UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended
December 31, 2001 Commission File Number 1-12784
AMLI RESIDENTIAL PROPERTIES TRUST
(Exact name of registrant as specified in its charter)
Maryland 36-3925916
(State of Organization) (I.R.S. Employer Identification No.)
125 South Wacker Drive, Suite 3100,
Chicago, Illinois 60606
(Address of principal executive office) (Zip code)
Registrant's telephone number, including area code: (312) 443-1477
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
------------------- -------------------------------
Common Shares of Beneficial New York Stock Exchange
Interest, $.01 par value
Preferred Share Purchase Rights New York Stock Exchange
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 such
filing requirements for the past 90 days. Yes [ X ] No [ ]
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 registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ X ]
The aggregate market value of the voting stock held by non-affiliates of
the registrant was approximately $387,083,186 based on the closing price
($24.10) on the New York Stock Exchange on February 28, 2002.
The number of the Registrant's Common Shares of Beneficial Interest, $.01
par value, outstanding as of February 28, 2002 was 17,850,659.
Documents Incorporated By Reference
Portions of the Registrant's Proxy Statement for the annual shareholders'
meeting to be held on April 29, 2002 are incorporated by reference into
Part III.
TABLE OF CONTENTS
Page
----
PART I
Item 1. Business . . . . . . . . . . . . . . . . . . 1
Item 2. Communities. . . . . . . . . . . . . . . . . 22
Item 3. Legal Proceedings. . . . . . . . . . . . . . 34
Item 4. Submission of Matters to a Vote
of Security Holders. . . . . . . . . . . . . 34
PART II
Item 5. Market for the Registrant's Common Equity
and Related Shareholder Matters. . . . . . . 35
Item 6. Selected Financial Data. . . . . . . . . . . 38
Item 7. Management's Discussion and
Analysis of Financial Condition
and Results of Operations. . . . . . . . . . 40
Item 7A. Quantitative and Qualitative Disclosures
About Market Risk. . . . . . . . . . . . . . 61
Item 8. Financial Statements and
Supplementary Data . . . . . . . . . . . . . 62
Item 9. Changes in and Disagreements
with Accountants on Accounting and
Financial Disclosure . . . . . . . . . . . . 127
PART III
Item 10. Trustees and Executive Officers
of the Registrant. . . . . . . . . . . . . . 127
Item 11. Executive Compensation . . . . . . . . . . . 127
Item 12. Security Ownership of Certain
Beneficial Owners and Management . . . . . . 127
Item 13. Certain Relationships and
Related Transactions . . . . . . . . . . . . 127
PART IV
Item 14. Exhibits, Financial Statement Schedule,
and Reports on Form 8-K. . . . . . . . . . . 128
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . 133
i
PART I
ITEM 1. BUSINESS
THE COMPANY
AMLI Residential Properties Trust ("AMLI" or the "Company") is a self-
administered and self-managed real estate investment trust (a "REIT")
engaged in the development, acquisition and management of upscale,
institutional quality multifamily apartment communities in eight major
metropolitan markets in the Southeast, Southwest, Midwest and Mountain
regions of the United States. Founded in 1980, AMLI became a publicly
traded company through an initial public offering ("Initial Offering") in
February 1994.
AMLI's business strategy is focused on increasing market share in its
existing eight markets through acquisition and development of luxury
communities. AMLI accesses capital from both the public and private
markets, including private equity from co-investment relationships with
institutional partners. As part of its growth strategy, AMLI is committed
to branding its communities and services to its residents.
As of December 31, 2001, AMLI owned directly or had interests in 78
multifamily apartment communities (the "Communities") comprised of 30,195
apartment homes. Seventy-one of these Communities, totaling 27,258
apartment homes, were stabilized as of December 31, 2001; seven Communities
and an additional phase to an existing community were under development or
in lease-up at that date. When completed, these development communities
will total 2,937 apartment homes. As a result of acquisition and
development of new communities and sales of older communities, the average
age of the Company's properties has decreased to 6.3 years as of December
31, 2001. In addition, the Company owns land for the future development of
additional communities or additional phases to existing communities, or for
sale.
AMLI is the sole general partner of, and owns a majority of the
partnership interests in, Amli Residential Properties, L.P., a Delaware
limited partnership (the "Operating Partnership"), through which it owns
its interests in the Communities. As of December 31, 2001, the Company
owned approximately 86% of the outstanding partnership interests ("OP
Units") in the Operating Partnership. OP Units are convertible into the
Company's common shares of beneficial interest on a one-for-one basis and
are entitled to distributions equal to distributions received on common
shares. The Company conducts all its business through the Operating
Partnership and its subsidiaries and affiliates.
The Company's headquarter offices are located at 125 S. Wacker Drive,
Suite 3100, Chicago, Illinois 60606, and its telephone number is (312) 443-
1477. In addition, AMLI maintains regional offices in Atlanta, Dallas,
Indianapolis and Kansas City.
COMPETITIVE ADVANTAGES
The Company seeks to increase cash flow by professionally managing the
Communities and providing an outstanding living environment to its
residents, selectively developing and acquiring high-quality multifamily
communities and advising and co-investing with institutional partners. In
pursuit of these strategies, the Company benefits from the following
competitive advantages:
ACQUISITION EXPERTISE. AMLI acquires institutional quality
multifamily communities, with focus on newer properties, having high-
quality construction, amenities, location and market position. AMLI
acquires assets when it believes capitalization rates are attractive. AMLI
currently operates in eight markets, but will consider acquisition
opportunities in additional markets depending on the market, product type,
perceived risks and portfolio objectives.
DEVELOPMENT EXPERTISE. AMLI has extensive experience in the
development of upscale multifamily communities. The Company applies a
long-term ownership perspective to the development process, utilizing high-
quality building materials, and designs communities which satisfy the
current needs of residents and anticipate their future needs. The Company
believes that over time these communities will realize total returns on
invested capital that are commensurate with the increased risk over
comparable acquisitions.
INSTITUTIONAL CO-INVESTMENTS. AMLI acquires and develops multifamily
communities in co-investment joint ventures with partners, primarily
institutional investors such as insurance companies, endowments,
foundations, and public and corporate pension funds. The Company believes
that co-investment partnerships create an opportunity to leverage the
Company's acquisition, development and management expertise and generate
higher returns on its invested equity capital. Since its Initial Offering,
and through December 31, 2001, AMLI has formed 49 such co-investment joint
ventures with fourteen investors, twelve of which are institutional
investors. The following table shows the Company's co-investment
acquisition and development activities since the Initial Offering:
Co-Investment Summary
(dollars in thousands)
Co-Inves-
No. of No. of tor's Company's
Trans- Apartment Total Equity Equity
Year actions Homes Cost (2) Debt (1) (3)
---- ------- --------- -------- ------- --------- --------
1994 4 1,528 71,200 44,700 18,900 7,600
1995 4 1,240 79,700 49,800 22,300 7,600
1996 5 1,958 146,800 63,400 58,200 25,200
1997 4 2,306 154,300 91,500 47,700 15,100
1998 9 2,836 203,200 28,900 127,000 47,300
1999 10 3,604 270,000 79,100 144,200 46,700
2000 10 4,419 367,200 168,900 131,000 67,300
2001 3 1,313 160,400 86,400 48,600 25,400
-- ------ --------- ------- ------- -------
Total 49 19,204 1,452,800 612,700 597,900 242,200
== ====== ========= ======= ======= =======
(1)The Company has established strategic alliances with Stichting
Bedrijfspensioenfonds voor de Metaal en Technische Bedrijfstakken
("BPMT"), Prudential Insurance Company of America, Western and
Southern Life Insurance Company, Allstate Insurance Company, Erie
Insurance Group, The New York Common Retirement Fund, Ohio State
Teachers' Retirement System, The Northwestern Mutual Life Insurance
Company, Endowment Realty Investors, The Rockefeller Foundation,
National Electrical Benefit Fund, and investors represented by Nomura
Securities and others.
(2)Through December 31, 2001, three communities owned by three
co-investment partnerships have been sold which reduced total
investment in co-investment properties to $1,367 million. This
represents total cost expended and projected costs to complete.
(3)At December 31, 2001, the estimated completion costs of the seven
communities under construction were $114 million. Most of AMLI's
18 million share of the equity needed to complete these communities
will be contributed in 2002.
AMLI BRAND. All of the Communities are
operated by the Company under the AMLI brand name.
AMLI believes promoting its brand name creates an awareness in the market
place of high quality rental living, exceptional customer service and
superior value for both current and prospective residents. To maximize the
effectiveness of the AMLI brand name, the Company
has a wide range of programs and practices to maintain uniformly high
quality service and consistent apartment quality at all of the Communities.
DEVELOPMENT
Since the Initial Offering, the Company and its co-investment
partnerships' development pipeline has grown steadily. Through December
31, 2001, the Company has developed or has under development 36 Communities
(excluding two phases to two existing Communities) containing 11,993
apartment homes, of which 25 Communities are for co-investment
partnerships. Approximately 80% of the total apartment homes developed or
under development have been built with co-investment partners and the other
20% have been developed or are under development solely for the Company.
Since 1994, the Company has developed apartment homes in seven of its
eight markets. As of December 31, 2001, most of the Company's development
activities have been in Atlanta (40%) followed by Dallas (15%), Chicago
(14%), Kansas (13%), Austin (8%), Indianapolis (7%), and Houston (3%). In
2002, the Company anticipates commencing development of a limited number of
apartment communities.
The Company believes that the operating prospects for the existing
development communities remain acceptable based upon current economic and
other conditions existing in the areas in which the Company's development
activities are focused. In 2001, the Company slowed its development
activities because of unfavorable economic conditions in certain of its
markets. As with any development project, there are uncertainties and
risks. While the Company has prepared development budgets and has
estimated completion and stabilization target dates for each of the
development communities based upon what it believes are reasonable
assumptions, there can be no assurance that actual costs will not exceed
current budgets or that the Company will not experience construction delays
due to the unavailability of building materials, weather conditions or
other events beyond the Company's control. Similarly, adverse market
conditions at the time that the development communities become available
for leasing could affect the rental rates that may be charged and the
period necessary to achieve stabilization at the development communities,
which could have a material adverse effect on the financial condition of
the affected development communities.
In August 2001, the Company broke ground and commenced development of
AMLI at Carmel Center, a 322 apartment home community located in Carmel,
Indiana. Total anticipated development cost is $28.4 million. Through
December 31, 2001, $10.4 million had been expended and the project is
approximately 3.5% complete. The first apartment homes are expected to be
available for occupancy in the second quarter of 2002 with stabilization
anticipated to occur in the third quarter of 2004.
CO-INVESTMENT DEVELOPMENT
During 2001, the Company formed two new co-investment partnerships for
the development of new communities at two locations, which when completed
will contain 830 apartment homes. National Electrical Benefit Fund and The
Northwestern Mutual Life Insurance Company are the venture partners that
co-invested with AMLI in 2001. Seven properties currently under
construction or in lease-up in co-investment partnerships will contain
2,615 apartment homes. The Company's ownership interests in these co-
investment partnerships range from 20% to 30%. The following table
provides additional information about the Company's co-investment
development communities at December 31, 2001:
COMPANY CO-INVESTMENT DEVELOPMENT OR LEASE UP COMMUNITIES
--------------------------------------------------------
Communities Co-in- Amount
(Company No. Company'svestment Anticipated Expended Co-invest-
Percentage of Completion Equity Equity Development through ment
Ownership) Location Units Percentage Debt (1) (1) Cost 12/31/01 Partner
----------- ---------------- ------------------- -------- -------- ----------- ---------- ----------
(in thou-(in thou- (in thou- (in thou- (in thou-
sands) sands) sands) sands) sands)
AMLI:
at Mill
Creek Gwinnett Northwestern
(25%) County, GA 400 98% $ -- 6,800 20,300 27,100 25,763 Mutual Life
at King's -- 5,000 14,800 The N.Y.
Harbor (25%) Houston, TX 300 100% 19,800 19,490 Common
Retirement
Fund
at Kedron Prudential
Village Peachtree Insurance of
(20%) City, GA 216 81% 19,200 200 800 20,200 15,812 America
at Cambridge Overland Northwestern
Square (30%) Park, KS 408 82% -- 9,700 22,500 32,200 27,894 Mutual Life
at Milton Alpharetta, Northwestern
Park (25%) GA 461 41% -- 8,700 26,100 34,800 15,183 Mutual Life
at Seven National
Bridges Woodridge, Electrical
(20%) IL 520 22% 50,000 6,400 25,800 82,200 16,876 Benefit Fund
at Barrett Cobb County, Northwestern
Walk (25%) GA 310 19% -- 5,600 16,900 22,500 4,278 Mutual Life
------ -------- -------- -------- -------- --------
Total 2,615 $ 69,200 42,400 127,200 238,800 125,296
====== ======== ======== ======== ======== ========
(1) The Company's remaining capital commitment is approximately $18 million and the co-investors' remaining
capital commitment is approximately $54 million.
ACQUISITIONS
The Company acquires institutional multifamily apartment communities, with a focus on newer, higher quality
properties. The Company currently operates in eight markets, but will consider acquisition opportunities in
additional markets. The Company will acquire either single asset or multi-asset portfolios in its current
markets. During 2001, the Company formed one co-investment partnership with BPMT for the acquisition of a
stabilized community. The Company's percentage ownership in this co-investment partnership is 69%. The table
below summarizes the Company's acquisition activities during 2001.
COMPANY ACQUISITION ACTIVITIES
------------------------------
Acqui-
No. of tion Purchase
Communities Location Units Date Price Debt Rate
-------------------- -------- ------ -------- ---------- ---------- --------
(in (in
thousands) thousands)
Wholly-owned:
AMLI:
at Gateway Park (1) Denver, CO 328 1/29/01 $ 33,050 -- --
at Stonebridge
Ranch (1) McKinney, TX 250 6/11/01 17,110 -- --
at the Medical Center (1) Houston, TX 334 8/7/01 27,150 -- --
at Shadow Ridge (1) Flower Mound, TX 222 8/31/01 18,000 -- --
------ -------- -------
Total
Wholly-Owned
Communities 1,134 95,310 --
------ -------- -------
Co-investment:
AMLI:
at Osprey Lake Gurnee, IL 483 2/1/01 52,000 35,320 7.02%
------ -------- -------
Total co-investment
communities 483 52,000 35,320
------ -------- -------
Total communities 1,617 $147,310 35,320
====== ======== =======
(1) These acquisitions completed tax deferred third-party exchanges for Federal income tax purposes.
FINANCING
On February 1, 2001, the Company acquired AMLI at Osprey Lake in a
joint venture with BPMT. Approximately 65% of the acquisition cost of this
483-apartment home community was financed by a 7.02%, $35.3 million first
mortgage loan with New York State Teachers' Retirement System ("NYSTRS").
The loan matures in ten years and being amortized based on a thirty-year
amortization schedule. AMLI and BPMT contributed approximately 69% and
31%, respectively, of the equity capital.
On March 14, 2001, the Company refinanced the $19 million construction
loan for AMLI at Summit Ridge with a 7.27%, $20 million first mortgage loan
with The Northwestern Mutual Life Insurance Company. The loan matures in
seven years and being amortized based on a thirty-year amortization
schedule. The loan amount represents approximately 68% of total
development costs.
On June 6, 2001, the Company closed on a $140 million, ten-year, 6.56%
fixed-rate financing, which is secured by first mortgages on seven of its
previously unencumbered wholly-owned properties. The Company paid down its
unsecured line of credit from the proceeds of this loan and concurrently
reduced its commitment under this line of credit by $50 million to $200
million.
On February 4, 2002, a 9.24%, $11 million balance of the AMLI at
Windbrooke loan was refinanced with a new loan from GMAC Commercial
Mortgage Corporation. The new 6.43%, $20.8 million loan matures in ten
years and will be amortized based on a thirty-year amortization schedule.
Proceeds of the new loan in excess of the amount used to repay this loan
were distributed to the Company and its co-investment partners on the same
date. The Company's share of this distribution was $1.5 million. With
this distribution, the partners have received a return of all their
original capital plus the agreed yield as contained in the partnership
agreements entitling the Company to an increased share of future cash
flows.
On January 28, 2002, the Company obtained a commitment for a 6.40%,
$18 million first mortgage loan from The Northwestern Mutual Life Insurance
Company for a co-investment partnership in which the lender has a 75%
ownership interest. The loan is expected to close in mid-April 2002, be
secured by a first mortgage on AMLI at Mill Creek, mature in seven years
and be amortized based on a thirty-year amortization schedule.
THE OPERATING PARTNERSHIP
The Company carries on its business through the Operating Partnership
and its affiliates, AMLI Management Company ("AMC"), AMLI Residential
Construction, LLC ("Amrescon") and AMLI Institutional Advisors, Inc.
("AIA") (collectively the "Service Companies"). Amrescon is a wholly-owned
subsidiary of AMC. The Company is the sole general partner of the
Operating Partnership, through which it owns the Communities, interests in
co-investment Communities and interests in the Service Companies. At
December 31, 2001, the Company owned an approximate 86% partnership
interest in the Operating Partnership of which 16.6% represents preferred
OP units. Amli Realty Co. and its affiliates ("ARC") owned a 6.9% interest
in the Operating Partnership and certain other third-party investors owned
the remaining 7.1% partnership interest. The Company's interest in the
Operating Partnership entitles it to share in cash distributions from, and
in the profits and losses of, the Operating Partnership in proportion to
the Company's percentage ownership (apart from tax allocations of profits
and losses to take into account pre-contribution property appreciation).
In connection with each offering of shares by the Company, the net proceeds
from the issuance of any such shares are contributed to the Operating
Partnership in exchange for a corresponding number of OP Units. The
Company holds one OP Unit in the Operating Partnership for each common
share and each preferred share that it has issued. The Operating
Partnership, from time to time, has issued OP Units for the acquisition of
apartment communities and land parcels for development. The OP Units are
convertible into common shares on a one-for-one basis.
As the general partner of the Operating Partnership, the Company has
the exclusive power under the partnership agreement of the Operating
Partnership to manage and conduct the business of the Operating
Partnership. The Board of Trustees of the Company manages the affairs of
the Company by directing the affairs of the Operating Partnership. The
Operating Partnership will terminate in the year 2093 unless terminated
earlier in connection with, among other things, a merger or a sale of all
or substantially all of the assets of the Operating Partnership or upon a
vote of the partners.
THE SERVICE COMPANIES
The property management, institutional advisory and construction
management aspects of the Company's business are conducted through AMC, AIA
and Amrescon, respectively, because, among other things, the third-party
income from their respective businesses might jeopardize the Company's REIT
status under Sections 856 through 860 of the Code if such operations were
carried on directly by the Operating Partnership. Following enactment of
new legislation passed to broaden a REIT's ability to provide additional
services to its residents, AMC and AIA have elected to become taxable REIT
subsidiaries as of January 1, 2001.
The Operating Partnership holds 100% of the non-voting preferred stock
of each of AMC and AIA. The non-voting preferred stock is entitled to
dividends equal to 95% of all distributions of AMC and AIA. ARC holds 95%
of the voting common stock of each of AMC and AIA which, in each case, is
generally entitled to dividends equal to 4.75% of all distributions. The
remaining 5% of the voting common stock of each of AMC and AIA, entitled to
..25% of all distributions, is owned by the Operating Partnership. The
charter of each of AMC and AIA requires the quarterly distributions as
dividends of the "net operating cash flow" (as defined in each such
charter) of each of AMC and AIA, if there are funds legally available for
dividends. That provision may not be changed without the consent of the
Operating Partnership. Accordingly, the Operating Partnership is entitled
to receive substantially all of the available net cash flow from each of
AMC and AIA through ownership of the preferred stock, and thereby enjoys
substantially all of the economic benefit of the businesses carried on by
AMC and AIA.
According to the charter of each of AMC and AIA, a majority of the
members of the board of directors of each of AMC and AIA must be
individuals who are not officers, directors or employees of ARC, and all
contracts for services between AMC or AIA and ARC must be approved by a
majority of the unaffiliated directors of AMC or AIA, as the case may be.
Ownership of 95% of the voting common stock will enable ARC to control the
election of the board of directors (including the unaffiliated directors)
of AMC and AIA. The holders of a majority of the non-voting preferred
stock of each of AMC and AIA are entitled to an approval right with respect
to certain fundamental corporate actions, including the issuance of any
additional shares of preferred stock or other senior securities, or a sale,
lease or exchange of all or substantially all of the assets of, or the
merger, consolidation or dissolution of AMC or AIA, as the case may be. In
addition, the Company has a right of first refusal (which may be assigned
to a third party with the consent of ARC, such consent not to be
unreasonably withheld) to acquire on its own behalf or on behalf of any
controlled affiliate, the common stock of each of AMC and AIA, subject to
the consent of third-party clients and to applicable law. Such right of
first refusal may only be exercised to the extent that the ownership of
such common stock or assets would not disqualify the Company as a REIT.
THE BUSINESS OF AMC
AMC provides management and leasing services to each of the
Communities in which the Operating Partnership presently has, or expected
to have, an interest. AMC also receives fees for providing management and
leasing services to two communities owned by third parties. Management and
leasing services are provided to the Communities and the co-investment
Communities pursuant to the terms of a management contract, which AMC has
agreed not to terminate so long as the Operating Partnership is not in
material breach of such contract. Residential property management and
leasing services provided by AMC are provided at market rates. AMLI
Corporate Homes ("ACH"), a division of AMC, leases apartment homes from the
Communities and the co-investment Communities for short-term residents.
Such ACH leases are at market rates.
THE BUSINESS OF AIA
AIA renders investment advice to institutional capital sources,
primarily pension plans, endowments, foundations and insurance companies
and provides certain asset management services to certain of the co-
investment partnerships. AIA intends to continue to develop its
institutional investment advisory business and will continue to manage and
administer existing advisory relationships with institutional investors.
The Company actively pursues co-investments through relationships
administered by AIA. In this way, the Company seeks to diversify the
sources of capital for investments in properties. In addition to
generating advisory fee income for AIA, these relationships have the
potential to generate fee income for (1) AMC in cases where AMC is engaged
to manage the communities acquired by the co-investment ventures; (2)
Amrescon, in cases where Amrescon is engaged as general contractor by co-
investment development ventures; and (3) the Operating Partnership.
THE BUSINESS OF AMRESCON
Amrescon, a wholly-owned subsidiary of AMC, provides general
contracting, construction management and landscaping services to the
Company and its managed ventures. Amrescon is based in Atlanta, has
regional offices in Chicago, Dallas, Indianapolis and Kansas City, and is
engaged exclusively in the design, development, construction and
landscaping of upscale multifamily properties on behalf of the Operating
Partnership.
LEASES
AMC uses a standard Company lease modified at each Community to the
extent necessary to comply with state and local law or custom. The term of
a lease varies with local market conditions; however, six-month and one-
year leases are most common. Generally, the leases provide that unless the
parties agree in writing to a renewal, the tenancy will convert at the end
of the lease term to a month-to-month tenancy, subject to the terms and
conditions of the lease, unless either party gives the other at least 30
days notice prior to termination. All leases are terminable by the lessor
for non-payment of rent, violation of property rules and regulations, or
other specified defaults.
LEASING
Employees of AMC are responsible for leasing activities at the
Communities. Leasing consultants meet with prospective residents and show
models and vacant units. The leasing consultants maintain contact with
existing residents to determine the residents' level of satisfaction with
their Community. All leasing consultants participate in a comprehensive
formal training program administered by AMC. AMC, as it deems necessary,
may employ the services of, and pay customary fees to, unaffiliated real
estate brokers, apartment locator services and existing tenants for
locating prospective tenants.
COMPETITION
All of the Communities are located in developed areas that include
other upscale apartment communities. The number of competitive upscale
apartment communities in a particular area could have a material effect on
AMC's ability to lease apartment units and on the rent charged at the
Communities or at any newly developed or acquired communities. The Company
may be competing with others that have greater resources than the Company
and whose officers and directors have more experience than the Company's
officers and Trustees. In addition, other forms of multifamily residential
communities, and for sale housing, provide housing alternatives to
potential residents of the Communities.
INSURANCE
The Company believes that each of the Communities is covered by
adequate fire, flood and property insurance provided by reputable companies
and with commercially reasonable deductibles and limits. The Company
maintains comprehensive liability, all-risk property insurance coverage
with respect to the Communities and with policy specifications, limits and
deductibles customarily carried for similar communities. The Company has
obtained title insurance insuring fee title to the Communities in an
aggregate amount which the Company believes to be adequate.
AMERICANS WITH DISABILITIES ACT
The Communities and any newly acquired apartment communities must
comply with Title III of the Americans with Disabilities Act (the "ADA") to
the extent that such properties are public accommodations and/or commercial
facilities as defined by the ADA. Compliance with the ADA requirements
could require removal of structural barriers to handicapped access in
certain public areas of the Communities where such removal is readily
achievable. The ADA does not, however, consider residential properties,
such as apartment communities, to be public accommodations or commercial
facilities, except to the extent portions of such facilities, such as the
leasing office, are open to the public. The Company believes that its
properties comply with all present requirements under the ADA and
applicable state laws. Noncompliance could result in imposition of fines
or an award of damages to private litigants. If required to make material
additional changes, the Company's results of operations could be adversely
affected.
ENVIRONMENTAL MATTERS
Many jurisdictions have adopted laws and regulations relating to
environmental controls and the development of real estate. Such laws and
regulations could affect the Communities and any additional communities
acquired or developed by the Company in the future, and/or reduce the
number and attractiveness of investment opportunities available to the
Company. The effect upon the Company of the application of such laws and
regulations cannot be predicted. Such laws and regulations have not had a
material effect on the Company's financial condition and results of
operations to date. The Company is not aware of any environmental
condition on any of the Communities, or the communities planned to be
developed by the Company, which is likely to have a material adverse effect
on the Company's financial condition and results of operations.
EMPLOYEES
The Company, the Operating Partnership and the Service Companies
employ a total of approximately 875 persons. AMC employs substantially all
of the professional employees that are currently engaged in the residential
property management and leasing business on behalf of the Company.
PROPERTY OPERATIONS
The Company seeks to increase cash flow at the Communities through
rent increases while maintaining high occupancy rates and aggressive
management of its operating expenses. As of December 31, 2001, the
weighted average occupancy rate of the stabilized Communities was 91% and
the average monthly rental rate per apartment home was $865, or $0.93 per
square foot. The Company owns multifamily communities with service,
lifestyle and physical amenities that residents value and that support high
rental rates. Typical services that are provided at the Communities, which
are customary for similar upscale multifamily properties, include pet care
or plant watering for out-of-town residents; on-site overnight delivery
drop-off boxes; on-site pick-up of dry cleaning or other items; occasional
social events for residents designed to provide a sense of community;
frequent maintenance programs; and a policy of guaranteeing attention to
any maintenance or repair request from a resident within 48 hours.
By establishing critical mass in each of its markets, the Company
expects to achieve economies of scale in its operations, resulting in
reduced operating and administrative expenses without reductions in
service. In addition, the relatively low average age of the Communities
contributes to reduced operating and maintenance expenses. At December 31,
2001, the average age of the stabilized Communities was approximately 6.3
years. The Company also believes that attention to landscaping and
physical appearance contributes to reducing resident turnover and enhances
the rental rates and occupancy levels of the Communities.
Additionally, AMLI has a dedicated team whose function is to evaluate
new or enhanced products, features or services that might be incorporated
in either the apartment homes or the Communities to produce complementary
income from property operations and maximize customer/resident satisfaction
within the Communities. Some of the products, features and services in
existence include carports and garages, secured entry gates, private phone
and cable systems, high-speed internet connection services, custom rental
insurance, energy efficient lighting programs, water submetering, bulk
purchases of utilities and card key systems for laundry facilities.
DEVELOPMENT ACTIVITIES
The Company currently has developments in progress in Atlanta,
Chicago, Houston, Indianapolis and Kansas City. In addition, the Company
owns 316 acres of land, which are currently being planned for development,
being held for future development or being considered for sale. The
following table summarizes the Company's development activities for the
period from the date of its Initial Offering in February 1994 through
December 31, 2001:
COMPANY AND CO-INVESTMENT DEVELOPMENT ACTIVITIES
(dollars in thousands)
------------------------------
TOTAL
---------------------------------------------
No. of
Communities
Developed No. of Projected
or Under Apartment Development
Year Development (1) Homes Cost
---- --------------- --------- ------------
1994. . . . . 2 734 $ 37,900
1995. . . . . 5 1,280 75,900
1996. . . . . 6 1,672 113,900
1997. . . . . 6 2,336 166,300
1998. . . . . 7 2,086 167,700
1999. . . . . 4 1,348 94,500
2000. . . . . 3 1,385 107,100
2001. . . . . 3 1,152 134,100
--- ------ --------
Total . . 36 11,993 $897,400
=== ====== ========
WHOLLY-OWNED
------------------------------------------
No. of
Communities
Developed No. of Projected
or Under Apartment Development
Year Development (1) Homes Cost
---- --------------- --------- ------------
1994. . . . . 1 232 $ 11,000
1995 (3). . . 4 834 48,100
1996 (4). . . 3 794 50,300
1997 (5). . . 5 1,536 111,500
1998 (6). . . (1) (490) (24,400)
1999. . . . . (2) (830) (73,000)
2000. . . . . -- -- --
2001. . . . . 1 322 28,400
--- ------ --------
Total . . 11 2,398 $151,900
=== ====== ========
CO-INVESTMENTS
--------------------------------------------------------
No. of
Communities
Developed No. of Projected Company's
or Under Apartment Development Commitment
Year Development (1) Homes Cost (2)
---- --------------- --------- ------------ ----------
1994. . . . . 1 502 $ 26,900 4,600
1995. . . . . 1 446 27,800 3,900
1996 (3). . . 3 878 63,600 14,600
1997 (4). . . 1 800 54,800 7,400
1998 (5)(7) . 8 2,576 192,100 45,600
1999 (6). . . 6 2,178 167,500 35,200
2000 (7). . . 3 1,385 107,100 23,800
2001. . . . . 2 830 105,700 12,100
--- ------ -------- --------
Total . . 25 9,595 $745,500 147,200
=== ====== ======== ========
--------------------
(1) Represents the number of Communities for which development
was commenced during the applicable year. Property sales
have not been reflected in the above number.
(2) Most of the balance of the Company's capital commitment
(approximately $18 million) will be funded during 2002.
(3) Includes a 222-unit Community started in 1995 and contributed to
a co-investment partnership in 1996.
(4) Includes an 800-unit Community started in 1996 and contributed
to a co-investment partnership in 1997.
(5) Includes four Communities with a total of 1,520 units started
in 1997 and contributed to four co-investment partnerships in 1998.
(6) Includes two Communities with a total of 830 units started in 1998
and contributed to two co-investment partnerships in 1999.
(7) Excludes an additional phase to an existing Community.
ACQUISITION ACTIVITIES
The Company actively pursues the acquisition of new communities. The
Company seeks to acquire, directly or through co-investments, multifamily
communities. The Company follows a strategy of acquiring (directly or
through co-investments) institutional quality apartment communities, which
typically have high-quality construction, amenities, location and market
position. The following table summarizes the Company's acquisition
activities for the period from the date of the Initial Offering through
December 31, 2001:
COMPANY AND CO-INVESTMENT ACQUISITION ACTIVITIES
(dollars in thousands)
------------------------------------------------
TOTAL
----------------------------------------
Total
No. of No. of Acquisition
Communities Apartment Costs
Year Acquired Homes(2)(3) (2)(3)(4)
---- ------------ ----------- -----------
1994. . . . . 8 2,184 $ 99,400
1995. . . . . 3 794 51,900
1996. . . . . 2 1,080 83,200
1997. . . . . 10 3,230 222,100
1998. . . . . 5 1,362 93,900
1999. . . . . 4 1,426 102,500
2000. . . . . 10 4,108 323,500
2001. . . . . 5 1,617 150,000
--- ------ ----------
Total . . 47 15,801 $1,126,500
=== ====== ==========
WHOLLY-OWNED
-----------------------------------------
No. of No. of Total
Communities Apartment Acquisition
Year Acquired Homes Costs
---- ------------ ---------- ------------
1994. . . . . 5 1,158 $ 55,100
1995. . . . . -- -- --
1996. . . . . -- -- --
1997. . . . . 7 1,724 122,600
1998. . . . . 4 1,102 82,800
1999. . . . . -- -- --
2000. . . . . 3 1,074 63,400
2001. . . . . 4 1,134 95,300
--- ------ --------
Total . . 23 6,192 $419,200
=== ====== ========
CO-INVESTMENTS (1)
---------------------------------------------------------
No. of No. of Total Company's
Communities Apartment Acquisition Commitment
Year Acquired Homes(2)(3) Costs(2)(3) (2)(3)
---- ------------ ----------- ----------- ----------
1994. . . . . 3 1,026 $ 44,300 3,000
1995. . . . . 3 794 51,900 3,700
1996. . . . . 2 1,080 83,200 10,600
1997. . . . . 3 1,506 99,500 7,700
1998. . . . . 1 260 11,100 1,700
1999. . . . . 4 1,426 102,500 11,500
2000. . . . . 7 3,034 260,100 43,500
2001. . . . . 1 483 54,700 13,300
--- ------ -------- -------
Total . . 24 9,609 $707,300 95,000
=== ====== ======== =======
--------------------
(1) The Company's ownership interest in these co-investment joint
ventures ranges from 10% to 75%.
(2) In 1998, includes AMLI on Timberglen, a 260-unit Community that
was acquired by the Company prior to the Initial Offering and
was subsequently contributed to a 40% owned partnership.
(3) In 2001, includes AMLI at Peachtree City, a 312-unit Community,
that was developed by the Company and subsequently was sold to a
20% owned co-investment partnership.
(4) Represents total Company's and co-investment ventures' equity
plus debt.
