Edgar Filing: BRE PROPERTIES INC /MD/

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Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2009

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-14306

BRE PROPERTIES, INC.

(Exact Name of Registrant as Specified in Its Charter)

Maryland

94-1722214

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

525 Market Street

4^th Floor

San Francisco, CA

94105-2712

(Address of Principal Executive Offices)

(Zip Code)

(415) 445-6530

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ¨ Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes x No

Number of shares of common stock

outstanding as of July 31, 2009

52,822,089

BRE PROPERTIES, INC.

INDEX TO FORM 10-Q

June 30, 2009


		Page No.
PART I	FINANCIAL INFORMATION

	ITEM 1. Financial Statements:
	Consolidated Balance Sheets – June 30, 2009 (unaudited) and December 31, 2008	2

	Consolidated Statements of Income (unaudited) – three months ended June 30, 2009 and 2008	3

	Consolidated Statements of Income (unaudited) – six months ended June 30, 2009 and 2008	4

	Consolidated Statements of Cash Flows (unaudited) – six months ended June 30, 2009 and 2008	5-6

	Condensed Notes to Consolidated Financial Statements (unaudited)	7-15

	ITEM 2:
	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16-27

	ITEM 3:
	Quantitative and Qualitative Disclosures about Market Risk	27

	ITEM 4:
	Controls and Procedures	27

PART II	OTHER INFORMATION

	ITEM 1: Legal Proceedings	28
	ITEM 1A: Risk Factors	28
	ITEM 2: Unregistered Sales of Equity Securities and Use of Proceeds	28
	ITEM 3: Defaults Upon Senior Securities	28
	ITEM 4: Submission of Matters to a Vote of Security Holders	29
	ITEM 5: Other Information	29
	ITEM 6: Exhibits	29-30

PART I FINANCIAL INFORMATION

ITEM 1 – Financial Statements.

BRE Properties, Inc.

Consolidated Balance Sheets


(Amounts in thousands, except share data)	June 30, 2009			December 31, 2008 ⁽¹⁾
	(unaudited)
Assets
Real estate portfolio:
Direct investments in real estate:
Investments in rental properties	$	3,105,464		$	2,927,481
Construction in progress		124,935			295,074
Less: accumulated depreciation		(540,165	)		(514,388	)

		2,690,234			2,708,167

Equity interests in and advances to real estate joint ventures-Investments in rental properties		62,435			62,497
Real estate held for sale, net		8,168			17,022
Land under development		128,762			123,609

Total real estate portfolio		2,889,599			2,911,295

Cash		5,848			7,724
Other assets		76,454			73,725

Total assets	$	2,971,901		$	2,992,744


Liabilities and Shareholders’ Equity

Liabilities:
Unsecured senior notes	$	948,906		$	1,505,905
Unsecured line of credit		497,000			245,000
Mortgage loans payable		443,390			151,496
Accounts payable and accrued expenses		62,148			91,167

Total liabilities		1,951,444			1,993,568


Redeemable noncontrolling interests		26,674			29,972

Shareholders’ equity:
Preferred stock, $0.01 par value; 20,000,000 shares authorized; 7,000,000 shares with $25 liquidation preference issued and outstanding at June 30, 2009 and December 31, 2008.		70			70

Common stock, $0.01 par value, 100,000,000 shares authorized; 52,820,545 and 51,149,745 shares issued and outstanding at June 30, 2009 and December 31, 2008, respectively.		528			511
Additional paid-in capital		1,069,222			1,032,391
Cumulative dividends in excess of accumulated net income		(76,037	)		(63,768	)

Total shareholders’ equity		993,783			969,204

Total liabilities and shareholders’ equity	$	2,971,901		$	2,992,744

See condensed notes to unaudited consolidated financial statements.

⁽¹⁾	Restated to reflect the adoption of APB 14-1 and SFAS No. 160

BRE Properties, Inc.

Consolidated Statements of Income (unaudited)


(Amounts in thousands, except per share data)	For the Three Months Ended June 30,
	2009		2008⁽¹⁾
Revenues
Rental income	$	82,889	$	82,606
Ancillary income		3,368		3,527


Total revenues		86,257		86,133


Expenses
Real estate		27,533		25,404
Provision for depreciation		22,368		19,471
Interest		19,421		23,254
General and administrative		4,218		5,378


Total expenses		73,540		73,507


Other income		1,196		637
Net gain on extinguishment of debt		1,958		—
Income before noncontrolling interests, income from investments in unconsolidated entities and discontinued operations		15,871		13,263
Partnership income		580		683

Income from continuing operations		16,451		13,946

Discontinued operations, net		980		3,968
Net gain on sales		14,289		—

Income from discontinued operations		15,269		3,968

Net Income		31,720		17,914

Redeemable noncontrolling interest in income		545		580

Net income attributable to controlling interests		31,175		17,334
Dividends attributable to preferred stock		2,953		2,953

Net Income available to common shareholders	$	28,222	$	14,381


Per common share data - Basic Income from continuing operations (net of preferred dividends)	$	0.25	$	0.20
Income from discontinued operations	$	0.29	$	0.08

Net income available to common shareholders	$	0.54	$	0.28


Weighted average common shares outstanding – basic		51,765		51,020

Per common share data - Diluted Income from continuing operations (net of preferred dividends)	$	0.25	$	0.20
Income from discontinued operations	$	0.29	$	0.08

Net income available to common shareholders	$	0.54	$	0.28


Weighted average common shares outstanding – assuming dilution		51,765		51,538


Dividends declared and paid per common share	$	0.5625	$	0.5625

See condensed notes to unaudited consolidated financial statements

⁽¹⁾	Restated to reflect the adoption of APB 14-1 and FSP EITF 03-6-1.

BRE Properties, Inc.

