EXHIBIT 99.1
Contact: Janie Maddox
Post Properties, Inc.
(404) 846-5056
POST PROPERTIES ANNOUNCES FOURTH QUARTER EARNINGS
Investor/Analyst Conference Call Scheduled for February 10, 2004 at
10:00 a.m. EST
ATLANTA, February 9, 2004 - Post Properties, Inc. (NYSE: PPS) announced today
net income available to common shareholders of $5.8 million for the fourth
quarter of 2003, compared to $9.6 million for the fourth quarter of 2002. On a
diluted per share basis, net income available to common shareholders was $0.15
for the fourth quarter of 2003, compared to $0.26 for the fourth quarter of
2002.
For the year ended December 31, 2003, net income available to common
shareholders was $2.7 million, compared to $49.3 million for the year ended
December 31, 2002. On a diluted per share basis, net income available to common
shareholders was $0.07 for the full year of 2003, compared to $1.33 in 2002.
Excluding severance and proxy charges, net income available to common
shareholders totaled $26.6 million, or $0.71 per diluted share, for the year
ended December 31, 2003. A reconciliation of net income available to common
shareholders to net income available to common shareholders, excluding severance
and proxy charges is included in the financial data (Table 1) accompanying this
press release.
The company uses the National Association of Real Estate Investment Trusts
(NAREIT) definition of Funds from Operations (FFO) as an operating measure of
the company's financial performance.
FFO for the fourth quarter of 2003 totaled $19.8 million, or $0.47 per diluted
share, compared to $23.7 million, or $0.56 per diluted share, for the fourth
quarter of 2002. Excluding asset impairment charges, FFO for the fourth quarter
of 2002 was $25.6 million, or $0.61 per diluted share. FFO for the fourth
quarter of 2003 was consistent with management's previously issued estimates.
For the year ended December 31, 2003, FFO totaled $40.0 million, or $0.95 per
diluted share, compared to $98.9 million, or $2.35 per diluted share, for the
year ended December 31, 2002. Excluding severance, proxy and asset impairment
charges, FFO for the year ended December 31, 2003, totaled $84.2 million, or
$2.00 per diluted share, compared to $110.2 million, or $2.62 per diluted share,
for the year ended December 31, 2002. In October 2003, NAREIT clarified the
definition of FFO to include impairment losses. As such, prior period and prior
year presentations of FFO above have been restated to conform with the revised
NAREIT definition of FFO. Additionally, for the year ended December 31, 2002,
FFO has been restated from the prior year presentation to reflect a reduction of
$0.1 million for early debt extinguishment costs reclassified from extraordinary
items to operating expenses under SFAS No. 145. A reconciliation of FFO to GAAP
net income is included in the financial data (Table 2) accompanying this press
release.
Total revenues from continuing operations were $72.9 million for the fourth
quarter of 2003, compared to $72.2 million for the fourth quarter of 2002. For
the year ended December 31, 2003, total revenues from continuing operations were
$290.4 million, compared to $287.3 million in 2002.
Said David P. Stockert, Post's CEO and President, "Operating results for the
fourth quarter met our expectations, with ongoing signs of stabilizing market
conditions. We are positioning our business to
take advantage of the recovery as we continue to shape the portfolio, strengthen
the balance sheet and build the management team and the independent board."
MATURE COMMUNITY DATA
For the fourth quarter of 2003, average economic occupancy at the company's 53
mature (same store) communities, containing 19,646 apartment units, was 93.2%,
compared to 90.9% for the fourth quarter of 2002. For the year ended December
31, 2003, average economic occupancy for these mature communities was 91.9%,
compared to 91.0% in 2002.
Total revenues for the mature communities decreased 1.8% during the fourth
quarter of 2003, compared to the fourth quarter of 2002, and operating expenses
increased 3.9%, resulting in a 4.6% decline in same store net operating income
(NOI), or $1.7 million ($0.04 per diluted share). For the year ended December
31, 2003, total revenues for the mature communities decreased 3.4% compared to
2002, while operating expenses increased 1.6%, resulting in a 6.1% decline in
same store NOI, or $9.1 million ($0.22 per diluted share).
On a sequential basis, same store NOI increased by 0.5%, or $0.2 million ($0.005
per diluted share) during the fourth quarter of 2003, compared to the third
quarter of 2003. Total revenues for the mature communities decreased 1.6% and
operating expenses decreased 5.4%, between periods. For the fourth quarter of
2003, average economic occupancy was 93.2% compared to 93.1% for the third
quarter of 2003.
Same store NOI is a supplemental non-GAAP financial measure. A reconciliation of
same store NOI to the comparable GAAP financial measure is included in the
financial data (Table 3) accompanying this press release. Same store NOI by
market data is also included in the financial data (Table 4) accompanying this
press release.
ASSET SALES AND CAPITAL REINVESTMENT STRATEGY; REDEMPTION OF 7 5/8% SERIES C
PREFERRED STOCK
During the fourth quarter of 2003, the company sold two apartment communities,
realizing net proceeds of approximately $63 million. For the year ended December
31, 2003, the company sold five apartment communities (one held in a joint
venture) and various land parcels and realized net proceeds of approximately
$238 million (including the repayment of a joint venture loan of approximately
$59 million made in connection with the development of one of the five
properties). For the year ended December 31, 2003, the company realized GAAP
accounting gains on the sale of these five properties and land parcels of
approximately $35 million, and economic gains on property sales (before
accumulated depreciation and write-downs for asset impairment charges) of
approximately $4 million. A reconciliation of GAAP accounting gains on property
sales to economic gains on property sales is included in the financial data
(Table 6) accompanying this press release.
