Gables Residential (NYSE:GBP)
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Gables Residential (NYSE:GBP) (the "Company") today
reported earnings for the second quarter. Net income available to
common shareholders was $0.54 per diluted share. Funds from operations
("FFO") available to common shareholders was $0.40 per diluted share
and adjusted funds from operations ("AFFO") available to common
shareholders was $0.88 per diluted share. Each of these metrics
includes expenses of approximately $0.09 per diluted share associated
with the Company's previously announced plan of merger. Excluding the
impact of these merger-related expenses, the Company's FFO was in line
with its previous earnings guidance for the quarter.
Net income available to common shareholders for the quarter was
$15.8 million, or $0.54 per diluted share, compared to $15.3 million,
or $0.52 per diluted share, for the comparable period of 2004. The
second quarter 2005 results included gains from real estate asset
sales of $18.7 million, or $16.6 million, net of $2.1 million of
minority interest, or $0.56 per diluted share. The second quarter 2004
results included gains from real estate asset sales of $14.2 million,
or $12.4 million, net of $1.8 million of minority interest, or $0.42
per diluted share. For the first six months of 2005, net income
available to common shareholders was $55.6 million, or $1.89 per
diluted share, compared to $20.4 million, or $0.70 per diluted share,
for the comparable period of 2004. For the first six months of 2005,
results included gains from real estate asset sales of $53.4 million,
or $47.1 million, net of $6.3 million of minority interest, or $1.60
per diluted share. For the first six months of 2004, results included
gains from real estate asset sales of $17.0 million, or $14.9 million,
net of $2.1 million of minority interest, or $0.51 per diluted share.
FFO available to common shareholders for the quarter was $13.3
million, or $0.40 per diluted share. FFO available to common
shareholders for the second quarter of 2004 was $18.5 million, or
$0.55 per diluted share, after a supplemental adjustment of $1.0
million to exclude debt extinguishment costs associated with the sale
of real estate assets, or $17.5 million, or $0.52 per diluted share,
including such costs. FFO available to common shareholders for the
first six months of 2005 was $37.8 million, or $1.14 per diluted
share, after a supplemental adjustment of $0.1 million to exclude debt
extinguishment costs associated with the sale of real estate assets,
or $37.7 million, or $1.13 per diluted share, including such costs.
FFO available to common shareholders for the first six months of 2004
was $36.1 million, or $1.08 per diluted share, after a supplemental
adjustment of $1.0 million to exclude debt extinguishment costs
associated with the sale of real estate assets, or $35.1 million, or
$1.05 per diluted share, including such costs. The FFO metric excludes
gain on sale of operating real estate assets and real estate asset
depreciation and amortization. A reconciliation of net income to FFO
is included on page 14.
AFFO available to common shareholders, which treats recurring
value retention capital expenditures as period costs and includes
economic gains and losses on asset sales, was $29.1 million, or $0.88
per diluted share, for the quarter, compared to $22.2 million, or
$0.66 per diluted share, for the comparable period of 2004. AFFO
available to common shareholders for the first six months of 2005 was
$42.3 million, or $1.27 per diluted share, compared to $35.5 million,
or $1.06 per diluted share, for the comparable period of 2004.
Economic gains and losses represent the gains and losses on sales of
assets in accordance with GAAP, less accumulated depreciation through
the date of sale. A reconciliation of net income to FFO and to AFFO is
included on page 14. A summary of the Company's results over the last
five years, including AFFO is included on page 15.
This earnings release is available on Gables Residential's website
at www.gables.com. Please click on "Investor Relations" then
"Financial Information/Earnings Releases" or go directly to this web
address: www.gables.com/q205earningsrelease.
The Company produces Earnings Release Supplements ("the
Supplements") that provide detailed information regarding the
financial position and operating results of the Company. These
Supplements are available via the Company's website and through e-mail
distribution. Access to the Supplements through the Company's website
is available at www.gables.com/financialreports. If you would like to
receive future press releases via e-mail, please register through the
Company's website at www.gables.com/mailalerts. Some items referenced
in the earnings release may require Adobe Acrobat 6.0 Reader. If you
do not have Adobe Acrobat 6.0 Reader, you may download it at the
following website: www.adobe.com/products/acrobat/readstep2.html.
The Company will not host an earnings conference call this quarter
due to its previously announced plan of merger.
Same-Store Operating Results for the Second Quarter 2005
On a year-over-year basis, total property revenues increased 2.9%
and property operating and maintenance expenses increased 4.9%,
resulting in a 1.7% increase in property net operating income ("NOI")
for the second quarter. On a sequential-quarter basis, total property
revenues increased 0.9% and property operating and maintenance
expenses increased 2.1%, resulting in a 0.1% increase in property NOI.
The number of apartment homes included in the year-over-year and
sequential same-store results as a percentage of the Company's total
stabilized portfolio at June 30, 2005 is 68% and 75%, respectively.
The Company does not include its proportionate share of joint venture
results in its same-store pool of assets. A detail of the
year-over-year and sequential-quarter same-store results by market is
presented on pages 16 and 17, respectively.
Investment and Disposition Activity
During the quarter, the Company acquired seven communities
comprising 945 apartment homes in three markets for a total of $80
million. In its Dallas EPN zones, the Company acquired Gables Katy
Trail (158 apartment homes), Gables Uptown Tower (196 apartment
homes), Carlisle on the Creek (176 apartment homes) and Saltillo (79
apartment homes). In the Buckhead EPN of Atlanta, the Company acquired
two adjacent communities, Northmoor and Lindview, comprising a total
of 224 apartment homes. The Company also acquired Memorial Hills (112
apartment homes) in the River Oaks EPN of Houston. On a year-to-date
basis, the Company has acquired nine communities comprising 1,660
apartment homes located in EPN zones in four of its markets for a
total of $172 million.
