Bay Apartment Communities Reports 16 Percent Growth in FFO Per Share.SAN JOSE San Jose, city, United States San Jose (sănəzā`, săn hōzā`), city (1990 pop. 782,248), seat of Santa Clara co., W central Calif.; founded 1777, inc. 1850. , Calif.--(BUSINESS WIRE)--April 23, 1997--Bay Apartment Communities (NYSE/PCX Symbol: BYA), a multifamily real estate company, said Funds From Operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. (FFO FFO See: Funds from operations ) per share on a weighted average, fully-diluted basis increased 16 percent in the first quarter of 1997 over comparable FFO per share in the first quarter of 1996. For the quarter ended March 31, 1997, Bay reported FFO of $13,321,000, or $.58 per share on a weighted average, fully-diluted basis, versus FFO of $6,982,000, or $.50 per share on the same basis, in the first quarter of fiscal 1996. FFO for the fourth quarter of 1996 was $12,302,000, or $.56 per share. The company noted the increase in FFO per share occurred despite an increase in weighted average, fully-diluted shares to approximately 23 million at March 31, 1997 compared with approximately 14 million at March 31, 1996 and approximately 22 million at December December: see month. 31, 1996. The increase in weighted average, fully-diluted shares outstanding reflects Bay's sale of 1.4 million shares of common stock in January January: see month. 1997 and transactions involving the sale of more than 7.8 million shares of common and convertible preferred stock Convertible Preferred Stock Preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date. Also known as "convertible preferred shares". during the last three quarters of 1996. These transactions raised approximately $233 million in net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). to the company. As a result of these transactions, the company's total debt to total market capitalization Total Market Capitalization The total market value of all of a firm's outstanding securities. was approximately 24.1 percent at March 31, 1997 compared with approximately 41.2 percent at March 31, 1996. For the first quarter of 1997, Bay reported revenues of $26,257,000 versus revenues of $16,472,000 for the same period a year ago. Bay's net income for the first quarter of 1997 was $7,771,000, or $.33 per share on a weighted average, fully-diluted basis, compared with net income of $3,195,000, or $.19 per share on the same basis, for the same period in 1996. "Bay continues to successfully execute its strategies and deliver on its objectives of providing increased returns to shareholders through portfolio growth and an improved balance sheet," noted Gilbert Gil·bert , Walter Born 1932. American biologist. He shared a 1980 Nobel Prize for developing methods of mapping the structure and function of DNA. M. Meyer Mey·er , Annie Florance Nathan 1867-1951. American writer and a founder of Barnard College at Columbia University (1889). Her plays include The Dominant Sex (1911) and Black Souls (1932). , chairman and chief executive officer. "We have not only enhanced the company's presence in its core market of the San Francisco Bay Area “Bay Area” redirects here. For other uses, see Bay Area (disambiguation). The San Francisco Bay Area, colloquially known as the Bay Area or The Bay , but have continued our successful expansion into Southern California Southern California, also colloquially known as SoCal, is the southern portion of the U.S. state of California. Centered on the cities of Los Angeles and San Diego, Southern California is home to nearly 24 million people and is the nation's second most populated region, ," he added. The company's portfolio-wide physical occupancy Gaining or having physical possession of real property subject to, or in the absence of, legal right or title. In a fire insurance policy, for example, the term occupancy at March 31, 1997 was 97.7 percent versus 96.0 percent at December 31, 1996. Physical occupancies at March 31, 1997 exclude four of Bay's apartment home communities undergoing substantial reconstruction. Average apartment home rents increased 13.4 percent to $1,014 per apartment home in the first quarter of 1997 compared with $894 per apartment home in the first quarter of 1996. Capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. expenditures for the quarter were $31 per apartment home--$122 on an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. basis--or approximately 2.1 percent of same period FFO. Bay's earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
