Berkshire Income Realty Announces Third Quarter FFO of $2,787,773 and the Acquisitions of Four Multifamily Apartment Communities.BOSTON Boston, town, England Boston, town (1991 pop. 26,495), E central England, on the Witham River. Boston's fame as a port dates from the 13th cent., when it was a Hanseatic port trading wool and wine. Having recovered from a decline in the 18th and 19th cent. -- Berkshire Berkshire (bärk`shĭr, –shər, bûrk`–) or Berks (bärks, bûrks), former county, S central England. Income Realty realty n. a short form of "real estate." (See: real estate) REALTY. An abstract of real, as distinguished from personalty. Realty relates to lands and tenements, rents or other hereditaments. Vide Real Property. , Inc. (AMEX AMEX See: American Stock Exchange :BIR BIR British Institute of Radiology BIR Bureau of Internal Revenue BIR Bureau of International Recycling BIR Baculovirus IAP Repeat BIR Biomedical Imaging Resource BIR Bureau of Intelligence and Research (US State Department) .PR.A) (AMEX:BIR_PA) (AMEX:BIRPRA) (AMEX:BIR-A) (AMEX:BIR.A) (AMEX:BIR/RPA) today released its results for the quarter ended September September: see month. 30, 2004. Financial highlights for the quarter include: --The Company's 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. for the three and nine months ended September 30, 2004 were $2,787,773 and $6,286,169, respectively. --For the three and nine months ended September 30, 2004, Berkshire reported net income, before depreciation, of $2,781,204 and $6,296,653, respectively. For the comparable periods in 2003, Berkshire and the Berkshire Income Realty Predecessor predecessor - parent Group (the Company's predecessor entities for accounting purposes) reported net income, before depreciation, of $3,933,745 and 8,697,364, respectively. The decrease in net income, before depreciation, from quarter to quarter and year to year, was driven primarily by the decrease in income associated with the amortization of the basis differential of the mortgage funds in which the Company holds ownership interests. Fluctuations in that amortization occur when large amounts of mortgages, held by the mortgage funds, pay off during a period, as was the case in 2003. In 2004, there were substantially fewer mortgages paid off than in the previous year. Because the Company did not have any operations until the quarter ended June June: see month. 30, 2003, the discussion in this press release of operating activities prior to April 1, 2003 refers to the operations and activities of the Berkshire Income Realty Predecessor Group. As described in the Company's Form 10K for the year ended December December: see month. 31, 2003, the Berkshire Income Realty Predecessor Group contributed to the Company the initial properties that comprise To embrace, cover, or include; to confine within; to consist of. In the law governing patents—grants of an exclusive right or privilege to make, use, or sell an invention or product for a term of years—the term comprise a portion of the Company's current operations. --On November November: see month. 3 and November 4, 2004, the Company consummated con·sum·mate tr.v. con·sum·mat·ed, con·sum·mat·ing, con·sum·mates 1. a. To bring to completion or fruition; conclude: consummate a business transaction. b. the acquisition of four multifamily apartment communities in Virginia Virginia, state, United States Virginia, state of the south-central United States. It is bordered by the Atlantic Ocean (E), North Carolina and Tennessee (S), Kentucky and West Virginia (W), and Maryland and the District of Columbia (N and NE). , definitive purchase agreements for which the Company entered into on September 2, 2004. The Virginia communities total 729 apartment units and range in size from 153 to 216 apartments units. The aggregate purchase price for the Virginia multifamily apartment communities is $42,700,000, allocated as follows: Trellis 1. Trellis - An object-oriented language from the University of Karlsruhe(?) with static type-checking and encapsulation. 2. Trellis - An object-oriented application development system from DEC, based on the Trellis language. (Formerly named Owl). at Lees Mill, $8,825,000 (Newport News Newport News, independent city (1990 pop. 170,045), SE Va., on the Virginia peninsula, at the mouth of the James River, off Hampton Roads, near Norfolk; inc. 1896. , VA), Bridgewater Bridgewater, town (1990 pop. 21,249), Plymouth co., E Mass.; inc. 1656. Manufacturing includes shoes and metal products. Its iron foundry industry dates from colonial times. Bridgewater State College and a state prison are there. on the Lake, $18,950,000 (Hampton Hampton, part of Greater London, England Hampton, since 1965 part of the Greater London outer borough of Richmond upon Thames, SE England, on the Thames River. It is the site of Hampton Court Palace, which occupies about eight acres (3. , VA), Arboretum arboretum: see botanical garden. arboretum Place where trees, shrubs, and sometimes herbaceous plants are cultivated for scientific and educational purposes. An arboretum may be a collection in its own right or a part of a botanical garden. Place, $10,575,000 (Newport News, VA) and Silver Hill at Arboretum, $4,350,000 (Newport News, VA). The Company also acquired the vacant land adjacent