Post Properties, Inc. (NYSE: PPS) announced today a net loss
attributable to common shareholders of $35.5 million, or $0.73 per
diluted share, for the second quarter of 2010, compared to a net
loss attributable to common shareholders of $50.7 million, or $1.14
per diluted share, for the second quarter of 2009.
The net loss attributable to common shareholders was $38.6
million for the six months ended June 30, 2010, compared to a net
loss of $50.3 million for the six months ended June 30, 2009. On a
diluted per share basis, the net loss attributable to common
shareholders was $0.79 for the six months ended June 30, 2010,
compared to a net loss of $1.13 for the six months ended June 30,
2009.
The Company’s net loss attributable to common shareholders for
the three and six months ended June 30, 2010 and 2009 included
non-cash impairment charges of approximately $35.1 million and
$76.3 million, respectively. For the six months ended June 30,
2009, these charges were partially offset by a net gain of
approximately $24.7 million on the sale of an apartment community,
as well as 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.
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 2010 was a deficit of $17.2
million, or $0.35 per diluted share, compared to a deficit of $59.0
million, or $1.32 per diluted share, for the second quarter of
2009. The Company’s reported FFO for the second quarter of 2010 and
2009 included the non-cash impairment charges discussed above of
approximately $35.1 million and $76.3 million, or $0.72 and $1.71
per diluted share, respectively.
FFO for the six months ended June 30, 2010 was a deficit of $2.1
million, or $0.04 per diluted share, compared to a deficit of $42.0
million, or $0.94 per diluted share, for the first six months of
2009. The Company’s reported FFO for the six months ended June 30,
2010 and 2009 included the non-cash impairment charges discussed
above (offset by the income items discussed above in 2009) of
approximately $35.1 million and $74.0 million, or $0.72 and $1.66
per diluted share, respectively.
Mature (Same Store) Community Data
Average economic occupancy at the Company’s 43 mature (same
store) communities, containing 15,713 apartment units, was 95.2%
and 93.3% for the second quarter of 2010 and 2009,
respectively.
Total revenues for the mature communities decreased 3.0% and
total operating expenses increased 0.4% during the second quarter
of 2010, compared to the second quarter of 2009, resulting in a
5.3% decrease in same store net operating income (“NOI”). The
average monthly rental rate per unit decreased 5.2% during the
second quarter of 2010, compared to the second quarter of 2009.
On a sequential basis, total revenues for the mature communities
increased 1.0% and total operating expenses decreased 1.7%,
producing a 3.0% increase in same store NOI for the second quarter
of 2010, compared to the first quarter of 2010. On a sequential
basis, the average monthly rental rate per unit increased 0.2%. For
the second quarter of 2010, average economic occupancy at the
mature communities was 95.2%, compared to 95.0% for the first
quarter of 2010.
For the six months ended June 30, 2010, average economic
occupancy at the Company’s mature communities was 95.1%, compared
to 93.5% for the six months ended June 30, 2009.
Total revenues for the mature communities decreased 3.8% and
total operating expenses increased 0.4% during the first half of
2010, compared to the first half of 2009, resulting in a 6.6%
decrease in same store NOI. The average monthly rental rate per
unit decreased 6.0% for the six months ended June 30, 2010,
compared to the six months ended June 30, 2009.
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. Information on 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.
Development Activity
During the second quarter of 2010, Post West Austin™ in Austin,
TX and Post Sierra at Frisco Bridges™ in Dallas, TX, achieved
stabilized apartment occupancy. Post Park® in Hyattsville, MD
remained in lease-up as of June 30, 2010, and as of the date of
this press release was more than 70% leased.
The Company today announced the planned development of the
second phase of its Post Carlyle Square™ apartment community in
Alexandria, VA. The second phase of Post Carlyle Square™ is planned
to consist of 344 luxury apartment units with an average unit size
of approximately 906 square feet, and a total estimated development
cost of approximately $95 million. The Company currently expects
that the stabilized yield on the project will be approximately
7.3%, after a 3% management fee and $300 per unit reserve, and
based on rents, without trending, that the Company is currently
achieving at phase I of Post Carlyle Square™. The Company believes
that by commencing this development at this time, it will benefit
from cyclically low construction pricing. Additionally, first
apartment unit deliveries are anticipated in the second quarter of
2012, a time of expected favorable multifamily supply and demand
conditions in the greater Washington, DC market. The Company
expects to initially fund future estimated construction
expenditures primarily by utilizing available borrowing capacity
under its unsecured revolving lines of credit.
