Exhibit 99.2
Associated Estates Realty Corporation
Second Quarter 2012
Earnings Release and Supplemental Financial Information
| Apartments at the Arboretum | |||
| 3000 Renaissance Park Place | Phone: | (866) 783-0967 | |
| Cary, NC 27513 | Web Site: | www.arboretumapartments.com | |
| For more information, please contact: | ||
| Jeremy Goldberg | ||
| (216) 797-8715 | ||
| Associated Estates Realty Corporation |
| Second Quarter 2012 |
| Supplemental Financial Information |
| Table of Contents | Page |
Development Pipeline | |
| Construction and Other Services, General and Administrative Expense, Development | |
| Costs and Personnel - Allocated | |
Sequential Property Revenue | |
Sequential Property Operating Expenses | |
Sequential Property Net Operating Income (Property NOI) | |
Second Quarter Property Revenue | |
| "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 our 2012 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 our 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 we own and manage properties, including interest rates, the overall level of economic activity, the availability of consumer credit and mortgage financing, unemployment rates and other factors; elimination or limitations to federal government support for Fannie Mae and/or Freddie Mac that might result in significantly reduced availability of mortgage financing sources as well as increases in interest rates for mortgage financing; our ability to refinance debt on favorable terms at maturity; risks of a lessening of demand for the multifamily units that we own; competition from other available multifamily units and changes in market rental rates; the failure of development projects to perform in accordance with our expectations; increases in property and liability insurance costs; unanticipated increases in real estate taxes and other operating expenses; weather conditions that adversely affect operating expenses; expenditures that cannot be anticipated such as utility rate and usage increases and unanticipated repairs; our inability to control operating expenses or achieve increases in revenue; shareholder ownership limitations that may discourage a takeover otherwise considered favorably by shareholders; the results of litigation filed or to be filed against us; changes in tax legislation; risks of personal injury claims and property damage related to mold claims that are not covered by our insurance; catastrophic property damage losses that are not covered by our insurance; our ability to acquire properties at prices consistent with our investment criteria; risks associated with property acquisitions such as failure to achieve expected results or matters not discovered in due diligence; risks related to the perception of residents and prospective residents as to the attractiveness, convenience and safety of our properties or the neighborhoods in which they are located; and construction and construction business risks, including, without limitation, rapid and unanticipated increases in prices of building materials and commodities. |
2
| Associated Estates Realty Corporation |
| Second Quarter Earnings |
ASSOCIATED ESTATES REALTY CORPORATION REPORTS SECOND QUARTER RESULTS
Increases Same Community NOI Guidance
Second Quarter Same Community Revenue up 5.9 Percent
Quarter-End Same Community Physical Occupancy 97.0 Percent
Cleveland, Ohio - July 24, 2012 - Associated Estates Realty Corporation (NYSE, NASDAQ: AEC) today reported financial results for the second quarter ended June 30, 2012. Funds from operations (FFO) for the second quarter of 2012 was $0.32 per common share (diluted), compared with $0.27 per common share (diluted), for the second quarter of 2011, an 18.5 percent increase.
Net income applicable to common shares was $23.6 million or $0.54 per common share (diluted) for the quarter ended June 30, 2012, principally as a result of gains from property sales. This compared with net loss applicable to common shares of $1.6 million or $0.04 per common share (diluted) for the quarter ended June 30, 2011.
"Fundamentals remain strong and our properties are well positioned to benefit. The positive momentum supports the increased NOI guidance," said Jeffrey I. Friedman, president and chief executive officer.
A reconciliation of net income (loss) attributable to the Company to FFO, and to FFO as adjusted, is included on page 10.
Same Community Portfolio Results
Net operating income (NOI) for the second quarter of 2012 for the Company's same community portfolio increased 5.5 percent when compared with the second quarter of 2011. Revenue increased 5.9 percent and property operating expenses increased 6.4 percent. Physical occupancy was 97.0 percent at the end of the second quarter of 2012 versus 96.7 percent at the end of the second quarter of 2011. Average monthly net rent collected per unit for the same community properties was $1,024 compared with $969 for the second quarter of 2011, a 5.7 percent increase.
First Half Performance
FFO as adjusted for the six months ended June 30, 2012 was $0.61 per common share (diluted) after adjusting for $1.7 million of loan prepayment costs and a credit to expense of $279,000 for a refund of defeasance costs on a previously defeased loan in the first quarter. FFO as adjusted for the six months ended June 30, 2011 was $0.50 per common share (diluted).
For the six months ended June 30, 2012, net income applicable to common shares was $21.5 million, or $0.50 per common share (diluted) compared to net loss applicable to common shares of $4.7 million, or $0.11 per common share (diluted) for the period ended June 30, 2011.
A reconciliation of net income (loss) attributable to the Company to FFO and FFO as adjusted, is included on page 10.
NOI for the six months ended June 30, 2012, for the Company's Same Community portfolio increased 7.1 percent due to a 5.8 percent increase in revenue and a 4.0 percent increase in property operating expenses compared to the first six months of 2011.
Additional quarterly and first half financial information, including performance by region for the Company's portfolio, is included on pages 16 through 27.
Acquisitions
On May 23, 2012, the Company acquired The Apartments at the Arboretum, located in Cary, NC, a suburb of Raleigh. The 205-unit property was built in 2009 and is located minutes from the Research Triangle Park. The Company previously announced that it had completed its due diligence on The Park at Crossroads, a 344-unit property built in 2006, also in Cary. The acquisition of The Park at Crossroads is subject to the assumption of an approximately $24.9 million loan. The loan has an interest rate of 6.3 percent and matures in November 2016. Closing is expected to occur during the third quarter.
3
| Associated Estates Realty Corporation |
| Second Quarter Earnings |
Subsequent to quarter end, the Company acquired two properties, one in the Raleigh-Durham market and one in Dallas. On July 17, 2012, the Company closed on Southpoint Village, in Durham, NC. The 211-unit property was built in 2007, has condominium style finishes and is located within walking distance to a major shopping center with five anchor department stores, including Nordstrom. On July 23, 2012, the Company acquired a 396-unit property in Dallas, TX, which is now known as 21 Forty Medical District. 21 Forty Medical District is a class A community built in 2009. It is located in the Southwestern Medical District, which contains the largest concentration of medical facilities in North Texas and the University of Texas Southwestern.
Dispositions
During the quarter, the Company sold 5 properties, with a combined total of 1,192 units; The Falls, a 520-unit property in Duluth, GA and a four property portfolio in Western Michigan, with a total of 672 units. The average age of the five properties was 26 years and the total sales price was $60 million.
Development Activity
As previously announced, on May 8, 2012, the Company purchased the historic Desmond's Tower at 5500 Wilshire Boulevard and the adjacent parking lot. The Company plans to build approximately 175 luxury apartments and structured parking within the area currently comprising a parking lot. The apartments will be known as The Desmond on Wilshire and construction is expected to begin in the second quarter of 2013.
Capital Markets Activity
During the quarter ending June 30, 2012, the Company sold 681,178 common shares via its "At-the-Market" program, resulting in net proceeds after sales commissions of approximately $11.1 million, or a weighted average net price of $16.30 per share. These issuances completed the Company's $25 million "At-the-Market" program. Proceeds were used to reduce borrowings on the Company's unsecured line of credit.
On June 27, 2012, the Company sold 6.325 million common shares in a follow-on equity offering resulting in net proceeds of approximately $87.2 million. Proceeds were used to fund acquisitions and development and for general corporate purposes.
“Our capital markets activity has improved our balance sheet and positioned the Company to achieve investment grade ratings in the near term," said Lou Fatica, Vice President, Treasurer and Chief Financial Officer. "Our recent acquisitions enhanced both the asset quality of our portfolio and the geographic distribution of our NOI," Fatica added.
2012 Outlook
The Company updated its full year FFO as adjusted guidance to a range of $1.23 to $1.25 per common share. Additionally, the Company increased same community revenue guidance to a range of 5.0 percent to 5.5 percent and NOI to a range of 6.25 percent to 6.75 percent. Detailed assumptions relating to the Company's guidance can be found on page 29.
Conference Call
A conference call to discuss the results will be held on July 25, 2012 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.” The call will be archived through August 8, 2012. The dial-in number for the replay is 877-344-7529 and the conference number for the replay is 10015722.
Via the Internet (listen only): Access the Company's website at AssociatedEstates.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 "Q2 2012 Earnings Webcast" link. The webcast will be archived for 90 days.
