Exhibit 99.2
Second Quarter 2010
Supplemental Financial Data
Table of Contents
| Page | ||
Consolidated Statements of Operations | 3 | |
Calculation of Funds from Operations and Adjusted Funds From Operations | 6 | |
Same Store Results | 7 | |
Consolidated Balance Sheets | 10 | |
Debt Summary | 11 | |
Summary of Apartment Communities Under Construction and in Lease-Up and Land Held for Future Investment and Sale | 14 | |
Summary of Condominium Projects | 15 | |
Community Acquisition and Disposition Summary | 16 | |
Capitalized Costs Summary | 17 | |
Investments in Unconsolidated Real Estate Entities | 18 | |
Net Asset Value Supplemental Information | 19 | |
Non-GAAP Financial Measures and Other Defined Terms | 21 | |
The projections and estimates given in this document and other written or oral statements made by or on behalf of the Company may constitute “forward-looking statements” within the meaning of the federal securities laws. All forward-looking statements are subject to certain risks and uncertainties that could cause actual events to differ materially from those projected. Management believes that these forward-looking statements are reasonable; however, you should not place undue reliance on such statements. These statements are based on current expectations and speak only as of the date of such statements. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of future events, new information or otherwise. The following are some of the factors that could cause the Company’s actual results and its expectations to differ materially from those described in the Company’s forward-looking statements: the success of the Company’s business strategies discussed in its Annual Report on Form 10-K for the year ended December 31, 2009 and in subsequent filings with the SEC; future local and national economic conditions, including changes in job growth, interest rates, the availability of mortgage and other financing and related factors; uncertainties associated with the global capital markets, including the continued availability of traditional sources of capital and liquidity and related factors; conditions affecting ownership of residential real estate and general conditions in the multi-family residential real estate market; the effects on the financial markets of the emergency stabilization actions of the U.S government, U.S. Treasury, Federal Reserve and other governmental and regulatory bodies; uncertainties associated with the Company’s real estate development and construction; uncertainties associated with the timing and amount of apartment community sales; the Company’s ability to generate sufficient cash flows to make required payments associated with its debt financing; the effects of the Company’s leverage on its risk of default and debt service requirements; the impact of a downgrade in the credit rating of the Company’s securities; the impact of the lack of sales of condominium units at the Atlanta Condominium Project; the effects of a default by the Company or its subsidiaries on an obligation to repay outstanding indebtedness, including cross-defaults and cross-acceleration under other indebtedness or the responsibility for limited recourse guarantees; the effects of covenants of the Company’s or its subsidiaries’ mortgage indebtedness on operational flexibility and default risks; the Company’s ability to maintain its current dividend level; uncertainties associated with the Company’s condominium for-sale housing business, including the timing and volume of condominium sales and including the ability to sell units above sales prices required by the lender; the impact of any additional charges the Company may be required to record in the future related to any impairment in the carrying value of its assets; the impact of competition on the Company’s business, including competition for residents in the Company’s apartment communities and buyers of the Company’s for-sale condominium homes and development locations; the effectiveness of interest rate hedging contracts; the Company’s ability to succeed in new markets; the costs associated with compliance with laws requiring access to the Company’s properties by persons with disabilities; the impact of the Company’s ongoing litigation with the Equal Rights Center regarding the Americans with Disabilities Act and the Fair Housing Act as well as the impact of other litigation; the effects of losses from natural catastrophes in excess of insurance coverage; uncertainties associated with environmental and other regulatory matters; the costs associated with moisture infiltration and resulting mold remediation; the costs of remediating damage to the Company’s communities that have stucco or exterior insulation finishing systems for potential water penetration and other related issues; the Company’s ability to control joint ventures, properties in which it has joint ownership and corporations and limited partnership in which it has partial interests; the Company’s ability to renew leases or relet units as leases expire; the Company’s ability to continue to qualify as a REIT under the Internal Revenue Code; and the effects of changes in accounting policies and other regulatory matters detailed in the Company’s filings with the Securities and Exchange Commission. Other important risk factors regarding the Company are included under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 and may be discussed in subsequent filings with the SEC. The risk factors discussed in Form 10-K under the caption “Risk Factors” are specifically incorporated by reference into this document.
2
POST PROPERTIES, INC.
CONSOLIDATED STATEMENTSOF OPERATIONS
(In thousands, except per share or unit data)
(Unaudited)
| Three months ended June 30, | Six months ended June 30, | |||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||
Revenues | ||||||||||||
Rental | $ | 66,379 | $ | 64,808 | $ | 131,513 | $ | 30,192 | ||||
Other property revenues | 4,181 | 4,033 | 7,907 | 7,601 | ||||||||
Other | 271 | 277 | 554 | 503 | ||||||||
Total revenues | 70,831 | 69,118 | 139,974 | 138,296 | ||||||||
Expenses | ||||||||||||
Total property operating and maintenance | 32,915 | 32,658 | 66,406 | 65,356 | ||||||||
Depreciation | 18,643 | 18,009 | 37,114 | 35,601 | ||||||||
General and administrative | 3,967 | 3,964 | 8,643 | 8,373 | ||||||||
Investment and development (1) | 678 | 793 | 1,280 | 1,790 | ||||||||
Other investment costs (1) | 490 | 646 | 1,159 | 1,299 | ||||||||
Impairment losses (2) | 35,091 | 9,658 | 35,091 | 9,658 | ||||||||
Total expenses | 91,784 | 65,728 | 149,693 | 122,077 | ||||||||
Operating income (loss) | (20,953) | 3,390 | (9,719) | 16,219 | ||||||||
Interest income | 196 | 23 | 365 | 138 | ||||||||
Interest expense | (12,561) | (12,241) | (25,174) | (26,419) | ||||||||
Amortization of deferred financing costs | (653) | (682) | (1,486) | (1,616) | ||||||||
Net gains (losses) on condominium sales activities (3) | 187 | 232 | 1,135 | (28) | ||||||||
Equity in income (loss) of unconsolidated real estate entities (4) | 173 | (74,656) | 296 | (74,546) | ||||||||
Other income (expense) (5) | (142) | 50 | (297) | 1,109 | ||||||||
Net gain (loss) on early extinguishment of indebtedness (6) | - | (79) | - | 819 | ||||||||
Loss from continuing operations | (33,753) | (83,963) | (34,880) | (84,324) | ||||||||
Discontinued operations (7) | ||||||||||||
Income from discontinued property operations | - | 2,026 | - | 4,635 | ||||||||
Gains on sales of real estate assets | - | 24,742 | - | 24,742 | ||||||||
Income from discontinued operations | - | 26,768 | - | 29,377 | ||||||||
Net loss | (33,753) | (57,195) | (34,880) | (54,947) | ||||||||
Noncontrolling interests - consolidated real estate entities | - | 8,150 | (61) | 8,226 | ||||||||
Noncontrolling interests - Operating Partnership | 125 | 250 | 136 | 248 | ||||||||
Net loss attributable to the Company | (33,628) | (48,795) | (34,805) | (46,473) | ||||||||
Dividends to preferred shareholders | (1,878) | (1,910) | (3,768) | (3,819) | ||||||||
Preferred stock redemption costs | (37) | - | (45) | - | ||||||||
Net loss attributable to common shareholders | $ | (35,543) | $ | (50,705) | $ | (38,618) | $ | (50,292) | ||||
Per common share data - Basic(8) | ||||||||||||
Loss from continuing operations | ||||||||||||
(net of preferred dividends and redemption costs) | $ | (0.73) | $ | (1.75) | $ | (0.79) | $ | (1.80) | ||||
Income from discontinued operations | - | 0.61 | - | 0.66 | ||||||||
Net loss attributable to common shareholders | $ | (0.73) | $ | (1.14) | $ | (0.79) | $ | (1.13) | ||||
Weighted average common shares outstanding - basic | 48,432 | 44,118 | 48,401 | 44,116 | ||||||||
Per common share data - Diluted(8) | ||||||||||||
Loss from continuing operations | ||||||||||||
(net of preferred dividends and redemption costs) | $ | (0.73) | $ | (1.75) | $ | (0.79) | $ | (1.80) | ||||
Income from discontinued operations | - | 0.61 | - | 0.66 | ||||||||
Net loss attributable to common shareholders | $ | (0.73) | $ | (1.14) | $ | (0.79) | $ | (1.13) | ||||
Weighted average common shares outstanding - diluted | 48,432 | 44,118 | 48,401 | 44,116 | ||||||||
3
POST PROPERTIES, INC.
NOTESTO CONSOLIDATED
STATEMENTSOF OPERATIONS
(In thousands, except per share or unit data)
| (1) | Investment and development expenses for the three and six months ended June 30, 2010 and 2009 included investment group expenses, development personnel and associated costs not allocable to current development projects. Other investment costs for the three and six months ended June 30, 2010 and 2009 includes land carry costs, primarily property taxes and assessments. |
| (2) | For the three and six months ended June 30, 2010, the Company recorded non-cash impairment charges of $34,691 associated with its luxury condominium project in Austin, Texas and $400 associated with a land parcel in Tampa, Florida. For the three and six months ended June 30, 2009, the Company recorded non-cash impairment charges of $9,658 to write-off certain condominium land held for future investment, including $1,560 allocable to the noncontrolling joint venture interest in the consolidated entity holding the land. |
| (3) | A summary of revenues and costs and expenses of condominium activities for the three and six months ended June 30, 2010 and 2009 is as follows: |
| Three months ended June 30, | Six months ended June 30, | |||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||
Condominium revenues | $ 15,908 | $ 6,176 | $ 17,748 | $ 8,222 | ||||||
Condominium costs and expenses | (15,721) | (5,944) | (16,613) | (8,250) | ||||||
Net gains (losses) on sales of condominiums | $ 187 | $ 232 | $ 1,135 | $ (28) | ||||||
| (4) | For the three and six months ended June 30, 2009, the Company recognized a non-cash impairment charge associated with its investment in an unconsolidated entity constructing luxury condominium homes in Atlanta, Georgia. The gross non-cash impairment charge totaled $74,733, including $6,514 allocable to the noncontrolling joint venture interest in the consolidated entity controlling the investment. The charge resulted from the write-off of the Company’s investment and the recognition of guarantee liabilities associated with the write-down of the condominium assets of the unconsolidated entity to their estimated fair value as of June 30, 2009. |
| (5) | For the three and six months ended June 30, 2010 and 2009, other expenses included estimated state franchise and other income taxes. For the three and six months ended June 30, 2009, other income (expense) included non-cash income of approximately $207 and $582, respectively, related to a reduction in estimated costs associated with the hurricane damage sustained in 2008, offset by inspection expenses related to the Company’s exterior remediation project. For the six months ended June 30, 2009, other income (expense) also included non-cash income of $874 related to the mark-to-market of an interest rate swap agreement that became ineffective under generally accepted accounting principles. |
| (6) | The net gain on early extinguishment of indebtedness for the six months ended June 30, 2009 includes a net gain of $3,445 from the early extinguishment of debt related to the Company’s tender offer for its 2010 and 2011 senior unsecured bonds, offset by a net loss of $2,626 on the prepayment of the Company’s weekly-remarketed, variable rate taxable mortgage bonds and the associated interest rate swap agreement. |
| (7) | In accordance with ASC Topic 360, “Property, Plant and Equipment,” the operating results of real estate assets designated as held for sale or sold are included in discontinued operations for all periods presented. Additionally, all subsequent gains or additional losses on the sale of these assets are included in discontinued operations. There were no communities classified as held for sale at June 30, 2010. |
4
For the three and six months ended June 30, 2009, income from discontinued operations included the operating results of three apartment communities, containing 1,328 units. The operating revenues and expenses of these communities for the three and six months ended June 30, 2009 were as follows:
| Three months ended June 30, 2009 | Six months ended June 30, 2009 | |||||||
Revenues | ||||||||
Rental | $ | 3,228 | $ | 7,463 | ||||
Other property revenues | 196 | 454 | ||||||
Total revenues | 3,424 | 7,917 | ||||||
Expenses | ||||||||
Total property operating and maintenance (exclusive of items shown separately below) | 1,087 | 2,559 | ||||||
Interest | 311 | 723 | ||||||
Total expenses | 1,398 | 3,282 | ||||||
Income from discontinued property operations | $ | 2,026 | $ | 4,635 | ||||
For the three and six months ended June 30, 2009, the Company recognized net gains in discontinued operations of $24,742 from the sale of one apartment community, containing 530 units. This sale generated aggregate net proceeds of approximately $47,013 for the three and six months ended June 30, 2009. There were no sales of apartment communities in 2010.
| (8) | Post Properties, Inc. is structured as an UPREIT, or Umbrella Partnership Real Estate Investment Trust. Post GP Holdings, Inc., a wholly-owned subsidiary of the Company, is the sole general partner and, together with Post LP Holdings, Inc., also a wholly-owned subsidiary of the Company, owns the controlling interest in Post Apartment Homes, L.P., the Operating Partnership through which the Company conducts its operations. As of June 30, 2010, there were 48,862 units of the Operating Partnership outstanding, of which 48,691, or 99.7%, were owned by the Company. |
5
POST PROPERTIES, INC.
