-----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, TXnp605WRjQE+0iUuv8mp3YHupa07A3fi7VeUSPm1LyB7gYq5qNVOmi6tPqwOtJi LLUHjgjIphDBd8ksBvc/XA== 0000892626-99-000145.txt : 19990322 0000892626-99-000145.hdr.sgml : 19990322 ACCESSION NUMBER: 0000892626-99-000145 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990319 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: 99569001 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, 1998 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 Preferred Share Purchase Rights New York Stock Exchange 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 $293,685,396 based on the closing price ($19.9375) on the New York Stock Exchange on March 1, 1999. The number of the Registrant's Common Shares of Beneficial Interest, $.01 par value, outstanding as of December 31, 1998 was 16,655,155. Documents Incorporated By Reference Portions of the Proxy Statement for the annual shareholders' meeting to be held on May 3, 1999 are incorporated by reference into Part III. TABLE OF CONTENTS Page ---- PART I Item 1. Business . . . . . . . . . . . . . . . . . . . . 1 Item 2. Communities. . . . . . . . . . . . . . . . . . . 18 Item 3. Legal Proceedings. . . . . . . . . . . . . . . . 27 Item 4. Submission of Matters to a Vote of Security Holders. . . . . . . . . . . . . . . 27 PART II Item 5. Market for the Registrant's Common Equity and Related Shareholder Matters. . . . . . . . . 28 Item 6. Selected Financial Data. . . . . . . . . . . . . 30 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . . . . . . 32 Item 7A. Quantitative and Qualitative Disclosures About Market Risk. . . . . . . . . . . . . . . . 43 Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . 45 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . . . . . . 93 PART III Item 10. Trustees and Executive Officers of the Registrant. . . . . . . . . . . . . . . . 93 Item 11. Executive Compensation . . . . . . . . . . . . . 93 Item 12. Security Ownership of Certain Beneficial Owners and Management . . . . . . . . 93 Item 13. Certain Relationships and Related Transactions . . . . . . . . . . . . . . 93 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. . . . . . . . . . . . . 94 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . 98 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, 1998, AMLI owned or had co-investment interests in 64 multifamily apartment communities (the "Communities") comprised of 24,421 apartment homes. Fifty-two of these Communities, totalling 19,559 apartment homes, were stabilized as of December 31, 1998. An additional twelve Communities and three additional phases to existing Communities were under development or in lease-up at that date. When completed, these development communities will total 4,862 apartment homes. In addition, the Company owns land for the future development of six additional communities and six additional phases to existing communities totalling approximately 3,522 apartment homes. Of this total, the Company anticipates that 1,100 apartment homes will be developed over a long-term development plan. 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, 1998, the Company owned 85% 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 Atlanta, Dallas, Indianapolis and Kansas City. 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 it believes capitalization rates are attractive and enhanced performance from the target communities is possible through the potential for 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, 1998, AMLI has formed 26 such co-investment joint ventures with ten institutional investors, representing total anticipated acquisition and development costs of approximately $656 million, of which $91.5 million are the estimated completion costs of communities under construction at ten locations at December 31, 1998. The Company's invested capital in these 26 joint ventures totals approximately $103 million of which $21.4 million will be funded in 1999. In connection with co- investment partnerships, the Company has established strategic alliances with Prudential Insurance Company of America, Western and Southern Life Insurance Company, 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 formed seven new co-investment partnerships with five of these institutional investors during 1998. 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 64% of the 8,108 apartment homes developed or under development by the Company had been built with a co- investment partner and the other 36% had been developed or are under development solely for the Company. 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 had been in Atlanta and Dallas. In 1998 and 1999, the Company anticipates developing more apartment homes in its three Midwest markets (Chicago, Indianapolis and Kansas City) than in either Atlanta or Dallas. The tables below summarize as of December 31, 1998, certain information related to the Company development communities and the co- investment development communities. COMPANY DEVELOPMENT COMMUNITIES -------------------------------
AMOUNT COMPANY PROJECTED ANTICIPATED EXPENDED DEVELOPMENT NO. OF COMPLETION COMPLETION DEVELOPMENT THROUGH COMMUNITIES LOCATION UNITS PERCENTAGE DATE COST 12/31/98 - ----------- -------- ------ ---------- ---------- ----------- -------- (in thousands) (in thousands) AMLI: at AutumnChase III Carrollton, Texas 240 99% Jan. 1999 $ 14,200 $ 13,941 at Killian Creek Gwinnett County, Georgia 216 74% Jun. 1999 13,900 10,484 at St. Charles St. Charles, Illinois 400 6% Jun. 2000 41,900 8,713 at Bent Tree II Dallas, Texas 200 1% Mar. 2000 14,200 2,069 at Monterey Oaks Austin, Texas 430 1% Sep. 2000 30,900 4,992 ----- -------- -------- 1,486 $115,100 $ 40,199 ===== ======== ========
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 12/31/98 PARTNER - ----------- ---------- ---------------- ----- ---------- ---------- ----------- ---------- ---------- (in (in thousands) thousands) AMLI: at Deerfield 25% Plano, Texas 240 42% Sep. 1999 $ 17,500 $ 8,609 Western and Southern Life Insurance Company on the Parkway 25% Dallas, Texas 240 99% Jan. 1999 16,200 15,519 Western and Southern Life Insurance Company at Northwinds 35% Atlanta, Georgia 800 81% Sep. 1999 54,400 44,432 Northwestern Mutual Life at Oakhurst North 25% Aurora, Illinois 464 91% Sep. 1999 44,300 38,092 Prudential Insurance Company of America at Wells Branch 25% Austin, Texas 576 95% Mar. 1999 35,100 33,030 Prudential Insurance Company of America Creekside 25% Overhand Park, 224 3% Jun. 2000 16,200 3,195 ERI Creekside, Kansas Inc. at Wynnewood 25% Overland Park, 232 4% Mar. 2000 17,600 2,858 The N.Y. Farms Kansas Common Retire- ment Fund at Regents Crest II 25% Overland Park, 108 8% Dec. 1999 7,800 1,638 ERI Regents Kansas Crest, Inc. at Castle Creek 40% Indianapolis, 276 3% Jun. 2000 20,700 3,458 ERI Castle Indiana Creek, Inc. at Lake Clearwater 25% Indianapolis, 216 9% Mar. 2000 16,700 4,137 The N.Y. Indiana Common Retirement Fund ------ -------- -------- 3,376 $246,500 $154,968 ====== ======== ========
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 unavailability 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 During 1997, the Company and Northwestern Mutual Life Insurance formed a partnership to develop an 800-unit apartment community, which was the Company's only development co-investment that year. During 1998, the Company formed seven new co-investment partnerships for the development of new communities at eight locations. Prudential Insurance Company of America, Western and Southern Life Insurance Company, The New York Common Retirement Fund and Endowment Realty Investors, Inc. are each co-owners with AMLI of two new development communities. Seven properties currently under construction in co-investment partnerships will contain 2,468 apartment homes and an additional phase to an existing 368-unit apartment community is under construction and will contain 108 apartment homes. The Company's ownership interests in these co-investment partnerships range from 25% to 40%. The costs of the co-investment development communities total $246.5 million of which AMLI has a remaining capital commitment of $52.9 million and the co-investors have a total capital commitment of $138 million. One community secures a $10.8 million first mortgage loan that was funded in December 1998 and another community's construction is being funded in part by a $11.7 million construction loan from the Company. This loan is expected to be refinanced late in 1999 with permanent first mortgage financing from a third party lender. ACQUISITIONS The table set forth below summarizes the Company's acquisition activities during 1998. 1998 ACQUISITIONS ----------------- AMLI RESIDENTIAL
Company No. of Acquisition Acquisition Interest Communities Location Units Date Cost Loan Rate - ---------- -------- ------ ----------- ----------- ---------- ---------- AMLI: at Clairmont Atlanta, Georgia 288 1/21/98 $18,400 12,880 6.95% at Lexington Farms Overland Park, 404 10/27/98 31,700 -- Kansas at Centennial Park Overland Park, 170 10/28/98 16,250 -- Kansas at Eagle Creek Indianapolis, Indiana 240 10/27/98 16,450 -- ------ ------- ------ Total Company Communities 1,102 $82,800 12,880 ====== ======= ======
On January 21, 1998, the Company acquired a 288 apartment home community in Atlanta, Georgia for $18.4 million financed in part by a $12.9 million, 6.95% fixed rate, ten-year loan from an insurance company. 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 by a $13.0 million, 7.0% fixed rate insurance company loan with a maturity date of 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 of the total $132 million purchase price payable to TCR- Midwest in 1997, 1998 and 1999, the Company's general contractor affiliate paid in 1997 $3.4 million for the construction organization and personnel. The Company anticipates paying $1.5 million for the general partnership interest in another 400 apartment home community in 1999 to complete TCR- Midwest acquisition. In October 1998, the Company acquired three additional TCR-Midwest communities, AMLI at Lexington Farms, a 404-unit property located in Overland Park, Kansas, AMLI at Centennial Park, a 170-unit property located in Overland Park, Kansas and AMLI at Eagle Creek, a 240-unit property located in Indianapolis, Indiana. The acquisition price of these three communities totalled $64.4 million which was paid in part by cash of $56.4 million and OP Units that were valued at $8.0 million. FINANCING In July 1998, the Company increased its unsecured line of credit to $200 million from $150 million and a sixth bank was added to the bank group. In June 1998, the Company extended the maturity of the line of credit to June 2001. In July 1998, Moody's assigned an investment grade rating of Baa3 to borrowings under this credit facility and the interest rate decreased to LIBOR plus 90 basis points from LIBOR plus 130 basis points. At December 31, 1998, the Company's remaining availability on its $200 million line of credit was $65 million. The line of credit agreement also provides for an annual fee of $0.4 million (20 basis points). On February 20, 1998, the Company privately placed $75 million of Series B convertible preferred shares with an institutional investor. The shares were issued at $24 per share and carried 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 $1.80 per share annually) if the annual dividend rate on common shares is increased to more than $1.80 per share. Funding occurred in three equal installments in March, June and September 1998. Total proceeds, net of 1.12% in offering costs, were 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, the Delaware limited partnership, through which it owns the Communities, interests in co- investment Communities and interests in the Service Companies. At December 31, 1998, the Company owned an 85% (17.3% represents preferred units) partnership interest in the Operating Partnership, 7.4% was held by Amli Realty Co. and its affiliates ("ARC") and 7.6% 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 Operating Partnership, from time to time, has issued OP Units for the acquisition of apartment communities and land parcels for development. The OP Units 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 aspects of the Company's business 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 investor 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 and provides certain asset management services to co-investment partnerships. 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 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; (2) Amrescon, in cases where Amrescon is engaged as general contractor by co-investment development ventures; and (3) the Operating Partnership. 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, has regional offices in Chicago, Dallas Indianapolis and Kansas City, 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 and Dallas. 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 lessor 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. AMERICANS WITH DISABILITIES ACT The Communities and any newly acquired apartment communities must comply with Title III of the Americans with Disabilities Act (the "ADA") to the extent that such properties are public accommodations and/or commercial facilities as defined by the ADA. Compliance with the ADA requirements could require removal of structural barriers to handicapped access in certain public areas of the Company's Communities where such removal is readily achievable. The ADA does not, however, consider residential properties, such as apartment communities, to be public accommodations or commercial facilities, except to the extent portions of such facilities, such as the leasing office, are open to the public. The Company believes that its properties comply with all present requirements under the ADA and applicable state laws. Noncompliance could result in imposition of fines or an award of damages to private litigants. If required to make material additional changes, the Company's results of operations could be adversely affected. 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 800 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. 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, 1998, the weighted average occupancy rate of the stabilized Communities was 92%, and the average monthly rental rate per apartment home was $768, or $.88 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 residents; 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. 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, 1998, 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, high-speed internet connection services, custom rental insurance, energy efficient lighting programs, water submetering, bulk purchases of utilities and card key systems for laundry facilities. DEVELOPMENT ACTIVITIES The Company has identified certain sub-markets within its seven identified geographic markets where strong multifamily property demand justifies new construction. The Company currently has developments underway in Chicago, Atlanta, Dallas, Austin, Indianapolis and Kansas City. In addition, the Company owns 254 acres of land, on which it expects to develop approximately 3,522 apartment homes, including 2,422 units on 150 acres on which it expects to break ground and commence construction during 1999. 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, 1998: 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 1998 . . . . . . . . . . 8 2,086 167,700,000 --- ----- ------------ Total. . . . . . . . 27 8,108 $561,100,000 === ===== ============ - -------------------- (1) Represents the number of communities or additional phases for which development was commenced during the applicable year. Of the twenty-seven communities developed or under development, fourteen are owned by co- investment partnerships, and two others are anticipated to be owned by co- investment partnerships. (2) The Company's share of the total estimated development budget is expected to be approximately $231 million, of which $135 million has been expended through December 31, 1998. The Company anticipates that the remaining commitment of $96 million will be reduced in 1999 upon the formation of additional co-investment partnerships. ACQUISITION ACTIVITIES 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, 1998: 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 1998 (3) . . . . . . . . . . 5 1,362 93,860,000 --- ----- ------------ Total. . . . . . . . . . 28 8,650 $549,253,000 === ===== ============ - -------------------- (1) Of these acquisitions, sixteen Communities were acquired by the Company directly and twelve 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. (3) Includes AMLI on Timberglen, a 260-unit property contributed by the Company to a 40% owned partnership in December 1998. INSTITUTIONAL CO-INVESTMENTS AMLI differentiates itself from other multifamily REITs through its co-investment activities and its established relationships with a number of institutional partners. By co-investing, AMLI is able to (i) diversify access to equity capital; (ii) "leverage" its invested capital to promote the AMLI brand identify and increase market share; (iii) obtain the participation of sophisticated partners in its real estate decisions; (iv) increase FFO returns on reduced capital exposure. 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) oversees construction and development in the case of a venture with a property under development; and (v) recommends the sale or refinancing of the property. All of AMLI's equity investments are made on a pari passu basis with its co-investment partners and any disputes over major decisions are generally resolved through the exercise of a buy-sell provision. As of December 31, 1998, the Company had established co-investment relationships with ten institutional investors. Since the Initial Offering, the Company has entered into 26 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 1998 . . . . 1 260 8 2,576 2,836 --- ------ --- ------ ------ Total. . . 12 4,666 14 5,202 9,868 === ====== === ====== ====== - -------------------- (1) Represents the number of Communities for which development was commenced during the applicable year. Excludes an additional phase to an existing community on which development was started in 1998. (2) Represents the number of apartment homes planned for the Community for which development was commenced in the applicable year. Includes 108 apartment homes in an additional phase to an existing community on which development was started in 1998. The table below sets forth the total expected capital outlays for all 26 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 26 joint venture relationships through December 31, 1998: CO-INVESTMENT ACTIVITIES SINCE THE INITIAL OFFERING
1994 1995 1996 1997 1998 Total (4) ----------- ----------- ------------ ------------ ------------ ----------- Total Expected Project Cost (1). . . . $71,191,000 $79,682,000 $146,819,000 $154,252,000 $203,179,000 $655,123,000 AMLI Expected Equity Investment . . . 7,641,000 7,548,000 25,165,000 15,046,000 47,328,000 102,728,000 Actual Fee Income to AMLI and the Service Companies Initial or One-Time Fees (2). . . . . . . 287,000 607,000 1,921,000 3,290,000 5,414,000 11,519,000 Annual Fee Income (3) . . . . . . . . . 287,000 949,000 1,822,000 2,720,000 3,690,000 9,468,000 - -------------------- (1) Includes $278.3 million which has been or is expected to 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, property acquisition fees, financing fees and disposition fees. The amounts shown represent the portion of the fees earned in the applicable year. The initial and one-time fee income for 1998 represents amounts earned by the Company for the year ended December 31, 1998. Subsequent to December 31, 1998, additional one-time fees of approximately $3,471,000 are anticipated to be earned by the Company and the Service Companies in connection with the completion of nine development communities under construction on behalf of existing co- investment joint ventures. (3) Annual fee income before intercompany eliminations includes property management fees, asset management fees and partnership administration fees. The Company owns an average of 27% interest in the 26 co-investment partnerships at December 31, 1998. The amounts shown represent the portion of the fees earned in the applicable year. The annual fee income for 1998 represents amounts earned by the Company for the year ended December 31, 1998. 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 target 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 communities:
AT DECEMBER 31, ------------------------------------------------------------------------------------ 1982- 1998 1997 1996 1995 1994 1993 1992 1991 1990 ------- ------ ------ ------ ------ ------ ------ ------ ------ WHOLLY-OWNED: Units at beginning of year . . . . . . . . . 11,650 9,824 9,600 9,789 8,207 6,793 5,673 5,103 -- Units acquired . . . . . . 1,102 1,724 -- -- 1,582 1,414 1,120 570 3,460 Units sold/contributed to co-investment. . . . . (472) (350) -- (421) -- -- -- -- -- Units developed. . . . . . 512 452 224 232 -- -- -- -- 1,643 Total wholly owned units at end of year . . . . . 12,792 11,650 9,824 9,600 9,789 8,207 6,793 5,673 5,103 CO-INVESTMENTS: Units at beginning of year. . . . . . . . . 5,851 3,677 2,245 1,451 425 425 425 425 -- Units acquired/con- tributed to co-investment. . . . . . 260 1,506 1,080 794 1,026 -- -- -- 150 Units sold . . . . . . . . -- -- (150) -- -- -- -- -- -- Units developed. . . . . . 656 668 502 -- -- -- -- -- 275 Total co-investment units at end of year. . . . . . . . . 6,767 5,851 3,677 2,245 1,451 425 425 425 425 Total stabilized units. . . . . . 19,559 17,501 13,501 11,845 11,240 8,632 7,218 6,098 5,528
ITEM 2. COMMUNITIES STABILIZED COMMUNITIES The Communities include 52 stabilized (generally 95% occupied) multifamily apartment communities containing 19,559 apartment homes operated under the AMLI [registered trademark] brand name. Thirty-three of the stabilized Communities, containing an aggregate of 12,792 apartment homes, are directly owned by the Company (the "Wholly-Owned Communities") and nineteen Communities, containing an aggregate of 6,767 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 5,502 10 4,320 3 1,182 Atlanta, Georgia . . . . . 12 4,934 7 3,372 5 1,562 Chicago, Illinois. . . . . 8 2,762 2 449 6 2,313 Austin, Texas. . . . . . . 5 1,877 4 1,289 1 588 Indianapolis, Indiana. . . 3 1,536 3 1,536 -- -- Eastern Kansas . . . . . . 8 2,194 7 1,826 1 368 Houston, Texas . . . . . . 3 754 -- -- 3 754 --- ------ --- ------ --- ----- Total. . . . . . . . . 52 19,559 33 12,792 19 6,767 === ====== === ====== === ===== As of December 31, 1998, the average age of the stabilized Communities was approximately eight years, the average occupancy rate of the stabilized Communities was 92%, and the average monthly rental rate per apartment home was $768. DEVELOPMENT COMMUNITIES The development communities consist of fifteen multifamily apartment communities or new phases of existing communities which upon completion will contain 4,862 apartment homes. 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 . . . . . 2 1,016 1 216 1 800 Dallas/Ft. Worth, Texas . . . . . . . . . . 4 920 2 440 2 480 Chicago, Illinois. . . . . 2 864 1 400 1 464 Austin, Texas. . . . . . . 2 1,006 1 430 1 576 Indianapolis, Indiana. . . 2 492 -- -- 2 492 Eastern Kansas . . . . . . 3 564 -- -- 3 564 ---- ----- ---- ----- ---- ----- Total. . . . . . . . . 15 4,862 5 1,486 10 3,376 ==== ===== ==== ===== ==== ===== 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.
