.
.
.
EXHIBIT 99.2
FIRST QUARTER 2004
Supplemental Financial Data
TABLE OF CONTENTS
Page
Consolidated Statements of Operations ............................................... 3
Calculation of Funds from Operations and Adjusted Funds From Operations ............ 5
Same Store Results .................................................................. 6
Consolidated Balance Sheets ......................................................... 8
Consolidated Debt Summary ........................................................... 9
Asset Sales Summary ................................................................. 12
Capitalized Costs Summary ........................................................... 13
Investments in Unconsolidated Real Estate Entities .................................. 14
Net Asset Value Supplemental Information ............................................ 15
Definitions and Reconciliations of Supplemental Non-GAAP Financial Measures ......... 17
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 to differ materially from the expected results
described in the Company's forward-looking statements: 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 or acquisition 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, 2003 and
may be discussed in subsequent filings with the SEC. These risk factors are
specifically incorporated by reference into this document.
Copyright(C)2004 Post Apartment Homes, LP All Rights Reserved 2
POST PROPERTIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share or unit data)
(Unaudited)
THREE MONTHS ENDED
MARCH 31,
----------------------------------
2004 2003
----------------------------------
REVENUES
Rental ................................................................. $ 71,247 $ 68,865
Other property revenues (1) ............................................ 4,145 3,960
Other .................................................................. 76 130
------------ ------------
Total revenues ........................................................ 75,468 72,955
------------ ------------
EXPENSES
Property operating and maintenance (exclusive of items shown
separately below) ..................................................... 33,185 31,290
Depreciation ........................................................... 21,186 20,290
General and administrative ............................................. 4,642 3,624
Development costs and other (2) ........................................ 535 567
Severance charges (3) .................................................. - 19,712
------------ ------------
Total expenses ........................................................ 59,548 75,483
------------ ------------
OPERATING INCOME (LOSS) .................................................. 15,920 (2,528)
Interest income ........................................................ 180 234
Interest expense ....................................................... (16,281) (15,629)
Amortization of deferred financing costs ............................... (1,116) (788)
Equity in income (losses) of unconsolidated real estate entities ....... 216 (393)
Minority interest in consolidated property partnerships ................ 272 334
Minority interest of preferred unitholders ............................. (1,400) (1,400)
Minority interest of common unitholders ................................ 473 2,623
------------ ------------
LOSS FROM CONTINUING OPERATIONS ....................................... (1,736) (17,547)
------------ ------------
DISCONTINUED OPERATIONS (4)
Income (loss) from discontinued operations, net of minority interest ... 3,638 (9,132)
Gains on property sales, net of minority interest ...................... 1,509 6,091
------------ ------------
INCOME (LOSS) FROM DISCONTINUED OPERATIONS ............................ 5,147 (3,041)
------------ ------------
NET INCOME (LOSS) ........................................................ 3,411 (20,588)
Dividends to preferred shareholders .................................... (2,597) (2,862)
Redemption costs on preferred stock .................................... (1,716) -
------------ ------------
NET LOSS AVAILABLE TO COMMON SHAREHOLDERS ................................ $ (902) $ (23,450)
============ ============
PER COMMON SHARE DATA - BASIC(5)
Loss from continuing operations (net of preferred dividends
and redemption costs) ................................................. $ (0.15) $ (0.55)
Income (loss) from discontinued operations ............................. 0.13 (0.08)
------------ ------------
Net loss available to common shareholders .............................. $ (0.02) $ (0.63)
============ ============
Dividends declared ..................................................... $ 0.45 $ 0.45
============ ============
Weighted average common shares outstanding - basic ..................... 39,382 37,262
============ ============
Weighted average common shares and units outstanding - basic ........... 42,461 42,049
============ ============
PER COMMON SHARE DATA - DILUTED (5)
Loss from continuing operations (net of preferred dividends
and redemption costs) ................................................. $ (0.15) $ (0.55)
Income (loss) from discontinued operations ............................. 0.13 (0.08)
------------ ------------
Net loss available to common shareholders .............................. $ (0.02) $ (0.63)
============ ============
Dividends declared ..................................................... $ 0.45 $ 0.45
============ ============
Weighted average common shares outstanding - diluted ................... 39,382 37,262
============ ============
Weighted average common shares and units outstanding - diluted ......... 42,461 42,049
============ ============
Copyright(C)2004 Post Apartment Homes, LP All Rights Reserved 3
POST PROPERTIES, INC.
NOTES TO CONSOLIDATED
STATEMENTS OF OPERATIONS
(1) Other property revenues include charges to residents for services, utility
reimbursements from residents and other miscellaneous property revenues. In
prior periods, utility reimbursements from residents were classified as
reductions of property operating and maintenance expenses. Prior period
amounts have been reclassified to conform with the current year
presentation.
(2) Development costs and other expenses for the three months ended March 31,
2004 include development personnel and associated costs not allocable to
development projects. Other expenses for the three months ended March 31,
2003 included legal expenses related to board of director governance and
transition matters, the settlement costs related to the bankruptcy of a
former technology investment and losses on the disposal of the Company's
partial ownership interest in corporate aircraft.
(3) For the three months ended March 31, 2003, the Company recorded severance
charges of $19,712 relating to the change in roles from executive to
non-executive status of the Company's former chairman and vice chairman of
the board of directors. The severance charges represented the discounted
present value of the estimated payments to be made to these individuals
under their existing employment arrangements.
(4) Under SFAS No. 144, the operating results of real estate assets designated
as held for sale 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.
For the three months ended March 31, 2004, income from discontinued
operations included the results of operations of 8 communities, containing
3,942 units, classified as held for sale at March 31, 2004 and the results
of operations of one community sold in 2004 through its sale date. For the
three months ended March 31, 2003, income from discontinued operations
included the results of operations of all communities classified as held
for sale at March 31, 2004, one community sold in 2004 and the results of
operations of four communities sold in 2003 through their sale dates.
The revenues and expenses of these communities for the three months ended
March 31, 2004 and 2003 were as follows:
THREE MONTHS ENDED
MARCH 31,
----------------------------
2004 2003
---- ----
REVENUES
Rental .............................................................. $ 7,932 $ 12,170
Other ............................................................... 698 833
----------- -----------
Total revenues .................................................... 8,630 13,003
----------- -----------
EXPENSES
Property operating and maintenance
(exclusive of items shown separately below) ....................... 3,785 5,082
Depreciation ........................................................ - 2,438
Interest ............................................................ 923 1,671
Asset impairment charge ............................................. - 14,118
----------- -----------
Total expenses .................................................... 4,708 23,309
----------- -----------
INCOME (LOSS) FROM DISCONTINUED OPERATIONS 3,922 (10,306)
BEFORE MINORITY INTEREST ............................................
Minority interest ................................................... (284) 1,174
----------- -----------
INCOME (LOSS) FROM DISCONTINUED OPERATIONS .......................... $ 3,638 $ (9,132)
=========== ===========
In the first quarter of 2003, the Company recorded an asset impairment
charge of $14,118 to write down the cost of the Company's apartment
community located in Phoenix, Arizona to its estimated fair value. This
impairment loss, originally reflected in continuing operations, was
reclassified to discontinued operations to reflect the designation of this
community as held for sale during the third quarter of 2003 and the final
sale of the community in the fourth quarter of 2003.
