<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported): January 31, 1997
CHARLES E. SMITH RESIDENTIAL REALTY L.P.
(Exact name of registrant as specified in its charter)
Commission File Number: 1934 Act File Number: 0-25968
Delaware 54-1681657
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2345 Crystal Drive
Crystal City, VA 22202
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number including area code: (703) 920-8500
<PAGE>
Item 5. Other Events
- -----------------------
On February 12, 1997, Charles E. Smith Residential Realty, Inc. ("the
Company"), the general partner of Charles E. Smith Residential Realty L.P. ("the
Operating Parntership") completed an offering of 2.7 million shares of Common
Stock of the Company. On March 13, 1997, the underwriter of the stock offering
exercised its over-allotment option and purchased an additional 405,000 shares
of common stock. The 3,105,000 shares (the "Offering") were issued at $28.375
per share totaling $82,937,000, net of underwriting discounts and other expenses
totaling $5,136,000. The Company contributed the net proceeds from the Offering
to the Operating Partnership in exchange for 3.1 million limited partnership
units. The Operating Partnership used the net proceeds from the contribution to
repay $72.1 million in borrowing under its line of credit and $9.0 million of
mortgage debt and to fund certain other costs incurred in connection with the
acquisitions discussed below.
On February 24,1997 the Operating Partnership acquired two luxury, high-rise
properties for approximately $113 million, primarily through the issuance of
equity in the form of 1,149,623 limited partnership units valued at $28.4125
per unit and the assumption of $79 million of debt. The two properties, Crystal
Plaza and Crystal Towers, comprise 1,452 apartment units and are located in
Crystal City, Arlington, Virginia. The two properties were acquired from two
partnerships in which Robert H. Smith, was a general and limited partner and
Robert P. Kogod, was a limited partner. Messrs. Smith and Kogod are Co-Chairmen
and Co-CEOs of the Company. These acquisitions consolidate the ownership by the
Company of all of the Smith-developed multifamily communities in Crystal City
and increased by 64.4% the number of apartment units that the Company owns in
Crystal City, Virginia.
On March 3, 1997 The Operating Partnership also acquired The Kenmore, a 376-
unit property in northwest Washington, D.C, for approximately $16.3 million
consisting of 510,700 limited partnership units of the Operating Partnership
valued at $14.5 million, the assumption of debt of $1.2 million and $.6 million
in related acquisition costs. The Operating Partnership also completed the
acquisition for approximately $9.5 million of 17 acres of land for the
development of an estimated 630-unit apartment community in Springfield,
Virginia.
A copy of the related press releases are attached as Exhibits 99.1 through
99.6.
Item 7. Financial Statements and Exhibits
- --------------------------------------------
(A) Pro forma financial information - beginning at page F-5.
(B) Exhibits
99.1 Press Release dated January 30, 1997 of the Company E-1
99.2 Press Release dated February 13, 1997 E-10
99.3 Press Release dated February 24, 1997 E-11
99.4 Press Release dated March 3, 1997 E-13
99.5 Press Release dated March 13, 1997 E-15
99.6 Consent of Independent Public Accountants E-16
2
<PAGE>
INDEX TO PRO FORMA INFORMATION AND FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
CHARLES E. SMITH RESIDENTIAL REALTY L.P.
Pro Forma (unaudited) Consolidated Balance Sheet F-5
as of December 31, 1996
Pro Forma (unaudited) Consolidated Statement of F-6
Operations for the year ended December 31, 1996
Notes and Management's Assumptions to Unaudited Pro Forma F-7
Consolidated Financial Information
ACQUISITION PROPERTIES
Report of Independent Public Accountants--Crystal Plaza F-10
Statements of Revenues and Certain Expenses of Crystal Plaza F-11
for the years ended December 31, 1996, 1995 and 1994
Report of Independent Public Accountants--Crystal Towers F-13
Statements of Revenues and Certain Expenses of Crystal Towers F-14
for the years ended December 31, 1996, 1995 and 1994
</TABLE>
F-1
<PAGE>
CHARLES E. SMITH RESIDENTIAL REALTY L.P.
PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
Charles E. Smith Residential Realty L.P. (the "Operating Partnership")
was organized in Delaware in 1993. The Operating Partnership had no operations
prior to the completion of the business combination which occurred on June 30,
1994. Charles E. Smith Residential Realty, Inc. (the "Company"), a Maryland
Corporation, was formed in June 1993 with the intent of qualifying as a real
estate investment trust ("REIT") under the Internal Revenue Code of 1986, as
amended. In connection with the business combination, the Company, on June 30,
1994, raised equity through an initial public offering and a private placement,
and issued debt in a series of concurrent private financing transactions. The
proceeds were used to acquire the 1.0% sole general partnership and a 41.7%
limited partnership interest in the Operating Partnership. The Operating
Partnership is the successor entity to CES Group (the "Predecessor").
Simultaneous with the initial public offering and private placement, the
entities that owned the properties and the related service businesses included
in the CES Group transferred the properties and related service businesses to
the Operating Partnership (or corporations in which the Operating Partnership
owns substantially all of the equity) and received in exchange, directly or
indirectly, units of limited partnership in the Operating Partnership. Assets
and liabilities related to interests contributed by the Predecessor Partners
have been recorded at their predecessor cost. The Company, through the Operating
Partnership and its subsidiaries, is engaged in the ownership, operation,
management, leasing, acquisition and development of real estate properties,
primarily residential multifamily properties.
On February 12, 1997, the Company completed a follow-on equity
offering of approximately $83 million, net of underwriting discounts and other
expenses totaling $5.1, through the issuance of 3.1 million shares of Common
Stock of the Company ("the Offering"), including the Underwriters' option for an
additional 405,000 which was exercised on March 13, 1997. Net proceeds of the
Offering were contributed by the Company to the Operating Partnership in
exchange for 3.1 million limited partnership units. The Operating Partnership
used the resulting net proceeds for repayment of a portion of the outstanding
indebtedness under certain of its lines of credit, certain mortgage debt and
acquisition costs. On February 24, 1997 the Operating Partnership acquired two
luxury, high-rise properties in Crystal City, Virginia, primarily through the
issuance of equity in the form of Operating Partnership Units and assumption of
debt.
. Crystal Plaza. On February 24, 1997 the Operating Partnership
--------------
acquired Crystal Plaza, a 540-unit luxury high-rise property located in Crystal
City, Virginia for a total cost of approximately $43.8 million, consisting of
Operating Partnership Units with a value of $9.4 million, the assumption of
$33.0 million of debt, other acquisition costs and a fair value adjustment to
debt. The property is currently subject to a 5.1% net profits interest in favor
of an unaffiliated third party. In the first year after acquisition, the
Operating Partnership expects to realize an unleveraged yield on capitalized
costs of 9.15% after estimated recurring capital expenditures. Messrs. Smith and
Kogod and family had a 17.19% interest in the partnership that owned Crystal
Plaza. The average monthly revenue per apartment unit for Crystal Plaza was
$1,105 in 1995 and $1,167 in 1996 and its average occupancy (calculated
beginning on the rent commencement date) was 98.8% in 1995 and 98.7% in 1996.
Crystal Plaza was developed and managed by the CES Group, the predecessor to the
Operating Partnership with the same quality standards as the properties in the
Operating Partnership portfolio.
F-2
<PAGE>
. Crystal Towers. On February 24, 1997, the Operating Partnership
---------------
also acquired Crystal Towers, a 912-unit luxury-rise property located in Crystal
City, Virginia for a total cost of approximately $69.3 million, including
consideration of Operating Partnership Units valued at $24.1 million, the
assumption of $46.0 million of debt, approximately $1.6 million in cash and
certain acquisition costs, reduced by a fair value adjustment to debt and the
transfer of cash reserves. In the first year after acquisition, the Operating
Partnership expects to realize an unleveraged yield on capitalized costs of
9.19% after estimated recurring capital expenditures. The average monthly
revenue per apartment unit for Crystal Towers was $1,002 in 1995 and $1,047 in
1996 and its average occupancy was 97.7% in 1995 and 97.6% in 1996. Crystal
Towers was developed and managed by the CES Group, with the same quality
standards as the properties in the Operating Partnership's portfolio. Messrs.
