Archstone-Smith Reports Lower Q3 Earnings, Revenue

Third-quarter same-store expenses increased 4.7% over the same period last year, driven primarily by increases in property taxes, utilities and insurance costs. As a result, third quarter same-store net operating income decreased 4.3%; year to date same-store NOI decreased 1.9% from 2001. On a sequential basis, Archstone-Smith's third quarter same-store revenues decreased 0.4% from the second quarter of 2002.

"We continue to be pleased with our operating performance during these very challenging economic times," says R. Scot Sellers, chairman and chief executive officer. "Our emphasis on customer service and innovative operating initiatives such as revenue management are producing solid relative performance for Archstone-Smith, during a difficult time for the apartment industry."

Also, Ameriton Properties Inc. completed the sale of one development community during the third quarter. This disposition contributed approximately $11.2 million, or $0.05 per share, to Archstone-Smith's third quarter funds from operations.

Archstone-Smith also will expense approximately $5 million to $7 million in the third quarter, representing $0.02 to $0.03 per share, for costs to correct moisture infiltration issues and claims related to mold at one of its high-rise properties in Southeast Florida.

The company also expects to incur additional costs of approximately $11 million to $13 million for related capital improvements. The company is also subject to litigation in connection with these issues. Archstone-Smith believes it will recover a portion of these costs from insurance carriers and is evaluating other potential recoveries.

With a current total market capitalization of approximately $9.3 billion, Archstone-Smith has 225 garden communities and high-rise properties, representing 79,489 units, including 2,117 units under construction as of Sept. 30.