Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - BRE PROPERTIES INC /MD/ | d8k.htm |
| EX-99.1 - PRESS RELEASE OF BRE PROPERTIES, INC. - BRE PROPERTIES INC /MD/ | dex991.htm |
Exhibit 99.2
The Vistas of West Hills, Valencia, CA
BRE Properties, Inc.
SUPPLEMENTAL OPERATING AND FINANCIAL DATA
For the Quarter Ended March 31, 2011
BRE Properties, Inc.
First Quarter 2011
Earnings Release and
Supplemental Financial Data
| Table of Contents |
Page | |||
| Financial and Operating Highlights |
1 | |||
| Consolidated Balance Sheets |
2 | |||
| Consolidated Statements of Income - Comparative Quarters |
3 | |||
| Consolidated Statements of Income - Past Five Quarters |
4 | |||
| Reconciliation of FFO, Capital Expenditures, and Continuing and Discontinued Operations |
5 | |||
| Market Summaries “Same-Store” Data |
||||
| - Quarter vs. Quarter |
6 | |||
| - Same-Store Operating Expense Summary and Joint Venture Disclosure |
7 | |||
| - Sequential “Same-Store” Operating Data |
8 | |||
| - Summary of Revenue and Occupancy Changes |
9 | |||
| - Renewal and Leasing Metrics |
10 | |||
| - Operating Metrics |
11 | |||
| Debt Summary |
12 | |||
| Development Communities and Land Held for Development |
13 | |||
| Exhibit A - Share Analysis |
14 | |||
| Exhibit B - Non-GAAP Financial Measure Reconciliations and Definitions |
15-16 | |||
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: Except for the historical information contained herein, this document contains forward-looking statements regarding BRE and property performance, and is based on BRE’s current expectations and judgment. Actual results could vary materially depending on risks and uncertainties inherent to general and local real estate conditions, future interest rate levels or capital market conditions. For more details, please refer to BRE’s SEC filings, including its most recent Annual Report on Form 10-K and quarterly report on Form 10-Q.
BRE Properties, Inc.
Financial and Operating Highlights
First Quarter 2011
(Unaudited; in thousands, except per share, ratio and community data)
| Quarter ending March 31, |
||||||||
| 2011 | 2010 | |||||||
| Selected Financial Results |
||||||||
| Total revenues (1) |
$ | 90,604 | $ | 81,663 | ||||
| Total real estate expenses (1) |
$ | 29,390 | $ | 26,573 | ||||
| G&A expense |
$ | 5,234 | $ | 5,206 | ||||
| EBITDA (2) |
$ | 57,225 | $ | 53,982 | ||||
| Interest expense |
$ | 19,748 | $ | 21,099 | ||||
| Net income |
$ | 9,645 | $ | 5,525 | ||||
| Funds from operations (2) |
$ | 34,782 | $ | 29,380 | ||||
| Net income per share - diluted |
$ | 0.15 | $ | 0.10 | ||||
| FFO per share - diluted (2) |
$ | 0.53 | $ | 0.52 | ||||
| Quarter ending March 31, |
||||||||
| 2011 | 2010 | |||||||
| Same-Store Operating Results |
||||||||
| Revenue growth (%) (3) |
1.5% | -4.7% | ||||||
| Expense growth (%) (3) |
0.4% | 2.2% | ||||||
| NOI growth (%) (3) |
2.0% | -7.6% | ||||||
| Operating margin |
68.2% | 68.0% | ||||||
| Occupancy (avg. physical) |
95.3% | 95.1% | ||||||
| Annual turnover ratio |
54.4% | 57.1% | ||||||
| Quarter ending March 31, |
||||||||
| 2011 | 2010 | |||||||
| Financial Metrics |
||||||||
| Debt-to-EBITDA |
8.0x | 8.8x | ||||||
| Debt-to-total market capitalization |
36.0 | % | 46.7 | % | ||||
| Debt-to-gross assets |
47.6 | % | 52.9 | % | ||||
| Secured debt-to-gross assets |
20.9 | % | 20.7 | % | ||||
| Interest coverage ratio (4) |
2.5x | 2.2x | ||||||
| Fixed charge coverage (4) |
2.3x | 2.0x | ||||||
| Quarter ending March 31, |
||||||||
| 2011 | 2010 | |||||||
| Non Same-Store Operating Results |
||||||||
| Revenues |
$ | 10,228 | $ | 2,399 | ||||
| NOI |
$ | 6,707 | $ | 1,562 | ||||
| Occupancy (avg. physical) |
92.3 | % | 33.3 | % | ||||
| Gross asset value |
$ | 559,304 | $ | 164,138 | ||||
| Units |
2,263 | 930 | (5) | |||||
| Capitalization |
||||
| BRE common share price, 12/31/10 |
$ | 43.50 | ||
| BRE common share price, 3/31/11 |
$ | 47.18 | ||
| Common shares and units - Outstanding |
||||
| period end |
65,956 | |||
| quarter average |
64,890 | |||
| Total funded debt |
$ | 1,844,958 | ||
| Preferred equity (liquidation value) |
$ | 175,000 | ||
| Common equity (at market) |
$ | 3,111,804 | ||
| Total market capitalization |
$ | 5,131,762 | ||
| Total assets, gross at 3/31/11 |
$ | 3,876,266 | ||
| Community Information |
||||||||
| As of March 31, 2011 |
||||||||
| Operating: |
Properties | Units | ||||||
| Wholly or majority owned |
||||||||
| Same-store |
68 | 19,275 | ||||||
| Non same-store |
8 | 2,263 | ||||||
| Total |
76 | 21,538 | ||||||
| Joint venture |
13 | 4,080 | ||||||
| Development Pipeline: |
||||||||
| Construction in progress |
1 | 336 | ||||||
| Land under development |
6 | 1,938 | ||||||
| Land under contract |
3 | 880 | ||||||
| (1) | Revenues reported exclude results from discontinued operations, partnership income and other income. Expenses exclude discontinued operations. |
| (2) | Please refer to Exhibit B for definitions and reconciliations of all non-GAAP financial measures presented in this package. |
| (3) | Percentages represent year over year comparisons for the stated period. |
| (4) | Interest coverage ratio represents adjusted EBITDA to interest expense, excluding capitalized interest. Fixed charge coverage represents adjusted EBITDA to interest expense excluding capitalized interest, plus preferred stock dividends. |
| (5) | Represents Q1’11 non same-store units present during Q1’10. |
Page 1
BRE Properties, Inc.
Consolidated Balance Sheets
First Quarter 2011
(Unaudited, dollar amounts in thousands except per share data)
| March 31, 2011 |
December 31, 2010 |
|||||||
| ASSETS |
||||||||
| Real estate portfolio: |
||||||||
| Direct investments in real estate: |
||||||||
| Investments in rental properties |
$ | 3,525,870 | $ | 3,464,466 | ||||
| Construction in progress |
33,559 | 29,095 | ||||||
| Less: accumulated depreciation |
(664,413 | ) | (640,456 | ) | ||||
| 2,895,016 | 2,853,105 | |||||||
| Equity in real estate joint ventures: |
||||||||
| Investments |
60,946 | 61,132 | ||||||
| Land under development |
192,890 | 183,291 | ||||||
| Total real estate portfolio |
3,148,852 | 3,097,528 | ||||||
| Cash |
7,106 | 6,357 | ||||||
| Other assets |
55,895 | 52,362 | ||||||
| TOTAL ASSETS |
$ | 3,211,853 | $ | 3,156,247 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
| Liabilities: |
||||||||
| Unsecured senior notes |
$ | 724,638 | $ | 773,076 | ||||
| Unsecured line of credit |
310,000 | 209,000 | ||||||
| Mortgage loans payable |
810,320 | 810,842 | ||||||
| Accounts payable and accrued expenses |
45,318 | 52,070 | ||||||
| Total liabilities |
1,890,276 | 1,844,988 | ||||||
| Redeemable noncontrolling interests |
37,130 | 34,866 | ||||||
| Shareholders’ equity: |
||||||||
| Preferred Stock, $0.01 par value; 20,000,000 shares authorized: 7,000,000 shares with total liquidation preference of $175,000,000 issued and outstanding at March 31, 2011 and December 31, 2010, respectively. |
70 | 70 | ||||||
| Common stock, $0.01 par value, 100,000,000 shares authorized. Shares issued and outstanding: 65,341,438 and 64,675,815 at March 31, 2011 and December 31, 2010, respectively. |
653 | 647 | ||||||
| Additional paid-in capital |
1,283,724 | 1,275,676 | ||||||
| Total shareholders’ equity |
1,284,447 | 1,276,393 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS EQUITY |
$ | 3,211,853 | $ | 3,156,247 | ||||
Page 2
BRE Properties, Inc.
