Core Portfolio Drives Strong FFO Growth
ARLINGTON, Va., July 27 /PRNewswire/ -- Charles E. Smith Residential
Realty, Inc. (NYSE: SRW), one of the country's leading residential REITs,
announced today that Funds from Operations (FFO) for the Company's second
quarter, ended June 30, 1998, was $0.73 per share, an increase of 12.3% over
the Company's second quarter 1997. (All per share amounts are for diluted
shares.) For the six month period ended June 30, 1998, the Company's FFO was
$1.37 per share, up 12.3%, as compared with the first six months of 1997. FFO
is generally regarded as the best measure of a REIT's performance.
Ernest Gerardi, Jr., President of Charles E. Smith Residential Realty,
Inc., commented, "Our FFO growth is driven by our continuing strong core
portfolio earnings, which reflects both broad demand strength in our markets
and our success in controlling expenses. While our core portfolio is our
primary engine of growth, we are also actively pursuing strategic development
and acquisition opportunities to complement our core growth."
In the second quarter the Company completed acquisitions in Washington,
D.C., Chicago and Boston, totaling 1,655 apartment units, and also started
construction at two development projects in the Washington D.C. area -- 400
units in Reston, Virginia's Town Center District, and 142 units at an urban
infill site on Connecticut Avenue in northwest Washington, D.C. Including
these, the Company has a current pipeline of five projects totaling over 2,500
units under construction in Chicago, Northern Virginia, and Washington, D.C.
The Company also completed the acquisition of Presidential Villas -- one of
the largest providers of corporate furnished rental apartment services in the
Chicago market. This acquisition doubles the size and expands the geographic
scope of the Company's growing furnished apartment business.
Charles E. Smith Residential Realty is structured as an umbrella
partnership real estate investment trust, or UPREIT, under which 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 59% of its Operating Partnership and
is its sole general partner.
The Operating Partnership's total Funds from Operations was $24.4 million,
for the second quarter of 1998, an increase of 40.3% over the same quarter of
1997. For the first six months of 1998, the Operating Partnership's FFO was
$45.0 million, up 45.2% over the same six month period of 1997.
The Operating Partnership's total revenue from rental properties was $61.8
million for the second quarter of 1998, an increase of 24.8% over second
quarter 1997, and total rental property revenue for the first six months of
1998 was $117.4 million, an increase of 24.6% over total rental revenue for
the first six months of 1997.
The Operating Partnership's operating income from rental properties before
depreciation for the second quarter of 1998 was $36.6 million, up 26.0% over
the same quarter of the prior year, and for the first six months of 1998
operating income was $70.0 million, up 28.5% over the same six month period in
1997.
The Company will hold a teleconference on Tuesday, July 28th at 11:00
EDT to review the information reported in this release. To participate,
please call 1-800-633-8540 shortly before 11:00 a.m. on that day, 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 approximately
20,000 apartment units, has another 2,500+ 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 $1.8 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, including statements of goals, intentions, and expectations
regarding or based on assumptions about general economic and market
conditions, competitive dynamics and other factors that, by their nature, are
subject to significant uncertainties, some of which are discussed in the
Company's filings with the Securities and Exchange Commission. Because of
these uncertainties, and the assumptions on which statements in this release
are based, actual future results may differ materially.
Charles E. Smith Residential Realty, Inc.
Financial Highlights
For the Three and Six Months Ended June 30, 1998 and 1997
(unaudited)
3 Months Ended June 30, 6 Months Ended June 30,
% Change % Change
From From
Last Last
(dollars in thousands, 1998 1997 Year 1998 1997 Year
except per share data)
Revenue from the
Operating Partnership $61,757 $49,483 24.8%$117,427 $94,259 24.6%
Funds From Operations
of the Operating
Partnership 24,362 17,363 40.3% 45,020 31,010 45.2%
Funds From Operations
- attributable to
shareholders 14,169 8,568 65.4% 25,718 15,021 71.2%
Per Share - basic (a) $0.73 $0.65 12.3% $1.37 $1.22 12.3%
Per Share - diluted $0.73 $0.65 12.3% $1.37 $1.22 12.3%
Net Income of the
Operating Partnership $18,274 $12,068 51.4% $31,589 $20,864 51.4%
Net Income - attributable
to common shareholders 7,022 5,947 18.1% 12,976 10,106 28.4%
Per Common Share
- basic (a) $0.46 $0.45 2.2% $0.84 $0.82 2.4%
Per Common Share
- diluted $0.45 $0.45 0.0% $0.84 $0.82 2.4%
Dividends Declared
per Share $0.520 $0.505 3.0% $1.040 $1.010 3.0%
Total Assets $1,044,454 $865,506 20.7%
Debt Composition as of June 30, 1998
Average Average
Interest Dollars in % of Years to
Rate Thousands Total Maturity
Fixed Rate Debt
Long Term Mortgages 7.71% $440,265 63.5% 8.5
$83M Line of Credit 7.27% 30,000 4.3% 6.0
Sub-Total 7.69% 470,265 67.8% 8.3
Variable Rate Debt
Mortgages 6.79% 13,175 1.9% 0.4
Construction Loan 6.96% 18,808 2.7% 2.3
$275M Line of Credit 6.61% 191,500 27.6% 2.7
Sub-Total 6.65% 223,483 32.2% 2.5
Total Debt 7.35% $693,748 100.0% 6.4
As of As of As of As of As of
06/30/98 03/31/98 12/31/97 09/30/97 06/30/97
Debt to Total Market
Capitalization Ratio 38.3% 34.7% 35.0% 37.2% 40.7%
Market Capitalization
(in millions) $1,810 $1,722 $1,746 $1,491 $1,335
Debt to Total Market Capitalization Ratio at 6/30/98 is based on
15,820,722 common shares, 3,765,524 convertible preferred shares, and
13,739,288 partnership units outstanding at a common stock price of $32.00 and
$50M of perpetual preferred stock.
