Berkshire Income Realty Announces Second Quarter Funds from Operations of $2,839,413

  Berkshire Income Realty Announces Second Quarter Funds from Operations of
  $2,839,413

Business Wire

BOSTON -- August 28, 2013

Berkshire Income Realty, Inc. (NYSE MKT:BIR_pa), (NYSE MKT: BIRPRA), (NYSE
MKT: BIR-A), (NYSE MKT: BIR.PR.A) ("Berkshire" or the "Company") reported its
results for the quarter ended June30, 2013. Financial highlights for the
three- and six-month periods ended June30, 2013 include:

- Same Property Net Operating Income ("Same Property NOI") increased
approximately 6.4% - Same Property NOI, a non-GAAP financial measure,
increased primarily as a result of growth in comparative revenue for
properties acquired or placed in service prior to January 1, 2012 and owned
through June30, 2013 ("Same Property"). The Same Property Portfolio had total
revenue increases of approximately 4.6% for the three months ended June30,
2013 as compared to the same period a year ago. Growth in market rents and
increases in utility recoveries were the main factors contributing to higher
revenue. The increase in revenue was partially offset by increased expenses
related to higher real estate taxes at various properties in the portfolio and
increased property management fees driven by higher revenue.

- The Company's Funds From Operations ("FFO") decreased approximately $771,800
for the three months ended June30, 2013. The Company's FFO, a non-GAAP
financial measure, for the three months ended June30, 2013 was $2,839,413
compared to $3,611,215 for the comparable three months ended June30, 2012.
The decrease in the Company's FFO during the three month period is due to
increased expenses, specifically incentive advisory fees, real estate taxes
and interest expense, which exceeded the increase in revenue for the
comparable periods. FFO for the six months ended June30, 2013 increased by
$1,150,266 as compared to the same period ended June30, 2012 and is due
primarily to higher revenue and lower incentive advisory fees during the six
month period.

- A presentation and reconciliation of net income (loss), the most directly
comparable financial measure calculated and presented in accordance with
accounting principles generally accepted in the United States of America
("GAAP"), to FFO and Same Property NOI is set forth on pages 2 and 3 of this
press release. For the three months ended June30, 2013 and 2012, the net
income (loss) was $14,531,303 and $(3,282,604), respectively. For the six
months ended June30, 2013 and 2012, the net income (loss) was $10,534,627 and
$(1,270,648), respectively.

- Development Activities - The Company owns interests in three development
joint ventures of which two have completed construction during the six month
period ended June 30, 2013 and are currently being leased. Construction of the
2020 Lawrence project, a 231-unit LEED-gold certified mid-rise multifamily
building, located in downtown Denver, Colorado, completed earlier this year,
has been well received by the Denver rental market. Move-in of residents began
late in 2012 and current physical occupancy is approximately 58% with total
leased units of approximately 68%. Construction of the Trilogy NoMa
development project, a 603-unit multifamily community in downtown Washington,
D.C., was completed during the quarter ended June 30, 2013. Current physical
occupancy is approximately 37% while leased units total approximately 43%.
Construction activities of the Walnut Creek development project, located in
Walnut Creek, California, is anticipated to begin in late 2013. Regulatory and
environmental entitlement approvals are complete and development budgets are
being finalized.

- Sale of properties - During the six months ended June 30, 2013, the Company
sold two properties located in Houston, Texas; Walden Pond and Gables of
Texas. The Company was able to take advantage of the strong capital markets to
obtain favorable pricing for these assets. The Company recognized gains of
approximately $18,700,000 on an aggregate sales price of $31,500,000. Cash
from the transaction was used to pay down debt associated with the funding of
ongoing development projects and will be used to fund distributions to common
shareholders.

- Economic Conditions - During 2013, on a national basis, the multifamily
sector continued to exhibit strong fundamentals and improved performance due
to continued increases in rents and stable occupancies resulting from
continued favorable apartment unit supply and demand dynamics. Reduced
homeownership has increased demand in the apartment sector, while low levels
of construction of new units during the recession has contributed to a 10-year
low in the national vacancy rate. Capital markets improvements have had a
favorable impact on sales of multifamily assets with transaction volumes
reaching five-year highs in the third quarter of 2012. With the benefit of the
improvement in the economy, the Company will continue to implement its program
of increasing rental rates to drive growth in revenue and net operating
income.

