-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, U4JuHxnjXBYQu1n8BOhjSTXiyD7+A1uFtTPa7iSPKGZ3rcXn78Q2E7JWnrUqgBu8 edGxioOIBwgnZBOj31vfnw== 0000950131-98-003270.txt : 19980514 0000950131-98-003270.hdr.sgml : 19980514 ACCESSION NUMBER: 0000950131-98-003270 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980513 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: EQUITY RESIDENTIAL PROPERTIES TRUST CENTRAL INDEX KEY: 0000906107 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 363877868 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12252 FILM NUMBER: 98618859 BUSINESS ADDRESS: STREET 1: TWO N RIVERSIDE PLZ STREET 2: STE 400 CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3124741300 MAIL ADDRESS: STREET 1: TWO N RIVERSIDE PLAZA STREET 2: SUITE 450 CITY: CHICAGO STATE: IL ZIP: 60606 10-Q 1 FORM 10-Q FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended MARCH 31, 1998 OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 1-12252 EQUITY RESIDENTIAL PROPERTIES TRUST (Exact Name of Registrant as Specified in Its Charter) Maryland 13-3675988 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) Two North Riverside Plaza, Chicago, Illinois 60606 (Address of Principal Executive Offices) (Zip Code) (312) 474-1300 (Registrant's Telephone Number, Including Area Code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- APPLICABLE ONLY TO CORPORATE USERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: At May 11, 1998, 97,711,238 of the Registrant's Common Shares of Beneficial Interest were outstanding. EQUITY RESIDENTIAL PROPERTIES TRUST CONSOLIDATED BALANCE SHEETS (Amounts in thousands except for share amounts) (Unaudited)
March 31, December 31, 1998 1997 ---------- ----------- ASSETS Investment in real estate Land $ 829,111 $ 791,980 Depreciable property 6,486,759 6,293,415 Construction in progress 47,059 36,040 ---------- ----------- 7,362,929 7,121,435 Accumulated depreciation (508,394) (444,762) ---------- ----------- Investment in real estate, net of accumulated depreciation 6,854,535 6,676,673 Cash and cash equivalents 77,575 33,295 Investment in mortgage notes, net 175,532 176,063 Rents receivable 3,798 3,302 Deposits - restricted 39,645 36,374 Escrow deposits - mortgage 45,314 44,864 Deferred financing costs, net 23,283 23,092 Other assets 109,660 100,968 ---------- ----------- Total assets $7,329,342 $ 7,094,631 ========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Mortgage notes payable $1,655,635 $ 1,582,559 Notes, net 1,130,461 1,130,764 Line of credit -- 235,000 Accounts payable and accrued expenses 66,787 67,699 Accrued interest payable 35,514 28,048 Rents received in advance and other liabilities 41,417 38,750 Security deposits 29,711 28,193 Distributions payable 89,015 20,223 ---------- ----------- Total liabilities 3,048,540 3,131,236 ---------- ----------- Commitments and contingencies Minority Interests 282,240 273,404 ---------- -----------
See accompanying notes. 2 EQUITY RESIDENTIAL PROPERTIES TRUST CONSOLIDATED BALANCE SHEETS (continued) (Amounts in thousands except for share amounts) (Unaudited)
March 31, December 31, 1998 1997 ------------- ------------ Shareholders' equity: Preferred Shares of beneficial interest, $.01 par value; 100,000,000 shares authorized: 9 3/8% Series A Cumulative Redeemable Preferred Shares of Beneficial Interest, liquidation preference $25 per share, 6,120,000 shares issued and outstanding $ 153,000 $ 153,000 9 1/8% Series B Cumulative Redeemable Preferred Shares of Beneficial Interest, liquidation preference $250 per share, 500,000 shares issued and outstanding 125,000 125,000 9 1/8% Series C Cumulative Redeemable Preferred Shares of Beneficial Interest, liquidation preference $250 per share, 460,000 shares issued and outstanding 115,000 115,000 8.60% Series D Cumulative Redeemable Preferred Shares of Beneficial Interest, liquidation preference $250 per share, 700,000 shares issued and outstanding 175,000 175,000 Series E Cumulative Convertible Preferred Shares of Beneficial Interest, liquidation preference $25 per share, 3,998,000 shares issued and outstanding 99,950 99,963 9.65% Series F Cumulative Redeemable Preferred Shares of Beneficial Interest, liquidation preference $25 per share, 2,300,000 shares issued and outstanding 57,500 57,500 7 1/4% Series G Convertible Cumulative Preferred Shares of Beneficial Interest, liquidation preference $250 per share, 1,265,000 shares issued and outstanding 316,250 316,250 Common Shares of beneficial interest, $.01 par value, 200,000,000 shares authorized, 96,355,220 shares issued and outstanding as of March 31, 1998 and 89,085,265 shares issued and outstanding as of December 31, 1997 964 891 Paid in capital 3,122,344 2,785,661 Employee notes (4,987) (5,145) Distributions in excess of accumulated earnings (161,459) (133,129) ------------- ------------ Total shareholders' equity 3,998,562 3,689,991 ------------- ------------ Total liabilities and shareholders' equity $ 7,329,342 $ 7,094,631 ============= ============
See accompanying notes. 3 EQUITY RESIDENTIAL PROPERTIES TRUST CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands except for per share data) (Unaudited)
Quarter Ended March 31, ------------------------- 1998 1997 ------------------------- REVENUES Rental income $277,226 $134,235 Fee and asset management 1,360 1,578 Interest income - investment in mortgage notes 4,931 3,683 Interest and other income 2,824 1,891 -------- -------- Total revenues 286,341 141,387 -------- -------- EXPENSES Property and maintenance 66,713 32,334 Real estate taxes and insurance 27,443 13,911 Property management 11,579 5,671 Fee and asset management 1,052 967 Depreciation 64,390 28,877 Interest: Expense incurred 50,254 23,293 Amortization of deferred financing costs 624 603 General and administrative 4,880 2,975 -------- -------- Total expenses 226,935 108,631 -------- -------- Income before gain on disposition of properties and allocation to Minority Interests 59,406 32,756 Gain on disposition of properties 1,869 3,632 -------- -------- Income before allocation to Minority Interests 61,275 36,388 Income allocated to Minority Interests (3,688) (3,426) -------- -------- Net income 57,587 32,962 Preferred distributions (21,692) (9,061) -------- -------- Net income available to Common Shares $ 35,895 $ 23,901 ======== ======== Weighted average Common Shares outstanding 93,361 51,791 ======== ======== Distributions declared per Common Share outstanding $ 0.67 $ 0.63 ======== ======== Net income per weighted average Common Share outstanding $ 0.38 $ 0.46 ======== ======== Net income per weighted average Common Share outstanding - assuming dilution $ 0.38 $ 0.45 ======== ========
See accompanying notes. 4 EQUITY RESIDENTIAL PROPERTIES TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) (Unaudited)