For the three months ended March 31, 2004, the Company recognized net gains
from discontinued operations of $1,627 ($1,509 net of minority interest)
from the sale of one community containing 398 units and certain land
parcels. For the three months ended March 31, 2003, the Company recognized
net gains from discontinued operations of $7,981 ($7,072 net of minority
interest), on the sale of one community, containing 239 apartment units,
reduced by losses of $1,106 ($981 net of minority interest) resulting from
losses on the sale of certain land parcels and additional reserves to
write-down to fair value certain other land parcels previously classified
as held for sale.
(5) 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., owns the controlling interest in Post Apartment
Homes, L.P., the Operating Partnership, through which the Company conducts
its operations. As of March 31, 2004, there were 42,477,526 units of the
Operating Partnership outstanding, of which 39,612,855 or 93.3% were owned
by the Company. For the three months ended March 31, 2004, the potential
dilution from the Company's outstanding stock options of 55,057 shares was
antidilutive to the continuing operations per share calculation. As such,
these amounts were excluded form weighted average shares and units and the
income (loss) per share calculations for the three months ended March 31,
2004.
Copyright(C)2004 Post Apartment Homes, LP All Rights Reserved 4
POST PROPERTIES, INC.
CALCULATION OF FUNDS FROM OPERATIONS
AND ADJUSTED FUNDS FROM OPERATIONS AVAILABLE TO COMMON SHAREHOLDERS
(In thousands, except per share or unit data)
(Unaudited)
A reconciliation of net income available to common shareholders to funds from
operations available to common shareholders and adjusted funds from operations
available to common shareholders is provided below.
THREE MONTHS ENDED
MARCH 31,
------------------------------
2004 2003 (1)
---- --------
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS ..................... $ (902) $ (23,450)
Minority interest of common unitholders - continuing operations ...... (473) (2,623)
Minority interest in discontinued operations (2) ..................... 402 (391)
Gains on property sales - discontinued operations .................... (1,627) (6,875)
Depreciation on wholly-owned real estate assets, net (3) ............. 20,039 21,618
Depreciation on real estate assets held in unconsolidated entities ... 327 466
------------ ------------
FUNDS FROM OPERATIONS AVAILABLE TO COMMON SHAREHOLDERS,
AS DEFINED (A) ....................................................... 17,766 (11,255)
Redemption costs on preferred stock .................................. 1,716 -
Severance charges .................................................... - 19,712
Asset impairment charges ............................................ - 14,118
------------ ------------
FUNDS FROM OPERATIONS AVAILABLE TO COMMON SHAREHOLDERS,
EXCLUDING PREFERRED STOCK REDEMPTION COSTS, SEVERANCE AND IMPAIRMENT
CHARGES (B) .......................................................... $ 19,482 $ 22,575
============ ============
FUNDS FROM OPERATIONS AVAILABLE TO COMMON SHAREHOLDERS, AS DEFINED ..... $ 17,766 $ (11,255)
Recurring capital expenditures ....................................... (2,422) (1,462)
Non-recurring capital expenditures ................................... (1,244) (958)
------------ ------------
ADJUSTED FUNDS FROM OPERATIONS AVAILABLE TO COMMON SHAREHOLDERS (4)
(C) .................................................................... 14,100 (13,675)
Redemption costs on preferred stock .................................. 1,716 -
Severance charges .................................................... - 19,712
Asset impairment charges ............................................ - 14,118
------------ ------------
ADJUSTED FUNDS FROM OPERATIONS AVAILABLE TO COMMON SHAREHOLDERS,
EXCLUDING PREFERRED STOCK REDEMPTION COSTS, SEVERANCE AND IMPAIRMENT
CHARGES (4) (D) ...................................................... $ 15,816 $ 20,155
============ ============
PER COMMON SHARE DATA - BASIC
Funds from operations per share or unit, as defined (A/F) .............. $ 0.42 $ (0.27)
Adjusted funds from operations per share or unit, as defined (4) (C/F).. $ 0.33 $ (0.33)
Funds from operations per share or unit, excluding preferred stock
redemption costs, severance and impairment charges (B/F) ............. $ 0.46 $ 0.54
Adjusted funds from operations per share or unit, excluding preferred
stock redemption costs, severance and impairment charges (4) (D/F) ... $ 0.37 $ 0.48
Dividends declared (E) ................................................. $ 0.45 $ 0.45
Weighted average shares outstanding .................................... 39,382 37,262
Weighted average shares and units outstanding (F) ...................... 42,461 42,049
PER COMMON SHARE DATA - DILUTED
Funds from operations per share or unit, as defined (A/G) .............. $ 0.42 $ (0.27)
Adjusted funds from operations per share or unit, as defined (4) (C/G).. $ 0.33 $ (0.33)
Funds from operations per share or unit, excluding preferred stock
redemption costs, severance and impairment charges (B/G) ............. $ 0.46 $ 0.54
Adjusted funds from operations per share or unit, excluding preferred
stock redemption costs, severance and impairment charges (4) (D/G) ... $ 0.37 $ 0.48
Dividends declared (E) ................................................. $ 0.45 $ 0.45
Weighted average shares outstanding (5) ................................ 39,437 37,262
Weighted average shares and units outstanding (5) (G) .................. 42,516 42,049
(1) For the three months ended March 31, 2003, FFO available to common
shareholders has been restated from the prior period presentation to
reflect a reduction of $14,118 for impairment losses on real estate assets
resulting from the NAREIT modification of the definition of FFO in 2003.
(2) Represents the minority interest in earnings and gains on properties held
for sale and sold reported as discontinued operations for the periods
presented.
(3) Depreciation on wholly-owned real estate assets is net of the minority
interest portion of depreciation in consolidated entities.
(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 $134 and $208 for the three months ended March 31,
2004 and 2003, respectively, are excluded from the calculation of adjusted
funds from operations.
(5) Diluted weighted average shares and units for the three months ended March
31, 2004 include 55 shares and units, that were antidilutive to all income
(loss) per share computations under generally accepted accounting
principles.
Copyright(C)2004 Post Apartment Homes, LP All Rights Reserved 5
POST PROPERTIES, INC.
SAME STORE RESULTS
(Dollars 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. Same store net
operating income is a supplemental non-GAAP financial measure. See Table 1 on
page 19 for a reconciliation of same store net operating income to GAAP net
income. The operating performance and capital expenditures of the 57 communities
containing 21,954 apartment units which were fully stabilized as of January 1,
2003, is summarized as follows:
THREE MONTHS ENDED
MARCH 31,
---------------------------
2004 2003 % CHANGE
----------- ----------- ---------
Rental and other revenues ............................................ $ 64,709 $ 64,944 (0.4)%
Property operating and maintenance expenses (excluding depreciation
and amortization) .................................................. 25,274 23,881 5.8%
----------- -----------
Same store net operating income ..................................... $ 39,435 $ 41,063 (4.0)%
=========== ===========
Capital expenditures (1)
Recurring
Carpet ............................................................ $ 696 $ 432 61.1%
Other ............................................................. 1,338 576 132.3%
----------- -----------
Total recurring .................................................. 2,034 1,008 101.8%
Non-recurring ...................................................... 1,148 435 163.9%
----------- -----------
Total capital expenditures (A) .................................... $ 3,182 $ 1,443 120.5%
=========== ===========
Total capital expenditures per unit (A/21,954 UNITS) ............... $ 145 $ 66 119.7%
=========== ===========
Average monthly rental rate per unit (2) ............................. $ 988 $ 1,034 (4.4)%
=========== ===========
(1) See Table 3 on page 20 for a reconciliation of these segment components of
property capital expenditures to total recurring capital expenditures and
total non-recurring capital expenditures as presented on the consolidated
cash flow statements prepared under GAAP.
