Post Properties, Inc. (NYSE: PPS) announced today net income
available to common shareholders of $2.4 million, or $0.05 per
diluted share, for the fourth quarter of 2010, compared to a net
loss attributable to common shareholders of $10.8 million, or $0.22
per diluted share, for the fourth quarter of 2009.
The Company’s net loss attributable to common shareholders for
the three months ended December 31, 2009 included $4.4 million of
severance charges as well as a loss of $4.1 million associated with
the early extinguishment of indebtedness.
The Company also announced a net loss attributable to common
shareholders of $14.5 million for the year ended December 31, 2010,
compared to a net loss of $10.9 million for the year ended December
31, 2009. On a diluted per share basis, the net loss attributable
to common shareholders was $0.30 for the year ended December 31,
2010, compared to a net loss of $0.24 for the year ended December
31, 2009.
The Company’s net loss attributable to common shareholders for
the year ended December 31, 2010 included non-cash impairment
charges of approximately $35.1 million primarily relating to the
Company’s Austin condominium project, offset by 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 loss attributable to common shareholders
for the year ended December 31, 2009 included net gains of $79.4
million on the sales of apartment communities and income of $1.8
million relating to the mark-to-market of an interest rate swap
agreement and changes in previous hurricane loss estimates. These
gains were offset by non-cash impairment charges of $76.3 million
relating to the Company’s investment in the Atlanta condominium
project and adjacent land and infrastructure, severance charges of
$4.8 million, an aggregate loss of approximately $3.3 million
related to the early extinguishment of indebtedness and other
charges totaling $0.5 million.
Funds From Operations
The Company uses the National Association of Real Estate
Investment Trusts (“NAREIT”) definition of Funds from Operations
(“FFO”) as an operating measure of the Company’s financial
performance. A reconciliation of FFO to GAAP net income is included
in the financial data (Table 1) accompanying this press
release.
FFO for the fourth quarter of 2010 was $21.1 million, or $0.43
per diluted share, compared to $8.2 million, or $0.17 per diluted
share, for the fourth quarter of 2009.
The Company’s reported FFO for the fourth quarter of 2009
included the severance charges and debt extinguishment loss
discussed above totaling $8.5 million, or $0.17 per diluted
share.
FFO for the year ended December 31, 2010 was $59.3 million, or
$1.21 per diluted share, compared to a deficit of $20.0 million, or
$0.44 per diluted share, for the year ended December 31, 2009.
The Company’s reported FFO for the year ended December 31, 2010
included the non-cash impairment charges discussed above totaling
$35.1 million, offset by the net gain discussed above totaling
$20.9 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 year ended December 31, 2009 included the non-cash
impairment charges, severance charges, debt extinguishment loss and
other charges discussed above totaling approximately $84.9 million,
offset by the income items discussed above totaling approximately
$1.8 million, resulting in total net charges of approximately $83.1
million, or $1.82 per diluted share.
Said Dave Stockert, CEO and President of Post, “The Company
finished the year well, with property revenues in the fourth
quarter turning solidly positive, on a year-over-year basis, on
increasing rents and higher occupancy. Our outlook for 2011
reflects our expectations of the continued improvement and growing
profitability of our business.”
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 94.4% for the fourth quarter of 2010 and 2009,
respectively.
Total revenues for the mature communities increased 1.7% and
total operating expenses decreased 5.5% during the fourth quarter
of 2010, compared to the fourth quarter of 2009, resulting in a
6.9% increase in same store net operating income (“NOI”). The
average monthly rental rate per unit increased 0.7% during the
fourth quarter of 2010, compared to the fourth quarter of 2009.
On a sequential basis, total revenues for the mature communities
decreased 0.7% and total operating expenses decreased 10.5%,
producing a 6.6% increase in same store NOI for the fourth quarter
of 2010, compared to the third quarter of 2010. On a sequential
basis, the average monthly rental rate per unit increased 0.6%. For
the fourth quarter of 2010, average economic occupancy at the
mature communities was 95.2%, compared to 95.8% for the third
quarter of 2010.
