EXHIBIT 99.1
Contact: Janie Maddox
Post Properties, Inc.
(404) 846-5056
POST PROPERTIES ANNOUNCES FIRST QUARTER EARNINGS
Investor/Analyst Conference Call Scheduled for May 6 at 10:00 a.m. EDT
ATLANTA, May 5, 2003 - Post Properties, Inc. (NYSE: PPS) announced today that
its net loss available to common shareholders was $23.5 million for the first
quarter of 2003, compared to net income available to common shareholders of
$14.2 million for the first quarter of 2002. On a diluted per share basis, net
income (loss) available to common shareholders was ($0.63) for the first quarter
of 2003 compared to $0.38 in the first quarter of 2002. Included in the
company's first quarter 2003 results was a severance charge of $19.7 million
reflecting the present value of payments and other costs to be incurred by the
company in connection with employment agreements with the company's former
chairman and vice chairman, consistent with a press release issued by the
company on February 21, 2003. This severance charge included approximately $14.0
million related to ongoing compensation and benefits and approximately $5.7
million related to the estimated future costs of the settlement of the
split-dollar life insurance obligations under the existing contracts. In
addition, first quarter 2003 results included a non-cash asset impairment charge
of $14.1 million, in accordance with SFAS No. 144, to write-down to fair value
an apartment community, located in Phoenix, AZ, that is likely to be marketed
for sale in the relatively near term as part of the company's strategy to exit
non-strategic markets. Excluding the severance charge of $19.7 million and the
asset impairment charge of $14.1 million, net income available to common
shareholders was $6.5 million or $0.18 per diluted share for the first quarter
of 2003, compared to the reported $14.2 million or $0.38 per diluted share for
the first quarter of 2002. Net income available to common shareholders,
excluding severance and asset impairment charges is a supplemental non-GAAP
financial measure. A reconciliation of this supplemental measure to GAAP net
income is included in the financial data accompanying this press release.
Funds from operations (FFO) for the first quarter of 2003 totaled $2.9 million
or $0.07 per diluted share compared to $30.2 million or $0.72 per diluted share
in the first quarter of 2002. Excluding the severance charges discussed above,
FFO for the first quarter of 2003 totaled $22.6 million or $0.54 per diluted
share. FFO is a supplemental non-GAAP financial measure used by real estate
investment trusts to measure and compare operating performance. A reconciliation
of FFO to GAAP net income is included in the financial data accompanying this
press release.
Total revenues from continuing operations were $82.0 million for the first
quarter of 2003, compared to $82.2 million for the first quarter of 2002.
Mr. Stockert, Chief Executive Officer of Post Properties, said, "Despite ongoing
challenges in our key markets, Post continues on the right track. Our operating
performance for the first quarter was consistent with our prior guidance, after
adjusting for non-cash charges."
Mr. Stockert also noted that, "In the past year, we have made significant
strides in cutting costs and in bringing Post's development exposure to a level
consistent with current market conditions. We are continuing to focus our
geographic footprint by selling older assets in our most concentrated markets
and exiting many of our single-asset markets. We believe that we are on course
to meet our asset sales targets for the year and we are applying the cash from
these sales to reduce debt and further strengthen the balance sheet."
MATURE COMMUNITY DATA
In the first quarter of 2003, average economic occupancy at the company's 67
mature (same store) communities, containing 24,347 apartment units, was 90.1%
compared to 90.1% in the first quarter of 2002.
Total revenues for the mature communities decreased 4.6% during the first
quarter of 2003 compared to the first quarter of 2002, while operating expenses
decreased 0.3%, resulting in a 6.9% decline in net operating income (NOI) or
$3.1 million ($0.07 per diluted share). NOI is defined as property rental and
other revenues less direct property operating expenses. NOI excludes interest,
depreciation and corporate general and administrative expenses. Same store net
operating income is a supplemental non-GAAP financial measure. A reconciliation
of same store net operating income to the comparable GAAP financial measure is
included in the financial data accompanying this press release.
ASSET SALES
During the quarter, the company sold its only community in Austin, TX, Post West
Avenue Lofts(TM), along with an adjacent land parcel. The sale produced over $33
million of net proceeds and completed the company's exit of the Austin market.
As is its practice, the company used a competitive bid process to achieve the
highest price from a number of qualified bidders, in this case achieving a price
per square foot for the apartment community in excess of $140.
Since launching its self-funding strategy in 2000, the company has raised more
than $575 million in net proceeds from asset sales. More than 70% of these
proceeds were generated from the sale of properties in the company's three
largest markets: Atlanta, Dallas and Tampa. The average age of the communities
sold has been 12 years.
