Post Properties, Inc. (NYSE: PPS) announced today net income
available to common shareholders of $46.8 million, or $0.86 per
diluted share, for the second quarter of 2014, compared to $26.6
million, or $0.48 per diluted share, for the second quarter of
2013.
Net income available to common shareholders for the six months
ended June 30, 2014, was $60.1 million, or $1.10 per diluted share,
compared to $46.0 million, or $0.84 per diluted share, for the six
months ended June 30, 2013.
Net income for the three and six months ended June 30, 2014,
included a gain of $36.1 million on the sale of one apartment
community, offset by a loss of $4.3 million on the extinguishment
of indebtedness.
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 second quarter of 2014 was $31.7 million, or $0.58
per diluted share, compared to $47.9 million, or $0.87 per diluted
share, for the second quarter of 2013. For the second quarter of
2014, Core FFO (excluding FFO from condominium activities) was
$31.7 million, or $0.58 per diluted share, compared to $33.9
million, or $0.62 per diluted share, for the second quarter of
2013. There were no condominium activities in the second quarter of
2014.
FFO for the six months ended June 30, 2014 was $66.8 million, or
$1.22 per diluted share, compared to $88.4 million, or $1.61 per
diluted share, for the six months ended June 30, 2013. For the six
months ended June 30, 2014, Core FFO (excluding FFO from
condominium activities) was $66.0 million, or $1.21 per diluted
share, compared to $66.3 million, or $1.21 per diluted share, for
the six months ended June 30, 2013.
FFO and Core FFO for the three and six months ended June 30,
2014 included the net loss on extinguishment of indebtedness of
$4.3 million, or $0.08 per diluted share.
Said Dave Stockert, the Company’s CEO and President, “Results
for the second quarter demonstrate ongoing growth from our core
apartment business, value creation from our development pipeline,
strong pricing for Post® communities in the disposition market, and
solid positioning of our balance sheet.”
Same Store Community Data
Average economic occupancy at the Company’s 48 same store
communities, containing 17,714 apartment units, was 96.2% and 95.5%
for the second quarter of 2014 and 2013, respectively.
Total revenues for the same store communities increased 3.0% and
total operating expenses increased 7.3% during the second quarter
of 2014, compared to the second quarter of 2013, producing a 0.3%
increase in same store net operating income (“NOI”). The average
monthly rental rate per unit increased 2.4% during the second
quarter of 2014, compared to the second quarter of 2013. Excluding
planned exterior painting expenses at certain communities,
operating expenses would have increased 3.8% year over year for the
second quarter, primarily attributable to increased real estate
taxes.
On a sequential basis, total revenues for the same store
communities increased 1.7% and total operating expenses increased
5.2%, resulting in a 0.5% decrease in same store NOI for the second
quarter of 2014, compared to the first quarter of 2014. On a
sequential basis, the average monthly rental rate per unit
increased 0.9%. For the second quarter of 2014, average economic
occupancy at the same store communities was 96.2%, compared to
95.4% for the first quarter of 2014.
For the six months ended June 30, 2014, average economic
occupancy at the Company’s same store communities was 95.8%
compared to 95.5% for the six months ended June 30, 2013.
Total revenues for the same store communities increased 2.7% and
total operating expenses increased 5.5% during the first half of
2014, compared to the first half of 2013, producing a 1.0% increase
in same store NOI. The average monthly rental rate per unit
increased 2.4% for the six months ended June 30, 2014, compared to
the six months ended June 30, 2013.
Investment Activity
Development Activity
The Company announced today the commencement of the development
of its Post Galleria™ apartment community located in Houston,
Texas. Post Galleria™ is planned to consist of 388 luxury apartment
units with an average unit size of approximately 867 square feet.
The community is expected to have a total estimated development
cost of approximately $80.7 million, and is expected to produce an
estimated stabilized yield on cost of approximately 5.8%,
calculated on current market rents and after a 3% management fee
and $300 per unit replacement reserve. The Company anticipates that
first apartment unit deliveries will occur in the third quarter of
2016.
In the aggregate, the Company has 1,201 units in four apartment
communities, and approximately 10,556 square feet of retail space,
under development or in lease-up with a total estimated cost of
$230.8 million, and a remaining funding requirement of $125.1
million. The Company believes it has adequate internal resources,
as well as sufficient capacity on its unsecured lines of credit, to
fund its development commitments.
In addition to its projects in development, the Company also
recently stabilized two other new communities – Post Parkside™ at
Wade in Raleigh, North Carolina, and Post Lake® at Baldwin Park, in
Orlando, Florida.
