UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to _________
Commission file number 1-10524
UNITED DOMINION REALTY TRUST, INC.
(Exact name of registrant as specified in its charter)
VIRGINIA 54-0857512
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
10 South Sixth Street, Virginia 23219-3802
(Address of principal executive offices - zip code)
(804) 780-2691
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months, and (2) has been subject to filing requirements
for at least the past 90 days.
Yes X No
APPLICABLE ONLY TO CORPORATE USERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of May 7, 1997:
Common Stock 87,064,821
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
(UNAUDITED)
MARCH 31, DECEMBER 31,
1997 1996
------------ -----------
ASSETS
Real estate owned:
Real estate held for investment (Note 3) $ 2,097,370 $ 2,007,612
Less: accumulated depreciation 175,810 173,291
------------ -----------
1,921,560 1,834,321
Real estate under development 46,020 37,855
Real estate held for disposition 73,417 39,556
Cash and cash equivalents 18,617 13,452
Other assets 32,426 41,720
------------ -----------
Total assets $ 2,092,040 $ 1,966,904
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable-secured (Note 4) $ 397,501 $ 376,560
Notes payable-unsecured (Note 5) 712,962 668,275
Distributions payable to common shareholders 21,837 19,699
Accounts payable, accrued expenses and other liabilities 49,979 49,962
------------ -----------
Total liabilities 1,182,279 1,114,496
Minority interest of unitholders in operating partnership 2,027 2,029
Shareholders' equity:
Preferred stock, no par value; 25,000,0000 shares authorized:
9 1/4% Series A Cumulative Redeemable Preferred Stock
(liquidation preference of $25 per share), 4,200,000
shares issued and outstanding 105,000 105,000
Common stock, $1 par value; 150,000,000 shares authorized
86,466,539 shares issued and outstanding (81,982,551 in 1996) 86,467 81,983
Additional paid-in-capital 877,070 814,795
Notes receivable from officer-shareholders (6,160) (5,926)
Distributions in excess of net income (154,643) (147,529)
Unrealized gain on securities available-for-sale -- 2,056
------------ -----------
Total shareholders' equity 907,734 850,379
------------ -----------
Total liabilities and shareholders' equity $ 2,092,040 $ 1,966,904
============ ===========
SEE ACCOMPANYING NOTES.
2
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1997 1996
- --------------------------------------------------------------------------- -------- ---------
REVENUES
Rental income $ 89,984 $ 54,839
Interest and other non-property income 251 350
-------- ---------
90,235 55,189
EXPENSES
Rental expenses:
Utilities 6,466 4,528
Repairs and maintenance 11,819 8,539
Real estate taxes 7,112 3,980
Property management 2,777 1,502
Other rental expenses 9,442 5,173
Real estate depreciation 16,162 10,560
Interest 19,150 10,646
General and administrative 1,833 1,383
Other depreciation and amortization 450 284
-------- ---------
75,211 46,595
Income before gains (losses) on sales of investments and minority interest
of unitholders in operating partnership 15,024 8,594
Gains on sales of investments 2,120 965
Minority interest of unitholders in operating partnership (31) --
-------- ---------
Net income 17,113 9,559
Dividends to preferred shareholders 2,428 2,428
-------- ---------
Net income available to common shareholders $ 14,685 $ 7,131
======== =========
Net income per common share $ .17 .13
======== =========
Dividends declared per common share $ .2525 .24
======== =========
Weighted average number of common shares outstanding 85,046 54,467
======== =========
SEE ACCOMPANYING NOTES.
3
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1997 1996
- ------------------------------------------------------------------------------ --------- ---------
OPERATING ACTIVITIES
Net income $ 17,113 $ 9,559
Adjustments to reconcile net income to cash provided
by operating activities:
Depreciation and amortization 16,612 10,844
Minority interest of unitholders in operating partnership 31 --
Gains on sales of investments (2,120) (965)
Amortization of deferred financing costs 399 300
Changes in operating assets and liabilities:
Increase (decrease) in operating liabilities (495) 3,032
Increase in operating assets (4,526) (1,436)
--------- ---------
Net cash provided by operating activities 27,014 21,334
INVESTING ACTIVITIES
Acquisition of real estate, net of debt and liabilities assumed (90,312) (36,146)
Capital expenditures (22,075) (10,994)
Development of real estate assets (8,318) (79)
Net proceeds from sales of investments 9,944 4,248
Proceeds from interest rate hedge transaction 1,539 --
Payments on notes receivable 2,142 1
--------- ---------
Net cash used in investing activities (107,080) (42,970)
FINANCING ACTIVITIES
Net proceeds from the issuance of common stock 66,526 1,457
Gross proceeds from the issuance of unsecured notes payable 125,000 111
Net proceeds from the issuance of secured notes payable -- 15
Net borrowings (repayments) of short-term bank borrowings (18,250) 51,100
Cash distributions paid to preferred shareholders (2,428) (2,428)
Cash distributions paid to common shareholders (19,663) (12,695)
Cash distriburions paid to minority interest of unitholders (33) --
Scheduled mortgage principal payments (1,122) (353)
Mortgage financing proceeds released from construction funds -- 734
Payments on unsecured notes (63,414) (10,000)
Non-scheduled payments on secured notes payable -- (77)
Payment of financing costs (1,385) (290)
--------- ---------
Net cash provided by financing activities 85,231 27,574
Net increase in cash and cash equivalents 5,165 5,938
Cash and cash equivalents, beginning of period 13,452 2,904
--------- ---------
Cash and cash equivalents, end of period $ 18,617 $ 8,842
========= =========
SUPPLEMENTAL INFORMATION:
Interest paid during the period $ 15,087 $ 12,287
Secured debt assumed through the acquisition of properties 22,063 --
SEE ACCOMPANYING NOTES.
