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EXHIBIT 99.2
THIRD QUARTER 2004
Supplemental Financial Data
TABLE OF CONTENTS
Page
Consolidated Statements of Operations .............................. 3
Calculation of Funds from Operations and Adjusted Funds From
Operations ........................................................ 6
Same Store Results ................................................. 8
Consolidated Balance Sheets ........................................ 10
Consolidated Debt Summary .......................................... 11
Asset Acquisition and Disposition Summary .......................... 14
Capitalized Costs Summary .......................................... 15
Investments in Unconsolidated Real Estate Entities ................. 16
Net Asset Value Supplemental Information ........................... 17
Definitions and Reconciliations of Supplemental Non-GAAP Financial
Measures .......................................................... 19
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 current report on Form 8-K dated October 6, 2004 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 NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------------- ------------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
REVENUES
Rental ................................................. $ 74,298 $ 70,440 $ 217,726 $ 208,784
Other property revenues (1) ............................ 4,680 4,485 13,365 12,598
Other (2) .............................................. 814 102 936 379
------------ ------------ ------------ ------------
Total revenues ........................................ 79,792 75,027 232,027 221,761
------------ ------------ ------------ ------------
EXPENSES
Property operating and maintenance (exclusive of
items shown separately below) (3) ..................... 36,054 33,017 102,659 96,347
Depreciation ........................................... 21,864 21,553 64,227 62,096
General and administrative (4) ......................... 6,017 3,738 16,136 10,703
Development costs and other (5) ........................ 283 274 1,200 841
Proxy contest and related costs (6) .................... - - - 5,231
Severance charges (7) .................................. - - - 21,506
------------ ------------ ------------ ------------
Total expenses ........................................ 64,218 58,582 184,222 196,724
------------ ------------ ------------ ------------
OPERATING INCOME ......................................... 15,574 16,445 47,805 25,037
Interest income ........................................ 247 223 639 708
Interest expense ....................................... (17,299) (17,122) (50,306) (49,001)
Amortization of deferred financing costs ............... (1,066) (1,084) (3,273) (2,839)
Equity in income of unconsolidated real estate
entities .............................................. 420 60 843 7,768
Minority interest in consolidated property
partnerships .......................................... 167 677 742 1,359
Minority interest of preferred unitholders ............. (980) (1,400) (3,780) (4,200)
Minority interest of common unitholders ................ 406 457 1,125 3,160
------------ ------------ ------------ ------------
LOSS FROM CONTINUING OPERATIONS ....................... (2,531) (1,744) (6,205) (18,008)
------------ ------------ ------------ ------------
DISCONTINUED OPERATIONS (8)
Income (loss) from discontinued operations, net of
minority interest ..................................... 738 (74) 6,742 (6,583)
Loss on early extinguishment of indebtedness
associated with property sales, net of minority
interest (9) .......................................... - - (3,849) -
Gains on property sales, net of minority interest ...... - 166 106,039 30,043
------------ ------------ ------------ ------------
INCOME FROM DISCONTINUED OPERATIONS ................... 738 92 108,932 23,460
------------ ------------ ------------ ------------
NET INCOME (LOSS) ........................................ (1,793) (1,652) 102,727 5,452
Dividends to preferred shareholders .................... (1,909) (2,862) (6,416) (8,587)
Redemption costs on preferred stock and units .......... (1,810) - (3,526) -
------------ ------------ ------------ ------------
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS ....... $ (5,512) $ (4,514) $ 92,785 $ (3,135)
============ ============ ============ ============
PER COMMON SHARE DATA - BASIC (10)
Loss from continuing operations (net of preferred
dividends and redemption costs) ........................ $ (0.16) $ (0.12) $ (0.41) $ (0.71)
Income from discontinued operations .................... 0.02 - 2.75 0.63
------------ ------------ ------------ ------------
Net income (loss) available to common shareholders ..... $ (0.14) $ (0.12) $ 2.34 $ (0.08)
============ ============ ============ ============
Dividends declared ..................................... $ 0.45 $ 0.45 $ 1.35 $ 1.35
============ ============ ============ ============
Weighted average common shares outstanding - basic ..... 39,892 37,841 39,694 37,523
============ ============ ============ ============
PER COMMON SHARE DATA - DILUTED (10)
Loss from continuing operations (net of preferred
dividends and redemption costs) ....................... $ (0.16) $ (0.12) $ (0.41) $ (0.71)
Income from discontinued operations .................. 0.02 - 2.75 0.63
------------ ------------ ------------ ------------
Net income (loss) available to common shareholders ..... $ (0.14) $ (0.12) $ 2.34 $ (0.08)
============ ============ ============ ============
Dividends declared ..................................... $ 0.45 $ 0.45 $ 1.35 $ 1.35
============ ============ ============ ============
Weighted average common shares outstanding - diluted ... 39,892 37,857 39,694 37,524
============ ============ ============ ============
Copyright (C) 2004 Post Apartment Homes, LP All Rights Reserved 3
POST PROPERTIES, INC.
NOTES TO CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except per share or unit data)
(1) Other property revenues include charges to residents for services, utility
reimbursements from residents and other miscellaneous property revenues.
In prior years, utility reimbursements from residents were classified as
reductions of property operating and maintenance expenses. Prior year
amounts have been reclassified to conform with the current year
presentation.
(2) Other revenues include forfeited earnest money deposits from terminated
property and land sale contracts totaling $684 for the three and nine
months ended September 30, 2004.
(3) For the three and nine months ended September 30, 2004, property operating
and maintenance expenses include a charge of $703 relating to estimated
hurricane damage at the Company's Florida properties and a severance
charge of $569 for the elimination of certain property management
positions resulting from company downsizing due to recent asset sales.
(4) General and administrative expenses for the three and nine months ended
September 30, 2004 include legal and other professional fees totaling $499
and $1,386, respectively, related to a shareholder proposal, shareholder
litigation and the settlement announced in August 2004 with the Company's
former chairman and CEO. General and administrative expenses for the three
and nine months ended September 30, 2004 also include $620 of consulting
expenses relating to a review and valuation of each asset in the company's
real estate portfolio to assist with future capital investment decisions
and strategic planning and relating to professional services to assist
with the selection of new property management software.
(5) Development costs and other expenses for the three and nine months ended
September 30, 2004 include development personnel and associated costs not
allocable to development projects. Development costs and other expenses
for the three months ended September 30, 2003 represents development
personnel and associated costs not allocable to development projects. For
the nine months ended September 30, 2003, the amounts included development
personnel and associated costs not allocable to development projects as
well as 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.
(6) Proxy and related costs for the nine months ended September 30, 2003
represented the legal, advisory and other expenses associated with the
proxy contest concluded in the second quarter of 2003. In addition, the
amount included the estimated legal and settlement costs associated with
the resolution of two derivative and purported class action lawsuits filed
against the Company during the proxy contest. These lawsuits were settled
in October 2004.
(7) For the nine months ended September 30, 2003, severance charges included a
second quarter charge of $1,795 representing the costs associated with the
departure of two executive officers and a first quarter charge of $19,711
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. In August 2004, the Company entered into a final
settlement agreement with its former chairman of the board of directors.
Under the terms of the agreement, the former chairman's employment and
non-competition agreements were terminated and the Company agreed to
continue to provide the former chairman certain payments and benefits
through May 2013, the approximate expiration date of the original
employment agreement. Because the present value of the estimated payments
under the settlement agreement approximated the Company's remaining
accrued charge under the former employment agreement, no additional
charges were recorded as a result of the settlement.
