Exhibit 99.2
Associated Estates Realty Corporation
Second Quarter 2013
Earnings Release and Supplemental Financial Information
| Park at Crossroads | |||
| 6000 Scarlet Sky Lane | Phone: | (866) 440-8139 | |
| Cary, NC 27518 | Web Site: | parkatcrossroads.com | |
| For more information, please contact: | ||
| Jeremy Goldberg | ||
| (216) 797-8715 | ||
| Associated Estates Realty Corporation |
| Second Quarter 2013 |
| Supplemental Financial Information |
| Table of Contents | Page |
| 12 | |
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 the Company's 2013 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 uncertainties 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 overall level of economic activity, the availability of consumer credit and mortgage financing, unemployment rates and other factors; elimination of, or limitation on, federal government support for Fannie Mae and/or Freddie Mac that may result in significantly reduced availability of mortgage financing sources as well as increases in interest rates for mortgage financing; the ability of the Company to refinance debt on favorable terms at maturity; risks of a lessening of demand for the multifamily units owned by the Company; competition from other available multifamily units, single family units available for rental or purchase, and changes in market rental rates; the failure of development projects or redevelopment activities to achieve expected results due to, among other causes, construction and contracting risks, unanticipated increases in materials and/or labor, and delays in project completion and/or lease-up that result in increased costs and/or reduce the profitability of a completed project; the failure to enter into development joint venture arrangements on acceptable terms; 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; inability of the Company 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 the Company; changes in tax legislation; risks of personal injury claims and property damage related to mold claims that are not covered by the Company's insurance; catastrophic property damage losses that are not covered by the Company's insurance; the inability to acquire properties at prices consistent with the Company's 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 the Company's properties or the neighborhoods in which they are located; and other uncertainties and risk factors addressed in documents filed by the Company with the Securities and Exchange Commission, including, without limitation, the Company's Annual Report on Form 10-K and the Company's Quarterly Reports on Form 10-Q. |
2
| Associated Estates Realty Corporation |
| Second Quarter Earnings |
ASSOCIATED ESTATES REALTY CORPORATION REPORTS SECOND QUARTER RESULTS
Quarter-End Same Community Physical Occupancy 96.6 Percent
Same Community Rental Revenue Up 3.9%
Company Acquires 388-Unit Property in Doral, Florida
Revises Guidance
Cleveland, Ohio - July 23, 2013 - Associated Estates Realty Corporation (NYSE, NASDAQ: AEC) announced today its financial results for the second quarter ended June 30, 2013. Funds from Operations (FFO) for the second quarter of 2013 was $0.31 per common share (diluted), compared to $0.32 per common share (diluted), for the second quarter of 2012.
Net income applicable to common shares was $1.6 million, or $0.03 per common share (diluted), for the quarter ended June 30, 2013. This compared to net income applicable to common shares of $23.6 million, or $0.54 per common share (diluted), for the quarter ended June 30, 2012. Net income in the second quarter of 2012 was driven primarily by $22.9 million of gains associated with the sale of five properties.
“The fundamentals of the apartment business remain solid and our properties are well positioned to continue to benefit," said Jeffrey I. Friedman, President and Chief Executive Officer. "We're full and rents are growing quite nicely,” Friedman continued.
A reconciliation of net income attributable to the Company to FFO, and to FFO as adjusted, is included on page 10.
Quarterly Same Community Portfolio Results
Net operating income (NOI) for the second quarter of 2013 for the Company's same community portfolio increased 4.9% compared to the second quarter of 2012. Revenue increased 3.9% and property operating expenses increased 2.3%. Physical occupancy was 96.6% at the end of the second quarter compared to 97.3% at the end of the second quarter of 2012. Average monthly net rent collected per unit for the same community properties was $1,104 compared to $1,070 for the second quarter of 2012, a 3.2% increase.
First Half Performance
FFO and FFO as adjusted for the six months ended June 30, 2013, was $0.62 per common share (diluted). 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.
For the six months ended June 30, 2013, net income applicable to common shares was $12.0 million, or $0.24 per common share (diluted) compared to net income applicable to common shares of $21.5 million, or $0.50 per common share (diluted) for the period ended June 30, 2012. Net income in the first half of 2012 was driven primarily by gains of $22.9 million from the previously referenced property sales.
Additional quarterly financial information, including performance by region for the Company's portfolio, is included on pages 16 through 27.
2013 Outlook
The Company revised its full year FFO as adjusted guidance range to $1.26 to $1.30 per common share (diluted). Detailed assumptions relating to the Company's guidance can be found on page 29.
3
| Associated Estates Realty Corporation |
| Second Quarter Earnings |
Transactional Activity
On July 16, 2013, the Company closed on the acquisition of Doral West, in Doral, FL. The 388-unit property was built in 1998. The property is adjacent to the Florida Turnpike, and is in close proximity to 11 million square feet of office space and 72 million square feet of industrial space. Doral West also offers easy access to downtown Miami and the Miami International Airport. The former owners were in the process of an interior upgrade. The Company will complete the renovation of the remaining 252 units. In addition, the Company will upgrade the entire property including the community areas, landscaping and building exteriors.
As previously announced on May 28, 2013, the Company will expand its presence in California by developing two land parcels. The Company entered into a joint venture agreement with Legendary Developments with respect to a 5.6 acre site known as 950 Third in the Arts District of downtown Los Angeles. The Company plans to build 472 apartments with ground floor retail and underground parking at the site. The Company also acquired a 3.36 acre site located in the South of Market (“SoMa”) neighborhood in San Francisco. The Company plans to build a 408-unit apartment community that will include ground floor retail and underground parking. The Company intends to develop the SoMa project in a joint venture.
Capital Markets Activity
During the quarter ended June 30, 2013, the Company sold 107,498 common shares via its “At-the-Market” program, resulting in net proceeds after sales commissions of approximately $1.9 million, or a weighted average net price of $18.08 per share.
On June 3, 2013, the Company sold 6,500,000 common shares on a forward basis. On July 2, 2013, the underwriters' exercised their option to purchase an additional 547,958 common shares on a forward basis. After giving effect to this partial option exercise, an aggregate of 7,047,958 common shares were sold resulting in projected net proceeds of approximately $116.2 million. Settlement of the forward sale agreements will occur no later than October 1, 2013. The Company intends to use the net proceeds received from the forward equity sale toward the repayment of five secured mortgages totaling approximately $130 million that are scheduled to mature on October 1, 2013.
On June 19, 2013, the Company amended its $350 million revolving credit facility. This amendment extends the maturity date from January 12, 2016 to June 15, 2017, and reduces the interest rate spread and facility fee across the pricing grid.
“Our capital markets activity has significantly improved our balance sheet and our financial flexibility," said Lou Fatica, Vice President, Treasurer and Chief Financial Officer.
Conference Call
A conference call to discuss the Company's second quarter results will be held on July 24, 2013 at 2:00 p.m. Eastern. To participate in the call:
Via Telephone: The dial-in number is (855) 233-8223, and the conference ID is 93204891. The call will be archived through August 7, 2013. The dial-in number for the replay is (855) 859-2056.
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 "Second Quarter 2013 Earnings Conference Call" 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, 2013 and 2012 |
| (Unaudited; in thousands, except per share and ratio data) |
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| OPERATING INFORMATION | ||||||||||||||||
| Total revenue | $ | 45,663 | $ | 39,999 | $ | 90,656 | $ | 78,206 | ||||||||
| Property revenue | $ | 45,425 | $ | 39,686 | $ | 90,106 | $ | 77,893 | ||||||||
| Net income attributable to AERC | $ | 1,638 | $ | 23,569 | $ | 11,984 | $ | 21,489 | ||||||||
| Per share - basic | $ | 0.03 | $ | 0.55 | $ | 0.24 | $ | 0.50 | ||||||||
| Per share - diluted | $ | 0.03 | $ | 0.54 | $ | 0.24 | $ | 0.50 | ||||||||
Funds from Operations (FFO) (1) | $ | 15,429 | $ | 13,744 | $ | 31,017 | $ | 24,410 | ||||||||
FFO as adjusted (1) | $ | 15,429 | $ | 13,744 | $ | 31,017 | $ | 25,874 | ||||||||
| FFO per share - diluted | $ | 0.31 | $ | 0.32 | $ | 0.62 | $ | 0.57 | ||||||||
| FFO as adjusted per share - diluted | $ | 0.31 | $ | 0.32 | $ | 0.62 | $ | 0.61 | ||||||||
Funds Available for Distribution (FAD) (1) | $ | 13,238 | $ | 11,578 | $ | 27,959 | $ | 23,306 | ||||||||
| Dividends per share | $ | 0.19 | $ | 0.18 | $ | 0.38 | $ | 0.35 | ||||||||
| Payout ratio - FFO | 61.3 | % | 56.3 | % | 61.3 | % | 61.4 | % | ||||||||
| Payout ratio - FFO as adjusted | 61.3 | % | 56.3 | % | 61.3 | % | 57.4 | % | ||||||||
| Payout ratio - FAD | 73.1 | % | 66.7 | % | 69.1 | % | 63.6 | % | ||||||||
| General and administrative expense | $ | 4,398 | $ | 4,264 | $ | 9,356 | $ | 8,633 | ||||||||
| Development costs | $ | 181 | $ | 297 | $ | 443 | $ | 607 | ||||||||
| Personnel - allocated | $ | 1,070 | $ | 933 | $ | 2,132 | $ | 1,827 | ||||||||
| Costs associated with acquisitions | $ | 64 | $ | 485 | $ | 64 | $ | 485 | ||||||||
Interest expense (2) | $ | 6,825 | $ | 6,332 | $ | 13,752 | $ | 13,506 | ||||||||
| Capitalized interest | $ | 786 | $ | 411 | $ | 1,262 | $ | 618 | ||||||||
Interest coverage ratio (3) | 2.87:1 | 2.94:1 | 2.93:1 | 2.71:1 | ||||||||||||
Fixed charge coverage ratio (4) | 2.87:1 | 2.94:1 | 2.93:1 | 2.71:1 | ||||||||||||
| General and administrative expense to property revenue | 9.7 | % | 10.7 | % | 10.4 | % | 11.1 | % | ||||||||
| Personnel - allocated to property revenue | 2.4 | % | 2.4 | % | 2.4 | % | 2.3 | % | ||||||||
Interest expense to property revenue (2) | 15.0 | % | 16.0 | % | 15.3 | % | 17.3 | % | ||||||||
Property NOI (5) | $ | 27,808 | $ | 24,104 | $ | 55,398 | $ | 47,239 | ||||||||
ROA (6) | 8.0 | % | 7.8 | % | 8.0 | % | 7.8 | % | ||||||||
| Same Community revenue increase | 3.9 | % | 6.1 | % | 4.1 | % | 6.2 | % | ||||||||
| Same Community expense increase | 2.3 | % | 6.9 | % | 2.2 | % | 4.2 | % | ||||||||