INSTITUTIONAL CO-INVESTMENTS
AMLI differentiates itself from other multifamily REITs through its
co-investment activities and its established relationships with a number of
institutional partners. By co-investing, AMLI is able to (i) diversify
access to equity capital; (ii) "leverage" its invested capital to promote
the AMLI brand identity and increase market share;
(iii) obtain the participation of sophisticated partners in its real estate
decisions; and (iv) increase earnings on reduced capital exposure. In
addition to the various fee income AMLI earns, AMLI receives its
unsubordinated proportionate share of the real estate income generated by
the on-going operation of each community owned through a co-investment
joint venture. In addition, AMLI receives cash flow in excess of its
ownership interests after a certain yield is achieved. All of the co-
investment Communities are managed by the Company and operated under the
AMLI [registered trademark] brand name.
While each co-investment is structured individually, in a typical
venture the Company (i) acts as the general partner or managing member of
the venture; (ii) handles the administration of the venture; (iii) manages
the day-to-day operations of the community held by the venture;
(iv) oversees construction and development in the case of a venture with a
property under development; and (v) recommends the sale or refinancing of
the property. All of AMLI's equity investments are made on a pari passu
basis with its co-investment partners and any unresolved disputes of a
material nature over major decisions would generally be resolved through
the exercise of a buy-sell provision in the partnership agreement. As of
December 31, 2001, the Company had established co-investment relationships
with fourteen investors.
Because the Company does not control these partnerships (the Company
shares decision making authority over all major decisions with various co-
investment partners), the Company's investments in these partnerships are
appropriately accounted for using the equity method of accounting. This
presentation, while required under generally accepted accounting
principles, keeps more than half of the Company's assets and debt (and all
of the Company's co-investment partners' equity) "off balance sheet."
The Company has entered into 49 co-investment ventures for the
acquisition or development of multifamily apartment communities. The table
below summarizes the co-investment activities of the Company since the
Initial Offering:
COMPANY CO-INVESTMENT ACTIVITIES
No. of No. of Total
No. of Apartment No. of Apartment No. of
Communities Homes Communities Homes Apartment
Year Acquired Acquired Developed(1) Developed(2) Homes
---- ----------- --------- ------------ ------------ ---------
1994. . . . 3 1,026(4) 1 502(5) 1,528
1995. . . . 3 794 1 446 1,240
1996. . . . 2 1,080 3 878(8) 1,958
1997. . . . 3 1,506 1 800 2,306
1998. . . . 1 260(6) 8(3) 2,576 2,836
1999. . . . 4 1,426 6 2,178 3,604
2000. . . . 7 3,034(7) 3(3) 1,385 4,419
2001. . . . 1 483 2 830 1,313
-- ----- -- ------ ------
Total . . 24 9,609 25 9,595 19,204
== ===== == ====== ======
--------------------
(1) Represents the number of Communities for which development was
commenced during the applicable year.
(2) Represents the number of apartment homes planned for the Community
for which development was commenced in the applicable year. Includes
apartment homes in an additional phase to an existing Community.
(3) Excludes an additional phase to an existing Community.
(4) Includes a 588-unit Community that was sold in December 1999.
(5) This Community was sold in September 2000.
(6) This wholly-owned Community was sold to a 40% owned co-investment
partnership.
(7) Includes a wholly-owned 312 apartment home Community that was sold to
a 20% owned co-investment partnership.
(8) Includes a 488-unit Community that was sold in July 2001.
The following table shows the one-time and recurring annual fee income
that the Company and the Service Companies have received from 49 joint
venture relationships through December 31, 2001:
COMPANY CO-INVESTMENT COMPENSATION THE INITIAL OFFERING
(in thousands)
1994 1995 1996 1997 1998 1999 2000 2001 Total
-------- -------- -------- -------- -------- -------- -------- -------- ----------
Transaction fees: (1)
Acquisition fees. . $ 270 219 184 193 -- 149 705 118 1,838
Development fees. . -- 206 819 1,451 2,526 2,692 1,904 1,701 11,299
Construction fees . 17 182 918 1,558 2,432 2,798 3,005 1,974 12,884
Disposition fees. . -- -- 66 -- -- 740 512 234 1,552
Debt/Equity placement
fees. . . . . . . -- -- -- 88 81 95 327 113 704
-------- -------- -------- -------- -------- -------- -------- -------- ----------
287 607 1,987 3,290 5,039 6,474 6,453 4,140 28,277
-------- -------- -------- -------- -------- -------- -------- -------- ----------
Recurring fees and
other interests: (2)
Asset management
fees. . . . . . . 167 541 868 967 1,014 1,071 882 847 6,357
Property management
fees. . . . . . . 120 408 954 1,694 2,454 3,438 4,956 6,601 20,625
Cash flow
preferences . . . -- -- -- 59 195 381 1,090 2,107 3,832
-------- -------- -------- -------- -------- -------- -------- -------- ----------
287 949 1,822 2,720 3,663 4,890 6,928 9,555 30,814
-------- -------- -------- -------- -------- -------- -------- -------- ----------
Value Added:
Promoted interest
from cash flow. . -- -- -- 26 33 80 137 173 449
Promoted interest
from sale . . . . -- -- -- -- -- 554 1,181 1,796 3,531
-------- -------- -------- -------- -------- -------- -------- -------- ----------
-- -- -- 26 33 634 1,318 1,969 3,980
-------- -------- -------- -------- -------- -------- -------- -------- ----------
Total. . . . . $ 574 1,556 3,809 6,036 8,735 11,998 14,699 15,664 63,071
======== ======== ======== ======== ======== ======== ======== ======== ==========
--------------------
(1) The transaction fees are shown net of intercompany eliminations to the extent of the Company's percentage
interest in its co-investment joint ventures. The amounts shown represent the portion of the fees earned in
the applicable year. The transaction fees for 2001 represent amounts earned by the Company for the year
ended December 31, 2001. Subsequent to December 31, 2001, additional construction and development fees of
approximately $2,095 million and $2,752 million, respectively, are anticipated to be earned by the
Company and the Service Companies in connection with the completion of development communities under
construction on behalf of existing co-investment joint ventures.
(2) Recurring fees are shown before intercompany eliminations because such fees are expensed by the
co-investment partnerships, which reduce the Company's share of income from the partnerships. The
Company owns a weighted average 32% interest in the 49 co-investment partnerships at December 31, 2001.
The amounts shown represent the portion of the fees earned in the applicable year. The recurring fees
for 2001 represent amounts earned by the Company for the year ended December 31, 2001. Recurring fees
should increase as additional co-investment Communities under development are completed.
The Company has received indications of interest from existing co-
investment partners and other potential investors and is pursuing other
commitments for the acquisition or development of additional co-investment
communities. In addition, the Company is continually working to expand the
base of its institutional joint venture partners.
HISTORY OF THE AMLI RESIDENTIAL PROPERTY BUSINESS
The Company was formed in February 1994 to continue and expand the
multifamily property business previously conducted by ARC. ARC was founded
in 1980 by Gregory T. Mutz and John E. Allen, the Chairman and Vice-
Chairman of the Company, respectively. From the date of its inception
through the date of the Initial Offering, ARC focused on owning, managing,
leasing, acquiring and developing upscale residential apartment communities
in the Southwest, Southeast and Midwest areas of the United States. During
the period from 1982 to 1989, ARC was actively engaged in both the
development and acquisition of multifamily communities. From 1989 through
the date of the Initial Offering, ARC exclusively pursued acquisition
opportunities due to ARC's belief that this strategy provided a more
favorable return relative to the risk taken than did the development of new
properties during this period. From the date of the Initial Offering to
the present, AMLI has pursued a strategy of selective acquisitions and
developments in its target markets.
Prior to 1994 all communities shown as wholly-owned were originally acquired as co-investments between ARC
and the third parties who contributed their interests to the Company in various property partnerships. The
following table shows ARC's and the Company's history of acquiring and developing apartment communities:
COMPANY STABILIZED COMMUNITIES AT DECEMBER 31,
-------------------------------------------------------------------------------
1982-
2001 2000 1999 1998 1997 1996 1995 1994 1993
------- ------ ------ ------ ------ ------ ------ ------ ------
Wholly-owned:
Units at beginning of year. . 12,191 12,515 12,792 11,650 9,824 9,600 9,789 8,207 --
Units acquired (1). . . . . . 1,134 1,074 -- 1,102 1,724 -- -- 1,582 6,564
Units sold/contributed to
co-investments . . . . . . . (1,078) (1,598) (773) (472) (350) -- (421) -- --
Units developed (2) . . . . . -- 200 496 512 452 224 232 -- 1,643
------- ------ ------ ------ ------ ------ ------ ------ ------
Total wholly owned units
at end of year. . . . . . . 12,247 12,191 12,515 12,792 11,650 9,824 9,600 9,789 8,207
------- ------ ------ ------ ------ ------ ------ ------ ------
Co-investments:
Units at beginning of year. . 13,956 8,936 6,767 5,851 3,677 2,245 1,451 425 --
Units acquired/contributed
to co-investments . . . . . 483 3,034 1,026 260 1,506 1,080 794 1,026 150
Units sold (1). . . . . . . . (488) (652) (713) -- -- (150) -- -- --
Units developed (2) . . . . . 1,060 2,638 1,856 656 668 502 -- -- 275
------- ------ ------ ------ ------ ------ ------ ------ ------
Total co-investment units
at end of year. . . . . . . 15,011 13,956 8,936 6,767 5,851 3,677 2,245 1,451 425
------- ------ ------ ------ ------ ------ ------ ------ ------
Total stabilized units. . 27,258 26,147 21,451 19,559 17,501 13,501 11,845 11,240 8,632
======= ====== ====== ====== ====== ====== ====== ====== ======
(1) In 2000 includes 150 units sold to the Company by a co-investment.
(2) Units included on this line when community reaches stabilization.
ITEM 2. COMMUNITIES
STABILIZED COMMUNITIES
The Communities include 71 stabilized multifamily apartment
communities containing 27,258 apartment homes operated under the AMLI
[registered trademark] brand name. "Stabilized" refers to a Community
having achieved substantial (92-95%) occupancy at the conclusion of an
initial lease-up period. Thirty-one of the stabilized Communities,
containing an aggregate of 12,247 apartment homes, are directly owned by
the Company (the "Wholly-Owned Communities") and 40 Communities, containing
an aggregate of 15,011 apartment homes, are owned through co-investment
joint ventures (the "Co-Investment Communities"). The stabilized
Communities are located in the markets described in the table below.
Wholly-owned Co-investment
Total Communities Communities
------------- ------------ -------------
Location No. Units No. Units No. Units
-------- ---- ----- ---- ----- ---- -----
Dallas/Ft. Worth, Texas 19 7,688 10 4,306 9 3,382
Atlanta, Georgia. . . . 15 5,637 7 2,771 8 2,866
Chicago, Illinois . . . 8 3,243 1 196 7 3,047
Austin, Texas . . . . . 6 2,797 3 1,304 3 1,493
Indianapolis, Indiana . 6 2,428 3 1,536 3 892
Kansas City, Kansas . . 8 2,518 4 1,154 4 1,364
Houston, Texas. . . . . 7 2,205 2 652 5 1,553
Denver, Colorado. . . . 2 742 1 328 1 414
--- ------ --- ------ --- ------
Total . . . . . . . 71 27,258 31 12,247 40 15,011
=== ====== === ====== === ======
As of December 31, 2001, the average age of the stabilized Communities
was approximately 6.3 years, the weighted average occupancy rate of the
stabilized Communities was 91%, and the average monthly rental rate per
apartment home was $865.
DEVELOPMENT COMMUNITIES
The development Communities, including Communities in lease-up,
consist of seven multifamily apartment communities and a phase to an
existing Community, which upon completion will contain 2,937 apartment
homes. The development Communities are under development in the markets
described below:
Wholly-Owned Co-investment
Development Development
Total Communities Communities
------------ ------------ -------------
Location No. Units No. Units No. Units
-------- --- ----- --- ----- --- -----
Atlanta, Georgia. . . . . 3 1,387 -- -- 3(1) 1,387
Indianapolis, Indiana . . 1 322 1 322 -- --
Kansas City, Kansas . . . 1 408 -- -- 1 408
Houston, Texas. . . . . . 1 300 -- -- 1 300
Chicago, Illinois . . . . 1 520 -- -- 1 520
--- ----- --- ----- --- -----
Total . . . . . . . . 7 2,937 1 322 6 2,615
=== ====== === ====== === =====
(1) Excludes a second phase that contains 216 apartment homes.
The Wholly-Owned Communities and the Co-Investment Communities are
primarily oriented to residents demanding high levels of services and
contain numerous resident amenities, such as business centers, fitness
centers, swimming pools, tennis courts, basketball and volleyball courts,
miles of jogging trails and nature walks. Most of the apartment homes have
a patio, porch or sunroom, and many offer one or more additional features
such as vaulted ceilings, microwave ovens, Palladian windows, fireplaces
and washers and dryers or washer/dryer connections. The Wholly-Owned
Communities and Co-Investment Communities that were developed by AMLI have
won numerous awards for design, landscaping and architecture.
The table below summarizes certain information related to the Wholly-Owned Communities and the Co-Investment
Communities.
2001
Average
Monthly 2001
Average Collected Weighted
Year Number Unit Size Rent Average
Wholly-owned Communities Location Completed of Units (Square Feet) Per Unit Occupancy
------------------------ -------- --------- -------- ------------- -------- ----------
Dallas/Ft. Worth, TX
AMLI:
at Bent Tree Dallas 1996/00 500 963 $ 865 92%
at Bishop's Gate West Plano 1997 266 1,098 1,027 91%
at Chase Oaks Plano 1986 250 775 724 94%
at Gleneagles Dallas 1987/97 590 882 741 93%
on the Green Ft. Worth 1990/93 424 846 723 92%
at Nantucket Dallas 1986 312 712 600 92%
of North Dallas Dallas 1985/86 1,032 879 715 93%
at Stonebridge Ranch McKinney 2001 250 857 728 85%
at Shadow Ridge Flower Mound 2001 222 983 1,025 76%
at Valley Ranch Irving 1985 (1) 460 848 752 93%
------ ------ ------ -----
4,306 882 769 91%
------ ------ ------ -----
Austin, TX
AMLI:
in Great Hills Austin 1985 344 750 788 91%
at Lantana Ridge Austin 1997 354 881 919 92%
at StoneHollow Austin 1997 606 866 856 91%
------ ------ ------ -----
1,304 839 855 91%
------ ------ ------- -----
Houston, TX
AMLI:
at the Medical Center Houston 2001 334 962 919 95%
at Western Ridge Houston 2000 318 911 853 92%
------ ------ ------- -----
652 937 886 94%
------ ------ ------- -----
2001
Average
Monthly 2001
Average Collected Weighted
Year Number Unit Size Rent Average
Wholly-owned Communities Location Completed of Units (Square Feet) Per Unit Occupancy
------------------------ -------- --------- -------- ------------- -------- ----------
Atlanta, GA
AMLI:
at Clairmont Atlanta 1988 288 796 848 92%
at Killian Creek Snellville 1999 256 1,027 854 94%
at Park Creek Gainesville 1998 200 976 794 91%
at Towne Creek Gainesville 1989 150 811 652 91%
at Spring Creek Dunwoody 1985/86/
87/89 1,180 916 809 92%
at Vinings Atlanta 1985 360 1,040 879 94%
at West Paces Atlanta 1992 337 1,050 952 93%
------ ------ ------ -----
2,771 945 834 92%
------ ------ ------ -----
Kansas City, KS
AMLI:
at Centennial Park Overland Park 1998 170 1,205 988 91%
at Lexington Farms Overland Park 1998 404 972 791 91%
at Regents Center Overland Park 1991/95/97 424 940 761 92%
at Town Center Overland Park 1997 156 1,134 940 89%
------ ------ ------ -----
1,154 1,017 829 91%
------ ------ ------ -----
Indianapolis, IN
AMLI:
at Conner Farms Indianapolis 1993 300 1,091 848 91%
at Eagle Creek Indianapolis 1998 240 973 806 92%
at Riverbend Indianapolis 1983/85 996 824 635 88%
------ ------ ------ -----
1,536 899 703 89%
------ ------ ------ -----
Chicago, IL
AMLI:
at Poplar Creek Schaumburg 1985 196 906 1,087 95%
------ ------ ------ -----
Denver, CO
AMLI:
at Gateway Park Denver 2000 328 899 932 89%
------ ------ ------ -----
Total Wholly-owned
Communities at
December 31, 2001 12,247 910 $ 806 91.4%
====== ====== ====== =====
(1) This community was under renovation in 2001.
2001
Average
Monthly 2001
Company's Average Collected Weighted
Co-investment Percentage Year Number Unit Size Rent Average
Communities Ownership Location Completed of Units (Square Feet)Per Unit Occupancy
---------------- ---------- -------- --------- -------- ---------------------- ----------
Atlanta, GA
AMLI:
at Barrett Lakes 35% Cobb County 1997 446 1,037 $ 893 93%
at Northwinds 35% Alpharetta 1999 800 1,023 946 94%
at River Park 40% Norcross 1997 222 1,021 981 92%
at Willeo Creek 30% Rosewell 1989 242 1,229 912 93%
at Windward Park 45% Alpharetta 1999 328 1,082 915 89%
at Peachtree City 20% Peachtree City 1998 312 980 964 93%
at Lost Mountain 75% Paulding County 2000 164 958 795 93%
at Park Bridge 25% Alpharetta 2000 352 1,012 909 93%
------ ------ ------ -----
2,866 1,039 923 93%
------ ------ ------ -----
Chicago, IL
AMLI:
at Chevy Chase 33% Buffalo Grove 1988 592 812 1,107 93%
at Danada Farms 10% Wheaton 1989/91 600 869 1,051 94%
at Fox Valley 25% Aurora 1998 272 990 1,012 92%
at Windbrooke 15% Buffalo Grove 1987 236 903 1,148 96%
at Oakhurst North 25% Aurora 2000 464 1,013 1,012 89%
at St. Charles (1) 25% St. Charles 2000 400 990 1,117 88%
at Osprey Lake 69% Gurnee 1997/99 483 938 1,011 92%
------ ------ ------ -----
3,047 1,069 1,062 92%
------ ------ ------ -----
Indianapolis, IN
AMLI:
on Spring Mill 20%
residual Carmel 1999 400 1,017 836 80%
at Lake Clear-
water 25% Indianapolis 2000 216 1,009 896 93%
at Castle Creek 40% Indianapolis 2000 276 978 863 91%
------ ------ ------ -----
892 1,003 859 86%
------ ------ ------ -----
2001
Average
Monthly 2001
Company's Average Collected Weighted
Co-investment Percentage Year Number Unit Size Rent Average
Communities Ownership Location Completed of Units (Square Feet)Per Unit Occupancy
---------------- ---------- -------- --------- -------- ------------- -------- ----------
Kansas City, KS
AMLI:
at Regents Crest 25% Overland Park 1997/00 476 948 764 89%
Creekside 25% Overland Park 2000 224 813 801 92%
at Wynnewood
Farms 25% Overland Park 2000 232 1,017 918 90%
at Summit Ridge (1) 25% Lee's Summit 2001 432 952 762 89%
------ ------ ------ -----
1,364 939 795 89%
------ ------ ------ -----
Austin, TX
AMLI:
at Wells Branch 25% Austin 1999 576 963 884 85%
at Scofield Ridge 45% Austin 2000 487 889 904 89%
at Monterey Oaks 25% Austin 2000 430 960 966 93%
------ ------ ------ -----
1,493 938 914 89%
------ ------ ------ -----
Dallas, TX
AMLI:
at Deerfield 25% Plano 1999 240 996 869 91%
at Fossil Creek 25% Ft. Worth 1998 384 1,001 852 93%
at Oak Bend 40% Lewisville 1997 426 898 775 92%
on the Parkway 25% Dallas 1999 240 939 870 90%
at Prestonwood
Hills 45% Dallas 1997 272 903 866 94%
on Timberglen 40% Dallas 1985 260 774 646 94%
at Verandah 35% Arlington 1986/91 538 733 702 92%
on Frankford 45% Dallas 1998 582 889 886 94%
at Breckinridge
Point 45% Richardson 1999 440 1,063 930 90%
------ ------ ------ -----
3,382 904 822 92%
------ ------ ------ -----
2001
Average
Monthly 2001
Company's Average Collected Weighted
Co-investment Percentage Year Number Unit Size Rent Average
Communities Ownership Location Completed of Units (Square Feet)Per Unit Occupancy
---------------- ---------- -------- --------- -------- ------------- -------- ----------
Houston, TX
AMLI:
at Champions Centre 15% Houston 1994 192 857 717 93%
at Champions Park 15% Houston 1991 246 902 708 92%
at Greenwood Forest 15% Houston 1995 316 984 759 91%
Midtown 45% Houston 1998 419 880 1,058 97%
Towne Square 45% Houston 1999 380 827 976 95%
------ ------ ------ -----
1,553 889 879 94%
------ ------ ------ -----
Denver, CO
AMLI:
at Lowry Estates 50% Denver 2000 414 947 1,125 89%
------ ------ ------ -----
Total Co-investment Communities
at December 31, 2001 15,011 945 $ 913 91.4%
====== ====== ====== =====
Total 27,258 930 $ 865 91.4%
====== ====== ====== =====
(1) Fourth quarter average occupancy; in lease-up prior to the fourth quarter.
OCCUPANCY
The following is a listing of approximate physical occupancy levels by quarter for the Company's Wholly-Owned
Communities and Co-Investment Communities:
2001 2000
Location/Community Company's Number ----------------------------------------------------
------------------ Percentage of at at at at at at at at
Wholly-owned Communities Ownership Units 12/31 9/30 6/30 3/31 12/31 9/30 6/30 3/31
------------------------ ---------- ------- ----- ----- ----- ------ ----- ----------- ------
Dallas/Ft. Worth, TX
AMLI:
at AutumnChase . . . . . . N/A N/A N/A N/A 92% 91% 93% 91% 88%
at Bent Tree . . . . . . . 500 89% 93% 92% 92% 91% 91% 97% 95%
at Bishop's Gate . . . . . 266 92% 90% 93% 90% 89% 93% 92% 91%
at Chase Oaks. . . . . . . 250 90% 95% 93% 96% 94% 94% 93% 95%
at Gleneagles. . . . . . . 590 91% 92% 94% 95% 96% 95% 95% 92%
on the Green . . . . . . . 424 91% 93% 94% 91% 91% 92% 97% 95%
at Nantucket . . . . . . . 312 96% 94% 94% 92% 96% 95% 97% 94%
of North Dallas. . . . . . 1,032 94% 92% 93% 95% 96% 93% 90% 90%
on Rosemeade . . . . . . . N/A N/A N/A 93% 94% 90% 95% 95% 96%
at Stonebridge Ranch . . . 250 90% 90% 82% N/A N/A N/A N/A N/A
at Shadow Ridge. . . . . . 222 78% 85% N/A N/A N/A N/A N/A N/A
at Valley Ranch. . . . . . 460 89% 90% 93% 95% 94% 97% 95% 97%
------ ----- ----- ----- ----- ----- ----- ----- -----
4,306 91% 92% 93% 94% 93% 94% 93% 92%
------ ----- ----- ----- ----- ----- ----- ----- -----
Austin, TX
AMLI:
at the Arboretum . . . . . N/A N/A N/A N/A N/A N/A 98% 94% 95%
in Great Hills . . . . . . 344 94% 92% 90% 91% 91% 95% 97% 97%
at Lantana Ridge . . . . . 354 88% 94% 89% 90% 96% 97% 93% 94%
at Martha's Vineyard . . . N/A N/A N/A N/A N/A N/A 94% 97% 98%
at StoneHollow . . . . . . 606 94% 94% 94% 89% 88% 97% 97% 98%
------ ----- ----- ----- ----- ----- ----- ----- -----
1,304 92% 93% 92% 90% 91% 96% 96% 97%
------ ----- ----- ----- ----- ----- ----- ----- -----
Houston, TX
AMLI:
at the Medical Center. . . . 334 93% 94% N/A N/A N/A N/A N/A N/A
at Western Ridge . . . . . . 318 95% 98% 95% 91% 90% N/A N/A N/A
------ ----- ----- ----- ----- ----- ----- ----- -----
652 94% 96% 95% 91% 90% 0% 0% 0%
------ ----- ----- ----- ----- ----- ----- ----- -----
2001 2000
Company's Number ----------------------------------------------------
Percentage of at at at at at at at at
Location/Community Ownership Units 12/31 9/30 6/30 3/31 12/31 9/30 6/30 3/31
------------------ ---------- ------- ----- ----- ----- ------ ----- ----------- ------
Atlanta, GA
AMLI:
at Clairmont. . . . . . . . 288 94% 92% 95% 97% 88% 93% 96% 97%
at Killian Creek. . . . . . 256 87% 92% 93% 97% 97% 95% 96% 97%
at Park Creek . . . . . . . 200 85% 83% 91% 93% 93% 95% 91% 95%
at Peachtree City . . . . . N/A N/A N/A N/A N/A N/A N/A N/A 94%
at Towne Creek. . . . . . . 150 89% 93% 90% 89% 91% 93% 93% 93%
on Spring Creek . . . . . . 1,180 90% 90% 94% 92% 94% 90% 92% 90%
at Vinings. . . . . . . . . 360 91% 90% 93% 95% 94% 96% 95% 89%
at West Paces . . . . . . . 337 94% 94% 93% 93% 90% 90% 95% 92%
------ ----- ----- ----- ----- ----- ----- ----- -----
2,771 90% 91% 93% 93% 93% 92% 93% 92%
------ ----- ----- ----- ----- ----- ----- ----- -----
Kansas City, KS
AMLI:
at Alvamar . . . . . . . . N/A N/A N/A 93% 86% 93% 92% 92% 86%
at Centennial Park . . . . 170 92% 96% 88% 86% 91% 81% 89% 84%
at Lexington Farms . . . . 404 92% 92% 93% 91% 81% 87% 90% 91%
at Regents Center. . . . . 424 88% 94% 93% 89% 82% 87% 89% 92%
at Town Center . . . . . . 156 90% 96% 90% 87% 88% 87% 87% 83%
------ ----- ----- ----- ----- ----- ----- ----- -----
1,154 90% 94% 92% 89% 85% 87% 89% 89%
------ ----- ----- ----- ----- ----- ----- ----- -----
Indianapolis, IN
AMLI:
at Conner Farms. . . . . . 300 89% 92% 93% 89% 89% 93% 94% 94%
at Eagle Creek . . . . . . 240 88% 90% 93% 93% 93% 93% 93% 94%
at Riverbend . . . . . . . 996 90% 94% 90% 83% 84% 89% 84% 79%
------ ----- ----- ----- ----- ----- ----- ----- -----
1,536 90% 92% 91% 86% 87% 90% 87% 84%
------ ----- ----- ----- ----- ----- ----- ----- -----
Chicago, IL
AMLI:
at Poplar Creek. . . . . . 196 94% 95% 94% 96% 99% 96% 93% 99%
------ ----- ----- ----- ----- ----- ----- ----- -----
DENVER, CO
AMLI:
at Gateway Park. . . . . . 328 85% 91% 93% 85% N/A N/A N/A N/A
------ ----- ----- ----- ----- ----- ----- ----- -----
12,247 90.7% 92.1% 92.4% 91.3% 91.2% 92.5% 92.5% 91.7%
====== ===== ===== ===== ===== ===== ===== ===== =====
2001 2000
Company's Number ----------------------------------------------------
Percentage of at at at at at at at at
Location/Community Ownership Units 12/31 9/30 6/30 3/31 12/31 9/30 6/30 3/31
------------------ ---------- ------- ----- ----- ----- ------ ----- ----------- ------
Co-investment Communities:
--------------------------
Atlanta, GA
AMLI:
at Barrett Lakes . . . . . 35% 446 85% 94% 92% 94% 97% 96% 95% 96%
at Northwinds. . . . . . . 35% 800 93% 92% 95% 93% 95% 94% 96% 96%
at Pleasant Hill . . . . . N/A N/A N/A N/A N/A N/A N/A N/A 97% 97%
at River Park. . . . . . . 40% 222 94% 89% 91% 96% 93% 98% 98% 93%
at Willeo Creek. . . . . . 30% 242 91% 84% 91% 98% 94% 96% 92% 95%
at Windward Park . . . . . 45% 328 87% 90% 91% 88% 90% 93% 93% 93%
at Peachtree City. . . . . 20% 312 92% 92% 94% 89% 93% 96% 92% N/A
lease lease
at Lost Mountain . . . . . 75% 164 83% 93% 95% 95% 95% up up N/A
lease lease lease
at Park Bridge . . . . . . 25% 352 92% 93% 96% 95% up up up N/A
------ ----- ----- ----- ----- ----- ----- ----- -----
2,866 90% 91% 94% 93% 94% 95% 95% 95%
------ ----- ----- ----- ----- ----- ----- ----- -----
Chicago, IL
AMLI:
at Chevy Chase . . . . . . 33% 592 85% 91% 95% 95% 96% 97% 95% 97%
at Danada Farms. . . . . . 10% 600 86% 87% 94% 96% 97% 95% 95% 93%
at Fox Valley. . . . . . . 25% 272 83% 92% 93% 94% 90% 95% 97% 92%
at Willowbrook . . . . . . N/A N/A N/A N/A 93% 93% 95% 95% 96% 90%
at Windbrooke. . . . . . . 15% 236 86% 95% 97% 96% 97% 98% 95% 98%
lease
at Oakhurst North. . . . . 25% 464 80% 86% 90% 93% 92% 91% 94% up
lease lease lease
at St. Charles . . . . . . 25% 400 87% 84% 91% 89% 91% up up up
at Osprey Lake . . . . . . 69% 483 96% 93% 92% 87% N/A N/A N/A N/A
------- ----- ----- ----- ----- ----- ----- ----- -----
3,047 86% 89% 93% 93% 94% 95% 95% 94%
------- ----- ----- ----- ----- ----- ----- ----- -----
Indianapolis, IN
AMLI:
on Spring Mill . . . . . . 20% lease
residual 400 80% 81% 78% 80% 79% 85% 91% up
lease lease
at Lake Clearwater . . . . 25% 216 84% 93% 94% 94% 96% 96% up up
lease lease lease lease
at Castle Creek. . . . . . 40% 276 91% 88% 91% 95% up up up up
------- ----- ----- ----- ----- ----- ----- ----- -----
892 84% 86% 86% 88% 85% 89% 91% 0%
------- ----- ----- ----- ----- ----- ----- ----- -----
2001 2000
Company's Number ----------------------------------------------------
Percentage of at at at at at at at at
Location/Community Ownership Units 12/31 9/30 6/30 3/31 12/31 9/30 6/30 3/31
------------------ ---------- ------- ----- ----- ----- ------ ----- ----------- ------
Kansas City, KS
AMLI:
at Regents Crest . . . . . 25% 476 86% 89% 92% 90% 83% 86% 87% 86%
lease lease lease
Creekside. . . . . . . . . 25% 224 91% 93% 88% 91% 93% up up up
lease lease lease
at Wynnewood Farms . . . . 25% 232 88% 93% 92% 91% 88% up up up
lease lease lease lease lease lease
at Summit Ridge. . . . . . 25% 432 91% up up up up up up N/A
------- ----- ----- ----- ----- ----- ----- ----- -----
1,364 89% 91% 91% 91% 87% 86% 87% 86%
------- ----- ----- ----- ----- ----- ----- ----- -----
Dallas, TX
AMLI:
at Deerfield . . . . . . . 25% 240 93% 92% 95% 86% 90% 92% 82% 93%
at Fossil Creek. . . . . . 25% 384 87% 95% 95% 94% 90% 92% 97% 94%
at Oak Bend. . . . . . . . 40% 426 91% 96% 94% 93% 92% 94% 92% 90%
on the Parkway . . . . . . 25% 240 91% 94% 92% 91% 89% 92% 94% 95%
at Prestonwood Hills . . . 45% 272 89% 95% 97% 96% 94% 95% 92% 93%
on Timberglen. . . . . . . 40% 260 95% 94% 94% 94% 95% 96% 96% 94%
at Verandah. . . . . . . . 35% 538 93% 96% 94% 90% 90% 93% 95% 95%
on Frankford . . . . . . . 45% 582 92% 93% 93% 94% 95% 94% 90% N/A
at Breckinridge Point. . . 45% 440 87% 89% 93% 93% 88% 91% N/A N/A
------- ----- ----- ----- ----- ----- ----- ----- -----
3,382 91% 94% 94% 93% 92% 93% 92% 93%
------- ----- ----- ----- ----- ----- ----- ----- -----
Austin, TX
AMLI:
at Wells Branch. . . . . . 25% 576 88% 93% 87% 81% 86% 94% 93% 94%
at Scofield Ridge. . . . . 45% 487 86% 90% 87% 80% 89% 93% N/A N/A
lease lease lease
at Monterey Oaks . . . . . 25% 430 92% 94% 88% 94% 93% up up up
------- ----- ----- ----- ----- ----- ----- ----- -----
1,493 88% 92% 87% 88% 89% 93% 93% 94%
------- ----- ----- ----- ----- ----- ----- ----- -----
2001 2000
Company's Number ----------------------------------------------------
Percentage of at at at at at at at at
Location/Community Ownership Units 12/31 9/30 6/30 3/31 12/31 9/30 6/30 3/31
------------------ ---------- ------- ----- ----- ----- ------ ----- ----------- ------
Houston, TX
AMLI:
at Champions Centre. . . . 15% 192 94% 93% 89% 95% 91% 94% 93% 94%
at Champions Park. . . . . 15% 246 94% 92% 94% 90% 88% 87% 93% 96%
at Greenwood Forest. . . . 15% 316 91% 93% 93% 87% 88% 92% 96% 94%
Midtown. . . . . . . . . . 45% 419 90% 97% 96% 96% 96% 97% 96% 94%
Towne Square . . . . . . . 45% 380 91% 96% 90% 95% 92% N/A N/A N/A
------- ----- ----- ----- ----- ----- ----- ----- -----
1,553 92% 94% 93% 93% 91% 93% 95% 94%
------- ----- ----- ----- ----- ----- ----- ----- -----
Denver, CO
AMLI:
at Lowry Estates . . . . . 50% 414 91% 91% 88% 87% 89% N/A N/A N/A
------- ----- ----- ----- ----- ----- ----- ----- -----
Total co-investment
communities . . . . . . . . 15,011 89.0% 91.5% 92.0% 91.7% 88.9% 93.5% 93.8% 93.9%
------- ----- ----- ----- ----- ----- ----- ----- -----
Total . . . . . . . . . . . . 27,258 89.8% 91.8% 92.2% 91.5% 90.0% 93.0% 93.1% 92.6%
======= ===== ===== ===== ===== ===== ===== ===== =====
ITEM 3. LEGAL PROCEEDINGS
None of the Company, the Operating Partnership, the Service Companies
or the co-investment partnerships is presently subject to any material
litigation nor, to the Company's knowledge, has any material litigation
been threatened. The Company is a party to routine litigation and
administrative proceedings arising in the ordinary course of business, most
of which are expected to be covered by liability insurance and none of
which individually or in the aggregate are expected to have a material
effect on the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of the Company's
shareholders during the fourth quarter of the year ended December 31, 2001.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The Company's common shares began trading on the NYSE on February 9, 1994, under the symbol "AML." The
following table sets forth the quarterly high and low sales prices per share as reported on the NYSE Composite
Tape by CompuServe and the dividends paid by the Company with respect to the periods noted.
