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| AvalonBay Communities, Inc. Announces Fourth Quarter 1999 And Year End Operating Results |
ALEXANDRIA, Va., Jan. 18 /PRNewswire/ -- AvalonBay Communities, Inc. (NYSE: AVB) reported today that Funds from Operations ("FFO") for the quarter ended December 31, 1999 was $58,234,000 or $.87 per share (diluted) compared to $48,610,000 or $.75 per share (diluted) for the comparable period of 1998, a per share increase of approximately 16.0%. For the year ended December 31, 1999, FFO was $212,610,000 or $3.22 per share (diluted) compared to $144,152,000 or $2.87 per share (diluted) for the comparable period of 1998, a per share increase of approximately 12.2%. AvalonBay Communities, Inc. (the "Company") is the surviving corporation from the merger of Avalon Properties, Inc. with and into the Company (sometimes referred to as "Bay" before the Merger) on June 4, 1998. The 1999 results reflect the operating results of the surviving corporation. The 1998 results reflect the operating results of Bay through June 4, 1998 and reflect the results of the combined operations of Avalon and Bay after that date. The Company will hold a conference call on January 19, 2000 at 11:00 AM Eastern Time (EST) to review these results. The domestic number to call to participate is 800-982-3654. The international number to call to participate is 703-871-3021. To hear a replay of this call, please call 888-266-2086, Access Code: 2702894. Operating Results for the Quarter Ended December 31, 1999 Compared to the Prior Year Period Total revenue increased by $12,735,000, or 10.6% to $132,343,000, and earnings before interest, income taxes, depreciation and amortization ("EBITDA") increased by $11,395,000 or 15.2% to $86,169,000. The overall increase in revenue and EBITDA is primarily attributable to newly developed and redeveloped communities as well as operating improvements related to Established Communities. Net income available to common stockholders was $31,145,000 or $.46 per share (diluted) compared to $22,091,000 or $.34 per share (diluted) for the prior year period, a per share increase of 35.3%. For Established Communities, rental revenue increased 4.8%, comprised of rental rate growth of 4.0% and an increase in economic occupancy of 0.8%. Total revenue increased $3,033,000 to $65,760,000. Operating expenses increased $79,000, or 0.4%. Accordingly, net operating income increased by $2,954,000 or 6.6%. The table that follows summarizes the percentage change in fourth quarter 1999 operating results for Established Communities compared to the prior year period: Established Communities Operating Results 4Q99 Compared to 4Q98 Rental Operating Revenue Expenses NOI ---------------------------------------------------- No. California 2.8% 7.3% 1.3% So. California 7.9% (11.3%) 17.4% Northeast 5.5% (3.8%) 9.3% Mid-Atlantic 6.6% (1.4%) 9.9% Midwest 7.6% (1.9%) 15.2% Operating Results for the Year Ended December 31, 1999 Compared to the Prior Year Period Total revenue increased by $151,207,000, or 42.8% to $504,544,000, and EBITDA increased by $99,125,000 or 45.1% to $318,760,000. Net income available to common stockholders was $99,354,000 or $1.50 per share (diluted) compared to $68,560,000 or $1.37 per share (diluted) for the prior year period. The results for the year ended December 31, 1999 include non-recurring charges totaling $15,632,000 primarily attributable to certain management and other organizational changes announced in the first quarter of 1999. For Established Communities, rental revenue increased 4.1%, comprised of rental rate growth of 4.4% and a decrease in economic occupancy of 0.3%. Total revenue increased $10,006,000 to $256,851,000. Operating expenses increased $1,791,000, or 2.5%. Accordingly, net operating income increased by $8,215,000 or 4.7%. The table that follows summarizes the percentage change in year to date operating results for Established Communities compared to the prior year period: Established Communities Operating Results YTD99 Compared to YTD98 Rental Operating Revenue Expenses NOI ---------------------------------------------------- No. California 1.7% 3.4% 1.1% So. California 7.9% (5.8%) 15.2% Northeast 5.1% 2.7% 5.9% Mid-Atlantic 6.0% 2.2% 7.6% Midwest 5.3% 2.4% 7.6% Financing Activity On October 15, 1999 the Company completed a refinancing of $18,755,000 in variable rate tax-exempt bonds. The bonds have a maturity date of 2026, are fully amortizing and are credit enhanced by the Federal National Mortgage Association (Fannie Mae). In early 2000, the Company entered into a joint venture agreement with Multi Employer Development Partners ("MEDP") to develop Avalon on the Sound, a 412 apartment high rise community in New Rochelle, New York with a total capitalized cost estimated to be $92 million. The terms of the partnership agreement provide for a permanent capital structure comprised of 60% equity and 40% debt. Equity contributions will be funded 25% by AvalonBay and 75% by MEDP. Construction financing with a mini-permanent feature will provide the debt capital. Operating cash flow will be distributed 25% to AvalonBay and 75% to MEDP until each receives a 9% return on invested capital. Thereafter, cash flow will be distributed equally to AvalonBay and MEDP. Upon a sale to a third party, cash is distributed first to each partner until capital contributions are recovered. Thereafter, sales proceeds are distributed based upon achievement of certain IRR levels. Distributions where an IRR of 12-15% is achieved are made 40% to AvalonBay and 60% to MEDP. Thereafter, sales proceeds are distributed equally to AvalonBay and MEDP. During the first three years following completion, AvalonBay has a call option to purchase MEDP's interest. Thereafter, customary Buy-Sell provisions are in effect. AvalonBay will receive construction, development and management fees for services rendered to the joint venture. Development and Redevelopment Activity During the fourth quarter, two new development communities, Avalon Crest (Northern New Jersey) and Avalon Towers by the Bay (San Francisco, California) were completed. On an aggregate basis, these communities contain 577 apartment homes for a total investment of approximately $122.7 million. The Company expects the first full quarter of stabilized occupancy for these communities to be the first quarter of 2000. The Company expects the weighted average initial stabilized yield on these communities to be 10.6%. No assurance can be given that the expected dates of stabilization or the expected yields at stabilization will be achieved. Also during the fourth quarter, the redevelopment of six communities, Waterhouse Place (Portland, Oregon), Avalon at West Grove (Chicago, Illinois), Governor's Square (San Francisco, California), Crossbrook (Central Valley, California), Warner Oaks (Los Angeles, California) and Avalon at Pacific Bay (Orange County, California) were completed containing 1,738 apartment homes for a total investment in redevelopment (i.e. exclusive of acquisition costs) of approximately $30.8 million. Two of these communities, Warner Oaks and Crossbrook, obtained their first full quarter of stabilized occupancy during the fourth quarter of 1999. The first full quarter of stabilized occupancy for Waterhouse Place, Avalon at West Grove and Avalon at Pacific Bay will be the first quarter of 2000. The Company expects the first full quarter of occupancy for Governor's Square to be the second quarter of 2000, with a weighted average initial stabilized yield on these communities to be 8.7%. No assurance can be given that the expected dates of stabilization or the expected yields at stabilization will be achieved. The development of four new communities, Avalon Bellevue (Seattle, Washington), Avalon at Arlington Square I (Northern Virginia), Avalon on the Sound (Westchester, New York) and Avalon Estates (Boston, Massachusetts) commenced during the fourth quarter of 1999. These four communities will contain an aggregate of 1,286 apartment homes upon completion with a projected total investment of approximately $210.7 million. Disposition Activity During the fourth quarter, the Company sold seven existing communities. The net proceeds from the sale of these communities, which contain a total of 2,004 apartment homes, were approximately $90.5 million. In addition, the company sold a participating mortgage note secured by an apartment home community for net proceeds of $25,300,000. The proceeds from the sale of these assets will be re-deployed to development and redevelopment communities currently under construction or reconstruction. About AvalonBay Communities, Inc. AvalonBay, named the NAHB Development Company of the year