| Same Community NOI increase | 4.9 | % | 5.6 | % | 5.4 | % | 7.5 | % | ||||||||
| Same Community operating margins | 61.3 | % | 60.7 | % | 61.5 | % | 60.7 | % | ||||||||
| (1) | See page 10 for a reconciliation of net income attributable to AERC to these non-GAAP measurements and page 30 for the Company's definition of these non-GAAP measurements. |
| (2) | Excludes amortization of financing fees of $570 and $1,064 for 2013 and $464 and $1,134 for 2012. The six months ended 2012 also excludes $1,743 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 applicable to common shares to EBITDA and the Company's 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 attributable to AERC to this non-GAAP measurement and the Company's definition of this non-GAAP measurement. |
| (6) | ROA is calculated as trailing twelve month Property NOI divided by average gross real estate assets, 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 2013 |
| (Unaudited; in thousands, except per share and ratio data) |
| June 30, | December 31, | |||||||
| 2013 | 2012 | |||||||
| CAPITALIZATION DATA | ||||||||
| Net real estate assets | $ | 1,129,918 | $ | 1,139,917 | ||||
| Total assets | $ | 1,165,878 | $ | 1,172,477 | ||||
| Debt | $ | 707,775 | $ | 716,778 | ||||
| Noncontrolling redeemable interest | $ | 2,084 | $ | 3,078 | ||||
| Total shareholders' equity attributable to AERC | $ | 401,096 | $ | 403,398 | ||||
| Common shares outstanding | 50,455 | 49,527 | ||||||
| Share price, end of period | $ | 16.08 | $ | 16.12 | ||||
| Total capitalization | $ | 1,519,091 | $ | 1,515,153 | ||||
| Undepreciated book value of real estate assets | $ | 1,511,975 | $ | 1,511,647 | ||||
| Debt to undepreciated book value of real estate assets | 46.8 | % | 47.4 | % | ||||
| Secured debt to undepreciated book value | 24.8 | % | 24.9 | % | ||||
| Annual dividend | $ | 0.76 | $ | 0.72 | ||||
| Annual dividend yield based on share price, end of period | 4.7 | % | 4.5 | % | ||||
6
| Associated Estates Realty Corporation |
| Financial and Operating Highlights |
| Second Quarter 2013 |
| Number of | |||||||||
| Properties | Units | Average Age | |||||||
| PORTFOLIO INFORMATION | |||||||||
| Company Portfolio: | |||||||||
| Same Community: | |||||||||
| Midwest | 27 | 6,362 | 20 | ||||||
| Mid-Atlantic | 10 | 3,053 | 12 | ||||||
| Southeast | 7 | 1,848 | 16 | ||||||
| Southwest | 2 | 446 | 15 | ||||||
| Total Same Community | 46 | 11,709 | 17 | ||||||
| Acquisitions | 4 | 1,156 | 5 | ||||||
Development (1) | 1 | 242 | 1 | ||||||
| Total Company Portfolio | 51 | 13,107 | 16 | ||||||
| (1) | Represents a 242-unit community located in Nashville, Tennessee. |
7
| Associated Estates Realty Corporation |
| Condensed Consolidated Balance Sheets |
| Second Quarter 2013 |
| (Unaudited; dollar amount in thousands) |
| June 30, | December 31, | |||||||
| 2013 | 2012 | |||||||
| ASSETS | ||||||||
| Real estate assets | ||||||||
| Investment in real estate | $ | 1,484,554 | $ | 1,501,198 | ||||
| Construction in progress | 27,421 | 10,449 | ||||||
| Less: Accumulated depreciation | (382,057 | ) | (371,730 | ) | ||||
| Net real estate owned | 1,129,918 | 1,139,917 | ||||||
| Investment in unconsolidated entities | 1,613 | — | ||||||
| Total net real estate | 1,131,531 | 1,139,917 | ||||||
| Cash and cash equivalents | 4,219 | 4,740 | ||||||
| Restricted cash | 5,945 | 4,429 | ||||||
| Other assets | 24,183 | 23,391 | ||||||
| Total assets | $ | 1,165,878 | $ | 1,172,477 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Mortgage notes payable | $ | 374,275 | $ | 376,278 | ||||
| Unsecured notes | 150,000 | — | ||||||
| Unsecured revolving credit facility | 33,500 | 190,500 | ||||||
| Unsecured term loan | 150,000 | 150,000 | ||||||
| Total debt | 707,775 | 716,778 | ||||||
| Accounts payable and other liabilities | 54,923 | 49,223 | ||||||
| Total liabilities | 762,698 | 766,001 | ||||||
| Noncontrolling redeemable interest | 1,734 | 1,734 | ||||||
| Equity | ||||||||
| Common shares, without par value; $.10 stated value; 91,000,000 authorized; | ||||||||
| 50,454,527 issued and outstanding at June 30, 2013 and | ||||||||
| 49,526,639 issued and outstanding at December 31, 2012, respectively | 5,045 | 4,953 | ||||||
| Paid-in capital | 637,162 | 634,587 | ||||||
| Accumulated distributions in excess of accumulated net income | (240,486 | ) | (233,208 | ) | ||||
| Accumulated other comprehensive loss | (625 | ) | (2,934 | ) | ||||
| Total shareholders' equity attributable to AERC | 401,096 | 403,398 | ||||||
| Noncontrolling interest | 350 | 1,344 | ||||||
| Total equity | 401,446 | 404,742 | ||||||
| Total liabilities and equity | $ | 1,165,878 | $ | 1,172,477 | ||||
8
| Associated Estates Realty Corporation |
| Consolidated Statements of Operations and Comprehensive Income |
| Three and Six Months Ended June 30, 2013 and 2012 |
| (Unaudited; dollar and share amounts in thousands) |
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| REVENUE | ||||||||||||||||
| Property revenue | $ | 45,425 | $ | 39,686 | $ | 90,106 | $ | 77,893 | ||||||||
| Office revenue | 238 | 313 | 550 | 313 | ||||||||||||
| Total revenue | 45,663 | 39,999 | 90,656 | 78,206 | ||||||||||||
| EXPENSES | ||||||||||||||||
| Property operating and maintenance | 17,617 | 15,582 | 34,708 | 30,654 | ||||||||||||
| Depreciation and amortization | 14,356 | 12,297 | 28,740 | 24,171 | ||||||||||||
| Construction and other services | — | 83 | — | 153 | ||||||||||||
| General and administrative | 4,398 | 4,264 | 9,356 | 8,633 | ||||||||||||
| Development costs | 181 | 297 | 443 | 607 | ||||||||||||
| Costs associated with acquisitions | 64 | 485 | 64 | 485 | ||||||||||||
| Total expenses | 36,616 | 33,008 | 73,311 | 64,703 | ||||||||||||
| Operating income | 9,047 | 6,991 | 17,345 | 13,503 | ||||||||||||
| Interest expense | (7,395 | ) | (6,796 | ) | (14,816 | ) | (16,104 | ) | ||||||||
| Income (loss) from continuing operations | 1,652 | 195 | 2,529 | (2,601 | ) | |||||||||||
| Income from discontinued operations: | ||||||||||||||||
| Operating income, net of interest expense | — | 611 | 690 | 1,361 | ||||||||||||
| Gain on disposition of properties | — | 22,859 | 8,796 | 22,819 | ||||||||||||
| Income from discontinued operations | — | 23,470 | 9,486 | 24,180 | ||||||||||||
| Net income | 1,652 | 23,665 | 12,015 | 21,579 | ||||||||||||
| Net (income) loss attributable to noncontrolling redeemable interest | (14 | ) | 4 | (31 | ) | 9 | ||||||||||
| Net income attributable to AERC | $ | 1,638 | $ | 23,669 | $ | 11,984 | $ | 21,588 | ||||||||
| Allocation to participating securities | — | (100 | ) | — | (99 | ) | ||||||||||
| Net income applicable to common shares | $ | 1,638 | $ | 23,569 | $ | 11,984 | $ | 21,489 | ||||||||
| Earnings per common share - basic: | ||||||||||||||||
| Income (loss) from continuing operations applicable to common shares | $ | 0.03 | $ | — | $ | 0.05 | $ | (0.06 | ) | |||||||
| Income from discontinued operations | — | 0.55 | 0.19 | 0.56 | ||||||||||||
| Net income applicable to common shares - basic | $ | 0.03 | $ | 0.55 | $ | 0.24 | $ | 0.50 | ||||||||
| Earnings per common share - diluted: | ||||||||||||||||
| Income (loss) from continuing operations applicable to common shares | $ | 0.03 | $ | — | $ | 0.05 | $ | (0.06 | ) | |||||||
| Income from discontinued operations | — | 0.54 | 0.19 | 0.56 | ||||||||||||
| Net income applicable to common shares - diluted | $ | 0.03 | $ | 0.54 | $ | 0.24 | $ | 0.50 | ||||||||
| Comprehensive income: | ||||||||||||||||
| Net income | $ | 1,652 | $ | 23,665 | $ | 12,015 | $ | 21,579 | ||||||||
| Other comprehensive income: | ||||||||||||||||
| Change in fair value and reclassification of hedge instruments | 2,421 | (1,655 | ) | 2,309 | (1,633 | ) | ||||||||||
| Total comprehensive income | 4,073 | 22,010 | 14,324 | 19,946 | ||||||||||||
| Comprehensive (income) loss attributable to noncontrolling interests | (14 | ) | 4 | (31 | ) | 9 | ||||||||||
| Total comprehensive income attributable to AERC | $ | 4,059 | $ | 22,014 | $ | 14,293 | $ | 19,955 | ||||||||
| Weighted average shares outstanding - basic | 49,864 | 42,968 | 49,749 | 42,655 | ||||||||||||
| Weighted average shares outstanding - diluted | 50,583 | 43,461 | 50,431 | 42,655 | ||||||||||||
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, 2013 and 2012 |
| (In thousands; except per share data) |
| Three Months Ended | Six Months Ended | |||||||||||||||||
| June 30, | June 30, | |||||||||||||||||
| �� | 2013 | 2012 | 2013 | 2012 | ||||||||||||||
| CALCULATION OF FFO AND FAD | ||||||||||||||||||
| Net income attributable to AERC | $ | 1,638 | $ | 23,669 | $ | 11,984 | $ | 21,588 | ||||||||||
| Add: | Depreciation - real estate assets | 12,650 | 11,772 | 25,483 | 23,386 | |||||||||||||
| Amortization of intangible assets | 1,141 | 1,162 | 2,346 | 2,255 | ||||||||||||||
| Less: | Gain on disposition of properties | — | (22,859 | ) | (8,796 | ) | (22,819 | ) | ||||||||||
Funds from Operations (FFO) (1) | 15,429 | 13,744 | 31,017 | 24,410 | ||||||||||||||
| Add: | Prepayment costs | — | — | — | 1,743 | |||||||||||||
| Less: | Refund of defeasance costs on previously defeased loan | — | — | — | (279 | ) | ||||||||||||
Funds from Operations as adjusted (1) | 15,429 | 13,744 | 31,017 | 25,874 | ||||||||||||||
| Add: | Depreciation - other assets | 565 | 530 | 1,089 | 1,055 | |||||||||||||
| Amortization of deferred financing fees | 570 | 464 | 1,064 | 1,143 | ||||||||||||||
| Less: | Recurring fixed asset additions (2) | (3,326 | ) | (3,160 | ) | (5,211 | ) | (4,766 | ) | |||||||||
Funds Available for Distribution (FAD) (1) | $ | 13,238 | $ | 11,578 | $ | 27,959 | $ | 23,306 | ||||||||||
Weighted average shares outstanding - diluted (3) | 50,583 | 43,461 | 50,431 | 42,655 | ||||||||||||||
| PER SHARE INFORMATION: | ||||||||||||||||||
| FFO - diluted | $ | 0.31 | $ | 0.32 | $ | 0.62 | $ | 0.57 | ||||||||||
| FFO as adjusted - diluted | $ | 0.31 | $ | 0.32 | $ | 0.62 | $ | 0.61 | ||||||||||
| Dividends | $ | 0.19 | $ | 0.18 | $ | 0.38 | $ | 0.35 | ||||||||||
| Payout ratio - FFO | 61.3 | % | 56.3 | % | 61.3 | % | 61.4 | % | ||||||||||
| Payout ratio - FFO as adjusted | 61.3 | % | 56.3 | % | 61.3 | % | 57.4 | % | ||||||||||
| Payout ratio - FAD | 73.1 | % | 66.7 | % | 69.1 | % | 63.6 | % | ||||||||||
| (1) | See page 30 for the Company's 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 83 stock options for the three and six months ended June 30, 2013 as their inclusion would be anti-dilutive. The Company has also excluded 488 common share equivalents from the six months ended June 30, 2012 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. |
10
| Associated Estates Realty Corporation |
Discontinued Operations (1) |
| Three Months Ended June 30, 2013 and 2012 |
| (Unaudited; dollar amounts in thousands) |
| Three Months Ended | |||||||
| June 30, | |||||||
| 2013 | 2012 | ||||||
| REVENUE | |||||||
| Property revenue | $ | — | $ | 3,952 | |||
| EXPENSES | |||||||
| Property operating and maintenance | — | 2,174 | |||||
| Depreciation and amortization | — | 1,167 | |||||
| Total expenses | — | 3,341 | |||||
| Operating income | — | 611 | |||||
| Interest expense | — | — | |||||
| Gain on disposition of properties | — | 22,859 | |||||
| Income from discontinued operations | $ | — | $ | 23,470 | |||
| (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 is one property sold in 2013 and six properties sold in 2012.