Smith and Kogod and family had a 4.86% ownership interest in the partnership
that had a 93% ownership interest in Crystal Towers, and the cash purchase of
the remaining 7% of the property was made pursuant to purchase rights assigned
(at no cost to the Operating Partnership) from a partnership controlled by
Messrs. Smith and Kogod.
. The Kenmore. The Operating Partnership also acquired on March 3,
------------
1997, the Kenmore, a 376-unit property located on Connecticut Avenue in
northwest Washington, D.C., for a total cost of approximately $16.3 million, at
an unleveraged yield after estimated recurring capital expenditures of 9.03%.
The Kenmore was acquired for a combination of equity in the form of 510,700
Operating Partnership Units valued at $14.5 million, the assumption of debt of
$1.2 million and $.6 million of acquisition costs. The Kenmore acquisition
increases the percentage of the Operating Partnership's multifamily residential
portfolio in northwest Washington, D.C. to 16.7%.
. Springfield, Virginia development site. ("Springfield Land") The
----------------------------------------
Operating Partnership purchased for $9.5 million approximately 17 acres of land
for the development of a 630-unit multi-phase low and mid-rise apartment
community in Springfield, Virginia. The site is strategically located adjacent
to a new Metrorail and commuter rail station and a regional shopping mall, and
offers access to the I-495 Capital Beltway and I-395, a major route into
Washington, D.C. Budgeted costs for this project are expected to be
approximately $59.1 million and construction commenced in June 1997.
F-3
<PAGE>
Since January 1, 1996 the Operating Partnership has acquired the
following Properties ("the 1996 Acquisitions"):
. Van Ness South. On July 30, 1996, the Operating Partnership acquired
---------------
this 625 apartment unit property located in northwest Washington, D.C. for $41.8
million. The cash acquisition was funded with proceeds from the Operating
Partnership's line of credit.
. 1841 Columbia Road. On August 2, 1996, the Operating Partnership
------------------
acquired this 8-story, 115 apartment unit property located in northwest
Washington, D.C. in exchange for 79,600 Operating Partnership Units valued at
$2.0 million, together with the assumption of $3.3 million of existing mortgage
debt. The mortgage debt is due on August 1, 1999 and bears interest at 9% per
year. The total value of the acquisition was approximately $5.3 million.
. Charter Oak. On March 15, 1996, the Operating Partnership acquired
------------
this 262 apartment unit complex located in Reston, Virginia, for 22,059
partnership units of the Operating Partnership which were valued at $0.5 million
together with a cash payment of $13.7 million. The cash acquisition was funded
with proceeds from the Operating Partnership's line of credit. The total value
of the acquisition was approximately $14.2 million.
. Governor Spotswood. On March 14, 1996, the Operating Partnership
-------------------
acquired this 47 apartment unit property located in Alexandria, Virginia for
$2.8 million. The cash acquisition was funded with proceeds from the Operating
Partnership's line of credit.
F-4
<PAGE>
CHARLES E. SMITH RESIDENTIAL REALTY L.P.
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following sets forth the unaudited pro forma consolidated balance
sheet as of December 31, 1996 and the unaudited pro forma consolidated
statement of operations for the year ended December 31, 1996 of Charles
E. Smith Residential Realty L.P. The unaudited pro forma information
is based on the financial statements of the Operating Partnership and
should be read in conjunction with the 1996 historical financial
statements and notes related thereto appearing in the Operating
Partnership's Form 10-K.
The unaudited pro forma consolidated financial statements as of December
31, 1996 and for the year ended December 31, 1996 are presented as if
the Offering (including the assets to be acquired) and the acquisitions
of the properties acquired during 1996 (the "1996 Acquisitions") all had
occurred by December 31, 1996 for the pro forma consolidated balance
sheet and at the beginning of the period for the pro forma consolidated
statement of operations for the year ended December 31, 1996. The assets
to be acquired include Crystal Plaza, Crystal Towers, The Kenmore and 17
acres of land for development located in Springfield, Virginia.
The pro forma consolidated financial statements are not necessarily
indicative of what the Operating Partnership's actual financial
position would have been or the actual results of operations of the
Operating Partnership would have been assuming the completion of the
Offering (including the assets to be acquired) and had the 1996
Acquisitions occurred by December 31, 1996 for the pro forma
consolidated balance sheet and at the beginning of the period for the
pro forma consolidated statement of operations, nor do the pro forma
consolidated financial statements purport to represent the Operating
Partnership's financial position or results of operations at any future
date or for any future period. Additionally, the pro forma consolidated
financial statements previously filed have been adjusted to reflect
actual events.
CHARLES E. SMITH RESIDENTIAL REALTY L.P.
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1996
(UNAUDITED) (IN THOUSANDS)
<TABLE>
<CAPTION>
Pro Forma Adjustments
--------------------------------------------------------------
Acquisitions
-------------------------------------------
Crystal Crystal The Other
ASSETS Historical Plaza (B) Towers (C) Kenmore (D) Adjustments
--------------- ------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Rental property, at predecessor cost, net $267,658
Rental property, acquired and developed, net 202,435 44,080 69,673 16,010 9,540 (E)
Cash and cash equivalents 3,898 (300) (375) (247)
(1,610)
Tenants' security deposits 3,521 150 245 50
Escrow funds 6,087 900
Investment in and advances to Property Service
Businesses and other 10,756
Deferred charges, net 17,646
Other assets 10,210
--------------
Total assets $522,211
==============
LIABILITIES AND EQUITY
Liabilities
Mortgage loans $416,808 34,400 44,532 1,274
Notes payable 129,736 9,540 (E)
Accounts payable and accrued expenses 9,525
Tenants' security deposits 3,521 150 245 50
--------------
Total liabilities 559,590
--------------
Interest of Other Operating Partnership Unitholders 351,873 9,380 24,056 14,489 439 (F)
--------------
Partners' Equity
General Partner's General and Limited
Partnership Interest (389,252) (439)(F)
--------------
Total liabilities and equity $522,211
==============
<CAPTION>
Supplemental
ASSETS Pro Forma Offering (A) Pro Forma
------------------- --------------- ------------------
<S> <C> <C> <C>
Rental property, at predecessor cost, net $267,658 $267,658
Rental property, acquired and developed, net 341,738 341,738
Cash and cash equivalents 1,366 72,166 1,366
(72,166)
Tenants' security deposits 3,966 3,966
Escrow funds 6,987 6,987
Investment in and advances to Property Service
Businesses and other 10,756 10,756
Deferred charges, net 17,646 17,646
Other assets 10,210 10,210
-------------- -------------
Total assets $660,327 $660,327
============== =============
LIABILITIES AND EQUITY
Liabilities
Mortgage loans $497,014 $497,014
Notes payable 139,276 (72,166) 67,110
Accounts payable and accrued expenses 9,525 9,525
Tenants' security deposits 3,966 3,966
-------------- -------------
Total liabilities 649,781 577,615
-------------- -------------
Interest of Other Operating Partnership Unitholders 400,237 400,237
-------------- -------------
Partners' Equity
General Partner's General and Limited
Partnership Interest (389,691) 72,166 (317,525)
-------------- -------------
Total liabilities and equity $660,327 $660,327
============== =============
</TABLE>
F-5
<PAGE>
CHARLES E. SMITH RESIDENTIAL REALTY L.P.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED) (IN THOUSANDS, EXCEPT FOR PER UNIT AMOUNTS)
<TABLE>
<CAPTION>
Pro Forma Adjustments
-----------------------------------------------------------------
Acquisitions
--------------------------------
Crystal Crystal The Other 1996
RENTAL PROPERTIES Historical Plaza Towers Kenmore Adjustments Acquisitions (A)
------------- --------- ---------- -------- ------------ -----------------
<S> <C> <C> <C> <C> <C> <C>
Revenues $166,283 7,557 11,464 3,058 $5,438
Expenses
Operating 75,779 3,162 4,871 1,540 (475)(B) 2,816
Depreciation and amortization 17,931 3,244 (C) 561
---------- ------ ------- ------ ------- ---------
Total expenses 93,710 3,162 4,871 1,540 2,769 3,377
PROPERTY SERVICE BUSINESSES
Equity in income of Property Service Businesses 7,846 (475)(B)
Corporate general and administrative expenses (3,025)
Interest income 1,029
Interest expense (43,606) (2,704) (D) (3,456) (D) (109) (D) (2,269)
---------- ------ ------- ------ ------- ----------
Net income of the Operating Partnership $ 34,817 1,691 3,137 1,409 (3,244) (208)
==========
Net income per unit $1.59
==========
Weighted average units outstanding 21,908
==========
</TABLE>
<TABLE>
<CAPTION>
Supplemental
RENTAL PROPERTIES Pro Forma Offering Pro Forma
----------------- ------------- -------------
<S> <C> <C> <C>
Revenues $193,800 $193,800
Expenses
Operating 87,693 87,693
Depreciation and amortization 21,736 21,736
--------------- ---------- -------------
Total expenses 109,429 - 109,429
PROPERTY SERVICE BUSINESSES
Equity in income of Property Service Businesses 7,371 7,371
Corporate general and administrative expenses (3,025) (3,025)
Interest income 1,029 1,029
Interest expense (52,144) 5,246 (D) (46,898)
--------------- ----------- -------------
Net income of the Operating Partnership $ 37,602 5,246 $ 42,848
=============== ============
Net income per unit $1.59 $1.63
=============== ============
Weighted average units outstanding 23,597 26,297
=============== ============
</TABLE>
F-6
<PAGE>
CHARLES E. SMITH RESIDENTIAL REALTY L.P.
