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| AvalonBay Communities, Inc. Announces Third Quarter 2000 Operating Results |
ALEXANDRIA, Va., Oct. 18 /PRNewswire/ -- AvalonBay Communities, Inc. (NYSE: AVB; PCX) reported today that Earnings per Share ("EPS") before gain on sale of communities for the quarter ended September 30, 2000 was $.50 (diluted) compared to $.40 (diluted) for the comparable period of 1999, a per share increase of 25.0%. For the nine month period ended September 30, 2000, EPS before gain on sale of communities was $1.37 (diluted) compared to $.85 (diluted) for the comparable period of 1999, a per share increase of 61.2%. Funds from Operations ("FFO") for the quarter was $64,498,000 or $.94 per share (diluted) compared to $54,885,000 or $.83 per share (diluted) as previously reported for the comparable period of 1999, a per share increase of 13.3%. FFO per share for the nine months ended September 30, 2000 increased by 15.3% to $2.71 from $2.35 as previously reported for the comparable period of 1999. EPS (including gain on sale of communities) for the quarter ended September 30, 2000 was $.71 (diluted), compared to $0.37 (diluted) for the comparable period of 1999, a per share increase of 91.9%. This increase is primarily attributable to an increase in gain on sale of communities. EPS (including gain on sale of communities) for the nine months ended September 30, 2000 was $1.86 (diluted), compared to $1.25 (diluted) for the comparable period of 1999, a per share increase of 48.8%. The Company will hold a conference call on October 19, 2000 at 4:00 PM Eastern Time (EST) to review these results. The domestic number to call to participate is 1-877-282-2315. The international number to call to participate is 1-703-871-3016. The domestic number to hear a replay of this call is 1-888-266-2086, and the international number to hear a replay of this call is 1-703-925-2435 - Access Code: 4631522. A webcast of the conference call will also be available on the company's website at http://www.avalonbay.com/earnings, and an on-line playback of the webcast will be available for 30 days following the call. Operating Results for the Quarter Ended September 30, 2000 Compared to the Prior Year Period Total revenue increased by $15,243,000, or 11.6% to $146,351,000, and earnings before interest, income taxes, depreciation and amortization ("EBITDA") increased by $12,320,000 or 15.0% to $94,680,000. 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. For Established Communities, rental revenue increased 9.8%, comprised of rental rate growth of 9.1% and an increase in economic occupancy of 0.7%. Total revenue increased $7,190,000 to $80,377,000 and operating expenses increased $1,141,000, or 5.3%. Accordingly, net operating income (NOI) increased by $6,049,000 or 11.7%. Established Communities Operating Results 3Q00 Compared to 3Q99 Rental Operating Revenue Expenses NOI ---------------------------------------------------------------------- No. California 14.5% 4.9% 17.9% So. California 10.8% 7.2% 12.3% Northeast 6.9% 4.9% 7.8% Mid-Atlantic 9.0% 4.7% 10.9% Midwest 3.4% 8.9% 0.3% Pacific Northwest 1.2% 0.1% 1.5% ----- ----- ----- Total Established 9.8% 5.3% 11.7% ===== ===== ===== Operating Results for the Nine Months Ended September 30, 2000 Compared to the Prior Year Period Total revenue increased by $48,155,000, or 12.9% to $421,397,000, and EBITDA increased by $40,256,000 or 17.3% to $272,847,000. 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. For Established Communities, rental revenue increased 8.1%, comprised of rental rate growth of 6.9% and an increase in economic occupancy of 1.2%. Total revenue increased $17,400,000 to $233,027,000 and operating expenses increased $2,089,000, or 3.3%. Accordingly, NOI increased by $15,311,000 or 10.0%. Established Communities Operating Results YTD 00 Compared to YTD 99 Rental Operating Revenue Expenses NOI ---------------------------------------------------------------------- No. California 10.0% 1.6% 12.9% So. California 8.6% 0.9% 12.2% Northeast 6.7% 5.2% 7.3% Mid-Atlantic 7.6% 4.2% 8.9% Midwest 4.5% 3.4% 5.2% Pacific Northwest 16.5% (1.1%) 24.2% ----- ------ ------ 8.1% 3.3% 10.0% ===== ====== ====== Development Activity During the third quarter, the Company completed two development communities, Avalon Essex (located in the Boston, Massachusetts area) and Avalon Haven (located in the Fairfield-New Haven, Connecticut area). These communities add 282 apartment homes to the portfolio for a total investment of $36.0 million. The first full quarter of stabilized occupancy for these communities will be the fourth quarter of 2000. Also during the third