FORM 10-K/A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
AMENDMENT NO. 2
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. The entire
Annual Report on Form 10-K for the year ended December 31, 1995, including those
items not amended is included in this amendment.
ITEM 1. Business
Item 1 has been revised as follows:
Amendment No. 1
(i) the reference to the dividend payout ratio has been deleted
Amendment No. 2
(ii) the word "dividends" has been replaced with the word "distributions", (iii)
the discussion regarding environmental liabilities has been revised, and (iv)
additional disclosure regarding partnership redemption rights has been added.
ITEM 2. Properties
Amendment No. 2
The property table has been revised to add average square feet and average
rental rates for the year ended December 31, 1995 and disclosure regarding net
effective rents.
ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters
Amendment No. 2
Item 5 has been revised to add the following information: (i) distributions
required for the Company to maintain its status as a REIT for 1995 and (ii)
portion of 1995 distributions that represents a return of capital, ordinary
income and capital gains.
ITEM 6. Selected Financial Data
Amendment No. 1
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
item" has been changed to "Income before gains (losses) on sales of investments
and extraordinary item".
ITEM 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Amendment No. 1
Management's Discussion and Analysis of Financial Condition and Results of
Operations has been revised as follows:
(i) Liquidity and Capital Resources has been moved to begin the discussion,
(ii) references to net operating income have been deleted,
Amendment No. 2
(iii) the word "dividends" has been replaced by the word "distributions", (iv)
additional disclosure regarding market and credit risk for financial instruments
has been added, and (iv) the paragraph under Results of Operations discussing
Statement No. 121 "Accounting for the Impairment of Long-Lived Assets and
Long-Lived Assets to be Disposed of" has been revised.
ITEM 8. Consolidated Statements of Operations
Amendment No. 1
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.
ITEM 8. Notes to Consolidated Financial Statements
Amendment No. 2
Note 1 "Real estate assets and depreciation", Note 2 "Real Estate Owned" and
Note 11 "Unaudited Summarized Consolidated Quarterly Financial Data" were
revised to reflect the recognition of a $1.7 million impairment loss in the
third quarter of 1995, (originally recorded in the fourth quarter of 1995) and
the line item "Income from property operations" was changed to "Income before
gains (losses) on sales of investments and extraordinary item".
ITEM 11. Executive Compensation
Amendment No. 2
The table setting forth option grants in the last fiscal year has been added.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
Amendment No. 2
The table setting forth beneficial ownership has been revised.
UNITED DOMINION REALTY TRUST, INC.
(Registrant)
By: /s/ Jerry A. Davis
Jerry A. Davis, Vice President & Corporate Controller
UNITED DOMINION REALTY TRUST, INC.
TABLE OF CONTENTS
PAGE
PART I.
Item 1. Business 3
Item 2. Properties 12
Item 3. Legal Proceedings 13
Item 4. Submission of Matters to a Vote of Security-Holders 13
PART II.
Item 5. Market for Registrant's Common Equity and Related 15
Stockholder Matters
Item 6. Selected Financial Data 15
Item 7. Management's Discussion and Analysis of Financial 17
Condition and Results of Operation
Item 8. Financial Statements and Supplementary Data 22
Item 9. Changes in and Disagreements with Accountants on 22
Accounting and Financial Disclosure
PART III.
Item 10. Directors and Executive Officers of the 23
Registrant
Item 11. Executive Compensation 23
Item 12. Security Ownership of Certain Beneficial 23
Owners and Management
Item 13. Certain Relationships and Related Transactions 23
PART IV.
Item 14. Exhibits, Financial Statement Schedule, and 24
Reports on Form 8-K
Part I
Item 1. Business
United Dominion Realty Trust, Inc., a Virginia corporation, and its
subsidiaries (collectively, the "Company") is a self-administered equity real
estate investment trust ("REIT"), formed in 1972, whose business is devoted to
one industry segment, the ownership and operation of income-producing real
estate, primarily apartment communities located in the southeastern U.S. (the
"Southeast"). The Company is headquartered in Richmond, Virginia with divisional
offices in Richmond, Atlanta, Georgia, and Orlando, Florida, and regional
offices in the previously mentioned cities plus Columbia, Maryland, Raleigh,
North Carolina, and Nashville, Tennessee. The Company has approximately 1,100
associates as of March 15, 1996. The Company is a fully integrated real estate
company with acquisition, development and asset and property management
capabilities. The Company acquires, upgrades and operates its properties
with the goals of maximizing its funds from operations ("FFO") (defined as
income before gains [losses] on investments and extraordinary items
[computed in accordance with generally accepted accounting principles] plus
real estate depreciation, less preferred dividends and after adjustment for
significant nonrecurring items, if any) and quarterly distributions to
shareholders, while building equity primarily through real estate
appreciation.
At the beginning of 1991, the Company embarked on a major expansion of
its apartment portfolio in an effort to take advantage of unique buying
opportunities resulting from the real estate credit crisis. This enabled the
Company to (i) acquire more stable apartment properties having high occupancy
levels and not requiring substantial renovation, and (ii) enter into new markets
including the Baltimore/Washington area, central and south Florida, Nashville
and Memphis, Tennessee. The Company's acquisition strategy focuses on acquiring
two types of apartment communities: (i) near Class A properties built since 1980
where the investment (purchase price plus planned improvements) represents a
significant discount to replacement cost and (ii) well-located communities built
in the late 1960s or 1970s that can be upgraded and repositioned for the longer
term. In 1995, the Company purchased 23 apartment communities with 5,142
apartment homes for approximately $195 million. This includes 9 apartment
communities with 1,596 apartment homes acquired in a portfolio purchase for
$65.7 million, including closing costs. As of March 15, 1996, the Company's
portfolio of income-producing real estate consisted of 154 properties including
144 apartment complexes, 6 shopping centers, and 4 other properties. A
geographic distribution of the Company's portfolio of apartment communities
held for investment is included in Item 2, "Properties".
The Company is operated so as to qualify as a real estate investment
trust under the applicable provisions of the Internal Revenue Code of 1986, as
amended (the "Code"). To qualify, the Company must meet certain tests which,
among other things, require that its assets consist primarily of real estate,
its income be derived primarily from real estate, and at least 95% of its
taxable income be distributed to its shareholders. Because the Company qualifies
as a REIT, it is generally not subject to Federal income taxes.
The Company manages its properties directly, rather than through
outside property management firms. During 1995, the cost of internal property
management of the Company's apartment properties was approximately 2.6% of rents
collected versus the 4-5% fee typically charged by independent fee management
companies in the Company's region. In determining its cost of self management,
the Company considers all direct and indirect costs associated with the internal
property management function.
Near the end of 1992, management of the Company determined that the
Company should devote substantially all of its resources to the apartment
business. During 1994, the Company sold one shopping center and during 1995 the
Company sold seven shopping centers. As of the end of 1995, six of the Company's
remaining seven shopping centers were under contract to be sold. There is no
assurance that these sales transactions will be consummated. Although no formal
plans which would commit the Company for divestiture have been made, the
Company hopes to substantially liquidate its commercial properties over time
as opportunities arise.
A significant aspect of the Company's investment strategy has been to
concentrate its investments within the Southeast. The Company currently owns
properties in the seven coastal states from Delaware to Florida plus Tennessee
and Alabama. This strategy of geographically focusing on one region, has enabled
management to regularly inspect each property and to monitor developments in
local real estate markets. The Company is a significant apartment owner in 15
Southeast markets with each market averaging approximately 2,000 apartment
homes. The Company's strategy is to establish a dominant presence in each of
these markets in order to:
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(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 that 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 distributions. 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 9 1/4% 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.
In the past, the Company utilized fixed rate mortgage debt to finance
its growth. As the Company's capital base has broadened over the past several
years primarily through its 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
At the end of 1995, the apartment portion of the Company's portfolio
included 141 complexes having a total of 34,224 apartment homes and constituting
95.8% of the Company's real estate owned, at cost. During 1995, the Company
acquired 23 apartment complexes, having a total of 5,142 apartment homes, a
16.9% increase in the number of apartment homes owned. During 1995, 1994, and
1993, apartments provided approximately 96%, 93% and 89% respectively, of the
Company's rental income. The Company's apartment communities consist primarily
of upper middle to moderate income complexes which make up the broadest segment
of the apartment market. Management believes that well located apartments offer
the Company a good combination of current income and longer term equity growth.
Although there is no known move toward rent control in any of the markets in
which the Company now owns apartments, should rent control legislation be
enacted, the Company's ability to raise rents to cover increases in operating
expenses might be impaired. While the Company has been largely unaffected by
military cutbacks and base closures, the effect of future defense cuts on the
Company's region is unknown. As the Company has expanded beyond Virginia and
North Carolina, it has attempted to avoid markets where the exposure to reduced
defense spending is believed to be high. The Company has one property, Indian
Hills in Anniston, Alabama, which caters to Fort McClellan which was included in
the list of military base closings announced by the Defense Department in
February, 1995.
Management expects the Company's apartment business to continue to be
stable during the next two to three years. Apartment markets in the Company's
region in 1994 and 1995 generally benefitted from the combination of job growth
which led to strong growth in the number of renter households and only modest
apartment construction. Beginning in mid-year 1994 and lasting through mid-year
1995, physical occupancy of the Company's apartments steadily increased.
However, occupancy trended downward beginning in August, 1995 and continued to
decline albeit slowly through year end. Physical occupancy at the Company's
apartment properties averaged 93.9% for December, 1995. Management believes that
apartment markets within the Southeast will remain in balance over the next few
years if construction activity remains at 1994 and 1995 levels. Because the
Company's apartment occupancy has stabilized at approximately 94% at the
beginning of 1996, it is anticipated that the Company will benefit more from
higher rent growth in 1996 and 1997 than from occupancy gains.
It is widely believed by those who closely follow the industry that the
next few years will be a period of consolidation for REITs. Prior to 1990,
United Dominion was the only major publicly held REIT focusing almost
exclusively on apartment investments. Since then, a number of new multifamily
REITs have been formed. According to the National Association of Real Estate
Investment Trusts (NAREIT), there were more than 35 apartment REITs as of
February 29, 1996. It is believed that some of these REITs may be forced to seek
to be acquired by larger, better capitalized REITs with superior access to the
capital markets, such as the Company. If consolidation occurs, then the Company
expects to participate in the process as an acquirer of other apartment REITs
when such transactions are accretive to FFO earnings and can enhance dividend
growth and shareholder value.
At December 31, 1995, commercial properties, primarily shopping
centers, constituted the remaining 4% of the Company's real estate owned at
cost. During 1995, 1994, and 1993, commercial properties provided 4%, 7%, and
11%, respectively, of the Company's rental income. The commercial portfolio has
become a non-material portion of the Company's total portfolio.
In most of the Company's markets, the competition for residents among
properties is very intense. Some competing properties are larger and/or newer
than the Company's properties and offer features for prospective residents not
offered by properties owned by the Company. The competitive situation of each
property varies and intensifies as additional properties are constructed.
The Company expects to continue to aggressively acquire additional
apartment properties within the Southeast during 1996. When it is in the market
for new acquisitions, the Company competes with numerous other investors,
including REITs, individuals, partnerships, corporations, pension funds,
syndicators, insurance companies, foreign investors, and other real estate
entities. Management believes that the Company, in general, is well positioned
in terms of economic and other resources to compete effectively. Even though the
Company has certain advantages over some of its competitors because of its
substantial presence in the region and its access to capital, some competing
investors are larger than the Company in terms of assets and other investment
resources and may have a competitive advantage.
5
To date, compliance with Federal, State, and local environmental
protection regulations has not had a material effect upon the capital
expenditures, earnings, or competitive position of the Company. However, over
the past few years, there have been increasing concerns raised regarding the
presence of asbestos and other hazardous materials in existing real estate
properties. In response to this, on March 1, 1991, the Company adopted a
property management plan for hazardous materials. As part of the plan, Phase I
environmental site investigation and reports have been completed for each
property owned by the Company and not previously inspected. In addition, all
proposed acquisitions are inspected prior to acquisition. Nevertheless, it is
possible that the Company's assessments did not reveal all environmental
liabilities or that there are material environmental liabilities of which the
Company is unaware. In some cases, the Company has abandoned otherwise
economically attractive acquisitions because the costs of removal or control
have been prohibitive and/or the Company has been unwilling to accept the
potential risks involved. The Company does not believe it would be required to
remediate any asbestos materials at any of its properties as asbestos is managed
in place in accordance with current environmental laws and regulations.
Management believes that thorough professional environmental inspections
and testing for asbestos and other hazardous materials, coupled with a
conservative posture toward accepting known risk, the Company can minimize
its exposure to potential liability associated with environmental hazards.
The Company is not aware of any environmental hazards on or in its
properties which individually or in the aggregate may have a material adverse
impact on its operations or financial position. To the best of its
knowledge, the Company is in compliance with all applicable environmental rules
and regulations. The Company has not been notified by any governmental
authority, and is not otherwise aware, of any material noncompliance, liability
or claim relating to hazardous or toxic substances or petroleum products in
connection with any of its properties. The Company does not believe that the
cost of continued compliance with applicable environmental laws or regulations
will have a material adverse effect on the Company or its financial condition or
results of operations. There can be no assurance, however, that future
environmental laws, regulations or ordinances will not require additional
remediation of existing conditions that are not currently actionable, or impose
additional or more stringent requirements on the Company, the costs of
compliance with which would have a material adverse effect on the Company or its
financial condition.
UNITED DOMINION REALTY, L.P.
On October 23, 1995, the Company organized United Dominion Realty, L.P.
(the "Partnership") under the Virginia Revised Uniform Limited Partnership Act.
The Company is the sole General Partner of the Partnership and currently holds a
99% interest therein. The remaining 1% is currently held by UDRT of North
Carolina, L.L.C., a wholly owned subsidiary of the Company. In 1995, the
Company acquired two apartment communities and land to develop an additional
apartment community using the Partnership, and transferred seven of its
Tennessee properties into the Partnership. The Partnership is intended to assist
the Company in competing for acquisitions of properties that meet the Company's
investment strategies from seller partnerships some or all of whose partners
may wish to defer taxation of gain realized on sale through an exchange of
partnership interests.
The Partnership is organized under a First Amended and Restated
Agreement of Limited Partnership dated as of December 31, 1995 (the "Partnership
Agreement"). A summary of certain provisions of the Partnership Agreement is set
forth below. The summary does not purport to be complete and is subject to and
qualified in its entirety by reference to applicable provisions of the
Partnership Act and the complete Partnership Agreement, which is filed as an
exhibit to this annual report on Form 10-K for the year ended December 31, 1995.
ADMISSION OF LIMITED PARTNERS; INVESTMENT AGREEMENTS
The Company presently intends to limit admission to the Partnership to
Limited Partners who are "accredited investors," as defined in Rule 501(a) under
the Securities Act of 1933, as amended (the "Securities Act"). Limited Partners
will be admitted upon executing and delivering to the Company an Investment
Agreement (the "Investment Agreement")
6
and delivering to the Partnership the consideration prescribed therein. In the
Investment Agreement, the prospective Limited Partner makes representations as
to his status as an accredited investor and other representations and agreements
regarding the Units, defined below, to be issued to him, intended to assure
compliance with the Securities Act. Any rights to Securities Act registration of
the Common Stock of the Company, if any, issued to such Limited Partner upon
redemption of his Units (see "Redemption Rights" below), will also be set forth
in the Investment Agreement.
UNITS
The interests in the Partnership of the Partnership's limited Partners
(the "Limited Partners") are represented by units of limited partnership
interest (the "Units"). All holders of Units are entitled to share in cash
distributions from, and in the profits and losses of, the Partnership.
Distributions by the Partnership are made equally for each Unit outstanding. As
the Partnership's sole General Partner, the Company intends to make
distributions per Unit in the same amount as the cash dividends paid by the
Company on each share of Common Stock. However, because the Partnership
properties, which are the primary source of cash available for distribution to
Unit holders, are significantly fewer than the properties held directly by the
Company and may not perform as well, there can be no assurance that
distributions per Unit will always equal Common Stock dividends per share. A
distribution made to the Company to enable it to maintain its REIT status (see
"Management and Operations" below) may deplete cash otherwise distributable to
Unit holders. The Partnership may borrow from the Company for the purpose of
equalizing per Unit and per share of Common Stock distributions, but
neither the Partnership nor the Company is under any obligation regarding
Partnership borrowings for this or any other purpose.
The Limited Partners have the rights to which limited partners are
entitled under the Partnership Act. The Units are illiquid; they are not
registered for secondary sale under any securities laws, state or federal, and
cannot be transferred by a holder unless they are so registered or an exemption
from such registration is available. Neither the Partnership nor the Company is
under any obligation to effect any such registration or to establish any such
exemption. The Partnership Agreement imposes additional restrictions on the
transfer of Units, as described below under "Transferability of Interests."
MANAGEMENT AND OPERATIONS
The Company, as the sole General Partner of the Partnership, has full,
exclusive and complete responsibility and discretion in the management and
control of the Partnership, and the Limited Partners have no authority to
transact business for, or participate in the management activities or decisions
of, the Partnership.