4
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
Common Stock, $1 Par Value Preferred Stock
------------------------- -------------------
Number Number
of Shares Amount of Shares Amount
- ---------------------------------------------------------------------------------------------------------
Balance at December 31, 1996 81,982,551 $81,983 4,200,000 $105,000
Common shares issued in public offering 4,000,000 4,000 - -
Exercise of common share options 12,650 12 - -
Common shares purchased by officers, net of repayments 20,000 20 - -
Common shares issued through dividend reinvestment and
stock purchase plan 450,700 451 - -
Common shares issued through employee stock purchase plan 638 1 - -
Net income - - - -
Preferred stock distributions declared ($.58 per share) - - - -
Common stock distributions declared ($.2525 per share) - - - -
Realized gain on securities available-for-sale - - - -
------------- --------- --------------------
Balance at March 31, 1997 86,466,539 $86,467 4,200,000 $105,000
============= ========= ====================
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
(continued)
Unrealized
Gain on
Additional Receivable Distributions Securities Total
Paid-in from Officer in Excess of Available- Shareholders'
Capital Shareholders Net Income for-Sale Equity
- ------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1996 $814,795 ($5,926) ($147,529) $2,056 $850,379
Common shares issued in public offering 55,420 - - - 59,420
Exercise of common share options 156 - - - 168
Common shares purchased by officers, net of repayments 288 (234) - - 74
Common shares issued through dividend reinvestment and
stock purchase plan 6,400 - - - 6,851
Common shares issued through employee stock purchase plan 11 - - - 12
Net income - - 17,113 - 17,113
Preferred stock distributions declared ($.58 per share) - - (2,428) - (2,428)
Common stock distributions declared ($.2525 per share) - - (21,799) - (21,799)
Realized gain on securities available-for-sale - - - (2,056) (2,056)
--------- ---------- ---------- ------------ ----------
Balance at March 31, 1997 $877,070 ($6,160) ($154,643) $0 $907,734
========= ========== ========== ============ ==========
SEE ACCOMPANYING NOTES.
5
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
United Dominion Realty Trust, Inc. and its wholly owned subsidiaries, including
United Dominion Realty, L.P., its Operating Partnership, (collectively, the
"Company"). The financial statements of the Company include the minority
interest of unitholders in the operating partnership. All significant
inter-company accounts and transactions have been eliminated in consolidation.
The consolidated financial statements reflect all adjustments which are, in the
opinion of management, necessary for a fair presentation of financial position
at March 31, 1997 and results of operations for the interim periods ended March
31, 1997 and 1996. Such adjustments are normal and recurring in nature. The
interim results presented are not necessarily indicative of results that can be
expected for a full year. The accompanying consolidated financial statements
should be read in conjunction with the audited financial statements and related
notes appearing in the Company's December 31, 1996 Annual Report on Form 10-K
filed with the Securities and Exchange Commission.
2. RECLASSIFICATIONS
Certain previously reported amounts have been reclassified to conform with the
current financial statement presentation.
3. REAL ESTATE HELD FOR INVESTMENT
The following table summarizes real estate held for investment at March 31, 1997
and December 31, 1996:
March 31, December 31,
DOLLARS IN THOUSANDS 1997 1996
- -------------------------------------------------------------------------
Land and land improvements $ 365,055 $ 353,092
Buildings and improvements 1,602,652 1,537,387
Furniture, fixtures and equipment 123,370 115,308
Construction in progress 6,293 1,825
----------- -----------
Real estate held for investment $ 2,097,370 $ 2,007,612
=========== ===========
4. SECURED NOTES PAYABLE
Secured notes payable encumbers $708 million or 31.5% of the Company's
real estate owned ($1.5 billion or 68.5% of the Company's real estate owned is
not encumbered) which consist of the following at March 31, 1997:
Principal Weighted Average Weighted Average No. Properties
DOLLARS IN THOUSANDS Balance Interest Rate Years to Maturity Encumbered
- ------------------------------------------------------------------------------------------------
Fixed-Rate Mortgage Notes $ 122,716 8.3% 4.0 20
Fixed-Rate Tax-Exempt Notes 116,797 6.9% 24.1 17
Fixed-Rate REMIC Financings 94,366 7.8% 3.8 27
Fixed-Rate Secured Notes (a) 45,000 7.3% 2.4 6
----------------------------------------------------------------
Total Fixed-Rate Notes 378,879 7.7% 10.0 70
Variable-Rate Secured Notes 13,072 6.1% 2.5 2
Variable-Rate Tax-Exempt Notes 5,550 6.2% 10.2 2
----------------------------------------------------------------
Total Variable-Rate Notes 18,622 6.1% 4.3 4
----------------------------------------------------------------
TOTAL SECURED NOTES PAYABLE $ 397,501 7.4% 9.7 74
================================================================
(a) Variable-rate secured notes payable which have been effectively swapped to a
fixed-rate at March 31, 1997 consist of a $40 million variable-rate secured
senior credit facility which encumbers six apartment communities and a $5
million variable-rate construction note payable. The interest rate swap
agreements have an aggregate notional value of $45 million under which the
Company pays a fixed-rate of interest and receives a variable-rate on the
notional amounts. The interest rate swap agreements effectively change the
Company's interest rate exposure on $45 million from a variable-rate to a
weighted average fixed-rate of approximately 7.3%.
6
5. UNSECURED NOTES PAYABLE
A summary of unsecured notes payable at March 31, 1997 and December 31, 1996 is
as follows:
March 31, December 31,
DOLLARS IN THOUSANDS 1997 1996
------------- ----------
COMMERCIAL BANKS
Borrowings outstanding under
revolving credit facilities and
other bank debt $ 107,000 (a) $ 125,250
INSURANCE COMPANIES--SENIOR UNSECURED NOTES
7.98% due March, 1997-2003 44,571 (b) 52,000
8.72% due November, 1996-1998 (c) 4,000 4,000
------- -------
48,571 56,000
OTHER (d) 7,391 6,040
SENIOR UNSECURED NOTES - OTHER
7.00% Unsecured Note due January 15, 1997 (e) -- 55,985
7.25% Notes due April 1, 1999 75,000 75,000
8.50% Debentures due September 15, 2024 (f) 150,000 150,000
7.95% Medium-Term Notes due July 12, 2006 125,000 125,000
7.25% Notes due January 15, 2007 125,000 --
7.07% Medium-Term Notes due November 15, 2006 25,000 25,000
7.02% Medium-Term Notes due November 15, 2005 50,000 50,000
------- -------
550,000 480,985
------- -------
TOTAL UNSECURED NOTES PAYABLE $ 712,962 $ 668,275
======= =======
(a) The weighted average balance outstanding for the three months ended March
31, 1997 was $72.3 million and carried a weighted average daily interest
rate of 6.19%. The weighted average interest rate at March 31, 1997 was
6.3%.
