FORM 10-K/A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
AMENDMENT TO APPLICATION OR REPORT
Filed Pursuant to Section 12, 13 or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
UNITED DOMINION REALTY TRUST, INC.
(Exact name of registrant as specified in its charter)
The undersigned registrant hereby amends the following items, financial
statements and other portions of its Annual Report on Form 10-K for the year
ended December 31, 1995 as set forth in the pages attached hereto.
ITEM 1. Business
The reference to the dividend payout ratio has been deleted.
ITEM 6. Selected Financial Data
Selected Financial Data has been revised as follows: (i) the line item
"Impairment loss on real estate held for disposition" has been deleted, and (ii)
the line item "Income before gains (losses) on investments and extraordinary
items" has been changed to "Income before gains (losses) on sales of
investments and extraordinary items".
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Management's Discussion and Analysis of Financial Condition and Results of
Operations has the following revisions: (i) Liquidity and Capital Resources has
been moved to begin the discussion, and (ii) references to net operating income
have been deleted.
Consolidated Statements of Operations
The Consolidated Statements of Operations have been revised to move the expense
line items of Interest, General and administrative, Other depreciation and
amortization and Impairment loss on real estate held for disposition, directly
under the caption "Expenses". Also, the line items "Income before gains (losses)
on investments and extraordinary items" and "Gains (losses) on sales of real
estate" have been changed to "Income before gains (losses) on sales of
investments and extraordinary items" and "Gains (losses) on sales of
investments", respectively.
UNITED DOMINION REALTY TRUST, INC.
(Registrant)
Date: April 12, 1996 By: /s/ Jerry A. Davis
-------------- -------------------
Jerry A. Davis, Vice President
Corporate Controller
(bullet) Be a local market leader.
(bullet) Improve operating efficiencies in the purchase of good and services.
(bullet) Reduce the cost of community management.
(bullet) Generate new sources of revenue from services marketed to residents.
(bullet) Reduce costs and add revenues from utility deregulation.
(bullet) Build stronger local organizations which are conducive to growing
and retaining associates.
The Company will continue to grow principally through acquisitions.
However, given its size, as well as its objective to be a dominant owner in its
larger markets, management believes it is important that the Company have some
development capability. During 1995, the Company began building its prototype
apartment building as a second phase to Clear Run Apartments in Wilmington,
North Carolina. The Company plans to build this prototype as a second phase at
four other communities in 1996. The Company also plans to do a ground up
development of 360 apartment homes in a suburb of Nashville.
As a qualified REIT, the Company distributes a substantial portion of
its cash flow to its shareholders in the form of dividends. Over the past
several years, the Company has sought to retain a greater portion of its cash
flow. For 1995, the Company's cash flow from operating activities exceeded cash
distributions paid to common shareholders by approximately $20.7 million. The
Company utilizes a variety of primarily external financing sources to fund new
acquisitions, property renovations and expansions, major capital improvements
and balloon debt payments. The Company has frequently utilized its bank lines of
credit to temporarily finance these expenditures and has subsequently replaced
the short-term bank debt with longer term debt or equity. During 1995 the
Company recognized cash proceeds from sales of real estate owned of $23.5
million. Property sales should continue to be a funding source in the future.
During 1995 the Company raised approximately $218 million externally.
This included $78.7 million from the sale of common stock in February, September
and October and $101.5 million from the April sale of 4,200,000 shares of 91/4%
Series A Cumulative Redeemable Preferred Stock ($25 per share liquidation
preference value)("Preferred Stock"). Also during 1995, the Company completed
new tax-exempt housing bond financings or assumed such bond financings and
conventional mortgage notes in connection with certain acquisitions in the
aggregate amount of approximately $38.0 million.
