10-Q 1 amli_302.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended March 31, 2002 Commission File Number 1-12784 AMLI RESIDENTIAL PROPERTIES TRUST (Exact name of registrant as specified in its charter) Maryland 36-3925916 (State of Organization) (I.R.S. Employer Identification No.) 125 South Wacker Drive, Suite 3100, Chicago, Illinois 60606 (Address of principal executive office) (Zip code) Registrant's telephone number, including area code: (312) 443-1477 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 and (2) has been subject to such filing requirements for the past 90 days. Yes ( X ) No ( ) The number of the Registrant's Common Shares of Beneficial Interest outstanding was 18,110,659 as of April 30, 2002. INDEX PART I FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Consolidated Balance Sheets as of March 31, 2002 and December 31, 2001 . . . . . . . 3 Consolidated Statements of Operations for the three months ended March 31, 2002 and 2001 . . . . 5 Consolidated Statements of Shareholders' Equity for the three months ended March 31, 2002. . . . . 6 Consolidated Statements of Cash Flows for the three months ended March 31, 2002 and 2001 . . . . 7 Notes to Consolidated Financial Statements . . . . . 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . 32 Item 3. Quantitative and Qualitative Disclosures About Market Risk. . . . . . . . . . . . . . . . . 43 PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . 49 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . 50 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED BALANCE SHEETS MARCH 31, 2002 AND DECEMBER 31, 2001 (Dollars in thousands, except share data) MARCH 31, DECEMBER 31, 2002 2001 (UNAUDITED) (AUDITED) ----------- ------------ ASSETS: Rental apartments: Land . . . . . . . . . . . . . . . . $ 99,784 99,784 Depreciable property . . . . . . . . 646,122 644,627 -------- ---------- 745,906 744,411 Less accumulated depreciation. . . . (112,501) (107,139) -------- ---------- 633,405 637,272 Rental community under development. . . . . . . . . . . . . 13,254 10,392 Land held for development or sale, net of provision for loss of $1,389 and $2,086, respectively. . . 43,160 47,611 Investments in partnerships. . . . . . 187,327 184,270 Cash and cash equivalents. . . . . . . 2,417 5,892 Deferred expenses, net . . . . . . . . 4,025 3,836 Investment in and receivables from the Service Companies. . . . . . . . 19,048 15,161 Other assets . . . . . . . . . . . . . 12,708 14,568 -------- -------- Total assets $915,344 919,002 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY: LIABILITIES: Debt (note 5). . . . . . . . . . . . . $405,126 399,309 Accrued interest payable . . . . . . . 1,822 1,838 Accrued real estate taxes payable. . . 6,257 12,270 Construction costs payable . . . . . . 3,164 4,079 Security deposits and prepaid rents. . 2,713 2,656 Other liabilities. . . . . . . . . . . 7,978 7,100 -------- -------- Total liabilities. . . . . . 427,060 427,252 -------- -------- AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED BALANCE SHEETS - CONTINUED MARCH 31, DECEMBER 31, 2002 2001 (UNAUDITED) (AUDITED) ----------- ------------ Commitments and contingencies (note 6) Mandatorily redeemable convertible preferred shares . . . . . . . . . . 93,287 93,287 Minority interest. . . . . . . . . . . 67,339 68,186 -------- -------- SHAREHOLDERS' EQUITY (note 2): Series A Cumulative Convertible Preferred shares of beneficial interest, $0.01 par value, 1,500,000 authorized, 1,200,000 issued and 100,000 and 350,000 outstanding, respectively (aggregate liquidation preference of $2,021 and $7,075, respectively) . . . . . . 1 4 Shares of beneficial interest, $0.01 par value, 145,375,000 authorized, 18,110,659 and 17,840,368 common shares issued and outstanding, respectively . . . . 181 178 Additional paid-in capital . . . . . . 356,205 355,728 Employees' and Trustees' notes . . . . (10,821) (10,857) Accumulated other comprehensive loss . . . . . . . . . . . . . . . . (3,559) (4,294) Dividends paid in excess of earnings . . . . . . . . . . . . . . (14,349) (10,482) -------- -------- Total shareholders' equity . . . . . . . . . . . 327,658 330,277 -------- -------- Total liabilities and shareholders' equity . . . . $915,344 919,002 ======== ======== See accompanying notes to consolidated financial statements. AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED STATEMENTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2002 AND 2001 (UNAUDITED) (Dollars in thousands, except share data) 2002 2001 -------- -------- Revenues: Property: Rental . . . . . . . . . . . . . . . . . . $ 26,981 26,765 Other. . . . . . . . . . . . . . . . . . . 1,664 1,570 Interest and share of loss from the Service Companies . . . . . . . . (230) (403) Other interest . . . . . . . . . . . . . . . 233 477 Income from partnerships . . . . . . . . . . 2,029 2,295 Other. . . . . . . . . . . . . . . . . . . . 718 624 -------- -------- Total revenues . . . . . . . . . . . 31,395 31,328 -------- -------- Expenses: Personnel. . . . . . . . . . . . . . . . . . 2,841 2,837 Advertising and promotion. . . . . . . . . . 592 532 Utilities. . . . . . . . . . . . . . . . . . 718 888 Building repairs and maintenance and services . . . . . . . . . . . . . . . 926 1,178 Landscaping and grounds maintenance. . . . . 498 500 Real estate taxes. . . . . . . . . . . . . . 3,762 3,540 Insurance. . . . . . . . . . . . . . . . . . 501 307 Property management fees . . . . . . . . . . 859 708 Other operating expenses . . . . . . . . . . 252 326 Interest . . . . . . . . . . . . . . . . . . 5,800 6,427 Amortization of deferred costs . . . . . . . 146 136 Depreciation . . . . . . . . . . . . . . . . 5,362 5,086 General and administrative . . . . . . . . . 1,540 1,518 -------- -------- Total expenses . . . . . . . . . . . 23,797 23,983 -------- -------- Income before minority interest. . . . . . . . 7,598 7,345 Minority interest. . . . . . . . . . . . . . . 938 940 -------- -------- Net income . . . . . . . . . . . . . 6,660 6,405 Less income attributable to preferred shares . . . . . . . . . . . . . . 2,082 1,633 -------- -------- Net income attributable to common shares . . . . . . . . . $ 4,578 4,772 ======== ======== Net income per common share - basic . . . . . $ 0.26 0.27 ======== ======== Net income per common share - diluted. . . . . $ 0.26 0.27 ======== ======== Dividends declared and paid per common share . . . . . . . . . . . . . . $ 0.48 0.47 ======== ======== See accompanying notes to consolidated financial statements. AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY THREE MONTHS ENDED MARCH 31, 2002 (Dollars in thousands)
SHARES OF BENEFICIAL INTEREST EMPLOYEES' ACCUMULATED ------------------------------ ADDITIONAL AND OTHER DIVIDENDS PREFERRED COMMON PAID-IN TRUSTEES' COMPREHEN- IN EXCESS SHARES SHARES AMOUNT CAPITAL NOTES SIVE LOSS OF EARNINGS TOTAL --------- ---------- ------ --------- ---------- ---------- ----------- ------- Balance at December 31, 2001. . . . . 350,000 17,840,368 $182 355,728 (10,857) (4,294) (10,482) 330,277 Comprehensive income: Net income . . . . . . . . -- -- -- -- -- -- 6,660 6,660 Preferred share dividends paid. . . . . . -- -- -- -- -- -- (1,961) (1,961) Net gain on derivative contracts . . . . . . . . -- -- -- -- -- 735 -- 735 ------- Comprehensive income attributable common shares. . . . . . . . . . . 5,434 ------- Common share distributions. . . . . . . -- -- -- -- -- -- (8,566) (8,566) Shares issued in connection with: Executive Share Purchase Plan . . . . . . -- 10,291 -- 248 -- -- -- 248 Options exercised. . . . . -- 10,000 -- 204 -- -- -- 204 Employees' and Trustees' notes, net of repayments . . . . -- -- -- -- 36 -- -- 36 Preferred shares con- verted to common shares . . (250,000) 250,000 -- -- -- -- -- -- Reallocation of minority interest . . . . . -- -- -- 25 -- -- -- 25 -------- ---------- ---- ------- ------- ------- ------- ------- Balance at March 31, 2002 . . . . . . 100,000 18,110,659 $182 356,205 (10,821) (3,559) (14,349) 327,658 ======== ========== ==== ======= ======= ======= ======= ======= See accompanying notes to consolidated financial statements.
AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 2002 AND 2001 (UNAUDITED) (Dollars in thousands) 2002 2001 -------- -------- Cash flows from operating activities: Net income . . . . . . . . . . . . . . . . . $ 6,660 6,405 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization. . . . . . . 5,508 5,222 Cash distributions from partnerships in excess of share of income . . . . . . 2,538 2,067 Loss from the Service Companies. . . . . . 495 583 Minority interest. . . . . . . . . . . . . 938 940 Changes in assets and liabilities: Increase in deferred costs . . . . . . . . (346) (51) Decrease in other assets . . . . . . . . . 322 1,181 Decrease in accrued real estate taxes. . . (5,680) (4,920) Decrease in accrued interest payable . . . (16) (282) Increase in tenant security deposits and prepaid rents. . . . . . . . . . . . 57 507 Increase in other liabilities. . . . . . . 572 61 -------- ------- Net cash provided by operating activities . . . . . . . . 11,048 11,713 -------- ------- Cash flows from investing activities: Investments in partnerships, net of Operating Partnership units issued in 2001. . . . . . . . . . . . . . . . . (5,173) (9,150) Repayments from affiliates . . . . . . . . . 2,692 3,226 (Increase) decrease in earnest money deposits . . . . . . . . . . . . . . . . . (460) 520 Acquisition properties, net of Operating Partnership units issued and net of $14,444 cash in deferred exchange escrow . . . . . . . . . . . . . . . . . . -- (16,975) Capital expenditures - rehab properties and other additions. . . . . . . . . . . . (490) (406) Capital expenditures - other properties. . . (1,005) (999) Properties under development, net of co-investors' share of costs . . . . . . . (4,096) (2,104) Decrease in construction costs payable . . . (915) (151) -------- ------- Net cash used in investing activities . . . . . . . . (9,447) (26,039) -------- ------- AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED 2002 2001 -------- -------- Cash flows from financing activities: Debt proceeds, net of financing costs. . . . 24,000 49,858 Debt repayments. . . . . . . . . . . . . . . (18,183) (23,597) Cash distribution from refinancing of a partnership's debt . . . . . . . . . . . . 905 -- Proceeds from issuance of Executive Share Purchase Plan shares and Option Plan shares, net of Employees' and Trustees' notes. . . . . . . . . . . . . . 488 113 Repurchase of shares of beneficial interest - common shares . . . . . . . . . -- (3,312) Distributions to partners. . . . . . . . . . (1,759) (1,717) Dividends paid . . . . . . . . . . . . . . . (10,527) (10,022) -------- ------- Net cash (used in) provided by financing activities . . . . . . . . (5,076) 11,323 -------- ------- Net change in cash and cash equivalents. . . . (3,475) (3,003) Cash and cash equivalents at beginning of period . . . . . . . . . . . 5,892 5,106 -------- ------- Cash and cash equivalents at end of period . . . . . . . . . . . . . . $ 2,417 2,103 ======== ======= Supplemental disclosure of cash flow information: Cash paid for mortgage and other interest, net of amounts capitalized . . . $ 5,816 6,709 ======== ======== Supplemental disclosure of non-cash investing and financing activities: OP units issued for the acquisition of properties. . . . . . . . . . . . . . . $ -- 2,764 OP units issued for the acquisition of a property in a co-investment partnership . . . . . . . . . . . . . . -- 7,576 ======== ======== See accompanying notes to consolidated financial statements. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2002 AND 2001 (Unaudited) (Dollars in thousands, except share data) 1. ORGANIZATION AND BASIS OF PRESENTATION Organization AMLI Residential Properties Trust (the "Company" or "AMLI") commenced operations upon the completion of its initial public offering on February 15, 1994. In the opinion of management, all adjustments, which include only normal recurring adjustments necessary to present fairly the financial position at March 31, 2002 and December 31, 2001 and the results of operations and cash flows for the periods presented, have been made. Certain information and note disclosures normally included in the Company's annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2001 Annual Report and in Form 10-K filed with the Securities and Exchange Commission. The results for the three months ended March 31, 2002 are not necessarily indicative of expected results for the entire year. The consolidated financial statements include the accounts of the Company and AMLI Residential Properties, L. P. (the "Operating Partnership" which holds the operating assets of the Company). The Company is the sole general partner and owned an 86% majority interest in the Operating Partnership at March 31, 2002. The limited partners hold Operating Partnership units ("OP Units") which are convertible into shares of the Company on a one-for-one basis, subject to certain limitations. At March 31, 2002, there are 3,664,396 OP Units held by the limited partners. The Company owns 5% of the voting control and 95% of economic benefit of unconsolidated subsidiaries which provide property management, construction, and institutional advisory services for the Company and its co-investment partnerships. These Service Company subsidiaries elected taxable REIT subsidiary status for IRS reporting purposes as of January 1, 2001. This election has not affected the ownership structure of the Service Company subsidiaries and, accordingly, the Company's use of the equity method to account for these subsidiaries continues to be applied consistently with prior years. The Company's management has made a number of estimates and assumptions relating to the reporting of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during the report periods to prepare these financial statements in conformity with accounting principles generally accepted in the United States of America. Actual amounts realized or paid could differ from these estimates. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Real Estate Assets At March 31, 2002, the Company was continuing the rehab of the second phase of AMLI at Valley Ranch. Starting in 1999 and through March 31, 2002, the Company has spent $2,542 on the rehab of this property and expects to spend an additional $620 in 2002 to complete the rehab. Rental Communities Under Development At March 31, 2002, the Company has eight communities under development including seven in joint ventures with co-investment partners as follows: AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
TOTAL NUMBER NUMBER TOTAL ESTIMATED OF OF EXPENDED COSTS UPON COMMUNITY LOCATION ACRES UNITS THRU 3/31/02 COMPLETION --------- -------- ------ ------ ------------ ---------- Wholly-Owned: Development Communities: AMLI: at Carmel Center Carmel, IN 15 322 $ 13,254 28,400 --- ----- -------- -------- Co-Investments (Company Ownership Percentage): Development Communities: AMLI: at Mill Creek (25%) Gwinnett County, GA 33 400 25,775 25,800 at Milton Park (25%) Alpharetta, GA 21 461 19,553 35,000 at Kedron Village (20%) Peachtree City, GA 21 216 18,336 20,200 at Barrett Walk (25%) Cobb County, GA 26 310 5,629 22,500 at King's Harbor (25%) Houston, TX 15 300 19,570 19,800 at Cambridge Square (30%) Overland Park, KS 21 408 30,902 32,200 at Seven Bridges (20%) Woodridge, IL 13 520 24,554 82,200 --- ----- -------- -------- Total co-investment development communities 150 2,615 144,319 237,700 --- ----- -------- -------- Total wholly-owned and co-investments 165 2,937 $157,573 266,100 === ===== ======== ========
AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED Land Held for Development or Sale At March 31, 2002, the Company owns several parcels of land, which are currently being planned for development, being held for future development or being considered for sale.
