Post Properties, Inc. (NYSE: PPS) announced today net income
available to common shareholders of $21.7 million, or $0.44 per
diluted share, for the third quarter of 2010, compared to $50.2
million, or $1.13 per diluted share, for the third quarter of
2009.
The Company also announced a net loss attributable to common
shareholders of $16.9 million for the nine months ended September
30, 2010, compared to a net loss of $0.1 million for the nine
months ended September 30, 2009. On a diluted per share basis, the
net loss attributable to common shareholders was $0.35 for the nine
months ended September 30, 2010, compared to a net loss of less
than $0.01 for the nine months ended September 30, 2009.
The Company’s net income (loss) available to common shareholders
for the three and nine months ended September 30, 2010 included a
net gain of $20.9 million related to the acquisition of all
remaining interests in its Atlanta condominium project and adjacent
land and infrastructure and the acquisition of the related
construction loans. The Company’s net income for the nine months
ended September 30, 2010 also included non-cash impairment charges
of approximately $35.1 million primarily relating to the Company’s
Austin condominium project.
The Company’s net income available to common shareholders for
the three and nine months ended September 30, 2009 included net
gains of $54.6 million and $79.4 million, respectively, on the
sales of apartment communities, offset by severance charges of $0.4
million in the third quarter of 2009. The Company’s net income
available to common shareholders for the nine months ended
September 30, 2009 also included non-cash impairment charges of
$76.3 million relating to the Company’s investment in the Atlanta
condominium project and adjacent land and infrastructure, partially
offset by gains of $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.
Said David Stockert, CEO and President of Post, “We are pleased
with the Company’s results this quarter, which exceeded our
expectations. Apartment market conditions continued to improve and
we were able to grow revenues on a sequential basis in every one of
our markets. As a result, we again increased our guidance for funds
from operations for the full year 2010. We took advantage of the
favorable interest environment to refinance debt maturing in the
near term and to preserve the Company's substantial liquidity, and
completed a series of transactions that allow us to open our
Atlanta condominium project and begin closing units.”
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 2010 was $40.3 million, or $0.82
per diluted share, compared to $13.9 million, or $0.31 per diluted
share, for the third quarter of 2009. The Company’s reported FFO
for the third quarter of 2010 included the net gain discussed above
totaling $20.9 million, or $0.43 per diluted share. The Company’s
reported FFO for the third quarter of 2009 included the severance
charges discussed above totaling $0.4 million, or $0.01 per diluted
share.
FFO for the nine months ended September 30, 2010 was $38.1
million, or $0.78 per diluted share, compared to a deficit of $28.2
million, or $0.63 per diluted share, for the nine months ended
September 30, 2009. The Company’s reported FFO for the nine months
ended September 30, 2010 included the net gain discussed above
totaling $20.9 million, offset by the non-cash impairment charges
discussed above of $35.1 million, resulting in total net charges
included in FFO of $14.2 million, or $0.29 per diluted share. The
Company’s reported FFO for the nine months ended September 30, 2009
included the impairment and severance charges discussed above
totaling $76.7 million, offset by the income items discussed above
totaling $2.3 million, resulting in total net charges included in
FFO of $74.4 million, or $1.67 per diluted share.
Mature (Same Store) Community Data
Average economic occupancy at the Company’s 43 mature (same
store) communities, containing 15,713 apartment units, was 95.8%
and 94.4% for the third quarter of 2010 and 2009, respectively.
Total revenues for the mature communities increased 0.1% and
total operating expenses decreased 0.4% during the third quarter of
2010, compared to the third quarter of 2009, resulting in a 0.4%
increase in same store net operating income (“NOI”). The average
monthly rental rate per unit decreased 1.7% during the third
quarter of 2010, compared to the third quarter of 2009.
On a sequential basis, total revenues for the mature communities
increased 1.6% and total operating expenses increased 5.2%,
producing a 0.8% decrease in same store NOI for the third quarter
of 2010, compared to the second quarter of 2010. On a sequential
basis, the average monthly rental rate per unit increased 0.9%. For
the third quarter of 2010, average economic occupancy at the mature
communities was 95.8%, compared to 95.2% for the second quarter of
2010.
For the nine months ended September 30, 2010, average economic
occupancy at the Company’s mature communities was 95.3%, compared
to 93.8% for the nine months ended September 30, 2009.