Quarter Ended March 31, ------------------------- 1998 1997 ------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 57,587 $ 32,962 Adjustments to reconcile net income to net cash provided by operating activities: Income allocated to Minority Interests 3,688 3,426 Depreciation 64,390 28,877 Amortization of deferred financing costs (including discounts and premiums on debt) 100 681 Amortization of discount on investment in mortgage notes - (750) Gain on disposition of properties (1,869) (3,632) Changes in assets and liabilities: (Increase) decrease in rents receivable (496) 99 Decrease in deposits - restricted 357 127 (Increase) in other assets (2,471) (4,299) (Decrease) in accounts payable and accrued expenses (912) (1,874) Increase in accrued interest payable 7,466 2,710 Increase in rents received in advance and other liabilities 3,600 3,379 --------- --------- Net cash provided by operating activities 131,440 61,706 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Investment in real estate, net (142,203) (152,612) Improvements to real estate (14,091) (6,276) Additions to non-real estate property (2,385) (1,515) Proceeds from disposition of real estate 16,665 4,771 Purchase of management contract rights (119) (3,500) (Increase) in mortgage deposits (450) (2,148) Deposits (made) on real estate acquisitions (11,898) (5,258) Deposits applied on real estate acquisitions 8,270 16,761 Decrease in investment in mortgage notes 531 451 Investment in partnerships - development (11,094) - Costs related to Mergers (987) - Other investing activities 398 (101) --------- --------- Net cash (used for) investing activities (157,363) (149,427) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from sale of Common Shares 356,829 89,576 Proceeds from exercise of options 1,568 1,626 Payment of offering costs (10,013) (101) Distributions to Common Share and Preferred Share owners (23,235) (41,034) Distributions to Minority Interests (312) (4,904) Principal receipts on employee notes 158 184 Repayments on line of credit (235,000) - Principal payments on mortgage notes payable (20,542) (20,562) Loan and bond acquisition costs (768) (501) Increase in security deposits 1,518 995 --------- --------- Net cash provided by financing activities 70,203 25,279 --------- --------- Net increase (decrease) in cash and cash equivalents 44,280 (62,442) Cash and cash equivalents, beginning of period 33,295 147,271 --------- --------- Cash and cash equivalents, end of period $ 77,575 $ 84,829 ========= =========
See accompanying notes. 5 EQUITY RESIDENTIAL PROPERTIES TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (Amounts in thousands) (Unaudited)
Quarter Ended March 31, ------------------------- 1998 1997 ------------------------- Supplemental information: Cash paid during the period for interest $42,788 $20,583 ======= ======= Mortgage loans assumed through acquisitions of real estate $93,617 $60,851 ======= ======= Net real estate contributed in exchange for OP units or Common Shares $ 50 - ======= =======
See accompanying notes. 6 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Definition of Special Terms: Capitalized terms used but not defined in this Quarterly Report on Form 10-Q are as defined in the Company's Annual Report on Form 10-K for the year ended December 31, 1997 ("Form 10-K"). 1. Business As used herein, the term "Company" means Equity Residential Properties Trust ("EQR") and its subsidiaries as the survivor of the mergers between EQR and each of Wellsford Residential Property Trust ("Wellsford") (the "Wellsford Merger") and Evans Withycombe Residential, Inc. ("EWR") (the "EWR Merger"). The Company is engaged in the acquisition, ownership and operation of multifamily properties and is a self-administered and self-managed equity real estate investment trust ("REIT"). As of March 31, 1998, the Company controlled a portfolio of 476 multifamily properties (individually a "Property" and collectively the "Properties"). The Company's interest in six of these Properties at the time of acquisition thereof consisted solely of ownership of debt collateralized by such Properties. The Company also has an investment in partnership interests and subordinated mortgages collateralized by 21 properties and mortgage loans collateralized by five properties (collectively, the "Additional Properties"). 2. Basis of Presentation The balance sheet and statements of operations and cash flows as of and for the quarter ended March 31, 1998 represent the consolidated financial information of the Company and its subsidiaries. Due to the Company's ability as general partner to control either through ownership or by contract the Operating Partnership, the Management Partnerships, the Financing Partnerships, the LLCs and the EWR Operating Partnership, each such entity has been consolidated with the Company for financial reporting purposes. In regard to Management Corp., Management Corp. II and Evans Withycombe Management, Inc., the Company does not have legal control; however, these entities are consolidated for financial reporting purposes, the effects of which are immaterial. These unaudited Consolidated Financial Statements of the Company have been prepared pursuant to the Securities and Exchange Commission ("SEC") rules and regulations and should be read in conjunction with the Financial Statements and Notes thereto included in the Company's Annual Report on Form 10-K. The following Notes to Consolidated Financial Statements highlight significant changes to the notes included in the Form 10-K and present interim disclosures as required by the SEC. The accompanying Consolidated Financial Statements reflect, in the opinion of management, all adjustments necessary for a fair presentation of the interim financial statements. All such adjustments are of a normal and recurring nature. 7 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited) 3. Shareholders' Equity and Minority Interests On January 27, 1998, the Company completed an offering of 4,000,000 publicly registered Common Shares, which were sold to the public at a price of $50.4375 per share (the "January 1998 Common Share Offering"). The Company received net proceeds of approximately $195.3 million in connection therewith. On February 18, 1998, the Company completed offerings of 988,340 publicly registered Common Shares, which were sold to the public at a price of $50.625 per share. On February 23, 1998, the Company completed an offering of 1 million publicly registered Common Shares, which were sold to the public at a price of $48 per share. The Company received net proceeds from these offerings (collectively, the "February 1998 Common Share Offerings") of approximately $95 million. On March 30, 1998, the Company completed an offering of 495,663 publicly registered Common Shares, which were sold at a price of $47.9156 per share (the "March 1998 Common Share Offering"). The Company received net proceeds of approximately $23.7 million in connection therewith. The following table presents the changes in the Company's issued and outstanding Common Shares for the quarter ended March 31, 1998: ========================================================================================= Balance at January 1, 1998 89,085,265 - ----------------------------------------------------------------------------------------- Common Shares issued through January 1998 Common Share Offering 4,000,000 Common Shares issued through February 1998 Common Share Offerings 1,988,340 Common Shares issued through March 1998 Common Share Offering 495,663 Common Shares issued through DRIP Plan 640,162 Common Shares issued through conversion of Series E Preferred Shares 278 Conversion of OP Units into Common Shares 8,705 Common Shares issued through Employee Share Purchase Plan 37,824 Common Shares issued through restricted share awards 44,899 Common Shares issued through exercise of options 54,084 ---------- Balance at March 31, 1998 96,355,220 ========== =========================================================================================