David Quade, President of the Company, comments: "The Company generated strong
operating results in the second quarter which were the result of our program
of increasing rental rates and controlling operating expenses within the
portfolio. Same Property rental rate increases averaged over 4% and
contributed to an increase in Same Property NOI of approximately 6%.
Development activities, which continue to be a focus of the Company, were
highlighted in the second quarter by the completion of construction at the
Trilogy NoMa project. Located in downtown Washington, D.C., Trilogy NoMa is
being well received by the local rental market with current leasing levels
reaching approximately 43%. We are pleased with the Company's operating
results which demonstrate strong growth resulting from our efforts over the
past few years to significantly upgrade the overall quality of the real estate
portfolio."

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"). FFO falls within the definition of a "non-GAAP financial measure"
as stated in Item 10(e) of Regulation S-K promulgated by the Securities and
Exchange Commission (the "SEC"). Management considers FFO to be an appropriate
measure of performance of an equity Real Estate Investment Trust ("REIT"). We
calculate FFO by adjusting net income (loss) (computed in accordance with
GAAP, including non-recurring items), for gains (or losses) from sales of
properties, impairments, 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 with
net income (loss) as presented in the consolidated 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 operating real estate assets and excluding real estate asset
depreciation and amortization (which can vary among owners of identical assets
in similar condition based on historical cost accounting and useful life
estimates), FFO can help one compare the operating performance of a company's
real estate between periods or as compared to different companies.

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
the current NAREIT definition differently. FFO is not a GAAP financial measure
and should not be considered as an alternative to net income (loss), the most
directly comparable financial measure of our performance calculated and
presented 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 consolidated financial statements.

The following table presents a reconciliation of net income (loss) to FFO for
the three and six months ended June30, 2013 and 2012:

                 Three months ended                Six months ended
                   June 30,                            June 30,
                   2013            2012              2013            2012
Net income         14,531,303        (3,282,604  )     10,534,627        (1,270,648  )
(loss)
Add:
Depreciation
of real            5,615,658         5,561,784         11,175,225        11,359,480
property
Depreciation
of real
property
included in        256,118           673,904           513,336           1,474,474
results of
discontinued
operations
Amortization
of acquired
in-place           —                 16,104            5,377             36,072
leases and
tenant
relationships
Equity in loss
of
unconsolidated     855,136           715,572           1,631,103         —
multifamily
entities
Funds from
operations of
unconsolidated     431,695           312,207           800,396           577,655
multifamily
entities, net
of impairments
Less:
Funds from
operations of
noncontrolling     (161,439    )     (352,865    )     (337,988    )     (664,832    )
interest in
properties
Gain on
disposition of     (18,689,058 )     (32,887     )     (18,689,058 )     (6,622,210  )
real estate
assets
Equity in
income of
unconsolidated     —                —                —                (407,239    )
multifamily
entities
Funds from         $ 2,839,413      $ 3,611,215      $ 5,633,018      $ 4,482,752 
Operations
                                                                                     

FFO for the three months ended June30, 2013 decreased as compared to the same
period ended June30, 2012 and increased for the six months ended June30,
2013 as compared to the six-month period ended June30, 2012. The decrease in
FFO for the three months ended June30, 2013 compared to the three months
ended June30, 2012 is mainly attributable to increased expenses, specifically
incentive advisory fees, real estate taxes and interest expenses, which
exceeded the increase in revenue for the comparable periods. The increase in
FFO for the six months ended June30, 2013 compared to the same period ended
June30, 2012 is due primarily to increased revenue and lower incentive
advisory fees, which were partially offset by higher real estate taxes and
interest expense as the 2020 Lawrence Project was completed in the first
quarter of 2013.

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.

Same Property NOI falls within the definition of a "non-GAAP financial
measure" as stated in Item 10(e) of Regulation S-K promulgated by the SEC and
should not be considered as an alternative to net income (loss), the most
directly comparable financial measure of our performance calculated and
presented in accordance with GAAP. The Company believes Same Property NOI is a
measure of operating results that is useful to investors to analyze the
performance of a real estate company because it provides a direct measure of
the operating results of the Company's multifamily apartment communities. The
Company also believes it is a useful measure to facilitate the comparison of
operating performance among competitors. The calculation of Same Property NOI
requires classification of income statement items between operating and
non-operating expenses, where operating items include only those items of
revenue and expense which are directly related to the income producing
activities of the properties. We believe that to achieve a more complete
understanding of the Company's performance, Same Property NOI should be
compared with our reported net income (loss). Management uses Same Property
NOI to evaluate the operating results of properties without reflecting the
effect of investing and financing activities such as mortgage debt and capital
expenditures which, have an impact on interest expense and depreciation and
amortization. The Same Property portfolio consists of 19 properties acquired
or placed in service on or prior to January 1, 2012 and owned through June30,
2013.

