Post Properties, Inc. (NYSE: PPS) announced today a net loss
attributable to common shareholders of $(27.0) million for the
second quarter of 2008, compared to net income available to common
shareholders of $62.0 million for the second quarter of 2007. On a
diluted per share basis, the net loss attributable to common
shareholders was $(0.61) for the second quarter of 2008, compared
to net income available to common shareholders of $1.40 for the
second quarter of 2007. The net loss attributable to common
shareholders was $(26.2) million for the six months ended June 30,
2008, compared to net income available to common shareholders of
$84.6 million for the six months ended June 30, 2007. On a diluted
per share basis, the net loss attributable to common shareholders
was $(0.60) for the six months ended June 30, 2008, compared to net
income available to common shareholders of $1.91 for the six months
ended June 30, 2007. The Company�s net loss attributable to common
shareholders for the three and six months ended June 30, 2008
included (i) non-cash impairment charges of approximately $28.9
million attributable to the substantial cessation of current
development activities associated with four land parcels in
pre-development discussed below which were written down to their
estimated fair market values, as well as the write off of
capitalized pursuit costs associated with abandoned projects; and
(ii) severance charges of $0.4 million associated with the
elimination of certain employment positions in the second quarter
of 2008. The Company eliminated additional employment positions in
July 2008 and, as a result, recognized additional severance charges
of approximately $1.6 million in the third quarter of 2008. The net
loss attributable to common shareholders for the three and six
months ended June 30, 2008 also included a charge of approximately
$2.1 million and $8.2 million, respectively, related to the process
to seek a potential sale of the Company. The Board formally
concluded that process without a business combination or other sale
transaction on June 25, 2008. The Company�s reported net income
(loss) attributable to common shareholders included net gains on
the sales of apartment communities (including a proportionate 75%
gain on the sale of a 75% interest in two apartment communities to
a joint venture in 2007) of $55.3 million for the three months
ended June 30, 2007 and $2.3 million and $72.0 million for the six
months ended June 30, 2008 and 2007, respectively. The Company uses
the National Association of Real Estate Investment Trusts
(�NAREIT�) definition of Funds from Operations (�FFO�) as an
operating measure of the Company�s financial performance. A
reconciliation of FFO to GAAP net income is included in the
financial data (Table 1) accompanying this press release. FFO for
the second quarter of 2008 was a deficit of $(12.6) million, or
$(0.29) per diluted share, compared to FFO of $22.1 million, or
$0.49 per diluted share, for the second quarter of 2007. The
Company�s reported FFO for the second quarter of 2008 included the
charges in the aggregate of approximately $31.4 million, or $0.71
per diluted share, discussed above. The Company�s reported FFO for
the second quarter of 2007 included a net gain of approximately
$1.7 million, or $0.04 per diluted share, on the sale of a land
site in Dallas, Texas, offset by non-cash compensation expense of
approximately $0.9 million, or $0.02 per diluted share, related to
a variable compensation plan. FFO for the six months ended June 30,
2008 totaled $1.3 million, or $0.03 per diluted share, compared to
$42.8 million, or $0.95 per diluted share, for the first six months
of 2007. The Company�s reported FFO for the six months ended June
30, 2008 included the charges in the aggregate of approximately
$37.5 million, or $0.84 per share, discussed above. The Company�s
reported FFO for the six months ended June 30, 2007 included net
gains of approximately $3.9 million, or $0.09 per diluted share, on
the sale of land sites in Atlanta, Georgia and Dallas, Texas. Said
David P Stockert, President and Chief Executive Officer, �We are
taking the steps necessary to adjust our business plan to the
realities of difficult current economic and financial market
conditions. We have reduced the size and risk of our development
pipeline and assessed the carrying value of our assets in order to
maintain the strength of our balance sheet. With Post�s portfolio
of high-quality, well located properties, moderate leverage and
adequate liquidity, we believe we are positioned to navigate
successfully this point in the economic cycle and to enhance the
value of our business as conditions improve.� Conclusion of
Strategic Process and Commitment to Strategies to Enhance
Shareholder Value On January 23, 2008, the Company announced that
its Board of Directors had authorized management, working with
financial and legal advisors, to initiate a formal process to
pursue a potential sale or other business combination and to seek
proposals from potentially interested parties. After conducting a
thorough process, the Board ended the process on June 25, 2008 due
to the increasingly difficult market environment and a lack of
definitive proposals. At the same time, the Board reaffirmed its
commitment to actively pursue other strategies to enhance
shareholder value through the following strategies: Realizing value
through asset sales, the proceeds of which can be used to repay
debt, pay potential special dividends or repurchase shares, and
fund committed investments: The Company is currently, or expects to
commence, marketing for sale eight apartment communities from which
it currently expects to realize gross proceeds of approximately
$500 million. The communities, comprising 2,615 apartment units,
include five communities, with an average age of 16 years, located
in Atlanta, Georgia, one 18-year old community, located in the
northern Virginia submarket of greater Washington, D.C., and the
Company�s only two communities located in New York City. As of June
30, 2008, all eight communities were classified on the Company�s
balance sheet as held for sale. The Company�s ability to sell these
apartment communities will be dependent on the sales market for
