PR Newswire
CLEVELAND, Feb. 7, 2011
CLEVELAND, Feb. 7, 2011 /PRNewswire/ -- Associated Estates Realty Corporation (NYSE, NASDAQ: AEC) today reported financial results for the fourth quarter and year ended December 31, 2010.
Funds from operations (FFO) for the fourth quarter ended December 31, 2010 were $0.24 per common share (basic and diluted), compared with $0.26 per common share (basic and diluted), for the fourth quarter ended December 31, 2009.
Net loss applicable to common shares was $1.4 million or $0.03 per common share (basic and diluted) for the fourth quarter ended December 31, 2010, compared with net loss applicable to common shares of $3.9 million or $0.23 per common share (basic and diluted) for the fourth quarter ended December 31, 2009.
"Our operating results were much stronger than we expected at the beginning of 2010," said Jeffrey I. Friedman, president and chief executive officer. "It was a year where Associated Estates was hitting on all cylinders; solid property operations, improving our balance sheet and closing on strategic acquisitions," Friedman added.
A reconciliation of net (loss) income attributable to the Company to FFO, and to FFO as adjusted, is included in the table at the end of this press release and in the Company's supplemental financial information to be furnished with this earnings release to the Securities and Exchange Commission on Form 8-K.
Same Community Portfolio Results
Net operating income (NOI) for the fourth quarter of 2010 for the Company's same community portfolio increased 5.0 percent compared with the fourth quarter of 2009. Revenue increased 2.1 percent and property operating expenses decreased 2.1 percent when compared with the fourth quarter of 2009. Physical occupancy was 94.7 percent at the end of the fourth quarter 2010 versus 93.9 percent at the end of the fourth quarter of 2009. Average net rent collected per unit for the fourth quarter 2010 for the same community properties was $866 per month compared with $848 for the fourth quarter of 2009. Net rent collected per unit for the fourth quarter 2010 for the Company's same community Midwest portfolio increased 2.3 percent to $795; net collected rent per unit for the Company's same community Mid-Atlantic portfolio increased 0.3 percent to $1,167; and net rent collected per unit for the Company's same community properties in the Southeast markets increased 2.7 percent to $899.
Additional quarterly financial information, including performance by region for the Company's portfolio, is included in the Company's supplemental fact booklet, which is available on the "Investors" section of the Company's website at www.AssociatedEstates.com, or by clicking on the following link: http://ir.AssociatedEstates.com/results.cfm.
Year-to-Date Performance
FFO for the twelve months ended December 31, 2010, was $0.85 per common share (basic and diluted) and includes a credit to expenses of $553,000 for a refund of defeasance costs on certain previously defeased loans and non-cash charges of $1.0 million and $727,000, associated with the redemption of the Company's Series B preferred shares and trust preferred debt in the second quarter, respectively. FFO as adjusted for the twelve months of 2010, excludes the refund and non-cash charges, and was $0.89 per common share (basic and diluted). FFO for the twelve months ended December 31, 2009, was $1.20 per common share (basic and diluted) and includes a credit to expenses of $563,000 for a refund of defeasance costs on certain previously defeased loans. FFO as adjusted for the twelve months of 2009, excluding that credit, was $1.17 per common share (basic and diluted). The lower per share 2010 FFO and FFO as adjusted amounts reflect the issuance of an additional 23.6 million common shares in 2010.
For the twelve months ended December 31, 2010, net loss applicable to common shares was $11.7 million or $0.38 per common share (basic and diluted) compared to net income applicable to common shares of $1.6 million or $0.10 per common share (basic and diluted) for the period ended December 31, 2009. The December 31, 2009 results include $0.95 per share (basic and diluted) attributable to income from discontinued operations, primarily due to gains from property dispositions. There were no such gains in 2010.
A reconciliation of net (loss) income attributable to the Company to FFO, and to FFO as adjusted, is included in the table at the end of this press release and in the Company's supplemental financial information to be furnished with this earnings release to the Securities and Exchange Commission on Form 8-K.
NOI for the twelve months ended December 31, 2010 for the Company's same community portfolio, increased 0.8 percent due to the net of a 0.8 percent increase in revenue partially offset by a 0.8 percent increase in property operating expenses compared to the twelve months of 2009.
Acquisitions
On December 14, the Company purchased Westwind Farms Apartments, a Class A apartment community located in Ashburn, Virginia. The property was built in 2006, contains 464 units and is approximately 96 percent occupied. Average monthly rent per unit is $1,249.
