Post Properties, Inc. (NYSE: PPS) announced today a net loss
attributable to common shareholders of $(15.3) million for the
fourth quarter of 2008, compared to net income available to common
shareholders of $77.3 million for the fourth quarter of 2007. On a
diluted per share basis, the net loss attributable to common
shareholders was $(0.35) for the fourth quarter of 2008, compared
to net income available to common shareholders of $1.76 for the
fourth quarter of 2007.
The Company�s net loss attributable to common shareholders was
$(16.3) million for the year ended December 31, 2008, compared to
net income available to common shareholders of $171.1 million for
the year ended December 31, 2007. On a diluted per share basis, the
Company�s net loss attributable to common shareholders was $(0.37)
for the year ended December 31, 2008, compared to net income
available to common shareholders of $3.88 for the year ended
December 31, 2007.
The Company�s net loss attributable to common shareholders for
the three months ended December 31, 2008 included (i) non-cash
impairment charges of approximately $60.0 million relating to
certain land held for sale and land held for investment (see below
for further discussion), (ii) non-cash charges of approximately
$1.6 million relating to the write-off of capitalized pursuit costs
for two abandoned development projects, (iii) severance charges of
approximately $2.9 million associated with the elimination of
certain employment positions during the quarter, and (iv) a
non-cash charge of approximately $0.9 million related to the
mark-to-market of a derivative instrument that became ineffective
during the third quarter of 2008.
The Company�s net loss attributable to common shareholders for
the year ended December 31, 2008 included (i) non-cash impairment
charges of approximately $87.8 million relating to certain land
held for sale and land held for investment (see below for further
discussion), (ii) non-cash charges of approximately $2.7 million
relating to the write off of capitalized pursuit costs related to
abandoned development projects, (iii) hurricane casualty losses of
approximately $2.8 million, (iv) severance charges of approximately
$5.5 million, and (v) charges of approximately $8.2 million
relating to the process, no longer underway, to seek a potential
sale of the Company.
The Company�s reported net loss attributable to common
shareholders included net gains on the sales of apartment
communities (including minority interest) of $49.4 million and
$75.2 million for the three months and year ended December 31,
2008, respectively. The Company�s reported net income available to
common shareholders for the three months and year ended December
31, 2007 included net gains on the sales of apartment communities
(including minority interest) of $45.4 million and $62.4 million,
respectively, as well as proportionate gains of approximately $26.0
million and $81.3 million, respectively, on the sale of a 75%
interest in three apartment communities to a joint venture.
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 fourth quarter of 2008 was a deficit of $(47.2)
million, or $(1.06) per diluted share, compared to FFO of $22.7
million, or $0.51 per diluted share, for the fourth quarter of
2007. The Company�s reported FFO for the fourth quarter of 2008
included non-cash impairment charges, severance charges, abandoned
pursuit costs and the non-cash derivative mark-to-market charge
discussed above totaling approximately $65.4 million, or $1.47 per
diluted share. The Company�s reported FFO for the fourth quarter of
2007 included a net gain of approximately $1.2 million, or $0.03
per diluted share, on the sale of a land site as well as a $0.1
million non-cash loss on the early extinguishment of tax-exempt
secured indebtedness and related interest rate cap arrangements in
connection with asset sales.
FFO for the year ended December 31, 2008 was a deficit of
$(29.8) million, or $(0.67) per diluted share, compared to $89.4
million, or $2.00 per diluted share, for the year ended December
31, 2007. The Company�s reported FFO for the year ended December
31, 2008 included non-cash impairment charges, severance charges,
hurricane casualty losses, abandoned pursuit costs and charges
relating to the sale process discussed above totaling approximately
$107.0 million, or $2.41 per diluted share. The Company�s reported
FFO for the year ended December 31, 2007 included net gains of
approximately $5.1 million, or $0.12 per diluted share, on the sale
of land sites in Atlanta, Georgia and Dallas, Texas, offset
partially by the $0.1 million non-cash loss on the early
extinguishment of debt.
Mature (Same Store) Community Data
Average economic occupancy at the Company�s 38 mature (same
store) communities, containing 14,029 apartment units, was 93.9%
and 94.8% for the fourth quarter of 2008 and 2007,
respectively.