In connection with its previously announced asset sales program, the company
expects to sell nine additional apartment communities for expected sales prices
totaling approximately $276 to $280 million. This asset sales program, which the
company currently expects to complete in the first and second quarters of 2004,
is consistent with an overall strategy to take advantage of high demand for
apartment assets, reduce the average age of the portfolio and lessen the
company's market concentration in Atlanta, GA and Dallas, TX. During 2003, the
company also exited certain single asset markets, including the Austin, TX,
Pasadena, CA and Phoenix, AZ markets, as it focuses on fewer markets where the
company can achieve operating efficiencies and leverage the Post(R) brand.
The apartment communities currently held for sale include six properties in
Atlanta, GA, two properties in Dallas, TX and one property in Orlando, FL. In
connection with the sale of six of these properties (five in Atlanta, GA and one
in Orlando, FL), the company expects that the purchaser will acquire those
properties subject to a combined total of approximately $119 million of
tax-exempt bond financing.
Total estimated gross proceeds from the company's asset sales program over the
past four years, including the nine properties currently held for sale, is
expected to exceed $1 billion.
The company intends to use the proceeds of its asset sales program for various
corporate purposes, which may include preferred equity redemptions, common
equity repurchases and debt reductions intended to maintain the strength of the
company's balance sheet, combined with reinvestment in developments and
acquisitions that enhance the diversification of the company's cash flow stream
and the quality of its portfolio. In this regard, the company recently announced
its intention to redeem its 7-5/8% Series C Cumulative Redeemable Preferred
Shares totaling $50 million, plus accrued and unpaid dividends, on March 5,
2004.
Said Mr. Stockert, "We continue to pursue an aggressive program of asset sales
designed to take advantage of high demand for apartment properties in an
environment of strong capital flows and low cap rates to realize the value of
our assets, while repositioning our portfolio over time to produce more
diversified and stable cash flow and improve its overall quality. We are also
committed to utilizing sales proceeds in ways that strengthen our balance sheet
and drive long-term value for our shareholders."
With respect to the nine asset sales planned in 2004, the company expects to
realize GAAP accounting gains of approximately $136 million to $140 million and
economic gains on property sales (before accumulated depreciation and
write-downs for asset impairment charges) of approximately $58 million to $62
million. A reconciliation of GAAP accounting gains on property sales to economic
gains on property sales is included in the financial data (Table 6) accompanying
this press release. The company also expects to realize taxable capital gains in
2004 from these sales totaling approximately $102 million to $106 million. The
company expects to be able to use its regular quarterly dividend of 45 cents per
share, as well as other tax planning strategies, to pay out or otherwise
mitigate the impact of these taxable capital gains. Although the company does
not currently have plans to do so, the company may also evaluate a special
dividend.
In addition, upon issuance of the Series C Preferred Shares in February 1998,
the company incurred approximately $1.7 million in issuance costs and recorded
such costs as a reduction of shareholders' equity. The redemption price of the
Series C Preferred Shares exceeds the related carrying value by the
approximately $1.7 million of issuance costs. Upon redemption in the first
quarter of 2004, in accordance with GAAP, the company will reflect the
approximately $1.7 million of issuance costs as a reduction of earnings in
arriving at both net income available to common shareholders and funds from
operations available to common shareholders.
FINANCING ACTIVITY; REFINANCING OF UNSECURED LINE OF CREDIT
Upon their maturity on October 1, 2003, the company repaid $100 million of its
7.25% unsecured notes, using borrowings under its unsecured line of credit.
During the fourth quarter of 2003, the company closed a 5-year mortgage loan on
its Post Biltmore(TM) property located in Atlanta, GA. The loan bears interest
at a rate of 4.04% per annum and matures on
December 10, 2008. Post Biltmore(TM) is owned in an unconsolidated joint venture
with the New York State Common Retirement Fund.
In January 2004, the company closed a $350 million, three-year unsecured
revolving line of credit facility that matures in January 2007. The new
revolving credit facility reflects a $30 million increase in Post's borrowing
capacity over its prior facility. The new facility currently bears an interest
rate of 90 basis points over the London Interbank Offered Rate (LIBOR) and was
provided by a syndicate of nine banks. This facility replaces Post's previous
revolving line of credit facility which was scheduled to mature in April 2004.
As of February 6, 2004, the company had approximately $70 million outstanding
under this new credit facility.
During 2003, the company used a portion of its net proceeds from asset sales to
reduce leverage and strengthen the balance sheet. Total debt as a percentage of
undepreciated real estate assets (adjusted for joint venture partners' share of
debt) declined from 47.1% at December 31, 2002 to 43.7% at December 31, 2003.
Total debt and preferred shares and units as a percentage of undepreciated
assets (adjusted for joint venture partners' share of debt) also declined from
54.8% at December 31, 2002 to 51.8% at December 31, 2003. A computation of debt
ratios and reconciliation of the ratios to the appropriate GAAP measures in the
company's financial statements is included in the financial data (Table 5)
accompanying this press release.