Consolidated Statements of Income (unaudited)


(Amounts in thousands, except per share data)	For the Six Months Ended June 30,
	2009		2008⁽¹⁾
Revenues
Rental income	$	165,939	$	163,604
Ancillary income		6,699		6,808


Total revenues		172,638		170,412


Expenses
Real estate		53,910		50,706
Provision for depreciation		43,118		39,138
Interest		40,443		46,216
General and administrative		8,544		10,033


Total expenses		146,015		146,093


Other income		1,823		1,231
Net gain on extinguishment of debt		1,958		—
Income before noncontrolling interests, income from investments in unconsolidated entities and discontinued operations		30,404		25,550
Partnership income		1,237		1,315

Income from continuing operations		31,641		26,865

Discontinued operations, net		2,282		7,288
Net gain on sales		14,289		—

Income from discontinued operations		16,571		7,288

Net Income		48,212		34,153

Redeemable noncontrolling interest in income		1,091		1,161

Net income attributable to controlling interests		47,121		32,992
Dividends attributable to preferred stock		5,906		5,906

Net Income available to common shareholders	$	41,215	$	27,086


Per common share data - Basic Income from continuing operations (net of preferred dividends)	$	0.47	$	0.39
Income from discontinued operations	$	0.32	$	0.14

Net income available to common shareholders	$	0.79	$	0.53


Weighted average common shares outstanding – basic		51,505		51,005


Per common share data - Diluted Income from continuing operations (net of preferred dividends)	$	0.47	$	0.38
Income from discontinued operations	$	0.32	$	0.14

Net income available to common shareholders	$	0.79	$	0.52


Weighted average common shares outstanding – assuming dilution		51,505		51,466


Dividends declared and paid per common share	$	1.125	$	1.125

See condensed notes to unaudited consolidated financial statements

⁽¹⁾	Restated to reflect the adoption of APB 14-1 and FSP EITF 03-6-1.

BRE Properties, Inc.

Consolidated Statements of Cash Flows (unaudited)


(Amounts in thousands)	For the Six Months Ended June 30,
	2009			2008⁽¹⁾
Cash flows from operating activities:
Net income attributable to controlling interests	$	47,121		$	32,992
Adjustments to reconcile net income attributable to controlling interests to net cash flows generated by operating activities:
Noncontrolling interest income		1,091			1,161
Net gain on sale of land		(121	)		—
Net gain on sale of discontinued operations		(14,289	)		—
Net gain on extinguishment of debt		(1,958	)		—
Noncash interest on convertible debt		3,950			3,906
Equity in earnings from unconsolidated entities		(1,237	)		(1,315	)
Distributions of earnings from unconsolidated entities		1,309			1,365
Provision for depreciation		43,118			39,138
Depreciation from discontinued operations		159			1,412
Noncash stock based compensation expense		1,136			1,994
(Increase) decrease in other assets		(1,051	)		1,808
Decrease in accounts payable and accrued expenses		(19,369	)		(693	)

Net cash flows generated by operating activities		59,859			81,768


Cash flows from investing activities:
Additions to land under development		(6,331	)		(11,135	)
Additions to direct investment construction in progress		(54,935	)		(66,150	)
Rehabilitation expenditures and other		(4,165	)		(8,121	)
Capital expenditures		(9,685	)		(8,204	)
Improvements to real estate joint ventures		(144	)		(174	)
Additions for furniture, fixture and equipment		(563	)		(2,660	)
Proceeds from sale of rental property, net of closing costs		50,114			—
Proceeds from sale of land, net of closing costs		10,100			—
Investments in property under contract		(2,610	)		(3,336	)

Net cash flows used in investing activities		(18,219	)		(99,780	)


Cash flows from financing activities:
Principal payments on mortgage loans		(18,106	)		(21,266	)
Repayment of unsecured notes		(557,984	)		—
Proceeds from new mortgage loans, net		307,463			—
Lines of credit:
Advances		768,000			565,000
Repayments		(516,000	)		(458,000	)
Cash dividends paid to common shareholders		(59,197	)		(57,901	)
Cash dividends paid to preferred shareholders		(5,906	)		(5,906	)
Distributions to operating company unit holders		(879	)		(949	)
Distributions to other noncontrolling interests		(212	)		(212	)
Proceeds from exercises of stock options		—			412
Purchase of equity securities and other, net		(505	)		(122	)
Proceeds from dividend reinvestment plan		779			808
Proceeds from issuance of common shares, net		36,583			—
Proceeds from hedging activities		2,448			—

Net cash flows (used in) generated by financing activities		(43,516	)		21,864


(Decrease)/ Increase in cash		(1,876	)		3,852
Balance at beginning of period		7,724			6,952

Balance at end of period	$	5,848		$	10,804

BRE Properties, Inc.

Consolidated Statements of Cash Flows Cont. (unaudited)


(Amounts in thousands)	For the Six Months Ended June 30,
	2009			2008⁽¹⁾
Supplemental disclosure of non cash activities:
Transfers of construction in progress to investments in rental properties	$	223,976		$	118,552

Transfer of net investment in rental properties to held for sale	$	43,038		$	83,254

Change in accrued improvements to direct investments in real estate	$	189		$	465

Change in accrued development costs for construction in progress and land under development	$	(1,983	)	$	4,879

Change in market value of redeemable noncontrolling interests	$	3,298		$	2,324

See condensed notes to unaudited consolidated financial statements.

⁽¹⁾	Restated to reflect the adoption of APB 14-1 and SFAS No. 160.

BRE Properties, Inc.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

June 30, 2009

NOTE A – BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q. Accordingly, certain information and footnote disclosures normally included in consolidated financial statements have been omitted. The consolidated balance sheet at December 31, 2008 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. These consolidated financial statements should be read in conjunction with the Annual Report on Form 10-K for the year ended December 31, 2008 of BRE Properties, Inc. (the “Company” or “BRE”). In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal recurring adjustments only) necessary for a fair presentation of the Company’s consolidated financial statements for the interim periods presented.

Certain reclassifications have been made from the prior period’s presentation to conform to the current period’s presentation. On January 1, 2009, the Company adopted FASB staff position APB 14-1, “Accounting for Convertible Debt Instruments That May be Settled in cash upon Conversion (Including Partial Cash Settlement)” (FSP APB 14-1), FASB Staff Position No. EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities” (FSP EITF 03-6-1) and SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements – An Amendment of ARB No. 51” (SFAS No. 160), which became effective for the fiscal years beginning after December 15, 2009. These accounting standards require that the Company restate prior years presented to give retroactive effect to their adoption. The detail of the impact of adoption on prior periods can be found in Note H to these unaudited consolidated financial statements.

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the dates of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

NOTE B – STOCK-BASED COMPENSATION

Financial Accounting Standards Board (FASB) No. 123 (Revised 2004), “Share-Based Payment,” (SFAS No. 123(R)) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values.

