BRE Properties, Inc. (NYSE:BRE) today reported operating results for the quarter and year ended December 31, 2011. All per share results are reported on a fully diluted basis.

Operational and Financial Highlights
  • Annual funds from operations (FFO) totaled $154.4 million, or $2.14 per share. Fourth quarter FFO totaled $43.3 million, or $0.57 per share.
  • Annual net income available to common shareholders totaled $66.5 million, or $0.93 per share. Fourth quarter net income available to common shareholders totaled $33.6 million, or $0.44 per share.
  • Year-over-year annual same-store revenues and net operating income (NOI) increased 3.4% and 4.3%, respectively. Physical occupancy averaged 95.5%; annual turnover in the same-store portfolio was 60%.
  • Year-over-year fourth quarter same-store revenues and NOI increased 5.5% and 6.6%, respectively. Physical occupancy averaged 95.4%; annualized turnover in the same-store portfolio was 53%.
  • Sold two assets in the Inland Empire during the fourth quarter for a sales price of $65.2 million and a gain on sale of $14.5 million. Also during the quarter the company completed the sale of a property owned in an unconsolidated joint venture. BRE’s share of the proceeds from the property sale totaled $4.8 million and resulted in a gain of $2.0 million (inclusive of a promote of $372,000). The gain and promote are excluded from FFO per share totals.
  • The company issued 232,000 shares of common stock during the fourth quarter, at an average share price of $49.26 per share, with total gross proceeds of $11.4 million under its at-the-market equity program.
  • Subsequent to the end of the quarter, the company amended and restated its unsecured revolving credit facility. The facility’s capacity remains at $750 million, and has an initial maturity date of April 2015 with an option to extend for an additional year provided certain conditions are met.
  • 2012 FFO guidance announced in a range of $2.30 to $2.40 per share. Same-Store revenue and NOI are expected to increase in ranges of 5.00% to 6.75% and 5.25% to 8.00%, respectively.

Fourth Quarter 2011

Funds from operations, the generally accepted measure of operating performance for real estate investment trusts, totaled $43.3 million, or $0.57 per share, for the fourth quarter 2011, compared with $9.8 million, or $0.15 per share, for the fourth quarter 2010. (A reconciliation of net income available to common shareholders to FFO is provided at the end of this release.) FFO for the fourth quarter 2010 included a loss on retirement of debt totaling $22.9 million, or $0.36 per share.

Net income available to common shareholders for the fourth quarter 2011 totaled $33.6 million, or $0.44 per share, compared with net income of $149,000, or $0.00 per share, for the same period 2010. The fourth quarter 2011 results included gains on sales totaling $16.5 million or, $0.22 per share. The fourth quarter 2010 results included a gain on sale of real estate of approximately $15.2 million, or $0.24 per share, and the loss on retirement of debt cited above totaling $22.9 million, or $0.36 per share.

Total revenues from continuing operations for the quarter were $96.0 million, compared with $87.4 million for the fourth quarter 2010. Adjusted EBITDA for the quarter totaled $61.9 million, compared with $57.1 million in the fourth quarter 2010. (A reconciliation of net income available to common shareholders to Adjusted EBITDA is provided at the end of this release.)

BRE’s year-over-year earnings and FFO results reflect the impact of the following during 2011: (1) increases in same-store property-level operating results over 2010 levels; (2) incremental NOI from acquired and newly completed properties in the last 24 months; (3) a reduction in interest expense due to lower leverage levels and higher levels of capitalized interest; and (4) a reduction in preferred stock dividends due to redemptions, and repurchases, which were offset by (5) a higher level of outstanding shares from equity issued in 2010 and 2011.