Assuming conversion of all OP Units into Common Shares, total Common Shares outstanding at March 31, 1998 would have been 105,940,085. The equity positions of various individuals and entities that contributed their properties to the Operating Partnership in exchange for a partnership interest are collectively referred to as the "Minority Interests". As of March 31, 1998, the Minority Interests held 9,584,865 OP Units which represented a 9.05% interest in the Operating Partnership. Net proceeds from the Company's Common Share offerings are contributed by the Company to the Operating Partnership in return for an increased ownership percentage and are 8 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited) treated as capital transactions in the Company's Consolidated Financial Statements. As a result, the net offering proceeds are allocated between shareholders' equity and Minority Interests to account for the change in their respective percentage ownership of the underlying equity of the Operating Partnership. The Company paid a $0.67 per Common Share distribution on April 10, 1998 for the quarter ended March 31, 1998 to Common Share holders of record as of March 27, 1998. The following table summarizes the distributions paid to Preferred Share and Depositary Share holders related to the quarter ended March 31, 1998:
Distribution For the ------------ ------- Amount Date Paid Quarter ended Record Date ------ --------- ------------- ----------- Series A Preferred Share holders $0.585938 04/15/98 03/31/98 03/27/98 Series B Depositary Share holders $0.570313 04/15/98 03/31/98 03/27/98 Series C Depositary Share holders $0.570313 04/15/98 03/31/98 03/27/98 Series D Depositary Share holders $0.537500 04/15/98 03/31/98 03/27/98 Series E Preferred Share holders $0.437500 04/01/98 03/31/98 03/13/98 Series F Preferred Share holders $0.603125 04/15/98 03/31/98 03/27/98 Series G Depositary Share holders $0.453125 04/15/98 03/31/98 03/27/98
4. Real Estate During the quarter ended March 31, 1998, the Company acquired the 15 Properties listed below from unaffiliated third parties. In connection with certain of the acquisitions listed below, the Company assumed mortgage indebtedness of approximately $93.6 million and issued OP Units having a value of approximately $0.1 million. The cash portion of these transactions was funded primarily from proceeds raised from the January 1998 Common Share Offering, the February 1998 Common Share Offerings and working capital. 9 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited)
Total Date Number Acquisition Cost Acquired Property Location of Units (in thousands) -------- -------- -------- -------- ------------ 01/07/98 Cityscape St. Louis Park, MN 156 $12,330 01/09/98 740 River Drive St. Paul, MN 162 12,861 01/13/98 Prospect Towers Hackensack, NJ 157 36,315 01/16/98 Park Place Houston, TX 229 13,571 01/16/98 Park Westend Richmond, VA 312 13,396 01/29/98 Emerald Bay at Winter Park Winter Park, FL 432 15,697 02/05/98 Farnham Park Houston, TX 216 15,755 02/25/98 Plantation Houston, TX 232 10,018 02/27/98 Balcones Club Austin, TX 312 12,314 03/02/98 Coach Lantern Scarborough, ME 90 4,849 03/02/98 Foxcroft Scarborough, ME 104 5,041 03/02/98 Yarmouth Woods Yarmouth, ME 138 6,775 03/20/98 Rolido Parque Houston, TX 369 10,835 03/26/98 The Fairfield Stamford, CT 263 45,824 03/26/98 Trails of Valley Ranch Irving, TX 216 10,719 ----- -------- 3,388 $226,300 ===== ========
5. Commitments to Acquire Rental Properties As of March 31, 1998, in addition to the properties that were subsequently acquired as discussed in Note 13 of the Notes to Consolidated Financial Statements, the Company entered into separate agreements to acquire six multifamily properties containing 1,701 units from unaffiliated third parties. The expected combined purchase price is approximately $203.2 million, which includes the assumption of mortgage indebtedness of approximately $40.7 million. The closings of these pending transactions are subject to certain contingencies and conditions; therefore, there can be no assurance that these transactions will be consummated or that the final terms thereof will not differ in material respects from those summarized in the preceding paragraph. 6. Dispositions On March 12, 1998, the Company sold Mountain Brook Apartments and Ridgemont Apartments, both located in Chattanooga, Tennessee for a sales price of $16.7 million. The gain for financial reporting purposes was approximately $1.9 million. 10 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited) 7. Calculation of Net Income Per Weighted Average Common Share The following tables set forth the computation of net income per weighted average Common Share outstanding and net income per weighted average Common Share outstanding - assuming dilution. 11 Equity Residential Properties Trust Notes To Consolidated Financial Statements (Continued) (Unaudited)
Quarter Ended March 31, ------------------------------- 1998 1997 -------- -------- (Amounts in thousands except per share amounts) Numerator: Income before allocation of income to Minority Interests, preferred distributions and gain on disposition of properties $ 59,406 $32,756 Allocation of income to Minority Interests (3,688) (3,426) Distributions to preferred shareholders (21,692) (9,061) -------- ------- Income before gain on disposition of properties 34,026 20,269 Gain on disposition of properties 1,869 3,632 -------- ------- Numerator for net income per weighted average Common Share outstanding 35,895 23,901 Effect of dilutive securities: Allocation of income to Minority Interests 3,688 3,426 -------- ------- Numerator for net income per weighted average Common Share outstanding - assuming dilution $ 39,583 $27,327 ======== ======= Denominator: Denominator for net income per weighted average Common Share outstanding 93,361 51,791 Effect of dilutive securities: Contingent incremental employee share options 1,152 898 OP Units 9,587 7,478 -------- ------- Denominator for net income per weighted average Common Share outstanding - assuming dilution 104,100 60,167 ======== ======= Net income per weighted average Common Share outstanding $ 0.38 $ 0.46 ======== ======= Net income per weighted average Common Share outstanding - assuming dilution $ 0.38 $ 0.45 ======== =======
12 Equity Residential Properties Trust Notes To Consolidated Financial Statements (Continued) (Unaudited)
Quarter Ended March 31, -------------------------- 1998 1997 -------- -------- Net income per weighted average Common Share outstanding: Income before gain on disposition of properties per weighted average Common Share outstanding $0.36 $0.39 Gain on disposition of properties 0.02 0.07 ----- ----- Net income per weighted average Common Share outstanding $0.38 $0.46 ===== ===== Net income per weighted average Common Share outstanding - assuming dilution: Income before gain on disposition of properties per weighted average Common Share outstanding - assuming dilution $0.36 $0.39 Gain on disposition of properties 0.02 0.06 ----- ----- Net income per weighted average Common Share outstanding - assuming dilution $0.38 $0.45 ===== =====
