TCT Town & Country Trust

BALTIMORE, Aug. 2 /PRNewswire-FirstCall/ -- The Town and Country Trust (NYSE:TCT), a multifamily real estate investment trust, today reported results for the quarter and six months ended June 30, 2005. All per share results are reported on a fully diluted basis. Results for the Quarter Ended June 30, 2005 For the quarter ended June 30, 2005, the Company reported net income of $2.9 million, or $0.17 per share, versus a net loss of $2.4 million, or $0.14 per share, for the comparable quarter of 2004. 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 recent experience. Also included in the second quarter 2004 results is income from discontinued operations of $543,000, which is net of an impairment charge of $272,000. Net income for the quarter ended June 30, 2005 includes 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. Funds From Operations ("FFO") for the second quarter of 2005 was $9.3 million, or $0.45 per share, compared to $8.3 million, or $0.41 per share, for the second quarter last year. FFO for 2004 was adversely affected by the $272,000 impairment loss 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. Net operating income for the second quarter of 2005 increased by $1,149,000, or 6.3%, compared with the second quarter of 2004. During the current quarter, rental revenues grew by $1,818,000, or 5.8%, over the prior year as a result of a 6.2% increase in average rental rates. Occupancy was 92.5% for the second quarter of 2005 versus 92.7% last year. On a sequential quarterly basis, occupancy grew by 60 basis points from the first quarter of 2005. During the second quarter, operating expenses grew by $669,000, or 5.1%, over the prior year. Results for the Six Months Ended June 30, 2005 For the six months ended June 30, 2005, the Company reported net income of $4.8 million, or $0.28 per share, compared to a net loss of $1.6 million, or $0.10 per share, reported for last year. Included in the results for 2004, is the charge for additional depreciation of $5.7 million ($0.28 per share) recorded in the second quarter. The net loss for the six months ended June 30, 2004 also included a $630,000 loss from discontinued operations, which is net of an impairment charge of $1,672,000. FFO for 2005 was $17.6 million, or $0.86 per share, compared to $14.6 million, or $0.74 per share, for last year. FFO for 2004 was adversely affected by the $1,672,000 impairment loss referred to above. A reconciliation of FFO to net income is included in the accompanying Financial Highlights table. Net operating income for the first six months of 2005 increased by $2,017,000, or 5.6%, compared with 2004. Rental income for the six months ended June 30, 2005, grew by $3,431,000, or 5.5%, primarily attributable to an average rental rate increase of 5.5%. Occupancy was 92.2% compared to 92.3% for last year. Operating expenses for the six months ended June 30, 2005 increased by $1,414,000, or 5.4%, over the prior year. The Company had no acquisition activity in 2004 or the first six months of 2005. Accordingly, the operating results for the Company's entire portfolio of 13,065 apartment homes represent results on a "same store" basis. Additional information regarding the Company's financial position and results, including selected market operating data, appears in the accompanying tables. The Town and Country Trust is a multifamily real estate investment trust that owns and operates 38 apartment communities with 13,065 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 Six Months Ended June 30, Ended June 30, 2005 2004 Change 2005 2004 Change Revenues: Gross rental income $34,364 $32,381 6.1% $68,141 $64,578 5.5% Less: Vacancy and credit loss 2,740 2,418 13.3% 5,584 5,172 8.0% Net rental income 31,624 29,963 5.5% 62,557 59,406 5.3% Other rental revenue 1,491 1,334 11.8% 2,942 2,662 10.5% Total rental revenues 33,115 31,297 5.8% 65,499 62,068 5.5% Operating