NOTES AND MANAGEMENT'S ASSUMPTIONS TO UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL INFORMATION
(DOLLAR AMOUNTS IN THOUSANDS)
1. Basis of Presentation
---------------------
The unaudited Pro Forma Consolidated Balance Sheet as of December 31,
1996 and Pro Forma Consolidated Statement of Operations for the year ended
December 31, 1996 are based on the historical financial statements of the
Operating Partnership and its subsidiary partnerships.
The unaudited Pro Forma Consolidated Statement of Operations for the
year ended December 31, 1996 is presented as if the Offering (including the
assets to be acquired) and the 1996 Acquisitions all had occurred as of January
1, 1996. The unaudited Pro Forma Consolidated Balance Sheet as of December
31,1996 is presented as if the Offering (including the assets to be acquired)
and the 1996 Acquisitions had occurred by December 31, 1996. The assets to be
acquired include Crystal Plaza, Crystal Towers, The Kenmore and 17 acres of land
for development located in Springfield, Virginia. The unaudited pro forma
information should be read in conjunction with the historical financial
statements and notes related thereto appearing in the Operating Partnership's
1996 Form 10-K.
Preparation of the pro forma financial information was based on
assumptions considered appropriate by the Operating Partnership's management.
The pro forma financial information is unaudited and is not necessarily
indicative of the results which actually would have occurred if the Offering
(including the assets to be acquired) and the 1996 Acquisitions had been
consummated at the beginning of the period presented, nor does it purport to
represent the future financial position and results of operations for future
periods. In management's opinion, all adjustments necessary to reflect the
effects of these transactions have been made.
F-7
<PAGE>
<TABLE>
<CAPTION>
2. Adjustments to Pro Forma Consolidated Balance Sheet
(A) Issuance of 2,700,000 Operating Partnership Units to general partner assuming a unit price of $28.375
<S> <C> <C>
Proceeds from Offering $76,613
Costs associated with Offering (4,447)
----------
Net proceeds $72,166
==========
Paydown of Notes Payable (72,166)
----------
Total use of proceeds $72,166
==========
(B) Acquisition of Crystal Plaza
Purchase price of rental property $43,780
Mortgage debt (33,000)
Fair value adjustment to mortgage debt (1,400)
----------
Value of Operating Partnership Units issued 9,380
==========
Number of Operating Partnership Units issued (assuming a
$28.375 unit price) 330,573
==========
Purchase price of rental property $43,780
Acquisition costs 300
----------
Cost basis of rental property $44,080
==========
(C) Acquisition of Crystal Towers
Purchase price of rental property $69,298
Mortgage debt (46,002)
Fair value adjustment to mortgage debt 1,470
----------
24,766
Fannie Mae cash reserve 900
Cash paid for Tower ownership interest (1,610)
----------
Value of Operating Partnership Units issued $24,056
==========
Number of Operating Partnership Units issued (assuming a
$28.375 unit price) 847,789
==========
Purchase price of rental property $69,298
Acquisition costs 375
----------
Cost basis of rental property $69,673
==========
(D) Acquisition of The Kenmore
Purchase price of rental property $15,763
Mortgage debt (1,174)
Fair value adjustment to mortgage debt (100)
----------
Value of Operating Partnership Units issued $14,489
==========
Number of Operating Partnership Units issued (assuming a
$28.375 unit price) 510,633
==========
Purchase price of rental property $15,763
Acquisition costs 247
----------
Cost basis of rental property $16,010
==========
</TABLE>
(E) Acquisition of 17 acres of land located in Springfield, Virginia
("Springfield Land") for $9,540. Acquisition is assumed to be funded with
proceeds from the Operating Partnership's line of credit.
(F) To adjust the redemption value of Other Operating Partnership Unitholders'
interest for the issuance of Operating Partnership Units in connection
with the acquisitions of Crystal Towers, Crystal Plaza and The Kenmore.
F-8
<PAGE>
3. Adjustments to Pro Forma Consolidated Statements of Operations
(A) During 1996 the Operating Partnership acquired Van Ness South Apartments
(on July 30, 1996), 1841 Columbia Road Apartments (on August 2, 1996),
Charter Oak Apartments (on March 15, 1996), and Governor Spotswood
Apartments (on March 14, 1996). The adjustments reflect the operations
of the four acquisitions as if the purchases occurred on January 1, 1996
for the year ended December 31, 1996. Depreciation and amortization has
been adjusted based on the allocated purchase price of the assets
acquired and an estimated useful life of 40 years. Interest expense has
been adjusted based on the additional financing incurred as a result of
the acquisitions, using a weighted average borrowing rate of 7.27% for
the year ended December 31, 1996.
(B) Operating expenses have been adjusted to eliminate intercompany
management fees related to the properties acquired.
(C) Depreciation and amortization has been adjusted based on the allocated
purchase price of the assets to be acquired and an estimated useful life
of 40 years, as if the purchases occurred on January 1, 1996 for the
year ended December 31, 1996.
(D) Adjustments to interest expense are as follows:
<TABLE>
<CAPTION>
-------------------
Year Ended
December 31,
1996
-------------------
<S> <C>
Increase in interest expense for Crystal Plaza
(assuming a weighted average
interest rate of 7.27% for the year ended
December 31, 1996) $ (2,704)
Increase in interest expense for Crystal Towers
mortgage loan (assuming weighted average
interest rate of 7.27% for the year ended
December 31, 1996) (3,456)
Increase in interest expense for The Kenmore
(assuming a weighted average
interest rate of 7.27% for the year ended
December 31, 1996) (109)
Decrease in interest expense for pay down
of notes payable with proceeds from Offering
(assuming a weighted average interest rate of
7.27% for the year ended December 31, 1996) 5,246
</TABLE>
Interest expense related to draws on the line-of-credit to purchase the
Springfield Land were $696 for the year ended December 31, 1996. This
amount is capitalized into the cost basis of the property in accordance
with generally accepted accounting principles.
F-9
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Charles E. Smith Residential Realty L.P.
We have audited the accompanying statements of revenues and certain expenses of
Crystal Plaza ("the Property") for the years ended December 31, 1996, 1995, and
1994. These financial statements are the responsibility of the Property's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The accompanying statements of revenues and certain expenses were prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in the Form 8-K/A of Charles E. Smith
Residential Realty L.P. Material amounts, described in Note 1 to the
statements of revenue and certain expenses, that would not be comparable to
those resulting from the proposed future operations of the Property are excluded
and the statements are not intended to be a complete presentation of the
revenues and expenses of this property.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the revenues and certain expenses of Crystal Plaza for
the years ended December 31, 1996, 1995, and 1994 in conformity with generally
accepted accounting principles.
