<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
FOR QUARTERLY AND TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
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 of 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 reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months, and (2) has been subject to filing requirements
for at least the past 90 days.
Yes X No ______
------
APPLICABLE ONLY TO CORPORATE USERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of August 1, 2000:
Common Stock, $1 Par Value: 103,483,067
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (unaudited)
Consolidated Balance Sheets as of June 30, 2000 and December 31, 1999............................. 2
Consolidated Statements of Operations for the three and six months ended June 30, 2000 and 1999... 3
Consolidated Statements of Cash Flows for the six months ended June 30, 2000 and 1999............. 4
Consolidated Statements of Shareholders' Equity for the six months ended June 30, 2000............ 5
Notes to Consolidated Financial Statements........................................................ 6-11
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations........................................................................................ 12-22
Item 3. Quantitative and Qualitative Disclosures About Market Risk........................................ 22
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.................................................................................. 23
Item 2. Changes in Securities.............................................................................. 23
Item 3. Defaults Upon Senior Securities.................................................................... 23
Item 4. Submission of Matters to a Vote of Security Holders................................................ 23
Item 5. Other Information.................................................................................. 23
Item 6. Exhibits and Reports on Form 8-K................................................................... 23-27
Signatures ..................................................................................................... 28
</TABLE>
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except for share data)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
---- ----
<S> <C>
ASSETS
Real estate owned:
Real estate held for investment (Note 2) $ 3,792,850 $ 3,577,848
Less: accumulated depreciation (457,452) (373,164)
------------ --------------
3,335,398 3,204,684
Real estate under development 66,917 91,914
Real estate held for disposition
(net of accumulated depreciation of $8,781 and $22,700) (Note 3) 43,909 260,583
------------ --------------
Total real estate owned, net of accumulated depreciation 3,446,224 3,557,181
Cash and cash equivalents 9,338 7,678
Restricted cash 54,304 56,969
Deferred financing costs 15,497 13,511
Investment in unconsolidated joint ventures (Note 7) 10,865 2,614
Other assets 49,500 50,364
------------ --------------
Total assets $ 3,585,728 $ 3,688,317
============ ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Secured debt (Note 4) $ 927,709 $ 1,000,136
Unsecured debt (Note 5) 1,147,416 1,127,169
Real estate taxes payable 35,598 30,887
Accrued interest payable 19,816 17,867
Security deposits and prepaid rent 21,977 20,738
Distributions payable 36,562 36,020
Accounts payable, accrued expenses and other liabilities 38,527 51,121
------------ --------------
Total liabilities 2,227,605 2,283,938
Minority interests 91,239 94,167
Shareholders' equity
Preferred stock, no par value; $25 liquidation preference,
25,000,000 shares authorized;
4,145,020 shares 9.25% Series A Cumulative
Redeemable issued and outstanding 103,626 104,214
(4,168,560 in 1999)
5,581,489 shares 8.60% Series B Cumulative
Redeemable issued and outstanding 139,537 148,658
(5,946,300 in 1999)
8,000,000 shares 7.50% Series D Cumulative
Convertible Redeemable issued
and outstanding (8,000,000 in 1999) 175,000 175,000
Common stock, $1 par value; 150,000,000 shares authorized
103,487,168 shares issued and outstanding (102,740,777 in 1999) 103,487 102,741
Additional paid-in capital 1,091,887 1,083,687
Distributions in excess of net income (338,079) (296,030)
Deferred compensation - unearned restricted stock awards (899) (305)
Notes receivable from officer-shareholders (7,675) (7,753)
------------ --------------
Total shareholders' equity 1,266,884 1,310,212
------------ --------------
Total liabilities and shareholders' equity $ 3,585,728 $ 3,688,317
============ ==============
See accompanying notes to consolidated financial statements.
</TABLE>
2
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C>
REVENUES
Rental income $ 155,144 $ 154,430 $ 309,202 $ 308,221
Non-property income 1,980 483 3,049 930
--------- --------- --------- ---------
Total revenues 157,124 154,913 312,251 309,151
EXPENSES
Rental expenses:
Real estate taxes and insurance 17,684 16,515 35,167 32,510
Personnel 16,586 16,411 33,024 33,039
Repair and maintenance 9,130 10,448 17,662 19,705
Utilities 6,197 7,390 12,731 15,639
Administrative and marketing 6,065 6,432 11,966 12,435
Property management 4,760 4,784 9,404 9,296
Other operating 331 281 755 678
Real estate depreciation 44,054 31,465 77,958 60,857
Interest 39,752 38,918 78,826 76,997
Impairment loss on real estate and investments - 7,100 - 7,100
General and administrative 3,698 2,750 7,568 6,444
Other depreciation and amortization 1,250 1,030 2,453 2,121
--------- --------- --------- ---------
Total expenses 149,507 143,524 287,514 276,821
--------- --------- --------- ---------
Income before gains on sales of investments, minority
interests and extraordinary item 7,617 11,389 24,737 32,330
Gains on sales of investments 5,928 32,214 8,461 32,405
--------- --------- --------- ---------
Income before minority interests and extraordinary item 13,545 43,603 33,198 64,735
Minority interests of outside partners (560) (214) (737) (381)
Minority interests of unitholders in operating partnerships (294) (3,098) (962) (3,981)
--------- --------- --------- ---------
Income before extraordinary item 12,691 40,291 31,499 60,373
Extraordinary item - early extinguishment of debt 586 509 358 509
--------- --------- --------- ---------
Net income 13,277 40,800 31,857 60,882
Distributions to preferred shareholders -
Series A and B (5,396) (5,653) (10,979) (11,306)
Distributions to preferred shareholders -
Series D (Convertible) (3,825) (3,787) (7,650) (7,573)
Discount on preferred share repurchases 2,177 - 2,177 -
--------- --------- --------- ---------
Net income available to common shareholders $ 6,233 $ 31,360 $ 15,405 $ 42,003
========= ========= ========= =========
Earnings per common share (Note 6):
Basic $ 0.06 $ 0.30 $ 0.15 $ 0.40
========= ========= ========= =========
Diluted $ 0.06 $ 0.30 $ 0.15 $ 0.40
========= ========= ========= =========
Common distributions declared per share $ 0.2675 $ 0.2650 $ 0.5350 $ 0.5300
========= ========= ========= =========
Weighted average number of common shares outstanding-basic 103,271 104,324 103,087 104,274
Weighted average number of common shares outstanding-diluted 103,470 104,338 103,258 104,284
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
Six Months Ended June 30, 2000 1999
-----------------------------------------------------------------------------------------------------------------
<S> <C>
OPERATING ACTIVITIES
Net income $ 31,857 $ 60,882
Adjustments to reconcile net income to cash provided
by operating activities:
Depreciation and amortization 80,411 62,978
Minority interests 1,699 4,362
Impairment loss on real estate owned - 7,100
Extraordinary item-early extinguishment of debt (358) (509)
Amortization of deferred financing costs and other 2,153 1,729
Gains on sales of investments (8,461) (32,405)
Changes in operating assets and liabilities:
Decrease in operating liabilities (5,098) (14,325)
Decrease/(increase) in operating assets 400 (9,151)
-------- ------
Net cash provided by operating activities 102,603 80,661
INVESTING ACTIVITIES
Proceeds from sales of investments 87,083 99,790
Proceeds received for excess expenditures over
investment contribution in development joint venture 34,215 -
Development of real estate assets (54,646) (56,597)
Capital expenditures - real estate assets, net of escrow
reimbursements (16,060) (32,529)
Acquisition of real estate assets (14,765) (26,250)
Capital expenditures - non real estate assets (2,233) (3,155)
Funds held in escrow from tax free exchanges pending the
acquisition of real estate - (32,936)
Net cash paid in connection with mergers - (4,331)
Other - 1,132
------- ------
Net cash provided by/(used in) investing activities 33,594 (54,876)
FINANCING ACTIVITIES
Net reduction in secured debt (71,875) (21,993)
Net increase in unsecured debt 20,650 73,727
Payment of financing costs (3,807) (4,790)
Proceeds from the issuance of common stock 7,429 8,685
Distributions paid to minority interests (4,785) (7,026)
Distributions paid to preferred shareholders (18,555) (16,078)
Distributions paid to common shareholders (55,277) (52,787)
Repurchase of common and preferred stock (8,317) (3,070)
-------- ---------
Net cash (used in) financing activities (134,537) (23,332)
Net increase in cash and cash equivalents 1,660 2,453
Cash and cash equivalents, beginning of period 7,678 26,081
------- ------
Cash and cash equivalents, end of period $ 9,338 $ 28,534
======== ========
SUPPLEMENTAL INFORMATION:
Interest paid during the period $ 76,399 $ 84,975
Conversion of operating partnership units to common stock 626 1,005
Issuance of restricted stock awards 829 476
