GBP Gables Residential Trust

Gables Third Quarter Earnings Meet Consensus Estimates BOCA RATON, Fla., Nov. 4 /PRNewswire-FirstCall/ -- Gables Residential (the "Company"), today reported earnings for the third quarter that met consensus estimates. Net income available to common shareholders was $0.56 per diluted share and funds from operations ("FFO") available to common shareholders was $0.60 per diluted share. Net income available to common shareholders for the quarter was $14.6 million, or $0.56 per diluted share, compared to $3.6 million, or $0.15 per diluted share, for the comparable period of 2002. The third quarter 2003 results included gains from asset sales of $12.4 million, or $0.39 per diluted share, compared to $1.1 million, or $0.04 per diluted share, for the third quarter 2002. In addition, the third quarter 2002 results included a charge of $4.0 million, or $0.13 per diluted share, that was recorded in connection with the Company's redemption of its 8.3% Series A Preferred Shares in August 2002. This charge is discussed in more detail on page 5. For the first nine months of 2003, net income available to common shareholders was $28.2 million, or $1.12 per diluted share, compared to $34.2 million, or $1.38 per diluted share, for the comparable period of 2002. The year to date 2003 results included gains from asset sales of $17.4 million, or $0.56 per diluted share, compared to $24.8 million, or $0.80 per diluted share, for the comparable period in 2002. In addition, the nine months ended September 30, 2002 results included (i) the third quarter 2002 charge of $4.0 million, or $0.13 per diluted share, related to the redemption of the 8.3% Series A Preferred Shares and (ii) the second quarter 2002 unusual items charge of $1.7 million, or $0.05 per diluted share, that was recorded in connection with an early extinguishment of debt in May 2002. This charge is discussed in more detail on page 4. FFO available to common shareholders for the quarter was $19.0 million, or $0.60 per diluted share, compared to $14.7 million, or $0.48 per diluted share, for the comparable period of 2002. FFO available to common shareholders for the first nine months of 2003 was $57.3 million, or $1.86 per diluted share, compared to $55.9 million, or $1.81 per diluted share, for the comparable period of 2002. The FFO metric excludes gain on sale of previously depreciated operating real estate assets and real estate asset depreciation and amortization. A reconciliation of net income to FFO is included on page 13. This earnings release is available on Gables Residential's website at http://www.gables.com/ . Please click on "Investor Relations/Financial Information/Earnings Releases" or go directly to this web address: http://www.gables.com/q303earningsrelease . The Company produces Earnings Release Supplements ("the Supplements") that provide detailed information regarding the financial position and operating results of the Company. These Supplements are available via the Company's website and through e-mail distribution. Access to the Supplements through the Company's website is available at http://www.gables.com/financialreports . If you would like to receive future press releases via e-mail, please register through the Company's website at http://www.gables.com/mailalerts . Some items referenced in the earnings release may require the Adobe Acrobat 6.0 Reader. If you do not have Adobe Acrobat 6.0 Reader, you may download it at the following website: http://www.adobe.com/products/acrobat/readstep2.html . The Company will host a conference call on Wednesday, November 5, 2003 at 11:00 a.m. Eastern Time. Gables executives will discuss third-quarter earnings, current activity and the local multifamily markets. The conference call will be open to the public and will also be broadcast live on the Internet via Gables Residential's website at http://www.gables.com/ . Please click on "Investor Relations/Calendar of Events/Conference Calls" or go directly to this web address: http://www.gables.com/conferencecalls . Those listening by phone should call in 5-10 minutes before conference time to (800) 884-5695 and use the passcode 11481803. International callers or those in the 617 area code should call (617) 786-2960. A playback of the conference call will be available from 3:00 p.m. Eastern Time on Wednesday, November 5, 2003 until midnight on Friday, November 14, 2003. US/Canada participants should call (888) 286-8010. International callers or those in the 617 area code should call (617) 801-6888. The Gables playback code is 11481803. The playback can also be accessed for 12 months following the conference call via Gables Residential's website at http://www.gables.com/webcasts . Operating Results for the Third Quarter 2003 Compared to the Third