multifamily assets and the continued availability of financing at
terms attractive to potential buyers. The Company currently expects
to use the proceeds to repay debt, pay potential special dividends
or repurchase shares of its common stock and fund its committed
investments. See �Development, Disposition and Other Investment
Activity � Disposition Activity� for further discussion. Cutting
costs by reducing corporate overhead, development and property
management expenses: The Company is taking steps to reduce overhead
expenses, including the elimination of 24 property management,
corporate and development employment positions as of July 31, 2008
and certain other positions though attrition, which the Company
currently expects will reduce overhead costs prospectively on an
annual basis by approximately $3 million. As discussed above, the
Company recognized severance charges relating to these job
eliminations in the second and third quarters of 2008. There can be
no assurance that the Company will not recognize additional
severance charges in the third quarter of 2008 or in future
periods. Focusing the Company by evaluating the number of markets
within which it operates, and the appropriate size of its
development pipeline: After an evaluation of its development
pipeline in light of difficult current market conditions, the
Company has decided to defer further activities on four of its
development projects: Allen Plaza I in Atlanta, Georgia, the third
phase of Post Lake� at Baldwin Park in Orlando, Florida, Post Soho
Square� in Tampa, Florida, and Post Walk� at Citrus Park Village in
Tampa, Florida which is also currently held for sale. The Company
also decided to abandon the pursuit of its Post Plaza South�
development project in Charlotte, North Carolina and to terminate
its purchase contract to acquire that site. The total projected
development costs of these projects totaled more than $430 million.
As discussed above, the Company recognized non-cash impairment
charges relating to these decisions in the second quarter of 2008.
As discussed above, the Company has also decided to exit the New
York market through the sale of its two high-rise apartment
communities located in Manhattan. Pursuing construction loan
financing and joint venture equity to fund development activity:
The Company�s share of its active development pipeline is currently
less than $500 million, with approximately $280 million of
estimated construction costs that remain to be funded
(approximately $250 million, excluding committed construction loan
financing). The Company expects primarily to fund its active
development pipeline using asset sale proceeds and available
borrowing capacity under its unsecured revolving lines of credit.
The Company is also currently pursuing potential construction loan
financing and joint venture equity to fund its development pipeline
and future project starts that are currently in pre-development.
There can be no assurance that the Company will be able to attract
construction loan financing and joint venture equity on terms that
are attractive. If unable to do so, the Company expects to postpone
projects currently in pre-development. Mature (Same Store)
Community Data For the second quarter of 2008, average economic
occupancy at the Company�s 36 mature (same store) communities,
containing 13,693 apartment units, was 93.8%, compared to 94.1% for
the second quarter of 2007. Total revenues for the mature
communities increased 2.6% during the second quarter of 2008,
compared to the second quarter of 2007, and operating expenses
increased 6.6%, producing a 0.1% decrease in same store net
operating income (�NOI�). The average monthly rental rate per unit
increased 2.3% during the second quarter of 2008, compared to the
second quarter of 2007. Property tax, maintenance and utility
expenses accounted for a majority of the increase in operating
expenses. On a sequential basis, total revenues for the mature
communities increased 1.3% and operating expenses increased 5.9%
producing a 1.7% decrease in same store NOI for the second quarter
of 2008, compared to the first quarter of 2008, or $0.5 million. On
a sequential basis, the average monthly rental rate per unit
increased 0.4%. Property tax and maintenance expenses accounted for
a majority of the sequential increase in operating expenses. For
the second quarter of 2008, average economic occupancy at the
mature communities was 93.8%, compared to 94.3% for the first
quarter of 2008. For the six months ended June 30, 2008, average
economic occupancy at the Company�s mature communities was 94.1%
compared to 94.0% for the six months ended June 30, 2007. Total
revenues for the mature communities increased 2.7% during the six
months ended June 30, 2008 compared to the six months ended June
30, 2007, and operating expenses increased 5.2% producing a 1.1%
increase in same store NOI, or $0.7 million. The average monthly
rental rate per unit increased 2.6% during the six months ended
June 30, 2008, compared to the six months ended June 30, 2007. Same
store NOI is a supplemental non-GAAP financial measure. A
reconciliation of same store NOI to the comparable GAAP financial
measure is included in the financial data (Table 2) accompanying
this press release. Same store NOI by geographic market is also
included in the financial data (Table 3) accompanying this press
release. Development, Dispositions and Other Investment Activity
Development Activity The Company today announced that it has
completed the lease-up of the latest phase of its Post Hyde Park�
community in Tampa, Florida, consisting of 84 units. The Company
also announced today that it has ceased further development
activities at its Post Walk� at Citrus Park Village community in
Tampa, Florida, which had not yet commenced substantial physical
construction. As of June 30, 2008, this community was classified on
the Company�s balance sheet as held for sale. As of June 30, 2008,
the Company�s aggregate pipeline of development projects under
construction totaled approximately $525.2 million (including the
Company�s share, net of joint venture partner interests, of $479.4
million). The Company also owns land for which it is in
