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Original Source: FD (FAIR DISCLOSURE) WIRE
. Greg Mutz, AMLI Residential Properties Trust, Chairman & CEO . Bob Chapman, AMLI Residential Properties Trust, EVP & CFO . Steve Hallsey, AMLI Residential Properties Trust, EVP & CEO of AMLI Management Company . Allan Sweet, AMLI Residential Properties Trust, President
AML continues to work on the B to A initiatives, where it is selling its older B assets and upgrading with A properties. AML closed about $95m of permanent financing, including about $45m, which occurred in July after the end of the qtr. AML is encouraged by the sequential growth in occupancy, rental income, other income, and total income. Q&A Focus: Acquisitions, dispositions, CapEx, NOI, and guidance.
A. Key Data From Call 1. 2Q04 FFO = $0.55 a share.
S1. 2Q04 Overview (G.M.) 1. Details: 1. AML had a $0.55 FFO vs. $0.54 mid range in the guidance. 1. $0.55 does include a net gain of $0.12 for early extinguishment of debt financing. 2. The community operational level is as expected. 1. AML anticipates basically a better 2H04 vs. 1H04. 2. Every market except Denver showed an increase in collected revenue per occupied unit in 2Q04 vs. 1Q04. 3. AML continues to work on the B to A initiatives, where it is selling its older B assets and upgrading with A properties.
1. AML bought $100m and sold $100m. 2. AML is buying just a shade south of a 6% cap rate and are selling somewhere south of 7% cap rate. 1. Thus, AML is basically giving up 100 BP per dollar as we sell the Bs and buy the As. 4. On acquisition, AML entered the Southeast Florida market. 1. AML bought a luxury community AMLI at Ibis, a 234-unit community in North Palm Beach county.
5. On 2H04, on the property operational level, AML will be in the
guidance range. 1. From a FFO standpoint, AML is going to come in somewhere between $2.06-2.14m with a midpoint of $2.10 per share FFO. 2. AML is working on a number of transactions, both acquisitions and dispositions, that will impact the results
in the last six months.
S2. 2Q04 Debt (B.C.) 1. Debt Position: 1. During the last month, AML closed about $95m of permanent financing, including about $45m, which occurred in July after the end of the qtr. 2. AML used the net proceeds to pay down the line of credit and has been repositioning a substantial portion of the debt structure from short-term floating into long-term fixed rates. 3. AML further reduced the amount of the floating rate debt because in connection with the sale of Spring Creek, the buyer assumed about $40m worth of variable rate tax-exempt debt. 4. AML closed the end of the qtr. with $105m borrowed on its line and a 43% debt-to-market cap. 1. The debt-to-market cap was down 10 BP from the beginning of the year at 53%. 5. The outstanding balance on the line is about $55m. 1. This is fully covered by $85m worth of interest rate caps and swaps, $25m of which burns off later this year. 6. Floating rate debt exposure is virtually non-existent today.
7. AML assumes that it will borrow back some of the availability
on its line to fund future investment activity net of potential disposition proceeds from the sales. 8. AML will continue to reposition additional borrowings, if any and when, under the line of credit into longer-term fixed rate debt and/or it will consider employing additional interest rate swaps to try to take advantage of the low interest rate environment.
S3. 2Q04 Property Operations (S.H.) 1. Details: 1. AML is encouraged by the sequential growth in occupancy, rental income, other income, and total income. 2. Momentum and strength in the nine markets is still relatively low to moderate. 1. There are some very positive signs in each of these marketplaces, which is beginning to strengthen. 3. AML remains optimistic with the current economic fundamentals in seven of the nine markets.
2. Revenue Management: 1. At the beginning of 2Q04, AML hired a new VP of Revenue Management. 2. AML is 30 days from rolling out a real-time revenue pricing program, which will make AML more nimble and consumer sensitive when it comes to the rent structure. 3. E-procurement program has been deployed to 50% of the portfolio. 4. AML track (Phonetic) the e-procurement program is beginning to show significant improvement in purchasing and in terms of the expense control. 1. AML track and AML phone track has been deployed 100% on AML track and 70% on AML phone track throughout the portfolio. 5. Occupancy increased 150 BP vs. 2Q03. 1. 2Q04 occupancy is the highest 2Q occupancy in the last five years. 6. Sequentially, total revenue was up 70 BP after two consecutive quarterly declines. 7. Rental income increased 10 BP as a result of increased occupancy in six of the nine markets. 8. On a YTD basis, seven of the nine markets are showing positive market rent increases. 1. This is a low of 20 BP in Dallas to a high of 510 BP in Chicago. 2. …