For the year ended December 31, 2010, average economic occupancy
at the Company’s mature communities was 95.3%, compared to 94.0%
for the year ended December 31, 2009.
Total revenues for the mature communities decreased 1.5% and
total operating expenses decreased 1.2% for the year ended December
31, 2010, compared to the year ended December 31, 2009, resulting
in a 1.7% decrease in same store NOI. The average monthly rental
rate per unit decreased 3.4% for the year ended December 31, 2010,
compared to the year ended December 31, 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
The Company today announced the planned development of its Post
South Lamar™ apartment community in Austin, TX. Post South Lamar™
is planned to consist of 298 apartment units with an average unit
size of approximately 852 square feet and approximately 8,555
square feet of street-level retail space, and is expected to have a
total estimated development cost of approximately $41.7 million.
The Company currently expects the stabilized yield on the project
will be approximately 7.0%, after a 3% management fee and $300 per
unit reserve, and based on current market rents, without trending.
The Company anticipates that first apartment unit deliveries will
occur in the third quarter of 2012. The Company currently expects
to fund future estimated construction expenditures primarily by
utilizing available borrowings under its unsecured revolving lines
of credit and proceeds under its at-the-market common equity sales
program.
The Company today also announced that its Post Park® apartment
community in Hyattsville, MD, consisting of 396 apartment units,
had achieved stabilized occupancy as of the end of 2010.
Financing Activity
Debt Financing, Leverage and Line Capacity
In December 2010, the Company repaid its $100.5 million of
outstanding 7.7% senior unsecured notes upon their maturity. These
notes were repaid using the proceeds from the Company’s $150.0
million, 4.75% senior unsecured notes offering completed in October
2010.
In January 2011, the Company entered into a new unsecured
revolving line of credit facility. The credit facility was provided
by a syndicate of eight financial institutions arranged by Wells
Fargo Securities, LLC and J.P. Morgan Securities LLC. The credit
facility provides for a $300 million unsecured revolving line of
credit which has a three-year term with a one-year extension
option, and which matures in January 2014. The new credit facility
amends and restates the Company’s existing $400 million unsecured
revolving credit facility. The credit facility has a current stated
interest rate of the London Interbank Offered Rate (LIBOR) plus
2.30% and requires the payment of annual facility fees currently
equal to 0.45% of the aggregate loan commitments. The credit
facility provides for the interest rate and facility fee rate to be
adjusted up or down based on changes in the credit ratings of the
Company’s senior unsecured debt. The credit facility also includes
an uncommitted competitive bid option for up to half of the total
available borrowing facility, as long as the Company maintains its
investment grade credit rating. This option allows participating
banks to bid to provide the Company loans at a rate that is lower
than the stated rate for syndicated borrowings. The credit facility
contains representations, financial and other affirmative and
negative covenants, events of defaults and remedies typical for
this type of facility.
In January 2011, the Company also entered into a new unsecured
revolving line of credit agreement with Wells Fargo Bank, N.A.,
providing for a $30 million unsecured cash management line of
credit which has a three-year term with a one-year extension
option, and which matures in January 2014. The cash management line
carries pricing and terms, including debt covenants, substantially
consistent with those of the syndicated credit facility described
above. The new credit agreement amends and restates the Company’s
existing $30 million unsecured revolving cash management line.
Total debt and preferred equity as a percentage of undepreciated
real estate assets (adjusted for joint venture partners’ share of
debt) was 42.1% at December 31, 2010, and variable rate debt as a
percentage of total debt was 0.0% as of that same date.
As of February 7, 2011, the Company had cash and cash
equivalents of $14.2 million. The Company had no outstanding
borrowings and letters of credit totaling $0.7 million under its
combined $330 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 today announced its intention to redeem all
outstanding shares of its 7-5/8% Series B cumulative redeemable
preferred stock in March 2011 for its redemption value of
approximately $49.6 million, plus accrued and unpaid dividends
through the redemption date. The Company expects to record a charge
of approximately $1.8 million, or $0.04 per diluted share, in the
first quarter of 2011 relating to the write off of original
issuance costs and expenses in connection with the redemption.