Quarter 2002 The Company's markets and portfolio continue to feel the residual impact of the national economy's job-growth contraction and related decline in renter demand. On a same-store basis, total revenues declined 2.4% and property operating and maintenance expenses declined 1.3%, resulting in a 3.0% reduction in property net operating income ("NOI"). A detail of the same-store results by market is presented on page 14. Expense comparisons in certain markets are skewed as a result of the recordation of property tax true-up adjustments and appeal settlements in the third quarter of 2003. A ratable recordation of property taxes throughout both 2002 and 2003 would result in a decline in expenses and NOI of 0.3% and 4.3%, respectively, from the third quarter 2002 to the third quarter 2003. Investment and Disposition Activity During the quarter, the Company acquired Gables Woodley Park, 211 apartment homes in the Northwest Washington, D.C. EPN(TM), for $53 million and completed construction of two assets in the Uptown Dallas EPN(TM): Gables Ellis Street, 245 apartment homes; and Gables State Thomas Ravello, 290 apartment homes. The Company also sold both phases of Gables Meyer Park, 641 apartment homes in a non-EPN(TM) location in Houston, for $52 million, resulting in a gain of $12.4 million. Year to date, the Company has acquired 784 apartment homes, completed the lease-up of 989 apartment homes, sold 941 apartment homes, and commenced development on 1,247 apartment homes which are expected to deliver stabilized earnings in late 2004 and in 2005. "Our research indicates that the national economy is in the early phase of a slow recovery. Our plans to deliver new assets in late 2004 and 2005 should allow us to capitalize on projected improving fundamentals," said Mr. Chris Wheeler, CEO. Equity Capital Transactions The Company closed an offering of 2.5 million common shares on August 26, 2003, with net proceeds of approximately $79 million. Proceeds of the offering were used to pay down borrowings under the Company's unsecured lines of credit that are being utilized for the acquisition and development activities discussed above and for general corporate purposes. On October 17, 2003, the Company issued a notice of redemption for its 2.0 million outstanding 8.625% Series B Preferred Units at $25.00 per unit plus accrued and unpaid distributions. The $50 million of Series B Preferred Units will be redeemed on November 17, 2003. In connection with the issuance of the Series B Preferred Units in November 1998, the Company incurred $1.3 million in issuance costs and recorded such costs as a reduction of shareholders' equity. The redemption price of the Series B Preferred Units exceeds the related carrying value by the $1.3 million of issuance costs. Upon redemption in the fourth quarter of 2003, the Company will reflect the $1.3 million excess as a reduction of earnings in arriving at both net income available to common shareholders and funds from operations available to common shareholders. This accounting treatment is in accordance with a clarification by the SEC staff in July 2003 of EITF Abstracts, Topic No. D-42, "The Effect on the Calculation of Earnings per Share for the Redemption or Induced Conversion of Preferred Stock." Unusual Items In May 2002, the Company expensed approximately $1.7 million of early debt extinguishment costs. Under accounting rules in effect at that time, these costs were classified as an extraordinary item and, as such, did not reduce FFO. In April 2002, SFAS No. 145 was issued. The Company adopted this standard on its January 1, 2003 effective date and pursuant to the new rules, reclassified the $1.7 million of early debt extinguishment costs from extraordinary items to unusual items. In the computation of FFO pursuant to the NAREIT definition outlined on page 7, net income is adjusted for extraordinary items but is not adjusted for unusual items. As such, previously reported FFO for the nine months ended September 30, 2002 has been reduced by $1.7 million. The adoption of this standard had no impact on previously reported net income. Original Issuance Costs Associated with the Redemption of Series A Preferred Shares In August 2002, the Company redeemed its 4.6 million outstanding 8.3% Series A Cumulative Redeemable Preferred Shares for $115 million plus accrued and unpaid dividends. In connection with the issuance of the Series A Preferred Shares in July 1997, the Company incurred $4.0 million in issuance costs and recorded such costs as a reduction of shareholders' equity. The redemption price of the Series A Preferred Shares exceeded the related carrying value by the $4.0 million of issuance costs. The July 2003 clarification of Topic No. D-42 discussed above became effective for the third quarter 2003 and is required to be reflected retroactively in the financial statements of prior periods. As a result, the Company has reduced its previously reported net income available to common shareholders and funds from operations available to common shareholders for the three and nine months ended September 30, 2002 by the $4.0 million excess. Earnings Guidance The Company's guidance for the fourth quarter of 2003 and the full year 2003 for net income and FFO available to common shareholders on a diluted per share basis is disclosed and reconciled below: Fourth Quarter 2003: Range Low-End High-End Expected net income available to common shareholders $0.10 $0.74 Add: Expected real estate asset depreciation and amortization 0.42 0.42 Less: Expected gain on sale of previously depreciated operating real estate assets 0.00 -0.62 Expected FFO available to common shareholders $0.52 $0.54 Charge associated with redemption of Series B Preferred Units 0.04 0.04 Expected FFO available to common shareholders after supplemental adjustment for Series B Preferred Unit redemption charge $0.56 $0.58 Same-Store Operating Assumptions to the Company's Guidance (A): Total property revenues -2.75% -2.00% Property operating and maintenance expenses (B) 4.75% 3.75% Property net operating income (NOI) (B) -6.75% -5.00% (A) Represents the projected change from the fourth quarter 2002 to the fourth quarter 2003. (B) A ratable recordation of property taxes throughout both 2002 and 2003 would result in a mid-point of the range of the projected change from the fourth quarter 2002 to the fourth quarter 2003 for expenses and NOI of 2.8% and -5.3%, respectively. Full Year 2003: Range Low-End High-End Expected net income available to common shareholders $1.22 $1.86 Add: Expected real estate asset depreciation and amortization 1.72 1.72 Less: Expected gain on sale of previously depreciated operating real estate assets -0.56 -1.18 Expected FFO available to common shareholders $2.38 $2.40 Charge associated with redemption of Series B Preferred Units 0.04 0.04 Expected FFO available to common shareholders after supplemental adjustment for Series B Preferred Unit redemption charge $2.42 $2.44 Same-Store Operating Assumptions to the Company's Guidance (C): Total property revenues -2.10% -1.90% Property operating and maintenance expenses 1.50% 1.25% Property net operating income (NOI) -4.00% -3.50% (C) Represents the projected change from 2002 to 2003. Discontinued Operations The Company adopted SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," effective January 1, 2002. This standard requires, among other things, that operating results of real estate assets sold subsequent to January 1, 2002, that the Company has no continuing involvement with, be reflected as discontinued operations in the statements of operations for all periods presented. The Company evaluates, in the ordinary course of its business, the continued ownership of its assets relative to available opportunities to acquire and develop new assets and relative to available equity and debt capital financing. The Company sells assets if it determines that such sales are the most attractive sources of capital for redeployment in its business, for repayment of debt, for repurchases of stock, and for other uses. The Company expects to reclassify historical operating results whenever necessary in order to comply with the requirements of SFAS No. 144. Non-GAAP Financial Measures and Other Terms This release, including the Supplements, contains certain non-GAAP financial measures and other terms. The Company's definition and calculation of these non-GAAP financial measures and other terms may differ from the definitions and methodologies used by other REITs and, accordingly, may not be comparable. The non-GAAP financial measures referred to below should not be considered as alternatives to net income or other GAAP measures as indicators of our performance. Additional information regarding these items and other non-GAAP financial measures and terms used in this release, including the Supplements, can be found elsewhere herein. Funds from Operations (FFO) is used by industry analysts and investors as a supplemental operating performance measure of an equity real estate investment trust ("REIT"). The Company calculates FFO in accordance with the definition that was adopted by the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT"). FFO, as defined by NAREIT, represents net income (loss) determined in accordance with generally accepted accounting principles ("GAAP"), excluding extraordinary items as defined under GAAP and gains or losses from sales of previously depreciated operating real estate assets, plus certain non-cash items, such as real estate asset depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many