EX-99.1 2 0002.txt PRESENTATION MATERIALS EXHIBIT 99.1 FORWARD-LOOKING STATEMENTS AND QUALIFICATIONS In addition to historical information, this document contains forward-looking statements under the federal securities law. These statements are based on current expectations, estimates and projections about the industry and markets in which Archstone operates, management's beliefs and assumptions made by management. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties which are difficult to predict. Actual operating results may differ materially from what is expressed or forecasted in this Form 8-K. See "Risk Factors" in Archstone's 1999 Annual Report on Form 10-K for factors which could affect Archstone's future financial performance. This presentation contains projections and statements regarding trends in the real estate industry which exist as of today. By their nature, there can be no assurance as to how accurate these projections will turn out to be, and other observers of the real estate industry could discern different trends or draw different conclusions from these trends. This report includes data and projections prepared by third parties. Archstone does not endorse or confirm such data and projections and is not suggesting that the sources of those projections are experts. Additional cautions apply to data and projections prepared by third parties, because Archstone cannot independently verify these data and projections. Archstone is undertaking no obligation to update these projections or statements and can provide no assurance that they will remain accurate at any particular point in time in the future. Readers should review this presentation in conjunction with a review of Archstone's Form 10-K for the fiscal year ended December 31, 1999 and subsequent reports on Form 10-Q. Important Notes Because the opening presentation was prepared as a slide show, the text on each page was kept to a minimum to facilitate visual communication and to emphasize major points. A summary of all of the information presented at the November 16, 2000 exposition is also included in this report. This presentation is dated November 15 and 16, 2000, and the information and analyses presented should be read as of that date with the understanding that Archstone is not undertaking to update this presentation or the third party data and projections included in this presentation. 5 [LETTERHEAD OF ARCHSTONE COMMUNITIES] Archstone Hosts Investor Conference in Boston Opening Session to be Webcast on Archstone's Website DENVER -- November 15, 2000 -- Archstone Communities (NYSE:ASN), one of the nation's largest apartment developers, owners and operators, will provide an update on the company's investment strategy, its operating and financial performance and innovative use of technology, in a meeting today with analysts and investors in Boston. A webcast of the opening session presentation will be broadcast live on the company's website at 11 a.m. EST on November 15, 2000. The opening session will be hosted by R. Scot Sellers, chairman and chief executive officer; Charles E. Mueller, Jr., chief financial officer; Daniel E. Amedro, chief information officer; and Dana K. Hamilton, senior vice president. Mr. Sellers will discuss Archstone's investment strategy, operating performance and management team. Mr. Mueller will provide an overview of the company's financial strategy. Mr. Amedro and Ms. Hamilton will cover the company's operating and technology initiatives. For access to the opening session presentation: ---------------------------------------------- . Visit www.archstonecommunities.com ---------------------------- . Select "Investors" from the top menu . Click on the Hear the opening session from Archstone's Boston Investor --------------------------------------------------------- Conference from November 15, 2000. The presentation will be archived for ---------------------------------- approximately one month. The event will also be archived on www.prnewswire.com. As part of its investor meeting, Archstone is hosting an exposition, which highlights the company's investment and operating activities and its use of technology to enhance its core business. The exposition covers the following areas: . West Region Investments . East Region Investments . Northeast Presence . Revenue Management and Online Lease . Web-enabled Accounting Tools . Training and Development . Taxable REIT Subsidiaries . Creating a Retail Environment . The Archstone Brand -more- 6 Archstone Hosts Investor Conference in Boston Page 2 A summary of the all of the information presented at the exposition--including profile information on certain Archstone communities, investments in the East and West Regions, and the company's various operating and technology initiatives--is available on the company's website at www.archstonecommunities.com in the Investors section under Press Releases, or by calling (800) 982-9293. Archstone Communities is a leading real estate operating company focused on the operation, development, acquisition, redevelopment and long-term ownership of apartment communities in markets and sub-markets with high barriers to entry throughout the United States. With a total market capitalization of $5.7 billion, Archstone has a strategic national presence with 235 communities representing 72,318 units, including 8,875 units in its development pipeline, as of September 30, 2000, in markets that include 31 of the nation's 50 largest metropolitan markets. # # # Archstone's press releases are available on the company's web site at www.archstonecommunities.com or by calling (800) 982-9293. In addition to historical information, this press release contains forward- looking statements under the federal securities law. These statements are based on current expectations, estimates and projections about the industry and markets in which Archstone operates, management's beliefs and assumptions made by management. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties which are difficult to predict. Actual operating results may differ materially from what is expressed or forecasted in this press release. See "Risk Factors" in Archstone's 1999 Annual Report on Form 10-K for factors which could affect Archstone's future financial performance. 7 ARCHSTONE Investor and Analyst Conference Boston Harbor Hotel at Rowes Wharf November 15 - 16, 2000 8 Archstone Communities Redefining the apartment industry through: . Capital allocation . Innovation . People 9 Capital allocation Relentless focus on intelligent investments . Key point of differentiation for truly great companies . Archstone began recycling capital long before equity markets closed to REITs . Measure, report and reward accordingly . Value creation defines long-term success . Focus on long-term gains, not short-term accretion . National presence in protected markets . Core investments in supply-constrained markets with strong economies . Opportunistic investments in high-growth, liquid markets 10 Apartments are a very attractive investment . Housing is a necessity . In Archstone's protected markets, demand is 2 to 3 times supply . Operating margins are 60% to 70% 11 Investment acumen Archstone has made the right moves . Conventional wisdom typically produces mediocre returns . Making the right investment decisions can invite criticism, but the value creation can be tremendous . Timely decisions . 