4
| Associated Estates Realty Corporation |
| Financial and Operating Highlights |
| For the Three and Six Months Ended June 30, 2012 and 2011 |
| (Unaudited; in thousands, except per share and ratio data) |
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| OPERATING INFORMATION | 2012 | 2011 | 2012 | 2011 | ||||||||||||
| Total revenue | $ | 42,309 | $ | 42,000 | $ | 82,687 | $ | 81,910 | ||||||||
| Property revenue | $ | 41,996 | $ | 36,207 | $ | 82,374 | $ | 71,445 | ||||||||
| Net income (loss) applicable to common shares | $ | 23,569 | $ | (1,573 | ) | $ | 21,489 | $ | (4,655 | ) | ||||||
| Per share - basic | $ | 0.55 | $ | (0.04 | ) | $ | 0.50 | $ | (0.11 | ) | ||||||
| Per share - diluted | $ | 0.54 | $ | (0.04 | ) | $ | 0.50 | $ | (0.11 | ) | ||||||
Funds from Operations (FFO) (1) | $ | 13,744 | $ | 11,188 | $ | 24,410 | $ | 20,706 | ||||||||
FFO as adjusted (1) | $ | 13,744 | $ | 11,188 | $ | 25,874 | $ | 20,706 | ||||||||
| FFO per share - diluted | $ | 0.32 | $ | 0.27 | $ | 0.57 | $ | 0.50 | ||||||||
| FFO as adjusted per share - diluted | $ | 0.32 | $ | 0.27 | $ | 0.61 | $ | 0.50 | ||||||||
Funds Available for Distribution (FAD) (1) | $ | 11,578 | $ | 9,838 | $ | 23,306 | $ | 18,792 | ||||||||
| Dividends per share | $ | 0.18 | $ | 0.17 | $ | 0.35 | $ | 0.34 | ||||||||
| Payout ratio - FFO | 56.3 | % | 63.0 | % | 61.4 | % | 68.0 | % | ||||||||
| Payout ratio - FFO as adjusted | 56.3 | % | 63.0 | % | 57.4 | % | 68.0 | % | ||||||||
| Payout ratio - FAD | 66.7 | % | 70.8 | % | 63.6 | % | 75.6 | % | ||||||||
| General and administrative expense | $ | 4,264 | $ | 3,959 | $ | 8,633 | $ | 8,129 | ||||||||
| Development costs | $ | 297 | $ | 102 | $ | 607 | $ | 176 | ||||||||
| Personnel - allocated | $ | 987 | $ | 839 | $ | 1,935 | $ | 1,669 | ||||||||
| Costs associated with acquisitions | $ | 485 | $ | 65 | $ | 485 | $ | 121 | ||||||||
Interest expense (2) | $ | 6,332 | $ | 7,023 | $ | 13,506 | $ | 13,905 | ||||||||
Interest coverage ratio (3) | 2.94:1 | 2.45:1 | 2.71:1 | 2.35:1 | ||||||||||||
Fixed charge coverage ratio (4) | 2.94:1 | 2.45:1 | 2.71:1 | 2.35:1 | ||||||||||||
| General and administrative expense to property revenue | 10.2 | % | 10.9 | % | 10.5 | % | 11.4 | % | ||||||||
| Personnel - allocated to property revenue | 2.4 | % | 2.3 | % | 2.3 | % | 2.3 | % | ||||||||
Interest expense to property revenue (2) | 15.1 | % | 19.4 | % | 16.4 | % | 19.5 | % | ||||||||
Property NOI (5) | $ | 25,260 | $ | 21,863 | $ | 49,428 | $ | 42,527 | ||||||||
ROA (6) | 7.8 | % | 7.7 | % | 7.8 | % | 7.7 | % | ||||||||
| Same Community revenue increase | 5.9 | % | 4.0 | % | 5.8 | % | 5.8 | % | ||||||||
| Same Community expense increase | 6.4 | % | 1.2 | % | 4.0 | % | 3.5 | % | ||||||||
| Same Community NOI increase | 5.5 | % | 6.1 | % | 7.1 | % | 7.5 | % | ||||||||
| Same Community operating margins | 60.2 | % | 60.4 | % | 60.2 | % | 59.5 | % | ||||||||
| (1) | See page 10 for a reconciliation of net income (loss) attributable to AERC to these non-GAAP measurements and page 30 for our definition of these non-GAAP measurements. |
| (2) | Excludes amortization of financing fees of $464 and $1,133 for 2012 and $470 and $929 for 2011. The six months ended 2012 excludes $1.7 million of prepayment costs and $(279) for refunds on previously defeased loan. |
| (3) | Is calculated as EBITDA divided by interest expense, including capitalized interest and amortization of deferred financing costs and excluding prepayment costs/refunds. Individual line items in this calculation include results from discontinued operations where applicable. See page 31 for a reconciliation of net income (loss) applicable to common shares to EBITDA and our definition of EBITDA. |
| (4) | Represents interest expense, including capitalized interest, and preferred stock dividend payment coverage, excluding prepayment costs/refunds. Individual line items in this calculation include discontinued operations where applicable. |
| (5) | See page 32 for a reconciliation of net income (loss) attributable to AERC to this non-GAAP measurement and our definition of this non-GAAP measurement. |
| (6) | ROA is calculated as trailing twelve month Property NOI divided by average gross real estate assets, excluding properties currently under development or held for sale. Gross real estate assets for acquired properties are prorated based upon the percentage of time owned. |
5
| Associated Estates Realty Corporation |
| Financial and Operating Highlights |
| Second Quarter 2012 |
| (Unaudited; in thousands, except per share and ratio data) |
| June 30, | December 31, | |||||||
| CAPITALIZATION DATA | 2012 | 2011 | ||||||
| Net real estate assets | $ | 1,030,723 | $ | 986,834 | ||||
| Total assets | $ | 1,060,203 | $ | 1,018,493 | ||||
| Debt | $ | 602,738 | $ | 664,788 | ||||
| Noncontrolling redeemable interest | $ | 3,077 | $ | 2,763 | ||||
| Total shareholders' equity attributable to AERC | $ | 412,175 | $ | 308,793 | ||||
| Common shares outstanding | 49,492 | 42,331 | ||||||
| Share price, end of period | $ | 14.95 | $ | 15.95 | ||||
| Total capitalization | $ | 1,342,643 | $ | 1,339,967 | ||||
| Undepreciated book value of real estate assets | $ | 1,382,021 | $ | 1,345,439 | ||||
| Debt to undepreciated book value of real estate assets | 43.6 | % | 49.4 | % | ||||
| Secured debt to undepreciated book value | 29.1 | % | 35.8 | % | ||||
| Annual dividend | $ | 0.72 | $ | 0.68 | ||||
| Annual dividend yield based on share price, end of period | 4.8 | % | 4.3 | % | ||||
6
| Associated Estates Realty Corporation |
| Financial and Operating Highlights |
| Second Quarter 2012 |
| Number of | |||||||||
| PORTFOLIO INFORMATION | Properties | Units | Average Age | ||||||
| Company Portfolio: | |||||||||
| Same Community: | |||||||||
| Midwest | 28 | 6,526 | 19 | ||||||
| Mid-Atlantic | 9 | 2,803 | 11 | ||||||
| Southeast | 7 | 2,469 | 13 | ||||||
| Southwest | 1 | 222 | 13 | ||||||
| Total Same Community | 45 | 12,020 | 16 | ||||||
| Acquisitions | 4 | 901 | 9 | ||||||
Developed (1) | 1 | 242 | — | ||||||
| Total Company Portfolio | 50 | 13,163 | 15 | ||||||
| (1) | Reflects construction of 242-units in Nashville, Tennessee. |
7
| Associated Estates Realty Corporation |
| Condensed Consolidated Balance Sheets |
| Second Quarter 2012 |
| (Unaudited; dollar amount in thousands) |
| June 30, | December 31, | |||||||
| 2012 | 2011 | |||||||
| ASSETS | ||||||||
| Real estate assets | ||||||||
| Investment in real estate | $ | 1,378,316 | $ | 1,323,139 | ||||
| Construction in progress | 3,705 | 22,300 | ||||||
| Less: Accumulated depreciation | (351,298 | ) | (358,605 | ) | ||||
| Net real estate | 1,030,723 | 986,834 | ||||||
| Cash and cash equivalents | 2,062 | 4,328 | ||||||
| Restricted cash | 7,149 | 6,901 | ||||||
| Other assets | 20,269 | 20,430 | ||||||
| Total assets | $ | 1,060,203 | $ | 1,018,493 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Mortgage notes payable | $ | 402,738 | $ | 481,788 | ||||
| Unsecured revolving credit facility | 75,000 | 58,000 | ||||||
| Unsecured term loan | 125,000 | 125,000 | ||||||
| Total debt | 602,738 | 664,788 | ||||||
| Accounts payable and other liabilities | 42,213 | 42,149 | ||||||
| Total liabilities | 644,951 | 706,937 | ||||||
| Noncontrolling redeemable interest | 1,734 | 1,734 | ||||||
| Equity | ||||||||
| Common shares, without par value; $.10 stated value; 91,000,000 | ||||||||
| authorized; 49,492,430 issued and outstanding at June 30, 2012 | ||||||||
| and 46,570,763 issued and 42,330,899 outstanding | ||||||||
| at December 31, 2011, respectively | 4,949 | 4,657 | ||||||
| Paid-in capital | 632,971 | 583,172 | ||||||
| Accumulated distributions in excess of accumulated net income | (223,707 | ) | (228,545 | ) | ||||
| Accumulated other comprehensive loss | (2,038 | ) | (405 | ) | ||||
| Less: Treasury shares, at cost, 5,190,558 shares | ||||||||
| at December 31, 2011 | — | (50,086 | ) | |||||
| Total shareholders' equity attributable to AERC | 412,175 | 308,793 | ||||||
| Noncontrolling interest | 1,343 | 1,029 | ||||||
| Total equity | 413,518 | 309,822 | ||||||
| Total liabilities and equity | $ | 1,060,203 | $ | 1,018,493 | ||||
8
| Associated Estates Realty Corporation |
| Consolidated Statements of Operations and Comprehensive Income |
| Three and Six Months Ended June 30, 2012 and 2011 |
| (Unaudited; dollar and share amounts in thousands) |
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| REVENUE | ||||||||||||||||
| Property revenue | $ | 41,996 | $ | 36,207 | $ | 82,374 | $ | 71,445 | ||||||||
| Office revenue | 313 | — | 313 | — | ||||||||||||
| Construction and other services | — | 5,793 | — | 10,465 | ||||||||||||
| Total revenue | 42,309 | 42,000 | 82,687 | 81,910 | ||||||||||||
| EXPENSES | ||||||||||||||||
| Property operating and maintenance | 16,736 | 14,344 | 32,946 | 28,918 | ||||||||||||
| Depreciation and amortization | 13,039 | 12,328 | 25,649 | 24,475 | ||||||||||||
| Construction and other services | 83 | 5,819 | 153 | 10,770 | ||||||||||||
| General and administrative | 4,264 | 3,959 | 8,633 | 8,129 | ||||||||||||
| Development costs | 297 | 102 | 607 | 176 | ||||||||||||
| Costs associated with acquisitions | 485 | 65 | 485 | 121 | ||||||||||||
| Total expenses | 34,904 | 36,617 | 68,473 | 72,589 | ||||||||||||
| Operating income | 7,405 | 5,383 | 14,214 | 9,321 | ||||||||||||
| Interest expense | (6,796 | ) | (7,493 | ) | (16,103 | ) | (14,834 | ) | ||||||||
| Income (loss) from continuing operations | 609 | (2,110 | ) | (1,889 | ) | (5,513 | ) | |||||||||
| Income from discontinued operations: | ||||||||||||||||
| Operating income | 197 | 549 | 649 | 884 | ||||||||||||
| Gain on disposition of properties | 22,859 | — | 22,819 | — | ||||||||||||
| Income from discontinued operations | 23,056 | 549 | 23,468 | 884 | ||||||||||||
| Net income (loss) | 23,665 | (1,561 | ) | 21,579 | (4,629 | ) | ||||||||||
| Net loss (income) attributable to noncontrolling redeemable interest | 4 | (12 | ) | 9 | (26 | ) | ||||||||||
| Net income (loss) attributable to AERC | 23,669 | (1,573 | ) | 21,588 | (4,655 | ) | ||||||||||
| Allocation to participating securities | (100 | ) | — | (99 | ) | — | ||||||||||
| Net income (loss) applicable to common shares | $ | 23,569 | $ | (1,573 | ) | $ | 21,489 | $ | (4,655 | ) | ||||||
| Earnings per common share - basic: | ||||||||||||||||
| Income (loss) from continuing operations applicable to common shares | $ | 0.01 | $ | (0.05 | ) | $ | (0.04 | ) | $ | (0.13 | ) | |||||
| Income from discontinued operations | 0.54 | 0.01 | 0.54 | 0.02 | ||||||||||||
| Net income (loss) applicable to common shares - basic | $ | 0.55 | $ | (0.04 | ) | $ | 0.50 | $ | (0.11 | ) | ||||||
| Earnings per common share - diluted: | ||||||||||||||||
| Income (loss) from continuing operations applicable to common shares | $ | 0.01 | $ | (0.05 | ) | $ | (0.04 | ) | $ | (0.13 | ) | |||||
| Income from discontinued operations | 0.53 | 0.01 | 0.54 | 0.02 | ||||||||||||
| Net income (loss) applicable to common shares - diluted | $ | 0.54 | $ | (0.04 | ) | $ | 0.50 | $ | (0.11 | ) | ||||||
| Other comprehensive income: | ||||||||||||||||
| Change in fair value and reclassification of hedge instruments | $ | (1,655 | ) | $ | — | $ | (1,633 | ) | $ | — | ||||||
| Total comprehensive income (loss) applicable to common shares | $ | 21,914 | $ | (1,573 | ) | $ | 19,856 | $ | (4,655 | ) | ||||||
| Weighted average shares outstanding - basic | 42,968 | 41,414 | 42,655 | 41,338 | ||||||||||||
| Weighted average shares outstanding - diluted | 43,461 | 41,414 | 42,655 | 41,338 | ||||||||||||
9
| Associated Estates Realty Corporation |
| Reconciliation of Funds from Operations (FFO) and Funds Available for Distribution (FAD) |
| For the Three and Six Months Ended June 30, 2012 and 2011 |
| (In thousands; except per share data) |
| Three Months Ended | Six Months Ended | |||||||||||||||||
| June 30, | June 30, | |||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||||
| CALCULATION OF FFO AND FAD | ||||||||||||||||||
| Net income (loss) attributable to AERC | $ | 23,669 | $ | (1,573 | ) | $ | 21,588 | $ | (4,655 | ) | ||||||||
| Add: | Depreciation - real estate assets | 11,772 | 10,795 | 23,386 | 21,293 | |||||||||||||
| Amortization of intangible assets | 1,162 | 1,966 | 2,255 | 4,068 | ||||||||||||||
| Less: | Gain on disposition of properties | (22,859 | ) | — | (22,819 | ) | — | |||||||||||
Funds from Operations (FFO)(1) | 13,744 | 11,188 | 24,410 | 20,706 | ||||||||||||||
| Add: | Prepayment costs | — | — | 1,743 | — | |||||||||||||
| Less: | Refund of defeasance costs on previously defeased loan | — | — | (279 | ) | — | ||||||||||||
Funds from Operations as adjusted (1) | 13,744 | 11,188 | 25,874 | 20,706 | ||||||||||||||
| Add: | Depreciation - other assets | 530 | 487 | 1,055 | 942 | |||||||||||||
| Amortization of deferred financing fees | 464 | 476 | 1,143 | 948 | ||||||||||||||
| Less: | Recurring fixed asset additions (2) | (3,160 | ) | (2,313 | ) | (4,766 | ) | (3,804 | ) | |||||||||
Funds Available for Distribution (FAD) (1) | $ | 11,578 | $ | 9,838 | $ | 23,306 | $ | 18,792 | ||||||||||
Weighted average shares outstanding - diluted (3) | 43,461 | 41,414 | 42,655 | 41,338 | ||||||||||||||
| PER SHARE INFORMATION: | ||||||||||||||||||
| FFO - diluted | $ | 0.32 | $ | 0.27 | $ | 0.57 | $ | 0.50 | ||||||||||
| FFO as adjusted - diluted | $ | 0.32 | $ | 0.27 | $ | 0.61 | $ | 0.50 | ||||||||||
| Dividends | $ | 0.18 | $ | 0.17 | $ | 0.35 | $ | 0.34 | ||||||||||
| Payout ratio - FFO | 56.3 | % | 63.0 | % | 61.4 | % | 68.0 | % | ||||||||||
| Payout ratio - FFO as adjusted | 56.3 | % | 63.0 | % | 57.4 | % | 68.0 | % | ||||||||||
| Payout ratio - FAD | 66.7 | % | 70.8 | % | 63.6 | % | 75.6 | % | ||||||||||
| (1) | See page 30 for our definition of these non-GAAP measurements. Individual line items included in FFO and FAD calculations include results from discontinued operations where applicable. |
| (2) | Fixed asset additions exclude development, investment, revenue enhancing and non-recurring capital additions. |
| (3) | The Company has excluded 125 and 488 common share equivalents from the three and six months ended June 30, 2012 calculation, respectively, and 502 and 493 common share equivalents from the three and six months ended June 30, 2011 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. |
10
| Associated Estates Realty Corporation |
Discontinued Operations (1) |
| Three Months Ended June 30, 2012 and 2011 |
| (Unaudited; dollar amounts in thousands) |
| Three Months Ended | |||||||||
| June 30, | |||||||||
| 2012 | 2011 | ||||||||
| REVENUE | |||||||||
| Property Revenue | $ | 1,642 | $ | 3,547 | |||||
| EXPENSES | |||||||||
| Property operating and maintenance | 1,020 | 1,756 | |||||||
| Depreciation and amortization | 425 | 920 | |||||||
| Total expenses | 1,445 | 2,676 | |||||||
| Operating income | 197 | 871 | |||||||
| Interest expense | — | (322 | ) | ||||||
| Gain on disposition of properties | 22,859 | — | |||||||
| Income from discontinued operations | $ | 23,056 | $ | 549 | |||||
| (1) | 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 five properties disposed of in 2012 and two properties disposed of in 2011.