BOARD AND SENIOR MANAGEMENT CHANGES
The company announced recently that Douglas Crocker II, formerly Trustee,
President, Chief Executive Officer and Vice Chairman of Equity Residential, and
Walter M. "Sonny" Deriso, Jr., Vice Chairman of Synovus, will be standing for
election to the company's Board of Directors. Mr. Crocker and Mr. Deriso are
expected to join the Board when directors are elected at the company's Annual
Meeting of Shareholders on May 27, 2004. The company also announced that John T.
Glover and Robert L. Anderson have decided not to stand for re-election as
directors when their terms expire at the 2004 Annual Meeting of Shareholders.
In addition, on November 5, 2003, Nicholas B. Paumgarten, Managing Director at
J.P. Morgan Chase & Co. and Chairman of J.P. Morgan Corsair II Capital Partners,
L.P., was appointed to the company's Board of Directors. On December 1, 2003,
Christopher J. Papa joined the company as Executive Vice President and Chief
Financial Officer.
OUTLOOK
The estimates presented below are forward-looking and are based on current
apartment market and general economic conditions and other risks outlined below.
Management believes that the company's net loss per diluted share for the first
quarter of 2004 will be in a range of $0.03 to $0.05. Management is currently
expecting to close the sale of one asset in the first quarter of 2004.
Management believes that the company's FFO per share for the first quarter of
2004 will be in a range of $0.39 to $0.41, or $0.43 to $0.45, excluding charges
for the preferred stock issuance costs discussed above. Management's estimates
of per share FFO for the first quarter of 2004, excluding charges for preferred
stock issuance costs, are based on the following assumptions: seasonally lower
same store NOI, as compared to same store NOI for the fourth quarter of 2003,
due primarily to increased property operating expenses; dilution from the sale
of two assets completed in the fourth quarter of 2003, the proceeds of which
were used primarily to pay down short-term floating rate debt; the previously
announced redemption of the company's 7 5/8% Series C Cumulative Redeemable
Preferred Shares on March 5, 2004; and modestly increased general and
administrative expenses. A reconciliation of projected net loss per diluted
share to
projected FFO per diluted share for the first quarter of 2004 is included in the
financial data (Table 7) accompanying this press release.
SUPPLEMENTAL FINANCIAL DATA
The company also produces Supplemental Financial Data that includes detailed
information regarding the company's operating results and balance sheet. This
Supplemental Financial Data is considered an integral part of this earnings
release and is available on the company's website. The company's earnings
release and the Supplemental Financial Data is available through the company's
web site at
"http://www.postproperties.com/posthome.nsf/ExtList/2003-4QFinancials".
The ability to access the attachments on the company's web site requires the
Adobe Acrobat 4.0 Reader, which may be downloaded at
http://www.adobe.com/products/acrobat/readstep.html.
NON-GAAP FINANCIAL MEASURES AND OTHER DEFINED TERMS
The company uses certain non-GAAP financial measures and other defined terms in
this press release and in its Supplemental Financial Data available on the
company's website. The non-GAAP financial measures include FFO, FAD, net
operating income, same store capital expenditures, net income, FFO and FAD
excluding certain accounting charges, certain debt statistics and ratios and
economic gains on property sales. The definitions of these non-GAAP financial
measures are summarized below and on page 21 of the Supplemental Financial Data.
The company believes that these measures are helpful to investors in measuring
financial performance and/or liquidity and comparing such performance and/or
liquidity to other REITS.
FUNDS FROM OPERATIONS - The company uses FFO as an operating measure. The
company uses the NAREIT definition of FFO. FFO is defined by NAREIT to mean
net income (loss) available to common shareholders determined in accordance
with GAAP, excluding gains (or losses) from extraordinary items and sales
of property, plus depreciation and amortization of real estate assets, and
after adjustment for unconsolidated partnerships and joint ventures all
determined on a consistent basis in accordance with GAAP. In October 2003,
NAREIT issued additional guidance modifying the definition of FFO. The
first modification revised the treatment of asset impairment losses and
impairment losses incurred to write-down assets to their fair value at the
date assets are classified as held for sale, to include such losses in FFO.
Previously, such losses were excluded from FFO consistent with the
treatment of gains and losses on property sales. The second modification
clarified the treatment of original issue costs and premiums paid on
preferred stock redemptions to deduct such costs and premiums in
determining FFO available to common shareholders. This modification was
consistent with the recently clarified treatment of these costs under GAAP.
The company adopted the modifications to the definition of FFO effective
with its reported results for the third quarter of 2003. Prior period and
prior year presentations of FFO have been restated to conform with the
revised definition of FFO. FFO presented in the company's press release and
Supplemental Financial Data is not necessarily comparable to FFO presented
by other real estate companies because not all real estate companies use
the same definition. The company's FFO is comparable to the FFO of real
estate companies that use the current NAREIT definition.
