UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to _________
Virginia 54-0857512
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(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
10 South Sixth Street, Richmond, Virginia 23219-3802
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(Address of principal executive offices - zip code)
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of exchange on which registered ------------------- ------------------------------------ Common Stock, $1 par value New York Stock Exchange Preferred Stock Purchase Rights New York Stock Exchange 9.25% Series A Cumulative Redeemable Preferred Stock New York Stock Exchange 8.60% Series B Cumulative Redeemable Preferred Stock New York Stock Exchange 7.50% Series D Cumulative Convertible Redeemable Preferred Stock None |
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to filing requirements for at least the past 90 days.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or other information statements incorporated by reference into Part III of this Form 10-K ( ).
The aggregate market value of the shares of common stock held by non-affiliates (based upon the closing sales price on the New York Stock Exchange) on March 2, 1999 was approximately $1 billion. * As of March 21, 2000 there were 103,127,425 shares of common stock, $1 par value, outstanding.
Part III incorporates certain information by reference from the Proxy Statement to be filed with respect to the Annual Meeting of Shareholders on May 9, 2000.
*In determining this figure, the Company has assumed that all of its officers & directors, and persons known to the Company to be beneficial owners of more than 5% of the Company's shares, are affiliates. Such assumptions should not be deemed conclusive for any other purpose.
UNITED DOMINION REALTY TRUST, INC.
TABLE OF CONTENTS
PAGE
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PART I.
Item 1. Business 3
Item 2. Properties 14
Item 3. Legal Proceedings 15
Item 4. Submission of Matters to a Vote of Security Holders 15
PART II.
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters 18
Item 6. Selected Financial Data 20
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations 21
Item 7A. Quantitative and Qualitative Disclosures about Market Risk 34
Item 8. Financial Statements and Supplementary Data 34
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 34
PART III.
Item 10. Directors and Executive Officers of the Registrant 35
Item 11. Executive Compensation 35
Item 12. Security Ownership of Certain Beneficial Owners and Management 35
Item 13. Certain Relationships and Related Transactions 35
PART IV.
Item 14. Exhibits, Financial Statement Schedule, and Reports on Form 8-K 36
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Part I
General
United Dominion Realty Trust, Inc. ("United Dominion"), a Virginia corporation, is a self-administered equity real estate investment trust with activities related to the ownership, development, acquisition, renovation, management, marketing and strategic disposition of multifamily apartment communities nationwide.
Formed in 1972, United Dominion is headquartered in Richmond, Virginia with regional offices in Richmond, Dallas and Atlanta. The regional offices are responsible for the operation, acquisition, construction and asset management activities in their respective geographic regions. United Dominion had approximately 2,400 employees as of January 31, 2000.
The Company operates as a real estate investment trust under the applicable provisions of the Internal Revenue Code of 1986, as amended. To qualify, the Company must meet certain tests which, among other things, require that its assets consist primarily of real estate, its income be derived primarily from real estate and at least 95% of its taxable income be distributed to its common shareholders. Because the Company qualifies as a REIT, it is generally not subject to federal income taxes.
Business and Operating Strategies
The apartment industry has become increasingly competitive, as ownership has shifted to large companies with more resources and sophisticated management. In order to compete more effectively, United Dominion began a strategic repositioning in 1996, with the objective of being better positioned to achieve more consistent earnings growth in the future in order to increase shareholder value over the long-term. During the past several years, United Dominion implemented this strategy through the following:
. the acquisition of portfolios and mergers with companies primarily in different markets and different regions;
. the disposition of communities that do not meet the long-term strategic objectives set for the portfolio due to location, size, age, quality and/ or operating performance;
. the development of higher quality apartment communities in target markets that can provide higher returns on investment;
. the upgrade of our communities through various capital investments and through the addition of revenue enhancing and/or expense reducing features;
. building local operating management groups throughout the country in order to bring local market knowledge in order to run our business effectively;
. refocusing on serving our residents by providing high quality apartment homes and uncompromising service;
. the hiring of experienced corporate and operations staff; and
. the investment in efficient, scalable systems.
United Dominion believes that the repositioning strategy provides the following benefits:
. more consistent property net operating income growth;
. lower capital expenditures per apartment home;
. improved operating margins;
. operating efficiencies;
. increased cash flow per apartment home and per common share; and
. a balance between acquisitions and development that will provide better investment returns.
1999 Accomplishments
. Net operating income (property operating income less property operating expenses) from our same communities (those acquired or developed prior to January 1, 1998) increased 5.6% in 1999 compared to 1998; the third consecutive year same community net operating income growth has exceeded 5%;
. Completed seven development projects aggregating $120 million with 1,846 apartment homes in five different markets. Lease-ups were generally ahead of projected absorption at these communities;
. Return on investment of the American Apartment Communities II acquisition that occurred in December 1998 of 9.1%, which is better than the initial projection of 9.0%;
. Completed the disposition of $241 million of apartment homes that no longer met our investment criteria, which included exiting certain non-core markets including Greenville, South Carolina;
. Instituted a share repurchase program, which resulted in the buyback of $44 million of common and preferred stock and operating partnership units (OP Units);
. Repurchased $70 million of higher rate debt using proceeds from the disposition program in order to proactively manage the balance sheet;
. Paid dividends of $1.06 per share, which represents United Dominion's 23rd year of consecutive dividend increases to shareholders;
. Systems upgrades and technology initiatives that make United Dominion a leader in the apartment industry, which included the installation of the PeopleSoft financial system, the ongoing development of a web-based property management system and the ability to provide high-speed broadband Internet service to residents;
. Concluded the upgrade of our core portfolio of apartments, which included the addition of new features and enhanced amenities to attract resident customers; and
. Higher resident satisfaction as indicated by United Dominion winning the 1999 Level 1 National Multifamily Customer Service Award for Excellence.
Apartments and Markets
Apartments
At December 31, 1999, United Dominion's apartment portfolio included 301 communities having a total of 82,154 completed apartment homes (See Item 2, Properties). In addition, United Dominion had three new communities and three additional phases to existing communities with 1,622 apartment homes under development at December 31, 1999. United Dominion's apartment communities consist primarily of upper and middle-income garden and townhouse communities that make up the broadest segment of the apartment market. Most of the communities are considered to be "A" and "B" grade quality that compete at or near the top of their respective markets. "A" grade communities are generally properties less than five years old with superior amenity packages. "B" grade communities are generally either of 1970's or 1980's construction, located in good neighborhoods. Management believes that these well-located apartments offer United Dominion a good combination of current income and longer-term income growth. As a result of the upgrade program, the overall quality of United Dominion's apartment portfolio has improved.
Markets
Geographic market diversification increases investment opportunity and decreases the risk associated with cyclical local real estate markets and economies, thereby increasing the stability of United Dominion's earnings growth. In a given year, United Dominion will have some markets that are strong or recovering, some will be balanced and others may be softening. However, with its market diversification, United Dominion's aggregate results of operations are anticipated to be balanced from year to year.
During 1999, for the first time in United Dominion's history, we operated a national portfolio of apartment homes. In 1999, West Coast markets, including Seattle, Portland, Sacramento, San Francisco, the Monterey Peninsula and Southern California, became important markets for United Dominion, providing almost 20% of its property operating income by the fourth quarter. These markets have barriers to apartment construction, which limits new supply and offers the prospect for higher revenue growth in the future. In addition, new Midwest markets, including Columbus, Detroit and Indianapolis, provided another 8% of our property operating income. Most of the West and Midwest markets provided occupancy rates above the average of the portfolio during 1999. As a result of the geographic diversification, no single market is expected to provide more than 10% of our property net operating income in 2000.
United Dominion's three largest markets, Dallas, Houston and Orlando, provided above average rent growth in 1999. Although there has been an increase in multifamily permits in these markets, they have benefited from strong economic and job growth during the past several years.
During 1999, apartment supply and demand was in relative balance in most of United Dominion's markets. Although there was an increase in apartment construction in 1999, a strong economy led to good absorption of the new supply of apartments. In 1999, United Dominion experienced a slight increase in physical occupancy to 92.6% along with higher rent growth. A key objective for 2000 will be to grow average occupancy during a time when economic growth may slow slightly and new apartment home completions are near the levels where they have been the past two years. This can be achieved through aggressive property management, use of the Internet to lease apartments and use of revenue maintenance tools to manage vacant inventory.
Acquisitions and Mergers
During the past five years, United Dominion acquired 65,000 apartment homes as part of our strategy to diversify geographically. However, this pace slowed during 1999, with acquisitions being funded with disposition proceeds in order to complete 1031 tax-deferred exchanges. During 1999, using the proceeds from its disposition program, United Dominion acquired five communities with 1,230 apartment homes at a total cost of $74 million. The communities are located in markets that are considered strategically important to United Dominion, such as Baltimore, Maryland, South Florida and Riverside and San Diego, California where we have locally based infrastructure.
When evaluating potential acquisitions, United Dominion considers geographic location, construction quality, condition and design of the community, asset quality and age of the property, current and projected cash flow of the property, the ability to increase the value and cash flow of the property through upgrades and repositioning, potential for rent increases, competition from existing multifamily communities, anticipated new construction and the potential for economic growth in the market.
The following table summarizes United Dominion's growth during the last five years (dollars in thousands):
1999 1998 (a) 1997 1996 (b) 1995
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Homes acquired 1,230 28,510 8,628 22,032 5,142
Homes owned at December 31, 82,154 86,893 62,789 55,664 34,224
Total real estate owned, at carrying value $3,953,045 $3,952,752 $2,517,398 $2,099,641 $1,205,685
Total rental income $ 618,749 $ 478,718 $ 386,672 $ 241,260 $ 194,511
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(a) Includes 7,550 apartment homes acquired in the ASR Merger on March 27, 1998 and 14,001 apartment homes acquired in the AAC Merger on December 7, 1998.
(b) Includes 14,320 completed apartment homes and 675 homes under development acquired in connection with the South West Merger on December 31, 1996.
During 2000, United Dominion does not anticipate acquiring communities except to reinvest a portion of the proceeds from property sales.
Prior to 1990, United Dominion was the only major publicly held REIT focusing predominantly on apartment investments. Since then, a number of new multifamily REITs have been formed. Some of these REITs may seek to be acquired by larger, more strongly capitalized REITs that have superior access to the capital markets. During the past few years, the apartment sector has undergone consolidation and United Dominion has been a major participant in this real estate consolidation process, completing the following mergers:
On December 31, 1996, United Dominion completed the acquisition of South West Property Trust Inc. ("South West") in a statutory merger (the "South West Merger"). South West was a publicly traded multifamily REIT that owned 44 communities with 14,320 apartment homes primarily located in Texas and several other Southwestern markets. The South West Merger provided the company with significant diversification beyond its traditional Southeast and Mid-Atlantic markets, expanding United Dominion into Southwestern markets.
On March 27, 1998, United Dominion completed the acquisition of ASR Investments Corporation ("ASR") in a statutory merger (the "ASR Merger"). ASR was a publicly traded multifamily REIT that owned 39 communities with 7,550 apartment homes located in Arizona, Texas, New Mexico and the state of Washington. The ASR Merger furthered the company's investment in Southwestern markets, provided an initial presence in the Pacific Northwest, and provided United Dominion with critical size in Houston and Phoenix.
On December 7, 1998, United Dominion completed the acquisition of American Apartment Communities II, Inc. (AAC) in a statutory merger (the "AAC Merger"). In connection with the acquisition of AAC, the Company acquired 53 communities with 14,001 apartment homes located primarily in California, the Pacific Northwest, the Midwest and Florida. The AAC Merger allowed United Dominion to enter into new major markets that are believed to have the potential for good long-term growth, such as, Portland, San Francisco, Sacramento, San Jose, Monterey, Los Angeles, Denver, Indianapolis and Detroit. In addition, it added size to our existing portfolios in Columbus, Tampa, South Florida and Seattle.
Development
During 1999, United Dominion continued to expand its development capability, both as a way of upgrading the portfolio and increasing investment options. There is balance between acquisition and development capabilities that will allow United Dominion to achieve better long-term investment returns.
During 1999, United Dominion continued its commitment to development as part of its strategic repositioning, shifting capital into development activity which can provide returns on investment (property operating income less property operating expenses divided by the average investment in real estate) in excess of 10% and away from lower yielding acquisitions. During 1999, United Dominion invested $114 million on the development of over 1,500 apartment homes, up from 890 homes completed during 1998. United Dominion believes that having a development capability provides the following benefits:
. returns on investment in excess of returns on acquisitions;
. control over the quality of the product which includes quality of features, size and floor plan;
. by acting as our own general contractor, we have more control over the schedule, including building delivery; and
. the ability to add presence in existing markets where we have a strong operating group in place.
During 2000, we plan to undertake a development joint venture with a financial partner. This will allow us to reduce our development capital commitment, generate fee income as the general contractor and developer and continue to increase our development expertise and capability.
In determining whether to develop in a certain market, United Dominion analyzes demographic and market data such as income levels, occupancy rates, household formation, employment growth and supply demand ratios.
Same Communities
United Dominion's net income is primarily generated from the operations of its apartment communities. During 1999, the company's same communities provided rental growth of 3.1% that was coupled with a 0.6% decrease in rental expenses. Average physical occupancy, rental rates, and operating margins at United Dominion's same communities during the comparable periods are set forth below:
1999 1998 1997
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Physical occupancy 93.1% 92.9% 92.6%
Average monthly rental rates $ 631 $ 602 $ 572
Operating margin 61.3% 59.6% 57.3%
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Over the past three years, United Dominion's strategic objectives include upgrading the apartment portfolio through the addition of features and initiatives to the communities that are appropriate for the market and which will support higher rents. United Dominion completed the same community upgrade program in 1999 as part of the strategic plan to improve the overall quality of the portfolio. United Dominion recognized the need to improve its asset quality in order to compete with an increase in the supply of newer communities, and consequently, embarked on the upgrade program. In addition, several initiatives which are considered revenue enhancing or expense reducing were underway that either allowed United Dominion to increase rents by more than the inflationary rate or allowed United Dominion to pass expenses to residents including: sub- metering of water and sewer to residents where local and state regulations allow, gating and fencing of apartment communities, installing monitoring devices such as intrusion alarms or controlled access devices, adding business and fitness centers and constructing carports, garages and self storage units. Capital expenditures decreased from 1998 as the overall age and physical condition of the apartment portfolio has improved.
Dispositions
As part of its strategic repositioning, United Dominion determined that it would selectively dispose of assets that are not in core markets, have a lower net operating income growth rate than the overall portfolio or no longer meet the operating and investment strategies of United Dominion. The disposition program allowed United Dominion to reduce the age of its existing portfolio, which should result in lower operating expense and capital expenditure growth associated with the older communities. During 1999, the focus of United Dominion's investment activities was the sale of non-strategic properties.
During the past three years, United Dominion sold approximately 15,000 of its slow-growth, non-core apartment homes while exiting certain markets which have proved to be less profitable. These sales allowed United Dominion to exit markets that had low growth opportunities and improve the average age of the apartment portfolio by selling communities with an average age of 25 years. Proceeds from the disposition program were used to strengthen the balance sheet by paying down debt, as well as to fund new development projects and to selectively repurchase shares of United Dominion's preferred and common stock.
At December 31, 1999, there were 37 communities with 7,182 apartment homes and four commercial properties classified as real estate held for disposition. United Dominion intends to sell 6,000 to 7,000 apartment homes during 2000, which will substantially complete the sale of its non-strategic assets. However, a REIT must constantly monitor and adjust its assets in order to achieve the best return on invested capital. Proceeds from the 2000 sales, expected to be at levels similar to 1999, are expected to be used to reduce debt, repurchase preferred shares, fund development activity and acquire communities through 1031 exchanges.
Financing
United Dominion's significant 1998 acquisition activity was financed primarily with debt, and to a lesser extent, preferred stock and Operating Partnership Units. Since completing these acquisitions, United Dominion's objective has been to maintain Baa2/BBB investment grade debt ratings and to improve its overall financial flexibility through proactive balance sheet management.
During the first half of 1999 United Dominion refinanced a significant portion of the debt that resulted from the 1998 acquisitions. During 1999, our two major financing activities consisted of selling $190 million of medium-term notes at a weighted average interest rate of 7.6% and closing on $195.7 million of a $200 million revolving credit facility with the Federal National Mortgage Association that had a weighted average interest rate of 6.3% at December 31, 1999.
During 1999, $141 million of the proceeds from the disposition program were used to repay $70 million of unsecured debt at a weighted average interest rate of 7.7% and to repurchase $43.5 million of common and preferred shares and OP Units. In addition, United Dominion was relieved of $57.7 million of mortgage debt. We expect to use a significant portion of our 2000 disposition proceeds to repay debt and repurchase common shares and Operating Partnership Units and further increase our financial flexibility.
Competition
In most of United Dominion's markets, the competition for residents among communities is extremely intense as some competing communities offer features that United Dominion's communities do not have. Also, some competing communities are larger and/or newer than United Dominion's communities. The competitive situation of each community varies and intensifies as additional properties are constructed.
Management believes that United Dominion, in general, is well positioned in terms of economic and other resources to compete effectively and intends to maintain its pricing discipline while continuing to pursue acquisitions that meet United Dominion's long-term investment objectives.
United Dominion believes it has certain competitive advantages that include:
. A fully integrated organization with property management, development, acquisition, redevelopment, marketing and financing expertise;
. geographic diversification of its apartment portfolio with market presence in over 30 markets across the country; and
. local presence in many of its major markets which allows us to become local market experts.
Environmental Regulations
To date, compliance with federal, state, and local environmental protection regulations has not had a material effect on the capital expenditures, earnings or competitive position of United Dominion. However, over the past few years, the issue has been raised regarding the presence of asbestos and other hazardous materials in existing real estate properties. United Dominion has a property management plan for hazardous materials. As part of the plan, Phase I environmental site investigation and reports have been completed for each property owned. In addition, all proposed acquisitions are inspected prior to acquisition. Acquisitions through merger are inspected on a case by case basis given historical information available. The inspections are conducted by qualified environmental consultants, and the report issued is reviewed by United Dominion prior to the purchase or development of any property. Nevertheless, it is possible that United Dominion's environmental assessments will not reveal all environmental liabilities, or that some material environmental liabilities exist in which United Dominion is unaware. In some cases, United Dominion has abandoned otherwise economically attractive acquisitions because the costs of removal or control have been prohibitive and/or United Dominion has been unwilling to accept the potential risks involved. United Dominion does not believe it will be required to engage in any large-scale abatement at any of its properties as asbestos is managed in place in accordance with current environmental laws and regulations. Management believes that through professional environmental inspections and testing for asbestos and other hazardous materials, coupled with a conservative posture toward accepting known risk, United Dominion can minimize its exposure to potential liability associated with environmental hazards.
Recently enacted federal legislation requires owners and landlords of residential housing constructed prior to 1978 to disclose to potential residents or purchasers of the communities any known lead paint hazards and will impose treble damages for failure to so notify. In addition, lead based paint in any of the communities may result in lead poisoning in children residing in that community if chips or particles of such lead based paint are ingested, and United Dominion
may be held liable under state laws for any such injuries caused by ingestion of lead based paint by children living at the communities.
United Dominion is unaware of any environmental hazards at any of its properties which individually or in the aggregate may have a material adverse impact on its operations or financial position. United Dominion has not been notified by any governmental authority, and is not otherwise aware, of any material non- compliance, liability or claim relating to environmental liabilities in connection with any of its properties. United Dominion does not believe that the cost of continued compliance with applicable environmental laws and regulations will have a material adverse effect on the company or its financial condition or results of operations. There can be no assurance, however, that future environmental laws, regulations or ordinances will not require additional remediation of existing conditions that are not currently actionable. Also, if more stringent requirements are imposed on United Dominion in the future, the costs of compliance could have a material adverse effect on United Dominion or its financial condition. To the best of its knowledge, United Dominion is in compliance with all applicable environmental rules and regulations.
Operating Partnership - United Dominion Realty, L.P.
On October 23, 1995, United Dominion organized United Dominion Realty, L.P. (the "Partnership") under the Virginia Revised Uniform Limited Partnership Act, as amended (the "Partnership Act"). United Dominion is the sole General Partner of the Partnership and currently holds a 90.8% interest. The Partnership is intended to assist United Dominion in competing for the acquisition of properties that meet United Dominion's investment strategies from seller partnerships, some or all of whose partners may wish to defer taxation of gain realized on sale through an exchange of partnership interests.
The Partnership was organized under a First Amended and Restated Agreement of Limited Partnership dated as of December 31, 1995 which was subsequently amended in the Second Amended and Restated Agreement of Limited Partnership dated as of August 30, 1997 and later amended by the Third Amended and Restated Agreement of Limited Partnership dated as of December 7, 1998 (the "Partnership Agreement"). A summary of certain provisions of the Partnership Agreement is set forth below. The summary does not purport to be complete and is subject to and qualified in its entirety by reference to applicable provisions of the Partnership Act and the complete Partnership Agreement. The Partnership Agreement is filed as an exhibit to United Dominion's Annual Report on Form 10-K for the fiscal year ended December 31, 1998.
Admission of Limited Partners; Investment Agreements
United Dominion presently intends to limit admission to the Partnership to Limited Partners who are "accredited investors," as defined in Rule 501(a) under the Securities Act of 1933, as amended (the "Securities Act"). Limited Partners will be admitted upon executing and delivering to United Dominion an Investment Agreement (the "Investment Agreement") and delivering to the Partnership the consideration prescribed therein. In the Investment Agreement, the prospective Limited Partner makes both representations as to his status as an accredited investor and other representations and agreements regarding the Units (defined below) to be issued to him, thus, assuring compliance with the Securities Act. Any rights to Securities Act registration of the Common Stock of United Dominion issued to such Limited Partner upon redemption of his Units (see "Redemption Rights" below), will also be set forth in the Investment Agreement or a separate registration rights agreement.
Units
The interests in the Partnership of the Partnership's limited partners (the "Limited Partners") are represented by units of limited partnership interest (the "Units"). All holders of Units are entitled to share in the cash distributions from, and in the profits and losses of, the Partnership. Distributions by the Partnership are made equally for each Unit outstanding except that outside partners have first priority as described in the "Distributions" section. As the Partnership's sole General Partner, United Dominion intends to make distributions per Unit in the same amount as the cash dividends paid by United Dominion on each share of Common Stock. However, because Partnership properties, which are the primary source of cash available for distribution to Unit holders, are significantly fewer than properties held directly by United Dominion and may not perform as well, there can be no assurance that distributions per Unit will always equal Common Stock dividends per share. A distribution made to United Dominion that enables it to maintain its REIT status (see "Management and Operations" below) may deplete cash otherwise available to Unit holders. The Partnership may borrow from United Dominion for the purpose of equalizing per Unit and per Common share distributions, but neither the Partnership nor United Dominion is under any obligation regarding Partnership borrowings for this or any other
purpose.
The Limited Partners have the rights to which limited partners are entitled under the Partnership Act. The Units are illiquid, they are not registered for secondary sale under any securities laws, state or federal, and they cannot be transferred by a holder except as provided in the Partnership Agreement and unless they are registered as such or an exemption from such registration is available. Except as provided in any Investment Agreement or other agreement with a partner, neither the Partnership nor United Dominion is under any obligation to effect any such registration or to establish any such exemption. The Partnership Agreement imposes additional restrictions on the transfer of Units, as described below under "Transferability of Interests."
Management and Operations
United Dominion, as the sole General Partner of the Partnership, has full, exclusive and complete responsibility and discretion in the management and control of the Partnership. The Limited Partners have no authority to transact business for, or participate in the management activities or decisions of the Partnership.
The Partnership Agreement requires that the Partnership be operated in a manner that will enable United Dominion to both satisfy the requirements for being classified as a REIT and avoid any federal income tax liability. The General Partner is expressly directed, notwithstanding anything to the contrary in the Partnership Agreement, to cause the Partnership to distribute amounts (including proceeds of Partnership borrowings) that sufficiently enable United Dominion to pay distributions to its shareholders that are required in order to maintain REIT status and to avoid income tax or excise tax liability.
Ability to Engage in Other Businesses; Conflicts of Interest
United Dominion and other persons (including officers, directors, employees, agents and other affiliates of United Dominion) are not prohibited under the Partnership Agreement from engaging in other business activities, including business activities substantially similar or identical to those of the Partnership. United Dominion will not be required to present any business opportunities to the Partnership or to any Limited Partner.
Borrowing by the Partnership
The General Partner is authorized under the Partnership Agreement to cause the Partnership to borrow money and to issue and guarantee debt as it deems necessary for the conduct of the activities of the Partnership. Such debt may be secured by mortgages, deeds of United Dominion, pledges or other liens on the assets of the Partnership.
Reimbursement of General Partner; Transactions with the General Partner and its Affiliates
The General Partner will receive no compensation for its services as General Partner of the Partnership. However, as a partner in the Partnership, the General Partner has the same right to allocations of profit and loss and distributions as other partners of the Partnership. In addition, the Partnership will reimburse the General Partner for all expenses it incurs relating to the ownership and operation of, or for the benefit of, the Partnership and any offering of Units or other partnership interests, and for the pro rata share of the expenses of any offering of securities of United Dominion some or all of the proceeds of which are contributed to the Partnership.
Liability of General Partner and Limited Partners
The General Partner is liable for all general obligations of the Partnership to the extent not paid by the Partnership. The General Partner is not liable for the non-recourse obligations of the Partnership.
The Limited Partners are not required to make further capital contributions to the Partnership after their respective initial contributions are fully paid. Assuming that a Limited Partner acts in conformity with the provisions of the Partnership Agreement, the liability of the Limited Partner for obligations of the Partnership under the Partnership Agreement and Partnership Act will be limited to, subject to certain possible exceptions, the loss of the Limited Partner's investment in the Partnership.
The Partnership is qualified to conduct business in each state in which it owns property and may qualify to conduct business in other jurisdictions. Maintenance of limited liability may require compliance with certain legal requirements of those jurisdictions and certain other jurisdictions. Limitations on the liability of a limited partner for the obligations of a limited partnership have not clearly been established in many states. Accordingly, if it were determined that the
right, or exercise of the right by the Limited Partners, to make certain amendments to the Partnership Agreement or to take other action pursuant to the Partnership Agreement constituted "control" of the Partnership's business for the purposes of the statutes of any relevant state, the Limited Partners might be held personally liable for the Partnership's obligations. The Partnership will operate in a manner the General Partner deems reasonable, necessary and appropriate to preserve the limited liability of the Limited Partners.
Exculpation and Indemnification of the General Partner
If acting in good faith, the Partnership Agreement provides that the General Partner will incur no liability for monetary damages to the Partnership or any Limited Partner for losses sustained or liabilities incurred as a result of errors in judgment or of any act or omission. In addition, the General Partner is not responsible for any misconduct or negligence on the part of its agents, provided the General Partner appointed such agents in good faith.
The Partnership Agreement also provides for indemnification of the General Partner, the directors, officers and employees of the General Partner, and such other persons as the General Partner may from time to time designate, against any and all losses, claims, damages, liabilities (joint or several), expenses (including reasonable legal fees and expenses), judgments, fines, settlements and other amounts arising from any and all claims, demands, actions, suits or proceedings, whether civil, criminal, administrative or investigative, that relate to the operations of the Partnership in which any such indemnitee may be involved, or is threatened to be involved, unless it is established that (i) the act or omission of such indemnitee was material to the matter giving rise to the proceeding and either was committed in bad faith or was the result of active and deliberate dishonesty, (ii) such indemnitee actually received an improper personal benefit in money, property or services or (iii) in the case of any criminal proceeding, such indemnitee had reasonable cause to believe that the act or omission was unlawful.
Sale of Assets; Merger
Under the Partnership Agreement, the General Partner generally has the exclusive authority to determine whether, when and on what terms the assets of the Partnership will be sold or on which the Partnership will merge or consolidate with another entity.
Removal of the General Partner; Transfer of General Partner's Interest
The Partnership Agreement does not authorize the Limited Partners to remove the General Partner and the Limited Partners have no right to remove the General Partner under the Partnership Act. The General Partner may not transfer any of its interest as General Partner and withdraw as General Partner, except (a) to a wholly-owned subsidiary of the General Partner or the owner of all the ownership interests in the General Partner, (b) in connection with a merger or sale of all or substantially all of the assets of the General Partner or (c) as a result of the bankruptcy of the General Partner. A substitute or additional General Partner may be admitted upon compliance with the applicable provisions of the Partnership Agreement, including delivery by counsel for the Partnership of an opinion that admission of such General Partner will not cause (i) the Partnership to be classified other than as a partnership for federal income tax purposes or (ii) the loss of any Limited Partner's limited liability. The General Partner may not sell all or substantially all of its assets, or enter into a merger, unless the sale or merger includes the sale of all or substantially all of the assets of, or the merger of, the Partnership and the Limited Partners receive for each Unit substantially the same consideration as the holder of one share of Common Stock.
Transferability of Interests
A Limited Partner generally may not transfer his interest in the Partnership without the consent of the General Partner which may be withheld at its absolute discretion. The General Partner may require, as a condition of any transfer, that the transferring Limited Partner assume all costs incurred by the Partnership in connection with such a transfer.
Redemption Rights
Each Limited Partner has the right (the "Redemption Right"), subject to the purchase right of the General Partner described below, to cause the redemption of such Limited Partner's Units for cash in an amount per Unit equal to the average of the closing sale prices of the Common Stock of United Dominion on the New York Stock Exchange (the "NYSE") for the ten trading days immediately preceding the date of receipt by the General Partner of notice of such Limited Partner's exercise of the Redemption Right provided that such Units have been outstanding for at least one year. Subject to certain restrictions intended to prevent undesirable tax consequences and assure compliance with the Securities Act, a Limited Partner may exercise the Redemption Right at any time but not more than twice within the
same calendar year and not with respect to less than 1,000 Units (or all Units owned by such Limited Partner, if less than 1,000). A Limited Partner that exercises the Redemption Right shall be deemed to have offered to sell the Units to be redeemed to the General Partner, and the General Partner may elect to purchase such Units by paying to such Limited Partner either the redemption price in cash or by delivering to such Limited Partner a number of shares of Common Stock of the Company equal to the product of the number of such Units, multiplied by the "Conversion Factor," which is 1.0, subject to customary antidilution provisions in the event of stock dividends on or subdivisions or combinations of the Common Stock subsequent to issuance of such Units. Any Common Stock issued to the redeeming Limited Partner will be listed on the NYSE and, if to the extent provided in such Redeeming Partner's Investment Agreement or other agreement, registered under the Securities Act and/or entitled to rights to Securities Act registration.
No Withdrawal of Capital by Limited Partners
No Limited Partner has the right to withdraw any part of his capital contribution to the Partnership or interest thereon or to receive any distribution, except as provided in the Partnership Agreement.
Issuance of Additional Limited Partnership Interests and Other Partnership Securities
The General Partner is authorized, without the consent of the Limited Partners, to cause the Partnership to issue additional Units or other Partnership securities to the partners or to other persons on such terms and conditions and for such consideration, including cash or any property or other assets permitted by the Partnership Act, as the General Partner deems appropriate.
Meetings
The Partnership Agreement does not provide for annual meetings of the Limited Partners, and the General Partner does not anticipate calling such meetings.
Amendment of Partnership Agreement
Amendments to the Partnership Agreement may, with four exceptions, be made by the General Partner without the consent of the Limited Partners. Any amendment to the Partnership Agreement which would (i) affect the Conversion Factor or the Redemption Rights of the Limited Partners, (ii) adversely affect the rights of the Limited Partners to receive distributions payable to them under the Partnership Agreement, or (iii) alter the Partnership's profit and loss allocations shall require the consent of Limited Partners. Any amendment that would impose any obligation upon the Limited Partners to make additional capital contributions to the Partnership shall require the consent of each Limited Partner owning more than 50% of the percentage interests in the Partnership.
Books and Reports
The General Partner is required to keep at the specified office of the Partnership the Partnership's books and records, including copies of the Partnership's federal, state and local tax returns, a list of the partners and their last known business addresses, the Partnership Agreement, the Partnership certificate and all amendments thereto and any other documents and information required under the Partnership Act. Any partner or his duly authorized representative, upon paying duplicating, collection and mailing costs, is entitled to inspect or copy such records during ordinary business hours.
The General Partner will furnish to each Limited Partner, as soon as practicable after the close of each fiscal year, an annual report containing financial statements of the Partnership (or United Dominion, if consolidated financial statements including the Partnership are prepared) for such fiscal year. The financial statements will be audited by accountants selected by the General Partner. In addition, as soon as practicable after the close of each fiscal quarter (other than the last quarter of the fiscal year), the General Partner will furnish to each Limited Partner a quarterly report containing unaudited financial statements of the Partnership (or the Company and the Partnership, consolidated).
The General Partner will furnish to each Limited Partner, within 75 days after the close of each fiscal year of the Partnership, the tax information necessary to file such Limited Partner's individual tax returns.
Loans to Partnership
The Partnership Agreement provides that the General Partner may borrow additional Partnership funds for any Partnership purpose from the General Partner or a subsidiary or subsidiaries of the General Partner or otherwise.
Adjustments of Capital Accounts and Percentage Interests
A separate capital account will be established and maintained for each Partner. The General Partner shall revalue the property of the Partnership to its fair market value (as determined by the General Partner, in its sole discretion) in accordance with applicable federal income tax regulations if: (i) a new or existing general or limited partner of the Partnership (a Partner or collectively Partners) acquires an additional interest in the Partnership in exchange for more than a de minimis capital contribution, (ii) the Partnership distributes to a Partner more than a de minimis amount of Partnership property as consideration for a Partnership interest or (iii) the Partnership is liquidated for federal income tax purposes. When the Partnership's property is revalued by the General Partner, the capital accounts of the partners shall be adjusted in accordance with such regulations, which generally requires such capital accounts to be adjusted to reflect the manner in which the unrealized gain or loss inherent in such property (that has not been reflected in the capital accounts previously) would be allocated among the Partners pursuant to the Partnership Agreement if there were a taxable disposition of such property for its fair market value on the date of the revaluation.
If the number of outstanding Units increases or decreases during a taxable year, each Partner's percentage interest in the Partnership shall be adjusted by the General Partner as of the effective date of each such increase or decrease to a percentage equal to the number of Units held by such Partner divided by the aggregate number of Units outstanding, after giving effect to such increase or decrease, and profits and losses for the year will be allocated among the Partners in a manner selected by the General Partner to give appropriate effect to such adjustments.
Registration Rights
Limited Partners have no rights to Securities Act registration of any Common Stock of United Dominion received in connection with redemption of Units except as provided in their respective Investment Agreements or other agreements with United Dominion.
Tax Matters; Profit and Loss Allocations
Pursuant to the Partnership Agreement, the General Partner is the "tax matters" partner of the Partnership and, as such, has the authority to handle tax audits and to make tax elections under the Code on behalf of the Partnership.
Profits of the Partnership are to be allocated first to partners in proportion to and up to the amount of cash distributions, and second in accordance with the respective partnership interests. Losses are allocated in accordance with each partners percentage interest.
Distributions
The Partnership Agreement provides that the General Partner shall distribute cash quarterly, in amounts determined by the General Partner in its sole discretion (i) first to the outside limited partners, (ii) second to United Dominion (or appropriate subsidiary) until United Dominion has received an amount equal to prior distributions to the outside limited partners, and (iii) third, to the outside limited partners and United Dominion (or the appropriate subsidiary) in accordance with their percentage interests in the Partnership. Also, the amount of cash distributable to a Limited Partner who has not been a Limited Partner for the full quarter for which the distribution is paid is subject to pro rata reduction. Upon liquidation of the Partnership, after payment of, or adequate provision for, debts and obligations of the Partnership, including any Partner loans, any remaining assets of the Partnership will be distributed to all Partners with positive capital accounts in accordance with their respective positive capital account balances. If the General Partner has a negative balance in its capital account following a liquidation of the Partnership, it will be obligated to contribute cash to the Partnership equal to the negative balance in its capital account.
Term
The Partnership will continue until December 31, 2051, or until sooner dissolved upon (i) the bankruptcy, dissolution, death or withdrawal of a General Partner (unless the Limited Partners elect to continue the Partnership by electing by unanimous consent a substitute General Partner within 90 days of such occurrence), (ii) the passage of 90 days after the sale or other disposition of all or substantially all the assets of the Partnership, (iii) the redemption of all Limited Partners' interests in the Partnership or (iv) election by the General Partner. Upon dissolution of the Partnership, the General Partner will proceed to liquidate the assets of the Partnership and distribute the proceeds remaining after payment or adequate provision for payment of all debts and obligations of the Partnership as provided in the Partnership Agreement.
Item 2. Properties
Real Estate Owned
The table below sets forth a summary by major geographic market of United
Dominion's real estate portfolio at December 31, 1999.
See also Notes 1 and 2 to the Consolidated Financial Statements and Schedule
III - Summary of Real Estate Owned.
Number of Number of Percentage of Carrying
Apartment Apartment Carrying Value Encumbrances Cost
Major Geographic Markets Communities Homes Value (In thousands) (In thousands) Per Home
------------------------------------------------------------------------------------------------------------------------------------
Apartments:
Dallas/Fort Worth, TX 29 9,042 11% $415,116 $ 43,455 (A) $45,910
Houston, TX 25 6,228 6% 238,123 66,546 (A) 38,234
Phoenix, AZ 10 3,458 5% 198,702 19,500 (A) 57,462
Orlando, FL 13 4,052 5% 194,569 41,298 (A) 48,018
Tampa, FL 12 4,018 5% 179,307 40,177 (A) 44,626
San Antonio, TX 12 3,515 4% 171,556 38,138 (A) 48,807
Raleigh, NC 9 2,951 4% 146,528 15,202 49,654
Nashville, TN 11 3,064 4% 144,107 - 47,032
San Francisco, CA 4 980 4% 138,681 68,751 141,511
Charlotte, NC 10 2,534 3% 128,190 17,650 50,588
Columbus, OH 5 2,175 3% 118,268 34,459 54,376
Wilmington, NC 10 2,710 3% 111,709 - 41,221
Monterey Peninsula, CA 13 1,955 3% 111,474 703 (A) 57,020
Memphis, TN 7 2,196 3% 105,859 33,032 48,205
South Florida 6 1,638 3% 102,349 - (A) 62,484
Richmond, VA 8 2,372 3% 102,120 2,917 (A) 43,052
Greensboro, NC 8 2,123 3% 102,091 4,072 48,088
Columbia, SC 9 2,730 2% 97,414 5,000 35,683
Southern California 6 1,762 2% 95,243 6,034 54,054
Baltimore, MD 8 1,788 2% 85,368 34,800 (A) 47,745
Atlanta, GA 6 1,426 2% 69,239 10,841 (A) 48,555
Jacksonville, FL 3 1,157 1% 56,783 12,455 49,078
Hampton Roads, VA 6 1,437 1% 54,655 - (A) 38,034
Sacramento, CA 2 914 1% 52,758 17,065 (A) 57,722
Denver, CO 2 876 1% 44,942 - 51,304
Seattle, WA 5 1,159 1% 57,816 28,684 49,884
Detroit, MI 4 744 1% 42,910 635 (A) 57,675
Washington, DC 3 615 1% 35,731 - (A) 58,099
Portland, OR 3 627 1% 34,353 1,542 (A) 54,789
Indianapolis, IN 3 875 1% 28,699 304 (A) 32,799
Austin, TX 2 542 1% 23,836 - (A) 43,978
Other Florida 7 1,665 1% 78,929 - 47,405
Eastern Shore MD and Delaware 6 1,156 1% 52,553 - (A) 45,461
Other North Carolina 4 1,052 1% 48,876 10,142 46,460
Other Virginia 6 1,154 1% 47,984 2,780 41,581
Other Michigan 4 1,227 1% 47,535 - (A) 38,741
Other Midwest 5 969 1% 42,780 1,006 (A) 44,149
Other Washington State 3 536 1% 21,914 8,889 40,884
Arkansas 2 512 1% 22,306 - 43,566
Nevada 1 384 1% 20,776 - 54,104
New Mexico 3 530 1% 19,972 7,771 (A) 37,683
Other Arizona 2 408 -- 13,408 4,618 32,863
Other Georgia 1 240 -- 10,413 - (A) 43,388
Alabama 1 242 -- 8,780 - 36,281
Other Texas 1 248 -- 8,330 - (A) 33,589
Other South Carolina 1 168 -- 7,428 2,200 44,214
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Total Apartments 301 82,154 100% $3,940,480 $ 997,066 $47,965
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Commercial Properties (C) 4 N/A -- 12,565 3,070 N/A
---------------------------------------------------------------------------------------------------
Total Real Estate Owned 305 82,154 100% $ 3,953,045 $ 1,000,136 $47,965
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Physical Average Monthly Rental Average
Occupancy Rates for the Year Ended Unit Size
Major Geographic Markets Full Year 1999 December 31, 1999 (B) (Square Feet)
-----------------------------------------------------------------------------------------------------------------
Apartments:
Dallas/Fort Worth, TX 94.5% $625 801
Houston, TX 90.5% 582 794
Phoenix, AZ 91.5% 662 891
Orlando, FL 94.1% 666 930
Tampa, FL 92.4% 646 950
San Antonio, TX 92.4% 623 818
Raleigh, NC 92.5% 693 914
Nashville, TN 89.7% 636 955
San Francisco, CA 98.8% 1,482 776
Charlotte, NC 91.2% 680 965
Columbus, OH 92.8% 631 853
Wilmington, NC 89.8% 593 936
Monterey Peninsula, CA 93.1% 735 727
Memphis, TN 93.9% 593 833
South Florida 91.1% 830 1,084
Richmond, VA 94.3% 661 945
Greensboro, NC 88.8% 625 981
Columbia, SC 91.1% 535 812
Southern California 93.8% 704 751
Baltimore, MD 96.2% 695 865
Atlanta, GA 92.7% 692 908
Jacksonville, FL 90.5% 638 896
Hampton Roads, VA 95.1% 603 1,016
Sacramento, CA 97.8% 646 820
Denver, CO 93.5% 644 957
Seattle, WA 93.2% 681 840
Detroit, MI 94.9% 690 946
Washington, DC 97.7% 783 814
Portland, OR 91.2% 682 890
Indianapolis, IN 94.0% 519 966
Austin, TX 94.6% 620 713
Other Florida 92.1% 610 841
Eastern Shore MD and Delaware 96.3% 667 922
Other North Carolina 94.7% 586 890
Other Virginia 93.8% 623 869
Other Michigan 90.5% 622 815
Other Midwest 94.5% 608 1,004
Other Washington State 83.3% 702 936
Arkansas 93.9% 593 821
Nevada 93.4% 646 839
New Mexico 89.4% 526 670
Other Arizona 91.5% 445 602
Other Georgia 90.8% 581 852
Alabama 91.8% 513 1,095
Other Texas 85.4% 562 739
Other South Carolina 88.7% 509 855
---------------------------------------------------------------------------
Total Apartments 92.6% $645 873
---------------------------------------------------------------------------
Commercial Properties (C) N/A N/A N/A
---------------------------------------------------------------------------
Total Real Estate Owned 92.6% $645 873
---------------------------------------------------------------------------
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(A) These communities are encumbered by the following: (i) 21 communities encumbered by two REMIC financings aggregating $59.2 million, (ii) 19 communities encumbered by one secured note payable in the amount of $195.7 million and (iii) 29 communities encumbered by two fixed rate debt aggregating $161.5 million. The amount of debt is not included in the encumbrances shown for the individual markets.
(B) Average Monthly Rental Rates for the Year Ended December 31, 1999, represents potential rent collections (gross potential rents less market adjustments), which approximates net effective rents. These amounts exclude the 1999 acquisitions.
(C) Includes four commercial properties and one parcel of land included in real estate held for disposition.
Neither United Dominion nor any of its apartment communities is presently subject to any material litigation nor, to United Dominion's knowledge, is any litigation threatened against United Dominion or any of the communities, other than routine actions arising in the ordinary course of business. Some of these routine actions are expected to be covered by liability insurance, and none are expected to have a material adverse effect on the business or financial condition or results of operations of United Dominion.
No matters were submitted to a vote of security holders during the fourth quarter of United Dominion's fiscal year ended December 31, 1999.
The executive officers of United Dominion, listed below, serve in their respective capacities for approximate one year terms.
Name Age Office Since
---- --- ------ -----
John P. McCann 55 Chairman of the Board 1974
and Chief Executive Officer
John S. Schneider 61 Vice-Chairman of the Board, 1996
Chief Operations Officer
and President
A. William Hamill 52 Executive Vice President 1999
and Chief Financial Officer
Richard A. Giannotti 44 Senior Vice President and Director 1985
of Development-East
Mark E. Wood 55 Senior Vice President and Director 1996
of Development-West
Katheryn E. Surface 41 Senior Vice President, Corporate 1992
Secretary and General Counsel
Kevin W. Walsh 45 Senior Vice President of 1999
Finance
Curt W. Carter 43 Senior Vice President and Director 1985
of Apartment Operations-Northern
Region
Robert L. Landis 41 Senior Vice President and Director 1996
of Apartment Operations-Western
Region
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Walter J. Lamperski 42 Senior Vice President and Director 1996
of Apartment Operations-Southern
Region
Blake W. Clemens 42 Senior Vice President and Director 1998
of Acquisitions
Thomas J. Corcoran 53 Senior Vice President and
Director of Human Resources 1997
Patrick S. Gregory 50 Senior Vice President and
Director of Information Technology 1997
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Mr. McCann has been United Dominion's managing Chief Executive Officer since 1974. Mr. McCann was elected Chairman of the Board in 1996.
Mr. Schneider is the former Chief Executive Officer and Chairman of the Board of South West Property Trust Inc. (South West). Mr. Schneider was employed with the investment banking firm of Donaldson, Lufkin and Jenrette until from 1967 until 1973, when he co-founded a predecessor firm to South West. Mr. Schneider was elected Vice Chairman of the Board and Executive Vice President in 1996 in connection with the merger with South West and President in 1998.
Mr. Hamill joined United Dominion as Executive Vice President and Chief Financial Officer in October 1999. Prior to joining United Dominion, Mr. Hamill was the Chief Financial Officer of Union Camp Corporation. Mr. Hamill also previously served as an investment banker with Morgan Stanley & Co. Incorporated, where he was a managing director.
Mr. Giannotti joined United Dominion as Director of Development and Construction in September 1985. He was elected Assistant Vice President in 1988, Vice President in 1989 and Senior Vice President in 1996. In 1998, Mr. Giannotti was elected Director of Development-East.
Mr. Wood joined United Dominion as Vice President of Construction in connection with the merger of South West in 1996. He was promoted to Senior Vice President and Director Development -West in 1998.
Ms. Surface joined United Dominion in 1992 as Assistant Vice President and Legal Counsel, elected General Counsel, Corporate Secretary and Vice President in 1994 and elected to Senior Vice President in 1997.