quarter, the Company started construction of three development communities, Avalon Harbor (located in Stamford, Connecticut), Avalon Belltown (located in downtown Seattle, Washington) and Avalon Towers on the Peninsula (located in the San Jose, California area). Furthermore, the Company started construction of Avalon Westpark (located in the San Jose, California area) subsequent to quarter end. When completed, these four communities will contain 852 apartment homes with a projected total investment of $195.3 million. On August 30, 2000, Avalon River Mews was substantially destroyed by fire. At the time of the fire, the community (located in the Northern New Jersey area) was under construction and unoccupied. The Company has begun reconstruction, and expects insurance proceeds will substantially cover all destroyed assets as well as a reimbursement of lost rents due to schedule delays, resulting in no material net economic loss to the Company. Redevelopment Activity During the third quarter, the Company completed four redevelopment communities, Avalon Greenbriar (located in the Seattle, Washington area), Avalon at Mission Bay (located in the San Diego, California area), Avalon at Creekside (located in the San Jose, California area) and Laguna Niguel (located in the Orange County, California area). These communities contain 1,455 apartment homes for a total investment in redevelopment (i.e. exclusive of acquisition costs) of $41.3 million. Subsequent to quarter end, the Company commenced redevelopment on Avalon at the Prudential Center, located in downtown Boston, Massachusetts. Total investment in redevelopment (i.e. exclusive of acquisition costs) for this 781 apartment home community is expected to total $25.0 million. Disposition Activity The Company previously announced the sale of Glen Creek (located in the San Jose, California area) and Governor's Square (located in the Sacramento, California area) during the third quarter. The Company also sold Avalon Woods (located in the Richmond, Virginia area) during the third quarter. The net proceeds from the sale of these three communities, which contain a total of 708 apartment homes, were approximately $45.9 million. Acquisition Activity The Company acquired two communities during the third quarter in connection with the terms of a forward purchase contract agreed to in 1997 with an unrelated party. Avalon WildReed (located in the Seattle, Washington area) and Avalon Palladia (located in Portland, Oregon area) contain an aggregate of 731 apartment homes, and were acquired for a total purchase price of $69.2 million. Recent Financing Activity During the third quarter, the Company issued $150,000,000 of medium-term notes with a maturity of 8 years at an interest rate of 8.25%. The proceeds were used immediately to repay amounts outstanding under the Company's line of credit. Financial Outlook The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. Management expects net operating income from Established Communities in the fourth quarter 2000 to grow modestly from current levels, reflecting established seasonal trends. General and administrative expenses are expected to decline. These expected increases to earnings will be offset by asset sales and a projected increase in interest costs. Accordingly, management expects the current quarter's rate of FFO per share of $.94 to continue into the fourth quarter. The Company plans to publish additional forward-looking statements during the fourth quarter that may help investors estimate earnings for 2001. Applying Technology to Real Estate The Company actively seeks to employ new technologies that will enhance operations and maximize investment returns. As a result, the Company, along with its collaborating partners, established Realeum, Inc. during the quarter. Realeum, a collaboration among AvalonBay, United Dominion Realty Trust and Post Properties, was formed to develop and deliver new, web based property management solutions to the industry. In December 2000, AvalonBay will commence beta testing of the initial core transactional system. Live production use for AvalonBay is planned to commence in the first quarter of 2001. Realeum is funded by the collaborating REIT partners and outside venture capital firms. The venture firms are Venrock Associates, The Carlyle Group, Internet Realty Partners and Stichting Pensioenfonds ABP. Realeum completed its initial outside funding round on August 28, 2000, in which $15 million in capital was received from the outside venture capital firms. The Company owns a minority equity stake in Realeum. The Company evaluates other technology initiatives from time to time that it believes are