Post Properties, Inc. (NYSE: PPS) announced today net income
available to common shareholders of $50.2 million for the third
quarter of 2009, compared to net income available to common
shareholders of $25.2 million for the third quarter of 2008. On a
diluted per share basis, net income available to common
shareholders was $1.13 for the third quarter of 2009, compared to
$0.57 for the third quarter of 2008.
The Company reported a net loss attributable to common
shareholders of $0.1 million for the nine months ended September
30, 2009, compared to a net loss attributable to common
shareholders of $1.0 million for the nine months ended September
30, 2008. On a diluted per share basis, the net loss attributable
to common shareholders was less than $0.01 for the nine months
ended September 30, 2009, compared to $0.02 for the nine months
ended September 30, 2008.
The Company’s net income available to common shareholders for
the three months ended September 30, 2009 included net gains of
approximately $54.6 million on the sales of two apartment
communities in July 2009, offset by severance charges of
approximately $0.4 million relating to headcount reductions that
were initiated during the third quarter. The Company’s net income
available to common shareholders for the three months ended
September 30, 2008 included a net gain of approximately $23.5
million on the sale of one apartment community, offset by hurricane
casualty losses of approximately $2.8 million and severance charges
totaling approximately $2.2 million.
The Company’s net loss attributable to common shareholders for
the nine months ended September 30, 2009 included net gains of
approximately $79.4 million on the sales of three apartment
communities and gains of approximately $2.3 million relating to the
early extinguishment of indebtedness, the mark-to-market of an
interest rate swap, and changes in previous hurricane loss
estimates. These gains were offset by non-cash impairment charges
of approximately $76.3 million relating to the Company’s investment
in a condominium project and adjacent land and the severance
charges discussed above totaling approximately $0.4 million. The
Company’s net loss attributable to common shareholders for the nine
months ended September 30, 2008 included net gains of approximately
$25.8 million on the sale of two apartment communities, offset by
non-cash impairment charges of approximately $28.9 million,
hurricane casualty losses of approximately $2.8 million, severance
charges of approximately $2.6 million and approximately $8.2
million in costs related to the Company’s formal process to pursue
a business combination or other sale transaction.
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 third quarter of 2009 was $13.9 million, or $0.31
per diluted share, compared to $16.1 million, or $0.36 per diluted
share, for the third quarter of 2008. The Company’s reported FFO
for the third quarter of 2009 included the severance charges
discussed above totaling approximately $0.4 million, or $0.01 per
diluted share, and for the third quarter of 2008 included the
severance charges and hurricane casualty losses discussed above
totaling approximately $5.0 million, or $0.11 per diluted
share.
FFO for the nine months ended September 30, 2009 was a deficit
of $28.2 million, or $0.63 per diluted share, compared to FFO of
$17.4 million, or $0.39 per diluted share, for the nine months
ended September 30, 2008. The Company’s reported FFO for the nine
months ended September 30, 2009 included the impairment and
severance charges discussed above totaling approximately $76.7
million, offset by the income items discussed above totaling
approximately $2.3 million, resulting in total net charges of
approximately $74.4 million, or $1.67 per diluted share. The
Company’s reported FFO for the nine months ended September 30, 2008
included the charges discussed above in the aggregate of
approximately $42.5 million, or $0.95 per diluted share.
Mature (Same Store) Community Data
Average economic occupancy at the Company’s 41 mature (same
store) communities, containing 14,921 apartment units, was 94.5%
and 95.2% for the third quarters of 2009 and 2008,
respectively.
Total revenues for the mature communities decreased 6.0% and
total operating expenses decreased 0.1% during the third quarter of
2009, compared to the third quarter of 2008, resulting in a 10.0%
decrease in same store net operating income (“NOI”). The average
monthly rental rate per unit decreased 5.5% during the third
quarter of 2009, compared to the third quarter of 2008.
On a sequential basis, total revenues for the mature communities
decreased 1.6% and total operating expenses increased 6.1%,
producing a 6.7% decrease in same store NOI for the third quarter
of 2009, compared to the second quarter of 2009. On a sequential
basis, the average monthly rental rate per unit decreased 2.6%. For
the third quarter of 2009, average economic occupancy at the mature
communities was 94.5%, compared to 93.4% for the second quarter of
2009.
For the nine months ended September 30, 2009, average economic
occupancy at the Company’s mature communities was 93.9%, compared
to 94.3% for the nine months ended September 30, 2008.
