Archstone-Smith Announces Results for the First Quarter of 2005

DENVER, April 26 /PRNewswire-FirstCall/ -- Archstone-Smith announced net earnings per share (EPS) of $0.32 for the quarter ending March 31, 2005, compared with $0.49 per share for the same period in 2004. The company's funds from operations (FFO) was $0.46 per share in the first quarter of 2005, compared with $0.51 per share during the first quarter of 2004. First quarter 2005 FFO with gains/losses, which includes gross gains from asset sales, was $0.49 per share, compared with $0.67 per share in the first quarter of 2004. The company's earnings this quarter were lower than one year ago principally due to lower profits from the sale of assets.

Same-store Portfolio Performance Continues to Accelerate; Company Reiterates Guidance

"Our core business continues to improve, with same-store revenue growth accelerating again for each of the last four quarters. We remain very excited about the increasing momentum of our operating performance, and therefore we are reiterating our 2005 EPS guidance of $1.45 -- $1.65 per share and our 2005 FFO guidance of $1.90 -- $2.00 per share," said R. Scot Sellers, chairman and chief executive officer.

Archstone-Smith's same-store revenues increased 2.7% in the first quarter of 2005, representing the third consecutive quarter the company has produced positive quarterly same-store revenue growth in both its high-rise and garden portfolios. The Washington, D.C. metropolitan area and Southern California -- which collectively represent 59% of the company's portfolio -- produced first quarter same-store revenue growth of 3.5% and 2.9%, respectively. First quarter same-store operating expenses increased 7.3% from last year primarily due to the one-time impact of a ground-lease true-up in the first quarter of 2004, as well as higher real estate taxes and extraordinary weather-related costs resulting from the severe winter in Washington, D.C., New York and Boston. Archstone-Smith's same-store net operating income (NOI) was up 0.2% in the first quarter.

"The case for future rent growth in our core markets is very compelling," said Mr. Sellers. According to Torto Wheaton Research, the nationwide cost of renting an apartment is 92% of the cost of owning a home. By comparison, the cost of renting an apartment in many of Archstone-Smith's key submarkets is much less expensive than the cost of owning a home in the same area. For example, according to Torto Wheaton Research, the cost of renting in the Connecticut Avenue corridor in Washington, D.C. and Marina del Rey, Calif., is only 19% the cost of owning a home; in La Jolla, Calif, the cost of renting is just 17% of the cost of owning a home. "We believe the enormous discrepancy between the cost of renting and the cost of owning a home in our core markets will produce continued upward pressure on our rental rates because of the growing shortage of new housing availability."

Ameriton Is An Extremely Profitable Franchise for Archstone-Smith

Archstone-Smith's first quarter 2005 results include operating community sales gains from Ameriton, the company's wholly owned subsidiary, which contributed $14.3 million, or $0.06 per share, to Archstone-Smith's first quarter EPS and $12.0 million, or $0.05 per share, to the company's first quarter FFO. "Ameriton has an impressive track record of identifying under-managed investment opportunities -- and leveraging principal-to-principal relationships to buy assets that are not widely marketed," said Mr. Sellers. "It continues to be an extremely profitable franchise for us." Archstone-Smith expects Ameriton to contribute $0.20 -- $0.23 to the company's FFO in 2005.

Company Continues to Execute on Share Repurchase Program

"We believe that Archstone-Smith stock trades at a significant discount to our net asset value, and will continue to opportunistically repurchase additional shares based on market conditions," said Charles E. Mueller, Jr., chief financial officer. Year-to-date through today, the company has repurchased 1.6 million of its common shares at prices ranging from $33.35 to $35.40 per share, at an average per-share price of $34.25, representing a total investment of $55.7 million. The company has approximately $132.9 million remaining on its share repurchase authorization.

Archstone-Smith's first quarter FFO includes a one-time gain of $23.5 million, or approximately $0.105 per share, resulting from the sale of its interest in Rent.com to eBay, which closed in February 2005. This gain was partially offset by $17.9 million of prepayment penalties related to the early repayment of secured debt. The company also incurred approximately $1.5 million in legal fees associated with its cost-recovery litigation against insurance providers, and approximately $0.7 million of additional hurricane damage costs. The net FFO contribution of the Rent.com transaction, including the impact of the prepayment penalties and additional expenses, was approximately $0.015 per share.

Archstone-Smith Declares 119th Consecutive Common Share Dividend

Archstone-Smith also announced that its Board declared the company's 119th consecutive quarterly common share dividend. The company will pay a dividend of $0.4325 per common share payable on May 31, 2005 to shareholders of record as of May 16, 2005. On an annualized basis, this represents a dividend of $1.73 per common share.

Archstone-Smith is a recognized leader in apartment investment and operations. With a current total market capitalization of $12.2 billion, Archstone-Smith owns and operates an irreplaceable portfolio of high-rise and garden apartment communities concentrated in many of the most desirable neighborhoods in the Washington, D.C. metropolitan area, Southern California, the San Francisco Bay area, Chicago, the New York City metropolitan area, Boston, Southeast Florida and Seattle. The company continually upgrades the quality of its portfolio through the selective sale of assets, using proceeds to fund investments with even better growth prospects. Through its two brands, Archstone and Charles E. Smith, Archstone-Smith strives to provide great apartments and great service to its customers -- backed by unconditional service guarantees. As of March 31, 2005, Archstone-Smith owned or had an ownership position in 231 communities, representing 79,023 units, including units under construction.

Archstone-Smith, an S&P 500 company, was recognized as one of America's Most Admired Companies for 2004 by Fortune Magazine and ranks 991 on the Forbes 2000 List, the magazine's comprehensive ranking of the world's largest companies, for 2005. In addition, the company was recognized as Company of the Year by Colorado Biz Magazine. To find out more, visit ArchstoneSmith.com.

Archstone-Smith's first quarter 2005 full financials and archived press releases are available on its web site at http://www.archstonesmith.com/ or may be obtained by calling (800) 982-9293.

In addition to historical information, this press release and quarterly supplemental information contain forward-looking statements and information under the federal securities law. These statements are based on current expectations, estimates and projections about the industry and markets in which Archstone-Smith operates, management's beliefs and assumptions made by management. While Archstone-Smith management believes the assumptions underlying its forward-looking statements and information are reasonable, such information is necessarily subject to uncertainties and may involve certain risks, many of which are difficult to predict and are beyond management's control. As such, these statements and information are not guarantees of future performance, and actual operating results may differ materially from what is expressed or forecasted in this press release and supplemental information. See "Risk Factors" in Archstone-Smith's 2004 Annual Report on Form 10-K for factors which could affect Archstone-Smith's future financial performance.

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