SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number 1-10524
UNITED DOMINION REALTY TRUST, INC.
(Exact name of registrant as specified in its charter)
VIRGINIA 54-0857512
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) Identification No.)
10 SOUTH SIXTH STREET, RICHMOND, VIRGINIA 23219-3802
(Address of principal executive offices) (Zip Code)
804-780-2691
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all report
or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 mon
subject to filing requirements for at least the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's class of
common stock as the latest practicable date.
OUTSTANDING AT
CLASS OF COMMON STOCK AUGUST 3, 1995
$1 PAR VALUE 51,791,093
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands, except share data)
<TABLE>
<CAPTION>
June 30, December 31,
<S> 1995 1994
ASSETS
Real estate owned: (Notes 7 and 8) <C> <C>
Apartments $1,030,444 $ 928,758
Shopping centers 52,758 74,237
Office and industrial buildings 4,605 4,604
1,087,807 1,007,599
Less accumulated depreciation 133,465 120,341
954,342
887,258
Cash and cash equivalents 14,017 7,261
Other assets (Note 8) 29,175 17,394
$ 997,534 $ 911,913
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgage notes payable (Note 3) $ 158,041 $158,449
7 1/4% Notes due April 1, 1999 75,000 75,000
8 1/2% Debentures due September 15, 2024 150,000 150,000
Other notes payable (Note 4) 108,724 143,215
Accounts payable, accrued expenses and other liabilities 24,654 18,459
Distributions payable to common shareholders 11,652 9,822
528,071 554,945
Shareholders' equity:
Preferred stock, no par value; 25,000,000 shares authorized:
9 1/4% Series A Cumulative Redeemable Preferred Stock
(liquidation preference of $25 per share),
4,200,000 shares issued and outstanding
(no shares outstanding in 1994) (Note 6) 105,000 ---
Common stock, $1 par value; 100,000,000 shares authorized,
51,784,981 shares issued and outstanding (50,355,640
in 1994) (Note 5) 51,785 50,356
Additional paid-in capital 424,206 410,797
Notes receivable from officer shareholders (5,969) (5,991)
Distributions in excess of net income (105,559) (98,194)
Total shareholders' equity 469,463 356,968
$ 997,534 $911,913
</TABLE>
See accompanying notes.
2
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
<S>
Income:
Property operations: <C> <C> <C> <C>
Rental income $47,747 $29,673 $93,239 $56,379
Property expenses:
Utilities 3,271 2,144 6,927 4,856
Repairs and maintenance 7,717 4,724 14,065 8,441
Real estate taxes 3,422 2,062 6,658 3,864
Property management 1,114 1,083 2,368 2,052
Other operating expenses 4,146 2,480 8,214 4,720
Depreciation of real estate owned 9,493 6,238 18,549 11,877
29,163 18,731 56,781 35,810
Income from property operations 18,584 10,942 36,458 20,569
Interest and other income 361 272 535 386
18,945 11,214 36,993 20,955
Expenses:
Interest 10,135 5,890 20,589 10,621
General and administrative (Note 9) 1,547 1,067 2,781 2,486
Other depreciation and amortization 270 190 543 366
11,952 7,147 23,913 13,473
Income before gains on sales of invest-
ments and extraordinary item 6,993 4,067 13,080 7,482
Gains on sales of real estate
owned (Note 8) 4,576 -- 4,639 ---
Income before extraordinary item 11,569 4,067 17,719 7,482
Extraordinary item -early
extinguishment of debt -- (89) -- (89)
Net income 11,569 3,978 17,719 7,393
Dividends to preferred share-
holders (Note 6) 1,781 -- 1,781 --
Net income available to
common shareholders $ 9,788 $ 3,978 $15,938 $ 7,393
Net income per common share:
Before extraordinary item $ .19 $ .09 $ .31 $ .18
Extraordinary item -- -- -- --
$ .19 $ .09 $ .31 $ .18
Distributions declared per common share $ .225 $ .195 $ .45 $ .39
Weighted average number of
common shares outstanding 51,776 42,508 51,452 42,100
</TABLE>
See accompanying notes.