/s/ Arthur Andersen LLP
Washington, D.C.,
May 9, 1997
F-10
<PAGE>
<TABLE>
<CAPTION>
CRYSTAL PLAZA
-------------
STATEMENTS OF REVENUES AND CERTAIN EXPENSES
-------------------------------------------
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
REVENUES:
Rental income $ 7,556,972 $ 7,166,685 $ 6,933,230
----------- ----------- -----------
CERTAIN EXPENSES:
Payroll and related costs 648,316 599,756 572,609
Utilities 619,741 607,316 574,908
Repairs and maintenance 908,218 895,099 787,775
Real estate taxes 389,562 339,000 323,045
Leasing and management fees 359,748 337,915 318,013
Other expenses 236,508 236,685 223,416
----------- ----------- -----------
Total certain expenses 3,162,093 3,015,771 2,799,766
----------- ----------- -----------
REVENUES IN EXCESS OF CERTAIN EXPENSES $ 4,394,879 $ 4,150,914 $ 4,133,464
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-11
<PAGE>
CRYSTAL PLAZA
-------------
NOTES TO STATEMENTS OF REVENUES AND CERTAIN EXPENSES
----------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
----------------------------------------------------
1. BASIS OF PRESENTATION:
----------------------
The accompanying statements of revenues and certain expenses relate to the
operations of Crystal Plaza apartments (the "Property") which is owned by
Plaza Associates Limited Partnership ("Plaza"). The Property consists of two
apartment buildings containing 540 residential units and 9 retail units,
located in Arlington, Virginia. The Property is to be acquired by Charles E.
Smith Residential Realty L.P. (the "Operating Partnership").
The accompanying statements have been prepared for the purpose of complying
with Rule 3-14 of Regulation S-X of the Securities and Exchange Commission
and thus, exclude certain expenses, such as interest expense, depreciation
and amortization, certain professional fees and other costs not related to
the future operations of the Property. Management is not aware of any
material factors relating to the Property which would cause the reported
financial information not to be indicative of future operating results.
Significant Accounting Policies
-------------------------------
The accompanying statements were prepared on the accrual basis of accounting.
Rental income attributable to residential leases is recognized when due from
tenants. The Property requires tenants to initially execute a one-year
lease. At the expiration of the lease term, the lease converts to a month-
to-month basis.
2. RELATED PARTY TRANSACTIONS:
---------------------------
Smith Realty Company, an operating subsidiary of the Operating Partnership,
provided management services to the Property. Management fees, computed based
on a percentage of rents collected, were paid to Smith Realty Company for
management services. Prior to June 30, 1994, these services were provided by
Charles E. Smith Management Inc., an affiliated entity.
Expenses of the Property also include payments to Consolidated Engineering
Services, an operating subsidiary of the Operating Partnership, related to
engineering, repair and maintenance services. Prior to June 30, 1994, these
services were provided by Consolidated Engineering Services, Inc., an
affiliated entity, and Charles E. Smith Service Company, Inc., an affiliated
entity.
The Property paid environmental computer service fees to an affiliate.
Charles E. Smith Insurance Agency, Inc., an operating subsidiary of the
Operating Partnership, received premiums and commissions from the Property
related to insurance.
Amounts paid or accrued for the related time periods are as follows:
<TABLE>
<CAPTION>
Year Year Year
Ended Ended Ended
December 31, December 31, December 31,
1996 1995 1994
-------------- -------------- --------------
<S> <C> <C> <C>
Smith Realty Company $360,000 $338,000 $318,000
Consolidated Engineering Services 149,000 0 57,000
Environmental Computer Services 8,000 7,000 7,000
Charles E. Smith Insurance Agency, Inc. 55,000 56,000 50,000
</TABLE>
Certain expenses are allocated to the Property by an affiliate. These costs
include advertising, marketing and proposal costs, and certain common area
service costs.
F-12
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Charles E. Smith Residential Realty L.P.
We have audited the accompanying statements of revenues and certain expenses of
Crystal Towers ("the Property") for the years ended December 31, 1996, 1995, and
1994. These financial statements are the responsibility of the Property's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The accompanying statements of revenues and certain expenses were prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in the Form 8-K/A of Charles E. Smith
Residential Realty L.P. Material amounts, described in Note 1 to the statements
of revenue and certain expenses, that would not be comparable to those resulting
from the proposed future operations of the Property are excluded and the
statements are not intended to be a complete presentation of the revenues and
expenses of this property.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the revenues and certain expenses of Crystal Towers for
the years ended December 31, 1996, 1995, and 1994 in conformity with generally
accepted accounting principles.
/s/ Arthur Andersen LLP
Washington, D.C.,
May 9, 1997
F-13
<PAGE>
CRYSTAL TOWERS
--------------
STATEMENTS OF REVENUES AND CERTAIN EXPENSES
-------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
REVENUES
Rental income $11,463,762 $10,961,786 $10,606,841
----------- ----------- -----------
CERTAIN EXPENSES
Payroll and related costs 1,091,477 1,007,284 924,210
Utilities 980,005 966,207 944,954
Repairs and maintenance 1,026,243 1,141,286 917,536
Real estate taxes 671,464 658,029 554,575
Leasing and management fees 568,770 521,418 494,236
Other expenses 532,741 471,124 402,794
----------- ----------- -----------
Total Expenses 4,870,700 4,765,348 4,238,305
----------- ----------- -----------
REVENUES IN EXCESS OF CERTAIN EXPENSES $ 6,593,062 $ 6,196,438 $ 6,368,536
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-14
<PAGE>
CRYSTAL TOWERS
--------------
NOTES TO STATEMENTS OF REVENUES AND CERTAIN EXPENSES
----------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
----------------------------------------------------
1. BASIS OF PRESENTATION:
----------------------
The accompanying statements of revenues and certain expenses relate to the
operations of Crystal Towers apartments (the "Property") which is owned by
Tower Associates Limited Partnership ("Tower"). The Property consists of two
apartment buildings containing 912 residential units and 9 retail units,
located in Arlington, Virginia. The Property is to be acquired by Charles E.
Smith Residential Realty L.P. (the "Operating Partnership").
The accompanying statements have been prepared for the purpose of complying
with Rule 3-14 of Regulation S-X of the Securities and Exchange Commission
and thus, exclude certain expenses, such as interest expense, depreciation
and amortization, certain professional fees and other costs not related to
the future operations of the Property. Management is not aware of any
material factors relating to the Property which would cause the reported
financial information not to be indicative of future operating results.
Significant Accounting Policies
-------------------------------
The accompanying statements were prepared on the accrual basis of accounting.
Rental income attributable to residential leases is recognized when due from
tenants. The Property requires tenants to initially execute a one-year
lease. At the expiration of the lease term, the lease converts to a month-
to-month basis.
2. RELATED PARTY TRANSACTIONS:
---------------------------
Smith Realty Company, an operating subsidiary of the Operating Partnership,
provided management services to the Property. Management fees, computed based
on a percentage of rents collected, were paid to Smith Realty Company for
management services. Prior to June 30, 1994, these services were provided by
Charles E. Smith Management, Inc., an affiliated entity.
Expenses of the Property include payments to Smith Management Construction,
Inc., an operating subsidiary of the Operating Partnership, for construction
management services related to certain building repairs and improvements.
Prior to June 30, 1994, these services were provided by Charles E. Smith
Managment Construction Company, an affiliated entity.
Expenses of the Property also include payments to Consoldated Engineering
Services, an operating subsidiary of the Company, related to engineering,
repair and maintenance services. Prior to June 30, 1994, these services were
provided by Consolidated Engineering Services, Inc., an affiliated entity,
and Charles E. Smith Service Company, Inc., an affiliated entity.
The Property paid environmental computer service fees to an affiliate.
Charles E. Smith Insurance Agency, Inc., an operating subsidiary of the
Operating Partnership, received premiums and commissions from the Property
related to insurance.
Amounts paid or accrued for the related time periods are as follows:
<TABLE>
<CAPTION>
Year Year Year
Ended Ended Ended
December 31, December 31, December 31,
1996 1995 1994
-------------- -------------- --------------
<S> <C> <C> <C>
Smith Realty Company $569,000 $521,000 $494,000
Smith Management Construction 1,000 0 61,000
Consolidated Engineering Services 150,000 88,000 63,000
Environmental Computer Services 12,000 10,000 10,000
Charles E. Smith Insurance Agency, Inc. 81,000 91,000 101,000
</TABLE>
Certain expenses are allocated to the Property by an affiliate. These costs
include advertising, marketing and proposal costs, and certain common area
service costs.