pre-development with respect to approximately 1,822 rental
apartment units and approximately 133,000 square feet of retail
amenities. Total projected future development costs of this
pre-development pipeline are estimated to be approximately $380
million. There can be no assurance that projects in pre-development
will commence construction in the future or at all or that actual
development costs will approximate estimated costs. The start of
future developments will depend in large part on local market
conditions, the Company�s ability to generate asset sale proceeds
and the Company�s ability to attract potential construction loan
financing and joint venture equity to fund development activities
on terms that management believes are attractive. If unable to do
so, the Company expects to postpone projects currently in
pre-development. Disposition Activity The Company is currently, or
expects to commence, marketing for sale the eight apartment
communities discussed above. Gross proceeds from the sales of these
eight communities are currently expected to be approximately $500
million. There can be no assurance that the gross proceeds will be
realized or that these sales will close. Apartment Community
Renovation Program The Company is currently undertaking substantial
renovations and re-leasing of three apartment communities,
containing 1,226 units located in Atlanta, Georgia and Dallas,
Texas. The Company believes that the long-term value of these
communities will be enhanced as a result of the renovations;
however, operating results at these communities is affected
negatively by increased vacancy during the renovation period. As of
June 30, 2008, the renovation of Post Chastain�, containing 558
units, in Atlanta, Georgia was complete. The community is expected
to reach stabilized occupancy later in 2008. As of June 30, 2008,
the Company had completed the renovation of 106 units (15.9% of the
total) at Post Peachtree Hills� and Post Heights�. The renovation
of these communities began earlier in 2008. Condominium Activity
The Company recognized approximately $1.4 million of incremental
losses, or $0.03 per diluted share, on condominium sales, net of
minority interest, in FFO during the second quarter of 2008,
compared to incremental gains of approximately $2.6 million, or
$0.06 per diluted share, during the second quarter of 2007. The
Company provides additional information on its condominium
activities on page 17 of its Supplemental Financial Data. The
Company�s reported net loss on condominium sales in FFO during the
second quarter of 2008 was primarily attributable to revised
estimates reflecting the Company�s current expectations of total
sales and costs for ongoing condominium projects through their
expected sell-out, and reflects the Company�s current view of sales
prices and trends, the residential and condominium housing markets,
the current state of the credit markets, as well as general
economic conditions. Financing Activity Total debt and preferred
equity as a percentage of undepreciated real estate assets
(adjusted for joint venture partners� share of debt) was 43.6% at
June 30, 2008, and variable rate debt as a percentage of total debt
was 13.6% as of that same date. As of June 30, 2008, the Company
had outstanding borrowings of approximately $144 million on its
combined $630 million unsecured lines of credit. Computations of
debt ratios and reconciliations of the ratios to the appropriate
GAAP measures in the Company�s financial statements are included in
the financial data (Table 4) accompanying this press release. Third
Quarter and Full Year 2008 Same Store NOI Outlook The estimates and
assumptions presented below are forward-looking and are based on
the Company�s current and expected future view of the apartment
market and general economic conditions as well as other risks
outlined below under the caption "Forward Looking Statements."
There can be no assurance that the Company's actual results will
not differ materially from the estimates set forth below. The
Company assumes no obligation to update this guidance in the
future. For the third quarter of 2008, the Company expects that
same store NOI will increase in the range of 1.1% to 2.1%, compared
to the third quarter of 2007, based on: -- An increase in same
store revenue of 1.1% to 1.5% -- An increase in same store
operating expenses of 0.8% to 1.2%. The Company also expects that
sequential same store NOI will increase in the third quarter of
2008 in the range of 3.2% to 4.2%, compared to the second quarter
of 2008, based on: -- An increase in same store revenue of 1.1% to
1.5% -- A decrease in same store operating expenses of 1.8% to
2.2%. For the full year of 2008, the Company expects that same
store NOI will increase (decrease) in the range of (0.1%) to 0.4%,
compared to the full year of 2007, based on: -- An increase in same
store revenue of 1.8% to 2.1% -- An increase in same store
operating expenses of 4.7% to 5.0%. As announced in the first
quarter, the Company will not provide earnings and FFO guidance for
the third quarter and full year 2008. Supplemental Financial Data
The Company also produces Supplemental Financial Data that includes
detailed information regarding the Company�s operating results and
balance sheet. This Supplemental Financial Data is considered an
integral part of this earnings release and is available on the
Company�s website. The Company�s Earnings Release and the
Supplemental Financial Data are available through the investor
relations/financial reports/quarterly and other reports section of
the Company�s website at www.postproperties.com. The ability to
access the attachments on the Company�s website requires the Adobe
Acrobat 4.0 Reader, which may be downloaded at
http://www.adobe.com/products/acrobat/readstep.html. Non-GAAP
Financial Measures and Other Defined Terms The Company uses certain
non-GAAP financial measures and other defined terms in this press
release and in its Supplemental Financial Data available on the
Company�s website. The non-GAAP financial measures include FFO,
Adjusted Funds from Operations (�AFFO�), net operating income, same
store capital expenditures, and certain debt statistics and ratios.