Effective January 1, 2006, the Company adopted the provisions of SFAS No. 123(R) using the modified prospective method. This method requires the recognition of compensation cost for all share based payments that were unvested as of January 1, 2006. The cost related to stock-based compensation included in the determination of consolidated net income for the six months ended June 30, 2009 and 2008 includes all awards outstanding that vested during these periods.

Stock based compensation awards under BRE’s plans vest over periods ranging from one to five years. At June 30, 2009, compensation cost related to unvested awards not yet recognized totaled approximately $15,800,000 and the weighted average period over which it is expected to be recognized is 2.3 years. During the six months ended June 30, 2009, 369,061 restricted shares were awarded and 135,643 restricted shares vested. During the six months ended June 30, 2009, no stock options were awarded.

NOTE C – CONSOLIDATION OF VARIABLE INTEREST ENTITIES

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities,” which was revised in December 2003 (Interpretation No. 46), and addresses the consolidation of variable interest entities (“VIEs”). Under Interpretation No. 46, arrangements that are not controlled through voting or similar rights are accounted for as VIEs. An enterprise is required to consolidate a VIE if it is the primary beneficiary of the VIE.

Under Interpretation No. 46, a VIE is created when (i) the equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support from other parties or (ii) the entity’s equity holders as a group lack one of the following three characteristics of a controlling financial interest: (a) the direct or indirect ability to make decisions about the entity through voting or similar rights, (b) the obligation to absorb expected losses of the entity if they occur or (c) the right to receive the expected residual returns of the entity if they occur. If an entity is deemed to be a VIE pursuant to Interpretation No. 46, the enterprise that is deemed to absorb a majority of the expected losses or receive a majority of expected residual returns of the VIE is considered the primary beneficiary and must consolidate the VIE.

Based on the provisions of Interpretation No. 46, the Company has concluded that under certain circumstances when the Company (i) enters into option agreements for the purchase of land or communities from an entity and pays a non-refundable deposit, or (ii) enters into arrangements for the formation of joint ventures, a VIE may be created under condition (ii) (b) or (c) of the previous paragraph. For each VIE created, the Company has computed expected losses and residual returns based on the probability of future cash flows as outlined in Interpretation No. 46. If the Company is determined to be the primary beneficiary of the VIE, the assets, liabilities and operations of the VIE are consolidated with the Company’s financial statements.

At June 30, 2009, the Company had made non-refundable cash deposits for three purchase option agreements totaling approximately $4,990,000, which are included in Other assets on the consolidated balance sheet. The aggregate purchase price of properties under option is approximately $43,945,000. The Company’s maximum exposure to loss if it elects not to purchase the option properties is $20,472,000, representing non-refundable deposits and the related predevelopment costs at June 30, 2009. Based on analyses performed under Interpretation No. 46, the Company is not the primary beneficiary in any of the arrangements as of June 30, 2009.

The Company consolidates entities not deemed as VIEs that it has the ability to control. The accompanying consolidated financial statements include the accounts of the Company and other controlled subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

The Company considers consolidation as outlined in Emerging Issues Task Force No. 04-5, “Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights” (EITF 04-5), which provides guidance on consolidations for Limited Partnerships and similar entities. Under EITF 04-5 the managing member of a limited liability company, or LLC, is presumed to control the LLC and must prove non-managing member(s) have certain rights that preclude the managing member from exercising unilateral control. Based on the provisions of EITF 04-5, the Company has reviewed its control as the General Partner of our joint venture assets and concluded that it does not have control over any of the LLCs managed by the Company.

After considering the potential consolidation under Interpretation No. 46 and EITF 04-5, the Company considers guidance under Accounting Principles Board No. 18, “The Equity Method of Accounting for Investments in Common Stock” (APB 18), and Statement of Position No. 78-9, “Accounting for Investments in Real Estate Ventures” (SOP 78-9). Based upon the provisions of both APB 18 and SOP 78-9, the Company has applied the equity method of accounting to its investments in joint ventures.

NOTE D – DISCONTINUED OPERATIONS

The results of operations for properties sold during the period or designated as held for sale at the end of the period are required to be classified as discontinued operations if deemed a component of an entity. The property-specific components of net earnings that are classified as discontinued operations include operating results, depreciation expense recognized prior to the classification as held for sale, and the net gain or loss on disposal. The Company allocates interest to discontinued operations to the extent that the property was encumbered.

During the quarter ended June 30, 2009, the Company reclassified three operating communities located in: Seattle (2) and the Inland Empire (1), totaling 891 units, from Real estate held for sale under the provisions of SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets” (SFAS No. 144) to Investments in rental properties as the assets no longer met the held for sale criteria. The asset values as of June, 30, 2009, reflect the carrying amounts, adjusted for depreciation expense that would have been recognized had the communities been continuously classified as Investments in rental properties.

At June 30, 2009, the Company had one operating apartment community, Arbor Pointe, a 240-unit property located in Sacramento, classified as held for sale under the provisions of SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets” (SFAS No. 144). The operating property was classified as held for sale in March 2009, and no depreciation has been recorded on the operating community since March 2009. Subsequent to the end of the quarter ended June 30, 2009, the Company sold the operating community. The sales price totaled approximately $16,000,000 resulting in a net gain on sale of approximately $7,200,000 to be recognized during the third quarter of 2009.

In June 2009, the Company sold one operating community, Overlook at Blue Ravine, a 512-unit property located in Folsom, California. The sales price totaled approximately $51,000,000 resulting in a net gain on sales of approximately $14,300,000.

In January 2009, the Company sold an excess parcel of land in Santa Clara, California, classified as held for sale at December 31, 2008, for gross sales proceeds totaling $17,100,000.

For the quarter ended June 30, 2009, the net gain on sale and combined results of operations generated by the one operating apartment community held for sale and the property sold during June 2009 were included in discontinued operations on the consolidated statements of income and totaled $15,269,000. For the quarter ended June 30, 2008, the combined results of operations generated by the one operating apartment community held for sale, the one property sold during June 2009, and the six properties sold during 2008 were included in the discontinued operations line on the consolidated statements of income and totaled $3,968,000.