F-15
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, hereunto duly authorized, on the
22nd day of August 1997.
CHARLES E. SMITH RESIDENTIAL REALTY L.P.
BY: CHARLES E. SMITH RESIDENTIAL REALTY, INC.,
ITS GENERAL PARTNER
By: /s/ Charles R. Hagen
--------------------
Charles R. Hagen
Vice President and
Chief Accounting Officer
of Charles E. Smith
Residential Realty, Inc.
(on behalf of the Registrant
and as Chief Accounting Officer)
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibit Page
- ----------- ------- ----
<S> <C> <C>
99.1 Press Release dated January 30, 1997 of the Company E-1
99.2 Press Release dated February 13, 1997 E-10
99.3 Press Release dated February 24, 1997 E-11
99.4 Press Release dated March 3, 1997 E-13
99.5 Press Release dated March 13, 1997 E-15
99.6 Consent of Independent Public Accountants E-16
</TABLE>
<PAGE>
Exhibit 99.1
NEWS RELEASE
[LOGO OF CHARLES E. SMITH
Charles E. Smith Residential Realty, Inc. RESIDENTIAL REALTY, INC.
APPEARS HERE]
FOR IMMEDIATE RELEASE Contact: Ernest A. Gerardi, Jr.
- --------------------- (703) 769-1000
January 30, 1997
M. Bruce Snyder
(703) 769-1029
Charles E. Smith Residential Realty's 1996 FFO Up 10%
Announces Follow-on Equity Offering to Fund Pending Acquisitions
ARLINGTON, VA - Charles E. Smith Residential Realty, Inc. (NYSE: SRW), the
largest publicly traded multifamily real estate investment trust focused on the
greater Washington, D.C. region, announced today that Funds From Operations
(FFO) for 1996 increased 10% over 1995 and that the Company's Board of Directors
approved a follow-on common equity offering, of at least 2.7 million shares, to
fund two acquisitions presently under contract.
The Board also approved the acquisition of the properties under contract,
two luxury high-rise apartment communities, for approximately $113 million.
These acquisitions will be purchased with a combination of Operating Partnership
Units and the assumption of debt, which will be partially repaid with the
follow-on offering proceeds. The economic impact from the two acquisitions will
be immediately accretive to FFO and, along with the equity offering and issuance
of Operating Partnership Units, will lower the Company's overall debt to total
market capitalization ratio from 46% to approximately 42%. The two properties,
Crystal Plaza and Crystal Towers, comprise 1,452 apartment units and are located
in Crystal City, Virginia. Underwriters for the offering are Goldman, Sachs &
Co.; Donaldson, Lufkin & Jenrette Securities Corporation; Prudential Securities
Incorporated; and Legg Mason Wood Walker, Inc.
(more)
E-1
<PAGE>
Charles E. Smith Residential News Release/January 30, 1997 Page 2
The Company's FFO for 1996 was $23.9 million, or $2.41 per share, a 10.0%
increase over the Company's FFO per share for 1995. For the quarter ended
December 31, 1996, FFO was $7.1 million, or $0.70 per share, up 11.1% over the
fourth quarter of 1995. FFO is widely considered to be the most appropriate
measure of a real estate investment trust's operating performance.
Ernest A. Gerardi, Jr., President of Charles E. Smith Residential Realty,
Inc., stated that "We are quite pleased with our continued solid growth in 1996,
which exceeded analysts expectations. This performance is the result of a
combination of our acquisition and development programs, together with
operational initiatives that will continue to fuel growth in the years ahead.
The implementation of these initiatives positions us well for 1997 and beyond."
The Company is structured as an umbrella partnership real estate investment
trust, or UPREIT. All property ownership and business operations take place in
an operating partnership and its subsidiaries and affiliates. The Company
currently owns approximately 45% of the Operating Partnership and is its sole
general partner.
The Operating Partnership's total revenue from rental properties was
$166.3 million for 1996, an increase of 14.7% over 1995. For the fourth quarter
of 1996, revenue from rental properties increased 12.0% over the same period
last year.
The Operating Partnership's 1996 income from rental properties before
depreciation increased 14.2% from $79.3 million to $90.5 million. Income from
rental properties before depreciation for the fourth quarter of 1996 increased
12.7% to $24.3 million. The Property Service Businesses contributed income
before depreciation of $8.9 million in 1996 and $3.2
(more)
E-2
<PAGE>
Charles E. Smith Residential News Release/January 30, 1997 Page 3
million in the fourth quarter of 1996. For the twelve months ended
December 31, 1996, the Property Service Businesses provided 8.9% of the
Operating Partnership's total income before depreciation.
The Operating Partnership's earnings before interest, taxes,
depreciation, and amortization (EBITDA) increased 12.8% to $97.8 million in
1996. For the fourth quarter of 1996, EBITDA increased 10.7% to $27.2 million.
The Company's net income for 1996 was $11.0 million, or $1.11 per share,
an increase of 37.0% over 1995. Net income for the fourth quarter was $5.0
million, or $0.49 per share, up 40.0% over the fourth quarter of 1995. Net
income in all periods reflect charges for quarterly distributions paid to other
operating partnership unitholders in excess of net income attributed to these
unitholders, because these unitholders' partnership interests are carried at
zero on the balance sheet. Such charges were $4.8 million in 1996 and $0.1
million for the fourth quarter, and it is important to note that they have no
effect on the Company's FFO.
The Company will hold a teleconference on Friday, January 31 at 11:00am
EST to review the information reported in this release. To participate, please
call 1-800-759-6338 shortly before 11:00am and identify yourself as a
participant in the Charles E. Smith Residential Realty teleconference.
(more)
E-3
<PAGE>
Charles E. Smith Residential News Release/January 30, 1997 Page 4
Charles E. Smith Residential Realty, Inc. is a self-managed real estate
investment trust that is the largest publicly traded multifamily real estate
company focused on the greater Washington, D.C. region. The Company and its
subsidiaries and affiliates own, acquire, develop, and manage multifamily
residential, as well as provide related real estate services to other property
owners in the Washington region.
The total market capitalization of Charles E. Smith Residential Realty was
approximately $1.2 billion on December 31, 1996 based on a stock price of
$29.25.
This news release contains forward-looking statements regarding the
company's outlook, which are based on assumptions about economic and market
conditions, competitive dynamics and other factors subject to a number of risks
and uncertainties, some of which are discussed in the Company's filings with the
Securities and Exchange Commission. Actual results could differ materially.
(more)
E-4
<PAGE>
Page 5
CHARLES E. SMITH RESIDENTIAL REALTY, INC.
Financial Highlights
For the Three and Twelve Months Ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
3 Months Ended December 31, 12 Months Ended December 31,
--------------------------------- ---------------------------------
% Change % Change
From From
(dollars in thousands except per share data) 1996 1995 Last Year 1996 1995 Last Year
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Funds From Operations of the Operating Partnership $15,489 $13,691 13.1% $52,748 $47,311 11.5%
Funds From Operations - attributable to the Company 7,050 6,090 15.8% 23,869 20,391 17.1%
Per Share (a) $0.70 $0.63 11.1% $2.41 $2.19 10.0%
Net Income of the Operating Partnership $11,034 $9,348 18.0% $34,817 $31,053 12.1%
Net Income - attributable to the Company 4,967 3,378 47.0% 10,977 7,529 45.8%
Per Share $0.49 $0.35 40.0% $1.11 $0.81 37.0%
Dividends Declared per Share $0.505 $0.490 3.1% $1.990 $1.930 3.1%
EBITDA of the Operating Partnership $27,174 $24,543 10.7% $97,769 $86,657 12.8%
</TABLE>
- --------------------------------------------------------------------------------
Debt Composition as of 12/31/96
<TABLE>
<CAPTION>
Dollars in % of
Thousands Total
--------- -----
<S> <C> <C>
Long Term Mortgage Debt (maturities greater than 1 year)
Fixed Rate (rate: 8.05%) $399,563 73.1%
Variable Rate 0 0.0%
Short Term Mortgage Debt (maturities less than 1 year)
Fixed Rate 0 0.0%
Variable Rate (rate: 7.20%) 17,245 3.2%
$100M Acquisition Line of Credit (rate: 7.16%) 82,050 15.0%
$83M Acquisition Line of Credit (rate: 7.27%) 30,000 5.5%
Construction Loan (rate: 7.32%) 17,686 3.2%
----------- -----------
Total Debt $546,544 100.0%
=========== ===========
Average Interest Rate: 7.82% Average Years to Maturity: 6.0
</TABLE>
[MATURITY SCHEDULE BAR GRAPH APPEARS HERE]
1997 116,981
1999 113,384
2001 125,214
2004 30,000
2009 148,095
2020 12,870
* As of 12/31/96, the Company's Debt to Total Market Capitalization Ratio was
45.9%, based on 9,969,607 shares and 12,029,857 partnership units
outstanding at a stock price of $29.25.