As the Company's capital base has broadened over the past several years
primarily through the sale of common stock in seven of the last nine years, its
financial strength and credit standing have improved. The Company's senior debt
is currently rated BBB+ by Standard & Poor's and Baal by Moody's. As a result of
its investment grade debt ratings, the Company has used and expects to continue
to use unsecured debt as its primary debt funding source. The Company also uses
secured debt financing but to a much lesser extent and only (i) when such
financing takes the form of tax-exempt housing bonds or (ii) in connection with
an acquisition when existing mortgage financing is in place that either is
closed to prepayment or cannot be repaid at a reasonable cost.
At December 31, 1995, the Company had $70 million of revolving credit
facilities with four commercial banks plus $33.5 million of additional available
lines of credit with three of these banks. The Company will seek to further
expand these credit arrangements during 1996. At December 31, 1995, the Company
had $18.4 million of borrowings outstanding under the revolving credit
facilities and no borrowings outstanding under its lines of credit.
4
SELECTED FINANCIAL INFORMATION
YEARS ENDED DECEMBER 31, 1995 1994 1993 1992 1991
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In thousands, except per share data and apartments owned
OPERATING DATA
Rental income $195,240 $139,972 $89,084 $63,202 $51,250
Income before gains (losses) on sales of
investments and extraodinary item 28,037 19,118 11,286 6,577 3,578
Gains (losses) on sales of investments 5,090 108 (89) -- 26
Extraordinary item - early extinguishment of debt -- (89) -- (242) (35)
Net income 33,127 19,137 11,197 6,335 3,569
Dividends to preferred shareholders 6,637 -- -- -- --
Net income available to common shareholders 26,490 19,137 11,197 6,335 3,569
Common distributions declared 48,610 37,539 27,988 23,271 15,872
Weighted average number of common shares outstanding (a) 52,781 46,182 38,202 34,604 24,642
Per share:(a)
Net income per common share $0.50 $0.41 $0.29 $0.18 $0.14
Common distributions declared 0.90 0.78 0.70 0.66 0.63
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BALANCE SHEET DATA
Real estate held for investment $1,131,098 $1,007,599 $582,213 $454,115 $361,503
Real estate held for disposition 51,015 -- -- -- --
Accumulated depreciation 129,454 120,341 91,444 71,806 56,074
Total assets 1,080,616 911,913 505,840 390,365 314,473
Mortgage notes payable 180,481 158,449 72,862 76,516 73,373
Notes payable 349,858 368,215 156,558 104,605 94,973
Shareholders' equity 516,389 356,968 259,963 197,677 136,152
Number of common shares outstanding (a) 56,375 50,356 41,653 35,285 27,133
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OTHER DATA:
CASH FLOW DATA
Cash provided by operating activities $66,428 $54,544 $33,939 $24,608 $16,614
Cash used in investing activities (183,930) (359,631) (130,064) (81,373) (67,321)
Cash provided by financing activities 113,145 306,575 100,793 56,777 50,815
FUNDS FROM OPERATIONS (b)
Income before gains (losses) on sales of investments and
extraordinary items $28,037 $19,118 $11,286 $6,577 $3,578
Adjustments:
Real estate depreciation 38,939 28,729 19,516 15,557 12,732
Non-recurring items:
Impairment loss on real estate held for disposition 1,700 -- -- -- --
Prior years' employment and other taxes (c) 395 -- -- -- --
Adoption of SFAS No. 112 "Employers' Accounting
for Postemployment Benfits" -- 450 -- -- --
Provision for possible investment losses -- -- -- 1,564
Imputed interest expense -- -- -- -- 530
Dividends to preferred shareholders (6,637) -- -- -- --
---------------------------------------------------------
Funds from operations $62,434 $48,297 $30,802 $23,698 $16,840
=========================================================
APARTMENTS HOMES OWNED
Total apartment homes owned at December 31, 1995 34,224 29,282 17,914 13,832 10,924
Weighted average number of apartment homes owned during the year 31,242 23,160 15,445 11,387 9,491
(a) All share and per share information has been adjusted to give effect
to a 2-for-1 stock split in May, 1993.