CALCULATIONOF FUNDSFROM OPERATIONSAND ADJUSTED FUNDS FROM OPERATIONS
AVAILABLETO COMMON SHAREHOLDERSAND UNITHOLDERS
(In thousands, except per share or unit data)
(Unaudited)
A reconciliation of net income (loss) available to common shareholders to funds (deficit) from operations available to common shareholders and unitholders and adjusted funds from operations available to common shareholders and unitholders is provided below.
| Three months ended June 30, | Six months ended June 30, | |||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||
Net loss attributable to common shareholders | $ | (35,543) | $ | (50,705) | $ | (38,618) | $ | (50,292) | ||||
Noncontrolling interests - Operating Partnership | (125) | (250) | (136) | (248) | ||||||||
Depreciation on consolidated real estate assets, net (1) | 18,180 | 17,501 | 36,182 | 34,578 | ||||||||
Depreciation on real estate assets held in unconsolidated entities | 355 | 350 | 709 | 700 | ||||||||
Gains on sales of apartment communities | - | (24,742) | - | (24,742) | ||||||||
Losses (gains) on sales of condominiums | (187) | (232) | (1,135) | 28 | ||||||||
Incremental gains (losses) on condominium sales (2) | 150 | (959) | 872 | (2,072) | ||||||||
Deficit from operations attributable to common shareholders and unitholders (A) | $ | (17,170) | $ | (59,037) | $ | (2,126) | $ | (42,048) | ||||
Deficit from operations attributable to common shareholders and unitholders (A) | $ | (17,170) | $ | (59,037) | $ | (2,126) | $ | (42,048) | ||||
Annually recurring capital expenditures | (3,391) | (3,673) | (5,969) | (6,307) | ||||||||
Periodically recurring capital expenditures (3) | (726) | (1,215) | (1,278) | (5,009) | ||||||||
Non-cash impairment charges | 35,091 | 76,317 | 35,091 | 76,317 | ||||||||
Non-cash income related to mark-to-market of interest rate swap agreement | - | - | - | (874) | ||||||||
Non-cash straight-line adjustment for ground lease expenses | 279 | 284 | 560 | 574 | ||||||||
Net loss (gain) on early extinguishment of indebtedness | - | 79 | - | (819) | ||||||||
Preferred stock redemption costs | 37 | - | 45 | - | ||||||||
Adjusted funds from operations available to common shareholders and unitholders (4) (B) | $ | 14,120 | $ | 12,755 | $ | 26,323 | $ | 21,834 | ||||
Per Common Share Data - Basic | ||||||||||||
Deficit from operations per share or unit, as defined (A÷C) | $ | (0.35) | $ | (1.32) | $ | (0.04) | $ | (0.94) | ||||
Adjusted funds from operations per share or unit (4)(B÷C) | $ | 0.29 | $ | 0.29 | $ | 0.54 | $ | 0.49 | ||||
Dividends declared | $ | 0.20 | $ | 0.20 | $ | 0.40 | $ | 0.40 | ||||
Weighted average shares outstanding | 48,649 | 44,351 | 48,603 | 44,325 | ||||||||
Weighted average shares and units outstanding(C) | 48,820 | 44,570 | 48,775 | 44,544 | ||||||||
Per Common Share Data - Diluted | ||||||||||||
Deficit from operations per share or unit, as defined (A÷D) | $ | (0.35) | $ | (1.32) | $ | (0.04) | $ | (0.94) | ||||
Adjusted funds from operations per share or unit (4)(B÷D) | $ | 0.29 | $ | 0.29 | $ | 0.54 | $ | 0.49 | ||||
Dividends declared | $ | 0.20 | $ | 0.20 | $ | 0.40 | $ | 0.40 | ||||
Weighted average shares outstanding (5) | 48,803 | 44,351 | 48,736 | 44,325 | ||||||||
Weighted average shares and units outstanding (5)(D) | 48,974 | 44,570 | 48,909 | 44,544 | ||||||||
| (1) | Depreciation on consolidated real estate assets is net of the minority interest portion of depreciation on consolidated entities. |
| (2) | For conversion projects, the Company recognizes accounting gains under GAAP to the extent that net sales proceeds from the sale of condominium units exceed the Company’s net GAAP basis and related expenses. For FFO purposes, the Company recognizes incremental gains on condominium sales in FFO, net of provision for income taxes, to the extent that net sales proceeds, less costs of sales, from the sale of condominium units exceed the “transfer price.” The transfer price for purposes of computing incremental gains on condominium sales included in FFO at conversion projects reflects the greater of (1) the estimated fair value on the date the project was acquired by the Company’s taxable REIT subsidiary (as supported by independently-prepared, third-party appraisals) or (2) its net book value at that time. For development projects, gains on condominium sales in FFO are equivalent to gains reported under GAAP. |
| (3) | Excludes approximately $5,759 and $8,157 for the three months and $10,653 and $13,528 for the six months ended June 30, 2010 and 2009, respectively, of periodically recurring capital expenditures related to the Company’s exterior remediation project. Includes approximately $140 and $2,058 of periodically recurring capital expenditures associated with communities under rehabilitation for the three and six months ended June 30, 2009, respectively. |
| (4) | Since the Company does not add back the depreciation of non-real estate assets in its calculation of funds from operations, non-real estate related capital expenditures of $95 and $67 for the three months and $446 and $126 for the six months ended June 30, 2010 and 2009, respectively, are excluded from the calculation of adjusted funds from operations available to common shareholders and unitholders. |
| (5) | Diluted weighted average shares and units include the impact of dilutive securities totaling 154 and 133 for the three and six months ended June 30, 2010, respectively. These dilutive securities were antidilutive to the computation of income (loss) per share, as the Company reported a loss from continuing operations for these periods under generally accepted accounting principles. Additionally, basic and diluted weighted average shares and units included the impact of non-vested shares and units totaling 217 and 233 for the three months and 202 and 209 for the six months ended June 30, 2010 and 2009, respectively, for the computation of funds (deficit) from operations per share. Such non-vested shares and units are considered in the income (loss) per share computations under generally accepted accounting principles using the “two-class method.” |
6
POST PROPERTIES, INC.
SAME STORE RESULTS
(In thousands, except per share or unit data)
(Unaudited)
Same Store Results
The Company defines fully stabilized or same store communities as those which have reached stabilization prior to the beginning of the previous calendar year, adjusted by communities sold and classified as held for sale and communities under rehabilitation. Same store net operating income is a supplemental non-GAAP financial measure. See Table 1 on page 23 for a reconciliation of same store net operating income to GAAP net income and Table 3 on page 26 for a quarterly margin analysis. The operating performance and capital expenditures of the 43 communities containing 15,713 apartment units which were fully stabilized as of January 1, 2009, are summarized as follows:
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2010 | 2009 | % Change | 2010 | 2009 | % Change | |||||||||||
Revenues: | ||||||||||||||||
Rental and other revenue | $ | 56,459 | $ | 58,445 | (3.4)% | $ | 112,300 | $ | 117,151 | (4.1)% | ||||||
Utility reimbursements | 1,705 | 1,545 | 10.4 % | 3,458 | 3,186 | 8.5 % | ||||||||||
Total rental and other revenues | $ | 58,164 | $ | 59,990 | (3.0)% | $ | 115,758 | $ | 120,337 | (3.8)% | ||||||
Property operating and maintenance expenses: | ||||||||||||||||
Personnel expenses | 5,753 | 5,553 | 3.6 % | 11,508 | 11,089 | 3.8 % | ||||||||||
Utility expense | 3,115 | 2,936 | 6.1 % | 6,609 | 6,317 | 4.6 % | ||||||||||
Real estate taxes and fees | 8,158 | 8,351 | (2.3)% | 16,409 | 17,008 | (3.5)% | ||||||||||
Insurance expenses | 954 | 1,038 | (8.1)% | 1,980 | 2,034 | (2.7)% | ||||||||||
Building and grounds repairs and maintenance (1) | 3,681 | 3,568 | 3.2 % | 7,278 | 6,830 | 6.6 % | ||||||||||
Ground lease expense | 673 | 669 | 0.6 % | 1,341 | 1,337 | 0.3 % | ||||||||||
Other expenses | 1,638 | 1,754 | (6.6)% | 3,242 | 3,541 | (8.4)% | ||||||||||
Total property operating and maintenance expenses (excluding depreciation and amortization) | 23,972 | 23,869 | 0.4 % | 48,367 | 48,156 | 0.4 % | ||||||||||
Same store net operating income | $ | 34,192 | $ | 36,121 | (5.3)% | $ | 67,391 | $ | 72,181 | (6.6)% | ||||||
Capital expenditures (2) | ||||||||||||||||
Annually recurring: | ||||||||||||||||
Carpet | $ | 743 | $ | 689 | 7.8 % | $ | 1,338 | $ | 1,281 | 4.4 % | ||||||
Other | 2,436 | 2,710 | (10.1)% | 4,317 | 4,495 | (4.0)% | ||||||||||
Total annually recurring | 3,179 | 3,399 | (6.5)% | 5,655 | 5,776 | (2.1)% | ||||||||||
Periodically recurring (3) | 6,291 | 8,764 | (28.2)% | 11,354 | 15,182 | (25.2)% | ||||||||||
Total capital expenditures(A) | $ | 9,470 | $ | 12,163 | (22.1)% | $ | 17,009 | $ | 20,958 | (18.8)% | ||||||
Total capital expenditures per unit | ||||||||||||||||
(A ÷ 15,713 units) | $ | 603 | $ | 774 | (22.1)% | $ | 1,082 | $ | 1,334 | (18.9)% | ||||||
Average monthly rental rate per unit (4) | $ | 1,215 | $ | 1,281 | (5.2)% | $ | 1,214 | $ | 1,292 | (6.0)% | ||||||
Gross turnover (5) | 54.2% | 61.0% | (6.8)% | 48.0% | 51.8% | (7.3)% | ||||||||||
Net turnover (6) | 49.0% | 52.8% | (3.8)% | 42.9% | 44.1% | (2.7)% | ||||||||||
| (1) | Building and grounds repairs and maintenance includes $96 and $37 for the three months and $156 and $48 for the six months ended June 30, 2010 and 2009, respectively, related to exterior painting of communities. |
| (2) | See Table 4 on page 27 for a reconciliation of these segment components of property capital expenditures to total annually recurring capital expenditures and total periodically recurring capital expenditures as presented in the consolidated cash flow statements prepared under GAAP. |
