UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
FOR QUARTERLY AND TRANSITION REPORTS 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, 1998
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, Richmond, 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 8, 1998:
Common Stock: 102,381,283
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except for share data)
(Unaudited)
March 31, December 31,
1998 1997
- ---------------------------------------------------------------------------------------------------------------------
Assets
Real estate owned:
Real estate held for investment $ 2,641,958 $ 2,281,438
Less: accumulated depreciation 214,945 200,506
------------- --------------
2,427,013 2,080,932
Real estate under development 38,774 24,598
Real estate held for disposition 153,675 166,501
Cash and cash equivalents 5,961 473
Other assets 109,881 41,221
------------- --------------
Total assets $ 2,735,304 $ 2,313,725
============= ==============
Liabilities and Shareholders' Equity
Notes payable-secured $ 610,034 $ 417,325
Notes payable-unsecured 790,083 738,901
Real estate taxes payable 18,334 21,744
Accrued interest payable 16,658 14,912
Security deposits and prepaid rent 15,487 12,105
Distributions payable to common and preferred shareholders 27,498 25,607
Accounts payable, accrued expenses and other liabilities 14,376 10,081
------------- --------------
Total liabilities 1,492,470 1,240,675
Minority interest of unitholders in operating partnership 37,515 14,693
Shareholders' equity:
Preferred stock, no par value; $25 liquidation preference,
25,000,000 shares authorized;
4,200,000 shares 9.25% Series A Cumulative Redeemable 105,000 105,000
6,000,000 shares 8.60% Series B Cumulative Redeemable 150,000 150,000
Common stock, $1 par value; 150,000,000 shares authorized
100,700,952 shares issued and outstanding (89,168,442 in 1997) 100,701 89,168
Additional paid-in capital 1,054,592 906,307
Notes receivable from officer-shareholders (8,776) (8,806)
Distributions in excess of net income (196,198) (183,312)
------------- --------------
Total shareholders' equity 1,205,319 1,058,357
============= ==============
Total liabilities and shareholders' equity $ 2,735,304 $ 2,313,725
============= ==============
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, 1998 1997
- -------------------------------------------------------------------------------------------------------------
Revenues
Rental income $104,249 $ 89,984
Interest and other non-property income 1,012 251
-------------- ---------------
105,261 90,235
Expenses
Rental expenses:
Utilities 5,805 6,466
Repairs and maintenance 12,354 11,819
Real estate taxes 9,052 7,112
Property management 3,330 2,777
Other operating expenses 10,480 9,442
Real estate depreciation 20,928 16,162
Interest 22,825 19,150
General and administrative 2,163 1,833
Other depreciation and amortization 746 450
-------------- ---------------
87,683 75,211
-------------- ---------------
Income before gains (losses) on sales of investments and minority interest
of unitholders in operating partnership 17,578 15,024
Gains (losses) on sales of investments (260) 2,120
-------------- ---------------
Income before minority interest of unitholders in operating
partnership 17,318 17,144
Minority interest of unitholders in operating partnership (135) (31)
-------------- ---------------
Net income 17,183 17,113
Dividends to preferred shareholders (5,650) (2,428)
-------------- ---------------
Net income available to common shareholders $ 11,533 $ 14,685
============== ===============
Earnings per common share:
Basic earnings per share $ 0.13 $ 0.17
============== ===============
Diluted earnings per share $ 0.13 $ 0.17
============== ===============
Distributions declared per common share $ 0.2625 $ 0.2525
============== ===============
Weighted average number of common shares outstanding-basic 90,867 85,046
Weighted average number of common shares outstanding -diluted 92,115 85,273
See accompanying notes.
3
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three months ended March 31, 1998 1997
- -----------------------------------------------------------------------------------------------------------------------
Operating Activities
Net income $ 17,183 $ 17,113
Adjustments to reconcile net income to cash provided
by operating activities:
Depreciation and amortization 21,674 16,612
Minority interest of unitholders in operating partnership 135 31
(Gains)/losses on sales of investments 260 (2,120)
Amortization of deferred financing costs 472 399
Changes in operating assets and liabilities:
Decrease in operating liabilities (8,150) (495)
Increase in operating assets (1,580) (4,526)
---------- -----------
Net cash provided by operating activities 29,994 27,014
Investing Activities
Acquisition of real estate, net of liabilities assumed (50,028) (90,312)
Capital expenditures (12,504) (22,075)
Development of real estate assets (12,607) (8,318)
Net proceeds from sales of investments 9,730 9,944
Proceeds from interest rate hedge transaction -- 1,539
Issuance of and payments on notes receivable (12,951)
Payments on notes receivable 2,142
Net cash acquired in acquisition of ASR Investments Corporation 330 --
---------- -----------
Net cash used in investing activities (78,030) (107,080)
Financing Activities
Net proceeds from the issuance of common stock 38,446 59,675
Net proceeds from the issuance of common stock through the
dividend reinvestment and stock purchase plan 12,936 6,851
Gross proceeds from the issuance of unsecured notes payable -- 125,000
Net borrowings of short-term bank debt 58,900 (18,250)
Distributions paid to preferred shareholders (5,653) (2,428)
Distributions paid to common shareholders (22,527) (19,663)
Distributions paid to minority interest unitholders (657) (33)
Scheduled principal payments on secured notes payable (1,707) (1,122)
Payments on unsecured notes payable (7,504) (63,414)
Non-scheduled payments on secured notes payable (18,165) --
Payment of financing costs (545) (1,385)
---------- -----------
Net cash provided by financing activities 53,524 85,231
Net increase (decrease) in cash and cash equivalents 5,488 5,165
Cash and cash equivalents, beginning of period 473 13,452
---------- -----------
Cash and cash equivalents, end of period $ 5,961 $ 18,617
========== ===========
Supplemental Information:
Interest paid during the period $ 22,389 $ 15,087
Non-cash transactions associated with the acquisition of properties:
Secured debt assumed through the acquisition of properties 43,022 22,063
Issuance of operating partnership units 1,924 --
Non-cash transactions associated with the acquisition of ASR Investment
Corporation:
Real estate assets acquired 313,700 --
Other operating assets acquired 8,848
Issuance of common stock 108,465 --
Issuance of operating partnership units 21,420 --
Secured debt assumed 179,440 --
Operating liabilities assumed 13,553 --
4
See accompanying notes.