11
| Associated Estates Realty Corporation |
Discontinued Operations (1) |
| Six Months Ended June 30, 2012 and 2011 |
| (Unaudited; dollar amounts in thousands) |
| Six Months Ended | |||||||||
| June 30, | |||||||||
| 2012 | 2011 | ||||||||
| REVENUE | |||||||||
| Property revenue | $ | 4,194 | $ | 7,002 | |||||
| EXPENSE | |||||||||
| Property operating and maintenance | 2,252 | 3,523 | |||||||
| Depreciation and amortization | 1,047 | 1,828 | |||||||
| Total expenses | 3,299 | 5,351 | |||||||
| Operating income | 895 | 1,651 | |||||||
| Interest expense | (246 | ) | (767 | ) | |||||
| Gain on disposition of properties | 22,819 | — | |||||||
| Income from discontinued operations | $ | 23,468 | $ | 884 | |||||
| (1) | 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 five properties disposed of in 2012 and two properties disposed of in 2011.
12
| Associated Estates Realty Corporation |
| Development Pipeline |
| As of June 30, 2012 |
| (Unaudited; dollar amounts in thousands) |
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 page 2 of this document for a list of risk factors.
Current Development
| Total | |||||||||||||||||||||||||||||
| Estimated | Estimated/Actual Dates for | ||||||||||||||||||||||||||||
| Under | Ownership | Total | Capital | Cost to | Total | Construction | Initial | Construction | Stabilized | % | % | ||||||||||||||||||
| Construction | % | Units | Cost (1) | Date | Debt | Start | Occupancy | Completion | Operations (2) | Leased | Occupied | ||||||||||||||||||
| Vista Germantown | 90.0% | 242 | $ | 36,200 | $ | 35,462 | $ | 18,989 | Q4 2010 | Q1 2012 | Q3 2012 | Q4 2012 | 84.3% | 72.0% | |||||||||||||||
| Nashville, TN | |||||||||||||||||||||||||||||
| San Raphael Phase II | 100.0% | 99 | $ | 13,750 | $ | 1,554 | $ | — | Q2 2012 | Q3 2013 | Q4 2013 | Q1 2014 | N/A | N/A | |||||||||||||||
| Dallas, TX | |||||||||||||||||||||||||||||
| Total | 341 | $ | 49,950 | $ | 37,016 | $ | 18,989 | ||||||||||||||||||||||
Future Development Pipeline - Unimproved Land
| Estimated Number | ||||||||||
| Name | Location | Ownership % | of Units (3) | Cost to Date | ||||||
| Dwell Turtle Creek | Dallas, Texas | 100.0% | 265 | $ | 7,524 | |||||
| Dwell Bethesda | Bethesda, Maryland | 97.0% | 140 | $ | 14,132 | |||||
| The Desmond on Wilshire | Los Angeles, California | 100.0% | 175 | $ | 17,698 | |||||
| Total | 580 | $ | 39,354 | |||||||
| (1) | Total capital cost represents estimated costs for projects under development inclusive of all capitalized costs in accordance with GAAP. |
| (2) | We define stabilized occupancy as the earlier of the attainment of 93.0% physical occupancy or one year after the completion of construction. |
| (3) | Based on current projections as of July 24, 2012. |
13
| 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) |
| Six Months Ended | ||||||||||
| Estimated | June 30, 2012 | |||||||||
| GAAP Useful | Cost Per | |||||||||
| Life (Years) | Amount | Unit (1) | ||||||||
| OPERATING EXPENSES RELATED TO REPAIRS AND MAINTENANCE | ||||||||||
Repairs and maintenance (2) | $ | 5,696 | $ | 414 | ||||||
Maintenance personnel labor cost (2) | 3,718 | 271 | ||||||||
| Total Operating Expenses Related to Repairs and Maintenance | 9,414 | 685 | ||||||||
| CAPITAL EXPENDITURES | ||||||||||
Recurring Capital Expenditures (3) | ||||||||||
| Amenities | 5 | 226 | 17 | |||||||
| Appliances | 5 | 599 | 44 | |||||||
| Building improvements | 14 | 748 | 54 | |||||||
| Carpet and flooring | 5 | 1,574 | 115 | |||||||
| Office/Model | 5 | 60 | 4 | |||||||
| HVAC and mechanicals | 15 | 459 | 33 | |||||||
| Landscaping and grounds | 14 | 922 | 67 | |||||||
| Suite improvements | 5 | 29 | 2 | |||||||
| Total Recurring Capital Expenditures - Properties | 4,617 | 336 | ||||||||
| Corporate capital expenditures | 149 | 11 | ||||||||
| Total Recurring Capital Expenditures | 4,766 | 347 | ||||||||
| Total Recurring Capital Expenditures and Repairs and Maintenance | $ | 14,180 | $ | 1,032 | ||||||
| Total Recurring Capital Expenditures | $ | 4,766 | ||||||||
Investment/Revenue Enhancing/Non-Recurring Expenditures (4) | ||||||||||
| Building improvements - unit upgrades | Various | 441 | ||||||||
| Building improvements - other | 20 | 274 | ||||||||
| Ground improvements | Various | 52 | ||||||||
| Total Investment/Revenue Enhancing/Non-Recurring Expenditures | 767 | |||||||||
| Grand Total Capital Expenditures | $ | 5,533 | ||||||||
| (1) | Calculated using weighted average units owned during the six months ended June 30, 2012 of 13,739. |
| (2) | Included in property operating and maintenance expense in the Consolidated Statements of Operations and Comprehensive Income. |
| (3) | See page 32 for our definition of recurring fixed asset additions. |
| (4) | See page 32 for our definition of investment/revenue enhancing and/or non-recurring fixed asset additions. |
14
| Associated Estates Realty Corporation |
| Construction and Other Services, General and Administrative Expense, Development |
| Costs and Personnel - Allocated |
| For the Three and Six Months Ended June 30, 2012 and 2011 |
| (Unaudited; in thousands) |
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Construction and Other Services | ||||||||||||||||
| Revenue | $ | — | $ | 5,793 | $ | — | $ | 10,465 | ||||||||
| Expense | 83 | 5,819 | 153 | 10,770 | ||||||||||||
| Construction and other services net (loss) income | $ | (83 | ) | $ | (26 | ) | $ | (153 | ) | $ | (305 | ) | ||||
| General and Administrative, Development Costs | ||||||||||||||||
| and Personnel - Allocated | ||||||||||||||||
General and administrative expense (1) | $ | 4,264 | $ | 3,959 | $ | 8,633 | $ | 8,129 | ||||||||
| Development costs | 297 | 102 | 607 | 176 | ||||||||||||
Personnel - allocated (2) | 987 | 839 | 1,935 | 1,669 | ||||||||||||
| Total expense | $ | 5,548 | $ | 4,900 | $ | 11,175 | $ | 9,974 | ||||||||
| (1) | As reported per the Consolidated Statement of Operations and Comprehensive Income. |
| (2) | Represents general and administrative expense allocations to property operating and maintenance expenses. |
15
| Associated Estates Realty Corporation |
| Same Community Data |
| Operating Results for the Last Five Quarters |
| (Unaudited; in thousands, except unit totals and per unit amounts) |
| Quarter Ended | ||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
| 2012 | 2012 | 2011 | 2011 | 2011 | ||||||||||||||||
| Property Revenue | $ | 38,194 | $ | 37,266 | $ | 36,612 | $ | 36,859 | $ | 36,068 | ||||||||||
| Property Operating and | ||||||||||||||||||||
| Maintenance Expenses | ||||||||||||||||||||
| Personnel - on site | 3,410 | 3,533 | 3,278 | 3,171 | 3,167 | |||||||||||||||
| Personnel - allocated | 902 | 876 | 851 | 863 | 840 | |||||||||||||||
| Advertising | 395 | 382 | 369 | 378 | 374 | |||||||||||||||
| Utilities | 1,797 | 1,880 | 1,859 | 1,987 | 1,727 | |||||||||||||||
| Repairs and maintenance | 2,601 | 2,230 | 2,002 | 2,504 | 2,471 | |||||||||||||||
| Real estate taxes and insurance | 5,017 | 4,867 | 4,427 | 4,664 | 4,536 | |||||||||||||||
| Other operating | 1,078 | 1,049 | 1,166 | 1,200 | 1,167 | |||||||||||||||
| Total Expenses | 15,200 | 14,817 | 13,952 | 14,767 | 14,282 | |||||||||||||||
| Property Net Operating Income | $ | 22,994 | $ | 22,449 | $ | 22,660 | $ | 22,092 | $ | 21,786 | ||||||||||
| Operating Margin | 60.2 | % | 60.2 | % | 61.9 | % | 59.9 | % | 60.4 | % | ||||||||||
| Personnel - Allocated to | ||||||||||||||||||||
| Property Revenue | 2.4 | % | 2.4 | % | 2.3 | % | 2.3 | % | 2.3 | % | ||||||||||
| Total Number of Units | 12,020 | 12,020 | 12,020 | 12,020 | 12,020 | |||||||||||||||
| NOI Per Unit | $ | 1,913 | $ | 1,868 | $ | 1,885 | $ | 1,838 | $ | 1,812 | ||||||||||
Average Net Rents Per Unit (1) | $ | 1,065 | $ | 1,057 | $ | 1,058 | $ | 1,043 | $ | 1,020 | ||||||||||
Average Net Rent Collected Per Unit (2) | $ | 1,024 | $ | 1,002 | $ | 984 | $ | 986 | $ | 969 | ||||||||||
Physical Occupancy - End of Period (3) | 97.0 | % | 97.3 | % | 95.1 | % | 95.0 | % | 96.7 | % | ||||||||||
| (1) | Represents gross potential rents less concessions. |
| (2) | Represents gross potential rents less vacancies and concessions. |
| (3) | Is defined as number of units occupied divided by total number of units. |
16
| Associated Estates Realty Corporation |
| Same Community Data |
| Operating Results for the Six Months Ended June 30, 2012 and 2011 |
| (Unaudited; in thousands, except unit totals and per unit amounts) |
| Six Months Ended | ||||||||
| June 30, | ||||||||
| 2012 | 2011 | |||||||
| Property Revenue | $ | 75,460 | $ | 71,306 | ||||
| Property Operating and Maintenance Expenses | ||||||||
| Personnel - on site | 6,943 | 6,496 | ||||||
| Personnel - allocated | 1,778 | 1,669 | ||||||
| Advertising | 777 | 726 | ||||||