Mr. Walsh joined United Dominion as Vice President of Finance in May 1998. In 1999, Mr. Walsh was elected to Senior Vice President. Prior to joining United Dominion, Mr. Walsh was the Vice President of Finance and Treasurer of Tultex Corporation. His experience also includes fifteen years in corporate banking with predecessors to both First Union and NationsBank.
Mr. Carter joined United Dominion in 1991 as an Assistant Vice President of Apartment Operations. In 1992, he was promoted to Vice President of Apartment Operations. In 1995, he was elected Regional Vice President- Northern Region, and in 1997 was promoted to Senior Vice President and Director of Apartment Operations- Northern Region.
Mr. Landis joined United Dominion in 1996 as Regional Vice President- Florida Region and was promoted in 1997 to Senior Vice President and Director of Apartment Operations-Florida Region. During 1998, Mr. Landis became the Senior Vice President and Director of Apartment Operations-Western Region. Prior to joining United
Dominion, he was Vice President of Asset Management and Property Management for
CRI/CAPREIT, Inc.
Mr. Lamperski joined United Dominion in 1996 as the Regional Vice President-Southern Region and was promoted in 1997 to Senior Vice President and Director of Apartment Operations-Southern Region. From February 1990 to August 1996, he was Vice President and Director of Property Management for Steven D. Bell, a property management company located in Greensboro, North Carolina.
Mr. Clemens joined United Dominion in 1998 as a Vice President and Director of Acquisitions and was promoted to Senior Vice President in 1999. Prior to joining United Dominion, Mr. Clemens was the Vice President of Acquisitions for McNeil Real Estate Management Company from 1996 to 1998. Prior to this, Mr. Clemens was the Vice President of Acquisitions and Finance at Insignia Commercial Group, Incorporated.
Mr. Corcoran joined United Dominion in 1997 as the Assistant Vice President of Human Resources and was promoted to Vice President in 1998 and Senior Vice President in 1999. Prior to joining United Dominion, Mr. Corcoran was the Vice President of Human Resources for Acordia, Inc., a national insurance brokerage firm from 1993 to 1995.
Mr. Gregory joined United Dominion in 1997 as the Vice President and Director Information Technology and was promoted to Senior Vice President in 1999. From 1976 to 1997, Mr. Gregory was employed by Crestar Bank as a New Technology Analyst.
PART II
United Dominion's Common Stock is traded on the New York Stock Exchange (NYSE) under the symbol UDR. The following tables set forth the quarterly high and low sale prices per common share reported on the NYSE for each quarter of the last two years. Distribution information for Common Stock reflects distributions declared per share for each calendar quarter and paid at the end of the following month.
COMMON STOCK
Distributions
High Low Declared
1998
1st Quarter $14 13/16 $13 3/4 $.2625
2nd Quarter 14 1/2 13 5/16 .2625
3rd Quarter 14 1/16 10 11/16 .2625
4th Quarter 11 3/4 10 1/16 .2625
1999
1st Quarter $11 1/4 $ 9 1/16 $.2650
2nd Quarter 11 15/16 9 13/16 .2650
3rd Quarter 12 1/16 10 3/4 .2650
4th Quarter 11 5/8 9 1/8 .2650
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United Dominion determined that, for federal income tax purposes, approximately 58.6% of the distributions for each of the four quarters of 1999 represented ordinary income to its shareholders, 29.2% represented return of capital to its shareholders and 12.2% represented long-term capital gain to its shareholders.
On March 21, 2000, the closing sale price of the Common Stock was $9 7/8 per share on the NYSE, and there were 8,874 holders of record of the 103,127,425 shares of Common Stock.
United Dominion pays regular quarterly distributions to holders of shares of Common Stock. Future distributions by United Dominion will be at the discretion of its Board of Directors after considering the company's actual funds from operations, financial condition and capital requirements, the annual distribution requirements under the REIT provisions of the Internal Revenue Code and other factors. The annual distribution payment for calendar year 1999 necessary for United Dominion to maintain its status as a REIT was approximately $.78 per share. United Dominion paid total distributions of $1.06 per share for 1999.
SERIES A PREFERRED STOCK
United Dominion's Series A Preferred Stock ("Series A Preferred") and Series B Preferred Stock ("Series B Preferred") is traded on the New York Stock Exchange (NYSE) under the symbol "UDRpfa" and "UDRpfb", respectively. The following tables set forth the quarterly high and low sale prices per share reported on the NYSE for each quarter of the last two years for the Series A Preferred and Series B Preferred. Distribution information for the Series A Preferred and Series B Preferred reflects distributions declared per share for each calendar quarter and paid at the end of the following month.
Distributions
High Low Declared
1998
1st Quarter $26 11/16 $26 1/8 $.5775
2nd Quarter 26 7/8 25 3/4 .5775
3rd Quarter 25 15/16 24 1/2 .5775
4th Quarter 25 11/16 24 3/8 .5775
1999
1st Quarter $25 1/8 $24 $.5775
2nd Quarter 25 1/4 23 13/16 .5775
3rd Quarter 25 1/16 20 9/16 .5775
4th Quarter 22 3/8 17 13/16 .5775
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On or after April 24, 2000, the Series A Preferred Stock may be redeemed for cash at a redemption price of $25 per share, plus accrued and unpaid dividends from the proceeds from the sale of additional capital stock (common or preferred).
SERIES B PREFERRED STOCK
Distributions
High Low Declared
1998
1st Quarter $27 3/8 $26 3/16 $.5375
2nd Quarter 26 1/2 25 5/8 .5375
3rd Quarter 26 13/16 24 9/16 .5375
4th Quarter 25 7/8 24 9/16 .5375
1999
1st Quarter $26 1/16 $24 $.5375
2nd Quarter 25 1/2 23 5/8 .5375
3rd Quarter 25 5/16 20 1/4 .5375
4th Quarter 22 5/8 15 5/8 .5375
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The Series B Preferred Stock may be redeemed beginning May 29, 2007 at the sole option of United Dominion at a redemption price of $25 per share, plus accrued and unpaid dividends from the proceeds from the sale of additional capital stock (common or preferred).
SERIES D PREFERRED STOCK
On December 7, 1998, in connection with the acquisition of American Apartment Communities II, Inc. (AAC), United Dominion issued eight million shares of Series D Convertible Redeemable Preferred Stock (Series D) to one of the sellers of AAC. The Series D is convertible into 1.5385 shares of common stock at the option of the holder at any time at $16.25 per share. The Series D is not redeemable prior to December 7, 2003. On or after this date, United Dominion may, at its option, redeem all or part of the Series D at a price per share of $25, plus accrued and unpaid dividends from the proceeds from the sale of additional capital stock (common or preferred). Distributions declared for 1999 were $1.89 per share or $.4725 per quarter. The Series D is not listed on any exchange.
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
United Dominion has a Dividend Reinvestment and Stock Purchase Plan under which holders of Common and Preferred Stock may elect to automatically reinvest their distributions and make additional cash payments to acquire additional shares of United Dominion's Common Stock at a discount.
OPERATING PARTNERSHIP UNITS
From time to time, United Dominion issues shares of its common stock in exchange for Operating Partnership Units (OP Units) tendered to United Dominion's operating partnership, United Dominion Realty L.P., for redemption in accordance with the provisions of the Agreement of Limited Partnership of United Dominion Realty L.P. Such shares are issued based on the exchange ratio of one share for each OP Unit. During 1999, United Dominion issued a total of 71,373 shares of common stock in exchange for OP Units.
The following table sets forth selected consolidated financial and other information for United Dominion as of and for each of the years in the five year period ended December 31, 1999. The table should be read in conjunction with the Consolidated Financial Statements of United Dominion Realty Trust, Inc. and the Notes thereto included elsewhere herein.
Selected Financial Data
Years Ended December 31, 1999 1998 1997 1996 1995
-----------------------------------------------------------------------------------------------------------------------------------
In thousands, except per share data and apartment homes owned
Operating Data (a)
Rental income $ 618,749 $ 478,718 $ 386,672 $ 241,260 $ 194,511
Income before gains on sales of investments, minority interests
and extraordinary item 60,379 47,339 57,813 33,726 28,037
Gains on sales of investments 37,995 26,672 12,664 4,346 5,090
Extraordinary item - early extinguishment of debt 927 (138) (50) (23) -
Net income 93,622 72,332 70,149 37,991 33,127
Distributions to preferred shareholders 37,714 23,593 17,345 9,713 6,637
Net income available to common shareholders 55,908 48,739 52,804 28,278 26,490
Common distributions declared 109,607 107,758 88,587 55,493 48,610
Weighted average number of common shares outstanding-basic 103,604 99,966 87,145 57,482 52,781
Weighted average number of common shares outstanding-diluted 103,639 100,062 87,339 57,655 52,972
Weighted average number of common shares, OP Units and common
share equivalents - diluted 124,127 103,793 87,656 57,724 52,972
Per share:
Basic earnings per share $0.54 $0.49 $0.61 $0.49 $0.50
Diluted earnings per share 0.54 0.49 0.60 0.49 0.50
Common distributions declared 1.06 1.05 1.01 0.96 0.90
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Balance Sheet Data (a)
Real estate owned, at carrying value $3,953,045 $3,952,752 $2,517,398 $2,099,641 $1,205,685
Accumulated depreciation 395,864 316,630 245,367 187,909 153,026
Total real estate owned, net of accumulated depreciation 3,557,181 3,636,122 2,272,031 1,911,732 1,052,659
Total assets 3,688,317 3,762,940 2,313,725 1,966,904 1,080,616
Secured debt 1,000,136 1,072,185 417,325 376,560 180,481
Unsecured debt 1,127,169 1,045,564 738,901 668,275 349,858
Total debt 2,127,305 2,117,749 1,156,226 1,044,835 530,339
Shareholders' equity 1,310,212 1,374,121 1,058,357 850,379 516,389
Number of common shares outstanding 102,741 103,639 89,168 81,983 56,375
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Other Data (a)
Cash Flow Data
Cash provided by operating activities $ 190,876 $ 152,875 $ 137,903 $ 90,064 $ 66,428
Cash used in investing activities (34,294) (276,142) (342,273) (161,572) (183,930)
Cash (used in) provided by financing activities (174,985) 148,875 191,391 82,056 113,145
Funds from operations (b)
Income before gains on sales of investments, minority
interests and extraordinary item $ 60,379 $ 47,339 $ 57,813 $ 33,726 $ 28,037
Adjustments:
Depreciation of real estate owned, net of outside 120,543 99,588 76,688 47,410 38,939
partners' interest
Distributions to preferred shareholders (37,714) (23,593) (17,345) (9,713) (6,637)
Minority interest of outside partnerships (1,245) (111) -- -- --
Non-recurring items:
Impairment loss on real estate and investments 19,300 -- 1,400 290 1,700
Loss on termination of an interest rate risk
management agreement -- 15,591
Prior years' employment and other taxes -- -- -- -- 395
Adjustment for internal acquisition costs (c) -- (544) (1,341) (901) (587)
-------------------------------------------------------------
Funds from operations-basic $ 161,263 $ 138,270 $ 117,215 $ 70,812 $ 61,847
=============================================================
Adjustments:
Distributions to preferred shareholders-Series D
(Convertible) 15,154 986 -- -- --
-------------------------------------------------------------
Funds from operations-diluted $ 176,417 $ 139,256 $ 117,215 $ 70,812 $ 61,847
=============================================================
Apartment Homes Owned
Total apartment homes owned at December 31 82,154 86,893 62,789 55,664 34,224
Weighted average number of apartment homes owned during the
year 85,926 70,724 58,038 37,481 31,242
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(a) From 1996 to 1998, United Dominion completed the following statutory
mergers: (i) South West Property Trust, Inc. on December 31, 1996 for an
aggregate purchase price of $572 million, (ii) ASR Investments Corporation
Inc. on March 27, 1998 for an aggregate purchase price of $323 million, and
(iii) American Apartment Communities II on December 7, 1998, for an
aggregate purchase price of $794 million.
(b) Funds from operations ("FFO") is defined as income before gains (losses) on sales of investments, minority interests and extraordinary items (computed in accordance with generally accepted accounting principles) plus real estate depreciation, less preferred dividends and after adjustment for significant non-recurring items, if any. This definition conforms to recommendations set forth in a White Paper adopted by the National Association of Real Estate Investment Trusts (NAREIT) in early 1995. United Dominion considers FFO in evaluating property acquisitions and its operating performance and believes that FFO should be considered along with, but not as an alternative to, net income and cash flows as a measure of United Dominion's activities in accordance with generally accepted accounting principles and is not necessarily indicative of cash available to fund cash needs.
(c) Reflects the adjustment for internal acquisition costs that were capitalized prior to March 19, 1998.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Overview
This annual report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1993, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Such forward-looking statements
include, without limitation, statements concerning property acquisitions and
dispositions, development activity and capital expenditures, capital raising
activities, rent growth, occupancy and rental expense growth. Such statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievement of United Dominion Realty Trust,
Inc. ("United Dominion") to be materially different from the results of
operations or plans expressed or implied by such forward-looking statements.
Such factors include, among other things, unanticipated adverse business
developments affecting United Dominion, or its properties, adverse changes in
the real estate markets and general and local economies and business conditions.
Although United Dominion believes that the assumptions underlying the forward-
looking statements contained herein are reasonable, any of the assumptions could
be inaccurate, and therefore there can be no assurance that such statements
included in this report will prove to be accurate. In light of the significant
uncertainties inherent in the forward-looking statements included herein, the
inclusion of such information should not be regarded as a representation by
United Dominion or any other person that the results or conditions described in
such statements or the objectives and plans of United Dominion will be achieved.
The following discussion should be read in conjunction with the Consolidated
Financial Statements and Notes thereto of United Dominion appearing elsewhere in
this annual report.
United Dominion is a real estate investment trust ("REIT") with activities related to the ownership, development, acquisition, renovation, management, marketing and strategic disposition of multifamily apartment communities nationwide. Management's strategy is to be a national, highly efficient provider of quality apartment homes. During the past several years, United Dominion has implemented this strategy through the acquisition of portfolios of higher quality communities, the disposition of non-strategic communities, a greater commitment to development and the upgrade of its core portfolio of apartment communities. Through a combination of dispositions and acquisitions over the past two years, United Dominion aggressively moved the company into better performing markets with attractive prospects for long-term growth. During this same period, more emphasis has been placed on higher quality development projects. This strategy resulted in the upgrade of the overall quality and average age of United Dominion's portfolio which is now solidly positioned with "B" and "A" grade communities. United Dominion seeks to be a market leader by operating a sufficiently sized portfolio of apartments within each of its target markets in order to drive down operating costs through economies of scale and management efficiencies. United Dominion believes that geographic market diversification increases investment opportunities and decreases the risk associated with cyclical local real estate markets and economies.
At December 31, 1999, United Dominion owned 301 communities containing 82,154 apartment homes nationwide, including 37 communities with 7,182 completed apartment homes included in real estate held for disposition and 330 recently completed apartment homes included in real estate under development.
The following table summarizes United Dominion's apartment market information by major geographic markets and other geographic areas (including real estate under development and excluding four commercial properties):
As of December 31, 1999 December 31, 1999
------------------------------------------------------------------------------------------- -----------------------------
No. of No. of % of Carrying Year Ended Quarter Ended
Apartment Apartment Carrying Value Physical Physical
Area Communities Homes Value (in thousands) Occupancy Occupancy
------------------------------------------------------------------------------------------- -----------------------------
Major Markets
-------------
Dallas/Fort Worth, TX 29 9,042 11% $ 415,116 94.5% 94.8%
Houston, TX 25 6,228 6% 238,123 90.5% 90.3%
Phoenix, AZ 10 3,458 5% 198,702 91.5% 93.3%
Orlando, FL 13 4,052 5% 194,569 94.1% 94.3%
Tampa, FL 12 4,018 5% 179,307 92.4% 93.2%
San Antonio, TX 12 3,515 4% 171,556 92.4% 92.5%
Raleigh, NC 9 2,951 4% 146,528 92.5% 92.3%
Nashville, TN 11 3,064 4% 144,107 89.7% 92.4%
San Francisco, CA 4 980 4% 138,681 98.8% 99.5%
Charlotte, NC 10 2,534 3% 128,190 91.2% 91.1%
Columbus, OH 5 2,175 3% 118,268 92.8% 95.3%
Wilmington, NC 10 2,710 3% 111,709 89.8% 93.7%
Monterey Peninsula, CA 13 1,955 3% 111,474 93.1% 91.2%
Memphis, TN 7 2,196 3% 105,859 93.9% 94.1%
South Florida 6 1,638 3% 102,349 91.1% 90.8%
Richmond, VA 8 2,372 3% 102,120 94.3% 97.0%
Greensboro, NC 8 2,123 3% 102,091 88.8% 90.8%
Columbia, SC 9 2,730 2% 97,414 91.1% 91.2%
Southern California 6 1,762 2% 95,243 93.8% 93.4%
Baltimore, MD 8 1,788 2% 85,368 96.2% 97.1%
Atlanta, GA 6 1,426 2% 69,239 92.7% 94.4%
Seattle, WA 5 1,159 1% 57,816 93.2% 96.9%
Jacksonville, FL 3 1,157 1% 56,783 90.5% 92.0%
Hampton Roads, VA 6 1,437 1% 54,655 95.1% 97.4%
Sacramento, CA 2 914 1% 52,758 97.8% 98.1%
Denver, CO 2 876 1% 44,942 93.5% 95.1%
Detroit, MI 4 744 1% 42,910 94.9% 95.0%
Washington, DC 3 615 1% 35,731 97.7% 98.4%
Portland, OR 3 627 1% 34,353 91.2% 91.0%
Indianapolis, IN 3 875 1% 28,699 94.0% 92.7%
Austin, TX 2 542 1% 23,836 94.6% 97.4%
Other Areas
-----------
Other Florida 7 1,665 1% 78,929 92.1% 94.6%
Eastern Shore MD and Delaware 6 1,156 1% 52,553 96.3% 95.6%
Other North Carolina 4 1,052 1% 48,876 94.7% 94.5%
Other Virginia 6 1,154 1% 47,984 93.8% 94.7%
Other Michigan 4 1,227 1% 47,535 90.5% 95.0%
Other Midwest 5 969 1% 42,780 94.5% 95.0%
Other Washington State 3 536 1% 21,914 83.3% 93.5%
Arkansas 2 512 1% 22,306 93.9% 95.3%
Nevada 1 384 1% 20,776 93.4% 96.8%
New Mexico 3 530 1% 19,972 89.4% 90.6%
Other Arizona 2 408 -- 13,408 91.5% 94.8%
Other Georgia 1 240 -- 10,413 90.8% 95.9%
Alabama 1 242 -- 8,780 91.8% 91.7%
Other Texas 1 248 -- 8,330 85.4% 91.4%
Other South Carolina 1 168 -- 7,428 88.7% 93.0%
-------------------------------------------------- -------------------
Total 301 82,154 100% $3,940,480 92.6% 93.6%
================================================== ===================
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Liquidity and Capital Resources
United Dominion expects to meet its short-term financial requirements through net cash provided by operations and borrowings under its unsecured bank lines of credit. United Dominion believes that cash provided by operations will be adequate to meet normal operating requirements and payment of distributions by United Dominion in accordance with REIT requirements in both the short and long- term. In addition, budgeted capital expenditures and monthly principal amortization of debt are also expected to be funded from net cash provided by operating activities.
United Dominion meets certain long-term liquidity requirements, such as scheduled debt maturities, development activity and significant capital improvements through: (i) the issuance of long-term secured and unsecured borrowings, (ii) proceeds from the sales of assets, (iii) common and preferred stock offerings, (iv) retained operating cash flow and (v) the use of unused credit facilities. To facilitate future fund raising activities in the public capital markets, management believes that it is prudent to maintain shelf registration statement capacity. In this regard, United Dominion filed such a shelf registration statement in December 1999 providing for the issuance of up to $700 million in common shares, preferred shares and debt securities.
In March 2000, United Dominion sold $100 million of senior unsecured notes due March 2003 at an interest rate of 8.625%. The proceeds from the offering were used to prepay certain mortgage debt and repay revolving bank debt.
United Dominion currently plans to establish during 2000, a program for the sale of up to $150 million aggregate principal amount of medium-term notes.
United Dominion has no significant maturities of debt until the fourth quarter of 2000 at which time approximately $175 million of secured and unsecured debt will mature. At this time, management expects to refinance the maturing debt with debt of similar characteristics and prevailing market rates.
The following discussion explains the changes in net cash provided by operating activities, net cash used in investing activities and net cash used in financing activities which are presented in United Dominion's Consolidated Statements of Cash Flows.
Operating Activities
For the year ended December 31, 1999, United Dominion's cash flow from operating activities was $190.9 million compared to $152.9 million in 1998. The increase was primarily due to the increased operating income from United Dominion's acquired communities as well as increases in property operating income achieved through higher rent growth as discussed under "Results of Operations".
Investing Activities
For the year ended December 31, 1999, net cash used in investing activities was $34.3 million compared to $276.1 million for 1998, a decrease of $241.8 million. During 1999, United Dominion shifted its focus from the acquisition of real estate assets to the disposition and development of real estate assets. Changes in the level of investing activities from period to period reflect the changing levels of United Dominion's acquisition, capital expenditure, development and disposition programs, as well as the impact of the capital market environment on these activities.
Disposition of Investments
As part of its strategic repositioning, United Dominion determined that it would selectively dispose of assets that are not in core markets, have a lower net operating income growth rate than the overall portfolio or no longer meet the operating and investment strategies of United Dominion. The disposition program allows United Dominion to reduce the age of its existing portfolio, which should result in lower operating expense and capital expenditure growth associated with the older communities.
During 1999, United Dominion sold 36 communities with 7,443 apartment homes for
an aggregate sales price of $241.2 million and recognized gains for financial
reporting purposes of $38.0 million. These sales allowed United Dominion to exit
certain markets that had low growth opportunities and improve the average age of
the company's overall apartment portfolio by selling communities with an average
age of 25
years. During 1998, 18 communities with 5,318 apartment homes and an average age of 25 years were sold for an aggregate sales price of $156.6 million, which resulted in gains for financial reporting purposes of $26.7 million.
Proceeds from the disposition program were used to strengthen the balance sheet by paying down debt, as well as to fund new development projects and to selectively repurchase shares of United Dominion's preferred and common stock. Where necessary to defer capital gain taxes, disposition proceeds have been reinvested in strategically attractive communities.
United Dominion intends to sell 6,000 to 7,000 apartment homes during 2000. Proceeds from the 2000 dispositions, expected to be at levels similar to 1999, are to be used to reduce debt, repurchase preferred shares, fund development activity and acquire communities through 1031 exchanges.
Subsequent to year-end, United Dominion sold three communities for approximately $18.5 million. In addition, United Dominion entered into contracts to sell two communities with 285 apartment homes for an aggregate sales price in excess of $17 million. For financial reporting purposes, aggregate gains on the sales of investments are not expected to be material. The transactions are expected to close during the first and second quarters of 2000; however, there can be no assurance that these transactions will be consummated as planned.
Real Estate under Development
During 1999, United Dominion continued its commitment to development as part of its strategic repositioning, shifting capital into development activity and away from lower yielding acquisitions. During 1999, the development of over 1,500 homes was completed, up from 890 homes during 1998. Development activity is focused in core markets that have locally based development teams and strong operations managers in place.
During 1999, the following development projects were completed:
Total
No. Apt. Costs Cost per Date % Leased
Property Location Homes (Thousands) Home Completed at 12/31/99
----------------------------------------------------------------------------------------------
New Communities
---------------
Stone Canyon Houston, TX 216 $ 10,322 $47,800 3/99 89.4%
Dominion Franklin Nashville, TN 360 26,347 73,200 3/99 91.4%
Ashlar I Ft. Myers, FL 260 18,887 72,600 5/99 99.6%
Alexander Court Columbus, OH 356 22,827 64,100 11/99 91.9%
Sierra Foothills Phoenix, AZ 322 21,458 66,600 11/99 79.5%
Legends at Park 10 Houston, TX 236 13,612 57,700 11/99 89.8%
-----------------------------
1,750 113,453 64,800
Additional Phases
-----------------
Heritage Green II Columbus, OH 96 $ 6,740 $70,200 5/99 94.8%
-----------------------------
Total 1,846 $120,193 $65,100
=============================
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The following projects are under development at December 31, 1999:
Costs Estimated Estimated Expected
No. Apt. Completed To Date Costs Cost per Completion
Property Location Homes Apt. Homes (Thousands) (Thousands) Home Date
--------------------------------------------------------------------------------------------------------------------
New Communities
---------------
Ashton at Waterford Lakes Orlando, FL 292 204 $19,244 $ 21,000 $71,900 1Q00
The Meridian Dallas, TX 250 82 11,403 16,500 66,000 2Q00
Oaks at Weston Raleigh, NC 380 -- 6,391 30,200 79,500 2Q01
--------------------------------------------------------
922 286 37,038 67,700 73,400
Additional Phases
-----------------
Dominion Crown Point II Charlotte, NC 220 44 10,016 14,800 67,300 1Q01
Ashlar II Ft. Myers, FL 168 -- 1,712 12,900 76,800 4Q00
Escalante II San Antonio, TX 312 -- 5,295 19,700 63,100 4Q00
--------------------------------------------------------
700 44 17,023 47,400 67,700
Total 1,622 330 $54,061 $115,100 $71,000
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In addition to the apartment homes under development at December 31, 1999, United Dominion has land held for future development with a carrying value of $37.9 million. Future development activity will be based upon the availability of capital and real estate fundamentals. Additional development starts planned in 2000 are expected to be undertaken with financial partners through joint venture arrangements.
Acquisitions
During 1999, United Dominion curtailed its active pace of acquisitions, investing in new communities only when necessary to complete 1031 exchanges in order to defer taxes on large capital gains. During 1999, using proceeds from its disposition program, United Dominion acquired five communities with 1,230 apartment homes at a total cost (including closing costs) of $74.3 million or $60,400 per home during 1999. These communities are located in markets that are considered strategically important to United Dominion, such as Baltimore, Maryland, South Florida and Riverside and San Diego, California.
During 2000, United Dominion does not anticipate acquiring communities except to reinvest a portion of the proceeds from property dispositions in order to defer taxes on capital gains.
Capital Expenditures
United Dominion capitalizes those expenditures related to acquiring new assets, materially enhancing the value of an existing asset, or substantially extending the useful life of an existing asset. Expenditures necessary to maintain an existing property in ordinary operating condition are expensed as incurred.
During 1999, United Dominion substantially completed the upgrade program which was part of the strategic plan to improve the overall quality of its portfolio. Capital expenditures decreased from 1998 as the overall age and physical condition of the apartment portfolio has improved. For the year ended December 31, 1999, $32.8 million or $639 per home was spent on capital expenditures for United Dominion's same communities (those acquired or developed prior to January 1, 1998). These capital improvements included recurring capital expenditures, including floor coverings, HVAC equipment, roofs, appliances, landscaping, siding, parking lots and other non-revenue enhancing capital expenditures, which aggregated $19.8 million or $386 per home. In addition, non-recurring / revenue enhancing capital expenditures, including water sub-metering, gating and access systems, the additions of microwaves, washer-dryers, interior upgrades and new business and fitness centers totaled $13.0 million or $253 per home for the year ended December 31, 1999. United Dominion reduced capital expenditures related to same communities throughout 1999, but will continue to selectively add revenue- enhancing improvements, which are budgeted to provide a high return on investment. Capital expenditures during 2000 are expected to be at levels similar to 1999.
In addition to capital improvements to its same communities, United Dominion invested approximately $42 million or $1,220 per home on its non-mature communities (those acquired or developed subsequent to January 1, 1998) during 1999, which includes both recurring and revenue enhancing capital improvements.
Financing Activities
Net cash used in financing activities during 1999 was $175.0 million compared to net cash provided by financing activities of $148.9 million for 1998. During 1999, as part of its strategic plan to improve its balance sheet position, United Dominion used approximately 60% of the proceeds from its disposition program to pay down secured and unsecured debt. The remaining proceeds were used to acquire assets where necessary to complete 1031 exchanges and, to a lesser extent, to repurchase shares of preferred and common stock.
In January 1999, United Dominion established a program for the sale of up to $200 million aggregate principal amount of medium-term notes (the "MTN Program"). For the year ended December 31, 1999, United Dominion sold an aggregate of $190 million of senior unsecured notes under the MTN Program with a weighted average interest rate of 7.61%. Net proceeds from the offerings were used to repay amortizing unsecured debt, repay maturing mortgage debt, repay a $75 million senior unsecured note that matured in April 1999 and repay revolving bank debt.
During 1999, United Dominion closed on $195.7 million of a $200 million revolving credit facility with the Federal National Mortgage Association (the "FNMA Credit Facility"). The FNMA Credit Facility is for an initial term of five years, bears interest at a floating rate which can be fixed for periods of up to 270 days, and can be extended for an additional five or ten years at United Dominion's discretion. The FNMA Credit Facility had a weighted average interest rate of 6.32% at December 31, 1999. United Dominion used interest rate swap agreements to limit its interest rate exposure on $57 million of this borrowing (see Secured Credit Facilities in Note 3). The proceeds from the FNMA Credit Facility were used to repay a $91 million secured credit facility assumed in connection with the American Apartment Communities II transaction, to replace $58 million in maturing secured debt and the remaining proceeds were used to repay revolving bank debt.
United Dominion issued 1.6 million shares of its common stock and received $16.7 million under its Dividend Reinvestment and Stock Purchase Plan during 1999 that included $1.2 million in optional cash investments and $15.5 million of reinvested dividends.
For the year ended December 31, 1999, United Dominion paid distributions to its common shareholders and unitholders in its operating partnerships aggregating $118.8 million. The distribution to common shareholders and holders of operating partnership units equates to a dividend rate of $1.06 per share or unit. In addition, $35.0 million of preferred dividends were paid to Series A, B and D preferred shareholders.
In June 1999, the Board of Directors authorized the repurchase of up to 5.5 million common shares, or 5% of the total common shares outstanding, using proceeds from the disposition program. Such purchases will be made from time to time in the open market or in privately negotiated transactions; the timing, volume and price of such purchases will be at the discretion of management and the Board of Directors. For the year ended December 31, 1999, United Dominion repurchased 2.6 million common shares at an average price of $11.22 per share. The Board of Directors, also approved the repurchase of up to $25 million of United Dominion's Series A and Series B Cumulative Redeemable Preferred Stock from time to time as market conditions permit. For the year ended December 31, 1999, United Dominion repurchased 31,440 Series A preferred shares at an average price of $19.76 per share and 53,700 Series B preferred shares at an average price of $18.35 per share. In addition, United Dominion redeemed one million operating partnership units for $12.0 million.
During 1999, using proceeds from its disposition program, United Dominion repurchased $70.0 million of certain of its higher rate outstanding unsecured debt with a weighted average yield of 7.74%. In addition, in connection with the disposition program, United Dominion was relieved of $57.7 million of mortgage debt and $9.3 million of revolving bank debt.
Credit Facilities
United Dominion has a $200 million three-year unsecured revolving credit facility (the "Bank Credit Facility") which expires in August 2000 and a $110 million one-year unsecured line of credit (the "Line of Credit") which expires in August 2000 that are provided by a consortium of banks. Under the Bank Credit Facility, pricing is based upon the higher of United Dominion's senior unsecured debt ratings from Standard & Poor's Corporation and Moody's Investor Services that are currently BBB and Baa2, respectively. At these rating levels, interest under the Bank Credit Facility is LIBOR plus 0.50% and interest under the Line of Credit is LIBOR plus 1.0%. However, these rates are subject to change as United Dominion's credit ratings change. The Bank Credit Facility also includes a $100 million competitive bid option, which allows United Dominion to solicit bids from participating banks at rates below the contractual rate. At December 31, 1999, $277.6 million was outstanding under these credit facilities leaving $32.4 million available for use.
The Bank Credit Facility and Line of Credit are subject to customary financial covenants and limitations.
Derivative Instruments
United Dominion, from time to time, uses derivative instruments to synthetically alter on-balance sheet liabilities or to hedge anticipated financing transactions. Derivative contracts did not have a material impact on the results of operations during 1999.
Market Risk
United Dominion is exposed to market risk principally from interest rate risk associated with variable rate notes payable and maturing debt that has to be refinanced. United Dominion does not hold financial instruments for trading purposes, but rather issues these financial instruments to finance owning and managing real estate. United Dominion's interest rate sensitivity position is managed by its treasury department. Interest rate sensitivity is the relationship between changes in market interest rates and the fair value of market rate sensitive assets and liabilities. United Dominion's earnings are affected by changes in short-term interest rates on its variable rate debt and the repricing of fixed rate debt. A large portion of United Dominion's market risk is exposure to short-term interest rates from variable rate borrowings outstanding under its bank credit facilities, which totaled $277.6 million at December 31, 1999. The impact on United Dominion's financial statements of refinancing fixed rate debt that matured during 1999 was not material.
At December 31, 1999, the notional value of United Dominion's derivative products for the purpose of managing interest rate risk was $177 million of interest rate swaps under which United Dominion pays a fixed rate of interest and receives a variable rate. These agreements effectively fix $177 million of United Dominion's variable rate notes payable to a weighted average fixed rate of 6.78% (see Note 5 - Financial Instruments). At December 31, 1999, the fair market value of the interest rate swaps in a favorable value position to United Dominion would have been $626 thousand. If interest rates were 100 basis points more or less at December 31, 1999, the fair market value of the interest rate swaps would have increased or decreased $500 thousand, respectively.
If market interest rates for variable rate debt averaged 100 basis points more in 2000 than they did during 1999, United Dominion's interest expense, after considering the effects of its interest rate swap agreements, would increase, and income before taxes would decrease by $4.0 million. Comparatively, if market interest rates for variable rate debt averaged 100 basis points more in 1999 than it did in 1998, United Dominion's interest expense, after considering the effects of its interest rate swap agreements, would increase, and income before taxes would decrease by $4.0 million. If market rates for fixed rate debt were 100 basis points higher at December 31, 1999, the fair value of fixed rate debt would have decreased from $1.55 billion to $1.50 billion. If market interest rates for fixed rate debt were 100 basis points lower at December 31, 1999, the fair value of fixed rate debt would have increased from $1.55 billion to $1.62 billion.
These amounts are determined by considering the impact of the hypothetical interest rates on United Dominion's borrowing cost and interest rate swap agreements. These analyses do not consider the effects of the reduced level of overall economic activity that could exist in such an environment. Further, in the event of a change of such magnitude, management would likely take actions to further mitigate its exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, the sensitivity analysis assumes no change in United Dominion's financial structure.
Results of Operations
United Dominion's net income is primarily generated from the operations of its apartment communities.
1999-vs-1998
For 1999, net income available to common shareholders increased $7.2 million, with a corresponding increase of $.05 for both basic and diluted earnings per share, compared to 1998. The increase per share was primarily attributable to aggregate gains on the sale of investments of $38.0 million ($.37 per share) for the year ended December 31, 1999, compared to $26.7 million ($.27 per share) in 1998. However, the increases associated with the gain on sales of investments were moderated in part due to the $19.3 million of impairment losses recorded during 1999. United Dominion's non-mature communities with 31,454 apartment homes at December 31, 1999 provided a substantial portion of the increase in United Dominion's operating income during 1999.
1998-vs-1997
For 1998, net income available to common shareholders decreased $4.1 million, with a corresponding decrease of $.12 and $.11 for basic and diluted earnings per share, respectively, compared to 1997. The
decrease per share was primarily attributable to the $15.6 million ($.15 per share) loss on the termination of an interest rate risk management agreement during the fourth quarter of 1998. Net income available to common shareholders for the year ended December 31, 1998 included aggregate gains on the sales of investments of $26.7 million ($.27 per share) compared to $12.7 million ($.15 per share) in 1997.
The following is a combined summary of the operating performance for United Dominion's apartment portfolio (dollars in thousands):
Year Ended Year Ended
December 31, December 31,
------------------------------------ -----------------------------------
1999 1998 % Change 1998 1997 % Change
Same Communities
----------------------------------------------------------------------------------------------------------------------------------
Property rental income $ 366,173 $ 355,038 3.1% $ 328,018 $ 316,995 3.5%
----------------------------------------------------------------------------------------------------------------------------------
Property rental expenses (excluding
depreciation and amortization) (141,721) (142,548) -0.6% (132,758) (132,712) 0.0%
----------------------------------------------------------------------------------------------------------------------------------
Property operating income $ 224,452 $ 212,490 5.6% $ 195,260 $ 184,283 6.0%
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
Physical occupancy 93.1% 93.1% 0.0% 92.9% 92.9% 0.0%
----------------------------------------------------------------------------------------------------------------------------------
Average monthly rental rates $ 631 $ 610 3.4% $ 602 $ 582 3.4%
----------------------------------------------------------------------------------------------------------------------------------
Non-Mature Communities
----------------------------------------------------------------------------------------------------------------------------------
Property rental income $ 251,125 $ 122,245 105.4% $ 149,262 $ 67,207 122.1%
----------------------------------------------------------------------------------------------------------------------------------
Property rental expenses (excluding
depreciation and amortization) (103,452) (56,333) 83.6% (66,120) (30,262) 118.5%
----------------------------------------------------------------------------------------------------------------------------------
Property operating income $ 147,673 $ 65,912 124.1% $ 83,142 $ 36,945 125.1%
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
Weighted average number of apartment homes 33,980 19,408 75.1% 22,849 10,164 124.8%
----------------------------------------------------------------------------------------------------------------------------------
All Communities
----------------------------------------------------------------------------------------------------------------------------------
Property rental income $ 617,298 $ 477,279 29.3% $ 477,279 $ 384,205 24.2%
----------------------------------------------------------------------------------------------------------------------------------
Property rental expenses (excluding
depreciation and amortization) (245,173) (198,877) 23.2% (198,877) (162,977) 22.0%
----------------------------------------------------------------------------------------------------------------------------------
Property operating income $ 372,125 $ 278,402 33.7% $ 278,402 $ 221,228 25.8%
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
Weighted average number of apartment homes 85,926 70,724 21.5% 70,724 58,038 21.9%
----------------------------------------------------------------------------------------------------------------------------------
Physical occupancy 92.6% 92.5% 0.1% 91.7% 92.3% -0.6%
----------------------------------------------------------------------------------------------------------------------------------
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Same Communities
1999-vs-1998 (51,316 apartment homes)
In 1999, property rental income grew 3.1%, or approximately $11.1 million, reflecting an increase in average monthly rental rates of 3.4% while physical occupancy remained constant at 93.1%.
For 1999, property operating expenses at these same communities decreased 0.6%, or $827 thousand. Utility expense decreased due to the continued transfer of water and sewer costs to residents, repair and maintenance expense decreased as a result of the upgrade program and taking more turnover work in-house and property management expenses decreased due to better economies of scale. However, these decreases were offset by an increase in personnel costs due to higher salaries and benefit costs, an increase in real estate taxes, the addition of monitored alarms in more communities and higher technology costs.
As a result of the increase in property rental income and the decrease in property operating expenses, the operating margin (property operating income divided by property rental income) improved 1.5% to 61.3%.
1998-vs-1997 (47,875 apartment homes)
Compared to the same period in 1997, property rental income from these communities grew 3.5%, or approximately $11.0 million, reflecting an increase in average monthly rental rates of 3.4%. During 1998, physical occupancy of 92.9% was the same as reported in 1997.
For 1998, property operating expenses at these communities were unchanged. Utility expenses decreased as a result of United Dominion's water and sewer sub- metering initiative and repair and maintenance expenses decreased as United Dominion continued to benefit from a centralized purchasing initiative and the upgrade program. However, these expense decreases were offset by increases in real estate taxes primarily in certain Florida and Texas markets and increases in personnel costs as United Dominion experienced pressure on wages due to low unemployment and tighter job markets.
Due to the increase in property rental income and the unchanged property operating expenses, the operating margin improved 1.4% to 59.5%.
Non-Mature Communities
1999-vs-1998
Property rental income and property operating expenses increased from 1998 to 1999 directly as a result of the increase in the weighted average number of apartment homes owned during 1999. For the year ended December 31, 1999, average economic occupancy was 88.2%, and the operating margin was 58.8% for the non- mature communities.
United Dominion's non-mature apartment portfolio can be categorized as follows for the years ended December 31, 1999 and 1998:
American Apartment Communities II, Inc. (AAC)
On an average investment of $761 million, the AAC portfolio (13,728 homes net of sales) provided a first year return on investment (property rental income less property operating expenses divided by the average capital investment in real estate) of 9.1% which is slightly better than the projection of 9.0%. These communities achieved physical occupancy of 93.6%, which is higher than United Dominion's average physical occupancy primarily due to the California markets included in this portfolio. For the year, these communities had an economic occupancy of 92.1% and an operating margin of 62.7%.
1998 Acquisitions (Excluding AAC)
For the 13,577 homes (net of sales) acquired in 1998, the return on investment for the year ended December 31, 1999, on an average investment of $611 million was 8.4%. This return on investment was below amounts projected for 1999, however, these communities continue to be upgraded, repositioned and selectively sold, which is expected to improve overall operating results over the long-term. These communities had an economic occupancy of 88.8% and an operating margin of 57.8%.
Included in this category are five communities with 1,230 apartment homes acquired by United Dominion during 1999 that are projected to provide a first year return on investment of 9.0% on an initial investment of $74 million. These communities did not have a material impact on 1999 results of operations.
Included in this category are the 12,761 apartment homes sold for an aggregate sales price of $398 million as part of United Dominion's strategic repositioning (see Disposition of Investments under Liquidity and Capital Resources) since January 1, 1998. The communities sold during 1999 and 1998 had a capitalization rate (budgeted property operating income less a reserve placement divided by the sales price) in the 10% range.
United Dominion developed 2,404 homes at various times since January 1, 1998, which included the completion of six new communities and one additional phase to an existing community during 1999. Once stabilized, development communities are projected to generate an average return on investment in the 10% range, however, the full impact on property operating income is not realized until after the communities are stabilized, which is generally six months after construction is completed. United Dominion considers a development community stabilized on the earlier to occur of (i) one year after completion of construction or (ii) attainment of 90% physical occupancy. Construction activity is staged to allow for leasing and occupancy during the construction period in order to minimize the lease-up period subsequent to the completion of construction.
1998-vs-1997
Property rental income and property operating expenses increased from 1997 to 1998 directly as a result of the increase in the weighted average number of apartment homes owned during 1998. For the year ended December 31, 1998, average economic occupancy was 88.6%, and the operating margin was 55.7% for the non- mature communities.
On an average investment of $355 million, the 1997 acquisitions which consisted of 8,524 apartment homes provided a 9.1% return on investment during 1998. For the year, these communities had economic occupancy of 91.5% and an operating margin of 56.6%. During 1998, property operating expenses were adversely impacted by (i) an increase in real estate taxes due to reassessments at several Florida communities and (ii) the delay in United Dominion's implementation of its water billing and reimbursement schedule for these communities.
1998 Single Acquisitions
On an average investment of $312 million, the 1998 acquisitions which consisted of 6,959 apartment homes provided an annualized return on investment of 8.7%. These results were below the full year forecasted return on investment of 9.0% as a result of delays in water billing and reimbursement and market softness in San Antonio and Phoenix where United Dominion acquired communities in 1998.
ASR Investments Corporation (ASR)
A total of 7,550 apartment homes were included in the ASR merger on March 27, 1998, which provided the largest increase in property rental income and property operating expenses for United Dominion's apartment portfolio during 1998. The annualized return on investment for the ASR properties was 7.3% on an average investment of $313 million during 1998. The under-performance of this portfolio was primarily attributable to weak markets in Phoenix, Tucson and Albuquerque and certain assets were undergoing upgrading and repositioning. For the year ended December 31, 1998, these communities had economic occupancy of 87.9% and an operating margin of 49.3%.
American Apartment Communities (AAC)
This included 14,001 apartment homes in the AAC merger on December 7, 1998 for an initial investment of $767 million. This acquisition did not have a material effect on 1998 results of operations.
During 1998 and 1997, United Dominion sold approximately $225 million of real estate consisting of 30 communities with 7,888 apartment homes, the net proceeds from which were used to acquire newer communities that provide higher long-term returns on investment than the communities being sold. The properties sold during 1998 had a capitalization rate (budgeted property operating income less a replacement reserve divided by the sales price) in excess of 10%.
These communities consisted of 1,957 apartment homes in five new communities and five additional phases to existing communities developed from January 1, 1997 to December 31, 1998. Once stabilized, development communities are projected to generate an average return on investment in excess of 10%.
Interest Expense
During 1999, interest expense increased $47.5 million over the corresponding amount in 1998 as the weighted average amount of debt employed during 1999 was higher than it was in 1998 ($2.1 billion in 1999 versus $1.5 billion in 1998). The increase in the weighted average amount of debt employed in 1999 is primarily due to debt assumed during 1998 to fund United Dominion's investment activities. The weighted average interest rate on this debt was 7.4% in both 1999 and 1998. For 1999, 1998 and 1997, total interest capitalized was $5.2 million, $3.4 million and $2.6 million, respectively.
For 1998, interest expense increased $27.2 million over 1997. The weighted average amount of debt employed during 1998 was higher than it was in 1997 ($1.5 billion in 1998 versus $1.0 billion in 1997) which accounted for the majority of the increase in interest expense. The weighted average interest rate on this debt was slightly lower than it was in 1997, decreasing from 7.5% in 1997 to 7.4% in 1998 reflecting greater usage of lower rate short-term bank borrowings in 1998 ($238.6 million weighted average outstanding in 1998 versus $74.6 million in 1997).
General and Administrative
During the year ended December 31, 1999, general and administrative expenses increased $3.7 million, or 36.6%, over 1998, primarily due to the expanded operations of United Dominion and its continued investment in professional staff, technology and scaleable accounting and information systems.
During 1998, general and administrative expenses increased by $3.1 million over 1997. In 1998, United Dominion incurred increases in most of its general and administrative expense categories which was directly attributable to the expanded operations of United Dominion and its investment in infrastructure. The largest increases occurred in payroll and payroll-related expenses. General and administrative expense as a percentage of rental income increased 0.3% from 1.8% during 1997 to 2.1% during 1998 primarily due to (i) the added infrastructure costs incurred due to the expanded operations of United Dominion and (ii) the change in accounting for internal acquisition costs subsequent to March 19, 1998.
Impairment Loss
For the year ended December 31, 1999, United Dominion recognized $18.3 million in impairment losses on its real estate portfolio. At the beginning of June 1999, United Dominion embarked on an accelerated disposition plan for non- strategic properties. As a result of the review of its real estate apartment portfolio, 21 properties included in real estate held for investment were moved to real estate held for disposition during the second quarter. Accordingly, through the review and analysis of communities targeted for strategic disposition, an aggregate $7.1 million impairment loss was recognized on five communities in the second quarter. Based on United Dominion's review and analysis of the sales planned for 2000 and the periodic evaluation of its apartment portfolio, an additional $11.2 million impairment loss was recognized in the fourth quarter of 1999, related principally to communities acquired in the ASR merger in 1998.
