<PAGE>
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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 September 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.)
400 East Cary 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 November 1, 2000:
Common Stock, $1 Par Value: 103,177,765
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<PAGE>
UNITED DOMINION REALTY TRUST, INC.
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
PAGE
-----
<C> <S> <C>
PART I--FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (unaudited)
Consolidated Balance Sheets as of September 30, 2000 and
December 31, 1999............................................. 3
Consolidated Statements of Operations for the three and nine
months ended September 30, 2000 and 1999...................... 4
Consolidated Statements of Cash Flows for the nine months
ended September 30, 2000 and 1999............................. 5
Consolidated Statements of Shareholders' Equity for the nine
months ended September 30, 2000............................... 6
Notes to Consolidated Financial Statements.................... 7-12
Management's Discussion and Analysis of Financial Condition
Item 2. and Results of Operations..................................... 13-24
Item 3. Quantitative and Qualitative Disclosures About Market Risk.... 25
PART II--OTHER INFORMATION
Item 1. Legal Proceedings............................................. 26
Item 2. Changes in Securities......................................... 26
Item 3. Defaults Upon Senior Securities............................... 26
Item 4. Submission of Matters to a Vote of Security Holders .......... 26
Item 5. Other Information............................................. 26
Item 6. Exhibits and Reports on Form 8-K.............................. 26-29
Signatures.................................................... 30-31
</TABLE>
2
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except for share data)
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------- ------------
<S> <C> <C>
ASSETS
Real estate owned:
Real estate held for investment (Note 2).......... $3,748,936 $3,577,848
Less: accumulated depreciation.................. (482,071) (373,164)
---------- ----------
3,266,865 3,204,684
Real estate under development..................... 74,029 91,914
Real estate held for disposition (net of
accumulated depreciation of $6,817 and $22,700)
(Note 3)......................................... 19,830 260,583
---------- ----------
Total real estate owned, net of accumulated
depreciation................................. 3,360,724 3,557,181
Cash and cash equivalents........................... 10,885 7,678
Restricted cash..................................... 51,875 56,969
Deferred financing costs............................ 15,640 13,511
Investment in unconsolidated development joint
venture (Note 4)................................... 8,125 --
Other assets........................................ 60,175 52,978
---------- ----------
Total assets.................................. $3,507,424 $3,688,317
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Secured debt (Note 5)............................... $ 913,362 $1,000,136
Unsecured debt (Note 6)............................. 1,098,919 1,127,169
Real estate taxes payable........................... 41,207 30,887
Accrued interest payable............................ 21,174 17,867
Security deposits and prepaid rent.................. 22,107 20,738
Distributions payable............................... 36,437 36,020
Accounts payable, accrued expenses and other
liabilities........................................ 39,850 51,121
---------- ----------
Total liabilities............................. 2,173,056 2,283,938
Minority interests.................................. 89,693 94,167
Shareholders' equity
Preferred stock, no par value; $25 liquidation
preference, 25,000,000 shares authorized;
4,054,320 shares 9.25% Series A Cumulative
Redeemable issued and outstanding (4,168,560 in
1999).......................................... 101,358 104,214
5,565,089 shares 8.60% Series B Cumulative
Redeemable issued and outstanding (5,946,300 in
1999).......................................... 139,127 148,658
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
103,187,750 shares issued and outstanding
(102,740,777 in 1999)............................ 103,188 102,741
Additional paid-in capital........................ 1,089,026 1,083,687
Distributions in excess of net income............. (354,679) (296,030)
Notes receivable from officer-shareholders........ (7,561) (7,753)
Deferred compensation--unearned restricted stock
awards........................................... (784) (305)
---------- ----------
Total shareholders' equity.................... 1,244,675 1,310,212
---------- ----------
Total liabilities and shareholders' equity.... $3,507,424 $3,688,317
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended September Nine Months Ended
30, September 30,
------------------ ------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUES
Rental and other property income....... $154,645 $155,523 $463,847 $463,745
Non-property income.................... 1,383 701 4,432 1,631
-------- -------- -------- --------
Total revenues..................... 156,028 156,224 468,279 465,376
EXPENSES
Rental expenses:
Real estate taxes and insurance...... 17,042 15,207 52,209 47,717
Personnel............................ 16,311 17,308 49,335 50,347
Repair and maintenance............... 9,905 10,735 27,568 30,440
Utilities............................ 6,857 7,468 19,588 23,107
Administrative and marketing......... 6,121 6,583 18,110 19,018
Property management.................. 4,557 4,722 13,960 14,018
Other operating...................... 337 538 1,069 1,218
Real estate depreciation............... 37,349 29,957 115,305 90,814
Interest............................... 39,100 39,014 117,926 116,011
Impairment loss on real estate and
investments........................... -- -- -- 7,100
General and administrative............. 7,266 3,065 14,834 9,509
Non real estate depreciation and
amortization.......................... 984 1,106 3,438 3,226
-------- -------- -------- --------
Total expenses..................... 145,829 135,703 433,342 412,525
-------- -------- -------- --------
Income before gains on sales of
investments, minority interests and
extraordinary item.................... 10,199 20,521 34,937 52,851
Gains on sales of depreciable
property.............................. 10,429 48 18,890 32,454
Gains on sales of land................. 832 -- 832 --
-------- -------- -------- --------
Income before minority interests and
extraordinary item.................... 21,460 20,569 54,659 85,305
Minority interests of unitholders in
operating partnerships................ (798) (251) (1,760) (4,232)
Minority interests of outside
partners.............................. (388) (276) (1,126) (657)
-------- -------- -------- --------
Income before extraordinary item....... 20,274 20,042 51,773 80,416
Extraordinary item--early
extinguishment of debt................ (91) (166) 267 343
-------- -------- -------- --------
Net income............................. 20,183 19,876 52,040 80,759
Distributions to preferred
shareholders--Series A and B.......... (5,354) (5,653) (16,333) (16,953)
Distributions to preferred
shareholders--Series D (Convertible).. (3,825) (3,788) (11,475) (11,367)
Discount on preferred share
repurchases........................... 157 -- 2,334 --
-------- -------- -------- --------
Net income available to common
shareholders.......................... $ 11,161 $ 10,435 $ 26,566 $ 52,439
======== ======== ======== ========
Earnings per common share (Note 7):
Basic................................ $ 0.11 $ 0.10 $ 0.26 $ 0.50
======== ======== ======== ========
Diluted.............................. $ 0.11 $ 0.10 $ 0.26 $ 0.50
======== ======== ======== ========
Common distributions declared per
share................................. $ 0.2675 $ 0.2650 $ 0.8025 $ 0.7950
======== ======== ======== ========
Weighted average number of common
shares outstanding--basic............. 103,258 103,439 103,160 103,897
Weighted average number of common
shares outstanding--diluted........... 103,514 103,490 103,346 103,919
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
------------------
2000 1999
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net income................................................ $ 52,040 $ 80,759
Adjustments to reconcile net income to cash provided by
operatimg activities:
Depreciation and amortization........................... 118,743 94,040