12-Month Period Ended December 31, 2011

For the annual period, FFO totaled $154.4 million, or $2.14 per share, compared with $98.9 million, or $1.58 per share, for the same period in 2010. FFO for the annual period in 2011 includes a $3.8 million, or $0.05 per share, preferred stock redemption charge. FFO for the annual period in 2010 included: (1) acquisition-related expenses totaling $4.0 million, or $0.06 per share; (2) one-time compensation costs related to the resignation of the company’s chief operating officer, totaling $1.3 million, or $0.02 per share; and (3) a loss on retirement of debt totaling $23.5 million, or $0.38 per share. Net income available to common shareholders for 2011 period totaled $66.5 million, or $0.93 per diluted share, compared with $41.6 million, or $0.67 per diluted share, for the same period 2010. The year-to-date 2010 results included a gain on sales of real estate of approximately $40.1 million, or $0.65 per share and the non operating expenses cited above.

Same-Store Property Results

BRE defines 2011 same-store properties as stabilized apartment communities owned by the company since January 1, 2010. Of the 21,336 apartment units owned directly by BRE, same-store units totaled 18,641 for the quarter and year-to-date periods.

On a year-over-year basis, fourth quarter same-store revenues and NOI increased 5.5% and 6.6%, respectively. The revenue increase was driven by a 5.3% increase in revenue per unit earned during the period, coupled with a 20-basis-point increase in year-over-year financial occupancy levels.

On a sequential basis, same-store revenue increased 0.8%, NOI increased 2.5% and expenses decreased 2.8% over third quarter 2011 levels. The sequential quarter increase in revenues was driven by a 1.0% increase in revenue earned per unit during the fourth quarter, offset by a 20-basis-point decrease in financial occupancy.

Investment Activity

During the quarter the company commenced construction on two sites; Wilshire La Brea, a 478-unit community in Los Angeles, Calif. and Solstice, a 280-unit community in Sunnyvale, Calif. BRE has four communities under construction at quarter-end. In addition to the two fourth quarter starts, construction is also in process at Lawrence Station, a 336-unit community in Sunnyvale, Calif., with estimated completion date in the first quarter of 2013; and Aviara, a 166-unit community in Mercer Island, Wash., with an estimated completion date in the second quarter of 2013. In addition to the four communities under construction, BRE owns three land parcels (two in Northern California and one in Southern California) representing approximately 1,000 units of future development, and an estimated aggregate investment of approximately $424 million upon completion.

On November 15, 2011, BRE sold Windrush Village and Galleria at Towngate, two communities located in the eastern half of the Inland Empire, with a combined 634 units, for total sales proceeds of $65.2 million; with a gain on sale of $14.5 million. During 2010 and 2011, five properties were sold in the Inland Empire, reducing the company’s exposure in this market to 5.1% of total NOI from 11.2% in 2009.

On December 22, 2011, Pinnacle at Hunter’s Glen, a 264-unit property in Denver, Colo., which was owned in an unconsolidated joint venture, was sold to a third party. BRE’s share of the proceeds from the property sale totaled $4.8 million and resulted in a gain of $2.0 million (inclusive of a promote of $372,000). The gain and promote are excluded from FFO per share totals.

Capital Markets Activity

Under the at-the-market (ATM) equity distribution agreement filed with the Securities and Exchange Commission on Form 8-K on February 25, 2010, the company issued 232,000 shares of common stock, at an average share price of $49.26 per share, with total gross proceeds of $11.4 million. The remaining capacity under the equity distribution agreement totals $163.6 million.

Subsequent to the end of the quarter, the company amended and restated its unsecured revolving credit facility, maintaining borrowing capacity at $750 million and extending the maturity date of the facility from September 2012 to April 2015. Based on the company’s current debt ratings, the revolving credit facility is priced at LIBOR plus 120 basis points with an annual facility fee of 20 basis points. Funds from the revolving credit facility will be used for acquisition and development activities as well as for general corporate purposes.

Common and Preferred Dividends Declared

On February 6, 2012, BRE’s Board of Directors approved regular common and preferred stock dividends for the quarter ending March 31, 2012. All common and preferred dividends will be payable on Friday, March 30, 2012 to shareholders of record on Thursday, March 15, 2012.

The board also approved a 2.7% increase for the 2012 common dividend to $0.385 per share quarterly. The quarterly dividend payment is equivalent to $1.54 per share on an annualized basis, and represents a yield of approximately 2.95% on Friday’s closing price of $52.27 per share. BRE has paid uninterrupted quarterly dividends to shareholders since the company’s founding in 1970.

