BERKSHIRE INCOME REALTY ANNOUNCES THIRD QUARTER FFO OF $4,384,000 AND TEXAS
ACQUISITION
BOSTON, MASSACHUSETTS - - November 14, 2003 - - Berkshire Income, Realty, Inc.
(AMEX: "BIR_pa", "BIRPRA", "BIR.PR.A") ("Berkshire" or the "Company") today
reported its results for the quarter ended September 30, 2003. Financial
highlights for the quarter ended September 30, 2003 include:
o The Company's funds from operations for the quarter ended September
30, 2003 were $4,384,000.
o For the quarter ended September 30, 2003, Berkshire reported net
income of $2,114,000. For the comparable period in 2002, the Berkshire
Income Realty Predecessor Group reported a net loss of $215,000. 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 October 30, 2003, Berkshire Income Realty - OP, L.P. (the
"O.P."), the operating partnership subsidiary of the Company, through its
newly formed and wholly owned subsidiary, St. Marin/Karrington Limited
Partnership, purchased the St. Marin Apartments, a 350-unit multi-family
apartment community and the Karrington Apartments, a 250-unit multi-family
apartment community, which are contiguous properties located in Coppell,
Texas from WHCO Real Estate Limited Partnership and WHCO II Real Estate
Limited Partnership, respectively. Both of the sellers are third parties.
The purchase and sale agreements, as amended, provide for purchase prices
of $26,125,000 and $20,000,000 for St. Marin and Karrington, respectively,
which was paid in cash. The Company will operate the two properties as one
under the name St. Marin/Karrington Apartments.
o On October 31, 2003, the Company announced it that would pay 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") on November 15, 2003 to shareholder of
record on November 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
The Company has adopted the revised definition of Funds from Operations
adopted by the Board of Governors of the National Association of Real Estate
Investment Trusts ("NAREIT"). Management considers Funds from Operations ("FFO")
to be an appropriate measure of performance of an equity REIT. We calculate FFO
by adjusting net income (loss) (computed in accordance with GAAP, including
non-recurring items), for gains (or losses) from sales of properties and real
estate related depreciation and amortization. Management believes that in order
to facilitate a clear understanding of the historical operating results of the
Company, FFO should be considered in conjunction with net income as presented in
the financial statements. Management considers FFO to be a useful measure for
reviewing the comparative operating and financial performance of the Company,
because, by excluding gains and losses related to sales of previously
depreciated operating real estate assets and excluding real estate asset
depreciation and amortization (which can vary among owners of identical assets
in similar condition based on historical cost accounting and useful life
estimates), FFO can help one compare the operating performance of a company's
real estate between periods or as compared to different companies.
The Company's calculation of FFO may not be directly comparable to FFO
reported by other REITS or similar real estate companies that have not adopted
the term in accordance with the current NAREIT definition or that interpret the
current NAREIT definition differently. FFO should not be considered as an
alternative to net income (determined in accordance with GAAP) as an indication
of our performance. FFO does not represent cash generated from operating
activities determined in accordance
with GAAP and is not a measure of liquidity or an indicator of our ability to
make cash distributions. We believe that to further understand our performance,
FFO should be compared with our reported net income and considered in addition
to cash flows in accordance with GAAP, as presented in our financial statements.
The calculation of FFO for the three month period ended September 30, 2003
is presented below (in thousands):
Three Months
Ended
September 30, 2003
-------------------
Net Income $ 2,114
Add:
Minority interest in Operating Partnership 488
Depreciation of real property 1,782
-------------------
Funds from Operations $ 4,384
===================
Further information regarding the results of Berkshire for the quarter
ended September 30, 2003 can be found in Berkshire's Form 10-Q for the quarter
ended September 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.