Said David P. Stockert, CEO and President of Post Properties,
“In the second quarter, we continued to benefit from the positive
trends in multifamily fundamentals across our markets. We increased
revenues, compared with the prior quarter, on a combination of
higher average rents and occupancy. As a result, we expect to
produce full-year portfolio results meaningfully better than we had
forecast coming into 2010. The metro DC development announced today
is an opportunity to create value, taking advantage of this
improving outlook.”
Financing Activity
Leverage and Line Capacity
Total debt and preferred equity as a percentage of undepreciated
real estate assets (adjusted for joint venture partners’ share of
debt) was 43.3% at June 30, 2010, and variable rate debt as a
percentage of total debt was 2.3% as of that same date.
As of July 30, 2010, the Company had outstanding borrowings of
$12 million and letters of credit totaling approximately $2 million
under its combined $430 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.
Capital Market Activity
As previously announced in February 2010, the Company initiated
an at-the-market common equity program for the sale of up to four
million shares of common stock. The Company expects to use this
program as an additional source of capital and liquidity and to
maintain the strength of its balance sheet. Sales under this
program will be dependent upon a variety of factors, including,
among others, market conditions, the trading price of the Company’s
common stock and potential use of proceeds. During the three and
six months ended June 30, 2010, and through the date of this press
release, the Company sold 41,313 shares, at an average price per
share of $27.70, producing net proceeds of approximately $1.1
million under this program. There can be no assurance that the
Company will sell additional shares under this program.
During the three and six months ended June 30, 2010, the Company
repurchased preferred stock with a liquidation value of
approximately $1.0 million and $2.0 million, respectively, under a
rule 10b5-1 repurchase program.
Other Investment Activity
Apartment Community Remediation Activity
As of June 30, 2010, the Company had substantially completed its
initiative to remediate communities with stucco exteriors or
exterior insulation finishing systems. Through June 30, 2010, the
Company had incurred approximately $42.9 million of capital
expenditures relating to these remediation projects, and expects
that total costs will be within its previous estimate, not to
exceed $45 million.
Condominium Activity
During the second quarter of 2010, the Company completed the
sell-out of its condominium conversion community in Houston, TX,
and commenced closing units at its condominium development in
Austin, TX. Additionally, as of June 30, 2010, the Company remained
in discussions with its construction lenders for its condominium
development in Atlanta, GA, and, as a consequence, had not executed
any unit sales contracts at this project.
The Company recognized incremental gains in FFO, excluding
impairment charges, of approximately $0.2 million from condominium
sales activities during the second quarter of 2010, compared to
incremental losses, excluding impairment charges, of approximately
$1.0 million during the second quarter of 2009. During the second
quarter of 2010, the Company sold 10 condominium units for
aggregate gross sales revenues of approximately $15.9 million,
compared to 26 condominium units sold in the second quarter of 2009
for aggregate gross sales revenues of approximately $6.2
million.
Non-Cash Impairment Charges
As discussed above, the Company began closing units at its
condominium development in Austin, TX during the second quarter of
2010. As a result, the project is now considered “held for sale”
for financial reporting purposes requiring the Company to record
the asset at fair value, determined utilizing a discounted cash
flow model. The Company recorded a non-cash impairment charge
during the second quarter of 2010 of approximately $34.7 million to
record the asset at fair value for financial reporting purposes.
The non-cash impairment charge was substantially consistent with
the Company’s prior disclosures on this matter. The Company’s
condominium development in Atlanta, GA was not deemed “held for
sale” as of June 30, 2010, and no additional impairment loss was
recorded related to this asset during the second quarter; however,
if the asset had been deemed “held for sale,” the unconsolidated
entity that holds the asset may have recorded an additional
impairment of $5 million to $7 million (see revised 2010 outlook
below for further discussion). The Company also recorded a non-cash
impairment charge of approximately $0.4 million during the second
quarter of 2010 relating to a land parcel in Tampa, FL that it
contemplates selling in a future period.
Revised 2010 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 of 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 anticipates that FFO
for the full year 2010 will be in the range of $1.24 to $1.32 per
diluted share, excluding the impact of non-cash impairment charges
discussed below. This compares to the Company’s previous outlook
for FFO issued earlier this year of $0.98 to $1.12 per diluted
share, excluding impairment charges.