The Partnership Agreement requires that the Partnership be operated in
a manner that will enable the Company to satisfy the requirements for being
classified as a REIT and to avoid any federal income tax liability. The General
Partner is expressly directed, notwithstanding anything to the contrary in the
Partnership Agreement, to cause the Partnership to distribute amounts (including
proceeds of Partnership borrowings) sufficient to enable the Company to pay
distributions to its shareholders required to maintain its REIT status and avoid
income tax or excise tax liability.
ABILITY TO ENGAGE IN OTHER BUSINESSES; CONFLICTS OF INTEREST
The Company and other persons (including officers, directors,
employees, agents and other affiliates of the Company) are not prohibited under
the Partnership Agreement from engaging in other business activities, including
business activities substantially similar or identical to those of the
Partnership, and the Company will not be required to present any business
opportunities to the Partnership or to any Limited Partner.
BORROWING BY THE PARTNERSHIP
The General Partner is authorized under the Partnership Agreement to
cause the Partnership to borrow money and to issue and guarantee debt as it
deems necessary for the conduct of the activities of the Partnership. Such debt
may be secured by mortgages, deeds of Company, pledges or other liens on the
assets of the Partnership.
REIMBURSEMENT OF GENERAL PARTNER; TRANSACTIONS WITH THE GENERAL PARTNER AND ITS
AFFILIATES
The General Partner will receive no compensation for its services as
General Partner of the Partnership. However, as a partner in the Partnership,
the General Partner has the same right to allocations of profit and loss and
distributions as other partners of the Partnership. In addition, the Partnership
will reimburse the General Partner for all expenses it incurs
7
relating to the ownership and operation of, or for the benefit of, the
Partnership and any offering of Units or other partnership interests, and for
the pro rata share of the expenses of any offering securities of the Company
some or all the proceeds of which are contributed to the Partnership.
LIABILITY OF GENERAL PARTNER AND LIMITED PARTNERS
The General Partner is liable for all general obligations of the
Partnership to the extent not paid by the Partnership. The General Partner is
not liable for the non-recourse obligations of the Partnership.
The Limited Partners are not required to make further capital
contributions to the Partnership after their respective initial contributions
are fully paid. Assuming that a Limited Partner acts in conformity with the
provisions of the Partnership Agreement, the liability of the Limited Partner
for obligations of the Partnership under the Partnership Agreement and
Partnership Act will be limited, subject to certain possible exceptions, to the
loss of the Limited Partner's investment in the Partnership.
The Partnership is qualified to conduct business in each state in which
it owns property and may qualify to conduct business in other jurisdictions.
Maintenance of limited liability may require compliance with certain legal
requirements of those jurisdictions and certain other jurisdictions. Limitations
on the liability of a limited partner for the obligations of a limited
partnership have not clearly been established in many states. Accordingly, if it
were determined that the right, or exercise of the right by the Limited
Partners, to make certain amendments to the Partnership Agreement or to take
other action pursuant to the Partnership Agreement constituted "control" of the
Partnership's business for the purposes of the statutes of any relevant state,
the Limited Partners might be held personally liable for the Partnership's
obligations. The Partnership will operate in a manner the General Partner deems
reasonable, necessary and appropriate to preserve the limited liability of the
Limited Partners.
EXCULPATION AND INDEMNIFICATION OF THE GENERAL PARTNER
The Partnership Agreement provides that the General Partner will incur
no liability for monetary damages to the Partnership or any Limited Partner for
losses sustained or liabilities incurred as a result of errors in judgment or of
any act or omission if the General Partner acted in good faith. In addition, the
General Partner is not responsible for any misconduct or negligence on the part
of its agents, provided the General Partner appointed such agents in good faith.
The Partnership Agreement also provides for indemnification of the
General Partner, the directors, officers and employees of the General Partner,
and such other persons as the General Partner may from time to time designate,
against any and all losses, claims, damages, liabilities (joint or several),
expenses (including reasonable legal fees and expenses), judgments, fines,
settlements, and other amounts arising from any and all claims, demands,
actions, suits or proceedings, whether civil, criminal, administrative or
investigative, that relate to the operations of the Partnership in which any
such indemnitee may be involved, or is threatened to be involved, unless it is
established that (i) the act or omission of such indemnitee was material to the
matter giving rise to the proceeding and either was committed in bad faith or
was the result of active and deliberate dishonesty, (ii) such indemnitee
actually received an improper personal benefit in money, property or services,
or (iii) in the case of any criminal proceeding, such indemnitee had reasonable
cause to believe that the act or omission was unlawful.
SALE OF ASSETS
Under the Partnership Agreement, the General Partner generally has the
exclusive authority to determine whether, when and on what terms the assets of
the Partnership will be sold.
REMOVAL OF THE GENERAL PARTNER; TRANSFER OF GENERAL PARTNER'S INTEREST
The Partnership Agreement does not authorize the Limited Partners to
remove the General Partner and the Limited Partners have no right to remove the
General Partner under the Partnership Act. The General Partner may not transfer
any of its interest as General Partner and withdraw as General Partner, except
(a) to a wholly-owned subsidiary of the General Partner or the owner of all the
ownership interests in the General Partner, (b) in connection with a merger or
sale of all or substantially all of the assets of the General Partner or (c) as
a result of the bankruptcy of the General Partner. A substitute or additional
General Partner may be admitted upon compliance with the applicable provisions
of the Partnership Agreement, including delivery by counsel for the Partnership
of an opinion that admission of such General Partner will not cause (i) the
8
Partnership to be classified other than as a partnership for federal income tax
purposes, or (ii) the loss of any Limited Partner's limited liability. The
General Partner may not sell all or substantially all of its assets, or enter
into a merger, unless the sale or merger includes the sale of all or
substantially all of the assets of, or the merger of, the Partnership and the
Limited Partners receive for each Unit substantially the same consideration as
the holder of one share of Common Stock.
TRANSFERABILITY OF INTERESTS
A Limited Partner may transfer his interest in the Partnership without
the consent of the General Partner, unless in the opinion of counsel for the
Partnership such transfer would require the registration of such interest under
the Securities Act or would otherwise violate any applicable federal or state
securities or blue sky law (including investment suitability standards) and
unless such transfer would have undesirable federal income tax consequences for
the Partnership. The General Partner may require, as a condition of any
transfer, that the transferring Limited Partner assume all costs incurred by the
Partnership in connection with such transfer.
REDEMPTION RIGHTS
Each Limited Partner has the right (the "Redemption Right"), subject
to the purchase right of the General Partner described below, to cause the
redemption of such Limited Partner's Units for cash in an amount per Unit
equal to the average of the closing sale prices of the Common Stock of the
Company on the New York Stock Exchange (the "NYSE") for the ten trading days
immediately preceding the date of receipt by the General Partner of notice of
such Limited Partner's exercise of the Redemption Right. Subject to certain
restrictions intended to prevent undesirable tax consequences and assure
compliance with the Securities Act, a Limited Partner may exercise the
Redemption Right at any time but not more than twice within the same calendar
year and not with respect to less than 1,000 units (or all units owned by such
Limited Partner, if less than 1,000). A Limited Partner that exercises the
Redemption Right shall be deemed to have offered to sell the Units to be
redeemed to the General Partner, and the General Partner may elect to
purchase such Units by paying to such Limited Partner either the redemption
price in cash or by delivering to such Limited Partner a number of shares of
Common Stock of the Company equal to the product of the number of such Units,
multiplied by the "Conversion Factor," which is 1.0, subject to customary
antidilution provisions in the event of stock dividends on or subdivisions or
combinations of the Common Stock subsequent to issuance of such Units. Any
Common Stock issued to the redeeming Limited Partner will be listed on the NYSE
and if and to the extent provided in such Redeeming Partner's Investment
Agreement, registered under the Securities Act and/or entitled to rights to
Securities Act registration.
NO WITHDRAWAL OF CAPITAL BY LIMITED PARTNERS
No Limited Partner has the right to withdraw any part of his capital
contribution to the Partnership or to interest thereon or to receive any
distribution, except as provided in the Partnership Agreement.
ISSUANCE OF ADDITIONAL LIMITED PARTNERSHIP INTERESTS AND OTHER PARTNERSHIP
SECURITIES
The General Partner is authorized, without the consent of the Limited
Partners, to cause the Partnership to issue additional Units or other
Partnership securities to the partners or to other persons on such terms and
conditions and for such consideration, including cash or any property or other
assets permitted by the Partnership Act, as the General Partner deems
appropriate.
MEETINGS
The Partnership Agreement does not provide for annual meetings of the
Limited Partners, and the General Partner does not anticipate calling such
meetings.
AMENDMENT OF PARTNERSHIP AGREEMENT
Amendments to the Partnership Agreement may, with four exceptions, be
made by the General Partner without the consent of the Limited Partners. Any
amendment to the Partnership Agreement which would (i) affect the Conversion
Factor or the Redemption Rights of the Limited Partners, (ii) adversely affect
the rights of the Limited Partners to receive distributions payable to them
under the Partnership Agreement, (iii) alter the Partnership's profit and loss
allocations or (iv) impose any obligation upon the Limited Partners to make
additional capital contributions to the Partnership shall require the consent of
Limited Partners owning more than 50% of the percentage interests in the
Partnership.
9
BOOKS AND REPORTS
The General Partner is required to keep at the specified office of the
Partnership the Partnership's books and records, including copies of the
Partnership's federal, state and local tax returns, a list of the partners and
their last known business addresses, the Partnership Agreement, the Partnership
certificate and all amendments thereto and any other documents and information
required under Partnership Act. Any partner or his duly authorized
representative, upon paying duplicating, collection and mailing costs, is
entitled to inspect or copy such records during ordinary business hours.
The General Partner will furnish to each Limited Partner, as soon as
practicable after the close of each fiscal year, an annual report containing
financial statements of the Partnership (or the Company, if consolidated
financial statements including the Partnership are prepared) for such fiscal
year. The financial statements will be audited by accountants selected by the
General Partner. In addition, as soon as practicable after the close of each
fiscal quarter (other than the last quarter of the fiscal year), the General
Partner will furnish to each Limited Partner a quarterly report containing
unaudited financial statements of the Partnership (or the Company and the
Partnership, consolidated).
The General Partner will furnish to each Limited Partner, within 75
days after the close of each fiscal year of the Partnership, the tax information
necessary to file such Limited Partner's individual tax returns.
LOANS TO PARTNERSHIP
The Partnership Agreement provides that the General Partner may borrow
additional Partnership funds for any Partnership purpose from the General
Partner or a subsidiary or subsidiaries of the General Partner or otherwise.
ADJUSTMENTS OF CAPITAL ACCOUNTS AND PERCENTAGE INTERESTS
A separate capital account will be established and maintained for each
Partner. If (i) a new or existing general or limited partner of the
Partnership (a "Partner" or collectively "Partners") acquires an additional
interest in the Partnership interest in exchange for more than a de minimis
capital contribution, (ii) the Partnership distributes to a Partner more
than a de minimis amount of Partnership property as consideration for a
Partnership interest, or (iii) the Partnership is liquidated for federal income
tax purposes, the General Partner shall revalue the property of the
Partnership to its fair market value (as determined by the General Partner, in
its sole discretion) in accordance with applicable federal income tax
regulations. When the Partnership's property is revalued by the General
Partner, the capital accounts of the partners shall be adjusted in accordance
with such regulations, which generally require such capital accounts to be
adjusted to reflect the manner in which the unrealized gain or loss inherent
in such property (that has not been reflected in the capital accounts
previously) would be allocated among the partners pursuant to the Partnership
Agreement if there were a taxable disposition of such property for its fair
market value on the date of the revaluation.
If the number of outstanding Units increases or decreases during a
taxable year, each partner's percentage interest in the Partnership shall be
adjusted by the General Partner effective as of the effective date of each such
increase or decrease to a percentage equal to the number of Units held by such
Partner divided by the aggregate number of Units outstanding after giving effect
to such increase or decrease, and profits and losses for the year will be
allocated among the partners in a manner selected by the General Partner to give
appropriate effect to such adjustments.
REGISTRATION RIGHTS
Limited Partners have no rights to Securities Act registration of any
Common Stock of the Company received in connection with redemption of Units
except as provided in their respective Investment Agreements.
TAX MATTERS; PROFIT AND LOSS ALLOCATIONS
Pursuant to the Partnership Agreement, the General Partner is the tax
matters partner of the Partnership and, as such, has the authority to handle tax
audits and to make tax elections under the Code on behalf of the Partnership.
Profit and loss of the Partnership generally will be allocated among
the Partners in accordance with their respective interests in the Partnership
based on the number of Units held by the Partners.
10
DISTRIBUTIONS
The Partnership Agreement provides that the General Partner shall
distribute cash quarterly, in amounts determined by the General Partner in its
sole discretion, to the partners in accordance with their respective percentage
interests in the Partnership, except that the amount of cash distributable to a
Limited Partner who has not been a Limited Partner for the full quarter for
which the distribution is paid is subject to pro rata reduction. Upon
liquidation of the Partnership, after payment of, or adequate provision for,
debts and obligations of the Partnership, including any Partner loans, any
remaining assets of the Partnership will be distributed to all Partners with
positive capital accounts in accordance with their respective positive capital
account balances. If the General Partner has a negative balance in its capital
account following a liquidation of the Partnership, it will be obligated to
contribute cash to the Partnership equal to the negative balance in its capital
account.
TERM
The Partnership will continue until December 31, 2051, or until sooner
dissolved upon (i) the bankruptcy, dissolution, death or withdrawal of a General
Partner (unless the Limited Partners elect to continue the Partnership by
electing by unanimous consent a substitute General Partner within 90 days of
such occurrence), (ii) the passage of 90 days after the sale or other
disposition of all or substantially all the assets of the Partnership, (iii) the
redemption of all Limited Partners' interests in the Partnership, or (iv)
election by the General Partner. Upon dissolution of the Partnership, the
General Partner will proceed to liquidate the assets of the Partnership and
distribute the proceeds remaining after payment or adequate provision for
payment of all debts and obligations of the Partnership as provided in the
Partnership Agreement.
11
ITEM 2. PROPERTIES
REAL ESTATE HELD FOR INVESTMENT
The table below sets forth a summary by major geographic market of the Company's
portfolio of apartment rental properties held for investment at December 31,
1995. The Company also held five commercial properties for investment at
December 31, 1995, having an aggregate cost of $7,249,020 containing 325,000
square feet. See also Notes 1 and 2 to the Consolidated Financial Statements and
Schedule III - Summary of Real Estate Owned.
AVERAGE
MONTHLY
RENTAL
RATES FOR
NUMBER NUMBER PERCENTAGE REAL ECONOMIC THE YEAR AVERAGE
MAJOR OF OF OF ESTATE COST OCCUPANCY ENDED UNIT SIZE
GEOGRAPHIC APARTMENT APARTMENT APARTMENT AT PER FULL YEAR DECEMBER (SQUARE
MARKETS COMMUNITIES HOMES HOMES COST ENCUMBRANCES UNIT 1995 31, 1995* FEET)
---------------------------------------------------------------------------------------------------------------------------------
Richmond,
Virginia 12 3,541 11% $99,088,108 $10,546,791 $27,982 95.8% $464 945
Columbia,
South Carolina 11 3,218 10% 95,294,439 19,841,033 29,613 94.6% 458 864
Raleigh,
North Carolina 7 2,272 7% 81,186,113 7,000,000 35,733 99.0% 538 927
Tampa,
Florida 8 2,351 7% 76,449,020 -- 32,518 90.1% 527 986
Charlotte,
North Carolina 10 2,002 6% 71,555,132 10,629,071 35,742 95.3% 513 958
Orlando,
Florida 8 2,253 7% 78,902,434 27,510,000 35,021 90.5% 532 926
Atlanta,
Georgia 6 1,670 5% 57,011,100 6,027,182 34,138 92.0% 523 960
Baltimore,
Maryland 8 1,746 5% 73,650,412 30,800,000 42,182 93.4% 614 865
Eastern,
North Carolina 8 1,730 5% 47,537,154 1,463,867 27,478 98.1% 482 916
Hampton Roads,
Virginia 6 1,436 5% 42,319,745 3,900,000 29,471 94.4% 503 997
Nashville,
Tennessee 5 1,344 4% 46,520,494 5,223,854 34,613 97.9% 523 979
Greenville/Spartanburg,
South Carolina 7 1,330 4% 37,328,147 3,265,000 28,066 93.9% 456 890
Washington, DC 4 1,011 3% 34,380,221 11,437,183 34,006 93.1% 610 865
Ft. Lauderdale,
Florida 4 960 3% 58,232,414 -- 60,659 91.6% 768 1,092
Memphis,
Tennessee 4 935 3% 30,179,225 5,890,000 32,277 94.4% 462 784
Other Maryland 4 784 2% 31,548,586 -- 40,241 96.1% 591 935
Other North Carolina 2 447 1% 14,497,318 -- 32,432 90.8% 431 885
Other Florida 6 1,524 5% 51,283,043 17,452,916 33,652 90.9% 564 819
Other Virginia 6 988 3% 33,138,387 2,960,000 33,541 96.3% 498 848
Delaware 3 468 1% 19,238,635 -- 41,108 95.4% 587 745
Other Georgia 2 468 1% 20,067,668 6,407,421 42,880 90.8% 594 1,140
Other South Carolina 2 408 1% 12,030,615 2,200,000 29,487 89.2% 382 909
Alabama 2 382 1% 12,410,936 -- 32,489 87.0% 474 1,067
=======================================================================================================
135 33,268 100% $1,123,849,346 $172,554,318 $33,782 94.1% $520 924
=======================================================================================================
At December 31, 1995, the Company has six shopping centers and six apartment
properties classified in the consolidated balance sheet as real estate held for
disposition in the amount of $51,015,137, net of accumulated depreciation in the
amount of $23,572,195 and impairment loss valuation allowance in the amount of
$1,700,000. These properties are not included in the above table.