1995: Aggressively investing in California . 1996: Selling Dallas/Phoenix . 1997: Selling Houston . 1998: Investing in Atlanta, Washington, D.C. and Boston . Controlling land early in the cycle in target markets 12 The value of owning apartments in protected markets Lowest apartment occupancy 1980 - 2000 PROTECTED MARKETS OTHER MARKETS -------------------------------------- ------------------------------------ Bay Area/San Jose 95.6% Dallas 83.5% L. A. County 93.8% Houston 81.6% San Diego 92.9% Phoenix 84.3% Boston 94.6% Denver 87.1% Washington, D.C. 94.5% Atlanta 88.8% Seattle 93.1% 13 Capital redeployment - West Region Concentrating Archstone's capital in protected markets [The following table was depicted as a bar graph in the presentation.] Market 12/31/95 12/31/00 -------------------------------------------------------------------------------- Southern California $44.3 million $1,080.9 million Bay Area $38.6 million $608.0 million Seattle $80.7 million $331.1 million Texas $786.3 million $408.1 million Arizona $476.7 million $229.7 million New Mexico $179.2 million $104.9 million 14 Capital redeployment - East Region Concentrating Archstone's capital in protected markets [The following table was depicted as a bar graph in the presentation.] Market 6/30/98 12/31/00 ------------------------------------------------------------------------------ Washington D.C. $160.3 million $493.3 million Northeast/Midwest $0 $582.1 million Florida $534.8 million $426.3 million Atlanta $443.5 million $283.5 million 15 Enhancing our core growth rate Same-store revenue growth rate has improved dramatically . Archstone's same-store revenue growth . 1997: 2.7% . 1998: 3.6% . 1999: 3.6% . 2000 YTD: 6.5% . Third quarter 2000 same-store revenue growth . Archstone: 7.6% . Camden: 3.9% . Equity Residential: 5.1% (1) . AIMCO: 5.5% (1) Includes utility reimbursements 16 Building a presence in supply-constrained markets [The following information was presented on a United States map in the presentation.] Primary Target Markets: ----------------------- Atlanta New York City metro area Boston Orange County Chicago San Diego Denver (Headquarters) San Francisco Bay area Ft. Lauderdale / West Palm Beach Seattle Inland Empire Ventura County Los Angeles County Washington D. C. Minneapolis Operating Communities: ---------------------- Austin Portland Charlotte Salt Lake City Dallas Phoenix Houston Tampa Orlando Raleigh Markets to be Exited: --------------------- Albuquerque Reno Indianapolis Richmond Nashville San Antonio Markets Exited: --------------- Asheville Jacksonville Birmingham Kansas City Columbia Columbus Memphis El Paso Santa Fe Ft. Myers Sarasota Greensville Tucson 17 Capital allocation creates value Value creation through acquisitions and development/(1)/
Market Market Value /(2)/ Total Investment /(3)/ Value Created % Value Created --------------------------------------------------------------------------------------------------------------------- Northern California $ 536.6 $ 293.6 $243.0 82.8% Southern California 521.5 359.5 162.0 45.1% Washington D.C. 336.3 210.5 125.8 59.8% Northeast/Midwest 315.6 245.9 69.7 28.3% Seattle 258.6 211.1 47.5 22.5% Denver 196.1 142.1 54.0 38.0% ------------ ----------------- -------------- ---------------- Total $2,164.7 $1,462.7 $702.0 48.0% ============ ================= ============== ================
(1) Stabilized acquisitions and developments through 12/31/00; in millions (2) Based on projected yields and management's estimates of capitalization rates (3) Represents Archstone's gross book basis before accumulated depreciation 18 Components of development pipeline 57% of construction activity already funded Investment (millions) ----------------- Under construction at 9/30/00 Total expected investment $548 In "Lease-up" - 49% leased Total expected investment 273 Funded to date 202 ----------------- Balance to fund 71 "Pre-Lease-up" Total expected investment 275 Funded to date 110 ----------------- Balance to fund 165 Total funding commitments $236 In Planning - no commitment to fund $688 19 Development Pipeline Communities in planning
Start Dates --------------------------------------------------------------------------- Total Investment 1H2001 2H2001 1H2002 After 1H2002 ----------------- ---------------- --------------- ------------- --------------- West Region San Francisco $ 33 $ - $ 33 $ - $ - Los Angeles 142 - 142 - - Ventura County 74 - 24 - 50 Seattle 11 - 11 - - ----------------- ---------------- --------------- ------------- --------------- Total West Region $260 $ - $ 210 $ - $ 50 ----------------- ---------------- --------------- ------------- --------------- East Region Washington D.C. $111 $ - $ 56 $ 55 $ - Southeast Florida 10 - 10 - - New York City Metro Area 172 - 172 - Boston 30 30 - - Denver 105 42 - 63 ----------------- ---------------- --------------- ------------- --------------- Total East Region $428 $72 $ 66 $ 227 $ 63 ----------------- ---------------- --------------- ------------- --------------- TOTAL $688 $72 $ 276 $ 277 $ 113 ================= ================ =============== ============= ===============
(in millions) 20 Our view of equity capital . A scarce resource we manage judiciously . We view our cost of equity as 13% to 14% . Weighted average cost of capital is 10.5% . Raise equity only when there is a compelling opportunity to create incremental value - and its cost is lower than the cost of internal capital (dispositions) . $584 million in net dispositions since 1995 . $2.3 billion of dispositions at an unleveraged IRR of 13.0% . Repurchased 17% of our outstanding common shares . $505 million since February 1999, at an average price of $21.39 per share 21 Significant long-term value creation . Net asset value per share has increased 15.4% in last 12 months . Current Archstone net asset value: $28.57 . Current share price: $22.69/(1)/ . Current discount to NAV: 20.6% (1) Closing share price on November 10, 2000. 22 ARCHSTONE Financial Strategy Chaz Mueller Chief Financial Officer 23 Financial strategy update Disciplined financial management . Continue to fund growth internally . Minimal common equity sold in last five years . Active capital recycling program . Steady reduction in dividend payout ratio . Ability to finance investment plans without new common equity . Current market capitalization of $5.7 billion ($3.2 billion of equity) 24 Conservative financial strategy Strong balance sheet and financial flexibility /(1)/ . Strong investment grade ratings . Standard & Poor's: BBB+ . Moody's: Baa1 . Fitch: A- . 2.7x fixed charge coverage . 69% of assets unencumbered . Represents $3.5 billion . Relatively level principal amortization schedule . $600 million of available capacity on credit facilities (1) As of September 30, 2000 25 Our dividend provides current income and future growth Annual dividend per common share [The following information was depicted as a line graph in the presentation] Common share dividend per share in 1991: $0.64 Common share dividend per share in 1992: $0.70 Common share dividend per share in 1993: $0.82 Common share dividend per share in 1994: $1.00 Common share dividend per share in 1995: $1.15 Common share dividend per share in 1996: $1.24 Common share dividend per share in 1997: $1.30 Common share dividend per share in 1998: $1.39 Common share dividend per share in 1999: $1.48 Common share dividend per share in 2000 (E): $1.54 . 