The company’s 6.75% Series D quarterly preferred dividend is $0.421875 per share.

2012 Earnings Outlook

Earnings per share (EPS) for the full year 2012 are estimated to be within a range of $1.00 to $1.10.

Management estimates FFO per share for 2012 to range from $2.30 to $2.40. The estimated increase in earnings can be attributed to an expected increase in NOI from same-store operations, increased NOI from properties acquired in 2011, offset by loss of NOI from properties sold in 2011, and an increase in the total weighted average shares outstanding.

For the first quarter of 2012, the company estimates FFO per share to range from $0.54 to $0.56. The difference between the company’s fourth quarter 2011 FFO of $0.57 per share and the midpoint of the first quarter 2012 guidance range of $0.55 is primarily due to loss of NOI from Inland Empire properties sold in the fourth quarter and an increase in expected operating expenses in Q1 2012. 2012 guidance does not assume successful property tax appeals; the company received the benefit of approximately $600,000 in property tax appeals in the fourth quarter of 2011.

The company’s 2012 financial outlook is based on a number of assumptions and estimates, which are outlined in Attachment B to this release. The primary assumptions and estimates include:

Same-Store Operations
  • An increase in same-store revenue in a range of 5.00% to 6.75%;
  • An increase in same-store expenses in a range of 4.00% to 4.50%; and
  • An increase in same-store NOI in a range of 5.25% to 8.00%.

Expected expense growth of 4.00 – 4.50% within the 2012 same-store pool reflects: (1) the benefit of $1.8 million of tax appeal proceeds received by certain communities in 2011 resulting in a lower base year for comparison purposes with 2012; and (2) estimated costs of $600,000 in 2012 associated with the adoption of a third-party revenue management system. While the company expects to realize a revenue lift in 2012 from the introduction of a third-party revenue management system, no benefit has been recognized in its same-store revenue outlook in recognition of 2012 being an implementation year for the system. Excluding these two expense items, the projected level of increase for other same-store real estate expenses is in a range of 2.0% - 2.75%.

Investment Activity

Development advances are estimated to range from $190 to $240 million; capitalized interest is estimated to range from $20.0 to $21.5 million.

Annual FFO guidance does not include any nonroutine income or expense items (including gains or losses associated with the sale of land).

Q4 2011 Analyst Conference Call

The company will hold a conference call on Tuesday, February 7, 2012 at 12:00 p.m. Eastern (9:00 a.m. Pacific) to review these results. The dial-in number to participate in the United States and Canada is 888.542.1138; the international number is 719.325.2302 Enter Conf. ID# 2736549. A telephone replay of the call will be available for 14 days at 877.870.5176 or 858.384.5517 international, using the same ID# 2736549. A link to the live webcast of the call will be posted on www.breproperties.com, in the Investors section. A webcast replay will be available for 90 days following the call.

About BRE Properties

BRE Properties, based in San Francisco, California, focuses on the development, acquisition and management of apartment communities located primarily in the major metropolitan markets of Southern and Northern California and Seattle. BRE directly owns 76 multifamily communities (totaling 21,336 units) and has joint venture interests in an additional 11 apartment communities (totaling 3,592 units). BRE Properties is a real estate investment trust (REIT) listed in the S&P MidCap 400 Index. For more information on BRE Properties, please visit our website at www.breproperties.com.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: Except for the historical information contained herein, this news release contains forward-looking statements regarding the company’s capital resources, portfolio performance and results of operations, and is based on the company’s current expectations and judgment. You should not rely on these statements as predictions of future events because there is no assurance that the events or circumstances reflected in the statements can be achieved or will occur. Forward-looking statements are identified by words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “pro forma,” “estimates,” or “anticipates” or their negative form or other variations, or by discussions of strategy, plans or intentions. The following factors, among others, could affect actual results and future events: defaults or nonrenewal of leases, increased interest rates and operating costs, failure to obtain necessary outside financing, difficulties in identifying properties to acquire and in effecting acquisitions, failure to successfully integrate acquired properties and operations, inability to dispose of assets that no longer meet our investment criteria under applicable terms and conditions, risks and uncertainties affecting property development and construction (including construction delays, cost overruns, inability to obtain necessary permits and public opposition to such activities), failure to qualify as a real estate investment trust under the Internal Revenue Code of 1986, as amended, and increases in real property tax rates. The company’s success also depends on general economic trends, including interest rates, tax laws, governmental regulation, legislation, population changes and other factors, including those risk factors discussed in the section entitled “Risk Factors” in the company’s most recent Annual Report on Form 10-K as they may be updated from time to time by the company’s subsequent filings with the Securities and Exchange Commission, or SEC. Do not rely solely on forward-looking statements, which only reflect management’s analysis. The company assumes no obligation to update this information. For more details, refer to the company’s SEC filings, including its most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.
 