United Dominion Realty Trust, Inc.
Consolidated Statements of Shareholders' Equity
Three Months Ended March 31, 1998
(In thousands, except per share amounts)
(Unaudited)
Preferred Stock
Balance, December 31, 1997 $ 255,000
------------
Balance, March 31, 1998 $ 255,000
============
Common Stock, $1 Par Value
Balance, December 31, 1997 $ 89,168
Issuance of common shares through Unit Investment Trust 2,804
Issuance of common shares in the acquisition of ASR Investment Corporation 7,743
Issuance of common shares through dividend reinvestment
and stock purchase plan 946
Issuance of common shares through exercise of stock options 40
------------
Balance, March 31, 1998 $ 100,701
============
Additional Paid-in Capital
Balance, December 31, 1997 $ 906,307
Issuance of common shares through Unit Investment Trust 35,166
Issuance of common shares in the acquisition of ASR Investment Corporation 100,722
Issuance of common shares through dividend reinvestment
and stock purchase plan 11,990
Issuance of common shares through exercise of stock options 407
------------
Balance, March 31, 1998 $ 1,054,592
============
Notes Receivable from Officer-Shareholders
Balance, December 31, 1997 $ (8,806)
Principal repayments 30
============
Balance, March 31, 1998 $ (8,776)
============
Distributions in Excess of Net Income
Balance, December 31, 1997 $ (183,312)
Net income 17,183
Common stock distributions declared ($0.2625 per share) (24,419)
Preferred stock distributions declared-Series A ($0.58 per share) (2,428)
Preferred stock distributions declared-Series B ($0.54 per share) (3,222)
============
Balance, March 31, 1998 $ (196,198)
============
============
Total Shareholders' Equity $ 1,205,319
============
See accompanying notes.
5
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of presentation
The accompanying consolidated financial statements include the accounts of
United Dominion Realty Trust, Inc. and its subsidiaries, including United
Dominion Realty, L.P., its Operating Partnership, (collectively, the "Company").
As of March 31, 1998, United Dominion Realty Trust, Inc. and its wholly-owned
subsidiaries had a 89% interest in the Operating Partnership. 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, 1998 and results of
operations for the interim periods ended March 31, 1998 and 1997. 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, 1997 Annual Report on Form 10-K filed with the Securities
and Exchange Commission.
Certain previously reported amounts have been reclassified to conform with the
current financial statement presentation.
2. Real estate held for investment
The following table summarizes real estate held for investment:
March 31, December 31,
Dollars in thousands 1998 1997
- -----------------------------------------------------------------------
Land and land improvements $ 443,612 $ 393,505
Buildings and improvements 2,083,467 1,783,565
Furniture, fixtures and equipment 110,616 100,380
Construction in progress 4,263 3,988
----------- ------------
Real estate held for investment $2,641,958 2,281,438
Accumulated depreciation (214,945) (200,506)
----------- ------------
Real estate held for investment, net $2,427,013 $ 2,080,932
=========== ============
3. Notes payable - secured
Notes payable-secured, which encumber $1.1 billion or 39% of the Company's real
estate owned, at cost, ($1.8 billion or 61% of the Company's real estate owned,
at cost, is unencumbered) consist of the following at March 31, 1998:
Principal Weighted Average Weighted Average No. Communities
Dollars in thousands Balance Interest Rate Years to Maturity Encumbered
- ---------------------------------------------------------------------------------------------------------------------
Fixed Rate Debt
Mortgage notes payable $ 316,384 8.30% 3.1 68
Tax-exempt secured notes payable 127,336 7.00% 18.5 18
REMIC financings 78,099 7.35% 2.5 23
Secured notes payable (a) 45,000 7.29% 1.2 6
-----------------------------------------------------------------------------
Total Fixed-Rate Notes 566,819 7.75% 6.4 115
Variable Rate Debt
Secured notes payable 41,015 6.63% 1.6 7
Tax-exempt secured notes payable 2,200 3.07% 4.4 1
------------------------------------------------------------------------------
Total Variable-Rate Notes 43,215 6.45% 1.7 8
------------------------------------------------------------------------------
Total Notes Payable - Secured $ 610,034 7.66% 6.0 123
================================================================================
(a) Variable-rate secured notes payable which have been effectively swapped
to a fixed-rate at March 31, 1998 consist of a $39 million
variable-rate secured senior credit facility which encumbers six
apartment communities and a $6 million variable-rate construction note
payable. The Company has five interest rate swap agreements with
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 7.29%.
4. Notes payable - unsecured
A summary of notes payable - unsecured is as follows:
March 31, December 31,
Dollars in thousands 1998 1997
----------------- ----------------
Commercial Banks
Borrowings outstanding under
revolving credit facilities $ 194,500 $135,600
Insurance Companies--Senior Unsecured Notes
7.98% due March, 1999-2003 (a) 37,143 44,571
8.72% due November 1998 2,000 2,000
--------- ----------
39,143 46,571
Other (b) 6,440 6,730
Senior Unsecured Notes - Other
7.25% Notes due April 1999 75,000 75,000
8.50% Debentures due September 2024 (c) 150,000 150,000
7.95% Medium-Term Notes due July 2006 125,000 125,000
7.25% Notes due January 2007 125,000 125,000
7.07% Medium-Term Notes due November 2006 25,000 25,000
7.02% Medium-Term Notes due November 2005 50,000 50,000
-------- --------
550,000 550,000
-------- --------
Total Notes Payable - Unsecured $790,083 $738,901
========= ========
(a) Payable in five equal annual principal installments of $7.4 million.
(b) Includes $6.0 million and $6.2 million at March 31, 1998 and December
31, 1997, respectively, of deferred gains from the termination of
interest rate hedge transactions.