6.6% current dividend yield . 141% increase in dividend since 1991 . Q4 2000 will represent the 100/th/ consecutive common share dividend paid Source: Bloomberg. Data as of November 9, 2000. 26 A proven track record Average annual return last 10 years /(1)/ [The following information was depicted as a bar chart in the presentation] Russell 2000 /(2)/: 15.31% Dow Jones Industrial Average: 18.64% S&P 500: 19.33% Archstone: 21.98% (1) Source: Bloomberg. Data from December 31, 1990 through November 9, 2000. (2) Data is only available from December 31, 1995 to November 9, 2000. 27 ARCHSTONE Innovation Dana Hamilton, Senior Vice President 28 Innovation is one of Archstone's core values Innovation is also a core tenet of our brand [The following information was depicted as a picture in the presentation] . Associate Satisfaction . Customer Satisfaction . Company Performance 29 The right people focused on the right things Recruiting, selection, and training make a critical difference . Online Recruiting . Selecting for Success(TM) . Training Communities . Customer-Centered Selling . Operations Simulation 30 SafeRent improves efficiency Innovative idea becomes a successful company . Reduces credit approval time to 30 seconds - potential to move residents in up to two days sooner . $500,000 in annual savings . Increased accuracy . Amount owed per lease down 22% . Closings ratios increased from 29% to 33% . Able to accept 17% more "good" applicants . Seven of the 10 top apartments companies use SafeRent . Additional products under development 31 Online Lease and Web Communities The first truly online transactions in the apartment industry . Online apartment search . Virtual tours/360-degree views . Real-time pricing and availability . Online application and approval . Collection of all fees and deposits . Lease generation and acceptance . Renewals and transfers Reduces lease completion time to less than 15 minutes! 32 Archstone is creating a retail customer experience Integrating brand and technology to create a "self-sell" environment [The following information is shown on a picture of a leasing office.] . Plasma monitor to create and launch the sales process . Less space devoted to "living room" feel . "Self-sell" tools are critically important . Kiosk to greet customers and support Online Lease . Greater emphasis on sales environment 33 ARCHSTONE Revenue Management & Technology Dan Amedro, Chief Information Officer 34 Revenue management will change our industry Our services and brand offering should command a premium . Allows Archstone to react faster to market conditions, giving us a distinct competitive advantage . Efficiently matches consumer buying behavior with available inventory to maximize revenues . Improves forecasting accuracy by retaining knowledge and predicting behavior . Lease rates will have more dimensions . Provides Archstone with a tool to: . Monitor and manage field pricing actions . Develop and measure effectiveness of new marketing programs and promotions . Special promotions will be much more precisely targeted 35 Technological infrastructure Leveraging technology to improve our core business . Key infrastructure accomplishments . Networked communities . Centralized applications and data . Web-delivered services . Benefits . Lower equipment costs . Lower support costs . Increased reliability and performance . Quicker, cheaper deployment of new services 36 System development principles Minimize risk and maximize return . Focus on the customer . Incremental improvement . Time to market 37 2001 will be a revolutionary year for Archstone Online Lease and Revenue Management are defining events . Products are currently being tested in Denver . 12 communities have been identified for pilot . Rollout expected to be completed by year-end 2001 . Re-invents the sales process . Associates are extremely excited about these programs . Approximately $2 million of expense to be included in 2001 FFO 38 Taxable REIT subsidiaries - AMERITON Property Inc. Significant growth opportunity Opportunistic investments/shorter-term ownership . Develop and acquire apartments for sale to third parties . Emphasizes Archstone's core strengths: . Investments . Development . Operations . $200 to $300 million of annual investments . Target IRR of 18% to 20% . Potential for positive impact on Archstone's earnings 39 Taxable REIT subsidiaries - Archstone Management Services Significant growth opportunity Third -party property management arm leverages Archstone's operating expertise . Provides the platform to expand the Archstone brand without significant acquisition or development investments . Extends reach and scale of Archstone's technology initiatives . No true competitors . Potential for positive impact on Archstone's earnings 40 A word about our values . Leadership . Camaraderie . Innovation . Enterprising . Honest & Ethical "Strong values allow everything to change, and they unleash passion because people care about them, and want to be associated with them." - Lew Platt Former Chairman and CEO Hewlett-Packard 41 Archstone Communities "Combine a great idea with a great manager and you're certain to obtain a great result." - Warren Buffet 42 The best in the business Archstone's management team West Region: Dick Banks, Managing Director John Jordano, Investments Joe Dominguez, Development Larry Levitt, Dispositions Scott Monroe, Operations East Region: Lindsay Freeman, Managing Director Neil Brown, Investments Chris Nolan, Acquisitons/Dispositions Chris Hughes, Development Northeast Presence: Rick Dickason, Investments Gary Truitt, Development Scott Schaull, Development Henry Bunis, Acquisitions Rick Campbell, Investments Revenue Management and Online Lease: Dan Amedro, Chief Information Officer Dana Hamilton, National Operations Dan Ogden, West Region Operations Dennis Littlewood, Information Technology ArchPay: William Kell, Controller Making the Seal Real: Joe Durzo, National Training and Development Tom Klaess, East Region Operations Taxable REIT Subsidiaries: Carrie Brower, General Counsel Jeff Jones, AMERITON Glenn Rand, Archstone Management Services Creating a Retail Experience: Capey Lester, East Region Operations The Archstone Brand: Toni Lopez, East Region Operations Others: Scot Sellers, Chairman and CEO Chaz Mueller, Chief Financial Officer Jack Callison, Investor Relations Heather Campbell, Communications 43 Archstone Communities "One thing that the truly great companies of the world have in common, regardless of the diversity of their industries, is a total business focus on servicing customers." Jack Welsh, Jr. Chairman and CEO General Electric 44 As part of Archstone's Investor Conference today in Boston, the company is hosting an exposition, which highlights the company's investment and operating activities and its use of technology to improve its core business. The exposition covers