11
| Associated Estates Realty Corporation |
Discontinued Operations (1) |
| Six Months Ended June 30, 2013 and 2012 |
| (Unaudited; dollar amounts in thousands) |
| Six Months Ended | |||||||
| June 30, | |||||||
| 2013 | 2012 | ||||||
| REVENUE | |||||||
| Property revenue | $ | 1,923 | $ | 8,676 | |||
| EXPENSES | |||||||
| Property operating and maintenance | 1,055 | 4,545 | |||||
| Depreciation and amortization | 178 | 2,525 | |||||
| Total expenses | 1,233 | 7,070 | |||||
| Operating income | 690 | 1,606 | |||||
| Interest expense | — | (245 | ) | ||||
| Gain on disposition of properties | 8,796 | 22,819 | |||||
| Income from discontinued operations | $ | 9,486 | $ | 24,180 | |||
| (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 is one property sold in 2013 and six properties sold in 2012.
12
| Associated Estates Realty Corporation |
| Development Pipeline |
| As of June 30, 2013 |
| (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.
Consolidated Current Developments
| 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 | ||||||||||||||||||
| San Raphael Phase II | 100.0% | 99 | $ | 13,750 | $ | 10,830 | $ | — | Q2 2012 | Q3 2013 | Q4 2013 | Q1 2014 | N/A | N/A | |||||||||||||||
| Dallas, TX | |||||||||||||||||||||||||||||
| Bethesda | 97.0% (4) | 140 | $ | 53,400 | $ | 18,113 | $ | — | Q4 2012 | Q4 2014 | Q1 2015 | Q3 2015 | N/A | N/A | |||||||||||||||
| Bethesda, MD | |||||||||||||||||||||||||||||
| Cantabria | 100.0% | 249 | $ | 56,800 | $ | 12,898 | $ | — | Q2 2013 | Q3 2014 | Q1 2015 | Q2 2015 | N/A | N/A | |||||||||||||||
| Dallas, TX | |||||||||||||||||||||||||||||
| The Desmond on Wilshire | 100.0% | 175 | $ | 76,300 | $ | 22,550 | $ | — | Q2 2013 | Q4 2014 | Q2 2015 | Q3 2015 | N/A | N/A | |||||||||||||||
| Los Angeles, CA | |||||||||||||||||||||||||||||
| Total | 663 | $ | 200,250 | $ | 64,391 | $ | — | ||||||||||||||||||||||
Consolidated Future Development Pipeline - Unimproved Land
| Estimated Number | ||||||||||
| Name | Location | Ownership % | of Units (3) | Cost to Date | ||||||
8th and Harrison | San Francisco, CA | 100.0% | 408 | $ | 46,891 | |||||
Unconsolidated Future Development Pipeline - Unimproved Land
| Estimated Number | |||||||||||
| Name | Location | Ownership % | of Units (3) | Cost to Date | |||||||
| 950 Third | Los Angeles, CA | 50.0% | 472 | $ | 31,613 | (5) | |||||
| (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 23, 2013. |
| (4) | Ownership percentage based on current equity of the joint venture and is subject to change based on changes in total equity. Joint venture partner contribution is $350. |
| (5) | The Company's investment in this entity at June 30, 2013 is $1,613. |
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, 2013 | |||||||||
| GAAP Useful | Cost Per | |||||||||
| Life (Years) | Amount | Unit (1) | ||||||||
| OPERATING EXPENSES RELATED TO REPAIRS AND MAINTENANCE | ||||||||||
Repairs and maintenance (2) | $ | 5,523 | $ | 419 | ||||||
Maintenance personnel labor cost (2) | 3,567 | 270 | ||||||||
| Total Operating Expenses Related to Repairs and Maintenance | 9,090 | 689 | ||||||||
| CAPITAL EXPENDITURES | ||||||||||
Recurring Capital Expenditures (3) | ||||||||||
| Amenities | 5 | 484 | 37 | |||||||
| Appliances | 5 | 507 | 38 | |||||||
| Building improvements | 14 | 694 | 53 | |||||||
| Carpet and flooring | 5 | 1,449 | 110 | |||||||
| Furnishings | 5 | 73 | 6 | |||||||
| Office/Model | 5 | 161 | 12 | |||||||
| HVAC and mechanicals | 15 | 429 | 33 | |||||||
| Landscaping and grounds | 14 | 1,163 | 88 | |||||||
| Unit improvements | 5 | 203 | 15 | |||||||
| Total Recurring Capital Expenditures - Properties | 5,163 | 392 | ||||||||
| Corporate capital expenditures | 48 | 4 | ||||||||
| Total Recurring Capital Expenditures | 5,211 | 396 | ||||||||
| Total Recurring Capital Expenditures and Repairs and Maintenance | $ | 14,301 | $ | 1,085 | ||||||
| Total Recurring Capital Expenditures | $ | 5,211 | ||||||||
Investment/Revenue Enhancing/Non-Recurring Expenditures (4) | ||||||||||
| Building improvements - unit upgrades | Various | 99 | ||||||||
| Building improvements - other | 20 | 1,069 | ||||||||
| Ground improvements | Various | 48 | ||||||||
| Total Investment/Revenue Enhancing/Non-Recurring Expenditures | 1,216 | |||||||||
| Grand Total Capital Expenditures | $ | 6,427 | ||||||||
| (1) | Calculated using weighted average units owned during the six months ended June 30, 2013 of 13,186. |
| (2) | Included in property operating and maintenance expense in the Consolidated Statements of Operations and Comprehensive Income. |
| (3) | See page 32 for the Company's definition of recurring fixed asset additions. |
| (4) | See page 32 for the Company's 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, 2013 and 2012 |
| (Unaudited; in thousands) |
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Construction and Other Services | ||||||||||||||||
| Revenue | $ | — | $ | — | $ | — | $ | — | ||||||||
| Expense | — | 83 | — | 153 | ||||||||||||
| Construction and other services net loss | $ | — | $ | (83 | ) | $ | — | $ | (153 | ) | ||||||
| General and Administrative, Development Costs | ||||||||||||||||
| and Personnel - Allocated | ||||||||||||||||
General and administrative expense (1) | $ | 4,398 | $ | 4,264 | $ | 9,356 | $ | 8,633 | ||||||||
| Development costs | 181 | 297 | 443 | 607 | ||||||||||||
Personnel - allocated (2) | 1,070 | 933 | 2,132 | 1,827 | ||||||||||||
| Total expense | $ | 5,649 | $ | 5,494 | $ | 11,931 | $ | 11,067 | ||||||||
| (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, | ||||||||||||||||
| 2013 | 2013 | 2012 | 2012 | 2012 | ||||||||||||||||
| Property Revenue | $ | 40,387 | $ | 39,723 | $ | 39,731 | $ | 39,707 | $ | 38,873 | ||||||||||
| Property Operating and | ||||||||||||||||||||
| Maintenance Expenses | ||||||||||||||||||||
| Personnel - on site | 3,265 | 3,391 | 3,362 | 3,348 | 3,347 | |||||||||||||||
| Personnel - allocated | 951 | 945 | 946 | 943 | 917 | |||||||||||||||
| Advertising | 425 | 415 | 400 | 420 | 415 | |||||||||||||||
| Utilities | 1,765 | 1,813 | 1,756 | 1,924 | 1,708 | |||||||||||||||
| Repairs and maintenance | 2,637 | 2,216 | 2,071 | 2,657 | 2,640 | |||||||||||||||
| Real estate taxes and insurance | 5,493 | 5,443 | 5,158 | 5,485 | 5,277 | |||||||||||||||
| Other operating | 1,094 | 1,030 | 1,014 | 953 | 968 | |||||||||||||||
| Total Expenses | 15,630 | 15,253 | 14,707 | 15,730 | 15,272 | |||||||||||||||
| Property Net Operating Income | $ | 24,757 | $ | 24,470 | $ | 25,024 | $ | 23,977 | $ | 23,601 | ||||||||||
| Operating Margin | 61.3 | % | 61.6 | % | 63.0 | % | 60.4 | % | 60.7 | % | ||||||||||
| Personnel - Allocated to | ||||||||||||||||||||
| Property Revenue | 2.4 | % | 2.4 | % | 2.4 | % | 2.4 | % | 2.4 | % | ||||||||||
| Total Number of Units | 11,709 | 11,709 | 11,709 | 11,709 | 11,709 | |||||||||||||||
| NOI Per Unit | $ | 2,114 | $ | 2,090 | $ | 2,137 | $ | 2,048 | $ | 2,016 | ||||||||||
Average Net Rents Per Unit (1) | $ | 1,155 | $ | 1,142 | $ | 1,142 | $ | 1,131 | $ | 1,112 | ||||||||||
Average Net Rent Collected Per Unit (2) | $ | 1,104 | $ | 1,094 | $ | 1,095 | $ | 1,091 | $ | 1,070 | ||||||||||
Physical Occupancy - End of Period (3) | 96.6 | % | 96.6 | % | 96.1 | % | 97.3 | % | 97.3 | % | ||||||||||
| (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, 2013 and 2012 |
| (Unaudited; in thousands, except unit totals and per unit amounts) |
| Six Months Ended | ||||||||
| June 30, | ||||||||
| 2013 | 2012 | |||||||
| Property Revenue | $ | 80,110 | $ | 76,946 | ||||
| Property Operating and Maintenance Expenses | ||||||||