(c) Debentures include an investor put feature, which grants a one time
option to redeem debentures in September 2004.
5. Earnings Per Share
Basic earnings per common share is computed using net income available to common
shareholders and the weighted average shares outstanding. Diluted earnings per
common share is also computed using net income available to common shareholders,
however, the weighted average shares outstanding are adjusted for potentially
dilutive securities for the periods presented. The effect of the operating
partnership units was antidilutive for the three months ended March 31, 1997,
and is therefore not included in the following calculations. The following table
sets forth the computation of basic and diluted earnings per share:
In thousands, except per share data March 31, 1998 March 31, 1997
- -------------------------------------------------------------------------------------------
Numerator:
Numerator for basic earnings per share-net
income available to common shareholders $ 11,533 $ 14,685
Effect of minority interest 135 --
-------- --------
Numerator for diluted earnings per share- net
income available to common shareholders $ 11,688 $ 14,685
======== ========
Denominator:
Denominator for basic earnings per share-
weighted average shares 90,867 85,046
Effect of dilutive securities:
Operating partnership units 1,131 --
Employee stock options 117 227
---------- --------
Dilutive potential common shares
denominator for dilutive earnings per
share-adjusted weighted average shares
and assumed conversions 92,115 85,273
========== =========
Basic earnings per share $ 0.13 $ 0.17
========== =========
Diluted earnings per share $ 0.13 $ 0.17
========== =========
6. Pro Forma Financial Information
On March 27, 1998, the Company completed the acquisition of ASR Investments
Corporation (ASR) in a statutory merger. ASR was a publicly-traded multifamily
REIT that owned and operated 39 communities with 7,550 apartment homes located
in Arizona, Texas, New Mexico and the state of Washington. Each share of ASR's
common stock was exchanged for 1.575 shares of the Company's common stock. The
acquisition was structured as a tax-free transaction and was treated as a
purchase for accounting purposes. In connection with the acquisition, the
Company acquired primarily real estate assets totaling $313.7 million.
Consideration given by the Company included 7,742,839 shares of the Company's
common stock valued at $14 per share for an aggregate equity value of $108.4
million plus the issuance of 1,529,990 Units in the ASR Operating Partnership
valued at $21.4 million. In addition, the Company assumed, at fair value,
mortgage debt totaling $179.4 million and other liabilities of $13.6 million.
Information concerning unaudited pro forma results of operations for the
quarters ended March 31, 1998 and 1997 are set forth below. For the quarter
ended March 31, 1998 such pro forma information assumes the acquisition of ASR
as if the transaction occurred on January 1, 1998. For the quarter ended March
31, 1997, such pro forma information assumes the following transactions occurred
on January 1, 1997: (i) the acquisition by the Company of 17 apartment
communities with 5,659 apartment homes at a total cost of $219 million and (ii)
the acquisition of ASR Investment Corporation of 22 apartment communities with
4,208 apartment homes at a total cost of $176 million.
Pro Forma Pro Forma
Quarter Ended Quarter Ended
In thousands, except per share amounts March 31, 1998 March 31, 1997
- ---------------------------------------------------------------------------------------------------
Rental income $115,979 $109,355
Net income available to common shareholders
before extraordinary item 12,241 16,148
Net income per common share before
extraordinary item-basic $ 0.12 $ 0.17
Net income per common share before
extraordinary item-diluted $ 0.12 $ 0.17
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.
7. Accounting Pronouncements
As of January 1, 1998, the Company adopted SFAS No. 130 "Reporting Comprehensive
Income" (Statement 130). Statement 130 establishes new rules for the reporting
and display of comprehensive income and its components; however, the adoption of
Statement 130 had no impact on the Company's net income or stockholders' equity
for each of the periods presented.
On March 19, 1998, the Emerging Issues Task Force of the Financial Accounting
Standards Board reached a consensus decision on Issues No. 97-11, "Accounting
for Internal Costs Relating to Real Estate Property Acquisitions" which provides
that internal costs of identifying and acquiring operating property should be
expensed as incurred. The Company has historically capitalized on a successful
efforts basis, the direct, internal costs of identifying and acquiring operating
property and, accordingly, will realize an increase in expense upon adoption of
this consensus, which is effective immediately. The Company does not expect the
impact on earnings to be material in 1998.