the following areas: . West Region Investments . East Region Investments . Northeast Presence . Revenue Management and Online Lease . Web-enabled Accounting Tools . Training and Development . Taxable REIT Subsidiaries . Creating a Retail Environment . The Archstone Brand A summary of the all of the information presented in the exposition--including profile information on certain Archstone communities, investments in the East and West Regions, and the company's various operating and technology initiatives--follows below: WEST REGION INVESTMENTS Hosted by Richard Banks, Managing Director; John Jordano, Investments; Joseph Dominguez, Development; Larry Levitt, Dispositions; and Scott Monroe, Operations Archstone's communities in its West Region comprise 46.9% of its portfolio and represent a total investment of $2.7 billion, including operating communities, communities under construction and communities in planning as of September 30, 2000. The company focuses its West Region investments in protected, supply- constrained locations in markets that include Southern California, the San Francisco Bay area and Seattle. Archstone provided information on its West Region capital allocation strategy, through which the company is selling communities in non-core, secondary markets, and is redeploying the proceeds into investments in protected locations in its primary target markets. As of September 30, 2000, Archstone's West Region comprised:
---------------------------------------------------------------------------------------------------------------- WEST REGION - CAPITAL ALLOCATION ---------------------------------------------------------------------------------------------------------------- Primary Operating Markets to be Target Markets Markets Exited Markets (34.3% of total Archstone (8.1% of total Archstone (4.5% of total Archstone Exited portfolio) portfolio) portfolio) ---------------------------------------------------------------------------------------------------------------- Los Angeles Phoenix Albuquerque Santa Fe San Diego Salt Lake City Las Vegas Tucson San Francisco Bay Area Portland Reno Seattle Orange County Ventura County Inland Empire ----------------------------------------------------------------------------------------------------------------
45 In addition, the following West Region communities were featured at the exposition: --------------------------------------------------------------------------------------------------------------------------- WEST REGION - FEATURED OPERATING COMMUNITIES --------------------------------------------------------------------------------------------------------------------------- Community Redwood Shores Harborside The Cambrian --------------------------------------------------------------------------------------------------------------------------- City Redwood City, CA Redwood City, CA Redmond, WA --------------------------------------------------------------------------------------------------------------------------- Market San Francisco Bay area San Francisco Bay area Seattle --------------------------------------------------------------------------------------------------------------------------- Date Acquired September 1996 December 1996 June 1997 --------------------------------------------------------------------------------------------------------------------------- Total Units 304 148 422 --------------------------------------------------------------------------------------------------------------------------- Rental Rates $2,090 - $3,000 $2,200 - $3,000 $ 915 - $1,540 --------------------------------------------------------------------------------------------------------------------------- Avg. Unit Size 759 sq. ft. 831 sq. ft. 1,018 sq. ft. --------------------------------------------------------------------------------------------------------------------------- Total Investment/(1)/ $40.4 million $22.1 million $43.9 million --------------------------------------------------------------------------------------------------------------------------- Current Yield/(2)/ 14.9% 14.2% 10.1% --------------------------------------------------------------------------------------------------------------------------- Value Created/(3)/ $45.6 million $22.7 million $13.3 million --------------------------------------------------------------------------------------------------------------------------- % Value Created 112.9% 102.7% 30.3% --------------------------------------------------------------------------------------------------------------------------- WEST REGION - FEATURED DEVELOPMENT COMMUNITIES --------------------------------------------------------------------------------------------------------------------------- Community Archstone Hacienda Archstone Torrey Hills Archstone Mission Valley --------------------------------------------------------------------------------------------------------------------------- City Pleasanton, CA San Diego, CA San Diego, CA --------------------------------------------------------------------------------------------------------------------------- Market San Francisco Bay area Southern California Southern California --------------------------------------------------------------------------------------------------------------------------- Total Units 540 340 736 --------------------------------------------------------------------------------------------------------------------------- Rental Rates $1,736 - $2,881 $1,220 - $2,140 $1,135 - $2,056 --------------------------------------------------------------------------------------------------------------------------- Avg. Unit Size 999 sq. ft. 957 sq. ft. 936 sq. ft. --------------------------------------------------------------------------------------------------------------------------- Lease-up Absorption/(4)(5)/ 47 units/mo. 40 units/mo. 53 units/mo. Rental Rates Ahead of 24.3% 11.7% 4.4% Budget --------------------------------------------------------------------------------------------------------------------------- Stabilization/(6)/ Date Aug. 2000 Aug. 2000 Projected 2Q 2002 --------------------------------------------------------------------------------------------------------------------------- Total Investment $75.9 million $43.2 million $106.3 million --------------------------------------------------------------------------------------------------------------------------- Current Yield 11.8% 11.0% 10.2% (projected) --------------------------------------------------------------------------------------------------------------------------- Value Created $52.0 million $24.7 million $48.6 million --------------------------------------------------------------------------------------------------------------------------- % Value Created 68.5% 57.2% 45.7% --------------------------------------------------------------------------------------------------------------------------- WEST REGION - FEATURED FUTURE DEVELOPMENT STARTS --------------------------------------------------------------------------------------------------------------------------- Community Archstone Westside Archstone Playa Del Ray --------------------------------------------------------------------------------------------------------------------------- City