Exhibit 99.2
Associated Estates Realty Corporation
Third Quarter 2014
Earnings Release and Supplemental Financial Information
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| Lofts at Weston Lakeside | | | |
| 2101 Lakeside Lofts Circle | | Phone: | (800) 338-1588 |
| Cary, North Carolina 27513 | | Web Site: | LoftsatWestonLakeside.com |
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| For more information, please contact: | |
| Jeremy Goldberg |
| (216) 797-8715 |
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| Associated Estates Realty Corporation |
| Third Quarter 2014 |
| Supplemental Financial Information |
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| Table of Contents | Page |
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| General and Administrative Expense, Personnel Expense - Allocated, Construction Services, | |
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| Development and Property Management | |
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| Year-to-Date Property Revenue, Operating Expenses and Net Operating Income | |
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| This news release contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on certain assumptions, as well as current expectations, estimates, projections, judgments and knowledge of management, all of which are subject to risks, trends and uncertainties that could cause actual results to vary from those projected. Factors which may cause the Company’s actual results or performance to differ materially from those contemplated by forward-looking statements include, without limitation, those described under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K and in other filings with the Securities and Exchange Commission, and 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; 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 results of litigation involving the Company; and risks associated with property acquisitions and dispositions, such as failure to achieve expected results. Readers should carefully review the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, and the other documents the Company files from time to time with the Securities and Exchange Commission. These forward-looking statements reflect management’s judgment as of this date, and the Company assumes no obligation to revise or update them to reflect future developments or circumstances. |
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| Associated Estates Realty Corporation |
| Third Quarter Earnings |
ASSOCIATED ESTATES REALTY CORPORATION REPORTS
THIRD QUARTER AND YEAR-TO-DATE 2014 RESULTS
Increased Year-to-Date Same Community Revenue by 2.7%
Achieved Year-to-Date Same Community Average Occupancy of 96%
Delivered First Units At Dallas Development Project
Cleveland, Ohio - October 28, 2014 - Associated Estates Realty Corporation (NYSE, NASDAQ: AEC) announced today its financial results for the third quarter ended September 30, 2014.
“Our solid third quarter results demonstrate that we are taking the right steps to grow our business and deliver returns for shareholders,” said Jeffrey I. Friedman, CEO and President. “We continue to focus on our fully funded development pipeline, which is progressing in line with our strategic plan. Associated Estates is well positioned in its markets and apartment fundamentals remain very positive. We are confident that the continued execution of our strategic plan is the best way to enhance value for all shareholders,” Friedman continued.
Funds from Operations (FFO) for the third quarter of 2014 were $0.32 per common share (diluted), compared to $0.32 per common share (diluted) for the third quarter of 2013. Net income applicable to common shares was $3.4 million, or $0.06 per common share (diluted), for the quarter ended September 30, 2014. For the third quarter of 2013, net income applicable to common shares was $19.9 million, or $0.40 per common share (diluted), which included an $18.1 million gain associated with a property sale. There were no property sales during the third quarter of 2014.
Same Community Portfolio Results
Net operating income (NOI) for the Company’s same community portfolio increased 2.7% for the third quarter of 2014 compared to the third quarter of 2013. Revenue increased 1.9%, while property operating expenses increased 0.7%. Average occupancy for the third quarter of 2014 was 95.4% compared to 95.7% for the third quarter of 2013.
Year-to-Date Performance
FFO for the nine months ended September 30, 2014 was $0.92 per common share (diluted), compared to $0.93 per common share (diluted) for the nine months ended September 30, 2013.
For the nine months ended September 30, 2014, net income applicable to common shares was $107.7 million, or $1.86 per common share (diluted), compared to net income applicable to common shares of $31.8 million, or $0.63 per common share (diluted), for the period ended September 30, 2013. Net income in the first three quarters of 2014 includes gains of $100.9 million, or $1.74 per common share (diluted), from the sale of four properties. Net income in the first three quarters of 2013 includes gains of $26.9 million, or $0.53 per common share (diluted), from the sale of two properties.
NOI year-to-date 2014 for the Company’s same community portfolio increased 3.1% compared to the first three quarters of 2013. Revenue increased 2.7%, while property operating expenses increased 1.9%.
A reconciliation of net income attributable to the Company to FFO is included on page 11.
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| Associated Estates Realty Corporation |
| Third Quarter Earnings |
Capital Markets Activity
As previously announced, on July 25, 2014, the Company amended its $150 million term loan. Among other modifications, the amendment extends the maturity date from January 3, 2018 to January 3, 2020, and reduces the interest rate spread across the pricing grid, with a current rate of LIBOR plus 140 basis points. PNC Bank, N.A. and Wells Fargo, N.A. are Co-Lead Arrangers of the term loan.
On October 1, 2014, the Company repaid a $24.5 million property specific mortgage. The Company has no remaining debt maturities in 2014 and $19.7 million maturing in 2015.
Quarterly Dividend on Common Shares
The Company previously announced it increased its dividend from $0.19 per share per quarter to $0.20 per share per quarter, effective with the dividend payable on November 3, 2014. This represents a 5.3 percent increase to the dividend.
“Our modified term loan provides a more favorable pricing grid and further extends our maturity duration, which increases our financial flexibility," said Lou Fatica, Senior Vice President, Treasurer and Chief Financial Officer. "Our quarter over quarter fixed charge coverage ratio improved from 2.8 times to 3.4 times, or 21%. Additionally, after recently increasing the dividend by more than five percent, our payout ratio remains one of the lowest in the sector. We are pleased with our improving cash flow which has enabled us to reward our shareholders with a growing dividend," Fatica added.
Development Update
Cantabria at Turtle Creek, the Company’s 249-unit development in Dallas, TX, has begun unit deliveries and approximately 20% of the units have been leased. Construction is expected to be completed in the first quarter of 2015 and stabilization is expected in the second quarter of 2015. Full details relating to all of the Company's developments can be found on page 12.
2014 Outlook
The Company has maintained its full-year FFO and same community operating performance guidance ranges. Additional detailed assumptions relating to the Company's guidance can be found on page 22.
Upcoming Events
The Company will participate in REITWorld 2014, NAREIT's Annual Convention, being held from Wednesday, November 5 through Friday, November 7 at the Atlanta Marriott Marquis. Members of the Company’s management team will be hosting scheduled meetings with investors throughout the conference. A copy of all presentation materials will be accessible, beginning November 5, in the Investors section of the Company's website at AssociatedEstates.com.
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| Associated Estates Realty Corporation |
| Third Quarter Earnings |
Conference Call
A conference call to discuss the Company’s third quarter results will be held on October 29, 2014, 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 2107576. An operator will ask you for the conference ID. The call will be archived through November 13, 2014. The dial-in number for the replay is (855) 859-2056.