1998 1998 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 1987/96 450 832 $ 695 94% at Bent Tree Dallas 1996 300 943 832 93% at Bishop's Gate West Plano 1997 266 1,098 1,040 94% at Chase Oaks Plano 1986 250 775 679 94% at Gleneagles Dallas 1987/97 590 882 719 95% on the Green Ft. Worth 1990/93 424 846 682 93% at Nantucket Dallas 1986 312 712 556 96% of North Dallas Dallas 1985/86 1,032 878 652 93% on Rosemeade Dallas 1987 236 870 665 95% at Valley Ranch Irving 1985 460 848 703 95% ------ ------ ------ ----- 4,320 867 706 94% ------ ------ ------ ----- AUSTIN, TX AMLI: at the Arboretum Austin 1983 231 771 688 95% in Great Hills Austin 1985 344 750 690 96% at Lantana Ridge Austin 1997 354 881 809 91% at Martha's Vineyard Austin 1986 360 723 611 96% ------ ------ ------ ----- 1,289 782 700 94% ------ ------ ------- ----- ATLANTA, GA AMLI: at Clairmont Atlanta 1988 288 796 779 95% at Park Creek (1) Gainesville 1998 200 976 664 93% at Peachtree City Fayette County 1998 312 980 846 94% at Sope Creek Marietta 1982/83/95 695 910 691 95% at Spring Creek Dunwoody 1985/86/87/89 1,180 916 723 93% at Vinings Atlanta 1985 360 1,041 779 94% at West Paces Atlanta 1992 337 934 882 96% ------ ------ ------ ----- 3,372 929 751 94% ------ ------ ------ ----- 1998 1998 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 92% at Centennial Park Overland Park 1997 170 1,205 974 90% at Crown Colony Topeka 1986/97 220 783 597 92% at Lexington Farms (1) Overland Park 1998 404 972 782 79% at Regents Center Overland Park 1991/95/97 424 940 729 92% at Sherwood Topeka 1993 300 868 626 92% at Town Center Overland Park 1997 156 1,134 973 93% ------ ------ ------ ----- 1,826 948 746 89% ------ ------ ------ ----- INDIANAPOLIS, IN AMLI: at Conner Farms Indianapolis 1993 300 1,082 782 91% at Riverbend Indianapolis 1983/85 996 824 587 93% at Eagle Creek (1) Indianapolis 1998 240 973 753 86% ------ ------ ------ ----- 1,536 898 651 91% ------ ------ ------ ----- CHICAGO, IL AMLI: at Park Sheridan Chicago 1986 253 855 945 97% at Poplar Creek Schaumburg 1985 196 911 954 95% ------ ------ ------ ----- 449 879 949 96% ------ ------ ------ ----- TOTAL WHOLLY-OWNED COMMUNITIES AT DECEMBER 31, 1998 12,792 890 $ 725 93.1% ====== ====== ====== =====
1998 1998 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 35% Atlanta 1997 446 1,037 $ 842 93% at Pleasant Hill 40% Gwinnett County 1996 502 1,000 797 93% at River Park 40% Atlanta 1997 222 1,021 855 95% at Towne Creek 1% Gainesville 1989 150 811 617 90% at Willeo Creek 30% Rosewell 1989 242 1,229 821 93% ------ ------ ---- ----- 1,562 1,031 805 93% ------ ------ ---- ----- CHICAGO, IL AMLI: at Chevy Chase 33% Buffalo Grove 1988 592 812 956 96% at Danada Farms 10% Wheaton 1989/91 600 869 920 95% at Fox Valley (1) 25% Aurora 1998 272 986 934 88% at Prairie Court 1% Oak Park 1987 125 845 1,080 96% at Willowbrook 40% Willowbrook 1987 488 857 934 95% at Windbrooke 15% Buffalo Grove 1987 236 903 975 98% ------ ------ ---- ----- 2,313 868 948 95% ------ ------ ---- ----- EASTERN KANSAS AMLI: at Regents Crest 25% Overland Park 1997 368 942 738 94% ------ ------ ---- ----- AUSTIN, TX AMLI: at Park Place 25% Austin 1985 588 677 588 95% ------ ------ ---- ----- 1998 1998 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 - ---------------- ---------- -------- --------- -------- ------------- -------- ---------- DALLAS, TX AMLI: at Fossil Creek (1) 25% Ft. Worth 1998 384 1,001 788 89% at Timberglen 40% Dallas 1985 260 774 636 95% at Verandah 35% Arlington 1986/91 538 733 670 95% ------ ------ ---- ----- 1,182 829 701 93% ------ ------ ---- ----- HOUSTON, TX AMLI: at Champions Centre 15% Houston 1994 192 857 747 95% at Champions Park 15% Houston 1991 246 902 728 96% at Greenwood Forest 15% Houston 1995 316 984 780 95% ------ ------ ---- ----- 754 925 755 95% ------ ------ ---- ----- TOTAL CO-INVESTMENT COMMUNITIES AT DECEMBER 31, 1998 6,767 892 $808 94.1% ====== ====== ==== ===== TOTAL 19,559 891 $754 93.5% ====== ====== ==== ===== (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:
1998 1997 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 92% 93% 90% 97% 96% 97% 95% 97% at Bent Tree. . . . . . . . . 300 97% 91% 93% 93% 93% N/A N/A N/A at Bishop's Gate. . . . . . . 266 91% 92% 97% 100% 90% N/A N/A N/A at Chase Oaks . . . . . . . . 250 92% 93% 93% 98% 94% 96% 97% 96% at Gleneagles . . . . . . . . 590 92% 93% 98% 97% 97% 99% 98% 96% on the Green. . . . . . . . . 424 88% 93% 92% 96% 93% 95% 93% 91% at Nantucket. . . . . . . . . 312 91% 93% 97% 98% 98% 98% 98% 99% of North Dallas . . . . . . . 1,032 91% 93% 93% 96% 95% 96% 97% 94% on Rosemeade. . . . . . . . . 236 94% 94% 95% 96% 92% 95% 97% 97% at Valley Ranch . . . . . . . 460 90% 92% 97% 98% 99% 97% 97% 95% ------ ----- ----- ----- ----- ----- ----- ----- ----- 4,320 92% 93% 94% 97% 96% 97% 96% 95% ------ ----- ----- ----- ----- ----- ----- ----- ----- AUSTIN, TEXAS AMLI: at the Arboretum. . . . . . . 231 94% 97% 96% 97% 96% 100% 97% 97% in Great Hills. . . . . . . . 344 89% 99% 97% 98% 97% 98% 97% 95% at Lantana Ridge. . . . . . . 354 90% 92% 92% 94% 81% 83% N/A N/A at Martha's Vineyard. . . . . 360 93% 96% 97% 96% 97% 98% 99% 97% ------ ----- ----- ----- ----- ----- ----- ----- ----- 1,289 91% 95% 96% 96% 92% 94% 98% 96% ------ ----- ----- ----- ----- ----- ----- ----- ----- ATLANTA, GEORGIA AMLI: at Clairmont. . . . . . . . . 288 96% 95% 96% 96% N/A N/A N/A N/A at Peachtree City . . . . . . 312 90% 96% 99% N/A N/A N/A N/A N/A lease lease at Park Creek . . . . . . . . 200 97% up up N/A N/A N/A N/A N/A at Sope Creek . . . . . . . . 695 94% 97% 95% 94% 93% 94% 93% 96% at Spring Creek . . . . . . . 1,180 92% 94% 93% 94% 94% 95% 95% 97% at Vinings. . . . . . . . . . 360 92% 94% 96% 95% 96% 96% 95% 93% at West Paces . . . . . . . . 337 95% 97% 99% 98% 94% 92% 93% 98% ------ ----- ----- ----- ----- ----- ----- ----- ----- 3,372 93% 95% 95% 95% 94% 94% 94% 96% ------ ----- ----- ----- ----- ----- ----- ----- ----- 1998 1997 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 90% 94% 94% 95% 93% 90% 93% 98% at Centennial Park. . . . . . 170 89% N/A N/A N/A N/A N/A N/A N/A at Crown Colony . . . . . . . 220 88% 91% 89% 96% 95% 98% 93% 97% at Lexington Farms. . . . . . 404 85% N/A N/A N/A N/A N/A N/A N/A at Regents Center . . . . . . 424 95% 93% 95% 90% 87% 93% 99% 91% at Sherwood . . . . . . . . . 300 93% 89% 93% 92% 97% 98% 95% 98% at Town Center. . . . . . . . 156 91% 96% 94% 93% 92% N/A N/A N/A ------ ----- ----- ----- ----- ----- ----- ----- ----- 1,826 90% 92% 93% 93% 92% 95% 96% 96% ------ ----- ----- ----- ----- ----- ----- ----- ----- INDIANAPOLIS, INDIANA AMLI: at Conner Farms . . . . . . . 300 89% 93% 86% 90% 93% N/A N/A N/A at Eagle Creek. . . . . . . . 240 87% N/A N/A N/A N/A N/A N/A N/A at Riverbend. . . . . . . . . 996 88% 92% 93% 96% 88% 89% 94% 92% ------ ----- ----- ----- ----- ----- ----- ----- ----- 1,536 88% 92% 92% 95% 89% 89% 94% 92% ------ ----- ----- ----- ----- ----- ----- ----- ----- CHICAGO, ILLINOIS AMLI: at Park Sheridan. . . . . . . 253 93% 98% 97% 100% 98% 99% 92% 93% at Poplar Creek . . . . . . . 196 93% 94% 95% 98% 91% N/A N/A N/A ------ ----- ----- ----- ----- ----- ----- ----- ----- 449 93% 96% 96% 99% 95% 99% 92% 93% ------ ----- ----- ----- ----- ----- ----- ----- ----- 12,792 91.4% 93.6% 94.2% 95.1% 93.6% 95.0% 95.4% 95.1% ====== ===== ===== ===== ===== ===== ===== ===== ===== CO-INVESTMENT COMMUNITIES: - -------------------------- ATLANTA, GA AMLI: lease lease lease at Barrett Lakes. . . . . . . 35% 446 88% 93% 93% 96% 95% up up up at Pleasant Hill. . . . . . . 40% 502 91% 94% 95% 93% 89% 91% 96% 97% lease lease at River Park . . . . . . . . 40% 222 91% 96% 95% 98% 95% 97% up up at Towne Creek. . . . . . . . 1% 150 83% 89% 92% 95% 88% 97% 90% 93% at Willeo Creek . . . . . . . 30% 242 86% 96% 94% 98% 91% 91% 95% 98% ------ ----- ----- ----- ----- ----- ----- ----- ----- 1,562 89% 94% 94% 96% 92% 93% 95% 96% ------ ----- ----- ----- ----- ----- ----- ----- ----- 1998 1997 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 95% 97% 98% 97% 94% 96% 99% 97% at Danada Farms . . . . . . . 10% 600 94% 94% 96% 98% 93% 94% 93% 92% lease lease lease at Fox Valley . . . . . . . . 25% 272 86% 89% 87% up up up N/A N/A at Prairie Court. . . . . . . 1% 125 94% 96% 93% 96% 98% 98% 100% 97% at Willowbrook. . . . . . . . 40% 488 96% 95% 98% 98% 94% 98% 94% 96% at Windbrooke . . . . . . . . 15% 236 98% 99% 95% 100% 98% 99% 100% 96% ------- ----- ----- ----- ----- ----- ----- ----- ----- 2,313 94% 95% 95% 98% 94% 96% 96% 95% ------- ----- ----- ----- ----- ----- ----- ----- ----- EASTERN KANSAS AMLI: at Regents Crest. . . . . . . 25% 368 96% 96% 94% 92% 93% N/A N/A N/A ------- ----- ----- ----- ----- ----- ----- ----- ----- DALLAS, TX AMLI: lease lease lease at Fossil Creek . . . . . . . 25% 384 90% up up up N/A N/A N/A N/A on Timberglen . . . . . . . . 40% 260 92% N/A N/A N/A N/A N/A N/A N/A at Verandah . . . . . . . . . 35% 538 94% 93% 96% 97% 94% 95% 96% 94% ------- ----- ----- ----- ----- ----- ----- ----- ----- 1,182 92% 93% 96% 97% 94% 95% 96% 94% ------- ----- ----- ----- ----- ----- ----- ----- ----- AUSTIN, TX AMLI: at Park Place . . . . . . . . 25% 588 92% 95% 95% 95% 98% 97% 94% 96% ------- ----- ----- ----- ----- ----- ----- ----- ----- HOUSTON, TX AMLI: at Champions Centre . . . . . 15% 192 93% 95% 97% 98% 97% 94% 98% 95% at Champions Park . . . . . . 15% 246 91% 98% 95% 95% 98% 99% 99% 97% at Greenwood Forest . . . . . 15% 316 92% 98% 96% 97% 95% 96% 96% 96% ------- ----- ----- ----- ----- ----- ----- ----- ----- 754 92% 97% 96% 97% 96% 96% 98% 96% ------- ----- ----- ----- ----- ----- ----- ----- ----- Total Co-Investment Communities. . . . . . . . . . 6,767 92.1% 94.8% 94.8% 96.4% 94.2% 95.5% 95.8% 95.5% ------- ----- ----- ----- ----- ----- ----- ----- ----- Total Stabilized Communities . . 19,559 91.6% 94.1% 94.4% 95.9% 93.8% 95.2% 95.7% 95.3% ======= ===== ===== ===== ===== ===== ===== ===== =====
ITEM 3. LEGAL PROCEEDINGS None of the Company, the Operating Partnership, the Service Companies or the co-investment partnerships is 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, 1998. 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.
1998 1997 ----------------------------- ----------------------------- DIVIDENDS DIVIDENDS PER SHARE PER SHARE HIGH LOW (1) HIGH LOW (1) ------ ----- --------- ------ ----- --------- First Quarter . . . . . . . . . . . . $24.38 $22.00 $0.44 $24.75 $22.50 $.43 Second Quarter . . . . . . . . . . . . 23.94 19.31 0.44 23.63 21.50 .43 Third Quarter. . . . . . . . . . . . . 23.13 19.56 0.44 23.75 21.75 .44 Fourth Quarter . . . . . . . . . . . . 23.25 18.44 0.45 24.19 21.75 .44 (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 March 1, 1999, the last reported sale price of the common shares on the NYSE was $19.9375 per share. On the same date, the Company had 16,675,832 common shares outstanding held by 338 shareholders of record. The Company's current dividend payment level equals an annual rate of $1.80 per common share. The Company anticipates that it will continue to make regular quarterly dividend payments. Approximately 6.9% of dividends paid during 1998 represented a return of capital, and the Company estimates that a similar percentage of the total dividends to be paid in 1999 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 Internal Revenue Code and such other factors as the Board of Trustees deems relevant. The annual dividend payments for calendar year 1998 necessary for the Company to maintain its status as a REIT were approximately $1.05 per share. ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected financial data relating to the historical financial condition and results of operations of the Company. Such selected financial data is qualified in its entirety by, and should be read in conjunction with, "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements and notes thereto included in this report. HISTORICAL (in thousands, except per share data) ----------------------------------------------------------------------- 1998 1997 1996 1995 1994 ----------- ----------- ---------- ----------- ----------- OPERATING DATA: Revenues . . . . . . . . . . $ 117,353 90,073 78,271 73,877 65,215 Income before minority interest and extra- ordinary item. . . . . . . 34,697 28,926 19,949 17,006 13,398 Net income . . . . . . . . . 29,700 24,352 15,250 13,719 8,710 Net income per common share (basic and diluted) . . . . . . . . . 1.49 1.43 1.11 1.18 .75(A) BALANCE SHEET DATA: Residential real estate, before accumulated depreciation. . . . . . . . $ 739,764 653,947 495,519 442,865 451,762 Total assets . . . . . . . . 785,592 679,978 504,357 433,227 442,619 Total debt . . . . . . . . . 367,370 333,250 202,013 215,255 217,687 Minority interest. . . . . . 54,574 51,463 44,871 39,077 42,743 Shareholders' equity . . . . 342,854 270,439 242,022 166,163 170,161 OTHER DATA: Funds from operations (B). . . . . . . . . . . . 53,232 42,172 32,009 27,404 22,033(A) Funds from operations per common share (diluted). . . . . . . . . 2.34 2.13 2.01 1.90 1.53(A) Cash dividends paid per common share . . . . . . . 1.76 1.73 1.72 1.71 1.05(A) Net cash flow from operating activities . . . 47,175 39,129 31,934 28,334 26,269 Net cash flow for investing activities . . . (121,935) (170,900) (66,864) (2,551) (143,308) Net cash flow from (for) financing activities . . . 73,630 127,156 42,942 (26,964) 110,326 (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) The Company believes that funds from operations is useful as a 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, 1998 and 1997 for the years ended December 31, 1998, 1997 and 1996. This information should be read in conjunction with the accompanying consolidated financial statements and notes thereto. The Company commenced operations upon completion of its Initial Public Offering in February 1994. On January 30, 1996, the Company issued 1,200,000 Series A 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. In July 1997, the Company closed on the public offering of 1,694,700 common shares. In February 1998, the Company placed 3,125,000 Series B convertible preferred shares for $24 per share. The net proceeds of the issuance of the preferred shares and the public offerings were used to reduce the Company's debt and fund development costs. As of December 31, 1998, the Company owned an 85% general partnership interest in AMLI Residential Properties, L.P. (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, 1998, the Company owned 20,880,155 OP Units and the limited partners owned 3,565,672 OP Units. At December 31, 1998, the Company owns, or owns interests, in 19,559 apartment homes and an additional 4,862 apartment homes under development. RESULTS OF OPERATIONS During the period from January 1, 1997 through December 31, 1998, growth from property revenues and property operating expenses resulted from increases at communities owned as of January 1, 1997, from communities acquired and from the newly-constructed communities since January 1, 1997. Since January 1, 1997, the Company has acquired a total of ten stabilized communities that contributed to increases in property revenues and property operating expenses as follows: Number of Community Location Units Date Acquired - --------- -------- --------- ------------- AMLI: at Paces North Atlanta, GA 152 Jun. 97 at Lantana Ridge Austin, TX 354 Sep. 97 at Bent Tree Dallas, TX 300 Oct. 97 at Bishop's Gate West Plano, TX 266 Oct. 97 at Poplar Creek Schaumburg, IL 196 Dec. 97 at Conner Farms Indianapolis, IN 300 Dec. 97 at Clairmont Atlanta, GA 288 Jan. 98 at Centennial Park Overland Park, KS 170 Oct. 98 at Lexington Farms Overland Park, KS 404 Oct. 98 at Eagle Creek Indianapolis, IN 240 Oct. 98 ----- 2,670 ===== In addition, the Company has developed and begun rental operations of four new communities and three additional phases to existing stabilized communities as follows: Date of Number of Initial Rental Community Location Units Operations - --------- -------- --------- -------------- AMLI: at Regents Center III Overland Park, KS 124 Nov. 96 at Town Center Overland Park, KS 156 Jan. 97 at Crown Colony II Topeka, KS 64 Apr. 97 at Peachtree City Fayette County, GA 312 Aug. 97 at AutumnChase III Dallas, TX 240 Nov. 97 at Park Creek Gainesville, GA 200 Feb. 98 at Killian Creek Gwinnett County, GA 256 Nov. 98 ----- 1,352 ===== During the same period, the Company has contributed AMLI on Timberglen to a co-investment partnership and has invested in co-investment partnerships which acquired the following stabilized communities: Number of Date Company Community Location Units Acquired Ownership - --------- -------- --------- -------- --------- AMLI: at Danada Farms Wheaton, IL 600 Feb. 97 10% at Verandah Arlington, TX 538 Mar. 97 35% at Regents Crest Overland Park, KS 368 Dec. 97 25% on Timberglen Dallas, TX 260 Dec. 98 40% ----- 1,766 ===== In addition, the Company in joint venture with institutional investors, completed the development or has under development and begun rental operations of eight new communities as follows: Date of Initial Number of Rental Company Community Location Units Operations Ownership - --------- -------- --------- ---------- --------- AMLI: at Barrett Lakes Cobb County, GA 446 Nov. 96 35% at River Park Norcross, GA 222 Nov. 96 40% at Fox Valley Aurora, IL 272 Feb. 97 25% at Fossil Creek Ft. Worth, TX 384 Apr. 97 25% at Northwinds Fulton County, GA 800 Sep. 97 35% at Wells Branch Austin, TX 576 Jan. 98 25% at Oakhurst North Aurora, IL 464 May 98 25% on the Parkway Dallas, TX 240 May 98 25% ----- 3,404 ===== For the year ended December 31, 1998, net income attributable to common shares was $24,825, or $1.49 per share, on total revenues of $117,353 (including a $3,621 non-recurring gain on sale of a residential property). 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). In 1997, net income included an extraordinary loss of $196 on early extinguishment of debt. On a "same community" basis, weighted average occupancy of the wholly- owned apartment homes increased slightly to 93.9% for the year ended December 31, 1998 from 93.7% in the prior year. Weighted average collected rental rates increased by 1.5% to $681 from $671 per unit per month for the years ended December 31, 1998 and 1997, respectively. Including co- investment communities, weighted average occupancy of the apartment homes increased to 94.3% for the year ended December 31, 1998 from 93.8% in the prior year, and weighted average collected rental rates increased by 2.6% to $720 from $702 per unit per month for the years ended December 31, 1998 and 1997, respectively. COMPARISON OF YEAR ENDED DECEMBER 31, 1998 TO YEAR ENDED DECEMBER 31, 1997 Income before minority interest increased to $34,697 for the year ended December 31, 1998 from $28,926 for the year ended December 31, 1997. This increase was primarily attributable to a $27,280 increase in total revenues, reduced by an $8,650 increase in property operating expenses, a $8,268 increase in interest expense and a $4,743 increase in depreciation. Net income for the years ended December 31, 1998 and 1997 was $29,700 and $24,352, respectively. Total property revenues increased by $23,011, or 27.1%. This increase in property revenues was primarily from the 2,670 apartment homes acquired during 1997 and 1998. In addition, leasing commenced on 1,228 apartment homes developed by the Company during the period from January 1, 1997 through December 31, 1998. Furthermore, moderate increases in rental rates were achieved while managing and maintaining just below 95% average occupancy at the stabilized communities. Other property revenues include increases in revenues from garages and carports ($211), telephone and cable systems ($111) and other fees ($1,260) charged to residents. On a same community basis, total property revenues increased by $2,197, or 2.9%. Interest and share of income from Service Companies increased 139.8% to $2,760 from $1,151 as a result of increased construction fees earned from co-investment partnerships. Income from partnerships increased to $2,169 from $925, or 134.5%. This increase was a result of the acquisition of 1,766 apartment homes in 1997 and 1998 through four new co-investment partnerships. In addition, eight new co-investment partnerships have invested in eight development communities, which have a total of 3,404 apartment homes that began rental operations in 1997 and 1998, and of which 1,324 units were stabilized in 1998. Other income increased to $3,323 from $2,658, or 25%, as a result of fees charged to newly formed co-investment partnerships that own properties under development. This increase includes a $1,074 increase in development fees, reduced by a $200 decrease in financing, acquisition and other fees. Other interest income increased by $751. This increase was from additional employee notes for purchase of the Company's shares, from increased short-term advances to co-investment partnerships, and from a gap loan to one co-investment partnership that was repaid in December 1998. Property operating expenses increased by $8,650, or 24.8%. This increase is principally due to the increase in the number of apartment homes through acquisition or development. On a same community basis, property operating expenses increased by $1,143, or 3.7%. The increase in operating expense is largely due to a $435 increase in real estate taxes, a $508 increase in personnel costs and a $307 increase in repairs and maintenance. This increase was offset in part by a $245 reduction of utilities expense resulting from the implementation of billings to residents and the installation of water and energy conservation equipment. Interest expense, net of the amounts capitalized, increased to $20,263 from $11,995, or 68.9%, primarily due to increased indebtedness incurred in conjunction with property acquisition, development and investments in joint ventures. General and administrative expenses increased to $3,993 for the year ended December 31, 1998 from $2,850, or 40.1%, for the year ended December 31, 1997. The increase is primarily attributable to increased compensation and compensation-related costs attributable to both additional employees, increased rates of compensation and $422 of dead deal costs. 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 community 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. LIQUIDITY AND CAPITAL RESOURCES At December 31, 1998, the Company had $4,546 in cash and cash equivalents and $65,000 in availability under its $200,000 unsecured line of credit. On February 20, 1998, the Company privately placed $75,000 of Series B preferred shares with an institutional investor. The shares were issued at $24 per share. Funding occurred in three equal installments in March, June and September 1998. Proceeds from this private placement, net of 1.12% in offering costs, were $74,160. During 1998, nineteen of the Company's wholly-owned stabilized communities are unencumbered. There are no 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, 1998 increased to $47,175 from $39,129 for the year ended December 31, 1997. 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, 1998 decreased to $121,935 from $170,900 for the year ended December 31, 1997. The decrease consisted primarily of fewer acquisitions and repayments from affiliates of the Company's advances for development costs. Net cash flows provided by financing activities for the year ended December 31, 1998 were $73,630. In 1998, cash flows include repayments of borrowings of $361,599 and $74,160 net proceeds from the private placement of convertible preferred shares reduced by employees' and trustees' notes. The share prices of most REITs are generally depressed relative to share price levels of one or two years ago. Although the Company's share value held up better than its peers in 1998 (it was the same as it was at the end of 1997), it has declined in 1999. The Company does not anticipate raising any significant public equity capital in the near-term and will fund its construction and development activities primarily by raising additional Co-investment equity and through additional borrowings under its line of credit. Funds from operations ("FFO") is defined as net income (computed in accordance with generally accepted accounting principles("GAAP")), 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 FFO on the same basis. FFO is widely accepted in measuring the performance of equity REITs. An understanding of the Company's FFO will enhance the reader's comprehension of the Company's results of operations and cash flows as presented in the financial statements and data included elsewhere herein. FFO 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. FFO for the years ended December 31, 1998 and 1997 is summarized as follows: 1998 1997 ------- ------- Net income before minority interest and extraordinary item $34,697 28,926 Depreciation 17,963 13,220 Share of co-investment partnerships' depreciation 3,793 2,483 Share of Service Company's goodwill amortization 400 -- Gains on sales of residential properties (3,621) (2,457) ------- ------- FFO $53,232 42,172 ======= ======= Weighted average diluted shares and units 22,760 19,848 ======= ======= 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. FFO as shown above is net of startup losses at newly-constructed communities. At some communities, the initial lease-up was so rapid that there were no startup losses. In the typical situation, startup losses will be recorded between the time the first apartment building is delivered from construction until occupancy levels are adequate to recover all costs and expenses (including interest but excluding depreciation). FFO, as shown above for 1998 and 1997, is shown net of startup losses of $1,387 and $1,096, respectively. The startup losses for 1998 are attributable to the initial lease-up of AMLI at AutumnChase III, AMLI at Killian Creek, AMLI at Park Creek, AMLI at Wells Branch, AMLI at Oakhurst North, AMLI on the Parkway, AMLI at Fox Valley, AMLI at Fossil Creek and AMLI at Northwinds. The startup losses for 1997 are attributable to the initial lease-up of AMLI at AutumnChase III, AMLI at Town Center, AMLI at Crown Colony II, 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 1999 as initial lease-up is completed at these and other communities which will enter the lease-up period during 1999. 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 1998 was $23,215 which would require the Company to pay dividends of approximately $22,054. For the year ended December 31, 1998, the Company paid dividends to its shareholders of $32,728 (141% of REIT taxable income), of which approximately 6.9% represents a return of capital and 20.6% 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. Through December 31, 1998, the Company has issued common and preferred shares that total approximately $128,467, leaving a balance of $71,533 that the Company may issue in the future. COMPANY INDEBTEDNESS The Company's debt as of December 31, 1998 includes $176,370 (48% of the total) which is secured by first mortgages on 12 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 7.6% $176,370 48.0% Tax-Exempt Tax-Exempt Rate + 1.23% 40,750 11.1% Bonds (1) Tax-Exempt Rate + 1.15% 9,500 2.6% Lines of Credit (2) LIBOR + .90% 135,000 36.7% Notes payable to Service Companies Various 5,750 1.6% -------- ------ Total $367,370 100.0% ======== ====== - -------------------- (1) The tax-exempt bonds bear interest at a variable tax-exempt rate that is adjusted weekly based on the re-marketing of these bonds (3.0% for AMLI at Spring Creek and 2.92% for AMLI at Poplar Creek at March 1, 1999). The AMLI at Spring Creek bonds mature on October 1, 2024 and the related credit enhancement expires on October 15, 2002. The AMLI at Poplar Creek bonds mature on February 1, 2024 and the related credit enhancement expires on December 18, 2002. (2) Amounts borrowed under lines of credit are due in 2001. The interest rate on $50,000 has been fixed pursuant to interest rate swap contracts. DEVELOPMENT ACTIVITIES At December 31, 1998, the Company has made capital contributions totalling $81,047 to its existing co-investment partnerships and anticipates funding substantially all of its remaining commitment of $21,339 during 1999 to complete the 3,376 apartment homes being developed by co-investment partnerships. Two of the five wholly-owned communities currently under development, AMLI at St. Charles and AMLI at Monterey Oaks, are anticipated to be contributed to co-investment partnerships in 1999. These 830 apartment homes under construction have estimated costs to complete of $59,095, will be funded in 1999 and 2000. The Company expects to incur $15,806 in 1999 to complete the 656 apartment homes in the remaining three wholly-owned communities under development. The Company owns land for the development of an additional 3,522 apartment homes in Ft. Worth and Houston, Texas; Noblesville, Indiana; Summit, Missouri and Atlanta, Georgia. The Company has earnest money deposits of $1,141 for six land parcels anticipated to be acquired in 1999 for future development. 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 1998 and 1997, a total of $6,378 and $5,592 was spent on building repairs and maintenance (including contract services), respectively, and $2,298 and $1,796 was spent on landscaping and grounds maintenance, respectively, as follows: 1998 1997 ------ ------ BUILDING REPAIRS AND MAINTENANCE Painting (exterior and interior) $1,691 1,293 Carpet and vinyl 810 675 Carpentry 87 76 Heating and air-conditioning 183 190 Plumbing 250 223 Appliances 155 181 Electrical systems 185 120 Parking lots/resurfacing 138 326 Other repairs and maintenance 1,090 810 CONTRACT SERVICES Property monitoring services 496 621 Rubbish collection services 601 504 Cleaning services 395 277 Pest control services 192 179 Other services 105 117 ------ ----- $6,378 5,592 ====== ===== LANDSCAPING AND GROUNDS MAINTENANCE Lawn maintenance $2,116 1,683 Seasonal color 48 43 All other 134 70 ------ ----- $2,298 1,796 ====== ===== During 1998 and 1997, a total of $3,991 and $3,323, respectively, in expenditures was capitalized in accordance with the Company's policy, as follows: 1998 1997 ------ ------ Carpet replacements $1,902 1,485 Carports and entry gates 55 398 Energy saving lighting fixtures 145 96 Water saving devices 11 185 Major appliances 267 274 Clubhouse, amenities and business centers 764 438 Roof replacements 311 127 Landscaping improvements 47 54 All other 489 266 ------ ----- $3,991 3,323 ====== ===== 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 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. REHAB EXPENDITURES The average age of AMLI's communities was a little more than eight years at the time of its Initial Offering in 1994, the same as today. AMLI intends to maintain the average effective age of its portfolio in this same approximate range by continuing to: 1. develop new communities; 2. acquire newly-constructed communities; 3. sell selected older properties; 4. co-invest selected older properties; 5. rehab desirable, well-located older properties after they become 15-20 years old. AMLI has sold three older properties in the five years it has been a public company. AMLI's oldest property is now 18 years old. In September 1998, AMLI initiated its first community rehab since its Initial Offering by commencing the rehab of AMLI at Riverbend in Indianapolis. Rehab is a capital improvement program undertaken to repair or replace, among other things, the items described previously in the Capital Expenditures Policy at an aggregate cost of at least the greater of $3,000 per apartment home or 5% of the value of the entire apartment community. All costs (except costs to routinely paint the interiors of units at turnover) associated with a rehab will be capitalized and depreciated over their policy lives. To the extent a cost would have been expensed had it not been incurred pursuant to a rehab (pavement resurfacing, exterior painting, vinyl replacement are the primary such costs), such costs will be depreciated over fifteen years. Rehab expenditures are distinguished from recurring capital expenditures in that they: 1. are made on behalf of older properties; 2. are started and completed within a 24 month period; 3. cost a minimum of $3,000 per apartment home or 5% of the value of the property being rehabbed; and 4. are generally undertaken only once or twice during the useful life of a given property. AMLI's larger properties were built in phases, and the rehabs of these larger properties are anticipated to be done in phases, each extending over consecutive periods not exceeding 24 months. 