| Utilities | 3,677 | 3,622 | ||||||
| Repairs and maintenance | 4,831 | 4,654 | ||||||
| Real estate taxes and insurance | 9,884 | 9,501 | ||||||
| Other operating | 2,127 | 2,188 | ||||||
| Total Expenses | 30,017 | 28,856 | ||||||
| Property Net Operating Income | $ | 45,443 | $ | 42,450 | ||||
| Operating Margin | 60.2 | % | 59.5 | % | ||||
| Personnel - Allocated to Property Revenue | 2.4 | % | 2.3 | % | ||||
| Total Number of Units | 12,020 | 12,020 | ||||||
| NOI Per Unit | $ | 3,781 | $ | 3,532 | ||||
Average Net Rents Per Unit (1) | $ | 1,061 | $ | 1,014 | ||||
Average Net Rent Collected Per Unit (2) | $ | 1,013 | $ | 958 | ||||
Physical Occupancy - End of Period (3) | 97.0 | % | 96.7 | % | ||||
| (1) | Represents gross potential rents less concessions. |
| (2) | Represents gross potential rents less vacancies and concessions. |
| (3) | Is defined as number of units occupied divided by total number of units. |
17
| Associated Estates Realty Corporation |
| Same Community Data |
| As of June 30, 2012 and 2011 |
| (Unaudited) |
| 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 | Q2 | Q2 | % | Q2 | Q2 | % | Q2 | Q2 | % | Q2 | Q2 | Q2 | Q2 | |||||||||||||||||||||||||||||||||||||
| Units | Age (6) | 2012 | 2011 | Change | 2012 | 2011 | Change | 2012 | 2011 | Change | 2012 | 2011 | 2012 | 2011 | |||||||||||||||||||||||||||||||||||||
| Midwest Properties | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Indiana | 836 | 16 | $ | 869 | $ | 819 | 6.1 | % | $ | 898 | $ | 862 | 4.2 | % | $ | 924 | $ | 920 | 0.4 | % | 97.6 | % | 97.2 | % | 73.2 | % | 87.1 | % | |||||||||||||||||||||||
| Southeast Michigan | 1,778 | 19 | 860 | 798 | 7.8 | % | 897 | 830 | 8.1 | % | 932 | 911 | 2.3 | % | 96.7 | % | 97.1 | % | 58.0 | % | 52.6 | % | |||||||||||||||||||||||||||||
| Western Michigan | 438 | 21 | 783 | 722 | 8.4 | % | 803 | 760 | 5.7 | % | 821 | 790 | 3.9 | % | 98.2 | % | 98.2 | % | 69.4 | % | 67.6 | % | |||||||||||||||||||||||||||||
| Central Ohio | 2,171 | 21 | 873 | 812 | 7.5 | % | 894 | 846 | 5.7 | % | 902 | 868 | 3.9 | % | 98.2 | % | 97.7 | % | 57.7 | % | 61.5 | % | |||||||||||||||||||||||||||||
| Northeastern Ohio | 1,303 | 17 | 1,024 | 968 | 5.8 | % | 1,051 | 996 | 5.5 | % | 1,064 | 1,038 | 2.5 | % | 98.0 | % | 98.0 | % | 52.8 | % | 48.5 | % | |||||||||||||||||||||||||||||
| Total Midwest | 6,526 | 19 | 893 | 834 | 7.1 | % | 921 | 868 | 6.1 | % | 940 | 915 | 2.7 | % | 97.7 | % | 97.5 | % | 59.6 | % | 60.2 | % | |||||||||||||||||||||||||||||
| Mid-Atlantic Properties | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Maryland | 315 | 26 | 1,463 | 1,415 | 3.4 | % | 1,520 | 1,469 | 3.5 | % | 1,549 | 1,519 | 2.0 | % | 97.1 | % | 97.1 | % | 38.1 | % | 49.5 | % | |||||||||||||||||||||||||||||
| Metro DC | 352 | 26 | 1,298 | 1,257 | 3.3 | % | 1,370 | 1,318 | 3.9 | % | 1,378 | 1,363 | 1.1 | % | 95.5 | % | 96.9 | % | 54.5 | % | 47.7 | % | |||||||||||||||||||||||||||||
| Northern Virginia | 1,272 | 7 | 1,473 | 1,384 | 6.4 | % | 1,532 | 1,450 | 5.7 | % | 1,560 | 1,512 | 3.2 | % | 97.2 | % | 95.8 | % | 50.2 | % | 53.7 | % | |||||||||||||||||||||||||||||
| Southeastern Virginia | 864 | 6 | 1,129 | 1,092 | 3.4 | % | 1,183 | 1,145 | 3.3 | % | 1,212 | 1,222 | (0.8 | )% | 97.2 | % | 98.6 | % | 53.8 | % | 57.1 | % | |||||||||||||||||||||||||||||
| Total Mid-Atlantic | 2,803 | 11 | 1,344 | 1,282 | 4.8 | % | 1,403 | 1,342 | 4.5 | % | 1,429 | 1,404 | 1.8 | % | 97.0 | % | 96.9 | % | 50.8 | % | 53.8 | % | |||||||||||||||||||||||||||||
| Southeast Properties | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Central Florida | 288 | 9 | �� | 997 | 946 | 5.4 | % | 1,053 | 1,009 | 4.4 | % | 1,113 | 1,145 | (2.8 | )% | 97.9 | % | 95.5 | % | 61.1 | % | 55.6 | % | ||||||||||||||||||||||||||||
| Southeast Florida | 984 | 15 | 1,251 | 1,212 | 3.2 | % | 1,315 | 1,299 | 1.2 | % | 1,369 | 1,432 | (4.4 | )% | 95.6 | % | 95.9 | % | 65.9 | % | 58.1 | % | |||||||||||||||||||||||||||||
| Georgia | 1,197 | 14 | 824 | 795 | 3.6 | % | 878 | 888 | (1.1 | )% | 967 | 1,071 | (9.7 | )% | 94.3 | % | 92.4 | % | 57.8 | % | 58.8 | % | |||||||||||||||||||||||||||||
| Total Southeast | 2,469 | 13 | 1,015 | 979 | 3.7 | % | 1,072 | 1,066 | 0.6 | % | 1,144 | 1,223 | (6.5 | )% | 95.3 | % | 94.2 | % | 61.4 | % | 58.2 | % | |||||||||||||||||||||||||||||
| Southwest Properties | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Texas | 222 | 13 | 922 | 873 | 5.6 | % | 959 | 893 | 7.4 | % | 1,019 | 1,032 | (1.3 | )% | 98.2 | % | 99.5 | % | 48.6 | % | 48.6 | % | |||||||||||||||||||||||||||||
| Total Southwest | 222 | 13 | 922 | 873 | 5.6 | % | 959 | 893 | 7.4 | % | 1,019 | 1,032 | (1.3 | )% | 98.2 | % | 99.5 | % | 48.6 | % | 48.6 | % | |||||||||||||||||||||||||||||
| Total/Average Same | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Community | 12,020 | 16 | $ | 1,024 | $ | 969 | 5.7 | % | $ | 1,065 | $ | 1,020 | 4.4 | % | $ | 1,097 | $ | 1,095 | 0.2 | % | 97.0 | % | 96.7 | % | 57.7 | % | 58.1 | % | |||||||||||||||||||||||
| (1) | Represents gross potential rents less vacancies and concessions for all units divided by the number of units in a market. |
| (2) | Represents gross potential rents less concessions 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. |
18
| Associated Estates Realty Corporation |
| Sequential Property Revenue |
| For the Three Months Ended June 30, 2012 and March 31, 2012 |
| (Unaudited; in thousands, except unit totals) |
| Q2 | Q1 | Q2 | Q1 | ||||||||||||||||||||
| No. of | Physical | Physical | 2012 | 2012 | Increase/ | % | |||||||||||||||||
| Property Revenue | Units | Occupancy (1) | Occupancy (1) | Revenue | Revenue | (Decrease) | Change | ||||||||||||||||
| Same Community | |||||||||||||||||||||||
| Midwest Properties | |||||||||||||||||||||||
| Indiana | 836 | 97.6 | % | 98.0 | % | $ | 2,264 | $ | 2,233 | $ | 31 | 1.4 | % | ||||||||||
| Southeast Michigan | 1,778 | 96.7 | % | 97.6 | % | 4,778 | 4,663 | 115 | 2.5 | % | |||||||||||||
| Western Michigan | 438 | 98.2 | % | 98.9 | % | 1,103 | 1,070 | 33 | 3.1 | % | |||||||||||||
| Central Ohio | 2,171 | 98.2 | % | 98.7 | % | 5,892 | 5,689 | 203 | 3.6 | % | |||||||||||||
| Northeastern Ohio | 1,303 | 98.0 | % | 97.6 | % | 4,146 | 4,039 | 107 | 2.6 | % | |||||||||||||
| Total Midwest Properties | 6,526 | 97.7 | % | 98.1 | % | 18,183 | 17,694 | 489 | 2.8 | % | |||||||||||||
| Mid-Atlantic Properties | |||||||||||||||||||||||
| Maryland | 315 | 97.1 | % | 96.8 | % | 1,410 | 1,394 | 16 | 1.1 | % | |||||||||||||
| Metro DC | 352 | 95.5 | % | 96.0 | % | 1,399 | 1,383 | 16 | 1.2 | % | |||||||||||||
| Northern Virginia | 1,272 | 97.2 | % | 96.2 | % | 5,791 | 5,593 | 198 | 3.5 | % | |||||||||||||
| Southeastern Virginia | 864 | 97.2 | % | 97.1 | % | 3,007 | 2,968 | 39 | 1.3 | % | |||||||||||||
| Total Mid-Atlantic Properties | 2,803 | 97.0 | % | 96.5 | % | 11,607 | 11,338 | 269 | 2.4 | % | |||||||||||||
| Southeast Properties | |||||||||||||||||||||||
| Central Florida | 288 | 97.9 | % | 96.5 | % | 903 | 880 | 23 | 2.6 | % | |||||||||||||
| Southeast Florida | 984 | 95.6 | % | 97.0 | % | 3,810 | 3,804 | 6 | 0.2 | % | |||||||||||||
| Georgia | 1,197 | 94.3 | % | 94.7 | % | 3,063 | 2,928 | 135 | 4.6 | % | |||||||||||||
| Total Southeast Properties | 2,469 | 95.3 | % | 95.8 | % | 7,776 | 7,612 | 164 | 2.2 | % | |||||||||||||
| Southwest Properties | |||||||||||||||||||||||
| Texas | 222 | 98.2 | % | 99.1 | % | 628 | 622 | 6 | 1.0 | % | |||||||||||||
| Total Southwest Properties | 222 | 98.2 | % | 99.1 | % | 628 | 622 | 6 | 1.0 | % | |||||||||||||
| Total Same Community | 12,020 | 97.0 | % | 97.3 | % | 38,194 | 37,266 | 928 | 2.5 | % | |||||||||||||
Acquisitions (2) | |||||||||||||||||||||||
| Southeast Florida | 222 | 94.6 | % | 95.5 | % | 850 | 858 | (8 | ) | (0.9 | )% | ||||||||||||
| Metro DC | 250 | 96.4 | % | 94.0 | % | 1,472 | 1,465 | 7 | 0.5 | % | |||||||||||||
| North Carolina | 205 | 96.1 | % | N/A | 329 | N/A | 329 | N/A | |||||||||||||||
| Texas | 224 | 97.3 | % | 96.0 | % | 667 | 655 | 12 | 1.8 | % | |||||||||||||
| Development | |||||||||||||||||||||||
| Tennessee | 242 | N/A | N/A | 484 | 135 | 349 | 258.5 | % | |||||||||||||||
| Total Property Revenue | 13,163 | 97.0 | % | 97.2 | % | $ | 41,996 | $ | 40,379 | $ | 1,617 | 4.0 | % | ||||||||||
| (1) | Represents physical occupancy at the end of the quarter. |
| (2) | We define acquisition properties as acquired properties which have been owned less than one year. |
19
| Associated Estates Realty Corporation |
| Sequential Property Operating Expenses |
| For the Three Months Ended June 30, 2012 and March 31, 2012 |
| (Unaudited; in thousands, except unit totals) |
| Q2 | Q1 | Q2 | Q1 | ||||||||||||||||||||
| No. of | Physical | Physical | 2012 | 2012 | Increase/ | % | |||||||||||||||||