Via the Internet (listen only): Access the Investors section of 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 "Third Quarter 2014 Earnings Conference Call" link. The webcast will be archived for 90 days.
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| Associated Estates Realty Corporation |
| Financial and Operating Highlights |
| For the Three and Nine Months Ended September 30, 2014 and 2013 |
| (Unaudited; in thousands, except per share and ratio data) |
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| | | Three Months Ended | | Nine Months Ended |
| | | September 30, | | September 30, |
| | | 2014 | | 2013 | | 2014 | | 2013 |
| OPERATING INFORMATION | | | | | | | | |
| Total revenue | | $ | 48,207 |
| | $ | 46,069 |
| | $ | 145,824 |
| | $ | 132,409 |
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| Property revenue | | $ | 47,444 |
| | $ | 45,619 |
| | $ | 143,862 |
| | $ | 131,409 |
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| Property management and construction services revenue | | $ | 312 |
| | $ | — |
| | $ | 578 |
| | $ | — |
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| Net income applicable to common shares | | $ | 3,418 |
| | $ | 19,908 |
| | $ | 107,674 |
| | $ | 31,841 |
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| Per share - basic | | $ | 0.06 |
| | $ | 0.40 |
| | $ | 1.87 |
| | $ | 0.64 |
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| Per share - diluted | | $ | 0.06 |
| | $ | 0.40 |
| | $ | 1.86 |
| | $ | 0.63 |
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Funds from Operations (FFO) (1) | | $ | 18,618 |
| | $ | 16,028 |
| | $ | 53,497 |
| | $ | 47,046 |
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| FFO per share - diluted | | $ | 0.32 |
| | $ | 0.32 |
| | $ | 0.92 |
| | $ | 0.93 |
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Funds Available for Distribution (FAD) (1) | | $ | 16,641 |
| | $ | 13,114 |
| | $ | 48,455 |
| | $ | 41,073 |
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| Dividends per share | | $ | 0.19 |
| | $ | 0.19 |
| | $ | 0.57 |
| | $ | 0.57 |
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| Payout ratio - FFO | | 59.4 | % | | 59.4 | % | | 62.0 | % | | 61.3 | % |
| Payout ratio - FAD | | 65.5 | % | | 73.1 | % | | 67.9 | % | | 69.5 | % |
| General and administrative expense | | $ | 4,200 |
| | $ | 4,946 |
| | $ | 14,116 |
| | $ | 14,302 |
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| Development costs | | $ | 162 |
| | $ | 220 |
| | $ | 690 |
| | $ | 662 |
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| Construction services expense | | $ | 129 |
| | $ | — |
| | $ | 219 |
| | $ | — |
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| Personnel expense - allocated | | $ | 1,119 |
| | $ | 1,072 |
| | $ | 3,393 |
| | $ | 3,101 |
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| Costs associated with acquisitions | | $ | 59 |
| | $ | 392 |
| | $ | 172 |
| | $ | 457 |
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Interest expense (2) | | $ | 5,916 |
| | $ | 7,156 |
| | $ | 18,526 |
| | $ | 20,908 |
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| Capitalized interest | | $ | 1,238 |
| | $ | 1,123 |
| | $ | 3,431 |
| | $ | 2,384 |
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Interest coverage ratio (3) | | 3.37:1 |
| | 2.77:1 |
| | 3.22:1 |
| | 2.87:1 |
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Fixed charge coverage ratio (4) | | 3.37:1 |
| | 2.77:1 |
| | 3.22:1 |
| | 2.87:1 |
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| General and administrative expense to property revenue | | 8.9 | % | | 10.8 | % | | 9.8 | % | | 10.9 | % |
| Personnel - allocated as a percentage of property revenue | | 2.4 | % | | 2.3 | % | | 2.4 | % | | 2.4 | % |
Interest expense to property revenue (2) | | 12.5 | % | | 15.7 | % | | 12.9 | % | | 15.9 | % |
Property NOI (5) | | $ | 29,371 |
| | $ | 28,283 |
| | $ | 88,289 |
| | $ | 81,215 |
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ROA (6) | | 7.7 | % | | 8.0 | % | | 7.7 | % | | 8.0 | % |
Same Community revenue increase (7) | | 1.9 | % | | 3.0 | % | | 2.7 | % | | 3.7 | % |
Same Community expense increase (decrease) (7) | | 0.7 | % | | (1.7 | )% | | 1.9 | % | | 0.8 | % |
Same Community NOI increase (7) | | 2.7 | % | | 6.1 | % | | 3.1 | % | | 5.6 | % |
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| (1) | See page 11 for a reconciliation of net income attributable to AERC to these non-GAAP measurements and page 23 for the Company's definition of these non-GAAP measurements. |
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| (2) | Excludes amortization of financing fees of $471 and $1,402 for 2014 and $477 and $1,541 for 2013. |
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| (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 23 for a reconciliation of net income applicable to common shares to EBITDA and the Company's definition of EBITDA. |
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| (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. |
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| (5) | See page 24 for a reconciliation of net income attributable to AERC to this non-GAAP measurement and the Company's definition of this non-GAAP measurement. |
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| (6) | ROA is calculated as trailing twelve month Property NOI divided by average gross real estate assets, excluding properties currently under development. Gross real estate assets for acquired properties are prorated based upon the percentage of time owned. |
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| (7) | Same Community percentages for prior periods are as previously reported. |
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| Associated Estates Realty Corporation |
| Financial and Operating Highlights |
| Third Quarter 2014 |
| (Unaudited; in thousands, except per share and ratio data) |
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| | | September 30, | | December 31, |
| | | 2014 | | 2013 |
| CAPITALIZATION DATA | | | | |
| Cash and cash equivalents | | $ | 5,328 |
| | $ | 4,586 |
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| Net real estate assets | | $ | 1,356,422 |
| | $ | 1,373,999 |
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| Total assets | | $ | 1,421,831 |
| | $ | 1,422,497 |
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| Debt | | $ | 729,324 |
| | $ | 812,974 |
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| Noncontrolling interests | | $ | 350 |
| | $ | 350 |
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| Total shareholders' equity attributable to AERC | | $ | 622,474 |
| | $ | 544,450 |
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| Common shares outstanding | | 57,648 |
| | 57,476 |
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| Share price, end of period | | $ | 17.51 |
| | $ | 16.05 |
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| Total capitalization | | $ | 1,738,740 |
| | $ | 1,735,464 |
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Undepreciated book value of real estate assets (1) | | $ | 1,752,917 |
| | $ | 1,760,840 |
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| Net debt to undepreciated book value of real estate assets | | 41.3 | % | | 45.9 | % |
| | | | | |
| Secured debt to undepreciated book value | | 16.4 | % | | 15.9 | % |
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Annual dividend (2) | | $ | 0.80 |
| | $ | 0.76 |
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| Annual dividend yield based on share price, end of period | | 4.6 | % | | 4.7 | % |
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| (1) | Includes $45,921 and $9,321 of the Company's investment in unconsolidated entities at September 30, 2014 and December 31, 2013. |
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| (2) | The quarterly dividend increased $0.01 to $0.20 per quarter, effective with the November 3, 2014 dividend payment. |
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| Associated Estates Realty Corporation |
| Financial and Operating Highlights |
| Third Quarter 2014 |
| (Unaudited) |
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| | | | | Number of | | |
| | | Properties | | Units | | Average Age |
| PORTFOLIO INFORMATION | | | | | | |
| Company Portfolio: | | | | | | |
| Same Community: | | | | | | |
| Midwest | | 25 |
