UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): October 28, 1998
------------------------
UNITED DOMINION REALTY TRUST, INC
-------------------------------------------------------
(Exact name of registrant as specified in its charter)
Virginia 1-10524 54-0857512
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation of organization) Identification No.)
10 South Sixth Street, Virginia 23219-3802
---------------------------------------------------
(Address of principal executive offices - zip code)
(804) 780-2691
--------------------------------------------------
Registrant's telephone number, including area code
<PAGE>
ITEM 5. OTHER EVENTS
On October 23, 1998, United Dominion Realty Trust, Inc., the registrant, issued
a Press Release announcing its results of operations for the three and nine
months ended September 30, 1998. The following is a summary of United Dominion
Realty Trust, Inc.'s results of operations:
United Dominion Realty Trust, Inc., Richmond, Virginia (NYSE:UDR) today reported
funds from operations (FFO) of $35.1 million for the quarter ended September 30,
1998, compared with $29.1 million for the same period last year. For the first
nine months of 1998, FFO was $102.7 million compared with last year's FFO of
$86.4 million.
John McCann, President and CEO stated "We are implementing a strategy that
correctly positions our Company for the long-term. Key elements of our plan
include entering new markets, maximizing our internal growth through the
implementation of revenue enhancing and expense reducing initiatives and
improvements, upgrading the overall quality of our assets to achieve higher same
community results and lower capital expenditures per apartment, and investing in
the infrastructure to support our growing Company while enhancing management
tools at all levels. This plan slows FFO growth in the short-term, but will
enhance it over the longer-term.
We are achieving solid performance from our same community portfolio, as
evidenced by the 7.2% year to date increase in net operating income (NOI). This
reflects the strengths of our core portfolio, operations and many of our
markets. We have made many acquisitions over the past two years and shortly will
close on the acquisition of American Apartment Communities II. Over the next
twelve months, our focus will be on growing these same community results as we
have done with our core portfolio, while completing the repositioning of our
Company."
For the quarter ended September 30, 1998, the Company reported rental income of
$123.5 million, income from property operations (excluding depreciation) of
$70.8 million, and net income available to common shareholders of $8.2 million.
For the third quarter of 1997, the Company had rental income of $98.8 million,
income from property operations (excluding depreciation) of $56.2 million and
net income available to common shareholders of $17.7 million. On a per share
basis, basic and diluted net income available to common shareholders for the
third quarter of 1998 were both $.08 compared to the third quarter of 1997 when
they were both $.20. Net income for the third quarter of 1997 includes gains on
the sales of investments of $9.3 million, or $.11 per share.
For the first nine months of 1998, the Company reported rental income of $346.2
million, income from property operations (excluding depreciation) of $203.0
million and net income available to common shareholders of $49.0 million. For
the first nine months of 1997, the Company had rental income of $284.2 million,
income from property operations (excluding depreciation) of $163.0 million and
net income available to common shareholders of $43.4 million. On a per share
basis, basic and diluted net income available to common shareholders for the
first nine months of 1998 were both $.50 compared to the first nine months of
1997 when basic and diluted net income available to common shareholders were
both $.50. Net income available to common shareholders for the first nine months
of 1998 included a $20.5 million gain ($.20 per share) on the sales of
investments, while $12.7 million ($.15 per share) of such gains were recorded
during the same period last year. Additionally, net income available to common
shareholders for the first nine months of 1998 compared to the same period last
year reflects an additional $5.3 million ($.05 per share) of dividends to
preferred shareholders.
A comparison of the third quarter results between the 1998 and 1997 communities
is as follows:
Same Community - For the 48,245 completed apartment homes in the 178 stabilized
communities owned by the Company since the beginning of 1997, NOI increased $2.7
million or 5.9%. Rental income increased $2.7 million or 3.3%, primarily as a
result of a 3.5% increase in average rents to $605 as physical occupancy
remained relatively flat at 93.5% compared to the same period last year. A
<PAGE>
portion of the rent growth reflected the impact of upgrades and revenue
enhancing capital expenditures that have been made since January 1, 1997. Rental
expenses remained flat over the same quarter last year as utilities, repairs and
maintenance and other operating expenses decreased as a result of the upgrade
programs and improved economies of scale. The operating margin improved 1.5% to
59.1% as a result of increased rental income.
