Exhibit 99.1
BERKSHIRE INCOME REALTY ANNOUNCES SECOND QUARTER FFO OF $2,475,000
BOSTON, MASSACHUSETTS - - August 14, 2003 - - Berkshire Income Realty, Inc.
(AMEX: "BIR_pa", "BIRPRA", "BIR.PR.A", "BIR-A","BIR.A") ("Berkshire" or the
"Company") today reported its results for the quarter ended June 30, 2003.
Financial highlights for the quarter ended June 30, 2003 include:
o The Company's funds from operations for the quarter ended June 30, 2003
were $2,475,000.
o For the quarter ended June 30, 2003, Berkshire reported net income of
$627,000. For the comparable period in 2002, the Berkshire Income Realty
Predecessor Group reported a net loss of $1,002,000. Because the Company
did not have any operations until the quarter ended June 30, 2003, the
discussion in this press release of operations or activities prior to April
1, 2003 refers to the operations and activities of the Berkshire Income
Realty Predecessor Group, the Company's predecessor entities for accounting
purposes. As described below, the Berkshire Income Realty Predecessor Group
contributed to the Company the initial properties that make up the
Company's current operations.
o On July 31, 2003, the Company reiterated its declaration of its regular
quarterly cash dividend of $.5625 on each share (aggregate quarterly
dividend of $1,675,000) of its 9% Series A Cumulative Redeemable Preferred
Stock ("Preferred Shares") payable to shareholder of record on August 10,
2003. The regular cash dividend payable on the Series A Preferred Stock is
payable on February 15, May 15, August 15 and November 15 of each year.
Funds From Operations
Management considers funds from operations ("FFO") to be an appropriate
measure of the performance of an equity REIT. FFO is generally defined as net
income or loss (computed in accordance with accounting principles generally
accepted in the United States of America, including non-recurring items)
adjusted for gains (or losses) from sales of properties, real estate related
depreciation and amortization and after adjustment for unconsolidated entities.
Management believes that in order to facilitate a clear understanding of the
consolidated historical operating results of the Company, FFO should be
considered in conjunction with net income as presented in the consolidated
financial statements included elsewhere herein. FFO does not represent cash
generated from operating activities in accordance with accounting principles
generally accepted in the United States of America and is not necessarily
indicative of cash available to fund cash needs. FFO should not be considered as
an alternative to net income as an indication of the Company's performance or to
cash flow from operating activities as a measure of liquidity. All REITs may not
be using the same definition for FFO. Accordingly, the above presentation may
not be comparable to other similarly titled measures of FFO of other REITs.
The calculation of FFO for the three month period ended June 30, 2003 is
presented below (in thousands):
Three
Months
Ended June
30,
----------
2003
----------
Income (loss) before minority interest in
Operating Partnership $ 627
Depreciation of real property 1,848
----------
FFO $ 2,475
==========
Further information regarding the results of Berkshire for the quarter ended
June 30, 2003 can be found in Berkshire's Form 10-Q for the quarter ended June
30, 2003, which is being filed today with the Securities and Exchange Commission
and will be available on the SEC's website at www.sec.gov.
Offering and Other Formation Transactions
On April 4, 2003 and April 18, 2003, the Company issued 2,667,717 and
310,393 shares, respectively, of its Preferred Shares, with a $25.00 liquidation
preference per share. The Preferred Shares were issued in exchange for the
interests in six mortgage funds. For each interest in the mortgage funds that
was validly tendered and not withdrawn in the Offering, the Company issued its
Preferred Shares based on an exchange ratio applicable to each mortgage fund.
Simultaneously with the completion of the Offering on April 4, 2003, KRF
Company, L.L.C. ("KRF Company"), an affiliate of the Company, contributed its
ownership interests in five multi-family apartment communities (the
"Properties"), to our operating partnership, Berkshire Income Realty-OP, L.P.
