Driven By 7.4% Increase in Core Portfolio Operating Income
ARLINGTON, Va., Feb. 9 /PRNewswire/ -- Charles E. Smith Residential
Realty, Inc. (NYSE: SRW), the country's premier urban multifamily REIT,
announced today that Funds From Operations (FFO) for 1998 was $98.6 million,
up 35.1% over the prior year. 1998 FFO per share was up 10.0% to $2.91 per
(diluted) share. The FFO increase was attributed primarily to core portfolio
operating income growth of 7.4%, plus contributions from acquired properties.
For the quarter ended December 31, 1998, FFO was $27.8 million, up 21.3% over
fourth quarter 1997 FFO. Fourth quarter FFO per (diluted) share was $0.79, up
9.4% over the fourth quarter of 1997. FFO is widely considered to be the most
appropriate measure of a real estate investment trust's operating performance.
"Operationally, 1998 was another excellent year in terms of double digit
FFO growth and expansion of our development pipeline," said Ernest A. Gerardi,
Jr., President of Charles E. Smith Residential Realty, Inc. "These results
demonstrate that our urban franchise strategy is sound and very profitable,
though our inherent value is not yet reflected in the turbulent capital
markets. In addition to our 10% FFO growth, by year-end we had over
3,300 units under construction, and we added more than 1,900 units in
acquisitions during the year. Importantly, we have achieved a critical mass
of over 4,600 units in Chicago with our recently announced 2,400-unit
portfolio acquisition. That makes us the largest REIT apartment owner in that
market, which is significant considering we first entered the Chicago market
in late 1997. During 1998, consistent with our urban concentration strategy,
we also increased our presence in Boston and entered the southeast Florida
market. All of our target submarkets continue to show excellent fundamentals,
with strong employment growth, high occupancy and tight supply. For example,
at our two properties that are currently delivering, lease-up is going
extremely well -- with 696 units leased compared with 411 units delivered to
date."
Mr. Gerardi continued, "During 1998 we further strengthened our balance
sheet by raising over $134 million in equity through private placements, and
refinanced our debt portfolio to lock in historically low long term rates.
This provides ample capital capacity, including over $300 million in debt
availability, to fund our development and acquisition pipelines through 1999
and beyond. We thus enter 1999 in a very strong strategic position to
continue our internal and external growth programs."
Charles E. Smith Residential Realty is structured as an umbrella
partnership real estate investment trust, or UPREIT. Under this structure,
all property ownership and business operations take place in an Operating
Partnership and its subsidiaries and affiliates. Charles E. Smith Residential
Realty, Inc. (the REIT) currently owns approximately 62% of its Operating
Partnership and is its sole general partner. The balance of the Operating
Partnership is owned by former property and business owners who have
contributed their interests in exchange for ownership units of the Operating
Partnership.
The Operating Partnership's total revenue from rental properties was
$250.2 million for 1998, an increase of 25.0% over 1997. For the fourth
quarter of 1998, revenue from rental properties increased 21.3% over the same
period the previous year.
The Operating Partnership's 1998 income from rental properties before
depreciation increased 27.8% to $148.6 million. Income from rental properties
before depreciation for the fourth quarter of 1998 increased 24.6% to
$40.3 million.
The Operating partnership's earnings before interest, taxes, depreciation,
and amortization (EBITDA) increased 23.5% to $148.1 million in 1998. For the
fourth quarter of 1998, EBITDA increased 27.9% to $44.8 million.
Charles E. Smith Residential Realty, Inc.'s net income attributable to
common shares for 1998 was $30.4 million, or $1.85 per (diluted) share,
compared with $1.86 per share in 1997. Net income attributable to common
shares for the fourth quarter was $12.0 million, or $0.68 per (diluted) share,
up 25.9% over the net income for the fourth quarter of 1997 of $0.54 per
share.
The Company will hold a teleconference on Wednesday, February 10, 1999 at
11:00 am EST to review the information reported in this release. To
participate, please call 1-800-701-4762 shortly before 11:00 am and identify
yourself as a participant in the Charles E. Smith Residential Realty
teleconference.