(2) 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.
SAME STORE OPERATING RESULTS BY MARKET -
COMPARISON OF 2004 TO 2003
(Increase (decrease) from same period in prior year)
THREE MONTHS ENDED
MARCH 31, 2004
------------------------------------------------------
AVERAGE
ECONOMIC
MARKET REVENUES (1) EXPENSES (1) NOI (1) OCCUPANCY
- ------ ------------ ------------ ------- ---------
Atlanta (1.7)% 6.8% (6.2)% 2.3%
Dallas 0.6% 3.7% (1.6)% 2.9%
Tampa 3.2% 11.4% (2.3)% 4.2%
Washington, DC 3.8% 5.2% 3.2% 2.7%
Charlotte 4.6% (1.0)% 7.6% 4.9%
Other (2) (3.3)% 5.4% (8.8)% 0.7%
---- ---- ---- ---
Total (0.4)% 5.8% (4.0)% 2.6%
==== ==== ==== ===
(1) See Table 2 on page 19 for a reconciliation of these components of same
store net operating income and Table 1 on page 19 for a reconciliation of
same store net operating income to GAAP net income.
(2) Includes communities located in Orlando, FL; Houston, TX; Denver, CO and
Nashville, TN.
Copyright(C)2004 Post Apartment Homes, LP All Rights Reserved 6
SAME STORE OCCUPANCY BY MARKET
AVERAGE ECONOMIC
OCCUPANCY (1)
------------------
THREE MONTHS ENDED PHYSICAL
MARCH 31, OCCUPANCY (2)
APARTMENT % OF -------------------- AT MARCH 31,
MARKET UNITS UNITS 2004 2003 2004
------ ----- ----- ---- ---- ----
Atlanta 11,886 54.1% 92.6% 90.3% 95.1%
Dallas 4,353 19.8% 91.5% 88.6% 93.7%
Tampa 1,439 6.6% 94.4% 90.2% 95.3%
Washington, DC 1,204 5.5% 97.3% 94.6% 97.4%
Charlotte 1,065 4.9% 94.0% 89.1% 96.9%
Other 2,007 9.1% 90.7% 90.0% 94.1%
------ ----- ---- ---- ----
Total 21,954 100.0% 92.8% 90.2% 94.9%
====== ===== ==== ==== ====
(1) Average economic occupancy is defined 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. The calculation of average
economic occupancy does not include a deduction for concessions and
employee discounts. Average economic occupancy, including these amounts
would have been 92.7% and 89.2% for the three months ended March 31, 2004
and 2003, respectively. For the three months ended March 31, 2004 and 2003,
net concessions were $49 and $722, respectively, and employee discounts
were $117 and $146, respectively.
(2) Physical occupancy is defined as the number of units occupied divided by
total apartment units, expressed as a percentage.
SAME STORE SEQUENTIAL COMPARISON
THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, 2004 DECEMBER 31, 2003 % CHANGE
-------------- ----------------- --------
Rental and other revenues ..................... $ 64,709 $ 64,432 0.4%
Property operating and maintenance expenses
(excluding depreciation and amortization) ... 25,274 24,189 4.5%
---------- ----------
Same store net operating income (1) ........... $ 39,435 $ 40,243 (2.0)%
========== ==========
Average economic occupancy .................... 92.8% 92.9% (0.1)%
========== ==========
Average monthly rental rate per unit .......... $ 988 $ 993 (0.5)%
========== ==========
SEQUENTIAL SAME STORE OPERATING RESULTS BY MARKET -
COMPARISON OF FIRST QUARTER OF 2004 TO FOURTH QUARTER 2003
(Increase (decrease) between periods)
AVERAGE
ECONOMIC
MARKET REVENUES (1) EXPENSES (1) NOI (1) OCCUPANCY
------ ------------ ------------ ------- ---------
Atlanta (0.2)% 3.1% (2.1)% (0.7)%
Dallas 0.4% 4.9% (2.9)% (0.4)%
Tampa 1.0% 15.3% (7.9)% (0.9)%
Washington, DC 2.0% 7.3% (0.4)% 1.4%
Charlotte 2.4% 3.6% 1.8% 1.3%
Other (2) 1.3% 1.3% 1.3% 1.7%
--- --- ---- ----
Total 0.4% 4.5% (2.0)% (0.1)%
=== === ==== ====
(1) See Table 2 on page 19 for a reconciliation of these components of same
store net operating income and Table 1 on page 19 for a reconciliation of
same store net operating income to GAAP net income (loss).
(2) Includes communities located in Orlando, FL; Houston, TX; Denver, CO and
Nashville, TN.
Copyright(C)2004 Post Apartment Homes, LP All Rights Reserved 7
POST PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share or unit data)
MARCH 31, DECEMBER 31,
2004 2003
---- ----
ASSETS
Real estate assets
Land ................................................................... $ 254,000 $ 254,000
Building and improvements .............................................. 1,884,387 1,883,582
Furniture, fixtures and equipment ...................................... 215,671 214,002
Construction in progress ............................................... 13,657 12,946
Land held for future development ....................................... 13,375 11,994
----------- -----------
2,381,090 2,376,524
Less: accumulated depreciation ......................................... (453,077) (432,157)
Assets held for sale, net of accumulated depreciation of $69,822 and
$74,614 at March 31, 2004 and December 31, 2003 respectively ......... 122,409 145,238
----------- -----------
Total real estate assets ............................................... 2,050,422 2,089,605
Investments in and advances to unconsolidated real estate entities ....... 22,763 74,786
Cash and cash equivalents ................................................ 16,947 1,334
Restricted cash .......................................................... 2,091 2,065
Deferred charges, net .................................................... 15,443 12,285
Other assets ............................................................. 57,778 35,376
----------- -----------
Total assets ........................................................... $ 2,165,444 $ 2,215,451
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable, including $119,085 of debt secured by assets held for
sale at March 31, 2004 and December 31, 2003 ........................... $ 1,198,629 $ 1,186,322
Accrued interest payable ................................................. 12,681 6,923
Dividend and distribution payable ........................................ 19,582 19,509
Accounts payable and accrued expenses .................................... 65,144 65,872
Security deposits and prepaid rents ...................................... 7,824 7,890
----------- -----------
Total liabilities ........................................................ 1,303,860 1,286,516
----------- -----------
Minority interest of preferred unitholders in Operating Partnership ...... 70,000 70,000
----------- -----------
Minority interest of common unitholders in Operating Partnership ......... 47,287 62,409
----------- -----------
Shareholders' equity
Preferred stock, $.01 par value, 20,000,000 authorized:
8 1/2 % Series A Cumulative Redeemable Shares, liquidation preference
$50 per share, 900,000 shares issued and outstanding .................. 9 9
7 5/8 % Series B Cumulative Redeemable Shares, liquidation preference
$25 per share, 2,000,000 shares issued and outstanding ................ 20 20
7 5/8 % Series C Cumulative Redeemable Shares, liquidation preference
$25 per share, 2,000,000 shares issued and outstanding ................ -- 20
Common stock, $.01 par value, 100,000,000 authorized:
39,676,204 and 39,676,204 shares issued, 39,612,855 and 38,686,315
shares outstanding at March 31, 2004 and December 31, 2003
respectively .......................................................... 396 396
Additional paid-in capital ............................................... 765,304 849,632
Accumulated earnings ..................................................... -- --
Accumulated other comprehensive income ................................... (14,451) (12,362)
Deferred compensation .................................................... (4,746) (4,424)
----------- -----------
746,532 833,291
Less common stock in treasury, at cost, 63,349 and 989,889 shares at
March 31, 2004 and December 31, 2003, respectively ..................... (2,235) (36,765)
----------- -----------
Total shareholders' equity ............................................... 744,297 796,526
----------- -----------
Total liabilities and shareholders' equity ............................... $ 2,165,444 $ 2,215,451
=========== ===========
Copyright(C)2004 Post Apartment Homes, LP All Rights Reserved 8
POST PROPERTIES, INC.
