UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) October 26, 2005
BRE Properties, Inc.
(Exact name of registrant as specified in its charter)
| Maryland | 1-14306 | 94-1722214 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (I.R.S. Employer Identification No.) |
| 525 Market Street, 4th Floor, San Francisco, CA | 94105-2712 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code (415) 445-6530
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 2.02. Results of Operations and Financial Condition.
On October 26, 2005, BRE Properties, Inc. issued a press release and supplemental financial data with respect to its financial results for the quarter ended September 30, 2005. A copy of the press release and supplemental financial data is furnished as Exhibit 99.1 to this report. The information contained in this Item 2.02 and the attached Exhibit 99.1 are furnished to, but not filed with, the Securities and Exchange Commission.
ITEM 8.01. Other Events.
On October 25, 2005, we reported operating results for the quarter and nine-month period ended September 30, 2005.
Funds from operations (FFO), the generally accepted measure of operating performance for real estate investment trusts, totaled $27.3 million, or $0.51 per diluted share, during third quarter 2005, as compared with $29.5 million, or $0.57 per diluted share for the quarter ended September 30, 2004. (A reconciliation of net income available to common shareholders to FFO is provided at the end of this report.)
Net income available to common shareholders for the third quarter totaled $6.9 million, or $0.13 per diluted share, as compared with $11.5 million, or $0.23 per diluted share, for the same period 2004.
Adjusted EBITDA for the quarter totaled $52.2 million, as compared with $49.7 million in third quarter 2004. (A reconciliation of net income available to common shareholders to Adjusted EBITDA is provided at the end of this report.) For third quarter 2005, revenues totaled $76.8 million, as compared with $66.6 million a year ago, which excludes revenues from discontinued operations of $5.2 million in the current period and $9.3 million in the prior period.
For the year-to-date period, FFO totaled $80.4 million, or $1.53 per diluted share, as compared with $85.3 million, or $1.65 per diluted share for the nine-month period in 2004.
Net income available to common shareholders for the nine-month period in 2005 totaled $49.2 million, or $0.95 per diluted share, as compared with $36.3 million, or $0.72 per diluted share, for the same period in 2004. The 2005 year-to-date results include a net gain on sales totaling $26.9 million, or $0.52 per diluted share. No property sales were recorded during the first nine months of 2004.
Adjusted EBITDA for the nine-month in 2005 period totaled $151.7 million, as compared with $144.5 million for the same period in 2004. For the nine months ended September 30, 2005, revenues totaled $220.0 million, as compared with revenues of $194.0 million for the same period in 2004, which excludes revenues from discontinued operations of $18.1 million in the current period and $28.0 million in the prior period.
Our year-over-year comparative earnings and FFO results were influenced by property-level same-store performance, income from acquisitions, properties in the lease-up phase of development and property dispositions. Same-store net operating income (NOI) increased 5.3% for the quarter and 3.2% year to date, as compared with the same periods in 2004. (A reconciliation of net income available to common shareholders to NOI is provided at the end of this report.) The positive overall NOI variances were offset by increased interest expense, increased G&A expenses, and preferred stock dividends on our Series D cumulative redeemable preferred stock issued in December 2004. Earnings per share (EPS) results for the quarter were influenced by an increased level of depreciation expense related to new property acquisitions and development properties completed during the past year.
Interest expense increased to $19.5 million during third quarter 2005, from $16.8 million in third quarter 2004, and to $55.9 million, from $49.0 for the respective nine-month periods. The increases reflect the issuance of unsecured notes, $100 million in first quarter 2004 and $150 million in second quarter 2005, as well as a rising short-term interest rate environment. General and administrative expense increased to $4.0 million in third quarter 2005, from $3.1 million in third quarter 2004. The year-over-year increase in G&A expense included anticipated amounts for our long-term incentive compensation program, increased estimates for professional fees and additional staffing expense.