The company reported a 6.44 percent weighted average interest rate on all debt at the end of the first quarter of 1997 versus 6.38 percent at the end of the first quarter of 1996. "The growth in rents and increased occupancy in our portfolio reflects the strength of our markets, both in the San Francisco Bay Area and our newer Southern California markets," said Max L. Gardner Gardner, city (1990 pop. 20,125), Worcester co., N central Mass.; settled 1764, inc. as a city 1921. Its furniture and lumber industries date from c.1805. Diversified metal and electronics manufactures add to the city's economic base. A state prison is there. , executive vice president and chief operating officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. . "During the quarter, we completed the lease-up of Rosewalk, a 300-apartment home community in San Jose, and acquired two communities containing 385 apartment homes," he continued. "These acquisitions enhanced our presence in Southern California and marked our initial entry into Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. and San Diego San Diego (săn dēā`gō), city (1990 pop. 1,110,549), seat of San Diego co., S Calif., on San Diego Bay; inc. 1850. San Diego includes the unincorporated communities of La Jolla and Spring Valley. Coronado is across the bay. Counties. They included the Rancho ran·cho n. pl. ran·chos Southwestern U.S. 1. A hut or group of huts for housing ranch workers. 2. A ranch. Penasquitos Racquet Club Apartments, a 176-apartment home community in San Diego, and The Village Apartments, a 209- apartment home community in West Covina West Covina, city (1990 pop. 96,086), Los Angeles co., S Calif., in the San Gabriel valley; settled 1905, inc. 1923. Before World War II, West Covina was a small rural community where walnuts, wheat, and livestock were raised. . In addition, to date in April we have acquired the Banbury Banbury (băn`bərē), town (1991 pop. 37,463), Oxfordshire, central England, on the Cherwell River. Light industry and tourism are important to the local economy. Cross Apartments, a 400-apartment home community in Huntington Beach Huntington Beach, city (1990 pop. 181,519), Orange co., S Calif., on the Pacific coast, across from Santa Catalina Island, in an oil-producing area; inc. 1909. It manufactures aerospace vehicles, aircraft parts, optical instruments, and heat transfer equipment. , and Cardiff Cardiff (kär`dĭf), Welsh Caerdydd, city and county (1998 est. pop. 320,900), S Wales, on the Taff River near its mouth on the Bristol Channel. Cardiff is the capital of Wales and an important port. Until the early 20th cent. Gardens, a 252-apartment home community in Campbell Campbell, city, United States Campbell, city (1990 pop. 36,048), Santa Clara co., W Calif., in the fertile Santa Clara valley; founded 1885, inc. 1952. . The company expects to spend approximately $17.9 million for reconstruction programs at these four communities." During the quarter, the company continued activities on three new apartment home communities in Santa Clara Santa Clara, city, Cuba Santa Clara (sän`tä klä`rä), city (1994 est. pop. 217,000), capital of Villa Clara prov., central Cuba. County which when completed will contain 1,325 apartment homes, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Geoffrey Geoffrey (jĕf`rē), 1158–86, duke of Brittany (1171–86); fourth son of Henry II of England. Betrothed (1166) to Constance, heiress of Brittany, he was recognized as heir to the duchy in 1169 and succeeded to it on the death of her L. Baker, Bay's vice president and chief development and acquisition officer. The company completed investments totaling approximately $6.4 million to acquire two land parcels (including one acquired in early April 1997) totaling 8.87 acres on The Alameda Alameda (ăləmē`də, –mā`də), city (1990 pop. 76,459), Alameda co., W central Calif., on an island just off the eastern