Non-Mature Communities - For the 24,464 apartment homes in the 91 communities
not owned throughout 1998 and 1997, plus the 4,948 apartment homes in the 17
communities sold during 1998, physical occupancy was 89.8% and the operating
margin was 54.1%.
All Communities - For the 72,365 weighted average apartment homes owned during
the third quarter of 1998, physical occupancy was 92.2% and the operating margin
was 57.5%.
United Dominion Realty Trust, Inc. now owns, 72,709 completed apartment homes in
269 communities in the Sunbelt and the Pacific Northwest. On September 11, 1998,
the Company agreed to acquire the San Francisco based private REIT of American
Apartment Communities II that includes 54 communities containing 14,141
apartment homes. With the acquisition, the Company will own in excess of 86,000
completed apartment homes and operate nationally in 35 major markets.
<PAGE>
FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
Operating Results September 30, September 30,
--------------------------------------------
In thousands, except per share amounts 1998 1997 1998 1997
- ---------------------------------------------------------------------------------------------------------- ----------------------
<S> <C>
Revenues:
Rental income $123,475 $98,816 $346,171 $284,182
Interest and other non-property income 576 479 2,735 867
--------- -------- --------- ----------
124,051 99,295 348,906 285,049
Expenses:
Rental expenses:
Utilities 7,259 6,166 19,204 18,290
Repairs and maintenance 17,072 14,528 45,107 40,707
Real estate taxes 10,461 8,107 29,802 23,014
Property management 4,048 3,080 11,855 9,154
Other rental expenses 13,787 10,762 37,241 30,051
Real estate depreciation 26,901 19,740 73,376 55,029
Interest 27,224 19,346 75,784 58,265
General and administrative 2,534 1,619 7,306 5,271
Other depreciation and amortization 893 494 2,434 1,339
Impairment loss on real estate owned -- 1,400 -- 1,400
--------- -------- --------- ----------
110,179 85,242 302,109 242,520
Income before gains on sales of investments, minority interest
of unitholders in operating partnership and extraordinary item 13,872 14,053 46,797 42,529
Gains on sales of investments 13 9,309 20,474 12,682
--------- -------- --------- ----------
Income before minority interest of unitholders in operating
partnership 13,885 23,362 67,271 55,211
Minority interest of unitholders in operating partnership (78) (53) (1,200) (112)
--------- -------- --------- ----------
Income before extraordinary item 13,807 23,309 66,071 55,099
Extraordinary item - early extinguishment of debt -- -- (116) --
--------- -------- --------- ----------
Net income 13,807 23,309 65,955 55,099
Dividends to preferred shareholders (5,650) (5,653) (16,953) (11,692)
--------- -------- --------- ----------
Net income available to common shareholders $8,157 $17,656 $49,002 $43,407
========= ======== ========= ==========
Weighted average number of common shares outstanding-basic 103,104 87,853 98,786 86,602
Weighted average number of common shares outstanding-diluted 106,222 88,007 101,352 86,770
Common distributions declared $27,089 $22,261 $80,555 $66,071
- -----------------------------------------------------------------------------------------------------------------------------------
Funds from Operations (a)
Income before gains on sales of investments, minority
interest of unitholders in operating partnership and extraordinary item $13,872 $14,053 $46,797 $42,529
Adjustments:
Real estate depreciation 26,901 19,740 73,376 55,029
Dividends to preferred shareholders (5,650) (5,653) (16,953) (11,692)
Impairment loss on real estate owned -- 1,400 -- 1,400
Change in accounting for internal acquisitions costs (b) -- (436) (544) (915)
========= ======== ========= ==========
Funds from operations $35,123 $29,104 $102,676 $86,351
========= ======== ========= ==========