Consolidated Statements of Income
Quarters Ended March 31, 2011 and 2010
(Unaudited, dollar and share amounts in thousands)
| Quarter ended 3/31/11 |
Quarter ended 3/31/10 |
|||||||
| REVENUES |
||||||||
| Rental income |
$ | 87,345 | $ | 78,537 | ||||
| Ancillary income |
3,259 | 3,126 | ||||||
| Total revenues |
90,604 | 81,663 | ||||||
| EXPENSES |
||||||||
| Real estate |
$ | 29,390 | $ | 26,573 | ||||
| Provision for depreciation |
24,401 | 21,883 | ||||||
| Interest |
19,748 | 21,099 | ||||||
| General and administrative |
5,234 | 5,206 | ||||||
| Other expenses (1) |
143 | 925 | ||||||
| Total expenses |
78,916 | 75,686 | ||||||
| Other income |
605 | 724 | ||||||
| Net income before noncontrolling interests, partnership income and discontinued operations |
12,293 | 6,701 | ||||||
| Income from unconsolidated entities |
640 | 547 | ||||||
| Income from continuing operations |
12,933 | 7,248 | ||||||
| Discontinued operations: |
||||||||
| Discontinued operations, net (2) |
— | 1,603 | ||||||
| Income from discontinued operations |
— | 1,603 | ||||||
| NET INCOME |
$ | 12,933 | $ | 8,851 | ||||
| Redeemable noncontrolling interest in income |
335 | 373 | ||||||
| Dividends attributable to preferred stock |
2,953 | 2,953 | ||||||
| NET INCOME AVAILABLE TO COMMON SHAREHOLDERS |
$ | 9,645 | $ | 5,525 | ||||
| Net income per common share - basic |
$ | 0.15 | $ | 0.10 | ||||
| Net income per common share - diluted |
$ | 0.15 | $ | 0.10 | ||||
| Weighted average shares outstanding - basic (3) |
64,890 | 55,320 | ||||||
| Weighted average shares outstanding - diluted (3) |
65,105 | 55,415 | ||||||
| (1) | For the three months ended March 31, 2011; $143,000 of acquisition costs were reported in other expenses. For the three months ended March 31, 2010 other expenses include $925,000 related to acquisition costs. |
| (2) | For 2010, includes four operating properties sold during the twelve months ending December 31, 2010. |
| Quarter ended 3/31/11 |
Quarter ended 3/31/10 |
|||||||
| Rental and ancillary income |
— | $ | 4,460 | |||||
| Real estate expenses |
— | (1,633 | ) | |||||
| Provision for depreciation |
— | (1,224 | ) | |||||
| Income from discontinued operations, net |
— | $ | 1,603 | |||||
| (3) | See analysis of weighted average shares and ending shares in Exhibit A. |
Page 3
BRE Properties, Inc.
Consolidated Statements of Income
Past Five Quarters
(Unaudited, dollar amounts in thousands)
| Mar. 31, 2011 |
Dec. 31, 2010 |
Sept. 30, 2010 |
June 30, 2010 |
Mar. 31, 2010 |
||||||||||||||||
| REVENUES |
||||||||||||||||||||
| Rental income |
$ | 87,345 | $ | 86,162 | $ | 83,752 | $ | 80,829 | $ | 78,537 | ||||||||||
| Ancillary income |
3,259 | 3,012 | 3,436 | 3,120 | 3,126 | |||||||||||||||
| Total revenues |
90,604 | 89,174 | 87,188 | 83,949 | 81,663 | |||||||||||||||
| EXPENSES |
||||||||||||||||||||
| Real estate |
$ | 29,390 | $ | 28,704 | $ | 28,337 | $ | 27,713 | $ | 26,573 | ||||||||||
| Provision for depreciation |
24,401 | 24,223 | 23,209 | 22,470 | 21,883 | |||||||||||||||
| Interest |
19,748 | 21,428 | 21,639 | 20,727 | 21,099 | |||||||||||||||
| General and administrative |
5,234 | 5,116 | 5,015 | 5,233 | 5,206 | |||||||||||||||
| Other expenses |
143 | 211 | 2,391 | 1,771 | 925 | |||||||||||||||
| Total expenses |
78,916 | 79,682 | 80,591 | 77,914 | 75,686 | |||||||||||||||
| Other income |
605 | 681 | 741 | 788 | 724 | |||||||||||||||
| Net (loss) from extinguishment of debt |
— | (22,949 | ) | — | (558 | ) | — | |||||||||||||
| Income/(loss) from continuing operations and discontinued operations |
12,293 | (12,776 | ) | 7,338 | 6,265 | 6,701 | ||||||||||||||
| Income from unconsolidated entities |
640 | 586 | 520 | 526 | 547 | |||||||||||||||
| Income/(loss) from continuing operations |
12,933 | (12,190 | ) | 7,858 | 6,791 | 7,248 | ||||||||||||||
| Discontinued operations: |
||||||||||||||||||||
| Discontinued operations, net (1) |
— | 401 | 1,862 | 1,151 | 1,603 | |||||||||||||||
| Net gain on sales of discontinued operations |
— | 15,226 | 13,203 | 11,681 | — | |||||||||||||||
| Income from discontinued operations |
— | 15,627 | 15,065 | 12,832 | 1,603 | |||||||||||||||
| NET INCOME |
$ | 12,933 | $ | 3,437 | $ | 22,923 | $ | 19,623 | $ | 8,851 | ||||||||||
| Redeemable noncontrolling interest in income |
335 | 335 | 365 | 373 | 373 | |||||||||||||||
| Dividends attributable to preferred stock |
2,953 | 2,953 | 2,953 | 2,953 | 2,953 | |||||||||||||||
| NET INCOME AVAILABLE TO COMMON SHAREHOLDERS |
$ | 9,645 | $ | 149 | $ | 19,605 | $ | 16,297 | $ | 5,525 | ||||||||||
| Net income per common share - basic |
$ | 0.15 | $ | 0.00 | $ | 0.30 | $ | 0.26 | $ | 0.10 | ||||||||||
| Net income per common share - diluted |
$ | 0.15 | $ | 0.00 | $ | 0.30 | $ | 0.26 | $ | 0.10 | ||||||||||
| Weighted average shares outstanding - basic (2) |
64,890 | 64,305 | 64,050 | 61,820 | 55,320 | |||||||||||||||
| Weighted average shares outstanding - diluted (2) |
65,105 | 64,305 | 64,210 | 61,990 | 55,415 | |||||||||||||||
| (1) | Details of earnings from discontinued operations, net: |
| Mar. 31, 2011 |
Dec. 31, 2010 |
Sept. 30, 2010 |
June 30, 2010 |
Mar. 31, 2010 |
||||||||||||||||
| Rental and ancillary income |
— | $ | 885 | $ | 3,410 | $ | 3,703 | $ | 4,460 | |||||||||||
| Real estate expenses |
— | (369 | ) | (1,376 | ) | (1,464 | ) | (1,633 | ) | |||||||||||
| Provision for depreciation |
— | (115 | ) | (172 | ) | (1,088 | ) | (1,224 | ) | |||||||||||
| Income from discontinued operations, net |
— | $ | 401 | $ | 1,862 | $ | 1,151 | $ | 1,603 | |||||||||||
| (2) | See analysis of weighted average shares and ending shares in Exhibit A. |
Page 4
BRE Properties, Inc.
