EX-99.1 2 l12432aexv99w1.txt EX-99.1 PRESS RELEASE EXHIBIT 99.1 [Letterhead of The Town and Country Trust] FOR IMMEDIATE RELEASE: THE TOWN AND COUNTRY TRUST ANNOUNCES FOURTH QUARTER AND FULL YEAR 2004 RESULTS BALTIMORE, MD, FEBRUARY 24, 2005 - The Town and Country Trust (NYSE:TCT), a multifamily real estate investment trust, today reported results for the fourth quarter and year ended December 31, 2004. All per share results are reported on a fully diluted basis. For the fourth quarter, the Company reported net income of $1.7 million, or $0.10 per share, compared to net income of $32.2 million, or $2.04 per share, for the fourth quarter of 2003. Net income for the full year ended December 31, 2004 was $1.8 million, or $0.10 per share, compared to $78.8 million, or $4.90 per share for 2003. The significant decline in net income from the fourth quarter and full year 2003 is the result of the inclusion in 2003 of gains on property sales of $38.7 million (before minority interest of $5.4 million) and $80.1 million (before minority interest of $11.0 million), respectively. Funds From Operations ("FFO") for the fourth quarter of 2004 was $7.7 million, or $0.39 per share, compared to $4.8 million, or $0.26 per share, for the fourth quarter last year. FFO for the full year 2004 was $30.4 million, or $1.53 per share, compared to $33.0 million, or $1.75 per share for last year. Diluted FFO per share for 2003 has been restated to give effect to the assumed conversion of convertible debt in accordance with the adoption of Emerging Issues Task Force Issue 04-08 in the fourth quarter of 2004. Net income and FFO were adversely affected by impairment charges aggregating $1.7 million in the first half of 2004 and $4.0 million in the fourth quarter 2003 relating to the Company's sale of two Charlotte, North Carolina apartment communities in 2004. Net income and FFO for 2004 were also adversely affected by fourth quarter separation charges of $1.5 million related to the departure of two senior executive officers and by third quarter expenses aggregating $573,000 related to hurricane damage sustained in Florida. Net income for the year was negatively impacted by a depreciation charge of $6.5 million ($0.33 per share) related to the change in estimated useful lives of certain assets. The Company computes FFO in a manner consistent with the definition adopted by NAREIT (The National Association of Real Estate Investment Trusts) and considers FFO to be its primary supplemental performance measure. A reconciliation of FFO to net income is included in the accompanying Financial Highlights table. Same Store Results For both the quarterly and full year comparison, 12,332 apartments in 35 communities (94% of total apartments owned at December 31, 2004) were classified as "same store", i.e., owned throughout both years. For the fourth quarter of 2004, same store net operating income increased by 8.4% over the comparable quarter of the prior year. Same store rental revenues for the quarter grew by 5.1%, principally as a result of increases in rental rates of 4.4% (net of concessions), offset in part by a decline in occupancy to 92.4% from 93.8% in the fourth quarter of 2003. Fourth quarter 2004 occupancy statistics were adversely affected by a significant number of apartment homes not available for rent as a result of the redevelopment of a 692-unit community. Excluding this property, same store occupancy was 93.2% compared to 93.9% last year. On a sequential quarterly basis, same store occupancy decreased by 60 basis points from the third quarter 2004. During the fourth quarter, same store operating expenses increased by 0.7%, compared to last year. -5- In the full year comparison, same store net operating income and revenues increased by 3.2% and 2.7%, respectively. This is primarily attributable to increases in rental rates of 3.3% (net of concessions), offset in part by a decline in occupancy to 92.5% from 93.6% in 2003. Excluding the property under redevelopment referred to above, same store occupancy was 93.1% compared to 93.7% last year. Same store operating expenses grew by $1,011,000, or 2.1%, of which $573,000 relates to hurricane damage sustained in Florida during 2004. CAPITAL MARKET ACTIVITIES Over the past 17 months, the Company has raised additional capital on two separate occasions. In August 2003, the Company sold $74.75 million of 5.375% Convertible Senior Notes and, in February 2004, the Company issued 1.4 million common shares in a private sale at $24.80 per share. Proceeds from both transactions were used, on an interim basis, primarily to repay floating rate debt. These funds are intended to provide long-term liquidity for portfolio improvement and expansion. To date, however, the Company has been unable to find suitable investment opportunities in its preferred markets at acceptable pricing as the investment climate for multifamily properties remains extremely competitive. While the extent and timing of additional property acquisitions are unknown, when this capital is fully invested in real estate, it is expected to provide returns that are significantly higher than our current floating rate interest costs. Interest expense on the Convertible Senior Notes for the year, including amortization of financing costs, was $2,447,000 greater than in 2003. Additional information regarding the Company's financial position and results, including selected market operating data, appear in the accompanying tables. The Town and Country Trust is a multifamily real estate investment trust that owns and operates 38 apartment communities with 13,065 apartment homes in the Mid-Atlantic states and Florida. Additional information regarding The Town and Country Trust can be found on the Trust's web site at www.tctrust.com With the exception of historical information, the matters herein contain forward-looking statements that are made pursuant to the Safe Harbor provisions of the Securities Litigation Reform Act of 1995. Management cautions that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied. Examples of such factors that could result in such differences include but are not limited to: interest rate fluctuations; competition for tenants; changes in the Trust's capacity to acquire additional apartment properties and any changes in the Trust's financial condition or operating results due to an acquisition of additional apartment properties; local economic and business conditions, including without limitation, conditions which may affect public securities markets generally, the real estate investment trust industry, or the markets in which the Trust's apartment properties are located, and other factors referred to in the Trust's periodic and other reports filed with the Securities and Exchange Commission. FOR FURTHER DETAILS CONTACT THE TOWN AND COUNTRY TRUST: Thomas L. Brodie Alan W. Lasker FINANCIAL RELATIONS BOARD President and COO Sr. Vice President and CFO Joseph Calabrese (Investor Inquiries) The Town and Country Trust The Town and Country Trust (212) 827-3772 (212) 407-2161 (212) 407-2151

