Company Completes Year With Over 33% Portfolio Growth,
Including 2,O00 Units Under Construction
ARLINGTON, Va., Feb. 9 /PRNewswire/ -- Charles E. Smith Residential
Realty, Inc. (NYSE: SRW), one of the country's leading apartment REITs,
announced today that Funds From Operations (FFO) for 1997 was $37.2 million,
up 55.7% over the prior year. 1997 FFO per basic share was up 10.4% to $2.66
($2.65 per diluted share). The FFO increase was attributed to a combination
of core portfolio operating income growth and contributions from acquired
properties. FFO is widely considered to be the most appropriate measure of a
real estate investment trust's operating performance. For the quarter ended
December 31, 1997, FFO was $12.3 million, up 74.1% over fourth quarter 1996
FFO of $7.0 million. Fourth quarter FFO per basic and diluted share was
$0.73, up 2.8% (4.3% per diluted share) over the fourth quarter of 1996.
Fourth quarter per share results reflect the effects of lowering the debt
ratio from 46% to 35% during 1997 as the Company issued equity to fund its
increased pace of acquisition and construction.
Ernest A. Gerardi, Jr., President of Charles E. Smith Residential Realty,
Inc., stated that, "1997 was a breakout year for us in terms of growth. In
addition to again meeting our double digit FFO growth target, we added more
than 3,000 apartment units of quality high-rise acquisitions, and started
construction on another 2,000 units. The total of over 5,000 units will
represent a 33% increase in our portfolio compared with the start of 1997. We
also successfully launched our geographic expansion program with the addition
of high quality urban high-rise assets in Chicago and Boston -- excellent
growth markets that complement our strong base in the Northern
Virginia/Washington, D.C. area. During 1997 we strengthened our balance sheet
by raising over $280 million in equity through a series of public and private
placements, which funded our investment growth and substantially deleveraged
our capital structure. We thus enter 1998 in an exceptionally strong
strategic position to continue our aggressive 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 55% 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
$200.1 million for 1997, an increase of 22.0% over 1996. For the fourth
quarter of 1997, revenue from rental properties increased 28.4% over the same
period the previous year.
The Operating Partnership's 1997 income from rental properties before
depreciation increased 25.4% to $116.3 million. Income from rental properties
before depreciation for the fourth quarter of 1997 increased 30.0% to $32.3
million. The Company's Property Service Businesses contributed 6.1% and 7.8%
of the Operating Partnership's total income before depreciation during 1997
and 1996 respectively.
The Operating Partnership's earnings before interest, taxes, depreciation,
and amortization (EBITDA) increased 22.7% to $120.0 million in 1997. For the
fourth quarter of 1997, EBITDA increased 28.8% to $35.0 million.
Charles E. Smith Residential Realty, Inc.'s net income for 1997 was $24.7
million, or $1.87 per basic share, an increase of 68.5% over 1996. Net income
for the fourth quarter was $7.9 million, or $0.54 per basic share, up 8.0%
over the fourth quarter of 1996. Net income in 1996 reflected charges for
quarterly distributions paid to other operating partnership unitholders in
excess of net income attributed to these unitholders, because these
unitholders' partnership interests were carried at zero on the balance sheet
at that time. Such charges were $4.8 million for the year and $0.1 million
for the fourth quarter.