Impairment loss on real estate owned.................... -- 7,100
Gains on sales of investments........................... (19,722) (32,454)
Minority interests...................................... 2,886 4,889
Extraordinary item-early extinguishment of debt......... (267) (343)
Amortization of deferred financing costs and other...... 4,219 2,613
Changes in operating assets and liabilities:
Increase in operating liabilities..................... 3,120 7,063
Increase in operating assets.......................... (2,572) (549)
-------- --------
Net cash provided by operating activities........... 158,447 163,118
INVESTING ACTIVITIES
Proceeds from sales of investments........................ 169,396 119,150
Proceeds received for excess expenditures over investment
contribution in development joint venture................ 33,412 --
Development of real estate assets......................... (62,652) (92,576)
Capital expenditures--real estate assets, net of escrow
reimbursements........................................... (35,012) (46,136)
Acquisition of real estate assets......................... (14,765) (47,204)
Capital expenditures--non real estate assets.............. (889) (5,180)
Funds held in escrow from tax free exchanges pending the
acquisition of real estate............................... -- (9,029)
Net cash paid in connection with mergers.................. -- (6,237)
Other..................................................... -- 1,132
-------- --------
Net cash provided by/(used in) investing
activities......................................... 89,490 (86,080)
FINANCING ACTIVITIES
Net decrease in secured debt.............................. (86,773) (40,841)
Net (decrease)/increase in unsecured debt................. (27,646) 100,504
Distributions paid to common shareholders................. (82,494) (80,823)
Distributions paid to preferred shareholders.............. (27,780) (25,517)
Distributions paid to minority interests.................. (7,548) (5,844)
Repurchase of common and preferred stock and operating
partnership units........................................ (14,572) (30,094)
Payment of financing costs................................ (5,441) (6,649)
Proceeds from the issuance of common stock................ 7,524 12,971
-------- --------
Net cash (used in) financing activities............. (244,730) (76,293)
Net increase in cash and cash equivalents................. 3,207 745
Cash and cash equivalents, beginning of period............ 7,678 18,529
-------- --------
Cash and cash equivalents, end of period.................. $ 10,885 $ 19,274
======== ========
SUPPLEMENTAL INFORMATION:
Interest paid during the period........................... $113,878 $117,506
Conversion of operating partnership units to common
stock.................................................... 241 1,005
Issuance of restricted stock awards....................... 831 --
Non-cash transactions associated with the acquisition of
properties:
Secured debt assumed.................................... 10,130 --
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Nine Months Ended September 30, 2000
(In thousands, except per share data)
(Unaudited)
<TABLE>
<S> <C>
PREFERRED STOCK
Balance, December 31, 1999......................................... $ 427,872
Repurchase of preferred stock.................................... (12,387)
----------
Balance, September 30, 2000........................................ $ 415,485
==========
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....................................... (344)
Purchase of restricted stock awards.............................. (86)
Issuance of restricted stock awards.............................. 86
Issuance of common shares to employees, officers and director-
shareholders.................................................... 5
Conversion of operating partnership units........................ 19
----------
Balance, September 30, 2000........................................ $ 103,188
==========
ADDITIONAL PAID-IN CAPITAL
Balance, December 31, 1999......................................... $1,083,687
Issuance of common shares through dividend reinvestment and stock
purchase plan................................................... 6,541
Repurchase of preferred stock.................................... 2,628
Repurchase of common stock....................................... (3,398)
Issuance of common shares to employees, officers and director-
shareholders.................................................... 17
Adjustment for cash purchase and conversion of minority interests
of unitholders in operating partnerships........................ (449)
----------
Balance, September 30, 2000........................................ $1,089,026
==========
DISTRIBUTIONS IN EXCESS OF NET INCOME
Balance, December 31, 1999......................................... $ (296,030)
Net income....................................................... 52,040
Common stock distributions declared ($.803 per share)............ (82,881)
Preferred stock distributions declared--Series A ($1.74 per
share).......................................................... (7,148)
Preferred stock distributions declared--Series B ($1.61 per
share).......................................................... (9,185)
Preferred stock distributions declared--Series D ($1.44 per
share).......................................................... (11,475)
----------
Balance, September 30, 2000........................................ $ (354,679)
==========
NOTES RECEIVABLE FROM OFFICER-SHAREHOLDERS
Balance, December 31, 1999......................................... $ (7,753)
Principal repayments from officer-shareholders................... 192
----------
Balance, September 30, 2000........................................ $ (7,561)
==========
DEFERRED COMPENSATION-UNEARNED RESTRICTED STOCK AWARDS
Balance, December 31, 1999......................................... $ (305)
Issuance of restricted stock awards.............................. (831)
Amortization of deferred compensation............................ 352
----------
Balance, September 30, 2000........................................ $ (784)
==========
TOTAL SHAREHOLDERS' EQUITY......................................... $1,244,675
==========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 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 September 30, 2000, there were
74,463,788 units in the Operating Partnership outstanding, of which
67,653,400, or 90.9%, were owned by United Dominion and 6,810,388, or 9.1%,
were owned by non-affiliated limited partners. As of September 30, 2000, there
were 4,529,876 units in the Heritage OP outstanding, of which 3,873,911, or
85.5%, were owned by United Dominion and 655,965, or 14.5%, 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 September 30, 2000 and results of operations for the interim
periods ended September 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 the 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 to the
current financial statement presentation.
2. Real Estate Held for Investment
At September 30, 2000 there are 279 communities with 77,348 apartment homes
classified as real estate held for investment. The following table summarizes
the components of real estate held for investment at September 30, 2000 and
December 31, 1999 (dollars in thousands):
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------- ------------
<S> <C> <C>
Land and land improvements...................... $ 557,726 $ 636,905
Buildings and improvements...................... 3,000,239 2,767,940
Furniture, fixtures and equipment............... 187,388 166,826
Construction in progress........................ 3,583 6,177
---------- ----------
Real estate held for investment................. 3,748,936 3,577,848
Accumulated depreciation........................ (482,071) (373,164)
---------- ----------
Real estate held for investment, net of
accumulated depreciation....................... $3,266,865 $3,204,684
========== ==========
</TABLE>
7
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
3. Real Estate Held for Disposition
At September 30, 2000, United Dominion had four communities with 578
apartment homes, three commercial properties and one parcel of land included
in real estate held for disposition totaling $19.8 million, which is net of
$6.8 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
$660,000 and $670,000 for the three months ended September 30, 2000 and 1999
and $2.1 million for the nine months ended September 30, 2000 and 1999.
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.
