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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2003

OR

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to _______________

Commission file numbers 1-12080 and 0-28226

POST PROPERTIES, INC.
POST APARTMENT HOMES, L.P.
(Exact name of registrant as specified in its charter)

     
Georgia   58-1550675
Georgia   58-2053632
(State or other jurisdiction   (I.R.S. Employer
of incorporation or organization)   Identification No.)

4401 Northside Parkway, Suite 800, Atlanta, Georgia 30327
(Address of principal executive offices — zip code)

(404) 846-5000
(Registrant’s telephone number, including area code)

     Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.

         
Post Properties, Inc.   Yes [X]   No [   ]
Post Apartment Homes, L.P.   Yes [X]   No [   ]

Indicate by check mark whether the registrants are accelerated filers (as defined in Rule 12b-2 of the Exchange Act).

         
Post Properties, Inc.   Yes [X]   No [   ]
Post Apartment Homes, L.P.   Yes [X]   No [   ]

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date:

38,002,848 shares of common stock outstanding as of November 7, 2003 (excluding treasury stock).

 

 

POST PROPERTIES, INC.
POST APARTMENT HOMES, L.P.

INDEX

                 
          Page
         
Part I
   FINANCIAL INFORMATION      
 
              
 
   Item 1      Financial Statements      
 
              
 
   POST PROPERTIES, INC.      
 
   Consolidated Balance Sheets as of September 30, 2003 and December 31, 2002     1  
 
   Consolidated Statements of Operations for the three and nine months ended September 30, 2003 and 2002     2  
 
   Consolidated Statement of Shareholders' Equity and Accumulated Earnings for the nine months ended September 30, 2003     3  
 
   Consolidated Statements of Cash Flows for the nine months ended September 30, 2003 and 2002     4  
 
   Notes to Consolidated Financial Statements     5  
 
          
 
   POST APARTMENT HOMES, L.P.      
 
   Consolidated Balance Sheets as of September 30, 2003 and December 31, 2002     17  
 
   Consolidated Statements of Operations for the three and nine months ended September 30, 2003 and 2002     18  
 
   Consolidated Statement of Partners’ Equity for the nine months ended September 30, 2003     19  
 
   Consolidated Statements of Cash Flows for the nine months ended September 30, 2003 and 2002     20  
 
   Notes to Consolidated Financial Statements     21  
 
              
 
   Item 2      Management’s Discussion and Analysis of Financial Condition and Results of Operations 33
 
   Item 3      Quantitative and Qualitative Disclosures about Market Risk       52
 
   Item 4      Controls and Procedures       53
 
              
Part II
   OTHER INFORMATION     54  
 
            
 
   Item 1      Legal Proceedings       54  
 
   Item 2      Changes in Securities and Use of Proceeds       54  
 
   Item 3      Defaults Upon Senior Securities       54  
 
   Item 4      Submission of Matters to a Vote of Security Holders       54  
 
   Item 5      Other Information       54  
 
   Item 6      Exhibits and Reports on Form 8-K       54  
 
              
 
   Signatures     56  
 
   Exhibit Index     58  

 

 

POST PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)

                       
          September 30,   December 31,
          2003   2002
         
 
          (Unaudited)        
Assets
                
 
Real estate assets
                
   
Land
   $ 254,000     $ 273,058  
   
Buildings and improvements
     1,880,223       1,976,809  
   
Furniture, fixtures and equipment
     211,791       246,634  
   
Construction in progress
     12,466       92,945  
   
Investments in and advances to unconsolidated real estate entities
     100,908       182,285  
   
Land held for future development
     11,988       24,879  
 
    
     
 
 
     2,471,376       2,796,610  
   
Less: accumulated depreciation
     (411,312 )     (426,136 )
   
Assets held for sale net of accumulated depreciation of $82,286 and $17,829 at September 30, 2003 and December 31, 2002, respectively
     199,723       73,061  
 