The Company will hold a teleconference on Tuesday, February 10 at 11:00
a.m. EST to review the information reported in this release. To participate,
please call 1-800-263-9150 shortly before 11:00 a.m. 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 18,500
apartment units, has over 2,000 units under construction, and manages an
additional 4,000+ units for other owners. The total market capitalization of
the Company -- Charles E. Smith Residential Realty, including its Operating
Partnership -- is approximately $1.7 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
"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 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, 1997 and 1996
(dollars in thousands except per share data)
3 Months Ended December 31,12 Months Ended December 31,
% Change % Change
From From
1997 1996 Last Year 1997 1996 Last Year
Funds From Operations
of the Operating
Partnership $22,876 $15,489 47.7% $72,963 $52,748 38.3%
Funds From
Operations
- attributable
to shareholders 12,271 7,050 74.1% 37,164 23,869 55.7%
Per Share (a)
- basic $0.73 $0.71 2.8% $2.66 $2.41 10.4%
Per Share
- diluted $0.73 $0.70 4.3% $2.65 $2.41 10.0%
Net Income of the
Operating
Partnership $17,563 $11,034 59.2% $52,210 $34,817 50.0%
Net Income -
attributable
to common
shareholders 7,884 4,967 58.7% 24,712 10,977 125.1%
Per Common Share
(a) - basic $0.54 $0.50 8.0% $1.87 $1.11 68.5%
Per Common Share
- diluted $0.54 $0.49 10.2% $1.86 $1.11 67.6%
Dividends Declared
per Share $0.520 $0.505 3.0% $2.050 $1.990 3.0%
EBITDA of the
Operating
Partnership $35,006 $27,174 28.8% $119,956 $97,769 22.7%
Interest Coverage
Ratio 3.12 X 2.53 X -- 2.78 X 2.38 X --
Debt Composition as of December 31, 1997
Average Average
Interest Dollars in % of Years to
Rate Thousands Total Maturity
Fixed Rate Debt
Long Term Mortgages 7.88% $479,072 78.4% 7.0
$83M Line of Credit 7.27% 30,000 4.9% 6.5
Sub-Total 7.85% 509,072 83.3% 7.0
Variable Rate Debt
Mortgages/
Construction Loans 7.22% 26,899 4.4% 1.1
$100M Line of Credit 6.98% 75,000 12.3% 2.3
Sub-Total 7.04% 101,899 16.7% 2.0
Total Debt 7.71% $610,971 100.0% 6.2
As of As of As of As of As of
12/31/97 09/30/97 06/30/97 03/31/9712/31/96
Debt to Total Market
Capitalization Ratio 35.0% 37.2% 40.7% 42.9% 45.9%
Market Capitalization
(in millions) 1,746 1,491 1,335 1,272 1,190
* As of 12/31/97, the Company's Debt to Total Market Capitalization Ratio
was 35.0%, based on 14,942,429 common shares, 2,878,410 preferred shares, and
14,161,102 partnership units outstanding at a common stock price of $35.50.
(a) Weighted average shares and partnership units outstanding during the
periods were as follows:
Common Shares 14,551,395 9,999,835 13,217,691 9,885,309
Preferred Shares 2,219,776 -- 747,685 --
Partnership Units 14,484,000 11,919,629 13,452,382 11,983,848
Total Shares
and Partnership Units31,255,171 21,919,464 27,417,758 21,869,157
CHARLES E. SMITH RESIDENTIAL REALTY, INC.
Balance Sheet
As of December 31,
(dollars in thousands) 1997 1996
ASSETS
Rental property, at
predecessor cost, net (a) $261,609 $267,658
Rental property, acquired
and developed, net (b) 489,121 202,435
Rental property under development 53,093 --
Cash and cash equivalents -- 3,898
Tenants' security deposits 2,453 3,521
Escrow funds 7,606 6,087
Investment in and advances to
Property Service Businesses and other 15,905 10,756
Deferred charges, net 16,047 17,646
Other assets 19,672 10,210
Total assets $865,506 $522,211
LIABILITIES AND EQUITY
Liabilities
Mortgage loans $505,971 $416,808
Notes payable 105,000 129,736
Accounts payable and accrued expenses 13,732 9,525
Tenants' security deposits 2,453 3,521
Total liabilities 627,156 559,590
Minority Interest 113,499 --
Shareholders' equity
Preferred Stock - $0.01 par value;
2,640,325 shares authorized;
Series A Cumulative Convertible
Redeemable Preferred Stock,
liquidation preference of $27.08,
1,661,743 shares issued and outstanding 44,485 --
Preferred Stock - $0.01 par value;
1,216,666 shares authorized;
Series B Cumulative Convertible
Redeemable Preferred Stock,
liquidation preference of $28.50;
1,216,666 shares issued and outstanding 34,675 --
Common stock - $0.01 par value; 95,000,000
shares authorized; 14,942,429 and
9,969,607 shares issued and outstanding
at December 31, 1997 and December 31,
1996, respectively 150 100
Additional paid-in capital - including
contributed deficit of $244,208 (a) 51,912 (23,852)
Retained deficit (6,371) (13,627)
Total shareholders' equity 124,851 (37,379)
Total liabilities and equity $865,506 $522,211
(a) At the formation of the company, all rental properties were recorded
at the predecessor partners' historical cost basis, which is significantly
less than current value, and therefore, dilutes shareholders' equity,
(b) During 1997, the following operating properties were acquired:
Number of
Acquisition Apartment Total
Date Units Cost
Crystal Plaza 02/20/97 540 $42,883
Crystal Towers 02/20/97 912 70,628
The Kenmore 03/01/97 376 16,241
Lincoln Towers 10/03/97 714 88,878
One East Delaware (Chicago) 10/08/97 306 42,550
2000 Commonwealth (Boston) 10/10/97 188 27,432
3,036 $288,612
CHARLES E. SMITH RESIDENTIAL REALTY, INC.
