Same Community Occupancy 95.8%
Same Community NOI Up 6.9% for the Quarter
Company Reaffirms Full-Year Guidance
CLEVELAND, Oct. 27 /PRNewswire-FirstCall/ -- Associated Estates Realty
Corporation (NYSE: AEC) (Nasdaq: AEC) today reported a net loss available
to common shareholders of $4.2 million or $0.26 per common share (basic and
diluted), for the third quarter ended September 30, 2008, compared with a
net loss available to common shareholders of $4.0 million or $0.24 per
common share (basic and diluted), for the third quarter ended September 30,
2007.
Funds from operations (FFO) for the quarter were $0.31 per common share
(basic and diluted), compared with $0.29 per common share (basic and
diluted), for the third quarter ended September 30, 2007, a 6.9 percent
increase.
A reconciliation of net (loss) income applicable to common shares to
FFO is included in the table at the end of this press release and in the
Company's supplemental financial information to be furnished with this
earnings release to the Securities and Exchange Commission on Form 8-K.
Revenue for the quarter was $35.3 million compared with $34.5 million
for the third quarter of 2007, a 2.3 percent increase.
Q3 Same Community Portfolio Results
Net operating income (NOI) from the Company's same community portfolio
increased 6.9 percent as a result of revenue increasing 3.3 percent, and
property operating expenses decreasing 1.0 percent, compared with the third
quarter of 2007. Physical occupancy remains constant at 95.8 percent
compared to the end of the third quarter of 2007. For the third quarter,
the average net rent collected per unit for the same community properties
increased 3.1 percent to $864 per month. Net rent collected per unit for
the Company's same community Midwest portfolio grew 5.1 percent to $789,
while net rent collected per unit for the Company's same community
properties in the Mid-Atlantic/Southeast markets decreased 0.1 percent to
$1,020.
Additional quarterly financial information, including performance by
region for the Company's portfolio, is included in the Company's
supplemental fact booklet, which is available on the "Investors" section of
the Company's web site at http://www.aecrealty.com, or by clicking on the
following link: http://ir.aecrealty.com/results.cfm.
Year-to-Date Performance
For the nine months ended September 30, 2008, net income applicable to
common shares was $31.8 million or $1.96 per share (basic and diluted)
compared to net income applicable to common shares of $4.0 million or $0.23
per share (basic and diluted) for the period ended September 30, 2007. The
results for the nine month period ended September 30, 2008 and September
30, 2007 include gains from property sales of $45.2 million and $17.0
million, or $2.79 per share and $1.00 per share, respectively.
Funds from operations for the first nine months ended September 30,
2008 were $0.87 per share and include defeasance and/or prepayment costs of
$2.0 million, or approximately $0.12 per share associated with the
repayment of $11.0 million in debt. Excluding these costs, FFO as adjusted
for the period ended September 30, 2008 was $0.99 per share.
A reconciliation of net (loss) income applicable to common shares to
FFO, and to FFO as adjusted, is included in the table at the end of this
press release and in the Company's supplemental financial information to be
furnished with this earnings release to the Securities and Exchange
Commission on Form 8-K.
Year-to-date, NOI for the same community portfolio was up 6.7 percent.
This increase was driven by a 3.5 percent increase in revenue and a 0.3
percent decrease in property operating expenses.
Debt Maturities
The Company has no debt maturities remaining in 2008, a total of $72.3
million maturing in 2009, and a total of $78.6 million in 2010. A schedule
of debt maturities can be found on page 24 of the supplemental fact book.
The Company's $150 million line of credit had a balance of $14.5
million on September 30, 2008, and matures in 2011.
2008 Outlook
The Company has reaffirmed its expectations for full-year FFO as
adjusted of $1.28 to $1.32 per share, which excludes defeasance and other
prepayment costs. Assumptions relating to the Company's earnings guidance
can be found on page 25 of the supplemental fact book.
Conference Call
A conference call to discuss the results will be held tomorrow,
Tuesday, October 28, 2008 at 2:00 p.m. (EDT). To participate in the call:
Via Telephone: The dial in number is 800-860-2442 and the pass code is
"Estates."
