Berkshire Income Realty Announces Year End FFO of $8,233,802.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) _pa)(AMEX:BIRPRA) (AMEX:BIR-A)(AMEX:BIR.PR.A) ("Berkshire" or the "Company") reported its results for the year ended December December: see month. 31, 2005. Financial highlights for the year ended December 31, 2005 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. ("FFO FFO See: Funds from operations ") for the year ended December 31, 2005 were $8,233,802, an increase of $1,701,682 or 26% over FFO of $6,532,120 for the year ended December 31, 2004. --For the year ended December 31, 2005, net income, prior to charges for depreciation, was $27,957,092 and included a gain on the sale of real estate assets of $25,215,105. Net income, prior to charges for depreciation, including depreciation reported as part of discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. , and the gain on the sale of real estate assets was $2,741,987 for the year ended December 31, 2005. For 2004, comparable net income, prior to charges for depreciation, was $3,816,621. The decrease in net income, before depreciation and gain on the sale of real estate, was due primarily to two factors, an increase in charges to minority common interest in the Operating Partnership and a decrease in the minority interest in properties expense as compared to last year. The increase in the minority common interest in the Operating Partnership was related mainly to the declaration of a special distribution to common limited partners of the Operating Partnership in the amount of $6,000,000, which was paid in the fourth quarter of 2005. The decrease in the minority interest in properties expense is related to the distributions made to the minority owners of the related properties in 2004. There was no comparable distribution in 2005. Income from the Company's investment in mortgage funds was comparable to the prior year and reflects the benefit from the pay off of the final underlying mortgage during 2005 as compared to corresponding levels of mortgage pay off activity during 2004. --As of December 31, 2005, the majority of the Company's capital has been invested in real estate assets. However, as funds become available, the Company will continue to look for properties to consider for potential acquisition. The Company will continue to invest in additional real estate assets it considers will benefit from its renovation and operating investment objectives. --The Company continues to renovate and rehabilitate re·ha·bil·i·tate v. 1. To restore to good health or useful life, as through therapy and education. 2. To restore to good condition, operation, or capacity. properties in its portfolio. Renovation projects started in previous years continue at two properties and the operating results of the renovated units continue to meet the Company's projected expectations. Additionally, two renovation projects were started in 2005 and preliminary returns on renovated properties restored to the rental pool are providing increased rents that are in line with management's plans. President and CFO See Chief Financial Officer. , David Quade comments, "Berkshire continued to achieve positive operating results during the year ended December 31, 2005. Funds From Operations increased by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $1,700,000, or 26% over FFO for 2004 and benefited from a full year of operations of properties acquired in the previous year. The Company acquired six additional properties during 2005 that we feel will benefit from the value added Value Added The enhancement a company gives its product or service before offering the product to customers. Notes: This can either increase the products price or value. activities Berkshire brings as part of its investment objective to renovate and rehabilitate properties it acquires. 2005 earnings increased significantly from the prior year and was a result of the sale of one of our Florida Florida, state, United States Florida (flôr`ĭdə, flŏr`–), state in the extreme SE United States. A long, low peninsula between the Atlantic Ocean (E) and the Gulf of Mexico (W), Florida is bordered by Georgia and assets, the proceeds of which were reinvested in one of the six properties acquired in 2005." Funds From Operations The Company has adopted the revised definition of FFO 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 Real Estate Investment Trust ("REIT REIT See: Real Estate Investment Trust REIT See real estate investment trust (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 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 ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). "), including non-recurring items), for gains (or losses) from sales of properties, real estate related depreciation and amortization, and adjustment for unconsolidated partnerships and ventures. 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 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 (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 Indicator Anything used to predict future financial or economic trends. Notes: In the context of technical analysis, an indicator is a mathematical calculation based on a securities price and/or volume. The result is used to predict future prices. of our ability to make cash distributions. We believe that to further understand our performance, FFO should be compared with our reported net income and considered in addition to cash flows in accordance with GAAP, as presented in our financial statements.
