-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AFWpw80O5b0Ja+I9DUQdteOMBNnyvUPfDzh4bj3ibP/1vmNZBx1/86e7pdVhMIu2 8blDe08RHJwTUaE15aBtfg== 0000892626-98-000101.txt : 19980323 0000892626-98-000101.hdr.sgml : 19980323 ACCESSION NUMBER: 0000892626-98-000101 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980320 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMLI RESIDENTIAL PROPERTIES TRUST CENTRAL INDEX KEY: 0000914724 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 363925916 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-12784 FILM NUMBER: 98569364 BUSINESS ADDRESS: STREET 1: 125 S WACKER DR STREET 2: STE 3100 CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3124431477 FORMER COMPANY: FORMER CONFORMED NAME: AMLI RESIDENTIAL PROPERTIES INC DATE OF NAME CHANGE: 19931112 10-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 1997 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 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class which registered - ------------------- ------------------------------- Common Shares of Beneficial New York Stock Exchange Interest, $.01 par value Securities registered pursuant to Section 12(g) of the Act: None 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 [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of the voting stock held by non-affiliates of the registrant was approximately $339,317,865 based on the closing price ($22.50) on the New York Stock Exchange on February 27, 1998. The number of the Registrant's Common Shares of Beneficial Interest, $.01 par value, outstanding as of December 31, 1997 was 16,577,580. Documents Incorporated By Reference Portions of the Proxy Statement for the annual shareholders' meeting to be held on April 27, 1998 are incorporated by reference into Parts I and III. TABLE OF CONTENTS Page ---- PART I Item 1. Business. . . . . . . . . . . . . . . . . . . . 1 Item 2. Communities . . . . . . . . . . . . . . . . . . 20 Item 3. Legal Proceedings . . . . . . . . . . . . . . . 29 Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . 29 PART II Item 5. Market for the Registrant's Common Equity and Related Shareholder Matters . . . . . . . . 30 Item 6. Selected Financial Data . . . . . . . . . . . . 32 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . 34 Item 7A. Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . 42 Item 8. Financial Statements and Supplementary Data. . . . . . . . . . . . . . . 43 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. . . . . . . . . . . . . . 88 PART III Item 10. Trustees and Executive Officers of the Registrant . . . . . . . . . . . . . . . 88 Item 11. Executive Compensation. . . . . . . . . . . . . 88 Item 12. Security Ownership of Certain Beneficial Owners and Management. . . . . . . . 88 Item 13. Certain Relationships and Related Transactions. . . . . . . . . . . . . . 88 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K . . . . . . . . . . . . 89 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . 93 i PART I ITEM 1. BUSINESS THE COMPANY AMLI Residential Properties Trust ("AMLI" or the "Company") is a self- administered and self-managed real estate investment trust (a "REIT") engaged in the development, acquisition and management of upscale, institutional quality multifamily apartment communities in seven major metropolitan markets in the Southeast, Southwest and Midwest regions of the United States. Founded in 1980, AMLI became a publicly traded company through an initial public offering ("Initial Offering") in February, 1994. As part of its core strategy, AMLI differentiates itself through an internal growth strategy focused on branding its product and services, an external growth strategy balanced between both development and acquisition, geographic diversification in three regions and seven core cities, and accessing capital from both the public markets and from co-investment relationships with institutional partners. As of December 31, 1997, AMLI owned or had co-investment interests in 56 multifamily apartment communities (the "Communities") comprised of 21,445 apartment homes. Forty-five of these Communities, totalling 17,501 apartment homes, were stabilized as of December 31, 1997. An additional 11 locations were under development or in lease-up at that date (the "Development Communities"). When completed, these Development Communities will total 3,944 apartment homes. In addition, the Company owns land for the future development of three additional communities totalling approximately 880 apartment homes, and at February 27, 1997, the Company has acquired three additional land parcels located in Indianapolis, Indiana and Overland Park, Kansas, on which the Company intends to develop 724 apartment homes. AMLI is the sole general partner of, and controls a majority of the limited partnership interests in, Amli Residential Properties, L.P., a Delaware limited partnership (the "Operating Partnership") through which it owns its interests in the Communities. As of December 31, 1997, the Company owned 84% of the outstanding partnership interests ("OP Units") in the Operating Partnership. OP Units are convertible into common shares on a one-for-one basis. The Company conducts all its business through the Operating Partnership and its subsidiaries and affiliates. The Company's headquarters offices are located at 125 S. Wacker Drive, Suite 3100, Chicago, Illinois 60606, and its telephone number is (312) 443- 1477. In addition, AMLI maintains regional offices in both Atlanta and Dallas and opened additional offices in Indianapolis and Kansas City in December 1997. COMPETITIVE ADVANTAGES The Company seeks to increase cash flow by intensively managing the Communities, selectively developing and acquiring additional high-quality multifamily communities and advising and co-investing with institutional partners. In pursuit of these strategies, the Company benefits from the following competitive advantages: DEVELOPMENT AND ACQUISITION EXPERTISE. AMLI has extensive experience in both the acquisition and development of upscale multifamily communities. AMLI focuses on institutional quality multifamily communities having high- quality construction, amenities, location and market position. The Company believes that over time these communities will realize returns exceeding national averages for multifamily properties due to higher expected annual growth in cash flows, reduced on-going maintenance costs and capital expenditures, and higher relative levels of residual values. The Company applies a long-term ownership perspective to the development process, utilizing high-quality building materials and designs communities which satisfy the current needs of residents and anticipate their future needs. AMLI acquires assets at times when capitalization rates are attractive and enhanced performance from the target communities is possible through application of the Company's management expertise. INSTITUTIONAL CO-INVESTMENTS. AMLI actively acquires and develops multifamily communities in co-investment joint ventures with institutional investment partners such as insurance companies, endowments, foundations, and public and private pension funds. The Company believes that co- investment partnerships create an opportunity to leverage the Company's acquisition, development and management expertise and generate higher returns on its invested equity capital. Since its Initial Offering, and through December 31, 1997, AMLI has formed 17 such co-investment joint ventures with eight institutional investors, several of which involve new development, representing a total anticipated acquisition and development costs of approximately $450 million, of which all but $28.0 million relating to the completion costs for AMLI at Northwinds has been incurred at December 31, 1997. The Company's invested capital in these 17 joint ventures totals approximately $55.0 million. In connection with its co- investment business, the Company has established strategic alliances with Allstate Insurance Company, Erie Insurance Group, The New York Common Retirement Fund, Northwestern Mutual Life Insurance Company, Endowment Realty Investors, The Rockefeller Foundation, and investors represented by Nomura Securities and others. The Company co-invested with three of these institutional investors during 1997. AMLI BRAND. All of the Communities are operated by the Company under the AMLI brand name. AMLI believes promoting its brand name creates an awareness in the marketplace of quality rental living and extraordinary customer service for both current and prospective residents. To maximize the effectiveness of the AMLI brand name, the Company has a wide range of programs and practices to maintain uniformly high quality service and consistent apartment quality at all of the Communities. RECENT DEVELOPMENTS Since the Initial Offering, the Company has expanded its portfolio of Communities through the acquisition, development and selective expansion of its apartment communities. DEVELOPMENT At the time of the Initial Offering in 1994, the Company and its predecessors had not begun the development of a new multifamily community for five years. Since that time, the development pipeline has grown steadily and extensively. Approximately 44% of the 6,022 apartment homes developed or under development by the Company have been built with a co- investment partner and the other 56% have been developed or are under development solely for the Company. As used herein, the "Company Development Communities" means Communities under development by the Company for its own account and the "Co-Investment Development Communities" refers to Communities under development on behalf of the Company's co-investment joint ventures. In conjunction with the acquisition of interests in seven apartment communities from Trammell Crow Residential Midwest ("TCR-Midwest"), AMLI and its Service Companies acquired TCR-Midwest's Development and Management Operations in Indianapolis and Kansas City in December 1997. Through 1997, most of the Company's development activities have been in Atlanta and Dallas. The Company anticipates developing more apartment homes in its three Midwest markets (Chicago, Indianapolis and Kansas City) in 1998 and 1999 than in either Atlanta or Dallas. The tables set forth below summarize certain information related to the Company Development Communities and the Co-Investment Development Communities. The Company Development Communities and Co-Investment Development Communities exclude 2,078 apartment homes located in eight communities for which development was completed and property operations were stabilized prior to December 31, 1997. COMPANY DEVELOPMENT COMMUNITIES -------------------------------
AMOUNT COMPANY PROJECTED ANTICIPATED EXPENDED DEVELOPMENT NO. OF COMPLETION COMPLETION DEVELOPMENT THROUGH COMMUNITIES LOCATION UNITS PERCENTAGE DATE COST 12/31/97 - ----------- -------- ------ ---------- ---------- ----------- -------- (in thousands) (in thousands) AMLI: on the Parkway . Dallas, Texas 240 30% Sep. 1998 $ 15,600 $ 4,619 at Wells Branch. Austin, Texas 576 42% Feb. 1999 34,200 14,199 at Deerfield . . Plano, Texas 240 14% Mar. 1999 16,500 2,270 at AutumnChase III . . . . . . Carrollton, Texas 240 75% Jul. 1998 14,500 10,916 at Peachtree City. . . . . . Atlanta, Georgia 312 84% Mar. 1998 21,700 18,163 at Park Creek. . Gainesville, Georgia 200 44% Jul. 1998 12,600 5,548 at Killian Farms Gwinnett County, Georgia 216 16% Jan. 1999 13,900 2,258 at Oakhurst. . . Aurora, Illinois 464 32% Jun. 1999 45,100 14,517 ----- -------- -------- 2,488 $174,100 $ 72,490 ===== ======== ========
CO-INVESTMENT DEVELOPMENT COMMUNITIES -------------------------------------
AMOUNT CO-INVESTMENT COMPANY NO. PROJECTED ANTICIPATED EXPENDED CO-INVEST- DEVELOPMENT PERCENTAGE OF COMPLETION COMPLETION DEVELOPMENT THROUGH MENT COMMUNITIES OWNERSHIP LOCATION UNITS PERCENTAGE DATE COST 12/31/97 PARTNER - ----------- ---------- ---------------- ----- ---------- ---------- ----------- ---------- ---------- (in (in thousands) thousands) AMLI at: Fox Valley 25% Aurora, Illinois 272 99% Jan. 1998 $ 24,500 $ 24,403 The N.Y. Common Retirement Fund Fossil Creek 25% Ft. Worth, Texas 384 88% Jan. 1998 22,700 20,896 The N.Y. Common Retirement Fund Northwinds 35% Atlanta, Georgia 800 49% Jan. 1999 54,800 26,888 North- western Mutual Life ----- -------- -------- 1,456 $102,000 $ 72,187 ===== ======== ========
The Company believes that the operating prospects for the Development Communities remain favorable based on current economic and other conditions existing in the areas in which the Company's development activities are focused. As with any development project, there are uncertainties and risks associated with development. While the Company has prepared development budgets and has estimated completion and stabilization target dates for each of the Development Communities based on what it believes are reasonable assumptions, there can be no assurance that actual costs will not exceed current budgets or that the Company will not experience construction delays due to the inability of building materials, weather conditions or other events beyond the Company's control. Similarly, adverse market conditions at the time that the Development Communities become available for leasing could affect the rental rates that may be charged and the period necessary to achieve stabilization at the Development Communities, which could have a material adverse effect on the financial condition of the affected Development Communities. CO-INVESTMENT DEVELOPMENT In September 1996, AMLI closed on two separate joint ventures with The New York Common Retirement Fund ("NYCRF") for the development of two multi- family residential communities. Through these ventures, the Company is currently developing a 272 apartment home community in metropolitan Chicago, Illinois and a 384 apartment home community in Ft. Worth, Texas. Construction of each of these Development Communities had been commenced earlier in 1996 by AMLI. Construction of AMLI at Fox Valley, the Development Community located in metropolitan Chicago, is substantially complete at a cost of approximately $24.5 million, with stabilization expected in the third quarter of 1998. Construction of AMLI at Fossil Creek, the Development Community located in Ft. Worth, is substantially complete at a cost of approximately $22.7 million, with stabilization expected in the third quarter of 1998. The Company owns a 25% interest in the joint ventures that own these Development Communities and The New York Common Retirement Fund owns a 75% interest. In September 1997, AMLI formed its third development co-investment venture with Northwestern Mutual Life Insurance Company ("NML") in order to develop AMLI at Northwinds, an 800 apartment home community in Atlanta. NML is providing construction and permanent financing in the amount of $33.8 million of the total $54.8 million estimated cost. At December 31, 1997, the first units have been occupied and development is approximately 49% complete. Construction completion and the achievement of stabilized operations are anticipated to occur in 1999. ACQUISITIONS The table set forth below summarizes the Company's acquisition activities during 1997. 1997 ACQUISITION ---------------- AMLI RESIDENTIAL 1997-1998 ACQUISITIONS
Company No. of Acquisition Acquisition Interest Communities Location Units Date Cost Loan Rate - ---------- -------- ------ ----------- ----------- ---------- ---------- AMLI at: Paces North Smyma, Georgia 152 06/11/97 $ 8,900 Lantana Ridge Austin, Texas 354 09/30/97 23,800 Bent Tree North Dallas, Texas 300 10/15/97 19,000 Bishop's Gate Plano, Texas 266 10/17/97 23,000 14,000 9.10% Poplar Creek Schaumburg, Illinois 196 12/18/97 12,500 9,500 Variable Conner Farms Indianapolis, Indiana 300 12/22/97 21,700 13,000 7.00% Town Center Overland Park, Kansas 156 12/22/97 13,750 ----- -------- ------ Total Company Communities 1,724 $122,650 36,500 ----- -------- ------
Company Acquisi- Acquisi- Co-Investment Percentage No. of tion tion Interest Co-Investment Communities Ownership Location Units Date Cost Loan Rate Partner - ------------- ----------- -------- ------ -------- -------- ------ -------- ------------- AMLI at: Danada 10% Wheaton, Illinois 600 02/28/97 $ 48,400 24,500 7.33% State Teachers Retirement System of Ohio Verandah 35% Arlington, Texas 538 03/25/97 25,400 16,940 7.55% La Moon, Inc. Regents Crest 25% Overland Park, Kansas 368 12/22/97 25,600 16,300 7.50% ERI Regents Crest, Inc. ----- -------- ------ Total Co-investment Communities 1,506 $ 99,400 57,740 ----- -------- ------ Total Communities 3,230 $222,050 94,240 ===== ======== ======
On December 22, 1997, the Company closed the first part of its acquisition of apartment home communities from TCR-Midwest. The initial closing included rights to four development sites in Indianapolis and Kansas City and included the hiring of key development and management personnel. The Company acquired AMLI at Conner Farms, a 300 apartment home community in Indianapolis for an allocated cost of $21.7 million, financed in part with a $13.0 million, 7.0% fixed rate insurance company loan with a maturity on June 15, 2003; and AMLI at Town Center, a newly-constructed 156 apartment home community in Overland Park, Kansas whose development had been financed by a $13.0 ADC (Acquisition, Development, Construction) loan from the Company. A co-investment venture in which the Company has a 25% interest concurrently acquired AMLI at Regents Crest, a 368 apartment home community in Overland Park, Kansas, for $25.3 million, including the assumption of a $16.3 million, 7.5% fixed rate mortgage loan due December 15, 2003. As part to the total $132 million purchase price payable to TCR- Midwest in 1997 and 1998 or 1999, the Company paid in December 1997 $1.0 million for the rights to acquire four Midwest sites for future development, and the Company's general contractor affiliate paid $3.4 million for the construction organization and personnel. The Company anticipates that it will close the acquisition from TCR-Midwest of three other communities containing 814 apartment homes and the general partnership interest in another 400 apartment home community later in 1998. On January 21, 1998, the Company acquired a 288 apartment home community in Atlanta, Georgia for $18.4 million financed in part with a $12.9 million, 6.95% fixed rate, ten-year loan from an insurance company. FINANCING In June 1997, the Company's secured $100 million line of credit became unsecured, and in October 1997, a fifth bank was added to the bank group, the line of credit was increased to $150 million, and pricing was decreased from 135 to 130 basis points over LIBOR. At December 31, 1997, the Company's remaining availability on its $150 million line of credit was $50 million. In October, the Company's $40.75 million tax-exempt bond issue was re-marketed on an unsecured basis. In July 1997, the Company completed a public offering of 1,694,700 common shares priced at $23.4375 per share. Proceeds totalled approximately $37.5 million (net of 5.75% in commissions and expenses) and were used to repay debt. On February 20, 1998, the Company agreed to privately place $75 million of a new series of convertible preferred shares with an institutional investor. The shares which will be issued at $24 per share and which will carry an initial annual dividend of $1.80 per share, are non-callable for nine years and not subject to mandatory redemption. The preferred shares are convertible into common shares on a one-to-one basis. The minimum $1.80 per share annual dividend will increase to match the dividend rate on AMLI's common shares (currently $1.76 per share annually) if the annual dividend rate on common shares is increased to more than $1.80 per share. The company anticipates funding to occur in three equal installments in March, June and September 1998. Total proceeds, net of an estimated 1.05% in offering costs, will be approximately $74.2 million. THE OPERATING PARTNERSHIP The Company carries on its business through the Operating Partnership and its affiliates, AMLI Management Company ("AMC"), AMLI Residential Construction, Inc. ("Amrescon") and AMLI Institutional Advisors, Inc. ("AIA") (collectively the "Service Companies"). The Company is the sole general partner of the Operating Partnership, a Delaware limited partnership, through which it owns the Communities, interests in co- investment Communities and interests in the Service Companies. At December 31, 1997, the Company owned an 84% partnership interest in the Operating Partnership, 10% was held by Amli Realty Co. and its affiliates ("ARC") and 6% was held by certain other third party investors. The Company's interest in the Operating Partnership entitles it to share in cash distributions from, and in the profits and losses of, the Operating Partnership in proportion to the Company's percentage ownership (apart from tax allocations of profits and losses to take into account pre-contribution property appreciation). In connection with each offering of shares by the Company, the net proceeds from the issuance of any such shares are contributed to the Operating Partnership in exchange for a corresponding number of OP Units. The Company holds one OP Unit in the Operating Partnership for each common share and each preferred share that it has issued. The OP Units issued to ARC and certain Original Investors are convertible into common shares on a one-for-one basis. As the general partner of the Operating Partnership, the Company has the exclusive power under the agreement of limited partnership of the Operating Partnership to manage and conduct the business of the Operating Partnership. The Board of Trustees of the Company manages the affairs of the Company by directing the affairs of the Operating Partnership. The Operating Partnership will terminate in the year 2093 unless terminated earlier in connection with, among other things, a merger or a sale of all or substantially all of the assets of the Operating Partnership or upon a vote of the partners. THE SERVICE COMPANIES The management, institutional advisory and construction management businesses of the Company are conducted through AMC, AIA and Amrescon, respectively, because, among other things, the third-party income from their respective businesses might jeopardize the Company's REIT status under Sections 856 through 860 of the Code if such operations were carried on directly by the Operating Partnership. The Operating Partnership holds 100% of the nonvoting preferred stock of each of the Service Companies and also holds certain subordinated notes of AMC, AIA and Amrescon. The nonvoting preferred stock is entitled to dividends equal to 95% of all distributions of the Service Companies. ARC holds 95% of the voting common stock of each of the Service Companies which, in each case, is generally entitled to dividends equal to 4.75% of all distributions. The remaining 5% of the voting common stock of each of the Service Companies, entitled to .25% of all distributions, is owned by the Operating Partnership. The charter of each of the Service Companies requires the quarterly distribution as dividends of the "net operating cash flow" (as defined in each such charter) of each such Service Company, if there are funds legally available for dividends. Such provision of the charter of each of the Service Companies may not be changed without the consent of the holders of the preferred stock. Accordingly, the Operating Partnership is entitled to receive substantially all of the available net cash flow from each of the Service Companies through ownership of the preferred stock thereof and the subordinated notes, and thereby enjoys substantially all of the economic benefit of the businesses carried on by such companies. According to the charter of each of the Service Companies, a majority of the members of the board of directors of the respective Service Company must be individuals who are not officers, directors or employees of ARC, and all contracts for services between a Service Company and ARC must be approved by a majority of the unaffiliated directors of the relevant Service Company. Ownership of 95% of the voting common stock will enable ARC to control the election of the board of directors (including the unaffiliated directors) of the Service Companies. The holders of a majority of the nonvoting preferred stock of each Service Company are entitled to an approval right with respect to certain fundamental corporate actions, including the issuance of any additional shares of preferred stock or other senior securities, or a sale, lease or exchange of all or substantially all of the assets of, or the merger, consolidation or dissolution of, the respective Service Company. In addition, the Company has a right of first refusal (which may be assigned to a third party with the consent of ARC, such consent not to be unreasonably withheld) to acquire on its own behalf or on behalf of any controlled affiliate, the common stock of each of the Service Companies, subject to the consent of third-party clients and to applicable law. Such right of first refusal may only be exercised to the extent that the ownership of such common stock or assets would not disqualify the Company as a REIT. THE BUSINESS OF AMC AMC, a Delaware corporation, provides management and leasing services to each of the Communities presently owned by the Company. In addition, AMC provides such services to the co-investment Communities. AMC is expected to manage any additional multifamily communities acquired or developed by the Operating Partnership, as well as any additional co- investment communities acquired through separate account relationships of AIA, subject to the consent of the co-investment partners. Management and leasing services are provided to the Communities and the co-investment Communities pursuant to the terms of a management contract which has an initial term of three years and which AMC has agreed not to terminate so long as the Operating Partnership is not in material breach of such contract. Residential property management and leasing services provided by AMC are performed at market rates. AMLI Corporate Homes ("ACH"), a division of AMC, leases apartment homes from the Communities and the co- investment Communities for short-term residents. Such ACH leases are at market rates. THE BUSINESS OF AIA AIA, an Illinois corporation, renders investment advice to institutional capital sources, primarily pension plans, endowments, foundations and insurance companies. AIA intends to continue to develop its institutional investment advisory business and will continue to manage and administer existing advisory relationships with institutional investors. The Company actively pursues co-investments through relationships administered by AIA. In this way, the Company seeks to diversify the sources of capital for investments in properties. In addition to generating advisory fee income for AIA, these separate account relationships have the potential to generate fee income for (1) AMC in cases where AMC is engaged to manage the communities acquired by the co- investment ventures and (2) Amrescon, in cases where Amrescon is engaged as general contractor with respect to co-investment development ventures. THE BUSINESS OF AMRESCON Amrescon, a Delaware corporation, provides general contracting, construction management and landscaping services to the Company and its managed ventures. Amrescon is based in Atlanta, Georgia, has regional offices in Dallas, Texas, Indianapolis, Indiana and Kansas City, Kansas, and is engaged exclusively in the design, development, construction and landscaping of upscale multifamily properties on behalf of the Company. A division of Amrescon, Amli Landscape Co. performs all landscape installation and maintenance services for the Communities located in Atlanta. LEASES AMC uses a standard Company lease modified at each Community to the extent necessary to comply with state and local law or custom. The term of a lease varies with local market conditions, however, six-month and one- year leases are most common. Generally, the leases provide that unless the parties agree in writing to a renewal, the tenancy will convert at the end of the lease term to a month-to-month tenancy, subject to the terms and conditions of the lease, unless either party gives the other at least 30 days prior notice of termination. All leases are terminable by the Operating Partnership for nonpayment of rent, violation of property rules and regulations or other specified defaults. LEASING Employees of AMC are responsible for leasing activities at the Communities. Leasing consultants meet with prospective residents and show models and vacant units. The leasing consultants maintain contact with existing residents to determine the residents' level of satisfaction with their community. All leasing consultants participate in a comprehensive formal training program administered by AMC. AMC, as it deems necessary, may employ the services of, and pay customary fees to, unaffiliated real estate brokers, apartment locator services and existing tenants for locating prospective tenants. COMPETITION All of the Communities are located in developed areas that include other upscale apartment communities. The number of competitive upscale apartment communities in a particular area could have a material effect on AMC's ability to lease apartment units and on the rent charged at the Communities or at any newly developed or acquired communities. The Company may be competing with others that have greater resources than the Company and whose officers and directors have more experience than the Company's officers and Trustees. In addition, other forms of multifamily residential communities, and single-family housing, provide housing alternatives to potential residents of the Communities. INSURANCE The Company believes that each of the Communities is covered by adequate fire, flood and property insurance provided by reputable companies and with commercially reasonable deductibles and limits. The Company maintains comprehensive liability, all-risk property insurance coverage with respect to the Communities and with policy specifications, limits deductibles customarily carried for similar communities. The Company has obtained title insurance insuring fee title to the Communities in an aggregate amount which the Company believes to be adequate. ENVIRONMENTAL MATTERS Many jurisdictions have adopted laws and regulations relating to environmental controls and the development of real estate. Such laws and regulations could affect the Communities and any additional communities acquired or developed by the Company in the future and/or operate to reduce the number and attractiveness of investment opportunities available to the Company. The effect upon the Company of the application of such laws and regulations cannot be predicted. Such laws and regulations have not had a material effect on the Company's financial condition and results of operations to date. The Company is not aware of any environmental condition on any of the Communities, or the communities planned to be developed by the Company, which is likely to have a material adverse effect on the Company's financial condition and results of operations. EMPLOYEES The Company, the Operating Partnership and the Service Companies employ a total of approximately 625 persons. AMC employs substantially all of the professional employees that are currently engaged in the residential property management and leasing business on behalf of the Company. GROWTH STRATEGIES The Company seeks to increase cash flow by intensively managing the Communities, selectively developing and acquiring additional high-quality multifamily communities, and advising and co-investing with institutional partners. The Company believes that, over time, a portfolio consisting of high-quality communities, which the Company believes is typical of its portfolio, will realize returns exceeding national averages for multifamily properties due to expected higher annual growth in cash flows, reduced on- going maintenance costs and capital expenditures, and higher relative levels of residual market values. GROWTH FROM PROPERTY OPERATIONS The Company seeks to increase cash flow at the Communities through rent increases while maintaining high occupancy rates and aggressive management of its operating expenses. As of December 31, 1997, the weighted average occupancy rate of the stabilized Communities was 93%, and the average monthly rental rate per apartment home was $730, or $0.84 per square foot. The Company owns multifamily communities with service, lifestyle and physical amenities that residents value and that support higher rental rates. Typical services that are provided at the Communities, which are customary for similar upscale multifamily properties, include pet care or plant watering for out-of-town tenants; on- site overnight delivery drop-off boxes; on-site pick-up of dry cleaning or other items; occasional social events for residents designed to provide a sense of community; frequent maintenance programs; and a policy of guaranteeing attention to any maintenance or repair request from a tenant within 48 hours. AMLI believes that a key element of its continued success is its ability to create brand loyalty in the mind of the resident customer. All communities owned and operated by the Company use the AMLI [registered trademark] brand name as part of the strategy to promote brand identity for quality living, as well as to create franchise value. The Company believes that the AMLI [registered trademark] brand name creates an awareness in the marketplace such that customers of the Company equate the AMLI [registered trademark] brand with quality multifamily communities and exceptional customer service. The Company believes the expertise and experience of its on-site personnel are essential to the success of its brand strategy and cash flow growth from the Communities. A wide range of programs and practices are in place to ensure that the Company's on-site personnel provide uniformly high-quality service. These programs and practices include the following: (i) incentive-based compensation that rewards employees who achieve superior results; (ii) extensive training programs focusing on marketing, selling skills and negotiating techniques; (iii) requiring leasing agents to have a strong knowledge of the Communities and competing properties; (iv) periodic unit inspections designed to ensure that vacant apartments are rent-ready and attractive to show; (v) a newsletter that creates a sense of a team and gives special recognition to employees who have made outstanding contributions or who have experienced a significant personal event; (vi) manager training programs that focus on the financial analysis applicable to apartment communities; (vii) development training for all maintenance staff to further skills and knowledge of industry practices; (viii) annual incentive group trips for managers, leasing personnel and maintenance employees; and (ix) written manuals describing various policies and procedures that are to be observed by employees. In addition, the Company has training facilities in Dallas and Atlanta that are used for training programs and seminars for management, leasing and maintenance employees. By establishing critical mass in each of its markets, the Company expects to achieve economies of scale in its operations, resulting in reduced operating and administrative expenses without reductions in service. In addition, the relatively low average age of the Communities contributes to reduced operating and maintenance expenses. At December 31, 1997, the average age of the stabilized Communities was approximately eight years. The Company also believes that attention to landscaping and physical appearance contributes to reducing resident turnover and enhances the rental rates and occupancy levels of the Communities. Additionally, AMLI has a dedicated team whose function is to evaluate new or enhanced products, features or services that might be incorporated in either the apartment homes or the Communities to produce complementary income from property operations and maximize customer/resident satisfaction within the Communities. Some of the products, features and services either in existence or being considered include the construction of carports and garages, private phone and cable systems, custom rental insurance, energy efficient lighting programs, water submetering, bulk purchases of utilities and card key systems for laundry facilities. DEVELOPMENT STRATEGIES The Company actively pursues the development of new communities. The Company seeks to develop multifamily communities that meet an identified market demand, are well-located in markets the Company believes will experience above-average growth rates and produce first-year stabilized cash on cash returns of 100 to 200 basis points higher than capitalization rates available on acquisitions in these markets. The Company's management has significant experience in the development of multifamily communities and believes that this expertise will permit it to successfully capitalize on new development opportunities. The Company has identified certain sub-markets within its seven identified cities where strong multifamily property demand exceeds the level of new construction. The Company currently has development underway in Chicago, Atlanta, Dallas and Kansas City. In addition, the Company owns 56.5 acres of land, on which it expects to develop approximately 880 apartment homes. In addition, the Company has acquired 45 additional acres as of February 27, 1998 on which it intends to develop 724 apartment homes. The following table summarizes the Company's development activities for the period from the date of its Initial Offering in February 1994 through December 31, 1997: AMLI DEVELOPMENT ACTIVITIES No. of Communities Developed No. of Estimated or Under Apartment Development Year Development (1) Homes Budget (2) - ---- --------------- --------- ------------ 1994. . . . . . . . . . 2 734 $ 37,600,000 1995. . . . . . . . . . 5 1,280 75,900,000 1996. . . . . . . . . . 6 1,672 113,600,000 1997. . . . . . . . . . 6 2,336 166,300,000 --- ----- ------------ Total . . . . . . . 19 6,022 $393,400,000 === ===== ============ - -------------------- (1) Represents the number of Communities for which development was commenced during the applicable year. Of the Communities developed by the Company since the Initial Offering, thirteen Communities were developed by the Company for its own account and six for co-investment joint ventures. The Company's ownership interest in these co-investment joint ventures ranges from 25% to 40%. (2) The Company's share of the total estimated development budget is expected to be approximately $252 million. AMLI's development philosophy is to design communities and apartment homes that meet the needs of both current and prospective residents. The Company builds to hold and manage for long-term investment and, as such, utilizes high quality, long-lasting building products for exterior and interior construction. The Communities are extensively landscaped to enhance curb appeal and to create an attractive living environment for the residents. The apartment homes are designed and appointed with features in select units such as more closet space, larger kitchens with mirrored backsplashes and upgraded appliance packages, nine foot ceilings, crown molding, built-in work spaces, additional wiring to accommodate private phone and cable systems, garden-style tubs and double vanities. ACQUISITION STRATEGIES The Company actively pursues the acquisition of new communities. The Company seeks to acquire, directly or through co-investments, multifamily communities that are available at attractive prices, capable of enhanced performance through application of the Company's management expertise and that are in the Company's target markets. The Company follows a strategy of acquiring (directly or through co-investments) institutional quality apartment communities, which typically have high-quality construction, amenities, location and market position, and are therefore attractive investments for institutional investors, such as insurance companies, endowments, foundations and pension funds. The following table summarizes the Company's acquisition activities for the period from the date of the Initial Offering through December 31, 1997: AMLI ACQUISITION ACTIVITIES No. of No of Total Communities Apartment Acquisition Year Acquired (1) Homes Costs (2) - ---- ------------ ---------- ------------ 1994. . . . . . . . . . . . 8 2,184 $ 99,428,000 1995. . . . . . . . . . . . 3 794 51,763,000 1996. . . . . . . . . . . . 2 1,080 82,152,000 1997. . . . . . . . . . . . 10 3,230 222,050,000 --- ----- ------------ Total . . . . . . . . . 23 7,288 $455,393,000 === ===== ============ - -------------------- (1) Of these acquisitions, twelve Communities were acquired by the Company directly and eleven through co-investment joint ventures. The Company's ownership interest in these co-investment joint ventures ranges from 10% to 40%. (2) The Company's share of the total acquisition costs was $202.4 million. The Company currently focuses on acquiring properties in selected markets in the Southwest, Southeast and Midwest regions of the United States. The Company's acquisition teams consist of experienced finance, development and asset management professionals working together to identify opportunities, evaluate property information, negotiate and successfully execute favorable transactions for the Company. The Company's acquisition process is driven by thorough market research. Successful acquisitions are based upon a knowledge and careful analysis of employment, population and income trends, quality of infrastructure, retail and commercial services, transportation and utility systems, schools and property tax policies. The Company's acquisition teams review and monitor economic data and economic development information and maintain close contact with real estate owners, developers, brokers, lenders, insurance companies, government agencies and other institutions to identify potential properties for acquisition by the Company. INSTITUTIONAL CO-INVESTMENTS AMLI actively acquires and develops multifamily communities in co- investment joint ventures with institutional investment partners such as insurance companies, endowments, foundations, and public and private pension funds. The Company believes that these co-investment partnerships create an opportunity to leverage the Company's acquisition, development and management experience and generate higher returns on its invested capital. AMLI differentiates itself from other multifamily REITs through its co-investment business and its established relationships with a number of institutional partners. By co-investing, AMLI is able to (i) generate higher returns on its equity investment (as compared to wholly-owned communities) through the receipt of supplemental acquisition, development, construction and other fee income; (ii) build market share and thereby benefit from economies of scale; (iii) expand the AMLI {registered trademark] brand identity; and (iv) diversify its sources of capital for its acquisition and development activities. In addition to the incremental fee income, AMLI receives its pro rata share of the real estate income generated by the on-going operation of each community owned through a co- investment joint venture. All of the co-investment Communities are managed by the Company and operated under the AMLI [registered trademark] brand name. While each co-investment is structured individually, in a typical venture the Company (i) acts as the general partner or managing member of the venture; (ii) handles the administration of the venture; (iii) manages the day-to-day operations of the community held by the venture; (iv) in the case of a venture with a property under development, oversees construction and development; and (v) recommends the sale or refinancing of the property. All of AMLI's co-investments are made on a pari passu basis with its co-investment partners and any disputes over sale or refinancing decisions are generally resolved through the exercise of a buy-sell provision. As of December 31, 1997, the Company had established co- investment relationships with Allstate Insurance Company, Erie Insurance Group, The New York Common Retirement Fund, Northwestern Mutual Life Insurance Company, Endowment Realty Investors, The Rockefeller Foundation and investors represented by Nomura Securities and others. Since the Initial Offering, the Company has entered into 17 co- investment ventures for the acquisition or development of multifamily apartment communities. The table below summarizes the co-investment activities of the Company since the Initial Offering: AMLI CO-INVESTMENT ACTIVITIES No. of No. of Total No. of Apartment No. of Apartment No. of Communities Homes Communities Homes Apartment Year Acquired Acquired Developed(1) Developed(2) Homes - ---- ----------- --------- ------------ ------------ --------- 1994. . . . 3 1,026 1 502 1,528 1995. . . . 3 794 1 446 1,240 1996. . . . 2 1,080 3 878 1,958 1997. . . . 3 1,506 1 800 2,306 --- ------ --- ------ ------ Total . . 11 4,406 6 2,626 7,032 === ====== === ====== ====== - -------------------- (1) Represents the number of Communities for which development was commenced during the applicable year. (2) Represents the number of apartment homes planned for the Community for which development was commenced in the applicable year. The table below sets forth the total expected capital outlays for all 17 of these development and acquisition ventures, the Company's expected share of such capital requirements and the one-time and recurring annual fee income that the Company and the Service Companies have received from these 17 joint venture relationships through December 31, 1997: CO-INVESTMENT ACTIVITIES SINCE THE INITIAL OFFERING
1994 1995 1996 1997 Total (4) ----------- ----------- ------------ ------------ ------------ Total Expected Project Cost (1) . . . . . . . $71,191,000 $79,682,000 $146,819,000 $154,252,000 $451,944,000 AMLI Expected Equity Investment. . . . . . . 7,641,000 7,548,000 25,165,000 15,046,000 55,400,000 Actual Fee Income to AMLI and the Service Companies Initial or One-Time Fees (2) . . . . . . . . . . 287,000 607,000 1,778,000 3,284,000 5,956,000 Annual Fee Income (3). . . . . . . . . . . . . 221,000 769,000 1,363,000 2,164,000 4,517,000 - -------------------- (1) Includes $249.4 million which has been or will be debt financed. Total expected costs are included in the year in which a development project begins or an acquisition closes. (2) The one-time fee income is shown net of intercompany eliminations to the extent of the Company's percentage interest in its co-investment joint ventures. One time fees include general contractor fees, development and redevelopment fees and property acquisition fees. The amounts shown represent the portion of the fees earned in the applicable year. The initial and one-time fee income for 1997 represents amounts earned by the Company for the year ended December 31, 1997. Subsequent to December 31, 1997, additional one-time fees of approximately $1,042,000 are anticipated to be earned by the Company and the Service Companies in connection with the completion of three Development Communities under development on behalf of existing co-investment joint ventures. (3) Annual fee income includes property management fees, asset management fees and partnership administration fees. The amounts shown represent the portion of the fees earned in the applicable year. The annual fee income for 1997 represents amounts earned by the Company for the year ended December 31, 1997. Annual fee income will increase as additional co-investment Communities under development are completed.