| | 5,936 |
| | 21 |
|
| Mid-Atlantic | | 10 |
| | 3,146 |
| | 8 |
|
| Southeast | | 6 |
| | 1,560 |
| | 18 |
|
| Southwest | | 3 |
| | 842 |
| | 11 |
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| Total Same Community | | 44 |
| | 11,484 |
| | 16 |
|
| | | | | | | |
| Acquisitions | | 6 |
| | 1,451 |
| | 8 |
|
Development (1) | | — |
| | 99 |
| | 1 |
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| Total Owned Portfolio | | 50 |
| | 13,034 |
| | 15 |
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| Properties Under Development: | | | | | | |
| Wholly Owned: | | | | | | |
| Dallas | | 1 |
| | 249 |
| | |
| Southern California | | 1 |
| | 175 |
| | |
| Joint Ventures: | | | | | | |
| Metro DC | | 1 |
| | 140 |
| | |
| Northern California | | 1 |
| | 410 |
| | |
| Southern California | | 1 |
| | 472 |
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| Third Party Managed: | | | | | | |
| Atlanta | | 1 |
| | 345 |
| | |
| Central Florida | | 1 |
| | 350 |
| | |
| Southeast Florida | | 1 |
| | 331 |
| | |
| Total Company Portfolio | | 58 |
| | 15,506 |
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| (1) | Reflects a 99-unit expansion to a community located in Dallas, Texas. |
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| Associated Estates Realty Corporation |
| Condensed Consolidated Balance Sheets |
| Third Quarter 2014 |
| (Unaudited; dollar amounts in thousands) |
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| | | September 30, | | December 31, |
| | | 2014 | | 2013 |
| ASSETS | | | | |
| Real estate assets | | | | |
| Investment in real estate | | $ | 1,621,559 |
| | $ | 1,708,726 |
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| Construction in progress | | 85,437 |
| | 42,793 |
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| Less: Accumulated depreciation | | (396,495 | ) | | (386,841 | ) |
| Net real estate owned | | 1,310,501 |
| | 1,364,678 |
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| Investment in unconsolidated entities | | 45,921 |
| | 9,321 |
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| Total net real estate | | 1,356,422 |
| | 1,373,999 |
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| Cash and cash equivalents | | 5,328 |
| | 4,586 |
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| Restricted cash | | 24,071 |
| | 3,465 |
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| Other assets | | 36,010 |
| | 40,447 |
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| Total assets | | $ | 1,421,831 |
| | $ | 1,422,497 |
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| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | |
| Mortgage notes payable | | $ | 287,824 |
| | $ | 279,474 |
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| Unsecured notes | | 250,000 |
| | 250,000 |
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| Unsecured revolving credit facility | | 41,500 |
| | 133,500 |
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| Unsecured term loan | | 150,000 |
| | 150,000 |
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| Total debt | | 729,324 |
| | 812,974 |
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| Accounts payable and other liabilities | | 69,683 |
| | 64,723 |
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| Total liabilities | | 799,007 |
| | 877,697 |
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| Equity | | | | |
| Common shares, without par value; $.10 stated value; 91,000,000 authorized; | | | | |
| 57,708,675 issued and 57,647,647 outstanding at September 30, 2014 and | | | | |
| 57,595,479 issued and 57,476,192 outstanding at December 31, 2013, respectively | | 5,771 |
| | 5,760 |
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| Paid-in capital | | 757,323 |
| | 754,582 |
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| Accumulated distributions in excess of accumulated net income | | (138,990 | ) | | (213,275 | ) |
| Accumulated other comprehensive loss | | (634 | ) | | (702 | ) |
| Less: Treasury shares, at cost, 61,028 and 119,287 shares | | | | |
| at September 30, 2014 and December 31, 2013, respectively | | (996 | ) | | (1,915 | ) |
| Total shareholders' equity attributable to AERC | | 622,474 |
| | 544,450 |
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| Noncontrolling interest | | 350 |
| | 350 |
|
| Total equity | | 622,824 |
| | 544,800 |
|
| Total liabilities and equity | | $ | 1,421,831 |
| | $ | 1,422,497 |
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| Associated Estates Realty Corporation |
| Consolidated Statements of Operations and Comprehensive Income |
| Three and Nine Months Ended September 30, 2014 and 2013 |
| (Unaudited; dollar and share amounts in thousands) |
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| | | Three Months Ended | | Nine Months Ended |
| | | September 30, | | September 30, |
| | | 2014 | | 2013 | | 2014 | | 2013 |
| REVENUE | | | | | | | | |
| Property revenue | | $ | 47,444 |
| | $ | 45,619 |
| | $ | 143,862 |
| | $ | 131,409 |
|
| Office revenue | | 451 |
| | 450 |
| | 1,384 |
| | 1,000 |
|
| Property management and construction services revenue | | 312 |
| | — |
| | 578 |
| | — |
|
| Total revenue | | 48,207 |
| | 46,069 |
| | 145,824 |
| | 132,409 |
|
| | | | | | | | | |
| EXPENSES | | | | | | | | |
| Property operating and maintenance | | 18,073 |
| | 17,336 |
| | 55,573 |
| | 50,194 |
|
| Depreciation and amortization | | 15,779 |
| | 14,212 |
| | 47,958 |
| | 41,960 |
|
| General and administrative | | 4,200 |
| | 4,946 |
| | 14,116 |
| | 14,302 |
|
| Development costs | | 162 |
| | 220 |
| | 690 |
| | 662 |
|
| Construction services | | 129 |
| | — |
| | 219 |
| | — |
|
| Costs associated with acquisitions | | 59 |
| | 392 |
| | 172 |
| | 457 |
|
| Total expenses | | 38,402 |
| | 37,106 |
| | 118,728 |
| | 107,575 |
|
| Operating income | | 9,805 |
| | 8,963 |
| | 27,096 |
| | 24,834 |
|
| Interest expense | | (6,387 | ) | | (7,633 | ) | | (19,928 | ) | | (22,449 | ) |
| Gain on disposition of properties | | — |
| | — |
| | 100,870 |
| | — |
|
| Income from continuing operations | | 3,418 |
| | 1,330 |
| | 108,038 |
| | 2,385 |
|
| Income from discontinued operations: | | | | | | | | |
| Operating income, net of interest expense | | — |
| | 605 |
| | — |
| | 2,769 |
|
| Gain on disposition of properties | | — |
| | 18,072 |
| | — |
| | 26,868 |
|
| Income from discontinued operations | | — |
| | 18,677 |
| | — |
| | 29,637 |
|
| Net income | | 3,418 |
| | 20,007 |
| | 108,038 |
| | 32,022 |
|
| Net income attributable to noncontrolling redeemable interest | | — |
| | (14 | ) | | — |
| | (45 | ) |
| Net income attributable to AERC | | $ | 3,418 |
| | $ | 19,993 |
| | $ | 108,038 |
| | $ | 31,977 |
|
| Allocation to participating securities | | — |
| | (85 | ) | | (364 | ) | | (136 | ) |
| Net income applicable to common shares | | $ | 3,418 |
| | $ | 19,908 |
| | $ | 107,674 |
| | $ | 31,841 |
|
| | | | | | | | | |
| Earnings per common share - basic: | | | | | | | | |
| Income from continuing operations applicable to common shares | | $ | 0.06 |
| | $ | 0.02 |
| | $ | 1.87 |
| | $ | 0.04 |
|
| Income from discontinued operations | | — |
| | 0.38 |
| | — |
| | 0.60 |
|
| Net income applicable to common shares - basic | | $ | 0.06 |
| | $ | 0.40 |
| | $ | 1.87 |
| | $ | 0.64 |
|
| | | | | | | | | |
| Earnings per common share - diluted: | | | | | | | | |
| Income from continuing operations applicable to common shares | | $ | 0.06 |
| | $ | 0.02 |
| | $ | 1.86 |
| | $ | 0.04 |
|
| Income from discontinued operations | | — |
| | 0.38 |
| | — |
| | 0.59 |
|
| Net income applicable to common shares - diluted | | $ | 0.06 |
| | $ | 0.40 |
| | $ | 1.86 |
| | $ | 0.63 |
|
| | | | | | | | | |
| Comprehensive income: | | | | | | | | |
| Net income | | $ | 3,418 |
| | $ | 20,007 |
| | $ | 108,038 |
| | $ | 32,022 |
|
| Other comprehensive income: | | | | | | | | |
| Change in fair value and reclassification of hedge instruments | | 814 |
| | (622 | ) | | 68 |
| | 1,687 |
|
| Total comprehensive income | | 4,232 |
| | 19,385 |
| | 108,106 |
| | 33,709 |
|
| Comprehensive income attributable to noncontrolling interests | | — |
| | (14 | ) | | — |
| | (45 | ) |
| Total comprehensive income attributable to AERC | | $ | 4,232 |
| | $ | 19,371 |
| | $ | 108,106 |
| | $ | 33,664 |
|
| | | | | | | | | |
| Weighted average shares outstanding - basic | | 57,531 |
| | 49,949 |
| | 57,456 |
| | 49,816 |
|
| | | | | | | | | |
| Weighted average shares outstanding - diluted | | 58,033 |