NUMBER NUMBER TOTAL OF OF EXPENDED COMMUNITY LOCATION ACRES UNITS THRU 3/31/02 --------- -------- ------ ------ ------------ Wholly-Owned: Land Held for Development or Sale: AMLI: at Champions II (1)(2) Houston, TX 14 288 $ 2,610 at Mesa Ridge (1)(2) Ft. Worth, TX 27 460 4,158 at Prairie Lakes I Noblesville, IN 17 228 1,183 at Prairie Lakes II-IV Noblesville, IN 103 1,100 6,417 at Anderson Mill (1)(2) Austin, TX 39 520 4,154 at Downtown Austin Austin, TX 2 220 11,594 at Parmer Park Austin, TX 28 480 5,470 at Vista Ridge (1)(2) City of Lewisville, TX 15 340 3,172 at Westwood Ridge Overland Park, KS 30 428 3,581 at Lexington Farms II Overland Park, KS 7 104 821 --- ----- -------- Total land held for development 282 4,168 $ 43,160 === ===== ======== (1) The Company has expensed interest carry of $275 on these land parcels for the three months ended March 31, 2002. (2) Amounts are shown net of an allowance for loss totaling $1,389 on these land parcels in Texas. An additional provision of $697 had been made in December 2001 to state the value of two parcels of land in Dallas, Texas at the lower costs or market, and as of January 2002 these parcels were sold to Amrescon for their estimated $5,076 market value and carrying value. The Company financed 100% of the selling price. Amrescon intends to develop and sell this land over the next 2-3 years and use the proceeds from sale to repay the financing provided by the Company.
AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED Acquisition The Company acquired no properties during the three months ended March 31, 2002. The table below summarizes the properties acquired by the Company during 2001:
Number Year of Com- Date Purchase Total Community Location Units pleted Acquired Price Debt Equity --------- -------- -------- -------- -------- -------- ------ -------- WHOLLY-OWNED: AMLI: at Gateway Park (1) . . . . . . Denver, CO 328 2000 1/29/01 33,050 -- 33,050 at Stonebridge Ranch (1) . . . McKinney, TX 250 2001 6/11/01 17,110 -- 17,110 at the Medical Center (1). . . Houston, TX 334 2000 8/7/01 27,150 -- 27,150 at Shadow Ridge (1) . . . . . . Flower Mound, TX 222 2000 8/31/01 18,000 -- 18,000 ------ -------- ------ ------- Total wholly-owned 1,134 95,310 -- 95,310 ------ -------- ------ ------- CO-INVESTMENTS (Company ownership percentage): AMLI at Osprey Lake (69%) (2). . Gurnee, IL 483 1997/99 2/1/01 52,000 35,320 16,680 ------ -------- ------- ------- Total wholly-owned and co-investments 1,617 $147,310 35,320 111,990 ====== ======== ======= ======= (1) These acquisitions completed deferred third party exchanges for Federal income tax purposes. The Company issued 86,494 and 109,748 OP Units as part of the total payment for the acquisition of AMLI at Gateway Park and AMLI at the Medical Center, respectively. (2) The Company issued 333,610 OP Units for a 43% interest in this property which was contributed to a joint venture with a private real estate investment trust in which AMLI owned a 44% interest.
AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED DISPOSITION The Company selectively sells properties and reinvests the proceeds in new communities to continually improve the quality of its portfolio and increase the potential for growth in net operating income. The gains on sales of residential communities are reported separately in the Consolidated Statements of Operations and neither the properties' selling prices nor related gains are included in revenues in the Consolidated Statements of Operations. Incentive compensation received from co- investment partnerships in the form of a promoted interest that is paid to the Company from sales proceeds is included in other revenues in the Consolidated Statements of Operations. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED The Company sold no properties during the three months ended March 31, 2002 and 2001. The table below summarizes the properties sold by the Company during 2001:
Net Operating Income in Twelve Months Costs Immediately Year Before Prior to Number Acquired/ Date Depre- Sale Net Date of Community Location of Units Developed Sold ciation Price Proceeds Gain (3) Sale --------- -------- -------- --------- -------- -------- -------- -------- -------- ----------- WHOLLY-OWNED: AMLI at: AutumnChase (1) Carrollton, TX 690 87/96/99 6/5/01 29,850 40,550 39,144 9,249 3,608 Alvamar Lawrence, KS 152 1994 7/27/01 8,263 8,900 8,794 2,036 740 Rosemeade (2) Dallas, TX 236 1990 8/24/01 11,653 12,430 11,861 2,408 1,045 ----- ------- ------- ------- ------- ------- Total wholly-owned 1,078 49,766 61,880 59,799 13,693 5,393 ----- ------- ------- ------- ------- ------- CO-INVESTMENTS (Company owner- ship percentage): AMLI at Willowbrook (40%) Willowbrook, IL 488 1996 7/31/01 39,402 58,500 57,611 22,245 4,209 ----- -------- ------- ------- ------- ------- Total wholly-owned and co-investments 1,566 $ 89,168 120,380 117,410 35,938 9,602 ===== ======== ======= ======= ======= ======= (1) The net proceeds from the sale of Phase I of this community were used to acquire AMLI at Stonebridge Ranch in a deferred third-party exchange for Federal income tax purposes. The remaining proceeds were used for the acquisition of AMLI at the Medical Center to complete the deferred third party exchange for Federal income tax purposes. (2) The net proceeds from this sale were used to fund the acquisition of AMLI at Shadow Ridge in completion of a deferred third-party exchange for Federal income tax purposes. (3) Gains on sales of co-investment properties are shown net of disposition fees and promoted interests paid to the Company by the co-investment partnerships.
AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED STANDARDS IMPLEMENTED AND TRANSITION ADJUSTMENT On January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"). Adoption of SFAS 144 is required for fiscal years beginning after December 15, 2001, and interim periods within those years. SFAS 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets. This statement supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets To Be Disposed of," ("SFAS 121") and related literature and establishes a single accounting model, based on the framework established in SFAS 121, for long-lived assets to be disposed of by sale. The Company's adoption of SFAS 144 had no impact on its consolidated financial statements. On January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 142 "Accounting for Goodwill and Other Intangible Assets" ("SFAS 142"), which requires, among other things, that effective January 1, 2002 goodwill resulting from a business combination accounted for as a purchase no longer be amortized, but be subjected to ongoing impairment review. The only goodwill included in the accounts of the Company and its unconsolidated subsidiaries is $3,300 recorded on the books of an unconsolidated subsidiary. This amount was being amortized using the straight-line method over the five year period, and at December 31, 2001, the remaining unamortized goodwill was $668. As a result of implementing SFAS 142, whereby no amortization will be recorded in 2002, the Company's share of income, net of tax effect, from the unconsolidated subsidiary is increased by approximately $100 for the three months ended March 31, 2002. Pro-forma share of income, net of tax, from this unconsolidated subsidiary will be increased by approximately $400 for the year ended December 31, 2002. DERIVATIVES AND HEDGING FINANCIAL INSTRUMENTS In the normal course of business, the Company uses a variety of derivative financial instruments to manage or hedge interest rate risks. The Company requires that hedging derivative instruments are effective in reducing the interest rate risk exposure that they are designated to hedge. This effectiveness is essential for qualifying for hedge accounting. Some derivative instruments are associated with the hedge of an anticipated transaction. In those cases, hedge effectiveness criteria also require that it be probable that the underlying transaction occurs. Instruments that meet these hedging criteria are formally designated as hedges at the inception of the derivative contract. When the terms of an underlying transaction are modified, or when the underlying hedged item ceases to exist, all changes in the fair value of the instrument are marked-to-market with changes in value included in net income each period until the instrument matures. Any derivative instrument used for risk management that does not meet the hedging criteria is marked-to-market each period. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED The Company is exposed to the effect of interest rate changes. The Company limits these risks by following established risk management policies and procedures including the use of derivatives. For interest rate exposures, derivatives are used primarily to align rate movements between interest rates associated with the Company's rental income and other financial assets with interest rates on related debt, and manage the cost of borrowing obligations. The Company does not enter into derivative contracts for trading or speculative purposes. Further, the Company has a policy of only entering into contracts with major financial institutions based upon their credit rating and other factors. When viewed in conjunction with the underlying and offsetting exposure that the derivatives are designed to hedge, the Company has not sustained a material loss from those instruments nor does it anticipate any material adverse effect on its net income or financial position in the future from the use of derivatives. To manage interest rate risk, the Company may employ options, forwards, interest rate swaps, caps and floors or a combination thereof depending on the underlying exposure. The Company undertakes a variety of borrowings: from lines of credit, to medium- and long-term financings. To reduce overall interest cost, the Company uses interest rate instruments, typically interest rate swaps, to convert a portion of its variable rate debt to fixed rate debt, or even a portion of its fixed-rate debt to variable rate. Interest rate differentials that arise under these swap contracts are recognized in interest expense over the life of the contracts. The resulting cost of funds is usually lower than that which would have been available if debt with matching characteristics was issued directly. The Company also employs forwards or purchase options to hedge qualifying anticipated transactions. Gains and losses are deferred and recognized in net income in the same period that the underlying transaction occurs, expires or is otherwise terminated. To determine the fair values of derivative instruments, the Company uses a variety of methods and assumptions that are based on market conditions and risks existing at each balance sheet date. For the majority of financial instruments including most derivatives, long-term investments and long-term debt, standard market conventions and techniques such as discounted cash flow analysis, option pricing models, replacement cost, and termination costs are used to determine fair value. All methods of assessing fair value result in a general approximation of value, and such value may or may not actually be realized. The following table summarizes the notional amounts and approximate fair value of the Company's interest rate swap contracts. The notional amounts at March 31, 2002 provide an indication of the extent of the Company's involvement in these instruments at that time, but does not represent exposure to credit, interest rate or market risks. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Approximate Cumulative Liability at Notional Fixed Term of Contract Cash March 31, Amount Rate(1) Contract Maturity Paid, Net 2002 (2) -------- ------- -------- --------- ---------- ------------- $10,000(3) 6.216% 5 years 11/01/02 $ 436 262 10,000(3) 6.029% 5 years 11/01/02 357 250 20,000 6.145% 5 years 02/15/03 826 632 10,000 6.070% 5 years 02/18/03 382 322 15,000 6.405% 5 years 09/20/04 533 788 10,000 6.438% 5 years 10/04/04 335 556 ------- ------ ----- $75,000 $2,869 2,810 ======= ====== ===== (1) The fixed rate for the swaps includes the swap spread (the risk component added to the Treasury yield to determine a fixed rate) and excludes lender's spread. (2) Represents the approximate amount which the Company would have paid as of March 31, 2002 if these contracts were terminated. This amount was recorded as a liability in the accompanying Consolidated Balance Sheet as of March 31, 2002. (3) These contracts were marked-to-market in 2002 and 2001.
AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED As a result of a reduced level of borrowings under the Company's unsecured line of credit following a $140,000 fixed rate financing and a sale of a co-investment property, $20,000 of the total $75,000 in interest rate swap contracts held by the Company no longer hedge any exposure to floating rate debt. On March 31, 2002, the derivative instruments were reported at their fair value as Other Liabilities of $2,810 which decreased by $914 from $3,724 as of December 31, 2001. The offsetting adjustments were reported as losses in Accumulated Other Comprehensive Loss of $3,559, which decreased by $735 from $4,294 as of December 31, 2001. The adjustments to the shareholders' equity include $1,369 and $1,413 of the Company's share of Other Comprehensive Loss of a co-investment partnership as of March 31, 2002 and December 31, 2001, respectively. In addition, adjustments to earnings of $19 and $17 due to a small ineffectiveness on the swaps have been recorded as of March 31, 2002 and 2001, respectively. All the Company's hedges that are reported at fair value and are represented on the Consolidated Balance Sheets are characterized as cash flow hedges. These transactions hedge the future cash flows of debt transactions. Interest rate swaps that convert variable payments to fixed payments, interest rate caps, floors, collars, and forwards are cash flow hedges. The unrealized gains/losses in the fair value of these hedges are reported on the Consolidated Balance Sheets with a corresponding adjustment to either Accumulated Other Comprehensive Income or in earnings--depending on the type of hedging relationship. If the hedging transaction is a cash flow hedge, then the offsetting gains and losses are reported in Accumulated Other Comprehensive Income. If the hedging transaction is characterized as a fair value hedge, then the changes in fair value of the hedge and the hedged item are reflected in earnings. If the fair value hedging relationships is fully effective, there is no net effect reflected in income or funds from operations ("FFO"). Over time, the unrealized gains and losses held in Accumulated Other Comprehensive Income will be reclassified to earnings. This reclassification is consistent with when the hedged items are also recognized in earnings. The Company hedges its exposure to the variability in future cash flows for forecasted transactions over a maximum period of 12 months. During the forecasted period, unrealized gains and losses in the hedging instrument will be reported in Accumulated Other Comprehensive Income. Once the hedged transaction takes place, the hedge gains and losses will be reported in earnings during the same period in which the hedged item is recognized in earnings. TRANSACTIONS WITH CO-INVESTMENT PARTNERSHIPS The Company's co-investment partnerships are generally formed by the Company contributing its interest in property and receiving credit or reimbursement based on its cost, in which case no gain or loss is recognized upon partnership formation. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED PER SHARE DATA The following table presents information necessary to calculate basic and diluted earnings per share for the periods indicated (in thousands, except per share amounts). 2002 2001 ---------- ---------- Net income. . . . . . . . . . . . . . . . $ 6,660 6,405 Less income attributable to preferred shares. . . . . . . . . . . (2,082) (1,633) ---------- ---------- Net income attributable to common shares - basic . . . . . . . . . $ 4,578 4,772 ========== ========== Net income attributable to common shares - diluted . . . . . . . . $ 6,660 6,405 ========== ========== Weighted average common shares - basic . . . . . . . . . . . . . . . . 17,886,763 17,825,987 Dilutive options and other plan shares. . . . . . . . . . . . . . . . . 299,739 111,775 Convertible preferred shares. . . . . . . 4,156,832 3,475,000 ---------- ---------- Weighted average common shares - Diluted . . . . . . . . . . . . . . . 22,343,334 21,412,762 ========== ========== Net income per common share: Basic . . . . . . . . . . . . . . . . $ 0.26 0.27 Diluted . . . . . . . . . . . . . . . $ 0.26 0.27 ========== ========== RECLASSIFICATIONS Certain amounts in the consolidated 2001 financial statements of the Company have been reclassified to conform with the current presentation. 3. INVESTMENTS IN PARTNERSHIPS AND SERVICE COMPANIES INVESTMENTS IN PARTNERSHIPS At March 31, 2002, the Operating Partnership was a general partner in various co-investment partnerships. The Operating Partnership and the Service Companies receive various fees for services provided to these co- investment partnerships, including development fees, construction fees, acquisition fees, property management fees, asset management fees, financing fees, administrative fees and disposition fees. The Operating Partnership is entitled to shares of cash flow or liquidation proceeds in excess of its stated ownership percentages based, in part, on cumulative returns to its partners in excess of specified rates. The Operating Partnership received cash flow and recorded operating income in excess of its ownership percentages of $622 for the three months ended March 31, 2002. Investments in partnerships at March 31, 2002 and the Company's 2002 share of income or loss for the three months then ended from each are summarized as follows: AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Equity Total Company's Company's Company's ------------------ Company's Net Share of Share of Percentage Total Company's Investment Income Net Income Deprecia- Community Ownership Assets Total Share (1) (1) (Loss) (Loss) tion --------- ---------- ---------- ------ --------- ---------- ------ ---------- --------- AMLI: at Greenwood Forest (2) 15% $ 15,284 3,852 578 561 25 4 16 at Champions Park 15% 11,150 11,005 1,651 1,651 200 30 13 at Champions Centre 15% 8,370 8,229 1,234 1,234 160 24 10 at Windbrooke (3) 15% 16,101 (5,403) (810) -- 60 18 17 at Willeo Creek 30% 13,310 4,007 1,202 1,202 71 21 30 at Barrett Lakes 35% 23,392 7,096 2,484 2,585 220 88 76 at Chevy Chase 33% 40,960 12,240 4,024 4,024 382 102 100 at River Park 40% 12,901 4,108 1,630 1,591 149 79 41 at Fox Valley 25% 22,273 21,495 5,374 5,550 290 73 46 at Fossil Creek 25% 19,046 18,751 4,688 4,774 301 75 48 at Danada Farms 10% 43,717 18,244 1,824 1,816 441 44 34 at Verandah 35% 20,862 4,190 1,560 1,615 11 17 91 at Northwinds 35% 49,580 15,314 5,360 5,207 393 182 154 at Regents Crest 25% 30,990 15,371 3,843 3,937 117 72 61 at Oakhurst North 25% 40,211 38,897 9,724 9,663 288 72 121 at Wells Branch 25% 31,037 30,527 7,632 7,048 447 112 72 on the Parkway 25% 14,129 3,701 922 636 9 2 37 on Timberglen (1) 40% 9,727 3,164 1,296 -- 13 38 51 at Castle Creek 40% 19,599 19,046 7,618 7,772 288 131 66 at Lake Clearwater 25% 15,685 15,216 3,804 3,855 144 36 34 Creekside 25% 15,321 15,080 3,770 3,891 207 65 32 at Deerfield 25% 16,253 3,708 924 775 (25) (6) 38 at Wynnewood Farms 25% 17,812 17,527 4,382 4,421 243 61 37 at Monterey Oaks 25% 28,544 28,240 7,060 7,143 461 115 59 at St. Charles 25% 41,662 40,652 10,163 10,196 445 111 82 at Park Bridge 25% 23,999 23,791 5,948 6,002 395 99 45 at Mill Creek 25% 25,540 25,253 6,313 6,573 344 86 48 at Lost Mountain 75% 11,179 590 443 554 (52) 21 56 on Spring Mill 20% (Residual) 28,327 27,462 -- 1,229 265 -- -- at Prestonwood Hills 45% 17,173 5,586 2,530 2,525 43 31 57 at Windward Park 45% 26,590 8,580 3,902 3,894 (128) (46) 87 AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED Equity Total Company's Company's Company's ------------------ Company's Net Share of Share of Percentage Total Company's Investment Income Net Income Deprecia- Community Ownership Assets Total Share (1) (1) (Loss) (Loss) tion --------- ---------- ---------- ------ --------- ---------- ------ ---------- --------- at Summit Ridge 25% 28,027 7,813 1,953 1,686 59 15 58 at Oak Bend 40% 24,310 5,374 2,150 2,150 16 31 71 Midtown 45% 32,594 10,605 4,809 4,791 145 90 103 on Frankford 45% 38,564 12,685 5,753 5,737 143 95 125 at Peachtree City I 20% 28,449 28,243 5,649 3,625 311 62 37 at Kedron Village 20% 18,447 751 150 127 (160) (32) 18 at Scofield Ridge 45% 36,952 12,183 5,525 5,506 (35) 9 115 at Breckinridge Point 45% 33,192 10,938 4,959 4,942 9 25 103 at Cambridge Square 30% 31,046 26,776 8,033 8,563 (28) (18) 23 Towne Square 45% 32,447 10,779 4,887 4,833 26 32 100 at Lowry Estates 50% 50,909 16,856 8,428 8,278 (18) 18 170 at King's Harbor 25% 19,385 18,955 4,739 5,023 (54) (13) 43 at Milton Park 25% 19,621 17,701 4,425 4,317 (33) (8) -- at Osprey Lake 69% 52,464 15,918 10,940 10,752 (133) (74) 243 at Seven Bridges 20% 25,826 16,364 3,220 4,021 -- -- -- at Barrett Walk 25% 5,732 4,836 1,209 1,253 -- -- -- ---------- ------- ------- ------- ------- ------ ------ 1,188,689 662,296 187,902 187,528 6,455 1,989 2,868 Other -- -- -- (201) -- 40 -- ---------- ------- ------- ------- ------- ------ ------ Total $1,188,689 662,296 187,902 187,327 6,455 2,029 2,868 ========== ======= ======= ======= ======= ====== ====== (1) The Company's investments in partnerships differ from the Company's share of co-investment partnerships' equity primarily due to capitalized interest on its investments in properties under development, purchase price basis differences and the elimination of the Company's share of acquisition, financing and development fee income. These items are amortized over forty years using the straight-line method. The purchase price basis difference of AMLI on Timberglen resulted in a negative investment balance which is included in other liabilities in the accompanying Consolidated Balance Sheet as of March 31, 2002. (2) In April 2002, the Company made a preferred $11,200 capital contribution to AMLI at Greenwood Forest Limited Partnership to enable it to repay the existing 8.95% first mortgage loan. The Company will receive a 6.75% preferential allocation of cash flow on its preferred capital until this partnership's property is sold or refinanced. (3) On February 4, 2002, the balance of the AMLI at Windbrooke loan was refinanced with a new loan from GMAC Commercial Mortgage Corporation. The net proceeds were distributed to the partners, including $1,545 to the Company. With this distribution, the partners have received a return of all their original capital plus a targeted yield, which resulted in a negative investment balance that is included in other liabilities in the accompanying Consolidated Balance Sheet as of March 31, 2002.
AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED All but two debt financings have been obtained at fixed rates from various insurance companies on behalf of these co-investment partnerships. All of these first mortgages are non-recourse debt and secured by mortgages on the respective communities. The following summarizes co-investment debt at March 31, 2002: Outstand- Total ing at Company's Interest Community Commitment 3/31/02 Share Rate Maturity --------- ---------- --------- --------- -------- --------- AMLI: at Greenwood Forest $ 11,625 11,156 1,673 8.95% May 2002 at Kedron Village 19,170 16,160 3,232 L+1.875% June 2002 at Chevy Chase 29,767 27,073 8,934 6.67% Apr. 2003 at Willeo Creek 10,000 9,125 2,737 6.77% May 2003 at Regents Crest 16,500 15,081 3,770 7.50% Dec. 2003 at Verandah 16,940 16,193 5,667 7.55% Apr. 2004 on Timberglen 6,770 6,382 2,553 7.70% June 2004 at Seven Bridges 50,000 5,420 1,084 L+1.80% Jan. 2005 at Prestonwood Hills 11,649 11,343 5,137 7.17% Aug. 2006 at Windward Park 18,183 17,714 8,030 7.27% Aug. 2006 at Oak Bend 18,834 18,448 7,379 7.81% Dec. 2006 Midtown 21,945 21,480 9,740 7.52% Dec. 2006 at Deerfield 12,600 12,335 3,084 7.56% Dec. 2006 at Danada Farms 24,500 23,745 2,375 7.33% Mar. 2007 on Frankford 25,710 25,356 11,500 8.25% June 2007 at Breckinridge Point 22,110 21,794 9,882 7.57% July 2007 at Scofield Ridge 24,618 24,275 11,009 7.70% Aug. 2007 Towne Square 21,450 21,179 9,603 7.60% Jan. 2008 at Lowry Estates 33,900 33,533 16,766 7.12% Jan. 2008 at Summit Ridge 20,000 19,807 4,952 7.27% Feb. 2008 at River Park 9,100 8,599 3,440 7.75% June 2008 on the Parkway 10,800 10,210 2,553 6.75% Jan. 2009 at Barrett Lakes 16,680 15,952 5,583 8.50% Dec. 2009 at Northwinds 33,800 33,403 11,691 8.25% Oct. 2010 at Osprey Lake 35,320 34,963 24,037 7.02% Mar. 2011 at Windbrooke 20,800 20,773 3,116 6.43% Mar. 2012 at Lost Mountain 10,252 10,197 7,647 6.84% Nov. 2040 -------- -------- ------- $553,023 491,696 187,174 ======== ======== ======= In general, these loans provide for monthly payments of principal and interest based on a 25 or 27 year amortization schedule and a balloon payment at maturity. Some loans provide for payments of interest only for an initial period, with principal amortization commencing generally within two years. INVESTMENTS IN SERVICE COMPANIES Combined financial information of the various Service Companies at and for the three months ended March 31, 2002 and 2001 is summarized as follows: AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED Three Months Ended March 31, ---------------------- 2002 2001 -------- -------- Construction contract revenue . . . . . . $ 20,122 11,683 Construction contract costs . . . . . . . (19,489) (11,168) -------- -------- Construction gross profit . . . . . . . . 633 515 Property management fees. . . . . . . . . 2,691 2,502 Corporate homes' gross profit . . . . . . 346 305 Loss on a land sale . . . . . . . . . . . (73) -- Other income. . . . . . . . . . . . . . . 122 190 -------- -------- Total income. . . . . . . . . . . . . . . 3,719 3,512 -------- -------- General and administrative: Construction. . . . . . . . . . . . . . 550 506 Property management . . . . . . . . . . 2,508 2,414 Corporate homes . . . . . . . . . . . . 242 227 -------- -------- Total general and administrative. . . . . 3,300 3,147 -------- -------- EBITDA. . . . . . . . . . . . . . . . . . 419 365 Interest. . . . . . . . . . . . . . . . . (409) (698) Depreciation (1). . . . . . . . . . . . . (716) (575) Income taxes. . . . . . . . . . . . . . . 268 345 -------- -------- Net loss. . . . . . . . . . . . . . . . . $ (438) (563) ======== ======== March 31, December 31, 2002 2001 --------- ------------ Receivables from affiliates . . . . . . . $ 7,771 9,136 Land held for sale. . . . . . . . . . . . 8,005 4,951 Building and equipment, net of accumulated depreciation. . . . . . . . 2,398 2,463 Information technology costs, net of accumulated depreciation . . . . 8,900 8,384 Investments and other assets. . . . . . . 10,625 9,911 -------- -------- Total assets. . . . . . . . . . . . . . . $ 37,699 34,845 ======== ======== Due to the Company. . . . . . . . . . . . $ 21,692 17,311 Bank debt . . . . . . . . . . . . . . . . 14,000 14,000 Other . . . . . . . . . . . . . . . . . . 4,348 5,733 -------- -------- Total liabilities . . . . . . . . . . . . $ 40,040 37,044 ======== ======== Total deficit . . . . . . . . . . . . . . $ (2,341) (2,199) ======== ======== (1) Includes $104 in amortization of goodwill in 2001. No amortization of goodwill was recorded in 2002 in accordance with SFAS 142. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED For 2001, substantially all interest expense of the Service Companies resulted from direct borrowings from banks under the Company's line of credit, with interest at LIBOR + 1.05%. Amounts borrowed from the banks by the Service Companies are guaranteed by the Company for which it received a guaranty fee from the Service Companies totaling $35 and $68 for the three months ended March 31, 2002 and 2001, respectively. In 2002, the Company sold two land parcels to a Service Company for $5,076, which increased advances to the Service Companies that bear interest at a rate of prime plus 1%. Interest and share of income (loss) from the Service Companies as included in the accompanying Consolidated Statements of Operations are reconciled below: March 31, ----------------- 2002 2001 ------ ------ Intercompany interest expensed . . . . . . . $ 265 159 Intercompany interest capitalized. . . . . . -- 21 Net income (loss). . . . . . . . . . . . . . (438) (563) Intercompany eliminations and other owners' share. . . . . . . . . . . . (57) (20) ------ ------ Interest and share of income from the Service Companies. . . . . . . . . . . . . $ (230) (403) ====== ====== The Service Companies recorded an after-tax charge against earnings of $72 and $14 for the three months ended March 31, 2002 and 2001, respectively, pursuant to APB Opinion No. 25 "Accounting for Certain Transactions Involving Stock Compensation." 4. RELATED PARTY TRANSACTIONS During the three months ended March 31, 2002 and 2001, the Company accrued or paid to its affiliates fees and other costs and expenses as follows: 2002 2001 ------ ------ Management fees $ 859 708 General contractor fees 202 13 Interest expense -- 140 Landscaping and grounds maintenance -- 439 ====== ====== In addition, at March 31, 2002 and December 31, 2001, the Company owed Amli Residential Construction, Inc. $3,164 and $4,079, respectively, for construction costs of communities under development or rehab. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED During the three months ended March 31, 2002 and 2001, the Company earned or received from its affiliates fees and other income as follows: 2002 2001 ------ ----- Development fees $ 458 251 Acquisition, disposition and financing fees -- 231 Asset management fees 129 143 Interest on notes and advances to Service Companies 265 142 Interest on advances to other affiliates -- 180 ====== ===== In addition, during the three months ended March 31, 2002 and 2001, total revenues of $918 and $820, respectively, were generated from leases to AMLI Corporate Homes ("ACH"), a division of one of the Service Companies. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED 5. DEBT The table below summarizes certain information relating to the indebtedness of the Company.
Balance Balance Original at Interest Maturity at Encumbered Communities Amount 3/31/02 Rate Date 12/31/01 ---------------------- -------- ------- ----------- -------- -------- BOND FINANCING: Tax-Exempt Unsecured (1) $ 40,750 40,750 Rate+1.25% 10/1/24 40,750 Tax-Exempt AMLI at Poplar Creek (1) 9,500 9,500 Rate+1.26% 2/1/24 9,500 -------- ------- ------- Total Bonds 50,250 50,250 50,250 -------- ------- ------- MORTGAGE NOTES PAYABLE TO FINANCIAL INSTITUTIONS: AMLI at Conner Farms 13,275 11,888 7.00% 6/15/03 11,960 AMLI at Riverbend 31,000 27,938 7.30% 7/1/03 28,102 AMLI in Great Hills 11,000 9,919 7.34% 7/1/03 9,977 AMLI at Valley Ranch 11,500 9,615 7.63% 7/10/03 9,688 AMLI at Nantucket 7,735 7,291 7.70% 6/1/04 7,325 AMLI at Bishop's Gate 15,380 14,155 7.25% (2) 8/1/05 14,230 AMLI at Regents Center 20,100 18,979 8.90% (3) 9/1/05 19,037 AMLI on the Green/AMLI of North Dallas (4) 43,234 39,416 7.79% 5/1/06 39,621 AMLI at Clairmont 12,880 12,530 6.95% 1/15/08 12,573 AMLI - various (5) (6) 140,000 138,980 6.56% 8/17/11 139,369 AMLI at Park Creek 10,322 10,165 7.88% 12/1/38 10,177 -------- ------- ------- Total Mortgage Notes Payable 316,426 300,876 302,059 -------- ------- ------- OTHER NOTES PAYABLE: Unsecured line of credit (6)(7) 200,000 54,000 L+1.05% 11/15/03 47,000 -------- ------- --------- -------- ------- Total (8) $566,676 405,126 399,309 ======== ======= ======= AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (1) The terms of these tax-exempt bonds require that a portion of the apartment units be leased to individuals who qualify based on income levels specified by the U.S. Government. The bonds bear interest at a variable rate that is adjusted weekly based upon the remarketing rate for these bonds (1.70% for AMLI at Spring Creek and 1.73% for AMLI at Poplar Creek at April 25, 2002). The credit enhancement for the AMLI at Spring Creek bonds was provided by a $41,297 letter of credit from Wachovia Bank which expires on October 15, 2002 and the credit enhancement for the AMLI at Poplar Creek bonds was provided by a $9,617 letter of credit from LaSalle National Bank that expires December 18, 2002. (2) This original $14,000 mortgage note bears interest at 9.1%. For financial reporting purposes, this mortgage note was valued at $15,380 to reflect a 7.25% market rate of interest when assumed in connection with the acquisition of AMLI at Bishop's Gate on October 17, 1997. The unamortized premium at March 31, 2002 was $645. (3) $13,800 at 8.73% and $6,300 at 9.23%. (4) These two properties secure the FNMA loan that was sold at a discount of $673. At March 31, 2002, the unamortized discount was $275. (5) This loan is secured by seven previously unencumbered properties (AMLI at Bent Tree, AMLI at Lantana Ridge, AMLI at StoneHollow, AMLI at Western Ridge, AMLI at Killian Creek, AMLI at Eagle Creek and AMLI at Gateway Park). (6) The Company has used interest rate swaps on $55,000 of the outstanding amount to fix its base interest rate (before current lender's spread) at an average of 6.22%. The Company paid the outstanding balance down in June 2001 by $140,000 from the proceeds of a ten-year mortgage loan secured by seven of its wholly-owned properties. Additionally, AMLI concurrently reduced the commitment amount under its current line of credit by $50,000 to $200,000. (7) The Company's unsecured line of credit has been provided by a group of eight banks led by Wachovia Bank, N.A. and Bank One, N.A. In November 2000, the maturity date was extended to November 2003 with a one-year renewal option. In addition, AMC and Amrescon were added as borrowers under this line of credit, and such borrowings by the Service Companies ($14,000 at March 31, 2002) are guaranteed by the Company and count against the Company's total availability under this line of credit. This unsecured line of credit requires that the Company meet various covenants typical of such an arrangement, including minimum net worth, minimum debt service coverage and maximum debt to equity percentage. The unsecured line of credit is used for acquisition and development activities and working capital needs. (8) All but $20,479 is non-recourse to the partners of the Operating Partnership.
AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED As of March 31, 2002, the scheduled maturities of the Company's debt are as follows: Fixed Rate Mortgage Notes Payable Unsecured Bond to Financial Lines Financings Institutions of Credit Total ---------- ------------- --------- ------- 2002 . . . . . . $ -- 3,679 -- 3,679 2003 . . . . . . -- 61,814 54,000 115,814 2004 . . . . . . -- 10,745 -- 10,745 2005 . . . . . . -- 34,812 -- 34,812 2006 . . . . . . -- 38,123 -- 38,123 Thereafter . . . 50,250 151,703 -- 201,953 ------- ------- ------- ------- $50,250 300,876 54,000 405,126 ======= ======= ======= ======= 6. INCOME TAXES The Company qualifies as a REIT under Section 856 through 860 of the Internal Revenue Code of 1986, as amended. A REIT will generally not be subject to Federal income taxation on that portion of its income that qualifies as REIT taxable income to the extent that it distributes at least 90% of its taxable income to its shareholders and complies with certain other requirements. In 2000, the Company distributed approximately 90% of its taxable income and has designated a portion of its dividends paid during 2001 as a throw back dividend to 2000. The Company's current dividend payment level equals an annual rate of $1.92 per common share, increased on October 29, 2001 from an annual rate of $1.88 per common share. The Company anticipates that all dividends paid in 2002 will be fully taxable (primarily as ordinary income), and absent property sales, it will distribute at least 100% of the taxable income. 7. COMMITMENTS AND CONTINGENCIES The limited partnership Agreements of AMLI at Verandah L.P. and AMLI on Timberglen provide for the redemption (at an amount determined by formula) by the partnerships of the limited partner's entire interest, in their sole discretion, at any time after March 25, 2002 and December 16, 2003, or at any time that there is a designated event of default on related indebtedness of the partnerships, which event of default remains uncured and unwaived to the time of notice of redemption election. The redemption amount may be paid in cash or Company shares of beneficial interest, or any combination thereof, in the sole discretion of the Company. At March 31, 2002, the Company is contingently liable on $9,828 in bank letters of credit issued to secure commitments made in ordinary course of business by the Company and its co-investment partnerships. 8. SUBSEQUENT EVENTS On April 8, 2002, $11,156 balance of the AMLI at Greenwood Forest loan was repaid. The payment was funded from an additional capital contribution made by AMLI. In exchange, the Company will receive a 6.75% preferential allocation of cash flow on its additional capital until the sale or refinancing of the partnership's property. The Company anticipates receiving the return of this additional capital contribution later in 2002. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED On April 15, 2002, a partnership in which AMLI owns a 25% ownership interest closed on a 6.40%, $18,000 first mortgage permanent loan with The Northwestern Mutual Life Insurance Company. The loan is secured by AMLI at Mill Creek, will mature in seven years and is amortized based on a thirty- year amortization schedule. AMLI received a partnership distribution of $4,500 from the proceeds of this loan. On April 18, 2002, the Company completed the sales of two Houston, Texas communities, in which AMLI had a 15% ownership interest. AMLI at Champions Park, which contains 246 apartment homes, was built in 1991 and acquired by AMLI in 1994 for $9,900. AMLI at Champions Centre, which contains 192 apartment homes, was built in 1994 and purchased by AMLI in 1994 for $12,958. The partnership's gains on these sales totaled approximately $3,243, of which the Company's share was approximately $486. AMLI received approximately $3,463 in cash as its 15% share of the net sales proceeds. In addition, AMLI received a disposition fee of $239. On April 24, 2002, the Company, through a joint venture with the AFL- CIO Building Investment Trust, acquired AMLI at Park Meadows, a 518- apartment home community located in Littleton, Colorado. AMLI and AFL-CIO contributed approximately 25% and 75%, respectively, of the equity capital. Approximately 50% of the $56,500 acquisition costs will be financed by a permanent loan provided by GMAC Commercial Mortgage Corporation. The interest rate on the loan is 6.25%, and provides for interest only payments for a loan term of seven years. The loan is anticipated to close in June 2002 and the proceeds will be distributed to the partners in accordance with their ownership percentage. On May 1, 2002, the Company acquired AMLI Upper West Side, a 194- apartment home community located in Fort Worth, Texas. This wholly- owned community was acquired without debt for $13,600. On May 7, 2002, the Company refinanced two loans from Nationwide Life Insurance secured by two of its wholly-owned properties, AMLI at Conner Farms and AMLI at Valley Ranch, with new loans from the same lender. The 7.00%, $11,863 balance of the AMLI at Corner Farms loan was refinanced with a 6.68%, $14,900 loan. The balance of the 7.70%, AMLI at Valley Ranch loan of $9,590 was refinanced with a 6.68%, $18,800 loan. For the first three years of the five-year term, these loans will be interest only and thereafter they will be amortized for five years based on 30-year amortization schedules. 9. SEGMENT REPORTING The revenues, net operating income, FFO and assets for the Company's reportable segment are summarized as follows: Three Months Ended March 31, ------------------------ 2002 2001 ---------- ---------- Multifamily segment revenues . . . . . . . . . . $ 69,175 68,807 ========== ========== AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED Three Months Ended March 31, ------------------------ 2002 2001 ---------- ---------- Multifamily segment net operating income . . . . $ 42,161 42,455 Reconciling items to FFO: Reduce co-investment net operating income to Company's share (1). . . . . . . . (19,568) (19,945) Interest income and share of income (loss) from Service Companies . . . . (230) (299) Other interest income. . . . . . . . . . . . . 233 477 Other revenues . . . . . . . . . . . . . . . . 718 624 General and administrative expenses. . . . . . (1,540) (1,518) Interest expense and loan cost amortization. . (5,946) (6,563) ---------- ---------- Consolidated FFO before minority interest. . . . 15,828 15,231 Reconciling items to net income: Depreciation - wholly owned properties . . . . (5,362) (5,086) Depreciation - share of co-investment properties . . . . . . . . . . . . . . . . . (2,868) (2,696) Share of Service Company's goodwill amortization . . . . . . . . . . . . . . . . -- (104) ---------- ---------- Income before minority interest and extraordinary items. . . . . . . . . . . . . . 7,598 7,345 Minority interest. . . . . . . . . . . . . . . . 938 940 ---------- ---------- Net income . . . . . . . . . . . . . . . . . . . $ 6,660 6,405 ========== ========== March 31, December 31, 2002 2001 ---------- ------------ Segment assets (2) . . . . . . . . . . . . . . . $1,953,877 1,935,423 ========== ========== (1) Represents amount required to reduce co-investment properties' net operating income to the Company's share of net operating income from partnerships. (2) Represents original acquisition costs of wholly owned and co investment properties. The Company derives no consolidated revenues from foreign countries nor has any major customers that individually account for 10% or more of the Company's consolidated revenues. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) The following discussion is based primarily on the consolidated financial statements of Amli Residential Properties Trust (the "Company" or "AMLI") as of March 31, 2002 and December 31, 2001 and for the three months ended March 31, 2002 and 2001. This information should be read in conjunction with the accompanying unaudited consolidated financial statements and notes thereto. These financial statements include all adjustments which are, in the opinion of management, necessary to reflect a fair statement of the results for the interim periods presented, and all such adjustments are of a normal recurring nature. As of March 31, 2002, the Company owned an 86% general partnership interest in AMLI Residential Properties, L.P. (the "Operating Partnership"), which holds the operating assets of the Company. The limited partners hold Operating Partnership units ("OP Units") that are convertible into common shares of the Company on a one-for-one basis, subject to certain limitations. At March 31, 2002, the Company owned 22,135,659 OP Units including 4,025,000 Preferred OP Units and the limited partners owned 3,664,396 OP Units. The Company has qualified, and anticipates continuing to qualify, as a real estate investment trust ("REIT") for Federal income tax purposes. ACCOUNTING FOR INVESTMENTS IN AND TRANSACTIONS WITH UNCONSOLIDATED PARTNERSHIPS The Company has differentiated itself from other publicly-owned multifamily residential REIT's in the manner and to the extent it conducts its business through co-investment with institutional investors. The condensed combined financial information for the Company and its co- investment partnerships at March 31, 2002, as shown below, is presented as supplementary information intended to provide a better understanding of the Company's financial position. The information presented in the following table includes the unconsolidated co-investment partnerships at 100%. Effect of Company and Consolidated Combining Co-Investment Company Co-Investment Partnerships ("GAAP") Partnerships (Combined) ------------ ------------- ------------- Rental apartments. . . . . . . $ 745,906 1,119,059 1,864,965 Accumulated depreciation . . . (112,501) (106,135) (218,636) ---------- ---------- ---------- 633,405 1,012,924 1,646,329 Land and rental communities under development. . . . . . 56,414 144,319 200,733 Investments in co-investment partnerships . . . . . . . . 187,327 (187,327) -- Other, net . . . . . . . . . . 16,264 (3,250) 13,014 ---------- ---------- ---------- 893,410 966,666 1,860,076 Effect of Company and Consolidated Combining Co-Investment Company Co-Investment Partnerships ("GAAP") Partnerships (Combined) ------------ ------------- ------------- Debt - Company's share . . . . (405,126) (187,174) (592,300) Debt - partners' share . . . . -- (304,522) (304,522) ---------- ---------- ---------- Total net assets . . . . . . . 488,284 474,970 963,254 Partners' share of net assets . . . . . . . . . . . -- (474,970) (474,970) ---------- ---------- ---------- Company's share of net assets . . . . . . . . . $ 488,284 -- 488,284 ========== ========== ========== Debt to total capitaliza- tion - undepreciated book value . . . . . . . . . 38.4% ========== The information presented in the following table includes AMLI's proportionate share of unconsolidated co-investment partnerships. Company and Share of Consolidated Share of Co-Investment Company Co-Investment Partnerships ("GAAP") Partnerships (Combined) ------------ ------------- ------------- Rental apartments. . . . . . . $ 745,906 370,334 1,116,240 Accumulated depreciation . . . (112,501) (30,781) (143,282) ---------- ---------- ---------- 633,405 339,553 972,958 Land and rental communities under development. . . . . . 56,414 35,480 91,894 Investments in co-investment partnerships . . . . . . . . 187,327 (187,327) -- Other, net . . . . . . . . . . 16,264 (532) 15,732 ---------- ---------- ---------- 893,410 187,174 1,080,584 Debt - Company's share . . . . (405,126) (187,174) (592,300) ---------- ---------- ---------- Company's share of net assets . . . . . . . . . $ 488,284 -- 488,284 ========== ========== ========== Debt to total capitaliza- tion - undepreciated book value . . . . . . . . . 38.4% 48.3% ========== ========== Details of the differences between the Company's aggregate investment in partnerships and its aggregate share of equity as recorded on the books of these partnerships, net of accumulated amortization, are as follows at March 31, 2002: Total equity per partnerships. . . . . . $191,074 Capitalized interest . . . . . . . . . 