Welcome!

News Feed Item

Associated Estates Realty Corporation Reports Fourth Quarter And Full Year Results

Full Year Same Community NOI up 5.0%

CLEVELAND, Feb. 4, 2014 /PRNewswire/ -- Associated Estates Realty Corporation (NYSE, NASDAQ: AEC) announced today its financial results for the fourth quarter and full year ended December 31, 2013.  Funds from Operations (FFO) for the fourth quarter of 2013 were $0.33 per common share (diluted), compared to $0.35 per common share (diluted) for the fourth quarter of 2012.   Fourth quarter 2012 FFO is adjusted for loan prepayment costs of $688,000.

Net income applicable to common shares was $29.2 million, or $0.51 per common share (diluted), for the quarter ended December 31, 2013.  This compared to net income applicable to common shares of $6.9 million, or $0.14 per common share (diluted), for the fourth quarter of 2012.  The quarter-over-quarter increase in net income was driven by improved property operations and gains associated with sales of two properties in 2013 vs. one property in 2012.

Quarterly Same Community Portfolio Results

Net operating income (NOI) for the fourth quarter of 2013 for the Company's same community portfolio increased 3.6% compared to the fourth quarter of 2012.  Revenue increased 3.0% and property operating expenses increased 1.9%.  Average occupancy for the fourth quarter of 2013 was 95.4% compared to 95.6% for the fourth quarter of 2012.  Average monthly property revenue per occupied unit for the fourth quarter of 2013 was $1,225 compared to $1,187 for the fourth quarter of 2012, a 3.2% increase. 

Full Year Performance

FFO for the year ended December 31, 2013, was $1.27 per common share (diluted), and net income applicable to common shares was $61.0 million, or $1.17 per common share (diluted).

For the year ended December 31, 2013, revenue for the Company's same community portfolio increased 3.3% and expenses grew 0.7%, resulting in a 5.0% increase in the Company's same community NOI compared to the year ended December 31, 2012.

"It was another strong year for Associated Estates.  In 2014, we will continue to focus on execution in all aspects of our business," said Jeffrey I. Friedman, President and Chief Executive Officer.  "Our previously announced acquisitions, dispositions and development projects are all proceeding as planned.  We expect our continued portfolio transformation to create significant long term value," Friedman continued.

A reconciliation of net income attributable to the Company to FFO, and to FFO as adjusted, is included in the table at the end of this press release and in the Fourth Quarter 2013 Supplemental Financial Information furnished with this earnings release to the Securities and Exchange Commission on Form 8-K, and is available on the Investors section of the Company's website at AssociatedEstates.com.  The Fourth Quarter 2013 Supplemental Financial Information provides additional quarterly and year-to-date financial information, including performance by region for the Company's portfolio.

Transactional Activity

In the fourth quarter, the Company closed on the purchase of three properties: 

  • The Apartments at Blakeney in Charlotte, NC on October 10, 2013 
  • St. Mary's Square in Raleigh, NC on November 18, 2013
  • Lofts at Weston Lakeside in Cary, NC on November 19, 2013

On November 14, 2013, the Company sold St. Andrews, a 102-unit property located in Columbus, OH, and on December 18, 2013, the Company sold Courtney Chase, a 288-unit property located in Orlando, FL.

Including the transactions noted above, during 2013, the Company acquired five properties for a total of approximately $261 million and sold four properties for a total of approximately $139 million.

Capital Markets Activity

As previously announced, on October 21, the Company completed the issuance of $100 million of unsecured notes.  The notes were offered in a private placement with two maturity tranches: $45 million 7-year maturity at 4.29% and $55 million 10.2-year maturity at 4.94%.  The credit spread on the 7-year maturity was 2.25% and the credit spread on the 10.2-year maturity was 2.30%.  The $100 million total issuance has a weighted average interest rate of 4.65% and a weighted average maturity of 8.8 years.