3
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1995 1994
<S>
OPERATING ACTIVITIES: <C> <C>
Net income $ 17,719 $ 7,393
Adjustments to reconcile net income to
net cash provided by operating activities:
Gains on sales of investments (Note 8) (4,639) --
Extraordinary item -- 89
Depreciation and amortization 19,092 12,243
Adoption of SFAS No. 112 "Employers' Accounting
for Postemployment Benefits (Note 9) -- 450
Changes in operating assets and liabilities:
Increase in operating liabilities 4,539 5,528
Increase in operating assets (246) (651)
Net cash provided by operating activities 36,465 25,052
INVESTING ACTIVITIES:
Acquisitions of real estate, net of debt and liabilities
assumed (Note 9) (95,111) (86,443)
Capital expenditures (14,547) (7,441)
Net proceeds from sales of real estate owned (Note 8) 16,601 --
Other 36 100
Net cash used in investing activities (93,021) (93,784)
FINANCING ACTIVITIES:
Net proceeds from the public sale of preferred stock (Note 6) 101,478 --
Net proceeds from issuance of common stock (Note 5) 18,383 108,989
Increase in mortgages and notes payable 25,369 102,855
Net repayment of short-term bank borrowings (14,150) (28,650)
Cash distributions paid to common shareholders (21,473) (15,423)
Scheduled mortgage principal payments (1,115) (671)
Payments on notes and non-scheduled
mortgage principal payments (45,180) (18,147)
Net cash provided by financing activities 63,312 148,953
Net increase in cash and cash equivalents 6,756 80,221
Cash and cash equivalents, beginning of period 7,261 5,773
Cash and cash equivalents, end of period $ 14,017 $ 85,994
</TABLE>
See accompanying notes.
4
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 1995
(UNAUDITED)
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
Common Stock, $1 Par Value Preferred Stock Additional Receivable Distributions Total
Number Number Paid-in from Officer in Excess of Shareholders'
of Shares Amount of Shares Amount Capital Shareholders Net Income Equity
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994 50,355,640 $50,356 -- $410,797 ($5,991) ($98,194) $356,968
Sale of common
shares issued in direct
institutional sale (Note 5) 1,360,000 1,360 -- 16,452 17,812
Sale of preferred
shares issued in public
offering (Note 6) 4,200 $105,000 (3,522) 101,478
Exercise of share options 69,064 69 -- 476 545
Shares purchased by
officers net of repayments -- 22 22
Shares issued through
Employee Stock Purchase Plan 277 -- 3 3
Net income -- 17,719 17,719
Preferred stock dividends
declared (1,781) (1,781)
Common stock dividends
declared ($.45 per share) -- (23,303) (23,303)
Balance at June 30, 1995 51,784,981 $51,785 4,200 $105,000 $424,206 ($5,969) ($105,559) $469,463
</TABLE>
See accompanying notes.
5
UNITED DOMINION REALTY TRUST, INC.
Notes to Consolidated Financial Statements
June 30, 1995
(Unaudited)
(1) The consolidated financial statements of the Trust include the accounts of
the Trust and its wholly-owned subsidiaries. All significant inter-company
accounts have been eliminated in consolidation. The financial information
furnished reflects all adjustments which are necessary for a fair
presentation of financial position at June 30, 1995 and results of
operations for the interim periods ended June 30, 1995 and 1994. Such
adjustments are of a normal and recurring nature. The interim results
presented are not necessarily indicative of results that can be expected
for a full year. The accompanying financial statements should be read in
conjunction with the audited financial statements and related notes
appearing in the Trust's 1994 Annual Report.
(2) Certain previously reported amounts have been reclassified to conform with
current financial statement presentation.
(3) Mortgage notes payable consist of conventional mortgage notes payable and
"bond indebtedness" which represents mortgages or deeds of trust granted to
secure tax-exempt bonds issued to finance the acquisition and/or
rehabilitation of certain of the Trust's properties. Conventional mortgage
notes payable included 16 loans encumbering 10 properties at June 30, 1995
and 18 loans encumbering 12 properties at June 30, 1994. Mortgage notes
payable aggregating $42.4 million at June 30, 1995 had fixed rates of
interest ranging from 7.00% to 9.625% (weighted average interest rate of
8.06%). Bond indebtedness aggregating $103.6 million and encumbering 16
properties at June 30, 1995 had fixed rates of interest ranging from 5.976%
to 8.00% (weighted average interest rate of 6.95%). At June 30, 1995, the
Trust had variable rate bond indebtedness encumbering three properties
aggregating $12.1 million (weighted average interest rate of 5.21%).
(4) A summary of unsecured notes payable at June 30, 1995 and 1994 is as
follows:
Dollars in thousands 1995 1994
COMMERCIAL BANKS
Variable rate note due November, 1994 (a) 10,000
INSURANCE COMPANIES-SENIOR UNSECURED NOTES
7.98% due March, 1997-2003 52,000 52,000
9.57% due July, 1996 35,000 35,000
7.89% due March, 1996 10,000 10,000
7.57% due March, 1995 - 10,000
8.72% due November, 1995-1998 8,000 10,000
OTHER 3,724(b) 761
$ 108,724 $ 127,761
(a) The interest rate on this note was LIBOR plus 62 1/2 basis points.