Total revenues for the mature communities decreased 1.1% during
the fourth quarter of 2008, compared to the fourth quarter of 2007,
and operating expenses increased 1.5%, producing a 2.6%, or $0.9
million, decrease in same store net operating income (�NOI�). The
average monthly rental rate per unit remained flat during the
fourth quarter of 2008, compared to the fourth quarter of 2007.
On a sequential basis, total revenues for the mature communities
decreased 2.7% and operating expenses decreased 7.9% producing a
0.9%, or $0.3 million, increase in same store NOI for the fourth
quarter of 2008, compared to the third quarter of 2008. On a
sequential basis, the average monthly rental rate per unit
decreased 0.4%. For the fourth quarter of 2008, average economic
occupancy at the mature communities was 93.9%, compared to 95.3%
for the third quarter of 2008.
For the years ended December 31, 2008 and 2007, average economic
occupancy at the Company�s mature communities was 94.4% and 94.6%,
respectively.
Total revenues for the mature communities increased 1.4% during
the year ended December 31, 2008 compared to the year ended
December 31, 2007, and operating expenses increased 3.6% producing
a 0.1%, or $0.1 million, decrease in same store NOI. The average
monthly rental rate per unit increased 1.6% during the year ended
December 31, 2008, compared to the year ended December 31,
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 and average rental rate per unit
by geographic market is also included in the financial data (Table
3) accompanying this press release.
Cost Savings Activity
During the year ended December 31, 2008, the Company reduced its
headcount approximately 15%, including an approximately 25%
reduction in headcount in corporate office positions, through a
combination of asset sales, out-sourcing, attrition and positions
eliminated. In connection with these headcount reductions, the
Company incurred severance charges during 2008 of approximately
$5.5 million. The Company also implemented a salary freeze for
associates with base salaries greater than $50,000, substantially
reduced bonuses, including eliminating any incentive bonus for 2008
for the Company�s President and CEO, reduced long-term incentives
for executive officers for 2008 and targeted long-term incentives
for 2009. In addition, at his request, compensation paid to the
Chairman of the Company�s Board of Directors was substantially
reduced for 2008 and waived entirely for 2009.
Financing Activity
In October 2008, the Company closed six, cross-collateralized
secured mortgage loans. The mortgage loans have an aggregate
principal amount of approximately $184.7 million, require fixed,
interest-only payments at 6.09% and mature in six years on November
1, 2014. The mortgage loans are also pre-payable without penalty
beginning after October 2012.
In January 2009, the Company closed five, cross-collateralized
secured mortgage loans. The mortgage loans have an aggregate
principal amount of approximately $202.2 million, require fixed
interest-only payments for the first two years and then principal
and interest payments for the remaining term of the loans based on
a 30-year amortization schedule. The loans bear interest at a fixed
rate of 5.99% and mature in ten years on February 1, 2019.
Total debt and preferred equity as a percentage of undepreciated
real estate assets (adjusted for joint venture partners� share of
debt) was 45.7% at December 31, 2008, and variable rate debt as a
percentage of total debt was 12.9% as of that same date. These
percentages are computed without taking into account cash and cash
equivalents on the Company�s balance sheet at December 31,
2008.
At the end of December 2008, the Company repaid approximately
$39.2 million of secured debt that was scheduled to mature in early
2009, using available cash from its recent secured financings. In
2009, the Company has approximately $34.0 million of debt, secured
by one of its New York apartment communities, that matures in March
and that it currently plans to refinance. The Company also has
approximately $92.3 million of weekly remarketed, variable rate
taxable mortgage bonds that it intends to redeem in March 2009
using available cash equivalents from its recent secured
financings.
As of February 9, 2009, the Company had no outstanding
borrowings and letters of credit totaling approximately $37.2
million under its combined $630 million unsecured lines of credit,
held available cash equivalents of approximately $191.6 million,
and held approximately $25.5 million in a restricted cash
collateral account with respect to the taxable mortgage bonds
discussed above.
As the Company separately announced today, it has made a public
tender offer for any and all of its $185 million, 7.7% senior
unsecured notes due December 2010 and its $100 million, 5.125%
senior unsecured notes due October 2011. The tender offer expires
on February 19, 2009. The Company expects to fund any notes
tendered using available cash equivalents, proceeds from the
mortgage loans described above and through borrowings under its
unsecured revolving 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.