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 in 2011 as an additional source of
capital and liquidity, to maintain the strength of its balance
sheet and to fund its planned investment activities. 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 fourth quarter. For the year
ended December 31, 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 $1.1 million under this
program.
Other Investment Activity
Condominium Activity
During the fourth quarter of 2010, the Company closed 17
condominium units at its Austin Condominium Project for aggregate
gross revenue of $18.8 million. During the quarter, the Company
also sold 4 condominium units at its Atlanta Condominium Project
for aggregate gross revenue of $3.5 million. As of February 7,
2011, the Company has, in the aggregate, closed 55 units at the
Austin Condominium Project and had 14 units under contract. As of
that same date, the Company has, in the aggregate, closed 4 units
at the Atlanta Condominium Project and had 6 units under contract.
There can be no assurance that condominium units under contract
will close.
The Company recognized incremental net gains in FFO of $3.8
million from condominium sales activities during the fourth quarter
of 2010, compared to $1.5 million during the fourth quarter of
2009. For the year ended December 31, 2010, the Company recognized
incremental net gains in FFO of $5.9 million from condominium sales
activities, compared to incremental losses of $0.1 million during
the same period in 2009.
Land Activity
Sales
During the fourth quarter of 2010, the Company sold a land
parcel located in Raleigh, North Carolina for gross proceeds of
$5.3 million. No gain or loss was recognized, as the land was
previously recorded as held for sale at fair value.
Purchases
In November 2010, pursuant to the terms of the final trial court
order in connection with a previously disclosed lawsuit involving
the Company’s Post Pentagon Row™ apartment community in Arlington
Co., VA, the land under Pentagon Row was transferred to the Company
and Federal Realty Investment Trust, collectively. The Company paid
$8.8 million for its interest in the property. During the nine
months ended September 30, 2010, the Company recorded $1.1 million
of ground rent expense (including a straight-line rent adjustment
of $0.4 million) at Post Pentagon Row™ that will not recur in
future periods as a result of the Company’s acquisition of the land
underlying the ground lease. Post Pentagon Row™ is included in the
Company’s “same store” communities. The Company also recorded
income of $0.5 million in other income in connection with the
reimbursement of a portion of the ground lease payments it incurred
from the date of the trial court decision to the date of
closing.
2011 Outlook
The estimates and assumptions presented below are forward
looking and are based on the Company’s 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 2011 will be in the range of $1.49 to $1.67 per
diluted share. This outlook assumes that net gains from condominium
sales will be in the range of $0.00 to $0.08 per diluted share (for
purposes of this discussion, “Condo FFO”). Excluding Condo FFO, the
Company anticipates that FFO for the full year 2011 will be in the
range of $1.49 to $1.59 per diluted share (for purposes of this
discussion, “Core FFO”).
As discussed below, the Company expects to record a charge of
approximately $0.04 per diluted share in connection with the
redemption of preferred stock in the first quarter of 2011.
Excluding the impact of this charge, the Company anticipates that
FFO for the full year 2011 will be in the range of $1.53 to $1.71
per diluted share and Core FFO will be in the range of $1.53 to
$1.63 per diluted share.
The above estimates of Core FFO are based on the following
expected changes in same store NOI in 2011, compared to 2010 (see
Table 4 in the Fourth Quarter 2010 Supplemental Financial Data for
2010 net operating income that will make up the 2011 same store
pool):
Revenue 3.7% to 4.3% Operating expenses 1.5%
to 2.1% (1) Net operating income (NOI) 4.8% to 6.2% (1)
(1) Excluding the impact of the elimination of the ground lease
expense associated with the acquisition of the land underlying Post
Pentagon Row™, as discussed above, the range of operating expense
growth would be 2.6% to 3.2%, and the range of NOI growth would be
4.0% to 5.4%.
