Life Insurance

DENVER, Oct. 24 /PRNewswire-FirstCall/ -- Archstone-Smith announced net earnings per share (EPS) of $0.80 for the quarter ending September 30, 2005, compared with $0.70 per share for the same period in 2004. The company's funds from operations (FFO) was $0.65 per share in the third quarter of 2005, compared with $0.56 per share during the third quarter of 2004. Third quarter 2005 FFO with gains/losses, which includes gross gains from asset sales, was $0.97 per share, compared with $0.79 per share in the third quarter of 2004.

Archstone-Smith also announced that it is raising its 2005 guidance. The company is increasing its EPS guidance to $2.50 to $3.00 per share; its FFO guidance is increasing to $2.10 to $2.13 per share. FFO guidance for gains on the sale of Ameriton operating communities remains unchanged.

Archstone-Smith's same-store revenues increased 4.1% in the third quarter of 2005, representing six consecutive quarters of increasing revenue growth. "Our performance continues to improve as our pricing power strengthens in our core markets," said R. Scot Sellers, chairman and chief executive officer.

The company's third quarter 2005 same-store performance was principally driven by the company's Southeast Florida, New York City metropolitan area, Southern California and Washington, D.C. metropolitan area markets, which produced third quarter same-store revenue growth of 9.1%, 6.5%, 4.6% and 4.6%, respectively. Archstone-Smith's same-store net operating income (NOI) was up 5.7% in the third quarter. "We are very excited about the momentum in our operating portfolio, and look forward to positive performance as we continue to enhance our irreplaceable portfolio positions in the nation's most desirable neighborhoods. Our emphasis on locations characterized by limited competition, expensive single-family home prices and strong job growth, continues to produce very strong results," said Mr. Sellers.

Archstone-Smith's third quarter 2005 results include gains from the sale of three communities by Ameriton, the company's wholly owned subsidiary, which contributed $27.8 million, or $0.119 per share, to Archstone-Smith's third quarter EPS and $27.3 million, or $0.117 per share, to third quarter FFO. "Ameriton continues to be an extremely profitable franchise for us, which has consistently produced very attractive returns on our invested capital," said Mr. Sellers. Since 2000, Ameriton completed the sale of $1.2 billion of apartment communities, generating a pre-tax unleveraged internal rate of return of 26.4%.

Archstone-Smith is in the final stages of the capital redeployment program it began in 1995; the company expects to sell virtually all its non-core assets by early 2006. "We believe the completion of this process will further improve the growth rate from our exceptionally well-located portfolio," said Charles E. Mueller, Jr., chief financial officer. "In addition, we have a tremendous opportunity to create significant incremental value for our shareholders as we complete and stabilize our $2.8 billion development pipeline during the next several years." This pipeline represents the total expected investment of all Archstone-Smith and Ameriton wholly owned and joint venture developments under construction and in planning.

Currently, Archstone-Smith and Ameriton have $1.4 billion of communities under construction, including the 627-unit Mosaic, Archstone-Smith's first development in Manhattan, which broke ground during the third quarter of 2005. In addition, the company continues to make excellent progress on Archstone Boston Common, formerly called Park Essex, a 420-unit, 28-story community -- and the first high-rise apartment building to be built in downtown Boston in 20 years. Archstone-Smith expects pre-leasing to commence at this community in the spring of 2006.

In the third quarter, Archstone-Smith closed on 28 apartment community acquisitions from Oakwood Worldwide, the leading global provider of corporate housing, representing 9,423 units, and a total expected investment of $1.4 billion. Archstone-Smith expects to acquire nine additional communities from Oakwood later this year and during 2006. "This exceptionally well located portfolio enhances our presence in many of our best-performing markets and epitomizes our commitment to improve our portfolio with every investment we make," said Mr. Mueller.

In addition, the company's third quarter results include a total net positive impact of $16.7 million, or $0.07 per share of earnings and FFO, resulting from all insurance recoveries and costs related to litigation settlements. The insurance recoveries related to moisture infiltration and mold litigation totaled $18.7 million. The company also received $2.6 million in cost reimbursements for expenses related to the Fair Housing Act (FHA) and Americans with Disabilities Act (ADA) lawsuit, which it settled in the second quarter of 2005. The recoveries were booked in the third quarter as other income, as they were initially expensed. This income was offset by $4.6 million of legal expenses and litigation settlement costs.

Archstone-Smith also announced that its Board declared the company's 121st consecutive quarterly common share dividend. The company will pay a dividend of $0.4325 per common share payable on November 30, 2005 to shareholders of record as of November 16, 2005. On an annualized basis, this represents a dividend of $1.73 per common share.

Archstone-Smith , an S&P 500 company, is a recognized leader in apartment investment and operations. With a current total market capitalization of $14.4 billion, the company's portfolio is concentrated in many of the most desirable neighborhoods in the Washington, D.C. metropolitan area, Southern California, the San Francisco Bay area, the New York City metropolitan area, Boston, Southeast Florida, Chicago and Seattle. The company continually upgrades the quality of its portfolio through the selective sale of assets, using proceeds to fund investments in markets 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 September 30, 2005, Archstone-Smith owned or had an ownership position in 253 communities, representing 86,937 units, including units under construction.

Archstone-Smith's third 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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