2001 2000
----------------------------- -----------------------------
Dividends Dividends
Per Share Per Share
High Low (1) High Low (1)
------ ----- --------- ------ ----- ---------
First Quarter . . . . . . . . . . . $25.19 $21.00 $0.47 $22.38 $19.81 $0.46
Second Quarter. . . . . . . . . . . 24.60 21.75 0.47 23.88 20.44 0.47
Third Quarter . . . . . . . . . . . 24.90 22.80 0.48 25.25 23.50 0.47
Fourth Quarter. . . . . . . . . . . 25.77 22.38 0.48 24.69 20.13 0.47
(1) The Company paid dividends with respect to these quarters in the quarter immediately following the
calendar quarter in which the related cash flow from operations was generated.
The number of beneficial holders of common shares at February 28, 2002 was approximately 10,000.
Dividends are declared and paid in the second month following the end
of the calendar quarter in which the related cash flow from operations is
generated. On February 28, 2002, the last reported sale price of the
common shares on the NYSE was $24.10 per share. On the same date, the
Company had 17,850,659 common shares outstanding held by 318 shareholders
of record.
The Company's current dividend payment level equals an annual rate of
$1.92 per common share. The Company anticipates that it will continue to
make regular quarterly dividend payments. In 1999 the Company distributed
approximately 90% of its taxable income and designated a portion of its
dividends being paid during 2000 as a throw back dividend to 1999. In 2000
the Company distributed approximately 90% of its taxable income and has
again designated a portion of its dividends paid during 2001 as a throw
back dividend to 2000. In 2001, the Company distributed over 100% of its
taxable income. Accordingly, no provision has been made for Federal income
taxes for the Company. Dividends paid in 2001 were fully taxable
(approximately 33% as capital gain and approximately 67% as ordinary
income). The Company estimates that dividends to be paid in 2002 will also
be fully taxable.
Future distributions by the Company will be at the discretion of the
Board of Trustees and will depend on the actual cash available for
distribution and funds from operations of the Company, its financial
condition, capital requirements, the annual distribution requirements under
the REIT provisions of the Internal Revenue Code and such other factors as
the Board of Trustees deems relevant. The annual dividend payments for
calendar year 2001 (including the capital gain dividend) necessary for the
company to maintain its status as a REIT are approximately $1.46 per share.
UNITS IN THE OPERATING PARTNERSHIP
On April 17, 2000, the Operating Partnership issued 333,610 OP Units
at a then-current value of $7.5 million, in exchange for multifamily
residential apartment properties. The OP Units were issued solely to
"accredited investors" within the meaning of Rule 501 of Regulation D, and
the OP Units were issued in reliance upon the exemption from registration
set forth in Regulation D.
On January 29, 2001, the Operating Partnership issued 86,494 OP Units
at a then-current value of $1.9 million, in exchange for multifamily
residential apartment properties. The OP Units were issued solely to
"accredited investors" in reliance upon the exemption set forth in
Regulation D.
On March 31, 2001, the Operating Partnership issued 40,136 OP Units at
a then-current value of $0.9 million, in exchange for multifamily
residential apartment properties. The OP Units were issued solely to
"accredited investors' in reliance upon the exemption set forth in
Regulation D.
On August 6, 2001, the Operating Partnership issued 109,748 OP Units
at a then-current value of $2.6 million, in exchange for multifamily
residential apartment properties. The OP Units were issued solely to an
"accredited investor" in reliance upon the exemption set forth in
Regulation D.
PRIVATE PLACEMENT OF 800,000 SERIES D CUMULATIVE CONVERTIBLE REDEEMABLE
PREFERRED SHARES OF BENEFICIAL INTEREST OF THE COMPANY
On October 31, 2001, the Company completed a private placement of
800,000 Series D Cumulative Convertible Redeemable Preferred shares of
beneficial interest to The Equitable Life Assurance Society of the United
States. The aggregate offering price of such preferred shares was $20
million. Each preferred share is initially convertible into 0.9009 of the
Company's common shares of beneficial interest at an exercise price of
$27.75 per share. The Company relied on Regulation D to effectuate the
private placement. The investor who purchased the preferred shares in the
private placement is an institutional "accredited investor" within the
meaning of Rule 501 of Regulation D.
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected financial data relating to the historical financial condition and
results of operations of the Company. Such selected financial data is qualified in its entirety by, and should be
read in conjunction with, "Item 7. Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the financial statements and notes thereto included in this report.
HISTORICAL
(dollars in thousands, except share data)
----------------------------------------------------------------
2001 2000 1999 1998 1997
---------- ---------- ---------- ---------- ----------
OPERATING DATA:
Total revenues. . . . . . . . . . . $ 130,172 131,746 129,108 117,353 90,073
Gains from sales of residential
properties. . . . . . . . . . . . 23,296 50,180 21,158 3,621 2,457
Income before minority interest
and extraordinary item. . . . . . 53,654 90,095 61,071 34,697 28,926
Net income. . . . . . . . . . . . . 45,746 76,533 51,738 29,700 24,352
Net income attributable to
common shares . . . . . . . . . . 38,791 69,476 44,457 24,825 22,449
Net income per common share
- basic . . . . . . . . . . . . . 2.18 4.00 2.63 1.49 1.43
Net income per common share
- diluted . . . . . . . . . . . . 2.12 3.59 2.46 1.49 1.43
BALANCE SHEET DATA:
Residential real estate, before
accumulated depreciation . . . . . 802,414 748,345 729,325 739,764 653,947
Investments in partnerships . . . . 184,270 166,569 107,518 72,150 50,729
Total assets. . . . . . . . . . . . 919,002 865,991 804,618 785,592 679,978
Total debt. . . . . . . . . . . . . 399,309 385,981 369,541 367,370 333,250
Mandatorily redeemable convertible
preferred shares. . . . . . . . . 93,287 74,144 74,144 74,162 --
Minority interest . . . . . . . . . 68,186 59,537 57,813 54,574 51,463
Shareholders' equity. . . . . . . . 330,277 325,795 282,897 268,692 270,439
OP Units owned by AMLI. . . . . . . 22,115,368 21,324,504 20,971,138 20,880,155 17,677,580
Total OP Units. . . . . . . . . . . 25,779,764 24,558,242 24,538,654 24,445,827 20,958,523
HISTORICAL
(dollars in thousands, except per share data)
----------------------------------------------------------------
2001 2000 1999 1998 1997
---------- ---------- ---------- ---------- ----------
OTHER DATA:
Funds from operations (A) . . . . . 63,142 67,859 63,579 53,232 42,172
Operating earnings (B). . . . . . . 30,358 39,915 39,913 31,076 26,469
Cash dividends paid per common
share . . . . . . . . . . . . . . 1.89 1.86 1.81 1.76 1.73
Net cash flow from operating
activities. . . . . . . . . . . . 63,129 58,269 62,503 47,175 39,129
Net cash flow for investing
activities. . . . . . . . . . . . (44,534) (26,448) (22,014) (121,935) (170,900)
Net cash flow from (for) financing
activities. . . . . . . . . . . . (17,809) (29,033) (42,717) 73,630 127,156
Apartment homes (C) . . . . . . . . 12,569 12,191 12,715 14,278 14,138
UNCONSOLIDATED CO-INVESTMENT
PARTNERSHIPS
Total revenues. . . . . . . . . . . 166,593 128,376 92,084 68,018 48,489
Residential real estate, before
accumulated depreciation. . . . . 1,243,786 1,173,863 795,779 576,807 434,566
Total assets. . . . . . . . . . . . 1,184,528 1,112,991 772,897 557,265 423,234
Total debt. . . . . . . . . . . . . 489,912 471,753 320,355 263,520 224,799
Company's share of debt . . . . . . 186,842 170,654 99,068 71,802 59,045
Property EBITDA . . . . . . . . . . 102,128 78,209 56,342 40,684 28,626
Company's share of Property
EBITDA (D). . . . . . . . . . . . 35,879 25,081 15,976 11,147 7,491
Apartment homes (C) . . . . . . . . 17,626 16,801 13,034 10,143 7,307
(A) The Company believes that funds from operations ("FFO") is useful as a measure of the performance of an
equity REIT. FFO is defined as net income (computed in accordance with generally accepted accounting
principles ("GAAP")), excluding extraordinary gains (losses) from debt restructurings and gains (losses)
from sales of depreciable operating properties, plus depreciation and amortization, and after
adjustments for unconsolidated partnerships, joint ventures and other affiliates. Adjustments for
unconsolidated partnerships, joint ventures and other affiliates are calculated to reflect FFO on the
same basis. FFO does not represent cash flows from operations, as defined by GAAP; is not indicative
that cash flows are adequate to fund all cash needs; and is not to be considered an alternative to net
income or any other GAAP measure as a measurement of the results of the Company's operations or the
Company's cash flows or liquidity as defined by GAAP.
(B) Operating earnings is net income before gains from sales of residential properties and allocation to
minority interest.
(C) Includes communities still under development at end of year.
(D) Includes the Company's share of cash flows in excess of its ownership interest.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Dollars in thousands,
except share data and rental rates per unit)
The following discussion is based primarily on the consolidated
financial statements of AMLI Residential Properties Trust (the "Company" or
"AMLI") as of December 31, 2001 and 2000 and for the years ended
December 31, 2001, 2000 and 1999. This information should be read in
conjunction with the accompanying consolidated financial statements and
notes thereto.
As of December 31, 2001, the Company owned approximately 86% general
partnership interest in AMLI Residential Properties, L.P. (the "Operating
Partnership"), which holds the operating assets of the Company. The
limited partners hold Operating Partnership units ("OP Units") that are
convertible into common shares of the Company on a one-for-one basis,
subject to certain limitations. During 2001, the Company repurchased
220,400 common shares of the total 500,000 shares authorized for
repurchase. In addition, the Operating Partnership issued 569,988 OP Units
for the acquisition of wholly-owned and co-investment communities.
Furthermore, the Company privately placed 800,000 Series D Convertible
Preferred shares at $25 per share that are convertible into 720,721 shares
at $27.75 per share. The issue is redeemable by the Company after five
years. The $19,144 net proceeds will be used to fund future acquisition
and development opportunities and to reduce the Company's debt. In the
interim, the proceeds were used to pay down the Company's borrowings on its
unsecured line of credit. At December 31, 2001, the Company owned
22,115,368 OP Units including 4,275,000 Preferred OP Units and the limited
partners owned 3,664,396 OP Units. The Company has qualified, and
anticipates continuing to qualify, as a real estate investment trust
("REIT") for Federal income tax purposes.
At December 31, 2001, the Company owned, or owned interests in, 27,258
apartment homes in stabilized communities and an additional 2,937 apartment
homes under development or in lease-up.
CRITICAL ACCOUNTING AREAS
ACCOUNTING FOR INVESTMENTS IN AND TRANSACTIONS WITH UNCONSOLIDATED
PARTNERSHIPS
In February 2002 the Company marked its eighth year as a public
company traded on the NYSE. The Company has differentiated itself from
other publicly-owned multi-family residential REITs in the manner and to
the extent it conducts its business through co-investment with
institutional investors. The Company had operated successfully by co-
investing as a private company in the years prior to 1994. The Company
started in 1994 with 8,632 apartment homes; all but 425 of these were
wholly-owned. At December 31, 2001, the Company's wholly-owned portfolio
had grown to 12,569 units, and its co-investment portfolio had grown to
17,626 units.
Because the Company does not control these partnerships (the Company
shares decision making authority over all major decisions with various co-
investment partners), the Company's investments in these partnerships are
appropriately accounted for using the equity method of accounting. This
presentation, while required under generally accepted accounting
principles, keeps more than half of the Company's assets and debt (and all
of the Company's co-investment partners' equity) "off balance sheet."
The condensed combined financial information for the Company and its
co-investment partnerships at and for the year ended December 31, 2001, as
shown below, is presented as supplementary information intended to provide
a better understanding of the Company's financial position.
The information presented in the following table includes the
unconsolidated co-investment partnerships at 100%.
Company
Effect of and Co-
Consol- Combining Investment
idated Co-Invest- Partner-
Company ment Part- ships
("GAAP") nerships (Combined)
-------- ---------- ----------
Rental apartments $744,411 1,118,490 1,862,901
Accumulated depreciation (107,139) (97,229) (204,368)
-------- --------- ---------
637,272 1,021,261 1,658,533
Land and rental communities
under development 58,003 125,296 183,299
Investments in co-investment
partnerships 184,270 (184,270) --
Other, net 11,514 (9,455) 2,059
-------- --------- ---------
891,059 952,832 1,843,891
Debt - Company's share (399,309) (186,842) (586,151)
Debt - partners' share -- (303,070) (303,070)
-------- --------- ---------
Total net assets 491,750 462,920 954,670
Partners' share of net assets -- (462,920) (462,920)
-------- --------- ---------
Company's share of net assets $491,750 -- 491,750
======== ========= =========
Debt to total capitalization -
undepreciated book value 38.1%
========
The information presented in the following table includes AMLI's
proportionate share of unconsolidated co-investment partnership.
Company and
Consol- Share of Share of Co-
idated Co-Invest- Investment
Company ment Part- Partnerships
("GAAP") nerships (Combined)
-------- ---------- ------------
Rental apartments $744,411 370,165 1,114,576
Accumulated depreciation (107,139) (27,913) (135,052)
-------- --------- ---------
637,272 342,252 979,524
Land and rental communities
under development 58,003 31,085 89,088
Investments in co-investment
partnerships 184,270 (184,270) --
Other, net 11,514 (2,225) 9,289
-------- --------- ---------
891,059 186,842 1,077,901
Debt - Company's share (399,309) (186,842) (586,151)
-------- --------- ---------
Company's share of net assets $491,750 -- 491,750
======== ========= =========
Debt to total capitalization -
undepreciated book value 38.1% 48.0%
======== =========
The Company conducts business through its co-investment partnerships
in the same way it conducts the business of its wholly-owned properties.
The Company is compensated in a variety of ways for the services it
provides to these co-investment partnerships or AMLI's partners. Most of
the accounting policies that are deemed to be Critical Accounting Policies
relate to accounting for this compensation, which includes, among other
fees, acquisition fees, disposition fees, development fees, asset
management fees and promoted interest earned by the Operating Partnership
and construction and property management fees earned by the Company's
unconsolidated 95%-owned service company subsidiaries, which are also
accounted for using the equity method of accounting.
In general, fees are recognized upon completion of the earnings
process regardless of the timing of the receipt of cash. For instance,
acquisition and disposition fees are recognized only upon completion of an
acquisition or disposition of property on behalf of a co-investment
partnership, and asset management and property management fees are
recognized as they are earned as services are provided. Development and
construction fees are recognized using the percentage of completion method
(e.g., 40% of total development fees are recognized when 40% of total costs
are incurred). Payment of a portion of development fees earned may, in
some instances, be deferred until completion of development and lease-up.
Absent indications of inability to complete development or lease-up, this
payment deferral does not necessitate deferral of development fee income as
recognized on the percentage of completion method. At December 31, 2001
and 2000, total development fees earned but not yet collected totaled
$1,267 and $3,223, respectively, and are included in Other Assets in the
accompanying Consolidated Balance Sheets at December 31, 2001 and 2000.
That portion of any fees earned from a co-investment partnership is
eliminated to the extent of the Company's ownership interest, (that is,
AMLI does not recognize as income). For instance, if the Company earns a
$400 acquisition fee, which is earned from a partnership in which it holds
a 25% ownership interest, only $300 in fee income is recognized. Because
the partnership has incurred $400 of cost and capitalized this fee as part
of its property acquisition cost, the Company's share of equity on the
books of this partnership will exceed its investment in this partnership by
$100. The eliminated fees and the other differences are being taken into
earnings over 40 years as the underlying properties are depreciated over
their estimated useful lives.
Details of these differences between the Company's aggregate
investment in partnerships and its aggregate share of equity as recorded on
the books of these partnerships, net of accumulated amortization, are as
follows at December 31, 2001:
Total equity per partnerships $188,551
Capitalized interest 4,013
Eliminated fees (5,467)
Other (2,827)
--------
Total investments in partnerships $184,270
========
The Company capitalizes interest relating to its investments to the
extent that qualified assets of each partnership (those under development)
exceed debt of that partnership. Most of the $4,013 in capitalized
interest relates to the Company's capital contributions, which funded its
share of the development costs of properties owned by unleveraged
partnerships. Capitalized interest is being amortized against earnings
over 40 years.
PROMOTED INTERESTS
In most of the co-investment partnerships, the Company is entitled to
an increased share of any cash flow after the Company and its co-investment
partners have received distributions equal to their original cash
contributions plus a minimum return on their contributions. The Company
views these "promoted interests" as "back end" compensation for having
managed successful investments for its partners. The promoted interest
amounts are recognized in income when received in cash. Most of this
additional compensation is recognized following the completion of the
investment (i.e., sale of the property and distribution of the sale
proceeds), although receipt of cash and recognition of income can occur
earlier, as happened in February 2002 upon the refinancing of AMLI at
Windbrooke, a co-investment property. This property, acquired in 1995 for
$17,775, had increased in value by more than $8,000 as of the February 2002
maturity of its original $11,500, 9.24% loan. On February 4, 2002, the
Company received $1,545 as its share of refinancing proceeds from the
placement of a new $20,800, 6.56% first mortgage loan on the property.
The Company's co-investment partner's $8,023 share of the distribution
returned all original capital contribution plus, when taken together with
prior distributions of operating cash flow, the minimum return hurdle of
the partnership. As a result, notwithstanding the Company's original 15%
interest in this partnership, the Company will, in general, be receiving
future cash flows in excess of AMLI's ownership interest. This means that
even after the additional debt service, the Company anticipates that its
share of future annual cash flows will be greater in 2002 than it was in
2001.
Promoted interests recognized from the sales of AMLI at Pleasant Hill
in 2000 and AMLI at Willowbrook in 2001 contributed $0.05 and $0.07 per
share, respectively, to FFO and operating earnings in those years.
ACCOUNTING FOR INVESTMENTS IN AND TRANSACTIONS WITH UNCONSOLIDATED
SERVICE COMPANY SUBSIDIARIES
Each of the service company subsidiaries (collectively the "Service
Companies") is a taxable REIT subsidiary ("TRS") established to provide
services for fees, primarily to the Company and its co-investment
partnerships. Through its 95% economic ownership of these subsidiaries,
the Company is able to participate in the costs and benefits of value-added
activities which would be impermissible for a REIT to undertake directly.
The Company eliminates fee income generated by the Service Companies to the
extent of the Company's interest in the respective co-investment
partnerships.
Capital needs of the Service Companies since the Company's initial
public offering in 1994 have resulted primarily from (1) working capital
requirements associated with construction activities undertaken on behalf
of the Company and its co-investment partnerships, (2) costs of management
information systems development, especially in 2001, to give the management
company the scalable systems needed to accommodate future growth, and (3)
costs of real estate acquired.
AMLI Management Company ("AMC") capitalizes costs of hardware and
software acquired and installed and also capitalizes internal costs
associated with software development, and amortizes all such costs over
five years. Some accounting judgment is required in the determination of
the costs appropriate for capitalization and in the determination of the
appropriateness of the period over which such costs are amortized. Total
deferred information technology costs of AMC, net of accumulated
amortization, are approximately $8,384 at December 31, 2001.
In conjunction with the Company's land acquisition activities,
Amrescon has acquired land that cannot or will not be developed for multi-
family development/investment purposes. In 2001, Amrescon has also
commenced participation in two joint ventures, which will build multifamily
developments intended for sale at or near completion. The Company recorded
$2,506 as its after-tax share of gains from Amrescon's land sales in 2000,
but has not recorded any significant gain or loss in 2001 and currently
anticipates no significant gain from sales of Amrescon's land or
developments in 2002.
COST CAPITALIZATION
The Company capitalizes costs associated with developing real estate
and significant costs incurred to improve or replace components of
completed properties. Details of costs capitalized and expensed are
provided later in this discussion. There is diversity in accounting
policies adopted by the real estate industry. The Company is of the
opinion that its policies are generally consistent with industry practice.
One exception is that the Company expenses the cost of exterior painting of
existing communities. The American Institute of Certified Public
Accountants is in the process of developing additional formal guidance
regarding cost capitalization. Such new rules may, if and when adopted,
cause certain capitalized real estate development-related costs to be
expensed.
VALUE OF LAND
The Company's inventory of land is carried at cost, but not in excess
of fair market value. Accounting judgment is required to value the land
appropriately in instances in which cost may exceed net realizable value.
Late in 2001, most of the land in Texas which the Company had intended to
develop, was determined as not worth its carrying value. Accordingly, the
Company recorded a $2,086 provision for loss to appropriately state this
land at its estimated fair market value.
RESULTS OF OPERATIONS
The increase in property revenues and property operating expenses
resulted from moderate increases at the Company's same store communities.
The increases from acquisitions of new communities and stabilization of a
newly-constructed community was offset by sales of older communities during
the periods reported. Since January 1, 2000, the Company has sold seven
stabilized communities containing a total of 2,676 apartment homes. During
the same period, the Company has acquired a total of 2,208 units in seven
stabilized communities. All of these acquisitions completed deferred
third-party exchanges for Federal income tax purposes. In addition, a 200-
unit phase to an existing community has stabilized in 2001. Property
operations from wholly-owned assets for the twelve months ended
December 31, 2001 and 2000 are summarized as follows:
Increase
2001 2000 (Decrease)
-------- -------- ----------
TOTAL WHOLLY-OWNED
PROPERTY REVENUES
------------------
Same communities. . . . . . . . . $ 91,293 88,598 2,695
New communities . . . . . . . . . 1,983 1,273 710
Acquisition communities . . . . . 17,078 6,739 10,339
Communities contributed
to ventures/sold . . . . . . . . 4,488 16,279 (11,791)
-------- -------- --------
Total . . . . . . . . . . . . $114,842 112,889 1,953
======== ======== ========
Increase
2001 2000 (Decrease)
-------- -------- ----------
TOTAL WHOLLY-OWNED PROPERTY
OPERATING EXPENSES
---------------------------
Same communities. . . . . . . . . $ 35,425 33,842 1,583
New communities . . . . . . . . . 775 601 174
Acquisition communities . . . . . 7,030 2,543 4,487
Communities contributed
to ventures/sold . . . . . . . . 1,974 6,402 (4,428)
-------- -------- --------
Total . . . . . . . . . . . . $ 45,204 43,388 1,816
======== ======== ========
TOTAL WHOLLY-OWNED PROPERTY
NET OPERATING INCOME
---------------------------
Same communities. . . . . . . . . $ 55,868 54,756 1,112
New communities . . . . . . . . . 1,208 672 536
Acquisition communities . . . . . 10,048 4,196 5,852
Communities contributed
to ventures/sold . . . . . . . . 2,514 9,877 (7,363)
-------- -------- --------
Total . . . . . . . . . . . . $ 69,638 69,501 137
======== ======== ========
The term "New Communities" refers to completed properties that were
stabilized after the beginning of the earliest period for which comparative
financial information is presented.
Property Net Operating Income is computed before interest, taxes,
depreciation and amortization. This performance measure is not intended as
a replacement for net income determined in accordance with generally
accepted accounting principles ("GAAP").
Income from partnerships increased as a result of the Company's
investment in eight co-investment partnerships which have acquired eight
stabilized communities in 2000 and 2001. A 312-unit community, which was a
wholly-owned community, was acquired by a 20% owned co-investment
partnership. The communities are as follows:
Date No of
Market Acquired Units
------ --------- -----
AMLI:
Midtown. . . . . . . . . . . . Houston Jan. 2000 419
at Peachtree City. . . . . . . Atlanta June 2000 312
on Frankford . . . . . . . . . Dallas Aug. 2000 582
at Scofield Ridge. . . . . . . Austin Aug. 2000 487
at Breckinridge Point. . . . . Dallas Sept. 2000 440
at Lowry Estates . . . . . . . Denver Dec. 2000 414
Towne Square . . . . . . . . . Houston Dec. 2000 380
at Osprey Lake . . . . . . . . Illinois Feb. 2001 483
-----
Total . . . . . . . . . . . 3,517
=====
In addition, the Company, through joint ventures with institutional
investors, has completed or has under development and begun rental
operations of thirteen communities. Eight communities with a total of
2,238 units were stabilized in 2000. Three communities with a total of
1,060 units were stabilized in 2001. Two communities, containing a total
of 700 apartment homes, are in lease-up as of December 31, 2001 and are
anticipated to reach stabilization in 2002.
The Company sold one co-investment community containing 502 apartment
homes in 2000 and another containing 488 apartment homes in 2001. These
sales partially reduced the overall revenue growth of the co-investment
communities. Property operations for all co-investment properties for the
twelve months ended December 31, 2001 and 2000 are summarized as follows:
Increase
2001 2000 (Decrease)
-------- -------- ----------
TOTAL CO-INVESTMENT
PROPERTY REVENUES
-------------------
Same communities. . . . . . . . . $ 81,355 80,803 552
New communities . . . . . . . . . 24,909 16,176 8,733
Development and/or lease-up
communities. . . . . . . . . . . 12,432 3,110 9,322
Acquisition communities . . . . . 39,824 15,422 24,402
Communities contributed
to ventures/sold . . . . . . . . 7,102 11,642 (4,540)
-------- -------- --------
Total . . . . . . . . . . . . $165,622 127,153 38,469
======== ======== ========
Company's share of co-invest-
ment total revenues. . . . . . . $ 52,768 36,777 15,991
======== ======== ========
TOTAL CO-INVESTMENT
PROPERTY OPERATING EXPENSES
---------------------------
Same communities. . . . . . . . . $ 31,052 30,254 798
New communities . . . . . . . . . 9,117 7,454 1,663
Development and/or lease-up
communities. . . . . . . . . . . 5,353 1,804 3,549
Acquisition communities . . . . . 15,625 5,772 9,853
Communities contributed
to ventures/sold . . . . . . . . 2,347 3,660 (1,313)
-------- -------- --------
Total . . . . . . . . . . . . $ 63,494 48,944 14,550
======== ======== ========
Company's share of co-invest-
ment total expenses. . . . . . . $ 18,951 13,916 5,035
======== ======== ========
TOTAL CO-INVESTMENT PROPERTY
NET OPERATING INCOME
----------------------------
Same communities. . . . . . . . . $ 50,303 50,549 (246)
New communities . . . . . . . . . 15,792 8,722 7,070
Development and/or lease-up
communities. . . . . . . . . . . 7,079 1,306 5,773
Acquisition communities . . . . . 24,199 9,650 14,549
Communities contributed
to ventures/sold . . . . . . . . 4,755 7,982 (3,227)
-------- -------- --------
Total . . . . . . . . . . . . $102,128 78,209 23,919
======== ======== ========
Company's share of co-invest-
ment total net operating
income and cash flow in excess
of ownership interest. . . . . . $ 35,879 25,081 10,798
======== ======== ========
For the year ended December 31, 2001, total revenues were $130,172 and
net income including gains of $23,296 from sales of three wholly-owned
residential properties and one co-investment property was $45,746. For the
year ended December 31, 2000, total revenues were $131,746 and net income
which included gains of $50,180 from sales of four wholly-owned residential
properties and one co-investment property was $76,533. For the year ended
December 31, 2001, basic earnings per common share decreased to $2.18
(including $1.09 per share from the sales of residential properties) from
$4.00 (including $2.42 per share from the sales of residential properties)
in the year earlier period. For the year ended December 31, 2001, diluted
earnings per common share decreased to $2.12 (including $1.04 per share of
gains from the sales of residential properties) from $3.59 (including $2.02
per share of gains from sales of residential properties) for the year ended
December 31, 2000.
On a "same community" basis, weighted average occupancy of the wholly-
owned apartment homes was 91.8% for the years ended December 31, 2001 and
2000. Weighted average collected rental rates increased by 3.0% to $792
from $769 per unit per month for the years ended December 31, 2001 and
2000, respectively. Including co-investment communities, weighted average
occupancy of the apartment homes decreased to 92.0% for the year ended
December 31, 2001 from 92.7% in the prior year, and weighted average
collected rental rates increased by 3.0% to $834 from $810 per unit per
month for the years ended December 31, 2001 and 2000, respectively.
OPERATING EARNINGS PER SHARE
Most publicly traded real estate companies have been reporting funds
from operations ("FFO") as a primary supplemental measurement of earnings.
In broad terms, but subject to many exceptions that unfortunately are not
consistently applied by all REITs, the industry moved from net income under
GAAP to FFO by excluding the results of sales of investment property and
real estate depreciation expense. Many industry analysts have recently
advocated the use of a new supplemental earnings measurement, operating
earnings, in an attempt to narrow the differences. This alternative to FFO
resembles GAAP net income, although it still excludes gains or losses on
sales of investment properties.
The following shows the relationship among FFO, operating earnings and
net income.
2001 2000
-------- --------
FFO. . . . . . . . . . . . $ 63,142 67,859
Depreciation expense (1) . 32,784 27,944
-------- --------
Operating earnings . . . . 30,358 39,915
Gains on sales (1) . . . . 23,296 50,180
-------- --------
Net income (2) . . . . . . $ 53,654 90,095
======== ========
(1) Including share from co-investments.
(2) Before allocation to minority interest.
COMPARISON OF YEAR ENDED DECEMBER 31, 2001 TO YEAR ENDED DECEMBER 31, 2000
Income before minority interest decreased to $53,654 for the year
ended December 31, 2001 from $90,095 for the year ended December 31, 2000
as follows:
Increase
2001 2000 (Decrease)
-------- -------- ----------
Property revenues . . . . . . . . $114,842 112,889 1,953
Other income. . . . . . . . . . . 15,330 18,857 (3,527)
-------- -------- --------
Total revenues. . . . . . . . 130,172 131,746 (1,574)
-------- -------- --------
Property operating expenses . . . 45,204 43,388 1,816
Interest expense. . . . . . . . . 25,461 24,695 766
Depreciation and amortization . . 21,831 19,992 1,839
Provision for loss on land held
for development or sale . . . . 2,086 -- 2,086
General and administrative. . . . 5,232 3,756 1,476
-------- -------- --------
99,814 91,831 7,983
-------- -------- --------
Income before gains on sales
and minority interest . . . . . 30,358 39,915 (9,557)
Gains on sales of residential
properties. . . . . . . . . . . 23,296 50,180 (26,884)
-------- -------- --------
Income before minority interest . 53,654 90,095 (36,441)
Minority interest . . . . . . . . 7,908 13,562 (5,654)
-------- -------- --------
Net income. . . . . . . . . . . . $ 45,746 76,533 (30,787)
======== ======== ========
The decrease in total revenues was largely from the decrease in the
Company's share of income from the Service Companies, which in 2000
included after-tax gains on sales of non-residential land parcels of
$2,506, offset in part by an increase in share of income from partnerships
in 2001. Total property revenues increased by $1,953, or 1.7%. This
increase in property revenues was primarily from moderate increases in same
community revenues during 2001 compared to 2000. The increase in property
revenues from the 2,208 apartment homes acquired in 2001 and stabilization
of a 200-unit development community was offset by a decrease resulting from
2,676 apartment homes sold during this period. Other property revenues
include increases in various fees charged to residents. On a same
community basis total property revenues increased by $2,695, or 3.0%, and
net operating income increased by $1,112, or 2.0%.
The Company operates, owns and manages apartments in eight
metropolitan areas. A combination of a moderate over-supply of rental
apartments in the Company's markets coupled with a general business slow-
down has contributed to overall growth in collected rents at less than the
rate of inflation.
Interest and share of income (loss) from the Service Companies
decreased 102.3% to a loss of $117 from an income of $5,022. This decrease
was primarily due to $2,506 in after-tax gains from sales of land parcels
which benefited the Company in 2000 and decreased interest income as a
result of the Service Companies' direct borrowings under the Company's line
of credit. In addition, construction income was lower as a result of
slower construction and development, and a $186 after-tax write-off of
investment in an information technology company.
During 2001, the Service Companies commenced or continued a variety of
information technology system initiatives, most notably the implementation
of an Enterprise Resource Planning ("ERP") system using the Oracle
database. As of June 2001, the Company has discontinued using its
predecessor General Ledger and Accounts Payable systems and has "gone live"
with the ERP. Information technology expenditures incurred and capitalized
during 2001 of approximately $6,500 will be depreciated over five years.
As a result of increased expenditures by AMC for information technology
such as the ERP and other systems applications at the communities, AMC has
increased the management fee it charges the Company for managing its
wholly-owned properties to 3% from 2.5% effective July 1, 2001.
Income from partnerships increased to $9,143 from $6,787, or 34.7%.