Accounting for real estate assets using historical cost accounting under
GAAP assumes that the value of real estate assets diminishes predictably
over time. NAREIT stated in its April 2002 White Paper on Funds from
Operations that "since real estate asset values have historically risen or
fallen with market conditions, many industry investors have considered
presentations of operating results for real estate companies that use
historical cost accounting to be insufficient by themselves." As a
result, the concept of FFO was created by NAREIT for the REIT industry to
provide an alternate measure. Since the company agrees with the concept of
FFO and appreciates the reasons surrounding its creation, the company
believes that FFO is an important supplemental measure of operating
performance. In addition, since most equity REITs provide FFO information
to the investment community, the company believes that FFO is a useful
supplemental measure for comparing the company's results to those of other
equity REITs. The company believes that the line on its consolidated
statement of operations entitled "net income available to common
shareholders" is the most directly comparable GAAP measure to FFO. The
company also computes a dividend payout ratio using dividends declared
during the quarter divided by FFO per diluted share in order to provide
investors with one alternate earnings measure to compare the relationship
of FFO to the company's quarterly dividends and distributions.
FUNDS AVAILABLE FOR DISTRIBUTION - The company also uses funds available
for distribution ("FAD") as an operating measure. FAD is defined as FFO
less operating capital expenditures. The company believes that FAD is an
important supplemental measure of operating performance for an equity REIT
because it provides investors with an indication of the REIT's ability to
fund its operating capital expenditures through earnings. In addition,
since most equity REITs provide FAD information to the investment
community, the company believes that FAD is a useful supplemental measure
for comparing the company to other equity REITs. The company believes that
the line on its consolidated statement of operations entitled "net income
available to common shareholders" is the most directly comparable GAAP
measure to FAD. The company also computes a dividend payout ratio using
dividends declared during the quarter divided by FAD per diluted share in
order to provide investors with one alternate earnings measure to compare
the relationship of FAD to the company's quarterly dividends and
distributions.
PROPERTY NET OPERATING INCOME - The company uses property NOI, including
same store NOI and same store NOI by market, as an operating measure. NOI
is defined as rental and other revenues from real estate operations less
total property and maintenance expenses from real estate operations
(exclusive of depreciation and amortization). The company believes that NOI
is an important supplemental measure of operating performance for a REIT's
operating real estate because it provides a measure of the core operations,
rather than factoring in depreciation and amortization, financing costs and
general and administrative expenses generally incurred at the corporate
level. This measure is particularly useful, in the opinion of the company,
in evaluating the performance of geographic operations, same store
groupings and individual properties. Additionally, the company believes
that NOI, as defined, is a widely accepted measure of comparative operating
performance in the real estate investment community. The company believes
that the line on its consolidated statement of operations entitled "income
from continuing operations" is the most directly comparable GAAP measure to
NOI.
SAME STORE CAPITAL EXPENDITURES - The company uses same store recurring and
non-recurring capital expenditures as cash flow measures. Same store
recurring and non-recurring capital expenditures are supplemental non-GAAP
financial measures. The company believes that same store recurring and
non-recurring capital expenditures are important indicators of the costs
incurred by the company in maintaining its same store communities on an
ongoing basis. The corresponding GAAP measures include information with
respect to the company's other operating segments consisting of communities
stabilized in the prior year, lease-up communities, and sold communities in
addition to same store information. Therefore, the company believes that
the company's presentation of same store recurring and non-recurring
capital expenditures is necessary to demonstrate same store
replacement costs over time. The company believes that the most directly
comparable GAAP measure to same store recurring and non-recurring capital
expenditures are the lines on the company's consolidated statements of cash
flows entitled "recurring capital expenditures" and "non-recurring capital
expenditures."
NET INCOME, FFO AND FAD EXCLUDING CERTAIN CHARGES - The company uses net
income, FFO and FAD excluding certain severance, proxy and impairment
charges as operating measures. The company reports net income, FFO and FAD
excluding certain charges as alternative financial measures of core
operating performance. The company believes net income, FFO and FAD before
certain charges are informative measures for comparing operating
performance between periods and for comparing operating performance to
other companies that have not incurred such charges. The company further
believes that charges of the nature incurred in 2003 and 2002 are not
necessarily repetitive in nature and that it is therefore meaningful to
compare operating performance using alternative, non-GAAP measures. In
addition, the company believes the investment and analyst communities
desire to understand the meaningful components of the company's performance
and that these non-GAAP measures assist in providing such supplemental
measures. The company believes that the most directly comparable GAAP
financial measures to each of net income, FFO and FAD, excluding certain
charges, is the line on the company's consolidated statements of operations
entitled "net income available to common shareholders." The company
computes dividend payout ratios using dividends declared during the quarter
divided by FFO and FAD per diluted share, excluding certain charges in
order to provide investors with alternate earnings measures to compare the
relationship of FFO and FAD, excluding certain charges, to the company's
quarterly dividends and distributions.
DEBT STATISTICS AND DEBT RATIOS - The company uses a number of debt
statistics and ratios as supplemental measures of liquidity. The numerator
and/or the denominator of certain of these statistics and/or ratios include
non-GAAP financial measures that have been reconciled to the most directly
comparable GAAP financial measure. These debt statistics and ratios
include: (1) an interest coverage ratio; (2) a fixed charge coverage ratio;
(3) total debt as a percentage of undepreciated real estate (unadjusted and
adjusted for joint venture partners' share of debt); (4) total debt plus
preferred shares and units as a percentage of undepreciated real estate
(total debt unadjusted and adjusted for joint venture partners' share of
debt); (5) a ratio of consolidated debt to total assets; (6) a ratio of
secured debt to total assets; (7) a ratio of total unencumbered assets to
unsecured debt; and (8) a ratio of consolidated income available to debt
service to annual debt service charge. A number of these debt statistics
and ratios are derived from covenants found in the company's debt
agreements, including, among others, the company's senior unsecured notes.