| Personnel - on site | 6,656 | 6,813 | ||||||
| Personnel - allocated | 1,896 | 1,811 | ||||||
| Advertising | 840 | 819 | ||||||
| Utilities | 3,578 | 3,505 | ||||||
| Repairs and maintenance | 4,852 | 4,917 | ||||||
| Real estate taxes and insurance | 10,936 | 10,421 | ||||||
| Other operating | 2,124 | 1,945 | ||||||
| Total Expenses | 30,882 | 30,231 | ||||||
| Property Net Operating Income | $ | 49,228 | $ | 46,715 | ||||
| Operating Margin | 61.5 | % | 60.7 | % | ||||
| Personnel - Allocated to Property Revenue | 2.4 | % | 2.4 | % | ||||
| Total Number of Units | 11,709 | 11,709 | ||||||
| NOI Per Unit | $ | 4,204 | $ | 3,990 | ||||
Average Net Rents Per Unit (1) | $ | 1,149 | $ | 1,107 | ||||
Average Net Rent Collected Per Unit (2) | $ | 1,099 | $ | 1,061 | ||||
Physical Occupancy - End of Period (3) | 96.6 | % | 97.3 | % | ||||
| (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, 2013 and 2012 |
| (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) | 2013 | 2012 | Change | 2013 | 2012 | Change | 2013 | 2012 | Change | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||||||||||||||||||
| Midwest Properties | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Indiana | 836 | 17 | $ | 870 | $ | 869 | 0.1 | % | $ | 907 | $ | 898 | 1.0 | % | $ | 912 | $ | 924 | (1.3 | )% | 96.3 | % | 97.6 | % | 68.9 | % | 73.2 | % | |||||||||||||||||||||||
| Southeast Michigan | 1,778 | 20 | 911 | 860 | 5.9 | % | 945 | 897 | 5.4 | % | 947 | 932 | 1.6 | % | 97.6 | % | 96.7 | % | 48.6 | % | 58.0 | % | |||||||||||||||||||||||||||||
| Western Michigan | 438 | 22 | 832 | 783 | 6.3 | % | 857 | 803 | 6.7 | % | 859 | 821 | 4.6 | % | 97.5 | % | 98.2 | % | 66.7 | % | 69.4 | % | |||||||||||||||||||||||||||||
| Central Ohio | 2,007 | 22 | 916 | 893 | 2.6 | % | 959 | 914 | 4.9 | % | 961 | 922 | 4.2 | % | 97.4 | % | 98.4 | % | 53.6 | % | 58.2 | % | |||||||||||||||||||||||||||||
| Northeast Ohio | 1,303 | 18 | 1,071 | 1,024 | 4.6 | % | 1,117 | 1,051 | 6.3 | % | 1,119 | 1,064 | 5.2 | % | 96.8 | % | 98.0 | % | 59.9 | % | 52.8 | % | |||||||||||||||||||||||||||||
| Total Midwest | 6,362 | 20 | 934 | 900 | 3.8 | % | 973 | 928 | 4.8 | % | 976 | 947 | 3.1 | % | 97.2 | % | 97.7 | % | 56.4 | % | 59.8 | % | |||||||||||||||||||||||||||||
| Mid-Atlantic Properties | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Maryland | 315 | 27 | 1,478 | 1,463 | 1.0 | % | 1,553 | 1,520 | 2.2 | % | 1,559 | 1,549 | 0.6 | % | 94.6 | % | 97.1 | % | 49.5 | % | 38.1 | % | |||||||||||||||||||||||||||||
| Metro DC | 602 | 18 | 1,616 | 1,554 | 4.0 | % | 1,687 | 1,637 | 3.1 | % | 1,689 | 1,659 | 1.8 | % | 95.7 | % | 95.8 | % | 54.5 | % | 53.2 | % | |||||||||||||||||||||||||||||
| Northern Virginia | 1,272 | 8 | 1,500 | 1,473 | 1.8 | % | 1,582 | 1,532 | 3.3 | % | 1,584 | 1,560 | 1.5 | % | 96.1 | % | 97.2 | % | 56.9 | % | 48.4 | % | |||||||||||||||||||||||||||||
| Southeast Virginia | 864 | 7 | 1,133 | 1,129 | 0.4 | % | 1,198 | 1,183 | 1.3 | % | 1,202 | 1,212 | (0.8 | )% | 95.9 | % | 97.2 | % | 50.0 | % | 57.4 | % | |||||||||||||||||||||||||||||
| Total Mid-Atlantic | 3,053 | 12 | 1,417 | 1,391 | 1.9 | % | 1,491 | 1,452 | 2.7 | % | 1,494 | 1,480 | 0.9 | % | 95.8 | % | 96.9 | % | 53.7 | % | 50.8 | % | |||||||||||||||||||||||||||||
| Southeast Properties | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Central Florida | 288 | 10 | 1,056 | 997 | 5.9 | % | 1,098 | 1,053 | 4.3 | % | 1,104 | 1,113 | (0.8 | )% | 96.2 | % | 97.9 | % | 69.4 | % | 61.1 | % | |||||||||||||||||||||||||||||
| Southeast Florida | 1,206 | 15 | 1,291 | 1,247 | 3.5 | % | 1,353 | 1,314 | 3.0 | % | 1,356 | 1,376 | (1.5 | )% | 95.6 | % | 95.4 | % | 58.4 | % | 69.0 | % | |||||||||||||||||||||||||||||
| Georgia | 354 | 21 | 1,033 | 979 | 5.5 | % | 1,078 | 1,024 | 5.3 | % | 1,079 | 1,049 | 2.9 | % | 96.3 | % | 98.0 | % | 68.9 | % | 73.4 | % | |||||||||||||||||||||||||||||
| Total Southeast | 1,848 | 16 | 1,205 | 1,156 | 4.2 | % | 1,261 | 1,218 | 3.5 | % | 1,264 | 1,273 | (0.7 | )% | 95.8 | % | 96.3 | % | 62.1 | % | 68.6 | % | |||||||||||||||||||||||||||||
| Southwest Properties | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Texas | 446 | 15 | 979 | 945 | 3.6 | % | 1,018 | 983 | 3.6 | % | 1,019 | 1,041 | (2.1 | )% | 97.1 | % | 97.8 | % | 42.2 | % | 45.7 | % | |||||||||||||||||||||||||||||
| Total Southwest | 446 | 15 | 979 | 945 | 3.6 | % | 1,018 | 983 | 3.6 | % | 1,019 | 1,041 | (2.1 | )% | 97.1 | % | 97.8 | % | 42.2 | % | 45.7 | % | |||||||||||||||||||||||||||||
| Total/Average Same | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Community | 11,709 | 17 | $ | 1,104 | $ | 1,070 | 3.2 | % | $ | 1,155 | $ | 1,112 | 3.9 | % | $ | 1,158 | $ | 1,141 | 1.5 | % | 96.6 | % | 97.3 | % | 56.1 | % | 58.3 | % | |||||||||||||||||||||||
| (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, 2013 and March 31, 2013 |
| (Unaudited; in thousands, except unit totals) |
| Q2 | Q1 | Q2 | Q1 | ||||||||||||||||||||
| No. of | Physical | Physical | 2013 | 2013 | Increase/ | % | |||||||||||||||||
| Units | Occupancy (1) | Occupancy (1) | Revenue | Revenue | (Decrease) | Change | |||||||||||||||||
| Property Revenue | |||||||||||||||||||||||
| Same Community | |||||||||||||||||||||||
| Midwest Properties | |||||||||||||||||||||||
| Indiana | 836 | 96.3 | % | 97.0 | % | $ | 2,280 | $ | 2,219 | $ | 61 | 2.7 | % | ||||||||||
| Southeast Michigan | 1,778 | 97.6 | % | 96.6 | % | 5,076 | 4,935 | 141 | 2.9 | % | |||||||||||||
| Western Michigan | 438 | 97.5 | % | 99.3 | % | 1,180 | 1,154 | 26 | 2.3 | % | |||||||||||||
| Central Ohio | 2,007 | 97.4 | % | 96.4 | % | 5,799 | 5,665 | 134 | 2.4 | % | |||||||||||||
| Northeast Ohio | 1,303 | 96.8 | % | 96.9 | % | 4,426 | 4,308 | 118 | 2.7 | % | |||||||||||||
| Total Midwest Properties | 6,362 | 97.2 | % | 96.8 | % | 18,761 | 18,281 | 480 | 2.6 | % | |||||||||||||
| Mid-Atlantic Properties | |||||||||||||||||||||||
| Maryland | 315 | 94.6 | % | 95.9 | % | 1,438 | 1,420 | 18 | 1.3 | % | |||||||||||||
| Metro DC | 602 | 95.7 | % | 97.0 | % | 2,984 | 2,964 | 20 | 0.7 | % | |||||||||||||
| Northern Virginia | 1,272 | 96.1 | % | 96.4 | % | 5,936 | 5,922 | 14 | 0.2 | % | |||||||||||||
| Southeast Virginia | 864 | 95.9 | % | 95.0 | % | 3,033 | 2,992 | 41 | 1.4 | % | |||||||||||||
| Total Mid-Atlantic Properties | 3,053 | 95.8 | % | 96.1 | % | 13,391 | 13,298 | 93 | 0.7 | % | |||||||||||||
| Southeast Properties | |||||||||||||||||||||||
| Central Florida | 288 | 96.2 | % | 96.5 | % | 945 | 924 | 21 | 2.3 | % | |||||||||||||
| Southeast Florida | 1,206 | 95.6 | % | 96.0 | % | 4,805 | 4,771 | 34 | 0.7 | % | |||||||||||||
| Georgia | 354 | 96.3 | % | 98.0 | % | 1,125 | 1,112 | 13 | 1.2 | % | |||||||||||||
| Total Southeast Properties | 1,848 | 95.8 | % | 96.5 | % | 6,875 | 6,807 | 68 | 1.0 | % | |||||||||||||
| Southwest Properties | |||||||||||||||||||||||
| Texas | 446 | 97.1 | % | 96.2 | % | 1,360 | 1,337 | 23 | 1.7 | % | |||||||||||||
| Total Southwest Properties | 446 | 97.1 | % | 96.2 | % | 1,360 | 1,337 | 23 | 1.7 | % | |||||||||||||
| Total Same Community | 11,709 | 96.6 | % | 96.6 | % | 40,387 | 39,723 | 664 | 1.7 | % | |||||||||||||
Acquisitions (2) | |||||||||||||||||||||||
| North Carolina | 760 | 97.0 | % | 96.2 | % | 2,547 | 2,493 | 54 | 2.2 | % | |||||||||||||
| Texas | 396 | 97.0 | % | 96.5 | % | 1,398 | 1,393 | 5 | 0.4 | % | |||||||||||||
| Development | |||||||||||||||||||||||
| Tennessee | 242 | 95.5 | % | 97.9 | % | 1,093 | 1,072 | 21 | 2.0 | % | |||||||||||||
| Total Property Revenue | 13,107 | 96.6 | % | 96.6 | % | $ | 45,425 | $ | 44,681 | $ | 744 | 1.7 | % | ||||||||||
| (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. |