* The Company's Debt Coverage Ratio for the 3 months ended 12/31/96 was
2.53:1.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(a) Weighted average shares, partnership units, and equivalents outstanding
during the periods were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Shares and equivalents 10,062,702 9,707,047 9,913,308 9,310,929
Partnership Units 11,960,203 12,115,528 11,994,324 12,292,066
------------ ------------ ------------ ------------
Total Shares and Partnership Units 22,022,905 21,822,575 21,907,632 21,602,995
============ ============ ============ ============
</TABLE>
(more)
E-5
<PAGE>
Page 6
CHARLES E. SMITH RESIDENTIAL REALTY, INC.
Operating Summary
For the Three and Twelve Months Ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
3 Months Ended December 31, 12 Months Ended December 31,
------------------------------------- -----------------------------------
% Change % Change
From From
(dollars in thousands except per share data) 1996 1995 Last Year 1996 1995 Last Year
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RENTAL PROPERTIES (a)
Revenue $43,469 $38,813 12.0% $166,283 $144,909 14.7%
Expenses (excluding depreciation) (19,164) (17,238) 11.2% (75,779) (65,627) 15.5%
----------- ---------- ---------- ------------ ----------- --------
Income Before Depreciation 24,305 21,575 12.7% 90,504 79,282 14.2%
PROPERTY SERVICE BUSINESSES
Engineering and Technical Services 1,126 1,044 7.9% 3,663 3,485 5.1%
Property Management Services 392 692 -43.4% 2,296 2,008 14.3%
Financing Services 1,041 805 29.3% 1,953 1,579 23.7%
Interior Construction and Renovation Services 665 511 30.1% 980 1,106 -11.4%
----------- ---------- ---------- ------------ ----------- --------
Income of the PSBs Before Depreciation 3,224 3,052 5.6% 8,892 8,178 8.7%
----------- ---------- ---------- ------------ ----------- --------
Total Income Before Depreciation 27,529 24,627 11.8% 99,396 87,460 13.6%
OTHER INCOME AND EXPENSES
Interest Income 303 425 -28.7% 1,029 1,424 -27.7%
Corporate General and Administrative Expenses (818) (808) 1.2% (3,025) (2,842) 6.4%
Interest Expense (including amort. of financing costs) (11,358) (10,228) 11.0% (43,606) (37,421) 16.5%
Depreciation of Real Property (4,455) (4,343) 2.6% (17,931) (16,258) 10.3%
Depreciation and Amortization - PSBs (167) (325) -48.6% (1,046) (1,310) -20.2%
----------- ---------- ---------- ------------ ----------- --------
NET INCOME OF THE OPERATING PARTNERSHIP 11,034 9,348 18.0% 34,817 31,053 12.1%
Interest of Other Operating Partnership Unitholders (6,015) (5,189) 15.9% (19,062) (17,648) 8.0%
Distributions in Excess of Earnings Allocated to
Other Operating Partnership Unitholders (52) (781) -93.3% (4,778) (5,876) -18.7%
----------- ---------- ---------- ------------ ----------- --------
Attributable to the Company $4,967 $3,378 47.0% $10,977 $7,529 45.8%
=========== ========== ========== ============ =========== ========
Net Income per Share (b) $0.49 $0.35 40.0% $1.11 $0.81 37.0%
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCOME OF THE OPERATING PARTNERSHIP 11,034 $9,348 18.0% $34,817 $31,053 12.1%
Add: Depreciation of Real Property 4,455 4,343 2.6% 17,931 16,258 10.3%
----------- ---------- ---------- ------------ ----------- --------
FFO OF THE OPERATING PARTNERSHIP 15,489 13,691 13.1% 52,748 47,311 11.5%
Interest of Other Operating Partnership Unitholders (8,439) (7,601) 11.0% (28,879) (26,920) 7.3%
----------- ---------- ---------- ------------ ----------- --------
Attributable to the Company $7,050 $6,090 15.8% $23,869 $20,391 17.1%
=========== ========== ========== ============ =========== ========
Funds From Operations per Share (b) $0.70 $0.63 11.1% $2.41 $2.19 10.0%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Details are shown on the following page.
(b) Weighted average shares, partnership units, and equivalents outstanding
during the periods were as follows:
<TABLE>
<S> <C> <C> <C> <C>
Shares and equivalents 10,062,702 9,707,047 9,913,308 9,310,929
Partnership Units 11,960,203 12,115,528 11,994,324 12,292,066
------------ ----------- ------------ ------------
Total Shares and Partnership Units 22,022,905 21,822,575 21,907,632 21,602,995
============ =========== ============ ============
</TABLE>
(more)
E-6
<PAGE>
Page 7
CHARLES E. SMITH RESIDENTIAL REALTY, INC.
Rental Property Details
For the Three and Twelve Months Ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
3 Months Ended December 31, 12 Months Ended December 31,
------------------------------------- ------------------------------------------
% Change % Change
From From
(dollars in thousands) 1996 1995 Last Year 1996 1995 Last Year
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CORE RESIDENTIAL PORTFOLIO (a)
Revenue $33,266 $32,289 3.0% $132,111 $127,745 3.4%
Expenses (excluding depreciation) (15,082) (14,625) 3.1% (61,248) (58,566) 4.6%
----------- ----------- ----------- ----------- ----------- -----------
Income Before Depreciation 18,184 17,664 2.9% 70,863 69,179 2.4%
RETAIL PORTFOLIO
Revenue 2,619 2,692 -2.7% 10,176 10,418 -2.3%
Expenses (excluding depreciation) (708) (895) -20.9% (3,567) (3,447) 3.5%
----------- ----------- ----------- ----------- ----------- -----------
Income Before Depreciation 1,911 1,797 6.3% 6,609 6,971 -5.2%
SUB-TOTAL CORE PORTFOLIO
Revenue 35,885 34,981 2.6% 142,287 138,163 3.0%
Expenses (excluding depreciation) (15,790) (15,520) 1.7% (64,815) (62,013) 4.5%
----------- ----------- ----------- ----------- ----------- -----------
Income Before Depreciation 20,095 19,461 3.3% 77,472 76,150 1.7%
ACQUISITION PORTFOLIO
Revenue 6,482 3,179 N/A 19,914 5,831 N/A
Expenses (excluding depreciation) (2,925) (1,373) N/A (9,324) (2,850) N/A
----------- ----------- ----------- ----------- ----------- -----------
Income Before Depreciation 3,557 1,806 N/A 10,590 2,981 N/A
WESTERLY AT WORLDGATE
Revenue 1,102 653 N/A 4,082 915 N/A
Expenses (excluding depreciation) (449) (345) N/A (1,640) (764) N/A
----------- ----------- ----------- ----------- ----------- -----------
Income Before Depreciation 653 308 N/A 2,442 151 N/A
TOTAL PORTFOLIO
Revenue 43,469 38,813 12.0% 166,283 144,909 14.7%
Expenses (excluding depreciation) (19,164) (17,238) 11.2% (75,779) (65,627) 15.5%
----------- ----------- ----------- ----------- ----------- -----------
Income Before Depreciation $24,305 $21,575 12.7% $90,504 $79,282 14.2%
=========== =========== =========== =========== =========== ===========
</TABLE>
- --------------------------------------------------------------------------------
(a) Includes Potomac View (192 units, acquired 8/94) and The Manor (435 units,
acquired 8/94) for a total of 12,462 apartment units.
(more)
E-7
<PAGE>
Page 8
CHARLES E. SMITH RESIDENTIAL REALTY, INC.