| Property Operating Expenses | Units | Occupancy (1) | Occupancy (1) | Expenses | Expenses | (Decrease) | Change | ||||||||||||||||
| Same Community | |||||||||||||||||||||||
| Midwest Properties | |||||||||||||||||||||||
| Indiana | 836 | 97.6 | % | 98.0 | % | $ | 916 | $ | 863 | $ | 53 | 6.1 | % | ||||||||||
| Southeast Michigan | 1,778 | 96.7 | % | 97.6 | % | 2,021 | 1,924 | 97 | 5.0 | % | |||||||||||||
| Western Michigan | 438 | 98.2 | % | 98.9 | % | 479 | 474 | 5 | 1.1 | % | |||||||||||||
| Central Ohio | 2,171 | 98.2 | % | 98.7 | % | 2,707 | 2,476 | 231 | 9.3 | % | |||||||||||||
| Northeastern Ohio | 1,303 | 98.0 | % | 97.6 | % | 1,596 | 1,523 | 73 | 4.8 | % | |||||||||||||
| Total Midwest Properties | 6,526 | 97.7 | % | 98.1 | % | 7,719 | 7,260 | 459 | 6.3 | % | |||||||||||||
| Mid-Atlantic Properties | |||||||||||||||||||||||
| Maryland | 315 | 97.1 | % | 96.8 | % | 498 | 487 | 11 | 2.3 | % | |||||||||||||
| Metro DC | 352 | 95.5 | % | 96.0 | % | 409 | 419 | (10 | ) | (2.4 | )% | ||||||||||||
| Northern Virginia | 1,272 | 97.2 | % | 96.2 | % | 1,857 | 1,867 | (10 | ) | (0.5 | )% | ||||||||||||
| Southeastern Virginia | 864 | 97.2 | % | 97.1 | % | 986 | 1,015 | (29 | ) | (2.9 | )% | ||||||||||||
| Total Mid-Atlantic Properties | 2,803 | 97.0 | % | 96.5 | % | 3,750 | 3,788 | (38 | ) | (1.0 | )% | ||||||||||||
| Southeast Properties | |||||||||||||||||||||||
| Central Florida | 288 | 97.9 | % | 96.5 | % | 377 | 360 | 17 | 4.7 | % | |||||||||||||
| Southeast Florida | 984 | 95.6 | % | 97.0 | % | 1,562 | 1,673 | (111 | ) | (6.6 | )% | ||||||||||||
| Georgia | 1,197 | 94.3 | % | 94.7 | % | 1,508 | 1,453 | 55 | 3.8 | % | |||||||||||||
| Total Southeast Properties | 2,469 | 95.3 | % | 95.8 | % | 3,447 | 3,486 | (39 | ) | (1.1 | )% | ||||||||||||
| Southwest Properties | |||||||||||||||||||||||
| Texas | 222 | 98.2 | % | 99.1 | % | 284 | 283 | 1 | 0.4 | % | |||||||||||||
| Total Southwest Properties | 222 | 98.2 | % | 99.1 | % | 284 | 283 | 1 | 0.4 | % | |||||||||||||
| Total Same Community | 12,020 | 97.0 | % | 97.3 | % | 15,200 | 14,817 | 383 | 2.6 | % | |||||||||||||
Acquisitions (2) | |||||||||||||||||||||||
| Southeast Florida | 222 | 94.6 | % | 95.5 | % | 397 | 404 | (7 | ) | (1.7 | )% | ||||||||||||
| Metro DC | 250 | 96.4 | % | 94.0 | % | 504 | 541 | (37 | ) | (6.8 | )% | ||||||||||||
| North Carolina | 205 | 96.1 | % | N/A | 108 | N/A | 108 | N/A | |||||||||||||||
| Texas | 224 | 97.3 | % | 96.0 | % | 325 | 335 | (10 | ) | (3.0 | )% | ||||||||||||
| Development | |||||||||||||||||||||||
| Tennessee | 242 | N/A | N/A | 202 | 113 | 89 | 78.8 | % | |||||||||||||||
| Total Property Operating Expenses | 13,163 | 97.0 | % | 97.2 | % | $ | 16,736 | $ | 16,210 | $ | 526 | 3.2 | % | ||||||||||
| (1) | Represents physical occupancy at the end of the quarter. |
| (2) | We define acquisition properties as acquired properties which have been owned less than one year. |
20
| Associated Estates Realty Corporation |
| Sequential Property Net Operating Income (Property NOI) |
| For the Three Months Ended June 30, 2012 and March 31, 2012 |
| (Unaudited; in thousands, except unit totals) |
| Q2 | Q1 | Q2 | Q1 | ||||||||||||||||||||
| No. of | Physical | Physical | 2012 | 2012 | Increase/ | % | |||||||||||||||||
Property NOI (1) | Units | Occupancy (2) | Occupancy (2) | NOI | NOI | (Decrease) | Change | ||||||||||||||||
| Same Community | |||||||||||||||||||||||
| Midwest Properties | |||||||||||||||||||||||
| Indiana | 836 | 97.6 | % | 98.0 | % | $ | 1,348 | $ | 1,370 | $ | (22 | ) | (1.6 | )% | |||||||||
| Southeast Michigan | 1,778 | 96.7 | % | 97.6 | % | 2,757 | 2,739 | 18 | 0.7 | % | |||||||||||||
| Western Michigan | 438 | 98.2 | % | 98.9 | % | 624 | 596 | 28 | 4.7 | % | |||||||||||||
| Central Ohio | 2,171 | 98.2 | % | 98.7 | % | 3,185 | 3,213 | (28 | ) | (0.9 | )% | ||||||||||||
| Northeastern Ohio | 1,303 | 98.0 | % | 97.6 | % | 2,550 | 2,516 | 34 | 1.4 | % | |||||||||||||
| Total Midwest Properties | 6,526 | 97.7 | % | 98.1 | % | 10,464 | 10,434 | 30 | 0.3 | % | |||||||||||||
| Mid-Atlantic Properties | |||||||||||||||||||||||
| Maryland | 315 | 97.1 | % | 96.8 | % | 912 | 907 | 5 | 0.6 | % | |||||||||||||
| Metro DC | 352 | 95.5 | % | 96.0 | % | 990 | 964 | 26 | 2.7 | % | |||||||||||||
| Northern Virginia | 1,272 | 97.2 | % | 96.2 | % | 3,934 | 3,726 | 208 | 5.6 | % | |||||||||||||
| Southeastern Virginia | 864 | 97.2 | % | 97.1 | % | 2,021 | 1,953 | 68 | 3.5 | % | |||||||||||||
| Total Mid-Atlantic Properties | 2,803 | 97.0 | % | 96.5 | % | 7,857 | 7,550 | 307 | 4.1 | % | |||||||||||||
| Southeast Properties | |||||||||||||||||||||||
| Central Florida | 288 | 97.9 | % | 96.5 | % | 526 | 520 | 6 | 1.2 | % | |||||||||||||
| Southeast Florida | 984 | 95.6 | % | 97.0 | % | 2,248 | 2,131 | 117 | 5.5 | % | |||||||||||||
| Georgia | 1,197 | 94.3 | % | 94.7 | % | 1,555 | 1,475 | 80 | 5.4 | % | |||||||||||||
| Total Southeast Properties | 2,469 | 95.3 | % | 95.8 | % | 4,329 | 4,126 | 203 | 4.9 | % | |||||||||||||
| Southwest Properties | |||||||||||||||||||||||
| Texas | 222 | 98.2 | % | 99.1 | % | 344 | 339 | 5 | 1.5 | % | |||||||||||||
| Total Southwest Properties | 222 | 98.2 | % | 99.1 | % | 344 | 339 | 5 | 1.5 | % | |||||||||||||
| Total Same Community | 12,020 | 97.0 | % | 97.3 | % | 22,994 | 22,449 | 545 | 2.4 | % | |||||||||||||
Acquisitions (3) | |||||||||||||||||||||||
| Southeast Florida | 222 | 94.6 | % | 95.5 | % | 453 | 454 | (1 | ) | (0.2 | )% | ||||||||||||
| Metro DC | 250 | 96.4 | % | 94.0 | % | 968 | 924 | 44 | 4.8 | % | |||||||||||||
| North Carolina | 205 | 96.1 | % | N/A | 221 | N/A | 221 | N/A | |||||||||||||||
| Texas | 224 | 97.3 | % | 96.0 | % | 342 | 320 | 22 | 6.9 | % | |||||||||||||
| Development | |||||||||||||||||||||||
| Tennessee | 242 | N/A | N/A | 282 | 22 | 260 | 1,181.8 | % | |||||||||||||||
| Total Property NOI | 13,163 | 97.0 | % | 97.2 | % | $ | 25,260 | $ | 24,169 | $ | 1,091 | 4.5 | % | ||||||||||
| (1) | See page 32 for a reconciliation of net income (loss) attributable to AERC to this non-GAAP measurement and for our definition of this non-GAAP measurement. |
| (2) | Represents physical occupancy at the end of the quarter. |
| (3) | We define acquisition properties as acquired properties which have been owned less than one year. |
21
| Associated Estates Realty Corporation |
| Second Quarter Property Revenue |
| For the Three Months Ended June 30, 2012 and 2011 |
| (Unaudited; in thousands, except unit totals) |
| 2012 | 2011 | Q2 | Q2 | |||||||||||||||||||||
| No. of | Physical | Physical | 2012 | 2011 | Increase/ | % | ||||||||||||||||||
| Property Revenue | Units | Occupancy (1) | Occupancy (1) | Revenue | Revenue | (Decrease) | Change | |||||||||||||||||
| Same Community | ||||||||||||||||||||||||
| Midwest Properties | ||||||||||||||||||||||||
| Indiana | 836 | 97.6 | % | 97.2 | % | $ | 2,264 | $ | 2,125 | $ | 139 | 6.5 | % | |||||||||||
| Southeast Michigan | 1,778 | 96.7 | % | 97.1 | % | 4,778 | 4,432 | 346 | 7.8 | % | ||||||||||||||
| Western Michigan | 438 | 98.2 | % | 98.2 | % | 1,103 | 1,016 | 87 | 8.6 | % | ||||||||||||||
| Central Ohio | 2,171 | 98.2 | % | 97.7 | % | 5,892 | 5,467 | 425 | 7.8 | % | ||||||||||||||
| Northeastern Ohio | 1,303 | 98.0 | % | 98.0 | % | 4,146 | 3,902 | 244 | 6.3 | % | ||||||||||||||
| Total Midwest Properties | 6,526 | 97.7 | % | 97.5 | % | 18,183 | 16,942 | 1,241 | 7.3 | % | ||||||||||||||
| Mid-Atlantic Properties | ||||||||||||||||||||||||
| Maryland | 315 | 97.1 | % | 97.1 | % | 1,410 | 1,360 | 50 | 3.7 | % | ||||||||||||||
| Metro DC | 352 | 95.5 | % | 96.9 | % | 1,399 | 1,349 | 50 | 3.7 | % | ||||||||||||||
| Northern Virginia | 1,272 | 97.2 | % | 95.8 | % | 5,791 | 5,429 | 362 | 6.7 | % | ||||||||||||||
| Southeastern Virginia | 864 | 97.2 | % | 98.6 | % | 3,007 | 2,917 | 90 | 3.1 | % | ||||||||||||||
| Total Mid-Atlantic Properties | 2,803 | 97.0 | % | 96.9 | % | 11,607 | 11,055 | 552 | 5.0 | % | ||||||||||||||
| Southeast Properties | ||||||||||||||||||||||||
| Central Florida | 288 | 97.9 | % | 95.5 | % | 903 | 847 | 56 | 6.6 | % | ||||||||||||||
| Southeast Florida | 984 | 95.6 | % | 95.9 | % | 3,810 | 3,681 | 129 | 3.5 | % | ||||||||||||||
| Georgia | 1,197 | 94.3 | % | 92.4 | % | 3,063 | 2,953 | 110 | 3.7 | % | ||||||||||||||
| Total Southeast Properties | 2,469 | 95.3 | % | 94.2 | % | 7,776 | 7,481 | 295 | 3.9 | % | ||||||||||||||
| Southwest Properties | ||||||||||||||||||||||||
| Texas | 222 | 98.2 | % | 99.5 | % | 628 | 590 | 38 | 6.4 | % | ||||||||||||||
| Total Southwest Properties | 222 | 98.2 | % | 99.5 | % | 628 | 590 | 38 | 6.4 | % | ||||||||||||||
| Total Same Community | 12,020 | 97.0 | % | 96.7 | % | 38,194 | 36,068 | 2,126 | 5.9 | % | ||||||||||||||
Acquisitions (2) | ||||||||||||||||||||||||