4. Investment in Unconsolidated Joint Ventures
At September 30, 2000, United Dominion's investment in unconsolidated joint
ventures consisted 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. The operating
results for the joint venture were not material for the nine months ended
September 30, 2000. The following is a summary of the financial position of
the joint venture for the date presented (dollars in thousands):
<TABLE>
<CAPTION>
As of
September 30,
2000
-------------
<S> <C>
Assets:
Real estate, net............................................. $71,914
Other assets................................................. 7,203
-------
Total assets............................................... $79,117
=======
Liabilities and partners' equity:
Mortgage notes payable....................................... $35,786
Other liabilities............................................ 11,531
Partners' equity............................................. 31,800
-------
Total liabilities and partners' equity..................... $79,117
=======
</TABLE>
8
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
5. Secured Debt
Secured debt, which encumbers $1.6 billion or 41.7% of United Dominion's
real estate owned ($2.3 billion or 58.3% of United Dominion's real estate
owned is unencumbered) consists of the following at September 30, 2000
(dollars in thousands):
<TABLE>
<CAPTION>
Principal No. of
Outstanding Weighted Avg. Weighted Avg. Communities
------------------- Interest Rate Years to Maturity Encumbered
2000 1999 2000 2000 2000
-------- ---------- ------------- ----------------- -----------
<S> <C> <C> <C> <C> <C>
Fixed Rate Debt
Mortgage Notes Payable
(a).................... $521,188 $ 555,414 7.80% 6.4 77
Tax-Exempt Secured Notes
Payable................ 95,849 96,699 6.91% 11.7 13
REMIC Financings........ 23,892 59,167 7.01% 0.2 10
Secured Credit
Facilities (b)......... 57,000 57,000 6.65% 13.3 --
-------- ---------- ---- ---- ---
Total Fixed Rate Secured
Debt................... 697,929 768,280 7.56% 7.5 100
Variable Rate Debt
Secured Credit
Facilities............. 176,960 138,675 7.29% 13.6 22
Tax-Exempt Secured Notes
Payable................ 19,916 66,616 5.68% 24.7 3
Mortgage Notes Payable.. 18,557 26,565 7.40% 12.0 5
-------- ---------- ---- ---- ---
Total Variable Rate
Secured Debt........... 215,433 231,856 7.15% 14.5 30
-------- ---------- ---- ---- ---
Total Secured Debt...... $913,362 $1,000,136 7.46% 8.5 130
======== ========== ==== ==== ===
</TABLE>
--------
(a) Includes fair value adjustments aggregating $12.1 million recorded in
connection with the ASR Merger and the AAC Merger on March 27, 1998 and
December 7, 1998, respectively.
(b) At September 30, 2000, United Dominion had $234.0 million outstanding
under revolving credit facilities with the Federal National Mortgage
Association (the "FNMA Credit Facilities"). At September 30, 2000, the
FNMA Credit Facilities had a weighted average floating rate of interest of
7.14%. In order to limit a portion of its interest rate exposure on the
FNMA Credit Facilities, United Dominion entered into three interest 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%.
Approximate principal payments due during each of the next five calendar
years and thereafter, as of September 30, 2000, are as follows (dollars in
thousands):
<TABLE>
<CAPTION>
Amount
Year Maturing
---- --------
<S> <C>
2000................................................................ $ 26,063
2001................................................................ 66,375
2002................................................................ 52,585
2003................................................................ 49,186
2004................................................................ 123,311
Thereafter.......................................................... 595,842
--------
Total............................................................. $913,362
========
</TABLE>
9
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
6. Unsecured Debt
A summary of unsecured debt at September 30, 2000 and December 31, 1999 is
as follows (dollars in thousands):
<TABLE>
<CAPTION>
2000 1999
---------- ----------
<S> <C> <C>
Commercial Banks
Borrowings outstanding under an unsecured credit
facility (a) (b)...................................... $ 154,500 $ 277,600
Senior Unsecured Notes -- Other
8.13% Senior Notes due November 2000................... 140,885 146,150
7.60% Medium-Term Notes due January 2002............... 48,750 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, Oregon Bonds due October 2003.. 7,345 7,345
8.63% Notes due March 2003............................. 99,000 --
7.98% Notes due March, 2000--2003 (d).................. 22,285 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.................. 107,515 120,340
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 (e).............. 46,700 --
8.50% Monthly Income Notes due November 2008........... 58,088 59,778
8.50% Debentures due September 2024 (f)................ 125,398 140,000
Other (g).............................................. 4,228 4,931
---------- ----------
944,419 849,569
---------- ----------
Total Unsecured Debt................................... $1,098,919 $1,127,169
========== ==========
</TABLE>
--------
(a) Weighted average interest rate of 7.5% and 6.7% at September 30, 2000 and
December 31, 1999, respectively.
(b) As of September 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) United Dominion has two interest rate swap agreements associated with
these tax-exempt bonds with an aggregate notional value of $46.7 million
under which United Dominion pays a variable rate of interest and receives
a fixed rate on the notional amount. As of September 30, 2000, United
Dominion paid a weighted average variable rate of 5.5% and received a
weighted average fixed rate of 6.3%.
(f) Includes an investor put feature, which grants a one-time option to redeem
the debentures in September 2004.
(g) Includes $4.0 million and $4.6 million at September 30, 2000 and December
31, 1999, respectively, of deferred gains from the termination of interest
rate risk management agreements.
10
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
7. 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 Nine months ended
September 30, September 30,
------------------ ------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Numerator for basic and diluted earnings
per share-net income available to common
shareholders............................ $ 11,161 $ 10,435 $ 26,566 $ 52,439
Denominator:
Beginning denominator for basic earnings
per share-weighted average common shares
outstanding............................. 103,354 103,439 103,256 103,897
Non-vested restricted stock.............. (96) -- (96) --
-------- -------- -------- --------
Denominator for basic earnings per
share................................... 103,258 103,439 103,160 103,897
-------- -------- -------- --------
Non-vested restricted stock.............. 96 -- 96 --
Effect of dilutive securities:
Employee stock options................... 160 51 90 22
-------- -------- -------- --------
Denominator for diluted earnings per
share................................... 103,514 103,490 103,346 103,919
======== ======== ======== ========
Basic earnings per share................. $ 0.11 $ 0.10 $ 0.26 $ 0.50
======== ======== ======== ========
Diluted earnings per share............... $ 0.11 $ 0.10 $ 0.26 $ 0.50
======== ======== ======== ========
</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 calculations. If the operating partnership units were converted
to common stock, the additional shares of common stock outstanding for the
three and nine months ended September 30, 2000 and 1999 would be 7,489,450 and
7,498,455 for 2000 and 8,251,432 and 8,398,303 for 1999, respectively. If the
convertible preferred stock were converted to common stock, the additional
shares of common stock outstanding for the three and nine months ended
September 30, 2000 and 1999 would be 12,307,692 common shares.
11
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
8. Contingencies
During the third quarter of 2000, the company agreed to settle a class action
lawsuit concerning water usage billing in Texas in the amount of $2.7 million.
The settlement is subject to court approval. As a result of the settlement, the
company accrued $2.7 million for the settlement amount and estimated fees. The
company will pay the settlement amount when court approval is final.
Individuals may opt out of the settlement and in the event that more than 125
persons opt out, United Dominion may elect to withdraw the settlement
agreement. Management believes that the litigation will be resolved in
accordance with the settlement agreement.
9. 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 will adopt this pronouncement effective January 1,
2001. The company has determined that the adoption of Statement 133 will not
have a material effect on earnings or the financial position of United Dominion
upon adoption.
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 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.
12
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Forward Looking Statements
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.
Overview
United Dominion is a real estate investment trust (REIT) with activities
related to the ownership, development, acquisition, renovation, management,
marketing and strategic disposition of multifamily apartment communities
nationwide. We believe that apartment communities are a more attractive
investment opportunity compared to other types of real estate due to the broad
resident base which results in relatively stable demand for apartments during
real estate cycles. We also believe that geographic market diversification
increases investment opportunities and decreases the risk associated with
cyclical local real estate markets and economies.