Total revenues for the mature communities decreased 2.5% and
total operating expenses increased 0.1% for the nine months ended
September 30, 2010, compared to the nine months ended September 30,
2009, resulting in a 4.4% decrease in same store NOI. The average
monthly rental rate per unit decreased 4.6% for the nine months
ended September 30, 2010, compared to the nine months ended
September 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
Post Park® in Hyattsville, MD remains in lease-up and as of
October 29, 2010 is 81% leased. In addition, the Company’s
previously announced development of the second phase of its Post
Carlyle Square™ apartment community in Alexandria, VA is underway
with a total projected development cost of $95 million.
Financing Activity
Debt Financing, Leverage and Line Capacity
In October 2010, as previously announced, the Company completed
its public offering of $150.0 million of senior unsecured notes
bearing interest at 4.75% and due 2017. The Company used a portion
of the net proceeds from this offering to fully repay amounts
outstanding under its revolving credit facilities. The Company
intends to use the remaining net proceeds to repay its outstanding
$100.5 million of 7.70% senior notes at maturity on December 20,
2010, and for general corporate purposes.
Total debt and preferred equity as a percentage of undepreciated
real estate assets (adjusted for joint venture partners’ share of
debt) was 41.4% at September 30, 2010, and variable rate debt as a
percentage of total debt was 3.0% as of that same date.
As of October 29, 2010, the Company had cash and cash
equivalents of $116 million. The Company had no outstanding
borrowings and letters of credit totaling $2.2 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.
Other Capital Markets Activity
The Company has 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. No shares
were issued under this program in the third quarter. For the nine
months ended September 30, 2010, and through the date of this press
release, the Company has sold 41,313 shares, at an average price
per share of $27.70, producing net proceeds of $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 nine months ended September 30, 2010, the
Company repurchased preferred stock with a liquidation value of
approximately $0.1 million and $2.0 million, respectively, under a
rule 10b5-1 repurchase program.
Other Investment Activity
Atlanta Condominium Project – Recent Developments
As previously announced, in September 2010, the residential
portion of the mixed-use development in Atlanta, Georgia,
consisting of 129 luxury condominium units, sponsored by the
Company and its partner, was conveyed to the residential partners
in full redemption of their interest in the mixed-use limited
partnership that was developing the project. In addition, a
subsidiary of the Company acquired the lenders’ interest in the
residential loan facilities relating to the Atlanta condominium
project and adjacent land and infrastructure for aggregate
consideration of $49.8 million.
Subsequent to its acquisition of the residential loans, and in
exchange for the release of the guarantors of the residential
loans, the Company acquired all remaining interests in the entities
that held the Atlanta condominium project and adjacent land and
infrastructure that were not previously held by the Company. The
Company now wholly owns the Atlanta condominium project and
adjacent land and infrastructure and consolidates the Atlanta
condominium project for financial reporting purposes as of
September 30, 2010.
As a result of the above-described transactions, the Company
recorded a net gain of $26.4 million, partially offset by an
impairment loss during the quarter ended September 30, 2010 of $5.5
million on the project in connection with the acquisition of the
underlying residential loans and condominium asset at fair
value.
Condominium Activity
During the third quarter of 2010, the Company sold 28
condominium units at its Austin condominium project for aggregate
gross sales revenue of $28.5 million. As of October 29, 2010, the
Company has, in the aggregate, closed 42 units at the Austin
condominium project and had 33 units under contract. As of that
same date, the Company had 5 units under contract at the Atlanta
condominium project. The Atlanta condominium project is expected to
open in November 2010. There can be no assurance that condominium
units under contract will close.
The Company recognized incremental net gains in FFO, excluding
impairment charges, of $1.2 million from condominium sales
activities during the third quarter of 2010, compared to $0.4
million during the third quarter of 2009. During the nine months
ended September 30, 2010, the Company recognized incremental net
gains in FFO, excluding impairment charges, of $2.1 million from
condominium sales activities, compared to incremental losses of
$1.6 million during the same period in 2009.
Land Sale Activity
During the third quarter of 2010, the Company sold a land parcel
located in Citrus Park, Florida for gross proceeds of $3.8 million.
No gain or loss was recognized, as the land was previously recorded
as held for sale at fair value.
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 $1.36 to $1.40 per
diluted share, excluding the impact of net charges discussed below.
This compares to the Company’s previous outlook for FFO issued last
quarter of $1.24 to $1.32 per diluted share, excluding net
charges.
As discussed above, the Company recorded $14.2 million of
impairment charges, net of gains, in FFO during the first nine
months of 2010.