The following table represents the reconciliation of GAAP net income (loss) to
the other non-GAAP measures presented for the six months ended June30, 2013
and 2012:

                 Three months ended               Six months ended
                   June 30,                          June 30,
                   2013            2012             2013             2012
Net income         14,531,303        (3,282,604 )     $ 10,534,627       $ (1,270,648 )
(loss)
Add:
Depreciation       6,432,388         6,120,855        12,759,624         12,499,149
Interest,
inclusive of
amortization       6,647,682         6,093,443        13,057,302         12,306,267
of deferred
financing fees
Amortization
of acquired
in-place           —                 16,104           5,377              36,072
leases and
tenant
relationships
Net income
from               (18,630,988 )     (248,001   )     (18,748,838  )     (5,913,936   )
discontinued
operations
Equity in
(income) loss
of                 855,136          715,572         1,631,103         (407,239     )
unconsolidated
multifamily
entities
Net operating      9,835,521         9,415,369        19,239,195         17,249,665
income
Add:
Net operating
income related
to properties
acquired or
placed in          1,613,602        1,344,801       3,558,033         4,028,635    
service after
January 1,
2012 and
non-property
activities
Same Property
net operating      11,449,123       10,760,170      $ 22,797,228      $ 21,278,300 
income
                                                                                      

The Company

The Company is a Real Estate Investment Trust ("REIT") whose objective is to
acquire, own, operate, develop and rehabilitate multifamily apartment
communities. The Company owns interests in twenty multifamily apartment
communities and one multifamily development project, of which six are located
in the Baltimore/Washington, D.C. metropolitan area; three are located in
Dallas, Texas; three are located in Virginia; two are located in Houston,
Texas; and one is located in each of Austin, Texas; Atlanta, Georgia;
Sherwood, Oregon; Tampa, Florida; Philadelphia, Pennsylvania; Walnut Creek,
California; and Denver, Colorado.

Forward Looking Statements

With the exception of the historical information contained in this release,
the matters described herein may contain forward-looking statements that are
made pursuant to the Safe Harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements, including
statements about apartment rental demand and fundamentals, 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, especially as they may affect rental markets,
legislative/regulatory changes (including changes to laws governing the
taxation of REITs), possible sales of assets, the acquisition restrictions
placed on the Company by an affiliated entity Berkshire Multifamily Value Plus
Fund III, LP, availability of capital, interest rates and interest rate
spreads, changes in accounting principles generally accepted in the United
States of America and policies and guidelines 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 December31, 2012 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. The Company assumes no obligation to update such information.

BERKSHIRE INCOME REALTY, INC.
CONSOLIDATED BALANCE SHEETS
                                                          
                                           June 30,            December 31,
                                           2013                2012
                                                               
ASSETS
Multifamily apartment communities, net
of accumulated depreciation of             $ 382,660,242       $ 402,999,104
$229,570,535 and $235,825,752,
respectively
Cash and cash equivalents                  20,782,083          12,224,361
Cash restricted for tenant security        1,245,211           1,332,178
deposits
Replacement reserve escrow                 1,042,391           986,790
Prepaid expenses and other assets          8,026,311           9,545,966
Investments in unconsolidated              15,547,996          16,873,924
multifamily entities
Acquired in-place leases and tenant
relationships, net of accumulated          —                   5,377
amortization of $0 and $599,702,
respectively
Deferred expenses, net of accumulated
amortization of $3,112,602 and             2,975,532          3,210,510     
$3,096,284, respectively
Total assets                               $ 432,279,766      $ 447,178,210 
                                                               
LIABILITIES AND DEFICIT
                                                               
Liabilities:
Mortgage notes payable                     $ 463,075,489       $ 478,185,998
Note payable - other                       1,250,000           1,250,000
Due to affiliates, net                     1,935,146           3,446,460
Due to affiliate, incentive advisory       7,317,372           6,634,261
fees
Dividend and distributions payable         837,607             1,137,607
Accrued expenses and other liabilities     10,967,445          15,081,550
Tenant security deposits                   1,540,907          1,475,298     
Total liabilities                          486,923,966        507,211,174   
                                                               