(b) Payable in six equal annual principal installments of $7.4 million.
(c) Payable in two equal annual principal installments of $2 million.
(d) Includes $6.9 million and $5.6 million at March 31, 1997 and December
31, 1996, respectively, of deferred gain from the termination of interest
rate hedge transactions.
(e) Represents an unsecured note assumed in connection with the South West
Property Trust Inc. statutory merger (the "South West Merger") on December
31, 1996. The note was paid in full on January 3, 1997.
(f) Debentures include an investor put feature which grants a one time option
to redeem debentures at the end of 10 years.
During the first quarter of 1997, the Company had an interest rate swap
agreement with a notional value ranging from approximately $77 million to $82
million which fixed the interest rate on a portion of the Company's expected
unsecured variable-rate debt at approximately 6.7%.
6. ACCOUNTING PRONOUNCEMENTS
During the first quarter of 1997, the Financial Accounting Standards Board
issued a new statement on the calculation of earnings per share (SFAS No. 128)
which is effective beginning in the 4th quarter of 1997. Early adoption is
prohibited. Under the new statement, primary and fully dilutive earnings per
share are replaced with basic and diluted earnings per share. The Company's
basic earnings per share for the three month period ended March 31, 1997 and
1996 according to the new statements would not change from the reported amounts.
The Company's diluted earnings per common share would be $.17 and $.13,
respectively for the same periods.
7
PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The Company considers portions of this information to be forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Although the Company
believes that the expectations reflected in such forward-looking statements are
based upon reasonable assumptions, it can give no assurance that its
expectations will be achieved.
The Company is an owner and operator of primarily middle income apartment
communities across the Sunbelt in 22 major markets dispersed throughout a 15
state area extending from Delaware to Nevada where it seeks to be a market
leader by operating a sufficiently sized portfolio of apartments within each
market. The Company believes this market diversification increases investment
opportunity and decreases the risk associated with cyclical local markets. The
Company's investment strategy focuses on acquiring apartment communities in its
major markets where it can add value. The following table summarizes the
Company's major apartment market information:
Quarter Ended
As of March 31,1997 March 31,1997
Number of Number of Percentage of Average Monthly
Apartment Apartment Apartment Economic Rental
Market Communities Homes Homes Occupancy** Rates*
- ---------------------------------------------------------- --------------------
HELD FOR INVESTMENT
Dallas, TX 21 7,789 13% 93.1% $537
Columbia, SC 12 3,534 6% 89.0% 498
Raleigh, NC 11 3,316 6% 96.0% 625
Richmond, VA 10 3,253 6% 90.0% 544
Orlando, FL 9 2,816 5% 94.0% 566
Charlotte, NC 13 2,815 5% 92.4% 593
Tampa, FL 9 2,639 4% 94.5% 564
Eastern NC 10 2,530 4% 94.7% 555
Greensboro, NC 9 2,122 4% 85.1% 543
Nashville, TN 8 2,116 4% 91.5% 578
San Antonio, TX 5 1,983 3% 92.3% 614
Baltimore, MD 8 1,746 3% 92.6% 645
Greenville, SC 8 1,718 3% 85.8% 513
Washington, DC 6 1,483 3% 86.8% 677
Atlanta, GA 6 1,462 2% 88.2% 599
Hampton Roads, VA 6 1,428 2% 89.2% 552
Jacksonville, FL 3 1,157 2% 87.4% 594
Ft. Lauderdale, FL 4 960 2% 94.5% 781
Memphis, TN 4 935 2% 91.3% 507
Austin, TX 3 867 1% 90.4% 531
Phoenix, AZ 3 712 1% 89.8% 643
Houston, TX 2 514 1% 89.8% 464
Other 34 7,744 13% 92.0% 552
-----------------------------------------------------------
204 55,639 95% 91.6% 567
HELD FOR DISPOSITION 13 2,834 5% 90.0% 478
-----------------------------------------------------------
TOTAL 217 58,473 100% 91.5% $562
===========================================================
* Average Monthly Rental Rates for the Quarter Ended March 31, 1997, represents
potential rent collections (gross potential rents less market adjustments),
which approximates net effective rents. These figures exclude 1997 acquisitions.
8
** Economic Occupancy for the Quarter Ended March 31, 1997, is defined as
rental income (gross potential rent less vacancy loss, management units,
move-in concessions and credit loss) divided by potential collections (gross
potential rent less management units and move-in concessions) for the
period, expressed as a percentage.
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 quarterly distributions. The Company
seeks to retain sufficient cash to cover normal operating needs, including
routine replacements and to help fund additional acquisitions and development
activity. For the three months ended March 31, 1997, the Company's cash flow
from operating activities exceeded cash distributions paid to preferred and
common shareholders by approximately $4.9 million. The Company utilizes a
variety of primarily external financing sources to fund portfolio growth, major
capital improvement programs and balloon debt payments. The Company's bank lines
of credit generally have been used to temporarily finance these expenditures and
subsequently this short-term bank debt has been replaced with longer term debt
or equity.
OPERATING ACTIVITIES
For the three months ended March 31, 1997, the Company's cash flow from
operating activities increased approximately $5.7 million over the same period
last year. This increase was primarily a result of the significant expansion of
the Company's portfolio of apartment communities as discussed below and under
"Results of Operations".
The Company considers its cash provided by operating activities adequate to meet
its operating requirements and payments of distributions to both common and
preferred shareholders.
INVESTING ACTIVITIES
During the three months ended March 31, 1997, net cash used for investing
activities was approximately $107.1 million compared to approximately $43.0
million for the same period last year. The level of investing activities
primarily reflects the increased levels of the Company's acquisition, capital
expenditure and development programs.
ACQUISITIONS
The Company expects to purchase between 7,000 and 9,000 apartment homes at an
aggregate purchase price between $300 million and $400 million during 1997. The
Company's strategy is to acquire apartment communities that can provide a first
year weighted average return on average investment of approximately 9.75% which
may vary depending on market conditions.