This increase was a result of the acquisition of eight stabilized
communities through eight new co-investment partnerships. In addition,
thirteen new co-investment partnerships have invested in twelve development
communities and a second phase to an existing stabilized community during
2001 and 2000. During 2001, three communities achieved stabilized
operations, two communities were in lease-up and two others recently
commenced rental operations. On a same community basis, total property
revenues increased by $552, or 0.7%, and net operating income decreased by
$246, or 0.5%.
Other income decreased to $4,872 from $5,645, or 13.7%. This decrease
is primarily due to lower acquisition and development fees as the Company's
acquisition and development activities have slowed down. Other income
includes $1,796 and $1,181 of the Company's share of sale proceeds as
promoted interest from a sale of a co-investment community in each of 2001
and 2000, respectively.
Property operating expenses increased by $1,816, or 4.2%. This
increase is principally due to increases in exterior painting, personnel
costs, property insurance and real estate tax expense. In addition,
management fees increased as a result of a 20% increase in the fee rates.
On a same community basis, property operating expenses increased by $1,201,
or 4.7%.
Interest expense, net of the amounts capitalized, increased to $25,461
from $24,695, or 3.1%. This is primarily due to a $785 expense relating to
two interest rate swap contracts with a total notional amount of $20,000
that were marked-to-market in the third quarter of 2001. In addition,
$1,204 of carrying costs on land parcels were no longer capitalized in
2001.
In 2001, the Company provided for and recorded as expense a $2,086
allowance for possible loss on land inventory due to a decrease in value of
some land parcels located in Texas.
General and administrative expenses increased to $5,232 for the year
ended December 31, 2001 from $3,756 for the year ended December 31, 2000.
The increase is primarily due to costs attributable to abandoned projects
and an investment in a Broadband high-speed Internet access business that
were written off. Higher personnel costs due to increased number of
employees and higher shareholder service expenses also contributed to the
increase.
COMPARISON OF YEAR ENDED DECEMBER 31, 2000 TO YEAR ENDED DECEMBER 31, 1999
Income before minority interest increased to $90,095 for the year
ended December 31, 2000 from $61,071 for the year ended December 31, 1999
as follows:
Increase
2000 1999 (Decrease)
-------- -------- ----------
Property revenues . . . . . . . . $112,889 114,954 (2,065)
Other income. . . . . . . . . . . 18,857 14,154 4,703
-------- -------- --------
Total revenues. . . . . . . . 131,746 129,108 2,638
-------- -------- --------
Property operating expenses . . . 43,388 44,348 (960)
Interest expense. . . . . . . . . 24,695 22,201 2,494
Depreciation and amortization . . 19,992 18,604 1,388
General and administrative. . . . 3,756 4,042 (286)
-------- -------- --------
91,831 89,195 2,636
-------- -------- --------
Income before gains on sales and
minority interest . . . . . . . 39,915 39,913 2
Gains on sales of residential
properties. . . . . . . . . . . 50,180 21,158 29,022
-------- -------- --------
Income before minority interest . 90,095 61,071 29,024
Minority interest . . . . . . . . 13,562 9,333 4,229
-------- -------- --------
Net income. . . . . . . . . . . . $ 76,533 51,738 24,795
======== ======== ========
Total property revenues decreased by $2,065, or 1.8%. This decrease
in property revenues was primarily due to the sale of the Company's 80%
interest in a rental property during 2000 and the sales of three rental
properties in the third quarter of 1999. The decrease was partially offset
by increases resulting from the stabilization of a 200-unit development
during 2000. Furthermore, moderate increases in rental rates were
achieved, offset by a slight decline in weighted average occupancy as a
result of sales of older properties and acquisitions of new communities.
On a same community basis, total property revenues increased by $1,630, or
1.7%. Excess supply of apartments in the Company's Kansas City and certain
Dallas submarkets, together with sub-normal occupancy rates at three of the
four communities in rehab, held back the overall growth in property
revenues during 2000.
Interest and share of income from the Service Companies increased
64.0% to $5,022 from $3,062. This was a result of $2,506 in after-tax
gains from a Service Company's sales of six land parcels in 2000, offset by
approximately $500 in after-tax expenses related to a third-party
assessment of business processes and related technology initiatives and $53
in after-tax expense resulting from implementation of FASB Interpretation
No. 44 "Accounting for Certain Transactions Involving Stock Compensation."
Income from partnerships increased to $6,787 from $4,283, or 58.5%.
This increase was a result of the acquisition of five stabilized
communities containing a total of 2,240 units through five new co-
investment partnerships. During the third quarter of 1999, the Company
acquired 1,026 apartment homes that also contributed to this increase. In
addition, twelve new co-investment partnerships have invested in eleven
development communities and a second phase to an existing stabilized
community during 2000 and 1999. During 2000, nine communities containing a
total of 2,638 apartment homes achieved stabilized operations, and four
communities with 1,460 apartment homes were still under development and/or
in lease-up. On a same community basis, total property revenues increased
by $1,418, or 2.6%, and net operating income increased by $958, or 2.7%.
Other income increased to $5,645 from $5,126, or 10.1%. This increase
is primarily due to $1,181 in incentive compensation in the form of a
promoted interest received by the Company from the sale of AMLI at Pleasant
Hill in 2000, compared to $554 in incentive compensation received in 1999
from the sale of AMLI at Prairie Court. In addition, development fees were
lower in 2000 as the Company's development activities moderated in Dallas
and Kansas City.
Property operating expenses decreased by $960, or 2.2%. This decrease
is principally due to the sale of the Company's 80% interest in a 312-unit
community. In addition, lower repairs and maintenance as a result of
having sold older properties and having fewer apartment homes, and
reduction of utilities expense resulting from the implementation of
billings to residents and the installation of water and energy conservation
equipment, contributed to the decrease. Real estate taxes increased by
only $120, but increased to 11.9% of total property revenues in 2000 from
11.5% of total property revenues in 1999. On a same community basis,
property operating expenses increased by $438, or 1.2%.
Interest expense, net of the amounts capitalized, increased to $24,695
from $22,201, or 11.2%, primarily due to increased indebtedness incurred in
conjunction with property acquisitions, developments and investments in
joint ventures. Of the total $2,494 increase, $230 related to payments
made on a one-year interest rate swap on $75,000 notional amount entered
into in May 2000.
General and administrative expenses decreased to $3,756 for the year
ended December 31, 2000, or 7.1%, from $4,042 for the year ended
December 31, 1999. Lower employee incentive compensation and lower
shareholder service expenses contributed to the decrease.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 2001, the Company had $5,892 in cash and cash
equivalents and $139,000 in availability under its $200,000 unsecured line
of credit. The availability under the line of credit is based on total
borrowings of $61,000, including $14,000 borrowed by an unconsolidated
Service Company affiliate. The borrowings of the Service Company affiliate
is guaranteed by the Company. Borrowings under the line of credit bear
interest at a rate of LIBOR plus 1.05%. The Company has fixed the rate on
up to $75,000 of borrowings on its line of credit at an average rate of
6.22% plus 1.05% under interest rate swap contracts. In September 2001,
$20,000 of these interest rate swap contracts no longer hedge any exposure
to floating rate debt.
On June 6, 2001, the Company closed on the $140,000 ten-year 6.56%
fixed-rate financing, which is secured by first mortgages on seven of the
Company's previously unencumbered wholly-owned communities. The Company
paid down its unsecured line of credit from the proceeds of this loan and
concurrently reduced its unsecured line of credit to $200,000.
At December 31, 2001, twelve of the Company's wholly-owned stabilized
communities were unencumbered. There are no fixed-rate loans on wholly-
owned communities with maturity dates prior to July 2003.
Net cash flows provided by operating activities for the year ended
December 31, 2001 increased to $63,129 from $58,269 for the year ended
December 31, 2000. In 2001, the Company distributed over 100% of its
taxable income. The increase was primarily due to increased distributions
from co-investment partnerships, increased other income and a decrease in
other assets, as a result of repayment of receivables from co-investment
partnerships, offset in part by lower property net operating income and
increased interest expense.
Cash flows used in investing activities for the year ended
December 31, 2001 increased to $44,534 from $26,448 for the year ended
December 31, 2000. The increase consisted primarily of increased
acquisitions, increased advances to affiliates, primarily the Service
Companies, lower net proceeds from sales of residential properties, offset
primarily by lower investments in co-investment partnerships and lower
expenditures for development, and capital expenditures for property
improvements including rehab.
Net cash flows used in financing activities for the year ended
December 31, 2001 were $17,809, $11,224 lower than in 2000. In 2001, cash
flows included $19,144 net proceeds from the private placement of
convertible preferred shares and $2,271 from issuance of common shares from
employee purchases, net of employee notes. These cash flows were offset in
part by $4,884 used to repurchase 220,400 of the Company's common shares of
beneficial interest and $4,119 less borrowings, net of repayments of its
unsecured line of credit.
The Company does not currently anticipate raising any significant
public equity capital in the near term and expects to fund its acquisition
and development activities by raising additional equity from its co-
investment partners and by selectively selling properties. Operating cash
flows in excess of dividends and additional borrowings on the Company's
unsecured line of credit also are expected to fund these activities. In
2001, the Company generated $15,981 of funds from operations in excess of
dividends paid.
In January 2001 the Board of Trustees authorized the purchase of up to
500,000 of the Company's common shares of beneficial interest, which
represents approximately 3% of the common shares outstanding. During 2001,
the Company repurchased 220,400 shares at prices ranging from $21.72 to
$23.00 per share.
During 2001 the Company formed three co-investment partnerships having
capital requirements totaling $74,032, of which AMLI's co-investment
partners will contribute a total of $48,032. At December 31, 2001, AMLI's
co-investment partners have contributed $19,188, and $28,844 is anticipated
to be contributed in 2002. In addition, during 2001, the Company sold four
communities, including one in a co-investment partnership, for aggregate
net sales proceeds of $117,410, which generated net proceeds to the Company
of $70,266. Substantially all of these proceeds were used to acquire four
properties to complete tax deferred third-party exchanges for Federal
income tax purposes.
FFO is defined as net income (computed in accordance with GAAP),
excluding extraordinary gains (losses) from debt restructurings and gains
(losses) from sales of depreciable operating properties, plus depreciation
and amortization, and after adjustments for unconsolidated partnerships,
joint ventures and other affiliates. Adjustments for unconsolidated
partnerships, joint ventures and other affiliates are calculated to reflect
FFO on the same basis. FFO does not represent cash flows from operations,
as defined by GAAP; is not indicative that cash flows are adequate to fund
all cash needs; and is not to be considered an alternative to net income or
any other GAAP measure as a measurement of the results of the Company's
operations or the Company's cash flows or liquidity as defined by GAAP.
FFO is widely accepted in measuring the performance of equity REITs.
An understanding of the Company's FFO will enhance the reader's
comprehension of the Company's results of operations and cash flows as
presented in the financial statements and data included elsewhere herein.
FFO for the years ended December 31, 2001, 2000 and 1999 is summarized
as follows:
2001 2000 1999
---------- ---------- ----------
Net income before minority
interest $ 53,654 90,095 61,071
Depreciation 21,080 19,558 18,194
Share of co-investment
partnerships' depreciation 11,289 7,971 5,057
Share of Service Company's
goodwill amortization 415 415 415
Gains on sales of residential
properties (23,296) (50,180) (21,158)
---------- ---------- ----------
FFO $ 63,142 67,859 63,579
========== ========== ==========
Weighted average shares
and units including
dilutive shares 25,204,376 24,692,150 24,552,054
========== ========== ==========
The Company expects to pay quarterly dividends from funds available
for distribution. Until distributed, funds available for distribution are
used to temporarily reduce outstanding balances on the Company's revolving
lines of credit.
The Company intends to finance the majority of its future acquisition
and development activities by co-investing these acquisitions and
developments with institutional partners. In addition, the Company is
selectively selling older communities and using the proceeds of such sales
to buy newly-constructed properties. The Company expects to meet its
short-term liquidity requirements by using its working capital and any
portion of net cash flow from operations not distributed currently. The
Company believes that its future net cash flows will be adequate to meet
operating requirements in both the short and the long term and provide for
payment of dividends by the Company in accordance with REIT requirements.
The Company qualifies as a REIT under Section 856 through 860 of the
Internal Revenue Code of 1986, as amended. A REIT will generally not be
subject to Federal income taxation on that portion of its income that
qualifies as REIT taxable income to the extent that it distributes at least
90% of its taxable income to its shareholders and complies with certain
other requirements. In 1999, the Company distributed approximately 90% of
its taxable income and has designated a portion of its dividends paid
during 2000 as a throw back dividend to 1999. In 2000, the Company
distributed approximately 90% of its taxable income and has again
designated a portion of its dividends paid during 2001 as a throw back
dividend to 2000. In 2001, the Company distributed over 100% of its
taxable income. The Company's current dividend payment level equals an
annual rate of $1.92 per common share, increased on October 29, 2001 from
an annual rate of $1.88 per common share. All dividends paid in 2001 are
fully taxable (approximately 67% as ordinary income and approximately 33%
as capital gain).
The Company has recorded no deferred taxes on gains for financial
reporting purposes that have been deferred for income tax reporting
purposes because the Company intends to distribute to its shareholders any
deferred tax gain upon ultimate realization for income tax reporting
purposes.
The Company expects to meet certain long-term liquidity requirements
such as scheduled debt maturities, repayment of loans for construction,
development and acquisition activities through the issuance of long-term
secured and unsecured debt and additional equity securities of the Company
(or OP Units). Through December 31, 2001, the Company has issued common
and preferred shares that total approximately $128,467 leaving a balance of
$71,533 that the Company may issue in the future under its shelf
registration statement.
COMPANY INDEBTEDNESS
The Company's debt as of December 31, 2001 includes $302,059 secured
by first mortgages on eighteen of the wholly-owned communities and $9,500
floating-rate tax-exempt bonds secured by another community and is
summarized as follows:
SUMMARY DEBT TABLE
------------------
Type of Weighted Average Outstanding Percent
Indebtedness Interest Rate Balance of Total
------------ ---------------- ----------- --------
Fixed-Rate
Mortgages 7.1% $302,059 75.6%
Tax-Exempt Tax-exempt rate + 1.23%
Bonds (1) Tax-exempt rate + 1.24% 50,250 12.6%
Line of
Credit (2) LIBOR + 1.05% 47,000 11.8%
-------- ------
Total $399,309 100.0%
======== ======
--------------------
(1) The tax-exempt bonds bear interest at variable tax-exempt rates that
are adjusted weekly based on the remarketing of these bonds (1.35%
for AMLI at Spring Creek and 1.36% for AMLI at Poplar Creek at
February 4, 2002). The AMLI at Spring Creek bonds mature on
October 1, 2024 and the related credit enhancement expires on
October 15, 2002. The AMLI at Poplar Creek bonds mature on
February 1, 2024 and the related credit enhancement expires on
December 18, 2002.
(2) Amounts borrowed under the line of credit are due in 2003. The
interest rate on up to $55,000 has been fixed pursuant to interest
rate swap contracts. Additional interest rate swap contracts on
$20,000 have been marked to the value of the related liability for
payment which will extend through November 2002.
DEVELOPMENT ACTIVITIES
At December 31, 2001, the Company had made capital contributions
totaling $211,117 to its existing co-investment partnerships and
anticipates funding substantially all of its remaining commitment (net of
its share of co-investment debt) of $17,506 during 2002 to complete the
2,615 apartment homes being developed by co-investment partnerships.
The Company owns land in Ft. Worth, Austin and Houston, Texas;
Indianapolis, Indiana; and Kansas City, Kansas, being held for the
development of an additional 4,792 apartment homes, or for sale. The
Company has made earnest money deposits of $455 for four land parcels for
development anticipated to be acquired in future years.
In 2001 the Company has postponed active development planning for some
of its land parcels in Houston and Forth Worth, Texas until conditions in
those particular submarkets are more favorable for development. During
2001 the Company expensed $1,204 of costs associated with carrying these
land parcels and provided $2,086 for estimated loss on these land parcels.
CAPITAL EXPENDITURES
Capital expenditures are those made for assets having a useful life in
excess of one year and include replacements (such as carpeting and
appliances) and betterments (such as unit upgrades, enclosed parking
facilities and similar items).
In conjunction with acquisitions of existing communities, it is the
Company's policy to provide in its acquisition budgets adequate funds to
complete any deferred maintenance items and to otherwise make the
communities acquired competitive with comparable newly-constructed
communities. In some cases, the Company will provide in its acquisition
budgets additional funds to upgrade or otherwise improve new acquisitions.
During 2001, 2000 and 1999, a total of $5,951, $5,687 and $6,335,
respectively, was spent on building repairs and maintenance (including
contract services) and $2,238, $2,365 and $2,473, respectively, was spent
on landscaping and grounds maintenance as follows:
2001 2000 1999
------ ------ ------
BUILDING REPAIRS AND MAINTENANCE
Painting (exterior and interior) $1,912 1,449 1,482
Carpet and vinyl 859 822 855
Wallpaper and mini-blinds 161 191 202
Carpentry, glass and hardware 343 298 321
Heating and air-conditioning 164 163 182
Plumbing 279 318 338
Appliances 143 134 140
Electrical 145 153 161
Parking lots/resurfacing 128 166 218
Swimming pools and amenity areas 246 226 305
Other repairs and maintenance 350 263 345
CONTRACT SERVICES
Property monitoring services 271 258 417
Rubbish collection services 265 486 593
Cleaning services 444 445 441
Pest control services 179 207 189
Other services 62 108 146
------ ----- -----
Total $5,951 5,687 6,335
====== ===== =====
LANDSCAPING AND GROUNDS MAINTENANCE
Lawn maintenance $2,045 2,217 2,278
All other 193 148 195
------ ----- -----
Total $2,238 2,365 2,473
====== ===== =====
During 2001, 2000 and 1999, a total of $5,615, $4,688 and $4,366,
respectively, was capitalized in accordance with the Company's policy, as
follows:
2001 2000 1999
------ ------ ------
Carpet replacements $2,166 2,097 1,838
Major appliances 280 303 447
Clubhouse, amenities and
business centers 704 1,059 1,173
Roof replacements 791 291 239
HVAC and plumbing 276 381 239
Landscaping improvements 604 -- --
All other 794 557 430
------ ----- -----
Total $5,615 4,688 4,366
====== ===== =====
The Company's accounting treatment of various capital and maintenance
costs is detailed in the following table.
CAPITALIZE/ DEPRECIABLE
EXPENDITURES EXPENSE LIFE IN YEARS
------------ ----------- -------------
Improvements, upgrades, additions
(not replacements - includes additional
garages, additional amenities, etc.) * capitalize 15 or 40
Costs budgeted as a part of an "Approved
Acquisition Budget" (must be spent
within one year of acquisition) * capitalize 5, 15 or 40
Replacement of carpet for entire unit capitalize 5
Replacement of major appliances
(refrigerators, stoves,
dishwashers, washers/dryers) capitalize 15
Replacement of kitchen cabinets capitalize 15
New landscaping construction or
installation capitalize 15
Roof replacements capitalize 15
Exercise/amenity equipment capitalize 5
Maintenance equipment capitalize 5
New model or clubhouse
furniture and fixtures capitalize 5
Roof repairs expense n/a
Exterior painting expense n/a
Parking lot repairs/resurfacing expense n/a
Repairs to amenity areas,
including swimming pools expense n/a
Vinyl expense n/a
All expenditures for acquiring
or replacing ceiling fans,
mini-blinds, air-conditioning
compressors, garbage disposals, etc. expense n/a
CAPITALIZE/ DEPRECIABLE
EXPENDITURES EXPENSE LIFE IN YEARS
------------ ----------- -------------
Landscaping replacements expense n/a
Replacement signage expense n/a
Repairs to or refinishing of
kitchen cabinetry expense n/a
Equipment repairs (all types) expense n/a
All interior painting expense n/a
In general, the Company expenses any
disbursement totaling less than $2.5
* The current policy provides that most capitalizable additions will
have a life of 15 years, except for the items of personal property,
which have estimated lives of 5 years. Included in an acquisition
budget may be some costs, which would otherwise be expensed, such
as exterior painting; such items are being depreciated over
15 years.
REHAB EXPENDITURES
The average age of AMLI's communities at December 31, 2001 was a
little more than six years, lower than the average age of eight years at
the time of its initial offering in 1994. The average age of the
properties in its wholly-owned portfolio is approximately nine years, and
the average age of the properties owned by co-investment partnerships is
approximately five years. AMLI intends to maintain the average effective
age of its portfolio in this same approximate range by continuing to:
1. develop new communities;
2. acquire newly-constructed communities;
3. sell selected older communities;
4. rehab desirable, well-located older communities after they become
15-20 years old.
AMLI has sold seventeen older communities in the eight years it has
been a public company. AMLI's oldest community is now 17 years old. In
September 1998, AMLI initiated its first community rehab since its Initial
Offering by commencing the rehab of AMLI at Riverbend in Indianapolis. In
1999, the Company commenced the rehab of three additional communities:
AMLI at Spring Creek, Atlanta, AMLI of North Dallas and AMLI at Valley
Ranch, Dallas. During 2001, the first phase rehabs have been completed and
the second and final phase of the rehab at AMLI at Valley Ranch has begun.
The Company expects to spend an additional $870 in 2002 to complete the
rehab of AMLI at Valley Ranch. The Company has decided not to rehab
additional phases of the other three communities. The table below shows
rehab expenditures to date.
TOTAL
2000 2001 THROUGH
COMMUNITY ADDITIONS ADDITIONS 12/31/01
--------- --------- --------- --------
AMLI:
at Riverbend. . . . . . . . . . $2,843 358 7,036
at Spring Creek . . . . . . . . 2,514 94 3,565
of North Dallas . . . . . . . . 1,322 57 3,128
at Valley Ranch . . . . . . . . 780 805 2,294
------ ------ ------
Total . . . . . . . . . . . $7,459 1,314 16,023
====== ====== ======
Rehab is a capital improvement program undertaken to repair or
replace, among other things, the items described previously in the capital
expenditures policy at an aggregate cost of at least the greater of $3.0
per apartment home or 5% of the value of the entire apartment community.
All costs (except costs to routinely paint the interiors of units at
turnover) associated with a rehab will be capitalized and depreciated over
their policy lives. To the extent a cost would have been expensed had it
not been incurred pursuant to a rehab (pavement resurfacing, exterior
painting and vinyl replacement are the primary such costs), such costs will
be depreciated over fifteen years.
Rehab expenditures are distinguished from recurring capital
expenditures in that they:
1. are made on behalf of older properties;
2. are anticipated to be started and completed within a 24-month
period;
3. cost a minimum of $3.0 per apartment home or 5% of the value of
the property being rehabbed; and
4. are generally undertaken only once or twice during the useful
life of a given property.
AMLI's larger properties were built in phases, and the rehabs of these
larger properties are anticipated to be done in phases, each extending over
periods not exceeding 24 months. The Company does not anticipate to start
a new rehab in the near future.
INFLATION
Inflation has been low. Virtually all apartment leases at the wholly-
owned communities and co-investment communities are for six or twelve
months' duration. This enables the Company to pass along inflationary
increases in its operating expenses on a timely basis. Because the
Company's property operating expenses (exclusive of depreciation and
amortization) are approximately 39.4% of rental and other revenues,
increased inflation typically results in comparable increases in income
before interest and general and administrative expenses, so long as rental
market conditions allow increases in rental rates while maintaining stable
occupancy.
An increase in general price levels may immediately precede, or
accompany, an increase in interest rates. At December 31, 2001, the
Company's exposure (including the Company's proportionate share of its co-
investment partnerships' expense) to rising interest rates was mitigated by
the existing debt level of approximately 38.1% of the Company's total
market capitalization (48.0% including the Company's share of co-investment
partnerships' debt), the high percentage of intermediate-term fixed-rate
debt (75.6% of total debt), and the use of interest rate swaps to
effectively fix the interest rate on $30,000 through February 2003, $15,000
through September 2004 and $10,000 through October 2004 (13.8% of total
debt). As a result, for the foreseeable future, increases in interest
expense resulting from increasing inflation are anticipated to be less than
future increases in income before interest and general and administrative
expenses.
OTHER MATTERS
On January 1, 2001, the Company adopted SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," as amended by SFAS No. 138,
"Accounting for Certain Derivative Instruments and Certain Hedging
Activities." SFAS No. 133, as amended, establishes accounting and
reporting standards for derivative instruments. Specifically, SFAS No. 133
requires an entity to recognize all derivatives as either assets or
liabilities in the statement of financial position and to measure those
instruments at fair value. Additionally, the fair value adjustments will
affect either shareholders' equity or net income depending on whether the
derivative instrument qualifies as a hedge for accounting purposes and, if
so, the nature of the hedging activity.
As of January 1, 2001, the adoption of the new standards resulted in
derivative instruments reported on the balance sheet as liabilities of
$1,277, and as "Accumulated Other Comprehensive Income (Loss)" of $1,249,
which are gains and losses not affecting retained earnings in the
Consolidated Statement of Shareholders' Equity. As of December 31, 2001,
as a result of significant declines in interest rates during 2001, the
liabilities had increased by $2,447 to $3,724 and Accumulated Other
Comprehensive Loss had increased by $3,045 to $4,294, which includes $1,413
of the Company's share of co-investment partnership's Other Comprehensive
Loss. In September 2001, the Company marked-to-market $20,000 notional
amount of interest rate swap contracts and, as a result, recognized
additional interest expense of $785 at that time.
The following table summarizes the notional amounts and approximate
fair value of the Company's liability under existing interest rate swap
contracts. The notional amounts at December 31, 2001, provide an
indication of the extent of the Company's involvement in these instruments
at that time, but do not represent exposure to credit, interest rate or
market risks.
Cumula-
tive Approximate
Fixed Cash Liability at
Notional Rate Term of Contract Paid, December 31,
Amount (1) Contract Maturity Net 2001 (2)
-------- ------ -------- --------- ------- ------------
$ 10,000(3) 6.216% 5 years 11/1/02 $ 331 373
10,000(3) 6.029% 5 years 11/1/02 257 357
20,000 6.145% 5 years 2/15/03 616 875
10,000 6.070% 5 years 2/18/03 279 442
15,000 6.405% 5 years 9/20/04 362 989
10,000 6.438% 5 years 10/4/04 223 688
-------- ------ -----
$ 75,000 $2,068 3,724
======== ====== =====
-----------
(1) The fixed rate for the swaps includes the swap spread (the risk
component added to the Treasury yield to determine a fixed rate;
excludes lender's spread).
(2) Represents the approximate amount which the Company would have paid
as of December 31, 2001 to terminate these contracts. This amount
was recorded as a liability in the accompanying Consolidated
Balance Sheet as of December 31, 2001.
(3) These contracts were marked-to-market in 2001 and the Company
recorded interest expense of $785 included in the accompanying
Statement of Operations for the twelve months ended December 31,
2001.
"Accounting for Certain Transactions involving Stock Compensation," an
interpretation of APB No. 25, became effective July 1, 2000. The Service
Companies recorded an after-tax charge against earnings of $182 and $53 for
the twelve months ended December 31, 2001 and 2000, respectively, pursuant
to the provisions of this statement.
Statement of Financial Accounting Standards No. 142 "Accounting for
Goodwill and Other Intangible Assets," issued in 2001, requires, among
other things, that effective January 1, 2002 goodwill resulting from a
business combination accounted for as a purchase no longer be amortized,
but be subjected to ongoing impairment review. The only goodwill included
in the accounts of the Company and its unconsolidated subsidiaries is
recorded on the books of an unconsolidated subsidiary. This amount is
being amortized using the straight-line method over the five-year period
ended December 31, 2002. When the new accounting literature is implemented
by the Company on the effective date, the remaining unamortized goodwill of
$668 will not be charged to expense, so that the Company's share of income
in 2002, net of tax effect, will be approximately $415 greater than would
have otherwise been recorded had this change not been required.
On July 19, 2001, the SEC issued interpretative guidance relating to
the "Classification and Measurement of Redeemable Securities." This ruling
requires, among other things, that preferred shares subject to redemption
upon change in control (as is the case with both the Company's Series B
Preferred Shares issued on February 20, 1998 and its Series D Preferred
Shares issued on October 31, 2001) be classified outside of permanent
equity. In accordance with the required implementation of this new
requirement, the Company has restated its Consolidated Balance Sheet and
Consolidated Statements of Shareholders' Equity from prior periods to
reflect its Series B Preferred Shares outside of its permanent equity,
starting with its annual report on Form 10-K reporting its financial
position as of December 31, 2001 and 2000. The restatement of the
Company's Consolidated Balance Sheet and Consolidated Statements of
Shareholders' Equity has no effect on its income reported during these
periods.
In October 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" ("SFAS 144"). Adoption of
SFAS 144 is required for fiscal years beginning after December 15, 2001,
and interim periods within those years, with early adoption encouraged.
SFAS 144 addresses financial accounting and reporting for the impairment or
disposal of long-lived assets. This statement supersedes SFAS 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets To Be Disposed of" ("SFAS 121") and related literature and
establishes a single accounting model, based on the framework established
in SFAS 121, for long-lived assets to be disposed of by sale. The Company
will adopt SFAS 144 in the first quarter of 2002. The Company's adoption
of SFAS 144 will have no impact on its consolidated financial statements.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995
Certain statements set forth herein or incorporated by reference
herein from the Company's filings under the Securities Exchange Act of
1934, as amended, contain forward-looking statements, including, without
limitation, statements relating to the timing and anticipated capital
expenditures of the Company's development programs. Although the Company
believes that the expectations reflected in such forward-looking statements
are based on reasonable assumptions, the actual results may differ
materially from that set forth in the forward-looking statements. Certain
factors that might cause such differences include general economic
conditions, local real estate conditions, construction delays due to the
unavailability of construction materials, weather conditions or other
delays beyond the control of the Company. Consequently, such forward-
looking statements should be regarded solely as reflections of the
Company's current operating and development plans and estimates. These
plans and estimates are subject to revision from time to time as additional
information becomes available, and actual results may differ from those
indicated in the referenced statements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
MARKET RISK
The Company is exposed to interest rate changes primarily as a result
of its line of credit and long-term debt used to maintain liquidity and
fund capital expenditures and expansion of the Company's real estate
investment portfolio and operations. The Company's interest rate risk
management objective is to limit the impact of interest rate changes on
earnings and cash flows and to lower its overall borrowing costs. To
achieve its objectives, the Company borrows primarily at fixed rates and
may enter into derivative financial instruments such as interest rate
swaps, caps and Treasury locks in order to mitigate its interest rate risk
on a related financial instrument. The Company does not enter into
derivative or interest rate transactions for speculative purposes.
The Company's interest rate risk is monitored using a variety of
techniques. The following table presents the principal amounts, weighted
average interest rates, fair values and other terms required by year of
expected maturity to evaluate the expected cash flows and sensitivity to
interest rate changes. The interest rate shown for the variable rate LIBOR
debt excludes the effect of the Company's interest rate swaps on $47,000 of
these borrowings.
Esti-
mated
There- Fair
2003 2004 2005 after Total Value
-------- ------- ------- ------- ------- ------
Fixed-rate debt . . $ 59,727 7,325 33,267 201,740 302,059 308,815
Average interest
rate at December 31,
2001 . . . . . . . 7.3% 7.7% 8.2% 6.9% 7.1% 7.0%
Variable-rate LIBOR
debt . . . . . . . 47,000 -- -- -- 47,000 47,000
Average interest
rate at December 31,
2001 . . . . . . . 3.0% -- -- -- 3.0% 3.0%
Variable-rate TENR
debt . . . . . . . -- -- -- 50,250 50,250 50,250
Average interest
rate at December 31,
2001 . . . . . . . -- -- -- 3.9% 3.9% 3.9%
-------- ------- ------- ------- ------- -------
Total . . . . . $106,727 7,325 33,267 251,990 399,309 406,065
======== ======= ======= ======= ======= =======
The table incorporates only those exposures that exist as of
December 31, 2001; it does not consider those exposures or positions which
could arise after that date. Moreover, because there were no firm
commitments to actually sell these instruments at fair value at
December 31, 2001, the information presented herein is merely an estimate
and has limited predictive value. As a result, the Company's ultimate
realized gain or loss with respect to interest rate fluctuations will
depend on the exposures that arise during the period, the Company's hedging
strategies at that time, and future changes in the level of interest rates.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
AMLI RESIDENTIAL PROPERTIES TRUST
INDEX
PAGE
----
Independent Auditors' Report. . . . . . . . . . . . . . . 62
Consolidated Balance Sheets, December 31, 2001 and 2000 . 63
Consolidated Statements of Operations, years ended
December 31, 2001, 2000 and 1999. . . . . . . . . . . . 65
Consolidated Statements of Shareholders' Equity,
years ended December 31, 2001, 2000 and 1999. . . . . . 67
Consolidated Statements of Cash Flows, years ended
December 31, 2001, 2000 and 1999. . . . . . . . . . . . 70
Notes to Consolidated Financial Statements. . . . . . . . 72
SCHEDULE
--------
Consolidated Real Estate and Accumulated Depreciation . . III
SCHEDULES NOT FILED:
All schedules other than those indicated in the above index have been
omitted as the required information is inapplicable.
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders
AMLI Residential Properties Trust:
We have audited the accompanying consolidated balance sheets of AMLI
Residential Properties Trust (the "Company") as of December 31, 2001 and
2000, and the related consolidated statements of operations, shareholders'
equity and cash flows for each of the years in the three-year period ended
December 31, 2001. In connection with our audits of the consolidated
financial statements, we have also audited the related financial statement
schedule. These consolidated financial statements and financial statement
schedule are the responsibility of the management of the Company. Our
responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. 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 includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of the
Company as of December 31, 2001 and 2000, and the results of its operations
and its cash flows for each of the years in the three-year period ended
December 31, 2001, in conformity with accounting principles generally
accepted in the United States of America. Also in our opinion, the related
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
As discussed in Note 2 to the consolidated financial statements, the
Company has restated its previously issued consolidated balance sheet and
consolidated statements of shareholders' equity to reflect its Series B
Preferred Shares outside of its permanent equity for all periods presented.