* Average monthly rental rates for the year ended December 31, 1995, represents
potential rent collections (gross potential rents less market adjustments),
which approximates net effective rents.
ITEM 3. LEGAL PROCEEDINGS
Neither the Company nor any of its apartment communities is presently
subject to any material litigation nor, to the Company's knowledge, is any
litigation threatened against the Company or any of the communities, other
than routine actions arising in the ordinary course of business, some of
which are expected to be covered by liability insurance and all of which
collectively are not expected to have a material adverse effect on the
business or financial condition or results of operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's shareholders
during the last quarter of its fiscal year ended December 31, 1995.
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company, listed below, serve in their
respective capacities for approximate one year terms and are subject to
re-election annually by the Board of Directors, normally in May of each year.
Name Age Office Since
John P. McCann 51 President and Chief 1974
Executive Officer
James Dolphin 46 Senior Vice President 1979
and Chief Financial Officer
Barry M. Kornblau 46 Senior Vice President and 1991
Director of Apartment Operations
Richard B. Chess 42 Vice President and Director 1987
of Acquisitions
Richard A. Giannotti 40 Vice President and Director 1985
of Construction
Katheryn E. Surface 37 Vice President, Corporate Secretary
and General Counsel 1992
Jerry A. Davis 33 Vice President and Corporate Controller 1989
Mr. McCann, a Director, has been the Company's managing officer since
1974, serving as its President since 1979, its Secretary from 1974 to 1980, and
its Treasurer from 1982 to 1985.
Mr. Dolphin, a Director, was first employed by the Company in May, 1979
as Controller and served as Corporate Secretary from 1980 to February, 1994. He
was elected Vice President of Finance in 1985 and Senior Vice President in 1987.
Mr. Kornblau, a Director, joined the Company in 1991 as Senior Vice
President and Director of Apartment Operations. From 1985 through 1990, he was
President and Chief Executive Officer of Summit Realty Group, Inc. which managed
the Trust's apartment properties during that period. He is a licensed real
estate broker and a C.P.M.
Mr. Chess joined the Company in October, 1987 as Director of
Acquisitions. He was elected Assistant Vice President in 1988 and Vice President
in 1989.
Mr. Giannotti joined the Company as Director of Development and
Construction in September, 1985. He was elected Assistant Vice President in
1988 and Vice President in 1989.
Ms. Surface joined the Company in 1992 as Assistant Vice President and
Legal Counsel and in 1994 was elected General Counsel, Corporate Secretary and
Vice President. From 1986 to 1992, she was an attorney with the law firm of
Hunton and Williams, the Company's outside counsel.
Mr. Davis joined the Company in March, 1989 as Controller and was
subsequently elected Assistant Secretary. In 1991 he was elected Vice
President. He is a certified public accountant.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is traded on the New York Stock Exchange
("NYSE") under the symbol "UDR". The following table sets forth the quarterly
high and low closing sale prices per share reported on the NYSE for each quarter
of the last two years. Distribution information reflects distributions
declared per share for each calender quarter and paid at the end of the
following month.
DISTRIBUTIONS
1994 HIGH LOW DECLARED
1st Quarter $ 15 7/8 $ 12 3/4 $ .195
2nd Quarter 15 1/8 13 3/8 .195
3rd Quarter 14 1/4 13 .195
4th Quarter 14 1/2 12 1/4 .195
1995
1st Quarter $ 14 5/8 $ 13 $ .225
2nd Quarter 15 3/8 13 1/2 .225
3rd Quarter 15 13 1/2 .225
4th Quarter 15 13 1/4 .225
The Company determined that, for Federal income tax purposes, approximately
82.3% of the distributions for each of the four quarters of 1995 represented
ordinary income to its shareholders, 17.4% represented return of capital to its
shareholders and .3% represented capital gains to its shareholders.
On March 15, 1996, the closing sale price of the Common Stock was $15.50 per
share on the NYSE. On March 15, 1996 there were 5,636 holders of record of the
56,506,249 shares of Common Stock.
The Company pays regular quarterly distributions to holders of shares of
Common Stock. Future distributions by the Company will be at the discretion
of its Board of Directors and will depend on the actual funds from operations
of the Company, the Company's financial condition and capital requirements, the
annual distribution requirements under the REIT provisions of the Internal
Revenue Code and such other factors as the Board of Directors deems relevant.
The annual distribution payment for the calendar year 1995 necessary for the
Company to maintain its status as a REIT was approximately $.67 per share. The
Company paid total distributions of $.87 for 1995.
The Company has a Dividend Reinvestment and Stock Purchase Plan under which
holders of Common and Preferred Stock may elect to automatically reinvest their
distributions and make additional cash payments to acquire additional shares of
the Company's Common Stock.
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected consolidated financial and
other information for the Company as of and for each of the years in the five
year period ended December 31, 1995. The table should be read in conjunction
with the Consolidated Financial Statements of United Dominion Realty Trust, Inc.
and the Notes thereto included elsewhere herein.
SELECTED FINANCIAL INFORMATION
YEARS ENDED DECEMBER 31, 1995 1994 1993 1992 1991
--------------------------------------------------------------------------------------------------------------------------------
In thousands, except per share data and apartments homes 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
---------------------------------------------------------------------------------------------------------------------------------
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
---------------------------------------------------------------------------------------------------------------------------------
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 distributions. 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 does not obtain collateral or other security to support
off-balance sheet financial instruments subject to credit risk, but monitors the
credit standing of counterparties. There was no credit exposure to the Company
at December 31, 1995.
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. The Company recorded a $1.7 million impairment
loss in 1995 associated with management's decision to sell a shopping center at
a discount as part of a portfolio transactions.
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. 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 $450,000 charge to expense. In 1994,
the Company incurred increases in most of its general and administrative expense
categories. The largest percentage increase related to employee payroll and
related employee overhead costs which resulted from the significant growth the
Company experienced during 1994.
INFLATION
Management believes that the direct effects of inflation on the Company's
operations have been inconsequential.
21
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Consolidated Financial Statements and Schedule on page
F-1 of this Annual Report on Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated herein by reference from the Company's definitive proxy
statement to be filed with respect to its Annual Meeting of Shareholders to be
held on May 7, 1996.
Information required by this item regarding the executive officers of
the Company is included in Part I of this Annual Report on Form 10-K in the
section entitled "Executive Officers of the Registrant".
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 402(c) of Regulation S-K is set forth
below. Other information required by Item II of Form 10-K is incorporated herein
by reference from the Company's definitive proxy statement to be filed with
respect to its Annual Meeting of Shareholders to be held on May 7, 1996.
OPTION/SAR GRANTS IN LAST FISCAL YEAR (NOTE 1)
Individual Grants Potential Realizable
------------------------------------------------------------------- Value at Assumed Annual
Number of Securities Percent of Total Rates of Share Price
Underlying Options/SARs Granted Appreciation for Option
Options/SAR's to Employees in Exercise or Term
Name Granted (#) Fiscal Year Base Price Expiration ------------------------
(Note 2) (Note 3) ($/Share) Date 5% ($) 10% ($)
--------------------------------------------------------------------------------------------------------------
John P. McCann 60,000 16.13% $14.625 12/12/05 $551,855 $1,398,509
James Dolphin 30,000 8.06% 14.625 12/12/05 275,928 699,255
Barry M. Kornblau 30,000 8.06% 14.625 12/12/05 275,928 699,255
Richard B. Chess 22,500 6.05% 14.625 12/12/05 206,946 524,441
Richard A. Giannotti 22,500 6.05% 14.625 12/12/05 206,946 524,441
Note 1 The Company has never granted SARs.
Note 2 Stock options granted to employees on December 12, 1995, were granted at
an exercise price of $14.625, which was the fair market value as of the
date of the grant. The options may not be exercised until Janury 1, 1997
and expire on December 12, 2005 (the tenth anniversary of the date of
grant).
Note 3 A total of 372,000 employee stock options was granted during 1995.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Beneficial ownership of shares as of March 15, 1996, by directors and
officers of the Company and nominees for election at the Annual Meeting of the
Company's Shareholders held May 8, 1996, including shares deemed owned as a
consequence of ownership of stock options exercisable within 60 days, is
indicated in the table below. Except as otherwise indicated in the footnotes,
each person named in the table and included in the director/officer group has
sole voting and investment powers as to such shares, or shares such powers with
his spouse and minor children, if any.
Shares Beneficially Owned
-----------------------------------------------------
Immediately Through Options(1)
----------------------- -----------------------
Name Number Percent Number Percent
---- ------ ------- ------ -------
Jeff C. Bane 105,820(2) 0.2 6,000 --
Robert P. Buford 129,000 0.2 6,000 --
Richard B. Chess 57,650 0.1 52,263(4) 0.1
R. Toms Dalton, Jr. 33,740 0.1 4,000 --
James Dolphin 140,310 0.2 60,542(4) 0.1
Richard A. Giannotti 49,250 0.1 51,012(4) 0.1
Barry M. Kornblau 218,499(5) 0.4 30,774(4) 0.1
John C. Lanford 12,323(6) -- 6,000 --
John P. McCann 358,164(2)(3) 0.6 231,204(4) 0.4
H. Franklin Minor 64,900 0.1 6,000 --
Lynne B. Sagalyn 1,000 -- --(7) --
C. Harmon Williams, Jr. 98,668(2) 0.2 6,000 --
All directors and officers as a
group* 1,399,836(2)(3)(5) 2.5 691,779(4) 1.2
*(24 persons)
-------------------------
(1) Assumes exercise in full of all options exercisable within 60 days.
(2) Includes, in the case of Messrs. McCann, Bane and Williams and all
directors and officers as a group, 37,500 shares owned by Planned Property
Realty Corp., of which Mr. McCann is President and 50% shareholder and of which
Messrs. Bane and Williams are each 25% shareholders. The Form 3 of Mr. Bane
was amended by a Form 5 for 1995 to report ownership of shares by Planned
Property Realty Corp.
(3) Includes 8,000 shares held by the Profit Sharing Plan of the Company of
which Messrs. McCann and Dolphin are trustees and under which they share voting
and investment powers as to such shares.
(4) Does not include 44,737 shares, 97,126 shares, 45,988 shares, 77,226
shares, 138,132 and 516,925 shares issuable upon exercise of options granted
to Messrs. Chess, Dolphin, Giannotti, Kornblau, McCann and all directors and
officers as a group, respectively, which are not exercisable within 60 days.
(5) Does not include a total of 1,263,708 shares beneficially owned by Mr.
Kornblau's parents, beneficial ownership of which is disclaimed by Mr.
Kornblau.
(6) Includes 1,323 shares in Mr. Lanford's self-directed IRA account, the
purchase of which in June of 1993 was not reported to the Commission on a
timely basis, but was reported on Mr. Lanford's Form 5 for 1995.
(7) In the event Ms. Sagalyn is elected to the Board at the Annual Meeting
and certain proposed amendments to the Company's 1985 Stock Option Plan are
approved, she will be granted 7,000 stock options.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated herein by reference from the Company's definitive proxy
statement to be filed with respect to its Annual Meeting of Shareholders to be
held on May 7, 1996.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1&2) See Index to Consolidated Financial Statements and
Schedule on page F-1 of this Annual Report on Form 10-K.
(3) Exhibits
.
The exhibits listed below are filed as part of this annual report.
References under the caption "Location" to exhibits, forms, or other filings
indicate that the form or other filing has been filed, that the indexed exhibit
and the exhibit referred to are the same and that the exhibit referred to is
incorporated by reference.
Exhibit Description Location
3(a)(i) Restated Articles of Exhibit 3 to the
Incorporation Company's Quarterly
Report on Form 10-Q for the
quarter ended June 30, 1992.
3(a)(ii) Amendment of Restated Articles Exhibit 6(a)(2) to the
of Incorporation Company's Form 8-A
Registration Statement
dated April 19, 1990.
3(a)(iii) Amendment and Restated Articles Exhibit 1 (c) to the
of Incorporation Company's Form 8-A
Registration Statement
dated April 24, 1995.
3(b)(i) By-Laws Exhibit 4(c) to the
Company's Form S-3
Registration Statememt
(Registration No. 33-44743)
filed with the Commission
on December 31, 1991.
3(b)(ii) Amendment of By-Laws Filed herewith.
4(i)(a) Specimen Common Stock Exhibit 4(i) to the
Certificate Company's Annual Report on
Form 10-K for the year
ended December 31, 1993.
4(i)(b) Form of Certificate for Shares Exhibit 1(e) to the
of 9 1/4% Series A Cumulative Company's Form 8-A
Redeemable Preferred Stock Registration Statement
dated April 24, 1995.
4(ii)(a) Loan Agreement dated as of Exhibit 6(c)(i) to the
November 7, 1991, between the Company's Form 8-A
Company and Aid Association for Registration Statement
Lutherans dated April 19, 1990.
4(ii)(c) Note Purchase Agreement dated Exhibit 6(c)(3) to the
as of February 19, 1992, between Company's Form 8-A
the Company and Principal Mutual Registration Statement
Life Insurance Company dated April 19, 1990.
4(ii)(e) Note Purchase Agreement dated Exhibit 6(c)(5) to the
as of February 15, 1993, between Company's Form 8-A
the Company and CIGNA Property Registration Statement
and Casualty Insurance Company, dated April 19, 1990.
Connecticut General Life
Insurance Company, Connecticut
General Life Insurance Company,
on behalf of one or more separate
accounts, Insurance Company of
North America, Principal Mutual
Life Insurance Company and Aid
Association for Lutherans
4(ii)(f) Credit Agreement dated as of Exhibit 6 (c)(6) to the
December 15, 1994 between the Company's Form 8-A
Company and First Union National Registration Statement
Bank of Virginia dated April 19, 1990.
4(ii)(g)(1) Indenture dated as of April 1, Exhibit 4(ii)(f)(1) to
1994, between the Company and the Company's Quarterly
NationsBank of Virginia, N.A., Report on Form 10-Q for
as Trustee the quarter ended March
31, 1994.
4(ii)(g)(2) Resolution of the Board of Exhibit 4(ii)(f)(2) to
Directors of the Company the Company's Quarterly
establishing terms of 7 1/4% Report on Form 10-Q for
Notes due April 1, 1999 the quarter ended
March 13, 1994.
4(ii)(g)(3) Form of 7 1/4% Notes due Exhibit 4(ii)(f)(3) to the
April 1, 1999 Company's Quarterly Report
on Form 10-Q for the
quarter ended
March 31, 1994.
4(ii)(g)(4) Resolution of the Board of Exhibit 4 (ii)(f)(4) to the
the Company establishing terms Company's Quarterly Report
of the 8 1/2% Debentures due on Form 10-Q for quarter
September 15, 2024 ended September 30, 1994.
4(ii)(g)(5) Form of 8 1/2% Debentures Exhibit 4 (ii)(f)(5) to the
due September 15, 2024 Company's Quarterly Report
on Form 10-Q for the
quarter ended Septem-
ber 30, 1994.
The Company agrees to furnish to the Commission on request a copy of
any instrument with respect to long-term debt of the Company or its subsidiaries
the total amount of securities authorized under which does not exceed 10% of the
total assets of the Company and its subsidiaries on a consolidated basis.
10(i) Employment Agreement between Exhibit 10(v)(i) to the
the Company and John P. McCann Company's Annual report on
dated October 29, 1982 Form 10-K for the year
ended December 31, 1982.
10(ii) Employment Agreement between Exhibit 10(v)(ii) to the
the Company and James Dolphin Company's Annual Report on
dated October 29, 1982. Form 10-K for the year
ended December 31, 1982.
10(iii) Employment Agreement between Exhibit 10(iii) to the
The Company and Barry M. Company's Annual Report on
Kornblau, dated Form 10-K for the year
February 1, 1991. December 31, 1990.
10(iv) 1985 Stock Option Plan, Exhibit B to the Company's
as amended definitive proxy statement
dated April 13, 1992.
10(v) 1991 Stock Purchase and Loan Exhibit 10(v) to the
Plan Company's Annual Report on
Form 10-K for the year
ended December 31, 1991.
10(vi) Amended and Restated Agreement Filed herewith.