Strategic Plan
From 1996 to 1998, United Dominion acquired other REIT's, private portfolios
and individual communities, growing its portfolio from 34,000 to over 80,000
apartment homes, with an objective of being a national company and one of the
larger apartment REIT's. In the latter part of this three year period, the
company began to upgrade the portfolio to be solid B-grade and above. The
upgrade process included the disposition of non-strategic communities, a
greater commitment to development and the upgrade of the core portfolio of
apartment communities. With this process complete, we have refined the
objectives of our strategic plan in order to accelerate earnings growth while
increasing the long-term profitability and financial flexibility of United
Dominion. The refinement of our strategy includes the following key points:
. We will continue to target the middle market customer in the renter-by-
necessity customer segment. While we market to a broad range of renter
groups, we will place special emphasis on two of the fastest growing
renter groups which are the young households or "echo boomers" and the
individuals employed in professional positions who have immigrated to
the United States, particularly near high-tech centers.
. We plan to channel new acquisition and development activity to locations
inside the beltways and/or edge cities which is where we believe
apartment demand will be greater and supply more constrained. We believe
these locations will be more attractive to our target customers.
13
<PAGE>
. Our investments in acquisitions inside the beltways or in edge city
locations rather than the newer suburbs will mean that more of our
acquisitions will involve renovation and repositioning which was the
cornerstone on which we originally built the company.
. We have curtailed development activity in suburban, low barrier to entry
markets and plan to sell our suburban development sites.
. We have identified markets that we consider to have the most attractive
investment opportunity for us and we plan to strengthen our presence in
these markets to be a more significant factor and over time withdraw
from markets which provide inadequate returns. These dispositions will
likely occur over time and will be less dilutive because we will be
selling higher quality assets while channeling our new investments into
fewer markets. Given our portfolio size, in the normal course of
business, United Dominion will have annual dispositions and
reinvestments as it seeks to maximize the earnings potential of its
portfolio.
. We plan to use joint ventures to further our portfolio strategy. We
expect to do most of our new development in a joint venture arrangement
where we can generate development, general contacting and management fee
income.
. Management is focused on developing initiatives to enhance United
Dominion's financial performance. As such, we will use technology to
enable us to increase non-rental service revenues from our customers.
Over the long-term, we believe that these strategic refinements will allow
our portfolio and our company to have higher and more consistent earnings
growth.
At September 30, 2000, United Dominion owned 283 communities with 78,226
apartment homes nationwide, including 4 communities with 578 completed
apartment homes included in real estate held for disposition and 300 recently
completed apartment homes included in real estate under development.
14
<PAGE>
The following table summarizes United Dominion's apartment market information
by major and other geographic markets:
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
As of September 30, 2000 September 30, 2000 September 30, 2000
--------------------------------------------- ---------------------- ----------------------
No. of No. of % of Average Average
Apartment Apartment Carrying Carrying Value Physical Monthly Physical Monthly
Area Communities Homes Value (in thousands) Occupancy Rental Rates Occupancy Rental Rates
---- ----------- --------- -------- -------------- --------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Major Markets
Houston, TX............. 23 5,846 6.0% $ 231,409 92.8% $ 599 92.9% $ 604
Dallas, TX.............. 14 4,533 5.7% 218,496 95.1% 660 95.2% 662
Phoenix, AZ............. 10 3,460 5.2% 198,924 93.7% 689 92.6% 696
Orlando, FL............. 14 4,140 5.2% 198,328 94.5% 682 94.8% 688
San Antonio, TX......... 12 3,755 4.8% 185,640 93.8% 641 94.0% 645
Tampa, FL............... 10 3,370 4.0% 155,481 94.4% 675 95.4% 674
Fort Worth, TX.......... 11 3,561 3.8% 148,139 95.9% 607 96.0% 614
Raleigh, NC............. 9 2,951 3.8% 147,878 91.2% 704 90.3% 709
San Francisco, CA....... 4 980 3.6% 139,264 99.6% 1,568 99.4% 1,628
Charlotte, NC........... 10 2,710 3.5% 133,413 92.1% 677 92.8% 671
Columbus, OH............ 5 2,175 3.2% 121,905 95.0% 655 94.9% 658
Nashville, TN........... 8 2,220 3.1% 117,839 94.3% 650 95.2% 641
Richmond, VA............ 8 2,372 2.7% 105,085 96.3% 680 97.1% 690
Monterey Peninsula, CA.. 11 1,827 2.7% 103,845 94.1% 821 96.7% 838
South Florida........... 6 1,638 2.7% 103,158 92.2% 844 92.0% 851
Greensboro, NC.......... 8 2,123 2.7% 102,470 92.9% 630 92.8% 632
Memphis, TN............. 6 1,956 2.5% 97,789 95.0% 605 95.4% 623
Southern California..... 5 1,414 2.3% 89,152 95.0% 805 95.1% 828
Wilmington, NC.......... 6 1,869 2.3% 88,059 89.6% 646 91.5% 649
Baltimore, MD........... 8 1,788 2.2% 86,083 97.8% 726 98.3% 735
Atlanta, GA............. 6 1,426 1.8% 69,828 94.3% 714 95.4% 721
Columbia, SC............ 6 1,584 1.6% 61,375 92.9% 532 94.4% 511
Jacksonville, FL........ 3 1,157 1.5% 57,153 90.3% 650 90.3% 654
Hampton Roads, VA....... 6 1,437 1.4% 55,227 96.1% 628 96.0% 637
Sacramento, CA.......... 2 914 1.4% 53,054 97.6% 670 97.7% 681
Portland, OR............ 4 996 1.3% 48,939 93.3% 678 94.7% 680
East Lansing, MI........ 4 1,226 1.2% 47,734 92.4% 630 91.1% 641
Denver, CO.............. 2 876 1.2% 46,547 93.8% 682 93.4% 695
Fort Myers, FL.......... 2 616 1.2% 44,505 95.5% 777 94.3% 784
Fayetteville, NC........ 3 884 1.1% 41,273 93.5% 592 92.0% 596
Detroit, MI............. 4 744 1.1% 40,604 96.6% 701 96.9% 709
Washington, DC.......... 3 615 0.9% 35,912 98.5% 813 98.5% 825
Eastern Shore MD........ 4 784 0.9% 35,147 96.3% 716 98.1% 722
Seattle, WA............. 3 628 0.9% 33,372 96.1% 697 96.1% 703
Fredericksburg, VA...... 2 556 0.8% 30,768 97.1% 722 97.5% 731
Austin, TX.............. 2 542 0.7% 28,577 96.0% 650 96.4% 664
Indianapolis, IN........ 2 766 0.7% 26,392 91.5% 528 90.1% 531
Tacoma, WA.............. 2 429 0.7% 25,558 92.5% 718 95.6% 715
Daytona Beach, FL....... 3 549 0.6% 24,603 94.7% 672 94.2% 682
Little Rock, AR......... 2 512 0.6% 22,572 96.7% 596 98.0% 600
Jacksonville, NC........ 3 653 0.5% 19,464 94.4% 493 95.5% 499
Dover, DE............... 2 372 0.5% 17,794 96.4% 634 96.0% 640
Albuquerque, NM......... 2 426 0.4% 16,894 93.0% 522 94.1% 525
Tucson, AZ.............. 2 408 0.4% 13,501 92.9% 451 91.9% 454
Dayton, OH.............. 2 240 0.3% 12,413 94.1% 687 93.9% 694
Pullman, WA............. 2 334 0.3% 11,552 83.9% 828 78.0% 659
Roanoke, VA............. 3 454 0.3% 10,505 93.2% 478 93.6% 480
Other Single Asset
Markets................ 14 3,410 3.5% 133,950 94.1% 577 94.4% 580
--- ------ ----- ---------- ---- ------ ---- ------
Total Apartments....... 283 78,226 99.7% $3,837,570 94.1% $ 667 94.4% $ 672
Commercial.............. 4 N/A 0.3% 12,042 N/A N/A N/A N/A
--- ------ ----- ---------- ---- ------ ---- ------
Total.................. 287 78,226 100.0% $3,849,612 94.1% $ 667 94.4% $ 672
=== ====== ===== ========== ==== ====== ==== ======
</TABLE>
15
<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 its 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 activities.