After the impact of net charges, the Company anticipates that
FFO for the full year 2010 will be in the range of $1.07 to $1.11
per diluted share. This compares to the Company’s previous outlook
issued last quarter for FFO, after net charges, of $0.38 to $0.50
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 -1.5% to -1.7% -2.0% to -2.3% Operating expenses 0.1% to
0.3% 0.4% to 0.7% Net operating income (NOI) -2.6% to -3.1% -3.7%
to -4.3%
The above estimates of FFO assume a current outlook for expected
net income attributable to on-going condominium activities of $0.04
to $0.05 per diluted share for the full year 2010, which compares
to a previously issued outlook for net income attributable to
condominium activities of $0.02 to $0.04 per diluted share (each
excluding the impact of net charges discussed above).
The above estimates of FFO reflect the October 2010 public
unsecured note offering discussed previously, including the
expected use of a portion of the proceeds to repay debt maturing in
December 2010, and the interim investment of such proceeds in cash
and cash equivalents.
Other than the start of the second phase of Post Carlyle
Square™, 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,
November 2, at 10:00 a.m. EST. The telephone numbers are
877-681-3377 for US and Canada callers and 719-325-4929 for
international callers. The access code is 5060344. 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. EST on Tuesday,
November 2, and will be available until Monday, November 8, at
11:59 p.m. EST. 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 5060344. 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 a leading
developer and operator of upscale multifamily communities. 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. Post Properties is headquartered in Atlanta,
Georgia, and has operations in nine markets across the country.
Post Properties has interests in 20,207 apartment units in 56
communities, including 1,747 apartment units in five communities
held in unconsolidated entities, 396 apartment units in one
community currently in lease-up and 344 apartment units in one
community currently under construction. The Company is also
developing and selling 277 luxury for-sale condominium homes in two
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 regarding future operating
conditions, including the Company’s current outlook as to expected
funds from operations, same store operating income, condominium
profits, and overhead expenses for the year ending December 31,
2010, anticipated development activities (including the projected
costs, projected yield, timing and anticipated potential sources of
financing of projected future development activities), expectations
regarding the timing and delivery of completed for-sale condominium
homes, expectations regarding offerings of the Company’s common
stock and the use of proceeds thereof and expectations regarding
the use of proceeds from the Company’s offering of senior unsecured
notes. 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 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; 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 and the U.S. Department of
Justice 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 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 Nine months
ended September 30, September 30, 2010
2009 2010 2009 OPERATING DATA
Revenues from continuing operations $ 72,895 $ 69,388 $ 212,869 $
207,684 Net income (loss) available to common shareholders $ 21,670
$ 50,226 $ (16,948 ) $ (66 )
Funds (deficit) from operations available
to common shareholders and unitholders (Table 1)
$ 40,269 $ 13,857 $ 38,144 $ (28,191 ) Weighted average
shares outstanding - diluted 48,670 44,220 48,446 44,151 Weighted
average shares and units outstanding - diluted 48,841 44,419 48,618
44,363 PER COMMON SHARE DATA - DILUTED Net income (loss)
available to common shareholders $ 0.44 $ 1.13 $ (0.35 ) $ -
Funds (deficit) from operations available
to common shareholders and unitholders (Table 1) (1)
$ 0.82 $ 0.31 $ 0.78 $ (0.63 ) Dividends declared $ 0.20 $