Reconciliation of Funds from Operations (FFO), and Capital Expenditures
(In thousands, except per share, unit and per unit data)
| Mar. 31, 2011 |
Dec. 31, 2010 |
Sept. 30, 2010 |
June 30, 2010 |
Mar. 31, 2010 |
||||||||||||||||
| CALCULATION OF FFO |
||||||||||||||||||||
| NET INCOME AVAILABLE TO COMMON SHAREHOLDERS |
$ | 9,645 | $ | 149 | $ | 19,605 | $ | 16,297 | $ | 5,525 | ||||||||||
| Add back/ exclude: |
||||||||||||||||||||
| Depreciation from continuing operations |
24,401 | 24,223 | 23,209 | 22,470 | 21,883 | |||||||||||||||
| Depreciation from discontinued operations |
— | 115 | 172 | 1,088 | 1,224 | |||||||||||||||
| Redeemable noncontrolling interest in income (1) |
335 | — | 365 | 373 | 373 | |||||||||||||||
| Depreciation from unconsolidated entities |
506 | 501 | 524 | 486 | 480 | |||||||||||||||
| Net (gain) on sales of discontinued operations |
— | (15,226 | ) | (13,203 | ) | (11,681 | ) | — | ||||||||||||
| Less: Redeemable noncontrolling interests in income not convertible to common (1) |
(105 | ) | — | (105 | ) | (105 | ) | (105 | ) | |||||||||||
| FUNDS FROM OPERATIONS (2) |
$ | 34,782 | $ | 9,762 | $ | 30,567 | $ | 28,928 | $ | 29,380 | ||||||||||
| Allocation to participating securities (3) |
($ | 195 | ) | ($ | 35 | ) | ($ | 161 | ) | ($ | 199 | ) | ($ | 261 | ) | |||||
| Weighted average shares and equivalents outstanding - diluted |
65,720 | 64,500 | 64,850 | 62,685 | 56,170 | |||||||||||||||
| Funds from operations (per share) - diluted |
$ | 0.53 | $ | 0.15 | $ | 0.47 | $ | 0.46 | $ | 0.52 | ||||||||||
| (1) | OP units were dilutive for the quarters ending March 31, 2011, September 30, 2010, June 30, 2010 and March 31, 2010. OP units were anti-dilutive for the quarter ending December 31, 2010, but dilutive for the twelve months ending December 31, 2010. |
| (2) | Funds From Operations (FFO) is calculated in accordance with the White Paper adopted by the National Association of Real Estate Investment Trusts in October 1999 (as amended in April 2002). See Exhibit B for further definition. |
| (3) | Adjustment to the numerators for diluted FFO per common share and diluted net income per common share calculations when applying the two class method for calculating EPS. |
| Mar. 31, 2011 |
Dec. 31, 2010 |
Sept. 30, 2010 |
June 30, 2010 |
Mar. 31, 2010 |
||||||||||||||||
| NON OPERATING EXPENSE ITEMS INCLUDED IN FFO |
||||||||||||||||||||
| Net loss on extinguishment of debt |
— | $ | 22,949 | — | $ | 558 | — | |||||||||||||
| Net loss extinguishment of debt - per share |
$ | 0.00 | $ | 0.36 | $ | 0.00 | $ | 0.01 | $ | 0.00 | ||||||||||
| Acquisition costs |
$ | 143 | $ | 211 | $ | 2,390 | $ | 470 | $ | 925 | ||||||||||
| Acquisition costs - per share |
$ | 0.00 | $ | 0.00 | $ | 0.04 | $ | 0.01 | $ | 0.02 | ||||||||||
| Severance cost |
— | — | — | $ | 1,300 | — | ||||||||||||||
| Severance cost - per share |
$ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.02 | $ | 0.00 | ||||||||||
| Mar. 31, 2011 |
Dec. 31, 2010 |
Sept. 30, 2010 |
June 30, 2010 |
Mar. 31, 2010 |
||||||||||||||||
| CAPITAL EXPENDITURES |
||||||||||||||||||||
| Recurring capital expenditures |
$ | 4,956 | $ | 7,129 | $ | 5,679 | $ | 6,446 | $ | 3,797 | ||||||||||
| Average apartment units in period |
21,423 | 21,615 | 21,906 | 21,649 | 21,523 | |||||||||||||||
| Capital expenditures per apartment unit in period |
$ | 231 | $ | 330 | $ | 259 | $ | 300 | $ | 176 | ||||||||||
| Capital expenditures per apartment unit-trailing four quarters |
$ | 1,120 | $ | 1,065 | $ | 973 | $ | 986 | $ | 1,000 | ||||||||||
| Revenue enhancing rehabilitation costs |
$ | 1,659 | $ | 1,801 | $ | 1,840 | $ | 1,178 | $ | 1,125 | ||||||||||
Page 5
BRE Properties, Inc.
“Same-Store” Markets Summary
For the Quarters ended March 31, 2011 and 2010
(Dollar amounts in thousands)
| Revenues | Expenses | |||||||||||||||||||||||||||
| No. of Units |
Q1 2011 |
Q1 2010 |
% Change |
Q1 2011 |
Q1 2010 |
% Change |
||||||||||||||||||||||
| California |
||||||||||||||||||||||||||||
| San Diego |
3,958 | $ | 17,292 | $ | 17,275 | 0.1 | % | $ | 5,075 | $ | 5,146 | -1.4 | % | |||||||||||||||
| Inland Empire |
1,807 | 6,558 | 6,443 | 1.8 | % | 2,045 | 2,208 | -7.4 | % | |||||||||||||||||||
| Orange County |
3,349 | 14,337 | 14,296 | 0.3 | % | 4,678 | 4,467 | 4.7 | % | |||||||||||||||||||
| Los Angeles |
2,547 | 11,809 | 11,820 | -0.1 | % | 3,978 | 3,931 | 1.2 | % | |||||||||||||||||||
| San Francisco |
3,152 | 15,567 | 14,977 | 3.9 | % | 4,541 | 4,338 | 4.7 | % | |||||||||||||||||||
| Subtotal; California |
14,813 | $ | 65,563 | $ | 64,811 | 1.2 | % | $ | 20,317 | $ | 20,090 | 1.1 | % | |||||||||||||||
| Washington |
||||||||||||||||||||||||||||
| Seattle |
3,160 | 10,879 | 10,645 | 2.2 | % | 3,787 | 3,785 | 0.1 | % | |||||||||||||||||||
| Non-Core Markets (1) |
1,302 | 3,708 | 3,533 | 5.0 | % | 1,360 | 1,484 | -8.4 | % | |||||||||||||||||||
| Total Same-Store (2) |
19,275 | $ | 80,150 | $ | 78,989 | 1.5 | % | $ | 25,464 | $ | 25,359 | 0.4 | % | |||||||||||||||