Level of Investment and NOI by Region
Quarter Ended September 30, 2005
| Region |
# Units |
Gross Investment |
% Investment |
% NOI |
|||||||
| ($ amounts in 000s) | |||||||||||
| Southern California |
11,092 | $ | 1,358,174 | 50 | % | 53 | % | ||||
| Northern California |
5,880 | 618,384 | 23 | % | 26 | % | |||||
| Seattle |
3,572 | 392,099 | 15 | % | 12 | % | |||||
| Phoenix |
1,586 | 120,308 | 4 | % | 3 | % | |||||
| Discontinued Operations |
2,184 | 211,200 | 8 | % | 6 | % | |||||
| Total |
24,314 | $ | 2,700,165 | 100 | % | 100 | % | ||||
Acquisition activities during 2004 and 2005 increased third quarter 2005 NOI by $3.3 million, as compared with third quarter 2004. Development and lease-up properties generated $0.6 million
in additional NOI during the quarter, as compared with third quarter 2004 levels. Disposition activities during fourth quarter 2004 and first half of 2005 reduced third quarter 2005 NOI $2.7 million, as compared with third quarter 2004.
Same-Store Property Results
We define same-store properties as stabilized apartment communities owned by us for at least five full quarters. Of the 23,826 apartment units owned directly by us, same-store units totaled 18,990 for the quarter and 18,826 units for the nine-month period.
On a year-over-year basis, overall same-store operating results were affected by increased market rents and increased real estate expenses, consistent with management’s expectations. Average same-store market rent for third quarter 2005 increased 7% to $1,233 per unit, from $1,157 per unit in third quarter 2004. Same-store physical occupancy levels averaged 95.3% during third quarter 2005, as compared with 95.5% in the same period 2004. Annualized resident turnover averaged 65% during the nine months ended September 30, 2005, as compared with 66% during the nine months ended September 30, 2004.
On a sequential basis, same-store NOI improved 2.5% during third quarter 2005, as compared with second quarter 2005. Sequential same-store revenue increased 2.8%. Expenses increased by 3.6% during the quarter, as compared with second quarter levels.
Same-Store % Growth Results
Q3 2005 Compared with Q3 2004
| % NOI |
% Change |
# Units | ||||||||||||
| Revenue |
Expenses |
NOI |
||||||||||||
| L.A./Orange County, California |
30 | % | 6.8 | % | 9.2 | % | 5.8 | % | 5,605 | |||||
| San Diego, California |
24 | % | 6.9 | % | 10.7 | % | 5.5 | % | 3,711 | |||||
| San Francisco, California |
19 | % | 3.0 | % | -3.0 | % | 5.6 | % | 3,035 | |||||
| Seattle, Washington |
13 | % | 2.9 | % | 2.3 | % | 3.2 | % | 3,149 | |||||
| Sacramento, California |
10 | % | 4.2 | % | 0.0 | % | 6.3 | % | 2,156 | |||||
| Phoenix, Arizona |
4 | % | 3.3 | % | 2.1 | % | 4.1 | % | 1,334 | |||||
| Total |
100 | % | 5.1 | % | 4.7 | % | 5.3 | % | 18,990 | |||||
Same-Store % Growth Results
Nine Months Ended September 30, 2005 Compared with 2004
| % NOI |
% Change |
# Units | ||||||||||||
| Revenue |
Expenses |
NOI |
||||||||||||
| L.A./Orange County, California |
28 | % | 5.7 | % | 3.1 | % | 6.8 | % | 4,901 | |||||
| San Diego, California |
25 | % | 5.5 | % | 6.0 | % | 5.4 | % | 3,711 | |||||
| San Francisco, California |
19 | % | -0.9 | % | 1.4 | % | -1.9 | % | 3,035 | |||||
| Seattle, Washington |
14 | % | 1.1 | % | 1.4 | % | 1.0 | % | 3,149 | |||||
| Sacramento, California |
10 | % | 1.4 | % | -1.9 | % | 3.1 | % | 2,156 | |||||
| Phoenix, Arizona |
4 | % | 0.2 | % | -0.8 | % | 0.8 | % | 1,334 | |||||
| Total |
100 | % | 2.9 | % | 2.3 | % | 3.2 | % | 18,286 | |||||
Same-Store Average Occupancy and Turnover Rates
| Physical Occupancy |
Turnover Ratio |
||||||||||||||
| Q3 2005 |
Q2 2005 |
Q3 2004 |
YTD 2005 |
YTD 2004 |
|||||||||||
| L.A./Orange County, California |
94.9 | % | 94.6 | % | 96.1 | % | 62 | % | 59 | % | |||||
| San Diego, California |
95.5 | % | 94.4 | % | 96.0 | % | 69 | % | 70 | % | |||||
| San Francisco, California |
95.7 | % | 94.2 | % | 94.0 | % | 59 | % | 65 | % | |||||
| Sacramento, California |
96.5 | % | 95.0 | % | 96.3 | % | 70 | % | 76 | % | |||||
| Seattle, Washington |
94.6 | % | 94.6 | % | 94.6 | % | 62 | % | 63 | % | |||||
| Phoenix, Arizona |
94.9 | % | 92.6 | % | 95.7 | % | 72 | % | 76 | % | |||||
| Average |