2011 Outlook
The Company announced its full year FFO as adjusted guidance range of $1.02 to $1.06 per common share (basic and diluted). The Company also said its same community NOI guidance is for growth in the range of 4.0% to 5.0%. Detailed assumptions relating to the Company's earnings guidance can be found on page 25 of the fourth quarter 2010 supplemental fact booklet on the Company's website at www.AssociatedEstates.com.
Conference Call
A conference call to discuss the results will be held on February 8, 2011 at 2:00 p.m. Eastern. To participate in the call:
Via Telephone: The dial-in number is 800-860-2442, and the passcode is "Estates."
Via the Internet (listen only): Access the Company's website at www.AssociatedEstates.com. Please log on at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software. Select the "Q4 2010 Earnings Webcast" link. The webcast will be archived through February 27, 2011.
Company Profile
Associated Estates is a real estate investment trust ("REIT") and is a member of the Russell 2000 and the MSCI US REIT Index. The Company is headquartered in Richmond Heights, Ohio. Associated Estates' portfolio consists of 52 properties containing 13,662 units located in eight states. For more information about the Company, please visit its website at www.AssociatedEstates.com.
FFO and FFO as adjusted are non-Generally Accepted Accounting Principle (GAAP) measures. The Company generally considers FFO and FFO as adjusted to be useful measures for reviewing the comparative operating and financial performance of the Company because FFO and FFO as adjusted can help one compare the operating performance of a company's real estate between periods or to different REITs. A reconciliation of net (loss) income attributable to the Company to FFO, and to FFO as adjusted, is included in the table at the end of this press release and in the Company's supplemental financial information to be included with this earnings release and furnished to the Securities and Exchange Commission on Form 8-K.
Safe Harbor Statement
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This news release contains forward-looking statements based on current judgments and knowledge of management, which are subject to certain risks, trends and uncertainties that could cause actual results to vary from those projected, including but not limited to, expectations regarding the Company's 2011 performance, which are based on certain assumptions. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this news release. These forward-looking statements are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words "expects," "projects," "believes," "plans," "anticipates" and similar expressions are intended to identify forward-looking statements. Investors are cautioned that the Company's forward-looking statements involve risks and uncertainty that could cause actual results to differ from estimates or projections contained in these forward-looking statements, including without limitation the following: changes in the economic climate in the markets in which the Company owns and manages properties, including interest rates, the overall level of economic activity, the availability of consumer credit and mortgage financing, unemployment rates and other factors; the ability of the Company to refinance debt on favorable terms at maturity; risks of a lessening of demand for the multifamily units owned by the Company; competition from other available multifamily units and changes in market rental rates; new acquisitions and/or development projects may fail to perform in accordance with the Company's expectations; increases in property and liability insurance costs; unanticipated increases in real estate taxes and other operating expenses; weather conditions that adversely affect operating expenses; expenditures that cannot be anticipated such as utility rate and usage increases, unanticipated repairs and real estate tax valuation reassessments or millage rate increases; inability of the Company to control operating expenses or achieve increases in revenue; shareholder ownership limitations that may discourage a takeover otherwise considered favorably by shareholders; the results of litigation filed or to be filed against the Company; changes in tax legislation; risks of personal injury claims and property damage related to mold claims that are not covered by the Company's insurance; catastrophic property damage losses that are not covered by the Company's insurance; the ability to acquire properties at prices consistent with the Company's investment criteria; risks associated with property acquisitions such as failure to achieve expected results or matters not discovered in due diligence; risks related to the perception of residents and prospective residents as to the attractiveness, convenience and safety of the Company's properties or the neighborhoods in which they are located; and construction and construction business risks, including, without limitation, rapid and unanticipated increases of building materials and commodities.