PART I
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
The Company considers portions of the information contained in Item 2. to
include 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 engaged in the ownership, acquisition, development and operation
of apartment communities throughout the country. The Company's investment
strategy has focused on acquiring apartment communities in 24 targeted major
markets and geographically expanding into other markets in the Mid West and Far
West. Strategically, the Company intends to continue its expansion into other
areas of the United States and enter into several new markets in 1998 as
appropriate opportunities arise. The Company seeks to be a market leader by
operating a sufficiently sized portfolio of apartments within each market in
order to drive down operating costs through economies of scale and management
efficiencies. The Company believes this market diversification increases
investment opportunity and decreases the risk associated with cyclical local
real estate markets and economies. The following table summarizes the Company's
apartment market information by geographic region and market:
Three Months Ended
As of March 31, 1998 March 31, 1998
- --------------------------------------------------------------------- ------------------------------------
Average
Number of Number of % of Carrying Physical Monthly Average
Apartment Apartment Apartment Value Occupancy Rental Unit Size
Market Communities Homes Homes (in thousands) ** Rates* (Square Feet)
- --------------------------------------------------------------------- ---------------------------------
Raleigh, NC 11 3,484 6% $ 151,813 92.5% $652 925
Richmond, VA 12 3,518 5% 121,395 92.1% 583 889
Greensboro, NC 10 2,638 4% 115,166 79.5% 578 863
Eastern NC 10 2,530 4% 101,455 88.3% 584 924
Baltimore, MD 8 1,746 3% 78,322 91.3% 670 864
Washington, DC 6 1,483 2% 66,272 90.4% 693 830
Hampton Roads, VA 8 1,830 3% 62,325 90.7% 551 874
Fayetteville, NC 3 884 1% 40,419 89.7% 564 899
Eastern Shore, MD 4 784 1% 33,772 97.4% 645 935
Other Virginia 6 1,156 2% 46,642 80.8% 601 870
Delaware 2 368 1% 17,433 93.2% 613 892
Other North Carolina 1 168 -- 7,401 94.3% 582 836
Charlotte, NC 13 3,009 4% 132,435 88.7% 635 970
Columbia, SC 12 3,534 5% 115,711 94.1% 509 859
Memphis, TN 7 2,427 4% 106,161 91.3% 525 302
Nashville, TN 8 2,116 3% 94,606 92.2% 598 952
Atlanta, GA 6 1,462 2% 64,386 90.8% 616 901
Greenville, SC 8 1,718 3% 60,661 87.5% 523 882
Other Georgia 2 468 -- 21,844 91.4% 643 1,140
Other South Carolina 2 408 -- 13,005 91.6% 421 908
Alabama 1 242 -- 10,990 92.5% 519 1,097
Orlando 12 3,584 5% 155,548 94.1% 617 784
Tampa 11 3,105 4% 111,964 95.8% 588 966
Miami/Ft. Lauderdale 4 960 1% 62,091 93.2% 806 1,092
Jacksonville 3 1,157 2% 55,053 91.4% 604 872
Other Florida 7 1,646 2% 68,710 95.6% 577 842
Dallas, TX *** 29 8,954 13% 371,073 93.2% 595 590
Houston, TX *** 23 5,783 8% 185,751 90.8% 544 379
Phoenix, AZ *** 7 1,980 3% 118,745 94.3% 650 328
San Antonio, TX 5 1,983 3% 88,198 91.2% 619 847
Washington State *** 3 812 1% 43,473 -- -- --
Tucson, AZ *** 8 1,112 2% 28,909 -- -- --
New Mexico *** 4 758 1% 28,251 90.5% 549 729
Austin, TX 2 542 1% 22,440 89.6% 592 713
Arkansas 2 512 1% 20,966 92.5% 576 821
Nevada 1 384 -- 20,308 84.3% 650 837
Other Texas 2 496 -- 15,851 89.2% 524 738
Oklahoma 1 316 -- 9,567 88.9% 459 756
---------------------------------------------- ------------------------------
Total 264 70,057 100% $2,869,112 91.3% $594 742
============================================== ===============================
* Average monthly rental rates represent potential rent collections
(gross potential rents less market adjustments), which approximate net
effective rents. These figures exclude 1998 acquisitions.
** Physical occupancy is defined as rental income (potential rental
collections less vacancy loss, management units, units held out of
service and move-in concessions) divided by potential collections
(gross potential rent less management units, units held out of service
and move-in concessions) for the period, expressed as a percentage.
*** Physical Occupancy, Average Monthly Rental Rates and Average Unit Size
are not available for the communities included in these markets which
were acquired on March 27, 1998 in connection with the acquisition of
ASR Investment Corporation.
Liquidity and Capital Resources
As a qualified real estate investment trust ("REIT"), the Company distributes a
substantial portion of its cash flow to its shareholders in the form of
quarterly distributions. The Company believes that cash provided by operations
will be adequate to meet normal operating requirements and payment of
distributions by the Company in accordance with REIT requirements in both the
short and long term. For the three months ended March 31, 1998, the Company's
cash flow from operating activities exceeded cash distributions paid to
preferred and common shareholders and operating partnership unitholders by $1.2
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. At March 31, 1998, the
Company had cash and cash equivalents of $6.0 million and amounts available
under its credit facilities aggregating $70.5 million. The following discussion
explains the changes in net cash provided by operating activities, net cash used
for investing activities and net cash provided by financing activities which are
presented in the Company's Consolidated Statements of Cash Flows.
Operating Activities
For the quarter ended March 31, 1998, the Company's cash flow from operating
activities increased $3.0 million over the same period last year. This increase
is primarily due to the increased operating income from the Company's acquired
apartment communities, as well as increases in property operating income within
the Company's mature apartment portfolio achieved through higher rental rates
and decreased property operating expenses as discussed below and under "Results
of Operations".
Investing Activities
During the three months ended March 31,1998, net cash used for investing
activities was $78.0 million compared to $107.1 million for the same period last
year. Changes in the level of investing activities from period to period
primarily reflect the changing levels of the Company's acquisition, capital
expenditure and development programs.
Acquisitions
The Company seeks to acquire apartment communities that can provide returns on
investment in excess of the Company's cost of capital. These acquisitions
typically are projected to provide first year weighted average returns on
average investment of approximately 9-9 1/2% with the prospect for future cash
flow growth and appreciation. The Company expects to purchase between 8,000 and
10,000 apartment homes in individual and portfolio transactions at an aggregate
cost ranging from $350 million and $450 million during 1998 (excluding ASR).
During the first three months of 1998, the Company acquired six apartment
communities with 2,076 apartment homes at a total cost (including closing costs)
of $95.9 million or $46,200 per home. The communities acquired by market were as
follows:
Purchase
Purchase No. Apt. Year Price Cost
Location Date Name Homes Built (thousands) per Home
- ----------------------------------------------------------------------------------------------------------------------------------
Memphis, Tennessee 01/09/98 The Trails at Kirby Parkway (a) (b) 376 1987 $16,757 $44,566
01/09/98 Cinnamon Trails 208 1989 9,531 45,823
01/09/98 The Trails at Mount Moriah (a) (b) 630 1990/91 28,026 44,486
02/06/98 Dogwood Creek (b) (c) 278 1997 18,446 66,353
Phoenix, Arizona 01/09/98 The Village at North Park 320 1983 15,056 47,050
Dallas, Texas 01/30/98 Summit Ridge (b) 264 1983 8,034 30,430
------------------------------------------------------------------------------------------------------
Total/Weighted Average 2,076 1989 $95,850 $46,171
(a) These two properties are operating as one apartment community
named The Trails.
(b) The Company assumed four mortgage notes aggregating $43.0
million with a weighted average interest rate of 7.6% in
connection with the acquisition of these apartment
communities.