Non-cash transactions associated with the acquisition of properties:
Secured debt assumed 10,130 -
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Six Months Ended June 30, 2000
(In thousands, except per share data)
(Unaudited)
<TABLE>
<S> <C>
PREFERRED STOCK
Balance, December 31, 1999 $ 427,872
Repurchase of preferred stock (9,709)
-----------
Balance, June 30, 2000 $ 418,163
===========
COMMON STOCK, $1 PAR VALUE
Balance, December 31, 1999 $ 102,741
Issuance of common shares through dividend reinvestment and stock purchase plan 767
Repurchase of common stock (26)
Purchase of restricted stock awards (86)
Issuance of restricted stock awards 86
Conversion of operating partnership units 5
-----------
Balance, June 30, 2000 $ 103,487
===========
ADDITIONAL PAID-IN CAPITAL
Balance, December 31, 1999 $ 1,083,687
Issuance of common shares through dividend reinvestment and stock purchase plan 6,547
Repurchase of preferred stock 2,478
Repurchase of common stock (231)
Issuance of common shares to employees, officers and director-shareholders 37
Adjustment for cash purchase and conversion of minority interests of
unitholders in operating partnerships (631)
-----------
Balance, June 30, 2000 $ 1,091,887
===========
NOTES RECEIVABLE FROM OFFICER-SHAREHOLDERS
Balance, December 31, 1999 $ (7,753)
Principal repayments from officer-shareholders 78
-----------
Balance, June 30, 2000 $ (7,675)
===========
DISTRIBUTIONS IN EXCESS OF NET INCOME
Balance, December 31, 1999 $ (296,030)
Net income 31,857
Common stock distributions declared ($.535 per share) (55,277)
Preferred stock distributions declared-Series A ($1.16 per share) (4,794)
Preferred stock distributions declared-Series B ($1.08 per share) (6,185)
Preferred stock distributions declared-Series D ($.96 per share) (7,650)
-----------
Balance, June 30, 2000 $ (338,079)
===========
DEFERRED COMPENSATION-UNEARNED RESTRICTED STOCK AWARDS
Balance, December 31, 1999 $ (305)
Issuance of restricted stock awards (829)
Amortization of deferred compensation 235
-----------
Balance, June 30, 2000 $ (899)
===========
TOTAL SHAREHOLDERS' EQUITY $ 1,266,884
===========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
(UNAUDITED)
1. Basis of Presentation
The accompanying consolidated financial statements include the accounts of
United Dominion and its subsidiaries, including United Dominion Realty, L.P.,
(the "Operating Partnership"), and Heritage Communities L.P., (the "Heritage
OP"), (collectively, "United Dominion"). As of June 30, 2000, there were
74,463,788 units in the Operating Partnership outstanding, of which, 67,624,603,
or 90.8%, were owned by United Dominion and 6,839,185, or 9.2%, were owned by
non-affiliated limited partners. As of June 30, 2000, there were 4,502,668
units in the Heritage OP outstanding, of which 3,839,330, or 85.3%, were owned
by United Dominion and 663,338 units, or 14.7%, were owned by non-affiliated
limited partners. The consolidated financial statements of United Dominion
include the minority interests of the unitholders in the operating partnerships.
The accompanying interim unaudited consolidated financial statements have been
prepared according to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted according to such rules and
regulations, although management believes that the disclosures are adequate to
make the information presented not misleading. The accompanying consolidated
financial statements should be read in conjunction with the audited financial
statements and related notes appearing in United Dominion's December 31, 1999
Annual Report on Form 10-K filed with the Securities and Exchange Commission.
In the opinion of management, the consolidated financial statements reflect all
adjustments which are necessary for the fair presentation of financial position
at June 30, 2000 and results of operations for the interim periods ended June
30, 2000 and 1999. Such adjustments are normal and recurring in nature. All
significant inter-company accounts and transactions have been eliminated in
consolidation. The interim results presented are not necessarily indicative of
results that can be expected for a full year.
The preparation of these financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the dates of the
financial statements and the amounts of revenues and expenses during the
reporting periods. Actual amounts realized or paid could differ from those
estimates.
Certain previously reported amounts have been reclassified to conform with the
current financial statement presentation.
2. Real Estate Held for Investment
At June 30, 2000 there are 286 communities with 79,206 apartment homes
classified as real estate held for investment. The following table summarizes
the components of real estate held for investment at June 30, 2000 and December
31, 1999 (dollars in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
----------- -----------
<S> <C>
Land and land improvements $ 564,546 $ 636,905
Buildings and improvements 3,037,692 2,767,940
Furniture, fixtures and equipment 188,344 166,826
Construction in progress 2,268 6,177
----------- -----------
Real estate held for investment 3,792,850 3,577,848
Accumulated depreciation (457,452) (373,164)
----------- -----------
Real estate held for investment, net
of accumulated depreciation $3,335,398 $3,204,684
=========== ===========
</TABLE>
6
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
(UNAUDITED)
3. Real Estate Held for Disposition
At June 30, 2000, United Dominion had eight communities with 1,428 apartment
homes, three commercial properties and one parcel of land included in real
estate held for disposition totaling $43.9 million, which is net of $8.8 million
of accumulated depreciation. Certain assets are secured by mortgage
indebtedness, which may be assumed by the purchaser or repaid from the net
proceeds. Real estate held for disposition contributed property operating income
(property rental income less property operating expense) of $2.7 million and
$2.6 million for the six months ended June 30, 2000 and 1999, respectively.
Properties held for disposition reflect properties management has committed to
sell during the next twelve months.
The management of United Dominion periodically reviews its divestiture program,
which is designed to better position the company for achieving more consistent
earnings growth and increasing shareholder value over the long-term. The factors
considered in these reviews include the age, quality and projected operating
income of communities that might be sold, the expected market value for the
communities, the estimated timing for completion of sales and the proforma
effect of sales upon United Dominion's earnings and financial position. After
a review undertaken in the second quarter of 2000, management transferred
approximately $197 million of assets from real estate held for disposition to
real estate held for investment and, as a result, approximately $10 million in
catch up depreciation expense was recognized on the communities transferred.
Also, during the second quarter 2000 review, management reaffirmed its objective
to sell approximately $200 million of non-core properties during 2000.
4. Secured Debt
Secured debt, which encumbers $1.8 billion or 45.0% of United Dominion's real
estate owned, ($2.1 billion or 55.0% of United Dominion's real estate owned is
unencumbered) consists of the following at June 30, 2000 (dollars in thousands):
<TABLE>
<CAPTION>
No. of
Weighted Avg. Weighted Avg. Communities
Principal Outstanding Interest Rate Years to Maturity Encumbered
--------------------------------------------------------------------------------
2000 1999 2000 2000 2000
--------------------------------------------------------------------------------------------------------------------
<S> <C>
Fixed Rate Debt
Mortgage Notes Payable (a) $544,299 $ 555,414 7.82% 6.4 82
Tax-Exempt Secured Notes Payable 95,968 96,699 6.92% 12.0 13
REMIC Financings 53,267 59,167 7.82% 0.5 20
Secured Credit Facilities (b) 57,000 57,000 6.65% 13.5 --
--------------------------------------------------------------------------------
Total Fixed Rate Secured Debt 750,534 768,280 7.62% 7.2 115
Variable Rate Debt
Secured Credit Facilities 138,675 138,675 6.60% 13.5 19
Tax-Exempt Secured Notes Payable 19,916 66,616 4.81% 25.0 3
Mortgage Notes Payable 18,584 26,565 7.40% 12.2 9
--------------------------------------------------------------------------------
Total Variable Rate Secured Debt 177,175 231,856 6.48% 14.7 31
--------------------------------------------------------------------------------
Total Secured Debt $927,709 $1,000,136 7.40% 8.7 146
================================================================================
</TABLE>
(a) Includes fair value adjustments aggregating $13.1 million recorded in
connection with the ASR Merger and the AAC Merger on March 27, 1998 and
December 7, 1998, respectively.
(b) During 1999, United Dominion closed on a $200 million revolving credit
facility with the Federal National Mortgage Association (the "FNMA Credit
Facility"). At June 30, 2000, the FNMA Credit Facility had a weighted
average floating rate of interest of 6.61%. In order to limit a portion of
its interest rate exposure on the Credit Facility, United Dominion entered
into three forward rate swap agreements. These agreements have an
aggregate notional value of $57 million under which United Dominion pays a
fixed rate of interest and receives a variable rate on the notional amount.
The interest rate swap agreements effectively change United Dominion's
interest rate exposure on $57 million of secured debt from a variable rate
to a weighted average fixed rate of 6.65%.