Charles E. Smith Residential Realty, Inc. is a self-managed real estate
investment trust listed on the New York Stock Exchange (SRW). The Company and
its subsidiaries and affiliates own, acquire, develop, and manage multi-family
residential properties; and also provide a full range of real estate services
to other property owners. The Company owns a portfolio of over 20,000
apartment units, has over 3,000 units under construction, and manages an
additional 3,500+ units for other owners. The total market capitalization of
the Company -- Charles E. Smith Residential Realty, including its Operating
Partnership -- is approximately $2 billion. Investor information including
press releases about Charles E. Smith Residential Realty is available on the
Company's Web site at: http://www.smithreit.com, and also through PR Newswire
"News on Call" by fax 800-758-5804, ext. 101271, or at
http://www.prnewswire.com.
This news release contains forward-looking statements regarding the
company's outlook, which are based on assumptions about economic and market
conditions, competitive dynamics and other factors subject to a number of
risks and uncertainties, some of which are discussed in the Company's filings
with the Securities and Exchange Commission. Actual results could differ
materially.
CHARLES E. SMITH RESIDENTIAL REALTY, INC.
Financial Highlights
For the Three and Twelve Months Ended December 31, 1998 and 1997
(dollars in thousands, except share data)
3 Months Ended Dec. 31, 12 Months Ended Dec. 31,
% Change % Change
From From
1998 1997 Last Year 1998 1997 Last Year
Revenue from the
Operating
Partnership $66,723 $55,016 21.3% $250,211 $200,104 25.0%
Funds From
Operations of the
Operating
Partnership 27,750 22,876 21.3% 98,588 72,963 35.1%
Funds From
Operations -
attributable
to shareholders 16,873 12,271 37.5% 58,034 37,164 56.2%
Per Share
- basic(A) $0.797 $0.732 8.9% $2.925 $2.661 9.9%
Per Share
- diluted $0.794 $0.726 9.4% $2.911 $2.646 10.0%
Net Income of the
Operating
Partnership $24,573 $17,563 39.9% $69,870 $52,210 33.8%
Net Income -
attributable to
common
shareholders 12,025 7,884 52.5% 30,407 24,712 23.0%
Per Common Share -
basic(A) $0.68 $0.54 25.9% $1.86 $1.87 -0.5%
Per Common Share -
diluted $0.68 $0.54 25.9% $1.85 $1.86 -0.5%
Dividends Declared
per Share $0.535 $0.520 2.9% $2.110 $2.050 2.9%
Total Assets $1,185,399 $865,506 37.0%
Interest Coverage
Ratio 3.24 2.78 16.5%
(A) Weighted average shares and partnership units outstanding during the
periods were as follows (in 000s):
3 Months Ended Dec. 31, 12 Months Ended Dec. 31,
1998 1997 1998 1997
Common Shares 17,568 14,551 16,318 13,218
Convertible Preferred
Shares 3,606 2,220 3,523 748
Partnership Units 13,657 14,484 13,866 13,452
Total Shares and
Partnership Units 34,831 31,255 33,707 27,418
CHARLES E. SMITH RESIDENTIAL REALTY, INC.
Operating Summary
For the Three and Twelve Months Ended December 31, 1998 and 1997
(dollars in thousands,
except per share data)
3 Months Ended Dec. 31, 12 Months Ended Dec. 31,
% Change % Change
From From
1998 1997(B) Last Year 1998 1997(B) Last Year
RENTAL PROPERTIES(A)
Revenue $66,723 $55,016 21.3% $250,211 $200,104 25.0%
Operating
Expenses (26,431) (22,669) 16.6%(101,635) (83,827) 21.2%
Depreciation and
Amortization (7,513) (5,226) 43.8% (28,958) (20,666) 40.1%
32,779 27,121 20.9% 119,618 95,611 25.1%
PROPERTY SERVICE
BUSINESSES (PSBs)2,849 3,961 -28.1% 8,433 7,597 11.0%
OTHER INCOME AND
EXPENSES
Corporate General and
Administrative
Expenses (2,542) (1,980) 28.4% (8,947) (6,563) 36.3%
Interest Expense,