2014 Outlook

  • Same Community Revenue Growth         2.75% to 3.75%
  • Same Community Expense Growth        1.75% to 2.75%
  • Same Community Property NOI Growth  3.40% to 4.40%
  • Earnings Per Common Share                $2.95 to $3.25
  • Funds from Operations                         $1.27 to $1.31

Detailed assumptions relating to the Company's guidance can be found on page 24 of the Fourth Quarter 2013 Supplemental Financial Information on the Company's website at AssociatedEstates.com.

Joint Venture Activity

The Company announced today that it entered into a 50/50 joint venture with AIG Global Real Estate with respect to a 410-unit apartment community that will be developed on a 3.36 acre land parcel owned by Associated Estates.  The site is located in the South of Market ("SoMa") neighborhood of San Francisco. 

The site is a highly visible corner located at 8th and Harrison Streets.  In addition to the 410 apartments, the project will feature 40,000 square feet of commercial space in wood frame buildings, built over a subterranean parking garage.  The community will feature a "best-in-class" amenity package, and the apartments will have an average size of 853 square feet.  Construction is scheduled to commence in the second quarter of 2014, with project completion expected in 2016.

"We are very excited about our strategic partnership with AIG Global Real Estate.  Their outstanding reputation and deep experience as a joint venture partner in multifamily projects bring tremendous value to our San Francisco development," said Jason Friedman, Senior Vice President of Acquisitions and Development.  "Together, we recognize the significant upside from this unique development opportunity in the high barrier to entry SoMa submarket," Friedman continued.

Conference Call

A conference call to discuss the Company's fourth quarter results will be held on February 5, 2014, at 2:00 p.m. Eastern.  To participate in the call:

Via Telephone: The dial-in number is (855) 233-8223, and the conference ID is 31049869.  An operator will ask you for the conference ID.  The call will be archived through February 19. 2014. The dial-in number for the replay is (855) 859-2056.

Via the Internet (listen only):  Access the Investors section of the Company's website at AssociatedEstates.com.  Please log on at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software. Select the "Fourth Quarter 2013 Earnings Conference Call" link.  The webcast will be archived for 90 days.

Upcoming Events

The Company will participate in the Wells Fargo 17th Annual Real Estate Securities Conference, being held February 26 and 27 at The Plaza Hotel in New York City.  The Company will also participate in Citi's 2014 Global Property CEO Conference, scheduled for March 2 through March 5 at The Westin Diplomat in Hollywood, FL.  Members of the Company's management team will be hosting scheduled meetings with investors throughout both conferences.  A copy of all presentation materials will be accessible, beginning February 26, in the Investors section of the Company's website at AssociatedEstates.com.

Company Profile

Associated Estates is a real estate investment trust and is a member of the S&P 600, Russell 2000 and the MSCI US REIT Indices.  The Company is headquartered in Richmond Heights, Ohio.  Associated Estates' portfolio consists of 53 apartment communities containing 13,676 units located in ten states.  For more information about the Company, please visit its website at AssociatedEstates.com.

This press release shall not constitute an offer to sell, nor a solicitation of an offer to buy, any security, and any statement to the contrary is not authorized by the Company.

FFO and FFO as adjusted are non-Generally Accepted Accounting Principle measures.  The Company generally considers FFO and FFO as adjusted to be useful measures for reviewing the comparative operating and financial performance of the Company because FFO and FFO as adjusted can help one compare the operating performance of a company's real estate between periods or to different REITs.  A reconciliation of net income attributable to the Company to FFO, and to FFO as adjusted, is included in the table at the end of this press release and in the Fourth Quarter Supplemental Financial Information included with this earnings release and furnished to the Securities and Exchange Commission on Form 8-K.