The Company has $323 million of assets in various stages of
development with approximately $167 million of costs remaining to be
incurred at June 30, 2005. In addition, the Company has development
rights for the future development of an estimated 2,305 apartment
homes in ten communities for total budgeted costs estimated to be
approximately $400 million as outlined in page 30 of the press release
including the Supplements.
During the quarter, the Company sold its remaining asset in Tampa,
Gables Beach Park (166 apartment homes), to a condominium converter
for $41.2 million. The related gain on sale of real estate assets in
accordance with GAAP was $18.7 million, or $0.56 per diluted share.
The economic gain for this sale transaction was $17.8 million, or
$0.54 per diluted share, after taking into account $0.9 million of
accumulated depreciation. On a year-to-date basis, the Company has
sold seven real estate assets comprising 2,045 apartment homes in four
markets for a total of $168.5 million. The related gain on sale of
real estate assets in accordance with GAAP was $53.4 million, or $1.60
per diluted share. The economic gain for these transactions was $8.3
million, or $0.25 per diluted share, after taking into account $0.1
million of associated debt extinguishment costs and $45.0 million of
accumulated depreciation.
Promotion of Sue Ansel to COO
During the quarter, the Company announced that Sue Ansel was
promoted to Chief Operating Officer. Ms. Ansel previously served as a
Senior Vice President with responsibility for the Company's apartment
operations and asset management functions in Dallas, Austin, Houston,
San Diego and the Inland Empire, which includes a portfolio of over
15,000 apartment homes. In addition to her operating experience, she
has been involved in the development, acquisition and ancillary
service businesses during her 18- year tenure with the Company.
Agreement and Plan of Merger with ING Clarion
On June 7, 2005, the Company entered into an agreement and plan of
merger pursuant to which a newly formed affiliate of ING Clarion
Partners, LLC, an indirect wholly owned subsidiary of ING Groep, N.V.,
will acquire the Company and its subsidiaries through the mergers of
Gables Residential Trust and Gables Realty Limited Partnership with
merger subsidiaries of the ING Groep, N.V. (the "merger"). Pursuant to
the terms of the agreement and plan of merger, each issued and
outstanding common share of beneficial interest of the Company will be
converted into the right to receive $43.50 in cash, without interest.
In addition, holders of common shares will receive additional merger
consideration that represents a pro-rata portion of the monthly
dividend allocable to the month in which the mergers are closed and
will be based on the number of days having elapsed in such monthly
period (the "pro-rata dividend"). Each existing common unit of limited
partnership in the Company's Operating Partnership (other than common
units held by the Company) will be converted into and cancelled in
exchange for the right to receive (1) $43.50 in cash, without
interest, plus a distribution equal to the pro-rata dividend or (2) if
the holder so elects, a Class A common unit of limited partnership
interest in the surviving partnership and a distribution equal to the
pro-rata dividend, provided that the issuance of Class A common units
would be exempt from registration under the Securities Act and
applicable state securities laws. Holders of not more than $75 million
of existing common units in the Operating Partnership in the aggregate
may elect to receive Class A common units (any excess will be subject
to pro-rata reduction among all holders electing to receive Class A
common units).
Completion of the merger, which is expected to occur by the end of
the third quarter of 2005, is subject to approval by the Company's
common shareholders and certain other customary closing conditions.
The merger has been unanimously approved by the Company's Board of
Trustees, which will recommend that the common shareholders approve
the merger. Gables expects to continue to pay regular monthly
dividends at an annualized rate of $2.41 per share through the closing
of the merger, including a pro-rated dividend for the month in which
the merger closes.
Earnings Guidance
The Company is not providing earnings guidance this quarter due to
the pending merger.
Discontinued Operations
The Company adopted SFAS No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets," effective January 1, 2002. This
standard requires, among other things, that operating results of
certain real estate assets sold or held for sale subsequent to January
1, 2002, be reflected as discontinued operations in the statements of
operations for all periods presented. The Company evaluates, in the
ordinary course of its business, the continued ownership of its assets
relative to available opportunities to acquire and develop new assets
and relative to available equity and debt capital financing. The
Company sells assets if it determines that such sales are the most
attractive sources of capital for redeployment in its business, for
repayment of debt, for repurchases of stock, and for other uses. The
Company expects to reclassify historical operating results whenever
necessary in order to comply with the requirements of SFAS No. 144.
Non-GAAP Financial Measures and Other Terms
This release, including the Supplements, contains certain non-GAAP
financial measures and other terms. The Company's definition and
calculation of these non-GAAP financial measures and other terms may
differ from the definitions and methodologies used by other REITs and,
accordingly, may not be comparable. The non-GAAP financial measures
referred to below should not be considered as alternatives to net
income or other GAAP measures as indicators of the Company's
performance. Additional information regarding these items and other
non-GAAP financial measures and terms used in this release, including
the Supplements, can be found elsewhere herein.
Funds From Operations (FFO) is used by industry analysts and
investors as a supplemental operating performance measure of an equity
real estate investment trust ("REIT"). The Company calculates FFO in
accordance with the definition that was adopted by the Board of
Governors of the National Association of Real Estate Investment Trusts
("NAREIT"). FFO, as defined by NAREIT, represents net income (loss)
determined in accordance with generally accepted accounting principles
("GAAP"), excluding extraordinary items as defined under GAAP and
gains or losses from sales of previously depreciated operating real
estate assets as defined under GAAP, plus certain non-cash items, such
as real estate asset depreciation and amortization, and after
adjustments for unconsolidated partnerships and joint ventures.
