Berkshire Income Realty Announces Year End Funds from Operations of $10,907,025

  Berkshire Income Realty Announces Year End Funds from Operations of
  $10,907,025

Business Wire

BOSTON -- April 9, 2014

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 year ended December31, 2013. Financial highlights for the year ended
December31, 2013 include:

- Same Property Net Operating Income ("Same Property NOI") increased
approximately 5.4% - Same Property NOI, a non-GAAP financial measure,
increased as a result of growth in revenue for properties acquired or placed
in service prior to January 1, 2012 ("Same Property"). The Same Property
portfolio had a total revenue increase of approximately 4.1% for the year
ended December31, 2013 compared to the same period a year ago. The strong
revenue growth outpaced the increase in operating expenses for the Same
Property portfolio. Average physical occupancy for the 2013 Same Property
Portfolio was 95.87%, which was substantially unchanged from the 95.44%
average in 2012. A reconciliation of accounting principles generally accepted
in the United States of America ("GAAP") net income to Same Property NOI is
included in the financial data accompanying this release.

- The Company's Funds From Operations ("FFO") grew approximately 2.9% for the
year ended December31, 2013 - The Company's FFO, a non-GAAP financial
measure, for the year ended December31, 2013 was $10,907,025 compared to
$10,601,772 for the year ended December31, 2012. Solid gains in rental
revenue and incremental operations from 2020 Lawrence, on which construction
was completed in the first quarter of 2013, helped drive the Company's FFO
growth. The growth was partially offset by both higher interest expense,
resulting from less capitalized interest as two developments were completed in
2013, and the loss of operating income provided by properties sold in the
comparative periods. A reconciliation of GAAP net income to FFO is included in
the financial data accompanying this release.

- A presentation and reconciliation of net income (loss), the most directly
comparable financial measure calculated and presented in accordance with GAAP,
to FFO and Same Property NOI is set forth on pages 2 and 3 of this press
release. For the years ended December31, 2013, 2012, and 2011, the Company's
net income was $7,209,633, $29,021,154 and $1,922,299, respectively.

- Development Activities - During the year ended December 31, 2013, the
Company owned or had interests in three development joint ventures, two of
which have completed construction and are currently completing lease up.
Construction of 2020 Lawrence, a 231-unit LEED-gold certified, mid-rise
multifamily building, located in downtown Denver, Colorado, was completed
early in 2013 and is in lease up as the property continues to be well-received
in the Denver rental market. Current physical occupancy is approximately 91%
with total leased units of approximately 98%. Construction of the Trilogy NoMa
development project, a 603-unit multifamily community in downtown Washington,
D.C., was completed in the middle of 2013 and current physical occupancy is
approximately 65% with leased units of approximately 69%. Regulatory and
environmental entitlement approvals are complete for the Walnut Creek
development project, located in Walnut Creek, California, and construction
plans and budgets continue to be reviewed and finalized.

- Sale of properties - During the year ended December 31, 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 both
to pay down the outstanding revolving credit facility debt related to funding
ongoing development activities and to fund distributions to common
shareholders.

- Economic Conditions - In 2013, the multifamily sector continued to exhibit
improved performance and strong fundamentals on a national basis due to
sustained higher rent levels and continued stable occupancies due to ongoing
favorable apartment unit supply and demand mix. Continued reduced levels of
new unit construction and home ownership rates in the apartment sector have
driven demand in recent years to a 10-year low national vacancy rate. Improved
capital markets have had a favorable impact on the sale of multifamily assets
with transaction volumes reaching five-year highs in recent years.

David Quade, President of the Company, commented: "We were pleased with the
Company's strong fourth quarter operating results, which contributed to the
increase in net operating income for the year. The positive results can be
attributed to revenue growth and our continued focus on controlling operating
expenses. In addition, Same Property revenue increased 4.1%, which resulted in
the Same Property NOI increase of 5.4%. The Company's financial position
remains strong as we head into 2014, with a continued focus on improving the
quality of the real estate portfolio through acquisitions, development, and
dispositions. In the first quarter of 2014, we acquired two Class-A
properties, Pavilion Townplace, located in Dallas, Texas, and Eon of
Lindbergh, located in Atlanta, Georgia, and invested in a joint venture to
develop Aura Prestonwood, a 322-unit multifamily apartment property located in
Dallas, Texas."