The weighted average interest rate was 6.75% and 6.65%, respectively,
for the quarter and six months ended June 30, 1995. The note had an
original maturity date of November, 1994 which was extended to June
30, 1995. The note was repaid in April, 1995.
(b) Includes a $3.2 million deferred gain from two interest rate hedge
transaction that expired during the third quarter of 1994.
(5) In February, 1995, the Trust sold 1,360,000 shares of its common stock to a
group of institutional investors at a price of $13 1/8 per share. Net
proceeds of $17.8 million were used to curtail then existing bank debt.
(6) In April, 1995, the Trust sold 4,200,000 shares of 9 1/4% Cumulative
Redeemable Preferred Stock in a public offering at $25 per share
("preferred stock"). Net proceeds of the offering after deducting
underwriting commissions and direct offering costs aggregated approximately
$101.5 million of which approximately $33.1 million was used to repay
current bank debt and approximately $65.7 million was used to fund the
acquisition of a portfolio of nine apartment communities (see Note 7). The
remaining net proceeds were temporarily invested in short-term money market
investments and were subsequently used to fund additional apartment
acquisitions.
Dividends on the preferred stock are cumulative from the date of issuance
and payable on a quarterly basis commencing on July 15, 1995, at an annual
dividend rate of $2.3125 per share. The preferred stock is redeemable on or
after April 24, 2000 solely from the proceeds from the sale of capital
stock (common or preferred) to finance the redemption. The preferred stock
has no stated maturity and is not subject to any sinking fund or mandatory
redemption and is not convertible into any other securities of the Trust.
(7) During the second quarter of 1995, the Trust acquired ten apartment
communities containing 1,948 units at a total cost of $79.1 million,
including closing costs. These acquisitions include a portfolio of nine
apartment properties (the "High Portfolio") containing 1,596 units that the
Trust acquired on May 4, 1995, for approximately $65.7 million, including
closing costs. The second quarter acquisitions were as follows:
YEAR PURCHASE
UNITS COMPLETED PRICE
HIGH PORTFOLIO
PROPERTIES:
Greens at Cedar Chase
Dover, DE 144 1989 $6.4
Brittingham Square
Salisbury, MD 144 1991 5.6
Greens of Constant Friendship
Baltimore, MD 136 1990 5.6
HIGH PORTFOLIO YEAR PURCHASE
PROPERTIES CONT.: UNITS COMPLETED PRICE
Greens at Cross Court
Easton, MD 144 1987 5.7
Greens at Hilton Run
Lexington Park, MD 328 1988 13.2
Greens at Schumaker Pond
Salisbury, MD 168 1988 6.8
Greens at Falls Run
Fredericksburg, VA 200 1989 8.1
Greens at Hollymead
Charlottesville, VA 144 1990 6.2
Manor at England Run
Fredericksburg, VA 188 1990 8.1
OTHER:
Hunters Ridge at Walden Lake
Plant City, FL 352 1994 13.4
1,948 $79.1
For the six month period ended June 30, 1995, the Trust acquired 12
apartment communities containing 2,427 units at a total cost of $95.5
million, including closing costs.
(8) On June 30, 1995, the Trust divested four shopping centers in two separate
transactions with First Washington Realty Trust, Inc. and for financial
reporting purposes, recognized $4.6 million of aggregate gains ($.09 per
share). Total consideration of approximately $20 million included cash of
approximately $12.4 million and 358,000 shares of First Washington's 9.75%
Series A Cumulative Participating Preferred Stock, recorded at $7.7 million
($21.50 per share) as "investment securities available-for-sale" which is
included under the caption "Other Assets" in the accompanying balance
sheet. Available-for-sale securities are stated at fair value, with
unrealized gains and losses reported as a separate component of
shareholders' equity. The disposition of two of the shopping centers was
structured to qualify as tax deferred exchanges pursuant to Section 1031 of
the Internal revenue Code of 1986, as amended (the "Code"), which will
enable the Trust to defer, for income tax purposes, approximately $4
million of related capital gains. On the sale of the remaining two
centers, the Trust will recognize an approximate $900,000 capital gain for
income tax purposes. The four shopping centers were Glen Lea (79,000
square feet), Hanover Village (97,000 square feet), Laburnum Park (71,000
square feet) and Laburnum Square (99,000 square feet). The transactions did
not include approximately 20 acres of developed land at two centers.