(8) 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 and nine months ended September 30, 2004, income from
discontinued operations included the results of operations of one
community, containing 460 units, classified as held for sale at September
30, 2004 and the results of operations of eight communities sold in 2004
through their sale dates. For the three and nine months ended September
30, 2003, income from discontinued operations included the results of
operations of the community classified as held for sale at September 30,
2004, eight communities sold in 2004 and the results of operations of four
communities sold in 2003 through their sale dates.
Copyright (C) 2004 Post Apartment Homes, LP All Rights Reserved 4
The revenues and expenses of these communities for the three and nine months
ended September 30, 2004 and 2003 were as follows:
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------------ -----------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
REVENUES
Rental ....................................... $ 830 $ 9,918 $ 15,529 $ 32,838
Other ........................................ 83 820 1,446 2,505
------------ ------------ ------------ ------------
Total revenues ............................. 913 10,738 16,975 35,343
------------ ------------ ------------ ------------
EXPENSES
Property operating and maintenance
(exclusive of items shown separately
below) ..................................... 374 4,505 7,678 14,476
Depreciation ................................. - 1,610 - 6,277
Interest ..................................... 74 1,361 1,766 4,574
Asset impairment charges ..................... - 3,344 626 17,462
------------ ------------ ------------ ------------
Total expenses ............................. 448 10,820 10,070 42,789
------------ ------------ ------------ ------------
INCOME (LOSS) FROM DISCONTINUED OPERATIONS
BEFORE MINORITY INTEREST .................... 465 (82) 6,905 (7,446)
Minority interest ........................... 273 8 (163) 863
------------ ------------ ------------ ------------
INCOME (LOSS) FROM DISCONTINUED OPERATIONS ... $ 738 $ (74) $ 6,742 $ (6,583)
============ ============ ============ ============
In the second quarter of 2004, the Company recorded an asset impairment
loss of $626 to write-down the cost of an apartment community, located in
Dallas, Texas, to its realized value. In the third quarter of 2003, the
Company recorded a $3,344 asset impairment charge to write-down this asset
to its estimated fair value at the date the asset was classified as held
for sale. 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 nine months ended September 30, 2004, the Company recognized gains
from discontinued operations of $113,739 ($106,039 net of minority
interest) from the sale of eight communities containing 3,880 units and
certain land parcels. These sales generated net proceeds of approximately
$242,962, including debt assumed by the purchasers.
For the three months ended September 30, 2003, the Company recognized net
gains from discontinued operations of $185 ($166 net of minority interest)
resulting from the sale of land. For the nine months ended September 30,
2003, the Company recognized net gains from discontinued operations of
$33,690 ($30,043 net of minority interest) on the sale of two communities
containing 1,009 units and certain land parcels.
(9) Includes the write-off of unamortized deferred costs of $3,187 ($2,972,
net of minority interest) relating to tax-exempt indebtedness assumed in
connection with the sale of five properties in June 2004, plus a loss of
$941 ($877, net of minority interest) in connection with the termination
of related interest rate cap agreements that were used as cash flow hedges
of the assumed debt.
(10) 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 September 30, 2004, there were 42,423 units of
Operating Partnership outstanding, of which 39,922, or 94.1%, were owned
by the Company. For the three and nine months ended September 30, 2004,
the potential dilution from the Company's outstanding stock options of 98
and 67, respectively, was antidilutive to the continuing operations per
share calculation. As such, these amounts were excluded from weighted
average shares and units and the income (loss) per share calculations for
the three and nine months ended September 30, 2004.
Copyright (C) 2004 Post Apartment Homes, LP All Rights Reserved 5
POST PROPERTIES, INC.
CALCULATION OF FUNDS FROM OPERATIONS
AND ADJUSTED FUNDS FROM OPERATIONS AVAILABLE
TO COMMON SHAREHOLDERS AND UNITHOLDERS
(In thousands, except per share or unit data)
(Unaudited)
A reconciliation of net income (loss) available to common shareholders to funds
from operations available to common shareholders and unitholders and adjusted
funds from operations available to common shareholders and unitholders is
provided below.
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------------ -----------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS .... $ (5,512) $ (4,514) $ 92,785 $ (3,135)
Minority interest of common unitholders - continuing
operations ......................................... (406) (457) (1,125) (3,160)
Minority interest in discontinued operations (1) .... (273) 11 7,584 2,783
Gains on property sales - discontinued operations ... - (185) (113,739) (33,690)
Gains on property sales - unconsolidated entities ... - - - (8,395)
Depreciation on wholly-owned real estate assets, net
(2) ................................................ 21,035 21,571 61,180 64,555
Depreciation on real estate assets held in
unconsolidated entities ............................ 332 333 993 1,236
------------ ------------ ------------ ------------
FUNDS FROM OPERATIONS AVAILABLE TO COMMON SHAREHOLDERS
AND UNITHOLDERS, AS DEFINED (A) ..................... 15,176 16,759 47,678 20,194
Redemption costs on preferred stock and preferred
units ............................................... 1,810 - 3,526 -
Severance charges ................................... - - - 21,506
Proxy and related costs ............................. - - - 5,231
Loss on early extinguishment of indebtedness
associated with property sales ..................... - - 4,128 -
Asset impairment charges ........................... - 3,344 626 17,462
------------ ------------ ------------ ------------
FUNDS FROM OPERATIONS AVAILABLE TO COMMON SHAREHOLDERS
AND UNITHOLDERS, EXCLUDING CERTAIN CHARGES (B) ...... $ 16,986 $ 20,103 $ 55,958 $ 64,393
============ ============ ============ ============
FUNDS FROM OPERATIONS AVAILABLE TO COMMON SHAREHOLDERS
AND UNITHOLDERS, AS DEFINED ......................... $ 15,176 $ 16,759 $ 47,678 $ 20,194
Recurring capital expenditures ...................... (2,420) (2,996) (7,613) (6,982)
Non-recurring capital expenditures .................. (1,058) (1,055) (3,604) (3,231)
------------ ------------ ------------ ------------
ADJUSTED FUNDS FROM OPERATIONS AVAILABLE TO COMMON
SHAREHOLDERS AND UNITHOLDERS (3) (C) ................ 11,698 12,708 36,461 9,981
Redemption costs on preferred stock ................. 1,810 - 3,526 -
Severance charges ................................... - - - 21,506
Proxy and related costs ............................. - - - 5,231
Loss on early extinguishment of indebtedness
associated with property sales ..................... - - 4,128 -
Asset impairment charges ........................... - 3,344 626 17,462
------------ ------------ ------------ ------------
ADJUSTED FUNDS FROM OPERATIONS AVAILABLE TO COMMON
SHAREHOLDERS AND UNITHOLDERS, EXCLUDING
CERTAIN CHARGES (3) (D) ............................. $ 13,508 $ 16,052 $ 44,741 $ 54,180
============ ============ ============ ============
PER COMMON SHARE DATA - BASIC
Funds from operations per share or unit, as defined
(A/F) ............................................... $ 0.36 $ 0.40 $ 1.12 $ 0.48
Adjusted funds from operations per share or unit, as
defined (3) (C/F) ................................... $ 0.28 $ 0.30 $ 0.86 $ 0.24
Funds from operations per share or unit, excluding
certain charges (B/F) ............................... $ 0.40 $ 0.48 $ 1.32 $ 1.53
Adjusted funds from operations per share or unit,
excluding certain charges (4) (D/F) ................. $ 0.32 $ 0.38 $ 1.05 $ 1.29
Dividends declared (E) ................................ $ 0.45 $ 0.45 $ 1.35 $ 1.35
Weighted average shares outstanding ................... 39,892 37,841 39,694 37,523
Weighted average shares and units outstanding (F) ..... 42,433 42,190 42,457 42,102
Copyright (C) 2004 Post Apartment Homes, LP All Rights Reserved 6
PER COMMON SHARE DATA - DILUTED
Funds from operations per share or unit, as defined
(A/G) ................................................ $ 0.36 $ 0.40 $ 1.12 $ 0.48
Adjusted funds from operations per share or unit, as
defined (3) (C/G) .................................... $ 0.28 $ 0.30 $ 0.86 $ 0.24
Funds from operations per share or unit, excluding
certain charges (B/G) ................................ $ 0.40 $ 0.48 $ 1.32 $ 1.53
Adjusted funds from operations per share or unit,
excluding certain charges (4) (D/G) .................. $ 0.32 $ 0.38 $ 1.05 $ 1.29
Dividends declared (E) ................................. $ 0.45 $ 0.45 $ 1.35 $ 1.35
Weighted average shares outstanding (4) ................ 39,990 37,857 39,761 37,524
Weighted average shares and units outstanding (4) (G) .. 42,531 42,206 42,524 42,104
(1) Represents the minority interest in earnings and gains on property sales
reported as discontinued operations for the periods presented.
