Bay Apartment Communities reports a 9.5 percent increase in fourth quarter FFO.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)--Jan. 31, 1996--Bay Apartment Communities (NYSE NYSE See: New York Stock Exchange : BYA) today announced that its 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 fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis increased 9.5 percent in the fourth quarter of 1995 compared with the same period in 1994. For the quarter ended December December: see month. 31, 1995, Bay reported FFO of $6,765,000, or $.49 per share on a fully diluted basis, compared with FFO of $5,122,000, or $.44 per share on a fully diluted basis, in the same period a year ago. Fourth quarter FFO per share represents approximately a two percent increase over FFO of $5,509,000, or $.48 per share, in the third quarter of 1995. Based on the revised NAREIT NAREIT National Association of Real Estate Investment Trusts definition which the company has adopted for 1996, FFO in the fourth quarter of 1995 would have been $6,532,000, or $.47 per share, compared with FFO of $4,968,000, or $.43 per share, in the fourth quarter of 1994, and $5,287,000, or $.46 per share, in the third quarter of 1995. For the year ended December 31, 1995, FFO was $22,762,000, or $1.87 per share on a fully diluted basis, compared with FFO for all of 1994 of $16,247,000, or $1.41 on a pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma basis. FFO for all of 1994 reflects the fact that Bay did not complete its IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. until March 17, 1994 and paid off a significant amount of debt with proceeds from the offering. The FFO per share calculations for 1994 are not comparable to those for 1995 because the company did not complete its IPO until March 17, 1994. Under the revised NAREIT definition of FFO, the company's FFO for all of 1995 would have been $21,844,000, or $1.79 per share, versus $15,825,000, or $1.37 per share on a pro forma basis, in 1994. Bay's net income for 1995 was $11,460,000, or $.91 per share on a fully diluted basis, versus net income of $6,770,000, or $.59 per share on a pro forma basis, a year ago. Revenues in 1995 were $55,933,000, compared with $37,168,000 in 1994. Per share amounts for all periods of 1995 and 1994 are stated on a fully diluted basis to take into account Bay's issuance of 2.3 million shares of 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". in the fourth quarter of 1995. The company's portfolio-wide physical occupancy at December 31, 1995, was 95.6 percent compared with 97.3 percent at September September: see month. 30, 1995. The company said the occupancy level at December 31 reflects seasonal move-outs that typically occur at the end of the year and that the average physical occupancy of its portfolio during the fourth quarter of 1995 was approximately 96.6 percent. 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.
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 fourth quarter of 1995, excluding planned rehabilitation rehabilitation: see physical therapy. costs, were $37 per apartment home and $127 per apartment home for the full year. Fourth quarter capitalized expenditures represented 3.6 percent of same period FFO. Capitalized expenditures for 1995 represented approximately 3.0 percent of 1995 FFO, based on the old definition. "Our results for the quarter, as well as all of 1995, very strongly demonstrate the success of Bay's strategies and the abilities of our integrated management team," said Gilbert 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 president of Bay. "We produced strong financial results in the quarter despite some events which would normally have a short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. dilutive effect Dilutive effect Result of a transaction that decreases earnings per common share (EPS). ," he continued. "These events included our issuance of convertible preferred stock and the temporary 70 percent vacancy VACANCY. A place which is empty. The term is principally applied to cases where an office is not filled. 2. By the constitution of the United States, the president has the power to fill up vacancies that may happen during the recess of the senate. at one of our communities -- Sea Ridge -- due to our major reconstruction program which is currently underway and scheduled for completion at the end of the first quarter of 1996. In addition, we did not receive the full benefit of our $56.4 million bond debt restructuring Debt Restructuring A method used by companies with outstanding debt obligations to alter the terms of the debt agreements in order to achieve some advantage. Notes: since it did not occur until the final two weeks of the quarter. "We have significantly enhanced our position as the leading multi-family developer, builder and manager in 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 . The company's financial