Disposition, Development and Other Investment
Activity
Disposition Activity
In October 2008, the Company closed the sale of its Post Woods�
apartment community located in Atlanta, Georgia for a gross sales
price of approximately $52.8 million. Post Woods� is a 494-unit
garden-style apartment community located in the Cumberland/Vinings
area of Atlanta and was completed in phases in the 1970�s and early
1980�s.
In December 2008, the Company closed the sale of its Post Lenox
Park� apartment community located in Atlanta, Georgia for a gross
sales price of approximately $22.7 million. Post Lenox Park� is a
206-unit garden-style apartment community located in the Buckhead
area of Atlanta and was completed in 1995.
The Company continues to market for sale two other apartment
communities located in Atlanta, Georgia and a third located in
northern Virginia. The Company�s strategic plans no longer include
selling its two New York City apartment communities that were
previously being marketed for sale. As a result, those communities
have been reflected in the same store operating data discussed
above, with prior results having been adjusted to reflect the
current period presentation.
Gross proceeds that may potentially be realized by the Company
from the sales of the three communities being marketed for sale are
currently expected to be more than $150 million, although current
conditions in the global capital markets and the U.S. economy may
adversely affect the Company�s ability to sell assets. As a result,
there can be no assurance that the potential gross proceeds will be
realized by the Company or that these assets will be sold.
Development Activity
As of December 31, 2008, the Company�s aggregate pipeline of
development projects under construction totaled approximately
$542.0 million (including the Company�s share, net of joint venture
partner interests, of $508.3 million). As of the same date,
approximately $200.7 million of estimated construction costs
remained to be funded by the Company (or approximately $163.3
million, excluding committed construction loan financing and escrow
deposits held by the construction lender). The Company expects to
fund future estimated construction expenditures primarily by
utilizing available cash equivalents of approximately $191.6
million and borrowing capacity under its unsecured revolving lines
of credit totaling approximately $592.8 million as of February 9,
2009.
In response to conditions in the global capital markets and the
U.S. economy, the Company, as disclosed in the prior quarter, has
deferred substantive activities on its pre-development pipeline. At
present, management believes that the timing of future development
starts will depend largely on the stabilization of capital market
conditions and the U.S. economy, which it believes will influence
conditions in employment and in local real estate markets, the
Company�s ability to generate asset sales proceeds and its ability
to attract potential construction loan financing and joint venture
equity to fund future development. Until such time as substantive
development activities re-commence or certain land positions are
sold, the Company expects that operating results will be adversely
impacted by costs of carrying land held for future development or
sale.
Non-Cash Impairments of Land Held for Investment and
Sale
Based on the Company�s outlook for conditions in the global
capital markets and the U.S. economy, management revised its
current expectations regarding the timing and projected future cash
flows from land held for future development (including the
Company�s expectations of possible future uses, capitalization
rates, investors� return expectations, rental rates and operating
cash flows) and reduced its expectations regarding the estimated
fair values of its land holdings. As a result, the Company recorded
non-cash impairment charges of approximately $60.0 million in the
fourth quarter of 2008 relating to a substantial portion of its
land held for sale and land held for future investment (including
the Company�s interest in a joint venture that holds land for
future investment) in the fourth quarter of 2008. This charge was
in addition to $27.8 million of non-cash impairment charges that
the Company recorded in the second quarter of 2008.
The Company considers a real estate asset held for investment as
impaired if the undiscounted, estimated future cash flows of the
asset (both the annual estimated cash flow from future operations
and the estimated cash flow from the asset�s eventual sale) over
its expected holding period are less than the asset�s net book
value. For those assets deemed impaired, a non-cash impairment
charge was recognized to reduce the carrying value of the assets to
their estimated fair values. For real estate assets held for sale,
the Company recognized impairment losses for assets with a net book
value in excess of their estimated fair values, less estimated
costs to sell.
After considering the impact of the impairment charges discussed
above, which on a cumulative basis represented an approximately 47%
reduction to the original aggregate carrying values of its land
assets, the Company�s land held for future investment and sale
totaled $98.4 million at December 31, 2008.
Apartment Community Renovation and Remediation
Activity
The Company is currently undertaking substantial renovations and
re-leasing of two apartment communities, Post Peachtree Hills� in
Atlanta, Georgia and Post Heights� in Dallas, Texas, containing a
total of 668 units. 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. The renovation of these communities began earlier in 2008.
As of December 31, 2008, the Company had completed the renovation
of 482 units (72% of the total) at these communities.