Commitments and contingencies              —                   —
                                                               
Deficit:
Noncontrolling interest in properties      885,514             1,527,431
Noncontrolling interest in Operating       (83,848,935   )     (89,708,267   )
Partnership
Series A 9% Cumulative Redeemable
Preferred Stock, no par value, $25
stated value, 5,000,000 shares             70,210,830          70,210,830
authorized, 2,978,110 shares issued
and outstanding at June 30, 2013 and
December 31, 2012, respectively
Class A common stock, $.01 par value,
5,000,000 shares authorized, 0 shares
issued and outstanding at June 30,         —                   —
2013 and December 31, 2012,
respectively
Class B common stock, $.01 par value,
5,000,000 shares authorized, 1,406,196
shares issued and outstanding at June      14,062              14,062
30, 2013 and December 31, 2012,
respectively
Excess stock, $.01 par value,
15,000,000 shares authorized, 0 shares
issued and outstanding at June 30,         —                   —
2013 and December 31, 2012,
respectively
Accumulated deficit                        (41,905,671   )     (42,077,020   )
Total deficit                              (54,644,200   )     (60,032,964   )
                                                               
Total liabilities and deficit              $ 432,279,766      $ 447,178,210 
                                                                             

BERKSHIRE INCOME REALTY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
                                                    
                   Three months ended                    Six months ended
                   June 30,                              June 30,
                   2013             2012               2013             2012
Revenue:
Rental             $ 18,154,499       $ 17,044,839       $ 35,929,035       $ 33,913,424
Utility            852,825            721,711            1,690,499          1,453,630
reimbursement
Other              843,754           775,531           1,651,633         1,516,074    
Total revenue      19,851,078        18,542,081        39,271,167        36,883,128   
Expenses:
Operating          4,425,981          4,200,119          9,075,223          8,561,080
Maintenance        1,230,171          1,176,245          2,113,072          2,234,698
Real estate        2,024,714          1,695,820          3,835,212          3,425,702
taxes
General and        507,809            557,173            1,237,899          1,324,342
administrative
Management         1,203,974          1,152,971          2,396,786          2,287,663
fees
Incentive          622,908            344,384            1,373,780          1,799,978
advisory fees
Depreciation       6,432,388          6,120,855          12,759,624         12,499,149
Interest,
inclusive of
amortization       6,647,682          6,093,443          13,057,302         12,306,267
of deferred
financing fees
Amortization
of acquired
in-place           —                 16,104            5,377             36,072       
leases and
tenant
relationships
Total expenses     23,095,627        21,357,114        45,854,275        44,474,951   
Loss before
equity in
income (loss)
of                 (3,244,549   )     (2,815,033   )     (6,583,108   )     (7,591,823   )
unconsolidated
multifamily
entities
Equity in
income (loss)
of                 (855,136     )     (715,572     )     (1,631,103   )     407,239      
unconsolidated
multifamily
entities
Loss from
continuing         (4,099,685   )     (3,530,605   )     (8,214,211   )     (7,184,584   )
operations
Discontinued
operations:
Income (loss)
from               (58,070      )     215,114            59,780             (708,274     )
discontinued
operations
Gain on
disposition of     18,689,058        32,887            18,689,058        6,622,210    
real estate
assets
Net income
from               18,630,988        248,001           18,748,838        5,913,936    
discontinued
operations
Net income         14,531,303         (3,282,604   )     10,534,627         (1,270,648   )
(loss)
Net (income)
loss
attributable
to                 4,724              (130,281     )     (14,808      )     (218,306     )
noncontrolling
interest in
properties
Net (income)
loss
attributable
to                 (12,553,460  )     4,966,475         (6,998,082   )     4,723,683    
noncontrolling
interest in
Operating
Partnership
Net income
attributable       1,982,567          1,553,590          3,521,737          3,234,729
to the Company
Preferred          (1,675,194   )     (1,675,195   )     (3,350,388   )     (3,350,389   )
dividend
Net income
(loss)
available to       $ 307,373         $ (121,605   )     $ 171,349         $ (115,660   )
common
shareholders
Net loss from
continuing
operations
attributable       (13.03       )     (0.27        )     (13.21       )     (4.29        )
to the Company
per common
share, basic
and diluted
Net income
from
discontinued
operations
attributable       13.25             0.18              13.33             4.21         
to the Company
per common
share, basic
and diluted
Net income
(loss)
available to
common             0.22              (0.09        )     0.12              (0.08        )
shareholders
per common
share, basic
and diluted
Weighted
average number
of common
shares             1,406,196         1,406,196         1,406,196         1,406,196    
outstanding,
basic and
diluted
                                                                                         

Contact:

For Berkshire Income Realty, Inc.
Stephen Lyons,1-617-574-8367
stephen.lyons@bpadv.com
Facsimile: 1-617-574-8312
 
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