95.3 | % | 94.4 | % | 95.5 | % | 65 | % | 66 | % | |||||
Development Activity
During third quarter 2005, we had two Southern California communities in the lease-up phase, The Heights, with 208 units, in Chino Hills, and Galleria at Towngate, with 268 units, in Moreno Valley. At the end of the quarter, 94 units were delivered at The Heights, 82 of which were occupied. At Galleria at Towngate, 20 units were delivered, nine of which were occupied.
We currently have five communities with a total of 1,190 units under construction, for a total estimated investment of $253 million, and an estimated balance to complete totaling $96 million. Expected delivery dates for these units range from first quarter 2006 through fourth quarter 2007. All development communities are in Southern California. At September 30, 2005, we owned four parcels of land representing 1,023 units of future development, for an estimated aggregate cost of $308 million upon completion. The land parcels are located in Northern and Southern California, and the Seattle, Washington metro area.
Financial and Other Information
At September 30, 2005, our combination of debt and equity resulted in a total market capitalization of approximately $4.1 billion, with a debt-to-total market capitalization ratio of 37%. Our outstanding debt of $1.5 billion carried a weighted average interest rate of 6.0% for the nine-month period. Our coverage ratio of Adjusted EBITDA to interest expense was 2.7 times for the quarter. The weighted average maturity for outstanding debt is 4.5 years. At September 30, 2005, outstanding borrowings under our unsecured and secured lines of credit totaled $301 million, with a weighted average interest cost of 4.6%.
For third quarter 2005, cash dividend payments to common shareholders totaled $25.5 million, or $0.50 per share, which represents an increase of 2.6% over prior year per share dividend levels.
Forward-Looking Statements
In addition to historical information, we have made forward-looking statements in this Current Report on Form 8-K. These forward-looking statements pertain to, among other things, our capital resources, portfolio performance and results of operations. Forward-looking statements involve numerous risks and uncertainties. You should not rely on these statements as predictions of future events because there is no assurance that the events or circumstances reflected in the statements can be achieved or will occur. Forward-looking statements are identified by words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “pro forma,” “estimates” or “anticipates” or in their negative form or other variations, or by discussions of strategy, plans or intentions. Forward-looking statements are based on assumptions, data or methods that may be incorrect or imprecise or incapable of being realized. The following factors, among others, could affect actual results and future events: defaults or non-renewal of leases, illiquidity of real estate and reinvestment risk, our regional focus in the Western United States, insurance coverage, increased interest rates and operating costs, failure to obtain necessary outside financing, difficulties in identifying properties to acquire and in effecting acquisitions, failure to successfully integrate acquired properties and operations, risks and uncertainties affecting property development and construction (including construction delays, cost overruns, inability to obtain necessary permits and public opposition to such activities), failure to qualify as a real estate investment trust under the Internal Revenue Code as of 1986, as amended, environmental uncertainties, risks related to natural disasters, financial market fluctuations, changes in real estate and zoning laws and increases in real property tax rates. Our success also depends upon economic trends, including interest rates, income tax laws, governmental regulation, legislation, population changes and other factors. Do not rely solely on forward-looking statements, which only reflect management’s analysis. We assume no obligation to update forward-looking statements. For more details, please refer to our SEC filings, including our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.