Historical cost accounting for real estate assets in accordance
with GAAP implicitly assumes that the value of real estate assets
diminishes predictably over time. Since real estate values instead
have historically risen or fallen with market conditions, many
industry investors and analysts have considered presentation of
operating results for real estate companies that use historical cost
accounting to be insufficient by themselves. Thus, NAREIT created FFO
as a supplemental measure of REIT operating performance that excludes
historical cost depreciation, among other items, from GAAP net income.
The use of FFO, combined with the required primary GAAP presentations,
has improved the understanding of operating results of REITs among the
investing public and made comparisons of REIT operating results more
meaningful. Management generally considers FFO to be a useful measure
for reviewing the comparative operating and financial performance of
the Company (although it should be reviewed in conjunction with net
income which remains the primary measure of performance) because by
excluding gains or losses related to sales of previously depreciated
operating real estate assets and excluding real estate asset
depreciation and amortization, FFO can help users compare the
operating performance of a company's real estate between periods or as
compared to different companies.
The Company presents FFO with a supplemental adjustment to exclude
debt extinguishment costs associated with the sale of real estate
assets. These debt extinguishment costs are incurred when the sale of
an asset encumbered by debt requires the Company to pay the
extinguishment costs prior to the debt's stated maturity and to
write-off unamortized loan costs at the date of the extinguishment.
Such costs are excluded from the gain on sale of real estate assets
reported in accordance with GAAP. However, the Company views the debt
extinguishment costs associated with the sale of real estate assets as
an incremental cost of the sale transaction because the Company
extinguished the debt in connection with the consummation of the sale
transaction and the Company had no intent to extinguish the debt
absent such transaction. The Company believes that this supplemental
adjustment more appropriately reflects the results of its operations
exclusive of the impact of its sale transactions.
Adjusted Funds From Operations (AFFO) represents FFO less
recurring value retention capital expenditures, plus economic gains
and losses from sales of previously depreciated operating real estate
assets. The Company believes AFFO is a useful supplemental operating
performance metric because AFFO results in a more comprehensive
evaluation of the way the Company operates its business. The Company
modified its definition of AFFO for reporting purposes in the second
quarter of 2004 to include economic gains and losses from sales of
previously depreciated operating real estate assets because the
Company believes inclusion of economic gains and losses on asset sales
reflects the results of its investment activities which are a
fundamental component of its business strategy. Prior period
presentation of AFFO has been conformed accordingly. Management
generally considers AFFO to be a useful measure for reviewing the
comparative operating and financial performance of the Company
(although it should be reviewed in conjunction with net income which
remains the primary measure of performance) because by including gains
or losses related to sales of previously depreciated operating real
estate assets and excluding real estate asset depreciation and
amortization, AFFO can help users understand the financial performance
of a company's operating and investment results over time.
Economic Gains and Losses on Sale of Real Estate Assets represent
the gains or losses on sale in accordance with GAAP, less accumulated
depreciation through the date of sale. As such, economic gains and
losses reflect the cash proceeds from a sale less the cash invested in
the sold community. The Company treats debt extinguishment costs
associated with the sale as a reduction to the economic gains and
losses because it believes such costs represent an incremental cost of
the sale transaction.
Recurring Value Retention Capital Expenditures represent costs
typically incurred every year during the life of a community, such as
expenditures for carpet, vinyl flooring, appliances, mechanical
equipment and fixtures. To the extent such costs are incurred in
connection with a major renovation of a community, they are excluded
from this category.
Non-recurring Capital Expenditures represent costs that are
generally incurred in connection with a major project impacting an
entire community, such as roof replacement, parking lot resurfacing,
exterior painting and siding replacement. These costs are not incurred
on a regular basis and may not occur or reoccur during the anticipated
hold period of an asset. To the extent such costs are incurred in
connection with a major renovation of a community, they are excluded
from this category.
Value Enhancing Capital Expenditures represent costs for which an
incremental value is expected to be achieved from increasing the NOI
potential for a community or recharacterizing the quality of the
income stream with an anticipated reduction in potential sales cap
rate for items such as replacement of wood siding with a masonry-based
Hardi-Board product, amenity upgrades and additions, installation of
security gates and additions of covered parking. To the extent such
costs are incurred in connection with a major renovation of a
community, they are excluded from this category.
Property Net Operating Income (NOI) is used by industry analysts,
investors and Company management to measure operating performance of
the Company's properties. NOI represents total property revenues less
property operating and maintenance expenses (as reflected in the
accompanying statements of operations). Accordingly, NOI excludes
certain expenses included in the determination of net income such as
property management and other indirect operating expenses, interest
expense and depreciation and amortization expense. These items are
excluded from NOI in order to provide results that are more closely
related to a property's results of operations. Certain items, such as
interest expense, while included in FFO and net income, do not affect
the operating performance of a real estate asset and are often
incurred at the corporate level as opposed to the property level. As a
result, management uses only those income and expense items that are
incurred at the property level to evaluate a property's performance.
Real estate asset depreciation and amortization is excluded from NOI
for the same reasons that it is excluded from FFO pursuant to NAREIT's
definition.
Stabilized Occupancy is defined as the earlier to occur of (i) 93%
physical occupancy or (ii) one year after completion of construction.
