TCT Town & Country Trust

BALTIMORE, Nov. 2 /PRNewswire-FirstCall/ -- The Town and Country Trust (NYSE:TCT), a multifamily real estate investment trust, today reported results for the quarter and nine months ended September 30, 2005. All per share results are reported on a fully diluted basis. Results for the Quarter Ended September 30, 2005 For the quarter ended September 30, 2005, the Company reported net income of $2.8 million, or $0.16 per share, versus $1.7 million, or $0.10 per share, for the comparable quarter of 2004. The results for 2004 include expenses aggregating $573,000, or $0.03 per share, relating to damage sustained in Florida during the 2004 hurricane season. Funds From Operations ("FFO") for the third quarter of 2005 was $9.5 million, or $0.46 per share, compared to $8.0 million, or $0.40 per share, for the third quarter last year. FFO for 2004 was adversely affected by the hurricane related expenses referred to above. The Company computes FFO in a manner consistent with the definition adopted by NAREIT (The National Association of Real Estate Investment Trusts) and considers FFO to be its primary supplemental performance measure. A reconciliation of FFO to net income is included in the accompanying Financial Highlights table. One apartment community is currently under contract for sale and classified in the Company's balance sheets as "Real estate held for disposition". Results from this property as well as results from two properties sold in the first six months of 2004, are reflected in the caption "Income from discontinued operations" in the accompanying financial highlights. Results from the remainder of the Company's portfolio are classified as results from continuing operations and consist of results from 12,918 apartment homes, classified as same store, that were held throughout both the 2005 and 2004 reporting periods. Same Store Results Net operating income for the third quarter of 2005 increased by $1,591,000, or 9.1%, compared with the third quarter of 2004. During the current quarter, rental revenues grew by $2,024,000, or 6.5%, over the prior year as a result of a 6.7% increase in average rental rates. Occupancy was 92.7% for the third quarter of 2005 versus 93.2% last year. On a sequential quarter basis, occupancy improved by 20 basis points from the second quarter of 2005. During the third quarter, operating expenses grew by $433,000, or 3.1%, over the prior year. The 2004 operating expenses were negatively impacted by the hurricane related expenses referred to above and 2005 included increased cost of $189,000 associated with the purchase of gas, water and electric expenses. Results for the Nine Months Ended September 30, 2005 For the nine months ended September 30, 2005, the Company reported net income of $7.6 million, or $0.44 per share, compared to $0.1 million, or $0.01 per share, reported for last year. Included in the results for 2004, is a charge for additional depreciation of $5.7 million ($0.28 per share) relating to the Company's change in the estimated useful lives of certain depreciable assets, principally carpet, to more closely approximate their current economic lives based on experience. Also included in the 2004 results are the $573,000 in hurricane related expenses referred to above and a loss from discontinued operations of $628,000, which includes an impairment charge of $1,672,000. Net income for the nine months ended September 30, 2005 includes income of $50,000 from discontinued operations and a $171,000 gain on involuntary conversion relating to insurance proceeds received in connection with a fire at one of the Company's apartment communities. FFO for 2005 was $27.2 million, or $1.32 per share, compared to $22.6 million, or $1.14 per share, for last year. FFO for 2004 was adversely affected by the $1,672,000 impairment loss and the hurricane related expenses referred to above. A reconciliation of FFO to net income is included in the accompanying Financial Highlights table. Same Store Results Net operating income for the first nine months of 2005 increased by $3,577,000, or 6.8%, compared with 2004. Rental income for the nine months ended September 30, 2005, grew by $5,461,000, or 5.9%, primarily attributable to an average rental rate increase of 6.0%. Occupancy was 92.4% compared to 92.7% for last year. Operating expenses for the nine months ended September 30, 2005 increased by $1,884,000, or 4.8%, over the prior year. Operating expenses in 2004 included the hurricane related expenses