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Post Properties Announces First Quarter 2016 Earnings

ATLANTA, May 02, 2016 (BUSINESS WIRE) -- Post Properties, Inc. PPS, -0.33% announced today net income available to common shareholders of $19.2 million, or $0.36 per diluted share, for the first quarter of 2016, compared to $19.0 million, or $0.35 per diluted share, for the first quarter of 2015. Net income for the first quarter of 2015 included a gain on the sale of a retail condominium of $1.8 million, or $0.03 per diluted share.

Funds From Operations

The Company uses the National Association of Real Estate Investment Trusts (“NAREIT”) definition of Funds from Operations (“FFO”) as an operating measure of the Company’s financial performance. A reconciliation of FFO to GAAP net income is included in the financial data (Table 1) accompanying this press release.

FFO for the first quarter of 2016 was $41.9 million, or $0.78 per diluted share, compared to $38.5 million, or $0.70 per diluted share for the first quarter of 2015. FFO for the first quarter of 2015 included losses on extinguishment of indebtedness of $0.2 million, or less than $0.01 per diluted share.

Said Dave Stockert, Post’s CEO and President, “Results for the first quarter point to the ongoing favorable operating conditions for our business. Same-store revenue growth that was higher than at any time in the past two-plus years helped drive strong top-line and bottom-line growth.”

Same Store Community Data

Total revenues at the Company’s 52 same store communities, containing 19,819 apartment units, increased 4.0% and total operating expenses increased 4.9% during the first quarter of 2016, compared to the first quarter of 2015, producing a 3.4% increase in same store net operating income (“NOI”). The average monthly rental rate per unit increased 2.4% during the first quarter of 2016, compared to the first quarter of 2015. Average economic occupancy was 96.2% for the first quarter of 2016, compared to 94.9% for the first quarter of 2015.

On a sequential basis, total revenues for the same store communities increased 0.7% and total operating expenses increased 5.0%, resulting in a 1.9% decrease in same store NOI for the first quarter of 2016, compared to fourth quarter of 2015. On a sequential basis, the average monthly rental rate per unit increased 0.6%. For the first quarter of 2016, average economic occupancy at the same store communities was 96.2%, compared to 96.5% for the fourth quarter of 2015.

Same store NOI is a supplemental non-GAAP financial measure. A reconciliation of same store NOI to the comparable GAAP financial measure is included in the financial data (Table 2) accompanying this press release. Information on same store NOI and average rental rate per unit by geographic market is also included in the financial data (Table 3) accompanying this press release.

Investment Activity

Development Activity

In the aggregate, the Company has 2,290 units in six apartment communities, and approximately 5,800 square feet of retail space, under development with a total estimated cost of $478.6 million, and a remaining funding requirement of $296.0 million. The Company believes it has adequate internal and external resources to fund its development commitments.

Share Repurchase Program

During the first quarter of 2016, the Company repurchased 598,733 shares of common stock at an aggregate cost of $32.7 million and at an average gross price per share of $54.67. Cumulatively, since the most recent program began in 2015, the Company has repurchased 1,180,700 shares of common stock at an aggregate cost of $65.1 million and at an average gross price per share of $55.10. Any future repurchases are expected to be conditioned on the trading price of the Company’s common stock in relation to management’s estimates of the net asset value of the Company’s portfolio and on general economic and market conditions. There can be no assurance that any additional shares will be repurchased under this program.

Financing Activity

Leverage and Line of Credit Capacity

Total debt and preferred equity as a percentage of undepreciated real estate assets (adjusted for joint venture partners’ share of real estate assets and debt) was 30.4% at March 31, 2016.

As of April 29, 2016, the Company had outstanding borrowings of $53.9 million and letters of credit totaling $0.2 million under its combined $330 million unsecured lines of credit. The Company has no principal debt maturities until 2017.

Computations of debt ratios and reconciliations of the ratios to the appropriate GAAP measures in the Company’s financial statements are included in the financial data (Table 4) accompanying this press release.