The Company has received indications of interest and is pursuing other commitments for the acquisition or development of additional co-investment communities. In addition, the Company is continually working to expand the base of its institutional joint venture partners. HISTORY OF THE AMLI RESIDENTIAL PROPERTY BUSINESS The Company was formed in February 1994 to continue and expand the multifamily property business previously conducted by ARC. ARC was founded in 1980 by Gregory T. Mutz and John E. Allen, the Chairman and Vice- Chairman of the Company, respectively. Ronald L. Jensen, Chairman of UICI, served on ARC's Board of Directors from 1980 to 1982. From the date of its inception through the date of the Initial Offering, ARC focused on owning, managing, leasing, acquiring and developing upscale residential apartment communities in the Southwest, Southeast and Midwest areas of the United States. During the period from 1982 to 1989, ARC was actively engaged in both the development and acquisition of multifamily communities. From 1989 through the date of the Initial Offering, ARC exclusively pursued acquisition opportunities due to ARC's belief that this strategy provided a more favorable return relative to the risk taken than did the development of new properties during this period. From the date of the Initial Offering to the present, AMLI has pursued a strategy of selective acquisitions and developments in its primary markets. Prior to 1994 all communities currently wholly-owned were originally acquired as co-investments between ARC and the Original Investors in various Property Partnerships. The table below sets forth ARC's and the Company's history of acquiring and developing apartment projects:
AT DECEMBER 31, ------------------------------------------------------------------------------ 1982- 1997 1996 1995 1994 1993 1992 1991 1990 ------- ------- ------- ------- ------- ------- ------- ------- WHOLLY-OWNED: Units at beginning of year. . . . . . . 9,824 9,600 9,789 8,207 6,793 5,673 5,103 -- Units Acquired. . . . 1,724 -- -- 1,582 1,414 1,120 570 3,460 Units Sold. . . . . . (350) -- (421) -- -- -- -- -- Units Developed . . . 452 224 232 -- -- -- -- 1,643 Total wholly owned units at end of year. . . 11,650 9,824 9,600 9,789 8,207 6,793 5,673 5,103 CO-INVESTMENTS: Units at beginning of year . . . . . . 3,677 2,245 1,451 425 425 425 425 -- Units Acquired. . . . 1,506 1,080 794 1,026 -- -- -- 150 Units sold. . . . . . -- (150) -- -- -- -- -- -- Units Developed . . . 668 502 -- -- -- -- -- 275 Total co-investment units at end of year . . . . . . 5,851 3,677 2,245 1,451 425 425 425 425 Total units . 17,501 13,501 11,845 11,240 8,632 7,218 6,098 5,528
ITEM 2. COMMUNITIES STABILIZED COMMUNITIES The Communities include 45 stabilized multifamily apartment communities containing 17,501 apartment homes operated under the AMLI [registered trademark] brand name. Twenty-nine of the stabilized Communities, containing an aggregate of 11,650 apartment homes, are directly owned by the Company (the "Wholly-Owned Communities") and sixteen Communities, containing an aggregate of 5,851 apartment homes, are owned through co-investment joint ventures (the "Co-Investment Communities"). The stabilized Communities are located in the markets described in the table below: Wholly-Owned Co-Investment Total Communities Communities ------------- ------------ ------------ Location No. Units No. Units No. Units - -------- ---- ----- ---- ----- ---- ----- Dallas/Ft. Worth, Texas . . . . . . . . . 13 5,330 12 4,792 1 538 Atlanta, Georgia. . . . . 9 4,134 4 2,572 5 1,562 Chicago, Illinois . . . . 7 2,490 2 449 5 2,041 Austin, Texas . . . . . . 5 1,877 4 1,289 1 588 Indianapolis, Indiana . . 2 1,296 2 1,296 -- -- Eastern Kansas. . . . . . 6 1,620 5 1,252 1 368 Houston, Texas. . . . . . 3 754 -- -- 3 754 --- ------ --- ------ --- ----- Total . . . . . . . . 45 17,501 29 11,650 16 5,851 === ====== === ====== === ===== As of December 31, 1997, the average age of the stabilized Communities was approximately eight years, the average occupancy rate of the stabilized Communities was 93%, and the average monthly rental rate per apartment home was $730. DEVELOPMENT COMMUNITIES The Development Communities consist of eleven multifamily apartment communities or new phases of existing Communities which upon completion will contain 3,944 apartment homes. See "Growth Strategies-Development Strategy" for a discussion of the Company's development activities. The Development Communities are under development in the markets described in the table below: Company Co-Investment Development Development Total Communities Communities ------------- ------------ ------------- Location No. Units No. Units No. Units - -------- ---- ----- ---- ----- ----- ----- Atlanta, Georgia. . . . . 4 1,528 3 728 1 800 Dallas/Ft. Worth, Texas. . . . . . . . . . 4 1,104 3 720 1 384 Chicago, Illinois . . . . 2 736 1 464 1 272 Austin, Texas . . . . . . 1 576 1 576 -- -- ---- ----- ---- ----- ---- ----- Total . . . . . . . . 11 3,944 8 2,488 3 1,456 ==== ===== ==== ===== ==== ===== The Wholly-Owned Communities and the Co-Investment Communities are primarily oriented to residents demanding high levels of services and contain numerous tenant amenities, such as fitness centers, swimming pools, tennis courts, basketball and volleyball courts, miles of jogging trails and nature walks. Most of the apartment units have a patio, porch or sunroom, and many offer one or more additional features such as vaulted ceilings, microwave ovens, Palladian windows, fireplaces and washers and dryers or washer/dryer connections. The Wholly-Owned Communities and Co- Investment Communities that were developed by AMLI have won numerous awards for design, landscaping and architecture. The table set forth below summarizes certain information related to the Wholly-Owned Communities and the Co-Investment Communities.
1997 1997 AVERAGE WEIGHTED AVERAGE COLLECTED AVERAGE YEAR NUMBER UNIT SIZE RENT PHYSICAL WHOLLY-OWNED COMMUNITIES LOCATION COMPLETED OF UNITS (SQUARE FEET) PER UNIT OCCUPANCY - ------------------------ -------- --------- -------- ------------- -------- ---------- DALLAS/FT. WORTH, TX AMLI at AutumnChase Carrollton 1987/1996 450 832 $ 694 95% AMLI at Bent Tree Dallas 1996 300 943 824 94% AMLI at Chase Oaks Plano 1986 250 775 664 95% AMLI at Gleneagles Dallas 1987/1997 590 884 692 93% AMLI on the Green Ft. Worth 1990/1993 424 846 695 92% AMLI at Nantucket Dallas 1986 312 712 534 97% AMLI of North Dallas Dallas 1985/1986 1,032 878 634 94% AMLI at Reflections Irving 1986 212 822 657 97% AMLI on Rosemeade Dallas 1987 236 870 649 95% AMLI on Timberglen Dallas 1985 260 774 589 96% AMLI at Valley Ranch Irving 1985 460 848 672 95% AMLI at Bishop's Gate West Plano 1997 266 1,098 1,056 92% ------ ------ ------ ----- 4,792 860 685 94% ------ ------ ------ ----- AUSTIN, TX AMLI at the Arboretum Austin 1983 231 771 677 94% AMLI in Great Hills Austin 1985 344 747 668 95% AMLI at Lantana Ridge Austin 1997 354 881 800 87% AMLI at Martha's Vineyard Austin 1986 360 704 600 94% ------ ------ ------ ----- 1,289 776 687 92% ------ ------ ------- ----- ATLANTA, GA AMLI at Sope Creek Marietta 1982/1983/1995 695 910 690 92% AMLI at Spring Creek Dunwoody 1985-1989 1,180 916 704 94% AMLI at Vinings Atlanta 1985 360 1,040 760 93% AMLI at West Paces Atlanta 1992 337 933 859 94% ------ ------ ------ ----- 2,572 934 729 94% ------ ------ ------ ----- 1997 1997 WEIGHTED AVERAGE AVERAGE AVERAGE YEAR NUMBER UNIT SIZE RENT PHYSICAL WHOLLY-OWNED COMMUNITIES LOCATION COMPLETED OF UNITS (SQUARE FEET) PER UNIT OCCUPANCY - ------------------------ -------- --------- -------- ------------- -------- ---------- EASTERN KANSAS AMLI at Alvamar Lawrence 1989 152 828 664 91% AMLI at Crown Colony Topeka 1986/1997 220 783 573 93% AMLI at Regents Center Overland Park 1991/1995/1997 424 938 733 91% AMLI at Sherwood Topeka 1993 300 868 613 94% AMLI at Town Center Overland Park 1997 156 1,135 777 86% ------ ------ ------ ----- 1,252 905 673 91% ------ ------ ------ ----- INDIANAPOLIS, IN AMLI at Conner Farms Indianapolis 1993 300 1,082 796 93% AMLI at Riverbend Indianapolis 1983/1985 996 824 574 91% ------ ------ ------ ----- 1,296 884 626 91% ------ ------ ------ ----- CHICAGO, IL AMLI at Park Sheridan Chicago 1986 253 855 920 94% AMLI at Poplar Creek Chicago 1985 196 911 718 91% ------ ------ ------ ----- 449 879 832 93% ------ ------ ------ ----- TOTAL WHOLLY-OWNED COMMUNITIES AT DECEMBER 31, 1997 11,650 875 $ 693 93% ====== ====== ====== =====
1997 1997 WEIGHTED COMPANY'S AVERAGE AVERAGE AVERAGE CO-INVESTMENT PERCENTAGE YEAR NUMBER UNIT SIZE RENT PHYSICAL COMMUNITIES OWNERSHIP LOCATION COMPLETED OF UNITS (SQUARE FEET) PER UNIT OCCUPANCY - ---------------- ---------- -------- --------- -------- ------------- -------- ---------- ATLANTA, GA AMLI at: Barrett Lakes (1) 35% Atlanta 1997 446 1,032 $821 87% Pleasant Hill 40% Gwinnett County 1996 502 1,000 804 93% River Park (1) 40% Atlanta 1997 222 1,018 763 95% Towne Creek 1% Gainesville 1989 150 811 652 90% Willeo Creek 30% Roswell 1989 242 1,229 803 93% ------ ------ ---- ----- 1,562 1,029 788 91% ------ ------ ---- ----- CHICAGO, IL AMLI at: Chevy Chase 33% Buffalo Grove 1988 592 812 909 95% Danada Farms 10% Wheaton 1989/1991 600 869 916 92% Prairie Court 1% Oak Park 1987 125 845 1,050 95% Willowbrook 40% Willowbrook 1987 488 857 896 93% Windbrooke 15% Buffalo Grove 1987 236 903 944 96% ------ ------ ---- ----- 2,041 852 920 94% ------ ------ ---- ----- EASTERN KANSAS AMLI at: Regents Crest 25% Overland Park 1997 368 942 929 93% ------ ------ ---- ----- AUSTIN, TX AMLI at: Park Place 25% Austin 1985 588 677 584 95% ------ ------ ---- ----- DALLAS, TX AMLI at: Verandah 35% Arlington 1986/1991 538 733 687 94% ------ ------ ---- ----- 1997 1997 WEIGHTED COMPANY'S AVERAGE AVERAGE AVERAGE CO-INVESTMENT PERCENTAGE YEAR NUMBER UNIT SIZE RENT PHYSICAL COMMUNITIES OWNERSHIP LOCATION COMPLETED OF UNITS (SQUARE FEET) PER UNIT OCCUPANCY - ---------------- ---------- -------- --------- -------- ------------- -------- ---------- HOUSTON, TX AMLI at: Champions Centre 15% Houston 1994 192 857 712 95% Champions Park 15% Houston 1991 246 902 690 96% Greenwood Forest 15% Houston 1995 316 984 734 95% ------ ------ ---- ----- 754 924 714 95% ------ ------ ---- ----- TOTAL CO-INVESTMENT COMMUNITIES AT DECEMBER 31, 1997 5,851 886 $803 93% ====== ====== ==== ===== TOTAL 17,501 879 $730 93% ====== ====== ==== ===== (1) Fourth quarter average occupancy; in lease-up prior to the fourth quarter.
OCCUPANCY The following is a listing of approximate physical occupancy levels by quarter for the Company's Wholly-Owned Communities and Co-Investment Communities:
1997 1996 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, TEXAS AMLI at AutumnChase. . . . . 450 96% 97% 95% 97% 95% 95% 96% 94% AMLI at Bent Tree. . . . . . 300 93% N/A N/A N/A N/A N/A N/A N/A AMLI at Chase Oaks . . . . . 250 94% 96% 97% 96% 96% 96% 95% 98% AMLI at Gleneagles . . . . . 590 97% 99% 98% 96% 95% 98% 97% 95% AMLI on the Green. . . . . . 424 93% 95% 93% 91% 89% 96% 98% 97% AMLI at Nantucket. . . . . . 312 98% 98% 98% 99% 98% 97% 95% 98% AMLI of North Dallas . . . . 1,032 95% 96% 97% 94% 94% 95% 97% 97% AMLI at Reflections. . . . . 212 98% 98% 98% 96% 99% 97% 88% 95% AMLI on Rosemeade. . . . . . 236 92% 95% 97% 97% 98% 97% 98% 98% AMLI on Timberglen . . . . . 260 98% 95% 97% 97% 99% 97% 96% 97% AMLI at Valley Ranch . . . . 460 99% 97% 97% 95% 92% 93% 95% 95% AMLI at Bishop's Gate. . . . 266 90% N/A N/A N/A N/A N/A N/A N/A ------ ----- ----- ----- ----- ----- ----- ----- ----- 4,792 96% 97% 96% 95% 94% 96% 96% 96% ------ ----- ----- ----- ----- ----- ----- ----- ----- AUSTIN, TEXAS AMLI at the Arboretum. . . . 231 96% 100% 97% 97% 95% 96% 97% 96% AMLI in Great Hills. . . . . 344 97% 98% 97% 95% 94% 97% 97% 96% AMLI at Lantana Ridge. . . . 354 81% 83% N/A N/A N/A N/A N/A N/A AMLI at Martha's Vineyard. . 360 97% 98% 99% 97% 95% 95% 95% 95% ------ ----- ----- ----- ----- ----- ----- ----- ----- 1,289 92% 94% 98% 96% 95% 96% 96% 96% ------ ----- ----- ----- ----- ----- ----- ----- ----- ATLANTA, GEORGIA AMLI at Sope Creek . . . . . 695 93% 94% 93% 96% 93% 92% 96% 95% AMLI at Spring Creek . . . . 1,180 94% 95% 95% 97% 93% 97% 96% 96% AMLI at Vinings. . . . . . . 360 96% 96% 95% 93% 95% 95% 99% 99% AMLI at West Paces . . . . . 337 94% 92% 93% 98% 98% 95% 97% 92% ------ ----- ----- ----- ----- ----- ----- ----- ----- 2,572 94% 94% 94% 96% 94% 95% 96% 95% ------ ----- ----- ----- ----- ----- ----- ----- ----- 1997 1996 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 - ------------------ ---------- ------- ----- ----- ----- ------ ----- ----- ------ ------ EASTERN KANSAS AMLI at Alvamar. . . . . . . 152 93% 90% 93% 98% 99% 98% 96% 95% AMLI at Crown Colony . . . . 220 95% 98% 93% 97% 95% 96% 96% 86% AMLI at Regents Center . . . 424 87% 93% 99% 91% 90% 95% 94% 98% AMLI at Town Center. . . . . 156 92% N/A N/A N/A N/A N/A N/A N/A AMLI at Sherwood . . . . . . 300 97% 98% 95% 98% 96% 97% 97% 89% ------ ----- ----- ----- ----- ----- ----- ----- ----- 1,252 92% 95% 96% 96% 94% 97% 96% 93% ------ ----- ----- ----- ----- ----- ----- ----- ----- INDIANAPOLIS, INDIANA AMLI at Conner Farms . . . . 300 93% N/A N/A N/A N/A N/A N/A N/A AMLI at Riverbend. . . . . . 996 88% 89% 94% 92% 93% 96% 94% 94% ------ ----- ----- ----- ----- ----- ----- ----- ----- 1,296 89% 89% 94% 92% 93% 96% 94% 94% ------ ----- ----- ----- ----- ----- ----- ----- ----- CHICAGO, ILLINOIS AMLI at Park Sheridan. . . . 253 98% 99% 92% 93% 90% 92% 97% 96% AMLI at Poplar Creek . . . . 196 91% N/A N/A N/A N/A N/A N/A N/A ------ ----- ----- ----- ----- ----- ----- ----- ----- 449 95% 99% 92% 93% 90% 92% 97% 96% ------ ----- ----- ----- ----- ----- ----- ----- ----- 11,650 93.6% 95.0% 95.4% 95.1% 93.9% 95.7% 95.8% 95.3% ====== ===== ===== ===== ===== ===== ===== ===== ===== CO-INVESTMENT COMMUNITIES: - -------------------------- ATLANTA, GA AMLI at: lease lease lease lease lease lease lease Barrett Lakes . . . . . . . 35% 446 95% up up up up up up up lease lease lease Pleasant Hill . . . . . . . 40% 502 89% 91% 96% 97% 95% up up up lease lease lease lease lease lease River Park. . . . . . . . . 40% 222 95% 97% up up up up up up Towne Creek . . . . . . . . 1% 150 88% 97% 90% 93% 93% 97% 97% 97% Willeo Creek. . . . . . . . 30% 242 91% 91% 95% 98% 95% 97% N/A N/A ------ ----- ----- ----- ----- ----- ----- ----- ----- 1,562 92% 93% 95% 96% 95% 97% 97% 97% ------ ----- ----- ----- ----- ----- ----- ----- ----- 1997 1996 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 94% 96% 99% 97% 93% 96% N/A N/A Prairie Court . . . . . . . 1% 125 98% 98% 100% 97% 96% 97% 97% 97% Willowbrook . . . . . . . . 40% 488 94% 98% 94% 96% 92% 94% N/A N/A Windbrooke. . . . . . . . . 15% 236 98% 99% 100% 96% 92% 97% 96% 96% Danada Farms. . . . . . . . 10% 600 93% 94% 93% 92% N/A N/A N/A N/A ------- ----- ----- ----- ----- ----- ----- ----- ----- 2,041 94% 96% 96% 95% 93% 96% 96% 96% ------- ----- ----- ----- ----- ----- ----- ----- ----- EASTERN KANSAS AMLI at Regents Crest. . . . 25% 368 93% N/A N/A N/A N/A N/A N/A N/A ------- ----- ----- ----- ----- ----- ----- ----- ----- DALLAS, TX AMLI at Verandah . . . . . . 35% 538 94% 95% 96% 94% N/A N/A N/A N/A ------- ----- ----- ----- ----- ----- ----- ----- ----- AUSTIN, TX AMLI at Park Place . . . . . 25% 588 98% 97% 94% 96% 97% 95% 97% 97% ------- ----- ----- ----- ----- ----- ----- ----- ----- HOUSTON, TX AMLI at: Champions Centre. . . . . . 15% 192 97% 94% 98% 95% 92% 98% 95% 95% Champions Park. . . . . . . 15% 246 98% 99% 99% 97% 92% 95% 89% 89% Greenwood Forest. . . . . . 15% 316 95% 96% 96% 96% 93% 90% N/A N/A ------- ----- ----- ----- ----- ----- ----- ----- ----- 754 96% 96% 98% 96% 92% 94% 92% 92% ------- ----- ----- ----- ----- ----- ----- ----- ----- Total Co-Investment Communities . . . . . . . . . 5,851 94.2% 95.5% 95.8% 95.5% 93.8% 95.4% 95.3% 95.3% ------- ----- ----- ----- ----- ----- ----- ----- ----- TOTAL . . . . . . . . . . . . . 17,501 93.8% 95.2% 95.7% 95.3% 93.9% 97.2% 95.7% 91.6% ======= ===== ===== ===== ===== ===== ===== ===== =====
ITEM 3. LEGAL PROCEEDINGS None of the Company, the Operating Partnership, the Service Companies or the co-investment partnerships are presently subject to any material litigation nor, to the Company's knowledge, has any material litigation been threatened. The Company is party to routine litigation and administrative proceedings arising in the ordinary course of business, most of which are expected to be covered by liability insurance and none of which individually or in the aggregate are expected to have a material effect on the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of the Company's shareholders during the fourth quarter of the year ended December 31, 1997. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS The Company's common shares began trading on the NYSE on February 9, 1994, under the symbol "AML." The following table sets forth the quarterly high and low sales prices per share as reported on the New York Stock Exchange Composite Tape by CompuServe and the dividends paid by the Company with respect to the periods noted.
1997 1996 ----------------------------- ----------------------------- DIVIDENDS DIVIDENDS PER SHARE PER SHARE HIGH LOW (1) HIGH LOW (1) ------ ----- --------- ------ ----- --------- First Quarter . . . . . . . . . . . . $24.75 $22.50 $.43 $21.38 $19.38 $.43 Second Quarter. . . . . . . . . . . . 23.63 21.50 .43 21.00 18.88 .43 Third Quarter . . . . . . . . . . . . 23.75 21.75 .44 20.88 19.75 .43 Fourth Quarter. . . . . . . . . . . . 24.19 21.75 .44 23.50 20.25 .43 (1) The Company paid dividends with respect to these quarters in the quarter immediately following the quarter for which they are paid.
