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Colonial Properties Trust Reports Results For Third Quarter 2012

Stocks in this article: CLP

Safe Harbor Statement

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: Estimates of future earnings are, by definition, and certain other statements in this press release, including statements regarding future dispositions and developments, development costs, credit ratings, operating performance outlook and other business fundamentals, may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and involve known and unknown risks, uncertainties and other factors that may cause the company’s actual results, performance, achievements or transactions to be materially different from the results, performance, achievements or transactions expressed or implied by the forward looking statements. Factors that impact such forward looking statements include, among others, changes in national, regional and local economic conditions, which may be negatively impacted by concerns about inflation, deflation, government deficits (including the European sovereign debt crisis), high unemployment rates, decreased consumer confidence and liquidity concerns, particularly in markets in which we have a high concentration of properties; exposure, as a multifamily focused REIT, to risks inherent in investments in a single industry; ability to obtain financing on favorable rates, if at all; performance of affiliates or companies in which we have made investments; changes in operating costs; higher than expected construction costs; uncertainties associated with the timing and amount of real estate disposition and the resulting gains/losses associated with such dispositions; legislative or regulatory decisions; the company’s ability to continue to maintain our status as a REIT for federal income tax purposes; price volatility, dislocations and liquidity disruptions in the financial markets and the resulting impact on availability of financing; the effect of any rating agency action on the cost and availability of new debt financings; level and volatility of interest rates or capital market conditions; effect of any terrorist activity or other heightened geopolitical crisis; or other factors affecting the real estate industry generally.

Except as otherwise required by the federal securities laws, the company assumes no responsibility to update the information in this press release.

The company refers you to the documents filed by the company from time to time with the Securities and Exchange Commission, specifically the section titled “Risk Factors” in the company’s Annual Report on Form 10-K for the year ended December 31, 2011, as may be updated or supplemented in the company’s Form 10-Q filings, which discuss these and other factors that could adversely affect the company’s results.

 
COLONIAL PROPERTIES TRUST
Financial Statements
Third Quarter 2012
     
BALANCE SHEET          
 
($ in 000s) As of As of
9/30/2012 12/31/2011
ASSETS

Real Estate Assets

Operating Properties $ 3,315,910 $ 3,445,455
Undeveloped Land & Construction in Progress   302,923     306,826  
Total Real Estate, before Depreciation 3,618,833 3,752,281
 
Less: Accumulated Depreciation (768,829 ) (731,894 )
Real Estate Assets Held for Sale, net   238,040     10,543  
 
Net Real Estate Assets 3,088,044 3,030,930
 
Cash and Equivalents 4,931 6,452
Restricted Cash 23,528 43,489
Accounts Receivable, net 25,277 26,762
Notes Receivable 42,576 43,787
Prepaid Expenses 19,180 19,912
Deferred Debt and Lease Costs 24,810 22,408
Investment in Unconsolidated Subsidiaries 8,362 12,303
Other Assets   48,463     52,562  
 
Total Assets $ 3,285,171   $ 3,258,605  
 
LIABILITIES
Unsecured Credit Facility $ 183,624 $ 184,000
Notes and Mortgages Payable   1,644,140     1,575,727  
Total Debt 1,827,764 1,759,727
 
Accounts Payable 36,965 50,266
Accrued Interest 15,911 11,923
Accrued Expenses 42,521 15,731
Investment in Unconsolidated Subsidiaries 6,967 31,577
Other Liabilities   36,335     25,208  
Total Liabilities   1,966,463     1,894,432  
 
Redeemable Common Units 160,093 159,582
 
EQUITY
Limited Partner's Noncontrolling Interest 700 728
 
Cumulative Earnings 1,271,911 1,267,958
Cumulative Distributions (1,910,306 ) (1,862,838 )
Common Equity, including Additional Paid-in Capital 1,973,065 1,965,812
Treasury Shares, at Cost (150,163 ) (150,163 )
Accumulated Other Comprehensive Loss   (26,592 )   (16,906 )
Total Equity, including Noncontrolling Interest   1,158,615     1,204,591  
 
