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We encourage our listeners to read BRE’s Form 10-K for a full description of potentialrisk factors and our 10-Q for interim updates. This morning management’s commentary will cover our financial and operating results for the quarter, the operating environment, and un update on our investment and activity, our financial position and our outlook for the balance of the year. John, Scott and I will provide the prepared remarks. Steve Dominiak will be available during the Q&A session. FFO per share totaled $0.59 for the quarter, which compares favorably to the range we provided in May of $0.56 to $0.58. Our results came in through the high end of the FFO range as property level expenses came in lower than anticipated. We are updating our annual FFO guidance to a range of $2.32 to $2.38 with a midpoint at 2.35, which is unchanged from our initial guidance. The updated guidance reflects the continued strength of market fundamentals that we see in our Northern California and Seattle market while also recognizing the impact of less trends experienced by our Southern California markets in the first half of the year. We are encouraged by the June job numbers in our core market. San Diego reordered year-over-year job gains of 23,000 or 1.9% growth. Orange county reordered gains of 33,000 or 2.4% growth, and Los Angeles posted new jobs of 78,000 for growth of 2.1%. On a percentage of growth basis, these gains all exceeded the markets of New York, Washington, D.C., Dallas and Atlanta. The San Francisco Bay area and Seattle markets continue their strong growth in employment, recording year-over-year gains in June of 3% and 2.6%, respectively. These numbers suggest that Southern California job growth is finally gaining traction. There is no doubt that the uneven pace of the recovery in markets like San Diego, which experienced the negative effect of troop rotation early in the year, challenged our ability to aggressively push rent and impacted the patient growth for the entire portfolio. As a result, we’ve brought the midpoint of our annual same-store revenue guidance down by 50 basis points from the initial midpoint, reflecting this market condition.
We have benefited from better than expected expense savings in our same-store portfolio, but we’ve also lowered the midpoint for our expected growth rate by 75 basis points for expenses.In the second half of the year, we expect a natural deceleration in revenue growth from the 5.5 we reported in the first half. But, we do expect an increase from the second quarter results of 5.1% as we benefit from some of the momentum we experienced late in the second quarter. There are a couple of notable data points. First, new leases were signed at an increase of 5.4% during the quarter and the trend throughout the quarter was very encouraging. The monthly trend increased from 3.5% in April to 5.6 in May, to 6.5 in June. The rollout of LRO was completed during the second quarter and we are very pleased with the seamless rollout and adoption by our on-site and pricing team. We are encouraged to see the improvement in the rental rate activity increases in Southern California. June and July increases were greater than 4% to the 165 basis points higher from the same time a year ago. We also look at peak level rents relative to today’s rents to provide context about potential for continued growth. Rents in Southern California remained 5% below peak levels providing room to run. Although Seattle rents have increased significantly they are still 3% below levels achieved in the third quarter of 2008. Bay area rents on the other hand are now 6% above the previous cycle peak. However, income levels have dramatically improved and the lack of broad based supply still provide the strong foundation for operating fundamentals in the Bay area. Even with the continued rent increases, move outs due to rent increases in the second quarter declined 50 basis points year-over-year to 13%, sequentially declined from the first quarter by 160 basis points. Read the rest of this transcript for free on seekingalpha.com