Total revenues for the mature communities decreased 3.7% and
total operating expenses decreased 4.2% for the nine months ended
September 30, 2009, compared to the nine months ended September 30,
2008, resulting in a 3.3% decrease in same store NOI. The average
monthly rental rate per unit decreased 3.2% for the nine months
ended September 30, 2009, compared to the nine months ended
September 30, 2008.
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.
Financing Activity
Common Stock Offering and Debt Prepayment
Late in the third quarter, the Company completed a public
offering of 4,025,000 shares of its common stock at a price of
$17.75 per share. The offering generated proceeds of approximately
$68.0 million after deducting the underwriting discount and
estimated offering expenses payable by the Company. In October
2009, the Company used a portion of the net proceeds from the
offering to repay approximately $39.2 million of existing mortgage
indebtedness secured by the Company’s Post Fallsgrove property that
was scheduled to mature in November 2011, and to pay an
approximately $4.0 million prepayment penalty in connection the
early extinguishment of that debt. The interest rate on the
mortgage indebtedness was 6.1%. The remaining net proceeds from the
offering will be used for general corporate purposes, which may
include funding the Company’s development pipeline or the
repurchase of its outstanding preferred stock or senior unsecured
notes. In October 2009, the Company repurchased approximately $6.1
million of its 6.3% senior unsecured notes due 2013 through
open-market repurchases.
Other Financing Activity
Total debt and preferred equity as a percentage of undepreciated
real estate assets (adjusted for joint venture partners’ share of
debt) was 44.8% at September 30, 2009, and variable rate debt as a
percentage of total debt was 0.8% as of that same date.
As of October 30, 2009, the Company had outstanding borrowings
and letters of credit totaling approximately $3.6 million under its
combined $630 million unsecured lines of credit and held available
cash and cash equivalents of approximately $54 million.
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 July 2009, the Company closed the sale of its Post Forest®
apartment community located in the greater Washington, D.C. area
for a gross sales price of approximately $57.5 million. Post
Forest® is a 364-unit garden-style apartment community located in
Fairfax County, VA and was completed in 1990. The Company
recognized a gain on the sale of approximately $37.3 million in the
third quarter of 2009.
The Company also closed in July 2009 the sale of its Post Ridge®
apartment community, located in Atlanta, Georgia, for a gross sales
price of approximately $44.8 million. Post Ridge® is a 434-unit
garden-style apartment community located in the northwest area of
Atlanta and was completed in 1998. The Company recognized a gain on
the sale of approximately $17.3 million in the third quarter of
2009.
The Company currently has no other apartment communities being
marketed for sale.
Development Activity
As of September 30, 2009, the Company’s aggregate pipeline of
development projects under construction and/or in lease-up (before
the impact of impairment charges recorded in the second quarter)
totaled approximately $487 million. As of that same date,
approximately $100 million of estimated construction costs remained
to be funded by the Company, including retainage and construction
payables. The Company expects to fund future estimated construction
expenditures primarily by utilizing available cash and cash
equivalents and borrowing capacity under its unsecured revolving
lines of credit and under a construction loan.
Apartment Community Renovation and Remediation
Activity
As previously announced, the Company continues its initiative to
remediate communities with stucco exteriors or exterior insulation
finishing systems. The Company currently estimates that the
aggregate cost of this initiative will be approximately $45
million. Through September 30, 2009, the Company had incurred
approximately $23.9 million of capital expenditures relating to
these remediation projects. The Company expects to fund future
estimated remediation expenditures primarily by utilizing available
cash and cash equivalents and borrowing capacity under its
revolving lines of credit.
Condominium Activity
The Company recognized incremental gains in FFO of approximately
$0.4 million, net of income tax expense, from condominium sales
activities during the third quarter of 2009 compared to incremental
losses in FFO of approximately $0.2 million during the third
quarter of 2008. During the third quarter of 2009, the Company sold
27 condominium units for aggregate gross sales revenues of
approximately $6.6 million, compared to 30 condominium units sold
in the third quarter of 2008 for aggregate gross sales revenues of
approximately $8.6 million. In October 2009, the Company completed
the sell out of the remaining units at its Mercer Square™
condominium development in a bulk sale transaction totaling 15
units for a gross sales price of approximately $2.2 million.