Disposition Activity
As previously announced, the Company has marketed for sale three
apartment communities, containing 645 apartment units and 65,900
square feet of retail space – Post Rice Lofts™ in Houston, Texas,
and Post Toscana™ and Post Luminaria™, in New York, NY.
The sale of Post Rice Lofts™ was completed in May 2014. Post
Toscana™ and Post Luminaria™ are currently under contract and the
sales are currently expected to be completed in the third quarter
of 2014. There can be no assurance, however, that these sales will
close. The Company is pursuing these sales in order to take
advantage of strong demand for high-quality multifamily assets, to
harvest value and to enhance the Company’s capacity for future
growth, particularly through development.
The Company currently expects that gross proceeds from the sale
of these three assets will total approximately $341.8 million.
Proceeds, after payment of transaction costs and a distribution to
the Company’s partner, who owns a 32% interest in Post Luminaria™,
have or are expected to be used, in combination with a portion of
cash on hand, as follows:
- To prepay in May 2014, a $120.0
million, 4.88% mortgage loan secured by Post Addison Circle™, and
associated prepayment premiums of approximately $4.2 million;
- To prepay at closing, a $49.6 million,
5.84% mortgage loan secured by Post Toscana™, and associated
estimated prepayment premiums of approximately $8.0 million to $8.2
million; and
- To prepay at closing, a $33.4 million,
5.61% mortgage loan secured by Post Luminaria™, and associated
estimated prepayment premiums, the Company’s share of which are
expected to be approximately $3.7 million to $3.8 million.
Remaining sales proceeds may be used to pay special dividends to
common shareholders that may be required to distribute taxable
capital gains, after various tax planning strategies have been
employed, for opportunistic share repurchases, to fund new
investment opportunities, and for general corporate purposes. There
can be no assurance that the Company’s planned asset sales will be
completed, or that the proceeds will be sufficient or will be
applied in a manner consistent with the above.
In conjunction with the sale of Post Rice Lofts™, the Company
recognized a gain on sale of $36.1 million for the three and six
months ended June 30, 2014. The Company expects to recognize gains,
net of minority interest, of approximately $126.0 to $127.0 million
in the third quarter of 2014 on the sale of the two New York
communities currently under contract, as well as losses on early
extinguishment of indebtedness, net of minority interest, of
approximately $12.7 million to $13.0 million, or $0.23 to $0.24 per
diluted share. There can be no assurance that the estimated losses
on early extinguishment of indebtedness will not change due to
future changes in interest rates or otherwise.
Financing Activity
Leverage, Line and Term Loan Capacity
Total debt and preferred equity as a percentage of undepreciated
real estate assets (adjusted for joint venture partners’ share of
real estate assets and debt) was 33.1% at June 30, 2014.
As of July 25, 2014, the Company had cash and cash equivalents
of $9.3 million. Additionally, the Company had $6.3 million of
outstanding borrowings and letters of credit totaling $0.2 million
under its combined $330 million unsecured lines of credit. The
Company has no principal debt maturities until 2017.
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.
At-the-Market Common Equity Activity
The Company has available an at-the-market (“ATM”) common equity
program that provides for the sale of up to 4 million shares of
common stock. As of June 30, 2014 and since its inception, no
shares have been issued under that program. Sales under this
program are dependent upon a variety of factors, including, among
others, market conditions, the trading price of the Company’s
common stock, the Company’s liquidity position and the potential
use of proceeds.
Information Technology Systems Initiatives
The Company is in the process of upgrading and replacing its
financial and property management information technology systems,
which it expects to be completed by the end of 2014. As part of
this project, in addition to other system implementation costs
capitalized, the Company is required to expense certain up-front
implementation and training costs. These expensed system
implementation costs totaled $0.5 million and $0.7 million for the
three and six months ended June 30, 2014, respectively. These
expenses are currently projected to total approximately $1.3
million for the full year of 2014.
2014 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
per diluted share for the full year 2014 will be in the range set
forth below. The tables below reflect net gains from condominium
sales (for purposes of this discussion, "Condo FFO") and FFO before
Condo FFO (for purposes of this discussion, "Core FFO"). Adjusted
Funds from Operations (“AFFO”) per share is defined as FFO per
share less operating property capital expenditures after adjusting
for the impact of non-cash straight-line long-term ground lease
expense and debt extinguishment losses. Core AFFO represents AFFO
excluding net gains from condominium sales.
