Exhibit 99
CORNERSTONE REALTY INCOME TRUST, INC.
FOR IMMEDIATE
RELEASECORNERSTONE REALTY TO ACQUIRE APPLE RESIDENTIAL IN A TRANSACTION
VALUED AT APPROXIMATELY $350 MILLION
RICHMOND, Virginia, March 31 -- Cornerstone Realty Income Trust, Inc. (NYSE:
TCR) announced today that it has entered into a definitive merger agreement with
Apple Residential Income Trust, Inc. ("Apple"), in a transaction valued at
approximately $350 million. Apple is a publicly-held, non-traded real estate
investment trust (REIT), presently advised and managed by Cornerstone, that owns
27 communities, containing 7,034 apartment homes, located principally in the
Dallas/Fort Worth metropolitan area. The merger will create a leading owner and
operator of apartment properties in the southern United States, with a total pro
forma market capitalization of approximately $1 billion and a portfolio of 85
multifamily communities, containing 20,496 apartment units.
"We are excited about bringing together the Cornerstone and Apple
companies," said Glade M. Knight, Chairman and Chief Executive Officer of
Cornerstone. "Cornerstone is a leading operator of apartment properties in the
southeastern United States and the acquisition of Apple provides us with an
ideal opportunity to enter dynamic Texas markets. Because Cornerstone has served
as Apple's advisor and manager, we are very familiar with the Apple portfolio
and feel confident that the portfolio will make a strong contribution to
Cornerstone's future operating results. We believe that this transaction will
help achieve Cornerstone's long-term strategic plan to maximize shareholder
value."
"Financially, we believe this transaction will provide multiple
benefits," stated Mr. Knight. "Specifically, we expect Cornerstone to realize
immediate and long-term accretion to funds from operations (FFO) and significant
balance sheet flexibility with a lower debt to total market capitalization ratio
of approximately 25%. In addition, we anticipate that the combined company's
larger size will provide greater access to capital on more attractive terms."
Under the terms of the merger agreement, Apple shareholders will
receive 0.40 of a share of Cornerstone $25.00 Series A convertible preferred
stock (the "Series A Preferred Stock") for each share of Apple common stock. The
Series A Preferred Stock will have a first year dividend yield of 8.50%, which
will increase to 9.00% in the second year and 9.50% in the third year and
thereafter. Each share of Series A Preferred Stock carries a $25.00 per share
liquidation preference and is convertible into 1.5823 shares of Cornerstone
common stock, which reflects a conversion price of $15.80 for Cornerstone common
stock. After five years, the Series A Preferred Stock will be redeemable at
$25.00 per share plus any accrued dividends, at the option of Cornerstone, in
whole or in part, for cash or stock, subject to certain conditions. In addition,
Cornerstone will assume approximately $32.1 million of Apple debt with an
average interest rate of approximately 6.475%.
The Apple and Cornerstone Boards of Directors have unanimously
approved the merger. The transaction has been structured as a tax-free
reorganization and will be accounted for under the purchase method of
accounting. It is expected that the combined company will maintain Cornerstone's
current common share dividend, as well as its common share dividend policy.
After the merger, Glade M. Knight and other senior executive officers
of Cornerstone will continue to serve in their present capacities. Cornerstone's
Board of Directors will remain unchanged and the company will continue to be
headquartered in Richmond, Virginia.
Mr. Knight has agreed to waive his right to receive approximately $3.5
million from change of control provisions in his Apple stock option agreement.
In consideration for waiving this right, Cornerstone will grant Mr. Knight
comparable options to purchase common stock of the combined company at a market
exercise price on the date of the grant.
The merger is subject to the approval of Cornerstone's and Apple's
shareholders, as well as other customary closing conditions, and is expected to
close in July 1999. A registration statement relating to the approval of the
merger and the offering of the securities to be issued with the merger will be
filed with the Securities and Exchange Commission shortly. In connection with
the transaction, Cornerstone was advised by PaineWebber Incorporated and Apple
was advised by Bowles Hollowell Conner, a subsidiary of First Union Capital
Markets Corp.
Cornerstone Realty Income Trust, Inc. is a self-administered and
self-managed real estate investment trust that specializes in the acquisition,
repositioning, management and ownership of multifamily communities located in
North Carolina, Virginia, South Carolina and Georgia. The company's portfolio
consists of 58 communities, aggregating 13,462 apartment units. More information
about Cornerstone Realty Income Trust may be found on Cornerstone's web site at
http://www.cornerstonereit.com.
Information contained in this press release may constitute
"forward-looking statements" within the meaning of federal securities laws.
Forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the future results, performance or achievements of
the Company to be materially different from any forward-looking statements.
These statements are not guarantees of future performance because actual
operating results may materially differ from these predictions. Factors that
could cause actual results to materially differ from management's projections,
estimates and expectations include, but are not limited to, local market
conditions, the ability to achieve projected costs, occupancy levels and
revenues and other factors discussed periodically in the Company's reports filed
with the Securities and Exchange Commission.
For additional information contact:
Glade M. Knight
Chairman and Chief Executive Officer
S. Jay Olander
Senior Vice President and Chief Financial Officer
David S. McKenney
Senior Vice President of Corporate Services
Phone: (804) 643-1761