As discussed above, the Company recorded $35.1 million of
impairment charges in the second quarter of 2010. In addition, the
Company’s estimates of FFO, including charges, assume that the
Company may record an additional impairment charge of $5 million to
$7 million in connection with its Atlanta condominium development
in the third quarter of 2010. At that time, the project may be
classified as “held for sale” for financial reporting purposes,
requiring the Company to write the asset down to its estimated fair
value. There can be no assurance, however, that the Company’s
estimates will not change in future periods or that any impairment
charge will actually be realized.
After the impact of actual and potential additional impairment
charges, the Company anticipates that FFO for the full year 2010
will be in the range of $0.38 to $0.50 per diluted share. This
compares to the Company’s previous outlook issued earlier this year
for FFO, after impairment charges, of $0.18 to $0.32 per diluted
share.
The above estimates of FFO assume the following expected changes
in same store NOI for 2010, compared to 2009:
Current
Outlook
Previously
Issued
Outlook
Revenue -2.0% to -2.3% -3.4% to -4.1% Operating expenses 0.4% to
0.7% 1.6% to 2.4% Net operating income (NOI) -3.7% to -4.3% -6.9%
to -8.6%
The above estimates of FFO also assume a current outlook for
expected net income attributable to on-going condominium activities
of $0.02 to $0.04 per diluted share for the full year 2010, which
compares to a previously issued outlook for a net loss attributable
to condominium activities of $0.01 to $0.04 per diluted share (each
excluding the impact of actual and potential additional impairment
charges discussed above).
During the second half of 2010, the Company expects that
interest capitalized to development projects will decline by
approximately $3 million, or $0.06 per diluted share, compared to
interest capitalized in the first half of 2010.
Other than the start of the second phase of Post Carlyle Square™
announced today, the Company’s outlook does not assume any
additional development starts in 2010, nor does it assume any
acquisitions or dispositions of apartment communities in 2010.
Other current assumptions regarding the Company’s overhead
expenses are substantially unchanged from those made in its
previously issued 2010 outlook.
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 preferred stock redemption
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 is the line on the Company’s consolidated statements
of cash flows entitled “property capital expenditures,” which also
includes revenue generating 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 3, at 10:00 a.m. ET. The telephone numbers are 877-741-4251
for US and Canada callers and 719-325-4887 for international
callers. The access code is 1324344. 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, August 3, and will be
available until Monday, August 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 1324344. 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 39 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 19,863 apartment units in 55 communities,
including 1,747 apartment units in five communities held in
unconsolidated entities and 396 apartment units in one community
currently 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)
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 regarding future operating
conditions, including the Company’s current outlook as to expected
funds from operations, same store operating income, condominium
profits, overhead expenses and potential additional impairment
charges for the year ending December 31, 2010, anticipated
development and remediation activities (including the projected
costs, projected yield, timing and anticipated potential sources of
financing of projected future development and remediation
activities), expectations regarding the timing and delivery of
completed for-sale condominium homes and expectations regarding
offerings of the Company’s common stock and the use of proceeds
thereof. 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 for the year ended December 31, 2009 and
in subsequent filings with the SEC; future local and national
economic conditions, including changes in job growth, interest
rates, the availability of mortgage and other financing and related
factors; uncertainties associated with the global capital markets,
including the continued availability of traditional sources of
capital and liquidity and related factors; conditions affecting
ownership of residential real estate and general conditions in the
multi-family residential real estate market; the effects on the
financial markets of the emergency stabilization actions of the
U.S. government, U.S. Treasury, Federal Reserve and other
governmental and regulatory bodies; uncertainties associated with
the Company’s real estate development and construction;
uncertainties associated with the timing and amount of apartment
community sales; the Company’s ability to generate sufficient cash
flows to make required payments associated with its debt financing;