BRE Properties, Inc.
Consolidated Balance Sheets
Fourth Quarter 2011
(Unaudited, dollar amounts in thousands except per share data)      
 
December 31, December 31,
ASSETS   2011       2010  
 
Real estate portfolio:

Direct investments in real estate:
 
Investments in rental properties $ 3,607,045 $ 3,464,466
Construction in progress 246,347 29,095
Less: accumulated depreciation   (729,151 )   (640,456 )
  3,124,241     2,853,105  
Equity in real estate joint ventures:
Investments 63,313 61,132
 
Land under development   101,023     183,291  
 
Total real estate portfolio 3,288,577 3,097,528
 
Cash 9,600 6,357
Other assets   54,444     52,362  
 
TOTAL ASSETS $ 3,352,621   $ 3,156,247  
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY      
 
Liabilities:
Unsecured senior notes $ 724,957 $ 773,076
Unsecured line of credit 129,000 209,000
Mortgage loans payable 808,714 810,842
Accounts payable and accrued expenses   63,273     52,070  
 
Total liabilities   1,725,944     1,844,988  
 
Redeemable noncontrolling interests   16,228     34,866  
 
Shareholders' equity:
 

Preferred Stock, $0.01 par value; 20,000,000 shares authorized: 2,159,715 and 7,000,000shares with $25 liquidation preference issued and outstanding at December 31, 2011and December 31, 2010, respectively.
22 70
 

Common stock, $0.01 par value, 100,000,000 shares authorized. Shares issued and outstanding:75,556,167 and 64,675,815 at December 31, 2011 and December 31, 2010, respectively.
756 647
 
Additional paid-in capital   1,609,671     1,275,676  
 
Total shareholders' equity   1,610,449     1,276,393  
 
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY $ 3,352,621   $ 3,156,247  
 
BRE Properties, Inc.
Consolidated Statements of Income
Quarters Ended December 31, 2011 and 2010
(Unaudited, dollar and share amounts in thousands)
         
Quarter ended Quarter ended Twelve months ended Twelve months ended
REVENUES     12/31/11     12/31/10     12/31/11     12/31/10  
 
Rental income $ 92,337 $ 84,451 $ 357,505 $ 322,510
Ancillary income   3,652     2,962     13,876     12,455  
 
Total revenues 95,989 87,413 371,381 334,965
 
EXPENSES          
 
Real estate $ 30,263 $ 28,092 $ 119,212 $ 108,634
Provision for depreciation 25,672 23,778 102,574 90,038
Interest 18,103 21,428 74,964 84,894
General and administrative 5,697 5,116 21,768 20,570
Other expenses (1)   -     211     402     5,298  
Total expenses 79,735 78,625 318,920 309,434
 
Other income 657 681 2,536 2,934
Net (loss) from extinguishment of debt   -     (22,949 )   -     (23,507 )
 
Net income before noncontrolling interests,
partnership income and discontinued operations 16,911 (13,480 ) 54,997 4,958
 
Income from unconsolidated entities 726 586 2,888 2,178
Net gain on sale of unconsolidated entities   2,022     -     4,270     -  
Income/(loss) from continuing operations 19,659 (12,894 ) 62,155 7,136
 