Convertible Preferred Shares that could be converted into 7,623,507 shares of common shares were outstanding at March 31, 1998 but were not included in the computation of diluted earnings per share because it would be anti-dilutive. 13 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited) 8. Mortgage Notes Payable As of March 31, 1998, the Company had outstanding mortgage indebtedness of approximately $1.66 billion encumbering 158 of the Properties. The carrying value of such Properties (net of accumulated depreciation of $168.8 million) was approximately $2.7 billion. The mortgage notes payables are generally due in monthly installments of interest only. In connection with the Properties acquired during the quarter ended March 31, 1998, the Company assumed the outstanding mortgage balances on seven Properties in the aggregate amount of $93.6 million. Concurrent with the refinancing of certain tax-exempt bonds and as a requirement of the credit provider of the bonds, the Financing Partnership, which owns certain of the Properties, entered into interest rate protection agreements, which were assigned to the credit provider as additional security. The Financing Partnership pays interest based on a fixed interest rate and the counterparty of the agreement pays interest to the Company at a floating rate that is calculated based on the Public Securities Association Index for municipal bonds ("PSA Municipal Index"). As of March 31, 1998, the aggregate notional amount of these agreements was approximately $173.8 million. The fixed interest rates for these agreements were 4.81%, 4.528% and 4.90%. The termination dates are October 1, 2003, January 1, 2004 and April 1, 2004. The Company simultaneously entered into substantially identical reverse interest rate protection agreements. Under these agreements the Company pays interest monthly at a floating rate based on the PSA Municipal Index and the counterparty pays interest to the Company based on a fixed interest rate. As of March 31, 1998, the aggregate notional amount of these agreements was approximately $173.8 million. The fixed interest rates received by the Company in exchange for paying interest based on the PSA Municipal Index for these agreements were 4.74%, 4.458% and 4.83%. The termination dates are October 1, 2003, January 1, 2004 and April 1, 2004. Collectively, these agreements effectively cost the Company 0.07% per annum on the current outstanding aggregate notional amount. The Company believes that it has limited exposure to the extent of non- performance by the counterparties of the agreements since each counterparty is a major U.S. financial institution, and the Company does not anticipate their non- performance. Furthermore, any non-performance by the counterparty is offset by non-performance by the Company. The Company also has an interest rate cap agreement for a notional amount of $228 million, for which it will receive payments if the PSA index exceeds 5.75%, that terminates on December 1, 1999. Any payments by the counterparty under this agreement have been collaterally assigned to the provider of certain sureties related to the tax exempt bonds secured by certain of it's Properties. The Company has no payment obligations to the counterparty with respect to this agreement. As of March 31, 1998, scheduled maturities for the Company's outstanding mortgage indebtedness are at various dates through October 1, 2030. During the quarter ended March 31, 1998, the effective interest cost on these mortgage notes was 7.3%. During the quarter ended March 31, 1998, the Company repaid the outstanding mortgage balance on one Property in the amount of $18.2 million. Subsequent to March 31, 1998, the Company repaid the outstanding mortgage balances on four Properties in the aggregate amount of approximately $16 million. 14 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited) 9. Line of Credit During the quarter ended March 31, 1998, the Company repaid $235 million outstanding on its line of credit with proceeds raised from the January 1998 Common Share Offering and the February 1998 Common Share Offerings. As of March 31, 1998, there were no amounts outstanding on this line of credit. 10. Notes As of March 31, 1998, the Company had outstanding unsecured notes of approximately $1.1 billion (net of a $2.4 million discount and including a $7.9 million premium). In February 1996, the Company entered into an interest rate protection agreement that hedged the interest rate risk of the 1999 Notes by locking the effective four year Treasury Rate, commencing May 15, 1999 through May 2003. There was no current cost to the Company for entering into this agreement. Prior to the issuance of the 2002 Notes, the Operating Partnership entered into an interest rate protection agreement to effectively fix the interest rate cost of such issuance. The Operating Partnership made a one time settlement payment of this protection transaction, which was approximately $0.8 million and is being amortized over the term of the 2002 Notes. As of March 31, 1998, the unamortized balance of this cost was approximately $0.5 million. Prior to the issuance of the 2026 Notes, the Company entered into an interest rate protection agreement to effectively fix the interest rate cost of this issuance to 7.5%. The Operating Partnership received a one-time settlement payment of this transaction, which was approximately $0.6 million, which amount is being amortized over the term of the 2026 Notes. As of March 31, 1998, the unamortized balance was approximately $0.5 million. Prior to the issuance of the 2001 and 2003 Notes, the Operating Partnership entered into two interest rate protection agreements to effectively fix the interest rate costs of such issuances. The Operating Partnership made a one time settlement payment of each protection transaction, which was approximately $5 million and $1.7 million, respectively, which are being amortized over the term of the Notes on a straight-line basis. As of March 31, 1998 the unamortized balance of these costs were approximately $4.6 million and $1.6 million, respectively. In regard to all of the interest rate protection agreements mentioned in the previous paragraphs, the Company believes that it has limited exposure to the extent of non-performance by the counterparties of each agreement since each counterparty is a major U.S. financial institution, and the Company does not anticipate their non-performance. 15 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited) 11. Deposits - restricted Deposits-restricted as of March 31, 1998 primarily included a deposit in the amount of $20 million held in a third party escrow account to provide collateral for third party construction financing in connection with the Joint Venture Agreement. Also, approximately $12.1 million was held in third party escrow accounts, representing proceeds received in connection with the Company's disposition of two properties and earnest money deposits made for additional acquisitions. In addition, approximately $7.5 million was for tenant security and utility deposits for certain of the Company's Properties. 