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» Colonial Properties Trust Q1 2010 Earnings Call Transcript
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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 second quarter and our guidance for 2010. 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 their 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 will now turn the call over to Tom. Tom Lowder Thanks, Jerry. And welcome to everyone joining us. On the call today we'll discuss second quarter results, provide an update on the initiatives we’re pursuing this year and review our revised 2010 guidance. Our initiatives that we announced at the first of the year to improve our company were to simplify the business, improve operating margins, strengthen the balance sheet and grow the company. We've executed well on our initiatives in the second quarter, we released the strong occupancies, we've had sequential growth in revenues and in NOI, we've exited a couple of joint ventures, we've secured attractive 10 years financing and raised an additional $17 million of equity through our ATM program. A number of factors such as the unbundling of households and lower home ownership coupled with limited multifamily supply in our markets has led the fundamentals improving earlier than we all had expected. I'll discuss at the end of our call our revised guidance.
I’ll now turn the call over to Reynolds, who will report on the details of our operating performance and our financing activities. Reynolds?Reynolds Thompson Thanks Tom. FFO for the second quarter was $0.27 per share, compared with $0.56 of the prior year period. Operating FFO, which we define as FFO before transaction income was $0.27 per share, compared with $0.28 per share for the prior year. Our second quarter same property fiscal occupancy remains strong at 96.4%, down 30 basis points sequentially and up 220 basis points compared to last year. Revenue was down 1.3%, versus the prior year, but increased sequentially for the first time in eight quarters by 1.3%. Our sequential revenue growth was broad based. All of the two of our markets posted increases. Rates on new leases decreased approximately 3.4%, for the quarter, based on 5100 new leases. On a monthly basis, new lease rates in June declined only 1.5%. We anticipate a continuation of this trend with new lease rates turning positive during the third quarter. Additionally, our monthly rental rate for occupied unit turned positive sequentially in June, the first time in 25 months. For the quarter, our renewal rates were up 2.1%, based on 4200 renewals. On the expense side we experienced a 0.2% increase sequentially and a 4.7% increase over last year. The increase over prior years primarily in repairs and maintenance as we prepared more apartments for move-ins and also for a heightened emphasis on landscaping which included mulch pine straw and irrigation repairs. Overall, same store NOI declined 5.3%, versus the second quarter of 2009. Sequentially, NOI increased 2.2%, as a result of increased average physical occupancy. Qualified traffic for the quarter was up slightly compared to last year. Turnover improved 150 basis points over last year and 90 basis points sequentially to 62.7%.
Move-outs due to home purchases were approximately 16% and financial and job related turnover was 25.6%, a 190 basis point decline sequentially.LRO has been a useful tool in identifying turning points in our markets. During the first quarter, we were able to improve occupancy and begin working on rents. Beginning in May, we pushed asking rents and LRO by an average of 10% on 12,000 units, then let the system go back to work. The test was successful as we now have asking rents 6.5% higher than where we started in May. With the early success in our first wave of rate increases we pushed rates 8% on another 16,000 units at the beginning of June. We consider this test a success as well, as asking rents have settled in at a net increase of 5%. During the process, we maintained a strong occupancy level, good traffic and reasonable closing ratios. Read the rest of this transcript for free on seekingalpha.com