The following is a reconciliation of GAAP net income (loss) to FFO
for the years ended December 31, 2005, 2004 and 2003:
December 31,
---------------------------------------
2005 2004 2003
------------- ------------ ------------
Net income (loss) $ 6,388,747 $(7,811,651) $ 3,642,260
Add:
Depreciation of real
property 16,727,642 8,964,346 6,288,282
Depreciation of real
property included in
results of discontinued
operations 388,541 - -
Minority interest in
Operating Partnership 7,320,750 976,100 732,075
Minority interest in
properties - 2,932,572 143,518
Amortization of acquired in-
place leases and tenant
relationships 3,321,236 1,603,612 212,200
Equity in loss of
Multifamily Venture 163,587 276,085 -
Funds from operations of
Multifamily Venture 230,445 - -
Less:
Minority interest in
properties (83,063) - -
Funds from operations of
Multifamily Venture - (1,260) -
Minority interest in
properties share of funds
from operations (1,008,978) (174,980) (394,672)
Gain on transfer of property
to Multifamily Venture - (232,704) -
Gain on disposition of real
estate assets (25,215,105) - -
------------- ------------ ------------
Funds from Operations $ 8,233,802 $ 6,532,120 $10,623,663
============= ============ ============
The net income in 2005 and net loss in 2004, includes certain items of a variable nature. The most significant is the gain on the disposition Act of disposing; transferring to the care or possession of another. The parting with, alienation of, or giving up of property. The final settlement of a matter and, with reference to decisions announced by a court, a judge's ruling is commonly referred to as disposition, regardless of of real estate assets of $25,215,105 in 2005. The gain is related to the sale of Windward wind·ward adj. 1. Of or moving toward the quarter from which the wind blows. 2. Of or on the side exposed to the wind or to prevailing winds. adv. In a direction from which the wind blows; against the wind. Lakes Apartments. Additionally, loss from discontinued operations relate exclusively to the sale of Windward Lakes and include property operating costs operating costs npl → gastos mpl operacionales and approximately $1,132,000 of costs associated with the early extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. of the outstanding debt on the property in 2005. Additional variable activity relates to charges to minority common interest in Operating Partnership expense, which increased by approximately $6,345,000 in the year ended December 31, 2005, which was primarily related to a special distribution of $6,000,000 paid in the fourth quarter of 2005. During 2005, equity in income of the mortgage funds, interests in which the Company acquired in exchange for shares of its 9% Series A Cumulative Redeemable Redeemable Eligible for redemption under the terms of an indenture. 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. (the "Mortgage Funds"), was comparable to 2004. During the years ended December 31, 2005 and 2004, equity in the income of Mortgage Funds included the substantial pay down of the underlying mortgages held by the Mortgage Funds. The pay down of the final underlying mortgage in 2005 resulted in the Company's investments in the Mortgage Funds being reduced to $0 as of December 31, 2005. There will be no additional equity in the income of the Mortgage Funds received in future periods, thus past FFO results should not be considered indicative indicative: see mood. of future FFO results. Additional information regarding the Company's investments in the Mortgage Funds and the operating results of Berkshire for the years ended December 31, 2005, 2004 and 2003 can be found in our Annual Report on 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 fiscal year ended December 31, 2005, which was filed with the Securities and Exchange Commission on March 28, 2006. The document is available on the Commission's website at www.sec.gov See .gov and GovNet. (networking) gov - The top-level domain for US government bodies. . Other Non-GAAP Measures The Company believes that the use of certain other non-GAAP measures for comparative presentation between reporting periods allows for more meaningful comparisons of the periods presented. Net income, prior to charges for depreciation, allows for comparison of operating results absent the significant non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. included in GAAP net income. Additionally, net income, prior to charges for depreciation and the gain on the sale of real estate assets, eliminates the unusual activity related to the gain from the sale of the real estate assets, which presents a more meaningful comparison to the previous year results, which did not include a similar event.