| (3) | Periodically recurring capital expenditures included $5,759 and $8,157 for the three months and $10,653 and $13,528 for the six months ended June 30, 2010 and 2009, respectively, related to the Company’s exterior remediation project. Periodically recurring capital expenditures included $104 and $259 for the three months and $181 and $585 for the six months ended June 30, 2010 and 2009, respectively, related to the Company’s “resident design center” program. |
| (4) | Average monthly rental rate is defined as the average of the gross actual rates for occupied units and the anticipated rental rates for unoccupied units divided by total units. See Table 2 on page 24 for further information. |
| (5) | Gross turnover represents the percentage of leases expiring during the period that are not renewed by the existing resident(s). |
| (6) | Net turnover is gross turnover decreased by the percentage of expiring leases where the resident(s) transfer to a new apartment unit in the same community or in another Post® community. |
7
Same Store Operating Results by Market –
Comparison of Second Quarter of 2010 to Second Quarter of 2009
(Increase (decrease) from same period in prior year)
| Three months ended June 30, 2010 | Six months ended June 30, 2010 | |||||||||||||||||||||||||||
Market | Revenues | (1) | Expenses | (1) | NOI | (1) | Average Economic Occupancy | Revenues | (1) | Expenses | (1) | NOI | (1) | Average Economic Occupancy | ||||||||||||||
Atlanta | (3.4)% | 3.6 % | (8.3)% | 2.4 % | (3.8)% | 1.9 % | (7.9)% | 2.8 % | ||||||||||||||||||||
Washington, D.C. | 1.3 % | (1.7)% | 3.0 % | 1.1 % | 0.5 % | 2.6 % | (0.7)% | 0.4 % | ||||||||||||||||||||
Dallas | (5.2)% | 1.2 % | (9.9)% | 1.1 % | (6.3)% | 1.8 % | (12.0)% | 0.3 % | ||||||||||||||||||||
Tampa | (2.2)% | (8.6)% | 2.2 % | 1.9 % | (2.4)% | (7.0)% | 0.8 % | 2.0 % | ||||||||||||||||||||
Charlotte | (5.5)% | 6.5 % | (12.2)% | 3.0 % | (7.4)% | 6.1 % | (14.7)% | 2.7 % | ||||||||||||||||||||
New York | (6.6)% | 16.6 % | (18.1)% | 2.8 % | (8.6)% | 10.1 % | (19.1)% | 2.1 % | ||||||||||||||||||||
Houston | (7.0)% | 2.1 % | (13.4)% | (0.2)% | (6.9)% | (7.3)% | (6.6)% | (0.2)% | ||||||||||||||||||||
Orlando | 0.6 % | (14.9)% | 14.3 % | 1.9 % | 1.0 % | (6.7)% | 7.5 % | 2.1 % | ||||||||||||||||||||
Austin | 0.9 % | (4.4)% | 5.3 % | 2.6 % | (0.4)% | (5.8)% | 4.1 % | 3.5 % | ||||||||||||||||||||
Total | (3.0)% | 0.4 % | (5.3)% | 1.9 % | (3.8)% | 0.4 % | (6.6)% | 1.6 % | ||||||||||||||||||||
| (1) | See Table 2 on page 24 for a reconciliation of these components of same store net operating income and Table 1 on page 23 for a reconciliation of same store net operating income to GAAP net income. |
Same Store Occupancy by Market
| Apartment Units | % of NOI Three months ended June 30, 2010 | Average Economic Occupancy (1) | Average Economic Occupancy (1) | Physical Occupancy at June 30, 2010 (2) | Average Rental Rate Per Unit Three Months Ended June 30, 2010 (3) | ||||||||||||
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||
Market | 2010 | 2009 | 2010 | 2009 | |||||||||||||
Atlanta | 4,800 | 25.3% | 95.5% | 93.1% | 95.9% | 93.1% | 95.6% | $ | 1,037 | ||||||||
Washington, D.C. | 1,905 | 20.1% | 95.6% | 94.5% | 94.8% | 94.4% | 96.2% | 1,786 | |||||||||
Dallas | 3,429 | 16.7% | 94.1% | 93.0% | 94.0% | 93.7% | 94.2% | 1,006 | |||||||||
Tampa | 2,111 | 13.9% | 96.4% | 94.5% | 96.9% | 94.9% | 95.5% | 1,179 | |||||||||
Charlotte | 1,388 | 7.4% | 94.3% | 91.3% | 93.8% | 91.1% | 94.3% | 1,010 | |||||||||
New York | 337 | 5.8% | 96.2% | 93.4% | 94.9% | 92.8% | 95.8% | 3,591 | |||||||||
Houston | 837 | 4.6% | 91.7% | 91.9% | 91.8% | 92.0% | 93.5% | 1,183 | |||||||||
Orlando | 598 | 4.2% | 97.1% | 95.2% | 97.0% | 94.9% | 94.0% | 1,287 | |||||||||
Austin | 308 | 2.0% | 94.1% | 91.5% | 95.6% | 92.1% | 95.5% | 1,279 | |||||||||
Total | 15,713 | 100.0% | 95.2% | 93.3% | 95.1% | 93.5% | 95.1% | $ | 1,215 | ||||||||
| (1) | The calculation of average economic occupancy does not include a deduction for net concessions and employee discounts. Average economic occupancy, including these amounts, would have been 94.0% and 92.2% for the three months and 93.9% and 92.0% for the six months ended June 30, 2010 and 2009, respectively. For the three months ended June 30, 2010 and 2009, net concessions were $494 and $524, respectively, and employee discounts were $178 and $199, respectively. For the six months ended June 30, 2010 and 2009, net concessions were $1,000 and $1,413, respectively, and employee discounts were $352 and $397, respectively. |
| (2) | Physical occupancy is defined as the number of units occupied divided by total apartment units, expressed as a percentage. |
| (3) | Average monthly rental rate is defined as the average of the gross actual rates for occupied units and the anticipated rental rates for unoccupied units divided by total units. See Table 2 on page 24 for further information. |
8
Same Store Sequential Comparison
| Three months ended | ||||||||
| June 30, 2010 | March 31, 2010 | % Change | ||||||
Rental and other revenue | $ | 56,459 | $ | 55,839 | 1.1 % | |||
Utility reimbursements | 1,705 | 1,753 | (2.7)% | |||||
Total rental and other revenues | $ | 58,164 | $ | 57,592 | 1.0 % | |||
Personnel expenses | 5,753 | 5,755 | (0.0)% | |||||
Utility expense | 3,115 | 3,494 | (10.8)% | |||||
Real estate taxes and fees | 8,158 | 8,251 | (1.1)% | |||||
Insurance expenses | 954 | 1,026 | (7.0)% | |||||
Building and grounds repairs and maintenance (1) | 3,681 | 3,597 | 2.3 % | |||||
Ground lease expense | 673 | 668 | 0.7 % | |||||
Other expenses | 1,638 | 1,603 | 2.2 % | |||||
Total property operating and maintenance expenses (excluding depreciation and amortization) | 23,972 | 24,394 | (1.7)% | |||||
Same store net operating income (2) | $ | 34,192 | $ | 33,198 | 3.0 % | |||
Average economic occupancy | 95.2% | 95.0% | 0.2 % | |||||
Average monthly rental rate per unit | $ | 1,215 | $ | 1,213 | 0.2 % | |||
| (1) | Building and grounds repairs and maintenance includes $96 and $60 for the three months ended June 30, 2010 and March 31, 2010, respectively, related to exterior painting of communities. |
| (2) | See Table 2 on page 24 for a reconciliation of these components of same store net operating income and Table 1 on page 23 for a reconciliation of same store net operating income to GAAP net income. |
Sequential Same Store Operating Results by Market –
Comparison of Second Quarter of 2010 to First Quarter 2010
(Increase (decrease) between periods)
Market | Revenues | (1) | Expenses | (1) | NOI | (1) | Average Economic Occupancy | |||||||
Atlanta | 0.4 % | 1.4 % | (0.5)% | (0.7)% | ||||||||||
Washington, D.C. | 2.6 % | (9.7)% | 10.2 % | 1.5 % | ||||||||||
Dallas | 0.5 % | 1.0 % | 0.1 % | 0.1 % | ||||||||||
Tampa | (0.1)% | (3.1)% | 1.9 % | (1.1)% | ||||||||||
Charlotte | 1.0 % | 1.4 % | 0.8 % | 0.9 % | ||||||||||
New York | 3.4 % | (5.3)% | 10.6 % | 2.6 % | ||||||||||
Houston | 0.0 % | 4.6 % | (3.4)% | (0.3)% | ||||||||||
Orlando | 1.5 % | (9.6)% | 10.5 % | 0.2 % | ||||||||||
Austin | 1.2 % | (0.6)% | 2.5 % | (2.9)% | ||||||||||
Total | 1.0 % | (1.7)% | 3.0 % | 0.2 % | ||||||||||
| (1) | See Table 2 on page 24 for a reconciliation of these components of same store net operating income and Table 1 on page 23 for a reconciliation of same store net operating income to GAAP net income. |
9
POST PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share or unit data)
| June 30, 2010 | December 31, 2009 | |||||
| (Unaudited) | ||||||
Assets | ||||||
Real estate assets | ||||||
Land | $ | 284,647 | $ | 283,217 | ||
Building and improvements | 2,010,564 | 1,983,839 | ||||
Furniture, fixtures and equipment | 236,079 | 230,271 | ||||
Construction in progress | 19,498 | 28,274 | ||||
Land held for future investment | 77,868 | 93,899 | ||||
| 2,628,656 | 2,619,500 | |||||
Less: accumulated depreciation | (655,559) | (625,391) | ||||
Condominiums, for-sale and under construction | 85,378 | 107,366 | ||||
Assets held for sale | 8,222 | 5,045 | ||||
Total real estate assets | 2,066,697 | 2,106,520 | ||||
Investments in and advances to unconsolidated real estate entities | 7,950 | 8,322 | ||||
Cash and cash equivalents | 8,033 | 13,347 | ||||
Restricted cash | 11,017 | 11,177 | ||||
Deferred charges, net | 8,017 | 8,365 | ||||
Other assets | 29,129 | 29,698 | ||||
Total assets | $ | 2,130,843 | $ | 2,177,429 | ||
Liabilities and equity | ||||||
Indebtedness | $ | 1,007,340 | $ | 992,760 | ||
Accounts payable and accrued expenses | 76,584 | 79,815 | ||||
Investments in unconsolidated real estate entities | 54,203 | 54,706 | ||||
Dividend and distribution payable | 9,771 | 9,724 | ||||
Accrued interest payable | 4,693 | 4,890 | ||||
Security deposits and prepaid rents | 15,007 | 16,079 | ||||
Total liabilities | 1,167,598 | 1,157,974 | ||||
Redeemable common units | 3,877 | 3,402 | ||||
Commitments and contingencies | ||||||
Equity | ||||||
Company shareholders’ equity | ||||||
Preferred stock, $.01 par value, 20,000 authorized: | ||||||
8 1/2% Series A Cumulative Redeemable Shares, liquidation preference $50 per share, 868 and 900 shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively | 9 | 9 | ||||
7 5/8% Series B Cumulative Redeemable Shares, liquidation preference | ||||||
$25 per share, 1,986 and 2,000 shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively | 20 | 20 | ||||
Common stock, $.01 par value, 100,000 authorized: | ||||||
48,695 and 48,453 shares issued and 48,691 and 48,445 shares outstanding at June 30, 2010 and December 31, 2009, respectively | 486 | 484 | ||||
Additional paid-in-capital | 961,273 | 960,593 | ||||
Accumulated earnings | - | 57,253 | ||||
| 961,788 | 1,018,359 | |||||
Less common stock in treasury, at cost, 93 and 97 shares at June 30, 2010 | (3,175) | (3,240) | ||||
Total Company shareholders’ equity | 958,613 | 1,015,119 | ||||
Noncontrolling interests - consolidated real estate entities | 755 | 934 | ||||
Total equity | 959,368 | 1,016,053 | ||||
Total liabilities and equity | $ | 2,130,843 | $ | 2,177,429 | ||
10
POST PROPERTIES, INC.