(2) Depreciation on wholly-owned real estate assets is net of the minority
interest portion of depreciation in consolidated entities.
(3) 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 $265 and $182 for the three months ended
September 30, 2004 and 2003, respectively, and $553 and $521 for the nine
months ended September 30, 2004 and 2003, respectively, are excluded from
the calculation of adjusted funds from operations available to common
shareholders.
(4) Diluted weighted average shares and units for the three and nine months
ended September 30, 2004 include 98 and 67 shares and units, respectively,
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 7
POST PROPERTIES, INC.
SAME STORE RESULTS
(In thousands, except per share or unit data)
(Unaudited)
SAME STORE RESULTS
The Company defines fully stabilized or same store communities as those which
have reached stabilization prior to the beginning of the previous calendar year,
adjusted by communities sold and classified as held for sale. Same store net
operating income is a supplemental non-GAAP financial measure. See Table 1 on
page 21 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 NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- -------------------------
2004 2003 % CHANGE 2004 2003 % CHANGE
----------- ----------- -------- ----------- ----------- ---------
Rental and other revenues ............. $ 65,762 $ 65,452 0.5% $ 195,745 $ 194,999 0.4%
Property operating and maintenance
expenses (excluding depreciation and
amortization) ....................... 26,047 25,411 2.5% 76,896 73,909 4.0%
----------- ----------- ----------- -----------
Same store net operating income ...... $ 39,715 $ 40,041 (0.8)% $ 118,849 $ 121,090 (1.9)%
=========== =========== =========== ===========
Capital expenditures (1)
Recurring
Carpet ............................. $ 859 $ 649 32.4% $ 2,204 $ 1,637 34.6%
Other .............................. 1,405 1,625 (13.5)% 4,531 3,562 27.2%
----------- ----------- ----------- -----------
Total recurring ................... 2,264 2,274 (0.4)% 6,735 5,199 29.5%
Non-recurring ....................... 985 922 6.8% 3,181 2,256 41.0%
----------- ----------- ----------- -----------
Total capital expenditures (A) ..... $ 3,249 $ 3,196 1.7% $ 9,916 $ 7,455 33.0%
=========== =========== =========== ===========
Total capital expenditures per unit
(A/21,954 UNITS) ................... $ 148 $ 146 1.4% $ 452 $ 340 32.9%
=========== =========== =========== ===========
Average monthly rental rate per unit
(2) ................................. $ 986 $ 1,004 (1.8)% $ 986 $ 1,019 (3.2)%
=========== =========== =========== ===========
(1) See Table 3 on page 23 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 NINE MONTHS ENDED
SEPTEMBER 30, 2004 SEPTEMBER 30, 2004
------------------------------------------------ -------------------------------------------
AVERAGE AVERAGE
ECONOMIC ECONOMIC
MARKET REVENUES EXPENSES (1) NOI (1) OCCUPANCY REVENUES EXPENSES (1) NOI (1) OCCUPANCY
- -------------- -------- ------------ ------- --------- -------- ------------ -------- ---------
Atlanta (0.3)% 0.1% (0.6)% 0.7% (0.3)% 3.0% (2.2)% 1.9%
Dallas (1.1)% 10.1% (9.5)% 2.1% (0.3)% 7.6% (6.1)% 2.0%
Tampa 3.0% 1.6% 4.0% 1.7% 2.7% 4.4% 1.6% 2.5%
Washington, DC 4.9% (3.2)% 8.9% 2.6% 4.2% 2.8% 4.9% 2.3%
Charlotte 3.3% (2.7)% 6.7% 2.1% 4.3% (3.3)% 8.5% 3.5%
Other (2) 1.1% 5.2% (1.9)% 3.0% (1.4)% 5.4% (6.0)% 1.7%
---- --- ---- --- ---- --- ---- ---
Total 0.5% 2.5% (0.8)% 1.5% 0.4% 4.0% (1.9)% 2.0%
==== === ==== === ==== === ==== ===
(1) See Table 2 on page 22 for a reconciliation of these components of same
store net operating income and Table 1 on page 21 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 8
SAME STORE OCCUPANCY BY MARKET
AVERAGE ECONOMIC AVERAGE ECONOMIC
OCCUPANCY (1) OCCUPANCY (1)
% OF NOI ----------------------- ------------------ PHYSICAL
------------------ THREE MONTHS ENDED NINE MONTHS ENDED OCCUPANCY (2)
THREE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, AT SEPTEMBER 30,
APARTMENT SEPTEMBER 30, ----------------------- ------------------ ----------------
MARKET UNITS 2004 2004 2003 2004 2003 2004
- -------------- -------- ---- ---- ----- ---- ---- ----
Atlanta 11,886 52.6% 94.3% 93.6% 93.5% 91.6% 95.6%
Dallas 4,353 16.5% 93.1% 91.0% 92.3% 90.3% 93.7%
Tampa 1,439 6.9% 96.1% 94.4% 94.9% 92.4% 96.4%
Washington, DC 1,204 9.6% 98.1% 95.5% 97.6% 95.3% 98.8%
Charlotte 1,065 5.3% 95.8% 93.7% 95.4% 91.9% 96.3%
Other 2,007 9.1% 90.9% 87.9% 90.9% 89.2% 92.0%
------ ----- ---- ---- ---- ---- ----
Total 21,954 100.0% 94.2% 92.7% 93.5% 91.5% 95.2%
====== ===== ==== ==== ==== ==== ====
(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 93.5% and 91.7% for the three months ended September 30,
2004 and 2003, respectively and 92.9% and 90.1% for the nine months ended
September 30, 2004 and 2003, respectively. For the three months ended
September 30, 2004 and 2003, net concessions were $319 and $538,
respectively, and employee discounts were $109 and $131, respectively. For
the nine months ended September 30, 2004 and 2003, net concessions were
$924 and $2.302, respectively, and employee discounts were $340 and $420,
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
SEPTEMBER 30, 2004 JUNE 30, 2004 % CHANGE
------------------ ------------------ --------
Rental and other revenues ..................... $ 65,762 $ 65,274 0.7%
Property operating and maintenance expenses
(excluding depreciation and amortization) ... 26,047 25,575 1.8%
---------- ----------
Same store net operating income (1) ........... $ 39,715 $ 39,699 0.0%
========== ==========
Average economic occupancy .................... 94.2% 93.6% 0.6%
========== ==========
Average monthly rental rate per unit .......... $ 986 $ 985 0.1%
========== ==========
SEQUENTIAL SAME STORE OPERATING RESULTS BY MARKET -
COMPARISON OF THIRD QUARTER OF 2004 TO SECOND QUARTER 2004
(Increase (decrease) between periods)
AVERAGE
ECONOMIC
MARKET REVENUES (1) EXPENSES (1) NOI (1) OCCUPANCY
- -------------- ------------ ------------ ------- ---------
Atlanta 0.4% 1.0% (0.1)% 0.7%
Dallas 0.5% 3.2% (1.9)% 0.8%
Tampa 2.7% 4.5% 1.6% 2.0%
Washington, DC 1.4% (3.0)% 3.5% 0.8%
Charlotte 0.1% 8.1% (3.6)% (0.6)%
Other (2) 1.8% 1.8% 1.7% (0.2)%
--- --- ---- ---
Total 0.7% 1.8% 0.0% 0.6%
=== === ==== ===
(1) See Table 2 on page 22 for a reconciliation of these components of same
store net operating income and Table 1 on page 21 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. (1)
Copyright (C) 2004 Post Apartment Homes, LP All Rights Reserved 9
POST PROPERTIES, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share or unit data)
SEPTEMBER 30, DECEMBER 31,
2004 2003
------------ ------------
ASSETS (UNAUDITED)
Real estate assets
Land .................................................................... $ 274,020 $ 254,000
Building and improvements ............................................... 1,949,257 1,883,582