For purposes of evaluating comparative operating performance, the
Company categorizes its operating communities based on the period each
community reaches a stabilized occupancy and operating expense level.
For purposes of the period-end community charts, once a development
community has reached a stabilized occupancy level, it is reclassified
from the Development/Lease-up Communities chart to the Stabilized
Communities chart.
Physical Occupancy represents gross potential rent less physical
vacancy loss as a percentage of gross potential rent.
Economic Occupancy represents actual rent revenue collected
divided by gross potential rent. Thus, economic occupancy differs from
physical occupancy in that it takes into account concessions,
non-revenue producing apartment homes and delinquencies.
Gross Potential Rent is determined by valuing occupied apartment
homes at contract rates and vacant units at market rates.
Income Available for Debt Service and Preferred Dividends
represents net income available to common shareholders before interest
expense and credit enhancement fees, preferred dividends, original
issuance costs associated with redemption of preferred shares, income
taxes, depreciation, amortization, minority interest, gain on sale of
real estate assets, debt extinguishment costs associated with the sale
of real estate assets, long-term compensation expense, extraordinary
items and unusual items, all from both continuing and discontinued
operations, as applicable. Management generally considers income
available for debt service and preferred dividends to be an
appropriate supplemental measure to net income of the operating
performance of the Company because it helps investors to understand
the ability of the Company to incur and service its debt and preferred
stock obligations.
Forward-Looking Statements
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995: This release, including the Supplements, contains
forward-looking statements within the meaning of federal securities
laws. These forward-looking statements reflect the Company's current
views with respect to the future events or financial performance
discussed in this release, based on management's beliefs and
assumptions and information currently available. When used, the words
"believe," "anticipate," "estimate," "project," "should," "expect,"
"plan," "assume" and similar expressions that do not relate solely to
historical matters identify forward-looking statements.
Forward-looking statements in this release include, without
limitation, statements relating to the Company's ability to produce
total returns through monthly dividends and share price changes that
exceed the NAREIT apartment sector index and the anticipated closing
of the Company's proposed merger by the end of the third quarter of
2005. Forward-looking statements are subject to risks, uncertainties
and assumptions and are not guarantees of future events or
performance, which may be affected by known and unknown risks, trends
and uncertainties. Should one or more of these risks or uncertainties
materialize, or should the Company's assumptions prove incorrect,
actual results may vary materially from those anticipated, projected
or implied in the forward-looking statements. Factors that may cause
such a variance include, among others: the delay in or failure to
close the merger; local and national economic and market conditions,
including changes in occupancy rates, rental rates, and job growth;
the demand for apartment homes in the Company's markets; the
uncertainties associated with the Company's current real estate
development, including actual costs exceeding the Company's budgets;
changes in construction costs; construction delays due to the
unavailability of materials or weather conditions; the failure to sell
assets on favorable terms, in a timely manner or at all; the failure
of acquisitions to yield anticipated results; the cost and
availability of financing; changes in interest rates; competition; the
effects of the Company's accounting and other policies; and additional
factors discussed from time to time in the Company's filings with the
Securities and Exchange Commission. The Company expressly disclaims
any responsibility to update forward-looking statements to reflect
changes in underlying assumptions or factors, new information, future
events or otherwise.
About Gables
With a mission of Taking Care of the Way People Live(R), Gables
Residential has received national recognition for excellence in the
management, development, acquisition and construction of luxury
multifamily communities in high job growth markets. The Company's
strategic objective is to produce total returns through monthly
dividends and share price changes that exceed the NAREIT apartment
sector index.
The Company has a research-driven strategy focused on markets
characterized by high job growth and resiliency to national economic
downturns. Within these markets, the Company targets Established
Premium Neighborhoods(TM) ("EPN's"), generally defined as areas with
high per square foot prices for single-family homes. By investing in
resilient, demand-driven markets and EPN(TM) locations with barriers
to entry, the Company expects to achieve its strategic objective.
The Company is one of the largest apartment operators in the
nation and currently manages 41,029 apartment homes in 158
communities. The Company owns or has an interest in 84 communities
with 21,163 stabilized apartment homes located primarily in Atlanta,
Houston, South Florida, Austin, Dallas, Washington, D.C. and San
Diego/Inland Empire and has an additional 11 communities with 2,673
apartment homes under development or lease-up. For further
information, please contact Gables Investor Relations at (800)
371-2819 or access Gables Residential's website at www.gables.com.