| Southeast Florida | 222 | 94.6 | % | 92.8 | % | 850 | 139 | 711 | 511.5 | % | ||||||||||||||
| Metro DC | 250 | 96.4 | % | N/A | 1,472 | N/A | 1,472 | N/A | ||||||||||||||||
| North Carolina | 205 | 96.1 | % | N/A | 329 | N/A | 329 | N/A | ||||||||||||||||
| Texas | 224 | 97.3 | % | N/A | 667 | N/A | 667 | N/A | ||||||||||||||||
| Development | ||||||||||||||||||||||||
| Tennessee | 242 | N/A | N/A | 484 | N/A | 484 | N/A | |||||||||||||||||
| Total Property Revenue | 13,163 | 97.0 | % | 96.7 | % | $ | 41,996 | $ | 36,207 | $ | 5,789 | 16.0 | % | |||||||||||
| (1) | Represents physical occupancy at the end of the quarter. |
| (2) | We define acquisition properties as acquired properties which have been owned less than one year. |
22
| Associated Estates Realty Corporation |
| Second Quarter Property Operating Expenses |
| For the Three Months Ended June 30, 2012 and 2011 |
| (Unaudited; in thousands, except unit totals) |
| 2012 | 2011 | Q2 | Q2 | ||||||||||||||||||||
| No. of | Physical | Physical | 2012 | 2011 | Increase/ | % | |||||||||||||||||
| Property Operating Expenses | Units | Occupancy (1) | Occupancy (1) | Expenses | Expenses | (Decrease) | Change | ||||||||||||||||
| Same Community | |||||||||||||||||||||||
| Midwest Properties | |||||||||||||||||||||||
| Indiana | 836 | 97.6 | % | 97.2 | % | $ | 916 | $ | 838 | $ | 78 | 9.3 | % | ||||||||||
| Southeast Michigan | 1,778 | 96.7 | % | 97.1 | % | 2,021 | 1,967 | 54 | 2.7 | % | |||||||||||||
| Western Michigan | 438 | 98.2 | % | 98.2 | % | 479 | 479 | — | — | % | |||||||||||||
| Central Ohio | 2,171 | 98.2 | % | 97.7 | % | 2,707 | 2,451 | 256 | 10.4 | % | |||||||||||||
| Northeastern Ohio | 1,303 | 98.0 | % | 98.0 | % | 1,596 | 1,547 | 49 | 3.2 | % | |||||||||||||
| Total Midwest Properties | 6,526 | 97.7 | % | 97.5 | % | 7,719 | 7,282 | 437 | 6.0 | % | |||||||||||||
| Mid-Atlantic Properties | |||||||||||||||||||||||
| Maryland | 315 | 97.1 | % | 97.1 | % | 498 | 509 | (11 | ) | (2.2 | )% | ||||||||||||
| Metro DC | 352 | 95.5 | % | 96.9 | % | 409 | 432 | (23 | ) | (5.3 | )% | ||||||||||||
| Northern Virginia | 1,272 | 97.2 | % | 95.8 | % | 1,857 | 1,522 | 335 | 22.0 | % | |||||||||||||
| Southeastern Virginia | 864 | 97.2 | % | 98.6 | % | 986 | 944 | 42 | 4.4 | % | |||||||||||||
| Total Mid-Atlantic Properties | 2,803 | 97.0 | % | 96.9 | % | 3,750 | 3,407 | 343 | 10.1 | % | |||||||||||||
| Southeast Properties | |||||||||||||||||||||||
| Central Florida | 288 | 97.9 | % | 95.5 | % | 377 | 322 | 55 | 17.1 | % | |||||||||||||
| Southeast Florida | 984 | 95.6 | % | 95.9 | % | 1,562 | 1,512 | 50 | 3.3 | % | |||||||||||||
| Georgia | 1,197 | 94.3 | % | 92.4 | % | 1,508 | 1,453 | 55 | 3.8 | % | |||||||||||||
| Total Southeast Properties | 2,469 | 95.3 | % | 94.2 | % | 3,447 | 3,287 | 160 | 4.9 | % | |||||||||||||
| Southwest Properties | |||||||||||||||||||||||
| Texas | 222 | 98.2 | % | 99.5 | % | 284 | 306 | (22 | ) | (7.2 | )% | ||||||||||||
| Total Southwest Properties | 222 | 98.2 | % | 99.5 | % | 284 | 306 | (22 | ) | (7.2 | )% | ||||||||||||
| Total Same Community | 12,020 | 97.0 | % | 96.7 | % | 15,200 | 14,282 | 918 | 6.4 | % | |||||||||||||
Acquisitions (2) | |||||||||||||||||||||||
| Southeast Florida | 222 | 94.6 | % | 92.8 | % | 397 | 62 | 335 | 540.3 | % | |||||||||||||
| Metro DC | 250 | 96.4 | % | N/A | 504 | N/A | 504 | N/A | |||||||||||||||
| North Carolina | 205 | 96.1 | % | N/A | 108 | N/A | 108 | N/A | |||||||||||||||
| Texas | 224 | 97.3 | % | N/A | 325 | N/A | 325 | N/A | |||||||||||||||
| Development | |||||||||||||||||||||||
| Tennessee | 242 | N/A | N/A | 202 | N/A | 202 | N/A | ||||||||||||||||
| Total Property Operating Expenses | 13,163 | 97.0 | % | 96.7 | % | $ | 16,736 | $ | 14,344 | $ | 2,392 | 16.7 | % | ||||||||||
| (1) | Represents physical occupancy at the end of the quarter. |
| (2) | We define acquisition properties as acquired properties which have been owned less than one year. |
23
| Associated Estates Realty Corporation |
| Second Quarter Property Net Operating Income (Property NOI) |
| For the Three Months Ended June 30, 2012 and 2011 |
| (Unaudited; in thousands, except unit totals) |
| 2012 | 2011 | Q2 | Q2 | ||||||||||||||||||||
| No. of | Physical | Physical | 2012 | 2011 | Increase/ | % | |||||||||||||||||
Property NOI (1) | Units | Occupancy (2) | Occupancy (2) | NOI | NOI | (Decrease) | Change | ||||||||||||||||
| Same Community | |||||||||||||||||||||||
| Midwest Properties | |||||||||||||||||||||||
| Indiana | 836 | 97.6 | % | 97.2 | % | $ | 1,348 | $ | 1,287 | $ | 61 | 4.7 | % | ||||||||||
| Southeast Michigan | 1,778 | 96.7 | % | 97.1 | % | 2,757 | 2,465 | 292 | 11.8 | % | |||||||||||||
| Western Michigan | 438 | 98.2 | % | 98.2 | % | 624 | 537 | 87 | 16.2 | % | |||||||||||||
| Central Ohio | 2,171 | 98.2 | % | 97.7 | % | 3,185 | 3,016 | 169 | 5.6 | % | |||||||||||||
| Northeastern Ohio | 1,303 | 98.0 | % | 98.0 | % | 2,550 | 2,355 | 195 | 8.3 | % | |||||||||||||
| Total Midwest Properties | 6,526 | 97.7 | % | 97.5 | % | 10,464 | 9,660 | 804 | 8.3 | % | |||||||||||||
| Mid-Atlantic Properties | |||||||||||||||||||||||
| Maryland | 315 | 97.1 | % | 97.1 | % | 912 | 851 | 61 | 7.2 | % | |||||||||||||
| Metro DC | 352 | 95.5 | % | 96.9 | % | 990 | 917 | 73 | 8.0 | % | |||||||||||||
| Northern Virginia | 1,272 | 97.2 | % | 95.8 | % | 3,934 | 3,907 | 27 | 0.7 | % | |||||||||||||
| Southeastern Virginia | 864 | 97.2 | % | 98.6 | % | 2,021 | 1,973 | 48 | 2.4 | % | |||||||||||||
| Total Mid-Atlantic Properties | 2,803 | 97.0 | % | 96.9 | % | 7,857 | 7,648 | 209 | 2.7 | % | |||||||||||||
| Southeast Properties | |||||||||||||||||||||||
| Central Florida | 288 | 97.9 | % | 95.5 | % | 526 | 525 | 1 | 0.2 | % | |||||||||||||
| Southeast Florida | 984 | 95.6 | % | 95.9 | % | 2,248 | 2,169 | 79 | 3.6 | % | |||||||||||||
| Georgia | 1,197 | 94.3 | % | 92.4 | % | 1,555 | 1,500 | 55 | 3.7 | % | |||||||||||||
| Total Southeast Properties | 2,469 | 95.3 | % | 94.2 | % | 4,329 | 4,194 | 135 | 3.2 | % | |||||||||||||
| Southwest Properties | |||||||||||||||||||||||
| Texas | 222 | 98.2 | % | 99.5 | % | 344 | 284 | 60 | 21.1 | % | |||||||||||||
| Total Southwest Properties | 222 | 98.2 | % | 99.5 | % | 344 | 284 | 60 | 21.1 | % | |||||||||||||
| Total Same Community | 12,020 | 97.0 | % | 96.7 | % | 22,994 | 21,786 | 1,208 | 5.5 | % | |||||||||||||
Acquisitions (3) | |||||||||||||||||||||||
| Southeast Florida | 222 | 94.6 | % | 92.8 | % | 453 | 77 | 376 | 488.3 | % | |||||||||||||
| Metro DC | 250 | 96.4 | % | N/A | 968 | N/A | 968 | N/A | |||||||||||||||
| North Carolina | 205 | 96.1 | % | N/A | 221 | N/A | 221 | N/A | |||||||||||||||
| Texas | 224 | 97.3 | % | N/A | 342 | N/A | 342 | N/A | |||||||||||||||
| Development | |||||||||||||||||||||||
| Tennessee | 242 | N/A | N/A | 282 | N/A | 282 | N/A | ||||||||||||||||
| Total Property NOI | 13,163 | 97.0 | % | 96.7 | % | $ | 25,260 | $ | 21,863 | $ | 3,397 | 15.5 | % | ||||||||||
| (1) | See page 32 for a reconciliation of net income (loss) attributable to AERC to this non-GAAP measurement and for our definition of this non-GAAP measurement. |
| (2) | Represents physical occupancy at the end of the quarter. |
| (3) | We define acquisition properties as acquired properties which have been owned less than one year. |
24
| Associated Estates Realty Corporation |
| Year-to-Date Property Revenue |
| For the Six Months Ended June 30, 2012 and 2011 |
| (Unaudited; in thousands, except unit totals) |
| 2012 | 2011 | YTD | YTD | ||||||||||||||||||||
| No. of | Physical | Physical | 2012 | 2011 | Increase/ | % | |||||||||||||||||
| Property Revenue | Units | Occupancy (1) | Occupancy (1) | Revenues | Revenues | (Decrease) | Change | ||||||||||||||||
| Same Community | |||||||||||||||||||||||
| Midwest Properties | |||||||||||||||||||||||
| Indiana | 836 | 97.6 | % | 97.2 | % | $ | 4,498 | $ | 4,221 | $ | 277 | 6.6 | % | ||||||||||
| Southeast Michigan | 1,778 | 96.7 | % | 97.1 | % | 9,441 | 8,717 | 724 | 8.3 | % | |||||||||||||
| Western Michigan | 438 | 98.2 | % | 98.2 | % | 2,173 | 2,026 | 147 | 7.3 | % | |||||||||||||
| Central Ohio | 2,171 | 98.2 | % | 97.7 | % | 11,581 | 10,779 | 802 | 7.4 | % | |||||||||||||
| Northeastern Ohio | 1,303 | 98.0 | % | 98.0 | % | 8,185 | 7,697 | 488 | 6.3 | % | |||||||||||||
| Total Midwest Properties | 6,526 | 97.7 | % | 97.5 | % | 35,878 | 33,440 | 2,438 | 7.3 | % | |||||||||||||
| Mid-Atlantic Properties | |||||||||||||||||||||||
| Maryland | 315 | 97.1 | % | 97.1 | % | 2,804 | 2,694 | 110 | 4.1 | % | |||||||||||||
| Metro DC | 352 | 95.5 | % | 96.9 | % | 2,782 | 2,660 | 122 | 4.6 | % | |||||||||||||
| Northern Virginia | 1,272 | 97.2 | % | 95.8 | % | 11,384 | 10,825 | 559 | 5.2 | % | |||||||||||||