(c) The Company issued 130,416 Operating Partnership Units valued
at $1.9 million in connection with this community.
On April 17, 1998, the Company acquired a portfolio of eight apartment
communities with 1,970 apartment homes in a portfolio transaction valued at
approximately $71 million. Seven of the communities are located in San Antonio,
Texas and one is located just east of Dallas. In connection with the
transaction, the Company issued 481,251 shares of common stock and 1,023,725
operating partnership units valued at $14.75 each for an aggregate equity value
of $22 million and assumed eight mortgage loans totaling $44 million with a
weighted average interest rate of 8.4%. The acquisition of this portfolio
allowed the Company to nearly double its presence in San Antonio and achieve its
objective of gaining size in existing markets.
Mergers
On March 27, 1998, the Company completed the acquisition of ASR Investments
Corporation in a statutory merger. ASR was a publicly-traded multifamily REIT
with apartment communities located in Arizona, Texas, New Mexico and the state
of Washington. Each share of ASR's common stock was exchanged for 1.575 shares
of the Company's common stock. The acquisition was structured as a tax-free
transaction and was treated as a purchase for accounting purposes. In connection
with the acquisition, the Company acquired primarily real estate assets totaling
$313.7 million. Consideration given by the Company included 7,742,839 shares of
the Company's common stock valued at $14 per share for an aggregate equity value
of $108.4 million plus the issuance of 1,529,990 Units in the ASR Operating
Partnership valued at $21.4 million. In addition, the Company assumed, at fair
value, mortgage debt totaling $179.4 million and other liabilities of $13.6
million.
Combining ASR's 7,550 apartment homes and the Company's 62,507 apartment homes
created a portfolio of 70,057 homes located throughout 24 major markets. The
Merger both strengthened the Company's position in several long-term growth
markets in the Southwest and established an initial presence in the Northwest
where the Company plans to make additional acquisitions in the future. The 7,550
apartment homes had a weighted average year built of 1984 and are geographically
distributed as follows:
Number of Number of
City/State Apartment Communities Apartment Homes
- ------------------------ --------------------- ---------------
Houston, Texas 14 2,261
Dallas, Texas 8 1,889
Tucson, Arizona 8 1,112
Phoenix, Arizona 3 928
Albuquerque, New Mexico 3 548
Washington 3 812
--- ------
Total 39 7,550
=== =====
Real estate under development
Consistent with the Company's acquisition strategy, development activity is
focused primarily in its major markets. During the first three months of 1998,
the Company invested approximately $12.6 million in development projects on nine
apartment communities, including four new apartment communities, two additional
phases to existing apartment communities and three parcels of undeveloped land.
At March 31, 1998, the Company had 1,338 apartment homes under development as
outlined below (dollars in thousands, except cost per home):
Development Estimated Estimated Expected
No. Apt. Completed Costs Development Cost Completion
Property Location Homes Apt. Homes to Date Cost Per Home Date
- ---------------------------------------------------------------------------------------------------------------------
New Apartment Communities
Dominion Franklin Nashville, TN 360 -- $ 10,542 $23,334 $ 64,800 1Q99
Ashlar I Fort Myers, FL 260 -- 2,915 18,566 71,400 1Q99
Sierra Foothills Phoenix, AZ 322 -- 1,610 21,062 65,400 1Q99
Ranchstone Houston, TX 216 -- 926 11,118 51,500 1Q99
----------------------------------------------------------
1,158 -- 15,993 74,080 64,000
Additional Phases
Mill Creek II Wilmington, NC 180 -- 5,329 12,081 67,100 3Q98
-----------------------------------------------------------
Land Held for Development
Indian Creek Dallas, TX -- -- 2,980 -- -- --
Ashlar II Fort Myers, FL -- -- 1,127 -- -- --
Wimbledon II Dallas, TX -- -- 645 -- -- --
Other -- -- 925 -- -- --
----------------------------------------------------------
-- -- -- -- --
----------------------------------------------------------
1,338 -- $26,999 $ 86,161 $64,400
===========================================================
The Company completed the following development project during the first quarter
of 1998 (dollars in thousands, except cost per home):
Development Estimated
No. Apt. Costs Development Cost Date of % Leased
Property Location Homes to Date Cost Per Home Completion at 3/31/98
- --------------------------------------------------------------------------------------------------------------------------
Additional Phases
Oak Forest II* Dallas, TX 260 $11,775 $13,375 $51,400 1Q98 79%
============================================
* Oak Forest has been substantially completed, although some costs associated
with development were still outstanding as of March 31, 1998.
During 1998, the Company expects to start another 1,700 apartment homes in five
different markets, investing approximately $100 million on the development of
new apartment communities and additional phases to existing communities which
are anticipated to provide stabilized returns on investment exceeding 10%.
Capital Expenditures
During the first quarter of 1998, the Company invested $12.5 million on capital
improvements to its apartment portfolio. During this period, capitalized
expenditures averaged $752 per home (on an annualized basis) for all apartment
homes acquired prior to 1996. Capital expenditures for the full year 1998 are
expected to be at or below 1997 levels.
Disposition of investments
In an effort to upgrade its apartment portfolio, the Company continually
undertakes portfolio review analyses with the objective of identifying
properties that no longer meet the Company's investment objectives due to size,
location, age, quality and/or performance. Since the Company began its
disposition program in the second half of 1997, approximately $200 million of
real estate owned has been sold. These sales will allow the Company to reduce
the age of its existing portfolio, which should result in lower operating
expense and capital expenditure growth associated with the older properties. The
Company intends to sell approximately $75 million of communities each quarter
until the end of the year, at which time it is believed the majority of the
disposition program will be complete. The sales are initially dilutive to
earnings as the initial returns on investment on higher quality apartments are
approximately 100 to 125 basis points lower than the return on investment on the
communities being sold. The net proceeds from these sales will be primarily used
to acquire apartment communities that will provide higher long term returns on
investment than the communities being sold.