referred to above while 2005 includes $571,000 in increased cost associated with the purchase of electric, gas and water. Additional information regarding the Company's financial position and results, including selected market operating data, appears in the accompanying tables. Other Matters On October 6, 2005, the Company acquired an apartment community in Bear, Delaware, a suburb of Wilmington, Delaware that contains 264 garden-style apartments and one townhome for approximately $41.6 million including acquisition costs. The property was acquired through an intermediary in anticipation of the completion of a like-kind exchange under Section 1031 of the Internal Revenue Code. The company funded the acquisition using its existing credit facilities. The Town and Country Trust is a multifamily real estate investment trust that owns and operates 39 apartment communities with 13,330 apartment homes in the Mid-Atlantic states and Florida. Additional information regarding The Town and Country Trust can be found on the Trust's web site at http://www.tctrust.com/. With the exception of historical information, the matters herein contain forward-looking statements that are made pursuant to the Safe Harbor provisions of the Securities Litigation Reform Act of 1995. Management cautions that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied. Examples of such factors that could result in such differences include but are not limited to: interest rate fluctuations; competition for tenants; changes in the Trust's capacity to acquire additional apartment properties and any changes in the Trust's financial condition or operating results due to an acquisition of additional apartment properties; local economic and business conditions, including without limitation, conditions which may affect public securities markets generally, the real estate investment trust industry, or the markets in which the Trust's apartment properties are located, and other factors referred to in the Trust's periodic and other reports filed with the Securities and Exchange Commission. The Town and Country Trust Financial Highlights (In thousands, except per share data - unaudited) Three Months Nine Months Ended September 30, Ended September 30, 2005 2004 Change 2005 2004 Change Revenues: Gross rental income $34,594 $32,397 6.8% $101,470 $95,721 6.0% Less: Vacancy and credit loss 2,713 2,452 10.6% 8,170 7,511 8.8% Net rental income 31,881 29,945 6.5% 93,300 88,210 5.8% Other rental revenue 1,513 1,425 6.2% 4,415 4,044 9.2% Total rental revenues 33,394 31,370 6.5% 97,715 92,254 5.9% Operating expenses: Real estate taxes and insurance 3,240 3,140 3.2% 9,521 9,451 0.7% Utilities 1,881 1,674 12.4% 6,175 5,552 11.2% Repairs and maintenance 4,513 4,701 -4.0% 12,387 12,067 2.7% Marketing and advertising 1,399 1,231 13.6% 3,822 3,458 10.5% Management expense 1,632 1,633 -0.1% 5,088 4,950 2.8% Other 1,559 1,412 10.4% 4,313 3,944 9.4% Total operating expenses 14,224 13,791 3.1% 41,306 39,422 4.8% Net operating income (NOI)(b) 19,170 17,579 9.1% 56,409 52,832 6.8% Real estate depreciation 6,175 5,837 5.8% 18,151 22,569 -19.6% Interest expense 8,325 8,134 2.3% 24,749 24,182 2.3% General and administrative expenses 1,279 1,341 -4.6% 4,351 4,420 -1.6% Other depreciation and amortization 219 258 -15.1% 675 806 -16.3% Gain on involuntary conversion - - (171) - Income before discontinued operations and minority interests (a) 3,172 2,009 8,654 855 Income allocated to minority interest from continuing operations (399) (254) (1,088) (116) Income from continuing operations 2,773 1,755 7,566 739 Discontinued Operations: Income (loss) from discontinued operations before impairment of assets and gain on involuntary conversion 43 (13) 57 390 Impairment of assets held for sale and gain on involuntary conversion - - - (1,114) (Income) loss allocated to minority interest from discontinued operations (5) 1 (7) 96 Income (loss) from discontinued operations 38 (12) 50 (628) Net income $2,811 $1,743 $7,616 $111 Basic earnings per share: Income from continuing operations $0.16 $0.10 $0.44 $0.04 Loss from discontinued operations 0.00 0.00 0.00 (0.03) Net income $0.16 $0.10 $0.44 $0.01 Diluted earnings per share (e): Income from continuing operations $0.16 $0.10 $0.44 $0.04 Loss from discontinued operations 0.00 0.00 0.00 (0.03) Net income $0.16 $0.10 $0.44 $0.01 Weighted average common shares outstanding- basic 17,177 17,022 17,160 16,838 Dilutive effect of outstanding options and restricted shares 298 292 290 295 Weighted average