| Southeastern Virginia | 864 | 97.2 | % | 98.6 | % | 5,975 | 5,738 | 237 | 4.1 | % | |||||||||||||
| Total Mid-Atlantic Properties | 2,803 | 97.0 | % | 96.9 | % | 22,945 | 21,917 | 1,028 | 4.7 | % | |||||||||||||
| Southeast Properties | |||||||||||||||||||||||
| Central Florida | 288 | 97.9 | % | 95.5 | % | 1,784 | 1,681 | 103 | 6.1 | % | |||||||||||||
| Southeast Florida | 984 | 95.6 | % | 95.9 | % | 7,613 | 7,254 | 359 | 4.9 | % | |||||||||||||
| Georgia | 1,197 | 94.3 | % | 92.4 | % | 5,990 | 5,846 | 144 | 2.5 | % | |||||||||||||
| Total Southeast Properties | 2,469 | 95.3 | % | 94.2 | % | 15,387 | 14,781 | 606 | 4.1 | % | |||||||||||||
| Southwest Properties | |||||||||||||||||||||||
| Texas | 222 | 98.2 | % | 99.5 | % | 1,250 | 1,168 | 82 | 7.0 | % | |||||||||||||
| Total Southwest Properties | 222 | 98.2 | % | 99.5 | % | 1,250 | 1,168 | 82 | 7.0 | % | |||||||||||||
| Total Same Community | 12,020 | 97.0 | % | 96.7 | % | 75,460 | 71,306 | 4,154 | 5.8 | % | |||||||||||||
Acquisitions (2) | |||||||||||||||||||||||
| Southeast Florida | 222 | 94.6 | % | 92.8 | % | 1,708 | 139 | 1,569 | 1,128.8 | % | |||||||||||||
| Metro DC | 250 | 96.4 | % | N/A | 2,938 | N/A | 2,938 | N/A | |||||||||||||||
| North Carolina | 205 | 96.1 | % | N/A | 329 | N/A | 329 | N/A | |||||||||||||||
| Texas | 224 | 97.3 | % | N/A | 1,321 | N/A | 1,321 | N/A | |||||||||||||||
| Development | |||||||||||||||||||||||
| Tennessee | 242 | N/A | N/A | 618 | N/A | 618 | N/A | ||||||||||||||||
| Total Property Revenue | 13,163 | 97.0 | % | 96.7 | % | $ | 82,374 | $ | 71,445 | $ | 10,929 | 15.3 | % | ||||||||||
| (1) | Represents physical occupancy at the end of the quarter. |
| (2) | The Company defines acquisition properties as acquired properties which have been owned less than one year. |
25
| Associated Estates Realty Corporation |
| Year-to-Date Property Operating Expenses |
| For the Six Months Ended June 30, 2012 and 2011 |
| (Unaudited; in thousands, except unit totals) |
| 2012 | 2011 | YTD | YTD | ||||||||||||||||||||
| No. of | Physical | Physical | 2012 | 2011 | Increase/ | % | |||||||||||||||||
| Property Operating Expenses | Units | Occupancy (1) | Occupancy (1) | Expenses | Expenses | (Decrease) | Change | ||||||||||||||||
| Same Community | |||||||||||||||||||||||
| Midwest Properties | |||||||||||||||||||||||
| Indiana | 836 | 97.6 | % | 97.2 | % | $ | 1,779 | $ | 1,714 | $ | 65 | 3.8 | % | ||||||||||
| Southeast Michigan | 1,778 | 96.7 | % | 97.1 | % | 3,945 | 3,966 | (21 | ) | (0.5 | )% | ||||||||||||
| Western Michigan | 438 | 98.2 | % | 98.2 | % | 954 | 940 | 14 | 1.5 | % | |||||||||||||
| Central Ohio | 2,171 | 98.2 | % | 97.7 | % | 5,183 | 4,797 | 386 | 8.0 | % | |||||||||||||
| Northeastern Ohio | 1,303 | 98.0 | % | 98.0 | % | 3,118 | 3,052 | 66 | 2.2 | % | |||||||||||||
| Total Midwest Properties | 6,526 | 97.7 | % | 97.5 | % | 14,979 | 14,469 | 510 | 3.5 | % | |||||||||||||
| Mid-Atlantic Properties | |||||||||||||||||||||||
| Maryland | 315 | 97.1 | % | 97.1 | % | 985 | 1,007 | (22 | ) | (2.2 | )% | ||||||||||||
| Metro DC | 352 | 95.5 | % | 96.9 | % | 828 | 838 | (10 | ) | (1.2 | )% | ||||||||||||
| Northern Virginia | 1,272 | 97.2 | % | 95.8 | % | 3,723 | 3,526 | 197 | 5.6 | % | |||||||||||||
| Southeastern Virginia | 864 | 97.2 | % | 98.6 | % | 2,000 | 1,883 | 117 | 6.2 | % | |||||||||||||
| Total Mid-Atlantic Properties | 2,803 | 97.0 | % | 96.9 | % | 7,536 | 7,254 | 282 | 3.9 | % | |||||||||||||
| Southeast Properties | |||||||||||||||||||||||
| Central Florida | 288 | 97.9 | % | 95.5 | % | 738 | 647 | 91 | 14.1 | % | |||||||||||||
| Southeast Florida | 984 | 95.6 | % | 95.9 | % | 3,234 | 3,021 | 213 | 7.1 | % | |||||||||||||
| Georgia | 1,197 | 94.3 | % | 92.4 | % | 2,963 | 2,869 | 94 | 3.3 | % | |||||||||||||
| Total Southeast Properties | 2,469 | 95.3 | % | 94.2 | % | 6,935 | 6,537 | 398 | 6.1 | % | |||||||||||||
| Southwest Properties | |||||||||||||||||||||||
| Texas | 222 | 98.2 | % | 99.5 | % | 567 | 596 | (29 | ) | (4.9 | )% | ||||||||||||
| Total Southwest Properties | 222 | 98.2 | % | 99.5 | % | 567 | 596 | (29 | ) | (4.9 | )% | ||||||||||||
| Total Same Community | 12,020 | 97.0 | % | 96.7 | % | 30,017 | 28,856 | 1,161 | 4.0 | % | |||||||||||||
Acquisitions (2) | |||||||||||||||||||||||
| Southeast Florida | 222 | 94.6 | % | 92.8 | % | 802 | 62 | 740 | 1,193.5 | % | |||||||||||||
| Metro DC | 250 | 96.4 | % | N/A | 1,044 | N/A | 1,044 | N/A | |||||||||||||||
| North Carolina | 205 | 96.1 | % | N/A | 108 | N/A | 108 | N/A | |||||||||||||||
| Texas | 224 | 97.3 | % | N/A | 660 | N/A | 660 | N/A | |||||||||||||||
| Development | |||||||||||||||||||||||
| Tennessee | 242 | N/A | N/A | 315 | N/A | 315 | N/A | ||||||||||||||||
| Total Property Operating Expenses | 13,163 | 97.0 | % | 96.7 | % | $ | 32,946 | $ | 28,918 | $ | 4,028 | 13.9 | % | ||||||||||
| (1) | Represents physical occupancy at the end of the quarter. |
| (2) | The Company defines acquisition properties as acquired properties which have been owned less than one year. |
26
| Associated Estates Realty Corporation |
| Year-to-Date Property Net Operating Income (Property NOI) |
| For the Six Months Ended June 30, 2012 and 2011 |
| (Unaudited; in thousands, except unit totals) |
| 2012 | 2011 | YTD | YTD | ||||||||||||||||||||
| No. of | Physical | Physical | 2012 | 2011 | Increase/ | % | |||||||||||||||||
Property NOI (1) | Units | Occupancy (2) | Occupancy (2) | NOI | NOI | (Decrease) | Change | ||||||||||||||||
| Same Community | |||||||||||||||||||||||
| Midwest Properties | |||||||||||||||||||||||
| Indiana | 836 | 97.6 | % | 97.2 | % | $ | 2,719 | $ | 2,507 | $ | 212 | 8.5 | % | ||||||||||
| Southeast Michigan | 1,778 | 96.7 | % | 97.1 | % | 5,496 | 4,751 | 745 | 15.7 | % | |||||||||||||
| Western Michigan | 438 | 98.2 | % | 98.2 | % | 1,219 | 1,086 | 133 | 12.2 | % | |||||||||||||
| Central Ohio | 2,171 | 98.2 | % | 97.7 | % | 6,398 | 5,982 | 416 | 7.0 | % | |||||||||||||
| Northeastern Ohio | 1,303 | 98.0 | % | 98.0 | % | 5,067 | 4,645 | 422 | 9.1 | % | |||||||||||||
| Total Midwest Properties | 6,526 | 97.7 | % | 97.5 | % | 20,899 | 18,971 | 1,928 | 10.2 | % | |||||||||||||
| Mid-Atlantic Properties | |||||||||||||||||||||||
| Maryland | 315 | 97.1 | % | 97.1 | % | 1,819 | 1,687 | 132 | 7.8 | % | |||||||||||||
| Metro DC | 352 | 95.5 | % | 96.9 | % | 1,954 | 1,822 | 132 | 7.2 | % | |||||||||||||
| Northern Virginia | 1,272 | 97.2 | % | 95.8 | % | 7,661 | 7,299 | 362 | 5.0 | % | |||||||||||||
| Southeastern Virginia | 864 | 97.2 | % | 98.6 | % | 3,975 | 3,855 | 120 | 3.1 | % | |||||||||||||
| Total Mid-Atlantic Properties | 2,803 | 97.0 | % | 96.9 | % | 15,409 | 14,663 | 746 | 5.1 | % | |||||||||||||
| Southeast Properties | |||||||||||||||||||||||
| Central Florida | 288 | 97.9 | % | 95.5 | % | 1,046 | 1,034 | 12 | 1.2 | % | |||||||||||||
| Southeast Florida | 984 | 95.6 | % | 95.9 | % | 4,379 | 4,233 | 146 | 3.4 | % | |||||||||||||
| Georgia | 1,197 | 94.3 | % | 92.4 | % | 3,027 | 2,977 | 50 | 1.7 | % | |||||||||||||
| Total Southeast Properties | 2,469 | 95.3 | % | 94.2 | % | 8,452 | 8,244 | 208 | 2.5 | % | |||||||||||||
| Southwest Properties | |||||||||||||||||||||||
| Texas | 222 | 98.2 | % | 99.5 | % | 683 | 572 | 111 | 19.4 | % | |||||||||||||
| Total Southwest Properties | 222 | 98.2 | % | 99.5 | % | 683 | 572 | 111 | 19.4 | % | |||||||||||||
| Total Same Community | 12,020 | 97.0 | % | 96.7 | % | 45,443 | 42,450 | 2,993 | 7.1 | % | |||||||||||||
Acquisitions (3) | |||||||||||||||||||||||
| Southeast Florida | 222 | 94.6 | % | 92.8 | % | 906 | 77 | 829 | 1,076.6 | % | |||||||||||||
| Metro DC | 250 | 96.4 | % | N/A | 1,894 | N/A | 1,894 | N/A | |||||||||||||||
| North Carolina | 205 | 96.1 | % | N/A | 221 | N/A | 221 | N/A | |||||||||||||||
| Texas | 224 | 97.3 | % | N/A | 661 | N/A | 661 | N/A | |||||||||||||||
| Development | |||||||||||||||||||||||
| Tennessee | 242 | N/A | N/A | 303 | N/A | 303 | N/A | ||||||||||||||||
| Total Property NOI | 13,163 | 97.0 | % | 96.7 | % | $ | 49,428 | $ | 42,527 | $ | 6,901 | 16.2 | % | ||||||||||
| (1) | See page 32 for a reconciliation of net income (loss) attributable to AERC 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 been owned less than one year. |
27
| Associated Estates Realty Corporation |
| Debt Structure |
| As of June 30, 2012 |
| (Dollar amounts in thousands) |
| Balance | Percentage | Weighted | ||||||||
| Outstanding | of | Average | ||||||||
| June 30, 2012 | Total Debt | Interest Rate | ||||||||
| Fixed Rate Debt: | ||||||||||
| Secured | $ | 350,317 | 58.1 | % | 5.3 | % | ||||
| Total Fixed Rate Debt | 350,317 | 58.1 | % | 5.3 | % | |||||
| Variable Rate Debt Hedged: | ||||||||||
Secured (1) | 33,432 | 5.6 | % | 4.7 | % | |||||
Unsecured (2) | 125,000 | 20.7 | % | 2.0 | % | |||||