shore of San Francisco Bay; settled 1850, inc. as a city 1884. in downtown San Jose Downtown San Jose is the central business district of San Jose, California, United States. The area is generally located north of Interstate 280 and east of Guadalupe Parkway, which roughly parallels Guadalupe River. . Bay has initiated development of Paseo Alameda on the assemblage assemblage: see collage. assemblage Three-dimensional construction made from household materials such as rope and newspapers or from any found materials. . The development will be comprised of 305 apartment homes and approximately 15,000 square feet to be leased as retail space. The company also initiated construction on CentreMark, a 311-apartment home community being developed on a 7.9 acre assemblage at Stevens Creek Stevens Creek is a creek in Santa Clara County, California. The creek flows from the Santa Cruz Mountains into Stevens Creek Reservoir. It continues through Cupertino, Los Altos, and Mountain View before emptying into the San Francisco Bay. Boulevard boulevard Broad landscaped avenue that typically permits several lanes of vehicular traffic as well as pedestrian walkways. The earliest boulevards originally followed the city walls (the word originally meant “bulwark”) and were built in the ancient Middle and Highway 280 in San Jose. In addition, the company's construction of Toscana Toscana: see Tuscany, Italy. , a 709-apartment home community in Sunnyvale Sunnyvale, city (1990 pop. 117,229), Santa Clara co., W Calif., near San Francisco; settled 1849, inc. 1912. A city in Silicon Valley, its many manufactures include semiconductors; machinery and instruments; electrical, electronic, and aerospace products; , is on schedule. "The Paseo Alameda and CentreMark communities symbolize Bay's knowledge of the market and development skills in that both are assemblages of multiple parcels at each site. These are strategically located communities on heavily traveled corridors in prime, urban in-fill locations in Silicon Valley," Baker said. Despite investing approximately $73.8 million in the acquisition of communities and development sites since the beginning of 1997 and planned investments of $40.1 million in reconstruction programs during the year, the company continues to be in a strong financial condition, noted Jeffrey B. Van Horn, vice president and chief financial officer. "Our sale of 1,662,000 shares of common stock for approximately $60 million which is scheduled to close today, combined with Bay's other recent equity transactions and the expansion of our credit line to $200 million during 1996, provides us the resources to continue our portfolio growth strategy," he said. "At the same time, Bay's total debt to total market capitalization is at the lowest level in the company's history and among the lowest of all multifamily REITS REITS Real Estate Investors of the Tri-States (Harrison, TN) ." Bay Apartment Communities is a fully integrated, multifamily real estate investment trust focused on the acquisition, development, construction, reconstruction and management of high quality apartment communities. The company currently owns 38 apartment communities containing 9,839 apartment homes. The company's portfolio consists of 32 apartment home communities in the San Francisco Bay Area and Northern California Northern California, sometimes referred to as NorCal, is the northern portion of the U.S. state of California. The region contains the San Francisco Bay Area, the state capital, Sacramento; as well as the substantial natural beauty of the redwood forests, the northern , and six in Southern California. This release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of Section 27A of the Securities Act of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements contained in this release are statements that involve risks and uncertainties, including, but not limited to, market demand, the effect of economic conditions, the impact of competition and competitive pricing, changes in construction scope or cost, the result of financing efforts, actual purchases under agreements, the effect of the company's accounting policies and other risks detailed in the company's Securities and Exchange Commission filings. -0-
