ARLINGTON, Va., July 31 /PRNewswire/ -- Charles E. Smith Residential
Realty, Inc. (NYSE: SRW) announced today that Funds from Operations (FFO) for
the Company's second quarter, ended June 30, 1997, increased 12.1% on a per
share basis, to $17.4 million or $0.65 per share, as compared with the
Company's FFO for second quarter l996 of $12.6 million or $0.58 per share.
This increase was primarily attributable to two factors: 1) continued core
portfolio revenue growth along with a slight decrease in operating expenses,
resulting in a 6.8% "same store" net operating income (NOI) increase over
second quarter 1996, and 2) the contribution from the 2,830 apartment units
acquired over the past 12 months. For the six month period ended June 3O,
l997, the Company's FFO increased 13.0% on a per share basis to $31.0 million,
or $1.22 per share, as compared with FFO of $23.7 million or $1.08 per share
for the first six months of 1996. FFO is generally regarded as the best
measure of a REIT's operating performance.
During the second quarter the Company also finalized a private placement
of $71.5 million in convertible preferred stock with a major institutional
investor. The first $20 million of these funds was drawn on June 30, 1997 and
used to retire short term debt, with the balance to be drawn by May, 1998,
with timing at the company's discretion.
Ernest Gerardi, Jr. President of Charles E. Smith Residential Realty, Inc.
commented: "Our second quarter performance reflects the positive results of
the core portfolio revenue and expense initiatives we instituted in late 1996
and the continued strengthening of the Washington metro area market. We are
confident in our growth strategy of enhanced core NOI growth, more aggressive
acquisitions and development in our primary Washington area market, and
geographic expansion into other metropolitan area markets. We are pleased
that a major investor shares this confidence in our company and strategy, as
shown by the $71.5 million private equity placement. This additional capital,
coming shortly after our successful $88 million follow-on stock offering in
February, further reduces our debt ratio and provides additional financial
flexibility to implement our growth strategy."
Revenue from rental properties was $49.5 million in the second quarter of
1997, an increase of 23.5% over the second quarter of 1996, and rental
property revenue for the first six months of 1997 was $94.3 million, an
increase of 19.4% over rental revenue for the first six months of 1996.
Second quarter 1997 operating income, including income from rental properties
before depreciation and equity in income of its property service businesses,
was $30.0 million, up 23.1% over second quarter 1996. Second quarter earnings
before interest, taxes, depreciation and amortization (EBITDA) was $29.0
million, an increase of 22.6% over second quarter 1996. For the first six
months of 1997 operating income was $56.2 million, up 19.9% over the same
period in 1996, and EBITDA was up 19.5% to $54.5 million from $45.6 million in
1996.
In June, the Company broke ground on its latest development project, a $60
million, 630 unit garden and mid-rise apartment community in Springfield, VA,
located at the site of a newly opened METROrail and commuter rail station.
In the second quarter of 1997, the Company's Consolidated Engineering
Services affiliate announced the awards of two substantial new contracts -- a
contract for facilities management, operations and maintenance of the new 2
million square foot Ronald Reagan Federal Building and International Trade
Center, and a similar contract for the FBI's 250,000 square foot regional
headquarters. Both buildings are in downtown Washington and both contracts
are for a five-year period, including renewal options, with an aggregate value
of $25 million.
The company will hold a teleconference on Friday, August 1, 1997, at
11:00 a.m. EDT to review the information reported in this release. To
participate, please call 1-800-633-8638 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 multifamily
residential properties for its own account, and provide a full range of real
estate services to other property owners. The Company owns a portfolio of
over 17,000 apartment units and manages an additional 4,000 units for other
owners. The total market capitatization of the Company -- Charles E. Smith
Residential Realty, including its Operating Partnership -- was approximately
$1.3 billion on June 30, 1997, based on a stockprice of $28.75. 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'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.
CHARLES E. SMITH RESIDENTIAL REALTY, INC.