Total Liabilities and Equity $ 3,285,171   $ 3,258,605  
 
SHARES & UNITS OUTSTANDING, END OF PERIOD          
 
(shares and units in 000s) As of As of
9/30/2012 12/31/2011
Basic
Shares 88,114 87,474
Operating Partnership Units (OP Units)   7,153     7,169  
Total Shares & OP Units 95,267 94,643
         

COLONIAL PROPERTIES TRUSTFinancial StatementsThird Quarter 2012

 
 
CONSOLIDATED STATEMENTS OF OPERATIONS
 
($ in 000s, except per share data) Three Months Ended Nine Months Ended
9/30/2012 9/30/2011 9/30/2012 9/30/2011

Revenue

Minimum Rent $ 79,892 $ 72,152 $ 235,073 $ 209,170
Tenant Recoveries 2,178 2,173 6,615 6,109
Other Property Related Revenue 14,757 12,411 41,293 35,509
Other Non-Property Related Revenue   1,275     1,967     4,090     5,950  
Total Revenues 98,102 88,703 287,071 256,738
 

Operating Expenses

Operating Expenses:
Property Operating Expenses 28,187 26,328 79,337 72,584
Taxes, Licenses and Insurance   10,819     9,789     32,304     29,285  
Total Property Operating Expenses 39,006 36,117 111,641 101,869
 
Property Management Expense 3,238 2,395 9,085 6,998
General and Administrative Expense 5,896 5,204 17,108 15,595
Management Fee and Other Expenses 1,392 2,028 5,206 5,681

Investment and Development Expenses (1)

41 458 632 1,437
Depreciation 29,804 28,032 87,968 83,292
Amortization 1,490 1,961 4,632 5,545

Impairment and Other Losses (2)

  547     100     1,441     2,344  
Total Operating Expenses   81,414     76,295     237,713     222,761  
Income from Operations 16,688 12,408 49,358 33,977
 

Other Income (Expense)

Interest Expense (23,037 ) (22,309 ) (69,367 ) (63,582 )
Debt Cost Amortization (1,450 ) (1,218 ) (4,286 ) (3,516 )
Interest Income 459 332 2,010 1,001
(Loss) Income from Partially-Owned Investments (517 ) (618 ) 21,505 (1,091 )
Gain (Loss) on Sale of Property 142 75 (94 ) 19
Income Tax and Other   (224 )   (221 )   (690 )   (740 )
Total Other Income (Expense)   (24,627 )   (23,959 )   (50,922 )   (67,909 )
 
Loss from Continuing Operations (7,939 ) (11,551 ) (1,564 ) (33,932 )
 

Discontinued Operations

Income from Discontinued Operations (2)

977 2,325 5,882 6,907
Gain (Loss) on Disposal of Discontinued Operations   -     23,675     (14 )   23,675  
Net Income from Discontinued Operations

 

  977     26,000     5,868     30,582  
 
Net (Loss) Income   (6,962 )   14,449     4,304     (3,350 )
 
Noncontrolling Interest

Continuing Operations

Noncontrolling Interest of Limited Partners (12 ) (4 ) (29 ) (47 )
Noncontrolling Interest in CRLP - Preferred - (906 ) - (2,719 )
Noncontrolling Interest in CRLP - Common 597 957 120 2,924

Discontinued Operations

Noncontrolling Interest in CRLP - Common   (73 )   (1,997 )   (442 )   (2,437 )
Loss (Income) Attributable to Noncontrolling Interest   512     (1,950 )   (351 )   (2,279 )
Net (Loss) Income Available to Common Shareholders $ (6,450 ) $ 12,499   $ 3,953   $ (5,629 )
 
 