In addition, the company presents these measures because the degree of
leverage could affect the company's ability to obtain additional financing
for working capital, capital expenditures, acquisitions, development or
other general corporate purposes. The company uses these measures
internally as an indicator of liquidity and the company believes that these
measures are also utilized by the investment and analyst communities to
better understand the company's liquidity.
ECONOMIC GAINS ON PROPERTY SALES - The company uses economic gains on
property sales as a supplemental measure of operating performance. Economic
gains on property sales are defined as gains on property sales in
accordance with GAAP, before accumulated depreciation and any prior period
write-downs for asset impairment charges on such assets. The company
believes economic gains on property sales is an important supplemental
measure to gains on property sales in accordance with GAAP because it
assists investors and analysts in understanding the relationship
between the cash proceeds from the sale of an asset and the cash invested
in that asset. The company believes the line on its consolidated statement
of operations entitled "gains on property sales - discontinued operations"
is the most directly comparable GAAP measure to economic gains on property
sales.
AVERAGE ECONOMIC OCCUPANCY - The company uses average economic occupancy as
a statistical measure of operating performance. The company defines average
economic occupancy as gross potential rent less vacancy losses, model
expenses and bad debt expenses divided by gross potential rent for the
period, expressed as a percentage.
CONFERENCE CALL INFORMATION
The company will hold its quarterly conference call on Tuesday, February 10,
2004, at 10 a.m. EST. The telephone numbers are 1-800-881-7286 for domestic
calls and 913-981-4902 for international callers. The access code is 218677. The
conference call will be open to the public and can be listened to live on Post's
web site at www.postproperties.com under Corporate Information/Investor Info.
The replay will begin at 1:00 p.m. EST on February 10, and will be available
until Monday, February 16, 2004, at 11:59 p.m. EST. The telephone numbers for
the replay are 1-888-203-1112 for domestic callers and 719-457-0820 for
international callers. The access code for the replay is 218677. A replay of the
call also will be available through Wednesday, March 31, 2004, on Post's web
site. The financial and statistical information that will be discussed on the
call is contained in this press release and the Supplemental Financial Data.
Both documents will be available on the company's website at
"http://www.postproperties.com/posthome.nsf/ExtList/2003-4QFinancials" prior to
the quarterly conference call.
Post Properties, Inc., a leading developer and operator of upscale apartment
communities in the United States, pioneered building and branding resort-style
garden apartments for more than 30 years. Post now also focuses on the creation
of high-quality, high-density, live-work-walk neighborhoods in infill locations
in major urban markets. The company has been recognized locally, nationally and
internationally for building better neighborhoods and the preservation of
historic buildings. Operating as a self-administered and self-managed equity
real estate investment trust (REIT), the company's primary business consists of
developing and managing Post(R) brand-name apartment communities.
Nationwide, Post Properties owns approximately 28,081 apartment homes in 72
communities, including 468 units currently in lease-up.
FORWARD LOOKING STATEMENT:
Certain statements made in this press release and other written or oral
statements made by or on behalf of the company, may constitute "forward-looking
statements" within the meaning of the federal securities laws. Statements
regarding future events and developments and the company's future performance,
as well as management's expectations, beliefs, plans, estimates or projections
relating to the future, are forward-looking statements within the meaning of
these laws. Examples of such statements in this press release include the
company's anticipated asset sales during the first half of 2004 (including the
estimated proceeds, estimated gains on sales and the use of proceeds from such
sales) and the company's projected net income per diluted share and projected
FFO per diluted share for the first quarter of 2004. All forward-looking
statements are subject to certain risks and uncertainties that could cause
actual events to differ materially from those projected. Management believes
that these forward-looking statements are reasonable; however, you should not
place undue reliance on such statements.
These statements are based on current expectations and speak only as of the date
of such statements. The company undertakes no obligation to publicly update or
revise any forward-looking statement, whether as a result of future events, new
information or otherwise.
The following are some of the factors that could cause the company's actual
results to differ materially from the expected results described in the
company's forward-looking statements: future local and national economic
conditions, including changes in job growth, interest rates, the availability of
financing and other factors; demand for apartments in the company's markets and
the effect on occupancy and rental rates; the impact of competition on the
company's business, including competition for tenants and development locations;
the company's ability to obtain financing or self-fund the development or
acquisition of additional apartment communities; the uncertainties associated
with the company's current and planned future real estate development, including
actual costs exceeding the company's budgets or development periods exceeding
expectations; uncertainties associated with the timing and amount of asset sales
and the resulting gains/losses associated with such asset sales; conditions
affecting ownership of residential real estate and general conditions in the
multi-family residential real estate market; the effects of changes in
accounting policies and other regulatory matters detailed in the company's
filings with the Securities and Exchange Commission and uncertainties of
litigation; and the company's ability to continue to qualify as a real estate
investment trust under the Internal Revenue Code. Other important risk factors
regarding the company are included under the caption "Risk Factors" in the
company's Annual Report on Form 10-K for the year ended December 31, 2002 and
may be discussed in subsequent filings with the SEC. The risk factors discussed
in such Form 10-K under the caption "Risk Factors" are specifically incorporated
by reference into this press release.