to Arboretum Place for $1,500,000. President and CFO See Chief Financial Officer. , David Quade comments, "We are very excited about the Virginia acquisitions. We feel the apartment communities are in a good rental market and are well located. These acquisitions also allow us to put an additional $13 million of our available capital to work." Funds From Operations The Company has adopted the revised definition of Funds from Operations ("FFO FFO See: Funds from operations ") adopted by the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT NAREIT National Association of Real Estate Investment Trusts "). Management considers FFO to be an appropriate measure of performance of an equity REIT Equity REIT A Real Estate Investment Trust that assumes ownership status in the property it invests in enabling investors of the REIT to earn dividends on rental income from the property and appreciation in property resale. Antithesis of a Mortgage REIT. . We calculate FFO by adjusting net income (loss) (computed in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). , including non-recurring items) for gains (or losses) from our minority interest in our operating partnership, Berkshire Income Realty - OP, L.P., sales of properties and real estate-related depreciation and amortization. Management believes that in order to facilitate a clear understanding of the historical operating results of the Company, FFO should be considered in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with net income (loss) as presented in the financial statements included elsewhere herein. Management considers FFO to be a useful measure for reviewing the comparative operating and financial performance of the Company because, by excluding gains and losses related to sales of previously depreciated Depreciated may refer to:
The Company's calculation of FFO may not be directly comparable to FFO reported by other REITs or similar real estate companies that have not adopted the term in accordance with the current NAREIT definition or that interpret To run a program one line at a time. Each line of source language is translated into machine language and then executed. the current NAREIT definition differently. FFO should not be considered as an alternative to net income (loss) (determined in accordance with GAAP) as an indication of our performance. FFO does not represent cash generated from operating activities determined in accordance with GAAP and is not a measure of liquidity or an indicator of our ability to make cash distributions. We believe that to further understand our performance, FFO should be compared with our reported net income (loss) and considered in addition to cash flows in accordance with GAAP, as presented in our financial statements. The following table presents a reconciliation of net income (loss) to FFO for the three and nine months ended September 30, 2004 and 2003:
Three Months ended Nine Months ended
September 30, September 30,
2004 2003 2004 2003
----------- ----------- ------------ -----------
Net Income (loss) $29,350 $2,114,976 $(1,898,170) $3,116,645
Add:
Depreciation of real
property 2,489,999 1,915,149 6,873,034 4,652,562
Minority interest in
Operating Partnership 244,025 488,050 732,075 488,050
Minority interest in
properties 2,418 31,025 111,228 125,228
Amortization of
acquired in-place
leases and tenant
relationships 361,251 - 1,134,188 -
Equity in loss of
Multifamily Joint
Venture 58,105 - 160,778 -
Funds from Operations
of Multifamily Joint
Venture 43,908 - 10,562 -
Less:
Minority interest in
properties share of
Funds from Operations (111,770) (132,660) (275,309) (260,029)
----------- ----------- ------------ -----------
Gain on transfer of
property to
Multifamily Joint
Venture - - (232,704) -
----------- ----------- ------------ -----------
Funds from Operations $2,787,773 $4,416,539 $6,286,169 $8,122,456
=========== =========== ============ ===========
Forward Looking Statements This release may contain 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. that are made pursuant to the Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Forward-looking statements involve a number of risks, uncertainties or other factors beyond the Company's control, which may cause material differences in actual results, performance or other expectation. These factors include, but are not limited to, changes in economic conditions generally and the real estate and bond markets specifically, legislative/regulatory changes (including changes to laws governing gov·ern v. gov·erned, gov·ern·ing, gov·erns v.tr. 1. To make and administer the public policy and affairs of; exercise sovereign authority in. 2. the taxation of REITs, availability of capital, interest rates and interest rate spreads, changes in generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting and guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. applicable to REITs), those set forth in Part I, "Risk Factors" of the Company's Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2003 and other risks and uncertainties as may be detailed from time to time in the Company's public announcements and SEC filings. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" . The Company assumes no obligation to update such information.
BERKSHIRE INCOME REALTY, INC.