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.
We consider our liquidity and ability to generate cash from operations,
dispositions and financings to be adequate to meet all of our cash flow needs
in the foreseeable future (see "Financing Activities").
A significant portion of the proceeds from the sale of communities has been
used to reduce debt and, to a lesser extent, to buy back preferred and common
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 by reinvesting the proceeds through a combination of
acquisitions, debt repayment and stock repurchases that minimizes the dilutive
impact by managing the overall yield on reinvested funds.
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 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 and
reinvest in targeted markets.
During the fourth quarter of 2000, United Dominion has debt maturities that
include a $140.9 million unsecured note payable and a $23.9 million secured
note payable. We expect to repay the maturing unsecured note with proceeds
from a $100 million term bank loan currently being arranged and borrowings
under our existing unsecured credit facility. The secured note payable is
expected to be repaid using proceeds from additional borrowings under an
existing revolving credit facility with the Federal National Mortgage
Association and borrowings under our unsecured credit facility. During 2001,
excluding amortizing debt balances, United Dominion has $58.5 million of
maturing debt which we anticipate repaying using proceeds from the sales of
apartment communities and/or borrowings under our unsecured credit facility.
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........................................................... $ 167,342
2001........................................................... 74,608
2002........................................................... 109,568
2003........................................................... 340,264(a)
2004........................................................... 303,514
Thereafter..................................................... 1,016,985
----------
Total........................................................ $2,012,281
==========
</TABLE>
--------
(a) Includes $154.5 million of unsecured bank debt (see discussion under
"Unsecured Credit Facilities" that follows).
16
<PAGE>
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.
Operating Activities
For the nine months ended September 30, 2000, United Dominion's cash flow
from operating activities of $158.4 million was relatively flat compared to
$163.1 million for the same period last year as the increase in operating
income from United Dominion's apartment portfolio was offset by the decreased
size of the portfolio due to the disposition program.
Investing Activities
For the nine months ended September 30, 2000, net cash provided by investing
activities was $89.5 million compared to net cash used in investing activities
of $86.1 million for the same period last year. Changes in the level of
investing activities from period to period reflect United Dominion's strategy
as it relates to acquisition, capital expenditure, development and disposition
programs, as well as the impact of the capital market environment on these
activities.
During the nine months ended September 30, 2000, $51.3 million of additional
asset sales were consummated compared to the same period last year. In
accordance with our plan to increase our financial flexibility, a majority of
the 2000 disposition proceeds were used for financing activities to reduce
debt and repurchase preferred shares, with a smaller portion reinvested in
acquisitions. In addition, there was a significant reduction in development
expenditures as we scaled back our internal development programs. As a result
of a development joint venture consummated during the second quarter, we
received $33.4 million as reimbursement of development costs related to the
projects United Dominion contributed (see discussion that follows under
"Development Joint Venture").
Disposition of Investments
As part of our overall strategy, during the first nine months of 2000,
United Dominion continued to selectively dispose of assets that no longer met
the operating and investment strategies of the company. 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.
For the nine months ended September 30, 2000, United Dominion sold 20
communities with 4,649 apartment homes, one commercial property and a parcel
of land for an aggregate sales price of approximately $174 million and
recognized gains for financial reporting purposes of $19.7 million.
We anticipate selling approximately $200 million of assets during 2000,
using the proceeds to improve our financial flexibility and opportunistically
reinvest a portion of the proceeds in acquisitions.
Real Estate under Development
Development activity has been focused in core markets that have strong
operations managers in place. During the nine month period, United Dominion
invested approximately $62.7 million on real estate projects.
The following projects are complete as of September 30, 2000:
<TABLE>
<CAPTION>
Development Cost
No. of Apt. Costs Per Date
Homes (In thousands) Home Completed % Leased
----------- -------------- ------- --------- --------
<S> <C> <C> <C> <C> <C>
New Communities:
Ashton at Waterford
Lakes
Orlando, FL........... 292 $21,400 $73,300 Feb-00 99.3%
Additional Phases:
Dominion Crown Pointe
II
Charlotte, NC......... 220 14,700 66,800 Jun-00 80.9%
--- ------- -------
Total................ 512 $36,100 $70,500
=== ======= =======
</TABLE>
17
<PAGE>
The following projects were under development at September 30, 2000:
<TABLE>
<CAPTION>
Cost to Est. Expected
No. of Apt. Completed Date Budgeted Cost Cost Completion
Homes Apt. Homes (In thousands) (In thousands) Per Home Date
----------- ---------- -------------- -------------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
New Communities:
Dominion Place at
Kildaire Farm
Raleigh, NC.......... 332 -- $ 7,000 $25,700 $77,400 1Q02
Red Stone Ranch
Austin, TX.......... 324 -- 4,500 21,700 67,000 4Q01
----- --- ------- ------- -------
Subtotal............. 656 -- 11,500 47,400 72,300
----- --- ------- ------- -------
Additional Phases:
Ashlar II
Fort Myers, FL....... 168 60 10,600 12,900 76,800 4Q00
Escalante II
San Antonio, TX...... 312 240 17,400 19,700 63,100 4Q00
Greensview II
Denver, CO........... 192 -- 1,700 16,700 87,000 4Q01
----- --- ------- ------- -------
Subtotal............. 672 300 29,700 49,300 73,400
----- --- ------- ------- -------
Total................ 1,328 300 $41,200 $96,700 $72,800
===== === ======= ======= =======
</TABLE>
In addition to the apartment homes under development at September 30, 2000,
United Dominion has land held for future development with a carrying value of
$32.9 million, a significant portion of which we expect to sell during 2001 as
these locations do not meet the investment criteria outlined as a result of
the refinement of our strategy. We anticipate funding approximately $50
million on internal development activity in 2001, which would include current
development activity and two additional second phases at existing communities.
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
$33 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, since the inception of the joint venture, United
Dominion has recognized fee income of approximately $1.7 million for general
contracting services provided by the company to the joint venture.