Discontinued operations:
Discontinued operations, net (2) 502 1,105 2,411 7,588
Net gain on sales of discontinued operations   14,489     15,226     14,489     40,111  
Income from discontinued operations 14,991 16,331 16,900 47,699
 
NET INCOME $ 34,650 $ 3,437 $ 79,055 $ 54,835
 
Redeemable noncontrolling interest in income 165 335 1,168 1,446
 
Redemption related preferred stock issuance cost - - 3,771 -
 
Dividends attributable to preferred stock   911     2,953     7,655     11,813  
 
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $ 33,574   $ 149   $ 66,461   $ 41,576  
 
Net income per common share - basic $ 0.45   $ 0.00   $ 0.93   $ 0.67  
 
Net income per common share - diluted $ 0.44   $ 0.00   $ 0.93   $ 0.67  
 
 
Weighted average shares outstanding - basic   75,415     64,305     71,220     61,420  
 
Weighted average shares outstanding - diluted   75,830     64,305     71,670     61,850  
 

(1)

 

For the quarter ended December 31, 2011, there were no acquisition costs reported in other expenses. For the quarter ended December 31, 2010, other expenses include $211,000 of acquisition costs. For the twelve months ended December, 2011, $402,000 of acquisition costs were reported in other expenses. For the twelve months ended December 31, 2010, other expenses include a one-time $1,300,000 charge associated with the resignation of our COO and $3,998,000 related to acquisition costs.
 

(2)

 
For 2011, includes two properties sold during the twelve months ended December 31, 2011. For 2010, includes includes two properties sold during the twelve months ended December 31, 2011 and four operating properties sold during the twelve months ending December 31, 2010.
 
 
Quarter ended Quarter ended Twelve months ended Twelve months ended
  12/31/11     12/31/10     12/31/11     12/31/10  
Rental and ancillary income $ 919 $ 2,646 $ 6,239 $ 19,466
Real estate expenses (417 ) (981 ) (2,462 ) (7,532 )
Provision for depreciation   -     (560 )   (1,366 )   (4,346 )
Income from discontinued operations, net $ 502   $ 1,105   $ 2,411   $ 7,588  
 
BRE Properties, Inc.
Non-GAAP Financial Measure Reconciliations and Definitions
(Dollar amounts in thousands)  
 
This document includes certain non-GAAP financial measures that management believes are helpful in understanding our business, as further described below. BRE's definition and calculation of non-GAAP financial measures may differ from those of other REITs, and may, therefore, not be comparable. The non-GAAP financial measures should not be considered an alternative to net income or any other GAAP measurement of performance and should not be considered an alternative to cash flows from operating, investing or financing activities as a measure of liquidity.
 

Funds from Operations (FFO)

FFO is used by industry analysts and investors as a supplemental performance measure of an equity REIT. FFO is defined by the National Association of Real Estate Investment Trusts as net income or loss (computed in accordance with accounting principles generally accepted in the United States) excluding extraordinary items as defined under GAAP and gains or losses from sales of previously depreciated real estate assets, plus depreciation and amortization of real estate assets and adjustments for unconsolidated partnerships and joint ventures. We calculate FFO in accordance with the NAREIT definition.
 
We believe that FFO is a meaningful supplemental measure of our operating performance because historical cost accounting for real estate assets in accordance with GAAP assumes that the value of real estate assets diminishes predictably over time, as reflected through depreciation. Because real estate values have historically risen or fallen with market conditions, management considers FFO an appropriate supplemental performance measure because it excludes historical cost depreciation, as well as gains or losses related to sales of previously depreciated property, from GAAP net income. By excluding depreciation and gains or losses on sales of real estate, management uses FFO to measure returns on its investments in real estate assets. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions nor the level of capital expenditures to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results from operations, the utility of FFO as a measure of our performance is limited.
 