Funds Available for Distribution (FAD) Calculation
For the Three and Twelve Months Ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
3 Months Ended December 31, 12 Months Ended December 31,
------------------------------------- --------------------------------------
% Change % Change
From From
(dollars in thousands except per share data) 1996 1995 Last Year 1996 1995 Last Year
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET INCOME OF THE OPERATING PARTNERSHIP $11,034 $9,348 18.0% $34,817 $31,053 12.1%
Add: Depreciation of Real Property 4,455 4,343 2.6% 17,931 16,258 10.3%
----------- ----------- ----------- ----------- ----------- -----------
FFO OF THE OPERATING PARTNERSHIP $15,489 $13,691 13.1% $52,748 $47,311 11.5%
=========== =========== =========== =========== =========== ===========
Add: Amortization of Deferred Financing Costs 631 690 -8.6% 2,583 2,719 -5.0%
Depreciation and Amortization - PSBs 167 325 -48.6% 1,046 1,310 -20.2%
Reserve Fund Reimbursements 0 176 -100.0% 398 995 -60.0%
Amortization of Unit Grants 120 143 -16.1% 525 570 -7.9%
Less: Additions to Rental Property (a) (3,344) (2,665) 25.5% (7,298) (5,257) 38.8%
Principal Curtailments on Mortgage Debt (103) (185) -44.3% (614) (466) 31.8%
Straight-Lining of Retail Rents (249) (234) 6.4% (962) (1,065) -9.7%
----------- ----------- ----------- ----------- ----------- -----------
FAD OF THE OPERATING PARTNERSHIP 12,711 11,941 6.4% 48,426 46,117 5.0%
Interest of Other Operating Partnership
Unitholders (6,927) (6,633) 4.4% (26,513) (26,240) 1.0%
----------- ----------- ----------- ----------- ----------- -----------
Attributable to the Company $5,784 $5,308 9.0% $21,913 $19,877 10.2%
=========== =========== =========== =========== =========== ===========
Funds Available for Distribution per Share (b) $0.57 $0.55 3.6% $2.21 $2.13 3.8%
Dividend Declared per Share $0.505 $0.490 3.1% $1.990 $1.930 3.1%
Payout Ratios
As a Percentage of FAD 89% 89% 90% 91%
As a Percentage of FFO 72% 78% 83% 88%
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(a)Additions to Rental Property details are as follows:
<S> <C> <C> <C> <C>
Core Residential Portfolio $2,682 $2,374 $5,806 $4,899
Retail Portfolio 80 9 287 55
Acquisition Portfolio 582 282 1,205 303
------------ ------------ ------------ ------------
Total Additions to Rental Property $3,344 $2,665 $7,298 $5,257
============ ============ ============ ============
<CAPTION>
(b)Weighted average shares, partnership units, and equivalents outstanding during the periods were as follows:
<S> <C> <C> <C> <C>
Shares and equivalents 10,062,702 9,707,047 9,913,308 9,310,929
Partnership Units 11,960,203 12,115,528 11,994,324 12,292,066
------------ ------------ ------------ ------------
Total Shares and Partnership Units 22,022,905 21,822,575 21,907,632 21,602,995
============ ============ ============ ============
</TABLE>
(more)
E-8
<PAGE>
Page 9
CHARLES E. SMITH RESIDENTIAL REALTY, INC.
Residential Portfolio Statistics for the Twelve Months Ended December 31, 1996
<TABLE>
<CAPTION>
Number of Average Monthly Average
Property Apartment Sq. Ft. Revenue Economic
Property Type / Property Name Location Units Per Unit Per Unit Occupancy
- ----------------------------------------------------- --------------------- ----------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Core Residential Portfolio
High-Rise
Albemarle Washington, D.C. 235 1,097 1,126 99.3%
Calvert - Woodley Washington, D.C. 136 1,001 1,046 99.8%
Cleveland House Washington, D.C. 216 894 1,001 98.3%
Corcoran House Washington, D.C. 138 464 757 99.5%
Courthouse Plaza Arlington, VA 396 772 1,134 97.8%
Crystal House I Arlington, VA 426 917 933 96.7%
Crystal House II Arlington, VA 402 938 905 96.3%
Crystal Place Arlington, VA 180 894 1,210 97.6%
Crystal Square Arlington, VA 378 1,121 1,080 98.4%
Gateway Place Arlington, VA 162 826 2,023 93.1%
Marbury Plaza Washington, D.C. 672 997 621 95.3%
Skyline Towers Fairfax Co., VA 940 1,221 950 97.1%
Statesman Washington, D.C. 281 593 739 98.6%
2501 Porter Street Washington, D.C. 202 760 1,356 96.7%
Water Park Towers Arlington, VA 360 881 1,486 97.8%
----------- ------------- ------------ ------------
Sub-Total / Average 5,124 956 1,018 97.3%
Mid-Rise
Berkeley Arlington, VA 138 891 704 97.6%
Columbian Stratford Arlington, VA 227 942 719 98.2%
Executive Central Arlington, VA 230 903 749 98.8%
Executive North Arlington, VA 215 892 748 97.6%
Executive South Arlington, VA 266 842 727 98.1%
Windsor Towers Arlington, VA 280 1,025 760 96.9%
----------- ------------- ------------ ------------
Sub-Total / Average 1,356 920 737 97.9%
Garden
Bedford Village Fairfax Co., VA 752 1,070 859 96.1%
Car Barn Washington, D.C. 196 1,311 823 96.9%
Columbia Crossing Arlington, VA 247 976 1,116 98.2%
Concord Village Arlington, VA 531 1,025 762 93.9%
Fort Chaplin Washington, D.C. 549 983 603 96.5%
The Manor Montgomery Co., MD 435 999 729 95.6%
Newport Village Alexandria, VA 937 1,115 862 98.3%
Orleans Village Fairfax Co., VA 851 1,061 787 96.9%
Oxford Manor Washington, D.C. 227 1,005 596 94.7%
Patriot Village Fairfax Co., VA 1,065 1,162 851 96.7%
Potomac View Loudoun Co., VA 192 965 708 97.8%
----------- ------------- ------------ ------------
Sub-Total / Average 5,982 1,042 801 96.6%
----------- ------------- ------------ ------------
12,462 994 883 97.0%
Residential Acquisition / Development Portfolio
High-Rise
Suburban Tower (acquired 1/95) Montgomery Co., MD 172 677 762 97.4%
Connecticut Heights (acquired 6/95) Washington, D.C. 519 536 761 95.9%
The Bennington (acquired 9/95) Arlington, VA 348 804 986 97.3%
Van Ness South (acquired 7/96) Washington, D.C. 625 956 N/A N/A
1841 Columbia Road (acquired 8/96) Washington, D.C. 115 634 N/A N/A
----------- ------------- ------------ ------------
Sub-Total / Average 1,779 756 837 96.7%
Garden
Blvd. of Old Town / Gov. Spotswood
(acquired 4/95,3/96) Alexandria, VA 159 603 723 96.8%
Westerly at Worldgate (opened 5/95) Fairfax Co., VA 320 921 1,063 92.8%
Oakwood (acquired 12/95) Vienna, VA 218 968 1,001 93.9%
Charter Oak (acquired 3/96) Reston, VA 262 1,097 N/A N/A
----------- ------------- ------------ ------------
Sub-Total / Average 959 927 966 93.9%
----------- ------------- ------------ ------------
2,738 816 889 95.5%
----------- ------------- ------------ ------------
All Residential Properties 15,200 962 $884 96.9%
=========== ============= ============ ============
</TABLE>
###
E-9
<PAGE>
Exhibit 99.2
February 13, 1997
[LETTERHEAD OF CHARLES E. SMITH RESIDENTIAL REALTY, INC.]
Charles E. Smith Residential Issues 2.7 million shares of Primary Common Stock
ARLINGTON, VA--Charles E. Smith Residential Realty, Inc. (NYSE:SRW) is
pleased to announce the successful issuance of 2.7 million shares of common
stock priced at the close of business February 12, 1997 based upon the last
trade of $28.375. The funds will be used primarily to fund pending acquisitions.