expenses: Real estate taxes and insurance 3,173 3,234 -1.9% 6,449 6,480 -0.5% Utilities 1,885 1,718 9.7% 4,349 3,931 10.6% Repairs and maintenance 4,285 4,088 4.8% 8,049 7,547 6.7% Marketing and advertising 1,289 1,200 7.4% 2,514 2,308 8.9% Management expense 1,724 1,583 8.9% 3,466 3,327 4.2% Other 1,461 1,325 10.3% 2,824 2,644 6.8% Total operating expenses 13,817 13,148 5.1% 27,651 26,237 5.4% Net operating income (NOI) (b) 19,298 18,149 6.3% 37,848 35,831 5.6% Real estate depreciation 6,205 11,644 -46.7% 12,304 17,037 -27.8% Interest expense 8,419 8,325 1.1% 16,691 16,306 2.4% General and administrative expenses 1,321 1,316 0.4% 3,072 3,078 -0.2% Other depreciation and amortization 232 284 -18.3% 456 548 -16.8% Gain on involuntary conversion (171) - (171) - Income (loss) before discontinued operations and minority interests (a) 3,292 (3,420) 5,496 (1,138) (Income) loss allocated to minority interest from continuing operations (414) 433 (691) 136 Income (loss) from continuing operations 2,878 (2,987) 4,805 (1,002) Discontinued Operations: Income from discontinued operations - 894 - 945 Impairment of assets held for sale - (272) - (1,672) (Income) loss allocated to minority interest from discontinued operations - (79) - 97 Income (loss) from discontinued operations - 543 - (630) Net income (loss) $2,878 $(2,444) $4,805 $(1,632) Basic earnings (loss) per share: Income (loss) from continuing operations $0.17 $(0.17) $0.28 $(0.06) Income (loss) from discontinued operations - 0.03 - (0.04) Net income(loss) $0.17 $(0.14) $0.28 $(0.10) Diluted earnings (loss) per share: Income (loss) from continuing operations $0.17 $(0.17) $0.28 $(0.06) Income (loss) from discontinued operations - 0.03 - (0.04) Net income (loss) $0.17 $(0.14) $0.28 $(0.10) Weighted average common shares outstanding-basic 17,163 17,018 17,152 16,745 Dilutive effect of outstanding options and restricted shares 284 - 278 - Weighted average common shares outstanding-diluted 17,447 17,018 17,430 16,745 Dividends declared per share $0.43 $0.43 $0.86 $0.86 Funds from operations (b): Net income (loss) $2,878 $(2,444) $4,805 $(1,632) Income (loss) allocated to minority interest 414 (354) 691 (233) Real estate depreciation 6,205 11,644 12,304 17,037 Gain on involuntary conversion (171) (558) (171) (558) Funds from operations $9,326 $8,288 12.5% $17,629 $14,614 20.6% Funds from operations per share: Basic $0.48 $0.43 $0.90 $0.76 Diluted $0.45 $0.41 10.2% $0.86 $0.74 16.2% See accompanying Notes to Supplemental Information The Town and Country Trust Same Store Market Operating Data Three Months Three Months Ended Ended June 30, March 31, 2005 2004 Change 2005 Property Operating Income ($000's) Rental revenue $33,115 $31,297 5.8% $32,384 Operating expenses 13,817 13,148 5.1% 13,834 Same Store net operating income (NOI) $19,298 $18,149 6.3% $18,550 Rental Revenue ($000's) Baltimore $12,132 $11,395 6.5% $11,847 Metropolitan Washington, DC Northern Virginia 7,069 6,771 4.4% 6,843 Maryland Suburbs 3,382 3,382 0.0% 3,318 Pennsylvania 4,007 3,780 6.0% 3,914 Orlando, Florida 2,129 1,938 9.9% 2,099 Sarasota/Bradenton, Florida 1,877 1,722 9.0% 1,861 Newark, Delaware 1,284 1,137 12.9% 1,266 Palm Beach Gardens, Florida 1,235 1,172 5.4% 1,236 Total $33,115 $31,297 5.8% $32,384 Average Monthly Rent (net of concessions) Baltimore $864 $809 6.8% $848 Metropolitan Washington, DC Northern Virginia 1,162 1,095 6.1% 1,149 Maryland Suburbs 973 930 4.6% 962 Pennsylvania 678 653 3.8% 671 Orlando, Florida 770 714 7.8% 750 Sarasota/Bradenton, Florida 798 755 5.7% 783 Newark, Delaware 920 844 9.0% 897 Palm Beach Gardens, Florida 945 898 5.2% 929 Total $889 $837 6.2% $874 Occupancy Baltimore 91.2% 91.4% -0.2% 90.2% Metropolitan Washington, DC Northern Virginia 93.0% 94.5% -1.5% 91.3% Maryland Suburbs 91.1% 94.5% -3.4% 91.0% Pennsylvania 91.5% 90.1% 1.4% 90.7% Orlando, Florida 95.4% 93.8% 1.6% 96.0% Sarasota/Bradenton, Florida 97.2% 