(b) Funds from operations ("FFO") is defined as income before gains
(losses) on sales of investments and extraordinary items (computed in
accordance with generally accepted accounting principles) plus real
estate depreciation, less preferred dividends and after adjustment for
significant non-recurring items, if any. This definition conforms to
the recommendations set forth in a White Paper adopted by the National
Association of Real Estate Investment Trusts ("NAREIT") in early 1995.
FFO for years prior to 1995 have been adjusted to conform to the
NAREIT definition. The Trust considers FFO in evaluating property
acquisitions and its operating performance and believes that FFO
should be considered along with, but not as an alternative to, net
income and cash flows as a measure of the Trust's operating
performance and liquidity. FFO does not represent cash generated from
operating activities in accordance with generally accepted accounting
principles and is not necessarily indicative of cash available to fund
cash needs.
(c) Prior years payroll tax liability resulting from an Internal Revenue
Service examination for the years 1993 and 1994.
16
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
LIQUIDITY AND CAPITAL RESOURCES
As a qualified REIT, the Company distributes a substantial portion of its cash
flow to its shareholders in the form of dividends. Over the past few years, the
Company has sought to retain a greater portion of its cash flow. For 1995, the
Company's cash flow from operating activities exceeded cash distributions paid
to common shareholders by approximately $20.7 million. The Company presently
intends to continue to retain a greater percentage of its cash flow from
operating activities, which allows for the retention of sufficient cash to cover
normal operating needs, including routine replacements and to help fund
additional acquisitions. The Company utilizes a variety of primarily external
financing sources to fund portfolio growth, major capital improvement programs
and balloon debt payments. The Company has frequently utilized its bank lines of
credit to temporarily finance these expenditures and has subsequently replaced
this short-term bank debt with longer term debt or equity. The Company has, from
time to time, used derivative instruments to synthetically alter on-balance
sheet liabilities or to hedge anticipated financing transactions. Derivative
contracts did not have a material impact on results of operations during the
three year period ended December 31, 1995.
At the beginning of 1995, the Company had approximately $7.3 million of cash and
cash equivalents and $89.4 million of available and unused bank lines of credit.
For 1995, the Company's cash flow from operating activities increased $11.9
million over the same period last year, primarily as a result of the significant
expansion of the Company's portfolio as discussed below and under "Results of
Operations".
During 1995, net cash used for investing activities was $183.9 million which
resulted primarily from the Company's acquisition of 23 apartment communities
containing 5,142 apartment homes and several parcels of undeveloped land for a
total cost of $198.1 million, which includes $24.1 million of mortgage and bond
indebtedness assumed in these transactions. The Company also funded $35.6
million of capital improvements to its properties during the year. This includes
$10.5 million of improvements at the Company's 17,916 mature apartment homes.
Excluding 11 communities that were acquired in the latter part of 1993 and which
still were undergoing rehabilitation in 1995, the remaining 15,220 mature
apartment homes averaged $424 in capital expenditures. This includes the
following: carpet and tile replacements ($141/unit), appliances ($48/unit), HVAC
equipment ($33/unit), various interior improvements ($50/unit), various exterior
improvements including new roofs ($89/unit), various land improvements including
parking lots and site lighting ($31/unit) and various other improvements
($32/unit). The Company also received net cash proceeds of $23.5 million from
the sale of real estate owned during 1995 and payments aggregating $2.2 million
on mortgage notes receivable.