During the first quarter of 1997, the Company acquired seven apartment
communities containing 2,592 apartment homes at a total cost of $116.3 million,
including closing costs. The weighted average first year return on average
investment is projected by the Company to be approximately 9.8%. All of the
apartment communities acquired were located in the Company's major markets. The
apartment communities acquired during the quarter were as follows:
9
PURCHASE
PURCHASE NAME/ NO. APT. YEAR PRICE COST
DATE LOCATION HOMES BUILT (000'S)** PER HOME
- -------- ------------------------ ------- ----- --------- --------
02/19/97 Club at Hickory Hollow/
Nashville, TN 406 1987 $ 17,371 $42,800
02/28/97 Dominion at Brookhaven/ *
Charlotte, NC 400 1991 17,355 43,400
02/28/97 Crosswinds/
Wilmington, NC 380 1990 19,327 50,900
02/28/97 Dominion Trinity Park/ *
Raleigh, NC 380 1994 22,155 58,300
03/25/97 Anderson Mill/
Austin, TX 350 1984 14,305 40,900
03/27/97 Oak Ridge/
Dallas, TX 486 1983 17,290 35,600
03/27/97 Breckenridge/
Nashville, TN 190 1986 8,480 44,600
----------------------------------
1997 TOTAL/WEIGHTED AVERAGE 2,592 1988 $116,283 $44,900
==================================
*In connection with the acquisition of Dominion Trinity Park
and Dominion at Brookhaven, the Company assumed two mortgage
notes payable aggregating $22 million with a weighted average
interest rate of approximately 8.4%.
**Includes closing costs.
REAL ESTATE UNDER DEVELOPMENT
At March 31, 1997, the Company had 1,258 apartment homes under development as
outlined below (dollars in thousands):
TOTAL
DEVELOPMENT ESTIMATED EXPECTED
NO. APT. COMPLETED COSTS DEVELOPMENT COST COMPLETION
PROPERTY LOCATION HOMES APT. HOMES TO DATE COST PER HOME DATE
- ------------------------------------------------------------------------------------------------------------------
APARTMENT COMMUNITIES
Providence Court Charlotte, NC 420 226 $ 24,089 $ 29,698 $ 70,700 4Q `97
Dominion Franklin Nashville, TN 360 -- 2,690 22,090 61,400 4Q `98
------------------------------------------------------------
780 226 26,779 51,788 66,400
ADDITIONAL PHASES
England Run II Fredericksburg, VA 168 -- 3,240 10,830 64,500 3Q `97
Brantley Pines II Ft. Myers, FL 96 16 5,058 6,668 69,500 2Q `97
Oak Park II Dallas, TX 80 80 4,159 4,581 57,300 2Q `97
Oak Forest II Dallas, TX 260 -- 3,371 13,367 51,400 1Q `98
Steeplechase II Greensboro, NC 176 -- 2,217 11,705 66,500 3Q `97
Greenway Park II Phoenix, AZ 20 -- 600 2,612 130,600 4Q `97
Other -- -- 596 -- --
------------------------------------------------------------
800 96 19,241 49,763 $ 62,200
------------------------------------------------------------
1,580 322 $ 46,020 $ 101,551 $ 64,300
============================================================
Consistent with the Company's acquisition strategy, development activity is
expected to be focused primarily in its major markets. During the first quarter
of 1997, the Company invested approximately $8.3 million in eight properties
currently under development, which includes two apartment communities and six
additional phases to existing apartment communities. The Company expects to
spend in excess of $50 million on development activity during 1997. At various
times during the first quarter of 1997, 217 apartment homes were completed and
became available for occupancy, including the completion of the additional phase
at Oak Park Apartments. Development activity is generally progressing on
schedule and on budget. Absorption at the completed apartment homes in
Charlotte, North Carolina and Dallas, Texas, has been slower than projected year
to date, however, absorption has been very good at the Ft. Myers, Florida
property. These additions did not have a material impact on the first quarter
results of operations.
Due to the increased risk associated with development, the Company requires a
higher return from these investments. On average, the Company requires a 100
basis point (1.0%) higher stabilized return on investment on its development
properties
10
than it does for acquisition properties. Generally, the prototype development
product is believed to compete just below the top of the market.
CAPITAL EXPENDITURES
During the first quarter of 1997, the Company spent approximately $22.1 million
on capital improvements to its apartment portfolio. The Company has a policy of
capitalizing expenditures related to acquisitions and the material enhancement
of the value, or the substantial extenuation of the useful life of an existing
asset. Some of these capital expenditures related to an upgrade program that
began in 1996 to modernize the kitchens and bathrooms at certain of the
Company's older apartment communities. These upgrades are designed to enhance
rent growth and add value to the apartment communities. In addition, the Company
has several initiatives in place such as: (i) submetering of water and sewer to
residents where local and state regulations allow the cost to be passed to the
resident, (ii) gating and fencing apartment communities, (iii) installing
monitoring devices such as intrusion alarms or controlled access devices, (iv)
enlarging fitness centers and (v) adding business centers. Capital expenditures
during 1997 are expected to be similar to 1996 levels with the Company spending
approximately $400 per mature apartment home on revenue enhancing expenditures
and $400 per unit on recurring capital expenditures.
DISPOSITION OF INVESTMENTS
SECURITIES AVAILABLE-FOR-SALE
During the first quarter of 1997, the Company sold its investment in the
preferred stock of First Washington Realty Trust, Inc. obtained as partial
consideration in the 1995 sale of four commercial properties. The Company
received approximately $9.9 million in cash proceeds from the sale of the stock
and recognized approximately a $2.1 million gain on the sale ($.025 per share)
for financial reporting purposes.
REAL ESTATE HELD FOR DISPOSITION
During the first quarter of 1997, the Company transferred seven apartment
communities aggregating $33.7 million, net of accumulated depreciation, from
real estate held for investment to real estate held for disposition. The Company
is offering these seven properties for sale in a portfolio transaction. This
classification is consistent with the Company's ongoing portfolio review
analysis and whereby properties that do not meet the long-term investment
objectives of the Company will be disposed. The Company does not anticipate any
losses from the portfolio sale, and accordingly, the real estate is carried at
lower of cost or market value less disposal costs.
Real estate held for disposition included in the Consolidated Balance Sheet in
the aggregate amount of $73.4 million, net of accumulated depreciation and
valuation allowance includes: (i) 13 apartment communities aggregating $54.8
million, (ii) three shopping centers aggregating $14.6 million, (iii) three
11
other commercial properties aggregating $2.4 million and (iv) one parcel of land
in the amount of $1.6 million. Real estate held for disposition contributed net
rental income (rental income less rental expenses and depreciation expense) in
the aggregate amount of approximately $2.4 million for the quarter ended March
31, 1997. The Company expects to dispose of these properties within the next
twelve months.