The following joint venture projects are complete as of September 30, 2000:
<TABLE>
<CAPTION>
Development Cost
No. of Apt. Costs Per Date
Homes (In thousands) Home Completed % Leased
----------- -------------- ------- --------- --------
<S> <C> <C> <C> <C> <C>
New Communities:
The Meridian
Dallas, TX............ 250 $16,100 $64,400 Jun-00 100.0%
--- ------- -------
Total................ 250 $16,100 $64,400
=== ======= =======
</TABLE>
18
<PAGE>
The following joint venture projects were under development at September 30,
2000:
<TABLE>
<CAPTION>
Cost to Est. Expected
No. of Apt. Completed Date Budgeted Cost Cost Completion
Homes Apt. Homes (In thousands) (In thousands) Per Home Date
----------- ---------- -------------- -------------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
New Communities:
Oaks at Weston
Raleigh, NC.......... 380 160 $22,800 $30,100 $79,200 2Q01
Sierra Canyon
Phoenix, AZ.......... 236 -- 11,000 16,700 70,800 1Q01
Parke 33
Lakeland, FL......... 264 112 15,500 17,400 65,900 1Q01
Mandolin
Dallas, TX........... 308 -- 6,700 22,100 71,800 3Q01
----- --- ------- ------- -------
Total............... 1,188 272 $56,000 $86,300 $72,600
===== === ======= ======= =======
</TABLE>
As part of our strategy refinement, we anticipate using joint ventures with
institutional partners to further our investments and portfolio strategy in
the future.
Acquisitions
During the nine months ended September 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 2001, in order to complete 1031 exchange requirements, we expect to
invest 25% to 30% of our disposition proceeds in our targeted markets. These
acquisitions will focus on a product where there is the opportunity to add
value by repositioning the property to be attractive to our target customer.
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 nine months of 2000, $29.3 million or $380 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 $18.2 million or $236
per home ($315 annualized). 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 $11.1 million or $144 per home ($192 annualized)
for the first nine 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 nine months ended September
30, 2000 was $244.7 million compared to net cash used by financing activities
of $76.3 million for the same period last year. For the nine months ended
September 30, 2000, as part of its plan to improve its balance sheet position,
United Dominion used 89% of the proceeds from its disposition program to pay
down secured and unsecured debt and to repurchase shares of common and
preferred stock. The remaining 11% 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
19
<PAGE>
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.
On September 28, 2000, United Dominion closed on the first part of a $56
million revolving credit facility (the "FNMA Credit Facility") with the
Federal National Mortgage Association. The $38.3 million initially borrowed
under the terms of the FNMA Credit Facility has an initial interest rate of
7.12%, which is fixed through April 1, 2001. The FNMA Credit Facility is for
an initial term of five years, bears interest at a floating rate which can be
fixed for periods of up to 270 days, and can be extended for an additional
five or ten years at United Dominion's discretion. The proceeds from the FNMA
Credit Facility were used to repay a $28.6 million REMIC financing that
matured during the third quarter and the remaining proceeds were used to repay
revolving bank debt. United Dominion plans to borrow the remaining $17.7
million during the fourth quarter to repay a maturing secured note.
For the nine months ended September 30, 2000, using proceeds from its
disposition program, United Dominion repurchased $42.5 million of certain of
its higher rate outstanding unsecured debt with a weighted average yield of
8.55%. In addition, the company repaid $46.0 million of mortgage debt and
$52.7 million of revolving bank debt. During the remainder of the year, United
Dominion expects to make further debt reductions with disposition proceeds.
During the first nine months of 2000, United Dominion paid distributions to
its common shareholders and unitholders in its operating partnerships
aggregating $90.0 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, $27.8 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 nine months ended September 30, 2000, United Dominion repurchased
121,840 Series A preferred shares at an average price of $23.21 per share and
381,211 Series B preferred shares at an average price of $18.77 per share.
Subsequent to September 30, 2000, United Dominion repurchased an additional
43,700 Series A preferred shares at an average price of $23.91 per share.
In 1999, the Board of Directors authorized the repurchase of up to 5.5
million common shares, or 5% of the total outstanding common shares using
disposition proceeds. As a result, during the nine-month period ended
September 30, 2000, the company repurchased 339,559 common shares at an
average price of $11.18 and repurchased 1,914 operating partnership units. As
of September 30, 2000, approximately 2.5 million common shares remain
available for purchase. Subsequent to September 30, 2000, the company
repurchased an additional 187,500 shares of common stock at an average price
of $9.64 per share.
United Dominion issued 864,141 shares of its common stock and received $7.5
million under its Dividend Reinvestment and Stock Purchase Plan during the
first nine months of 2000.
In November 2000, the company intends to borrow up to $100 million in the
form of an unsecured term loan from a consortium of banks. The term loan will
initially mature in May 2003 but may be extended at the company's option for
two additional twelve-month periods.
On November 14, 2000, Standard & Poor's Corporation ("S&P") revised its
ratings on certain issues of the company's outstanding debt to BBB- from BBB.
In addition, S&P revised its ratings on the company's Series A and Series B
preferred stock to BB+ from BBB-. These revisions will not trigger an increase
in the borrowing rate under the company's $375 million three-year unsecured
revolving credit facility that extends until August 2003 (see discussion under
"Unsecured Credit Facilities" that follows). In addition, management does not
believe that these revisions will prevent the company from completing the $100
million unsecured bank term loan currently being arranged or from accessing
the public or private markets for either secured or unsecured financing.
20
<PAGE>
Unsecured Credit Facilities
In June 2000, United Dominion closed on a $375 million three-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, the company pays 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 nine months ended September 30, 2000 (dollars in thousands):
<TABLE>
<CAPTION>
Three months Nine months
ended ended
September 30, September 30,
2000 2000
------------- -------------
<S> <C> <C>
Total line of credit............................... $375,000 $375,000
Borrowings outstanding at end of period............ $154,500 $154,500
Maximum borrowings outstanding during the period... $239,900 $308,000
Weighted average daily borrowings outstanding...... $197,220 $191,621
Weighted average daily nominal interest rate....... 7.60% 7.07%
Weighted average daily effective interest rate..... 7.71% 7.17%
</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 depreciable 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 generally accepted accounting
principles and is not necessarily indicative of cash available to fund cash
needs.
21
<PAGE>
The following table outlines United Dominion's FFO calculation for the three
and nine months ended September 30, 2000 (dollars in thousands):
<TABLE>
<CAPTION>
Three Months
Ended Nine Months Ended
September 30, September 30,
----------------- ------------------
2000 1999 2000 1999
-------- ------- -------- --------
<S> <C> <C> <C> <C>
Net income............................. $ 20,183 $19,876 $ 52,040 $ 80,759
Adjustments:
Distributions to preferred
shareholders........................ (9,179) (9,441) (27,808) (28,320)
Real estate depreciation, net of
outside partners' interest.......... 36,987 29,651 114,174 89,902
Gains on sales of investments, net of
outside partners' interest.......... (10,424) (48) (18,572) (32,454)
Minority interests of unitholders in
operating partnership............... 798 251 1,760 4,232
Real estate depreciation related to
unconsolidated entities............. 96 44 188 134
Extraordinary items--early
extinguishment of debt.............. 91 166 (267) (343)
Impairment loss on real estate and
investments......................... -- -- -- 7,100
-------- ------- -------- --------
Funds from operations--basic........... $ 38,552 $40,499 $121,515 $121,010
======== ======= ======== ========
Distributions to preferred
shareholders--Series D (Convertible).. 3,825 3,788 11,475 11,367
-------- ------- -------- --------
Funds from operations--diluted......... $ 42,377 $44,287 $132,990 $132,377
======== ======= ======== ========
Weighted average number of common share
and OP Units outstanding--basic....... 110,748 111,690 110,659 112,295
Weighted average number of common share
and OP Units outstanding--diluted..... 123,312 124,050 123,152 124,625
</TABLE>
Results of Operations
Net Income Available to Common Shareholders
Net income available to common shareholders was relatively flat for the
three months ended September 30, 2000 compared to the same period last year,
increasing $0.7 million. Additional property operating income growth generated
from the performance of the portfolio was offset by the decrease in the size
of the portfolio due to the disposition program. Net income available to
common shareholders decreased $25.9 million for the nine months ended
September 30, 2000 compared to the same period last year. For the nine months
ended September 30, 1999, United Dominion recognized $32.5 million of gains on
the sales of investments compared to $19.7 million for the comparable period
in 2000. In addition, real estate depreciation increased significantly for the
nine months ended September 30, 2000 as a result of the recapture of
depreciation expense on communities transferred from real estate held for
disposition to real estate held for investment during the second quarter of
2000 and, to a lesser extent, the impact of completed development communities
and capital expenditures (see Note 2 to the Consolidated Financial
Statements).