4,291 Eliminated fees. . . . . . . . . . . . (5,572) Other. . . . . . . . . . . . . . . . . (2,466) -------- Total investments in partnerships. . . . $187,327 ======== RESULTS OF OPERATIONS For the three months ended March 31, 2002, property revenues and property operating expenses moderately increased from the same period a year ago. The increases from acquisitions of new communities were offset by sales of older communities during 2001. Since January 1, 2001, the Company has sold three stabilized communities containing a total of 1,078 apartment homes. During the same period, the Company has acquired a total of 1,134 units in four stabilized communities. All of these acquisitions completed deferred third-party exchanges for Federal income tax purposes. Property operations from wholly-owned assets for the three months ended March 31, 2002 and 2001 are summarized as follows: Increase 2002 2001 (Decrease) ------- ------- --------- Total Wholly-Owned Property Revenues ------------------ Same communities. . . . . . . . $25,592 25,474 118 Acquisition communities . . . . 3,053 618 2,435 Communities contributed to ventures/sold . . . . . . . -- 2,243 (2,243) ------- ------- ------- Total. . . . . . . . . . . . $28,645 28,335 310 ======= ======= ======= Total Wholly-Owned Property Operating Expenses --------------------------- Same communities. . . . . . . . $ 9,685 9,739 (54) Acquisition communities . . . . 1,264 174 1,090 Communities contributed to ventures/sold . . . . . . . -- 903 (903) ------- ------- ------- Total. . . . . . . . . . . . $10,949 10,816 133 ======= ======= ======= Total Wholly-Owned Property Net Operating Income ----------------------------- Same communities. . . . . . . . $15,907 15,735 172 Acquisition communities . . . . 1,789 444 1,345 Communities contributed to ventures/sold . . . . . . . -- 1,340 (1,340) ------- ------- ------- Total. . . . . . . . . . . . $17,696 17,519 177 ======= ======= ======= Property Net Operating Income is computed before interest, taxes, depreciation and amortization. This performance measure is not intended as a replacement for net income determined in accordance with generally accepted accounting principles ("GAAP"). The Company, through joint ventures with institutional investors, has completed or has under development and begun rental operations of seven communities. Since January 1, 2001, three communities with a total of 1,060 apartment homes were stabilized and four communities, containing a total of 1,324 apartment homes, were in lease-up as of March 31, 2002 and are anticipated to reach stabilization in 2002 and 2003. In addition, in 2001 the Company invested in one co-investment partnership which acquired a 483-unit stabilized community and sold one 488-unit community. This sale and weak market conditions have contributed to a decrease in share of income from partnerships. Increase 2002 2001 (Decrease) ------- ------- --------- Total Co-investment Property Revenues ------------------------------------- Same communities. . . . . . . . . $33,948 34,854 (906) New communities . . . . . . . . . 2,623 2,166 457 Development and/or lease-up communities. . . . . . . . . . . 1,633 162 1,471 Acquisition communities . . . . . 1,453 940 513 Communities contributed to ventures/sold . . . . . . . . 874 2,350 (1,476) ------- ------- ------- Total. . . . . . . . . . . . . $40,531 40,472 59 ======= ======= ======= Company's share of co-invest- ment total revenues. . . . . . . $13,087 13,159 (72) ======= ======= ======= Total Co-investment Property Operating Expenses --------------------------- Same communities. . . . . . . . . $13,111 13,020 91 New communities . . . . . . . . . 915 927 (12) Development and/or lease-up communities. . . . . . . . . . . 942 250 692 Acquisition communities . . . . . 550 308 242 Communities contributed to ventures/sold . . . . . . . . 388 898 (510) ------- ------- ------- Total. . . . . . . . . . . . . $15,906 15,403 503 ======= ======= ======= Company's share of co-invest- ment property operating expenses . . . . . . . . . . . . $ 5,114 4,935 179 ======= ======= ======= Total Co-investment Property Net Operating Income ---------------------------- Same communities. . . . . . . . . $20,837 21,834 (997) New communities . . . . . . . . . 1,708 1,239 469 Development and/or lease-up communities. . . . . . . . . . . 691 (88) 779 Acquisition communities . . . . . 903 632 271 Communities contributed to ventures/sold. . . . . . . . . . 486 1,452 (966) ------- ------- ------- Total. . . . . . . . . . . . . $24,625 25,069 (444) ======= ======= ======= Company's share of co-invest- ment property NOI . . . . . . . . $ 7,973 8,224 (251) ======= ======= ======= The term "New Communities" refers to completed properties that were stabilized after the beginning of the earliest period for which comparative financial information is presented. For the three months ended March 31, 2002, total revenues were $31,395 and net income was $6,660. Total revenues for the year earlier period were $31,328 and net income was $6,405. Basic and diluted earnings per common share were $0.26 compared to $0.27 for the comparable period of 2001. On a "same community" basis, weighted average occupancy of the apartment homes owned wholly by the Company increased to 91.8% for the three months ended March 31, 2002 from 89.5% in the prior year. Weighted average collected rental rates decreased by 0.5% to $773 from $776 per unit per month for the three months ended March 31, 2002 and 2001, respectively. Including Co-Investment Communities, weighted average occupancy of the Company's apartment homes decreased to 90.7% for the three months ended March 31, 2002 from 91.6% in the prior year, and weighted average collected rental rates decreased by 0.8% to $854 from $861 per unit per month for the three months ended March 31, 2002 and 2001, respectively. OPERATING EARNINGS Operating earnings is a supplemental earnings measurement which is an alternative to funds from operations ("FFO"). It resembles GAAP net income, although it excludes gains or losses on sales of investment properties. The following shows the relationship among FFO, operating earnings and net income. As of March 31, ------------------- 2002 2001 ------- ------ FFO. . . . . . . . . . . . . . $15,828 15,231 Depreciation expense (1) . . . 8,230 7,886 ------- ------ Operating earnings . . . . . . 7,598 7,345 Gains on sales . . . . . . . . -- -- ------- ------ Net income (2) . . . . . . . . $ 7,598 7,345 ======= ====== (1) Including shares from co-investments. (2) Before allocation to minority interest. COMPARISON OF THREE MONTHS ENDED MARCH 31, 2002 TO THREE MONTHS ENDED MARCH 31, 2001. Income before minority interest increased to $7,598 for the three months ended March 31, 2002 from $7,345 for the three months ended March 31, 2001 as follows: Increase 2002 2001 (Decrease) ------- ------- --------- Property revenues. . . . . . . . . $28,645 28,335 310 Other income . . . . . . . . . . . 2,750 2,993 (243) ------- ------- ------- Total revenues . . . . . . . . 31,395 31,328 67 ------- ------- ------- Property operating expenses. . . . 10,949 10,816 133 Interest expense . . . . . . . . . 5,800 6,427 (627) Amortization and depreciation. . . 5,508 5,222 286 General and administrative . . . . 1,540 1,518 22 ------- ------- ------- Total expenses . . . . . . . . 23,797 23,983 (186) ------- ------- ------- Income before minority interest. . 7,598 7,345 253 Minority interest. . . . . . . . . 938 940 (2) ------- ------- ------- Net Income . . . . . . . . . . . . $ 6,660 6,405 255 ======= ======= ======= Total property revenues increased by $310, or 1.1% which was primarily from the acquisition of 1,134 apartment homes during 2001. The increase was offset by 1,078 apartment homes sold during the period from June to August of 2001. Other property revenues include increases in various fees charged to residents. On a same community basis total property revenues increased by $118 or 0.5% and net operating income increased by $172 or 1.1%. The Company operates, owns and manages apartments in eight metropolitan areas. A combination of a moderate over-supply of rental apartments in the Company's markets coupled with a general business slow- down has contributed to overall growth in collected rents at less than the rate of inflation. Interest and share of income (loss) from Service Companies increased by $173, or 42.9% as a result of additional advances to the Service Companies to fund the 2002 acquisition cost of two land parcels and not recording amortization of goodwill in accordance with Statement of Financial Accounting Standards No. 142 "Accounting for Goodwill and Other Intangible Assets." During 2001 the Service Companies commenced or continued a variety of information technology system initiatives, most notably the implementation of an Enterprise Resource Planning ("ERP") system using the Oracle database. Information technology expenditures incurred and capitalized are being depreciated over five years. Primarily because of increased expenditures by AMLI Management Company ("AMC") for information technology such as the ERP and other systems applications, AMC increased the management fee it charges the Company for managing its wholly-owned properties to 3% from 2.5% effective July 1, 2001. Income from partnerships decreased to $2,029 from $2,295 or 11.6%. This decrease was a result of a sale of a 488 apartment homes community in the third quarter of 2001 and general economic conditions, which was offset in part by stabilization of 1,060 units of three communities under development in 2001. On a same community basis, total property revenues decreased by $906 or 2.6% and net operating income decreased by $997, or 4.6%. Property operating expenses increased by $133, or 1.2%. This increase is principally due to increases in real estate tax expense and management fees as a result of higher fees charged by AMC for managing the Company's wholly-owned properties. On a same community basis, property operating expenses decreased by $54 or 0.6%. Interest expense, net of the amounts capitalized, decreased to $5,800 from $6,427 or 9.8%, primarily due to repayment of the Company's short-term borrowings. General and administrative expenses increased moderately to $1,540 for the three months ended March 31, 2002 from $1,518 for the three months ended March 31, 2001. The increase is primarily due to higher personnel costs as a result of increased number of employees. LIQUIDITY AND CAPITAL RESOURCES At March 31, 2002, the Company had $2,417 in cash and cash equivalents and $132,000 in availability under its $200,000 unsecured line of credit. The availability under the line of credit is based on total borrowings of $68,000, including $14,000 borrowed directly by unconsolidated Service Company affiliates. The borrowings of the Service Company affiliates are guaranteed by the Company. Borrowings under the line of credit bear interest at a rate of LIBOR plus 1.05%. At March 31, 2002, twelve of the Company's wholly-owned stabilized communities were unencumbered. There are no fixed rate loans on wholly- owned communities with maturity dates prior to July 2003. Net cash flows provided by operating activities for the three months ended March 31, 2002 decreased to $11,048 from $11,713 for the three months ended March 31, 2001. The decrease is primarily due to increased distributions from co-investment partnerships offset in part by higher real estate taxes. Cash flows used in investing activities for the three months ended March 31, 2002 decreased to $9,447 from $26,039 for the three months ended March 31, 2001. The decrease is primarily due to lower investments in partnerships, expenditures incurred in connection with the purchase of a property in 2001 and nothing acquired in 2002, offset in part by higher expenditures for development costs. Net cash flows used in financing activities for the three months ended March 31, 2002 were $5,076 which reflect lower borrowings on the Company's line of credit offset by slightly higher dividend payments. FFO is defined as net income (computed in accordance with GAAP), excluding extraordinary gains (losses) from debt restructuring and gains (losses) from sales of depreciable operating properties, plus depreciation and amortization, and after adjustments for unconsolidated partnerships, joint ventures and other affiliates. Adjustments for unconsolidated partnerships, joint ventures and other affiliates are calculated to reflect FFO on the same basis. FFO does not represent cash flows from operations, as defined by GAAP; is not indicative that cash flows are adequate to fund all cash needs; and is not to be considered an alternative to net income or any other GAAP measure as a measurement of the results of the Company's operations or the Company's cash flows or liquidity as defined by GAAP. FFO is widely accepted in measuring the performance of equity REITs. An