Weighted average number of common shares and OP Units outstanding-basic 106,181 88,013 101,268 86,746
Weighted average number of common shares and OP Units outstanding-diluted 106,222 88,167 101,352 86,914
- -----------------------------------------------------------------------------------------------------------------------------------
Per Share:
Basic earnings per common share $0.08 $0.20 $0.50 $0.50
Diluted earnings per common share $0.08 $0.20 $0.50 $0.50
Common distributions declared $0.2625 $0.2525 $0.7875 $0.7575
- -----------------------------------------------------------------------------------------------------------------------------------
Mature Apartment Information
Average monthly rent $605 $584 $599 $579
Physical occupancy 93.5% 93.6% 92.8% 92.7%
Economic occupancy 92.8% 92.8% 92.2% 92.1%
Operating margin 59.1% 57.6% 59.9% 57.9%
- -----------------------------------------------------------------------------------------------------------------------------------
Apartment Homes Owned
Total apartment homes owned at end of period 72,709 61,099 72,709 61,099
Weighted average number of apartment homes owned during the period 72,365 60,204 68,723 57,803
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Balance Sheet Data September 30, December 31,
--------------------------------- ------------------
1998 1997 1997
- ------------------------------------------------------------------------------------------------------------ ------------------
<S> <C>
Real estate owned, at cost (c) $3,099,553 $2,382,267 $2,472,537
Notes payable-secured 646,718 412,624 417,325
Notes payable-unsecured 902,180 687,521 738,901
Shareholders' equity 1,219,549 1,057,502 1,058,357
Number of common shares outstanding 103,207 88,162 89,168
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Funds from operations is defined as income before gains (losses) on the
sales of investments, minority interest of unitholders in operating
partnership and extraordinary items (computed in accordance with
generally accepted accounting principles) plus real estate depreciation,
less preferred dividends and after adjustment for signficant non-recurring
items, if any.
(b) Represents the change in accounting for internal acquisition costs which
were capitalized during 1997 and the first quarter of 1998.
(c) Includes real estate held for investment, real estate held for disposition
and real estate under development.
<PAGE>
Same Community Information By Major Market
<TABLE>
<CAPTION>
Average Rental
Physical Occupancy Rent Rate
---------------------------- 3Q97 Growth(2)
Market Apartments (1) 3Q98 3Q97
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Dallas, TX 5,550 95.87% 95.26% $602 3.63%
Columbia, SC 3,326 94.24% 94.07% $515 2.65%
Raleigh, NC 3,104 95.39% 95.49% $660 3.70%
Richmond, VA 2,826 93.10% 94.24% $605 5.67%
Orlando, FL 2,816 94.86% 96.53% $622 7.75%
Tampa, FL 2,203 92.73% 92.80% $615 4.38%
Eastern NC 2,150 88.59% 96.68% $586 3.47%
San Antonio, TX 1,983 93.84% 93.12% $624 0.85%
Charlotte, NC 1,746 95.80% 96.17% $614 3.71%
Baltimore, MD 1,746 95.62% 93.49% $680 3.67%
Hampton Roads, VA 1,628 92.05% 94.68% $555 1.90%
Greensboro, NC 1,607 90.95% 86.23% $588 0.37%
Nashville, TN 1,520 93.07% 91.67% $594 0.83%
Washington, DC 1,483 93.79% 89.05% $703 2.32%
Atlanta, GA 1,462 95.58% 93.20% $631 4.53%
Greenville, SC 1,436 89.50% 89.12% $533 2.32%
Jacksonville, FL 1,157 92.16% 86.76% $620 3.71%
Ft. Lauderdale, FL 960 89.62% 94.56% $822 3.89%
Phoenix, AZ 732 88.08% 92.40% $666 6.09%
Memphis, TN 704 95.80% 94.76% $543 2.34%
Houston, TX 514 96.77% 94.64% $495 5.51%
Austin, TX 192 95.29% 89.51% $538 1.62%
</TABLE>
Notes:
(1) Same community for 1998 are those communities that were acquired,
developed and stabilized prior to January 1997, and held throughout the
first nine months of 1997 and 1998.
