Berkshire Income Realty Announces Third Quarter Funds from Operations of $2,808,885

  Berkshire Income Realty Announces Third Quarter Funds from Operations of
  $2,808,885

Business Wire

BOSTON -- December 2, 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 September30, 2013. Financial highlights for the
three- and nine-month periods ended September30, 2013 include:

- Same Property Net Operating Income ("Same Property NOI") increased
approximately 6.4% for the quarter ended September 30, 2013. 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 September30, 2013 ("Same Property
Portfolio"). The Same Property Portfolio had total revenue increases of
approximately 3.6% for the three months ended September30, 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. Average
monthly rental rates for the three-month period ended September30, 2013 of
$1,207 per apartment unit increased by 3.07% over the 2012 rental rates of
$1,171 for the same period, contributing to an increase of approximately
$565,000 in rental revenue. Average physical occupancy for the 2013 Same
Property Portfolio was 95.96%, which increased from the 95.62% average in
2012, and resulted in an overall increase in revenue of approximately $9,000.

- The Company's Funds From Operations ("FFO"), a non-GAAP financial measure,
for the three months ended September30, 2013 was $2,808,885 compared to
$4,025,319 for the three months ended September30, 2012. The Company's FFO
decreased $1,216,434 for the three months ended September30, 2013. The
decrease in FFO is mainly attributable to higher interest expense resulting
from the treatment of interest for the 2020 Lawrence Project and Trilogy NoMa
development. Both properties are now operational and interest was expensed in
the current period compared to the prior comparative period where interest was
capitalized during the construction phase of the projects. The decrease in FFO
is also attributable to the loss of operating income provided by assets that
were sold in the fourth quarter of 2012 and the second quarter of 2013, which
were partially offset by higher net operating income from the balance of the
portfolio, driven by higher rents and added operations from the 2020 Lawrence
Project. FFO for the nine months ended September30, 2013 decreased by $66,168
as compared to the same period ended September30, 2012 and is due primarily
to higher interest costs fees during the nine-month period. A reconciliation
of GAAP net income to FFO is included in the financial data accompanying this
news release.

- 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 3 and 4 of this
press release. For the three months ended September30, 2013 and 2012, the net
income (loss) was $(2,897,836) and $(2,702,352), respectively. For the nine
months ended September30, 2013 and 2012, the net income (loss) was $7,636,791
and $(3,973,000), respectively.

- Development Activities - During the nine months ended September 30, 2013,
the Company owned or had interests in three development joint ventures, two of
which have completed construction and are currently in lease up. Construction
of the 2020 Lawrence Project, a 231-unit LEED-gold certified mid-rise
multifamily building, located in downtown Denver, Colorado was completed
earlier this year and is being well received by the Denver rental market.
Current physical occupancy is approximately 77% with total leased units of
approximately 80%. Construction of the Trilogy NoMa development project, a
603-unit multifamily community in downtown Washington, D.C., was completed mid
year and current physical occupancy is approximately 49% with leased units of
approximately 53%. Construction activities of the Walnut Creek development
project, located in Walnut Creek, California, is anticipated to begin in early
2014. Regulatory and environmental entitlement approvals are complete and
construction plans and budgets are being finalized.

- Sale of properties - During the nine months ended September 30, 2013, the
Company sold two properties located in Houston, Texas: Walden Pond and Gables
of Texas. 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 the outstanding revolving credit facility debt associated with the
funding of ongoing development projects and to fund distributions to common
shareholders.

- Economic Conditions - During 2013, the multifamily sector continues to
exhibit strong fundamentals and improved performance due to continued
increases in rents as well as stable occupancies as a result of ongoing
favorable apartment unit supply and demand dynamics. The continued trend of
contraction in homeownership levels 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 latter part of 2012. With
sustained improvement in the economy, the Company will continue its program of
implementing rental rate increases to drive growth in revenue and net
operating income.