Los Angeles, CA Los Angeles, CA --------------------------------------------------------------------------------------------------------------------------- Market Southern California Southern California --------------------------------------------------------------------------------------------------------------------------- Total Units 204 305 --------------------------------------------------------------------------------------------------------------------------- Projected Rental Rates 1,405 - $2,0.5 $1,525 - $2,550 --------------------------------------------------------------------------------------------------------------------------- Avg. Unit Size 865 sq. ft. 886 sq. ft. --------------------------------------------------------------------------------------------------------------------------- Projected Stabilization Date 3Q 2003 3Q 2003 --------------------------------------------------------------------------------------------------------------------------- Total Investment $44.9 million $71.0 million ---------------------------------------------------------------------------------------------------------------------------
46
--------------------------------------------------------------------------------------------------------------------- WEST REGION - FEATURED REDEVELOPMENT COMMUNITY --------------------------------------------------------------------------------------------------------------------- Community Ashton Place --------------------------------------------------------------------------------------------------------------------- City San Jose, CA --------------------------------------------------------------------------------------------------------------------- Market San Francisco Bay area --------------------------------------------------------------------------------------------------------------------- Date Acquired September 1996 --------------------------------------------------------------------------------------------------------------------- Total Units 948 --------------------------------------------------------------------------------------------------------------------- Rental Rates 1,461 - $3,281 --------------------------------------------------------------------------------------------------------------------- Avg. Unit Size 917 sq. ft. --------------------------------------------------------------------------------------------------------------------- Initial purchase price in 1996 $64.8 million --------------------------------------------------------------------------------------------------------------------- Incremental capital invested $36.5 million --------------------------------------------------------------------------------------------------------------------- Current market value $193.1 million --------------------------------------------------------------------------------------------------------------------- Value created $91.8 million --------------------------------------------------------------------------------------------------------------------- % Value created 90.6% ---------------------------------------------------------------------------------------------------------------------
EAST REGION INVESTMENTS Hosted by Lindsay Freeman, Managing Director; Neil Brown, Investments; Chris Nolan, Acquisitions and Dispositions; and Chris Hughes, Development Archstone's communities in its East Region comprise 53.1% of its portfolio, and represent a total investment of $3.1 billion, including operating communities, communities under construction and communities in planning as of September 30, 2000. The company focuses its East Region investments in protected, supply- constrained locations in markets that include the Washington, D.C. metro area, Boston, the New York City metro area, Southeast Florida and Atlanta. Archstone provided information on its East Region capital allocation strategy, through which the company is selling communities in non-core, secondary markets, and is redeploying the proceeds into investments in protected locations in its primary target markets. As of September 30, 2000, Archstone's East Region comprised:
------------------------------------------------------------------------------------------------------------------ EAST REGION - CAPITAL ALLOCATION ------------------------------------------------------------------------------------------------------------------ Primary Target Operating Markets to be Markets Markets Exited Markets (33.5% of total (15.6% of total (4.0% of total Archstone Exited Archstone portfolio) Archstone portfolio) portfolio) ------------------------------------------------------------------------------------------------------------------ Atlanta Dallas Nashville Asheville Boston Houston Richmond Birmingham Chicago Austin San Antonio Columbia Denver Charlotte Columbus Ft. Lauderdale/West Palm Beach Orlando El Paso Minneapolis Raleigh Ft. Myers New York City metro area Tampa Jacksonville Washington, D.C. Kansas City Memphis Sarasota ------------------------------------------------------------------------------------------------------------------
47 In addition, the following East Region communities were featured at the exposition:
-------------------------------------------------------------------------------------------------------------------------- EAST REGION - FEATURED OPERATING COMMUNITIES -------------------------------------------------------------------------------------------------------------------------- Community Fair Lakes Virginia Highlands Park Place at Turtle Run -------------------------------------------------------------------------------------------------------------------------- City Fairfax, VA Atlanta, GA Coral Springs, FL -------------------------------------------------------------------------------------------------------------------------- Market Washington, D.C. Atlanta Southeast Florida -------------------------------------------------------------------------------------------------------------------------- Date Acquired December 1998 April 1994 April 1994 -------------------------------------------------------------------------------------------------------------------------- Total Units 282 348 350 -------------------------------------------------------------------------------------------------------------------------- Rental Rates $1,070 - $1,475 $760 - $1,440 $720 - $915 -------------------------------------------------------------------------------------------------------------------------- Avg. Unit Size 920 sq. ft. 744 sq. ft. 870 sq. ft. -------------------------------------------------------------------------------------------------------------------------- Total Investment $25.7 million $20.9 million $17.5 million -------------------------------------------------------------------------------------------------------------------------- Current Yield 12.4% 13.6% 10.6% -------------------------------------------------------------------------------------------------------------------------- Value Created $16.8 million $12.5 million $4.3 million -------------------------------------------------------------------------------------------------------------------------- % Value