22
<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 total apartment portfolio for each of the
periods presented (dollars in thousands):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- ------------------------------
2000 1999 % Change 2000 1999 % Change
-------- -------- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Property rental income.. $154,324 $155,200 (0.6)% $ 462,746 $ 462,685 0.0 %
Property rental expenses
(excluding depreciation
and amortization)...... (60,682) (61,800) (1.8)% (180,295) (184,254) (2.1)%
-------- -------- ---- --------- --------- ----
Property operating
income................. $ 93,642 $ 93,400 0.3 % $ 282,451 $ 278,431 1.4 %
======== ======== ==== ========= ========= ====
Weighted average number
of homes............... 80,021 85,673 (6.6)% 81,221 86,590 (6.2)%
Physical occupancy...... 94.4% 93.2% 1.2 % 94.1% 92.5% 1.6 %
</TABLE>
For the period ended September 30, 2000, total apartment community property
operating income for the three month period remained relatively flat at $93.6
million compared to the same period last year due to a combination of higher
expenses in the third quarter of 2000 and the impact of the disposition
program. For the nine months ended September 30, 2000, the 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.
Same Communities
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 75,990 and 77,170 weighted average apartment homes for the three
and nine month comparative periods) provided 95% and 93% of its property
operating income for the nine months ended September 30, 2000 and 1999,
respectively.
For the quarter, property operating income increased 2.9% or $2.4 million
compared to the third quarter of 1999. The growth in property operating income
resulted from a $5.7 million or 4.1% increase in property rental income which
was driven by a $4.4 million or 3.0% increase in rental rates and an increase
in physical occupancy of $1.4 million or 1.0%. During the nine months ended
September 30, 2000, same community property operating income increased 4.3% or
$10.9 million compared to the same period last year. The growth in property
operating income resulted primarily from a $17.7 million or 4.3% increase in
property rental income which was driven by a $12.3 million or 2.7% increase in
average monthly rental rates coupled with $5.4 million or 1.4% increase in
physical occupancy. For both periods, the increased rental rates and occupancy
was partially offset by higher concessions and bad debt expense.
For the quarter ended September 30, 2000, property operating expenses at
these same communities increased $3.3 million or 6.1%. The increase in
property operating expenses was due to (i) a $0.9 million or 7.7% increase in
real estate taxes related to the $1.4 billion of real estate acquired in 1998
which have undergone reassessment, (ii) a $1.3 million or 73.5% increase in
property insurance costs attributable to a combination of our loss history
plus overall increases in market rates, and (iii) an unusually high turnover
rate during the third quarter which resulted in increased repair and
maintenance and turnover costs. For the nine month period, property operating
expenses increased $7.0 million or 4.3% compared to the same period in the
prior year for the same reasons as mentioned above.
We expect fourth quarter property operating income growth to be below our
year-to-date average of 4.3%. Higher insurance and real estate tax costs are
expected to continue in the fourth quarter; however, we expect turnover costs
to moderate.
23
<PAGE>
Non-Mature Communities
The remaining 5% of United Dominion's property operating income during the
first nine months of 2000 was generated from its non-mature communities (those
communities acquired or developed during 1999 and the first nine months of
2000). United Dominion's development communities which included 2,290
apartment homes constructed since January 1, 1999 provided an additional $2.3
million and $6.9 million of property operating income for the three and nine
months ended September 30, 2000. In addition, the six communities with 1,497
apartment homes acquired by United Dominion during 1999 and 2000 provided an
additional $1.2 million and $4.2 million of property operating income for the
three and nine months ended September 30, 2000, respectively.
The increase in property operating income provided by the same communities,
development communities and acquisition communities since September 30, 1999,
was offset by the loss of $5.8 million and $26.7 million of property operating
income due to the disposition of 12,092 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 September 30, 1999.
Real Estate Depreciation
Real estate depreciation increased $7.4 million or 25%, and $24.5 million or
27% for the three and nine months ended September 30, 2000, respectively, over
the same periods last year. This increase is primarily attributable to the
recapture of depreciation expense on communities transferred from real estate
held for disposition to real estate held for investment during the second
quarter of 2000 and, to a lesser extent, the impact of completed development
communities (see Note 2 to the Consolidated Financial Statements) and capital
expenditures.
Interest Expense
Interest expense increased $86,000 and $1.9 million for the three and nine
months ended September 30, 2000, respectively, over the same periods last
year. For the nine month period, the weighted average amount of debt
outstanding decreased 3.8% or $79.0 million from 1999 levels and the weighted
average interest rate increased from 7.4% in 1999 to 7.6% in 2000. For the
three month period, the weighted average amount of debt outstanding decreased
5.1% or $104.8 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 nine months
ended September 30, 2000, total interest capitalized was $876,000 and $2.8
million, respectively, compared to $1.1 million and $4.3 million,
respectively, for the comparable periods last year.
General and Administrative
During the three and nine months ended September 30, 2000, general and
administrative expenses increased $4.2 million or 137%, and $5.3 million or
56% 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.
Furthermore, during the third quarter, United Dominion recorded two
additional charges to general and administrative expense. First, United
Dominion recognized a charge of $2.7 million to settle a class action lawsuit
concerning water usage billing in Texas (see Note 8--Contingencies). The
settlement is subject to court approval. In addition, a $1.0 million charge
was recorded to recognize expenses under employment agreements for certain
executives of United Dominion as a result of decisions made during the
strategy refinement process.
24
<PAGE>
Gains on Sales of Investments
For the three and nine months ended September 30, 2000, United Dominion
recognized gains for financial reporting purposes of $11.3 million and $19.7
million, respectively, compared to $48,000 and $32.5 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 three and nine months ended September 30, 2000, United Dominion
recognized a $157,000 and $2.3 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.
Technology Initiatives
We are committed to technology initiatives that will allow us to improve our
operating efficiencies, gain marketing advantages and provide the electronic
services our customers demand. As such, we have several key technology
initiatives underway:
. We are developing a comprehensive eCommerce plan for United Dominion. As
part of this plan, we are creating a new corporate home page as well as
home pages for each of our communities. The community home pages will
allow us to reach our residents via the Internet to offer services which
provide additional revenue sources for the company.