As announced last quarter, the Company is underway with an
initiative to engage third-party engineers and consultants to
inspect and evaluate each of its communities that have stucco
exteriors or exterior insulation finishing systems (�EIFS�) for
potential water penetration and other related issues. At this time,
the Company has preliminarily determined that varying levels of
remediation and improvements may be required to be performed at
approximately 30 properties in its portfolio. The Company
preliminarily estimates that the aggregate cost of this initiative
could be approximately $45 million to complete the scope of the
remediation and improvements, although the scope and cost will vary
considerably among individual properties. The Company currently
expects that a substantial majority of the costs related to these
remediation efforts will be recorded as annually and periodically
recurring capital expenditures. In addition and as a result of this
project, the Company currently estimates that the net book value of
certain building components totaling approximately $6.5 million to
$7.0 million will be retired and, as such, are being depreciated on
an accelerated basis over the remaining estimated useful life of
those assets, which is expected to be not later than 2009. The work
is currently underway at approximately seven properties and is
expected to be completed at all the properties by 2010. The work
may include, but not be limited to, remediation, improvements and
replacements of exterior stucco and EIFS siding, windows and doors,
roofing and gutters, exterior sealants and coatings. There can be
no assurance that the scope of work or the Company�s preliminary
estimates of costs will not change in the future.
Condominium Activity
The Company recognized breakeven results from condominium
activities during the fourth quarter of 2008, net of minority
interest and provision for income taxes, compared to incremental
gains of approximately $0.1 million during the fourth quarter of
2007.
During the fourth quarter of 2008, the Company completed the
100% sell-out of its condominium development project in the greater
Washington D.C. area, containing 145 homes.
2009 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. In addition, the Company does not currently
intend to provide quarterly earnings guidance during 2009.
Based on its current outlook, the Company currently expects that
FFO for 2009 will be in the range of $1.05 to $1.25 per diluted
share (including an $0.08 to $0.09 per diluted share loss on early
extinguishment of indebtedness discussed below). The estimates of
per share FFO for 2009 are based on the following assumptions:
� a decrease in same store NOI of 4.5% to 8.0%, compared to
2008, based on:
-- a decrease in same store revenue of
2.5% to 4.3%, compared to 2008, and
-- an increase in same store operating
expenses of 0.3% to 1.1%, compared to 2008;
� an increase in expensed land and condominium carrying costs,
deficits attributable to the lease up of apartment communities
under rehabilitation and development, and the negative interest
carry costs associated with available cash from financing
activities totaling approximately $0.30 per diluted share, compared
to 2008, although this amount could vary significantly based on the
timing of forecasted capital, development and lease up
activities;
� a decrease in overhead expenses (G&A, property management
and development and investment expenses, net of development costs
capitalized) of 6.0% to 8.0%, compared to 2008;
� a net loss attributable to condominium activities of $0.03 to
$0.04 per diluted share; and
� a loss on early extinguishment of indebtedness in March of
$0.08 to $0.09 per diluted share.
Supplemental Financial Data
The Company also produces Supplemental Financial Data that
includes detailed information regarding the Company�s operating
results, investment activity, financing activity 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 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 24 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, non-cash income