(a) Weighted average shares and partnership units outstanding during the
periods were as follows (in 000's):
3 Months Ended 6 Months Ended
June 30, June 30,
1998 1997 1998 1997
Common Shares 15,422 13,245 15,370 12,304
Convertible Preferred Shares 3,856 -- 3,359 --
Partnership Units 14,037 13,535 14,057 13,098
Total Shares and Partnership Units 33,315 26,780 32,786 25,402
CHARLES E. SMITH RESIDENTIAL REALTY, INC.
Operating Summary
For the Three and Six Months Ended June 30, 1998 and 1997
(unaudited)
3 Months Ended June 30, 6 Months Ended June 30,
% Change % Change
From From
(dollars in thousands, 1998 1997(b) Last 1998 1997(b) Last
except per share data) Year Year
RENTAL PROPERTIES (a)
Revenue $61,757 $49,483 24.8% $117,427 $94,259 24.6%
Operating
Expenses (25,124) (20,413) 23.1% (47,422) (39,764) 19.3%
Depreciation and
Amortization (7,088) (5,295) 33.9% (13,475) (10,146) 32.8%
29,545 23,775 24.3% 56,530 44,349 27.5%
PROPERTY SERVICE
BUSINESSES (PSBs) 2,227 896 148.7% 2,891 1,705 69.6%
OTHER INCOME AND EXPENSES
Corporate General
and Administrative
Expenses (2,203) (1,648) 33.7% (4,228) (3,039) 39.1%
Interest Expense,
net (11,295) (10,955) 3.1% (22,022) (22,151) -0.6%
Gain on sale of
property 0 0 0% 3,120 0 100.0%
Extraordinary item
-- loss on debt
extinguishment 0 0 0% (4,702) 0 100.0%
NET INCOME OF THE
OPERATING
PARTNERSHIP 18,274 12,068 51.4% 31,589 20,864 51.4%
Minority Interest (7,672) (6,121) 25.3% (13,543) (10,758) 25.9%
Net Income 10,602 5,947 78.3% 18,046 10,106 78.6%
Less income
attributable to
preferred shares (3,580) 0 100.0% (5,070) 0 100.0%
Net Income
attributable to
Common Shares $7,022 $5,947 18.1% $12,976 $10,106 28.4%
Net Income per
Common Share
- basic $0.46 $0.45 2.2% $0.84 $0.82 2.4%
Net Income Per
Common Share
- diluted $0.45 $0.45 0.0% $0.84 $0.82 2.4%
NET INCOME OF THE
OPERATING PARTNERSHIP$18,274 $12,068 51.4% $31,589 $20,864 51.4%
Less: Perpetual
Preferred Dividends(1,000) 0 100.0% (1,626) 0 100.0%
Add: Depreciation of
Real Property 7,088 5,295 33.9% 13,475 10,146 32.8%
Less: Gain on sale
of property 0 0 0% (3,120) 0 100.0%
Add: Extraordinary
item - loss on debt
extinguishment 0 0 0% 4,702 0 100.0%
FFO OF THE OPERATING
PARTNERSHIP 24,362 17,363 40.3% 45,020 31,010 45.2%
Minority Interest (10,193) (8,795) 15.9% (19,302) (15,989) 20.7%
FFO attributable to
shareholders $14,169 $8,568 65.4% $25,718 $15,021 71.2%
Funds From
Operations per
Share - basic $0.73 $0.65 12.3% $1.37 $1.22 12.3%
Funds From
Operations per
Share - diluted $0.73 $0.65 12.3% $1.37 $1.22 12.3%
(a) Details are shown on the following page.