DEBT SUMMARY
(Dollars in thousands, except per share or unit data)
(Unaudited)
Summary of Outstanding Debt at June 30, 2010 – Consolidated
| Percentage of Total | Weighted Average Rate (1) June 30, | ||||||||
Type of Indebtedness | Balance | 2010 | 2009 | ||||||
Unsecured fixed rate senior notes | $ | 335,917 | 33.3% | 6.4% | 6.4% | ||||
Secured fixed rate notes | 648,270 | 64.4% | 5.7% | 5.8% | |||||
Unsecured lines of credit | 15,000 | 1.5% | 1.0% | 1.1% | |||||
Secured variable rate construction note | 8,153 | 0.8% | 1.6% | 1.8% | |||||
| $ | 1,007,340 | 100.0% | 5.9% | 5.8% | |||||
| Balance | Percentage of Total Debt | Weighted Average Maturity of Total Debt (2) (3) | |||||||
Total fixed rate debt | $ | 984,187 | 97.7% | 4.7 | |||||
Total variable rate debt | 23,153 | 2.3% | 0.9 | ||||||
Total debt | $ | 1,007,340 | 100.0% | 4.6 | |||||
Debt Maturities – Consolidated and Unconsolidated
| Consolidated | Unconsolidated Entities | ||||||||||||||
Aggregate debt maturities by | Amount | Weighted Average Rate on Debt Maturities (1) | Amount | Company Share | Weighted Average Rate on Debt Maturities (1) | ||||||||||
Remainder of 2010 | $ | 100,937 | 7.7% | $ | - | $ | - | 0.0% | |||||||
2011 | 36,276 | (3) | 2.7% | 66,157 | (4) | 66,157 | 1.7% | ||||||||
2012 | 100,104 | 5.5% | - | - | 0.0% | ||||||||||
2013 | 186,606 | 6.1% | 79,772 | 27,920 | 5.8% | ||||||||||
2014 | 188,644 | 6.1% | - | - | 0.0% | ||||||||||
Thereafter | 394,773 | 5.6% | 126,723 | 31,681 | 5.7% | ||||||||||
| $ | 1,007,340 | 5.9% | $ | 272,652 | $ | 125,758 | 4.1% | ||||||||
Debt Statistics
| Six months ended June 30, | ||||
| 2010 | 2009 | |||
Interest coverage ratio (5)(6) | 2.5x | 2.4x | ||
Fixed charge coverage ratio (5)(7) | 2.2x | 2.1x | ||
Total debt as a % of undepreciated real estate assets (adjusted for joint venture partner’s share of debt) (8) | 40.0% | 41.6% | ||
Total debt and preferred equity as a % of undepreciated real estate assets (adjusted for joint venture partner’s share of debt) (8) | 43.3% | 45.0% | ||
| (1) | Weighted average rate includes credit enhancements and other fees, where applicable. The weighted average rates at June 30, 2009 are based on the debt outstanding at that date. |
| (2) | Weighted average maturity of total debt represents number of years to maturity based on the debt maturities schedule above. |
| (3) | Includes outstanding indebtedness on lines of credit of $15,000 maturing in 2011. |
| (4) | Amount represents the outstanding balance of the condominium portion of the total construction loan outstanding on the Company’s mixed-use development. See page 18 for further discussion. |
| (5) | Calculated for the six months ended June 30, 2010 and 2009. |
| (6) | Interest coverage ratio is defined as net income available for debt service divided by interest expense. For purposes of this calculation, net income available for debt service represents income from continuing operations, before preferred or common noncontrolling interest, gains on sales of real estate, impairment charges, interest expense, depreciation, amortization and income taxes. Net income available for debt service was also adjusted for the Company’s share of depreciation and interest expense from unconsolidated entities, and interest expense used in the calculation was adjusted to include the Company’s share of interest expense from unconsolidated entities. The calculation of the interest coverage ratio is a non-GAAP financial measure. A reconciliation of net income available for debt service to income from continuing operations and interest expense to consolidated interest expense is included in Table 5 on page 27. |
| (7) | Fixed charge coverage ratio is defined as net income available for debt service divided by interest expense plus dividends to preferred shareholders and distributions to preferred unitholders. For purposes of this calculation, net income available for debt service represents earnings from continuing operations, before preferred or common noncontrolling interest, gains on sales of real estate, impairment charges, interest expense, depreciation, amortization and income taxes. Net income available for debt service was also adjusted for the Company’s share of depreciation and interest expense from unconsolidated entities, and interest expense used in the calculation was adjusted to include the Company’s share of interest expense from unconsolidated entities. The calculation of the fixed charge coverage ratio is a non-GAAP financial measure. A reconciliation of net income available for debt service to income from continuing operations and fixed charges to consolidated interest expense plus preferred dividends to shareholders and preferred distributions to unitholders is included in Table 5 on page 27. |
| (8) | A computation of the debt ratios is included in Table 6 on page 28. |
11
POST PROPERTIES, INC.
DEBT SUMMARY (CONT.)
(Dollars in thousands, except per share or unit data)
(Unaudited)
Financial Debt Covenants - Senior Unsecured Public Notes
Covenant requirement (1) | As of June 30, 2010 | |
Consolidated Debt to Total Assets cannot exceed 60% | 36% | |
Secured Debt to Total Assets cannot exceed 40% | 24% | |
Total Unencumbered Assets to Unsecured Debt must be at least 1.5/1 | 5.5x | |
Consolidated Income Available for Debt Service Charge must be at least 1.5/1 | 2.5x |
| (1) | A summary of the public debt covenant calculations and reconciliations of the financial components used in the public debt covenant calculations to the most comparable GAAP financial measures are detailed below. |
Ratio of Consolidated Debt to Total Assets | |||
| As of June 30, 2010 | |||
Consolidated debt, per balance sheet (A) | $ | 1,007,340 | |
Total assets, as defined(B) (Table A) | $ | 2,778,385 | |
Computed ratio(A÷B) | 36% | ||
Required ratio (cannot exceed) | 60% | ||
Ratio of Secured Debt to Total Assets | |||
Total secured debt (C) | $ | 656,423 | |
Computed ratio(C÷B) | 24% | ||
Required ratio (cannot exceed) | 40% | ||
Ratio of Total Unencumbered Assets to Unsecured Debt | |||
Consolidated debt, per balance sheet (A) | $ | 1,007,340 | |
Total secured debt (C) | (656,423) | ||
Total unsecured debt(D) | $ | 350,917 | |
Total unencumbered assets, as defined(E) (Table A) | $ | 1,916,330 | |
Computed ratio(E÷D) | 5.5x | ||
Required minimum ratio | 1.5x | ||
Ratio of Consolidated Income Available for Debt Service to Annual Debt Service Charge | |||
Consolidated Income Available for Debt Service, as defined(F) (Table B) | $ | 135,882 | |
Annual Debt Service Charge, as defined(G) (Table B) | $ | 53,784 | |
Computed ratio(F÷G) | 2.5x | ||
Required minimum ratio | 1.5x | ||
| (2) | The actual calculation of these ratios requires the use of annual trailing financial data. These computations reflect annualized 2010 results for comparison and presentation purposes. The computations using annual financial data also reflect compliance with the debt covenants. |
12
POST PROPERTIES, INC.
DEBT SUMMARY (CONT.)
(Dollars in thousands, except per share or unit data)
(Unaudited)
Table A
Calculation of Total Assets and Total Unencumbered Assets for Public Debt Covenant Computations | |||
| As of June 30, 2010 | |||
Total real estate assets | $ | 2,066,697 | |
Add: | |||
Investments in and advances to unconsolidated real estate entities | 7,950 | ||
Accumulated depreciation | 655,559 | ||
Other tangible assets | 48,179 | ||
Total assets for public debt covenant computations | 2,778,385 | ||
Less: | |||
Encumbered real estate assets | (862,055) | ||
Total unencumbered assets for public debt covenant computations | $ | 1,916,330 | |
Table B
Calculation of Consolidated Income Available for Debt Service and Annual Debt Service Charge (Annualized) (1) | |||
Consolidated income available for debt service | Six months ended June 30, 2010 | ||
Net loss | $ | (34,880) | |
Add: | |||
Non-cash impairment charge - consolidated entities | 35,091 | ||
Depreciation | 37,114 | ||
Depreciation (company share) of assets held in unconsolidated entities | 709 | ||
Amortization of deferred financing costs | 1,486 | ||
Interest expense | 25,174 | ||
Interest expense (company share) of assets held in unconsolidated entities | 1,718 | ||
Income tax expense | 537 | ||
Other non-cash expenses | 2,127 | ||
Less: | |||
Gains on sales of real estate assets | (1,135) | ||
Consolidated income available for debt service | $ | 67,941 | |
Consolidated income available for debt service (annualized) | $ | 135,882 | |
Annual debt service charge | |||
Consolidated interest expense | $ | 25,174 | |
Interest expense (company share) of assets held in unconsolidated entities | 1,718 | ||
Debt service charge | $ | 26,892 | |
Debt service charge (annualized) | $ | 53,784 | |
| (1) | The actual calculation of these ratios requires the use of annual trailing financial data. These computations reflect annualized 2010 results for comparison and presentation purposes. The computations using annual financial data also reflect compliance with the debt covenants. |
13
POST PROPERTIES, INC.
SUMMARYOF APARTMENT COMMUNITIESUNDERCONSTRUCTIONANDINLEASE-UP
AND LAND HELDFOR FUTUREINVESTMENTAND SALE
($ in millions)
Communities Under Construction and in Lease-Up
Community | Location | Number of Units | Retail Sq. Ft. | Estimated Total Cost | Costs Incurred as of 06/30/10 | Quarter of First Units Available | Estimated Quarter of Stabilized Occupancy (1) | Units Leased (2) | Percent Leased (2) | ||||||||||||
Post Park® | Wash. DC | 396 | 1,700 | $ | 84.7 | $ | 81.6 | 2Q 2009 | 4Q 2010 | 290 | 73 | % | |||||||||
Post Carlyle Square™ - Phase II | Wash. DC | 344 | - | 95.0 | 12.3 | 2Q 2012 | 4Q 2013 | - | - | ||||||||||||
Total | 740 | 1,700 | $ | 179.7 | $ | 93.9 | 290 | ||||||||||||||
| (1) | The Company defines stabilized occupancy as the earlier to occur of (i) the attainment of 95% physical occupancy on the first day of any month or (ii) one year after completion of construction. |
| (2) | As of July 30, 2010. |
Land Held for Future Investment and Sale
The following are land positions (including pre-development costs incurred to date) that the Company currently holds. There can be no assurance that projects held for future investment will be developed in the future or at all or that land held for sale will be sold.