19
| Associated Estates Realty Corporation |
| Sequential Property Operating Expenses |
| For the Three Months Ended June 30, 2013 and March 31, 2013 |
| (Unaudited; in thousands, except unit totals) |
| Q2 | Q1 | Q2 | Q1 | ||||||||||||||||||||
| No. of | Physical | Physical | 2013 | 2013 | Increase/ | % | |||||||||||||||||
| Units | Occupancy (1) | Occupancy (1) | Expenses | Expenses | (Decrease) | Change | |||||||||||||||||
| Property Operating Expenses | |||||||||||||||||||||||
| Same Community | |||||||||||||||||||||||
| Midwest Properties | |||||||||||||||||||||||
| Indiana | 836 | 96.3 | % | 97.0 | % | $ | 1,069 | $ | 809 | $ | 260 | 32.1 | % | ||||||||||
| Southeast Michigan | 1,778 | 97.6 | % | 96.6 | % | 1,997 | 1,980 | 17 | 0.9 | % | |||||||||||||
| Western Michigan | 438 | 97.5 | % | 99.3 | % | 498 | 506 | (8 | ) | (1.6 | )% | ||||||||||||
| Central Ohio | 2,007 | 97.4 | % | 96.4 | % | 2,601 | 2,464 | 137 | 5.6 | % | |||||||||||||
| Northeast Ohio | 1,303 | 96.8 | % | 96.9 | % | 1,709 | 1,649 | 60 | 3.6 | % | |||||||||||||
| Total Midwest Properties | 6,362 | 97.2 | % | 96.8 | % | 7,874 | 7,408 | 466 | 6.3 | % | |||||||||||||
| Mid-Atlantic Properties | |||||||||||||||||||||||
| Maryland | 315 | 94.6 | % | 95.9 | % | 491 | 494 | (3 | ) | (0.6 | )% | ||||||||||||
| Metro DC | 602 | 95.7 | % | 97.0 | % | 986 | 941 | 45 | 4.8 | % | |||||||||||||
| Northern Virginia | 1,272 | 96.1 | % | 96.4 | % | 1,860 | 1,916 | (56 | ) | (2.9 | )% | ||||||||||||
| Southeast Virginia | 864 | 95.9 | % | 95.0 | % | 939 | 907 | 32 | 3.5 | % | |||||||||||||
| Total Mid-Atlantic Properties | 3,053 | 95.8 | % | 96.1 | % | 4,276 | 4,258 | 18 | 0.4 | % | |||||||||||||
| Southeast Properties | |||||||||||||||||||||||
| Central Florida | 288 | 96.2 | % | 96.5 | % | 387 | 384 | 3 | 0.8 | % | |||||||||||||
| Southeast Florida | 1,206 | 95.6 | % | 96.0 | % | 2,027 | 2,098 | (71 | ) | (3.4 | )% | ||||||||||||
| Georgia | 354 | 96.3 | % | 98.0 | % | 507 | 493 | 14 | 2.8 | % | |||||||||||||
| Total Southeast Properties | 1,848 | 95.8 | % | 96.5 | % | 2,921 | 2,975 | (54 | ) | (1.8 | )% | ||||||||||||
| Southwest Properties | |||||||||||||||||||||||
| Texas | 446 | 97.1 | % | 96.2 | % | 559 | 612 | (53 | ) | (8.7 | )% | ||||||||||||
| Total Southwest Properties | 446 | 97.1 | % | 96.2 | % | 559 | 612 | (53 | ) | (8.7 | )% | ||||||||||||
| Total Same Community | 11,709 | 96.6 | % | 96.6 | % | 15,630 | 15,253 | 377 | 2.5 | % | |||||||||||||
Acquisitions (2) | |||||||||||||||||||||||
| North Carolina | 760 | 97.0 | % | 96.2 | % | 835 | 812 | 23 | 2.8 | % | |||||||||||||
| Texas | 396 | 97.0 | % | 96.5 | % | 711 | 675 | 36 | 5.3 | % | |||||||||||||
| Development | |||||||||||||||||||||||
| Tennessee | 242 | 95.5 | % | 97.9 | % | 441 | 352 | 89 | 25.3 | % | |||||||||||||
| Total Property Operating Expenses | 13,107 | 96.6 | % | 96.6 | % | $ | 17,617 | $ | 17,092 | $ | 525 | 3.1 | % | ||||||||||
| (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. |
20
| Associated Estates Realty Corporation |
| Sequential Property Net Operating Income (Property NOI) |
| For the Three Months Ended June 30, 2013 and March 31, 2013 |
| (Unaudited; in thousands, except unit totals) |
| Q2 | Q1 | Q2 | Q1 | ||||||||||||||||||||
| No. of | Physical | Physical | 2013 | 2013 | Increase/ | % | |||||||||||||||||
| Units | Occupancy (2) | Occupancy (2) | NOI | NOI | (Decrease) | Change | |||||||||||||||||
Property NOI (1) | |||||||||||||||||||||||
| Same Community | |||||||||||||||||||||||
| Midwest Properties | |||||||||||||||||||||||
| Indiana | 836 | 96.3 | % | 97.0 | % | $ | 1,211 | $ | 1,410 | $ | (199 | ) | (14.1 | )% | |||||||||
| Southeast Michigan | 1,778 | 97.6 | % | 96.6 | % | 3,079 | 2,955 | 124 | 4.2 | % | |||||||||||||
| Western Michigan | 438 | 97.5 | % | 99.3 | % | 682 | 648 | 34 | 5.2 | % | |||||||||||||
| Central Ohio | 2,007 | 97.4 | % | 96.4 | % | 3,198 | 3,201 | (3 | ) | (0.1 | )% | ||||||||||||
| Northeast Ohio | 1,303 | 96.8 | % | 96.9 | % | 2,717 | 2,659 | 58 | 2.2 | % | |||||||||||||
| Total Midwest Properties | 6,362 | 97.2 | % | 96.8 | % | 10,887 | 10,873 | 14 | 0.1 | % | |||||||||||||
| Mid-Atlantic Properties | |||||||||||||||||||||||
| Maryland | 315 | 94.6 | % | 95.9 | % | 947 | 926 | 21 | 2.3 | % | |||||||||||||
| Metro DC | 602 | 95.7 | % | 97.0 | % | 1,998 | 2,023 | (25 | ) | (1.2 | )% | ||||||||||||
| Northern Virginia | 1,272 | 96.1 | % | 96.4 | % | 4,076 | 4,006 | 70 | 1.7 | % | |||||||||||||
| Southeast Virginia | 864 | 95.9 | % | 95.0 | % | 2,094 | 2,085 | 9 | 0.4 | % | |||||||||||||
| Total Mid-Atlantic Properties | 3,053 | 95.8 | % | 96.1 | % | 9,115 | 9,040 | 75 | 0.8 | % | |||||||||||||
| Southeast Properties | |||||||||||||||||||||||
| Central Florida | 288 | 96.2 | % | 96.5 | % | 558 | 540 | 18 | 3.3 | % | |||||||||||||
| Southeast Florida | 1,206 | 95.6 | % | 96.0 | % | 2,778 | 2,673 | 105 | 3.9 | % | |||||||||||||
| Georgia | 354 | 96.3 | % | 98.0 | % | 618 | 619 | (1 | ) | (0.2 | )% | ||||||||||||
| Total Southeast Properties | 1,848 | 95.8 | % | 96.5 | % | 3,954 | 3,832 | 122 | 3.2 | % | |||||||||||||
| Southwest Properties | |||||||||||||||||||||||
| Texas | 446 | 97.1 | % | 96.2 | % | 801 | 725 | 76 | 10.5 | % | |||||||||||||
| Total Southwest Properties | 446 | 97.1 | % | 96.2 | % | 801 | 725 | 76 | 10.5 | % | |||||||||||||
| Total Same Community | 11,709 | 96.6 | % | 96.6 | % | 24,757 | 24,470 | 287 | 1.2 | % | |||||||||||||
Acquisitions (3) | |||||||||||||||||||||||
| North Carolina | 760 | 97.0 | % | 96.2 | % | 1,712 | 1,681 | 31 | 1.8 | % | |||||||||||||
| Texas | 396 | 97.0 | % | 96.5 | % | 687 | 718 | (31 | ) | (4.3 | )% | ||||||||||||
| Development | |||||||||||||||||||||||
| Tennessee | 242 | 95.5 | % | 97.9 | % | 652 | 720 | (68 | ) | (9.4 | )% | ||||||||||||
| Total Property NOI | 13,107 | 96.6 | % | 96.6 | % | $ | 27,808 | $ | 27,589 | $ | 219 | 0.8 | % | ||||||||||
| (1) | See page 32 for a reconciliation of net income 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. |
21
| Associated Estates Realty Corporation |
| Second Quarter Property Revenue |
| For the Three Months Ended June 30, 2013 and 2012 |
| (Unaudited; in thousands, except unit totals) |
| 2013 | 2012 | Q2 | Q2 | |||||||||||||||||||||
| No. of | Physical | Physical | 2013 | 2012 | Increase/ | % | ||||||||||||||||||
| Units | Occupancy (1) | Occupancy (1) | Revenue | Revenue | (Decrease) | Change | ||||||||||||||||||
| Property Revenue | ||||||||||||||||||||||||
| Same Community | ||||||||||||||||||||||||
| Midwest Properties | ||||||||||||||||||||||||
| Indiana | 836 | 96.3 | % | 97.6 | % | $ | 2,280 | $ | 2,264 | $ | 16 | 0.7 | % | |||||||||||
| Southeast Michigan | 1,778 | 97.6 | % | 96.7 | % | 5,076 | 4,778 | 298 | 6.2 | % | ||||||||||||||
| Western Michigan | 438 | 97.5 | % | 98.2 | % | 1,180 | 1,103 | 77 | 7.0 | % | ||||||||||||||
| Central Ohio | 2,007 | 97.4 | % | 98.4 | % | 5,799 | 5,574 | 225 | 4.0 | % | ||||||||||||||
| Northeast Ohio | 1,303 | 96.8 | % | 98.0 | % | 4,426 | 4,146 | 280 | 6.8 | % | ||||||||||||||
| Total Midwest Properties | 6,362 | 97.2 | % | 97.7 | % | 18,761 | 17,865 | 896 | 5.0 | % | ||||||||||||||
| Mid-Atlantic Properties | ||||||||||||||||||||||||
| Maryland | 315 | 94.6 | % | 97.1 | % | 1,438 | 1,410 | 28 | 2.0 | % | ||||||||||||||
| Metro DC | 602 | 95.7 | % | 95.8 | % | 2,984 | 2,871 | 113 | 3.9 | % | ||||||||||||||
| Northern Virginia | 1,272 | 96.1 | % | 97.2 | % | 5,936 | 5,791 | 145 | 2.5 | % | ||||||||||||||
| Southeast Virginia | 864 | 95.9 | % | 97.2 | % | 3,033 | 3,007 | 26 | 0.9 | % | ||||||||||||||