Net cash provided by financing activities during 1995 was approximately $113.1
million reflecting (i) the sale of common and preferred stock during the year
netting approximately $181.1 million, (ii) net proceeds from the issuance of
mortgage notes payable and notes payable of approximately $31.3 million, (iii)
net short-term bank borrowings of $4.25 million and (iv) mortgage financing
proceeds released from construction funds of $2.5 million. These cash inflows
were partially offset by (i) $50.4 million of cash distributions paid to common
and preferred shareholders, (ii) scheduled mortgage principal payments of $1.9
million, and (iii) payments on notes and non-scheduled mortgage principal
payments of $53.7 million. In February, 1995 the Company sold 1,360,000 shares
of its common stock to a group of institutional investors at a price of $13 1/8
per share. Net proceeds of $17.8 million were used to curtail then outstanding
bank debt. In April, 1995, the Company sold 4,200,000 shares of 9 1/4%
Cumulative Redeemable Preferred Stock ($25 per share liquidation preference
value). Net proceeds of the offering after deducting underwriting commissions
and direct offering costs aggregated approximately $101.5 million, of which
approximately $33.1 million was used to repay then outstanding bank debt and
approximately $65.7 million was used to acquire a portfolio of nine apartment
communities. The remaining net proceeds were temporarily invested in short-term
money market instruments and were subsequently used to fund additional apartment
acquisitions. In September and October, 1995, the Company sold an aggregate of
4,550,000 shares of common stock in a public offering at $14.25 per share. Net
proceeds of the offering, after deducting underwriting commissions and direct
offering costs, aggregated approximately $61 million. Proceeds from the offering
were used to repay $26.8 million of then existing bank debt. The remaining
proceeds were temporarily invested in short-term money market instruments and
subsequently used to purchase additional apartment communities. Also during
1995, the Company completed new tax-exempt multifamily housing bond financings
or assumed such bond financings and conventional mortgage notes in connection
with certain acquisitions in the aggregate amount of approximately $45.4
million.
The Company considers its cash provided by operating activities to be adequate
to meet operating requirements and payments of distributions. The Company
expects to acquire 5,000 to 7,000 apartment homes during 1996 at an estimated
cost of $35,000 to $40,000 per apartment home. While the Company used primarily
equity, both preferred and common, to fund its acquisition program during 1995,
it anticipates that it will use a combination of equity, debt and proceeds from
property sales to fund its 1996 acquisitions. During the first half of 1996 the
Company plans to implement a medium-term note program which is expected to
include an initial $50 million 7-10 year issue. In November, 1995, the Company
entered into a treasury rate lock transaction which had the effect of fixing a
10-year Treasury rate beginning March 1, 1996 at 5.946%. This agreement was
terminated on February 20, 1996 at no gain or loss to the Company. The Company
anticipates a second medium-term note issue around mid-July, 1996 in the amount
of $50 million, primarily to repay a then maturing $35 million senior note
issue. In July, 1995, the Company executed a forward starting interest rate swap
with a notional amount of $50 million which had the effect of fixing the
interest rate on a 10-year Treasury starting July 15, 1996 at 6.544%. Including
the $35 million loan, the Company has aggregate debt maturities of $47 million
in 1996. The maturing debt has a weighted average interest rate of 9.26%. When
this hedge transaction was executed, it was intended to fix a rate on 7-10 year
debt at approximately 7.5% which is approximately 170 basis points lower than
the weighted average interest rate on the maturing debt to be refinanced. At
December 31, 1995, the Company had an aggregate unrealized loss on these
derivative instruments of approximately $4 million, which includes $1.4 million
relating to the rate lock agreement terminated on February 20, 1996 at no gain
or loss.
The Company currently has six shopping centers and six apartment communities
under contracts or letters of intent to sell. These sales are scheduled to occur
during the first half of 1996 and will generate approximately $63 million of
cash proceeds. Three of these properties are encumbered with an aggregate amount
of approximately $7.9 million of secured debt. If all twelve sales occur, the
Company will recognize an aggregate gain of approximately $8.5 million for
financial reporting purposes. For income tax purposes, several of the sales are
expected to be structured as tax deferred exchanges. The proceeds from these
property dispositions will be used to purchase apartment communities. There are
no assurances that any of these sales transactions will be consummated.
Depending upon the volume and timing of acquisition activity, the Company
anticipates raising equity capital during the middle of the year through both a
public offering and private placements.
The Company's liquidity and capital resources are believed to be more than
adequate to meet its cash requirements for the next several years. The Company
expects to meet its long-term liquidity requirements, such as balloon debt
maturities, property acquisitions and significant capital improvements primarily
through the issuance of capital stock and the issuance of long-term unsecured
notes payable. The Company will also rely upon (i) the assumption of mortgage
indebtedness, (ii) property sales, (iii) distributions reinvested and cash
reinvested through the Company's Dividend Reinvestment and Stock Purchase Plan
and (iv) retained cash flow to meet its cash requirements.