(the "Operating Partnership") in exchange for common limited partner interests
in the Operating Partnership. KRF Company then contributed an aggregate of
$1,283,000 to the Company in exchange for common stock of the Company in an
amount which together with the $100 contributed prior to the offering, equaled
1,283,313 shares of common stock of the Company and equaled 1% of the fair value
of total net assets of the Operating Partnership. This amount was contributed by
the Company to its wholly owned subsidiary, BIR GP, L.L.C., who then contributed
the cash to the Operating Partnership in exchange for the sole general partner
interest in the Operating Partnership.
Other Significant Events
On March 20, 2003, KRF Company, through a newly formed affiliate, Gables of
Texas Limited Partnership ("Gables"), whose general partner, Gables of Texas,
L.L.C., was also a newly formed affiliate, acquired The Gables Apartments, a
140-unit multi-family apartment community located in Houston, Texas, from an
unrelated third party for a purchase price of approximately $6,925. On April 24,
2003, the Operating Partnership acquired the interests in Gables and Gables of
Texas L.L.C. from KRF Company for approximately $6,925 plus closing costs of
approximately $143. The purchase price for Gables and Gables of Texas L.L.C. was
equal to the purchase price KRF Company paid the original seller of The Gables
Apartments (including equity payments, transfer taxes, financing and closing
costs as applicable).
On April 29, 2003, the Preferred Shares began trading on the American Stock
Exchange, under the symbol "BIR.PR.A".
On May 30, 2003 the Operating Partnership and its wholly owned subsidiary
BIR McNab Sub, L.L.C., a newly formed Delaware limited liability company,
acquired all of the outstanding limited and general partner units of McNab KC3
Limited Partnership ("McNab") from affiliates of the Company. The acquisition
was structured as a contribution of units from an affiliate of the Company in
exchange for the issuance by the Operating Partnership of 5,000 common limited
partner units valued at $10.00 per unit. McNab is the fee simple owner of a
276-unit multi-family apartment community located in Pompano Beach, Florida that
is referred to as Windward Lakes Apartments. The general and limited partners of
McNab are affiliates of the Company, namely George and Douglas Krupp.
The McNab partnership interests contributed to the Operating Partnership by
George and Douglas Krupp, were subject to certain obligations of McNab and its
partners including the assumption of $13,398,000 of first mortgage debt,
including accrued interest, $4,162,000 of principal, accrued interest,
participation interest and interest rebates collateralized by the partnership
interests (the "Additional Loan") and the assumption of approximately $1,266,000
of liabilities payable to other affiliates of the Company. Upon completion of
the acquisition, the Operating Partnership immediately paid off the first
mortgage and Additional Loan debt totaling $18,244,000 using available cash.
Forward-Looking Statements
With the exception of the historical information contained in the release, the
matters described herein contain forward-looking statements that are made
pursuant to the Safe Harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements involve a number of risks,
uncertainties or other factors beyond the Company's control, which may cause
material differences in actual results, performance or other expectations. These
factors include, but are not limited to, changes in economic conditions
generally and the real estate and bond markets specifically,
legislative/regulatory changes (including changes to laws governing the taxation
of real estate investment trusts ("REITs"), availability of capital, interest
rates and interest rate spreads, changes in generally accepted accounting
principles and policies and guidelines applicable to REITs, those set forth in
Part I, Item 1A. "Risk Factors" of the Company's Form 10-K and other risks and
uncertainties as may be detailed from time to time in the Company's public
announcements and SEC filings. Readers are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of the date hereof. The
Company assumes no obligation to update such information.
BERKSHIRE INCOME REALTY, INC.