Financial Highlights
For the Three and Six Months Ended June 30, 1997 and 1996
3 Months Ended June 30, 6 Months Ended June 30,
% Change % Change
(dollars in thousands From From
except per share data) 1997 1996 last year 1997 1996 last year
Funds From Operations of
the Operating Partnership $17,363 $12,632 37.5% $31,010 $23,720 30.7%
Funds From Operations -
attributable to
shareholders 8,612 5,719 50.6% 15,102 10,698 41.2%
Per Share(a) $0.65 $0.58 12.1% $1.22 $1.08 13.0%
Net Income of the Operating
Partnership $12,068 $8,296 45.5% $20,864 $14,992 39.2%
Net Income - attributable
to shareholders 5,970 2,390 149.8% 10,153 3,131 224.3%
Per Share(a) $0.45 $0.24 87.5% $0.82 $0.32 156.2%
Dividends Declared per
Share $0.505 $0.490 3.1% $1.010 $0.980 3.1%
EBITDA of the Operating
Partnership $29,036 $23,692 22.6% $54,472 $45,586 19.5%
Debt Coverage Ratio 2.72 2.37 2.54 2.31
Debt Composition as of June 30, 1997
Average Average
Interest Dollars in % of Years to
Rate Thousands Total Maturity
Fixed Rate Debt
Long Term Mortgages 8.10% $479,191 88.2% 6.8
$83M Line of Credit 7.27% 30,000 5.5% 7.0
Sub-Total 8.05% 509,191 93.7% 6.8
Variable Rate Debt
Short Term Mortgages 7.41% 8,151 1.5% 0.2
$100M Line of Credit 6.74% 26,000 4.8% 2.8
Sub-Total 6.90% 34,151 6.3% 2.2
Total Debt 7.98% $543,342 100.0% 6.5
As of As of As of
06/30/97 03/31/97 12/31/96
Debt to Total Market Capitalization Ratio 40.7% 42.9% 45.9%
* As of 6/30/97, the Company's Debt to Total Market Capitalization Ratio
was 40.7%, based on 13,312,706 common shares, 13,470,992 partnership units,
and 738,553 preferred shares outstanding at a stock price of $28.75.
(a) Weighted average shares, partnership units, and equivalents
outstanding during the periods were as follows:
Shares and equivalents 13,345,659 9,906,982 12,415,783 9,864,608
Partnership Units 13,534,785 11,976,778 13,098,256 12,007,373
Total Shares and
Partnership Units 26,880,444 21,883,760 25,514,039 21,871,981
CHARLES E. SMITH RESIDENTIAL REALTY, INC.
Balance Sheet
As of June 30, 1997 and December 31, 1996
June 30, December 31,
(dollars in thousands) 1997 1996
ASSETS
Rental property, at predecessor cost, net(a) $263,786 $267,658
Rental property, acquired and developed, net(b) 329,856 202,435
Rental property under development 12,742 0
Cash and cash equivalents 7,290 3,898
Tenants' security deposits 3,112 3,521
Escrow funds 8,998 6,087
Investment in and advances to Property Service
Business and other 14,356 10,756
Deferred charges, net 16,274 17,646
Other assets 12,501 10,210
Total assets $668,915 $522,211
LIABILITIES AND EQUITY
Liabilities
Mortgage loans $487,342 $416,808
Notes payable 56,000 129,736
Accounts payable and accrued expenses 12,934 9,525
Tenants' security deposits 3,112 3,521
Total liabilities 559,388 559,590
Minority Interest 55,393 0
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, 738,553 shares
issued and outstanding 19,772 0
Common stock - $0.01 par value; 95,000,000 shares
authorized; 13,312,706 and 9,969,607 shares
issued and outstanding at June 30, 1997 and
December 31, 1996, respectively 133 100
Additional paid-in capital - including contributed
deficit of $244,208(a) 41,655 (23,852)
Retained deficit (7,426) (13,627)
Total shareholders' equity 54,134 (37,379)
Total liabilities and equity $668,915 $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, results in dilution of shareholders'
book value.
(b) During the first quarter of 1997, the following properties were
acquired:
Number of
Acquisition Apartment Total
Date Units Cost
Crystal Plaza 02/20/97 540 $43,043
Crystal Towers 02/20/97 912 69,763
The Kenmore 03/01/97 376 16,279
1,828 $129,085
CHARLES E. SMITH RESIDENTIAL REALTY, INC.