| | 50,267 |
| | 57,928 |
| | 50,376 |
|
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| Associated Estates Realty Corporation |
| Reconciliation of Funds from Operations (FFO) and Funds Available for Distribution (FAD) |
| Three and Nine Months Ended September 30, 2014 and 2013 |
| (Unaudited; in thousands, except per share data) |
|
| | | | | | | | | | | | | | | | | | |
| | | | | Three Months Ended | | Nine Months Ended |
| | | | | September 30, | | September 30, |
| | | | | 2014 | | 2013 | | 2014 | | 2013 |
| CALCULATION OF FFO AND FAD | | | | | | | | |
| Net income attributable to AERC | | $ | 3,418 |
| | $ | 19,993 |
| | $ | 108,038 |
| | $ | 31,977 |
|
| | | | | | | | | | | |
| Add: | | Depreciation - real estate assets | | 14,272 |
| | 13,456 |
| | 43,419 |
| | 38,941 |
|
| | | Amortization of intangible assets | | 928 |
| | 651 |
| | 2,910 |
| | 2,996 |
|
| Less: | | Gain on disposition of properties | | — |
| | (18,072 | ) | | (100,870 | ) | | (26,868 | ) |
| | | | | | | | | | | |
| | | Funds from Operations (FFO) (1) | | 18,618 |
| | 16,028 |
| | 53,497 |
| | 47,046 |
|
| | | | | | | | | | | |
| Add: | | Depreciation - other assets | | 579 |
| | 539 |
| | 1,629 |
| | 1,627 |
|
| | | Amortization of deferred financing fees | | 471 |
| | 477 |
| | 1,402 |
| | 1,541 |
|
| Less: | | Recurring fixed asset additions (2) | | (3,027 | ) | | (3,930 | ) | | (8,073 | ) | | (9,141 | ) |
| | | Funds Available for Distribution (FAD) (1) | | $ | 16,641 |
| | $ | 13,114 |
| | $ | 48,455 |
| | $ | 41,073 |
|
| | | | | | | | | | | |
Weighted average shares outstanding - diluted (3) | | 58,033 |
| | 50,267 |
| | 57,928 |
| | 50,376 |
|
| | | | | | | | | |
| PER SHARE INFORMATION: | | | | | | | | |
| FFO - diluted | | $ | 0.32 |
| | $ | 0.32 |
| | $ | 0.92 |
| | $ | 0.93 |
|
| Dividends | | $ | 0.19 |
| | $ | 0.19 |
| | $ | 0.57 |
| | $ | 0.57 |
|
| | | | | | | | | |
| Payout ratio - FFO | | 59.4 | % | | 59.4 | % | | 62.0 | % | | 61.3 | % |
| Payout ratio - FAD | | 65.5 | % | | 73.1 | % | | 67.9 | % | | 69.5 | % |
| |
| (1) | See page 23 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 93 stock options for the three and nine months ended September 30, 2013, as their inclusion would be anti-dilutive. |
|
|
| Associated Estates Realty Corporation |
| Development Pipeline |
| As of September 30, 2014 |
| (Unaudited; dollar amounts in thousands, except per unit data) |
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 | | Cost | | | | | | | | Estimated/Actual Dates for | | Average | | Commercial | | | | |
| Under | | | | Ownership | | Total | | Capital | | to | | | | Total | | | | Construction | Initial | Construction | Stabilized | | Rent | | Rent | | % | | % |
| Construction | | Location | | % | | Units | | Cost (1) (6) | | Date | | | | Debt | | | | Start | Occupancy | Completion | Operations (2) | | Per Unit (3) | | Per Month (5) | | Leased | | Occupied |
| Cantabria at Turtle Creek | | Dallas, TX | | 100.0% | | 249 |
| | $ | 56,800 |
| | $ | 46,436 |
| | | | $ | 25,688 |
| | | | Q2 2013 | Q3 2014 | Q1 2015 | Q2 2015 | | $ | 2,286 |
| | N/A | | 13.3% | | 2.4% |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 7001 Arlington at Bethesda | | Bethesda, MD | | 98.1% (4) | | 140 |
| | $ | 53,400 |
| | $ | 40,725 |
| | | | $ | 12,954 |
| | | | Q4 2012 | Q4 2014 | Q2 2015 | Q3 2015 | | $ | 2,781 |
| | $ | 39,000 |
| | N/A | | N/A |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| The Desmond on Wilshire | | Los Angeles, CA | | 100.0% | | 175 |
| | $ | 76,300 |
| | $ | 40,528 |
| | | | $ | — |
| | | | Q2 2013 | Q3 2015 | Q4 2015 | Q1 2016 | | $ | 3,338 |
| | N/A | | N/A | | N/A |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | | | | 564 |
| | $ | 186,500 |
| | $ | 127,689 |
| | | | $ | 38,642 |
| | | | | | | | | | | | | | | |
Unconsolidated Current Developments
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Total | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Estimated | | Cost | | AEC | | | | AEC | | Estimated/Actual Dates for | | Average | | Commercial | | | | |
| Under | | | | Ownership | | Total | | Capital | | to | | Investment | | Total | | Share | | Construction | Initial | Construction | Stabilized | | Rent | | Rent | | % | | % |
| Construction | | Location | | % | | Units | | Cost (1) (6) | | Date | | to Date | | Debt | | of Debt | | Start | Occupancy | Completion | Operations (2) | | Per Unit (3) | | Per Month (5) | | Leased | | Occupied |
| 350 8th | | San Francisco, CA | | 50.0% | | 410 |
| | $ | 245,000 |
| | $ | 72,500 |
| | $ | 33,609 |
| | $ | — |
| | $ | — |
| | Q2 2014 | Q4 2015 | Q4 2016 | Q1 2017 | | $ | 3,837 |
| | $ | 152,000 |
| | N/A | | N/A |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 950 East Third | | Los Angeles, CA | | 50.0% | | 472 |
| | $ | 164,000 |
| | $ | 35,566 |
| | $ | 4,547 |
| | $ | — |
| | — |
| | Q3 2014 | Q3 2016 | Q1 2017 | Q4 2017 | | $ | 2,651 |
| | $ | 66,000 |
| | N/A | | N/A |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | | | | 882 |
| | $ | 409,000 |
| | $ | 108,066 |
| | $ | 38,156 |
| | $ | — |
| | $ | — |
| | | | | | | | | | | | | |
Unconsolidated Future Development Pipeline - Unimproved Land
|
| | | | | | | | | | | | | | | | | |
| | | | | | | Estimated | | | | | | AEC |
| | | | | Ownership | | Number | | | | Cost to | | Investment |
| Name | | Location | | % | | of Units (6) | | | | Date | | to Date |
| 5th and Huntington | | Monrovia, CA | | 50.0% | | 154 |
| | | | $ | 15,223 |
| | $ | 7,765 |
|
| |
| (1) | Total capital cost are calculated as if owned 100.0% by the Company and represent 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) | Reflects our projected stabilized rents. We expect to update these projections periodically to reflect market rents and rents achieved. |
| |
| (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) | Based on 6,898 square feet of commercial space at 7001 Arlington at Bethesda, 40,000 square feet of commercial space at 350 8th and 19,700 square feet of commercial space at 950 East Third. |
| |
| (6) | Based on current projections as of October 28, 2014. |
|
|
| 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) |
|
| | | | | | | | | | |
| | | | | Nine Months Ended |
| | | Estimated | | September 30, 2014 |
| | | GAAP Useful | | | | Cost Per |
| | | Life (Years) | | Amount | | Unit (1) |
| OPERATING EXPENSES RELATED TO REPAIRS AND MAINTENANCE | | | | | | |
Repairs and maintenance (2) | | | | $ | 8,971 |
| | $ | 685 |
|
Maintenance personnel labor cost (2) | | | | 5,028 |
| | 384 |
|
| Total Operating Expenses Related to Repairs and Maintenance | | | | 13,999 |
| | 1,069 |
|
| | | | | | | |
| CAPITAL EXPENDITURES | | | | | | |
Recurring Capital Expenditures (3) | | | | | | |
| Amenities | | 5 | | 460 |
| | 35 |
|
| Appliances | | 5 | | 849 |
| | 65 |
|
| Building improvements | | 14 | | 1,276 |
| | 98 |
|
| Carpet and flooring | | 5 | | 2,662 |
| | 203 |
|
| Furnishings | | 5 | | 117 |
| | 9 |
|
| Office/Model | | 5 | | 111 |
| | 8 |
|
| HVAC and mechanicals | | 15 | | 699 |
| | 54 |
|
| Landscaping and grounds | | 14 | | 1,306 |
| | 100 |
|
| Unit improvements | | 5 | | 119 |
| | 9 |
|
| Total Recurring Capital Expenditures - Properties | | | | 7,599 |
| | 581 |
|
| Corporate capital expenditures | | | | 474 |
| | 36 |
|
| Total Recurring Capital Expenditures | | | | 8,073 |
| | 617 |
|
| Total Recurring Capital Expenditures and Repairs and Maintenance | | | | $ | 22,072 |
| | $ | 1,686 |
|
| | | | | | | |
| Total Recurring Capital Expenditures | | | | $ | 8,073 |
| | |
Investment/Revenue Enhancing/Non-Recurring Expenditures (4) | | | | | | |
| Building improvements - unit upgrades | | Various | | 982 |
| | |
| Building improvements - other | | 20 | | 768 |
| | |
| Ground improvements | | Various | | 62 |
| | |
| Total Investment/Revenue Enhancing/Non-Recurring Expenditures | | | | 1,812 |
| | |
| Grand Total Capital Expenditures | | | | $ | 9,885 |
| | |
| |
| (1) | Calculated using weighted average units owned during the nine months ended September 30, 2014 of 13,090. |
| |
| (2) | Included in property operating and maintenance expense in the Consolidated Statements of Operations and Comprehensive Income. |
| |
| (3) | See page 24 for the Company's definition of recurring fixed asset additions. |
| |
| (4) | See page 24 for the Company's definition of investment/revenue enhancing and/or non-recurring fixed asset additions. |
|
|
| Associated Estates Realty Corporation |
| General and Administrative Expense, Personnel Expense - Allocated, Construction Services, |
| Development and Property Management |