Operating Summary
For the Three and Twelve Months Ended December 31, 1997 and 1996
(dollars in thousands except per share data)
3 Months Ended December 31, 12 Months Ended December 31,
% Change % Change
From From
1997 1996(b) Last Year 1997 1996(b)Last Year
RENTAL PROPERTIES (a)
Revenue $55,016 $42,850 28.4% 200,104 $163,959 22.0%
Operating Expenses (22,669) (17,975) 26.1% (83,827) (71,225) 17.7%
32,347 24,875 30.0% 116,277 92,734 25.4%
PROPERTY SERVICE BUSINESSES (PSBs)
Engineering and
Technical Services 932 1,126 -17.2% 3,838 3,663 4.8%
Property Management
Services 186 392 -52.6% 790 2,296 -65.6%
Financing Services 2,709 1,041 160.2% 3,128 1,953 60.2%
Interior Construction
and Renovation
Services 490 665 -26.3% 1,067 980 8.9%
Operating Income 4,317 3,224 33.9% 8,823 8,892 -0.8%
Depreciation and
Amortization - PSBs (356) (167) 113.2% (1,226) (1,046) 17.2%
Equity in Income
of the PSBs 3,961 3,057 29.6% 7,597 7,846 -3.2%
36,308 27,932 30.0% 123,874 100,580 23.2%
OTHER INCOME AND EXPENSES
Corporate General and
Administrative
Expenses (1,980) (1,388) 42.7% (6,563) (5,255) 24.9%
Interest Expense (11,747) (11,358) 3.4% (45,411) (43,606) 4.1%
Interest Income 295 303 -2.6% 1,063 1,029 3.3%
Depreciation
of Real Property (5,226) (4,455) 17.3% (20,666) (17,931) 15.3%
Extraordinary item
- loss on
debt extinguishment (87) 0 100.0% (87) 0 100.0%
NET INCOME OF
THE OPERATING
PARTNERSHIP 17,563 11,034 59.2% 52,210 34,817 50.0%
Minority Interest (8,182) (6,015) 36.0% (25,617) (19,062) 34.4%
Distributions in
Excess of Earnings
Allocated to
Minority Interest (d) 0 (52)-100.0% 0 (4,778) -100.0%
Net Income 9,381 4,967 88.9% 26,593 10,977 142.3%
Less Income
attributable to
preferred shares (1,497) 0 100.0% (1,881) 0 100.0%
Net Income
attributable
to Common Shares $7,884 $4,967 58.7% $24,712 $10,977 125.1%
Net Income per
Common Share (c)
- basic $0.54 $0.50 8.0% $1.87 $1.11 68.5%
Net Income per
Common Share
- diluted $0.54 $0.49 10.2% $1.86 $1.11 67.6%
NET INCOME OF
THE OPERATING
PARTNERSHIP $17,563 $11,034 59.2% $52,210 $34,817 50.0%
Add: Depreciation
of Real Property 5,226 4,455 17.3% 20,666 17,931 15.3%
Add: Extraordinary item
- loss on debt
extinguishment 87 0 100.0% 87 0 100.0%
FFO OF THE OPERATING
PARTNERSHIP 22,876 15,489 47.7% 72,963 52,748 38.3%
Minority Interest (10,605) (8,439) 25.7% (35,799) (28,879) 24.0%
FFO attributable
to shareholders $12,271 $7,050 74.1% $37,164 $23,869 55.7%
Funds From Operations
per Share
(c) - basic $0.73 $0.71 2.8% $2.66 $2.41 10.4%
Funds From Operations
per Share - diluted $0.73 $0.70 4.3% $2.65 $2.41 10.0%
(a) Details are shown on the following page.
(b) Certain amounts have been reclassified to conform with the current
year presentation. Per share amounts have been restated based on
SFAS No. 128 "Earnings per Share."
(c) Weighted average shares and partnership units outstanding during the
periods were as follows:
Common Shares 14,551,395 9,999,835 13,217,691 9,885,309
Preferred Shares 2,219,776 -- 747,685 --
Partnership Units 14,484,000 11,919,629 13,452,382 11,983,848
Total Shares and
Partnership Units31,255,171 21,919,464 27,417,758 21,869,157
(d) Minority Interest balances were restored in connection with the first
quarter follow-on offering, therefore there are no charges in 1997.