CurrentOutlook
PreviouslyIssued Outlook
Core FFO, before debt extinguishment losses $2.62 - $2.66 $2.55 -
$2.62 Debt extinguishment losses, net of minority interest ($0.32)
- ($0.31) - Core FFO $2.30 - $2.35
$2.55 - $2.62
Condo FFO $0.015 - $0.015 $0.00 - $0.01 FFO $2.32 - $2.37 $2.55 -
$2.63 Core AFFO $2.16 - $2.21 $2.09 - $2.17
Same Store
Assumptions
CurrentOutlook
PreviouslyIssued Outlook
Revenue 2.70% - 3.00% 2.30% - 2.80% Operating expenses 5.00% -
5.50% 5.00% - 5.50% Net operating income (NOI) 1.00% - 1.60% 0.30%
- 1.40%
The above estimates of FFO and AFFO per share are also based on
the following assumptions:
- The sales of the two New York
communities are forecasted to close in the third quarter of 2014.
The use of proceeds from asset sales is discussed further above
under the caption “Disposition Activity”. For the second quarter of
2014, NOI from the two New York communities totaled $2.3 million
($1.9 million, net of minority interest) and interest expense on
the secured loans on those two communities that are expected to be
paid off at closing totaled $1.2 million ($1.1 million, net of
minority interest).
- Any special dividends to common
shareholders that may be required to distribute taxable capital
gains, after various tax planning strategies have been employed,
are not anticipated to be paid until year end 2014. Thus, any such
distributions should have minimal impact on the Company’s FFO and
AFFO projections for 2014.
The Company anticipates that net income available to common
shareholders will be in the range of $3.73 to $3.81 per diluted
share for the full year 2014. The difference between net income
available to common shareholders and FFO per diluted share includes
depreciation on real estate assets, which is anticipated to be
$1.56 to $1.57 per diluted share and gains on sales of real estate
assets, which are anticipated to be $2.98 to $3.00 per diluted
share for the full year 2014.
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
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 listed below and on page 19 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 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, debt extinguishment gains (losses) 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 newly stabilized
communities, lease-up communities, held for sale communities, sold
communities 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) interest coverage
ratios; (2) fixed charge coverage ratios; (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; (8) a ratio of consolidated income available for
debt service to annual debt service charge; and (9) a debt to
annualized income available for debt service ratio. 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.
The Company uses income available for debt service to calculate
certain debt ratios and statistics. Income available for debt
service is defined as net income (loss) before interest, taxes,
depreciation, amortization, gains on sales of real estate assets,
non-cash impairment charges and other non-cash income and expenses.
Income available for debt service is a supplemental measure of
operating performance that does not represent and should not be
considered as an alternative to net income or cash flow from
operating activities as determined under GAAP, and the Company’s
calculation thereof may not be comparable to similar measures
reported by other companies, including EBITDA or Adjusted
EBITDA.
Property Operating Statistics – The Company uses average
economic occupancy, gross turnover, net turnover and percentage
increases in rent for new and renewed leases as statistical
measures of property 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. Gross
turnover is defined as the percentage of leases expiring during the
period that are not renewed by the existing residents. Net turnover
is defined as gross turnover decreased by the percentage of
expiring leases where the residents transfer to a new apartment
unit in the same community or in another Post® community. The
percentage increases in rent for new and renewed leases are
calculated using the respective new or renewed rental rate as of
the date of a new lease, as compared with the previous rental rate
on that same unit.
Conference Call Information
The Company will hold its quarterly conference call on Friday,
August 1, at 10:00 a.m. ET. The telephone numbers are 888-503-8175
for US and Canada callers and 719-325-2323 for international
callers. The access code is 5633926. The conference call will be
open to the public and can be listened to live on Post’s website at
www.postproperties.com. Click Investors in the top menu, then
select either Investor’s Overview or Events Calendar. The replay
will begin at 1:00 p.m. ET on Friday, August 1, and will be
available until Friday, August 8, at 1:00 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 5633926. A replay of the call also will be archived on
Post’s website under Investors/Audio Archives.
About Post
Post Properties, founded more than 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 high density urban and resort-style
garden apartments. Post Properties is headquartered in Atlanta,
Georgia, and has operations in ten markets across the country.
Post Properties has interests in 22,596 apartment units in 60
communities, including 1,471 apartment units in four communities
held in unconsolidated entities and 1,201 apartment units in four
communities currently under development or in lease-up.