David Quade, President of the Company, comments: "The Company continues to
generate strong operating results which can be attributed to continued revenue
growth and a strong focus on controlling operating expenses throughout the
portfolio. We are pleased that year-to-date Same Property rental rate
increases averaged almost 4% which has resulted in an increase in Same
Property NOI of approximately 7%. The Company's two developments, which are in
the lease up phase, are doing well and their increasing lease up is providing
an incremental increase to the net operating income of the Total Property
Portfolio. Overall, we are very pleased with the Company's operating results
which are the result of our efforts to significantly upgrade the quality of
the 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 nine months ended September30, 2013 and 2012:

                Three months ended               Nine months ended
                 September 30,                     September 30,
                 2013            2012             2013           2012
Net income       $ (2,897,836 )   $ (2,702,352 )   $ 7,636,791     $ (3,973,000 )
(loss)
Add:
Depreciation
of real          5,563,785        5,417,852        16,739,010      16,777,332
property
Depreciation
of real
property
included in      —                668,825          513,336         2,143,299
results of
discontinued
operations
Amortization
of acquired
in-place         —                16,104           5,377           52,176
leases and
tenant
relationships
Equity in loss
of
unconsolidated   24,499           653,110          1,655,602       245,871
multifamily
entities
Funds from
operations of
unconsolidated   307,279          315,832          1,107,675       893,487
multifamily
entities, net
of impairments
Less:
Funds from
operations of
noncontrolling   (188,842     )   (344,052     )   (526,830    )   (1,008,884   )
interest in
properties
Gain on
disposition of   —               —               (18,689,058 )   (6,622,210   )
real estate
assets
Funds from       $ 2,808,885     $ 4,025,319     $ 8,441,903    $ 8,508,071  
Operations
                                                                                

FFO decreased for the three and nine month periods ended September30, 2013 as
compared to the same three and nine month periods ended September30, 2012.
The decrease in FFO is mainly attributable to higher interest expense
resulting from the treatment of interest for the 2020 Lawrence Project and the
Trilogy NoMa development project. Both properties are now operational and
interest was expensed in the current period as opposed to the prior
comparative period where interest was capitalized during the construction
phase of the projects. The decrease in FFO is also attributable to the loss of
operating income provided by assets that were sold in the fourth quarter of
2012 and the second quarter of 2013, which were partially offset by higher net
operating income from the balance of the portfolio driven by higher rents and
added operations from the 2020 Lawrence Project.

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
September30, 2013.

The following table represents the reconciliation of GAAP net income (loss) to
the other non-GAAP measures presented for the three and nine months ended
September30, 2013 and 2012:

                Three months ended               Nine months ended
                 September 30,                     September 30,
                 2013            2012             2013            2012
Net income       $ (2,897,836 )   $ (2,702,352 )   $ 7,636,791      $ (3,973,000 )
(loss)
Add:
Depreciation     6,397,609        5,984,472        19,157,233       18,483,621
Interest,
inclusive of
amortization     6,784,545        5,680,646        19,841,847       17,986,913
of deferred
financing fees
Amortization
of acquired
in-place         —                16,104           5,377            52,176
leases and
tenant
relationships
Net income
from             12,444           (223,502     )   (18,736,394  )   (6,137,438   )
discontinued
operations
Equity in
(income) loss
of               24,499          653,110         1,655,602       245,871      
unconsolidated
multifamily
entities
Net operating    10,321,261       9,408,478        29,560,456       26,658,143
income
Add:
Net operating
income related
to properties
acquired or
placed in        1,025,695       1,260,605       4,583,728       5,289,240    
service after
January 1,
2012 and
non-property
activities
Same Property
net operating    $ 11,346,956    $ 10,669,083    $ 34,144,184    $ 31,947,383 
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. The Company also own interests in two
unconsolidated multifamily entities.

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
                                                            
                                             September 30,     December 31,
                                             2013              2012
                                                               
ASSETS
Multifamily apartment communities, net of
accumulated depreciation of $235,968,144     $ 379,127,145     $ 402,999,104
and $235,825,752, respectively
Cash and cash equivalents                    9,312,414         12,224,361
Cash restricted for tenant security          1,267,396         1,332,178
deposits
Replacement reserve escrow                   1,086,540         986,790
Prepaid expenses and other assets            8,275,848         9,545,966
Investments in unconsolidated multifamily    14,655,404        16,873,924
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 $3,252,650 and $3,096,284,   2,838,489        3,210,510     
respectively
Total assets                                 $ 416,563,236    $ 447,178,210 
                                                               