CONSOLIDATED DEBT SUMMARY
(Dollars in thousands, except per share or unit data)
(Unaudited)
SUMMARY OF OUTSTANDING DEBT AT MARCH 31, 2004
WEIGHTED AVERAGE RATE (1)
THREE MONTHS ENDED MARCH 31,
PERCENTAGE ----------------------------
TYPE OF INDEBTEDNESS BALANCE OF TOTAL 2004 2003
-------------------- ------- -------- ---- ----
Unsecured fixed rate senior notes ................. $ 608,000 50.72% 7.43% 7.40%
Secured tax exempt variable rate notes (2) ........ 214,380 17.89% 1.59% 1.70%
Secured conventional fixed rate notes ............. 326,249 27.22% 6.50% 6.77%
Lines of credit .................................. 50,000 4.17% 1.96% 2.10%
------------ ------ ---- ----
$ 1,198,629 100.00% 5.90% 5.75%
============ ====== ==== ====
PERCENTAGE
BALANCE OF TOTAL DEBT
------- -------------
Total fixed rate debt ............................. $ 934,249 77.94%
Total variable rate debt .......................... 264,380 22.06%
------------ ------
Total debt ...................................... $ 1,198,629 100.00%
============ ======
DEBT MATURITIES
WEIGHTED AVERAGE RATE
AGGREGATE DEBT MATURITIES BY YEAR (3) AMOUNT ON DEBT MATURITIES (1)
------------------------------------- ------ ----------------------
Remainder of 2004 ................................... $ 26,411 7.04%
2005 ................................................ 204,402 (4) 7.83%
2006 ................................................ 79,732 6.98%
2007 ................................................ 112,178 7.16%
2008 ................................................ 4,014 6.52%
2009 and thereafter ................................. 721,892 (4) 5.34%
------------
$ 1,148,629
============
DEBT STATISTICS
THREE MONTHS ENDED
MARCH 31,
--------------------------
2004 2003
---- ----
Interest coverage ratio (5)(6) .............................................. 2.3x (9) 2.4x
Fixed charge coverage ratio (5)(7) .......................................... 1.9x (9) 1.9x
Total debt as a % of undepreciated real estate assets (adjusted for joint
venture partner's share of debt) (8) ..................................... 46.9% 47.3%
Total debt and preferred equity as % of undepreciated real estate assets
(adjusted for joint venture partner's share of debt) (8) ................. 53.2% 55.2%
(1) Weighted average rate includes credit enhancements and other fees, where
applicable. The weighted average rates for the three months ended March 31,
2003 are based on the debt outstanding for that period.
(2) The Company has purchased interest rate cap arrangements that limit the
Company's exposure to increases in the base rate to 5.00 percent.
(3) Excludes outstanding balances on lines of credit of $50,000 maturing in
2007. In January 2004 and April 2004, the Company refinanced its primary
revolving lines of credit for 3-year terms maturing in January 2007.
(4) Aggregate debt maturities for years ended in 2009 and thereafter include
$100,000 of Mandatory Par Put Remarketed Securities ("MOPPRS"). The MOPPRS
mature in March 2015, but are subject to mandatory tender for remarketing
in March 2005. In March 2005, if the remarketing dealer elects not to
remarket the MOPPRS, the Company is required to redeem the MOPPRS at par.
If the remarketing dealer elects to remarket the securities in March 2005,
the interest rate on the MOPPRS will be established at a rate of 5.715%
plus the Company's applicable credit spread for Company securities with
similar maturities. The MOPPRS may be redeemed, at the Company's option,
immediately prior to their remarketing in March 2005 at an optional
redemption price equal to the outstanding principal balance plus a
prepayment penalty.
(5) Calculated for the three months ended March 31, 2004 and 2003.
(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 minority interest, gains on property sales,
severance, proxy and asset impairment charges, interest expense,
depreciation and amortization. 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 4 on page 20.
(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 minority interest,
gains on property sales, severance, proxy and asset impairment charges,
interest expense, depreciation and amortization. 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 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 4 on page 20.
(8) A computation of the debt ratios is included in Table 5 on page 21.
(9) The interest coverage and fixed charge coverage ratios, including
discontinued operations, for the three months ended March 31, 2004 would be
2.5x and 2.0x, respectively.
Copyright(C)2004 Post Apartment Homes, LP All Rights Reserved 9
POST PROPERTIES, INC.
CONSOLIDATED DEBT SUMMARY (CONT.)
(Dollars in thousands, except per share or unit data)
(Unaudited)
FINANCIAL DEBT COVENANTS - SENIOR UNSECURED PUBLIC NOTES
ACTUAL RATIO AS
OF
COVENANT REQUIREMENT (1) MARCH 31, 2004
------------------------ --------------
Consolidated Debt to Total Assets cannot exceed 60% .............. 45%
Secured Debt to Total Assets cannot exceed 40% ................... 20%
Total Unencumbered Assets to Unsecured Debt must be
at least 1.50/1 ................................................ 2.83/1
Consolidated Income Available for Debt Service Charge
must be at least 1.50/1 ........................................ 2.47/1
(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
MARCH 31, 2004
--------------
Consolidated debt, per balance sheet (A) ....................... $ 1,198,629
============
Total assets, as defined (B) (Table A) ......................... $ 2,672,780
============
Computed ratio (A/B) ........................................... 45%
============
Required ratio (cannot exceed) ................................. 60%
============
RATIO OF SECURED DEBT TO TOTAL ASSETS
Secured conventional fixed rate notes ........................... $ 326,249
Secured tax exempt variable rate notes .......................... 214,380
-----------
Total secured debt (C) ...................................... $ 540,629
===========
Computed ratio (C/B) ........................................... 20%
===========
Required ratio (cannot exceed) ................................. 40%
===========
RATIO OF TOTAL UNENCUMBERED ASSETS TO UNSECURED DEBT
Consolidated debt, per balance sheet (A) ........................ $ 1,198,629
Total secured debt (C) .......................................... (540,629)
-----------
Total unsecured debt (D) .................................... $ 658,000
===========
Total unencumbered assets, as defined (E) (Table A) ............ $ 1,864,604
===========
Computed ratio (E/D) ........................................... 2.83x
===========
Required minimum ratio ......................................... 1.50x
===========
RATIO OF CONSOLIDATED INCOME AVAILABLE FOR DEBT SERVICE TO ANNUAL
DEBT SERVICE CHARGE
Consolidated Income Available for Debt Service, as defined (F)
(Table B) ..................................................... $ 172,868
===========
Annual Debt Service Charge, as defined (G) (Table B) ............ $ 69,900
===========
Computed ratio (F/G) ........................................... 2.47x
===========
Required minimum ratio ......................................... 1.50x
===========
Copyright(C)2004 Post Apartment Homes, LP All Rights Reserved 10
POST PROPERTIES, INC.