94.6% 2.6% 98.2% Newark, Delaware 94.5% 92.0% 2.5% 96.7% Palm Beach Gardens, Florida 95.6% 93.3% 2.3% 97.0% Total 92.5% 92.7% -0.2% 91.9% The Town and Country Trust Same Store Market Operating Data Six Months Ended June 30, 2005 2004 Change Property Operating Income ($000's) Rental revenue $65,499 $62,068 5.5% Operating expenses 27,651 26,237 5.4% Same Store net operating income (NOI) $37,848 $35,831 5.6% Rental Revenue ($000's) Baltimore $23,979 $22,614 6.0% Metropolitan Washington, DC Northern Virginia 13,912 13,374 4.0% Maryland Suburbs 6,700 6,619 1.2% Pennsylvania 7,921 7,559 4.8% Orlando, Florida 4,228 3,859 9.6% Sarasota/Bradenton, Florida 3,738 3,425 9.1% Newark, Delaware 2,550 2,266 12.5% Palm Beach Gardens, Florida 2,471 2,352 5.1% Total $65,499 $62,068 5.5% Average Monthly Rent (net of concessions) Baltimore 856 804 6.5% Metropolitan Washington, DC Northern Virginia 1,156 1,091 6.0% Maryland Suburbs 967 930 4.0% Pennsylvania 675 651 3.7% Orlando, Florida 760 716 6.1% Sarasota/Bradenton, Florida 791 753 5.0% Newark, Delaware 909 861 5.6% Palm Beach Gardens, Florida 937 897 4.5% Total $881 $835 5.5% Occupancy Baltimore 90.7% 91.4% -0.7% Metropolitan Washington, DC Northern Virginia 92.2% 93.8% -1.6% Maryland Suburbs 91.1% 93.2% -2.1% Pennsylvania 91.1% 90.2% 0.9% Orlando, Florida 95.7% 93.4% 2.3% Sarasota/Bradenton, Florida 97.7% 94.8% 2.9% Newark, Delaware 95.6% 90.0% 5.6% Palm Beach Gardens, Florida 96.3% 94.3% 2.0% Total 92.2% 92.3% -0.1% Community Information % of Communities Apartment Total Market: Homes Portfolio Baltimore 12 4,997 38.2% Metropolitan Washington, DC Northern Virginia 6 2,151 16.5% Maryland Suburbs 4 1,236 9.5% Pennsylvania 7 2,073 15.9% Orlando, Florida 3 930 7.1% Sarasota/Bradenton, Florida 3 742 5.7% Newark, Delaware 2 488 3.7% Palm Beach Gardens, Florida 1 448 3.4% Total 38 13,065 100.0% The Town and Country Trust Summary Balance Sheets (In thousands) June 30, December 31, 2005 2004 (unaudited) Assets: Real estate, at cost $832,180 $815,318 Accumulated depreciation (282,231) (271,984) Net real estate assets 549,949 543,334 Other assets 20,304 18,750 Total assets $570,253 $562,084 Liabilities and shareholders' equity: Mortgage debt $434,788 $415,132 5.375% Convertible Senior Notes due 2023 74,750 74,750 Notes Payable - 2,000 Other liabilities 17,135 16,893 Minority interest 5,364 6,592 Shareholders' equity 38,216 46,717 Total liabilities and shareholders' equity $570,253 $562,084 Capitalization June 30, 2005 (In thousands, except per share data) % of % of Total Interest Debt: Amount Debt Capitalization Rate Maturity Secured Fixed Rate: Fannie Mae (c) $340,000 66.7% 6.64% April, 2008 Freddie Mac 33,175 6.5% 6.81% April, 2009 Freddie Mac 17,334 3.4% 7.85% Nov., 2009 Freddie Mac 24,279 4.8% 4.15% April, 2007 Total secured fixed rate debt 414,788 81.4% 38.3% 6.55% Secured Floating Rate: Fannie Mae (c) 20,000 3.9% 4.18% April, 2008 Total secured floating rate debt 20,000 3.9% 1.9% 4.18% Total mortgage debt 434,788 85.3% 40.2% 6.35% Unsecured: 5.375% Convertible Senior Notes due 2023 74,750 14.7% 5.38% Aug., 2023 Total unsecured debt 74,750 14.7% 6.9% 5.38% Total debt $509,538 100.0% 47.1% 6.29% Equity: Common shares outstanding 17,572 Operating Partnership (OP) units 2,467 Total shares and OP units outstanding 20,039 Common share price at June 30, 2005 $28.51 Total equity capitalization, at market $571,306 52.9% Total market capitalization (debt and equity) $1,080,844 100.0% 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 4.64% through April 2007. DATASOURCE: The Town and Country Trust CONTACT: Thomas L. Brodie, President and COO, The Town and Country Trust, +1-212-407-2161, Alan W. Lasker, Sr. Vice President and CFO, The Town and Country Trust, +1-212-407-2151; Joseph Calabrese, Investor Inquiries, Financial Relations Board, +1-212-827-3772 Web site: http://www.tctrust.com/

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