Dividends are declared and paid in the second month following the end of the calendar quarter in which the related cash flow from operations is generated. On February 27, 1998, the last reported sale price of the common shares on the NYSE was $22.50 per share. On the same date, the Company had 16,606,071 common shares outstanding held by 272 shareholders of record. The Company's current dividend payment level equals an annual rate of $1.76 per common share. The Company anticipates that it will continue to make regular quarterly dividend payments. Approximately 9.8% of dividends paid during 1997 represented a return of capital, and the Company estimates that approximately 18% of the total dividends to be paid in 1998 will be treated as a return of capital. Future distributions by the Company will be at the discretion of the Board of Trustees and will depend on the actual cash available for distribution and funds from operations of the Company, its financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Code and such other factors as the Board of Trustees deems relevant. The annual dividend payments for calendar year 1997 necessary for the Company to maintain its status as a REIT were approximately $1.21 per share. ITEM 6. SELECTED FINANCIAL DATA
HISTORICAL (in thousands) ----------------------------------------------------------------------- 1997 1996 1995 1994 1993 ----------- ----------- ---------- ----------- ----------- OPERATING DATA: Revenues. . . . . . . . . . $ 90,073 78,271 73,877 65,215 48,534 Income (loss) before minority interest and extraordinary item. . . . . . . . . . . 28,926 19,949 17,006 13,398 (1,695) Net income (loss) . . . . . 24,352 15,250 13,719 8,710 (1,695) Net income per common share (basic and diluted). . . . . . . . . 1.43 1.11 1.18 .75(A) N/A BALANCE SHEET DATA: Residential real estate, before accumulated depreciation . . . . . . . $ 653,947 495,519 442,865 451,762 338,895 Total assets. . . . . . . . 679,978 504,357 433,227 442,619 311,236 Total debt. . . . . . . . . 333,250 202,013 215,255 217,687 263,021 Minority interest . . . . . 51,463 44,871 39,077 42,743 -- Shareholders'/ partners' equity . . . . . 270,439 242,022 166,163 170,161 39,157 OTHER DATA: Funds from operations (B) . . . . . . . . . . . 42,172 32,009 27,404 22,033(A) 8,021 Funds from operations per common share (diluted) . . . . . . . . 2.13 2.01 1.90 1.53(A) N/A Cash dividends paid per common share. . . . . . . 1.73 1.72 1.71 1.05(A) N/A Net cash flow from operating activities. . . 39,129 31,934 28,334 26,269 10,594 Net cash flow for investing activities. . . (170,900) (66,864) (2,551) (143,308) (71,796) Net cash flow from (for) financing activities. . . 127,156 42,942 (26,964) 110,326 64,951 (A) The information presented is for the ten and one-half month period ended December 31, 1994 based on shares and units outstanding during the period. (B) Industry analysts generally consider funds from operations to be an appropriate measure of the performance of an equity REIT. Funds from operations is defined as net income (computed in accordance with generally accepted accounting principles), excluding gains (losses) from debt restructuring and sales of property, 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 funds from operations on the same basis. Funds from operations does not represent cash flows from operations as defined by generally accepted accounting principles ("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.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in thousands, except share data and rental rates per unit) The following discussion is based primarily on the consolidated financial statements of AMLI Residential Properties Trust (the "Company") as of December 31, 1997 and 1996 and for the years ended December 31, 1997 and 1996. This information should be read in conjunction with the accompanying consolidated financial statements and notes thereto. On January 30, 1996, the Company issued 1,200,000 convertible preferred shares for $20 per share, or $24,000, directly to four institutional investors and Amli Realty Co. ("ARC") in a registered offering. In November 1996, the Company completed a public offering of 2,976,900 common shares. The net proceeds of the issuance of the preferred shares and the public offering were used to reduce the Company's debt and fund development costs. In July 1997, the Company closed on the offering of 1,694,700 common shares. The net proceeds were used to pay down floating rate debt. As of December 31, 1997, the Company owned an 84% general partnership interest in the Operating Partnership, which holds the 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 December 31, 1997, the Company owned 17,677,580 OP Units and the limited partners owned 3,280,943 OP Units. RESULTS OF OPERATIONS During 1997, growth in property revenues and property operating expenses resulted both from increases at communities owned as of January 1, 1996 and from the newly constructed additional phases to existing communities. During the same period, the Company invested in five co-investment partnerships, which own the 600-unit AMLI at Danada Farms in Wheaton, Illinois, the 538-unit AMLI at Verandah in Arlington, Texas, the 368-unit AMLI at Regents Crest in Overland Park, Kansas, the 592-unit AMLI at Chevy Chase in Buffalo Grove, Illinois, and the 488-unit AMLI at Willowbrook in Willowbrook, Illinois. For the year ended December 31, 1997, net income attributable to common shares was $22,449, or $1.43 per share, on total revenues of $90,073 (including a $2,457 non-recurring gain on sale of a residential property). For the year ended December 31, 1996, net income attributable to common shares was $13,504, or $1.11 per share, on total revenues of $78,271. In 1997, net income included an extraordinary loss of $196 on early extinguishment of debt. In 1996, net income included an extraordinary loss of $1,118 on early extinguishment of debt and a non-recurring gain resulting from interest rate swap contracts of $584. On a "same community" basis, weighted average occupancy of the wholly- owned apartment homes decreased slightly to 93.8% for the year ended December 31, 1997 from 94.0% in the prior year. Weighted average collected rental rates increased by 1.3% to $661 from $653 per unit per month for the years ended December 31, 1997 and 1996, respectively. Including Co- Investment Communities, weighted average occupancy of the apartment homes decreased to 93.9% for the year ended December 31, 1997 from 94.1% in the prior year, and weighted average collected rental rates increased by 1.8% to $672 from $660 per unit per month for the years ended December 31, 1997 and 1996, respectively. COMPARISON OF YEAR ENDED DECEMBER 31, 1997 TO YEAR ENDED DECEMBER 31, 1996 Income before nonrecurring items, minority interest and extraordinary items increased to $26,469 for the year ended December 31, 1997 from $19,365 for the year ended December 31, 1996. The increase was primarily attributable to an $11,802 increase in total revenues, less a $2,997 increase in property operating expenses. For the years ended December 31, 1997 and 1996, net income was $24,352 and $15,250, respectively. Total property revenues increased by $9,686, or 12.7%. On a same community basis, total property revenues increased by $1,507; or 2.1%. Other property revenues increased by $1,070, or 32.7%, including increases in revenues from garages and carports ($216), from phone and cable systems ($175), and from various fees charged to residents ($679). The $2,116 increase in other revenue includes a $356 increase in share of income from co-investment ventures, a $1,451 increase in development fees and a $606 increase in asset management fees. Property operating expenses increased by $2,997, or 9.3%. On a same community basis, property operating expenses increased by $119, or 0.4%. The increase in individual operating expenses was generally proportionate to the increase in total operating expenses, except that utilities expense decreased by $74, or 1.8%, as the Company continued implementation of its Resident Utility Billing System and installation of water and energy conservation equipment, and insurance expense decreased by $119, or 12.2%. Interest expense, net of the amounts capitalized, increased to $11,995 from $11,916. General and administrative expenses increased to $2,850 for the year ended December 31, 1997 from $2,353 for the year ended December 31, 1996. The increase is primarily attributable to increased compensation and compensation-related costs. The extraordinary charge of $196, net of minority interest, for the year ended December 31, 1997 was $922 less than the comparable $1,118 extraordinary charge for the year ended December 31, 1996, as only two loans were repaid shortly ahead of their scheduled maturities in 1997. COMPARISON OF YEAR ENDED DECEMBER 31, 1996 TO YEAR ENDED DECEMBER 31, 1995 Income before nonrecurring items, minority interest and extraordinary items increased to $19,365 for the year ended December 31, 1996 from $15,508 for the year ended December 31, 1995. The increase was primarily attributable to a $1,010 decrease in interest expense and a $4,394 increase in total revenues, reduced by a $1,302 increase in property operating expenses. For the years ended December 31, 1996 and 1995, net income was $15,250 and $13,719, respectively. Total property revenues increased by $2,994, or 4.2%. On a same community basis, total property revenues increased by $2,477, or 3.6%. Other property revenues increased by $472, or 16.9%, including increases in revenues from garages and carports ($46), from phone and cable systems ($40), and from various fees charged to residents ($281). The $1,409 increase in other revenue includes a $535 increase in share of income from co-investment ventures, a $612 increase in development fees and a $284 increase in asset management fees. Property operating expenses increased by $1,302, or 3.1%. On a same community basis, property operating expenses increased by $1,088, or 3.7%. Interest expense, net of the amount capitalized, decreased to $11,916 from $12,926, or 7.8%. General and administrative expenses increased to $2,353 for the year ended December 31, 1996 from $1,932 for the year ended December 31, 1995. The increase is primarily attributable to increased compensation and compensation-related costs. The extraordinary charge of $1,118, net of minority interest, for the year ended December 31, 1996 related primarily to the write-off of deferred costs upon a major refinancing during 1996. There was no such re-financing or extraordinary items in 1995. LIQUIDITY AND CAPITAL RESOURCES At December 31, 1997, the Company had $5,676 in cash and cash equivalents and $50,000 in availability under its $150,000 unsecured line of credit. The Company is negotiating to increase this line of credit to $200,000 during the second quarter of 1998 and anticipates that a sixth bank will join the existing bank group at that time. On February 20, 1998, the Company committed to privately place $75,000 of a new issue of preferred shares with an institutional investor. The shares will be issued at $24 per share. The Company anticipates funding to occur in three equal installments in March, June and September 1998. Proceeds from this private placement, net of an estimated 1.05% in offering costs, are anticipated to aggregate approximately $74,200. During 1997, the number of the Company's wholly-owned Communities that are unencumbered increased from five to fourteen. The Company expects to repay two fixed rate loans aggregating $10,984 at their scheduled 1998 maturities from additional borrowings under its unsecured line of credit, whereupon two more Communities will be unencumbered. There are no other fixed rate loans on wholly-owned Communities with maturity dates prior to June 2003. Net cash flows provided by operating activities for the year ended December 31, 1997 increased to $39,129 from $31,934 for the year ended December 31, 1996. The increase is primarily due to an increase in property net operating income and an increase in other revenues. Cash flows used in investing activities for the year ended December 31, 1997 increased to $170,900 from $66,864 for the year ended December 31, 1996. The increase consisted primarily of expenditures for the acquisition of land parcels and development costs, contributions to co- investment partnerships and working capital advances to the Service Companies, and net cash proceeds from the sale of a residential property in 1997. Net cash flows provided by financing activities for the year ended December 31, 1997 were $127,156. In 1997, cash flows include net proceeds of borrowings and $37,447 net proceeds from the offering of common shares reduced by employees' and trustees' notes. Funds from operations is defined as net income (computed in accordance with generally accepted accounting principles), excluding gains (losses) from debt restructuring and sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect funds from operations on the same basis. Funds from operations is widely accepted in measuring the performance of equity REITs. An understanding of the Company's funds from operations 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. Funds from operations should not be considered an alternative to net income or any other GAAP measurement as a measure of the results of the Company's operations, the Company's cash flows or liquidity. Funds from operations for the years ended December 31, 1997 and 1996 are summarized as follows: 1997 1996 -------- -------- Net income before minority interest and extraordinary item $28,926 19,949 Depreciation 13,220 11,321 Other, net 26 (1) 739 (2) ------- ------ Funds from operations $42,172 32,009 ======= ====== Weighted average diluted shares and units 19,848 15,965 ======= ====== (1) Includes share of co-investment partnerships' depreciation, net of $2,457 gain on sale of residential property. (2) Includes share of co-investment partnerships' depreciation, net of $584 gain from sale of interest rate caps. The Company expects to pay quarterly dividends from cash available for distribution. Until distributed, funds available for distribution will be invested in short-term investment grade securities or used to temporarily reduce outstanding balances on the Company's revolving lines of credit. Funds from operations as shown above is net of start-up losses at newly-constructed communities. At some Communities (such as AMLI at Pleasant Hill and Phase IV of the AMLI at Sope Creek), the initial lease-up was so rapid that there were no start-up losses. In the typical situation, start-up losses will be recorded between the time the first apartment homes are delivered from construction until occupancy levels are adequate to recover all costs and expenses (including interest but excluding depreciation). Funds from operations as shown above for 1997 and 1996 are shown net of $1,096 and $284, respectively, of start- up losses which for 1997 are attributable to the initial lease-up of Phase III of AMLI At Autumn Chase, AMLI at Town Center, Phase II of AMLI at Crown Colony, AMLI at River Park, AMLI at Barrett Lakes, AMLI at Fox Valley, AMLI at Fossil Creek, AMLI at Peachtree City, and AMLI at Northwinds. Additional amounts will be recorded in 1998 as initial lease-up is completed at these and other communities which will enter the lease-up period during 1998. 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 is of the opinion 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. In order to qualify as a REIT, the Company is required to distribute dividends to its shareholders equal to 95% of its REIT taxable income. The Company's REIT taxable income for the year 1997 was $19,975 which would require the Company to distribute approximately $18,976. For the year ended December 31, 1997, the Company distributed $29,079, or $1.73 per share to its shareholders, of which approximately 9.8% represents a return of capital and 11.0% is capital gain. The Company expects to meet certain long-term liquidity requirements such as scheduled debt maturities and 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). On July 20, 1995, the Company's shelf registration became effective. The registration covers up to an aggregate of $200,000 of preferred shares, common shares and warrants to purchase which the Company may issue from time to time. During 1997, the Company issued common shares that total approximately $39,720, leaving a balance of $71,533 that the Company may issue in the future. COMPANY INDEBTEDNESS The Company's debt as of December 31, 1997 includes $186,750 (56% of the total) which is secured by first mortgages on 15 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 7.8% $177,250 53% Tax-Exempt Tax-Exempt Rate + 1.48% 50,250 15% Bonds (1) Tax-Exempt Rate + 1.15% Lines of Credit (2) LIBOR + 1.30% 100,000 30% Notes payable to Service Companies Various 5,750 2% -------- ---- Total $333,250 100% ======== ==== - -------------------- (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 (4.78% for AMLI at Spring Creek and 4.35% for AMLI at Poplar Creek at February 23, 1998). The Spring Creek bonds mature on October 1, 2024 and the related credit enhancement expires on October 15, 2002. The 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 2000. DEVELOPMENT ACTIVITIES At December 31, 1997, the Company has made substantially all required and anticipated capital contributions to its existing co-investment partnerships and anticipates incurring costs of $101,610 (primarily in 1998) to complete the 2,488 wholly-owned apartment homes currently under development. The Company owns land for the development of an additional 880 apartment homes in Ft. Worth, Texas and Atlanta and has acquired three additional land parcels located in Indianapolis, Indiana and Overland Park, Kansas as of February 27, 1998 on which it intends to develop 724 apartment homes. The Company expects to close in 1998 the acquisition of an additional seven land parcels for commencement of development of 2,716 additional apartment homes in 1998. 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 communities, 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 communities acquired competitive with comparable newly-constructed communities. In some cases, the Company will provide in its acquisition budget additional funds to upgrade or otherwise improve new acquisitions. During 1997 and 1996, a total of $5,592 and $4,933 was spent on building repairs and maintenance (including contract services), respectively, and $1,796 and $1,736 was spent on landscaping and grounds maintenance, respectively, as follows: 1997 1996 ------ ------ BUILDING REPAIRS AND MAINTENANCE Painting (exterior and interior) $1,293 1,246 Carpet and vinyl 675 390 Carpentry 76 152 Heating and air-conditioning 190 187 Plumbing 223 195 Appliances 181 159 Electrical systems 120 110 Parking lots/resurfacing 326 117 Other repairs and maintenance 810 725 CONTRACT SERVICES Property monitoring services 621 654 Rubbish collection services 504 463 Cleaning services 277 262 Pest control services 179 171 Other services 117 102 ------ ----- $5,592 4,933 ====== ===== LANDSCAPING AND GROUNDS MAINTENANCE Lawn maintenance $1,683 1,522 Seasonal color 43 107 All other 70 107 ------ ----- $1,796 1,736 ====== ===== During 1997 and 1996, a total of $3,323 and $1,937, respectively, in expenditures were capitalized in accordance with the Company's policy, as follows: Carpet replacements $1,485 1,191 Carports and entry gates 398 310 Energy saving lighting fixtures 96 86 Water saving devices 185 84 Major appliances 274 67 Clubhouse, amenities and business centers 438 -- Roof replacements 127 -- Landscaping improvements 54 24 All other 266 175 ------ ----- $3,323 1,937 ====== ===== The Company's accounting treatment of various capital and maintenance costs is detailed in the following table. CAPITALIZE/ DEPRECIABLE EXPENDITURES EXPENSE LIFE IN YEARS ------------ ----------- ------------- Improvements, upgrades, additions (not replacements - includes additional garages, additional amenities, etc.) * capitalize 15 or 40 Costs budgeted as a part of an "Approved Acquisition Budget" (must be spent within one year of acquisition) * capitalize 5, 15 or 40 Replacement of carpet for entire unit capitalize 5 Replacement of major appliances (refrigerators, stoves, dishwashers, washers/dryers) capitalize 15 Replacement of kitchen cabinets capitalize 15 New landscaping construction or installation capitalize 15 Roof replacements capitalize 15 Exercise/amenity equipment capitalize 5 Maintenance equipment capitalize 5 New model or clubhouse furniture and fixtures capitalize 5 New computer systems (entire systems) capitalize 5 Roof repairs expense n/a Exterior painting expense n/a Parking lot repairs/resurfacing expense n/a Repairs to amenity areas, including swimming pools expense n/a Vinyl expense n/a CAPITALIZE/ DEPRECIABLE EXPENDITURES EXPENSE LIFE IN YEARS ------------ ----------- ------------- All expenditures for acquiring or replacing ceiling fans, mini-blinds, air-conditioning compressors, garbage disposals, etc. expense n/a Landscaping replacements expense n/a Computer expenditures (anything less than a full system) expense n/a Replacement signage expense n/a Repairs to or refinishing of kitchen cabinetry expense n/a Equipment repairs (all types) expense n/a All interior painting expense n/a In general, the Company expenses any disbursement totalling less than $2,500 * The current policy provides that most capitalizable additions will have a life of 15 years, except for the items of personal property which have estimated lives of 5 years. Included in an acquisition budget may be some costs which would otherwise be expensed, such as exterior painting; such items are being depreciated over 15 years. INFLATION 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 41.2% of rental and other revenue, 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 without adverse impact on occupancy. An increase in general price levels may immediately precede, or accompany, an increase in interest rates. At December 31, 1997, the Company's exposure to rising interest rates is mitigated by the existing debt level of approximately 42% of the Company's current market capitalization (46% including the Company's share of co-investment partnerships' debt), by utilizing intermediate-term fixed rate debt (53% of total debt), and by using interest rate swaps to fix the interest rate for five years on $50,000 (15% of total debt) of the Company's floating rate 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. YEAR 2000 The Company and the Service Companies have replaced all primary data processing systems within the last two years and believe the new systems are YEAR 2000 compliant. The Company has undertaken a review of other aspects of its operations that may be affected by the YEAR 2000 problem. For instance, three of its Communities have elevators whose performance could be affected. The Company is contacting a number of its vendors, including banks and companies providing certain outsourcing services, including payroll and benefits administration, to ensure that these vendors are addressing the problem. The Company is of the opinion that there will be no direct material effect on its operating performance or results of operations from the YEAR 2000 problem. 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 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA AMLI RESIDENTIAL PROPERTIES TRUST INDEX PAGE ---- Independent Auditors' Report. . . . . . . . . . . . . . . . . 44 Consolidated Balance Sheets, December 31, 1997 and 1996 . . . 45 Consolidated Statements of Operations, years ended December 31, 1997, 1996 and 1995. . . . . . . . . . . . . . 47 Consolidated Statements of Shareholders' Equity, years ended December 31, 1997, 1996 and 1995. . . . . . . . 49 Consolidated Statements of Cash Flows, years ended December 31, 1997, 1996 and 1995. . . . . . . . . . . . . . 51 Notes to Consolidated Financial Statements. . . . . . . . . . 53 SCHEDULE -------- Consolidated Real Estate and Accumulated Depreciation . . . . III SCHEDULES NOT FILED: All schedules other than those indicated in the above index have been omitted as the required information is inapplicable. INDEPENDENT AUDITORS' REPORT The Board of Trustees and Shareholders AMLI Residential Properties Trust: We have audited the accompanying consolidated balance sheets of AMLI Residential Properties Trust (the "Company") as of December 31, 1997 and 1996, and the related consolidated statements of operations, shareholders' equity and cash flows for each of the years in the three-year period ended December 31, 1997. In connection with our audits of the consolidated financial statements, we have also audited the related financial statement schedule. These consolidated financial statements and financial statement schedule are the responsibility of the management of the Company. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 1997 and 1996, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 1997, in conformity with generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. KPMG PEAT MARWICK LLP Chicago, Illinois February 23, 1998 AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1997 AND 1996 (Dollars in thousands, except share data)
1997 1996 ---------- --------- ASSETS: Rental apartments: Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 78,476 59,854 Depreciable property. . . . . . . . . . . . . . . . . . . . . . . . . . 496,747 373,140 -------- --------- 575,223 432,994 Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . (62,641) (50,478) -------- --------- 512,582 382,516 Property under development. . . . . . . . . . . . . . . . . . . . . . . . 78,724 62,525 Investments in partnerships . . . . . . . . . . . . . . . . . . . . . . . 50,729 30,669 Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . 5,676 10,291 Deferred expenses, net. . . . . . . . . . . . . . . . . . . . . . . . . . 3,140 2,139 Security deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,821 1,737 Notes receivable from and advances to Service Companies . . . . . . . . . 18,356 9,735 Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,950 4,745 -------- --------- Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . $679,978 504,357 ======== ========= AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED BALANCE SHEETS - CONTINUED 1997 1996 ---------- --------- LIABILITIES AND SHAREHOLDERS' EQUITY: LIABILITIES: Debt (note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $333,250 202,013 Accrued interest payable. . . . . . . . . . . . . . . . . . . . . . . . . 1,389 1,161 Accrued real estate taxes payable . . . . . . . . . . . . . . . . . . . . 9,334 6,978 Construction costs payable. . . . . . . . . . . . . . . . . . . . . . . . 8,403 2,263 Security deposits and prepaid rents . . . . . . . . . . . . . . . . . . . 2,722 2,757 Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,978 2,292 -------- --------- Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . 358,076 217,464 -------- --------- Commitments and contingencies (note 8) Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,463 44,871 -------- --------- SHAREHOLDERS' EQUITY: Preferred shares of beneficial interest, $.01 par value 1,500,000 authorized, 1,200,000 issued and 1,100,000 outstanding (aggregate liquidation preference of $22,195 and $22,190, respectively) . . . . . . . . . . . . . . . . . 11 11 Shares of beneficial interest, $.01 par value, 150,000,000 authorized, 16,577,580 and 14,812,035 common shares issued and outstanding, respectively. . . . . . . . . . . . . . . . . . 166 148 Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . . . . 341,148 301,585 Employees and trustee notes . . . . . . . . . . . . . . . . . . . . . . . (6,924) (487) Retained earnings (deficit) . . . . . . . . . . . . . . . . . . . . . . . 18,897 (5,455) Dividends paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (82,859) (53,780) -------- --------- Total shareholders' equity. . . . . . . . . . . . . . . . . . . . . . 270,439 242,022 -------- --------- Total liabilities and shareholders' equity. . . . . . . . . . . . . . $679,978 504,357 ======== ========= See accompanying notes to consolidated financial statements.
AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Dollars in thousands, except share data)
1997 1996 1995 ---------- --------- --------- Revenues: Property: Rental. . . . . . . . . . . . . . . . . . . . . . $ 80,479 71,863 69,341 Other . . . . . . . . . . . . . . . . . . . . . . 4,339 3,269 2,797 Interest and share of income (loss) from Service Companies. . . . . . . . . . . . . . . 1,151 632 496 Other interest. . . . . . . . . . . . . . . . . . . . 521 224 369 Income from partnerships. . . . . . . . . . . . . . . 925 569 34 Other . . . . . . . . . . . . . . . . . . . . . . . . 2,658 1,714 840 --------- -------- -------- Total revenues. . . . . . . . . . . . . . . 90,073 78,271 73,877 --------- -------- -------- Expenses: Personnel . . . . . . . . . . . . . . . . . . . . . 7,648 6,714 6,287 Advertising and promotion . . . . . . . . . . . . . 2,147 1,917 1,702 Utilities . . . . . . . . . . . . . . . . . . . . . 4,087 4,161 4,125 Building repairs and maintenance and services . . . 5,592 4,933 4,554 Landscaping and grounds maintenance . . . . . . . . 1,796 1,736 1,811 Real estate taxes . . . . . . . . . . . . . . . . . 9,476 8,465 7,947 Insurance . . . . . . . . . . . . . . . . . . . . . 858 977 914 Property management fees. . . . . . . . . . . . . . 2,147 1,878 1,803 Other operating expenses. . . . . . . . . . . . . . 1,192 1,165 1,111 Interest. . . . . . . . . . . . . . . . . . . . . . 11,995 11,916 12,926 Amortization of deferred costs. . . . . . . . . . . 596 1,370 1,792 Depreciation. . . . . . . . . . . . . . . . . . . . 13,220 11,321 10,785 General and administrative. . . . . . . . . . . . . 2,850 2,353 1,932 Expenses associated with the AMLI brand name . . . . . . . . . . . . . . -- -- 680 --------- -------- -------- Total expenses. . . . . . . . . . . . . . . 63,604 58,906 58,369 --------- -------- -------- Income before nonrecurring gains, minority interest and extraordinary item. . . . . . 26,469 19,365 15,508 Gain on sale of residential property. . . . . . . . . 2,457 -- 1,498 Gain resulting from interest rate cap contracts . . . -- 584 -- --------- -------- -------- AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED 1997 1996 1995 ---------- --------- --------- Income before minority interest and extraordinary item. . . . . . . . . . . . . . . . . 28,926 19,949 17,006 Minority interest . . . . . . . . . . . . . . . . . . 4,378 3,581 3,287 --------- -------- -------- Income before extraordinary item. . . . . . . . . . . 24,548 16,368 13,719 Extraordinary item - loss on early extinguishment of debt (net of minority interest). . . . . . . . . . . . . (196) (1,118) -- --------- -------- -------- Net income. . . . . . . . . . . . . . . . . 24,352 15,250 13,719 Less income attributable to Series A preferred shares. . . . . . . . . . . . . . . . . . 1,903 1,746 -- --------- -------- -------- Net income attributable to common shares . . . . . . . . . . . . . . $ 22,449 13,504 13,719 ========= ======== ======== Income per common share (basic and diluted): Before extraordinary item . . . . . . . . . . . . . $ 1.44 1.20 1.18 Extraordinary item. . . . . . . . . . . . . . . . . (.01) (.09) -- Net income. . . . . . . . . . . . . . . . . . . . . 1.43 1.11 1.18 Dividends declared and paid per common share. . . . . 1.73 1.72 1.71 See accompanying notes to consolidated financial statements.
AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Dollars in thousands)
SHARES OF EMPLOYEES BENEFICIAL INTEREST ADDITIONAL AND RETAINED -------------------- PAID-IN TRUSTEES EARNINGS DIVIDENDS SHARES AMOUNT CAPITAL NOTES (DEFICIT) PAID TOTAL ------- ------ ---------- --------- -------- --------- --------- Balance at December 31, 1994 . . . . 11,530,370 $115 216,577 -- (34,424) (12,107) 170,161 Units converted to shares. . . . . . . . 151,289 2 2,150 -- -- 2,152 Reallocation of minority interest. . . . -- -- 25 -- -- 25 Net income. . . . . . . . -- -- -- 13,719 -- 13,719 Dividends paid. . . . . . -- -- -- -- (19,894) (19,894) ---------- ---- -------- -------- -------- -------- ------- Balance at December 31, 1995 . . . . 11,681,659 117 218,752 -- (20,705) (32,001) 166,163 Shares issued in connection with: Preferred shares . . . 1,200,000 12 23,906 23,918 Second offering. . . . 2,976,900 30 60,957 60,987 Executive Share Purchase Plan . . . . 35,700 -- 779 779 Employees and Trustee notes. . . . . . -- -- -- (487) -- -- (487) Units converted to shares. . . . . . . . 17,776 -- 270 -- -- 270 Reallocation of minority interest. . . . -- -- (3,079) -- -- (3,079) Net income. . . . . . . . -- -- -- 15,250 -- 15,250 Dividends paid. . . . . . -- -- -- -- (21,779) (21,779) ---------- ---- -------- ------- -------- -------- ------- Balance at December 31, 1996. . . . . 15,912,035 159 301,585 (487) (5,455) (53,780) 242,022 AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - CONTINUED SHARES OF EMPLOYEES BENEFICIAL INTEREST ADDITIONAL AND RETAINED -------------------- PAID-IN TRUSTEES EARNINGS DIVIDENDS SHARES AMOUNT CAPITAL NOTES (DEFICIT) PAID TOTAL ------- ------ ---------- --------- -------- --------- --------- Shares issued in connection: Common shares offering. . . . . . . 1,694,700 17 37,430 -- -- -- 37,447 Executive Share Purchase Plan. . . . 36,310 -- 840 -- -- -- 840 Employees and Trustees notes. . . . . -- -- -- (6,437) -- -- (6,437) Units converted to shares . . . . . . . 34,535 1 543 -- -- -- 544 Reallocation of minority interest . . . -- -- 750 -- -- -- 750 Net income. . . . . . . . -- -- -- -- 24,352 -- 24,352 Dividends paid. . . . . . -- -- -- -- -- (29,079) (29,079) ---------- ---- ------- ------- ------- ------- ------- Balance at December 31, 1997 . . . . 17,677,580 $177 341,148 (6,924) 18,897 (82,859) 270,439 ========== ==== ======= ======= ======= ======= ======= See accompanying notes to consolidated financial statements.
AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Dollars in thousands)
1997 1996 1995 --------- --------- --------- Cash flows from operating activities: Net income. . . . . . . . . . . . . . . . . . . . . . $ 24,352 15,250 13,719 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization. . . . . . . . . . . 13,816 12,691 12,577 Income from partnerships . . . . . . . . . . . . . (915) (569) (34) (Income) loss from Service Companies . . . . . . . (104) 238 (40) Gain resulting from interest rate cap contracts. . -- (584) -- Loss on early extinguishment of debt . . . . . . . 211 1,365 -- Gain on sale of residential property . . . . . . . (2,457) -- (1,498) Minority interest. . . . . . . . . . . . . . . . . 4,341 3,334 3,287 Changes in assets and liabilities: (Increase) decrease in deferred expenses. . . . . . (586) 35 (245) (Increase) decrease in security deposits. . . . . . (84) 143 168 (Increase) decrease in other assets . . . . . . . . (711) (1,568) 474 Increase in accrued real estate taxes and interest payable. . . . . . . . . . . . . . . 615 439 352 (Decrease) increase in tenant security deposits and prepaid rents . . . . . . . . . . . . . . . . (35) 318 (260) Increase (decrease) in other liabilities. . . . . . 686 842 (166) --------- --------- --------- Net cash provided by operating activities . . 39,129 31,934 28,334 --------- --------- --------- Cash flows from investing activities: Net cash proceeds from sale of residential property . 13,394 -- 29,583 Investments in partnerships, net of cash distributions. . . . . . . . . . . . . . . . . (11,552) (16,317) (5,590) Dividends from Service Companies. . . . . . . . . . . -- -- 40 Advances to affiliates. . . . . . . . . . . . . . . . (10,351) (5,285) (3,050) Earnest money deposits. . . . . . . . . . . . . . . . (1,660) (175) (350) Capital expenditures - existing properties. . . . . . (3,323) (1,937) (1,714) Acquisition properties. . . . . . . . . . . . . . . . (104,493) -- (8,847) Properties under development, net of reimbursable co-investor's costs . . . . . . . . . . . . . . . . (59,055) (44,100) (13,401) Increase in construction costs payable. . . . . . . . 6,140 950 778 --------- --------- --------- Net cash used in investing activities . . . . (170,900) (66,864) (2,551) --------- --------- --------- AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED 1997 1996 1995 --------- --------- --------- Cash flows from financing activities: Debt proceeds, net of financing costs . . . . . . . . 249,088 165,589 71,800 Debt repayments, including prepayment penalties in 1997 and 1996. . . . . . . . . . . . . (119,528) (184,122) (74,094) Net proceeds from the sale of interest rate cap contracts. . . . . . . . . . . . . . . . . -- 1,310 -- Net proceeds from treasury lock contracts . . . . . . -- 1,424 -- Proceeds from preferred shares offering, net of issuance costs . . . . . . . . . . . . . . . -- 23,918 -- Proceeds from the common shares offering, net of issuance costs . . . . . . . . . . . . . . . 37,447 61,169 -- Employees and Trustees notes, net of proceeds from issuance of Executive Share Purchase Plan shares. . . . . . . . . . . . . . . . (5,597) 292 -- Distributions to partners . . . . . . . . . . . . . . (5,175) (4,859) (4,776) Dividends paid. . . . . . . . . . . . . . . . . . . . (29,079) (21,779) (19,894) --------- --------- --------- Net cash provided by (used in) financing activities. . . . . . . . . . . . 127,156 42,942 (26,964) --------- --------- --------- Net (decrease) increase in cash and cash equivalents . . . . . . . . . . . . . . (4,615) 8,012 (1,181) Cash and cash equivalents at beginning of year. . . . . . . . . . . . . . . . . 10,291 2,279 3,460 --------- --------- --------- Cash and cash equivalents at end of year. . . . . . . . . . . . . . . . . . . . $ 5,676 10,291 2,279 ========= ========= ========= Supplemental disclosure of cash flow information: Cash paid for mortgage and other interest, net of amount capitalized . . . . . . . . . . . . . $ 11,767 11,985 12,833 ========= ========= ========= See accompanying notes to consolidated financial statements.
AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years ended December 31, 1997, 1996 and 1995 (Dollars in thousands, except share data) 1. ORGANIZATION AND BASIS OF PRESENTATION ORGANIZATION AMLI Residential Properties Trust ("AMLI" or the "Company"), a self- administered and self-managed real estate investment trust ("REIT"), was formed on February 15, 1994 to continue and expand the multifamily property business previously conducted by Amli Realty Co. ("ARC") and its affiliates. The Company is the sole general partner of AMLI Residential Properties, L.P. (the "Operating Partnership") in which it holds an 84% interest. All the properties (the "Properties") and property interests are owned and operated through the Operating Partnership. The Company and its affiliates develop, acquire, lease, manage and hold for investment upscale residential apartment communities. The Company commenced operations effective with the completion of its initial public offering ("Initial Offering") on February 15, 1994. The Company qualifies as a REIT for Federal income tax purposes. During 1995, the Company created a brand name utilizing the AMLI name. The process required changing property signage (which includes the AMLI name), stationery and marketing materials to include products that will identify the Company's residential communities. The Company completed the implementation of this brand name strategy in the fall of 1995, and incurred a total cost of $680. BASIS OF PRESENTATION The accompanying consolidated financial statements include the accounts of the Company and the Operating Partnership. Limited partnership interests in the Operating Partnership ("OP Units") are convertible into common shares of the Company on a one-for-one basis, subject to certain limitations (see note 7). AMLI Management Company ("AMC"), AMLI Corporate Homes ("ACH"), a division of AMC, AMLI Institutional Advisors, Inc. ("AIA"), AMLI Residential Construction, Inc. ("Amrescon") and AMLI Landscape Co., a division of Amrescon, (the "Service Companies") provide services to the Company's wholly-owned properties as well as to properties owned by or joint ventured with third parties. AMLI's investments in the Service Companies are accounted for using the equity method. All significant inter-entity balances and transactions have been eliminated in consolidation. The Company's management has made a number of estimates and assumptions relating to the reporting of assets and liabilities and disclosure of contingent assets and liabilities to prepare these financial statements in conformity with generally accepted accounting principles. 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 AND DEPRECIATION Real estate assets are stated at cost less accumulated depreciation. Ordinary repairs and maintenance are expensed as incurred; replacements having an estimated useful life of at least one year and betterments are capitalized and depreciated over their estimated useful lives. Depreciation is computed on a straight-line basis over useful lives of the properties (buildings and related land improvements -- 40 years; furniture, fixtures and equipment -- 5 - 15 years). Approximately 50% of real estate assets are pledged to secure debt (see note 5). 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. All such costs are capitalized when subsequently incurred. On December 10, 1997, the Company completed the sale of the 350-unit AMLI at Bear Creek apartments located in Euless, Texas. The sale price of $13,775 was paid in cash, resulting in a gain of $2,457. On August 11, 1995, the Company closed the sale of the 421-unit Club Laguna apartments located in Orange County, California. The sale price of $29,908 was paid in cash, resulting in a gain of $1,498. Losses in carrying values of investment assets are provided by management when the losses become apparent and the investment asset is considered impaired in accordance with Statement of Financial Accounting Standards No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" ("SFAS 121") . Management evaluates its investment properties at least quarterly to assess whether any impairment indications are present, comparing current net operating income as a percentage of cost to income capitalization rates. If any investment asset is considered impaired, a loss is provided to reduce the carrying value of the property to its estimated fair value. No such losses have been required or provided in the accompanying financial statements. PROPERTIES UNDER DEVELOPMENT During 1997, the Company acquired five land parcels located in Ft. Worth, Texas and Atlanta, Georgia for a total cost of $9,110. Construction will commence on four of these sites in 1998. During 1996, the Company acquired six sites located in Fort Worth and Dallas, Texas, Atlanta, Georgia and Aurora, Illinois for a total cost of $22,330. Physical construction of new communities will commence or continue at these sites in 1998. During 1996, the Company contributed one land parcel each at cost to three co-investment partnerships, namely AMLI at River Exchange, L.P., Acquiport/Aurora Crossing, L.P. and Acquiport/Fossil Creek, L.P., and during 1997, the Company contributed another land parcel at cost to Gardner Drive, L.L.C. (see note 3). The table below shows all land parcels owned as of December 31, 1997 that are currently under development or will be under development in 1998. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NUMBER NUMBER TOTAL OF OF EXPENDED COMMUNITY LOCATION ACRES UNITS THRU 12/31/97 - --------- -------- ------ ------ ------------- Wholly-Owned: Development Communities: AMLI on the Parkway Dallas, TX 10 240 $ 4,619 AMLI at Wells Branch Austin, TX 29 576 14,199 AMLI at Deerfield (1) Plano, TX 18 240 2,270 AMLI at AutumnChase III Carrollton, TX 24 240 10,916 AMLI at Peachtree City Atlanta, GA 26 312 18,163 AMLI at Park Creek Gainesville, GA 20 200 5,548 AMLI at Killian Farms Gwinnett County, GA 22 216 2,258 AMLI at Oakhurst North (1) Aurora, IL 29 464 14,517 --- ----- -------- Total Development Communities 178 2,488 72,490 --- ----- -------- Land held for future development: AMLI at Bent Tree II Dallas, TX 10 200 1,632 AMLI at Mesa Ridge II Ft. Worth, TX 27 520 3,469 AMLI at Spring Creek V Atlanta, GA 20 160 1,133 --- ----- -------- Total land held for future development 57 880 6,234 --- ----- -------- Total Wholly-Owned 235 3,368 78,724 --- ----- -------- Co-Investments (Company Ownership Percentage): AMLI at Fox Valley (25%) (2) Aurora, IL 18 272 24,403 AMLI at Fossil Creek (25%) (2) Ft. Worth, TX 19 384 20,896 AMLI at Northwinds (35%) (3) Atlanta, GA 80 800 26,888 --- ----- -------- Total Co-Investments 117 1,456 72,187 --- ----- -------- Total 352 4,824 $150,911 === ===== ======== AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (1) It is the Company's intention to develop these land parcels in partnership with one or more institutional investors. (2) AMLI at Fox Valley and AMLI at Fossil Creek were contributed to 25% owned co-investment partnerships in September 1996. (3) AMLI at Northwinds was conveyed at cost to a 35% owned co-investment limited liability company in September 1997.
AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED INTEREST AND REAL ESTATE TAX CAPITALIZATION Interest and real estate taxes incurred during the construction period are capitalized and depreciated over the lives of the constructed assets. During the years ended December 31, 1997, 1996 and 1995, total interest capitalized was $4,721, $3,242 and $1,638, respectively. Net of amounts capitalized, total interest incurred during the years ended December 31, 1997, 1996 and 1995 aggregated $11,995, $11,916 and $12,926, respectively. REVENUE RECOGNITION Rental revenues -- the Company leases its residential properties under operating leases with terms generally of six or twelve months. Rental income is recognized when earned; this method approximates recognition using the straight-line method over the related lease term. At December 31, 1997 apartment leases in effect provide for annual rentals aggregating approximately $84,818. FAIR VALUES The estimated fair values of the Company's financial instruments presented in these Notes to Consolidated Financial Statements have been determined by management based on pertinent information available as of December 31, 1997 and 1996, using appropriate methodologies. These estimates are not necessarily indicative of the amounts the Company could ultimately realize. The Company's financial instruments consist primarily of its cash equivalents, interest-bearing notes receivable from the Service Companies, operating payables, debt and interest rate limitation contracts. The carrying amounts of the Company's cash equivalents and operating payables are considered to be a reasonable estimate of fair value due to the short- term nature of these instruments. CASH AND CASH EQUIVALENTS For purposes of the statement of cash flows, the Company considers all investments purchased with an original maturity of three months or less to be cash equivalents. DEFERRED EXPENSES AND INTEREST RATE LIMITATION CONTRACTS Deferred expenses consist primarily of financing costs which are amortized using the straight-line method over the terms of the related debt. During the construction period, amortization of deferred costs relating to properties under development are capitalized and depreciated over the lives of the constructed assets. During the years ended December 31, 1997, 1996 and 1995, capitalized amortization of deferred costs was $246, $63 and $214, respectively. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED In December 1995, the Company initiated a program of buying and rolling Treasury Locks as a means of limiting its exposure to rising interest rates in anticipation of funding a new $43,907 loan through FNMA. Through May 6, 1996 (the date on which the FNMA certificates were sold), the Company received net cash of $1,424 from the above described activities. These net proceeds are included as a reduction of deferred costs and are being amortized over the ten-year term of the FNMA loan. At December 31, 1997, the unamortized balance of the net proceeds of these Treasury Lock activities is $1,267. The FNMA certificates were sold at a discount of $673; this discount was netted against the liability and is being amortized over the ten-year loan term. On June 11, 1996, the Company replaced the Lehman Whole Loan with new fixed rate loans. Concurrently, the Company sold the $54,835 interest rate cap contract which pertained to the Lehman Whole Loan. The sale was completed on June 13, 1996 and the Company received net proceeds of $1,310. The unamortized deferred costs related to the LIBOR cap were written off and a nonrecurring net gain of $584 was recognized. The Company uses interest rate caps and swaps to limit its exposure to increases in interest rates on its floating rate debt. The Company does not use them for trading purposes. The interest rate swaps the Company has entered into are off-balance sheet derivatives which are accounted for as "synthetic alterations," in that the borrowings on the Company's line of credit to which they relate have floating rate risk and the swaps have been designated and have been effective synthetic alterations of these borrowings. Under synthetic alteration accounting, periodic contractual payments or receipts are accounted for as adjustments to interest expense. Any derivative which cannot be accounted for as a synthetic alteration (of which the Company has none at December 31, 1997) would be carried at market value in the Company's balance sheet with changes in market value recognized in non-interest income. At December 31, 1997, the Company was a party to various interest rate swap agreements which require the Company to pay to counterparties on a monthly basis the amounts, if any, by which the Company's interest cost on the fixed rate basis exceeds the interest payments it makes on certain floating rate debt. The Company is exposed to credit losses in the event of nonperformance by the counterparties to its interest rate swaps. The Company does not obtain collateral or other security to support financial instruments subject to credit risk but monitors the credit standing of counterparties. The Company anticipates, however, that the counterparties will be able to fully satisfy their obligations under the contracts. The following summarizes certain information pursuant to interest rate limitation and swap contracts at December 31, 1997. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Approximate Unamortized Cumulative Value of Type Remaining Cost Cash Liability Notional Fixed of Contract Original December Received December Amount Rate Contract Maturity Cost 1997 (Paid) 1997 - -------- ------- -------- --------- -------- ----------- ---------- ----------- $ 5,845 3.875% LIBOR Cap 02/15/98 $ 314 7 358 20 10,000 6.216% Swap 11/01/02 -- -- -- (134) 10,000 6.029% Swap 11/01/02 -- -- -- (54) 20,000 6.145% Swap 02/15/03 -- -- -- (199) 10,000 6.070% Swap 02/18/03 -- -- -- (67) ------ ----- ----- ---- $ 314 7 358 (434) ====== ===== ===== ==== The fixed rate for the swaps includes the swap spread (the risk component added to the Treasurary yield to determine a fixed rate; excludes lender's spread).
AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED OTHER ASSETS At December 31, 1997, other assets consist primarily of $924 in current receivables from affiliates, $2,002 in development fees receivable, $550 in restricted cash, $451 in tax escrow deposits and $2,335 in earnest money deposits. The Company believes that the carrying amounts of its notes receivable from the Service Companies reasonably approximate their fair values. PER SHARE DATA In 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128") which superseded APB Opinion No. 15, "Earnings Per Share." SFAS 128 replaces the presentation of "primary EPS," which the Company has historically presented, with a presentation of "basic EPS," and replaces presentation of "fully diluted EPS," which the Company has not been required to present due to the immaterial difference from primary EPS, with "diluted EPS." Basic EPS, unlike primary EPS, excludes dilution and is computed by dividing income attributable to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted into common shares or resulted in the issuance of common shares that then shared in the earnings of the entity. SFAS 128 is effective for financial statements for both interim and annual periods ending after December 15, 1997. As of December 31, 1997, the Company adopted SFAS 128. The following is a reconciliation of net income and weighted average number of shares. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
For the years ended December 31, -------------------------------------------------------------------------------------- 1997 1996 1995 ---------------------------- --------------------------- -------------------------- Per Per Per Share Share Share Income Shares Amount Income Shares Amount Income Shares Amount ------ ---------- ------ ------ ---------- ------ ------ ---------- ------ Income before extra- ordinary item. . . . . $24,548 16,368 13,719 Less: Income allocable to preferred shares . . . (1,903) (1,746) -- ------- ------- ------- BASIC EARNINGS PER SHARE Income before extra- ordinary item attributable to common shares. . . . 22,645 15,660,225 $1.44 14,622 12,141,877 1.20 13,719 11,634,776 1.18 EFFECT OF DILUTIVE SECURITIES Option and other Plan shares. . . . . 84,051 21,039 3,650 Preferred shares (antidilutive) . . . -- -- -- -- -- -- ------- ---------- ----- ------- ---------- ---- ------- ---------- ---- DILUTED EARNINGS PER SHARE Income before extra- ordinary item allocable to common shares outstanding and assumed shares exercised. . . . . . $22,645 15,744,276 $1.44 14,622 12,162,916 1.20 13,719 11,638,426 1.18 ======= ========== ===== ======= ========== ==== ======= ========== ====
AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED RECLASSIFICATIONS Certain amounts in the consolidated 1996 and 1995 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 December 31, 1997, the Company is a general partner in various co- investment partnerships and in the GP Properties (AMLI at Prairie Court in Oak Park, Illinois and AMLI at Towne Creek in Gainesville, Georgia) which are accounted for using the equity method. Investments in partnerships at December 31, 1997 and the Company's 1997 share of income or loss from each (excluding the GP Properties from which the Company received distributions and recorded income of $4) are summarized as follows: AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Equity Total Company's Company's ------------------- Net Share of Percentage Total Company's Company's Income Net Income Community Ownership Assets Total Share Investment (Loss) (Loss) - ----------- --------- ------ ----- --------- ---------- ----- ---------- AMLI at: Park Place 25% $19,562 6,359 1,590 1,554 354 90 Greenwood Forest 15% 17,222 5,007 751 732 (38) (5) Champions Park 15% 12,558 3,170 476 476 148 21 Champions Centre 15% 9,828 2,766 415 415 7 1 Windbrooke 15% 17,112 5,052 758 758 (21) (3) Willeo Creek 30% 14,982 4,789 1,437 1,437 42 9 Pleasant Hill 40% 26,764 11,287 4,811 4,389 877 341 Barrett Lakes 35% 26,423 10,854 3,799 3,925 114 50 Chevy Chase 33% 44,487 13,754 4,529 4,546 550 182 Willowbrook 40% 36,973 11,553 4,621 4,528 292 121 River Park 40% 14,510 5,756 2,302 2,256 (67) (26) Fox Valley 25% 24,845 22,903 5,726 5,901 (248) (63) Fossil Creek 25% 21,125 19,621 4,905 4,989 (62) (16) Danada Farms 10% 48,808 23,151 2,315 2,305 967 97 Verandah 35% 25,976 8,085 2,830 2,902 197 132 Northwinds 35% 27,106 20,995 7,362 7,267 (27) (9) Regents Crest 25% 25,727 9,342 2,336 2,349 (2) (1) ======= ====== ------- ------ === --- $50,963 50,729 921 ======= ====== GP Properties 4 ---- $925 ====
AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED The fixed-rate debt financing which has been obtained from various insurance companies on behalf of these co-investment partnerships is summarized below: Total Outstanding Interest Community Commitment at 12/31/97 Rate Maturity - --------- ---------- ----------- -------- -------- AMLI at: Park Place $13,000 12,429 8.21% October 1999 Champions Centre 6,700 6,648 8.93% January 2002 Champions Park 9,500 8,967 7.26% January 2002 Windbrooke 11,500 11,500 9.24% February 2002 Greenwood Forest 11,625 11,625 8.95% May 2002 Chevy Chase 29,767 29,452 6.67% April 2003 Willeo Creek 10,000 9,909 6.77% May 2003 Willowbrook 24,500 24,310 7.785% May 2003 Regents Crest 16,500 16,253 7.50% December 2003 Verandah 16,940 16,940 7.55% April 2004 Danada Farms 24,500 24,500 7.33% March 2007 Pleasant Hill 15,500 14,753 9.15% March 2007 River Park 9,100 8,025 7.75% June 2008 Barrett Lakes 16,680 14,224 8.50% December 2009 Northwinds 33,800 3,014 8.25% October 2010 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. Loans against newly-completed properties provide for payments of interest only for an initial period, with principal amortization commencing generally within two years of completion of construction and initial lease-up. At December 31, 1996, the Company is a general partner in various co- investment partnerships and in the GP Properties which are accounted for using the equity method. Investments in partnerships at December 31, 1996 and the Company's 1996 share of income or loss from each (excluding the GP Properties from which the Company received distributions and recorded income of $30) are summarized as follows: AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Equity Total Company's Company's ------------------- Net Share of Percentage Total Company's Company's Income Net Income Community Ownership Assets Total Share Investment (Loss) (Loss) - ----------- --------- ------ ----- --------- ---------- ----- ---------- AMLI at: Park Place 25% $20,142 6,724 1,681 1,645 568 143 Greenwood Forest 15% 17,731 5,525 829 809 (181) (27) Champions Park 15% 12,695 3,172 477 477 (183) (27) Champions Centre 15% 10,020 2,908 436 436 (101) (15) Windbrooke 15% 17,600 5,574 836 836 (116) (17) Willeo Creek 30% 15,556 5,197 1,559 1,562 66 20 Pleasant Hill 40% 27,128 11,987 5,091 4,709 824 320 Barrett Lakes 35% 15,454 11,098 3,884 4,007 (22) (8) Chevy Chase 33% 45,928 15,017 4,955 4,955 170 56 Willowbrook 40% 38,125 12,382 4,953 4,876 262 105 River Park 40% 10,877 6,224 2,489 2,479 51 (21) Fox Valley 25% 15,032 11,559 2,890 2,868 -- -- Fossil Creek 25% 6,394 3,995 999 1,010 -- -- ====== ====== ------- ------ ====== ------ $31,079 30,669 529 ======= ====== GP Properties/Other 40 ------ $ 569 ======
AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED INVESTMENTS IN SERVICE COMPANIES The Company owns 5% of the voting common stock and 100% of the nonvoting preferred stock in the Service Companies, which provide property management, corporate homes administration, construction, landscaping, investment advisory and asset management services to the Company and to certain other parties. The nonvoting preferred stock entitles the Company to approximately 95% of all cash distributions from the Service Companies. For the year ended December 31, 1995, the Company received dividends of $40 from AMC; no other dividends have been paid by the Service Companies through December 31, 1997. Summarized combined financial information of the various Service Companies at and for the years ended December 31, 1997, 1996 and 1995 follows: 1997 1996 1995 -------- -------- -------- Income (1) $ 8,402 7,204 4,085 General and administrative expenses (6,441) (5,981) (3,335) ------- ------- ------- 1,961 1,223 750 Interest (1,049) (871) (588) Depreciation (381) (188) (86) Income tax (312) (90) (29) ------- ------- ------- Net income $ 219 74 47 ======= ======= ======= Total assets $26,410 14,226 5,820 ======= ======= ======= (1) Net of construction and landscaping costs. Substantially all interest expense of the Service Companies results from notes payable to the Company at interest rates ranging from 9.5% to 13.0%. The Company's share of income (loss) from the Service Companies in 1997, 1996 and 1995 was $104, ($238) and $40, respectively, after elimination of intercompany profit on construction activities. The Company's interest income from the Service Companies is combined with the Company's share of income (loss) from the Service Companies in the accompanying consolidated statements of operations. 4. RELATED PARTY TRANSACTIONS General and administrative expenses as included in the accompanying consolidated statements of operations include allocations of costs to the Company from ARC and its affiliates. Such allocations are not in excess of ARC's cost of providing services to the Company, including personnel, occupancy and other corporate overhead. Following the Initial Offering, AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED the majority of these costs have been borne directly by the Company. Approximately $335 was allocated to the Company and the Service Companies from ARC's Service Bureau Division in each of the years ended December 31, 1996 and 1995, respectively, to reimburse ARC for the Company's allocated share of costs incurred on its behalf. As of January 1, 1997, all former employees of the Service Bureau are full-time employees of the Company. The management of the Company is of the opinion that the costs allocated from ARC's Service Bureau Division reasonably approximate or are less than the costs the Company would incur by contracting for such services with an unaffiliated entity. The Company and the Service Companies have agreed to pay for a share of ARC's total occupancy cost. The Company's total occupancy cost was approximately $484, $310 and $150 for the years ended December 31, 1997, 1996 and 1995, respectively, including $400, $255 and $122 allocable to the Service Companies. During 1997, 1996 and 1995, the Company accrued or paid to its affiliates fees and other costs and expenses as follows: 1997 1996 1995 ------- ------ ------ Management fees $2,147 1,878 1,803 General contractor fees 857 525 285 Interest expense 36 31 30 Landscaping and grounds maintenance 629 613 585 ====== ====== ====== In addition, at December 31, 1997 and 1996, the Company owed Amrescon $8,403 and $2,263, respectively, for construction costs of communities under development. During 1997, 1996 and 1995, the Company earned or received from its affiliates other income as follows: 1997 1996 1995 ------- ------ ------ Development fees $1,452 826 338 Acquisition fees 281 184 240 Asset management fees 606 507 223 Disposition fee -- 66 -- Accounting and administrative fees 11 6 29 Interest on advances 397 381 167 Interest on notes receivable 650 455 455 ====== ====== ===== During 1997, the Company began a program of leasing apartment homes to ACH for short-term residents. Leases are at market rates. Rents and other charges are collected by ACH and payments are remitted to the Company on a periodic basis. During 1997, total revenues of $1,362 were generated from ACH leases of which $624 was due from ACH at December 31, 1997. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED During 1996, Amrescon paid $165 for the assets of Regents Management Corporation, whereupon a principal of that corporation became an employee of Amrescon and an executive officer of the Company. The assets acquired consist of furniture and equipment and the contracts for the construction of AMLI at Regents Center III and AMLI at Crown Colony II. An additional $30 was paid in 1997 in conjunction with this transaction. During 1994, Amrescon purchased lumber futures contracts in order to protect against increases in the cost of lumber to be used in constructing new apartments. Cumulative losses on these contracts totalled $68, which amount is treated as an additional cost of properties developed in 1995. Amrescon may resume using lumber futures in the future to protect against increases in the cost of lumber as additional properties are developed. 5. DEBT The table below sets forth certain information relating to the indebtedness of the Company. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Balance Balance Original at Interest Maturity at Encumbered Communities Amount 12/31/97 Rate Date 12/31/96 - ---------------------- -------- -------- -------- -------- -------- BOND FINANCING: Tax-Exempt (1)(2) $ 40,750 40,750 Rate+1.48% 10/1/24 40,750 Tax-Exempt AMLI at Poplar Creek (2) 9,500 9,500 Rate+1.15% 2/1/24 -- -------- ------- ------- Total Bonds 50,250 50,250 40,750 -------- ------- ------- MORTGAGE NOTES PAYABLE TO FINANCIAL INSTITUTIONS: (3) 4,800 -- 9.90% 9/28/97 4,427 (3) 8,500 -- 7.70% 10/31/97 8,152 (3) 7,060 -- 7.42% 11/1/97 6,669 AMLI at Reflections 4,800 4,436 7.05% 6/30/98 4,528 AMLI on Rosemeade 7,050 6,548 7.02% 10/5/98 6,682 AMLI at Sherwood 7,320 6,813 7.75% 7/1/03 6,992 AMLI at Riverbend 31,000 30,349 7.30% 7/1/03 30,815 AMLI in Great Hills 11,000 10,770 7.34% 7/1/03 10,935 AMLI at Valley Ranch 11,500 10,693 7.625% 7/10/03 10,900 AMLI at Conner Farms 13,275 12,965 7.00% 6/15/03 -- AMLI at Nantucket 7,735 7,735 7.70% 6/1/04 -- AMLI on Timberglen 6,770 6,770 7.70% 6/1/04 -- AMLI at Regents Center 20,100 19,819 (4) 9/1/05 19,975 AMLI at Bishop's Gate 15,380 15,329 (5) 8/1/05 -- AMLI on the Green (6) AMLI of North Dallas (6) 43,234 42,383 7.789% 5/1/06 42,938 -------- ------- -------- Total Mortgage Notes Payable 199,524 174,610(7) 153,013 -------- ------- -------- AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED Balance Balance Original at Interest Maturity at Encumbered Properties Amount 12/31/97 Rate Date 12/31/96 - --------------------- -------- -------- -------- -------- -------- OTHER NOTES PAYABLE: AMLI at Park Creek 10,322 2,640 7.875% 12/1/38 -- Secured line of credit (3) 60,000 -- L+1.35%(3) 5/31/98 7,500 Unsecured line of credit (8)(9) 150,000 100,000 L+1.30% 6/26/00 -- Note payable to Service Company 5,000 5,000 9.50% 1/1/03 -- Unsecured note payable to Service Company 750 750 4.00% Demand 750 Unsecured line of credit 8,000 -- L+1.30% 8/30/98 -- -------- ------- --------- ------- ------- Total Other Notes Payable 234,072 108,390 8,250 -------- ------- ------- Total $483,846 333,250 202,013 ======== ======= ======= (1) This bond issue financed the original development of AMLI at Spring Creek; as of October 1997, this property no longer secures the bond indebtedness or the credit enhancement. (2) 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 (4.78% for Spring Creek and 4.35% for Poplar Creek at February 23, 1998). The credit enhancement for the 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 Poplar Creek bonds was provided by a $9,617 letter of credit from LaSalle National Bank that expires December 18, 2002. (3) AMLI at the Arboretum, AMLI at Gleneagles, AMLI at Martha's Vineyard, and AMLI at Sope Creek became unencumbered properties when these loans were repaid in 1997 on or prior to their scheduled maturities. (4) $13,800 at 8.73% and $6,300 at 9.23%. (5) This original $14,000 mortgage bears interest at 9.1%. It 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. (6) These two properties secure the FNMA loan that was sold at a discount of $673. At December 31, 1997, the unamortized discount amount is $561. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (7) All but $21,319 of the total is non-recourse to the partners of the Operating Partnership. (8) The Company has used interest rate swaps on $50,000 of the outstanding amount to fix its base interest rate (before current lender's spread of 1.30%) at an average of 6.12%. (9) The Company's $150,000 unsecured line of credit has been provided by a group of five banks led by Wachovia Bank, N.A. and the First National Bank of Chicago. The credit agreement provides for annual one-year extensions and reductions in the interest rate based on the future credit rating the Company is able to obtain. 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. The Company intends to negotiate an increase in the line of credit to $200,000 during 1998.
AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED As of December 31, 1997, the scheduled maturities of the Company's debt are as follows:
FIXED RATE MORTGAGE NOTES NOTES PAYABLE UNSECURED PAYABLE TO BOND TO FINANCIAL LINES SERVICE FINANCINGS INSTITUTIONS OF CREDIT COMPANIES TOTAL ---------- ------------- --------- ----------- ---------- 1998. . . . . . . . . . . . . . . . . . $ -- 13,432 -- 750 14,182 1999. . . . . . . . . . . . . . . . . . -- 2,757 -- -- 2,757 2000. . . . . . . . . . . . . . . . . . -- 2,935 100,000 -- 102,935 2001. . . . . . . . . . . . . . . . . . -- 3,160 -- -- 3,160 2002. . . . . . . . . . . . . . . . . . -- 3,220 -- -- 3,220 Thereafter. . . . . . . . . . . . . . . 50,250 151,746 -- 5,000 206,996 ------- ------- ------- ------- ------- $50,250 177,250 100,000 5,750 333,250 ======= ======= ======= ======= =======
AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED At December 31, 1997, 1996 and 1995, the carrying value and fair value of the Company's long-term debt are not considered to be significantly different. The Company considers the interest rates on its long-term debt as market rates, based on interest rates, payment terms and maturities available to the Company as of December 31, 1997, 1996 and 1995, for these types of loans. Current estimates of fair value may differ from the amount presented herein. 6. INCOME TAXES 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 95 percent of its taxable income to its shareholders and complies with certain other requirements. Accordingly, no provision has been made for Federal income taxes for the Company. Approximately 9.8% of dividends paid during 1997 represented a return of capital. 7. SHAREHOLDERS' EQUITY Upon the closing of the Company's Initial Offering on February 15, 1994, a total of 11,530,370 of the Company's common shares were issued and outstanding. At that time, the Company owned a like number of OP Units, which represented approximately 81% of the total 14,426,710 OP Units outstanding at that time. During 1997 and 1996, a total of 365,381 and 222,822 OP Units were issued, respectively, to third parties as partial consideration for the acquisition of certain communities and land parcels. A total of 34,535, 17,776 and 151,289 OP Units were converted to common shares during 1997, 1996 and 1995, respectively. Pursuant to the authority vested to the Board of Trustees in the Declaration of Trust dated January 31, 1994, the Trustees classified and designated 1,500,000 unissued shares of beneficial interest of the Company as Series A cumulative convertible preferred shares of beneficial interest. On January 30, 1996, the Company completed the sale of 1,200,000 newly issued Series A convertible preferred shares, $.01 par value, for $24,000 in a registered offering. The price per share of $20 was the price of the Company's common shares on January 15, 1996. The Company sold the preferred shares directly to four institutional investors and ARC without the use of a placement agent or underwriter. The proceeds from the sale of these preferred shares, less $82 of transaction costs, were used to reduce the Company's debt, fund development costs and for general corporate purposes. The preferred shares will pay an annual dividend equal to $1.72 per share or the dividend amount paid on common shares, whichever is higher. The Company's Board of Trustees authorized the payment of dividends at this annual rate for the period from January 30, 1996 to February 20, 1996, the dividend payment date. The preferred shares are perpetual and generally have no voting rights except in certain limited circumstances. The preferred shares may be converted on a share-for-share basis into common shares at any time at a conversion price that shall be adjusted from time to time. After January 25, 2001, the Company may redeem the preferred shares at its option for cash or common shares. The Company may redeem the AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED preferred shares for common shares only when the price of the common shares equals or exceeds the conversion price for 20 of the 30 days preceding the date of redemption notice. The preferred shares and the common shares into which the preferred shares may be converted have been registered under the Company's existing shelf registration. On February 29, 1996, ARC elected to convert its 100,000 Series A convertible preferred shares into common shares. During 1997 and 1996, a total of 72,010 new common shares were issued pursuant to the Company's Executive Share Purchase Plan (see note 8). On November 27, 1996, the Company closed a 2,750,000 secondary offering of its common shares. The offering was priced at $21.75 per share. On December 30, 1996, 226,900 additional common shares were issued pursuant to the Underwriters' over-allotment option. Net of approximately 5.75% in commissions and selling expenses, proceeds of the 2,976,900 common share offering totalled approximately $61,000. The net proceeds were used to pay down $46,035 of floating rate debt, to prepay a $4,774 first mortgage note payable, and to provide approximately $10,000 of working capital to fund future acquisition and development activities. On July 11, 1997, the Company completed an offering of 1,500,000 common shares at a price of $23.4375 per share. In addition, the underwriters exercised their over-allotment option for 194,700 shares. The net proceeds of $37,500 were used principally to pay down the balance outstanding on the Company's line of credit and to fund acquisition and development activities. At December 31, 1997, the Company owned 17,677,580 OP Units, which was approximately 84% of the total 20,958,523 OP Units outstanding. At December 31, 1996, the Company owned 15,912,035 OP Units, which was approximately 84% of the total 18,862,132 OP Units outstanding. 8. COMMITMENTS AND CONTINGENCIES LEASES OF OFFICE SPACE The Company shares office space with the Service Companies and with ARC at its Chicago headquarters. Amrescon and AMC share space at regional corporate offices in Atlanta and Dallas. The Company is party to these leases, which have terms expiring through the year 2008 and which provide for minimum rent and additional rent based on increases in operating expenses. The Company's share of lease payments for noncancellable office leases (including amounts allocated to the Service Companies) was $485, $310 and $150 in 1997, 1996 and 1995, respectively. The 1997 expense includes the entire $223 rent for the Atlanta and Dallas offices and rent in Chicago based on actual space occupied at a rate not in excess of the current market rate. As of August 1, 1997, an ARC subsidiary occupying a portion of the Chicago offices relocated to provide additional space for the Company. Concurrently, the Company leased additional space in Chicago and extended its Chicago lease through October 31, 2008. The Company's estimated share of future minimum rent payments under the operating leases are as follows: AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED 1998. . . . . . . . . . . . . . . . . . $ 762 1999. . . . . . . . . . . . . . . . . . 621 2000. . . . . . . . . . . . . . . . . . 543 2001. . . . . . . . . . . . . . . . . . 554 2002. . . . . . . . . . . . . . . . . . 566 Thereafter. . . . . . . . . . . . . . . 2,169 ------ $5,215 ====== RETIREMENT SAVINGS PLAN The Amli Residential Properties Retirement Savings Plan (the "Retirement Plan"), is a qualified plan under Section 401(k) of the Internal Revenue Code. The provisions of the Retirement Plan obligate the Company to contribute up to 50% of the amounts contributed to the Retirement Plan by its employees (such contribution not to exceed $0.500 per employee per year). Employees vest in Company contributions as follows: Less than three years' service. . . . . . . . . . . 0% Three or more years' service. . . . . . . . . . . . 100% === As of January 1, 1995, the Retirement Plan was amended to provide for an additional contribution by Participating Employers, as defined, equal to a percentage (3% for 1997, 1996 and 1995) of each eligible employee's compensation. An employee is eligible who has completed one year of service by and is an employee as of either June 30 or December 31 of the year for which the contribution is made. Those additional contributions together with the Company's annual 50% matching contribution are to be invested (semi-annually each February and August) in open market purchases of the Company's common stock. Such contributions, by and on behalf of affiliates of the Company, were $314, $228 and $230 in 1997, 1996 and 1995, respectively. BONUS INCENTIVE COMPENSATION A bonus incentive compensation plan has been established for executive and key officers. This program awards both a cash and a common share or OP Unit bonus to executive officers and certain key officers covered under the plan based on the achievement of specified targets and goals for the Company and the individual officer. The primary targets are the desired annual funds from operations ("FFO") per share and how the Company performs relative to its competitors. The amount of cash bonus and number of common shares or OP Units will be based on a formula determined for each officer up to 50% of base compensation. PERFORMANCE INCENTIVE PLAN In 1995, the Company established a Performance Incentive Plan (the "Incentive Plan") whereby executive and key officers and employees may receive OP Units or cash if a target growth in FFO is achieved for a period of five years starting from the year the rights under this Incentive Plan are granted. If the target growth in FFO is achieved, OP Units actually issued under this Incentive Plan will include both the original award plus additional units based on assumed re-investment of dividends from the date of the award to the date of issuance. Expense is recognized for financial AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED reporting purposes over the five year determination period for each year's award based upon the estimated value at December 31, 1997 of the OP Units to be issued. In 1997, 1996 and 1995, a total of $249, $181, and $76, respectively, was charged to expense by the Company and the Service Companies pursuant to this incentive plan. At December 31, 1997, there are 73,750 OP Units that may be issued in conjunction with the Incentive Plan, as follows: January 1995 Award. . . . . . . . . . . . 22,152 January 1996 Award. . . . . . . . . . . . 15,304 February 1997 Award . . . . . . . . . . . 17,144 December 1997 Award . . . . . . . . . . . 19,150 ------ 73,750 ====== OPTION PLAN The Company has adopted the AMLI Residential Properties Trust Option Plan (the "Option Plan") to provide incentives to attract and retain Trustees, officers and key employees and service providers. The Option Plan provides for the grants of options to purchase a specified number of common shares or OP Units ("Options"). Under the Option Plan, the total number of common shares available for grant and available to be issued upon exchange of OP Units issued under the Option Plan equals 1,000,000. Upon certain extraordinary events, the Executive Compensation Committee may make such adjustments in the aggregate number of common shares or OP Units reserved for issuance, the number of common shares or OP Units covered by outstanding awards and the exercise prices specified therein as they determine to be appropriate. At December 31, 1997, there were 80,894 remaining common shares available for grant under the Option Plan. The per share weighted average fair value of options granted during 1997, 1996 and 1995 was $1.61, $1.52 and $1.96, respectively, on the date of grant using the Black Scholes Option-pricing model with the following weighted average assumptions: 1997 - - expected dividend yield 7.76%, risk-free interest rate of 6.03%, expected life of 4.24 years and expected volatility of 16.53%; 1996 - expected dividend yield 7.5%, risk-free interest rate of 5.6%, expected life of five years and expected volatility rate of 17.3%; 1995 - expected dividend yield 7.5%, risk-free interest rate of 7.5%, expected life of 6.8 years and expected volatility rate of 17.3%. The options granted in 1997 and 1996 have a contractual term of ten years (seven years for options granted in 1995). On January 1, 1996, the Company adopted SFAS No. 123 "Accounting for Stock-Based Compensation." Pursuant to its provisions, the Company may either record additional compensation expense each year based on the fair value of the options granted in that year, or, as the Company has elected under APB No. 25, record no such additional compensation costs in its consolidated financial statements and disclose the pro forma effects as if SFAS No. 123 had been applied. Disclosure of pro forma effects are required only for options granted after December 31, 1994. Therefore, the full impact of calculating compensation cost for stock options under SFAS No. 123 is not included because compensation cost is reflected over the vesting period of five years and compensation cost for options granted prior to January 1, 1995 is not considered. Had the Company determined compensation cost based upon the fair value at the grant date for these options under SFAS 123, the charge against the Company's net income would have been $113, $57 and $19 for the years ended December 31, 1997, 1996 and 1995, respectively, or less than $0.01 per share in each of these years. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED The Trustees who are not members of management hold 17,440 vested options. At December 31, 1997, there were 143,499 vested options held by employees at a weighted average exercise price of $20.50 per share. Through December 31, 1997, no options have been exercised nor have any expired. Stock option activity for employees during the years ended December 31, 1997, 1996 and 1995 is as follows: WEIGHTED AVERAGE NUMBER OF EXERCISE SHARES PRICE -------- --------- Balance at December 31, 1994 456,500 $ 20.50 Granted 47,500 18.25 Cancelled (4,500) 20.50 ------- ------ Balance at December 31, 1995 499,500 20.29 Granted 125,600 20.19 Cancelled (23,000) 20.46 ------- ------ Balance at December 31, 1996 602,100 20.21 Granted 310,000 22.96 Cancelled (10,434) 20.80 ------- ------ Balance at December 31, 1997 901,666 $21.23 ======= ====== At December 31, 1997, the range of exercise prices was $18.25-$23.50 and the weighted average remaining contractual life of the outstanding options was 7.2 years. On February 2, 1998, the Board of Trustees awarded an additional 58,500 options to acquire common shares, primarily at an exercise price of $23.19 per share. EXECUTIVE SHARE PURCHASE PLAN At their 1996 Annual Meeting, the Company's shareholders approved the AMLI Residential Properties Trust Executive Share Purchase Plan (the "Purchase Plan"). Individuals eligible to participate in the Purchase Plan currently include all nine Trustees (who may in any one year acquire newly- issued common shares having a value as of the acquisition date of up to $100) and 26 members of management (who may in any one year acquire newly- issued common shares having a value as of the acquisition date of up to 50% of their annual base compensation). The common shares may be acquired at 85% of their then current value, and the participants may elect to receive financing for up to 80% of their acquisition cost. The 15% discount is taxable income to the participants and expense for the Company's financial reporting purposes in the year in which the common shares are issued. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED During 1997 and 1996, Trustees and employees acquired a total of 36,310 and 35,700 common shares, respectively, pursuant to the Purchase Plan. Related shareholder loans ($526 in 1997 and $487 in 1996) bear interest at rates ranging from 7.32% to 8.23% and are fully amortizing over a ten-year term. At December 31, 1997 and 1996, the outstanding balances of these loans were $965 and $487, respectively, and are included in the accompanying balance sheets as a reduction of shareholders' equity. Total expense recorded in 1997 and 1996 for the 15% discount, including the Service Companies' share, was $126 and $117, respectively. SHAREHOLDER LOANS TO OFFICERS/TRUSTEES During 1997, the Board of Trustees approved up to $5,980 in recourse loans to the four Officers/Trustees and nine other officers to enable them to acquire on the open market 261,000 of the Company's common shares of beneficial interest. These loans bear interest at rates ranging from 5.89% to 6.23% and have a term of nine years from February 28, 1997 or December 12, 1997. At December 31, 1997, the balance of these loans was $5,959 and is included in the accompanying balance sheet as a reduction of shareholders' equity. PURCHASE OBLIGATION The limited partnership agreement of AMLI at Verandah L.P. provides for the redemption (at an amount determined by formula) by the partnership of the limited partner's entire interest, in its sole discretion, at any time after March 25, 2002, or at any time that there is a designated event of default on related indebtedness of the partnership, 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 common shares of beneficial interest, or any combination thereof, in the sole discretion of the Company. The original capital contribution made by the limited partner was $5,525. LEGAL ACTIONS The Company is a party to several legal actions which arose in the normal course of business. In the opinion of management, there will be no adverse consequences from these actions which would be material to the Company's financial position or results of operations. FUTURE PROPERTY ACQUISITIONS On December 22, 1997, the Company had acquired AMLI at Conner Farms, a 300-unit luxury apartment community located in Indianapolis, Indiana, as part of the acquisition of a portion of the assets and operations of Trammell Crow Residential Midwest ("TCR-Midwest") located in Indianapolis and Kansas City. Other TCR-Midwest assets acquired on December 22, 1997 included AMLI at Town Center, a property financed with a Company-provided $12,955 ADC loan which had been accounted for as an owned property under development by AMLI prior to December 22, 1997; a partnership interest in a 368-unit apartment community located in Kansas City, Kansas; four contracts to acquire land for future development; and TCR-Midwest's residential construction organization, which was acquired by Amrescon. In connection with certain properties acquired in December 1997, the Company agreed to acquire, assuming certain conditions are met, three additional properties totalling 814 units and the general partnership interest in a partnership owning another 400 units. The additional properties and general partnership interest are anticipated to be acquired in 1998 and 1999 for an aggregate of $66,000 pursuant to the terms of the purchase agreement. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED 9. SUBSEQUENT EVENTS On January 16, 1998, the Company acquired a 288 apartment home community in Atlanta, Georgia for $18,400 financed in part with a $12,880, 6.95% fixed rate, ten-year loan from an insurance company. In January 1998, the Company acquired two land parcels located in Indianapolis, Indiana for a total purchase price of $4,636. In February 1998, the Company purchased one additional land parcel located in Overland Park, Kansas for a total acquisition cost of $1,700. On February 20, 1998, the Company agreed to privately place $75,000 of a new series of convertible preferred shares with an institutional investor. The preferred shares, which will be issued at $24 per share and which will carry an initial annual dividend of $1.80 per share, are non- callable for nine years and not subject to mandatory redemption. The preferred shares are convertible into common shares on a one-to-one basis. The minimum $1.80 per share annual dividend will increase to match the dividend rate on AMLI's common shares (currently $1.76 per share annually) if the annual dividend rate on common shares is increased to more than $1.80 per share. The Company anticipates funding to occur in three equal installments in March, June and September 1998. Total proceeds, net of an estimated 1.05% in offering costs, are expected to approximate $74,200. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED 10. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
YEAR ENDED DECEMBER 31, 1997 ------------------------------------- FIRST SECOND THIRD FOURTH ----- ------ ----- ------ Revenues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $20,850 21,313 22,982 24,928 Income before minority interest and extraordinary item. . . . . . . . . . . . . . . . . . . . . 6,076 6,038 7,229 9,583 Minority interest . . . . . . . . . . . . . . . . . . . . . . . . 953 958 1,062 1,405 Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,650 4,430 5,675 7,694 Earnings per common share (basic and diluted): Income before extraordinary item. . . . . . . . . . . . . . . . 0.31 0.31 0.35 0.46 Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . 0.31 0.30 0.35 0.46 YEAR ENDED DECEMBER 31, 1996 ------------------------------------- FIRST SECOND THIRD FOURTH ----- ------ ----- ------ Revenues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $18,698 19,247 20,072 20,254 Income before minority interest and extraordinary item. . . . . . . . . . . . . . . . . . . . . 4,473 5,079 4,782 5,615 Minority interest . . . . . . . . . . . . . . . . . . . . . . . . 807 920 878 976 Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,339 2,568 3,431 4,166 Earnings per common share (basic and diluted): Income before extraordinary item. . . . . . . . . . . . . . . . .29 .31 .28 .32 Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . .29 .22 .28 .32
SCHEDULE III AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1997 (Dollars in thousands)
GROSS AMOUNT AT WHICH INITIAL COSTS (A) CARRIED AT CLOSE OF PERIOD (B) -------------------------------------- ------------------------------------- COSTS RELATED BUILDINGS CAPITALIZED BUILDINGS ENCUM- AND SUBSEQUENT TO AND PROPERTIES BRANCES(C) LAND IMPROVEMENTS ACQUISITION LAND IMPROVEMENTS TOTAL - ---------- ---------- --------- ------------ ------------- ---------- ------------ ---------- DALLAS/FT. WORTH TX AMLI: at AutumnChase . . . . .$ -- 2,991 16,884 303 2,993 17,185 20,178 at Bent Tree Ridge . . . -- 2,854 16,173 26 2,855 16,198 19,053 at Bishop's Gate . . . . 15,329 3,659 20,708 10 3,659 20,718 24,377 at Chase Oaks. . . . . . -- 1,003 9,513 317 1,003 9,830 10,833 at Gleneagles. . . . . . -- 3,178 22,723 318 3,182 23,037 26,219 on the Green . . . . . . 12,433 1,693 17,007 249 1,693 17,256 18,949 at Nantucket . . . . . . 7,735 1,931 6,817 198 1,931 7,015 8,946 of North Dallas. . . . . 29,950 7,278 37,204 1,163 7,278 38,367 45,645 at Reflections . . . . . 4,436 947 6,492 215 947 6,707 7,654 on Rosemeade . . . . . . 6,548 1,534 9,182 334 1,534 9,516 11,050 on Timberglen. . . . . . 6,770 1,932 8,094 235 1,932 8,329 10,261 at Valley Ranch. . . . . 10,693 3,139 16,199 697 3,139 16,896 20,035 ------- ------ ------- ----- ------ ------- ------- Subtotal - Dallas/ Ft. Worth, TX . . . . . 93,894 32,139 186,996 4,065 32,146 191,054 223,200 ------- ------ ------- ----- ------ ------- ------- AUSTIN, TX AMLI: at the Arboretum . . . . -- 1,664 9,480 287 1,664 9,767 11,431 in Great Hills . . . . . 10,770 3,228 14,304 351 3,228 14,655 17,883 at Martha's Vineyard . . . . . . . -- 2,154 13,216 273 2,154 13,489 15,643 at Lantana . . . . . . . -- 3,582 20,299 10 3,584 20,307 23,891 ------- ------ ------- ----- ------ ------- ------- Subtotal - Austin, TX . . 10,770 10,628 57,299 921 10,630 58,218 68,848 ------- ------ ------- ----- ------ ------- -------
SCHEDULE III - CONTINUED AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
DATE DEPRECIABLE ACCUMULATED COMPLETED/ LIVES PROPERTIES DEPRECIATION ACQUIRED YEARS - ---------- ------------ ---------- ----------- DALLAS/FT. WORTH TX AMLI: at AutumnChase . . . . . . 1,539 7/91-6/96 5 - 40 years at Bent Tree Ridge . . . . 93 10/15/97 5 - 40 years at Bishop's Gate . . . . . 120 10/17/97 5 - 40 years at Chase Oaks. . . . . . . 1,139 06/02/94 5 - 40 years at Gleneagles. . . . . . . 3,726 07/01/88 5 - 40 years on the Green . . . . . . . 2,135 02/16/94 5 - 40 years at Nantucket . . . . . . . 2,362 12/16/88 5 - 40 years of North Dallas. . . . . . 4,333 7/89-7/90 5 - 40 years at Reflections . . . . . . 879 03/02/93 5 - 40 years on Rosemeade . . . . . . . 1,127 12/28/90 5 - 40 years on Timberglen. . . . . . . 999 07/09/90 5 - 40 years at Valley Ranch. . . . . . 1,965 05/25/90 5 - 40 years ------ Subtotal - Dallas/ Ft. Worth, TX . . . . . 20,417 ------ AUSTIN, TX AMLI: at the Arboretum . . . . . 2,231 06/04/86 5 - 40 years in Great Hills . . . . . . 1,744 01/18/91 5 - 40 years at Martha's Vineyard . . . . . . . . 1,536 10/09/92 5 - 40 years at Lantana . . . . . . . . 193 09/30/97 5 - 40 years ------ Subtotal - Austin, TX. . . . . . . 5,704 ------
SCHEDULE III - CONTINUED AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
GROSS AMOUNT AT WHICH INITIAL COSTS (A) CARRIED AT CLOSE OF PERIOD (B) -------------------------------------- ---------------------------------- COSTS RELATED BUILDINGS CAPITALIZED BUILDINGS ENCUM- AND SUBSEQUENT TO AND PROPERTIES BRANCES(C) LAND IMPROVEMENTS ACQUISITION LAND IMPROVEMENTS TOTAL - ---------- ---------- --------- ------------ ------------- ---------- ------------ ---------- ATLANTA, GA AMLI: at Paces North . . . . . . -- 916 8,019 300 916 8,319 9,235 at Sope Creek. . . . . . . -- 3,347 22,817 1,123 3,378 23,909 27,287 at South Gwinnett. . . . . -- 320 1,812 -- 320 1,812 2,132 at Spring Creek. . . . . . 40,750 8,579 45,971 1,095 8,579 47,066 55,645 at Vinings . . . . . . . . -- 1,490 9,576 146 1,490 9,722 11,212 at West Paces. . . . . . . -- 2,160 20,595 226 2,160 20,821 22,981 ------- ------ ------- ------ ------ ------- ------- Subtotal - Atlanta, GA. . . 40,750 16,812 108,790 2,890 16,843 111,649 128,492 ------- ------ ------- ------ ------ ------- ------- EASTERN KANSAS AMLI: at Alvamar . . . . . . . . -- 727 6,983 204 727 7,187 7,914 at Crown Colony. . . . . . -- 977 8,548 375 978 8,922 9,900 at Regents Center. . . . . 19,819 2,260 22,397 587 2,265 22,979 25,244 at Sherwood. . . . . . . . 6,813 1,281 12,430 279 1,281 12,709 13,990 at Town Center . . . . . . -- 1,231 11,837 -- 1,231 11,837 13,068 ------- ------ ------- ------ ------ ------- ------- Subtotal - Overland, KS . . 26,632 6,476 62,195 1,445 6,482 63,634 70,116 ------- ------ ------- ------ ------ ------- ------- INDIANAPOLIS, IN AMLI: at Riverbend . . . . . . . 30,349 5,184 33,209 609 5,184 33,818 39,002 at Conner Farms. . . . . . 12,965 3,262 18,484 -- 3,262 18,484 21,746 ------- ------ ------- ------ ------ ------- ------- Subtotal - Indianapolis, IN 43,314 8,446 51,693 609 8,446 52,302 60,748 ------- ------ ------- ------ ------ ------- ------- CHICAGO, IL AMLI: at Park Sheridan . . . . . -- 1,101 9,458 388 1,101 9,846 10,947 at Poplar Creek. . . . . . 9,500 1,878 10,643 -- 1,878 10,643 12,521 ------- ------ ------- ------ ------ ------- ------- Subtotal - Chicago, IL. . . 9,500 2,979 20,101 388 2,979 20,489 23,468 ------- ------ ------- ------ ------ ------- ------- TOTAL PROPERTIES . . . . 224,860 77,480 487,074 10,318 77,526 497,346 574,872 ======= ====== ======= ====== ====== ======= =======
SCHEDULE III - CONTINUED AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
DATE DEPRECIABLE ACCUMULATED COMPLETED/ LIVES PROPERTIES DEPRECIATION ACQUIRED YEARS - ---------- ------------ ---------- ----------- ATLANTA, GA AMLI: at Paces North . . . . . . . 140 at Sope Creek. . . . . . . . 6,856 7/82 -12/95 5 - 40 years at South Gwinnett. . . . . . 44 at Spring Creek. . . . . . . 13,906 5/85 - 5/89 5 - 40 years at Vinings . . . . . . . . . 1,284 06/19/92 5 - 40 years at West Paces. . . . . . . . 2,306 11/15/93 5 - 40 years ------- Subtotal - Atlanta, GA. . . 24,536 ------- EASTERN KANSAS AMLI: at Alvamar . . . . . . . . . 685 10/18/94 5 - 40 years at Crown Colony. . . . . . . 614 10/18/94 5 - 40 years at Regents Center. . . . . . 1,952 10/18/94 5 - 40 years at Sherwood. . . . . . . . . 1,220 10/18/94 5 - 40 years at Town Center . . . . . . . 341 12/22/97 5 - 40 years ------- Subtotal - Overland, KS . . 4,812 ------- INDIANAPOLIS, IN AMLI: at Riverbend . . . . . . . . 4,201 12/12/92 5 - 40 years at Conner Farms. . . . . . . 34 12/22/97 5 - 40 years ------- Subtotal - Indianapolis, IN . 4,235 ------- CHICAGO, IL AMLI: at Park Sheridan . . . . . . 2,754 08/31/89 5 - 40 years at Poplar Creek. . . . . . . 14 12/18/97 5 - 40 years ------- Subtotal - Chicago, IL. . . . 2,768 ------- TOTAL PROPERTIES . . . . . 62,472 =======
SCHEDULE III - CONTINUED AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
GROSS AMOUNT AT WHICH INITIAL COSTS (A) CARRIED AT CLOSE OF PERIOD (B) ------------------------- ------------------------------------- COSTS RELATED BUILDINGS CAPITALIZED BUILDINGS ENCUM- AND SUBSEQUENT TO AND DESCRIPTION BRANCES(C) LAND IMPROVEMENTS ACQUISITION LAND IMPROVEMENTS TOTAL - ----------- ---------- --------- ------------ ------------- ---------- ------------ ---------- LAND PARCELS AND OTHER AMLI: at AutumnChase III. . . . . . . . . -- 1,323 9,593 1,323 9,593 10,916 at Wells Branch. . . . -- 2,400 11,799 2,400 11,799 14,199 on the Parkway . . . . 1,166 3,453 1,166 3,453 4,619 at Mesa Ridge. . . . . 3,070 399 3,070 399 3,469 at Peachtree City. . . 2,870 15,293 2,870 15,293 18,163 at Oakhurst. . . . . . 5,014 9,503 4,944 9,573 14,517 at Bent Tree II. . . . -- 1,615 17 1,615 17 1,632 at Deerfield . . . . . -- 1,805 465 1,805 465 2,270 at Park Creek. . . . . 2,640 1,206 4,342 1,207 4,341 5,548 at Killian Farms . . . -- 1,726 532 1,726 532 2,258 at Spring V. . . . . . -- 985 148 985 148 1,133 Other. . . . . . . . . 28 248 75 28 323 351 --------- -------- -------- -------- -------- -------- -------- TOTAL LAND PARCELS AND OTHER . . . . . 2,640 23,208 248 55,619 23,139 55,936 79,075 --------- -------- -------- -------- -------- -------- -------- TOTAL . . . . . . . .$ 227,500 100,688 487,322 65,937 100,665 553,282 653,947 ========= ======== ======== ======== ======== ======== ========
SCHEDULE III - CONTINUED AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
DATE DEPRECIABLE ACCUMULATED COMPLETED/ LIVES PROPERTIES DEPRECIATION ACQUIRED YEARS - ---------- ------------ ---------- ----------- LAND PARCELS AND OTHER AMLI: at AutumnChase III . . . . 9 08/31/95 5 - 40 years at Wells Branch. . . . . . 05/12/94 on the Parkway . . . . . . 11/30/94 at Mesa Ridge. . . . . . . 12/23/96 at Peachtree City. . . . . 85 5/96 5 - 40 years at Bent Tree II. . . . . . -- 12/08/97 at Deerfield . . . . . . . -- 12/13/97 at Park Creek. . . . . . . -- 01/08/97 at Killian Farms . . . . . -- 03/13/97 at Spring V. . . . . . . . -- 04/01/97 Other. . . . . . . . . . . 75 5 - 40 years --------- TOTAL LAND PARCELS AND OTHER . . . . . . . 169 --------- TOTAL . . . . . . . . . . $ 62,641 ========= NOTES: (A) The initial costs represents the original development costs or original purchase price of the properties to the Company, including closing costs. (B) The aggregate cost of real estate owned at December 31, 1997 for Federal income tax purposes was $619,238. (C) Amounts disclosed exclude current accrued interest and debt not secured by properties.