12. Commitments and Contingencies The Company, as an owner of real estate, is subject to various environmental laws of Federal and local governments. Compliance by the Company with existing laws has not had a material adverse effect on the Company's financial condition and results of operations. However, the Company cannot predict the impact of new or changed laws or regulations on its current Properties or on properties that it may acquire in the future. The Company does not believe there is any other litigation, except as mentioned in the previous paragraph, threatened against the Company other than routine litigation arising out of the ordinary course of business, some of which is expected to be covered by liability insurance, none of which is expected to have a material adverse effect on the consolidated financial statements of the Company. In connection with the Joint Venture Agreement, the Company is obligated to fund an additional $20 million in connection with the third party construction financing. In connection with the Wellsford Merger, the Company has provided a standby obligation in the amount of $30 million pursuant to an agreement entered into with Wellsford Real Properties, Inc., a Maryland corporation ("WRP"), for the construction financing for a multifamily development project located in Denver, Colorado. In addition, the Company has provided a $14.8 million credit enhancement with respect to bonds issued to finance certain public improvements at the multifamily development project. 13. Subsequent Events On April 1, 1998, the Company acquired Harbor Pointe Apartments, a 595-unit multifamily property located in Milwaukee, Wisconsin, from an unaffiliated third party for a purchase price of approximately $24 million, which included securing financing in the amount of $12 million and the issuance of OP Units having a value of approximately $2.3 million. On April 1, 1998, the Company acquired five of the Additional Properties containing 1,371 units, from an unaffiliated third party for a total purchase price of approximately $95.7 million, which included mortgage indebtedness of $50 million and the issuance of OP Units having a value of approximately $6.3 million. In April 1997, the Company had made a $88 Million Mortgage Note Investment collateralized by these five Additional Properties. On April 1, 1998, the Company acquired Sonterra at Foothill Ranch Apartments, a 300-unit multifamily property located in Foothill Ranch, California from an unaffiliated third party for a purchase price of approximately $31.5 million. On April 7, 1998, the Company acquired Vista Pointe at the Valley Apartments, a 231-unit multifamily property located in Irving, Texas, from an unaffiliated third party for a purchase price of approximately $18.6 million. On April 23, 1998, the Company acquired Emerson Place Apartments, a 462- unit multifamily property located in Boston, Massachusetts, from an unaffiliated third party for a purchase price of approximately $72.5 million. In April 1998, the Operating Partnership issued 6.63% unsecured notes due April 13, 2015 in a public debt offering (the "2015 Notes"). The Operating Partnership received net proceeds of approximately $298.1 million in connection with this issuance. The Operating Partnership also received approximately $8.1 million from the sale of an option to remarket the 2015 Notes in April 2005. Prior to the issuance of the 2015 Notes, the Operating Partnership entered into an interest rate 16 EQUITY RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited) protection agreement to effectively fix the interest rate cost of such issuance at 6.44%. The Operating Partnership received a one-time settlement payment from this transaction, which was appproximately $0.6 million, will be amortized over seven years. In April 1998, the Company sold approximately 350,000 Common Shares pursuant to the DRIP Plan and raised net proceeds of approximately $17.5 million. On April 29, 1998, the Company completed an offering of 946,565 publicly registered Common Shares, which were sold at a price of $46.5459 per share. The Company received net proceeds of approximately $44.1 million in connection therewith. On May 1, 1998, the Company disposed of one Property located in Fort Myers, Florida for a sales price of $8.5 million. The Company expects to record a gain for financial reporting purposes of approximately $1.4 million. 17 EQUITY RESIDENTIAL PROPERTIES TRUST PART I Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Overview The following discussion and analysis of the results of operations and financial condition of the Company should be read in connection with the Consolidated Financial Statements and Notes thereto. Due to the Company's ability to control the Operating Partnership, the EWR Operating Partnership, the Management Partnerships, the Financing Partnerships and the LLCs, each entity has been consolidated with the Company for financial reporting purposes. Capitalized terms used herein and not defined, are as defined in the Company's Annual Report on Form 10-K for the year ended December 31, 1997. Forward-looking statements in this report are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words "believes", "expects" and "anticipates" and other similar expressions which are predictions of or indicate future events and trends and which do not relate solely to historical matters, identify forward-looking statements. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results, performance, or achievements of the Company to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. Factors that might cause such differences include, but are not limited to, the following: the alternative sources of capital to the Company are too high; occupancy levels and market rents may be adversely affected by local economic and market conditions, which are beyond the Company's control; and additional factors as discussed in Part I of the Annual Report as filed on Form 10-K. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to publicly release any revisions to these forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Results of Operations Since EQR's IPO and through March 31, 1998, the Company has acquired direct or indirect interests in 427 properties (the "Acquired Properties"), containing 121,898 units in the aggregate for a total purchase price of approximately $6.8 billion, including the assumption of approximately $1.6 billion of mortgage indebtedness and $0.4 billion of unsecured notes. The Company's interest in six of the Acquired Properties at the time of acquisition thereof consisted solely of ownership of the debt collateralized by such Acquired Properties. The Company purchased its interests in 15 of such Acquired Properties consisting of 3,388 units in 1998 (the "1998 Acquired Properties"). During the quarter ended March 31, 1998, the Company disposed of two properties (the "1998 Disposed Properties") for a total sales price of $16.7 million. The Company's overall results of operations for the quarters ended March 31, 1998 and 1997 have been significantly