(loss) related to mark-to-market of interest rate swap agreements,
non-cash debt extinguishment costs 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 Thursday,
February 12, at 10:00 a.m. ET. The telephone numbers are
888-233-8078 for US and Canada callers and 913-312-6687 for
international callers. The access code is 3047296. 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
Information/Event Calendar. The replay will begin at 1:00 p.m. ET
on Thursday, February 12, and will be available until Wednesday,
February 18, 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 3047296. A
replay of the call also will be archived on Post�s website under
Investor Information/Audio Archives. 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 37 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 21,189 apartment units in 58 communities,
including 1,747 apartment units in five communities held in
unconsolidated entities and 1,736 apartment units in five
communities currently under construction and/or in lease-up. The
Company is also developing and selling 361 for-sale condominium
homes in three communities (including 129 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
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 costs, timing and expense to
remediate and improve apartment communities with stucco and EIFS
exteriors, anticipated overhead reductions, expectations regarding
the timing and projected future cash flows from land held for
future development and estimated fair values of land holdings,
expectations regarding the source of funds for the tender offer of
notes, and anticipated full year 2009 FFO, same store NOI and other
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
in previous filings with the SEC; future conditions in the global
capital markets, including changes in the availability of credit
and liquidity; future local and national economic conditions,
including changes in levels of employment, 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 in the Company�s quarterly
report on Form 10-Q dated September 30, 2008 and may be discussed
in subsequent filings with the SEC. The risk factors discussed in
Form 10-K, as amended, and the September 30, 2008 Form 10-Q 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 Year ended December
31, December 31, 2008 � �
2007 2008
�
2007 OPERATING DATA Revenues from continuing operations $
69,767 $ 70,526 $ 281,940 $ 277,324 Net income (loss) available to
common shareholders $ (15,260 ) $ 77,333 $ (16,289 ) $ 171,062
Funds from operations (deficit) available to common shareholders
and unitholders (Table 1) $ (47,225 ) $ 22,713 $ (29,820 ) $ 89,382
� Weighted average shares outstanding - diluted 44,146 44,006
44,009 44,129 Weighted average shares and units outstanding -
diluted 44,384 44,541 44,316 44,738 � PER COMMON SHARE DATA -
DILUTED Net income (loss) available to common shareholders $ (0.35
) $ 1.76 $ (0.37 ) $ 3.88 � Funds from operations (deficit)
available to common shareholders and unitholders (Table 1) (1) $
(1.06 ) $ 0.51 $ (0.67 ) $ 2.00 � Dividends declared $ 0.20 $ 0.45
$ 1.55 $ 1.80 �
(1) Diluted weighted average
shares and units for the three months and year ended December 31,
2008 exclude 19 and 159 shares and units, respectively, that were
antidilutive to all income (loss) per share computations under
generally accepted accounting principles and the deficit in funds
from operations for such periods.
�
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 Year ended December 31,
December 31, �
2008 � � �
2007 � �
2008
� � �
2007 �
Net income (loss) available to common
shareholders $ (15,260 ) $ 77,333 $ (16,289 ) $ 171,062
Minority interest of common unitholders - continuing operations
(447 ) 389 (719 ) 1,347 Minority interest in discontinued
operations 342 636 606 1,047 Depreciation on wholly-owned real
estate assets, net 17,619 16,241 63,471 65,560 Depreciation on real
estate assets held in unconsolidated entities 349 320 1,391 1,143