CHARLES E. SMITH RESIDENTIAL REALTY, INC.
Rental Property Details
For the Three and Twelve Months Ended December 31, 1997 and 1996
3 Months Ended Dec. 31, 12 Months Ended Dec. 31,
% Change % Change
From From
Last Last
(dollars in thousands) 1997 1996(b) Year 1997 1996(b) Year
CORE RESIDENTIAL
PORTFOLIO(a)
Revenue $38,668 $37,477 3.2% $153,438 $148,202 3.5%
Operating Expenses (16,356) (16,031) 2.0% (65,360) (65,109) 0.4%
22,312 21,446 4.0% 88,078 83,093 6.0%
ACQUISITION and
DEVELOPMENT PORTFOLIO
Revenue 13,652 2,754 -- 36,021 5,581 --
Operating Expenses (5,306) (1,232) -- (14,834) (2,545) --
8,346 1,522 -- 21,187 3,036 --
RETAIL PORTFOLIO
Revenue 2,696 2,619 2.9% 10,645 10,176 4.6%
Operating Expenses (1,007) (712) 41.4% (3,633) (3,571) 1.7%
1,689 1,907 -11.4% 7,012 6,605 6.2%
TOTAL PORTFOLIO
Revenue 55,016 42,850 28.4% 200,104 163,959 22.0%
Operating Expenses (22,669) (17,975) 26.1% (83,827) (71,225)17.7%
$32,347 $24,875 30.0% $116,277 $92,734 25.4%
(a) The following properties are included in the Core Residential
portfolio:
Units
Original Core 11,835
Potomac View 192 Acquired 8/94
The Manor 435 Acquired 8/94
Suburban Tower 172 Acquired 1/95
Boulevard of Old Town I/II 159 Acquired 4/95, 3/96
The Westerly 320 Opened 5/95
Connecticut Heights 519 Acquired 6/95
The Bennington 348 Acquired 9/95
Oakwood 218 Acquired 12/95
Total Number of Core
Apartment Units 14,198
(b) 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, 1997 and 1996
3 Months Ended Dec. 31, 12 Months Ended Dec. 31,
% Change % Change
From From
(dollars in thousands Last Last
except per share data) 1997 1996 Year 1997 1996 Year
NET INCOME OF THE
OPERATING PARTNERSHIP$17,563 $11,034 59.2% $52,210 $34,817 50.0%
Add: Depreciation
of Real Property 5,226 4,455 17.3% 20,666 17,931 15.3%
Add: Extraordinary
item - loss
on debt
extinguishment 87 0 100.0% 87 0 100.0%
FFO OF THE OPERATING
PARTNERSHIP $22,876 $15,489 47.7% $72,963 $52,748 38.3%
Add: Amortization
of Deferred
Financing Costs 544 631 -13.8% 2,298 2,583 -11.0%
Amortization
of Unit Grants 162 120 35.0% 579 525 10.3%
Less: Additions to
Rental
Property(a) (4,634) (3,380) 37.1% (12,811) (7,424) 72.6%
Principal
Curtailments
on Mortgage Debt (508) (103) 393.2% (1,396) (614) 127.4%
Straight-Lining
of Retail Rents (33) (249) -86.7% (340) (962) -64.7%
FAD OF THE OPERATING
PARTNERSHIP 18,407 12,508 47.2% 61,293 46,856 30.8%
Minority Interest (8,492) (6,810) 24.7% (30,073)(25,653) 17.2%
FAD attributable
to shareholders $9,915 $5,698 74.0% $31,220 $21,203 47.2%
Funds Available
for Distribution
per Share $0.59 $0.57 3.5% $2.24 $2.14 4.7%
Dividend Declared
per Share $0.520 $0.505 3.0% $2.050 $1.990 3.0%
Payout Ratios
As a Percentage
of FFO 71% 71% 77% 83%
As a Percentage
of FAD 88% 89% 92% 93%
(a) Additions to Rental Property consist of the following:
Core Residential
Portfolio $3,439 $3,253 $10,294 $6,763
Retail Portfolio 248 80 314 287
Acquisition
Portfolio 947 47 2,203 374
Total Additions
to Rental
Property $4,634 $3,380 $12,811 $7,424
CHARLES E. SMITH RESIDENTIAL REALTY, INC.
Residential Portfolio Statistics for the Twelve Months Ended December 31, 1997
Number of Average Monthly Average
Property Type/ Property Year Apartment Sq. Ft. Rev. per Economic
Property Name Type Built Units per Unit Unit Occupancy
Core Residential
Portfolio
NW Washington, D.C.