| For the Three and Nine Months Ended September 30, 2014 and 2013 |
| (Unaudited; in thousands) |
|
| | | | | | | | | | | | | | | | |
| | | Three Months Ended | | Nine Months Ended |
| | | September 30, | | September 30, |
| | | 2014 | | 2013 | | 2014 | | 2013 |
| General and Administrative, Personnel - Allocated, Construction | | | | | | | | |
| Services, Development and Property Management | | | | | | | | |
General and administrative expense (1) | | $ | 4,200 |
| | $ | 4,946 |
| | $ | 14,116 |
| | $ | 14,302 |
|
Personnel expense - allocated (2) | | 1,119 |
| | 1,072 |
| | 3,393 |
| | 3,101 |
|
| Total | | 5,319 |
| | 6,018 |
| | 17,509 |
| | 17,403 |
|
Construction services revenue (1) | | (223 | ) | | — |
| | (387 | ) | | — |
|
Construction services expense (1) | | 129 |
| | — |
| | 219 |
| | — |
|
| Construction services, net | | (94 | ) | | — |
| | (168 | ) | | — |
|
Development costs (1) | | 162 |
| | 220 |
| | 690 |
| | 662 |
|
| Net development | | 68 |
|
| 220 |
| | 522 |
| | 662 |
|
Property management revenue (1) | | (89 | ) | | — |
| | (191 | ) | | — |
|
| Net overhead | | $ | 5,298 |
| | $ | 6,238 |
| | $ | 17,840 |
| | $ | 18,065 |
|
| |
| (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. |
|
|
| 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 |
| | | September 30, | | June 30, | | March 31, | | December 31, | | September 30, |
| | | 2014 | | 2014 | | 2014 | | 2013 | | 2013 |
| | | | | | | | | | | |
| Property Revenue | | $ | 40,690 |
| | $ | 40,360 |
| | $ | 39,891 |
| | $ | 39,696 |
| | $ | 39,914 |
|
| Property Operating and | | | | | | | | | | |
| Maintenance Expenses | | | | | | | | | | |
| Personnel - on site | | 3,109 |
| | 3,309 |
| | 3,288 |
| | 3,054 |
| | 3,262 |
|
| Personnel - allocated | | 962 |
| | 956 |
| | 945 |
| | 940 |
| | 945 |
|
| Advertising | | 432 |
| | 405 |
| | 442 |
| | 397 |
| | 406 |
|
| Utilities | | 1,932 |
| | 1,723 |
| | 1,861 |
| | 1,846 |
| | 1,904 |
|
| Repairs and maintenance | | 2,424 |
| | 2,561 |
| | 2,457 |
| | 2,067 |
| | 2,450 |
|
| Real estate taxes and insurance | | 5,593 |
| | 5,453 |
| | 5,798 |
| | 5,383 |
| | 5,440 |
|
| Other operating | | 967 |
| | 863 |
| | 885 |
| | 879 |
| | 899 |
|
| Total Expenses | | 15,419 |
| | 15,270 |
| | 15,676 |
| | 14,566 |
| | 15,306 |
|
| | | | | | | | | | | |
| Property Net Operating Income | | $ | 25,271 |
| | $ | 25,090 |
| | $ | 24,215 |
| | $ | 25,130 |
| | $ | 24,608 |
|
| | | | | | | | | | | |
| Operating Margin | | 62.1 | % | | 62.2 | % | | 60.7 | % | | 63.3 | % | | 61.7 | % |
| | | | | | | | | | | |
| Personnel - Allocated as a | | | | | | | | | | |
| Percentage of Property Revenue | | 2.4 | % | | 2.4 | % | | 2.4 | % | | 2.4 | % | | 2.4 | % |
| | | | | | | | | | | |
| Total Number of Units | | 11,484 |
| | 11,484 |
| | 11,484 |
| | 11,484 |
| | 11,484 |
|
| | | | | | | | | | | |
| Property NOI Per Unit | | $ | 2,201 |
| | $ | 2,185 |
| | $ | 2,109 |
| | $ | 2,188 |
| | $ | 2,143 |
|
| | | | | | | | | | | |
| Monthly Property Revenue | | | | | | | | | | |
| Per Occupied Unit | | $ | 1,238 |
| | $ | 1,215 |
| | $ | 1,202 |
| | $ | 1,208 |
| | $ | 1,211 |
|
| | | | | | | | | | | |
Average Occupancy (1) | | 95.4 | % | | 96.4 | % | | 96.3 | % | | 95.4 | % | | 95.7 | % |
| |
| (1) | Is defined as the average number of units occupied during the quarter divided by total number of units. |
|
|
| Associated Estates Realty Corporation |
| Same Community Data |
| Operating Results for the Nine Months Ended September 30, 2014 and 2013 |
| (Unaudited; in thousands, except unit totals and per unit amounts) |
|
| | | | | | | | |
| | | Nine Months Ended |
| | | September 30, |
| | | 2014 | | 2013 |
| | | | | |
| Property Revenue | | $ | 120,941 |
| | $ | 117,813 |
|
| Property Operating and Maintenance Expenses | | | | |
| Personnel - on site | | 9,706 |
| | 9,713 |
|
| Personnel - allocated | | 2,863 |
| | 2,788 |
|
| Advertising | | 1,279 |
| | 1,237 |
|
| Utilities | | 5,516 |
| | 5,378 |
|
| Repairs and maintenance | | 7,442 |
| | 7,280 |
|
| Real estate taxes and insurance | | 16,845 |
| | 16,286 |
|
| Other operating | | 2,715 |
| | 2,810 |
|
| Total Expenses | | 46,366 |
| | 45,492 |
|
| | | | | |
| Property Net Operating Income | | $ | 74,575 |
| | $ | 72,321 |
|
| | | | | |
| Operating Margin | | 61.7 | % | | 61.4 | % |
| | | | | |
| Personnel - Allocated as a Percentage to Property Revenue | | 2.4 | % | | 2.4 | % |
| | | | | |
| Total Number of Units | | 11,484 |
| | 11,484 |
|
| | | | | |
| Property NOI Per Unit | | $ | 6,494 |
| | $ | 6,298 |
|
| | | | | |
| Monthly Property Revenue Per Occupied Unit | | $ | 1,219 |
| | $ | 1,192 |
|
| | | | | |
Average Occupancy (1) | | 96.0 | % | | 95.7 | % |
| |
| (1) | Is defined as the average number of units occupied during the quarter divided by total number of units. |
|
|
| Associated Estates Realty Corporation |
| Same Community Data |
| As of September 30, 2014 and 2013 |
| (Unaudited) |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Property Revenue per | | Average | | Turnover |
| | | | | | | Occupied Unit | | Occupancy (1) | | Ratio (2) |
| | | No. of | | Average | | Q3 | | Q3 | | % | | Q3 | | Q3 | | Q3 | | Q3 |
| | | Units | | Age (3) | | 2014 | | 2013 | | Change | | 2014 | | 2013 | | 2014 | | 2013 |
| Midwest Properties | | | | | | | | | | | | | | | | | | |
| Indianapolis | | 836 |
| | 18 |
| | $ | 981 |
| | $ | 966 |
| | 1.6 | % | | 95.9 | % | | 94.7 | % | | 88.0 | % | | 92.8 | % |
| Southeast Michigan | | 1,778 |
| | 21 |
| | 1,047 |
| | 1,008 |
| | 3.9 | % | | 94.9 | % | | 96.2 | % | | 75.1 | % | | 65.0 | % |
| Western Michigan | | 438 |
| | 23 |
| | 952 |
| | 941 |
| | 1.2 | % | | 96.6 | % | | 97.3 | % | | 84.9 | % | | 85.8 | % |
| Central Ohio | | 1,581 |
| | 23 |
| | 1,040 |
| | 1,029 |
| | 1.1 | % | | 95.5 | % | | 96.2 | % | | 75.6 | % | | 75.9 | % |
| Northeast Ohio | | 1,303 |
| | 19 |
| | 1,250 |
| | 1,209 |
| | 3.4 | % | | 94.6 | % | | 96.1 | % | | 78.6 | % | | 60.8 | % |
| Total Midwest | | 5,936 |
| | 21 |
| | 1,073 |
| | 1,047 |
| | 2.5 | % | | 95.2 | % | | 96.0 | % | | 78.6 | % | | 72.4 | % |
| | | | | | | | | | | | | | | | | | | |
| Mid-Atlantic Properties | | | | | | | | | | | | | | | | | | |
| Metro DC | | 250 |
| | 6 |
| | 2,134 |
| | 2,146 |
| | (0.6 | )% | | 95.7 | % | | 96.3 | % | | 80.0 | % | | 75.2 | % |
| Raleigh-Durham | | 760 |
| | 7 |
| | 1,241 |
| | 1,211 |
| | 2.5 | % | | 96.0 | % | | 96.3 | % | | 60.5 | % | | 65.8 | % |
| Northern Virginia | | 1,272 |
| | 9 |
| | 1,646 |
| | 1,649 |
| | (0.2 | )% | | 95.2 | % | | 95.3 | % | | 68.9 | % | | 61.0 | % |
| Southeast Virginia | | 864 |
| | 8 |
| | 1,237 |
| | 1,242 |
| | (0.4 | )% | | 96.3 | % | | 94.1 | % | | 63.9 | % | | 78.2 | % |
| Total Mid-Atlantic | | 3,146 |
| | 8 |
| | 1,475 |
| | 1,471 |
| | 0.3 | % | | 95.7 | % | | 95.4 | % | | 66.4 | % | | 68.0 | % |
| | | | | | | | | | | | | | | | | | | |
| Southeast Properties | | | | | | | | | | | | | | | | | | |
| Southeast Florida | | 1,206 |
| | 16 |
| | 1,470 |
| | 1,400 |
| | 5.0 | % | | 95.7 | % | | 95.7 | % | | 64.7 | % | | 55.4 | % |
| Atlanta | | 354 |
| | 22 |
| | 1,186 |
| | 1,122 |
| | 5.7 | % | | 96.1 | % | | 97.3 | % | | 74.6 | % | | 58.8 | % |
| Total Southeast | | 1,560 |
| | 18 |
| | 1,406 |
| | 1,337 |
| | 5.2 | % | | 95.8 | % | | 96.0 | % | | 66.9 | % | | 56.2 | % |
| | | | | | | | | | | | | | | | | | | |
| Southwest Properties | | | | | | | | | | | | | | | | | | |
| Dallas | | 842 |
| | 11 |
| | 1,206 |
| | 1,156 |
| | 4.3 | % | | 94.2 | % | | 94.6 | % | | 80.3 | % | | 67.9 | % |
| Total Southwest | | 842 |
| | 11 |
| | 1,206 |
| | 1,156 |
| | 4.3 | % | | 94.2 | % | | 94.6 | % | | 80.3 | % | | 67.9 | % |
| | | | | | | | | | | | | | | | | | | |
| Total/Average Same | | | | | | | | | | | | | | | | | | |
| Community | | 11,484 |
| | 16 |
| | $ | 1,238 |
| | $ | 1,211 |
| | 2.2 | % | | 95.4 | % | | 95.7 | % | | 73.8 | % | | 68.7 | % |
| |
| (1) | Is defined as the average number of units occupied during the quarter divided by total number of units. |
| |
| (2) | Represents the number of units turned over for the quarter, divided by the number of units in a market, annualized. |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Associated Estates Realty Corporation |
| Sequential Property Revenue, Operating Expenses and Net Operating Income (NOI) |
| For the Three Months Ended September 30, 2014 and June 30, 2014 |
| (Unaudited, in thousands, except unit totals) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Q3 | | Q2 | | Q3 | | Q2 | | | | | | Q3 | | Q2 | | | | | | Q3 | | Q2 | | | | |