During 1997, the company recorded and impairment loss of $1.4 million relating to two communities included in United Dominion's real estate held for investment. These communities were subsequently moved to real estate held for disposition based upon management's decision to dispose of these properties.
Distributions to Preferred Shareholders
Distributions to preferred shareholders totaled $37.7 million for 1999 compared to $23.6 million for 1998. The increase was a result of the issuance of eight million shares of Series D 7.50% Cumulative Convertible Redeemable Preferred Stock in December 1998.
Distributions to preferred shareholders totaled $23.6 million for the year ended December 31, 1998 compared to $17.3 million for 1997. The increase was a result of the issuance of six million shares of Series B 8.60% Cumulative Redeemable Preferred Stock in May 1997.
age of 25
Inflation
United Dominion believes that the direct effects of inflation on United Dominion's operations have been inconsequential.
Information Technology
United Dominion is currently engaged in the development of an innovative on-site property management system (the "system") to enable management to capture, review and analyze data to a greater extent than is possible using available existing commercial software. United Dominion believes the new system will enable it to become a more efficient provider of a high quality living environment for its residents, and provide the scalability necessary to support future growth. These development activities are being conducted through a joint venture with another public multifamily real estate company. The system development process is currently managed by the employees of United Dominion and its joint venture partner who have significant related project management experience. The actual programming and documentation of the system is being conducted by employees and third party consultants under the supervision of these experienced project managers.
Current projections indicate that total development costs over a three-year period will be approximately $7.5 million (including hardware costs and expenses, the costs of employees and related overhead, and the costs of engaging third party consultants) and that such development costs will be shared on an equal basis by the joint venture partners. Once developed, the system would be used in place of current property management information systems for which a license fee is paid to third parties.
The system is currently projected to undergo an on-site test (i.e., a "beta test") during the third quarter of 2000 and the system should be functional by the fourth quarter of 2000.
Neither United Dominion nor its joint venture partner have been engaged in the development of systems software. There are several risks associated with the development of the system for internal use, such as: (i) the inability to maintain the schedule or budget that has been projected for the development and implementation of the software, and (ii) the system may not have the functionality and efficiencies desired.
Year 2000
United Dominion completed the transition to the Year 2000 with all of its computer platforms Year 2000 compliant and the transition took place without incident. There have been no reported problems with any equipment or software, nor have any disruptions with suppliers or vendors occurred. United Dominion will continue to monitor its systems in 2000 to insure that any latent issues with Year 2000 are identified and addressed.
Taxable REIT Subsidiary
In December 1999, the REIT Modernization Act ("RMA") was signed into law. The RMA contains several provisions that, when effective in 2001, will allow REIT's to compete more effectively in the real estate industry by allowing REIT's to offer the same types of services as other competitors in the marketplace. The most important feature of the RMA is the allowance for REIT's to create a taxable REIT subsidiary ("TRS") that can provide services to residents and others without disqualifying the rents that a REIT receives from its residents.
Under the prior law, REIT's were not allowed to provide non-customary or tenant specific services to its residents, such as concierge services, beyond a de minimus amount. As the apartment industry has become a competitive customer focused business, these constraints inhibited REIT's from maintaining a competitive edge in attracting and maintaining residents. As such, the RMA has several significant benefits for the REIT industry REIT's will be allowed, through a TRS, to provide a wide range of increasingly important services that residents have come to expect. In addition, the TRS will allow REIT's to generate new sources of income for REIT shareholders.
Effective January 1, 2001, a REIT can own 100% of the stock of a TRS. However, the legislation contains a number of safeguards that would limit the size of a TRS to ensure that REIT's remain focused on their core business of owning and operating real estate assets.
The RMA provides another significant change to the existing law. The RMA changes the minimum distribution requirement from 95% to 90% of the REIT's taxable income. This will allow REIT's to retain a greater level of capital which can be used to invest back into expenditures to maintain the quality of their real estate assets as well as repay outstanding debt.
During 2000, United Dominion will determine the best uses of the TRS in order to be in a position to take full advantage of the opportunities the new legislation has to offer in 2001.
Information required by this regarding Quantitative and Qualitative Disclosures about Market Risk is included in Part II, Item 7 of this Annual Report on Form 10-K included in Management's Discussion and Analysis of Financial Condition and Results of Operations.
See Index to Consolidated Financial Statements and Schedule on page 45 of this Annual Report on Form 10-K.
None.
Part III
Incorporated herein by reference from United Dominion's Proxy Statement to be filed with respect to its Annual Meeting of Shareholders to be held on May 9, 2000.
Information required by this item regarding the executive officers of United Dominion is included in Part I of this Annual Report on Form 10-K in the section entitled "Executive Officers of the Registrant".
Incorporated herein by reference from United Dominion's Proxy Statement to be filed with respect to its Annual Meeting of Shareholders to be held on May 9, 2000.
Incorporated herein by reference from United Dominion's Proxy Statement to be filed with respect to its Annual Meeting of Shareholders to be held on May 9, 2000.
Incorporated herein by reference from United Dominion's Proxy Statement to be filed with respect to its Annual Meeting of Shareholders to be held on May 9, 2000.
PART IV
(a) (1&2) See Index to Consolidated Financial Statements and Schedule on page 45 of this Annual Report on Form 10-K.
(3) Exhibits
The exhibits listed below are filed as part of this Annual Report. References under the caption Location to exhibits, forms, or other filings indicate that the form or other filing has been filed, that the indexed exhibit and the exhibit referred to are the same and that the exhibit referred to is incorporated by reference.
Exhibit Description Location
--------- --------------------------------------- ---------------------------------------------------
1(a) Underwriting Agreement and related Filed herewith.
Pricing Agreement, each dated
February 29, 2000, between the Company
and certain of its subsidiaries and the
underwriters named therein, relating to
$100,000,000 8.625% Notes Due 2003 of
the Company, issued March 3, 2000.
2(a) Agreement and Plan of Merger dated Exhibit 2(a) to the Company's Form S-4 Registration
as of December 19, 1997, between Statement (Registration No. 333-45305) filed with
the Company, ASR Investment the Commission on January 30, 1998.
Corporation and ASR Acquisition Sub,
Inc.
2(b) Agreement of Plan of Merger dated as Exhibit 2(c) to the Company's Form S-3 Registration
of September 10, 1998, between the Statement (Registration No. 333-64281) filed with
Company and American Apartment the Commission on September 25, 1998.
Communities II, Inc. including as
exhibits thereto the proposed terms
of the Series D Preferred Stock and the
proposed form of Investment Agreement
between the Company, United Dominion
Realty, L.P., American Apartment
Communities II, Inc., American
Apartment Communities Operating
Partnership, L.P., Schnitzer Investment
Corp., AAC Management LLC and LF
Strategic Realty Investors, L.P.
2(c) Partnership Interest Purchase and Exchange Exhibit 2(d) to the Company's Form S-3 Registration
Agreement dated as of September 10, 1998, Statement (Registration No. 333-64281) filed with
between the Company, United Dominion the Commission on September 25, 1998.
Realty, L.P., American Apartment
Communities Operating Partnership, L.P.,
AAC Management LLC, Schnitzer
Investment Corp., Fox Point Ltd. and
James D. Klingbeil including as an exhibit
thereto the proposed form of the Third
Amended and Restated Limited Partnership
Agreement of United Dominion Realty, L.P.
3(a) Restated Articles of Incorporation Exhibit 4(a)(ii) to the Company's Form S-3
Registration Statement (Registration No. 333-72885)
filed with the Commission on February 24, 1999.
|
3(b) Restated By-Laws Exhibit 3(b) to the Company's Annual Report
on Form 10-K for the year ended December
31, 1998.
4(i)(a) Specimen Common Stock Exhibit 4(i) to the Company's Annual Report
Certificate on Form 10-K for the year ended December
31, 1993.
4(i)(b) Form of Certificate for Shares of 9 1/4% Exhibit 1(e) to the Company's Form 8-A
Series A Cumulative Redeemable Preferred Registration Statement dated April 24, 1995.
Stock
4(i)(c) Form of Certificate for Shares of 8.60% Exhibit 1(e) to the Company's Form 8-A
Series B Cumulative Redeemable Preferred Registration Statement dated June 11, 1997.
Stock
4(i)(d) Rights Agreement dated as of January 27, Exhibit 1 to the Company's Form 8-A
1998, between the Company and ChaseMellon Registration Statement dated February 4, 1998.
Shareholder Services, L.L.C., as Rights Agent.
4(i)(d)(a) First Amended and Restated Rights Exhibit 4(i)(d)(a) to the Company's Form 10-Q
Agreement dates as of September 14, for the quarter ended September 30, 1999.
1999, between the Company and ChaseMellon
Shareholders Services, L.L.C., as Rights Agent
4(i)(e) Form of Rights Certificate Exhibit 4(e) to the Company's Form 8-A
Registration Statement dated February 4, 1998.
4(ii)(e) Note Purchase Agreement dated as of February Exhibit 6(c)(5) to the Company's Form 8-A
15, 1993, between the Company and CIGNA Registration Statement dated April 19, 1990.
Property and Casualty Insurance Company,
Connecticut General Life Insurance Company,
Connecticut General Life Insurance Company, on
behalf of one or more separate accounts,
Insurance Company of North America, Principal
Mutual Life Insurance Company and Aid
Association for Lutherans
4(ii)(f) 364-day Credit Agreement dated as of September Exhibit 4(ii)(f) to the Company's Form 10-Q for
16, 1999, between the Company and certain the quarter ended September 30, 1999.
subsidiaries and a syndicate of banks
represented by Bank of America, N.A.
4(ii)(g)(a) Resolutions of the Board of Directors of the Filed herewith.
Company establishing terms of 8.625% Notes
Due 2003.
4(ii)(g)(b) Form of 8.625% Notes Due 2003. Filed herewith.
10(i) Employment Agreement between the Company and Exhibit 10(i) to the Company's Annual Report
John P. McCann dated December 8, 1998. on Form 10-K for the year ended December 31, 1998.
|
10(ii) Employment Agreement between the Company Exhibit 10(ii) to the Company's Annual Report
and John S. Schneider dated December 8, on Form 10-K for the year ended December 31, 1998.
1998.
10(iii) Employment Agreement between the Company Exhibit 10(iii) to the Company's Annual Report
and Richard Giannotti dated December 8, on Form 10-K for the year ended December 31, 1998.
1998.
10(iv) Employment Agreement between the Company Exhibit 10(iv) to the Company's Quarterly Report
and A. William Hamill dated September 30, on Form 10-Q for the quarter ended September 30,
1999. 1999.
10(v) 1985 Stock Option Plan, as amended. Exhibit 10(iv) to the Company's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 1998.
10(vi) 1991 Stock Purchase and Loan Plan. Exhibit 10(viii) to the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1997.
10(vii) Third Amended and Restated Agreement of Exhibit 10(vi) to the Company's Annual Report
Limited Partnership of United Dominion on Form 10-K for the year ended December 31,
Realty, L.P. Dated as of December 7, 1998. 1998.
10(vii)(a) Subordination Agreement dated April 16, 1998, Exhibit 10(vi)(a) to the Company's Form 10-Q for
between the Company and United Dominion the quarter ended March 31, 1998.
Realty, L.P.
10(viii) Servicing and Purchase Agreement dated as of Exhibit 10(vii) to the Company's Form 10-Q for
June 24, 1999, including as an exhibit thereto the quarter ended June 30, 1999.
the Note and Participation Agreement forms.
10(ix) Description of Restricted Stock Awards Filed herewith.
Program.
10(x) Description of United Dominion Realty Trust, Filed herewith.
Inc. Shareholder Value Plan.
10(xi) Description of United Dominion Realty Trust, Filed herewith.
Inc. Executive Deferral Plan.
10(xii) Employment Agreement between the Company and Filed herewith.
Curtis W. Carter dated December 8, 1998.
10(xiii) Employment Agreement between the Company and Filed herewith.
Mark E. Wood dated March 21, 2000.
12 Computation of Ratio of Earnings to Fixed Filed herewith.
Charges.
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21 The Company has the following subsidiaries, all of which but United
Dominion Realty, L.P. are wholly owned. The Company owns general and
limited partnership interests in United Dominion Realty, L.P.,
constituting 90.8% of the aggregate partnership interest.
United Dominion Realty Trust, Inc.
The Commons of Columbia, Inc.
UDRT of Virginia, Inc.
United Dominion Residential, Inc.
UDR at Marble Hill, LLC
United Dominion Realty, L.P.
UDRT of North Carolina, L.L.C.
UDRT of Alabama, Inc.
Cleary Court Property Owners' Association, Inc.
39
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UDR South Carolina Trust
UDR Western Residential, Inc.
SWPT II Arizona Properties, Inc.
SRL Amarillo Investors, Inc.
Little Rock Apartment Management, Inc.
SWP Arkansas Properties, Inc.
SWP Developers, Inc.
SWP Depositor, Inc.
South West REIT Holding, Inc.
South West Properties, L.P.
SWP REMIC Properties II, Inc.
SWP REMIC Properties II-A, L.P.
SWP Creeks Properties, Inc.
UDR Summit Ridge, L.P.
SWP Woodscape Properties, Inc.
SWP Woodscape Properties I, L.P.
SWP Properties, Inc.
SWP Properties I, L.P.
South West Property Apartments, L.P.
UDR Pecan Grove, L.P.
UDR Camino Village, L.P.
United Sub, Inc.
ASR Acquisition Sub, Inc.
UDR Audubon, L.P.
UDR Villages of Thousand Oaks, L.P.
UDR Cimarron City, L.P.
UDR Kenton, L.P.
ASR Investments Corporation
Heritage Communities L.P.
Heritage SGP Corporation
Heritage - Aspen Court L.P.
Heritage - Gentry Place L.P.
Heritage - Greenwood Creek L.P.
Heritage - Highlands of Preston L.P.
Heritage - 14400 Montfort L.P.
Heritage - Preston Park L.P.
Heritage - Smith Summit L.P.
Heritage - Springfield L.P.
Heritage - Briar Park L.P.
Heritage - Chelsea Park L.P.
Heritage - Country Club Place L.P.
Heritage - Ivystone L.P.
Heritage - London Park L.P.
Heritage - Marymont L.P.
Heritage - Riverway L.P.
Heritage - Timbercreek Landings L.P.
Heritage - Campus Commons North, L.L.C.
Heritage - Campus Commons South, L.L.C.
Heritage - Court, L.L.C.
Heritage - On The Boulevard, L.L.C.
Heritage - Pacific South Center, L.L.C.
40
|
Heritage - Arbor Terrace I, L.L.C.
Heritage - Arbor Terrace II, L.L.C.
ASR Properties, Inc.
ASC Properties, Inc.
ASC-I Properties, Inc.
ASC-II Properties, Inc.
ASC-III Properties, Inc.
ASC-IV Properties, Inc.
ASC-V Properties, Inc.
Rescap Inc.
Rescap Manager Limited Partnership
Contempo Heights L.L.C.
La Privada L.L.C.
Finisterra Apartments L.L.C.
ASV-I Properties, Inc.
ASV-II Properties, Inc.
ASV-III Properties, Inc.
ASV-IV Properties, Inc.
ASV-V Properties, Inc.
ASV-VI Properties, Inc.
ASV-VII Properties, Inc.
ASV-VIII Properties, Inc.
ASV-IX Properties, Inc.
ASV-X Properties, Inc.
ASV-XI Properties, Inc.
ASV-XII Properties, Inc.
ASV-XIII Properties, Inc.
ASV-XIV Properties, Inc.
ASV-XV Properties, Inc.
ASV-XVI Properties, Inc.
ASV-XVII Properties, Inc.
Heritage Residential Group, Inc.
RMA Investments Holdings, Inc.
CIMSA Financial Corporation
RMA Investments I, Inc.
RMA Investments II, Inc.
Cholla Estates Construction L.L.C.
ASR Finance Corporation
Southwest Capital Mortgage Funding L.P.
ASR Mortgage Acceptance, Inc.
UDR Developers, Inc.
UDR Texas Properties, L.P.
UDR of Tennessee, L.P.
UDR Seniors Housing, L.P.
UDR Aspen Creek, LLC
United Dominion Residential Ventures, L.L.C.
American Apartment Communities Holdings, Inc.
AAC Funding II, Inc.
AAC Funding III, Inc.
AAC Funding IV, Inc.
AAC Seattle I, Inc.
41
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FMP Member, Inc.
AAC Funding IV LLC
AAC Funding Partnership II
AAC Funding Partnership III
AAC Vancouver I, L.P.
AAC/FSC Crown Pointe Investors, LLC
AAC/FSC Hilltop Investors, LLC
AAC/FSC Seattle Properties, LLC
CMP-1, LLC
Coastal Anaheim Properties, LLC
Coastal Long Beach Properties, LLC
Coastal Monterey Properties LLC
Fountainhead Apartments Limited Partnership
Governour's Square of Columbus Co.
Jamestown of St. Matthews Co.
Northbay Properties II, L.P.
Parker's Landing Venture I
Parker's Landing Venture II
Polo Chase Venture Limited Partnership
Regency Park, L.P.
Sunset Company
Tivoli of Columbus Limited Partnership
Windward Point, LLC
Winterland San Francisco Partners
Woodlake Village, L.P.
UDR Virginia Properties, LLC
UDR California Properties, L.L.C.
UDR Florida Properties, L.L.C.
UDR Holdings, LLC
UDR Lakeside Mills, LLC
UDR Maryland Properties, LLC
23 Consent of Independent Filed herewith.
Auditors
27 Financial Data Schedule Filed electronically with
the Securities and
Exchange Commission.
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Exhibits 10(i) through 10(v) inclusive, are management contracts or compensatory plans or arrangements required to be filed as an exhibit to this Form 10-K pursuant to Item 14(c) of this report.
(b) Reports on Form 8-K
A Form 8-K was filed with the Securities and Exchange Commission on February 25, 2000. The filing reported United Dominion's 1999 fourth quarter and year to date results of operations as reported on its Press Release issued on February 1, 2000.
A Form 8-K was filed with the Securities and Exchange Commission on December 22, 1999. The filing reported United Dominion's 1999 dispositions and plans for 2000 dispositions as reported on its Press Release issued on December 16, 1999.
A Form 8-K was filed with the Securities and Exchange Commission on March 29, 1999. The filing reported pro forma financial information with respect to the American Apartment Communities II, Inc. merger.
A Form 8-K was filed with the Securities and Exchange Commission on January 20, 1999. The filing reported pro forma financial information with respect to the American Apartment Communities II, Inc. merger.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on March 17, 2000 by the following persons on behalf of the registrant and in the capacities indicated.
/s/ John P. McCann /s/ Jeff C. Bane
------------------------------------- -----------------------------------
John P. McCann Jeff C. Bane
Chairman of the Board and Chief Director
Executive Officer
/s/ Lynne Sagalyn
------------------------------------- ___________________________________
Lynne Sagalyn Mark J. Sandler
Director Director
/s/ John S. Schneider /s/ Robert W. Scharar
------------------------------------- -----------------------------------
John S. Schneider Robert W. Scharar
Director, Vice Chairman of the Board, Director
President and Chief Operating Officer
_____________________________________ ___________________________________
Robert P. Freeman Jon A. Grove
Director Director
/s/ James D. Klingbeil /s/ Barry M. Kornblau
------------------------------------- -----------------------------------
James D. Klingbeil Barry M. Kornblau
Director Director
/s/ R. Toms Dalton /s/ Robin R. Flanagan
------------------------------------- -----------------------------------
R. Toms Dalton Robin R. Flanagan
Director Vice President,
Controller-Corporate Accounting
and Chief Accounting Officer
/s/ A. William Hamill
-------------------------------------
A. William Hamill
Executive Vice President and
Chief Financial Officer
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
UNITED DOMINION REALTY TRUST, INC.
Page
----
FINANCIAL STATEMENTS FILED AS PART OF THIS REPORT
Report of Ernst & Young LLP, Independent Auditors 46
Consolidated Balance Sheets at December 31, 1999
and 1998 47
Consolidated Statements of Operations for each of
the three years in the period ended December 31, 1999 48
Consolidated Statements of Cash Flows for each of
the three years in the period ended December 31, 1999 49
Consolidated Statements of Shareholders' Equity for
each of the three years in the period ended
December 31, 1999 50
Notes to Consolidated Financial Statements 51
SCHEDULE FILED AS PART OF THIS REPORT
Schedule III - Summary of Real Estate Owned 70
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All other schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the financial statements and notes thereto.
The Board of Directors and Shareholders
United Dominion Realty Trust, Inc.
We have audited the accompanying consolidated balance sheets of United Dominion Realty Trust, Inc. (the "Company") as of December 31, 1999 and 1998, and the related consolidated statements of operations, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1999. Our audits also included the financial statement schedule listed in the Index at Item 14(a). The financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit also 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 estimate made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of United Dominion Realty Trust, Inc. at December 31, 1999 and 1998, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects, the information set forth therein.
Ernst & Young LLP
Richmond, Virginia
January 31, 2000
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
December 31, December 31,
1999 1998
---------------------------------------------------------------------------------------------------------------------
ASSETS
Real estate owned:
Real estate held for investment (Notes 2 and 9) $ 3,577,848 $ 3,643,245
Less: accumulated depreciation 373,164 280,663
-------------- --------------
3,204,684 3,362,582
Real estate under development 91,914 99,395
Real estate held for disposition (net of accumulated depreciation of $22,700
and $35,967) (Note 2) 260,583 174,145
-------------- --------------
Total real estate owned, net of accumulated depreciation 3,557,181 3,636,122
Cash and cash equivalents 7,678 26,081
Restricted cash 56,969 50,805
Deferred financing costs 13,511 10,894
Other assets 52,978 39,038
-------------- --------------
Total assets $ 3,688,317 $ 3,762,940
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Secured debt (Note 3) $ 1,000,136 $ 1,072,185
Unsecured debt (Note 4) 1,127,169 1,045,564
Real estate taxes payable 30,887 29,078
Accrued interest payable 17,867 20,714
Security deposits and prepaid rent 20,738 21,125
Distributions payable 36,020 31,423
Accounts payable, accrued expenses and other liabilities 51,121 53,288
-------------- --------------
Total liabilities 2,283,938 2,273,377
Minority interests 94,167 115,442
Shareholders' equity (Notes 6 and 7):
Preferred stock, no par value; $25 liquidation preference,
25,000,000 shares authorized;
4,168,560 shares 9.25% Series A Cumulative Redeemable issued and 104,214 105,000
outstanding (4,200,000 in 1998)
5,946,300 shares 8.60% Series B Cumulative Redeemable issued and 148,658 150,000
outstanding (6,000,000 in 1998)
8,000,000 shares 7.50% Series D Cumulative Convertible Redeemable issued 175,000 175,000
and outstanding
Common stock, $1 par value; 150,000,000 shares authorized
102,740,777 shares issued and outstanding (103,639,117 in 1998) 102,741 103,639
Additional paid-in capital 1,083,687 1,090,432
Distributions in excess of net income (296,030) (242,331)
Deferred compensation - unearned restricted stock awards (305) --
Notes receivable from officer-shareholders (7,753) (7,619)
-------------- --------------
Total shareholders' equity 1,310,212 1,374,121
-------------- --------------
Total liabilities and shareholders' equity $ 3,688,317 $ 3,762,940
============== ==============
|
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Year ended December 31, 1999 1998 1997
-------------------------------------------------------------------------------------------------------------------
Revenues
Rental income $ 618,749 $ 478,718 $ 386,672
Other non-property income 1,942 3,382 1,123
------------ ------------ ------------
Total revenues 620,691 482,100 387,795
Expenses
Rental expenses:
Personnel 66,968 51,219 53,315
Real estate taxes and insurance 63,425 48,898 36,273
Repair and maintenance 41,339 36,827 21,392
Utilities 30,106 26,361 24,861
Administrative and marketing 25,410 19,066 15,208
Property management 18,475 16,945 12,299
Other operating expenses 1,539 244 383
Real estate depreciation 121,727 99,588 76,688
Interest 153,748 106,238 79,004
Impairment loss on real estate and investments (Note 2) 19,300 - 1,400
General and administrative 13,850 10,139 7,075
Other depreciation and amortization 4,425 3,645 2,084
Loss on termination of interest rate risk management agreement
(Note 5) - 15,591 -
------------ ------------ ------------
Total expenses 560,312 434,761 329,982
------------ ------------ ------------
Income before gains on sales of investments, minority interests
and extraordinary item 60,379 47,339 57,813
Gains on sales of investments 37,995 26,672 12,664
------------ ------------ ------------
Income before minority interests and extraordinary item 98,374 74,011 70,477
Minority interests of outside partners (1,245) (111) -
Minority interests of unitholders in operating partnership (4,434) (1,430) (278)
------------ ------------ ------------
Income before extraordinary item 92,695 72,470 70,199
Extraordinary item - early extinguishment of debt 927 (138) (50)
------------ ------------ ------------
Net income 93,622 72,332 70,149
Distributions to preferred shareholders - Series A and B (22,560) (22,607) (17,345)
Distributions to preferred shareholders - Series D (Convertible) (15,154) (986) -
------------ ------------ ------------
Net income available to common shareholders $ 55,908 $ 48,739 $ 52,804
============ ============ ============
Earnings per common share (Note 1):
Basic $ 0.54 $ 0.49 $ 0.61
============ ============ ============
Diluted $ 0.54 $ 0.49 $ 0.60
============ ============ ============
Common distributions declared per share $ 1.06 $ 1.05 $ 1.01
============ ============ ============
Weighted average number of common shares outstanding-basic 103,604 99,966 87,145
Weighted average number of common shares outstanding-diluted 103,639 100,062 87,339
|
See accompanying notes to consolidated financial statements.
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year ended December 31, 1999 1998 1997
-------------------------------------------------------------------------------------------------------------------------------
Operating Activities
Net income $ 93,622 $ 72,332 $ 70,149
Adjustments to reconcile net income to cash provided by operating
activities:
Depreciation and amortization 126,152 103,233 78,772
Minority interests 5,679 1,541 278
Impairment loss on real estate and investments 19,300 -- 1,400
Amortization of deferred financing costs and other 5,184 2,061 1,706
Gains on sales of investments (37,995) (26,672) (12,664)
Extraordinary item-early extinguishment of debt (927) 138 50
Net cash paid in mergers (8,417) -- --
Changes in operating assets and liabilities:
Increase in operating liabilities 3,640 30,682 8,830
Increase in operating assets (15,362) (30,440) (10,618)
------------- ------------- -------------
Net cash provided by operating activities 190,876 152,875 137,903
Investing Activities
Net proceeds from sales of investments 236,706 155,459 77,257
Development of real estate assets (114,028) (97,222) (52,217)
Acquisition of real estate, net of liabilities assumed (75,719) (169,808) (271,836)
Capital expenditures - real estate assets (74,323) (100,398) (95,499)
Capital expenditures - non real estate assets (8,062) (2,876) (3,659)
Net cash paid in mergers -- (59,446) --
Other investing activities 1,132 (1,851) 3,681
------------- ------------- -------------
Net cash used in investing activities (34,294) (276,142) (342,273)
Financing Activities
Net reduction in secured debt (72,048) (98,792) (19,337)
Net proceeds from the issuance of unsecured debt 83,828 307,482 69,936
Payment of financing costs (6,719) (4,875) (2,836)
Proceeds from the sale of preferred stock -- -- 145,068
Proceeds from the issuance of common stock 17,250 76,686 100,751
Distributions paid to minority interests (9,200) (2,413) (144)
Distributions paid to preferred shareholders (34,958) (22,611) (16,270)
Distributions paid to common shareholders (109,608) (103,074) (85,777)
Repurchase of operating partnership units (11,967) (3,528) --
Repurchase of common and preferred stock (31,563) -- --
------------- ------------- -------------
Net cash (used in)/provided by financing activities (174,985) 148,875 191,391
Net increase (decrease) in cash and cash equivalents (18,403) 25,608 (12,979)
Cash and cash equivalents, beginning of year 26,081 473 13,452
------------- ------------- -------------
Cash and cash equivalents, end of year $ 7,678 $ 26,081 $ 473
============= ============= =============
Supplemental Information:
Interest paid during the period $ 162,236 $ 104,858 $ 76,669
Conversion of operating partnership units to common stock 3,947 7,542 --
Non-cash transactions associated with the acquisition of properties:
Secured debt assumed -- 116,326 60,052
Issuance of common stock -- 7,099 --
Issuance of operating partnership -- 18,477 12,530
units
Non-cash transactions associated with mergers:
Real estate assets acquired -- 1,080,696 --
Other operating assets acquired -- 26,845 --
Issuance of preferred stock -- 175,000 --
Issuance of common stock -- 108,456 --
Issuance of operating partnership units -- 88,831 --
Secured debt assumed -- 637,188 --
Operating liabilities assumed -- 36,026 --
Minority interests in partnerships assumed -- 5,382 --
|
See accompanying notes to consolidated financial statements.
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands, except per share data)
Year ended December 31 1999 1998 1997
---------------------------------------------------------------------------------------------------------------------------------
Preferred Stock
Balance, beginning of year $ 430,000 $ 255,000 $ 105,000
Issuance of 8.60% Series B Cumulative Redeemable - - 150,000
Issuance of 7.50% Series D Cumulative Convertible Redeemable
in connection with the acquisition of American
Apartment Communities II - 175,000 -
Purchase of preferred stock (2,128) - -
------------ ------------ --------------
Balance, end of year $ 427,872 $ 430,000 $ 255,000
============ ============ ==============
Common Stock, $1 Par Value
Balance, beginning of year $ 103,639 $ 89,168 $ 81,983
Issuance of common shares in public offerings - 2,804 4,000
Issuance of common shares in the acquisition of ASR Investment
Corporation - 7,743 -
Issuance of common shares to employees, officers and director-
shareholders 72 78 333
Issuance of common shares through dividend reinvestment and stock
purchase plan 1,598 2,825 2,852
Issuance of common shares in connection with the acquisition of properties - 482 -
Purchase of common stock (2,688) - -
Issuance of restricted stock awards 46 - -
Conversion of operating partnership units 74 539 -
------------ ------------ --------------
Balance, end of year $ 102,741 $ 103,639 $ 89,168
============ ============ ==============
Additional Paid-in Capital
Balance, beginning of year $ 1,090,432 $ 906,307 $ 814,795
Issuance of commons shares in public offerings, net of issuance costs - 35,170 55,386
Issuance of common shares in the acquisition of ASR Investment Corporation - 100,713 -
Offering costs associated with the issuance of preferred shares - - (4,934)
Issuance of common shares to employees, officers and director-shareholders 665 801 4,170
Issuance of common shares through dividend reinvestment and stock
purchase plan 15,049 33,821 36,890
Issuance of common shares in connection with the acquisition of properties - 6,617 -
Purchase of common stock (27,372) - -
Purchase of preferred stock 626 - -
Issuance of restricted stock awards 414 - -
Adjustment for cash purchase and conversion of minority interests of - - -
unitholders in operating partnerships 3,873 7,003 -
------------ ------------ --------------
Balance, end of year $ 1,083,687 $ 1,090,432 $ 906,307
============ ============ ==============
Notes Receivable from Officer-Shareholders
Balance, beginning of year $ (7,619) $ (8,806) $ (5,926)
Principal repayments officer-shareholders 139 1,413 635
Shares issued to officer-shareholders (273) (226) (3,515)
------------ ------------ --------------
Balance, end of year $ (7,753) $ (7,619) $ (8,806)
============ ============ ==============
Distributions in Excess of Net Income
Balance, beginning of year $ (242,331) $ (183,312) $ (147,529)
Net income 93,622 72,332 70,149
Common stock distributions declared ($1.06 per share for 1999,
$1.05 per share for 1998 and $1.01 per share for 1997) (109,607) (107,758) (88,587)
Preferred stock distributions declared-Series A ($2.31
per share for 1999, 1998 and 1997) (9,688) (9,704) (9,713)
Preferred stock distributions declared-Series B ($2.15
per share for 1999 and 1998 and $1.27 per share for 1997) (12,872) (12,903) (7,632)
Preferred stock distributions declared-Series D ($1.89
per share for 1999 and $.12 per share for 1998) (15,154) (986) -
------------ ------------ --------------
Balance, end of year $ (296,030) $ (242,331) $ (183,312)
============ ============ ==============
Deferred Compensation - Unearned Restricted Stock Awards
Balance, beginning of year $ - $ - $ -
Issuance of restricted stock awards (460) - -
Amortization of deferred compensation 155 - -
------------ ------------ --------------
Balance, end of year $ (305) $ - $ -
============ ============ ==============
Unrealized Gains on Securities Available-for-Sale
Balance, beginning of year $ - $ - $ 2,056
Realized gain on securities available-for-sale - - (2,056)
Unrealized gain on securities available-for-sale - - -
------------ ------------ --------------
Balance, end of year $ - $ - $ -
============ ============ ==============
Total Shareholders' Equity $ 1,310,212 $ 1,374,121 $ 1,058,357
============ ============ ==============
|
See accompanying notes to consolidated financial statements.
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Formation United Dominion Realty Trust, Inc., a Virginia corporation, was formed in 1972. United Dominion operates within one defined business segment with activities related to the ownership, development, acquisition, renovation, management, marketing and strategic disposition of multifamily apartment communities nationwide. At December 31, 1999, United Dominion owned 301 communities with 82,154 completed apartment homes and had three communities and three additional phases to existing communities with 1,622 apartment homes under development.
Basis of presentation The accompanying consolidated financial statements include the accounts of United Dominion and its subsidiaries, including United Dominion Realty, L.P., (the "Operating Partnership"), and Heritage Communities L.P. (collectively, "United Dominion"). As of December 31, 1999, there were 74,463,788 units in the Operating Partnership outstanding, of which, 67,619,425, or 90.8%, were owned by United Dominion and 6,844,363, or 9.2%, were owned by non-affiliated limited partners. In connection with the acquisition of ASR Investment Corporation in March 1998, United Dominion acquired Heritage Communities L.P., a Delaware limited partnership (the "Heritage OP"). As of December 31, 1999, there were 4,502,668 units in the Heritage OP outstanding, of which 3,839,330, or 85.3%, were owned by United Dominion and 663,338 units, or 14.7%, were owned by non-affiliated limited partners. The consolidated financial statements of United Dominion include the minority interests of the unitholders in the operating partnerships. All significant inter-company accounts and transactions have been eliminated in consolidation.
Income taxes United Dominion is operated as, and elects to be taxed as, a real estate investment trust ("REIT") under the Internal Revenue Code of 1986, as amended (the "Code"). Generally, a REIT that complies with the provisions of the Code and distributes at least 95% of its taxable income to its shareholders will not be subject to U.S. federal income taxes. Accordingly, no provision has been made for federal income taxes. However, United Dominion is subject to certain state and local excise or franchise taxes.
The differences between net income available to common shareholders for financial reporting purposes and taxable income before dividend deductions relate primarily to temporary differences, principally real estate depreciation and the tax deferral of certain gains on property sales. The temporary differences in depreciation result from differences in the book and tax basis of certain real estate assets and the differences in the methods of depreciation and lives of the real estate assets.
For income tax purposes, distributions paid to common shareholders consist of ordinary income, capital gains, return of capital or a combination thereof. For the three years ended December 31, 1999, distributions paid per common share were taxable as follows:
1999 1998 1997
------ ------ ------
Ordinary income $ .620 $.913 $.727
Long-term capital gain .129 --- .021
Return of capital .309 .127 .249
------ ----- -----
$1.058 $1.040 $.997
====== ====== =====
|
Dividends declared on all series of United Dominion's preferred stock represent ordinary income to preferred stockholders for tax purposes in the year paid.
Use of estimates The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
Reclassifications Certain reclassifications have been made to amounts in prior years' financial statements to conform with current year presentation.
Cash and cash equivalents Cash and cash equivalents include all cash and liquid investments with maturities of three months or less when purchased.
Real estate Real estate assets held for investment are carried at historical cost less accumulated depreciation less any recorded impairment losses.
Expenditures for ordinary repair and maintenance costs are charged to expense as incurred. Significant expenditures for improvements, renovations and replacements related to the acquisition and improvement of real estate assets are capitalized at cost and depreciated over their estimated useful lives.
United Dominion recognizes impairment losses on long-lived assets used in operations when there is an event or change in circumstance that indicates an impairment in the value of an asset and the undiscounted future cash flows are not sufficient to recover the asset's carrying value. If such indicators of impairment are present, an impairment loss is recognized based on the excess of the carrying amount of the asset over its fair value.
For long-lived assets to be disposed of, impairment losses are recognized when the fair value of the asset less estimated cost to sell is less than the carrying value of the asset. Real estate is classified as real estate held for disposition when management has committed to sell and is actively marketing the property, and United Dominion expects to dispose of these properties within the next twelve months. Real estate held for disposition is carried at the lower of cost, net of accumulated depreciation or fair value less the cost to dispose, determined on an asset by asset basis. Depreciation is not recorded on real estate held for disposition and gains (losses) from initial and subsequent adjustments to the carrying value of the assets, if any, are recorded as a separate component of income from continuing operations.
Depreciation is computed on a straight-line basis over the estimated useful lives of the related assets which is 35 years for buildings, 10 to 35 years for major improvements, and 5 to 20 years for furniture, fixtures, equipment and other assets.
All development projects and related carrying costs are capitalized and reported on the balance sheet as "real estate under development" until such time as the development project is completed. Upon completion, the total cost of the building and associated land is transferred to real estate held for investment and the assets are depreciated over their estimated useful lives. The cost of development projects includes interest, real estate taxes, insurance and allocated development overhead during the construction period.
Interest and real estate taxes incurred during the development period are capitalized as part of the real estate under development to the extent that such charges do not cause the carrying value of the asset to exceed its net realizable value. During 1999, 1998 and 1997, total interest capitalized was $5.2 million, $3.4 million and $2.6 million, respectively.
Commencing with the adoption of EITF No. 97-11, "Accounting for Internal Costs Relating to Real Estate Property Acquisitions" in March 1998, United Dominion expenses direct internal costs of identifying and acquiring operating properties.
Revenue recognition United Dominion's apartment homes are leased under operating leases with terms generally of one year or less. Rental income is recognized after it is earned and paid.
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
Restricted cash Restricted cash consists of escrow deposits held by lenders for real estate taxes, insurance and replacement reserves and security deposits.
Deferred financing costs Deferred financing costs include fees and other costs incurred to obtain debt financings and are generally amortized on a straight- line basis, which approximates the effective interest method, over a period not to exceed the term of the related debt. Unamortized financing costs are written- off when debt is retired before its maturity date.
Interest rate swap agreements United Dominion enters into interest rate swap agreements to alter the interest rate characteristics of outstanding debt instruments. Each interest rate swap agreement is designated with all or a portion of the principal balance and term of a specific debt obligation. The interest rate swaps involve the periodic exchange of payments over the life of the related agreements. Amounts received or paid on the interest rate swaps are recorded on an accrual basis as an adjustment to the related interest expense of the outstanding debt based on the accrual method of accounting. The related amounts payable to and receivable from counterparties are included in other liabilities and other assets, respectively. The fair value of and changes in the fair value as a result of changes in market interest rates for the interest rate swap agreements are not reflected in the financial statements.
Gains and losses on terminations of interest rate swap agreements are deferred as an adjustment to the carrying amount of the outstanding debt and amortized into interest expense over the remaining term of the original contract life of the terminated swap agreement. In the event of early extinguishment of a designated debt obligation, any realized or unrealized gain or loss from the swap would be recognized in income coincident with the extinguishment gain or loss. There were no gains or losses on terminations of interest rate swap agreements recognized by United Dominion for the periods presented.
Any interest rate swap agreements that are not designated with outstanding debt or notional amounts of interest rate swap agreements in excess of the original amounts of the underlying debt obligations are recorded as an asset or liability at fair value, with the changes in the fair value recorded in other income or expense (fair value method).
Interest rate risk management agreements United Dominion enters into interest rate futures contracts to hedge interest rate risk associated with anticipated debt transactions. United Dominion follows SFAS No. 80, "Accounting for Futures Contracts," which permits hedge accounting for anticipatory transactions meeting certain criteria. Gains and losses, if any, on these transactions are deferred as an adjustment to the carrying amount of the outstanding debt and amortized over the term of the related debt as an adjustment to interest expense. The fair values of interest rate risk management agreements are not recognized in the financial statements. At the time the anticipated transaction is no longer likely to occur, United Dominion would mark the derivative instrument to market and would recognize any adjustment in the consolidated statement of operations.
Earnings per share Basic earnings per common share is computed based upon the weighted average number of common shares outstanding during the year. Diluted earnings per common share is computed based on common shares outstanding plus the effect of dilutive stock options and other potentially dilutive common stock equivalents. The dilutive effect of stock options and other potentially dilutive common stock equivalents is determined using the treasury stock method based on United Dominion's average stock price. The early extinguishment of debt does not have an effect on the earnings per share calculation for the periods presented. The following table sets forth the computation of basic and diluted earning per share (dollars in thousands, except per share amounts):
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
1999 1998 1997
---------------------------------------------------------------------------
Numerator for basic and diluted earnings
per share-net income available to common
shareholders $ 55,908 $ 48,739 $52,804
Denominator:
Denominator for basic earnings per share-
weighted average shares 103,604 99,966 87,145
Effect of dilutive securities:
Employee stock options 35 96 194
-------- -------- -------
Denominator for dilutive earnings per
share 103,639 100,062 87,339
======== ======== =======
Basic earnings per share $ .54 $ .49 $ .61
======== ======== =======
Diluted earnings per share $ .54 $ .49 $ . 60
======== ======== =======
|
The effect of the conversion of the operating partnership units and convertible preferred stock is not dilutive and is therefore not included as a dilutive security in the earnings per share computation. The weighted average effect of the conversion of the operating partnership units for the years ended December 31, 1999, 1998 and 1997 was 8,180,409, 2,963,427, and 317,120, respectively. The weighted average effect of the conversion of the convertible preferred stock for the years ended December 31, 1999 and 1998 was 12,307,692 and 809,273, respectively.
Minority interests in operating partnerships Interests in operating partnerships held by limited partners are represented by operating partnership units (OP Units). The operating partnerships' income is allocated to holders of OP Units based upon net income available to common shareholders and the weighted average number of OP Units outstanding to total common shares plus OP Units outstanding during the period. Capital contributions, distributions and profits and losses are allocated to minority interests in accordance with the terms of the individual partnership agreements. OP Units can be exchanged for cash or shares of United Dominion's common stock on a one-for-one basis, at the option of United Dominion. OP Units as a percentage of total OP Units and shares outstanding was 6.8%, 7.7% and 1.1% at December 31, 1999, 1998 and 1997, respectively.
Minority interest in other partnerships United Dominion has limited partners in certain real estate partnerships acquired as part of the acquisition of American Apartment Communities II on December 7, 1998. Net income for these partnerships is allocated based on the percentage interest owned by these limited partners in each respective real estate partnership.
Stock based compensation United Dominion has elected to follow Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25") in accounting for its employee stock options because the alternative fair value accounting provided for under SFAS No. 123, "Accounting for Stock Based Compensation," requires use of option valuation models that were not developed for use in valuing employee stock options. Under APB 25, because the exercise price of United Dominion's employee stock options equals the market price of the underlying stock on the date of grant, no compensation cost has been recognized.
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
Impact of recently issued accounting standards In June 1998, the Financial Accounting Standards Board issued Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("Statement 133"), as amended by Statement No. 137, "Accounting for Derivative Instruments and Hedging Activities -Deferral of the Effective Date of FASB Statement No. 133 - an Amendment of FASB Statement No. 133," which is required to be adopted in years beginning after June 15, 2000. Statement 133 permits early adoption as of the beginning of any fiscal quarter after its issuance, however, United Dominion does not anticipate adopting Statement 133 until such time as it is required. Statement 133 will require United Dominion to recognize all derivatives on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through income. If the derivative is a hedge, depending on the nature of the hedge, changes in fair value of derivatives will either be offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of the derivative's change in fair value will be immediately recognized in earnings. United Dominion has not yet determined what the effect of Statement 133 will be on earnings and the financial position of United Dominion, however, management does not anticipate that the adoption of Statement 133 will have a significant effect on earnings or the financial position of United Dominion.
2. REAL ESTATE OWNED
United Dominion operates in over 30 major markets dispersed throughout a 22 state area. At December 31, 1999, the company's largest apartment market was Dallas, Texas, where it owned 9.7% of its apartment homes, based upon carrying value. Excluding Dallas, United Dominion did not own more than 5.5% of its apartment homes in any one market, based upon carrying value.
The following table summarizes real estate held for investment at December 31, (dollars in thousands):
1999 1998
--------------------------
Land and land improvements $ 636,905 $ 647,328
Buildings and improvements 2,767,940 2,819,312
Furniture, fixtures and equipment 166,826 169,364
Construction in progress 6,177 7,241
--------------------------
Real estate held for investment 3,577,848 3,643,245
Accumulated depreciation (373,164) (280,663)
--------------------------
Real estate held for investment, net $3,204,684 $3,362,582
==========================
|
The following is a summary of real estate owned by market at December 31, 1999
(dollars in thousands):
Real Estate Held for Investment by Market (in order of carrying value and
excluding real estate under development):
Initial
Number of Acquisition Carrying Accumulated
Market Communities Cost Value Depreciation Encumbrances
Dallas/Ft. Worth, TX 25 $ 312,391 $ 348,190 $ 28,588 $ 34,299 (A)
Phoenix, AZ 10 164,891 196,529 11,174 19,500 (A)
Houston, TX 15 139,969 183,991 11,875 43,546 (A)
Orlando, FL 13 146,114 175,325 24,667 41,298 (A)
San Antonio, TX 12 150,741 165,825 12,051 38,138 (A)
Tampa, FL 11 146,849 162,933 19,550 40,177 (A)
Raleigh, NC 9 123,071 139,336 23,894 15,202
San Francisco, CA 4 128,754 138,681 3,320 68,751
Columbus, OH 5 86,625 120,913 3,244 34,459
|
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
Initial
Number of Acquisition Carrying Accumulated
Market Communities Cost Value Depreciation Encumbrances
Charlotte, NC 10 95,265 118,169 20,430 17,650
Nashville, TN 8 83,987 116,954 9,253 --
Wilmington, NC 10 80,116 111,709 23,421 --
Monterey Peninsula, CA 13 100,762 111,474 2,930 703 (A)
Memphis, TN 7 95,594 103,723 10,110 33,032
South Florida 6 96,137 102,349 10,310 (A)
Richmond, VA 8 75,101 100,058 24,772 2,917 (A)
Columbia, SC 9 83,053 97,332 19,490 5,000
Southern California 6 94,583 95,243 2,102 6,034
Other FL 8 56,901 86,616 11,308 --
Greensboro, NC 5 63,359 78,175 8,625 --
Atlanta, GA 6 57,669 69,224 10,347 10,841
Baltimore, MD 6 58,846 65,439 10,796 18,260 (A)
Seattle, WA 5 63,998 57,816 2,341 28,684
Jacksonville, FL 3 44,787 56,783 8,657 12,455
Hampton, VA 6 42,741 54,653 15,238 (A)
Sacramento, CA 2 47,549 52,758 1,406 17,065 (A)
Other VA 6 29,510 47,439 9,337 2,780
Denver, CO 2 44,195 44,111 1,298 --
Other North Carolina 3 39,004 41,155 4,734 10,142
Detroit, MI 4 38,126 40,254 1,111 635 (A)
Other Midwest 3 36,119 38,293 1,267 1,006 (A)
Washington DC 3 32,603 35,731 4,565 (A)
Eastern Shore MD 4 31,403 34,790 5,217 (A)
Portland, OR 3 41,892 34,353 1,163 1,542 (A)
Indianapolis, IN 2 29,988 26,263 938 304 (A)
Austin, TX 2 21,005 23,836 2,506 (A)
Arkansas 2 20,500 22,306 2,083 --
Nevada 1 20,000 20,776 1,759 --
Delaware 2 14,732 17,761 3,044 (A)
New Mexico 2 16,023 16,761 1,219 5,221 (A)
Arizona 2 11,891 13,408 780 4,618
Other GA 1 8,590 10,413 2,244 (A)
---------------------------------------------------------------
264 $3,075,434 $3,577,848 $373,164 $514,259 (A)
===============================================================
|
Real Estate Held for Disposition (B)
Initial
Number of Acquisition Carrying Accumulated
Properties Cost Value Depreciation Encumbrances
Apartments 37 $ 257,625 $ 270,718 $ 20,909 $ 66,407 (A)
Commercial 4 11,082 12,565 1,791 3,070
-----------------------------------------------------------
41 $ 268,707 $ 283,283 $ 22,700 $ 69,477 (A)
===========================================================
Total 305 $3,344,141 $3,861,131 $395,864 $1,000,136 (A)
===========================================================
|
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(A) There are 21 communities encumbered by two REMIC financings aggregating $59.2 million, 19 communities encumbered by one secured note payable aggregating $195.7 million and 29 communities encumbered by fixed rate debt aggregating $161.5 million. The amount of this debt is not included in the encumbrances shown for the individual markets or in real estate held for disposition.