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 40.4% 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 while maintaining stable occupancy. An increase in general price levels may immediately precede, or accompany, an increase in interest rates. At December 31, 1998, the Company's exposure (including the Company's proportionate share of its co- investment partnerships' expense) to rising interest rates is mitigated by the existing debt level of approximately 40% of the Company's total market capitalization at December 31, 1998 (45% including the Company's share of co-investment partnerships' debt), the high percentage of intermediate-term fixed rate debt (48% of total debt), and the use of interest rate swaps to effectively fix the interest rate on $20,000 of floating rate debt through November 2002 and $30,000 through February 2003 (14% 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 Chairman of the Securities and Exchange Commission has asked all public companies to provide thorough, meaningful disclosure regarding their Year 2000 readiness. This topic is getting increasing attention as January 1, 2000 gets closer. As is now widely understood, there is real potential for malfunction by computers and other equipment whose performance is dependent in part on microprocessors. The Company and the Service Companies have replaced all primary data processing systems within the last thirty months and believe the new systems are Year 2000 compliant. The Company has commenced testing of its data processing systems; some testing will be complete by March 31, 1999, and all testing is now anticipated to be complete by September 30, 1999. Little remedial action is anticipated. Some external consultants are being engaged by the Service Companies to assist these testing efforts and remedial action, if any is required. Total costs for using outside consultants in this effort is estimated at less than $100,000, most of which has yet to be incurred. The Company has undertaken a review of other aspects of its operations that may be affected by the Year 2000 problem. In the currently expected worst case scenarios, either a computer program or software could malfunction, or mechanical operations, such as elevators, electronic locking or entry systems and HVAC systems, could malfunction. AMLI believes that each of these problems can be temporarily corrected manually, and repaired permanently in a short period of time. The Company has contacted all its significant vendors, including banks and companies providing outsourcing services for payroll and benefits administration, to ensure that these vendors are satisfactorily addressing the problem. The Company continues to be of the opinion that there will be no direct material effect on its operating performance or results of operations from the Year 2000 problem. Although the Company intends to diligently continue preparations for Year 2000, it is not possible to quantify potential indirect effects resulting from the lack of readiness on the part of others with whom the Company conducts its business. Contingency plans have been prepared for use by all community locations and for all departments at AMLI's corporate offices. In general, these plans provide for ensuring that hard copy of all significant reports is made at the end of 1999; they describe the manual procedures that will have to be performed during any period of disruption of services or communication; and they provide for inventorying a larger than usual quantity of supplies including computer supplies and fax machines, in case replacements are required as a result of any Year 2000 casualty. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK MARKET RISK The Company is exposed to interest rate changes primarily as a result of its line of credit and long-term debt used to maintain liquidity and fund capital expenditures and expansion of the Company's real estate investment portfolio and operations. The Company's interest rate risk management objective is to limit the impact of interest rate changes on earnings and cash flows and to lower its overall borrowing costs. To achieve its objectives, the Company borrows primarily at fixed rates and may enter into derivative financial instruments such as interest rate swaps, caps and treasury locks in order to mitigate its interest rate risk on a related financial instrument. The Company does not enter into derivative or interest rate transactions for speculative purposes. The Company's interest rate risk is monitored using a variety of techniques. The table below presents the principal amounts, weighted average interest rates, fair values and other terms required by year of expected maturity to evaluate the expected cash flows and sensitivity to interest rate changes. Esti- mated There- Fair 1999 2000 2001 2002 2003 after Total Value ---- ---- ---- ---- ---- ------- ------- ----- Fixed rate debt . . . $750 75,270 106,100 182,120 185,220 Average interest rate. . . . 4.0% 7.5% 7.8% 7.7% 7.5% Variable rate LIBOR debt. . . . 135,000 135,000 135,000 Average interest rate. . . . 6.5% 6.5% 6.5% Variable rate TENR debt. . . . 50,250 50,250 50,250 Average interest rate. . . . 5.4% 5.4% 5.4% ---- ------ ------- ------ ------ ------- ------- ------- $750 -- 135,000 -- 75,270 156,350 367,370 370,470 ==== ====== ======= ====== ====== ======= ======= ======= The table incorporates only those exposures that exist as of December 31, 1998; it does not consider those exposures or positions which could arise after that date. Moreover, because firm commitments are not presented in the table above, the information presented therein has limited predictive value. As a result, the Company's ultimate realized gain or loss with respect to interest rate fluctuations will depend on the exposures that arise during the period, the Company's hedging strategies at that time, and interest rates. The following summarizes certain information pursuant to interest rate limitation and swap contracts at December 31, 1998. Approximate Value of Remaining Cumulative Liability at Notional Fixed Type of Contract Cash December 31, Amount Rate (1) Contract Maturity Paid 1998 (2) - -------- -------- -------- --------- ---------- ------------ $10,000 6.216% Swap 11/01/02 $ 64 405 10,000 6.029% Swap 11/01/02 44 340 20,000 6.145% Swap 02/15/03 94 801 10,000 6.070% Swap 02/18/03 40 373 - ------- ---- ----- $50,000 $242 1,919 ======= ==== ===== (1) The fixed rate for the swaps includes the swap spread (the risk component added to the Treasury yield to determine a fixed rate; excludes lender's spread). (2) "Value of Liability" represents the approximate amount which would have to be paid as of December 31, 1998 to terminate these contracts. This amount is not recorded as a liability in the accompanying balance sheet as of December 31, 1998. (3) Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities," becomes effective for all fiscal quarters for fiscal years beginning after June 15, 1999 and is not expected to have a material impact on the Company's financial statements. 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 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA AMLI RESIDENTIAL PROPERTIES TRUST INDEX PAGE ---- Independent Auditors' Report . . . . . . . . . . . . . . . . . 46 Consolidated Balance Sheets, December 31, 1998 and 1997. . . . 47 Consolidated Statements of Operations, years ended December 31, 1998, 1997 and 1996 . . . . . . . . . . . . . . 49 Consolidated Statements of Shareholders' Equity, years ended December 31, 1998, 1997 and 1996 . . . . . . . . 51 Consolidated Statements of Cash Flows, years ended December 31, 1998, 1997 and 1996 . . . . . . . . . . . . . . 53 Notes to Consolidated Financial Statements . . . . . . . . . . 55 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, 1998 and 1997, 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, 1998. 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, 1998 and 1997, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 1998, 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 LLP Chicago, Illinois February 23, 1999 AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1998 AND 1997 (Dollars in thousands, except share data)
1998 1997 ---------- --------- ASSETS: Rental apartments: Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 91,459 78,476 Depreciable property . . . . . . . . . . . . . . . . . . . . . . . . . . 586,507 496,747 -------- --------- 677,966 575,223 Less accumulated depreciation. . . . . . . . . . . . . . . . . . . . . . (78,143) (62,641) -------- --------- 599,823 512,582 Property under development . . . . . . . . . . . . . . . . . . . . . . . . 61,798 78,724 Investments in partnerships. . . . . . . . . . . . . . . . . . . . . . . . 72,150 50,729 Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . 4,546 5,676 Deferred expenses, net . . . . . . . . . . . . . . . . . . . . . . . . . . 2,942 3,140 Security deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,684 1,821 Notes receivable from and advances to Service Companies. . . . . . . . . . 31,277 18,356 Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,372 8,950 -------- --------- Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . $785,592 679,978 ======== ========= AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED BALANCE SHEETS - CONTINUED 1998 1997 ---------- --------- LIABILITIES AND SHAREHOLDERS' EQUITY: LIABILITIES: Debt (note 5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $367,370 333,250 Accrued interest payable . . . . . . . . . . . . . . . . . . . . . . . . . 2,170 1,389 Accrued real estate taxes payable. . . . . . . . . . . . . . . . . . . . . 10,141 9,334 Construction costs payable . . . . . . . . . . . . . . . . . . . . . . . . 1,967 8,403 Security deposits and prepaid rents. . . . . . . . . . . . . . . . . . . . 3,420 2,722 Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,096 2,978 -------- --------- Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 388,164 358,076 -------- --------- Commitments and contingencies (note 8) Minority interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,574 51,463 -------- --------- SHAREHOLDERS' EQUITY: Series A Cumulative Convertible Preferred shares of beneficial interest, $0.01 par value 1,500,000 authorized, 1,200,000 issued and 1,100,000 outstanding (aggregate liquidation preference of $22,200 and $22,195, respectively). . . . . . . . . . . . . . . . . . 11 11 Series B Cumulative Convertible Preferred shares of beneficial interest, $0.01 par value, 3,125,000 authorized, issued and outstanding (aggregate liquidation price of $76,406 at December 31, 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 -- Shares of beneficial interest, $0.01 par value, 145,375,000 authorized, 16,655,155 and 16,577,580 common shares issued and outstanding, respectively . . . . . . . . . . . . . . . . . . 167 166 Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . 420,303 341,148 Employees' and trustees' notes . . . . . . . . . . . . . . . . . . . . . . (10,668) (6,924) Dividends paid in excess of earnings . . . . . . . . . . . . . . . . . . . (66,990) (63,962) -------- --------- Total shareholders' equity . . . . . . . . . . . . . . . . . . . . . . 342,854 270,439 -------- --------- Total liabilities and shareholders' equity . . . . . . . . . . . . . . $785,592 679,978 ======== ========= See accompanying notes to consolidated financial statements.
AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (Dollars in thousands, except share data)
1998 1997 1996 ---------- --------- --------- Revenues: Property: Rental . . . . . . . . . . . . . . . . . . . . . . . $101,892 80,479 71,863 Other. . . . . . . . . . . . . . . . . . . . . . . . 5,937 4,339 3,269 Interest and share of income from Service Companies. . . 2,760 1,151 632 Other interest . . . . . . . . . . . . . . . . . . . . . 1,272 521 224 Income from partnerships . . . . . . . . . . . . . . . . 2,169 925 569 Other. . . . . . . . . . . . . . . . . . . . . . . . . . 3,323 2,658 1,714 --------- -------- -------- Total revenues . . . . . . . . . . . . . . . . 117,353 90,073 78,271 --------- -------- -------- Expenses: Personnel. . . . . . . . . . . . . . . . . . . . . . . 10,073 7,648 6,714 Advertising and promotion. . . . . . . . . . . . . . . 2,982 2,147 1,917 Utilities. . . . . . . . . . . . . . . . . . . . . . . 4,272 4,087 4,161 Building repairs and maintenance and services. . . . . 6,378 5,592 4,933 Landscaping and grounds maintenance. . . . . . . . . . 2,298 1,796 1,736 Real estate taxes. . . . . . . . . . . . . . . . . . . 12,539 9,476 8,465 Insurance. . . . . . . . . . . . . . . . . . . . . . . 841 858 977 Property management fees . . . . . . . . . . . . . . . 2,698 2,147 1,878 Other operating expenses . . . . . . . . . . . . . . . 1,512 1,192 1,165 Interest . . . . . . . . . . . . . . . . . . . . . . . 20,263 11,995 11,916 Amortization of deferred costs . . . . . . . . . . . . 465 596 1,370 Depreciation . . . . . . . . . . . . . . . . . . . . . 17,963 13,220 11,321 General and administrative . . . . . . . . . . . . . . 3,993 2,850 2,353 --------- -------- -------- Total expenses . . . . . . . . . . . . . . . . 86,277 63,604 58,906 --------- -------- -------- Income before nonrecurring gains, minority interest and extraordinary item . . . . . . . 31,076 26,469 19,365 Gain on sales of residential properties. . . . . . . . . 3,621 2,457 -- Gain resulting from interest rate cap contracts. . . . . -- -- 584 --------- -------- -------- AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED 1998 1997 1996 ---------- --------- --------- Income before minority interest and extraordinary item . . . . . . . . . . . . . . . . . . 34,697 28,926 19,949 Minority interest. . . . . . . . . . . . . . . . . . . . 4,997 4,378 3,581 --------- -------- -------- Income before extraordinary item . . . . . . . . . . . . 29,700 24,548 16,368 Extraordinary item - loss on early extinguishment of debt (net of minority interest) . . . . . . . . . . . . . . -- (196) (1,118) --------- -------- -------- Net income . . . . . . . . . . . . . . . . . . 29,700 24,352 15,250 Less income attributable to preferred shares . . . . . . 4,875 1,903 1,746 --------- -------- -------- Net income attributable to common shares. . . . . . . . . . . . . . . . $ 24,825 22,449 13,504 ========= ======== ======== Income per common share (basic and diluted): Before extraordinary item. . . . . . . . . . . . . . . $ 1.49 1.44 1.20 Extraordinary item . . . . . . . . . . . . . . . . . . -- (.01) (.09) Net income . . . . . . . . . . . . . . . . . . . . . . 1.49 1.43 1.11 Dividends declared and paid per common share . . . . . . 1.76 1.73 1.72 See accompanying notes to consolidated financial statements.
AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (Dollars in thousands)
SHARES OF EMPLOYEES' DIVIDENDS BENEFICIAL INTEREST ADDITIONAL AND PAID IN --------------------- PAID-IN TRUSTEES' EXCESS OF SHARES AMOUNT CAPITAL NOTES EARNINGS TOTAL ------- ------ ---------- --------- --------- --------- Balance at December 31, 1995 . . . . . . 11,681,659 $117 218,752 -- (52,706) 166,163 Shares issued in connection with: Class A Preferred shares offering. . . . . . . . . . . . . 1,200,000 12 23,906 -- -- 23,918 Common shares offering. . . . . . . 2,976,900 30 60,957 -- -- 60,987 Executive Share Purchase Plan . . . 35,700 -- 779 -- -- 779 Employees' and Trustees' notes . . . . -- -- -- (487) -- (487) Units converted to shares. . . . . . . 17,776 -- 270 -- -- 270 Reallocation of minority interest. . . -- -- (3,079) -- -- (3,079) Dividends paid in excess of earnings . . . . . . . . . . . . . . -- -- -- -- (6,529) (6,529) ---------- ---- -------- ------- -------- ------- Balance at December 31, 1996 . . . . . . 15,912,035 159 301,585 (487) (59,235) 242,022 Shares issued in connection with: Common shares offering. . . . . . . 1,694,700 17 37,430 -- -- 37,447 Executive Share Purchase Plan . . . 36,310 -- 840 -- -- 840 Employees' and Trustees' notes, net of repayments. . . . . . . . . . -- -- -- (6,437) -- (6,437) Units converted to shares. . . . . . . 34,535 1 543 -- -- 544 Reallocation of minority interest. . . -- -- 750 -- -- 750 Dividends paid in excess of earnings . . . . . . . . . . . . . . -- -- -- -- (4,727) (4,727) ---------- ---- ------- ------- ------- ------- Balance at December 31, 1997 . . . . . . 17,677,580 177 341,148 (6,924) (63,962) 270,439 AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - CONTINUED SHARES OF EMPLOYEES' DIVIDENDS BENEFICIAL INTEREST ADDITIONAL AND PAID IN --------------------- PAID-IN TRUSTEES' EXCESS OF SHARES AMOUNT CAPITAL NOTES EARNINGS TOTAL ------- ------ ---------- --------- --------- --------- Shares issued in connection with: Class B Preferred shares offering . 3,125,000 31 74,125 -- -- 74,156 Executive Share Purchase Plan . . . 43,153 1 971 -- -- 972 Options exercised . . . . . . . . . 1,666 -- 34 -- -- 34 Employees' and Trustees' notes, net of repayments. . . . . . . . . . -- -- -- (3,744) -- (3,744) Units converted to shares. . . . . . . 32,756 -- 671 -- -- 671 Reallocation of minority interest. . . -- -- 3,354 -- -- 3,354 Dividends paid in excess of earnings. . . . . . . . . . . . . -- -- -- -- (3,028) (3,028) ---------- ---- ------- ------- ------- ------- Balance at December 31, 1998 . . . . . . 20,880,155 $209 420,303 (10,668) (66,990) 342,854 ========== ==== ======= ======= ======= ======= See accompanying notes to consolidated financial statements.
AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (Dollars in thousands)
1998 1997 1996 --------- --------- --------- Cash flows from operating activities: Net income . . . . . . . . . . . . . . . . . . . . . . $ 29,700 24,352 15,250 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization . . . . . . . . . . . 18,428 13,816 12,691 Income from partnerships. . . . . . . . . . . . . . (2,169) (915) (569) (Income) loss from Service Companies. . . . . . . . 134 (104) 238 Gain resulting from interest rate cap contracts . . -- -- (584) Loss on early extinguishment of debt. . . . . . . . -- 211 1,365 Gain on sale of residential property. . . . . . . . (3,621) (2,457) -- Minority interest . . . . . . . . . . . . . . . . . 4,997 4,341 3,334 Changes in assets and liabilities: (Increase) decrease in deferred expenses . . . . . . (113) (586) 35 Decrease (increase) in security deposits . . . . . . 137 (84) 143 Increase in other assets . . . . . . . . . . . . . . (2,382) (711) (1,568) Increase in accrued real estate taxes and interest payable . . . . . . . . . . . . . . . 1,248 615 439 Increase (decrease) in tenant security deposits and prepaid rents. . . . . . . . . . . . . . . . . 698 (35) 318 Increase in other liabilities. . . . . . . . . . . . 118 686 842 --------- --------- --------- Net cash provided by operating activities. . . 47,175 39,129 31,934 --------- --------- --------- Cash flows from investing activities: Net cash proceeds from sale of residential property. . 10,263 13,394 -- Investments in partnerships, net of cash distributions . . . . . . . . . . . . . . . . . 25 (11,552) (16,317) Advances to affiliates . . . . . . . . . . . . . . . . (10,440) (10,351) (5,285) Earnest money deposits . . . . . . . . . . . . . . . . (447) (1,660) (175) Capital expenditures - existing properties . . . . . . (3,991) (3,323) (1,937) Acquisition properties . . . . . . . . . . . . . . . . (74,541) (104,493) -- Properties under development, net of co-investors' share of costs . . . . . . . . . . . . . . . . . . . (36,368) (59,055) (44,100) (Decrease) increase in construction costs payable. . . (6,436) 6,140 950 --------- --------- --------- Net cash used in investing activities. . . . . (121,935) (170,900) (66,864) --------- --------- --------- AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED 1998 1997 1996 --------- --------- --------- Cash flows from financing activities: Debt proceeds, net of financing costs. . . . . . . . . 402,355 249,088 165,589 Debt repayments, including prepayment penalties in 1997 and 1996 . . . . . . . . . . . . . (361,599) (119,528) (184,122) 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. . . . . . . . . . . . . . . . 74,160 -- 23,918 Proceeds from common shares offerings, net of issuance costs. . . . . . . . . . . . . . . . -- 37,447 61,169 Employees' and Trustees' notes, net of proceeds from issuance of Executive Share Purchase Plan and Option Plan shares . . . . . . . . (2,664) (5,597) 292 Distributions to partners. . . . . . . . . . . . . . . (5,894) (5,175) (4,859) Dividends paid . . . . . . . . . . . . . . . . . . . . (32,728) (29,079) (21,779) --------- --------- --------- Net cash provided by financing activities . . . . . . . . . . . . 73,630 127,156 42,942 --------- --------- --------- Net (decrease) increase in cash and cash equivalents. . . . . . . . . . . . . . . (1,130) (4,615) 8,012 Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . 5,676 10,291 2,279 --------- --------- --------- Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . . $ 4,546 5,676 10,291 ========= ========= ========= Supplemental disclosure of cash flow information: Cash paid for mortgage and other interest, net of amount capitalized. . . . . . . . . . . . . . $ 19,482 11,767 11,985 ========= ========= ========= See accompanying notes to consolidated financial statements.
AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years ended December 31, 1998, 1997 and 1996 (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 85% interest. All 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. 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 at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. 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). Thirteen apartment communities having an original undepreciated cost of $281,565 are pledged to secure debt (see note 5). AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED In September 1998, AMLI initiated its first community rehab since its Initial Offering by commencing the rehab of AMLI at Riverbend in Indianapolis. Rehab is a capital improvement program involving significant repairs, replacements and improvements at an aggregate cost of at least the greater of $3,000 per apartment home or 5% of the value of the entire apartment community. All costs (except costs to routinely paint the interiors of units at turnover) associated with a rehab will be capitalized and depreciated over their policy lives. To the extent a cost would have been expensed had it not been incurred pursuant to a rehab (pavement re- surfacing, exterior painting, vinyl replacement are the primary such costs), such costs will be depreciated over fifteen years. 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 as costs of acquisition properties. On October 27, 1998, the Company closed on the acquisition of two TCR- Midwest communities, AMLI at Eagle Creek in Indiana and AMLI at Lexington Farms in Kansas. The two communities have a total of 644 apartment homes, and the acquisition price of $48,150 was paid in cash of $41,108 and OP Units valued at $7,042. In addition, the acquisition of a third TCR- Midwest community, AMLI at Centennial Park in Kansas, a 170-unit apartment community, closed on October 28, 1998. The acquisition price of $16,250 was paid in cash of $15,337 and the balance in OP Units. On December 30, 1998, the Company closed the sale of the 212-unit AMLI at Reflections apartments located in Irving, Texas. The sale price of $10,400 was paid in cash, resulting in a gain of $3,621. 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. 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." 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 Land being planned for development and all apartment homes in a new community or new phase are reported as "property under development" until the entire community or new phase is substantially complete and stabilized (generally 95% occupancy). Upon stabilization, all apartment homes in the community or new phase are reported as "Rental apartments." Regardless of whether or not 95% occupancy is achieved, a community or new phase will be reported as "Rental apartments" no later than six months following substantial completion of construction. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED During 1997, the Company acquired five land parcels located in Ft. Worth, Texas and Atlanta, Georgia for a total cost of $9,110. A 200-unit apartment community known as AMLI at Park Creek was developed on one land parcel located in Atlanta, which achieved stabilized operations in the fourth quarter of 1998. The development of three land parcels is well underway and one is currently in lease-up. The remaining land parcel is currently held for sale. During 1998, the Company acquired thirteen land parcels for development for a total cost of $33,650. The sites are located in Atlanta, Indianapolis, Eastern Kansas, Metropolitan Chicago, Dallas, Austin and Houston. Construction has commenced on six of these sites in 1998 and will commence on the remaining sites in 1999. At December 31, 1998, the Company's properties under development include parcels of land in the development planning stage as follows: AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
NUMBER NUMBER TOTAL OF OF EXPENDED COMMUNITY LOCATION ACRES UNITS THRU 12/31/98 - --------- -------- ------ ------ ------------- Wholly-Owned: Development Communities: AMLI: at AutumnChase III Carrollton, TX 24 240 $ 13,941 at Bent Tree II Dallas, TX 10 200 2,069 at Monterey Oaks (1) Austin, TX 26 430 4,992 at Killian Creek Gwinnett County, GA 22 216 10,484 at St. Charles (1) St. Charles, IL 25 400 8,713 --- ----- -------- Total Development Communities 107 1,486 40,199 --- ----- -------- Land held for future development: AMLI: at Champions II (1) Houston, TX 14 288 2,364 at Kings Harbor (1) Houston, TX 15 300 2,087 at Mesa Ridge (1) Ft. Worth, TX 27 520 3,709 at Fossil Lake Ft. Worth, TX 19 324 2,844 at Park Bridge (1) Atlanta, GA 35 352 3,993 at Prairie Lakes I Noblesville, IN 17 228 835 at Prairie Lakes II-IV Noblesville, IN 103 1,100 4,021 at Summit Ridge (1) Summit, MO 24 410 1,746 --- ----- -------- Total land held for future development 254 3,522 21,599 --- ----- -------- Total Wholly-Owned 361 5,008 61,798 --- ----- -------- Co-Investments (Company Ownership Percentage): AMLI: at Northwinds (35%) (2) Atlanta, GA 80 800 44,432 at Deerfield (25%) (3) Plano, TX 18 240 8,609 on the Parkway (25%) (4) Dallas, TX 10 240 15,519 at Oakhurst North (25%) (5) Aurora, IL 29 464 38,092 at Wells Branch (25%) (5) Austin, TX 29 576 33,030 Creekside (25%) (3) Overland Park, KS 12 224 3,195 at Wynnewood Farms (25%) (3) Overland Park, KS 20 232 2,858 at Regents Crest II (25%) (3) Overland Park, KS 6 108 1,638 at Castle Creek (40%) (6) Indianapolis, IN 16 276 3,458 at Lake Clearwater (25%) (3) Indianapolis, IN 11 216 4,137 --- ----- -------- Total Co-Investments 231 3,376 154,968 --- ----- -------- Total 592 8,384 $216,766 === ===== ======== 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 Northwinds was conveyed at cost to a 35% owned co-investment limited liability company in September 1997. (3) In December 1998, these land parcels under development were conveyed at cost to five co-investment partnerships in which the Company has a 25% ownership interest. (4) In July 1998, AMLI on the Parkway was conveyed at cost to a 25% owned co-investment partnership. (5) In June 1998, AMLI at Oakhurst North and AMLI at Wells Branch were contributed at cost to a 25% owned co- investment partnership. (6) In December 1998, AMLI at Castle Creek was contributed at cost to a 40% owned co-investment partnership.
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, 1998, 1997 and 1996, total interest capitalized was $5,695, $4,721 and $3,242, respectively. Net of amounts capitalized, total interest incurred during the years ended December 31, 1998, 1997 and 1996 aggregated $20,263, $11,995 and $11,916, respectively. ACQUISITION The Company's policy is and has been to expense internal costs (i.e., salaries and overhead of acquisition personnel) of acquiring operating properties. This policy is consistent with the recently-issued EITF 97-11, "Accounting for Internal Costs Relating to Real Estate Property Acquisitions" and thus the issuance of EITF 97-11 had no impact on the Company's results of operations. REVENUE RECOGNITION Rental revenues -- the Company leases its residential properties pursuant to 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, 1998, apartment leases in effect provide for annual rentals aggregating approximately $111,958. 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, 1998 and 1997, 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, operating payables, debt and interest rate limitation contracts. The carrying amounts of the Company's cash equivalents, interest-bearing notes from the Service Companies and operating payables are considered to be a reasonable estimate of fair value due to the short-term nature of these instruments. At December 31, 1998, the Company's fixed rate debt that has a carrying amount of $182,120 has an estimated fair value of $185,220. The Company's liability on its interest rate limitation contracts has a total approximate fair value of $1,919 at December 31, 1998. CASH AND CASH EQUIVALENTS For purposes of the statements 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 is capitalized and depreciated over the lives of the constructed assets. During the years ended December 31, 1998, 1997 and 1996, capitalized amortization of deferred costs was $107, $246 and $63, respectively. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED 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, 1998) 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, 1998, 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, 1998. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Approximate Value of Type Remaining Cumulative Liability Notional Fixed of Contract Cash December Amount Rate (1) Contract Maturity Paid 1998 (2) - -------- ------- -------- --------- ---------- ----------- $10,000 6.216% Swap 11/01/02 $ 64 405 10,000 6.029% Swap 11/01/02 44 340 20,000 6.145% Swap 02/15/03 94 801 10,000 6.070% Swap 02/18/03 40 373 - ------- ---- ----- $50,000 $242 1,919 ======= ==== ===== (1) The fixed rate for the swaps includes the swap spread (the risk component added to the Treasury yield to determine a fixed rate; excludes lender's spread). (2) "Value of Liability" represents the approximate amount which would have to be paid as of December 31, 1998 to terminate these contracts. This amount is not recorded as a liability in the accompanying balance sheet as of December 31, 1998. (3) Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities," becomes effective for all fiscal quarters for fiscal years beginning after June 15, 1999 and is not expected to have a material impact on the Company's financial statements.
AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED OTHER ASSETS At December 31, 1998, other assets consist primarily of $5,686 in current receivables from affiliates, $528 in development fees receivable, $1,135 in restricted cash, $611 in tax escrow deposits and $1,141 in earnest money deposits. The Company believes that the carrying amounts of its notes receivable reasonably approximate their fair values. PER SHARE DATA In accordance with Statement of Financial Accounting Standards No. 128, "Earnings Per Share," basic EPS is computed by dividing income available 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 stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. A reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation is as follows: AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED Years Ended December 31, ------------------------------------- 1998 1997 1996 ---------- ---------- ---------- Income before extraordinary items. . . . . . . . . . . . . $ 29,700 24,548 16,368 Less income attributable to preferred shares . . . . . . . (4,875) (1,903) (1,746) ---------- ---------- ---------- Income before extraordinary item attributable to common shares. . . . . . . . . $ 24,825 22,645 14,622 ========== ========== ========== Weighted average common shares - Basic . . . . . . . . 16,624,513 15,660,225 12,141,877 Dilutive Options and Other Plan shares. . . . . . . . . . 65,022 84,051 21,039 Weighted average common shares - Dilutive. . . . . . . 16,689,535 15,744,276 12,162,916 ========== ========== ========== Earnings per share before extraordinary item: Basic. . . . . . . . . . . . $ 1.49 1.44 1.20 Diluted. . . . . . . . . . . $ 1.49 1.44 1.20 ========== ========== ========== RECLASSIFICATIONS Certain amounts in the consolidated 1998 and 1997 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, 1998, the Operating Partnership 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. The Operating Partnership and the Service Companies receive various fees for services provided to these co-investment partnerships, including development fees, construction fees, acquisition fees, property management fees, asset management fees, financing fees, administrative fees and disposition fees. The Operating Partnership is entitled to shares of cash flow or liquidation proceeds in excess of its stated ownership percentages based on returns to its partners in excess of specified rates. Through December 31, 1998, the Operating Partnership has received $370 of cash flow in excess of its ownership percentages ($270 for the year ended December 31, 1998). Investments in partnerships at December 31, 1998 and the Company's 1998 share of income or loss from each are summarized as follows: AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Equity Total Company's Company's Company's ------------------- Company's Net Share of Share of Percentage Total Company's Investment Income Net Income Deprecia- Community Ownership Assets Total Share (1) (1) (Loss) (Loss) tion - ----------- --------- ------ ----- --------- ---------- ----- ---------- --------- AMLI: at Park Place 25% $ 19,388 6,203 1,551 1,516 384 96 140 at Greenwood Forest 15% 16,771 4,628 694 676 141 21 71 at Champions Park 15% 12,385 3,081 462 462 110 17 54 at Champions Centre 15% 9,461 2,446 367 367 56 8 43 at Windbrooke 15% 16,637 4,613 692 692 60 9 75 at Willeo Creek 30% 14,509 4,472 1,342 1,342 84 25 151 at Pleasant Hill 40% 25,806 10,314 4,357 3,886 850 340 336 at Barrett Lakes 35% 26,483 9,480 3,318 3,429 631 209 324 at Chevy Chase 33% 43,406 13,170 4,336 4,336 815 273 414 at Willowbrook 40% 36,183 11,120 4,448 4,359 527 211 449 at River Park 40% 14,811 5,672 2,269 2,223 515 206 176 at Fox Valley 25% 24,199 23,731 5,933 6,129 589 147 184 at Fossil Creek 25% 21,428 20,460 5,115 5,212 598 149 169 at Danada Farms 10% 47,472 21,615 2,161 2,152 1,124 113 133 at Verandah 35% 24,646 6,820 2,406 2,468 (426) (73) 481 at Northwinds 35% 44,092 21,276 7,461 7,332 533 187 241 at Regents Crest 25% 26,917 10,535 2,634 2,650 178 131 166 at Oakhurst North 25% 39,674 36,495 9,124 9,032 (103) (26) 61 at Wells Branch 25% 33,794 32,685 8,171 7,595 492 123 77 on the Parkway 25% 16,639 5,544 1,386 1,062 (40) (10) 40 on Timberglen 40% 11,437 4,341 1,736 266 5 2 8 at Castlecreek 40% 3,458 3,347 1,339 1,298 -- -- -- at Lake Clearwater 25% 4,137 3,869 967 941 -- -- -- Creekside 25% 3,195 3,076 769 747 -- -- -- at Deerfield 25% 8,609 6,080 1,520 1,371 -- -- -- at Wynnewood Farms 25% 2,893 2,687 672 607 -- -- -- -------- -------- ------- ------- ------ ------ ------ Total $548,430 277,760 75,230 72,150 7,123 2,158 3,793 ======== ======== ======= ======= ====== ====== GP Properties and Other 11 ------ $2,169 ======
AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (1) The Company's investment in partnerships differ from the Company's share of co-investment partnerships' equity primarily due to capitalized interest on its investments in properties under development and the elimination of the Company's share of development fee income. These items are amortized over 40 years using the straight-line method. 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 12/31/98 Rate Maturity - --------- ---------- ----------- -------- -------- AMLI: at Park Place $13,000 12,216 8.21% October 1999 at Deerfield 11,370 2,185 7.13% December 1999 at Champions Centre 6,700 6,587 8.93% January 2002 at Champions Park 9,500 8,840 7.26% January 2002 at Windbrooke 11,500 11,417 9.24% February 2002 at Greenwood Forest 11,625 11,564 8.95% May 2002 at Chevy Chase 29,767 28,951 6.67% April 2003 at Willeo Creek 10,000 9,744 6.77% May 2003 at Willowbrook 24,500 23,962 7.785% May 2003 at Regents Crest 16,500 16,010 7.50% December 2003 at Verandah 16,940 16,940 7.55% April 2004 on Timberglen 6,770 6,724 7.70% June 2004 at Danada Farms 24,500 24,500 7.33% March 2007 at Pleasant Hill 15,500 15,179 9.15% March 2007 at River Park 9,100 8,663 7.75% June 2008 on the Parkway 10,800 10,800 6.75% January 2009 at Barrett Lakes 16,680 16,680 8.50% December 2009 at Northwinds 33,800 20,308 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, 1997, the Company was 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, 1997 and the Company's 1997 share of income or loss from each (excluding the GP Properties) are summarized as follows: AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Equity Total Company's Company's Company's ------------------- Company's Net Share of Share of Percentage Total Company's Investment Income Net Income Deprecia- Community Ownership Assets Total Share (1) (1) (Loss) (Loss) tion - ----------- --------- ------ ----- --------- ---------- ----- ---------- --------- AMLI: at Park Place 25% $19,562 6,359 1,590 1,554 354 90 133 at Greenwood Forest 15% 17,222 5,007 751 732 (38) (5) 70 at Champions Park 15% 12,558 3,170 476 476 148 21 53 at Champions Centre 15% 9,828 2,766 415 415 7 1 42 at Windbrooke 15% 17,112 5,052 758 758 (21) (3) 75 at Willeo Creek 30% 14,982 4,789 1,437 1,437 42 9 151 at Pleasant Hill 40% 26,764 11,287 4,811 4,389 877 341 340 at Barrett Lakes 35% 26,423 10,854 3,799 3,925 114 50 194 at Chevy Chase 33% 44,487 13,754 4,529 4,546 550 182 406 at Willowbrook 40% 36,973 11,553 4,621 4,528 292 121 424 at River Park 40% 14,510 5,756 2,302 2,256 (67) (26) 148 at Fox Valley 25% 24,845 22,903 5,726 5,901 (248) (63) 70 at Fossil Creek 25% 21,125 19,621 4,905 4,989 (62) (16) 63 at Danada Farms 10% 48,808 23,151 2,315 2,305 967 97 112 at Verandah 35% 25,976 8,085 2,830 2,902 197 132 180 at Northwinds 35% 27,106 20,995 7,362 7,267 (27) (9) 12 at Regents Crest 25% 25,727 9,342 2,336 2,349 (2) (1) 10 -------- -------- ------- ------- ------ ---- ------ Total $414,008 184,444 50,963 50,729 3,083 921 2,483 ======== ======== ======= ======= ====== ====== 4 GP Properties and Other ---- $925 ==== (1) The Company's investment in partnerships differ from the Company's share of co-investment partnerships' equity primarily due to capitalized interest on its investments in properties under development and the elimination of the Company's share of development fee income. These items are amortized over 40 years using the straight-line method.
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. No dividends have been paid by the Service Companies for each of the three years ended December 31, 1998. Summarized combined financial information of the various Service Companies at and for the years ended December 31, 1998, 1997 and 1996 follows: 1998 1997 1996 -------- ------- ------- Income (1) $12,323 8,402 7,204 General and administrative expenses (7,700) (6,441) (5,981) ------- ------- ------- 4,623 1,961 1,223 Interest (2,352) (1,049) (871) Depreciation (2) (1,297) (381) (188) Income tax (362) (312) (90) ------- ------- ------- Net income $ 612 219 74 ======= ======= ======= Total assets $44,759 26,410 14,226 ======= ======= ======= (1) Net of construction and landscaping costs. (2) Includes $668 in amortization of goodwill in 1998. 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%. Interest and share of income from Service Companies as included in the accompanying Consolidated Statements of Operations is reconciled below: 1998 1997 1996 -------- -------- -------- Intercompany interest expensed . $ 2,352 1,049 871 Intercompany interest capitalized. . . . . . . . . . 542 -- -- Net income . . . . . . . . . . . 612 219 74 Intercompany eliminations and minority interests . . . . . . (746) (117) (313) -------- -------- -------- $ 2,760 1,151 632 ======== ======== ======== 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 for the year ended December 31, 1996 to reimburse ARC for the Company's allocated share of costs incurred on its behalf. Since 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 $811, $485 and $310 for the years ended December 31, 1998, 1997 and 1996, respectively, including $400 and $255 for the years ended December 31, 1997 and 1996, respectively, allocable to the Service Companies. In 1998, the Company leased all of its office space at both the Corporate and regional locations. The Company's 1998 occupancy cost includes $662 which has been allocated to the Service Companies. During 1998, 1997 and 1996, the Company accrued or paid to its affiliates fees and other costs and expenses as follows: 1998 1997 1996 ------ ------ ------ Management fees $2,698 2,147 1,878 General contractor fees 1,167 857 525 Interest expense 561 36 31 Landscaping and grounds maintenance 786 629 613 ====== ====== ====== In addition, at December 31, 1998 and 1997, the Company owed Amrescon $1,967 and $8,403, respectively, for construction costs of communities under development. During 1998, 1997 and 1996, the Company earned or received from its affiliates other income as follows: 1998 1997 1996 ------ ------ ------ Development fees $2,526 1,452 826 Acquisition fees -- 281 184 Asset management fees 603 606 507 Debt placement fee 81 -- -- Disposition fee -- -- 66 Accounting and administrative fees 12 11 6 Interest on advances to other affiliates 451 -- -- Interest on notes and advances to Service Companies 2,894 1,047 836 ====== ====== ===== 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 1998 and 1997, total revenues of $2,129 and $1,362, respectively, were generated from ACH leases of which $22 and $624 were due from ACH at December 31, 1998 and 1997, respectively. 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 12/31/98 Rate Date 12/31/97 - ---------------------- -------- -------- -------- -------- -------- BOND FINANCING: Tax-Exempt (1)(2) $ 40,750 40,750 Rate+1.23% 10/1/24 40,750 Tax-Exempt AMLI at Poplar Creek (2) 9,500 9,500 Rate+1.15% 2/1/24 9,500 -------- ------ ------- Total Bonds 50,250 50,250 50,250 -------- ------ ------- MORTGAGE NOTES PAYABLE TO FINANCIAL INSTITUTIONS: AMLI at Reflections (3) 4,800 -- 7.05% 6/30/98 4,436 AMLI on Rosemeade (3) 7,050 -- 7.02% 10/5/98 6,548 AMLI at Sherwood 7,320 6,621 7.75% 7/1/03 6,813 AMLI at Riverbend 31,000 29,847 7.30% 7/1/03 30,349 AMLI in Great Hills 11,000 10,593 7.34% 7/1/03 10,770 AMLI at Valley Ranch 11,500 10,470 7.625% 7/10/03 10,693 AMLI at Conner Farms 13,275 12,739 7.00% 6/15/03 12,965 AMLI at Nantucket 7,735 7,683 7.70% 6/1/04 7,735 AMLI on Timberglen 6,770 -- 7.70%(4) 6/1/04 6,770 AMLI at Regents Center 20,100 19,649 (5) 9/1/05 19,819 AMLI at Bishop's Gate 15,380 15,072 (6) 8/1/05 15,329 AMLI on the Green (7) AMLI of North Dallas (7) 43,234 41,778 7.789% 5/1/06 42,383 AMLI at Clairmont 12,880 12,880 6.95% 2/15/08 -- -------- ------- -------- Total Mortgage Notes Payable 192,044 167,332 (8) 174,610 -------- ------- -------- AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED Balance Balance Original at Interest Maturity at Encumbered Properties Amount 12/31/98 Rate Date 12/31/97 - --------------------- -------- -------- -------- -------- -------- OTHER NOTES PAYABLE: AMLI at Park Creek 10,322 9,038 7.875% 12/1/38 2,640 Unsecured line of credit (9)(10) 200,000 135,000 L+.90% 6/27/01 100,000 Note payable to Service Company 5,000 5,000 10.00% 1/1/03 5,000 Unsecured note payable to Service Company 750 750 4.00% Demand 750 Unsecured line of credit 7,000 -- L+.90% 8/30/01 -- -------- ------- --------- ------- ------- Total Other Notes Payable 223,072 149,788 108,390 -------- ------- ------- Total $465,366 367,370 333,250 ======== ======= ======= (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 (3.0% for AMLI at Spring Creek and 2.92% for AMLI at Poplar Creek at March 1, 1999). The credit enhancement for the AMLI at Spring Creek bonds was provided by a $41,297 letter of credit from Wachovia Bank that expires on October 15, 2002 and the credit enhancement for the AMLI at Poplar Creek bonds was provided by a $9,617 letter of credit from LaSalle National Bank that expires December 18, 2002. (3) This loan was repaid on its maturity. (4) This property was contributed and the mortgage was transferred to a 40% owned co-investment partnership on December 16, 1998. (5) $13,800 at 8.73% and $6,300 at 9.23%. (6) 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. (7) These two properties secure the FNMA loan that was sold at a discount of $673. At December 31, 1998, the unamortized discount amount is $494. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (8) All but $21,319 of the total is non-recourse to the partners of the Operating Partnership. (9) 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 .90%) at an average of 6.12%. (10) The Company's $200,000 unsecured line of credit has been provided by a group of six 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. In June 1998, the Company extended the maturity of the line of credit by one year to June 2001. In July 1998, Moody's rated the borrowing under this facility Baa3; this reduced the interest rate from LIBOR plus 130 basis points to LIBOR plus 90 basis points. Concurrently, the annual 15 basis points non-use fee was replaced by an annual 20 basis points facility fee based on the entire commitment. The commitment under the line of credit was increased to $200,000 from $150,000 in July 1998, and a sixth bank was added to the bank lending group. 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.
AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED As of December 31, 1998, 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 ---------- ------------- --------- ----------- ---------- 1999 . . . . . . . . . . . . . . . . . . $ -- 2,683 -- 750 3,433 2000 . . . . . . . . . . . . . . . . . . -- 3,033 -- -- 3,033 2001 . . . . . . . . . . . . . . . . . . -- 3,282 135,000 -- 138,282 2002 . . . . . . . . . . . . . . . . . . 50,250 3,534 -- -- 53,784 2003 . . . . . . . . . . . . . . . . . . -- 65,785 -- 5,000 70,785 Thereafter . . . . . . . . . . . . . . . -- 98,053 -- -- 98,053 ------- ------- ------- ------- ------- $50,250 176,370 135,000 5,750 367,370 ======= ======= ======= ======= =======
AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED At December 31, 1998, 1997 and 1996, 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, 1998, 1997 and 1996, for these types of loans, and estimates that the fair value of its long-term debt exceeds the carrying value by approximately $3,100 at December 31, 1998. 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% of its taxable income to its shareholders and complies with certain other requirements. In 1998, the Company distributed approximately 141% of its taxable income. Accordingly, no provision has been made for Federal income taxes for the Company. Approximately 6.9% of dividends paid during 1998 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 1998 and 1997, a total of 317,485 and 365,381 OP Units were issued, respectively, to third parties as partial consideration for the acquisition of certain communities and land parcels. A total of 32,756 and 34,535 OP Units were converted to common shares during 1998 and 1997, 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 Series A 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 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. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED On February 29, 1996, ARC elected to convert its 100,000 Series A convertible preferred shares into common shares. During 1998 and 1997, a total of 43,153 and 36,310 new common shares, respectively, 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 share 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. On February 20, 1998, the Company privately placed $75,000 of Series B convertible preferred shares with an institutional investor. The preferred shares which were issued at $24 per share and carried 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 $1.80 per share annually) if the annual dividend rate on common shares is increased to more than $1.80 per share. Funding of $25,000 each occurred on March 9, June 30, and September 30, 1998. Total proceeds, net of 1.12% in offering costs, were $74,160. On November 2, 1998, the Company's Board of Trustees adopted a shareholder rights plan. In connection with the adoption of the rights plan, the Board declared a dividend distribution of one right for each common share outstanding on November 13, 1998, and created a series of preferred shares, consisting of 150,000 shares, designated the Series C Junior Participating Preferred Shares (the "Series C Preferred Shares"). The rights will not become exercisable unless someone acquires 15% or more of the Company's common shares or commences a tender offer for 15% or more of the common shares. Once exercisable, each right would entitle the holder, other than holders who caused the rights to become exercisable, to purchase one one-thousandth of a Series C Preferred Share. Each Series C Preferred Share, when and if issued, would entitle the holder to receive quarterly dividends on a cumulative basis, to exercise 1,000 votes per share on all matters submitted to shareholders and to receive a preference in the event of a liquidation. Under certain circumstances, each right would also entitle the holder, other than holders who caused the rights to become exercisable, to purchase common shares of the Company or of an acquiring person at a 50% discount to the market price. At December 31, 1998, the Company owned 20,880,155 OP Units, which were approximately 85% of the total 24,445,827 OP Units outstanding. At December 31, 1997, the Company owned 17,677,580 OP Units, which were approximately 84% of the total 20,958,523 OP Units outstanding. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED 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 $811, $485 and $310 in 1998, 1997 and 1996, 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: 1999 . . . . . . . . . . . . . . . . . . $ 782 2000 . . . . . . . . . . . . . . . . . . 734 2001 . . . . . . . . . . . . . . . . . . 748 2002 . . . . . . . . . . . . . . . . . . 763 2003 . . . . . . . . . . . . . . . . . . 680 Thereafter . . . . . . . . . . . . . . . 3,339 ------ $7,046 ====== GROUND LEASE In May 1998, the Company, as lessee, entered into a 60-year ground lease on a property in Austin, Texas. Rent is scheduled to commence July 1, 1999 at the initial annual base rent of $150. In addition to scheduled 2% annual increases in base rent, the lease provides for percentage rent based on a share of "Excess Cash Flow", as defined. The Company intends to contribute this leasehold interest to a new co-investment partnership which will develop and operate a Class A apartment community on this site, with construction commencing late in 1999. 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% === AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED 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 1998, 1997 and 1996) 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 semi-annual additional contributions together with the Company's annual 50% matching contribution are to be invested in open market purchases of the Company's common shares and other investments. Such contributions, by and on behalf of affiliates of the Company, were $487, $314 and $228 in 1998, 1997 and 1996, respectively, all of which were invested in Company shares. 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 reporting purposes over the five-year determination period for each year's award based upon the estimated value at December 31, 1998 of the OP Units to be issued. In 1998, 1997 and 1996, a total of $533, $249 and $181, respectively, was charged to expense by the Company and the Service Companies pursuant to this Incentive Plan. At December 31, 1998, there are 110,697 OP Units (net of cancellations) that may be issued in conjunction with the Incentive Plan, as follows: At December 31, 1998 After Original Dividend Award Re-investment -------- --------------- January 1995 Award. . . . . 17,700 24,586 January 1996 Award. . . . . 13,350 16,813 February 1997 Award . . . . 15,800 18,784 December 1997 Award . . . . 23,450 26,014 November 1998 Award . . . . 24,500 24,500 ------ ------- 94,800 110,697 ====== ======= AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED 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 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 2,000,000. 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, 1998, there were 828,500 remaining common shares available for grant under the Option Plan. The per share weighted average fair value of Options granted during 1998, 1997 and 1996 was $1.39, $1.61 and $1.52, respectively, on the date of grant using the Black Scholes Option-pricing model with the following weighted average assumptions: 1998 - - expected dividend yield 7.91%, risk-free interest rate of 5.11%, expected life of 4.06 years and expected volatility rate of 17.16%; 1997 - expected dividend yield 7.76%, risk-free interest rate of 6.03%, expected life of 4.24 years and expected volatility rate of 16.53%; and 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%. The Options granted under this plan have a contractual term of ten years (except that the Options granted in 1995 have a contractual term of seven years). 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 $200, $113 and $57 for the years ended December 31, 1998, 1997 and 1996, respectively, or less than $0.01 per share in each of these years. The Trustees who are not members of management hold 19,640 Options. At December 31, 1998, there were 298,834 vested Options held by employees at a weighted average exercise price of $20.50 per share. Through December 31, 1998, 1,666 Options have been exercised and none have expired. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED Stock Option activity for employees during the years ended December 31, 1998, 1997 and 1996 is as follows: WEIGHTED AVERAGE NUMBER OF EXERCISE SHARES PRICE --------- --------- 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 Granted 312,000 21.80 Cancelled (40,500) 21.33 Exercised (1,666) 20.50 --------- ------ Balance at December 31, 1998 1,171,500 $21.36 ========= ====== At December 31, 1998, the range of exercise prices was $18.25 - $23.50 and the weighted average remaining contractual life of the outstanding options was 7.4 years. 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. During 1998 and 1997, Trustees and employees acquired a total of 43,153 and 36,310 common shares, respectively, pursuant to the Purchase Plan. Related shareholder loans ($636 in 1998 and $526 in 1997) bear interest at rates ranging from 6.91% to 8.23% and are fully amortizing over a ten-year term. At December 31, 1998 and 1997, the outstanding balances of these loans were $1,278 and $965, respectively, and are included in the accompanying balance sheets as a reduction of shareholders' equity. Total expense recorded in 1998 and 1997 for the 15% discount, including the Service Companies' share, was $146 and $126, respectively. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED SHAREHOLDER LOANS TO OFFICERS/TRUSTEES During 1998 and 1997, the Board of Trustees approved up to $3,550 and $5,980, respectively, in recourse loans to the four Officers/Trustees and eleven other officers to enable them to acquire on the open market approximately 430,559 of the Company's common shares of beneficial interest. These loans bear interest at rates ranging from 4.45% to 6.23% and have terms of nine years. At December 31, 1998 and 1997, the balances of these loans totalled $9,390 and $5,959, respectively, and are included in the accompanying balance sheets as a reduction of shareholders' equity. PURCHASE OBLIGATION The limited partnership agreements of AMLI at Verandah L.P. and AMLI on Timberglen, L.P. provide for the redemption (at an amount determined by formula) by the partnerships of the limited partners' entire interests, in their sole discretion, at any time after March 25, 2002 and December 16, 2003, respectively, or at any time that there is a designated event of default on related indebtedness of the partnerships, which event of default remains uncured and unwaived to the time of notice of redemption election. The redemption amount may be paid in cash or Company common shares of beneficial interest, or any combination thereof, in the sole discretion of the Company. LETTERS OF CREDIT At December 31, 1998, the Company is contingently liable on $6,100 in bank letters of credit issued to secure commitments made in the ordinary course of business by the Company and its co-investment partnerships. 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 In connection with the acquisition of certain properties and a portion of the assets and operations of Trammell Crow Residential Midwest, the Company agreed to acquire, assuming certain conditions are met, the general partnership interest in a partnership owning 400 apartment homes. The general partnership interest is anticipated to be acquired in 1999 for an aggregate of $1,500 pursuant to the terms of the purchase agreement. 9. SEGMENT REPORTING During 1998, the Company adopted SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information," which establishes standards for the way that public business enterprises report information about operating segments in financial statements, as well as related disclosures about products and services, geographic areas and major customers. The accounting policies of the segments are the same as those described in Note 2. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED The Company defines each of its multifamily communities as an individual operating segment. It has also determined that all communities have similar economic characteristics and also meet the other criteria which permit the communities to be aggregated into one reportable segment, that being the development, acquisition, operation and ownership of multifamily communities in its target markets throughout the Southeast, Southwest, and Midwest. The Company's chief operating decision maker assesses and measures segment operating results based on a performance measure referred to as net operating income at the individual operating segment and FFO at the aggregated segment level. The National Association of Real Estate Investment Trusts defines FFO 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. FFO is not a measure of operating results or cash flows from operating activities as measured by generally accepted accounting principles, is not necessarily indicative of cash available to fund cash needs, and should not be considered an alternative to cash flows as a measure of liquidity. The revenues, net operating income, FFO, assets, investments in partnerships and total expenditures for property additions for the Company's reportable segment for the years ended December 31, 1998, 1997 and 1996 are summarized as follows: 1998 1997 1996 ---------- ---------- ---------- Multifamily segment revenues (1) . . $ 172,582 130,135 101,408 Reconciling items: Reduce co-investment revenues to Company's share (2) . . . . . (62,584) (44,392) (25,707) Interest income and share of income (loss) from Service Companies. . . . . . . . . . . . 2,760 1,151 632 Other interest income. . . . . . . 1,272 521 224 Other revenues . . . . . . . . . . 3,323 2,658 1,714 ---------- ---------- ---------- Consolidated revenues. . . . . . . . $ 117,353 90,073 78,271 ========== ========== ========== Multifamily segment net operating income (1). . . . . . . . . . . . . $ 103,043 76,633 58,614 Reconciling items to FFO: Reduce co-investment net operating income to Company's share (3) . . . . . . . . . . . . (32,845) (23,350) (13,536) Interest income and share of income (loss) from Service Companies. . . . . . . . . . . . 3,160 1,151 632 Other interest income. . . . . . . 1,272 521 224 Other revenues . . . . . . . . . . 3,323 2,658 1,714 General and administrative expenses . . . . . . . . . . . . (3,993) (2,850) (2,353) Interest expense and loan cost amortization . . . . . . . . . . (20,728) (12,591) (13,286) ---------- ---------- ---------- AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED 1998 1997 1996 ---------- ---------- ---------- Consolidated FFO before minority interest . . . . . . . . . . . . . 53,232 42,172 32,009 ---------- ---------- ---------- Reconciling items to net income: Depreciation - wholly owned Properties . . . . . . . . . . . (17,963) (13,220) (11,321) Depreciation - share of co-investment Properties . . . . (3,793) (2,483) (1,323) Share of Service Company's goodwill amortization. . . . . . (400) -- -- Gains on sales of residential properties . . . . . . . . . . . 3,621 2,457 -- Gain resulting from interest rate cap contracts . . . . . . . -- -- 584 ---------- ---------- ---------- Income before minority interest and extraordinary items. . . . . . 34,697 28,926 19,949 Minority interest. . . . . . . . . . 4,997 4,378 3,581 ---------- ---------- ---------- Income before extraordinary items. . . . . . . . . . . . . . . $ 29,700 24,548 16,368 ========== ========== ========== 1998 1997 ---------- ---------- Segment assets (1) (4) . . . . . . . $1,281,291 1,061,378 Reconciling items: Subsequent capital expenditures (1) . . . . . . . . . . . . . . . 21,239 13,154 Reduce co-investment Properties to Company's share (5) . . . . . (490,616) (369,856) Accumulated depreciation . . . . . (78,143) (62,641) Other assets (6) . . . . . . . . . 51,821 37,943 ---------- ---------- Total assets . . . . . . . . . . . . $ 785,592 679,978 ========== ========== Investments in partnerships. . . . . $ 72,150 50,729 ========== ========== Total expenditures for property additions (1) . . . . . . . . . . . $ 201,058 285,058 ========== ========== (1) Represents all Properties in which the Company has an ownership interest. (2) Represents amount required to reduce co-investment Properties' revenues to the Company's share of net income from partnerships. (3) Represents amount required to reduce co-investment Properties' net operating income to the Company's share of net operating income from partnerships. (4) Represents original acquisition costs of Properties in which the Company has an ownership interest. (5) Represents amount required to reduce co-investment Properties' assets to the Company's investments in partnerships. (6) Non segment assets consist primarily of cash and cash equivalents, deferred expenses, security deposits, notes receivable from Service Companies and other assets. The Company does not derive any of its consolidated revenues from foreign countries and does not have any major customers that individually account for 10% or more of the Company's consolidated revenues. AMLI RESIDENTIAL PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED 10. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
YEAR ENDED DECEMBER 31, 1998 ------------------------------------- FIRST SECOND THIRD FOURTH ----- ------ ----- ------ Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $26,662 29,309 30,155 31,227 Income before minority interest and extraordinary item . . . . . . . . . . . . . . . . . . . . . . 6,259 7,690 8,302 12,446 Minority interest. . . . . . . . . . . . . . . . . . . . . . . . . . 933 1,109 1,129 1,826 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,722 5,623 5,750 8,730 Earnings per common share - basic: Income before extraordinary item . . . . . . . . . . . . . . . . . 0.28 0.34 0.35 0.52 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.28 0.34 0.35 0.52 Earnings per common share - diluted: Income before extraordinary item . . . . . . . . . . . . . . . . . 0.28 0.34 0.35 0.52 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.28 0.34 0.34 0.52 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
SCHEDULE III AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1998 (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 16,884 381 2,993 17,263 20,256 at Bent Tree. . . . . . -- 2,854 16,173 203 2,856 16,374 19,230 at Bishop's Gate. . . . 15,072 3,659 20,708 (108) 3,616 20,643 24,259 at Chase Oaks . . . . . -- 1,003 9,513 415 1,003 9,928 10,931 at Gleneagles . . . . . -- 3,178 22,723 386 3,182 23,105 26,287 on the Green. . . . . . 12,205 1,693 17,007 391 1,693 17,398 19,091 at Nantucket. . . . . . 7,683 1,931 6,817 276 1,931 7,093 9,024 of North Dallas . . . . 29,573 7,278 37,204 1,777 7,278 38,981 46,259 on Rosemeade. . . . . . -- 1,534 9,182 364 1,534 9,546 11,080 at Valley Ranch . . . . 10,470 3,139 16,199 927 3,139 17,126 20,265 ------- ------ ------- ----- ------ ------- ------- Subtotal - Dallas/ Ft. Worth, TX. . . . . 75,003 29,260 172,410 5,012 29,225 177,457 206,682 ------- ------ ------- ----- ------ ------- ------- AUSTIN, TX AMLI: at the Arboretum. . . . -- 1,664 9,480 393 1,664 9,873 11,537 in Great Hills. . . . . 10,593 3,228 14,304 562 3,228 14,866 18,094 at Martha's Vineyard. . . . . . . -- 2,154 13,216 435 2,154 13,651 15,805 at Lantana Ridge. . . . -- 3,582 20,299 139 3,585 20,435 24,020 ------- ------ ------- ----- ------ ------- ------- Subtotal - Austin, TX. . 10,593 10,628 57,299 1,529 10,631 58,825 69,456 ------- ------ ------- ----- ------ ------- -------
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. . . . . . . 2,146 7/91-6/96 5 - 40 years at Bent Tree. . . . . . . . 601 10/15/97 5 - 40 years at Bishop's Gate. . . . . . 764 10/17/97 5 - 40 years at Chase Oaks . . . . . . . 1,481 06/02/94 5 - 40 years at Gleneagles . . . . . . . 4,481 7/88-11/96 5 - 40 years on the Green. . . . . . . . 2,713 02/16/94 5 - 40 years at Nantucket. . . . . . . . 2,552 12/16/88 5 - 40 years of North Dallas . . . . . . 5,527 7/89-7/90 5 - 40 years on Rosemeade. . . . . . . . 1,432 12/28/90 5 - 40 years at Valley Ranch . . . . . . 2,522 05/25/90 5 - 40 years ------ Subtotal - Dallas/ Ft. Worth, TX. . . . . . 24,219 ------ AUSTIN, TX AMLI: at the Arboretum. . . . . . 2,524 06/04/86 5 - 40 years in Great Hills. . . . . . . 2,211 01/18/91 5 - 40 years at Martha's Vineyard. . . . . . . . . 1,961 10/09/92 5 - 40 years at Lantana Ridge. . . . . . 822 09/30/97 5 - 40 years ------ Subtotal - Austin, TX . . . . . . . 7,518 ------
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 8,019 331 916 8,350 9,266 at Sope Creek . . . . . . . -- 3,347 22,817 1,313 3,378 24,099 27,477 at Killian Creek. . . . . . -- 320 1,812 106 320 1,918 2,238 at Spring Creek . . . . . . 40,750 8,579 45,971 1,531 8,579 47,502 56,081 at Vinings. . . . . . . . . -- 1,490 9,576 239 1,490 9,815 11,305 at West Paces . . . . . . . -- 2,160 20,595 291 2,160 20,886 23,046 at Park Creek . . . . . . . 9,038 1,207 10,052 1 1,208 10,052 11,260 at Peachtree City . . . . . -- 2,870 16,955 206 3,001 17,030 20,031 at Clairmont. . . . . . . . 12,880 2,791 15,640 487 2,791 16,127 18,918 ------- ------ ------- ------ ------ ------- ------- Subtotal - Atlanta, GA . . . 62,668 23,680 151,437 4,505 23,843 155,779 179,622 ------- ------ ------- ------ ------ ------- ------- EASTERN KANSAS AMLI: at Alvamar. . . . . . . . . -- 727 6,983 283 727 7,266 7,993 at Crown Colony . . . . . . -- 977 8,548 591 978 9,138 10,116 at Regents Center . . . . . 19,649 2,260 22,397 803 2,265 23,195 25,460 at Sherwood . . . . . . . . 6,621 1,281 12,430 367 1,281 12,797 14,078 at Town Center. . . . . . . -- 1,231 11,837 440 1,350 12,158 13,508 at Centennial Park. . . . . -- 2,445 13,855 6 2,445 13,861 16,306 at Lexington Farms. . . . . -- 4,776 27,060 119 4,776 27,179 31,955 ------- ------ ------- ------ ------ ------- ------- Subtotal - Overland, KS. . . 26,270 13,697 103,110 2,609 13,822 105,594 119,416 ------- ------ ------- ------ ------ ------- ------- INDIANAPOLIS, IN AMLI: at Riverbend. . . . . . . . 29,847 5,184 33,209 1,343 5,184 34,552 39,736 at Conner Farms . . . . . . 12,739 3,262 18,484 401 3,262 18,885 22,147 at Eagle Creek. . . . . . . -- 2,477 14,038 7 2,478 14,044 16,522 ------- ------ ------- ------ ------ ------- ------- Subtotal - Indianapolis, IN. 42,586 10,923 65,731 1,751 10,924 67,481 78,405 ------- ------ ------- ------ ------ ------- ------- AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED 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 - ---------- ---------- --------- ------------ ------------- ---------- ------------ ---------- CHICAGO, IL AMLI: at Park Sheridan. . . . . . -- 1,101 9,458 496 1,101 9,954 11,055 at Poplar Creek . . . . . . 9,500 1,878 10,643 453 1,885 11,089 12,974 ------- ------ ------- ------ ------ ------- ------- Subtotal - Chicago, IL . . . 9,500 2,979 20,101 949 2,986 21,043 24,029 ------- ------ ------- ------ ------ ------- ------- TOTAL PROPERTIES. . . . . 226,620 91,167 570,088 16,355 91,431 586,179 677,610 ======= ====== ======= ====== ====== ======= =======
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. . . . . . . . 410 06/11/97 5 - 40 years at Sope Creek . . . . . . . . 7,622 7/82 -12/95 5 - 40 years at Killian Creek. . . . . . . 101 03/13/97 5 - 40 years at Spring Creek . . . . . . . 15,165 5/85 - 5/89 5 - 40 years at Vinings. . . . . . . . . . 1,595 06/19/92 5 - 40 years at West Paces . . . . . . . . 2,917 11/15/93 5 - 40 years at Park Creek . . . . . . . . 273 07/31/98 5 - 40 years at Peachtree City . . . . . . 721 04/30/98 5 - 40 years at Clairmont. . . . . . . . . 474 01/21/98 5 - 40 years ------- Subtotal - Atlanta, GA . . . 29,278 ------- EASTERN KANSAS AMLI: at Alvamar. . . . . . . . . . 919 10/18/94 5 - 40 years at Crown Colony . . . . . . . 926 10/94-6/97 5 - 40 years at Regents Center . . . . . . 2,768 10/94-12/96 5 - 40 years at Sherwood . . . . . . . . . 1,629 10/18/94 5 - 40 years at Town Center. . . . . . . . 789 12/22/97 5 - 40 years at Centennial Park. . . . . . 80 12/28/98 5 - 40 years at Lexington Farms. . . . . . 159 10/27/98 5 - 40 years ------- Subtotal - Overland, KS. . . 7,270 ------- INDIANAPOLIS, IN AMLI: at Riverbend. . . . . . . . . 5,316 12/12/92 5 - 40 years at Conner Farms . . . . . . . 608 12/22/97 5 - 40 years at Eagle Creek. . . . . . . . 81 12/27/98 5 - 40 years ------- Subtotal - Indianapolis, IN. . 6,005 ------ SCHEDULE III - CONTINUED AMLI RESIDENTIAL PROPERTIES TRUST CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED DATE DEPRECIABLE ACCUMULATED COMPLETED/ LIVES PROPERTIES DEPRECIATION ACQUIRED YEARS - ---------- ------------ ---------- ----------- CHICAGO, IL AMLI: at Park Sheridan. . . . . . . 3,053 08/31/89 5 - 40 years at Poplar Creek . . . . . . . 365 12/18/97 5 - 40 years ------- Subtotal - Chicago, IL . . . . 3,418 ------- TOTAL PROPERTIES. . . . . . 77,708 =======
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 -- 12,618 1,454 12,487 13,941 at Mesa Ridge . . . . . -- 3,070 -- 639 3,100 609 3,709 at Bent Tree II . . . . -- 1,615 -- 454 1,615 454 2,069 at Killian Creek. . . . -- 1,726 -- 8,758 1,726 8,758 10,484 at Kings Harbor . . . . -- 1,765 -- 322 1,802 285 2,087 at Park Bridge. . . . . -- 3,312 -- 681 3,407 586 3,993 at St. Charles. . . . . -- 5,100 -- 3,613 5,326 3,387 8,713 at Fossil Lake. . . . . -- 2,439 -- 405 2,722 122 2,844 at Summit Ridge . . . . -- 1,500 -- 246 1,513 233 1,746 at Prairie Lakes I. . . -- 730 -- 105 753 82 835 at Prairie Lakes II-VI -- 3,595 -- 426 3,706 315 4,021 at Monterey Oaks. . . . -- 4,050 -- 942 4,235 757 4,992 at Champions II . . . . -- 2,343 -- 21 2,348 16 2,364 Other . . . . . . . . . -- 28 248 80 28 328 356 --------- -------- -------- -------- -------- -------- -------- TOTAL LAND PARCELS AND OTHER. . . . . . -- 32,596 248 29,310 33,735 28,419 62,154 --------- -------- -------- -------- -------- -------- -------- TOTAL. . . . . . . . .$ 226,620 123,763 570,336 45,665 125,166 614,598 739,764 ========= ======== ======== ======== ======== ======== ========
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. . . . . 317 08/31/95 5 - 40 years at Mesa Ridge . . . . . . . -- 12/23/96 at Bent Tree II . . . . . . -- 12/08/97 at Killian Creek. . . . . . 21 03/13/97 5 - 40 years at Kings Harbor . . . . . . -- 03/03/98 at Park Bridge. . . . . . . -- 04/30/98 at St. Charles. . . . . . . -- 06/08/98 at Fossil Lake. . . . . . . -- 06/26/98 at Summit Ridge . . . . . . -- 07/15/98 at Prairie Lakes I. . . . . -- 07/22/98 at Prairie Lakes II-VI. . . -- 07/22/98 at Monterey Oaks. . . . . . -- 08/07/98 at Champions II . . . . . . -- 12/01/98 Other . . . . . . . . . . . 97 5 - 40 years --------- TOTAL LAND PARCELS AND OTHER. . . . . . . . 435 --------- TOTAL. . . . . . . . . . . $ 78,143 ========= 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, 1998 for Federal income tax purposes was $705,991. (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: 1998 1997 1996 ---------- ---------- ---------- Balance at beginning of period . . . . . . . . . . . $653,947 495,519 442,865 Additions during period. . . . . . . . . . . . . . . 190,810 189,939 66,700 Contributions to Joint Venture . . . . . . . . . . . (96,095) (19,516) (14,046) Sale of property . . . . . . . . . . . . . . . . . . (7,737) (11,995) -- Other. . . . . . . . . . . . . . . . . . . . . . . . (1,161) -- -- -------- -------- -------- $739,764 653,947 495,519 ======== ======== ======== (E) Reconciliation of accumulated depreciation: Balance at beginning of period . . . . . . . . . . . $ 62,641 50,478 39,157 Additions during period. . . . . . . . . . . . . . . 17,963 13,220 11,321 Sale of property . . . . . . . . . . . . . . . . . . (2,461) (1,057) -- -------- -------- -------- Balance at end of period . . . . . . . . . . . . . . $ 78,143 62,641 50,478 ======== ======== ========
ITEM 9. CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There were no changes or disagreements with the accountants on accounting and financial disclosures. 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 May 3, 1999 (the "Proxy Statement"), under the captions "Election of Trustees," "Management - Trustees and Executive Officers" and "Section 16(A) Beneficial Ownership Reporting Compliance." 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 captions "Election of Trustees" and "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 in 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. . . . . . . . . . . . . . 46 Consolidated Balance Sheets, December 31, 1998 and 1997. . . . . . . . . . . . . . . . . . . . . . . 47 Consolidated Statements of Operations, years ended December 31, 1998, 1997 and 1996. . . . . 49 Consolidated Statements of Shareholders' Equity, years ended December 31, 1998, 1997 and 1996. . . . . 51 Consolidated Statements of Cash Flows, years ended December 31, 1998, 1997 and 1996. . . . . 53 Notes to Consolidated Financial Statements. . . . . . . 55 (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 46. (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). 4.4 Articles Supplementary Classifying and Designating a Series of Preferred Shares as Series B Cumulative Convertible Preferred Shares of Beneficial Interest (Incorporated by reference to exhibit 4 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998). 4.5 Rights Agreement, dated as of November 2, 1998, between AMLI Residential Properties Trust and Harris Trust and Savings Bank, as Rights Agent, including Exhibit A thereto (Form of Articles Supplementary relating to the Series C Junior Participating Preferred Shares) and Exhibit B thereto (Form of Right Certificate) (Incorporated by reference to exhibit 4 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1998). 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). 10.1(d) Fourth Amendment to 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 March 31, 1998). 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). 10.11(b) Second Amendment to AMLI Residential Properties Option Plan (Incorporated by reference to exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998). 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 Registration Rights Agreement dated March 9, 1998 between AMLI Residential Properties Trust and Security Capital Preferred Growth Incorporated (Incorporated by reference to exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998). 10.14 Employment Agreement between the Registrant and Gregory T. Mutz (Incorporated by reference to exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998). 10.15 Employment Agreement between the Registrant and John E. Allen (Incorporated by reference to exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998). 10.16 Employment Agreement between the Registrant and Allan J. Sweet (Incorporated by reference to exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998). 10.17 Employment Agreement between the Registrant and Philip N. Tague (Incorporated by reference to exhibit 10.4 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998). 10.18 Employment Agreement between the Registrant and Robert S. Aisner (Incorporated by reference to exhibit 10.5 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998). 10.19 Employment Agreement between the Registrant and Robert J. Chapman (Incorporated by reference to exhibit 10.6 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998). 10.20 $200,000 Amended and Restated Credit Agreement dated as of July 27, 1998 among AMLI Residential Properties, L.P., the banks listed herein, Wachovia Bank, N.A., as Agent and The First National Bank of Chicago, as Documentation Agent and Dresdner Bank, A.G., New York and Grand Cayman Branches, as Co-Agent (Incorporated by reference to exhibit 10.7 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998). 21.1 Subsidiaries of the Registrant. 23.1 Consent of KPMG LLP. 27 Financial Data Schedule. 99.1 Operating and Financial Data furnished to Shareholders and Analysts. (b) Reports on Form 8-K No reports on Form 8-K have been filed for the year ended December 31, 1998. 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, 1999 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, 1999 By: /S/ GREGORY T. MUTZ Gregory T. Mutz Chairman of the Board of Trustees Date: March 19, 1999 By: /S/ JOHN E. ALLEN John E. Allen Vice-Chairman of the Board of Trustees Date: March 19, 1999 By: /S/ ALLAN J. SWEET Allan J. Sweet President and Trustee Date: March 19, 1999 By: /S/ PHILIP N. TAGUE Philip N. Tague Executive Vice President and Trustee Date: March 19, 1999 By: /S/ LAURA D. GATES Laura D. Gates Trustee Date: March 19, 1999 By: /S/ MARC S. HEILWEIL Marc S. Heilweil Trustee Date: March 19, 1999 By: /S/ STEPHEN G. MCCONAHEY Stephen G. McConahey Trustee Date: March 19, 1999 By: /S/ QUINTIN E. PRIMO III Quintin E. Primo III Trustee Date: March 19, 1999 By: /S/ JOHN G. SCHREIBER John G. Schreiber Trustee Date: March 19, 1999 By: /S/ ROBERT J. CHAPMAN Robert J. Chapman Chief Financial Officer Date: March 19, 1999 By: /S/ CHARLES C. KRAFT Charles C. Kraft Principal Accounting Officer INDEX TO EXHIBITS Exhibit No. Document Description - ----------- -------------------- 21.1 Subsidiaries of the Registrant 23.1 Consent of KPMG 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 85% 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 40% 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% AB. Clairmont, L.P. . . . . . . . . . . . . Delaware 100% AC. Wells Oakhurst, L.P.. . . . . . . . . . Delaware 25% AD. AMLI Parkway, L.P.. . . . . . . . . . . Texas 25% AE. AMLI Castle Creek, L.P. . . . . . . . . Delaware 40% AF. Acquiport/Clearwater, L.P.. . . . . . . Delaware 25% AG. AMLI Creekside, L.P.. . . . . . . . . . Delaware 25% AH. AMLI Deerfield, L.P.. . . . . . . . . . Texas 25% AI. Acquiport/Wynnewood, L.P. . . . . . . . Delaware 25% EX-23.1 3 EXHIBIT 23.1 - ------------ CONSENT OF KPMG LLP The Board of Trustees AMLI Residential Properties Trust: We consent to incorporation by reference in the registration statements (Nos. 333-65503 and 33-57327) on Form S-3 of AMLI Residential Properties Trust of our report dated February 23, 1999, relating to the consolidated balance sheets of AMLI Residential Properties Trust as of December 31, 1998 and 1997, 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, 1998, and the related schedule, which report appears in the December 31, 1998 annual report on Form 10-K of AMLI Residential Properties Trust. KPMG LLP Chicago, Illinois March 19, 1999 EX-27 4
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE REGISTRANT'S FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS INCLUDED IN SUCH REPORT. 12-MOS DEC-31-1998 DEC-31-1998 4,546 0 0 0 0 0 739,764 78,143 785,592 0 367,370 167 0 42 342,645 785,592 0 117,353 0 86,277 0 0 20,263 29,700 0 29,700 0 0 0 29,700 1.49 1.49
EX-99.1 5 EXHIBIT 99.1 - ------------ AMLI RESIDENTIAL PROPERTIES TRUST FINANCIAL AND OPERATING DATA December 31, 1998 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, 1998 and 1997 8. Same Community Comparison - Wholly-Owned - year ended December 31, 1998 and 1997 9. Same Community Comparison - Wholly-Owned & Co-Invest- ments - three months ended December 31, 1998 and 1997 10. Same Community Comparison - Wholly-Owned & Co-Invest- ments - year ended December 31, 1998 and 1997 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, ----------------------- ----------------------- 1998 1997 1998 1997 -------- -------- ------- -------- REVENUES - -------- Property revenues: Rental . . . . . . . . . . . . . . . . . . . . . . . $ 26,877 $ 22,483 $101,892 $ 80,479 Other. . . . . . . . . . . . . . . . . . . . . . . . 1,583 1,178 5,937 4,339 -------- -------- -------- -------- Total Property Revenues. . . . . . . . . . . . . 28,460 23,661 107,829 84,818 -------- -------- -------- -------- Property operating expenses. . . . . . . . . . . . . . (10,412) (8,861) (40,895) (32,796) Property management fees . . . . . . . . . . . . . . . (711) (600) (2,698) (2,147) -------- -------- -------- -------- Property expenses. . . . . . . . . . . . . . . . (11,123) (9,461) (43,593) (34,943) Operating expense ratio. . . . . . . . . . . . . 39.1% 40.0% 40.4% 41.2% -------- -------- -------- -------- Net operating income . . . . . . . . . . . . . . 17,337 14,200 64,236 49,875 -------- -------- -------- -------- OTHER INCOME - ------------ Share of Service Cos. FFO (1). . . . . . . . . . . . 145 (156) 267 104 Interest from Service Companies (2). . . . . . . . . 892 318 2,893 1,047 Other interest . . . . . . . . . . . . . . . . . . . 428 122 1,272 521 Share of partnerships FFO (3). . . . . . . . . . . . 1,814 1,017 5,962 3,408 Fee income - financing, acquisitions and dispositions . . . . . . . . . . . . . . . . . . . 81 144 81 281 Fee income - developments. . . . . . . . . . . . . . 507 277 2,526 1,451 Fee income - asset management. . . . . . . . . . . . 151 151 603 606 Other. . . . . . . . . . . . . . . . . . . . . . . . 2 43 113 320 -------- -------- -------- -------- Total other income . . . . . . . . . . . . . . . 4,020 1,916 13,717 7,738 General and administrative (4) . . . . . . . . . . . . (1,190) (697) (3,993) (2,850) -------- -------- -------- -------- EBITDA . . . . . . . . . . . . . . . . . . . . . . . . 20,167 15,419 73,960 54,763 -------- -------- -------- -------- Interest expense . . . . . . . . . . . . . . . . . . . (5,270) (3,844) (20,263) (11,995) Amortization of deferred costs . . . . . . . . . . . . (101) (161) (465) (596) -------- -------- -------- -------- Funds from operations (FFO). . . . . . . . . . . . $14,796 11,414 53,232 42,172 -------- -------- -------- -------- 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, ----------------------- ----------------------- 1998 1997 1998 1997 -------- -------- ------- -------- Capital expenditures paid from FFO (5) . . . . . . . . (962) (618) (3,991) (3,323) Other - share of Co-Investments Cap Exp. . . . . . . . (62) (44) (330) (198) -------- -------- -------- -------- Funds available for distribution (FAD) . . . . . . $ 13,772 $ 10,752 $ 48,911 $ 38,651 ======== ======== ======== ======== FFO per share. . . . . . . . . . . . . . . . . . . . . $ 0.61 $ 0.55 $ 2.34 $ 2.13 FAD per share. . . . . . . . . . . . . . . . . . . . . $ 0.56 $ 0.52 $ 2.15 $ 1.95 Dividend per share . . . . . . . . . . . . . . . . . . $ 0.45 $ 0.44 $ 1.77 $ 1.74 ======== ======== ======== ======== Dividend as a % of FFO . . . . . . . . . . . . . . . . 74.2% 80.1% 75.7% 81.8% Dividend as a % of FAD . . . . . . . . . . . . . . . . 79.7% 85.1% 82.4% 89.3% ======== ======== ======== ======== NOTES: (1) Includes shares of income (before amortization of goodwill of $400 in each of the years ended December 31, 1998 and 1997). (2) Interest on 13% notes receivable and working capital advances. (3) Includes share of income and share of depreciation of $3,793 and $2,483 for the years ended December 31, 1998 and 1997, respectively. (4) Includes dead deal costs of $292 and $91 for the three months, and $422 and $159 for the years ended December 31, 1998 and 1997, respectively. (5) Excludes rehabilitation costs paid from FFO of $377 for the three months and year ended December 31, 1998.