SCHEDULE III - CONTINUED AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
(D) Reconciliation of real estate owned: 1997 1996 1995 ---------- ---------- ---------- Balance at beginning of period. . . . . . . . . . . $495,519 442,865 451,762 Additions during period . . . . . . . . . . . . . . 189,939 66,700 25,997 Contribution to Joint Venture . . . . . . . . . . . (19,516) (14,046) (5,608) Sale of property. . . . . . . . . . . . . . . . . . (11,995) -- (29,286) -------- -------- -------- $653,947 495,519 442,865 ======== ======== ======== (E) Reconciliation of accumulated depreciation: Balance at beginning of period. . . . . . . . . . . $ 50,478 39,157 29,574 Additions during period . . . . . . . . . . . . . . 13,220 11,321 10,785 Sale of property. . . . . . . . . . . . . . . . . . (1,057) -- (1,202) -------- -------- -------- Balance at end of period. . . . . . . . . . . . . . $ 62,641 50,478 39,157 ======== ======== ========
ITEM 9. CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. PART III ITEM 10. TRUSTEES AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required by this item is hereby incorporated by reference to the materials appearing in the Company's Proxy Statement for the annual meeting of shareholders to be held on April 27, 1998 (the "Proxy Statement"), under the captions "Election of Trustees", "Management - Trustees and Executive Officers" and "Compliance with Section 16(A) of the Exchange Act." ITEM 11. EXECUTIVE COMPENSATION The information required by this item is hereby incorporated by reference to the materials appearing in the Proxy Statement under the caption "Executive Compensation." ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this item is hereby incorporated by reference to the materials appearing in the Proxy Statement under the caption "Security Ownership." ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this item is hereby incorporated by reference to the materials appearing on of the Proxy Statement under the caption "Certain Relationships and Related Transactions." PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K (a) The following documents are filed as part of this report: (1) Independent Auditors' Report . . . . . . . . . . . . Consolidated Balance Sheets, December 31, 1997 and 1996 . . . . . . . . . . . . . . . . . . . . . Consolidated Statements of Operations, years ended December 31, 1997, 1996 and 1995 . . . Consolidated Statements of Shareholders' Equity, years ended December 31, 1997, 1996 and 1995 . . . Consolidated Statements of Cash Flows, years ended December 31, 1997, 1996 and 1995 . . . Notes to Consolidated Financial Statements . . . . . (2) Financial Statement Schedule and Independent Auditors' Report TITLE SCHEDULE Consolidated Real Estate and Accumulated Depreciation . . . . . . . . . . . . III The independent auditors' report with respect to the financial statement schedule is on page 40. (3) Exhibits 3.1 Amended and Restated Declaration of Trust of the Registrant (Incorporated by reference to exhibit 3.1 to Registration Statement No. 33-71566). 3.2 Amended and Restated By-laws of the Registrant (Incorporated by reference to exhibit 3.2 to Registration Statement No. 33- 71566). 4.1 Form of Share Certificate for Common Shares of Beneficial Interest (Incorporated by reference to exhibit 4.1 to the Registration Statement No. 33-71566). 4.2 Form of Share Certificate for Series A Cumulative Convertible Preferred Shares of Beneficial Interest (Incorporated by reference to exhibit 4.5 to the Registrant's Form 8-K dated January 18, 1996). 4.3 Articles Supplementary Classifying and Designating a Series of Preferred Shares as Series A Cumulative Convertible Preferred Shares of Beneficial Interest (Incorporated by reference to exhibit 4.9 to the Registrant's Form 8-K dated January 30, 1996). 10.1 Amended and Restated Agreement of Limited Partnership of AMLI Residential Properties, L.P. (Incorporated by reference to exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1994). 10.1(a) First Amendment to Amended and Restated Agreement of Limited Partnership of AMLI Residential Properties, L.P. (Incorporated by reference to exhibit 10.1(a) to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1995). 10.1(b) Second Amendment to Amended and Restated Agreement of Limited Partnership of AMLI Residential Properties, L.P. (Incorporated by reference to exhibit 10.1(b) to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1995). 10.1(c) Third Amendment to Amended and Restated Agreement of Limited Partnership of AMLI Residential Properties, L.P. (Incorporated by reference to exhibit 10.1(c) to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1996). 10.2 Registration Rights and Lock-Up Agreement between the Company and certain Original Investors (Incorporated by reference to exhibit 10.8 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1994). 10.3 Corporate Services Agreement among the Registrant, AMLI Residential Properties L.P., AMLI Management Company and AMLI Institutional Advisors, Inc. (Incorporated by reference to exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1994). 10.4 Administrative Services Agreement between AMLI Management Company and AMLI Realty Co. (Incorporated by reference to exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1994). 10.5 Non-Competition Agreement between the Registrant and Amli Realty Co. (Incorporated by reference to exhibit 10.4 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1994). 10.6 Non-Competition Agreement between the Registrant and Gregory T. Mutz (Incorporated by reference to exhibit 10.5 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1994). 10.7 Non-Competition Agreement between the Registrant and John E. Allen (Incorporated by reference to exhibit 10.6 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1994). 10.8 Non-Competition Agreement between the Registrant and Allan J. Sweet (Incorporated by reference to exhibit 10.7 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1994). 10.9 Management Agreement between AMLI Residential Properties, L.P. and Amli Management Company (Incorporated by reference to exhibit 10.10 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1994). 10.10 Performance Incentive Plan (Incorporated by reference to exhibit 10 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995). 10.11 Amli Residential Properties Trust Option Plan (Incorporated by reference to exhibit 10.8 to the Registration Statement No. 33-71566). 10.11(a) First Amendment to AMLI Residential Properties Option Plan (Incorporated by reference to exhibit 10 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1995). 10.12 AMLI Residential Properties Trust Executive Share Purchase Plan (Incorporated by reference to exhibit 10.1 to the Registration Statement No. 333-8813). 10.13 (i) Side Agreement, dated as of May 3, 1996, between the Registrant, AMLI Residential Properties, L.P. and Peachtree City Multifamily Partners, L.P., (ii) Two Letter Agreements, dated May 3, 1996, between the Registrant and Peachtree City Multifamily Partners, L.P. (iii) Letter Agreement, dated May 3, 1996 between AMLI Residential Properties, L.P. and Peachtree City Multifamily Partners, L.P. (Incorporated by reference to exhibit 99.1 to the Registration Statement No. 333-8819. 10.14 (i) Agreement to Assign Sales Contract and Development Documents, dated as of January 16, 1996, between Bristol Chicago Development Corp. and Amli Residential Properties, L.P., (ii) Agreement to Assign Sales Contract and Development Documents, dated as of July 22, 1996 between Bristol Oakhurst Development L.L.C. and Amli Residential Properties, L.P. and the First Amendment thereto dated as of October 2, 1996, (iii) Agreement Regarding Acquisition of Partnership Interests, dated as of December 20, 1996, among Amli Residential Properties, L.P., Verandah Holdings Phase I Inc., JSDP, Inc., M&B Holdings General Partnership, Fairgrowth International, Inc. and TVA SP Partnership, the First Amendment thereto dated as of January 16, 1997, and the Second Amendment thereto dated as of February 28, 1997, and (iv) Assignment of Contract, dated as of March, 1997, by Easlan Capital of Atlanta, Inc. to Amli Residential Properties, L.P.; Sales Agreement, dated as of February 29, 1996, among Virgil R. Williams, James N. Williams, Easlan Capital of Atlanta, Inc., Belkofer and Company, Inc. and Williams-Adair Realty Corp., the First Amendment thereto dated as of April 25, 1996, the Second Amendment thereto dated as of September, 1996, and the Third Amendment thereto (Incorporated by reference to exhibits 99.1, 99.2, 99.3 and 99.4, respectively, to the Registration Statement No. 333-24433). 21.1 Subsidiaries of the Registrant 23.1 Consent of KPMG Peat Marwick LLP (Incorporated by reference to exhibit 23.1 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1996). 27 Financial Data Schedule. 99.1 Operating and Financial Data furnished to Shareholders and Analysts (b) Reports on Form 8-K A report on Form 8-K was filed on June 27, 1997 to report a new unsecured revolving line of credit between AMLI Residential Properties Trust and a bank group led by Wachovia Bank N.A. and First National Bank of Chicago a co-agents. A report on Form 8-K was filed on July 9, 1997 to report an underwriting agreement with respect to common shares of AMLI Residential Properties Trust and a list of subsidiaries of the Registrant. 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: March 19, 1998 By: /S/ ALLAN J. SWEET Allan J. Sweet President and Trustee 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: March 19, 1998 By: /S/ GREGORY T. MUTZ Gregory T. Mutz Chairman of the Board of Trustees Date: March 19, 1998 By: /S/ JOHN E. ALLEN John E. Allen Vice-Chairman of the Board of Trustees Date: March 19, 1998 By: /S/ ALLAN J. SWEET Allan J. Sweet President and Trustee Date: March 19, 1998 By: /S/ PHILIP N. TAGUE Philip N. Tague Executive Vice President and Trustee Date: March 19, 1998 By: /S/ LAURA D. GATES Laura D. Gates Trustee Date: March 19, 1998 By: /S/ MARC S. HEILWEIL Marc S. Heilweil Trustee Date: March 19, 1998 By: /S/ STEPHEN G. MCCONAHEY Stephen G. McConahey Trustee Date: March 19, 1998 By: /S/ QUINTIN E. PRIMO III Quintin E. Primo III Trustee Date: March 19, 1998 By: /S/ JOHN G. SCHREIBER John G. Schreiber Trustee Date: March 19, 1998 By: /S/ ROBERT J. CHAPMAN Robert J. Chapman Chief Financial Officer Date: March 19, 1998 By: /S/ CHARLES C. KRAFT Charles C. Kraft Principal Financial Officer and Principal Accounting Officer INDEX TO EXHIBITS Exhibit No. Document Description - ----------- -------------------- 21.1 Subsidiaries of the Registrant 23.1 Consent of KPMG Peat Marwick LLP 27 Financial Data Schedule 99.1 Operating and Financial Data furnished to Shareholders and Analysts EX-21.1 2 EXHIBIT 21.1 - ------------ SUBSIDIARIES OF THE COMPANY COMPANY'S JURISDICTION PERCENTAGE NAME OF SUBSIDIARY OF INCORPORATION OWNERSHIP - ------------------ ---------------- ---------- AMLI Residential Properties, L.P. . . . . . . Delaware 84% A. AMLI Residential Construction, Inc. . Delaware 95% B. AMLI Institutional Advisors, Inc. . . Illinois 95% C. AMLI Management Company . . . . . . . Delaware 95% D. Laurel Park Venture . . . . . . . . . Georgia 100% E. Pleasant Hill Joint Venture . . . . . Georgia 40% F. AMLI Foundation Co-Investors, L. P. . Delaware 25% G. AMLI Foundation Co-Investors-II, L. P. . . . . . . . . . . . . . . . Delaware 15% H. AMLI at Champions, L. P. . . . . . . Texas 15% I. AMLI at Windbrooke, L. P. . . . . . . Illinois 15% J. AMLI at Willeo Creek, L. P. . . . . . Georgia 30% K. Barrett Lakes, L.L.C. . . . . . . . . Delaware 35% L. AMLI at Chevy Chase, L.P. . . . . . . Illinois 33% M. AMLI at Willowbrook, L.P. . . . . . . Illinois 40% N. AMLI at River Exchange, L.L.C.. . . . Delaware 40% O. Acquiport/Aurora Crossing, L.P. . . . Delaware 25% P. Acquiport/Fossil Creek, L.P.. . . . . Delaware 25% Q. AMLI at Danada, L.L.C.. . . . . . . . Illinois 10% R. AMLI at Verandah, L.P.. . . . . . . . Delaware 35% S. Gardner Drive Limited Liability Company . . . . . . . . . . . . . . . Delaware 35% T. AMLI at Regents Crest, L.P. . . . . . Delaware 25% U. Park Creek-Gainsville, L.L.C. . . . . Georgia 100% V. Timberglen, L.P.. . . . . . . . . . . Delaware 100% W. AMLI Partners Ltd. 85-IV. . . . . . . Illinois 1% X. AMLI Towne Creek Crossing L.P.. . . . Georgia 1% Y. Lantana Apartments, Ltd.. . . . . . . Texas 100% Z. Windsor Plano Partners, Ltd.. . . . . Texas 100% AA. AMLI at Conner Farms, L.P.. . . . . . Delaware 100% BB. Clairmont, L.P. . . . . . . . . . . . Delaware 100% EX-23.1 3 EXHIBIT 23.1 - ------------ CONSENT OF KPMG PEAT MARWICK LLP The Board of Trustees AMLI Residential Properties Trust: We consent to incorporation by reference in the registration statements (Nos. 333-8819, 33-89508 and 33-93120) on Form S-3 and the registration statements (Nos. 333-8813 and 333-8815) on Form S-8 of AMLI Residential Properties Trust of our report dated February 23, 1998, relating to the consolidated balance sheets of AMLI Residential Properties Trust as of December 31, 1997 and 1996, and the related consolidated statements of operations, changes in shareholders' equity and cash flows for each of the years in the three-year period ended December 31, 1997, and the related schedule, which report appears in the December 31, 1997 annual report on Form 10-K of AMLI Residential Properties Trust. KPMG PEAT MARWICK LLP Chicago, Illinois March 19, 1998 EX-27 4
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE REGISTRANT'S FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS INCLUDED IN SUCH REPORT. 12-MOS DEC-31-1997 DEC-31-1997 5,676 0 0 0 0 0 653,947 62,641 679,978 0 333,250 166 0 11 270,262 679,978 0 90,073 0 63,604 0 0 11,995 24,548 0 24,548 0 196 0 24,352 1.43 1.43
EX-99.1 5 EXHIBIT 99.1 - ------------ AMLI RESIDENTIAL PROPERTIES TRUST FINANCIAL AND OPERATING DATA December 31, 1997 1. Funds from Operations 2. Statements of Operations 3. Balance Sheets 4. Selected Financial Information 5. Debt 6. Debt Maturities 7. Same Community Comparison - Wholly-Owned - three months ended December 31, 1997 and 1996 8. Same Community Comparison - Wholly-Owned - year ended December 31, 1997 and 1996 9. Same Community Comparison - Wholly-Owned & Co- Investments - three months ended December 31, 1997 and 1996 10. Same Community Comparison - Wholly-Owned & Co- Investments - year ended December 31, 1997 and 1996 11. Property Information 12. Property EBITDA 13. Development Activities AMLI RESIDENTIAL PROPERTIES TRUST FUNDS FROM OPERATIONS Unaudited - Dollars in thousands except per share data
THREE MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, ----------------------- ----------------------- 1997 1996 1997 1996 -------- -------- ------- -------- REVENUES - -------- Property revenues: Rental. . . . . . . . . . . . . . . . . . . . . . . $ 22,483 $ 18,443 $ 80,479 $ 71,863 Other . . . . . . . . . . . . . . . . . . . . . . . 1,178 842 4,339 3,269 -------- -------- -------- -------- Total property revenues . . . . . . . . . . . . 23,661 19,285 84,818 75,132 -------- -------- -------- -------- Property operating expenses . . . . . . . . . . . . . (8,861) (7,339) (32,796) (30,068) Property management fees. . . . . . . . . . . . . . . (600) (482) (2,147) (1,878) -------- -------- -------- -------- Property expenses . . . . . . . . . . . . . . . (9,461) (7,821) (34,943) (31,946) Operating expense ratio . . . . . . . . . . . . 40.0% 40.6% 41.2% 42.5% Net operating income. . . . . . . . . . . . . . 14,200 11,464 49,875 43,186 -------- -------- -------- -------- OTHER INCOME - ------------ Share of income (loss) from Service Companies . . . (156) (79) 103 (238) Interest from Service Companies (1) . . . . . . . . 318 286 1,048 870 Other interest. . . . . . . . . . . . . . . . . . . 122 75 521 224 Share of partnerships FFO (2) . . . . . . . . . . . 1,018 557 3,409 1,892 Fee income - acquisitions and dispositions. . . . . 144 -- 281 250 Fee income - developments . . . . . . . . . . . . . 277 325 1,451 819 Fee income - asset management . . . . . . . . . . . 151 144 606 507 Other . . . . . . . . . . . . . . . . . . . . . . . 43 33 320 138 -------- -------- -------- -------- Total other income . . . . . . . . . . . . . . 1,917 1,341 7,739 4,462 General and administrative. . . . . . . . . . . . . . (697) (650) (2,850) (2,353) -------- -------- -------- -------- EBITDA. . . . . . . . . . . . . . . . . . . . . . . . 15,420 12,155 54,764 45,295 -------- -------- -------- -------- Interest expense. . . . . . . . . . . . . . . . . . . (3,844) (2,935) (11,995) (11,916) Amortization of deferred costs. . . . . . . . . . . . (162) (266) (597) (1,370) -------- -------- -------- -------- Funds from operations (FFO) . . . . . . . . . . . 11,414 8,954 42,172 32,009 -------- -------- -------- -------- AMLI RESIDENTIAL PROPERTIES TRUST FUNDS FROM OPERATIONS - CONTINUED Unaudited - Dollars in thousands except per share data THREE MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, ----------------------- ----------------------- 1997 1996 1997 1996 -------- -------- ------- -------- Capital expenditures paid from FFO. . . . . . . . . . (618) (755) (3,323) (1,936) Other Share of Co-Investments Cap Exp . . . . . . . . (44) (24) (198) (57) -------- -------- -------- -------- Funds available for distribution (FAD). . . . . . $ 10,752 $ 8,175 $ 38,651 $ 30,016 ======== ======== ======== ======== FFO per share . . . . . . . . . . . . . . . . . . . . $ 0.55 $ 0.53 $ 2.13 $ 2.01 FAD per share . . . . . . . . . . . . . . . . . . . . $ 0.52 $ 0.48 $ 1.95 $ 1.88 Dividend per share. . . . . . . . . . . . . . . . . . $ 0.44 $ 0.43 $ 1.74 $ 1.72 ======== ======== ======== ======== Dividend as a % of FFO. . . . . . . . . . . . . . . . 80.1% 81.4% 81.8% 85.6% Dividend as a % of FAD. . . . . . . . . . . . . . . . 85.1% 89.1% 89.3% 91.3% ======== ======== ======== ======== (1) Includes $259 and $650 of interest on 13% notes receivable for the quarter and year, respectively, and interest on working capital advances. (2) Share of income plus share of depreciation; share of depreciation was $650 and $372 for the three months ended December 31, 1997 and 1996, respectively, and $2,484 and $1,323 for the year ended December 31, 1997 and 1996, respectively.
AMLI RESIDENTIAL PROPERTIES TRUST STATEMENTS OF OPERATIONS Unaudited - Dollars in thousands except per share data
THREE MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, ----------------------- ----------------------- 1997 1996 1997 1996 -------- -------- ------- -------- REVENUES: - -------- Property revenues: Rental. . . . . . . . . . . . . . . . . . . . . . $ 22,483 $ 18,443 $ 80,479 $ 71,863 Other . . . . . . . . . . . . . . . . . . . . . . 1,178 842 4,339 3,269 Interest and share of income (loss) from Service Companies . . . . . . . . . . . . . . . . 162 207 1,151 632 Other interest. . . . . . . . . . . . . . . . . . . 122 75 521 224 Share of income from co-investment partnerships . . 368 187 925 570 Fees from co-investment partnerships. . . . . . . . 615 500 2,658 1,713 -------- -------- -------- -------- Total revenues. . . . . . . . . . . . . . . . . 24,928 20,254 90,073 78,271 -------- -------- -------- -------- EXPENSES: - -------- Personnel . . . . . . . . . . . . . . . . . . . . . 2,150 1,689 7,648 6,714 Advertising and promotion . . . . . . . . . . . . . 599 448 2,147 1,917 Utilities . . . . . . . . . . . . . . . . . . . . . 1,056 929 4,087 4,161 Building repairs and maintenance. . . . . . . . . . 1,323 1,292 5,592 4,933 Landscaping and grounds maintenance . . . . . . . . 443 445 1,796 1,736 Real estate taxes . . . . . . . . . . . . . . . . . 2,675 2,036 9,476 8,465 Insurance . . . . . . . . . . . . . . . . . . . . . 217 239 858 977 Other operating expenses. . . . . . . . . . . . . . 398 261 1,192 1,165 Property management fees. . . . . . . . . . . . . . 600 482 2,147 1,878 Interest, net of capitalized. . . . . . . . . . . . 3,844 2,935 11,995 11,916 Amortization of deferred costs. . . . . . . . . . . 162 266 596 1,370 Depreciation of real property . . . . . . . . . . . 2,726 2,280 9,875 8,793 Depreciation of personal property . . . . . . . . . 912 687 3,345 2,528 General and administrative. . . . . . . . . . . . . 697 650 2,850 2,353 -------- -------- -------- -------- Total expenses. . . . . . . . . . . . . . . . . 17,802 14,639 63,604 58,906 -------- -------- -------- -------- Non-recurring item - gain on sale of property / rate caps. . . . . . . . . . . . . . . . 2,457 -- 2,457 584 -------- -------- -------- -------- Income before taxes, minority interest and extraordinary item. . . . . . . . . . . . . . . 9,583 5,615 28,926 19,949 -------- -------- -------- -------- AMLI RESIDENTIAL PROPERTIES TRUST STATEMENTS OF OPERATIONS - CONTINUED THREE MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, ----------------------- ----------------------- 1997 1996 1997 1996 -------- -------- ------- -------- Income taxes. . . . . . . . . . . . . . . . . . . . . -- -- -- -- -------- -------- -------- -------- Income before minority interest/extraordinary items . . . . . . . . . . . . . . . . . . . . . . . 9,583 5,615 28,926 19,949 Minority interest . . . . . . . . . . . . . . . . . . 1,405 976 4,378 3,581 -------- -------- -------- -------- Income before and extraordinary items . . . . . . . . 8,178 4,639 24,548 16,368 Extraordinary items, net of minority interest . . . . -- -- (196) (1,118) -------- -------- -------- -------- Net income. . . . . . . . . . . . . . . . . . . . . . 8,178 4,639 24,352 15,250 Net income allocable to preferred shares. . . . . . . 484 473 1,903 1,746 -------- -------- -------- -------- Net income allocable to common shares . . . . . . . . $ 7,694 $ 4,166 $ 22,449 $ 13,504 ======== ======== ======== ======== INCOME PER COMMON SHARE: - ----------------------- Before extraordinary items. . . . . . . . . . . . . $ 0.46 $ 0.32 $ 1.44 $ 1.20 Extraordinary item. . . . . . . . . . . . . . . . . $ 0.00 $ 0.00 $ (0.01) $ (0.09) Income per common share . . . . . . . . . . . . . . $ 0.46 $ 0.32 $ 1.43 $ 1.11 ======== ======== ======== ======== FUNDS FROM OPERATIONS: - --------------------- Income before taxes, minority interest and extraordinary item. . . . . . . . . . . . . . $ 9,583 $ 5,615 $ 28,926 $ 19,949 Depreciation of real property . . . . . . . . . . . 2,726 2,280 9,875 8,793 Depreciation of personal property . . . . . . . . . 912 687 3,344 2,528 Non-recurring items . . . . . . . . . . . . . . . . (2,457) -- (2,457) (584) Other - share of Co-investments depreciation. . . . 650 372 2,484 1,323 -------- -------- -------- -------- Funds from operations (FFO) . . . . . . . . . . . $ 11,414 $ 8,954 $ 42,172 $ 32,009 ======== ======== ======== ======== AMLI RESIDENTIAL PROPERTIES TRUST STATEMENTS OF OPERATIONS - CONTINUED THREE MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, ----------------------- ----------------------- 1997 1996 1997 1996 -------- -------- ------- -------- FFO per share . . . . . . . . . . . . . . . . . . . . $ 0.55 $ 0.53 $ 2.13 $ 2.01 ======== ======== ======== ======== Capital expenditures paid from FFO. . . . . . . . . . $ (618) $ (755) $ (3,323) $ (1,936) Other - share of Co-investments Cap exp . . . . . . . (44) (24) (198) (57) -------- -------- -------- -------- Funds available for distribution (FAD). . . . . . . . $ 10,752 $ 8,175 $ 38,651 $ 30,016 ======== ======== ======== ======== FAD per share . . . . . . . . . . . . . . . . . . . . $ 0.52 $ 0.48 $ 1.95 $ 1.88 ======== ======== ======== ======== Dividends per share . . . . . . . . . . . . . . . . . $ 0.44 $ 0.43 $ 1.74 $ 1.72 ======== ======== ======== ======== Dividends as a % of FFO . . . . . . . . . . . . . . . 80.1% 81.4% 81.8% 85.6% Dividends as a % of FAD . . . . . . . . . . . . . . . 85.1% 89.1% 89.3% 91.3% ======== ======== ======== ========
AMLI RESIDENTIAL PROPERTIES TRUST CONDENSED BALANCE SHEETS Unaudited - Dollars in thousands except per share data
DEC. 31, DEC. 31, 1997 1996 -------- -------- ASSETS - ------ Rental apartments Land . . . . . . . . . . . . . . . . . . . $ 76,323 $ 59,854 Depreciable property . . . . . . . . . . . 485,832 373,140 -------- -------- 562,155 432,994 Less accumulated depreciation. . . . . . (62,641) (50,478) -------- -------- 499,514 382,516 Properties under development. . . . . . . . 91,792 62,525 Investments in partnerships . . . . . . . . 50,729 30,669 Cash and cash equivalents . . . . . . . . . 5,676 10,291 Security deposits . . . . . . . . . . . . . 1,821 1,737 Deferred costs, net . . . . . . . . . . . . 3,140 2,139 Notes receivable and advances to Service Companies . . . . . . . . . . . . 18,356 9,735 Other assets. . . . . . . . . . . . . . . . 8,950 4,745 -------- -------- Total assets. . . . . . . . . . . . . . . . $679,978 $504,357 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Debt. . . . . . . . . . . . . . . . . . . . $333,250 $202,013 Accrued interest payable. . . . . . . . . . 1,389 1,161 Accrued real estate taxes . . . . . . . . . 9,334 6,978 Construction costs payable. . . . . . . . . 8,403 2,263 Security deposits and prepaid rents . . . . 2,722 2,757 Other liabilities . . . . . . . . . . . . . 2,978 2,292 -------- -------- Total liabilities . . . . . . . . . . . . . 358,076 217,464 -------- -------- Minority interest . . . . . . . . . . . . . 51,463 44,871 -------- -------- AMLI RESIDENTIAL PROPERTIES TRUST CONDENSED BALANCE SHEETS - CONTINUED DEC. 31, DEC. 31, 1997 1996 -------- -------- Shareholders' equity Preferred shares, $.01 par value . . . . . 11 11 Shares of beneficial interest, $.01 par value . . . . . . . . . . . . . 166 148 Additional paid-in capital . . . . . . . . 341,148 301,098 Employees and trustees notes . . . . . . . (6,924) -- Retained earnings. . . . . . . . . . . . . 18,897 (5,455) Dividends paid . . . . . . . . . . . . . . (82,859) (53,780) -------- -------- Total shareholders' equity . . . . . . 270,439 242,022 -------- -------- Total liabilities and shareholders' equity. . . . . . . . . . $679,978 $504,357 ======== ========
AMLI RESIDENTIAL PROPERTIES TRUST SELECTED QUARTERLY FINANCIAL INFORMATION December 31, 1997 (dollars in thousands except for quarter ending share data)
QUARTER ENDING ----------------------------------------------------------------------- DEC. 31, SEPT. 30, JUNE 30, MAR. 31, DEC. 31, 1997 1997 1997 1997 1996 -------- -------- -------- -------- -------- Total Debt $333,250 $235,692 $238,061 $220,964 $202,013 Total Debt (1) $392,295 $289,097 $290,699 $271,738 $240,593 Total Shares and Units Outstanding (2) 20,958,523 20,675,333 18,976,280 18,968,168 18,862,132 Value per Common Share - end of quarter $ 22.250 $ 23.250 $ 23.625 $ 23.000 $ 23.375 Total Equity (Market Value) - end of quarter $466,327 $480,701 $448,315 $436,268 $440,902 Total Market Capitalization $799,577 $716,393 $686,376 $657,232 $642,915 Total Market Capitalization (1) $858,622 $769,798 $739,014 $708,006 $681,495 ======== ======== ======== ======== ======== Total Revenues (3) $ 24,928 $ 22,982 $ 21,313 $ 20,850 $ 20,254 EBITDA (4) $ 15,420 $ 13,961 $ 12,861 $ 12,522 $ 12,155 EBITDA (4) (5) $ 16,539 $ 14,993 $ 13,833 $ 13,267 $ 12,870 FFO $ 11,414 $ 11,237 $ 9,888 $ 9,633 $ 8,954 FAD $ 10,752 $10,358 $ 9,073 $ 8,468 $ 8,175 Dividends Paid $ 9,037 $ 8,889 $ 8,158 $ 8,111 $ 6,794 Debt service (net of capitalized interest) $ 4,340 $ 3,154 $ 3,420 $ 3,195 $ 3,462 Interest Expense $ 3,844 $2,619 $ 2,886 $ 2,646 $ 2,935 G & A Expense $ 697 $ 680 $ 706 $ 767 $ 650 Total Shares and Units Outstanding - Wtd. Avg. 20,714,889 20,461,533 18,973,232 18,882,000 16,948,000 ========== ========== ========== ========== ========== AMLI RESIDENTIAL PROPERTIES TRUST SELECTED QUARTERLY FINANCIAL INFORMATION - CONTINUED December 31, 1997 QUARTER ENDING ----------------------------------------------------------------------- DEC. 31, SEPT. 30, JUNE 30, MAR. 31, DEC. 31, 1997 1997 1997 1997 1997 -------- -------- -------- -------- -------- Interest Coverage Ratio 4.01 5.33 4.46 4.73 4.14 Interest Coverage Ratio (6) 3.35 4.14 3.60 3.93 3.54 Debt as % of Total Market Capitalization 41.68% 32.90% 34.68% 33.62% 31.42% Debt as % of Total Market Capitalization (1) 45.69% 37.55% 39.34% 38.38% 35.30% EBITDA as % of Total Market Capitalization 7.71% 7.80% 7.50% 7.62% 7.56% FFO as % of Total Market Equity 9.79% 9.35% 8.82% 8.83% 8.12% G&A as % of Total Market Capitalization 0.35% 0.38% 0.41% 0.47% 0.40% G&A as % of Total Revenues 2.80% 2.96% 3.31% 3.68% 3.21% Dividends as % of FFO (based on per share amounts) 80.1% 80.4% 82.5% 84.3% 81.4% Dividends as % of FAD (based on per share amounts) 85.1% 87.3% 89.9% 95.9% 89.1% ======== ======== ======== ======== ======== Apartment Units - Wholly Owned In Operation 11,650 10,782 10,364 9,824 9,824 Under Development 2,488 2,032 2,296 2,444 1,404 Apartment Units - Co-Investments In Operation 5,851 5,037 4,815 4,815 3,677 Under Development 1,456 1,754 1,324 1,324 1,324 -------- -------- -------- -------- -------- Total Units 21,445 19,605 18,799 18,407 16,229 ======== ======== ======== ======== ======== (1) Including proportionate share of debt of Co-investment partnerships accounted for using the equity method. (2) End of the quarter - includes 1,100,000 preferred shares convertible to common shares. (3) Excluding non-recurring gain of $2,457 in 1997 and $584 in 1996. (4) Includes other income, net of G & A expenses. (5) Before share of co-investment interest expense and amortization. (6) Including share of co-investment interest expense.