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GABLES RESIDENTIAL
Consolidated Statements of Operations
June 30, 2005
(Unaudited and amounts in thousands, except for per share data)
Three months ended Six months ended
June 30, June 30,
------------------ -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Revenues:
Rental revenues $ 51,941 $ 45,380 $101,004 $ 90,139
Other property revenues 4,334 3,829 7,939 7,191
--------- --------- --------- ---------
Total property revenues 56,275 49,209 108,943 97,330
--------- --------- --------- ---------
Property management revenues 2,176 2,078 4,410 4,232
Ancillary services revenues 817 1,337 1,896 2,551
Interest income 123 32 210 40
Other revenues 87 453 385 859
--------- --------- --------- ---------
Total other revenues 3,203 3,900 6,901 7,682
--------- --------- --------- ---------
Total revenues 59,478 53,109 115,844 105,012
--------- --------- --------- ---------
Expenses:
Property operating and
maintenance (exclusive of
items shown below) 21,446 17,897 41,301 35,621
Real estate asset
depreciation and
amortization 12,905 11,412 25,161 23,165
Property management (owned
and third party) 4,165 4,113 8,741 8,399
Ancillary services 845 1,010 1,710 2,074
Interest expense and credit
enhancement fees 12,228 9,485 23,625 18,827
Amortization of deferred
financing costs 382 426 874 840
General and administrative 2,925 2,751 6,075 5,725
Corporate asset
depreciation and
amortization 953 714 1,878 1,212
Unusual items 2,828 - (472) -
--------- --------- --------- ---------
Total expenses 58,677 47,808 108,893 95,863
--------- --------- --------- ---------
Income from continuing
operations before equity in
income of joint ventures,
gain on sale and minority
interest 801 5,301 6,951 9,149
Equity in income of joint
ventures 476 60 961 544
Gain on sale of technology
investment - - 5,838 -
Minority interest of common
unitholders in Operating
Partnership 100 (399) (1,115) (674)
--------- --------- --------- ---------
Income from continuing
operations 1,377 4,962 12,635 9,019
Operating income from
discontinued operations, net
of minority interest (2) 983 350 2,088
Gain on sale of discontinued
operations, net of minority
interest 16,588 12,419 47,127 14,498
Debt extinguishment costs
associated with the sale of
real estate assets, net of
minority interest - (862) (137) (862)
--------- --------- --------- ---------
Income from discontinued
operations, net of minority
interest 16,586 12,540 47,340 15,724
Net income 17,963 17,502 59,975 24,743
Dividends to preferred
shareholders (2,193) (2,193) (4,387) (4,387)
--------- --------- --------- ---------
Net income available to common
shareholders $ 15,770 $ 15,309 $ 55,588 $ 20,356
--------- --------- --------- ---------
Weighted average number of
common shares outstanding -
basic 29,283 29,258 29,351 29,119
Weighted average number of
common shares outstanding -
diluted 33,128 33,548 33,302 33,487
Per Common Share Information-
Basic:
Income (loss) from continuing
operations (net of preferred
dividends) $ (0.03) $ 0.09 $ 0.28 $ 0.16
Income from discontinued
operations, net of minority
interest $ 0.57 $ 0.43 $ 1.61 $ 0.54
Net income available to common
shareholders $ 0.54 $ 0.52 $ 1.89 $ 0.70
Per Common Share Information-
Diluted:
Income (loss) from continuing
operations (net of preferred
dividends) $ (0.03) $ 0.09 $ 0.28 $ 0.16
Income from discontinued
operations $ 0.56 $ 0.43 $ 1.61 $ 0.54
Net income available to common
shareholders $ 0.54 $ 0.52 $ 1.89 $ 0.70
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GABLES RESIDENTIAL
Funds From Operations and Adjusted Funds From Operations
June 30, 2005
(Unaudited and amounts in thousands, except for per share data)
Three months ended Six months ended
June 30, June 30,
-------------------- ------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Net income available to common
shareholders $ 15,770 $ 15,309 $ 55,588 $ 20,356
Minority interest of common
unitholders in Operating
Partnership:
Continuing operations (100) 399 1,115 674
Discontinued operations 2,126 1,795 6,312 2,263
--------- --------- --------- ---------
Total 2,026 2,194 7,427 2,937
--------- --------- --------- ---------
Real estate asset depreciation
and amortization:
Wholly-owned real estate
assets - continuing
operations 12,905 11,412 25,161 23,165
Wholly-owned real estate
assets - discontinued
operations 67 2,268 370 4,739
Joint venture real estate
assets 1,271 495 2,525 886
--------- --------- --------- ---------
Total 14,243 14,175 28,056 28,790
--------- --------- --------- ---------
Gain on sale of operating real
estate assets:
Wholly-owned real estate
assets - discontinued
operations (18,714) (14,198) (53,411) (16,580)
Joint venture real estate
assets - - - (432)
--------- --------- --------- ---------
Total (18,714) (14,198) (53,411) (17,012)
--------- --------- --------- ---------
FFO available to common
shareholders - diluted (a) $ 13,325 $ 17,480 $ 37,660 $ 35,071
--------- --------- --------- ---------
Debt extinguishment costs
associated with the sale of
real estate assets - 986 156 986
--------- --------- --------- ---------
FFO available to common
shareholders, after a
supplemental adjustment to
exclude debt extinguishment
costs associated with the
sale of real estate
assets - diluted (b) $ 13,325 $ 18,466 $ 37,816 $ 36,057
--------- --------- --------- ---------
Recurring value retention
capital expenditures:
Carpet and flooring (1,179) (1,261) (2,174) (2,306)
Appliances (135) (173) (251) (339)
Other additions and
improvements (742) (1,193) (1,436) (2,066)
--------- --------- --------- ---------
Total (2,056) (2,627) (3,861) (4,711)
--------- --------- --------- ---------
Economic gain on sale
of operating real estate
assets:
Gain on sale of operating
real estate assets 18,714 14,198 53,411 17,012
Less: accumulated
depreciation (907) (6,866) (44,957) (11,912)
Less: debt extinguishment
costs associated with the
sale of real estate assets - (986) (156) (986)
--------- --------- --------- ---------
Economic gain on
sale of operating real
estate assets 17,807 6,346 8,298 4,114
--------- --------- --------- ---------
AFFO available to common
shareholders - diluted (c) $ 29,076 $ 22,185 $ 42,253 $ 35,460
--------- --------- --------- ---------
Average common shares
outstanding - basic (d) 29,283 29,258 29,351 29,119
Incremental shares from
assumed conversions of:
Common units 3,724 4,203 3,840 4,250
Stock options 100 73 91 104
Other 21 14 20 14
--------- --------- --------- ---------
Average common shares
outstanding - diluted (e) 33,128 33,548 33,302 33,487
--------- --------- --------- ---------
Ownership of Operating
Partnership's average
common units outstanding:
Gables Residential (f) 88.72% 87.44% 88.43% 87.26%
Minority interest 11.28% 12.56% 11.57% 12.74%
--------- --------- --------- ---------
Total 100.00% 100.00% 100.00% 100.00%
--------- --------- --------- ---------
Per common share data - basic:
FFO available to common
shareholders ((a)*(f))/(d) $ 0.40 $ 0.52 $ 1.13 $ 1.05
FFO available to common
shareholders, after a
supplemental adjustment to
exclude debt extinguishment
costs associated with the
sale of real estate
assets ((b)*(f))/(d) $ 0.40 $ 0.55 $ 1.14 $ 1.08
AFFO available to common
shareholders ((c)*(f))/(d) $ 0.88 $ 0.66 $ 1.27 $ 1.06
Per common share data -
diluted:
FFO available to common
shareholders (a)/(e) $ 0.40 $ 0.52 $ 1.13 $ 1.05
FFO available to common
shareholders, after a
supplemental adjustment
to exclude debt
extinguishment costs
associated with the sale
of real estate assets
(b)/(e) $ 0.40 $ 0.55 $ 1.14 $ 1.08
AFFO available to common
shareholders (c)/(e) $ 0.88 $ 0.66 $ 1.27 $ 1.06
*T
-0-
*T
GABLES RESIDENTIAL
Net Income, FFO, AFFO and Dividends - Five Year History
June 30, 2005
(Unaudited and amounts in thousands, except for per share data)
Years ended December 31,
-----------------------------
2000 2001 2002
--------- --------- ---------
Net income available to common
shareholders $ 57,579 $ 55,074 $ 45,661
Add: Minority interest of common
unitholders in Operating Partnership 16,359 14,249 11,077
Add: Real estate asset depreciation and
amortization 45,289 49,313 49,400
Less: Gain on sale of operating real
estate assets (28,622) (34,110) (30,346)
--------- --------- ---------
FFO available to common shareholders -
diluted 90,605 84,526 75,792
Add: Debt extinguishment costs
associated with the sale of real estate
assets - - -
--------- --------- ---------
FFO available to common shareholders,
after a supplemental adjustment to
exclude debt extinguishment costs
associated with the sale of real
estate assets - diluted 90,605 84,526 75,792
Less: Recurring value retention capital
expenditures (10,910) (11,797) (13,077)
Add: Economic gain on sale of operating
real estate assets:
Gain on sale of operating real estate
assets per GAAP 28,622 34,110 30,346
Less: accumulated depreciation (19,232) (13,114) (13,393)
Less: debt extinguishment costs
associated with the sale of real estate
assets - - -
--------- --------- ---------
Economic gain on sale of operating
real estate assets 9,390 20,996 16,953
--------- --------- ---------
AFFO available to common shareholders -
diluted $ 89,085 $ 93,725 $ 79,668
--------- --------- ---------
Average common shares outstanding -
diluted 30,439 30,314 30,684
Per common share data - diluted:
Net income available to common
shareholders $ 2.43 $ 2.29 $ 1.85
FFO available to common shareholders $ 2.98 $ 2.79 $ 2.47
FFO available to common shareholders,
after a supplemental adjustment to
exclude debt extinguishment costs
associated with the sale of real
estate assets $ 2.98 $ 2.79 $ 2.47
Recurring value retention capital
expenditures $ (0.36) $ (0.39) $ (0.43)
Economic gain on sale of operating real
estate assets $ 0.31 $ 0.69 $ 0.55
--------- --------- ---------
AFFO available to common shareholders $ 2.93 $ 3.09 $ 2.60
--------- --------- ---------
Dividends $ 2.20 $ 2.34 $ 2.41
--------- --------- ---------
AFFO available to common shareholders
less dividends $ 0.73 $ 0.75 $ 0.19
--------- --------- ---------
Six
months
Years ended ended
December 31, June 30,
------------------- ---------
2003 2004 2005
--------- --------- ---------
Net income available to common
shareholders $ 49,062 $ 82,892 $ 55,588
Add: Minority interest of common
unitholders in Operating Partnership 9,690 11,901 7,427
Add: Real estate asset depreciation and
amortization 53,989 57,991 28,056
Less: Gain on sale of operating real
estate assets (37,693) (73,341) (53,411)
--------- --------- ---------
FFO available to common shareholders -
diluted 75,048 79,443 37,660
Add: Debt extinguishment costs associated
with the sale of real estate assets - 1,623 156
--------- --------- ---------
FFO available to common shareholders,
after a supplemental adjustment to
exclude debt extinguishment costs
associated with the sale of real
estate assets - diluted 75,048 81,066 37,816
Less: Recurring value retention capital
expenditures (10,498) (9,775) (3,861)
Add: Economic gain on sale of operating
real estate assets:
Gain on sale of operating real estate
assets per GAAP 37,693 73,341 53,411
Less: accumulated depreciation (20,725) (49,981) (44,957)
Less: debt extinguishment costs
associated with the sale of real
estate assets - (1,623) (156)
--------- --------- ---------
Economic gain on sale of operating
real estate assets 16,968 21,737 8,298
--------- --------- ---------
AFFO available to common shareholders -
diluted $ 81,518 $ 93,028 $ 42,253
--------- --------- ---------
Average common shares outstanding -
diluted 31,452 33,559 33,302
Per common share data - diluted:
Net income available to common
shareholders $ 1.87 $ 2.82 $ 1.89
FFO available to common shareholders $ 2.39 $ 2.37 $ 1.13
FFO available to common shareholders,
after a supplemental adjustment to
exclude debt extinguishment costs
associated with the sale of real
estate assets $ 2.39 $ 2.42 $ 1.14
Recurring value retention capital
expenditures $ (0.33) $ (0.29) $ (0.12)
Economic gain on sale of operating real
estate assets $ 0.54 $ 0.65 $ 0.25
--------- --------- ---------
AFFO available to common shareholders $ 2.59 $ 2.77 $ 1.27
--------- --------- ---------
Dividends $ 2.41 $ 2.41 $ 1.21
--------- --------- ---------
AFFO available to common shareholders
less dividends $ 0.18 $ 0.36 $ 0.06
--------- --------- ---------
*T
-0-
*T
GABLES RESIDENTIAL
Results of Property Operations - Year-over-Year Comparisons -
Second Quarter
June 30, 2005
(Unaudited and amounts in thousands, except for property data)
The combined operating performance for all of the Company's
wholly-owned communities that are included in continuing operations
for the three months ended June 30, 2005 ("2Q 2005") and June 30, 2004
("2Q 2004") is as follows:
Number
of
2Q 2005
Apt.