common shares outstanding- diluted 17,475 17,314 17,450 17,133 Dividends declared per share $0.43 $0.43 $1.29 $1.29 Funds from operations (b): Net income $2,811 $1,743 $7,616 $111 Income allocated to minority interest 404 253 1,095 20 Real estate depreciation 6,310 6,002 18,614 23,039 Gain on involuntary conversion - - (171) (558) Funds from operations $9,525 $7,998 19.1% $27,154 $22,612 20.1% Funds from operations per share: Basic $0.49 $0.41 $1.38 $1.17 Diluted (e) $0.46 $0.40 16.1% $1.32 $1.14 16.1% See accompanying Notes to Supplemental Information The Town and Country Trust Same Store Market Operating Data Three Months Three Months Ended Nine Months Ended September 30, June 30, Ended September 30, 2005 2004 Change 2005 2005 2004 Change Property Operating Income ($000's) Rental revenue $33,394 $31,370 6.5% $32,518 $97,715 $92,254 5.9% Operating expenses 14,224 13,791 3.1% 13,525 41,306 39,422 4.8% Same Store net operating income (NOI) $19,170 $17,579 9.1% $18,993 $56,409 $52,832 6.8% Rental Revenue ($000's) Baltimore $11,802 $11,070 6.6% $11,535 $34,603 $32,501 6.5% Metropolitan Washington, DC Northern Virginia 7,395 6,909 7.0% 7,069 21,307 20,283 5.0% Maryland Suburbs 3,466 3,301 5.0% 3,382 10,166 9,919 2.5% Pennsylvania 4,086 3,870 5.6% 4,007 12,007 11,429 5.1% Orlando, Florida 2,210 1,994 10.8% 2,129 6,438 5,853 10.0% Sarasota/ Bradenton, Florida 1,910 1,770 7.9% 1,877 5,648 5,195 8.7% Newark, Delaware 1,271 1,284 -1.0% 1,284 3,821 3,551 7.6% Palm Beach Gardens, Florida 1,254 1,172 7.0% 1,235 3,725 3,523 5.7% Total $33,394 $31,370 6.5% $32,518 $97,715 $92,254 5.9% Average Monthly Rent (net of concessions) Baltimore $868 $811 7.0% $847 848 794 6.8% Metropolitan Washington, DC Northern Virginia 1,192 1,117 6.7% 1,162 1,168 1,100 6.2% Maryland Suburbs 991 948 4.5% 973 975 936 4.2% Pennsylvania 694 652 6.4% 678 681 651 4.6% Orlando, Florida 793 725 9.4% 770 771 719 7.2% Sarasota/ Bradenton, Florida 824 762 8.1% 798 802 756 6.1% Newark, Delaware 934 913 2.3% 920 917 879 4.3% Palm Beach Gardens, Florida 974 897 8.6% 945 949 897 5.8% Total $904 $847 6.7% $882 $885 $835 6.0% Occupancy Baltimore 91.2% 91.5% -0.3% 91.2% 90.9% 91.5% -0.6% Metropolitan Washington, DC Northern Virginia 94.6% 95.1% -0.5% 93.0% 93.0% 94.3% -1.3% Maryland Suburbs 91.8% 92.6% -0.8% 91.1% 91.3% 93.0% -1.7% Pennsylvania 91.1% 91.8% -0.7% 91.5% 91.1% 90.7% 0.4% Orlando, Florida 95.4% 95.4% 0.0% 95.4% 95.6% 94.0% 1.6% Sarasota/ Bradenton, Florida 96.4% 95.5% 0.9% 97.2% 97.2% 95.1% 2.1% Newark, Delaware 92.9% 95.7% -2.8% 94.5% 94.7% 91.9% 2.8% Palm Beach Gardens, Florida 94.4% 93.9% 0.5% 95.6% 95.6% 94.2% 1.4% Total 92.7% 93.2% -0.5% 92.5% 92.4% 92.7% -0.3% Communities Apartment Homes % of 2005 Held 2005 Held Total Market: Same Store For Sale Total Same Store For Sale Total Portfolio Baltimore 11 1 12 4,850 147 4,997 38.2% Metropolitan Washington, DC Northern Virginia 6 6 2,151 2,151 16.5% Maryland Suburbs 4 4 1,236 1,236 9.5% Pennsylvania 7 7 2,073 2,073 15.9% Orlando, Florida 3 3 930 930 7.1% Sarasota/ Bradenton, Florida 3 3 742 742 5.7% Newark, Delaware 2 2 488 488 3.7% Palm Beach Gardens, Florida 1 1 448 448 3.4% Total 37 1 38 12,918 147 13,065 100.0% The Town and Country Trust Summary Balance Sheets (In thousands) September 30, December 31, 2005 2004 (unaudited) Assets: Real estate, at cost $818,751 $793,358 Accumulated depreciation (285,610) (270,946) Net real estate assets 533,141 522,412 Real estate and other assets held for disposition 20,870 21,188 Other assets 22,854 18,484 Total assets $576,865 $562,084 Liabilities and shareholders' equity: Mortgage debt $439,631 $407,856 5.375% Convertible Senior Notes due 2023 74,750 74,750 Notes Payable - 2,000 Mortgage debt and other liabilities held for disposition 8,113 7,409 Other liabilities 15,385 16,760 Minority interest 4,796 6,592 Shareholders' equity 34,190 46,717 Total liabilities and shareholders' equity $576,865 $562,084 Capitalization September 30, 2005 (In thousands, except per share data) % of % of Total Interest Debt: Amount Debt Capitalization Rate Maturity Secured Fixed Rate: Fannie Mae (c) (d) $333,580 63.9% 6.64% April, 2008 Freddie Mac 33,175 6.4% 6.81% April, 2009 Freddie Mac 17,274 3.3% 7.85% Nov., 2009 Freddie Mac 24,164 4.6% 4.15% April, 2007 Total secured fixed rate debt 408,193 78.2% 37.0% 6.55% Secured Floating Rate: Fannie Mae (c) (d) 31,438 6.0% 4.39% April, 2008 Total secured floating rate debt 31,438 6.0% 2.8% 4.39% Total mortgage debt 439,631 84.2% 39.8% 6.34% Unsecured: 5.375% Convertible Senior