During the second quarter of 1997, the Company sold two apartment communities
containing 278 apartment homes for an aggregate sales price of $6.1 million. The
Company will recognize approximately $1.3 million of gains on the sale of
investments for financial reporting purposes in connection with these sales.
FINANCING ACTIVITIES
FINANCIAL STRUCTURE
The Company intends to maintain what management believes is a conservative
capital structure.
Balance at Weighted Average Capitalization
March 31, 1997 Interest Rate Percentage
Fixed Rate Secured Debt $ 378,879 7.6% 15.2%
Fixed Rate Unsecured Debt 688,151 7.4% 27.6%
------------ ---- -----
1,067,030 7.5% 42.8%
Variable Rate Secured Debt 18,622 6.1% 0.7%
Variable Rate Unsecured Debt 24,811 6.3% 1.0%
------------ ---- -----
43,433 6.3% 1.7%
------------ ---- -----
Total Debt $ 1,110,463 7.4% 44.5%
Equity capitalization at market 1,383,236 n/a 55.5%
------------ ------
Total market capitalization (debt & equity) $ 2,493,699 n/a 100.0%
============ ======
Net cash provided by financing activities during the first three months of 1997
was approximately $85.2 million compared to $27.6 million for the same period
last year, reflecting the significant debt and equity financing activities
during the first quarter of 1997.
On January 28, 1997, the Company issued 4,000,000 shares of its common stock at
$15.75 per share for an aggregate value of approximately $63 million. Net
proceeds of approximately $59.7 million were used to repay an unsecured credit
facility assumed in connection with the South West Merger.
The Company also received approximately $6.9 million under its Dividend
Reinvestment and Stock Purchase Plan during the first quarter of 1997 which
included approximatley $6.0 million in optional cash investments and $.9 million
of reinvested dividends. The Company expects to generate approximately $30
million in proceeds from the Plan during 1997.
In anticipation of the issuance of unsecured debt in early 1997, the Company
entered into a $100 million (notional amount) Treasury rate lock agreement in
November 1996. On January 27, 1997, the Company issued $125 million of 7.25%
Notes due January 15, 2007 under its $462.5 million shelf registration
statement. The Notes were priced to yield 7.31% which was 79 basis points over
the 10 year Treasury at the time of issuance. The interest rate protection
agreement was terminated simultaneously with the $125 million Note issuance and
the Company received $1.5 million in cash. This had the economic effect of
lowering the interest rate on the Notes to approximately 7.14%. Net proceeds of
approximately $124 million were used to curtail bank debt and purchase apartment
communities.
12
DERIVATIVE INSTRUMENTS
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 the results
of operations during the quarters ended March 31, 1997 and 1996.
At March 31, 1997, the Company had six interest rate swap agreements (the
"agreements") with three commercial lenders for an aggregate notional value of
approximately $127 million. Under these agreements, the Company pays a fixed
rate of interest and receives a variable rate of interest on the notional
amounts. These interest rate swap agreements effectively changed the Company's
interest rate exposure on approximately $127 million of its variable rate debt
from a variable rate to a weighted average fixed rate of approximately 6.9%
during the first quarter of 1997. These agreements did not have a material
impact on results of operations during the three months ended March 31, 1997 or
1996.
CREDIT FACILITIES
At March 31, 1997, the Company had the following credit facilities:
Weighted Average Weighted Average
Amount of Amount Interest Rate at Interest Rate During
Credit facility facility outstanding March 31, 1997 First Quarter 1997
- --------------------------------------------------------------------------------
Revolving credit $ 70,000 $ 57,000 6.35% 6.18%
Line of credit 33,500 -- -- --
Interim credit 50,000 50,000 6.34% 6.21%
--------------------------------------------------------------
$ 153,500 $ 107,000 6.35% 6.19%
==============================================================
During the first quarter of 1997, the Company used primarily bank debt to fund
its acquisitions program. The Company expects to close a new unsecured
senior revolving credit facility in the amount of $250 million with a group of
its commercial banks during the second quarter of 1997.
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 short- and long-term capital requirements, such as balloon
debt maturities, property acquisitions, development activity and significant
capital improvements primarily through the public and private sale of capital
stock and the issuance of medium and long-term unsecured notes payable. The
Company may also fund its capital requirements through (i) the assumption of
mortgage indebtedness, (ii) sales of properties, (iii) cash invested through the
Company's Dividend Reinvestment and Stock Purchase Plan, (iv) retained operating
cash flow and (v) the issuance of operating partnership units. The Company's
senior debt is currently rated BBB+ by Standard & Poor's and Baa1 by Moody's. As
a result of its investment grade debt ratings, the Company expects to use
unsecured debt as its primary debt funding source.
Depending upon the volume and timing of acquisition activity, the Company
anticipates raising additional debt and equity capital during the next twelve
months to finance capital requirements while striving to minimize the overall
cost of capital. During the second quarter of 1997, the Company plans to file a
shelf registration statement for approximately $675 million of debt and
preferred and common equity securities.
FUNDS FROM OPERATIONS
Funds from operations ("FFO") is defined as income before gains (losses) on
sales of investments, minority interest of unitholders in operating partnership
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
computes FFO in accordance with the recommendations set forth by the National
Association of Real Estate Investment Trusts ("NAREIT"). 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.
13
For the three months ended March 31, 1997, FFO increased 71.9% to $28.8 million,
compared with $16.7 million for the same period last year. The increase in FFO
was principally due to the increased net rental income from the Company's 25,154
non-mature apartment homes in 81 apartment communities (those acquired,
developed and sold subsequent to January 1, 1996).
Three Months Ended
March 31
(In thousands)
1997 1996 % Change
-----------------------------
Calculation of Funds from Operations:
Income before gains (losses) on sales of investments,
minority interest of unitholders in operating
partnership and extraordinary item $ 15,024 $ 8,594 74.8%
Adjustments:
Real estate depreciation 16,162 10,560 53.0%
Dividends to preferred shareholders (2,428) (2,428) --
-----------------------------
Funds from Operations $ 28,758 $ 16,726 71.9%
=============================
RESULTS OF OPERATIONS
The Company's net income is primarily generated from the operations of its
apartment communities. For purposes of evaluating the Company's comparative
operating performance, the Company categorizes its apartment communities into
two categories (i) mature--those communities acquired, developed and stabilized
prior to January 1, 1996 and held throughout both the first quarter of 1997 and
1996 and (ii) non-mature--those communities acquired, developed and sold
subsequent January 1, 1996.