performance reflects our ability to generate strong internal growth, while implementing value-added val·ue-add·ed adj. Of or relating to the estimated value that is added to a product or material at each stage of its manufacture or distribution: new development, acquisition and repositioning repositioning Laparoscopic surgery The changing of a Pt's position during a procedure to improve access or visualization of the operative field, which may be linked to complications, as it changes anatomic planes of operation. Cf Laparoscopic surgery. programs. During the year, we grew the portfolio by more than 1,600 apartment homes, or some 33 percent," Meyer continued. "Bay's financial performance and portfolio growth during 1995 reflect the vibrant health of our market and the lack of significant competition for the development and acquisition of apartment home communities," noted Max 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. , Bay's 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. . Meyer noted that during the fourth quarter alone, Bay acquired three apartment communities comprising 701 apartment homes. They included City Heights, a 185-apartment home community in downtown San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden ; The Promenade promenade Public place where people walk (or, in the past, rode) at leisure for pleasure, exercise, or display. Promenades are pedestrian avenues pleasingly landscaped or commanding a view, often located along waterfronts and in parks. Vehicular traffic may or may not be restricted. , a 220-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; ; and The Pointe pointe n. In ballet, dancing that is performed on the tips of the toes. [From French pointe (des pieds), point (of the feet), tiptoe; see point.] , a 296-apartment home community in Fairfield Fairfield. 1 City (1990 pop. 12,200), Jefferson co., N central Ala., an industrial suburb of Birmingham; inc. 1919. Founded (1910) by the United States Steel Corp., its steel industry has greatly declined, negatively affecting the city's economy. . "Our strategy with these communities -- as is the case with all our acquisitions -- is to generate increased returns from them using our proven repositioning and on-site on-site adj. Done or located at the site, as of a particular activity: on-site monitoring of a production run; an on-site film shoot. property marketing and management skills," Meyer noted. "In addition to these acquisitions," he continued, "Bay completed construction and fully occupied two new communities -- Carriage Square in San Jose and Canyon Creek Canyon Creek can mean the following:
Meyer said that one key to the company's strong financial performance in 1995 was its success in reducing borrowing costs and total debt. At the end of 1995, Bay's debt to total market capitalization Total Market Capitalization The total market value of all of a firm's outstanding securities. was approximately 40 percent compared with 44 percent at the end of 1994. In addition, approximately 77 percent of the debt had fixed interest rates, versus 53 percent a year ago. At year end, the average interest rate on the company's debt was approximately 6.65 percent versus 7.14 percent a year ago. Average debt maturities have increased from approximately eight years at the end of 1994 to approximately 20 years at the end of 1995. "Bay's major financing initiatives, including a private placement and our refinancings, not only contributed to our improved financial performance, but positioned Bay to take advantage of what we see as a highly opportunistic opportunistic /op·por·tu·nis·tic/ (op?er-tldbomacn-is´tik) 1. denoting a microorganism which does not ordinarily cause disease but becomes pathogenic under certain circumstances. 2. market environment," Meyer said. On October 2, 1995, the company completed the sale of approximately 2.3 million newly issued shares of convertible Series A Preferred Stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. to an institutional investor Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. for approximately $49.2 million. "A major accomplishment during the year included the refinancing Refinancing An extension and/or increase in amount of existing debt. of $89.4 million in new and restructured long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. , fixed-rate, tax-exempt bonds Tax-exempt bond A bond usually issued by municipal, county, or state governments whose interest payments are not subject to federal and, in some cases, state and local income tax. tax-exempt bond See municipal bond. . This new debt, which carries an all-in interest rate of approximately 6.5 percent for the first 15 years, not only reduced our borrowing costs, but fixed the rate and lengthened length·en tr. & intr.v. length·ened, length·en·ing, length·ens To make or become longer. length  en·er n. the maturity of a
significant portion of our debt."
