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Post Properties Announces Fourth Quarter 2012 Earnings

Post Properties has interests in 22,218 apartment units in 60 communities, including 1,471 apartment units in four communities held in unconsolidated entities and 2,046 apartment units in seven communities currently under development or in lease-up. 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 apartment market conditions, expectations regarding use of proceeds from unsecured bank credit facilities, expectations regarding future operating conditions, including the Company’s current outlook as to expected funds from operations, revenue, operating expenses and net operating income, anticipated development activities (including projected construction expenditures and timing), expectations regarding the for-sale condominium business, 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, 2011 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 effects of any decision by the government to eliminate Fannie Mae or Freddie Mac or reduce government support for apartment mortgage loans; 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 compete for limited investment opportunities; 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; and 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; 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, 2011 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,
2012   2011 2012     2011
OPERATING DATA
Total revenues $ 86,101 $ 77,749 $ 334,911 $ 305,316
Net income available to common shareholders $ 17,931 $ 2,979 $ 80,251 $ 19,254
Funds from operations available to common
shareholders and unitholders (Table 1) $ 38,828 $ 20,911 $ 154,349 $ 93,664
 
Weighted average shares outstanding - diluted 54,518 52,435 54,131 50,808
Weighted average shares and units outstanding - diluted 54,661 52,592 54,278 50,972
 
PER COMMON SHARE DATA - DILUTED
Net income available to common shareholders $ 0.33 $ 0.06 $ 1.48 $ 0.38
 
Funds from operations available to common
shareholders and unitholders (Table 1) (1) $ 0.71 $ 0.40 $ 2.84 $ 1.83
 
Dividends declared $ 0.25 $ 0.22 $ 0.97 $ 0.84
 

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 218 and 359 for the three months and 310 and 388 for the year ended December 31, 2012 and 2011, respectively. Additionally, diluted weighted average shares and units included the impact of non-vested shares and units totaling 129 and 162 for the three months and 127 and 162 for the year ended December 31, 2012 and 2011, 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 amounts)

             
Three months ended Year ended
December 31, December 31,
2012 2011 2012 2011
Net income available to common shareholders $ 17,931 $ 2,979 $ 80,251 $ 19,254
Noncontrolling interests - Operating Partnership 42 8 217 62
Depreciation on consolidated real estate assets, net 20,566 18,538 78,737 73,878
Depreciation on real estate assets held in
unconsolidated entities 289 363 1,199 1,447
Gains on sales of condominiums (10,578 ) (1,757 ) (36,273 ) (10,514 )
Incremental gains on condominium sales 10,578 780 36,273 9,537
Gains on sales of depreciable real estate assets -
unconsolidated entities   -     -     (6,055 )   -  
Funds from operations available to common
shareholders and unitholders $ 38,828   $ 20,911   $ 154,349   $ 93,664  
 
Funds from operations - per share and unit - diluted (1) $ 0.71   $ 0.40   $ 2.84   $ 1.83  
Weighted average shares and units outstanding - diluted (1)   54,790     52,754     54,405     51,134  
 

1) Diluted weighted average shares and units include the impact of dilutive securities totaling 218 and 359 for the three months and 310 and 388 for the year ended December 31, 2012 and 2011, respectively. Additionally, diluted weighted average shares and units included the impact of non-vested shares and units totaling 129 and 162 for the three months and 127 and 162 for the year ended December 31, 2012 and 2011, 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 Year ended
December 31, December 31, September 30, December 31, December 31,
2012 2011 2012 2012 2011
Total same store NOI $ 47,890 $ 45,752 $ 47,185 $ 186,343 $ 171,499
Property NOI from other operating segments   1,529     (204 )   1,639     4,040     489  
Consolidated property NOI   49,419     45,548     48,824     190,383     171,988  
Add (subtract):
Interest income 34 39 20 393 1,021
Other revenues 213 232 209 850 918
Depreciation (20,973 ) (18,880 ) (20,334 ) (80,145 ) (75,263 )
Interest expense (11,855 ) (13,672 ) (11,816 ) (46,419 ) (56,791 )
Amortization of deferred financing costs (669 ) (712 ) (667 ) (2,695 ) (2,797 )
General and administrative (4,411 ) (3,768 ) (3,763 ) (16,342 ) (16,100 )
Investment and development (312 ) (148 ) (203 ) (1,317 ) (1,161 )
Other investment costs (242 ) (157 ) (547 ) (1,401 ) (1,435 )
Gains on condominium sales activities, net 10,578 1,757 10,261 36,273 10,514
Equity in income of unconsolidated
real estate entities, net 579 211 475 7,995 1,001
Other income (expense), net 590 389 (137 ) 1,034 619
Net loss on extinguishment of indebtedness   (4,017 )   (6,919 )   -     (4,318 )   (6,919 )
 