(B) Real estate held for disposition contributed property operating income (property rental income less property rental expenses) in the aggregate amount of approximately $25.2 million for the year ended December 31, 1999. The properties classified as held for disposition at December 31, 1999 reflect properties management has committed to sell during the next twelve months.
For the year ended December 31, 1999, United Dominion recognized $18.3 million in impairment losses on its real estate owned. At the beginning of June 1999, United Dominion embarked on an accelerated disposition plan for non-strategic properties. Accordingly, through the review and analysis of communities targeted for strategic disposition which included exiting one of United Dominion's major markets and planned sales in 2000, an aggregate $14.8 million impairment loss was recognized on assets held for disposition. An impairment loss was indicated as a result of the net book value of the assets held for disposition being greater than the estimated fair market value less the cost of disposal.
In connection with the periodic evaluation of its apartment portfolio, United Dominion recorded a $3.5 million impairment loss on three communities acquired in the ASR merger in 1998 which are classified in real estate held for investment. An impairment loss was indicated as the sum of the estimated future cash flows from the assets was deemed to be less than their carrying amounts.
The following is a reconciliation of the carrying amount of real estate held for investment at December 31, (dollars in thousands):
1999 1998 1997
--------------------------------------
Balance at January 1 $3,643,245 $2,281,438 $ 2007,612
Real estate acquired 75,719 1,388,514 344,363
Capital expenditures 72,096 98,872 96,102
Transferred from development 116,787 23,350 65,475
Impairment loss on real estate (3,500) -- (1,400)
Transferred to real estate held for disposition (326,499) (148,929) (230,714)
--------------------------------------
Balance at December 31 $3,577,848 $3,643,245 $2,281,438
======================================
|
The following is a reconciliation of accumulated depreciation for real estate held for investment at December 31, (dollars in thousands):
1999 1998 1997
------------------------------------
Balance at January 1 $280,663 $200,506 $173,291
Depreciation expense for the year* 122,884 100,683 77,440
Transferred to real estate held for disposition (30,383) (20,526) (50,225)
------------------------------------
Balance at December 31 $373,164 $280,663 $200,506
====================================
|
* Includes $1,157, $1,095 and $752 for 1999, 1998 and 1997, respectively, classified as "Other depreciation and amortization" in the Consolidated Statements of Operations.
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
3. SECURED DEBT
Secured debt, which encumber $1.9 billion or 48.0% of United Dominion's real estate owned, ($2.1 billion or 52.0% of United Dominion's real estate owned is unencumbered) consist of the following at December 31, 1999 (dollars in thousands):
Weighted Average No. of
--------------------
Interest Years to Communities
Principal Outstanding Rate Maturity Encumbered
1999 1998 1999 1999 1999
----------------------------------------------------------------
Fixed Rate Debt
Mortgage Notes Payable (a) $ 555,414 $ 618,997 7.81% 6.5 84
Tax-Exempt Secured Notes Payable 96,699 125,405 6.91% 12.5 13
REMIC Financings 59,167 75,919 7.78% 1.0 21
Secured Credit Facilities 57,000 45,000 6.65% 14.0 --
------------------------------------------------------------
Total Fixed Rate Secured Debt 768,280 865,321 7.61% 7.4 118
Variable Rate Debt
Secured Credit Facilities 138,675 -- 6.18% 14.0 19
Tax-Exempt Secured Notes Payable 66,616 64,895 4.96% 18.9 5
Mortgage Notes Payable 26,565 141,969 7.34% 13.3 9
------------------------------------------------------------
Total Variable Rate Secured Debt 231,856 206,864 5.96% 15.3 33
------------------------------------------------------------
Total Secured Debt $1,000,136 $1,072,185 7.23% 9.2 151
============================================================
|
(a) Includes fair value adjustments aggregating $14.8 million recorded in connection with two statutory mergers consummated in 1998.
Fixed Rate Debt
Mortgage Notes Payable Fixed rate mortgage notes payable are generally due in monthly installments of principal and interest and mature at various dates from August 2000 through June 2034 and carry interest rates ranging from 7.13% to 9.58%.
Tax-Exempt Secured Notes Payable Fixed rate mortgage notes payable which secure tax-exempt housing bond issues mature at various dates through November 2025 and carry interest rates from 6.13% to 8.50%. Interest on these notes is generally payable in semi-annual installments.
REMIC Financings United Dominion has two fixed rate REMIC Financings which bear interest of 7.01% and 8.50% and mature in December 2000 and February 2001, respectively. United Dominion makes monthly installments of principal and interest over the term of the REMIC Financings.
Secured Credit Facilities On March 18, 1999, United Dominion closed on the first part of a $200 million revolving credit facility with the Federal National Mortgage Association (the "FNMA Credit Facility"). The FNMA Credit Facility is for an initial term of five years, bear interest at a floating rate which can be fixed for periods of up to 270 days, and can be extended for an additional five or ten years at United Dominion's discretion. The $102.3 million initially borrowed under the terms of the FNMA Credit Facility had an interest rate of 5.70%. In April 1999, United Dominion borrowed an additional $16.6 million at an interest rate of 5.68% and $10.7 million at an interest rate of 5.72%. In August, an additional $66.1 million was borrowed under the FNMA Credit Facility at an interest rate of 6.53%. At December 31, 1999, the FNMA Credit Facility had a weighted average floating rate of interest of 6.32%. In order to limit a portion of its interest rate exposure on the Credit Facility, United Dominion entered into three forward rate swap agreements. These agreements have an aggregate notional value of $57 million under which United Dominion pays a fixed rate of interest and receives a variable rate on the notional amount. The interest rate swap agreements effectively change United Dominion's interest rate exposure on $57 million of
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
secured debt from a variable rate to a weighted average fixed rate of 6.65% (see Note 5 - Financial Instruments).
Variable Rate Debt
Secured Credit Facilities Variable rate secured credit facilities consists of
$138.7 million of the $195.7 million outstanding on the FNMA Credit Facility.
Tax-Exempt Secured Notes Payable Variable rate mortgage notes payable which secure tax-exempt housing bond issues mature at various dates from December 2002 to April 2029. At December 31, 1999, these notes carry interest rates ranging from 4.75% to 5.90%.
Mortgage Notes Payable Variable rate mortgage notes payable are generally due in monthly installments of principal and interest and mature at various dates from February 2001 through September 2027. At December 31, 1999, these notes carry interest rates ranging from 6.86% to 7.50%.
The extraordinary loss for the years ended December 31, 1998 and 1997 resulted from the write-off of deferred financing costs on mortgage debt satisfied.
The aggregate maturities of secured debt for the five years subsequent to December 31, 1999 are as follows (dollars in thousands):
Fixed Variable
------ -------------------------------------------- ------------------------------- ----------
Mortgage Tax-Exempt REMIC Secured Secured Tax Exempt Mortgage
Year Notes Bonds Financings Notes Notes Notes Notes TOTAL
------ -------------------------------------------- ------------------------------- ----------
2000 $ 28,351 $ 1,150 $26,445 $ - $ - $ 1,500 $ 629 $ 58,075
2001 64,845 1,402 32,722 - - 1,500 4,232 104,701
2002 51,325 1,490 - - - 4,000 660 57,475
2003 52,076 1,306 - - - 1,900 6,255 61,537
2004 120,435 4,866 - - - 2,000 619 127,920
Thereafter 238,382 86,485 - 57,000 138,675 55,716 14,170 590,428
-------------------------------------------- ------------------------------ ----------
$555,414 $96,699 $59,167 $57,000 $138,675 $66,616 $26,565 $1,000,136
============================================ ============================== ==========
|
4. UNSECURED DEBT
A summary of unsecured debt at December 31, 1999 and 1998 is as follows (dollars in thousands):
1999 1998
-------- --------
Commercial Banks
Borrowings outstanding under
credit facilities (a) (b) $277,600 $240,000
Insurance Companies--Senior Unsecured Notes
7.98% due March, 2000-2003 (c) 29,800 37,228
Other (d) 4,931 5,836
|
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
Senior Unsecured Notes - Other
7.25% Notes repaid April 1999 -- 75,000
8.13% Senior Notes due November 2000 146,150 150,000
7.60% Medium-Term Notes due January 2002 55,000 --
7.65% Medium-Term Notes due January 2003 (e) 10,000 --
7.22% Medium-Term Notes due February 2003 12,000 --
5.05% City of Portland, OR Bonds due October 2003 7,345 --
7.67% Medium-Term Notes due January 2004 54,000 --
7.73% Medium-Term Notes due April 2005 23,400 --
7.02% Medium-Term Notes due November 2005 50,000 50,000
7.95% Medium-Term Notes due July 2006 120,340 125,000
7.07% Medium-Term Notes due November 2006 25,000 25,000
7.25% Notes due January 2007 111,825 125,000
8.50% Monthly Income Notes due November 2008 59,778 62,500
8.50% Debentures due September 2024(f) 140,000 150,000
---------- ----------
814,838 762,500
---------- ----------
Total Unsecured Debt $1,127,169 $1,045,564
========== ==========
|
(a) Weighted average interest rate of 6.7% and 6.0% at December 31, 1999 and
1998, respectively.
(b) As of December 31, 1999, United Dominion had seven interest rate swap
agreements associated with commercial bank borrowings with an aggregate
notional value of $110 million under which United Dominion pays a fixed
rate of interest and receives a variable rate of interest on the notional
amounts. The interest rate swaps effectively change United Dominion's
interest rate exposure on these borrowings from a variable rate to a
weighted average fixed rate of approximately 6.77% (see Note 5 - Financial
Instruments).
(c) Payable annually in four equal principal installments of $7.4 million.
(d) Includes $4.6 million and $5.4 million at December 31, 1999 and 1998,
respectively, of deferred gains from the termination of interest rate risk
management agreements.
(e) United Dominion has one interest rate swap agreement associated with these
unsecured notes with an aggregate notional value of $10 million under which
United Dominion pays a fixed rate of interest and receives a variable rate
on the notional amount. The interest rate swap agreement effectively
changes United Dominion's interest rate exposure on the $10 million from a
variable rate to a fixed rate of 7.65% (see Note 5 - Financial
Instruments).
(f) Debentures include an investor put feature which grants a one-time option
to redeem debentures in September 2004.
For the year ended December 31, 1999, United Dominion recognized a $927 thousand extraordinary gain related to the repurchase of $70.0 million of its unsecured notes payable at less than face value.
Information concerning short-term bank borrowings is summarized in the table that follows (dollars in thousands):
1999 1998
-----------------------------------------------------------------------------------------
Total revolving credit facilities
and lines of credit at December 31 $310,000 $265,000
Borrowings outstanding at December 31 277,600 240,000
Weighted average daily borrowings
during the year 223,629 238,587
Maximum daily borrowings during the year 283,000 334,500 (a)
Weighted average daily interest rate during the year 5.8% 6.1% (a)
Weighted average daily interest rate at December 31 6.7% 6.0%
|
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(a) Includes balances on a $75 million bridge facility funded in July 1998 that matured in November 1998.
At December 31, 1999, United Dominion had in place a syndicated three year $200 million unsecured revolving credit facility (the "Bank Credit Facility") of which $197.6 million was outstanding at December 31, 1999. The Bank Credit Facility will expire on August 4, 2000. Borrowings under the Bank Credit Facility generally bear interest at LIBOR plus .50%. United Dominion is also required to pay a fee of .20% of the committed amount. This fee and the interest rate are both subject to change should United Dominion's credit ratings change.
At December 31, 1999, United Dominion had a $110 million syndicated 364-day credit agreement (the "Line of Credit") of which $80 million was outstanding at December 31, 1999. The Line of Credit will mature on September 15, 2000. Borrowings under the Line of Credit generally bear interest at LIBOR plus 1.00%. United Dominion is also required to pay a fee of .20% of the committed amount. This fee and the interest rate are both subject to change should United Dominion's credit ratings change.
The Bank Credit Facility and the Line of Credit are subject to customary financial covenants and limitations. The underlying loan agreements contain certain covenants which, among other things, require United Dominion to maintain minimum consolidated tangible net worth, as defined, and maintain certain financial ratios.
5. FINANCIAL INSTRUMENTS
Fair Value of Financial Instruments
The following disclosures of estimated fair value of financial instruments were determined by United Dominion using available market information and appropriate valuation methodologies. Considerable judgement is necessary to interpret market data and develop estimated fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts United Dominion would realize on the disposition of the financial instruments. The use of different market assumptions or estimation methodologies may have a material effect on the estimated fair value amounts. The carrying amounts and estimated fair value of United Dominion's financial instruments at December 31, 1999 and 1998, both on and off-balance sheet, are summarized as follows (dollars in thousands):
1999 1998
------------------------ ------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
------------------------ ------------------------
Secured debt $1,000,136 $1,031,074 $1,072,185 $1,125,582
Unsecured debt 1,127,169 1,102,605 1,045,564 1,068,868
Interest rate swap agreements -
favorable / (unfavorable) -- 626 -- (1,321)
|
The following methods and assumptions were used by United Dominion in estimating the fair values set forth above.
Cash and cash equivalents The carrying amount of cash and cash equivalents ------------------------- approximates fair value. Secured and unsecured debt Estimated fair value is based on mortgage rates, -------------------------- |
tax-exempt bond rates and corporate unsecured debt rates believed to be available to United Dominion for the issuance of debt with similar terms and remaining lives. The carrying amount of United Dominion's variable rate secured debt approximate fair value at December 31, 1999 and 1998. The carrying amounts of United Dominion's borrowings under variable rate unsecured debt arrangements, short-term revolving credit agreements and lines of credit approximate their fair values at December 31, 1999 and 1998.
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
Notional Fixed Type of Underlying Contract Fair
Amount Rate Contract Debt Maturity Value
----------------------------------------------------------------------
$ 7,000 6.78% Swap FNMA 06/30/00 $ 230
10,000 7.22% Swap FNMA 04/01/04 141
40,000 6.49% Swap FNMA 04/01/04 174
20,000 7.07% Swap Bank Credit Facility 05/01/00 (45)
5,000 6.70% Swap Bank Credit Facility 06/01/00 (4)
5,000 6.82% Swap Bank Credit Facility 07/01/04 91
5,000 6.48% Swap Bank Credit Facility 10/03/02 98
10,000 6.64% Swap Bank Credit Facility 10/03/02 152
20,000 6.44% Swap Bank Credit Facility 01/24/00 10
45,000 6.84% Swap Line of Credit 01/18/00 23
10,000 7.65% Swap 4-year MTN 01/27/03 (244)
----------------------------------------------------------------------
$ 177,000 $ 626
======================================================================
|
For all periods presented, United Dominion had no deferred gains or losses relating to terminated swap contracts.
Interest rate risk management agreements
In order to reduce the interest rate risk associated with the anticipated issuance of unsecured debt during 1998, United Dominion entered into a $100 million (notional amount) fixed pay forward starting swap agreement (interest rate risk management agreement) with an investment banking firm in July 1997. United Dominion settled the interest rate risk management agreement on November 9, 1998, by paying $15.6 million to the counterparty. United Dominion was unable to issue the unsecured debt contemplated by the interest rate risk management agreement, and accordingly, the cost associated with this settlement is reflected in the 1998 Statement of Operations. United Dominion has no interest rate risk management agreements outstanding at December 31, 1999.
Risk of counterparty non-performance
United Dominion has not obtained collateral or other security to support financial instruments. In the event of non-performance by the counterparty, United Dominion's credit loss on its derivative instruments is limited to the value of the derivative instruments that are favorable to United Dominion at December 31, 1999. However, such non-performance is not anticipated as the counterparties are highly rated, credit quality U.S. financial institutions and management believes that the likelihood of realizing material losses from counterparty non-performance is remote.
6. EMPLOYEE BENEFIT PLANS
Profit Sharing Plan
The United Dominion Realty Trust, Inc. Profit Sharing Plan (the "Plan") is a defined contribution plan covering all eligible full-time employees. Under the Plan, United Dominion makes discretionary profit sharing and matching contributions to the Plan as determined by the Compensation Committee of the Board of Directors. Aggregate contributions, both matching and discretionary, which are included in United Dominion's consolidated statements of operations for the three years ended December 31, 1999, 1998 and 1997 were $2.2 million, $550,000 and $646,000, respectively.
Stock Option Plan
United Dominion's 1985 Share Option Plan, (the "Option Plan"), authorizes the grant of options, at the discretion of the Board of Directors, to certain officers, directors and key employees of United Dominion, for up to ten million shares of
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
United Dominion's common stock which is limited to 8% of the number of shares of common stock issued and outstanding. The Option Plan generally provides, among other things, that options be granted at exercise prices not lower than the market value of the shares on the date of grant. Shares under options which subsequently expire or are canceled are available for subsequent grant. For options granted prior to December 12, 1995, the optionee has up to five years from the date on which the options first become exercisable during which to exercise the options. For options granted on or after December 12, 1995, the options have a ten-year term. Options granted prior to December 9, 1997 vest on December 31 of the year subsequent to grant while options granted on and after this date vest ratably over a three year period beginning on December 31 of the year subsequent to grant. On December 8, 1998, United Dominion cancelled 1,047,165 options which were granted on December 9, 1997 at $14.25. United Dominion subsequently issued options on December 8, 1998, which vest over a three-year period, at United Dominion's then market price of $10.875.
Pro forma information regarding net income and earnings per share is required by SFAS No. 123 "Accounting for Stock Based Compensation" ("SFAS No. 123"), and has been determined as if United Dominion had accounted for its employee stock options under the fair value method of accounting as defined in SFAS No. 123. The fair value for these options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted average assumptions for 1999, 1998 and 1997:
1999 1998 1997
----- ----- -----
Risk free interest rate 6.7% 4.9% 4.8%
Dividend yields 6.9% 6.6% 6.6%
Volatility factor .144 .150 .150
Weighted average expected life (years) 9 9 9
|
The weighted average fair value of options granted during 1999, 1998 and 1997 was $.76, $.66 and $1.35, respectively.
For purposes of the pro forma disclosures, the estimated fair value of the options is amortized to expense over the options' vesting period. United Dominion's pro forma information is as follows (dollars in thousands, except per share amounts):
1999 1998 1997
------- -------- --------
Net income available
to common shareholders
As reported $55,908 $48,739 $52,804
Pro forma 54,847 47,841 52,221
Earnings per common share-diluted
As reported $ .54 $ .49 $ .60
Pro forma .53 .48 .60
|
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
A summary of United Dominion's stock option activity during the three years ended December 31, 1999 is provided in the following table (dollars in thousands, except per share amounts):
Options Outstanding
------------------------------------------------------
Shares Available Weighted Average Range of
For Future Grant Options Exercise Price Exercise Prices
----------------------------------------------------- ----------------- -------------- ---------------
Balance, December 31, 1996 1,970,040 1,775,216 $13.29 $ 7.44-$15.25
Granted (1,841,000) 1,841,000 14.34 13.50-15.38
Exercised -- (116,495) 11.18 7.44-14.63
Forfeited 51,000 (51,000) 15.09 13.13-15.38
---------- ---------- ------ --------------
Balance, December 31, 1997 180,040 3,448,721 13.89 7.44- 15.38
Granted (1,137,665) 1,137,665 11.16 10.88-14.13
Exercised -- (73,490) 11.47 7.44-13.88
Forfeited 1,153,883 (1,153,883) 14.28 7.44-15.38
Additional shares authorized (a) 4,735,858 -- -- --
---------- ---------- ------ --------------
Balance, December 31, 1998 4,932,116 3,359,013 12.89 7.44-15.38
Granted (1,192,333) 1,192,333 10.02 9.63-11.19
Exercised -- (46,998) 9.87 9.19-10.25
Forfeited 288,756 (288,756) 13.46 10.88-15.38
---------- ---------- ------ --------------
Balance, December 31, 1999 4,028,539 4,215,592 $12.09 $9.19- $ 15.38
========== ========== ====== ==============
|
(a) The number of shares of common stock issuable upon the exercise of options outstanding is limited to 8% of the number of shares of common stock issued and outstanding.
Exercisable at December 31,
1997 916,981 $12.67 $7.44-$15.38 1998 1,691,863 13.79 7.44-15.38 1999 2,042,505 13.28 9.19-15.38 |
The weighted average remaining contractual life on all options outstanding is 7.5 years. Approximately 1,407,315 of share options had exercise prices between $14.13 and $15.38, approximately 1,967,691 of share options had exercise prices between $10.81 and $13.94 and approximately 840,586 of share options had exercise prices between $9.19 and $10.25.
7. SHAREHOLDERS' EQUITY
Preferred Stock Both Series A and Series B Preferred Stock have no stated par value and a liquidation preference of $25 per share. With no voting rights and no stated maturity, the preferred stock in both series is not subject to any sinking fund or mandatory redemption and is not convertible into any other securities of United Dominion. The Series A and Series B Preferred Stock are not redeemable prior to April 24, 2000 and May 29, 2007, respectively. On or after these dates, the Series A and Series B Preferred Stock may be redeemed for cash at the option of United Dominion, in whole or in part, at a redemption price of $25 per share plus accrued and unpaid dividends. The redemption price is payable solely out of the sales proceeds of other capital stock of United Dominion. All dividends due and payable on the Series A and Series B Preferred Stock have been accrued or paid as of the end of each fiscal year. United Dominion declared total distributions of $2.31 and $2.15 per share on the Series A and Series B Preferred Stock, respectively, during 1999.
On December 7, 1998, in connection with the AAC merger, United Dominion issued eight million shares of newly created Series D Convertible Redeemable Preferred Stock (Series D), with a liquidation preference of $25 per share. The Series D has no voting rights, no stated maturity and is not subject to any sinking fund or mandatory redemption. Series D is convertible into 1.5385 shares of common stock at the option of the holder of Series D at any time at $16.25 per share. The Series D is not redeemable prior to December 7, 2003. On or after this date, United Dominion may, at its option, redeem at any time all or part of the Series D at a price per share of $25, payable in cash, plus all accrued and unpaid dividends,
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
provided that the current market price of the common stock at least equals the conversion price, initially set at $16.25 per share. The redemption is payable solely out of the sale proceeds of other capital stock. In addition, United Dominion may not redeem in any consecutive 12 month period a number of shares of Series D having an aggregate liquidation preference of more than $100 million. United Dominion declared total distributions of $1.89 per share on the Series D Preferred Stock during 1999.
Officers' Stock Purchase and Loan Plan Under the Officer Stock Purchase and Loan Plan (the "Loan Plan"), certain officers have purchased common stock at the then current market price with financing provided by United Dominion at an interest rate of 7%. The underlying notes mature between November 2001 and October 2006. A total of 848,500 shares have been issued and 551,500 shares are available for future issuance under the Loan Plan.
Dividend Reinvestment and Stock Purchase Plan United Dominion's Dividend Reinvestment and Stock Purchase Plan (the "Stock Purchase Plan") allows common and preferred shareholders the opportunity to purchase, through reinvestment of cash dividends, additional shares of United Dominion's common stock. As of December 31, 1999, 8,337,961 shares of common stock had been issued under the Stock Purchase Plan. Shares in the amount of 5,662,039 were reserved for further issuance under the Stock Purchase Plan at December 31, 1999. During 1999, 1,597,841 shares were issued under the Stock Purchase Plan for a total consideration of approximately $16.7 million.
Restricted Stock Awards United Dominion's 1999 Restricted Stock Awards Plan authorizes the granting of restricted stock awards to employees, officers and directors of United Dominion. The shares of common stock vest ratably over a three year period. Deferred compensation expense is recorded over the vesting period and is based upon the value of the common stock on the date of issuance. A total of 46,000 shares of restricted stock have been issued under the Restricted Stock Awards Plan as of December 31, 1999.
Purchase Rights On January 27, 1998, the Board of Directors authorized a Shareholders Rights Plan (the "Rights Plan") which will become exercisable only if a person or group (the "Acquiring Person") acquires or announces a tender offer for more than 15% of the outstanding common stock of United Dominion. Upon exercise, United Dominion may issue one share of common stock in exchange for each right. Each right will entitle the holder to purchase for $45 one thousandth of a share of Series C Preferred stock or, at the option of United Dominion, common stock of United Dominion having a value of $90.
8. COMMITMENTS AND CONTINGENCIES
United Dominion is party to several ground leases relating to operating communities. In addition, United Dominion is party to various other operating leases related to the operation of its corporate and regional offices. Future minimum lease payments for noncancelable land and other leases at December 31, 1999 are as follows (dollars in thousands):
2000 $ 2,177
2001 1,800
2002 1,746
2003 1,566
2004 1,444
Thereafter 26,631
-------
Total $35,364
=======
|
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
United Dominion incurred $2.8 million, $1.6 million and $1.2 million, respectively, of rent expense for the years ended December 31, 1999, 1998 and 1997.
United Dominion is party to various legal actions which are incidental to its business. Management believes that these actions will not have a material adverse affect on the consolidated balance sheets and statements of operation.
United Dominion is committed to completing its real estate currently under development which has an estimated cost to complete of $59.0 million at December 31, 1999.
9. ACQUISITIONS AND PRO FORMA FINANCIAL INFORMATION
On March 27, 1998, United Dominion completed the acquisition of ASR Investments Corporation in a statutory merger (the "ASR Merger"). In connection with the ASR Merger, United Dominion acquired 39 communities with 7,550 apartment homes. Each share of ASR's common stock was exchanged for 1.575 shares of United Dominion's common stock. The acquisition was structured as a tax-free transaction and was treated as a purchase for accounting purposes. In connection with the acquisition, United Dominion acquired primarily real estate assets totaling $313.7 million. Consideration given by United Dominion included 7,742,839 shares of United Dominion's common stock valued at $14 per share for an aggregate equity value of $108.4 million plus the issuance of 1,529,990 Units in the ASR Operating Partnership valued at $21.4 million. In addition, United Dominion assumed, at fair value, mortgage debt totaling $179.4 million and other liabilities of $13.6 million.
On December 7, 1998, United Dominion completed the acquisition of American Apartment Communities II ("AAC") in a statutory merger (the "AAC Merger"). In connection with the acquisition of AAC, United Dominion acquired 53 communities with 14,001 apartment homes. The AAC Merger was structured as a tax-free merger and exchange of partnership units and was treated as a purchase for accounting purposes. In connection with the AAC Merger, United Dominion acquired primarily real estate assets totaling $766.9 million. The aggregate purchase price consisted of the following: (i) 8,000,000 shares of United Dominion's 7.5% Series D Convertible Preferred Stock ($25 liquidation preference value) which is convertible into United Dominion's Common Stock at $16.25 per share with a fair market value of $175 million, (ii) the issuance of 5,614,035 units of limited partnership interest in the Partnership with an aggregate fair market value of $67.4 million, (iii) the assumption of $457.7 million of secured notes payable at fair market value, (iv) the assumption of liabilities and minority interest aggregating $27.8 million and (v) $59.8 million of cash.
Information concerning unaudited pro forma results of operations of United
Dominion for the years ended December 31, 1998 and 1997 are set forth below. For
1998, such pro forma information assumes the following transactions occurred on
January 1, 1998: (i) the acquisition of ASR, (ii) the acquisition of AAC and
(iii) the acquisition of 13 communities with 4,318 apartment homes for an
aggregate purchase price of $144 million. For 1997, in addition to the
acquisitions previously described, such pro forma information assumes the
following transactions occurred on January 1, 1997: (i) the acquisition by
United Dominion of 17 communities with 5,659 apartment homes at a total cost of
$219 million and (ii) the acquisition by ASR of 22 communities with 4,208
apartment homes at total cost of $176 million.
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
In addition to the ASR Merger and the AAC Merger, all of the acquisitions described have been accounted for as purchases of real estate and operating results for those communities are reflected in the accompanying consolidated financial statements from their respective dates of acquisition.
Pro Forma
Year Ended
December 31,
-------------------
In thousands, except per share amounts 1998 1997
-------------------------------------- -------- --------
(Unaudited)
Rental income $597,460 $566,681
Net income available to common shareholders
before extraordinary item 43,218 37,468
Net income available to common shareholders 43,080 37,418
Net income per common share before
extraordinary item - basic and diluted $ .41 $ .39
Net income per common share -
basic and diluted .41 .39
|
The unaudited information is not necessarily indicative of what United Dominion's consolidated results of operations would have been if the acquisitions had occurred at the beginning of each period presented. Additionally, the pro forma information does not purport to be indicative of United Dominion's results of operations for future periods.
10. INDUSTRY SEGMENTS
United Dominion adopted Financial Accounting Standards Board ("FASB") Statement No. 131, Disclosure about Segments of an Enterprise and Related Information" ("Statement 131") in the fourth quarter of 1998. Statement 131 superseded FASB Statement No. 14, "Financial Reporting for Segments of a Business Enterprise." Statement 131 establishes standards for the way public business enterprises report information regarding reportable operating segments. The adoption of Statement 131 did not affect the results of operations or financial position of United Dominion.
United Dominion owns and operates multifamily apartment communities throughout the United States which generated rental and other property related income through the leasing of apartment units to a diverse base of tenants. United Dominion separately evaluates the performance of each of its apartment communities. However, because each of the apartment communities have similar economic characteristics, facilities, services and tenants, the apartment communities have been aggregated into a single apartment communities segment. All segment disclosure are included in or can be derived from United Dominion's consolidated financial statements.
All revenues are from external customers and no revenues are generated from transactions with other segments. There are no tenants which contributed 10% or more of United Dominion's total revenues during 1999, 1998 or 1997.
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
11. UNAUDITED SUMMARIZED CONSOLIDATED QUARTERLY FINANCIAL DATA
Summarized consolidated quarterly financial data for the year ended December 31, 1999 is as follows (dollars in thousands, except per share amounts):
Three Months Ended
-----------------------------------------------------
March 31 June 30 (a) September 30 December 31 (b)
--------- ----------- ------------ ---------------
Rental income $153,791 $154,430 $155,523 $155,005
Income before gains on sales
of investments, minority interests
and extraordinary item 20,941 11,389 20,521 7,528
Gains on the sales of investments 191 32,214 48 5,542
Net income 20,082 40,800 19,876 12,864
Distributions to preferred shareholders 9,439 9,440 9,441 9,394
Net income available to
common shareholders 10,643 31,360 10,435 3,470
Earnings per common share:
Basic $ .10 $ .30 $ .10 $ .03
Diluted $ .10 $ .30 $ .10 $ .03
Weighted average number of common shares
outstanding-basic 103,932 104,324 103,439 102,735
Weighted average number of common shares
outstanding-diluted 103,935 104,338 103,490 102,807
|
Three Months Ended
----------------------------------------------------------
March 31(a) June 30 September 30 December 31(a), (b)
------------ --------- ------------ -------------------
Rental income $104,249 $118,176 $123,475 $132,818
Income before gains (losses) on sales
of investments, minority interests
and extraordinary item 17,578 15,387 13,872 502
Gains (losses) on the sales of investments (260) 20,721 13 6,198
Net income 17,183 35,005 13,807 6,337
Distributions to preferred shareholders 5,650 5,653 5,650 6,640
Net income (loss) available to
common shareholders 11,533 29,352 8,157 (303)
Earnings per common share:
Basic $ .13 $ .29 $ .08 $ (.00)
Diluted $ .13 $ .29 $ .08 $ (.00)
Weighted average number of common shares
outstanding-basic 90,867 101,562 103,104 103,467
Weighted average number of common shares
outstanding-diluted 90,985 102,358 103,145 103,476
|
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(a) United Dominion completed the acquisition of ASR Investments Corporation on
March 27, 1998 and the acquisition of American Apartment Communities II on
December 7, 1998.
(b) The fourth quarter of 1998 includes a $15.6 million charge associated with
the termination of an interest rate risk management agreement.
SCHEDULE III.
Summary of Real Estate Owned
Cost of
Improvements
Intitial Costs Total Capitalized
------------------------------
Land and Buildings Initial Subsequent
Land and Acquisition to Acquisition
Encumbrances (j) Improvements Improvements Cost (i) (Net of Disposals)
------------------ ------------------------------ ---------------- -------------------
Apartments:
Real estate held for investment
Dallas, Texas
Preston Oaks b $ 1,783,626 $ 6,416,374 $ 8,200,000 $ 530,121
Preston Trace c 2,195,500 8,304,500 10,500,000 552,953
Rock Creek c 4,076,680 15,823,320 19,900,000 3,573,377
Windridge b 3,414,311 14,027,310 17,441,621 2,266,191
Autumnwood c 2,412,180 8,687,820 11,100,000 762,036
Cobblestone c 2,925,372 10,527,738 13,453,110 1,681,620
Pavillion b 4,428,258 19,032,881 23,461,139 1,184,901
Oak Park 3,966,129 22,227,701 26,193,830 (697,245)
Catalina b 1,543,321 5,631,679 7,175,000 456,151
Wimbledon Court c 1,809,183 10,930,306 12,739,489 1,745,504
Southern Oaks 1,565,000 5,335,000 6,900,000 542,005
Hunters Ridge 1,613,000 5,837,000 7,450,000 573,789
Lakeridge c 1,631,350 5,668,650 7,299,999 715,626
Summergate c 1,171,300 3,928,700 5,100,000 595,043
Oak Forest 5,630,740 23,293,922 28,924,662 9,817,808
The Oaks of Lewisville 3,726,795 13,563,181 17,289,976 3,119,859
Kelly Crossing 2,496,701 9,156,355 11,653,056 1,127,200
Parc Plaza 1,683,531 5,279,123 6,962,654 990,898
Summit Ridge 4,872,444 1,725,508 6,308,032 8,033,540 1,246,411
Greenwood Creek 4,774,835 1,958,378 8,551,018 10,509,396 935,853
Highlands of Preston 4,580,372 2,151,056 8,167,630 10,318,686 1,303,422
Derby Park 7,239,436 3,121,153 11,764,974 14,886,127 542,940
Aspen Court 1,912,063 776,587 4,944,947 5,721,534 684,781
The Summit 5,278,406 1,932,195 9,041,301 10,973,496 1,005,111
Springfield 5,206,080 3,074,511 6,823,120 9,897,631 846,362
Orlando, Florida
Fisherman's Village 2,387,368 7,458,897 9,846,265 2,795,562
Seabrook 1,845,853 4,155,275 6,001,128 2,581,715
Dover Village 2,894,702 6,456,100 9,350,802 3,196,819
Lakeside North 12,440,000 1,532,700 11,076,062 12,608,762 3,296,687
Regatta Shores 757,008 6,607,367 7,364,375 2,386,927
Alafaya Woods d 1,653,000 9,042,256 10,695,256 1,787,491
Vinyards 8,940,000 1,840,230 11,571,625 13,411,855 2,525,212
Andover Place 13,485,000 3,692,187 7,756,919 11,449,106 2,757,718
Los Altos d 2,803,805 12,348,464 15,152,270 2,286,065
Lotus Landing 2,184,723 8,638,664 10,823,387 1,675,727
Seville on the Green 1,282,616 6,498,062 7,780,678 1,678,320
Arbors at Lee Vista d 3,975,679 16,920,454 20,896,133 1,449,777
Heron Lake 6,432,533 1,446,553 9,287,878 10,734,431 792,740
Gross amount at Which
Carried at Close of Period Total
-------------------------------------
Land and Buildings Carrying
Land and Value Accumulated Date of
Improvements Improvements (h) (a) Depreciation Construction
------------------------------------- ------------ ---------------- ----------------
Apartments:
Real estate held for investment
Dallas, Texas
Preston Oaks $ 1,895,879 $ 6,834,242 $ 8,730,121 $ 779,301 1980
Preston Trace 2,333,010 8,719,943 11,052,953 963,573 1984
Rock Creek 4,473,445 18,999,932 23,473,377 2,105,346 1979
Windridge 3,996,322 15,711,490 19,707,812 1,905,987 1980
Autumnwood 2,640,715 9,221,321 11,862,036 1,102,885 1984
Cobblestone 3,089,857 12,044,873 15,134,730 1,385,007 1984
Pavillion 4,615,450 20,030,590 * 24,646,040 2,329,082 1979
Oak Park 4,780,229 20,716,355 25,496,585 2,456,430 1982, 1998
Catalina 1,645,302 5,985,849 7,631,151 711,272 1982
Wimbledon Court 2,789,704 11,695,289 14,484,993 1,201,246 1983
Southern Oaks 1,600,188 5,841,816 7,442,005 731,015 1982
Hunters Ridge 1,794,234 6,229,555 8,023,789 780,972 1992
Lakeridge 1,768,334 6,247,292 8,015,625 773,038 1984
Summergate 1,379,968 4,315,075 5,695,043 518,945 1984
Oak Forest 6,309,302 32,433,168 38,742,470 2,545,941 1996, 1998
The Oaks of Lewisville 4,480,658 15,929,177 20,409,835 1,974,317 1983
Kelly Crossing 2,814,883 9,965,373 12,780,256 1,037,252 1984
Parc Plaza 1,839,226 6,114,326 7,953,552 649,206 1986
Summit Ridge 2,159,446 7,120,505 9,279,952 662,931 1983
Greenwood Creek 2,075,518 9,369,732 11,445,249 663,904 1984
Highlands of Preston 2,303,384 9,318,724 11,622,108 667,857 1985
Derby Park 3,499,222 11,929,844 15,429,067 998,474 1984
Aspen Court 1,041,896 5,364,419 6,406,315 386,395 1986
The Summit 2,298,403 9,680,204 11,978,607 689,536 1983
Springfield 3,259,924 7,484,069 10,743,993 568,301 1985
Orlando, Florida
Fisherman's Village 3,071,962 9,569,866 12,641,828 1,922,285 1984
Seabrook 2,227,419 6,355,424 8,582,842 1,456,920 1984
Dover Village 3,355,114 9,192,507 12,547,621 2,860,515 1981
Lakeside North 2,213,892 13,691,557 15,905,449 3,201,570 1984
Regatta Shores 1,496,916 8,254,386 9,751,302 2,244,224 1988
Alafaya Woods 2,096,368 10,386,379 12,482,747 2,368,946 1988/90
Vinyards 2,361,248 13,575,819 15,937,067 3,062,340 1984/86
Andover Place 4,441,272 9,765,552 14,206,824 1,985,387 1988
Los Altos 3,293,459 14,144,876 17,438,335 1,867,618 1990
Lotus Landing 2,374,503 10,124,611 12,499,114 944,301 1985
Seville on the Green 1,433,223 8,025,775 9,458,998 749,337 1986
Arbors at Lee Vista 4,360,580 17,985,330 22,345,910 1,375,080 1991
Heron Lake 1,578,534 9,948,637 11,527,171 626,684 1989
Depreciable
Life of
Date Building
Acquired Component
------------ ---------------
Apartments:
Real estate held for investment
Dallas, Texas
Preston Oaks 12/31/96 35 yrs.
Preston Trace 12/31/96 35 yrs.
Rock Creek 12/31/96 35 yrs.
Windridge 12/31/96 35 yrs.
Autumnwood 12/31/96 35 yrs.
Cobblestone 12/31/96 35 yrs.
Pavillion 12/31/96 35 yrs.
Oak Park 12/31/96 35 yrs.
Catalina 12/31/96 35 yrs.
Wimbledon Court 12/31/96 35 yrs.
Southern Oaks 12/31/96 35 yrs.
Hunters Ridge 12/31/96 35 yrs.
Lakeridge 12/31/96 35 yrs.
Summergate 12/31/96 35 yrs.
Oak Forest 12/31/96 35 yrs.
The Oaks of Lewisville 03/27/97 35 yrs.
Kelly Crossing 06/18/97 35 yrs.
Parc Plaza 10/30/97 35 yrs.
Summit Ridge 03/27/98 35 yrs.
Greenwood Creek 03/27/98 35 yrs.
Highlands of Preston 03/27/98 35 yrs.
Derby Park 03/27/98 35 yrs.
Aspen Court 03/27/98 35 yrs.
The Summit 03/27/98 35 yrs.
Springfield 03/27/98 35 yrs.
Orlando, Florida
Fisherman's Village 12/29/95 35 yrs.
Seabrook 02/20/96 35 yrs.
Dover Village 3/31/93 35 yrs.
Lakeside North 04/14/94 35 yrs.
Regatta Shores 06/30/94 35 yrs.
Alafaya Woods 10/21/94 35 yrs.
Vinyards 10/31/94 35 yrs.
Andover Place 19/29/95 & 09/30/9 35 yrs.
Los Altos 10/31/96 35 yrs.
Lotus Landing 07/01/97 35 yrs.
Seville on the Green 10/21/97 35 yrs.
Arbors at Lee Vista 12/31/97 35 yrs.
Heron Lake 03/27/98 35 yrs.
|
Cost of
Improvements
Intitial Costs Total Capitalized
-------------------------------
Land and Buildings Initial Subsequent
Land and Acquisition to Acquisition
Encumbrances (j) Improvements Improvements Cost (i) (Net of Disposals)
---------------- ------------------------------- ---------------- -------------------
Raleigh, North Carolina
Dominion on Spring Forest 1,257,500 8,586,255 9,843,755 2,850,723
Dominion Park Green 500,000 4,321,872 4,821,872 1,244,921
Dominion on Lake Lynn 1,723,363 5,303,760 7,027,123 2,197,691
Dominion Courtney Place 1,114,600 5,119,259 6,233,859 2,678,260
Dominion Walnut Ridge 1,791,215 11,968,852 13,760,067 2,020,629
Dominion Walnut Creek 3,170,290 21,717,407 24,887,697 2,841,165
Dominion Ramsgate 907,605 6,819,154 7,726,759 681,882
Harbour Pointe 1,898,740 7,101,260 9,000,000 137,506
Copper Mill 1,548,280 16,066,720 17,615,000 805,675
Trinity Park 15,202,148 4,579,648 17,575,712 22,155,360 806,193
Charlotte, North Carolina
The Highlands 321,400 2,830,346 3,151,746 2,453,267
Emerald Bay 626,070 4,722,862 5,348,932 2,624,018
Dominion Peppertree 1,546,267 7,699,221 9,245,488 1,428,272
Dominion Crown Point 1,115,261 8,648,865 9,764,126 1,517,372
Dominion Harris Pond 886,788 6,728,097 7,614,885 1,173,119
Dominion Mallard Creek (A) 5,286,892 698,860 6,488,061 7,186,921 563,074
Chateau Village 1,046,610 6,979,555 8,026,164 2,010,495
Dominion at Sharon 667,368 4,856,103 5,523,471 937,996
Providence Court 0 22,047,803 22,047,803 9,190,662
Stoney Pointe 12,363,127 1,499,650 15,855,610 17,355,260 1,005,466
Richmond, Virginia
Dominion Olde West 1,965,097 12,203,965 14,169,062 3,642,140
Dominion Laurel Springs 464,480 3,119,716 3,584,196 1,096,684
Dominion English Hills d 1,979,174 11,524,313 13,503,487 5,235,888
Dominion Gayton Crossing 2,916,860 825,760 5,147,968 5,973,728 6,305,074
Dominion West End d 2,059,252 15,049,088 17,108,340 2,480,461
Courthouse Green d 732,050 4,702,353 5,434,403 3,035,353
Waterside at Ironbridge 1,843,819 13,238,590 15,082,409 514,371
Corporate Headquarters 245,332 0 245,332 2,646,644
Houston, Texas
Woodtrail b 1,543,000 5,457,000 7,000,000 1,968,873
Park Trails b 1,144,750 4,105,250 5,250,000 504,830
Green Oaks 5,313,920 19,626,181 24,940,101 2,104,673
Sky Hawk 2,297,741 7,157,965 9,455,706 1,777,515
South Grand at Pecan Grove 10,611,128 4,058,090 14,755,809 18,813,899 3,239,221
Breakers 1,527,467 5,297,930 6,825,397 1,755,182
Braesridge 9,311,384 3,048,212 10,961,749 14,009,961 1,520,863
Skylar Pointe 8,450,023 3,604,483 11,592,432 15,196,915 3,174,814
Stone Canyon 899,515 899,515 9,422,885
Chelsea Park 3,279,625 1,991,478 5,787,626 7,779,104 1,083,347
Country Club Place 3,402,110 498,632 6,520,172 7,018,804 708,680
Arbor Ridge 3,565,032 1,688,948 6,684,229 8,373,177 45,141
London Park 4,249,085 2,018,478 6,667,450 8,685,928 1,241,833
Legends at Park 10 1,995,011 1,995,011 11,616,704
Towne Lake 1,333,958 5,308,884 6,642,842 939,739
Gross amount at Which
Carried at Close of Period Total
-------------------------------------
Land and Buildings Carrying
Land and Value Accumulated Date of
Improvements Improvements (h) (a) Depreciation Construction
------------------------------------- ------------ ---------------- ----------------
Raleigh, North Carolina
Dominion on Spring Forest 1,590,092 11,104,386 12,694,478 4,289,327 1978/81
Dominion Park Green 683,491 5,383,303 6,066,793 1,937,129 1987
Dominion on Lake Lynn 2,222,832 7,001,982 9,224,814 2,161,888 1986
Dominion Courtney Place 1,397,012 7,515,107 8,912,119 1,911,643 1979/81
Dominion Walnut Ridge 2,187,221 13,593,476 15,780,696 3,046,721 1982/84
Dominion Walnut Creek 3,682,948 24,045,913 27,728,862 5,058,480 1985/86
Dominion Ramsgate 1,005,603 7,403,039 8,408,641 961,558 1988
Harbour Pointe 1,898,796 7,238,710 9,137,506 779,826 1984
Copper Mill 1,755,353 16,665,321 18,420,675 1,822,899 1997
Trinity Park 4,696,853 18,264,700 22,961,553 1,924,742 1987
Charlotte, North Carolina
The Highlands 648,291 4,956,722 5,605,013 3,135,715 1970
Emerald Bay 1,179,772 6,793,179 7,972,950 3,442,007 1972
Dominion Peppertree 1,840,457 8,833,304 10,673,760 2,304,375 1987
Dominion Crown Point 1,585,606 9,695,892 11,281,498 2,124,705 1987
Dominion Harris Pond 1,213,702 7,574,302 8,788,004 1,608,800 1987
Dominion Mallard Creek (A) 776,615 6,973,380 7,749,995 1,409,891 1989
Chateau Village 1,407,249 8,629,411 10,036,660 1,338,797 1974
Dominion at Sharon 897,820 5,563,648 6,461,467 775,591 1984
Providence Court 7,403,009 23,835,456 31,238,465 2,445,314 1997
Stoney Pointe 1,733,721 16,627,005 18,360,726 1,845,083 1991
Richmond, Virginia
Dominion Olde West 2,409,869 15,401,333 17,811,202 7,030,866 1978/82/84/85/87
Dominion Laurel Springs 629,481 4,051,398 4,680,880 1,553,130 1972
Dominion English Hills 2,791,907 15,947,467 18,739,374 5,887,304 1969/76
Dominion Gayton Crossing 1,154,343 11,124,459 12,278,802 2,704,162 1973
Dominion West End 2,635,873 16,952,927 19,588,801 2,734,344 1989
Courthouse Green 1,074,475 7,395,280 8,469,756 3,718,955 1974/78
Waterside at Ironbridge 1,966,099 13,630,681 15,596,780 1,142,817 1987
Corporate Headquarters 245,352 2,646,624 2,891,976 0 1999
Houston, Texas
Woodtrail 1,720,755 7,248,118 8,968,873 1,042,304 1978
Park Trails 1,157,500 4,597,329 5,754,830 572,312 1983
Green Oaks 5,736,323 21,308,451 27,044,774 2,159,879 1985
Sky Hawk 2,694,055 8,539,166 11,233,221 968,055 1984
South Grand at Pecan Grove 4,426,643 17,626,476 22,053,120 1,547,219 1985
Breakers 1,854,904 6,725,675 8,580,579 676,510 1985
Braesridge 3,315,626 12,215,199 15,530,824 1,141,337 1982
Skylar Pointe 3,658,701 14,713,028 18,371,729 1,375,015 1979
Stone Canyon 899,515 9,422,886 10,322,400 2,464 1998
Chelsea Park 2,282,748 6,579,703 8,862,451 480,958 1983
Country Club Place 638,395 7,089,089 7,727,484 441,084 1985
Arbor Ridge 2,026,944 6,391,374 8,418,318 445,042 1983
London Park 2,265,686 7,662,075 9,927,761 557,356 1983
Legends at Park 10 1,995,011 11,616,704 13,611,715 73 1998
Towne Lake 1,556,275 6,026,306 7,582,581 465,410 1984
Depreciable
Life of
Date Building
Acquired Component
------------ ---------------
Raleigh, North Carolina
Dominion on Spring Forest 05/21/91 35 yrs.