understanding of the Company's FFO will enhance the reader's comprehension of the Company's results of operations and cash flows as presented in the financial statements and data included elsewhere herein. FFO for the three months ended March 31, 2002 and 2001 is summarized as follows: March 31, -------------------------- 2002 2001 ---------- --------- Income before minority interest $ 7,598 7,345 Depreciation 5,362 5,086 Share of co-investment partner- ships' depreciation 2,868 2,696 Share of Service Company's goodwill amortization -- 104 ---------- ---------- FFO $ 15,828 15,231 ========== ========== Weighted average shares and units including dilutive shares 26,007,730 24,925,231 ========== ========== The Company expects to pay quarterly dividends from cash available for distribution. Until distributed, funds available for distribution are used to temporarily reduce outstanding balances on the Company's revolving lines of credit. The Company intends to finance the majority of its future acquisition and development activities by co-investing these acquisitions and developments with institutional partners. In addition, the Company is selectively selling older communities and using proceeds of such sales to buy newly-constructed properties. The Company expects to meet its short- term liquidity requirements by using its working capital and any portion of net cash flow from operations not distributed currently. The Company believes that its future net cash flows will be adequate to meet operating requirements in both the short and the long term and provide for payment of dividends by the Company in accordance with REIT requirements. The Company qualifies as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. A REIT will generally not be subject to Federal income taxation on that portion of its income that qualifies as REIT taxable income to the extent that it distributes at least 90% of its taxable income to its shareholders and complies with certain other requirements. In 2000, the Company distributed approximately 90% of its taxable income and has designated a portion of its dividends paid during 2001 as a throw back dividend to 2000. The Company's current dividend payment level equals an annual rate of $1.92 per common share, increased on October 29, 2001 from an annual rate of $1.88 per common share. The Company anticipates that all dividends paid in 2002 will be fully taxable (primarily as ordinary income), and absent property sales, it will distribute at least 100% of the taxable income. The Company has recorded no deferred taxes on gains for financial reporting purposes that have been deferred for income tax reporting purposes because the Company intends to distribute to its shareholders any deferred tax gain upon ultimate realization for income tax reporting purposes. The Company expects to meet certain long-term liquidity requirements such as scheduled debt maturities, repayment of loans for construction, development, and acquisition activities through the issuance of long-term secured and unsecured debt and additional equity securities of the Company or OP Units. Through March 31, 2002, the Company has issued preferred and common shares for an aggregate issuance price of $128,467 leaving a balance of $71,533 in shares that the Company may issue in the future under its shelf registration statement. COMPANY INDEBTEDNESS The Company's debt as of March 31, 2002 includes $300,876 which is secured by first mortgages on eighteen of the wholly-owned communities and is summarized as follows: SUMMARY DEBT TABLE ------------------ Type of Weighted Average Outstanding Percent Indebtedness Interest Rate Balance of Total ------------ ---------------- ----------- -------- Fixed Rate Mortgages 7.1% $300,876 74.3% Tax-Exempt Tax-Exempt Rate + 1.25% 50,250 12.4% Bonds (1) Tax-Exempt Rate + 1.26% Lines of Credit (2) LIBOR + 1.05% 54,000 13.3% -------- ------ Total $405,126 100.0% ======== ====== -------------------- (1) The tax-exempt bonds bear interest at a variable tax-exempt rate that is adjusted weekly based on the re-marketing of these bonds (1.70% for AMLI at Spring Creek and 1.73% % for AMLI at Poplar Creek at April 25, 2002). The AMLI at Spring Creek bonds mature on October 1, 2024 and the related credit enhancement expires on October 15, 2002. The AMLI at Poplar Creek bonds mature on February 1, 2024 and the related credit enhancement expires on December 18, 2002. (2) Amounts borrowed under lines of credit are due in 2003. The interest rate on $55,000 has been fixed pursuant to interest rate swap contracts. Additional interest rate swap contracts on $20,000 have been marked to the value of the related liability in 2001 for payment which will extend through November 2002. DEVELOPMENT ACTIVITIES The Company anticipates incurring the estimated $15,100 completed costs for AMLI at Carmel Center (note 2 to Financial Statements) over the next twelve months. At March 31, 2002, the Company has made capital contributions totaling $215,037 to its existing co-investment partnerships and anticipates funding substantially all of its remaining commitment (net of its share of co- investment debt) of $13,851 during 2002 and 2003 to complete the 2,937 homes being developed by co-investment partnerships. The Company owns land in Ft. Worth, Austin and Houston, Texas; Indianapolis, Indiana; and Kansas City, Kansas, being held for the development of an additional 4,168 apartment homes, or for sale. The Company has made earnest money deposits of $915 for eight land parcels for development anticipated to be acquired in future years. The Company has postponed active development planning for some of its land parcels in Houston and Forth Worth, Texas, until conditions in those particular submarkets are more favorable for development. The Company expensed $274 and $229 of costs associated with carrying these land parcels for the three months ended March 31, 2002 and 2001, respectively. CAPITAL EXPENDITURES Capital expenditures are those made for assets having a useful life in excess of one year and include replacements (including carpeting and appliances) and betterments, such as unit upgrades, enclosed parking facilities and similar items. In conjunction with acquisitions of existing properties, it is the Company's policy to provide in its acquisition budgets adequate funds to complete any deferred maintenance items and to otherwise make the properties acquired competitive with comparable newly-constructed properties. In some cases, the Company will provide in its acquisition budget additional funds to upgrade or otherwise improve new acquisitions. REHAB EXPENDITURES In September 1998, AMLI initiated its first community rehab since its initial public offering. Rehab is a capital improvement program involving significant repairs, replacements and improvements at an aggregate cost of at least the greater of $3 per apartment home or 5% of the value of the entire apartment community. All costs (except costs to routinely paint the interiors of units at turnover) associated with a rehab will be capitalized and depreciated over their policy lives. At March 31, 2002, the Company was continuing the rehab of the second phase of AMLI at Valley Ranch. Starting in 1999 and through March 31, 2002, the Company has spent $2,542 on the rehab of this property and expects to spend an additional $620 to complete the rehab. INFLATION Inflation has been low. Virtually all apartment leases at the wholly- owned communities and co-investment communities are for six or twelve months' duration. This enables the Company to pass along inflationary increases in its operating expenses on a timely basis. Because the Company's property operating expenses (exclusive of depreciation and amortization) are approximately 38.2% of rental and other revenues, increased inflation typically results in comparable increases in income before interest and general and administrative expenses, so long as rental market conditions allow increases in rental rates while maintaining stable occupancy. An increase in general price levels may immediately precede, or accompany, an increase in interest rates. At March 31, 2002, the Company's exposure (including the Company's proportionate share of its co-investment partnerships' expense) to rising interest rates is mitigated by the existing debt level of approximately 38.4% of the Company's total market capitalization (48.3% including the Company's share of co-investment partnerships' debt), the high percentage of intermediate-term fixed-rate debt (74.3% of total debt), and the use of interest rate swaps to effectively fix the interest rate on $30,000 of floating-rate debt through February 2003, $15,000 through September 2004 and $10,000 through October 2004 (13.6% of total debt). As a result, for the foreseeable future, increases in interest expense resulting from increasing inflation are anticipated to be less than future increases in income before interest and general and administrative expenses. OTHER MATTERS On January 1, 2001, the Company adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", as amended by SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities". SFAS No. 133, as amended, establishes accounting and reporting standards for derivative instruments. Specifically SFAS No. 133 requires an entity to recognize all derivatives as either assets or liabilities in the statement of financial position and to measure those instruments at fair value. Additionally, the fair value adjustments will affect either shareholders' equity or net income depending on whether the derivative instrument qualifies as a hedge for accounting purposes and, if so, the nature of the hedging activity. Derivative instruments reported on the Consolidated Balance Sheets as liabilities totaled $2,810 and $3,724 as of March 31, 2002 and December 31, 2001, respectively, a $914 decrease. The derivative instruments reported on the Consolidated Balance Sheets as "Accumulated Other Comprehensive Income (Loss)", which are gains and losses not affecting retained earnings in the Consolidated Statement of Shareholders' Equity totaled $3,559 and $4,294 as of March 31, 2002 and December 31, 2001, respectively, a $735 decrease. The adjustments to the shareholders' equity include $1,369 and $1,413 of the Company's share of Other Comprehensive Loss of a co- investment partnership as of March 31, 2002 and December 31, 2001, respectively. The Service Companies recorded an after-tax charge against earnings of $72 and $14 for the three months ended March 31, 2002 and 2001, respectively, pursuant to APB Opinion No. 25 "Accounting for Certain Transactions Involving Stock Compensation." On January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 142 "Accounting for Goodwill and Other Intangible Assets" ("SFAS 142"), which requires, among other things, that effective January 1, 2002 goodwill resulting from a business combination accounted for as a purchase no longer be amortized, but be subjected to ongoing impairment review. The only goodwill included in the accounts of the Company and its unconsolidated subsidiaries is $3,300 recorded on the books of an unconsolidated subsidiary. This amount was being amortized using the straight-line method over the five year period, and at December 31, 2001, the remaining unamortized goodwill was $668. As a result of implementing SFAS 142, whereby no amortization will be recorded in 2002, the Company's share of income, net of tax effect, from the unconsolidated subsidiary is increased by approximately $100 for the three months ended March 31, 2002. Pro-forma share of income, net of tax, from this unconsolidated subsidiary will be increased by approximately $400 for the year ended December 31, 2002. On July 19, 2001, the SEC issued interpretative guidance relating to the "Classification and Measurement of Redeemable Securities". This ruling requires, among other things, that preferred shares subject to redemption upon change in control (as is the case with both the Company's Series B Preferred Shares issued on February 20, 1998 and its Series D Preferred Shares issued on October 31, 2001) be classified outside of permanent equity. In accordance with the required implementation of this new requirement, the Company restated its balance sheets from prior periods to reflect its Series B Preferred Shares outside of its permanent capital, starting with its annual report on Form 10-K reporting its financial position as of December 31, 2001 and 2000. This restatement of the Company's balance sheets had no effect on its income reported during these periods. SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Certain statements set forth herein or incorporated by reference herein from the Company's filings under the Securities Exchange Act of 1934, as amended, contain forward-looking statements, including, without limitation, statements relating to the timing and anticipated capital expenditures of the Company's development programs. Although the Company believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, the actual results may differ materially from that set forth in the forward-looking statements. Certain factors that might cause such differences include general economic conditions, local real estate conditions, construction delays due to the unavailability of construction materials, weather conditions or other delays beyond the control of the Company. Consequently, such forward- looking statements should be regarded solely as reflections of the Company's current operating and development plans and estimates. These plans and estimates are subject to revision from time to time as additional information becomes available, and actual results may differ from those indicated in the referenced statements. