Strategic Transaction Will More Than Double Colonial Properties' Multifamily
Portfolio NOI and Diversify Its Geographic Mix by Adding Assets in High Growth
Markets
BIRMINGHAM, Ala., Oct. 25 /PRNewswire-FirstCall/ -- Colonial Properties
Trust (NYSE: CLP), a real estate investment trust (REIT) that owns a
diversified portfolio of multifamily, office and retail properties, and
Cornerstone Realty Income Trust, Inc. (NYSE: TCR) ("Cornerstone"), a Richmond,
Virginia-based REIT focused on multifamily communities, today announced that
they have entered into a definitive merger agreement under which Cornerstone
will merge into Colonial Properties. The total transaction value, including
the assumption or repayment of Cornerstone debt, is approximately $1.5
billion, or $10.80 per share, based on Colonial Properties' closing price as
of October 22, 2004. The transaction is expected to close during the first
quarter of 2005.
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"This is truly a company-changing event," stated Thomas H. Lowder,
Colonial Properties' chairman and chief executive officer. "The combined
company will have a total enterprise value in excess of $5 billion and possess
one of the largest Sunbelt focused multifamily platforms. With the
acquisition of Cornerstone, Colonial Properties achieves three primary
corporate objectives. We significantly increase our multifamily portfolio,
diversify our Net Operating Income (NOI) stream geographically and further
expand our presence in high growth metropolitan statistical areas (MSAs). We
expect our multifamily portfolio to generate over 50 percent of our 2005 pro
forma NOI versus approximately 29 percent in 2004. No single state will
account for more than 27 percent of our 2005 pro forma NOI which compares to
approximately 42 percent in 2004."
Lowder also commented, "We reconfirm our funds from operations (FFO)
guidance for 2005 and we intend to maintain our current common dividend
policy."
Glade M. Knight, Cornerstone's chairman and chief executive officer, who
has agreed to join Colonial Properties' board of directors after the merger,
said, "This transaction is a wonderful strategic fit for Cornerstone and at
the same time provides our shareholders with a premium and the ability to
participate in the recovery of our combined Sunbelt markets. We have admired
Colonial Properties' assets and their people for a long time and are excited
about the prospects of our new company."
Transaction Details
The transaction will be structured as a common and preferred stock
election merger, with Cornerstone shareholders having the right to elect to
receive the merger consideration in Colonial Properties common or preferred
depositary shares, subject to the restriction that the preferred depositary
shares issued shall not exceed 25 percent of the total merger consideration.
The merger agreement provides that Cornerstone shareholders who elect to
receive common stock will receive 0.2584 Colonial Properties shares for each
Cornerstone share. Cornerstone shareholders who elect to receive redeemable
preferred depositary shares will receive 0.4200 shares of $25 liquidation
preference redeemable Series E Preferred Depositary Shares with a dividend
rate of 7.62 percent which will be listed on the NYSE. The exchange ratios
are subject to minor adjustments related to certain tax matters.
Depending upon the shareholder's election, Colonial Properties expects to
issue approximately 11 to 14 million shares of new common stock and up to
approximately $150 million of new preferred securities and refinance or assume
approximately $850 million of Cornerstone's existing secured debt. The
transaction, which remains subject to approval by the common shareholders of
Colonial Properties and Cornerstone, has been unanimously approved by both
boards of directors.
Cornerstone will have the right to terminate the transaction if Colonial
Properties' average share price for the 20 days preceding 10 days prior to the
close of the transaction is below $31.00. However, in the event Colonial
Properties' share price is below such level, Colonial Properties has the right
to continue the transaction through the payment, at its sole option, of
additional Colonial Properties common stock or cash to provide Cornerstone
shareholders value equivalent to that which they would have received had the
Colonial Properties stock price been $31.00 for such measurement period.
Colonial Properties will have the right to terminate if the average of its
share price exceeds $49.00 for 20 consecutive days preceding 10 days prior to
the close of the transaction.
Colonial Properties was advised by Banc of America Securities LLC, which
rendered a fairness opinion to the Colonial Properties Board of Directors.
Citigroup Global Markets Inc. acted as co-advisor. Colonial Properties' legal
advisors were Hogan & Hartson L.L.P., Leitman, Siegal & Payne, P.C. and Sirote
Permutt, P.C. Cornerstone was advised by Wachovia Securities. McGuireWoods
LLP acted as its legal advisor.
Conference Call
Colonial Properties and Cornerstone will hold a joint conference call
Monday, October 25, 2004 at 10:00AM Eastern/9:00AM Central. To participate,
dial 1-877-500-9123. For international access to the call, please dial 706-
643-7652. A replay will be available for 30 days by dialing 1-800-642-1687;
for international access to the recording, please dial 1-706-645-9291. The
Conference ID is 1768266. Access to the live call and a replay will be
available through the Company's website at http://www.colonialprop.com under
"Investor Relations: Shareholder Information."
The Company will have a slide presentation available to augment
management's formal presentation, which will be accessible via the Company's
website at http://www.colonialprop.com under "Investor Relations: Shareholder
Information."