. United Dominion has approximately a 15% interest in Realeum, Inc.
Realeum is currently developing an innovative on-site property
management and leasing automation system. We believe this system will
enable us to capture, review and analyze data in a manner that is not
currently available on the commercial market. In addition, we expect
this system to make the lease application process easier for residents
while providing operating efficiencies.
. We are working with CAIS Internet, a leading Internet access company, to
provide high-speed broadband Internet service to all of our communities.
Item 3. Quantitative and Qualitative Disclosure of Market Risk
United Dominion is exposed to interest rate changes associated with our
unsecured credit facility and other variable rate debt as well as refinancing
risk on our fixed-rate debt. Our involvement with derivative financial
instruments is limited to and we do not expect to use them for trading or
other speculative purposes. We occasionally use derivative instruments to
manage our exposure to interest rates.
See United Dominion's Form 10-K "Item 7A Qualitative and Quantitative
Disclosures About Market Risk" for a more complete discussion of our interest
rate sensitive assets and liabilities. As of September 30, 2000, there have
been no material changes in the fair value of assets and liabilities since
that date.
25
<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. 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.
In October 2000, United Dominion reached an agreement to settle a class
action lawsuit concerning water usage billing in Texas. The settlement was for
$2.7 million and is subject to court approval (see Note 8--Contingencies).
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.
26
<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
------- ----------- --------
<C> <S> <C>
2(a) Agreement and Plan of Exhibit 2(a) to the Company's Form S-4
Merger dated as of Registration Statement (Registration No.
December 19, 1997, 333-45305) filed with the Commission on
between the Company, ASR January 30, 1998.
Investment Corporation
and ASR Acquisition Sub,
Inc.
2(b) Agreement of Plan of Exhibit 2(c) to the Company's Form S-3
Merger dated as of Registration Statement (Registration No.
September 10, 1998, 333-64281) filed with the Commission on
between the Company and September 25, 1998.
American Apartment
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 Exhibit 2(d) to the Company's Form S-3
Purchase and Exchange Registration Statement (Registration No.
Agreement dated as of 333-64281) filed with the Commission on
September 10, 1998, September 25, 1998.
between the Company,
United Dominion 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 Exhibit 4(a)(ii) to the Company's Form S-3
Incorporation 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.
4(i)(b) Form of Certificate for Exhibit 1(e) to the Company's Form 8-A
Shares of 9 1/4% Series Registration Statement dated April 24,
A Cumulative Redeemable 1995.
Preferred Stock
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
Exhibit Description Location
------- ----------- --------
<C> <S> <C>
4(i)(c) Form of Certificate for Exhibit 1(e) to the Company's Form 8-A
Shares of 8.60% Series B Registration Statement dated June 11, 1997.
Cumulative Redeemable
Preferred Stock
4(i)(d) Rights Agreement dated Exhibit 1 to the Company's Form 8-A
as of January 27, 1998, Registration Statement dated February 4,
between the Company and 1998.
ChaseMellon Shareholder
Services, L.L.C., as
Rights Agent.
4(i)(d)(a) First Amended and Exhibit 4(i)(d)(a) to the Company's
Restated Rights Quarterly Report on Form 10-Q for the
Agreement dates as of quarter ended September 30, 1999.
September 14, 1999,
between the Company and
ChaseMellon Shareholders
Services, L.L.C., as
Rights Agent
4(i)(e) Form of Rights Exhibit 4(e) to the Company's Form 8-A
Certificate Registration Statement dated February 4,
1998.
4(ii)(e) Note Purchase Agreement Exhibit 6(c)(5) to the Company's Form 8-A
dated as of February 15, Registration Statement dated April 19,
1993, between the 1990.
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 Exhibit 4(ii)(f) to the Company's Quarterly
dated as of June 1, Report on Form 10-Q for the quarter ended
2000, between the June 30, 2000.
Company and certain
subsidiaries and a
syndicate of banks
represented by Bank of
America, N.A.
10(i) Employment Agreement Exhibit 10(i) to the Company's Annual
between the Company and Report on Form 10-K for the year ended
John P. McCann dated December 31, 1998.
December 8, 1998.
10(ii) Employment Agreement Exhibit 10(ii) to the Company's Annual
between the Company and Report on Form 10-K for the year ended
John S. Schneider dated December 31, 1998.
December 8, 1998.
10(iii) Employment Agreement Exhibit 10(iii) to the Company's Annual
between the Company and Report on Form 10-K for the year ended
Richard Giannotti dated December 31, 1998.
December 8, 1998.
10(iv) Employment Agreement Exhibit 10(iv) to the Company's Quarterly
between the Company and Report on Form 10-Q for the quarter ended
A. William Hamill dated September 30, 1999.
September 30, 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.
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
Exhibit Description Location
------- ----------- --------
<C> <S> <C>
10(vi) 1991 Stock Purchase and Exhibit 10(viii) to the Company's Quarterly
Loan Plan. Report on Form 10-Q for the quarter ended
March 31, 1997.
10(vii) Third Amended and Exhibit 10(vi) to the Company's Annual
Restated Agreement of Report of on Form 10-K for the year ended
Limited Partnership December 31, 1998.
United Dominion Realty,
L.P. Dated as of
December 7, 1998.
10(vii)(a) Subordination Agreement Exhibit 10(vi)(a) to the Company's
dated April 16, 1998, Quarterly Report on Form 10-Q for the
between the Company and quarter ended March 31, 1998.
United Dominion Realty,
L.P.
10(viii) Servicing and Purchase Exhibit 10(vii) to the Company's Quarterly
Agreement dated as of Report on Form 10-Q for the quarter ended
June 24, 1999, including June 30, 1999.
as an exhibit thereto
the Note and
Participation Agreement
forms.
10(ix) Description of Exhibit 10(ix) to the Company's Annual
Restricted Stock Awards Report on Form 10-K for the year ended
Program. December 31, 1999.
10(x) Description of United Exhibit 10(x) to the Company's Annual
Dominion Realty Trust, Report on Form 10-K for the year ended
Inc. Shareholder Value December 31, 1999.
Plan.
10(xi) Description of United Exhibit 10(xi) to the Company's Annual
Dominion Realty Trust, Report on Form 10-K for the year ended
Inc. Executive Deferral December 31, 1999.
Plan.
10(xii) Employment Agreement Exhibit 10(xii) to the Company's Annual
between the Company and Report on Form 10-K for the year ended
Curtis W. Carter dated December 31, 1999.
December 8, 1998.
10(xiii) Employment Agreement Exhibit 10(xiii) to the Company's Annual
between the Company and Report on Form 10-K for the year ended
Mark E. Wood dated March December 31, 1999.
21, 2000.
12 Computation of Ratio of Filed herewith.
Earnings to Fixed
Charges.
27 Financial Data Schedule Filed electronically with the Securities
and Exchange Commission.
</TABLE>
29
<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: November 14, 2000 /s/ A. William Hamill
_____________________________________
A. William Hamill
Executive Vice President and
Chief Financial Officer
Date: November 14, 2000 /s/ Robin R. Flanagan
_____________________________________
Robin R. Flanagan
Vice President and
Chief Accounting Officer
30