Via the Internet (listen only): Access the Company's website at
http://www.aecrealty.com. Please log on at least 15 minutes prior to the scheduled
start time in order to register, download and install any necessary audio
software. Select the "Register for AEC's Conference Call" link on the left
hand side of the page and follow the brief instructions to register for the
event. The webcast will be archived through November 11, 2008.
Company Profile
Associated Estates Realty Corporation (AEC), based in Richmond Heights,
Ohio, is a real estate investment trust ("REIT") and is a member of the
Russell 2000. AEC's portfolio consists of 54 owned and managed properties
totaling 13,396 units in nine states. For more information about the
Company, please visit its website at http://www.aecrealty.com.
FFO and FFO as adjusted are non-Generally Accepted Accounting Principle
(GAAP) measures. The Company generally considers FFO and FFO as adjusted to
be a useful measure for reviewing the comparative operating and financial
performance of the Company because FFO and FFO as adjusted can help one
compare the operating performance of a company's real estate between
periods or as compared to different REITs. A reconciliation of net (loss)
income applicable to common shares to FFO and FFO as adjusted is included
in the table at the end of this press release and in the Company's
supplemental financial information to be furnished with this earnings
release to the Securities and Exchange Commission on Form 8K.
Safe Harbor Statement
This news release contains forward-looking statements based on current
judgments and knowledge of management, which are subject to certain risks,
trends and uncertainties that could cause actual results to vary from those
projected, including but not limited to, expectations regarding the
Company's 2008 performance, which are based on certain assumptions.
Accordingly, readers are cautioned not to place undue reliance on
forward-looking statements, which speak only as of the date of this news
release. These forward-looking statements are intended to be covered by the
safe harbor provisions of the Private Securities Litigation Reform Act of
1995. The words "expects," "projects," "believes," "plans," "anticipates,"
and similar expressions are intended to identify forward-looking
statements. Investors are cautioned that the Company's forward-looking
statements involve risks and uncertainty, that could cause actual results
to differ from estimates or projections contained in these forward-looking
statements, including without limitation the following: changes in the
economic climate in the markets in which the Company owns and manages
properties, including interest rates, the ability of the Company to
consummate the sale of properties pursuant to its current plan, the overall
level of economic activity, the availability of consumer credit and
mortgage financing, unemployment rates and other factors; the ability of
the Company to refinance debt on favorable terms at maturity; the ability
of the Company to defease or prepay debt pursuant to its current plan;
risks of a lessening of demand for the multifamily units owned or managed
by the Company; competition from other available multifamily units and
changes in market rental rates; increases in property and liability
insurance costs; unanticipated increases in real estate taxes and other
operating expenses (e.g., cleaning, utilities, repair and maintenance
costs, insurance and administrative costs, security, landscaping, staffing
and other general costs); weather conditions that adversely affect
operating expenses; expenditures that cannot be anticipated such as utility
rate and usage increases, unanticipated repairs, and real estate tax
valuation reassessments or millage rate increases; inability of the Company
to control operating expenses or achieve increases in revenue; the results
of litigation filed or to be filed against the Company; changes in tax
legislation; risks of personal injury claims and property damage related to
mold claims because of diminished insurance coverage; catastrophic property
damage losses that are not covered by the Company's insurance; risks
associated with property acquisitions such as environmental liabilities,
among others; changes in or termination of contracts relating to third
party management and advisory business; risks related to the Company's
joint venture; risks related to the perception of residents and prospective
residents as to the attractiveness, convenience and safety of the Company's
properties or the neighborhoods in which they are located; and the
Company's ability to acquire properties at prices consistent with our
investment criteria.