On January 20, 1998, the Company sold a portfolio of five apartment communities
containing 2,406 apartment homes, which had a weighted average age of 21 years
for an aggregate sales price of $65.6 million. The transaction was structured to
qualify as a like-kind exchange under Section 1031 of the Internal Revenue Code,
so the related capital gain will be deferred for federal income tax purposes.
These five communities, all located in Texas, were acquired on December 31, 1996
in connection with the South West Property Trust Inc. Merger ("South West
Merger"), and accordingly, no significant gain or loss was recorded for
financial reporting purposes.
On April 24, 1998, the Company sold a portfolio of eleven Southeast apartment
communities located in the Southeast containing 2,303 homes, which had a
weighted average age of 24 years for an aggregate sales price of $69.4 million.
For income tax purposes, eight of the eleven communities sold were structured to
qualify as a tax deferred exchange so that the related capital gain will be
deferred. The Company will realize an approximate $20 million gain on the sale
for financial reporting purposes in the second quarter of 1998.
Financing Activities
Net cash provided by financing activities during the three months ended March
31, 1998 was $53.5 million compared to $85.2 million for the same period last
year.
Cash provided by financing activities
During the first quarter of 1998, the Company entered into two separate
transactions to sell its common stock to Unit Investment Trust's ("UIT"). In
February 1998, the Company issued 1.7 million shares of its common stock at a
gross sales price of $14.31 per share to a UIT. In March 1998, the Company
issued 1.1 million shares of its common stock at a gross sales price of $14.19
to a second UIT. The net proceeds from the two UIT's aggregating $38.0 million
were primarily used to curtail bank debt.
The Company issued 945,921 shares of its common stock and received $12.9 million
under its Dividend Reinvestment and Stock Purchase Plan (the "Plan") during the
first quarter of 1998 which included $9.8 million in optional cash investments
and $3.1 million of reinvested dividends.
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. However, acquisition activity is expected to be funded
primarily with the proceeds from the sales of apartment communities.
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.
For the three months ended March 31, 1998, FFO increased 14.3% to $32.9 million,
compared with $28.8 million for the same period last year. The increase in FFO
was principally due to the increased net rental income from the Company's
non-mature apartment homes acquired and developed subsequent to January 1, 1997.
Three Months Ended
March 31,
(in thousands)
----------------------------
1998 1997 % Change
----------------------------
Calculation of funds from operations:
Income before gains on sales of investments and minority
interest of unitholders in operating partnership $ 17,578 $15,024 17.0%
Adjustments:
Real estate depreciation 20,928 16,162 29.5%
Dividends to preferred shareholders (5,650) (2,428) 132.7%
-----------------------------
Funds from operations $ 32,856 $28,758 14.3%
=============================
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, mature and non-mature. For the 1998 versus 1997 comparison,
these communities are as follows: (i) mature--those communities acquired,
developed and stabilized prior to January 1, 1997 and held throughout both the
first quarter of 1998 and 1997 and (ii) non-mature--those communities acquired,
developed or sold subsequent January 1, 1997.
The Company's apartment operations are divided into four geographic regions,
each of which constitutes a core operating unit. Based on the total number
apartment homes, the Northern Region constitutes 29.4% of the Company's
apartment portfolio and includes Delaware, Maryland, Virginia and northern North
Carolina. The Southern Region constitutes 22.0% of the Company's portfolio and
includes Charlotte, North Carolina, South Carolina, Georgia, Tennessee and
Alabama. The Florida Region includes the entire state of Florida or 14.9% of the
Company's apartment portfolio, while the Western Region constitutes 33.7% of the
Company's apartment portfolio and includes Texas, Arkansas, Oklahoma, Nevada,
New Mexico, Arizona and Washington.
For the three months ended March 31, 1998, the Company reported increases over
the same period last year in rental income, income before gains on sales of
investments and minority interest of unitholders in operating partnership and
net income. The non-mature apartment homes provided a substantial portion of the
aggregate reported increases. However, compared to the same period last year,
net income available to common shareholders decreased $3.2 million at quarter
end March 31, 1998, with corresponding decreases of $.04 for basic and diluted
earnings per share, respectively. Net income available to common shareholders
for the first quarter of 1997 included a $2.1 million gain ($.02 per share) on
the sale of investments, while no such gains were recorded in the current
quarter. Additionally, net income available to common shareholders for the first
quarter of 1998 was reduced by $3.2 million ($.03 per share) of dividends to
holders of the Company's Series B preferred stock, issued in May 1997.
All Apartment Communities
The operating performance of the Company's 264 apartment communities with 70,057
apartment homes for the three months ended March 31, 1998 and 217 apartment
communities with 58,473 apartment homes for the three months ended March 31,
1997, respectively, is summarized in the chart below (dollars in thousands):
1998 1997 % Change
-----------------------------------
Property rental income $ 103,865 $ 89,217 16.4%
Property operating expenses (excluding
depreciation and amortization) (40,872) (37,380) 9.3%
----------------------------------
Property operating income $ 62,993 $ 51,837 21.5%
==================================
Weighted average number
of apartment homes 63,005 56,288 11.9%
Physical occupancy 91.3% 91.4% (0.1%)
Due to the acquisition and development of 19,270 apartment homes since January
1, 1997, the weighted average number of apartment homes increased 11.9% to
63,005 for the three months ended March 31, 1998, which resulted in significant
increases in property rental income and property operating expenses.