7
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
(UNAUDITED)
Approximate principal payments due during each of the next five calendar years
and thereafter, as of June 30, 2000, are as follows (dollars in thousands):
<TABLE>
<CAPTION>
Amount
Year Maturing
---------------------------------
<S> <C>
2000 $ 46,893
2001 95,512
2002 52,625
2003 49,229
2004 125,707
Thereafter 557,743
-----------
Total $927,709
===========
</TABLE>
5. Unsecured Debt
A summary of unsecured debt at June 30, 2000 and December 31, 1999 is as
follows (dollars in thousands):
<TABLE>
<CAPTION>
2000 1999
---------- ----------
<S> <C>
Commercial Banks
Borrowings outstanding under an
unsecured credit facility (a) (b) $ 187,300 $ 277,600
Senior Unsecured Notes - Other
8.13% Senior Notes due November 2000 144,260 146,150
7.60% Medium-Term Notes due January 2002 50,000 55,000
7.65% Medium-Term Notes due January 2003 (c) 10,000 10,000
7.22% Medium-Term Notes due February 2003 12,000 12,000
5.05% City of Portland, OR Bonds due October 2003 7,345 7,345
8.63% Notes due March 2003 99,000 --
7.98% Notes due March, 2000-2003 (d) 22,371 29,800
7.67% Medium-Term Notes due January 2004 54,000 54,000
7.73% Medium-Term Notes due April 2005 22,400 23,400
7.02% Medium-Term Notes due November 2005 50,000 50,000
7.95% Medium-Term Notes due July 2006 108,155 120,340
7.07% Medium-Term Notes due November 2006 25,000 25,000
7.25% Notes due January 2007 110,825 111,825
ABAG Tax-Exempt Bonds due August 2008 46,700 --
8.50% Monthly Income Notes due November 2008 58,233 59,778
8.50% Debentures due September 2024 (e) 135,398 140,000
Other (f) 4,429 4,931
---------- ----------
960,116 849,569
---------- ----------
Total Unsecured Debt $1,147,416 $1,127,169
========== ==========
</TABLE>
(a) Weighted average interest rate of 7.6% and 6.7% at June 30, 2000 and
December 31, 1999, respectively.
8
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
(UNAUDITED)
(b) As of June 30, 2000, United Dominion had three interest rate swap
agreements associated with commercial bank borrowings with an aggregate
notional value of $20 million under which United Dominion pays a fixed rate
of interest and receives a variable rate of interest on the notional
amounts. The interest rate swaps effectively change United Dominion's
interest rate exposure on these borrowings from a variable rate to a
weighted average fixed rate of approximately 7.2%.
(c) United Dominion has one interest rate swap agreement associated with these
unsecured notes with an aggregate notional value of $10 million under which
United Dominion pays a fixed rate of interest and receives a variable rate
on the notional amount. The interest rate swap agreement effectively
changes United Dominion's interest rate exposure on the $10 million from a
variable rate to a fixed rate of 7.65%.
(d) Payable annually in three equal principal installments of $7.4 million.
(e) Includes an investor put feature which grants a one-time option
to redeem the debentures in September 2004.
(f) Includes $4.2 million and $4.6 million at June 30, 2000 and December 31,
1999, respectively, of deferred gains from the termination of interest rate
risk management agreements.
6. Earnings Per Share
Basic earnings per common share is computed based upon the weighted average
number of common shares outstanding during the period. Diluted earnings per
common share is computed based on common shares outstanding plus the effect of
dilutive stock options and other potentially dilutive common stock equivalents.
The dilutive effect of stock options and other potential common stock
equivalents is determined using the treasury stock method based on United
Dominion's average stock price. The early extinguishment of debt does not have
an effect on the earnings per share calculation for the periods presented. The
following table sets forth the computation of basic and diluted earnings per
share (dollars in thousands, except per share data):
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
2000 1999 2000 1999
----------------------------------- -----------------------------------
<S> <C>
Numerator for basic and diluted earnings per share-
net income available to common shareholders $ 6,233 $ 31,360 $ 15,405 $ 42,003
Denominator:
Beginning denominator for basic earnings
per share-weighted average common
shares outstanding 103,388 104,324 103,204 104,274
Non-vested restricted stock (117) - (117) -
-------------- --------------- -------------- ---------------
Denominator for basic earnings per share 103,271 104,324 103,087 104,274
-------------- --------------- -------------- ---------------
Non-vested restricted stock 117 - 117 -
Effect of dilutive securities:
Employee stock options 82 14 54 10
-------------- --------------- -------------- ---------------
Denominator for diluted earnings per share 103,470 104,338 103,258 104,284
============== =============== ============== ===============
Basic earnings per share $ 0.06 $ 0.30 $ 0.15 $ 0.40
============== =============== ============== ===============
Diluted earnings per share $ 0.06 $ 0.30 $ 0.15 $ 0.40
============== =============== ============== ===============
</TABLE>
The effect of the conversion of the operating partnership units and convertible
preferred stock is not dilutive and is therefore not included in the following
9
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
(UNAUDITED)
calculations. If the operating partnership units were converted to common stock,
the additional shares of common stock outstanding for the three and six months
ended June 30, 2000 and 1999 would be 7,502,546 and 7,503,058 for 2000 and
8,363,908 and 8,476,792 for 1999, respectively. If the convertible preferred
stock was converted to common stock, the additional shares of common stock
outstanding for the three and six months ended June 30, 2000 and 1999 would be
12,307,692 common shares.
7. Investment in Unconsolidated Joint Ventures
At June 30, 2000, United Dominion's investment in unconsolidated joint ventures
consists of a 25% partnership interest in a development joint venture in which
the company is serving as the managing partner. No gain or loss was recognized
on the company's contribution to the development joint venture. United Dominion
has responsibility for the venture's operations and for the development of five
apartment communities with a total of 1,438 homes for an aggregate total cost of
approximately $105 million. During 1999, United Dominion entered into a joint
venture with another public multifamily real estate company to develop a web-
based apartment operating system. United Dominion's joint venture interest
consists of a 40% limited liability company membership interest. The operating
results for the joint ventures were not material for the six months ended
June 30, 2000. The following is a combined summary of the financial position of
the joint venture entities for the date presented (dollars in thousands):
<TABLE>
<CAPTION>
As of
June 30, 2000
------------------
Assets:
<S> <C> <C>
Real estate, net $51,712
Other assets 11,821
----------
Total assets $63,533
==========
Liabilities and partners' equity:
Mortgage notes payable $16,436
Other liabilities 8,535
Partners' equity 38,562
----------
Total liabilities and partners' equity $63,533
==========
</TABLE>
8. Impact of Recently Issued Standards
In June 1998, the Financial Accounting Standards Board issued Statement No. 133,
"Accounting for Derivative Instruments and Hedging Activities" ("Statement
133"), as amended by Statement No. 137, "Accounting for Derivative Instruments
and Hedging Activities - Deferral of the Effective Date of FASB Statement No.
133 - an Amendment of FASB Statement No. 133," which is required to be adopted
in years beginning after June 15, 2000. Statement 133 will require United
Dominion to recognize all derivatives on the balance sheet at fair value.
Derivatives that are not hedges must be adjusted to fair value through income.
If the derivative is a hedge, depending on the nature of the hedge, changes in
fair value of derivatives will either be offset against the change in fair value
of the hedged assets, liabilities, or firm commitments through earnings or
recognized in other comprehensive income until the hedged item is recognized in
earnings. The ineffective portion of the derivative's change in fair value will
be immediately recognized in earnings. In June 2000, the Financial Accounting
Standards Board issued SFAS No. 138, "Accounting for Derivative Instruments and
Hedging Activities - Deferral of the Effective date of SFAS No. 133," which
addresses the application of a limited number of Statement 133 issues. United
Dominion currently plans to adopt this pronouncement effective January 1, 2001.
United Dominion has not yet determined what the effect of Statement 133 will be
on earnings and the financial position of United Dominion, however, management
does not anticipate that the adoption of Statement 133 will have a material
effect on earnings or the financial position of United Dominion.
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial Statements."
SAB 101 provides guidance on applying generally accepted accounting principles
10
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
(UNAUDITED)
to revenue recognition issues in financial statements. The Securities and
Exchange Commission issued SAB 101B in June 2000 that further delays the
effective date of SAB 101 until no later than the fourth fiscal quarter of
fiscal years beginning after December 15, 1999. Thus, United Dominion will adopt
SAB 101 in the fourth quarter of 2000. Management does not anticipate that the
adoption of SAB 101 will have a material effect on United Dominion's
consolidated financial statements.
11
<PAGE>
2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
The following information should be read in conjunction with the United Dominion
Realty Trust, Inc. ("United Dominion") 1999 Form 10-K as well as the financial
statements and notes included in Item 1 of this report. This quarterly report
contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1993, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. Such forward-looking statements include, without
limitation, statements concerning property acquisitions and dispositions,
development activity and capital expenditures, capital raising activities, rent
growth, occupancy and rental expense growth. Words such as "expects",
"anticipates", "intends", "plans", "believes", "seeks", "estimates" and
variations of such words and similar expressions are intended to identify such
forward-looking statements. Such statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievement of United Dominion to be materially different from the results of
operations or plans expressed or implied by such forward-looking statements.