| Total Mid-Atlantic Properties | 3,053 | 95.8 | % | 96.9 | % | 13,391 | 13,079 | 312 | 2.4 | % | ||||||||||||||
| Southeast Properties | ||||||||||||||||||||||||
| Central Florida | 288 | 96.2 | % | 97.9 | % | 945 | 903 | 42 | 4.7 | % | ||||||||||||||
| Southeast Florida | 1,206 | 95.6 | % | 95.4 | % | 4,805 | 4,660 | 145 | 3.1 | % | ||||||||||||||
| Georgia | 354 | 96.3 | % | 98.0 | % | 1,125 | 1,071 | 54 | 5.0 | % | ||||||||||||||
| Total Southeast Properties | 1,848 | 95.8 | % | 96.3 | % | 6,875 | 6,634 | 241 | 3.6 | % | ||||||||||||||
| Southwest Properties | ||||||||||||||||||||||||
| Texas | 446 | 97.1 | % | 97.8 | % | 1,360 | 1,295 | 65 | 5.0 | % | ||||||||||||||
| Total Southwest Properties | 446 | 97.1 | % | 97.8 | % | 1,360 | 1,295 | 65 | 5.0 | % | ||||||||||||||
| Total Same Community | 11,709 | 96.6 | % | 97.3 | % | 40,387 | 38,873 | 1,514 | 3.9 | % | ||||||||||||||
Acquisitions (2) | ||||||||||||||||||||||||
| North Carolina | 760 | 97.0 | % | 96.1 | % | 2,547 | 329 | 2,218 | N/A | |||||||||||||||
| Texas | 396 | 97.0 | % | N/A | 1,398 | N/A | 1,398 | N/A | ||||||||||||||||
| Development | ||||||||||||||||||||||||
| Tennessee | 242 | 95.5 | % | N/A | 1,093 | 484 | 609 | N/A | ||||||||||||||||
| Total Property Revenue | 13,107 | 96.6 | % | 97.3 | % | $ | 45,425 | $ | 39,686 | $ | 5,739 | 14.5 | % | |||||||||||
| (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. |
22
| Associated Estates Realty Corporation |
| Second Quarter Property Operating Expenses |
| For the Three Months Ended June 30, 2013 and 2012 |
| (Unaudited; in thousands, except unit totals) |
| 2013 | 2012 | Q2 | Q2 | ||||||||||||||||||||
| No. of | Physical | Physical | 2013 | 2012 | Increase/ | % | |||||||||||||||||
| Units | Occupancy (1) | Occupancy (1) | Expenses | Expenses | (Decrease) | Change | |||||||||||||||||
| Property Operating Expenses | |||||||||||||||||||||||
| Same Community | |||||||||||||||||||||||
| Midwest Properties | |||||||||||||||||||||||
| Indiana | 836 | 96.3 | % | 97.6 | % | $ | 1,069 | $ | 916 | $ | 153 | 16.7 | % | ||||||||||
| Southeast Michigan | 1,778 | 97.6 | % | 96.7 | % | 1,997 | 2,021 | (24 | ) | (1.2 | )% | ||||||||||||
| Western Michigan | 438 | 97.5 | % | 98.2 | % | 498 | 479 | 19 | 4.0 | % | |||||||||||||
| Central Ohio | 2,007 | 97.4 | % | 98.4 | % | 2,601 | 2,545 | 56 | 2.2 | % | |||||||||||||
| Northeast Ohio | 1,303 | 96.8 | % | 98.0 | % | 1,709 | 1,596 | 113 | 7.1 | % | |||||||||||||
| Total Midwest Properties | 6,362 | 97.2 | % | 97.7 | % | 7,874 | 7,557 | 317 | 4.2 | % | |||||||||||||
| Mid-Atlantic Properties | |||||||||||||||||||||||
| Maryland | 315 | 94.6 | % | 97.1 | % | 491 | 498 | (7 | ) | (1.4 | )% | ||||||||||||
| Metro DC | 602 | 95.7 | % | 95.8 | % | 986 | 912 | 74 | 8.1 | % | |||||||||||||
| Northern Virginia | 1,272 | 96.1 | % | 97.2 | % | 1,860 | 1,857 | 3 | 0.2 | % | |||||||||||||
| Southeast Virginia | 864 | 95.9 | % | 97.2 | % | 939 | 985 | (46 | ) | (4.7 | )% | ||||||||||||
| Total Mid-Atlantic Properties | 3,053 | 95.8 | % | 96.9 | % | 4,276 | 4,252 | 24 | 0.6 | % | |||||||||||||
| Southeast Properties | |||||||||||||||||||||||
| Central Florida | 288 | 96.2 | % | 97.9 | % | 387 | 378 | 9 | 2.4 | % | |||||||||||||
| Southeast Florida | 1,206 | 95.6 | % | 95.4 | % | 2,027 | 1,959 | 68 | 3.5 | % | |||||||||||||
| Georgia | 354 | 96.3 | % | 98.0 | % | 507 | 517 | (10 | ) | (1.9 | )% | ||||||||||||
| Total Southeast Properties | 1,848 | 95.8 | % | 96.3 | % | 2,921 | 2,854 | 67 | 2.3 | % | |||||||||||||
| Southwest Properties | |||||||||||||||||||||||
| Texas | 446 | 97.1 | % | 97.8 | % | 559 | 609 | (50 | ) | (8.2 | )% | ||||||||||||
| Total Southwest Properties | 446 | 97.1 | % | 97.8 | % | 559 | 609 | (50 | ) | (8.2 | )% | ||||||||||||
| Total Same Community | 11,709 | 96.6 | % | 97.3 | % | 15,630 | 15,272 | 358 | 2.3 | % | |||||||||||||
Acquisitions (2) | |||||||||||||||||||||||
| North Carolina | 760 | 97.0 | % | 96.1 | % | 835 | 108 | 727 | N/A | ||||||||||||||
| Texas | 396 | 97.0 | % | N/A | 711 | N/A | 711 | N/A | |||||||||||||||
| Development | |||||||||||||||||||||||
| Tennessee | 242 | 95.5 | % | N/A | 441 | 202 | 239 | N/A | |||||||||||||||
| Total Property Operating Expenses | 13,107 | 96.6 | % | 97.3 | % | $ | 17,617 | $ | 15,582 | $ | 2,035 | 13.1 | % | ||||||||||
| (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. |
23
| Associated Estates Realty Corporation |
| Second Quarter Property Net Operating Income (Property NOI) |
| For the Three Months Ended June 30, 2013 and 2012 |
| (Unaudited; in thousands, except unit totals) |
| 2013 | 2012 | Q2 | Q2 | ||||||||||||||||||||
| No. of | Physical | Physical | 2013 | 2012 | Increase/ | % | |||||||||||||||||
| Units | Occupancy (2) | Occupancy (2) | NOI | NOI | (Decrease) | Change | |||||||||||||||||
Property NOI (1) | |||||||||||||||||||||||
| Same Community | |||||||||||||||||||||||
| Midwest Properties | |||||||||||||||||||||||
| Indiana | 836 | 96.3 | % | 97.6 | % | $ | 1,211 | $ | 1,348 | $ | (137 | ) | (10.2 | )% | |||||||||
| Southeast Michigan | 1,778 | 97.6 | % | 96.7 | % | 3,079 | 2,757 | 322 | 11.7 | % | |||||||||||||
| Western Michigan | 438 | 97.5 | % | 98.2 | % | 682 | 624 | 58 | 9.3 | % | |||||||||||||
| Central Ohio | 2,007 | 97.4 | % | 98.4 | % | 3,198 | 3,029 | 169 | 5.6 | % | |||||||||||||
| Northeast Ohio | 1,303 | 96.8 | % | 98.0 | % | 2,717 | 2,550 | 167 | 6.5 | % | |||||||||||||
| Total Midwest Properties | 6,362 | 97.2 | % | 97.7 | % | 10,887 | 10,308 | 579 | 5.6 | % | |||||||||||||
| Mid-Atlantic Properties | |||||||||||||||||||||||
| Maryland | 315 | 94.6 | % | 97.1 | % | 947 | 912 | 35 | 3.8 | % | |||||||||||||
| Metro DC | 602 | 95.7 | % | 95.8 | % | 1,998 | 1,959 | 39 | 2.0 | % | |||||||||||||
| Northern Virginia | 1,272 | 96.1 | % | 97.2 | % | 4,076 | 3,934 | 142 | 3.6 | % | |||||||||||||
| Southeast Virginia | 864 | 95.9 | % | 97.2 | % | 2,094 | 2,022 | 72 | 3.6 | % | |||||||||||||
| Total Mid-Atlantic Properties | 3,053 | 95.8 | % | 96.9 | % | 9,115 | 8,827 | 288 | 3.3 | % | |||||||||||||
| Southeast Properties | |||||||||||||||||||||||
| Central Florida | 288 | 96.2 | % | 97.9 | % | 558 | 525 | 33 | 6.3 | % | |||||||||||||
| Southeast Florida | 1,206 | 95.6 | % | 95.4 | % | 2,778 | 2,701 | 77 | 2.9 | % | |||||||||||||
| Georgia | 354 | 96.3 | % | 98.0 | % | 618 | 554 | 64 | 11.6 | % | |||||||||||||
| Total Southeast Properties | 1,848 | 95.8 | % | 96.3 | % | 3,954 | 3,780 | 174 | 4.6 | % | |||||||||||||
| Southwest Properties | |||||||||||||||||||||||
| Texas | 446 | 97.1 | % | 97.8 | % | 801 | 686 | 115 | 16.8 | % | |||||||||||||
| Total Southwest Properties | 446 | 97.1 | % | 97.8 | % | 801 | 686 | 115 | 16.8 | % | |||||||||||||
| Total Same Community | 11,709 | 96.6 | % | 97.3 | % | 24,757 | 23,601 | 1,156 | 4.9 | % | |||||||||||||
Acquisitions (3) | |||||||||||||||||||||||
| North Carolina | 760 | 97.0 | % | 96.1 | % | 1,712 | 221 | 1,491 | N/A | ||||||||||||||
| Texas | 396 | 97.0 | % | N/A | 687 | N/A | 687 | N/A | |||||||||||||||
| Development | |||||||||||||||||||||||
| Tennessee | 242 | 95.5 | % | N/A | 652 | 282 | 370 | N/A | |||||||||||||||
| Total Property NOI | 13,107 | 96.6 | % | 97.3 | % | $ | 27,808 | $ | 24,104 | $ | 3,704 | 15.4 | % | ||||||||||
| (1) | See page 32 for a reconciliation of net income 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. |
24
| Associated Estates Realty Corporation |
| Year-to-Date Property Revenue |
| For the Six Months Ended June 30, 2013 and 2012 |
| (Unaudited; in thousands, except unit totals) |
| 2013 | 2012 | YTD | YTD | ||||||||||||||||||||
| No. of | Physical | Physical | 2013 | 2012 | Increase/ | % | |||||||||||||||||