The definitions of these non-GAAP financial measures are summarized
below and on page 23 of the Supplemental Financial Data. The
Company believes that these measures are helpful to investors in
measuring financial performance and/or liquidity and comparing such
performance and/or liquidity to other REITs. Funds from Operations
� The Company uses FFO as an operating measure. The Company uses
the NAREIT definition of FFO. FFO is defined by NAREIT to mean net
income (loss) available to common shareholders determined in
accordance with GAAP, excluding gains (or losses) from
extraordinary items and sales of depreciable operating property,
plus depreciation and amortization of real estate assets, and after
adjustment for unconsolidated partnerships and joint ventures all
determined on a consistent basis in accordance with GAAP. FFO
presented in the Company�s press release and Supplemental Financial
Data is not necessarily comparable to FFO presented by other real
estate companies because not all real estate companies use the same
definition. The Company�s FFO is comparable to the FFO of real
estate companies that use the current NAREIT definition. Accounting
for real estate assets using historical cost accounting under GAAP
assumes that the value of real estate assets diminishes predictably
over time. NAREIT stated in its April 2002 White Paper on Funds
from Operations that �since real estate asset values have
historically risen or fallen with market conditions, many industry
investors have considered presentations of operating results for
real estate companies that use historical cost accounting to be
insufficient by themselves.� As a result, the concept of FFO was
created by NAREIT for the REIT industry to provide an alternate
measure. Since the Company agrees with the concept of FFO and
appreciates the reasons surrounding its creation, the Company
believes that FFO is an important supplemental measure of operating
performance. In addition, since most equity REITs provide FFO
information to the investment community, the Company believes that
FFO is a useful supplemental measure for comparing the Company�s
results to those of other equity REITs. The Company believes that
the line on its consolidated statement of operations entitled �net
income available to common shareholders� is the most directly
comparable GAAP measure to FFO. Adjusted Funds From Operations �
The Company also uses adjusted funds from operations (�AFFO�) as an
operating measure. AFFO is defined as FFO less operating capital
expenditures and after adjusting for the impact of non-cash
straight-line, long-term ground lease expense, non-cash impairment
charges and strategic review costs. The Company believes that AFFO
is an important supplemental measure of operating performance for
an equity REIT because it provides investors with an indication of
the REIT�s ability to fund its operating capital expenditures
through earnings. In addition, since most equity REITs provide AFFO
information to the investment community, the Company believes that
AFFO is a useful supplemental measure for comparing the Company to
other equity REITs. The Company believes that the line on its
consolidated statement of operations entitled �net income available
to common shareholders� is the most directly comparable GAAP
measure to AFFO. Property Net Operating Income � The Company uses
property NOI, including same store NOI and same store NOI by
market, as an operating measure. NOI is defined as rental and other
revenues from real estate operations less total property and
maintenance expenses from real estate operations (exclusive of
depreciation and amortization). The Company believes that NOI is an
important supplemental measure of operating performance for a
REIT�s operating real estate because it provides a measure of the
core operations, rather than factoring in depreciation and
amortization, financing costs and general and administrative
expenses generally incurred at the corporate level. This measure is
particularly useful, in the opinion of the Company, in evaluating
the performance of geographic operations, same store groupings and
individual properties. Additionally, the Company believes that NOI,
as defined, is a widely accepted measure of comparative operating
performance in the real estate investment community. The Company
believes that the line on its consolidated statement of operations
entitled �net income� is the most directly comparable GAAP measure
to NOI. Same Store Capital Expenditures � The Company uses same
store annually recurring and periodically recurring capital
expenditures as cash flow measures. Same store annually recurring
and periodically recurring capital expenditures are supplemental
non-GAAP financial measures. The Company believes that same store
annually recurring and periodically recurring capital expenditures
are important indicators of the costs incurred by the Company in
maintaining its same store communities on an ongoing basis. The
corresponding GAAP measures include information with respect to the
Company�s other operating segments consisting of communities
stabilized in the prior year, lease-up communities, rehabilitation
properties, sold properties and commercial properties in addition
to same store information. Therefore, the Company believes that the