The company is currently under contract to sell two additional properties,
including one held by an unconsolidated equity investment entity (one in a core
market, and the other in Pasadena, CA), and expects to close both transactions
in the second quarter. These two pending transactions are expected to result in
net proceeds from asset sales for the first half of 2003 of more than $130
million.
DEBT ISSUANCE
On February 26, 2003, one of the company's unconsolidated equity investment
entities closed a $17 million loan with a life insurance company. The loan is
secured by Post Peachtree(TM) in Atlanta, GA. Payments of principal and interest
will be based upon an interest rate of 4.28% per annum and a 30-year
amortization schedule, with the balance due on March 10, 2008. The company
received 100% of the loan proceeds from the joint venture as a payment towards
the principal of the company's construction note to the joint venture. The net
proceeds were used by the company to repay outstanding indebtedness.
DEVELOPMENT AND LEASE-UP
The company has completed the lease-ups of Post Peachtree(TM) in Atlanta, GA,
Phase III of Post Harbour Place(TM) in Tampa, FL and Post Luminaria(TM) in New
York City.
Post Peachtree(TM) is a 16-story tower with 121 units located in Atlanta's
Buckhead District. The development is structured as a joint venture with Post
owning a 35% equity interest. As of May 3, 2003, it was 91% leased. Phase III of
Post Harbour Place(TM) consists of 259 apartment homes located on the north side
of Harbour Island across Garrison Channel from downtown Tampa. As of May 3,
2003, it was 95% leased. Post Luminaria(TM) is a 20-story tower consisting of
138 apartment homes located at 385 First Avenue in Manhattan. The development is
structured as a joint venture with Post contributing approximately two-thirds of
the equity to the venture and the landowner contributing the balance. As of May
3, 2003, the community was 95% leased.
OUTLOOK
The estimates presented below are forward-looking and are based on current
apartment market and general economic conditions and other risks outlined below.
Management believes that the company's net income per diluted share for the
second quarter of 2003 will be in a range of $0.62 to $0.64. This net income per
diluted share estimate includes estimated gains on property sales of $0.75 to
$0.77 per diluted share, estimated severance costs associated with two
executives departing the company in the second quarter of approximately $0.04
per diluted share and costs associated with the on-going proxy contest of
approximately $0.09 to $0.11 per diluted share. Management believes that the
company's FFO per share for the second quarter of 2003 will be in a range of
$0.38 to $0.40 and that FFO per share, excluding severance costs and the cost of
the proxy contest will be in a range of $0.52 to $0.54. A reconciliation of our
projected net income per diluted share to our projected FFO per diluted share
excluding severance costs and the costs of the proxy contest for the second
quarter of 2003 is included in the financial data accompanying this press
release.
SUPPLEMENTAL FINANCIAL DATA
The company also produces Supplemental Financial Data (the Supplemental Package)
that provides detailed information regarding the company's operating results and
balance sheet. The Supplemental Package is available through the company's web
site at "http://www.postproperties.com/posthome.nsf/ExtList/2003-1QFinancials".
The ability to access the attachments on the company's web site requires the
Adobe Acrobat 4.0 Reader, which may be downloaded at
http://www.adobe.com/products/acrobat/readstep.html.
CONFERENCE CALL INFORMATION
The company will hold its quarterly conference call on Tuesday, May 6, at 10
a.m. EDT. The telephone numbers are 1-800-810-0924 for domestic calls and
1-913-981-4900 for international callers. Callers should reference "Post
Properties' First Quarter 2003 Earnings Call." The passcode is 654399. The
conference call will be open to the public and can be listened to live on Post's
web site at www.postproperties.com under Corporate Information/Investor Info.
The replay will begin two hours after the completion of the call and will be
available until Monday, May 12, at 11:59 p.m. EDT. The telephone numbers for the
replay are 1-888-203-1112 for domestic callers and 1-719-457-0820 for
international callers. The passcode for the replay is 654399. A replay of the
call also will be available through Monday, June 30, on Post's web site. The
financial and statistical information that will be discussed on the call is
contained in this press release and the Supplemental Package, both of which will
be available on the company's website at
"http://www.postproperties.com/posthome.nsf/ExtList/2003-1QFinancials" prior to
the quarterly conference call.