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 and in the Company’s outlook include, expectations
regarding apartment market conditions, expectations regarding
future operating conditions, including the Company’s current
outlook as to expected funds from operations, adjusted funds from
operations, revenue, operating expenses, net operating income,
capital expenditures, depreciation, gains on sales and net income,
anticipated development activities (including projected
construction expenditures and timing), expectations regarding
apartment community sales (including gross sales proceeds and
timing) and the use of proceeds thereof (including the prepayment
of indebtedness and prepayment penalties as well as the possible
repurchase of shares and special dividends to shareholders),
expectations regarding use of proceeds from unsecured bank credit
facilities, 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, 2013 and
in subsequent filings with the SEC; conditions affecting ownership
of residential real estate and general conditions in the
multi-family residential real estate market; uncertainties
associated with the Company’s real estate development and
construction; uncertainties associated with the timing and amount
of apartment community sales; exposure to economic and other
competitive factors due to market concentration; future local and
national economic conditions, including changes in job growth,
interest rates, the availability of mortgage and other financing
and related factors; 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; 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 warranty and related obligations; 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 for development locations; the Company’s
ability to compete for limited investment opportunities; the
effects of any decision by the government to eliminate Fannie Mae
or Freddie Mac or reduce government support for apartment mortgage
loans; the effects of changing interest rates and effectiveness of
interest rate hedging contracts; the success of the Company’s
acquired apartment communities; 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 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; the
effects of changes in accounting policies and other regulatory
matters detailed in the Company’s filings with the Securities and
Exchange Commission; increased costs arising from health care
reform; and any breach of the Company’s privacy or information
security systems. 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, 2013 and may be discussed in subsequent filings with the SEC.
The risk factors discussed in the 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, 2014
2013 2014
2013 OPERATING DATA Total revenues $ 95,026 $ 89,280 $
188,538 $ 175,638 Net income available to common shareholders $
46,797 $ 26,566 $ 60,111 $ 45,985 Funds from operations available
to common shareholders and unitholders (Table 1) $ 31,698 $ 47,906
$ 66,827 $ 88,443 Weighted average shares outstanding -
diluted 54,335 54,658 54,314 54,648 Weighted average shares and
units outstanding - diluted 54,470 54,801 54,449 54,791 PER
COMMON SHARE DATA - DILUTED Net income available to common
shareholders $ 0.86 $ 0.48 $ 1.10 $ 0.84 Funds from
operations available to common shareholders and unitholders (Table
1) (1) $ 0.58 $ 0.87 $ 1.22 $ 1.61 Dividends declared $ 0.40
$ 0.33 $ 0.76 $ 0.58
1) Funds from operations available to common shareholders and
unitholders per share was computed using weighted average shares
and units outstanding, including the impact of dilutive securities
totaling 112 and 194 for the three months and 115 and 198 for the
six months ended June 30, 2014 and 2013, respectively.
Additionally, diluted weighted average shares and units included
the impact of non-vested shares and units totaling 130 and 127 for
the three months and 121 and 119 for the six months ended June 30,
2014 and 2013, respectively, for the computation of FFO per share.
Such non-vested shares and units are considered in the income per
share computations under GAAP 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
and unit amounts)