For the three months ended March 31, 1997, the Company reported increases over
the same period last year in rental income, income before gains (losses) on
sales of investments and minority interest of unitholders in operating
partnership and net income. Net income available to common shareholders
increased $7.6 million, with a corresponding increase of $.04 per share compared
to the same period last year. Since the beginning of 1996, the Company acquired
and developed a total of 25,154 apartment homes in 81 apartment communities
(including 14,320 completed apartment homes in 44 apartment communities acquired
in the South West Merger), representing a 70.9% expansion in the number of
apartment homes owned during that period. These non-mature apartment homes
provided a substantial portion of the aggregate reported increases.
ALL APARTMENT COMMUNITIES
The operating performance for the Company's 217 apartment communities containing
58,473 completed apartment homes for the three months ended March 31, 1997 and
145 apartment communities containing 35,036 apartment homes for the three months
ended March 31, 1996, respectively, is summarized as follows:
14
Three Months Ended
March 31,
(In thousands)
1997 1996 % Change
-----------------------------------
Rental income $ 89,236 $ 53,280 67.5%
Rental expenses (37,399) (23,223) 61.0%
Real estate depreciation (16,162) (10,466) 54.4%
-----------------------------------
Net rental income (1) $ 35,675 $ 19,591 82.1%
===================================
Weighted average number
of apartment homes 56,288 34,460 63.3%
Economic occupancy (2) 91.5% 93.1% (1.6%)
Average monthly rents $ 562 $ 529 6.2%
(1) Net rental income for an apartment community is defined as total rental
income, less rental expenses, less real estate depreciation.
(2) Economic occupancy is defined as rental income (gross potential rent less
vacancy loss, management units, move-in concessions and credit loss) divided
by potential collections (gross potential rent less management units and
move-in concessions) for the period, expressed as a percentage.
Due to the acquisition and development of 25,154 apartment homes since January
1, 1996, the weighted average number of apartment homes increased 63.3% to
56,288 for the three months ended March 31, 1997. As a result of the increase in
the number of apartment homes acquired since January 1, 1996, the Company has
experienced significant increases in rental income, rental expenses and real
estate depreciation for the three months ended March 31, 1997.
MATURE APARTMENT COMMUNITIES
The operating performance for the Company's 136 mature apartment communities
containing 33,319 apartment homes for the three months ended March 31, 1997
and 1996 is summarized as follows:
Three Months Ended
March 31,
(In thousands)
1997 1996 % Change
-------------------------------------
Rental income $ 53,284 $ 51,385 3.7%
Rental expenses (23,070) (22,349) 3.2%
Real estate depreciation (9,554) (10,134) (5.7%)
-------------------------------------
Net rental income $ 20,660 $ 18,902 9.3%
=====================================
Economic occupancy 91.8% 93.0% (1.2%)
Average monthly
rental rates $ 562 $ 539 4.2%
For the three months ended March 31, 1997, the Company's mature communities
provided approximately 60% of the Company's apartment rental income and net
rental income. During the first quarter of 1997, the Company's mature apartment
communities experienced good rent and other income growth. Compared to the same
period last year, total rental income from these apartment homes grew 3.7%, or
$1.9 million, reflecting an increase in average monthly rents of 4.2% to $562
per month, or an increase of $2.3 million. In addition, other income, primarily
fee income, increased $429,000 or 26.5%. The rental rate increase was offset by
a 1.2% decline in economic occupancy to 91.8%, which resulted from a decrease in
physical occupancy of 1.4% and an improvement in credit loss of .2%. The
economic occupancy declined due to the weakening of certain major markets during
the last half of 1996 including Columbia, South Carolina, Greenville,
15
South Carolina, Washington, DC, Jacksonville, Florida, Richmond, Atlanta and
Hampton Roads. Overall, economic occupancy bottomed out in January 1997 and has
been trending upward during the remainder of the first quarter to 92.3% for
March 1997. The Company attributes the market softness primarily to increased
home buying, a slowdown in job growth and an oversupply of apartment homes in
certain of the southeastern markets. The Company expects to maintain rent growth
in the 4% range and economic occupancy in the 92% range during 1997.
For the three months ended March 31, 1997, rental expenses at these communities
increased 3.2%, or $721,000, resulting in a decrease in the operating expense
ratio (the ratio of rental expenses to rental income) of .2% to 43.3%. The 3.2%
increase in operating expenses is attributable to higher real estate taxes,
insurance, marketing and advertising and incentive compensation earned by
apartment site associates. Real estate taxes increased approximately $101,000
over the same period last year as the Company has experienced continuing
pressure on this expense item over the past year. Casualty insurance expense has
increased approximately $107,000 over the same period last year. Over the past
several years, the Company experienced several large casualty insurance claims
relating to hurricane and storm damage which resulted in a significant increase
in insurance rates beginning with its July 1, 1996 policy year. Marketing and
advertising costs increased approximately $290,000 over the same period last
year as a direct result of softening in certain major markets. Incentive
compensation earned by the site associates increased approximately $200,000 due
to the better performance achieved by these communities compared to the same
period last year. The Company expects the rate of growth in rental expenses to
range in the 3% to 4% range during 1997. The first quarter of 1996 included
approximately $400,000 of weather related expenses which included high levels of
gas, snow removal and repair labor expenses.
For the three months ended March 31, 1997, depreciation expense decreased
$580,000 or 5.7%, primarily as a result of the transfer of properties from real
estate held for investment to real estate held for disposition since the first
quarter of 1996. Depreciation ceases when properties are transferred from real
estate held for investment to real estate held for disposition in accordance
with the Company's accounting policy.