KPMG LLP
Chicago, Illinois
February 4, 2002
AMLI RESIDENTIAL PROPERTIES TRUST
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2001 AND 2000
(Dollars in thousands, except share data)
2001 2000
-------- --------
ASSETS:
Rental apartments:
Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 99,784 91,242
Depreciable property. . . . . . . . . . . . . . . . . . . . . . . . 644,627 604,081
-------- --------
744,411 695,323
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . (107,139) (94,590)
-------- --------
637,272 600,733
Rental community under development. . . . . . . . . . . . . . . . . . 10,392 --
Land held for development or sale, net of $2,086 provision for loss
at December 31, 2001. . . . . . . . . . . . . . . . . . . . . . . . 47,611 53,022
Investments in partnerships . . . . . . . . . . . . . . . . . . . . . 184,270 166,569
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . 5,892 5,106
Deferred expenses, net. . . . . . . . . . . . . . . . . . . . . . . . 3,836 3,425
Notes receivable from and advances to Service Companies . . . . . . . 17,323 4,857
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,406 32,279
-------- --------
Total assets. . . . . . . . . . . . . . . . . . . . . . . . $919,002 865,991
======== ========
AMLI RESIDENTIAL PROPERTIES TRUST
CONSOLIDATED BALANCE SHEETS - CONTINUED
2001 2000
-------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY:
LIABILITIES:
Debt (note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . $399,309 385,981
Accrued interest payable. . . . . . . . . . . . . . . . . . . . . . . 1,838 1,783
Accrued real estate taxes payable . . . . . . . . . . . . . . . . . . 12,270 10,806
Construction costs payable. . . . . . . . . . . . . . . . . . . . . . 4,079 1,501
Security deposits and prepaid rents . . . . . . . . . . . . . . . . . 2,656 2,507
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 7,100 3,937
-------- --------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . 427,252 406,515
-------- --------
Commitments and contingencies (note 9)
Mandatorily redeemable convertible preferred shares . . . . . . . . . 93,287 74,144
Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . 68,186 59,537
SHAREHOLDERS' EQUITY:
Series A Cumulative Convertible Preferred shares of beneficial
interest, $0.01 par value, 1,500,000 authorized, 1,200,000 issued
and 350,000 outstanding (aggregate liquidation preference of $7,075
and $7,073, respectively) . . . . . . . . . . . . . . . . . . . . . 4 4
Shares of beneficial interest, $0.01 par value, 145,375,000
authorized, 17,840,368 and 17,849,504 common shares
issued and outstanding, respectively. . . . . . . . . . . . . . . . 178 178
Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . . 355,728 353,827
Employees' and Trustees' notes. . . . . . . . . . . . . . . . . . . . (10,857) (12,231)
Accumulated other comprehensive loss. . . . . . . . . . . . . . . . . (4,294) --
Dividends paid in excess of earnings. . . . . . . . . . . . . . . . . (10,482) (15,983)
-------- --------
Total shareholders' equity. . . . . . . . . . . . . . . . . . . . 330,277 325,795
-------- --------
Total liabilities and shareholders' equity. . . . . . . . . . . . $919,002 865,991
======== ========
See accompanying notes to consolidated financial statements.
AMLI RESIDENTIAL PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
(Dollars in thousands, except share data)
2001 2000 1999
-------- -------- --------
Revenues:
Property:
Rental. . . . . . . . . . . . . . . . . . . . . $107,947 106,364 108,268
Other . . . . . . . . . . . . . . . . . . . . . 6,895 6,525 6,686
Interest and share of income (loss) from
Service Companies . . . . . . . . . . . . . . . (117) 5,022 3,062
Other interest. . . . . . . . . . . . . . . . . . 1,432 1,403 1,683
Income from partnerships. . . . . . . . . . . . . 9,361 6,787 4,283
Other . . . . . . . . . . . . . . . . . . . . . . 4,654 5,645 5,126
-------- -------- --------
Total revenues. . . . . . . . . . . . . . 130,172 131,746 129,108
-------- -------- --------
Expenses:
Property:
Personnel . . . . . . . . . . . . . . . . . . 11,375 11,033 10,927
Advertising and promotion . . . . . . . . . . 2,757 2,371 2,597
Utilities . . . . . . . . . . . . . . . . . . 3,385 3,316 3,643
Building repairs and maintenance and services 5,951 5,687 6,335
Landscaping and grounds maintenance . . . . . 2,238 2,365 2,473
Real estate taxes . . . . . . . . . . . . . . 14,036 13,386 13,266
Insurance . . . . . . . . . . . . . . . . . . 1,226 906 816
Property management fees. . . . . . . . . . . 3,159 2,822 2,875
Other operating expenses. . . . . . . . . . . 1,077 1,502 1,416
Interest. . . . . . . . . . . . . . . . . . . . 25,461 24,695 22,201
Amortization of deferred costs. . . . . . . . . 751 434 410
Depreciation. . . . . . . . . . . . . . . . . . 21,080 19,558 18,194
Provision for loss on land held for development
or sale . . . . . . . . . . . . . . . . . . . 2,086 -- --
General and administrative. . . . . . . . . . . 5,232 3,756 4,042
-------- -------- --------
Total expenses. . . . . . . . . . . . . . 99,814 91,831 89,195
-------- -------- --------
Income before gains on sales and minority
interest. . . . . . . . . . . . . . . . . . . . . 30,358 39,915 39,913
Gains on sales of residential properties,
including share of gains on sales of co-investment
properties of $9,603, $6,800 and $1,663 in the
years ended December 31, 2001, 2000 and 1999,
respectively. . . . . . . . . . . . . . . . . . . 23,296 50,180 21,158
-------- -------- --------
AMLI RESIDENTIAL PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED
2001 2000 1999
-------- -------- --------
Income before minority interest . . . . . . . . . . 53,654 90,095 61,071
Minority interest . . . . . . . . . . . . . . . . . 7,908 13,562 9,333
-------- -------- --------
Net income. . . . . . . . . . . . . . . . 45,746 76,533 51,738
Less income attributable to preferred shares. . . . 6,955 7,057 7,281
-------- -------- --------
Net income attributable to
common shares . . . . . . . . . . . . . $ 38,791 69,476 44,457
======== ======== ========
Net income per common share - basic . . . . . . . . $ 2.18 4.00 2.63
======== ======== ========
Net income per common share - diluted . . . . . . . $ 2.12 3.59 2.46
======== ======== ========
Dividends declared and paid per common share. . . . $ 1.89 1.86 1.81
======== ======== ========
See accompanying notes to consolidated financial statements.
AMLI RESIDENTIAL PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
(Dollars in thousands)
Accumu-
lated
Shares of Beneficial Interest Employees' Other Distribu-
------------------------------- Additional and Compre- tions in
Preferred Common Paid-in Trustees' hensive Excess of
Shares Shares Amount Capital Notes Loss Earnings Total
--------- ---------- ------ ---------- ---------- ------- --------- -------
Balance at December 31,
1998. . . . . . . . . . .1,100,000 16,655,155 $ 178 346,173 (10,668) -- (66,991) 268,692
Comprehensive income:
Net income . . . . . . . . -- -- -- -- -- -- 51,738 51,738
Preferred share dividends
paid. . . . . . . . . . . -- -- -- -- -- -- (7,305) (7,305)
-------
Comprehensive income
attributable to
common shares. . . . . . . -- -- -- -- -- -- -- 44,433
-------
Common shares distributions -- -- -- -- -- -- (30,601) (30,601)
Shares issued in connection
with:
Executive Share Purchase
Plan . . . . . . . . . . -- 37,271 -- 779 -- -- -- 779
Units converted to shares -- 53,712 1 821 -- -- -- 822
Preferred shares converted
to common shares. . . . (250,000) 250,000 -- -- -- -- -- --
Employees' and Trustees'
notes, net of repay-
ments . . . . . . . . . -- -- -- -- (1,332) -- -- (1,332)
Reallocation of minority
interest. . . . . . . . . -- -- -- 104 -- -- -- 104
--------- ---------- ----- ------- ------- ------- ------- -------
Balance at December 31,
1999. . . . . . . . . . . 850,000 16,996,138 179 347,877 (12,000) -- (53,159) 282,897
AMLI RESIDENTIAL PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - CONTINUED
Accumu-
lated
Shares of Beneficial Interest Employees' Other Distribu-
------------------------------- Additional and Compre- tions in
Preferred Common Paid-in Trustees' hensive Excess of
Shares Shares Amount Capital Notes Loss Earnings Total
--------- ---------- ------ ---------- ---------- ------- --------- -------
Comprehensive income:
Net income . . . . . . . . -- -- -- -- -- -- 76,533 76,533
Preferred share dividends
paid. . . . . . . . . . . -- -- -- -- -- -- (7,159) (7,159)
-------
Comprehensive income
attributable to
common shares. . . . . . . -- -- -- -- -- -- -- 69,374
-------
Common share distributions. -- -- -- -- -- -- (32,198) (32,198)
Shares issued in connection
with:
Executive Share Purchase
Plan . . . . . . . . . . -- 11,421 -- 249 -- -- -- 249
Options exercised . . . . -- 8,167 -- 168 -- -- -- 168
Units converted to shares -- 333,778 3 5,711 -- -- -- 5,714
Employees' and Trustees'
notes, net of repayments -- -- -- -- (231) -- -- (231)
Preferred shares converted
to common shares . . . . . (500,000) 500,000 -- -- -- -- -- --
Reallocation of minority
interest. . . . . . . . . -- -- -- (178) -- -- -- (178)
--------- ---------- ----- ------- ------- ------- ------- -------
Balance at December 31,
2000 . . . . . . . . . . . 350,000 17,849,504 182 353,827 (12,231) -- (15,983) 325,795
AMLI RESIDENTIAL PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - CONTINUED
Accumu-
lated
Shares of Beneficial Interest Employees' Other Distribu-
------------------------------- Additional and Compre- tions in
Preferred Common Paid-in Trustees' hensive Excess of
Shares Shares Amount Capital Notes Loss Earnings Total
--------- ---------- ------ ---------- ---------- ------- --------- -------
Comprehensive income:
Net income . . . . . . . . -- -- -- -- -- -- 45,746 45,746
Preferred share dividends
paid. . . . . . . . . . . -- -- -- -- -- -- (6,568) (6,568)
Net cumulative effect
adjustment of loss on
derivative contracts. . . -- -- -- -- -- (1,249) -- (1,249)
Current period loss on
derivative contracts. . . -- -- -- -- -- (3,045) -- (3,045)
-------
Comprehensive income
attributable to
common shares. . . . . . . -- -- -- -- -- -- -- 34,884
-------
Common share distributions. -- -- -- -- -- -- (33,677) (33,677)
Shares issued in connection
with:
Executive Share Purchase
Plan . . . . . . . . . . -- 12,434 -- 282 -- -- -- 282
Options exercised . . . . -- 59,500 1 1,114 -- -- -- 1,115
Units converted to shares -- 139,330 1 2,551 -- -- -- 2,552
Employees' and Trustees'
notes, net of repayments -- -- -- -- 1,374 -- -- 1,374
Shares repurchased. . . . . -- (220,400) (2) (4,882) -- -- -- (4,884)
Reallocation of minority
interest. . . . . . . . . -- -- -- 2,836 -- -- -- 2,836
--------- ---------- ----- ------- ------- ------- ------- -------
Balance at December 31,
2001 . . . . . . . . . . . 350,000 17,840,368 $ 182 355,728 (10,857) (4,294) (10,482) 330,277
========= ========== ===== ======== ======= ======= ======= =======
See accompanying notes to consolidated financial statements.
AMLI RESIDENTIAL PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
(Dollars in thousands)
2001 2000 1999
-------- -------- --------
Cash flows from operating activities:
Net income. . . . . . . . . . . . . . . . . . . . $ 45,746 76,533 51,738
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization. . . . . . . . . 21,831 19,992 18,604
Cash distributions from partnerships in excess
of share of income . . . . . . . . . . . . . 6,389 4,445 4,978
Gains on sales of residential properties . . . (13,693) (43,380) (21,158)
Gains on sales of land parcels . . . . . . . . -- (130) (281)
Share of partnership gains on sales of
residential properties . . . . . . . . . . . (9,603) (6,800) (1,663)
Provision for loss on land held for development
or sale. . . . . . . . . . . . . . . . . . . 2,086 -- --
Loss (income) from Service Companies . . . . . 1,063 (428) 1,254
Minority interest. . . . . . . . . . . . . . . 7,908 13,562 9,333
Other. . . . . . . . . . . . . . . . . . . . . -- -- 129
Changes in assets and liabilities:
Increase in deferred expenses . . . . . . . . . (193) (639) (966)
Decrease (increase) in other assets . . . . . . 535 (5,411) 1,098
Increase (decrease) in accrued real estate taxes 575 454 (33)
Increase (decrease) in accrued interest payable 55 40 (427)
Increase (decrease) in tenant security deposits
and prepaid rents . . . . . . . . . . . . . . 149 (300) (613)
Increase in other liabilities . . . . . . . . . 281 331 510
--------- --------- ---------
Net cash provided by operating activities 63,129 58,269 62,503
--------- --------- ---------
Cash flows from investing activities:
Net cash proceeds from sales of residential
properties less $14,444 cash in deferred
exchange escrow at December 31, 2000 . . . . . 59,799 85,480 49,114
Net cash proceeds from sales of land parcels. . . -- 305 1,451
Investments in partnerships, net of Operating
Partnership units issued. . . . . . . . . . . . (8,605) (52,976) (30,800)
Share of partnership net cash proceeds from
sales of residential properties . . . . . . . . 10,467 5,904 3,250
AMLI RESIDENTIAL PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
2001 2000 1999
-------- -------- --------
(Advances to) repayments from affiliates. . . . . (11,444) 36,484 (7,161)
Earnest money deposits. . . . . . . . . . . . . . 590 792 (696)
Acquisition properties, net of OP units issued
in 2001 . . . . . . . . . . . . . . . . . . . . (76,932) (63,918) (762)
Capital expenditures - rehabs . . . . . . . . . . (1,314) (7,459) (6,779)
Capital expenditures - other. . . . . . . . . . . (5,615) (4,688) (4,366)
Properties under development, net of co-investors'
share of costs. . . . . . . . . . . . . . . . . (14,058) (25,805) (25,365)
Increase (decrease) in construction costs payable 2,578 (567) 100
--------- --------- ---------
Net cash used in investing activities . . (44,534) (26,448) (22,014)
--------- --------- ---------
Cash flows from financing activities:
Debt proceeds, net of financing costs . . . . . . 276,671 404,500 265,234
Debt repayments . . . . . . . . . . . . . . . . . (264,350) (388,060) (263,064)
Proceeds from preferred shares offering,
net of issuance costs . . . . . . . . . . . . . 19,144 -- --
Proceeds from issuance of Executive Share
Purchase Plan shares and Option Plan shares,
net of Employees' and Trustees' notes . . . . . 2,771 186 (547)
Repurchase of shares of beneficial interest -
common shares . . . . . . . . . . . . . . . . . (4,884) -- --
Distributions to partners . . . . . . . . . . . . (6,916) (6,302) (6,434)
Dividends paid. . . . . . . . . . . . . . . . . . (40,245) (39,357) (37,906)
--------- --------- ---------
Net cash used in financing activities . . (17,809) (29,033) (42,717)
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents 786 2,788 (2,228)
Cash and cash equivalents
at beginning of year. . . . . . . . . . . . . . . 5,106 2,318 4,546
--------- --------- ---------
Cash and cash equivalents
at end of year. . . . . . . . . . . . . . . . . . $ 5,892 5,106 2,318
========= ========= =========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest,
net of amount capitalized . . . . . . . . . . . $ 25,406 24,655 22,628
OP units issued for the acquisition of properties 2,764 -- --
OP units issued for the acquisition of a property
in a co-investment partnership. . . . . . . . . 7,576 -- --
========= ========= =========
See accompanying notes to consolidated financial statements.
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
(Dollars in thousands, except share data)
1. ORGANIZATION AND BASIS OF PRESENTATION
ORGANIZATION
AMLI Residential Properties Trust ("AMLI" or the "Company"), a self-
administered and self-managed real estate investment trust ("REIT"), was
formed on February 15, 1994 to continue and expand the multifamily property
businesses previously conducted by Amli Realty Co. ("ARC") and its
affiliates. The Company is the sole general partner of AMLI Residential
Properties, L.P. (the "Operating Partnership") in which it holds an
approximate 86% interest. All the properties and property interests are
owned and operated through the Operating Partnership. The Company and its
affiliates develop, acquire, lease, manage and hold for investment upscale
residential apartment communities. At December 31, 2001, the Company owned
or has ownership interest in 71 stabilized apartment communities containing
27,258 apartment units, and has under development or in lease-up 2,937
apartment homes in seven communities and an additional phase to an existing
community. The Company qualifies as a REIT for Federal income tax
purposes.
BASIS OF PRESENTATION
The accompanying consolidated financial statements are prepared using
accounting principles generally accepted in the United States of America,
and include the accounts of the Company and the Operating Partnership.
Limited partnership interests in the Operating Partnership ("OP Units") are
convertible into common shares of the Company on a one-for-one basis,
subject to certain limitations (see note 8).
AMLI Management Company ("AMC") and AMLI Institutional Advisors, Inc.
("AIA") are "C-Corp" affiliates of the Company which provide various
services to the Company and co-investment partnerships in which the Company
has an interest. The Company owns less than 5% of the voting common shares
of these companies, which together are known as the Company's Service
Companies and which have each elected to be treated as a taxable REIT
subsidiary ("TRS") of the Company as of January 1, 2001. The Company has
not changed the equity method of accounting for its investments in AMC and
AIA as a result of the change in the structure of these Service Companies.
Through preferred stock ownership, the Company is entitled to approximately
95% of the income and cash flow generated by these Service Companies.
AMC provides property management and leasing services, and its wholly-
owned affiliates, AMLI Corporate Homes ("ACH"), AMLI Residential
Construction LLC ("Amrescon"), and AMLI Landscape Co. ("ALC"), provide
corporate home rental services, construction contracting and management
services, and landscaping services, respectively. AIA provides
institutional advisory services.
All significant inter-entity balances and transactions have been
eliminated in consolidation.
The Company's management has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and reported amounts of revenues and expenses during
the reporting period. Actual results could differ from these estimates.
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REAL ESTATE ASSETS AND DEPRECIATION
Real estate assets are stated at cost less accumulated depreciation.
Ordinary repairs and maintenance are expensed as incurred; replacements
having an estimated useful life of at least one year and betterments are
capitalized and depreciated over their estimated useful lives.
Depreciation is computed on a straight-line basis over useful lives of the
properties (buildings and related land improvements -- 40 years; furniture,
fixtures and equipment -- 5 - 15 years). Nineteen apartment communities
having an original undepreciated cost of $466,511 are pledged to secure
debt (see note 5).
In September 1998, AMLI initiated its first community rehab since its
initial public offering. Rehab is a capital improvement program involving
significant repairs, replacements and improvements at an aggregate cost of
at least the greater of $3.0 per apartment home or 5% of the value of the
entire apartment community. All costs (except costs to routinely paint the
interiors of units at turnover) associated with a rehab will be capitalized
and depreciated over their policy lives. To the extent a cost would have
been expensed had it not been incurred pursuant to a rehab (pavement re-
surfacing, exterior painting, vinyl replacement are the primary such
costs), such costs will be depreciated over fifteen years.
At December 31, 2001, the Company was continuing the rehab of the
second phase of AMLI at Valley Ranch. Starting in 1999 and through
December 31, 2001, the Company has spent $2,294 on the rehab of this
property and expects to spend an additional $870 in 2002 to complete the
rehab.
In conjunction with acquisitions of existing properties, it is the
Company's policy to provide in its acquisition budgets adequate funds to
complete any deferred maintenance items and to otherwise make the
properties acquired competitive with comparable newly-constructed
properties. In some cases, the Company will provide in its acquisition
budget additional funds to upgrade or otherwise improve new acquisitions.
All such costs are capitalized when subsequently incurred as costs of
acquisition properties.
Losses in carrying values of investment assets are provided by
management when the losses become apparent and the investment asset is
considered impaired in accordance with Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of." Management evaluates its
investment properties at least quarterly to assess whether any impairment
indications are present, comparing current net operating income as a
percentage of cost to income capitalization rates. If any investment asset
is considered impaired, a loss is provided to reduce the carrying value of
the property to its estimated fair value. The Company has provided for
losses on its land parcels held for future development or sale totaling
$2,086, which is included in the accompanying consolidated financial
statements.
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
PROPERTIES UNDER DEVELOPMENT
All apartment homes in a new community or new phase that are under
development or in lease-up are reported as "Rental communities under
development" until the entire community or new phase is substantially
complete and stabilized (generally 95% occupancy). Upon stabilization, all
apartment homes in the community or new phase are reported as "Rental
apartments." Regardless of whether 95% occupancy is achieved, a community
or new phase will be reported as "Rental apartments" no later than six
months following substantial completion of construction.
During 2000 and 2001, the Company acquired seven land development
parcels for a total cost of $25,322. The sites are located in Georgia,
Texas, Illinois, Indiana and Kansas. The Company has commenced
construction on four of these sites in 2000 and 2001. In 2002, the Company
intends to convey the Indiana land to Amrescon at its cost for alternative
development purposes. The Company anticipates commencing construction on
the remaining sites in 2002 and 2003. The Company has postponed active
development planning for some of its land parcels in Houston and Fort
Worth, Texas until conditions in those particular submarkets are more
favorable for development. At December 31, 2001, the Company's properties
under development are as follows:
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
TOTAL
NUMBER NUMBER TOTAL ESTIMATED
OF OF EXPENDED COSTS UPON
COMMUNITY LOCATION ACRES UNITS THRU 12/31/01 COMPLETION
--------- -------- ------ ------ ------------- ----------
Wholly-Owned:
AMLI at Carmel Center Carmel, IN 15 322 $ 10,392 28,400
--- ----- -------- --------
Co-Investments
(Company Ownership Percentage):
AMLI:
at Mill Creek (25%) Gwinnett County, GA 33 400 25,763 27,100
at Milton Park (25%) Alpharetta, GA 21 461 15,183 35,000
at Kedron Village (20%) Peachtree City, GA 21 216 15,812 20,200
at Barrett Walk (25%) Cobb County, GA 26 310 4,278 22,500
at King's Harbor (25%) Houston, TX 15 300 19,490 19,800
at Cambridge Square (30%) Overland Park, KS 21 408 27,894 32,200
at Seven Bridges (20%) Woodridge, IL 13 520 16,876 82,200
--- ----- -------- --------
Total co-investment
development
communities 150 2,615 125,296 239,000
--- ----- -------- --------
Total wholly-owned
and co-investments 165 2,937 $135,688 267,400
=== ===== ======== ========
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
LAND HELD FOR DEVELOPMENT OR SALE
At December 31, 2001, the Company owns several parcels of land, which are currently being planned for
development, being held for future development or being considered for sale.
TOTAL
NUMBER NUMBER CAPITALIZED
OF OF THROUGH
COMMUNITY LOCATION ACRES UNITS 12/31/01
--------- -------- ------ ------ -----------
Wholly-Owned:
AMLI:
at Champions II (1) (2) Houston, TX 14 288 $ 2,593
at Mesa Ridge (1) (2) Ft. Worth, TX 27 520 4,140
at Fossil Lake (1) (2) Ft. Worth, TX 19 324 2,915
at Fossil Creek IV-A (1) (2) Ft. Worth, TX 15 240 2,160
at Prairie Lakes I Noblesville, IN 17 228 1,160
at Prairie Lakes II-IV Noblesville, IN 103 1,100 6,285
at Anderson Mill (1) (2) Austin, TX 39 520 4,159
at Downtown Austin Austin, TX 2 220 11,241
at Parmer Park Austin, TX 28 480 5,423
at Vista Ridge (1) (2) City of Lewisville, TX 15 340 3,230
at Westwood Ridge Overland Park, KS 30 428 3,510
at Lexington Farms II Overland Park, KS 7 104 795
--- ----- --------
Total land held for
development on sale 316 4,792 $ 47,611
=== ===== ========
(1) The Company has expensed interest carry of $1,204 on these land parcels for the twelve months
ended December 31, 2001.
(2) Amounts are shown net of an allowance for loss totaling $2,086 on these land parcels
in Texas. The provision for loss is included in the accompanying Consolidated
Statement of Operations for the year ended December 31, 2001.
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
INTEREST AND REAL ESTATE TAX CAPITALIZATION
Interest and real estate taxes incurred during the construction period
are capitalized and depreciated over the lives of the constructed assets.
During the years ended December 31, 2001, 2000 and 1999, total interest
capitalized was $4,100, $5,464 and $4,749, respectively. Net of amounts
capitalized, total interest incurred during the years ended December 31,
2001, 2000 and 1999 aggregated $25,461, $24,695 and $22,201, respectively.
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
ACQUISITION
The table below summarizes the properties acquired by the Company during 1999-2001:
Year
Number Com-
of pleted Date Purchase Total
Community Location Units (1) Acquired Price Debt Equity
--------- -------- -------- -------- -------- -------- ------ --------
WHOLLY-OWNED:
AMLI:
at StoneHollow
(2). . . . . . Austin, TX 606 1997 2/3/00 $36,806 -- 36,806
at Towne Creek
(2)(3) . . . . Gainesville, GA 150 1989 2/8/00 6,617 -- 6,617
at Western Ridge
(2). . . . . . Houston, TX 318 2000 12/28/00 20,000 -- 20,000
at Gateway Park
(2). . . . . . Denver, CO 328 2000 1/29/01 33,050 -- 33,050
at Stonebridge
Ranch (2). . . McKinney, TX 250 2001 6/11/01 17,110 -- 17,110
at the Medical
Center (2) . . Houston, TX 334 2000 8/7/01 27,150 -- 27,150
at Shadow Ridge
(2). . . . . . Flower Mound, TX 222 2000 8/31/01 18,000 -- 18,000
------ -------- ------ -------
Total wholly-owned 2,208 158,733 -- 158,733
------ -------- ------ -------
CO-INVESTMENTS
(Company ownership
percentage):
AMLI:
on Spring Mill
(20% residual)
(4) . . . . . . Indianapolis, IN 400 1999 6/30/99 29,475 -- 29,475
at Prestonwood
Hills (45%) . . Dallas, TX 272 1997 8/12/99 17,650 11,649 6,001
at Windward Park
(45%) . . . . . Alpharetta, GA 328 1999 8/26/99 27,485 18,183 9,302
at Oak Bend (40%) Lewisville, TX 426 1997 10/26/99 25,250 18,834 6,416
Midtown (45%). . Houston, TX 419 1998 1/13/00 33,250 21,945 11,305
on Frankford
(45%) . . . . . Dallas, TX 582 1998 6/27/00 38,819 25,710 13,109
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Year
Number Com-
of pleted Date Purchase Total
Community Location Units (1) Acquired Price Debt Equity
--------- -------- -------- -------- -------- -------- ------ --------
at Peachtree City I
(20%)(5). . . . Peachtree City,
GA 312 1998 6/29/00 28,630 -- 28,630
at Scofield Ridge
(45%) . . . . . Austin, TX 487 2000 8/15/00 37,300 24,618 12,682
at Breckinridge
Point (45%) . . Richardson, TX 440 1999 9/11/00 33,500 22,110 11,390
at Lowry Estates
(50%) . . . . . Denver, CO 414 2000 12/19/00 51,200 33,900 17,300
Towne Square
(45%) . . . . . Houston, TX 380 1999 12/28/00 32,500 21,450 11,050
at Osprey Lake
(69%) (6) . . . Gurnee, IL 483 1997/99 2/1/01 52,000 35,320 16,680
------ -------- ------- -------
Total co-investments 4,943 407,059 233,719 173,340
------ -------- ------- -------
Total wholly-owned and
co-investments 7,151 $565,792 233,719 332,073
====== ======== ======= =======
(1) These acquisitions, coupled with new development and the disposition of selected older communities, have
decreased the weighted average age of AMLI's wholly-owned and co-investment portfolio of apartment homes
to approximately 6.3 years (approximately 8.6 years for the wholly-owned portfolio and 4.6 years for the
co-investment portfolio).
(2) These acquisitions completed deferred third-party exchanges for Federal income tax purposes. The Company
issued 86,494 and 109,748 OP Units as part of the total payment for the acquisition of AMLI at Gateway
Park and AMLI at the Medical Center, respectively.
(3) The Company acquired the 99% interest in the community that it did not already own. This property was a
leasehold interest subject to a ground lease. The Company acquired the fee ownership of the underlying
land which was contributed on March 30, 2001 to the Company in exchange for 40,136 OP Units.
(4) The Company paid $1,320 for the general partnership interest in this partnership.
(5) The Company's 20% interest in AMLI at Peachtree City I is a result of the Company's sale of an 80%
interest in this property.
(6) The Company issued 333,610 OP Units for a 43% interest in this property which was contributed to a joint
venture with a private real estate investment trust in which AMLI owned a 44% interest.
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
DISPOSITION
The Company selectively sells properties and reinvests the proceeds in
new communities to continually improve the quality of its portfolio and
increase the potential for growth in net operating income. The gains on
sales of residential communities, including the Company's share of the
gains on sales of co-investment properties, are reported separately in the
accompanying Consolidated Statements of Operations and neither the
properties' selling prices nor related gains are included in revenues in
the accompanying Consolidated Statements of Operations. Incentive
compensation received from co-investment partnerships in the form of a
promoted interest that is paid to the Company from sales proceeds is
included in other revenues in the accompanying Consolidated Statements of
Operations.
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The table below summarizes the properties sold by the Company during 1999-2001:
Net
Operating
Income in
Twelve
the Months
Costs Immediately
Year Before Prior to
Number Acquired/ Date Depre- Sale Net Date of
Community Location of Units Developed Sold ciation Price Proceeds Gain (6) Sale
--------- -------- -------- --------- -------- -------- -------- -------- -------- -----------
WHOLLY-OWNED:
AMLI at:
Park SheridanChicago, IL 253 1989 10/12/99 11,186 23,500 23,088 15,102 1,586
Crown Colony Topeka, KS 220 94/97 10/14/99 10,239 11,288 11,194 1,959 1,027
Sherwood Topeka, KS 300 1994 10/14/99 14,130 14,962 14,832 2,434 1,560
Sope Creek
(1) Marietta, GA 695 82/83/95 2/3/00 27,604 42,500 42,105 22,316 4,014
Peachtree
City I (2) Peachtree City,
GA 312 1998 6/29/00 16,062 22,904 22,757 8,151 2,084
the Arbore-
tum and Austin, TX 591 1986 12/6/00 28,074 35,650 35,062 12,914 3,029
Martha's
Vineyard (3) 1992 12/21/00
AutumnChase
(4) Carrollton, TX 690 87/96/99 6/5/01 29,850 40,550 39,144 9,249 3,608
Alvamar Lawrence, KS 152 1994 7/27/01 8,263 8,900 8,794 2,036 740
Rosemeade (5)Dallas, TX 236 1990 8/24/01 11,653 12,430 11,861 2,408 1,045
----- ------- ------- ------- ------- -------
Total wholly-owned 3,449 157,061 212,684 208,837 76,569 18,693
----- ------- ------- ------- ------- -------
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Net
Operating
Income in
Twelve
Months
Costs Immediately
Year Before Prior to
Number Acquired/ Date Depre- Sale Net Date of
Community Location of Units Developed Sold ciation Price Proceeds Gain (6) Sale
--------- -------- -------- --------- -------- -------- -------- -------- -------- -----------
CO-INVESTMENTS
(Company owner-
ship percentage):
AMLI at:
Prairie Court
(1%) Chicago, IL 125 1987 8/16/99 9,129 13,500 12,850 6,717 911
Park Place
(25%) Austin, TX 588 1994 12/15/99 21,419 25,750 24,832 6,001 2,396
Pleasant Hill
(40%) Atlanta, GA 502 1996 9/28/00 26,445 39,104 37,983 13,829 3,382
Willowbrook
(40%) Willowbrook, IL 488 1996 7/31/01 39,402 58,500 57,611 22,245 4,209
----- -------- ------- ------- ------- -------
Total co-investments 1,703 96,395 136,854 133,276 48,792 10,898
----- -------- ------- ------- ------- -------
Total wholly-owned
and co-investments 5,152 $253,456 349,538 342,113 125,361 29,591
===== ======== ======= ======= ======= =======
(1) The net proceeds from this sale were used to acquire AMLI at StoneHollow and AMLI at Towne Creek in
completion of a deferred third-party exchange for Federal income tax purposes.
(2) Costs, sale price, net proceeds and gain are stated at 80%, which represents the Company's ownership
percentage that was sold to a co-investment partnership. The Company contributed its remaining
ownership in the property for which it received a 20% partnership interest.
(3) The net proceeds from these sales were used toward the acquisitions of AMLI at Western Ridge and AMLI
at Gateway Park, in completion of deferred third-party exchanges for Federal income tax purposes.
(4) The net proceeds from the sale of Phase I of this community were used to acquire AMLI at Stonebridge
Ranch in a deferred third-party exchange for Federal income tax purposes. The remaining proceeds were
used for the acquisition of AMLI at the Medical Center to complete the deferred third-party exchange
for Federal income tax purposes.
(5) The net proceeds from this sale were used to fund the acquisition of AMLI at Shadow Ridge in completion
of a deferred third-party exchange for Federal income tax purposes.
(6) Gains on sales of co-investment properties are shown net of disposition fees and promoted interests
paid to the Company by the co-investment partnerships.
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
In addition, the Company sold land parcels of 1.6 acres and 19.7 acres
resulting in gains on sales of $130 and $281 in 2000 and 1999,
respectively.
REVENUE RECOGNITION
Rental revenues -- the Company leases its residential properties
pursuant to operating leases with terms generally of six or twelve months.
Rental income is recognized when earned; this method approximates
recognition using the straight-line method over the related lease term. At
December 31, 2001, apartment leases in effect provide for annual rentals
aggregating approximately $117,700.