impacted by the Company's acquisition activity. The significant changes in rental revenues, property and maintenance expenses, real estate taxes and insurance, 18 EQUITY RESIDENTIAL PROPERTIES TRUST PART I Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) depreciation expense, property management and interest expense can all primarily be attributed to the acquisition of the 1997 Acquired Properties and the 1998 Acquired Properties. The impact of the 1997 Acquired Properties and the 1998 Acquired Properties is discussed in greater detail in the following paragraphs. Properties that the Company owned for all of the quarter ended March 31, 1998 and March 31, 1997 (the "First Quarter 1998 Same Store Properties") also impacted the Company's results of operations and are discussed as well in the following paragraphs. Comparison of quarter ended March 31, 1998 to quarter ended March 31, 1997 For the quarter ended March 31, 1998, income before gain on disposition of properties and allocation to Minority Interests increased by approximately $26.7 million when compared to the quarter ended March 31, 1997. This increase was primarily due to increases in rental revenues net of increases in property and maintenance expenses, real estate taxes and insurance, property management expenses, depreciation, interest expense and general and administrative expenses. All of the increases in the various line item accounts mentioned above can be primarily attributed to the 1997 Acquired Properties. These increases were partially offset by the 1997 Disposed Properties. The increase in interest income of $1.2 million earned on the Company's mortgage note investments is primarily attributable to its $88 Million Note Investment. In regard to the First Quarter 1998 Same Store Properties, rental revenues increased by approximately $6.5 million or 5.2% primarily as a result of higher rental rates charged to new tenants and tenant renewals, as well as a 1% increase in average occupancy levels. Overall property operating expenses which include property and maintenance, real estate taxes and insurance and an allocation of property management expenses increased approximately $1.3 million or 2.7%. This increase was primarily attributable to increased leasing and advertising as well as building, maintenance and utility costs. Property management represents expenses associated with the management of the Company's Properties. These expenses increased by approximately $5.9 million primarily due to the continued expansion of the Company's property management business to facilitate the management of the Company's additional properties. Subsequent to March 31, 1997, the Company opened approximately 14 new management offices. Fee and asset management revenues and fee and asset management expenses are associated with the management of properties not owned by the Company that are managed for affiliates. These expenses were slightly higher for the quarter ended March 31, 1998 when compared to the quarter ended March 31, 1997. Interest expense, including amortization of deferred financing costs, increased by approximately $27 million. This increase was primarily the result of an increase in the Company's average indebtedness outstanding which increased by $1.6 billion. However, the Company's 19 EQUITY RESIDENTIAL PROPERTIES TRUST PART I Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) effective interest costs decreased from 7.62% for the quarter ended March 31, 1997 to 7.27% for the quarter ended March 31, 1998. General and administrative expenses, which include corporate operating expenses, increased approximately $1.9 million between the periods under comparison. This increase was primarily due to adding corporate personnel, higher compensation costs and shareholder reporting costs as well as an increase in professional fees. General and administrative expenses as a percentage of total revenues were 1.7% for the quarter ended March 31, 1998, which was a decrease from 2.1% for the quarter ended March 31, 1997. Liquidity and Capital Resources As of January 1, 1998, the Company had approximately $33.3 million of cash and cash equivalents and $265 million available on its line of credit, of which $24.7 million was restricted. After taking into effect the various transactions discussed in the following paragraphs, the Company's cash and cash equivalents balance at March 31, 1998 was approximately $77.6 million and the amount available on the Company's line of credit was $500 million, of which $24.7 million was restricted. The following discussion also explains the changes in net cash provided by operating activities, net cash (used for) investing activities and net cash provided by financing activities, all of which are presented in the Company's Statements of Cash Flows. With respect to Property acquisitions during the quarter, the Company purchased 15 Properties containing 3,388 units for a total purchase price of approximately $225.2 million, including the assumption of mortgage indebtedness of approximately $93.6 million. These acquisitions were primarily funded from proceeds received from the January 1998 Common Share Offering, the February 1998 Common Share Offerings and working capital. Subsequent to March 31, 1998 and through May 11, 1998, the Company acquired nine additional properties containing 2,959 units for a total purchase price of approximately $242.3 million, including mortgage indebtedness of $62 million and the issuance of OP Units having a value of approximately $8.6 million. These acquisitions were primarily funded with proceeds from the February 1998 Common Share Offerings, the March 1998 Common Share Offering and working capital. During the quarter ended March 31, 1998, the Company disposed of two properties that generated net proceeds of $16.7 million. Subsequently, these proceeds will be ultimately applied to purchase additional Properties. As of March 31, 1998, the Company had total indebtedness of approximately $2.79 billion, which included mortgage indebtedness of $1.66 billion (including premiums of $3.7 million), of which $723 million represented tax exempt bond indebtedness, and unsecured debt of $1.13 billion (including net discounts and premiums in the amount of $5.5 million). During the quarter, the Company repaid $18.2 million of mortgage indebtedness on one of its Properties. 