Furniture, fixtures and equipment ....................................... 221,570 214,002
Construction in progress ................................................ 16,064 12,946
Land held for future development ........................................ 18,910 11,994
------------ ------------
2,479,821 2,376,524
Less: accumulated depreciation .......................................... (495,048) (432,157)
Assets held for sale, net of accumulated depreciation of $7,836 and
$74,614 at September 30, 2004 and December 31, 2003 respectively ...... 11,496 145,238
------------ ------------
Total real estate assets .............................................. 1,996,269 2,089,605
Investments in and advances to unconsolidated real estate entities ........ 21,794 74,786
Cash and cash equivalents ................................................. 3,002 1,334
Restricted cash ........................................................... 1,727 2,065
Deferred charges, net ..................................................... 10,658 12,285
Other assets .............................................................. 37,334 35,376
------------ ------------
Total assets .......................................................... $ 2,070,784 $ 2,215,451
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable, including $14,760 and $119,035 of debt secured by assets
held for sale at September 30, 2004 and December 31, 2003,
respectively ............................................................ $ 1,099,980 $ 1,186,322
Accrued interest payable .................................................. 12,152 6,923
Dividend and distribution payable ......................................... 19,091 19,509
Accounts payable and accrued expenses ..................................... 73,129 65,872
Security deposits and prepaid rents ....................................... 7,106 7,890
------------ ------------
Total liabilities ....................................................... 1,211,458 1,286,516
------------ ------------
Minority interest of preferred unitholders in Operating Partnership ....... - 70,000
------------ ------------
Minority interest of common unitholders in Operating Partnership .......... 45,207 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:
39,925,460 and 39,676,204 shares issued, 39,922,487 and 38,686,315
shares outstanding at September 30, 2004 and December 31, 2003,
respectively......................................................... 399 396
Additional paid-in capital .............................................. 768,566 849,632
Accumulated earnings .................................................... 59,569 -
Accumulated other comprehensive income .................................. (10,151) (12,362)
Deferred compensation ................................................... (4,207) (4,424)
------------ ------------
814,205 833,291
Less common stock in treasury, at cost, 2,973 and 989,889 shares
at September 30, 2004 and December 31, 2003, respectively .............. (86) (36,765)
------------ ------------
Total shareholders' equity .............................................. 814,119 796,526
------------ ------------
Total liabilities and shareholders' equity............................... $ 2,070,784 $ 2,215,451
============ ============
Copyright (C) 2004 Post Apartment Homes, LP All Rights Reserved 10
POST PROPERTIES, INC.
CONSOLIDATED DEBT SUMMARY
(Dollars in thousands, except per share or unit data)
(Unaudited)
SUMMARY OF OUTSTANDING DEBT AT SEPTEMBER 30, 2004
WEIGHTED AVERAGE RATE (1)
THREE MONTHS ENDED SEPTEMBER 30,
PERCENTAGE --------------------------------
TYPE OF INDEBTEDNESS BALANCE OF TOTAL 2004 2003
- ----------------------------------------------------- ------------ ---------- ------ ------
Unsecured fixed rate senior notes ................... $ 585,000 53.18% 7.44% 7.40%
Secured tax exempt variable rate notes (2) .......... 110,055 10.01% 1.85% 1.50%
Secured conventional fixed rate notes ............... 372,724 33.88% 6.52% 6.77%
Lines of credit .................................... 32,201 2.93% 2.35% 1.74%
------------ ------ ---- ----
$ 1,099,980 100.00% 6.35% 6.07%
============ ====== ==== ====
PERCENTAGE
BALANCE OF TOTAL DEBT
------------ -------------
Total fixed rate debt ............................... $ 957,724 87.07%
Total variable rate debt ............................ 142,256 12.93%
------------ ------
Total debt ........................................ $ 1,099,980 100.00%
============ ======
DEBT MATURITIES
WEIGHTED AVERAGE RATE
AGGREGATE DEBT MATURITIES BY YEAR (3) AMOUNT ON DEBT MATURITIES (1)
- ---------------------------------------------------- ------------- ----------------------
Remainder of 2004 ................................... $ 1,216 7.03%
2005 ................................................ 205,933 (4) 7.82%
2006 ................................................ 81,336 6.97%
2007 ................................................ 157,677 7.06%
2008 ................................................ 4,014 6.52%
2009 and thereafter ................................. 617,603 (4) 5.94%
------------
$ 1,067,779
============
DEBT STATISTICS
SEPTEMBER 30,
---------------------
2004 2003
-------- -----
Interest coverage ratio (5)(6)........................................ 2.3x (9) 2.3x
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)......................... 44.4% 44.7%
Total debt and preferred equity as % of undepreciated real estate
assets (adjusted for joint venture partner's share of debt) (8) ... 48.1% 52.7%
(1) Weighted average rate includes credit enhancements and other fees, where
applicable. The weighted average rates for the three months ended
September 30, 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 line of credit of $32,201 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 nine months ended September 30, 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 23.
(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 23.
(8) A computation of the debt ratios is included in Table 5 on page 24.
(9) The interest coverage and fixed charge coverage ratios, including
discontinued operations, for the nine months ended September 30, 2004
would be 2.4x and 2.0x, respectively.
Copyright (C) 2004 Post Apartment Homes, LP All Rights Reserved 11
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) SEPTEMBER 30, 2004
- -------------------------------------------------------------------- ------------------
Consolidated Debt to Total Assets cannot exceed 60% ................. 43%
Secured Debt to Total Assets cannot exceed 40% ...................... 19%
Total Unencumbered Assets to Unsecured Debt must be
at least 1.50/1 ................................................... 2.91/1
Consolidated Income Available for Debt Service Charge
must be at least 1.50/1 ........................................... 2.37/1
(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.
