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BRE > SEC Filings for BRE > Form 8-K on 31-Oct-2012All Recent SEC Filings

Show all filings for BRE PROPERTIES INC /MD/

Form 8-K for BRE PROPERTIES INC /MD/


31-Oct-2012

Results of Operations and Financial Condition, Other Events, Financial St


ITEM 2.02. Results of Operations and Financial Condition

On October 30, 2012, we issued a press release and supplemental financial data with respect to our financial results for the quarter September 30, 2012. Copies of the press release and supplemental financial data are furnished as Exhibit 99.1 and Exhibit 99.2 to this report, respectively. The information contained in this Item 2.02 and the attached Exhibit 99.1 and Exhibit 99.2 are furnished to, and not filed with, the Securities and Exchange Commission.



ITEM 8.01 Other Events

October 30, 2012 (San Francisco) We reported operating results for the quarter ended September 30, 2012. All per share results are reported on a fully diluted basis.

Third Quarter Operational and Financial Highlights

Quarterly funds from operations (FFO) totaled $32.5 million, or $0.42 per share. FFO for the third quarter includes a $15.0 million non-routine, non-cash impairment charge taken in conjunction with the decision to sell land in Anaheim, CA that the company previously intended to develop. Quarterly net income available to common shareholders totaled $12.9 million, or $0.17 per share.

Excluding the non-routine charge, FFO totaled $47.5 million, or $0.62 per share.

Year-over-year third-quarter same-store revenues and net operating income (NOI) increased 5.3% and 6.6%, respectively. On a sequential basis from the second quarter to the third quarter of 2012, same-store revenues and NOI both increased by 2.0%.

Physical occupancy averaged 95.5%; annualized turnover within the same-store portfolio was 71% for the quarter. Average revenue per occupied home for the quarter was $1,626.

Sold interests in three unconsolidated joint ventures for gross proceeds of $26.9 million and a gain on sales of $6.0 million.

Issued $300 million of 10.5 year senior unsecured notes with a coupon of 3.375%.

We did not issue any stock under its at-the-market (ATM) equity program.

Third Quarter 2012

To reduce the overall size of our development pipeline, we decided to take the following actions: (1) seek a joint venture partner for the development of two land parcels it owns in Pleasanton, CA; and (2) sell the two land parcels that compose its Park Viridian II site in Anaheim, CA which resulted in the previously noted impairment charge. The carrying value of the Anaheim parcels was reduced from $38.1 million to $23.1 million and is recorded in Other Assets as of September 30, 2012.

While there can be no assurances that we will complete the contemplated actions, the active and wholly-owned development pipeline will have a total estimated cost of $871 million of which approximately $445 million remains to be funded through the first quarter of 2015. The active and wholly-owned pipeline consists of our Lawrence Station, Aviara, Solstice, Wilshire La Brea, Mission Bay and Redwood City projects.

To date, we have funded $34 million, or 20%, of the $171 million total estimated development cost on the Pleasanton sites.

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We intend to fund the balance of the active and wholly-owned pipeline with proceeds from the future disposition of certain older, slower growth communities in its existing portfolio as well as from funds available under its $750 million unsecured revolving credit facility which had no outstanding balance as of the date of this release.

Funds from operations, the generally accepted measure of operating performance for real estate investment trusts, totaled $32.5 million, or $0.42 per share, for the third quarter of 2012, as compared with $41.5 million, or $0.55 per share, for the quarter ended September 30, 2011. Net income available to common shareholders for the third quarter totaled $12.9 million, or $0.17 per share, as compared with $17.1 million, or $0.23 per share, for the same period 2011 (a reconciliation of net income available to common shareholders to FFO is provided at the end of this release). The third quarter 2012 net income per share included gains on sales of unconsolidated partnership interests of $6.0 million, or $0.08 per share.

Our year-over-year earnings and FFO results reflect the impact of the following during 2012: (1) increases in same-store community-level operating results over 2011 levels; (2) incremental NOI from acquired and newly completed communities; and (3) a reduction in interest expense and preferred stock dividends due to lower leverage levels, offset by (4) a higher level of outstanding shares from equity issued in 2011 and 2012.

Same-Store Community Results

We define same-store communities as stabilized apartment communities owned by the company for two comparable twelve month periods. Of the 21,240 apartment homes owned directly by us, same-store homes totaled 19,878 for the quarter.