Operating Summary
For the Three and Six Months Ended June 30, 1997 and 1996
3 Months Ended June 30, 6 Months Ended June 30,
% Change % Change
(dollars in thousands From From
except per share data) 1997 1996 Last Year 1997 1996 Last Year
(b) (b)
RENTAL PROPERTIES(a)
Revenue $49,483 $40,069 23.5% $94,259 $78,952 19.4%
Operating Expenses (20,413) (17,172) 18.9% (39,764)(35,086) 13.3%
29,070 22,897 27.0% 54,495 43,866 24.2%
PROPERTY SERVICE BUSINESSES
Engineering and Technical
Services 956 852 12.2% 1,984 1,505 31.8%
Property Management
Services 185 385 -51.9% 342 1,300 -73.7%
Financing Services 164 421 -61.0% (79) 803 -109.8%
Interior Construction and
Renovation Services (118) 80 -247.5% 10 (56) 117.9%
Operating Income 1,187 1,738 -31.7% 2,257 3,552 -36.5%
Depreciation and
Amortization - PSBs (291) (294) -1.0% (552) (560) -1.4%
Equity Interest in
Income of the PSBs 896 1,444 -38.0% 1,705 2,992 -43.0%
29,966 24,341 23.1% 56,200 46,858 19.9%
OTHER INCOME AND EXPENSES
Interest Income 301 265 13.6% 532 534 -0.4%
General and Administrative
Expenses (1,648) (1,343) 22.7% (3,039) (2,630) 15.6%
Interest Expense (including
amort. of financing
costs) (11,256) (10,631) 5.9% (22,683)(21,042) 7.8%
Depreciation of Real
Property (5,295) (4,336) 22.1% (10,146) (8,728) 16.2%
NET INCOME OF THE OPERATING
PARTNERSHIP 12,068 8,296 45.5% 20,864 14,992 39.2%
Minority Interest (6,098) (4,542) 34.3% (10,711) (8,229) 30.2%
Distributions in Excess
of Earnings Allocated to
Minority Interest(d) 0 (1,364) -100.0% 0 (3,632) -100.0%
Net Income attributable
to shareholders $5,970 $2,390 149.8% $10,153 $3,131 224.3%
Net income per
Share(c) $0.45 $0.24 87.5% $0.82 $0.32 156.2%
NET INCOME OF THE OPERATING
PARTNERSHIP $12,068 $8,296 45.5% $20,864 $14,992 39.2%
Add: Depreciation of
Real Property 5,295 4,336 22.1% 10,146 8,728 16.2%
FFO OF THE OPERATING
PARTNERSHIP 17,363 12,632 37.5% 31,010 23,720 30.7%
Minority Interest (8,751) (6,913) 26.6% (15,908)(13,022) 22.2%
FFO Attributable to
Shareholders $8,612 $5,719 50.6% $15,102 $10,698 41.2%
Funds From Operations
per Share(c) $0.65 $0.58 12.1% $1.22 $1.08 13.0%
(a) Details are shown below.
(b) Certain amounts have been reclassified to conform with the current
year presentation.
(c) Weighted average shares, partnership units, and equivalents
outstanding during the periods were as follows:
Shares and equivalents 13,345,659 9,906,982 12,415,783 9,864,608
Partnership Units 13,534,785 11,976,778 13,098,256 12,007,373
Total Shares and
Partnership Units 26,880,444 21,883,760 25,514,039 21,871,981
(d) Minority Interest balances were restored in connection with the follow-
on offering, therefore there are no charges in 1997.
CHARLES E. SMITH RESIDENTIAL REALTY, INC.