CONSOLIDATED 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
MARCH 31, 2004
---------------
Total real estate assets ........................................ $2,050,422
Add:
Investments in unconsolidated real estate entities ........... 22,763
Accumulated depreciation ..................................... 453,077
Accumulated depreciation - assets held for sale .............. 69,822
Other tangible assets (cash, restricted cash,
other assets, exclusive of receivables) ...................... 76,696
----------
Total assets for public debt covenant computations .............. 2,672,780
Less:
Encumbered real estate assets ................................ 808,176
----------
Total unencumbered assets for public debt covenant computations.. $1,864,604
==========
TABLE B
CALCULATION OF CONSOLIDATED INCOME AVAILABLE FOR DEBT SERVICE AND
ANNUAL DEBT SERVICE CHARGE FOR PUBLIC DEBT COVENANT COMPUTATIONS(1)
THREE MONTHS ENDED
CONSOLIDATED INCOME AVAILABLE FOR DEBT SERVICE MARCH 31, 2004
- ---------------------------------------------------------------------- ------------------
Net income ........................................................ $ 3,411
Add:
Minority interests .............................................. 1,329
---------
Income before minority interest ................................... 4,740
Add:
Depreciation .................................................... 21,186
Depreciation (company share) of assets held in unconsolidated
entities ........................................................ 327
Depreciation of discontinued operations ......................... --
Amortization of deferred financing costs ........................ 1,116
Interest expense ................................................ 16,281
Interest expense (company share) of assets held in unconsolidated
entities ........................................................ 271
Interest expense of discontinued operations ..................... 923
Less:
Gains on property sales (before minority interest) .............. (1,627)
---------
Consolidated income available for debt service .................... $ 43,217
=========
Consolidated income available for debt service (annualized) ....... $ 172,868
=========
ANNUAL DEBT SERVICE CHARGE
Consolidated interest expense ...................................... $ 16,281
Interest expense (company share) of assets held in unconsolidated
entities ........................................................... 271
Interest expense of discontinued operations ....................... 923
---------
$ 17,475
=========
Annual debt service charge (interest expense annualized) .......... $ 69,900
=========
(1) The actual calculation of these ratios requires the use of annual trailing
financial data. These computations reflect annualized 2004 results for
comparison and presentation purposes. The computations using annual
trailing financial data also reflect compliance with the debt covenants.
Copyright(C)2004 Post Apartment Homes, LP All Rights Reserved 11
POST PROPERTIES, INC.
ASSET SALES SUMMARY
GROSS PROCEEDS GROSS
PROPERTY NAME/PERIOD LOCATION YEAR BUILT PER UNIT PROCEEDS
-------------------- -------- ---------- -------- --------
Q1 2003
Post West Avenue(TM) (1) Austin, TX 2000 $ 126,360 $ 30,200,000 (2)
Q2 2003
Post Park(R) Atlanta, GA 1988-1990 $ 78,156
Post Paseo Colorado Pasadena, CA 2002 250,639 $158,180,000 (3)(4)
Q3 2003
None
Q4 2003
Post Hackberry Creek(R) Dallas, TX 1988-1996 $ 64,916
Post Roosevelt Square(TM) (5) Phoenix AZ 2000 90,456 $ 64,497,000
------------
2003 YTD Total $252,877,000
============
Weighted Average Cap Rate -
Apartment Assets - 2003 6.1%(6)
============
Q1 2004
Post Townlake(R) Dallas, TX 1986-1987 $ 56,212 $ 22,372,000 (7)
============
Weighted Average Cap Rate -
Apartment Assets - 2004 7.4%(6)
============
(1) Includes approximately 7,400 square feet of retail space.
(2) Excludes approximately $8.6 million in gross proceeds from the sale of land
in Tampa, FL and Austin, TX.
(3) Includes gross proceeds of $98.0 million from the sale of a property held
in joint venture. The company's share of the sale proceeds, including
repayment of the company's construction loan to the joint venture, was
approximately $75.0 million.
(4) Excludes approximately $2.6 million of gross proceeds from the sale of land
in Dallas, TX.
(5) Includes approximately 11,000 square feet of retail space.
(6) Based on prior calendar year's net operating income after adjustments for
management fee (3.0%) and capital reserves ($300/unit), except for Post
Paseo Colorado, a recently completed development, which is based on
projected stabilized net operating income.
(7) Excludes approximately $2.1 million in gross proceeds from the sale of land
in Dallas, TX and Tampa, FL.
Copyright(C)2004 Post Apartment Homes, LP All Rights Reserved 12
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 and construction of new apartment
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
all interior and exterior painting of communities.
The Company capitalizes interest, real estate taxes, and certain internal
personnel and associated costs related to apartment communities under
development and construction. 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 community
separately for cost accumulation, capitalization and expense recognition
purposes. Prior to the commencement of leasing 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 as well as property management and leasing personnel
expenses) of such communities.
A summary of community development improvements and other capitalized
expenditures for the three months ended March 31, 2004 and 2003 is detailed
below.
THREE MONTHS ENDED
MARCH 31,
----------------------------------
2004 2003
---------- --------
NEW COMMUNITY DEVELOPMENT AND ACQUISITION ACTIVITY .... $ 293 $14,112
NON-RECURRING CAPITAL EXPENDITURES
Revenue generating additions and improvements (1) ... 26 89
Other community additions and improvements (2) ...... 1,244 958
RECURRING CAPITAL EXPENDITURES
Carpet replacements and other community additions
and improvements (3) ............................... 2,422 1,462
Corporate additions and improvements ................ 134 208
------- -------
$ 4,119 $16,829
======= =======
OTHER DATA
Capitalized interest ................................ $ 239 $ 1,869
======= =======
Capitalized personnel and associated costs (4) ...... $ 249 $ 600
======= =======
(1) Represents expenditures for major renovations of communities, water
sub-metering equipment and other unit upgrade costs that enhance the rental
value of such units.
(2) Represents property improvement expenditures that generally occur less
frequently than on an annual basis.
(3) Represents property improvement expenditures of a type that are expected to
be incurred on an annual basis.
(4) Reflects personnel and associated costs capitalized to construction and
development activities.
Copyright(C)2004 Post Apartment Homes, LP All Rights Reserved 13
POST PROPERTIES, INC.
INVESTMENTS IN UNCONSOLIDATED REAL ESTATE ENTITIES
(Dollars in thousands, except per share or unit data)
(Unaudited)
At March 31, 2004, the Company holds investments in three individual limited
liability companies (the "Property LLCs") with an institutional investor. Each
Property LLC owns a newly developed apartment community. At March 31, 2004, each
of the apartment communities had achieved stabilized occupancy. The Company
holds a 35% equity interest in the Property LLCs. The initial development costs
of the apartment communities were funded through member equity contributions
proportionate to the members' ownership interests and through construction
financing provided by the Company.