Looking Forward 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 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)
BALANCE SHEETS
(unaudited, in thousands, except share and per share amounts)
December 31,
September 30, 2002
2003 (Note 1)
Consolidated Combined
-------------- --------------
ASSETS
Multi-family apartment communities,
net of accumulated depreciation of
$100,166 and $94,712, respectively $ 99,896 $ 94,343
Cash and cash equivalents 41,819 4,852
Cash restricted for tenant security deposits 855 850
Replacement reserve escrow 250 407
Prepaid expenses and other assets 3,601 3,733
Investment in Mortgage Funds 40,197 -
Deferred expenses, net of accumulated
amortization of $281 and $246,
respectively 1,262 1,288
-------------- --------------
Total assets $ 187,880 $ 105,473
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY/OWNERS' DEFICIT
Liabilities:
Mortgage notes payable $ 131,901 $ 119,162
Notes payable - 3,155
Due to affiliates 1,456 2,879
Dividend and distributions payable 1,338 -
Accrued expenses and other liabilities 3,317 1,891
Tenant security deposits 940 912
-------------- -------------
Total liabilities 138,952 127,999
Minority interest - -
Commitments and Contingencies - -
Stockholders' equity / owners' deficit:
Series A 9% Cumulative Redeemable Preferred
Stock, no par value, $25 stated
value, 5,000,000 shares authorized, 2,978,110
and 0 shares issued and outstanding at
September 30, 2003 and December 31, 2002, 70,212 -
respectively
Class A common stock, $.01 par, 5,000,000
shares authorized; 0 shares issued and
outstanding at September 30, 2003 and
December 31, 2002, res2002, respectively - -
Class B common stock, $.01 par, 5,000,000
shares authorized; 1,283,313 and
100 shares issued and outstanding at
September 30, 2003 and December 31, 2002,
respectively 12 -
Excess stock, $.01 par value, 15,000,000 shares
authorized, 0 shares issued and outstanding at
September 30, 2003 and December 31, 2002,
respectively - -
Accumulated deficit (21,296) -
Owners' deficit (22,526) -
-------------- -------------
Total stockholders' equity / owners'
deficit 48,928 22,526)
Total liabilities and stockholders'
equity / owners' deficit $ 187,880 $ 105,473
============== =============
BERKSHIRE INCOME REALTY, INC.
(FORMERLY BERKSHIRE INCOME REALTY PREDECESSOR GROUP)
STATEMENTS OF OPERATIONS
(unaudited, in thousands, except share and per share amounts)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
--------------------- ----------------------
2003 2002 2003 2002
Consolidated Combined Consolidated Combined
--------------------- ----------------------
Revenue:
Rental $ 6,909 $ 6,738 $ 20,598 $ 19,739
Interest 11 86 78 158
Utility reimbursement 133 133 340 448
Other 372 276 925 737
--------------------- ----------------------
Total revenue 7,425 7,233 21,941 21,082
Expenses:
Operating 1,909 1,524 5,184 4,469
Maintenance 715 577 1,784 1,551
Real estate taxes 644 553 1,819 1,633
General and administrative 476 343 1,149 694
Organizational costs - - 213 -
Management fees 465 451 1,573 1,351
Depreciation 1,819 1,482 5,454 4,386
Interest 1,830 2,189 5,580 4,509
Loss on extinguishment of debt 87 285 339 1,168
Participation interest - 44 - 132
--------------------- ----------------------
Total expenses 7,945 7,448 23,095 19,893
--------------------- ----------------------
Income (loss) before minority
interest in properties, equity in
income of Mortgage Funds and
minority common interest in
Operating Partnership (520) (215) (1,154) 1,189
Minority interest in properties (31) - (125) (1,436)
Equity in income of Mortgage Funds 3,153 - 4,883 -
--------------------- ----------------------
Income (loss) before minority
common interest in Operating
Partnership 2,602 (215) 3,604 (247)
Minority common interest in
Operating Partnership (488) - (488) -
--------------------- ----------------------
Net income (loss) $ 2,114 $ (215) $ 3,116 (247)
===================== =====================
Preferred dividend (1,675) - (3,276) -
--------------------- ---------------------
Net income (loss) available to
common shareholders $ 439 $ (215) $ (160)$ (247)
===================== =====================
Earnings per common share, basic $ 0.34 $ (0.19)
===================== =====================
Weighted average number of common
shares outstanding 1,283,313 837,207
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