COLONIAL PROPERTIES TRUSTFinancial StatementsThird Quarter 2012

 
CONSOLIDATED STATEMENTS OF OPERATIONS (continued)
Three Months Ended Nine Months Ended
9/30/2012 9/30/2011 9/30/2012 9/30/2011
(Loss) Income per Share - Basic
Continuing Operations $ (0.09 ) $ (0.13 ) $ (0.02 ) $ (0.41 )
Discontinued Operations   0.01     0.27     0.06     0.34  
EPS - Basic $ (0.08 ) $ 0.14   $ 0.04   $ (0.07 )
 
(Loss) Income per Share - Diluted
Continuing Operations $ (0.09 ) $ (0.13 ) $ (0.02 ) $ (0.41 )
Discontinued Operations   0.01     0.27     0.06     0.34  
EPS - Diluted $ (0.08 ) $ 0.14   $ 0.04   $ (0.07 )
 
(1) Reflects costs incurred related to acquisitions and abandoned pursuits . These costs are volatile and therefore may vary between periods.
(2) During the three months ended September 30, 2012, the Company recorded a $3.0 million non-cash impairment charge on one of its commercial properties currently classified as held for sale (included in "Income from Discontinued Operations"), as well as a $0.4 million non-cash impairment charge on one of its joint venture investments holding undeveloped land. In addition to these impairment charges, during the nine months ended September 30, 2012, the Company recorded $0.9 million in charges as a result of warranty claims on units previously sold at two of the Company's for-sale residential projects and $0.3 million in non-cash impairment charges (included in "Income from Discontinued Operations"). During the nine months ended September 30, 2011, the Company recorded a $1.5 million charge for a loss contingency related to certain litigation, $0.6 million in casualty losses and $0.2 million in non-cash impairment charges.
 
SHARES AND UNITS OUTSTANDING, WEIGHTED
(shares and units in 000s) Three Months Ended Nine Months Ended
9/30/2012 9/30/2011 9/30/2012 9/30/2011
 
Basic
Shares 87,325 86,573 87,183 83,250
Operating Partnership Units (OP Units)   7,153     7,253     7,161     7,265  
Total Shares & OP Units 94,478 93,826 94,344 90,515
 
Dilutive Common Share Equivalents - - - -
 

Diluted (1)

Shares 87,325 86,573 87,183 83,250
Total Shares & OP Units 94,478 93,826 94,344 90,515
 
(1) For periods where the Company reported a net loss from continuing operations (after preferred dividends), the effect of dilutive shares has been excluded from per share computations as including such shares would be anti-dilutive.
 

COLONIAL PROPERTIES TRUSTFinancial StatementsThird Quarter 2012

 
FUNDS FROM OPERATIONS (FFO) RECONCILIATION
 
($ in 000s, except per share data) Three Months Ended Nine Months Ended
9/30/2012 9/30/2011 9/30/2012 9/30/2011
Net (Loss) Income Available to Common Shareholders $ (6,450 ) $ 12,499 $ 3,953 $ (5,629 )
Noncontrolling Interest in CRLP (Operating Partnership Unitholders)   (524 )   1,040     322     (487 )
Total (6,974 ) 13,539 4,275 (6,116 )
 

Adjustments - Consolidated Properties

Depreciation - Real Estate 30,993 31,634 94,124 95,165
Amortization - Real Estate 1,527 2,228 5,147 6,259
Impairment on Depreciable Asset 2,979 - 3,250 -
Remove: (Gain)/Loss on Sale of Property, net of Income Tax and
Noncontrolling Interest (142 ) (23,751 ) 107 (23,695 )
Include: Gain/(Loss) on Sale of Undepreciated Property, net of Income Tax and
Noncontrolling Interest   142     75     (127 )   6  
Total Adjustments - Consolidated 35,499 10,186 102,501 77,735
 