BRE PROPERTIES, INC.
Consolidated Balance Sheets
Third Quarter 2005
(Unaudited, dollar amounts in thousands except per share data)
| September 30, 2005 |
September 30, 2004 |
|||||||
| ASSETS | ||||||||
| Real estate portfolio: |
||||||||
| Direct investments in real estate: |
||||||||
| Investments in rental properties |
$ | 2,478,781 | 2,513,129 | |||||
| Construction in progress |
142,045 | 72,289 | ||||||
| Less: accumulated depreciation |
(312,269 | ) | (284,912 | ) | ||||
| 2,308,557 | 2,300,506 | |||||||
| Equity interests in and advances to real estate joint ventures: |
||||||||
| Investments in rental properties |
10,183 | 10,268 | ||||||
| Real estate held for sale, net |
195,047 | — | ||||||
| Land under development |
77,184 | 24,939 | ||||||
| Total real estate portfolio |
2,590,971 | 2,335,713 | ||||||
| Other assets |
55,673 | 47,174 | ||||||
| TOTAL ASSETS |
$ | 2,646,644 | $ | 2,382,887 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Liabilities: |
||||||||
| Unsecured senior notes |
$ | 980,000 | $ | 848,352 | ||||
| Unsecured line of credit |
226,000 | 218,000 | ||||||
| Secured line of credit |
75,000 | 140,000 | ||||||
| Mortgage loans |
215,690 | 130,016 | ||||||
| Accounts payable and accrued expenses |
54,733 | 42,480 | ||||||
| Total liabilities |
1,551,423 | 1,378,848 | ||||||
| Minority interests |
61,675 | 35,720 | ||||||
| Shareholders’ equity: |
||||||||
| Preferred Stock, $0.01 par value; 20,000,000 shares authorized: 10,000,000 and 7,000,000 shares with $25 liquidation preference issued and outstanding at September 30, 2005 and September 30, 2004, respectively. |
100 | 70 | ||||||
| Common stock, $0.01 par value, 100,000,000 shares authorized. Shares issued and outstanding: 51,186,459 and 50,263,488 at September 30, 2005 and 2004, respectively. |
512 | 503 | ||||||
| Additional paid-in capital |
1,032,934 | 967,746 | ||||||
| Total shareholders’ equity |
1,033,546 | 968,319 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
$ | 2,646,644 | $ | 2,382,887 | ||||
BRE PROPERTIES, INC.