| | | | | 2014 | | 2014 | | 2014 | | 2014 | | | | | | 2014 | | 2014 | | | | | | 2014 | | 2014 | | | | |
| | | No. of | | Average | | Average | | | | | | Incr/ | | % | | | | | | Incr/ | | % | | | | | | Incr/ | | % |
| | | Units | | Occupancy (1) | | Occupancy (1) | | Revenue | | Revenue | | (Decr) | | Change | | Expenses | | Expenses | | (Decr) | | Change | | NOI | | NOI | | (Decr) | | Change |
| Same Community | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Midwest Properties | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Indianapolis | �� | 836 |
| | 95.9 | % | | 97.0 | % | | $ | 2,360 |
| | $ | 2,318 |
| | $ | 42 |
| | 1.8 | % | | 950 |
| | $ | 948 |
| | 2 |
| | 0.2 | % | | 1,410 |
| | $ | 1,370 |
| | 40 |
| | 2.9 | % |
| Southeast Michigan | | 1,778 |
| | 94.9 | % | | 95.5 | % | | 5,303 |
| | 5,207 |
| | 96 |
| | 1.8 | % | | 2,074 |
| | 2,030 |
| | 44 |
| | 2.2 | % | | 3,229 |
| | 3,177 |
| | 52 |
| | 1.6 | % |
| Western Michigan | | 438 |
| | 96.6 | % | | 97.9 | % | | 1,207 |
| | 1,186 |
| | 21 |
| | 1.8 | % | | 491 |
| | 469 |
| | 22 |
| | 4.7 | % | | 716 |
| | 717 |
| | (1 | ) | | (0.1 | )% |
| Central Ohio | | 1,581 |
| | 95.5 | % | | 96.5 | % | | 4,711 |
| | 4,660 |
| | 51 |
| | 1.1 | % | | 1,980 |
| | 2,012 |
| | (32 | ) | | (1.6 | )% | | 2,731 |
| | 2,648 |
| | 83 |
| | 3.1 | % |
| Northeast Ohio | | 1,303 |
| | 94.6 | % | | 96.4 | % | | 4,621 |
| | 4,583 |
| | 38 |
| | 0.8 | % | | 1,673 |
| | 1,658 |
| | 15 |
| | 0.9 | % | | 2,948 |
| | 2,925 |
| | 23 |
| | 0.8 | % |
| | | 5,936 |
| | 95.2 | % | | 96.3 | % | | 18,202 |
| | 17,954 |
| | 248 |
| | 1.4 | % | | 7,168 |
| | 7,117 |
| | 51 |
| | 0.7 | % | | 11,034 |
| | 10,837 |
| | 197 |
| | 1.8 | % |
| Mid-Atlantic Properties | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Metro DC | | 250 |
| | 95.7 | % | | 96.3 | % | | 1,532 |
| | 1,518 |
| | 14 |
| | 0.9 | % | | 491 |
| | 493 |
| | (2 | ) | | (0.4 | )% | | 1,041 |
| | 1,025 |
| | 16 |
| | 1.6 | % |
| Raleigh-Durham | | 760 |
| | 96.0 | % | | 96.9 | % | | 2,717 |
| | 2,701 |
| | 16 |
| | 0.6 | % | | 880 |
| | 832 |
| | 48 |
| | 5.8 | % | | 1,837 |
| | 1,869 |
| | (32 | ) | | (1.7 | )% |
| Northern Virginia | | 1,272 |
| | 95.2 | % | | 96.4 | % | | 5,981 |
| | 6,001 |
| | (20 | ) | | (0.3 | )% | | 1,816 |
| | 1,826 |
| | (10 | ) | | (0.5 | )% | | 4,165 |
| | 4,175 |
| | (10 | ) | | (0.2 | )% |
| Southeast Virginia | | 864 |
| | 96.3 | % | | 96.3 | % | | 3,090 |
| | 3,096 |
| | (6 | ) | | (0.2 | )% | | 1,023 |
| | 1,005 |
| | 18 |
| | 1.8 | % | | 2,067 |
| | 2,091 |
| | (24 | ) | | (1.1 | )% |
| | | 3,146 |
| | 95.7 | % | | 96.5 | % | | 13,320 |
| | 13,316 |
| | 4 |
| | 0.0 | % | | 4,210 |
| | 4,156 |
| | 54 |
| | 1.3 | % | | 9,110 |
| | 9,160 |
| | (50 | ) | | (0.5 | )% |
| Southeast Properties | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Southeast Florida | | 1,206 |
| | 95.7 | % | | 96.8 | % | | 5,090 |
| | 5,044 |
| | 46 |
| | 0.9 | % | | 2,169 |
| | 2,074 |
| | 95 |
| | 4.6 | % | | 2,921 |
| | 2,970 |
| | (49 | ) | | (1.6 | )% |
| Atlanta | | 354 |
| | 96.1 | % | | 96.2 | % | | 1,210 |
| | 1,178 |
| | 32 |
| | 2.7 | % | | 528 |
| | 561 |
| | (33 | ) | | (5.9 | )% | | 682 |
| | 617 |
| | 65 |
| | 10.5 | % |
| | | 1,560 |
| | 95.8 | % | | 96.7 | % | | 6,300 |
| | 6,222 |
| | 78 |
| | 1.3 | % | | 2,697 |
| | 2,635 |
| | 62 |
| | 2.4 | % | | 3,603 |
| | 3,587 |
| | 16 |
| | 0.4 | % |
| Southwest Properties | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Dallas | | 842 |
| | 94.2 | % | | 96.0 | % | | 2,868 |
| | 2,868 |
| | 0 |
| | 0.0 | % | | 1,344 |
| | 1,362 |
| | (18 | ) | | (1.3 | )% | | 1,524 |
| | 1,506 |
| | 18 |
| | 1.2 | % |
| | | 842 |
| | 94.2 | % | | 96.0 | % | | 2,868 |
| | 2,868 |
| | 0 |
| | 0.0 | % | | 1,344 |
| | 1,362 |
| | (18 | ) | | (1.3 | )% | | 1,524 |
| | 1,506 |
| | 18 |
| | 1.2 | % |
| Total Same Community | | 11,484 | | 95.4 | % | | 96.4 | % | | 40,690 |
| | 40,360 |
| | 330 |
| | 0.8 | % | | 15,419 |
| | 15,270 |
| | 149 |
| | 1.0 | % | | 25,271 |
| | 25,090 |
| | 181 |
| | 0.7 | % |
Acquisitions (2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Southeast Florida | | 388 |
| | 87.0 | % | | 92.4 | % | | 1,861 |
| | 1,912 |
| | (51 | ) | | (2.7 | )% | | 602 |
| | 816 |
| | (214 | ) | | (26.2 | )% | | 1,259 |
| | 1,096 |
| | 163 |
| | 14.9 | % |
| Charlotte | | 562 |
| | 89.4 | % | | 80.0 | % | | 2,015 |
| | 1,292 |
| | 723 |
| | 56.0 | % | | 717 |
| | 433 |
| | 284 |
| | 65.6 | % | | 1,298 |
| | 859 |
| | 439 |
| | 51.1 | % |
| Raleigh-Durham | | 349 |
| | 94.4 | % | | 96.5 | % | | 1,341 |
| | 1,346 |
| | (5 | ) | | (0.4 | )% | | 427 |
| | 362 |
| | 65 |
| | 18.0 | % | | 914 |
| | 984 |
| | (70 | ) | | (7.1 | )% |
| Dallas | | 152 |
| | 89.3 | % | | 95.9 | % | | 1,183 |
| | 1,206 |
| | (23 | ) | | (1.9 | )% | | 683 |
| | 691 |
| | (8 | ) | | (1.2 | )% | | 500 |
| | 515 |
| | (15 | ) | | (2.9 | )% |
| Development | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Dallas (3) | | 99 |
| | 97.6 | % | | 98.0 | % | | 354 |
| | 337 |
| | 17 |
| | 5.0 | % | | 225 |
| | 215 |
| | 10 |
| | 4.7 | % | | 129 |
| | 122 |
| | 7 |
| | 5.7 | % |
| Properties owned at 9/30 | | 13,034 |
| | 94.6 | % | | 95.5 | % | | 47,444 |
| | 46,453 |
| | 991 |
| �� | 2.1 | % | | 18,073 |
| | 17,787 |
| | 286 |
| | 1.6 | % | | 29,371 |
| | 28,666 |
| | 705 |
| | 2.5 | % |
Dispositions (4) | | 909 |
| | | | | | — |
| | 815 |
| |
|
| |
|
| | — |
| | 345 |
| |
|
| |
|
| | — |
| | 470 |
| |
|
| |
|
|
| Total | | 13,943 |
| | | | | | $ | 47,444 |
| | $ | 47,268 |
| | | | | | $ | 18,073 |
| | $ | 18,132 |
| | | | | | $ | 29,371 |
| | $ | 29,136 |
| | | | |
| |
| (1) | Is defined as the average number of units occupied during the quarter divided by total number of units. |
| |
| (2) | We define acquisition properties as acquired properties which have been owned less than one year. |
| |
| (3) | Includes pre-leasing and administrative costs of our 249-unit Cantabria development in Dallas of approximately $70 and $21 for Q3 and Q2, respectively. |
| |
| (4) | Effective Q1 2014 for the Company, per ASU No. 2014-08, only disposals representing a major strategic shift in operations will be presented as discontinued operations. |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Associated Estates Realty Corporation |
| Third Quarter Property Revenue, Operating Expenses and Net Operating Income (NOI) |
| For the Three Months Ended September 30, 2014 and 2013 |
| (Unaudited; in thousands, except unit totals) |
| |
| | | | | Q3 | | Q3 | | Q3 | | Q3 | | | | | | Q3 | | Q3 | | | | | | Q3 | | Q3 | | | | |
| | | | | 2014 | | 2013 | | 2014 | | 2013 | | | | | | 2014 | | 2013 | | | | | | 2014 | | 2013 | | | | |
| | | No. of | | Average | | Average | | | | | | Incr/ | | % | | | | | | Incr/ | | % | | | | | | Incr/ | | % |
| | | Units | | Occupancy (1) | | Occupancy (1) | | Revenue | | Revenue | | (Decr) | | Change | | Expenses | | Expenses | | (Decr) | | Change | | NOI | | NOI | | (Decr) | | Change |
| Same Community | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Midwest Properties | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Indianapolis | | 836 |
| | 95.9 | % | | 94.7 | % | | $ | 2,360 |
| | $ | 2,293 |
| | $ | 67 |
| | 2.9 | % | | $ | 950 |
| | $ | 978 |
| | $ | (28 | ) | | (2.9 | )% | | $ | 1,410 |
| | $ | 1,315 |
| | $ | 95 |
| | 7.2 | % |
| Southeast Michigan | | 1,778 |
| | 94.9 | % | | 96.2 | % | | 5,303 |
| | 5,175 |
| | 128 |
| | 2.5 | % | | 2,074 |
| | 2,062 |
| | 12 |
| | 0.6 | % | | 3,229 |
| | 3,113 |
| | 116 |
| | 3.7 | % |
| Western Michigan | | 438 |
| | 96.6 | % | | 97.3 | % | | 1,207 |
| | 1,203 |
| | 4 |
| | 0.3 | % | | 491 |
| | 515 |
| | (24 | ) | | (4.7 | )% | | 716 |
| | 688 |
| | 28 |
| | 4.1 | % |
| Central Ohio | | 1,581 |
| | 95.5 | % | | 96.2 | % | | 4,711 |
| | 4,693 |
| | 18 |
| | 0.4 | % | | 1,980 |
| | 2,029 |
| | (49 | ) | | (2.4 | )% | | 2,731 |
| | 2,664 |
| | 67 |
| | 2.5 | % |
| Northeast Ohio | | 1,303 |
| | 94.6 | % | | 96.1 | % | | 4,621 |
| | 4,543 |
| | 78 |
| | 1.7 | % | | 1,673 |
| | 1,588 |
| | 85 |
| | 5.4 | % | | 2,948 |
| | 2,955 |
| | (7 | ) | | (0.2 | )% |
| | | 5,936 |
| | 95.2 | % | | 96.0 | % | | 18,202 |
| | 17,907 |
| | 295 |
| | 1.6 | % | | 7,168 |
| | 7,172 |
| | (4 | ) | | (0.1 | )% | | 11,034 |
| | 10,735 |
| | 299 |
| | 2.8 | % |
| Mid-Atlantic Properties | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Metro DC | | 250 |
| | 95.7 | % | | 96.3 | % | | 1,532 |
| | 1,550 |
| | (18 | ) | | (1.2 | )% | | 491 |
| | 509 |
| | (18 | ) | | (3.5 | )% | | 1,041 |
| | 1,041 |
| | 0 |
| | 0.0 | % |
| Raleigh-Durham | | 760 |
| | 96.0 | % | | 96.3 | % | | 2,717 |