The Company accounts for its investments in these Property LLCs using the equity
method of accounting. The excess of the Company's investment over its equity in
the underlying net assets of the Property LLCs was approximately $6,713 at March
31, 2004. This excess investment is being amortized as a reduction to earnings
on a straight-line basis over the lives of the related assets. The Company
provides real estate services (development, construction and property
management) to the Property LLCs for which it earns fees.
The operating results of the Company include its proportionate share of net
income (loss) from the investments in the Property LLCs. A summary of financial
information for the Property LLCs in the aggregate is as follows:
MARCH 31, DECEMBER 31,
Balance Sheet Data 2004 2003
------------------ ---- ----
Real estate assets, net of accumulated depreciation of $6,889 and
$5,939, respectively ............................................. $126,652 $127,513
Cash and other ..................................................... 4,830 2,516
-------- --------
Total assets ....................................................... $131,482 $130,029
======== ========
Mortgage notes payable ............................................. $ 83,691 $ 33,763
Construction notes payable to Company (1) .......................... -- 53,769
Other liabilities .................................................. 1,818 1,742
-------- --------
Total liabilities .................................................. 85,509 89,274
Members' equity .................................................... 45,973 40,755
-------- --------
Total liabilities and members' equity .............................. $131,482 $130,029
======== ========
Company's equity investment ....................................... $ 22,763 $ 21,017
======== ========
Company's share of notes payable ................................... $ 29,292 $ 30,636
======== ========
THREE MONTHS ENDED
MARCH 31,
-------------------------
Income Statement Data 2004 2003
--------------------- ---- ----
Revenue
Rental .............................. $ 3,248 $ 1,689
Other ............................... 208 135
------- -------
Total revenues ...................... 3,456 1,824
------- -------
Expenses
Property operating and maintenance .. 1,217 1,260
Depreciation and amortization ....... 950 895
Interest ............................ 773 708
------- -------
Total expenses ...................... 2,940 2,863
------- -------
Income (loss) from continuing operations 516 (1,039)
Loss from discontinued operations ...... - (85)
------- -------
Net income (loss) ...................... $ 516 $(1,124)
======= =======
Company's share of net income (loss) ... $ 216 $ (393)
======= =======
(1) All of the Company's construction financing to these unconsolidated real
estate entities is included in the Company's outstanding debt and total
assets. At December 31, 2003, the venture partner's share of the
construction loans was $34,950. All construction financing has been
refinanced with permanent loans from unaffiliated entities as of March 31,
2004.
The loss from discontinued operations represents the operating results of an
apartment community (held by a fourth Property LLC) that was sold in June 2003.
In March 2004, one of the Property LLCs repaid its outstanding construction note
payable to the Company of $53,916 through the proceeds from a third-party
non-recourse permanent mortgage note totaling $50,000 and from member equity
contributions. The mortgage note bears interest at 4.13%, requires monthly
interest payments and annual principal payment of $1 through 2009. Thereafter,
the note requires monthly principal and interest payments based on a 25-year
amortization schedule and matures in April 2034. The note is callable by the
lender in May 2009 and on each successive fifth year anniversary of the note
thereafter. The note is prepayable without penalty in May 2008. The additional
mortgage notes payable bear interest at rates ranging from 4.04% to 4.28% and
mature in 2008.
As part of the development and construction services agreements entered into
between the Company and the Property LLCs, the Company guaranteed the maximum
total amount for certain construction cost categories subject to aggregate
limits. The Company's remaining maximum exposure for the fourth Property LLC
totals approximately $5,200. The Company does not currently expect to be
required to fund any guarantees relating to this Property LLC.
Copyright(C)2004 Post Apartment Homes, LP All Rights Reserved 14
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, which is a supplemental non-GAAP
financial measure, that the Company makes internally to calculate Net Asset
Value ("NAV"). In addition, the company believes that investors and analysts use
similar measures in estimating the company's NAV. These measures, as adjusted,
are supplemental non-GAAP financial measures. With the exception of Net
Operating Income, 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. In the information below, the
company presents Net Operating Income for the quarter ended March 31, 2004 for
properties stabilized by the beginning of the quarter ended March 31, 2004 so
that a capitalization rate may be applied and an approximate value for the
assets determined. Properties not stabilized by the beginning of the quarter
ended March 31, 2004 are presented at full undepreciated cost. Other tangible
assets are also presented, as well as total liabilities and the liquidation
value of preferred shares and units. The Company believes it is important to
provide these measures to allow investors to easily develop their own
calculations of NAV. The Company also believes that internal and external NAV
estimates are a useful benchmark of the value of the company's assets over time
and provide a useful measure for analyzing the company's trading price on the
New York Stock Exchange.
FINANCIAL DATA
(In thousands)
THREE MONTHS ENDED AS
INCOME STATEMENT DATA MARCH 31, 2004 ADJUSTMENTS ADJUSTED
--------------------- -------------- ----------- --------
Rental revenues ..................................... $ 71,247 $ 4,178 (1) $ 75,425
Other property revenues ............................. 4,145 510 (1) 4,655
------------- ------------ ------------
Total rental and other revenues (A) ............ 75,392 4,688 80,080
Property operating & maintenance expenses
(excluding depreciation and amortization) (B) .... 33,185 (1,877) (1) 31,308
------------- ------------ ------------
Property net operating income (Table 1) (A-B) ....... $ 42,207 $ 6,565 $ 48,772
============= ============ ============
Apartment units represented ......................... 27,683 (726) (2) 26,957
AS OF AS
OTHER ASSET DATA MARCH 31, 2004 ADJUSTMENTS ADJUSTED
---------------- -------------- ----------- --------
Cash & equivalents .................................. $ 16,947 $ - $ 16,947
Construction in progress ............................ 13,657 92,071 (3) 105,728
Land held for development or sale ................... 13,375 7,064 (4) 20,439
Investments in and advances to unconsolidated real
estate entities (including construction loans
receivable) ...................................... 22,763 (22,763) (5) -
Other assets (6) .................................... 59,869 - 59,869
Total assets of unconsolidated real estate entities
(7) .............................................. 131,482 (105,855) (7) 25,627
LIABILITY DATA
Tax-exempt debt ..................................... 214,380 - 214,380
Other notes payable ................................. 984,249 - 984,249
Other liabilities (8) ............................... 105,231 - 105,231
Total liabilities of unconsolidated
real estate entities (9) ......................... 85,509 (55,581) (8) 29,928
OTHER DATA
Liquidation value of preferred shares ............... 95,000 - 95,000
Liquidation value of preferred units ................ 70,000 - 70,000
Common shares outstanding ........................... 39,613 - 39,613
Common units outstanding ............................ 2,865 - 2,865
(1) The adjustments reflect a reduction in rental revenues ($1,788) and other
property revenues ($3) and property operating and maintenance expenses
(excluding depreciation and amortization) ($474) from a property that had
not reached a stabilized occupancy of 95% by March 31, 2004 (Post Toscana).
The adjustments also include additions for the rental revenues ($7,196) and
other property revenues ($650) and property operating and maintenance
expenses (excluding depreciation and amortization) ($3,380) of held for
sale properties included in discontinued operations and for the company's
35% share of rental revenues ($542) and other property revenues ($30) and
property operating and maintenance expenses (excluding depreciation and
amortization) ($235) from Post Biltmore and Post Peachtree, properties
accounted for on the equity method of accounting. In addition, the
adjustments reflect a reduction of rental revenues ($1,772) and other
revenues ($167) and property operating and maintenance expenses (excluding
depreciation and amortization) ($1,678) relating to the company's corporate
apartment business. Lastly, the adjustment to operating and maintenance
expenses (excluding depreciation and amortization) also includes a
reduction for corporate property management expenses ($3,340).