Post Properties, Inc., a leading developer and operator of upscale apartment
communities in the United States, pioneered building and branding resort-style
garden apartments for more than 30 years. Post now also focuses on the creation
of high-quality, high-density, live-work-walk neighborhoods in infill locations
in major urban markets. The company has been recognized locally, nationally and
internationally for building better neighborhoods and the preservation of
historic buildings. Operating as a self-administered and self-managed equity
real estate investment trust (REIT), the company's primary business consists of
developing and managing Post(R) brand-name apartment communities.
Nationwide, Post Properties owns approximately 30,078 apartment homes in 80
communities, including 859 units currently under development.
FORWARD LOOKING STATEMENT:
Certain statements made in this press release 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. Statements
regarding future events and developments and the company's future performance,
as well as management's expectations, beliefs, plans, estimates or projections
relating to the future, are forward-looking statements within the meaning of
these laws. Examples of such statements in this press release include the
company's plans to sell certain assets and the company's projected net income
(loss) per diluted share and projected FFO per diluted share for the second
quarter. 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 to differ materially from the expected results described in the
company's forward-looking statements: the company's ability to successfully
defend against Mr. William's proxy contest; future local and national economic
conditions, including changes in job growth, interest rates, the availability of
financing and other factors; demand for apartments in the company's markets and
the effect on occupancy and rental rates; the impact of
competition on the company's business, including competition for tenants and
development locations; the company's ability to obtain financing or self-fund
the development of additional apartment communities; the uncertainties
associated with the company's current real estate development, including actual
costs exceeding the company's budgets or development periods exceeding
expectations; uncertainties associated with the timing and amount of asset sales
and the resulting gains/losses associated with such asset sales; conditions
affecting ownership of residential real estate and general conditions in the
multi-family residential real estate market; the effects of changes in
accounting policies and other regulatory matters detailed in the company's
filings with the Securities and Exchange Commission and uncertainties of
litigation; and the company's ability to continue to qualify as a real estate
investment trust under the Internal Revenue Code. 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, 2002 and
may be discussed in subsequent filings with the SEC. The risk factors discussed
in such Form 10-K under the caption "Risk Factors" are specifically incorporated
by reference into this press release.
FINANCIAL HIGHLIGHTS
(Unaudited; in thousands, except per share amounts)
THREE MONTHS ENDED
MARCH 31,
-------------------------------
2003 2002
-------------------------------
OPERATING DATA
Revenues $ 82,007 $82,186
Net income (loss) available to common shareholders (23,450) 14,158
Net income available to common shareholders, excluding severance and asset
impairment charges (Table 1) 6,527 14,158
Funds from operations (Table 2) 2,863 30,196
Funds from operations, excluding severance charges (Table 2) 22,575 30,196
Weighted average shares outstanding - diluted 37,262 37,049
Weighted average shares and units outstanding - diluted 42,049 42,106
PER COMMON SHARE DATA - DILUTED
Net income (loss) available to common shareholders $ (0.63) $ 0.38
Net income available to common shareholders, excluding severance and asset
impairment charges (Table 1) 0.18 0.38
Funds from operations (Table 2) 0.07 0.72
Funds from operations, excluding severance charges (Table 2) 0.54 0.72
Dividends declared 0.45 0.78
TABLE 1
RECONCILIATION OF NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS TO NET
INCOME AVAILABLE TO COMMON SHAREHOLDERS, EXCLUDING SEVERANCE AND ASSET
IMPAIRMENT CHARGES
(Unaudited; in thousands, except per share amounts)
THREE MONTHS ENDED
MARCH 31,
-------------------------------
2003 2002
-------------------------------
Net income (loss) available to common shareholders $(23,450) $14,158
Severance charges 19,712 --
Asset impairment charge 14,118 --
Minority interest impact of charges (computed at 11.39%) (3,853) --
-------------------------------
Net income available to common shareholders, excluding severance and asset
impairment charges $ 6,527 $14,158
===============================
Weighted average shares outstanding - diluted 37,262 37,049
===============================
Net income available to common shareholders, excluding severance and asset
impairment charges - per diluted share $ 0.18 $ 0.38
===============================
TABLE 2
RECONCILIATION OF NET INCOME (LOSS) TO FUNDS FROM OPERATIONS
(Unaudited; in thousands, except per share amounts)
THREE MONTHS ENDED
MARCH 31,
-------------------------------
2003 2002
-------------------------------
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS $(23,450) $ 14,158
Minority interest of common unitholders - continuing operations (3,877) 2,543
Gains on property sales - continuing operations -- (13,275)
Asset impairment charge 14,118 --
Gains on properties held for sale and sold, net of minority interest -
discontinued operations (6,091) 6,731
Minority interest in discontinued operations 79 315
Depreciation on wholly-owned real estate assets, net 21,618 19,586
Depreciation on real estate assets held in unconsolidated entities 466 138
-------------------------------
FUNDS FROM OPERATIONS (1) 2,863 30,196
Severance charges 19,712 --
-------------------------------
FUNDS FROM OPERATIONS, EXCLUDING SEVERANCE CHARGES $ 22,575 $ 30,196
===============================
Weighted average shares and units outstanding - diluted 42,049 42,106
===============================
Funds from operations - per diluted share $ 0.07 $ 0.72
===============================
Funds from operations, excluding severance charges - per diluted share $ 0.54 $ 0.72
===============================
(1) The Company uses the National Association of Real Estate Investment Trust
("NAREIT") definition of Funds from Operations ("FFO"). FFO is defined to
mean net income available to common shareholders determined in accordance
with GAAP, excluding gains (or losses) from debt restructuring and sales of
property, plus depreciation of real estate assets, and after adjustments
for unconsolidated partnerships and joint ventures. FFO should not be
considered as an alternative to net income (determined in accordance with
GAAP) as an indicator of the Company's financial performance or to cash
flow from operating activities (determined in accordance with GAAP) as a
measure of the Company's liquidity, nor is it necessarily indicative of
sufficient cash flow to fund all of the Company's needs.