Gains on sales of real estate assets (49,928 ) (72,588 ) (77,987 )
(157,620 ) Incremental gains (losses) on condominium sales (1) 100
382 (293 ) 6,922 Gains on sales of real estate assets -
unconsolidated entities - (16 ) - (186 ) Incremental gains on
condominium sales - unconsolidated entities (1) � - � � 16 � � - �
� 107 �
Funds from operations (deficit) available to common
shareholders and unitholders $ (47,225 ) $ 22,713 � $
(29,820 ) $ 89,382 � �
Funds from operations (deficit) - per
share and unit - diluted (2) $ (1.06 ) $ 0.51 � $ (0.67 ) $
2.00 �
Weighted average shares and units outstanding - diluted
(2) � 44,384 � � 44,541 � � 44,316 � � 44,738 � � (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 18 of the Supplemental
Financial Data for further detail. � (2) Diluted weighted average
shares and units for the three months and year ended December 31,
2008 exclude 19 and 159 shares and units, respectively, that were
antidilutive to all income (loss) per share computations under
generally accepted accounting principles and the deficit in funds
from operations for such periods. �
Table 2
Reconciliation of Same Store Net
Operating Income (NOI) to GAAP Net Income
(Unaudited; In thousands)
� � � �
Three months ended Year ended December
31, �
December 31, September 30, December
31, December 31, �
2008 � �
2007 � �
2008 � �
2008 � �
2007 � Total same store NOI
$ 33,675 $ 34,563 $ 33,381 $ 131,826 $ 131,908 Property NOI from
other operating segments � 4,245 � � 3,003 � � 4,133 � � 13,806 � �
11,259 � Consolidated property NOI � 37,920 � � 37,566 � � 37,514 �
� 145,632 � � 143,167 � Add (subtract): Interest income 300 170 96
667 822 Other revenues 294 186 261 1,029 602 Minority interest in
consolidated property partnerships (33 ) (440 ) (189 ) (395 )
(1,857 ) Depreciation (18,241 ) (15,225 ) (14,979 ) (63,530 )
(61,476 ) Interest expense (14,487 ) (12,080 ) (12,341 ) (48,863 )
(47,447 ) Amortization of deferred financing costs (894 ) (828 )
(869 ) (3,473 ) (3,297 ) General and administrative (3,464 ) (4,358
) (3,859 ) (16,808 ) (18,093 ) Investment and development (958 )
(1,598 ) (1,509 ) (5,131 ) (7,302 ) Other development costs (422 )
(113 ) (463 ) (1,384 ) (400 ) Strategic review costs - - - (8,161 )
- Impairment, severance and other charges (64,560 ) - (5,002 )
(98,862 ) - Gains on sales of real estate assets, net 525 28,509
476 2,752 100,015 Equity in income of unconsolidated real estate
entities 143 419 260 1,224 1,635 Other income (expense), net (1,665
) (393 ) 534 (1,239 ) (1,177 ) Minority interest of common
unitholders � 447 � � (389 ) � 1 � � 719 � � (1,347 ) � Income
(loss) from continuing operations (65,095 ) 31,426 (69 ) (95,823 )
103,845 Income from discontinued operations � 51,744 � � 47,816 � �
27,145 � � 87,171 � � 74,854 � � Net income (loss) $ (13,351 ) $
79,242 � $ 27,076 � $ (8,652 ) $ 178,699 �
Table 3
Same Store Net Operating Income
(NOI) and Average Rental Rate per Unit by Market
(In thousands)
� � � � �
Three months ended Q4 '08 vs. Q4 '07
% Change Q4 '08 vs. Q3 '08 % Change
Q4 '08 % Same Store NOI December 31, �
December 31, September 30, �
2008 �
2007 �
2008 Rental and other revenues Atlanta $
14,729 $ 14,891 $ 15,075 (1.1 )% (2.3 )% Dallas 9,988 10,064 10,435
(0.8 )% (4.3 )% Washington, D.C. 8,818 8,908 8,999 (1.0 )% (2.0 )%
Tampa 7,052 7,198 7,141 (2.0 )% (1.2 )% Charlotte 4,681 4,835 4,937
(3.2 )% (5.2 )% New York 3,772 3,806 3,809 (0.9 )% (1.0 )% Houston
3,084 3,006 3,134 2.6 % (1.6 )% Austin 1,236 1,227 1,299 0.7 % (4.8
)% Orlando � 999 � 1,007 � 1,017 (0.8 )% (1.8 )% Total rental and
other revenues � 54,359 � 54,942 � 55,846 (1.1 )% (2.7 )% �
Property operating and maintenance expenses (exclusive of
depreciation and amortization) � � Atlanta 6,162 5,580 6,461 10.4 %
(4.6 )% Dallas 4,005 4,261 4,605 (6.0 )% (13.0 )% Washington, D.C.
3,106 2,937 3,231 5.8 % (3.9 )% Tampa 2,680 2,932 2,930 (8.6 )%
(8.5 )% Charlotte 1,516 1,354 1,633 12.0 % (7.2 )% New York 1,131
1,113 1,119 1.6 % 1.1 % Houston 1,129 1,230 1,464 (8.2 )% (22.9 )%
Austin 525 562 588 (6.6 )% (10.7 )% Orlando � 430 � 410 � 434 4.9 %