During the quarter, the Trust also sold two apartment properties containing
202 units for $6.4 million, both of which were acquired in 1994 as part of
the Clover Portfolio. No significant book gain or loss was recognized on
the sale of either property. One of the transactions was structured to
qualify as a like-kind exchange pursuant to Section 1031 of the Code.
(9) General and administrative expenses for the 1995 periods include
approximately $204,000 associated with an unsuccessful business combination
with another apartment company. Negotiations were terminated in May, 1995.
At the beginning of 1994, the Trust adopted the provisions of SFAS No. 112
"Employers' Accounting for Postemployment Benefits". The cumulative of
this accounting change was to increase general and administrative expense
and decrease net income by $450,000 or $.01 per share for the 1994 periods.
<PAGE>
Form 10-Q
Quarter Ended June 30, 1995
MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND OPERATIONS
Funds from operations (FFO) is defined as income before gains (losses) on
investments and extraordinary items (computed in accordance with generally
accepted accounting principles) plus real estate depreciation, less preferred
dividends and after adjustment for significant non-recurring items, if any. The
Trust considers funds from operations in evaluating property acquisitions and
its operating performance and believes that funds from operations should be
considered along with, but not as an alternative to, net income and cash flows
as a measure of the Trust's operating performance and liquidity. Funds from
operations does not represent cash generated from operating activities in
accordance with generally accepted accounting principles and is not necessarily
indicative of cash available to fund cash needs.
In early 1995, the National Association of Real Estate Investment Trusts
("NAREIT") adopted a White Paper recommending certain changes to the calculation
of FFO. The Trust has implemented these recommendations and has restated FFO
for 1994 to conform with the revised definition set forth above. The impact of
adopting the NAREIT recommendations was to reduce FFO by approximately $341,000
and $690,000, respectively for the quarter and the six months ended June 30,
1995, and $263,000 and $520,000, respectively for the quarter and the six months
ended June 30, 1994.
RESULTS OF OPERATIONS
For the second quarter of 1995, the Trust reported increases over the
comparable 1994 quarter in rental income, income from property operations, net
income, and funds from operations. Second quarter 1995 rental income was $47.7
million compared to $29.6 million in the second quarter of 1994, an increase of
$18.1 million or 60.9%. Income from property operations, excluding
depreciation, increased from $17.2 million to $28.1 million, an increase of
$10.9 million or 63.4%. Net income available to common shareholders for the
second quarter totaled $9.8 million compared to $4.0 million reported in last
year's second quarter. On a per share basis, net income increased from $.09 for
the second quarter of 1994 to $.19 in the second quarter of 1995. During the
second quarter, 1995, the Trust sold certain properties and recognized gains on
the sales aggregating $4.6 million. No such gains were recorded during the same
quarter last year. Funds from operations increased 42.7% from $10.3 million last
year to $14.7 million in the current year's second quarter.
The Trust's 1994 acquisitions made the largest contribution to the reported
increases; however, 1995 acquisitions and improved results from the core
portfolio of mature apartments (those owned since the beginning of 1994) also
had a positive impact on second quarter 1995 results. For the 17,914 mature
apartment units (74 communities), economic occupancy was 94.9% in the current
quarter compared to 94.1% for the second quarter last year. Rental revenue at
these properties grew by 4.5%, operating expenses increased 4.6% and the
operating expense ratio remained unchanged at 44.1%. As a result, net operating
income from these apartment units increased 4.4% or $609,000. Almost half of
the increase in operating expenses relates to exterior painting which was
$230,000 higher in the second quarter, 1995 than in the second quarter, 1994.
For the remaining 13,593 apartment units (56 complexes), acquired since January
1, 1994, economic occupancy averaged 92.4% during the second quarter and the
operating expense ratio was 41.4%. For all of the Trust's 31,507 units,
economic occupancy was 93.8%, and the operating expense ratio was 43.0% for the
second quarter of 1995. During the second quarter last year, the 20,510 units
then owned had economic occupancy of 93.9% and operating expense ratio of 43.4%.
For the second quarter, net operating income from commercial properties
decreased 6.0% or $117,000 from the second quarter last year. The decrease was
caused primarily by anchor tenant vacancies at three shopping centers and one
industrial park during 1995 and the sale of one shopping center in 1994 and one
in February, 1995.