0.20 $ 0.60 $ 0.60
(1) Funds (deficit) from operations per
share was computed using weighted average shares and units
outstanding, including the impact of dilutive securities totaling
39 for the three months ended September 30, 2009 and 134 and 0 for
the nine months ended September 30, 2010 and 2009, 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 212 and 226 for the three months ended and 204
and 215 for the nine months ended September 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 toFunds 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, 2010
2009 2010 2009 Net income
(loss) available to common shareholders $ 21,670 $ 50,226 $
(16,948 ) $ (66 ) Noncontrolling interests - Operating Partnership
76 248 (60 ) - Depreciation on consolidated real estate assets, net
18,167 18,284 54,349 52,862 Depreciation on real estate assets held
in unconsolidated entities 356 352 1,065 1,052 Gains on sales of
apartment communities - (54,624 ) - (79,366 ) Gains on sales of
condominiums (1,184 ) (1,069 ) (2,319 ) (1,041 ) Incremental gains
(losses) on condominium sales (1) 1,184 440
2,057 (1,632 )
Funds (deficit) from
operations available to common shareholders and
unitholders $ 40,269 $ 13,857 $ 38,144 $
(28,191 )
Funds (deficit) from operations - per share and
unit - diluted (2) $ 0.82 $ 0.31 $ 0.78 $
(0.63 )
Weighted average shares and units outstanding - diluted
(2) 49,053 44,684 48,957
44,578
(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 39 for the
three months ended September 30, 2009 and 134 and 0 for the nine
months ended September 30, 2010 and 2009, 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 212 and 226 for the three months and 204 and 215 for the
nine months ended September 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
Nine months ended September 30, September
30, June 30, September 30,
September 30, 2010 2009 2010
2010 2009 Total same store NOI $ 33,903 $ 33,759 $
34,192 $ 101,294 $ 105,940 Property NOI from other operating
segments 4,811 1,423 3,453
10,434 1,679 Consolidated
property NOI 38,714 35,182
37,645 111,728 107,619 Add
(subtract): Interest income 390 49 196 755 187 Other revenues 223
298 271 777 801 Depreciation (18,623 ) (18,787 ) (18,643 ) (55,737
) (54,388 ) Interest expense (13,646 ) (12,978 ) (12,561 ) (38,820
) (39,397 ) Amortization of deferred financing costs (611 ) (726 )
(653 ) (2,097 ) (2,342 ) General and administrative (3,927 ) (3,892
) (3,967 ) (12,570 ) (12,265 ) Investment and development (569 )
(1,096 ) (678 ) (1,849 ) (2,886 ) Other investment costs (669 )
(697 ) (490 ) (1,828 ) (1,996 ) Impairment, severance and other
charges - (391 ) (35,091 ) (35,091 ) (10,049 ) Gains on condominium
sales activities, net 1,184 1,069 187 2,319 1,041
Equity in income (loss) of unconsolidated
real estate entities, net
18,258 (31 ) 173 18,554 (74,577 ) Other income (expense), net 26
(472 ) (142 ) (271 ) 637 Net gain on early extinguishment of
indebtedness 2,845 - -
2,845 819 Income (loss) from
continuing operations 23,595 (2,472 ) (33,753 ) (11,285 ) (86,796 )
Income from discontinued operations - 54,861
- - 84,238
Net income (loss) $ 23,595 $ 52,389 $ (33,753 ) $
(11,285 ) $ (2,558 )
Table 3
Same Store Net Operating Income (NOI) and
Average Rental Rate per Unit by Market
(In thousands)
Three months ended Q3
'10 Q3 '10 Q3 '10 September
30, September 30, June 30, vs. Q3 '09
vs. Q2 '10 % Same 2010 2009 2010
% Change % Change Store NOI Rental and other
revenues Atlanta $ 15,961 $ 15,818 $ 15,653 0.9 % 2.0 % Washington,
D.C. 10,560 10,192 10,352 3.6 % 2.0 % Dallas 10,634 10,766 10,414
(1.2 )% 2.1 % Tampa 7,762 7,839 7,713 (1.0 )% 0.6 % Charlotte 4,251
4,371 4,199 (2.7 )% 1.2 % New York 3,396 3,467 3,394 (2.0 )% 0.1 %
Houston 2,928 3,074 2,856 (4.7 )% 2.5 % Orlando 2,416 2,337 2,376
3.4 % 1.7 % Austin 1,207 1,206 1,207 0.1 % 0.0
% Total rental and other revenues 59,115 59,070
58,164 0.1 % 1.6 %
Property operating and maintenanceexpenses
(exclusive of depreciationand amortization)
Atlanta 7,049 7,610 7,009 (7.4 )% 0.6 % Washington, D.C. 3,888