Company�s presentation of same store annually recurring and
periodically recurring capital expenditures is necessary to
demonstrate same store replacement costs over time. The Company
believes that the most directly comparable GAAP measure to same
store annually recurring and periodically recurring capital
expenditures are the lines on the Company�s consolidated statements
of cash flows entitled �annually recurring capital expenditures�
and �periodically recurring capital expenditures.� Debt Statistics
and Debt Ratios � The Company uses a number of debt statistics and
ratios as supplemental measures of liquidity. The numerator and/or
the denominator of certain of these statistics and/or ratios
include non-GAAP financial measures that have been reconciled to
the most directly comparable GAAP financial measure. These debt
statistics and ratios include: (1) an interest coverage ratio; (2)
a fixed charge coverage ratio; (3) total debt as a percentage of
undepreciated real estate assets (adjusted for joint venture
partner�s share of debt); (4) total debt plus preferred equity as a
percentage of undepreciated real estate assets (adjusted for joint
venture partner�s share of debt); (5) a ratio of consolidated debt
to total assets; (6) a ratio of secured debt to total assets; (7) a
ratio of total unencumbered assets to unsecured debt; and (8) a
ratio of consolidated income available to debt service to annual
debt service charge. A number of these debt statistics and ratios
are derived from covenants found in the Company�s debt agreements,
including, among others, the Company�s senior unsecured notes. In
addition, the Company presents these measures because the degree of
leverage could affect the Company�s ability to obtain additional
financing for working capital, capital expenditures, acquisitions,
development or other general corporate purposes. The Company uses
these measures internally as an indicator of liquidity and the
Company believes that these measures are also utilized by the
investment and analyst communities to better understand the
Company�s liquidity. Average Economic Occupancy � The Company uses
average economic occupancy as a statistical measure of operating
performance. The Company defines average economic occupancy as
gross potential rent less vacancy losses, model expenses and bad
debt expenses divided by gross potential rent for the period,
expressed as a percentage. Conference Call Information The Company
will hold its quarterly conference call on Tuesday, August 5, at
10:00 a.m. ET. The telephone numbers are 888-819-8033 for US and
Canada callers and 913-981-4903 for international callers. The
access code is 4571165. The conference call will be open to the
public and can be listened to live on Post�s website at
www.postproperties.com under investor relations/event calendar. The
replay will begin at 1:00 p.m. ET on August 5, and will be
available until Monday, August 11, at 11:59 p.m. ET. The telephone
numbers for the replay are 888-203-1112 for US and Canada callers
and 719-457-0820 for international callers. The access code for the
replay is 4571165. A replay of the call also will be archived on
Post�s website under investor relations/audio archive. The
financial and statistical information that will be discussed on the
call is contained in this press release and the Supplemental
Financial Data. Both documents will be available through the
investor relations/financial reports/quarterly & other section
of the Company�s website at www.postproperties.com. Post
Properties, founded more than 36 years ago, is one of the largest
developers and operators of upscale multifamily communities in the
United States. The Company�s mission is delivering superior
satisfaction and value to its residents, associates, and investors,
with a vision of being the first choice in quality multifamily
living. Operating as a real estate investment trust (�REIT�), the
Company focuses on developing and managing Post� branded
resort-style garden and high density urban apartments. In addition,
the Company develops high-quality condominiums and converts
existing apartments to for-sale multifamily communities. Post
Properties is headquartered in Atlanta, Georgia, and has operations
in ten markets across the country. Post Properties owns 22,140
apartment homes in 61 communities, including 1,747 apartment units
in five communities held in unconsolidated entities, 1,736
apartment units in five communities currently under construction
and/or in lease-up. The Company is also developing and selling 514
for-sale condominium homes in four communities (including 137 units
in one community held in an unconsolidated entity) and is
converting apartment units in two communities initially consisting
of 349 units into for-sale condominium homes through a taxable REIT
subsidiary. Forward Looking Statements Certain statements made in
this press release and other written or oral statements made by or
on behalf of the Company, may constitute �forward-looking
statements� within the meaning of the federal securities laws.
Statements regarding future events and developments and the
Company�s future performance, as well as management�s expectations,
beliefs, plans, estimates or projections relating to the future,
are forward-looking statements within the meaning of these laws.