The above estimates of Core FFO are also based on the following
assumptions:
- Newly stabilized property NOI is
expected to increase just under 50% at the mid-point of the
projected range of Core FFO in 2011, compared to 2010 (see Table 4
in the Fourth Quarter 2010 Supplemental Financial Data for 2010 net
operating income that will make up the 2011 newly stabilized
property pool);
- Interest capitalized to development
projects is expected to decrease just over 50% in 2011, compared to
2010, based on projected construction expenditures of approximately
$80 million in 2011, relating to previously announced construction
starts (the second phase of Post Carlyle™ in Alexandria, VA and
Post South Lamar™ in Austin, TX) and, to a lesser extent, assumed
additional development starts later in 2011; the Company currently
expects that development starts (including Post South Lamar™) will
be at least $100 million in 2011;
- Interest expense (net of amounts
capitalized) is expected to increase by approximately 5% at the
mid-point of the projected range of Core FFO in 2011, compared to
2010, as a result of an expected decrease in interest capitalized
as discussed above, offset by an expected decrease in interest
incurred;
- Preferred dividends are expected to
decrease in 2011, compared to 2010, as a result of the announced
redemption of the Company’s 7-5/8 % Series B preferred shares in
March 2011; the Company expects to record a charge of approximately
$1.8 million, or $0.04 per diluted share, in the first quarter of
2011 in connection with the redemption;
- Diluted shares are expected to increase
in 2011, compared to 2010, based in part on the assumption that a
portion of the projected construction expenditures and the
preferred stock redemption will be funded through the issuance,
over the course of 2011, of approximately one-half of the
approximately 4 million common shares available for issuance under
the Company’s at-the-market common equity sales program;
- No acquisitions or dispositions of
operating real estate assets are currently assumed in 2011;
and
- In the aggregate, general and
administrative expenses, corporate property management expenses and
investment and development expenses (net of amounts capitalized to
development projects) are expected to be flat to down modestly in
2011, compared to 2010.
The Company does not expect to further engage in the for-sale
condominium business in future periods, other than completing the
sell-out of units at its two remaining condominium projects.
Although the Company includes condominium profits in its reported
FFO, the Company’s intention over time is to liquidate its
investment in its two remaining condominium projects and to
redeploy the invested capital back into its core apartment
business. The above estimates of Condo FFO are based on the
following assumptions:
- An assumed quarterly run-rate of
condominium holding expenses (including homeowners’ association
dues, real estate taxes, utilities and administrative and marketing
costs) of up to approximately $0.05 per diluted share per quarter;
if condominium profits are not sufficient to fully cover
condominium holding expenses, it would cause the Company to record
a loss during such period;
- An assumed monthly run-rate of
condominium unit sales averaging approximately 1.5 to 2 units per
month at each of the Company’s condominium projects (see Summary of
Condominium Projects in the Fourth Quarter 2010 Supplemental
Financial Data for additional information); and
- Sales mix, sales velocity and unit
pricing that are relatively consistent with the valuation models
for each of the condominium projects; actual sales mix, sales
velocity and unit pricing can vary significantly from the valuation
models and, as a result, could cause actual condominium profits to
differ materially from the Company’s estimates and, further, could
cause the Company to re-evaluate its valuation models and
assumptions which could result in impairment losses in future
periods.
Annual Meeting of Shareholders
The Company today announced that its Annual Meeting of
Shareholders will be held on May 25, 2011.