AMLI RESIDENTIAL PROPERTIES TRUST STATEMENTS OF OPERATIONS Unaudited - Dollars in thousands except per share data
THREE MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, ----------------------- ----------------------- 1998 1997 1998 1997 -------- -------- ------- -------- REVENUES: - -------- Property revenues: Rental . . . . . . . . . . . . . . . . . . . . . . $ 26,877 $ 22,483 $101,892 $ 80,479 Other. . . . . . . . . . . . . . . . . . . . . . . 1,583 1,178 5,937 4,339 Interest and share of income (loss) from Service Companies. . . . . . . . . . . . . . . . . 937 162 2,760 1,151 Other interest . . . . . . . . . . . . . . . . . . . 428 122 1,272 521 Share of income from co-investment partnerships. . . 661 368 2,169 925 Fees from co-investment partnerships . . . . . . . . 741 615 3,323 2,658 -------- -------- -------- -------- Total Revenues . . . . . . . . . . . . . . . . . 31,227 24,928 117,353 90,073 -------- -------- -------- -------- EXPENSES: - -------- Personnel. . . . . . . . . . . . . . . . . . . . . . 2,662 2,150 10,073 7,648 Advertising and promotion. . . . . . . . . . . . . . 804 599 2,982 2,147 Utilities. . . . . . . . . . . . . . . . . . . . . . 869 1,056 4,272 4,087 Building repairs and maintenance . . . . . . . . . . 1,885 1,323 6,378 5,592 Landscaping and grounds maintenance. . . . . . . . . 599 443 2,298 1,796 Real estate taxes. . . . . . . . . . . . . . . . . . 3,045 2,675 12,539 9,476 Insurance. . . . . . . . . . . . . . . . . . . . . . 137 217 841 858 Other operating expenses . . . . . . . . . . . . . . 411 398 1,512 1,192 Property management fees . . . . . . . . . . . . . . 711 600 2,698 2,147 Interest, net of capitalized . . . . . . . . . . . . 5,270 3,844 20,263 11,995 Amortization of deferred costs . . . . . . . . . . . 101 161 465 596 Depreciation of real property. . . . . . . . . . . . 3,471 2,727 13,132 9,875 Depreciation of personal property. . . . . . . . . . 1,247 912 4,831 3,345 General and administrative . . . . . . . . . . . . . 1,190 697 3,993 2,850 -------- -------- -------- -------- Total expenses . . . . . . . . . . . . . . . . . 22,402 17,802 86,277 63,604 -------- -------- -------- -------- Non-recurring item - gain on sale of properties . . . . . . . . . . . . . . . . . . . . . 3,621 2,457 3,621 2,457 -------- -------- -------- -------- Income before taxes, minority interest and extraordinary item . . . . . . . . . . . . . . . 12,446 9,583 34,697 28,926 -------- -------- -------- -------- AMLI RESIDENTIAL PROPERTIES TRUST STATEMENTS OF OPERATIONS - CONTINUED THREE MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, ----------------------- ----------------------- 1998 1997 1998 1997 -------- -------- ------- -------- Minority interest. . . . . . . . . . . . . . . . . . . 1,826 1,405 4,997 4,378 -------- -------- -------- -------- Income before and extraordinary items. . . . . . . . . 10,620 8,178 29,700 24,548 Extraordinary items, net of minority interest. . . . . -- -- -- (196) -------- -------- -------- -------- Net income . . . . . . . . . . . . . . . . . . . . . . 10,620 8,178 29,700 24,352 Net income allocable to preferred shares . . . . . . . 1,890 484 4,875 1,903 -------- -------- -------- -------- Net income allocable to common shares. . . . . . . . . $ 8,730 $ 7,694 $ 24,825 $ 22,449 ======== ======== ======== ======== INCOME PER COMMON SHARE: - ----------------------- Before extraordinary items . . . . . . . . . . . . . $ 0.52 $ 0.46 $ 1.49 $ 1.44 Extraordinary item . . . . . . . . . . . . . . . . . $ 0.00 $ 0.00 $ 0.00 $ (0.01) Income per common share. . . . . . . . . . . . . . . $ 0.52 $ 0.46 $ 1.49 $ 1.43 ======== ======== ======== ======== FUNDS FROM OPERATIONS: - --------------------- Income before taxes, minority interest and extraordinary item . . . . . . . . . . . . . . $ 12,446 9,583 $ 34,697 $ 28,926 Depreciation of real property. . . . . . . . . . . . 3,471 2,727 13,132 9,875 Depreciation of personal property. . . . . . . . . . 1,247 912 4,831 3,345 Non-recurring items - gain on sale of properties . . (3,621) (2,457) (3,621) (2,457) Share of Co-investments depreciation . . . . . . . . 1,153 649 3,793 2,483 Share of Service Company amortization of goodwill. . 100 -- 400 -- -------- -------- -------- -------- Funds from operations (FFO). . . . . . . . . . . . $ 14,796 11,414 $ 53,232 $ 42,172 ======== ======== ======== ======== AMLI RESIDENTIAL PROPERTIES TRUST STATEMENTS OF OPERATIONS - CONTINUED THREE MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, ----------------------- ----------------------- 1998 1997 1998 1997 -------- -------- ------- -------- FFO per share. . . . . . . . . . . . . . . . . . . . . $ 0.61 $ 0.55 $ 2.34 $ 2.13 ======== ======== ======== ======== Capital expenditures paid from FFO . . . . . . . . . . $ (962) $ (618) $ (3,991) $ (3,323) Other - share of Co-investments Cap exp. . . . . . . . (62) (44) (330) (198) -------- -------- -------- -------- Funds available for distribution (FAD) . . . . . . . . $ 13,772 $ 10,752 $ 48,911 $ 38,651 ======== ======== ======== ======== FAD per share. . . . . . . . . . . . . . . . . . . . . $ 0.56 $ 0.52 $ 2.15 $ 1.95 ======== ======== ======== ======== Dividends per share. . . . . . . . . . . . . . . . . . $ 0.45 $ 0.44 $ 1.77 $ 1.74 ======== ======== ======== ======== Dividends as a % of FFO. . . . . . . . . . . . . . . . 74.2% 80.1% 75.7% 81.8% Dividends as a % of FAD. . . . . . . . . . . . . . . . 79.7% 85.1% 82.4% 89.3% ======== ======== ======== ========
AMLI RESIDENTIAL PROPERTIES TRUST CONDENSED BALANCE SHEETS Unaudited - Dollars in thousands except per share data
DEC. 31, DEC. 31, 1998 1997 -------- -------- ASSETS - ------ Rental apartments Land. . . . . . . . . . . . . . . . . . . $ 91,459 $ 78,476 Depreciable property. . . . . . . . . . . 586,297 496,747 -------- -------- 677,756 575,223 Less accumulated depreciation . . . . . . (77,930) (62,641) -------- -------- 599,826 512,582 Properties under development . . . . . . . 61,765 78,724 Investments in partnerships. . . . . . . . 72,150 50,729 Cash and cash equivalents. . . . . . . . . 4,546 5,676 Security deposits. . . . . . . . . . . . . 1,684 1,821 Deferred costs, net. . . . . . . . . . . . 2,972 3,140 Notes receivable and advances to Service Companies. . . . . . . . . . . . 31,277 18,356 Other assets . . . . . . . . . . . . . . . 11,372 8,950 -------- -------- Total assets . . . . . . . . . . . . . . . $785,592 $679,978 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Debt . . . . . . . . . . . . . . . . . . . $367,370 $333,250 Accrued interest payable . . . . . . . . . 2,170 1,389 Accrued real estate taxes. . . . . . . . . 10,141 9,334 Construction costs payable . . . . . . . . 3,420 8,403 Security deposits and prepaid rents. . . . 1,967 2,722 Other liabilities. . . . . . . . . . . . . 3,096 2,978 -------- -------- Total liabilities. . . . . . . . . . . . . 388,164 358,076 -------- -------- Minority interest. . . . . . . . . . . . . 54,574 51,463 -------- -------- AMLI RESIDENTIAL PROPERTIES TRUST CONDENSED BALANCE SHEETS - CONTINUED DEC. 31, DEC. 31, 1998 1997 -------- -------- Shareholders' equity Preferred shares, $.01 par value. . . . . 42 11 Shares of beneficial interest, $.01 par value. . . . . . . . . . . . . 167 166 Additional paid-in capital. . . . . . . . 420,303 341,148 Employees and trustees notes. . . . . . . (10,668) (6,924) Dividends paid in excess of earnings. . . (66,990) (63,962) -------- -------- Total shareholders' equity. . . . . . . 342,854 270,439 -------- -------- Total liabilities and shareholders' equity . . . . . . . . . $785,592 $679,978 ======== ========
AMLI RESIDENTIAL PROPERTIES TRUST SELECTED QUARTERLY FINANCIAL INFORMATION December 31, 1998 (dollars in thousands except for share data)
QUARTER ENDING ----------------------------------------------------------------------- DEC. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31, 1998 1998 1998 1998 1997 -------- -------- -------- -------- -------- Debt $367,370 $336,190 $337,108 $361,305 $333,250 Debt including share of Co-investment debt $439,172 $402,972 $400,485 $422,393 $392,295 Total Shares and Units Outstanding (1) 24,445,827 24,130,128 23,085,101 22,028,680 20,958,523 Value per Common Share - end of quarter $ 22.25 $ 21.3125 $ 21.4375 $22.9375 $22.250 Total Equity (Market Value) - end of quarter $543,920 $514,273 $494,887 $505,283 $466,327 Market Capitalization $911,290 $850,463 $831,995 $866,588 $799,577 Market Capitalization including share of Co-investment debt $983,092 $917,245 $895,372 $927,676 $858,622 Market Capitalization including Co-investment at cost $1,455,887 $1,313,940 $1,279,707 $1,252,510 $1,183,456 ========== ========== ========== ========== ========== Total Revenues (2) $ 31,227 $ 30,155 $ 29,309 $ 26,662 $ 24,928 EBITDA (3) $ 20,167 $ 19,213 $ 18,048 $ 16,532 $ 15,420 FFO $ 14,796 $ 13,842 $ 13,130 $ 11,464 $ 11,414 FAD $ 14,772 $ 12,546 $ 11,965 $ 10,628 $ 10,752 Dividends Paid $ 10,323 $ 9,719 $ 9,356 $ 9,224 $ 9,037 Debt Service (net of capitalized interest) $ 5,924 $ 5,932 $ 5,441 $ 5,571 $ 4,340 Interest Expense $ 5,270 $ 5,255 $ 4,800 $ 4,938 $ 3,844 G & A Expense $ 1,190 $ 837 $ 1,112 $ 854 $ 697 Total Shares and Units Outstanding - Wtd. Avg. 24,355,803 23,097,922 22,050,967 21,238,186 20,714,889 ========== ========== ========== ========== ========== AMLI RESIDENTIAL PROPERTIES TRUST SELECTED QUARTERLY FINANCIAL INFORMATION - CONTINUED December 31, 1998 QUARTER ENDING ----------------------------------------------------------------------- DEC. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31, 1998 1998 1998 1998 1997 -------- -------- -------- -------- -------- Interest Coverage Ratio 3.83 3.66 3.76 3.35 4.01 Debt as % of Market Capitalization 40.31% 39.53% 40.52% 41.69% 41.68% Debt (including Share of Co-investment debt) as % of Market Capitalization 44.67% 43.93% 44.73% 45.53% 45.69% EBITDA as % of Market Capitalization 8.85% 9.04% 8.68% 7.63% 7.71% FFO as % of Market Equity 10.88% 10.77% 10.61% 9.08% 9.79% G&A as % of Market Capitalization 0.52% 0.39% 0.53% 0.39% 0.35% G&A as % of Total Revenues 3.81% 2.78% 3.79% 3.20% 2.80% Dividends as % of FFO (4) 74.2% 73.6% 74.1% 81.9% 80.1% Dividends as % of FAD (4) 79.7% 81.2% 81.3% 88.3% 85.1% ========== ========== ========== ========== ========== Apartment Units - In Operation Wholly Owned 12,792 12,250 12,250 11,938 11,650 Co-investments 6,767 6,123 6,123 5,851 5,851 ---------- ---------- ---------- ---------- ---------- 19,559 18,373 18,373 17,789 17,501 ---------- ---------- ---------- ---------- ---------- Apartments Units - Under Development Wholly Owned 1,486 2,352 2,100 2,488 2,488 Co-investments 3,376 2,464 2,224 1,456 1,456 ---------- ---------- ---------- ---------- ---------- 4,862 4,816 4,324 3,944 3,944 ---------- ---------- ---------- ---------- ---------- Total Units 24,421 23,189 22,697 21,733 21,445 ========== ========== ========== ========== ========== (1) End of the quarter - At December 31, 1998, includes 4,225,000 preferred shares convertible to common shares. (2) Excluding non-recurring gain of $3,621 in 1998 and $2,457 in 1997. (3) Includes other income, net of G & A expenses. (4) Based on per share amounts.
AMLI RESIDENTIAL PROPERTIES TRUST PORTFOLIO INDEBTEDNESS SUMMARY December 31, 1998 (Dollars in thousands)
Weighted Avg. Percent of Interest Years to Type of Indebtedness Balance Total Interest Rate Maturity - -------------------- -------- ----------- ---------- --------- ---------- Conventional Fixed Rate $176,370 48.0% Fixed 7.63% 7.8 Tax-exempt Variable Rate (1) 50,250 13.7% Variable 5.44% 3.8 Credit Facilities (2) 135,000 36.7% Variable 6.49% 2.5 Service Companies 5,750 1.6% Fixed 9.22% 3.5 -------- ------ ----- --- Total $367,370 100.0% 6.94% 5.2 ======== ====== ===== === Balance Weighted including Avg. share of Co- Percent of Interest Years to Type of Indebtedness investment debt (3) Total Interest Rate Maturity - -------------------- ------------------- ---------- ---------- ---------- -------- Conventional Fixed Rate $248,172 56.6% Fixed 7.68% 7.4 Tax-exempt Variable Rate (1) 50,250 11.4% Variable 5.44% 3.8 Credit Facilities (2) 135,000 30.7% Variable 6.49% 2.5 Service Companies 5,750 1.3% Fixed 9.22% 3.5 -------- ----- ----- --- Total $439,172 100.0% 7.08% 5.4 ======== ===== ===== === (1) Maturity Date shown is expiration date of Credit Enhancement. Bonds mature in 2024. (2) $50,000 has been swapped to a fixed rate ($20,000 maturing in November 2002 and $30,000 maturing in February 2003). Effective interest rate includes swap costs. (3) Co-Investment debt represents Amli Residential's pro rata share of debt. Interest rate and maturity reflect average numbers based on Amli's pro rata share.
AMLI RESIDENTIAL PROPERTIES TRUST DEBT MATURITIES December 31, 1998 Unaudited - Dollars in thousands
There- % to 1999 2000 2001 2002 2003 after Total Total -------- -------- -------- -------- -------- -------- -------- -------- Fixed Rate Mortgages $ 2,683 $ 3,033 $ 3,282 $ 3,534 $ 65,785 $ 98,053 $176,370 48.0% Tax Exempt Bonds* 50,250 50,250 13.7% Wachovia/First Chicago Line of Credit 135,000 135,000 36.7% Other 750 5,000 5,750 1.6% -------- -------- -------- -------- -------- -------- -------- -------- Total Loans $ 3,433 $ 3,033 $138,282 $ 53,784 $ 70,785 $ 98,053 $367,370 100.0% ======== ======== ======== ======== ======== ======== ======== ======== Percent to Total 0.9% 0.8% 37.6% 14.6% 19.3% 26.8% 100.0% 83.7% ======== ======== ======== ======== ======== ======== ======== ======== SHARE OF CO-INVESTMENT DEBT - --------------------------- Prudential Ins. - Park Place (25%) $ 3,054 -- -- -- -- -- 3,054 4.3% Nationwide Life Ins. - Greenwood Forest (15%) 17 19 20 1,679 -- -- 1,735 2.4% Lincoln National Ins. - Champions Park (15%) 21 22 24 1,259 -- -- 1,326 1.8% Prudential Ins. - Champions Centre (15%) 10 11 12 955 -- -- 988 1.4% Allstate Life Ins. - Windbrooke (15%) 16 18 20 1,659 -- -- 1,713 2.4% CIGNA - Chevy Chase (33%) 177 189 202 216 8,770 -- 9,554 13.3% Northwestern Mutual Life Ins. - Willowbrook (40%) 150 162 175 189 8,909 -- 9,585 13.3% Phoenix Mutual - Willeo Creek (30%) 53 57 61 65 2,687 -- 2,923 4.1% AMLI RESIDENTIAL PROPERTIES TRUST DEBT MATURITIES - CONTINUED There- % to 1999 2000 2001 2002 2003 after Total Total ------- ------- ------- ------- ------- -------- -------- ------ Northwestern Mutual Life Ins. - Pleasant Hill (40%) 80 88 96 106 116 5,586 6,072 8.5% Northwestern Mutual Life Ins. - Barrett Lakes (35%) 71 77 84 91 99 5,416 5,838 8.1% Erie Insurance - River Park (40%) 20 50 54 59 63 3,219 3,465 4.8% Prudential Ins - AMLI at Danada (10%) 17 25 27 29 31 2,321 2,450 3.4% Phoenix Home Life - AMLI at Verandah (35%) 55 88 94 102 110 5,480 5,929 8.2% Northwestern Mutual Life Ins. - Northwinds (35%) -- 15 95 103 112 6,783 7,108 9.9% Northwestern Mutual Life Ins. - Regents Creek (25%) 65 70 76 82 3,710 -- 4,003 5.6% Northwestern Mutual Life Ins. - Parkway (25%) 39 46 49 52 56 2,458 2,700 3.8% Jackson National Life Ins. - Timberglen (40%) 39 42 45 49 52 2,463 2,690 3.7% Amli Residential - Deerfield (25%) 546 -- -- -- -- -- 546 0.8% Central Bank, Trustee - Prairie Court (1%) 73 -- -- -- -- -- 73 0.1% Erie Insurance - Towne Creek (1%) 50 -- -- -- -- -- 50 0.1% -------- -------- -------- -------- -------- -------- -------- -------- Total Share of Co-Investment Loans $ 4,553 $ 979 $ 1,134 $ 6,695 $ 24,715 $ 33,726 $ 71,802 100.0% ======== ======== ======== ======== ======== ======== ======== ======== Percent to Total 6.3% 1.4% 1.6% 9.3% 34.4% 47.0% 100.0% 16.3% ======== ======== ======== ======== ======== ======== ======== ======== Total Including Share of Co-Investments Debt $ 7,986 $ 4,012 $139,416 $ 60,479 $ 95,500 $131,779 $439,172 100.0% ======== ======== ======== ======== ======== ======== ======== ======== Percent to Total 1.8% 0.9% 31.7% 13.8% 21.7% 30.1% 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, but the credit enhancement expires December 18, 2002.
