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BRE > SEC Filings for BRE > Form 8-K on 1-May-2013All Recent SEC Filings

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

ITEM 2.02. Results of Operations and Financial Condition

On April 30, 2013, we issued a press release and supplemental financial data with respect to our financial results for the quarter March 31, 2013. 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

April 30, 2013 (San Francisco) - We are a leading owner, operator and developer of high-quality apartment communities in targeted growth markets in California and Seattle, our reported Core Funds From Operations (Core FFO) is $0.58 per share for the quarter ended March 31, 2013. The per share results reflect an increase of 1.8% over the comparable period in 2012. Core FFO is used to facilitate comparisons of our earnings results and excludes certain non-core items that by their nature are not comparable when comparing periods or earnings performance between periods. All per share results are reported on a fully diluted basis.

A reconciliation of FFO and Core FFO can be found in Exhibit B of our Supplemental Operating and Financial Data. During the quarters ended March 31, 2013 and 2012 there were no reconciling differences between FFO and Core FFO.

First Quarter 2013 Highlights

First quarter same-store revenues and net operating income (NOI) increased 4.9% and 5.3%, respectively, compared to the first quarter 2012. During the quarter, physical occupancy averaged 95.2%; annualized turnover was 54%; and average revenue per occupied home was $1,666.

We completed the sale of six joint venture interests (four in Denver and two in Phoenix) to our joint venture partner for a total sales price of $47.4 million and a gain on sale of $15.0 million.

We delivered the first 54 homes at Aviara, a 166-home community located on Mercer Island in Seattle, Washington. Also during the quarter, we commenced construction of MB360, a 360-home luxury apartment community located in San Francisco, California.

First Quarter 2013

Funds from operations, the generally accepted measure of operating performance for real estate investment trusts, totaled $45.1 million, or $0.58 per share, for the first quarter 2013, compared with $43.6 million, or $0.57 per share, for the first quarter 2012. Core FFO was also $0.58 per share for the quarter. (A reconciliation of net income available to common shareholders to FFO is provided at the end of this release.)

Net income available to common shareholders for the first quarter 2013 totaled $34.0 million, or $0.44 per share, compared with net income of $18.1 million, or $0.24 per share, for the same period 2012. The first quarter 2013 results included a gain on sale of joint venture interests totaling $15.0 million or, $0.19 per share.

Our first quarter year-over-year earnings and FFO results reflect the impact of the following during 2013: (1) increases in same-store property-level operating results over 2012 levels; and (2) incremental NOI from newly completed properties in the last 24 months; offset by (1) a reduction in NOI from operating properties sold in 2012; (2) a reduction of partnership and management fee income from joint venture interests sold in 2012 and 2013; and (3) a higher level of outstanding shares from equity issued in the first quarter of 2012.

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Same-Store Results

We define same-store communities as stabilized apartment communities owned by us for two comparable calendar year periods. Of the 21,160 apartment homes owned directly by us, same-store homes totaled 20,824 for the first quarter.

On a year-over-year basis, first quarter same-store revenues increased 4.9% compared to first quarter 2012. The revenue increase was driven by a 5.0% increase in revenue earned per occupied home during the period, coupled with a 10-basis-point decrease in year-over-year financial occupancy levels. Operating expenses increased 4.0%, resulting in a 5.3% increase in NOI. Operating expenses were driven by increases in property taxes in the Seattle market and an overall higher level of utility and insurance costs.

On a sequential basis, same-store revenue increased 0.1%, expenses increased 2.1% and NOI decreased 0.8% over fourth quarter 2012 levels. The sequential quarter increase in revenues was driven by a 0.4% increase in revenue earned per occupied home during the fourth quarter, coupled with a 30-basis-point decrease in financial occupancy.

Company Initiatives

Dispositions. In February 2013, we completed the sale of our 15% interest in six joint venture communities to our venture partner in the communities; four in Denver and two in Phoenix for a combined gross sales price of $47.4 million. The combined gross sales price of the communities represents a 5.7% weighted average seller's capitalization rate based on the communities' 2012 NOI. The joint ventures contributed $3.8 million in FFO in 2012 through the combination of our equity share in the NOI and management fees earned as a third party manager.