| Total Variable Rate Debt Hedged | 158,432 | 26.3 | % | 2.6 | % | |||||
| Variable Rate Debt Unhedged: | ||||||||||
| Secured | 18,989 | 3.2 | % | 3.5 | % | |||||
| Unsecured | 75,000 | 12.4 | % | 2.0 | % | |||||
| Total Variable Rate Debt Unhedged | 93,989 | 15.6 | % | 2.3 | % | |||||
| TOTAL DEBT | $ | 602,738 | 100.0 | % | 4.1 | % | ||||
Interest coverage ratio (3) | 2.71:1 | |||||||||
Fixed charge coverage ratio (4) | 2.71:1 | |||||||||
| Weighted average maturity | 4.0 years | |||||||||
| Scheduled Principal Maturities: | Secured | Unsecured | Total | |||||||||
| 2012 | $ | — | $ | — | $ | — | ||||||
| 2013 | 150,235 | — | 150,235 | |||||||||
| 2014 | 44,538 | — | 44,538 | |||||||||
| 2015 | 20,491 | — | 20,491 | |||||||||
| 2016 | 49,987 | 200,000 | 249,987 | |||||||||
| Thereafter | 137,487 | — | 137,487 | |||||||||
| Total | $ | 402,738 | $ | 200,000 | $ | 602,738 | ||||||
| 66.8 | % | 33.2 | % | 100.0 | % | |||||||
| (1) | The interest rate on these mortgage notes are capped at 6.9% until maturity. |
| (2) | The Company entered into a forward starting swap in December 2011 related to this debt fixing the rate beginning in June 2013 for the duration of its maturity at a rate of 1.26% plus the credit spread which is currently 1.80%, or an all-in rate of 3.06%. |
| (3) | Is calculated as EBITDA divided by interest expense, including capitalized interest and amortization of deferred financing costs and excluding prepayment costs/credits. See page 31 for a reconciliation of net income (loss) available to common shares to EBITDA and our definition of EBITDA. |
| (4) | Represents interest expense, including capitalized interest and preferred stock dividend payment coverage, excluding costs/refunds. Individual line items in this calculation include discontinued operations where applicable. |
28
| Associated Estates Realty Corporation |
| 2012 Financial Outlook |
| As of July 24, 2012 |
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 page 2 of this document for a list of risk factors.
| Earnings Guidance Per Common Share | |||
| Expected net income attributable to AERC | $0.62 to $0.64 | ||
| Expected real estate depreciation and amortization | $1.16 | ||
| Expected gains on disposition of properties | -0.58 | ||
Expected Funds from Operations (1) | $1.20 to $1.22 | ||
| Expected prepayment and other costs associated with debt repayments, net | 0.03 | ||
Expected Funds from Operations as adjusted (1) | $1.23 to $1.25 | ||
| Same Community Portfolio | |||
| Revenue growth | 5.0% to 5.5% | ||
| Expense growth | 3.0% to 3.5% | ||
Property NOI (2) growth | 6.25% to 6.75% | ||
| Transactions | |||
| Acquisitions | $180.0 to $250.0 million | ||
| Dispositions | $60.0 to $75.0 million | ||
| Development | $40.0 to $60.0 million | ||
| Corporate Expenses | |||
| General and administrative expense | $16.6 to $17.0 million | ||
| Development costs | $1.0 to $1.2 million | ||
| Costs associated with acquisitions | $0.6 to $0.8 million | ||
| Debt | |||
| Capitalized interest | $1.2 to $1.5 million | ||
Expensed interest (excluding prepayment costs and defeasance refund) (3) | $30.1 to $30.5 million | ||
Capital Structure (4) | |||
| Weighted average shares outstanding | 46.5 million | ||
| (1) | See page 30 for our definition of this non-GAAP measurement. |
| (2) | See page 32 for our definition of this non-GAAP measurement. |
| (3) | Includes $2.1 million of deferred financing costs. |
| (4) | Earnings guidance reflects no additional common share issuances. |
29
| Associated Estates Realty Corporation |
| Definitions of Non-GAAP Financial Measures |
The foregoing supplemental financial data includes certain non-GAAP financial measures that we believe are helpful in understanding our business, as further described below. Our 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")
We define FFO in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT"). This definition includes 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, excludes impairment write-downs of depreciable real estate, gains on insurance recoveries and gains and losses from the disposition of properties and land. 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 our operating performance or as an alternative to cash flow as a measure of liquidity. We generally consider FFO to be a useful measure for reviewing our comparative operating and financial performance 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
We define FFO as adjusted as FFO, as defined above, excluding $1.7 million of prepayment penalties associated with debt repayments and $(279) of refunds for a previously defeased loan for the six months ended June 30, 2012. In accordance with GAAP, these prepayment penalties and refunds on the previously defeased loan are included in interest expense in the Company's Consolidated Statement of Operations and Comprehensive Income. We are providing this calculation as an alternative FFO calculation as we consider 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")
We define 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. We consider 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.
30
| Associated Estates Realty Corporation |
| Definitions of Non-GAAP Financial Measures |
Earnings Before Interest, Income Taxes, Depreciation and Amortization ("EBITDA")
EBITDA is defined as earnings before interest, income taxes, depreciation and amortization. We consider EBITDA to be an appropriate supplemental measure of our performance because it eliminates depreciation, income taxes 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 (loss) applicable to common shares to EBITDA.
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| (In thousands) | 2012 | 2011 | 2012 | 2011 | ||||||||||||
| Net income (loss) applicable to common shares | $ | 23,569 | $ | (1,573 | ) | $ | 21,489 | $ | (4,655 | ) | ||||||
| Allocation to participating securities | 100 | — | 99 | — | ||||||||||||
Interest expense (1) | 6,796 | 7,815 | 16,349 | 15,601 | ||||||||||||
| Depreciation and amortization | 13,464 | 13,248 | 26,696 | 26,303 | ||||||||||||
| Gain on disposition of properties | (22,859 | ) | — | (22,819 | ) | — | ||||||||||
| Income taxes | 103 | 39 | 179 | 131 | ||||||||||||
| Total EBITDA | $ | 21,173 | $ | 19,529 | $ | 41,993 | $ | 37,380 | ||||||||
| (1) | The six months ended June 30, 2012, include $1.7 million of prepayment costs and $(279) for refunds on a previously defeased loan. |
Net Operating Income ("NOI")
NOI is determined by deducting property operating and maintenance expenses, direct property management and service company expense and construction and other services expense from total revenue. We consider 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.
31
| 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. We consider 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 (loss) attributable to AERC.
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| (In thousands) | 2012 | 2011 | 2012 | 2011 | ||||||||||||
| Property NOI | $ | 25,260 | $ | 21,863 | $ | 49,428 | $ | 42,527 | ||||||||
| Office NOI | 313 | — | 313 | — | ||||||||||||
| Construction and other services net (loss) income | (83 | ) | (26 | ) | (153 | ) | (305 | ) | ||||||||
| Depreciation and amortization | (13,039 | ) | (12,328 | ) | (25,649 | ) | (24,475 | ) | ||||||||
| General and administrative expense | (4,264 | ) | (3,959 | ) | (8,633 | ) | (8,129 | ) | ||||||||
| Development costs | (297 | ) | (102 | ) | (607 | ) | (176 | ) | ||||||||
| Costs associated with acquisitions | (485 | ) | (65 | ) | (485 | ) | (121 | ) | ||||||||
| Interest expense | (6,796 | ) | (7,493 | ) | (16,103 | ) | (14,834 | ) | ||||||||
| Income (loss) from continuing operations | 609 | (2,110 | ) | (1,889 | ) | (5,513 | ) | |||||||||
| Income from discontinued operations: | ||||||||||||||||
| Operating Income | 197 | 549 | 649 | 884 | ||||||||||||
| Gain on disposition of properties | 22,859 | — | 22,819 | — | ||||||||||||
| Income from discontinued operation | 23,056 | 549 | 23,468 | 884 | ||||||||||||
| Net income (loss) | 23,665 | (1,561 | ) | 21,579 | (4,629 | ) | ||||||||||
| Net loss (income) attributable to noncontrolling redeemable interest | 4 | (12 | ) | 9 | (26 | ) | ||||||||||
| Consolidated net income (loss) attributable to AERC | $ | 23,669 | $ | (1,573 | ) | $ | 21,588 | $ | (4,655 | ) | ||||||
Recurring Fixed Asset Additions
We consider 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
We consider 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 us to increase rents.
Same Community Properties
Same Community properties are conventional multifamily residential apartments which were owned and operational for the entire periods presented.
32