Land Held for Future Investment: | |||||||||
Project | Metro Area | Carrying Value At June 30, 2010 (in thousands) | Estimated Usable Acreage | ||||||
Alexander | Atlanta, GA | $ | 6,652 | 2.5 | |||||
Allen Plaza | Atlanta, GA | 18,858 | 5.6 | ||||||
Millennium | Atlanta, GA | 2,774 | 1.0 | ||||||
Spring Hill | Atlanta, GA | 2,023 | 9.1 | ||||||
South Lamar | Austin, TX | 4,942 | 4.0 | ||||||
Frisco Bridges II | Dallas, TX | 5,480 | 5.4 | ||||||
Midtown Square III | Houston, TX | 3,502 | 1.6 | ||||||
Richmond | Houston, TX | 4,420 | 2.1 | ||||||
Baldwin Park | Orlando, FL | 9,841 | 13.5 | ||||||
Wade | Raleigh, NC | 14,208 | 39.6 | ||||||
Soho Square | Tampa, FL | 5,168 | 4.1 | ||||||
Total Land Held for Future Investment | $ | 77,868 | 88.5 | ||||||
Land Held for Sale: | |||||||||
Project | Metro Area | Carrying Value At June 30, 2010 (in thousands) | Estimated Usable Acreage | ||||||
Wade | Raleigh, NC | $ | 5,045 | 40.9 | |||||
Citrus Park | Tampa, FL | 3,177 | 17.7 | ||||||
Total Land Held for Sale | $ | 8,222 | 58.6 | ||||||
14
POST PROPERTIES, INC.
SUMMARYOF CONDOMINIUM PROJECTS
(Dollars in Thousands)
| The Ritz-Carlton Residences, Atlanta Buckhead | Four Seasons Private Residences, Austin | |||||
Non-financial Data | ||||||
Location | Atlanta, GA | Austin, TX | ||||
Ownership interest | (1) | 100% | ||||
Residential square footage | 245,539 | 291,452 | ||||
Average unit square footage (2) | 1,903 | 1,969 | ||||
Quarter of first units available | 3Q10 | 2Q10 | ||||
Units (3) | ||||||
Under contract | - | 54 | ||||
Closed | - | 23 | ||||
Available for sale | 129 | 71 | ||||
Total | 129 | 148 | ||||
Financial Data | ||||||
Balance Sheet/Cost Data as of 6/30/10 | ||||||
Condominium book value | $ | 30,493 | $ | 85,378 | ||
Condominium estimated cost to complete | $ | 7,074 | $ | 7,457 | ||
Projected total cost (before impairment losses) | $ | 112,300 | $ | 140,000 | ||
Units Closed as of 6/30/10 | ||||||
Quarter | - | 8 | ||||
Year to date | - | 8 | ||||
Project to date | - | 8 | ||||
Square Footage of Units Closed as of 6/30/10 (2) | ||||||
Quarter | - | 24,571 | ||||
Year to date | - | 24,571 | ||||
Project to date | - | 24,571 | ||||
| Gross Revenue as of 6/30/10 | ||||||
Quarter | $ | - | $ | 15,477 | ||
Year to date | $ | - | $ | 15,494 | ||
Project to date | $ | - | $ | 15,494 | ||
Net cumulative cash flow from sales of condominium units as of 6/30/10 (4) | $ | - | $ | 12,469 | ||
| (1) | The mixed-use project (the “Mixed-Use LP”) consists of 129 luxury for-sale condominiums to be marketed as The Ritz-Carlton Residences, Atlanta, Buckhead (sponsored through a joint venture between the Company and a private condominium developer; the “Condominium LLC”) and approximately 425,000 square feet of Class A office space (sponsored through a joint venture between an office REIT and a private office developer). The Condominium LLC owns an approximate 49% pro-rata interest in the Mixed-Use LP accounted for on the equity method, representing the condominium portion of the project. Due to its majority ownership and controlling financial interest of the Condominium LLC, the Company consolidates that entity on its consolidated balance sheet. See page 18 for further information regarding this project. |
| (2) | Average square footage information is based on approximate amounts and individual unit sizes may vary. |
| (3) | Represents unit status is as of July 30, 2010. Units “under contract” includes all units currently under contract. However, the Company has experienced contract terminations in prior condominium projects when units become available for delivery and may experience additional terminations in connection with existing projects. Accordingly, there can be no assurance that condominium units under contract will close. In addition, the Company is in discussions with its construction lenders for The Ritz-Carlton Residences, Atlanta Buckhead. These discussions are ongoing, and until such time that they are concluded, the Company is not able to execute sales contracts at prices below the minimum sales prices stated in the loan agreement without the lender’s prior written consent. As current market prices for condominium units at this project are substantially below the minimum sales prices, there are no executed sales contracts to date. |
| (4) | Amounts represent approximate cash flows from condominium activities beginning in the period of initial closings for each community. |
15
POST PROPERTIES, INC.
COMMUNITY ACQUISITIONAND DISPOSITION SUMMARY
Property Name/Period | Location | Units | Year Built | Gross Amount Per Unit | Gross Amount | ||||||||
Acquisitions | |||||||||||||
2009 | |||||||||||||
None | |||||||||||||
2010 | |||||||||||||
None | |||||||||||||
Dispositions | |||||||||||||
Q2 2009 | |||||||||||||
Post Dunwoody® | Atlanta, GA | 530 | 1989-1996 | $ | 89,434 | $ | 47,400,000 | ||||||
| Q3 2009 | |||||||||||||
Post Forest® | Washington, D.C. | 364 | 1990 | $ | 157,967 | 57,500,000 | |||||||
Post Ridge® | Atlanta, GA | 434 | 1998 | $ | 103,226 | 44,800,000 | |||||||
2009 YTD Total | $ | 149,700,000 | |||||||||||
Average Cap Rate – Dispositions – 2009 | 7.6% | (1) | |||||||||||
2010 | |||||||||||||
None | |||||||||||||
| (1) | Based on trailing twelve-month net operating income after adjustments for management fee (3.0%) and capital reserves ($300/unit). |
16
POST PROPERTIES, INC.
CAPITALIZED COSTS SUMMARY
(Dollars in thousands, except per share or unit data)
(Unaudited)
The Company has a policy of capitalizing those expenditures relating to the acquisition of new assets and the development, construction and rehabilitation of apartment and condominium communities. In addition, the Company capitalizes expenditures that enhance the value of existing assets and expenditures that substantially extend the life of existing assets. All other expenditures necessary to maintain a community in ordinary operating condition are expensed as incurred. Additionally, for new development communities, carpet, vinyl and blind replacements are expensed as incurred during the first five years (which corresponds to the estimated depreciable life of these assets) after construction completion. Thereafter, these replacements are capitalized. Further, the Company expenses as incurred the interior and exterior painting of operating communities, unless those communities are under major rehabilitation.
The Company capitalizes interest, real estate taxes, and certain internal personnel and associated costs related to apartment and condominium communities under development, construction, and major rehabilitation. The internal personnel and associated costs are capitalized to the projects under development based upon the effort identifiable with such projects. The Company treats each unit in an apartment and condominium community separately for cost accumulation, capitalization and expense recognition purposes. Prior to the commencement of leasing and sales activities, interest and other construction costs are capitalized and are reflected on the balance sheet as construction in progress. The Company ceases the capitalization of such costs as the residential units in a community become substantially complete and available for occupancy. This results in a proration of these costs between amounts that are capitalized and expensed as the residential units in a development community become available for occupancy. In addition, prior to the completion of units, the Company expenses as incurred substantially all operating expenses (including pre-opening marketing and property management and leasing personnel expenses) of such communities.
A summary of community acquisition and development improvements and other capitalized expenditures for the three and six months ended June 30, 2010 and 2009 is detailed below.
| Three months ended June 30, | Six months ended June 30, | |||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||
Development and acquisition expenditures (1) | $ | 13,430 | $ | 37,265 | $ | 29,948 | $ | 86,507 | ||||
Periodically recurring capital expenditures | ||||||||||||
Community rehabilitation and other revenue generating improvements (2) | 20 | 1,925 | 52 | 3,503 | ||||||||
Other community additions and improvements (3) (6) | 6,485 | 9,372 | 11,931 | 18,537 | ||||||||
Annually recurring capital expenditures | ||||||||||||
Carpet replacements and other community additions and improvements (4) | 3,391 | 3,673 | 5,969 | 6,307 | ||||||||
Corporate additions and improvements | 95 | 67 | 446 | 126 | ||||||||
| $ | 23,421 | $ | 52,302 | $ | 48,346 | $ | 114,980 | |||||
Other Data | ||||||||||||
Capitalized interest | $ | 2,500 | $ | 3,490 | $ | 4,894 | $ | 6,597 | ||||
Capitalized development and associated costs (5) | $ | 44 | $ | 1,194 | $ | 284 | $ | 2,499 | ||||
| (1) | Reflects aggregate community acquisition and development costs, exclusive of the change in construction payables and assumed debt, if any, between years. |
| (2) | Represents expenditures for community rehabilitations and other unit upgrade costs that enhance the rental value of such units. |
| (3) | Represents community improvement expenditures (e.g. property upgrades) that generally occur less frequently than on an annual basis. |
| (4) | Represents community improvement expenditures (e.g. carpets, appliances) of a type that are expected to be incurred on an annual basis. |
| (5) | Reflects internal personnel and associated costs capitalized to construction and development activities. |
| (6) | Periodically recurring expenditures includes $5,759 and $8,157 for the three months and $10,653 and $13,528 for the six months ended June 30, 2010 and 2009, respectively, related to the Company’s exterior remediation project. |
17
POST PROPERTIES, INC.