The following is a breakdown of the combined results of operations for the operating apartment communities included in discontinued operations:


	For the Three Months ended June 30,						For the Six Months ended June 30,
(amounts in thousands)	2009			2008			2009			2008
Rental and ancillary income	$	1,930		$	6,862		$	4,156		$	13,549
Real estate expenses		(950	)		(2,441	)		(1,715	)		(4,814	)
Provision for depreciation		—			(453	)		(159	)		(1,412	)
Interest expense	$	—		$	—		$	—		$	(35	)

Income from discontinued operations, net	$	980		$	3,968		$	2,282		$	7,288

Gain on sales, net		14,289			—			14,289			—

Total discontinued operations	$	15,269		$	3,968		$	16,571		$	7,288

NOTE E – EQUITY

On May 14, 2009, the Company entered into an equity distribution agreement under which the Company may offer and sell shares of its common stock having an aggregate offering price of up to $125,000,000 over time through its sales agent. During the three months ended June 30, 2009, 1,517,808 shares were issued for approximately $37,600,000 with an average price of $24.80 under the Company’s distribution plan. As of August 7, 2009 the company has approximately $87,400,000 available to be issued under the distribution plan.

On April 26, 2007, the Company’s Board of Directors authorized BRE to purchase an aggregate of up to $100,000,000 in its shares of common stock. As of August 7, 2009, the Company has not purchased any shares under this authorization.

During the six months ended June 30, 2009, 116,715 shares of common stock were issued under the Company’s stock based compensation plans, 36,277 shares of common stock were issued under the Company’s direct stock purchase and dividend reinvestment plan and zero operating company units were exchanged for common stock.

NOTE F – LEGAL MATTERS

As of June 30, 2009, there were no pending legal proceedings to which the Company is a party or of which any of the Company’s properties are the subject, which management anticipates would have a material effect upon the Company’s consolidated financial condition and results of operations.

NOTE G – DEBT

During the three months ended June 30, 2009, the Company repurchased at par $201,455,000 of its 7.450% Senior Notes due 2011, and at a discount to par of approximately 2.0%, $89,982,000 of its 7.125% Senior Notes due 2013 pursuant to a cash tender offer announced on April 1, 2009. The Company also repurchased at par $61,407,000 5.75% Senior Notes due 2009, and $119,421,000 of its 4.875% Senior Notes due 2010 pursuant to a cash tender offer announced on April 15, 2009. Also, during the quarter, the Company, through a series of open market transactions, repurchased $40,089,000 of our 4.125% convertible senior unsecured notes with an aggregate price at 89% of par, or approximately $35,809,000. The Company recognized a gain on early debt extinguishment of $6,079,000 and wrote-off approximately $4,121,000 of unamortized deferred financing costs and unamortized discounts in connection with these repurchases for a total recorded net gain of $1,958,000. The following is a summary of the debt tender and repurchase activity:

Debt Tender/Repurchase Summary

(Amounts in thousands)


Security	Cash Principal Outstanding		Bonds Retired		Cash Paid		Principal Amount Remaining		% of Par		Extinguishment Gain		Write off of Unamortized Discounts / Fees / Equity			Net Gain (Loss)
2011 7.45% Public Notes	$	250,000	$	201,455	$	201,455	$	48,545	100.00	%	$	—	$	(1,023	)	$	(1,023	)
2013 7.125% Public Notes		130,000		89,982		88,182		40,018	98.00	%		1,800		(1,127	)		673
2009 5.75% Public Notes		150,000		61,407		61,407		88,593	100.00	%		—		(294	)		(294	)
2010 4.875% Public Notes		150,000		119,421		119,421		30,579	100.00	%		—		(756	)		(756	)

Debt tender total	$	680,000	$	472,265	$	470,465	$	207,735	99.62	%	$	1,800	$	(3,200	)	$	(1,400	)


2012 4.125% Public Notes		449,600		40,089		35,809		409,511	89.32	%		4,280		(922	)		3,358

Total	$	1,129,600	$	512,354	$	506,274	$	617,246	98.81	%	$	6,079	$	(4,121	)	$	1,958

On April 7, 2009, the Company closed a $620,000,000 secured credit facility with Fannie Mae. The facility consists of two $310,000,000 tranches; the first was drawn in full upon closing; the second was drawn on August 3, 2009. The proceeds were used to repay our unsecured credit facility. The balance of the facility as of August 7, 2009, is $170,000,000. The first tranche will have a fixed rate terms of 10 years and the second will have an 11 year maturity. Together, the effective composite annual cost of debt is 5.6%. Fifteen multifamily properties totaling 4,651 units with a net carrying value of $607,500,000 secured the credit facility at the time of closing.

NOTE H – NEW ACCOUNTING PRONOUNCEMENTS

In June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets, an Amendment of FASB Statement No. 140” (SFAS No. 166). SFAS No. 166 modifies the financial components approach used in SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities — a Replacement of FASB Statement No. 125,” removes the concept of a qualifying special purpose entity, and clarifies and amends the derecognition criteria for determining whether a transfer of a financial asset or portion of a financial asset qualifies for sale accounting. SFAS No. 166 also requires expanded disclosures regarding transferred assets and how they affect the reporting entity. SFAS No. 166 is effective for us beginning January 1, 2010. We are currently evaluating the effects, if any, this statement may have on our financial statements.

In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R) (SFAS No. 167). SFAS No. 167 changes the consolidation analysis for VIEs and requires a qualitative analysis to determine the primary beneficiary of the VIE. The determination of the primary beneficiary of a VIE is based on whether the entity has the power to direct matters which most significantly impact the activities of the VIE and has the obligation to absorb losses, or the right to receive benefits, of the VIE which could potentially be significant to the VIE. SFAS No. 167 further amends FIN 46R to require an ongoing reconsideration of the primary beneficiary and also amends the events triggering a reassessment. SFAS No. 167 requires additional disclosures for VIEs, including providing additional disclosures about a reporting entity’s involvement with VIEs, how a reporting entity’s involvement with a VIE affects the reporting entity’s financial statements, and significant judgments and assumptions made by the reporting entity to determine whether it must consolidate the VIE. SFAS No. 167 is effective for us beginning January 1, 2010. We are currently evaluating the effects, if any, this statement may have on our financial statements.

