Cornerstone Realty Reports First Quarter 2001 Results.Business Editors RICHMOND Richmond, cities, United States Richmond. 1 City (1990 pop. 87,425), Contra Costa co., W Calif., on San Pablo Bay, an inlet of San Francisco Bay; inc. 1905. , Va.--(BUSINESS WIRE)--April 25, 2001 Cornerstone cornerstone Ceremonial building block, dated or otherwise inscribed, usually placed in an outer wall of a building to commemorate its dedication. Often the stone is hollowed out to contain newspapers, photographs, or other documents reflecting current customs, with a view to 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. Income Trust, Inc. (NYSE NYSE See: New York Stock Exchange : TCR TCR T cell receptor. ) reported today that 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 quarter ended March 31, 2001 totaled $17.2 million, or $0.32 per common share. Commenting on the first quarter results, Glade M. Knight, chairman and chief executive officer, said: "While our markets are generally exhibiting positive economic characteristics, we have experienced temporary softness in two of our major markets, Charlotte and Raleigh-Durham, which comprise nearly 24% of our portfolio. As anticipated, we have not been able to realize significant rent growth in these markets due to new construction, but we are maintaining high occupancy in the mid- mid- pref. Middle: midbrain. 90% range. "During the quarter we increased our annual dividend to $1.12 per common share, representing a yield of approximately 10.7% based upon the most recent closing price. We also commenced and successfully completed in mid-April Noun 1. mid-April - the middle part of April period, period of time, time period - an amount of time; "a time period of 30 years"; "hastened the period of time of his recovery"; "Picasso's blue period" Apr, April - the month following March and preceding May an exchange offer for our outstanding preferred shares Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. . As a result of this transaction, we have increased our projected future cash flow by approximately $5 million annually, improved our fixed charge coverage, expanded our common shareholder base, and provided ourselves with greater financial flexibility," Knight said. Operations For The Quarter Ended March 31, 2001 Compared With The Prior Year As a result of an asset sale in March of 2000, Cornerstone is operating 2,889 fewer apartments than it did at the beginning of 2000. The company reported that total revenues in the first quarter of 2001 were $35.9 million compared with $37.1 million a year ago. This decrease is attributable to the sale. First quarter 2001 earnings before interest, income taxes, depreciation and amortization ("EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become ") were $22.1 million compared with $22.8 million in the first quarter of 2000. Average economic occupancy in the first quarter was 94% compared with 93% a year ago, and the average rent per unit was $674 compared with $649 a year ago. Same-Property Operating Results Cornerstone's "same property" portfolio consists of the 69 stabilized sta·bi·lize v. sta·bi·lized, sta·bi·liz·ing, sta·bi·liz·es v.tr. 1. To make stable or steadfast. 2. apartment communities containing 17,014 apartment homes that the company has owned since January January: see month. 1, 2000, representing approximately 94% of Cornerstone's 18,076 units. For the first quarter of 2001, same property net operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. (NOI NOI Net Operating Income NOI Notice of Intent NOI Nation of Islam NOI Notice of Inquiry NOI Neuro Orthopaedic Institute NOI New Organizing Institute NOI Notice of Interest NOI No Offense Intended NOI National Olympiad in Informatics ) increased 3% from last year. Rental income Noun 1. rental income - income received from rental properties income - the financial gain (earned or unearned) accruing over a given period of time increased 2% while operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. increased 1.5% over last year. Dividends In March of 2001, Cornerstone announced an increase of its annual common share dividend rate to $1.12 per share, payable $0.28 per quarter. A quarterly dividend of $0.28 was paid on April 20, 2001 to shareholders of record on March 30, 2001. The company also paid a quarterly dividend of $0.5625 to holders of its Series A Convertible Preferred Shares on April 20, 2001. The next common and preferred share dividends are to be paid on July July: see month. 