| | 2,659 |
| | 58 |
| | 2.2 | % | | 880 |
| | 891 |
| | (11 | ) | | (1.2 | )% | | 1,837 |
| | 1,768 |
| | 69 |
| | 3.9 | % |
| Northern Virginia | | 1,272 |
| | 95.2 | % | | 95.3 | % | | 5,981 |
| | 5,996 |
| | (15 | ) | | (0.3 | )% | | 1,816 |
| | 1,863 |
| | (47 | ) | | (2.5 | )% | | 4,165 |
| | 4,133 |
| | 32 |
| | 0.8 | % |
| Southeast Virginia | | 864 |
| | 96.3 | % | | 94.1 | % | | 3,090 |
| | 3,030 |
| | 60 |
| | 2.0 | % | | 1,023 |
| | 967 |
| | 56 |
| | 5.8 | % | | 2,067 |
| | 2,063 |
| | 4 |
| | 0.2 | % |
| | | 3,146 |
| | 95.7 | % | | 95.4 | % | | 13,320 |
| | 13,235 |
| | 85 |
| | 0.6 | % | | 4,210 |
| | 4,230 |
| | (20 | ) | | (0.5 | )% | | 9,110 |
| | 9,005 |
| | 105 |
| | 1.2 | % |
| Southeast Properties | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Southeast Florida | | 1,206 |
| | 95.7 | % | | 95.7 | % | | 5,090 |
| | 4,850 |
| | 240 |
| | 4.9 | % | | 2,169 |
| | 2,074 |
| | 95 |
| | 4.6 | % | | 2,921 |
| | 2,776 |
| | 145 |
| | 5.2 | % |
| Atlanta | | 354 |
| | 96.1 | % | | 97.3 | % | | 1,210 |
| | 1,160 |
| | 50 |
| | 4.3 | % | | 528 |
| | 480 |
| | 48 |
| | 10.0 | % | | 682 |
| | 680 |
| | 2 |
| | 0.3 | % |
| | | 1,560 |
| | 95.8 | % | | 96.0 | % | | 6,300 |
| | 6,010 |
| | 290 |
| | 4.8 | % | | 2,697 |
| | 2,554 |
| | 143 |
| | 5.6 | % | | 3,603 |
| | 3,456 |
| | 147 |
| | 4.3 | % |
| Southwest Properties | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Dallas | | 842 |
| | 94.2 | % | | 94.6 | % | | 2,868 |
| | 2,762 |
| | 106 |
| | 3.8 | % | | 1,344 |
| | 1,350 |
| | (6 | ) | | (0.4 | )% | | 1,524 |
| | 1,412 |
| | 112 |
| | 7.9 | % |
| | | 842 |
| | 94.2 | % | | 94.6 | % | | 2,868 |
| | 2,762 |
| | 106 |
| | 3.8 | % | | 1,344 |
| | 1,350 |
| | (6 | ) | | (0.4 | )% | | 1,524 |
| | 1,412 |
| | 112 |
| | 7.9 | % |
| Total Same Community | | 11,484 | | 95.4 | % | | 95.7 | % | | 40,690 |
| | 39,914 |
| | 776 |
| | 1.9 | % | | 15,419 |
| | 15,306 |
| | 113 |
| | 0.7 | % | | 25,271 |
| | 24,608 |
| | 663 |
| | 2.7 | % |
Acquisitions (2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Southeast Florida | | 388 |
| | 87.0 | % | | 97.9 | % | | 1,861 |
| | 1,671 |
| | 190 |
| | 11.4 | % | | 602 |
| | 702 |
| | (100 | ) | | (14.2 | )% | | 1,259 |
| | 969 |
| | 290 |
| | 29.9 | % |
| Charlotte | | 562 |
| | 89.4 | % | | N/A |
| | 2,015 |
| | — |
| | 2,015 |
| | N/A |
| | 717 |
| | — |
| | 717 |
| | N/A |
| | 1,298 |
| | — |
| | 1,298 |
| | N/A |
|
| Raleigh-Durham | | 349 |
| | 94.4 | % | | N/A |
| | 1,341 |
| | — |
| | 1,341 |
| | N/A |
| | 427 |
| | — |
| | 427 |
| | N/A |
| | 914 |
| | — |
| | 914 |
| | N/A |
|
| Dallas | | 152 |
| | 89.3 | % | | 95.0 | % | | 1,183 |
| | 60 |
| | 1,123 |
| | N/A |
| | 683 |
| | 30 |
| | 653 |
| | N/A |
| | 500 |
| | 30 |
| | 470 |
| | N/A |
|
| Development | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Dallas (3) | | 99 |
| | 97.6 | % | | N/A |
| | 354 |
| | 5 |
| | 349 |
| | N/A |
| | 225 |
| | 19 |
| | 206 |
| | N/A |
| | 129 |
| | (14 | ) | | 143 |
| | N/A |
|
| Properties owned at 9/30 | | 13,034 |
| | 94.6 | % | | 95.8 | % | | 47,444 |
| | 41,650 |
| | 5,794 |
| | 13.9 | % | | 18,073 |
| | 16,057 |
| | 2,016 |
| | 12.6 | % | | 29,371 |
| | 25,593 |
| | 3,778 |
| | 14.8 | % |
Dispositions (4) | | 909 |
| | | | | | — |
| | 3,969 |
| | | | | | — |
| | 1,279 |
| | | | | | — |
| | 2,690 |
| | | | |
| Total | | 13,943 |
| | | | | | $ | 47,444 |
| | $ | 45,619 |
| | | | | | $ | 18,073 |
| | $ | 17,336 |
| | | | | | $ | 29,371 |
| | $ | 28,283 |
| | | | |
| |
| (1) | Is defined as the average number of units occupied during the quarter divided by total number of units. |
| |
| (2) | We define acquisition properties as acquired properties which have been owned less than one year. |
| |
| (3) | Includes pre-leasing and administrative costs of our 249-unit Cantabria development in Dallas of approximately $70 for Q3 2014. |
| |
| (4) | Effective Q1 2014 for the Company, per ASU No. 2014-08, only disposals representing a major strategic shift in operations will be presented as discontinued operations. |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Associated Estates Realty Corporation |
| Year-to-Date Property Revenue, Operating Expenses and Net Operating Income (NOI) |
| For the Nine Months Ended September 30, 2014 and 2013 |
| (Unaudited; in thousands, except unit totals) |
| |
| | | | | | | | | YTD | | YTD | | | | | | YTD | | YTD | | | | | | YTD | | YTD | | | | |
| | | | | 2014 | | 2013 | | 2014 | | 2013 | | | | | | 2014 | | 2013 | | | | | | 2014 | | 2013 | | | | |
| | | No. of | | Average | | Average | | | | | | Incr/ | | % | | | | | | Incr/ | | % | | | | | | Incr/ | | % |
| | | Units | | Occupancy (1) | | Occupancy (1) | | Revenue | | Revenue | | (Decr) | | Change | | Expenses | | Expenses | | (Decr) | | Change | | NOI | | NOI | | (Decr) | | Change |
| Same Community | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Midwest Properties | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Indianapolis | | 836 |
| | 96.9 | % | | 95.6 | % | | $ | 6,997 |
| | $ | 6,792 |
| | $ | 205 |
| | 3.0 | % | | $ | 2,753 |
| | $ | 2,856 |
| | $ | (103 | ) | | (3.6 | )% | | $ | 4,244 |
| | $ | 3,936 |
| | $ | 308 |
| | 7.8 | % |
| Southeast Michigan | | 1,778 |
| | 95.6 | % | | 96.0 | % | | 15,696 |
| | 15,186 |
| | 510 |
| | 3.4 | % | | 6,129 |
| | 6,038 |
| | 91 |
| | 1.5 | % | | 9,567 |
| | 9,148 |
| | 419 |
| | 4.6 | % |
| Western Michigan | | 438 |
| | 97.3 | % | | 97.4 | % | | 3,569 |
| | 3,537 |
| | 32 |
| | 0.9 | % | | 1,480 |
| | 1,519 |
| | (39 | ) | | (2.6 | )% | | 2,089 |
| | 2,018 |
| | 71 |
| | 3.5 | % |
| Central Ohio | | 1,581 |
| | 95.9 | % | | 95.6 | % | | 13,938 |
| | 13,710 |
| | 228 |
| | 1.7 | % | | 5,974 |
| | 6,019 |
| | (45 | ) | | (0.7 | )% | | 7,964 |
| | 7,691 |
| | 273 |
| | 3.5 | % |
| Northeast Ohio | | 1,303 |
| | 95.5 | % | | 95.9 | % | | 13,637 |
| | 13,277 |
| | 360 |
| | 2.7 | % | | 5,090 |
| | 4,947 |
| | 143 |
| | 2.9 | % | | 8,547 |
| | 8,330 |
| | 217 |
| | 2.6 | % |
| | | 5,936 |
| | 95.9 | % | | 95.9 | % | | 53,837 |
| | 52,502 |
| | 1,335 |
| | 2.5 | % | | 21,426 |
| | 21,379 |
| | 47 |
| | 0.2 | % | | 32,411 |
| | 31,123 |
| | 1,288 |
| | 4.1 | % |
| Mid-Atlantic Properties | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Metro DC | | 250 |
| | 95.5 | % | | 96.8 | % | | 4,551 |
| | 4,632 |
| | (81 | ) | | (1.7 | )% | | 1,491 |
| | 1,549 |
| | (58 | ) | | (3.7 | )% | | 3,060 |
| | 3,083 |
| | (23 | ) | | (0.7 | )% |
| Raleigh-Durham | | 760 |
| | 96.7 | % | | 95.2 | % | | 8,099 |
| | 7,699 |
| | 400 |
| | 5.2 | % | | 2,621 |
| | 2,531 |
| | 90 |
| | 3.6 | % | | 5,478 |
| | 5,168 |
| | 310 |
| | 6.0 | % |
| Northern Virginia | | 1,272 |
| | 95.9 | % | | 95.3 | % | | 17,978 |
| | 17,854 |
| | 124 |
| | 0.7 | % | | 5,666 |
| | 5,639 |
| | 27 |
| | 0.5 | % | | 12,312 |
| | 12,215 |
| | 97 |
| | 0.8 | % |
| Southeast Virginia | | 864 |
| | 96.1 | % | | 94.6 | % | | 9,228 |
| | 9,054 |
| | 174 |
| | 1.9 | % | | 3,083 |
| | 2,813 |
| | 270 |
| | 9.6 | % | | 6,145 |
| | 6,241 |
| | (96 | ) | | (1.5 | )% |
| | | 3,146 |
| | 96.0 | % | | 95.3 | % | | 39,856 |
| | 39,239 |
| | 617 |
| | 1.6 | % | | 12,861 |
| | 12,532 |
| | 329 |
| | 2.6 | % | | 26,995 |
| | 26,707 |
| | 288 |
| | 1.1 | % |
| Southeast Properties | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Southeast Florida | | 1,206 |
| | 96.5 | % | | 95.7 | % | | 15,117 |
| | 14,426 |
| | 691 |
| | 4.8 | % | | 6,433 |
| | 6,198 |
| | 235 |
| | 3.8 | % | | 8,684 |
| | 8,228 |
| | 456 |
| | 5.5 | % |
| Atlanta | | 354 |
| | 96.3 | % | | 96.6 | % | | 3,549 |
| | 3,397 |
| | 152 |
| | 4.5 | % | | 1,582 |
| | 1,480 |
| | 102 |
| | 6.9 | % | | 1,967 |
| | 1,917 |
| | 50 |
| | 2.6 | % |
| | | 1,560 |
| | 96.5 | % | | 95.9 | % | | 18,666 |
| | 17,823 |
| | 843 |
| | 4.7 | % | | 8,015 |
| | 7,678 |
| | 337 |
| | 4.4 | % | | 10,651 |
| | 10,145 |
| | 506 |
| | 5.0 | % |
| Southwest Properties | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Dallas | | 842 |
| | 95.5 | % | | 95.6 | % | | 8,582 |
| | 8,249 |
| | 333 |
| | 4.0 | % | | 4,064 |
| | 3,903 |
| | 161 |
| | 4.1 | % | | 4,518 |
| | 4,346 |
| | 172 |
| | 4.0 | % |
| | | 842 |
| | 95.5 | % | | 95.6 | % | | 8,582 |
| | 8,249 |
| | 333 |
| | 4.0 | % | | 4,064 |
| | 3,903 |
| | 161 |
| | 4.1 | % | | 4,518 |
| | 4,346 |
| | 172 |
| | 4.0 | % |
| Total Same Community | | 11,484 | | 96.0 | % | | 95.7 | % | | 120,941 |
| | 117,813 |
| | 3,128 |
| | 2.7 | % | | 46,366 |
| | 45,492 |
| | 874 |
| | 1.9 | % | | 74,575 |
| | 72,321 |
| | 2,254 |
| | 3.1 | % |
Acquisitions (2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Southeast Florida | | 388 |