On a year-over-year basis, overall same-store revenues and NOI increased 5.3% and 6.6%, respectively, for the third quarter. The revenue increase was driven by a 5.5% increase in revenue earned per occupied home during the quarter and a 20-basis-point decrease in year-over-year financial occupancy levels. Annualized turnover during the third quarter was 71%, as compared with 70% during the third quarter of 2011. Same-store expenses increased 2.4% over third quarter 2011 levels.

On a sequential basis, same-store revenue and NOI increased 2.0%, and expenses increased 1.9% over second quarter 2012 levels. The sequential quarter increase in revenues was driven by a 1.7% increase in revenue earned per occupied home during the third quarter and by a 30 basis-point increase in financial occupancy.

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Investment Activity

As of September 30, 2012, the first 175 homes had been delivered on our Lawrence Station development in Sunnyvale, CA. At quarter end, the community had 87 occupied homes and had leased a total of 112 homes. Leasing velocity has averaged 37 homes per month since opening in late June.

During the quarter, we exercised our option contract to purchase a land site in Redwood City, CA for $11.4 million.

In September 2012, Calavera Point and Pinnacle at the Creek, two communities located in Denver, Colo., owned in unconsolidated joint ventures, were sold to third parties. Also in September, Pinnacle Galleria, a community located in Sacramento, CA also owned in an unconsolidated joint venture, was sold to a third party. Our share of the proceeds from the property sales totaled $26.9 million and resulted in a gain of $6.0 million (inclusive of a promote of $2.3 million). The gain and promote are excluded from FFO per share results.

Capital Markets Activity

On August 13, 2012, we issued $300 million of 10.5 year senior unsecured notes with a coupon of 3.375%. Proceeds derived from the offering were used to repay outstanding borrowings under our $750 million unsecured revolving credit facility. Our revolving credit facility remains undrawn as of the date of this release. Excluding the revolving credit facility renewal in 2015, we do not have any meaningful debt maturities until 2017.

Common and Preferred Dividends Declared

On October 30, 2012, our Board of Directors approved regular common and preferred stock dividends for the quarter ending December 31, 2012. All common and preferred dividends will be payable on Monday, December 31, 2012 to shareholders of record on Friday, December 14, 2012. The quarterly common dividend payment of $0.385 is equivalent to $1.54 per share on an annualized basis and represents a yield of approximately 3.3% on Friday, October 26's closing price of $47.19 per share. We have paid uninterrupted quarterly dividends to shareholders since our founding in 1970.

Our 6.75% Series D quarterly preferred dividend is $0.421875 per share.

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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 75 multifamily communities (totaling 21,240 homes) and has joint venture interests in an additional 8 apartment communities (totaling 2,864 homes). 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 community 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.

-XXX-

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BRE Properties, Inc.

Consolidated Balance Sheets

Third Quarter 2012

(Unaudited, dollar amounts in thousands except per share data)





                                                         September 30,         December 31,
                                                             2012                  2011
ASSETS
Real estate portfolio:
Direct investments in real estate:
Investments in rental communities                       $     3,688,763       $    3,607,045
Construction in progress                                        299,573              246,347
Less: accumulated depreciation                                 (800,788 )           (729,151 )

                                                              3,187,548            3,124,241

Equity in real estate joint ventures:
Investments                                                      41,008               63,313
Land under development                                          109,694              101,023

Total real estate portfolio                                   3,338,250            3,288,577
Cash                                                             30,046                9,600
Other assets                                                     76,607               54,444

TOTAL ASSETS                                            $     3,444,903       $    3,352,621

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Unsecured senior notes                                  $       990,018       $      724,957
Unsecured line of credit                                             -               129,000
Mortgage loans payable                                          742,233              808,714
Accounts payable and accrued expenses                            67,063               63,273

Total liabilities                                             1,799,314            1,725,944

Redeemable and other noncontrolling interests                     8,107               16,228

Shareholders' equity:
Preferred Stock, $0.01 par value; 20,000,000 shares
authorized: 2,159,715 shares with $25 liquidation
preference issued and outstanding at September 30,
2012 and December 31, 2011, respectively.                            22                   22
Common stock, $0.01 par value, 100,000,000 shares
authorized. Shares issued and outstanding:
76,831,467 and 75,556,167 at September 30, 2012 and
December 31, 2011, respectively.                                    768                  756
Additional paid-in capital                                    1,636,692            1,609,671

Total shareholders' equity                                    1,637,482            1,610,449

TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY              $     3,444,903       $    3,352,621



ITEM 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit
Number       Description
 99.1        Press release of BRE Properties, Inc. dated October 30, 2012 including
             attachments.

 99.2        Supplemental Financial data dated September 30, 2012 including
             attachments.


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