Safe Harbor Statement

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:  This news release contains forward-looking statements based on current judgments and knowledge of management, which are subject to certain risks, trends and uncertainties that could cause actual results to vary from those projected, including but not limited to, expectations regarding the Company's 2014 performance, which are based on certain assumptions.  Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this news release.  These forward-looking statements are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  The words "expects," "projects," "believes," "plans," "anticipates" and similar expressions are intended to identify forward-looking statements.  Investors are cautioned that the Company's forward-looking statements involve risks and uncertainties that could cause actual results to differ from estimates or projections contained in these forward-looking statements, including without limitation the following: changes in the economic climate in the markets in which the Company owns and manages properties, including interest rates, the overall level of economic activity, the availability of consumer credit and mortgage financing, unemployment rates and other factors; elimination of, or limitations on, federal government support for Fannie Mae and/or Freddie Mac that may result in significantly reduced availability of mortgage financing sources as well as increases in interest rates for mortgage financing; the ability of the Company to refinance debt on favorable terms at maturity; risks of a lessening of demand for the multifamily units owned by the Company; competition from other available multifamily units, single family units available for rental or purchase, and changes in market rental rates; the inability of the Company to acquire and dispose of multifamily properties at prices and on terms acceptable to the Company; the failure of development projects or redevelopment activities to achieve expected results due to, among other causes, construction and contracting risks, unanticipated increases in materials and/or labor, delays in project completion and/or lease-up that result in increased costs and/or reduce the profitability of a completed project, and the absence of our right to control all activities and decisions of joint venture developments where the applicable agreements allocate decision making authority to, or require the consent of, our joint venture partner; the failure to enter into development joint venture arrangements on acceptable terms; increases in property and liability insurance costs; unanticipated increases in real estate taxes and other operating expenses; weather conditions that adversely affect operating expenses; expenditures that cannot be anticipated such as utility rate and usage increases and unanticipated repairs; inability of the Company to control operating expenses or achieve increases in revenue; shareholder ownership limitations that may discourage a takeover otherwise considered favorable by shareholders; the results of litigation involving the Company; changes in tax legislation; risks of personal injury claims and property damage claims that are not covered by the Company's insurance; catastrophic property damage losses that are not covered by the Company's insurance; risks associated with property acquisitions such as failure to achieve expected results or matters not discovered in due diligence; risks related to the perception of residents and prospective residents as to the attractiveness, convenience and safety of the Company's properties or the neighborhoods in which they are located; and other uncertainties and risk factors addressed in documents filed by the Company with the Securities and Exchange Commission, including, without limitation, the Company's Annual Report on Form 10-K and the Company's Quarterly Reports on Form 10-Q.














ASSOCIATED ESTATES REALTY CORPORATION




Financial Highlights




(in thousands, except per share data)




Three Months Ended 


Twelve Months Ended 




December 31,


December 31,




2013


2012


2013


2012











Total revenue


$   49,070


$   42,795


$ 181,479


$ 158,553











Net income attributable to AERC


$   29,273


$     6,911


$   61,250


$   30,592

Add:

Depreciation - real estate assets


14,839


12,868


53,779


48,547


Amortization of intangible assets


881


1,232


3,877


4,889

Less:

Gain on disposition of properties


(25,960)


(4,030)


(52,828)


(26,849)











Funds from Operations (FFO) (1)


$   19,033


$   16,981


$   66,078


$   57,179











Add:

Prepayment costs


-


688


-


2,430

Less:

Refund of defeasance costs on previously defeased loan


-


-


-


(279)











Funds from Operations (FFO) as adjusted (2)


$   19,033


$   17,669


$   66,078


$   59,330











Add:

Depreciation - other assets


549


532


2,176


2,108


Amortization of deferred financing fees


461


495


2,002


2,128

Less:

Recurring fixed asset additions 


(2,805)


(2,981)


(11,945)


(10,746)











Funds Available for Distribution (FAD) (3)


$   17,238


$   15,715


$   58,311


$   52,820











Per share:









Funds from Operations - diluted (1)


$       0.33


$       0.34


$       1.27


$       1.23

Funds from Operations as adjusted - diluted (2)


$       0.33


$       0.35


$       1.27


$       1.27

Dividends per share


$       0.19


$       0.18


$       0.76


$       0.71

Weighted average shares outstanding - basic


57,039


49,478


51,622


46,063

Weighted average shares outstanding - diluted


57,608


49,984


52,184


46,553











(1)