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 to FFO for the
years ended December31, 2013, 2012 and 2011:

                       
                           Year ended
                           December 31,
                           2013             2012             2011
Net income                 $ 7,209,633        $ 29,021,154       $ 1,922,299
Add:
Depreciation of real       22,207,591         22,127,308         23,782,722
property
Depreciation of real
property included in
results of                 472,807            2,614,306          4,043,822
discontinued
operations
Amortization of
acquired in-place          5,377              68,280             531,422
leases and tenant
relationships
Amortization of
acquired in-place
leases and tenant
relationships              —                  —                  8,916
included in
discontinued
operations
Equity in loss of
unconsolidated             —                  268,921            3,430,015
multifamily entities
Funds from
operations of
unconsolidated             1,304,723          1,100,467          1,124,125
multifamily
entities, net of
impairments
Less:
Noncontrolling
interest in
properties' share of       (755,803     )     (1,015,799   )     (1,322,049  )
funds from
operations
Gain on disposition
of real estate             (18,648,525  )     (43,582,865  )     (23,916,947 )
assets
Equity in income of
unconsolidated             (888,778     )     —                 —           
multifamily entities
Funds from                 $ 10,907,025      $ 10,601,772      $ 9,604,325 
Operations
                                                                             

FFO for the year ended December31, 2013 increased 2.9% as compared to FFO for
the year ended December31, 2012. The increase in FFO is due primarily to
growth in net operating income driven by higher rental revenue, incremental
operating income from 2020 Lawrence, which completed construction in the first
quarter of 2013, as well as lower incentive advisory fees. The increase was
partially offset by higher interest expense, resulting from less capitalized
interest for 2020 Lawrence and NoMa, as construction was completed in 2013,
and the loss of operating income provided by assets sold during 2012 and the
second 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
December31, 2013.

The following table represents the reconciliation of GAAP net income (loss) to
the other non-GAAP measures presented for the years ended December31, 2013,
2012 and 2011:

                      
                          Year ended
                          December 31,
                          2013             2012             2011
Net income                $ 7,209,633        $ 29,021,154       $ 1,922,299
Add:
Depreciation              25,481,041         24,421,521         26,460,715
Interest, inclusive
of amortization of        26,459,722         23,937,305         26,030,877
deferred financing
fees
Amortization of
acquired in-place         5,377              68,280             531,422
leases and tenant
relationships
Net income from
discontinued              (18,684,966  )     (42,210,823  )     (24,541,499  )
operations
Equity in (income)
loss of
unconsolidated            (888,778     )     268,921           3,430,015    
multifamily
entities
Net operating             39,582,029         35,506,358         33,833,829
income
Add:
Net operating
income related to
properties acquired
or placed in              5,811,875         7,545,214         3,740,979    
service after
January 1, 2012 and
non-property
activities
Same Property net         $ 45,393,904      $ 43,051,572      $ 37,574,808 
operating 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 two multifamily development projects, of which six are located
in the Baltimore/Washington, D.C. metropolitan area; four 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 December 31, 2013 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.

                             - tables to follow-

                                                         
BERKSHIRE INCOME REALTY, INC.
CONSOLIDATED BALANCE SHEETS
                                                               
                                           December 31,        December 31,
                                           2013                2012
                                                               
ASSETS
Multifamily apartment communities,
net of accumulated depreciation of         $ 381,663,433       $ 402,999,104
$242,291,624 and $235,825,752,
respectively
Cash and cash equivalents                  15,254,613          12,224,361
Cash restricted for tenant security        1,321,895           1,332,178
deposits
Replacement reserve escrow                 1,121,258           986,790
Prepaid expenses and other assets          10,675,302          9,545,966
Investments in unconsolidated              14,294,474          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                2,977,939          3,210,510     
$2,953,066 and $3,096,284,
respectively
Total assets                               $ 427,308,914      $ 447,178,210 
                                                               