| Net Operating Income | ||||||||||||||||||||||||
| No. of Communities |
No. of Units |
Q1 2011 |
Q1 2010 |
% Change |
% of Total |
|||||||||||||||||||
| California |
||||||||||||||||||||||||
| San Diego |
13 | 3,958 | $ | 12,217 | $ | 12,129 | 0.7 | % | 22.2 | % | ||||||||||||||
| Inland Empire |
7 | 1,807 | 4,513 | 4,235 | 6.6 | % | 8.3 | % | ||||||||||||||||
| Orange County |
11 | 3,349 | 9,659 | 9,829 | -1.7 | % | 17.7 | % | ||||||||||||||||
| Los Angeles |
12 | 2,547 | 7,831 | 7,889 | -0.7 | % | 14.3 | % | ||||||||||||||||
| San Francisco |
10 | 3,152 | 11,026 | 10,639 | 3.6 | % | 20.2 | % | ||||||||||||||||
| Subtotal; California |
53 | 14,813 | $ | 45,246 | $ | 44,721 | 1.2 | % | 82.7 | % | ||||||||||||||
| Washington |
||||||||||||||||||||||||
| Seattle |
12 | 3,160 | 7,092 | 6,860 | 3.4 | % | 13.0 | % | ||||||||||||||||
| Non-Core Markets (1) |
3 | 1,302 | 2,348 | 2,049 | 14.6 | % | 4.3 | % | ||||||||||||||||
| Total Same-Store (2) |
68 | 19,275 | $ | 54,686 | $ | 53,630 | 2.0 | % | 100.0 | % | ||||||||||||||
| Net
Operating Income |
Avg. Physical Occupancy |
Gross Carrying Value |
||||||||||||||||||||||
| No. of Communities |
No. of Units | Q1 2011 |
Q1 2010 |
Q1 2011 |
Q1 2011 |
|||||||||||||||||||
| “Non Same-Store” Summary |
||||||||||||||||||||||||
| Acquired properties (3) |
5 | 1,257 | $ | 3,661 | $ | 76 | 91.6 | % | 350,570 | |||||||||||||||
| Lease up properties (4) |
2 | 566 | 1,805 | 252 | 92.2 | % | 179,558 | |||||||||||||||||
| Rehabilitation properties (5) |
1 | 440 | 1,241 | 1,234 | 94.2 | % | 29,176 | |||||||||||||||||
| Joint venture income (6) |
13 | 4,080 | 640 | 547 | ||||||||||||||||||||
| Commercial and Other (7) |
|
n/ a |
|
n/a | (179 | ) | (103 | ) | ||||||||||||||||
| Other income |
|
n/ a |
|
n/a | 605 | 724 | ||||||||||||||||||
| Discontinued operations (8) |
4 | 1,530 | 0 | 2,827 | ||||||||||||||||||||
| Total Non Same-Store |
25 | 7,873 | $ | 7,773 | $ | 5,557 | 92.3 | % | $ | 559,304 | ||||||||||||||
| Less Properties Sold 2010 |
(4 | ) | (1,530 | ) | ||||||||||||||||||||
| Total All Units / NOI |
89 | 25,618 | $ | 62,459 | $ | 59,187 | ||||||||||||||||||
| (1) | Consists of one property in Sacramento, CA (400 Units) and two properties in Phoenix, AZ (902 units). |
| (2) | Consists of stabilized properties owned by BRE for at least five full quarters, starting January 1, 2010. |
| (3) | Consists of NOI from five properties acquired after January 1, 2010. |
| (4) | Consists of NOI from two properties fully delivered and under lease up. |
| (5) | Consists of NOI from one property under rehabilitation. |
| (6) | Consists of our percentage of net income derived from joint venture investments in rental properties. See page 7 for a reconciliation of the components of BRE’s share of joint venture net income. |
| (7) | Consists of NOI from commercial properties that will later be developed as multi-family and other real estate expenses. For the three months ended March 31, 2011 and 2010 other real estate expenses exceeded the NOI from commercial. |
| (8) | Includes results from four properties sold in 2010. |
Page 6
BRE Properties, Inc.
Same Store Operating Expense Summary and Joint Venture Disclosure
(Dollar amounts in thousands)
SAME-STORE OPERATING EXPENSES (19,275 Units)
| Q1 2011 | Q1 2010 | $ Change | % Change | % of Q1 2011 Operating Expenses |
||||||||||||||||
| Property taxes |
$ | 7,223 | $ | 7,467 | $ | (244 | ) | -3.3 | % | 28.3 | % | |||||||||
| Insurance |
991 | 909 | 82 | 9.0 | % | 3.9 | % | |||||||||||||
| Utilities |
1,787 | 1,733 | 54 | 3.1 | % | 7.0 | % | |||||||||||||
| Property management fees (1) |
2,564 | 2,524 | 40 | 1.6 | % | 10.1 | % | |||||||||||||
| Other operating expenses (2) |
12,899 | 12,726 | 173 | 1.4 | % | 50.7 | % | |||||||||||||
| Total operating expenses |
$ | 25,464 | $ | 25,359 | $ | 105 | 0.4 | % | 100.0 | % | ||||||||||
| (1) | Management fees based on a percentage of total revenues. Amount approximates the corporate cost to support on-site personnel. Corporate G&A is reduced by the allocation. |
| (2) | Includes advertising, payroll, property level administrative costs, repairs & maintenance and unit turnover costs. |
JOINT VENTURE DISCLOSURE- Q1 2011
| Joint Ventures |
Communities | Regional |
Units | BRE equity investment |
BRE Portion of debt |
|||||||||||||
| Relationship 1 - 15% BRE equity ownership |
11 | Phx. (3) Den. (8) | 3,592 | $ | 49,114 | $ | — | |||||||||||
| Relationship 2 - 35% BRE equity ownership |
2 | Phx. (1) Sac. (1) | 488 | 11,832 | 8,643 | (3) | ||||||||||||
| Total |
13 | 4,080 | $ | 60,946 | $ | 8,643 | ||||||||||||
| (3) | Debt Matures in 2011 with a weighted average interest rate of 7.60%. |
| BRE share |
Q1 2011 | Q1 2010 | ||||||
| Revenues |
$ | 2,005 | $ | 1,858 | ||||
| Expenses |
745 | 716 | ||||||
| NOI |
1,260 | 1,142 | ||||||
| Depreciation |
506 | 480 | ||||||
| Interest |
114 | 115 | ||||||
| Net Income |
$ | 640 | $ | 547 | ||||
| Third party management fees earned |
$ | 446 | $ | 418 | ||||
Page 7
BRE Properties, Inc.