AS OF
SEPTEMBER 30, 2004
------------------
RATIO OF CONSOLIDATED DEBT TO TOTAL ASSETS
Consolidated debt, per balance sheet (A) ........................... $ 1,099,980
==============
Total assets, as defined (B) (Table A) ............................. $ 2,563,010
==============
Computed ratio (A/B) ............................................... 43%
==============
Required ratio (cannot exceed) ..................................... 60%
==============
RATIO OF SECURED DEBT TO TOTAL ASSETS
Secured conventional fixed rate notes ............................... $ 372,724
Secured tax exempt variable rate notes .............................. 110,055
--------------
Total secured debt (C) .......................................... $ 482,779
==============
Computed ratio (C/B) ............................................... 19%
==============
Required ratio (cannot exceed) ..................................... 40%
==============
RATIO OF TOTAL UNENCUMBERED ASSETS TO UNSECURED DEBT
Consolidated debt, per balance sheet (A) ............................ $ 1,099,980
Total secured debt (C) .............................................. (482,779)
--------------
Total unsecured debt (D) ........................................ $ 617,201
==============
Total unencumbered assets, as defined (E) (Table A) ................ $ 1,796,212
==============
Computed ratio (E/D) ............................................... 2.91x
==============
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) ......................................................... $ 167,612
==============
Annual Debt Service Charge, as defined (G) (Table B) ................ $ 70,599
==============
Computed ratio (F/G) ............................................... 2.37x
==============
Required minimum ratio ............................................. 1.50x
==============
Copyright (C) 2004 Post Apartment Homes, LP All Rights Reserved 12
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
SEPTEMBER 30, 2004
------------------
Total real estate assets .......................................... $ 1,996,269
Add:
Investments in unconsolidated real estate entities .............. 21,794
Accumulated depreciation ....................................... 495,048
Accumulated depreciation - assets held for sale ................ 7,836
Other tangible assets (cash, restricted cash,
other assets, exclusive of receivables) ...................... 42,063
--------------
Total assets for public debt covenant computations ................ $ 2,563,010
Less:
Encumbered real estate assets .................................. 766,798
--------------
Total unencumbered assets for public debt covenant computations ... $ 1,796,212
==============
TABLE B
CALCULATION OF CONSOLIDATED INCOME AVAILABLE FOR DEBT SERVICE AND ANNUAL DEBT
SERVICE CHARGE FOR PUBLIC DEBT COVENANT COMPUTATIONS (1)
NINE MONTHS ENDED
SEPTEMBER 30, 2004
------------------
CONSOLIDATED INCOME AVAILABLE FOR DEBT SERVICE
Net income ......................................................... $ 102,727
Add:
Minority interests .............................................. 10,239
--------------
Income before minority interest .................................... 112,966
Add:
Depreciation ..................................................... 64,227
Depreciation (company share) of assets held in unconsolidated
entities.......................................................... 993
Amortization of deferred financing costs ......................... 3,273
Interest expense ................................................. 50,306
Interest expense (company share) of assets held in unconsolidated
entities.......................................................... 877
Interest expense of discontinued operations....................... 1,766
Asset impairment charge .......................................... 626
Loss on early extinguishment of debt ............................. 4,128
Less:
Gains on property sales (before minority interest) ............... (113,739)
--------------
Consolidated income available for debt service ..................... $ 125,423
==============
Consolidated income available for debt service (annualized) ........ $ 167,231
==============
ANNUAL DEBT SERVICE CHARGE
Consolidated interest expense ...................................... $ 50,306
Interest expense (company share) of assets held in unconsolidated
entities............................................................ 877
Interest expense of discontinued operations......................... 1,766
--------------
$ 52,949
==============
Annual debt service charge (interest expense annualized)........... $ 70,599
==============
(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 13
POST PROPERTIES, INC.
ASSET ACQUISITION AND DISPOSITION SUMMARY
GROSS AMOUNT GROSS
PROPERTY NAME/PERIOD LOCATION YEAR BUILT PER UNIT AMOUNT
- ----------------------------- ---------------- ---------- --------------- ---------------
ACQUISITIONS
Q1 2004
None
Q2 2004
Post Tysons Corner(TM) Washington, D.C. 1990 $ 171,972 $ 85,814,000
Q3 2004
None
---------------
2004 YTD Total $ 85,814,000
===============
Weighted Average Cap Rate -
Acquisitions - 2004 5.5% (1)
===============
DISPOSITIONS
Q1 2003
Post West Avenue(TM) (2) Austin, TX 2000 $ 126,360 $ 30,200,000 (3)
Q2 2003
Post Park(R) Atlanta, GA 1988-1990 $ 78,156
Post Paseo Colorado Pasadena, CA 2002 250,639 $ 158,180,000 (4)(5)
Q3 2003
None
Q4 2003
Post Hackberry Creek(R) Dallas, TX 1988-1996 $ 64,916
Post Roosevelt Square(TM) (6) Phoenix AZ 2000 90,456 $ 64,497,000
---------------
2003 YTD Total $ 252,877,000
===============
Weighted Average Cap Rate -
Dispositions - 2003 6.1% (7)
===============
Q1 2004
Post Townlake(R) Dallas, TX 1986-1987 $ 56,212 $ 22,372,000 (8)
Q2 2004
Post Windhaven (TM) Dallas, TX 1991 $ 52,743
Post Mill(R) (9) Atlanta, GA 1985-1986
Post Canyon(R) (9) Atlanta, GA 1986
Post Chase(R) (9) Atlanta, GA 1987
Post Court(R) (9) Atlanta, GA 1988
Post Lane(R) (9) Atlanta, GA 1988
Post Lake(R) (9) Orlando, FL 1988 $ 221,750,000
Q3 2004
None
---------------
2004 YTD Total $ 244,122,000
===============
Weighted Average Cap Rate -
Dispositions - 2004 6.7% (7)
===============
(1) Based on projected first twelve-month net operating income after
adjustment for management fee (3.0%) and capital reserves ($300/unit).
Also assumes that the Company will initially spend up to $2 million to
improve the community for total capitalized costs of approximately $88
million.
(2) Includes approximately 7,400 square feet of retail space.
(3) Excludes approximately $8.6 million in gross proceeds from the sale of
land in Tampa, FL and Austin, TX.
(4) 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.
(5) Excludes approximately $2.6 million of gross proceeds from the sale of
land in Dallas, TX.
(6) Includes approximately 11,000 square feet of retail space.
(7) Based on trailing twelve-month 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.
(8) Excludes approximately $2.1 million in gross proceeds from the sale of
land in Dallas, TX and Tampa, FL.
(9) The gross amount per unit for these properties is $65,409.
Copyright (C) 2004 Post Apartment Homes, LP All Rights Reserved 14
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 and nine months ended September 30, 2004 and 2003 is
detailed below.