Net income $ 18,934   $ 3,920   $ 22,322   $ 84,291   $ 25,595  
 

Table 3

Same Store Net Operating Income (NOI) and Average Rental Rate per Unit by Market

(In thousands)

           
Three months ended Q4 '12 Q4 '12 Q4 '12
December 31,   December 31,   September 30, vs. Q4 '11 vs. Q3 '12 % Same
2012 2011 2012 % Change % Change Store NOI
Rental and other revenues
Atlanta $ 20,807 $ 19,688 $ 20,982 5.7 % (0.8 )%
Washington, D.C. 13,180 12,691 13,283 3.9 % (0.8 )%
Dallas 15,989 15,018 16,261 6.5 % (1.7 )%
Tampa 8,851 8,314 8,851 6.5 % 0.0 %
Charlotte 4,930 4,618 5,013 6.8 % (1.7 )%
New York 3,704 3,585 3,709 3.3 % (0.1 )%
Houston 3,453 3,189 3,446 8.3 % 0.2 %
Orlando 2,778 2,592 2,777 7.2 % 0.0 %
Austin   2,823   2,630   2,845 7.3 % (0.8 )%
Total rental and other revenues   76,515   72,325   77,167 5.8 % (0.8 )%
 
Property operating and maintenance
expenses (exclusive of depreciation
and amortization)
Atlanta 8,280 7,579 8,569 9.2 % (3.4 )%
Washington, D.C. 4,147 3,818 4,157 8.6 % (0.2 )%
Dallas 6,296 6,062 6,996 3.9 % (10.0 )%
Tampa 3,169 2,998 3,275 5.7 % (3.2 )%
Charlotte 1,588 1,481 1,675 7.2 % (5.2 )%
New York 1,662 1,454 1,612 14.3 % 3.1 %
Houston 1,341 1,237 1,407 8.4 % (4.7 )%
Orlando 967 923 1,042 4.8 % (7.2 )%
Austin   1,175   1,021   1,249 15.1 % (5.9 )%
Total   28,625   26,573   29,982 7.7 % (4.5 )%
 
Net operating income
Atlanta 12,527 12,109 12,413 3.5 % 0.9 % 26.1 %
Washington, D.C. 9,033 8,873 9,126 1.8 % (1.0 )% 18.9 %
Dallas 9,693 8,956 9,265 8.2 % 4.6 % 20.2 %
Tampa 5,682 5,316 5,576 6.9 % 1.9 % 11.9 %
Charlotte 3,342 3,137 3,338 6.5 % 0.1 % 7.0 %
New York 2,042 2,131 2,097 (4.2 )% (2.6 )% 4.3 %
Houston 2,112 1,952 2,039 8.2 % 3.6 % 4.4 %
Orlando 1,811 1,669 1,735 8.5 % 4.4 % 3.8 %
Austin   1,648   1,609   1,596 2.4 % 3.3 % 3.4 %
Total same store NOI $ 47,890 $ 45,752 $ 47,185 4.7 % 1.5 % 100.0 %
 