Sequential “Same-Store” Multifamily Markets Summary
Last five quarters
REVENUES
| Q1’ 11 |
Q4’ 10 |
Q3’ 10 |
Q2’ 10 |
Q1’ 10 |
||||||||||||||||
| California |
||||||||||||||||||||
| San Diego |
0.7 | % | -0.5 | % | 0.3 | % | -0.4 | % | -0.1 | % | ||||||||||
| Inland Empire |
0.2 | % | 0.5 | % | 0.3 | % | 0.7 | % | 0.9 | % | ||||||||||
| Orange County |
0.3 | % | -0.6 | % | 0.8 | % | -0.2 | % | 0.2 | % | ||||||||||
| Los Angeles |
0.1 | % | -1.1 | % | 1.2 | % | -0.3 | % | 1.1 | % | ||||||||||
| San Francisco |
0.9 | % | -1.5 | % | 2.3 | % | 2.2 | % | -0.9 | % | ||||||||||
| Subtotal; California |
0.5 | % | -0.8 | % | 1.1 | % | 0.4 | % | 0.1 | % | ||||||||||
| Washington |
||||||||||||||||||||
| Seattle |
2.2 | % | -1.5 | % | -0.5 | % | 2.0 | % | 0.4 | % | ||||||||||
| Non-Core Markets (1) |
1.7 | % | 0.0 | % | 2.0 | % | 1.3 | % | 0.9 | % | ||||||||||
| Total Same Store (3) |
0.8 | % | -0.8 | % | 0.9 | % | 0.6 | % | 0.2 | % | ||||||||||
| EXPENSES (2) |
||||||||||||||||||||
| Q1’ 11 |
Q4’ 10 |
Q3’ 10 |
Q2’ 10 |
Q1’ 10 |
||||||||||||||||
| California |
||||||||||||||||||||
| San Diego |
6.0 | % | -3.7 | % | 1.0 | % | -4.3 | % | 10.3 | % | ||||||||||
| Inland Empire |
-0.7 | % | -11.0 | % | 2.7 | % | 2.1 | % | 2.3 | % | ||||||||||
| Orange County |
0.9 | % | -2.8 | % | 5.1 | % | 1.7 | % | 2.0 | % | ||||||||||
| Los Angeles |
-3.2 | % | 6.1 | % | -4.4 | % | 3.1 | % | 0.0 | % | ||||||||||
| San Francisco |
6.6 | % | -3.1 | % | -2.3 | % | 3.7 | % | -4.6 | % | ||||||||||
| Subtotal; California |
2.3 | % | -2.3 | % | 0.3 | % | 0.9 | % | 2.1 | % | ||||||||||
| Washington |
||||||||||||||||||||
| Seattle |
-0.6 | % | -3.8 | % | -5.2 | % | 10.4 | % | 0.1 | % | ||||||||||
| Non-Core Markets (1) |
0.1 | % | -7.6 | % | 5.2 | % | -5.8 | % | 12.2 | % | ||||||||||
| Total Same Store (3) |
1.8 | % | -2.9 | % | -0.3 | % | 1.9 | % | 2.3 | % | ||||||||||
| NET OPERATING INCOME |
||||||||||||||||||||
| Q1’ 11 |
Q4’ 10 |
Q3’ 10 |
Q2’ 10 |
Q1’ 10 |
||||||||||||||||
| California |
||||||||||||||||||||
| San Diego |
-1.4 | % | -0.8 | % | 0.1 | % | 1.3 | % | -3.9 | % | ||||||||||
| Inland Empire |
0.7 | % | 6.8 | % | -0.9 | % | 0.0 | % | 0.2 | % | ||||||||||
| Orange County |
0.0 | % | 0.5 | % | -1.2 | % | -1.1 | % | -0.6 | % | ||||||||||
| Los Angeles |
1.8 | % | -4.5 | % | 4.2 | % | -2.0 | % | 1.6 | % | ||||||||||
| San Francisco |
-1.2 | % | -0.9 | % | 4.2 | % | 1.6 | % | 0.6 | % | ||||||||||
| Subtotal; California |
-0.3 | % | 0.1 | % | 1.4 | % | 0.1 | % | -0.8 | % | ||||||||||
| Washington |
||||||||||||||||||||
| Seattle |
3.8 | % | -0.2 | % | 2.5 | % | -2.7 | % | 0.5 | % | ||||||||||
| Non-Core Markets (1) |
2.6 | % | 5.1 | % | -0.1 | % | 6.4 | % | -5.9 | % | ||||||||||
| Total Same Store (3) |
0.3 | % | 0.1 | % | 1.5 | % | 0.0 | % | -0.8 | % | ||||||||||
| (1) | Consists of one property in Sacramento, CA (400 Units) and two properties in Phoenix, AZ (902 units). |
| (2) | Expenses fluctuate from quarter to quarter due to timing of repairs and maintenance, utilities and other items. |
| (3) | Data reflects sequential results for the company’s current same-store pool totaling 19,275 units for all periods shown. |
Page 8
BRE Properties, Inc.
Summary of Revenue and Occupancy Changes - “Same-Store” properties
For the period ending March 31, 2011
| Q1’11 vs. Q4’10 Change | Average Revenue per Unit (1) | Financial Occupancy (2) | Rental Revenue | |||||||||||||||||||||||||||||||||||||||||||||
| units | Q1’ 11 |
Q4’ 10 |
% Change |
Q1’ 11 |
Q4’ 10 |
% Change |
Q1’ 11 | Q4’ 10 | % Change |
|||||||||||||||||||||||||||||||||||||||
| San Diego |
3,958 | 1,531 | 1,524 | 0.5 | % | 95.1 | % | 94.9 | % | 0.2 | % | 17,292 | 17,176 | 0.7 | % | |||||||||||||||||||||||||||||||||
| Inland Empire |
1,807 | 1,266 | 1,253 | 1.0 | % | 95.6 | % | 96.3 | % | -0.7 | % | 6,558 | 6,542 | 0.2 | % | |||||||||||||||||||||||||||||||||
| Orange County |
3,349 | 1,505 | 1,490 | 1.0 | % | 94.8 | % | 95.5 | % | -0.7 | % | 14,337 | 14,295 | 0.3 | % | |||||||||||||||||||||||||||||||||
| Los Angeles |
2,547 | 1,637 | 1,628 | 0.6 | % | 94.4 | % | 94.9 | % | -0.5 | % | 11,809 | 11,803 | 0.1 | % | |||||||||||||||||||||||||||||||||
| San Francisco |
3,152 | 1,735 | 1,713 | 1.3 | % | 94.9 | % | 95.2 | % | -0.3 | % | 15,567 | 15,423 | 0.9 | % | |||||||||||||||||||||||||||||||||
| Seattle |
3,160 | 1,204 | 1,184 | 1.7 | % | 95.3 | % | 94.8 | % | 0.5 | % | 10,879 | 10,642 | 2.2 | % | |||||||||||||||||||||||||||||||||
| Non Core Markets |
1,302 | 991 | 966 | 2.5 | % | 95.8 | % | 96.6 | % | -0.8 | % | 3,708 | 3,647 | 1.7 | % | |||||||||||||||||||||||||||||||||
| Same Store |
19,275 | 1,459 | 1,445 | 1.0 | % | 95.0 | % | 95.2 | % | -0.2 | % | 80,150 | 79,528 | 0.8 | % | |||||||||||||||||||||||||||||||||
| Q1’11 vs. Q1’10 Change | Average Revenue per Unit (1) | Financial Occupancy (2) | Rental Revenue | |||||||||||||||||||||||||||||||||||||||||||||
| units | Q1’ 11 |
Q1’ 10 |
% Change |
Q1’ 11 |
Q1’ 10 |
% Change |
Q1’ 11 | Q1’ 10 | % Change |
|||||||||||||||||||||||||||||||||||||||
| San Diego |
3,958 | 1,531 | 1,515 | 1.0 | % | 95.1 | % | 96.0 | % | -0.9 | % | 17,292 | 17,275 | 0.1 | % | |||||||||||||||||||||||||||||||||
| Inland Empire |
1,807 | 1,266 | 1,244 | 1.7 | % | 95.6 | % | 95.5 | % | 0.1 | % | 6,558 | 6,443 | 1.8 | % | |||||||||||||||||||||||||||||||||
| Orange County |
3,349 | 1,505 | 1,495 | 0.7 | % | 94.8 | % | 95.2 | % | -0.4 | % | 14,337 | 14,296 | 0.3 | % | |||||||||||||||||||||||||||||||||
| Los Angeles |
2,547 | 1,637 | 1,603 | 2.1 | % | 94.4 | % | 96.5 | % | -2.1 | % | 11,809 | 11,820 | -0.1 | % | |||||||||||||||||||||||||||||||||
| San Francisco |
3,152 | 1,735 | 1,664 | 4.3 | % | 94.9 | % | 95.2 | % | -0.3 | % | 15,567 | 14,977 | 3.9 | % | |||||||||||||||||||||||||||||||||
| Seattle |
3,160 | 1,204 | 1,188 | 1.3 | % | 95.3 | % | 94.5 | % | 0.8 | % | 10,879 | 10,645 | 2.2 | % | |||||||||||||||||||||||||||||||||
| Non Core Markets |
1,302 | 991 | 954 | 3.9 | % | 95.8 | % | 94.7 | % | 1.1 | % | 3,708 | 3,533 | 5.0 | % | |||||||||||||||||||||||||||||||||
| Same Store |
19,275 | 1,459 | 1,430 | 2.0 | % | 95.0 | % | 95.5 | % | -0.5 | % | 80,150 | 78,989 | 1.5 | % | |||||||||||||||||||||||||||||||||
| (1) | Average revenue per unit includes rental and ancillary income earned on occupied units during the period. Ancillary income per occupied unit totals approximately $50 per unit per month. Amounts reflect the effect of concessions amortized over the average lease term. |
| (2) | Financial occupancy is defined as gross potential rent less vacancy loss as a percentage of gross potential rent. Gross potential rent is determined by valuing occupied units at contract rates and vacant units at market rents. Vacancy loss is determined by valuing vacant units at current market rents. |
Page 9
BRE Properties, Inc.