FUNDS FROM OPERATIONS
Funds from Operations ("FFO") is defined as income before gains (losses) on
sales of investments and extraordinary items (computed in accordance with
generally accepted accounting principles) plus real estate depreciation, less
preferred dividends and after adjustment for significant non-recurring items, if
any. The Company considers FFO in evaluating property acquisitions and its
operating performance, and believes that FFO should be considered along with,
but not as an alternative to, net income and cash flows as a measure of the
Company's operating performance and liquidity. FFO does not represent cash
generated from operating activities in accordance with generally accepted
accounting principles and is not necessarily indicative of cash available to
fund cash needs.
For 1995, the Company implemented a revised definition of FFO and has restated
FFO for prior years to conform to the recommendations set forth in a White Paper
adopted by NAREIT (The National Association of Real Estate Investment Trusts) at
the beginning of the year. The impact of adopting the NAREIT recommendations was
to reduce FFO for 1995, 1994 and 1993 by $1.1 million, $915,000 and $855,000,
respectively.
RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
For 1995, the Company reported significant increases over 1994 in rental income,
income before gains (losses) on sales of investments and extraordinary items,
net income and FFO. Net income available to common shareholders increased $7.4
million or $.09 per share over 1994. During 1994 and 1995, the Company acquired
a total of 16,308 apartment homes in 67 communities, net of properties resold,
representing a 91% expansion in the number of apartment homes owned during that
period. These apartment homes (the "non-mature" communities) provided a
substantial portion of the aggregate reported increases noted above. However,
the improved performance of the Company's mature group of 17,916 apartment homes
in the 74 communities acquired prior to 1994 (the "mature" communities) also
contributed to the increases, particularly when considered on a per share basis.
For 1995, the Company's mature communities provided approximately 53% of the
Company's rental income. Total rental income from these apartment homes grew
5.0%, or $4.9 million in 1995, reflecting an increase in economic occupancy to
94.8% from 94.1% for 1994, and growth in average rents and other income of 4.4%.
The improvement in occupancy reflected stronger apartment markets throughout the
Company's region. Occupancy peaked in mid-1994 and remained above 95% through
mid-1995 before trending downward slighty in the second half of the year. Rental
expenses at these communities increased 2.6%, or $1.1 million, resulting in a
decrease in the operating expense ratio (the ratio of rental expenses to rental
income) of 1.0% to 42.9%. The increase in rental expenses reflected increased
repairs, real estate taxes and exterior painting expenses. These increases were
offset somewhat by lower gas, property management, and promotional expenses
caused primarily by the combination of stronger occupancy and efficiencies of
size. As a result of an Internal Revenue Service examination, property
management expenses for the 1995 period include a $395,000 payment for
employment and other taxes associated with employee occupied apartment homes for
the 1993 and 1994 tax years. In 1995, the Company was able to internally manage
its mature apartment communities at a cost of approximately 2.6% of rental
income versus 3.4% in 1994. This reduction was achieved through economies of
scale, as the Company acquired a significant number of apartment communities
over the past two years without a corresponding increase in property management
costs. Turnover (measured by move-outs) was 60% at the mature communities for
1995 versus 59% in 1994.
For the 16,308 apartments in the 67 non-mature communities, average occupancy
was 93.1% and the operating expense ratio was 41.3% during 1995. These
communities provided increases of $52.1 million and $21.6 million ,
respectively, in rental income and rental expenses. For the 34,224 apartment
homes in the 141 communities owned on December 31, 1995, occupancy averaged
94.0% and the operating expense ratio was 42.2% for the full year 1995. For
1994, the 29,282 apartment homes then owned had occupancy of 93.7% and an
expense ratio of 43.2% for that year. For 1995, rental income, rental expenses
and real estate depreciation from commercial properties decreased $1.8 million,
$370,000 and $741,000, respectively since 1994, primarily due to the sales of
eight shopping centers over the past two years.