Legal Matters
On September 28, 2009, the United States District Court for the
District of Columbia dismissed in its entirety the lawsuit filed
against the Company by the Equal Rights Center alleging various
violations of the Fair Housing Act and the Americans with
Disabilities Act. In granting the Company’s request to dismiss the
suit, the Court held that the plaintiff lacked standing to bring
the claims. Subsequent to the dismissal, the Company asked the
Court to require ERC’s attorneys to reimburse the Company’s costs,
expenses and attorney’s fees incurred in defending the action. ERC
has filed a notice of appeal of the Court’s decision to dismiss the
action to the United States Court of Appeals for the District of
Columbia Circuit. The Company’s motion and the appeal are both
pending.
2009 Revised 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 and condominium markets 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.
Based on its current outlook, the Company expects that FFO for
the full year 2009 will be a deficit in the range of $0.40 to $0.45
per diluted share, including net charges totaling $1.72 per diluted
share relating to non-cash impairment charges, severance charges
and losses relating to the early extinguishment of indebtedness,
offset by income relating to the mark-to-market of an interest rate
swap and changes in previous hurricane loss estimates, all as
discussed previously in this earnings release. Excluding the
above-mentioned items totaling $1.72 per diluted share, the revised
estimates of $1.27 to $1.32 per diluted share of FFO are within the
Company’s previously reported guidance.
The revised estimates include approximately $0.4 million of
severance charges recorded in the third quarter and an
approximately $4.0 million loss on the early extinguishment of
indebtedness expected to be reported in the fourth quarter that
were not included in the Company’s previously reported
guidance.
The revised estimates also reflect the impact on weighted
average shares outstanding of the Company’s recent common stock
offering. As previously announced, the Company may use a portion of
the proceeds from its common stock offering to repurchase its
preferred stock or senior unsecured notes. If the Company does so,
it could incur additional charges in the fourth quarter of 2009 in
connection with any repurchases completed in 2009, which charges
are not included in its 2009 guidance described above.
Additionally, while the Company’s 2009 guidance includes a $76.3
million loss relating to non-cash impairment charges, it does not
assume any additional impairment charges for 2009. The Company
continually evaluates the recoverability of the carrying value of
its real estate assets and there can be no assurance that the
Company will not take additional impairment charges in the
future.
The revised estimates also assume that the Company’s same store
net operating income for its fiscal year ending December 31, 2009
will be within the range of its previously reported guidance, as
follows:
- same store revenues are expected
to decline by 4.1% to 4.3% for the full year 2009, compared to
2008,
- same store operating expenses
are expected to decline by 1.9% to 2.5% for the full year 2009,
compared to 2008, and
- same store net operating income
is expected to decline by 5.2% to 5.9% for the full year 2009,
compared to 2008.
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 For Investors/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://get.adobe.com/reader/.
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 21 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 (“NOI”) – 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,
November 3, at 10:00 a.m. ET. The telephone numbers are
888-686-9703 for US and Canada callers and 913-981-5532 for
international callers. The access code is 2149705. The conference
call will be open to the public and can be listened to live on
Post’s website at www.postproperties.com under For Investors/Event
Calendar. The replay will begin at 1:00 p.m. ET on Tuesday,
November 3, and will be available until Monday, November 9, 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 2149705. A
replay of the call also will be archived on Post’s website under
For Investors/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 For Investors/Financial
Reports/Quarterly & Other Reports section of the Company’s
website at www.postproperties.com.
About Post
Post Properties, founded more than 38 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 has also developed high-quality condominiums and
converted existing apartments to for-sale multifamily communities.
Post Properties is headquartered in Atlanta, Georgia, and has
operations in nine markets across the country.