AMLI RESIDENTIAL PROPERTIES TRUST PORTFOLIO INDEBTEDNESS SUMMARY December 31, 1997 (Dollars in thousands)
Weighted Avg. Percent of Interest Years to Type of Indebtedness Balance Total Interest Rate Maturity - -------------------- -------- ----------- ---------- --------- ---------- Conventional Fixed Rate $177,250 53.2% Fixed 7.79% 6.9 Tax-exempt Variable Rate 50,250 15.1% Variable 5.00% 8.8 Credit Facilities 100,000 30.0% Variable 7.32% 2.5 Other 5,750 1.7% Fixed 9.22% 4.4 -------- ------ ----- --- Total $333,250 100.0% 7.26% 5.8 ======== ====== ===== === Balance Weighted including Avg. share of Co- Percent of Interest Years to Type of Indebtedness investment debt Total Interest Rate Maturity - -------------------- --------------- ---------- ---------- ---------- -------- Conventional Fixed Rate $236,295 60.2% Fixed 7.80% 6.9 Tax-exempt Variable Rate 50,250 12.8% Variable 5.00% 8.8 Credit Facilities 100,000 25.5% Variable 7.32% 2.5 Other 5,750 1.5% Fixed 9.22% 4.4 -------- ------ ----- --- Total $392,295 100.0% 7.34% 6.0 ======== ====== ===== ===
AMLI RESIDENTIAL PROPERTIES TRUST DEBT MATURITIES December 31, 1997 Unaudited - Dollars in thousands
There- % to 1998 1999 2000 2001 2002 after Total Total ------- ------- -------- ------- ------- -------- -------- ------ Fixed Rate Mortgages $13,432 $ 2,757 $ 2,935 $3,160 $3,220 $151,746 $177,250 53.2% Tax Exempt Bonds* 50,250 50,250 15.1% Wachovia/First Chicago Line of Credit 100,000 100,000 30.0% Other 750 5,000 5,750 1.7% ------- ------- -------- ------ ------- -------- -------- ------ Total Loans $14,182 $ 2,757 $102,935 $3,160 $3,220 $206,996 $333,250 100.0% ======= ======= ======== ====== ====== ======== ======== ====== Percent to Total 4.3% 0.8% 30.9% 0.9% 1.0% 62.1% 100.0% 84.9% ======= ======= ======== ====== ====== ======== ====== ====== SHARE OF CO-INVESTMENT DEBT - --------------------------- Prudential Ins. - Park Place (25%) 53 3,054 3,107 5.3% Nationwide Life Ins. - Greenwood Forest (15%) 3 5 5 6 1,725 1,744 3.0% Lincoln National Ins. - Champions Park (15%) 19 21 22 24 1,259 1,345 2.3% Prudential Ins. - Champions Centre (15%) 9 10 11 12 956 998 1.7% Allstate Life Ins. - Windbrooke (15%) 14 16 18 20 22 1,635 1,725 2.9% CIGNA - Chevy Chase (33%) 165 177 189 202 216 8,771 9,720 16.5% Northwestern Mutual Life Ins. - Willowbrook (40%) 139 150 162 175 189 8,908 9,723 16.5% Phoenix Mutual - Willeo Creek (30%) 49 53 56 60 64 2,690 2,972 5.0% AMLI RESIDENTIAL PROPERTIES TRUST DEBT MATURITIES - CONTINUED There- % to 1998 1999 2000 2001 2002 after Total Total ------- ------- ------- ------- ------- -------- -------- ------ Northwestern Mutual Life Ins. - Pleasant Hill (40%) 69 75 82 90 99 5,486 5,901 10.0% Northwestern Mutual Life Ins. - Barrett Lakes (35%) 71 77 84 91 4,656 4,979 8.3% Erie Insurance - River Park (40%) 20 51 55 60 3,024 3,210 5.4% Prudential Ins - AMLI at Danada (10%) 17 25 27 29 2,353 2,451 4.2% Phoenix Home Life - AMLI at Verandah (35%) 55 88 94 102 5,590 5,929 10.0% Northwestern Mutual Life Ins. - Northwinds (35%) 15 95 103 841 1,054 1.8% Northwestern Mutual Life Ins. - Regents Creek (25%) 60 65 69 76 82 3,712 4,064 6.9% Central Bank, Trustee - Prairie Court (1%) 73 73 0.1% Erie Insurance - Town Creek (1%) 50 50 0.1% ------- ------- -------- ------- ------- -------- -------- ------ Total Share of Co-Investment Loans $ 580 $ 3,912 $ 870 $ 1,020 $ 4,997 $ 47,666 $ 59,045 100.0% ======= ======= ======== ====== ======= ======== ======== ====== Percent to Total 1.0% 6.6% 1.5% 1.7% 8.5% 80.7% 100.0% 15.1% ======= ======= ======== ====== ======= ======== ======== ====== Total Including Share of Co-Investments Debt $14,762 $ 6,669 $103,805 $4,180 $ 8,217 $254,662 $392,295 100.0% ======= ======= ======== ====== ======= ======== ======== ====== Percent to Total 3.8% 1.7% 26.5% 1.1% 2.1% 64.8% 100.0% 100.0% ======= ======= ======= ====== ======= ======== ======== ====== * The Spring Creek Bonds mature in October 2024, but the credit enhancement expires on October 15, 2002. * The Poplar Creek Bonds mature in February 2024.
AMLI RESIDENTIAL PROPERTIES L.P. - "SAME COMMUNITY COMPARISON" (WHOLLY-OWNED PROPERTIES) THREE MONTHS ENDED DECEMBER 31, 1997 VERSUS THREE MONTHS ENDED DECEMBER 31, 1996 Excluding Autumn Chase II, Gleneagles II, Crown Colony II, Regents III, Vinings Square, Vinings II, Peachtree City and South Gwinnett
10/1/97-12/31/97 10/1/96-12/31/96 No. of --------------------------------- % -------------------------------- Apts. Amount/% Per Unit Per Sq Ft Change Amount/% Per Unit Per Sq Ft -------- -------- -------- ---------- ------ ---------- -------- --------- WEIGHTED AVG. OCCUPANCY - ----------------------- Dallas 4,088 95.3% 0.9% 94.5% Atlanta 2,420 92.6% -0.1% 92.7% Austin 935 95.8% 3.8% 92.2% Indianapolis 996 87.7% -6.8% 94.1% Eastern Kansas 908 91.8% -1.9% 93.6% Chicago 253 97.2% 8.2% 89.9% ----- ----- ----- ----- Weighted Average 93.6% 0.0% 93.6% ===== ===== ===== Total 9,600 ===== WEIGHTED AVG. RENTAL RATE - ------------------------- Dallas $642 2.6% $625 Atlanta $734 0.2% $733 Austin $646 -1.9% $659 Indianapolis $582 0.4% $580 Eastern Kansas $648 0.2% $647 Chicago $932 1.7% $916 ---- ---- ---- Weighted Average $668 1.0% $661 ==== ==== ==== TOTAL PROPERTY REVENUES Per Month Per Month - ----------------------- ---------- ---------- Dallas $ 7,295,435 $ 633 $0.77 4.9% $ 6,955,718 $614 $0.74 Atlanta $ 5,150,852 $ 709 $0.76 1.2% $ 5,089,835 $701 $0.75 Austin $ 1,823,404 $ 650 $0.88 4.6% $ 1,743,738 $622 $0.84 Indianapolis $ 1,587,514 $ 531 $0.64 -8.0% $ 1,725,585 $578 $0.70 Eastern Kansas $ 1,703,636 $ 625 $0.73 0.7% $ 1,691,244 $621 $0.72 Chicago $ 773,792 $1,019 $1.19 12.3 $ 689,300 $908 $1.06 ------------ ------ ----- ----- ----------- ---- ----- Total $ 18,334,633 $ 653 $0.77 2.5% $17,895,420 $641 $0.76 ============ ====== ===== ===== =========== ==== ===== AMLI RESIDENTIAL PROPERTIES L.P. - "SAME COMMUNITY COMPARISON" (WHOLLY-OWNED PROPERTIES) - CONTINUED Excluding Autumn Chase II, Gleneagles II, Crown Colony II, Regents III, Vinings Square, Vinings II, Peachtree City and South Gwinnett 10/1/97-12/31/97 10/1/96-12/31/96 --------------------------------- % -------------------------------- Amount/% Per Unit Per Sq Ft Change Amount/% Per Unit Per Sq Ft -------- -------- ---------- ------ ---------- -------- --------- PROPERTY OPERATING EXPENSES (ANNUALIZED) (ANNUALIZED) - --------------------------- ------------ ------------ Dallas $ 2,921,733 $3,119 $3.77 0.1% $2,917,783 $3,136 $3.79 Atlanta $ 1,850,565 $3,059 $3.28 -6.2% $1,973,749 $3,262 $3.50 Austin $ 812,834 $3,477 $4.72 8.5% $ 749,050 $3,204 $4.35 Indianapolis $ 738,836 $2,967 $3.60 36.4% $ 541,859 $2,176 $2.64 Eastern Kansas $ 471,614 $2,078 $2.41 -10.9% $ 529,282 $2,332 $2.71 Chicago $ 408,893 $6,465 $7.56 -7.6% $ 442,587 $6,997 $8.18 ------------ ------ ----- ----- ---------- ------ ----- Total $ 7,204,476 $3,113 $3.67 0.7% $7,154,310 $3,101 $3.65 ============ ====== ===== ===== ========== ====== ===== Operating Efficiency 39.3% 40.0% ============ ========== NET OPERATING INCOME PER MONTH PER MONTH - -------------------- --------- ---------- Dallas $ 4,373,702 $373 $0.45 8.3% $ 4,037,936 $353 $0.43 Atlanta $ 3,300,287 $455 $0.49 5.9% $ 3,116,086 $429 $0.46 Austin $ 1,010,570 $360 $0.49 1.6% $ 994,688 $355 $0.48 Indianapolis $ 848,678 $284 $0.34 -28.3% $ 1,183,726 $396 $0.48 Eastern Kansas $ 1,232,021 $452 $0.53 6.0% $ 1,161,962 $427 $0.50 Chicago $ 364,899 $481 $0.56 47.9% $ 246,713 $325 $0.38 ------------ ---- ----- ----- ----------- ---- ----- Total $ 11,130,158 $393 $0.46 3.6% $10,741,110 $383 $0.45 ============ ==== ===== ===== =========== ==== ===== Operating Margin 60.7% 60.0% ============ ========== CAPITAL EXPENDITURES (ANNUALIZED) (ANNUALIZED) - -------------------- ------------ ------------ Dallas $ 175,571 $183 $0.22 -61.0% $ 449,865 $465 $0.56 Atlanta $ 209,901 $347 $0.37 97.2% $ 106,425 $176 $0.19 Austin $ 75,436 $323 $0.44 56.2% $ 48,302 $207 $0.28 Indianapolis $ 38,688 $155 $0.19 12.7% $ 34,323 $138 $0.17 Eastern Kansas $ 82,278 $362 $0.42 46.6% $ 56,124 $247 $0.29 Chicago $ 6,029 $ 95 $0.11 -81.4% $ 32,451 $513 $0.60 ------------ ---- ----- ------ --------- ---- ----- Total $ 587,904 $250 $0.29 -19.2% $ 727,490 $313 $0.37 ============ ==== ===== ====== ========= ==== ===== AMLI RESIDENTIAL PROPERTIES L.P. - "SAME COMMUNITY COMPARISON" (WHOLLY-OWNED PROPERTIES) - CONTINUED Excluding Autumn Chase II, Gleneagles II, Crown Colony II, Regents III, Vinings Square, Vinings II, Peachtree City and South Gwinnett 10/1/97-12/31/97 10/1/96-12/31/96 --------------------------------- % -------------------------------- Amount/% Per Unit Per Sq Ft Change Amount/% Per Unit Per Sq Ft -------- -------- ---------- ------ ---------- -------- --------- REPAIRS AND MAINTENANCE (ANNUALIZED) (ANNUALIZED) - ----------------------- ------------ ------------ Dallas $ 409,649 $ 457 $0.55 -13.0% $ 470,875 $ 537 $0.65 Atlanta $ 258,809 $ 428 $0.46 -6.5% $ 276,712 $ 457 $0.49 Austin $ 123,707 $ 529 $0.72 6.1% $ 116,637 $ 499 $0.68 Indianapolis $ 173,220 $ 696 $0.84 20.5% $ 143,762 $ 577 $0.70 Eastern Kansas $ 85,962 $ 379 $0.44 15.1% $ 74,679 $ 329 $0.38 Chicago $ 70,970 $1,122 $1.31 -30.2% $ 101,685 $1,608 $1.88 ------------ ------ ----- ------ ---------- ------ ----- Total $ 1,122,316 $ 491 $0.58 -5.2% $1,184,350 $ 526 $0.62 ============ ====== ===== ====== ========== ====== ===== REAL ESTATE TAXES (ANNUALIZED) (ANNUALIZED) - ----------------- ------------ ------------ Dallas $ 854,088 $ 885 $1.07 0.7% $ 848,365 $ 879 $1.06 Atlanta $ 387,321 $ 640 $0.69 -23.1% $ 503,548 $ 832 $0.89 Austin $ 233,778 $1,000 $1.36 15.7% $ 202,118 $ 865 $1.17 Indianapolis $ 221,708 $ 890 $1.08 110.3% $ 105,426 $ 423 $0.51 Eastern Kansas $ 22,028 $ 97 $0.11 -82.1% $ 123,401 $ 544 $0.63 Chicago $ 149,372 $2,362 $2.76 3.5% $ 144,375 $2,283 $2.67 ------------ ------ ----- ----- ---------- ------ ----- Total $ 1,868,295 $ 800 $0.94 -3.1% $1,927,233 $ 824 $0.97 ============ ====== ===== ==== ========== ====== =====
AMLI RESIDENTIAL PROPERTIES L.P. - "SAME COMMUNITY COMPARISON" (WHOLLY-OWNED PROPERTIES) YEAR ENDED DECEMBER 31, 1997 VERSUS YEAR ENDED DECEMBER 31, 1996 Excluding Autumn Chase II, Gleneagles II, Crown Colony II, Regents III, Vinings Square, Vinings II, Peachtree City and South Gwinnett
1/1/97-12/31/97 1/1/96-12/31/96 No. of --------------------------------- % -------------------------------- Apts. Amount/% Per Unit Per Sq Ft Change Amount/% Per Unit Per Sq Ft ------ -------- -------- ---------- ------ ---------- -------- --------- WEIGHTED AVG. OCCUPANCY - ----------------------- Dallas 3,738 94.8% -0.1% 94.9% Atlanta 2,420 93.4% -0.6% 94.0% Austin 935 94.5% 1.5% 93.0% Indianapolis 996 90.9% -3.1% 93.8% Eastern Kansas 908 92.1% 0.0% 92.1% Chicago 253 94.1% 1.0% 93.1% ----- ----- ----- ----- Weighted Average 93.8% -0.3% 94.0% ===== ===== ===== Total 9,250 ===== WEIGHTED AVG. RENTAL RATE - ------------------------- Dallas $633 2.3% $619 Atlanta $728 0.9% $722 Austin $644 -1.6% $654 Indianapolis $574 1.0% $569 Eastern Kansas $647 0.4% $644 Chicago $920 3.4% $890 ---- ---- ---- Weighted Average $661 1.3% $653 ==== ==== ==== TOTAL PROPERTY REVENUES PER MONTH PER MONTH - ----------------------- --------- --------- Dallas $ 28,612,322 $629 $0.76 3.5% $27,654,157 $610 $0.74 Atlanta $ 20,666,484 $712 $0.76 1.3% $20,404,617 $703 $0.75 Austin $ 7,194,329 $641 $0.87 2.0% $ 7,054,970 $629 $0.85 Indianapolis $ 6,613,512 $553 $0.67 -1.7% $ 6,725,867 $563 $0.68 Eastern Kansas $ 6,863,533 $630 $0.73 1.8% $ 6,744,113 $619 $0.72 Chicago $ 2,925,225 $964 $1.13 5.1% $ 2,784,303 $917 $1.07 ------------ ---- ----- ---- ----------- ---- ----- Total $ 72,875,405 $652 $0.77 2.1% $71,368,026 $639 $0.75 ============ ==== ===== ==== =========== ==== ===== AMLI RESIDENTIAL PROPERTIES L.P. - "SAME COMMUNITY COMPARISON" (WHOLLY-OWNED PROPERTIES) - CONTINUED Excluding Autumn Chase II, Gleneagles II, Crown Colony II, Regents III, Vinings Square, Vinings II, Peachtree City and South Gwinnett 1/1/97-12/31/97 1/1/96-12/31/96 --------------------------------- % -------------------------------- Amount/% Per Unit Per Sq Ft Change Amount/% Per Unit Per Sq Ft -------- -------- ---------- ------ ---------- -------- --------- PROPERTY OPERATING EXPENSES (ANNUALIZED) (ANNUALIZED) - --------------------------- ------------ ----------- Dallas $ 12,376,036 $3,314 $4.01 -0.7% $12,457,048 $3,364 $4.07 Atlanta $ 7,392,753 $3,055 $3.28 -1.1% $ 7,477,603 $3,090 $3.31 Austin $ 3,304,241 $3,534 $4.80 6.2% $ 3,111,029 $3,327 $4.52 Indianapolis $ 2,658,522 $2,669 $3.24 8.8% $ 2,444,228 $2,454 $2.98 Eastern Kansas $ 2,471,118 $2,721 $3.16 -1.4% $ 2,507,350 $2,761 $3.21 Chicago $ 1,678,714 $6,635 $7.76 -4.9% $ 1,765,173 $6,977 $8.16 ------------ ------ ----- ----- ----------- ------ ----- Total $ 29,881,384 $3,235 $3.81 0.4% $29,762,431 $3,235 $3.81 ============ ====== ===== ===== =========== ====== ===== Operating Efficiency 41.0% 41.7% ===== ===== NET OPERATING INCOME PER MONTH PER MONTH - -------------------- --------- --------- Dallas $ 16,236,286 $352 $0.43 6.8% $15,197,109 $330 $0.40 Atlanta $ 13,273,731 $457 $0.49 2.7% $12,927,013 $445 $0.48 Austin $ 3,890,087 $347 $0.47 -1.4% $ 3,943,941 $352 $0.48 Indianapolis $ 3,954,991 $331 $0.40 -7.6% $ 4,281,639 $358 $0.43 Eastern Kansas $ 4,392,415 $403 $0.47 3.7% $ 4,236,763 $389 $0.45 Chicago $ 1,246,511 $411 $0.48 22.3% $ 1,019,130 $336 $0.39 ------------ ---- ----- ----- ----------- ---- ----- Total $ 42,994,020 $382 $0.45 3.3% $41,605,595 $370 $0.44 ============ ==== ===== ===== =========== ==== ===== Operating Margin 59.0% 58.3% ===== ===== CAPITAL EXPENDITURES (ANNUALIZED) (ANNUALIZED) - -------------------- ------------- ------------ Dallas $ 1,415,406 $384 $0.46 46.5% $ 966,428 $253 $0.31 Atlanta $ 774,749 $320 $0.34 127.8% $ 340,099 $141 $0.15 Austin $ 376,314 $402 $0.55 99.2% $ 188,939 $202 $0.27 Indianapolis $ 193,697 $194 $0.24 54.4% $ 125,423 $126 $0.15 Eastern Kansas $ 249,509 $275 $0.32 82.5% $ 136,745 $151 $0.18 Chicago $ 106,593 $421 $0.49 6.4% $ 100,155 $396 $0.46 ------------ ---- ----- ------ ---------- ---- ----- Total $ 3,116,267 $341 $0.40 67.7% $1,857,789 $201 $0.24 ============ ==== ===== ====== ========== ==== ===== AMLI RESIDENTIAL PROPERTIES L.P. - "SAME COMMUNITY COMPARISON" (WHOLLY-OWNED PROPERTIES) - CONTINUED Excluding Autumn Chase II, Gleneagles II, Crown Colony II, Regents III, Vinings Square, Vinings II, Peachtree City and South Gwinnett 1/1/97-12/31/97 1/1/96-12/31/96 --------------------------------- % -------------------------------- Amount/% Per Unit Per Sq Ft Change Amount/% Per Unit Per Sq Ft -------- -------- ---------- ------ ---------- -------- --------- REPAIRS AND MAINTENANCE (ANNUALIZED) (ANNUALIZED) - ----------------------- ------------ ------------ Dallas $ 2,015,104 $ 558 $0.68 3.7% $1,942,523 $ 551 $0.67 Atlanta $ 1,145,185 $ 473 $0.51 18.2% $ 968,448 $ 400 $0.43 Austin $ 565,731 $ 605 $0.82 28.2% $ 441,348 $ 472 $0.64 Indianapolis $ 589,329 $ 592 $0.72 16.7% $ 505,098 $ 507 $0.62 Eastern Kansas $ 363,079 $ 400 $0.46 8.6% $ 334,305 $ 368 $0.43 Chicago $ 333,615 $1,319 $1.54 -12.6% $ 381,601 $1,508 $1.76 ------------ ------ ----- ----- ---------- ------ ----- Total $ 5,012,043 $ 550 $0.65 9.6% $4,573,323 $ 509 $0.60 ============ ====== ===== ===== ========== ====== ===== REAL ESTATE TAXES (ANNUALIZED) (ANNUALIZED) - ----------------- ------------ ------------ Dallas $ 3,759,182 $ 981 $1.19 3.1% $3,645,337 $ 956 $1.16 Atlanta $ 1,475,365 $ 610 $0.65 -13.2% $1,698,801 $ 702 $0.75 Austin $ 879,996 $ 941 $1.28 6.8% $ 824,009 $ 881 $1.20 Indianapolis $ 742,334 $ 745 $0.90 15.5% $ 642,501 $ 645 $0.78 Eastern Kansas $ 660,029 $ 727 $0.84 -4.6% $ 691,690 $ 762 $0.89 Chicago $ 566,942 $2,241 $2.62 1.0% $ 561,308 $2,219 $2.59 ------------ ------ ----- ----- ---------- ------ ----- Total $ 8,083,848 $ 868 $1.02 0.3% $8,063,646 $ 867 $1.02 ============ ====== ===== ==== ========== ====== =====
AMLI RESIDENTIAL PROPERTIES L.P. - "SAME COMMUNITY COMPARISON" (WHOLLY-OWNED AND CO-INVESTMENT PROPERTIES) THREE MONTHS ENDED DECEMBER 31, 1997 VERSUS THREE MONTHS ENDED DECEMBER 31, 1996 Excluding Autumn Chase II, Gleneagles II, Crown II, Regents III, Vinings Square, Vinings II, Pleasant Hill, Chevy, Willowbrook, Barrett, River Park, Aurora, Fossil, Danada and Verandah
10/1/97-12/31/97 10/1/96-12/31/96 No. of --------------------------------- % -------------------------------- Apts. Amount/% Per Unit Per Sq Ft Change Amount/% Per Unit Per Sq Ft ------ -------- -------- ---------- ------ ---------- -------- --------- WEIGHTED AVG. OCCUPANCY - ----------------------- Dallas 4,088 95.3% 0.2% 95.1% Atlanta 2,812 92.2% -2.4% 94.4% Austin 1,523 95.8% 1.6% 94.3% Houston 754 96.0% 3.7% 92.5% Indianapolis 996 87.7% -6.2% 93.5% Eastern Kansas 908 91.8% -1.2% 93.0% Chicago 614 96.5% 2.4% 94.3% ------ ----- ----- ------ Weighted Average 93.8% -0.5% 94.3% ===== ===== ====== Total 11,695 ====== WEIGHTED AVG. RENTAL RATE - ------------------------- Dallas $642 4.4% $615 Atlanta $738 2.7% $719 Austin $625 -1.6% $635 Houston $730 3.2% $708 Indianapolis $582 2.9% $565 Eastern Kansas $648 -0.1% $649 Chicago $971 5.0% $925 ---- ----- ---- Weighted Average $681 2.7% $663 ==== ===== ==== TOTAL PROPERTY REVENUES PER MONTH PER MONTH - ----------------------- ---------- --------- Dallas $ 7,295,435 $ 595 $0.72 4.9% $ 6,955,718 $567 $0.69 Atlanta $ 5,987,767 $ 710 $0.75 0.8% $ 5,938,030 $704 $0.74 Austin $ 2,876,365 $ 630 $0.88 2.8% $ 2,797,377 $612 $0.86 Houston $ 1,693,623 $ 749 $0.81 11.3% $ 1,521,001 $672 $0.73 Indianapolis $ 1,587,514 $ 531 $0.64 -8.0% $ 1,725,585 $578 $0.70 Eastern Kansas $ 1,703,636 $ 625 $0.73 0.7% $ 1,691,244 $621 $0.72 Chicago $ 1,885,271 $1,023 $1.17 9.8% $ 1,717,043 $932 $1.07 ------------ ------ ----- ----- ----------- ---- ----- Total $ 23,029,610 $ 656 $0.77 3.1% $22,345,999 $637 $0.75 ============ ====== ===== ===== =========== ==== ===== AMLI RESIDENTIAL PROPERTIES L.P. - "SAME COMMUNITY COMPARISON" (WHOLLY-OWNED AND CO-INVESTMENT PROPERTIES) - CONT. Excluding Autumn Chase II, Gleneagles II, Crown II, Regents III, Vinings Square, Vinings II, Pleasant Hill, Chevy, Willowbrook, Barrett, River Park, Aurora, Fossil, Danada and Verandah 10/1/97-12/31/97 10/1/96-12/31/96 --------------------------------- % -------------------------------- Amount/% Per Unit Per Sq Ft Change Amount/% Per Unit Per Sq Ft -------- -------- ---------- ------ ---------- -------- --------- PROPERTY OPERATING EXPENSES (ANNUALIZED) (ANNUALIZED) - --------------------------- ------------ ------------ Dallas $ 2,921,733 $2,859 $3.46 0.1% $2,917,783 $2,855 $3.45 Atlanta $ 2,221,671 $3,160 $3.32 -4.9% $2,336,003 $3,323 $3.49 Austin $ 1,299,014 $3,412 $4.78 8.5% $1,197,136 $3,144 $4.41 Houston $ 693,644 $3,680 $3.98 26.5% $ 548,340 $2,909 $3.15 Indianapolis $ 738,836 $2,967 $3.60 36.4% $ 541,859 $2,176 $2.64 Eastern Kansas $ 471,614 $2,078 $2.41 -10.9% $ 529,282 $2,332 $2.71 Chicago $ 853,990 $5,563 $6.38 -5.9% $ 907,324 $5,911 $6.78 ------------ ------ ----- ----- ---------- ------ ----- Total $ 9,200,502 $3,147 $3.69 2.5% $8,977,727 $3,071 $3.60 ============ ====== ===== ===== ========== ====== ===== Operating Efficiency 40.0% 40.2% ===== ===== NET OPERATING INCOME PER MONTH PER MONTH - -------------------- --------- --------- Dallas $ 4,373,702 $357 $0.43 8.3% $ 4,037,936 $329 $0.40 Atlanta $ 3,766,096 $446 $0.47 4.6% $ 3,602,027 $427 $0.45 Austin $ 1,577,351 $345 $0.48 -1.4% $ 1,600,241 $350 $0.49 Houston $ 999,979 $442 $0.48 2.8% $ 972,660 $430 $0.46 Indianapolis $ 848,678 $284 $0.34 -28.3% $ 1,183,726 $396 $0.48 Eastern Kansas $ 1,232,021 $452 $0.53 6.0% $ 1,161,962 $427 $0.50 Chicago $ 1,031,281 $560 $0.64 27.4% $ 809,719 $440 $0.50 ------------ ---- ----- ----- ----------- ---- ----- Total $ 13,829,108 $394 $0.46 3.4% $13,368,272 $381 $0.45 ============ ==== ===== ===== =========== ==== ===== Operating Margin 60.0% 59.8% ===== ===== CAPITAL EXPENDITURES (ANNUALIZED) (ANNUALIZED) - -------------------- ------------ ------------ Dallas $ 175,571 $172 $0.21 -61.0% $449,865 $440 $0.53 Atlanta $ 228,984 $326 $0.34 106.5% $110,865 $158 $0.17 Austin $ 120,716 $317 $0.44 96.6% $ 61,387 $161 $0.23 Houston $ 16,608 $ 88 $0.10 27.4% $ 13,041 $ 69 $0.07 Indianapolis $ 38,688 $155 $0.19 12.7% $ 34,323 $138 $0.17 Eastern Kansas $ 82,278 $362 $0.42 46.6% $ 56,124 $247 $0.29 Chicago $ 13,009 $ 85 $0.10 -71.3% $ 45,320 $295 $0.34 ------------ ---- ----- ------ -------- ---- ----- Total $ 675,854 $231 $0.27 -12.3% $770,925 $264 $0.31 ============ ==== ===== ====== ======== ==== ===== AMLI RESIDENTIAL PROPERTIES L.P. - "SAME COMMUNITY COMPARISON" (WHOLLY-OWNED AND CO-INVESTMENT PROPERTIES) - CONT. Excluding Autumn Chase II, Gleneagles II, Crown II, Regents III, Vinings Square, Vinings II, Pleasant Hill, Chevy, Willowbrook, Barrett, River Park, Aurora, Fossil, Danada and Verandah 10/1/97-12/31/97 10/1/96-12/31/96 --------------------------------- % -------------------------------- Amount/% Per Unit Per Sq Ft Change Amount/% Per Unit Per Sq Ft -------- -------- ---------- ------ ---------- -------- --------- REPAIRS AND MAINTENANCE (ANNUALIZED) (ANNUALIZED) - ----------------------- ------------ ------------ Dallas $ 409,649 $ 401 $0.48 -13.0% $ 470,875 $ 461 $0.56 Atlanta $ 312,878 $ 445 $0.47 -1.6% $ 317,875 $ 452 $0.48 Austin $ 188,599 $ 495 $0.69 -1.2% $ 190,955 $ 502 $0.70 Houston $ 44,636 $ 237 $0.26 30.9% $ 34,093 $ 181 $0.20 Indianapolis $ 173,220 $ 696 $0.84 20.5% $ 143,762 $ 577 $0.70 Eastern Kansas $ 85,962 $ 379 $0.44 15.1% $ 74,679 $ 329 $0.38 Chicago $ 126,600 $ 825 $0.95 -13.7% $ 146,781 $ 956 $1.10 ------------ ------ ----- ----- ---------- ------ ----- Total $ 1,341,543 $ 459 $0.54 -2.7% $1,379,019 $ 472 $0.55 ============ ====== ===== ===== ========== ====== ===== REAL ESTATE TAXES (ANNUALIZED) (ANNUALIZED) - ----------------- ------------ ------------ Dallas $ 854,088 $ 836 $1.01 0.7% $ 848,365 $ 830 $1.00 Atlanta $ 431,354 $ 614 $0.64 -22.7% $ 558,078 $ 794 $0.83 Austin $ 374,523 $ 984 $1.38 9.0% $ 343,504 $ 902 $1.26 Houston $ 269,353 $1,429 $1.55 64.9% $ 163,336 $ 867 $0.94 Indianapolis $ 221,708 $ 890 $1.08 110.3% $ 105,426 $ 423 $0.51 Eastern Kansas $ 22,028 $ 97 $0.11 -82.1% $ 123,401 $ 544 $0.63 Chicago $ 314,213 $2,047 $2.35 -6.6% $ 336,285 $2,191 $2.51 ------------ ------ ----- ----- ---------- ------ ----- Total $ 2,487,267 $ 851 $1.00 0.4% $2,478,396 $ 848 $0.99 ============ ====== ===== ==== ========== ====== =====
AMLI RESIDENTIAL PROPERTIES L.P. - "SAME COMMUNITY COMPARISON" (WHOLLY-OWNED AND CO-INVESTMENT PROPERTIES) YEAR ENDED DECEMBER 31, 1997 VERSUS YEAR ENDED DECEMBER 31, 1996 Excluding Autumn Chase II, Gleneagles II, Crown II, Regents III, Vinings Square, Vinings II, Pleasant Hill, Chevy, Willowbrook, Barrett, River Park, Aurora, Fossil, Danada and Verandah