Rental Property Details
For the Three and Six Months Ended June 30, 1997 and 1996
3 Months Ended June 30, 6 Months Ended June 30,
% Change % Change
From From
(dollars in thousands) 1997 1996 Last Year 1997 1996 Last Year
(b) (b)
CORE RESIDENTIAL PORTFOLIO(a)
Revenue $38,328 $36,929 3.8% $75,538 $73,273 3.1%
Operating Expenses (15,907) (15,934) -0.2% (32,172) (32,862) -2.1%
22,421 20,995 6.8% 43,366 40,411 7.3%
RETAIL PORTFOLIO
Revenue 2,695 2,484 8.5% 5,137 4,926 4.3%
Operating Expenses (909) (933) -2.6% (1,757) (1,881) -6.6%
1,786 1,551 15.2% 3,380 3,045 11.0%
SUB-TOTAL CORE PORTFOLIO
Revenue 41,023 39,413 4.1% 80,675 78,199 3.2%
Operating Expenses (16,816) (16,867) -0.3% (33,929) (34,743) -2.3%
24,207 22,546 7.4% 46,746 43,456 7.6%
ACQUISITION PORTFOLIO
Revenue 8,460 656 N/A 13,584 753 N/A
Operating Expenses (3,597) (305) N/A (5,835) (343) N/A
4,863 351 N/A 7,749 410 N/A
TOTAL PORTFOLIO
Revenue 49,483 40,069 23.5% 94,259 78,952 19.4%
Operating Expenses (20,413) (17,172) 18.9% (39,764) (35,086) 13.3%
$29,070 $22,897 27.0% $54,495 $43,866 24.2%
(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 Six Months Ended June 30, 1997 and 1996
3 Months Ended June 30, 6 Months Ended June 30,
% Change % Change
From From
1997 1996 Last Year 1997 1996 Last Year
(dollars in thousands except
per share data)
NET INCOME OF THE OPERATING
PARTNERSHIP $12,068 $8,296 45.5% $20,864 $14,992 39.2%
Add: Depreciation of
Real Property 5,295 4,336 22.1% $10,146 $8,728 16.2%
FFO OF THE OPERATING
PARTNERSHIP $17,363 $12,632 37.5% $31,010 $23,720 30.7%
Add: Amortization of
Deferred
Financing Costs 574 651 -11.8% 1,218 1,278 -4.7%
Amortization of
Unit Grants 141 143 -1.4% 276 286 -3.5%
Less: Additions to Rental
Property(a) (2,756) (1,442) 91.1% (4,452) (2,266) 96.5%
Principal Curtailments
on Mortgage Debt (486) (178) 173.0% (630) (352) 79.0%
Straight-Lining of
Retail Rents (175) (247) -29.1% (151) (497) -69.6%
FAD OF THE OPERATING
PARTNERSHIP 14,661 11,559 26.8% 27,271 22,169 23.0%
Minority Interest (7,382) (6,327) 16.7% (14,000) (12,170) 15.0%
FAD Attributable to
shareholders $7,279 $5,232 39.1% $13,271 $9,999 32.7%
Funds Available for
Distribution per
Share(b) $0.55 $0.53 3.8% $1.07 $1.01 5.9%
Dividend Declared per
Share $0.505 $0.490 3.1% $1.010 $0.980 3.1%
Payout Ratios
As a Percentage
of FFO 78% 84% -- 83% 91% --
As a Percentage
of FAD 92% 92% -- 94% 97% --
(a) Additions to Rental Property consist of the following:
Core Residential Portfolio $2,391 $1,217 $3,895 $1,963
Retail Portfolio 8 95 53 166
Acquisition Portfolio 357 130 504 137
Total Additions to Rental
Property $2,756 $1,442 $4,452 $2,266
(b) Weighted average shares, partnership units, and equivalents
outstanding during the periods were as follows:
Shares and equivalents 13,345,659 9,906,982 12,415,783 9,864,608
Partnership Units 13,534,785 11,976,778 13,098,256 12,007,373
Total Shares and
Partnership Units 26,880,444 21,883,760 25,514,039 21,871,981
CHARLES E. SMITH RESIDENTIAL REALTY, INC.
Residential Portfolio Statistics for the Three Months Ended June 30, 1997
Number of Average Monthly Average
Property Type/ Property Year Apartment Sq. Ft. Revenue Economic
Property Name Type Built Units Per Unit Per Unit Occupancy
Core Residential
Portfolio
NW Washington, D.C.