Created 65.4% 59.8% 24.6% --------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------- EAST REGION - FEATURED DEVELOPMENT COMMUNITY --------------------------------------------------------------------------------------------------------------------- Community Woodland Park --------------------------------------------------------------------------------------------------------------------- City Herndon, VA --------------------------------------------------------------------------------------------------------------------- Market Washington, D.C. --------------------------------------------------------------------------------------------------------------------- Total Units 392 --------------------------------------------------------------------------------------------------------------------- Rental Rates 1,150 - $1,600 --------------------------------------------------------------------------------------------------------------------- Avg. Unit Size 1,033 sq. ft. --------------------------------------------------------------------------------------------------------------------- Lease-up Absorption 45 units/mo. Rental Rates Ahead of 20.9% Budget --------------------------------------------------------------------------------------------------------------------- Stabilization Date 4Q 2000 --------------------------------------------------------------------------------------------------------------------- Total Investment $42.6 million --------------------------------------------------------------------------------------------------------------------- Current Yield 12.3% --------------------------------------------------------------------------------------------------------------------- Value Created $27.3 million --------------------------------------------------------------------------------------------------------------------- % Value Created 64.1% ---------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------- EAST REGION - FEATURED FUTURE DEVELOPMENT START --------------------------------------------------------------------------------------------------------------------- Community Archstone Van Dorn --------------------------------------------------------------------------------------------------------------------- City Fairfax County, VA --------------------------------------------------------------------------------------------------------------------- Market Washington, D.C. --------------------------------------------------------------------------------------------------------------------- Total Units 400 --------------------------------------------------------------------------------------------------------------------- Projected Rental Rates 1,150 - $1,600 --------------------------------------------------------------------------------------------------------------------- Avg. Unit Size 1,046 sq. ft. --------------------------------------------------------------------------------------------------------------------- Projected Stabilization Date 3Q 2003 --------------------------------------------------------------------------------------------------------------------- Total Investment $39.7 million ---------------------------------------------------------------------------------------------------------------------
48 NORTHEAST PRESENCE Hosted by Richard Dickason, Investments; Gary Truitt, Development; Scott Shaull, Development; and Henry Bunis, Acquisitions Archstone entered the greater Northeast market in May 1999. Since that time, the company has made significant progress in building a strategic presence here, and now has 10 communities, representing 2,686 units in markets that include Boston and the New York City metro area. The following communities were featured at the exposition:
NORTHEAST MARKET - FEATURED OPERATING COMMUNITIES ----------------------------------------------------------------------------------------------------------------------- Community Village at Bear Hill The Arboretum Springdale Manor ----------------------------------------------------------------------------------------------------------------------- City Waltham, MA Burlington, MA Canton, MA ----------------------------------------------------------------------------------------------------------------------- Market Boston Boston Boston ----------------------------------------------------------------------------------------------------------------------- Date Acquired January 2000 May 1999 April 2000 ----------------------------------------------------------------------------------------------------------------------- Total units 324 312 227 ----------------------------------------------------------------------------------------------------------------------- Rental Rates $1,645 - $3,045 $1,545 - $2,350 $1,100 - $1,735 ----------------------------------------------------------------------------------------------------------------------- Avg. Unit Size 1,208 sq. ft. 1,011 sq. ft. 1,170 sq. ft. ----------------------------------------------------------------------------------------------------------------------- Total investment $77.7 million $46.3 million $32.9 million ----------------------------------------------------------------------------------------------------------------------- Current Yield 8.6% 9.9% 8.9% ----------------------------------------------------------------------------------------------------------------------- Value Created $15.5 million $14.8 million $6.1 million ----------------------------------------------------------------------------------------------------------------------- % Value Created 19.9% 32.0% 18.5% ----------------------------------------------------------------------------------------------------------------------- NORTHEAST MARKET - FEATURED DEVELOPMENT COMMUNITY ----------------------------------------------------------------------------------------------------------------------- Community Archstone Stamford ----------------------------------------------------------------------------------------------------------------------- City Stamford, Conn ----------------------------------------------------------------------------------------------------------------------- Market New York City metro area ----------------------------------------------------------------------------------------------------------------------- Total Units 160 ----------------------------------------------------------------------------------------------------------------------- Rental Rates 1,750 - $2.200 ----------------------------------------------------------------------------------------------------------------------- Avg. Unit Size 888 sq. ft. ----------------------------------------------------------------------------------------------------------------------- Construction Start 2Q 2000 ----------------------------------------------------------------------------------------------------------------------- Projected Stabilization Date 2Q 2002 ----------------------------------------------------------------------------------------------------------------------- Total Investment $30.8 million ----------------------------------------------------------------------------------------------------------------------- Projected