LIABILITIES AND DEFICIT
                                                               
Liabilities:
Mortgage notes payable                     $ 475,525,480       $ 478,185,998
Revolving credit facility -                —                   —
affiliate
Note payable - other                       1,250,000           1,250,000
Due to affiliates, net                     2,454,167           3,446,460
Due to affiliate, incentive advisory       8,289,617           6,634,261
fees
Dividend and distributions payable         837,607             1,137,607
Accrued expenses and other                 10,968,053          15,081,550
liabilities
Tenant security deposits                   1,531,472          1,475,298     
Total liabilities                          500,856,396        507,211,174   
                                                               
Commitments and contingencies              —                   —
                                                               
Deficit:
Noncontrolling interest in                 879,785             1,527,431
properties
Noncontrolling interest in Operating       (102,297,937  )     (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 December 31, 2013
and 2012, respectively
Class A common stock, $.01 par
value, 5,000,000 shares authorized,
0 shares issued and outstanding at         —                   —
December 31, 2013 and 2012,
respectively
Class B common stock, $.01 par
value, 5,000,000 shares authorized,
1,406,196 shares issued and                14,062              14,062
outstanding at December 31, 2013 and
2012, respectively
Excess stock, $.01 par value,
15,000,000 shares authorized, 0
shares issued and outstanding at           —                   —
December 31, 2013 and 2012,
respectively
Accumulated deficit                        (42,354,222   )     (42,077,020   )
Total deficit                              (73,547,482   )     (60,032,964   )
                                                               
Total liabilities and deficit              $ 427,308,914      $ 447,178,210 
                                                                             

                      
BERKSHIRE INCOME REALTY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
                          
                          Year ended
                          December 31,
                          2013             2012             2011
Revenue:
Rental                    $ 73,191,622       $ 68,545,521       $ 65,240,687
Utility                   3,441,604          2,954,366          2,714,358
reimbursement
Other                     3,398,904         3,013,758         2,732,821    
Total revenue             80,032,130        74,513,645        70,687,866   
Expenses:
Operating                 18,433,143         17,585,096         17,268,329
Maintenance               4,516,367          4,396,133          4,456,806
Real estate taxes         7,677,392          6,845,669          6,688,309
General and               2,504,227          2,424,966          2,337,435
administrative
Management fees           4,824,959          4,642,323          4,406,673
Incentive advisory        2,494,013          3,113,100          1,696,485
fees
Depreciation              25,481,041         24,421,521         26,460,715
Interest, inclusive
of amortization of        26,459,722         23,937,305         26,030,877
deferred financing
fees
Amortization of
acquired in-place         5,377             68,280            531,422      
leases and tenant
relationships
Total expenses            92,396,241        87,434,393        89,877,051   
Loss before equity
in income (loss) of
unconsolidated            (12,364,111  )     (12,920,748  )     (19,189,185  )
multifamily
entities
Equity in income
(loss) of
unconsolidated            888,778           (268,921     )     (3,430,015   )
multifamily
entities
Loss from
continuing                (11,475,333  )     (13,189,669  )     (22,619,200  )
operations
Discontinued
operations:
Income (loss) from
discontinued              36,441             (1,372,042   )     624,552
operations
Gain on disposition
of real estate            18,648,525        43,582,865        23,916,947   
assets, net
Net income from
discontinued              18,684,966        42,210,823        24,541,499   
operations
Net income                7,209,633          29,021,154         1,922,299
Net income
attributable to
noncontrolling            (107,292     )     (9,797,304   )     (6,306,178   )
interest in
properties
Net (income) loss
attributable to
noncontrolling            (391,968     )     (12,223,771  )     10,819,718   
interest in
Operating
Partnership
Net income
attributable to the       6,710,373          7,000,079          6,435,839
Company
Preferred dividend        (6,700,775   )     (6,700,777   )     (6,700,763   )
Net income (loss)
available to common       $ 9,598           $ 299,302         $ (264,924   )
shareholders
Net loss from
continuing
operations
attributable to the       (13.28       )     (29.81       )     (17.64       )
Company per common
share, basic and
diluted
Net income from
discontinued
operations
attributable to the       13.29             30.02             17.45        
Company per common
share, basic and
diluted
Net income (loss)
available to common
shareholders per          0.01              0.21              (0.19        )
common share, basic
and diluted
Weighted average
number of common          1,406,196         1,406,196         1,406,196    
shares outstanding,
basic and diluted
                                                                             

Contact:

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