net (11,861) (11,452) 3.6% (46,077) (44,348) 3.9%
Gain on sale of
property 15,030 0 N/A 18,150 0 N/A
Loss on unused
treasury lock 0 0 N/A (4,923) 0 N/A
Extraordinary item -
loss on debt
extinguishment(11,682) (87)13327.6% (16,384) (87) 18732.2%
NET INCOME OF THE
OPERATING
PARTNERSHIP 24,573 17,563 39.9% 69,870 52,210 33.8%
Minority Interest(9,764) (8,182) 19.3% (28,741) (25,617) 12.2%
Net Income 14,809 9,381 57.9% 41,129 26,593 54.7%
Less income
attributable to
preferred shares(2,784) (1,497) 86.0% (10,722) (1,881) 470.0%
Net Income
attributable to
Common Shares $12,025 $7,884 52.5% $30,407 $24,712 23.0%
Net Income per Common
Share - basic $0.68 $0.54 25.9% $1.86 $1.87 -0.5%
Net Income per Common
Share - diluted $0.68 $0.54 25.9% $1.85 $1.86 -0.5%
NET INCOME OF THE
OPERATING
PARTNERSHIP $24,573 $17,563 39.9% $69,870 $52,210 33.8%
Less: Perpetual
Preferred
Dividends (1,010) 0 N/A (3,647) 0 N/A
Gain on sale of
property (15,030) 0 N/A (18,150) 0 N/A
Add: Depreciation of
Real Property 7,513 5,226 43.8% 28,958 20,666 40.1%
Amortization of
Goodwill 22 0 N/A 250 0 N/A
Loss on unused
treasury lock 0 0 N/A 4,923 0 N/A
Extraordinary item -
loss on debt
extinguishment 11,682 8713327.6% 16,384 87 18732.2%
FFO OF THE OPERATING
PARTNERSHIP 27,750 22,876 21.3% 98,588 72,963 35.1%
Minority
Interest (10,877) (10,605) 2.6% (4O,554) (35,799) 13.3%
FFO attributable to
shareholders $16,873 $12,271 37.5% $58,034 $37,164 56.2%
(A) Details are shown in the following table.
(B) Minority Interest and per share amounts have been restated based on
SFAS No. 128 "Earnings per Share."
CHARLES E. SMITH RESIDENTIAL REALTY, INC.
Rental Property Details
For the Three and Twelve Months Ended December 31, 1998 and 1997
(dollars in thousands)
3 Months Ended Dec. 31, 12 Months Ended Dec. 31,
% Change % Change
From From
1998 1997(D) Last Year 1998 1997(D) Last Year
CORE RESIDENTIAL
PORTFOLIO(A)
Revenue $42,486 $40,048 6.1% $166,465 $158,785 4.8%
Operating
Expenses (16,297) (16,581) -1.7% (67,070) (66,264) 1.2%
26,189 23,467 11.6% 99,395 92,521 7.4%
ACQUISITION/DISPOSITION
PORTFOLIO(B)
Revenue 20,770 12,408 N/A 72,499 31,277 N/A
Operating Expenses(8,692) (5,015) N/A (30,061) (13,896) N/A
12,078 7,393 N/A 42,438 17,381 N/A
DEVELOPMENT PORTFOLIO(C)
Revenue 784 0 N/A 1,258 0 N/A
Operating Expenses (635) (83) N/A (1,300) (97) N/A
149 (83) N/A (42) (97) N/A
RETAIL PORTFOLIO
Revenue 2,683 2,560 4.8% 9,989 10,042 -0.5%
Operating Expenses (807) (990) -18.5% (3,204) (3,570) -10.3%
1,876 1,570 19.5% 6,785 6,472 4.8%
TOTAL PORTFOLIO
Revenue 66,723 55,016 21.3% 250,211 200,104 25.0%
Operating
Expenses (26,431) (22,669) 16.6%(101,635) (83,827) 21.2%
$40,292 $32,347 24.6% $148,576 $116,277 27.8%
(A) Includes 14,301 apartment units.
(B) Includes results of Oxford Manor and Marbury Plaza properties which
were sold in 1998.
Acquisition Portfolio: Units
1997 Properties
The Kenmore (NW Washington, D.C.) 376
Crystal Plaza (Northern VA) 540
Crystal Towers (Northern VA) 912
Lincoln Towers (Northern VA) 714
2000 Commonwealth (Boston) 188
One East Delaware (Chicago) 306
1998 Properties
Tunlaw Gardens (NW Washington, D.C.) 167
Tunlaw Park (NW Washington, D.C.) 120
Pan Vista (Northern VA) 299
McClurg Court (Chicago) 1,075
Cronin's Landing (Boston) 281
4,978
(C) Development Portfolio: **
Springfield Station (Northern VA) 630
Courthouse Place (Northern VA) 564
One Superior Place (Chicago) 809
The Park Connecticut (NW Washington, D.C.) 142
2,145
** Excludes projects under contingent pre-purchase agreements.
(D) Certain amounts have been reclassified to conform with the Current
Year Presentation.