(0.9 )% Total � 20,684 � 20,379 � 22,465 1.5 % (7.9 )% � Net
operating income Atlanta 8,567 9,311 8,614 (8.0 )% (0.5 )% 25.4 %
Dallas 5,983 5,803 5,830 3.1 % 2.6 % 17.9 % Washington, D.C. 5,712
5,971 5,768 (4.3 )% (1.0 )% 17.0 % Tampa 4,372 4,266 4,211 2.5 %
3.8 % 13.0 % Charlotte 3,165 3,481 3,304 (9.1 )% (4.2 )% 9.4 % New
York 2,641 2,693 2,690 (1.9 )% (1.8 )% 7.8 % Houston 1,955 1,776
1,670 10.1 % 17.1 % 5.8 % Austin 711 665 711 6.9 % 0.0 % 2.1 %
Orlando � 569 � 597 � 583 (4.7 )% (2.4 )% 1.7 % Total same store
NOI $ 33,675 $ 34,563 $ 33,381 (2.6 )% 0.9 % 100.0 % � � Average
rental rate per unit Atlanta $ 1,146 $ 1,138 0.7 % Dallas 1,076
1,057 1.8 % Washington, D.C. 1,763 1,762 0.1 % Tampa 1,237 1,304
(5.1 )% Charlotte 1,183 1,195 (1.0 )% New York 3,938 3,872 1.7 %
Houston 1,266 1,212 4.5 % Austin 1,347 1,315 2.4 % Orlando 1,346
1,437 (6.3 )% Total average rental rate per unit 1,303 1,303 0.0 %
Table 3 (con�t)
Same Store Net Operating Income
(NOI) Average Rental Rate per Unit by Market
(In thousands)
� �
Year ended December 31, �
December 31, �
2008 �
2007 % Change � Rental and other
revenues Atlanta $ 59,560 $ 58,468 1.9 % Dallas 40,774 39,565 3.1 %
Washington, D.C. 35,672 35,297 1.1 % Tampa 28,476 29,261 (2.7 )%
Charlotte 19,315 19,201 0.6 % New York 15,074 14,694 2.6 % Houston
12,319 11,751 4.8 % Austin 5,006 4,846 3.3 % Orlando � 4,021 �
4,124 (2.5 )% Total rental and other revenues � 220,217 � 217,207
1.4 % � Property operating and maintenance expenses (exclusive of
depreciation and amortization) � � Atlanta 24,823 23,956 3.6 %
Dallas 18,183 17,332 4.9 % Washington, D.C. 12,518 11,920 5.0 %
Tampa 11,903 12,140 (2.0 )% Charlotte 6,628 6,316 4.9 % New York
4,841 4,147 16.7 % Houston 5,506 5,248 4.9 % Austin 2,297 2,369
(3.0 )% Orlando � 1,692 � 1,871 (9.6 )% Total � 88,391 � 85,299 3.6
% � Net operating income Atlanta 34,737 34,512 0.7 % Dallas 22,591
22,233 1.6 % Washington, D.C. 23,154 23,377 (1.0 )% Tampa 16,573
17,121 (3.2 )% Charlotte 12,687 12,885 (1.5 )% New York 10,233
10,547 (3.0 )% Houston 6,813 6,503 4.8 % Austin 2,709 2,477 9.4 %
Orlando � 2,329 � 2,253 3.4 % Total same store NOI $ 131,826 $
131,908 (0.1 )% � � Average rental rate per unit Atlanta $ 1,149 $
1,127 2.0 % Dallas 1,072 1,042 2.9 % Washington, D.C. 1,765 1,737
1.6 % Tampa 1,267 1,307 (3.1 )% Charlotte 1,186 1,206 (1.7 )% New
York 3,905 3,775 3.4 % Houston 1,252 1,183 5.8 % Austin 1,337 1,281
4.4 % Orlando 1,366 1,430 (4.5 )% Total average rental rate per
unit 1,306 1,286 1.6 %
�
Table 4
Computation of Debt Ratios
(In thousands)
�
As of December 31, �
2008 � � �
2007 � Total
real estate assets per balance sheet $ 2,083,151 $ 2,111,612 Plus:
Company share of real estate assets held in unconsolidated entities
124,240 91,085 Company share of accumulated depreciation - assets
held in unconsolidated entities 6,952 5,149 Accumulated
depreciation per balance sheet 553,814 562,226 Accumulated
depreciation on assets held for sale � 42,379 � � 4,031 � Total
undepreciated real estate assets
(A) $ 2,810,536 � $
2,774,103 � � Total debt per balance sheet $ 1,112,913 $ 1,059,066
Plus: - Company share of third party debt held in unconsolidated
entities � 77,760 � � 60,959 � Total debt (adjusted for joint
venture partners' share of debt)
(B) $ 1,190,673 � $
1,120,025 � � Total debt as a % of undepreciated real estate assets
(adjusted for joint venture partners' share of debt
(B�A)
(1) � 42.4 % � 40.4 % � Total debt per balance sheet $
1,112,913 $ 1,059,066 Plus: Company share of third party debt held
in unconsolidated entities 77,760 60,959 Preferred shares at
liquidation value � 95,000 � � 95,000 � Total debt and preferred
equity (adjusted for joint venture partners' share of debt)
(C) $ 1,285,673 � $ 1,215,025 � � Total debt and preferred
equity as a % of undepreciated real estate assets (adjusted for
joint venture partners' share of debt)
(C�A) (1) � 45.7 % �
43.8 % �
(1) Excludes impact of available
cash and cash equivalents of $75,472 at December 31, 2008.
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