During the second quarter of 1995, interest expense was approximately $4.2
million higher than it was in the second quarter of 1994 as the Trust had more
debt outstanding on average in 1995 than in 1994. On a per share basis, interest
expense increased $.06.
For the second quarter of 1995, depreciation of real estate owned totaled
$9.5 million versus $6.2 million for the second quarter of 1994. The increase of
$3.3 million results almost exclusively from the portfolio expansion that has
occurred during the last year.
During the second quarter of 1995, general and administrative expense was
$1.5 million, compared to $1.1 million during the same period last year.
General and administrative expenses for the second quarter of 1995, include
approximately $204,000 associated with an unsuccessful business combination with
another apartment company. Negotiations were terminated in May, 1995.
Net income available to common shareholders for the three months ended June
30, 1995, increased $5.8 million over the same period last year, primarily as a
result of the $4.6 million of aggregate gains on the sales of real estate owned
recognized during the second quarter of 1995.
For the first six months of 1995, the Trust reported increases over the
comparable 1994 period in rental income, income from property operations, net
income and funds from operations. The majority of the reported increases were
attributable to the Trust's apartment acquisitions since the beginning of 1994.
The performance of the Trust's mature group of apartments contributed to the
increases with economic occupancy at 95.3% in the current year compared to 93.1%
for the first six months last year. Rental revenues at these properties grew by
5.7% and operating expenses increased approximately 2.4%, decreasing the
operating expense ratio 1.4% to 43.0% Operating expenses were high primarily as
a result of exterior painting expenses incurred during the second quarter. Net
operating income from these apartment units was up $2.3 million or 8.4% for the
six months ended June 30, 1995. For the remaining 13,593 apartment units
acquired by the Trust since the beginning of 1994, economic occupancy averaged
92.6% during the first six months of 1995 and operating expenses averaged 42.1%
of revenues. For the Trust's 31,507 units owned, economic occupancy was 94.1%
and the operating expense ratio was 42.6% for the first six months of 1995.
For the first six months of 1995, net operating income from commercial
properties decreased 7.3%, or $287,000, due to anchor tenant vacancies at three
shopping centers and one industrial park, as well as, the sale of one shopping
center during 1994 and one in 1995.
Interest expense for the six months ended June 30, 1995 increased by
approximately $10.0 million ($.15 per share) over the same period last year,
reflecting various debt financings completed since the beginning of 1994,
including: (i) the assumption of mortgage notes payable, (ii) the issuance of
tax-exempt bond financings, (ii) the completion of a $75 million public offering
of 7 1/4% Senior Notes in April, 1994, and (iv) the completion of a $150 million
public offering of 8 1/2% Debentures in September 1994.
For the first half of 1995, depreciation of real estate owned totaled $18.5
million versus $11.9 million in 1994. The increase of $6.6 million reflects the
portfolio expansion that has occurred during the past year.
For the first six months of 1995, general and administrative expense
increased approximately $295,000 over the same period last year. Of this
increase, $204,000 related to expenses associated with merger negotiations with
another apartment company that were terminated in May, 1995.
Net income available to common shareholders for the six months ended June
30, 1995, increased $8.5 million over the same period last year as a result of
the following: (i) $4.6 million of aggregate gains on the sale of real estate
owned recognized during the second quarter of 1995, and (ii) the positive impact
of the significant portfolio expansion that has occurred during the last twelve
months.
Management believes that the Trust's operating results for the remainder of
1995 will show continued improvement over the comparable period last year
reflecting the continued positive impact of the Trust's 1994 and 1995
acquisitions. During 1994, the Trust's mature apartment economic occupancy
improved steadily through August and then stabilized between 95% an 96% during
the remainder of the year. Mature apartment operating results improved during
each succeeding quarter last year. Thus, year to year improvement in quarterly
mature apartment operating results should be more moderate in the remaining
1995 quarters. Consequently, higher rent growth will be more important to
improved result than occupancy gains throughout the remainder of 1995.
Management believes that the Trust's operating results should continue to
benefit over the next few years from a number of factors including (i) the
contribution of the large volume of units acquired since 1994 and expected to be
acquired during the remainder of 1995, and (ii) continued strong apartment
markets as a result of anticipated job growth and resultant household formation
in the Southeast.
FINANCIAL CONDITION
As a qualified REIT, the Trust distributes a substantial portion of its
cash flow to its shareholders in the form of dividends. For the second quarter
of 1995, the dividend payout ratio (the ratio of distributions declared per
share to FFO) was 76% and the Trust's cash flow from operating activities
exceeded cash distributions paid to shareholders by $15.0 million. The Trust
utilizes a variety of primarily external financing sources to fund its
acquisition program. The Trust has frequently utilized its lines of credit to
finance these expenditures and has subsequently replaced any short-term bank
debt so incurred with longer term debt or equity.
