Archstone-Smith Announces Record Earnings for 2006

DENVER, Feb. 1 /PRNewswire-FirstCall/ -- Archstone-Smith announced record net earnings per share (EPS) of $3.33 for the year ended December 31, 2006 -- an 11% increase compared with the $3.00 reported in 2005. EPS for the fourth quarter of 2006 was $1.36, compared with $1.52 for the same period in 2005. Funds from operations (FFO) with gains/losses for the full year of 2006 was $3.86 per share, compared with $3.40 per share in 2005. FFO with gains/losses was $1.46 per share in the fourth quarter of 2006, compared with $1.39 per share for the fourth quarter of 2005. The company's FFO for the year ended December 31, 2006 was $2.26 per share, compared with $2.10 per share reported in 2005. FFO for the fourth quarter was $0.53 per share, compared with $0.52 per share for the same period in 2005.

Same-Store Growth Continues Through 2006

Same-store revenues increased 6.5% in 2006. Year-to-date same store expenses increased 4.4%, driven primarily by an increase in personnel and insurance expenses. The company's same-store net operating income (NOI) grew 7.5% in 2006. "2006 produced our highest NOI growth since 2000, thanks to the quality and location of our assets, the strength of our operating platform, and the hard work and dedication of our associates," said R. Scot Sellers, chairman and chief executive officer.

Acquisitions and Dispositions Continue to Improve Portfolio

For the year ended December 31, 2006, the company acquired $1.7 billion of apartment communities, representing 4,209 units, primarily in New York City and California. Archstone-Smith also completed the sale of $1.5 billion of apartment communities during the year in markets that include Atlanta, Austin, Chicago, Dallas, Denver, Houston, Phoenix and Portland. The company's 2006 dispositions produced cash gains of $403.1 million -- a profit of approximately 38.2% on the company's cost basis -- and an unleveraged IRR of 20.1%. "Substantially exiting our non-core markets in 2006 was the culmination of a very ambitious 12-year goal for Archstone-Smith," said Mr. Sellers. "We wanted to create the very best portfolio of apartments in the country, and are proud to have now achieved this goal."

Tremendous Value Creation Through Development Activity

As of December 31, 2006, including joint ventures and Ameriton, the company had 5,533 units under construction with an expected investment of $1.5 billion, and 7,252 units in planning representing an expected investment of $2.3 billion. The development pipeline is concentrated in markets that include Manhattan, downtown Boston, Southern California, the San Francisco Bay Area and Washington, D.C. "During the fourth quarter of 2006, we completed Archstone Del Mar Station and Archstone Presidio View in Southern California, and Archstone Boston Common and Archstone Reading in Boston -- all of these will be great long term assets for us," added Mr. Sellers. "In addition, nearly two quarters early, we are now open for leasing at Archstone Clinton, a fantastic new development in Manhattan, where we expect first units to be delivered in February."

Another Strong Year for Ameriton in 2006

Archstone-Smith's 2006 results include gains from sales by Ameriton, the company's wholly owned subsidiary, which contributed $64.6 million, or $0.255, to 2006 EPS, and $56.5 million, or $0.227 per share, to its FFO for the year. From 2000 through 2006, Ameriton has completed the sale of $1.8 billion of apartment communities, generating a pre-tax unleveraged IRR of 22.6%, excluding joint ventures.

Company Provides 2007 Earnings Guidance

In addition, Archstone-Smith announced its guidance for the coming year. The company's 2007 EPS guidance is $2.20 to $2.50 per share and its FFO guidance is $2.24 to $2.38 per share, which includes the impact of a lower contribution from Ameriton gains and the incremental cost of building the company's platform in Europe. "Our core operations remain strong, with forecasted same-store NOI growth of 5.5 - 7.5% in 2007," said Charles E. Mueller, Jr., chief financial officer. Projected FFO per share growth at the midpoint of the company's 2007 guidance is 9.3%, adjusting for the $14.0 million of insurance recoveries during 2006 and excluding Ameriton gains for both periods. A summary of Archstone-Smith's 2007 guidance assumptions can be found on page 30 of the company's Fourth Quarter 2006 Earnings Release and Supplemental Financial Information.

Archstone-Smith , an S&P 500 company, is a recognized leader in apartment investment and operations. With a current total market capitalization of $22.3 billion, the company's portfolio is concentrated in many of the most desirable neighborhoods in the Washington, D.C. metropolitan area, Southern California, the New York metropolitan area, the San Francisco Bay Area, Boston and Seattle. The company continually upgrades the quality of its portfolio through the selective sale of assets, using proceeds to fund investments in assets 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 December 31, 2006, the company owned or had an ownership position in 348 communities, representing 88,011 units, including units under construction.

Archstone-Smith's year-end 2006 Earnings Release and Supplemental Financial Information and archived press releases are available on its web site at http://www.archstonesmith.com/ or may be obtained by calling (800) 982-9293.

The company will host a webcast of its conference call with senior management today at 11:00 a.m. EST. To access the webcast, visit http://www.archstonesmith.com/, select "Investors," click on "Quarterly results," and follow the instructions. The webcast will be archived for approximately one month.

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. In addition, the historical performance described herein is not a guarantee of future performance, which may differ materially from past results. See "Risk Factors" in Archstone-Smith's 2005 Annual Report on Form 10-K for factors which could affect Archstone-Smith's future financial performance.

Contact: H. Andrew Cantor, 800-982-9293 * 303-708-5959

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