Such factors include, among other things, unanticipated adverse business
developments affecting United Dominion, or its properties, adverse changes in
the real estate markets and general and local economies and business conditions.
Although United Dominion believes that the assumptions underlying the forward-
looking statements contained herein are reasonable, any of the assumptions could
be inaccurate, and therefore there can be no assurance that such statements
included in this report will prove to be accurate. In light of the significant
uncertainties inherent in the forward-looking statements included herein, the
inclusion of such information should not be regarded as a representation by
United Dominion or any other person that the results or conditions described in
such statements or the objectives and plans of United Dominion will be achieved.
United Dominion is a real estate investment trust with activities related to the
ownership, development, acquisition, renovation, management, marketing and
strategic disposition of multifamily apartment communities nationwide.
Management's strategy is to be a national, highly efficient provider of quality
apartment homes. During the past several years, United Dominion has implemented
this strategy through the acquisition of portfolios of higher quality
communities, the disposition of non-strategic communities, a greater commitment
to development and the upgrade of its core portfolio of apartment communities.
Through a combination of dispositions and acquisitions over the past two years,
United Dominion aggressively moved the company into better performing markets
with attractive prospects for long-term growth. During this same period, more
emphasis has been placed on higher quality development projects. This strategy
resulted in the upgrade of the overall quality and average age of United
Dominion's portfolio, which is now solidly positioned with "B" and "A" grade
communities. United Dominion seeks to be a market leader by operating a
sufficiently sized portfolio of apartments within each of its target markets in
order to drive down operating costs through economies of scale and management
efficiencies. United Dominion believes that geographic market diversification
increases investment opportunities and decreases the risk associated with
cyclical local real estate markets and economies.
At June 30, 2000, United Dominion owned 294 communities with 80,734 apartment
homes nationwide, including 8 communities with 1,428 completed apartment homes
included in real estate held for disposition and 100 recently completed
apartment homes included in real estate under development.
12
<PAGE>
The following table summarizes United Dominion's apartment market information by
major and other geographic markets:
<TABLE>
<CAPTION>
As of June 30, 2000
------------------------------------------------------
No. of % of Carrying
No. of Apartment Carrying Value
Area Properties Homes Value (in thousands)
----------------------------------------------------------------------------------
Major Markets
-------------
<S> <C>
Houston, TX 25 6,228 6.1% $ 240,504
Dallas, TX 14 4,533 5.7% 221,535
Phoenix, AZ 10 3,460 5.1% 197,901
Orlando, FL 14 4,140 5.1% 197,663
San Antonio, TX 12 3,615 4.6% 181,791
Tampa, FL 10 3,370 4.0% 154,944
Fort Worth, TX 11 3,561 3.8% 147,317
Raleigh, NC 9 2,951 3.7% 145,861
San Francisco, CA 4 980 3.6% 139,128
Nashville, TN 10 2,808 3.5% 136,289
Charlotte, NC 11 2,710 3.4% 132,120
Columbus, OH 5 2,175 3.1% 121,257
Memphis, TN 7 2,196 2.7% 106,382
Monterey Peninsula, CA 11 1,827 2.6% 103,626
Richmond, VA 8 2,372 2.6% 103,023
South Florida 6 1,638 2.6% 102,786
Greensboro, NC 8 2,123 2.6% 102,409
Columbia, SC 9 2,730 2.5% 97,854
Southern California 5 1,414 2.3% 88,843
Wilmington, NC 6 1,869 2.2% 87,845
Baltimore, MD 8 1,788 2.2% 85,847
Atlanta, GA 6 1,426 1.8% 69,580
Jacksonville, FL 3 1,157 1.5% 57,015
Hampton Roads, VA 6 1,437 1.4% 54,979
Sacramento, CA 2 914 1.4% 52,881
Portland, OR 4 996 1.2% 48,757
East Lansing, MI 4 1,226 1.2% 47,599
Denver, CO 2 876 1.2% 45,706
Fayetteville, NC 3 884 1.1% 41,219
Detroit, MI 4 744 1.0% 40,440
Fort Myers, FL 2 556 1.0% 39,946
Washington, DC 3 615 0.9% 35,800
Eastern Shore MD 4 784 0.9% 35,016
Seattle, WA 3 628 0.9% 33,272
Fredericksburg, VA 2 556 0.8% 30,711
Austin, TX 2 542 0.7% 26,907
Indianapolis, IN 2 766 0.7% 26,343
Tacoma, WA 2 429 0.6% 25,389
Daytona Beach, FL 3 549 0.6% 24,551
Little Rock, AR 2 512 0.6% 22,411
Albuquerque, NM 3 530 0.5% 20,070
Jacksonville, NC 3 653 0.5% 19,425
Dover, DE 2 372 0.5% 17,791
Tucson, AZ 2 408 0.3% 13,459
Dayton, OH 2 240 0.3% 12,384
Pullman, WA 2 334 0.3% 11,466
Roanoke, VA 3 454 0.2% 10,486
Other Single Asset Markets 15 3,658 3.6% 141,812
------------------------------------------------------
Total Apartments 294 80,734 99.7% $3,900,340
------------------------------------------------------
Commercial 4 N/A 0.3% 12,117
------------------------------------------------------
Total 298 80,734 100.0% $3,912,457
======================================================
</TABLE>
<TABLE>
<CAPTION>
Six Months Three Months
Ended Ended
June 30, 2000 June 30, 2000
--------------------------------- -----------------------------------
Average Average
Physical Monthly Physical Monthly
Area Occupancy Rental Rates (a) Occupancy Rental Rates (a)
---------------------------------------------------------- -----------------------------------
Major Markets
-------------
<S> <C>
Houston, TX 92.7% $ 590 93.3% $ 591
Dallas, TX 95.1% 660 95.2% 661
Phoenix, AZ 94.3% 670 93.5% 674
Orlando, FL 94.3% 680 94.1% 682
San Antonio, TX 93.7% 639 93.7% 640
Tampa, FL 94.0% 675 94.2% 689
Fort Worth, TX 95.9% 603 96.3% 613
Raleigh, NC 91.6% 702 91.9% 703
San Francisco, CA 99.6% 1,537 99.6% 1,556
Nashville, TN 93.8% 717 94.7% 725
Charlotte, NC 91.8% 679 93.8% 675
Columbus, OH 95.1% 646 95.0% 646
Memphis, TN 94.8% 597 95.2% 598
Monterey Peninsula, CA 92.9% 813 95.9% 821
Richmond, VA 95.9% 675 95.9% 679
South Florida 92.3% 840 91.7% 844
Greensboro, NC 92.9% 629 93.1% 630
Columbia, SC 92.2% 543 93.0% 544
Southern California 95.0% 794 94.0% 803
Wilmington, NC 88.6% 644 89.8% 644
Baltimore, MD 97.5% 722 97.8% 724
Atlanta, GA 93.8% 711 93.9% 714
Jacksonville, FL 90.2% 647 89.8% 650
Hampton Roads, VA 96.2% 623 96.0% 628
Sacramento, CA 97.6% 664 96.9% 668
Portland, OR 92.6% 678 93.8% 677
East Lansing, MI 93.0% 625 91.4% 626
Denver, CO 94.0% 676 94.1% 681
Fayetteville, NC 94.3% 589 95.3% 591
Detroit, MI 96.4% 696 96.8% 699
Fort Myers, FL 96.1% 774 94.8% 778
Washington, DC 98.5% 807 98.4% 811
Eastern Shore MD 95.4% 713 96.9% 715
Seattle, WA 96.1% 694 96.2% 698
Fredericksburg, VA 96.9% 717 97.6% 720
Austin, TX 95.8% 642 96.6% 648
Indianapolis, IN 92.2% 527 92.7% 527
Tacoma, WA 92.0% 720 92.0% 725
Daytona Beach, FL 94.9% 666 94.8% 670
Little Rock, AR 96.1% 594 97.9% 594
Albuquerque, NM 92.5% 520 93.5% 520
Jacksonville, NC 93.8% 490 92.9% 493
Dover, DE 96.6% 631 96.9% 633
Tucson, AZ 93.4% 450 92.8% 452
Dayton, OH 94.2% 683 95.5% 686
Pullman, WA 86.9% 708 80.0% 704
Roanoke, VA 92.9% 477 92.7% 478
Other Single Asset Markets 94.0% 575 94.5% 577
--------------------------------- -----------------------------------
Total Apartments 94.0% $ 666 94.3% $ 668
--------------------------------- -----------------------------------
Commercial N/A N/A N/A N/A
--------------------------------- -----------------------------------
Total 94.0% $ 666 94.3% $ 668
================================= ===================================
</TABLE>
(a) Average monthly rental rates represent potential rent collections (gross
potential rents less market adjustments) which approximate net effective
rents. These average rent figures exclude development communities in lease-
up.