Of Limited Partnership of
United Dominion Realty, L.P.
Dated as of December 31, 1995
12 Computation of Ratio of Earnings Filed herewith.
to Fixed Charges
21 The Company has the following subsidiaries, all of which are
wholly owned:
The Commons of Columbia, a Virginia corporation
UDRT of North Carolina, L.L.C., a North Carolina limited
liability company
UDRT of Alabama, Inc., an Alabama corporation
UDR of Marble Hill, L.L.C., a Virginia limited liability
company
United Dominion Realty, L.P., a Virginia limited
partnership
United Dominion Residential, Inc., a Virginia corporation
UDRT of Virginia, Inc., a Virginia corporation
23 Consent of Independent Auditors Filed herewith.
Exhibits 10(i) through 10(v) inclusive, are management contracts or compenatory
plans or arrangements required to be filed as an exhibit to this Form 10-K
pursuant to Item 14(c) of this report.
(b) Reports on Form 8-K
(i) A Form 8-K dated December 28, 1995 was filed with the
Securities and Exchange Commission on January 11,
1996 and amended by a Form 8-K/A dated March 11,
1996. The filing reported the acquisition of certain
properties which in the aggregate were deemed to be
significant. The financial statements filed as a part
of this report are statements of rental operations of
Andover Place Apartments, Mallards of Wedgewood
Apartments, Hunters Ridge Apartments and Marble Hill
Apartments.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the registrant has duly caused this Annual Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
United Dominion Realty Company, Inc.
(registrant)
By /s/ James Dolphin
James Dolphin
Senior Vice President and Chief Financial Officer
March 29, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below on March 29, 1996 by the following persons on behalf of
the registrant and in the capacities indicated.
/s/ John P. McCann /s/ R. Toms Dalton, Jr.
John P. McCann R. Toms Dalton, Jr.
Director, President and Chief Director
Executive Officer
/s/ James Dolphin /s/ Jeff C. Bane
James Dolphin Jeff C. Bane
Director, Senior Vice President, Director
Secretary and Chief Financial
Officer
/s/ Jerry A. Davis
Jerry A. Davis John C. Lanford
Vice President, Controller-Corporate Director
Accounting and Chief Accounting Officer
/s/ C. Harmon Williams, Jr. /s/ H. Franklin Minor
C. Harmon Williams, Jr. H. Franklin Minor
Chairman of the Board of Directors Director
/s/ Barry M. Kornblau /s/ Robert P. Buford
Barry M. Kornblau Robert P. Buford
Director, Senior Vice President and Director
Director of Apartments
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
UNITED DOMINION REALTY TRUST, INC.
Page
FINANCIAL STATEMENTS FILED AS PART OF THIS REPORT
Report of Ernst & Young LLP, Independent Auditors F-2
Consolidated Balance Sheets at December 31, 1995 and 1994 F-3
Consolidated Statements of Operations for each of
the three years in the period ended December 31, 1995 F-4
Consolidated Statements of Shareholders' Equity for each of
the three years in the period ended December 31, 1995 F-5
Consolidated Statements of Cash Flows for each of the three
years in the period ended December 31, 1995 F-6
Notes to Consolidated Financial Statements F-7
SCHEDULE FILED AS PART OF THIS REPORT
Schedule III - Summary of Real Estate Owned F-18
All other schedules are omitted since the required information is not present or
is not present in amounts sufficient to require submission of the schedule, or
because the information required is included in the financial statements and
notes thereto.
Report of Ernst & Young LLP, Independent Auditors
The Board of Directors and Shareholders
United Dominion Realty Trust, Inc.
We have audited the accompanying consolidated balance sheets of United Dominion
Realty Trust, Inc. and subsidiaries (the "Company") as of December 31, 1995 and
1994, and the related consolidated statements of operations, shareholders'
equity, and cash flows for each of the three years in the period ended December
31, 1995. Our audits also included the financial statement schedule listed in
the Index at Item 14(a). These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of United Dominion
Realty Trust, Inc. and subsidiaries at December 31, 1995 and 1994, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
As discussed in Note 1 to the consolidated financial statements, in 1995
the Company changed its method of accounting for impairment of long-lived assets
and long-lived assets held for disposition.
/s/ ERNST & YOUNG LLP
Richmond, Virginia
January 25, 1996
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT FOR SHARE DATA)
December 31, 1995 1994
------------ ---- ----
ASSETS
Real estate held for investment (Notes 2 and 3):
Apartments $1,123,849 $ 928,758
Shopping centers 2,934 74,237
Office and industrial buildings 4,315 4,604
------------ ----------
1,131,098 1,007,599
Less accumulated depreciation 129,454 120,341
------------ ----------
1,001,644 887,258
Real estate held for disposition (Notes 1 and 2) 51,015 --
Cash and cash equivalents 2,904 7,261
Other assets 25,053 17,394
---------- ---------
$1,080,616 $ 911,913
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgage notes payable (Note 4) $ 180,481 $ 158,449
7 1/4% Notes due April 1, 1999 (Note 5) 75,000 75,000
8 1/2% Debentures due September 15, 2024 (Note 5) 150,000 150,000
Other notes payable (Note 5) 124,858 143,215
Accounts payable, accrued expenses and other liabilities 21,193 18,459
Distributions payable to common shareholders 12,695 9,822
---------- -----------
564,227 554,945
Shareholders' equity (Notes 9 and 10):
Preferred stock, no par value; 25,000,000 shares authorized: 9 1/4% Series A
Cumulative Redeemable Preferred Stock (liquidation preference of $25 per share),
4,200,000 shares issued
and outstanding (no shares outstanding in 1994) 105,000 --
Common stock, $1 par value; 100,000,000 shares authorized
56,375,333 shares issued and outstanding (50,355,640 in 1994) 56,375 50,356
Additional paid-in capital 480,971 410,797
Notes receivable from officer shareholders (6,091) (5,991)
Distributions in excess of net income (120,314) (98,194)
Unrealized gain on securities available-for-sale 448 --
------------ -----------
Total shareholders' equity 516,389 356,968
------------ -----------
$1,080,616 $ 911,913
============ ===========
See accompanying notes.
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.
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(In thousands, except share and per share amounts)
Common Stock, $1 Par Value Preferred Stock
---------------------------- --------------------
Additional
Number Number Paid-in
of Shares Amount of Shares Amount Capital
---------------- --------- -------------------------------- -
Balance at December 31, 1992 35,284,718 $35,285 - $ - $227,935
- -
Common shares issued in public offering 6,095,000 6,095 - - 71,573
Exercise of common share options 98,900 99 - - 741
Common shares purchased by officers, net of repayments 135,500 135 - - 1,712
Common shares issued through dividend
reinvestment and stock purchase Plan 38,979 39 - - 525
Common stock dividends declared ($.70 per share) - - - - -
Net income - - - - -
---------------- --------- ----------- ---------- -----------
Balance at December 31, 1993 41,653,097 41,653 302,486
Common shares issued in public offering 8,479,400 8,479 - - 105,731
Exercise of common share options 50,488 51 - - 456
Common shares purchased by officers, net of repayments 137,500 138 - - 1,652
Common shares issued through Dividend
Reinvestment and stock purchase Plan 35,155 35 - - 472
Common stock dividends declared ($.78 per share) - - - - -
Net income - - - - -
---------------- --------- ----------- ---------- -----------
Balance at December 31, 1994 50,355,640 50,356 - 410,797
Common shares issued in direct institutioanl sale 1,360,000 1,360 - 16,452
Preferred shares issued in public offering - - 4,200,000 105,000 (3,522)
Common shares issued in public offering 4,550,000 4,550 - - 56,376
Exercise of common share options 98,536 98 - - 717
Common shares purchased by officers, net of repayments 10,000 10 - - 136
Common shares issued through Employee Stock Purchase Plan 1,157 1 - - 15
Preferred stock dividends declared (1.58 per share) - - - - -
Common stock dividends declared ($.90 per share) - - - - -
Unrealized gain on securities available for sale at
December 31, 1995 - - - - -
Net income - - - - -
================ ========= =========== =========== ========
Balance at December 31, 1995 56,375,333 $56,375 4,200,000 $105,000 $480,971
================ ========= =========== =========== ========
Unrealized
Receivable Distributions Gain on
from in Excess Securities Total
Officer of Available Shareholders'
Shareholders Net Income for Sale Equity
-----------------------------------------------------
Balance at December 31, 1992 ($2,542) ($63,001) $ - $197,677
- - -
Common shares issued in public offering - - - 77,668
Exercise of common share options - - - 840
Common shares purchased by officers, net of repayments (1,842) - - 5
Common shares issued through dividend reinvestment and
stock purchase plan - - - 564
Common stock dividends declared ($.70 per share) - (27,988) - (27,988)
Net income - 11,197 - 11,197
--------- ------------ ------------ -------------
Balance at December 31, 1993 (4,384) (79,792) 259,963
Common shares issued in public offering - - - 114,210
Exercise of common share options - - - 507
Common shares purchased by officers, net of repayments (1,607) - - 183
Common shares issued through dividend reinvestment and
stock purchase plan - - - 507
Common stock dividends declared ($.78 per share) - (37,539) - (37,539)
Net income - 19,137 - 19,137
--------- ------------ ------------ -------------
Balance at December 31, 1994 (5,991) (98,194) 356,968
Common shares issued in direct institutional sale - - - 17,812
Preferred shares issued in public offering - - - 101,478
Common shares issued in public offering - - - 60,926
Exercise of common share options - - - 815
Common shares purchased by officers, net of repayments (100) - - 46
Common shares issued through Employee Stock Purchase Plan - - - 16
Preferred stock dividends declared ($1.58 per share) - (6,637) - (6,637)
Common stock dividends declared ($.90 per share) - (48,610) - (48,610)
Unrealized gain on securities available for sale at
December 31, 1995 - - 448 448
Net income - 33,127 - 33,127
========== ============ ============ =============
Balance at December 31, 1995 ($6,091) ($120,314) $448 $516,389
========== ============ ============ =============
See accompanying notes.
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
Years ended December 31, 1995 1994 1993
------------------------ ---- ---- ----
OPERATING ACTIVITIES
Net income $33,127 $19,137 $11,197
Adjustments to reconcile net income to net cash provided
by operating activities:
(Gains) losses on sales of real estate owned (5,090) (108) 89
Impairment loss on real estate held for disposition 1,700 -- --
Extraordinary item -- 89 --
Depreciation and amortization 40,042 29,644 20,372
Adoption of SFAS No. 112 "Employers' Accounting
for Postemployment Benefits" -- 450 --
Changes in operating assets and liabilities:
Increase in operating liabilities 763 6,680 2,724
Decrease in operating assets (4,114) (1,348) (443)
-------- -------- --------
Net cash provided by operating activities 66,428 54,544 33,939
INVESTING ACTIVITIES
Acquisitions of real estate, net of debt and liabilities assumed (173,937) (346,730) (117,197)
Capital expenditures (35,613) (19,154) (11,060)
Net proceeds from sales of real estate owned 23,464 2,706 69
Proceeds from gain on interest rate hedge transaction -- 3,484 --
Net (increase) decrease in mortgage notes receivable 2,156 63 (1,907)
Other -- -- 31
------- ------- -------
Net cash used in investing activities (183,930) (359,631) (130,064)
FINANCING ACTIVITIES
Net proceeds from issuance of common stock 79,615 115,407 79,077
Net proceeds from issuance of preferred stock 101,478 -- --
Net proceeds from issuance of mortgage notes payable 21,349 12,006 13,800
Net proceeds from issuance of notes payable 10,000 250,000 52,000
Net borrowings (repayments) of short-term bank borrowings 4,250 (14,500) 150
Mortgage financing proceeds released from construction funds 2,457 24,866 --
Cash distributions paid to preferred shareholders (4,613) -- --
Cash distributions paid to common shareholders (45,737) (35,005) (26,523)
Scheduled mortgage principal payments (1,932) (1,455) (806)
Payments on notes and non-scheduled mortgage principal payments (53,722) (44,744) (16,905)
-------- -------- --------
Net cash provided by financing activities 113,145 306,575 100,793
Net increase in cash and cash equivalents (4,357) 1,488 4,668
Cash and cash equivalents, beginning of year 7,261 5,773 1,105
-------- -------- --------
Cash and cash equivalents, end of year $ 2,904 $ 7,261 $ 5,773
======== ======== ========
See accompanying notes.
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION United Dominion Realty Trust, Inc. (the "Company"), a Virginia
corporation, is an owner-operator of income producing real estate, primarily
multifamily apartment communities in the mid-Atlantic and Southeastern, U.S.
BASIS OF PRESENTATION The accompanying consolidated financial statements include
the accounts of the Company and its wholly owned subsidiaries. All significant
inter-company accounts and transactions have been eliminated in consolidation.
USE OF ESTIMATES The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
FEDERAL INCOME TAXES The Company is operated as and annually elects to be taxed
as a real estate investment trust under the Internal Revenue Code of 1986, as
amended (the "Code"). Generally, a real estate investment trust, which complies
with the provisions of the Code and distributes at least 95% of its taxable
income to its shareholders, does not pay federal income taxes on its distributed
income. Accordingly, no provision has been made for federal income taxes.
CASH AND CASH EQUIVALENTS All highly liquid investments with maturities of three
months or less, when purchased, are considered to be cash equivalents.
REAL ESTATE ASSETS AND DEPRECIATION On October 1, 1995, the Company adopted the
provisions of Statement of Financial Accounting Standards ("SFAS") No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of" for the fiscal year ended December 31, 1995. The statement
requires impairment losses to be recognized for long-lived assets used in
operations when indicators of impairment are present and the undiscounted
future cash flows are not sufficient to recover the assets, carrying value. If
such indicators are present, an impairment loss is recognized based on the
excess of the carrying amount of the impaired asset over its fair value.
For long-lived assets to be disposed of, impairment losses are recognized when
the fair value of the asset, less the estimated cost to sell, is less than the
carrying value of the asset measured at the time management commits to a plan to
dispose of the asset. Assets are classified as assets to be disposed of when
management has committed to sell and is actively marketing the property. Assets
to be disposed of are carried at the lower of carrying value or fair value less
cost to dispose, determined on an asset by asset basis. Depreciation is not
recorded during the period in which assets are held for disposal and
gains(losses) from initial and subsequent adjustments to the carrying value of
the assets, if any, are recorded as a separate component of income from
continuing operations. Real estate assets held for disposition are reported
separately on the consolidated balance sheet, net of accumulated depreciation
and impairment loss valuation allowance.
Ordinary repairs and maintenance costs are expensed as incurred; significant
improvements, renovations, and replacements are capitalized and depreciated over
their estimated useful lives. Certain costs, principally payroll, directly
related to real estate acquisitions and redevelopment, are capitalized.
Depreciation is computed on a straight-line basis over the estimated useful
lives of the related assets which range from 25 to 40 years for properties, 10
to 35 years for major improvements, and 3 to 15 years for fixtures, equipment
and other assets.
INTEREST Interest is capitalized on accumulated expenditures relating to the
acquisition and development of certain qualifying properties. During 1995, 1994
and 1993, total interest paid was $39,568,000, $22,944,000 and $14,649,000,
respectively, which includes $40,000 that was capitalized during 1995. No
interest was capitalized in 1994 or 1993.
DEFERRED FINANCING COSTS Deferred financing costs are generally amortized over a
period not to exceed the term of the related debt. Amortization of deferred
financing costs is classified as interest expense and included in the
consolidated statements of operations in the amounts of $1,078,000, $1,180,000
and $707,000 for 1995, 1994 and 1993, respectively.
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
INTEREST RATE SWAP AGREEMENTS The Company enters into interest rate swap
agreements to alter the interest rate characteristics of outstanding debt
instruments. The interest rate swap agreements involve the periodic exchange of
interest payments over the life of the agreements. Amounts received or paid on
the interest rate swap agreements that are used to alter the interest rate
characteristics of outstanding debt are recorded on an accrual basis as an
adjustment to the related interest expense of the outstanding debt. The related
amount payable to and receivable from counterparties are included in other
liabilities. Changes in the fair value of the interest rate swap agreements
accounted for under the accrual method are not reflected in the accompanying
financial statements.
INTEREST RATE RISK MANAGEMENT AGREEMENTS The Company enters into interest rate
risk management agreements to manage interest rate risk associated with
anticipated debt transactions. The Company follows SFAS No.80 "Accounting for
Futures Contracts" which permits hedge accounting for anticipatory transactions
meeting certain criteria. Gains and losses, if any, on these transactions are
deferred and amortized over the terms of the related debt as an adjustment to
interest expense. Changes in the fair values of interest rate risk management
agreements are not recognized in the financial statements. In the event that the
anticipated transaction is no longer likely to occur, the Company would mark the
derivative to market and would recognize any adjustment in the consolidated
statement of operations. The Company does not enter into interest rate risk
management agreements for trading purposes.
INCOME PER COMMON SHARE Primary net income per common share is calculated using
the weighted average number of shares outstanding during each year. Options
outstanding are not included since their inclusion would not be materially
dilutive.