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------------- -----------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
NEW COMMUNITY DEVELOPMENT AND ACQUISITION ACTIVITY .... $ 1,039 $ 2,991 $ 38,581 $ 22,823
NON-RECURRING CAPITAL EXPENDITURES
Revenue generating additions and improvements (1) ... - 105 26 837
Other community additions and improvements (2) ...... 1,058 1,055 3,604 3,231
RECURRING CAPITAL EXPENDITURES
Carpet replacements and other community additions
and improvements (3) ............................... 2,420 2,996 7,613 6,982
Corporate additions and improvements ................ 265 182 553 521
------------ ------------ ------------ ------------
$ 4,782 $ 7,329 $ 50,377 $ 34,394
============ ============ ============ ============
OTHER DATA
Capitalized interest ................................ $ 287 $ 225 $ 787 $ 3,338
============ ============ ============ ============
Capitalized personnel and associated costs (4) ...... $ 249 $ 387 $ 748 $ 1,566
============ ============ ============ ============
(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. (1)
Copyright (C) 2004 Post Apartment Homes, LP All Rights Reserved 15
POST PROPERTIES, INC.
INVESTMENTS IN UNCONSOLIDATED REAL ESTATE ENTITIES
(Dollars in thousands, except per share or unit data)
(Unaudited)
At September 30, 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 September 30, 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 $6,618 at
September 30, 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:
SEPTEMBER 30, DECEMBER 31,
Balance Sheet Data 2004 2003
- ------------------------------------------------------ ------------ ------------
Real estate assets, net of accumulated depreciation of
$8,757 and $5,939, respectively .................... $ 124,899 $ 127,513
Cash and other ....................................... 3,284 2,516
------------ ------------
Total assets ......................................... $ 128,183 $ 130,029
============ ============
Mortgage notes payable ............................... $ 83,543 $ 33,763
Construction notes payable to Company (1) ............ - 53,769
Other liabilities .................................... 1,318 1,742
------------ ------------
Total liabilities .................................... 84,861 89,274
Members' equity ..................................... 43,322 40,755
------------ ------------
Total liabilities and members' equity ................ $ 128,183 $ 130,029
============ ============
Company's equity investment .......................... $ 22,165 $ 21,017
============ ============
Company's share of notes payable ..................... $ 29,240 $ 30,636
============ ============
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------------- -----------------------------
Income Statement Data 2004 2003 2004 2003
- ------------------------------------------------------ ------------ ------------ ------------ ------------
Revenue
Rental ............................................ $ 3,385 $ 2,638 $ 9,924 $ 6,434
Other ............................................. 252 130 722 357
------------ ------------ ------------ ------------
Total revenues .................................... 3,637 2,768 10,646 6,791
------------ ------------ ------------ ------------
Expenses
Property operating and maintenance ................ 1,116 866 3,560 3,301
Depreciation and amortization ..................... 972 954 2,892 2,798
Interest .......................................... 865 777 2,505 2,296
------------ ------------ ------------ ------------
Total expenses .................................... 2,953 2,597 8,957 8,395
------------ ------------ ------------ ------------
Income (loss) from continuing operations ............. 684 171 1,689 (1,604)
------------ ------------ ------------ ------------
Discontinued Operations
Loss from discontinued operations ................. - - - (188)
Gain on property sales ............................ - - - 26,179
------------ ------------ ------------ ------------
Income from discontinued operations .................. - - - 25,991
------------ ------------ ------------ ------------
Net income ........................................... $ 684 $ 171 $ 1,689 $ 24,387
============ ============ ============ ============
Company's share of net income ........................ $ 420 $ 60 $ 843 $ 7,768
============ ============ ============ ============
(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 previously
provided by the Company was refinanced with permanent loans from
unaffiliated entities as of March 31, 2004.
The income from discontinued operations represents the operating results and the
gain on sale of an apartment community (held by a fourth Property LLC) that was
sold in June 2003.
At September 30, 2004, mortgage notes payable include a $50,000 mortgage note
that bears interest at 4.13%, requires monthly interest payments and annual
principal payments 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.
Copyright (C) 2004 Post Apartment Homes, LP All Rights Reserved 16
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 September 30, 2004
for properties stabilized by the beginning of the quarter ended September 30,
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 September 30, 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
SEPTEMBER 30, 2004 ADJUSTMENTS ADJUSTED
- ---------------------------------------------------- ------------------ ---------------- ------------
INCOME STATEMENT DATA
Rental revenues ..................................... $ 74,298 $ (53) (1) $ 74,245
Other property revenues ............................. 4,680 98 (1) 4,778
------------- ------------ ------------
Total rental and other revenues (A) ............ 78,978 45 79,023
Property operating & maintenance expenses
(excluding depreciation and amortization) (B) .... 36,054 (5,452) (1) 30,602
------------- ------------ ------------
Property net operating income (Table 1) (A-B) ....... $ 42,924 $ (5,497) $ 48,421
============= ============ ============
Apartment units represented ......................... 24,700 (433) (2) 24,267
AS OF AS
SEPTEMBER 30, 2004 ADJUSTMENTS ADJUSTED
---------------------------------------------------- ------------------ ------------- ------------
OTHER ASSET DATA
Cash & equivalents .................................. $ 3,002 $ - $ 3,002
Construction in progress ............................ 16,064 - 16,064
Land held for development or sale ................... 18,910 1,540 (3) 20,450
Investments in and advances to unconsolidated real
estate entities (including construction loans
receivable) ...................................... 21,794 (21,794) (4) -
Other assets (5) .................................... 39,061 - 39,061
Cash and other assets of unconsolidated real estate
entities (6) ..................................... 3,284 (2,135) (6) 1,149
------------- ------------
$ 102,115 $ 79,726
============= ============
OTHER LIABILITY DATA
Tax-exempt debt ..................................... $ 110,055 - $ 110,055
Other notes payable ................................. 989,925 - 989,925
Other liabilities (7) ............................... 111,478 - 111,478
Total liabilities of unconsolidated
real estate entities (8) ......................... 84,861 (55,160) (7) 29,701
------------- ------------
$ 1,296,319 $ 1,241,159
============= ============
OTHER DATA
Liquidation value of preferred shares ............... 95,000 - 95,000
Common shares outstanding ........................... 39,922 - 39,922
Common units outstanding ............................ 2,501 - 2,501
(1) The adjustments include additions for the rental revenues ($830) and other
property revenues ($83) and property operating and maintenance expenses
(excluding depreciation and amortization) ($374) of a held for sale
property included in discontinued operations and for the Company's 35%
share of rental revenues ($1,184) and other property revenues ($88) and
property operating and maintenance expenses (excluding depreciation and
amortization) ($391) from all properties accounted for on the equity
method of accounting. In addition, the adjustments reflect a reduction of
rental revenues ($2,067) and other revenues ($74) and property operating
and maintenance expenses (excluding depreciation and amortization)
($1,852) 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 ($3,093), charges for hurricane damage ($703)
and personnel severance charges ($569).
Copyright (C) 2004 Post Apartment Homes, LP All Rights Reserved 17
(2) The adjustment reflects a reduction 65% of the 666 units held in
unconsolidated entities (a 433 unit reduction) to adjust the units held in
unconsolidated entities to the Company's 35% share of the units.
(3) The adjustment reflects land parcels included on the balance sheet as a
component of assets held for sale.
(4) The "As of September 30, 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 (none at September 30, 2004).
(5) These amounts consist of restricted cash and other assets, per the
Company's balance sheet.
(6) The "As of September 30, 2004" amount represents cash and other assets of
unconsolidated entities. The adjustment includes a reduction for the
venture partners' 65% share of cash and other assets ($2,135) of the
Company's projects held in unconsolidated entities as those projects
reached stabilized occupancy prior to the third quarter of 2004. The "As
Adjusted" amount represents the Company's 35% share of the cash and other
assets of all of the unconsolidated entities.
(7) 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.
(8) The "As of September 30, 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.