For 1995, depreciation of real estate owned increased $10.2 million with
substantially all of the increase attributable to the portfolio expansion that
occured during 1994 and 1995.
For 1995, interest expense increased approximately $12.1 million over 1994. The
Company used both debt and equity to finance its growth over the past two years;
however, the weighted average amount of debt employed was higher in 1995 than it
was in 1994 ($512 million in 1995 versus $392 million in 1994). The $.15 per
share increase in interest expense reflected this
17
higher average amount of outstanding debt in 1995 together with an increase in
the weighted average interest rate on this debt from 7.3% in 1994 to 7.9% in
1995. The rate increase reflected the Company's heavier reliance on lower rate
short-term bank borrowings in 1994 than in 1995 ($33.8 million weighted average
outstanding in 1994 versus $8.2 million in 1995).
General and administrative expenses were relatively flat in 1995, increasing by
only $62,000 over 1994. General and administrative expense for 1994 included a
$450,000 charge related to the adoption of SFAS No. 112, "Employers' Accounting
for Postemployment Benefits". In 1995, the Company incurred increases in most of
its general and administrative expense categories with the largest percentage
increase attributable to costs related to abandoned acquisitions, including
$204,000 associated with an unsuccessful business combination with another
apartment company.
During 1995, the Company sold seven shopping centers and two apartment
communities and recognized gains for financial reporting purposes totaling $5.1
million. Four of the shopping centers were sold to First Washington Realty
Trust, Inc. on June 30, 1995. In connection with the sales, the Company received
cash and 358,000 shares of First Washington's 9.75% Series A Cumulative
Participating Convertible Preferred Stock having a fair value of $7.7 million on
the date of sale. Five of the shopping center sales during the year were
structured to qualify as tax deferred exchanges which enabled the Company to
defer approximately $4.5 million of capital gains for income tax purposes. The
Company also sold two apartment communities, both of which were acquired as part
of the Clover Portfolio in 1994. No significant book gain or loss was recognized
on the sale of either property.
In March, 1995, the FASB issued Statement No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of,"
which requires impairment losses to be recognized for long-lived assets used in
operations when indicators of impairment are present and the estimated
undiscounted future cash flows are not sufficient to recover the assets carrying
value. The statement requires that impairment losses be recognized for
long-lived assets to be disposed of when the fair value of the asset, less the
estimated cost to sell, is less than the carrying value of that asset measured
at the time management commits to the sale or disposal. On October 1, 1995, the
Company opted for the early adoption of Statement No. 121. At the end of
October, 1995, the Company executed a letter of intent to sell five shopping
centers in a bulk sale at an aggregate purchase price of $28.4 million. Closing
is expected to occur in the first half of 1996. Based on a preliminary
allocation of the sales price, the Company recognized a $1.7 million impairment
loss associated with the disposition of one of these centers, Village Square, in
Myrtle Beach, South Carolina. The other four centers are expected to be sold at
modest gains. At December 31, 1995, an additional shopping center plus six
apartment communities were under contracts or letters of intent to sell. These
twelve properties are classified on the consolidated balance sheet as "Real
estate held for disposition" in the amount of $51.0 million, net of accumulated
depreciation and impairment loss valuation allowance. Real estate held for
disposition contributed income from property operations of approximately $4.1
million for the year ended December 31, 1995.
YEAR ENDED DECEMBER 31, 1994
For 1994, the Company reported significant increases over 1993 in rental income,
income before gains (losses) on sales of investments and extraordinary item, net
income and funds from operations. During 1993 and 1994, the Company acquired
15,450 apartment units (63 apartment communities) representing a 112% expansion
in the number of apartment homes owned during that two year period. These
additional apartment homes provided a substantial portion of the reported
increases noted above. However, the improved performance of the Company's mature
group of 13,832 apartment homes (57 apartment communities) acquired prior to
1993 also contributed to the increases, particularly when considered on a per
share basis.