FINANCIAL HIGHLIGHTS
(Unaudited; in thousands, except share and per share amounts)
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
--------------------------- ---------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
OPERATING DATA
Revenues $ 72,925 $ 72,232 $ 290,384 $ 287,306
Net income available to common shareholders $ 5,843 $ 9,649 $ 2,707 $ 49,297
Net income available to common shareholders,
excluding severance and proxy charges (Table 1) $ 5,843 $ 9,649 $ 26,623 $ 49,297
Funds from operations available to common shareholders
(Table 2) $ 19,764 $ 23,724 $ 39,958 $ 98,894
Funds from operations available to common shareholders,
excluding severance, proxy and asset impairment charges
(Table 2) $ 19,764 $ 25,573 $ 84,157 $ 110,245
Weighted average shares outstanding - diluted 38,176,235 37,061,628 37,687,524 36,953,962
Weighted average shares and units outstanding - diluted 42,228,473 42,032,638 42,134,072 42,035,577
PER COMMON SHARE DATA - DILUTED
Net income available to common shareholders $ 0.15 $ 0.26 $ 0.07 $ 1.33
Net income available to common shareholders,
excluding severance and proxy charges (Table 1) $ 0.15 $ 0.26 $ 0.71 $ 1.33
Funds from operations available to common shareholders
(Table 2) (1) $ 0.47 $ 0.56 $ 0.95 $ 2.35
Funds from operations available to common shareholders,
excluding severance, proxy and asset impairment charges
(Table 2) (1) $ 0.47 $ 0.61 $ 2.00 $ 2.62
Dividends declared $ 0.45 $ 0.78 $ 1.80 $ 3.12
(1) Funds from operations per share for the three and twelve months ended
December 31, 2003 were computed using weighted average shares and units
outstanding, including the impact of dilutive securities of 36,010 and
11,052, respectively. Such dilutive securities were antidilutive to all
income (loss) per share computations.
TABLE 1
RECONCILIATION OF NET INCOME AVAILABLE TO COMMON SHAREHOLDERS TO NET INCOME
AVAILABLE TO COMMON SHAREHOLDERS, EXCLUDING SEVERANCE AND PROXY CHARGES
(Unaudited; in thousands, except per share amounts)
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
--------------------- ----------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Net income available to common shareholders $ 5,843 $ 9,649 $ 2,707 $ 49,297
Severance charges - - 21,506 -
Proxy and related costs - - 5,231 -
Minority interest impact of charges (1) - - (2,821) -
--------- --------- --------- ---------
Net income available to common shareholders,
excluding severance and proxy charges $ 5,843 $ 9,649 $ 26,623 $ 49,297
========= ========= ========= =========
Weighted average shares outstanding - diluted 38,176 37,062 37,688 36,954
========= ========= ========= =========
Net income available to common shareholders, excluding
severance and proxy charges -per diluted share $ 0.15 $ 0.26 $ 0.71 $ 1.33
========= ========= ========= =========
(2) Computed at 10.55% for the twelve months ended December 31, 2003.
TABLE 2
RECONCILIATION OF NET INCOME AVAILABLE TO COMMON SHAREHOLDERS TO
FUNDS FROM OPERATIONS AVAILABLE TO COMMON SHAREHOLDERS
(Unaudited; in thousands, except per share amounts)
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------------------ ------------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------
Net income available to common shareholders $ 5,843 $ 9,649 $ 2,707 $ 49,297
Minority interest of common unitholders -
continuing operations (393) (101) (3,552) 2,681
Minority interest in discontinued operations 1,110 1,382 3,893 4,091
Gains on property sales - continuing operations - - - (13,275)
Gains on property sales - unconsolidated entities - - (8,395) -
Gains on property sales - discontinued operations
(excluding asset impairment losses) (7,103) (9,856) (40,793) (27,921)
Depreciation on wholly-owned real estate assets, net 19,975 22,283 84,530 82,918
Depreciation on real estate assets held in
unconsolidated entities 332 367 1,568 1,103
---------- ---------- ---------- ----------
Funds from operations available to
common shareholders (1)(2) 19,764 23,724 39,958 98,894
Severance charges - - 21,506 -
Proxy and related costs - - 5,231 -
Asset impairment charges - 1,849 17,462 11,351
---------- ---------- ---------- ----------
Funds from operations available to common shareholders,
excluding severance, proxy and asset impairment charge $ 19,764 $ 25,573 $ 84,157 $ 110,245
========== ========== ========== ==========
Weighted average shares and units outstanding - diluted(3) 42,264 42,033 42,145 42,036
========== ========== ========== ==========
Funds from operations - per diluted share $ 0.47 $ 0.56 $ 0.95 $ 2.35
========== ========== ========== ==========
Funds from operations, excluding severance, proxy and
asset impairment charges - per diluted share $ 0.47 $ 0.61 $ 2.00 $ 2.62
========== ========== ========== ==========
(1) In October 2003, the National Association of Real Estate Investment Trusts
("NAREIT") issued additional guidance modifying the definition of funds
from operations ("FFO"). The first modification revised the treatment of
asset impairment losses and impairment losses incurred to write-down assets
to their fair value at the date assets are classified as held for sale, to
include such losses in FFO. Previously such losses were excluded from FFO,
consistent with the treatment of gains on property sales. The second
modification clarified the treatment of original issue costs and premiums
paid on preferred stock redemptions to deduct such costs and premiums in
determining FFO available to common shareholders. This modification was
consistent with the recently clarified treatment of these costs under GAAP.
