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Colonial Properties Trust. (



Q4 2010 Earnings Call

January 27, 2011 14:00 am ET


Jerry A. Brewer, Executive Vice President, Finance

Thomas H. Lowder, Chairman and Chief Executive Officer

C. Reynolds Thompson, President and Chief Financial Officer

Paul F. Earle - Chief Operating Officer


Eric Wolfe - Citigroup

Alexander Goldfarb - Sandler O’Neill

Dustin Pizzo - UBS

Michael Salinsky - RBC Capital Markets

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Ladies and gentlemen, thank you standing by. Welcome to the Colonial Properties Trust Fourth Quarter 2010 Earnings Conference Call. During the presentation all participants will be in a listen-only mode. Afterwards we will conduct a question-and-answer session. (Operator Instructions)As a reminder this conference is being recorded Thursday, January 27, 2011.

I’d now like to turn the conference over to Jerry Brewer, Executive Vice President of Finance. Please go ahead sir.

Jerry Brewer

Thank you and welcome to everyone joining us today. We released our earnings this morning via Business Wire. Copy of this earnings release maybe found on our website at We’re also webcasting this call for your convenience. A replay will be available for your convenience at our website after the call.

Tom Lowder, our Chairman and Chief Executive Officer and Reynolds Thompson, President and Chief Financial Officer will lead today’s call. On the call, they will discuss our business developments, financial results for the fourth quarter and our guidance for 2011. After their comments, we’ll open up the call to take your questions. Paul Earle, our Chief Operating Officer, is also here to field the questions.

Let me remind you that much of the information we discuss on this call, including answers we give in response to your questions, may include forward-looking statements regarding our beliefs and current expectations with respect to various matters.

These forward-looking statements are intended to fall under the Safe Harbor provisions of the Securities Law. These estimates are also based on a number of assumptions, any of which, unrealized, could adversely affect our accuracy. Please see our latest SEC filings for the detail and explanation of risk. Any non-GAAP financial measures we discuss are reconciled to the closest GAAP measures and filings that can be found on our website.

I’ll now turn the call over to Tom.

Tom Lowder

Thanks, Jerry and welcome to everyone joining us. On the call today we’ll discuss our fourth quarter results and review our outlook for 2011. Throughout 2010, my CEO directives were to simplify the business, improve operating margins, strengthen the balance sheet and grow the company, we made good progress on each of these initiatives by exiting three joint ventures and selling non-core assets totaling 67 million, issuing a 158 million in common equity, repurchasing the majority of our outstanding preferred stock and acquiring two properties for $60 million in the year of 2010.

As discussed previously, business cycles can be characterized in three phases, reduction, restruction and

restructure and renewal. We made the tough decisions in reduction phase to reduce corporate overhead, reduce development spending and lower the dividend. During our restructure phase, we raised over 300 million in common equity to improve our balance sheet, repurchased a 150 million of high yield in preferred stock, repurchased unsecured bonds at a discount, extended our debt maturities with three Fannie Mae loans, exited 10 joint ventures and sold over $150 million of non-core assets.

While we still have some work to do in the restructuring phase, we are close to our restructuring targets. As we progress into the renewal phase, we will focus on three CEO directives for 2011, grow the company, improve operations, and achieve balance sheet targets.

Internally growing our core revenue back to at least the peak rents we experienced in mid 2008 represents over $0.30 of revenue per share. Externally, we’ll grow our asset base through the development of multifamily apartment communities on the land that we have an inventory and by selectively acquiring young well located multifamily assets in our core Sunbelt markets. The improvement in fundamentals that we and other multifamily companies have been experiencing over the past couple of quarters as well as the new supply that is constrained from the lack of funding has given us higher rents and improved margins. We are close to achieving our balance sheet targets. We continue to use after market equity programs, the latest of which was announced in the fourth quarter. For 2010, we’ve raised over a 158 million through these three ATM programs.

Now, I’d like to turn it over to Reynolds to provide more details on our operating performance in these capital markets activities. I will conclude the call with our 2011 guidance. Reynolds?

C. Reynolds Thompson

Thank you, Tom. FFO for the fourth quarter was $0.28 per share, compared with $0.25 a year ago. The increase is primarily related to an improvement in same property net operating income and a two penny gain from the repurchase of $50 million of our Series B preferred units. Operating FFO which we defined as FFO before transaction income was $0.27 per share, compared with $0.25 per share for the prior year. Multifamily same property NOI increased 3.5%, compared to the fourth quarter of 2009 and 6.9% sequentially. Revenue growth was up 2.2% in the fourth quarter of 2010, compared to the fourth quarter of 2009, continuing the favorable trends we’ve experienced since the second quarter of this year.

Our strongest fourth quarter revenue markets were Phoenix, Raleigh, Charlotte only markets with negative growth were Birmingham, Huntsville and Savannah. Multifamily same property physical occupancy was 96% at the end of the fourth quarter, a 130 basis points higher than the fourth quarter of 2009.

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