    
     
 
     
Total real estate assets
     2,259,787       2,443,535  
 
Cash and cash equivalents
     4,215       6,390  
 
Restricted cash
     2,024       1,369  
 
Deferred charges, net
     13,171       15,584  
 
Other assets
     37,270       41,273  
 
    
     
 
   
Total assets
   $ 2,316,467     $ 2,508,151  
 
    
     
 
 
                
Liabilities and shareholders’ equity
                
 
Notes payable
   $ 1,255,280     $ 1,414,555  
 
Accrued interest payable
     16,420       8,994  
 
Dividend and distribution payable
     19,466       33,252  
 
Accounts payable and accrued expenses
     81,706       49,124  
 
Security deposits and prepaid rents
     8,175       8,250  
 
    
     
 
   
Total liabilities
     1,381,047       1,514,175  
 
    
     
 
 
Minority interest of preferred unitholders in Operating Partnership
     70,000       70,000  
 
    
     
 
 
Minority interest of common unitholders in Operating Partnership
     72,714       90,277  
 
    
     
 
 
Commitments and contingencies
                
 
Shareholders’ equity
                
   
Preferred stock, $.01 par value, 20,000,000 authorized:
                
     
8 1/2% Series A Cumulative Redeemable Shares, liquidation preference $50 per share, 900,000 shares issued and outstanding
     9       9  
     
7 5/8% Series B Cumulative Redeemable Shares, liquidation preference $25 per share, 2,000,000 shares issued and outstanding
     20       20  
     
7 5/8% Series C Cumulative Redeemable Shares, liquidation preference $25 per share, 2,000,000 shares issued and outstanding
     20       20  
   
Common stock, $.01 par value, 100,000,000 authorized:
                
     
39,676,204 and 39,676,204 shares issued, 37,999,594 and 37,202,290 shares outstanding at September 30, 2003 and December 31, 2002, respectively
     396       396  
   
Additional paid-in capital
     873,197       940,122  
   
Accumulated earnings
     —       —  
   
Accumulated other comprehensive income
     (14,297 )     (14,822 )
   
Deferred compensation
     (4,466 )     (639 )
 
    
     
 
 
     854,879       925,106  
   
Less common stock in treasury, at cost, 1,676,610 shares and 2,473,914 shares at September 30, 2003 and December 31, 2002, respectively
     (62,173 )     (91,407 )
 
    
     
 
   
Total shareholders’ equity
     792,706       833,699
 
    
     
 
   
Total liabilities and shareholders’ equity
   $ 2,316,467     $ 2,508,151  
 
    
     
 

The accompanying notes are an integral part of these consolidated financial statements.

-1-

 

POST PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)

                                     
        Three months ended   Nine months ended
        September 30,   September 30,
       
 
        2003   2002   2003   2002
       
 
 
 
Revenues
                                
 
Rental
   $ 70,440     $ 70,263     $ 208,785     $ 205,853  
 
Other
     2,817       2,667       7,967       8,219  
 
Interest
     223       316       708       1,002  
 
    
     
     
     
 
   
Total revenues
     73,480       73,246       217,460       215,074  
 
    
     
     
     
 
 
Expenses
                                
 
Property operating and maintenance (exclusive of items shown separately below)
     31,247       29,995       91,348       86,925  
 
Depreciation
     21,553       19,311       62,097       55,637  
 
Interest
     17,122       13,676       48,992       37,386  
 
Amortization of deferred financing costs
     1,084       588       2,840       1,711  
 
General and administrative
     3,735       3,495       10,697       10,980  
 
Minority interest in consolidated property partnerships
     (677 )     (537 )     (1,359 )     (1,480 )
 
Other
     277       —       844       136  
 
Severance charges
     —       —       21,506       —  
 
Proxy and related costs
     —       —       5,231       —  
 
    
     
     
     
 
   
Total expenses
     74,341       66,528       242,196       191,295  
 
    
     