for 1998/1999 and the Property Management Company of the Year for 1996/1997, currently owns or holds an ownership interest in 134 apartment communities containing 39,181 apartment homes in twelve states and the District of Columbia, of which twelve communities are under construction and four communities are under reconstruction. AvalonBay is an equity REIT in the business of developing, redeveloping, acquiring and managing multifamily apartment communities in high barrier-to-entry markets of the United States. More information on AvalonBay may be found on AvalonBay's Web Site at http://www.avalonbay.com. For additional information, please contact Richard L. Michaux, President and Chief Executive Officer at 703-317-4602 or Thomas J. Sargeant, Executive Vice President and Chief Financial Officer at 703-317-4635. This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements contained in this release are statements that are subject to certain risks and uncertainties, including, but not limited to, possible changes in demand for apartment homes, the effects of economic conditions, the impact of competition and competitive pricing, changes in construction costs, the results of financing efforts, potential acquisitions under agreement, the effects of the Company's accounting policies and other matters detailed in the Company's filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998 under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations - Forward-Looking Statements". Management generally considers Funds from Operations ("FFO") to be an appropriate measure of the operating performance of the Company because it provides investors an understanding of the ability of the Company to incur and service debt and to make capital expenditures. FFO is determined based on a definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts which may differ from the methodology for computing FFO used by other REITs, and, accordingly, the Company's calculation of FFO may not be comparable to such other REITs. Earnings Release Attachments The Company produces Earnings Release Attachments ("the Attachments") that provide detailed information regarding operating, development, redevelopment, disposition and acquisition activity. These Attachments are available via the Company's web site. To access the Attachments through the Company's web site at http://www.avalonbay.com, select "Press Releases" under "Investors Corner" or select "4th Quarter Earnings Release" on the AvalonBay Communities home page. If you would like to receive future press releases via e-mail, please register through the Company's web site at http://www.avalonbay.com/website/PressRegistration.nsf. AVALONBAY COMMUNITIES, INC Company Profile at December 31, 1999 (Dollars in thousands except per share data) Selected Operating Information: Q499 Q498 % Change ----------- ----------- -------- Funds from Operations $ 58,234 $ 48,610 19.8% Per common share - basic $ 0.88 $ 0.75 17.3% Per common share - diluted $ 0.87 $ 0.75 16.0% Net income available to common stockholders $ 31,145 $ 22,091 41.0% Per common share - basic $ 0.47 $ 0.34 38.2% Per common share - diluted $ 0.46 $ 0.34 35.3% Dividends declared - common $ 34,194 $ 32,582 4.9% Per common share $ 0.52 $ 0.51 2.0% Total EBITDA $ 86,169 $ 74,774 15.2% Average shares outstanding - basic 66,500,022 64,486,472 Average shares outstanding - diluted 66,898,375 65,047,368 YTD99 YTD98 % Change ----------- ----------- -------- Funds from Operations $ 212,610 $ 144,152 47.5% Per common share - basic $ 3.24 $ 2.91 11.3% Per common share - diluted $ 3.22 $ 2.87 12.2% Net income available to common stockholders $ 99,354 $ 68,560 44.9% Per common share - basic $ 1.51 $ 1.39 8.6% Per common share - diluted $ 1.50 $ 1.37 9.5% Dividends declared - common $ 133,844 $ 108,484 23.4% Per common share $ 2.06 $ 1.95 5.6% Total EBITDA $ 318,760 $ 219,635 45.1% Average shares outstanding - basic 65,657,921 49,488,868 Average shares outstanding - diluted 66,110,664 50,146,909 Copyright 2000 AvalonBay Communities, Inc. All Rights ReservedSOURCE AvalonBay Communities, Inc.
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CONTACT:
Richard L. Michaux, President and Chief
Executive Officer, 703-317-4602; or Thomas J. Sargeant, Executive
Vice President and Chief Financial Officer, 703-317-4635, both of
AvalonBay Communities, Inc.