Dominion Park Green 09/27/91 35 yrs.
Dominion on Lake Lynn 12/01/92 35 yrs.
Dominion Courtney Place 07/08/93 35 yrs.
Dominion Walnut Ridge 03/04/94 35 yrs.
Dominion Walnut Creek 05/17/94 35 yrs.
Dominion Ramsgate 08/15/96 35 yrs.
Harbour Pointe 12/31/96 35 yrs.
Copper Mill 12/31/96 35 yrs.
Trinity Park 02/28/97 35 yrs.
Charlotte, North Carolina
The Highlands 01/17/84 35 yrs.
Emerald Bay 02/06/90 35 yrs.
Dominion Peppertree 12/14/93 35 yrs.
Dominion Crown Point 07/01/94 35 yrs.
Dominion Harris Pond 07/01/94 35 yrs.
Dominion Mallard Creek (A) 08/16/94 35 yrs.
Chateau Village 08/15/96 35 yrs.
Dominion at Sharon 08/15/96 35 yrs.
Providence Court 09/30/97 35 yrs.
Stoney Pointe 02/28/97 35 yrs.
Richmond, Virginia
Dominion Olde West 2/31/84 & 08/27/9 35 yrs.
Dominion Laurel Springs 09/06/91 35 yrs.
Dominion English Hills 12/06/91 35 yrs.
Dominion Gayton Crossing 09/28/95 35 yrs.
Dominion West End 12/28/95 35 yrs.
Courthouse Green 12/31/84 35 yrs.
Waterside at Ironbridge 09/30/97 35 yrs.
Corporate Headquarters 11/30/99 35 yrs.
Houston, Texas
Woodtrail 12/31/96 35 yrs.
Park Trails 12/31/96 35 yrs.
Green Oaks 06/25/97 35 yrs.
Sky Hawk 05/08/97 35 yrs.
South Grand at Pecan Grove 09/26/97 35 yrs.
Breakers 09/26/97 35 yrs.
Braesridge 09/26/97 35 yrs.
Skylar Pointe 11/20/97 35 yrs.
Stone Canyon 12/17/97 35 yrs.
Chelsea Park 03/27/98 35 yrs.
Country Club Place 03/27/98 35 yrs.
Arbor Ridge 03/27/98 35 yrs.
London Park 03/27/98 35 yrs.
Legends at Park 10 05/19/98 35 yrs.
Towne Lake 03/27/98 35 yrs.
|
SCHEDULE III.
Summary of Real Estate Owned Cost of
Improvements
Initial Costs Total Capitalized
----------------------------------
Land and Buildings Initial Subsequent
Land and Acquisition to Acquisition
Encumbrances (j) Improvements Improvements Cost (i) (Net of Disposals)
---------------- ---------------------------------- ------------ ------------------
Columbia, South Carolina
Gable Hill 824,847 5,307,194 6,132,041 1,292,961
St. Andrews Commons 1,428,826 9,371,378 10,800,204 1,496,945
Forestbrook 5,000,000 395,516 2,902,040 3,297,556 1,760,192
Crossroads 2,074,800 13,760,014 15,834,814 3,138,140
The Park 1,004,072 5,558,436 6,562,508 2,005,764
St. Andrews 976,192 6,884,502 7,860,694 1,018,436
Waterford 957,980 6,947,939 7,905,919 1,268,293
Hampton Greene 1,363,046 10,118,453 11,481,499 1,286,690
Rivergate 1,122,500 12,055,625 13,178,125 1,011,673
Tampa, Florida
Bay Cove 2,928,847 6,578,257 9,507,104 2,572,662
Summit West 2,176,500 4,709,970 6,886,470 2,077,805
Pinebrook 1,780,375 2,458,172 4,238,547 2,843,856
Village at Old Tampa Bay 1,750,320 10,756,337 12,506,657 2,067,928
Lakewood Place d 1,395,051 10,647,377 12,042,428 1,095,116
Hunters Ridge d 2,461,548 10,942,434 13,403,982 1,289,708
Bay Meadow 7,712,608 2,892,526 9,253,525 12,146,051 2,371,645
Cambridge 1,790,804 7,166,329 8,957,133 1,279,383
Orange Oaks 1,361,553 6,541,980 7,903,533 1,099,158
Parker's Landing 31,853,507 10,178,355 37,868,669 48,047,024 548,529
Sugar Mill Creek e 2,241,880 7,552,520 9,794,400 254,142
Greensboro, North Carolina
Beechwood 1,409,377 6,086,677 7,496,054 861,802
Steeplechase 3,208,108 11,513,978 14,722,086 12,058,659
Northwinds 1,557,654 11,735,787 13,293,441 867,710
Lake Brandt 1,546,950 13,489,466 15,036,416 678,417
Deep River Pointe 1,670,648 11,140,329 12,810,977 349,371
Eastern North Carolina
Colony Village 346,330 3,036,956 3,383,286 1,816,132
Brynn Marr 432,974 3,821,508 4,254,482 2,496,077
Liberty Crossing 840,000 3,873,139 4,713,139 2,640,985
Bramblewood 401,538 3,150,912 3,552,450 1,376,822
Cape Harbor 1,891,671 18,113,109 20,004,780 855,424
Mill Creek 1,404,498 4,489,398 5,893,895 13,280,395
The Creek 417,500 2,506,206 2,923,706 1,444,301
Forest Hills 1,028,000 5,420,478 6,448,478 1,767,817
Clear Run 874,830 8,740,602 9,615,432 5,048,129
Crosswinds 1,096,196 18,230,236 19,326,432 866,826
Gross amount at Which
Carried at Close of Period Total
------------------------------------
Land and Buildings Carrying
Land and Value Accumulated Date of Date
Improvements Improvements (h) (a) Depreciation Constuction Acquired
------------------------------------ -------- ------------ ----------- --------
Columbia, South Carolina
Gable Hill 1,184,326 6,240,676 7,425,002 2,403,028 1985 12/04/89
St. Andrews Commons 1,818,494 10,478,655 12,297,149 2,859,026 1986 05/20/93
Forestbrook 627,056 4,430,693 5,057,748 1,500,317 1974 07/01/93
Crossroads 2,605,133 16,367,821 18,972,954 3,609,947 1977/84 07/01/94
The Park 1,468,684 7,099,588 8,568,272 1,648,616 1975/77 07/01/94
St. Andrews 1,196,944 7,682,186 8,879,130 1,691,243 1972 07/01/94
Waterford 1,231,182 7,943,030 9,174,212 1,828,235 1985 07/01/94
Hampton Greene 1,866,086 10,902,104 12,768,189 2,278,167 1990 08/19/94
Rivergate 1,406,365 12,783,433 14,189,798 1,671,166 1989 08/15/96
Tampa, Florida
Bay Cove 3,264,201 8,815,565 12,079,766 2,826,433 1972 12/16/92
Summit West 2,446,995 6,517,280 8,964,275 2,133,335 1972 12/16/92
Pinebrook 2,039,000 5,043,403 7,082,403 1,830,553 1977 09/28/93
Village at Old Tampa Bay 2,120,323 12,454,262 14,574,585 3,152,798 1986 12/08/93
Lakewood Place 1,586,517 11,551,027 13,137,544 2,561,131 1986 03/10/94
Hunters Ridge 2,933,433 11,760,257 14,693,690 2,239,009 1992 06/30/95
Bay Meadow 3,421,576 11,096,120 14,517,695 1,436,787 1985 12/09/96
Cambridge 2,064,074 8,172,442 10,236,516 875,195 1985 06/06/97
Orange Oaks 1,534,286 7,468,405 9,002,691 771,467 1986 07/01/97
Parker's Landing 9,193,535 39,402,018 48,595,553 1,412,617 1991 12/07/98
Sugar Mill Creek 2,375,839 7,672,703 10,048,542 310,961 1988 12/07/98
Greensboro, North Carolina
Beechwood 1,599,720 6,758,136 8,357,856 1,710,041 1985 12/22/93
Steeplechase 3,748,136 23,032,609 26,780,745 2,528,179 1990/97 03/07/96
Northwinds 1,738,394 12,422,758 14,161,151 1,624,782 1989/97 08/15/96
Lake Brandt 1,771,863 13,942,970 15,714,833 1,750,446 1995 08/15/96
Deep River Pointe 1,783,557 11,376,791 13,160,348 1,012,011 1997 10/01/97
Eastern North Carolina
Colony Village 552,767 4,646,651 5,199,418 2,579,772 1972/74 12/31/84
Brynn Marr 734,114 6,016,445 6,750,559 3,016,012 1973/77 12/31/84
Liberty Crossing 1,400,915 5,953,209 7,354,124 2,803,360 1972/74 11/30/90
Bramblewood 551,414 4,377,858 4,929,272 2,450,853 1980/82 12/31/84
Cape Harbor 2,222,269 18,637,936 20,860,205 2,393,894 1996 08/15/96
Mill Creek 1,889,337 17,284,953 19,174,291 1,974,152 1986/98 09/30/91
The Creek 488,728 3,879,279 4,368,007 1,442,161 1973 06/30/92
Forest Hills 1,201,540 7,014,755 8,216,295 2,094,062 1964/69 06/30/92
Clear Run 1,234,266 13,429,295 14,663,561 2,564,093 1987/89 07/22/94
Crosswinds 1,191,487 19,001,771 20,193,258 2,102,685 1990 02/28/97
Depreciable
Life of
Building
Component
----------
Columbia, South Carolina
Gable Hill 35 yrs.
St. Andrews Commons 35 yrs.
Forestbrook 35 yrs.
Crossroads 35 yrs.
The Park 35 yrs.
St. Andrews 35 yrs.
Waterford 35 yrs.
Hampton Greene 35 yrs.
Rivergate 35 yrs.
Tampa, Florida
Bay Cove 35 yrs.
Summit West 35 yrs.
Pinebrook 35 yrs.
Village at Old Tampa Bay 35 yrs.
Lakewood Place 35 yrs.
Hunters Ridge 35 yrs.
Bay Meadow 35 yrs.
Cambridge 35 yrs.
Orange Oaks 35 yrs.
Parker's Landing 35 yrs.
Sugar Mill Creek 35 yrs.
Greensboro, North Carolina
Beechwood 35 yrs.
Steeplechase 35 yrs.
Northwinds 35 yrs.
Lake Brandt 35 yrs.
Deep River Pointe 35 yrs.
Eastern North Carolina
Colony Village 35 yrs.
Brynn Marr 35 yrs.
Liberty Crossing 35 yrs.
Bramblewood 35 yrs.
Cape Harbor 35 yrs.
Mill Creek 35 yrs.
The Creek 35 yrs.
Forest Hills 35 yrs.
Clear Run 35 yrs.
Crosswinds 35 yrs.
|
SCHEDULE III.
Summary of Real Estate Owned Cost of
Improvements
Initial Costs Total Capitalized
----------------------------------
Land and Buildings Initial Subsequent
Land and Acquisition to Acquisition
Encumbrances (j) Improvements Improvements Cost (i) (Net of Disposals)
---------------- ---------------------------------- ------------ ------------------
San Antonio, Texas
Promontory Pointe 7,548,219 28,051,781 35,600,000 2,063,598
Bluffs b 1,901,146 6,898,854 8,800,000 1,210,767
Ashley Oaks c 4,590,782 16,809,218 21,400,000 362,650
Sunflower 2,209,000 7,891,000 10,100,000 458,265
Escalanic 4,003,444 875,417 6,759,349 7,634,766 1,093,471
Cimarron City 3,129,269 487,906 4,534,793 5,022,699 620,157
Kenton 7,382,816 2,344,962 8,917,376 11,262,338 1,554,305
Peppermill 4,384,853 773,405 6,873,146 7,646,551 1,793,202
Sunset Canyon 8,842,261 3,201,039 10,669,680 13,870,720 2,995,004
Audubon 4,598,137 771,037 6,123,917 6,894,953 2,095,900
Grand Cypress 5,797,136 749,341 8,609,353 9,358,694 926,326
Inn At Los Patios 3,005,300 11,544,700 14,550,000 (1,489,487)
Nashville, Tennessee
Legacy Hill 1,147,660 5,867,567 7,015,227 2,680,368
Hickory Run 1,468,727 11,583,786 13,052,513 1,311,239
Dominion Franklin 2,117,244 2,117,244 24,230,126
Brookridge 707,508 5,461,251 6,168,760 1,028,328
Club at Hickory Hollow 2,139,774 15,231,201 17,370,975 1,752,625
Breckenridge 766,428 7,713,862 8,480,290 593,407
Williamsburg 1,376,190 10,931,309 12,307,498 1,164,247
Colonnade 1,459,754 16,014,857 17,474,612 206,901
Baltimore, Maryland
Gatewater Landing 2,078,422 6,084,526 8,162,948 1,102,194
Dominion Kings Place 4,620,000 1,564,942 7,006,574 8,571,516 755,523
Dominion at Eden Brook 7,890,000 2,361,167 9,384,171 11,745,339 1,082,388
Dominion Great Oaks d 2,919,481 9,099,691 12,019,172 2,986,389
Dominion Constant Friendship 903,122 4,668,956 5,572,078 662,873
Lakeside Mill 5,750,000 2,665,869 10,109,175 12,775,044 3,970
Atlanta, Georgia
Stanford Village 884,500 2,807,839 3,692,339 1,095,571
Griffin Crossing 1,509,633 7,544,018 9,053,651 1,241,934
Gwinnett Square d 1,924,325 7,376,454 9,300,779 1,447,504
Dunwoody Pointe 5,686,987 2,763,324 6,902,996 9,666,320 4,286,358
Riverwood 5,153,596 2,985,599 11,087,903 14,073,502 3,178,954
Waterford Place 1,579,478 10,302,679 11,882,157 305,079
Miami/Fort Lauderdale, Florida
Copperfield d 4,424,128 20,428,969 24,853,097 1,623,655
Mediterranean Village d 2,064,788 11,939,113 14,003,901 1,330,323
Cleary Court 2,399,848 7,913,450 10,313,298 1,528,958
University Club 1,390,220 6,992,620 8,382,840 1,467,700
Polo Chase 3,675,276 13,301,853 16,977,129 356,907
Pembroke Bay 4,442,492 16,664,469 21,106,962 404,631
Gross amount at Which
Carried at Close of Period Total
------------------------------------
Land and Buildings Carrying
Land and Value Accumulated Date of Date
Improvements Improvements (h) (a) Depreciation Constuction Acquired
------------------------------------ -------- ------------ ----------- --------
San Antonio, Texas
Promontory Pointe 7,794,292 29,869,306 37,663,598 3,379,919 1997 12/31/96
Bluffs 2,082,390 7,928,377 10,010,767 1,117,979 1978 12/31/96
Ashley Oaks 4,658,532 17,104,118 21,762,650 1,811,750 1993 12/31/96
Sunflower 2,301,959 8,256,306 10,558,265 968,360 1980 12/31/96
Escalanic 911,937 7,816,299 8,728,236 510,746 1986 04/16/98
Cimarron City 583,875 5,058,980 5,642,855 328,616 1983 04/16/98
Kenton 2,437,944 10,378,699 12,816,643 684,645 1983 04/16/98
Peppermill 926,913 8,512,840 9,439,753 570,351 1984 04/16/98
Sunset Canyon 3,541,720 13,324,003 16,865,723 970,062 1984 04/16/98
Audubon 988,517 8,002,337 8,990,854 617,300 1985 04/16/98
Grand Cypress 796,794 9,488,226 10,285,020 605,058 1995 04/16/98
Inn At Los Patios 3,005,300 10,055,213 13,060,513 486,610 1990 08/15/98
Nashville, Tennessee
Legacy Hill 1,419,424 8,276,171 9,695,594 1,617,171 1977 11/06/95
Hickory Run 1,633,746 12,730,005 14,363,752 2,037,295 1989 12/29/95
Dominion Franklin 2,656,545 23,690,825 26,347,370 28,718 1999 12/06/95
Brookridge 918,655 6,278,432 7,197,087 1,113,562 1986 03/28/96
Club at Hickory Hollow 2,668,936 16,454,664 19,123,600 1,954,511 1987 02/21/97
Breckenridge 949,676 8,124,020 9,073,697 922,254 1986 03/27/97
Williamsburg 1,534,910 11,936,836 13,471,746 957,348 1986 05/20/98
Colonnade 1,538,137 16,143,375 17,681,512 621,990 1998 01/07/99
Baltimore, Maryland
Gatewater Landing 2,169,331 7,095,811 9,265,142 2,120,711 1970 12/16/92
Dominion Kings Place 1,645,423 7,681,617 9,327,039 1,984,785 1983 12/29/92
Dominion at Eden Brook 2,462,172 10,365,554 12,827,727 2,711,664 1984 12/29/92
Dominion Great Oaks 3,729,385 11,276,175 15,005,561 2,883,942 1974 07/01/94
Dominion Constant Friendship 1,043,201 5,191,750 6,234,951 976,261 1990 05/04/95
Lakeside Mill 2,665,869 10,113,145 12,779,014 118,442 1989 12/10/99
Atlanta, Georgia
Stanford Village 1,163,216 3,624,694 4,787,910 1,735,119 1985 09/26/89
Griffin Crossing 1,681,736 8,613,848 10,295,585 1,957,911 1987/89 06/08/94
Gwinnett Square 2,121,447 8,626,836 10,748,283 1,589,468 1985 03/29/95
Dunwoody Pointe 3,273,387 10,679,291 13,952,678 2,110,106 1980 10/24/95
Riverwood 3,332,343 13,920,113 17,252,456 2,296,664 1980 06/26/96
Waterford Place 1,642,321 10,544,915 12,187,236 657,262 1985 04/15/98
Miami/Fort Lauderdale, Florida
Copperfield 4,969,542 21,507,210 26,476,752 3,834,227 1991 09/21/94
Mediterranean Village 2,268,554 13,065,670 15,334,224 2,564,744 1989 09/30/94
Cleary Court 2,631,357 9,210,899 11,842,256 1,832,096 1984/85 11/30/94
University Club 1,757,874 8,092,665 9,850,540 1,372,224 1988 09/26/95
Polo Chase 3,740,090 13,593,946 17,334,036 528,403 1991 12/07/98
Pembroke Bay 4,581,097 16,930,495 21,511,592 178,252 1989 07/26/99
Depreciable
Life of
Building
Component
-----------
San Antonio, Texas
Promontory Pointe 35 yrs.
Bluffs 35 yrs.
Ashley Oaks 35 yrs.
Sunflower 35 yrs.
Escalanic 35 yrs.
Cimarron City 35 yrs.
Kenton 35 yrs.
Peppermill 35 yrs.
Sunset Canyon 35 yrs.
Audubon 35 yrs.
Grand Cypress 35 yrs.
Inn At Los Patios 35 yrs.
Nashville, Tennessee
Legacy Hill 35 yrs.
Hickory Run 35 yrs.
Dominion Franklin 35 yrs.
Brookridge 35 yrs.
Club at Hickory Hollow 35 yrs.
Breckenridge 35 yrs.
Williamsburg 35 yrs.
Colonnade 35 yrs.
Baltimore, Maryland
Gatewater Landing 35 yrs.
Dominion Kings Place 35 yrs.
Dominion at Eden Brook 35 yrs.
Dominion Great Oaks 35 yrs.
Dominion Constant Friendship 35 yrs.
Lakeside Mill 35 yrs.
Atlanta, Georgia
Stanford Village 35 yrs.
Griffin Crossing 35 yrs
Gwinnett Square 35 yrs.
Dunwoody Pointe 35 yrs.
Riverwood 35 yrs.
Waterford Place 35 yrs.
Miami/Fort Lauderdale, Florida
Copperfield 35 yrs.
Mediterranean Village 35 yrs.
Cleary Court 35 yrs
University Club 35 yrs.
Polo Chase 35 yrs.
Pembroke Bay 35 yrs.
|
SCHEDULE III.
Summary of Real Estate Owned Cost of
Improvements
Initial Costs Total Capitalized
----------------------------
Land and Buildings Initial Subsequent
Land and Acquisition to Acquisition
Encumbrances (j) Improvements Improvements Cost (i) (Net of Disposal)
---------------- ---------------------------- ------------- -----------------
Washington, D.C
Dominion Middle Ridge d 3,311,468 13,283,047 16,594,515 912,576
Dominion Lake Ridge d 2,366,061 8,386,439 10,752,500 690,425
Knolls at Newgate 1,725,725 3,530,134 5,255,859 1,524,692
Hampton Roads, Virginia
Forest Lakes at Oyster Point 780,117 8,861,878 9,641,995 1,815,296
Woodscape 798,700 7,209,525 8,008,225 3,239,207
Eastwind 155,000 5,316,738 5,471,738 2,063,900
Dominion Waterside at Lynnhaven 1,823,983 4,106,710 5,930,693 1,126,494
Heather Lake 616,800 3,400,672 4,017,472 3,114,571
Dominion Yorkshire Downs d 1,088,887 8,581,771 9,670,658 552,770
Jacksonville, Florida
Greentree Place 12,455,000 1,634,330 11,226,990 12,861,320 3,459,440
Westland Park 1,834,535 14,864,742 16,699,276 3,340,996
The Antlers 4,034,039 11,192,842 15,226,880 5,195,299
Phoenix, Arizona
Paradise Falls c 1,622,700 6,170,800 7,793,500 2,779,594
Vista Point b 1,587,400 5,612,600 7,200,000 1,255,301
Sierra Palms 4,638,950 17,361,050 22,000,000 250,531
Northpark Village 1,519,314 13,536,707 15,056,021 1,267,796
Stonegate 3,608,460 735,036 7,939,875 8,674,911 612,551
Finisterra 1,273,798 26,392,207 27,666,005 184,436
La Privada 15,534,541 7,303,161 18,507,617 25,810,778 1,386,298
Terracina 3,757,224 34,780,779 38,538,002 4,328,142
Woodland Park 3,016,907 6,706,473 9,723,380 543,832
Sierra Foothills 2,728,172 2,728,172 18,729,625
Tucson, Arizona
Desert Springs 4,385,309 1,118,402 7,094,431 8,212,833 478,720
Posada Del Rio 843,748 4,288,097 5,131,845 (415,617)
Eastern Shore Maryland
Brittingham Square 650,143 4,962,246 5,612,389 570,718
Greens at Schumaker Pond 709,559 6,117,582 6,827,141 833,510
Greens at Cross Court 1,182,414 4,544,012 5,726,426 853,023
Greens at Hilton Run d 2,754,447 10,482,579 13,237,026 1,129,949
Fayetteville, North Carolina
Cumberland Trace 632,281 7,895,674 8,527,955 560,363
Village At Cliffdale 10,141,760 941,284 15,498,216 16,439,501 1,035,732
Morganton Place 819,090 13,217,086 14,036,176 555,086
Memphis, Tennessee
Briar Club 1,214,400 6,928,959 8,143,359 1,869,009
Gross amount at Which
Carried at Close of Period Total
-----------------------------------
Land and Buildings Carrying
Land and Value Accumulated Date of Date
Improvements Improvements (h) (a) Depreciation Construction Acquired
----------------------------------- -------- ------------ ------------ --------
Washington, D.C
Dominion Middle Ridge 3,423,239 14,083,851 17,507,091 1,852,981 1990 06/25/96
Dominion Lake Ridge 2,492,983 8,949,942 11,442,925 1,417,110 1987 02/23/96
Knolls at Newgate 1,846,268 4,934,283 6,780,551 1,294,946 1972 07/01/94
Hampton Roads, Virginia
Forest Lakes at Oyster Point 1,166,789 10,290,502 11,457,291 1,910,160 1986 08/15/95
Woodscape 1,100,154 10,147,278 11,247,432 4,462,580 1974/76 12/29/87
Eastwind 368,372 7,167,266 7,535,638 3,265,303 1970 04/04/88
Dominion Waterside at
Lynnhaven 2,009,683 5,047,503 7,057,186 813,609 1966 08/15/96
Heather Lake 1,030,545 6,101,498 7,132,043 4,067,057 1972/74 03/01/80
Dominion Yorkshire Downs 1,255,510 8,967,918 10,223,428 719,107 1987 12/23/97
Jacksonville, Florida
Greentree Place 2,261,104 14,059,656 16,320,760 3,160,326 1986 07/22/94
Westland Park 2,574,299 17,465,973 20,040,272 2,773,834 1990 05/09/96
The Antlers 4,760,539 15,661,640 20,422,180 2,722,635 1985 05/28/96
Phoenix, Arizona
Paradise Falls 1,815,207 8,757,887 10,573,094 894,067 1986 12/31/96
Vista Point 1,693,237 6,762,064 8,455,301 802,708 1986 12/31/96
Sierra Palms 4,704,744 17,545,787 22,250,531 1,894,955 1996 12/31/96
Northpark Village 1,819,190 14,504,627 16,323,817 1,124,575 1983 03/27/98
Stonegate 881,404 8,406,058 9,287,462 580,865 1978 03/27/98
Finisterra 1,303,253 26,547,188 27,850,441 1,646,350 1997 03/27/98
La Privada 7,794,661 19,402,415 27,197,076 1,275,680 1987 03/27/98
Terracina 4,492,064 38,374,080 42,866,144 2,420,135 1984 05/28/98
Woodland Park 3,206,079 7,061,133 10,267,212 516,492 1979 06/09/98
Sierra Foothills 2,788,376 18,669,421 21,457,797 17,806 1998 02/18/98
Tucson, Arizona
Desert Springs 1,123,560 7,567,993 8,691,553 466,928 1985 03/27/98
Posada Del Rio 938,382 3,777,846 4,716,228 313,532 1980 03/27/98
Eastern Shore Maryland
Brittingham Square 780,918 5,402,188 6,183,106 986,951 1991 05/04/95
Greens at Schumaker Pond 855,888 6,804,763 7,660,651 1,219,567 1988 05/04/95
Greens at Cross Court 1,362,893 5,216,555 6,579,449 977,309 1987 05/04/95
Greens at Hilton Run 3,045,621 11,321,355 14,366,976 2,033,520 1988 05/04/95
Fayetteville, North Carolina
Cumberland Trace 664,579 8,423,73 9,088,318 1,101,434 1973 08/15/96
Village At Cliffdale 1,118,152 16,357,08 17,475,233 2,007,330 1992 08/15/96
Morganton Place 886,825 13,704,43 14,591,261 1,625,684 1994 08/15/96
Memphis, Tennessee
Briar Club 1,522,537 8,489,831 10,012,368 2,002,236 1987 10/14/94
SCHEDULE III.
Summary of Real Estate Owned
Depreciable
Life of
Building
Component
---------
Washington, D.C
Dominion Middle Ridge 35 yrs.
Dominion Lake Ridge 35 yrs.
Knolls at Newgate 35 yrs.
Hampton Roads, Virginia
Forest Lakes at Oyster Point 35 yrs.
Woodscape 35 yrs.
Eastwind 35 yrs.
Dominion Waterside at Lynnhaven 35 yrs.
Heather Lake 35 yrs.
Dominion Yorkshire Downs 35 yrs.
Jacksonville, Florida
Greentree Place 35 yrs.
Westland Park 35 yrs.
The Antlers 35 yrs.
Phoenix, Arizona
Paradise Falls 35 yrs.
Vista Point 35 yrs.
Sierra Palms 35 yrs.
Northpark Village 35 yrs.
Stonegate 35 yrs.
Finisterra 35 yrs.
La Privada 35 yrs.
Terracina 35 yrs.
Woodland Park 35 yrs.
Sierra Foothills 35 yrs.
Tucson, Arizona
Desert Springs 35 yrs.
Posada Del Rio 35 yrs.
Eastern Shore Maryland
Brittingham Square 35 yrs.
Greens at Schumaker Pond 35 yrs.
Greens at Cross Court 35 yrs.
Greens at Hilton Run 35 yrs.
Fayetteville, North Carolina
Cumberland Trace 35 yrs.
Village At Cliffdale 35 yrs.
Morganton Place 35 yrs.
Memphis, Tennessee
Briar Club 35 yrs.
|
SCHEDULE III.
Summary of Real Estate Owned Cost of
Improvements
Initial Costs Total Capitalized
----------------------------
Land and Buildings Initial Subsequent
Land and Acquisition to Acquisition
Encumbrances (j) Improvements Improvements Cost (i) (Net of Disposals)
---------------- ---------------------------- ------------- ------------------
Hunters Trace 5,520,000 888,440 6,676,552 7,564,992 1,314,492
Hickory Pointe 1,074,424 6,052,020 7,126,444 1,502,982
Cinnamon Trails 1,886,632 7,644,522 9,531,154 (175,680)
The Trails 27,512,347 10,387,416 34,394,843 44,782,259 3,050,080
Dogwood Creek 2,771,868 15,673,846 18,445,714 568,362
Columbus, Ohio
Sycamore Ridge 13,861,385 4,067,900 15,433,285 19,501,185 685,156
Heritage Green 2,990,199 11,391,797 14,381,996 8,978,316
Alexander Court 1,573,412 1,573,412 21,253,649
Govenour's Square 18,724,971 7,512,513 28,695,050 36,207,563 983,126
Hickory Creek 3,421,413 13,539,402 16,960,815 387,289
Austin, Texas
Pecan Grove b 1,406,750 5,293,250 6,700,000 261,494
Anderson Mill 3,134,669 11,170,376 14,305,045 2,569,958
Albuquerque, New Mexico
Alvarado b 1,930,229 5,969,771 7,900,000 412,002
Dorado Heights 4,957,908 1,567,762 6,555,395 8,123,157 326,338
Detroit, Michigan
American Heritage e 1,021,412 3,958,146 4,979,558 51,394
Ashton Pines 1,822,351 8,013,902 9,836,253 120,134
Kings Gate e 1,180,664 4,828,504 6,009,168 66,593
Lancaster Lakes e 4,237,887 14,662,797 18,900,684 290,639
Other Midwest
Washington Park/Centerville, Ohio 2,011,520 7,565,279 9,576,799 926,936
Jamestown of St. Matthews/Kentucky e 3,865,596 14,422,383 18,287,979 438,370
Jamestown of Toledo/Toledo, Ohio e 1,800,271 7,053,585 8,853,856 208,637
Other Florida
Brantley Pines/Ft. Myers 1,892,888 8,247,621 10,140,509 4,793,209
The Ashlar I/Ft. Myers 2,853,178 2,853,178 16,033,992
Santa Barbara Landing/Naples 1,134,120 8,019,814 9,153,934 1,569,307
Mallards of Wedgewood/Lakeland 959,284 6,864,666 7,823,950 1,575,226
The Groves/Daytona Beach 789,953 4,767,055 5,557,008 1,668,188
Lakeside/Daytona Beach 2,404,305 6,420,160 8,824,465 1,200,232
Mallards of Brandywine/Deland 765,949 5,407,683 6,173,632 1,004,914
Lake Washington Downs/Melbourne 1,434,450 4,940,166 6,374,616 1,869,890
Seattle, Washington
Arbor Terrace 7,038,404 1,453,342 11,994,972 13,448,314 408,014
Aspen Creek 6,984,886 1,177,714 9,115,789 10,293,503 150,930
Crown Point 4,884,471 2,486,252 6,437,256 8,923,508 645,031
Hill Top 4,485,658 2,173,969 7,407,628 9,581,597 168,873
SCHEDULE III.
Summary of Real Estate Owned
Gross amount at Which
Carried at Close of Period Total
-----------------------------------
Land and Buildings Carrying
Land and Value Accumulated Date of Date
Improvements Improvements (h) (a) Depreciation Construction Acquired
----------------------------------- -------- ------------ ------------ --------
Hunters Trace 1,163,246 7,716,238 8,879,484 1,727,534 1986 10/14/94
Hickory Pointe 1,573,592 7,055,834 8,629,426 1,606,203 1985 02/10/95
Cinnamon Trails 2,039,201 7,316,272 9,355,473 583,445 1989 01/09/98
The Trails 11,010,750 36,821,589 47,832,339 2,747,657 1990 01/09/98
Dogwood Creek 2,878,748 16,135,328 19,014,076 1,443,224 1997 02/06/98
Columbus, Ohio
Sycamore Ridge 4,172,041 16,014,300 20,186,341 903,971 1997 07/02/98
Heritage Green 3,056,832 20,303,479 23,360,312 773,329 1998 07/02/98
Alexander Court 1,609,147 21,217,914 22,827,061 4,962 1999 07/02/98
Govenour's Square 7,634,425 29,556,265 37,190,689 1,075,402 1967 12/07/98
Hickory Creek 3,452,266 13,895,838 17,348,104 486,787 1988 12/07/98
Austin, Texas
Pecan Grove 1,454,170 5,507,324 6,961,494 509,601 1984 12/31/96
Anderson Mill 3,466,120 13,408,883 16,875,003 1,996,516 1984 03/27/97
Albuquerque, New Mexico
Alvarado 1,968,286 6,343,716 8,312,002 758,436 1984 12/31/96
Dorado Heights 1,616,840 6,832,656 8,449,495 460,240 1986 03/27/98
Detroit, Michigan
American Heritage 1,028,097 4,002,855 5,030,952 146,058 1968 12/07/98
Ashton Pines 1,835,608 8,120,779 9,956,387 250,054 1987 12/07/98
Kings Gate 1,188,449 4,887,312 6,075,761 165,429 1973 12/07/98
Lancaster Lakes 4,280,152 14,911,171 19,191,323 549,283 1988 12/07/98
Other Midwest
Washington Park/Centerville, Ohio 2,075,843 8,427,892 10,503,735 467,686 1998 12/07/98
Jamestown of St. Matthews/Kentucky 3,909,569 14,816,780 18,726,349 535,390 1968 12/07/98
Jamestown of Toledo/Toledo, Ohio 1,868,402 7,194,091 9,062,493 264,180 1965 12/07/98
Other Florida
Brantley Pines/Ft. Myers 814,362 14,119,357 14,933,718 2,773,758 1986 08/11/94
The Ashlar I/Ft. Myers 4,621,590 14,265,580 18,887,170 259,619 1999 12/24/97
Santa Barbara Landing/Naples 1,697,900 9,025,341 10,723,241 2,088,979 1987 09/01/94
Mallards of Wedgewood/Lakeland 1,246,120 8,153,055 9,399,175 1,629,716 1985 07/27/95
The Groves/Daytona Beach 1,432,097 5,793,099 7,225,196 1,180,384 1989 12/13/95
Lakeside/Daytona Beach 2,574,381 7,450,316 10,024,697 760,734 1985 07/01/97
Mallards of Brandywine/Deland 977,719 6,200,828 7,178,546 666,752 1985 07/01/97
Lake Washington Downs/Melbourne 1,729,170 6,515,336 8,244,506 1,948,257 1984 09/24/93
Seattle, Washington
Arbor Terrace 1,475,148 12,381,180 13,856,328 835,624 1996 03/27/98
Aspen Creek 1,258,261 9,186,172 10,444,433 339,182 1996 12/07/98
Crown Point 2,518,247 7,050,292 9,568,539 336,161 1987 12/07/98
Hill Top 2,216,480 7,533,990 9,570,470 293,502 1985 12/07/98
Depreciable
Life of
Building
Component
-----------
Hunters Trace 35 yrs.
Hickory Pointe 35 yrs.
Cinnamon Trails 35 yrs.
The Trails 35 yrs.
Dogwood Creek 35 yrs.
Columbus, Ohio
Sycamore Ridge 35 yrs.
Heritage Green 35 yrs.
Alexander Court 35 yrs.
Govenour's Square 35 yrs.
Hickory Creek 35 yrs.
Austin, Texas
Pecan Grove 35 yrs.
Anderson Mill 35 yrs.
Albuquerque, New Mexico
Alvarado 35 yrs.
Dorado Heights 35 yrs.
Detroit, Michigan
American Heritage 35 yrs.
Ashton Pines 35 yrs.
Kings Gate 35 yrs.
Lancaster Lakes 35 yrs.
Other Midwest
Washington Park/Centerville, Ohio 35 yrs.
Jamestown of St. Matthews/Kentucky 35 yrs.
Jamestown of Toledo/Toledo, Ohio 35 yrs.
Other Florida
Brantley Pines/Ft. Myers 35 yrs.
The Ashlar I/Ft. Myers 35 yrs.
Santa Barbara Landing/Naples 35 yrs.
Mallards of Wedgewood/Lakeland 35 yrs.
The Groves/Daytona Beach 35 yrs.
Lakeside/Daytona Beach 35 yrs.
Mallards of Brandywine/Deland 35 yrs.
Lake Washington Downs/Melbourne 35 yrs.
Seattle, Washington
Arbor Terrace 35 yrs.
Aspen Creek 35 yrs.
Crown Point 35 yrs.
Hill Top 35 yrs.
|
SCHEDULE III.
Summary of Real Estate Owned
Cost of
Intitial Costs Improvements
--------------------------------- Total Capitalized
Land and Buildings Initial Subsequent
Land and Acquisition to Acquisition
Encumbrances (j) Improvements Improvements Cost (i) (Net of Disposalsl)
----------------- ---------------- --------------- ------------ -------------------
Evergreen Park Apts 4,681,453 3,878,138 9,973,051 13,851,189 344,769
Indianapolis, Indiana
International Village e 3,934,102 11,478,908 15,413,010 329,864
Regency Park South 2,643,025 7,632,098 10,275,123 245,388
Denver, Colorado
Greensview 2,974,024 12,489,598 15,463,622 166,714
Mountain View 6,401,851 21,569,403 27,971,254 509,503
Portland, Oregon
Lancaster Commons e 2,485,291 7,451,165 9,936,456 183,089
Tualatin Heights e 3,272,585 9,134,089 12,406,674 490,987
University Park 3,007,202 8,191,307 11,198,509 137,454
Los Angeles, California
Pine Avenue 6,033,714 2,158,423 8,887,744 11,046,167 141,187
The Grand Resort 8,884,151 35,706,606 44,590,757 320,326
Grand Terrace 2,144,340 6,594,615 8,738,955 143,802
Sacramento, California
Foothills Tennis Village e 3,617,507 14,542,028 18,159,535 239,155
Woodlake Village 16,232,867 6,772,438 26,966,750 33,739,188 619,851
San Francisco, California
2000 Post Street 26,400,000 9,860,627 44,577,506 54,438,133 192,850
Birch Creek 1,528,312 4,365,315 16,695,509 21,060,824 752,325
Highlands of Marin 20,300,000 5,995,838 24,868,350 30,864,188 309,500
Marina Playa 19,017,528 6,224,383 23,916,283 30,140,666 922,322
Gross amount at Which
Carried at Close of Period
----------------------------------- Total
Land and Buildings Carrying
Land and Value Accumulated Date of
Improvements Improvements (h) (a) Depreciation Construction
----------------------------------- ------- --------------- -------------
Evergreen Park Apts 3,910,715 10,285,243 14,195,958 536,442 1988
Indianapolis, Indiana
International Village 3,976,199 11,766,675 15,742,874 560,782 1968
Regency Park South 2,688,317 7,832,194 10,520,511 377,508 1968
Denver, Colorado
Greensview 2,450,457 13,179,879 15,630,336 414,215 1987
Mountain View 6,249,912 22,230,845 28,480,757 883,487 1973
Portland, Oregon
Lancaster Commons 2,503,919 7,615,625 10,119,545 354,601 1992
Tualatin Heights 3,358,936 9,538,725 12,897,661 433,758 1989
University Park 3,008,511 8,327,452 11,335,963 375,112 1987
Los Angeles, California
Pine Avenue 2,160,001 9,027,353 11,187,354 284,989 1987
The Grand Resort 8,896,984 36,014,099 44,911,083 968,613 1971
Grand Terrace 2,193,927 6,688,830 8,882,757 125,429 1986
Sacramento, California
Foothills Tennis Village 3,680,947 14,717,744 18,398,690 477,259 1988
Woodlake Village 6,897,148 27,461,892 34,359,039 928,624 1979
San Francisco, California
2000 Post Street 9,911,958 44,719,025 54,630,983 1,203,057 1987
Birch Creek 4,583,889 17,229,260 21,813,149 560,803 1968
Highlands of Marin 6,059,698 25,113,990 31,173,688 745,584 1991
Marina Playa 6,391,496 24,671,492 31,062,988 810,756 1971
Depreciable
Life of
Date Building
Acquired Component
----------- ------------
Evergreen Park Apts 03/27/98 35 yrs.
Indianapolis, Indiana
International Village 12/07/98 35 yrs.
Regency Park South 12/07/98 35 yrs.
Denver, Colorado
Greensview 12/07/98 35 yrs.
Mountain View 12/07/98 35 yrs.
Portland, Oregon
Lancaster Commons 12/07/98 35 yrs.
Tualatin Heights 12/07/98 35 yrs.
University Park 03/27/98 35 yrs.
Los Angeles, California
Pine Avenue 12/07/98 35 yrs.
The Grand Resort 12/07/98 35 yrs.
Grand Terrace 06/30/99 35 yrs.
Sacramento, California
Foothills Tennis Village 12/07/98 35 yrs
Woodlake Village 12/07/98 35 yrs
San Francisco, California
2000 Post Street 12/07/98 35 yrs
Birch Creek 12/07/98 35 yrs
Highlands of Marin 12/07/98 35 yrs
Marina Playa 12/07/98 35 yrs
|
SCHEDULE III.