In June 2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles” (SFAS No. 168 or the Codification). Effective July 1, 2009, the Codification is the single source of authoritative accounting principles recognized by the FASB to be applied by non-governmental entities in the preparation of financial statements in conformity with GAAP. We do not expect the adoption of this statement to materially impact our financial statements, however our references to accounting literature within our notes to the condensed consolidated financial statements will be revised to conform to the Codification beginning with the quarter ending September 30, 2009.

In May 2009, the FASB issued Statement No. 165, Subsequent Events (SFAS No. 165). SFAS No. 165 requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date. The basis for the date through which the entity has evaluated subsequent events represents the date the financial statements were issued or were available to be issued. This statement is effective for the interim or annual financial periods ending after June 15, 2009 and should be applied prospectively. The adoption of SFAS No. 165 on April 1, 2009 did not have an impact on the Company’s financial position and results of operations. The Company determined that the basis for the date through which the entity has evaluated subsequent events represents the date the financial statements were issued, August 7, 2009. Detail of subsequent events can be found in Note J to these unaudited consolidated financial statements.

In April 2009, the FASB issued FASB Staff position No. FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (FSP 157-4 or the FSP). FSP 157-4 amends

Statement 157 to require interim disclosures of the inputs and valuation technique(s) used to measure fair value. The FSP also required reporting entities to disclose information regarding changes in valuation techniques and related inputs, if any, on an interim basis. FSP 157-4 is effective for interim and annual reporting periods ending after June 15, 2009. Early adoption is permitted, but only for periods ending after March 15, 2009. The adoption of this standard on April 1, 2009 did not have a material impact on the Company’s financial position and results of operations.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements – An Amendment of ARB No. 51” (SFAS No. 160). This Statement requires that the noncontrolling interest in the equity of a subsidiary be accounted for and reported as equity, provides revised guidance on the treatment of net income and losses attributable to the noncontrolling interest and changes in ownership interests in a subsidiary and requires additional disclosures that identify and distinguish between the interests of the controlling and noncontrolling owners. SFAS No. 160 requires that companies must also look to EITF Topic D-98, “Classification and Measurement of Redeemable Securities” (EITF D-98) to determine if redeemable noncontrolling interests still require presentation in the mezzanine section of the statement of financial position. SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. The Company adopted SFAS No. 160 on January 1, 2009. SFAS No. 160 requires that the Company restate prior period information to give retroactive effect to the adoption of SFAS No. 160. The Company determined that, in accordance with EITF D-98, certain minority interest should continue to be presented in the mezzanine section on the consolidated balance sheet and that the noncontrolling interests that have a conversion feature be marked to the redemption value at the reporting date. In addition, the Company determined that redeemable noncontrolling interest in income, which was previously reported before net income, should be presented below net income and above net income available to common shareholders. The impact of the adoption of SFAS No. 160 was a decrease of redeemable noncontrolling interest of $2,593,335 at June 30, 2008 and an increase in redeemable noncontrolling interest of $704,000 at December 31, 2008, to adjust the noncontrolling interest to its redemption value with an offsetting change in cumulative dividends in excess of accumulated net income.

In June 2008, the FASB issued FASB Staff Position No. EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities” (FSP EITF 03-6-1). FSP EITF 03-6-1 was issued to clarify that unvested share-based payment awards with a right to receive non-forfeitable dividends are participating securities. FSP EITF 03-6-1 also provides guidance on how to allocate earnings to participating securities and compute basic EPS using the two-class method. FSP EITF 03-6-1 is effective for the fiscal years beginning after December 15, 2008. Early application is not permitted. This FSP was adopted by the Company on January 1, 2009. FSP EITF 03-6-1 requires that the Company restate prior period information to give retroactive effect to the adoption of FSP EITF 03-6-1. The impact of the adoption of FSP EITF 03-6-1 to net income per common share – basic totaled $0.00 and $0.00 for the quarter and six months ended June 30, 2008, respectively. The impact of the adoption of FSP EITF 03-6-1 to net income per common share – diluted totaled $0.00, and ($0.01) for the quarter and six months ended June 30, 2008, respectively.

In May 2008, the FASB issued FASB staff position APB 14-1, “Accounting for Convertible Debt Instruments That May be Settled in cash upon Conversion (Including Partial Cash Settlement)” (FSP APB 14-1). FSP APB 14-1 requires the issuer of certain convertible debt instruments that may be settled in cash (or other assets) upon conversion to separately account for the liability (debt) and equity (conversion option) components of the instruments in a manner that reflects the

issuer’s nonconvertible debt borrowing rate. FSP APB 14-1 requires the initial debt proceeds from the sale of a company’s convertible debt instrument to be allocated between the liability component and the equity component. The resulting debt discount will be amortized over the debt instrument’s expected life as additional interest expense. As a result, a lower net income will be reflected as interest expense will include both the current period’s amortization of the debt discount and the instrument’s coupon interest. The additional interest expense recorded will result in an increased level of capitalized interest in accordance with SFAS 34, “Capitalization of Interest Cost”. FSP APB 14-1 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. The Company adopted FSP APB 14-1 on January 1, 2009. FSP APB 14-1 requires that the Company restate prior period information to give retroactive effect to the adoption of FSP APB 14-1. The Company’s 4.125% convertible senior notes are within the scope of FSP APB 14-1. The impact of the adoption of FSP APB 14-1 is noted in the tables below; which also include the impact from the adoption of SFAS No. 160 and EITF 03-06-01 referenced above.

Following is a summary of the Consolidated Statements of Income as previously reported (in thousands, except per share data):

As Reported:


(Amounts in thousands, except per share data)	Three Months Ended June 30, 2008		Six Months Ended June 30, 2008
Interest Expense	$	21,686	$	43,147
Net income	$	15,949	$	30,154
Allocation to participating securities - basic		N/A		N/A
Allocation to participating securities - diluted		N/A		N/A

Shares outstanding - basic		51,020		51,005
Shares outstanding - diluted		51,850		51,775

Net income per common share - basic	$	0.31	$	0.59
Net income per common share - diluted	$	0.31	$	0.58

Following is a summary of the restated Consolidated Statements of Income reflecting the required retroactive adoption of APB 14-1 and FSP EITF 03-6-1 (in thousands, except per share data). SFAS 160 had no impact on Net income available to common shareholders.