NON-MATURE COMMUNITIES
The operating performance for the three months ended March 31, 1997 for the
Company's 81 non-mature apartment communities which includes: (i) the 30
apartment communities containing 7,712 apartment homes acquired during 1996 and
a 253 unit community acquired in 1995 and not stabilized due to significant
rehabilitation, (ii) the 44 apartment communities containing 14,215 apartment
homes acquired on December 31, 1996 in connection with the South West Merger
(excluding 105 newly developed apartment homes), (iii) the seven apartment
communities containing 2,592 apartment homes acquired since January 1, 1997,
(iv) the four apartment communities containing 652 apartment homes sold since
January 1, 1996 and (v) the 382 apartment homes developed since January 1, 1996
is summarized as follows (dollars in thousands):
Former 1997 Acquisitions,
1996 Acquisitions South West Development & Sales Total Non-Mature
Three Months Ended Three Months Ended Three Months Ended Three Months Ended
March 31, March 31, March 31, March 31,
1997 1996 1997 1996 1997 1996 1997 1996
------------------- ------------------- ------------------- ------------------
Rental income $ 12,620 $ 958 $ 21,785 $ -- $ 1,547 $ 937 $ 35,952 $ 1,895
Rental expenses (5,041) (446) (8,810) -- (478) (428) (14,329) (874)
Real estate depreciation (2,310) (332) (4,119) -- (179) -- (6,608) (332)
------------------- ------------------- ------------------- ------------------
Net rental income $ 5,269 $ 180 $ 8,856 $ -- $ 890 $ 509 $ 15,015 $ 689
=================== =================== =================== ==================
For the three months ended March 31, 1997, the Company's non-mature apartment
communities provided approximately 40% of the Company's apartment rental income
and net rental income. Rental income, rental expenses and real estate
depreciation increased from 1996 to 1997 directly as a result of the increase in
the number of apartment homes acquired during 1996 and 1997. For the 25,154
apartments homes in the 81 non-mature communities acquired and developed since
January 1, 1996, average economic occupancy was 91.0% and the operating expense
ratio was 39.1% during the first quarter of 1997.
16
1996 ACQUISITIONS
The 30 apartment communities containing 7,712 apartment homes that were acquired
during 1996 (excluding the South West Merger) provided a significant increase in
rental income, rental expenses and depreciation expense for the Company's
apartment portfolio. For the first quarter of 1997, these apartment communities
had economic occupancy of 88.3% and an operating expense ratio of 39.1%. The
first year return on investment for these communities was projected at 9.5%,
however, the actual first quarter return on investment, on an average investment
of approximately $329 million, was 8.9%. The shortfall in the performance of the
1996 acquisitions was primarily due to the under-performance of nine apartment
communities that were acquired in August 1996 as part of a portfolio transaction
which had a concentration of communities in the Greensboro/Winston-Salem, North
Carolina market. Occupancy levels in this region peaked in the 93% to 94% range
in August 1996 when the Company acquired these properties and has fallen to
approximately 85.1% for the first quarter of 1997.
SOUTH WEST PROPERTY TRUST, INC. (SWP)
The acquisition of the 44 apartment communities containing 14,215 apartment
homes included in the SWP Merger on December 31, 1996, provided the largest
increases in rental income, rental expenses and depreciation expenses for the
Company's entire apartment portfolio. For the first quarter of 1997, these
apartment communities had economic occupancy of 91.9% and an operating expense
ratio of 39.6%. The first year return on investment for the SWP Portfolio was
projected to be 9.5% which approximates the 9.7% return on investment posted
during the first quarter of 1997. Included in the SWP communities are 12,361
stabilized apartment communities (those acquired, developed and stabilized prior
to January 1, 1996) which experienced rent growth of 4.7% over the amounts
reported last year by SWP, an average economic occupancy of 91.7% and an
operating expense ratio of 43.3%.
1997 ACQUISITIONS, DEVELOPMENT AND SALES
Included in this category are the seven apartment communities containing 2,592
apartment homes acquired by the Company during the first quarter of 1997 which
are projected to have a first year return on investment of approximately 9.8%
and the 530 apartment homes developed since January 1, 1997 (the 1996 figures
include results of operations of four apartment communities containing 652
apartment sold during 1996). These communities did not have a material impact on
first quarter 1997 results of operations.
COMMERCIAL PROPERTIES
Rental income, rental expenses and real estate depreciation from commercial
properties decreased $810,000, $279,000 and $94,000 respectively during the
three months ended March 31, 1997, compared to the same period last year. These
decreases were directly attributable to the sale of four shopping centers and
one industrial park since the beginning of 1996.
INTEREST EXPENSE
For the three months ended March 31, 1997 interest expense increased $8.5
million or $.03 per common share over the same period last year. The weighted
average amount of debt employed during 1997 was higher than it was in 1996
($1.0 billion in 1997 versus $554 million in 1996). The weighted average
interest rate on this debt was slightly lower in 1997 decreasing from 7.6% in
1996 to 7.3%. The lower average interest rate during 1997 reflected the
increased reliance on lower rate short-term bank borrowings increased in 1997
compared to 1996 ($72.3 million weighted average outstanding in 1997 versus
$42.5 million in 1996).
GENERAL AND ADMINISTRATIVE
During the first quarter of 1997, general and administrative expenses increased
by $450,000 over the same period last year. In 1997, the Company incurred
increases in most of its general and administrative expense categories which is
directly attributable to the increased size of the Company, however, general and
administrative expense as a percentage of rental revenues decreased .5% from
2.5% during the 1996 period to 2.0% in 1997 due to ecomonies of scale. During
the first quarter of 1997, general and administrative expenses grew 33% while
rental income grew by 64% over the same period last year.
17
GAINS ON SALES OF INVESTMENTS
During the first quarter of 1997, the Company recognized a gain for financial
reporting purposes of $2.1 million on the sale of its investment in the
preferred stock of First Washington Realty Trust, Inc. The Company sold four
shopping centers to First Washington Realty Trust, Inc. on June 30, 1995 and in
connection with the sales, 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.
During the first quarter of 1996, the Company sold one shopping center and
recognized a $965,000 gain for financial reporting purposes.
INFLATION
The Company believes that the direct effects of inflation on the Company's
operations have been inconsequential.
18
PART II
ITEM 1. 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 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULT UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 6, 1997, the Company held its Annual Meeting of Shareholders. A
total of 73,453,881 shares of common stock, representing 85% of the 86,288,728
shares outstanding and entitled to vote as of the March 14, 1997 record date
were represented in person or by proxy and constituted a quorum.