Three months ended Six months
ended June 30, June 30, 2014
2013 2014
2013 Net income available to common
shareholders $ 46,797 $ 26,566 $ 60,111 $ 45,985 Noncontrolling
interests - Operating Partnership 118 68 151 120 Depreciation on
consolidated real estate assets, net 20,581 20,981 42,071 41,758
Depreciation on real estate assets held in unconsolidated entities
294 291 586 580 Gains on sales of depreciable real estate assets
(36,092 ) - (36,092 ) -
Funds from
operations available to common shareholders and
unitholders $ 31,698 $ 47,906 $ 66,827 $ 88,443
Funds from operations available to common shareholders and
unitholders - core operations $ 31,698 $ 33,925 $ 66,017 $ 66,268
Funds from operations available to common shareholders and
unitholders - condominiums - 13,981 810
22,175
Funds from operations available to
common shareholders and unitholders $ 31,698 $
47,906 $ 66,827 $ 88,443
Funds from operations -
per share and unit - diluted (1) $ 0.58 $ 0.87 $ 1.22
$ 1.61
Funds from operations per share and unit - core
operations $ 0.58 $ 0.62 $ 1.21 $ 1.21
Weighted average shares and units outstanding - diluted (1)
54,600 54,928 54,570
54,910
1) Diluted weighted average shares and units include the impact
of dilutive securities totaling 112 and 194 for the three months
and 115 and 198 for the six months ended June 30, 2014 and 2013,
respectively. Additionally, diluted weighted average shares and
units included the impact of non-vested shares and units totaling
130 and 127 for the three months and 121 and 119 for the six months
ended June 30, 2014 and 2013, respectively, for the computation of
FFO per share. Such non-vested shares and units are considered in
the income per share computations under GAAP 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, 2014 2013
2014 2014 2013
Total same store NOI $ 46,086 $ 45,945 $ 46,318 $ 92,404 $
91,525 Property NOI from held for sale and sold - residential 2,267
2,990 2,473 4,739 5,693 Property NOI from held for sale and sold -
commercial 307 424 300 607 848 Property NOI from other operating
segments 4,348 1,519 3,606
7,955 1,672 Consolidated
property NOI 53,008 50,878
52,697 105,705 99,738 Add
(subtract): Interest income 4 23 12 16 59 Other revenues 223 229
219 442 443 Depreciation (20,829 ) (21,170 ) (21,767 ) (42,596 )
(42,114 ) Interest expense (10,433 ) (11,042 ) (11,244 ) (21,677 )
(22,094 ) Amortization of deferred financing costs (620 ) (645 )
(645 ) (1,265 ) (1,269 ) General and administrative (3,966 ) (4,170
) (4,128 ) (8,094 ) (8,415 ) Investment and development (794 ) (592
) (811 ) (1,605 ) (1,081 ) Other investment costs (210 ) (516 )
(273 ) (483 ) (821 ) Other expenses (502 ) - (907 ) (1,409 ) -
Gains on condominium sales activities, net - 13,981 810 810 22,175
Equity in income of unconsolidated real estate entities, net 501
477 485 986 955 Other income (expense), net (196 ) (282 ) (195 )
(391 ) (448 ) Net loss on extinguishment of indebtedness
(4,287 ) - - (4,287 ) -
Income from continuing operations, before gains on
sales of real estate assets 11,899 27,171 14,253 26,152 47,128
Gains on sales of real estate assets 36,092 - - 36,092 - Income
from discontinued operations - 443
- - 876 Net income
$ 47,991 $ 27,614 $ 14,253 $ 62,244 $
48,004
Table 3
Same Store Net Operating Income (NOI) and
Average Rental Rate per Unit by Market
(In thousands)
Three months ended Q2 '14 Q2 '14 Q2 '14
June 30, June 30, March 31,
vs. Q2 '13 vs. Q1 '14 % Same
2014 2013 2014 % Change
% Change Store NOI Rental and other
revenues Atlanta $ 21,305 $ 20,201 $ 20,846 5.5 % 2.2 % Dallas
17,970 17,370 17,805 3.5 % 0.9 % Houston 2,293 2,151 2,256 6.6 %
1.6 % Austin 3,036 2,944 2,986 3.1 % 1.7 % Washington, D.C. 13,037
13,199 12,823 (1.2 )% 1.7 % Tampa 9,350 9,119 9,251 2.5 % 1.1 %
Orlando 2,774 2,794 2,709 (0.7 )% 2.4 % Charlotte 6,780
6,558 6,596 3.4 % 2.8 % Total rental and other
revenues 76,545 74,336 75,272 3.0 % 1.7 %
Property operating and maintenance expenses (exclusive of
depreciation and amortization) Atlanta 8,767 8,269 8,091 6.0 % 8.4
% Dallas 7,881 7,407 7,664 6.4 % 2.8 % Houston 976 834 870 17.0 %
12.2 % Austin 1,328 1,204 1,345 10.3 % (1.3 )% Washington, D.C.