COMPUTATION OF IMPLIED PORTFOLIO CAPITALIZATION RATE
(In thousands)
THREE MONTHS ENDED
SEPTEMBER 30, 2004
------------------
CALCULATION OF ADJUSTED PROPERTY NET OPERATING INCOME
Total rental and other revenues ...................... $ 79,023 (a)
Property operating & maintenance expenses
(excluding depreciation and amortization) ......... (30,602) (a)
-------------
Property net operating income ........................ 48,421
Adjustments to property net operating income
Assumed property management fee (calculated at 3%
of revenues) ..................................... (2,371)
Assumed property capital expenditure reserve ($300
per unit per year based on 24,267 units) ......... (1,820)
-------------
Property net operating income, adjusted for assumed
management fee and assumed capital expenditures ... $ 44,230
=============
Property net operating income, adjusted for assumed
management fee and assumed capital expenditures
(annualized) (A) .................................. $ 176,920
=============
AS OF
SEPTEMBER 30, 2004
------------------
CALCULATION OF IMPLIED MARKET VALUE OF COMPANY GROSS
ASSETS
Implied market value of common shares and units ...... $ 1,268,448 (b)
Other assets, as adjusted ............................ (79,726) (a)
Other liabilities, as adjusted ....................... 1,241,159 (a)
Preferred stock, at liquidation value ................ 95,000 (a)
-------------
Implied market value of Company gross assets (B) ..... $ 2,524,881
=============
IMPLIED PORTFOLIO CAPITALIZATION RATE, BASED ON
COMPANY'S STOCK PRICE AS OF SEPTEMBER 30, 2004 (A/B) . 7.0%
=============
(a) Represents amounts in the "as adjusted" column from the Financial Data
table reflected above.
(b) Calculated as follows:
Common shares and units outstanding at
September 30, 2004 .................. 42,423
Per share market value of common stock
at September 30, 2004 ............... $ 29.90
------------
Implied market value of common shares
and units at September 30, 2004 ..... $ 1,268,448
============
Copyright (C) 2004 Post Apartment Homes, LP All Rights Reserved 18
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, 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 treatment of these costs under GAAP. The Company
adopted the modifications to the definition of FFO for all periods
presented. 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 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" 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, sold
properties and commercial properties 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 19
NET INCOME, FFO AND AFFO EXCLUDING CERTAIN CHARGES - The Company uses net
income, FFO and AFFO excluding certain preferred stock and unit redemption
costs, severance, proxy, loss on early extinguishment of debt 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 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 ON PROPERTY SALES - The Company uses economic gains losses
on property sales as a supplemental measure of operating performance.
Economic gains on property sales are defined as gains 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 on property sales is an important supplemental
measure to gains 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 on property sales - discontinued operations" is
the most directly comparable GAAP measure to economic gains 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 21
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 NINE MONTHS ENDED
---------------------------------------------- -----------------------------
SEPTEMBER 30, SEPTEMBER 30, JUNE 30, SEPTEMBER 30, SEPTEMBER 30,
2004 2003 2004 2004 2003
------------- ------------- ------------- ------------- ------------
Total same store NOI .................... $ 39,715 $ 40,041 $ 39,699 $ 118,849 $ 121,090
Property NOI from other operating
segments 3,209 1,867 3,603 9,583 3,945
------------ ------------ ------------ ------------ ------------
Consolidated property NOI ............... 42,924 41,908 43,302 128,432 125,035
Add (subtract):
Other revenues ....................... 814 102 45 936 379
Interest income ...................... 247 223 213 639 708
Minority interest in consolidated
property partnerships ............... 167 677 303 742 1,359
Depreciation ......................... (21,864) (21,553) (21,177) (64,227) (62,096)
Interest expense ..................... (17,299) (17,122) (16,726) (50,306) (49,001)
Amortization of deferred financing
costs ............................... (1,066) (1,084) (1,092) (3,273) (2,839)
General and administrative ........... (6,017) (3,738) (5,477) (16,136) (10,703)
Development costs and other expenses . (283) (274) (381) (1,200) (841)
Proxy contest and related costs ...... - - - - (5,231)
Severance charges .................... - - - - (21,506)
Equity in income of unconsolidated
entities 420 60 207 843 7,768
Minority interest of preferred
unitholders ......................... (980) (1,400) (1,400) (3,780) (4,200)
Minority interest of common
unitholders ......................... 406 457 246 1,125 3,160
------------ ------------ ------------ ------------ ------------
Income (loss) from continuing
operations .......................... (2,531) (1,744) (1,937) (6,205) (18,008)
Income from discontinued operations .. 738 92 103,047 108,932 23,460
------------ ------------ ------------ ------------ ------------
Net income (loss) ....................... $ (1,793) $ (1,652) $ 101,110 $ 102,727 $ 5,452
============ ============ ============ ============ ============
Copyright (C) 2004 Post Apartment Homes, LP All Rights Reserved 21
TABLE 2
SAME STORE NET OPERATING INCOME (NOI) SUMMARY BY MARKET
(Dollars in thousands)
THREE MONTHS ENDED, 3Q `04
SEPTEMBER 30, SEPTEMBER 30, JUNE 30, 3Q `03 2Q `04 % SAME
2004 2003 2004 % CHANGE % CHANGE STORE NOI
------------- ------------- ------------- -------- -------- ----------
Rental and other revenues
Atlanta .............................. $ 33,503 $ 33,613 $ 33,386 (0.3)% 0.4% -
Dallas ............................... 12,538 12,681 12,481 (1.1)% 0.5% -
Tampa ................................ 4,641 4,504 4,517 3.0% 2.7% -
Washington, DC ....................... 5,522 5,266 5,444 4.9% 1.4% -
Charlotte ............................ 3,229 3,127 3,226 3.3% 0.1% -
Other ................................ 6,329 6,261 6,220 1.1% 1.8% -
------------ ------------ ------------
Total rental and other revenues .... 65,762 65,452 65,274 0.5% 0.7% -
------------ ------------ ------------
Property operating and maintenance
expenses (exclusive of depreciation
and amortization)
Atlanta .............................. 12,609 12,601 12,480 0.1% 1.0% -
Dallas ............................... 5,971 5,423 5,788 10.1% 3.2% -
Tampa ................................ 1,887 1,857 1,806 1.6% 4.5% -
Washington, DC ....................... 1,708 1,764 1,760 (3.2)% (3.0)% -
Charlotte ............................ 1,105 1,136 1,022 (2.7)% 8.1% -
Other ................................ 2,767 2,630 2,719 5.2% 1.8% -
------------ ------------ ------------
Total .............................. 26,047 25,411 25,575 2.5% 1.8% -
------------ ------------ ------------
Net operating income
Atlanta .............................. 20,894 21,012 20,906 (0.6)% (0.1)% 52.6%
Dallas ............................... 6,567 7,258 6,693 (9.5)% (1.9)% 16.5%
Tampa ................................ 2,754 2,647 2,711 4.0% 1.6% 6.9%
Washington, DC ....................... 3,814 3,502 3,684 8.9% 3.5% 9.6%
Charlotte ............................ 2,124 1,991 2,204 6.7% (3.6)% 5.3%
Other ................................ 3,562 3,631 3,501 (1.9)% 1.7% 9.1%
------------ ------------ ------------
Total same store NOI ............... $ 39,715 $ 40,041 $ 39,699 (0.8)% 0.0% 100.0%
============ ============ ============
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------------
2004 2003 % CHANGE
------------ ----------- --------
Rental and other revenues
Atlanta .............................. $ 99,776 $ 100,091 (0.3)%
Dallas ............................... 37,500 37,603 (0.3)%
Tampa ................................ 13,715 13,350 2.7%
