Archstone-Smith Reports Across-the-Board Increases

DENVER-In an SEC 8K filing, locally based Archstone-Smith, one of the nation's largest apartment REITs, reports it earned $3 per share in 2005, an 11.5% increase over 2004's $2.69 per share.

Archstone-Smith, which specializes in high-end apartment communities in neighborhoods in cities with high barriers to entry, showed total net earnings of $616.17 million, 13.6% more than the previous year's $542.32. Revenues rose to $946.9 million or 27.7% more than the $743.61 million accrued in 2004. Earnings per share for the fourth quarter of 2005 were $1.52 per share in comparison to $1.11 per share for the same period the year before, reflecting nearly a 37% increase.

The company's FFO was $3.40 per share in 2005 whereas it was $3.26 per share in 2004. The FFO is one of the best measures of a REIT's financial health. Archstone-Smith measures its FFO as the positive impact of its investment strategy of selling some properties and deploying the capital elsewhere.

The company's guidance for earnings per share is projected to hit $2.60 to $3. The FFO projection is $2.11 to $2.21 per share. Last year's FFO per share of $2.10 included non-recurring items attributable to the net impact of Rent.com and other stock sales gains, insurance recoveries, hurricane damage, pre-payment penalties and a note receivable write-off. After the adjustment, the midpoint of the 2006 FFO guidance represents an increase of 8.5% above normalized 2005 FFO.

"The accelerating improvement in our same store results is very exciting and sets the stage for very positive performance from our portfolio in 2006," R. Scot Sellers, chairman and CEO, says in the 8K filing. "Our emphasis on operational excellence and innovation, combined with our unique portfolio, provides a very strong foundation for continued increases in long-term value for our shareholders."

Archstone-Smith's same-store revenues increased 5.5% in fourth quarter 2005, representing the seventh consecutive quarter of increasing revenue growth. Its same-store net operating income grew 6.4% in the fourth quarter--the highest quarterly NOI growth since the company's acquisition of Charles E. Smith Residential in fourth quarter 2001. "Solid employment growth, combined with the extremely expensive housing prices in our core markets, has provided us with excellent pricing power," Sellers says. "Apartment fundamentals are as good as we've seen in several years."

Overall transaction volume in 2005--acquisitions, dispositions and development starts for Archstone-Smith and Ameriton--totaled about $5 billion. "Each and every one of these transactions was aimed at creating significant incremental value for our shareholders," Sellers says, "and even further improving what we believe is already the best apartment portfolio in the US."