BAY APARTMENT COMMUNITIES, INC.
FINANCIAL AND OPERATIONAL DATA
(UNAUDITED)
For the Quarter Ended
March 31, Dec. 31, Sept. 30, June 30, March 31,
1997 1996 1996 1996 1996
Dollars in thousands, except per share and per unit
RESULTS OF OPERATIONS:
Revenues:
Rental revenues $25,393 $23,997 $22,380 $17,906 $16,094
Other revenues 864 678 670 487 378
Total revenues 26,257 24,675 23,050 18,393 16,472
Expenses:
Property operating 5,971 5,671 5,407 4,108 3,737
Property taxes 1,914 1,825 1,840 1,465 1,222
General and
administrative 1,447 1,172 997 864 860
Interest and
financing 3,317 3,426 3,743 3,635 3,472
Depreciation and
amortization 5,699 5,412 5,080 4,226 3,971
Total Expenses 18,348 17,506 17,067 14,298 13,262
Minority
interest (1) 138 155 138 12 15
Extraordinary
item (2) -- -- -- 511 --
Net income $7,771 $7,014 $5,845 $3,572 $3,195
Net income per
share
Primary $0.33 $0.31 $0.28 $0.20 $0.19
Fully diluted $0.33 $0.31 $0.28 $0.20 $0.19
FUNDS FROM OPERATIONS (FFO):
FFO (3) $13,321 $12,302 $10,831 $8,179 $6,982
per share
Primary $0.60 $0.58 $0.57 $0.56 $0.52
Fully diluted $0.58 $0.56 $0.55 $0.54 $0.50
FFO
per share annualized
Primary $2.40 $2.32 $2.29 $2.26 $2.07
Fully diluted $2.32 $2.24 $2.20 $2.15 $2.00
FUNDS AVAILABLE FOR
DISTRIBUTION
(FAD): (4) $12,674 $11,803 $10,337 $7,963 $6,916
FAD
per share
Primary $0.57 $0.55 $0.54 $0.55 $0.51
Fully diluted $0.55 $0.54 $0.53 $0.52 $0.50
FAD
per share annualized
Primary $2.27 $2.22 $2.18 $2.19 $2.05
Fully diluted $2.21 $2.15 $2.10 $2.09 $1.98
DIVIDEND DATA:
Dividends declared
per share
Common $0.41 $0.41 $0.40 $0.40 $0.40
Preferred $0.42 $0.42 $0.41 $0.41 $0.41
Dividends as a
percentage of
funds from
operations 71.6% 72.7% 80.5% 77.5% 79.8%
Dividends as
percentage of FAD 75.3% 75.7% 84.3% 79.6% 80.5%
BALANCE SHEET DATA:
Gross real
estate assets $789,226 $750,347 $731,729 $602,403 $505,240
Total gross
assets $749,215 $764,463 $745,438 $613,880 $519,863
Debt:
Fixed (5) $196,096 $196,253 $196,428 $176,324 $176,413
Variable 28,435 28,435 28,435 56,923 45,698
Subtotal 224,531 224,688 224,863 233,247 222,111
Construction
debt (6) 40,200 49,000 32,821 42,248 11,823
Total debt $264,731 $273,688 $257,684 $275,495 $233,934
Weighted average
interest rate,
all debt 6.44% 6.51% 6.41% 6.42% 6.38%
Weighted average
interest rate,
excluding
construction
debt 6.33% 6.35% 6.33% 6.36% 6.35%
Total debt to
total
capitalization
at market 24.14% 25.93% 29.41% 40.05% 41.15%
Total debt to
book
capitalization(7) 32.79% 35.80% 34.57% 44.88% 45.00%
Debt service
coverage before
cap. interest (8) 4.83x 4.40x 3.79x 3.21x 2.99x
Debt service
coverage including
cap. interest (9) 3.73x 3.43x 3.08x 2.83x 2.75x
Fixed debt as a
percentage of
total debt 74.1% 71.7% 76.2% 64.0% 75.4%
Fixed debt as a
percentage of total
debt, excluding
construction
debt 87.3% 87.3% 87.4% 75.6% 79.4%
OPERATIONAL DATA:
Capital expenditures
per unit (10) $31 $35 $42 $36 $26
Capital expenditures
per unit,
annualized $122 $139 $166 $142 $104
Occupancy at end
of period (11) 97.7% 96.0% 97.4% 97.9% 97.0%
Average rent at
end of period $1,014 $989 $963 $940 $894
Number of units 9,187 8,754 8,586 7,093 6,450
Same store
revenues (12) $17,921 $17,515 $17,362 $16,810 $16,145
Same store
operating
expenses (12) $5,182 $5,122 $5,265 $5,099 $4,795
Same store
EBITDA (12) $12,739 $12,252 $12,097 $11,711 $11,350
Average same
store rent at
end of period
(12) $975 $962 $945 $929 $892
Same store
occupancy at end
of period (12) 97.8% 96.2% 97.5% 97.6% 97.0%
STOCK DATA:
Common stock price
at end of period $35.875 $36.000 $28.500 $25.875 $24.125
Shares outstanding
Common 20,472,785 19,007,988 18,990,826 13,226,851 11,558,087
Convertible
preferred
stock
Series A & B 2,713,822 2,713,822 2,713,822 2,713,822 2,308,800
Total shares
outstanding 23,186,607 21,721,810 21,704,648 15,940,673 13,866,887
Weighted
average shares
outstanding
Common 19,997,068 18,999,606 16,796,991 12,529,399 11,558,087
Convertible
preferred
stock
Series A & B 2,713,822 2,713,822 2,713,822 2,544,692 2,308,800
Assumed
conversion of
common stock
equivalents 279,088 287,116 175,274 131,906 102,181
Fully diluted
shares
outstanding 22,989,978 22,000,544 19,686,087 15,205,997 13,969,068
BAY APARTMENT COMMUNITIES, INC.