Stabilized Yield 9.5% ----------------------------------------------------------------------------------------------------------------------- NORTHEAST MARKET - FEATURED FUTURE DEVELOPMENT START ----------------------------------------------------------------------------------------------------------------------- Community Archstone Roosevelt Raceway ----------------------------------------------------------------------------------------------------------------------- City Westbury, NY ----------------------------------------------------------------------------------------------------------------------- Market New York City metro area ----------------------------------------------------------------------------------------------------------------------- Total Investment $123.0 million ----------------------------------------------------------------------------------------------------------------------- Projected value created at stabilization $37.0 million ----------------------------------------------------------------------------------------------------------------------- Project attributes . Approximately 22 miles from mid-town Manhattan and eight miles from New York City . Barriers to entry in the Long Island market are among the highest in the country due to the lack of available land sites . There are only five known existing comparable apartment communities on all of Long Island . The site is adjacent to approximately 1.0 million sq. ft. of retail development including Target, Home Depot, Costco, Sony Theaters and Office Depot -----------------------------------------------------------------------------------------------------------------------
45 REVENUE MANAGEMENT AND ONLINE LEASE Hosted by Dan Amedro, Chief Information Officer; Dana Hamilton, National Operations; Dan Ogden, East Region Operations; and Dennis Littlewood, Information Technology Revenue Management Based on techniques employed successfully in the airline and hospitality industries, revenue management will enable Archstone to more accurately analyze and forecast future customer demand to optimize pricing for its apartments. Archstone approached Talus Solutions, a leading global provider of revenue management software products and services, to develop a software solution that would help Archstone establish leasing rates that would maximize revenues. Archstone contributed to the business model design and functionality of Lease Rent Optimizer(TM), which the revenue management software product is called, by sharing its industry acumen and actual leasing data. This allowed Talus Solutions to apply its highly successful revenue management concepts for the first time to the apartment industry. Archstone began testing Lease Rent Optimizer in November at its Denver communities and expects full portfolio implementation by year-end 2001. Expected benefits of Revenue Management include: . Efficiently matches consumer buying behavior with available inventory to maximize revenues . Improves forecasting accuracy by retaining knowledge and predicting behavior (move outs, renewals, etc.) . Analyzes all supply and demand variables at levels of detail far too difficult to compile manually . Provides Archstone with a tool to: . Monitor and manage field pricing actions . Develop and measure effectiveness of new marketing programs and promotions Online Lease With Archstone's Online Lease, prospective Archstone residents will be able to search for an apartment, review real-time availability and pricing, have their credit approved and complete a lease transaction--all with a few clicks of the mouse. Archstone believes it is the first company in the industry to offer such a service to its customers. In addition to prospective residents, Archstone associates will also use Online Lease, creating tremendous efficiencies by virtually eliminating paperwork, easing on-site administrative duties, and enhancing the company's consolidated reporting capabilities. Online Lease is currently in testing at Archstone's Denver communities, and is expected to be fully implemented portfolio-wide by the year-end 2001. Expected benefits of Online Lease include: . Significantly reduces paperwork at the communities . Enhances data collection and consolidated management reporting . Allows our customers another way to access us when--and how--they want: . In person . Through our Customer Service Connection . Online 24/7 . Facilitates intra-Archstone transfers and lease renewals . Streamlines Archstone's entire leasing process to make it as easy as possible for our customers to do business with us--online and offline . Reduces the leasing process to less than 15 minutes THE ARCHSTONE BRAND Hosted by Toni Lopez, East Region Operations More than a name and a logo, the Archstone Brand ensures the consistent delivery of superior customer service, improves customer satisfaction, unifies our associates and enhances our operations. The exposition features all of Archstone's marketing materials and advertising, as well as current Brand Metrics that indicate the brand is making an impact among our customers: 50 Brand metrics: . Overall satisfaction rating of 88%* . 86% of residents would recommend Archstone as a place to live* . 706 residents took advantage of the Archstone Relocation Guarantee during the quarter, bringing the year-to-date total to 1,912 residents * based on 2,204 total comment card respondents in the 3Q 2000 ARCHPAY, ARCHPLAN AND ARCHCARD Hosted by William Kell, Controller Web-enabled accounts payable, budgeting/forecasting and purchase card reporting systems allow Archstone's accounting group to work smarter, not harder. Benefits of incorporating technology into the accounting function include: ArchPay: Web-enabled accounts payable system . Automated work flow speeds vendor payment . Eliminates paper shuffling . Provides immediate access to real-time cost and budget detail . Centralized database enhances internal control and payment accuracy . Estimated annual savings of $500,000 ArchPlan: Web-enabled budget forecasting tool . Online national access facilitates budget communication and review . Provides global assumption and mass-change capabilities . Standardized reporting across the portfolio . Instantaneous consolidation . Forecasts reflect most current actual results ArchCard: Web-enabled purchase card (P-Card) reporting system . Online statements reduce paper flow, cost and labor expense . Statements are available every week . P-Card charges are automatically reconciled to the general ledger . Enhanced capabilities encourage greater use of P-Cards, which lowers accounts payable processing costs and speeds payment to vendors 51 MAKING THE SEAL REAL Hosted by Joseph Durzo, National Training and Development; and Thomas Klaess, East Region Operations Delivering on Archstone's brand promise--providing exceptional customer service through its Seal of Service(SM) guarantees--is the cornerstone of our operations strategy. Archstone helps its associates to deliver on this promise through training tools and systems and customer support. In this portion of the exposition, Archstone features its Service Training program, enhanced New-hire Orientation, and Training Communities--a mentor-ship training program