20 EQUITY RESIDENTIAL PROPERTIES TRUST PART I Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) This repayment was primarily funded from proceeds received from the January 1998 Common Share Offering. The Company has, from time to time, entered into interest rate protection agreements (financial instruments) to reduce the potential impact of increases in interest rates but believes it has limited exposure to the extent of non- performance by the counterparties of each protection agreement since each counterparty is a major U.S. financial institution, and the Company does not anticipate their non-performance. No such financial instrument has been used for trading purposes. In February 1996, the Company entered into an interest rate protection agreement that will hedge the Company's interest rate risk at maturity of $125 million of indebtedness. This agreement hedged the interest rate risk of the Operating Partnership's 1999 Notes by locking the effective four-year Treasury Rate commencing May 15, 1999. There was no current cost to the Company for entering into this agreement. In July 1997, the Company entered into two interest rate protection agreements to effectively fix the interest rate cost of the Company's 2001 Notes and 2003 Notes. One agreement was for a notional amount of $100 million with a locked in treasury rate at 6.134%. The second agreement was for a notional amount of $75 million with a locked in treasury rate of 6.287%. The fair value of these instruments as of March 31, 1998 approximates their carrying or contract values. The Company has a policy of capitalizing expenditures made for new assets, including newly acquired properties and the costs associated with placing these assets into service. Expenditures for improvements and renovations that significantly enhance the value of existing assets or substantially extend the useful life of an asset are also capitalized. Capital spent for replacement-type items such as appliances, draperies, carpeting and floor coverings, mechanical equipment and certain furniture and fixtures is also capitalized. Expenditures for ordinary maintenance and repairs are expensed to operations as incurred. With respect to acquired properties, the Company has determined that it generally spends $1,000 per unit during its first three years of ownership to fully improve and enhance these properties to meet the Company's standards. In regard to replacement-type items described above, the Company generally expects to spend $300 per unit on an annual recurring basis. During the quarter ended March 31, 1998, total capital expenditures for the Company approximated $16.5 million. Of this amount, approximately $3.4 million related to capital improvements and major repairs for certain of the 1995, 1996 and 1997 Acquired Properties. Capital improvements and major repairs for all of the Company's pre-IPO properties and certain Acquired Properties approximated $3.8 million, or $28 per unit. Capital spent for replacement-type items approximated $6.9 million, or $50 per unit. Also included in total capital expenditures was approximately $2.4 million expended for non-real estate additions such as computer software, computer equipment, furniture and fixtures and leasehold improvements for the Company's property management offices and its corporate headquarters. Such capital expenditures were primarily funded from working capital reserves and from net cash provided by operating activities. Total capital expenditures for the remaining portion of 1998 are budgeted to 21 EQUITY RESIDENTIAL PROPERTIES TRUST PART I Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) be approximately $80 million. Minority Interests as of March 31, 1998 increased by $8.8 million when compared to December 31, 1997. The primary factors that impacted this account during the three month period were distributions declared to Minority Interests, which amounted to $6.4 million for the three month period, the allocation of income from operations in the amount of $3.7 million and the conversion of OP Units into Common Shares and the issuances of Common Shares during the quarter. Total distributions paid in April 1998 amounted to approximately $92 million, which included distributions declared for the quarter ended March 31, 1998. On April 29, 1998, the Company completed an offering of 946,565 publicly registered Common Shares, which were sold at a price of $46.5459 per share. The Company received net proceeds of approximately $44.1 million in connection therewith. In April 1998, the Operating Partnership issued 6.63% unsecured notes due April 13, 2015 (the "2015 Notes") in a public debt offering. The Operating Partnership received net proceeds of approximately $298.1 million in connection with this issuance. The Operating Partnership also received approximately $8.1 million from the sale of an option to remarket the 2015 Notes in April 2005. Prior to the issuance of the 2015 Notes, the Operating Partnership entered into an interest rate protection agreement to effectively fix the interest rate cost of such issuance at 6.44%. The Operating Partnership received a one-time settlement payment from this transaction, which was approximately $0.6 million. In April, 1998, the Company sold approximately 350,000 Common Shares pursuant to the DRIP Plan and received net proceeds of approximately $17.5 million therefrom. The Company expects to meet its short-term liquidity requirements, including capital expenditures relating to maintaining its existing Properties, generally through its working capital, net cash provided by operating activities and borrowings under its line of credit. The Company considers its cash provided by operating activities to be adequate to meet operating requirements and payments of distributions. The Company also expects to meet its long-term liquidity requirements, such as scheduled mortgage debt maturities, reduction of outstanding amounts under its line of credit, property acquisitions, financing of construction and development activities and capital improvements through the issuance of unsecured notes and equity securities including additional OP Units as well as from undistributed FFO and proceeds received from the disposition of certain Properties. In addition, the Company has certain uncollateralized Properties available for additional mortgage borrowings in the event that the public capital markets are unavailable to the Company or the cost of alternative sources of capital to the Company is too high. The Company currently has a $500 million line of credit that is scheduled to mature in 22 EQUITY RESIDENTIAL PROPERTIES TRUST PART I Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) November 1999. As of May 11, 1998, no amounts were outstanding under the Company's line of credit. The Company has conducted a review of its computer operating systems and has identified those areas that could be affected by the "Year 2000" issue and has developed a plan to resolve this issue. The Company believes that by modifying certain existing hardware and software and, in other cases, converting to new application systems, the Year 2000 problem can be resolved without significant operational difficulties. The Company has initiated formal communications with all of its significant suppliers to determine the extent to which the Company's interface systems are vulnerable to those third parties' failure to remediate their own Year 2000 issues. The Company has estimated the Year 2000 project cost to be approximately $250,000. Funds From Operations The Company generally considers FFO to be one measure of the performance of real estate companies including an equity REIT. The resolution adopted by the Board of Governors of NAREIT defines FFO as net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from debt restructuring and sales of property, plus depreciation on real estate assets, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis. The Company believes that FFO is helpful to investors as a measure of the performance of an equity REIT because, along with cash flows from operating activities, financing activities