Supplemental Financial Data
The Company also produces Supplemental Financial Data that
includes detailed information regarding the Company’s operating
results, investment activity, financing activity, balance sheet and
properties. 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
Wednesday, February 9, at 10:00 a.m. ET. The telephone numbers are
888-299-7230 for US and Canada callers and 719-325-2498 for
international callers. The access code is 8409814. 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 Wednesday,
February 9, and will be available until Tuesday, February, 15, 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 8409814. 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 40 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 20,505 apartment units in 56
communities, including 1,747 apartment units in five communities
held in unconsolidated entities and 642 apartment units at two
communities currently under construction. The Company is also
selling 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, revenue, operating expenses, net operating
income, newly stabilized property net operating income, interest
capitalized to development projects, interest expense, preferred
dividends, number of diluted shares, condominium profits and
underlying assumptions, charges and overhead expenses for the first
quarter and full year 2011, anticipated development activities
(including the projected costs, projected construction
expenditures, projected yield, timing and anticipated potential
sources of financing of projected future development activities),
expectations regarding the for-sale condominium business and the
timing, sales pace and closing volumes of condominium homes,
expectations regarding the redemption of the Company’s 7-5/8%
series B cumulative redeemable preferred stock 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 economic 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
Company’s ability to renew leases or relet units as leases expire;
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 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 Year ended
December 31, December 31, 2010
2009 2010
2009 OPERATING DATA Revenues from continuing
operations $ 72,269 $ 68,640 $ 285,138 $ 276,323 Net income (loss)
available to common shareholders $ 2,441 $ (10,790 ) $ (14,507 ) $
(10,860 ) Funds (deficit) from operations available to common
shareholders and unitholders (Table 1) $ 21,120 $ 8,162 $ 59,264 $
(20,029 ) Weighted average shares outstanding - diluted
48,907 48,230 48,483 45,179 Weighted average shares and units
outstanding - diluted 49,077 48,406 48,655 45,382 PER COMMON
SHARE DATA - DILUTED Net income (loss) available to common
shareholders $ 0.05 $ (0.22 ) $ (0.30 ) $ (0.24 ) Funds
(deficit) from operations available to common shareholders and
unitholders (Table 1) (1) $ 0.43 $ 0.17 $ 1.21 $ (0.44 )
Dividends declared $ 0.20 $ 0.20 $ 0.80 $ 0.80
(1) Funds (deficit) from operations per
share was computed using weighted average shares and units
outstanding, including the impact of dilutive securities totaling
83 for the three months ended December 31, 2009 and 149 and 0 for
the years ended December 31, 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 211 and 221 for the three months ended and 206 and 217 for
the years ended December 31, 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 Year ended December 31,
December 31, 2010
2009 2010 2009
Net income (loss) available to common shareholders $
2,441 $ (10,790 ) $ (14,507 ) $ (10,860 ) Noncontrolling interests
- Operating Partnership 9 (48 ) (51 ) (48 ) Depreciation on
consolidated real estate assets, net 18,313 19,554 72,663 72,420
Depreciation on real estate assets held in unconsolidated entities
357 353 1,422 1,405 Gains on sales of apartment communities - - -
(79,366 ) Gains on sales of condominiums (3,842 ) (2,440 ) (6,161 )
(3,481 ) Incremental gains (losses) on condominium sales (1)
3,842 1,533 5,898 (99 )
Funds (deficit) from operations available to common
shareholders and unitholders $ 21,120 $ 8,162
$ 59,264 $ (20,029 )
Funds (deficit) from
operations - per share and unit - diluted (2) $ 0.43 $
0.17 $ 1.21 $ (0.44 )
Weighted average shares and
units outstanding - diluted (2) 49,288
48,710 49,010 45,599 (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 83 for the three months ended December 31, 2009
and 149 and 0 for the years ended December 31, 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 211 and 221 for the three months and 206
and 217 for the years ended December 31, 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
Year ended December 31, December
31, September 30, December 31, December
31, 2010 2009
2010 2010 2009
Total same store NOI $ 36,135 $ 33,813 $ 33,903 $ 137,429 $
139,753 Property NOI from other operating segments 4,902
2,162 4,811 15,336
3,840 Consolidated property NOI 41,037
35,975 38,714 152,765
143,593 Add (subtract): Interest income 86 59 390 841
245 Other revenues 218 271 223 995 1,072 Depreciation (18,760 )
(20,053 ) (18,623 ) (74,497 ) (74,442 ) Interest expense (15,793 )
(12,979 ) (13,646 ) (54,613 ) (52,377 ) Amortization of deferred
financing costs (890 ) (737 ) (611 ) (2,987 ) (3,079 ) General and
administrative (3,873 ) (4,031 ) (3,927 ) (16,443 ) (16,296 )
Investment and development (566 ) (1,228 ) (569 ) (2,415 ) (4,114 )
Other investment costs (589 ) (111 ) (669 ) (2,417 ) (2,107 )
Impairment, severance and other charges - (4,040 ) - (35,091 )
(13,507 ) Gains on condominium sales activities, net 3,842 2,440
1,184 6,161 3,481 Equity in income (loss) of unconsolidated real
estate entities, net 185 130 18,258 18,739 (74,447 ) Other income
(expense), net (603 ) (487 ) 26 (874 ) (432 ) Net gain (loss) on
early extinguishment of indebtedness - (4,136
) 2,845 2,845 (3,317 )
Income (loss) from continuing operations 4,294 (8,927 ) 23,595
(6,991 ) (95,727 ) Income from discontinued operations -
- - -
84,238 Net income (loss) $ 4,294 $ (8,927 ) $
23,595 $ (6,991 ) $ (11,489 )
Table 3
Same Store Net Operating Income (NOI) and Average Rental Rate
per Unit by Market (In thousands)
Three months ended
Q4 '10 Q4 '10 Q4 '10 December 31,
December 31, September 30, vs. Q4
'09 vs. Q3 '10 % Same 2010
2009 2010 % Change %
Change Store NOI Rental and other revenues
Atlanta $ 15,840 $ 15,653 $ 15,961 1.2 % (0.8 )% Washington, D.C.