“Same-Store” New Lease and Renewal Metrics
As of March 31, 2011
| Sequential “Same-Store” New Lease Transaction Summary |
| |||||||||||||||||||||||||||||||||||||||
| Transacted | ||||||||||||||||||||||||||||||||||||||||
| Move-ins | Effective Rent(1) | Market Rent(2) | % Discount - effective rent to market rent(3) |
|||||||||||||||||||||||||||||||||||||
| Q1 ‘11 | Q1 ‘11 | Q4 ‘10 | Q1 ‘11 | Q4 ‘10 | Q1 ‘11 | Q4 ‘10 | ||||||||||||||||||||||||||||||||||
| California |
||||||||||||||||||||||||||||||||||||||||
| San Diego |
601 | $ | 1,443 | $ | 1,457 | -1.0 | % | $ | 1,461 | $ | 1,478 | -1.2 | % | -1.3 | % | -1.5 | % | |||||||||||||||||||||||
| Inland Empire |
234 | 1,240 | 1,225 | 1.2 | % | 1,261 | 1,233 | 2.3 | % | -1.7 | % | -0.6 | % | |||||||||||||||||||||||||||
| Orange County |
563 | 1,462 | 1,474 | -0.8 | % | 1,517 | 1,489 | 1.9 | % | -3.6 | % | -1.0 | % | |||||||||||||||||||||||||||
| Los Angeles |
361 | 1,647 | 1,639 | 0.5 | % | 1,713 | 1,666 | 2.8 | % | -3.9 | % | -1.7 | % | |||||||||||||||||||||||||||
| San Francisco |
399 | 1,719 | 1,697 | 1.3 | % | 1,744 | 1,717 | 1.6 | % | -1.4 | % | -1.2 | % | |||||||||||||||||||||||||||
| Subtotal; California |
2,158 | $ | 1,511 | $ | 1,511 | 0.0 | % | $ | 1,548 | $ | 1,530 | 1.2 | % | -2.4 | % | -1.2 | % | |||||||||||||||||||||||
| Washington |
||||||||||||||||||||||||||||||||||||||||
| Seattle |
381 | 1,172 | 1,161 | 1.0 | % | 1,202 | 1,205 | -0.2 | % | -2.5 | % | -3.6 | % | |||||||||||||||||||||||||||
| Non-Core Markets |
189 | 936 | 962 | -2.7 | % | 951 | 972 | -2.1 | % | -1.6 | % | -1.0 | % | |||||||||||||||||||||||||||
| Total Same Store |
2,728 | $ | 1,424 | $ | 1,424 | 0.0 | % | $ | 1,458 | $ | 1,446 | 0.8 | % | -2.3 | % | -1.5 | % | |||||||||||||||||||||||
| (1) | Represents leased rent per unit less the monthly value of concessions awarded on new leases signed during the period (renewals are excluded). |
| (2) | Represents monthly market rent on the date leases noted above were signed. Market rents on leases signed may differ from overall community level market rent due to the weighting of units leased (1 bedrooms vs. 2’s etc.) during the period. |
| (3) | Represents discount realized from market rent levels on new leases signed during the quarter. |
| Renewal Lease Data by Market Q1’11 | ||||||||||||||||
| Renewals Q1 ‘11 |
Effective Q1 ‘11(4) |
Expiring(5) Effective |
||||||||||||||
| California |
||||||||||||||||
| San Diego |
453 | $ | 1,504 | $ | 1,470 | 2.3 | % | |||||||||
| Inland Empire |
213 | 1,275 | 1,248 | 2.2 | % | |||||||||||
| Orange County |
463 | 1,470 | 1,433 | 2.5 | % | |||||||||||
| Los Angeles |
269 | 1,632 | 1,574 | 3.7 | % | |||||||||||
| San Francisco |
398 | 1,731 | 1,659 | 4.3 | % | |||||||||||
| Subtotal; California |
1,796 | $ | 1,537 | $ | 1,492 | 3.0 | % | |||||||||
| Washington |
||||||||||||||||
| Seattle |
474 | 1,154 | 1,098 | 5.2 | % | |||||||||||
| Non-Core Markets |
223 | 971 | 920 | 5.5 | % | |||||||||||
| Total Same Store |
2,493 | $ | 1,414 | $ | 1,366 | 3.5 | % | |||||||||
| (4) | Represents leased rent per unit less the monthly value of concessions awarded on renewals signed during the quarter. |
| (5) | Represents leased rent per unit less the monthly value of concessions awarded on the prior lease that expired during the quarter. |
Page 10
BRE Properties, Inc.
“Same-Store” Operating Metrics
As of March 31, 2011 and 2010
| No. of Units |
Market Rent per Unit (2) | Occupancy (3) | Turnover Ratio (4) | |||||||||||||||||||||||||||||
| Q1’11 | Q1’10 | % Change | Q1’11 | Q1’10 | 2011 | 2010 | ||||||||||||||||||||||||||
| California |
||||||||||||||||||||||||||||||||
| San Diego |
3,958 | $ | 1,502 | $ | 1,485 | 1.1 | % | 95.0 | % | 95.8 | % | 62 | % | 66 | % | |||||||||||||||||
| Inland Empire |
1,807 | 1,265 | 1,230 | 3.0 | % | 95.6 | % | 94.8 | % | 56 | % | 59 | % | |||||||||||||||||||
| Orange County |
3,349 | 1,484 | 1,549 | -4.2 | % | 94.9 | % | 94.8 | % | 66 | % | 60 | % | |||||||||||||||||||
| Los Angeles |
2,547 | 1,664 | 1,654 | 0.5 | % | 94.8 | % | 96.0 | % | 50 | % | 55 | % | |||||||||||||||||||
| San Francisco |
3,152 | 1,775 | 1,655 | 7.2 | % | 95.4 | % | 95.0 | % | 47 | % | 49 | % | |||||||||||||||||||
| Subtotal; California |
14,813 | $ | 1,555 | $ | 1,534 | 1.4 | % | 95.1 | % | 95.3 | % | 57 | % | 58 | % | |||||||||||||||||
| Washington |
||||||||||||||||||||||||||||||||
| Seattle |
3,160 | 1,224 | 1,148 | 6.6 | % | 95.6 | % | 94.2 | % | 43 | % | 52 | % | |||||||||||||||||||
| Non-Core Markets (1) |
1,302 | 996 | 921 | 8.2 | % | 96.0 | % | 94.2 | % | 54 | % | 59 | % | |||||||||||||||||||
| Total/Average Same Store (5) |
19,275 | $ | 1,463 | $ | 1,429 | 2.4 | % | 95.3 | % | 95.1 | % | 54 | % | 57 | % | |||||||||||||||||
| (1) | Consists of one property in Sacramento, CA (400 Units) and two properties in Phoenix, AZ (902 units). |
| (2) | Represents, by region, weighted average market level rents across the quarter. |
| (3) | Represents average physical occupancy for the quarter. |
| (4) | Represents the annualized number of units turned over for the quarterly period, divided by the number of units in the region. |
| (5) | Consists of stabilized properties owned by BRE for at least five full quarters, starting January 1, 2010. |
Page 11
BRE Properties, Inc.