the effects of the Company’s leverage on its risk of default and
debt service requirements; the impact of a downgrade in the credit
rating of the Company’s securities; the impact of the lack of sales
of condominium units at the Atlanta Condominium Project; the
effects of a default by the Company or its subsidiaries on an
obligation to repay outstanding indebtedness, including
cross-defaults and cross-acceleration under other indebtedness or
the responsibility for limited recourse guarantees; the effects of
covenants of the Company’s or its subsidiaries’ mortgage
indebtedness on operational flexibility and default risks; the
Company’s ability to maintain its current dividend level;
uncertainties associated with the Company’s condominium for-sale
housing business, including the timing and volume of condominium
sales and including the ability to sell units above sales prices
required by the lender; the impact of any additional charges the
Company may be required to record in the future related to any
impairment in the carrying value of its assets; the impact of
competition on the Company’s business, including competition for
residents in the Company’s apartment communities and buyers of the
Company’s for-sale condominium homes and development locations; the
effectiveness of interest rate hedging contracts; the Company’s
ability to succeed in new markets; the costs associated with
compliance with laws requiring access to the Company’s properties
by persons with disabilities; the impact of the Company’s ongoing
litigation with the Equal Rights Center regarding the Americans
with Disabilities Act and the Fair Housing Act as well as the
impact of other litigation; the effects of losses from natural
catastrophes in excess of insurance coverage; uncertainties
associated with environmental and other regulatory matters; the
costs associated with moisture infiltration and resulting mold
remediation; 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;
the Company’s ability to control joint ventures, properties in
which it has joint ownership and corporations and limited
partnership in which it has partial interests; the Company’s
ability to renew leases or relet units as leases expire; the
Company’s ability to continue to qualify as a REIT under the
Internal Revenue Code; and the effects of changes in accounting
policies and other regulatory matters detailed in the Company’s
filings with the Securities and Exchange Commission. Other
important risk factors regarding the Company are included under the
caption “Risk Factors” in the Company’s Annual Report on Form 10-K
for the year ended December 31, 2009 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 Six months
ended June 30, June 30, 2010
2009 2010
2009 OPERATING DATA Revenues from continuing
operations $ 70,831 $ 69,118 $ 139,974 $ 138,296 Net loss
attributable to common shareholders $ (35,543 ) $ (50,705 ) $
(38,618 ) $ (50,292 ) Funds (deficit) from operations available to
common
shareholders and unitholders
(Table 1)
$ (17,170 ) $ (59,037 ) $ (2,126 ) $ (42,048 ) Weighted
average shares outstanding - diluted 48,432 44,118 48,401 44,116
Weighted average shares and units outstanding - diluted 48,603
44,337 48,574 44,335 PER COMMON SHARE DATA - DILUTED Net
loss attributable to common shareholders $ (0.73 ) $ (1.14 ) $
(0.79 ) $ (1.13 ) Funds (deficit) from operations available
to common shareholders and unitholders (Table 1) (1) $ (0.35 ) $
(1.32 ) $ (0.04 ) $ (0.94 ) Dividends declared $ 0.20 $ 0.20
$ 0.40 $ 0.40
(1) Funds (deficit)
from operations per share was computed using weighted average
shares and units outstanding, including the impact of dilutive
securities totaling 154 and 133 for the three and six months ended
June 30, 2010, 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, basic and diluted weighted
average shares and units included the impact of non-vested shares
and units totaling 217 and 233 for the three months ended and 202
and 209 for the six months ended June 30, 2010 and 2009,
respectively, for the computation of funds 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 Six months
ended June 30, June 30, 2010
2009 2010
2009 Net loss attributable to common
shareholders $ (35,543 ) $ (50,705 ) $ (38,618 ) $ (50,292 )
Noncontrolling interests - Operating Partnership (125 ) (250 ) (136
) (248 ) Depreciation on consolidated real estate assets, net
18,180 17,501 36,182 34,578 Depreciation on real estate assets held
in unconsolidated entities 355 350 709 700 Gains on sales of
apartment communities - (24,742 ) - (24,742 ) Losses (gains) on
sales of condominiums (187 ) (232 ) (1,135 ) 28 Incremental gains
(losses) on condominium sales (1) 150 (959 )
872 (2,072 )
Deficit from operations
attributable to common shareholders and unitholders $
(17,170 ) $ (59,037 ) $ (2,126 ) $ (42,048 )
Funds
(deficit) from operations - per share and unit - diluted (2) $
(0.35 ) $ (1.32 ) $ (0.04 ) $ (0.94 )
Weighted average shares
and units outstanding - diluted (2) 48,974
44,570 48,909 44,544
(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.