Notes due 2023 74,750 14.3% 5.38% Aug., 2023 Total unsecured debt 74,750 14.3% 6.8% 5.38% Mortgage Debt held for disposition Secured Fixed Rate 6,420 1.2% 6.64% April, 2008 Secured Floating Rate 1,562 0.3% 4.39% April, 2008 Total mortgage debt held for disposition 7,982 1.5% 0.7% 6.44% Total debt $522,363 100.0% 47.3% 6.25% Equity: Common shares outstanding 17,582 Operating Partnership (OP) units 2,467 Total shares and OP units outstanding 20,049 Common share price at September 30, 2005 $29.02 Total equity capitalization, at market $581,825 52.7% Total market capitalization (debt and equity) $1,104,188 100.0% See accompanying Notes to Supplemental Information The Town and Country Trust Notes to Supplemental Information (unaudited) (a) Minority interests represent certain limited partnership interests, equivalent to 2,467,000 shares. (b) Funds from operations ("FFO") is computed as income (computed in accordance with U.S. generally accepted accounting principles ("U.S. GAAP")) excluding gains and losses from sales and involuntary conversions of operating properties, plus real estate depreciation. This computation of FFO is consistent with the formal definition promulgated by the National Association of Real Estate Investment Trusts (NAREIT). The reconciliation of FFO to Net income, the most directly comparable financial measure calculated in accordance with U.S. GAAP, is included in the Financial Highlights. Management generally considers FFO to be a useful measure for reviewing the comparative operating performance of the Trust between periods or as compared to other companies, without giving effect to real estate depreciation and amortization, which assumes that the value of real estate diminishes predictably over time and which can vary among owners of similar assets based upon historical cost and useful life estimates. The Company uses net operating income (NOI) to measure the operating results of its communities and to compare the operating performance of single assets or groups of assets. The Company defines NOI as property rental income less property operating expenses and does not include depreciation and amortization, interest expense, general and administrative expenses, separation expense, discontinued operations, or gains/losses on sales and involuntary conversions of properties. Accordingly, this performance measure is not intended as a replacement for net income determined in accordance with U.S. generally accepted accounting principles. NOI is widely used by management and investors in the real estate industry in connection with the valuation of income-producing real estate and as a supplemental measure of operating performance. NOI measures presented by the Company may not be comparable to other similarly titled measures of other companies. A reconciliation of NOI to Net Income is included in the Financial Highlights. FFO and NOI should not be considered alternatives to net income as a measure of performance nor do they represent cash generated from operating activities in accordance with U.S. GAAP and, therefore, they should not be considered indicative of cash available to fund cash needs. (c) The information shown for this debt gives effect to two interest rate swap agreements in the aggregate notional amount of $40 million, which have the effect of fixing the interest rate on this amount of debt at approximately 4.68% through April 2007. (d) The information shown for this debt excludes $7,982 of mortgage debt allocated to properties held for disposition (e) Diluted earnings per share is calculated as net income divided by the weighted average number of shares outstanding. The weighted average shares outstanding is computed on the treasury stock method and the "if-converted" method. The "if-converted" method assumes the conversion of the Company's outstanding convertible senior notes which eliminates approximately $1 million in interest expense per quarter and increases the shares outstanding by 2,930,338 shares. Diluted earnings per share on an "If-converted" basis are only presented if dilutive to continuing operations. Funds from operations is computed in the same fashion. DATASOURCE: The Town and Country Trust CONTACT: Thomas L. Brodie, President and COO, +1-212-407-2161, or Alan W. Lasker, Sr. Vice President and CFO, +1-212-407-2151, both of The Town and Country Trust; or Joseph Calabrese, Investor Inquiries, Financial Relations Board, +1-212-827-3772, for The Town and Country Trust Web site: http://www.tctrust.com/

Copyright