Associated Estates Realty Corporation Reports Second Quarter Results
Company Raises Full-Year Guidance
Associated Estates Realty Corporation (NYSE:AEC) (NASDAQ:AEC) today reported a net loss available to common shareholders of $1.4 million or $0.09 per common share (basic and diluted), for the second quarter ended June 30, 2008, compared with net income available to common shareholders of $8.8 million or $0.51 per common share (basic and diluted), for the second quarter ended June 30, 2007. The second quarter 2008 and 2007 results include gains on dispositions of properties of $2.3 million and $12.5 million, or $0.14 and $0.73 per share, respectively.
Funds from operations (FFO) for the quarter were $0.34 per common share (basic and diluted), compared with $0.24 per common share (basic and diluted), for the second quarter ended June 30, 2007. FFO adjusted for defeasance and other prepayment costs (“FFO as adjusted”) was $0.34 per share (basic and diluted) for the second quarter of 2008 compared to $0.34 for the second quarter of 2007.
A reconciliation of net (loss) income applicable to common shares to FFO and FFO as adjusted is included in the table at the end of this press release and in the Company’s supplemental financial information to be furnished with this earnings release to the Securities and Exchange Commission on Form 8-K.
Total revenue for the quarter was $34.0 million compared with $32.0 million for the second quarter of 2007, an increase of 6.3 percent.
Same Community Portfolio Results
Net operating income (NOI) for the quarter from the Company’s same community portfolio increased 8.3 percent as a result of revenue from the Company’s same community portfolio increasing 3.3 percent, and property operating expenses for the same community portfolio decreasing 2.6 percent, compared with the second quarter of 2007. Physical occupancy was 96.7 percent at the end of the second quarter of 2008 compared with 96.4 percent at the end of the second quarter of 2007. For the second quarter, the average net rent collected per unit for the same community properties increased 3.0 percent to $846 per month. Net rent collected per unit for the Company’s same community Midwest portfolio grew 4.7 percent, while net rent collected per unit for the Company’s same community properties in the Mid-Atlantic/Southeast markets decreased 0.5 percent.
“Our strong year-to-date performance and improved outlook are a direct result of well positioned properties and the continued investment in our portfolio,” said John Shannon, Senior Vice President of Operations.
Additional quarterly financial information, including performance by region for the Company’s portfolio, is included in the Company’s supplemental fact booklet, which is available on the “Investors” section of the Company’s web site at www.aecrealty.com, or by clicking on the following link: http://ir.aecrealty.com/results.cfm.
First Half Performance
For the six months ended June 30, 2008, net income applicable to common shares was $36.1 million or $2.23 per share (basic and diluted) compared to net income applicable to common shares of $8.0 million or $0.47 per share (basic and diluted) for the period ended June 30, 2007. The results for the six month period ended June 30, 2008 and June 30, 2007 includes gains from property sales of $45.2 million and $17.0 million, or $2.79 per share and $0.99 per share, respectively.
Funds from operations for the first six months ended June 30, 2008 were $0.56 per share and include defeasance and/or prepayment costs of $2.0 million, or approximately $0.12 per share associated with the repayment of $11.0 million in debt. Excluding these costs, FFO for the first half of 2008 would have been $0.68 per share.
NOI for the six month period ended June 30, 2008 for the Company’s same community portfolio was up 5.9 percent primarily due to a 3.5 percent increase in revenues for the Company’s same community portfolio and only a 0.4 percent increase in property operating expenses for the same community portfolio compared with the first six months of 2007.
Acquisitions
On April 22, 2008, the Company announced that it had closed the purchase of two Class A properties located in the Richmond, Virginia metro area, totaling 536 units. The properties were completed in 2005 and 2006. With the addition of these two properties, the Company’s Virginia portfolio now totals 804 units, which represents approximately 9 percent of the Company’s NOI on an annualized basis.
2008 Adjusted Outlook
The Company is once again increasing its expectations for full-year FFO as adjusted, which excludes defeasance and other prepayment costs, to a range of $1.28 to $1.32 per share, up from the Company’s previous guidance of $1.22 to $1.26 per share. Assumptions relating to the Company’s earnings guidance can be found on page 25 of the supplemental fact book.
A conference call to discuss the results will be held today, Tuesday, July 29, 2008 at 2:00 p.m. (EDT). To participate in the call:
Via Telephone: The dial in number is 800-860-2442 and the pass code is “Estates.”
Via the Internet (listen only): Access the Company’s website at www.aecrealty.com. Please log on at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software. Select the “Register for AEC’s Conference Call” link on the left hand side of the page and follow the brief instructions to register for the event. The webcast will be archived through August 12, 2008.
Company Profile
Associated Estates Realty Corporation (AEC), based in Richmond Heights, Ohio, is a real estate investment trust (“REIT”) and is a member of the Russell 2000. AEC’s portfolio consists of 54 owned and managed properties totaling 13,396 units in nine states. For more information about the Company, please visit its website at www.aecrealty.com.
FFO and FFO as adjusted are non-Generally Accepted Accounting Principle (GAAP) measures. The Company generally considers FFO and FFO as adjusted to be a useful measure for reviewing the comparative operating and financial performance of the Company because FFO and FFO as adjusted can help one compare the operating performance of a company’s real estate between periods or as compared to different REITs. A reconciliation of net (loss) income applicable to common shares to FFO and FFO as adjusted is included in the table at the end of this press release and in the Company’s supplemental financial information to be furnished with this earnings release to the Securities and Exchange Commission on Form 8K.
Source: Associated Estates Realty Corporation