Management also believes that FFO, combined with the required GAAP presentations, is useful to investors in providing more meaningful comparisons of the operating performance of a company’s real estate between periods or as compared to other companies. FFO does not represent net income or cash flows from operations as defined by GAAP and is not intended to indicate whether cash flows will be sufficient to fund cash needs. It should not be considered an alternative to net income as an indicator of the REIT’s operating performance or to cash flows as a measure of liquidity. Our FFO may not be comparable to the FFO of other REITs due to the fact that not all REITs use the NAREIT definition.
 

Quarter Ended12/31/2011

Quarter Ended12/31/2010

Twelve Months Ended12/31/2011

Twelve Months Ended12/31/2010
       
 
Net income available to common shareholders $ 33,574 $ 149 $ 66,461 $ 41,576
Depreciation from continuing operations 25,672 23,778 102,574 90,038
Depreciation from discontinued operations - 560 1,366 4,346
Redeemable noncontrolling interest in income 165 - 1,168 1,446
Depreciation from unconsolidated entities 512 501 2,052 1,991
Net gain on sales of discontinued operations (14,489 ) (15,226 ) (14,489 ) (40,111 )
Net gain on sale of unconsolidated entities (2,022 ) - (4,270 ) -
Less: Redeemable noncontrolling interest in income not convertible into common shares   (105 )   -     (420 )   (420 )
Funds from operations $ 43,307   $ 9,762   $ 154,442   $ 98,866  
 
Diluted shares outstanding - EPS 75,830 64,305 71,670 61,850
 
Net income per common share - diluted $ 0.44   $ -   $ 0.93   $ 0.67  
 
Diluted shares outstanding - FFO 76,100 64,725 72,180 62,535
FFO per common share - diluted $ 0.57   $ 0.15   $ 2.14   $ 1.58  
           
BRE Properties, Inc.
Non-GAAP Financial Measure Reconciliations and Definitions
(Dollar amounts in thousands)
 

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA
EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined by BRE as EBITDA, excluding minority interests, gains or losses from sales of investments, preferred stock dividends and other expenses. We consider EBITDA and Adjusted EBITDA to be appropriate supplemental measures of our performance because they eliminate depreciation, interest, and, with respect to Adjusted EBITDA, gains (losses) from property dispositions and other charges, which permits investors to view income from operations without the impact of noncash depreciation or the cost of debt, or with respect to Adjusted EBITDA, other non-operating items described above.
 
Because EBITDA and Adjusted EBITDA exclude depreciation and amortization and capture neither the changes in the value of our properties that result from use or market conditions nor the level of capital expenditures to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results from operations, the utility of EBITDA and Adjusted EBITDA as measures of our performance is limited. Below is a reconciliation of net income available to common shareholders to EBITDA and Adjusted EBITDA:
 

Quarter Ended12/31/2011

Quarter Ended12/31/2010

Twelve Months Ended12/31/2011

Twelve Months Ended12/31/2010
       
 
Net income available to common shareholders $ 33,574 $ 149 $ 66,461 $ 41,576
Interest, including discontinued operations 18,103 21,428 74,964 84,894
Depreciation, including discontinued operations 25,672 24,338 103,940 94,384
EBITDA 77,349 45,915 245,365 220,854
Redeemable noncontrolling interest in income 165 335 1,168 1,446
Net gain on sales (14,489) (15,226) (14,489) (40,111)
Dividends on preferred stock 911 2,953 7,655 11,813
Other expenses - 211 402 5,298
Net loss from extinguishment of debt - 22,949 - 23,507
Net gain on sale of unconsolidated entities (2,022) - (4,270) -
Redemption related to preferred stock issuance cost - - 3,771 -
Adjusted EBITDA $ 61,914 $ 57,137 $ 239,602 $ 222,807
 
Net Operating Income (NOI)
We consider community level and portfolio-wide NOI to be an appropriate supplemental measure to net income because it helps both investors and management to understand the core property operations prior to the allocation of general and administrative costs. This is more reflective of the operating performance of the real estate, and allows for an easier comparison of the operating performance of single assets or groups of assets. In addition, because prospective buyers of real estate have different overhead structures, with varying marginal impact to overhead from acquiring real estate, NOI is considered by many in the real estate industry to be a useful measure for determining the value of a real estate asset or groups of assets.
 