20, 2001 to shareholders of record on June 29, 2001. Financing Activity On April 18, 2001 Cornerstone completed its exchange offer for its outstanding Series A Convertible Preferred Shares. A total of 12,458,917 preferred shares were validly tendered and not withdrawn pursuant to the exchange offer, representing 99% of the issued and outstanding preferred shares. Of the Series A Convertible Preferred Shares tendered, the holders of 742,168 shares elected to receive two common shares for each preferred share, and the holders of 11,716,748 shares elected to receive one common share and $12.25 in cash for each preferred share. Cornerstone issued a total of 13,201,085 common shares and paid $143.5 million in cash in exchange for all of the preferred shares tendered in the exchange offer. To fund the cash portion of the exchange offer, Cornerstone temporarily increased its unsecured Unsecured A loan or equity interest that is given without any guarantee of payment, performance, satisfaction or opportunity for return from the recipient. No property, interest or security is used as collateral in either a guarantee or a pledge. credit facility with First Union National Bank to $100 million from $50 million. The increased line of credit bears interest at a variable rate equal to LIBOR LIBOR See: London Interbank Offered Rate LIBOR See London interbank offered rate (LIBOR). plus 90 basis points if the amount outstanding is $50 million or less, and LIBOR plus 120 basis points if the amount outstanding is greater than $50 million. It is the company's intention to encumber To burden property by way of a charge that must be removed before ownership is free and clear. Property subject to an encumbrance may have a lien or mortgage imposed upon it. additional properties to pay down the $50 million increase in its line of credit used to fund the tender offer. During the quarter Cornerstone placed $75.5 million in secured financing through First Union Securities, Inc. The 10-year loan bears a fixed interest rate of 6.99% and is secured by seven of Cornerstone's apartment communities. The company also placed $15.68 million in secured financing through ARCS Commercial Mortgage Co., L.P. The 10-year loan bears an interest rate of 6.83% and is secured by one Cornerstone property. As a result of the completion of the exchange offer and the new financing, today Cornerstone's debt as a percent of total market capitalization Total Market Capitalization The total market value of all of a firm's outstanding securities. is approximately 46%, and a total of 39 of the company's 72 properties are secured by mortgages. In the fourth quarter of 2000, Cornerstone announced its intention to purchase an additional $50 million of its common shares. As of March 31, 2001 the company had purchased $13.1 million of its common shares under the new $50-million share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program. Second Quarter Earnings Guidance Cornerstone also announced today it currently expects that second quarter 2001 FFO will be $0.33 per common share, and that full-year 2001 FFO will be $1.32 per common share. In 2000 the company reported full-year FFO of $1.28 per common share. Forward Looking Statements Certain statements contained herein constitute "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 the Securities Act of 1933 and the Securities Exchange Act of 1934. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the future results, performance or achievements of the company to be materially different from any forward-looking statements. Such factors include, among others, risks associated with the timing of, costs associated with, and effects of planned financings, property improvements and local as well as general competitive factors. There is no assurance that planned events or results will be achieved. Corporate Profile Cornerstone Realty Income Trust, Inc. is a fully integrated, self-managed and self-advised real estate company that has operated as a REIT REIT See: Real Estate Investment Trust REIT See real estate investment trust (REIT). since 1993. The company focuses on the ownership and management of multifamily properties in select markets 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). , North Carolina North Carolina, state in the SE United States. It is bordered by the Atlantic Ocean (E), South Carolina and Georgia (S), Tennessee (W), and Virginia (N). Facts and Figures Area, 52,586 sq mi (136,198 sq km). Pop. , South Carolina South Carolina, state of the SE United States. It is bordered by North Carolina (N), the Atlantic Ocean (SE), and Georgia (SW). Facts and Figures Area, 31,055 sq mi (80,432 sq km). Pop. (2000) 4,012,012, a 15. , Georgia Georgia, country, Asia Georgia (jôr`jə), Georgian Sakartvelo, Rus. Gruziya, officially Republic of Georgia, republic (2005 est. pop. 4,677,000), c.26,900 sq mi (69,700 sq km), in W Transcaucasia. and Texas. Currently the company owns 72 apartment communities containing 18,076 apartment homes. Cornerstone's common shares have traded on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. since 1997 under the symbol TCR. Further information on Cornerstone may be found on the company's web site at: http://www.cornerstonereit.com .