Financial Highlights
(in thousands, except per share data)
Three Months Nine Months
Ended Ended
September 30, September 30,
2008 2007 2008 2007
Total revenue $35,343 $34,535 $101,484 $97,337
Net (loss) income (3,043) (2,821) 35,423 7,858
Net (loss) income applicable to common
shares (1) (4,244) (4,022) 31,820 3,962
Add: Depreciation - real estate assets 8,175 8,210 24,299 23,131
Depreciation - real estate assets -
joint ventures 24 24 69 505
Amortization of joint venture
deferred costs - - - 17
Amortization of intangible assets 1,101 753 3,062 792
Less: Gain on disposition of properties - - (45,203) (17,043)
Funds from Operations (FFO) (2) 5,056 4,965 14,047 11,364
Funds from Operations (FFO) as
adjusted (3) 5,056 4,965 16,006 15,760
Add: Depreciation - other assets 326 315 1,015 919
Depreciation - other assets -
joint ventures - 1 2 83
Amortization of deferred financing
fees 320 299 984 810
Amortization of deferred financing
fees - joint ventures - - - 25
Less: Recurring fixed asset additions (3,159) (2,999) (7,104) (6,670)
Recurring fixed asset additions -
joint ventures (2) (2) (4) (26)
Funds Available for Distribution
(FAD) (4) $2,541 $2,579 $10,899 $10,901
Per share
Net (loss) income applicable to common
shares - basic and diluted (1) $(0.26) $(0.24) $1.96 $0.23
Funds from Operations - basic and
diluted (2) $0.31 $0.29 $0.87 $0.66
Funds from Operations as adjusted -
basic and diluted (3) $0.31 $0.29 $0.99 $0.92
Dividends per share $0.17 $0.17 $0.51 $0.51
Weighted average shares outstanding -
basic and diluted (3) 16,298 17,069 16,222 17,110
(1) After preferred share dividends and original costs associated with the
preferred share repurchase of $1,201, $1,201, $3,603 and $3,896,
equivalent to $0.07, $0.07, $0.22 and $0.23 per common share,
respectively.
(2) The Company defines FFO as the inclusion of all operating results,
both recurring and non-recurring, except those results defined as
"extraordinary items" under generally accepted accounting
principles (GAAP), adjusted for depreciation on real estate assets
and amortization of intangible assets and gains and losses from the
disposition of properties and land. Adjustments for joint ventures
are calculated to reflect FFO on the same basis. FFO does not
represent cash generated from operating activities in accordance
with GAAP and is not necessarily indicative of cash available to
fund cash needs and should not be considered an alternative to net
income as an indicator of the Company's operating performance or as
an alternative to cash flow as a measure of liquidity. The Company
generally considers FFO to be a useful measure for reviewing the
comparative operating and financial performance of the Company
because FFO can help one compare the operating performance of a
company's real estate between periods or as compared to different
REITs. It should be noted, however, that certain other real estate
companies may define FFO in a different manner.
(3) The Company defines FFO as adjusted as FFO, as defined above, plus
the add back of defeasance and other prepayment costs of $2.0
million for the nine months ended September 30, 2008, and $4.2
million for nine months ended September 30, 2007. In accordance
with GAAP, these prepayment costs are included as interest expense
in the Company's Consolidated Statement of Operations. Also added
back is $172,000 of preferred stock repurchase costs for the nine
months ended September 30, 2007. In accordance with GAAP, the
Company reclassified from additional paid in capital the original
issuance costs associated with the repurchase of 111,500 depository
shares of the Series B Preferred Shares for the nine months ended
September 30, 2007. The Company is providing this calculation as
an alternative FFO calculation as it considers it a more
appropriate measure of comparing the operating performance of a
company's real estate between periods or as compared to different
REITs.
(4) The Company defines FAD as FFO as adjusted, as defined above, plus
depreciation other and amortization of deferred financing fees less
recurring fixed asset additions. Fixed asset additions exclude
development, investment, revenue enhancing and non-recurring
capital additions. Adjustments for joint ventures are calculated to
reflect FAD on the same basis. The Company considers FAD to be an
appropriate supplemental measure of the performance of an equity
REIT because, like FFO and FFO as adjusted, it captures real estate
performance by excluding gains or losses from the disposition of
properties and land and depreciation on real estate assets and
amortization of intangible assets. Unlike FFO and FFO as adjusted,
FAD also reflects that recurring capital expenditures are necessary
to maintain the associated real estate.
The full text and supplemental schedules of this press release are
available on AEC's website at http://www.aecrealty.com. To receive a copy of the
results by mail or fax, please contact Investor Relations at
1-800-440-2372. For more information, access the Investors section of
http://www.aecrealty.com.
For more information regarding the content of this news release, please
contact:
Kimberly Kanary
(216) 797-8718
SOURCE Associated Estates Realty Corporation
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Related links:
http://www.aecrealty.com
CONTACT:
Kimberly Kanary, Associated Estates Realty
Corporation, +1-216- 797-8718
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