Income from partnerships -- the Operating Partnership is entitled to
shares of cash flow or liquidation proceeds in excess of its stated
ownership percentages based on returns to its partners in excess of
specified rates. In such instances, the Company receives a share of income
equal to its share of cash flow in excess of its ownership interest. This
income is included in share of income from co-investment partnerships in
the accompanying Consolidated Statements of Operations. In addition, the
Company received $1,796, $1,181 and $554 as its share of net sale proceeds
in excess of its ownership interest from sales of residential properties in
2001, 2000 and 1999, respectively. Such income attributable to the
Company's "promoted interest" (its share that exceeds its proportionate
share based on its invested capital) is reported in total revenues as other
income in the accompanying Consolidated Statements of Operations.
Development fees -- the Company receives development fees from co-
investment partnerships during the development period. These fees, net of
related personnel costs, are recognized over the development period using
the percentage of completion method. Such fees, net of intercompany
eliminations to the extent of the Company's ownership interest in the co-
investment partnerships, totaled $1,701, $1,904 and $2,692 and were
included in other income in the accompanying Consolidated Statements of
Operations for the years ended December 31, 2001, 2000 and 1999,
respectively.
FAIR VALUES
The estimated fair values of the Company's financial instruments
presented in these Notes to Consolidated Financial Statements have been
determined by management based on pertinent information available as of
December 31, 2001 and 2000, using appropriate methodologies. These
estimates are not necessarily indicative of the amounts the Company could
ultimately realize.
The Company's financial instruments consist primarily of its cash
equivalents, interest-bearing notes receivable, operating payables, debt
and interest rate limitation contracts. The carrying amounts of the
Company's cash equivalents, interest-bearing notes from the Service
Companies and partnerships, and operating payables are considered to be a
reasonable estimate of fair value due to the short-term nature of these
instruments.
At December 31, 2001, the fair value of the Company's fixed-rate
mortgage indebtedness is $308,815, which is $6,756 greater than its
carrying value for financial reporting purposes. The Company's liability
under interest rate limitation contracts reported in the accompanying
Consolidated Balance Sheets is stated at an aggregate approximate fair
value of $3,724 at December 31, 2001.
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
CASH AND CASH EQUIVALENTS
For purposes of the Statements of Cash Flows, the Company considers
all investments purchased with an original maturity of three months or less
to be cash equivalents.
DEFERRED EXPENSES
Deferred expenses consist primarily of financing costs, which are
amortized using the straight-line method over the terms of the related
debt. During the construction period, amortization of deferred costs
relating to properties under development is capitalized and depreciated
over the lives of the constructed assets. During the years ended
December 31, 2001, 2000 and 1999, capitalized amortization of deferred
costs were $126, $158 and $115, respectively.
STANDARDS IMPLEMENTED AND TRANSITION ADJUSTMENT
On January 1, 2001, the Company adopted SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," as amended by SFAS No. 138,
"Accounting for Certain Derivative Instruments and Certain Hedging
Activities." SFAS No. 133, as amended, establishes accounting and
reporting standards for derivative instruments. Specifically, SFAS No. 133
requires an entity to recognize all derivatives as either assets or
liabilities in the balance sheet and to measure those instruments at fair
value. Additionally, the fair value adjustments will affect either
shareholders' equity or net income depending on whether the derivative
instrument qualifies as a hedge for accounting purposes and, if so, the
nature of the hedging activity.
As of January 1, 2001, the adoption of the new standard resulted in
derivative instruments reported on the balance sheet as liabilities of
$1,277 and as "Accumulated Other Comprehensive Income (Loss)" of $1,249,
which are gains and losses not affecting retained earnings in the
Consolidated Statement of Shareholders' Equity. As of December 31, 2001,
the liabilities increased by $2,447 to $3,724 and Accumulated Other
Comprehensive Loss increased by $3,045 to $4,294, which includes $1,413
Company's share of a co-investment partnership's Other Comprehensive Loss.
The Company anticipates that approximately $1,955 of the $4,294 Other
Comprehensive Loss will be charged against earnings over the twelve months
ending December 31, 2002.
As a result of a reduced level of borrowings under the Company's
unsecured line of credit following a $140,000 fixed-rate financing and a
sale of a co-investment property, $20,000 of the total $75,000 in interest
rate swap contracts held by the Company no longer hedge any exposure to
floating rate debt. A $785 marked-to-market charge against earnings was
recorded for the twelve months ended as of December 31, 2001 for the value
of this $20,000 notional amount of derivative contracts.
"Accounting for Certain Transactions Involving Stock Compensation," an
interpretation of APB No. 25, became effective July 1, 2000 and had no
material impact on the Company's financial statements. The Service
Companies recorded an after-tax charge against earnings of $182 and $53 for
the twelve months ended December 31, 2001 and 2000, respectively, as a
result of implementing this statement.
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
On July 19, 2001, the SEC issued interpretative guidance relating to
the "Classification and Measurement of Redeemable Securities". This ruling
requires, among other things, that preferred shares subject to redemption
upon change in control (as is the case with both the Company's Series B
Preferred Shares issued on February 20, 1998 and its Series D Preferred
Shares issued on October 31, 2001) be classified outside of permanent
equity. In accordance with the required implementation of this new
requirement, the Company has restated its Consolidated Balance Sheet and
Consolidated Statements of Shareholders' Equity from prior periods to
reflect its Series B Preferred Shares outside of its permanent equity,
starting with its annual report on Form 10-K reporting its financial
position as of December 31, 2001 and 2000. This restatement of the
Company's Consolidated Balance Sheet and Consolidated Statements of
Shareholders Equity has no effect on its income reported during those
periods.
DERIVATIVES AND HEDGING FINANCIAL INSTRUMENTS
In the normal course of business, the Company uses a variety of
derivative financial instruments to manage or hedge interest rate risks.
The Company requires that hedging derivative instruments are effective in
reducing the interest rate risk exposure that they are designated to hedge.
This effectiveness is essential for qualifying for hedge accounting. Some
derivative instruments are associated with the hedge of an anticipated
transaction. In those cases, hedge effectiveness criteria also require
that it be probable that the underlying transaction occurs. Instruments
that meet these hedging criteria are formally designated as hedges at the
inception of the derivative contract. When the terms of an underlying
transaction are modified, or when the underlying hedged item ceases to
exist, all changes in the fair value of the instrument are marked-to-market
with changes in value included in net income each period until the
instrument matures. Any derivative instrument used for risk management
that does not meet the hedging criteria is marked-to-market each period.
The Company is exposed to the effect of interest rate changes. The
Company limits these risks by following established risk management
policies and procedures including the use of derivatives. For interest
rate exposures, derivatives are used primarily to align rate movements
between interest rates associated with the Company's rental income and
other financial assets with interest rates on related debt, and manage the
cost of borrowing obligations.
The Company does not enter into derivative contracts for trading or
speculative purposes. Further, the Company has a policy of only entering
into contracts with major financial institutions based upon their credit
rating and other factors. When viewed in conjunction with the underlying
and offsetting exposure that the derivatives are designed to hedge, the
Company has not sustained a material loss from those instruments nor does
it anticipate any material adverse effect on its net income or financial
position in the future from the use of derivatives.
To manage interest rate risk, the Company may employ options,
forwards, interest rate swaps, caps and floors or a combination thereof
depending on the underlying exposure. The Company undertakes a variety of
borrowings: from lines of credit, to medium- and long-term financings. To
reduce overall interest cost, the Company uses interest rate instruments,
typically interest rate swaps, to convert a portion of its variable rate
debt to fixed rate debt, or even a portion of its fixed-rate debt to
variable rate. Interest rate differentials that arise under these swap
contracts are recognized in interest expense over the life of the
contracts. The resulting cost of funds is usually lower than that which
would have been available if debt with matching characteristics was issued
directly.
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The Company also employs forwards or purchase options to hedge
qualifying anticipated transactions. Gains and losses are deferred and
recognized in net income in the same period that the underlying transaction
occurs, expires or is otherwise terminated.
As of December 31, 2001, there were deferred losses from hedging
positions of $4,294 ($1,413 relates to share of a co-investment
partnership's Other Comprehensive Loss) which are reported in Accumulated
Other Comprehensive Loss, a shareholders' equity account. As of January 1,
2001, $1,249 had been incurred and an additional $3,045, net of charge to
earnings, was recorded during the year ended December 31, 2001.
To determine the fair values of derivative instruments, the Company
uses a variety of methods and assumptions that are based on market
conditions and risks existing at each balance sheet date. For the majority
of financial instruments including most derivatives, long-term investments
and long-term debt, standard market conventions and techniques such as
discounted cash flow analysis, option pricing models, replacement cost, and
termination costs are used to determine fair value. All methods of
assessing fair value result in a general approximation of value, and such
value may or may not actually be realized.
The following table summarizes the notional amounts and approximate
fair value of the Company's liability under existing interest rate swap
contracts. The notional amounts at December 31, 2001, provides an
indication of the extent of the Company's involvement in these instruments
at that time, but do not represent exposure to credit, interest rate or
market risks.
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Approximate
Cumulative Liability at
Notional Fixed Term of Contract Cash December 31,
Amount Rate(1) Contract Maturity Paid, Net 2001 (2)
-------- ------- -------- --------- ---------- -------------
$10,000(3) 6.216% 5 years 11/1/02 $ 331 373
10,000(3) 6.029% 5 years 11/1/02 257 357
20,000 6.145% 5 years 2/15/03 616 875
10,000 6.070% 5 years 2/18/03 279 442
15,000 6.405% 5 years 9/20/04 362 989
10,000 6.438% 5 years 10/4/04 223 688
------- ------ -----
$75,000 $2,068 3,724
======= ====== =====
(1) The fixed rate for the swaps includes the swap spread (the risk component added to the Treasury yield to
determine a fixed rate) and excludes lender's spread.
(2) Represents the approximate amount which the Company would have paid as of December 31, 2001 if these
contracts were terminated. This amount was recorded as a liability in the accompanying Consolidated Balance
Sheet as of December 31, 2001.
(3) These contracts were marked-to-market in 2001 and the Company recorded interest expense of $785 included in
the accompanying Consolidated Statements of Operations for the year ended December 31, 2001.
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
On December 31, 2001, the derivative instruments were reported at
their fair value as Other Liabilities of $3,724 which increased by $2,447
from $1,277 as of January 1, 2001. The offsetting adjustments were
reported as losses in Accumulated Other Comprehensive Loss of $4,294
($1,249 at January 1, 2001 and at December 31, 2001 increased by $3,045,
which includes $1,413 of the Company's share of Other Comprehensive Loss of
a co-investment partnership) and an adjustment to earnings of $58 due to a
small ineffectiveness on the swaps ($28 as of January 1, 2001 and $30 for
the twelve months ended December 31, 2001). Furthermore, two $10,000
notional amount swap contracts were marked-to-market resulting in an
additional $785 interest expense recorded in the twelve months ended
December 31, 2001.
All of the Company's hedges that are reported at fair value and are
represented on the Consolidated Balance Sheet are characterized as cash
flow hedges. These transactions hedge the future cash flows of debt
transactions. Interest rate swaps that convert variable payments to fixed
payments, interest rate caps, floors, collars, and forwards are cash flow
hedges. The unrealized gains/losses in the fair value of these hedges are
reported on the Consolidated Balance Sheet with a corresponding adjustment
to either Accumulated Other Comprehensive Income or in earnings--depending
on the type of hedging relationship. If the hedging transaction is a cash
flow hedge, then the offsetting gains and losses are reported in
Accumulated Other Comprehensive Income. If the hedging transaction is
characterized as a fair value hedge, then the changes in fair value of the
hedge and the hedged item are reflected in earnings. If the fair value
hedging relationship is fully effective, there is no net effect reflected
in income or FFO. Over time, the unrealized gains and losses held in
Accumulated Other Comprehensive Income will be reclassified to earnings.
This reclassification is consistent with when the hedged items are also
recognized in earnings.
The Company hedges its exposure to the variability in future cash
flows for forecasted transactions over a maximum period of 12 months.
During the forecasted period, unrealized gains and losses in the hedging
instrument will be reported in Accumulated Other Comprehensive Income.
Once the hedged transaction takes place, the hedge gains and losses will be
reported in earnings during the same period in which the hedged item is
recognized in earnings.
TRANSACTIONS WITH CO-INVESTMENT PARTNERSHIPS
The Company's co-investment partnerships are generally formed by the
Company contributing its interest in property and receiving credit or
reimbursement based on its cost, in which case no gain or loss is
recognized upon partnership formation.
During 2000, the Company contributed its interest in a property
including improvements in place to a joint venture, AMLI at Peachtree City
LLC, and received cash for the sale of its 80% interest in this property.
The Company had no continuing involvement with this property except to the
extent of its remaining 20% interest. The Company recognized $8,151 as
gain on sale in 2000 in accordance with Statement of Financial Accounting
Standards No. 66, "Accounting for Sales of Real Estate" and Statement of
Position No. 78-9, "Accounting for Investments in Real Estate Ventures."
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
OTHER ASSETS
Other assets reported in the accompanying Consolidated Balance Sheets
are as follows:
December 31,
-------------------
2001 2000
------- -------
Notes receivable . . . . . . . . . $ 2,925 3,145
Advances to co-investment
partnerships . . . . . . . . . . 2,413 1,637
Deposits . . . . . . . . . . . . . 1,923 3,140
Prepaid expenses . . . . . . . . . 1,497 504
Development fees receivable. . . . 1,267 3,223
Restricted cash. . . . . . . . . . 1,193 15,179
Accounts receivable. . . . . . . . 705 1,219
Other. . . . . . . . . . . . . . . 483 4,232
------- -------
$12,406 32,279
======= =======
POST-RETIREMENT BENEFITS
The Company offers no post-retirement benefits to any of its employees
and has no current intention to implement any such plan.
PER SHARE DATA
Basic earnings per share is computed based on net income to common
shareholders and the weighted average number of common shares outstanding.
Diluted earnings per share reflects common shares issuable from the assumed
conversion of common share options and awards granted, preferred shares,
units convertible into common shares and convertible subordinated
debentures. Only those items that have a dilutive impact on basic earnings
per share are included in diluted earnings per share. The following table
presents information necessary to calculate basic and diluted earnings per
share for the periods indicated (in thousands, except per share amounts).
Years Ended December 31,
-------------------------------------
2001 2000 1999
---------- ---------- ----------
Net income. . . . . . . . . . $ 45,746 76,533 51,738
Less income attributable to
preferred shares. . . . . . (6,955) (7,057) (7,281)
---------- ---------- ----------
Net income attributable to
common shares - basic . . . $ 38,791 69,476 44,457
========== ========== ==========
Net income attributable to
common shares - diluted . . $ 45,746 76,533 51,738
========== ========== ==========
Weighted average common
shares - basic. . . . . . . 17,806,311 17,390,092 16,922,922
Dilutive options and other
plan shares . . . . . . . . 174,133 144,970 55,211
Convertible preferred
shares. . . . . . . . . . . 3,597,424 3,794,672 4,020,890
---------- ---------- ----------
Weighted average common
shares - dilutive . . . . . 21,577,868 21,329,734 20,999,023
========== ========== ==========
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Years Ended December 31,
-------------------------------------
2001 2000 1999
---------- ---------- ----------
Net income per common share:
Basic . . . . . . . . . . $ 2.18 4.00 2.63
Diluted . . . . . . . . . $ 2.12 3.59 2.46
========== ========== ==========
RECLASSIFICATIONS
Certain amounts in the consolidated 2000 and 1999 financial statements
of the Company have been reclassified to conform with the current
presentation.
3. INVESTMENTS IN PARTNERSHIPS AND SERVICE COMPANIES
INVESTMENTS IN PARTNERSHIPS
At December 31, 2001, the Operating Partnership was a general partner
in various co-investment partnerships. The Operating Partnership and the
Service Companies receive various fees for services provided to these co-
investment partnerships, including development fees, construction fees,
acquisition fees, property management fees, asset management fees,
financing fees, administrative fees and disposition fees. The Operating
Partnership is entitled to shares of cash flow or liquidation proceeds in
excess of its stated ownership percentages based, in part, on cumulative
returns to its partners in excess of specified rates. The Operating
Partnership has received cash flow and has recorded operating income of
$2,280 in excess of its ownership percentages for the twelve months ended
December 31, 2001. In addition, the Company received $1,796 in the form of
a promoted interest from a sale of a co-investment property, which was
recorded as other income. Investments in partnerships at December 31, 2001
and the Company's 2001 share of income or loss from each are summarized as
follows:
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Equity Total Company's Company's
Company's ------------------ Company's Net Share of Share of
Percentage Total Company's Investment Income Net Income Deprecia-
Community Ownership Assets Total Share (1) (1) (Loss) (Loss) tion
--------- ------------------- ----- --------- ---------- ------ ---------- ----------
AMLI:
at Greenwood
Forest 15% $ 15,640 3,828 574 557 (209) (32) 64
at Champions Park 15% 11,472 2,609 391 391 (34) (5) 54
at Champions
Centre 15% 8,627 1,821 273 273 (139) (19) 38
at Windbrooke 15% 15,916 4,225 632 632 645 96 67
at Willeo Creek 30% 13,240 3,936 1,181 1,181 468 141 138
at Barrett Lakes 35% 23,523 7,200 2,520 2,622 899 319 318
at Chevy Chase 33% 41,017 12,358 4,065 4,094 1,923 722 421
at River Park 40% 12,995 4,209 1,684 1,642 700 280 181
at Fox Valley 25% 22,314 21,665 5,416 5,594 1,193 298 187
at Fossil Creek 25% 19,814 19,010 4,752 4,839 1,511 378 189
at Danada Farms 10% 44,065 18,749 1,875 1,866 1,907 191 141
at Verandah 35% 21,603 4,367 1,626 1,681 29 129 413
at Northwinds 35% 49,833 15,642 5,475 5,321 2,078 776 606
at Regents Crest 25% 31,139 15,560 3,892 3,970 548 247 242
at Oakhurst North 25% 40,526 39,468 9,867 9,867 1,748 437 372
at Wells Branch 25% 32,198 30,844 7,711 7,178 1,553 388 311
on the Parkway 25% 14,443 3,691 920 631 (79) (20) 147
on Timberglen 40% 10,007 3,231 1,326 (104) (15) 12 203
at Castle Creek 40% 19,798 19,310 7,724 7,879 1,212 573 263
at Lake Clearwater 25% 15,740 15,367 3,842 3,893 854 214 134
Creekside 25% 15,403 15,234 3,809 3,930 841 268 131
at Deerfield 25% 16,545 3,734 930 780 (266) (66) 150
at Wynnewood Farms 25% 17,870 17,664 4,416 4,456 1,017 253 146
at Monterey Oaks 25% 29,546 28,679 7,170 7,253 2,113 528 215
at St. Charles 25% 41,375 40,597 10,149 10,170 2,256 564 337
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Equity Total Company's Company's
Company's ------------------ Company's Net Share of Share of
Percentage Total Company's Investment Income Net Income Deprecia-
Community Ownership Assets Total Share (1) (1) (Loss) (Loss) tion
--------- ------------------- ----- --------- ---------- ------ ---------- ----------
at Park Bridge 25% 24,089 23,951 5,988 6,043 1,860 465 173
at Mill Creek 25% 25,623 25,421 6,355 6,617 397 99 130
at Lost Mountain 75% 11,184 618 463 515 (14) (68) 282
on Spring Mill 20%
(Residual) 28,343 27,665 -- 1,237 1,019 -- --
at Prestonwood
Hills 45% 17,561 5,643 2,555 2,550 221 144 227
at Windward Park 45% 26,680 8,708 3,948 3,940 213 163 342
at Summit Ridge 25% 27,947 7,754 1,938 1,669 (627) (157) 236
at Oak Bend 40% 24,862 5,487 2,195 2,195 95 182 280
Midtown 45% 33,511 10,712 4,856 4,839 745 436 409
on Frankford 45% 39,590 12,869 5,837 5,821 585 380 490
at Peachtree City I 20% 28,541 28,392 5,678 3,678 1,646 329 150
at Kedron Village 20% 15,992 911 182 167 (89) (18) 3
at Scofield Ridge 45% 37,887 12,347 5,599 5,580 (109) 34 452
at Breckinridge
Point 45% 34,045 11,085 5,026 5,008 272 208 404
at Cambridge
Square 30% 27,986 22,767 6,830 7,146 (173) (42) 22
Towne Square 45% 33,905 10,910 4,946 4,892 231 185 397
at Lowry Estates 50% 51,451 17,227 8,614 8,463 (276) (33) 678
at King's Harbor 25% 19,532 18,496 4,624 4,914 (414) (104) 75
at Milton Park 25% 15,252 12,245 3,061 2,862 -- -- --
at Osprey Lake 69% 52,794 16,312 11,213 11,019 (279) (128) 836
at Seven Bridges 20% 18,108 13,626 2,680 3,345 -- -- --
at Barrett Walk 25% 4,306 3,225 806 829 -- -- --
---------- ------- ------- ------- ------- ------ ------
1,183,838 649,369 185,614 183,925 28,056 8,747 11,054
Other, excluding
gain on sale 690 690 345 345 793(2) 614(2) 235
---------- ------- ------- ------- ------- ------ ------
Total $1,184,528 650,059 185,959 184,270 28,849 9,361 11,289
========== ======= ======= ======= ======= ====== ======
(1) The Company's investments in partnerships differ from the Company's share of co-investment
partnerships' equity primarily due to capitalized interest on its investments in properties under
development, purchase price basis differences, and the elimination of the Company's share of
acquisition, financing and development fee income. These items are amortized over forty years
using the straight-line method.
(2) Excludes $24,040 gain on sale of a residential property and the Company's share of such gain of
$9,603, which is reported as a share of a gain on sale of a residential property.
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
All but one debt financing have been obtained at fixed rates from
various insurance companies on behalf of these co-investment partnerships.
At December 31, 2001, the Company's share of co-investment debt totaled
$186,842. All of these first mortgages are nonrecourse debt and secured by
mortgages on the respective communities. The following summarizes co-
investment debt at December 31, 2001:
Out-
standing
Total at Company'sInterest
Community Commitment 12/31/01 Share Rate Maturity
--------- ---------- -------- ----------------- --------
AMLI:
at Champions Centre $ 6,700 6,368(1) 955 8.93% Jan. 2002
at Champions Park 9,500 8,396(1) 1,259 7.49% Jan. 2002
at Windbrooke 11,500 11,058(2) 1,659 9.24% Feb. 2002
at Greenwood Forest 11,625 11,192 1,679 8.95% May 2002
at Kedron Village 19,170 13,285 2,657 L+1.875% June 2002
at Chevy Chase 29,767 27,233 8,987 6.67% Apr. 2003
at Willeo Creek 10,000 9,177 2,753 6.77% May 2003
at Regents Crest 16,500 15,164 3,791 7.50% Dec. 2003
at Verandah 16,940 16,263 5,692 7.55% Apr. 2004
on Timberglen 6,770 6,411 2,564 7.70% June 2004
at Prestonwood Hills 11,649 11,379 5,154 7.17% Aug. 2006
at Windward Park 18,183 17,769 8,055 7.27% Aug. 2006
at Oak Bend 18,834 18,494 7,398 7.81% Dec. 2006
Midtown 21,945 21,545 9,769 7.52% Dec. 2006
at Deerfield 12,600 12,370 3,093 7.56% Dec. 2006
at Danada Farms 24,500 23,814 2,381 7.33% Mar. 2007
on Frankford 25,710 25,418 11,528 8.25% June 2007
at Breckinridge Point22,110 21,853 9,909 7.57% July 2007
at Scofield Ridge 24,618 24,339 11,038 7.70% Aug. 2007
Towne Square 21,450 21,239 9,643 7.60% Jan. 2008
at Lowry Estates 33,900 33,620 16,810 7.12% Jan. 2008
at Summit Ridge 20,000 19,862 4,966 7.27% Feb. 2008
at River Park 9,100 8,633 3,453 7.75% June 2008
on the Parkway 10,800 10,264 2,566 6.75% Jan. 2009
at Barrett Lakes 16,680 16,020 5,607 8.50% Dec. 2009
at Northwinds 33,800 33,483 11,719 8.25% Oct. 2010
at Osprey Lake 35,320 35,054 24,100 7.02% Mar. 2011
at Lost Mountain 10,252 10,209 7,657 6.84% Nov. 2040
-------- ------- -------
Total $509,923 489,912 186,842
======== ======= =======
----------
(1) These loans were repaid at maturity. The payments were funded
from additional contributions of $2,214 and $12,550 made by the
Company and its co-investment partners, respectively.
(2) This loan was repaid on February 4, 2002 from the proceeds of
a $20,800 ten-year 6.43% non-recourse first mortgage note payable,
with payments of principal and interest until its maturity in
February 2012. Proceeds of the new loan in excess of the amount
used to repay this loan were distributed to the Company and its co-
investment partners on the same date. The Company's share of this
distribution was $1,545. With this distribution, the partners have
received a return of all their original capital plus a targeted
yield. As a result, based on the provisions of the co-investment
partnership agreement, the Company will, in general, receive
future cash flows in excess of its ownership interest.
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
In general, these loans provide for monthly payments of principal and interest based on a 25- or 27-year
amortization schedule and a balloon payment at maturity. Some loans provide for payments of interest only for an
initial period, with principal amortization commencing generally within two years.
At December 31, 2000, the Operating Partnership was a general partner in various co-investment partnerships.
The Operating Partnership and the Service Companies receive various fees for services provided to these co-
investment partnerships, including development fees, construction fees, acquisition fees, property management
fees, asset management fees, financing fees, administrative fees and disposition fees. The Operating Partnership
is entitled to shares of cash flow or liquidation proceeds in excess of its stated ownership percentages based, in
part, on cumulative returns to its partners in excess of specified rates. The Operating Partnership has received
cash flow and has recorded operating income in excess of its ownership percentages of $1,203 for the twelve months
ended December 31, 2000. In addition, the Company received $1,181 in the form of a promoted interest from a sale
of a co-investment property, which was recorded as other income. Investments in partnerships at December 31, 2000
and the Company's 2000 share of income or loss from each are summarized as follows:
Equity Total Company's Company's
Company's ------------------- Company's Net Share of Share of
Percentage Total Company's Investment Income Net Income Deprecia-
Community Ownership Assets Total Share (1) (1) (Loss) (Loss) tion
----------- --------- -------- ------ --------- ---------- -------- ---------- ---------
AMLI:
at Greenwood Forest 15% $ 15,936 4,037 606 588 3 1 65
at Champions Park 15% 11,728 2,723 409 409 23 3 52
at Champions Centre 15% 8,859 2,020 303 301 (87) (15) 38
at Windbrooke 15% 16,221 4,383 657 657 512 77 67
at Willeo Creek 30% 13,622 4,093 1,228 1,228 226 68 156
at Barrett Lakes 35% 24,415 7,930 2,775 2,880 912 319 314
at Chevy Chase 33% 41,948 12,785 4,204 4,204 2,027 726 432
at Willowbrook 40% 35,010 10,840 4,336 4,255 1,176 470 478
at River Park 40% 13,397 4,509 1,804 1,760 730 292 177
at Fox Valley 25% 22,998 22,382 5,595 5,778 1,262 315 186
at Fossil Creek 25% 20,338 19,529 4,882 4,972 1,451 363 182
at Danada Farms 10% 45,173 19,636 1,964 1,955 1,768 177 138
at Verandah 35% 22,618 5,093 1,825 1,882 (102) 8 396
at Northwinds 35% 51,373 16,955 5,934 5,778 1,714 600 616
at Regents Crest 25% 31,938 16,059 4,015 4,095 271 158 226
at Oakhurst North 25% 41,809 40,870 10,218 10,219 1,403 351 342
at Wells Branch 25% 33,360 32,089 8,022 7,474 2,392 598 295
on the Parkway 25% 15,022 4,084 1,018 719 93 25 144
on Timberglen 40% 10,476 3,610 1,465 25 (14) 37 192
at Castle Creek 40% 20,066 19,442 7,777 7,908 192 77 204
at Lake Clearwater 25% 16,210 15,763 3,941 3,993 440 110 115
Creekside 25% 15,905 15,767 3,942 4,067 119 52 96
at Deerfield 25% 17,143 4,223 1,053 871 (298) (74) 147
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Equity Total Company's Company's
Company's ------------------- Company's Net Share of Share of
Percentage Total Company's Investment Income Net Income Deprecia-
Community Ownership Assets Total Share (1) (1) (Loss) (Loss) tion
----------- --------- -------- ------ --------- ---------- -------- ---------- ---------
AMLI:
at Wynnewood Farms 25% 18,187 17,626 4,407 4,449 181 47 111
at Monterey Oaks 25% 29,910 28,366 7,092 7,186 623 156 148
at St. Charles 25% 42,059 40,366 10,092 10,098 1,119 280 259
at Park Bridge 25% 24,136 22,352 5,588 5,678 193 48 56
at Mill Creek 25% 20,025 17,401 4,350 4,481 (169) (42) 9
at Lost Mountain 75% 10,695 931 699 800 (188) (141) 125
on Spring Mill 20%
(Residual) 29,253 28,576 -- 1,270 1,411 -- --
at Prestonwood
Hills 45% 18,015 5,935 2,688 2,681 156 117 216
at Windward Park 45% 27,348 9,230 4,011 4,178 401 258 332
at Summit Ridge 25% 27,714 7,538 1,884 1,665 (595) (149) 79
at Oak Bend 40% 25,621 5,968 2,387 2,319 183 100 264
Midtown 45% 34,229 11,303 5,306 5,105 486 313 375
on Frankford 45% 40,526 13,693 6,213 6,196 325 211 260
at Peachtree City I 20% 29,212 29,108 5,822 3,770 902 180 80
at Peachtree City II 20% 5,393 1,000 200 153 -- -- --
at Scofield Ridge 45% 38,682 13,205 5,991 5,971 288 175 166
at Breckinridge
Point 45% 34,775 11,788 5,346 5,328 176 110 124
at Cambridge Square 30% 6,654 5,759 1,728 1,718 -- -- --
at Towne Square 45% 33,792 11,593 5,264 5,146 (27) (12) 16
at Lowry Estates 50% 52,374 18,123 9,061 8,907 (43) (21) 41
at King's Harbor 25% 12,217 9,888 2,472 2,383 -- -- --
at Milton Park 25% 5,889 4,806 1,202 715 -- -- --
---------- ------- ------- ------- ------- ------- --------
1,112,271 603,377 169,776 166,215 21,635 6,368 7,719
Other 720 707 354 354 741(2) 419(2) 252
---------- ------- ------- ------- ------- ------- --------
Total $1,112,991 604,084 170,130 166,569 22,376 6,787 7,971
========== ======= ======= ======= ======= ======= ========
-----------------
(1) The Company's investments in partnerships differ from the Company's share of co-investment partnerships'
equity primarily due to capitalized interest on its investments in properties under development, purchase
price basis differences, and the elimination of the Company's share of acquisition, financing and development
fee income. These items are amortized over forty years using the straight-line method.
(2) Excludes $15,010 gain on sale of a residential property and the Company's share of such gain of $6,800,
which is reported as share of a gain on sale of a residential property.
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
At December 31, 1999, the Operating Partnership was a general partner
in various co-investment partnerships and in one GP Property (AMLI at Towne
Creek in Gainesville, Georgia) which was accounted for using the equity
method. Another GP Property, AMLI at Prairie Court, was sold in August
1999, for which the Company received a $554 share of net sale proceeds in
excess of its GP interest. The Operating Partnership and the Service
Companies receive various fees for services provided to these co-investment
partnerships, including development fees, construction fees, acquisition
fees, property management fees, asset management fees, financing fees,
administrative fees and disposition fees. The Operating Partnership is
entitled to shares of cash flow or liquidation proceeds in excess of its
stated ownership percentages based, in part, on returns to its partners in
excess of specified rates. During 1999, the Operating Partnership received
$441 of cash flow in excess of its ownership percentages. Investments in
partnerships at December 31, 1999 and the Company's 1999 share of income or
loss from each are summarized as follows:
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Equity Total Company's Company's
Company's ------------------- Company's Net Share of Share of
Percentage Total Company's Investment Income Net Income Deprecia-
Community Ownership Assets Total Share (1) (1) (Loss) (Loss) tion
----------- --------- ------- ----- --------- ---------- ----- ---------- ---------
AMLI:
at Greenwood
Forest 15% $16,447 4,384 658 640 56 8 72
at Champions Park 15% 12,108 2,930 440 440 112 17 52
at Champions
Centre 15% 9,281 2,307 346 346 (39) (6) 43
at Windbrooke 15% 16,515 4,621 693 693 234 35 77
at Willeo Creek 30% 14,166 4,417 1,325 1,325 294 88 154
at Pleasant Hill 40% 24,732 9,416 3,553 3,314 884 370 343
at Barrett Lakes 35% 25,441 8,723 3,053 3,161 656 230 319
at Chevy Chase 33% 42,950 13,208 4,349 4,349 1,539 508 422
at Willowbrook 40% 35,828 10,964 4,386 4,301 944 377 461
at River Park 40% 14,354 5,279 2,112 2,067 607 243 175
at Fox Valley 25% 23,637 23,100 5,775 5,963 1,390 347 186
at Fossil Creek 25% 21,019 20,248 5,062 5,154 1,489 372 180
at Danada Farms 10% 46,139 20,442 2,044 2,035 1,455 146 135
at Verandah 35% 23,649 5,905 2,099 2,157 (112) 36 387
at Northwinds 35% 52,463 20,179 7,077 6,876 1,127 394 522
at Regents Crest 25% 31,571 14,740 3,685 3,746 549 234 172
at Oakhurst North 25% 43,450 42,097 10,524 10,526 583 145 285
at Wells Branch 25% 34,461 33,335 8,334 7,771 1,623 406 268
on the Parkway 25% 15,568 4,441 1,108 802 93 30 157
on Timberglen 40% 10,974 3,987 1,606 209 (6) 41 186
at Castle Creek 40% 13,793 12,974 5,190 5,290 (103) (41) 12
at Lake
Clearwater 25% 14,073 12,347 3,087 3,147 (180) (45) 29
Creekside 25% 12,225 10,936 2,734 2,805 (98) (25) 2
at Deerfield 25% 17,452 4,708 1,174 983 (94) (15) 81
at Wynnewood
Farms 25% 12,601 10,836 2,709 2,715 (89) (22) 1
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Equity Total Company's Company's
Company's ------------------- Company's Net Share of Share of
Percentage Total Company's Investment Income Net Income Deprecia-
Community Ownership Assets Total Share (1) (1) (Loss) (Loss) tion
----------- --------- ------ ----- --------- ---------- ----- ---------- ---------
at Monterey Oaks 25% 17,607 14,452 3,613 3,611 (18) (4) --
at St. Charles 25% 39,965 33,561 8,390 8,354 33 8 35
at Park Bridge 25% 7,988 6,921 1,730 1,755 (1) -- --
at Mill Creek 25% 5,707 5,541 1,385 1,409 -- -- --
at Lost Mountain 75% 3,705 365 365 421 (1) (1) --
on Spring Mill 20%
(Residual) 29,989 29,320 -- 1,316 631 -- --
at Prestonwood
Hills 45% 18,407 6,273 2,851 2,844 75 53 79
at Windward Park 45% 28,235 9,714 4,414 4,404 152 99 123
at Summit Ridge 25% 7,198 -- -- (72) -- -- --
at Oak Bend 40% 25,784 6,552 2,626 2,626 59 29 65
-------- ------- ------- ------- ------- ------- -------
769,482 419,223 108,497 107,483 13,844 4,057 5,023
GP Properties and Other 189 152 35 35 948(2) 226(2) 34
-------- ------- ------- ------- ------- ------- -------
$769,671 419,375 108,532 107,518 14,792 4,283 5,057
======== ======= ======= ======= ======= ======= =======
(1) The Company's investments in partnerships differ from the Company's share of co-investment
partnerships' equity primarily due to capitalized interest on its investments in properties under
development, purchase price basis differences, and the elimination of the Company's share of
acquisition, financing and development fee income.
(2) Excludes gain on sale of AMLI at Park Place of $6,100 and the Company's share of such gain of $1,663,
which is reported as share of gain on sale of residential property.
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
INVESTMENTS IN SERVICE COMPANIES
The Company owns approximately 5% of the voting common stock and 100%
of the non-voting preferred stock in the Service Companies, which provide
property management, corporate homes administration, construction,
landscaping, investment advisory and asset management services to the
Company, co-investment partnerships, co-investment partnerships and certain
other parties. The non-voting preferred stock entitles the Company to
approximately 95% of all cash distributions from the Service Companies. No
dividends have been paid by the Service Companies for any of the three
years ended December 31, 2001.
Following enactment of new legislation passed to broaden a REIT's
ability to provide additional services to its residents, AMC and AIA each
have elected to become a TRS as of January 1, 2001. The election has not
affected the Company's method to account for this subsidiary and
accordingly the Company continues to use the equity method, which is
consistent with prior years.
Summarized combined financial information of the various Service
Companies at and for the years ended December 31, 2001, 2000 and 1999
follows:
2001 2000 1999
------- ------- -------
Construction contract revenue $58,385 105,712 98,390
Construction contract costs (55,579) (101,539) (94,213)
------- ------- -------
Construction gross profit 2,806 4,173 4,177
Property management fees 9,940 8,156 6,601
Corporate homes' gross profit 4,690 3,981 3,548
Gains on land sales 146 3,725 215
Other income 1,349 1,897 1,938
------- ------- -------
Total income 18,931 21,932 16,479
------- ------- -------
General and administrative:
Construction 1,669 2,345 1,723
Property management 9,018 7,863 6,460
Corporate homes 4,064 3,466 3,238
Other 623 828 361
------- ------- -------
Total general and administrative 15,374 14,502 11,782
------- ------- -------
EBITDA 3,557 7,430 4,697
Interest 2,182 4,257 3,748
Depreciation (1) 2,802 2,115 1,616
Income taxes (457) 405 (79)
------- ------- -------
Net income (loss) $ (970) 653 (588)
======= ======= =======
Receivables from affiliates $ 9,136 17,155
Land held for sale 4,951 9,699
Building and equipment, net of
accumulated depreciation 2,463 2,154
Information technology costs,
net of accumulated depreciation 8,384 3,718
Investments and other assets 9,911 9,274
------- -------
Total assets $34,845 42,000
======= =======
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
2001 2000 1999
------- ------- -------
Due to the Company $17,311 4,895
Bank debt 14,000 27,000
Other 5,733 11,395
------- -------
Total liabilities $37,044 43,290
======= =======
Total deficit $(2,199) (1,290)
======= =======
(1) Includes $668 in amortization of goodwill each year.
Unamortized goodwill totaling $668 at December 31, 2001
will not be anticipated in future years, in accordance
with Statement of Financial Accounting Standards No. 142
"Accounting for Goodwill and Other Intangible Assets."
For 2000 and 1999, substantially all interest expense of the Service
Companies resulted from notes payable to the Company at interest rates
ranging from 9.5% to 13.0%. In December 2000, two notes payable totaling
$27,000 were refinanced with direct borrowings from banks under the
Company's line of credit, with interest at LIBOR + 1.05%. At December 31,
2001, the Service Companies have repaid $13,000 of their line of credit
borrowings with advances from the Company, leaving a balance of $14,000.
Amounts borrowed from the banks by the Service Companies are guaranteed by
the Company for which it received a guaranty fee from the Service Companies
totaling $203 and $8 for the twelve months ended December 31, 2001 and
2000, respectively. Interest and share of income from Service Companies as
included in the accompanying Consolidated Statements of Operations are
reconciled below.
2001 2000 1999
------- ------- ------
Intercompany interest expensed $ 874 4,275 3,748
Intercompany interest
capitalized. . . . . . . . . 72 320 569
Net income (loss). . . . . . . (970) 635 (588)
Intercompany eliminations and
other owners' share. . . . . (93) (208) (667)
------- -------- --------
Interest and share of income
from the Service Companies . $ (117) 5,022 3,062
======= ======== ========
4. RELATED PARTY TRANSACTIONS
During 2001, 2000 and 1999, the Company accrued or paid to the Service
Companies and partnerships other costs and expenses as follows:
2001 2000 1999
------ ------ ------
Management fees. . . . . . . . $3,159 2,822 2,875
General contractor fees. . . . 209 186 433
Interest expense . . . . . . . 273 545 561
Landscaping and
grounds maintenance. . . . . 439 2,060 2,116
====== ====== ======
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
In addition, at December 31, 2001, 2000 and 1999, the Company owed
Amrescon $4,079, $1,501 and $2,068, respectively, for construction costs of
communities under development or rehab.
During 2001, 2000 and 1999, the Company earned or received from the
Service Companies and partnerships other income as follows:
2001 2000 1999
------ ------ ------
Development fees . . . . . . . $1,827 1,904 2,693
Acquisition, disposition and
financing fees . . . . . . . 465 1,544 998
Asset management fees. . . . . 546 584 600
Promoted interest (1). . . . . 1,796 1,181 554
Interest on notes and advances
to the Service Companies . . 946 4,595 4,317
Interest on advances to
other affiliates . . . . . . 285 281 708
====== ====== =====
----------------
(1) The Company's share of net sales proceeds representing incentive
compensation in the form of promoted interest in AMLI at
Willowbrook, AMLI at Pleasant Hill and AMLI at Prairie Court
in 2001, 2000 and 1999, respectively.
The Company leases apartment homes through ACH for short-term
residents. Leases are at market rates. Rents and other charges are
collected by ACH and are remitted to the Company on a periodic basis.
During 2001, 2000 and 1999, total revenues of $3,619, $2,018 and $2,050,
respectively, were generated from ACH leases.
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
5. DEBT
The table below sets forth certain information relating to the indebtedness of the Company.
Balance Balance
Original at Interest Maturity at
Encumbered Properties Amount 12/31/01 Rate Date 12/31/00
--------------------- -------- -------- ---------- -------- --------
BOND FINANCING:
Tax-exempt
Unsecured (1) $ 40,750 40,750 rate+1.23% 10/1/24 40,750
Tax-exempt
AMLI at Poplar Creek (1) 9,500 9,500 rate+1.24% 2/1/24 9,500
-------- ------ -------
Total bonds 50,250 50,250 50,250
-------- ------ -------
MORTGAGE NOTES PAYABLE TO FINANCIAL INSTITUTIONS:
AMLI at Conner Farms 13,275 11,960 7.00% 6/15/03 12,238
AMLI at Riverbend 31,000 28,102 7.30% 7/1/03 28,726
AMLI in Great Hills 11,000 9,977 7.34% 7/1/03 10,198
AMLI at Valley Ranch 11,500 9,688 7.63% 7/10/03 9,969
AMLI at Nantucket 7,735 7,325 7.70% 6/1/04 7,454
AMLI at Bishop's Gate 15,380 14,230 7.25%(2) 8/1/05 14,523
AMLI at Regents Center 20,100 19,037 8.90%(3) 9/1/05 19,260
AMLI on the Green/AMLI of North Dallas (4) 43,234 39,621 7.79% 5/1/06 40,402
AMLI at Clairmont 12,880 12,573 6.95% 2/15/08 12,738
AMLI - various (5)(6) 140,000 139,369 6.56% 8/17/11 --
AMLI at Park Creek 10,322 10,177 7.88% 12/1/38 10,223
-------- ------- --------
Total mortgage notes payable 316,426 302,059 165,731
-------- ------- --------
Other Notes Payable:
Unsecured line of credit (6)(7) 200,000 47,000 L+1.05% 11/15/03 165,000
Note payable to a Service Company 5,000 -- 10.00% 1/1/03 5,000
-------- ------- --------- ------- -------
Total other notes payable 205,000 47,000 170,000
-------- ------- -------
Total (8) $571,676 399,309 385,981
======== ======= =======
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
--------------------
(1) The terms of these tax-exempt bonds require that a portion of the apartment homes be leased to individuals
who qualify based on income levels specified by the U.S. Government. The bonds bear interest at variable
rates that are adjusted weekly based upon the remarketing rates for these bonds (1.35% for AMLI at Spring
Creek and 1.36% for AMLI at Poplar Creek at February 4, 2002). The credit enhancement for the AMLI at
Spring Creek bonds was provided by a $41,297 letter of credit from Wachovia Bank that expires on October 15,
2002 and the credit enhancement for the AMLI at Poplar Creek bonds was provided by a $9,617 letter of credit
from LaSalle National Bank that expires December 18, 2002.
(2) This original $14,000 mortgage bears interest at 9.1%. It was valued at $15,380 to reflect a 7.25% market
rate of interest when assumed in connection with the acquisition of AMLI at Bishop's Gate on October 17,
1997. The unamortized premium at December 31, 2001 was $683.
(3) $13,800 at 8.73% and $6,300 at 9.23%.
(4) These two properties secure the FNMA loan that was sold at a discount of $673. At December 31, 2001, the
unamortized discount amount was $292.
(5) This loan is secured by mortgages on seven previously unencumbered properties (AMLI at Bent Tree, AMLI at
Lantana Ridge, AMLI at StoneHollow, AMLI at Western Ridge, AMLI at Killian Creek, AMLI at Eagle Creek and
AMLI at Gateway Park).
(6) The Company has used interest rate swaps on $47,000 of the outstanding amount to fix its base interest rate
(before current lender's spread) at an average of 6.22%. The Company paid the outstanding balance down in
June 2001 by $140,000 from the proceeds of a new ten-year mortgage loan secured by seven of its wholly-owned
properties. AMLI concurrently reduced the commitment amount under its current line of credit by $50,000 to
$200,000.
(7) The Company's unsecured line of credit has been provided by a group of eight banks led by Wachovia Bank,
N.A. and Bank One, N.A. In November 2000, the maturity date was extended to November 2003 with a one-year
renewal option. In addition, AMC and Amrescon were added as borrowers under this line of credit, and such
borrowings by the Service Companies ($14,000 at December 31, 2001) are guaranteed by the Company and count
against the Company's total availability under this line of credit. This unsecured line of credit requires
that the Company meet various covenants typical of such an arrangement, including minimum net worth, minimum
debt service coverage and maximum debt to equity percentage. The unsecured line of credit is used for
acquisition and development activities and working capital needs.
(8) All but $20,537 is non-recourse to the partners of the Operating Partnership.
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
As of December 31, 2001, the scheduled maturities of the Company's
debt are as follows:
Fixed Rate
Mortgage
Notes Payable Unsecured
Bond to Financial Lines
Financings Institutions of Credit Total
---------- ------------- --------- -------
2002. . . . . . . . . $ -- 4,862 -- 4,862
2003. . . . . . . . . -- 61,814 47,000 108,814
2004. . . . . . . . . -- 10,745 -- 10,745
2005. . . . . . . . . -- 34,812 -- 34,812
2006. . . . . . . . . -- 38,123 -- 38,123
Thereafter. . . . . . 50,250 151,703 -- 201,953
------- ------- ------- -------
Total . . . . $50,250 302,059 47,000 399,309
======= ======= ======= =======
The Company has considered the interest rates on its long-term debt
and interest rates, payment terms and maturities available to the Company
as of December 31, 2001, for these types of loans, and estimates that the
fair value of its long-term debt exceeds the carrying value by
approximately $6,756 at December 31, 2001. At December 31, 2000, the fair
value of the Company's long-term debt exceeded the carrying value by
approximately $3,924.
6. INCOME TAXES
The Company qualifies as a REIT under Sections 856 through 860 of the
Internal Revenue Code of 1986, as amended. A REIT will generally not be
subject to Federal income taxation on that portion of its income that
qualifies as REIT taxable income to the extent that it distributes at least
90% of its taxable income to its shareholders and complies with certain
other requirements. In 1999 the Company distributed approximately 90% of
its taxable income and designated a portion of its dividends being paid
during 2000 as a throw back dividend to 1999. In 2000, the Company
distributed approximately 90% of its taxable income and again designated a
portion of its dividends paid during 2001 as a throw back dividend to 2000.
In 2001, the Company distributed over 100% of its taxable income.
Accordingly, no provision has been made for Federal income taxes for the
Company. Dividends paid in 2001 and 2000 were fully taxable (approximately
33% as capital gain and approximately 67% as ordinary income in 2001 and
approximately 40% as capital gain and approximately 60% as ordinary income
in 2000).
The Company has recorded no deferred taxes on gains for financial
reporting purposes that have been deferred for income tax reporting
purposes because the Company intends to distribute to its shareholders any
deferred tax gain upon ultimate realization for income tax reporting
purposes.
The following table shows a reconciliation of generally accepted
accounting principles ("GAAP") net income and taxable income:
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
RECONCILIATION BETWEEN GAAP NET INCOME AND REIT TAXABLE INCOME
--------------------------------------------------------------
2001 2000 1999
-------- -------- --------
GAAP net income . . . . . . . . . $ 45,746 76,533 51,738
Less: GAAP (net income) loss of
TRS included above. . . . . . . 970 (635) 588
-------- -------- --------
GAAP net income from REIT opera-
tions (1) . . . . . . . . . . . 46,716 75,898 52,326
Add: GAAP depreciation and
amortization. . . . . . . . . . 21,830 19,992 18,604
Less: Tax depreciation and
amortization. . . . . . . . . . (27,531) (23,715) (23,482)
GAAP/tax differences on gains/
losses from capital transactions (8,295) (34,419) (838)
Other GAAP/tax differences, net . (1,713) 772 (3,016)
-------- -------- --------
Taxable income before adjustments 31,007 38,528 43,594
Less: Capital gains. . . . . . . (13,100) (15,761) (20,506)
-------- -------- --------
Taxable ordinary income subject
to 90% dividend requirement . . $ 17,907 22,767 23,088
======== ======== ========
Minimum required distribution to
maintain REIT status. . . . . . $ 16,116 20,490 20,779
Less: Dividend paid deduction . . (22,286) (22,767) (23,088)
-------- -------- --------
Dividends paid beyond minimum
required. . . . . . . . . . . . $ (6,170) (2,277) (2,309)
======== ======== ========
(1) All adjustments to "GAAP net income from REIT operations" are net
of amounts attributable to minority interest and TRS.
RECONCILIATION BETWEEN CASH DIVIDENDS PAID AND DIVIDENDS PAID DEDUCTION:
-----------------------------------------------------------------------
2001 2000 1999
-------- -------- --------
Cash dividends paid . . . . . . . $ 40,245 39,357 37,906
Less: Dividends designated to
prior years . . . . . . . . . . (4,859) (5,688) --
Plus: Dividends designated from
following year. . . . . . . . . -- 4,859 5,688
Less: Portion designated capital
gain distributions. . . . . . . (13,100) (15,761) (20,506)
-------- -------- --------
Dividends paid deduction. . . . . $ 22,286 22,767 23,088
======== ======== ========
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
CHARACTERIZATION OF DISTRIBUTIONS
---------------------------------
2001 2000 1999
------------- ------------- -------------
$ % $ % $ %
----- ----- ----- ----- ----- -----
Ordinary income. . . $1.27 67% $1.13 60% $0.84 46%
Capital gains. . . . 0.44 23% 0.61 33% 0.66 37%
Unrecaptured
Sec. 1250 gain . . 0.18 10% 0.12 7% 0.31 17%
----- ----- ----- ----- ----- -----
$1.89 100% $1.86 100% $1.81 100%
===== ===== ===== ===== ===== =====
7. MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED SHARES
On February 20, 1998, the Company privately placed $75,000 of Series B
Convertible Preferred shares with an institutional investor. The Series B
Convertible Preferred shares, which were issued at $24 per share and
carried an initial annual dividend of $1.80 per share, are non-callable for
nine years and are subject to mandatory redemption in the event of a change
in control. The Series B Convertible Preferred shares are convertible into
common shares on a one-to-one basis. The minimum $1.80 per share annual
dividend will increase to match the dividend rate on AMLI's common shares
(currently $1.92 per share annually) if the annual dividend rate on common
shares is increased to more than $1.80 per share. Fundings of $25,000 each
occurred on March 9, June 30, and September 30, 1998. Total proceeds, net
of 1.12% in offering costs, were $74,144.
On October 31, 2001, the Company privately placed $20,000 of Series D
Cumulative Convertible Preferred shares to the Equitable Life Assurance
Society of the United States. The issue includes 800,000 shares at a par
value of $25 per share and is convertible into 720,721 common shares at
$27.75 per share, based on a conversion ratio of 0.9009 to 1. Required
quarterly dividend payments will be equal to the greater of $0.540625 per
share (based on 800,000 shares), an initial current yield of 8.65%, or the
quarterly dividend then payable by the Company on the common shares into
which the preferred shares could be converted. The issue is redeemable by
the Company after five years and is subject to mandatory redemption by the
Company, at the sole discretion of the holder, in the event of a change in
control. Total net proceeds, net of 4.28% in offering costs, were $19,144.
8. SHAREHOLDERS' EQUITY
During 2001, 2000 and 1999, a total of 569,988, 0 and 55,556 OP Units,
respectively, were issued to third parties as partial consideration for the
acquisition of certain communities and a land parcel. A total of 139,330,
333,778 and 53,712 OP Units were converted to common shares during 2001,
2000 and 1999, respectively.
During 2001, 2000 and 1999, a total of 12,434, 11,421 and 37,271 new
common shares, respectively, were issued pursuant to the Company's
Executive Share Purchase Plan (see note 9).
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
On January 30, 1996, the Company issued 1,200,000 Series A Preferred
shares at $20 per share. Through December 31, 2001, 850,000 of the Series
A Preferred shares had been converted to common shares on a share-for-share
basis. After January 25, 2001, the Company may redeem the Series A
Preferred shares at its option for cash or common shares. The Company may
redeem the Series A Preferred shares for common shares only when the price
of the common shares equals or exceeds the approximate $20 per share
conversion price for 20 of the 30 days preceding the date of redemption
notice.
On November 2, 1998, the Company's Board of Trustees adopted a
shareholder rights plan. In connection with the adoption of the rights
plan, the Board declared a dividend distribution of one right for each
common share outstanding on November 13, 1998, and created a series of
preferred shares, consisting of 150,000 shares, designated the Series C
Junior Participating Preferred Shares (the "Series C Preferred Shares").
The rights will not become exercisable unless someone acquires 15% or more
of the Company's common shares or commences a tender offer for 15% or more
of the common shares. Once exercisable, each right would entitle the
holder, other than holders who caused the rights to become exercisable, to
purchase one one-thousandth of a Series C Preferred Share. Each Series C
Preferred Share, when and if issued, would entitle the holder to receive
quarterly dividends on a cumulative basis, to exercise 1,000 votes per
share on all matters submitted to shareholders and to receive a preference
in the event of a liquidation. Under certain circumstances, each right
would also entitle the holder, other than holders who caused the rights to
become exercisable, to purchase common shares of the Company or shares of
an acquiring person at a 50% discount to the market price.
In January 2001, the Board of Trustees authorized the purchase of up
to 500,000 of the Company's common shares of beneficial interest, which
represents approximately 3% of the common shares outstanding. During 2001,
the Company repurchased 220,400 shares at prices ranging from $21.72 to
$23.00 per share.
At December 31, 2001, the Company owned 22,115,368 OP Units, which
were approximately 86% of the total 25,779,764 OP Units outstanding. At
December 31, 2000, the Company owned 21,324,504 OP Units, which were
approximately 87% of the total 24,558,242 OP Units outstanding.
9. COMMITMENTS AND CONTINGENCIES
LEASES OF OFFICE SPACE
The Company shares office space with the Service Companies and with
ARC at its Chicago headquarters. Amrescon and AMC share space at regional
corporate offices in Atlanta, Dallas, Indianapolis and Kansas City. The
Company is a party to these leases, which have terms expiring through the
year 2008 and which provide for minimum rent and additional rent based on
increases in operating expenses.
The Company's share of lease payments for non-cancellable office
leases (including amounts allocated to the Service Companies) was $1,063,
$888 and $796 in 2001, 2000 and 1999, respectively. The Company's
estimated share of future minimum rent payments under all such operating
leases are as follows:
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
2002 . . . . . . . . . . . . . . . . . $1,053
2003 . . . . . . . . . . . . . . . . . 1,020
2004 . . . . . . . . . . . . . . . . . 1,034
2005 . . . . . . . . . . . . . . . . . 1,017
2006 . . . . . . . . . . . . . . . . . 756
Thereafter . . . . . . . . . . . . . . 1,394
------
Total. . . . . . . . . . . . . . . $6,274
======
RETIREMENT SAVINGS PLAN
The AMLI Residential Properties Retirement Savings Plan (the
"Retirement Plan") is a qualified plan under Section 401(k) of the Internal
Revenue Code. The provisions of the Retirement Plan obligate the Company
to contribute up to 50% of the amounts contributed to the Retirement Plan
by its employees (such contribution not to exceed $1.0 per employee per
year for 2001 and 2000 and $0.5 for 1999). Employees vest in Company
contributions as follows:
Less than three years' service . . . . . . . . . 0%
Three or more years' service . . . . . . . . . . 100%
===
As of January 1, 1995, the Retirement Plan was amended to provide for
an additional contribution by Participating Employers, as defined, equal to
a percentage (0.0% for 2001, 2.5% for 2000, 3% for 1999) of each eligible
employee's compensation. An employee is eligible who has completed one
year of service by, and is an employee as of December 31 of the year for
which the contribution is made. Those additional contributions together
with the Company's matching contributions are to be invested in open market
purchases of the Company's common shares. Such contributions, by and on
behalf of employees of the Company and its affiliates, were $306, $623 and
$573 in 2001, 2000 and 1999, respectively, all of which were invested in
Company shares.
BONUS INCENTIVE COMPENSATION
A bonus incentive compensation plan has been established for executive
and key officers. This program awards a bonus to executive officers and
certain key officers covered under the plan based on the achievement of
specified targets and goals for the Company and the individual officer.
The primary targets are the desired annual Funds From Operations ("FFO")
per share and how the Company performs relative to its competitors. The
amount of bonus will be based on a formula determined for each officer up
to 50% of base compensation. No bonuses were paid pursuant to this
compensation program for the years ended December 31, 2001, 2000 or 1999.
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
PERFORMANCE INCENTIVE PLAN
In 1995 the Company established a Performance Incentive Plan (the
"Incentive Plan") whereby executive and key officers and employees may
receive OP Units or cash if a target growth in FFO is achieved for a period
of five years (or as many as ten years if the target is not reached sooner)
starting from the year the rights under this Incentive Plan are granted.
If the target growth in FFO is achieved, OP Units actually issued under
this Incentive Plan will include both the original award plus additional OP
Units based on assumed reinvestment of dividends from the date of the award
to the date of issuance. Expense is recognized for financial reporting
purposes over the five-year determination period for each year's award
based upon the estimated value at December 31, 2001 of the OP Units to be
issued. In 2001, 2000 and 1999, a total of $1,044, $686 and $385,
respectively, was charged to expense by the Company and the Service
Companies pursuant to this Incentive Plan. At December 31, 2001, there are
94,900 OP Units (net of cancellations and payments) that may be issued in
conjunction with the Incentive Plan, as follows:
At December 31,
2001 After
Original Dividend
Award Reinvestment
-------- ---------------
January 1996 Award (1). . 12,100 --
February 1997 Award . . . 14,800 21,369
December 1997 Award . . . 23,000 33,176
November 1998 Award . . . 22,100 29,236
November 1999 Award (2) . 3,100 3,791
October 2000 Award (2). . 3,300 4,028
October 2001 Award (2). . 3,300 3,300
------- -------
Total . . . . . . . . 81,700 94,900
======= =======
(1) The Board of Trustees has determined that the FFO growth targets for
each of the five-year periods ended December 31, 2001, 2000, and 1999
were achieved, and accordingly approved payment to individuals who
had fully vested Incentive Plan awards. The value of the Company's
shares at January 31, 2000 times the number of fully vested January
1995 awards totaled $573, and was paid in February 2000. The value
of the Company's share at January 31, 2001 times the number of fully
vested 1996 awards totaled $386 and was paid in February 2001. The
amount equal to the value of the Company's shares at January 31, 2002
times the number of fully vested January 1997 awards, which totaled
$540, has been fully accrued by the Company and its Service Company
affiliates as of December 31, 2001 and was paid in February 2002.
(2) In lieu of the October 2001, October 2000 and November 1999 awards,
certain officers were awarded forgivable loans (see Shareholder
Loans to Officers/ Trustees).
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
OPTION PLAN
The Company has adopted the AMLI Residential Properties Trust Option
Plan (the "Option Plan") to provide incentives to attract and retain
Trustees, officers and key employees and the Service Companies' officers
and employees. The Option Plan provides for options to purchase a
specified number of common shares or OP Units ("Options"). Under the
Option Plan, the total number of common shares available for grant and
available to be issued upon exchange of OP Units issued under the Option
Plan equals 2,850,000. Upon certain extraordinary events, the Executive
Compensation Committee may make such adjustments in the aggregate number of
common shares or OP Units reserved for issuance, the number of common
shares or OP Units covered by outstanding awards and the exercise prices
specified therein as they determine to be appropriate.
On January 1, 1996, the Company adopted SFAS No. 123, "Accounting for
Stock-Based Compensation." Pursuant to its provisions, the Company may
either record additional compensation expense each year based on the fair
value of the Options granted in that year, or, as the Company has elected
under APB No. 25, record no such additional compensation costs in its
consolidated financial statements and disclose the pro forma effects as if
SFAS No. 123 had been applied. Had the Company determined compensation
cost based upon the fair value at the grant date for these Options under
SFAS No. 123, the charge against the Company's net income would have been
$341, $228 and $227 for the years ended December 31, 2001, 2000 and 1999,
respectively, or approximately $0.01 per share in each of these years.
FASB Interpretation No. 44 "Accounting for Certain Transactions
Involving Stock Compensation" became effective July 1, 2000 and requires
that additional compensation expense be recorded related to options issued,
in 1999 and subsequent years, to employees of the Company's unconsolidated
affiliates. The Company's share of net income from the Service Company
affiliates includes a $182 and $53 after-tax charge recorded for the years
ended December 31, 2001 and 2000, respectively, as a result of implementing
this interpretation.
At December 31, 2001, the Trustees who are not members of management
hold 41,925 vested Options, and there were 731,750 vested Options held by
employees at a weighted average exercise price of $21.14 per share.
Through December 31, 2001, 69,333 Options have been exercised and none have
expired.
At December 31, 2001, Options have been issued for all but 290,917 of
the 2,850,000 shares reserved for issuance under the Option Plan. The per
share weighted average fair value of Options granted during 2001, 2000 and
1999 was $1.06, $1.59 and $1.42, respectively, on the date of the grant
using the Black Scholes Option-pricing model with the following weighted
average assumptions: 2001 - expected dividend yield of 7.65%, risk-free
interest rate of 3.52%, expected life of four years and expected volatility
rate of 17.38%; 2000 - expected dividend yield of 7.69%, risk-free interest
rate of 5.83%, expected life of five years and expected volatility rate of
16.73%, and 1999 - expected dividend yield of 7.83%, risk-free interest
rate of 6.23%, expected life of five years and expected volatility rate of
16.14%. The Options granted under this plan have a contractual term of ten
years, except that the Options granted in 1995 (all of which were exercised
during 2001) have a contractual term of seven years.
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Stock Option activity for employees during the years ended
December 31, 2001, 2000 and 1999 is as follows:
Weighted
Average
Number of Exercise
Shares Price
--------- ---------
Balance at December 31, 1998 1,171,500 $21.36
Granted 412,500 20.82
Cancelled (6,000) 21.98
Exercised -- --
--------- ------
Balance at December 31, 1999 1,578,000 21.26
Granted 634,250 23.16
Cancelled (39,583) 20.72
Exercised (8,167) 20.57
--------- ------
Balance at December 31, 2000 2,164,500 21.79
Granted 397,750 23.06
Cancelled (13,000) 21.80
Exercised (59,500) 18.82
--------- ------
Balance at December 31, 2001 2,489,750 $22.10
========= ======
At December 31, 2001, the range of exercise prices was $20.06 - $23.50
and the weighted average remaining contractual life of the outstanding
Options was 6.9 years.
EXECUTIVE SHARE PURCHASE PLAN
At their 1996 Annual Meeting, the Company's shareholders approved the
AMLI Residential Properties Trust Executive Share Purchase Plan (the
"Purchase Plan"). Individuals eligible to participate in the Purchase Plan
included all nine Trustees and 27 members of management (who may in any one
year acquire newly-issued common shares having a value as of the
acquisition date of up to the lower of $100 or 50% of their annual base
compensation). Starting in 2000, the only Trustees eligible to increase
their participation in the Purchase Plan are Messrs. Sweet and Tague.
The common shares may be acquired at 85% of their then current value,
and the participants may elect to receive financing for up to 80% of their
acquisition cost. The 15% discount is taxable income to the participants
and expense for the Company's financial reporting purposes in the year in
which the common shares are issued.
During 2001, 2000 and 1999, Plan Participants acquired a total of
12,434, 11,421 and 37,271 common shares, respectively, pursuant to the
Purchase Plan. Related shareholder loans ($181 in 2001, $169 in 2000 and
$445 in 1999) bear interest at rates ranging from 6.42% to 8.23% and are
fully repayable over a ten-year term. In November 2001, several senior
officers refinanced their Purchase Plan loans through a commercial bank and
repaid the Company. At December 31, 2001 and 2000, the outstanding
balances of these loans were $286 and $1,563, respectively, and are
included in the accompanying Consolidated Balance Sheets as a reduction of
shareholders' equity. Total expense recorded in 2001, 2000 and 1999 for
the 15% discount, including the Service Companies' share, was $42, $37 and
$117, respectively.
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
SHAREHOLDER LOANS TO OFFICERS/TRUSTEES
The Board of Trustees has approved recourse loans to the four
Officers/Trustees and nine other officers to enable them to acquire on the
open market approximately 442,794 of the Company's common shares of
beneficial interest. These loans bear interest at rates ranging from 3.91%
to 6.23% and have terms of nine years. At December 31, 2001 and 2000, the
balances of these loans totaled $7,677 and $8,749, respectively, and are
included in the accompanying Consolidated Balance Sheets as a reduction of
shareholders' equity.
During 1999, the Board of Trustees approved a new loan program ("New
Loan Program") for certain officers as a substitute for the Incentive Plan.
During 2001, 2000 and 1999, the Company loaned $920, $881 and $1,297 to
certain officers to purchase 36,805, 39,876 and 62,100 Company's shares on
the open market, respectively. The loans bear interest rates ranging from
3.91% to 6.06%. Interest only is payable during the five-year loan term.
The New Loan Program provides for forgiveness of the loan over a five-year
period, starting in the third year of the loan. The Company will expense
the loan amount over the five-year loan term using the straight-line method
and will include such amount in compensation expense. In 2002, 10% of the
loans made in 1999, or $130, will be forgiven. At December 31, 2001 and
2000, the balances of these loans totaled $2,890 and $1,919, respectively,
and are included in the accompanying Consolidated Balance Sheets as
reductions of shareholders' equity.
PURCHASE OBLIGATION
The limited partnership agreements of AMLI at Verandah, L.P. and AMLI
on Timberglen, L.P. provide for the redemption (at an amount determined by
formula) by the partnerships of the limited partners' entire interests, in
the limited partners' sole discretion, at any time after March 25, 2002 and
December 16, 2003, respectively, or at any time that there is a designated
event of default on related indebtedness of the partnerships, which event
of default remains uncured and unwaived to the time of notice of redemption
election. The redemption amount may be paid in cash or Company common
shares of beneficial interest, or any combination thereof, in the sole
discretion of the Company.
LETTERS OF CREDIT
At December 31, 2001, the Company is contingently liable with respect
to $6,960 in bank letters of credit issued to secure commitments made in
the ordinary course of business by the Company and its co-investment
partnerships.
LEGAL ACTIONS
The Company is a party to several legal actions which arose in the
normal course of business. In the opinion of management, there will be no
adverse consequences from these actions that would be material to the
Company's financial position or results of operations.
