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BRE Properties Reports Fourth Quarter And Full Year 2012 Results

Net income available to common shareholders for 2012 totaled $133.5 million, or $1.74 per diluted share, compared with $66.5 million, or $0.93 per diluted share, for the same period in 2011. Annual 2012 results included gains on sales of real estate of approximately $68.2 million, or $0.89 per share and the impairment charge cited above. Annual 2011 results included gains on sales of real estate of approximately $18.8 million, or $0.26 per share and the acquisition-related expenses and preferred stock redemption charge cited above.

Same-Store Results

BRE defines same-store communities as stabilized apartment communities owned by the Company for two comparable calendar year periods. Of the 21,160 apartment homes owned directly by BRE, same-store homes totaled 19,462 for the fourth quarter.

On a year-over-year basis, fourth quarter same-store revenues increased 5.6% compared to fourth quarter 2011. The revenue increase was driven by a 5.5% increase in revenue earned per occupied unit during the period, coupled with a 10-basis-point increase in year-over-year financial occupancy levels. Operating expenses increased 4.4%, resulting in a 6.2% increase in NOI.

On a sequential basis, same-store revenue increased 1.0%, NOI increased 2.1% and expenses decreased 1.2% over third quarter 2012 levels. The sequential quarter increase in revenues was driven by a 0.9% increase in revenue earned per occupied unit during the fourth quarter, coupled with a 10-basis-point increase in financial occupancy.

Company Initiatives

  • Dispositions. In December 2012, the Company completed the sale of two apartment communities in San Diego for a combined gross sales price of $77.0 million. The combined gross sales price of the communities represents a 6.2% weighted average seller’s capitalization rate based on the communities’ annualized NOI. The implied capitalization rate, after giving effect to the reassessed value upon sale under Proposition 13, is estimated at 5.6%. The sale of these two communities resulted in a total gain of approximately $53.9 million in the fourth quarter. Both communities were owned on an unencumbered basis.For the full year 2012, BRE sold three wholly-owned communities, for total net proceeds of $88.2 million and sold three communities in which it maintained joint venture interests for total net proceeds of $26.9 million. The sale of these communities and interests resulted in an aggregate gain of approximately $68.2 million. Gains related to the sales of these communities are included in the Company’s net income. FFO and Core FFO included no gains from the sale of these properties and interests.
  • Development. In December 2012, the Company completed development of Lawrence Station, a 336-unit luxury apartment community located in Sunnyvale, California. Lawrence Station is centrally located to many of Silicon Valley’s largest employers including Apple, Yahoo, Intel, Google, and Cisco Systems; and enjoys easy access to light rail, Amtrak and San Jose International Airport. The community was built for a total cost of $110 million and was completed on time and on budget. As of December 31, 2012, the community had 158 occupied homes and a total of 183 leased homes.In October, the Company commenced construction of Radius, a 264-unit luxury apartment community located in Redwood City, California. Radius is projected to be completed in the fourth quarter of 2014, at a total cost of $98 million, or $371,000 per unit. At December 31, 2012, the Company had funded $24 million of the development costs.

As previously communicated, the Company expects to reduce its outstanding development commitments through the completion of its active development projects, the disposition of its land site in Anaheim, California and the contribution of its two Pleasanton, California land parcels into a joint venture. The Anaheim land site is currently being marketed for sale and an update will be provided when a sale has been completed. The Company is completing construction documentation for the Pleasanton sites. It expects to commence the search for a joint venture partner in the first quarter of 2013.

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