10,408 10,070 10,560 3.4 % (1.4 )% Dallas 10,495 10,385 10,634 1.1
% (1.3 )% Tampa 7,768 7,651 7,762 1.5 % 0.1 % Charlotte 4,211 4,180
4,251 0.7 % (0.9 )% New York 3,453 3,337 3,396 3.5 % 1.7 % Houston
2,906 2,940 2,928 (1.2 )% (0.8 )% Orlando 2,433 2,318 2,416 5.0 %
0.7 % Austin 1,181 1,163 1,207 1.5 % (2.2 )%
Total rental and other revenues 58,695 57,697
59,115 1.7 % (0.7 )% Property operating and maintenance
expenses (exclusive of depreciation and amortization) Atlanta 6,478
6,986 7,049 (7.3 )% (8.1 )% Washington, D.C. 3,383 3,629 3,888 (6.8
)% (13.0 )% Dallas 4,356 4,720 5,161 (7.7 )% (15.6 )% Tampa 2,734
2,904 2,977 (5.9 )% (8.2 )% Charlotte 1,552 1,642 1,831 (5.5 )%
(15.2 )% New York 1,545 1,487 1,426 3.9 % 8.3 % Houston 1,141 1,154
1,338 (1.1 )% (14.7 )% Orlando 883 866 971 2.0 % (9.1 )% Austin
488 496 571 (1.6 )% (14.5 )% Total
22,560 23,884 25,212 (5.5 )% (10.5 )% Net
operating income Atlanta 9,362 8,667 8,912 8.0 % 5.0 % 25.8 %
Washington, D.C. 7,025 6,441 6,672 9.1 % 5.3 % 19.4 % Dallas 6,139
5,665 5,473 8.4 % 12.2 % 17.0 % Tampa 5,034 4,747 4,785 6.0 % 5.2 %
13.9 % Charlotte 2,659 2,538 2,420 4.8 % 9.9 % 7.5 % New York 1,908
1,850 1,970 3.1 % (3.1 )% 5.3 % Houston 1,765 1,786 1,590 (1.2 )%
11.0 % 4.9 % Orlando 1,550 1,452 1,445 6.7 % 7.3 % 4.3 % Austin
693 667 636 3.9 % 9.0 % 1.9 % Total same store
NOI $ 36,135 $ 33,813 $ 33,903 6.9 % 6.6 % 100.0 %
Average rental rate per unit Atlanta $ 1,056 $ 1,046 $ 1,049 1.0 %
0.7 % Washington, D.C. 1,826 1,775 1,813 2.9 % 0.7 % Dallas 1,019
1,023 1,013 (0.4 )% 0.6 % Tampa 1,197 1,176 1,189 1.8 % 0.7 %
Charlotte 1,008 1,040 1,009 (3.1 )% (0.1 )% New York 3,660 3,641
3,631 0.5 % 0.8 % Houston 1,172 1,215 1,180 (3.5 )% (0.7 )% Orlando
1,322 1,291 1,302 2.4 % 1.5 % Austin 1,294 1,278 1,288 1.3 % 0.5 %
Total average rental rate per unit 1,233 1,225 1,226 0.7 % 0.6 %
Table 3 (con’t) Same Store Net Operating
Income (NOI) and Average Rental Rate per Unit by Market (In
thousands) Year ended December
31, December 31, 2010
2009 % Change Rental and other revenues
Atlanta $ 63,050 $ 63,948 (1.4 )% Washington, D.C. 41,405 40,599
2.0 % Dallas 41,906 43,321 (3.3 )% Tampa 30,966 31,303 (1.1 )%
Charlotte 16,816 17,571 (4.3 )% New York 13,525 14,112 (4.2 )%
Houston 11,546 12,149 (5.0 )% Orlando 9,565 9,323 2.6 % Austin
4,789 4,779 0.2 % Total rental and other revenues
233,568 237,105 (1.5 )% Property operating and