Summary of Real Estate Owned
Cost of
Initial Costs Improvements
-------------------------------- Total Capitalized
Land and Buildings Initial Subsequent
Land and Acquisition to Acquisition
Encumbrances(j) Improvements Improvements Cost (i) (Net of Disposals)
--------------- -------------------------------- ---------------- ---------------------
Monterey Peninsula, California
Boronda Manor f 1,946,423 8,981,742 10,928,165 67,862
Garden Court g 888,038 4,187,950 5,075,988 48,592
Glenridge g 415,284 1,952,934 2,368,218 11,540
Harding Park Townhomes f 549,393 2,051,322 2,600,715 24,545
Heather Plaza f 2,020,384 9,226,038 11,246,422 131,511
Laurel Tree f 1,303,902 5,115,356 6,419,258 44,043
Pine Grove f 1,383,161 5,783,993 7,167,154 33,898
Santanna g 957,079 4,026,117 4,983,196 34,415
The Capri f 1,018,493 3,657,274 4,675,767 10,620
The Claremont g 463,143 1,837,120 2,300,263 12,830
The Pointe At Harden Ranch f 6,388,446 23,853,534 30,241,980 223,449
The Pointe At Northridge f 2,043,736 8,028,443 10,072,179 86,632
The Pointe At Westlake f 1,329,064 5,334,004 6,663,068 45,561
Valli Hi g 881,376 5,037,805 5,919,181 37,167
Other California
Silk Oak/Fresno 2,324,562 4,566,446 6,891,008 118,014
Windward Point/San Diego 1,767,970 7,117,879 8,885,849 144,914
Rancho Vallecitos/San Diego 3,302,967 10,877,286 14,180,254 42,187
Other Virginia
Greens at Falls Run/Fredericksburg 2,730,722 5,300,203 8,030,925 792,141
Manor at England Run/Fredericksburg 1,168,810 7,006,464 8,175,274 13,146,585
Laurel Ridge/Roanoke 2,780,000 445,400 2,531,357 2,976,757 1,519,955
Greens at Hollymead/Charlottesville 965,114 5,250,374 6,215,488 622,219
Craig Manor/Salem 282,200 2,419,570 2,701,770 996,647
Northview/Salem 171,600 1,238,501 1,410,101 851,009
Other Georgia
River Place/Macon d 1,097,280 7,492,385 8,589,665 1,823,834
Arkansas
Turtle Creek/Little Rock 1,913,177 7,086,823 9,000,000 751,685
Shadow Lake/Little Rock 2,523,670 8,976,330 11,500,000 1,054,226
Nevada
Sunset Pointe/Las Vegas 4,295,050 15,704,950 20,000,000 775,884
Delaware
Dover Country Club/Dover 2,007,878 6,365,053 8,372,931 2,325,354
Greens at Cedar Chase/Dover d 1,528,667 4,830,738 6,359,405 703,310
--------------------------------------------------------------------------------------------
$ 514,259,193 $ 568,525,246 $2,515,397,434 $3,083,922,680 $493,925,036
============================================================================================
Real estate held for disposition
Apartments
Deerwood Crossing/Winston-Salem,
NC $ - $ 1,539,901 $ 7,989,043 $ 9,528,944 $ 911,450
Dutch Village/Winston-Salem, NC 1,197,593 4,826,266 6,023,858 540,781
Gross amount at Which
Carried at Close of Period
----------------------------------- Total
Land and Buildings Carrying
Land and Value Accumulated Date of
Improvements Improvements (h) (a) Depreciation Construction
----------------------------------- -------------- ----------------- -------------
Monterey Peninsula, California
Boronda Manor 1,954,850 9,041,177 10,996,027 267,976 1979
Garden Court 890,232 4,234,348 5,124,580 127,938 1973
Glenridge 415,600 1,964,158 2,379,758 56,434 1989
Harding Park Townhomes 550,249 2,075,011 2,625,260 72,033 1984
Heather Plaza 1,990,719 9,387,214 11,377,933 297,605 1974
Laurel Tree 1,308,893 5,154,408 6,463,301 184,119 1977
Pine Grove 1,383,720 5,817,332 7,201,052 181,459 1963
Santanna 957,476 4,060,135 5,017,611 127,411 1989
The Capri 1,018,544 3,667,843 4,686,387 133,058 1973
The Claremont 463,957 1,849,136 2,313,093 64,055 1973
The Pointe At Harden Ranch 6,396,915 24,068,514 30,465,429 840,211 1986
The Pointe At Northridge 2,043,743 8,115,068 10,158,811 277,180 1979
The Pointe At Westlake 1,329,407 5,379,222 6,708,629 182,615 1975
Valli Hi 882,058 5,074,290 5,956,348 117,603 1965
Other California
Silk Oak/Fresno 2,354,241 4,654,781 7,009,022 16,648 1985
Windward Point/San Diego 1,796,891 7,233,872 9,030,763 235,101 1983
Rancho Vallecitos/San Die 3,304,236 10,918,204 14,222,440 470,982 1988
Other Virginia
Greens at Falls Run/Fredericksburg 2,876,643 5,946,423 8,823,066 1,108,675 1989
Manor at England Run/Fredericksburg 2,794,885 18,526,974 21,321,859 2,188,050 1990
Laurel Ridge/Roanoke 668,773 3,827,939 4,496,712 2,052,234 1970/72
Greens at Hollymead/Charlottesville 1,056,498 5,781,209 6,837,707 1,031,034 1990
Craig Manor/Salem 364,351 3,334,066 3,698,417 1,557,497 1975
Northview/Salem 246,975 2,014,135 2,261,110 1,399,369 1969
Other Georgia
River Place/Macon 1,700,991 8,712,508 10,413,499 2,244,453 1988
Arkansas
Turtle Creek/Little Rock 2,185,212 7,566,474 9,751,685 909,070 1985
Shadow Lake/Little Rock 2,743,019 9,811,207 12,554,226 1,173,493 1984
Nevada
Sunset Pointe/Las Vegas 4,437,932 16,337,952 20,775,884 1,758,837 1990
Delaware
Dover Country Club/Dover 2,359,250 8,339,035 10,698,285 2,005,526 1970
Greens at Cedar Chase/Dover 1,722,356 5,340,359 7,062,715 1,038,934 1988
---------------------------------------------------------------
$636,904,958 $ 2,940,942,758 $ 3,577,847,716 $ 373,164,015
===============================================================
Real estate held for disposition
Apartments
Deerwood Crossing/Winston-Salem, NC $ 1,670,816 $ 8,769,579 $ 10,440,395 $ 740,584 1973
Dutch Village/Winston-Salem, NC 1,282,479 5,282,160 6,564,639 468,792 1970
Depreciable
Life of
Date Building
Acquired Component
----------- ------------
Monterey Peninsula, California
Boronda Manor 12/07/98 35 yrs.
Garden Court 12/07/98 35 yrs.
Glenridge 12/07/98 35 yrs.
Harding Park Townhomes 12/07/98 35 yrs.
Heather Plaza 12/07/98 35 yrs.
Laurel Tree 12/07/98 35 yrs.
Pine Grove 12/07/98 35 yrs.
Santanna 12/07/98 35 yrs.
The Capri 12/07/98 35 yrs.
The Claremont 12/07/98 35 yrs.
The Pointe At Harden Ranc 12/07/98 35 yrs.
The Pointe At Northridge 12/07/98 35 yrs.
The Pointe At Westlake 12/07/98 35 yrs.
Valli Hi 12/07/98 35 yrs.
Other California
Silk Oak/Fresno 12/07/98 35 yrs.
Windward Point/San Diego 12/07/98 35 yrs.
Rancho Vallecitos/San Die 10/13/99 35 yrs.
Other Virginia
Greens at Falls Run/Fredericksburg 05/04/95 35 yrs.
Manor at England Run/Fredericksburg 05/04/95 35 yrs.
Laurel Ridge/Roanoke 05/17/88 35 yrs.
Greens at Hollymead/Charlottesville 05/04/95 35 yrs.
Craig Manor/Salem 11/06/87 35 yrs.
Northview/Salem 09/29/78 35 yrs.
Other Georgia
River Place/Macon 04/08/94 35 yrs.
Arkansas
Turtle Creek/Little Rock 12/31/96 35 yrs.
Shadow Lake/Little Rock 12/31/96 35 yrs.
Nevada
Sunset Pointe/Las Vegas 12/31/96 35 yrs.
Delaware
Dover Country Club/Dover 07/01/94 35 yrs.
Greens at Cedar Chase/Dover 05/04/95 35 yrs.
Real estate held for disposition
Apartments
Deerwood Crossing/Winston-Salem, NC 08/15/96 35 yrs.
Dutch Village/Winston-Salem, NC 08/15/96 35 yrs.
|
SCHEDULE III.
Summary of Real Estate Owned
Cost of
Improvements
Initial Costs Total Capitalized
----------------------------
Land and Buildings Initial Subsequent
Land and Acquisition to Acquisition
Encumbrances(j) Improvements Improvements Cost (i) (Net of Disposals)
--------------- ---------------------------- ----------- ------------------
Park Forest/Greensboro, NC 4,072,138 679,671 5,770,413 6,450,084 460,526
Patriot Place/Florence, SC 2,200,000 212,500 1,600,757 1,813,257 5,614,497
Woodside/Glen Burnie, MD 12,975,000 3,112,881 8,893,721 12,006,602 3,247,157
Twin Coves/Baltimore, MD 3,565,000 912,771 2,904,304 3,817,075 858,015
Park on Preston/Dallas, TX 5,406,615 1,521,877 8,569,278 10,091,155 (253,082)
Cold Springs Manor/
Indianapolis, IN e 599,646 1,774,834 2,374,480 60,991
Woodberry/Asheville, NC 388,699 6,380,899 6,769,598 951,246
Montfort/Dallas, TX 3,749,516 1,696,778 4,645,874 6,342,652 51,321
Fountainhead/Dayton, Ohio e 390,542 1,420,166 1,810,708 20,562
Chandler's Mill/Corpus
Christi, TX b 1,930,120 6,844,880 8,775,000 (442,663)
Villa Serena/Albuquerque, NM 2,549,763 512,421 3,403,906 3,916,327 (705,775)
On The Boulevard/Kennewick, WA 1,164,652 9,547,299 10,711,951 (227,420)
Campus Commons North/Pullman, WA 6,253,953 305,143 9,867,157 10,172,300 (1,970,651)
Campus Commons South/Pullman, WA 2,635,139 838,324 3,005,784 3,844,108 (616,317)
Dove Park/Grapevine, TX 2,309,195 9,699,046 12,008,241 911,788
Citiscape/Dallas, TX b 2,092,387 7,532,613 9,625,000 392,422
Bammelwood/Houston, TX 2,863,973 929,601 3,330,352 4,259,953 261,607
Briar Park/Houston, TX 1,334,966 329,002 2,794,131 3,123,133 86,131
Clear Lake Falls/Webster, TX 2,974,723 1,090,080 4,534,335 5,624,415 (378,440)
The Gallery/Houston, TX 1,562,072 768,708 3,358,484 4,127,192 48,957
Marymont/Tombull, TX 1,150,696 4,155,411 5,306,107 338,317
Memorial Bend/Houston, TX 1,829,704 882,230 3,776,765 4,658,995 (657,630)
Nantucket Square/Houston, TX 2,620,590 1,067,617 4,833,402 5,901,019 (726,681)
Prestonwood/Houston, TX 2,348,614 998,433 4,128,699 5,127,132 111,140
Riverway/Bay City, TX 1,129,758 523,457 2,828,282 3,351,739 61,048
Riviera Pines/Houston, TX 3,109,672 1,413,851 6,453,847 7,867,698 90,819
2900 Place/East Lansing, MI 1,818,957 5,593,327 7,412,284 48,331
Sunset Village/Flint, Michigan 796,994 1,829,226 2,626,220 29,528
Brandywine Creek/East Lansing, MI e 4,665,991 17,514,466 22,180,457 (2,869,847)
Lakewood/Haslett, MI e 1,113,126 3,877,503 4,990,629 49,546
Nemoke Trail/Haslett, MI e 3,430,631 12,222,526 15,653,157 70,181
Three Fountains/Montgomery, AL 1,075,009 6,872,302 7,947,311 832,656
Harbour Town/Nashville, TN 572,567 3,522,092 4,094,659 961,611
The Lakes/Nashville, TN 1,285,657 5,980,197 7,265,854 1,264,196
2131 Apartments/Nashville, TN 869,860 9,155,185 10,025,045 3,667,714
Commercial
Pacific South Center/Seattle, WA 3,069,871 1,000,000 4,000,000 5,000,000 (3,580)
Hanover Village-Land/Richmond, VA 1,623,910 0 1,623,910 0
Gloucester Exchange/Gloucester, VA 403,688 2,278,553 2,682,241 86,096
Tri-County Buildings/Bristol, TN 275,580 900,281 1,175,861 1,280,670
Meadowdale Office/Richmond, VA 240,563 359,913 600,476 119,344
--------------------------------------------------------------------------------
$ 69,476,556 $49,731,309 $218,975,518 $268,706,827 $14,576,564
================================================================================
Gross amount at Which
Carried at Close of Period Total
-------------------------------------------
Land and Buildings Carrying
Land and Value Accumulated
Improvements Improvements (h) (a) Depreciation
--------------------- ------------------ ----------- -------------
Park Forest/Greensboro, NC 804,457 6,106,153 6,910,610 592,023
Patriot Place/Florence, SC 1,451,936 5,975,818 7,427,754 2,671,181
Woodside/Glen Burnie, MD 3,446,281 11,807,478 15,253,759 1,910,891
Twin Coves/Baltimore, MD 1,025,146 3,649,943 4,675,090 373,910
Park on Preston/Dallas, TX 1,593,641 8,244,432 9,838,073 287,773
Cold Springs Manor/
Indianapolis, IN 601,096 1,834,375 2,435,471 4,512
Woodberry/Asheville, NC 549,427 7,171,417 7,720,844 822,465
Montfort/Dallas, TX 1,707,033 4,686,940 6,393,973 80,326
Fountainhead/Dayton, Ohio 390,542 1,440,728 1,831,270 3,028
Chandler's Mill/Corpus
Christi, TX 1,961,704 6,370,633 8,332,337 253,538
Villa Serena/Albuquerque, NM 513,945 2,696,607 3,210,552 97,684
On The Boulevard/Kennewick, WA 1,090,116 9,394,415 10,484,531 513,668
Campus Commons North/Pullman, WA 328,100 7,873,549 8,201,649 277,194
Campus Commons South/Pullman, WA 895,743 2,332,049 3,227,791 93,617
Dove Park/Grapevine, TX 2,566,974 10,353,056 12,920,029 1,036,306
Citiscape/Dallas, TX 2,180,783 7,836,639 10,017,422 824,483
Bammelwood/Houston, TX 947,590 3,573,969 4,521,560 198,498
Briar Park/Houston, TX 332,264 2,877,000 3,209,264 77,120
Clear Lake Falls/Webster, TX 1,099,021 4,146,954 5,245,975 123,003
The Gallery/Houston, TX 772,479 3,403,670 4,176,149 77,104
Marymont/Tombull, TX 1,158,696 4,485,728 5,644,424 128,011
Memorial Bend/Houston, TX 884,589 3,116,776 4,001,365 99,044
Nantucket Square/Houston, TX 1,070,242 4,104,096 5,174,338 116,824
Prestonwood/Houston, TX 1,005,193 4,233,080 5,238,272 124,325
Riverway/Bay City, TX 527,607 2,885,180 3,412,787 95,032
Riviera Pines/Houston, TX 1,415,869 6,542,648 7,958,517 167,615
2900 Place/East Lansing, MI 1,819,883 5,640,731 7,460,615 128,594
Sunset Village/Flint, Michigan 796,994 1,858,754 2,655,748 6,004
Brandywine Creek/East Lansing, MI 4,678,981 14,631,628 19,310,610 472,762
Lakewood/Haslett, MI 1,118,755 3,921,420 5,040,175 157,920
Nemoke Trail/Haslett, MI 3,430,631 12,292,707 15,723,338 354,478
Three Fountains/Montgomery, AL 1,268,368 7,511,599 8,779,967 1,797,658
Harbour Town/Nashville, TN 726,166 4,330,104 5,056,270 1,092,006
The Lakes/Nashville, TN 1,463,155 7,066,895 8,530,050 1,872,323
2131 Apartments/Nashville, TN 1,195,090 12,497,669 13,692,759 2,768,626
Commercial
Pacific South Center/Seattle, WA 1,000,000 3,996,420 4,996,420 0
Hanover Village-Land/Richmond, VA 1,103,600 520,310 1,623,910 0
Gloucester Exchange/Gloucester, VA 551,255 2,217,082 2,768,337 757,307
Tri-County Buildings/Bristol, TN 364,123 2,092,408 2,456,531 733,820
Meadowdale Office/Richmond, VA 259,684 460,136 719,820 300,034
-------------------------------------------------------------------------
$53,050,454 $230,232,937 $283,283,391 $22,700,081
=========================================================================
Depreciable
Life of
Date of Date Building
Construction Acquired Component
------------- --------- ------------
Park Forest/Greensboro, NC 1987 09/26/96 35 yrs.
Patriot Place/Florence, SC 1974 10/23/85 35 yrs.
Woodside/Glen Burnie, MD 1966 08/16/94 35 yrs.
Twin Coves/Baltimore, MD 1974 08/16/94 35 yrs.
Park on Preston/Dallas, TX 1983 03/27/98 35 yrs.
Cold Springs Manor/
Indianapolis, IN 1963 12/07/98 35 yrs.
Woodberry/Asheville, NC 1987 08/15/96 35 yrs.
Montfort/Dallas, TX 1986 03/27/98 35 yrs.
Fountainhead/Dayton, Ohio 1966 12/07/98 35 yrs.
Chandler's Mill/Corpus
Christi, TX 1984 12/31/96 35 yrs.
Villa Serena/Albuquerque, NM 1986 03/27/98 35 yrs.
On The Boulevard/Kennewick, WA 1995 03/27/98 35 yrs.
Campus Commons North/Pullman, WA 1972 03/27/98 35 yrs.
Campus Commons South/Pullman, WA 1972 03/27/98 35 yrs.
Dove Park/Grapevine, TX 1984 12/31/96 35 yrs.
Citiscape/Dallas, TX 1973 12/31/96 35 yrs.
Bammelwood/Houston, TX 1980 10/30/97 35 yrs.
Briar Park/Houston, TX 1987 03/27/98 35 yrs.
Clear Lake Falls/Webster, TX 1980 03/27/98 35 yrs.
The Gallery/Houston, TX 1968 03/27/98 35 yrs.
Marymont/Tombull, TX 1983 03/27/98 35 yrs.
Memorial Bend/Houston, TX 1967 03/27/98 35 yrs.
Nantucket Square/Houston, TX 1983 03/27/98 35 yrs.
Prestonwood/Houston, TX 1978 03/27/98 35 yrs.
Riverway/Bay City, TX 1985 03/27/98 35 yrs.
Riviera Pines/Houston, TX 1979 03/27/98 35 yrs.
2900 Place/East Lansing, MI 1966 12/07/98 35 yrs.
Sunset Village/Flint, Michigan 1940 12/07/98 35 yrs.
Brandywine Creek/East Lansing, MI 1974 12/07/98 35 yrs.
Lakewood/Haslett, MI 1974 12/07/98 35 yrs.
Nemoke Trail/Haslett, MI 1978 12/07/98 35 yrs.
Three Fountains/Montgomery, AL 1973 07/01/94 35 yrs.
Harbour Town/Nashville, TN 1974 12/10/93 35 yrs.
The Lakes/Nashville, TN 1986 09/15/93 35 yrs.
2131 Apartments/Nashville, TN 1972 12/16/92 35 yrs.
Commercial
Pacific South Center/Seattle, WA 1965 08/28/86 35 yrs.
Hanover Village-Land/Richmond, VA -- 06/30/86 35 yrs.
Gloucester Exchange/Gloucester, VA 1974 11/12/87 35 yrs.
Tri-County Buildings/Bristol, TN 1976/79 01/21/81 35 yrs.
Meadowdale Office/Richmond, VA 1976/82 12/31/84 35 yrs.
|
SCHEDULE III
Summary of Real Estate Owned
Cost of
Improvements
Initial Costs Total Capitalized
-----------------------------
Land and Buildings Initial Subsequent
Land and Acquisition to Acquisition
Encumbrances (j) Improvements Improvements Cost (i) (Net of Disposals)
----------------- ----------------------------- ----------- ------------------
Real estate under development
New apartment communities
Ashton at Waterford Lakes/Orlando, FL 3,079,772 16,163,734 19,243,506
The Meridian I/Dallas, TX 1,196,682 10,206,259 11,402,941
Oaks at Weston/Morrisville, NC 3,114,500 3,276,001 6,390,501
Additions to existing communities
Dominion at Crown Point II/Charlotte, NC 1,006,918 9,009,307 10,016,225
The Ashlar II/ Fort Myers, FL 1,099,056 612,483 1,711,539
Escalante II/San Antonio, TX 1,826,575 3,468,075 5,294,650
Land held for future development 37,854,702 0 37,854,702
--------------------------------------------------------------------------------
$ 0 $ 49,178,205 $ 42,735,859 $ 91,914,064 $ 0
================================================================================
--------------------------------------------------------------------------------
Total real estate owned $1,000,136 $667,434,760 $2,777,108,811 $3,444,543,571 $508,501,600
================================================================================
Gross amount at Which
Carried at Close of Period Total
-----------------------------------------
Land and Buildings Carrying
Land and Value Accumulated
Improvements Improvements (h) (a) Depreciation
--------------------- ------------------ ----------- -------------
Real estate under development
New apartment communities
Ashton at Waterford Lakes/Orlando, FL 3,079,772 16,163,734 19,243,506
The Meridian I/Dallas, TX 1,196,682 10,206,259 11,402,941
Oaks at Weston/Morrisville, NC 3,114,500 3,276,001 6,390,501
Additions to existing communities
Dominion at Crown Point II/Charlotte, NC 1,006,918 9,009,307 10,016,225
The Ashlar II/ Fort Myers, FL 1,099,056 612,483 1,711,539
Escalante II/San Antonio, TX 1,826,575 3,468,075 5,294,650
Land held for future development 37,854,702 0 37,854,702
----------------------------------------------------------------------------
$ 49,178,205 $ 42,735,859 $ 91,914,064 $ 0
============================================================================
----------------------------------------------------------------------------
Total real estate owned $739,133,616 $3,213,911,555 $3,953,045,171 $395,864,095
============================================================================
Depreciable
Life of
Date of Date Building
Construction Acquired Component
------------- --------- ------------
Real estate under development
New apartment communities
Ashton at Waterford Lakes/Orlando, FL 1999 05/28/98
The Meridian I/Dallas, TX 1999 01/27/98
Oaks at Weston/Morrisville, NC 1999 01/14/99
Additions to existing communities
Dominion at Crown Point II/Charlotte, NC 1999 12/29/98
The Ashlar II/ Fort Myers, FL 1999 12/24/97
Escalante II/San Antonio, TX 1999 04/16/98
Land held for future development
Total real estate owned
|
(a) The aggregate cost for federal income tax purposes was approximately
$3.3 billion at December 31, 1999 and 1998, respectively.
(b) Represents a $30,581,553 REMIC financing encumbering 12 apartment
communities.
(c) Represents a $28,585,050 REMIC financing encumbering 9 apartment
communities.
(d) Represents a $195,675,000 secured credit facility which encumbers
19 apartment communities.
(e) Represents $107,492,963 of fixed rate debt which encumbers 15
apartment communities.
(f) Represents $43,010,206 of fixed rate debt which encumbers 9
apartment communities.
(g) Represents $11,031,634 of fixed rate debt which encumbers 5
apartment communities.
(h) The depreciable life for all buildings is 35 years.
(i) Total initial acquisition cost includes a purchase price
reallocation of $8.5 million.
(j) Encumbrances include a fair market value adjustment of $14.8
million.
Exhibit 1(a)
February 29, 2000
Banc of America Securities LLC
First Union Securities, Inc.
Chase Securities Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
Merrill Lynch, Pierce, Fenner & Smith Incorporated
c/o Banc of America Securities LLC
100 North Tryon Street
Charlotte, North Carolina 28255
Ladies and Gentlemen:
From time to time United Dominion Realty Trust, Inc., a Virginia corporation (the "Company"), United Dominion Realty, L.P., a Virginia limited partnership (the "Operating Partnership"), UDR Western Residential, Inc., a Virginia corporation ("Residential"), UDRT of North Carolina, L.L.C., a North Carolina limited liability company ("North Carolina"), and ASR Investments Corporation, a Maryland corporation ("Investment"; the Operating Partnership, Residential, North Carolina and Investment are hereinafter sometimes called, collectively, the "Operating Entities" and, individually, an "Operating Entity"), propose to enter into one or more Pricing Agreements (each a "Pricing Agreement") in the form of Annex I hereto, with such additions and deletions as the parties thereto may determine, and, subject to the terms and conditions stated herein and therein, the Company proposes to issue and sell to the firms named in Schedule I to the applicable Pricing Agreement (such firms constituting the "Underwriters" with respect to such Pricing Agreement and the securities specified therein) certain of the Company's debt securities (the "Securities") specified in Schedule II to such Pricing Agreement (with respect to such Pricing Agreement, the "Designated Securities"). The terms and rights of any particular issuance of Designated Securities shall be as specified in the Pricing Agreement
relating thereto and in or pursuant to the indenture (the "Indenture") identified in such Pricing Agreement.
All references herein to any "subsidiary" or "subsidiaries" of the Company shall be deemed to include the Operating Entities unless otherwise expressly stated.
1. Particular sales of Designated Securities may be made from time to time to the Underwriters of such Securities, for whom the firms designated as representatives of the Underwriters of such Securities in the Pricing Agreement relating thereto will act as representatives (the "Representatives"). The term "Representatives" also refers to a single firm acting as sole representative of the Underwriters and to an Underwriter or Underwriters who act without any firm being designated as its or their representatives. This Underwriting Agreement shall not be construed as an obligation of the Company to sell any of the Securities or as an obligation of any of the Underwriters to purchase any of the Securities. The obligation of the Company to issue and sell any of the Securities and the obligation of any of the Underwriters to purchase any of the Securities shall be evidenced by the Pricing Agreement with respect to the Designated Securities specified therein. Each Pricing Agreement shall specify the aggregate principal amount of such Designated Securities, the initial public offering price of such Designated Securities, the purchase price to the Underwriters of such Designated Securities, the names of the Underwriters of such Designated Securities, the names of the Representatives of such Underwriters and the principal amount of such Designated Securities to be purchased by each Underwriter and shall set forth the date, time and manner of delivery of such Designated Securities and payment therefor. The Pricing Agreement shall also specify (to the extent not set forth in the Indenture and the registration statement and prospectus with respect thereto) the terms of such Designated Securities. A Pricing Agreement shall be in the form of an executed writing (which may be in counterparts), and may be evidenced by an exchange of telegraphic communications or any other rapid transmission device designed to produce a written record of communications transmitted. The obligations of the Underwriters under this Agreement and each Pricing Agreement shall be several and not joint.
2. The Company and the Operating Entities jointly and severally represent and warrant to, and agree with, each of the Underwriters that:
(a) Two registration statements on Form S-3 (File Nos. 333-27221 and 333-92667) (the "Initial Registration Statements") in respect of the Securities have been filed with the Securities and Exchange Commission (the "Commission"); the Initial Registration Statements and any post-effective amendment thereto, each in the form heretofore delivered or to be delivered to the Representatives and, excluding exhibits to such registration statements but including all documents incorporated by reference in the prospectus contained in the latest registration statement, to the Representatives for each of the other Underwriters, have been declared effective by the Commission in such form; other than a registration statement, if any, increasing the size of the offering (a "Rule 462(b) Registration Statement") filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the "Act"), which became effective upon filing and other than exhibits
filed as part of documents incorporated by reference in the Initial
Registration Statements, no other document with respect to the Initial
Registration Statements or any document incorporated by reference therein
has heretofore been filed or transmitted for filing with the Commission
(other than prospectuses filed pursuant to Rule 424(b) of the rules and
regulations of the Commission under the Act each in the form heretofore
delivered to the Representatives); and no stop order suspending the
effectiveness of the Initial Registration Statements, any post-effective
amendment thereto or the Rule 462(b) Registration Statement, if any, has
been issued and no proceeding for that purpose has been initiated or
threatened by the Commission; any preliminary prospectus included in the
Initial Registration Statements or filed with the Commission pursuant to
Rule 424(a) under the Act is hereinafter called a "Preliminary Prospectus";
the various parts of the Initial Registration Statements and the Rule
462(b) Registration Statement, if any, including all exhibits thereto and
the documents incorporated by reference in the prospectus contained in the
Initial Registration Statements at the time such part of the registration
statement became effective but excluding any Form T-1, each as amended at
the time such part of the Initial Registration Statements became effective
or such part of the Rule 462(b) Registration Statement, if any, became or
hereafter becomes effective, are hereinafter collectively called the
"Registration Statement"; the prospectus relating to the Securities, in the
form in which it has most recently been filed, or transmitted for filing,
with the Commission on or prior to the date of this Agreement, is
hereinafter called the "Prospectus"; any reference herein to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to the
applicable form under the Act, as of the date of such Preliminary
Prospectus or Prospectus, as the case may be; any reference to any
amendment or supplement to any Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include any documents filed after the date
of such Preliminary Prospectus or Prospectus, as the case may be, under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
incorporated by reference in such Preliminary Prospectus or Prospectus, as
the case may be; any reference to any amendment to the Registration
Statement shall be deemed to refer to and include any annual report of the
Company filed pursuant to Sections 13(a) or 15(d) of the Exchange Act after
the effective date of the Registration Statement that is incorporated by
reference in the Registration Statement; any reference to the Prospectus as
amended or supplemented shall be deemed to refer to the Prospectus as
amended or supplemented in relation to the applicable Designated Securities
in the form first used to confirm sales of such Designated Securities,
including any documents incorporated by reference therein as of the date of
such amendment or supplement, as the case may be; and if the Company elects
to rely on Rule 434 under the Act, any reference to the Prospectus shall be
deemed to include, without limitation, the form of prospectus and the
abbreviated term sheet, taken together, provided to the Underwriters by the
Company in reliance on Rule 434 under the Act (the "Rule 434 Prospectus");
(b) The documents incorporated by reference in the Prospectus, when they became effective or were filed with the Commission, as the case may be, conformed in
all material respects to the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder, and none of such documents contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and any further documents so filed and incorporated by reference in the Prospectus or any further amendment or supplement thereto, when such documents become effective or are filed with the Commission, as the case may be, will conform in all material respects to the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter of Designated Securities through the Representatives expressly for use in the Prospectus as amended or supplemented relating to such Designated Securities;
(c) The Registration Statement and the Prospectus conform, and any further amendments or supplements to the Registration Statement or the Prospectus will conform, in all material respects to the requirements of the Act and the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the rules and regulations of the Commission thereunder and do not and will not, as of the respective effective dates as to the Registration Statement, any Rule 462(b) Registration Statement and any amendment thereto and as of the applicable filing date as to the Prospectus and any amendment or supplement thereto and as of the Time of Delivery (as defined in Section 4 hereof) with respect to any Designated Securities, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter of Designated Securities through the Representatives expressly for use in the Prospectus as amended or supplemented relating to such Designated Securities;
(d) The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the Commonwealth of Virginia, with full power and authority to own, lease and operate its properties and conduct its business as described in the Prospectus; and the Company is duly qualified to transact business in all jurisdictions in which the conduct of its business requires such qualification except where the failure to so qualify would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company;
(e) Each subsidiary of the Company has been duly organized and is validly existing as a corporation, limited liability company, limited partnership or real estate investment trust in good standing under the laws of the jurisdiction of its incorporation or
organization, with power and authority to own, lease and operate its properties and conduct its business as described in the Prospectus and is duly qualified to transact business in all jurisdictions in which the conduct of its business requires such qualification except where the failure to so be in good standing would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company and its subsidiaries, considered as one enterprise; each such subsidiary is duly qualified to transact business in all jurisdictions in which the conduct of its business requires such qualification, or in which the failure to qualify would have a materially adverse effect upon the business of such subsidiary; all of the issued and outstanding shares of capital stock of each such corporate subsidiary and all of the issued and outstanding shares of beneficial interest of each such real estate investment trust subsidiary have been duly authorized and validly issued, are fully paid and non-assessable and are owned by the Company or a subsidiary of the Company, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity; all of the issued and outstanding partnership interests of each such partnership subsidiary and all of the issued and outstanding limited liability company interests of each such limited liability company subsidiary have been duly authorized and validly issued, are fully paid and (except in the case of general partnership interests) non-assessable and, except as otherwise disclosed in the Prospectus, are owned by the Company and/or one or more subsidiaries of the Company, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity; and the Company and/or one or more subsidiaries of the Company are the only members or general partners of the Company's limited liability company or limited partnership subsidiaries, as applicable, and own the entire membership or general partnership interest in each such subsidiary free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity;
(f) Neither the Company nor any of its subsidiaries has sustained since the date of the latest audited financial statements included or incorporated by reference in the Prospectus any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Prospectus; and, since the respective dates as of which information is given in the Registration Statement and the Prospectus, there has not been any material change in the capital stock, total assets or long-term debt of the Company or any of its subsidiaries or any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, management, financial position, shareholders' equity or results of operations of the Company and its subsidiaries, otherwise than as set forth or contemplated in the Prospectus as amended prior to the date of the Pricing Agreement relating to the Designated Securities.
(g) The Company has an authorized capitalization as set forth in the Prospectus, and all of the issued shares of capital stock of the Company have been duly and validly authorized and issued and are fully paid and non-assessable;
(h) The Securities have been duly and validly authorized, and, when Designated Securities are issued and delivered pursuant to this Agreement and the Pricing Agreement with respect to such Designated Securities, such Designated Securities will have been duly executed, authenticated, issued and delivered and will constitute valid and legally binding obligations of the Company entitled to the benefits provided by the Indenture, which will be substantially in the form filed as an exhibit to the Registration Statement; the Indenture has been duly authorized and duly qualified under the Trust Indenture Act and, at the Time of Delivery for such Designated Securities, the Indenture will constitute a valid and legally binding instrument, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles; and the Indenture conforms, and the Designated Securities will conform, to the descriptions thereof contained in the Prospectus as amended or supplemented with respect to such Designated Securities;
(i) The issue and sale of the Securities and the compliance by the Company and the Operating Entities with all of the provisions of the Securities, the Indenture, this Agreement, and any Pricing Agreement, and the consummation of the transactions herein and therein contemplated will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, nor will such action result in any violation of the provisions of the Articles of Incorporation or By-laws of the Company, Residential or Investment, the certificate of limited partnership or limited partnership agreement of the Operating Partnership, the operating agreement of North Carolina or any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their respective properties; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the issue and sale of the Securities or the consummation by the Company or any of the Operating Entities of the transactions contemplated by this Agreement, or any Pricing Agreement or the Indenture, except such as have been, or will have been prior to the Time of Delivery, obtained under the Act and the Trust Indenture Act and such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Securities by the Underwriters;
(j) The statements set forth in the Prospectus as amended or supplemented with respect to the Designated Securities under the captions "Description of Our Debt Securities" and "Description of the Notes" (or under any similar caption describing the Designated Securities), insofar as they purport to constitute a summary of the terms of the Securities, and under the captions "Description of Our Capital Stock," "Plan of
Distribution" and "Underwriting", insofar as they purport to describe the provisions of the laws and documents referred to therein, are accurate, complete and fair;
(k) Neither the Company nor any of its subsidiaries is in violation of its Articles of Incorporation or By-laws, limited partnership agreement, limited liability company agreement, operating agreement or other organizational documents or in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which it is a party or by which it or any of its properties may be bound;
(l) Other than as set forth in the Prospectus, there are no legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or of which any property of the Company or any of its subsidiaries is the subject which, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a material adverse effect on the current or future consolidated financial position, shareholders' equity or results of operations of the Company and its subsidiaries; and, to the best of the Company's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others;
(m) The financial statements together with related notes and schedules of the Company and its subsidiaries and of any companies, other entities or properties acquired or to be acquired by the Company, in each case as set forth or incorporated by reference in the Prospectus, present fairly the financial position and the results of operations of the Company and its subsidiaries and of such companies, entities and properties, as the case may be, at the indicated dates and for the indicated periods. Such financial statements have been prepared in accordance with generally accepted principles of accounting, consistently applied throughout the periods involved, and all adjustments necessary for a fair presentation of results for such periods have been made. The summary financial and statistical data included in the Prospectus present fairly the information shown therein and have been compiled on a basis consistent with the financial statements presented therein; the pro forma financial statements and related notes thereto included in the Prospectus present fairly the information shown therein, have been prepared in accordance with the Commission's rules and guidelines with respect to pro forma financial statements and have been properly compiled on the bases described therein, and the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred to therein;
(n) The Company and its subsidiaries have good and marketable title to, or valid and enforceable leasehold estates in, all items of real and personal property referred to in the Prospectus as owned or leased by them, in each case free and clear of all liens, encumbrances, claims, security interests and defects, other than those referred to in the Prospectus or which are not material in amount. Each lease of real property by the
Company or any of its subsidiaries as lessor requiring annual lease payments in excess of $100,000 is the legal, valid and binding obligation of the lessee in accordance with its terms (except that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought and to the Bankruptcy Act) and the rents which at present have remained due and unpaid for more than 30 days are not payable under leases such that, were no further rental payments to be received under such leases, the financial condition or results of operations of the Company and its subsidiaries would be materially adversely affected thereby. The Company has no reason to believe that the lessee under any lease (excluding leases for which rent payments due for the remainder of such lease are less than $500,000) calling for annual lease payments in excess of $500,000 is not financially capable of performing its obligations thereunder;
(o) The Company has filed all Federal, local and foreign income tax returns which have been required to be filed or has filed extensions and has paid all taxes indicated by said returns and all assessments received by it to the extent that such taxes have become due and are not being contested in good faith;
(p) The Company and each of its subsidiaries hold all material licenses, certificates and permits from governmental authorities which are necessary to the conduct of their respective businesses; and neither the Company nor any of its subsidiaries has infringed any patents, patent rights, trade names, trademarks or copyrights, which infringement is material to the business of the Company or any of its subsidiaries;
(q) With respect to all tax periods regarding which the Internal Revenue Service is or will be entitled to assert any claim, the Company has met the requirements for qualification as a real estate investment trust under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"), and the Company's present and contemplated operations, assets and income continue to meet such requirements;
(r) The conditions for use of registration statements on Form S-3 set forth in the General Instructions on Form S-3 have been satisfied and the Company is entitled to use such form for the transaction contemplated herein;
(s) The Company has no knowledge of (a) the unlawful presence of any hazardous substances, hazardous materials, toxic substances or waste materials (collectively, "Hazardous Materials") on any of the properties owned by it or any of its subsidiaries, or of (b) any unlawful spills, releases, discharges or disposal of Hazardous Materials that have occurred or are presently occurring off such properties as a result of any construction on or operation and use of such properties which presence or occurrence would materially adversely affect the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company or any of its subsidiaries. In connection with the construction on or operation and use of the properties owned by the Company or any of its subsidiaries, the Company represents that it has no knowledge of any material failure to comply with all applicable local, state and federal environmental
laws, regulations, ordinances and administrative and judicial orders relating to the generation, recycling, reuse, sale, storage, handling, transport and disposal of any Hazardous Materials;
(t) The Company is not and, after giving effect to the offering and sale of the Securities, will not be an "investment company" or an entity "controlled" by an "investment company", as such terms are defined in the Investment Company Act of 1940, as amended (the "Investment Company Act");
(u) Ernst & Young LLP, who have certified certain financial statements of the Company and its subsidiaries, and each other accounting firm which has certified any other financial statements which are included or incorporated by reference in the Prospectus, are each independent public accountants as required by the Act and the rules and regulations of the Commission thereunder;
(v) At the date of the Pricing Agreement with respect to the applicable Designated Securities, such Pricing Agreement and this Agreement will have been duly authorized, executed and delivered by the Company and the Operating Entities;
(w) The total real estate owned of the Operating Entities and the Company, in each case excluding any of their respective subsidiaries other than the Operating Entities, determined on a consolidated basis, are equal to at least 50% of the total consolidated real estate owned of the Company; the total net operating income of the Operating Entities and the Company for the year ended December 31, 1999, in each case excluding any of their respective subsidiaries other than the Operating Entities, determined on a consolidated basis, were equal to at least 50% of the total consolidated net operating income of the Company for the year ended December 31, 1999.
3. Upon the execution of the Pricing Agreement applicable to any Designated Securities and authorization by the Representatives of the release of such Designated Securities, the several Underwriters propose to offer such Designated Securities for sale upon the terms and conditions set forth in the Prospectus as amended or supplemented.
4. Designated Securities to be purchased by each Underwriter pursuant to the Pricing Agreement relating thereto, in the form specified in such Pricing Agreement, and in such authorized denominations and registered in such names as the Representatives may request upon at least twenty-four hours' prior notice to the Company, shall be delivered by or on behalf of the Company to the Representatives for the account of such Underwriter, against payment by such Underwriter or on its behalf of the purchase price therefor in the funds specified in such Pricing Agreement, all in the manner and at the place and time and date specified in such Pricing Agreement or at such other place and time and date as the Representatives and the Company may agree upon in writing, such time and date being herein called the "Time of Delivery" for such Securities.
5. The Company and the Operating Entities, jointly and severally, agree with each of the Underwriters of any Designated Securities that:
(a) If the Company does not elect to rely on Rule 434 under the Act, immediately following execution and delivery of the applicable Pricing Agreement, the Company will prepare the Prospectus as amended or supplemented in relation to the applicable Designated Securities in a form approved by the Representatives and will file such Prospectus pursuant to Rule 424(b) under the Act not later than the Commission's close of business on the business day following the execution and delivery of the Pricing Agreement relating to the applicable Designated Securities or, if applicable, such earlier time as may be required by Rule 424(b), or if the Company elects to rely on Rule 434 under the Act, immediately following execution and delivery of the applicable Pricing Agreement, the Company will prepare an abbreviated term sheet relating to the Designated Securities in a form approved by the Representatives that complies with the requirements of Rule 434 under the Act and will file such form of Rule 434 Prospectus complying with Rule 434(c)(2) of the Act pursuant to Rule 424(b) under the Act not later than the Commission's close of business on the business day following the execution and delivery of the Pricing Agreement relating to the applicable Designated Securities or if applicable, such earlier time as may be required by Rule 424(b); the Company will make no further amendment or any supplement to the Registration Statement or Prospectus as amended or supplemented after the date of the Pricing Agreement relating to such Securities and prior to the Time of Delivery for such Securities which shall be disapproved by the Representatives for such Securities promptly after reasonable notice thereof; the Company will advise the Representatives promptly of any such amendment or supplement after such Time of Delivery and will furnish the Representatives with copies thereof; the Company will file promptly all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act for so long as the delivery of a prospectus is required in connection with the offering or sale of such Securities, and during such same period will advise the Representatives, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any supplement to the Prospectus or any amended Prospectus has been filed with the Commission, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any prospectus relating to the Securities, of the suspension of the qualification of such Securities for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or Prospectus or for additional information; and, in the event of the issuance of any such stop order or of any such order preventing or suspending the use of any prospectus relating to the Securities or suspending any such qualification, the Company will promptly use its best efforts to obtain the withdrawal of such order;
(b) If necessary, promptly from time to time the Company will take such action as the Representatives may reasonably request to qualify such Securities for offering and
sale under the securities laws of such jurisdictions as the Representatives may request and will comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of such Securities, provided that in connection therewith the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction;
(c) Prior to 10:00 a.m. New York City time on the New York business day next succeeding the date of the applicable Pricing Agreement and from time to time, the Company will furnish the Underwriters with copies of the Prospectus as amended or supplemented in New York City in such quantities as the Representatives may reasonably request, and, if the delivery of a prospectus is required at any time in connection with the offering or sale of the Securities and if at such time any event shall have occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made or when such Prospectus is delivered, not misleading, or, if for any other reason it shall be necessary during such same period to amend or supplement the Prospectus or to file under the Exchange Act any document incorporated by reference in the Prospectus in order to comply with the Act, the Exchange Act or the Trust Indenture Act, the Company will notify the Representatives and upon their request will file such document and will prepare and furnish without charge to each Underwriter and to any dealer in securities as many copies as the Representatives may from time to time reasonably request of an amended Prospectus or a supplement to the Prospectus which will correct such statement or omission or effect such compliance;
(d) The Company will make generally available to its securityholders as soon as practicable, but in any event not later than eighteen months after the effective date of the Registration Statement (as defined in Rule 158(c) under the Act), an earnings statement of the Company and its subsidiaries (which need not be audited) complying with Section 11(a) of the Act and the rules and regulations of the Commission thereunder (including, at the option of the Company, Rule 158);
(e) During the period beginning from the date of the Pricing Agreement
for such Designated Securities and continuing to and including the later of
(i) the termination of trading restrictions for such Designated Securities,
as notified to the Company by the Representatives and (ii) the Time of
Delivery for such Designated Securities, the Company will not offer, sell,
contract to sell or otherwise dispose of any debt securities of the Company
which mature more than one year after such Time of Delivery and which are
substantially similar to such Designated Securities, without the prior
written consent of Banc of America Securities LLC;
(f) The Company will use the net proceeds received by it from the sale of the Securities in the manner specified in the Prospectus under the caption "Use of Proceeds"; and
(g) The Company will continue to elect to qualify as a "real estate investment trust" under the Code, and will use its best efforts to continue to meet the requirements to qualify as a "real estate investment trust".
6. The Company and the Operating Entities, jointly and severally, covenant and agree with the several Underwriters that they will pay or cause to be paid the following: (i) the reasonable fees, disbursements and expenses of the Company's counsel and accountants in connection with the registration of the Securities under the Act and all other expenses in connection with the preparation, printing and filing of the Registration Statement, any Preliminary Prospectus and the Prospectus and amendments and supplements thereto (including each abbreviated term sheet delivered by the Company pursuant to Rule 434 under the Act) and the mailing and delivering of copies thereof to the Underwriters and dealers; (ii) the cost of printing or producing any Agreement among Underwriters, this Agreement, any Pricing Agreement, any Indenture, any Blue Sky and Legal Investment Surveys, closing documents (including any compilation thereof) and any other documents in connection with the offering, purchase, sale and delivery of the Securities; (iii) all expenses, if any, in connection with the qualification of the Securities for offering and sale under state securities laws as provided in Section 5(b) hereof, including the fees and disbursements of counsel for the Underwriters in connection with such qualification and in connection with the Blue Sky and Legal Investment Surveys; (iv) any fees charged by securities rating services for rating the Securities; (v) any filing fees incident to, and the fees and disbursements of counsel for the Underwriters in connection with, any required review by the National Association of Securities Dealers, Inc. of the terms of the sale of the Securities; (vi) the cost of preparing the Securities; (vii) the fees and expenses of any Trustee and any agent of any Trustee and the fees and disbursements of counsel for any Trustee in connection with any Indenture and the Securities; and (viii) all other costs and reasonable expenses incident to the performance of its obligations hereunder which are not otherwise specifically provided for in this Section. It is understood, however, that, except as provided in this Section, and Sections 8 and 10 hereof, the Underwriters will pay all of their own costs and expenses, including the fees of their counsel, transfer taxes on resale of any of the Securities by them, and any advertising expenses connected with any offers they may make.