Washington, DC ....................... 16,331 15,667 4.2%
Charlotte ............................ 9,606 9,207 4.3%
Other ................................ 18,817 19,081 (1.4)%
------------ ------------
Total rental and other revenues .... 195,745 194,999 0.4%
------------ ------------
Property operating and maintenance
expenses (exclusive of depreciation
and amortization)
Atlanta .............................. 37,441 36,364 3.0%
Dallas ............................... 17,188 15,972 7.6%
Tampa ................................ 5,683 5,445 4.4%
Washington, DC ....................... 5,274 5,130 2.8%
Charlotte ............................ 3,162 3,270 (3.3)%
Other ................................ 8,148 7,728 5.4%
------------ ------------
Total .............................. 76,896 73,909 4.0%
------------ ------------
Net operating income
Atlanta .............................. 62,335 63,727 (2.2)%
Dallas ............................... 20,312 21,631 (6.1)%
Tampa ................................ 8,032 7,905 1.6%
Washington, DC ....................... 11,057 10,537 4.9%
Charlotte ............................ 6,444 5,937 8.5%
Other ................................ 10,669 11,353 (6.0)%
------------ ------------
Total same store NOI ............... $ 118,849 $ 121,090 (1.9)%
============ ============
Copyright (C) 2004 Post Apartment Homes, LP All Rights Reserved 22
TABLE 3
RECONCILIATION OF SEGMENT CASH FLOW DATA TO STATEMENTS OF CASH FLOWS
(Dollars in thousands)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------------- -----------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
Recurring capital expenditures by operating segment
Same store ........................................... $ 2,264 $ 2,274 $ 6,735 $ 5,199
Partially stabilized ................................. 34 15 121 42
Construction and lease-up ............................ 3 - 15 -
Other segments ....................................... 119 707 742 1,741
------------ ------------ ------------ ------------
Total recurring capital expenditures per statements of
cash flows ......................................... $ 2,420 $ 2,996 $ 7,613 $ 6,982
============ ============ ============ ============
Non-recurring capital expenditures by operating
segment
Same store ........................................... $ 985 $ 922 $ 3,181 $ 2,256
Partially stabilized ................................. 15 41 197 48
Construction and lease-up ............................ - - - -
Other segments ....................................... 58 92 226 927
------------ ------------ ------------ ------------
Total non-recurring capital expenditures per
statements of cash flows ........................... $ 1,058 $ 1,055 $ 3,604 $ 3,231
============ ============ ============ ============
TABLE 4
COMPUTATION OF INTEREST AND FIXED CHARGE COVERAGE RATIOS
(Dollars in thousands)
NINE MONTHS ENDED
SEPTEMBER 30,
-----------------------------
2004 2003
----------- ------------
Loss from continuing operations ...................... $ (6,205) $ (18,008)
Minority interest of common unitholders .............. (1,125) (3,160)
Minority interest of preferred unitholders ........... 3,780 4,200
Gains on property sales - unconsolidated entities .... - (8,395)
Depreciation expense ................................. 64,227 62,096
Depreciation (company share) of assets held in
unconsolidated entities ............................ 993 1,236
Interest expense ..................................... 50,306 49,001
Interest expense (company share) of assets held in
unconsolidated entities ............................ 877 1,069
Amortization of deferred financing costs ............. 3,273 2,839
Severance charges .................................... - 21,506
Proxy contest and related costs ...................... - 5,231
----------- ------------
Income available for debt service (A) ................ $ 116,126 $ 117,615
=========== ============
Interest expense ..................................... $ 50,306 $ 49,001
Interest expense (company share) of assets held in
unconsolidated entities ............................ 877 1,069
----------- ------------
Interest expense for purposes of computation (B) ..... 51,183 50,070
Dividends and distributions to preferred shareholders
and unitholders ...................................... 10,196 12,787
----------- ------------
Fixed charges for purposes of computation (C) ........ $ 61,379 $ 62,857
=========== ============
Interest coverage ratio (A/B) (1) .................... 2.3x 2.3x
=========== ============
Fixed charge coverage ratio (A/C) (1) ................ 1.9x 1.9x
=========== ============
(2) The interest coverage and fixed charge coverage ratios, including
discontinued operations, for the nine months ended September 30, 2004
would be 2.4x and 2.0x, respectively.
Copyright (C) 2004 Post Apartment Homes, LP All Rights Reserved 23
TABLE 5
COMPUTATION OF DEBT RATIOS
(In thousands)
AS OF SEPTEMBER 30,
------------------------------
2004 2003
------------ ------------
Total real estate assets per balance sheet ........................... $ 1,996,269 $ 2,158,879
Plus:
Company share of real estate assets held in unconsolidated entities .. 43,715 44,897
Company share of accumulated depreciation - assets held in
unconsolidated entities ............................................ 3,065 1,738
Accumulated depreciation per balance sheet ........................... 495,048 411,312
Accumulated depreciation on assets held for sale ..................... 7,836 82,286
------------ ------------
Total undepreciated real estate assets (A) ........................... $ 2,545,933 $ 2,699,112
============ ============
Total debt per balance sheet ......................................... $ 1,099,980 $ 1,255,280
Plus:
Company share of third party debt held in unconsolidated entities .... 29,240 5,892
Less:
Joint venture partner's share of construction debt to the Company .... - (54,309)
------------ ------------
Total debt (adjusted for joint venture partner's share of debt) (B) .. $ 1,129,220 $ 1,206,863
============ ============
Total debt as a % of undepreciated real estate assets (adjusted for
joint venture partner's share of debt) (B/A) ....................... 44.4% 44.7%
============ ============
Total debt per balance sheet ......................................... $ 1,099,980 $ 1,255,280
Plus:
Company share of third party debt held in unconsolidated entities .... 29,240 5,892
Preferred shares at liquidation value ................................ 95,000 145,000
Preferred units at liquidation value ................................. - 70,000
Less:
Joint venture partner's share of construction debt to the Company .... - (54,309)
------------ ------------
Total debt and preferred equity (adjusted for joint venture partner's
share of debt) (C) ................................................. $ 1,224,220 $ 1,421,863
============ ============
Total debt and preferred equity as a % of undepreciated assets
(adjusted for joint venture partner's share of debt) (C/A) ......... 48.1% 52.7%
============ ============
Copyright (C) 2004 Post Apartment Homes, LP All Rights Reserved 24
TABLE 6
CALCULATION OF COMPANY UNDEPRECIATED BOOK VALUE PER SHARE
(In thousands)
SEPTEMBER 30,
2004
-------------
Total shareholders' equity, per balance sheet ........................ $ 814,119
Plus:
Accumulated depreciation, per balance sheet .......................... 495,048
Accumulated depreciation - held for sale assets, per balance sheet ... 7,836
Minority interest of common unitholders in Operating Partnership,
per balance sheet .................................................. 45,207
Less:
Deferred charges, net, per balance sheet ............................. (10,658)
Preferred shares at liquidation value ................................ (95,000)
------------
Total undepreciated book value (A).................................... $ 1,256,552
============
Total common shares and units (B) .................................... 42,423
============
Company undepreciated book value per share (A/B) ..................... $ 29.62
============
Copyright (C) 2004 Post Apartment Homes, LP All Rights Reserved 25