Consolidated Statements of Income
Quarters and Nine Months Ended September 30, 2005 and 2004
(Unaudited, dollar and share amounts in thousands)
| Quarter ended 9/30/05 |
Quarter ended 9/30/04 |
Nine months ended 9/30/05 |
Nine months ended 9/30/05 |
|||||||||||||
| REVENUE |
||||||||||||||||
| Rental income |
$ | 73,461 | $ | 63,621 | $ | 210,014 | $ | 185,606 | ||||||||
| Ancillary income |
3,387 | 2,940 | 9,937 | 8,385 | ||||||||||||
| Total revenue |
76,848 | 66,561 | 219,951 | 193,991 | ||||||||||||
| EXPENSES |
||||||||||||||||
| Real estate expenses |
24,366 | 20,413 | 69,576 | 60,154 | ||||||||||||
| Depreciation |
18,893 | 15,178 | 52,722 | 40,706 | ||||||||||||
| Interest expense |
19,512 | 16,775 | 55,949 | 49,042 | ||||||||||||
| General and administrative |
4,045 | 3,091 | 12,853 | 9,488 | ||||||||||||
| Other expenses |
759 | 427 | 1,488 | 1,792 | ||||||||||||
| Total expenses |
67,575 | 55,884 | 192,588 | 161,182 | ||||||||||||
| Other income |
446 | 591 | 2,146 | 1,108 | ||||||||||||
| Income before minority interests, partnership income and discontinued operations |
9,719 | 11,268 | 29,509 | 33,917 | ||||||||||||
| Minority interests |
(915 | ) | (576 | ) | (2,620 | ) | (1,907 | ) | ||||||||
| Partnership income |
155 | 218 | 402 | 647 | ||||||||||||
| Income from continuing operations |
8,959 | 10,910 | 27,291 | 32,657 | ||||||||||||
| Discontinued operations: |
||||||||||||||||
| Discontinued operations, net(1) |
2,379 | 3,773 | 8,425 | 12,228 | ||||||||||||
| Net gain on sales |
— | — | 26,897 | — | ||||||||||||
| Total discontinued operations |
2,379 | 3,773 | 35,322 | 12,228 | ||||||||||||
| NET INCOME |
$ | 11,338 | $ | 14,683 | $ | 62,613 | $ | 44,885 | ||||||||
| Dividends attributable to preferred stock |
4,468 | 3,203 | 13,404 | 8,588 | ||||||||||||
| NET INCOME AVAILABLE TO COMMON SHAREHOLDERS |
$ | 6,870 | $ | 11,480 | $ | 49,209 | $ | 36,297 | ||||||||
| Net income per common share—basic |
$ | 0.13 | $ | 0.23 | $ | 0.97 | $ | 0.72 | ||||||||
| Net income per common share—assuming dilution |
$ | 0.13 | $ | 0.23 | $ | 0.95 | $ | 0.72 | ||||||||
| Weighted average shares outstanding—basic |
51,065 | 50,210 | 50,830 | 50,130 | ||||||||||||
| Weighted average shares outstanding—assuming dilution |
51,990 | 50,895 | 51,640 | 50,650 | ||||||||||||
| (1) | Details of net earnings from discontinued operations. For 2005 includes results from three properties sold during the first six months of 2005 and seven properties held for sale at September 30, 2005. 2004 also includes NOI from three properties sold during 4Q ’04. |
| Quarter 9/30/05 |
Quarter ended 9/30/04 |
Nine months ended 9/30/05 |
Nine months ended 9/30/04 |
|||||||||||||
| Rental and ancillary income |
$ | 5,184 | $ | 9,258 | 18,090 | $ | 27,950 | |||||||||
| Real estate expenses |
(1,990 | ) | (3,414 | ) | (6,424 | ) | (9,569 | ) | ||||||||
| Depreciation |
(815 | ) | (2,071 | ) | (3,241 | ) | (6,153 | ) | ||||||||
| Income from discontinued operations, net |
$ | 2,379 | $ | 3,773 | $ | 8,425 | $ | 12,228 | ||||||||
BRE PROPERTIES, INC.
Non-GAAP Financial Measure Reconciliations and Definitions
(Dollar amounts in thousands)
This document includes certain non-GAAP financial measures that management believes are helpful in understanding our business, as further described below. Our definition and calculation of non-GAAP financial measures may differ from those of other REITs, and may, therefore, not be comparable. The non-GAAP financial measures should not be considered an alternative to net income or any other GAAP measurement of performance and should not be considered an alternative to cash flows from operating, investing or financing activities as a measure of liquidity.
Funds from Operations (FFO)
FFO is used by industry analysts and investors as a supplemental performance measure of an equity REIT. FFO is defined by the National Association of Real Estate Investment Trusts as net income or loss (computed in accordance with accounting principles generally accepted in the United States) excluding extraordinary items as defined under GAAP and gains or losses from sales of previously depreciated real estate assets, plus depreciation and amortization of real estate assets and adjustments for unconsolidated partnerships and joint ventures. We calculate FFO in accordance with the NAREIT definition.