3,647 3,463 6.6 % 12.3 % Dallas 5,161 5,147 4,708 0.3 % 9.6 % Tampa
2,977 2,951 2,947 0.9 % 1.0 % Charlotte 1,831 1,696 1,691 8.0 % 8.3
% New York 1,426 1,436 1,406 (0.7 )% 1.4 % Houston 1,338 1,290
1,286 3.7 % 4.0 % Orlando 971 961 945 1.0 % 2.8 % Austin 571
573 517 (0.3 )% 10.4 % Total 25,212
25,311 23,972 (0.4 )% 5.2 % Net operating income
Atlanta 8,912 8,208 8,644 8.6 % 3.1 % 26.2 % Washington, D.C. 6,672
6,545 6,889 1.9 % (3.1 )% 19.7 % Dallas 5,473 5,619 5,706 (2.6 )%
(4.1 )% 16.1 % Tampa 4,785 4,888 4,766 (2.1 )% 0.4 % 14.1 %
Charlotte 2,420 2,675 2,508 (9.5 )% (3.5 )% 7.2 % New York 1,970
2,031 1,988 (3.0 )% (0.9 )% 5.8 % Houston 1,590 1,784 1,570 (10.9
)% 1.3 % 4.7 % Orlando 1,445 1,376 1,431 5.0 % 1.0 % 4.3 % Austin
636 633 690 0.5 % (7.8 )% 1.9 % Total same
store NOI $ 33,903 $ 33,759 $ 34,192 0.4 % (0.8 )% 100.0 %
Average rental rate per unit Atlanta $ 1,049 $ 1,071 $ 1,037
(2.1 )% 1.2 % Washington, D.C. 1,813 1,780 1,786 1.9 % 1.5 % Dallas
1,013 1,047 1,006 (3.2 )% 0.7 % Tampa 1,189 1,196 1,179 (0.6 )% 0.8
% Charlotte 1,009 1,055 1,010 (4.4 )% (0.1 )% New York 3,631 3,730
3,591 (2.7 )% 1.1 % Houston 1,180 1,247 1,183 (5.4 )% (0.3 )%
Orlando 1,302 1,307 1,287 (0.4 )% 1.2 % Austin 1,288 1,296 1,279
(0.6 )% 0.7 % Total average rental rate per unit 1,226 1,247 1,215
(1.7 )% 0.9 %
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, 2010 2009 % Change
Rental and other revenues Atlanta $ 47,210 $ 48,295 (2.2 )%
Washington, D.C. 30,998 30,529 1.5 % Dallas 31,411 32,937 (4.6 )%
Tampa 23,197 23,652 (1.9 )% Charlotte 12,605 13,391 (5.9 )% New
York 10,073 10,775 (6.5 )% Houston 8,640 9,208 (6.2 )% Orlando
7,131 7,005 1.8 % Austin 3,607 3,616 (0.2 )% Total
rental and other revenues 174,872 179,408 (2.5 )%
Property operating and maintenanceexpenses
(exclusive of depreciationand amortization)
Atlanta 20,969 21,275 (1.4 )% Washington, D.C. 11,184 10,756 4.0 %
Dallas 14,530 14,352 1.2 % Tampa 8,967 9,391 (4.5 )% Charlotte
5,188 4,859 6.8 % New York 4,316 4,062 6.3 % Houston 3,854 4,005
(3.8 )% Orlando 2,961 3,093 (4.3 )% Austin 1,609
1,675 (3.9 )% Total 73,578 73,468 0.1 % Net
operating income Atlanta 26,241 27,020 (2.9 )% Washington, D.C.
19,814 19,773 0.2 % Dallas 16,881 18,585 (9.2 )% Tampa 14,230
14,261 (0.2 )% Charlotte 7,417 8,532 (13.1 )% New York 5,757 6,713
(14.2 )% Houston 4,786 5,203 (8.0 )% Orlando 4,170 3,912 6.6 %
Austin 1,998 1,941 2.9 % Total same store NOI $
101,294 $ 105,940 (4.4 )% Average rental rate per
unit Atlanta $ 1,040 $ 1,104 (5.8 )% Washington, D.C. 1,791 1,789
0.1 % Dallas 1,009 1,073 (6.0 )% Tampa 1,180 1,225 (3.7 )%
Charlotte 1,012 1,105 (8.4 )% New York 3,603 3,837 (6.1 )% Houston
1,184 1,259 (6.0 )% Orlando 1,290 1,340 (3.7 )% Austin 1,280 1,322
(3.2 )% Total average rental rate per unit 1,218 1,277 (4.6 )%
Table 4
Computation of Debt Ratios
(In thousands)
As of September 30, 2010
2009 Total real estate assets per balance sheet $ 2,059,461
$ 2,099,926 Plus: Company share of real estate assets held in
unconsolidated entities 71,857 92,185 Company share of accumulated
depreciation - assets held in unconsolidated entities 10,187 8,324
Accumulated depreciation per balance sheet 673,982
605,694 Total undepreciated real estate assets
(A) $ 2,815,487 $ 2,806,129 Total debt
per balance sheet $ 1,013,972 $ 1,056,499 Plus: Company share of
third party debt held in unconsolidated entities 59,601
106,969 Total debt (adjusted for joint venture
partners' share of debt)
(B) $ 1,073,573 $ 1,163,468
Total debt as a % of undepreciated real
estate assets (adjusted for joint venture partners' share of debt)
(B÷A)
38.1 % 41.5 % Total debt per balance sheet $
1,013,972 $ 1,056,499 Plus: Company share of third party debt held
in unconsolidated entities 59,601 106,969 Preferred shares at
liquidation value 92,963 95,000
Total debt and preferred equity (adjusted
for joint venture partners' share of debt) (C)
$ 1,166,536 $ 1,258,468
Total debt and preferred equity as a % of
undepreciated real estate assets (adjusted for joint venture
partners' share of debt) (C÷A)
41.4 % 44.8 %
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