At the beginning of 1995, the Trust had approximately $7.3 million of cash
and cash equivalents and $89.35 million of available and unused bank lines of
credit. In February, 1995, the Trust sold 1.36 million shares of common stock
at $13 per share to a group of institutional investors. Net proceeds of
approximately $17.8 million were used to curtail then existing bank debt. In
April, 1995, the Trust sold 4.2 million shares of 9 1/4% Cumulative Redeemable
Preferred Stock at $25 per share. Net proceeds of the offering, after
deducting underwriting commissions and direct offering costs aggregated
approximately $101.5 million. A portion of the proceeds were used to retire
short-term bank debt and to acquire the High Portfolio in May, 1995. The
remaining proceeds have been and will be utilized for additional apartment
acquisitions and renovations. At June 30, 1995, the Trust had $14.0 million of
cash and cash equivalents and $103.5 million of available and unused bank lines
of credit available to it.
During the second quarter of 1995, the Trust, in separate transactions,
completed the sale of $15.7 million of tax-exempt multifamily housing bonds
secured by two apartment properties, Greentree Place in Jacksonville, Florida,
and Hunting Ridge in Greenville, South Carolina. The bonds bear interest at
6.75% and were initially placed for terms of 20 years ($12.4 million) and 15
years ($3.3 million). During this same period, the Trust prepaid six mortgage
notes payable aggregating approximately $10.2 million with a weighted average
interest rate of 10.1%.
During the second quarter of 1995, the Trust entered into a $50 million
(notional amount) fixed pay forward starting swap agreement with a major Wall
Street investment banking firm in order to reduce the interest rate risk
associated with anticipated refinancing of fixed rate debt maturing in 1996.
The transaction allowed the Trust to lock-in a ten year Treasury rate of 6.544%
on or before July 15, 1996. The Trust anticipates unwinding the interest rate
swap transaction upon refinancing of the $50 million debt in 1996. Any gain or
loss from this transaction will be recognized over the term of the refinanced
debt.
During the second quarter of 1995, the Trust acquired ten apartment
communities (1,948 units) at a total cost of approximately $79.1 million,
including closing costs. These acquisitions include a portfolio of nine
apartment communities, the High Portfolio, containing 1,596 units that the
Trust acquired on May 4, 1995, for $65.7 million, including closing costs, all
cash. The nine apartment communities are located in Delaware (1), Maryland (5),
and Virginia (3). In addition, on June 30, 1995, the Trust acquired a 352 unit
garden community in Plant City, Florida, for $13.4 million ($38,000/unit), all
cash.
During the second quarter of 1995, the Trust sold two smaller apartment
properties containing 202 units for $6.4 million, all cash, both of which were
acquired in 1994 as part of the Clover Portfolio. No significant book gain or
loss was recorded on these transactions.
During the second quarter of 1995, the Trust divested four Richmond area
shopping centers in two separate transactions with First Washington Realty
Trust, Inc. on June 30, 1995 and recognized $4.6 million of aggregate book gains
on the sales of real estate owned. Total consideration of approximately $20
million included cash of approximately $12.4 million and 358,000 shares of First
Washington's 9.75% Series A Cumulative Participating Preferred Stock recorded by
the Trust as "investment securities available-for-sale" in the amount of $7.7
million ($21.50 per share). These sales are part of the announced plan to
liquidate the Trust's commercial properties which now comprise approximately 5%
of real estate owned. The sale of two of the shopping centers were structured
as tax deferred exchanges which will enable the Trust to defer approximately $4
million of capital gain for income tax purposes. On the other two centers, the
Trust will recognize approximately $900,000 of capital gains for Federal income
tax purposes.
The Trust's liquidity and capital resources are believed to be more than
adequate to meet its cash requirements for the foreseeable future.
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
Form 10-Q
Quarter Ended June 30, 1995
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports of Form 8-K
(a) The exhibits listed on the accompanying index to exhibits are filed as
part of this quarterly report.
(b) Reports on Form 8-K
(i) A Form 8-K dated April 11, 1995, was filed with the Securities
and Exchange Commission on April 11, 1995. The filing updated
the Pro Forma Financial Information for the twelve months ended
December 31. 1994. (As previously reported on Form 8-K dated
October 14, 1994 which was filed with the Securities and Exchange
Commission on October 31, 1994 as subsequently amended by Form
8-K/A filed on December 29, 1994).
