | | (258) |
Gain on disposition of joint venture property | | (1,603) | | - | | (1,603) | | - |
Interest expense | | 11 | | 10 | | 41 | | 770 |
Depreciation and amortization | | 23 | | 25 | | 94 | | 628 |
EBITDA - Joint Ventures | | 5 | | 23 | | 34 | | 1,140 |
| | | | | | | | |
Total EBITDA | | $ | 16,420 | | $ | 17,805 | | $ | 64,854 | | $ | 66,531 |
| | | | | | | | |
(1) | 2008 includes defeasance and other prepayment costs of $1,959 for the twelve months ended December 31, and 2007 includes defeasance and other prepayment costs of $4,183 for the twelve months ended December 31, respectively. |
Net Operating Income ("NOI")
NOI is determined by deducting property operating and maintenance expenses, direct property management and service company expense and painting service expense 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 (loss) income.
| Three Months Ended | | Twelve Months Ended |
| December 31, | | December 31, |
(In thousands) | 2008 | | 2007 | | 2008 | | 2007 |
| | | | | | | |
Property NOI | $ | 19,757 | | $ | 18,401 | | $ | 76,251 | | $ | 66,026 |
Service company NOI | (5) | | (452) | | 160 | | (1,873) |
Painting services NOI | (102) | | (91) | | (328) | | 54 |
Depreciation and amortization | (9,445) | | (8,477) | | (36,930) | | (30,216) |
General and administrative expense | (3,390) | | (2,454) | | (13,769) | | (10,327) |
Interest income | 11 | | 51 | | 135 | | 430 |
Interest expense (1) | (9,226) | | (9,525) | | (36,489) | | (40,131) |
Equity in net income (loss) of joint ventures | 1,574 | | (12) | | 1,502 | | (258) |
Minority interest in operating partnership | (13) | | (13) | | (53) | | (53) |
Income from discontinued operations: | | | | | | | |
Operating income (loss) | 44 | | 1,058 | | (1,054) | | 5,649 |
Gain on disposition of properties | - | | 3,821 | | 45,202 | | 20,864 |
Income from discontinued operations | 44 | | 4,879 | | 44,148 | | 26,513 |
| | | | | | | |
Consolidated net (loss) income | $ | (795) | | $ | 2,307 | | $ | 34,627 | | $ | 10,165 |
| | | | | | | |
(1) | 2007 includes defeasance and other prepayment costs of $4,183 for the twelve months ended December 31. |
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 Properties
Same Community 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.