Debt Summary as of March 31, 2011
(Dollar amounts in thousands)
| DEBT MATURITY SCHEDULE |
|
|||||||||||||||||||||||||||
| Secured Debt | Unsecured Debt | Weighted | ||||||||||||||||||||||||||
| Amortization | Balloon | Floating | Fixed | Total | Avg. Rate(1) | % of Debt | ||||||||||||||||||||||
| Year |
||||||||||||||||||||||||||||
| 2011 |
$ | 1,606 | $ | — | $ | — | $ | 1,606 | 5.49 | % | 0.1 | % | ||||||||||||||||
| 2012 |
1,236 | 65,507 | 310,000 | (2) | 35,000 | (3) | 411,743 | 2.57 | % | 22.3 | % | |||||||||||||||||
| 2013 |
872 | 29,639 | — | 40,018 | 70,529 | 6.48 | % | 3.8 | % | |||||||||||||||||||
| 2014 |
3,839 | — | — | 50,000 | 53,839 | 4.82 | % | 2.9 | % | |||||||||||||||||||
| 2015 |
7,962 | — | — | — | 7,962 | 5.65 | % | 0.4 | % | |||||||||||||||||||
| 2016 |
9,041 | — | — | — | 9,041 | 5.65 | % | 0.5 | % | |||||||||||||||||||
| 2017 |
9,307 | — | — | 300,000 | 309,307 | 5.61 | % | 16.8 | % | |||||||||||||||||||
| 2018 |
9,853 | — | — | — | 9,853 | 5.65 | % | 0.5 | % | |||||||||||||||||||
| 2019 |
6,492 | 317,975 | — | — | 324,467 | 5.60 | % | 17.6 | % | |||||||||||||||||||
| 2020 |
3,346 | 343,646 | — | — | 346,992 | 5.62 | % | 18.8 | % | |||||||||||||||||||
| 2021 |
— | — | — | 300,000 | 300,000 | 5.31 | % | 16.3 | % | |||||||||||||||||||
| Total |
$ | 53,554 | $ | 756,767 | $ | 310,000 | $ | 725,018 | $ | 1,845,339 | 4.90 | % | 100 | % | ||||||||||||||
| WEIGHTED AVERAGE COST OF DEBT |
| |||||||||||||||
| Weighted | Weighted | Percentage | ||||||||||||||
| Balance | Avg. Term | Avg. Rate | Total Debt | |||||||||||||
| Fixed Rate |
||||||||||||||||
| Unsecured |
$ | 690,018 | 7.25 | 5.51 | % | 37.4 | % | |||||||||
| Convertible (unsecured) |
34,620 | (3) | 0.90 | 6.01 | % | 1.9 | % | |||||||||
| Secured |
810,320 | 7.76 | 5.60 | % | 43.9 | % | ||||||||||
| $ | 1,534,958 | 7.37 | 5.57 | % | 83.2 | % | ||||||||||
| Floating Rate |
||||||||||||||||
| Unsecured |
310,000 | 1.50 | 1.56 | % | 16.8 | % | ||||||||||
| Total debt |
$ | 1,844,958 | 6.39 | 4.90 | % | 100.0 | % | |||||||||
| CAPITALIZED INTEREST |
|
|||||||
| Q1 2011 | Q1 2010 | |||||||
| Capitalized Interest |
$ | 2,732 | $ | 3,134 | ||||
| YTD ‘10 | YTD ‘09 | |||||||
| Interest capitalized |
$ | 11,977 | $ | 16,330 | ||||
| SENIOR UNSECURED DEBT RATING As of May 3, 2011 |
||||||||
| Moody’s |
Baa2 | (stable | ) | |||||
| Standard & Poor’s |
BBB | (stable | ) | |||||
| Fitch |
BBB | (stable | ) | |||||
| SELECTED DEBT COVENANTS AND CREDIT RATIOS |
| |||||||
| Requirement | Actual | |||||||
| Total Debt to Gross Assets |
<60 | % | 47.6 | % | ||||
| Total Secured Debt to Total Assets |
<40 | % | 20.9 | % | ||||
| Total Unencumbered Assets to Unsecured Debt |
>1.6 | 2.65 | ||||||
| Minimum Fixed Charge Coverage |
>1.5 | 2.25 | ||||||
| Unencumbered NOI |
N/A | 68.2 | % | |||||
| SUMMARY OF PREFERRED SHARES |
| |||
| Q1 2011 | ||||
| Total preferred shares outstanding |
7,000 | |||
| Liquidation value |
$ | 175,000 | ||
| Dividend yield at par |
6.75 | % | ||
| (1) | Represents the weighted average effective interest rates of BRE’s debt maturities in the year in which they become due. |
| (2) | Outstanding balance under $750 million senior unsecured line of credit priced at LIBOR plus 47.5 bp, maturing in September 2012. |
| (3) | Represents $35 million cash principal with 4.125% coupon adjusted to reflect convertible debt accounting guidance effective January 2009. |
Page 12
BRE Properties, Inc.
Development Summary
March 31, 2011
(Dollar amounts in millions)
| CONSTRUCTION IN PROGRESS |
Number of Units |
Cost Incurred |
Estimated Cost |
Balance to Fund |
Product Type |
First CO (1) |
Final CO (1) |
|||||||||||||||||||||
| Lawrence Station |
||||||||||||||||||||||||||||
| Sunnyvale, CA |
336 | $ | 33.6 | $ | 110.4 | $ | 76.8 | Wrap | Q2 ‘12 | Q1 ‘13 | ||||||||||||||||||
| Total CIP |
336 | $ | 33.6 | $ | 110.4 | $ | 76.8 | |||||||||||||||||||||
| LAND UNDER DEVELOPMENT (2) |
Number of Units |
Cost Incurred (3) |
Estimated Cost (4) |
Balance to Fund |
Product Type |
Estimated Start Date |
||||||||||||||||||
| Wilshire La Brea |
||||||||||||||||||||||||
| Los Angeles, CA |
478 | $ | 110.3 | TBR | TBR | Podium | 2H ‘11 | |||||||||||||||||
| Pleasanton I |
||||||||||||||||||||||||
| Pleasanton, CA |
254 | 16.8 | TBR | TBR | Garden | TBD | ||||||||||||||||||
| Park Viridian II (5) |
||||||||||||||||||||||||
| Anaheim, CA |
400 | 33.0 | TBR | TBR | Garden | TBD | ||||||||||||||||||
| Town and Country |
||||||||||||||||||||||||
| Sunnyvale, CA |
280 | 27.0 | TBR | TBR | Podium | 2H ‘11 | ||||||||||||||||||
| Aviara (6) |
||||||||||||||||||||||||
| Mercer Island, WA |
166 | 5.8 | TBR | TBR | Podium | 2H ‘11 | ||||||||||||||||||
| Mission Bay (3) |
||||||||||||||||||||||||
| San Francisco, CA |
360 | 5.1 | TBR | TBR | Podium | 2H ‘12 | ||||||||||||||||||
| Total Land Owned |
1,938 | $ | 198.0 | $ | 855.8 | $ | 657.8 | |||||||||||||||||
| LAND UNDER CONTRACT (7) |
Number of Units |
Cost Incurred (8) |
Estimated Cost |
Balance to Fund |
Product Type |
|||||||||||||||
| Walnut Creek BART |
358 | $ | 8.8 | TBR | TBR | Podium | ||||||||||||||
| Walnut Creek, CA |
||||||||||||||||||||
| Redwood City |
271 | 0.9 | TBR | TBR | Podium | |||||||||||||||
| Redwood City, CA |
||||||||||||||||||||
| Pleasanton II |
251 | 0.5 | TBR | TBR | Garden | |||||||||||||||
| Pleasanton, CA |
||||||||||||||||||||
| Total |
880 | $ | 10.2 | $ | 303.7 | $ | 293.5 | |||||||||||||
| (1) | Represents estimated quarter in which first and final certificates of occupancy will be received. Projects generally received phased certificates of occupancy during the final six to nine months of construction. |
| (2) | Represents projects in various stages of predevelopment, development and initial construction, for which construction or supply contracts have not yet been finalized. When construction commences, projects are transferred to construction in progress. |
| (3) | Total includes Mission Bay, which as of March 31, 2011 was under contract and had a $5 million deposit. On April 13, 2011 the Company acquired the land parcels and funded the $36 million balance of the $41 million purchase price. The acquisition is for two parcels of land in the Mission Bay district that are entitled for residential use and can be developed in phases. |
| (4) | Reflects the aggregate cost estimates; specific property cost estimates To Be Reported (TBR) once entitlement approvals are received and the company is prepared to begin construction. |