INVESTMENTS IN UNCONSOLIDATED REAL ESTATE ENTITIES
(Dollars in thousands, except per share or unit data)
(Unaudited)
Apartments and Condominium Development Communities
The Company holds investments in limited liability companies (the “Property LLCs”) with institutional investors and accounts for its investments in these Property LLCs using the equity method of accounting. A summary of non-financial and financial information for the Property LLCs is as follows:
| Non-Financial Data | ||||||||
Joint Venture Property | Location | Property Type | # of Units | Ownership Interest | ||||
Post Collier Hills® (1) | Atlanta, GA | Apartments | 396 | 25% | ||||
Post Crest® (1) | Atlanta, GA | Apartments | 410 | 25% | ||||
Post Lindbergh® (1) | Atlanta, GA | Apartments | 396 | 25% | ||||
Post Biltmore™ | Atlanta, GA | Apartments | 276 | 35% | ||||
Post Massachusetts Avenue™ | Washington, D.C. | Apartments | 269 | 35% | ||||
3630 Peachtree South Tower (2) | Atlanta, GA | Mixed-Use | 129 | 49% |
| Financial Data | |||||||||||||||||||||||||||||||||||||||
| As of June 30, 2010 | Three months ended June 30, 2010 | Six months ended June 30, 2010 | |||||||||||||||||||||||||||||||||||||
Joint Venture Property | Gross Investment in Real Estate (9) | Mortgage/ Construction Notes Payable | Entity Equity | Company's Equity Investment | Entity NOI | Company's Equity in Earnings | Mgmt. Fees & Other | Entity NOI | Company's Equity in Earnings | Mgmt. Fees & Other | |||||||||||||||||||||||||||||
Post Collier Hills® (1) | $ | 54,769 | $ | 39,565 | (4) | $ | 11,893 | $ | (4,272 | )(1) | $ | 624 | $ | (18 | ) | $ | 1,238 | $ | (37 | ) | |||||||||||||||||||
Post Crest® (1) | 64,080 | 46,159 | (4) | 13,322 | (6,755 | )(1) | 661 | (34 | ) | 1,280 | (79 | ) | |||||||||||||||||||||||||||
Post Lindbergh® (1) | 60,395 | 41,000 | (5) | 16,525 | (4,137 | )(1) | 614 | (34 | ) | 1,232 | (66 | ) | |||||||||||||||||||||||||||
Post Biltmore™ | 36,414 | 29,272 | (6) | 817 | 2,061 | 572 | (20 | ) | 1,150 | (36 | ) | ||||||||||||||||||||||||||||
Post Massachusetts Avenue™ | 69,764 | 50,500 | (7) | 8,038 | 5,889 | 1,632 | 279 | 3,258 | 514 | ||||||||||||||||||||||||||||||
3630 Peachtree South Tower (2) | 121,326 | 137,935 | (8) | (20,632 | ) | (39,039 | )(3) | (90 | ) | - | (212 | ) | - | ||||||||||||||||||||||||||
Total | $ | 406,748 | $ | 344,431 | $ | 29,963 | $ | (46,253 | ) | $ | 4,013 | $ | 173 | $ | 207 | (10) | $ | 7,946 | $ | 296 | $ | 413 | (10) | ||||||||||||||||
| (1) | The Company’s investment in the 25% owned Property LLC resulted from the transfer of three previously owned apartment communities to the Property LLC co-owned with an institutional investor. The assets, liabilities and members’ equity of the Property LLC were recorded at fair value based on agreed-upon amounts contributed to the venture. The credit investments in the Company’s 25% owned Property LLC resulted from financing proceeds distributed in excess of the Company’s historical cost-basis investment. These credit investments are reflected in consolidated liabilities on the Company’s consolidated balance sheet. |
| (2) | The mixed-use project (the “Master LP”) consists of 129 luxury for-sale condominiums to be marketed as The Ritz-Carlton Residences, Atlanta, Buckhead (sponsored through a joint venture between the Company and a private condominium developer; the “Condo LLC”) and approximately 425,000 square feet of Class A office space (sponsored through a joint venture between an office REIT and a private office developer). The Condo LLC owns an approximate 49% pro-rata interest in the Master LP accounted for on the equity method, representing the condominium portion of the project. Due to its majority ownership and controlling financial interest of the Condo LLC, the Company consolidates that entity on its consolidated balance sheet. The Company’s share of gross real estate assets and construction notes payable at June 30, 2010 was $29,766 and $66,157, respectively. See page 15 for further information regarding the for-sale condominium portion of the project. |
| (3) | The Company’s credit investment primarily results from a non-cash impairment charge of $68,219, net of the allocable loss to the noncontrolling joint venture interest in the entity of $6,514, to write down its investment to fair value in 2009. The credit investment is reflected in consolidated liabilities on the Company’s balance sheet. |
| (4) | These notes bear interest at a fixed rate of 5.63% and mature in 2017. |
| (5) | This note bears interest at a fixed rate of 5.71% and matures in 2017. |
| (6) | This note bears interest at a fixed rate of 5.83% and requires monthly interest only payments through 2013. The note is prepayable without penalty in September 2011. |
| (7) | This note bears interest at a fixed rate of 5.82% and requires monthly interest only payments through 2013. The note is prepayable without penalty in September 2011. |
| (8) | At June 30, 2010, $137,935 was outstanding under a $178,840 construction loan facility bearing interest at a variable rate of LIBOR plus 1.35% and which matures in 2011. |
| (9) | Represents GAAP basis net book value plus accumulated depreciation. |
| (10) | Amounts include net property and asset management fees to the Company included in “Other Revenues” in the Company’s consolidated statements of operations. |
18
POST PROPERTIES, INC.
NET ASSET VALUE SUPPLEMENTAL INFORMATION
(Dollars in thousands, except per share or unit data)
(Unaudited)
This supplemental financial and other data provides adjustments to certain GAAP financial measures and Net Operating Income (“NOI”), which is a supplemental non-GAAP financial measure that the Company uses internally to calculate Net Asset Value (“NAV”). These measures, as adjusted, are also non-GAAP financial measures. With the exception of NOI, the most comparable GAAP measure for each of the non-GAAP measures presented below in the “As Adjusted” column is the corresponding number presented in the first column listed below.
The Company presents below NOI for the quarter ended June 30, 2010 for properties stabilized by April 1, 2010 so that a capitalization rate may be applied and an approximate value for the assets determined. Properties not stabilized by April 1, 2010 are presented at full undepreciated cost. Other tangible assets, total liabilities and the liquidation value of preferred shares are also presented.
Financial Data
(In thousands)
Income Statement Data | Three months ended June 30, 2010 | Adjustments | As Adjusted | |||||||
Rental revenues | $ | 66,379 | $ | (2,357) | (1) | $ | 64,022 | |||
Other property revenues | 4,181 | (94) | (1) | 4,087 | ||||||
Total rental and other revenues(A) | 70,560 | (2,451 | ) | 68,109 | ||||||
Property operating & maintenance expenses (excluding depreciation and amortization)(B) | 32,915 | (5,239) | (1) | 27,676 | ||||||
Property net operating income (Table 1)(A-B) | $ | 37,645 | $ | 2,788 | $ | 40,433 | ||||
Assumed property management fee (calculated at 3% of revenues)(A x 3%) | (2,043) | |||||||||
Assumed property capital expenditure reserve ($300 per unit per year based on 17,614 units) | (1,321) | |||||||||
Adjusted property net operating income | $ | 37,069 | ||||||||
Annualized property net operating income(C) | $ | 148,276 | ||||||||
Apartment units represented(D) | 19,863 | (2,249) | (1) | 17,614 | ||||||
Other Asset Data | As of June 30, 2010 | Adjustments | As Adjusted | |||||||
Cash & equivalents | $ | 8,033 | $ | - | $ | 8,033 | ||||
Real estate assets under construction or lease-up, at cost (2) | 19,498 | 165,919 | (2) | 185,417 | ||||||
Land held for future investment | 77,868 | - | 77,868 | |||||||
Condominiums, for-sale and under construction | 85,378 | - | 85,378 | |||||||
Assets held for sale | 8,222 | - | 8,222 | |||||||
Investments in and advances to unconsolidated real estate entities (3) | 7,950 | (7,950) | (3) | - | ||||||
Restricted cash and other assets | 40,146 | - | 40,146 | |||||||
Cash & other assets of unconsolidated apartment entities (4) | 6,103 | (4,286) | (4) | 1,817 | ||||||
Total(E) | $ | 253,198 | $ | 153,683 | $ | 406,881 | ||||
Other Liability Data | ||||||||||
Indebtedness | $ | 1,007,340 | $ | - | $ | 1,007,340 | ||||
Investments in unconsolidated real estate entities (3) | 54,203 | (15,164) | (3) | 39,039 | ||||||
Other liabilities (including noncontrolling interests) (5) | 106,055 | (14,607) | (5) | 91,448 | ||||||
Total liabilities of unconsolidated apartment entities (6) | 210,053 | (149,428) | (6) | 60,625 | ||||||
Total(F) | $ | 1,377,651 | $ | (179,199) | $ | 1,198,452 | ||||
19
Other Data
| As of June 30, 2010 | ||||||||
| # Shares/Units | Stock Price | Implied Value | ||||||
Liquidation value of preferred shares(G) | $ | 93,039 | ||||||
Common shares outstanding | 48,691 | |||||||
Common units outstanding | 171 | |||||||
Total(H) | 48,862 | $ | 22.73 | $ | 1,110,633 | |||
Implied market value of Company gross real estate assets(I) = (F+G+H-E) | $ | 1,995,243 | ||||||
Implied Portfolio Capitalization Rate(C÷I) | 7.4% | |||||||
Implied market value of Company gross real estate assets per unit(I÷D) | $ | 113.3 | ||||||
| (1) | The following table summarizes the adjustments made to the components of property net operating income for the three months ended June 30, 2010 to adjust property net operating income to the Company’s share for fully stabilized communities: |
| Rental Revenue | Other Revenue | Expenses | Units | ||||||||
Under construction and lease-up | $ | (2,309) | $ | (173) | $ | (1,580) | (993) | ||||
Corporate property management expenses | - | - | (2,497) | - | |||||||
Company share of unconsolidated entities | 1,944 | 149 | 761 | (1,256) | |||||||
Corporate apartments and other | (1,992) | (70) | (1,923) | - | |||||||
| $ | (2,357) | $ | (94) | $ | (5,239) | (2,249) | |||||
| (2) | The “As Adjusted” amount represents CIP balance per the Company’s balance sheet plus the costs of properties under construction and lease-up that have been transferred to operating real estate assets as apartment units are completed. The “As Adjusted” column consists of the following: |
| As Adjusted CIP | |||
Post Carlyle Square™ - Phase II | $ | 12,315 | |
Post Sierra at Frisco Bridges™ | 40,560 | ||
Post Park® | 81,596 | ||
Post West Austin™ | 50,946 | ||
| $ | 185,417 | ||
| (3) | The adjustment reflects a reduction for the investments in unconsolidated entities for entities with operating real estate assets, as the Company’s respective share of net operating income of such investments is included in the adjusted net operating income reflected above. The “As Adjusted” liability amount represents the consolidated credit investment in 3630 Peachtree South Tower (i.e., The Ritz-Carlton Residences, Atlanta, Buckhead). |
| (4) | The “As of June 30, 2010” amount represents cash and other assets of unconsolidated apartment entities. The adjustment includes a reduction for the venture partners’ respective share of cash and other assets. The “As Adjusted” amount represents the Company’s respective share of the cash and other assets of unconsolidated apartment entities. |
| (5) | The “As of June 30, 2010” amount consists of the sum of accrued interest payable, dividends and distributions payable, accounts payable and accrued expenses and security deposits and prepaid rents as reflected on the Company’s balance sheet. The adjustment represents a reduction for the non-cash liability associated with straight-line, long-term ground lease expense, offset by the addition of noncontrolling interests of consolidated real estate entities of $755. |
| (6) | The “As of June 30, 2010” amount represents total liabilities of unconsolidated apartment entities. The adjustments represent a reduction for the venture partner’s respective share of liabilities. The “As Adjusted” amount represents the Company’s respective share of liabilities of unconsolidated apartment entities. |
20
POST PROPERTIES, INC.
NON-GAAP FINANCIAL MEASURESAND OTHER DEFINED TERMS
(Dollars in thousands, except per share or unit data)
(Unaudited)
Definitions of Supplemental Non-GAAP Financial Measures and Other Defined Terms
The Company uses certain non-GAAP financial measures and other defined terms in this accompanying Supplemental Financial Data. These non-GAAP financial measures include FFO, AFFO, net operating income, same store capital expenditures and certain debt statistics and ratios. The definitions of these non-GAAP financial measures are summarized below. The Company believes that these measures are helpful to investors in measuring financial performance and/or liquidity and comparing such performance and/or liquidity to other REITs.
Funds from Operations - The Company uses FFO as an operating measure. The Company uses the NAREIT definition of FFO. FFO is defined by NAREIT to mean net income (loss) available to common shareholders determined in accordance with GAAP, excluding gains (losses) from extraordinary items and sales of depreciable operating property, plus depreciation and amortization of real estate assets, and after adjustment for unconsolidated partnerships and joint ventures all determined on a consistent basis in accordance with GAAP. FFO presented in the Company’s press release and Supplemental Financial Data is not necessarily comparable to FFO presented by other real estate companies because not all real estate companies use the same definition. The Company’s FFO is comparable to the FFO of real estate companies that use the current NAREIT definition.