(2) Diluted weighted
average shares and units include the impact of dilutive securities
totaling 154 and 133 for the three and six months ended June 30,
2010, 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, basic and diluted weighted
average shares and units included the impact of non-vested shares
and units totaling 217 and 233 for the three months and 202 and 209
for the six months ended June 30, 2010 and 2009, 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 Six months
ended June 30, June 30,
March 31,
June 30, June 30, 2010
2009 2010
2010 2009 Total same store NOI $
34,192 $ 36,121 $ 33,198 $ 67,391 $ 72,181 Property NOI from other
operating segments 3,453 62
2,171 5,623 256 Consolidated
property NOI 37,645 36,183
35,369 73,014 72,437 Add
(subtract): Interest income 196 23 169 365 138 Other revenues 271
277 283 554 503 Depreciation (18,643 ) (18,009 ) (18,471 ) (37,114
) (35,601 ) Interest expense (12,561 ) (12,241 ) (12,613 ) (25,174
) (26,419 ) Amortization of deferred financing costs (653 ) (682 )
(833 ) (1,486 ) (1,616 ) General and administrative (3,967 ) (3,964
) (4,676 ) (8,643 ) (8,373 ) Investment and development (678 ) (793
) (602 ) (1,280 ) (1,790 ) Other investment costs (490 ) (646 )
(669 ) (1,159 ) (1,299 ) Impairment losses (35,091 ) (9,658 ) -
(35,091 ) (9,658 ) Gains (losses) on condominium sales activities,
net 187 232 948 1,135 (28 ) Equity in income (loss) of
unconsolidated real estate entities 173 (74,656 ) 123 296 (74,546 )
Other income (expense), net (142 ) 50 (155 ) (297 ) 1,109 Net gain
(loss) on early extinguishment of indebtedness -
(79 ) - - 819
Loss from continuing operations (33,753 ) (83,963 ) (1,127 )
(34,880 ) (84,324 ) Income from discontinued operations -
26,768 - -
29,377 Net loss $ (33,753 ) $ (57,195 ) $ (1,127 ) $
(34,880 ) $ (54,947 )
Table 3
Same Store Net Operating Income
(NOI) and Average Rental Rate per Unit by Market
(In thousands)
Three months ended
Q2 '10 Q2 '10 Q2 '10
June 30,
June 30, March 31, vs. Q2 '09 vs. Q1
'10 % Same 2010 2009
2010 % Change % Change Store
NOI Rental and other revenues Atlanta $ 15,653 $ 16,197 $
15,596 (3.4 )% 0.4 % Washington, D.C. 10,352 10,215 10,085 1.3 %
2.6 % Dallas 10,414 10,982 10,364 (5.2 )% 0.5 % Tampa 7,713 7,889
7,721 (2.2 )% (0.1 )% Charlotte 4,199 4,443 4,156 (5.5 )% 1.0 % New
York 3,394 3,634 3,282 (6.6 )% 3.4 % Houston 2,856 3,072 2,855 (7.0
)% 0.0 % Orlando 2,376 2,362 2,340 0.6 % 1.5 % Austin 1,207
1,196 1,193 0.9 % 1.2 % Total rental and other
revenues 58,164 59,990 57,592 (3.0 )% 1.0 %
Property operating and maintenance expenses (exclusive of
depreciation and amortization) Atlanta 7,009 6,767 6,911 3.6 % 1.4
% Washington, D.C. 3,463 3,524 3,833 (1.7 )% (9.7 )% Dallas 4,708
4,650 4,662 1.2 % 1.0 % Tampa 2,947 3,224 3,042 (8.6 )% (3.1 )%
Charlotte 1,691 1,588 1,667 6.5 % 1.4 % New York 1,406 1,206 1,484
16.6 % (5.3 )% Houston 1,286 1,259 1,230 2.1 % 4.6 % Orlando 945
1,110 1,045 (14.9 )% (9.6 )% Austin 517 541
520 (4.4 )% (0.6 )% Total 23,972 23,869 24,394
0.4 % (1.7 )% Net operating income Atlanta 8,644 9,430 8,685
(8.3 )% (0.5 )% 25.3 % Washington, D.C. 6,889 6,691 6,252 3.0 %
10.2 % 20.1 % Dallas 5,706 6,332 5,702 (9.9 )% 0.1 % 16.7 % Tampa
4,766 4,665 4,679 2.2 % 1.9 % 13.9 % Charlotte 2,508 2,855 2,489
(12.2 )% 0.8 % 7.4 % New York 1,988 2,428 1,798 (18.1 )% 10.6 % 5.8
% Houston 1,570 1,813 1,625 (13.4 )% (3.4 )% 4.6 % Orlando 1,431
1,252 1,295 14.3 % 10.5 % 4.2 % Austin 690 655
673 5.3 % 2.5 % 2.0 % Total same store NOI $ 34,192 $ 36,121 $
33,198 (5.3 )% 3.0 % 100.0 % Average rental rate per
unit Atlanta $ 1,037 $ 1,110 $ 1,036 (6.6 )% 0.1 % Washington, D.C.