Homes 2Q 2005 2Q 2004 $ Change % Change
------- -------- -------- -------- --------
Rental and other
property revenues:
Same-store communities
(1) 13,454 $41,182 $40,020 $ 1,162 2.9% (A)
Triple net master
lease communities 728 1,864 1,862 2 0.1%
Communities stabilized
in 2Q 2005, but not
in 2Q 2004 1,337 4,721 1,702 3,019 177.4%
Communities not
stabilized in 2Q 2005
(2) 3,335 8,508 3,170 5,338 168.4%
Sold communities (3) - - 2,455 (2,455) -100.0%
------- -------- -------- -------- --------
Total property
revenues 18,854 $56,275 $49,209 $ 7,066 14.4%
------- -------- -------- -------- --------
Property operating and
maintenance expenses
(4):
Same-store communities
(1) $15,877 $15,140 $ 737 4.9% (A)
Triple net master
lease communities 218 216 2 0.9%
Communities stabilized
in 2Q 2005, but not
in 2Q 2004 2,054 626 1,428 228.1%
Communities not
stabilized in 2Q 2005
(2) 3,297 951 2,346 246.7%
Sold communities (3) - 964 (964) -100.0%
-------- -------- -------- --------
Total property
operating and
maintenance
expenses $21,446 $17,897 $ 3,549 19.8%
-------- -------- -------- --------
Property net operating
income (NOI) (5):
Same-store communities
(1) $25,305 $24,880 $ 425 1.7% (A)
Triple net master
lease communities 1,646 1,646 - 0.0%
Communities stabilized
in 2Q 2005, but not
in 2Q 2004 2,667 1,076 1,591 147.9%
Communities not
stabilized in 2Q 2005
(2) 5,211 2,219 2,992 134.8%
Sold communities (3) - 1,491 (1,491) -100.0%
-------- -------- -------- --------
Total property net
operating income
(NOI) $34,829 $31,312 $ 3,517 11.2%
-------- -------- -------- --------
Total property NOI as
a percentage of
total property
revenues 61.9% 63.6% - -1.7%
-------- -------- -------- --------
(1) Communities that were owned and fully stabilized throughout both
2Q 2005 and 2Q 2004 ("same-store").
(2) Communities that were under development/lease-up, in renovation or
not fully operational, acquired, or had not reached a stabilized
operating expense level subsequent to April 1, 2005, as applicable.
Includes the results of Belmar, Carlisle on the Creek, Gables Camino
Real, Gables Floresta, Gables Grandview, Gables Katy Trail, Gables
Lenox Hills, Gables Rock Springs I, II and III, Gables Town Place,
Gables Uptown Tower, Lindview, Memorial Hills, Northmoor and Saltillo.
(3) Communities that were sold subsequent to April 1, 2004. Includes
the results of Gables Palma Vista, Gables Wellington and Gables
Woodley Park which are now owned by the Company's NYSTRS joint
ventures that were formed during 2004.
(4) Represents direct property operating and maintenance expenses as
reflected in the Company's consolidated statements of operations and
excludes certain expenses included in the determination of net income
such as property management and other indirect operating expenses,
interest expense and depreciation and amortization expense.
(5) Calculated as total property revenues less property operating and
maintenance expenses as reflected above.