Because NOI excludes depreciation and does not capture the change in the value of our communities resulting from operational use and market conditions, nor the level of capital expenditures required to adequately maintain the communities (all of which have real economic effect and could materially impact our results from operations), the utility of NOI as a measure of our performance is limited. Other equity REITs may not calculate NOI consistently with our definition and, accordingly, our NOI may not be comparable to such other REITs' NOI. Accordingly, NOI should be considered only as a supplement to net income as a measure of our performance. NOI should not be used as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends or make distributions. NOI also should not be used as a supplement to or substitute for cash flow from operating activities (computed in accordance with GAAP).
 

Quarter Ended12/31/2011

Quarter Ended12/31/2010

Twelve Months Ended12/31/2011

Twelve Months Ended12/31/2010
       
 
Net income available to common shareholders $ 33,574 $ 149 $ 66,461 $ 41,576
Interest, including discontinued operations 18,103 21,428 74,964 84,894
Depreciation, including discontinued operations 25,672 24,338 103,940 94,384
Redeemable noncontrolling interest in income 165 335 1,168 1,446
Net gain on sales (14,489) (15,226) (14,489) (40,111)
Net gain on sale of unconsolidated entities (2,022) - (4,270) -
Dividends on preferred stock 911 2,953 7,655 11,813
General and administrative expense 5,697 5,116 21,768 20,570
Other expenses - 211 402 5,298
Net loss from extinguishment of debt - 22,949 - 23,507
Redemption related to preferred stock issuance cost - - 3,771 -
NOI $ 67,611 $ 62,253 $ 261,370 $ 243,377
Less Non Same-Store NOI 10,713 8,898 40,425 31,490
Same-Store NOI $ 56,898 $ 53,355 $ 220,945 $ 211,887
     
Exhibit B: 2011 Financial Outlook (page 1 of 2)
  (dollars in thousands, except per share amounts)
2012: EPS & FFO per share guidance
 
Low End High End
Earnings per share $ 1.00 $ 1.10
Depreciation per share $ 1.30 $ 1.30
Funds from operations per share $ 2.30 $ 2.40
 
2012: Same-store outlook            
 
Low End High End
Same-store revenue (2012 vs 2011) 5.00 % 6.75 %
Same-store expense (2012 vs 2011) 4.50 % 4.00 %
Same-store net operating income (2012 vs 2011) 5.25 % 8.00 %
 
Regional breakdown of same store revenues Low End High End

% of Total Same Store Revenues
Seattle 6.25 % 7.75 % 14.5 %
San Francisco Bay Area 8.25 % 9.75 % 21.2 %
Southern California 3.75 % 5.25 % 60.0 %
Non Core markets   4.50 %       5.50 %   4.3 %
Total   5.00 %       6.75 %   100.0 %
 
 
Detail of same store expense growth 2011 Actual   2012 Low End   % increase 2012 High End   % increase
Same store expenses - guidance $ 110,425 $ 115,395 4.50 % $ 114,842 4.00 %
Less property tax expense $ (31,999 ) $ (34,224 ) $ (34,224 )
Less revenue management costs $ -     $ (600 )     $ (600 )    
Same-store exp adjusted for non routine $ 78,426     $ 80,570     2.73 % $ 80,018     2.03 %
 
2012: Other elements of guidance              
 
2012 Same-store and non same-store pools
Communities Units
Ending 2011 communities
Same-store 66 18,641
 
Non same-store
Acquisition communities 7 1,689
Lease-up communities 2 566
Renovation communities 1 440
 
2011 pool adjustments
2011 lease-up communities moved to 2012 same-store 1 296
2010 acquisition communities moved to 2012 same store 4 1,037
 
2012 Communities
Same-store 71 19,974
 
Non same-store
Lease-up communities 1 270
Acquisition communities (acquired in 2011) 3 652
Renovation communities 1 440
 
Operating and capital elements Level / Range
Occupancy (same-store) 95.5%
LIBOR (average) 50 - 75 bps
Weighted average cost of debt outstanding 5.30% - 5.40%
 