complimentary to its existing investments and can help enhance the value of its real estate holdings. About AvalonBay Communities, Inc. AvalonBay, named the NAHB Development Company of the year for 1998 and 1999, currently owns or holds an ownership interest in 136 apartment communities containing 39,611 apartment homes in twelve states and the District of Columbia, of which 10 communities are under construction and 2 communities are under reconstruction. AvalonBay is an equity REIT in the business of developing, redeveloping, acquiring and managing luxury apartment communities in high barrier-to-entry markets of the United States. More information on AvalonBay may be found on AvalonBay's Website at http://www.avalonbay.com. For additional information, please contact Richard L. Michaux, Chairman and Chief Executive Officer, at 703-317-4602 or Thomas J. Sargeant, Executive Vice President and Chief Financial Officer, at 703-317-4635. Forward-Looking Statements 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, 1999 under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations - Forward-Looking Statements". Revised Definition of FFO Management generally considers 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 ("NAREIT") 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. For the nine months ended September 30, 1999, the Company's previously reported FFO excluded a nonrecurring restructuring charge of $16,644 in conformance with the NAREIT definition of FFO calculations then in place ("Original Definition"). The Company has adopted NAREIT's new FFO calculation, pursuant to NAREIT's White Paper dated October 1999, which modifies the FFO calculation to include certain nonrecurring charges ("Clarified Definition"). Although both FFO calculations are presented on the attached financial statements, the Company believes the comparison of FFO using the Original Definition represents the best guide to investors of comparable operations and growth between years. 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 website and through e-mail distribution. Access to the Attachments through the Company's website is available at http://www.avalonbay.com/earnings. If you would like to receive future press releases via e-mail, please register through the Company's website at http://www.avalonbay.com/website/PressRegistration.nsf. Some items referenced in the earnings release may require the Adobe Acrobat 4.0 Reader. If you do not have the Adobe Acrobat 4.0 Reader, you may download it at the following website address: http://www.adobe.com/products/acrobat/readstep.html. Copyright (c) 2000 AvalonBay Communities, Inc. All Rights Reserved AVALONBAY COMMUNITIES, INC. Company Profile at September 30, 2000 (Dollars in thousands except per share data) Selected Operating Information: Q3 00 Q3 99 % Change --------- --------- ------- FFO - Current Definition(1) $64,498 $54,831 17.6% Per common share - basic $0.96 $0.83 15.7% Per common share - diluted $0.94 $0.83 13.3% FFO - Former Definition(2) $64,498 $54,885 17.5% Per common share - basic $0.96 $0.83 15.7% Per common share - diluted $0.94 $0.83 13.3% Net income available to common stockholders $48,550 $24,336 99.5% Per common share - basic $0.72 $0.37 94.6% Per common share - diluted $0.71 $0.37 91.9% Dividends declared - common $37,379 $33,884 10.3% Per common share $0.56 $0.52 7.7% Total EBITDA $94,680 $82,360 15.0% Average shares outstanding - basic 67,342,523 65,816,784 Average shares outstanding - diluted 67,615,664 66,222,896 YTD 00 YTD 99 % Change -------- --------- ------- FFO - Current Definition(1) $184,082 $137,732 33.7% Per common share - basic $2.75 $2.11 30.3% Per common share - diluted $2.71 $2.09 29.7% FFO - Former Definition(2) $184,082 $154,376 19.2% Per common share - basic $2.75 $2.36 16.5% Per common share - diluted $2.71 $2.35 15.3% Net income available to common stockholders $126,489 $82,268 53.8% Per common share - basic $1.89 $1.26 50.0% Per common share - diluted $1.86 $1.25 48.8% Dividends declared - common $111,536 $99,650 11.9% Per common share $1.68 $1.54 9.1% Total EBITDA $272,847 $232,591 17.3% Average shares outstanding - basic 67,010,947 65,327,928 Average shares outstanding - diluted 67,865,259 65,759,854 (1) FFO is calculated based on NAREIT's October 1999 White Paper on FFO. Non-recurring charges of $16,644 for the nine months ended September 30, 1999 were previously excluded. (2) As previously reported for the quarter and nine months ended September 30, 1999.SOURCE AvalonBay Communities, Inc.
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CONTACT:
Richard L. Michaux, Chairman 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.