Accounting for real estate assets using historical cost accounting under GAAP assumes that the value of real estate assets diminishes predictably over time. NAREIT stated in its April 2002 White Paper on Funds from Operations that “since real estate asset values have historically risen or fallen with market conditions, many industry investors have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves.” As a result, the concept of FFO was created by NAREIT for the REIT industry to provide an alternate measure. Since the Company agrees with the concept of FFO and appreciates the reasons surrounding its creation, the Company believes that FFO is an important supplemental measure of operating performance. In addition, since most equity REITs provide FFO information to the investment community, the Company believes that FFO is a useful supplemental measure for comparing the Company’s results to those of other equity REITs. The Company believes that the line on its consolidated statement of operations entitled “net income (loss) available to common shareholders” is the most directly comparable GAAP measure to FFO.
Adjusted Funds From Operations - The Company also uses adjusted funds from operations (“AFFO”) as an operating measure. AFFO is defined as FFO less operating capital expenditures after adjusting for the impact of non-cash straight-line long-term ground lease expense, non-cash impairment charges, non-cash income (loss) related to mark-to-market of interest rate swap agreements and non-cash debt extinguishment costs. The Company believes that AFFO is an important supplemental measure of operating performance for an equity REIT because it provides investors with an indication of the REIT’s ability to fund operating capital expenditures through earnings. In addition, since most equity REITs provide AFFO information to the investment community, the Company believes that AFFO is a useful supplemental measure for comparing the Company to other equity REITs. The Company believes that the line on its consolidated statement of operations entitled “net income (loss) available to common shareholders” is the most directly comparable GAAP measure to AFFO.
Property Net Operating Income - The Company uses property NOI, including same store NOI and same store NOI by market, as an operating measure. NOI is defined as rental and other revenues from real estate operations less total property and maintenance expenses from real estate operations (exclusive of depreciation and amortization). The Company believes that NOI is an important supplemental measure of operating performance for a REIT’s operating real estate because it provides a measure of the core operations, rather than factoring in depreciation and amortization, financing costs and general and administrative expenses generally incurred at the corporate level. This measure is particularly useful, in the opinion of the Company, in evaluating the performance of geographic operations, same store groupings and individual properties. Additionally, the Company believes that NOI, as defined, is a widely accepted measure of comparative operating performance in the real estate investment community. The Company believes that the line on its consolidated statement of operations entitled “net income” is the most directly comparable GAAP measure to NOI.
21
Same Store Capital Expenditures - - The Company uses same store annually recurring and periodically recurring capital expenditures as cash flow measures. Same store annually recurring and periodically recurring capital expenditures are supplemental non-GAAP financial measures. The Company believes that same store annually recurring and periodically recurring capital expenditures are important indicators of the costs incurred by the Company in maintaining its same store communities on an ongoing basis. The corresponding GAAP measures include information with respect to the Company’s other operating segments consisting of communities stabilized in the prior year, lease-up communities, rehabilitation communities, sold properties and commercial properties in addition to same store information. Therefore, the Company believes that the Company’s presentation of same store annually recurring and periodically recurring capital expenditures is necessary to demonstrate same store replacement costs over time. The Company believes that the most directly comparable GAAP measure to same store annually recurring and periodically recurring capital expenditures is the line on the Company’s consolidated statements of cash flows entitled “property capital expenditures,” which also includes revenue generating capital expenditures.
Debt Statistics and Debt Ratios - The Company uses a number of debt statistics and ratios as supplemental measures of liquidity. The numerator and/or the denominator of certain of these statistics and/or ratios include non-GAAP financial measures that have been reconciled to the most directly comparable GAAP financial measure. These debt statistics and ratios include: (1) an interest coverage ratio; (2) a fixed charge coverage ratio; (3) total debt as a percentage of undepreciated real estate (adjusted for joint venture partner’s share of debt); (4) total debt plus preferred equity as a percentage of undepreciated real estate (adjusted for joint venture partner’s share of debt); (5) a ratio of consolidated debt to total assets; (6) a ratio of secured debt to total assets; (7) a ratio of total unencumbered assets to unsecured debt; and (8) a ratio of consolidated income available to debt service to annual debt service charge. A number of these debt statistics and ratios are derived from covenants found in the Company’s debt agreements, including, among others, the Company’s senior unsecured notes. In addition, the Company presents these measures because the degree of leverage could affect the Company’s ability to obtain additional financing for working capital, capital expenditures, acquisitions, development or other general corporate purposes. The Company uses these measures internally as an indicator of liquidity and the Company believes that these measures are also utilized by the investment and analyst communities to better understand the Company’s liquidity.
Average Economic Occupancy - The Company uses average economic occupancy as a statistical measure of operating performance. The Company defines average economic occupancy as gross potential rent less vacancy losses, model expenses and bad debt expenses divided by gross potential rent for the period, expressed as a percentage.
22
Reconciliations of Supplemental Non-GAAP Financial Measures
Table 1
Reconciliation of Same Store Net Operating Income (NOI) to GAAP Net Income
(Dollars in thousands)
(Unaudited)
| Three months ended | Six months ended | ||||||||||||||
| June 30, 2010 | June 30, 2009 | March 31, 2010 | June 30, 2010 | June 30, 2009 | |||||||||||
Total same store NOI | $ | 34,192 | $ | 36,121 | $ | 33,198 | $ | 67,391 | $ | 72,181 | |||||
Property NOI from other operating segments | 3,453 | 62 | 2,171 | 5,623 | 256 | ||||||||||
Consolidated property NOI | 37,645 | 36,183 | 35,369 | 73,014 | 72,437 | ||||||||||
Add (subtract): | |||||||||||||||
Interest income | 196 | 23 | 169 | 365 | 138 | ||||||||||
Other revenues | 271 | 277 | 283 | 554 | 503 | ||||||||||
Depreciation | (18,643) | (18,009) | (18,471) | (37,114) | (35,601) | ||||||||||
Interest expense | (12,561) | (12,241) | (12,613) | (25,174) | (26,419) | ||||||||||
Amortization of deferred financing costs | (653) | (682) | (833) | (1,486) | (1,616) | ||||||||||
General and administrative | (3,967) | (3,964) | (4,676) | (8,643) | (8,373) | ||||||||||
Investment and development | (678) | (793) | (602) | (1,280) | (1,790) | ||||||||||
Other investment costs | (490) | (646) | (669) | (1,159) | (1,299) | ||||||||||
Impairment losses | (35,091) | (9,658) | - | (35,091) | (9,658) | ||||||||||
Gains (losses) on condominium sales activities, net | 187 | 232 | 948 | 1,135 | (28) | ||||||||||
Equity in income (loss) of unconsolidated real estate entities | 173 | (74,656) | 123 | 296 | (74,546) | ||||||||||
Other income (expense), net | (142) | 50 | (155) | (297) | 1,109 | ||||||||||
Net gain (loss) on early extinguishment of indebtedness | - | (79) | - | - | 819 | ||||||||||
Loss from continuing operations | (33,753) | (83,963) | (1,127) | (34,880) | (84,324) | ||||||||||
Income from discontinued operations | - | 26,768 | - | - | 29,377 | ||||||||||
Net loss | $ | (33,753) | $ | (57,195) | $ | (1,127) | $ | (34,880) | $ | (54,947) | |||||
23
Table 2
Same Store Net Operating Income (NOI) and Average Rental Rate per Unit by Market
(Dollars in thousands)
| Three months ended | Q2 ’10 vs. Q2 ’09 % Change | Q2 ’10 vs. Q1 ’10 % Change | Q2 ’10 % Same Store NOI | ||||||||||||
| June 30, 2010 | June 30, 2009 | March 31, 2010 | |||||||||||||
Rental and other revenues | |||||||||||||||
Atlanta | $ | 15,653 | $ | 16,197 | $ | 15,596 | (3.4)% | 0.4 % | |||||||
Washington, D.C. | 10,352 | 10,215 | 10,085 | 1.3 % | 2.6 % | ||||||||||
Dallas | 10,414 | 10,982 | 10,364 | (5.2)% | 0.5 % | ||||||||||
Tampa | 7,713 | 7,889 | 7,721 | (2.2)% | (0.1)% | ||||||||||
Charlotte | 4,199 | 4,443 | 4,156 | (5.5)% | 1.0 % | ||||||||||
New York | 3,394 | 3,634 | 3,282 | (6.6)% | 3.4 % | ||||||||||
Houston | 2,856 | 3,072 | 2,855 | (7.0)% | 0.0 % | ||||||||||
Orlando | 2,376 | 2,362 | 2,340 | 0.6 % | 1.5 % | ||||||||||
Austin | 1,207 | 1,196 | 1,193 | 0.9 % | 1.2 % | ||||||||||
Total rental and other revenues | 58,164 | 59,990 | 57,592 | (3.0)% | 1.0 % | ||||||||||
Property operating and maintenance expenses (exclusive of depreciation and amortization) | |||||||||||||||
Atlanta | 7,009 | 6,767 | 6,911 | 3.6 % | 1.4 % | ||||||||||
Washington, D.C. | 3,463 | 3,524 | 3,833 | (1.7)% | (9.7)% | ||||||||||
Dallas | 4,708 | 4,650 | 4,662 | 1.2 % | 1.0 % | ||||||||||
Tampa | 2,947 | 3,224 | 3,042 | (8.6)% | (3.1)% | ||||||||||
Charlotte | 1,691 | 1,588 | 1,667 | 6.5 % | 1.4 % | ||||||||||
New York | 1,406 | 1,206 | 1,484 | 16.6 % | (5.3)% | ||||||||||
Houston | 1,286 | 1,259 | 1,230 | 2.1 % | 4.6 % | ||||||||||
Orlando | 945 | 1,110 | 1,045 | (14.9)% | (9.6)% | ||||||||||
Austin | 517 | 541 | 520 | (4.4)% | (0.6)% | ||||||||||
Total | 23,972 | 23,869 | 24,394 | 0.4 % | (1.7)% | ||||||||||
Net operating income | |||||||||||||||
Atlanta | 8,644 | 9,430 | 8,685 | (8.3)% | (0.5)% | 25.3% | |||||||||
Washington, D.C. | 6,889 | 6,691 | 6,252 | 3.0 % | 10.2 % | 20.1% | |||||||||
Dallas | 5,706 | 6,332 | 5,702 | (9.9)% | 0.1 % | 16.7% | |||||||||
Tampa | 4,766 | 4,665 | 4,679 | 2.2 % | 1.9 % | 13.9% | |||||||||
Charlotte | 2,508 | 2,855 | 2,489 | (12.2)% | 0.8 % | 7.4% | |||||||||
New York | 1,988 | 2,428 | 1,798 | (18.1)% | 10.6 % | 5.8% | |||||||||
Houston | 1,570 | 1,813 | 1,625 | (13.4)% | (3.4)% | 4.6% | |||||||||
Orlando | 1,431 | 1,252 | 1,295 | 14.3 % | 10.5 % | 4.2% | |||||||||
Austin | 690 | 655 | 673 | 5.3 % | 2.5 % | 2.0% | |||||||||
Total same store NOI | $ | 34,192 | $ | 36,121 | $ | 33,198 | (5.3)% | 3.0 % | 100.0% | ||||||
Average rental rate per unit | |||||||||||||||
Atlanta | $ | 1,037 | $ | 1,110 | $ | 1,036 | (6.6)% | 0.1 % | |||||||
Washington, D.C. | 1,786 | 1,787 | 1,773 | (0.1)% | 0.7 % | ||||||||||
Dallas | 1,006 | 1,078 | 1,008 | (6.7)% | (0.2)% | ||||||||||
Tampa | 1,179 | 1,229 | 1,173 | (4.1)% | 0.5 % | ||||||||||
Charlotte | 1,010 | 1,108 | 1,016 | (8.8)% | (0.6)% | ||||||||||
New York | 3,591 | 3,843 | 3,586 | (6.6)% | 0.2 % | ||||||||||
Houston | 1,183 | 1,263 | 1,190 | (6.3)% | (0.5)% | ||||||||||
Orlando | 1,287 | 1,339 | 1,280 | (3.9)% | 0.5 % | ||||||||||
Austin | 1,279 | 1,325 | 1,274 | (3.5)% | 0.4 % | ||||||||||
Total average rental rate per unit | 1,215 | 1,281 | 1,213 | (5.2)% | 0.2 % | ||||||||||
24
Table 2 (cont.)