Examples of such statements in this press release include
expectations with respect to the Company�s strategies to enhance
shareholder value, the Company�s anticipated development and sales
activities (including projected sales proceeds and the anticipated
use therefrom as well as the projected costs, timing and
anticipated potential sources of financing of projected future
development activities), anticipated renovation projects,
anticipated overhead reductions and anticipated third quarter and
full year 2008 same store NOI operating results. All
forward-looking statements are subject to certain risks and
uncertainties that could cause actual events to differ materially
from those projected. Management believes that these
forward-looking statements are reasonable; however, you should not
place undue reliance on such statements. These statements are based
on current expectations and speak only as of the date of such
statements. The Company undertakes no obligation to publicly update
or revise any forward-looking statement, whether as a result of
future events, new information or otherwise. The following are some
of the factors that could cause the Company�s actual results and
its expectations with respect to strategies to enhance shareholder
value to differ materially from those described in the Company�s
forward-looking statements: the success of the Company�s business
strategies discussed in its Annual Report on Form 10-K dated
December 31, 2007, as amended and this press release; future local
and national economic conditions, including changes in job growth,
interest rates, the availability of mortgage and other financing
and related factors; demand for apartments in the Company�s markets
and the effect on occupancy and rental rates; the impact of
competition on the Company�s business, including competition for
tenants and development locations for its apartment communities and
competing for-sale housing in the markets where the Company is
completing condominium conversions or developing new condominiums;
the uncertainties associated with the Company�s current and planned
future real estate development, including actual costs exceeding
the Company�s budgets or development periods exceeding
expectations; uncertainties associated with the timing and amount
of asset sales, the market for asset sales and the resulting
gains/losses associated with such asset sales; the Company's
ability to enter into new joint ventures and the availability of
equity financing from traditional real estate investors to fund
development activities; the Company's ability to obtain
construction loan financing to fund development activities;
uncertainties associated with the Company�s condominium conversion
and for-sale housing business; uncertainties associated with loss
of personnel in connection with the Company�s reduction of
corporate and property development and management overhead;
conditions affecting ownership of residential real estate and
general conditions in the multifamily residential real estate
market; uncertainties associated with environmental and other
regulatory matters; the impact of our ongoing litigation with the
Equal Rights Center regarding compliance with the Americans with
Disabilities Act and the Fair Housing Act (including any award of
compensatory or punitive damages or injunctive relief requiring us
to retrofit apartments or public use areas or prohibiting the sale
of apartment communities or condominium units) as well as the
impact of other litigation; the effects of changes in accounting
policies and other regulatory matters detailed in the Company�s
filings with the Securities and Exchange Commission; and the
Company�s ability to continue to qualify as a real estate
investment trust under the Internal Revenue Code. Other important
risk factors regarding the Company are included under the caption
�Risk Factors� in the Company�s Annual Report on Form 10-K dated
December 31, 2007, as amended, and may be discussed in subsequent
filings with the SEC. The risk factors discussed in Form 10-K, as
amended, under the caption �Risk Factors� are specifically
incorporated by reference into this press release. Financial
Highlights (Unaudited; in thousands, except per share and unit
amounts) � � Three months ended Six months ended June 30, June 30,
� 2008 � � � 2007 � 2008 � � � 2007 OPERATING DATA Revenues from
continuing operations $ 66,605 $ 64,652 $ 132,329 $ 128,833 Net
income (loss) available to common shareholders $ (26,973 ) $ 62,027
$ (26,196 ) $ 84,589 Funds from operations available to common
shareholders and unitholders (Table 1) $ (12,639 ) $ 22,092 $ 1,269
$ 42,794 � Weighted average shares outstanding - diluted 44,011
44,278 43,939 44,192 Weighted average shares and units outstanding
- diluted 44,305 44,900 44,287 44,840 � PER COMMON SHARE DATA -
DILUTED Net income (loss) available to common shareholders $ (0.61
) $ 1.40 $ (0.60 ) $ 1.91 � Funds from operations available to
common shareholders and unitholders (Table 1) (1) $ (0.29 ) $ 0.49
$ 0.03 $ 0.95 � Dividends declared $ 0.45 $ 0.45 $ 0.90 $ 0.90 �
(1) Funds from operations per share were computed using weighted
average shares and units outstanding, including the impact of
dilutive securities totaling 358 shares and units for the six
months ended June 30, 2008. Such dilutive securities were
antidilutive to the income (loss) per share computations for the
six months ended June 30, 2008 since the Company reported a per
share loss from continuing operations under generally accepted
accounting principles for such period. Additionally, diluted
weighted average shares and units for the three months ended June
30, 2008 excludes 307 shares and units that were antidilutive to
all income (loss) per share computations under generally accepted
accounting principles and the deficit in funds from operations for
such period. � Table 1 Reconciliation of Net Income (Loss)
Available to Common Shareholders to Funds From Operations Available
to Common Shareholders and Unitholders (Unaudited; in thousands,
except per share amounts) � � � Three months ended Six months ended
June 30, June 30, � 2008 � � � 2007 � � 2008 � � � 2007 � Net
income (loss) available to common shareholders $ (26,973 ) $ 62,027
$ (26,196 ) $ 84,589 Minority interest of common unitholders -
continuing operations (238 ) 852 (284 ) 882 Minority interest in
discontinued operations 25 59 78 380 Depreciation on wholly-owned
real estate assets, net 15,582 16,524 31,284 33,013 Depreciation on
real estate assets held in unconsolidated entities 345 274 693 500
Gains on sales of real estate assets 368 (60,998 ) (4,062 ) (79,659
) Incremental gains (losses) on condominium sales (1) (1,748 )
3,360 (244 ) 3,164 Gains on sales of real estate assets -
unconsolidated entities - 40 - (162 ) Incremental gains on
condominium sales - unconsolidated entities (1) � - � � (46 ) � - �
� 87 � Funds from operations available to common shareholders and
unitholders $ (12,639 ) $ 22,092 � $ 1,269 � $ 42,794 � � Funds
from operations - per share and unit - diluted (2) $ (0.29 ) $ 0.49
� $ 0.03 � $ 0.95 � Weighted average shares and units outstanding -
diluted (2) � � 44,305 � � 44,900 � � 44,645 � � 44,840 � � (1) For
condominium conversion projects, the Company recognizes incremental
gains on condominium sales in FFO, net of provision for income
taxes, to the extent that net sales proceeds, less costs of sales
and expenses, from the sale of condominium units exceeds the
greater of their fair value or net book value as of the date the
property is acquired by the Company's taxable REIT subsidiary. For
condominium development projects, gains on condominium sales in FFO
are equivalent to gains reported under GAAP. See the table entitled
"Summary of Condominium Projects" on page 17 of the Supplemental
Financial Data for further detail. (2) Funds from operations per
share were computed using weighted average shares and units
outstanding, including the impact of dilutive securities totaling
358 shares and units for the six months ended June 30, 2008. Such
dilutive securities were antidilutive to the income (loss) per
share computations for the six months ended June 30, 2008 since the
Company reported a per share loss from continuing operations under
generally accepted accounting principles for such period.