Meyer noted that during the quarter Bay also executed a new $47 million line of credit which was used to pay off or pay down existing lines of credit which carried higher interest rates. "We have made great progress during the year in not only producing highly positive financial results, but significantly enhancing the value of our portfolio," Meyer said. "By improving our balance sheet and strengthening the management throughout the company, we are well positioned to continue this track record in 1996." Bay Apartment Communities is a fully integrated, multi-family real estate investment trust focused on the acquisition, development, construction, reconstruction and management of high quality apartment communities in Northern California. Bay owns 25 apartment communities containing approximately 6,450 apartment homes in 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 and Northern California. -0-
Bay Apartment Communities, Inc
Financial and Operational Data
(Unaudited)
Quarter Ended
Dec. 31, Sept. 30, June 30, March 31, Dec. 31
1995 1995 1995 1995 1994
Dollars in thousands, except per share and per unit RESULTS OF OPERATIONS: Revenues: Rental revenues $14,848 $13,284 $12,544 $11,434 $10,786 Other revenues 352 340 303 416 241 Gain on sale 2,412 Total revenues 15,200 13,624 15,259 11,850 11,027 Expenses Property operating 3,491 3,375 2,858 2,728 2,598 Property taxes 1,248 1,065 1,073 963 950 General and administrative 650 711 612 494 497 Interest and financing 3,041 2,958 2,991 2,482 1,860 Depreciation and amortization 3,765 3,388 3,301 3,260 2,708 Total Expenses 12,195 11,497 10,835 9,927 8,613 Minority interest 5 6 5 3 0 Net income $3,000 $2,121 $4,419 $1,920 $2,414 Net income per share Primary $0.18 $0.18 $0.38 $0.17 $0.21 Fully diluted $0.18 $0.18 $0.38 $0.17 $0.21 FUNDS FROM OPERATIONS: $6,765 $5,509 $5,308 $5,180 $5,122 FFO per share (1) Primary $0.51 $0.48 $0.46 $0.45 $0.44 Fully diluted $0.49 $0.48 $0.46 $0.45 $0.44 FFO per share annualized Primary $2.02 $1.91 $1.84 $1.79 $1.77 Fully diluted $1.94 $1.91 $1.84 $1.79 $1.77 FFO- revised definition(2) $6,532 $5,287 $5,095 $4,970 $4,968 Primary $0.48 $0.46 $0.44 $0.43 $0.43 Fully diluted $0.47 $0.46 $0.44 $0.43 $0.43 FFO- revised definition per share annualized Primary $1.94 $1.83 $1.77 $1.72 $1.72 Fully diluted $1.88 $1.83 $1.77 $1.72 $1.72
Bay Apartment Communities, Inc
Financial and Operational Data
(Unaudited)
Quarter Ended
Dec. 31, Sept. 30, June 30, March 31, Dec. 31
1995 1995 1995 1995 1994
FUNDS AVAILABLE FOR DISTRIBUTION(3) $6,452 $5,258 $5,083 $4,977 $4,928 Funds available for distribution per share Primary $0.48 $0.46 $0.44 $0.43 $0.43 Fully diluted $0.46 $0.46 $0.44 $0.43 $0.43 Funds available for distribution per share annualized Primary $1.91 $1.82 $1.76 $1.72 $1.71 Fully diluted $1.85 $1.82 $1.76 $1.72 $1.71 DIVIDEND DATA: Dividends declared per share Common $0.39 $0.39 $0.39 $0.38 $0.38 Preferred $0.40 Dividends as a percentage of funds from operations 80.1% 81.7% 84.8% 84.7% 85.6% Dividends as a percentage of funds from operations; revised definition 83.0% 85.2% 88.4% 88.3% 88.3% Dividends as a percentage of funds available for distribution 84.0% 85.6% 88.6% 88.1% 89.0% BALANCE SHEET DATA: Gross real estate assets $498,210 $433,723 $424,681 $420,332 $398,333 Total gross assets $511,742 $448,443 $437,807 $432,318 $412,566
Debt:
Fixed (4) $176,501 $120,176 $120,270 $ 96,186 $ 96,211
Variable 51,300 42,130 35,730 63,893 42,501
Subtotal 227,801 162,306 156,000 160,079 138,712
Construction
debt 51,283 50,633 41,932 43,019
Total debt $227,801 $213,589 $206,633 $202,011 $181,731
Weighted average interest rate, all debt 6.73% 7.05% 7.14% 7.23% 6.98% Weighted average interest rate, excluding construction debt (5) 6.56% 6.60% 6.66% 6.82% 6.56% Total debt to total capitalization at market 40.40% 46.40% 47.86% 48.78% 43.89% Total debt to book capitalization (6) 44.50% 47.60% 47.20% 46.73% 44.05% Debt service coverage 3.14x 2.77x 2.71x 3.01x 3.64x Fixed debt as a percentage of total debt 77.5% 56.3% 58.2% 47.6% 52.9%
Bay Apartment Communities, Inc.
