Colonial Properties Trust (



Q4 2011 Earnings Call

January 26, 2012 2:00 PM ET


Jerry Brewer – EVP, Finance

Tom Lowder – Chairman and CEO

Reynolds Thompson – President and CFO

Paul Earle – COO


Nick Joseph – Citi

Derek Bower – UBS

Alexander Goldfarb – Sandler O’Neill

Michael Salinsky – RBC Capital Markets

Andrew McCulloch – Green Street Advisors

Richard Anderson – BMO Capital Markets

Taylor Schimkat – KBW

Michael Aryan – Sun Life Financial



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Ladies and gentlemen, thank you for standing by. Welcome to the Colonial Properties Trust Fourth Quarter 2011 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 26, 2012.

I would now like to turn the conference over to Jerry Brewer, Executive Vice President of Finance with Colonial Properties Trust. Please go ahead, sir.

Jerry Brewer

Thank you, Lyann, and welcome to everyone joining us today. We released our earnings this morning via Business Wire. A copy of this earnings release may be found on our website. We’re also webcasting this call for your convenience. A replay will be available for your convenience on 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 2012. 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 your 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

Thank you, Jerry, and welcome everyone joining us as I’ve discussed throughout 2011, three CEO-focused directives have been to grow the company, improve operations and achieve our balance sheet targets. We’ve significant progress on each of these directives and we’ll continue to build on these directives into this year. Three years ago, we laid out a business plan and are characterized in three phases, reduction, restructuring, renewal. We’ll now include the third year of this business plan and we are well into the renewal of growth phase.

In 2011, we achieved 7.3% same-store NOI growth, which is the best annualized percentage growth ever. And we were able to provide a strong total return of 19% to our shareholders. Recognition of this growth and our continued positive outlook, our Board has increased our common dividend 20% to $0.18 per quarter. We clearly have moment in our multifamily business. The 6.9% quarter-over-quarter growth in same property net operating income was a strong number with good rental rate growth, strong occupancy and exceptional expense controls. Our same property operating margin for the quarter improved 80 basis points over the prior year on historically low turnover and continued management of our turnover costs.

As I’ll discuss when we get to guidance, we expect all of these trends to continue in 2012 where the number of positive demand trends coming together for one of the better operating climates in this business recent memory. We’ve had a lot of success in improving our portfolio by pruning older multi-family properties as well as several commercial assets in exchange for much younger and faster growing assets in top quartile Sunbelt markets. We completed several asset recycling transactions in the quarter that Reynolds will discuss in a moment. And we expect there will be more of those this year. Our ultimate goal is to achieve a mix of at least 90% net operating income from our multifamily portfolio. We have a pipeline to get there and we will continue executing on that strategy.

Finally, in 2012, we are optimistic that we will achieve our investment grade rating. The amount of work we’ve done on the balance sheet is not gone unnoticed by the way (inaudible) season. We believe we’re close to justifying that rating. We believe we made a strong case and we’ll continue to fund our growth to leverage neutral transactions like the ones executed in the fourth quarter and to-date in the first quarter.

Now Reynolds will provide more details on our operating performance and activity during the quarter and I will conclude the call with our guidance for 2012. Reynolds?

Reynolds Thompson

Thank you, Tom. FFO for the fourth quarter was $0.28 per share. Multifamily same property net operating income increased 6.9% and revenue increased 5.5% compared to the fourth quarter of 2010. Our strongest fourth quarter revenue markets were Austin, Charlotte, Phoenix, Charleston, Rowley and Orlando.

Multifamily same property physical occupancy was 95.9% at the end of the fourth quarter. Same property NOI increased 7.3% for the year, which represents a record same-store number for the company. Revenues increased 4.4% and expenses increased 0.6%. Austin, Charlotte, Phoenix, Dallas, Fort Worth, Rowley and Savanna all achieved NOI growth of at least 8%.

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