Additionally, diluted weighted average shares and units for the
three months ended June 30, 2008 excludes 307 shares and units that
were antidilutive to all income (loss) per share computations under
generally accepted accounting principles and the deficit in funds
from operations for such period. � Table 2 Reconciliation of Same
Store Net Operating Income (NOI) to GAAP Net Income (Unaudited; In
thousands) � � � Three months ended Six months ended June 30, �
June 30, March 31, June 30, � June 30, � 2008 � � 2007 � � 2008 � �
2008 � � 2007 � Total same store NOI $ 30,190 $ 30,223 $ 30,724 $
60,914 $ 60,257 Property NOI from other operating segments � 2,625
� � 2,036 � � 2,304 � � 4,929 � � 4,715 � Consolidated property NOI
� 32,815 � � 32,259 � � 33,028 � � 65,843 � � 64,972 � Add
(subtract): Interest income 61 213 210 271 463 Other revenues 235
128 239 474 245 Minority interest in consolidated property
partnerships 427 (716 ) (366 ) 61 (693 ) Depreciation (14,386 )
(14,375 ) (14,263 ) (28,649 ) (28,726 ) Interest expense (10,112 )
(10,863 ) (10,156 ) (20,268 ) (21,908 ) Amortization of deferred
financing costs (859 ) (829 ) (851 ) (1,710 ) (1,641 ) General and
administrative (4,956 ) (5,959 ) (5,848 ) (10,804 ) (11,407 )
Investment and development (1,356 ) (1,955 ) (1,458 ) (2,814 )
(3,505 ) Strategic review costs (2,091 ) - (6,070 ) (8,161 ) -
Impairment and severance charges (29,300 ) - - (29,300 ) - Gains
(losses) on sales of real estate assets, net (368 ) 62,738 2,119
1,751 66,444 Equity in income of unconsolidated real estate
entities 420 310 401 821 814 Other income (expense) 66 (261 ) (174
) (108 ) (522 ) Minority interest of common unitholders � 238 � �
(852 ) � 46 � � 284 � � (882 ) � Income (loss) from continuing
operations (29,166 ) 59,838 (3,143 ) (32,309 ) 63,654 Income from
discontinued operations � 4,103 � � 4,099 � � 5,829 � � 9,932 � �
24,754 � � Net income (loss) $ (25,063 ) $ 63,937 � $ 2,686 � $
(22,377 ) $ 88,408 � Table 3 Same Store Net Operating Income (NOI)
Summary by Market (In thousands) � � � � � Three Months Ended Q2
'08 vs. Q2 '07 % Change Q2 '08 vs. Q1 '08 % Change Q2 '08 % Same
Store NOI June 30, � June 30, March 31, 2008 2007 2008 Rental and
other revenues Atlanta $ 14,969 $ 14,425 $ 14,787 3.8 % 1.2 %
Dallas 10,320 9,752 10,031 5.8 % 2.9 % Washington, D.C. 8,991 8,795
8,864 2.2 % 1.4 % Tampa 7,101 7,342 7,181 (3.3 )% (1.1 )% Charlotte
4,912 4,797 4,784 2.4 % 2.7 % Houston 3,070 2,910 3,031 5.5 % 1.3 %
Austin 1,231 1,213 1,240 1.5 % (0.7 )% Orlando � 991 � 1,052 �
1,015 (5.8 )% (2.4 )% Total rental and other revenues � 51,585 �
50,286 � 50,933 2.6 % 1.3 % � Property operating and maintenance
expenses (exclusive of depreciation and amortization) � � Atlanta
6,072 5,959 5,773 1.9 % 5.2 % Dallas 4,830 4,216 4,501 14.6 % 7.3 %
Washington, D.C. 3,023 2,825 3,040 7.0 % (0.6 )% Tampa 3,187 2,968
2,976 7.4 % 7.1 % Charlotte 1,813 1,585 1,566 14.4 % 15.8 % Houston
1,519 1,335 1,335 13.8 % 13.8 % Austin 566 604 593 (6.3 )% (4.6 )%
Orlando � 385 � 571 � 425 (32.6 )% (9.4 )% Total � 21,395 � 20,063
� 20,209 6.6 % 5.9 % � Net operating income Atlanta 8,897 8,466