At the meeting twelve (12) directors were re-elected. Each director
will serve an approximate one (1) year term until the Company's next Annual
Meeting. The following persons were elected Directors with each receiving at
least 72,072,913 shares, representing 83.5 % of the total number of shares
entitled to vote at the meeting and 98% of the shares voted: Jeff C. Bane, R.
Toms Dalton, James Dolphin, Barry M. Kornblau, John C. Lanford, John P. McCann,
H. Franklin Minor, Lynne B. Sagalyn, Mark J. Sandler, Robert W. Scharar, John S.
Schneider and C. Harmon Williams, Jr..
The 1991 Stock Purchase and Loan Plan was amended as follows: (i) allow
participation by all employees, in addition to the officers of the Company, (ii)
increase the number of shares of Common Stock that can be issued from 600,000
shares to 1,400,000 shares, (iii) extend the termination date from 2001 to 2010,
(iv) provided that neither the shares fully paid for by a participant nor shares
purchased by a participant and reacquired by the Company from that participant
shall be counted in any determination of the number of shares issued under the
1991 Stock Purchase and Loan Plan. The 1991 Stock Purchase and Loan Plan
amendment received 70,240,447 shares, representing 81.4% of the total number of
shares entitled to vote at the meeting and 81.4% of the shares voted.
The 1985 Stock Option Plan was amended to allow independent directors
leaving the Board with over 10 years of service to exercise stock options upon
the earlier to occur of: (i) the date of termination of the stock options or
(ii) the second anniversary of termination of service on the Board. The 1985
Stock Option Plan amendment received 69,202,451 shares, representing 80.2% of
the total number of shares entitled to vote at the meeting and 94.2% of the
shares voted.
ITEM 5. OTHER INFORMATION
None
19
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The exhibits listed on the accompanying index to exhibits are filed as
part of this quarterly report.
(b) A Form 8-K dated December 31, 1996 was filed with the Securities and
Exchange Commission on January 15, 1997. The filing reported the
acquisition by the Company of South West Property Trust Inc. effective
at the close of business on December 31, 1996. This Form 8-K was
amended by a Form 8-K/A filed March 17, 1997. The financial statements
filed as part of this report were the consolidated financial statements
and notes thereto of South West Property Trust Inc. as of and for each
of the three years in the period ended December 31, 1996.
A Form 8-K dated January 21, 1997 was filed with the Securities and
Exchange Commission on January 21, 1997. The filing reported the pro
forma results of the Company for the nine months ended September 30,
1996 and the year ended December 31, 1995.
20
EXHIBIT INDEX
Item 6 (a)
The exhibits listed below are filed as part of this quarterly 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
- ------- --------------------------------------- ---------------------------------------------------
2(b) Definitive Agreement and Plan of Exhibit 2(b) to the Company's Form S-4 Registration
Merger dated as of October 1, 1996, Statement (Registration No. 333-13745) filed with
the between the Company, United Sub, Commission on October 9, 1996.
Inc. and South West Property Trust Inc.
3(a) Restated Articles of Incorporation Exhibit 4(i)(c) to the Company's Form S-3
Registration Statement (Registration No. 33-64275)
3(a)(i) Amendment of Restated Articles of Exhibit 6(a)(4) to the Company's Form 8-A
Incorporation Registration Statements dated April 19, 1990 and
April 24, 1995.
3(b) Restated By-Laws Filed herewith.
4(i)(a) Specimen Common Stock Exhibit 4(i) to the Company's Annual Report
Certificate on Form 10-K for the year ended December
31, 1993.
4(i)(b) Form of Certificate for Shares Exhibit 1(e) to the Company's Form 8-A
of 9 1/4% Series A Cumulative Registration Statement dated April 24, 1995.
Redeemable Preferred Stock
4(ii)(a) Loan Agreement dated as of Exhibit 6(c)(i) to the Company's Form 8-A
November 7, 1991, between the Registration Statement dated April 19, 1990.
Company and Aid Association for
Lutherans
4(ii)(e) Note Purchase Agreement dated Exhibit 6(c)(5) to the Company's Form 8-A
as of February 15, 1993, between Registration Statement dated April 19, 1990.
the Company and CIGNA Property
and Casualty Insurance Company,
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
21
4(ii)(f) Credit Agreement dated as of Exhibit 6 (c)(6) to the Company's
December 15, 1994 between the Form 8-A Registration Statement
Company and First Union National Bank dated April 19, 1990.
of Virginia
10(i) Employment Agreement between Exhibit 10(v)Ii) to the Company's Annual Report on
the Company and John P. McCann Form 10-K for the year ended December 31, 1982.
dated October 29, 1982
10(ii) Employment Agreement between Exhibit 10(v)(ii) to theCompany's Annual Report on the
Company and James Dolphin Form 10-K for the year ended December 31, 1982.
dated October 29, 1982.
10(iii) Employment Agreement between Exhibit 10(iii) to the Company's Annual
The Company and Barry M. Kornblau, Report on Form 10-K for the year ended
dated February 1, 1991. December 31, 1990.
10(iv) Employment Agreement between Exhibit 10(iv) to the Company's Annual.
the Company and John S. Schneider Report on Form 10-K for the year ended
dated December 14, 1996. December 31, 1996.
10(v) Employment Agreement between Exhibit 10(v) to the Company's Annual.
the Company and Robert F. Sherman report on Form 10-K for the year ended
dated December 19, 1996. December 31, 1996.
10(vi) Employment Agreement between Exhibit 10(vi) to the Company's Annual
the Company and David L. Johnston Report on Form 10-K for the year ended
dated December 19, 1996. December 31, 1996.
10(vii) 1985 Stock Option Plan, Filed herewith.
as amended.
10(viii) 1991 Stock Purchase and Loan, Filed herewith.
as amended.
10(ix) Amended and Restated Agreement Exhibit 10(vi) to the Company's Annual Report on
of Limited Partnership of Form 10-K for the year ended December 31, 1995.
United Dominion Realty, L.P.
Dated as of December 31, 1995.
12 Computation of Ratio of Earnings Filed herewith.
to Fixed Charges
22
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)
Date: May 15, 1997 /s/ James Dolphin
- ------------------ -----------------
James Dolphin
Executive Vice President and Chief
Financial Officer
Date: May 15, 1997 /s/ Jerry A. Davis
- ------------------ ------------------
Jerry A. Davis
Vice-President, Corporate Controller and
Principal Accounting Officer
23