As Restated:


(Amounts in thousands, except per share data)	Three Months Ended June 30, 2008			Six Months Ended June 30, 2008
Interest Expense	$	23,254		$	46,216
Net income	$	14,381		$	27,086
Allocation to participating securities - basic		(132	)		(247	)
Allocation to participating securities - diluted		(133	)		(250	)

Shares outstanding - basic		51,020			51,005
Shares outstanding - diluted		51,538			51,466

Net income per common share - basic	$	0.28		$	0.53
Net income per common share - diluted	$	0.28		$	0.52

In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations” (SFAS No. 141(R)). This statement requires the acquiring entity in a business combination to recognize the fair value of assets acquired and liabilities assumed in the transaction and recognize contingent consideration arrangements and pre-acquisition loss and gain contingencies at their acquisition-date fair value. The acquirer is required to capitalize in-process research and development assets acquired and expense, as incurred, acquisition related transaction costs. The statement requires the acquirer to disclose to investors and other users of the financial statements all of the information they need to evaluate and understand the nature and financial effect of the business combination. SFAS No. 141(R) is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. The adoption of this standard on January 1, 2009 did not have a material impact on the Company’s financial position and results of operations.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities - an amendment of SFAS No. 133” (SFAS No. 161). This statement requires disclosures of how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for and how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. SFAS No. 161 is effective for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The adoption of this standard on January 1, 2009 did not have a material impact on the Company’s financial statement disclosures.

NOTE I – FAIR VALUE MEASUREMENT

In April 2009, the FASB issued FASB Staff position No. FAS 107-1, extending the disclosure requirements of FASB Statement No. 107, “Disclosures About Fair Value of Financial Instruments (Statement 107)”, to interim financial statements of publically traded companies. FSP 107-1 is effective for interim reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after periods ending after March 15, 2009. FSP 107-1 does not require disclosures for the earlier periods presented for comparative proposes at initial adoption. The FSP requires comparative disclosures only for periods ending after the initial adoption.

The fair values of our financial instruments (including such items in the financial statement captions as cash, other assets, accounts payable and accrued expenses, and lines of credit) approximate their carrying or contract values based on their nature, terms and interest rates that approximate current market rates. The fair value of mortgage loans payable and unsecured senior notes is estimated using discounted cash flow analyses with an interest rate similar to that of current market borrowing arrangements. The estimated fair value of our mortgage loans and unsecured senior notes is approximately $1,309,000,000 at June 30, 2009.

The Company adopted the provisions of SFAS No. 157, Fair Value Measurements (SFAS No. 157), effective January 1, 2008. Under this standard, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability ( i.e. the “exit price”) in an orderly transaction between market participants at the measurement date.

Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or

market and the instruments’ complexity. Assets and liabilities recorded at fair value in the consolidated statement of financial condition are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels, defined by SFAS 157 and directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows:

Level 1 — Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. The types of assets and liabilities carried at Level 1 fair value generally are G-7 government and agency securities, equities listed in active markets, investments in publicly traded mutual funds with quoted market prices and listed derivatives.

Level 2 — Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. Fair valued assets that are generally included in this category are stock warrants for which there are market-based implied volatilities, unregistered common stock and thinly traded common stock.

Level 3 — Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. Generally, assets carried at fair value and included in this category include stock warrants for which market-based implied volatilities are not available.

Upon the adoption of SFAS 160 and in accordance with EITF D-98, redeemable non controlling interests that have a conversion feature are required to be marked to redemption value. The maximum redemption amount of the noncontrolling interests is contingent on the fair value of the Company’s common stock at the redemption date, and therefore the amount reported is calculated based on the fair value of the Company’s common stock as of the balance sheet date. Since the valuation is based on observable inputs such as quoted prices for similar instruments in active markets, redeemable noncontrolling interests are classified as Level 2.

NOTE J – SUBSEQUENT EVENTS

The Company has evaluated and disclosed subsequent events through August 7, 2009, the date of issuance of the financial statements.

Subsequent to the end of the quarter ended June 30, 2009, the Company sold one operating community, Arbor Pointe, a 240-unit property located in Sacramento, California, which was reported as held for sale at June 30, 2009. The sales price totaled approximately $16,000,000 resulting in a net gain on sale of approximately $7,200,000 to be recognized during the third quarter of 2009.

On July 8, 2009, the Company repurchased $5,000,000 of our convertible senior unsecured notes with a fixed coupon rate of 4.125% for approximately $4,500,000, resulting in a $380,000 net gain on extinguishment of debt to be recognized during the third quarter of 2009.

On July 30, 2009, the Company’s Board of Directors approved a reduction in the quarterly common dividend to $0.375 from $0.5625 per share for the third and fourth quarters of 2009. The quarterly common dividend payment of $0.375 is equivalent to $1.50 per common share on an annualized basis.

On August 3, 2009, the Company received $310,000,000 from the second advance of the Fannie Mae secured facility and used the proceeds to pay down floating rate debt. As of August 7, 2009, the current balance on the unsecured revolving credit facility is $170,000,000.

ITEM 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

In addition to historical information, we have made forward-looking statements in this Quarterly Report on Form 10-Q. These forward-looking statements pertain to, among other things, our capital resources, financial liquidity, 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 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.

Executive Summary

We are a self-administered equity real estate investment trust, or “REIT,” focused on the acquisition, development and management of multifamily apartment communities in eight metropolitan markets of the Western United States. At June 30, 2009, our portfolio had real estate assets with a net book value of approximately $2.9 billion that included 74 wholly or majority-owned apartment communities, aggregating 21,485 units; thirteen multifamily communities owned in joint ventures, comprised of 4,080 apartment units; and five wholly or majority-owned apartment communities in various stages of construction and development, totaling 1,526 units. We earn revenue and generate cash primarily by collecting monthly rent from our apartment residents.

We currently have two communities with a total of 566 units under construction. The total estimated investment is $176,100,000, with an estimated balance to complete totaling $51,200,000. Expected delivery dates for these units range from the fourth quarter of 2009 through the third quarter 2010. The development communities are located in Northern California and the Seattle, Washington metro area. At June 30, 2009, we owned three parcels of land for future development located in Northern and Southern California.

Our year-over-year operating results reflect increased property-level same-store performance, rental and ancillary income from acquisitions completed or stabilized during 2008, and properties in the lease-up phase of development. We define same-store properties as stabilized apartment communities owned by the company for at least five full quarters. Acquired communities and recently completed development properties are considered non-same-store communities.