10. SUBSEQUENT EVENTS
On January 2, 2002, a $6,368 balance of the AMLI at Champions Centre
loan was repaid at maturity. The payment was funded from additional
contributions of $955 and $5,413 made by the Company and its co-investment
partners, respectively.
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
On January 5, 2002, an $8,396 balance of the AMLI at Champions Park
loan was repaid at maturity. The payment was funded from additional
contributions of $1,259 and $7,137 made by the Company and its co-
investment partners, respectively.
On January 28, 2002, the Company obtained a commitment for a 6.40%,
$18,000 first mortgage permanent loan with The Northwestern Mutual Life
Insurance Company. The loan is expected to close in mid-April 2002; be
secured by AMLI at Mill Creek; mature in seven years and be amortized based
on thirty-year amortization period.
On February 4, 2002, a 9.24%, $11,046 balance of the AMLI at
Windbrooke loan was refinanced with a new loan from GMAC Commercial
Mortgage Corporation. The new 6.43%, $20,800 loan will mature in ten years
and be amortized based on a thirty-year amortization period. On February
4, 2002, $9,568 of the proceeds were distributed to the partners, including
$1,545 to the Company.
11. SEGMENT REPORTING
The Company defines each of its multifamily communities as an
individual operating segment. It has also determined that all communities
have similar economic characteristics and also meet the other criteria
which permit the communities to be aggregated into one reportable segment,
that being the development, acquisition, operation and ownership of
multifamily communities in its target markets throughout the Southeast,
Southwest, Midwest and Mountain regions of the United States. The
Company's chief operating decision-maker assesses and measures segment
operating results based on a performance measure referred to as net
operating income at the individual operating segment level and FFO at the
aggregated segment level. The National Association of Real Estate
Investment Trusts defines FFO as net income (computed in accordance with
GAAP), excluding extraordinary gains (losses) from debt restructurings and
gains (losses) from sales of depreciable operating properties, plus
depreciation and amortization, and after adjustments for unconsolidated
partnerships, joint ventures and other affiliates. Adjustments for
unconsolidated partnerships, joint ventures and other affiliates are
calculated to reflect FFO on the same basis. FFO does not represent cash
flows from operations, as defined by GAAP; is not indicative that cash
flows are adequate to fund all cash needs; and is not to be considered an
alternative to net income or any other GAAP measure as a measurement of the
results of the Company's operations or the Company's cash flows or
liquidity as defined by GAAP.
The accounting policies of the segments are the same as those
described in Note 2.
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The revenues, net operating income, FFO, assets, investments in
partnerships and total expenditures for property additions for the
Company's reportable segment for the years ended December 31, 2001, 2000
and 1999 are summarized as follows:
2001 2000 1999
---------- ---------- ----------
Multifamily segment revenues (1). $ 280,463 239,903 204,071
Reconciling items:
Reduce co-investment revenues
to Company's share (2). . . . (156,260) (120,227) (84,834)
Interest income and share of
income (loss) from the
Service Companies . . . . . . (117) 5,022 3,062
Other interest income . . . . . 1,432 1,403 1,683
Other revenues. . . . . . . . . 4,654 5,645 5,126
---------- ---------- ----------
Consolidated revenues . . . . . . $ 130,172 131,746 129,108
========== ========== ==========
Multifamily segment net operating
income (1) . . . . . . . . . . . $ 171,063 146,995 114,668
Reconciling items to FFO:
Reduce co-investment net
operating income to Company's
share (3). . . . . . . . . . . (80,775) (62,736) (34,722)
Interest income and share of
income (loss) from the
Service Companies . . . . . . 298 5,437 3,477
Other interest income . . . . . 1,432 1,403 1,683
Other revenues. . . . . . . . . 4,654 5,645 5,126
General and administrative
expenses. . . . . . . . . . . (5,232) (3,756) (4,042)
Provision for loss on land
held for development or sale. (2,086) -- --
Interest expense and loan cost
amortization. . . . . . . . . (26,212) (25,129) (22,611)
---------- ---------- ----------
Consolidated FFO before minority
interest. . . . . . . . . . . . 63,142 67,859 63,579
Reconciling items to net income:
Depreciation - wholly-owned
properties. . . . . . . . . . (21,080) (19,558) (18,194)
Depreciation - share of
co-investment properties. . . (11,289) (7,971) (5,057)
Share of a Service Company's
goodwill amortization . . . . (415) (415) (415)
Gains on sales of residential
properties. . . . . . . . . . 23,296 50,180 21,158
---------- ---------- ----------
Income before minority interest . 53,654 90,095 61,071
Minority interest . . . . . . . . 7,908 13,562 9,333
---------- ---------- ----------
Net income. . . . . . . . . . . . $ 45,746 76,533 51,738
========== ========== ==========
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
2001 2000 1999
---------- ---------- ----------
Segment assets (1) (4). . . . . . $1,935,423 1,803,134 1,462,051
Reconciling items:
Subsequent capital expenditures
(1). . . . . . . . . . . . . . 110,777 92,621 79,089
Reduce co-investment properties
to Company's share (5). . . . (1,059,516) (980,841) (704,297)
Accumulated depreciation. . . . (107,139) (94,590) (90,441)
Other assets (6). . . . . . . . 39,457 45,667 58,216
---------- ---------- ----------
Total assets. . . . . . . . . . . $ 919,002 865,991 804,618
========== ========== ==========
Investments in partnerships . . . $ 184,270 166,569 107,518
========== ========== ==========
Total expenditures for property
additions (1). . . . . . . . . . $ 141,940 438,736 157,547
========== ========== ==========
----------
(1) In 2001 and 2000, represents all properties in which the Company has
an ownership interest; in 1999 excludes AMLI at Towne Creek in which
the Company had a 1% GP interest.
(2) Represents amount required to reduce co-investment properties'
revenues to the Company's share of net income from partnerships.
(3) Represents amount required to reduce co-investment properties' net
operating income to the Company's share of net operating income from
partnerships.
(4) Represents original acquisition costs of properties in which the
Company has an ownership interest.
(5) Represents amount required to reduce co-investment properties' assets
to the Company's investments in partnerships.
(6) Non-segment assets consist primarily of cash and cash equivalents,
deferred expenses, security deposits, notes receivable from and
advances to the Service Companies and other assets.
The Company does not derive any of its consolidated revenues from
foreign countries and does not have any major customers that individually
account for 10% or more of the Company's consolidated revenues.
AMLI RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
12. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Year Ended December 31, 2001
-------------------------------------
First Second Third Fourth
----- ------ ----- ------
Revenues. . . . . . . . . . . . . . . . . . . . . . . . . . . $31,328 32,449 34,298 32,097
Net income before minority interest . . . . . . . . . . . . . 7,345 16,810 22,839 6,660
Minority interest . . . . . . . . . . . . . . . . . . . . . . 940 2,585 3,595 788
Net income attributable to common shares. . . . . . . . . . . 4,772 12,592 17,611 3,816
Net income per common share - basic . . . . . . . . . . . . . 0.27 0.71 0.99 0.21
Net income per common share - diluted . . . . . . . . . . . . 0.27 0.67 0.89 0.21
Year Ended December 31, 2000
-------------------------------------
First Second Third Fourth
----- ------ ----- ------
Revenues. . . . . . . . . . . . . . . . . . . . . . . . . . . $30,825 34,097 34,135 32,689
Net income before minority interest . . . . . . . . . . . . . 30,949 18,929 17,739 22,478
Minority interest . . . . . . . . . . . . . . . . . . . . . . 5,021 2,835 2,497 3,209
Net income attributable to common shares. . . . . . . . . . . 24,099 14,265 13,476 17,636
Net income per common share - basic . . . . . . . . . . . . . 1.42 0.83 0.77 0.99
Net income per common share - diluted . . . . . . . . . . . . 1.23 0.76 0.71 0.90
SCHEDULE III
AMLI RESIDENTIAL PROPERTIES TRUST
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2001
(Dollars in thousands)
Gross Amount at Which
Initial Costs (A) Carried at Close of Period (B)
--------------------------------------- -------------------------------------
Costs
Related Buildings Capitalized Buildings
Encum- and Subsequent to and
Properties brances(C) Land Improvements Acquisition Land Improvements Total
---------- ---------- --------- ------------------------- ---------- ------------ ----------
Dallas/Ft. Worth TX
AMLI:
at Bent Tree . . . . .$ 25,883 4,469 25,953 2,494 4,472 28,444 32,916
at Bishop's Gate . . . 14,230 3,659 20,708 115 3,616 20,866 24,482
at Chase Oaks. . . . . -- 1,003 9,513 714 1,003 10,227 11,230
at Gleneagles. . . . . -- 3,178 22,723 1,531 3,182 24,250 27,432
on the Green . . . . . 11,051 1,693 17,007 803 1,693 17,810 19,503
at Nantucket . . . . . 7,325 1,931 6,817 734 1,931 7,551 9,482
of North Dallas. . . . 28,570 7,278 37,204 5,942 7,278 43,146 50,424
at Valley Ranch. . . . 9,688 3,139 16,199 3,585 3,139 19,784 22,923
at Stonebridge Ranch . -- 2,575 14,591 30 2,575 14,621 17,196
at Shadow Ridge. . . . -- 2,704 15,294 71 2,704 15,365 18,069
------- ------ ------- ------ ------ ------- -------
Subtotal - Dallas/
Ft. Worth, TX . . . . 96,747 31,629 186,009 16,019 31,593 202,064 233,657
------- ------ ------- ------ ------ ------- -------
Austin, TX
AMLI:
in Great Hills . . . . 9,977 3,228 14,304 1,386 3,228 15,690 18,918
at Lantana Ridge . . . 20,208 3,582 20,299 425 3,585 20,721 24,306
at StoneHollow . . . . 31,856 5,539 31,391 1,093 5,539 32,484 38,023
------- ------ ------- ------ ------ ------- -------
Subtotal - Austin, TX . 62,041 12,349 65,994 2,904 12,352 68,895 81,247
------- ------ ------- ------ ------ ------- -------
Houston, TX
AMLI:
at Western Ridge. . . 14,435 3,004 17,023 161 3,004 17,184 20,188
at the Medical Center -- 4,087 23,160 24 4,087 23,184 27,271
------- ------ ------- ------ ------ ------- -------
Subtotal - Houston, TX. 14,435 7,091 40,183 185 7,091 40,368 47,459
------- ------ ------- ------ ------ ------- -------
SCHEDULE III - CONTINUED
AMLI RESIDENTIAL PROPERTIES TRUST
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
Date Depreciable
Accumulated Completed/ Lives
Properties Depreciation Acquired Years
---------- ------------ ---------- -----------
Dallas/Ft. Worth TX
AMLI:
at Bent Tree . . . . . . 3,103 10/97-12/00 5 - 40 years
at Bishop's Gate . . . . 2,774 10/17/97 5 - 40 years
at Chase Oaks. . . . . . 2,453 6/2/94 5 - 40 years
at Gleneagles. . . . . . 6,833 7/88-11/96 5 - 40 years
on the Green . . . . . . 4,304 2/16/94 5 - 40 years
at Nantucket . . . . . . 3,191 12/16/88 5 - 40 years
of North Dallas. . . . . 10,047 7/89-7/90 5 - 40 years
at Valley Ranch. . . . . 4,610 5/25/90 5 - 40 years
at Stonebridge Ranch . . 252 6/11/01 5 - 40 years
at Shadow Ridge. . . . . 147 8/31/01 5 - 40 years
------
Subtotal - Dallas/
Ft. Worth, TX . . . . 37,714
------
Austin, TX
AMLI:
in Great Hills . . . . . 3,580 1/18/91 5 - 40 years
at Lantana Ridge . . . . 2,798 9/30/97 5 - 40 years
at StoneHollow . . . . . 1,945 2/3/00 5 - 40 years
------
Subtotal -
Austin, TX. . . . . . 8,323
------
Houston, TX
AMLI:
at Western Ridge . . . . 562 12/28/00 5 - 40 years
at the Medical Center. . 266 8/7/01 5 - 40 years
------
Subtotal -
Houston, TX . . . . . 828
------
SCHEDULE III - CONTINUED
AMLI RESIDENTIAL PROPERTIES TRUST
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which
Initial Costs (A) Carried at Close of Period (B)
-------------------------------------- ----------------------------------
Costs
Related Buildings Capitalized Buildings
Encum- and Subsequent to and
Properties brances(C) Land Improvements Acquisition Land Improvements Total
---------- ---------- --------- ------------ ------------- ---------- ------------ ----------
Atlanta, GA
AMLI:
at Spring Creek. . . . . -- 8,579 45,971 6,514 8,579 52,485 61,064
at Vinings . . . . . . . -- 2,405 17,595 1,466 2,406 19,060 21,466
at West Paces. . . . . . -- 2,160 20,595 908 2,160 21,503 23,663
at Killian Creek . . . . 13,041 2,046 13,677 346 2,046 14,023 16,069
at Clairmont . . . . . . 12,573 2,791 15,640 1,010 2,791 16,650 19,441
at Park Creek. . . . . . 10,177 1,207 10,052 127 1,208 10,178 11,386
at Towne Creek . . . . . -- 916 6,368 268 916 6,636 7,552
------- ------ ------- ------ ------ ------- -------
Subtotal - Atlanta, GA. . 35,791 20,104 129,898 10,639 20,106 140,535 160,641
------- ------ ------- ------ ------ ------- -------
Kansas City, KS
AMLI:
at Regents Center. . . . 19,037 2,260 22,397 1,076 2,265 23,468 25,733
at Town Center . . . . . -- 1,231 11,837 543 1,350 12,261 13,611
at Lexington Farms . . . -- 4,776 27,060 290 4,776 27,350 32,126
at Centennial Park . . . -- 2,445 13,855 564 2,447 14,417 16,864
------- ------ ------- ------ ------ ------- -------
Subtotal - Kansas City, KS 19,037 10,712 75,149 2,473 10,838 77,496 88,334
------- ------ ------- ------ ------ ------- -------
Indianapolis, IN
AMLI:
at Riverbend . . . . . . 28,102 5,184 33,209 8,686 5,184 41,895 47,079
at Conner Farms. . . . . 11,960 3,262 18,484 566 3,262 19,050 22,312
at Eagle Creek . . . . . 11,149 2,477 14,038 135 2,478 14,172 16,650
------- ------ ------- ------ ------ ------- -------
Subtotal - Indianapolis, IN 51,211 10,923 65,731 9,387 10,924 75,117 86,041
------- ------ ------- ------ ------ ------- -------
SCHEDULE III - CONTINUED
AMLI RESIDENTIAL PROPERTIES TRUST
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
Date Depreciable
Accumulated Completed/ Lives
Properties Depreciation Acquired Years
---------- ------------ ---------- -----------
Atlanta, GA
AMLI:
at Spring Creek. . . . . . 19,584 5/85 - 5/89 5 - 40 years
at Vinings . . . . . . . . 3,777 6/19/92 5 - 40 years
at West Paces. . . . . . . 4,686 11/15/93 5 - 40 years
at Killian Creek . . . . . 1,525 3/13/97 5 - 40 years
at Clairmont . . . . . . . 2,112 1/21/98 5 - 40 years
at Park Creek. . . . . . . 1,366 7/31/98 5 - 40 years
at Towne Creek . . . . . . 399 2/7/00 5 - 40 years
-------
Subtotal - Atlanta, GA. . 33,449
-------
Kansas City, KS
AMLI:
at Regents Center. . . . . 5,109 10/94-12/96 5 - 40 years
at Town Center . . . . . . 2,093 12/22/97 5 - 40 years
at Lexington Farms . . . . 2,706 10/27/98 5 - 40 years
at Centennial Park . . . . 1,453 12/28/98 5 - 40 years
-------
Subtotal - Kansas City, KS 11,361
-------
Indianapolis, IN
AMLI:
at Riverbend . . . . . . . 9,171 12/12/92 5 - 40 years
at Conner Farms. . . . . . 2,475 12/22/97 5 - 40 years
at Eagle Creek . . . . . . 1,395 12/27/98 5 - 40 years
-------
Subtotal - Indianapolis, IN 13,041
-------
SCHEDULE III - CONTINUED
AMLI RESIDENTIAL PROPERTIES TRUST
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which
Initial Costs (A) Carried at Close of Period (B)
-------------------------------------- ----------------------------------
Costs
Related Buildings Capitalized Buildings
Encum- and Subsequent to and
Properties brances(C) Land Improvements Acquisition Land Improvements Total
---------- ---------- --------- ------------ ------------- ---------- ------------ ----------
Chicago, IL
AMLI:
at Poplar Creek. . . . . 9,500 1,878 10,643 900 1,885 11,536 13,421
------- ------ ------- ------ ------ ------- -------
Subtotal - Chicago, IL. . 9,500 1,878 10,643 900 1,885 11,536 13,421
------- ------ ------- ------ ------ ------- -------
Denver, CO
AMLI:
at Gateway Park. . . . . 22,797 4,967 28,144 144 4,967 28,288 33,255
------- ------ ------- ------ ------ ------- -------
Subtotal - Denver, CO 22,797 4,967 28,144 144 4,967 28,288 33,255
------- ------ ------- ------ ------ ------- -------
Total properties . . . 311,559 99,653 601,751 42,651 99,756 644,299 744,055
Other . . . . . . . . . . -- 28 248 80 28 328 356
------- ------ ------- ------ ------ ------- -------
Total stabilized
properties . . . . . 311,559 99,681 601,999 42,731 99,784 644,627 744,411
======= ====== ======= ====== ====== ======= =======
SCHEDULE III - CONTINUED
AMLI RESIDENTIAL PROPERTIES TRUST
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
Date Depreciable
Accumulated Completed/ Lives
Properties Depreciation Acquired Years
---------- ------------ ---------- -----------
Chicago, IL
AMLI:
at Poplar Creek. . . . . 1,484 12/18/97 5 - 40 years
-------
Subtotal - Chicago, IL. . 1,484
-------
Denver, CO
AMLI:
at Gateway Park. . . . . 815 1/29/01 5 - 40 years
-------
Subtotal - Denver, CO . . 815
-------
Total properties . . . 107,015
Other . . . . . . . . . . 124
-------
Total stabilized
properties . . . . . 107,139
=======
SCHEDULE III - CONTINUED
AMLI RESIDENTIAL PROPERTIES TRUST
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which
Initial Costs (A) Carried at Close of Period (B)
---------------------------------------- ----------------------------------
Costs
Related Buildings Capitalized Buildings
Encum- and Subsequent to and
Properties Brances(C) Land Improvements Acquisition Land Improvements Total
----------- ---------- --------- ------------------------- ---------- ------------ ----------
Land parcels
and other
AMLI:
at Mesa Ridge. . . . -- 3,070 -- 1,070 2,703(D) 1,437 4,140
at Fossil Lake . . . -- 2,439 -- 476 2,264(D) 651 2,915
at Prairie Lakes I . -- 730 -- 430 753 407 1,160
at Prairie Lakes II-IV -- 3,595 -- 2,690 3,706 2,579 6,285
at Champions II. . . -- 2,343 -- 249 2,111(D) 481 2,592
at Vista Ridge . . . -- 2,617 -- 613 2,292(D) 938 3,230
at Anderson Mill . . -- 3,744 -- 415 3,323(D) 836 4,159
at Westwood Ridge. . -- 2,807 -- 703 2,861 649 3,510
at Fossil Lake II. . -- 1,716 -- 444 1,953(D) 207 2,160
at Downtown Austin . -- 5,674 -- 5,567 5,917 5,324 11,241
at Parmer. . . . . . -- 3,243 -- 2,180 3,307 2,116 5,423
at Lexington II. . . -- 500 -- 295 653 142 795
at Carmel Center City -- 4,000 -- 6,393 4,197 6,196 10,393
-------- -------- -------- -------- -------- -------- --------
Total land parcels
and other . . . . -- 36,478 -- 21,525 36,040 21,963 58,003
-------- -------- -------- -------- -------- -------- --------
Total . . . . . . . $311,559 136,159 601,999 64,256 135,824 666,590 802,414
======== ======== ======== ======== ======== ======== ========
SCHEDULE III - CONTINUED
AMLI RESIDENTIAL PROPERTIES TRUST
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
Date Depreciable
Accumulated Completed/ Lives
Properties Depreciation Acquired Years
---------- ------------ ----------- -----------
Land parcels
and other
AMLI:
at Mesa Ridge. . . . . . -- 12/23/96
at Fossil Lake . . . . . -- 6/26/98
at Prairie Lakes I . . . -- 7/22/98
at Prairie Lakes II-IV . -- 7/22/98
at Champions II. . . . . -- 12/1/98
at Vista Ridge . . . . . -- 5/3/99
at Anderson Mill . . . . -- 7/8/99
at Westwood Ridge. . . . -- 9/9/99
at Fossil Lake II. . . . -- 12/27/99
at Downtown Austin . . . -- 3/1/00
at Parmer. . . . . . . . -- 3/31/00
at Lexington II. . . . . -- 10/18/00
at Carmel Center City. . -- 11/20/00
--------
Total land parcels
and other . . . . . . --
--------
Total . . . . . . . . . $107,139
========
Notes:
(A) The initial costs represent the original development costs or original purchase price
of the properties to the Company, including closing costs.
(B) The aggregate cost of real estate owned at December 31, 2001 for Federal income tax purposes
was $736,214.
(C) Amounts disclosed exclude current accrued interest and debt not secured by properties.
(D) Land costs are net of an allowance for loss totaling $2,086.
SCHEDULE III - CONTINUED
AMLI RESIDENTIAL PROPERTIES TRUST
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
(E) Reconciliation of real estate owned:
2001 2000 1999
-------- -------- --------
Balance at beginning of period . . . . . . . . . $748,345 729,325 739,764
Additions during period. . . . . . . . . . . . . 117,763 118,012 59,726
Contributions to Joint Venture . . . . . . . . . (6,738) (43,314) (34,661)
Sale of property . . . . . . . . . . . . . . . . (54,629) (55,678) (35,504)
Other. . . . . . . . . . . . . . . . . . . . . . (2,327) -- --
-------- -------- --------
$802,414 748,345 729,325
======== ======== ========
(F) Reconciliation of accumulated depreciation:
Balance at beginning of period . . . . . . . . . $ 94,590 90,441 78,143
Additions during period. . . . . . . . . . . . . 21,080 19,558 18,194
Sale of property . . . . . . . . . . . . . . . . (8,531) (15,409) (5,935)
Other. . . . . . . . . . . . . . . . . . . . . . -- -- 39
-------- -------- --------
Balance at end of period . . . . . . . . . . . . $107,139 94,590 90,441
======== ======== ========
See Independent Auditors' Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There were no changes or disagreements with the accountants on
accounting and financial disclosures.
PART III
ITEM 10. TRUSTEES AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item is hereby incorporated by
reference to the materials appearing in the Company's Proxy Statement for
the annual meeting of shareholders to be held on April 29, 2002 (the "Proxy
Statement"), under the captions "Election of Trustees," "Management -
Trustees and Executive Officers" and "Section 16(A) Beneficial Ownership
Reporting Compliance."
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is hereby incorporated by
reference to the materials appearing in the Proxy Statement under the
captions "Election of Trustees" and "Executive Compensation."
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is hereby incorporated by
reference to the materials appearing in the Proxy Statement under the
caption "Security Ownership."
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is hereby incorporated by
reference to the materials appearing in the Proxy Statement under the
caption "Certain Relationships and Related Transactions."
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
(1) Independent Auditors' Report. . . . . . . . . . . 63
Consolidated Balance Sheets, December 31, 2001
and 2000. . . . . . . . . . . . . . . . . . . . 64
Consolidated Statements of Operations,
years ended December 31, 2001, 2000 and 1999. . 66
Consolidated Statements of Shareholders' Equity,
years ended December 31, 2001, 2000 and 1999. . 68
Consolidated Statements of Cash Flows,
years ended December 31, 2001, 2000 and 1999. . 71
Notes to Consolidated Financial Statements. . . . 73
(2) Financial Statement Schedule and Independent Auditors'
Report
Title Schedule
Consolidated Real Estate and
Accumulated Depreciation. . . . . . . . . . . III
The independent auditors' report with respect to the
financial statement schedule is on page 63.
(3) Exhibits
3.1 Amended and Restated Declaration of Trust of the
Registrant (Incorporated by reference to
exhibit 3.1 to Registration Statement
No. 33-71566).
3.2 Amended and Restated By-Laws of the Registrant
(Incorporated by reference to exhibit 3.1 to the
Registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 2001).
4.1 Form of Share Certificate for Common Shares of
Beneficial Interest (Incorporated by reference to
exhibit 4.1 to the Registration Statement
No. 33-71566).
4.2 Form of Share Certificate for Series A Cumulative
Convertible Preferred Shares of Beneficial Interest
(Incorporated by reference to exhibit 4.5 to the
Registrant's Form 8-K dated January 18, 1996).
4.3 Articles Supplementary Classifying and Designating
a Series of Preferred Shares as Series A Cumulative
Convertible Preferred Shares of Beneficial Interest
(Incorporated by reference to exhibit 4.9 to the
Registrant's Form 8-K dated January 30, 1996).
4.4 Articles Supplementary Classifying and Designating
a Series of Preferred Shares as Series B Cumulative
Convertible Preferred Shares of Beneficial Interest
(Incorporated by reference to exhibit 4 to the
Registrant's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998).
4.5 Rights Agreement, dated as of November 2, 1998,
between AMLI Residential Properties Trust and
Harris Trust and Savings Bank, as Rights Agent,
including Exhibit A thereto (Form of Articles
Supplementary relating to the Series C Junior
Participating Preferred Shares) and Exhibit B
thereto (Form of Right Certificate) (Incorporated
by reference to exhibit 4 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998).
4.6 Form of Share Certificate for Series D Cumulative
Convertible Redeemable Preferred Shares of
Beneficial Interest (Incorporated by reference to
exhibit 4.1 to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended September 30,
2001).
4.7 Articles Supplementary Classifying and Designating
a Series of Preferred Shares as Series D Cumulative
Convertible Redeemable Preferred Shares of
Beneficial Interest (Incorporated by reference to
exhibit 4.2 to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended September 30,
2001).
10.1 Amended and Restated Agreement of Limited
Partnership of AMLI Residential Properties, L.P.
(Incorporated by reference to exhibit 10.1 to the
Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1994).
10.1(a) First Amendment to Amended and Restated Agreement
of Limited Partnership of AMLI Residential
Properties, L.P. (Incorporated by reference to
exhibit 10.1(a) to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1995).
10.1(b) Second Amendment to Amended and Restated Agreement
of Limited Partnership of AMLI Residential
Properties, L.P. (Incorporated by reference to
exhibit 10.1(b) to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1995).
10.1(c) Third Amendment to Amended and Restated Agreement
of Limited Partnership of AMLI Residential
Properties, L.P. (Incorporated by reference to
exhibit 10.1(c) to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1996).
10.1(d) Fourth Amendment to Amended and Restated Agreement
of Limited Partnership of AMLI Residential
Properties, L.P. (Incorporated by reference to
exhibit 10.1 to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1998).
10.1(e) Fifth Amendment to Amended and Restated Agreement
of Limited Partnership of AMLI Residential
Properties, L.P. (Incorporated by reference to
exhibit 10.1 to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended September 30,
2001).
10.2 Registration Rights and Lock-Up Agreement between
the Company and certain Original Investors
(Incorporated by reference to exhibit 10.8 to the
Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1994).
10.3 Corporate Services Agreement among the Registrant,
AMLI Residential Properties L.P., AMLI Management
Company and AMLI Institutional Advisors, Inc.
(Incorporated by reference to exhibit 10.2 to the
Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1994).
10.4 Administrative Services Agreement between AMLI
Management Company and AMLI Realty Co.
(Incorporated by reference to exhibit 10.3 to the
Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1994).
10.5 Non-Competition Agreement between the Registrant
and Amli Realty Co. (Incorporated by reference to
exhibit 10.4 to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1994).
10.6 Non-Competition Agreement between the Registrant
and Gregory T. Mutz (Incorporated by reference to
exhibit 10.5 to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1994).
10.7 Non-Competition Agreement between the Registrant
and John E. Allen (Incorporated by reference to
exhibit 10.6 to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1994).
10.8 Non-Competition Agreement between the Registrant
and Allan J. Sweet (Incorporated by reference to
exhibit 10.7 to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1994).
10.9 Management Agreement between AMLI Residential
Properties, L.P. and Amli Management Company
(Incorporated by reference to exhibit 10.10 to the
Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1994).
10.10 Performance Incentive Plan (Incorporated by
reference to exhibit 10 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995).
10.11 Amli Residential Properties Trust Option Plan
(Incorporated by reference to exhibit 10.8 to the
Registration Statement No. 33-71566).
10.11(a)First Amendment to AMLI Residential Properties
Option Plan (Incorporated by reference to
exhibit 10 to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1995).
10.11(b)Second Amendment to AMLI Residential Properties
Option Plan (Incorporated by reference to
exhibit 10.2 to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1998).
10.12 AMLI Residential Properties Trust Executive Share
Purchase Plan (Incorporated by reference to
exhibit 10.1 to the Registration Statement
No. 333-8813).
10.13 Registration Rights Agreement dated March 9, 1998
between AMLI Residential Properties Trust and
Security Capital Preferred Growth Incorporated
(Incorporated by reference to exhibit 10.3 to the
Registrant's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998).
10.14 Employment Agreement between the Registrant and
Gregory T. Mutz (Incorporated by reference to
exhibit 10.1 to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1998).
10.15 Employment Agreement between the Registrant and
John E. Allen (Incorporated by reference to
exhibit 10.2 to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1998).
10.16 Employment Agreement between the Registrant and
Allan J. Sweet (Incorporated by reference to
exhibit 10.3 to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1998).
10.17 Employment Agreement between the Registrant and
Philip N. Tague (Incorporated by reference to
exhibit 10.4 to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1998).
10.18 Employment Agreement between the Registrant and
Robert S. Aisner (Incorporated by reference to
exhibit 10.5 to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1998).
10.19 Employment Agreement between the Registrant and
Robert J. Chapman (Incorporated by reference to
exhibit 10.6 to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1998).
10.20 $200,000,000 Amended and Restated Credit Agreement
dated as of July 27, 1998 among AMLI Residential
Properties, L.P., the banks listed herein, Wachovia
Bank, N.A., as Agent and The First National Bank of
Chicago, as Documentation Agent and Dresdner Bank,
A.G., New York and Grand Cayman Branches, as
Co-Agent (Incorporated by reference to exhibit 10.7
to the Registrant's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1998).
10.21 $250,000,000 (expandible to $300,000,000) Credit
Agreement dated as of October 12, 1999 among AMLI
Residential Properties, L.P., the banks listed
herein, Wachovia Bank, N.A., as Administrative
Agent and Bank One, N.A., as Syndication Agent and
PNC Bank, National Association, as Documentation
Agent and Harris Trust and Savings Bank, as Senior
Managing Agent and Commerzbank AG, New York Branch,
as Managing Agent and Wachovia Securities, Inc. and
Banc One Capital Markets, Inc., as Co-Lead
Arrangers and Joint Book Managers (Incorporated by
reference to exhibit 10 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999).
10.22 $250,000,000 (expandible to $300,000,000) Credit
Agreement dated as of November 15, 2000 among AMLI
Residential Properties, L.P., AMLI Management
Company, AMLI Residential Construction LLC, the
banks listed herein, Wachovia Bank, N.A., as
Administrative Agent and Bank One, N.A., as
Syndication Agent and PNC Bank, National
Association as Documentation Agent and Harris Trust
and Savings Bank, as Senior Managing Agent and
Commerzbank AG, New York Branch, as Managing Agent
and Wachovia Securities, Inc. and Banc One Capital
Markets, Inc., as Co-Lead Arrangers and Joint Book
Managers (Incorporated by reference to the exhibit
10.22 to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 2000).
10.23 Registration Rights Agreement between AMLI
Residential Properties Trust and The Equitable Life
Assurance Society of the United States
(Incorporated by reference to exhibit 10.2 to the
Registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 2001).
21.1 Subsidiaries of the Registrant.
23.1 Consent of KPMG LLP.
99.1 Financial and Operating Data furnished to
Shareholders and Analysts.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
December 31, 2001.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
AMLI RESIDENTIAL PROPERTIES TRUST
Date: March 22, 2002 By: /S/ ALLAN J. SWEET
Allan J. Sweet
President and Trustee
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date: March 22, 2002 By: /S/ GREGORY T. MUTZ
Gregory T. Mutz
Chairman of the Board of Trustees
Date: March 22, 2002 By: /S/ JOHN E. ALLEN
John E. Allen
Vice-Chairman of the Board
of Trustees
Date: March 22, 2002 By: /S/ ALLAN J. SWEET
Allan J. Sweet
President and Trustee
Date: March 22, 2002 By: /S/ PHILIP N. TAGUE
Philip N. Tague
Executive Vice President and Trustee
Date: March 22, 2002 By: /S/ LAURA D. GATES
Laura D. Gates
Trustee
Date: March 22, 2002 By: /S/ MARC S. HEILWEIL
Marc S. Heilweil
Trustee
Date: March 22, 2002 By: /S/ STEPHEN G. MCCONAHEY
Stephen G. McConahey
Trustee
Date: March 22, 2002 By: /S/ QUINTIN E. PRIMO III
Quintin E. Primo III
Trustee
Date: March 22, 2002 By: /S/ JOHN G. SCHREIBER
John G. Schreiber
Trustee
Date: March 22, 2002 By: /S/ ROBERT J. CHAPMAN
Robert J. Chapman
Chief Financial Officer
Date: March 22, 2002 By: /S/ CHARLES C. KRAFT
Charles C. Kraft
Principal Accounting Officer
INDEX TO EXHIBITS
EXHIBIT NO. DOCUMENT DESCRIPTION
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21.1 Subsidiaries of the Registrant
23.1 Consent of KPMG LLP
99.1 Financial and Operating Data furnished to
Shareholders and Analysts