INVESTMENT IN MARKETABLE EQUITY SECURITIES In connection with certain property
sales during 1995, the Company received marketable preferred stock with a fair
value of $7.7 million on the date of receipt. These securities are classified as
available-for-sale and are included in other assets. Securities
available-for-sale are stated at fair value. Unrealized gains and losses are
reported as a separate component of shareholders' equity and are not reported in
the consolidated statement of operations until realized or until a decline in
fair value is deemed to be other-than-temporary.
POSTEMPLOYMENT BENEFITS Effective January 1, 1994, the Company adopted the
provisions of SFAS No. 112, "Employers' Accounting for Postemployment Benefits".
This statement requires the accrual of the estimated cost of benefits provided
by an employer to its former or inactive employees after employment, but before
retirement. Adoption of SFAS No. 112 increased 1994 general and administrative
expense by $450,000 or $.01 per share.
RECLASSIFICATIONS Certain previously reported amounts have been reclassified to
conform with the current financial statement presentation.
STOCK BASED COMPENSATION In October, 1995, the Financial Accounting Standards
Board issued SFAS No. 123, "Accounting for Stock-Based Compensation" which is
effective for the Company's December 31, 1996 financial statements. SFAS No. 123
allows companies to either account for stock-based compensation under the new
provisions of SFAS No. 123 or under the provisions of APB Opinion No. 25, but
requires pro forma disclosure in the footnotes and financial statements as if
the measurement provisions of SFAS No. 123 had been adopted. The Company intends
to continue accounting for its stock-based compensation in accordance with the
provisions of APB No. 25. As such, the adoption of SFAS No. 123 will not impact
the financial position or the results of operations of the Company.
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. REAL ESTATE OWNED
The Company operates primarily in 15 separate major markets dispersed throughout
a nine state area. At December 31, 1995, the Company did not own more than 11%
of its apartment homes in any one market.
The following summarizes real estate held for investment at December 31, 1995
and 1994:
Dollars in thousands 1995 1994
---- ----
Land and land improvements $ 193,672 $ 174,536
Buildings and improvements 864,331 773,015
Furniture, fixtures and equipment 72,576 59,552
Construction in progress 519 496
----------- -----------
Real estate held for investment 1,131,098 1,007,599
Accumulated depreciation (129,454) (120,341)
---------- ----------
Real estate held for investment, net $ 1,001,644 $ 887,258
========== ==========
The following is a summary of real estate owned at December 31, 1995:
Initial
Dollars in thousands Number of Acquisition Carrying Accumulated
REAL ESTATE HELD FOR INVESTMENT Properties Cost Value* Depreciation Encumbrances
---------- ----------- -------- ------------ ------------
APARTMENTS
North Carolina 27 $180,491 $ 214,776 $ 37,187 $ 19,093
Florida 26 247,582 264,869 12,269 44,962
Virginia 28 175,432 208,924 44,865 28,844
South Carolina 20 121,089 144,653 14,558 25,306
Georgia 8 68,338 77,079 8,750 12,435
Maryland 12 99,906 105,199 5,093 30,800
Tennessee 9 71,481 76,700 3,193 11,114
Alabama 2 12,742 12,411 637 --
Delaware 3 18,684 19,239 652 --
COMMERCIAL
Tennessee 1 1,176 2,438 716 --
Virginia 4 4,288 4,810 1,534 --
---- ----------- ---------- -------- --------
140 $1,001,209 $1,131,098 $129,454 $172,554
==== =========== ========== ======== ========
REAL ESTATE HELD FOR DISPOSITION
APARTMENTS
North Carolina 3 $ 11,906 $ 17,254 $ 7,268 $ 3,231
Virginia 2 4,014 5,806 2,504 1,246
Georgia 1 4,526 7,914 2,319 --
COMMERCIAL
Virginia 5 11,766 21,541 6,556 3,450
South Carolina 2 12,566 13,396 2,787 --
North Carolina 1 5,169 8,676 2,138 --
---- --------- --------- --------- ---------
14 $ 49,947 $ 74,587 $ 23,572 $ 7,927
==== ========= ========= ========= =========
* Real estate held for disposition is stated at the lower of carrying value or
fair value, less cost to sell.
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Real estate held for disposition includes two parcels of land, six shopping
centers and six smaller apartment communities which contributed income from
property operations in the aggregate amount of approximately $4.1 million for
the year ended December 31, 1995. The sales of real estate held for disposition
are expected to occur during the first half of 1996, however, there are no
assurances that these sales will be consummated.
The Company recorded a $1.7 million impairment loss associated with
management's decision to sell a shopping center at a discount as part of a
portfolio transaction.
The following is a reconciliation of the carrying amount of real estate held for
investment:
In thousands 1995 1994 1993
------------ ---- ---- ----
Balance at January 1 $ 1,007,599 $ 582,213 $ 454,115
Real estate purchased* 198,136 409,280 118,265
Improvements 35,682 18,857 10,380
Real estate sold (34,031) (2,751) (547)
Transferred to real estate held for
disposition (76,288) -- --
---------- ----------- ---------
Balance at December 31 $ 1,131,098 $ 1,007,599 $ 582,213
========== ========== ========
*In connection with the acquisition of certain apartment properties in 1995 and
1994, the Company assumed approximately $24.1 and $60.3 million, respectively,
of mortgage debt encumbering the properties acquired.
The following is a reconciliation of accumulated depreciation:
In thousands 1995 1994 1993
------------ ---- ---- ----
Balance at January 1 $ 120,341 $ 91,444 $ 71,806
Depreciation expense for the year* 39,442 29,049 19,764
Transferred to real estate held for disposition (23,572) -- --
Real estate sold (6,757) (152) (126)
--------- ---------- --------
Balance at December 31 $ 129,454 $ 120,341 $ 91,444
======== ======== =======
*Depreciation expense of $503, $320 and $248, for 1995, 1994 and 1993,
respectively, is included in "Other depreciation and amortization" in the
consolidated statements of operations.
The Company's properties are leased to others under operating leases. Certain
shopping center leases provide that tenants share certain operating costs such
as real estate taxes, insurance and maintenance by reimbursement to the Company.
Such reimbursements amounted to $887,000 in 1995, $1,070,000 in 1994 and
$936,000 in 1993. The Company has no material net lease arrangements.
The aggregate cost of real estate owned for federal income tax purposes was
approximately $1.192 billion at December 31, 1995 and $987 million at December
31, 1994.
3. ACQUISITIONS
During 1995, the Company acquired 23 apartment communities containing 5,142
apartment homes at a total cost of $195.0 million. During 1994, the Company
acquired 47 apartment communities containing 11,433 apartment homes at a total
cost of $409.3 million. Information concerning unaudited pro forma results of
operations for the years ended December 31, 1995 and 1994 is set forth below.
For 1995, such information assumes the acquisition of 13 apartment communities
containing 2,417 apartment homes at a total cost of $98.6 million, as if the
acquisitions had occurred on January 1, 1995. For 1994, such pro forma
information assumes (i) the acquisition of 41 apartment communities containing
9,749 homes at a total cost of $350.3 million, and (ii) the 1995 acquisitions of
13 apartment communities containing 2,417 apartment homes at a total cost of
$98.6 million, as if the acquisitions had occurred on January 1, 1994.
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Pro Forma Pro Forma
In thousands, except per share amounts 1995 1994
-------------------------------------- ---- ----
Rental income $202,804 $183,836
Net income available to common shareholders 26,299 18,904
Net income per common share $ .50 $ .38
</TABLE
The unaudited information is not necessarily indicative of what the Company's
consolidated results of operations would have been if the acquisitions had
occurred at the beginning of each period presented. Additionally, the pro forma
information does not purport to be indicative of the Company's results of
operations for future periods.
4. MORTGAGE NOTES PAYABLE
Mortgage notes payable consisted of the following at December 31, 1995 and 1994:
In thousands 1995 1994
------------ ---- ----
Conventional fixed-rate $ 56,368 $ 53,206
Tax-exempt fixed-rate 112,843 93,053
Total fixed-rate 169,211 146,259
--------- ---------
Tax-exempt variable-rate 11,270 12,190
--------- ---------
$ 180,481 $ 158,449
======== ========
CONVENTIONAL FIXED-RATE MORTGAGE NOTES Conventional fixed-rate mortgage notes
included 19 loans encumbering 13 properties at December 31, 1995 and 22 loans
encumbering 17 properties at December 31, 1994. Mortgage notes are generally due
in monthly installments of principal and interest and mature at various dates
through 2020. At December 31, 1995 and 1994, this debt carried fixed rates of
interest ranging from 7.00% to 9.625% (8.2% weighted average) and 7.00% to
12.50% (8.5% weighted average), respectively. During 1995, the Company prepaid
five mortgage loans aggregating $10.3 million having a weighted average interest
rate of 10.1%.
TAX-EXEMPT MORTGAGE NOTES At December 31, 1995, 17 properties were encumbered by
fixed-rate mortgage notes which secure related tax-exempt housing bond issues.
Interest on these notes is generally payable in semi-annual installments and the
notes mature at various dates through 2025. At December 31, 1995 and 1994,
tax-exempt fixed-rate mortgage notes had interest rates ranging from 5.98% to
8.50% (weighted average 6.9%), and 5.91% to 10.235% (weighted average 7.2%),
respectively.
At December 31, 1995, three of the Company's properties were encumbered by
variable-rate mortgage notes, which secure tax-exempt housing bond issues.
Interest on these notes is generally payable in semi-annual installments and the
notes mature at various dates through 2010. At December 31, 1995 and 1994,
tax-exempt variable-rate notes had interest rates ranging from 5.00% to 7.29%
(weighted average 5.8%) and 4.60% to 7.29% (weighted average 5.6%),
respectively.
The tax-exempt mortgage notes contain covenants which require the Company to
lease or hold for lease 15% to 40% of the apartment homes for low to moderate
income residents, as defined. Certain of the Company's tax-exempt notes contain
covenants which require minimum rentals to individuals based upon income levels,
as specified.
The aggregate maturities of mortgage notes (conventional and bond related) for
the five years subsequent to December 31, 1995 are as follows (in thousands):
1996 $ 7,878
1997 9,701
1998 7,201
1999 12,677
2000 2,261
Thereafter 140,763
-------
$180,481
=======
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
These payments include special principal curtailments and balloon payments of
$5.6 million in 1996, $7.6 million in 1997, $4.8 million in 1998 and $10.0
million in 1999.
5. OTHER NOTES PAYABLE
A summary of other notes payable at December 31, 1995 and 1994 is as follows:
Dollars in thousands 1995 1994
-------------------- ---- ----
Commercial Banks
Borrowings outstanding under revolving credit facilities $ 18,400 $ 14,150
Variable rate note due March, 1995 (a) -- 10,000
Insurance Companies--Senior Unsecured Notes
7.98% due March, 1997-2003 (b) 52,000 52,000
9.57% due July, 1996 35,000 35,000
7.89% due March, 1996 10,000 10,000
7.57% due March, 1995 -- 10,000
8.72% due November, 1996-1998 (c) 6,000 8,000
Other (d) 3,458 4,065
--------- ---------
124,858 143,215
Senior Unsecured Notes - Other
7 1/4% Notes due April 1, 1999 75,000 75,000
8 1/2% Debentures due September 15, 2024(e) 150,000 150,000
-------- --------
$ 349,858 $ 368,215
======== ========
(a) The note had an interest rate of one month LIBOR plus 62 1/2 basis
points.
(b) Payable in seven equal annual principal installments of $7.4 million.
(c) Payable in three equal annual principal installments of $2 million.
(d) Includes $3.0 million and $3.5 million at December 31, 1995 and 1994,
respectively, of deferred gain from interest rate hedge transaction
discussed in Note 6.
(e) Debentures include an investor put feature which grants the
debentureholder a one time option to redeem debentures at the
end of 10 years.
Information concerning short-term bank borrowings is summarized in the table
that follows:
In thousands 1995 1994 1993
------------ ---- ---- ----
Total revolving credit facilities
and lines of credit
at December 31 $103,500 $103,500 $ 61,000
Borrowings outstanding
at December 31 18,400 14,150 28,650
Weighted average daily
borrowings during the year 8,198 33,787 11,313
Maximum daily borrowings
during the year 35,300 79,300 43,200
Weighted average daily interest
rate during the year 6.8% 5.1% 4.0%
Weighted average daily interest
rate at December 31 6.5% 6.5% 3.8%
The underlying loan agreements contain certain covenants which, among other
things, require the Company to maintain minimum consolidated tangible net worth,
as defined, and maintain certain financial ratios.
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 1995, the Company had $70 million of unsecured revolving credit
facilities with four commercial banks. These credit agreements currently expire
in June, 1996 and 1997, but are renewable annually by mutual agreement between
the Company and each bank. Interest on borrowings outstanding under these
agreements are at varying rates depending on the level of the Company's debt and
the term of the borrowing. Generally, loans for 30 days or more are priced at
LIBOR plus 5/8% to 1%. Loans of shorter duration are priced at spreads of 5/8%
to 11/8% over the applicable base rate. The Company is obligated to pay a fee
equal to 1/4% per annum on the average daily amount of the unused portion of the
commitment during the revolving loan period. None of these agreements have
compensating balance requirements.
At December 31, 1995, the Company had unsecured lines of credit with three
commercial banks totalling $33.5 million. At December 1995, there were no
borrowings outstanding under these lines. Each line is subject to periodic bank
review and requires the Company to maintain a depository relationship with the
respective bank, however, there are no formal compensating balance arrangements.
Borrowings bear interest generally at negotiated rates in line with borrowings
under the Company's revolving credit facilities.
6. FINANCIAL INSTRUMENTS
FAIR VALUE OF FINANCIAL INSTRUMENTS The following disclosures of estimated fair
value of financial instruments were determined by the Company using available
market information and appropriate valuation methodologies. Considerable
judgment is necessary to interpret market data and develop estimated fair value.
Accordingly, the estimates presented herein are not necessarily indicative of
the amounts that the Company could realize upon disposition of the financial
instruments. The use of different market assumptions and/or estimation
methodologies may have a material effect on the estimated fair value amounts.
The carrying amounts and estimated fair value of the Company's financial
instruments at December 31, 1995, both on and off-balance sheet, are summarized
as follows:
In thousands Carrying Amount Fair Value
------------ --------------- ----------
Cash and cash equivalents $2,904 $2,904
Investment in equity securities 8,144 8,144
Conventional mortgage notes payable 56,368 58,180
Tax-exempt notes payable 124,113 131,486
Notes payable 349,858 376,347
Interest rate risk management agreements -- (3,996)
The following methods and assumptions were used by the Company in estimating the
fair values set forth above.
MORTGAGE NOTES PAYABLE Estimated fair value is based on mortgage rates believed
to be available to the Company for issuance of debt with similar terms and
remaining maturities as of December 31, 1995.
NOTES PAYABLE The carrying amounts of the Company's borrowings under short-term
revolving credit agreements and lines of credit are variable rate and therefore,
approximate their fair values. The fair value of the Company's fixed rate term
debt are estimated using discounted cash flow analysis, based on the Company's
estimated incremental borrowing rate at December 31, 1995, for similar types of
borrowing arrangements.
INTEREST RATE RISK MANAGEMENT AGREEMENTS Fair value is based on market
quotations from investment banks.
Disclosure about the fair value of financial instruments is based upon relevant
information available to the Company at December 31, 1995. Although management
is not aware of any factors that would have a material effect on the fair value
amounts reported herein, such amounts have not been revalued since that date and
current estimates of fair value may significantly differ from the amounts
presented.
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
INTEREST RATE SWAP AGREEMENTS Interest rate swap contracts with a notional
amount of $10,000,000 and $20,000,000 matured during 1994 and 1993,
respectively. At December 31, 1995, there were no interest rate swap agreements
outstanding, nor were there any interest rate swap agreements entered into
during 1995. For all periods presented, the Company had no deferred gains or
losses relating to terminated swap contracts. Interest rate swap contracts did
not have a material impact on interest expense or consolidated results of
operations during the periods presented.
INTEREST RATE RISK MANAGEMENT AGREEMENTS In 1995, the Company entered into a $50
million (notional amount) fixed pay forward starting swap agreement with a major
Wall Street investment banking firm in order to reduce the interest rate risk
associated with the anticipated refinancing of fixed-rate debt maturing in 1996.
The transaction allowed the Company to lock-in a ten year Treasury rate of
6.544% on or before July 15, 1996. The Company anticipates unwinding the
interest rate swap transaction upon refinancing of the $50 million debt in 1996.
At December 31, 1995, the Company had a $2.6 million unrealized loss on this
transaction. In anticipation of the issuance of approximately $50 million of
medium-term notes during the first quarter of 1996, the Company entered into a
$50 million interest rate lock agreement with one of its commercial banks. The
transaction allowed the Company to lock-in a 10 year Treasury rate of 5.946%
beginning on or before March 1, 1996. At December 31, 1995, the Company had a
$1.4 million unrealized loss on this transaction. Any gain or loss from these
transactions will be recognized at the transaction date and amortized into
interest expense over the term of the new debt. While the Company is exposed to
credit loss in the event of nonperformance by the counterparties, such
nonperformance is not anticipated as the counterparties are highly rated, credit
quality companies. By entering into these interest rate risk management
agreements, the Company has reduced its interest rate risk associated with the
near-term maturities and additional issuance of unsecured debt by effectively
locking in an interest rate. There is no credit exposure to the Company under
these agreements at December 31, 1995.