We believe that FFO is a meaningful supplemental measure of our operating performance because historical cost accounting for real estate assets in accordance with GAAP assumes that the value of real estate assets diminishes predictably over time, as reflected through depreciation. Because real estate values have historically risen or fallen with market conditions, management considers FFO an appropriate supplemental performance measure because it excludes historical cost depreciation, as well as gains or losses related to sales of previously depreciated property, from GAAP net income. By excluding depreciation and gains or losses on sales of real estate, management uses FFO to measure returns on its investments in real estate assets. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions nor the level of capital expenditures to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results from operations, the utility of FFO as a measure of our performance is limited.
We also believe that FFO, combined with the required GAAP presentations, is useful to investors in providing more meaningful comparisons of the operating performance of a company’s real estate between periods or as compared to other companies. FFO does not represent net income or cash flows from operations as defined by GAAP and is not intended to indicate whether cash flows will be sufficient to fund cash needs. It should not be considered an alternative to net income as an indicator of the REIT’s operating performance or to cash flows as a measure of liquidity. Our FFO may not be comparable to the FFO of other REITs due to the fact that not all REITs use the NAREIT definition.
| Quarter Ended 9/30/05 |
Quarter Ended 9/30/04 |
Nine Months Ended 9/30/05 |
Nine Months Ended 9/30/04 |
|||||||||||||
| Net income available to common shareholders |
$ | 6,870 | $ | 11,480 | $ | 49,209 | $ | 36,297 | ||||||||
| Depreciation from continuing operations |
18,893 | 15,178 | 52,722 | 40,706 | ||||||||||||
| Depreciation from discontinued operations |
815 | 2,071 | 3,241 | 6,153 | ||||||||||||
| Minority interests |
915 | 576 | 2,620 | 1,907 | ||||||||||||
| Depreciation from unconsolidated entities |
209 | 284 | 627 | 773 | ||||||||||||
| Net gain on investments |
— | — | (26,897 | ) | — | |||||||||||
| Less: Minority interests not convertible to common |
(405 | ) | (105 | ) | (1,091 | ) | (488 | ) | ||||||||
| Funds from operations |
$ | 27,297 | $ | 29,484 | $ | 80,431 | $ | 85,348 | ||||||||
| Diluted shares outstanding—EPS |
51,990 | 50,895 | 51,640 | 50,650 | ||||||||||||
| Net income per common share—diluted |
$ | 0.13 | $ | 0.23 | $ | 0.95 | $ | 0.72 | ||||||||
| Diluted shares outstanding—FFO |
53,010 | 51,860 | 52,660 | 51,620 | ||||||||||||
| FFO per common share—diluted |
$ | 0.51 | $ | 0.57 | $ | 1.53 | $ | 1.65 | ||||||||
BRE PROPERTIES, INC.
Non-GAAP Financial Measure Reconciliations and Definitions
(Dollar amounts in thousands)
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA
EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined by BRE as EBITDA, excluding minority interests, gains or losses from sales of investments, preferred stock dividends and other expenses. We consider EBITDA and Adjusted EBITDA to be appropriate supplemental measures of our performance because they eliminate depreciation, interest, and, with respect to Adjusted EBITDA, gains (losses) from property dispositions and other charges, which permits investors to view income from operations without the impact of noncash depreciation or the cost of debt, or with respect to Adjusted EBITDA, other non-operating items described above.