1,786 1,787 1,773 (0.1 )% 0.7 % Dallas 1,006 1,078 1,008 (6.7 )%
(0.2 )% Tampa 1,179 1,229 1,173 (4.1 )% 0.5 % Charlotte 1,010 1,108
1,016 (8.8 )% (0.6 )% New York 3,591 3,843 3,586 (6.6 )% 0.2 %
Houston 1,183 1,263 1,190 (6.3 )% (0.5 )% Orlando 1,287 1,339 1,280
(3.9 )% 0.5 % Austin 1,279 1,325 1,274 (3.5 )% 0.4 % Total average
rental rate per unit 1,215 1,281 1,213 (5.2 )% 0.2 %
Table 3 (con’t)
Same Store Net Operating Income
(NOI) and Average Rental Rate per Unit by Market
(In thousands)
Six months ended June 30,
June 30, 2010 2009 %
Change Rental and other revenues Atlanta $ 31,249 $
32,477 (3.8 )% Washington, D.C. 20,438 20,337 0.5 % Dallas 20,777
22,171 (6.3 )% Tampa 15,435 15,812 (2.4 )% Charlotte 8,355 9,020
(7.4 )% New York 6,677 7,308 (8.6 )% Houston 5,711 6,135 (6.9 )%
Orlando 4,716 4,667 1.0 % Austin 2,400 2,410 (0.4 )%
Total rental and other revenues 115,758 120,337 (3.8
)% Property operating and maintenance expenses (exclusive of
depreciation and amortization) Atlanta 13,921 13,665 1.9 %
Washington, D.C. 7,296 7,108 2.6 % Dallas 9,369 9,205 1.8 % Tampa
5,989 6,440 (7.0 )% Charlotte 3,358 3,164 6.1 % New York 2,890
2,625 10.1 % Houston 2,516 2,715 (7.3 )% Orlando 1,990 2,132 (6.7
)% Austin 1,038 1,102 (5.8 )% Total 48,367
48,156 0.4 % Net operating income Atlanta 17,328
18,812 (7.9 )% Washington, D.C. 13,142 13,229 (0.7 )% Dallas 11,408
12,966 (12.0 )% Tampa 9,446 9,372 0.8 % Charlotte 4,997 5,856 (14.7
)% New York 3,787 4,683 (19.1 )% Houston 3,195 3,420 (6.6 )%
Orlando 2,726 2,535 7.5 % Austin 1,362 1,308 4.1 %
Total same store NOI $ 67,391 $ 72,181 (6.6 )%
Average rental rate per unit Atlanta $ 1,036 $ 1,121 (7.6 )%
Washington, D.C. 1,780 1,793 (0.7 )% Dallas 1,007 1,086 (7.3 )%
Tampa 1,176 1,240 (5.2 )% Charlotte 1,013 1,130 (10.4 )% New York
3,588 3,891 (7.8 )% Houston 1,186 1,266 (6.3 )% Orlando 1,283 1,356
(5.4 )% Austin 1,277 1,335 (4.3 )% Total average rental rate per
unit 1,214 1,292 (6.0 )%
Table 4
Computation of Debt Ratios
(In thousands)
As of June 30, 2010
2009 Total real estate assets per
balance sheet $ 2,066,697 $ 2,132,577 Plus: Company share of real
estate assets held in unconsolidated entities 102,082 80,436
Company share of accumulated depreciation - assets held in
unconsolidated entities 9,631 7,864 Accumulated depreciation per
balance sheet 655,559 587,116 Accumulated depreciation on assets
held for sale - 28,441 Total
undepreciated real estate assets
(A) $ 2,833,969 $
2,836,434 Total debt per balance sheet $ 1,007,340 $
1,086,790 Plus: Company share of third party debt held in
unconsolidated entities 125,758 93,280
Total debt (adjusted for joint venture partners' share of debt)
(B) $ 1,133,098 $ 1,180,070 Total debt
as a % of undepreciated real estate assets (adjusted for joint
venture partners' share of debt)
(B÷A) 40.0 %
41.6 % Total debt per balance sheet $ 1,007,340 $ 1,086,790
Plus: Company share of third party debt held in unconsolidated
entities 125,758 93,280 Preferred shares at liquidation value
93,039 95,000 Total debt and preferred
equity (adjusted for joint venture partners' share of debt)
(C) $ 1,226,137 $ 1,275,070 Total debt
and preferred equity as a % of undepreciated real estate assets
(adjusted for joint venture partners' share of debt)
(C÷A)
43.3 % 45.0 %
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