TABLE 3
RECONCILIATION OF SAME STORE NET OPERATING INCOME (NOI) TO INCOME FROM
CONTINUING OPERATIONS BEFORE EQUITY IN LOSSES OF UNCONSOLIDATED ENTITIES, GAINS
ON PROPERTY SALES AND MINORITY INTEREST
(Dollars in thousands)
THREE MONTHS ENDED
-------------------------
MARCH 31, MARCH 31,
2003 2002
-------- --------
Total same store NOI $ 41,791 $ 44,891
Property NOI from other operating segments 6,356 4,040
-------- --------
Consolidated property NOI 48,147 48,931
Add:
Interest income 234 405
Less:
Depreciation (22,728) (19,902)
Interest (16,561) (13,144)
Amortization of deferred loan costs (788) (555)
General and administrative (3,624) (3,765)
Minority interest in consolidated property partnerships 334 483
Other expenses (567) --
Severance charges (19,712) --
Asset impairment charge (14,118) --
-------- --------
Income from Continuing Operations before Equity in Losses of
Unconsolidated Entities, Gains on Property Sales and Minority Interest $(29,383) $ 12,453
======== ========
TABLE 4
SAME STORE NET OPERATING INCOME (NOI) SUMMARY BY MARKET
(Dollars in thousands)
THREE MONTHS ENDED
---------------------------------------------
MARCH 31, MARCH 31,
2003 2002 % CHANGE
---------------------------------------------
Rental and other revenues
Atlanta $ 38,040 $ 40,161 (5.3)%
Dallas 13,824 14,443 (4.3)%
Tampa 4,308 4,687 (8.1)%
Other 8,773 8,814 (0.5)%
-----------------------------
Total rental and other revenues $ 64,945 $ 68,105 (4.6)%
-----------------------------
Property operating and maintenance expenses
(exclusive of depreciation and amortization)
Atlanta $ 12,716 $ 12,404 2.5%
Dallas 5,627 6,015 (6.5)%
Tampa 1,681 1,722 (2.4)%
Other 3,130 3,073 1.9%
-----------------------------
Total $ 23,154 $ 23,214 (0.3)%
-----------------------------
Net operating income
Atlanta $ 25,324 $ 27,757 (8.8)%
Dallas 8,197 8,428 (2.7)%
Tampa 2,627 2,965 (11.4)%
Other 5,643 5,741 (1.7)%
-----------------------------
Total same store NOI $ 41,791 $ 44,891 (6.9)%
-----------------------------
TABLE 5
RECONCILIATION OF FORECASTED NET INCOME PER SHARE TO FORECASTED FUNDS FROM
OPERATIONS, EXCLUDING SEVERANCE AND PROXY COSTS, PER SHARE
(Dollars in thousands)
THREE MONTHS ENDED
JUNE 30, 2003
--------------------------
LOW RANGE HIGH RANGE
--------------------------
Forecasted net income, per share $ 0.62 0.64
Forecasted gains on property sales, per share (0.75) (0.77)
Forecasted depreciation, per share 0.51 0.53
------------------------
Forecasted funds from operations, per share 0.38 0.40
Forecasted severance and proxy costs, per share 0.14 0.14
------------------------
Forecasted funds from operations, excluding severance
and proxy costs, per share $ 0.52 $0.54
========================
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