Financial and Operational Data
(Unaudited)
Quarter Ended
Dec. 31, Sept. 30, June 30, March 31, Dec. 31
1995 1995 1995 1995 1994
Fixed debt as a percentage of total debt, excluding construction debt 77.5% 74.0% 77.1% 60.1% 69.4% OPERATIONAL DATA: Capital Expenditure per unit (7) $ 37 29 32 29 57 Capital Expenditures per unit, annualized $ 150 116 127 116 227 Occupancy at end of period (8) 95.6% 97.3% 95.9% 95.0% 96.3% Average rent at end of period $ 884 854 843 827 823 Number of units 6,450 5,689 5,461 5,196 4,844 Same store revenues (9) $ 8,559 8,435 8,139 8,004 7,944 Same store operating expenses (9) $ 2,608 2,607 2,348 2,468 2,406 Same store EBITDA (9) $ 5,951 5,828 5,791 5,536 5,538 Average rent at end of period, same store (9) $ 942 919 905 901 898 Occupancy, same store (9) 96.1% 97.3% 96.5% 95.6% 96.6% Common stock price, end of period $ 24.250 21.375 19.500 18.375 20.125 Shares outstanding Common 11,544,287 11,544,287 11,544,287 11,544,287 11,544,287 Preferred 2,308,800 -- -- -- --
Notes:
(1) Funds from operations ("FFO") represents net income plus
depreciation and amortization.
(2) Funds from operations-revised definition represents the
definition of FFO adopted in 1995 by the NAREIT Board of Governors
and excludes recurring amortization and depreciation on non-real
estate assets.
(3) Funds available for distribution represents the definition
of funds from operations, prior to the revision discussed in note
(2), less capital expenditures and loan principal payments.
(4) Fixed debt includes floating rate debt swapped to a
long-term fixed rate.
(5) Weighted average interest rate excludes construction debt
interest, the bulk of which is capitalized.
(6) Book capitalization excludes accumulated depreciation.
(7) Capitalized expenditures per unit exclude planned major
rehabilitation costs. These costs are considered part of the
acquisition cost.
(8) Represents physical occupancy at the end of the period
indicated.
(9) Same store communities are defined as the communities owned
prior to the IPO plus three acquisitions comprising a total of 3,142
apartment homes.
Bay Apartment Communities
Debt Analysis
December 31, 1995
Balance Matures Rate Interest Rate
Protection
Details
Tax-exempt
variable rate $ 89,121 November, 6.48% (a) Interest rate
under interest 2022-June, is fixed until
rate swap 2025 June, 2010.
Tax-exempt
variable rate 87,380 November, 5.88% (b) Interest rate
under interest 2007-March, is fixed until
rate swap 2017 March, 2004.
Tax-exempt 20,800 March, 2018 6.81%
variable rate (c)
Subtotal 197,301
Line of credit 0 December, Libor +
1996 2.25% (d)
Line of credit 30,500 December, Libor +
1997 1.60% (e)
Total: $ 227,801
-------------------
(a) The 6.48% 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 6.81% rate includes amortization of all deferred financing
costs.
(d) The rate excludes amortization of deferred financing costs of
approximately $400,000 per annum.
(e) The rate excludes amortization of deferred financing costs of
approximately $40,000 per annum.
CONTACT: Bay Apartment Communities Gilbert M. Meyer or Max L. Gardner, 408/983-1500 |
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