| Property Revenue | Units | Occupancy (1) | Occupancy (1) | Revenues | Revenues | (Decrease) | Change | ||||||||||||||||
| Same Community | |||||||||||||||||||||||
| Midwest Properties | |||||||||||||||||||||||
| Indiana | 836 | 96.3 | % | 97.6 | % | $ | 4,499 | $ | 4,498 | $ | 1 | 0.0 | % | ||||||||||
| Southeast Michigan | 1,778 | 97.6 | % | 96.7 | % | 10,012 | 9,441 | 571 | 6.0 | % | |||||||||||||
| Western Michigan | 438 | 97.5 | % | 98.2 | % | 2,334 | 2,173 | 161 | 7.4 | % | |||||||||||||
| Central Ohio | 2,007 | 97.4 | % | 98.4 | % | 11,464 | 10,957 | 507 | 4.6 | % | |||||||||||||
| Northeast Ohio | 1,303 | 96.8 | % | 98.0 | % | 8,734 | 8,185 | 549 | 6.7 | % | |||||||||||||
| Total Midwest Properties | 6,362 | 97.2 | % | 97.7 | % | 37,043 | 35,254 | 1,789 | 5.1 | % | |||||||||||||
| Mid-Atlantic Properties | |||||||||||||||||||||||
| Maryland | 315 | 94.6 | % | 97.1 | % | 2,858 | 2,804 | 54 | 1.9 | % | |||||||||||||
| Metro DC | 602 | 95.7 | % | 95.8 | % | 5,949 | 5,720 | 229 | 4.0 | % | |||||||||||||
| Northern Virginia | 1,272 | 96.1 | % | 97.2 | % | 11,858 | 11,384 | 474 | 4.2 | % | |||||||||||||
| Southeast Virginia | 864 | 95.9 | % | 97.2 | % | 6,024 | 5,975 | 49 | 0.8 | % | |||||||||||||
| Total Mid-Atlantic Properties | 3,053 | 95.8 | % | 96.9 | % | 26,689 | 25,883 | 806 | 3.1 | % | |||||||||||||
| Southeast Properties | |||||||||||||||||||||||
| Central Florida | 288 | 96.2 | % | 97.9 | % | 1,869 | 1,784 | 85 | 4.8 | % | |||||||||||||
| Southeast Florida | 1,206 | 95.6 | % | 95.4 | % | 9,576 | 9,321 | 255 | 2.7 | % | |||||||||||||
| Georgia | 354 | 96.3 | % | 98.0 | % | 2,237 | 2,133 | 104 | 4.9 | % | |||||||||||||
| Total Southeast Properties | 1,848 | 95.8 | % | 96.3 | % | 13,682 | 13,238 | 444 | 3.4 | % | |||||||||||||
| Southwest Properties | |||||||||||||||||||||||
| Texas | 446 | 97.1 | % | 97.8 | % | 2,696 | 2,571 | 125 | 4.9 | % | |||||||||||||
| Total Southwest Properties | 446 | 97.1 | % | 97.8 | % | 2,696 | 2,571 | 125 | 4.9 | % | |||||||||||||
| Total Same Community | 11,709 | 96.6 | % | 97.3 | % | 80,110 | 76,946 | 3,164 | 4.1 | % | |||||||||||||
Acquisitions (2) | |||||||||||||||||||||||
| North Carolina | 760 | 97.0 | % | 96.1 | % | 5,040 | 329 | 4,711 | N/A | ||||||||||||||
| Texas | 396 | 97.0 | % | N/A | 2,791 | N/A | 2,791 | N/A | |||||||||||||||
| Development | |||||||||||||||||||||||
| Tennessee | 242 | 95.5 | % | N/A | 2,165 | 618 | 1,547 | N/A | |||||||||||||||
| Total Property Revenue | 13,107 | 96.6 | % | 97.3 | % | $ | 90,106 | $ | 77,893 | $ | 12,213 | 15.7 | % | ||||||||||
| (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, 2013 and 2012 |
| (Unaudited; in thousands, except unit totals) |
| 2013 | 2012 | YTD | YTD | ||||||||||||||||||||
| No. of | Physical | Physical | 2013 | 2012 | Increase/ | % | |||||||||||||||||
| Property Operating Expenses | Units | Occupancy (1) | Occupancy (1) | Expenses | Expenses | (Decrease) | Change | ||||||||||||||||
| Same Community | |||||||||||||||||||||||
| Midwest Properties | |||||||||||||||||||||||
| Indiana | 836 | 96.3 | % | 97.6 | % | $ | 1,878 | $ | 1,779 | $ | 99 | 5.6 | % | ||||||||||
| Southeast Michigan | 1,778 | 97.6 | % | 96.7 | % | 3,977 | 3,945 | 32 | 0.8 | % | |||||||||||||
| Western Michigan | 438 | 97.5 | % | 98.2 | % | 1,004 | 954 | 50 | 5.2 | % | |||||||||||||
| Central Ohio | 2,007 | 97.4 | % | 98.4 | % | 5,064 | 4,878 | 186 | 3.8 | % | |||||||||||||
| Northeast Ohio | 1,303 | 96.8 | % | 98.0 | % | 3,359 | 3,118 | 241 | 7.7 | % | |||||||||||||
| Total Midwest Properties | 6,362 | 97.2 | % | 97.7 | % | 15,282 | 14,674 | 608 | 4.1 | % | |||||||||||||
| Mid-Atlantic Properties | |||||||||||||||||||||||
| Maryland | 315 | 94.6 | % | 97.1 | % | 985 | 985 | — | — | % | |||||||||||||
| Metro DC | 602 | 95.7 | % | 95.8 | % | 1,927 | 1,871 | 56 | 3.0 | % | |||||||||||||
| Northern Virginia | 1,272 | 96.1 | % | 97.2 | % | 3,776 | 3,723 | 53 | 1.4 | % | |||||||||||||
| Southeast Virginia | 864 | 95.9 | % | 97.2 | % | 1,846 | 2,000 | (154 | ) | (7.7 | %) | ||||||||||||
| Total Mid-Atlantic Properties | 3,053 | 95.8 | % | 96.9 | % | 8,534 | 8,579 | (45 | ) | (0.5 | %) | ||||||||||||
| Southeast Properties | |||||||||||||||||||||||
| Central Florida | 288 | 96.2 | % | 97.9 | % | 770 | 738 | 32 | 4.3 | % | |||||||||||||
| Southeast Florida | 1,206 | 95.6 | % | 95.4 | % | 4,124 | 4,034 | 90 | 2.2 | % | |||||||||||||
| Georgia | 354 | 96.3 | % | 98.0 | % | 1,001 | 980 | 21 | 2.1 | % | |||||||||||||
| Total Southeast Properties | 1,848 | 95.8 | % | 96.3 | % | 5,895 | 5,752 | 143 | 2.5 | % | |||||||||||||
| Southwest Properties | |||||||||||||||||||||||
| Texas | 446 | 97.1 | % | 97.8 | % | 1,171 | 1,226 | (55 | ) | (4.5 | )% | ||||||||||||
| Total Southwest Properties | 446 | 97.1 | % | 97.8 | % | 1,171 | 1,226 | (55 | ) | (4.5 | )% | ||||||||||||
| Total Same Community | 11,709 | 96.6 | % | 97.3 | % | 30,882 | 30,231 | 651 | 2.2 | % | |||||||||||||
Acquisitions (2) | |||||||||||||||||||||||
| North Carolina | 760 | 97.0 | % | 96.1 | % | 1,647 | 108 | 1,539 | N/A | ||||||||||||||
| Texas | 396 | 97.0 | % | N/A | 1,386 | N/A | 1,386 | N/A | |||||||||||||||
| Development | |||||||||||||||||||||||
| Tennessee | 242 | 95.5 | % | N/A | 793 | 315 | 478 | N/A | |||||||||||||||
| Total Property Operating Expenses | 13,107 | 96.6 | % | 97.3 | % | $ | 34,708 | $ | 30,654 | $ | 4,054 | 13.2 | % | ||||||||||
| (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. |
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| Associated Estates Realty Corporation |
| Year-to-Date Property Net Operating Income (Property NOI) |
| For the Six Months Ended June 30, 2013 and 2012 |
| (Unaudited; in thousands, except unit totals) |
| 2013 | 2012 | YTD | YTD | ||||||||||||||||||||
| No. of | Physical | Physical | 2013 | 2012 | Increase/ | % | |||||||||||||||||
Property NOI (1) | Units | Occupancy (2) | Occupancy (2) | NOI | NOI | (Decrease) | Change | ||||||||||||||||
| Same Community | |||||||||||||||||||||||
| Midwest Properties | |||||||||||||||||||||||
| Indiana | 836 | 96.3 | % | 97.6 | % | $ | 2,621 | $ | 2,719 | $ | (98 | ) | (3.6 | )% | |||||||||
| Southeast Michigan | 1,778 | 97.6 | % | 96.7 | % | 6,035 | 5,496 | 539 | 9.8 | % | |||||||||||||
| Western Michigan | 438 | 97.5 | % | 98.2 | % | 1,330 | 1,219 | 111 | 9.1 | % | |||||||||||||
| Central Ohio | 2,007 | 97.4 | % | 98.4 | % | 6,400 | 6,079 | 321 | 5.3 | % | |||||||||||||
| Northeast Ohio | 1,303 | 96.8 | % | 98.0 | % | 5,375 | 5,067 | 308 | 6.1 | % | |||||||||||||
| Total Midwest Properties | 6,362 | 97.2 | % | 97.7 | % | 21,761 | 20,580 | 1,181 | 5.7 | % | |||||||||||||
| Mid-Atlantic Properties | |||||||||||||||||||||||
| Maryland | 315 | 94.6 | % | 97.1 | % | 1,873 | 1,819 | 54 | 3.0 | % | |||||||||||||
| Metro DC | 602 | 95.7 | % | 95.8 | % | 4,022 | 3,849 | 173 | 4.5 | % | |||||||||||||
| Northern Virgina | 1,272 | 96.1 | % | 97.2 | % | 8,082 | 7,661 | 421 | 5.5 | % | |||||||||||||
| Southeast Virginia | 864 | 95.9 | % | 97.2 | % | 4,178 | 3,975 | 203 | 5.1 | % | |||||||||||||
| Total Mid-Atlantic Properties | 3,053 | 95.8 | % | 96.9 | % | 18,155 | 17,304 | 851 | 4.9 | % | |||||||||||||
| Southeast Properties | |||||||||||||||||||||||
| Central Florida | 288 | 96.2 | % | 97.9 | % | 1,099 | 1,046 | 53 | 5.1 | % | |||||||||||||
| Southeast Florida | 1,206 | 95.6 | % | 95.4 | % | 5,452 | 5,287 | 165 | 3.1 | % | |||||||||||||
| Georgia | 354 | 96.3 | % | 98.0 | % | 1,236 | 1,153 | 83 | 7.2 | % | |||||||||||||
| Total Southeast Properties | 1,848 | 95.8 | % | 96.3 | % | 7,787 | 7,486 | 301 | 4.0 | % | |||||||||||||
| Southwest Properties | |||||||||||||||||||||||