ASSOCIATED ESTATES REALTY CORPORATION Financial Highlights (in thousands, except per share data) | |||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||
December 31, | December 31, | ||||||||||||
2010 | 2009 | 2010 | 2009 | ||||||||||
Total revenue | $ | 45,589 | $ | 32,415 | $ | 153,715 | $ | 130,419 | |||||
Net (loss) income attributable to AERC | $ | (1,359) | $ | (2,816) | $ | (8,636) | $ | 6,210 | |||||
Add: Depreciation - real estate assets | 9,971 | 8,251 | 35,593 | 32,822 | |||||||||
Amortization of intangible assets | 1,462 | - | 2,219 | 1,068 | |||||||||
Less: Preferred share dividends | - | (1,050) | (2,030) | (4,199) | |||||||||
Preferred share redemption costs | - | - | (993) | - | |||||||||
Gain on disposition of properties/gain on insurance recoveries | (245) | (110) | (245) | (16,065) | |||||||||
Funds from Operations (FFO) (1) | $ | 9,829 | $ | 4,275 | $ | 25,908 | $ | 19,836 | |||||
Funds from Operations (FFO) as adjusted (2) | $ | 9,829 | $ | 4,275 | $ | 27,075 | $ | 19,273 | |||||
Add: Depreciation - other assets | 490 | 389 | 1,827 | 1,522 | |||||||||
Amortization of deferred financing fees | 412 | 300 | 1,415 | 1,225 | |||||||||
Less: Recurring fixed asset additions | (1,621) | (2,331) | (8,026) | (7,807) | |||||||||
Funds Available for Distribution (FAD) (3) | $ | 9,110 | $ | 2,633 | $ | 22,291 | $ | 14,213 | |||||
Per share: | |||||||||||||
Net (loss) income applicable to common shares - basic and diluted | $ | (0.03) | $ | (0.23) | $ | (0.38) | $ | 0.10 | |||||
Funds from Operations - basic and diluted (1) | $ | 0.24 | $ | 0.26 | $ | 0.85 | $ | 1.20 | |||||
Funds from Operations as adjusted - basic and diluted (2) | $ | 0.24 | $ | 0.26 | $ | 0.89 | $ | 1.17 | |||||
Dividends per share | $ | 0.17 | $ | 0.17 | $ | 0.68 | $ | 0.68 | |||||
Weighted average shares outstanding - basic and diluted | 41,147 | 16,561 | 30,421 | 16,516 | |||||||||
(1) The Company defines FFO in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT"). This definition includes all operating results, both recurring and non-recurring, except those results defined as "extraordinary items" under generally accepted accounting principles (GAAP), adjusted for depreciation on real estate assets and amortization of intangible assets, gains on insurance recoveries and gains and losses from the disposition of properties and land. FFO does not represent cash generated from operating activities in accordance with GAAP and is not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to net income as an indicator of the Company's operating performance or as an alternative to cash flow as a measure of liquidity. The Company generally considers FFO to be a useful measure for reviewing the comparative operating and financial performance of the Company because FFO can help one compare the operating performance of a company's real estate between periods or as compared to different REITs. It should be noted, however, that certain other real estate companies may define FFO in a different manner. | |
(2) The Company defines FFO as adjusted as FFO, as defined above, plus the add back of refunds on previously defeased loans of $(553,000) and $(563,000) for the twelve months ended December 31, 2010 and December 31, 2009, respectively. In accordance with GAAP, these refunds on previously defeased loans are included as an offset to interest expense in the Company's Consolidated Statement of Operations. Additionally, the computation of FFO as adjusted for the twelve months ended December 31, 2010 includes add backs of non–cash charges of $1.0 million and $727,000, respectively, associated with the redemption of the Company's Series B preferred shares and trust preferred debt. The Company is providing this calculation as an alternative FFO calculation as it considers it a more appropriate measure of comparing the operating performance of a company's real estate between periods or as compared to different REITs. | |
(3) The Company defines FAD as FFO as adjusted, as defined above, plus depreciation other and amortization of deferred financing fees less recurring fixed asset additions. Fixed asset additions exclude development, investment, revenue enhancing and non-recurring capital additions. The Company considers FAD to be an appropriate supplemental measure of the performance of an equity REIT because, like FFO and FFO as adjusted, it captures real estate performance by excluding gains or losses from the disposition of properties and land and depreciation on real estate assets and amortization of intangible assets. Unlike FFO and FFO as adjusted, FAD also reflects that recurring capital expenditures are necessary to maintain the associated real estate. | |
The full text and supplemental schedules of this press release are available on Associated Estates' website at www.AssociatedEstates.com. To receive a copy of the results by mail or fax, please contact Investor Relations at 1-800-440-2372. For more information, access the Investors section of www.AssociatedEstates.com.
For more information, please contact: | ||
Jeremy Goldberg | (216) 797-8715 | |
SOURCE Associated Estates Realty Corporation