LIABILITIES AND DEFICIT
                                                               
Liabilities:
Mortgage notes payable                       $ 461,726,623     $ 478,185,998
Note payable - other                         1,250,000         1,250,000
Due to affiliates, net                       2,051,898         3,446,460
Due to affiliate, incentive advisory fees    7,592,536         6,634,261
Dividend and distributions payable           3,637,607         1,137,607
Accrued expenses and other liabilities       9,882,792         15,081,550
Tenant security deposits                     1,549,398        1,475,298     
Total liabilities                            487,690,854      507,211,174   
                                                               
Commitments and contingencies                —                 —
                                                               
Deficit:
Noncontrolling interest in properties        1,046,067         1,527,431
Noncontrolling interest in Operating         (100,096,200  )   (89,708,267   )
Partnership
Series A 9% Cumulative Redeemable
Preferred Stock, no par value, $25 stated
value, 5,000,000 shares authorized,          70,210,830        70,210,830
2,978,110 shares issued and outstanding at
September 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 September 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 September   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 September 30, 2013 and
December 31, 2012, respectively
Accumulated deficit                          (42,302,377   )   (42,077,020   )
Total deficit                                (71,127,618   )   (60,032,964   )
                                                               
Total liabilities and deficit                $ 416,563,236    $ 447,178,210 
                                                                             

BERKSHIRE INCOME REALTY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
                                                
                 Three months ended                Nine months ended
                 September 30,                     September 30,
                 2013            2012             2013            2012
Revenue:
Rental           $ 18,468,549     $ 17,303,581     $ 54,397,584     $ 51,217,005
Utility          866,346          722,752          2,556,845        2,176,382
reimbursement
Other            867,340         768,984         2,518,973       2,285,058    
Total revenue    20,202,235      18,795,317      59,473,402      55,678,445   
Expenses:
Operating        4,587,613        4,473,126        13,662,836       13,034,206
Maintenance      1,384,633        1,321,345        3,497,705        3,556,043
Real estate      1,770,935        1,694,010        5,606,147        5,119,712
taxes
General and      505,702          554,381          1,743,601        1,878,723
administrative
Management       1,208,938        1,170,760        3,605,724        3,458,423
fees
Incentive        423,153          173,217          1,796,933        1,973,195
advisory fees
Depreciation     6,397,609        5,984,472        19,157,233       18,483,621
Interest,
inclusive of
amortization     6,784,545        5,680,646        19,841,847       17,986,913
of deferred
financing fees
Amortization
of acquired
in-place         —               16,104          5,377           52,176       
leases and
tenant
relationships
Total expenses   23,063,128      21,068,061      68,917,403      65,543,012   
Loss before
equity in loss
of               (2,860,893   )   (2,272,744   )   (9,444,001   )   (9,864,567   )
unconsolidated
multifamily
entities
Equity in loss
of
unconsolidated   (24,499      )   (653,110     )   (1,655,602   )   (245,871     )
multifamily
entities
Loss from
continuing       (2,885,392   )   (2,925,854   )   (11,099,603  )   (10,110,438  )
operations
Discontinued
operations:
Income (loss)
from             (12,444      )   223,502          47,336           (484,772     )
discontinued
operations
Gain on
disposition of   —               —               18,689,058      6,622,210    
real estate
assets
Net income
(loss) from      (12,444      )   223,502         18,736,394      6,137,438    
discontinued
operations
Net income       (2,897,836   )   (2,702,352   )   7,636,791        (3,973,000   )
(loss)
Net income
attributable
to               (25,553      )   (127,684     )   (40,361      )   (345,990     )
noncontrolling
interest in
properties
Net (income)
loss
attributable
to               4,488,677       4,397,555       (2,509,405   )   9,121,238    
noncontrolling
interest in
Operating
Partnership
Net income
attributable     1,565,288        1,567,519        5,087,025        4,802,248
to the Company
Preferred        (1,675,194   )   (1,675,194   )   (5,025,582   )   (5,025,583   )
dividend
Net income
(loss)
available to     $ (109,906   )   $ (107,675   )   $ 61,443        $ (223,335   )
common
shareholders
Net loss from
continuing
operations
attributable     (0.07        )   (0.24        )   (13.28       )   (4.52        )
to the Company
per common
share, basic
and diluted
Net income
(loss) from
discontinued
operations
attributable     (0.01        )   0.16            13.32           4.36         
to the Company
per common
share, basic
and diluted
Net income
(loss)
available to
common           (0.08        )   (0.08        )   0.04            (0.16        )
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:

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