Copyright(C)2004 Post Apartment Homes, LP All Rights Reserved 15
(2) The adjustment reflects a reduction of total apartment units for
properties that had not reached a stabilized occupancy of 95% by March 31,
2004 (Post Toscana(TM) and Post Massachusetts Avenue(TM) - 468 unit total
reduction) and a reduction of 65% of the 276 units at Post Biltmore(TM)
(179 unit reduction) and the 121 units at Post Peachtree(TM) (a 79 unit
reduction) to adjust the Post Biltmore(TM) and Post Peachtree(TM) units to
the company's 35% share of the units.
(3) The adjustment reflects the amount required for the "As Adjusted" amount to
equal the aggregate cost investment in projects that had not reached a
stabilized occupancy of 95% as of March 31, 2004 (Post Toscana(Tm)).
(4) The adjustment reflects land parcels included on the balance sheet as a
component of assets held for sale.
(5) The "As of March 31, 2004" amount represents the Company's investment in
and advances to unconsolidated entities. The adjustment reflects the
company's equity investments in unconsolidated entities. The "As Adjusted"
amount represents the construction loans receivable from the unconsolidated
entities.
(6) These amounts consist of restricted cash and other assets, per the
Company's balance sheet.
(7) The "As of March 31, 2004" amount represents total assets of unconsolidated
entities. The adjustment includes the additions to add back the accumulated
depreciation of such assets ($6,889) and a reduction for the venture
partner's 65% share of assets before accumulated depreciation of Post
Massachusetts Avenue(TM) ($45,976). The adjustment also includes a
reduction for all of the undepreciated real estate assets ($65,152) and a
reduction for the venture partners' 65% share of cash and other assets
($1,616) of the company's Post Biltmore(TM) and Post Peachtree(TM) projects
as those projects reached stabilized occupancy prior to March 31, 2004. The
"As Adjusted" amount represents the company's 35% share of undepreciated
real estate assets of Post Massachusetts Avenue(TM) plus the company's 35%
share of the cash and other assets of all of the unconsolidated entities.
(8) These amounts consist 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.
(9) The "As of March 31, 2004" amount represents total liabilities of
unconsolidated entities. The adjustment represents a reduction for the
venture partner's 65% share of liabilities of unconsolidated entities. The
"As Adjusted" amount represents the Company's 35% share of liabilities of
unconsolidated entities.
Copyright(C)2004 Post Apartment Homes, LP All Rights Reserved 16
POST PROPERTIES, INC.
NON-GAAP FINANCIAL MEASURES AND 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, net
income, FFO and AFFO excluding certain accounting charges, certain debt
statistics and ratios and economic gains (losses) on property sales. 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
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. In October 2003,
NAREIT issued additional guidance modifying the definition of FFO. The
first modification revised the treatment of asset impairment losses and
impairment losses incurred to write-down assets to their fair value at the
date assets are classified as held for sale, to include such losses in FFO.
Previously, such losses were excluded from FFO consistent with the
treatment of gains and losses on property sales. The second modification
clarified the treatment of original issue costs and premiums paid on
preferred stock redemptions to deduct such costs and premiums in
determining FFO available to common shareholders. This modification was
consistent with the recently clarified treatment of these costs under GAAP.
The company adopted the modifications to the definition of FFO effective
with its reported results for the third quarter of 2003. Prior period and
prior year presentations of FFO have been restated to conform with the
revised definition of FFO. 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. 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 (loss)" is the most directly comparable GAAP measure to NOI.
SAME STORE CAPITAL EXPENDITURES - The company uses same store recurring and
non-recurring capital expenditures as cash flow measures. Same store
recurring and non-recurring capital expenditures are supplemental non-GAAP
financial measures. The company believes that same store recurring and
non-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, and sold communities in
addition to same store information. Therefore, the company believes that
the company's presentation of same store recurring and non-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 recurring and non-recurring capital expenditures
are the lines on the company's consolidated statements of cash flows
entitled "recurring capital expenditures" and "non-recurring capital
expenditures."
Copyright(C)2004 Post Apartment Homes, LP All Rights Reserved 17
NET INCOME, FFO AND AFFO EXCLUDING CERTAIN CHARGES - The company uses net
income, FFO and AFFO excluding certain severance, proxy and impairment
charges as operating measures. The company reports net income, FFO and AFFO
excluding certain charges as alternative financial measures of core
operating performance. The company believes net income, FFO and AFFO before
charges are informative measures for comparing operating performance
between periods and for comparing operating performance to other companies
that have not incurred such charges. The company further believes that
charges of the nature incurred in 2004 and 2003 are not necessarily
repetitive in nature and that it is therefore meaningful to compare
operating performance using alternative, non-GAAP measures. In addition,
the company believes the investment and analyst communities desire to
understand the meaningful components of the company's performance and that
these non-GAAP measures assist in providing such supplemental measures. The
company believes that the most directly comparable GAAP financial measures
to each of net income, FFO and AFFO, excluding certain charges, is the line
on the company's consolidated statements of operations entitled "net income
(loss) available to common shareholders."
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.
ECONOMIC GAINS (LOSSES) ON PROPERTY SALES - The company uses economic gains
losses on property sales as a supplemental measure of operating
performance. Economic gains (losses) on property sales are defined as gains
(losses) on property sales in accordance with GAAP, before accumulated
depreciation and any prior period write-downs for asset impairment charges
on such assets. The company believes economic gains (losses) on property
sales is an important supplemental measure to gains (losses) on property
sales in accordance with GAAP because it assists investors and analysts in
understanding the relationship between the cash proceeds from the sale of
an asset and the cash invested in that asset. The company believes the line
on its consolidated statement of operations entitled "gains (losses) on
property sales - discontinued operations" is the most directly comparable
GAAP measure to economic gains (losses) on property sales.
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.