Albermarle High-
rise 1959 235 1,097 $1,150 98.4%
Calvert-Woodley High-
rise 1954 136 1,001 1,073 100.0%
Cleveland House High-
rise 1955 216 894 1,051 99.4%
Connecticut High-
Heights rise 1920s/74 519 536 823 96.6%
Corcoran House High-
rise 1961 138 464 779 99.2%
Statesman High-
rise 1961 281 593 770 98.3%
2501 Porter High-
Street rise 1988 202 760 1,402 99.6%
Total 1,727 723 971 98.4%
Crystal City
The Bennington High-
rise 1982 348 804 1,045 99.0%
Crystal House I High-
rise 1964 426 917 967 97.4%
Crystal House II High-
rise 1965 402 938 962 97.7%
Crystal Square High-
rise 1973/75 378 1,121 1,112 98.4%
Crystal Place High-
rise 1987 180 894 1,254 98.2%
Gateway Place High-
rise 1987 162 826 1,630 95.5%
Water Park High-
Towers rise 1988/89 360 881 1,454 98.1%
Total 2,256 923 1,151 97.9%
Other
NE & SE
Washington, D.C.
Car Barn Garden 1981/87 196 1,311 814 95.4%
Fort Chaplin Garden 1963/65 549 983 626 98.0%
Marbury Plaza High-
rise 1966 672 997 617 97.5%
Oxford Manor Garden 1968 227 1,005 564 91.7%
Total 1,644 1,031 636 96.6%
Other Northern
Virginia-Inside
Beltway
Bedford
Village Garden 1967 752 1,070 882 96.0%
Berkeley Mid-
rise 1960 138 891 726 98.6%
Boulevard of
Old Town I/II Garden 1941 159 603 814 98.3%
Columbia
Crossing Garden 1990/91 247 976 1,075 92.3%
Columbian Mid-
Stratford rise 1959 227 942 737 97.8%
Concord
Village Garden 1968 531 1,025 789 95.5%
Courthouse High-
Plaza rise 1988/90 396 772 1,205 99.5%
Executives Mid-
rise 1959/61 711 877 761 98.1%
Newport
Village Garden 1969/71 937 1,115 879 98.1%
Orleans
Village Garden 1965/67 851 1,061 812 97.5%
Patriot
Village Garden 1973-77 1,065 1,162 865 96.2%
Skyline High-
Towers rise 1970/72 940 1,221 970 96.1%
Windsor Mid-
Towers rise 1965 280 1,025 773 96.9%
Total 7,234 1,047 875 96.9%
Other Northern
Virginia-
Outside Beltway
Oakwood Garden 1980 218 968 967 95.5%
Potomac View Garden 1978 192 965 732 97.1%
Westerly at
Worldgate Garden 1995 320 921 1,014 94.0%
Total 730 947 926 95.1%
Suburban Maryland
The Manor Garden 1969 435 999 730 95.2%
Suburban High-
Tower rise 1960 172 677 796 96.9%
Sub-Total/
Average 607 908 749 95.7%
Sub-Total/
Average 14,198 975 900 97.1%
Acquisition
Portfolio
Charter Oak
(acquired
3/96) Garden 1970 262 1,097 893 97.0%
Van Ness
South
(acquired High-
7/96) rise 1970 625 956 1,023 98.3%
1841 Columbia
Road
(acquired High-
8/96) rise 1923 115 634 585 97.7%
Crystal Plaza
(acquired High-
2/97) rise 1967 540 1,129 1,188 97.8%
Crystal Towers
(acquired High-
2/97) rise 1967 912 1,107 1,077 97.8%
The Kenmore
(acquired High-
3/97) rise 1950 376 725 679 95.0%
Sub-Total/
Average 2,830 1,007 996 97.6%
All Residential
Properties 17,028 980 $916 97.2%
SOURCE Charles E. Smith Residential Realty, Inc.
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CONTACT:
investors, M. Bruce Snyder, 703-769-1029, or
media, John Kurtz, 703-769-1153
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