FINANCIAL AND OPERATIONAL DATA
(UNAUDITED)
(1) Minority interest includes approximately $117,000 in the first
quarter of 1997 and $135,000 and $121,000 in the fourth and third
quarters of 1996 respectively related to Bay Countrybrook L.P.
(2) Extraordinary item reflects a one-time write off of unamortized
loan and non-use fees.
(3) Funds from operations is the definition of FFO adopted in 1995
by the NAREIT Board of Governors. It represents net income plus all
depreciation and amortization, except depreciation for non-real
estate assets and amortization of recurring financing costs.
(4) Funds available for distribution represents net income plus all
depreciation and amortization less capital expenditures and loan
principal payments.
(5) Fixed debt includes floating rate debt swapped to a long-term
fixed rate.
(6) Construction debt includes amounts drawn from the line of credit
for development and construction purposes.
(7) Book capitalization excludes accumulated depreciation.
(8) Debt service coverage represents EBITDA divided by the sum of
interest expense and loan principal amortization payments (excluding
balloon payments).
(9) Debt service coverage represents EBITDA divided by the sum of
interest expense, capitalized interest and loan principal
amortization payments (excluding balloon payments).
(10) The company, as a matter of policy, expenses any
apartment-related expenditure less than $5,000. These normally
include any expenditure related to the interior of an apartment. The
company typically capitalizes expenditures such as those for new
security gate systems, leasing pavilion reconstruction and
redecorating, roofing repair and replacement, exterior siding repair
and repainting and parking area resurfacing. Capitalized
expenditures as described here exclude major reconstruction costs
incurred in conjunction with the acquisition and repositioning of
newly purchased apartment communities. Such costs are added to the
purchase price of those communities. Capitalized expenditures also
exclude the cost of cashflow enhancing improvements such as those
expended for construction of new garages or installation of water
conservation devices which almost immediately and permanently either
earn additional revenue or reduce expenses.
(11) Physical occupancy is that at the end of the period indicated.
(12) Same store communities are those communities owned prior to the
IPO plus fourteen post-IPO acquisitions. They comprise a total of
6,230 apartment homes. These apartment communities include all those
which were owned for all of 1996 and to date during 1997 and to which
the company made no major renovations after January 1, 1996.
BAY APARTMENT COMMUNITIES, INC.
DEBT ANALYSIS
(UNAUDITED)
March 31, 1997
Details Balance Matures Rate Interest Rate Protection
(000's)
Tax-exempt $88,669 November 6.48% Interest rate is fixed
variable 2022- (a) until June 2010.
rate under June 2025
interest
rate swap
Tax-exempt 87,380 November
variable 2007-
rate under March 2017 5.88% Interest rate is fixed
interest (b) until March 2004.
rate swap
Tax-exempt
fixed rate 20,047 March 2012 7.87% Interest rate is fixed
(c) until April 2002.
Tax-exempt
variable
rate 20,800 March 2018 6.51%
(d)
Tax-exempt
variable
rate 7,635 March 2023 5.15%
(e)
Subtotal 224,531
Line of
credit (f) 40,200 May 1999 Libor+1.55%
Total $264,731
(a) The 6.48% rate represents an all-in financing cost, including
amortization of deferred financing costs.
(b) The 5.88% rate excludes the amortization of financing costs paid
by the sponsor prior to the IPO; if such costs were included, the
all-inclusive effective rate would be 6.30%.
(c) The 7.87% rate represents an all-in financing cost, including
amortization of deferred financing costs.
(d) The 6.51% rate represents an all-in financing cost, including
amortization of all deferred financing costs. The company has the
right to repurchase these bonds and currently plans to repurchase
and reissue them on a long-term fixed rate basis by August 15, 1997.
(e) The 5.15% rate represents an all-in financing cost, including
amortization of all deferred financing costs. The debt floats in a
seven-day put bond mode with a current interest rate of 3.25%.
(f) The line of credit balance was used for development and
construction purposes.
CONTACT: Gilbert M. Meyer, Max L. Gardner or Jeffrey B. Van Horn 408/983-1500 |
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