Because EBITDA and Adjusted EBITDA exclude depreciation and amortization and capture neither the changes in the value of our properties that result from use or market conditions nor the level of capital expenditures to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results from operations, the utility of EBITDA and Adjusted EBITDA as measures of our performance is limited. Below is a reconciliation of net income available to common shareholders to EBITDA and Adjusted EBITDA:
| Quarter ended 9/30/05 |
Quarter ended 9/30/04 |
Nine months ended 9/30/05 |
Nine months ended 9/30/04 | ||||||||||
| Net income available to common shareholders |
$ | 6,870 | $ | 11,480 | $ | 49,209 | $ | 36,297 | |||||
| Interest |
19,512 | 16,775 | 55,949 | 49,042 | |||||||||
| Depreciation |
19,708 | 17,249 | 55,963 | 46,859 | |||||||||
| EBITDA |
46,090 | 45,504 | 161,121 | 132,198 | |||||||||
| Minority interests |
915 | 576 | 2,620 | 1,907 | |||||||||
| Net gain on sales |
— | — | (26,897 | ) | — | ||||||||
| Dividends on preferred stock |
4,468 | 3,203 | 13,404 | 8,588 | |||||||||
| Other expenses |
759 | 427 | 1,488 | 1,792 | |||||||||
| Adjusted EBITDA |
$ | 52,232 | $ | 49,710 | $ | 151,736 | $ | 144,485 | |||||
Net Operating Income (NOI)
We consider community level and portfolio-wide NOI to be an appropriate supplemental measure to net income because it helps both investors and management to understand the core property operations prior to the allocation of general and administrative costs. This is more reflective of the operating performance of the real estate, and allows for an easier comparison of the operating performance of single assets or groups of assets. In addition, because prospective buyers of real estate have different overhead structures, with varying marginal impact to overhead by acquiring real estate, NOI is considered by many in the real estate industry to be a useful measure for determining the value of a real estate asset or groups of assets.
Because NOI excludes depreciation and does not capture the change in the value of our communities resulting from operational use and market conditions, nor the level of capital expenditures required to adequately maintain the communities (all of which have real economic effect and could materially impact our results from operations), the utility of NOI as a measure of our performance is limited. Other equity REITs may not calculate NOI consistently with our definition and, accordingly, our NOI may not be comparable to such other REITs’ NOI. Accordingly, NOI should be considered only as a supplement to net income as a measure of our performance. NOI should not be used as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends or make distributions. NOI also should not be used as a supplement to or substitute for cash flow from operating activities (computed in accordance with GAAP).
| Quarter ended 9/30/05 |
Quarter ended 9/30/04 |
Nine months ended 9/30/05 |
Nine months ended 9/30/04 | ||||||||||
| Net income available to common shareholders |
$ | 6,870 | $ | 11,480 | $ | 49,209 | $ | 36,297 | |||||
| Interest |
19,512 | 16,775 | 55,949 | 49,042 | |||||||||
| Depreciation |
19,708 | 17,249 | 55,963 | 46,859 | |||||||||
| Minority interests |
915 | 576 | 2,620 | 1,907 | |||||||||
| Net gain on sales |
— | — | (26,897 | ) | — | ||||||||
| Dividends on preferred stock |
4,468 | 3,203 | 13,404 | 8,588 | |||||||||
| General and administrative expense |
4,045 | 3,091 | 12,853 | 9,488 | |||||||||
| Other expenses |
759 | 427 | 1,488 | 1,792 | |||||||||
| NOI |
$ | 56,277 | $ | 52,801 | $ | 164,589 | $ | 153,973 | |||||
| Less Non Same-Store NOI |
10,775 | 9,600 | 38,024 | 31,369 | |||||||||
| Same-Store NOI |
$ | 45,502 | $ | 43,201 | $ | 126,565 | $ | 122,604 | |||||
ITEM 9.01. Financial Statements and Exhibits.
(c) Exhibits.
| Exhibit Number |
Description | |
| 99.1 | Earnings Release and Supplemental Financial data, dated October 26, 2005 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| BRE Properties, Inc. (Registrant) | ||||
| Date: October 27, 2005 | /s/ Edward F. Lange, Jr. | |||
| Name: Edward F. Lange, Jr. | ||||
Exhibit Index
| Exhibit Number |
Description | |
| 99.1 | Earnings Release and Supplemental Financial data, dated October 26, 2005 |