At-the-Market Common Equity Program

The Company has available an at-the-market (“ATM”) common equity program that provides for the sale of up to 4 million shares of common stock. Sales under this ATM program are dependent on a variety of factors, including, among others, market conditions, the trading price of the Company’s common stock, the Company’s liquidity position and the potential use of proceeds. The Company’s outlook does not currently anticipate any share issuances under its ATM program.

2016 Outlook

The estimates and assumptions presented below are forward looking and are based on the Company’s future view of the apartment markets and of general economic conditions, as well as other risks outlined below under the caption “Forward-Looking Statements.” There can be no assurance that the Company’s actual results will not differ materially from the estimates set forth below. The Company assumes no obligation to update this guidance in the future.

Based on its current outlook, the Company anticipates that FFO and AFFO per diluted share for the full year 2016 will be in the range set forth below. Adjusted Funds from Operations (“AFFO”) per share is defined as FFO per share less operating property capital expenditures after adjusting for the impact of non-cash straight-line long-term ground lease expense and debt extinguishment losses, if any.

Previously
Current Issued
Outlook Outlook
FFO, per share $3.12 - $3.22 $3.10 - $3.22
AFFO, per share $2.65 - $2.75 $2.63 - $2.75
Same Store Growth
Revenue 2.8% - 3.2% 2.6% - 3.2%
Operating Expenses 3.4% - 4.0% 3.4% - 4.0%
Net Operating Income 2.1% - 3.1% 1.7% - 3.1%

The Company anticipates that net income available to common shareholders will be in the range of $1.37 to $1.49 per diluted share, for the full year 2016. The difference between net income available to common shareholders and FFO per diluted share consists of depreciation on real estate assets, which is anticipated to be $1.73 to $1.75 per diluted share. The difference between FFO and AFFO per diluted share consists of operating property capital expenditures after adjusting for the impact of non-cash straight-line long-term ground lease expense. Those operating property capital expenditures, net of the ground lease adjustment, are anticipated to total approximately $0.47 per diluted share at the mid-point of the estimated range of AFFO.

Supplemental Financial Data

The Company also produces Supplemental Financial Data that includes detailed information regarding the Company’s operating results, investment activity, financing activity, balance sheet and properties. This Supplemental Financial Data is considered an integral part of this earnings release and is available on the Company’s website. The Company’s Earnings Release and the Supplemental Financial Data are available through the Investors/Financial Reports/Quarterly and Other Reports section of the Company’s website at www.postproperties.com.

The ability to access the attachments on the Company’s website requires the Adobe Acrobat Reader, which may be downloaded at http://get.adobe.com/reader/.

Non-GAAP Financial Measures and Other Defined Terms

The Company uses certain non-GAAP financial measures and other defined terms in this press release and in its Supplemental Financial Data available on the Company’s website. The non-GAAP financial measures include FFO, Adjusted Funds from Operations (“AFFO”), net operating income, same store capital expenditures, and certain debt statistics and ratios. The definitions of these non-GAAP financial measures are listed below and on page 18 of the Supplemental Financial Data. 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 (or losses) from extraordinary items and sales of depreciable operating property, plus depreciation and amortization of real estate assets, non-cash impairment charges on depreciable real estate, and after adjustment for unconsolidated partnerships and joint ventures all determined on a consistent basis in accordance with GAAP. FFO presented in the Company’s press release and Supplemental Financial Data is not necessarily comparable to FFO presented by other real estate companies because not all real estate companies use the same definition. The Company’s FFO is comparable to the FFO of real estate companies that use the current NAREIT definition.

Accounting for real estate assets using historical cost accounting under GAAP assumes that the value of real estate assets diminishes predictably over time. NAREIT stated in its April 2002 White Paper on Funds from Operations that “since real estate asset values have historically risen or fallen with market conditions, many industry investors have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves.” As a result, the concept of FFO was created by NAREIT for the REIT industry to provide an alternate measure. Since the Company agrees with the concept of FFO and appreciates the reasons surrounding its creation, the Company believes that FFO is an important supplemental measure of operating performance.

In addition, since most equity REITs provide FFO information to the investment...


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