REIT to Use Proceeds to Accelerate Growth in Local and Other U.S. Markets

    ARLINGTON, Va., May l5 /PRNewswire/ --  Charles E. Smith Residential
Realty, Inc. (NYSE: SRW) a real estate investment trust specializing in high
quality multifamily rental properties announced today that is has structured
a $71.5 million private placement of convertible non-voting preferred stock
with a major institutional investor.  Proceeds will be used in funding the
Company's accelerated acquisition and development programs in the Washington,
D.C. area and other U.S. cities with strong urban multifamily markets.
    The convertible preferred stock will be issued at $27.08 per share, with
the net per share proceeds approximately equal to the per share net proceeds
of the Company's February 1997 public stock offering.  An initial $20 million
of the proceeds from the preferred placement will be drawn in June, 1997 and
the balance by May, 1998, with timing of draws at the discretion of the
Company.  The preferred shares will pay dividends equivalent to the rate being
paid on the Company's common shares, with a minimum of the current annual rate
of $2.02 per share.  The preferred shares cannot be converted into common
stock until January 31, 1999 except under certain conditions.  Conversion is
on a one-to-one basis and all conversions are subject to a 9.8% cap on common
stock ownership through May 2002.  The Company has the right to call or
require conversion after six years.
    The Company also announced the June start of a $59 million development
project, bringing its investment in acquisition and development transactions
so far in 1997 to $188 million.
    "One of our primary financial objectives in 1997 was to augment our
capital structure to fund a more aggressive growth strategy," said Ernest
Gerardi, Jr., president of Charles E. Smith Residential.  "This private equity
capital will provide us with additional financial flexibility to support our
accelerated acquisition and development programs, both in the Washington area
and in other growing metropolitan markets that play to our strengths in urban
high rise apartment properties."
    Gerardi added: "Driven by rapid growth in the telecommunications and
information technology sectors in Northern Virginia, the Washington area
economy is expanding at a healthy pace and we anticipate this will fuel
further increases in demand in the region's apartment market."  He noted that
in the first quarter of 1997, employment in Northern Virginia alone increased
by 40,000 jobs over the same period of the previous year, and that over 15 new
office buildings are slated for construction in the region over the next two
years.
    He continued: "While significant opportunities are developing in our own
backyard, we are also focused on expanding the geographic scope of our
portfolio -- primarily by targeting other successful multifamily operating
companies."
    The Company has recently completed the zoning approvals and purchase of
land for development of a new $59 million, 630-unit mid-rise and garden
apartment community in Springfield, VA.  Construction is scheduled to begin
next month.  The site is exceptionally well located to capitalize on the
growth in the area -- adjacent to a new Metrorail and commuter rail station,
across the street from a major regional shopping mall, and with highly
convenient highway access to the major employment centers in Northern Virginia
and downtown Washington.
    Charles E. Smith Residential Realty, Inc. is a self-managed Real Estate
Investment Trust based in the Washington D. C. area.  The Company and its
subsidiaries and affiliates own, acquire, develop and manage multifamily
residential properties, and provide a range of real estate services to other
property owners. The Company's portfolio includes 44 multifamily properties
with 17,028 units.
    The total market capitalization of Charles E. Smith Residential is
approximately $1.3 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 PRNewswire's "Company 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.

Link to this page: