Archstone-Smith to Acquire $1.4 Billion Apartment Portfolio Concentrat

DENVER, March 1 /PRNewswire-FirstCall/ -- Archstone-Smith , one of the nation's largest and most respected apartment companies, announced today that it has signed an agreement with the property-owning partnerships affiliated with Oakwood Worldwide, the largest global provider of corporate housing, to acquire 30 apartment communities (the "Portfolio"), representing over 10,000 units, for a purchase price of approximately $1.4 billion. Archstone-Smith estimates a portfolio acquisition yield of approximately 5.75%, based on a 12-month forward-looking estimate of net operating income, before reserves for capital expenditures. The closing of the Portfolio will occur in several stages, a majority of which are expected to close late in the second quarter of 2005, subject to completion of Archstone-Smith's due diligence review and customary closing conditions.

This strategic transaction further strengthens Archstone-Smith's dominant ownership position in many of its best-performing submarkets -- over 40% of the Portfolio is within walking distance of communities that Archstone-Smith currently owns. Approximately 78% of the Portfolio is concentrated in Archstone-Smith's core markets, including 40% in highly desirable neighborhoods in Southern California, 20% located in the Washington, D.C. metropolitan area and an additional 18% of the Portfolio is located in outstanding locations in the San Francisco Bay area, Boston, Chicago and Seattle. Please see the attached portfolio summary for a detailed list of the assets located in Archstone-Smith's core markets.

"The acquisition of this exceptionally well-located portfolio is a perfect fit with our emphasis on improving the quality of our portfolio with every investment we make," said R. Scot Sellers, chairman and chief executive officer. "We believe that this transaction further solidifies our dominant ownership position in many of the most protected submarkets in the country. Our relative out-performance in same-store net operating income during the last four years clearly illustrates the long-term benefits of building a dominant position in locations characterized by expensive single-family home prices, limited land for new housing, and diverse economies with strong job growth potential."

The closing of the Portfolio will increase Archstone-Smith's presence in Southern California from approximately 19% to 22% of its total portfolio, giving the company an unmatched concentration in key submarkets including Marina del Rey, Universal/Studio City, Warner Center, Pasadena and La Jolla -- all locations where it is exceptionally difficult to build or acquire new housing.

Under the terms of the agreement, Archstone-Smith will directly manage 15 of the Portfolio assets under the Archstone-Smith brand name. In addition, Archstone-Smith will enter into master lease agreements through which Oakwood will lease back and continue to manage the remaining 15 Oakwood furnished apartment communities for a period of seven years. In accordance with this master lease agreement, Archstone-Smith will receive a specified contractual base rent payment from Oakwood, which will then be adjusted annually by the percentage change in the average same-store net operating income growth rate for properties owned by Archstone-Smith in the same submarket. "Oakwood is a recognized global leader in the corporate and furnished apartment business, and we look forward to pursuing mutually beneficial opportunities to partner with them as one of Archstone-Smith's preferred corporate housing providers for our national apartment portfolio," said Mr. Sellers.

Archstone-Smith will utilize its significant financial flexibility and liquidity to fund the $1.4 billion transaction, including its cash on hand, proceeds from the sale of non-core assets, existing debt capacity and the assumption of outstanding secured debt. In addition, certain of the Portfolio's equity owners are expected to elect to receive some or all of the consideration in new Archstone-Smith common units. "The Portfolio acquisition is expected to be approximately $0.03 per share accretive on an annual basis. Based on the anticipated closing date, the transaction is expected to increase 2005 funds from operations by approximately $0.015 per share," said Charles E. Mueller, Jr., chief financial officer. "After closing on the acquisition of all of the communities, Archstone-Smith's total leverage ratios are expected to increase modestly, although they should remain slightly below our targeted long-term debt levels." The actual impact of the transaction on the company's financial results will vary based on economic conditions, financing costs and other factors.

Archstone-Smith is a recognized leader in apartment investment and operations. With a current total market capitalization of $11.8 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, Boston, the New York City metropolitan area, 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, A and C, Archstone-Smith strives to provide great apartments and great service to its customers -- backed by unconditional service guarantees. As of January 31, 2005, Archstone-Smith owned or had an ownership position in 235 communities, representing 81,018 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 956 on the Forbes 2000 List, the magazine's comprehensive ranking of the world's largest companies, for 2004. In addition, the company was recognized as Company of the Year by Colorado Biz Magazine. To find out more, visit Archstone-Smith.com.

In addition to historical information, this press release contains forward-looking statements under the federal securities laws. These statements are based on current expectations, estimates and projections about the industry and markets in which Archstone-Smith and Oakwood operate, managements' beliefs and assumptions made by managements. While managements of Archstone-Smith and Oakwood believe that the assumptions underlying the forward-looking statements are reasonable, such statements are necessarily subject to uncertainties and may involved certain risks, many of which are difficult to predict and beyond the control of management. As a result, forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties which are difficult to predict. Actual operating results may differ materially from what is expressed or forecasted in this press release. See "Risk Factors" in Archstone-Smith's 2004 Annual Report on Form 10K, for certain factors which could affect Archstone-Smith's future financial performance. Please refer to our 2004 Form 10K for a description of why we believe funds from operations is a useful financial measure and a reconciliation of funds from operating to earnings from operations.

(Logo: http://www.newscom.com/cgi-bin/prnh/19990907/ASNLOGO ) OAKWOOD PORTFOLIO SUMMARY CORE MARKETS Community name High-rise/ Number of Location/Market Garden Units SOUTHERN CALIFORNIA Oakwood La Jolla La Jolla, Calif. Garden 180 Oakwood Pasadena Pasadena, Calif. Garden 96 Oakwood Thousand Oaks Thousand Oaks, Calif. Garden 154 Oakwood Long Beach Marina* Seal Beach, Calif. Garden 549 Oakwood Marina del Rey* Marina del Rey, Calif. Garden 597 Oakwood Toluca Hills* Los Angeles Garden 1,151 Oakwood Woodland Hills East* Woodland Hills, Calif. Garden 883 WASHINGTON, D.C. METROPOLITAN AREA Oakwood Dulles Herndon, Va. Garden 411 Oakwood Arlington* Arlington, Va. High-rise 184 Oakwood Gaithersburg Gaithersburg, Md. Garden 648 Oakwood Falls Church* Falls Church, Va. High-rise 576 Oakwood Gaithersburg* Gaithersburg, Md. High-rise 136 SAN FRANCISCO BAY AREA Oakwood San Francisco* San Francisco Garden 15 Oakwood San Jose South* San Jose, Calif. Garden 789 Oakwood Mountain View* Mountain View, Calif. Garden 402 Oakwood Walnut Creek Walnut Creek Calif. Garden 106 BOSTON, CHICAGO AND SEATTLE Oakwood Boston* Boston High-rise 94 Oakwood Chicago* Chicago High-rise 304 Oakwood Seattle* Seattle High-rise 147 Oakwood Redmond Redmond, Wash. Garden 166 Oakwood Bellevue* Bellevue, Wash. Garden 191 TOTAL CORE MARKET UNITS: 7,779 TOTAL NON-CORE MARKET UNITS: 2,300 TOTAL UNITS: 10,079 * Represents communities subject to master lease agreements with Oakwood.