About Colonial Properties
Colonial Properties Trust is a diversified REIT that, through its
subsidiaries, owns a portfolio of multifamily, office and retail properties
where you live, work and shop in Alabama, Florida, Georgia, Mississippi, North
Carolina, South Carolina, Tennessee, Texas and Virginia. Colonial Properties
Trust performs development, acquisition, management, leasing and brokerage
services for its portfolio and properties owned by third parties. Colonial
Properties Trust is a diversified REIT, which has a total market
capitalization of $3.7 billion. The foundation of Colonial Properties' success
is its live, work and shop diversified investment strategy. The Company
manages or leases 23,786 apartment units, 6.7 million square feet of office
space and 16.3 million square feet of retail shopping space. Additional
information on Colonial Properties Trust is available on the Internet at
http://www.colonialprop.com. The Company, headquartered in Birmingham, Ala., is
listed on the New York Stock Exchange under the symbol "CLP" and is included
in the S&P SmallCap 600 Index.
About Cornerstone Realty Income Trust, Inc.
Cornerstone Realty Income Trust, Inc. (NYSE: TCR) is a fully integrated,
self-managed and self-advised real estate company that has operated as a real
estate investment trust (REIT) since 1993. The company focuses on the
ownership and management of multifamily communities in select markets in
Virginia, North Carolina, South Carolina, Georgia and Texas. Currently
Cornerstone owns 87 apartment communities with 22,910 units, a third-party
property management business, apartment land under development, and ownership
interests in four joint ventures. Cornerstone is headquartered in Richmond,
Virginia and its common stock trades on the New York Stock Exchange under the
symbol "TCR." For more information about Cornerstone, visit the company's web
site at http://www.CornerstoneREIT.com .
Forward Looking Statements
"Safe Harbor" Statement under the Private Securities Litigation Reform Act
of 1995: Except for the historical information contained herein, this news
release contains forward-looking statements regarding Company and property
performance, and is based on the Company's current expectations and judgment.
Actual results could vary materially depending on risks and uncertainties
inherent to general and local real estate conditions, competitive factors
specific to markets in which Colonial Properties operates, legislative or
other regulatory decisions, future interest rate levels or capital markets
conditions. The Company assumes no liability to update this information. For
more details, please refer to the Company's SEC filings, including its most
recent Annual Report on Form 10-K and quarterly reports on Form 10-Q.
Additional Information about the Merger and Where to Find It
In connection with the proposed merger of Cornerstone Realty Income Trust,
Inc. with and into Colonial Properties Trust, Cornerstone and Colonial
Properties intend to file relevant materials with the Securities and Exchange
Commission, including a registration statement on Form S-4 that will contain a
prospectus and a joint proxy statement. INVESTORS AND SECURITY HOLDERS OF
CORNERSTONE AND COLONIAL PROPERTIES ARE URGED TO READ THE MATERIALS WHEN THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT
CORNERSTONE, COLONIAL PROPERTIES AND THE MERGER. The proxy statement,
prospectus and other relevant materials (when they become available), and any
other documents filed by Cornerstone and Colonial Properties with the SEC, may
be obtained free of charge at the SEC's web site at http://www.sec.gov . In
addition, investors and security holders may obtain free copies of the
documents filed with the SEC by Colonial Properties by directing a written
request to Colonial Properties Trust, 2101 Sixth Avenue North, Suite 750,
Birmingham, Alabama 35203, Attention: Investor Relations, and free copies of
the documents filed with the SEC by Cornerstone by directing a written request
to Cornerstone Realty Income Trust, Inc., 306 East Main Street, Richmond,
Virginia 23219, Attention: Investor Relations. Investors and security holders
are urged to read the proxy statement, prospectus and the other relevant
materials when they become available before making any voting or investment
decision with respect to the merger.
Cornerstone, Colonial Properties and their respective executive officers,
trustees and directors may be deemed to be participants in the solicitation of
proxies from the security holders of Cornerstone and Colonial Properties in
connection with the merger. Information about those executive officers and
directors of Cornerstone and their ownership of Cornerstone common shares is
set forth in the proxy statement for Cornerstone's 2004 Annual Meeting of
Shareholders, which was filed with the SEC on April 8, 2004. Information
about the executive officers and trustees of Colonial Properties and their
ownership of Colonial Properties common stock and limited partnership units in
Colonial Realty Limited Partnership is set forth in the proxy statement for
Colonial Properties' 2004 Annual Meeting of Shareholders, which was filed with
the SEC on March 22, 2004. Investors and security holders may obtain
additional information regarding the direct and indirect interests of
Cornerstone, Colonial Properties and their respective executive officers,
trustees and directors in the merger by reading the proxy statement and
prospectus regarding the merger when they become available.
This communication shall not constitute an offer to sell or the
solicitation of an offer to sell or the solicitation of an offer to buy any
securities, nor shall there be any sale of securities in any jurisdiction in
which such offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such jurisdiction. No
offering of securities shall be made except by means of a prospectus meeting
the requirements of Section 10 of the Securities Act of 1933, as amended.
SOURCE Colonial Properties Trust
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Related links:
http://www.colonialprop.com
http://www.CornerstoneREIT.com
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CONTACT:
Weston M. Andress, CFO-CIO, +1-704-376-3391;
or Barbara M. Pooley, SVP Investor Relations, +1-704-376-1774; or
Linda S. Geiss, VP Media Relations, +1-205-250-8768, all of
Colonial Properties Trust; or Mark Murphy, Director Investor
Relations of Cornerstone Realty Income Trust, +1-804-643-1761
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