The company adopted the modifications to the definition of FFO effective
with its reported results for the third quarter of 2003. The modification
of FFO related to preferred stock redemption costs was not applicable for
the company for the periods presented. Prior period and prior year
presentations of FFO have been restated to conform with the revised NAREIT
definition of FFO. FFO is a supplemental non-GAAP financial measure used by
real estate investment trusts to measure and compare operating performance.
(2) For the three and twelve months ended December 31, 2002, FFO available to
common shareholders has been restated from the prior year presentation to
reflect a reduction of $1,849 and $11,351, respectively, for impairment
losses on real estate assets resulting from the NAREIT modification of the
definition of FFO. Additionally for the twelve months ended December 31,
2002, FFO has been restated from the prior year presentation to reflect a
reduction of $136 for early debt extinguishment costs reclassified from
extraordinary items to operating expenses under SFAS No. 145. For the
twelve months ended December 31, 2003, FFO available to common shareholders
has been restated to reflect a reduction of $14,118 for impairment losses
on real estate recognized in the first quarter of 2003.
(3) Diluted weighted average shares and units for the three and twelve months
ended December 31, 2003 include 36 and 11 shares and units, respectively,
that were antidilutive to all income (loss) per share computations under
generally accepted accounting principles.
TABLE 3
RECONCILIATION OF SAME STORE NET OPERATING INCOME (NOI) TO INCOME (LOSS) FROM
CONTINUING OPERATIONS
(Dollars in thousands)
THREE MONTHS ENDED TWELVE MONTHS ENDED
----------------------------------------- --------------------------
DECEMBER 31, DECEMBER 31, SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
2003 2002 2003 2003 2002
------------ ------------ ------------- ------------ ------------
Total same store NOI $ 35,439 $ 37,167 $ 35,247 $ 141,419 $ 150,543
Property NOI from other operating segments 6,906 6,322 6,763 26,330 20,093
------------ ------------ ------------ ------------ -----------
Consolidated property NOI 42,345 43,489 42,010 167,749 170,636
Add:
Interest income 187 286 223 894 1,288
Minority interest in consolidated property
partnerships 665 576 677 2,024 2,055
Gains on property sales - continued operations - - - - 13,275
Less:
Depreciation (21,603) (21,124) (21,553) (83,700) (76,760)
Interest (15,914) (14,650) (17,122) (64,905) (52,035)
Amortization of deferred loan costs (962) (616) (1,084) (3,801) (2,327)
General and administrative (4,400) (3,450) (3,735) (15,102) (14,431)
Development costs and other expenses (1,298) (694) (277) (2,138) (830)
Severance charges - - - (21,506) -
Proxy and related charges - - - (5,231) -
Equity in income (losses) of
unconsolidated entities 23 (306) 60 7,791 (1,590)
Minority interest of preferred unitholders (1,400) (1,400) (1,400) (5,600) (5,600)
Minority interest of common unitholders 393 101 457 3,552 (2,681)
------------ ------------ ------------ ------------ -----------
Income (loss) from continuing operations $ (1,964) $ 2,212 $ (1,744) $ (19,973) $ 31,000
============ ============ ============ ============ ===========
TABLE 4
SAME STORE NET OPERATING INCOME (NOI) SUMMARY BY MARKET
(Dollars in thousands)
THREE MONTHS ENDED 4Q'03 VS 4Q'03 VS
---------------------------------------------- --------- ---------
DECEMBER 31, DECEMBER 31, SEPTEMBER 30, 4Q'02 3Q'03
2003 2002 2003 % CHANGE % CHANGE
------------ ------------- ------------- --------- ---------
Rental and other revenues
Atlanta $32,092 $33,094 $32,740 (3.0)% (2.0)%
Dallas 12,009 12,078 12,200 (0.6)% (1.6)%
Tampa 4,414 4,368 4,400 1.1% 0.3%
Other 6,536 6,501 6,634 0.5% (1.5)%
------- ------- ------- ---- ----
Total rental and other revenues 55,051 56,041 55,974 (1.8)% (1.6)%
------- ------- ------- ---- ----
Property operating and maintenance expenses
(exclusive of depreciation and amortization)
Atlanta 11,109 10,986 11,727 1.1% (5.3)%
Dallas 4,748 4,214 4,941 12.7% (3.9)%
Tampa 1,626 1,591 1,753 2.2% (7.2)%
Other 2,129 2,083 2,306 2.2% (7.7)%
------- ------- ------- ---- ----
Total 19,612 18,874 20,727 3.9% (5.4)%
------- ------- ------- ---- ----
Net operating income
Atlanta 20,983 22,108 21,013 (5.1)% (0.1)%
Dallas 7,261 7,864 7,259 (7.7)% -
Tampa 2,788 2,777 2,647 0.4 % 5.3%
Other 4,407 4,418 4,328 (0.2)% 1.8%
------- ------- ------- ---- ----
Total same store NOI $35,439 $37,167 $35,247 (4.6)% 0.5%
======= ======= ======= ==== ====
TWELVE MONTHS ENDED
DECEMBER 31,
---------------------