Copyright(C)2004 Post Apartment Homes, LP All Rights Reserved 18
RECONCILIATIONS OF SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES
TABLE 1
RECONCILIATION OF SAME STORE NET OPERATING INCOME (NOI) TO GAAP NET INCOME
(Dollars in thousands)
THREE MONTHS ENDED
------------------------------------------------
MARCH 31 MARCH 31, DECEMBER 31,
2004 2003 2003
---- ---- ----
Total same store NOI ......................... $ 39,435 $ 41,063 $ 40,243
Property NOI from other operating segments ... 2,772 472 2,024
-------- -------- --------
Consolidated property NOI .................... 42,207 41,535 42,267
Add (subtract):
Other revenues ............................ 76 130 78
Interest income ........................... 180 234 187
Minority interest in consolidated property
partnerships ............................. 272 334 665
Depreciation .............................. (21,186) (20,290) (21,603)
Interest .................................. (16,281) (15,629) (15,914)
Amortization of deferred loan costs ....... (1,116) (788) (962)
General and administrative ................ (4,642) (3,624) (4,400)
Development costs and other expenses ...... (535) (567) (1,298)
Severance charges ......................... - (19,712) -
Equity in income (losses) of
unconsolidated entities .................. 216 (393) 23
Minority interest of preferred unitholders (1,400) (1,400) (1,400)
Minority interest of common unitholders ... 473 2,623 393
-------- -------- --------
Income (loss) from continuing operations .. (1,736) (17,547) (1,964)
Income (loss) from discontinued operations 5,147 (3,041) 10,669
-------- -------- --------
Net income (loss) ............................ $ 3,411 $(20,588) $ 8,705
======== ======== ========
TABLE 2
SAME STORE NET OPERATING INCOME (NOI) SUMMARY BY MARKET
(Dollars in thousands)
THREE MONTHS ENDED
-------------------------------------------- 1Q'04 VS 1Q'04 VS
MARCH 31, MARCH 31, DECEMBER 31, 1Q'03 4Q'03
2004 2003 2003 % CHANGE % CHANGE
---- ---- ---- -------- --------
Rental and other revenues
Atlanta ................................... $32,887 $33,467 $32,961 (1.7)% (0.2)%
Dallas .................................... 12,481 12,403 12,435 0.6% 0.4%
Tampa ..................................... 4,558 4,415 4,514 3.2% 1.0%
Washington, DC ............................ 5,364 5,166 5,257 3.8% 2.0%
Charlotte ................................. 3,151 3,012 3,078 4.6% 2.4%
Other ..................................... 6,268 6,481 6,187 (3.3)% 1.3%
------- ------- ------
Total rental and other revenues ......... 64,709 64,944 64,432 (0.4)% 0.4%
------- ------- ------
Property operating and maintenance expenses
(exclusive of depreciation and
amortization)
Atlanta ................................... 12,352 11,569 11,979 6.8% 3.1%
Dallas .................................... 5,429 5,237 5,174 3.7% 4.9%
Tampa ..................................... 1,990 1,787 1,726 11.4% 15.3%
Washington, DC ............................ 1,807 1,718 1,684 5.2% 7.3%
Charlotte ................................. 1,035 1,045 999 (1.0)% 3.6%
Other ..................................... 2,661 2,525 2,627 5.4% 1.3%
------- ------- ------
Total ................................... 25,274 23,881 24,189 5.8% 4.5%
------- ------- ------
Net operating income
Atlanta ................................... 20,535 21,898 20,982 (6.2)% (2.1)%
Dallas .................................... 7,052 2,628 2,788 (2.3)% (7.9)%
Washington, DC ............................ 3,557 3,448 3,573 3.2% (0.4)%
Charlotte ................................. 2,116 1,967 2,079 7.6% 1.8%
Other ..................................... 3,607 3,956 3,560 (8.8)% 1.3%
------- ------- ------
Total same store NOI .................... $39,435 $41,063 $40,243 (4.0)% (2.0)%
======= ======= =======
Copyright(C)2004 Post Apartment Homes, LP All Rights Reserved 19
TABLE 3
RECONCILIATION OF SEGMENT CASH FLOW DATA TO STATEMENTS OF CASH FLOWS
(Dollars in thousands)
THREE MONTHS ENDED
MARCH 31,
-------------------------------
2004 2003
---- ----
Recurring capital expenditures by operating segment
Same store ............................................................ $ 2,034 $ 1,008
Partially stabilized .................................................. 49 10
Construction and lease-up ............................................. 7 -
Other segments ........................................................ 332 444
------------ ------------
Total recurring capital expenditures per statements of cash flows ..... $ 2,422 $ 1,462
============ ============
Non-recurring capital expenditures by operating segment
Same store ............................................................ $ 1,148 $ 435
Partially stabilized .................................................. 19 4
Construction and lease-up ............................................. - -
Other segments ........................................................ 77 519
------------ ------------
Total non-recurring capital expenditures per statements of cash flows.. $ 1,244 $ 958
============ ============
TABLE 4
COMPUTATION OF INTEREST AND FIXED CHARGE COVERAGE RATIOS
(Dollars in thousands)
THREE MONTHS ENDED
MARCH 31,
----------------------------
2004 2003
---- ----
Loss from continuing operations ...................................... $ (1,736) $(17,547)
Minority interest of common unitholders .............................. (473) (2,623)
Minority interest of preferred unitholders ........................... 1,400 1,400
Depreciation expense ................................................. 21,186 20,290
Depreciation (company share) of assets held in unconsolidated entities 327 466
Interest expense ..................................................... 16,281 15,629
Interest expense (company share) of assets held in unconsolidated
entities ........................................................... 271 405
Amortization of deferred financing costs ............................. 1,116 788
Severance charges .................................................... - 19,712
-------- --------
Income available for debt service (A) ................................ $ 38,372 $ 38,520
======== ========
Interest expense ..................................................... $ 16,281 $ 15,629
Interest expense (company share) of assets held in unconsolidated
entities ........................................................... 271 405
-------- --------
Interest expense for purposes of computation (B) ..................... 16,552 16,034
Dividends and distributions to preferred shareholders and unitholders 3,997 4,262
-------- --------
Fixed charges for purposes of computation (C) ........................ $ 20,549 $ 20,296
======== ========
Interest coverage ratio (A/B) (1) .................................... 2.3x 2.4x
======== ========
Fixed charge coverage ratio (A/C) (1) ................................ 1.9x 1.9x
======== ========
(1) The interest coverage and fixed charge coverage ratios, including
discontinued operations, for the three months ended March 31, 2004 would be
2.5x and 2.0x, respectively.
Copyright(C)2004 Post Apartment Homes, LP All Rights Reserved 20
TABLE 5
COMPUTATION OF DEBT RATIOS
(In thousands)
AS OF MARCH 31,
---------------
2004 2003
---- ----
Total real estate assets per balance sheet ................................... $ 2,050,422 $ 2,210,379
Plus:
Company share of real estate assets held in unconsolidated entities .......... 44,329 69,678
Company share of accumulated depreciation - assets held in unconsolidated
entities ..................................................................... 2,411 1,637
Accumulated depreciation per balance sheet ................................... 453,077 448,341
Accumulated depreciation on assets held for sale ............................. 69,822 16,336
----------- -----------
Total undepreciated real estate assets (A) ................................... $ 2,620,061 $ 2,746,371
=========== ===========
Total debt per balance sheet ................................................. $ 1,198,629 $ 1,384,266
Plus:
Company share of debt held in unconsolidated entities ........................ 29,292 5,942
Less:
Joint venture partner's share of construction debt to the company ............ - (90,214)
----------- -----------
Total debt (adjusted for joint venture partner's share of debt) (B) .......... $ 1,227,921 $ 1,299,994
=========== ===========
Total debt as a % of undepreciated real estate assets (adjusted for joint
venture partner's share of debt) (B/A) ..................................... 46.9% 47.3%
=========== ===========
Total debt per balance sheet ................................................. $ 1,198,629 $ 1,384,266
Plus:
Company share of debt held in unconsolidated entities ........................ 29,292 5,942
Preferred shares at liquidation value ........................................ 95,000 145,000
Preferred units at liquidation value ......................................... 70,000 70,000
Less:
Joint venture partner's share of construction debt to the company ............ - (90,214)
----------- -----------
Total debt and preferred equity (adjusted for joint venture partner's share
of debt) (C)................................................................ $ 1,392,921 $ 1,514,994
=========== ===========
Total debt and preferred equity as a % of undepreciated assets (adjusted
for joint venture partner's share of debt) (C/A) ........................... 53.2% 55.2%
=========== ===========
Copyright(C)2004 Post Apartment Homes, LP All Rights Reserved 21