CHARLES E. SMITH RESIDENTIAL REALTY, INC.
Funds Available for Distribution (FAD) Calculation
For the Three and Twelve Months Ended December 31, 1998 and 1997
(dollars in thousands, except per share data)
3 Months Ended Dec. 31, 12 Months Ended Dec. 31,
% Change % Change
From From
1998 1997 Last Year 1998 1997 Last Year
FFO OF THE OPERATING
PARTNERSHIP $27,750 $22,876 21.3% $98,588 $72,963 35.1%
Add: Amortization of
Deferred Financing
Costs 329 544 -39.5% 1,641 2,298 -28.6%
Amortization of Unit
Grants 61 162 -62.3% 521 579 -10.0%
Less: Additions to
Rental
Property(A) (3,682) (4,634) -20.5% (16,852) (12,811) 31.5%
Principal Curtailments
on Mortgage Debt (411) (508) -19.1% (1,489) (1,396) 6.7%
Straight-Lining of
Retail Rents (181) (33) 448.5% (522) (340) 53.5%
FAD OF THE OPERATING
PARTNERSHIP 23,866 18,407 29.7% 81,887 61,293 33.6%
Minority Interest(9,376) (8,492) 10.4% (33,684) (30,073) 12.0%
FAD attributable to
shareholders $14,490 $9,915 46.1% $48,203 $31,220 54.4%
Funds Available for
Distribution per
Share - basic $0.68 $0.59 15.3% $2.43 $2.24 8.5%
Dividend Declared
per Share $0.535 $0.520 2.9% $2.110 $2.050 2.9%
Payout Ratios
As a Percentage
of FFO 67% 71% -- 72% 77% --
As a Percentage
of FAD 79% 88% -- 87% 92% --
(A) Additions to Rental Property consist of the following:
Core Residential Portfolio $1,695 $3,458 $11,020 $10,222
Core Redevelopment 90 69 1,435 565
Acquisition/Disposition
Portfolio 1,810 919 4,266 1,770
Retail Portfolio 87 188 131 254
Total Additions to Rental Property $3,682 $4,634 $16,852 $12,811
CHARLES E. SMITH RESIDENTIAL REALTY, INC.
Debt Composition
For the Year Ended December 31, 1998
Average Average
Interest Dollars in % of Years to
Rate Thousands Total Maturity
Fixed Rate Debt
Long Term Mortgages 7.10% $592,386 74.9% 11.5
$83M Line of Credit 7.27% 30,000 3.8% 5.5
Sub-Total 7.11% 622,386 78.7% 11.2
Variable Rate Debt
Construction Loans 6.89% 63,195 8.0% 2.1
$185M Revolver
(LIBOR + 1.05%) 6.31% 53,000 6.7% 2.2
$100M Revolver
(LIBOR + 1.05%) 6.12% 52,000 6.6% 2.2
Sub-Total 6.47% 168,195 21.3% 2.2
Total Debt 6.97% $790,581 100.0% 9.3
As of As of As of As of As of
12/31/98 09/30/98 06/30/98 03/31/98 12/31/97
Debt to Total
Market
Capitalization
Ratio 40.3% 40.4% 38.3% 34.7% 35.0%
Market
Capitalization
(in millions) $1,960 $1,859 $1,810 $1,722 $1,746
Annual Interest
Coverage Ratio 3.24 n/a n/a n/a 2.78
* Debt to Total Market Capitalization Ratio at l2/31/98 is based on
18,212,600 common shares, 3,354,953 convertible preferred shares, and
13,268,740 partnership units outstanding at a common stock price of $32.125
and $50M of perpetual preferred stock.
SOURCE Charles E. Smith Residential Realty, Inc.
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Related links:
http://www.smithreit.com
CONTACT:
Media: John Kurtz, 703-769-1153; Investors:
Greg Samay, 703-769-1029, both of Charles E. Smith Residential
Realty
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