| Texas | 446 | 97.1 | % | 97.8 | % | 1,525 | 1,345 | 180 | 13.4 | % | |||||||||||||
| Total Southwest Properties | 446 | 97.1 | % | 97.8 | % | 1,525 | 1,345 | 180 | 13.4 | % | |||||||||||||
| Total Same Community | 11,709 | 96.6 | % | 97.3 | % | 49,228 | 46,715 | 2,513 | 5.4 | % | |||||||||||||
Acquisitions (3) | |||||||||||||||||||||||
| North Carolina | 760 | 97.0 | % | 96.1 | % | 3,393 | 221 | 3,172 | N/A | ||||||||||||||
| Texas | 396 | 97.0 | % | N/A | 1,405 | N/A | 1,405 | N/A | |||||||||||||||
| Development | |||||||||||||||||||||||
| Tennessee | 242 | 95.5 | % | N/A | 1,372 | 303 | 1,069 | N/A | |||||||||||||||
| Total Property NOI | 13,107 | 96.6 | % | 97.3 | % | $ | 55,398 | $ | 47,239 | $ | 8,159 | 17.3 | % | ||||||||||
| (1) | See page 32 for a reconciliation of net income 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. |
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| Associated Estates Realty Corporation |
| Debt Structure |
| As of June 30, 2013 |
| (Dollar amounts in thousands) |
| Balance | Percentage | Weighted | ||||||||
| Outstanding | of | Average | ||||||||
| June 30, 2013 | Total Debt | Interest Rate | ||||||||
| Fixed Rate Debt Unhedged: | ||||||||||
| Secured | $ | 374,275 | 52.9 | % | 5.4 | % | ||||
| Unsecured - notes | 150,000 | 21.2 | % | 4.3 | % | |||||
| Total Fixed Rate Debt Unhedged | 524,275 | 74.1 | % | 5.1 | % | |||||
| Fixed Rate Debt Hedged: | ||||||||||
Unsecured - term loan (1) | 125,000 | 17.7 | % | 3.0 | % | |||||
| Total Fixed Rate Debt Hedged | 125,000 | 17.7 | % | 3.0 | % | |||||
| Variable Rate Debt Unhedged: | ||||||||||
| Unsecured - revolver | 33,500 | 4.7 | % | 1.5 | % | |||||
| Unsecured - term loan | 25,000 | 3.5 | % | 1.9 | % | |||||
| Total Variable Rate Debt Unhedged | 58,500 | 8.2 | % | 1.7 | % | |||||
| TOTAL DEBT | $ | 707,775 | 100.0 | % | 4.4 | % | ||||
Interest coverage ratio (2) | 2.93:1 | |||||||||
Fixed charge coverage ratio (3) | 2.93:1 | |||||||||
| Weighted average maturity | 4.7 years | |||||||||
| Scheduled Principal Maturities: | Secured | Unsecured | Total | |||||||||
| 2013 | $ | 129,704 | $ | — | $ | 129,704 | ||||||
| 2014 | 44,538 | — | 44,538 | |||||||||
| 2015 | 20,131 | — | 20,131 | |||||||||
| 2016 | 43,062 | — | 43,062 | |||||||||
| 2017 | — | 33,500 | 33,500 | |||||||||
| Thereafter | 136,840 | 300,000 | 436,840 | |||||||||
| Total | $ | 374,275 | $ | 333,500 | $ | 707,775 | ||||||
| 52.9 | % | 47.1 | % | 100.0 | % | |||||||
| (1) | The Company entered into a forward starting swap in December 2011 fixing the rate beginning in June 2013 until June 2016 at a rate of 1.26% plus the credit spread which was 1.70% as of June 30, 2013, or an all-in rate of 2.96%. Additionally, the Company entered into a forward starting swap in April 2013 fixing the rate beginning June 2016 at a rate of 1.55% plus the credit spread which was 1.70% as of June 30, 2013, or an all-in rate of 3.25% until the loan matures in January 2018. |
| (2) | Is calculated as EBITDA divided by interest expense, including capitalized interest and amortization of deferred financing costs and excluding prepayment costs/credits. Individual line items in this calculation include results from discontinued operations where applicable. See page 31 for a reconciliation of net income available to common shares to EBITDA and the Company's definition of EBITDA. |
| (3) | 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. |
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| Associated Estates Realty Corporation |
| 2013 Financial Outlook |
| As of July 23, 2013 |
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 | $0.78 to $1.24 | |
| Expected real estate depreciation and amortization | $1.11 | |
| Expected gains on disposition of properties | -0.63 to -1.05 | |
Expected Funds from Operations (1) | $1.26 to $1.30 | |
| Same Community Portfolio | ||
| Revenue growth | 3.25% to 3.75% | |
| Expense growth | 1.0% to 1.5% | |
Property NOI (2) growth | 4.75% to 5.25% | |
| Transactions | ||
| Acquisitions | $93.5 to $150.0 million | |
| Dispositions | $63.2 to $150.0 million | |
| Development | $105.0 to $115.0 million | |
| Corporate Expenses | ||
| General and administrative expense | $17.8 to $18.2 million | |
| Development costs | $0.8 to $1.0 million | |
| Costs associated with acquisitions | $0.1 to $0.2 million | |
| Debt | ||
| Capitalized interest | $3.5 million | |
Expensed interest (3) | $28.0 to $28.4 million | |
Capital Structure (4) | ||
| Weighted average shares outstanding | 52.5 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 $2.0 million of deferred financing costs. |
| (4) | Earnings guidance reflects settlement of forward equity sale of 7,047,958 common shares on October 1, 2013. |
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, and excludes impairment write-downs of depreciable real estate and gains and losses from the disposition of properties and land. FFO does not represent cash generated from operating activities in accordance with GAAP, 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 $1,743 of prepayment costs 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, 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 applicable to common shares to EBITDA.
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| (In thousands) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
| Net income applicable to common shares | $ | 1,638 | $ | 23,569 | $ | 11,984 | $ | 21,489 | ||||||||
| Allocation to participating securities | — | 100 | — | 99 | ||||||||||||
Interest expense (1) | 7,395 | 6,796 | 14,816 | 16,349 | ||||||||||||
| Depreciation and amortization | 14,356 | 13,464 | 28,918 | 26,696 | ||||||||||||
| Gain on disposition of properties | — | (22,859 | ) | (8,796 | ) | (22,819 | ) | |||||||||
| Income taxes | 109 | 103 | 210 | 179 | ||||||||||||
| Total EBITDA | $ | 23,498 | $ | 21,173 | $ | 47,132 | $ | 41,993 | ||||||||
| (1) | The six months ended June 30, 2012, includes $1,743 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 attributable to AERC.
| Three Months Ended | Six Months Ended | ||||||||||||||
| June 30, | June 30, | ||||||||||||||
| (In thousands) | 2013 | 2012 | 2013 | 2012 | |||||||||||
| Property NOI | $ | 27,808 | $ | 24,104 | $ | 55,398 | $ | 47,239 | |||||||
| Office NOI | 238 | 313 | 550 | 313 | |||||||||||
| Construction and other services net loss | — | (83 | ) | — | (153 | ) | |||||||||
| Depreciation and amortization | (14,356 | ) | (12,297 | ) | (28,740 | ) | (24,171 | ) | |||||||
| General and administrative expense | (4,398 | ) | (4,264 | ) | (9,356 | ) | (8,633 | ) | |||||||
| Development costs | (181 | ) | (297 | ) | (443 | ) | (607 | ) | |||||||
| Costs associated with acquisitions | (64 | ) | (485 | ) | (64 | ) | (485 | ) | |||||||
| Interest expense | (7,395 | ) | (6,796 | ) | (14,816 | ) | (16,104 | ) | |||||||
| Income (loss) from continuing operations | 1,652 | 195 | 2,529 | (2,601 | ) | ||||||||||
| Income from discontinued operations: | |||||||||||||||
| Operating income, net of interest expense | — | 611 | 690 | 1,361 | |||||||||||
| Gain on disposition of properties | — | 22,859 | 8,796 | 22,819 | |||||||||||
| Income from discontinued operations | — | 23,470 | 9,486 | 24,180 | |||||||||||
| Net income | 1,652 | 23,665 | 12,015 | 21,579 | |||||||||||
| Net (income) loss attributable to noncontrolling redeemable interest | (14 | ) | 4 | (31 | ) | 9 | |||||||||
| Consolidated net income attributable to AERC | $ | 1,638 | $ | 23,669 | $ | 11,984 | $ | 21,588 | |||||||
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