13
<PAGE>
Liquidity and Capital Resources
United Dominion's primary source of liquidity is its cash flow from operations
as determined by rental rates, occupancy levels and operating expenses related
to these apartment homes. United Dominion routinely uses its unsecured bank
credit facility to temporarily fund certain investing and financing activities
prior to arranging for longer-term financing. During the past several years,
proceeds from the sales of real estate have been used for both investing and
financing activity.
United Dominion regularly reviews its short and long-term liquidity requirements
and considers the adequacy of its cash flow from operations as well as other
liquidity sources to meet these requirements. United Dominion believes that it
can fund its short-term liquidity needs such as normal recurring operating
expenses, debt service payments, recurring capital expenditures and
distributions to common and preferred shareholders through cash provided by
operating activities and borrowings outstanding from our unsecured bank credit
facility, as needed.
A significant portion of the proceeds from the sale of communities is used to
reduce debt and, to a lesser extent, to buy back preferred stock and acquire
real estate assets. Management recognizes that using proceeds in this manner to
increase our financial flexibility will lessen the near-term earnings growth
rate as the return on reinvested proceeds is less than the return on the
properties sold; however, management strives to minimize this effect.
To facilitate future fund raising activities in the public capital markets,
management believes that it is prudent to maintain shelf registration statement
capacity. In this regard, United Dominion filed such a shelf registration
statement in December 1999 providing for the issuance of up to $700 million in
common shares, preferred shares and debt securities of which $600 million is
available for future issuance.
Future Capital Needs
Future development expenditures are expected to be funded with proceeds from the
sale of property and borrowings outstanding under our unsecured credit facility.
Acquisition activity is expected to be primarily limited to the reinvestment of
proceeds from the sale of property in order to defer large tax gains.
United Dominion has no significant maturities of debt until the fourth quarter
of 2000 at which time a $144.3 million unsecured note payable and a $24.2
million secured note payable will mature. Management expects to repay the
maturing unsecured debt from a variety of sources including proceeds from the
company's disposition program, utilizing availability under our unsecured bank
credit facility and the issuance of unsecured debt in the capital markets. We
expect to refinance the maturing secured debt with debt of similar
characteristics at the then prevailing market rates. The following table
outlines United Dominion's debt maturities over the next five years (dollars in
thousands):
<TABLE>
<CAPTION>
Amount
Year Maturing
----------------------------------------------------
<S> <C>
2000 $ 193,248
2001 105,274
2002 112,686
2003 375,036 (a)
2004 317,910
Thereafter 970,971
------------
Total $2,075,125
============
</TABLE>
(a) Includes $187.3 million of unsecured bank debt (See discussion under
"Unsecured Credit Facilities" that follows).
The following discussion explains the changes in net cash provided by operating
activities, net cash used in investing activities and net cash used in financing
activities which are presented in United Dominion's Consolidated Statements of
Cash Flows.
14
<PAGE>
Operating Activities
For the six months ended June 30, 2000, United Dominion's cash flow from
operating activities was $102.6 million compared to $80.7 million for the same
period last year. The increase is primarily due to the larger payment of
accrued operating expenses during the first half of 1999, a portion of which
related to the payment of expenses accrued in connection with the American
Apartment Communities II merger on December 7, 1998.
Investing Activities
For the six months ended June 30, 2000, net cash provided by investing
activities was $33.6 million compared to net cash used in investing activities
of $54.9 million for the same period last year. Changes in the level of
investing activities from period to period reflect the changing levels of United
Dominion's acquisition, capital expenditure, development and disposition
programs, as well as the impact of the capital market environment on these
activities. The decrease in investing related expenditures reflect decreased
acquisition activity and an increase in net proceeds received from the sale of
investments, including funds held in escrow pending the acquisition of real
estate. In addition, there was a net reduction in development expenditures as a
result of the receipt of $34.2 million in connection with the consummation of a
development joint venture in June 2000 (See discussion that follows under
"Development Joint Venture").
Disposition of Investments
During the first half of 2000, United Dominion continued its strategy of
selectively disposing of assets that are not in core markets, have a lower net
operating income growth rate than the overall portfolio or no longer meet the
operating and investment strategies of United Dominion.
For the six months ended June 30, 2000, United Dominion sold ten communities
with 1,957 apartment homes, one commercial property and one parcel of land for
an aggregate sales price of $87.8 million and recognized gains for financial
reporting purposes of $8.5 million. Proceeds from the disposition program were
primarily used to strengthen the balance sheet by paying down debt and
repurchasing shares of United Dominion's preferred stock.
United Dominion expects to sell approximately $200 million of real estate during
2000.
Real Estate under Development
Development activity is focused in core markets that have locally based
development teams and strong operations managers in place. For the six months
ended June 30, 2000, United Dominion invested $54.6 million on development
projects, including the acquisition of land.
The following projects are complete as of June 30, 2000:
<TABLE>
<CAPTION>
Development
No. of Costs Cost Per Date
Apt. Homes (In thousands) Home Completed % Leased
------------ ------------- ------------ ------------ ------------
New Communities:
-----------------
<S> <C>
Ashton at Waterford Lakes 292 $21,400 $73,300 Feb-00 95.2%
Orlando, FL
Additional Phases:
------------------
Dominion Crown Pointe II 220 14,100 64,100 Jun-00 71.4%
Charlotte, NC
------------ ------------- ------------
Total 512 $35,500 $69,300
============ ============= ============
</TABLE>
15
<PAGE>
The following projects are under development at June 30, 2000:
<TABLE>
<CAPTION>
No. of Completed Cost to Budgeted Expected
Apt. Apt. Date Cost Est. Cost Completion
Homes Homes (In thousands) (In thousands) Per Home Date
-------- -------- ------------ ------------- ---------- ------------
New Communities:
------------------
<S> <C>
Dominion Place at Kildaire Farm 332 -- $ 5,300 $25,700 $77,400 1Q02
Raleigh, NC
The Vintage at Buttercup Creek 324 -- 2,900 21,700 67,000 4Q01
Austin, TX
----------- ----------- ------------- -------------- -----------
Subtotal 656 -- 8,200 47,400 72,300
----------- ----------- ------------- -------------- -----------
Additional Phases:
Ashlar II 168 -- 6,000 12,900 76,800 4Q00
Fort Myers, FL
Escalante II 312 100 14,700 19,700 63,100 4Q00
San Antonio, TX
Greensview II 192 -- 1,000 16,700 87,000 4Q01
Denver, CO
----------- ------- ------------- -------------- -----------
Subtotal 672 100 21,700 49,300 73,400
----------- ------- ------------- -------------- -----------
Total 1,328 100 $29,900 $96,700 $72,800
=========== ======= ============= ============== ===========
</TABLE>
In addition to the apartment homes under development at June 30, 2000, United
Dominion has land held for future development with a carrying value of $37.0
million.
Development Joint Venture
On June 21, 2000, United Dominion completed the formation of a joint venture
that will invest approximately $105 million to develop five apartment
communities with a total of 1,438 apartment homes. United Dominion owns a 25%
interest in the joint venture and is serving as the managing partner of the
joint venture with responsibility for the venture's operations.
Prior to completing the joint venture, United Dominion had commenced
construction on all five of the projects. Upon closing of the venture, United
Dominion contributed the projects in return for its equity interest of
approximately $8 million in the venture and was reimbursed for approximately $34
million of development outlays that were incurred prior to closing the joint
venture. The proceeds received were used to reduce outstanding debt balances. In
addition, during the second quarter of 2000, United Dominion recognized fee
income of approximately $1.6 million for general contracting services provided
by the company to the joint venture of which approximately $1 million related to
construction activity prior to the second quarter of 2000.