4,640 4,200 4,488 10.5 % 3.4 % Tampa 3,748 3,325 3,416 12.7 % 9.7 %
Orlando 1,042 923 964 12.9 % 8.1 % Charlotte 2,077
2,229 2,116 (6.8 )% (1.8 )% Total 30,459
28,391 28,954 7.3 % 5.2 % Net operating income
Atlanta 12,538 11,932 12,755 5.1 % (1.7 )% 27.1 % Dallas 10,089
9,963 10,141 1.3 % (0.5 )% 21.9 % Houston 1,317 1,317 1,386 0.0 %
(5.0 )% 2.9 % Austin 1,708 1,740 1,641 (1.8 )% 4.1 % 3.7 %
Washington, D.C. 8,397 8,999 8,335 (6.7 )% 0.7 % 18.2 % Tampa 5,602
5,794 5,835 (3.3 )% (4.0 )% 12.2 % Orlando 1,732 1,871 1,745 (7.4
)% (0.7 )% 3.8 % Charlotte 4,703 4,329 4,480
8.6 % 5.0 % 10.2 % Total same store NOI $ 46,086 $ 45,945 $ 46,318
0.3 % (0.5 )% 100.0 % Average rental rate per unit
Atlanta $ 1,323 $ 1,261 $ 1,301 4.9 % 1.7 % Dallas 1,240 1,213
1,232 2.2 % 0.6 % Houston 1,396 1,326 1,374 5.3 % 1.6 % Austin
1,566 1,509 1,551 3.8 % 1.0 % Washington, D.C. 1,871 1,898 1,868
(1.4 )% 0.2 % Tampa 1,418 1,386 1,402 2.3 % 1.1 % Orlando 1,492
1,518 1,484 (1.7 )% 0.5 % Charlotte 1,255 1,221 1,245 2.8 % 0.8 %
Total average rental rate per unit
1,393 1,361 1,380 2.4 % 0.9 %
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, 2014 2013
% Change Rental and other revenues Atlanta $ 42,151 $
40,019 5.3 % Dallas 35,776 34,633 3.3 % Houston 4,549 4,310 5.5 %
Austin 6,023 5,828 3.3 % Washington, D.C. 25,859 26,239 (1.4 )%
Tampa 18,601 18,134 2.6 % Orlando 5,483 5,579 (1.7 )% Charlotte
13,376 13,106 2.1 % Total rental and other revenues
151,818 147,848 2.7 % Property operating and
maintenance expenses (exclusive of depreciation and amortization)
Atlanta 16,858 16,131 4.5 % Dallas 15,546 14,598 6.5 % Houston
1,846 1,653 11.7 % Austin 2,673 2,430 10.0 % Washington, D.C. 9,128
8,507 7.3 % Tampa 7,164 6,646 7.8 % Orlando 2,006 2,031 (1.2 )%
Charlotte 4,193 4,327 (3.1 )% Total 59,414
56,323 5.5 % Net operating income Atlanta 25,293
23,888 5.9 % Dallas 20,230 20,035 1.0 % Houston 2,703 2,657 1.7 %
Austin 3,350 3,398 (1.4 )% Washington, D.C. 16,731 17,732 (5.6 )%
Tampa 11,437 11,488 (0.4 )% Orlando 3,477 3,548 (2.0 )% Charlotte
9,183 8,779 4.6 % Total same store NOI $ 92,404 $
91,525 1.0 % Average rental rate per unit Atlanta $
1,312 $ 1,254 4.6 % Dallas 1,236 1,206 2.5 % Houston 1,385 1,316
5.2 % Austin 1,559 1,500 3.9 % Washington, D.C. 1,870 1,893 (1.2 )%
Tampa 1,410 1,378 2.3 % Orlando 1,488 1,515 (1.8 )% Charlotte 1,250
1,217 2.7 % Total average rental rate per unit 1,387 1,355 2.4 %
Table 4
Computation of Debt Ratios
(In thousands)
As of June 30, 2014
2013 Total real estate assets
per balance sheet $ 2,221,738 $ 2,260,846 Plus: Company share of
real estate assets held in unconsolidated entities 57,402 58,187
Company share of accumulated depreciation - assets held in
unconsolidated entities 13,403 11,896 Accumulated depreciation per
balance sheet 895,723 884,571 Accumulated depreciation on assets
held for sale 40,986 - Total
undepreciated real estate assets
(A) $ 3,229,252 $
3,215,500 Total debt per balance sheet $ 976,760 $
1,100,604 Plus: Company share of third party debt held in
unconsolidated entities 49,531 49,531
Total debt (adjusted for joint venture partners' share of debt)
(B) $ 1,026,291 $ 1,150,135 Total debt
as a % of undepreciated real estate assets (adjusted for joint
venture partners' share of debt)
(B÷A) 31.8 %
35.8 % Total debt per balance sheet $ 976,760 $ 1,100,604
Plus: Company share of third party debt held in unconsolidated
entities 49,531 49,531 Preferred shares at liquidation value
43,392 43,392 Total debt and preferred equity
(adjusted for joint venture partners\' share of debt)
(C) $
1,069,683 $ 1,193,527 Total debt and preferred
equity as a % of undepreciated real estate assets (adjusted for
joint venture partners' share of debt)
(C÷A) 33.1 %
37.1 %
Post Properties, Inc.Chris Papa, 404-846-5028
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