Market Snapshot
  • U.S.
  • Europe
  • Asia
Ticker Volume Price Price Delta
DJIA 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 2.54 0.14%
NASDAQ 4,095.52 9.29 0.23%
Ticker Volume Price Price Delta
STOXX 50 3,155.81 16.55 0.53%
FTSE 100 6,625.25 41.08 0.62%
DAX 9,409.71 91.89 0.99%
Ticker Volume Price Price Delta
NIKKEI 14,516.27 98.74 0.68%
TOPIX 1,173.37 6.78 0.58%
HANG SENG 22,760.24 64.23 0.28%

Associated Estates Realty Corporation Reports Fourth Quarter And Full Year Results



  Associated Estates Realty Corporation Reports Fourth Quarter And Full Year
                                   Results

Full Year Same Community NOI up 5.0%

2014 Same Community NOI Guidance up 3.9% at the Midpoint

Announces Joint Venture with AIG Global Real Estate on San Francisco
Development

PR Newswire

CLEVELAND, Feb. 4, 2014

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: 

  o The Apartments at Blakeney in Charlotte, NC on October 10, 2013 
  o St. Mary's Square in Raleigh, NC on November 18, 2013
  o 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

  o Same Community Revenue Growth         2.75% to 3.75%
  o Same Community Expense Growth        1.75% to 2.75%
  o Same Community Property NOI Growth  3.40% to 4.40%
  o Earnings Per Common Share                $2.95 to $3.25
  o 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 8^th 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 17^th 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    $   29,273    $           $   61,250  $   30,592
AERC                                        6,911
Add:  Depreciation - real     14,839        12,868      53,779      48,547
      estate assets
      Amortization of         881           1,232       3,877       4,889
      intangible assets
Less: Gain on disposition of  (25,960)      (4,030)     (52,828)    (26,849)
      properties
Funds from Operations (FFO)   $   19,033    $   16,981  $   66,078  $   57,179
^(1)
Add:  Prepayment costs        -             688         -           2,430
      Refund of defeasance
Less: costs on previously     -             -           -           (279)
      defeased loan
Funds from Operations (FFO)   $   19,033    $   17,669  $   66,078  $   59,330
as adjusted ^(2)
Add:  Depreciation - other    549           532         2,176       2,108
      assets
      Amortization of
      deferred financing      461           495         2,002       2,128
      fees
Less: Recurring fixed asset   (2,805)       (2,981)     (11,945)    (10,746)
      additions 
Funds Available for           $   17,238    $   15,715  $   58,311  $   52,820
Distribution (FAD) ^(3)
Per share:
Funds from Operations -       $       0.33  $           $           $      
diluted ^(1)                                0.34        1.27        1.23
Funds from Operations as      $       0.33  $           $           $      
adjusted - diluted ^(2)                     0.35        1.27        1.27
Dividends per share           $       0.19  $           $           $      
                                            0.18        0.76        0.71
Weighted average shares       57,039        49,478      51,622      46,063
outstanding - basic
Weighted average shares       57,608        49,984      52,184      46,553
outstanding - diluted

    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
(1) 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.
    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
(2) 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.
    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
(3) 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

Website: http://www.aecrealty.com
Sponsored Links
Advertisement
Advertisements
Sponsored Links
Advertisement