(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 Six Months Ended June 30, 1998 and 1997
(unaudited)
3 Months Ended June 30, 6 Months Ended June 30,
% Change % Change
From From
(dollars in Last Last
thousands) 1998 1997(d) Year 1998 1997(d) Year
CORE RESIDENTIAL
PORTFOLIO (a)
Revenue $42,769 $40,914 4.5% $84,076 $80,678 4.2%
Operating Expenses (17,346) (16,875) 2.8% (34,370) (34,220) 0.4%
25,423 24,039 5.8% 49,706 46,458 7.0%
ACQUISITION PORTFOLIO (b)
Revenue 16,502 6,021 N/A 28,401 8,731 N/A
Operating Expenses (6,660) (2,641) N/A (11,013) (3,809) N/A
9,842 3,380 N/A 17,388 4,922 N/A
DEVELOPMENT PORTFOLIO (c)
Revenue 86 0 N/A 87 0 N/A
Operating Expenses (279) 0 N/A (404) 0 N/A
(193) 0 N/A (317) 0 N/A
RETAIL PORTFOLIO
Revenue 2,400 2,548 -5.8% 4,863 4,850 0.3%
Operating Expenses (839) (897) -6.5% (1,635) (1,735) -5.8%
1,561 1,651 -5.5% 3,228 3,115 3.6%
TOTAL PORTFOLIO
Revenue 61,757 49,483 24.8% 117,427 94,259 24.6%
Operating Expenses(25,124) (20,413) 23.1% (47,422) (39,764) 19.3%
$36,633 $29,070 26.0% $70,005 $54,495 28.5%
(a) Includes 14,973 apartment units.
(b) Acquisition Portfolio: Units
1997 Properties
The Kenmore (NW Washington, D.C.) 376
Crystal Plaza (Crystal City) 540
Crystal Towers (Crystal City) 912
Lincoln Towers (Other Northern Virginia - Inside Beltway) 714
2000 Commonwealth (Boston, Massachusetts) 188
One East Delaware (Chicago, Illinois) 306
1998 Properties
Tunlaw Gardens (NW Washington, D.C.) 167
Tunlaw Park (NW Washington, D.C.) 120
Parc Vista (Crystal City) 299
McClurg Court (Chicago, IL) 1,075
4,697
(c) Development Portfolio:**
Springfield Station (Other Northern Virginia - Inside Beltway) 630
Courthouse Place (Other Northern Virginia - Inside Beltway) 564
One Superior Place (Chicago, Illinois) 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 Six Months Ended June 30, 1998 and 1997
(unaudited)
3 Months Ended June 30, 6 Months Ended June 30,
% Change % Change
(dollars in From From
thousands, except Last Last
per share data) 1998 1997 Year 1998 1997 Year
NET INCOME OF
THE OPERATING
PARTNERSHIP $18,274 $12,068 51.4% $31,589 $20,864 51.4%
Less: Perpetual
Preferred Dividends (1,000) 0 100% (1,626) 0 100.0%
Add: Depreciation
of Real Property 7,088 5,295 33.9% 13,475 10,146 32.8%
Less: Gain on sale
of property 0 0 0% (3,120) 0 100.0%
Add: Extraordinary
item - loss on debt
extinguishment 0 0 0% 4,702 0 100.0%
FFO OF THE OPERATING
PARTNERSHIP $24,362 $17,363 40.3% $45,020 $31,010 45.2%
Add: Amortization of
Deferred Financing
Costs 381 574 -33.6% 934 1,218 -23.3%
Amortization of
Unit Grants 201 142 41.5% 382 276 38.4%
Less: Additions to
Rental Property (a)(5,201) (2,757) 88.6% (8,848) (4,453) 98.7%
Principal Curtailments
on Mortgage Debt (282) (486) -42.0% (658) (630) 4.4%
Straight-Lining of
Retail Rents (128) (175) -26.9% (258) (151) 70.9%
FAD OF THE OPERATING
PARTNERSHIP 19,333 14,661 31.9% 36,572 27,270 34.1%
Minority Interest (8,079) (7,415) 9.0% (15,680) (14,061) 11.5%
FAD attributable
to shareholders $11,254 $7,246 55.3% $20,892 $13,209 58.2%
Funds Available for
Distribution per
Share - basic $0.58 $0.55 5.5% $1.12 $1.07 4.7%
Dividend Declared
per Share $0.520 $0.505 3.0% $1.040 $1.010 3.0%
Payout Ratios
As a Percentage of FFO 71% 78% -- 76% 83% --
As a Percentage of FAD 90% 92% -- 93% 94% --
(a) Additions to Rental Property consist of the following:
Core Residential
Portfolio $3,981 $2,504 -- $7,121 $4,095 --
Retail Portfolio 38 9 -- 38 54 --
Acquisition
Portfolio 1,182 244 -- 1,689 304 --
Total Additions to
Rental property $5,201 $2,757 -- $8,848 $4,453 --
SOURCE Charles E. Smith Residential Realty, Inc.
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Related links:
http://www.smithreit.com
CONTACT:
Investors: Greg Samay, 703-769-1029, or
Media: John Kurtz, 703-769-1153, both of Charles E. Smith
Residential Realty
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