Cornerstone Realty Income Trust, Inc.
Balance Sheet Data March 31, December 31,
In Thousands, except per share amounts 2001 2000
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Assets
------
Investment in Rental Property
Land $127,485 $127,441
Building and improvements 722,542 718,906
Furniture and fixtures 23,437 22,988
-------- --------
873,464 869,335
Less accumulated depreciation (100,800) (91,555)
-------- --------
772,664 777,780
-------- --------
Cash and cash equivalents 49,748 4,141
Prepaid expenses 1,819 1,396
Other assets 15,479 16,464
-------- --------
67,046 22,001
-------- --------
Total Assets $839,710 $799,781
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Liabilities and Shareholders' Equity
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Liabilities
Notes payable - Unsecured -- $13,210
Notes payable - Secured $320,758 245,424
Distributions payable 7,092 7,103
Accounts payable 610 622
Accrued expenses 3,194 9,689
Rents received in advance 251 356
Tenant security deposits 1,366 1,375
-------- --------
Total Liabilities 333,271 277,779
Shareholders' Equity
Preferred stock, no par value, authorized
25,000,000 shares; $25 liquidation preference,
Series A Cumulative Convertible Redeemable;
issued and outstanding 12,607,675 shares and
12,626,834 shares, respectively 265,092 265,194
Common stock, no par value, Common
stock, no par value, authorized
100,000,000 shares; issued and
outstanding 34,344,066 shares and
34,926,276 shares, respectively 336,171 342,455
Deferred compensation (43) (47)
Distributions greater than net income (94,781) (85,600)
-------- --------
506,439 522,002
-------- --------
Total Liabilities and Shareholders'
Equity $839,710 $799,781
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Cornerstone Realty Income Trust, Inc.
Three Months Ended
Operating Result March 31,
In Thousands Except Per Share Amounts 2001 2000
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Revenues:
Rental and Other Property Income $ 35,949 $ 37,098
Expenses:
Property and Maintenance 8,492 9,040
Real Estate Taxes and Insurance 4,193 4,028
Property Management 624 693
General and Administrative 525 485
Depreciation of Rental Property 9,245 9,066
Other 19 27
-------- --------
Total Expenses 23,098 23,339
Income before Interest Income (Expense) 12,851 13,759
Interest Income 76 110
Interest Expense (4,950) (4,651)
-------- --------
Income before Gains on Sales of Properties 7,977 9,218
Gain on Sale of Properties -- 23,406
-------- --------
Net Income $ 7,977 $ 32,624
Distributions Attributed to Preferred
Shareholders 7,466 7,997
-------- --------
Net Income Available to Common Shareholders $ 511 $ 24,627
-------- --------
Net Income Per Share - Basic and Diluted $ 0.01 $ 0.65
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Weighted Average Common Shares Outstanding-
Basic 34,463 37,997
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Statements of Funds from Operations
Net Income Available to Common Shareholders $ 511 $ 24,627
Adjustments:
Gain of Sale of Properties -- (23,406)
Depreciation of Rental Property 9,245 9,066
Distributions Attributed to Preferred
Shareholders 7,466 7,997
-------- --------
Funds from Operations $ 17,222 $ 18,284
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Per Share Data
Weighted Average Shares - Fully Converted 54,419 58,011
Funds from Operations Per Share $ 0.32 $ 0.32
Common Share Distributions $ 0.28 $ 0.2775
Net Income Per Share - Basic and Diluted $ 0.01 $ 0.65
Weighted Average Common Shares--- Basic 34,463 37,997
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