The following joint venture projects are complete as of June 30, 2000:
<TABLE>
<CAPTION>
Development
No. of Cost Cost Per Date
Apt. Homes (In thousands) Home Completed % Leased
------------ -------------- ------------ ------------- ------------
<S> <C>
New Communities:
The Meridian 250 $15,600 $62,400 Jun-00 100.0%
Dallas, TX
------------ -------------- ------------
Total 250 $15,600 $62,400
============ ============== ============
</TABLE>
16
<PAGE>
The following joint venture projects are under development at June 30, 2000:
<TABLE>
<CAPTION>
No. of Cost to Budgeted Expected
Apt. Completed Date Cost Est. Cost Completion
Homes Apt. Homes (In thousands) (In thousands) Per Home Date
----------- -------------- -------------- ------------- ------------- ------------
<S> <C>
New Communities:
Oaks at Weston 380 60 $16,600 $30,100 $79,200 2Q01
Raleigh, NC
Sierra Canyon 236 -- 7,000 16,700 70,800 1Q01
Phoenix, AZ
Parke 33 264 -- 8,500 17,400 65,900 1Q01
Lakeland, FL
Mandolin 308 -- 4,100 22,100 71,700 3Q01
Dallas, TX
----------- -------------- -------------- ------------- -------------
Total 1,188 60 $36,200 $86,300 $72,600
=========== ============== ============== ============= =============
</TABLE>
Acquisitions
During the six months ended June 30, 2000, United Dominion acquired one
community with 267 apartment homes at a total cost (including closing costs) of
$14.8 million which included the assumption of debt and the use of tax free
exchange funds. During the remainder of 2000, United Dominion does not
anticipate acquiring communities except to reinvest a portion of the proceeds
from property dispositions in order to defer taxes on capital gains.
Capital Expenditures
United Dominion capitalizes those expenditures related to acquiring new assets,
materially enhancing the value of an existing asset, or substantially extending
the useful life of an existing asset. Expenditures necessary to maintain an
existing property in ordinary operating condition are expensed as incurred.
During the first six months of 2000, $17.5 million or $225 per home was spent on
capital expenditures for United Dominion's same communities (those acquired or
developed prior to January 1, 1999). These capital improvements included
recurring capital expenditures, including floor coverings, HVAC equipment,
roofs, appliances, landscaping, siding, parking lots and other non-revenue
enhancing capital expenditures, which aggregated $10.9 million or $140 per home.
In addition, non-recurring / revenue enhancing capital expenditures, including
water sub-metering, gating and access systems, the additions of microwaves,
washer-dryers, interior upgrades and new business and fitness centers totaled
$6.6 million or $85 per home for the first six months of 2000. United Dominion
will continue to selectively add revenue-enhancing improvements, which are
budgeted to provide a high return on investment. Capital expenditures during
2000 are currently expected to be at levels somewhat below the levels in 1999.
Financing Activities
Net cash used in financing activities during the six months ended June 30, 2000
was $134.5 million compared to net cash used by financing activities of $23.3
million for the same period last year. For the six months ended June 30, 2000,
as part of its plan to improve its balance sheet position, United Dominion used
80% of the proceeds from its disposition program to pay down secured and
unsecured debt and to repurchase shares of preferred stock. The remaining 20% of
the proceeds were used to complete 1031 exchanges.
During the first quarter of 2000, United Dominion issued $100 million of 8.625%
unsecured notes due 2003. Net proceeds received of $99.5 million were used to
repay outstanding bank debt. In addition, United Dominion completed the
refinancing of tax-exempt notes aggregating $46.7 million at a blended rate of
6.32% and with a final maturity of August 2008. In conjunction with this
refinancing, the company removed the liens on $86 million of real estate which
had previously secured the tax-exempt notes.
For the six months ended June 30, 2000, United Dominion, using proceeds from its
disposition program, repurchased $27.2 million of certain of its higher rate
17
<PAGE>
outstanding unsecured debt with a weighted average yield of 8.72%. In addition,
the company was relieved of $9.7 million of mortgage debt and $22.8 million of
revolving bank debt. During the remainder of the year, United Dominion expects
to make further debt reductions as disposition activity increases.
United Dominion issued 768,355 shares of its common stock and received $7.3
million under its Dividend Reinvestment and Stock Purchase Plan during the first
six months of 2000.
During the first six months of 2000, United Dominion paid distributions to its
common shareholders and unitholders in its operating partnerships aggregating
$60.1 million. The distribution to common shareholders and holders of operating
partnership units equates to a dividend rate of $1.07 per share or unit. In
addition, $18.6 million of preferred dividends were paid to Series A, B and D
preferred shareholders.
In 1999, the Board of Directors approved the repurchase of up to $25 million of
United Dominion's Series A and Series B Cumulative Redeemable Preferred Stock
($25 liquidation value) from time to time as market conditions permit. For the
six months ended June 30, 2000, United Dominion repurchased 23,540 Series A
preferred shares at an average price of $19.90 per share and 364,811 Series B
preferred shares at an average price of $18.54 per share.
During the remainder of the year, United Dominion expects to continue to repay
debt and repurchase preferred stock using proceeds from its property
dispositions.
Unsecured Credit Facilities
In June 2000, United Dominion closed on a $375 million thee-year unsecured
revolving credit facility (the "Credit Facility") with a consortium of banks.
The Credit Facility, which extends until August 2003, replaces two lines of
credit that allowed the company to borrow in aggregate up to $310 million.
Under the Credit Facility, the company may borrow at a rate of LIBOR plus 100
basis points for LIBOR-based borrowings. This is equal to the rate the company
was able to borrow under a $110 million line of credit arranged last year that
was replaced by the new, expanded and longer-term Credit Facility. Under the
agreement, we pay a facility fee, which is equal to 0.20% of the commitment. The
Credit Facility is subject to customary financial covenants and limitations.
The following table summarizes our unsecured credit facility borrowings for the
three and six months ended June 30, 2000 (dollars in thousands):
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, 2000 June 30, 2000
----------------------- ----------------------
<S> <C>
Total line of credit $375,000 $375,000
Borrowings outstanding at end of period $187,300 $187,300
Maximum borrowings outstanding during the period $245,000 $308,000
Weighted average daily borrowings outstanding $201,641 $236,288
Weighted average daily nominal interest rate 7.15% 6.87%
Weighted average daily effective interest rate 7.66% 7.13%
</TABLE>
Funds from Operations
Funds from operations ("FFO") is defined as net income (computed in accordance
with generally accepted accounting principles), excluding gains (losses) from
sales of property, plus real estate depreciation and amortization, and after
adjustments for unconsolidated partnerships and joint ventures. United Dominion
computes FFO for all periods presented in accordance with the recommendations
set forth by the National Association of Real Estate Investment Trusts October
1, 1999 White Paper. United Dominion considers FFO in evaluating property
acquisitions and its operating performance, and believes that FFO should be
considered along with, but not as an alternative to, net income and cash flows
as a measure of United Dominion's operating performance and liquidity. FFO does
not represent cash generated from operating activities in accordance with
18
<PAGE>
generally accepted accounting principles and is not necessarily indicative of
cash available to fund cash needs.
The following table outlines United Dominion's FFO calculation for the three and
six months ended June 30, 2000 (dollars in thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- --------------------
2000 1999 2000 1999
--------------------- --------------------
<S> <C>
Net income $13,277 $40,800 $31,857 $60,882
Adjustments:
Distributions to preferred shareholders (9,221) (9,440) (18,629) (18,879)
Real estate depreciation, net of outside partners' interest 43,612 31,114 77,188 60,251
Gains on sale of real estate, net of outside partners' interest (5,615) (32,214) (8,148) (32,405)
Minority interests of unitholders in operating partnership 294 3,098 962 3,981
Extraordinary item-early extinguishment of debt (586) (509) (358) (509)
Impairment loss on real estate and investments 0 7,100 0 7,100
---------- ---------- --------- ----------
Funds from operations-basic $41,761 $39,949 $82,872 $80,421
========== ========== ========= ==========
Adjustment:
Distribution to preferred shareholders-Series D (Convertible) 3,825 3,787 7,650 7,573
---------- ---------- --------- ----------
Funds from operations-diluted $45,586 $43,736 $90,522 $87,994
========== ========== ========= ==========
Weighted average number of common shares and OP Units outstanding -
basic 110,774 112,688 110,590 112,751
Weighted average number of common shares and OP Units outstanding -
diluted 123,281 125,009 123,069 125,068
FFO per common share-basic $ 0.38 $ 0.35 $ 0.75 $ 0.71
========== ========== ========= ==========
FFO per common share-diluted $ 0.37 $ 0.35 $ 0.74 $ 0.70
========== ========== ========= ==========
</TABLE>
The increase in FFO for the three and six months ended June 30, 2000 is
primarily attributable to the net increase in property operating income
generated from United Dominion's same communities and fee income recognized on
the development joint venture as described below under "Apartment Community
Operations."
Results of Operations
Net Income Available to Common Shareholders
Net income available to common shareholders decreased $25.1 million and $26.6
million for the three and six-month periods ended June 30, 2000 compared to the
same periods last year. For the three and six months ended June 30, 1999, United
Dominion recognized $32.2 million and $32.4 million of gains on the sales of
investments compared to $5.9 million and $8.5 million for the comparable periods
in 2000. In addition, real estate depreciation increased significantly for the
three and six months ended June 30, 2000 as a result of the catch up of
depreciation expense on communities transferred from real estate held for
disposition to real estate held for investment and, to a lesser extent, the
impact of completed development communities (see Note 2 to the Consolidated
Financial Statements).