The Company defines FFO in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT").  This definition includes all operating results, both recurring and non-recurring, except those results defined as "extraordinary items" under generally accepted accounting principles ("GAAP"), adjusted for depreciation on real estate assets and amortization of intangible assets, and excludes impairment write-downs of depreciable real estate and gains and losses from the disposition of properties and land. FFO does not represent cash generated from operating activities in accordance with GAAP, is not necessarily indicative of cash available to fund cash needs and should not be considered an alternative to net income as an indicator of the Company's operating performance or as an alternative to cash flow as a measure of liquidity. The Company generally considers FFO to be a useful measure for reviewing the comparative operating and financial performance of the Company because FFO can help one compare the operating performance of a company's real estate between periods or as compared to different REITs. It should be noted, however, that other real estate companies may define FFO in a different manner.



(2)

The Company defines FFO as adjusted as FFO, as defined above, excluding $688 and $2.4 million of prepayment costs associated with debt repayments for the three and twelve months ended December 31, 2012 and $(279) of refunds for a previously defeased loan for the twelve months ended December 31, 2012.  In accordance with GAAP, these prepayment costs and refunds on the previously defeased loan are included in interest expense in the Company's Consolidated Statements of Operations and Comprehensive Income.  We are providing this calculation as an alternative FFO calculation as we consider it a more appropriate measure of comparing the operating performance of a company's real estate between periods or as compared to different REITs.



(3)

The Company defines FAD as FFO as adjusted, as defined above, plus depreciation other and amortization of deferred financing fees less recurring fixed asset additions. Fixed asset additions exclude development, investment, revenue enhancing and non-recurring capital additions. The Company considers FAD to be an appropriate supplemental measure of the performance of an equity REIT because, like FFO and FFO as adjusted, it captures real estate performance by excluding gains or losses from the disposition of properties and land, depreciation on real estate assets and amortization of intangible assets. Unlike FFO and FFO as adjusted, FAD also reflects that recurring capital expenditures are necessary to maintain the associated real estate.

The full text and supplemental financial information of this press release are available on Associated Estates' website at AssociatedEstates.com. To receive a copy of the results by mail or fax, please contact Investor Relations at (800) 440-2372. For more information, access the Investors section of AssociatedEstates.com.