Adjustments - Unconsolidated Properties

Depreciation - Real Estate 308 1,678 2,459 4,927
Amortization - Real Estate 62 1,181 784 2,363
Remove: (Gain)/Loss on Sale of Property   310     -     (22,399 )   22  
Total Adjustments - Unconsolidated   680     2,859     (19,156 )   7,312  
 
Funds from Operations $ 29,205   $ 26,584   $ 87,620   $ 78,931  
 
Income Allocated to Participating Securities   (228 )   (183 )   (685 )   (563 )

Funds from Operations Available to Common Shareholders and Unitholders

$ 28,977   $ 26,401   $ 86,935   $ 78,368  
                   
FFO per Share
Basic $ 0.31 $ 0.28 $ 0.92 $ 0.87
Diluted $ 0.31 $ 0.28 $ 0.92 $ 0.87
 
FFO, as defined by the National Association of Real Estate Investment Trusts (NAREIT), means income (loss) before noncontrolling interest (determined in accordance with GAAP), excluding gains (losses) from sales of depreciated property and impairment write-downs of depreciable real estate, plus real estate depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. FFO is presented to assist investors in analyzing the Company's performance. The Company believes that FFO is useful to investors because it provides an additional indicator of the Company's financial and operating performance. This is because, by excluding the effect of real estate depreciation and gains (or losses) from sales of properties (all of which are based on historical costs which may be of limited relevance in evaluating current performance), FFO can facilitate comparison of operating performance among equity REITs. FFO is a widely recognized measure in the Company's industry.
 
The Company's method of calculating FFO and Operating FFO may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. Neither FFO nor Operating FFO should be considered (1) as an alternative to net income (determined in accordance with GAAP), (2) as an indicator of financial performance, (3) as cash flow from operating activities (determined in accordance with GAAP) or (4) as a measure of liquidity nor is it indicative of sufficient cash flow to fund all of our needs, including our ability to make distributions.
 
COLONIAL PROPERTIES TRUST
Corporate Reconciliations
($ in 000s)
                   
         
RECONCILIATION OF REVENUES
 
Three Months Ended Nine Months Ended
9/30/2012 9/30/2011 9/30/2012 9/30/2011
Divisional Total Revenues
Multifamily - Same Property $ 82,013 $ 77,628 $ 241,133 $ 228,554
Multifamily - Non-Same Property (1) 11,227 8,776 30,160 21,992
Commercial   13,693     19,626     49,080     58,450  
Total Divisional Revenues 106,933 106,030 320,373 308,996
 
Less: Unconsolidated Revenues - Multifamily (489 ) (462 ) (1,441 ) (1,877 )
Less: Unconsolidated Revenues - Commercial (1,165 ) (6,813 ) (10,349 ) (19,918 )
Discontinued Operations (8,452 ) (12,019 ) (25,602 ) (36,413 )
Unallocated Corporate Revenues   1,275     1,967     4,090     5,950  
Consolidated Revenue Adjusted -'11 Discontinued Operations (2)   98,102     88,703     287,071     256,738  
Add: Additional Discontinued Operations Revenue, post filing (3)   -     8,402     -     25,606  
Total Consolidated Revenue, per 10-Q (4) $ 98,102   $ 97,105   $ 287,071   $ 282,344  
 
RECONCILIATION OF EXPENSES                  
 
9/30/2012 9/30/2011 9/30/2012 9/30/2011
Divisional Total Expenses
Multifamily - Same Property $ 33,239 $ 32,594 $ 95,884 $ 94,009
Multifamily - Non-Same Property (1) 5,032 4,668 13,531 11,423
Commercial   4,515     6,606     16,169     18,857  
Total Divisional Expenses 42,786 43,868 125,584 124,289
 