The following table represents the reconciliation of GAAP net
income (loss) to the other non-GAAP measures presented for the years
ended December 31:
2005 2004
------------- ------------
Net income (loss) $ 6,388,747 $(7,811,651)
Add:
Depreciation 21,107,820 10,823,256
Depreciation included discontinued
Operations 460,525 805,016
------------- ------------
Net income, prior to charges for
depreciation 27,957,092 3,816,621
Less:
Gain on disposition of real estate assets (25,215,105) -
------------- ------------
Net income, prior to charges for
depreciation and the gain on the
sale of real estate assets $ 2,741,987 $ 3,816,621
============= ============
The Company The Company is a REIT whose objective is to acquire, operate, and rehabilitate multifamily apartment communities. The Company owns interests in twenty-four such multifamily apartment communities, of which eight are located in the Baltimore/Washington, D.C. metropolitan area, five are located 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). , three are located in Houston, Texas “Houston” redirects here. For other uses, see Houston (disambiguation). Houston (pronounced /'hjuːstən/) is the largest city in the state of Texas and the , two are located in each of Dallas, Texas “Dallas” redirects here. For other uses, see Dallas (disambiguation). The City of Dallas (pronounced [ˈdæl.əs] or [ˈdæl. and the Chicago Chicago, city, United States Chicago (shĭkä`gō, shĭkô`gō), city (1990 pop. 2,783,726), seat of Cook co., NE Ill., on Lake Michigan; inc. 1837. , Illinois Illinois, river, United States Illinois, river, 273 mi (439 km) long, formed by the confluence of the Des Plaines and Kankakee rivers, NE Ill., and flowing SW to the Mississippi at Grafton, Ill. It is an important commercial and recreational waterway. area and one is located in each of Austin Austin. 1 City (1990 pop. 21,907), seat of Mower co., SE Minn., on the Cedar River, near the Iowa line; inc. 1868. The commercial and industrial center of a rich farm region, it is noted as home to the Hormel meatpacking company, whose Spam Town museum , Texas, Charlotte, North Carolina “Charlotte” redirects here. For other uses, see Charlotte (disambiguation). Charlotte is the largest city in the state of North Carolina and the 20th largest city in the United States. , Tampa, Florida “Tampa” redirects here. For other uses, see Tampa (disambiguation). Tampa is a United States city in Hillsborough County, on the west coast of Florida. It serves as the county seat for Hillsborough County.GR6. and the Ft. Lauderdale Lauderdale is the name of various places:
Forward Looking Statements With the exception of the historical information contained in this release, the matters described herein 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 expectations. 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, possible sales of assets, the acquisition restrictions placed on the Company by its investment in Berkshire Multifamily Value Fund, LP, availability of capital, interest rates and interest rate spreads, changes in generally accepted accounting policies 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, Item 1A "Risk Factors" of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2005 and other risks and uncertainties as may be detailed from time to time in the Company's public announcements and Securities and Exchange Commission 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.
CONSOLIDATED BALANCE SHEETS
December 31,
----------------------------
2005 2004
-------------- -------------
ASSETS
Multifamily apartment communities, net of
accumulated depreciation of $126,910,939
and $113,953,842, respectively $384,046,110 $260,554,434
Cash and cash equivalents 22,134,658 31,913,045
Cash restricted for tenant security
deposits 1,448,440 1,217,517
Replacement reserve escrow 1,570,379 2,157,952
Prepaid expenses and other assets 8,973,313 8,190,739
Investment in Mortgage Funds - 10,167,693
Investment in Multifamily Venture and
Limited Partnership 3,397,825 2,274,500
Acquired in place leases and tenant
relationships, net of accumulated
amortization of $5,047,287 and
$1,726,051, respectively 917,064 2,152,840
Deferred expenses, net of accumulated
amortization of $645,268 and $325,338,
respectively. 3,174,103 2,476,779
------------- -------------
Total assets $425,661,892 $321,105,499
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $370,521,700 $268,716,955
Due to affiliates 1,379,602 1,862,822
Dividend and distributions payable 1,837,607 1,087,607