For more information, please contact:
Jeremy Goldberg  (216) 797-8715

SOURCE Associated Estates Realty Corporation

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
Everything run by electricity will eventually be connected to the Internet. Get ahead of the Internet of Things revolution and join Akvelon expert and IoT industry leader, Sergey Grebnov, in his session at @ThingsExpo, for an educational dive into the world of managing your home, workplace and all the devices they contain with the power of machine-based AI and intelligent Bot services for a completely streamlined experience.
Because IoT devices are deployed in mission-critical environments more than ever before, it’s increasingly imperative they be truly smart. IoT sensors simply stockpiling data isn’t useful. IoT must be artificially and naturally intelligent in order to provide more value In his session at @ThingsExpo, John Crupi, Vice President and Engineering System Architect at Greenwave Systems, will discuss how IoT artificial intelligence (AI) can be carried out via edge analytics and machine learning techn...
With tough new regulations coming to Europe on data privacy in May 2018, Calligo will explain why in reality the effect is global and transforms how you consider critical data. EU GDPR fundamentally rewrites the rules for cloud, Big Data and IoT. In his session at 21st Cloud Expo, Adam Ryan, Vice President and General Manager EMEA at Calligo, will examine the regulations and provide insight on how it affects technology, challenges the established rules and will usher in new levels of diligence a...
FinTechs use the cloud to operate at the speed and scale of digital financial activity, but are often hindered by the complexity of managing security and compliance in the cloud. In his session at 20th Cloud Expo, Sesh Murthy, co-founder and CTO of Cloud Raxak, showed how proactive and automated cloud security enables FinTechs to leverage the cloud to achieve their business goals. Through business-driven cloud security, FinTechs can speed time-to-market, diminish risk and costs, maintain continu...
When shopping for a new data processing platform for IoT solutions, many development teams want to be able to test-drive options before making a choice. Yet when evaluating an IoT solution, it’s simply not feasible to do so at scale with physical devices. Building a sensor simulator is the next best choice; however, generating a realistic simulation at very high TPS with ease of configurability is a formidable challenge. When dealing with multiple application or transport protocols, you would be...
An increasing number of companies are creating products that combine data with analytical capabilities. Running interactive queries on Big Data requires complex architectures to store and query data effectively, typically involving data streams, an choosing efficient file format/database and multiple independent systems that are tied together through custom-engineered pipelines. In his session at @BigDataExpo at @ThingsExpo, Tomer Levi, a senior software engineer at Intel’s Advanced Analytics ...
Existing Big Data solutions are mainly focused on the discovery and analysis of data. The solutions are scalable and highly available but tedious when swapping in and swapping out occurs in disarray and thrashing takes place. The resolution for thrashing through machine learning algorithms and support nomenclature is through simple techniques. Organizations that have been collecting large customer data are increasingly seeing the need to use the data for swapping in and out and thrashing occurs ...
As many know, the first generation of Cloud Management Platform (CMP) solutions were designed for managing virtual infrastructure (IaaS) and traditional applications. But that’s no longer enough to satisfy evolving and complex business requirements. In his session at 21st Cloud Expo, Scott Davis, Embotics CTO, will explore how next-generation CMPs ensure organizations can manage cloud-native and microservice-based application architectures, while also facilitating agile DevOps methodology. He wi...
When you focus on a journey from up-close, you look at your own technical and cultural history and how you changed it for the benefit of the customer. This was our starting point: too many integration issues, 13 SWP days and very long cycles. It was evident that in this fast-paced industry we could no longer afford this reality. We needed something that would take us beyond reducing the development lifecycles, CI and Agile methodologies. We made a fundamental difference, even changed our culture...
In the enterprise today, connected IoT devices are everywhere – both inside and outside corporate environments. The need to identify, manage, control and secure a quickly growing web of connections and outside devices is making the already challenging task of security even more important, and onerous. In his session at @ThingsExpo, Rich Boyer, CISO and Chief Architect for Security at NTT i3, discussed new ways of thinking and the approaches needed to address the emerging challenges of security i...
Historically, some banking activities such as trading have been relying heavily on analytics and cutting edge algorithmic tools. The coming of age of powerful data analytics solutions combined with the development of intelligent algorithms have created new opportunities for financial institutions. In his session at 20th Cloud Expo, Sebastien Meunier, Head of Digital for North America at Chappuis Halder & Co., discussed how these tools can be leveraged to develop a lasting competitive advantage ...
SYS-CON Events announced today that Dasher Technologies will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 - Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Dasher Technologies, Inc. ® is a premier IT solution provider that delivers expert technical resources along with trusted account executives to architect and deliver complete IT solutions and services to help our clients execute their goals, plans and objectives. Since 1999, we'v...
There is only one world-class Cloud event on earth, and that is Cloud Expo – which returns to Silicon Valley for the 21st Cloud Expo at the Santa Clara Convention Center, October 31 - November 2, 2017. Every Global 2000 enterprise in the world is now integrating cloud computing in some form into its IT development and operations. Midsize and small businesses are also migrating to the cloud in increasing numbers. Companies are each developing their unique mix of cloud technologies and service...
For financial firms, the cloud is going to increasingly become a crucial part of dealing with customers over the next five years and beyond, particularly with the growing use and acceptance of virtual currencies. There are new data storage paradigms on the horizon that will deliver secure solutions for storing and moving sensitive financial data around the world without touching terrestrial networks. In his session at 20th Cloud Expo, Cliff Beek, President of Cloud Constellation Corporation, d...
SYS-CON Events announced today that IBM has been named “Diamond Sponsor” of SYS-CON's 21st Cloud Expo, which will take place on October 31 through November 2nd 2017 at the Santa Clara Convention Center in Santa Clara, California.