9,014 5.1 % (1.3 )% 29.4 % Dallas 5,490 5,536 5,530 (0.8 )% (0.7 )%
18.2 % Washington, D.C. 5,968 5,970 5,824 (0.0 )% 2.5 % 19.8 %
Tampa 3,914 4,374 4,205 (10.5 )% (6.9 )% 13.0 % Charlotte 3,099
3,212 3,218 (3.5 )% (3.7 )% 10.3 % Houston 1,551 1,575 1,696 (1.5
)% (8.5 )% 5.1 % Austin 665 609 647 9.2 % 2.8 % 2.2 % Orlando � 606
� 481 � 590 26.0 % 2.7 % 2.0 % Total same store NOI $ 30,190 $
30,223 $ 30,724 (0.1 )% (1.7 )% 100.0 % Table 3 (con�t) Same Store
Net Operating Income (NOI) Summary by Market (In thousands) � � Six
months ended June 30, � June 30, 2008 2007 % Change � Rental and
other revenues Atlanta $ 29,756 $ 28,679 3.8 % Dallas 20,351 19,319
5.3 % Washington, D.C. 17,855 17,454 2.3 % Tampa 14,283 14,668 (2.6
)% Charlotte 9,696 9,457 2.5 % Houston 6,100 5,738 6.3 % Austin
2,471 2,390 3.4 % Orlando � 2,006 � 2,084 (3.7 )% Total rental and
other revenues � 102,518 � 99,789 2.7 % � Property operating and
maintenance expenses (exclusive of depreciation and amortization) �
� Atlanta 11,845 11,509 2.9 % Dallas 9,331 8,311 12.3 % Washington,
D.C. 6,063 5,759 5.3 % Tampa 6,164 5,898 4.5 % Charlotte 3,379
3,214 5.1 % Houston 2,853 2,619 8.9 % Austin 1,159 1,210 (4.2 )%
Orlando � 810 � 1,012 (20.0 )% Total � 41,604 � 39,532 5.2 % � Net
operating income Atlanta 17,911 17,170 4.3 % Dallas 11,020 11,008
0.1 % Washington, D.C. 11,792 11,695 0.8 % Tampa 8,119 8,770 (7.4
)% Charlotte 6,317 6,243 1.2 % Houston 3,247 3,119 4.1 % Austin
1,312 1,180 11.2 % Orlando � 1,196 � 1,072 11.6 % Total same store
NOI $ 60,914 $ 60,257 1.1 % Table 4 Computation of Debt Ratios (In
thousands) � As of June 30, � 2008 � � � 2007 � Total real estate
assets per balance sheet $ 2,115,247 $ 2,000,916 Plus: Company
share of real estate assets held in unconsolidated entities 94,510
71,395 Company share of accumulated depreciation - assets held in
unconsolidated entities 6,049 4,360 Accumulated depreciation per
balance sheet 499,981 560,927 Accumulated depreciation on assets
held for sale � 93,844 � � - � Total undepreciated real estate
assets (A) $ 2,809,631 � $ 2,637,598 � � Total debt per balance
sheet $ 1,064,405 $ 938,998 Plus: Company share of third party debt
held in unconsolidated entities 65,128 44,880 Less: Joint venture
partners' share of mortgage debt of the company � - � � (8,550 )
Total debt (adjusted for joint venture partners' share of debt) (B)
$ 1,129,533 � $ 975,328 � � Total debt as a % of undepreciated real
estate assets (adjusted for joint venture partners' share of debt
(B�A) � 40.2 % � 37.0 % � Total debt per balance sheet $ 1,064,405
$ 938,998 Plus: Company share of third party debt held in
unconsolidated entities 65,128 44,880 Preferred shares at
liquidation value 95,000 95,000 Less: Joint venture partners' share
of mortgage debt of the company � - � � (8,550 ) Total debt and
preferred equity (adjusted for joint venture partners' share of
debt) (C) $ 1,224,533 � $ 1,070,328 � � Total debt and preferred
equity as a % of undepreciated real estate assets (adjusted for
joint venture partners' share of debt) (C�A) � 43.6 % � 40.6 %
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