(A) Additional information for the 53 same-store communities by market
is as follows:
Number of % of Physical Economic
Apartment 2Q 2005 Occupancy Occupancy
Market Homes NOI in 2Q 2005 in 2Q 2005
-------------------- ------------ ------------ ------------ ----------
Houston 3,857 23.4% 95.1% 93.8%
South Florida 2,398 22.8% 95.9% 94.8%
Atlanta 3,322 21.2% 93.6% 91.7%
Dallas 1,879 16.0% 95.5% 94.1%
Austin 1,916 14.7% 91.3% 90.3%
Washington, D.C. 82 1.9% 97.0% 96.8%
------------ ------------ ------------ ----------
Totals 13,454 100.0% 94.5% 93.1%
------------ ------------ ------------ ----------
% Change from 2Q 2004 to 2Q 2005 in
-------------------------------------------------
Economic
Market Occupancy Revenues Expenses NOI
-------------------- ------------ ------------ ------------ ----------
Houston 3.2% 1.5% 5.6% -1.2%
South Florida 2.1% 5.2% 5.3% 5.2%
Atlanta 2.8% 2.4% 0.8% 3.5%
Dallas 2.2% 2.1% 7.6% -1.1%
Austin 2.5% 3.5% 5.6% 2.1%
Washington, D.C. 0.5% 3.0% 15.9% -1.7%
------------ ------------ ------------ ----------
Totals 2.6% 2.9% 4.9% 1.7%
------------ ------------ ------------ ----------
*T
-0-
*T
GABLES RESIDENTIAL
Results of Property Operations - Sequential-Quarter Comparisons
June 30, 2005
(Unaudited and amounts in thousands, except for property data)
The combined operating performance for all of the Company's
wholly-owned communities that are included in continuing operations
for the three months ended June 30, 2005 ("2Q 2005") and March 31,
2005 ("1Q 2005") is as follows:
Number
of
2Q 2005
Apt.
Homes 2Q 2005 1Q 2005 $ Change % Change
------- -------- -------- -------- --------
Rental and other
property revenues: (6)
Same-store communities
(1) 14,791 $45,903 $45,498 $ 405 0.9% (A)
Triple net master
lease communities 728 1,864 1,864 - 0.0%
Communities stabilized
in 2Q 2005, but not
in 1Q 2005 - - - - -
Communities not
stabilized in 2Q 2005
(2) 3,335 8,508 5,306 3,202 60.3%
Sold communities (3) - - - - -
------- -------- -------- -------- --------
Total property
revenues 18,854 $56,275 $52,668 $ 3,607 6.8%
------- -------- -------- -------- --------
Property operating
and maintenance
expenses (4):
Same-store
communities (1) $17,931 $17,566 $ 365 2.1% (A)
Triple net master
lease communities 218 218 - 0.0%
Communities stabilized
in 2Q 2005, but not
in 1Q 2005 - - - -
Communities not
stabilized in 2Q 2005
(2) 3,297 2,071 1,226 59.2%
Sold communities (3) - - - -
-------- -------- -------- --------
Total property
operating and
maintenance
expenses $21,446 $19,855 $ 1,591 8.0%
-------- -------- -------- --------
Property net operating
income (NOI) (5):
Same-store communities
(1) $27,972 $27,932 $ 40 0.1% (A)
Triple net master
lease communities 1,646 1,646 - 0.0%
Communities stabilized
in 2Q 2005, but not
in 1Q 2005 - - - -
Communities not
stabilized in 2Q 2005
(2) 5,211 3,235 1,976 61.1%
Sold communities (3) - - - -
-------- -------- -------- --------
Total property net
operating income
(NOI) $34,829 $32,813 $ 2,016 6.1%
-------- -------- -------- --------
Total property NOI as a
percentage of total
property revenues 61.9% 62.3% - -0.4%
-------- -------- -------- --------
(1) Communities that were owned and fully stabilized throughout both
2Q 2005 and 1Q 2005 ("same-store").
(2) Communities that were under development/lease-up, in renovation or
not fully operational, acquired, or had not reached a stabilized
operating expense level subsequent to April 1, 2005, as applicable.
Includes the results of Belmar, Carlisle on the Creek, Gables Camino
Real, Gables Floresta, Gables Grandview, Gables Katy Trail, Gables
Lenox Hills, Gables Rock Springs I, II and III, Gables Town Place,
Gables Uptown Tower, Lindview, Memorial Hills, Northmoor and Saltillo.
(3) Communities that were sold subsequent to January 1, 2005.
(4) See (4) on page 16.
(5) Calculated as total property revenues less property operating and
maintenance expenses as reflected above.
(6) The results reported for 1Q 2005 in the earnings release dated May
3, 2005 have been restated to reflect the results of Gables Beach Park
as discontinued operations pursuant to SFAS No. 144. Gables Beach Park
was sold in 2Q 2005 and contributed $757 in total property revenues,
$248 in property operating and maintenance expenses and $509 in
property NOI to the 1Q 2005 results.
(A) Additional information for the 60 same-store communities by market
is as follows:
Number of % of Physical Economic
Apartment 2Q 2005 Occupancy Occupancy
Market Homes NOI in 2Q 2005 in 2Q 2005
-------------------- ------------ ------------ ------------ ----------
Houston 4,169 23.0% 94.7% 91.8%
Atlanta 3,918 22.9% 93.8% 90.2%
South Florida 2,398 20.6% 95.9% 94.8%
Dallas 2,308 18.5% 94.4% 93.0%
Austin 1,916 13.3% 91.3% 90.3%
Washington, D.C. 82 1.7% 97.0% 96.8%
------------ ------------ ------------ ----------
Totals 14,791 100.0% 94.2% 92.1%
------------ ------------ ------------ ----------
% Change from 1Q 2005 to 2Q 2005 in
-------------------------------------------------
Economic
Market Occupancy Revenues Expenses NOI
-------------------- ------------ ------------ ------------ ----------
Houston 0.4% 1.1% -2.1% 3.4%
Atlanta -0.5% -0.5% 3.8% -3.2%
South Florida -0.7% 0.7% 4.5% -1.2%
Dallas 2.2% 3.4% -0.4% 6.1%
Austin -3.8% -0.4% 7.7% -5.1%
Washington, D.C. 1.1% 3.2% 4.6% 2.4%
------------ ------------ ------------ ----------
Totals -0.2% 0.9% 2.1% 0.1%
------------ ------------ ------------ ----------
*T