For 1994, the Company's mature apartment communities provided approximately 53%
of the Company's rental income. Total rental income from these apartment homes
grew 6.2%, or $4.3 million in 1994, reflecting an increase in economic occupancy
to 94.3% compared to 91.6% for 1993, and growth in average rents and other
income of 3.3%. The improvement in occupancy reflected stronger apartment
markets throughout the Company's region. Rental expenses at these properties
increased 2.3% resulting in a decrease in the operating expense ratio (the ratio
of rental expenses to rental income) of 1.7% to 44.0%. The increase in rental
expenses was moderated by lower advertising, rental promotions, electricity, and
interior painting and cleaning expenses caused by the combination of stronger
occupancy and lower tenant turnover. Turnover was 57% for 1994.
18
For the 15,450 apartments in the 63 apartment communities acquired by the
Company since the beginning of 1993, average occupancy was 92.8% and the
operating expense ratio was 43.1% during 1994. These communities provided
increases of $46.2 million and $19.9 million , respectively, in rental income
and rental expenses. For the 29,282 apartment homes in the 120 communities owned
on December 31, 1994, occupancy averaged 93.7% and the operating expense ratio
was 43.6% for the full year 1994. For 1993, the 17,914 apartment homes then
owned had occupancy of 91.5% and an expense ratio of 45.5% for that year. For
1994, rental income and rental expenses from commercial properties increased
$351,000 and $130,000, respectively.
For 1994, depreciation of real estate owned increased $9.2 million with
substantially all of the increase attributable to the portfolio expansion that
occurred during 1993 and 1994. Interest expense increased approximately $11.4
million in 1994 over 1993. The Company used both debt and equity to finance its
growth during the two year period; however, the Company used more debt relative
to equity in 1994 than it did in 1993. The increase in interest expense of
approximately $.17 per share also reflects the rising interest rate environment
of 1994 when rates were generally higher than in 1993.
General and administrative expenses increased by $1.5 million or 43% during
1994. In January, 1994, the Company adopted SFAS No. 112, "Employers' Accounting
for Postemployment Benefits" and incurred a $450,000 charge to expense. In 1994,
the Company incurred increases in most of its general and administrative expense
categories. The largest percentage increase related to employee payroll and
related employee overhead costs which resulted from the significant growth the
Company experienced during 1994.
INFLATION
Management believes that the direct effects of inflation on the Company's
operations have been inconsequential.
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UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended December 31, 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------
In thousands, except per share data
Revenues
Rental income $195,240 $139,972 $89,084
Interest and other income 1,692 756 708
---------------- ---------------- ----------------
196,932 140,728 89,792
Expenses
Rental expenses:
Utilities 14,464 11,206 7,838
Repairs and maintenance 30,374 21,216 13,950
Real estate taxes 14,058 9,658 5,777
Property management 5,300 4,645 2,782
Other rental expenses 17,446 12,141 7,512
Depreciation of real estate owned 38,939 28,729 19,516
Interest 40,646 28,521 17,237
General and administrative 4,865 4,803 3,349
Other depreciation and amortization 1,103 691 545
Impairment loss on real estate held for disposition (Note 2) 1,700 - -
---------------- ---------------- ----------------
168,895 121,610 78,506
Income before gains (losses) on sales of investments
and extraordinary item 28,037 19,118 11,286
Gains (losses) on sales of investments 5,090 108 (89)
---------------- ---------------- ----------------
Income before extraordinary item 33,127 19,226 11,197
Extraordinary item -- early extinguishment of debt - (89) -
---------------- ---------------- ----------------
Net income 33,127 19,137 11,197
Dividends to preferred shareholders 6,637 - -
---------------- ---------------- ----------------
Net income available to common shareholders 26,490 19,137 11,197
Net income per common share $ .50 $ .41 $ .29
================ ================ ================
Weighted average number of common shares outstanding 52,781 46,182 38,202
See accompanying notes.