Post Properties owns 19,864 apartment units in 55 communities,
including 1,747 apartment units in five communities held in
unconsolidated entities and 1,429 apartment units in four
communities currently under construction and/or in lease-up. The
Company is also developing and selling 277 luxury for-sale
condominium homes in two communities (including 129 units in one
community held in an unconsolidated entity) and is completing the
sell out of units in two other condominium conversion communities
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 funds from operations and net operating income for the
year ending December 31, 2009, expected use of proceeds from the
Company’s common stock offering, anticipated losses on early
extinguishment of indebtedness and the Company’s anticipated
development, renovation and remediation activities (including the
projected costs, timing and anticipated potential sources of
financing of projected future development, renovation and
remediation activities). 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 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, 2008 and in
subsequent 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; a
downgrade in the credit rating of the Company’s securities; 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, including the lack of demand for for-sale housing and the
Company’s inability to sell for-sale products at attractive pricing
levels; 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 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 the Company 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; the costs of remediating damage
to the Company’s communities that have stucco or exterior
insulation finishing systems for potential water penetration and
other related issues; 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, 2008 and may be
discussed in subsequent filings with the SEC. The risk factors
discussed in Form 10-K 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 Nine months
ended September 30, September 30,
2009 2008 2009
2008 OPERATING DATA Revenues from
continuing operations $ 69,388 $ 71,910 $ 207,684 $ 212,173 Net
income (loss) attributable to common shareholders $ 50,226 $ 25,167
$ (66 ) $ (1,029 )
Funds (deficit) from operations
available to common shareholders and unitholders (Table 1)
$ 13,857 $ 16,136 $ (28,191 ) $ 17,405 Weighted average
shares outstanding - diluted 44,220 44,047 44,151 43,976 Weighted
average shares and units outstanding - diluted 44,419 44,340 44,363
44,306 PER COMMON SHARE DATA - DILUTED Net income (loss)
attributable to common shareholders $ 1.13 $ 0.57 $ - $ (0.02 )
Funds (deficit) from operations
available to common shareholders and unitholders (Table 1) (1)
$ 0.31 $ 0.36 $ (0.63 ) $ 0.39 Dividends declared $ 0.20 $
0.45 $ 0.60 $ 1.35
(1) Funds (deficit) from
operations per share were computed using weighted average shares
and units outstanding, including the impact of dilutive securities
totaling 39 and 110 for the three months ended and 0 and 242 for
the nine months ended September 30, 2009 and 2008,
respectively. These dilutive securities were
antidilutive to the computation of income (loss) per share, as the
Company reported a loss from continuing operations for these
periods under generally accepted accounting
principles. Additionally, diluted weighted average
shares and units included the impact of non-vested shares and units
totaling 226 and 80 for the three months ended and 215 and 92 for
the nine months ended September 30, 2009 and 2008, respectively,
for the computation of funds (deficit) from operations per
share. Such non-vested shares and units are considered
in the income (loss) per share computations under generally
accepted accounting principles using the “two-class method.”
Table 1
Reconciliation of Net Income
Available to Common Shareholders to
Funds From Operations Available to
Common Shareholders and Unitholders
(Unaudited; in thousands, except
per share amounts)
Three months ended Nine months
ended September 30, September 30,
2009 2008
2009 2008 Net income
(loss) available to common shareholders $ 50,226 $ 25,167 $ (66
) $ (1,029 ) Noncontrolling interests - Operating Partnership 248
198 - (8 ) Depreciation on consolidated real estate assets, net
18,284 14,569 52,862 45,851
Depreciation on real estate assets
held in unconsolidated entities
352 347 1,052 1,042 Gains on sales of apartment communities (54,624
) (23,520 ) (79,366 ) (25,831 ) Gains on sales of condominiums
(1,069 ) (476 ) (1,041 ) (2,227 ) Incremental gains on condominium
sales (1) 440 (149 ) (1,632 )
(393 )
Funds (deficit) from operations
available to common shareholders and unitholders
$ 13,857 $ 16,136 $ (28,191 ) $ 17,405
Funds (deficit) from operations
- per share and unit - diluted (2)
$ 0.31 $ 0.36 $ (0.63 ) $ 0.39
Weighted
average shares and units outstanding - diluted (2)
44,684 44,530 44,578
44,640
(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 15 of the Supplemental Financial Data for further
detail.
(2) Diluted weighted average
shares and units include the impact of dilutive securities totaling
39 and 110 for the three months ended and 0 and 242 for the nine
months ended September 30, 2009 and 2008, respectively. These
dilutive securities were antidilutive to the computation of income
(loss) per share, as the Company reported a loss from continuing
operations for this period under generally accepted accounting
principles. Additionally, diluted weighted average shares and units
included the impact of non-vested shares and units totaling 226 and
80 for the three months ended and 215 and 92 for the nine months
ended September 30, 2009 and 2008, respectively, for the
computation of funds (deficit) from operations per share. Such
non-vested shares and units are considered in the income (loss) per
share computations under generally accepted accounting principles
using the “two-class method.”