Charles E. Smith Residential Realty, Inc. is a self-managed Real Estate
Investment Trust that is the largest publicly traded multifamily real estate
company focused on the greater Washington, D. C. Region. The Company and its
subsidiaries and affiliates own, acquire, develop and manage multifamily
residential properties, and provide related real estate services to other
property owners in the Washington, D.C. area.
E-10
<PAGE>
Exhibit 99.3
February 24, 1997
[LETTERHEAD OF CHARLES E. SMITH RESIDENTIAL REALTY, INC.
SMITH REIT ACQUIRES $113 MILLION OF PROPERTIES
VIA OP UNIT EXCHANGE
1,452 apartment units added in strong Crystal City submarket
ARLINGTON, VA.--Charles E. Smith Residential Realty, Inc. (NYSE:SRW)
announced today that it has acquired two luxury high-rise apartment properties,
totaling 1,452 units in Crystal City, Virginia. These properties--Crystal Plaza
and Crystal Towers--were acquired in exchange for equity in the form of Smith
REIT Operating Partnership Units (OP Units), together with the assumption of
debt. Total value of the transactions was approximately $113 million, including
issuance of 1,149,623 Operating Partnership Units valued at $28.4125 per unit,
assumption of $79 million in loans, and other costs. The addition of these
properties brings the total number of apartment units in the Smith REIT
portfolio to 16,652, an increase of more than 40% since the company's initial
public offering in mid-1994.
Ernest Gerardi, Jr., president of the Smith REIT, said "We are pleased to
announce these acquisitions, which are consistent with the strategy outlined in
our recent follow-on stock offering to use the proceeds along with the
continuing issuance of Operating Partnership Units to grow our portfolio. These
acquisitions are expected to be accretive to earnings in 1997."
(more)
E-11
<PAGE>
The OP Unit exchange approach used by the Smith REIT to acquire these
properties is increasingly popular because it allows longer-term property owners
with low or negative tax basis, for whom a cash sale would cause a taxable gain,
to defer income taxes on the transaction. The Smith REIT's Operating Partnership
Units pay the same dividends as the Smith REIT's common stock and are redeemable
for stock on a one-to-one basis, subject to certain conditions. The property
owner obtains other advantages including regular dividends, liquidity,
investment diversification, and participation in any appreciation of Smith REIT
stock. Lastly, many property owners use the Unit exchange approach to enhance
estate planning.
Crystal Plaza is a 540-unit, 12-story twin-tower luxury high-rise built in
1967. It averaged 98.7% occupancy in 1996, with average revenue per unit of
$1,167, up 5.6% over 1995. Crystal Towers is a 912-unit, 12 story twin-tower
luxury high-rise also built in 1967. In 1996, it averaged 97.6% occupancy with
an average monthly revenue of $1,047 per unit, an increase of 4.5% over the
previous year. With the addition of these two properties, the Smith REIT now
owns all of the apartment properties in Crystal City originally developed and
built by the Charles E. Smith organization, a total of 3,360 units.
Crystal City is one of the strongest apartment submarkets in the Washing
area. Strategically located adjacent to National Airport and the Pentagon, and
minutes from downtown Washington and Capitol Hill, it had an average occupancy
rate of over 97% in 1996, and no new apartment construction underway or planned.
With its large concentration in this submarket--3,708 of a total of 4,669
apartment units--the Smith REIT benefits from both marketing and operational
efficiencies.
Charles E. Smith Residential Realty, Inc. is a self-managed real estate
investment trust and the largest publicly traded multifamily real estate company
with operations focused on the greater Washington D.C. area. The Company and its
subsidiaries and affiliates own, acquire, develop and manage multifamily
residential properties, as well as providing real estate services to other
property owners. Press releases and other information about Charles E. Smith
Residential Realty are available on the company's Web site at:
http://www.smithreit.com.
E-12
<PAGE>
Exhibit 99.4
March 3, 1997
[LETTERHEAD OF CHARLES E. SMITH RESIDENTIAL REALTY, INC.]
SMITH REIT ADDS LUXURY HIGH-RISE APARTMENTS
376 Unit property acquired via OP Unit exchange
ARLINGTON, VA.--Charles E. Smith Residential Realty, Inc. (NYSE:SRW)
announced today that it has acquired the Kenmore Apartments, a 376 unit luxury
high-rise property on upper Connecticut Avenue in northwest Washington, DC, in
exchange for equity in the form of Smith REIT Operating Partnership Units (OP
Units), together with the assumption of debt. Total value of the transaction was
approximately $15.6 million, including issuance of 510,674 Operating Partnership
Units and assumption of approximately $1.2 million in loans, and other costs.
The Kenmore increases the Smith REIT's presence in the prestigious Connecticut
Avenue corridor to 2,843 apartment units in 10 properties.
Ernest Gerardi, Jr., president of the Smith REIT, said, "This property is an
excellent addition to our strong concentration in the high demand Connecticut
Avenue corridor and further increases our ability to take advantage of marketing
and operational efficiencies. It also completes the commitment, involving the
acquisition of three properties, we made to our investors in conjunction with
our recent follow-on stock offering."
The OP Unit exchange approach used by the Smith REIT in its three recent
acquisitions is a special feature available only to certain REITs known as
"UPREITs". It is particularly advantageous to longer term property owners with
low or negative tax basis for whom a cash sale would cause a taxable gain,
because it allows deferral of income taxes on the transaction.
(more)
E-13
<PAGE>
Charles E. Smith Residential Realty / March 3, 1997 Page 2
The Kenmore is a 376 unit 11-story luxury high-rise located at 5415
Connecticut Avenue in northwest Washington, D.C. It averaged 97% occupancy in
1995 and 1996 and had an average monthly revenue of $665 in 1996. The addition
of the Kenmore brings the Smith REIT's concentration in the Connecticut Avenue
corridor to 2,843 apartment units in 10 properties, further extending the
company's operating efficiencies in this submarket.
The Connecticut Avenue corridor has long been and continues to be the
location of choice for many professionals and others working in downtown
Washington, D.C. because of the prestige of its address, its convenient access
to downtown by car of Metro and an excellent selection of fully-serviced
well-maintained luxury apartment buildings. Because of this continuing strong
demand, and limited new development in recent years, this submarket consistently
maintains occupancies of better than 96%.
Charles E. Smith Residential Realty, Inc is a self-managed real estate
investment trust and the largest publicly traded multifamily real estate company
with operations focused on the greater Washington, D.C. area. The company and
its subsidiaries and affiliates own, acquire, develop and manage multifamily
residential rental properties, as well as providing real estate services to
other property owners. Press releases and other investor information about
Charles E. Smith Residential Realty are available on the company's Web site at:
http://www.smithreit.com; and are also available through PR Newswire Company
News On Call, by fax, 800-758-5804, ext. 101271 or at:
http://www.prnewswire.com.
E-14
<PAGE>
Exhibit 99.5
NEWS RELEASE
[SMITH LOGO APPEARS HERE]
Charles E. Smith Residential Realty, Inc.
FOR IMMEDIATE RELEASE Contact: Denny Minami
- --------------------- (703) 769-1020
March 13, 1997
Bruce Snyder
(703) 769-1029
Charles E. Smith Residential Over-Allotment Exercised
ARLINGTON, VA -- Charles E. Smith Residential Realty, Inc. (NYSE:SRW)
announced today that its underwriter exercised the over-allotment option of
405,000 common shares at $28.375 per share. The funds will be used primarily to
repay debt thereby reducing our debt to market capitalization ratio to
approximately 42%.
Charles E. Smith Residential Realty, Inc. is a self-managed Real Estate
Investment Trust that is the largest publicly traded multifamily real estate
company with operations focused on the greater Washington, D.C. area. The
company and its subsidiaries and affiliates own, acquire, develop and manage
multifamily residential properties, and provide related real estate services to
other property owners. Investor information including press releases about
Charles E. Smith Residential Realty is available on the company's Web site
at:http://www.smithreit.com... and also through PR Newswire Company's "News On
Call" by fax, 800-758-5804, ext. 101271, or at: http://www.prnewswire.com.
E-15
<PAGE>
Exhibit 99.6
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
reports included in this Form 8-K/A, into Charles E. Smith Residential Realty
L.P.'s previously filed Registration Statement File No. 33-82382.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Washington, D.C.
August 21, 1997
E-16