19
<PAGE>
Apartment Community Operations
United Dominion's net income is primarily generated from the operations of its
apartment communities. The following table summarizes the operating performance
for United Dominion's apartment portfolio for each period (dollars in
thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------------- ----------------------------------
2000 1999 % Change 2000 1999 % Change
---------------------------------- ----------------------------------
<S> <C>
Total Apartment Homes
Property rental income $154,764 $154,064 0.5% $308,422 $307,485 0.3%
Property rental expenses (excluding
depreciation and amortization) (60,197) (61,763) -2.5% (119,614) (122,444) -2.3%
---------------------------------- ----------------------------------
Property operating income $94,567 $92,301 2.5% $188,808 $185,041 2.0%
================================== ==================================
Weighted average number of homes 81,606 86,979 -6.2% 81,830 87,208 -6.2%
Physical occupancy 94.3% 92.3% 2.0% 94.0% 92.1% 1.9%
</TABLE>
For the three and six months ended June 30, 2000, total apartment community
property operating income increased $2.3 million or 2.5% and $3.8 million or
2.0%, respectively. The strong increase in property operating income generated
from our same community portfolio was partially offset by the loss of property
operating income as a result of the company's disposition program during the
past year.
United Dominion's same communities (those communities acquired, developed and
stabilized prior to January 1, 1999 and held on January 1, 2000 which consisted
of 77,386 and 77,767 weighted average apartment homes for the three and six
month comparative periods) provided 95% and 92% of its property operating income
for the six months ended June 30, 2000 and 1999, respectively. During the first
six months of 2000, same community property operating income increased 5.0% or
$8.5 million compared to the first six months of 1999. The growth in property
operating income resulted primarily from a 4.4% or $12.2 million increase in
property rental income for the same communities over the same period in the
prior year. The increase was primarily driven by a 1.6% increase in physical
occupancy coupled with a 2.6% increase in average monthly rental rates. For the
quarter, property operating income increased 5.2% or $4.4 million compared to
the second quarter of 1999. The growth in property operating income resulted
primarily from a 4.6% or $6.5 million increase in property rental income
compared to the same period in the prior year, reflecting an increase in
physical occupancy of 1.8% and a 2.6% increase in average monthly rental rates.
During the first half of 2000, property operating expenses at these same
communities increased 3.4%, or $3.7 million. The increase in property operating
expenses was primarily due to (i) an increase in real estate taxes which are
being accrued at higher rates in 2000 on the $1.4 billion of real estate
acquired in 1998 in anticipation of reassessments, (ii) an increase in casualty
insurance costs largely as a result of hurricane losses incurred in North
Carolina over the past five years, and (iii) an increase in personnel costs,
primarily in the service area due to higher wages and healthcare costs. As a
result of the increase in property rental income exceeding the increase in
property operating expenses, the operating margin (property operating income
divided by property rental income) at the same communities improved 0.3% to
61.3% for the six month period ended June 30, 2000. For the quarter, property
operating expenses increased 3.7% or $2.0 million compared to the same period in
the prior year for same reasons as mentioned above. The operating margin
improved 0.4% to 61.1%.
The remaining 5% of United Dominion's property operating income during the first
six months of 2000 was generated from its non-mature communities (those
communities acquired and developed during 1999 and the first half of 2000).
Non-mature property operating income was comprised primarily of $3.0 million and
$5.3 million for the three and six month periods, respectively, generated by the
successful lease-up of United Dominion's development communities which included
20
<PAGE>
1,878 apartment homes constructed since January 1, 1999. In addition, the six
communities with 1,497 apartment homes acquired by United Dominion during 1999
and 2000 provided an additional $1.8 million and $3.4 million of property
operating income for the three and six months ended June 30, 2000, respectively.
The increase in property operating income provided by the same communities,
development communities and acquisition communities since June 30, 1999, was
offset by the loss of property operating income due to the disposition of 9,400
apartment homes during 1999 and 2000. As a result of United Dominion's
disposition program, the weighted average number of apartment homes declined
6.2% from June 30, 1999.
Real Estate Depreciation
Real estate depreciation increased $12.6 million or 40.0% and $17.1 million or
28.1% for the three and six months ended June 30, 2000, respectively, over the
same period last year. This increase is primarily attributable to the catch up
of depreciation expense on communities transferred from real estate held for
disposition to real estate held for investment and to a lesser extent, the
impact of completed development communities (see Note 2 to the Consolidated
Financial Statements).
Interest Expense
Interest expense increased $834,000 and $1.8 million for the three and six
months ended June 30, 2000, respectively, over the same period last year. For
the six month period, the weighted average amount of debt outstanding decreased
2.8% or $61.4 million from 1999 levels and the weighted average interest rate
increased from 7.4% in 1999 to 7.5% in 2000. For the three month period, the
weighted average amount of debt outstanding decreased 2.9% or $62.4 million in
2000 as compared to the same period in the prior year and the weighted average
interest rate increased from 7.4% in 1999 to 7.6% in 2000. The weighted average
amount of debt employed during 2000 was lower as disposition proceeds were used
to repay outstanding debt. The increase in the average interest rate during 2000
reflects the reliance on higher rate short-term bank borrowings which had higher
interest rates when compared to the same period in the prior year. For the three
and six months ended June 30, 2000, total interest capitalized was $1.0 million
and $2.0 million, respectively, compared to $1.5 million and $3.2 million,
respectively, for the comparable periods last year.
General and Administrative
During the three and six months ended June 30, 2000, general and administrative
expenses increased $948,000 or 34.5%, and $1.1 million or 17.4% over 1999,
reflecting a full year's impact of United Dominion's investment in professional
staff, technology and scaleable accounting and information systems and the
effect of additional franchise taxes in Tennessee as a result of a change in the
state law regarding franchise taxes.
Gains on Sales of Investments
For the three and six months ended June 30, 2000, United Dominion recognized
gains for financial reporting purposes of $5.9 million and $8.5 million,
respectively, compared to $32.2 million and $32.4 million for the comparable
periods last year. Changes in the level of gains recognized from period to
period reflect the changing level of United Dominion's divestiture activity from
period to period as well as the extent of gains related to specific properties
sold.
Discount on Preferred Share Repurchases
For the six months ended June 30, 2000, United Dominion recognized a $2.2
million discount on preferred share repurchases. The discount on preferred share
repurchases represents the difference between the carrying value and the
purchase price of the preferred shares.
Inflation
United Dominion believes that the direct effects of inflation on United
Dominion's operations have been inconsequential. Substantially all of the
company's leases are for a term of one year or less which generally minimizes
United Dominion's risk from the adverse effects of inflation.
21
<PAGE>
Information Technology
United Dominion is currently engaged in the development of a web-based
apartment operating system (the "system") to enable management to capture,
review and analyze data to a greater extent than is possible using available
existing commerical software. United Dominion believes the new system will
enable it to become a more efficient provider of a high quality living
environment for its residents, and provide the scalability necessary to support
future growth. These development activities are being conducted through a
joint venture with two other public multifamily real estate investment trusts.
The system development process is currently managed by the employees of United
Dominion and its joint venture partners who have significant related project
management experience. The actual programming and documentation of the system
is being conducted by employees and third party consultants under the
supervision of these experienced project managers.
Current projections indicate that total development costs through the end of
the year will be approximately $8.5 million (including hardware costs and
expenses, the costs of employees and related overhead, and the costs of engaging
third party consultants) and that United Dominion's share of such development
costs will be approximately 45%. The system is currently projected to begin
on-site testing (i.e., a "beta test") in December of 2000 and the first release
is scheduled for initial implementation late in the first quarter of 2001.
Neither United Dominion nor its joint venture partner has been engaged in the
development of systems software. There are several risks associated with the
development of the system for internal use, such as: (i) the inability to
maintain the schedule or budget that has been projected for the
development and implementation of the software, and (ii) the system may not
have the functionality and efficiencies desired.
Taxable REIT Subsidiary
In December 1999, the REIT Modernization Act ("RMA") was signed into law. The
RMA contains several provisions that, when effective in 2001, will allow REIT's
to compete more effectively in the real estate industry by allowing REIT's to
offer the same types of services as other competitors in the marketplace. The
most important feature of the RMA is the allowance for REIT's to create a
taxable REIT subsidiary ("TRS") that can provide services to residents and
others without disqualifying the rents that a REIT receives from its residents.
REIT's will be allowed, through a TRS, to provide a wide range of increasingly
important services that residents have come to expect. In addition, the TRS will
allow REIT's to generate new sources of income for REIT shareholders.