industry investors and analysts have considered presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. Thus, NAREIT created FFO as a supplemental measure of REIT operating performance that excludes historical cost depreciation, among other items, from GAAP net income. The use of FFO, combined with the required primary GAAP presentations, has improved the understanding of operating results of REITs among the investing public and made comparisons of REIT operating results more meaningful. Management generally considers FFO to be a useful measure for reviewing the comparative operating and financial performance of the Company (although it should be reviewed in conjunction with net income which remains the primary measure of performance) because by excluding gains or losses related to sales of previously depreciated operating real estate assets and excluding real estate asset depreciation and amortization, FFO can help users compare the operating performance of a company's real estate between periods or as compared to different companies. Adjusted Funds From Operations (AFFO) represents FFO less recurring value retention capital expenditures. Because FFO excludes real estate asset depreciation and amortization, AFFO represents a useful supplemental operating performance measure because it takes into consideration recurring value retention capital expenditures. Recurring Value Retention Capital Expenditures represent costs typically incurred every year during the life of a community, such as expenditures for carpet, vinyl flooring, appliances, mechanical equipment and fixtures. To the extent such costs are incurred in connection with a major renovation of a community they are excluded from this item. Non-recurring Capital Expenditures represent costs that are generally incurred in connection with a major project impacting an entire community, such as roof replacement, parking lot resurfacing, exterior painting and siding replacement. These costs are not incurred on a regular basis and may not occur or reoccur during the anticipated hold period of an asset. To the extent such costs are incurred in connection with a major renovation of a community they are excluded from this item. Value Enhancing Capital Expenditures represent costs for which an incremental value is expected to be achieved from increasing the NOI potential for a community or recharacterizing the quality of the income stream with an anticipated reduction in potential sales cap rate for items such as replacement of wood siding with a masonry-based Hardi-Board product, amenity upgrades and additions, installation of security gates and additions of covered parking. To the extent such costs are incurred in connection with a major renovation of a community they are excluded from this item. Property Net Operating Income (NOI) is used by industry analysts, investors and Company management to measure operating performance of the Company's properties. NOI represents total property revenues less property operating and maintenance expenses (as reflected in the accompanying statements of operations). Accordingly, NOI excludes certain expenses included in the determination of net income such as property management and other indirect operating expenses, interest expense and depreciation and amortization expense. These items are excluded from NOI in order to provide results that are more closely related to a property's results of operations. Certain items, such as interest expense, while included in FFO and net income, do not affect the operating performance of a real estate asset and are often incurred at the corporate level as opposed to the property level. As a result, management uses only those income and expense items that are incurred at the property level to evaluate a property's performance. Real estate asset depreciation and amortization is excluded from NOI for the same reasons that it is excluded from FFO pursuant to NAREIT's definition. Stabilized Occupancy is defined as the earlier to occur of (i) 93% physical occupancy or (ii) one year after completion of construction. For purposes of evaluating comparative operating performance, the Company categorizes its operating communities based on the period each community reaches stabilized occupancy. For purposes of the period-end community charts, once a community has reached a stabilized occupancy level it is reclassified from the Development/Lease-up Communities chart to the Stabilized Communities chart. Physical Occupancy represents gross potential rent less physical vacancy loss as a percentage of gross potential rent. Economic Occupancy represents actual rent revenue collected divided by gross potential rent. Thus, economic occupancy differs from physical occupancy in that it takes into account concessions, non-revenue producing apartment homes and delinquencies. Gross Potential Rent is determined by valuing occupied apartment homes at contract rates and vacant units at market rates. Income Available for Debt Service and Preferred Dividends represents net income available to common shareholders before interest expense and credit enhancement fees, preferred dividends, original issuance costs associated with redemption of preferred shares, income taxes, depreciation, amortization, minority interest, gain on sale of real estate assets, long-term compensation expense, extraordinary items and unusual items, all from both continuing and discontinued operations, as applicable. Management generally considers income available for debt service and preferred dividends to be an appropriate supplemental measure to net income of the operating performance of the Company because it helps investors to understand the ability of the Company to incur and service its debt and preferred stock obligations. Forward-Looking Statements Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This release, including the supplements, contains forward-looking statements within the meaning of federal securities laws. These forward-looking statements reflect the Company's current views with respect to the future events or financial performance discussed in this release, based on management's beliefs and assumptions and information currently available. When used, the words "believe", "anticipate", "estimate", "project", "should", "expect", "plan", "assume" and similar expressions that do not relate solely to historical matters identify forward-looking statements. Forward-looking statements in this release include, without limitation, statements relating to the Company's ability to produce total returns through monthly dividends and share price changes that exceed the NAREIT apartment sector index and the Company's ability to achieve its expectations for fourth quarter 2003 and full year 2003 earnings. Forward-looking statements are subject to risks, uncertainties and assumptions and are not guarantees of future events or performance, which may be affected by known and unknown risks, trends and uncertainties. Should one or more of these risks or uncertainties materialize, or should our assumptions prove incorrect, actual results may vary materially from those anticipated, projected or implied. Factors that may cause such a variance include, among others: local and national economic and market conditions, including changes in occupancy rates, rental rates, and job growth; the demand for apartment homes in the Company's current and proposed markets; the uncertainties associated with the Company's current real estate development, including actual costs exceeding the Company's budgets; changes in construction costs; construction delays due to the unavailability of materials or weather conditions; the failure to sell communities on favorable terms, in a timely manner or at all; the failure of acquisitions to yield anticipated results; the cost and availability of financing; changes in interest rates; competition; the effects of the Company's accounting and other policies; and additional factors discussed from time to time in the Company's filings with the Securities and Exchange Commission. The Company expressly disclaims any responsibility to update forward-looking statements. About Gables With a mission of Taking Care of the Way People Live(R), Gables Residential has received national recognition for excellence in the management, development, acquisition and construction of luxury multifamily communities in high job growth markets. The Company's strategic objective is to produce total returns through monthly dividends and share price changes that exceed the NAREIT apartment sector index. The Company has a research-driven strategy focused on markets characterized by high job growth and resiliency to national economic downturns. Within these markets, the Company targets Established Premium Neighborhoods(TM) ("EPN's"), generally defined as areas with high per square foot prices for single-family homes. By investing in resilient, demand-driven markets and EPN(TM) locations with barriers to entry, the Company expects to achieve its strategic objective. The Company is one of the largest apartment operators in the nation and currently manages 50,988 apartment homes in 180 communities, owns 84 communities with 23,338 stabilized apartment homes primarily in Atlanta, Houston, South Florida, Austin, Dallas, Tampa and Washington, DC and has an additional 9 communities with 2,388 apartment homes under development or lease-up. For further information, please contact Gables Investor Relations at (800) 371-2819 or access Gables Residential's website at http://www.gables.com/ . GABLES RESIDENTIAL Consolidated Statements of Operations September 30, 2003 (Unaudited and amounts in thousands, except for per share data) Three months ended Nine months ended September 30, September 30, 2003 2002 2003 2002 Revenues: Rental revenues $54,151 $50,400 $158,337 $151,673 Other property revenues 3,234 3,034 9,194 8,888 Total property revenues 57,385 53,434 167,531 160,561 Property management revenues 2,345 1,780 6,145 5,452 Ancillary services revenues 2,139 1,931 5,465 6,586 Interest income 3 155 164 336 Other revenues 424 576 544 661 Total other revenues 4,911 4,442 12,318 13,035 Total revenues 62,296 57,876 179,849 173,596 Expenses: Property operating and maintenance (exclusive of items shown below) 21,356 20,064 60,121 56,917 Real estate asset depreciation and amortization 13,123 10,142 38,084 33,209 Property management - owned 1,500 1,328 4,857 4,774 Property management - third party 2,268 1,560 6,041 4,856 Ancillary services 992 1,181 3,302 3,960 Interest expense and credit enhancement fees 11,499 11,760 33,897 31,645 Amortization of deferred financing costs 494 426 1,400 958 General and administrative 2,052 2,052 6,657 5,727 Corporate asset depreciation and amortization 576 405 1,400 1,286 Unusual items - - - 1,687 Total expenses 53,860 48,918 155,759 145,019 Income from continuing operations before equity in income of joint ventures, gain on sale and minority interest 8,436 8,958 24,090 28,577 Equity in income of joint ventures 55 931 250 2,859 Gain on sale of previously depreciated operating real estate assets - - - 17,906 Gain on sale of land and development rights - 267 - 2,068 Minority interest of common unitholders in Operating Partnership (902) (772) (3,029) (7,464) Minority interest of preferred unitholders in Operating Partnership (1,078) (1,078) (3,234) (3,234) Income from continuing operations 6,511 8,306 18,077 40,712 Operating income from discontinued operations, net of minority interest 67 396 575 1,725 Gain on disposition of discontinued operations, net of minority interest 10,174 - 14,249 1,763 Income from discontinued operations, net of minority interest 10,241 396 14,824 3,488 Net income 16,752 8,702 32,901 44,200 Dividends to preferred shareholders (2,194) (1,091) (4,710) (5,976) Original issuance costs associated with redemption of preferred shares - (4,009) - (4,009) Net income available to common shareholders $14,558 $3,602 $28,191 $34,215 Weighted average number of common shares outstanding - basic 26,031 24,764 25,075 24,696 Weighted average number of common shares outstanding - diluted 31,664 30,812 30,845 30,805 Per Common Share Information-Basic: Income from continuing operations (net of preferred dividends and original issuance costs associated with redemption of preferred shares) $0.17 $0.13 $0.53 $1.24 Income from discontinued operations, net of minority interest $0.39 $0.02 $0.59 $0.14 Net income available to common shareholders $0.56 $0.15 $1.12 $1.39 Per Common Share Information-Diluted: Income from continuing operations (net of preferred dividends and original issuance costs associated with redemption of preferred shares) $0.16 $0.13 $0.53 $1.24 Income from discontinued operations $0.39 $0.02 $0.59 $0.14 Net income available to common shareholders $0.56 $0.15 $1.12 $1.38 GABLES RESIDENTIAL Funds From Operations and Adjusted Funds From Operations September 30, 2003 (Unaudited and amounts in thousands, except for per share data) Three months ended Nine months ended September 30, September 30, 2003 2002 2003 2002 Net income available to common shareholders $14,558 $3,602 $28,191 $34,215 Minority interest of common unitholders in Operating Partnership: Continuing operations 902 772 3,029 7,464 Discontinued operations 2,209 95 3,294 854 Total 3,111 867 6,323 8,318 Real estate asset depreciation and amortization: Wholly-owned real estate assets - continuing operations 13,123 10,142 38,084 33,209 Wholly-owned real estate assets - discontinued operations 201 594 1,068 1,770 Joint venture real estate assets 368 347 1,057 1,091 Total 13,692 11,083 40,209 36,070 Gain on sale of previously depreciated operating real estate assets: Wholly-owned real estate assets - continuing operations - - - (17,906) Wholly-owned real estate assets - discontinued operations (12,368) - (17,410) (2,198) Joint venture real estate assets - (857) - (2,611) Total (12,368) (857) (17,410) (22,715) Funds from operations available to common shareholders - basic and diluted $18,993 $14,695 $57,313 $55,888 Recurring value retention capital expenditures: Carpet and flooring 1,618 1,998 3,992 4,840 Appliances 185 233 515 584 Other additions and improvements 1,057 1,255 3,578 4,426 Total 2,860 3,486 8,085 9,850 Adjusted funds from operations available to common shareholders - basic and diluted $16,133 $11,209 $49,228 $46,038 Average common shares and units outstanding - basic 31,525 30,718 30,752 30,662 Average common shares and units outstanding - diluted 31,664 30,812 30,845 30,805 Per common share data - basic: Funds from operations available to common shareholders $0.60 $0.48 $1.86 $1.82 Adjusted funds from operations available to common shareholders $0.51 $0.36 $1.60 $1.50 Per common share data - diluted: Funds from operations available to common shareholders $0.60 $0.48 $1.86 $1.81 Adjusted funds from operations available to common shareholders $0.51 $0.36 $1.60 $1.49 Common shares and units outstanding reconciliation: Average common shares and units outstanding - basic 31,525 30,718 30,752 30,662 Incremental shares from assumed conversions of: Stock options 128 87 83 137 Other 11 7 10 6 Average common shares and units outstanding - diluted 31,664 30,812 30,845 30,805 GABLES RESIDENTIAL Results of Property Operations - Third Quarter Comparisons September 30, 2003 (Unaudited and amounts in thousands, except for property data) The combined operating performance for all of the Company's wholly-owned communities that are included in continuing operations for the quarters ended September 30, 2003 ("3Q 2003") and September 30, 2002 ("3Q 2002") is as follows: Number of 3Q 2003 Apt. Homes 3Q 2003 3Q 2002 $ Change % Change Rental and other property revenues: Same-store communities (1) 16,699 $45,172 $46,274 $(1,102) -2.4%(A) Triple net master lease communities 728 1,646 1,646 - 0.0% Communities stabilized in 3Q 2003, but not in 3Q 2002 578 2,075 1,447 628 43.4% Development and lease- up communities 535 1,322 82 1,240 1512.2% Communities under renovation or not fully operational (2) 2,104 4,480 3,985 495 12.4% Acquired communities (2) 784 2,690 - 2,690 - Sold communities (2) - - - - - Total property revenues 21,428 $57,385 $53,434 $3,951 7.4% Property operating and maintenance expenses (3): Same-store communities (1) $16,955 $17,173 $(218) -1.3%(A) Triple net master lease communities - - - - Communities stabilized in 3Q 2003, but not in 3Q 2002 883 1,011 (128) -12.7% Development and lease- up communities 600 16 584 3650.0% Communities under renovation or not fully operational (2) 1,811 1,864 (53) -2.8% Acquired communities (2) 1,107 - 1,107 - Sold communities (2) - - - - Total property operating and maintenance expenses $21,356 $20,064 $1,292 6.4% Property net operating income (NOI) (4): Same-store communities (1) $28,217 $29,101 $(884) -3.0%(A) Triple net master lease communities 1,646 1,646 - 0.0% Communities stabilized in 3Q 2003, but not in 3Q 2002 1,192 436 756 173.4% Development and lease- up communities 722 66 656 993.9% Communities under renovation or not fully operational (2) 2,669 2,121 548 25.8% Acquired communities (2) 1,583 - 1,583 - Sold communities (2) - - - - Total property net operating income (NOI) $36,029 $33,370 $2,659 8.0% Total property NOI as a percentage of total property revenues 62.8% 62.5% - 0.3% (1) Communities that were owned and fully stabilized throughout both 3Q 2003 and 3Q 2002 ("same-store"). (2) Communities that were in renovation or not fully operational, acquired, or sold subsequent to July 1, 2002, as applicable. (3) Represents direct property operating and maintenance expenses as reflected in the Company's consolidated statements of operations and excludes certain expenses included in the determination of net income such as property management and other indirect operating expenses, interest expense and depreciation and amortization expense. (4) Calculated as total property revenues less property operating and maintenance expenses as reflected above. (A) Additional information for the 62 same-store communities by market is as follows: Physical Economic Occup- Occup- Number of % of ancy ancy Apartment 3Q 2003 in 3Q in 3Q Market Homes NOI 2003 2003 South Florida 4,377 29.0% 95.2% 93.5% Houston 4,589 25.6% 94.4% 93.0% Atlanta 3,431 16.8% 93.8% 90.7% Austin 1,677 11.7% 92.6% 91.7% Dallas 1,300 10.4% 94.9% 92.5% Washington, D.C. 82 1.7% 92.3% 92.5% Other 1,243 4.8% 91.0% 83.6% Totals 16,699 100.0% 94.1% 92.0% % Change from 3Q 2002 to 3Q 2003 in Economic Market Occupancy Revenues Expenses NOI South Florida 2.0% 0.4% 10.1% -4.6% Houston 1.0% -2.3% -4.4% -1.0% Atlanta 2.6% -5.4% 0.9% -8.9% Austin -2.2% -6.0% -16.6% 1.4% Dallas 1.8% -1.6% -8.1% 2.2% Washington, D.C. -0.8% 1.4% -16.7% 8.8% Other -1.8% -1.9% 4.8% -6.9% Totals 1.1% -2.4% -1.3% -3.0% DATASOURCE: Gables Residential CONTACT: Gables Investor Relations, +1-800-371-2819 Web site: http://www.gables.com/ http://www.gables.com/q303earningsrelease http://www.gables.com/financialreports http://www.gables.com/mailalerts http://www.gables.com/conferencecalls http://www.gables.com/webcasts

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