Same Store Net Operating Income (NOI) and Average Rental Rate per Unit by Market
(Dollars in thousands)
| Six months ended | % Change | |||||||
| June 30, 2010 | June 30, 2009 | |||||||
Rental and other revenues | ||||||||
Atlanta | $ | 31,249 | $ | 32,477 | (3.8)% | |||
Washington, D.C. | 20,438 | 20,337 | 0.5 % | |||||
Dallas | 20,777 | 22,171 | (6.3)% | |||||
Tampa | 15,435 | 15,812 | (2.4)% | |||||
Charlotte | 8,355 | 9,020 | (7.4)% | |||||
New York | 6,677 | 7,308 | (8.6)% | |||||
Houston | 5,711 | 6,135 | (6.9)% | |||||
Orlando | 4,716 | 4,667 | 1.0 % | |||||
Austin | 2,400 | 2,410 | (0.4)% | |||||
Total rental and other revenues | 115,758 | 120,337 | (3.8)% | |||||
Property operating and maintenance expenses (exclusive of depreciation and amortization) | ||||||||
Atlanta | 13,921 | 13,665 | 1.9 % | |||||
Washington, D.C. | 7,296 | 7,108 | 2.6 % | |||||
Dallas | 9,369 | 9,205 | 1.8 % | |||||
Tampa | 5,989 | 6,440 | (7.0)% | |||||
Charlotte | 3,358 | 3,164 | 6.1 % | |||||
New York | 2,890 | 2,625 | 10.1 % | |||||
Houston | 2,516 | 2,715 | (7.3)% | |||||
Orlando | 1,990 | 2,132 | (6.7)% | |||||
Austin | 1,038 | 1,102 | (5.8)% | |||||
Total | 48,367 | 48,156 | 0.4 % | |||||
Net operating income | ||||||||
Atlanta | 17,328 | 18,812 | (7.9)% | |||||
Washington, D.C. | 13,142 | 13,229 | (0.7)% | |||||
Dallas | 11,408 | 12,966 | (12.0)% | |||||
Tampa | 9,446 | 9,372 | 0.8 % | |||||
Charlotte | 4,997 | 5,856 | (14.7)% | |||||
New York | 3,787 | 4,683 | (19.1)% | |||||
Houston | 3,195 | 3,420 | (6.6)% | |||||
Orlando | 2,726 | 2,535 | 7.5 % | |||||
Austin | 1,362 | 1,308 | 4.1% | |||||
Total same store NOI | $ | 67,391 | $ | 72,181 | (6.6)% | |||
Average rental rate per unit | ||||||||
Atlanta | $ | 1,036 | $ | 1,121 | (7.6)% | |||
Washington, D.C. | 1,780 | 1,793 | (0.7)% | |||||
Dallas | 1,007 | 1,086 | (7.3)% | |||||
Tampa | 1,176 | 1,240 | (5.2)% | |||||
Charlotte | 1,013 | 1,130 | (10.4)% | |||||
New York | 3,588 | 3,891 | (7.8)% | |||||
Houston | 1,186 | 1,266 | (6.3)% | |||||
Orlando | 1,283 | 1,356 | (5.4)% | |||||
Austin | 1,277 | 1,335 | (4.3)% | |||||
Total average rental rate per unit | 1,214 | 1,292 | (6.0)% | |||||
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Table 3
Quarterly Margin Analysis
(Dollars in thousands)
| For the three months ended June 30, 2010 | |||||||||||||
| Rental and Other Property Revenues | Property Operating & Maintenance Expenses | Net Operating Income ("NOI") | NOI Margin | Expense Margin | |||||||||
Same store | $ | 58,164 | $ | 23,972 | $ | 34,192 | 58.8% | 41.2% | |||||
Partially stabilized (1) | 3,533 | 1,451 | 2,082 | 58.9% | 41.1% | ||||||||
Development and lease-up communities (2) | 3,681 | 2,094 | 1,587 | 43.1% | 56.9% | ||||||||
Other property segments: | |||||||||||||
Corporate apartments | 2,062 | 1,644 | 418 | 20.3% | 79.7% | ||||||||
Commercial | 3,120 | 1,257 | 1,863 | 59.7% | 40.3% | ||||||||
Corporate property management expenses (3) | - | 2,497 | (2,497) | ||||||||||
| $ | 70,560 | $ | 32,915 | ||||||||||
Consolidated property NOI (4) | $ | 37,645 | |||||||||||
Third-party management fees | $ | 207 | |||||||||||
| (1) | Partially stabilized communities include Post Alexander™, Post Peachtree Hills® and Post Heights™. |
| (2) | Development, rehabilitation and lease-up communities include Post Eastside™, Post Sierra at Frisco Bridges™, Post Park® and Post West Austin™. |
| (3) | The following table summarizes the Company’s net property management expense as a percentage of adjusted property revenues: |
Numerator: | |||
Corporate property management expenses | $ | 2,497 | |
Less: Third-party management fees | (207) | ||
Net property management expenses | $ | 2,290 | |
Denominator: | |||
Total rental and other property revenues | $ | 70,560 | |
Less: Corporate apartment revenues | (2,062) | ||
Adjusted property revenues | $ | 68,498 | |
Net property management expenses as a percentage of adjusted property revenues | 3.3% | ||
| (4) | Consolidated property net operating income (“NOI”) is a non-GAAP financial measure. See Table 1 on page 23 for a reconciliation of consolidated property NOI to GAAP net income (loss). |
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Table 4
Reconciliation of Segment Cash Flow Data to Statements of Cash Flows
(Dollars in thousands)
| Three months ended June 30, | Six months ended June 30, | |||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||
Annually recurring capital expenditures by operating segment | ||||||||||||
Fully stabilized | $ | 3,179 | $ | 3,399 | $ | 5,655 | $ | 5,776 | ||||
Communities stabilized during 2009 | 72 | 46 | 133 | 98 | ||||||||
Development and lease-up | 28 | 89 | 46 | 107 | ||||||||
Other segments | 112 | 139 | 135 | 326 | ||||||||
Total annually recurring capital expenditures | $ | 3,391 | $ | 3,673 | $ | 5,969 | $ | 6,307 | ||||
Periodically recurring capital expenditures by operating segment | ||||||||||||
Fully stabilized | $ | 6,291 | $ | 8,764 | $ | 11,354 | $ | 15,182 | ||||
Communities stabilized during 2009 | 1 | 145 | 9 | 2,132 | ||||||||
Development and lease-up | - | - | 36 | - | ||||||||
Other segments | 193 | 463 | 532 | 1,223 | ||||||||
Total periodically recurring capital expenditures (1) | $ | 6,485 | $ | 9,372 | $ | 11,931 | $ | 18,537 | ||||
Total revenue generating capital expenditures | $ | 20 | $ | 1,925 | $ | 52 | $ | 3,503 | ||||
Total property capital expenditures per statements of cash flows | $ | 9,896 | $ | 14,970 | $ | 17,952 | $ | 28,347 | ||||
| (1) | Includes approximately $5,759 and $8,157 for the three months and $10,653 and $13,528 for the six months ended June 30, 2010 and 2009, respectively, of periodically recurring capital expenditures related to the Company’s exterior remediation project. |
Table 5
Computation of Interest and Fixed Charge Coverage Ratios
(Dollars in thousands)
| Six months ended June 30, | ||||||
| 2010 | 2009 | |||||
Loss from continuing operations | $ | (34,880) | $ | (84,324) | ||
Other non-cash expenses, net | 2,127 | 1,713 | ||||
Income tax expense | 537 | 464 | ||||
Losses (gains) on sales of real estate assets | (1,135) | 28 | ||||
Net gains on early extinguishment of indebtedness | - | (819) | ||||
Non-cash impairment charge - unconsolidated entity | - | 74,733 | ||||
Non-cash impairment charge - consolidated entities | 35,091 | 9,658 | ||||
Depreciation expense | 37,114 | 35,601 | ||||
Depreciation (company share) of assets held in unconsolidated entities | 709 | 700 | ||||
Interest expense | 25,174 | 26,419 | ||||
Interest expense (company share) of assets held in unconsolidated entities | 1,718 | 1,718 | ||||
Amortization of deferred financing costs | 1,486 | 1,616 | ||||
Income available for debt service(A) | $ | 67,941 | $ | 67,507 | ||
Interest expense | $ | 25,174 | $ | 26,419 | ||
Interest expense (company share) of assets held in unconsolidated entities | 1,718 | 1,718 | ||||
Interest expense for purposes of computation(B) | 26,892 | 28,137 | ||||
Dividends and distributions to preferred shareholders and unitholders | 3,768 | 3,819 | ||||
Fixed charges for purposes of computation(C) | $ | 30,660 | $ | 31,956 | ||
Interest coverage ratio(A÷B) | 2.5x | 2.4x | ||||
Fixed charge coverage ratio(A÷C) | 2.2x | 2.1x | ||||
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Table 6
Computation of Debt Ratios
(Dollars in thousands)
| As of June 30, | ||||||
| 2010 | 2009 | |||||
Total real estate assets per balance sheet | $ | 2,066,697 | $ | 2,132,577 | ||
Plus: | ||||||
Company share of real estate assets held in unconsolidated entities | 102,082 | 80,436 | ||||
Company share of accumulated depreciation - assets held in unconsolidated entities | 9,631 | 7,864 | ||||
Accumulated depreciation per balance sheet | 655,559 | 587,116 | ||||
Accumulated depreciation on assets held for sale | - | 28,441 | ||||
Total undepreciated real estate assets(A) | $ | 2,833,969 | $ | 2,836,434 | ||
Total debt per balance sheet | $ | 1,007,340 | $ | 1,086,790 | ||
Plus: | ||||||
Company share of third party debt held in unconsolidated entities | 125,758 | 93,280 | ||||
Total debt (adjusted for joint venture partners’ share of debt)(B) | $ | 1,133,098 | $ | 1,180,070 | ||
Total debt as a % of undepreciated real estate assets (adjusted for joint venture partners’ share of debt)(B÷A) | 40.0% | 41.6% | ||||
Total debt per balance sheet | $ | 1,007,340 | $ | 1,086,790 | ||
Plus: | ||||||
Company share of third party debt held in unconsolidated entities | 125,758 | 93,280 | ||||
Preferred shares at liquidation value | 93,039 | 95,000 | ||||
Total debt and preferred equity (adjusted for joint venture partners’ share of debt)(C) | $ | 1,226,137 | $ | 1,275,070 | ||
Total debt and preferred equity as a % of undepreciated real estate assets (adjusted for joint venture partners’ share of debt)(C÷A) | 43.3% | 45.0% | ||||
Table 7
Calculation of Company Undepreciated Book Value Per Share
(Dollars in thousands)
| June 30, 2010 | |||
Total Company shareholders’ equity per balance sheet | $ | 958,613 | |
Plus: | |||
Accumulated depreciation, per balance sheet | 655,559 | ||
Noncontrolling interest of common unitholders in Operating Partnership, per balance sheet | 3,877 | ||
Less: | |||
Deferred charges, net, per balance sheet | (8,017) | ||
Preferred shares at liquidation value | (93,038) | ||
Total undepreciated book value(A) | $ | 1,516,994 | |
Total common shares and units(B) | 48,862 | ||
Company undepreciated book value per share(A÷B) | $ | 31.05 | |
28