(FORMERLY BERKSHIRE INCOME REALTY PREDECESSOR GROUP)
CONSOLIDATED BALANCE SHEETS
(unaudited)
September 30, December 31,
2004 2003
-------------- -------------
ASSETS
Multifamily apartment communities, net of
accumulated depreciation of $110,520,391
and $102,609,721, respectively $154,399,789 $145,222,916
Cash and cash equivalents 34,904,628 42,145,947
Available for sale securities, at fair
value 18,610,841 18,488,414
Cash restricted for tenant security
deposits 857,735 856,498
Replacement reserve escrow 478,247 318,708
Prepaid expenses and other assets 7,839,526 5,113,200
Investment in Mortgage Funds 13,027,092 24,046,908
Investment in Multifamily Joint Venture 2,306,847 -
Acquired in place leases and tenant
relationships, net of accumulated
amortization of $1,253,003 and $212,200,
respectively 226,471 1,061,004
Deferred expenses, net of accumulated
amortization of $540,567 and
$323,067 respectively. 1,529,684 1,621,498
-------------- -------------
Total assets $234,180,860 $238,875,093
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $186,092,756 $184,471,204
Due to affiliates 1,221,154 1,318,755
Dividends and distributions payable 1,087,607 1,087,593
Accrued expenses and other liabilities 3,874,790 3,268,859
Tenant security deposits 1,074,738 971,363
-------------- -------------
Total liabilities 193,351,045 191,117,774
-------------- -------------
Commitments and Contingencies - -
Minority interests - -
Stockholders' equity:
Series A 9% Cumulative Redeemable
Preferred Stock, no par value, $25
stated value, 5,000,000 shares
authorized, 2,978,110 shares issued
and outstanding at September 30, 2004
and December 31, 2003 70,210,830 70,210,830
Class A common stock, $.01 par value,
5,000,000 shares authorized; 0 shares
issued and outstanding at September
30, 2004 and December 31, 2003 - -
Class B common stock, $.01 par value,
5,000,000 shares authorized; 1,283,313
shares issued and outstanding at
September 30, 2004 and December 31,
2003 12,833 12,833
Excess stock, $.01 par value,
15,000,000 shares authorized, 0 shares
issued and outstanding at September
30, 2004 and December 31, 2003 - -
Accumulated deficit (29,393,848) (22,452,115)
Accumulated other comprehensive gain
(loss) - (14,229)
-------------- -------------
Total stockholders' equity 40,829,815 47,757,319
-------------- -------------
Total liabilities and stockholders'
equity $234,180,860 $238,875,093
============== =============
BERKSHIRE INCOME REALTY, INC.
(FORMERLY BERKSHIRE INCOME REALTY PREDECESSOR GROUP)
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three months ended Nine months ended
September 30, September 30,
-------------------------- --------------------------
2004 2003 2004 2003
------------- ------------ ------------- ------------
Revenue:
Rental $9,190,568 $6,908,604 $27,079,335 $20,597,848
Interest 153,997 11,519 640,010 78,235
Utility
reimbursement 132,474 132,671 395,860 339,975
Other 463,604 374,448 1,159,968 926,784
------------- ------------ ------------- ------------
Total
revenue 9,940,643 7,427,242 29,275,173 21,942,842
------------- ------------ ------------- ------------
Expenses:
Operating 2,542,538 1,912,239 7,304,839 5,187,303
Maintenance 782,811 714,588 2,102,462 1,783,680
Real estate
taxes 1,085,799 643,050 3,236,604 1,817,100
General and
administrative 355,951 476,240 1,074,150 1,148,700
Management fees 647,398 464,696 1,922,754 1,572,990
Depreciation 2,751,854 1,818,769 8,194,823 5,453,969
Loss on
extinguishment
of debt - 86,748 - 337,832
Organizational
costs - - - 213,428
Interest 2,638,987 1,829,877 8,093,230 5,580,719
Loss on sale of
securities - - 163,630 -
Amortization of
acquired in-
place leases
and tenant
relationships 361,251 - 1,134,188 -
------------- ------------ ------------- ------------
Total
expenses $11,166,589 7,946,207 33,226,680 23,095,721
------------- ------------ ------------- ------------
Loss before
minority
interest in
properties,
equity in loss
of Multifamily
Joint Venture,
equity in income
of Mortgage
Funds, minority
common interest
in Operating
Partnership and
gain on transfer
of property to
Multifamily
Joint Venture (1,225,946) (518,965) (3,951,507) (1,152,879)
Minority interest
in properties (2,418) (31,025) (111,228) (125,228)
Equity in loss of
Multifamily
Joint Venture (58,105) - (160,778) -
Equity in income
of Mortgage
Funds 1,559,844 3,153,016 2,824,714 4,882,802
Minority common
interest in
Operating
Partnership (244,025) (488,050) (732,075) (488,050)
------------- ------------ ------------- ------------
Income (loss)
before gain on
transfer of
property to
Multifamily
Joint Venture 29,350 2,114,976 (2,130,874) 3,116,645
Gain on transfer
of property to
Multifamily
Joint Venture - - 232,704 -
------------- ------------ ------------- ------------
Net income (loss) 29,350 2,114,976 (1,898,170) 3,116,645
------------- ------------ ------------- ------------
Preferred
dividend (1,675,200) $(1,675,202) (5,025,638) (3,276,089)
------------- ------------ ------------- ------------
Net income (loss)
available to
common
shareholders $(1,645,850) $439,774 $(6,923,808) $(159,444)
============= ============ ============= ============
Basic and diluted
earnings per
share data:
Net income
(loss) per
common share $(1.28) $0.34 $(5.40) $(0.19)
============= ============ ============= ============
Weighted average
number of common
shares
outstanding,
basic and
diluted 1,283,313 1,283,313 1,283,313 837,207
============ ============= ============
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