-TABLES FOLLOW- -6- THE TOWN AND COUNTRY TRUST FINANCIAL HIGHLIGHTS (IN THOUSANDS, EXCEPT PER SHARE DATA - UNAUDITED)

See accompanying Notes to Supplemental Information THE TOWN AND COUNTRY TRUST SAME STORE MARKET OPERATING DATA

COMMUNITY INFORMATION

THE TOWN AND COUNTRY TRUST SUMMARY BALANCE SHEETS (IN THOUSANDS, UNAUDITED)

CAPITALIZATION DECEMBER 31, 2004 (IN THOUSANDS, EXCEPT PER SHARE DATA)

See accompanying Notes to Supplemental Information THE TOWN AND COUNTRY TRUST NOTES TO SUPPLEMENTAL INFORMATION (UNAUDITED) (a) Minority interests represent certain limited partnership interests, equivalent to 2,467,000 shares. (b) In 2003, represents the reallocation of income previously allocated to minority interest in 2002 as required under U.S. generally accepted accounting principles that had been necessary to keep the minority interest balance as reported in the Company's Balance Sheet from falling below zero. (c) Funds from operations ("FFO") is computed as income (computed in accordance with U.S. generally accepted accounting principles ("U.S. GAAP")) excluding gains and losses from sales and involuntary conversions of operating properties, plus real estate depreciation. This computation of FFO is consistent with the formal definition promulgated by the National Association of Real Estate Investment Trusts (NAREIT). The reconciliation of FFO to Net income, the most directly comparable financial measure calculated in accordance with U.S. GAAP, is included in the Financial Highlights. Management generally considers FFO to be a useful measure for reviewing the comparative operating performance of the Trust between periods or as compared to other companies, without giving effect to real estate depreciation and amortization, which assumes that the value of real estate diminishes predictably over time and which can vary among owners of similar assets based upon historical cost and useful life estimates. The Company uses net operating income (NOI) to measure the operating results of its communities and to compare the operating performance of single assets or groups of assets. The Company defines NOI as property rental income less property operating expenses and does not include depreciation and amortization, interest expense, general and administrative expenses, separation expense, discontinued operations, or gains/losses on sales of properties. Accordingly, this performance measure is not intended as a replacement for net income determined in accordance with U.S. generally accepted accounting principles. NOI is widely used by management and investors in the real estate industry in connection with the valuation of income-producing real estate and as a supplemental measure of operating performance. NOI measures presented by the Company may not be comparable to other similarly titled measures of other companies. A reconciliation of NOI to Net Income is included in the Financial Highlights. FFO and NOI should not be considered alternatives to net income as a measure of performance nor do they represent cash generated from operating activities in accordance with U.S. GAAP and, therefore, they should not be considered indicative of cash available to fund cash needs. (d) Includes real estate depreciation on discontinued operations, which is through the date of classification as held for disposition. (e) The information shown for this debt gives effect to two interest rate swap agreements in the aggregate notional amount of $40 million, which have the effect of fixing the interest rate on this amount of debt at approximately 4.67% through April 2007. (f) Diluted FFO per share for the year ended December 31, 2003 has been restated as a result of the 4th quarter 2004 adoption of Emerging Issues Task Force Issue 04-08, "The Effect of Contingently Convertible Instruments on Diluted Earnings per Share".

TOWN & COUNTRY TRUST 8-K