AMLI RESIDENTIAL PROPERTIES L.P. - "SAME COMMUNITY COMPARISON" (WHOLLY-OWNED PROPERTIES) THREE MONTHS ENDED DECEMBER 31, 1998 VERSUS THREE MONTHS ENDED DECEMBER 31, 1997 (Excludes all properties acquired or stabilized after 1/1/97)
10/1/98-12/31/98 10/1/97-12/31/97 No. of --------------------------------- % -------------------------------- Apts. Amount/% Per Unit Per Sq Ft Change Amount/% Per Unit Per Sq Ft -------- -------- -------- ---------- ------ ---------- -------- --------- WEIGHTED AVG. OCCUPANCY - ----------------------- Dallas 3,966 90.9% -4.9% 95.6% Atlanta 2,420 94.5% 2.0% 92.6% Austin 935 94.4% -1.4% 95.8% Indianapolis 996 91.4% 4.3% 87.7% Kansas 908 92.7% 0.9% 91.8% Chicago 253 96.6% -0.7% 97.2% ----- ----- ----- ----- Weighted Average 92.5% -1.3% 93.7% ===== ===== ===== Total 9,478 ===== WEIGHTED AVG. RENTAL RATE - ------------------------- Dallas $ 652 -2.4% $ 668 Atlanta 756 2.9% 734 Austin 674 4.3% 646 Indianapolis 605 3.9% 582 Kansas 660 1.8% 648 Chicago 970 4.1% 932 ------ ---- ------ Weighted Average $ 684 0.8% $ 679 ====== ==== ====== TOTAL PROPERTY REVENUES Per Month Per Month - ----------------------- ---------- ---------- Dallas $ 7,920,310 $ 666 $0.79 -0.8% $ 7,981,689 $ 671 $0.80 Atlanta 5,408,264 745 0.80 5.0% 5,150,852 709 0.76 Austin 1,870,297 667 0.91 2.6% 1,823,404 650 0.88 Indianapolis 1,745,631 584 0.71 10.0% 1,587,514 531 0.64 Kansas 1,737,389 638 0.74 2.0% 1,703,636 625 0.73 Chicago 814,494 1,073 1.26 5.3% 773,792 1,019 1.19 ------------ ------ ----- ----- ----------- ------ ----- Total $ 19,496,385 $ 686 $0.80 2.5% $19,020,887 $ 669 $0.78 ============ ====== ===== ===== =========== ====== ===== AMLI RESIDENTIAL PROPERTIES L.P. - "SAME COMMUNITY COMPARISON" (WHOLLY-OWNED PROPERTIES) - CONTINUED (Excludes all properties acquired or stabilized after 1/1/97) 10/1/98-12/31/98 10/1/97-12/31/97 --------------------------------- % -------------------------------- Amount/% Per Unit Per Sq Ft Change Amount/% Per Unit Per Sq Ft -------- -------- ---------- ------ ---------- -------- --------- PROPERTY OPERATING EXPENSES (ANNUALIZED) (ANNUALIZED) - --------------------------- ------------ ------------ Dallas $ 3,538,751 3,569 $4.24 7.7% $ 3,285,579 $ 3,314 $3.94 Atlanta 1,942,871 3,211 3.44 5.0% 1,850,565 3,059 3.28 Austin 769,927 3,294 4.47 -5.3% 812,834 3,477 4.72 Indianapolis 737,312 2,961 3.59 -0.2% 738,836 2,967 3.60 Kansas 590,539 2,601 3.02 25.2% 471,614 2,078 2.41 Chicago 475,915 7,524 8.80 16.4% 408,893 6,465 7.56 ------------ ------ ----- ----- ----------- ------- ----- Total $ 8,055,315 $3,400 $3.98 6.4% $ 7,568,322 $ 3,194 $3.74 ============ ====== ===== ===== =========== ======= ===== Operating Efficiency 41.3% 39.8% ============ =========== NOI 1998 % 1997 % PER MONTH PER MONTH - --- ------ ------ --------- ---------- Dallas 55.3% 58.8% $ 4,381,559 $ 368 $0.44 -6.7% $ 4,696,110 $ 395 $0.47 Atlanta 64.1% 64.1% 3,465,393 477 0.51 5.0% 3,300,287 455 0.49 Austin 58.8% 55.4% 1,100,370 392 0.53 8.9% 1,010,570 360 0.49 Indianapolis 57.8% 53.5% 1,008,319 337 0.41 18.8% 848,678 284 0.34 Kansas 66.0% 72.3% 1,146,850 421 0.49 -6.9% 1,232,021 452 0.53 Chicago 41.6% 47.2% 338,580 446 0.52 -7.2% 364,899 481 0.56 ------ ----- ------------ ------ ----- ----- ----------- ------ ----- Total 58.7% 60.2% $11,441,070 $ 402 $0.47 -0.1% $11,452,566 $ 403 $0.47 ====== ===== ============ ====== ===== ===== =========== ====== ===== Operating Margin 58.7% 60.2% ============ =========== CAPITAL EXPENDITURES (ANNUALIZED) (ANNUALIZED) - -------------------- ------------ ------------ Dallas $ 311,687 $ 314 $0.37 81.7% $ 171,493 $ 173 $0.21 Atlanta 181,081 299 0.32 -13.7% 209,901 347 0.37 Austin 206,506 883 1.20 173.8% 75,436 323 0.44 Indianapolis (33,664) (135) (0.16) -187.0% 38,688 155 0.19 Kansas 131,858 581 0.68 60.3% 82,278 362 0.42 Chicago 45,562 720 0.84 655.7% 6,029 95 0.11 ----------- ------ ----- ------ --------- ------ ----- Total $ 843,030 $ 356 $0.42 44.4% 583,826 $ 246 $0.29 =========== ====== ===== ====== ========= ====== ===== AMLI RESIDENTIAL PROPERTIES L.P. - "SAME COMMUNITY COMPARISON" (WHOLLY-OWNED PROPERTIES) - CONTINUED (Excludes all properties acquired or stabilized after 1/1/97) 10/1/98-12/31/98 10/1/97-12/31/97 --------------------------------- % -------------------------------- Amount/% Per Unit Per Sq Ft Change Amount/% Per Unit Per Sq Ft -------- -------- ---------- ------ ---------- -------- --------- REPAIRS AND MAINTENANCE (ANNUALIZED) (ANNUALIZED) - ----------------------- ------------ ------------ Dallas $ 594,085 $ 599 $0.71 41.8% $ 418,816 $ 422 $0.50 Atlanta 331,341 548 0.59 28.0% 258,809 428 0.46 Austin 116,784 500 0.68 -5.6% 123,707 529 0.72 Indianapolis 171,459 689 0.84 -1.0% 173,220 696 0.84 Kansas 175,003 771 0.90 103.6% 85,962 379 0.44 Chicago 115,528 1,827 2.14 62.8% 70,970 1,122 1.31 ---------- ------ ----- ------ ---------- ------ ----- Total $1,504,200 $ 635 $0.74 32.9% $1,131,483 $ 478 $0.56 ========== ====== ===== ====== ========== ====== ===== REAL ESTATE TAXES (ANNUALIZED) (ANNUALIZED) - ----------------- ------------ ------------ Dallas $1,058,715 $1,068 $1.27 -6.0% $1,125,841 $1,135 $1.35 Atlanta 430,260 711 0.76 11.1% 387,321 640 0.69 Austin 263,435 1,127 1.53 12.7% 233,778 1,000 1.36 Indianapolis 136,024 546 0.66 -38.6% 221,708 890 1.08 Kansas 72,762 321 0.37 230.3% 22,028 97 0.11 Chicago 153,047 2,420 2.83 2.5% 149,372 2,362 2.76 ---------- ------ ----- ----- ---------- ------ ----- Total $2,114,243 $ 892 $1.04 -1.2% $2,140,048 $ 903 $1.06 ========== ====== ===== ===== ========== ====== =====
AMLI RESIDENTIAL PROPERTIES L.P. - "SAME COMMUNITY COMPARISON" (WHOLLY-OWNED PROPERTIES) YEAR ENDED DECEMBER 31, 1998 VERSUS YEAR ENDED DECEMBER 31, 1997 (Excludes all properties acquired or stabilized after 1/1/97)
1/1/98-12/31/98 1/1/97-12/31/97 No. of --------------------------------- % -------------------------------- Apts. Amount/% Per Unit Per Sq Ft Change Amount/% Per Unit Per Sq Ft ------ -------- -------- ---------- ------ ---------- -------- --------- WEIGHTED AVG. OCCUPANCY - ----------------------- Dallas 3,966 93.7% -1.0% 94.6% Atlanta 2,420 94.1% 0.7% 93.4% Austin 935 95.6% 1.2% 94.5% Indianapolis 996 92.6% 1.9% 90.9% Kansas 908 92.5% 0.5% 92.1% Chicago 253 97.0% 3.1% 94.1% ----- ----- ----- ----- Weighted Average 93.9% 0.2% 93.7% ===== ===== ===== Total 9,478 ===== WEIGHTED AVG. RENTAL RATE - ------------------------- Dallas $ 663 0.9% $ 657 Atlanta 743 2.0% 728 Austin 659 2.3% 644 Indianapolis 587 2.2% 574 Kansas 654 1.1% 647 Chicago 945 2.7% 920 ------ ---- ------ Weighted Average $ 681 1.5% $ 671 ====== ==== ====== TOTAL PROPERTY REVENUES PER MONTH PER MONTH - ----------------------- --------- --------- Dallas $31,750,576 $ 667 $0.79 2.3% $ 31,046,230 $ 652 $0.78 Atlanta 21,297,808 733 0.79 3.1% 20,666,484 712 0.76 Austin 7,435,714 663 0.90 3.4% 7,194,329 641 0.87 Indianapolis 6,882,159 576 0.70 4.1% 6,613,512 553 0.67 Kansas 6,948,411 638 0.74 1.2% 6,863,533 630 0.73 Chicago 3,191,724 1,051 1.23 9.1% 2,925,225 964 1.13 ----------- ------ ----- ---- ----------- ------ ----- Total $77,506,391 $ 681 $0.80 2.9% $75,309,312 $ 662 $0.77 =========== ====== ===== ==== =========== ==== ===== AMLI RESIDENTIAL PROPERTIES L.P. - "SAME COMMUNITY COMPARISON" (WHOLLY-OWNED PROPERTIES) - CONTINUED (Excludes all properties acquired or stabilized after 1/1/97) 1/1/98-12/31/98 1/1/97-12/31/97 --------------------------------- % -------------------------------- Amount/% Per Unit Per Sq Ft Change Amount/% Per Unit Per Sq Ft -------- -------- ---------- ------ ---------- -------- --------- PROPERTY OPERATING EXPENSES (ANNUALIZED) (ANNUALIZED) - --------------------------- ------------ ----------- Dallas $ 13,978,529 $3,525 $4.19 7.3% $13,032,812 $3,286 $3.91 Atlanta 7,615,699 3,147 3.37 3.0% 7,392,753 3,055 3.28 Austin 3,116,322 3,333 4.53 -5.7% 3,304,241 3,534 4.80 Indianapolis 2,633,914 2,644 3.21 -0.9% 2,658,522 2,669 3.24 Kansas 2,606,404 2,870 3.34 5.5% 2,471,118 2,721 3.16 Chicago 1,730,294 6,839 8.00 3.1% 1,678,714 6,635 7.76 ------------ ------ ----- ---- ----------- ------ ----- Total $ 31,681,163 $3,343 $3.91 3.7% $30,538,160 $3,222 $3.77 ============ ====== ===== ==== =========== ==== ===== Operating efficiency 40.9% 40.6% ============ =========== NOI 1998 % 1997 % PER MONTH PER MONTH - --- ------ ------ --------- ---------- Dallas 56.0% 58.0% $17,772,047 $ 373 $0.44 -1.3% $18,013,418 $ 378 $0.45 Atlanta 64.2% 64.2% 13,682,108 471 0.51 3.1% 13,273,731 457 0.49 Austin 58.1% 54.1% 4,319,392 385 0.52 11.0% 3,890,087 347 0.47 Indianapolis 61.7% 59.8% 4,248,245 355 0.43 7.4% 3,954,991 331 0.40 Kansas 62.5% 64.0% 4,342,007 398 0.46 -1.1% 4,392,415 403 0.47 Chicago 45.8% 42.6% 1,461,430 481 0.56 17.2% 1,246,511 411 0.48 ----- ----- ----------- ------ ----- ----- ----------- ------ ----- Total 59.1% 59.4% $45,825,229 $ 403 $0.47 2.4% $44,771,152 $ 394 $0.46 ===== ===== =========== ====== ===== ===== =========== ====== ===== Operating Margin 59.1% 59.4% =========== =========== CAPITAL EXPENDITURES (ANNUALIZED) (ANNUALIZED) - -------------------- ------------- ------------ Dallas $1,413,650 $ 356 $0.42 4.7% $1,350,616 $ 341 $0.40 Atlanta 783,182 324 0.35 1.1% 774,749 320 0.34 Austin 480,105 513 0.70 27.6% 376,314 402 0.55 Indianapolis 262,993 264 0.32 35.8% 193,697 194 0.24 Kansas 431,478 475 0.55 72.9% 249,509 275 0.32 Chicago 108,341 428 1.00 1.6% 106,593 421 0.49 ---------- ------ ----- ------ ---------- ------ ----- Total $3,479,748 $ 367 $0.43 14.0% $3,051,477 $ 322 $0.38 ========== ==== ===== ====== ========== ====== ===== AMLI RESIDENTIAL PROPERTIES L.P. - "SAME COMMUNITY COMPARISON" (WHOLLY-OWNED PROPERTIES) - CONTINUED (Excludes all properties acquired or stabilized after 1/1/97) 1/1/98-12/31/98 1/1/97-12/31/97 --------------------------------- % -------------------------------- Amount/% Per Unit Per Sq Ft Change Amount/% Per Unit Per Sq Ft -------- -------- ---------- ------ ---------- -------- --------- REPAIRS AND MAINTENANCE (ANNUALIZED) (ANNUALIZED) - ----------------------- ------------ ------------ Dallas $2,194,573 $ 553 $0.66 11.6% $1,966,295 $ 496 $0.59 Atlanta 1,165,811 482 0.52 1.8% 1,145,185 473 0.51 Austin 451,222 483 0.66 -20.2% 565,731 605 0.82 Indianapolis 538,943 541 0.66 -8.5% 589,329 592 0.72 Kansas 457,875 504 0.59 26.1% 363,079 400 0.46 Chicago 377,587 1,492 1.75 13.2% 333,615 1,319 1.54 ---------- ------ ----- ----- ---------- ------ ----- Total $5,186,011 $ 547 $0.64 4.5% $4,963,234 $ 524 $0.61 ========== ====== ===== ===== ========== ====== ===== REAL ESTATE TAXES (ANNUALIZED) (ANNUALIZED) - ----------------- ------------ ------------ Dallas $4,548,928 $1,147 $1.36 11.3% $4,088,319 $1,031 $1.23 Atlanta 1,613,467 667 0.71 9.4% 1,475,365 610 0.65 Austin 983,129 1,051 1.43 11.7% 879,996 941 1.28 Indianapolis 523,957 526 0.64 -29.4% 742,334 745 0.90 Kansas 626,348 690 0.80 -5.1% 660,029 727 0.84 Chicago 552,400 2,183 2.55 -2.6% 566,942 2,241 2.62 ---------- ------ ----- ----- ---------- ------ ----- Total $8,848,230 $ 934 $1.09 5.2% $8,412,985 $ 888 $1.04 ========== ====== ===== ===== ========== ====== =====
AMLI RESIDENTIAL PROPERTIES L.P. - "SAME COMMUNITY COMPARISON" (WHOLLY-OWNED AND CO-INVESTMENT PROPERTIES) THREE MONTHS ENDED DECEMBER 31, 1998 VERSUS THREE MONTHS ENDED DECEMBER 31, 1997 (Excludes all properties acquired or stabilized after 1/1/97)
10/1/98-12/31/98 10/1/97-12/31/97 No. of --------------------------------- % -------------------------------- Apts. Amount/% Per Unit Per Sq Ft Change Amount/% Per Unit Per Sq Ft ------ -------- -------- ---------- ------ ---------- -------- --------- WEIGHTED AVG. OCCUPANCY - ----------------------- Dallas 4,226 92.6% -2.8% 95.4% Atlanta 3,314 93.7% 1.0% 92.8% Austin 1,523 94.7% 0.0% 94.7% Houston 754 94.7% -1.4% 96.0% Indianapolis 996 91.4% 0.7% 90.8% Kansas 908 92.7% 1.7% 91.1% Chicago 1,694 95.8% 0.7% 95.1% ------ ----- ----- ------ Weighted Average 93.6% -0.5% 94.0% ===== ===== ====== Total 13,415 ====== WEIGHTED AVG. RENTAL RATE - ------------------------- Dallas $ 641 -2.2% $ 656 Atlanta 763 3.0% 740 Austin 645 4.4% 618 Houston 768 6.4% 721 Indianapolis 605 6.1% 570 Kansas 660 1.5% 650 Chicago 984 6.4% 925 ------ ----- ------ Weighted Average $ 721 2.5% $ 703 ====== ===== ====== TOTAL PROPERTY REVENUES PER MONTH PER MONTH - ----------------------- ---------- --------- Dallas $ 8,395,025 $ 662 $0.79 -0.6% $ 8,446,369 $ 666 $0.79 Atlanta 7,471,666 752 0.78 4.4% 7,158,638 720 0.75 Austin 2,921,693 639 0.90 1.6% 2,876,365 630 0.88 Houston 1,747,688 773 0.84 3.2% 1,693,623 749 0.81 Indianapolis 1,745,631 584 0.71 10.0% 1,587,514 531 0.64 Kansas 1,737,389 638 0.74 2.0% 1,703,636 625 0.73 Chicago 5,099,746 1,003 1.19 6.1% 4,807,503 946 1.12 ----------- ------ ----- ----- ----------- ---- ----- Total $29,118,838 $ 724 $0.84 3.0% $28,273,648 $703 $0.82 =========== ====== ===== ===== =========== ==== ===== AMLI RESIDENTIAL PROPERTIES L.P. - "SAME COMMUNITY COMPARISON" (WHOLLY-OWNED AND CO-INVESTMENT PROPERTIES) - CONT. (Excludes all properties acquired or stabilized after 1/1/97) 10/1/98-12/31/98 10/1/97-12/31/97 --------------------------------- % -------------------------------- Amount/% Per Unit Per Sq Ft Change Amount/% Per Unit Per Sq Ft -------- -------- ---------- ------ ---------- -------- --------- PROPERTY OPERATING EXPENSES (ANNUALIZED) (ANNUALIZED) - --------------------------- ------------ ------------ Dallas $ 3,765,287 $3,564 $4.25 7.9% $ 3,489,162 $3,303 $3.94 Atlanta 2,697,645 3,256 3.40 2.0% 2,645,270 3,193 3.33 Austin 1,210,671 3,180 4.46 -6.8% 1,299,014 3,412 4.78 Houston 792,236 4,203 4.54 14.2% 693,644 3,680 3.98 Indianapolis 737,312 2,961 3.59 -0.2% 738,836 2,967 3.60 Kansas 590,539 2,601 3.02 25.2% 471,614 2,078 2.41 Chicago 2,148,082 5,072 5.99 6.8% 2,010,925 4,748 5.61 ----------- ------ ----- ----- ----------- ------ ----- Total $11,941,773 $3,561 $4.14 5.2% $11,348,465 $3,384 $3.93 =========== ====== ===== ===== =========== ====== ===== Operating Efficiency 41.0% 40.1% =========== =========== NOI 1998 % 1997 % PER MONTH PER MONTH - --- ------ ------ --------- ---------- Dallas 55.1% 58.7% $ 4,629,738 $ 365 $0.44 -6.6% $ 4,957,207 $ 391 $0.47 Atlanta 63.9% 63.0% 4,774,020 480 0.50 5.8% 4,513,368 454 0.47 Austin 58.6% 54.8% 1,711,022 374 0.53 8.5% 1,577,351 345 0.48 Houston 54.7% 59.0% 955,451 422 0.46 -4.5% 999,979 442 0.48 Indianapolis 57.8% 53.5% 1,008,319 337 0.41 18.8% 848,678 284 0.34 Kansas 66.0% 72.3% 1,146,850 421 0.49 -6.9% 1,232,021 452 0.53 Chicago 57.9% 58.2% 2,951,664 581 0.69 5.5% 2,796,578 550 0.65 ----- ----- ----------- ------ ----- ----- ----------- ------ ----- Total 59.0% 59.9% $17,177,064 $ 427 $0.50 1.5% $16,925,182 $ 421 $0.49 ===== ===== =========== ====== ===== ===== =========== ====== ===== Operating Margin 59.0% 59.9% =========== =========== CAPITAL EXPENDITURES (ANNUALIZED) (ANNUALIZED) - -------------------- ------------ ------------ Dallas $ 340,684 $ 322 $0.38 89.3% $ 179,977 $ 170 $0.20 Atlanta 226,516 273 0.29 -4.5% 237,309 286 0.30 Austin 225,540 592 0.83 86.8% 120,716 317 0.44 Houston 16,050 85 0.09 -3.4% 16,608 88 0.10 Indianapolis (33,664) (135) (0.16) -187.0% 38,688 155 0.19 Kansas 131,858 581 0.68 60.3% 82,278 362 0.42 Chicago 147,876 349 0.41 214.4% 47,028 111 0.13 ----------- ------ ----- ------ --------- ------ ----- Total $ 1,054,860 $ 315 $0.37 46.0% $ 722,604 $ 215 $0.25 =========== ====== ===== ====== ========= ====== ===== AMLI RESIDENTIAL PROPERTIES L.P. - "SAME COMMUNITY COMPARISON" (WHOLLY-OWNED AND CO-INVESTMENT PROPERTIES) - CONT. (Excludes all properties acquired or stabilized after 1/1/97) 10/1/98-12/31/98 10/1/97-12/31/97 --------------------------------- % -------------------------------- Amount/% Per Unit Per Sq Ft Change Amount/% Per Unit Per Sq Ft -------- -------- ---------- ------ ---------- -------- --------- REPAIRS AND MAINTENANCE (ANNUALIZED) (ANNUALIZED) - ----------------------- ------------ ------------ Dallas $ 628,806 $ 595 $0.71 42.3% $ 441,768 $ 418 $0.50 Atlanta 434,908 525 0.55 20.1% 362,193 437 0.46 Austin 182,551 479 0.67 -3.2% 188,599 495 0.69 Houston 110,696 587 0.63 148.0% 44,636 237 0.26 Indianapolis 171,459 689 0.84 -1.0% 173,220 696 0.84 Kansas 175,003 771 0.90 103.6% 85,962 379 0.44 Chicago 398,497 941 1.11 39.1% 286,477 676 0.80 ----------- ------ ----- ----- ---------- ------ ----- Total $ 2,101,921 $ 627 $0.73 32.8% $1,582,856 $ 472 $0.55 =========== ====== ===== ===== ========== ====== ===== REAL ESTATE TAXES (ANNUALIZED) (ANNUALIZED) - ----------------- ------------ ------------ Dallas $ 1,118,274 $1,058 $1.26 -5.4% $1,181,776 $1,119 $1.33 Atlanta 604,923 730 0.76 13.1% 534,782 645 0.67 Austin 366,915 964 1.35 -2.0% 374,523 984 1.38 Houston 283,854 1,506 1.63 5.4% 269,353 1,429 1.55 Indianapolis 136,024 546 0.66 -38.6% 221,708 890 1.08 Kansas 72,762 321 0.37 230.3% 22,028 97 0.11 Chicago 731,577 1,727 2.04 -0.1% 732,174 1,729 2.04 ----------- ------ ----- ----- ---------- ------ ----- Total $ 3,314,329 $ 988 $1.15 -0.7% $3,336,344 $ 995 $1.16 =========== ====== ===== ===== ========== ====== =====
AMLI RESIDENTIAL PROPERTIES L.P. - "SAME COMMUNITY COMPARISON" (WHOLLY-OWNED AND CO-INVESTMENT PROPERTIES) YEAR ENDED DECEMBER 31, 1998 VERSUS YEAR ENDED DECEMBER 31, 1997 (Excludes all properties acquired or stabilized after 1/1/97)
1/1/98-12/31/98 1/1/97-12/31/97 No. of --------------------------------- % -------------------------------- Apts. Amount/% Per Unit Per Sq Ft Change Amount/% Per Unit Per Sq Ft ------ -------- -------- ---------- ------ ---------- -------- --------- WEIGHTED AVG. OCCUPANCY - ----------------------- Dallas 4,226 94.2% -0.5% 94.6% Atlanta 3,314 93.6% 0.5% 93.2% Austin 1,523 95.5% 0.8% 94.7% Houston 754 95.4% 0.5% 94.9% Indianapolis 996 92.6% 1.9% 90.9% Kansas 908 92.5% 0.5% 92.1% Chicago 1,694 96.1% 1.9% 94.3% ------ ----- ----- ----- Weighted Average 94.3% 0.5% 93.8% ===== ===== ===== Total 13,415 ====== WEIGHTED AVG. RENTAL RATE - ------------------------- Dallas $ 671 2.9% $ 652 Atlanta 751 1.3% 742 Austin 632 1.7% 621 Houston 755 5.7% 714 Indianapolis 587 2.3% 574 Kansas 654 1.1% 646 Chicago 960 4.1% 922 ------ ---- ------ Weighted Average $ 720 2.6% $ 702 ====== ==== ====== TOTAL PROPERTY REVENUES PER MONTH PER MONTH - ----------------------- --------- --------- Dallas $ 33,639,890 $ 663 $0.79 2.3% $ 32,885,663 $ 648 $0.77 Atlanta 29,482,215 741 0.77 2.1% 28,885,399 726 0.76 Austin 11,591,978 634 0.89 2.7% 11,285,286 617 0.87 Houston 6,910,481 764 0.83 6.6% 6,481,106 716 0.77 Indianapolis 6,882,159 576 0.70 4.1% 6,613,512 553 0.67 Kansas 6,948,411 638 0.74 1.2% 6,863,533 630 0.73 Chicago 20,009,186 984 1.16 6.1% 18,851,211 927 1.10 ------------ ------ ----- ----- ------------ ---- ----- Total $115,464,321 $ 717 $0.83 3.2% $111,865,710 $695 $0.81 ============ ====== ===== ===== ============ ==== ===== AMLI RESIDENTIAL PROPERTIES L.P. - "SAME COMMUNITY COMPARISON" (WHOLLY-OWNED AND CO-INVESTMENT PROPERTIES) - CONT. (Excludes all properties acquired or stabilized after 1/1/97) 1/1/98-12/31/98 1/1/97-12/31/97 --------------------------------- % -------------------------------- Amount/% Per Unit Per Sq Ft Change Amount/% Per Unit Per Sq Ft -------- -------- ---------- ------ ---------- -------- --------- PROPERTY OPERATING EXPENSES (ANNUALIZED) (ANNUALIZED) - --------------------------- ------------ ------------ Dallas $14,869,049 $3,518 $4.19 6.9% $13,907,829 $3,291 $3.92 Atlanta 10,785,689 3,255 3.39 2.4% 10,535,616 3,179 3.32 Austin 5,061,978 3,324 4.66 -3.4% 5,238,012 3,439 4.82 Houston 2,875,015 3,813 4.12 7.4% 2,675,963 3,549 3.84 Indianapolis 2,633,914 2,644 3.21 -0.9% 2,658,522 2,669 3.24 Kansas 2,606,404 2,870 3.34 5.5% 2,471,118 2,721 3.16 Chicago 8,086,446 4,774 5.64 3.7% 7,800,718 4,605 5.44 ----------- ------ ----- ------ ----------- ------ ----- Total $46,918,495 $3,497 $4.06 3.6% $45,287,778 $3,376 $3.92 =========== ====== ===== ====== =========== ====== ===== Operating Efficiency 40.6% 40.5% =========== =========== NOI 1998 % 1997 % PER MONTH PER MONTH - --- ------ ------ --------- ---------- Dallas 55.8% 57.7% $18,770,841 $ 370 $0.44 -1.1% $18,977,834 $ 374 $0.45 Atlanta 63.4% 63.5% 18,696,527 470 0.49 1.9% 18,349,783 461 0.48 Austin 56.3% 53.6% 6,530,001 357 0.50 8.0% 6,047,274 331 0.46 Houston 58.4% 58.7% 4,035,467 446 0.48 6.1% 3,805,142 421 0.45 Indianapolis 61.7% 59.8% 4,248,245 $355 0.43 7.4% 3,954,991 331 0.40 Kansas 62.5% 64.0% 4,342,007 398 0.46 -1.1% 4,392,415 403 0.47 Chicago 59.6% 58.6% 11,922,740 587 0.69 7.9% 11,050,493 544 0.64 ----- ----- ----------- ------ ----- ----- ----------- ------ ----- Total 59.4% 59.5% $68,545,826 $ 426 $0.49 3.0% $66,577,932 $ 414 $0.48 ===== ===== =========== ====== ===== ===== =========== ====== ===== Operating Margin 59.4% 59.5% =========== =========== CAPITAL EXPENDITURES (ANNUALIZED) (ANNUALIZED) - -------------------- ----------- ------------ Dallas $ 1,541,355 $ 365 $0.43 7.2% $1,437,488 $ 340 $0.41 Atlanta 918,387 277 0.29 -3.1% 947,944 286 0.30 Austin 689,679 453 0.63 30.5% 528,566 347 0.49 Houston 107,216 142 0.15 40.0% 76,559 102 0.11 Indianapolis 262,993 264 0.32 35.8% 193,697 194 0.24 Kansas 431,478 475 0.55 72.9% 249,509 275 0.32 Chicago 592,450 350 0.41 87.0% 316,877 187 0.22 ----------- ------ ----- ------ ---------- ------ ----- Total $ 4,543,558 $ 339 $0.39 21.1% $3,750,640 $ 280 $0.32 =========== ====== ===== ====== ========== ====== ===== AMLI RESIDENTIAL PROPERTIES L.P. - "SAME COMMUNITY COMPARISON" (WHOLLY-OWNED AND CO-INVESTMENT PROPERTIES) - CONT. (Excludes all properties acquired or stabilized after 1/1/97) 1/1/98-12/31/98 1/1/97-12/31/97 --------------------------------- % -------------------------------- Amount/% Per Unit Per Sq Ft Change Amount/% Per Unit Per Sq Ft -------- -------- ---------- ------ ---------- -------- --------- REPAIRS AND MAINTENANCE (ANNUALIZED) (ANNUALIZED) - ----------------------- ------------ ------------ Dallas $2,327,146 $ 551 $0.66 9.4% $2,127,761 $ 503 $0.60 Atlanta 1,586,619 479 0.50 3.0% 1,540,199 465 0.48 Austin 770,126 506 0.71 -11.6% 871,548 572 0.80 Houston 244,816 325 0.35 40.6% 174,181 231 0.25 Indianapolis 538,943 541 0.66 -8.5% 589,329 592 0.72 Kansas 457,875 504 0.59 26.1% 363,079 400 0.46 Chicago 1,308,036 772 0.91 16.4% 1,123,803 663 0.78 ---------- ------ ----- ----- ---------- ------ ----- Total $7,233,562 $ 539 $0.63 6.5% $6,789,901 $ 506 $0.59 ========== ====== ===== ===== ========== ====== ===== REAL ESTATE TAXES (ANNUALIZED) (ANNUALIZED) - ----------------- ------------ ------------ Dallas $ 4,795,939 $1,135 $1.35 11.0% $ 4,321,023 $1,022 $1.22 Atlanta 2,302,482 695 0.72 8.0% 2,132,577 644 0.67 Austin 1,529,292 1,004 1.41 7.7% 1,420,611 933 1.31 Houston 1,101,791 1,461 1.58 13.9% 967,755 1,283 1.39 Indianapolis 523,957 526 0.64 -29.4% 742,334 745 0.90 Kansas 626,348 690 0.80 -5.1% 660,029 727 0.84 Chicago 2,700,416 1,594 1.88 3.5% 2,609,534 1,540 1.82 ----------- ------ ----- ----- ----------- ------ ----- Total $13,580,226 $1,012 $1.18 5.7% $12,853,862 $ 958 $1.11 =========== ====== ===== ===== =========== ====== =====