Results of Operations

Comparison of the Three Months Ended June 30, 2009 and 2008

Rental and ancillary income

Total rental and ancillary revenues were $86,257,000 for the three months ended June 30, 2009, compared to $86,133,000 for the same period in 2008. We define our non same-store communities as communities acquired, developed and stabilized after March 31, 2008. During the 15 months subsequent to March 31, 2008, we completed the construction of 801 units. The increase in total rental and ancillary revenues was generated from non same-store communities. These non same-store communities increased revenue by $3,236,000 for the three months ended June 30, 2009, compared to the same period in 2008. The increase was offset by a decrease in rental and ancillary revenues of $3,112,000 or 3.8% on a same-store basis for the three months ended June 30, 2009, compared to the same period in 2008. Monthly market rents in the same-store portfolio for the second quarter of 2009 decreased 4.1% to $1,451 per unit from $1,513 per unit in the second quarter of 2008.

A summary of the components of revenues for the quarters ended June 30, 2009 and 2008 follows (dollar amounts in thousands):


	Three months ended June 30, 2009				Three months ended June 30, 2008
	Revenues		% of Total Revenues		Revenues		% of Total Revenues		% Change from 2008 to 2009
Rental income	$	82,889	96	%	$	82,606	96	%	0	%
Ancillary income		3,368	4	%		3,527	4	%	(5	)%

Total revenues	$	86,257	100	%	$	86,133	100	%	0	%

The total increase in revenues of $124,000 for the three months ended June 30, 2009, as compared with the three months ended June 30 2008, was generated from an increase in non same-store revenue offset by a decrease in same-store revenue as follows (dollar amounts in thousands):


	2009 Change			% Change from 2008 to 2009
Same-store communities	$	(3,112	)	(4	)%
Non same-store communities		3,236		90	%


Total increase in rental and ancillary revenues (excluding revenues from discontinued operations)	$	124		0	%

Real estate expenses

For the quarter ended June 30, 2009, real estate expenses totaled $27,533,000, as compared with $25,404,000 for the quarter ended June 30, 2008. The year-over-year increase in total real estate expenses was attributable to both same-store and non same-store communities. Same-store expenses increased $839,000, or 3.5%. Non same-store expenses increased $1,290,000, or 81.6% from the quarter ended June 30, 2008 which represents the increase in the year-over-year size of the portfolio from recently completed development properties.

A summary of the categories of real estate expenses for the three months ended June 30, 2009 and 2008 follows (dollar amounts in thousands):


	Three months ended June 30, 2009				Three months ended June 30, 2008
	Expense		% of Total Revenues		Expense		% of Total Revenues		% Change from 2008 to 2009
Same-store	$	24,663			$	23,824			4	%
Non same-store		2,870				1,580			82	%

Total real estate Expenses	$	27,533	32	%	$	25,404	29	%	8	%

Interest expense

Interest expense was $19,421,000 (net of $3,760,000 of interest capitalized to the cost of apartment communities under development and construction) for the quarter ended June 30, 2009, a decrease of $3,833,000, or 16.5%, from the same period in 2008. Interest expense was $23,254,000 for the quarter ended June 30, 2008 (net of $5,486,000 of interest capitalized to the cost of apartment communities under development and construction). The year-over-year decrease is primarily due to lower average cost of borrowing on our floating rate debt.

General and administrative expenses

General and administrative expenses totaled $4,218,000 and $5,378,000 for the three months ended June 30, 2009 and 2008, respectively. The $1,160,000, or 21.6%, decrease in the current period is primarily due to reduction in compensation related costs and legal expenses.

Other income

Other income for the quarter ended June 30, 2009 totaled $1,196,000 and is comprised of $636,000 of insurance settlement proceeds and approximately $424,000 of management fee income and approximately $94,000 of interest income. Other income for the three months ended June 30, 2008 totaled $637,000 and is comprised of, approximately $435,000 of management fee income, approximately $112,000 of interest income and $74,000 in insurance settlement proceeds.

Net gain from extinguishment of debt

Net gain on extinguishment of debt totaled $1,958,000, and zero for the quarters ended June 30, 2009 and 2008. During the quarter ended June 30, 2009 we repurchased $40,100,000 of our convertible senior unsecured notes with a fixed coupon rate of 4.125% for approximately $35,800,000 for a net gain on extinguishment of approximately $3,358,000. The Company retired $472,265,000 of unsecured public debt due in the years 2009 to 2013 for approximately $470,465,000 for a net loss from extinguishment of approximately $1,400,000 due to the write off of unamortized discounts and fees related to the initial transaction.

Discontinued operations

SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (SFAS No. 144) requires the results of operations for properties sold during the period or designated as held for sale at the end of the period and deemed a component of an entity to be classified as discontinued operations. The property-specific components of net earnings that are classified as discontinued operations include all property-related revenues and operating expenses, depreciation expense recognized prior to the classification as held for sale, and property-specific interest expense to the extent there is secured debt on the property. In addition, the net gain or loss on the eventual disposal of properties held for sale is reported as discontinued operations.

During the three months ended June 30, 2009, we reclassified three operating communities located in: Seattle (2) and the Inland Empire (1), totaling 891 units, from Real estate held for sale under the provisions of SFAS No. 144 “Accounting for the Impairment of Disposal of Long-Lived Assets” (SFAS No. 144) to Investments in rental properties. The asset values currently reflect the carrying amounts on the dates they were classified as held for sale, adjusted for depreciation expense that would have been recognized had the communities been continuously been classified as Investments in rental properties.

At June 30, 2009, the we had one operating apartment community, Arbor Pointe, a 240-unit property located in Sacramento, classified as held for sale under the provisions of SFAS No. 144 “Accounting for the Impairment of Disposal of Long-Lived Assets” (SFAS No. 144). The operating property was classified as held for sale in March 2009, and no depreciation has been recorded on the operating community since March 2009. Subsequent to the end of the quarter ended June 30, 2009, we sold the operating community. The sales price totaled approximately $16,000,000 resulting in a net gain on sale of approximately $7,200,000 to be recognized during the third quarter of 2009.