Development. In March 2013, we delivered the first homes at Aviara, a 166-home luxury apartment community located in Mercer Island, Washington. The community has a total estimated cost of $44.5 million and has $2.9 million left to fund. As of April 29, 2013, the community had 25 occupied homes and a total of 47 leased homes. Construction is expected to be completed in the second quarter of 2013.

In March, we commenced construction of MB360, a 360-home luxury apartment community located within the Mission Bay sub-market in San Francisco, California. MB360 is projected to be completed in the fourth quarter of 2014, at a total cost of $227 million, or $630,000 per home. At March 31, 2013, we had funded $77.4 million of the development costs.

As of March 31, 2013, our active and wholly-owned development pipeline has a total estimated cost of approximately $770 million, of which approximately $349 million remains to be funded through the fourth quarter of 2014. The active and wholly-owned pipeline consists of the Aviara, Solstice, Wilshire La Brea, Radius and MB360 projects.

We intend to fund the capital commitments related to our active and wholly-owned development projects primarily with proceeds from strategic asset sales of certain slower-growth communities in our existing portfolio, as well as from funds available under our $750 million unsecured revolving credit facility which had no outstanding balance as of the end of the quarter. We believe the disposition of slower-growth assets over time will contribute to a portfolio with greater concentrations in targeted markets and infill submarkets that can produce a sustainable, sector-leading growth rate. We expect to be prudent in the execution of our disposition plans, balancing strategic portfolio goals with capital needs, tax implications, and balance sheet metrics.

During the first quarter, we did not issue any stock under our at-the-market (ATM) equity program. The remaining capacity under the equity distribution agreements total $123.6 million.

Common and Preferred Dividends Declared

On April 30, 2013, our Board of Directors approved regular common and preferred stock dividends for the quarter ending June 30, 2013. All common and preferred dividends will be payable on Friday, June 28, 2013 to shareholders of record on Friday, June 14, 2013. The quarterly common dividend payment of $0.395 is equivalent to $1.58 per share on an annualized basis and represents a yield of approximately 3.2% on Monday's closing price of $50.05 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 74 multifamily communities (totaling 21,160 homes) and has joint venture interests in an additional 2 apartment communities (totaling 684 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

"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.


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BRE Properties, Inc.

Consolidated Balance Sheets

First Quarter 2013

(Unaudited, in thousands, except per share, unit and per unit data)

                                                           March 31,        December 31,
                                                             2013               2012
Real estate portfolio:
Direct investments in real estate:
Investments in rental communities                         $ 3,748,602      $    3,722,838
Construction in progress                                      404,778             302,263
Less: accumulated depreciation                               (836,827 )          (811,187 )

                                                            3,316,553           3,213,914

Equity in real estate joint ventures:
Investments                                                     8,854              40,753
Real estate held for sale, net                                 23,347              23,065
Land under development                                         35,498             104,675

Total real estate portfolio                                 3,384,252           3,382,407
Cash                                                           21,680              62,241
Other assets                                                   52,550              54,334

TOTAL ASSETS                                              $ 3,458,482      $    3,498,982

Unsecured senior notes                                    $   950,000      $      990,018
Unsecured revolving credit facility                               -                   -
Mortgage loans payable                                        741,636             741,942
Accounts payable and accrued expenses                          72,737              75,789

Total liabilities                                           1,764,373           1,807,749

Redeemable noncontrolling interests                             4,751               4,751

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 March 31, 2013 and
December 31, 2012, respectively.                                   22                  22
Common stock, $0.01 par value, 100,000,000 shares
authorized. Shares issued and outstanding: 77,057,622
and 76,925,351 at March 31, 2013 and December 31, 2012,
respectively.                                                     771                 769
Additional paid-in capital                                  1,688,565           1,685,691

Total shareholders' equity                                  1,689,358           1,686,482

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                $ 3,458,482      $    3,498,982

ITEM 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Number       Description
 99.1        Press release of BRE Properties, Inc. dated April 30, 2013 including

 99.2        Supplemental Financial data dated March 31, 2013 including

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