AMLI RESIDENTIAL PROPERTIES TRUST PROPERTY INFORMATION As of December 31, 1998
Approximate Rentable Average Year Year Number Area Unit Size Location Acquired Completed of Units (Sq Ft) (Sq ft) -------- -------- --------- -------- ----------- --------- WHOLLY OWNED PROPERTIES - ------------ DALLAS/FT. WORTH - ---------------- AMLI: at Autumn Chase Carrollton, TX 1991 1987/1996 450 374,288 832 at Bent Tree Dallas, TX 1997 1996 300 282,774 943 at Bishop's Gate West Plano, TX 1997 1997 266 292,092 1,098 at Chase Oaks Plano, TX 1994 1986 250 193,736 775 at Gleneagles Dallas, TX 1988 1987/1997 590 521,302 884 on the Green Ft. Worth, TX 1994 1990/1993 424 358,560 846 at Nantucket Dallas, TX 1988 1986 312 222,208 712 of North Dallas Dallas, TX 1989/1990 1985/1986 1,032 905,590 878 on Rosemeade Dallas, TX 1990 1987 236 205,382 870 at Valley Ranch Irving, TX 1990 1985 460 389,940 848 ------ --------- ------- Subtotal - Dallas/Ft. Worth, TX 4,320 3,745,872 867 ------ --------- ------- ATLANTA, GA - ----------- AMLI: at Sope Creek Marietta, GA 82/83/95 695 632,393 910 at Spring Creek Dunwoody, GA 85/86/87/89 1,180 1,080,560 916 at Vinings Atlanta, GA 1992 1985 208 229,708 1,104 at Vinings-Phase II Atlanta, GA 1997 1985 152 144,532 951 at West Paces Atlanta, GA 1993 1992 337 314,707 934 at Peachtree City Atlanta, GA 1998 312 305,756 980 at Park Creek Atlanta, GA 1998 200 194,792 974 at Clairmont Atlanta, GA 1998 1988 288 229,335 796 ------ --------- ------ Subtotal - Atlanta, GA 3,372 3,131,783 929 ------ --------- ------ Approximate Rentable Average Year Year Number Area Unit Size Location Acquired Completed of Units (Sq Ft) (Sq ft) -------- -------- --------- -------- ----------- --------- AUSTIN, TX - ---------- AMLI: at the Arboretum Austin, TX 1986 1983 231 178,116 771 in Great Hills Austin, TX 1991 1985 344 256,892 747 at Lantana Ridge Austin, TX 1997 1997 354 311,808 881 at Martha's Vineyard Austin, TX 1992 1986 360 253,328 704 ------ ---------- ----- Subtotal - Austin, TX 1,289 1,000,144 776 ------ ---------- ----- EASTERN KANSAS - -------------- AMLI: at Alvamar Lawrence, KS 1994 1989 152 125,800 828 at Centennial Overland Park, KS 1998 1998 170 204,855 1,205 at Crown Colony Topeka, KS 1994 1986 156 120,984 776 at Crown Colony II Topeka, KS 1997 64 51,292 801 at Lexington Farms Overland Park, KS 1998 1998 404 390,000 965 at Regents Center Overland Park, KS 1994 1991/1995 300 274,170 914 at Regents Center III Overland Park, KS 1997 124 123,728 998 at Sherwood Topeka, KS 1994 1993 300 260,340 868 at Town Center Overland Park, KS 1997 1997 156 176,994 1,135 ------ ---------- ----- Subtotal - Eastern Kansas 1,826 1,728,163 946 ------ ---------- ----- INDIANAPOLIS, IN - ---------------- AMLI: at Riverbend Indianapolis, IN 1992/1993 1983/1985 996 820,712 824 at Conner Farms Indianapolis, IN 1997 1993 300 324,636 1,082 at Eagle Creek Indianapolis, IN 1998 1996 240 215,512 898 ------ ---------- ----- Subtotal - Indianapolis, IN 1,536 1,360,860 886 ------ ---------- ----- Approximate Rentable Average Year Year Number Area Unit Size Location Acquired Completed of Units (Sq Ft) (Sq ft) -------- -------- --------- -------- ----------- --------- CHICAGO, IL - ----------- AMLI: at Park Sheridan Chicago, IL 1989 1986 253 216,315 855 at Poplar Creek Chicago, IL 1997 1985 196 178,490 911 ------ ---------- ----- Subtotal - Chicago, IL 449 394,805 879 ------ ---------- ----- TOTAL WHOLLY OWNED PROPERTIES 12,792 11,361,627 888 ====== ========== =====
AMLI RESIDENTIAL PROPERTIES TRUST PROPERTY INFORMATION - CONTINUED
Quarter Ended Year Ended December 31, 1998 Quarter Ended December 31, 1998 Year Ended Average Rental Rates Dec 31, 1998 Average Rental Rates Dec 31, 1998 ------------------------- Ave. ------------------------ Ave. Per Unit Per Sq. Ft. Occupancy Per Unit Per Sq. Ft. Occupancy -------- ----------- ------------ -------- ----------- ------------ WHOLLY OWNED PROPERTIES - ------------ DALLAS/FT. WORTH - ---------------- AMLI: at Autumn Chase 710 $0.85 92.6% 695 $0.84 94.0% at Bent Tree 835 0.89 92.4% 832 0.88 93.4% at Bishop's Gate 1,048 0.95 92.4% 1,040 0.95 93.6% at Chase Oaks 690 0.89 92.4% 679 0.88 94.4% at Gleneagles 716 0.81 93.2% 719 0.81 94.6% on the Green 689 0.81 91.4% 682 0.81 92.8% at Nantucket 560 0.79 92.8% 556 0.78 95.6% of North Dallas 659 0.75 92.2% 652 0.74 93.0% on Rosemeade 677 0.78 93.8% 665 0.76 94.7% at Valley Ranch 714 0.84 92.3% 703 0.83 95.2% ----- ----- ----- ----- ----- ----- Subtotal - Dallas/Ft. Worth, TX 713 $0.82 92.5% 706 $0.81 94.0% ----- ----- ----- ----- ----- ----- ATLANTA, GA - ----------- AMLI: at Sope Creek 696 $0.77 96.1% 691 $0.76 95.0% at Spring Creek 737 0.81 93.6% 723 0.79 93.1% at Vinings 836 0.76 91.1% 804 0.73 93.3% at Vinings-Phase II 764 0.80 95.8% 746 0.78 95.9% at West Paces 895 0.96 96.5% 882 0.94 96.2% at Peachtree City 883 0.90 93.6% 846 0.86 94.1% at Park Creek 673 0.69 92.7% 664 0.68 51.0% at Clairmont 786 0.99 95.1% 736 0.92 95.0% ----- ----- ----- ----- ----- ----- Subtotal - Atlanta, GA 766 $0.82 94.4% 747 $0.80 91.7% ----- ----- ----- ----- ----- ----- Quarter Ended Year Ended December 31, 1998 Quarter Ended December 31, 1998 Year Ended Average Rental Rates Dec 31, 1998 Average Rental Rates Dec 31, 1998 ------------------------- Ave. ------------------------ Ave. Per Unit Per Sq. Ft. Occupancy Per Unit Per Sq. Ft. Occupancy -------- ----------- ------------ -------- ----------- ------------ AUSTIN, TX - ---------- AMLI: at the Arboretum 698 $0.90 95.0% 688 $0.89 95.4% in Great Hills 708 0.95 94.1% 690 0.92 95.8% at Lantana Ridge 824 0.93 91.2% 809 0.92 91.1% at Martha's 627 0.89 94.4% 611 0.87 95.6% Vineyard ----- ----- ----- ----- ----- ----- Subtotal - Austin, TX 715 $0.92 93.6% 700 $0.90 94.4% ----- ----- ----- ----- ----- ----- EASTERN KANSAS - -------------- AMLI: at Alvamar 668 $0.81 94.5% 664 $0.80 92.3% at Centennial 975 0.81 90.3% 974 0.81 90.3% at Crown Colony 590 0.76 88.3% 579 0.75 92.1% at Crown Colony II 651 0.81 96.4% 641 0.80 93.0% at Lexington Farms 782 0.81 79.1% 782 0.81 79.1% at Regents Center 726 0.79 94.6% 715 0.78 93.0% at Regents Center III 768 0.77 91.1% 764 0.77 90.9% at Sherwood 625 0.72 92.1% 626 0.72 92.4% at Town Center 942 0.83 94.9% 973 0.86 93.1% ----- ----- ----- ----- ----- ----- Subtotal - Eastern Kansas 747 $0.79 89.7% 746 $0.79 89.3% ----- ----- ----- ----- ----- ----- INDIANAPOLIS, IN - ---------------- AMLI: at Riverbend 605 $0.73 91.4% 587 $0.71 92.6% at Conner Farms 790 0.73 91.1% 782 0.72 90.6% at Eagle Creek 753 0.84 86.0% 753 0.84 90.6% ----- ----- ----- ----- ----- ----- Subtotal - Indianapolis, IN 664 $0.75 90.5% 651 $0.73 91.9% ----- ----- ----- ----- ----- ----- Quarter Ended Year Ended December 31, 1998 Quarter Ended December 31, 1998 Year Ended Average Rental Rates Dec 31, 1998 Average Rental Rates Dec 31, 1998 ------------------------- Ave. ------------------------ Ave. Per Unit Per Sq. Ft. Occupancy Per Unit Per Sq. Ft. Occupancy -------- ----------- ------------ -------- ----------- ------------ CHICAGO, IL - ----------- AMLI: at Park Sheridan 970 $1.13 96.6% 945 $1.11 97.0% at Poplar Creek 944 1.04 94.4% 954 1.05 94.6% ----- ----- ----- ----- ----- ----- Subtotal - Chicago, IL 959 $1.09 95.6% 949 $1.08 96.0% ----- ----- ----- ----- ----- ----- TOTAL WHOLLY OWNED PROPERTIES 735 $0.83 92.6% 724 $0.82 92.6% ===== ===== ===== ===== ===== =====
AMLI RESIDENTIAL PROPERTIES TRUST PROPERTY INFORMATION - CONTINUED As of December 31, 1998
Approximate Rentable Average Year Year Number Area Unit Size Location Acquired Completed of Units (Sq Ft) (Sq ft) -------- -------- --------- -------- ----------- --------- CO-INVESTMENT PROPERTIES - ------------ ATLANTA, GA - ----------- AMLI: at Pleasant Hill Atlanta, GA 1996 502 501,816 1,000 at Barrett Lakes Atlanta, GA 1997 446 460,150 1,032 at River Park Atlanta, GA 1997 222 225,892 1,018 at Towne Creek Gainesville, GA 1989 150 121,722 811 at Willeo Creek Roswell, GA 1995 1989 242 297,302 1,229 ------ --------- ------ Subtotal - Atlanta, GA 1,562 1,606,882 1,029 ------ --------- ------ CHICAGO, IL - ----------- AMLI: at Prairie Court Oak Park, IL 1987 125 105,578 845 at Windbrooke Buffalo Grove, IL 1995 1987 236 213,160 903 at Chevy Chase Buffalo Grove, IL 1996 1988 592 480,676 812 at Danada Wheaton, IL 1997 1989/1991 600 521,500 869 at Fox Valley Aurora, IL 1998 272 269,093 989 at Willowbrook Willowbrook, IL 1996 1987 488 418,404 857 ------ --------- ------ Subtotal - Chicago, IL 2,313 2,008,411 868 ------ --------- ------ EASTERN KANSAS - -------------- AMLI: at Regents Crest Overland Park, KS 1997 1997 368 346,488 942 ------ --------- ------ Approximate Rentable Average Year Year Number Area Unit Size Location Acquired Completed of Units (Sq Ft) (Sq ft) -------- -------- --------- -------- ----------- --------- DALLAS/FT. WORTH - ---------------- AMLI: at Fossil Creek Fort Worth, TX 1997 384 384,358 1,001 on Timberglen Dallas, TX 1990 1985 260 201,198 774 at Verandah Arlington, TX 1997 1986/1991 538 394,504 733 ------ ---------- ------ Subtotal - Dallas/Ft. Worth 1,182 980,060 829 ------ ---------- ------ AUSTIN, TX - ---------- AMLI: at Park Place Austin, TX 1994 1985 588 397,968 677 ------ ---------- ------ HOUSTON, TX - ----------- AMLI: at Champions Centre Houston, TX 1994 1994 192 164,480 857 at Champions Park Houston, TX 1994 1991 246 221,646 901 at Greenwood Forest Houston, TX 1995 1995 316 310,844 984 ------ ---------- ------ 754 696,970 924 ------ ---------- ------ TOTAL CO-INVESTMENT PROPERTIES 6,767 6,036,779 892 ====== ========== ====== TOTAL WHOLLY OWNED AND CO-INVESTMENT PROPERTIES 19,559 17,398,406 890 ====== ========== ======
AMLI RESIDENTIAL PROPERTIES TRUST PROPERTY INFORMATION - CONTINUED As of December 31, 1998
Quarter Ended Year Ended December 31, 1998 Quarter Ended December 31, 1998 Year Ended Average Rental Rates Dec 31, 1998 Average Rental Rates Dec 31, 1998 ------------------------- Ave. ------------------------ Ave. Per Unit Per Sq. Ft. Occupancy Per Unit Per Sq. Ft. Occupancy -------- ----------- ------------ -------- ----------- ------------ CO-INVESTMENT PROPERTIES - ------------ ATLANTA, GA - ----------- AMLI: at Pleasant Hill 803 $0.80 93.9% 797 $0.80 92.8% at Barrett Lakes 853 0.83 92.5% 842 0.82 93.5% at River Park 872 0.86 95.2% 855 0.84 94.9% at Towne Creek 613 0.76 85.1% 617 0.76 90.0% at Willeo Creek 836 0.68 91.2% 821 0.67 92.9% ------ ----- ------ ------ ----- ------ Subtotal - Atlanta, GA 814 $0.79 92.4% 805 $0.78 93.1% ------ ----- ------ ------ ----- ------ CHICAGO, IL - ----------- AMLI: at Prarie Court 1,099 $1.30 93.6% 1,080 $1.28 95.7% at Windbrooke 990 1.10 98.2% 975 1.08 97.8% at Chevy Chase 980 1.21 95.2% 956 1.18 95.9% at Danada 932 1.07 94.5% 920 1.06 94.8% at Fox Valley 967 0.98 88.4% 934 0.94 76.3% at Willowbrook 964 1.12 95.5% 934 1.09 95.1% ------ ----- ------ ------ ----- ------ Subtotal - Chicago, IL 970 $1.12 94.5% 948 $1.09 93.3% ------ ----- ------ ------ ----- ------ EASTERN KANSAS - -------------- AMLI: at Regents Crest 763 $0.81 94.7% 738 $0.78 94.1% ------ ----- ------ ------ ----- ------ Quarter Ended Year Ended December 31, 1998 Quarter Ended December 31, 1998 Year Ended Average Rental Rates Dec 31, 1998 Average Rental Rates Dec 31, 1998 ------------------------- Ave. ------------------------ Ave. Per Unit Per Sq. Ft. Occupancy Per Unit Per Sq. Ft. Occupancy -------- ----------- ------------ -------- ----------- ------------ DALLAS/FT. WORTH - ---------------- AMLI: at Fossil Creek 826 0.83 88.5% 788 $0.79 72.0% on Timberglen 618 0.80 94.0% 636 0.82 94.9% at Verandah 666 0.91 94.9% 670 0.91 95.1% ------ ----- ------ ------ ----- ------ Subtotal - Dallas/Ft. Worth 708 0.85 92.7% 701 $0.85 87.6% ------ ----- ------ ------ ----- ------ AUSTIN, TX - ---------- AMLI: at Park Place 599 $0.88 95.1% 588 $0.87 95.3% ------ ----- ------ ------ ----- ------ HOUSTON, TX - ----------- AMLI: at Champions Centre 757 $0.88 93.6% 747 $0.87 95.3% at Champions Park 744 0.83 94.9% 728 0.81 96.0% at Greenwood Forest 792 0.81 95.2% 780 0.79 94.9% ------ ----- ------ ------ ----- ------ Subtotal - Houston, TX 768 $0.83 94.7% 755 $0.82 95.4% ------ ----- ------ ------ ----- ------ TOTAL CO-INVESTMENT PROPERTIES 822 $0.92 93.8% 808 $0.91 92.7% ====== ===== ====== ====== ===== ====== TOTAL WHOLLY OWNED AND CO-INVESTMENT PROPERTIES 765 $0.86 93.0% 753 $0.85 92.6% ====== ===== ====== ====== ===== ======
AMLI RESIDENTIAL PROPERTIES TRUST COMPONENTS OF PROPERTY EBITDA Unaudited - Dollars in thousands except per share data
WHOLLY-OWNED CO-INVESTMENTS AT 100% COMBINED AT 100% ----------------------------- ----------------------------- ----------------------------- Year Ended December 31, Year Ended December 31, Year Ended December 31, ----------------------------- ----------------------------- ----------------------------- % % % 1998 1997 Change 1998 1997 Change 1998 1997 Change ------- ------- ------- -------- ------- ------- ------- ------- ------- PROPERTY REVENUES - ----------------- RENTAL INCOME - ------------- Same Store Communities (1) $73,223 71,435 2.5% 34,243 33,003 3.8% 109,268 106,204 2.9% New Communities (2) 3,206 1,813 76.8% 6,355 3,469 83.2% 9,562 5,282 81.0% Development and/or Lease-up Communities (3) 4,923 596 725.8% 9,967 1,166 754.6% 14,889 1,762 744.8% Acquisition Communities (4) 18,561 2,764 571.5% 13,403 8,242 62.6% 31,965 11,006 190.4% Communities Sold/ Contributed to Ventures (5) 1,978 3,871 -48.9% 71 2,049 3,871 -47.1% -------- ------- ------ -------- ------- ------ -------- ------- ------ Total $101,892 80,479 26.6% 64,039 45,879 39.6% 167,732 128,125 30.9% ======== ======= ====== ======== ======== ====== ======== ======= ====== OTHER REVENUES - -------------- Same Store Communities $ 4,283 3,874 10.5% 1,826 1,714 6.5% 6,196 5,662 9.4% New Communities 163 111 46.7% 351 198 77.1% 515 310 66.2% Development and/or Lease-up Communities 369 68 440.9% 867 158 447.8% 1,235 226 445.7% Acquisition Communities 988 96 926.6% 928 539 72.3% 1,917 635 201.9% Communities Sold/ Contributed to Ventures 134 189 -29.0% 134 189 -29.0% -------- ------- ------ -------- ------- ------ -------- ------- ------ Total $ 5,937 4,339 36.8% 3,972 2,610 52.2% 9,997 7,022 42.4% ======== ======= ====== ======== ======== ====== ======== ======= ====== AMLI RESIDENTIAL PROPERTIES TRUST COMPONENTS OF PROPERTY EBITDA - CONTINUED Unaudited - Dollars in thousands except per share data WHOLLY-OWNED CO-INVESTMENTS AT 100% COMBINED AT 100% ----------------------------- ----------------------------- ----------------------------- Year Ended December 31, Year Ended December 31, Year Ended December 31, ----------------------------- ----------------------------- ----------------------------- % % % 1998 1997 Change 1998 1997 Change 1998 1997 Change ------- ------- ------- -------- ------- ------- ------- ------- ------- TOTAL PROPERTY REVENUES - -------------- Same Store Communities $ 77,506 75,309 2.9% 36,069 34,717 3.9% 115,464 111,866 3.2% New Communities 3,370 1,924 75.1% 6,707 3,667 82.9% 10,076 5,591 80.2% Development and/or Lease-up Communities 5,291 664 696.6% 10,834 1,325 717.9% 16,125 1,989 710.8% Acquisition Communities 19,549 2,860 583.4% 14,331 8,781 63.2% 33,881 11,641 191.0% Communities Sold/ Contributed to Ventures 2,112 4,060 -48.0% 71 -- 2,183 4,060 -46.2% -------- ------- ------ -------- ------- ------ -------- ------- ------ Total $107,828 84,818 27.1% 68,011 48,489 40.3% 177,730 135,147 31.5% ======== ======= ====== ======== ======== ====== ======== ======= ====== TOTAL OPERATING EXPENSES - --------------- Same Store Communities $ 31,681 30,538 3.7% 14,347 13,875 3.4% 46,918 45,288 3.6% New Communities 1,183 1,027 15.2% 2,137 1,600 33.6% 3,321 2,627 26.4% Development and/or Lease-up Communities 1,906 336 467.5% 5,051 998 406.4% 6,958 1,333 421.8% Acquisition Communities 7,524 995 656.3% 5,767 3,392 70.0% 13,291 4,387 203.0% Communities Sold/ Contributed to Ventures 1,298 2,048 -36.6% 25 1,323 2,048 -35.4% -------- ------- ------ -------- ------- ------ -------- ------- ------ Total $ 43,593 34,943 24.8% 27,328 19,864 37.6% 71,811 55,682 29.0% ======== ======= ====== ======== ======== ====== ======== ======= ====== AMLI RESIDENTIAL PROPERTIES TRUST COMPONENTS OF PROPERTY EBITDA - CONTINUED Unaudited - Dollars in thousands except per share data WHOLLY-OWNED CO-INVESTMENTS AT 100% COMBINED AT 100% ----------------------------- ----------------------------- ----------------------------- Year Ended December 31, Year Ended December 31, Year Ended December 31, ----------------------------- ----------------------------- ----------------------------- % % % 1998 1997 Change 1998 1997 Change 1998 1997 Change ------- ------- ------- -------- ------- ------- ------- ------- ------- PROPERTY EBITDA - --------------- Same Store Communities $ 45,825 44,771 2.4% 21,722 20,842 4.2% 68,546 66,578 3.0% New Communities 2,186 897 143.6% 4,569 2,067 121.0% 6,755 2,964 127.9% Development and/or Lease-Up Communities 3,385 328 930.9% 5,782 327 1668.3% 9,167 655 1298.8% Acquisition Communities 12,026 1,866 544.6% 8,564 5,390 58.9% 20,590 7,255 183.8% Communities Sold/ Contributed to Ventures 814 2,012 -59.6% 46 860 2,012 -57.3% -------- ------- ------ -------- ------- ------ -------- ------- ------ Total $ 64,236 49,875 28.8% 40,684 28,626 42.1% 105,918 79,465 33.3% ======== ======= ====== ======== ======== ====== ======== ======= ====== Company's share of Co-investment EBITDA (incl. share of cash flow in excess of ownership %) 11,153 7,491 48.9% 11,153 7,491 48.9% ======== ======== ====== ======== ======= ====== Percent of Co-investment EBITDA 27% 26% 11% 9% ======== ======== ======== ======= (1) Stabilized Communities at 1/1/97. (2) Development Communities stabilized after 1/1/97 but before 1/1/98. (3) Development Communities not yet stabilized. (4) Stabilized Communities acquired after 1/1/97. (5) Communities sold or contributed to co-investment ventures.
AMLI RESIDENTIAL PROPERTIES TRUST DEVELOPMENT ACTIVITIES FOURTH QUARTER 1998
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 1/24/99 - -------------- ------- ---------- ------- --------- -------- ---------- -------- --------- --------- ATLANTA, GEORGIA - ------- AMLI at: Killian Creek 216 $13.9 100% 4Q/97 4Q/98 2Q/99 3Q/99 74% 24% (formerly Killian Farms) Northwinds* 800 $54.4 35% 3Q/96 3Q/97 3Q/99 2Q/00 81% 71% DALLAS/FORT WORTH, TEXAS - ------------------ AMLI at: Deerfield 240 $17.5 25% 4Q/97 1Q/99 3Q/99 1Q/00 42% 4% Autumn Chase III 240 $14.2 100% 3Q/96 4Q/97 3Q/98 1Q/99 100% 92% on the Parkway 240 $16.2 25% 1Q/97 2Q/98 4Q/98 1Q/99 100% 93% at Bent Tree II 200 $14.2 100% 4Q/98 4Q/99 1Q/00 3Q/00 1% n/a AUSTIN, TEXAS - ------------- AMLI at: Wells Branch 576 $35.1 25% 1Q/97 1Q/98 1Q/99 4Q/99 95% 79% Monterey Oaks 430 $30.9 100% 4Q/98 4Q/99 3Q/00 3Q/01 1% n/a CHICAGO (METRO), ILLINOIS - ---------------- AMLI at: Oakhurst North 464 $44.3 25% 1Q/97 2Q/98 3Q/99 2Q/00 91% 43% at St. Charles 400 $41.9 100% 3Q/98 3Q/99 2Q/00 2Q/01 6% n/a AMLI RESIDENTIAL PROPERTIES TRUST DEVELOPMENT ACTIVITIES - CONTINUED 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 1/24/99 - -------------- ------- ---------- ------- --------- -------- ---------- -------- --------- --------- OVERLAND PARK, KANSAS - -------------- AMLI at: Wynnewood Farms 232 $17.6 25% 2Q/98 3Q/99 1Q/00 3Q/00 4% n/a Regents Crest II 108 $7.8 25% 2Q/98 3Q/99 4Q/99 1Q/00 8% n/a Creekside 224 $16.2 25% 2Q/98 4Q/99 2Q/00 3Q/00 3% n/a INDIANAPOLIS, INDIANA - ------------- AMLI at: Lake Clearwater 216 $16.7 25% 3Q/98 3Q/99 1Q/00 3Q/00 9% n/a Castle Creek 276 $20.7 40% 3Q/98 4Q/99 2Q/00 4Q/00 3% n/a ----- ------ TOTAL 4,862 $361.6 ===== ====== * Percent leased is based on the combined 800 units of both phases. All the above properties other than Killian Creek, Bent Tree II, and Autumn Chase III are being developed, or are anticipated to be developed as co-investments.
AMLI RESIDENTIAL PROPERTIES TRUST DEVELOPMENT ACTIVITIES - CONTINUED PLANNING STAGES - --------------- Number of Community Name Units - -------------- ------ ATLANTA, GEORGIA - -------- AMLI at: Park Bridge 352 INDIANAPOLIS, INDIANA - ------------ AMLI at: Prairie Lakes 228 Prarie Lakes (phases II-VI) 1,100 DALLAS/FORT WORTH, TEXAS - ------------------ AMLI at Mesa Ridge (Fossil Creek II) 520 Fossil Lake 324 HOUSTON, TEXAS - -------------- AMLI at: King's Harbour 300 Champions II 288 LEE'S SUMMIT MISSOURI - ------------ AMLI at Lee's Summit 410 - -------------------- 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. -----END PRIVACY-ENHANCED MESSAGE-----