Effective January 1, 2001, a REIT can own 100% of the stock of a TRS. However,
the legislation contains a number of safeguards that would limit the size of a
TRS to ensure that REIT's remain focused on their core business of owning and
operating real estate assets. Furthermore, the RMA changes the minimum
distribution requirement from 95% to 90% of the REIT's taxable income. This will
allow REIT's to retain a greater level of capital, which can be used to invest
back into expenditures to maintain the quality of their real estate assets as
well as repay outstanding debt.
Item 3. Quantitative and Qualitative Disclosure of Market Risk
Information required by Item 3 regarding Quantitative and Qualitative Disclosure
of Market Risk is included in Part I, Item 2 of this Form 10-Q included in
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
22
<PAGE>
PART II
Item 1. LEGAL PROCEEDINGS
---------------------------
United Dominion and its subsidiaries are engaged in various litigations
and have a number of unresolved claims pending, including, but not limited to,
litigation concerning water billing activities. The ultimate liability in
respect of such litigations and claims cannot be determined at this time.
United Dominion is of the opinion that such liability, to the extent not
provided for through insurance or otherwise, is not likely to be material in
relation to the consolidated financial statements of United Dominion.
Item 2. CHANGES IN SECURITIES
-----------------------------
None
Item 3. DEFAULT 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 ON 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
A Form 8-K was filed with the Securities and Exchange Commission on
February 25, 2000. The filing reported United Dominion's 1999 fourth
quarter and year to date results of operations as reported on its Press
Release issued on February 1, 2000.
23
<PAGE>
EXHIBIT INDEX
Item 6 (a)
The exhibits listed below are filed as part of this Quarterly Report.
References under the caption Location 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.
<TABLE>
<CAPTION>
Exhibit Description Location
--------- ------------------------------------ ---------------------------------------------------
<S> <C> <C>
2(a) Agreement and Plan of Merger dated Exhibit 2(a) to the Company's Form S-4 Registration
as of December 19, 1997, between Statement (Registration No. 333-45305) filed with
the Company, ASR Investment the Commission on January 30, 1998.
Corporation and ASR Acquisition Sub,
Inc.
2(b) Agreement of Plan of Merger dated as Exhibit 2(c) to the Company's Form S-3 Registration
of September 10, 1998, between the Statement (Registration No. 333-64281) filed with
Company and American Apartment the Commission on September 25, 1998.
Communities II, Inc. including as
exhibits thereto the proposed terms
of the Series D Preferred Stock and
the proposed form of Investment
Agreement between the Company,
United Dominion Realty, L.P.,
American Apartment Communities II,
Inc., American Apartment Communities
Operating Partnership, L.P.,
Schnitzer Investment Corp., AAC
Management LLC and LF Strategic
Realty Investors, L.P.
2(c) Partnership Interest Purchase and Exchange Exhibit 2(d) to the Company's Form S-3 Registration
Agreement dated as of September 10, 1998, Statement (Registration No. 333-64281) filed with
between the Company, United Dominion the Commission on September 25, 1998.
Realty, L.P., American Apartment
Communities Operating Partnership, L.P.,
AAC Management LLC, Schnitzer
Investment Corp., Fox Point Ltd. and
James D. Klingbeil including as an exhibit
thereto the proposed form of the Third
Amended and Restated Limited Partnership
Agreement of United Dominion Realty, L.P.
3(a) Restated Articles of Incorporation Exhibit 4(a)(ii) to the Company's Form S-3
Registration Statement (Registration No. 333-72885)
filed with the Commission on February 24, 1999.
3(b) Restated By-Laws Exhibit 3(b) to the Company's Annual Report
on Form 10-K for the year ended December
31, 1998.
4(i)(a) Specimen Common Stock Exhibit 4(i) to the Company's Annual Report
Certificate on Form 10-K for the year ended December
31, 1993.
</TABLE>
24
<PAGE>
<TABLE>
<S> <C> <C>
4(i)(b) Form of Certificate for Shares Exhibit 1(e) to the Company's Form 8-A
of 9 1/4% Series A Cumulative Registration Statement dated April 24, 1995.
Redeemable Preferred Stock
4(i)(c) Form of Certificate for Shares Exhibit 1(e) to the Company's Form 8-A
of 8.60% Series B Cumulative Registration Statement dated June 11, 1997.
Redeemable Preferred Stock
4(i)(d) Rights Agreement dated as of Exhibit 1 to the Company's Form 8-A
January 27, 1998, between the Company Registration Statement dated February 4, 1998.
and ChaseMellon Shareholder Services,
L.L.C., as Rights Agent.
4(i)(d)(a) First Amended and Restated Rights Exhibit 4(i)(d)(a) to the Company's Form 10-Q
Agreement dates as of September 14, for the quarter ended September 30, 1999.
1999, between the Company and
ChaseMellon Shareholders Services,
L.L.C., as Rights Agent
4(i)(e) Form of Rights Certificate Exhibit 4(e) to the Company's Form 8-A
Registration Statement dated February 4, 1998.
4(ii)(e) Note Purchase Agreement dated Exhibit 6(c)(5) to the Company's Form 8-A
as of February 15, 1993, between Registration Statement dated April 19, 1990.
the Company 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) 364-day Credit Agreement dated Filed herewith.
as of June 1, 2000, between
the Company and certain subsidiaries
and a syndicate of banks represented
by Bank of America, N.A.
10(i) Employment Agreement between Exhibit 10(i) to the Company's Annual Report
the Company and John P. McCann on Form 10-K for the year ended December 31,
dated December 8, 1998. 1998.
10(ii) Employment Agreement between Exhibit 10(ii) to the Company's Annual Report
the Company and John S. Schneider on Form 10-K for the year ended December 31,
dated December 8, 1998. 1998.
10(iii) Employment Agreement between Exhibit 10(iii) to the Company's Annual Report
the Company and Richard Giannotti on Form 10-K for the year ended December 31,
dated December 8, 1998. 1998.
</TABLE>
25
<PAGE>
<TABLE>
<S> <C> <C>
10(iv) Employment Agreement between Exhibit 10(iv) to the Company's Quarterly Report
the Company and A. William Hamill on Form 10-Q for the quarter ended September 30,
dated September 30, 1999. 1999.
10(v) 1985 Stock Option Plan, Exhibit 10(iv) to the Company's Quarterly
as amended. Report on Form 10-Q for the quarter ended
June 30, 1998.
10(vi) 1991 Stock Purchase and Loan Exhibit 10(viii) to the Company's Quarterly Report
Plan. on Form 10-Q for the quarter ended March 31, 1997.
10(vii) Third Amended and Restated Exhibit 10(vi) to the Company's Annual Report
Agreement of Limited Partnership of on Form 10-K for the year ended December 31,
United Dominion Realty, L.P. 1998.
Dated as of December 7, 1998.
10(vii)(a) Subordination Agreement dated Exhibit 10(vi)(a) to the Company's Form 10-Q for
April 16, 1998, between the the quarter ended March 31, 1998.
Company and United Dominion
Realty, L.P.
10(viii) Servicing and Purchase Exhibit 10(vii) to the Company's Form 10-Q for
Agreement dated as of June 24, the quarter ended June 30, 1999.
1999, including as an exhibit
thereto the Note and Participation
Agreement forms.
10(ix) Description of Restricted Stock Exhibit 10(ix) to the Company's Annual Report
Awards Program. on Form 10-K for the year ended December 31,
1999.
10(x) Description of United Dominion Exhibit 10(x) to the Company's Annual
Realty Trust, Inc. Shareholder Report on Form 10-K for the year ended
Value Plan. December 31, 1999.
10(xi) Description of United Dominion Exhibit 10(xi) to the Company's Annual
Realty Trust, Inc. Executive Report on Form 10-K for the year ended
Deferral Plan. December 31, 1999.
10(xii) Employment Agreement between Exhibit 10(xii) to the Company's Annual
the Company and Curtis W. Carter Report on Form 10-K for the year ended
dated December 8, 1998. December 31, 1999.
10(xiii) Employment Agreement between Exhibit 10(xiii) to the Company's Annual
the Company and Mark E. Wood Report on Form 10-K for the year ended
dated March 21, 2000. December 31, 1999.
</TABLE>
26
<PAGE>
<TABLE>
<S> <C> <C>
12 Computation of Ratio of Earnings Filed herewith.
to Fixed Charges.
27 Financial Data Schedule Filed electronically with the Securities
and Exchange Commission.
</TABLE>
27
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the registrant has duly caused this Quarterly Report to be signed
on its behalf by the undersigned, thereunto duly authorized.
United Dominion Realty Trust, Inc.
----------------------------------
(registrant)
Date: August 11, 2000 /s/ A. William Hamill
--------------------- ---------------------------------
A. William Hamill
Executive Vice President and
Chief Financial Officer
Date: August 11, 2000 /s/ Robin R. Flanagan
--------------------- ---------------------------------
Robin R. Flanagan
Vice President and
Chief Accounting Officer
28