 
Average rental rate per unit
Atlanta $ 1,227 $ 1,155 $ 1,214 6.2 % 1.1 %
Washington, D.C. 1,889 1,832 1,883 3.1 % 0.3 %
Dallas 1,170 1,099 1,160 6.5 % 0.9 %
Tampa 1,361 1,281 1,348 6.2 % 1.0 %
Charlotte 1,182 1,091 1,167 8.3 % 1.3 %
New York 3,856 3,749 3,824 2.9 % 0.8 %
Houston 1,366 1,236 1,338 10.5 % 2.1 %
Orlando 1,502 1,405 1,487 6.9 % 1.0 %
Austin 1,475 1,376 1,466 7.2 % 0.6 %
Total average rental rate per unit 1,382 1,305 1,370 5.9 % 0.9 %
 

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,
2012 2011 % Change
Rental and other revenues
Atlanta $ 82,080 $ 76,782 6.9 %
Washington, D.C. 52,426 49,954 4.9 %
Dallas 63,093 58,587 7.7 %
Tampa 34,839 32,514 7.2 %
Charlotte 19,451 17,919 8.5 %
New York 14,683 14,097 4.2 %
Houston 13,503 12,305 9.7 %
Orlando 10,927 10,167 7.5 %
Austin   11,130   10,051 10.7 %
Total rental and other revenues   302,132   282,376 7.0 %
 
Property operating and maintenance
expenses (exclusive of depreciation
and amortization)
Atlanta 32,753 31,259 4.8 %
Washington, D.C. 16,274 15,897 2.4 %
Dallas 26,474 25,446 4.0 %
Tampa 12,871 12,202 5.5 %
Charlotte 6,625 6,549 1.2 %
New York 6,567 6,086 7.9 %
Houston 5,393 5,213 3.5 %
Orlando 4,013 3,935 2.0 %
Austin   4,819   4,290 12.3 %
Total   115,789   110,877 4.4 %
 
Net operating income
Atlanta 49,327 45,523 8.4 %
Washington, D.C. 36,152 34,057 6.2 %
Dallas 36,619 33,141 10.5 %
Tampa 21,968 20,312 8.2 %
Charlotte 12,826 11,370 12.8 %
New York 8,116 8,011 1.3 %
Houston 8,110 7,092 14.4 %
Orlando 6,914 6,232 10.9 %
Austin   6,311   5,761 9.5 %
Total same store NOI $ 186,343 $ 171,499 8.7 %
 
 
Average rental rate per unit
Atlanta $ 1,199 $ 1,124 6.7 %
Washington, D.C. 1,868 1,812 3.1 %
Dallas 1,146 1,070 7.1 %
Tampa 1,332 1,243 7.2 %
Charlotte 1,146 1,055 8.6 %
New York 3,800 3,705 2.6 %
Houston 1,315 1,205 9.1 %
Orlando 1,465 1,370 6.9 %
Austin 1,441 1,331 8.3 %
Total average rental rate per unit 1,353 1,274 6.2 %

 

Table 4

Computation of Debt Ratios

(In thousands)

 
  As of December 31,
2012       2011
Total real estate assets per balance sheet $ 2,191,708 $ 2,075,517
Plus:
Company share of real estate assets held in unconsolidated entities 58,726 70,065
Company share of accumulated depreciation - assets held in unconsolidated entities 11,158 12,573
Accumulated depreciation per balance sheet   842,925     767,017  
Total undepreciated real estate assets (A) $ 3,104,517   $ 2,925,172  
 
Total debt per balance sheet $ 1,102,464 $ 970,443
Plus:
Company share of third party debt held in unconsolidated entities   49,531     59,601  
Total debt (adjusted for joint venture partners' share of debt) (B) $ 1,151,995   $ 1,030,044  
 
Total debt as a % of undepreciated real estate assets (adjusted for joint venture
partners' share of debt) (B÷A)   37.1 %   35.2 %
 
Total debt per balance sheet $ 1,102,464 $ 970,443
Plus:
Company share of third party debt held in unconsolidated entities 49,531 59,601
Preferred shares at liquidation value   43,392     43,392  
Total debt and preferred equity (adjusted for joint venture partners'
share of debt) (C) $ 1,195,387   $ 1,073,436  
 
Total debt and preferred equity as a % of undepreciated real estate assets (adjusted
for joint venture partners' share of debt) (C÷A)   38.5 %   36.7 %




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