Accrued expenses and other liabilities 10,050,160 7,312,054
Tenant security deposits 1,945,989 1,468,397
------------- -------------
Total liabilities 385,735,058 280,447,835
------------- -------------
Commitments and Contingencies - -
Minority interest in properties 7,003,446 7,422,481
Minority interest in Operating Partnership - -
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 December 31, 2005 and
2004, respectively 70,210,830 70,210,830
Class A common stock, $.01 par value,
5,000,000 shares authorized; 0 shares
issued and outstanding at December 31,
2005 and 2004, respectively - -
Class B common stock, $.01 par value,
5,000,000 shares authorized; 1,406,196
and 1,283,313 issued and outstanding at
December 31, 2005 and 2004, respectively 14,062 12,833
Excess stock, $.01 par value, 15,000,000
shares authorized, 0 shares issued and
outstanding at December 31, 2005 and
2004, respectively - -
Accumulated deficit (37,301,504) (36,988,480)
Accumulated other comprehensive income
(loss) - -
------------- -------------
Total stockholders' equity 32,923,388 33,235,183
------------- -------------
Total liabilities and stockholders'
equity $425,661,892 $321,105,499
============= =============
BERKSHIRE INCOME REALTY INC
CONSOLIDATED STATEMENTS OF EARNINGS
For the year ended December 31,
----------------------------------------
2005 2004 2003
------------- ------------- ------------
Revenue:
Rental $ 60,508,492 $ 34,873,996 $26,943,873
Interest 448,127 830,804 126,357
Utility reimbursement 905,114 487,263 429,095
Other 2,129,533 1,349,383 1,082,087
------------- ------------- ------------
Total revenue 63,991,266 37,541,446 28,581,412
------------- ------------- ------------
Expenses:
Operating 16,137,044 9,378,601 6,816,254
Maintenance 4,831,932 2,742,118 2,250,470
Real estate taxes 6,913,400 4,191,759 2,375,992
General and administrative 3,570,894 1,595,994 1,462,547
Organizational costs - - 213,000
Management fees 4,285,212 2,618,093 2,053,445
Depreciation 21,107,820 10,823,256 7,508,833
Interest 17,135,689 10,484,255 7,247,595
Loss on sale of securities - 163,630 -
Loss on extinguishment of
debt 80,017 1,059,143 353,044
Amortization of acquired in-
place leases and tenant
relationships 3,321,236 1,603,612 212,000
------------- ------------- ------------
Total expenses 77,383,244 44,660,461 30,493,180
------------- ------------- ------------
Loss before minority interest
in properties, equity in
loss of Multifamily Venture
and Limited Partnership,
equity in income of Mortgage
Funds, minority common
interest in Operating
Partnership, discontinued
operations and gain on
transfer of property to
Multifamily Venture (13,391,978) (7,119,015) (1,911,768)
Minority interest in
properties 83,063 (2,932,572) (143,518)
Equity in loss of Multifamily
Venture and Limited
Partnership (133,150) (276,085) -
Equity in income of Mortgage
Funds 3,040,732 3,392,585 6,720,746
Minority common interest in
Operating Partnership (7,320,750) (976,100) (732,075)
------------- ------------- ------------
Net income (loss) from
continuing operations (17,722,083) (7,911,187) 3,933,385
Discontinued operations:
Loss from discontinued
operations (1,104,275) (133,168) (291,125)
Gain on disposition of real
estate asset 25,215,105 - -
------------- ------------- ------------
Income (loss) from
discontinued operations 24,110,830 (133,168) (291,125)
------------- ------------- ------------
Income (loss) before gain on
transfer of assets to
Multifamily Venture 6,388,747 (8,044,355) 3,642,260
Gain on transfer of assets to
Multifamily Venture - 232,704 -
------------- ------------- ------------
Net income (loss) $ 6,388,747 $ (7,811,651) $ 3,642,260
============= ============= ============
Preferred dividend (6,700,796) (6,700,814) (4,951,258)
------------ ------------ -----------
Net loss available to common
shareholders $ (312,049) $(14,512,465) $(1,308,998)
============= ============= ============
Net income (loss) from
continuing operations per
common share, basic and
diluted $ (13.14) $ (6.16) $ 4.15
============= ============= ============
Net income (loss) from
discontinued operations per
common share, basic and
diluted $ 17.87 $ (0.10) $ (0.31)
============= ============= ============
Net loss per common share,
basic and diluted $ (0.23) $ (11.31) $ (1.38)
============= ============= ============
Weighted average number of
common shares outstanding,
basic and diluted 1,348,963 1,283,313 948,733
============= ============= ============
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