     
     
 
 
Income (loss) from continuing operations before equity in income (losses) of unconsolidated entities, gains on property sales and minority interest
     (861 )     6,718       (24,736 )     23,779  
 
Equity in income (losses) of unconsolidated real estate entities
     60       (441 )     7,768       (1,284 )
 
Gains on property sales
     —       —       —       13,275  
 
Minority interest of preferred unitholders
     (1,400 )     (1,400 )     (4,200 )     (4,200 )
 
Minority interest of common unitholders
     457       (244 )     3,160       (2,791 )
 
    
     
     
     
 
   
Income (loss) from continuing operations
     (1,744 )     4,633       (18,008 )     28,779  
 
    
     
     
     
 
 
Discontinued operations
                                
 
Income (loss) from discontinued operations, net of minority interest
     2,925       3,426       (3,584 )     11,937  
 
Gains (losses) on properties held for sale and sold, net of minority interest
     (2,833 )     (1,906 )     27,044       7,520  
 
    
     
     
     
 
   
Income from discontinued operations
     92       1,520       23,460       19,457  
 
    
     
     
     
 
 
Net income (loss)
     (1,652 )     6,153       5,452       48,236  
 
Dividends to preferred shareholders
     (2,862 )     (2,862 )     (8,587 )     (8,587 )
 
    
     
     
     
 
Net income (loss) available to common shareholders
   $ (4,514 )   $ 3,291     $ (3,135 )   $ 39,649  
 
    
     
     
     
 
 
Per common share data — Basic
                                
 
Income (loss) from continuing operations (net of preferred dividends)
   $ (0.12 )   $ 0.05     $ (0.71 )   $ 0.55  
 
Income from discontinued operations
     —       0.04       0.63       0.52  
 
    
     
     
     
 
 
Net income (loss) available to common shareholders
   $ (0.12 )   $ 0.09     $ (0.08 )   $ 1.07  
 
    
     
     
     
 
 
Dividends declared
   $ 0.45     $ 0.78     $ 1.35     $ 2.34  
 
    
     
     
     
 
 
Weighted average common shares outstanding – basic
     37,840,954       36,913,074       37,522,832       36,897,867  
 
    
     
     
     
 
 
Weighted average common shares and units outstanding – basic
     42,189,895       42,031,962       42,102,260       42,016,755  
 
    
     
     
     
 
 
                                
Per common share data — Diluted
                                
 
Income (loss) from continuing operations (net of preferred dividends)
   $ (0.12 )   $ 0.05     $ (0.71 )   $ 0.55  
 
Income from discontinued operations
     —       0.04       0.63       0.52  
 
    
     
     
     
 
 
Net income (loss) available to common shareholders
   $ (0.12 )   $ 0.09     $ (0.08 )   $ 1.07  
 
    
     
     
     
 
 
Dividends declared
   $ 0.45     $ 0.78     $ 1.35     $ 2.34  
 
    
     
     
     
 
 
Weighted average common shares outstanding – diluted
     37,857,411       36,916,835       37,524,488       36,941,598  
 
    
     
     
     
 
 
Weighted average common shares and units outstanding – diluted
     42,206,352       42,035,723       42,103,916       42,060,486  
 
    
     
     
     
 

The accompanying notes are an integral part of these consolidated financial statements.

-2-

 

POST PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY AND
ACCUMULATED EARNINGS
(In thousands)
(Unaudited)

                                                                     
                                        Accumulated                        
                        Additional           Other                        
        Preferred   Common   Paid-in   Accumulated   Comprehensive   Deferred   Treasury        
        Stock   Stock   Capital   Earnings   Income   Compensation   Stock   Total
       
 
 
 
 
 
 
 
Shareholders’ Equity and Accumulated Earnings, December 31, 2002
   $ 49     $ 396     $ 940,122     $ —     $ (14,822 )   $ (639 )   $<