During 1994, the Company entered into two interest rate hedge transactions
involving futures contracts with a total principal amount of $150 million to
hedge against possible interest rate fluctuations during the period prior to the
issuance of the $150 million Debentures. These two transactions effectively
reduced the interest rate on the Debentures from 8.50% to 8.22% for ten years.
These contracts were terminated upon issuance of the Debentures. Gains from
these contracts of $3.5 million were deferred as an adjustment to the carrying
amount of the Debentures and will be amortized on a straight line basis as a
reduction of interest expense over a ten year period.
The Company does not obtain collateral or other security to support off-balance
sheet financial instruments subject to credit risk, but monitors the credit
standing of counterparties.
7. INCOME TAXES
The differences between net income available to common shareholders for
financial reporting purposes and taxable income before dividend deductions
relate primarily to temporary differences, principally real estate depreciation,
the accrual on the preferred stock dividend, and the deferral for tax purposes
of certain gains on property sales.
All realized gains (losses) on sales of investments are distributed to
shareholders if and when recognized for income tax purposes. Since 1980, gains
aggregating approximately $11.6 million have been deferred for income tax
purposes and are undistributed at December 31, 1995.
For income tax purposes, distributions paid to shareholders consist of ordinary
income, capital gains, return of capital or a combination thereof. For the three
years ended December 31, 1995, distributions paid per share were taxable as
follows:
1995 1994 1993
---- ---- ----
Ordinary income $.715 $ .629 $ .493
Capital gains .003 .004 --
Return of capital .152 .127 .197
---- ---- ----
$.870 $.760 $.690
==== ==== ====
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. PROFIT SHARING PLAN
The "United Dominion Realty Trust, Inc. Profit Sharing Plan" (the "Plan") is a
defined contribution plan covering all full-time employees who have completed
1,000 hours of service and are age twenty-one or older at the time of
enrollment. Under the plan, participants may contribute a percentage of
compensation, but not in excess of the maximum allowed under the Code. The
Company may make matching contributions in an amount equal to a percentage of
each participant's elective deferral contribution deduction for that Plan year
as determined by the Compensation Committee. For the years ended December 31,
1995, 1994 and 1993, the Company matched 85%, 75% and 65%, respectively, of the
first $1,000 annually contributed by each eligible participant. Expenses related
to the Plan and included in the Company's consolidated statements of operations
for the three years ended December 31, 1995, 1994 and 1993 were $136,000,
$100,000, and $37,000, respectively.
The Plan also allows the Company to make discretionary profit sharing
contributions to the Plan as determined by the Compensation Committee of the
Board of Directors. Contribu-tions, if any, are allocated to each participant
based on the relative compensation of the participant to the compensation of all
participants (maximum annual compensation in the determination is $50,000).
Aggregate discretionary contributions of approximately $400,000, $250,000, and
$150,000 were made for the years ended December 31, 1995, 1994 and 1993,
respectively.
9. SHARE OPTIONS
Under the Company's 1985 Share Option Plan (the "Plan"), as amended, a maximum
of 2,400,000 options could be granted, at the discretion of the Board, to
certain officers, directors and key employees of the Company, through 1997. On
December 12, 1995, the Board granted 286,667 incentive stock options (ISO's)and
85,333 non-qualified options (NQO's) to certain officers and key employees of
the Company at $14.63 per share. These options vest on December 31, 1996. Of the
options outstanding at December 31, 1995, 705,480 options were not then
exercisable under the provisions of the Plan.
The Plan generally provides, among other things, that options be granted at
exercise prices not lower than the market value of the shares on the date of
grant. Shares under options which subsequently expire or are canceled are
available for subsequent grant. For options granted prior to December 12, 1995,
the optionee has up to five years from the date on which the options first
become exercisable during which to exercise the options. For the options granted
on December 12, 1995, the optionee has up to ten years from the date the options
were granted during which to exercise the options. Activity in the Company's
share option plan during the three years ended December 31, 1995 is summarized
in the following table.
Shares Available
for future Options Outstanding
Option Grant Shares Price per Share
---------------- ------------------------------------
Balance, December 31, 1992 1,371,000 970,400 $7.44 - $11.56
Options granted (67,100) 67,100 $13.63
Options exercised -- (98,900) $7.44 - $11.56
Options expired 4,000 (4,000) $9.09 - $11.56
--------- --------- --------------
Balance, December 31, 1993 1,307,900 934,600 $7.44 - $13.63
Options granted (371,000) 371,000 $13.13
Options exercised -- (50,488) $7.44 - $11.56
Options expired 23,240 (23,240) $11.56 - $13.63
--------- --------- --------------
Balance, December 31, 1994 960,140 1,231,872 $7.44 - $13.63
Options granted (372,000) 372,000 $14.63
Options exercised -- (98,536) $7.44 - $13.63
Options expired 14,700 (14,700) $11.56 - $13.63
--------- --------- --------------
Balance, December 31, 1995 602,840 1,490,636 $7.44 - $14.63
========= ========== ===============
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. SHAREHOLDERS' EQUITY
PREFERRED STOCK In April, 1995, the Company sold 4,200,000 shares of 9 1/4%
Cumulative Redeemable Preferred Stock in a public offering at $25 per share
("preferred stock"). Net proceeds of the offering, after deducting underwriting
commissions and direct offering costs, aggregated approximately $101.5 million
of which $33.1 million was used to repay then existing bank debt and $65.7
million was used to fund the acquisition of a portfolio of nine apartment
communities. The remaining net proceeds were used to help fund subsequent
apartment acquisitions.
Dividends on the preferred stock are payable on a quarterly basis at an annual
dividend rate of $2.3125 per share. The preferred stock has no par value, with a
liquidation preference of $25 per share and is redeemable on or after April 24,
2000, solely from the proceeds from the sale of additional capital stock (common
or preferred). The preferred stock has no voting rights, no stated maturity, is
not subject to any sinking fund or mandatory redemption and is not convertible
into any other securities of the Company.
COMMON STOCK In September, 1995, the Company completed a public offering of
4,550,000 shares of its common stock at $14.25 per share. Net proceeds of the
offering, after deducting underwriting commissions and direct offering costs,
aggregated approximately $61 million and were used to repay $26.8 million of
bank debt. The remaining net proceeds were temporarily invested in short-term
money market investments and were used primarily for the acquisition of
additional apartment communities. In February, 1995, the Company sold 1,360,000
shares of its common stock to a group of institutional investors at a price of
$131/8 per share. Net proceeds of $17.8 million were used to curtail then
existing bank debt.
All share and per share information in the accompanying financial statements has
been adjusted to retroactively reflect a 2 for 1 stock split in 1993.
OFFICERS' STOCK PURCHASE AND LOAN PLAN At December 31, 1995, 553,000 shares of
common stock were issued under the Officer Stock Purchase and Loan Plan. Under
the plan, certain officers have purchased common stock at the then current
market price with financing provided by the Company at 7% interest only. The
underlying notes mature beginning in November, 1998. A total of 47,000 shares
are available for future issuance under this plan.
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN As of December 31, 1995, 92,544
shares of common stock had been issued under the Company's Dividend Reinvestment
and Stock Purchase Plan. Shares in the amount of 907,456 are reserved for
further issuance under this plan. During 1995, shares were purchased on the open
market.
EMPLOYEE STOCK PURCHASE PLAN As of December 31, 1995, 1,157 shares of common
stock had been issued under the Company's Employee Stock Purchase Plan. Shares
in the amount of 98,843 are reserved for future issuance under the plan. During
1995, shares were also purchased on the open market.
11. UNAUDITED SUMMARIZED CONSOLIDATED QUARTERLY FINANCIAL DATA
Summarized unaudited consolidated quarterly financial data for the years ended
December 31, 1995 and 1994 is as follows: (In thousands, except per share data):
Three Months Ended
1995 March 31 June 30* September 30** December 31
---- -------- ------- ------------ -----------
Rental income $45,493 $47,747 $49,842 $52,158
Income before gains (losses) on sales of
investments and extraordinary item 6,087 6,993 5,599 9,358
Net income 6,150 11,569 5,804 9,604
Dividends to preferred shareholders -- 1,781 2,428 2,428
Net income available to common shareholders 6,150 9,788 3,376 7,176
Per share:
Net income per common share .12 .19 .07 .13
Weighted average number of common shares outstanding 51,125 51,776 51,883 56,293
* For the quarter ended June 30, 1995, the Company recognized a $4.6
million aggregate book gain on the sales of real estate.
** For the quarter ended September 30, 1995, the Company recognized a $1.7
million impairment loss on real estate held for disposition (Note 2).
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended
1994 March 31 June 30 September 30 December 31
---- -------- ------- ------------ -----------
Rental income $26,706 $29,673 $39,526 $44,066
Income before gains (losses) on sales of
investments and extraorindary item 3,415 4,067 5,995 5,641
Net income 3,415 3,978 5,975 5,768
Dividends to preferred shareholders -- -- -- --
Net income available to common shareholders 3,415 3,978 5,975 5,768
Per share:
Net income per common share .08 .09 .12 .11
Weighted average number of common shares
outstanding 41,688 42,508 50,153 50,241
SCHEDULE III.
Summary of Real Estate Owned
Cost of
Improvements
Initial Cost to Capitalized
Trust Subsequent to
Land and Buildings Acquisition
Land and (Net of
Encumbrances Improvements Improvements Disposals)
-------------------------------------------------------------------------------------
Apartments:
2131 Apartments/Nashville, TN $ $ 869,860 $9,155,185 $1,885,836
Alafaya Woods/Orlando, FL -- 1,653,000 9,042,256 677,711
Alexander Glen/Charlotte, NC 5,490,273 698,860 6,488,061 191,044
Andover Place/Orlando, FL 5,620,000 1,732,406 3,943,184 119,804
Bay Cove/Clearwater, FL -- 2,928,847 6,578,257 1,193,572
Bayberry Commons/Portsmouth, VA -- 516,800 3,485,645 1,027,509
Beechwood/Greensboro, NC -- 1,409,377 6,086,677 338,460
Braeland Commons/Columbia, MD 4,955,000 1,564,942 7,006,574 298,101
Braeton Bay/ Richmond, VA -- 2,059,252 15,049,088 36,281
Bramblewood/Goldsboro, NC -- 401,538 3,150,912 946,532
Brantley Pines/Fort Myers, FL -- 841,400 5,914,766 738,168
Briar Club/Memphis, TN -- 1,214,400 6,928,959 633,837
Brittingham Square/Salisbury, MD -- 650,143 4,962,246 24,314
Brynn Marr/Jacksonville, NC -- 432,974 3,821,508 1,047,691
Canterbury Woods/Charlotte, NC -- 409,675 5,011,435 1,693,246
Cinnamon Ridge/Raleigh, NC 7,000,000 967,230 3,337,197 4,065,357
Clear Run/Wilmington, NC -- 874,830 8,586,978 803,448
Cleary Court/Fort Lauderdale, FL -- 2,399,848 7,913,450 214,893
Colonial Villa/Columbia, SC -- 1,014,181 5,100,269 1,060,785
Colony of Stone Mountain/Atlanta, GA -- 3,160,000 5,641,646 3,027,996
Colony Village/New Bern, NC -- 346,330 3,036,956 1,003,058
Copperfield/Fort Lauderdale, FL -- 4,424,128 20,428,969 192,416
Country Walk/Columbia, SC -- 422,113 3,133,623 1,164,098
Courthouse Green/Richmond, VA -- 732,050 4,702,353 1,314,310
Courtney Square/Raleigh, NC -- 1,114,600 5,119,259 1,105,031
The Cove at Lake Lynn/Raleigh, NC -- 1,723,363 5,303,760 534,936
Covington Crossing/Memphis, TN -- 1,296,240 3,792,590 791,425
Craig Manor/Salem,VA -- 282,200 2,419,570 607,073
The Creek/Wilmington, NC -- 417,500 2,506,206 845,450
Crescent Square/Atlanta, GA -- 1,057,000 6,865,036 4,281,851
Crossroads/Columbia, SC -- 2,074,800 13,710,803 852,600
Dover Country Club/Dover, DE -- 2,007,878 6,347,331 539,290
Dover Village/Orlando, FL -- 2,894,702 6,456,100 1,591,328
Dunwoody Pointe/Atlanta, GA 6,027,182 2,763,324 6,902,996 33,189
Eastwind/Virginia Beach, VA -- 155,000 5,316,738 1,296,863
Eden Commons/Columbia, MD 8,450,000 2,361,167 9,384,171 485,788
Emerald Bay/Charlotte, NC -- 626,070 4,722,862 2,106,220
English Hills/Richmond, VA -- 1,979,174 11,524,313 2,800,786
Excalibur/Charlotte, NC -- 1,115,261 8,629,877 384,157
Fisherman's Village/Orlando, FL -- 2,387,368 7,458,897 2,070
Forest Hills/Wilmington, NC -- 1,028,000 5,420,478 685,376
Forest Lakes at Oyster Point/