maintenance expenses (exclusive of depreciation and amortization)
Atlanta 27,447 28,262 (2.9 )% Washington, D.C. 14,566 14,385 1.3 %
Dallas 18,886 19,071 (1.0 )% Tampa 11,701 12,295 (4.8 )% Charlotte
6,741 6,501 3.7 % New York 5,861 5,548 5.6 % Houston 4,996 5,160
(3.2 )% Orlando 3,844 3,959 (2.9 )% Austin 2,097
2,171 (3.4 )% Total 96,139 97,352 (1.2 )% Net
operating income Atlanta 35,603 35,686 (0.2 )% Washington, D.C.
26,839 26,214 2.4 % Dallas 23,020 24,250 (5.1 )% Tampa 19,265
19,008 1.4 % Charlotte 10,075 11,070 (9.0 )% New York 7,664 8,564
(10.5 )% Houston 6,550 6,989 (6.3 )% Orlando 5,721 5,364 6.7 %
Austin 2,692 2,608 3.2 % Total same store NOI $
137,429 $ 139,753 (1.7 )% Average rental rate per
unit Atlanta $ 1,044 $ 1,090 (4.2 )% Washington, D.C. 1,800 1,786
0.8 % Dallas 1,012 1,060 (4.5 )% Tampa 1,184 1,213 (2.4 )%
Charlotte 1,011 1,089 (7.2 )% New York 3,617 3,788 (4.5 )% Houston
1,181 1,248 (5.4 )% Orlando 1,298 1,328 (2.3 )% Austin 1,284 1,311
(2.1 )% Total average rental rate per unit 1,221 1,264 (3.4 )%
Table 4 Computation of Debt Ratios (In
thousands) As of December 31, 2010
2009 Total real
estate assets per balance sheet $ 2,042,375 $ 2,106,520 Plus:
Company share of real estate assets held in unconsolidated entities
71,306 97,570 Company share of accumulated depreciation - assets
held in unconsolidated entities 10,908 8,787 Accumulated
depreciation per balance sheet 692,514 625,391
Total undepreciated real estate assets
(A) $
2,817,103 $ 2,838,268 Total debt per balance
sheet $ 1,033,249 $ 992,760 Plus: Company share of third party debt
held in unconsolidated entities 59,601 116,576
Total debt (adjusted for joint venture partners' share of
debt)
(B) $ 1,092,850 $ 1,109,336 Total
debt as a % of undepreciated real estate assets (adjusted for joint
venture partners' share of debt)
(B÷A) 38.8 %
39.1 % Total debt per balance sheet $ 1,033,249 $ 992,760
Plus: Company share of third party debt held in unconsolidated
entities 59,601 116,576 Preferred shares at liquidation value
92,963 95,000 Total debt and preferred
equity (adjusted for joint venture partners' share of debt)
(C) $ 1,185,813 $ 1,204,336 Total debt
and preferred equity as a % of undepreciated real estate assets
(adjusted for joint venture partners' share of debt)
(C÷A)
42.1 % 42.4 %
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