7. The obligations of the Underwriters of any Designated Securities under the Pricing Agreement relating to such Designated Securities shall be subject, in the discretion of the Representatives, to the condition that all representations and warranties and other statements of the Company and the Operating Entities in or incorporated by reference in the Pricing Agreement relating to such Designated Securities are, at and as of the Time of Delivery for such Designated Securities, true and correct, the condition that the Company and the Operating Entities shall have performed all of their obligations hereunder theretofore to be performed, and the following additional conditions:
(a) The Prospectus as amended or supplemented in relation to the applicable Designated Securities shall have been filed with the Commission pursuant to Rule 424(b) within the applicable time period prescribed for such filing by the rules and regulations under the Act and in accordance with Section 5(a) hereof; no stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; and all requests for additional information on the part of the Commission shall have been complied with to the Representatives' reasonable satisfaction;
(b) Brown & Wood LLP, counsel for the Underwriters, shall have furnished to the Representatives such opinion or opinions, dated the Time of Delivery for such Designated Securities, with respect to the matters covered in paragraphs (i), (vi), (vii), (viii), (xi) and (xiv) of subsection (c) below as well as such other related matters as the Representatives may reasonably request, and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters. In rendering their opinion, Brown & Wood LLP may rely, as to all matters governed by or arising under the laws of the Commonwealth of Virginia and the States of Maryland and North Carolina, on the opinion of Hunton & Williams delivered pursuant to Section 7(c) below;
(c) Hunton & Williams, counsel for the Company, shall have furnished to the Representatives their written opinion, dated the Time of Delivery for such Designated Securities, in form and substance satisfactory to the Representatives, to the effect set forth below (such opinion shall be rendered to the Underwriters at the request of the Company and shall so state therein and shall further state that Brown & Wood LLP, in rendering their opinion pursuant to Section 7(b) above, may rely on such opinion of Hunton & Williams as to all matters governed by or arising under the laws of the Commonwealth of Virginia and the States of Maryland and North Carolina) :
(i) The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the Commonwealth of Virginia, with corporate power and authority to own its properties and conduct its business as described in the Prospectus as amended or supplemented;
(ii) The Company has an authorized capitalization as set forth in the Prospectus as amended or supplemented and all of the issued shares of capital stock of the Company have been duly and validly authorized and issued and are fully paid and non-assessable;
(iii) The Company is duly qualified to transact business in all jurisdictions in which the conduct of its business requires such qualification, or in which the failure to qualify would have a materially adverse effect upon the business of the Company;
(iv) Each subsidiary of the Company has been duly organized and is validly existing as a corporation, limited liability company, limited partnership or real estate investment trust in good standing under the laws of the jurisdiction of its incorporation or organization, with power and authority to own, lease and operate its properties and conduct its business as described in the Prospectus as amended or supplemented, and is duly qualified to transact business in all jurisdictions in which the conduct of its business requires such qualification except where the failure to so be in good standing would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company and its subsidiaries, considered as one enterprise; each such subsidiary is duly qualified to transact business in all jurisdictions in which the conduct of its business requires such qualification, or in which the failure to qualify would have a materially adverse effect upon the business of such subsidiary; all of the issued and outstanding shares of capital stock of each such corporate subsidiary and all of the issued and outstanding shares of beneficial interest of each such real estate investment trust subsidiary have been duly authorized and validly issued, are fully paid and non-assessable and are owned by the Company or by a subsidiary of the Company, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity; all of the issued and outstanding partnership interests of each such partnership subsidiary and all of the issued and outstanding limited liability company interests of each such limited liability company subsidiary have been duly authorized and validly issued, are fully paid and (except in the case of general partnership interests) non-assessable and, except as otherwise disclosed in the Prospectus, are owned by the Company and/or one or more subsidiaries of the Company, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity; and the Company, and/or such subsidiaries of the Company are the only members or general partners of the Company's limited liability company or limited partnership subsidiaries, as applicable, and own the entire membership or general partnership interest in each such subsidiary free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity;
(v) To the best of such counsel's knowledge and other than as set forth in the Prospectus as amended or supplemented, there are no legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or of which any property of the Company or any of its subsidiaries is the subject which, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a material adverse effect on the current or future consolidated financial position, shareholders' equity or results of operations of the Company and its subsidiaries; and, to the best of such counsel's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others;
(vi) This Agreement and the Pricing Agreement with respect to the Designated Securities have been duly authorized, executed and delivered by the Company and the Operating Entities;
(vii) The Designated Securities have been duly authorized and executed by the Company and, when duly authenticated by the Trustee in accordance with the Indenture and delivered to the Underwriters against payment of the consideration therefor in accordance with the Pricing Agreement, will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles, whether considered at law or in equity, and will be entitled to the benefits of the Indenture ;
(viii) The Indenture has been duly authorized, executed and delivered by the Company and constitutes a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles, whether considered at law or in equity; and the Indenture has been duly qualified under the Trust Indenture Act;
(ix) The issue and sale of the Designated Securities being delivered on the date of such opinion and the compliance by the Company and the Operating Entities with all of the provisions of the Designated Securities, the Indenture, this Agreement and the Pricing Agreement with respect to the Designated Securities and the consummation of the transactions herein and therein contemplated will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument known to such counsel to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, nor will such actions result in any violation of the provisions of the Articles of Incorporation or By-laws of the Company, Residential or Investment or the certificate of limited partnership or limited partnership agreement of the Operating Partnership or the operating agreement of North Carolina or any statute or any order, rule or regulation known to such counsel of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties;
(x) No consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the issue and sale of the Designated Securities being delivered on the date of such opinion or the consummation by the Company or the Operating Entities of the
transactions contemplated by this Agreement, the Pricing Agreement or the Indenture, except such as have been obtained under the Act and the Trust Indenture Act and such consents, approvals, authorizations, orders, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Designated Securities by the Underwriters;
(xi) The statements set forth in the Prospectus under the captions "Description of Our Debt Securities" and "Description of the Notes" (or under any similar caption), insofar as they constitute a summary of the Indenture, the Designated Securities, or any other documents referred to therein or matters of law are accurate summaries and fairly and correctly present the information called for with respect to such documents and matters;
(xii) The Company is not required to be registered under the Investment Company Act;
(xiii) The documents incorporated by reference in the Prospectus as amended or supplemented (other than the financial statements and related schedules therein, as to which such counsel need express no opinion), when they became effective or were filed with the Commission, as the case may be, complied as to form in all material respects with the requirements of the Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder; and although they do not assume any responsibility for the accuracy, completeness or fairness of the statements therein, nothing has come to their attention which leads them to believe that any documents incorporated by reference in the Prospectus as amended or supplemented (other than the financial statements and related schedules therein, as to which such counsel need express no opinion), when they became effective or were so filed, as the case may be, contained, in the case of a registration statement which became effective under the Act, an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or, in the case of other documents which were filed under the Act or the Exchange Act with the Commission, an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such documents were so filed, not misleading; and
(xiv) The Registration Statement and the Prospectus as amended or supplemented and any further amendments and supplements thereto made by the Company on or prior to the date of such opinion (other than the financial statements and related schedules therein, as to which such counsel need express no opinion) comply as to form in all material respects with the requirements of the Act and the Trust Indenture Act and the rules and regulations thereunder; if
applicable, the Rule 434 Prospectus complies as to form in all material respects with the requirements of Rule 434 under the Act; although they do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement or the Prospectus, except for those referred to in the opinion in subsection (xi) of this Section 7(c), nothing has come to their attention which leads them to believe that, as of its effective date the Registration Statement or any further amendment thereto made by the Company on or prior to the date of such opinion (other than the financial statements and related schedules therein, as to which such counsel need express no opinion) contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that, as of the date of the applicable Pricing Agreement, the Prospectus as amended or supplemented or any further amendment or supplement thereto made by the Company on or prior to the date of such opinion (other than the financial statements and related schedules therein, as to which such counsel need express no opinion) contained an untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading or that, as of the Time of Delivery, either the Registration Statement or the Prospectus as amended or supplemented or any further amendment or supplement thereto made by the Company on or prior to the date of such opinion (other than the financial statements and related schedules therein, as to which such counsel need express no opinion) contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and they do not know of any amendment to the Registration Statement required to be filed or of any contracts or other documents of a character required to be filed as an exhibit to the Registration Statement or required to be incorporated by reference into the Prospectus as amended or supplemented or required to be described in the Registration Statement or the Prospectus as amended or supplemented which are not filed or incorporated by reference or described as required;
(d) Hunton & Williams, counsel for the Company, shall have furnished to the Representatives their written opinion (which shall be rendered to the Underwriters at the request of the Company and shall so state therein), dated the Time of Delivery for such Designated Securities, in form and substance satisfactory to the Representatives, to the effect that the Company has qualified to be taxed as a real estate investment trust pursuant to Sections 856 through 860 of the Code for its most recently ended fiscal year and for the four fiscal years immediately preceding such year, and the Company's organization and contemplated method of operation are such as to enable it to continue to so qualify for its current fiscal year;
(e) On the date of the Pricing Agreement for such Designated Securities and at the Time of Delivery for such Designated Securities, the Underwriters shall have
received, a letter dated the date hereof and the Time of Delivery, respectively, in form and substance satisfactory to the Underwriters, from Ernst & Young LLP, independent public accountants, containing statements and information of the type ordinarily included in accountants' "comfort letters" to underwriters with respect to the financial statements and certain financial information contained in the Registration Statement and the Prospectus as amended or supplemented.
(f) (i) Neither the Company nor any of its subsidiaries shall have sustained since the date of the latest audited financial statements included or incorporated by reference in the Prospectus as amended prior to the date of the Pricing Agreement relating to the Designated Securities any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Prospectus as amended prior to the date of the Pricing Agreement relating to the Designated Securities, and (ii) since the respective dates as of which information is given in the Prospectus as amended prior to the date of the Pricing Agreement relating to the Designated Securities there shall not have been any change in the capital stock, total assets or long-term debt of the Company or any of its subsidiaries or any change, or any development involving a prospective change, in or affecting the general affairs, management, financial position, shareholders' equity or results of operations of the Company and its subsidiaries, otherwise than as set forth or contemplated in the Prospectus as amended prior to the date of the Pricing Agreement relating to the Designated Securities, the effect of which, in any such case described in Clause (i) or (ii), is in the judgment of the Representatives so material and adverse as to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Designated Securities on the terms and in the manner contemplated in the Prospectus as first amended or supplemented relating to the Designated Securities;
(g) On or after the date of the Pricing Agreement relating to the
Designated Securities (i) no downgrading shall have occurred in the rating
accorded the Company's debt securities or preferred stock by any
"nationally recognized statistical rating organization", as that term is
defined by the Commission for purposes of Rule 436(g)(2) under the Act, and
(ii) no such organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its rating of
any of the Company's debt securities or preferred stock;
(h) On or after the date of the Pricing Agreement relating to the
Designated Securities there shall not have occurred any of the following:
(i) a suspension or material limitation in trading in securities generally
on the New York Stock Exchange; (ii) a suspension or material limitation in
trading in the Company's securities on the New York Stock Exchange; (iii) a
general moratorium on commercial banking activities in New York declared by
either Federal or New York State authorities; or (iv) the outbreak or
escalation of hostilities, the occurrence of any change in financial
markets or, the occurrence of any calamity or crisis or the declaration by
the United States of a national
emergency or war, if the effect of any such event specified in this Clause
(iv) in the judgment of Banc of America Securities LLC makes it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Designated Securities on the terms and in the manner
contemplated in the Prospectus as amended or supplemented;
(i) The Company and the Operating Entities shall have complied with the provisions of Section 5(c) hereof with respect to the furnishing of prospectuses on the New York business day next succeeding the date of the applicable Pricing Agreement; and
(j) The Company and the Operating Entities shall have furnished or caused to be furnished to the Representatives at the Time of Delivery for the Designated Securities a certificate or certificates of officers of the Company, Residential and Investment and of the general partner of the Operating Partnership and of the sole member of North Carolina satisfactory to the Representatives as to the accuracy of the representations and warranties of the Company and the Operating Entities herein at and as of such Time of Delivery, as to the performance by the Company and the Operating Entities of all of their obligations hereunder to be performed at or prior to such Time of Delivery, as to the matters set forth in subsections (a) and (f) of this Section and as to such other matters as the Representatives may reasonably request.
8.
(a) The Company and the Operating Entities, jointly and severally, agree to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of either Section 15 of the Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred by any Underwriter or any such controlling person in connection with defending or investigating any such action or claim) caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any Preliminary Prospectus, any preliminary prospectus supplement, the Prospectus as amended or supplemented or any other prospectus relating to the Securities, or any amendment or supplement to any of the foregoing, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use therein in connection with the offering of the Designated Securities.
(b) Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors, its officers who sign the Registration Statement and each person, if any, who controls the Company within the meaning of either Section 15 of the Act or Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Company to such Underwriter, but only with reference to information relating to such Underwriter furnished to the Company in writing by such Underwriter through the Representatives in connection with the offering of the Designated Securities expressly for use in the Registration Statement, any Preliminary Prospectus, any preliminary prospectus supplement, the Prospectus as amended or supplemented or any other prospectus relating to the Designated Securities or any amendment or supplement to any of the foregoing.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may
be sought pursuant to either paragraph (a) or (b) of this Section 8, such
person (the "indemnified party") shall promptly notify the person against
whom such indemnity may be sought (the "indemnifying party") in writing and
the indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in
such proceeding and shall pay the fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any indemnified party
shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless
(i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any
such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings
in the same jurisdiction, be liable for the fees and expenses of more than
one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such fees and expenses shall be reimbursed
as they are incurred. Such firm shall be designated in writing by Banc of
America Securities LLC, in the case of parties indemnified pursuant to
paragraph (a) above, and by the Company, in the case of parties indemnified
pursuant to paragraph (b) above. The indemnifying party shall not be liable
for any settlement of any proceeding effected without its written consent,
but if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse
the indemnified party for fees and expenses of counsel as contemplated by
the second and third sentences of this paragraph, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding
effected without its written consent if (i) such settlement is entered into
more than 30 days after receipt by such indemnifying party of the aforesaid
request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent
of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could
have been a
party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. The obligations of the Company and the Operating Entities under this paragraph (c) are joint and several.
(d) To the extent the indemnification provided for in paragraph (a) or
(b) of this Section 8 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then each indemnifying party under such paragraph, in
lieu of indemnifying such indemnified party thereunder, shall contribute to
the amount paid or payable by such indemnified party as a result of such
losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and
the Operating Entities on the one hand and the Underwriters of the
Designated Securities on the other hand from the offering of the Designated
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company and the Operating Entities on the
one hand and of the Underwriters of the Designated Securities on the other
hand in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative benefits received by the Company
and the Operating Entities on the one hand and the Underwriters of the
Designated Securities on the other hand in connection with the offering of
the Designated Securities shall be deemed to be in the same respective
proportions as the net proceeds from the offering of such Designated
Securities (before deducting expenses) received by the Company and the
total underwriting discounts and commissions received by the Underwriters
of the Designated Securities, in each case as set forth in the table on the
cover of the Prospectus as amended or supplemented with respect to the
Designated Securities, bear to the aggregate public offering price of the
Designated Securities. The relative fault of the Company and the Operating
Entities on the one hand and the Underwriters on the other hand shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company or the Operating Entities on the one hand or by the Underwriters on
the other hand and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Underwriters' respective obligations to contribute pursuant
to this Section 8 are several in proportion to the respective principal
amounts of Designated Securities they have purchased hereunder, and not
joint. The obligations of the Company and the Operating Entities to
contribute pursuant to this Section 8 are joint and several.
(e) The Company, the Operating Entities and the Underwriters agree
that it would not be just or equitable if contribution pursuant to this
Section 8 were determined by pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations
referred to in paragraph (d) of this Section 8. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim. Notwithstanding
the provisions of this Section 8, no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Designated Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages that
such Underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The remedies
provided for in this Section 8 are not exclusive and shall not limit any
rights or remedies which may otherwise be available to any indemnified
party at law or in equity.
(f) The indemnity and contribution provisions contained in this
Section 8 and the representations, warranties and other statements of the
Company and the Operating Entities contained in this Agreement shall remain
operative and in full force and effect regardless of (i) any termination of
this Agreement, (ii) any investigation made by or on behalf of any
Underwriter or any person controlling any Underwriter or the Company, its
officers or directors or any person controlling the Company or any
Operating Entity, its officers or directors (if any) or any person
controlling any of the Operating Entities and (iii) acceptance of and
payment for any of the Designated Securities.
9. For purposes of this Section 9, (i) if the applicable Pricing Agreement provides for the Underwriters to purchase two or more separate series of Designated Securities, then each such series is sometimes referred to as a "Series" of Designated Securities, and (ii) if the applicable Pricing Agreement provides for the Underwriters to purchase only a single series of Designated Securities, then all references to any "Series" of Designated Securities shall be deemed to mean and refer to such single series of Designated Securities.
(a) If any Underwriter shall default in its obligation to purchase the Designated Securities of any Series (as defined in the Pricing Agreement) which it has agreed to purchase under the Pricing Agreement relating to such Designated Securities, the Representatives may in their discretion arrange for themselves or another party or other parties to purchase such Designated Securities of such Series on the terms contained herein. If within thirty-six hours after such default by any Underwriter the Representatives do not arrange for the purchase of such Designated Securities of such Series, then the Company shall be entitled to a further period of thirty-six hours within which to procure another party or other parties satisfactory to the Representatives to purchase such Designated Securities of such Series on such terms. In the event that, within the respective prescribed period, the Representatives notify the Company that they have so arranged for the purchase of such Designated Securities of such Series, or the Company notifies the Representatives that it has so arranged for the purchase of such
Designated Securities of such Series, the Representatives or the Company shall have the right to postpone the Time of Delivery for the Designated Securities of such Series for a period of not more than seven days, in order to effect whatever changes may thereby be made necessary in the Registration Statement or the Prospectus as amended or supplemented, or in any other documents or arrangements, and the Company agrees to file promptly any amendments or supplements to the Registration Statement or the Prospectus which in the opinion of the Representatives may thereby be made necessary. The term "Underwriter" as used in this Agreement shall include any person substituted under this Section with like effect as if such person had originally been a party to the Pricing Agreement with respect to the Designated Securities of such Series.
(b) If, after giving effect to any arrangements for the purchase of the Designated Securities of a Series of a defaulting Underwriter or Underwriters by the Representatives and the Company as provided in subsection (a) above, the aggregate principal amount of the Designated Securities of such Series which remains unpurchased does not exceed one- eleventh of the aggregate principal amount of the Designated Securities of such Series, then the Company shall have the right to require each non- defaulting Underwriter to purchase the principal amount of the Designated Securities of such Series which such Underwriter agreed to purchase under the Pricing Agreement relating to the Designated Securities of such Series and, in addition, to require each non-defaulting Underwriter to purchase its pro rata share (based on the principal amount of Designated Securities of such Series which such Underwriter agreed to purchase under such Pricing Agreement) of the Designated Securities of such Series of such defaulting Underwriter or Underwriters for which such arrangements have not been made; but nothing herein shall relieve a defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of
the Designated Securities of a Series of a defaulting Underwriter or
Underwriters by the Representatives and the Company as provided in
subsection (a) above, the aggregate principal amount of Designated
Securities of such Series which remains unpurchased exceeds one-eleventh of
the aggregate principal amount of the Designated Securities of such Series,
as referred to in subsection (b) above, or if the Company shall not
exercise the right described in subsection (b) above to require non-
defaulting Underwriters to purchase Designated Securities of such Series of
a defaulting Underwriter or Underwriters, then the Pricing Agreement
relating to the Designated Securities of such Series shall thereupon
terminate, without liability on the part of any non-defaulting Underwriter,
the Company or the Operating Entities, except for the expenses to be borne
by the Company, the Operating Entities and the Underwriters as provided in
Section 6 hereof and the indemnity and contribution agreements in Section 8
hereof and the provisions of Section 10 hereof; but nothing herein shall
relieve a defaulting Underwriter from liability for its default.
10. If any Pricing Agreement shall be terminated pursuant to Section 9 hereof, the Company and the Operating Entities shall not then be under any liability to any Underwriter with respect to the Designated Securities covered by such Pricing Agreement except as provided in
Section 6 and Section 8 hereof; but, if for any other reason Designated Securities are not delivered by or on behalf of the Company as provided herein, the Company and the Operating Entities will, jointly and severally, reimburse the Underwriters through the Representatives for all out-of-pocket expenses approved in writing by the Representatives, including fees and disbursements of counsel, reasonably incurred by the Underwriters in making preparations for the purchase, sale and delivery of such Designated Securities, but the Company and the Operating Entities shall then be under no further liability to any Underwriter with respect to such Designated Securities except as provided in Sections 6 and 8 hereof.
11. In all dealings hereunder, the Representatives of the Underwriters of Designated Securities shall act on behalf of each of such Underwriters, and the parties hereto shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of any Underwriter made or given by such Representatives jointly or by such of the Representatives, if any, as may be designated for such purpose in the Pricing Agreement.
All statements, requests, notices and agreements hereunder shall be in writing, and if to the Underwriters shall be delivered or sent by mail, telex or facsimile transmission to the address of the Representatives as set forth in the Pricing Agreement; and if to the Company or the Operating Entities shall be delivered or sent by mail, telex or facsimile transmission to the address of the Company set forth in the Registration Statement: Attention: Secretary; provided, however, that any notice to an Underwriter pursuant to Section 8(c) hereof shall be delivered or sent by mail, telex or facsimile transmission to such Underwriter at its address set forth in its Underwriters' Questionnaire, or telex constituting such Questionnaire, which address will be supplied to the Company by the Representatives upon request. Any such statements, requests, notices or agreements shall take effect upon receipt thereof.
12. This Agreement and each Pricing Agreement shall be binding upon, and inure solely to the benefit of, the Underwriters, the Company, the Operating Entities and, to the extent provided in Section 8 hereof, the officers and directors of the Company and each person who controls the Company, any of the Operating Entities or any Underwriter, and their respective heirs, executors, administrators, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement or any such Pricing Agreement. No purchaser of any of the Securities from any Underwriter shall be deemed a successor or assign by reason merely of such purchase.
13. Time shall be of the essence of each Pricing Agreement. As used herein, "business day" shall mean any day when the Commission's office in Washington, D.C. is open for business.
14. This Agreement and each Pricing Agreement shall be governed by and construed in accordance with the laws of the State of New York.
15. This Agreement and each Pricing Agreement may be executed by any one or more of the parties hereto and thereto in any number of counterparts, each of which shall be deemed to be
an original, but all such respective counterparts shall together constitute one and the same instrument.
If the foregoing is in accordance with your understanding, please sign and return to us six counterparts hereof.
Very truly yours,
United Dominion Realty Trust, Inc.
By: _____________________________________
Name:
Title:
United Dominion Realty, L.P.
By: United Dominion Realty Trust, Inc.,
its General Partner
By: _____________________________________
Name:
Title:
UDR Western Residential, Inc.
By: _____________________________________
Name:
Title:
UDRT of North Carolina, L.L.C.
By: United Dominion Realty Trust, Inc.,
its sole member
By: _____________________________________
Name:
Title:
ASR Investments Corporation
By: _____________________________________
Name:
Title:
Accepted as of the date hereof:
Banc of America Securities LLC
Acting severally on behalf of themselves and the several Underwriters
By: Banc of America Securities LLC
By: _____________________________________
Name:
Title:
Annex I Pricing Agreement
[Names of Representative(s)]
As Representatives of the several
Underwriters named in Schedule I hereto,
[Name and Address of Representative]
______________, ____
Dear Sirs:
United Dominion Realty Trust, Inc., a Virginia corporation (the "Company"), proposes, subject to the terms and conditions stated herein and in the Underwriting Agreement, dated ______________, ____ (the "Underwriting Agreement"), between the Company and the Operating Entities (as defined therein) on the one hand and [names of Representatives named therein] on the other hand, to issue and sell to the Underwriters named in Schedule I hereto (the "Underwriters") the Securities specified in Schedule II hereto (the "Designated Securities"). Each of the provisions of the Underwriting Agreement is incorporated herein by reference in its entirety, and shall be deemed to be a part of this Agreement to the same extent as if such provisions had been set forth in full herein; and each of the representations and warranties set forth therein shall be deemed to have been made at and as of the date of this Pricing Agreement, except that each representation and warranty which refers to the Prospectus in Section 2 of the Underwriting Agreement shall be deemed to be a representation or warranty as of the date of the Underwriting Agreement in relation to the Prospectus (as therein defined), and also a representation and warranty as of the date of this Pricing Agreement in relation to the Prospectus as amended or supplemented relating to the Designated Securities which are the subject of this Pricing Agreement. Each reference to the Representatives herein and in the provisions of the Underwriting Agreement so incorporated by reference shall be deemed to refer to you. Unless otherwise defined herein, terms defined in the Underwriting Agreement are used herein as therein defined. The Representative designated to act on behalf of the Representatives and on behalf of each of the Underwriters of the Designated Securities pursuant to Section 12 of the Underwriting Agreement and the address of the Representatives referred to in such Section 12 are set forth at the end of Schedule II hereto.
An amendment to the Registration Statement, or a supplement to the Prospectus, as the case may be, relating to the Designated Securities, in the form heretofore delivered to you, is now proposed to be filed with the Commission.
Subject to the terms and conditions set forth herein and in the Underwriting Agreement incorporated herein by reference, the Company agrees to issue and sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, on the basis of the representations and warranties set forth herein and in such Underwriting Agreement, to purchase from the Company, at the time and place and at the purchase price to the Underwriters set forth in Schedule II hereto, the respective principal amount of Designated Securities set forth opposite the name of such Underwriter in Schedule I hereto.
If the foregoing is in accordance with your understanding, please sign and return to us six counterparts hereof, and upon acceptance hereof by you, on behalf of each of the Underwriters, this letter and such acceptance hereof, including the provisions of the Underwriting Agreement incorporated herein by reference, shall constitute a binding agreement between each of the Underwriters and the Company and the Operating Entities. It is understood that your acceptance of this letter on behalf of each of the Underwriters is or will be pursuant to the authority set forth in a form of Agreement Among Underwriters, the form of which shall be submitted to the Company for examination upon request, but without warranty on the part of the Representatives as to the authority of the signers thereof.
Very truly yours,
United Dominion Realty Trust, Inc.
By: ______________________________
Name:
Title:
United Dominion Realty, L.P.
By: United Dominion Realty Trust, Inc.,
its General Partner
By: ______________________________
Name:
Title:
UDR Western Residential, Inc.
By: ______________________________
Name:
Title:
UDRT of North Carolina, L.L.C.
By: United Dominion Realty Trust, Inc.,
its sole member
By: _______________________________________
Name:
Title:
ASR Investments Corporation
By: _______________________________________
Name:
Title:
Accepted as of the date hereof:
On behalf of the Underwriters
SCHEDULE I
Principal Amount
of Designated
Securities
Underwriter to be Purchased
----------- -----------------
$
|
SCHEDULE II
Title of Designated Securities:
[ %] [Floating Rate] [Zero Coupon] [Notes]
[Debentures] due
Aggregate principal amount:
[$]
Price to Public:
% of the principal amount of the Designated Securities, plus accrued interest from _________ to _________ [and accrued amortization, if any, from _________ to _________]
Purchase Price by Underwriters:
% of the principal amount of the Designated Securities, plus accrued interest from _________ to _________ [and accrued amortization, if any, from _________ to _________]
Form of Designated Securities:
Specified funds for payment of purchase price:
Immediately Available Funds
Indenture:
Indenture dated _________, 199_, between the Company and _________, as Trustee
Maturity:
Interest Rate:
[ %] [Zero Coupon] [See Floating Rate Provisions]
Interest Payment Dates:
[Months and Dates]
Redemption Provisions:
[No provisions for redemption]
[The Designated Securities may be redeemed, otherwise than through the sinking fund, in whole or in part at the option of the Company, in the amount of [$ ] or an integral multiple thereof, ___________________________ [on or after _________, at the following redemption prices (expressed in percentages of principal amount to be redeemed). If (redeemed on or before _________, _________%, and if) redeemed during the 12-month period beginning ___________________________,
Year Redemption Price
and thereafter at 100% of their principal amount, together in each case with accrued interest to the redemption date.] [on any interest payment date falling on or after _________, _________, at the election of the Company, at a redemption price equal to the principal amount thereof, plus accrued interest to the date of redemption.]
[Other possible redemption provisions, such as mandatory redemption upon occurrence of certain events or redemption for changes in tax law]
[Restriction on refunding]
Sinking Fund Provisions:
[No sinking fund provisions]
[The Designated Securities are entitled to the benefit of a sinking fund to
retire [$ ] principal amount of Designated Securities on
_________ in each of the years _________ through _________ at 100% of their
principal amount plus accrued interest] [, together with [cumulative]
[noncumulative] redemptions at the option of the Company to retire an
additional [$ ] principal amount of Designated Securities in the
years through _________ at 100% of their principal amount plus accrued
interest].
Securities are extendable Debt Securities, insert--
Extendable provisions:
Securities are repayble on _________, [insert date and years], at the option of the holder, at their principal amount with accrued interest. Initial annual interest rate will _________%, and thereafter annual interest rate will be adjusted on _________, and
_________ to a rate not less than _________% of the effective annual
interest rate on U.S. Treasury obligations with _________-year maturities
as of the (insert date 15 days prior to maturity date] prior to such
[insert maturity date].]
Securities are Floating Rate debt Securities, insert--
Floating rate provisions:
Initial annual interest rate will be _________% through [and thereafter
will be adjusted [monthly] [on each _________, _________, _________ and] [
to an annual rate of _________% above the average rate for _____ year
[month] [securities] [certificates of deposit] issued by _________ and
[insert names of banks].] [and the annual interest rate [thereafter] [from
_________ through _______] will be the interest yield equivalent of the
weekly average per annum market discount rate for _________-month Treasury
bills plus ___% of Interest Differential (the excess, if any, of (i) then
current weekly average per annum secondary market yield for _________ -
month certificates of deposit over (ii) then current interest yield
equivalent of the weekly average per annum market discount rate for
_________ -month Treasury bills); [from and thereafter the rate will be the
then current interest yield equivalent plus _________% of Interest
Differential].]
Defeasance provisions:
Time of Delivery:
Closing Location for Delivery of Securities:
Names and addresses of Representatives:
Designated Representatives:
Address for Notices, etc.:
[Other Terms]*:
* A description of particular tax accounting or other unusual features (such as the addition of event risk provisions) of the Securities should be set forth, or referenced to an attached and accompanying description, if necessary to ensure agreement as to the terms of the Securities to be purchased and sold.
Such a description might appropriately be in the form in which such features shall be described in the Prospectus Supplement for the offering
Exhibit 1(a)
Banc of America Securities LLC
First Union Securities, Inc.
Chase Securities Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
Merrill Lynch, Pierce, Fenner & Smith Incorporated
c/o Banc of America Securities LLC
100 North Tryon Street
Charlotte, North Carolina 28255
February 29, 2000
Ladies and Gentlemen:
United Dominion Realty Trust, Inc., a Virginia corporation (the "Company"), proposes, subject to the terms and conditions stated herein and in the Underwriting Agreement, dated February 29, 2000 (the "Underwriting Agreement"), between the Company and the Operating Entities (as defined therein) on the one hand and Banc of America Securities LLC, First Union Securities, Inc., Chase Securities Inc., Donaldson, Lufkin & Jenrette Securities Corporation and Merrill Lynch, Pierce, Fenner & Smith Incorporated, on the other hand, to issue and sell to the Underwriters named in Schedule I hereto (the "Underwriters") the Securities specified in Schedule II hereto (the "Designated Securities"). Each of the provisions of the Underwriting Agreement is incorporated herein by reference in its entirety, and shall be deemed to be a part of this Agreement to the same extent as if such provisions had been set forth in full herein; and each of the representations and warranties set forth therein shall be deemed to have been made at and as of the date of this Pricing Agreement, except that each representation and warranty which refers to the Prospectus in Section 2 of the Underwriting Agreement shall be deemed to be a representation or warranty as of the date of the Underwriting Agreement in relation to the Prospectus (as therein defined), and also a representation and warranty as of the date of this Pricing Agreement in relation to the Prospectus as amended or supplemented relating to the Designated Securities which are the subject of this Pricing Agreement. Each reference to the Representatives herein and in the provisions of the Underwriting Agreement so incorporated by reference shall be deemed to refer to you. Unless otherwise defined herein, terms defined in the Underwriting Agreement are used herein as therein defined. The Representative designated to act on behalf of the Representatives and on behalf of each of the Underwriters of the Designated Securities pursuant to Section 12 of the Underwriting Agreement and the address of the Representatives referred to in such Section 12 are set forth at the end of Schedule II hereto.
An amendment to the Registration Statement, or a supplement to the Prospectus, as the case may be, relating to the Designated Securities, in the form heretofore delivered to you, is now proposed to be filed with the Commission.
Subject to the terms and conditions set forth herein and in the Underwriting Agreement incorporated herein by reference, the Company agrees to issue and sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, on the basis of the representations and warranties set forth herein and in such Underwriting Agreement, to purchase from the Company, at the time and place and at the purchase price to the Underwriters set forth in Schedule II hereto, the respective principal amount of Designated Securities set forth opposite the name of such Underwriter in Schedule I hereto.
If the foregoing is in accordance with your understanding, please sign and return to us six counterparts hereof, and upon acceptance hereof by you, on behalf of each of the Underwriters, this letter and such acceptance hereof, including the provisions of the Underwriting Agreement incorporated herein by reference, shall constitute a binding agreement between each of the Underwriters and the Company and the Operating Entities. It is understood that your acceptance of this letter on behalf of each of the Underwriters is or will be pursuant to the authority set forth in a form of Agreement among Underwriters, the form of which shall be submitted to the Company for examination upon request, but without warranty on the part of the Representatives as to the authority of the signers thereof.
Very truly yours,
United Dominion Realty Trust, Inc.
By:________________________________
Name:
Title:
United Dominion Realty, L.P.
By: United Dominion Realty Trust, Inc., its
General Partner
By:________________________________
Name:
Title:
UDR Western Residential, Inc.
By:________________________________
Name:
Title:
UDRT of North Carolina, L.L.C.
By: United Dominion Realty Trust, Inc., its
sole member
By:________________________________
Name:
Title:
ASR Investments Corporation
By:________________________________
Name:
Title:
Accepted as of the date hereof:
Banc of America Securities LLC
First Union Securities, Inc.
Chase Securities Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Acting severally on behalf of themselves and the several Underwriters
By: Banc of America Securities LLC
By:_______________________________
Name:
Title:
SCHEDULE I
Principal Amount of
Designated
Securities
Underwriter to be Purchased
----------- -------------------
Banc of America Securities LLC $ 70,000,000
First Union Securities, Inc. 20,000,000
Chase Securities Inc. 3,334,000
Donaldson, Lufkin & Jenrette Securities Corporation 3,333,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated 3,333,000
------------
Total $100,000,000
============
|
SCHEDULE II
Title of Designated Securities:
8.625% Notes Due 2003 (the "Notes")
Aggregate Principal Amount of Designated Securities:
$100,000,000
|
Initial Public Offering Price:
99.876% of the principal amount of the Notes, plus accrued interest, if any, from March 3, 2000.
Purchase Price by Underwriters:
99.526% of the principal amount of the Notes, plus accrued interest, if any, from March 3, 2000 (no accrued interest will be payable by the Underwriters in the case of Notes purchased by the Underwriters on March 3, 2000).
Form of Designated Securities:
Book-entry form represented by one or more global securities deposited with The Depository Trust Company and registered in the name of its nominee.
Specified funds for payment of purchase price:
Immediately available funds.
Indenture:
Indenture dated November 1, 1995, between the Company and First Union National Bank (formerly known as First Union National Bank of Virginia), as Trustee
Maturity:
March 15, 2003
Interest Rate:
8.625% per annum
Interest Payment Dates:
March 15 and September 15, commencing September 15, 2000.
Regular Record Dates:
March 1 and September 1
Redemption Provisions:
Not redeemable prior to maturity.
Sinking Fund Provisions:
No sinking fund provisions.
Defeasance provisions:
The provisions of Article 14 of the Indenture relating to defeasance and covenant defeasance will apply to the Notes.
Time of Delivery:
10 a.m., New York time, on March 3, 2000.
Closing Location for Delivery of Designated Securities:
Offices of Brown & Wood llp, One World Trade Center, New York, New York 10048-0557.
Names and addresses of Representatives:
Designated Representative:
Banc of America Securities LLC
Address for Notices, etc.:
Banc of America Securities LLC
100 North Tryon Street
Charlotte, North Carolina 28255
Attn: Ms. Lynn T. McConnell
Exhibit 4(ii)(g)(a)
RESOLUTIONS OF THE DEBT PRICING COMMITTEE
OF THE BOARD OF DIRECTORS OF
UNITED DOMINION REALTY TRUST, INC.
ADOPTED BY UNANIMOUS WRITTEN CONSENT
The undersigned members of the Debt Pricing Committee established by the resolutions adopted February 22, 2000 (the "Resolutions") of the Board of Directors of United Dominion Realty Trust, Inc. (the "Company"), by and in accordance with the authority granted to the Debt Pricing Committee in the Resolutions, do hereby adopt, by unanimous written consent, the following resolutions, terms used and not otherwise defined herein being defined in the Resolutions and in the Indenture (as defined below):
WHEREAS, the Debt Pricing Committee has determined to designate a series of Securities, which are herein referred to as the "Notes" pursuant to the Indenture dated as of November 1, 1995 (the "Indenture"), from the Company to First Union National Bank, as Trustee (the "Trustee"); and
WHEREAS, the Debt Pricing Committee has determined to offer and sell the Notes to Banc of America Securities LLC, First Union Securities, Inc., Chase Securities Inc., Donaldson, Lufkin & Jenrette Securities Corporation and Merrill Lynch, Pierce, Fenner & Smith Incorporated (collectively, the "Underwriters"), pursuant to an underwriting agreement between the Company, the Operating Entities (as defined in the Underwriting Agreement) and the Underwriters and a related pricing agreement between the Company, the Operating Entities and the Underwriters (together, the "Underwriting Agreement") for reoffering by the Underwriters to the public.
NOW THEREFORE BE IT RESOLVED, that in accordance with Section 301 of the Indenture, the following terms of the Notes are hereby established (terms not defined in these resolutions having the definitions specified in the Indenture):
1. The Notes shall constitute a series of Securities having the title "8.625% Notes Due 2003."
2. The aggregate principal amount of the Notes that may be authenticated and delivered under the Indenture (except for Notes authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Notes pursuant to Sections 304, 305, 306 or 906 of the Indenture) shall be $100,000,000. Notwithstanding the foregoing, this series of Securities may be reopened, without the consent of the Holders, for issuances of additional Notes so long as any such additional Notes carry the same rights to accrued and unpaid interest, and otherwise have the same terms and provisions and are in substantially the same form, as the Notes then outstanding.
3. The entire outstanding principal of the Notes shall be payable on March 15, 2003.
4. The rate at which the Notes shall bear interest shall be 8.625% per annum; the date from which such interest shall accrue shall be March 3, 2000 or the most recent Interest Payment Date to which interest has been paid or duly provided for; the Interest Payment Dates on which such interest will be payable shall be March 15 and September 15 of each year, commencing September 15, 2000; the Regular Record Dates for the interest payable on the Notes on any Interest Payment Date shall be the March 1 or September 1 next preceding an Interest Payment Date; and the basis upon which interest shall be calculated shall be that of a 360-day year consisting of twelve 30-day months.
5. The Borough of Manhattan, The City of New York, Charlotte, North Carolina, and Richmond, Virginia, are each designated as a Place of Payment for the Notes; the office or agency of the Company where Notes may be presented or surrendered for payment, where Notes may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Notes and the Indenture may be served, shall initially be (i)in the Borough of Manhattan, The City of New York, the office of the Trustee at 40 Broad Street, Suite 55, New York, New York 10004 and (ii) in Charlotte, North Carolina, the Corporate Trust Operations Office of the Trustee at 1525 West W.T. Harris Boulevard, 3C3, Charlotte, North Carolina 28262-1153, and (iii) in Richmond, Virginia, the Corporate Trust Office of the Trustee at 800 East Main Street, Lower Mezzanine, Richmond, Virginia 23219. The Trustee is hereby appointed as initial Paying Agent, transfer agent and Securities Registrar for the Notes.
6. The Notes shall not be subject to redemption at the option of the Company or subject to redemption at the option of the Holders and will not be subject to any mandatory sinking fund requirements.
7. Neither payments of principal of nor interest on the Notes shall be determined with reference to an index, formula or other similar method.
8. Neither principal of nor interest on the Notes shall be payable in a currency other than that in which they are denominated.
9. The Notes shall be issuable only as Registered Securities in permanent global form (without coupons) and will be issued in denominations of $1,000 and integral multiples thereof. Beneficial owners of interests in the permanent global Note may exchange such interests for definitive certificated Notes registered in a name other than that of the Depository or its nominee only in the manner provided in Section 305 of the Indenture. DTC shall be the depository with respect to the permanent global Note Due 2000. The form of such permanent global Note attached hereto as Exhibit A is hereby approved, with such changes therein as the officer executing the same on behalf of the Company shall approve, such approval to be conclusively evidenced by the execution thereof. In the event that the Notes in definitive certificated form are issued under the circumstances contemplated by Section 305 of the Indenture, such Notes shall be in
substantially the same form as the permanent global Note Due 2000, except they shall not bear the legend set forth on Exhibit A and shall have such further changes as may be approved by any officer of the Company executing such certificates on behalf of the Company, such approval to be conclusively evidenced by such execution.
10. Except as provided in Section 307 of the Indenture with respect to Defaulted Interest, interest on any Note shall be payable only to the Person in whose name that Note (or one or more Predecessor Securities thereof) is registered at the close of business on the Regular Record Date for such interest.
11. Sections 1402 and 1403 of the Indenture shall be applicable to the Notes.
12. The Company shall not pay Additional Amounts as contemplated by
Section 1011 of the Indenture on the Notes.
RESOLVED, that the Notes shall be sold to the Underwriters at a price equal to 99.526% of the principal amount thereof, plus accrued and unpaid interest thereon, if any, and the initial public offering price of the Notes shall be 99.876% of the principal amount thereof plus any accrued and unpaid interest thereon, if any; and further
RESOLVED, that, on behalf of the Company, in its own right, as general partner of United Dominion Realty, L.P. (the "Operating Partnership"), and as sole member of UDRT of North Carolina, L.L.C. ("North Carolina"), this Committee hereby approves the Underwriting Agreement, substantially in the form presented to this Committee in connection with the adoption of these resolutions; and further
RESOLVED, that each of the Chairman, President and Chief Executive Officer, the Executive Vice President and Chief Financial Officer, the Senior Vice President of Finance and the Senior Vice President, Secretary and General Counsel is authorized, in the name and on behalf of the Company, in its own right, and, where appropriate, as general partner of the Operating Partnership and as sole member of North Carolina, and (in the case of the certificates evidencing the Notes) under its corporate seal attested by its Secretary or an Assistant Secretary, to execute and deliver the Notes and the Underwriting Agreement, substantially in the respective forms approved hereby, with such changes as shall have been approved by the executing officer, such approval to be conclusively evidenced by the execution (by manual or facsimile signature) thereof by the executing officer), provided that any such change shall be consistent with all determinations made by the Debt Pricing Committee in these resolutions; and further
RESOLVED, that the form, terms and provisions of the Indenture, and the execution and delivery thereof by the officers of the Company who signed and attested the Indenture, be, and the same hereby are, ratified, confirmed and approved in all respects; and further
RESOLVED, that all officers of the Company are, and each of them acting singly is hereby authorized, in the name and on behalf of the Company, to make, execute and deliver or cause to be made, executed and delivered, and to evidence the approval of the Board of Directors and this Debt Pricing Committee of, all such officers' certificates, depository agreements, letters of representation or other agreements or arrangements necessary or appropriate in connection with the administration of any book-entry arrangements for the Notes and such other agreements,
undertakings, documents or instruments, and to perform all such acts and make all such payments, as may, in the judgment of any such officer, be necessary, appropriate or desirable to effectuate the purpose of these resolutions, including the performance of the obligations of the Company under the Indenture, the Notes and the Registration Statement, and the obligations of the Company, the Operating Partnership and North Carolina under the Underwriting Agreement or any other agreement, undertaking, document or instrument referred to herein or therein; and further
RESOLVED, that and any and all action heretofore taken by the officers of the Company pursuant to the authority conferred by the preceding resolutions and consistent therewith is ratified, approved and confirmed.
The foregoing resolutions are effective as of February 29, 2000. The undersigned waive any and all notice requirements with respect to the actions taken hereby.
March __, 2000 ____________________________________
John P. McCann
March __, 2000 ____________________________________
A. William Hamill
March __, 2000 ____________________________________
Kevin W. Walsh
|
EXHIBIT A
Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the Company (as defined below) or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.
REGISTERED PRINCIPAL AMOUNT
No.:R1 $100,000,000
CUSIP No.: 910197AG7
UNITED DOMINION REALTY TRUST, INC.
8.625% NOTE DUE 2003
|
UNITED DOMINION REALTY TRUST, INC., a Virginia corporation (hereinafter called the "Company," which term shall include any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to CEDE & CO., or registered assigns, upon presentation, the principal sum of ONE HUNDRED MILLION DOLLARS on March 15, 2003, and to pay interest on the outstanding principal amount thereon from March 3, 2000, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually in arrears on March 15 and September 15 in each year, commencing September 15, 2000, at the rate of 8.625% per annum, until the entire principal amount hereof is paid or made available for payment. Interest on this Note shall be calculated on the basis of a 360-day year consisting of twelve 30-day months. The interest so payable, and punctually paid or duly provided for on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on the Regular Record Date for such interest which shall be the March 1 or September 1 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date, and may either be paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Notes of this series not more than 15 days and not less than 10 days prior to such Special Record Date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture. Payment of the principal of and interest on this Note will be made at the office or agency of the Company maintained for that purpose in the City of Richmond, State of Virginia, or elsewhere as provided in the Indenture, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company payment of interest may
be made by (i) check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register kept for the Notes pursuant to Section 305 of the Indenture (the "Note Register") or (ii) transfer to an account of the Person entitled thereto located inside the United States.
This Note is one of a duly authorized issue of securities of the Company (herein called the "Notes"), issued and to be issued in one or more series under an Indenture, dated as of November 1, 1995 (herein called the "Indenture"), between the Company and First Union National Bank (formerly First Union National Bank of Virginia) (herein called the "Trustee," which term includes any successor trustee under the Indenture with respect to the Notes), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered. This Note is one of the series designated as the "8.625% Notes Due 2003," initially limited in aggregate principal amount to $100,000,000.
This Note is not redeemable at the option of the Company.
The Indenture contains provisions for defeasance at any time of (a) the entire indebtedness of the Company on this Note and (b) certain restrictive covenants and the related defaults and Events of Default applicable to the Company, in each case, upon compliance by the Company with certain conditions set forth in the Indenture, which provisions apply to this Note.
If an Event of Default with respect to the Notes shall occur and be continuing, the principal of the Notes may be declared due and payable in the manner and with the effect provided in the Indenture.
As provided in and subject to the provisions of the Indenture, the Holder of this Note shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Notes, the Holders of not less than 25% in principal amount of the Notes at the time Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable indemnity and the Trustee shall not have received from the Holders of a majority in principal amount of the Notes at the time Outstanding a direction inconsistent with such request, and shall have failed to institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Note for the enforcement of any payment of principal hereof or any interest on or after the respective due dates expressed herein.
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Notes under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than a majority in principal amount of the Outstanding Notes. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Notes at the time Outstanding, on behalf of the Holders of all Notes, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note.
No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, places and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note is registrable in the Note Register, upon surrender of this Note for registration of transfer at the office or agency of the Company in any Place of Payment where the principal of and interest on this Note are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar for the Notes (the "Note Registrar") duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes of this series, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.
The Notes are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Notes are exchangeable for a like aggregate principal amount of Notes of a different authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.
No recourse under or upon any obligation, covenant or agreement contained in the Indenture or in this Note, or because of any indebtedness evidenced thereby, shall be had against any promoter, as such or, against any past, present or future shareholder, officer or director, as such, of the Company or of any successor, either directly or through the Company or any successor, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance of this Note by the Holder thereof and as part of the consideration for the issue of the Notes.