Less: Unconsolidated Expenses - Multifamily (236 ) (218 ) (673 ) (941 )
Less: Unconsolidated Expenses - Commercial (342 ) (2,283 ) (3,821 ) (6,582 )
Discontinued Operations (6,181 ) (5,250 ) (12,700 ) (14,897 )
Impairment - Discontinued Operations (5)   2,979     -     3,251     -  
Total Property Operating Expenses 39,006 36,117 111,641 101,869
Property Management Expense 3,238 2,395 9,085 6,998
General & Administrative Expense 5,896 5,204 17,108 15,595
Management Fee and Other Expenses 1,392 2,028 5,206 5,681
Investment and Development Expenses (6) 41 458 632 1,437
Impairment and Other Losses 547 100 1,441 2,344
Depreciation 29,804 28,032 87,968 83,292
Amortization   1,490     1,961     4,632     5,545  
Consolidated Expense Adjusted -'11 Discontinued Operations (2)   81,414     76,295     237,713     222,761  
Add: Additional Discontinued Operations Expense, post filing (3)   -     6,565     -     19,869  
Total Consolidated Expense, per 10-Q (4) $ 81,414   $ 82,860   $ 237,713   $ 242,630  
 
RECONCILIATION OF NOI                  
 
9/30/2012 9/30/2011 9/30/2012 9/30/2011
Divisional Total NOI
Multifamily - Same Property $ 48,774 $ 45,034 $ 145,249 $ 134,545
Multifamily - Non-Same Property (1) 6,195 4,108 16,629 10,569
Commercial   9,178     13,020     32,911     39,593  
Total Divisional NOI 64,147 62,162 194,789 184,707
 
Less: Unconsolidated NOI - Multifamily (253 ) (244 ) (768 ) (936 )
Less: Unconsolidated NOI - Commercial (823 ) (4,530 ) (6,528 ) (13,336 )
Discontinued Operations (2,271 ) (6,769 ) (12,902 ) (21,516 )
Impairment - Discontinued Operations (5) (2,979 ) - (3,251 ) -
Unallocated Corporate Revenues 1,275 1,967 4,090 5,950
Property Management Expense (3,238 ) (2,395 ) (9,085 ) (6,998 )
General & Administrative Expense (5,896 ) (5,204 ) (17,108 ) (15,595 )
Management Fee and Other Expenses (1,392 ) (2,028 ) (5,206 ) (5,681 )
Investment and Development Expenses (6) (41 ) (458 ) (632 ) (1,437 )
Impairment and Other Losses (547 ) (100 ) (1,441 ) (2,344 )
Depreciation (29,804 ) (28,032 ) (87,968 ) (83,292 )
Amortization   (1,490 )   (1,961 )   (4,632 )   (5,545 )
Income from Operations 16,688 12,408 49,358 33,977
Total Other Income (Expense)   (24,627 )   (23,959 )   (50,922 )   (67,909 )
Loss from Continuing Operations (7)   (7,939 )   (11,551 )   (1,564 )   (33,932 )
Discontinued Operations   -     1,917     -     5,954  
Loss from Continuing Operations, per 10-Q (4) $ (7,939 ) $ (9,634 ) $ (1,564 ) $ (27,978 )
 
(1) Includes operations from for-sale portfolio.

(2) Reflects total consolidated revenue and total consolidated expense (as applicable), adjusted to reflect discontinued operations classifications made after filing of prior period financials.

(3) Adjustment to prior period financials to reflect discontinued operations classifications made after filing of prior period financials.

(4) For prior period, reflects total consolidated revenue, expense or income (loss) from continuing operations (as applicable) as presented in prior period financials (i.e., excluding adjustment for discontinued operations classifications made after filing of prior period financials).

(5) Includes non-cash impairment charges recorded on one of the Company's commercial assets, which is currently classified as held for sale.
(6) Reflects costs incurred related to acquisitions and abandoned pursuits. These costs are volatile and therefore may vary between periods.

(7) Income (Loss) from Continuing Operations before extraordinary items, noncontrolling interest and discontinued operations. Adjustments for additional discontinued operations have restated periods in accordance with ASC 205-20.





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