Mature Apartment Communities
The operating performance for the Company's 192 mature apartment communities
with 50,787 apartment homes for the three months ended March 31, 1998 is
summarized in total and by geographic region below (dollars in thousands):
Total Mature Operating Performance
<CAPTION
1998 1997 % Change
------------------------------------------
Property rental income $ 84,568 $ 81,425 3.9%
Property operating expenses (excluding
depreciation and amortization) (32,931) (33,853) (2.7%)
------------------------------------------
Property operating income $ 51,637 $ 47,572 8.5%
==========================================
Physical occupancy 92.4% 91.9% 0.5%
Average monthly rents $ 590 $ 569 3.5%
Mature Operating Performance (By Geographic Region)
North South Florida
1998 1997 1998 1997 1998 1997
------------------- ----------------------- -------------------
Property rental income $ 31,219 $ 30,500 $ 19,619 $ 18,738 $ 15,759 $ 14,985
Property operating
expenses (excluding
depreciation and amortization) (11,005) (11,592) (8,236) (8,368) (6,463) (6,865)
------------------- ----------------------- -------------------
Property operating income $ 20,214 $ 18,908 $ 11,383 $ 10,370 $ 9,296 $ 8,120
=================== ======================== ==================
Physical occupancy 90.8% 91.9% 92.6% 89.6% 94.8% 93.7%
Average monthly rents $ 604 $ 582 $ 552 $ 538 $ 615 $ 590
West Total
1998 1997 1998 1997
---------------------- ---------------------
Property rental income $ 17,971 $ 17,202 $ 84,568 $ 81,425
Property operating
expenses (excluding
depreciation and amortization) (7,227) (7,028) (32,931) (33,853)
---------------------- ---------------------
Property operating income $ 10,744 $ 10,174 $ 51,637 $ 47,572
====================== ====================
Physical occupancy 93.1% 92.8% 92.4% 91.9%
Average monthly rents $ 588 $ 568 $ 590 $ 569
For the three months ended March 31,1998, the Company's mature communities
provided approximately 81.4 % of the Company's property rental income and 82.0%
of its property operating income. During 1998, the Company's mature apartment
communities continued to generate strong rent growth. Compared to the same
period last year, total rental income from these apartment homes grew 3.9%, or
approximately $3.1 million, reflecting an increase in average monthly rents of
3.5% to $590 per month. In part, the increase in rental income was a result of
the Company's initiative and upgrade programs that have allowed the Company to
increase average monthly rents above the rate of inflation. In addition,
physical occupancy rose 0.5% to 92.4%, reflecting the recovery of certain major
southeastern markets that had experienced declines in early 1997. The Company
expects to maintain rent growth in the 3 1/2% to 4% range and economic occupancy
in the 92% range during the remainder of 1998. The majority of the Company's
apartment markets are in balance, providing stable occupancy and rent growth,
however, occupancy in several markets is expected to experience some softness
later during 1998.
For the three months ended March 31, 1998, property operating expenses at these
communities decreased 2.7%, or $0.9 million, resulting in a decrease in the
operating expense ratio of 2.6% to 38.9%. This decline is primarily the result
of two factors: (i) lower utility expenses directly attributable to the
Company's water sub-metering initiative and (ii) overall decreases in repairs
and maintenance and other operating expenses. The decreases in repairs and
maintenance and other operating expenses occurred as the Company has begun to
benefit from its upgrade program. In addition, the Company has taken advantage
of economies of scale due to its increased size and centralized purchasing. The
Company's objective is to maintain rental expense growth below the 2% range
during the remainder of 1998.
Non-Mature Communities
The operating performance for the three months ended March 31, 1998 for the
Company's 72 non-mature apartment communities with 19,270 apartment homes is
summarized in the chart below (dollars in thousands):
Sales Development
1997 Acquisitions 1998 Acquisitions Properties Properties Total Non-Mature
1998 1997 1998 1997 1998 1997 1998 1997 1998 1997
----------------- --------------------- ------------------ -------------------- ---------------------
Property rental income $13,939 $1,102 $ 2,938 $ -- $ 700 $ 6,361 $ 1,720 $ 329 $ 19,297 $ 7,792
Property operating
expenses (excluding
depreciation and
amortization) (5,855) (316) (926) -- (436) (3,108) (724) (103) (7,941) (3,527)
----------------- -------------------- ------------------ -------------------- --------------------
Property operating
income $ 8,084 $ 786 $ 2,012 $ -- $ 264 $ 3,253 $ 996 $ 226 $ 11,356 $ 4,265
================= ==================== ================== ==================== ====================
For the three months ended March 31, 1998, the Company's non-mature apartment
communities provided approximately 18.6% of the Company's property rental and
other income and 18.0% of its property operating income. For the quarter ended
March 31, 1998, these communities had physical occupancy of 86.8% (including
Development Properties undergoing lease-up) and an operating margin of 58.8%.
1997 Acquisitions
The 27 apartment communities containing 8,524 apartment homes (net of one
resold) included in this category had average monthly rental rates of $594,
physical occupancy of 90.2% and an operating margin of 58.0% for the first
quarter of 1998. The first year return on investment for these communities for
the three months ended March 31, 1998, on an average investment of approximately
$345 million, was 9.3% which approximates the Company's initial estimates.
1998 Acquisitions
Included in this category are the following: (i) the six communities with 2,076
apartment homes acquired by the Company during the first quarter of 1998 which
are projected to have a first year return on investment in the 9 1/2% range and
(ii) the 39 communities with 7,550 apartment homes included in the ASR portfolio
acquired on March 27, 1998 which are projected to have a first year return on
investment in the 9% range. These communities did not have a material impact on
the first quarter 1998 results of operations, primarily since the ASR
communities were owned for only 4 days during the first quarter of 1998.
Sales
Included in this category are the 17 communities with 4,976 apartment homes sold
as part of the Company's disposition program (see Disposition of investments
under Liquidity and Capital Resources) since January 1, 1997 (five communities
with 2,406 apartment homes were sold during the first quarter of 1998). These
communities did not have a material impact on the first quarter 1998 results of
operations.
Development
This represents the 1,120 homes developed at various times since January 1,
1997. These communities did not have a material impact on the first quarter 1998
results of operations.
Real Estate Depreciation
Real estate depreciation increased $4.8 million or 29% for the three months
ended March 31, 1998 over the same period last year. This increase is directly
attributable to the addition of depreciable real estate assets as a result of
the Company's acquisition, development and capital expenditure programs.
Interest Expense
Interest expense increased $3.7 million for the three months ended March 31,
1998 over the same period last year. The weighted average amount of debt
employed during the first three months of 1998 was higher than it was for the
same period during 1997 ($1.2 billion in 1998 versus $1.0 billion in 1997). The
weighted average interest rate on this debt was slightly higher than it was
during the same period last year, rising from 7.3% in 1997 to 7.4% in 1998. For
the three months ended March 31, 1998 and 1997, total interest capitalized was
$536,000 and $479,000, respectively.