Albemarle High-rise 1959 235 1,097 $1,161 98.8%
Calvert - Woodley High-rise 1954 136 1,001 1,090 99.1%
Cleveland House High-rise 1955 216 894 1,057 98.7%
Connecticut HeightsHigh-rise1920s
/74 519 536 835 96.2%
Corcoran House High-rise 1961 138 464 786 99.3%
Statesman High-rise 1961 281 593 773 98.9%
2501 Porter StreetHigh-rise 1988 202 760 1,390 97.7%
1,727 723 978 98.0%
Crystal City
The Bennington High-rise 1982 348 804 1,015 96.0%
Crystal House I High-rise 1964 426 917 974 96.2%
Crystal House II High-rise 1965 402 938 955 96.5%
Crystal Square High-rise 1973
/75 378 1,121 1,116 97.9%
Crystal Place High-rise 1987 180 894 1,264 98.0%
Gateway Place High-rise 1987 162 826 1,541 89.1%
Water Park Towers High-rise 1988
/89 360 881 1,434 96.6%
2,256 923 1,138 96.2%
Other NE & SE Washington,D. C.
Car Barn Garden 1981
/87 196 1,311 832 97.3%
Fort Chaplin Garden 1963
/65 549 983 636 97.7%
Marbury Plaza High-rise 1966 672 997 635 96.5%
Oxford Manor Garden 1968 227 1,005 594 95.0%
1,644 1,031 653 96.8%
Other Northern Va.
- Inside Beltway
Berkeley Mid-rise 1960 138 891 719 97.8%
Boulevard
of Old Town III Garden 1941 159 603 816 97.5%
Columbia Crossing Garden 1990/
91 247 976 1,046 92.3%
Columbian StratfordMid-rise 1959 227 942 732 96.7%
Concord Village Garden 1968 531 1,025 776 94.2%
Courthouse Plaza High-rise 1988
/90 396 772 1,179 97.6%
Executives Mid-rise 1959
-61 711 877 755 95.9%
Newport Village Garden 1969
/71 937 1,115 880 97.4%
Orleans Village Garden 1965
/67 851 1,061 806 95.9%
Patriot Village Garden 1973
-77 1,065 1,162 872 96.2%
Skyline Towers High-rise 1970
/72 940 1,221 970 96.5%
Windsor Towers Mid-rise 1965 280 1,025 783 97.6%
6,482 1,044 870 96.2%
Other Northern Va.
- Outside Beltway
Bedford Village Garden 1967 752 1,070 869 94.5%
Oakwood Garden 1980 218 968 1,021 97.6%
Potomac View Garden 1978 192 965 738 97.5%
Westerly at WorldgateGarden 1995 320 921 1,057 93.8%
1,482 1,009 915 95.1%
Suburban Maryland
The Manor Garden 1969 435 999 746 96.2%
Suburban Tower High-rise 1960 172 677 803 97.4%
Sub-Total/Average 607 908 762 96.6%
Sub-Total/Average 14,198 975 901 96.4%
Acquisition Portfolio
Charter Oak
(Other Northern Va.
- Outside Beltway) Garden 1970 262 1,097 918 97.7%
Van Ness South
(NW Washington,
D.C.) High-rise 1970 625 956 1,032 97.9%
1841 Columbia Road
(NW Washington,
D.C.) High-rise 1923 115 634 621 97.5%
The Kenmore
(NW Washington,
D.C.) High-rise 1950 376 725 N/A N/A
Crystal Plaza
(Crystal City) High-rise 1967 540 1,129 N/A N/A
Crystal Towers
(Crystal City) High-rise 1967 912 1,107 N/A N/A
Lincoln Towers
(Other Northern Va.
- Inside Beltway)High-rise 1992 714 879 N/A N/A
2000 Commonwealth
(Boston) High-rise 1986 188 878 N/A N/A
One East Delaware
(Chicago) High-rise 1989 306 704 N/A N/A
Sub-Total/Average 4,038 706 955 97.8%
All residential
properties 18,236 915 $904 96.5%
SOURCE Charles E. Smith Residential Realty, Inc.
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Related links:
http://www.smithreit.com
CONTACT:
Investors, Brian Cass, 703-769-1159 or media,
John Kurtz, 703-769-1153, both of Charles E. Smith Residential
Realty
CNOC: http://www.prnewswire.com or fax, 800-758-5804, ext.
101271
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