Operating property acquisitions - -
Development advances $ 190,000 - $ 240,000
Capitalized interest $ 20,000 - $ 21,500
Debt maturities $ 100,500 $ 100,500
Revenue enhancing rehab $ 30,000 - $ 55,000
Recurring capital expenditures $ 21,000 - $ 23,000
 
Common stock $ 50,000 - $ 175,000
Property sales / land sales $ - - $ 150,000
Debt issuance $ - - $ 300,000
 
Detail of increase in shares outstanding Low End High End
Shares outstanding 12/31/11 76,160 76,160
Impact of share issuance in 2012 Outlook (weighted avg.)   540     1,540  
2012 Outlook weighted average shares outstanding 76,700 77,700

 

Exhibit B:  2012 Financial Outlook (page 2 of 2)
                 
2012: Detail of financial outlook line items against comparable 2011 actual results (dollar amounts in thousands except per share amounts)
 
           
2011 2012 2012
  Actual     Low End High End
 
Rental and ancillary revenues
Same-store (1) $ 348,656 $ 366,089 5.00 % $ 372,190 6.75 %
 
Non same-store (1)
Lease-up communities 5,764 7,300 7,800
Acquisition communities 8,369 13,800 14,500
Renovation communities 6,909 7,000 7,250
Commercial & other   1,683     1,705   1,705  
Total rental and ancillary revenues 371,381 395,894 403,445
 
Real estate expenses
Same-store (1) 110,425 115,395 4.50 % 114,842 4.00 %
 
Non same-store (1)
Lease-up communities 1,987 2,400 2,300
Acquisition communities 3,201 5,000 4,900
Renovation communities 1,929 1,950 1,900
Commercial & other   1,670     1,651   1,601  
Total real estate expenses 119,213 126,395 125,543
 
Property level net operating income
Same-store (1) 238,230 250,694 5.25 % 257,348 8.00 %
 
Non same-store (1)
Lease-up communities 3,778 4,900 5,500
Acquisition communities 5,167 8,800 9,600
Renovation communities 4,980 5,050 5,350
Commercial & other   13     55   105  
Total property level net operating income 252,168 269,499 277,902
 
2012 acquisition communities (net) (2) - -
 
Non real estate expenses
Provision for depreciation 102,574 100,000 100,000
General & administrative 21,768 23,000 22,000
Interest expense 74,964 72,500 68,000
Other expenses 402 - -
Loss on retirement of debt   -     -   -  
Total non real estate expenses 199,708 195,500 190,000
 
Partnership and other income
Partnership income 2,888 2,800 2,800
Net gain on sale of unconsolidated entity 4,270 - -
Other income non property related   2,536     2,000   2,100  
Total partnership and other income 9,693 4,800 4,900
 
Discontinued operations - communities sold
Net operating income 3,777 - (3,750 )
Depreciation (1,366 ) - -
Gain on sales of discontinued operations   14,489     -   -  
Total discontinued operations 16,900 - (3,750 )
 
Redeemable noncontrolling interest in income 1,168 600 600
Preferred stock dividends 7,655 3,645 3,645
Redemption related preferred stock issuance costs   3,771     -   -  
Net income available to common shareholders $ 66,459   $ 74,554 $ 84,808  
 
Reconciliation to funds from operations
Depreciation from continuing and discontinued ops 103,940 100,000 100,000
Depreciation from unconsolidated entities 2,052 1,800 1,800
Convertible redeemable noncontrolling interests in income 749 186 186
Gain on sales of discontinued operations (14,489 ) - -
Net gain on sale of unconsolidated entity   (4,270 )   -   3,750  
Funds from operations $ 154,442   $ 176,540 $ 186,794  
 
Diluted shares outstanding - FFO 72,180 76,700 77,700
     
FFO per common share $ 2.14   $ 2.30 $ 2.40  

(1) 2011 Actual Same-store and Non Same-store communities are presented to reflect results for the comparable 2012 community pool composition.

Copyright Business Wire 2010