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK During the first quarter of 2002 the Company was limited in its ability to raise rents and increase occupancies at many of its wholly-owned properties because of relative weak demand (in Austin in particular and, more recently, also in Atlanta). Since December 31, 2000, the Company has reduced its exposure to risks associated with interest rate charges and has significantly extended the average maturities of its fixed rate debt portfolio by refinancing $140,000 in borrowings under its floating rate line of credit with a new ten year secured 6.56% fixed interest rate refinancing. In response to a nationwide economic slowdown, the Company has slowed or curtailed its development of new apartment properties, and has acquired fewer additional properties than in prior years in anticipation of better acquisition pricing. The September 11, 2001 attack on the World Trade Center has had, among other things, the effect of increasing the cost of insurance. The Company preliminarily anticipates that its insurance costs for 2002 will increase by at least 50% even with increased deductibles. The Company has discovered that some of the properties located in Texas have problems with mold caused by excessive moisture which accumulates in buildings or on building materials. Some molds are known to produce potent toxins or irritants. Concern about indoor exposure to mold has been increasing as exposure to mold can cause a variety of health effect and symptoms in certain individuals, including severe allergic or other reactions. As a result, the presence of mold at the Company's properties could require undertaking a costly remediation program to contain or remove the mold from the affected properties. Such a remediation program could necessitate the temporary relocation of some or all of the properties' tenants or the complete rehabilitation of the properties. There have been no other significant changes in the Company's exposure to market risks. OCCUPANCY The following is a listing of approximate physical occupancy levels by quarter for the Company's Wholly-Owned Communities and Co-Investment Communities:
2002 2001 Location/Community Company's Number -------------------------- -------------------------- ------------------ Percentage of at at at at at at at at Wholly-owned Communities Ownership Units 12/31 9/30 6/30 3/31 12/31 9/30 6/30 3/31 ------------------------ ---------- ------- ----- ----- ----- ----- ----- ----- ------ ------ Dallas/Ft. Worth, TX AMLI: at AutumnChase. . . . . . . N/A N/A N/A N/A N/A 92% at Bent Tree. . . . . . . . 500 94% 89% 93% 92% 92% at Bishop's Gate. . . . . . 266 95% 92% 90% 93% 90% at Chase Oaks . . . . . . . 250 97% 90% 95% 93% 96% at Gleneagles . . . . . . . 590 92% 91% 92% 94% 95% on the Green. . . . . . . . 424 90% 91% 93% 94% 91% at Nantucket. . . . . . . . 312 94% 96% 94% 94% 92% of North Dallas . . . . . . 1,032 92% 94% 92% 93% 95% on Rosemeade. . . . . . . . N/A N/A N/A N/A 93% 94% at Stonebridge Ranch. . . . 250 90% 90% 90% 82% N/A at Shadow Ridge . . . . . . 222 89% 78% 85% N/A N/A at Valley Ranch . . . . . . 460 89% 89% 90% 93% 95% ------ ----- ----- ----- ----- ----- ----- ----- ----- 4,306 92% 91% 92% 93% 94% ------ ----- ----- ----- ----- ----- ----- ----- ----- Austin, TX AMLI: in Great Hills. . . . . . . 344 89% 94% 92% 90% 91% at Lantana Ridge. . . . . . 354 90% 88% 94% 89% 90% at StoneHollow. . . . . . . 606 93% 94% 94% 94% 89% ------ ----- ----- ----- ----- ----- ----- ----- ----- 1,304 91% 92% 93% 92% 90% ------ ----- ----- ----- ----- ----- ----- ----- ----- Houston, TX AMLI: at the Medical Center . . . . 334 94% 93% 94% N/A N/A at Western Ridge. . . . . . . 318 94% 95% 98% 95% 91% ------ ----- ----- ----- ----- ----- ----- ----- ----- 652 94% 94% 96% 95% 91% ------ ----- ----- ----- ----- ----- ----- ----- ----- 2002 2001 Company's Number -------------------------- -------------------------- Percentage of at at at at at at at at Location/Community Ownership Units 12/31 9/30 6/30 3/31 12/31 9/30 6/30 3/31 ------------------ ---------- ------- ----- ----- ----- ----- ----- ----- ------ ------ Atlanta, GA AMLI: at Clairmont . . . . . . . . 288 94% 94% 92% 95% 97% at Killian Creek . . . . . . 256 95% 87% 92% 93% 97% at Park Creek. . . . . . . . 200 83% 85% 83% 91% 93% at Towne Creek . . . . . . . 150 93% 89% 93% 90% 89% on Spring Creek. . . . . . . 1,180 90% 90% 90% 94% 92% at Vinings . . . . . . . . . 360 93% 91% 90% 93% 95% at West Paces. . . . . . . . 337 91% 94% 94% 93% 93% ------ ----- ----- ----- ----- ----- ----- ----- ----- 2,771 91% 90% 91% 93% 93% ------ ----- ----- ----- ----- ----- ----- ----- ----- Kansas City, KS AMLI: at Alvamar. . . . . . . . . N/A N/A N/A N/A 93% 86% at Centennial Park. . . . . 170 89% 92% 96% 88% 86% at Lexington Farms. . . . . 404 92% 92% 92% 93% 91% at Regents Center . . . . . 424 89% 88% 94% 93% 89% at Town Center. . . . . . . 156 94% 90% 96% 90% 87% ------ ----- ----- ----- ----- ----- ----- ----- ----- 1,154 91% 90% 94% 92% 89% ------ ----- ----- ----- ----- ----- ----- ----- ----- Indianapolis, IN AMLI: at Conner Farms . . . . . . 300 90% 89% 92% 93% 89% at Eagle Creek. . . . . . . 240 93% 88% 90% 93% 93% at Riverbend. . . . . . . . 996 94% 90% 94% 90% 83% ------ ----- ----- ----- ----- ----- ----- ----- ----- 1,536 93% 90% 92% 91% 86% ------ ----- ----- ----- ----- ----- ----- ----- ----- Chicago, IL AMLI: at Poplar Creek . . . . . . 196 94% 94% 95% 94% 96% ------ ----- ----- ----- ----- ----- ----- ----- ----- DENVER, CO AMLI: at Gateway Park . . . . . . 328 89% 85% 91% 93% 85% ------ ----- ----- ----- ----- ----- ----- ----- ----- Total wholly-owned communities. . . . . . . . . 12,247 91.8% 90.7% 92.1% 92.4% 91.3% ====== ===== ===== ===== ===== ===== ===== ===== ===== 2002 2001 Company's Number -------------------------- -------------------------- Percentage of at at at at at at at at Location/Community Ownership Units 12/31 9/30 6/30 3/31 12/31 9/30 6/30 3/31 ------------------ ---------- ------- ----- ----- ----- ----- ----- ----- ------ ------ Co-investment Communities: -------------------------- Dallas, TX AMLI: at Deerfield. . . . . . . . 25% 240 93% 93% 92% 95% 86% at Fossil Creek . . . . . . 25% 384 91% 87% 95% 95% 94% at Oak Bend . . . . . . . . 40% 426 92% 91% 96% 94% 93% on the Parkway. . . . . . . 25% 240 92% 91% 94% 92% 91% at Prestonwood Hills. . . . 45% 272 93% 89% 95% 97% 96% on Timberglen . . . . . . . 40% 260 94% 95% 94% 94% 94% at Verandah . . . . . . . . 35% 538 92% 93% 96% 94% 90% on Frankford. . . . . . . . 45% 582 94% 92% 93% 93% 94% at Breckinridge Point . . . 45% 440 90% 87% 89% 93% 93% ------- ----- ----- ----- ----- ----- ----- ----- ----- 3,382 92% 91% 94% 94% 93% ------- ----- ----- ----- ----- ----- ----- ----- ----- Austin, TX AMLI: at Wells Branch . . . . . . 25% 576 92% 88% 93% 87% 81% at Scofield Ridge . . . . . 45% 487 88% 86% 90% 87% 80% at Monterey Oaks. . . . . . 25% 430 92% 92% 94% 88% 94% ------- ----- ----- ----- ----- ----- ----- ----- ----- 1,493 91% 88% 92% 87% 88% ------- ----- ----- ----- ----- ----- ----- ----- ----- Houston, TX AMLI: at Champions Centre . . . . 15% 192 98% 94% 93% 89% 95% at Champions Park . . . . . 15% 246 91% 94% 92% 94% 90% at Greenwood Forest . . . . 15% 316 92% 91% 93% 93% 87% Midtown . . . . . . . . . . 45% 419 91% 90% 97% 96% 96% Towne Square. . . . . . . . 45% 380 90% 91% 96% 90% 95% ------- ----- ----- ----- ----- ----- ----- ----- ----- 1,553 92% 92% 94% 93% 93% ------- ----- ----- ----- ----- ----- ----- ----- ----- 2002 2001 Company's Number -------------------------- -------------------------- Percentage of at at at at at at at at Location/Community Ownership Units 12/31 9/30 6/30 3/31 12/31 9/30 6/30 3/31 ------------------ ---------- ------- ----- ----- ----- ----- ----- ----- ------ ------ Atlanta, GA AMLI: at Barrett Lakes. . . . . . 35% 446 91% 85% 94% 92% 94% at Northwinds . . . . . . . 35% 800 93% 93% 92% 95% 93% at River Park . . . . . . . 40% 222 95% 94% 89% 91% 96% at Willeo Creek . . . . . . 30% 242 88% 91% 84% 91% 98% at Windward Park. . . . . . 45% 328 91% 87% 90% 91% 88% at Peachtree City . . . . . 20% 312 86% 92% 92% 94% 89% at Lost Mountain. . . . . . 75% 164 95% 83% 93% 95% 95% at Park Bridge. . . . . . . 25% 352 92% 92% 93% 96% 95% ------ ----- ----- ----- ----- ----- ----- ----- ----- 2,866 91% 90% 91% 94% 93% ------ ----- ----- ----- ----- ----- ----- ----- ----- Kansas City, KS AMLI: at Regents Crest. . . . . . 25% 476 90% 86% 89% 92% 90% Creekside . . . . . . . . . 25% 224 94% 91% 93% 88% 91% at Wynnewood Farms. . . . . 25% 232 91% 88% 93% 92% 91% lease lease lease at Summit Ridge . . . . . . 25% 432 90% 88% up up up ------- ----- ----- ----- ----- ----- ----- ----- ----- 1,364 91% 91% 91% 91% 91% ------- ----- ----- ----- ----- ----- ----- ----- ----- Indianapolis, IN AMLI: on Spring Mill. . . . . . . 20% residual 400 84% 80% 81% 78% 80% at Lake Clearwater. . . . . 25% 216 92% 84% 93% 94% 94% at Castle Creek . . . . . . 40% 276 89% 91% 88% 91% 95% ------- ----- ----- ----- ----- ----- ----- ----- ----- 892 87% 84% 86% 86% 88% ------- ----- ----- ----- ----- ----- ----- ----- ----- 2002 2001 Company's Number -------------------------- -------------------------- Percentage of at at at at at at at at Location/Community Ownership Units 12/31 9/30 6/30 3/31 12/31 9/30 6/30 3/31 ------------------ ---------- ------- ----- ----- ----- ----- ----- ----- ------ ------ Chicago, IL AMLI: at Chevy Chase. . . . . . . 33% 592 93% 85% 91% 95% 95% at Danada Farms . . . . . . 10% 600 93% 86% 87% 94% 96% at Fox Valley . . . . . . . 25% 272 85% 83% 92% 93% 94% at Willowbrook. . . . . . . N/A N/A N/A N/A N/A 93% 93% at Windbrooke . . . . . . . 15% 236 98% 86% 95% 97% 96% at Oakhurst North . . . . . 25% 464 86% 80% 86% 90% 93% at St. Charles. . . . . . . 25% 400 88% 87% 84% 91% 89% at Osprey Lake. . . . . . . 69% 483 93% 96% 93% 92% 87% ------- ----- ----- ----- ----- ----- ----- ----- ----- 3,047 91% 86% 89% 93% 93% ------- ----- ----- ----- ----- ----- ----- ----- ----- Denver, CO AMLI: at Lowry Estates. . . . . . 50% 414 87% 91% 91% 88% 87% ------- ----- ----- ----- ----- ----- ----- ----- ----- Total co-investment communities. . . . . . . . . 15,011 90.9% 89.0% 91.5% 92.0% 91.7% ------- ----- ----- ----- ----- ----- ----- ----- ----- Total. . . . . . . . . . . . . 27,258 91.3% 89.8% 91.8% 92.2% 91.5% ======= ===== ===== ===== ===== ===== ===== ===== =====
PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K No reports on Form 8-K have been filed during the quarter ended March 31, 2002. The Exhibits filed as part of this report are listed below. EXHIBIT NO. DOCUMENT DESCRIPTION ----------- -------------------- 99. Financial and Operating Data furnished to Shareholders and Analysts SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. AMLI RESIDENTIAL PROPERTIES TRUST Date: May 15, 2002 By: /s/ CHARLES C. KRAFT ----------------------------------- Charles C. Kraft Principal Accounting Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Date: May 15, 2002 By: /s/ ALLAN J. SWEET ----------------------------------- Allan J. Sweet President and Trustee Date: May 15, 2002 By: /s/ ROBERT J. CHAPMAN ----------------------------------- Robert J. Chapman Principal Financial Officer Date: May 15, 2002 By: /s/ CHARLES C. KRAFT ----------------------------------- Charles C. Kraft Principal Accounting Officer