Table 2
Reconciliation of Same Store Net
Operating Income (NOI) to GAAP Net Income
(Unaudited; In thousands)
Three months ended Nine
months ended September 30, September 30,
June 30, September 30, September
30, 2009 2008 2009 2009 2008
Total same store NOI $ 32,277 $ 35,845 $ 34,590 $ 101,491 $ 104,984
Property NOI from other operating
segments
2,905 1,668 1,593
6,128 2,727 Consolidated property NOI
35,182 37,513 36,183
107,619 107,711 Add (subtract): Interest
income 49 96 23 187 367 Other revenues 298 261 277 801 735
Depreciation (18,787 ) (14,980 ) (18,009 ) (54,388 ) (45,290 )
Interest expense (12,978 ) (12,340 ) (12,241 ) (39,397 ) (34,375 )
Amortization of deferred financing costs (726 ) (869 ) (682 )
(2,342 ) (2,579 ) General and administrative (3,892 ) (3,859 )
(3,964 ) (12,265 ) (13,344 ) Investment and development (1,096 )
(1,509 ) (793 ) (2,886 ) (4,173 ) Other investment costs (697 )
(463 ) (646 ) (1,996 ) (962 ) Strategic review costs - - - - (8,161
) Impairment, severance and other charges (391 ) (5,002 ) (9,658 )
(10,049 ) (34,302 ) Gains (losses) on sales of real estate assets,
net 1,069 476 232 1,041 2,227
Equity in income (loss) of
unconsolidated real estate entities
(31 ) 260 (74,656 ) (74,577 ) 1,081 Other income (expense), net
(472 ) 535 50 637 427 Net gain (loss) on early extinguishment of
indebtedness - - (79 )
819 - Income (loss) from continuing
operations (2,472 ) 119 (83,963 ) (86,796 ) (30,638 ) Income from
discontinued operations 54,861 27,344
26,768 84,238 35,691
Net income (loss) $ 52,389 $ 27,463 $ (57,195
) $ (2,558 ) $ 5,053
Table 3
Same Store Net Operating Income
(NOI) and Average Rental Rate per Unit by Market
(In thousands)
Three months ended Q3 '09 Q3
'09 Q3 '09 September 30,
September 30, June 30, vs. Q3 '08
vs. Q2 '09 % Same 2009 2008 2009
% Change % Change Store NOI Rental and other
revenues Atlanta $ 14,040 $ 15,075 $ 14,422 (6.9 )% (2.6 )% Dallas
10,766 11,784 10,982 (8.6 )% (2.0 )% Washington, D.C. 10,192 10,400
10,215 (2.0 )% (0.2 )% Tampa 6,908 7,141 6,966 (3.3 )% (0.8 )%
Charlotte 4,371 4,937 4,443 (11.5 )% (1.6 )% New York 3,467 3,809
3,634 (9.0 )% (4.6 )% Houston 3,074 3,134 3,072 (1.9 )% 0.1 %
Austin 1,206 1,299 1,196 (7.2 )% 0.8 % Orlando 2,337
2,379 2,362 (1.8 )% (1.1 )% Total rental and other revenues
56,361 59,958 57,292 (6.0 )% (1.6 )%
Property operating and maintenance
expenses (exclusive of depreciation and amortization)
Atlanta 6,720 6,461 5,958 4.0 % 12.8 % Dallas 5,147 5,143 4,650 0.1
% 10.7 % Washington, D.C. 3,647 3,746 3,524 (2.6 )% 3.5 % Tampa
2,614 2,930 2,866 (10.8 )% (8.8 )% Charlotte 1,696 1,633 1,588 3.9
% 6.8 % New York 1,436 1,119 1,206 28.3 % 19.1 % Houston 1,290
1,464 1,259 (11.9 )% 2.5 % Austin 573 589 541 (2.7 )% 5.9 % Orlando
961 1,028 1,110 (6.5 )% (13.4 )% Total
24,084 24,113 22,702 (0.1 )% 6.1 % Net
operating income Atlanta 7,320 8,614 8,464 (15.0 )% (13.5 )% 22.7 %
Dallas 5,619 6,641 6,332 (15.4 )% (11.3 )% 17.4 % Washington, D.C.