All terms used in this Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture.
THE INDENTURE AND THE NOTES, INCLUDING THIS NOTE, SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE COMMONWEALTH OF VIRGINIA.
Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused "CUSIP" numbers to be printed on the Notes as a convenience to the Holders of the Notes. No representation is made as to the correctness or accuracy of such CUSIP numbers as printed on the Notes, and reliance may be placed only on the other identification numbers printed hereon.
Unless the certificate of authentication hereon has been executed by or on behalf of the Trustee by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal this 3rd day of March, 2000.
UNITED DOMINION REALTY TRUST, INC.
By:__________________________________________
Name: Kevin W. Walsh
Title: Senior Vice President of Finance
[SEAL]
Attest:
By:_________________________________
Name: Katheryn E. Surface
Title: Senior Vice President and Secretary
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Notes of the series designated "8.625% Notes Due 2003" pursuant to the within-mentioned Indenture.
FIRST UNION NATIONAL BANK,
as Trustee
By:_________________________________
Authorized Signatory
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
_______________________________.................................................
................................................................................
................................................................................
................................................................................
(Please Print or Typewrite Name and Address including
Zip Code of Assignee)
................................................................................ the within Note of United Dominion Realty Trust, Inc., and irrevocably constitutes and appoints
................................................................................ Attorney to transfer said Note on the books of the within-named Company with full power of substitution in the premises.
Dated: . . . . . ..............................................
.............................................
NOTICE: The signature to this assignment must correspond with the name as it appears on the first page of the within Note in every particular, without alteration or enlargement or any change whatever.
Exhibit 4(ii)(g)(b)
Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the Company (as defined below) or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.
REGISTERED PRINCIPAL AMOUNT
No.: R1 $100,000,000
CUSIP No.: 910197AG7
UNITED DOMINION REALTY TRUST, INC.
8.625% NOTE DUE 2003
|
UNITED DOMINION REALTY TRUST, INC., a Virginia corporation (hereinafter called the "Company," which term shall include any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to CEDE & CO., or registered assigns, upon presentation, the principal sum of ONE HUNDRED MILLION DOLLARS on March 15, 2003, and to pay interest on the outstanding principal amount thereon from March 3, 2000, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually in arrears on March 15 and September 15 in each year, commencing September 15, 2000, at the rate of 8.625% per annum, until the entire principal amount hereof is paid or made available for payment. Interest on this Note shall be calculated on the basis of a 360-day year consisting of twelve 30-day months. The interest so payable, and punctually paid or duly provided for on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on the Regular Record Date for such interest which shall be the March 1 or September 1 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date, and may either be paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Notes of this series not more than 15 days and not less than 10 days prior to such Special Record Date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture. Payment of the principal of and interest on this Note will be made at the office or agency of the Company maintained for that purpose in the City of Richmond, State of Virginia, or elsewhere as provided in the Indenture, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company payment of interest may be made by (i) check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register kept for the Notes pursuant to Section 305 of the Indenture (the
"Note Register") or (ii) transfer to an account of the Person entitled thereto located inside the United States.
This Note is one of a duly authorized issue of securities of the Company (herein called the "Notes"), issued and to be issued in one or more series under an Indenture, dated as of November 1, 1995 (herein called the "Indenture"), between the Company and First Union National Bank (formerly First Union National Bank of Virginia) (herein called the "Trustee," which term includes any successor trustee under the Indenture with respect to the Notes), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered. This Note is one of the series designated as the "8.625% Notes Due 2003," initially limited in aggregate principal amount to $100,000,000.
This Note is not redeemable at the option of the Company.
The Indenture contains provisions for defeasance at any time of (a) the entire indebtedness of the Company on this Note and (b) certain restrictive covenants and the related defaults and Events of Default applicable to the Company, in each case, upon compliance by the Company with certain conditions set forth in the Indenture, which provisions apply to this Note.
If an Event of Default with respect to the Notes shall occur and be continuing, the principal of the Notes may be declared due and payable in the manner and with the effect provided in the Indenture.
As provided in and subject to the provisions of the Indenture, the Holder of this Note shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Notes, the Holders of not less than 25% in principal amount of the Notes at the time Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable indemnity and the Trustee shall not have received from the Holders of a majority in principal amount of the Notes at the time Outstanding a direction inconsistent with such request, and shall have failed to institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Note for the enforcement of any payment of principal hereof or any interest on or after the respective due dates expressed herein.
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Notes under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than a majority in principal amount of the Outstanding Notes. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Notes at the time Outstanding, on behalf of the Holders of all Notes, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note.
No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, places and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note is registrable in the Note Register, upon surrender of this Note for registration of transfer at the office or agency of the Company in any Place of Payment where the principal of and interest on this Note are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar for the Notes (the "Note Registrar") duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes of this series, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.
The Notes are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Notes are exchangeable for a like aggregate principal amount of Notes of a different autho rized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.
No recourse under or upon any obligation, covenant or agreement contained in the Indenture or in this Note, or because of any indebtedness evidenced thereby, shall be had against any promoter, as such or, against any past, present or future shareholder, officer or director, as such, of the Company or of any successor, either directly or through the Company or any successor, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance of this Note by the Holder thereof and as part of the consideration for the issue of the Notes.
All terms used in this Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture.
THE INDENTURE AND THE NOTES, INCLUDING THIS NOTE, SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE COMMONWEALTH OF VIRGINIA.
Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused "CUSIP" numbers to be printed on the Notes as a convenience to the Holders of the Notes. No representation is made as to the correctness or accuracy of such CUSIP numbers as printed on the Notes, and reliance may be placed only on the other identification numbers printed hereon.
Unless the certificate of authentication hereon has been executed by or on behalf of the Trustee by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal this 3rd day of March, 2000.
UNITED DOMINION REALTY TRUST, INC.
By:___________________________________________
Name: Kevin W. Walsh
Title: Senior Vice President of Finance
[SEAL]
Attest:
By:____________________________________
Name: Katheryn E. Surface
Title: Senior Vice President and Secretary
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Notes of the series designated "8.625% Notes Due 2003" pursuant to the within-mentioned Indenture.
FIRST UNION NATIONAL BANK,
as Trustee
By:_________________________________
Authorized Signatory
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL
SECURITY OR OTHER IDENTIFYING
NUMBER OF ASSIGNEE
____________________________ ..............................................
................................................................................
................................................................................
................................................................................
(Please Print or Typewrite Name and Address including
Zip Code of Assignee)
................................................................................ the within Note of United Dominion Realty Trust, Inc., and irrevocably constitutes and appoints
................................................................................ Attorney to transfer said Note on the books of the within-named Company with full power of substitution in the premises.
Dated: . . . . . ...................................................
...................................................
NOTICE: The signature to this assignment must correspond with the name as it appears on the first page of the within Note in every particular, without alteration or enlargement or any change whatever.
Exhibit 10(ix)
UNITED DOMINION REALTY TRUST, INC.
1999 LONG-TERM INCENTIVE PLAN
SUMMARY OF
RESTRICTED STOCK AWARDS
GENERAL INFORMATION REGARDING THE PLAN
United Dominion Realty Trust, Inc.'s Restricted Stock Award program is a subplan of the United Dominion Realty Trust, Inc. 1999 Long-Term Incentive Plan (the "Plan"). This summary is not complete, and you should refer to the full text of the Plan for further information. The purpose of the Plan is to promote the success, and enhance the value, of the Company by linking the personal interests of employees, officers and directors to those of the shareholders, and by providing such employees, officers and directors with an incentive for outstanding performance.
Administration
The Plan is administered by the Compensation Committee of the Board of Directors of the Company (the "Committee"). The Committee has the power, authority and discretion to designate participants; determine the type or types of awards to be granted to each participant and the number, terms and conditions of any award; establish, adopt or revise any rules and regulations as it may deem necessary or advisable to administer the Plan; and make all other decisions and determinations that may be required under, or as the Committee deems necessary or advisable to administer, the Plan.
Terms Generally Applicable to Discretionary Awards
Limitations on Transfer; Beneficiaries. No award will be assignable or transferable by a participant other than by will or the laws of descent and distribution or, except in the case of an incentive stock option, pursuant to a qualified domestic relations order; provided, however, that the Committee may (but need not) permit other transfers where the Committee concludes that such transferability (1) does not result in accelerated taxation, (2) does not cause any option intended to be an incentive stock option to fail to qualify as such, and (3) is otherwise appropriate and desirable, taking into account any factors deemed relevant, including without limitation, any state or federal tax or securities laws or regulations applicable to transferable awards. A participant may, in the manner determined by the Committee, designate a beneficiary to exercise the rights of the participant and to receive any distribution with respect to any award upon the participant's death.
Acceleration Upon Certain Events. Upon the participant's death or disability all outstanding awards in the nature of rights that may be exercised will become fully exercisable and all restrictions on
outstanding awards will lapse. In the event of a Change in Control of the Company (as defined in the Plan), all outstanding awards in the nature of rights that may be exercised will become fully vested and all restrictions on all outstanding awards will lapse; provided, however that such acceleration will not occur if, in the opinion of the Company's accountants, such acceleration would preclude the use of "pooling of interest" accounting treatment for a Change in Control transaction that would otherwise qualify for such accounting treatment and is contingent upon qualifying for such accounting treatment. Regardless of whether an event described above shall have occurred, the Committee may in its sole discretion declare all outstanding awards in the nature of rights that may be exercised to become fully vested, and/or all restrictions on all outstanding awards to lapse, in each case as of such date as the Committee may, in its sole discretion, declare. The Committee may discriminate among participants or among awards in exercising such discretion.
Termination and Amendment
The Board or the Committee may, at any time and from time to time, terminate, amend or modify the Plan without shareholder approval; provided, however, that the Committee may condition any amendment on the approval of shareholders of the Company if such approval is necessary or deemed advisable with respect to tax, securities or other applicable laws, policies or regulations. No termination, amendment, or modification of the Plan may adversely affect any award previously granted under the Plan, without the written consent of the participant. The Committee may amend any outstanding award without approval of the participant; provided that no such amendment may diminish the value of such award determined as if it has been exercised, vested, cashed in or otherwise settled on the date of such amendment, and the exercise price of any option may not be reduced.
Other Information
The Plan is not subject to any provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The Plan also is not subject to or qualified under Section 401 of the Internal Revenue Code. No one has or may create a lien on any funds, securities or other property held under the Plan.
Exhibit 10(x)
UNITED DOMINION REALTY TRUST, INC.
SHAREHOLDER VALUE PLAN
SECTION 1 PURPOSE
1.1 Background. The Shareholder Value Plan (the "Shareholder Value Plan") is a subplan of the United Dominion Realty Trust, Inc. 1999 Long-Term Incentive Plan (the "LTIP"), consisting of a program for the systematic grant of Performance Units under Article 9 of the LTIP. The Shareholder Value Plan has been established and approved, and will be administered by, the Committee pursuant to the terms of the LTIP.
1.2 Purpose. The purpose of the Shareholder Value Plan is:
(a) to increase a Participant's economic interest in the long-term success of the Company,
(b) to encourage Participants to continue employment with the Company, and
(c) to reward Participants for achieving long-term goals.
1.3 Effective Date. The Shareholder Value Plan is effective January 1.
SECTION 2 ELIGIBILITY
2.1 Eligibility. Participation in the Shareholder Value Plan shall be limited to key executives of the Company who are members of a select group of highly compensated or management employees who, through the effective execution of their assigned duties and responsibilities, are in a position to have a direct and measurable impact on the Company's long-term financial results, and are designated by the Committee to be eligible for a SVP Performance Unit Grant.
SECTION 3 DEFINITIONS
3.1 Defined Terms. Capitalized terms used herein and not otherwise defined shall have the meanings assigned such terms in the LTIP. In addition, the following terms shall have the following meanings.
Deferred Compensation Plan. The United Dominion Realty Trust, Inc. Executive Deferred Compensation Plan, as amended from time to time, or any successor plan or plans.
Payout Matrix. The matrix adopted by the Committee with respect to a Performance Period equating Unit Value to Performance Results. The initial Payout Matrix is set forth on Exhibit A hereto. Such Payout Matrix shall apply to the first Performance Period and all subsequent Performance Periods unless a different Payout Matrix is adopted by the Committee for any subsequent Performance Period.
Performance Period. A period of no less than three full fiscal years over which performance is measured for purposes of determining Performance Results. The Performance Period may be a rolling period.
Performance Results. The Performance Results with respect to any Performance Period shall be a measure of the Company's Total Shareholder Return (as calculated by the sum total of yield plus appreciation/depreciation in the price of the Company's common stock over the Performance Period) as ranked or compared to such indices or competitors as the Committee may, in its sole discretion, determine.
SVP Award. The value of an SVP Performance Unit Grant at the end of a Performance Period, calculated as the product of the SVP Performance Unit Grant multiplied by the Unit Value.
SVP Performance Unit. An SVP Performance Unit is a unit of long term incentive compensation granted under this Shareholder Value Plan, pursuant to the LTIP. An SVP Performance Unit shall have an initial value of zero dollars.
SVP Performance Unit Grant. The total number of SVP Performance Units granted to a Participant for a particular Performance Period.
Targeted SVP Compensation. The target compensation under the Shareholder Value Plan for a Participant with respect to a Performance Period, expressed in dollars and based on a percentage (determined by the Committee) of the Participant's total annual base compensation for the year in which the SVP Performance Unit Grant is made.
Total Shareholder Return (TSR). The sum total of yield plus appreciation/depreciation in the price of the Company's common stock over a specified period of time.
Unit Value. Unit Value shall be the value of each SVP Performance Unit based upon Performance Results, as determined by reference to the Payout Matrix. Initially, the Unit Values shall be determined by reference to the Payout Matrix set out on the attached Exhibit A. Unit Values for Performance Results between those shown in Exhibit A shall be determined by straight line interpolation.
SECTION 4 OPERATION
4.1 Performance Periods. The initial Performance Period hereunder is the three-year period beginning on January 1, 1999 and ending on December 31, 2001. The Committee shall determine and declare subsequent Performance Periods from time to time.
4.2 SVP Performance Unit Grants. At the beginning of a Performance Period (or such later date as may be permitted under Code Section 162(m) or the regulations thereunder), the Committee will determine the total number of SVP Performance Unit Grants that will be granted, which Participants will receive SVP Performance Unit Grants, and the amount of each Participant's SVP Performance Unit Grant.
4.3 Determination of SVP Performance Unit Grants. An SVP Performance Unit Grant will consist of a number of SVP Performance Units granted to any one Participant as determined by the Committee, in its sole discretion, at the beginning of each Performance Period (or in the case of a newly hired or newly promoted Participant, at such time as the Committee shall determine) as follows:
4.4 Timing of Grants. The Committee may elect to make an SVP Performance Unit Grant at any time provided that the beginning of a Performance Period coincides with the beginning of the Company's fiscal year. However, with respect to a newly hired or newly promoted Participant(s), the Committee may issue SVP Performance Unit Grants for the current Performance Period provided such Participant(s) is hired or promoted within the first three months of such Performance Period.
4.5 Amount of SVP Award. At the end of each Performance Period the
Committee shall determine in writing the Unit Value based upon the Payout Matrix
and make SVP Awards to each Participant equal to the Unit Value multiplied by
the number of the Participant's outstanding SVP Performance Units. For example:
the Participant's annual base compensation is $100,000 and the Targeted SVP
Compensation is 30% or $30,000. $30,000/$1000 = 30. The Participant is granted
30 SVP Performance Units on January 1, 1999 for the Performance Period starting
on that date. At the end of the Performance Period (December 31, 2001) the
Performance Results are 125% as shown on the Payout Matrix set out on Exhibit A.
The Unit Value will, therefore, be $1000. The Participant's SVP Award will be
$30,000. Notwithstanding the above, the Committee may for any reason reduce (but
not increase) any SVP Award.
4.6 Termination of Employment or Change in Control During Performance Period:
4.7 Form and Payment of SVP Award. An SVP Award may be made in either a cash amount or a number of shares of Stock, in the sole discretion of the Committee. Unless deferred as provided in Section 4.8 below, payment of the SVP Award shall be as soon after the close of a Performance Period as practical (within 120 days after a Change of Control transaction has been completed).
4.8 SVP Award Deferrals. On or before the end of the third calendar quarter of the final year of a Performance Period, a Participant who is eligible to participate in the Executive Deferred Compensation Plan may elect to defer receipt of his or her SVP Award with respect to such Performance Period under the Executive Deferred Compensation Plan. Any amount so deferred will be governed by the terms of the Executive Deferred Compensation Plan. Such election shall be made by filing with the director of human resources of the Company an election form in accordance with Section 4.01 of the Executive Deferred Compensation Plan. The
deferral election will be irrevocable except as provided in the Executive Deferred Compensation Plan.
SECTION 5 MISCELLANEOUS PROVISIONS
5.1 Grant Limitations. The maximum fair market value (measured as of the date of grant) of any SVP Performance Unit Grant to a Covered Employee (as defined in the LTIP) is $1,000,000.
5.2 Nontransferability of SVP Performance Units. SVP Performance Units may not be transferred, assigned, pledged or encumbered.
5.3 Amendment and Termination. The Committee may terminate, amend or modify the Shareholder Value Plan at any time in any respect it deems advisable, without prior notice; provided that: (i) any SVP Awards deferred by a Participant pursuant to Section 5 shall be paid as directed by such Participant; and (ii) the Shareholder Value Plan may be terminated only prospectively and any current Performance Periods for which Unit Values have not been determined shall continue until the end of such Performance Period, at which time SVP Awards shall be made pursuant to this Shareholder Value Plan.
5.4 Right to Terminate Employment. Nothing contained in the Shareholder Value Plan shall confer upon any person a right to be employed by or to continue in the employ of the Company or its Subsidiaries or interfere in any way with the right of the Company or any Subsidiary to terminate the employment of a Participant at any time, with or without cause.
5.5 Finality of Determinations. The Committee shall have the discretion to construe and interpret the provisions of the Shareholder Value Plan, and to administer the Shareholder Value Plan. Each determination, interpretation, or other action made by the Company or the Committee shall be final and binding for all purposes. The Company may, but is not required to, utilize a mediator to facilitate the resolution of any dispute, and such mediator shall be a disinterested party to the dispute.
5.6 Withholding. In accordance with Section 17.3 of the LTIP, the Company or employer Subsidiary shall have the authority and the right to deduct or withhold, or require a Participant to remit to the Company or such Subsidiary, an amount sufficient to satisfy federal, state, and local taxes (including the Participant's FICA obligation) required by law to be withheld with respect to any taxable event arising as a result of the Shareholder Value Plan.
5.7 Grants Discretionary. No employee or other person shall have any claim or right to receive a SVP Performance Unit Grant under the Shareholder Value Plan.
5.8 Severability. If any provision of this Shareholder Value Plan is held to be illegal, invalid, or unenforceable under present or future laws effective during the term hereof, the remaining provisions hereof shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision. Furthermore, in lieu of such illegal or unenforceable provision, there shall be added automatically as a part of this Shareholder Value Plan a provision as similar in terms to such illegal, invalid, or unenforceable
provision as may be possible and still be legal, valid and enforceable.
5.9 LTIP Controls. This Shareholder Value Plan is adopted pursuant to and shall be governed by and construed in accordance with the LTIP. In the event of any actual or alleged conflict between the provisions of the LTIP and the provisions of this Shareholder Value Plan, the provisions of the LTIP shall be controlling and determinative.
EXHIBIT A
Payout Matrix
under the
United Dominion Realty Trust, Inc.
Shareholder Value Plan
Composite Index: NAREIT Equity Apartment Index
---------------------------------------------------------------------------------------------
Performance Level Total Shareholder Return SVP Unit Value
(TSR) as a Percentage of
TSR of Composite Index
---------------------------------------------------------------------------------------------
less than 110% $ 0
---------------------------------------------------------------------------------------------
Threshold 110% $ 500
---------------------------------------------------------------------------------------------
Target 125% $1,000
---------------------------------------------------------------------------------------------
140% $1,500
---------------------------------------------------------------------------------------------
160% $2,000
---------------------------------------------------------------------------------------------
180% $2,500
---------------------------------------------------------------------------------------------
Maximum 200% or more $3,000
---------------------------------------------------------------------------------------------
|
Exhibit 10(xi)
UNITED DOMINION REALTY TRUST, INC.
EXECUTIVE DEFERRAL PLAN
SUMMARY
GENERAL INFORMATION REGARDING THE PLAN
The United Dominion Realty Trust, Inc. Executive Deferral Plan (the "EDP") is a non-qualified deferred compensation plan for key executives of the Company. Participants may defer a portion of salary or bonuses into the EDP on a pre-tax basis. Participants may direct investment of their deferrals into selected funds, which mirror those provided under the Company's 401(k) and Profit Sharing Plan. The Plan is administered by the 401(k) Committee of the Board of Directors of the Company (the "Committee"). The Board of Directors may amend or terminate the EDP, provided that no amendment may cause a reduction in participants' accounts. If the EDP is terminated, no future contributions may be made to the EDP, but all participant accounts existing at the time of termination will
continue to be governed by the terms of the EDP until paid out.
Exhibit 10(xii)
THIS EMPLOYMENT AGREEMENT ("Agreement"), entered into this 8th day of December, 1998, between UNITED DOMINION REALTY TRUST, INC., a Virginia corporation (the "Company") and CURTIS W. CARTER (the "Executive"), recites and provides as follows:
R E C I T A L S:
The Executive is a senior executive of the Company, and the Company now desires to reward the Executive for past performance and provide for the continued employment of the Executive upon the terms set forth in this Agreement.
A G R E E M E N T:
NOW, THEREFORE, in consideration of the foregoing, and the mutual promises and undertakings hereinafter set forth, and the payments to be made to the Executive hereunder, the parties hereto agree as follows:
a. The Company hereby agrees to and hereby does continue to employ the Executive as an executive officer of the Company, subject to the supervision of the Chief Operating Officer of the Company, or such other senior officer of the Company as may be prescribed by the Chief Executive Officer or the Board of Directors of the Company (the "Board"). Currently, the Executive is Senior Vice President and reports to the Chief Operating Officer, and is responsible for the Northern Region operations of the Company.
The Executive agrees that the description of the executive position above shall not limit the Company from assigning to the Executive such other duties and functions in addition to or in substitution of those described above.
b. The Executive agrees to serve the Company as a full time executive
officer with duties and authority as set forth in the Company's by-laws or as
otherwise prescribed by the Board, the Chief Operating Officer, or such other
senior officer prescribed by the Chairman, President or the Board. The
Executive shall devote such time, attention, skill, and efforts to the
performance of his duties as a Company executive as shall be required therefore,
all under the supervision and direction of the Board, the Chief Operating
Officer, or such other senior officer prescribed by the Board. The Executive
agrees that during the period of his employment he will not, without the
approval of a majority of the independent directors of the Board, have any other
(i) real estate investment trust or business affiliations, or (ii) corporate
affiliations that conflict with the business
of the Company or interfere with the ability of the Executive to perform his duties for the Company or comply with the covenants under this Agreement.
This Agreement will take effect as of the date of this Agreement and will end on December 31, 1998. After December 31, 1998, this Agreement will automatically renew for successive one (1) year periods, ending as of December 31 of each year, unless sooner terminated in accordance with Section 4.
Company, which may be modified from time to time (the "T&E Guidelines"). The Company at the end of each month during the period of this Agreement will, upon submission of appropriate bills or vouchers, reimburse expenses incurred by the Executive during such month in compliance with the T&E Guidelines. The Executive agrees to maintain adequate records, in such detail as the Company may reasonably request, of all expenses to be reimbursed by the Company hereunder and to make such records available for inspection as and when reasonably requested by the Company.
Compensation"). Compensation pursuant to paragraph 3(c) (long term incentive compensation) shall be governed by the terms of the subject plans.
(i) The Executive is convicted of or pleads nolo contendere to any crime, other than a traffic offense or misdemeanor;
(ii) The Executive shall commit, with respect to the Company, an act of fraud or embezzlement or shall have been grossly negligent in the performance of his duties hereunder;
(iii) The Executive engages in gross dereliction of duties, refusal to perform assigned duties consistent with his position, or repeated violation of the Company's policies after written warning; or,
(iv) The Executive engages in drug abuse.
Company, or (iv) the acquisition by any person or by a group of persons acting in concert, of more than 50% of the outstanding voting securities of the Company, which results in the resignation or addition of fifty percent (50%) or more members of the Board or the resignation or addition of fifty percent (50%) or more independent members of the Board.
(i) Notwithstanding anything in this Agreement to the contrary, in the event it shall be determined that any benefit, payment or distribution by the Company to or for the benefit of Executive (whether payable or distributable pursuant to the terms of this Agreement or otherwise)(such benefits, payments or distributions are hereinafter referred to as "Payments") would, if paid, be subject to the excise tax (the "Excise Tax") imposed by Section 4999 of the Code, then the aggregate present value of the Payments shall be reduced (but not below zero) to an amount expressed in present value that maximizes the aggregate present value of the Payments without causing the Payments or any part thereof to be subject to the Excise Tax and therefore nondeductible by the Company because of Section 280G of the Code (the "Reduced Amount"). For purposes of this Section, present value shall be determined in accordance with Section 280G(d)(4) of the Code.
(ii) All determinations required to be made under this Section, including whether an Excise Tax would otherwise be imposed, whether the Payments shall be reduced, the amount of the Reduced Amount, and the assumptions to be utilized in arriving at such determinations, shall be made by Ernst & Young, LLP or such other certified public accounting firm acceptable to the Company, in its sole discretion (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and Executive within fifteen (15) business days of the receipt of notice from Executive that a Payment is due to be made, or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any determination by the Accounting Firm shall be binding upon the Company and Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Payments hereunder will have been unnecessarily limited by this Section ("Underpayment"), consistent with the calculations required to be made hereunder. The Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of Executive.
(i) the assignment to the Executive of any duties inconsistent with the Executive's position and status as head of operations for the Northern Region, or a substantial adverse alteration in the nature or status of the Executive's responsibilities from those in effect immediately prior to the Change in Control;
(ii) a ten percent (10%) or greater reduction by the Company in the Executive's annual base salary as in effect on the date hereof or as the same may be increased from time to time except for across-the-board salary reductions affecting all senior executives of the Company and all senior executives of any person directly or indirectly in control of the Company;
(iii) the Executive's relocation by the Company to a location not within fifty miles of the Executive's present office or job location;
(iv) the failure by the Company to pay to the Executive any portion of the Executive's current compensation, or to pay to the Executive any portion of an installment of deferred compensation under any deferred compensation program of the Company, within thirty (30) days of the date such compensation is due;
(v) the failure by the Company to continue in effect any annual or long- term monetary incentive opportunity to which the Executive was entitled, or any compensation plan in which the Executive participates immediately prior to the Change in Control which constitutes more than ten percent (10%) of the Executive's total compensation; provided, however, that the Company may modify the monetary incentive opportunities so as to provide the Executive with the same or similar monetary incentive opportunities;
(vi) the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement or a similar agreement satisfactory to the Executive;
(vii) in the event the Executive terminates this Agreement for Good Reason
following a Change in Control as provided by this Section 5, the
Executive shall be entitled to the compensation provided by Section
5(b), reduced by
the amount of compensation received by the Executive following the Change in Control through the effective date of termination.
(i) The Executive acknowledges that he will be exposed to and learn a substantial amount of information which is proprietary and confidential to the Company, whether or not he develops or creates such information. The Executive acknowledges that such proprietary and confidential information may include, but is not limited to, trade secrets; acquisition or merger information; advertising and promotional programs; resource or developmental projects; plans or strategies for future business development; financial or statistical data; customer information, including, but not limited to, customer lists, sales records, account records, sales and marketing programs, pricing matters, and strategies and reports; and any Company
manuals, forms, techniques, and other business procedures or methods, devices, computer software or matters of any kind relating to or with respect to any confidential program or projects of the Company, or any other information of a similar nature made available to the Executive and not known in the trade in which the Company is engaged, which, if misused or disclosed, could adversely affect the business or standing of the Company. Confidential Information shall not include information that is generally known or generally available to the public through no fault of the Executive.
(ii) The Executive agrees that except as required by law, he will not at any time divulge to any person, agency, institution, company or other entity any information which he knows or has reason to believe is proprietary or confidential to the Company, including but not limited to the types of information described in Section 6(b)(i), or use such information to the competitive disadvantage of the Company. The Executive agrees that his duties and obligations under this Section 6 will continue for 12 months from the termination of his employment or as long as the Confidential Information remains proprietary or confidential to the Company.
(i) Executive acknowledges that the Company intends to extend business operations throughout the United States of America. Therefore, for a period of twelve (12) months after termination of Executive's employment for any reason (including Executive's resignation), Executive agrees that he shall not directly or indirectly carry on or participate in the ownership or management of apartment communities of the same class and quality of the communities owned by the Company that directly competes with the Company anywhere within the United States of America.
(ii) Independent of the preceding provision, Executive agrees that he shall not, for a period of twelve (12) months after termination of Executive's employment, directly or indirectly carry on or participate in the ownership or
management of apartment communities of the same class and quality of the apartment communities owned by the Company that directly competes with the Company within any county or city in which the Company conducts business.
(iii) These covenants shall not apply in the event the Executive is terminated (i) by the Company without cause or as a result of a Change of Control, or (ii) by the Executive (y) for Good Reason, which, for the purposes of this subsection, shall mean any of the reasons set forth in subsections 5(d)(i) to (iv), or (z) for a period of one (1) year following any change in the officer to whom the Executive directly reports.
(i) The parties agree that it is not their intention to violate any public policy or statutory or common law. The parties intend that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. If any provision of this Agreement is found by a court to be unenforceable, the parties authorize the court to amend or modify the provision to make it enforceable in the most restrictive fashion permitted by law.
(ii) The Executive and the Company are sophisticated parties and fully
understand (i) the ramifications of the non-competition, non-
solicitation and confidentiality restrictions of this Agreement and
(ii) that the laws of each state with respect to the enforceability of
such provisions vary. The parties are specifically selecting the
internal laws of the Commonwealth of Virginia to govern this Agreement
in order that it be enforceable against all of them.
a. The Executive acknowledges and agrees that this Agreement is a contract for his personal services, he is not entitled to assign, subcontract, or transfer any of the obligations imposed or benefits provided under this Agreement.
b. This Agreement shall be binding on and will inure to the benefit of any successors or assigns of the Company.
a. A "Notice of Termination" shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and, if appropriate, shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provisions so indicated.
b. "Code" shall mean the Internal Revenue Code of 1986, as amended.
WE AGREE TO THIS:
UNITED DOMINION REALTY TRUST, INC.,
a Virginia corporation
By: _______________________________
Its: ________________________________
EXECUTIVE
Exhibit 10(xiii)
THIS EMPLOYMENT AGREEMENT ("Agreement"), entered into this 21st day of March, 2000, between UNITED DOMINION REALTY TRUST, INC., a Virginia corporation (the "Company") and MARK E. WOOD (the "Executive"), recites and provides as follows:
R E C I T A L S:
The Executive is a senior executive of the Company, and the Company now desires to reward the Executive for past performance and provide for the continued employment of the Executive upon the terms set forth in this Agreement.
A G R E E M E N T:
NOW, THEREFORE, in consideration of the foregoing, and the mutual promises and undertakings hereinafter set forth, and the payments to be made to the Executive hereunder, the parties hereto agree as follows:
a. The Company hereby agrees to and hereby does continue to employ the Executive as an executive officer of the Company, subject to the supervision of the Chief Executive Officer of the Company, or such other senior officer of the Company as may be prescribed by the Chief Executive Officer or the Board of Directors of the Company (the "Board"). Currently, the Executive is Senior Vice President and Director of Development for the Western Region, and reports to the Chief Executive Officer. The Executive agrees that the description of the executive position above shall not limit the Company from assigning to the Executive such other duties and functions in addition to or in substitution of those described above.
b. The Executive agrees to serve the Company as a full time executive officer with duties and authority as set forth in the Company's by-laws or as otherwise prescribed by the Board. The Executive shall devote such time, attention, skill, and efforts to the performance of his duties as a Company executive as shall be required therefore, all under the supervision and direction of the Board. The Executive agrees that during the period of his employment he will not, without the approval of a majority of the independent directors of the Board, have any other (i) real estate investment trust or business affiliations, or (ii) corporate affiliations that conflict with the business of the Company or interfere with the ability of the Executive to perform his duties for the Company or comply with the covenants under this Agreement.
This Agreement will take effect as of the date of this Agreement and will end on December 31, 2000. After December 31, 2000, this Agreement will automatically renew for successive one (1) year periods, ending as of December 31 of each year, unless sooner terminated in accordance with Section 4.
any life insurance proceeds paid by or through the Company or disability insurance payments for one (1) year, as appropriate, payable to the Executive or his personal representative or other beneficiary.
(i) The Executive is convicted of or pleads nolo contendere to any crime, other than a traffic offense or misdemeanor;
(ii) The Executive shall commit, with respect to the Company, an act of fraud or embezzlement or shall have been grossly negligent in the performance of his duties hereunder;
(iii) The Executive engages in gross dereliction of duties, refusal to perform assigned duties consistent with his position, or repeated violation of the Company's policies after written warning; or,
(iv) The Executive engages in drug abuse.
consulting services to the Company as it may reasonably request, taking into
account the Executive's health, business commitments, geographical location and
other relevant circumstances. The intent of this paragraph is not to obligate
the Executive to perform any day-to-day duties for the Company following
termination of his employment but only to assist management in effecting a
smooth transition of the functions or projects for which the Executive was
responsible while an employee of the Company. Should the Executive fail to
render such advisory or consulting services, after 30 days' prior written notice
to the Executive and the Executive's failure to commence the rendering of such
service, the Company's sole remedy shall be to terminate payment of any
remaining severance compensation. If this Agreement is terminated pursuant to
Section 4(e) and no Severance Compensation is paid to the Executive, the
Executive shall be paid on an hourly basis to the extent requested by the
Company to perform advisory or consulting services, based upon his base salary
prior to termination for the actual time spent for advisory or consulting
services for the Company.
plus all other amounts to which the Executive is entitled under any compensation plan of the Company.
(i) Notwithstanding anything in this Agreement to the contrary, in the event it shall be determined that any benefit, payment or distribution by the Company to or for the benefit of Executive (whether payable or distributable pursuant to the terms of this Agreement or otherwise)(such benefits, payments or distributions are hereinafter referred to as "Payments") would, if paid, be subject to the excise tax (the "Excise Tax") imposed by Section 4999 of the Code, then the aggregate present value of the Payments shall be reduced (but not below zero) to an amount expressed in present value that maximizes the
aggregate present value of the Payments without causing the Payments or any part thereof to be subject to the Excise Tax and therefore nondeductible by the Company because of Section 280G of the Code (the "Reduced Amount"). For purposes of this Section, present value shall be determined in accordance with Section 280G(d)(4) of the Code.
(ii) All determinations required to be made under this Section, including whether an Excise Tax would otherwise be imposed, whether the Payments shall be reduced, the amount of the Reduced Amount, and the assumptions to be utilized in arriving at such determinations, shall be made by Ernst & Young, LLP or such other certified public accounting firm acceptable to the Company, in its sole discretion, (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and Executive within fifteen (15) business days of the receipt of notice from Executive that a Payment is due to be made, or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any determination by the Accounting Firm shall be binding upon the Company and Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Payments hereunder will have been unnecessarily limited by this Section ("Underpayment"), consistent with the calculations required to be made hereunder. The Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of Executive.
(i) the assignment to the Executive of any duties inconsistent with the Executive's position and status as Director of Development for the Western Region or a substantial adverse alteration in the nature or status of the Executive's responsibilities from those in effect immediately prior to the Change in Control;
(ii) a ten percent (10%) or greater reduction by the Company in the Executive's annual base salary as in effect on the date hereof or as the same may be increased from time to time except for across- the-board salary reductions affecting senior executives of the Company and senior executives of any person directly or indirectly in control of the Company;
(iii) the Executive's relocation by the Company to a location not within fifty miles of the Executive's present office or job location;
(iv) the failure by the Company to pay to the Executive any portion of the Executive's current compensation, or to pay to the Executive any portion of an installment of deferred compensation under any deferred compensation program of the Company, within thirty (30) days of the date such compensation is due;
(v) the failure by the Company to continue in effect any annual or long-term monetary incentive opportunity to which the Executive was entitled, or any compensation plan in which the Executive participates immediately prior to the Change in Control which constitutes more than ten percent (10%) of the Executive's total compensation; provided, however, that the Company may modify the monetary incentive opportunities so as to provide the Executive with the same or similar monetary incentive opportunities;
(vi) the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement or a similar agreement satisfactory to the Executive;
(vii) in the event the Executive terminates this Agreement for Good
Reason following a Change in Control as provided in this Section
5, the Executive shall be entitled to the compensation provided by
Section 5(b), reduced by the amount of compensation received by
the Executive following the Change in Control through the
effective date of termination.
recognizes and acknowledges that the confidential information described in
Section 6(b) (the "Confidential Information") which he will acquire in the
course of his employment is utilized by the Company in all geographic areas in
which the Company does business. Further, the Confidential Information will also
be utilized in all geographic areas into which the Company expands its business.
Thus, Executive acknowledges that he will be a formidable competitor in all
areas where the Company conducts business. Executive also acknowledges that the
Covenants serve to protect the Company's investment in the Confidential
Information.
(i) The Executive acknowledges that he will be exposed to and learn a substantial amount of information which is proprietary and confidential to the Company, whether or not he develops or creates such information. The Executive acknowledges that such proprietary and confidential information may include, but is not limited to, trade secrets; acquisition or merger information; advertising and promotional programs; resource or developmental projects; plans or strategies for future business development; financial or statistical data; customer information, including, but not limited to, customer lists, sales records, account records, sales and marketing programs, pricing matters, and strategies and reports; and any Company manuals, forms, techniques, and other business procedures or methods, devices, computer software or matters of any kind relating to or with respect to any confidential program or projects of the Company, or any other information of a similar nature made available to the Executive and not known in the trade in which the Company is engaged, which, if misused or disclosed, could adversely affect the business or standing of the Company. Confidential Information shall not include information that is generally known or generally available to the public through no fault of the Executive.
(ii) The Executive agrees that except as required by law, he will not at any time divulge to any person, agency, institution, company or other entity any information which he knows or has reason to believe is proprietary or confidential to the Company, including but not limited to the types of information described in Section 6(b)(i), or use such information to the competitive disadvantage of the Company. The Executive agrees that his duties and obligations under this Section 6 will continue for 12 months from the termination of his employment or as long as the Confidential Information remains proprietary or confidential to the Company.
(i) Executive acknowledges that the Company intends to extend business operations throughout the United States of America. Therefore, for a period of twelve (12) months after termination of Executive's employment for any reason (including Executive's resignation), Executive agrees that he shall not directly or indirectly carry on or participate in the ownership or management of apartment communities of the same class and quality of the communities owned by the Company that directly competes with the Company anywhere within the United States of America.
(ii) Independent of the preceding provision, Executive agrees that he shall not, for a period of twelve (12) months after termination of Executive's employment, directly or indirectly carry on or participate in the ownership or management of apartment communities of the same class and quality of the apartment communities owned by the Company that directly competes with the Company within any county or city in which the Company conducts business.
(iii) These covenants shall not apply in the event the Executive is terminated without cause, as a result of a Change of Control, or by the Executive for Good Reason, which, for the purposes of this subsection, shall mean any of the reasons set forth in subsections 5(d)(i) to (iv).
(i) The parties agree that it is not their intention to violate any public policy or statutory or common law. The parties intend that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. If any provision of this Agreement is found by a court to be unenforceable, the parties authorize the court to amend or modify the provision to make it enforceable in the most restrictive fashion permitted by law.
(ii) The Executive and the Company are sophisticated parties and fully understand (i) the ramifications of the non-competition, non- solicitation and confidentiality restrictions of this Agreement and (ii) that the laws of each state with respect to the enforceability of such provisions vary. The parties are specifically selecting the internal laws of the Commonwealth of Virginia to govern this Agreement in order that it be enforceable against all of them.
a. The Executive acknowledges and agrees that this Agreement is a contract for his personal services, he is not entitled to assign, subcontract, or transfer any of the obligations imposed or benefits provided under this Agreement.
b. This Agreement shall be binding on and will inure to the benefit of any successors or assigns of the Company.
a. A "Notice of Termination" shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and, if appropriate, shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provisions so indicated.
b. "Code" shall mean the Internal Revenue Code of 1986, as amended.
WE AGREE TO THIS:
UNITED DOMINION REALTY TRUST, INC.,
a Virginia corporation
By: _______________________________
Its: ________________________________
EXECUTIVE
EXHIBIT 12
Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends
(dollars in thousands)
Years ended December 31, 1995 1996 1997 1998 1999
---------- ---------- ---------- ---------- -----------
Net income before extraordinary item $ 33,127 $ 38,014 $ 70,199 $ 72,470 $ 92,695
Add:
Portion of rents representative
of the interest factor 201 257 412 569 928
Interest on indebtedness 40,646 50,843 79,004 106,238 153,748
---------- ---------- ---------- ---------- -----------
Earnings $ 73,974 $ 89,114 $ 149,615 $ 179,277 $ 247,371
========== ========== ========== ========== ===========
Fixed charges and preferred stock dividend:
Interest on indebtedness $ 40,646 $ 50,843 $ 79,004 $ 106,238 $ 153,748
Capitalized interest 40 541 2,634 3,360 5,153
Portion of rents representative
of the interest factor 201 257 412 569 928
---------- ---------- ---------- ---------- -----------
Fixed charges 40,887 51,641 82,050 110,167 159,829
---------- ---------- ---------- ---------- -----------
Add:
Preferred stock dividend 6,637 9,713 17,345 23,593 37,714
---------- ---------- ---------- ---------- -----------
Combined fixed charges and preferred
stock dividend $ 47,524 $ 61,354 $ 99,395 $ 133,760 $ 197,543
========== ========== ========== ========== ===========
Ratio of earnings to fixed charges 1.81 x 1.73 x 1.82 x 1.63 x 1.55 x
Ratio of earnings to combined fixed
charges and preferred stock dividend 1.56 1.45 1.51 1.34 1.25
|
Exhibit 23
Consent of Independent Auditors
We consent to the incorporation by reference in the following Registration Statements of United Dominion Realty Trust, Inc. and in the related Prospectuses of our report dated January 31, 2000, with respect to the consolidated financial statements and schedule of United Dominion Realty Trust, Inc. included in this Annual Report (Form 10-K) for the year ended December 31, 1999:
Registration Statement Number Description
----------------------------- -----------
33-40433 Form S-3, pertaining to the private placement of 900,000
shares of the Company's common stock in May, 1991.
33-47296 Form S-8, pertaining to the Company's Stock Purchase and
Loan Plan.
33-48000 Form S-8, pertaining to the Company's Stock Option Plan.
33-58201 Form S-8, pertaining to the Employee's Stock Purchase Plan.
333-11207 Form S-3, Shelf Registration Statement, pertaining to the
private placement of 1,679,840 shares of the Company's
Common Stock.
333-15133 Form S-3, pertaining to the Company's Dividend
Reinvestment and Stock Purchase Plan.
333-27221 Form S-3, Shelf Registration Statement, pertaining to the
registration of $600 million of Common Stock, Preferred
Stock and Debt Securities.
333-32829 Form S-8, pertaining to the Company's Stock Purchase and
Loan Plan.
333-42691 Form S-8, pertaining to the Company's Stock Option Plan.
333-44463 Form S-3, pertaining to the Company's Dividend
Reinvestment and Stock Purchase Plan.
333-48557 Form S-3, Shelf Registration Statement, pertaining to the
private placement of 104,920 shares of Common Stock and
104,920 rights to purchase Series C Junior Participating
Redeemable Preferred Stock.
333-53401 Form S-3, Shelf Registration Statement, pertaining to the
private placement of 1,528,089 shares of Common Stock and
1,528,089 rights to purchase Series C Junior Participating
Redeemable Preferred Stock.
333-64281 Form S-3, Shelf Registration Statement, pertaining to the
private placement of 849,498 shares of Common Stock and
849,498 rights to Purchase Series C Junior Participating
Redeemable Preferred Stock.
333-72885 Form S-3, Shelf Registration Statement, pertaining to the
private placement of 130,416 shares of Common Stock and
130,416 rights to purchase Series C Junior Participating
Redeemable Preferred Stock.
333-75897 Form S-8, pertaining to the Company's Long Term Incentive
Plan.
333-77107 Form S-3, Shelf Registration Statement, pertaining to the
private placement of 1,023,732 shares of Common Stock and
1,023,732 rights to purchase Series C Junior Participating
Redeemable Preferred Stock.
|
333-77161 Form S-3, Shelf Registration Statement, pertaining to the
private placement of 481,251 shares of Common Stock and
481,251 rights to purchase Series C Junior Participating
Redeemable Preferred Stock.
333-80279 Form S-8, pertaining to the Company's Open Market Purchase
Program.
333-82929 Form S-3, Shelf Registration Statement, pertaining to the
private placement of 95,119 shares of Common Stock and
95,119 rights to purchase Series C Junior Participating
Redeemable Preferred Stock.
333-92667 Form S-3, Shelf Registration Statement, pertaining to the
registration of $616,058,554 of Common Stock, Preferred
Stock and Debt Securities.
|
Ernst & Young LLP
Richmond, Virginia
March 22, 2000
| ARTICLE 5 |
| PERIOD TYPE | 12 MOS |
| FISCAL YEAR END | DEC 31 1999 |
| PERIOD END | DEC 31 1999 |
| CASH | 7,678 |
| SECURITIES | 0 |
| RECEIVABLES | 0 |
| ALLOWANCES | 0 |
| INVENTORY | 0 |
| CURRENT ASSETS | 123,458 |
| PP&E | 3,953,045 |
| DEPRECIATION | 395,864 |
| TOTAL ASSETS | 3,688,317 |
| CURRENT LIABILITIES | 156,633 |
| BONDS | 2,127,305 |
| PREFERRED MANDATORY | 0 |
| PREFERRED | 427,872 |
| COMMON | 102,741 |
| OTHER SE | 779,599 |
| TOTAL LIABILITY AND EQUITY | 3,688,317 |
| SALES | 618,749 |
| TOTAL REVENUES | 620,691 |
| CGS | 0 |
| TOTAL COSTS | 247,262 |
| OTHER EXPENSES | 140,002 |
| LOSS PROVISION | 19,300 |
| INTEREST EXPENSE | 153,748 |
| INCOME PRETAX | 92,695 |
| INCOME TAX | 0 |
| INCOME CONTINUING | 92,695 |
| DISCONTINUED | 0 |
| EXTRAORDINARY | 927 |
| CHANGES | 0 |
| NET INCOME | 93,622 |
| EPS BASIC | 0.54 |
| EPS DILUTED | 0.54 |