through which new Archstone associates work in an operating community to give superior customer service from the first day they interact with customers. Also featured is Operations Simulation, a new training tool that coaches Archstone's community managers to develop strategies, apply judgement, take intelligent risks and respond quickly to change. Simulating a "virtual dashboard" for community operations, the Simulation takes all the variables under a community manager's control--such as staffing, marketing, and pricing-- and lets them experiment with different strategies to achieve the best financial outcome. This program was launched in October 2000 and is being implemented portfolio-wide. TRS OPPORTUNITIES Hosted by Jeffry Jones, President, AMERITON Properties Incorporated; Glenn Rand, President, Archstone Management Services, Inc.; and Carrie Brower, General Counsel Taxable REIT Subsidiaries allow Archstone to extend its investment, development and operations expertise to other apartment owners. AMERITON Properties Incorporated AMERITON Properties, Incorporated utilizes Archstone's national development, acquisition and operating infrastructure to capitalize on short-term real estate investment opportunities. AMERITON creates the potential for additional positive earnings growth for Archstone. The following AMERITON communities were featured at the exposition:
----------------------------------------------------------------------------------------------------------------------- AMERITON PROPERTIES - FEATURED COMMUNITIES ----------------------------------------------------------------------------------------------------------------------- Community The Estates at Park Meadows Canyon Creek ----------------------------------------------------------------------------------------------------------------------- City Denver, Colo. Austin, Tex. ----------------------------------------------------------------------------------------------------------------------- Total Units 518 444 ----------------------------------------------------------------------------------------------------------------------- Avg. Unit Size 1,033 sq. ft. 874 sq. ft. ----------------------------------------------------------------------------------------------------------------------- Projected stabilization date Q1 2002 Q1 2002 ----------------------------------------------------------------------------------------------------------------------- Expected Yield 10.2% 10.1% ----------------------------------------------------------------------------------------------------------------------- Current Market Cap Rate 8.25% 8.5% ----------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------- AMERITON PROPERTIES- FEATURED DISPOSITION ----------------------------------------------------------------------------------------------------------------------- Community Gardens East ----------------------------------------------------------------------------------------------------------------------- City Palm Beach, Fla. ----------------------------------------------------------------------------------------------------------------------- Date Purchased March 1999 ----------------------------------------------------------------------------------------------------------------------- Purchase Price $28.3 million ----------------------------------------------------------------------------------------------------------------------- Date Sold June 2000 ----------------------------------------------------------------------------------------------------------------------- Selling Price $32.5 million ----------------------------------------------------------------------------------------------------------------------- Leveraged Internal Rate of Return 23.5% -----------------------------------------------------------------------------------------------------------------------
Archstone Management Services, Inc. Archstone Management Services, Inc. (AMS), announced in August 2000, marks Archstone's entry into third-party property management. Providing another platform to expand the Archstone brand without significant capital investments, AMS also provides a parallel career track for Archstone and AMERITON associates and extends the reach and scale of Archstone's technology and operating initiatives, creating potential for positive impact on Archstone's earnings growth. AMS is targeting private and institutional owners of apartment properties, which can take advantage of the Archstone brand, Seal of Service(SM) guarantees, recruiting, training and marketing resources. In addition, AMS can provide its customers with customized financial reports and access to due diligence, property tax appeal and capital expenditure management services--as well as revenue management, creating a distinct competitive advantage. 52 CREATING A RETAIL EXPERIENCE Hosted by Capey Lester, East Region Operations At Archstone Tyvola, a new development community in Charlotte, N.C., the traditional community clubhouse has been transformed into a dynamic sales environment that supports the Archstone brand, improves sales effectiveness and provides operational efficiencies. Enhancing the aesthetics and utility of clubhouse space for the same cost as a traditional leasing office and clubhouse, Tyvola creates a self-sell sales experience that begins the moment a customer walks in the door. Benefits of adopting a retail environment for apartment leasing include: The retail environment improves the sales process . Facilitates the delivery of information that is critical to the customer's decision-making process . Maximizes marketing appeal . Proactively integrates technology into the leasing office . Supports Archstone's web-enabled Online Lease Provides excellent brand recognition . Reinforces the brand promise and service offering in a visceral manner . Transforms brand attributes into a functional retail experience . Cohesive use of colors, brand registration and marketing materials gives Archstone a distinct look and feel, different from the competition * * * Footnotes: (1) Total Investment. For development communities, represents the total expected investment at completion; for operating communities, represents the total expected investment plus planned capital expenditures. (2) Yield. Net operating income divided by total investment. Net operating income is calculated as rental revenues less rental expenses and real estate taxes. (3) Value Created. Defined here as market value, based on projected yields and management's estimates of capitalization rates, less Total Investment. (4) Lease-up. The phase during which newly constructed apartments are being leased for the first time, but prior to the community become Stabilized. (5) Absorption. The number of units leased at a new development community under construction. (6) Stabilization. The classification assigned to an apartment community that has achieved 93% occupancy at market rents, and for which the redevelopment, new management and new marketing programs (or development and marketing in the case of a newly developed community) have been completed. This stabilization process takes up to 12 months except for major redevelopments, which could take longer. # # # 53