and investing activities it provides investors an understanding of the ability of the Company to incur and service debt and to make capital expenditures. FFO in and of itself does not represent cash generated from operating activities in accordance with GAAP and therefore should not be considered an alternative to net income as an indication of the Company's performance or to net cash flows from operating activities as determined by GAAP as a measure of liquidity and is not necessarily indicative of cash available to fund cash needs. The Company's calculation of FFO represents net income available to Common Shares, excluding gains on dispositions of properties, plus depreciation on real estate assets, income allocated to Minority Interests and amortization of deferred financing costs related to the Predecessor Business. The Company's calculation of FFO may differ from the methodology for calculating FFO utilized by other REITs and, accordingly, may not be comparable to such other REITs. The Company's accounting policy with respect to replacement type items is to capitalize such items as improvements and depreciate such improvements typically over a five year period. For the quarter ended March 31, 1998, FFO increased by $48.8 million representing a 93.5% increase when compared to the quarter ended March 31, 1997. The following is a reconciliation of net income available to Common Shares to FFO 23 EQUITY RESIDENTIAL PROPERTIES TRUST PART I Item 2. Management's Discussion and Analysis of Financial Condition and Results Operations (Continued) available to Common Shares and OP Units for the quarters ended March 31, 1998 and 1997:
Quarter Quarter Ended Ended 3/31/98 3/31/97 -------- -------- Net income available to Common Shares $ 35,895 $ 23,901 Adjustments: Income allocated to Minority Interests 3,688 3,426 Depreciation on real estate assets 63,225 28,432 Amortization of deferred financing costs related to predecessor business 12 58 Gain on disposition of properties (1,869) (3,632) -------- -------- FFO available to Common Shares and OP Units $100,951 $ 52,185 ======== ========
24 PART II. OTHER INFORMATION Item 1. Legal Proceedings There have been no new or significant developments related to the legal proceedings that were discussed in Part I, Item III of the Company's Form 10-K for the year ended December 31, 1997. Item 6. Exhibits and Reports on Form 8-K (A) Exhibits: 12 Computation of Ratio of Earnings to Fixed Charges. (B) Reports on Form 8-K: A Report on Form 8-K dated January 21, 1998, reporting information on the January 1998 Common Share Offering. A Report on Form 8-K dated February 12, 1998, reporting information on the February 1998 Common Share Offerings. A Report on Form 8-K dated February 12, 1998, reporting information on the February 1998 Common Share Offerings. A Report on Form 8-K dated February 18, 1998, reporting information on the February 1998 Common Share Offerings. A Report on Form 8-K dated March 25, 1998, reporting information on the March 1998 Common Share Offering. 25 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. EQUITY RESIDENTIAL PROPERTIES TRUST Date: May 11, 1998 By: /s/ Bruce C. Strohm ------------ -------------------------------------------------- Bruce C. Strohm Executive Vice President, General Counsel and Secretary Date: May 11, 1998 By: /s/ Michael J. McHugh ------------ -------------------------------------------------- Michael J. McHugh Executive Vice President, Chief Accounting Officer and Treasurer 26 EX-12 2 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES EQUITY RESIDENTIAL PROPERTIES TRUST Consolidated and Combined Historical, Including Predecessor Business Earnings to Combined Fixed Charges and Preferred Distributions Ratio
Historical -------- -------- -------- -------- -------- -------- -------- 03/31/98 03/31/97 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93 -------- -------- -------- -------- -------- -------- -------- (Amounts in thousands) REVENUES Rental income $277,226 $134,235 $707,733 $454,412 $373,919 $220,727 $104,388 Fee income - outside managed 1,360 1,578 5,697 6,749 7,030 4,739 4,651 Interest income - investment in mortgage notes 4,931 3,683 20,366 12,819 4,862 - - Interest and other income 2,824 1,891 13,525 4,405 4,573 5,568 3,031 -------- -------- -------- -------- -------- -------- -------- Total revenues 286,341 141,387 747,321 478,385 390,384 231,034 112,070 -------- -------- -------- -------- -------- -------- -------- EXPENSES Property and maintenance 66,713 32,334 176,075 127,172 112,186 66,534 35,324 Real estate taxes and insurance 27,443 13,911 69,520 44,128 37,002 23,028 11,403 Property management 11,579 5,671 26,793 17,512 15,213 10,249 3,491 Property management - non-recurring - - - - - 879 - Fee and asset management 1,052 967 3,364 3,837 3,887 2,056 2,524 Depreciation 64,390 28,877 156,644 93,253 72,410 37,273 15,384 Interest: Expense incurred 50,254 23,293 121,324 81,351 78,375 37,044 26,042 Amortization of deferred financing costs 624 603 2,523 4,242 3,444 1,930 3,322 Refinancing costs - - - - - - 3,284 General and administrative 4,880 2,975 15,064 9,857 8,129 6,053 3,159 -------- -------- -------- -------- -------- -------- -------- Total expenses 226,935 108,631 571,307 381,352 330,646 185,046 103,933 -------- -------- -------- -------- -------- -------- -------- Income (loss) before extraordinary items 59,406 32,756 176,014 97,033 59,738 45,988 8,137 ======== ======== ======== ======== ======== ======== ======== Combined Fixed Charges and Preferred Distributions: Interest and other financing costs 50,254 23,293 121,324 81,351 78,375 37,044 26,042 Refinancing costs - - - - - - 3,284 Amortization of deferred financing costs 624 603 2,523 4,242 3,444 1,930 3,322 Preferred distributions 21,692 9,061 59,012 29,015 10,109 - - -------- -------- -------- -------- -------- -------- -------- Total Combined Fixed Charges and Preferred Distributions 72,570 32,957 182,859 114,608 91,928 38,974 32,648 ======== ======== ======== ======== ======== ======== ======== Earnings before combined fixed charges and preferred distributions 110,284 56,652 299,861 182,626 141,557 84,962 40,785 ======== ======== ======== ======== ======== ======== ======== Funds from operations before combined fixed charges and preferred distributions 174,674 85,529 456,505 275,879 213,967 122,235 56,169 ======== ======== ======== ======== ======== ======== ======== Ratio of earnings before combined fixed charges and preferred distributions to combined fixed charges and preferred distributions 1.52 1.72 1.64 1.59 1.54 2.18 1.25 ======== ======== ======== ======== ======== ======== ======== Ratio of funds from operations before combined fixed charges and preferred distributions to combined fixed charges and preferred distributions 2.41 2.60 2.50 2.41 2.33 3.14 1.72 ======== ======== ======== ======== ======== ======== ========
EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED BALANCE SHEET AND STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 77,575 0 3,798 0 0 259,630 7,362,929 (508,394) 7,329,342 262,444 2,786,096 0 1,041,700 0 0 7,329,342 283,517 286,341 0 106,787 4,880 0 50,878 59,406 0 59,406 1,869 0 0 39,583 .38 .38
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