2003 2002 % CHANGE
---------- -------- --------
Rental and other revenues
Atlanta $129,601 $135,492 (4.3)%
Dallas 48,371 49,677 (2.6)%
Tampa 17,464 18,197 (4.0)%
Other 26,156 26,111 0.2%
-------- -------- ----
Total rental and other revenues 221,592 229,477 (3.4)%
-------- -------- ----
Property operating and maintenance expenses
(exclusive of depreciation and amortization)
Atlanta 44,891 43,867 2.3%
Dallas 19,479 19,232 1.3%
Tampa 6,772 6,823 (0.7)%
Other 9,031 9,012 0.2%
-------- -------- ----
Total 80,173 78,934 1.6%
-------- -------- ----
Net operating income
Atlanta 84,710 91,625 (7.5)%
Dallas 28,892 30,445 (5.1)%
Tampa 10,692 11,374 (6.0)%
Other 17,125 17,099 0.2%
-------- -------- ----
Total same store NOI $141,419 $150,543 (6.1)%
======== ======== ====
TABLE 5
COMPUTATION OF DEBT RATIOS
(Dollars in thousands)
AS OF AS OF
DECEMBER 31, 2003 DECEMBER 31, 2002
----------------- -----------------
Total real estate assets per balance sheet $ 2,164,391 $ 2,443,535
Plus:
Accumulated depreciation per balance sheet 432,157 426,136
Accumulated depreciation on assets held for sale 74,614 17,829
----------- -----------
Total undepreciated real estate assets (A) 2,671,162 2,887,500
Less:
Advances to unconsolidated joint ventures equal to
joint venture partner's share of joint venture construction debt (34,950) (104,191)
----------- -----------
Total undepreciated real estate assets
(adjusted for joint venture partner's share of debt) (B) $ 2,636,212 $ 2,783,309
=========== ===========
Total debt per balance sheet (C) $ 1,186,322 $ 1,414,555
Less:
Joint venture partners' share of joint venture construction debt (34,950) (104,191)
----------- -----------
Total debt (adjusted for joint venture partners' share) (D) $ 1,151,372 $ 1,310,364
=========== ===========
Total debt as a % of undepreciated real estate assets (C/A) 44.4% 49.0%
=========== ===========
Total debt as a % of undepreciated real estate assets
(adjusted for joint venture partner's share of debt) (D/B) 43.7% 47.1%
=========== ===========
Total debt per balance sheet $ 1,186,322 $ 1,414,555
Plus:
Preferred shares at liquidation value 145,000 145,000
Preferred units at liquidation value 70,000 70,000
----------- -----------
Total debt and preferred shares and units (E) 1,401,322 1,629,555
Less:
Joint venture partners' share of joint venture construction debt (34,950) (104,191)
----------- -----------
Total debt and preferred shares and units
(adjusted for joint venture partners' share of debt) (F) $ 1,366,372 $ 1,525,364
=========== ===========
Total debt and preferred shares and units as a % of
undepreciated assets (E/A) 52.5% 56.4%
=========== ===========
Total debt and preferred shares and units as a % of undepreciated
assets (adjusted for joint venture partners' share of debt) (F/B) 51.8% 54.8%
=========== ===========
TABLE 6
RECONCILIATION OF GAINS ON PROPERTY SALES TO ECONOMIC GAINS ON PROPERTY SALES
YEAR ENDED
12/31/2003 FORECASTED 2004
---------- -----------------------
LOW RANGE HIGH RANGE
--------- ----------
Gains on property sales - discontinued operations (before minority
interest) $ 37,448 $ 136,000 $ 140,000
Gains on property sales - unconsolidated entities 8,395 - -
--------- --------- ---------
45,843 136,000 140,000
Less: Asset impairment loss (included in income from
discontinued operations) (14,118) - -
Plus: Asset impairment loss (on assets held for sale) included in
gains on property sales - discontinued operations 3,344 - -
--------- --------- ---------
Gains on property sales $ 35,069 $ 136,000 $ 140,000
========= ========= =========
Gains on property sales $ 35,069 $ 136,000 $ 140,000
Less:
Accumulated depreciation on properties sold (25,501) (74,656) (74,656)
Accumulated depreciation on properties sold - unconsolidated
entities (947) - -
Prior period asset impairment losses on properties sold (4,964) (3,344) (3,344)
--------- --------- ---------
Economic gains on property sales $ 3,657 $ 58,000 $ 62,000
========= ========= =========
TABLE 7
RECONCILIATION OF FORECASTED NET INCOME PER COMMON SHARE TO
FORECASTED FUNDS FROM OPERATIONS PER COMMON SHARE
THREE MONTHS ENDED
MARCH 31, 2004
----------------------
LOW RANGE HIGH RANGE
--------- ----------
Forecasted net loss, per share $ (0.05) $ (0.03)
Forecasted gains on property sales, per share (0.03) (0.04)
Forecasted real estate depreciation, per share 0.47 0.48
-------- --------
Forecasted funds from operations, per share 0.39 0.41
Forecasted preferred stock redemption costs 0.04 0.04
-------- --------
Forecasted funds from operations, excluding preferred
stock redemption costs, per share $ 0.43 $ 0.45
======== ========