Newport News, VA -- 780,117 8,861,878 179,850
Forestbrook/Columbia, SC 5,000,000 395,516 2,902,040 1,180,092
Foxcroft/Tampa, FL -- 749,400 3,927,644 630,825
Franklin Mansions-Land/Nashville, TN -- 2,104,394 0 34,582
Gable Hill/Columbia, SC -- 824,847 5,307,194 713,648
Gatewater Landing/Glen Burnie, MD -- 2,078,422 6,084,526 701,153
Grand Oaks/Charlotte, NC -- 446,075 4,463,344 2,388,036
Great Oaks/Baltimore, MD -- 2,919,481 9,075,956 933,009
Greens at Cedar Chase/Dover, DE -- 1,528,667 4,830,738 61,963
Greens of Constant Friendship/
Baltimore, MD -- 903,122 4,668,956 19,896
Greens at Cross Court/Easton, MD -- 1,182,414 4,544,012 29,049
Greens at Falls Run/Fredericksburg, VA -- 2,730,722 5,300,203 24,678
Greens at Hilton Run/Lexington Park, MD -- 2,754,447 10,482,579 46,362
Greens at Hollymead/Charlottesville, VA -- 965,114 5,250,374 25,211
Greens at Schumaker Pond/Salisbury, MD -- 709,559 6,117,582 45,879
Greentree Place/Jacksonville, FL 12,455,000 1,634,330 11,226,990 683,250
Griffin Crossing/Atlanta, GA -- 1,509,633 7,544,018 438,413
The Groves/Daytona Beach, FL -- 789,953 4,767,055 5,565
Gwinnett Square/Atlanta, GA -- 1,924,325 7,376,454 221,285
Hampton Court/Alexandria, VA -- 7,388,420 4,811,937 405,764
Hampton Forest/Greenville, SC -- 454,140 2,578,103 339,651
Hampton Greene/Columbia, SC 7,841,033 1,363,046 10,118,453 362,098
Harbour Town/Nashville, TN -- 572,567 3,522,092 347,367
Harris Pond/Charlotte, NC 5,138,798 886,788 6,714,647 141,351
Heather Lake/Hampton, VA -- 616,800 3,400,672 2,083,099
Heatherwood/Greenville, SC -- 354,566 3,234,105 612,300
Heritage Trace/Newport News, VA 3,900,000 880,000 2,312,285 1,602,989
Hickory Run/Nashville, TN -- 1,468,727 11,583,786 7,423
Hickory Pointe/Memphis, TN -- 1,074,424 6,052,020 209,528
The Highlands/Charlotte, NC -- 321,400 2,830,346 1,869,598
Holly Tree Park/Waldorf, MD -- 1,576,366 5,095,323 209,332
Hunters Ridge/Plant City, FL -- 2,461,548 10,942,434 380,594
Hunters Trace/Memphis, TN 5,890,000 888,440 6,676,552 620,810
Hunting Ridge/Greenville, SC 3,265,000 449,500 2,234,882 251,166
Indian Hills/Anniston, AL -- 338,335 3,715,585 131,859
Key Pines/Spartanburg, SC -- 601,693 3,773,304 995,721
Knolls at Newgate/Fairfax, VA -- 1,725,725 3,518,741 502,864
The Lakes/Nashville, TN -- 1,285,657 5,980,197 673,350
Lake Washington Downs/Melbourne, FL -- 1,434,450 4,940,166 643,691
Lakeside North/Orlando, FL 12,440,000 1,532,700 11,076,062 1,455,899
Lakewood Place/Tampa, FL -- 1,395,051 10,647,377 468,348
The Landing/Greenville, SC -- 685,000 5,622,454 343,643
Laurel Ridge/Roanoke, VA 2,960,000 445,400 2,531,357 1,087,345
Laurel Village/Richmond, VA -- 694,281 3,119,716 521,788
The Ledges/Winston-Salem, NC -- 492,283 1,561,947 4,608,575
Legacy Hill/Nashville, TN 5,223,854 1,147,660 5,867,567 14,243
Liberty Crossing/Jacksonville, NC 1,463,867 840,000 3,873,139 1,541,088
Mallard Green/Charlotte, NC -- 329,300 2,766,436 59,970
Mallards of Wedgewood/Lakeland, FL -- 959,283 6,864,666 269,595
Manor at England Run/Fredericksburg, VA -- 1,710,477 6,413,447 1,376,993
Marble Hill/Richmond, VA 3,317,218 825,760 5,147,968 43,290
Meadow Run/Richmond, VA -- 636,059 3,423,884 1,171,082
Meadowdale Lakes/Richmond, VA 920,431 1,581,671 6,717,237 2,940,350
Mediterranean Village/Miami, FL -- 2,064,788 11,939,113 203,754
The Melrose/Dumfries, VA 5,312,183 662,000 3,705,404 3,875,979
Mill Creek/Wilmington, NC -- 597,248 4,618,561 711,353
Northview/Salem, VA -- 171,600 1,238,501 558,122
Olde West Village/Richmond, VA 3,871,932 1,965,097 12,203,965 1,621,856
Orange Orlando/Orlando, FL -- 1,233,151 2,177,417 1,033,037
Overlook/Greenville, SC -- 824,600 5,079,443 1,269,184
Palm Grove/Tampa, FL -- 616,121 5,268,814 528,323
The Park/Columbia, SC -- 1,004,072 5,535,334 1,087,409
Park Green/Raleigh, NC -- 500,000 4,321,872 826,318
Parkwood Court/Alexandria, VA 6,125,000 2,482,633 3,813,116 1,487,638
Patriot Place/Florence, SC 2,200,000 212,500 1,600,757 5,324,114
Peppertree/Charlotte, NC -- 1,546,267 7,699,221 651,899
Pinebrook/Clearwater,FL -- 1,780,375 2,458,172 1,794,704
Plum Chase/Columbia, SC 7,000,000 802,750 3,149,607 4,495,788
Regatta Shores/Orlando, FL -- 757,008 6,607,367 897,071
River Place/Macon, GA -- 1,097,280 7,492,385 773,156
River Road/Ettrick, VA -- 229,699 1,648,394 852,288
Riverwind/Spartanburg, SC -- 802,484 6,386,212 435,996
Rollingwood/Richmond, VA 2,437,210 777,971 5,058,707 1,962,714
Royal Oaks/Savannah, GA 6,407,421 533,100 9,907,978 263,770
Santa Barbara Landing/Naples, FL 4,997,916 1,134,120 8,019,814 415,782
The Shire/Raleigh, NC -- 1,791,215 11,968,852 1,052,616
Somerset/Charleston, SC -- 485,160 4,053,792 354,292
St. Andrews/Columbia, SC -- 976,192 6,866,147 203,261
St. Andrews Commons/Columbia, SC -- 1,428,826 9,371,378 472,524
Spring Forest/Raleigh, NC -- 1,257,500 8,586,255 1,720,167
Stanford Village/Atlanta, GA -- 884,500 2,807,839 571,596
Summit West/Tampa, FL -- 2,176,500 4,709,970 1,283,882
Three Fountains/Montgomery, AL -- 1,075,009 6,853,156 296,991
Timbercreek/Richmond, VA -- 379,000 2,030,525 1,134,137
Twin Coves/Baltimore, MD 3,750,000 912,771 2,893,861 456,530
Twin Rivers/Hopewell, VA -- 149,200 885,671 1,168,191
University Club/Ft. Lauderdale, FL -- 1,390,220 6,992,620 68,216
Village at Old Tampa Bay/Oldsmar, FL -- 1,750,320 10,756,337 1,021,604
Vinyards/Orlando, FL 9,450,000 1,840,230 11,571,625 762,042
Walnut Creek/Raleigh, NC -- 3,170,290 21,718,401 1,001,894
Waterford/Columbia, SC -- 957,980 6,926,736 316,229
West Knoll/Newark, DE -- 305,138 3,564,067 53,563
Windsor Harbor/Charlotte, NC -- 475,000 3,928,113 1,960,573
Woodscape/Newport News, VA -- 798,700 7,209,525 1,795,276
Woodside/Baltimore, MD 13,645,000 3,112,881 8,864,762 2,043,322
Shopping Centers:
Gloucester Exchange/Gloucester, VA -- 403,688 2,278,553 251,415
Office and Industrial Buildings:
Franklin St./Richmond, VA -- 67,900 282,173 75,843
Meadowdale Offices/Richmond, VA -- 240,563 359,913 93,340
Statesman Park/Roanoke, VA -- 90,162 565,557 101,050
Tri-County Buildings/Bristol, TN -- 275,580 900,281 1,263,000
-------------------------------------------------------------------------------------
$172,554,318 $171,545,275 $829,663,874 $129,889,218
=====================================================================================
Real Estate Held for Disposition
Apartments:
Azalea/Richmond, VA $ -- $ 272,522 $ 2,721,686 $ 1,009,575
Cedar Point/Raleigh, NC -- 75,400 4,514,435 2,921,515
Mill Creek/Atlanta, GA -- 529,800 3,996,252 3,387,840
Summit-on-Park/Charlotte, NC -- 147,000 1,021,602 964,072
Towne Square/Hopewell, VA 1,246,067 109,500 909,897 782,567
Woodland Hollow/Charlotte, NC 3,230,710 755,000 5,393,023 1,462,042
Shopping Centers:
Circle/Richmond, VA -- 885,964 1,836,464 1,627,917
Deerfield Plaza/Myrtle Beach, SC -- 883,767 2,182,509 646,872
Hanover Village-Land/Richmond, VA -- 1,623,910 0 0
Laburnum Park-Land/Richmond, VA -- 300,000 0 0
Meadowdale/Richmond, VA -- 1,099,620 3,875,145 1,106,516
The Village/Durham, NC -- 1,355,000 3,814,496 3,506,490
Village Square/Myrtle Beach, SC -- 3,070,000 6,428,614 183,638
Willow Oaks/Hampton, VA 3,450,000 934,220 1,211,045 7,040,401
-------------------------------------------------------------------------------------
$7,926,777 $12,041,703 $37,905,168 $24,639,445
=====================================================================================
Gross
Amount at Which
Carried at
Close of Period
Land and Buildings
Land and Total Accumulated Date of
Improvements Improvements (a) Depreciation Construction
--------------------------------------------------------------------------------------
Apartments:
2131 Apartments/Nashville, TN $1,062,415 $10,848,466 $11,910,881 $1,121,296 1972
Alafaya Woods/Orlando, FL 1,844,091 9,528,876 11,372,967 418,403 1988/90
Alexander Glen/Charlotte, NC 773,128 6,604,837 7,377,965 323,093 1989
Andover Place/Orlando, FL 1,735,808 4,059,586 5,795,394 44,678 1988
Bay Cove/Clearwater, FL 3,102,629 7,598,047 10,700,676 959,209 1972
Bayberry Commons/Portsmouth, VA 709,610 4,320,344 5,029,954 1,559,058 1973/74
Beechwood/Greensboro, NC 1,563,537 6,270,977 7,834,514 505,188 1985
Braeland Commons/Columbia, MD 1,611,272 7,258,345 8,869,617 815,136 1983
Braeton Bay/ Richmond, VA 2,059,251 15,085,370 17,144,621 0 1989
Bramblewood/Goldsboro, NC 508,726 3,990,256 4,498,982 1,766,200 1980/82
Brantley Pines/Fort Myers, FL 1,299,078 6,195,256 7,494,334 323,441 1986
Briar Club/Memphis, TN 1,297,103 7,480,093 8,777,196 352,646 1987
Brittingham Square/Salisbury, MD 652,547 4,984,156 5,636,703 114,215 1991
Brynn Marr/Jacksonville, NC 548,205 4,753,968 5,302,173 2,100,186 1973/77
Canterbury Woods/Charlotte, NC 545,477 6,568,879 7,114,356 2,654,210 1968/70
Cinnamon Ridge/Raleigh, NC 1,262,601 7,107,183 8,369,784 2,708,510 1968/70
Clear Run/Wilmington, NC 1,080,927 9,184,329 10,265,256 471,906 1987/89
Cleary Court/Fort Lauderdale, FL 2,473,000 8,055,191 10,528,191 301,692 1984/85
Colonial Villa/Columbia, SC 1,375,899 5,799,336 7,175,235 797,087 1974
Colony of Stone Mountain/Atlanta, GA 3,876,604 7,953,038 11,829,642 2,545,917 1970/72
Colony Village/New Bern, NC 483,387 3,902,957 4,386,344 1,816,821 1972/74
Copperfield/Fort Lauderdale, FL 4,464,327 20,581,186 25,045,513 860,540 1991
Country Walk/Columbia, SC 648,953 4,070,881 4,719,834 1,018,092 1974
Courthouse Green/Richmond, VA 941,166 5,807,547 6,748,713 2,550,308 1974/78
Courtney Square/Raleigh, NC 1,262,896 6,075,994 7,338,890 566,746 1979/81
The Cove at Lake Lynn/Raleigh, NC 1,857,167 5,704,892 7,562,059 850,951 1986
Covington Crossing/Memphis, TN 1,351,759 4,528,496 5,880,255 235,304 1974
Craig Manor/Salem,VA 355,235 2,953,608 3,308,843 1,003,519 1975
The Creek/Wilmington, NC 456,598 3,312,558 3,769,156 550,140 1973
Crescent Square/Atlanta, GA 1,343,952 10,859,935 12,203,887 3,271,318 1970
Crossroads/Columbia, SC 2,121,539 14,516,664 16,638,203 782,180 1977/84
Dover Country Club/Dover, DE 2,168,760 6,725,739 8,894,499 352,676 1970
Dover Village/Orlando, FL 3,092,825 7,849,305 10,942,130 939,262 1981
Dunwoody Pointe/Atlanta, GA 2,763,324 6,936,185 9,699,509 46,546 1980
Eastwind/Virginia Beach, VA 291,688 6,476,913 6,768,601 2,188,093 1970
Eden Commons/Columbia, MD 2,436,429 9,794,698 12,231,127 1,121,640 1984
Emerald Bay/Charlotte, NC 1,131,773 6,323,379 7,455,152 2,061,112 1972
English Hills/Richmond, VA 2,428,574 13,875,699 16,304,273 2,741,039 1969/76
Excalibur/Charlotte, NC 1,159,881 8,969,414 10,129,295 483,960 1987
Fisherman's Village/Orlando, FL 2,387,368 7,460,967 9,848,335 0 1984
Forest Hills/Wilmington, NC 1,137,457 5,996,397 7,133,855 834,883 1964/69
Forest Lakes at Oyster Point/
Newport News, VA 790,464 9,031,380 9,821,844 107,497 1986
Forestbrook/Columbia, SC 541,808 3,935,840 4,477,648 465,784 1974
Foxcroft/Tampa, FL 912,892 4,394,977 5,307,869 565,121 1972
Franklin Mansions-Land/Nashville, TN 2,138,976 0 2,138,976 0 --
Gable Hill/Columbia, SC 1,053,085 5,792,604 6,845,689 1,470,965 1985
Gatewater Landing/Glen Burnie, MD 2,103,284 6,760,817 8,864,101 817,006 1970
Grand Oaks/Charlotte, NC 794,520 6,502,935 7,297,455 3,149,328 1966/67
Great Oaks/Baltimore, MD 3,102,786 9,825,660 12,928,446 558,796 1974
Greens at Cedar Chase/Dover, DE 1,533,892 4,887,476 6,421,368 113,804 1988
Greens of Constant Friendship/
Baltimore, MD 907,823 4,684,151 5,591,974 109,006 1990
Greens at Cross Court/Easton, MD 1,186,510 4,568,965 5,755,475 107,125 1987
Greens at Falls Run/Fredericksburg, VA 2,733,209 5,322,394 8,055,603 128,198 1989
Greens at Hilton Run/Lexington Park, MD 2,769,799 10,513,589 13,283,388 244,127 1988
Greens at Hollymead/Charlottesville, VA 967,686 5,273,013 6,240,699 122,986 1990
Greens at Schumaker Pond/Salisbury, MD 710,607 6,162,413 6,873,020 139,725 1988
Greentree Place/Jacksonville, FL 1,796,141 11,748,429 13,544,570 576,246 1986
Griffin Crossing/Atlanta, GA 1,589,778 7,902,286 9,492,064 491,590 1987/89
The Groves/Daytona Beach, FL 789,952 4,772,621 5,562,573 0 1989
Gwinnett Square/Atlanta, GA 1,933,560 7,588,504 9,522,064 202,189 1985
Hampton Court/Alexandria, VA 7,526,928 5,079,193 12,606,121 641,707 1967
Hampton Forest/Greenville, SC 554,486 2,817,408 3,371,894 160,103 1968
Hampton Greene/Columbia, SC 1,561,771 10,281,826 11,843,597 510,706 1990
Harbour Town/Nashville, TN 698,564 3,743,462 4,442,026 330,303 1974
Harris Pond/Charlotte, NC 903,859 6,838,927 7,742,786 355,554 1987
Heather Lake/Hampton, VA 781,743 5,318,828 6,100,571 3,278,373 1972/74
Heatherwood/Greenville, SC 428,725 3,772,246 4,200,971 386,223 1978
Heritage Trace/Newport News, VA 1,172,351 3,622,923 4,795,274 1,456,429 1973
Hickory Run/Nashville, TN 1,468,726 11,591,210 13,059,936 0 1989
Hickory Pointe/Memphis, TN 1,171,404 6,164,568 7,335,972 210,743 1985
The Highlands/Charlotte, NC 542,070 4,479,274 5,021,344 2,315,855 1970
Holly Tree Park/Waldorf, MD 1,607,351 5,273,670 6,881,021 288,373 1973
Hunters Ridge/Plant City, FL 2,643,760 11,140,816 13,784,576 204,753 1992
Hunters Trace/Memphis, TN 979,724 7,206,078 8,185,802 315,871 1986
Hunting Ridge/Greenville, SC 518,172 2,417,376 2,935,548 102,539 1972
Indian Hills/Anniston, AL 356,896 3,828,883 4,185,779 206,948 1975
Key Pines/Spartanburg, SC 693,915 4,676,803 5,370,718 718,008 1974
Knolls at Newgate/Fairfax, VA 1,758,439 3,988,891 5,747,330 248,963 1972
The Lakes/Nashville, TN 1,421,521 6,517,683 7,939,204 626,857 1986