(ii) A Form 8-K dated June 30, 1995 was filed with the Securities and
Exchange Commission on July 17, 1995. The filing reported the
acquisition of certain properties which in the aggregate were
deemed to be significant. The financial statements filed as part
of this report are the combined statements of rental operations
of a portfolio of nine apartments communities which are
Brittingham Square Apartments, The Greens at Cedar Chase
Apartments, The Greens at Cross Court Apartments, The Greens at
Falls Run Apartments, The Greens at Hilton Run Apartments, the
Greens at Hollymead Apartments, The Greens at Schumaker Pond
Apartments, The Greens of Constant Friendship Apartments and the
Manor at England Run Apartments.
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
EXHIBIT INDEX
Item 6 (a)
References to pages under the caption "Location" are to sequentially
numbered pages of the manually signed original of this Form 10-Q, and references
to exhibits, forms, or other filings indicate that the form or other filing has
been filed, that the indexed exhibit and the exhibit referred to are the same
and that the exhibit referred to is incorporated by reference.
[CAPTION]
<TABLE>
<S> <C> <C>
EXHIBIT DESCRIPTION LOCATION
3(a)(i) Restated Articles of Incorporation Exhibit 3 to the Trust's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1992
3(a)(ii) Amendment of Restated Articles Exhibit 6(a)(2) to the Trust's Form 8-A
of Incorporation Registration Statement dated April 10, 1990
3(a)(iii) Amendment of Restated Articles Exhibit 1(c) to the Trust's Form 8-A
of Incorporation Registration Statement dated April 24, 1995
3(b) By-Laws Exhibit 4(c) to the Trust's Form S-3 Registration
Statement (Registration No. 33-44743) filed with
the Commission on December 31, 1991
4(i)(a) Specimen Common Stock Exhibit 4(i) to the Trust's Annual Report
Certificate on Form 10-K for the year ended December 31, 1993
4(i)(b) Specimen Certificate for Shares Exhibit 1(e) to the Trust's Form 8-A
of 9 1/4% Series A Cumulative Registration Statement dated April 24, 1995
Redeemable Preferred Stock
4(ii)(a) Loan Agreement dated as of Exhibit 6(c)(l) to the Trust's Form 8-A
November 7, 1991, between the Registration Statement dated April 19, 1990
Trust and Aid Association for
Lutherans
4(ii)(b) Loan Agreement dated as of Exhibit 6(c)(2) to the Trust's Form 8-A
November 14, 1991, between the Registration Statement dated April 19, 1990
Trust and Signet Bank/Virginia
4(ii)(c) Note Purchase Agreement dated Exhibit 6(c)(3) to the Trust's Form 8-A
as February 19, 1992, between Registration Statement dated April 19, 1990
the Trust and Principal Mutual
Life Insurance Company
4(ii)(e) Note Purchase Agreement dated Exhibit 6(c)(5) to the Trust's Form 8-A
as of January 15, 1993, between Registration Statement dated April 19, 1990
the Trust and CIGNA Property
and Casualty Insurance Company,
Connecticut General Life Insurance
Company, Connecticut General Life
Insurance Company, on behalf of
one or more separate accounts,
Insurance Company of North
America, Principal Mutual Life
Insurance Company and Aid
Association for Lutherans
4(ii)(f)(1) Indenture dated as of April 1, 1994, Exhibit 4(ii)(f)(1) to the Trust's
between the Trust and NationsBank Quarterly Report on Form 10-Q for
of Virginia, N.A., as Trustee the quarter ended March 31, 1994
4(ii)(f)(2) Resolution of the Board of Directors Exhibit 4(ii)(f)(2) to the Trust's
of the Trust establishing terms of Quarterly Report on Form 10-Q for
7 1/4% Notes due April 1, 1999 the quarter ended March 31, 1994
4(ii)(f)(3) Form of 7 1/4% Notes due Exhibit 4(ii)(f)(3) to the Trust's
April 1, 1999 Quarterly Report on Form 10-Q for
the quarter ended March 31, 1994
4(ii)(f)(4) Resolution of the Board of Exhibit 4 (ii)(f)(4) to the Trust's
the Trust establishing terms of Quarterly Report on Form 10-Q for the
8 1/2% Debentures due September 15, 2024 quarter ended September 30, 1994
4(ii)(f)(5) Form of 8 1/2% Debentures Exhibit 4 (ii)(f)(5) to the Trust's
due September 15, 2024 Quarterly Report on Form 10-Q for
the quarter ended September 30, 1994
4(ii)(g) Credit Agreement dated as of Exhibit 6 (c)(6) to the Trust's
December 15, 1994 between the Form 8-A Registration Statement
Trust and First Union National Bank dated April 19, 1990
of Virginia
</TABLE>
The Trust agrees to furnish to the Commission on request a copy of any
instrument with respect to long-term debt of the Trust or its subsidiary the
total amount of securities authorized under which does not exceed 10% of the
total assets of the Trust.