1/1/97-12/31/97 1/1/96-12/31/96 No. of --------------------------------- % -------------------------------- Apts. Amount/% Per Unit Per Sq Ft Change Amount/% Per Unit Per Sq Ft ------ -------- -------- ---------- ------ ---------- -------- --------- WEIGHTED AVG. OCCUPANCY - ----------------------- Dallas 3,738 94.8% -0.2% 95.0% Atlanta 2,812 93.2% -0.9% 94.0% Austin 1,523 94.7% 0.2% 94.5% Houston 754 94.9% 4.6% 90.7% Indianapolis 996 90.9% -3.1% 93.8% Eastern Kansas 908 92.1% 0.0% 92.1% Chicago 614 94.9% 0.8% 94.1% ------ ----- ----- ----- Weighted Average 93.9% -0.2% 94.1% ===== ===== ===== Total 11,345 ====== WEIGHTED AVG. RENTAL RATE - ------------------------- Dallas $631 3.2% $611 Atlanta $730 2.3% $714 Austin $621 -1.8% $633 Houston $714 0.8% $709 Indianapolis $574 1.0% $569 Eastern Kansas $646 0.4% $644 Chicago $956 3.2% $926 ---- ---- ---- Weighted Average $672 1.8% $660 ==== ==== ==== TOTAL PROPERTY REVENUES PER MONTH PER MONTH - ----------------------- --------- --------- Dallas $28,612,322 $583 $0.71 3.5% $27,654,157 $564 $0.68 Atlanta $24,071,838 $713 $0.75 1.3% $23,752,330 $704 $0.74 Austin $11,285,286 $617 $0.87 0.4% $11,239,477 $615 $0.86 Houston $ 6,481,106 $716 $0.77 7.8% $ 6,013,302 $665 $0.72 Indianapolis $ 6,613,512 $553 $0.67 -1.7% $ 6,725,867 $563 $0.68 Eastern Kansas $ 6,863,533 $630 $0.73 1.8% $ 6,744,113 $619 $0.72 Chicago $ 7,267,419 $986 $1.13 4.6% $ 6,946,243 $943 $1.08 ----------- ---- ----- ----- ----------- ---- ----- Total $91,195,016 $650 $0.76 2.4% $89,075,487 $635 $0.74 =========== ==== ===== ===== =========== ==== ===== AMLI RESIDENTIAL PROPERTIES L.P. - "SAME COMMUNITY COMPARISON" (WHOLLY-OWNED AND CO-INVESTMENT PROPERTIES) - CONT. Excluding Autumn Chase II, Gleneagles II, Crown II, Regents III, Vinings Square, Vinings II, Pleasant Hill, Chevy, Willowbrook, Barrett, River Park, Aurora, Fossil, Danada and Verandah 1/1/97-12/31/97 1/1/96-12/31/96 --------------------------------- % -------------------------------- Amount/% Per Unit Per Sq Ft Change Amount/% Per Unit Per Sq Ft -------- -------- ---------- ------ ---------- -------- --------- PROPERTY OPERATING EXPENSES (ANNUALIZED) (ANNUALIZED) - --------------------------- ------------ ------------ Dallas $ 12,376,036 $3,027 $3.66 -0.7% $12,457,048 $3,047 $3.68 Atlanta $ 8,851,778 $3,148 $3.31 -0.9% $ 8,930,020 $3,176 $3.34 Austin $ 5,238,012 $3,439 $4.82 6.4% $ 4,925,224 $3,234 $4.53 Houston $ 2,675,963 $3,549 $3.84 -4.3% $ 2,797,337 $3,710 $4.01 Indianapolis $ 2,658,522 $2,669 $3.24 8.8% $ 2,444,228 $2,454 $2.98 Eastern Kansas $ 2,471,118 $2,721 $3.16 -1.4% $ 2,507,350 $2,761 $3.21 Chicago $ 3,480,460 $5,669 $6.50 -2.1% $ 3,554,808 $5,790 $6.64 ------------ ------ ----- ------ ----------- ------ ----- Total $ 37,751,889 $3,228 $3.78 0.4% $37,616,015 $3,216 $3.77 ============ ====== ===== ====== =========== ====== ===== Operating Efficiency 41.4% 42.2% ===== ===== NET OPERATING INCOME PER MONTH PER MONTH - -------------------- --------- --------- Dallas 30.4% $16,236,286 $331 $0.40 6.8% $15,197,109 $310 $0.37 Atlanta 28.5% $15,220,060 $451 $0.47 2.7% $14,822,310 $439 $0.46 Austin 11.3% $ 6,047,274 $331 $0.46 -4.2% $ 6,314,253 $345 $0.48 Houston 7.1% $ 3,805,142 $421 $0.45 18.3% $ 3,215,964 $355 $0.38 Indianapolis 7.4% $ 3,954,991 $331 $0.40 -7.6% $ 4,281,639 $358 $0.43 Eastern Kansas 8.2% $ 4,392,415 $403 $0.47 3.7% $ 4,236,763 $389 $0.45 Chicago 7.1% $ 3,786,959 $514 $0.59 11.7% $ 3,391,434 $460 $0.53 ------ ----------- ---- ----- ----- ----------- ---- ----- Total 100.0% $53,443,127 $381 $0.45 3.9% $51,459,472 $367 $0.43 ====== =========== ==== ===== ===== =========== ==== ===== Operating Margin 58.6% 57.8% ===== ===== CAPITAL EXPENDITURES (ANNUALIZED) (ANNUALIZED) - -------------------- ----------- ------------ Dallas $ 1,415,406 $346 $0.42 46.5% $ 966,428 $236 $0.29 Atlanta $ 838,699 $298 $0.31 131.4% $ 362,454 $129 $0.14 Austin $ 528,566 $347 $0.49 112.2% $ 249,102 $164 $0.23 Houston $ 76,559 $102 $0.11 -15.8% $ 90,892 $121 $0.13 Indianapolis $ 193,697 $194 $0.24 54.4% $ 125,423 $126 $0.15 Eastern Kansas $ 249,509 $275 $0.32 82.5% $ 136,745 $151 $0.18 Chicago $ 167,114 $272 $0.31 16.0% $ 144,033 $235 $0.27 ------------ ---- ----- ------ ---------- ---- ----- Total $ 3,469,549 $297 $0.35 67.2% $2,075,078 $177 $0.21 ============ ==== ===== ====== ========== ==== ===== AMLI RESIDENTIAL PROPERTIES L.P. - "SAME COMMUNITY COMPARISON" (WHOLLY-OWNED AND CO-INVESTMENT PROPERTIES) - CONT. Excluding Autumn Chase II, Gleneagles II, Crown II, Regents III, Vinings Square, Vinings II, Pleasant Hill, Chevy, Willowbrook, Barrett, River Park, Aurora, Fossil, Danada and Verandah 1/1/97-12/31/97 1/1/96-12/31/96 --------------------------------- % -------------------------------- Amount/% Per Unit Per Sq Ft Change Amount/% Per Unit Per Sq Ft -------- -------- ---------- ------ ---------- -------- --------- REPAIRS AND MAINTENANCE (ANNUALIZED) (ANNUALIZED) - ----------------------- ------------ ------------ Dallas $ 2,015,104 $ 493 $0.60 3.7% $1,942,523 $ 475 $0.57 Atlanta $ 1,348,240 $ 479 $0.50 15.1% $1,171,191 $ 416 $0.44 Austin $ 871,548 $ 572 $0.80 19.7% $ 728,355 $ 478 $0.67 Houston $ 174,181 $ 231 $0.25 -11.9% $ 197,600 $ 262 $0.28 Indianapolis $ 589,329 $ 592 $0.72 16.7% $ 505,098 $ 507 $0.62 Eastern Kansas $ 363,079 $ 400 $0.46 8.6% $ 334,305 $ 368 $0.43 Chicago $ 541,117 $ 881 $1.01 -3.6% $ 561,412 $ 914 $1.05 ------------ ------ ----- ----- ---------- ------ ----- Total $ 5,902,598 $ 505 $0.59 8.5% $5,440,483 $ 465 $0.55 ============ ====== ===== ===== ========== ====== ===== REAL ESTATE TAXES (ANNUALIZED) (ANNUALIZED) - ----------------- ------------ ------------ Dallas $ 3,759,182 $ 920 $1.11 3.1% $ 3,645,337 $ 892 $1.08 Atlanta $ 1,725,399 $ 614 $0.64 -12.2% $ 1,965,749 $ 699 $0.73 Austin $ 1,420,611 $ 933 $1.31 5.9% $ 1,341,650 $ 881 $1.24 Houston $ 967,755 $1,283 $1.39 -7.3% $ 1,043,447 $1,384 $1.50 Indianapolis $ 742,334 $ 745 $0.90 15.5% $ 642,501 $ 645 $0.78 Eastern Kansas $ 660,029 $ 727 $0.84 -4.6% $ 691,690 $ 762 $0.89 Chicago $ 1,218,832 $1,985 $2.28 2.1% $ 1,193,333 $1,944 $2.23 ------------ ------ ----- ----- ----------- ------ ----- Total $ 10,494,142 $ 897 $1.05 -0.3% $10,523,707 $ 900 $1.05 ============ ====== ===== ===== =========== ====== =====
AMLI RESIDENTIAL PROPERTIES TRUST PROPERTY INFORMATION As of December 31, 1997
Qtr ended Dec. 31, 1997 Approx- Average Qtr ended imate Rental Rates Dec.31, Number Rentable Average ------------- 1997 Year Year of Area Unit Size Per Per Average PROPERTIES Location Acquired Completed Units (Sq Ft) (Sq ft) Unit Sq Ft Occupancy - ---------- -------- -------- --------- ------ --------- --------- ---- ----- ----------- DALLAS/FT. WORTH, TX - ---------- AMLI: at Autumn Chase Carrollton, TX 1991 1987 226 180,868 800 659 0.82 95.6% at Autumn Chase II Carrollton, TX 1996 224 193,420 863 748 0.87 96.8% at Bent Tree Dallas, TX 1997 1996 300 282,774 943 824 0.87 93.7% at Bishop's Gate West Plano, TX 1997 1997 266 292,092 1,098 1,056 0.96 92.1% at Chase Oaks Plano, TX 1994 1986 250 193,736 775 671 0.87 93.5% at Gleneagles Dallas, TX 1988 1987 326 274,300 841 650 0.77 97.7% at Gleneagles II Dallas, TX 1997 264 247,002 936 796 0.85 96.8% on the Green Ft. Worth, TX 1994 1990/93 424 358,560 846 699 0.83 93.6% at Nantucket Dallas, TX 1988 1986 312 222,208 712 547 0.77 96.2% of North Dallas Dallas, TX 1989/90 1985/86 1,032 905,590 878 641 0.73 94.9% at Reflections Irving, TX 1993 1986 212 174,332 822 667 0.81 97.5% on Rosemeade Dallas, TX 1990 1987 236 205,382 870 656 0.75 93.6% on Timberglen Dallas, TX 1990 1985 260 201,198 774 599 0.77 95.4% at Valley Ranch Irving, TX 1990 1985 460 389,940 848 690 0.81 96.7% ----- --------- --- ---- ----- ------ Subtotal-Dallas/ Ft. Worth, TX 4,792 4,121,402 860 695 0.81 95.2% ----- --------- --- ---- ----- ------ ATLANTA, GA - ----------- AMLI: at Sope Creek Marietta, GA 1982/83/95 695 632,393 910 695 0.76 91.2% at Spring Creek Dunwoody, GA 1985/86/ 1,180 1,080,560 916 710 0.78 93.9% 87/89 at Vinings Atlanta, GA 1992 1985 208 229,708 1,104 785 0.71 92.0% at Vinings-Phase II Atlanta, GA 1997 1985 152 144,532 951 726 0.76 95.8% at West Paces Atlanta, GA 1993 1992 337 314,707 934 870 0.93 91.3% ------ --------- ----- ---- ----- ------ Subtotal- Atlanta, GA 2,572 2,401,900 934 734 0.79 92.8% ------ --------- ----- ---- ----- ------ Qtr ended Dec. 31, 1997 Approx- Average Qtr ended imate Rental Rates Dec. 31, Number Rentable Average ------------- 1997 Year Year of Area Unit Size Per Per Average PROPERTIES Location Acquired Completed Units (Sq Ft) (Sq ft) Unit Sq Ft Occupancy - ---------- -------- -------- --------- ------ --------- --------- ---- ----- ----------- AUSTIN, TEXAS - ------------- AMLI: at the Arboretum Austin, TX 1986 1983 231 178,116 771 680 0.88 96.7% in Great Hills Austin, TX 1991 1985 344 256,892 747 674 0.90 96.0% at Lantana Ridge Austin, TX 1997 1997 354 311,808 881 811 0.92 85.6% at Martha's Vineyard Austin, TX 1992 1986 360 253,328 704 598 0.85 94.9% ------ --------- ----- ---- ----- ----- Subtotal- Austin, TX 1,289 1,000,144 776 692 0.89 93.0% ------ --------- ----- ---- ----- ----- EASTERN KANSAS - -------------- AMLI: at Alvamar Lawrence, KS 1994 1989 152 125,800 828 668 0.81 88.8% at Crown Colony Topeka, KS 1994 1986 156 120,984 776 556 0.72 96.2% at Crown Colony II Topeka, KS 1997 64 51,292 801 630 0.79 95.3% at Regents Center Overland Park, KS 1994 1991-95 300 274,170 914 712 0.78 87.4% at Regents Center III Overland Park, KS 1997 124 123,728 998 779 0.78 89.2% at Sherwood Topeka, KS 1994 1993 300 260,340 868 622 0.72 95.6% at Town Center Overland Park, KS 1997 1997 156 176,994 1,135 777 0.69 86.1% ------ --------- ----- --- ----- ----- Subtotal -Eastern KS 1,252 1,133,308 905 676 0.75 91.1% ------ --------- ----- ---- ----- ----- INDIANAPOLIS, IN - ---------------- AMLI: at Riverbend Indianapolis, IN 1992/93 1983/85 996 820,712 824 582 0.71 87.7% at Conner Farms Indianapolis, IN 1997 1993 300 324,636 1,082 796 0.74 92.9% ------ --------- ----- ---- ----- ----- Subtotal -Indianapolis, IN 1,296 1,145,348 884 631 0.71 88.9% ------ --------- ----- ---- ----- ----- Qtr ended Dec. 31, 1997 Approx- Average Qtr ended imate Rental Rates Dec. 31, Number Rentable Average ------------- 1997 Year Year of Area Unit Size Per Per Average PROPERTIES Location Acquired Completed Units (Sq Ft) (Sq ft) Unit Sq Ft Occupancy - ---------- -------- -------- --------- ------ --------- --------- ---- ----- ----------- CHICAGO, IL - ------------ AMLI: at Park Sheridan Chicago, IL 1989 1986 253 216,315 855 932 1.09 97.2% at Poplar Creek Chicago, IL 1997 1985 196 178,490 911 718 0.79 90.8% ------ ---------- ----- ---- ----- ----- Subtotal -Chicago, IL 449 394,805 879 838 0.95 94.4% ------ ---------- ----- ---- ----- ----- TOTAL PROPERTIES 11,650 10,196,907 875 700 0.80 93.3% ====== ========== ===== ==== ===== ===== CO-INVESTMENT PROPERTIES - -------------- ATLANTA, GA AMLI: at Pleasant Hill Atlanta, GA 1996 502 501,816 1,000 820 0.82 89.8% at Barrett Lakes Atlanta, GA 1997 446 460,150 1,032 844 0.82 82.2% at River Park Atlanta, GA 1997 222 225,892 1,018 831 0.82 95.5% at Towne Creek Gainesville, GA 1989 150 121,722 811 658 0.81 92.0% at Willeo Creek Roswell, GA 1995 1989 242 297,302 1,229 826 0.67 87.7% ------ --------- ----- ---- ----- ------ Subtotal- Atlanta, GA 1,562 1,606,882 1,029 814 0.79 88.3% ------ --------- ----- ---- ----- ------ CHICAGO, IL - ----------- AMLI: at Prairie Court Oak Park, IL 1987 125 105,578 845 1,074 1.27 94.4% at Windbrooke Buffalo Grove, IL 1995 1987 236 213,160 903 958 1.06 96.9% at Chevy Chase Buffalo Grove, IL 1996 1988 592 480,676 812 929 1.14 94.5% at Danada Wheaton, IL 1997 1989/91 600 521,500 869 929 1.07 93.4% at Willowbrook Willow Brook, IL 1996 1987 488 418,404 857 912 1.06 93.6% ------ --------- --- ------ ----- ----- Subtotal- Chicago, IL 2,041 1,739,318 852 937 1.10 94.3% ------ --------- --- ------ ----- ----- Qtr ended Dec. 31, 1997 Approx- Average Qtr ended imate Rental Rates Dec. 31, Number Rentable Average ------------- 1997 Year Year of Area Unit Size Per Per Average PROPERTIES Location Acquired Completed Units (Sq Ft) (Sq ft) Unit Sq Ft Occupancy - ---------- -------- -------- --------- ------ --------- --------- ---- ----- ----------- EASTERN KANSAS - -------------- AMLI: at Regents Crest Overland Park, KS 1997 1997 368 346,488 942 929 0.99 93.4% ------ --------- --- ------ ----- ----- DALLAS/FT. WORTH - ---------------- AMLI: at Verandah Arlington, TX 1997 1986/91 538 394,504 733 670 0.91 94.5% ------ --------- --- ------ ----- ----- AUSTIN, TX - ---------- AMLI: at Park Place Austin, TX 1994 1985 588 397,968 677 592 0.87 95.9% ------ --------- --- ------ ----- ----- HOUSTON, TX AMLI at: Champions Centre Houston, TX 1994 1994 192 164,480 857 708 0.83 98.4% Champions Park Houston, TX 1994 1991 246 221,646 901 724 0.80 93.9% Greenwood Forest Houston, TX 1995 1995 316 310,844 984 753 0.76 95.4% ---- ------- --- ---- ----- ----- Subtotal- Houston, TX 754 696,970 924 732 0.79 95.7% ---- --------- ---- ---- ----- ----- TOTAL CO-INVESTMENT PROPERTIES 5,851 5,182,130 886 818 0.92 93.0% ====== ========== === ==== ===== ===== TOTAL 17,501 15,379,037 879 739 0.84 93.2% ====== ========== === ==== ===== =====
AMLI RESIDENTIAL PROPERTIES TRUST COMPONENTS OF PROPERTY EBITDA WHOLLY-OWNED Unaudited - Dollars in thousands except per share data
WHOLLY-OWNED -------------------------------------------------------------------------------- THREE MONTHS ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, ------------------------------------- ------------------------------------ 1997 1996 % Change 1997 1996 % Change -------- -------- -------- ------- -------- -------- PROPERTY REVENUES - ----------------- Rental Income - ------------- Same Store Communities (1) . . . . . . . . . . $17,419 $17,128 1.7% $69,175 $68,292 1.3% New Communities (2). . . 489 462 5.9% 1,868 998 87.1% Development and/or Lease-up Communities (3) . . . . . . . . . . 1,698 303 4,319 377 Acquisition/Disposition Communities (4) . . . . 2,877 550 5,117 2,196 ------- ------- ----- ------- ------- ----- Total . . . . . . . . $22,483 $18,443 21.9% $80,479 $71,863 12.0% ======= ======= ===== ======= ======= ===== Other Revenues - -------------- Same Store Communities . $ 916 $ 767 19.3% $ 3,700 $ 3,077 20.2% New Communities. . . . . 21 19 7.9% 81 63 28.4% Development and/or Lease-up Communities. . 127 28 345 45 Acquisition/Disposition Communities . . . . . . 114 28 213 84 ------- ------- ----- ------- ------- ----- Total . . . . . . . . $ 1,178 $ 842 39.9% $ 4,339 $ 3,269 32.7% ======= ======= ===== ======= ======= ===== Total Property Revenues - ----------------------- Same Store Communities . $18,335 $17,895 2.5% $72,875 $71,369 2.1% New Communities. . . . . 510 481 6.0% 1,949 1,061 83.7% Development and/or Lease-up Communities. . 1,825 331 4,664 422 Acquisition/Disposition Communities . . . . . . 2,991 578 5,330 2,280 ------- ------- ----- ------- ------- ----- Total . . . . . . . . $23,661 $19,285 22.7% $84,818 $75,132 12.9% ======= ======= ===== ======= ======= ===== AMLI RESIDENTIAL PROPERTIES TRUST COMPONENTS OF PROPERTY EBITDA WHOLLY-OWNED - CONTINUED WHOLLY-OWNED -------------------------------------------------------------------------------- THREE MONTHS ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, ------------------------------------- ------------------------------------ 1997 1996 % Change 1997 1996 % Change -------- -------- -------- ------- -------- -------- Total Operating Expenses - ------------------------ Same Store Communities . $ 7,204 $ 7,154 0.7% $29,881 $29,762 0.4% New Communities. . . . . 181 180 0.5% 716 567 26.3% Development and/or Lease-Up Communities. . 898 200 2,069 323 Acquisition/Disposition Communities . . . . . . 1,178 287 2,277 1,294 ------- ------- ----- ------- ------- ----- Total . . . . . . . . $ 9,461 $ 7,821 21.0% $34,943 $31,946 9.4% ======= ======= ===== ======= ======= ===== PROPERTY EBITDA - --------------- Same Store Communities . $11,131 $10,741 3.6% $42,994 $41,607 3.3% New Communities. . . . . 329 301 9.3% 1,233 494 149.4% Development and/or Lease-Up Communities. . 927 131 2,595 99 Acquisition/Disposition Communities . . . . . . 1,813 291 3,053 986 ------- ------- ----- ------- ------- ----- Total . . . . . . . . $14,200 $11,464 23.9% $49,875 $43,186 15.5% ======= ======= ===== ======= ======= ===== (1) Stabilized Communities at 1/1/96. (2) Development Communities stabilized after 1/1/96 but before 1/1/97. (3) Development Communities not yet stabilized. (4) Stabilized Communities acquired after 1/1/96 and Communities sold after 1/1/97.
AMLI RESIDENTIAL PROPERTIES TRUST COMPONENTS OF PROPERTY EBITDA CO-INVESTMENTS AT 100% Unaudited - Dollars in thousands except per share data
CO-INVESTMENTS AT 100% -------------------------------------------------------------------------------- THREE MONTHS ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, ------------------------------------- ------------------------------------ 1997 1996 % Change 1997 1996 % Change -------- -------- -------- ------- -------- -------- PROPERTY REVENUES - ----------------- Rental Income - ------------- Same Store Communities (1) . . . . . . . . . . $ 4,456 $ 4,256 4.7% $17,424 $16,913 3.0% New Communities (2). . . 1,102 1,138 -3.2% 4,526 3,509 29.0% Development and/or Lease-up Communities (3) . . . . . . . . . . 2,180 -- 4,635 -- Acquisition/Disposition Communities (4) . . . . 5,447 2,610 108.7% 19,294 7,547 155.6% ------- ------- ----- ------- ------- ------ Total . . . . . . . . $13,186 $ 8,004 64.7% $45,880 $27,969 64.0% ======= ======= ===== ======= ======= ====== Other Revenues - -------------- Same Store Communities . $ 239 $ 195 22.6% $ 895 $ 795 12.6% New Communities. . . . . 69 69 -0.4% 287 198 45.1% Development and/or Lease-up Communities. . 157 -- 357 -- Acquisition/Disposition Communities . . . . . . 291 123 136.0% 1,070 295 262.3% ------- ------- ----- ------- ------- ------ Total . . . . . . . . $ 756 $ 387 95.1% $ 2,609 $ 1,288 102.5% ======= ======= ===== ======= ======= ====== Total Property Revenues - ----------------------- Same Store Communities . $ 4,695 $ 4,451 5.5% $18,320 $17,707 3.5% New Communities. . . . . 1,171 1,207 -3.0% 4,814 3,707 29.8% Development and/or Lease-Up Communities. . 2,337 -- 4,991 -- Acquisition/Disposition Communities . . . . . . 5,739 2,734 109.9% 20,364 7,843 159.7% ------- ------- ----- ------- ------- ------ Total . . . . . . . . $13,942 $ 8,392 66.1% $48,490 $29,258 65.7% ======= ======= ===== ======= ======= ====== AMLI RESIDENTIAL PROPERTIES TRUST COMPONENTS OF PROPERTY EBITDA CO-INVESTMENTS AT 100% - CONTINUED CO-INVESTMENTS AT 100% -------------------------------------------------------------------------------- THREE MONTHS ENDED DECEMBER 31, YEAR ENDED DECEMBER 31, ------------------------------------- ------------------------------------ 1997 1996 % Change 1997 1996 % Change -------- -------- -------- ------- -------- -------- Total Operating Expenses - ------------------------ Same Store Communities . $ 1,996 $ 1,823 9.5% $ 7,871 $ 7,854 0.2% New Communities. . . . . 424 400 6.0% 1,684 1,384 21.7% Development and/or Lease-Up Communities. . 914 -- 2,597 -- Acquisition/Disposition Communities . . . . . . 2,226 2,217 0.4% 7,711 2,903 165.6% ------- ------- ------ ------- ------- ------ Total . . . . . . . . $ 5,560 $ 4,440 25.2% $19,862 $12,141 63.6% ======= ======= ====== ======= ======= ====== PROPERTY EBITDA - --------------- Same Store Communities . $ 2,699 $ 2,627 2.7% $10,449 $ 9,854 6.0% New Communities. . . . . 747 808 -7.5% 3,130 2,323 34.7% Development and/or Lease-Up Communities. . 1,423 -- 2,394 -- Acquisition/Disposition Communities . . . . . . 3,513 1,676 109.6% 12,653 4,939 156.2% ------- ------- ------ ------- ------- ------ Total . . . . . . . . $ 8,382 $ 5,110 64.0% $28,626 $17,117 67.2% ======= ======= ====== ======= ======= ====== Company's share of Co-Investment EBITDA . . $ 2,196 $ 1,377 59.4% $ 7,432 $ 4,399 69.0% ======= ======= ====== ======= ======= ====== Percent of Co-Invest- ment EBITDA. . . . . . . 26% 27% 26% 26% ======= ======= ======= ======= (1) Stabilized Communities at 1/1/96. (2) Development Communities stabilized after 1/1/96 but before 1/1/97. (3) Development Communities not yet stabilized. (4) Stabilized Communities acquired after 1/1/96 and Communities sold after 1/1/97.
AMLI RESIDENTIAL PROPERTIES TRUST DEVELOPMENT ACTIVITIES FOURTH QUARTER 1997
UNDER CONSTRUCTION AND/OR IN INITIAL LEASE UP Construc- Percent Percent Number Percent tion First Stabili- Construc- Leased of Costs Owner- Start Units Completion zation tion as of Community Name Units (millions) ship Date Occupied Date Date Complete 1/25/98 - -------------- ------- ---------- ------- --------- -------- ---------- -------- --------- --------- ATLANTA, GEORGIA - ------- AMLI at: Killian Farms 216 $ 13.9 100% 4Q/97 3Q/98 1Q/99 3Q/99 3% N/A Peachtree City 312 $ 21.5 100% 3Q/96 3Q/97 2Q/98 4Q/98 73% 69% Northwinds 800 $ 55.5 35% 3Q/96 3Q/97 2Q/99 3Q/00 37% 17% Park Creek 200 $ 12.6 100% 2Q/97 1Q/98 3Q/98 2Q/99 40% N/A DALLAS/FORT WORTH, TEXAS - ------------------ AMLI at: Deerfield 240 $ 16.5 100% 4Q/97 4Q/98 2Q/99 4Q/99 2% N/A Fossil Creek 384 $ 23.6 25% 3Q/96 2Q/97 1Q/98 3Q/98 98% 57% Autumn Chase III 240 $ 14.5 100% 3Q/96 4Q/97 3Q/98 4Q/98 74% 22% on the Parkway 240 $ 15.7 100% 1Q/97 2Q/98 4Q/98 2Q/99 22% N/A AUSTIN, TEXAS - ------------- AMLI at: Wells Branch 576 $ 34.5 100% 1Q/97 1Q/98 3Q/99 2Q/00 34% 4% AURORA, ILLINOIS - -------- AMLI at: Aurora Crossing 272 $ 24.6 25% 2Q/96 1Q/97 1Q/98 4Q/98 95% 59% Oakhurst North 464 $ 44.8 100% 1Q/97 2Q/98 3Q/99 2Q/00 19% N/A ----- ------ Total 3,944 $277.7 ===== ====== AMLI RESIDENTIAL PROPERTIES TRUST DEVELOPMENT ACTIVITIES - CONTINUED FOURTH QUARTER 1997 UNDER CONSTRUCTION AND/OR IN INITIAL LEASE UP - CONTINUED Construc- Percent Percent Number Percent tion First Stabili- Construc- Leased of Costs Owner- Start Units Completion zation tion as of Community Name Units (millions) ship Date Occupied Date Date Complete 1/25/98 - -------------- ------- ---------- ------- --------- -------- ---------- -------- --------- --------- PLANNING STAGES - --------------- INDIANAPOLIS, INDIANA - ------------- AMLI at: Lake Clearwater 216 Castle Creek 276 DALLAS/FORT WORTH, TEXAS - ------------------ AMLI at: Bent Tree Ridge 200 Fossil Creek II 520 The following is a "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934. The projections contained in the table above that are not historical facts are forward-looking statements. Risks associated with the Company's development, construction and lease-up activities, which could impact the forward-looking statements may include: development opportunities may be abandoned; construction costs of a community may exceed original estimates, possibly making the community uneconomical; construction and lease-up may not be completed on schedule, resulting in increased debt service and construction costs; estimates of the costs of improvements to bring an acquired property up to the standards established for the market position intended for that property may prove inaccurate.
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