(FORMERLY BERKSHIRE INCOME REALTY PREDECESSOR GROUP)
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except per share and per share amounts)
June 30, December 31,
2003 2002
---------- ----------
ASSETS
Multi-family apartment communities, net of accumulated
depreciation of $98,347 and $94,712, respectively $ 99,283 $ 94,343
Cash and cash equivalents 10,207 4,852
Cash restricted for tenant security deposits 852 850
Replacement reserve escrow 335 407
Prepaid expenses and other assets 3,027 3,733
Investment in Mortgage Funds 49,146 -
Deferred expenses, net of accumulated amortization of
$250 and $246, respectively 936 1,288
---------- ----------
Total assets $ 163,786 $ 105,473
========== ==========
LIABILITIES, STOCKHOLDERS' EQUITY / OWNERS' DEFICIT
Liabilities:
Mortgage notes payable $ 105,135 $ 119,162
Notes payable - 3,155
Due to affiliates 5,477 2,879
Dividends payable 837 -
Accrued expenses and other liabilities 2,926 1,891
Tenant security deposits 981 912
---------- ----------
Total liabilities 115,356 127,999
Minority interest - -
Stockholders' equity / owners' deficit:
Series A 9% Cumulative Redeemable Preferred Stock Series,
no par value, $25 stated value, 5,000,000 shares
authorized, 2,978,110 and 0 shares issued and outstanding
at June 30, 2003 and December 31, 2002, respectively 74,453 -
Class A common stock, $.01 par, 5,000,000 shares
authorized; 0 shares issued and outstanding at June
30, 2003 and December 31, 2002, respectively - -
Class B common stock, $.01 par, 5,000,000 authorized
shares; 1,283,313 and 100 shares issued and outstanding
at June 30, 2003 and December 31, 2002, respectively 12 -
Excess stock $.01 par value, 15,000,000 shares authorized,
0 shares issued and outstanding at June 30, 2003 and
December 31, 2002, respectively - -
Accumulated deficit (26,035) -
Owners' deficit - (22,526)
---------- ----------
Total liabilities and stockholders' equity /
owners' deficit $ 163,786 $ 105,473
========== ==========
BERKSHIRE INCOME REALTY, INC.
(FORMERLY BERKSHIRE INCOME REALTY PREDECESSOR GROUP)
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except share and per share amounts)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
---------------------- ----------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------
Revenue:
Rental $ 7,081 $ 6,560 $ 13,689 $ 13,001
Interest 35 46 67 72
Utility reimbursement 98 152 207 315
Other 309 228 553 461
---------- ---------- ---------- ----------
Total revenue 7,523 6,986 14,516 13,849
Expenses:
Operating 1,654 1,407 3,275 2,945
Maintenance 598 558 1,069 974
Real estate taxes 610 549 1,175 1,080
General and administrative 525 163 673 351
Organizational costs 213 - 213 -
Management fees 676 459 1,108 900
Depreciation 2,182 1,453 3,635 2,904
Interest 1,822 1,185 3,750 2,320
Loss on extinguishment of debt 252 883 252 883
Participation interest - 44 - 88
---------- ---------- ---------- ----------
Total expenses 8,532 6,701 15,150 12,445
---------- ---------- ---------- ----------
Income (loss ) before minority
interest in properties, equity
in income of Mortgage Funds and
minority interest in Operating
Partnership (1,009) 285 (634) 1,404
Minority interest in properties (94) (1,382) (94) (1,436)
Equity in income of Mortgage
Funds 1,730 - 1,730 -
---------- ---------- ---------- ----------
Income (loss) before minority
common interest in Operating
Partnership 627 (1,097) 1,002 (32)
Minority common interest in
Operating Partnership - - - -
---------- ---------- ---------- ----------
Net income (loss) 627 (1,097) 1,002 (32)
Preferred dividend (1,601) - (1,601) -
---------- ---------- ---------- ----------
Net loss available to common
shareholders $ (974) $ (1,097) $ (599) (32)
========== ========== ========== ==========
Earnings per common share,
basic $ (0.80) $ (0.98)
========== ==========
Weighted average number of
common shares outstanding 1,214,106 610,457
========== ==========