(2) The change in gross potential rent from third quarter 1997 to third
quarter 1998.
<PAGE>
UNITED DOMINION REALTY TRUST, INC
THIRD QUARTER 1998
INFORMATION SUPPLEMENT
(unaudited
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
MATURE APARTMENTS:
(% Change):
Northern Southern Western Total
-------------- --------------- ----------------- -----------------
3Q98 9M98 3Q98 9M98 3Q98 9M98 3Q98 9M98
-------------- --------------- ----------------- -----------------
<S> <C>
NOI 7.0% 7.5% 6.6% 9.2% 2.6% 3.5% 5.9% 7.2%
Rental income 3.0% 3.2% 3.8% 4.1% 3.0% 3.2% 3.3% 3.5%
Average rent 3.4% 3.5% 4.0% 3.7% 2.9% 3.1% 3.5% 3.5%
Economic occupancy -0.7% -0.5% 0.6% 1.0% 0.0% 0.0% -0.1% 0.2%
Physical occupancy -0.4% -0.4% 0.2% 1.0% -0.5% -0.2% -0.2% 0.1%
Operating expenses -3.3% -0.4% 0.5% -1.8% 3.5% 2.7% -0.2% -1.5%
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
MAJOR MARKETS:
Mature NOI % Change
No. of % of ----------------------------------------------
Top 15 Homes Portfolio 3Q98 9M98
- -------------- ------- ------------------- ----------------------------------------------
<S> <C>
Dallas, TX 8,954 12.4% 6.6% 10.4%
Houston, TX 5,783 8.0% 31.9% 22.4%
Orlando, FL 3,848 5.3% 14.2% 13.5%
San Antonio, TX 3,840 5.3% 3.4% -2.9%
Raleigh, NC 3,484 4.8% 6.1% 6.9%
Columbia, SC 3,326 4.6% 3.4% 8.2%
Phoenix, AZ 3,136 4.3% -6.4% 0.5%
Richmond, VA 3,091 4.3% 6.4% 12.4%
Eastern NC 2,681 3.7% -7.4% -7.4%
Tampa, FL 2,669 3.7% 3.3% 12.5%
Nashville, TN 2,576 3.6% -1.5% 1.8%
Charlotte, NC 2,566 3.5% 6.1% 5.6%
Memphis, TN 2,196 3.0% 10.6% 6.1%
Greensboro, NC 2,123 2.9% 19.1% 13.0%
Hampton Roads, VA 1,830 2.5% 2.0% 10.9%
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
CAPITAL STRUCTURE:
W/Avg. % of Market
Amount Interest Rate Capitalization
------------------- ----------------------- --------------
(in million)
<S> <C>
Debt:
Secured mortgage debt $474.0 7.6% 15.7%
Tax-exempt bonds 141.1 6.9% 4.7%
Senior unsecured debt 595.2 7.5% 19.8%
Unsecured credit facilities 307.0 6.1% 10.2%
Secured credit facilities 31.7 6.4% 1.0%
------------------- --------------- --------------------
Combined total debt $1,549.0 7.2% 51.4%
Equity:
Preferred at par $255.0 8.5%
Common (including OP Units) at $11.38 1,208.9 40.1%
------------------- --------------------
Total market capitalization $3,012.9 100.0%
Coverage Ratios:
Interest Coverage Ratio 2.5
Fixed Charge Coverage
2.1
Debt Structure:
Fixed Rate $1,161.7 75.0%
Floating Rate 387.3* 25.0%
------------------- ---------------
$1,549.0 100.0%
</TABLE>
* $45 million of this amount is fixed via a swap.
Floating debt not fixed via a swap is $342.3 million or 22%.
<PAGE>
Signatures
Pursuant to the requirements of the Securities and 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: October 28, 1998 /s/ James Dolphin
---------------- ---------------------------
James Dolphin, Senior Vice President
Chief Financial Officer
Date: October 28, 1998 /s/ Robin R. Flanagan
---------------- ---------------------------
Robin R. Flanagan, Assistant
Vice President and Chief Accounting
Officer