6,545 6,654 6,691 (1.6 )% (2.2 )% 20.3 % Tampa 4,294 4,211 4,100
2.0 % 4.7 % 13.3 % Charlotte 2,675 3,304 2,855 (19.0 )% (6.3 )% 8.3
% New York 2,031 2,690 2,428 (24.5 )% (16.4 )% 6.3 % Houston 1,784
1,670 1,813 6.8 % (1.6 )% 5.5 % Austin 633 710 655 (10.8 )% (3.4 )%
2.0 % Orlando 1,376 1,351 1,252 1.9 % 9.9 %
4.2 % Total same store NOI $ 32,277 $ 35,845 $ 34,590 (10.0 )% (6.7
)% 100.0 % Average rental rate per unit Atlanta $
1,073 $ 1,152 $ 1,114 (6.9 )% (3.6 )% Dallas 1,047 1,108 1,078 (5.5
)% (2.9 )% Washington, D.C. 1,780 1,819 1,787 (2.1 )% (0.4 )% Tampa
1,180 1,250 1,214 (5.6 )% (2.8 )% Charlotte 1,055 1,188 1,108 (11.2
)% (4.8 )% New York 3,730 3,911 3,843 (4.6 )% (2.9 )% Houston 1,247
1,266 1,263 (1.5 )% (1.2 )% Austin 1,296 1,351 1,325 (4.1 )% (2.2
)% Orlando 1,307 1,417 1,339 (7.8 )% (2.4 )% Total average rental
rate per unit 1,253 1,326 1,287 (5.5 )% (2.6 )%
Table 3 (con’t)
Same Store Net Operating Income
(NOI) and Average Rental Rate per Unit by Market
(In thousands)
Nine months ended September 30,
September 30, 2009 2008 % Change
Rental and other revenues Atlanta $ 42,981 $ 44,831 (4.1 )%
Dallas 32,937 34,677 (5.0 )% Washington, D.C. 30,529 30,930 (1.3 )%
Tampa 20,904 21,424 (2.4 )% Charlotte 13,391 14,633 (8.5 )% New
York 10,775 11,302 (4.7 )% Houston 9,208 9,235 (0.3 )% Austin 3,616
3,770 (4.1 )% Orlando 7,005 7,062 (0.8 )% Total
rental and other revenues 171,346 177,864 (3.7 )%
Property operating and maintenance
expenses (exclusive of depreciation and amortization)
Atlanta 18,743 18,661 0.4 % Dallas 14,351 15,846 (9.4 )%
Washington, D.C. 10,756 11,003 (2.2 )% Tampa 8,311 9,223 (9.9 )%
Charlotte 4,859 5,112 (4.9 )% New York 4,062 3,710 9.5 % Houston
4,005 4,377 (8.5 )% Austin 1,675 1,772 (5.5 )% Orlando 3,093
3,176 (2.6 )% Total 69,855 72,880 (4.2 )%
Net operating income Atlanta 24,238 26,170 (7.4 )% Dallas
18,586 18,831 (1.3 )% Washington, D.C. 19,773 19,927 (0.8 )% Tampa
12,593 12,201 3.2 % Charlotte 8,532 9,521 (10.4 )% New York 6,713
7,592 (11.6 )% Houston 5,203 4,858 7.1 % Austin 1,941 1,998 (2.9 )%
Orlando 3,912 3,886 0.7 % Total same store NOI $
101,491 $ 104,984 (3.3 )% Average rental rate per
unit Atlanta $ 1,107 $ 1,149 (3.7 )% Dallas 1,073 1,102 (2.6 )%
Washington, D.C. 1,789 1,813 (1.3 )% Tampa 1,208 1,277 (5.4 )%
Charlotte 1,105 1,187 (6.9 )% New York 3,837 3,894 (1.5 )% Houston
1,259 1,248 0.9 % Austin 1,322 1,334 (0.9 )% Orlando 1,340 1,443
(7.1 )% Total average rental rate per unit 1,283 1,326 (3.2 )%
Table 4
Computation of Debt Ratios
(In thousands)
As of September 30, 2009 2008
Total real estate assets per balance sheet $ 2,099,926 $ 2,123,061
Plus: Company share of real estate assets held in unconsolidated
entities 92,185 113,210 Company share of accumulated depreciation -
assets held in unconsolidated entities 8,324 6,499 Accumulated
depreciation per balance sheet 605,694 514,029 Accumulated
depreciation on assets held for sale - 86,383
Total undepreciated real estate assets
(A) $
2,806,129 $ 2,843,182 Total debt per balance
sheet $ 1,056,499 $ 1,043,418 Plus: Company share of third party
debt held in unconsolidated entities 106,969
74,928 Total debt (adjusted for joint venture partners'
share of debt)
(B) $ 1,163,468 $ 1,118,346
Total debt as a % of undepreciated
real estate assets (adjusted for joint venture partners' share of
debt (B÷A)
41.5 % 39.3 %
Total debt per balance sheet $ 1,056,499 $ 1,043,418 Plus: Company
share of third party debt held in unconsolidated entities 106,969
74,928 Preferred shares at liquidation value 95,000
95,000
Total debt and preferred equity
(adjusted for joint venture partners' share of debt) (C)
$ 1,258,468 $ 1,213,346
Total debt and preferred equity as
a % of undepreciated real estate assets (adjusted for joint venture
partners' share of debt) (C÷A)
44.8 % 42.7 %
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