X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

DENVER-Helped by a sale of some of its properties, locally based Archstone-Smith boasts a dramatic improvement in the third quarter, at a time when many other large apartments REITs are suffering from a recession in most multi-family markets across the country. Archstone-Smith’s net earnings hit 79 cents a share, more than double the 31 cents a share in third quarter 2002.

Its Funds From Operations, with gains and losses that reflects the company’s capital recycling program, rose to 79 cents in the third quarter, compared with 55 cents per share for the like period in 2002.

The company’s standard FFO was 47 cents per share in the third quarter, compared with 53 cents per share during the third quarter 2002.

During the latest full quarter, Archstone-Smith’s same-store operating portfolio continued to perform well, the company says. Same-store revenues decreased 1.9% and expenses declined 3.9% from the same period of 2002. Same-store net operating income decreased 0.8% from the third quarter last year.

The Washington, DC metropolitan area and Southern California, which collectively represent 55% of the company’s NOI, produced NOI growth during the quarter of 6.3% and 3%, respectively. Since the first quarter of 2002, the company’s same-store NOI has decreased 3%.

“The stability in our same-store net operating income during the last two years of this recession reflects the benefit of investing in markets where it is very difficult to build new housing,” says R. Scot Sellers, chairman and CEO.

Today, 88% of Archstone-Smith’s portfolio is concentrated in its core protected markets, which, in addition to the Washington, DC metropolitan area and Southern California, include the San Francisco Bay area, Southeast Florida, Chicago, Boston, Seattle and the greater New York City area.

Archstone-Smith’s third quarter 2003 results include gains from the sale of apartment communities by Ameriton Properties Inc., which contributed $12.4 million, or approximately 5.5 cents per share to Archstone-Smith’s third quarter FFO and $15.7 million or about seven cents to the company’s third quarter earnings per share.

Ameriton is the company’s wholly owned taxable REIT subsidiary that utilizes Archstone-Smith’s development, acquisition and operating expertise to capitalize on short-term real estate investment opportunities.

Overall, sale proceeds have strengthened its balance sheet and positioned it for future growth, according to the company. So far this year, Archstone-Smith has closed $1.2 billion of sales, producing gross gains of $131.2 million, GAAP gains of $246.9 million and an unleveraged internal rate of return of 12.2%.

Year to date, the company has acquired $262 million of apartment communities, representing 1,483 units, through tax-deferred exchanges in its core markets including Santa Monica, CA, the San Francisco Bay area, Southeast Florida and the Washington, DC metropolitan area.

Archstone-Smith has also used a portion of the disposition proceeds to reduce its total debt by more than $650 million in the past 12 months. The company’s ratio of debt-to-total-un-depreciated-book-capitalization was 41.9% as of Sept. 30.

Currently, the company has over $1 billion of liquidity, including cash, liquid assets, restricted cash in escrows and capacity on its unsecured credit facilities. “This lower level of leverage gives us the financial capacity to fund incremental investment opportunities with inexpensive debt, which should enable us to increase our earnings and funds from operations in the future,” says Charles E. Mueller, Jr., CFO.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.