<TABLE>
<S> <C> <C>
10(i) Employment Agreement between Exhibit 10(v)(i)to Form 10-K for
the Trust and John P. McCann the year ended December 31, 1982.
dated October 29, 1982
10(ii) Employment Agreement between Exhibit 10(v)(ii) to Form 10-K for
the Trust and James Dolphin, the year ended December 31, 1982.
dated October 29, 1982.
10(iii) Employment Agreement between Exhibit 10(iii) to Form 10-K for the year
The Trust and Barry M. Kornblau, December 31, 1990.
dated January 1, 1991.
10(iv) 1985 Stock Option Plan, Exhibit B to the Trust's definitive proxy
as amended statement dated April 13, 1992.
10(v) 1991 Stock Purchase and Loan Exhibit 10(v) to Form 10-K for the year
Plan ended December 31, 1991.
12 Computation of Ratio of Earnings Exhibit 12 to this Form 10-Q
to Combined Fixed Charges and included herein
Preferred Stock Dividends
21 The Trust has the following subsidiaries, all of which are
wholly owned: The Commons of Columbia, a Maryland corporation
UDRT of North Carolina, L.L.C., a North Carolina limited
liability company UDRT of Alabama, Inc., an Alabama corporation
</TABLE>
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
Form 10-Q
Quarter Ended June 30, 1995
SIGNATURES
Pursuant to the requirements of Section 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
UNITED DOMINION REALTY TRUST, INC.
Date: August 14, 1995 /s/ James Dolphin
James Dolphin, Senior Vice President
Chief Financial Officer
Date: August 14, 1995 /s/ Jerry A. Davis
Jerry A. Davis, Vice President
Corporate Controller
EXHIBIT 12
UNITED DOMINION REALTY TRUST, INC
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
1994 1995 1994 1995
<S> <C> <C> <C> <C>
Income before extraordinary item $ 4,067 $11,569 $ 7,482 $17,719
Add:
Portion of rents representative
of the interest factor 39 43 61 90
Interest on indebtedness 5,890 10,135 10,621 20,589
Other - - 450 -
Earnings $ 9,996 $21,747 $18,614 $38,398
Add/(Deduct):
Depreciation on real estate 6,238 9,493 11,877 18,549
Gains on the sales of real estate owned - (4,576) - (4,639)
Funds from operations, as adjusted $16,234 $26,664 $30,491 $52,308
Fixed charges and preferred stock dividend:
Interest on indebtedness $ 5,890 $10,135 $10,621 $20,589
Portion of rents representative
of the interest factor 39 43 61 90
Fixed charges 5,929 10,178 10,682 20,679
Add:
Preferred stock dividend - 1,781 - 1,781
Combined fixed charges and preferred
stock dividend $ 5,929 $11,959 $10,682 $22,460
Ratio of earnings to fixed charges 1.69 x 2.14 x 1.74 x 1.86 x
Ratio of earnings to combined fixed
charges and preferred stock dividend 1.69 x 1.82 x 1.74 x 1.71 x
Ratio of funds from operations to fixed charges 2.74 2.62 2.85 2.53
Ratio of funds from operations to combined
fixed charges and preferred stock dividend 2.74 2.23 2.85 2.33
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 14,017
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 29,175
<PP&E> 1,087,807
<DEPRECIATION> 133,465
<TOTAL-ASSETS> 997,534
<CURRENT-LIABILITIES> 0
<BONDS> 491,765
<COMMON> 51,785
0
105,000
<OTHER-SE> 312,678
<TOTAL-LIABILITY-AND-EQUITY> 997,534
<SALES> 93,239
<TOTAL-REVENUES> 93,774
<CGS> 38,232
<TOTAL-COSTS> 38,232
<OTHER-EXPENSES> 21,873
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,589
<INCOME-PRETAX> 13,080
<INCOME-TAX> 0
<INCOME-CONTINUING> 17,719
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,719
<EPS-PRIMARY> 0.31
<EPS-DILUTED> 0.31
</TABLE>