General and Administrative
During the three months ended March 31, 1998, general and administrative
expenses increased by $330,000 or 18.0% over the same period last year due to
the increased size of the Company. In 1998, the Company incurred increases in
most of its general and administrative expense categories, as it invested
heavily in its personnel and technological infrastructure as part of a strategic
plan to position the Company for future growth. Despite the significant
improvement of its infrastructure, the Company has been able to keep general and
administrative expenses flat year over year as a percentage of rental income.
Inflation
The Company believes that the direct effects of inflation on the Company's
operations have been inconsequential.
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 12, 1998, the Company held its Annual Meeting of Shareholders. A
total of 76,312,225 shares of common stock, representing 83% of the shares
outstanding and entitled to vote as of the March 12, 1998 record date were
presented 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 75,219,483 shares, representing 81.9% of the total number of shares
entitled to vote at the meeting and 98.6% of the shares voted: Jeff C. Bane,
R. Toms Dalton, James Dolphin, Jon A. Grove, Barry M. Kornblau, John P.
McCann, H. Franklin Minor, Lynne B. Sagalyn, Mark J. Sandler, Robert W.
Scharar, John S. Schneider and C. Harmon Williams, Jr.
The 1985 Stock Option Plan (the "Plan") was amended as follows: (i)
limit the number of shares of Common Stock issuable on the exercise of options
outstanding at any time to 8% of the number of Common Stock issued and
outstanding at that time, subject to a maximum aggregate limit of shares that
may be issued upon the exercise of options granted under the Plan to 10,000,000,
and (ii) allow optionees to pay the exercise price of the options in
installments. The 1985 Stock Option Plan amendments received shares,
representing 44.9% of the total number of shares entitled to vote at the meeting
and 82.9% of the shares voted.
The proposal to amend the Articles of Incorporation (the "Articles") to
create a new class of equity security (Classified Common Stock) was defeated.
With respect to the proposed amendments to the Articles to conform the voting
rights of the Preferred Shareholders to the NYSE Listing manual - the meeting
was adjourned to a date to be determined no later than July 31, 1998, as a
quorum of preferred shareholders was not present.
Item 5. OTHER INFORMATION
None
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 March 27, 1998 was filed with the Commission on April
13, 1998. The filing reported the merger of ASR Investment Corporation
into a wholly-owned subsidiary of the Company on March 27, 1998
A Form 8-K dated February 17, 1998 was filed with the Commission on
February 17, 1998. The filing contained the Pro Forma Financial
Statements of the Company for the nine months ended September 30, 1997
and the twelve months ended December 31, 1996.
A Form 8-K dated February 13, 1998 was filed with the Commission on
February 13, 1998. The filing reported the Results of Operations of the
Company for the twelve months and quarter ended December 31, 1997.
A Form 8-K dated January 27, 1998 was filed with the Commission on
February 4, 1998. The filing contained the Rights Agreement between the
Company and ChaseMellon Shareholder Services, LLC.
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
- ------- -------------------------------- --------------------------------------
1(a) Underwriting Agreement dated Filed herewith.
February 18, 1998, between the
Company and A.G. Edwards & Sons, Inc.
1(b) Underwriting Agreement dated Filed herewith.
March 24, 1998 between the
Company and Wheat, First Securities, Inc.
2(a) Agreement and Plan of Merger dated Exhibit 2(a) to the Company's Form S-4 Registration
as of December 19, 1997, between Statement (Registration No. 333-45305) filed with
the Company, ASR Investment the Commission on January 30, 1998.
Corporation and ASR Acquisition Sub,
Inc.
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(b) to the Company's Form S-3 Registration
Statement (Registration No. 333-44463)
filed with the Commission on January 16, 1998.
3(a)(i) Amendment of Articles of Exhibit 3 to the Company's Form 8-A
Incorporation Registration Statement dated February 4,
1998.
3(b) Restated By-Laws Exhibit 3(b) to the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1997.
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(i)(c) Form of Certificate for Shares
of 8.60% Series B Cumulative Exhibit 1(e) to the Company's Form 8-A
Redeemable Preferred Stock Registration Statement dated June 11, 1997.
<CAPTION
4(i)(d) Rights Agreement dated as of Exhibit 1 to the Company's Form 8-A
January 27, 1998, between the Company Registration Statement dated February 4, 1998.
and ChaseMellon Shareholder
Services, L.L.C., as Rights Agent.
4(i)(e) Form of Rights Certificate
Exhibit 4(e) to the Company's Form 8-A
Registration Statement dated February 4, 1998.
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
10(i) Employment Agreement between Exhibit 10(v)(i) 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 the Company'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(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(iv) 1985 Stock Option Plan, Exhibit 10(vii) to the Company's Quarterly
as amended. Report on Form 10-Q for the quarter ended
March 31, 1997.
10(v) 1991 Stock Purchase and Loan Exhibit 10(viii) to the Company's Quarterly Report
Plan. on Form 10-Q for the quarter ended March 31, 1997.
10(vi) Second Amended and Restated Exhibit 10(ix) to the Company's Quarterly Report on
Agreement of Limited Partnership of Form 10-Q for the quarter ended September 30,1997.
United Dominion Realty, L.P.
Dated as of August 30, 1997.
10(vi)(a) Subordination Agreement dated Filed herewith.
April 16, 1998, between the
Company and United Dominion
Realty, L.P.
12 Computation of Ratio of Earnings Filed herewith.
to Fixed Charges.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the registrant has duly caused this Quarterly Report to be signed
on its behalf by the undersigned, thereunto duly authorized.
United Dominion Realty Trust, Inc.
- ----------------------------------
(registrant)
Date: May 15, 1998 /s/ James Dolphin
- ------------------------------------ -----------------
James Dolphin
Executive Vice President and Chief
Financial Officer