| (5) | During the first quarter of 2011, the Company purchased for $5.1 million, a 4.4 acre site contiguous to its existing Park Viridian operating community and an existing phase 2 land site in Anaheim. The combined undeveloped phases now total 400 units (185 units were added). |
| (6) | During the fourth quarter of 2010, the Company entered into a ground lease for the Mercer Island site. The ground lease has an initial term of 60 years, two 15-year extensions followed by a 10-year extension. The annualized GAAP expense is approximately $664,000. |
| (7) | Land under contract represents land parcels for which: 1) the Company has a signed agreement and the right to acquire the land (but not the obligation), 2) made a non refundable deposit and 3) commenced the entitlement process. Costs incurred on these projects are recorded in Other assets on the Consolidated Balance Sheets. |
| (8) | Represents deposits, contractual costs, and entitlement expenses incurred to date. |
| (9) | Development pipeline totals above do not include a potential future redevelopment site in Emeryville, California. The site consists of two existing occupied office buildings. The net book value of this investment is $10.2 million and it is recorded in Investment in rental properties. Predevelopment costs associated with this site total $2.8 million and are recorded in Other assets. |
Page 13
| BRE Properties, Inc. |
Exhibit A |
Share Analysis as of March 31, 2011
(Dollar and share amounts in thousands)
SUMMARY OF COMMON SHARES
| Qtr. Ended 3/31/2011 |
Qtr. Ended 12/31/2010 |
Qtr. Ended 9/30/2010 |
Qtr. Ended 6/30/2010 |
Qtr. Ended 3/31/2010 |
||||||||||||||||
| Weighted Average |
||||||||||||||||||||
| Weighted average shares outstanding (1) |
64,890 | 64,305 | 64,050 | 61,820 | 55,320 | |||||||||||||||
| Weighted average OP units (2) |
615 | — | 640 | 695 | 755 | |||||||||||||||
| Dilutive effect of stock based awards |
215 | 195 | 160 | 170 | 95 | |||||||||||||||
| Diluted shares - FFO (2) |
65,720 | 64,500 | 64,850 | 62,685 | 56,170 | |||||||||||||||
| Less: Anti-dilutive OP Units (3) |
(615 | ) | — | (640 | ) | (695 | ) | (755 | ) | |||||||||||
| Less: Anti-dilutive stock based awards (3) |
— | (195 | ) | — | — | — | ||||||||||||||
| Diluted shares - EPS (4) |
65,105 | 64,305 | 64,210 | 61,990 | 55,415 | |||||||||||||||
| As of 3/31/2011 |
As of 12/31/2010 |
As of 9/30/2010 |
As of 6/30/2010 |
As of 3/31/2010 |
||||||||||||||||
| Ending |
||||||||||||||||||||
| Shares outstanding at end of period |
65,341 | 64,675 | 64,088 | 64,022 | 55,663 | |||||||||||||||
| OP units at end of period |
615 | 615 | 639 | 639 | 715 | |||||||||||||||
| Dilutive effect of stock based awards |
215 | 170 | 160 | 175 | 95 | |||||||||||||||
| Total |
66,171 | 65,460 | 64,887 | 64,836 | 56,473 | |||||||||||||||
| SUMMARY OF PREFERRED SHARES |
||||||||||||||||||||
| Qtr. Ended 3/31/2011 |
Qtr. Ended 12/31/2010 |
Qtr. Ended 9/30/2010 |
Qtr. Ended 6/30/2010 |
Qtr. Ended 3/31/2010 |
||||||||||||||||
| 6.75% Series C, $25 per share liquidation preference |
4,000 | 4,000 | 4,000 | 4,000 | 4,000 | |||||||||||||||
| 6.75% Series D, $25 per share liquidation preference |
3,000 | 3,000 | 3,000 | 3,000 | 3,000 | |||||||||||||||
| 7,000 | 7,000 | 7,000 | 7,000 | 7,000 | ||||||||||||||||
| (1) | Represents denominator for shares in the calculation of basic earnings per share. |
| (2) | OP Units are anti-dilutive for FFO and EPS for the quarter ended December 31, 2010, and therefore are not included in shares calculation. |
| (3) | Under FASB guidance, common share equivalents deemed to be anti-dilutive are excluded from the diluted earnings per share calculations. |
| (4) | Represents denominator for shares in the calculation of diluted EPS. |
Page 14
| BRE Properties, Inc. | Exhibit B |
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 Ended 3/31/2011 |
Quarter Ended 3/31/2010 |
|||||||
| Net income available to common shareholders |
$ | 9,645 | $ | 5,525 | ||||
| Depreciation from continuing operations |
24,401 | 21,883 | ||||||
| Depreciation from discontinued operations |
— | 1,224 | ||||||
| Redeemable noncontrolling interest in income |
335 | 373 | ||||||
| Depreciation from unconsolidated entities |
506 | 480 | ||||||
| Less: Redeemable noncontrolling interest in income not convertible into common shares |
(105 | ) | (105 | ) | ||||
| Funds from operations |
$ | 34,782 | $ | 29,380 | ||||
| Allocation to participating securities - diluted FFO (1) |
$ | (195 | ) | $ | (261 | ) | ||
| Allocation to participating securities - diluted EPS (1) |
$ | (41 | ) | $ | (23 | ) | ||
| Diluted shares outstanding - EPS (2) |
65,105 | 55,415 | ||||||
| Net income per common share - diluted |
$ | 0.15 | $ | 0.10 | ||||
| Diluted shares outstanding - FFO (2) |
65,720 | 56,170 | ||||||
| FFO per common share - diluted |
$ | 0.53 | $ | 0.52 | ||||
| (1) | Adjustment to the numerators for diluted FFO per common share and diluted net income per common share calculations when applying the two class method for calculating EPS. |
| (2) | See analysis of weighted average shares and ending shares at Exhibit A. |
Page 15
| BRE Properties, Inc. | Exhibit B, continued |
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 Ended 3/31/2011 |
Quarter Ended 3/31/2010 |
|||||||
| Net income available to common shareholders |
$ | 9,645 | $ | 5,525 | ||||
| Interest, including discontinued operations |
19,748 | 21,099 | ||||||
| Depreciation, including discontinued operations |
24,401 | 23,107 | ||||||
| EBITDA |
53,794 | 49,731 | ||||||
| Redeemable noncontrolling interest in income |
335 | 373 | ||||||
| Dividends on preferred stock |
2,953 | 2,953 | ||||||
| Other expenses |
143 | 925 | ||||||
| Adjusted EBITDA |
$ | 57,225 | $ | 53,982 | ||||
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 Ended 3/31/2011 |
Quarter Ended 3/31/2010 |
|||||||
| Net income available to common shareholders |
$ | 9,645 | $ | 5,525 | ||||
| Interest, including discontinued operations |
19,748 | 21,099 | ||||||
| Depreciation, including discontinued operations |
24,401 | 23,107 | ||||||
| Redeemable noncontrolling interest in income |
335 | 373 | ||||||
| Dividends on preferred stock |
2,953 | 2,953 | ||||||
| General and administrative expense |
5,234 | 5,206 | ||||||
| Other expenses |
143 | 925 | ||||||
| NOI |
$ | 62,459 | $ | 59,188 | ||||
| Less Non Same-Store NOI |
7,773 | 5,558 | ||||||
| Same-Store NOI |
$ | 54,686 | $ | 53,630 | ||||
Page 16