| | 91.4 | % | | 97.9 | % | | 5,737 |
| | 1,671 |
| | 4,066 |
| | 243.3 | % | | 2,242 |
| | 702 |
| | 1,540 |
| | 219.4 | % | | 3,495 |
| | 969 |
| | 2,526 |
| | 260.7 | % |
| Charlotte | | 562 |
| | 89.9 | % | | N/A |
| | 4,427 |
| | N/A |
| | 4,427 |
| | N/A |
| | 1,562 |
| | N/A |
| | 1,562 |
| | N/A |
| | 2,865 |
| | N/A |
| | 2,865 |
| | N/A |
|
| Raleigh-Durham | | 349 |
| | 94.6 | % | | N/A |
| | 3,951 |
| | N/A |
| | 3,951 |
| | N/A |
| | 1,202 |
| | N/A |
| | 1,202 |
| | N/A |
| | 2,749 |
| | N/A |
| | 2,749 |
| | N/A |
|
| Dallas | | 152 |
| | 93.9 | % | | 95.0 | % | | 3,594 |
| | 60 |
| | 3,534 |
| | N/A |
| | 2,032 |
| | 30 |
| | 2,002 |
| | N/A |
| | 1,562 |
| | 30 |
| | 1,532 |
| | N/A |
|
| Development | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Dallas (3) | | 99 |
| | 93.0 | % | | N/A |
| | 982 |
| | 5 |
| | 977 |
| | N/A |
| | 544 |
| | 19 |
| | 525 |
| | N/A |
| | 438 |
| | (14 | ) | | 452 |
| | N/A |
|
| Properties owned at 9/30 | | 13,034 |
| | 95.4 | % | | 95.7 | % | | 139,632 |
| | 119,549 |
| | 20,083 |
| | 16.8 | % | | 53,948 |
| | 46,243 |
| | 7,705 |
| | 16.7 | % | | 85,684 |
| | 73,306 |
| | 12,378 |
| | 16.9 | % |
Dispositions (4) | | 909 |
| | | | | | 4,230 |
| | 11,860 |
| | | | | | 1,625 |
| | 3,951 |
| | | | | | 2,605 |
| | 7,909 |
| | | | |
| Total | | 13,943 |
| | | | | | $ | 143,862 |
| | $ | 131,409 |
| | | | | | $ | 55,573 |
| | $ | 50,194 |
| | | | | | $ | 88,289 |
| | $ | 81,215 |
| | | | |
| |
| (1) | Is defined as the average number of units occupied during the quarter divided by total number of units. |
| |
| (2) | We define acquisition properties as acquired properties which have been owned less than one year. |
| |
| (3) | Includes pre-leasing and administrative costs of our 249-unit Cantabria development in Dallas of approximately $91 for YTD 2014. |
| |
| (4) | Effective Q1 2014 for the Company, per ASU No. 2014-08, only disposals representing a major strategic shift in operations will be presented as discontinued operations. |
|
|
| Associated Estates Realty Corporation |
| Debt Structure |
| As of September 30, 2014 |
| (Dollar amounts in thousands) |
|
| | | | | | | | | | |
| | | Balance | | Percentage | | Weighted |
| | | Outstanding | | of | | Average |
| | | September 30, 2014 | | Total Debt | | Interest Rate |
| Fixed Rate Debt: | | | | | | |
| Secured | | $ | 249,182 |
| | 34.2 | % | | 4.9 | % |
| Unsecured - notes | | 250,000 |
| | 34.3 | % | | 4.4 | % |
| Total Fixed Rate Debt | | 499,182 |
| | 68.5 | % | | 4.6 | % |
| | | | | | | |
| Variable Rate Debt Swapped to Fixed: | | | | | | |
Unsecured - term loan (1) | | 125,000 |
| | 17.1 | % | | 2.7 | % |
| Total Variable Rate Debt Swapped to Fixed | | 125,000 |
| | 17.1 | % | | 2.7 | % |
| | | | | | | |
| Variable Rate Debt Unhedged: | | | | | | |
| Secured | | 38,642 |
| | 5.3 | % | | 1.5 | % |
| Unsecured - revolver | | 41,500 |
| | 5.7 | % | | 1.5 | % |
| Unsecured - term loan | | 25,000 |
| | 3.4 | % | | 1.6 | % |
| Total Variable Rate Debt Unhedged | | 105,142 |
| | 14.4 | % | | 1.5 | % |
| | | | | | | |
| TOTAL DEBT | | $ | 729,324 |
| | 100.0 | % | | 3.9 | % |
| | | | | | | |
Interest coverage ratio (2) | | 3.22:1 |
| | | | |
Fixed charge coverage ratio (3) | | 3.22:1 |
| | | | |
| Weighted average maturity | | 5.5 years |
| | | | |
|
| | | | | | | | | | | | |
| Scheduled Principal Maturities: | | Secured | | Unsecured | | Total |
2014 (4) | | $ | 24,500 |
| | $ | — |
| | $ | 24,500 |
|
| 2015 | | 19,658 |
| | — |
| | 19,658 |
|
| 2016 | | 80,138 |
| | — |
| | 80,138 |
|
| 2017 | | — |
| | 41,500 |
| | 41,500 |
|
| 2018 | | 47,591 |
| | — |
| | 47,591 |
|
| Thereafter | | 115,937 |
| | 400,000 |
| | 515,937 |
|
| TOTAL | | $ | 287,824 |
| | $ | 441,500 |
| | $ | 729,324 |
|
| |
| (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 1.40% as of September 30, 2014, or an all-in rate of 2.66%. 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 1.40% as of September 30, 2014, or an all-in rate of 2.95% until 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 23 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. |
| |
| (4) | Loan was repaid on October 1, 2014. |
|
|
| Associated Estates Realty Corporation |
| 2014 Financial Outlook |
| As of October 28, 2014 |
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 | | $2.66 to $3.23 |
| Expected real estate depreciation and amortization | | 1.06 |
| Expected gains on disposition of properties | | -2.46 to -2.99 |
Expected Funds from Operations (1) | | $1.26 to $1.30 |
| | | |
| Same Community Portfolio | | |
| Revenue growth | | 2.25% to 3.00% |
| Expense growth | | 0.75% to 1.50% |
Property NOI (2) growth | | 3.20% to 3.90% |
| | | |
| Transactions | | |
| Acquisitions | $125.6 million |
| Dispositions | $210.0 to $275.0 million |
| Development | $80.0 to $100.0 million |
| | | |
| Corporate Revenue/Expenses | | |
Construction services revenue, net (3) | $0.2 to $0.5 million |
| Property management fee revenue | | $0.2 to $0.3 million |
| General and administrative expense | $18.6 to $19.1 million |
Development costs (3) | | $0.8 to $1.0 million |
| Costs associated with acquisitions | | $0.2 million |
| | | |
| Debt | | |
| Capitalized interest | $5.0 million |
Expensed interest (4) | $25.2 to $25.7 million |
| | | |
Capital Structure (5) | | |
| Weighted average shares outstanding | | 58.0 million |
| |
| (1) | See page 23 for our definition of this non-GAAP measurement. |
| |
| (2) | See page 24 for our definition of this non-GAAP measurement. |
| |
| (3) | Net of construction services expense. |
| |
| (4) | Includes $1.8 million of deferred financing costs. |
| |
| (5) | Earnings guidance reflects no common share issuances. |
|
|
| 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 Available for Distribution ("FAD")
We define FAD as FFO, 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, 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, FAD also reflects the recurring capital expenditures that are necessary to maintain the associated real estate.
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 | | Nine Months Ended |
| | | September 30, | | September 30, |
| (In thousands) | | 2014 | | 2013 | | 2014 | | 2013 |
| | | | | | | | | |
| Net income applicable to common shares | | $ | 3,418 |
| | $ | 19,908 |
| | $ | 107,674 |
| | $ | 31,841 |
|
| Allocation to participating securities | | — |
| | 85 |
| | 364 |
| | 136 |
|
| Interest expense | | 6,387 |
| | 7,633 |
| | 19,928 |
| | 22,449 |
|
| Depreciation and amortization | | 15,779 |
| | 14,646 |
| | 47,958 |
| | 43,564 |
|
| Gain on disposition of properties | | — |
| | (18,072 | ) | | (100,870 | ) | | (26,868 | ) |
| Income taxes | | 106 |
| | 64 |
| | 301 |
| | 275 |
|
| | | | | | | | | |
| Total EBITDA | | $ | 25,690 |
| | $ | 24,264 |
| | $ | 75,355 |
| | $ | 71,397 |
|
|
|
| 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 | | Nine Months Ended |
| | | September 30, | | September 30, |
| (In thousands) | | 2014 | | 2013 | | 2014 | | 2013 |
| | | | | | | | | |
| Property NOI | | $ | 29,371 |
| | $ | 28,283 |
| | $ | 88,289 |
| | $ | 81,215 |
|
| Office NOI | | 451 |
| | 450 |
| | 1,384 |
| | 1,000 |
|
| Property management and construction services NOI | | 183 |
| | — |
| | 359 |
| | — |
|
| Depreciation and amortization | | (15,779 | ) | | (14,212 | ) | | (47,958 | ) | | (41,960 | ) |
| General and administrative expense | | (4,200 | ) | | (4,946 | ) | | (14,116 | ) | | (14,302 | ) |
| Development costs | | (162 | ) | | (220 | ) | | (690 | ) | | (662 | ) |
| Costs associated with acquisitions | | (59 | ) | | (392 | ) | | (172 | ) | | (457 | ) |
| Interest expense | | (6,387 | ) | | (7,633 | ) | | (19,928 | ) | | (22,449 | ) |
| Gain on disposition of properties | | — |
| | — |
| | 100,870 |
| | — |
|
| Income from continuing operations | | 3,418 |
| | 1,330 |
| | 108,038 |
| | 2,385 |
|
| Income from discontinued operations: | | | | | | | | |
| Operating income, net of interest expense | | — |
| | 605 |
| | — |
| | 2,769 |
|
| Gain on disposition of properties | | — |
| | 18,072 |
| | — |
| | 26,868 |
|
| Income from discontinued operations | | — |
| | 18,677 |
| | — |
| | 29,637 |
|
| Net income | | 3,418 |
| | 20,007 |
| | 108,038 |
| | 32,022 |
|
| Net income attributable to noncontrolling redeemable interest | | — |
| | (14 | ) | | — |
| | (45 | ) |
| Consolidated net income attributable to AERC | | $ | 3,418 |
| | $ | 19,993 |
| | $ | 108,038 |
| | $ | 31,977 |
|
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.