Lake Washington Downs/Melbourne, FL 1,579,894 5,438,413 7,018,307 517,474 1984
Lakeside North/Orlando, FL 1,631,060 12,433,601 14,064,661 749,480 1984
Lakewood Place/Tampa, FL 1,492,758 11,018,018 12,510,776 736,132 1986
The Landing/Greenville, SC 778,256 5,872,841 6,651,097 320,790 1976
Laurel Ridge/Roanoke, VA 648,390 3,415,713 4,064,102 1,361,250 1970/72
Laurel Village/Richmond, VA 776,450 3,559,335 4,335,785 744,590 1972
The Ledges/Winston-Salem, NC 1,120,186 5,542,619 6,662,805 3,102,639 1959
Legacy Hill/Nashville, TN 1,145,660 5,883,810 7,029,470 0 1977
Liberty Crossing/Jacksonville, NC 1,147,544 5,106,683 6,254,227 1,536,636 1972/74
Mallard Green/Charlotte, NC 363,283 2,792,423 3,155,706 150,891 1985
Mallards of Wedgewood/Lakeland, FL 988,894 7,104,649 8,093,543 101,421 1985
Manor at England Run/Fredericksburg, VA 3,020,706 6,480,211 9,500,917 150,515 1990
Marble Hill/Richmond, VA 828,620 5,188,398 6,017,018 56,700 1973
Meadow Run/Richmond, VA 834,395 4,396,630 5,231,025 2,128,682 1973/74
Meadowdale Lakes/Richmond, VA 2,193,200 9,046,058 11,239,258 4,385,577 1967/71
Mediterranean Village/Miami, FL 2,128,736 12,078,919 14,207,655 516,120 1989
The Melrose/Dumfries, VA 1,329,494 6,913,889 8,243,383 3,290,228 1951
Mill Creek/Wilmington, NC 786,991 5,140,171 5,927,162 978,398 1986
Northview/Salem, VA 216,569 1,751,654 1,968,223 1,087,848 1969
Olde West Village/Richmond, VA 2,216,484 13,574,434 15,790,918 4,689,698 1978/82/85/87
Orange Orlando/Orlando, FL 1,388,200 3,055,405 4,443,605 491,946 1971
Overlook/Greenville, SC 1,124,928 6,048,299 7,173,227 335,598 1976
Palm Grove/Tampa, FL 727,179 5,686,079 6,413,258 423,564 1969/71
The Park/Columbia, SC 1,250,402 6,376,413 7,626,815 315,569 1975/77
Park Green/Raleigh, NC 549,180 5,099,009 5,648,189 1,030,126 1987
Parkwood Court/Alexandria, VA 2,577,866 5,205,521 7,783,387 517,354 1964
Patriot Place/Florence, SC 1,355,659 5,781,712 7,137,371 2,303,536 1974
Peppertree/Charlotte, NC 1,622,411 8,274,976 9,897,387 681,938 1987
Pinebrook/Clearwater,FL 1,860,267 4,172,984 6,033,251 456,035 1977
Plum Chase/Columbia, SC 1,084,908 7,363,237 8,448,145 2,184,841 1974
Regatta Shores/Orlando, FL 992,064 7,269,382 8,261,446 431,756 1988
River Place/Macon, GA 1,393,689 7,969,132 9,362,821 583,704 1988
River Road/Ettrick, VA 316,464 2,413,917 2,730,381 1,389,984 1973/74
Riverwind/Spartanburg, SC 890,960 6,733,732 7,624,692 558,121 1987
Rollingwood/Richmond, VA 1,051,511 6,747,881 7,799,392 3,229,781 1974/78
Royal Oaks/Savannah, GA 556,206 10,148,642 10,704,848 546,921 1980
Santa Barbara Landing/Naples, FL 1,247,876 8,321,840 9,569,716 416,825 1987
The Shire/Raleigh, NC 1,978,587 12,834,096 14,812,683 823,801 1982/84
Somerset/Charleston, SC 536,990 4,356,254 4,893,244 226,962 1979
St. Andrews/Columbia, SC 1,023,055 7,022,545 8,045,600 385,681 1972
St. Andrews Commons/Columbia, SC 1,569,651 9,703,077 11,272,728 1,117,341 1986
Spring Forest/Raleigh, NC 1,408,066 10,155,856 11,563,922 2,207,645 1978/81
Stanford Village/Atlanta, GA 1,054,857 3,209,078 4,263,935 1,061,691 1985
Summit West/Tampa, FL 2,348,038 5,822,314 8,170,352 720,301 1972
Three Fountains/Montgomery, AL 1,094,419 7,130,737 8,225,156 430,211 1973
Timbercreek/Richmond, VA 516,962 3,026,700 3,543,662 1,715,738 1969
Twin Coves/Baltimore, MD 1,004,466 3,258,696 4,263,162 168,906 1974
Twin Rivers/Hopewell, VA 351,158 1,851,904 2,203,062 1,256,585 1972
University Club/Ft. Lauderdale, FL 1,430,079 7,020,977 8,451,056 64,175 1988
Village at Old Tampa Bay/Oldsmar, FL 2,007,013 11,521,248 13,528,261 911,846 1986
Vinyards/Orlando, FL 2,080,739 12,093,158 14,173,897 538,874 1984/86
Walnut Creek/Raleigh, NC 3,342,023 22,548,562 25,890,585 1,337,751 1985/86
Waterford/Columbia, SC 1,030,567 7,170,378 8,200,945 397,939 1985
West Knoll/Newark, DE 305,138 3,617,630 3,922,768 185,318 1964
Windsor Harbor/Charlotte, NC 892,976 5,470,710 6,363,686 1,822,128 1971
Woodscape/Newport News, VA 1,006,107 8,797,394 9,803,501 2,832,621 1974/76
Woodside/Baltimore, MD 3,329,380 10,691,585 14,020,965 609,255 1966
Shopping Centers:
Gloucester Exchange/Gloucester, VA 492,475 2,441,181 2,933,656 702,939 1974
Office and Industrial Buildings:
Franklin St./Richmond, VA 67,900 358,016 425,916 129,929 1890
Meadowdale Offices/Richmond, VA 258,144 435,674 693,818 292,043 1983
Statesman Park/Roanoke, VA 147,996 608,773 756,769 410,485 1974
Tri-County Buildings/Bristol, TN 364,120 2,074,738 2,438,859 716,173 1976/79
--------------------------------------------------------------------------------
$193,672,389 $937,425,977 $1,131,098,366 $129,454,008
================================================================================
Real Estate Held for Disposition
Apartments:
Azalea/Richmond, VA $ 403,786 $ 3,599,997 $ 4,003,783 $ 1,650,368 1967
Cedar Point/Raleigh, NC 231,347 7,280,003 7,511,350 3,455,287 1972
Mill Creek/Atlanta, GA 857,665 7,056,227 7,913,892 2,318,840 1972
Summit-on-Park/Charlotte, NC 245,650 1,887,024 2,132,674 1,091,746 1963
Towne Square/Hopewell, VA 326,080 1,475,884 1,801,964 853,610 1967
Woodland Hollow/Charlotte, NC 968,333 6,641,732 7,610,065 2,720,964 1974/76
Shopping Centers:
Circle/Richmond, VA 949,970 3,400,375 4,350,345 2,069,506 1956/62/67
Deerfield Plaza/Myrtle Beach, SC 1,267,012 2,446,136 3,713,148 841,228 1979
Hanover Village-Land/Richmond, VA 1,623,910 0 1,623,910 5,090 --
Laburnum Park-Land/Richmond, VA 300,000 0 300,000 0 --
Meadowdale/Richmond, VA 1,288,237 4,793,044 6,081,281 1,770,793 1976/82
The Village/Durham, NC 2,175,372 6,500,614 8,675,986 2,138,586 1965
Village Square/Myrtle Beach, SC 3,726,673 5,956,579 9,683,252 1,946,883 1978/79
Willow Oaks/Hampton, VA 3,102,314 6,083,352 9,185,666 2,709,294 1968/74
--------------------------------------------------------------------
$17,466,349 $57,120,967 $74,587,316 $23,572,195
====================================================================
Depreciable
Life of
Date Building
Acquired Component
----------------------------------------
Apartments:
2131 Apartments/Nashville, TN 12/16/92 35 yrs.
Alafaya Woods/Orlando, FL 10/21/94 35 yrs.
Alexander Glen/Charlotte, NC 08/16/94 35 yrs.
Andover Place/Orlando, FL 09/29/95 35 yrs.
Bay Cove/Clearwater, FL 12/16/92 35 yrs.
Bayberry Commons/Portsmouth, VA 04/07/88 35 yrs.
Beechwood/Greensboro, NC 12/22/93 35 yrs.
Braeland Commons/Columbia, MD 12/29/92 35 yrs.
Braeton Bay/ Richmond, VA 12/28/95 35 yrs.
Bramblewood/Goldsboro, NC 12/31/84 35 yrs.
Brantley Pines/Fort Myers, FL 08/11/94 35 yrs.
Briar Club/Memphis, TN 10/14/94 35 yrs.
Brittingham Square/Salisbury, MD 05/04/95 35 yrs.
Brynn Marr/Jacksonville, NC 12/31/84 35 yrs.
Canterbury Woods/Charlotte, NC 12/18/85 35 yrs.
Cinnamon Ridge/Raleigh, NC 12/01/89 35 yrs.
Clear Run/Wilmington, NC 07/22/94 35 yrs.
Cleary Court/Fort Lauderdale, FL 11/30/94 35 yrs.
Colonial Villa/Columbia, SC 09/16/92 35 yrs.
Colony of Stone Mountain/Atlanta, GA 06/12/90 35 yrs.
Colony Village/New Bern, NC 12/31/84 35 yrs.
Copperfield/Fort Lauderdale, FL 09/21/94 35 yrs.
Country Walk/Columbia, SC 12/19/91 35 yrs.
Courthouse Green/Richmond, VA 12/31/84 35 yrs.
Courtney Square/Raleigh, NC 07/08/93 35 yrs.
The Cove at Lake Lynn/Raleigh, NC 12/01/92 35 yrs.
Covington Crossing/Memphis, TN 10/14/94 35 yrs.
Craig Manor/Salem,VA 11/06/87 35 yrs.
The Creek/Wilmington, NC 06/30/92 35 yrs.
Crescent Square/Atlanta, GA 03/22/89 35 yrs.
Crossroads/Columbia, SC 07/01/94 35 yrs.
Dover Country Club/Dover, DE 07/01/94 35 yrs.
Dover Village/Orlando, FL 03/31/93 35 yrs.
Dunwoody Pointe/Atlanta, GA 10/24/95 35 yrs.
Eastwind/Virginia Beach, VA 04/04/88 35 yrs.
Eden Commons/Columbia, MD 12/29/92 35 yrs.
Emerald Bay/Charlotte, NC 02/06/90 35 yrs.
English Hills/Richmond, VA 12/06/91 35 yrs.
Excalibur/Charlotte, NC 07/01/94 35 yrs.
Fisherman's Village/Orlando, FL 12/29/95 35 yrs.
Forest Hills/Wilmington, NC 06/30/92 35 yrs.
Forest Lakes at Oyster Point/
Newport News, VA 08/15/95 35 yrs.
Forestbrook/Columbia, SC 07/01/93 35 yrs.
Foxcroft/Tampa, FL 01/28/93 35 yrs.
Franklin Mansions-Land/Nashville, TN 12/08/95 35 yrs.
Gable Hill/Columbia, SC 12/04/89 35 yrs.
Gatewater Landing/Glen Burnie, MD 12/16/92 35 yrs.
Grand Oaks/Charlotte, NC 05/01/84 35 yrs.
Great Oaks/Baltimore, MD 07/01/94 35 yrs.
Greens at Cedar Chase/Dover, DE 05/04/95 35 yrs.
Greens of Constant Friendship/
Baltimore, MD 05/04/95 35 yrs.
Greens at Cross Court/Easton, MD 05/04/95 35 yrs.
Greens at Falls Run/Fredericksburg, VA 05/04/95 35 yrs.
Greens at Hilton Run/Lexington Park, M 05/04/95 35 yrs.
Greens at Hollymead/Charlottesville, V 05/04/95 35 yrs.
Greens at Schumaker Pond/Salisbury, MD 05/04/95 35 yrs.
Greentree Place/Jacksonville, FL 07/22/94 35 yrs.
Griffin Crossing/Atlanta, GA 06/08/94 35 yrs.
The Groves/Daytona Beach, FL 12/13/95 35 yrs.
Gwinnett Square/Atlanta, GA 03/29/95 35 yrs.
Hampton Court/Alexandria, VA 02/19/93 35 yrs.
Hampton Forest/Greenville, SC 08/16/94 35 yrs.
Hamtpon Greene/Columbia, SC 08/19/94 35 yrs.
Harbour Town/Nashville, TN 12/10/93 35 yrs.
Harris Pond/Charlotte, NC 07/01/94 35 yrs.
Heather Lake/Hampton, VA 03/01/80 35 yrs.
Heatherwood/Greenville, SC 09/30/93 35 yrs.
Heritage Trace/Newport News, VA 06/30/89 35 yrs.
Hickory Run/Nashville, TN 12/29/95 35 yrs.
Hickory Pointe/Memphis, TN 02/10/95 35 yrs.
The Highlands/Charlotte, NC 01/17/84 35 yrs.
Holly Tree Park/Waldorf, MD 07/01/94 35 yrs.
Hunters Ridge/Plant City, FL 06/30/95 35 yrs.
Hunters Trace/Memphis, TN 10/14/94 35 yrs.
Hunting Ridge/Greenville, SC 11/01/94 35 yrs.
Indian Hills/Anniston, AL 07/01/94 35 yrs.
Key Pines/Spartanburg, SC 09/25/92 35 yrs.
Knolls at Newgate/Fairfax, VA 07/01/94 35 yrs.
The Lakes/Nashville, TN 09/15/93 35 yrs.
Lake Washington Downs/Melbourne, FL 09/24/93 35 yrs.
Lakeside North/Orlando, FL 04/14/94 35 yrs.
Lakewood Place/Tampa, FL 03/10/94 35 yrs.
The Landing/Greenville, SC 07/01/94 35 yrs.
Laurel Ridge/Roanoke, VA 05/17/88 35 yrs.
Laurel Village/Richmond, VA 09/06/91 35 yrs.
The Ledges/Winston-Salem, NC 08/13/86 35 yrs.
Legacy Hill/Nashville, TN 11/06/95 35 yrs.
Liberty Crossing/Jacksonville, NC 11/30/90 35 yrs.
Mallard Green/Charlotte, NC 07/01/94 35 yrs.
Mallard of Wedgewood/Lakeland, FL 07/27/95 35 yrs.
Manor at England Run/Fredericksburg, VA 05/04/95 35 yrs.
Marble Hill/Richmond, VA 09/28/95 35 yrs.
Meadow Run/Richmond, VA 12/31/84 35 yrs.
Meadowdale Lakes/Richmond, VA 12/31/84 35 yrs.
Mediterranean Village/Miami, FL 09/30/94 35 yrs.
The Melrose/Dumfries, VA 12/11/85 35 yrs.
Mill Creek/Wilmington, NC 09/30/91 35 yrs.
Northview/Salem, VA 09/29/78 35 yrs.
Olde West Village/Richmond, VA 12/31/84 & 8/27/91 35 yrs.
Orange Orlando/Orlando, FL 01/21/93 35 yrs.
Overlook/Greenville, SC 07/01/94 35 yrs.
Palm Grove/Tampa, FL 04/15/94 35 yrs.
The Park/Columbia, SC 07/01/94 35 yrs.
Park Green/Raleigh, NC 09/27/91 35 yrs.
Parkwood Court/Alexandria, VA 06/30/93 35 yrs.
Patriot Place/Florence, SC 10/23/85 35 yrs.
Peppertree/Charlotte, NC 12/14/93 35 yrs.
Pinebrook/Clearwater,FL 09/28/93 35 yrs.
Plum Chase/Columbia, SC 01/04/91 35 yrs.
Regatta Shores/Orlando, FL 06/30/94 35 yrs.
River Place/Macon, GA 04/08/94 35 yrs.
River Road/Ettrick, VA 08/31/81 35 yrs.
Riverwind/Spartanburg, SC 12/31/93 35 yrs.
Rollingwood/Richmond, VA 12/31/84 35 yrs.
Royal Oaks/Savannah, GA 07/01/94 35 yrs.
Santa Barbara Landing/Naples, FL 09/01/94 35 yrs.
The Shire/Raleigh, NC 03/04/94 35 yrs.
Somerset/Charleston, SC 07/01/94 35 yrs.
St. Andrews/Columbia, SC 07/01/94 35 yrs.
St. Andrews Commons/Columbia, SC 05/20/93 35 yrs.
Spring Forest/Raleigh, NC 05/21/91 35 yrs.
Stanford Village/Atlanta, GA 09/26/89 35 yrs.
Summit West/Tampa, FL 12/16/92 35 yrs.
Three Fountains/Montgomery, AL 07/01/94 35 yrs.
Timbercreek/Richmond, VA 08/31/83 35 yrs.
Twin Coves/Baltimore, MD 08/16/94 35 yrs.
Twin Rivers/Hopewell, VA 01/06/82 35 yrs.
University Club/Ft. Lauderdale, FL 09/26/95 35 yrs.
Village at Old Tampa Bay/Oldsmar, FL 12/08/93 35 yrs.
Vinyards/Orlando, FL 10/31/94 35 yrs.
Walnut Creek/Raleigh, NC 05/17/94 35 yrs.
Waterford/Columbia, SC 07/01/94 35 yrs.
West Knoll/Newark, DE 07/01/94 35 yrs.
Windsor Harbor/Charlotte, NC 01/13/89 35 yrs.
Woodscape/Newport News, VA 12/29/87 35 yrs.
Woodside/Baltimore, MD 08/16/94 35 yrs.
Shopping Centers:
Gloucester Exchange/Gloucester, VA 11/12/87 35 yrs.
Office and Industrial Buildings:
Franklin St./Richmond, VA 07/01/86 35 yrs.
Meadowdale Offices/Richmond, VA 12/31/84 35 yrs.
Statesman Park/Roanoke, VA 05/22/75 33 yrs.
Tri-County Buildings/Bristol, TN 01/21/81 33 yrs.
Real Estate Held for Disposition
Apartments:
Azalea/Richmond, VA 12/31/84 35 yrs.
Cedar Point/Raleigh, NC 12/18/85 35 yrs.
Mill Creek/Atlanta, GA 11/11/88 35 yrs.
Summit-on-Park/Charlotte, NC 01/17/84 35 yrs. .
Towne Square/Hopewell, VA 08/27/85 35 yrs.
Woodland Hollow/Charlotte, NC 11/03/86 35 yrs.
Shopping Centers:
Circle/Richmond, VA 11/01/73 25/35 yrs
Deerfield Plaza/Myrtle Beach, SC 01/17/84 35 yrs.
Hanover Village-Land/Richmond, VA 06/30/86 35 yrs.
Laburnum Park-Land/Richmond, VA 09/28/90 35 yrs.
Meadowdale/Richmond, VA 12/31/84 35 yrs.
The Village/Durham, NC 08/28/86 35 yrs.
Village Square/Myrtle Beach, SC 05/25/88 35 yrs.
Willow Oaks/Hampton, VA 08/01/84 35 yrs.
(a) The aggregate cost for federal income tax purposes was
approximately $1.192 billion at December 31, 1995 and $987 million
at December 31, 1994.