For the quarter ended June 30, 2009, the net gain on sale and combined results of operations generated by the one operating apartment community held for sale and the property sold during June 2009 were included in discontinued operations on the consolidated statements of income and totaled $15,269,000. For the quarter ended June 30, 2008, the combined results of operations generated by the one operating apartment community held for sale, the one property sold during June, 2009, and the six properties sold during 2008 were included in the discontinued operations line on the consolidated statements of income and totaled $3,968,000.

Dividends attributable to preferred stock

Dividends attributable to preferred stock for the second quarters of 2009 and 2008 represent the portion of dividends on our 6.75% Series C and 6.75% Series D Cumulative Redeemable Preferred Stock. All our current outstanding series of preferred stock have a $25.00 per share liquidation share preference.

Net Income available to common shareholders

As a result of the various factors mentioned above, net income available to common shareholders for the three months ended June 30, 2009 was $28,222,000, or $0.54 per diluted share, as compared with $14,381,000 or $0.28 per diluted share, for the same period in 2008.

Comparison of the Six Months Ended June 30, 2009 and 2008

Rental and ancillary income

Total rental and ancillary revenues were $172,638,000 for the six months ended June 30, 2009, compared to $170,412,000 for the same period in 2008. The increase in total rental and ancillary revenues was generated non same-store communities. We define our non-same-store communities as communities acquired, developed and stabilized after December 31, 2007. These non same-store communities increased revenue by $5,847,000 for the six months ended June 30, 2009, compared to the same period in 2008. During the 18 months subsequent to December 31, 2007, we completed the construction of 1,673 units. During the six months ended June 30, 2009, on a same store basis, rental and ancillary revenues decreased $3,621,000, or 2.2%, primarily due to decreases in market rents. Monthly market rents in the same-store portfolio for the six months ended June 30, 2009 decreased 2.9% to $1,461 per unit from $1,504 during the same period of 2008.

A summary of the components of revenues for the six months ended June 30, 2009 and 2008 follows (dollar amounts in thousands):


	Six months ended June 30, 2009				Six months ended June 30, 2008
	Revenues		% of Total Revenues		Revenues		% of Total Revenues		% Increase from 2008 to 2009
Rental income	$	165,939	96	%	$	163,604	96	%	1	%
Ancillary income		6,699	4	%		6,808	4	%	(2	)%

Total revenues	$	172,638	100	%	$	170,412	100	%	1	%

The total increase in revenues of $2,226,000 for the six months ended June 30, 2009 as compared with the six months ended June 30, 2008 generated from same-store and non same-store communities was as follows (dollar amounts in thousands):


	2009 Change			% Increase from 2008 to 2009
Same-store communities	$	(3,621	)	(2	)%
Non Same-store communities		5,847		89	%

Total increase in rental and ancillary revenues (excluding revenues from discontinued operations)	$	2,226		1	%

Real estate expenses

For the six months ended June 30, 2009, real estate expenses totaled $53,910,000 as compared with $50,706,000 for the six months ended June 30, 2008. The year-over-year increase in total real estate expenses was attributable to both same-store and non same-store communities. Same-store expenses increased $1,022,000, or 2.1%, Non same-store expenses increased $2,182,000 from the six months ended June 30, 2008 and represents the increase in year over year size of the portfolio.

A summary of the categories of real estate expenses for the six months ended June, 2009 and 2008 follows (dollar amounts in thousands):


	Six months ended June 30, 2009				Six months ended June 30, 2008
	Expense		% of Total Revenues		Expense		% of Total Revenues		% Change from 2008 to 2009
Same-store	$	48,800			$	47,778			2	%
Non same-store		5,110				2,928			75	%


Total real estate Expenses	$	53,910	31	%	$	50,706	30	%	6	%

Interest expense

Interest expense was $40,443,000 (net of interest capitalized to the cost of apartment communities under development of $9,415,000) for the six months ended June 30, 2009, a decrease of $5,773,000, or 12%, from the comparable period in 2008. Interest expense was $46,216,000 for the same period in 2008 (net of $11,549,000 of interest capitalized to the cost of apartment communities under construction). The year-over-year decrease is primarily due to lower average cost of borrowing on our floating rate debt.

General and administrative expenses

General and administrative expenses totaled $8,544,000 and $10,033,000 for the six months ended June 30, 2009 and 2008, respectively. The $1,489,000 or 14.8% decrease in the current period is primarily due to reduction in compensation related costs and legal expenses.

Other income

Other income for the six months ended June 30, 2009 totaled $1,823,000 and is comprised of, approximately $851,000 of management fee income, $636,000 of insurance settlement proceeds, approximately $187,000 of interest income, and $120,000 related to the sale of an excess land parcel. Other income for the six months ended June 30, 2008 totaled $1,231,000 and is comprised of approximately $856,000 of management fee income, approximately $260,000 of interest income and $74,000 of insurance settlement proceeds.

Net gain from extinguishment of debt

Net gain on extinguishment of debt totaled $1,958,000, and zero for the six months ended June 30, 2009 and 2008. During the quarter ended June 30, 2009 we repurchased $40,100,000 of our convertible senior unsecured notes with a fixed coupon rate of 4.125% for approximately $35,800,000 for a net gain on extinguishment of approximately $3,358,000. The Company retired $472,265,000 of unsecured public debt due in the years 2009 to 2013 for approximately $470,465,000 for a net loss from extinguishment of approximately $1,400,000 due to the write off of unamortized discounts and fees related to the initial transaction.

Discontinued operations

SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (SFAS 144), requires the results of operations for properties sold during the period or designated as held for sale at the end of the period and deemed a component of an entity to be classified as discontinued operations. The property-specific components of net earnings that are classified as discontinued operations include all property-related revenues and operating expenses, depreciation expense recognized prior to the classification as held for sale, and property-specific interest expense to the extent there is secured debt on the property. In addition, the net gain or loss on the eventual disposal of properties held for sale is reported as discontinued operations.

During the six months ended June 30, 2009, we reclassified three operating communities located in: Seattle (2) and the Inland Empire (1), totaling 891 units, from Real estate held for sale under the provisions of SFAS No. 144 “Accounting for the Impairment of Disposal of Long-Lived Assets” (SFAS No. 144) to Investments in rental properties. The asset values currently reflect the carrying amounts on the dates they were classified as held for sale, adjusted for depreciation expense that would have been recognized had the communities been continuously been classified as Investments in rental properties.

In January 2009, we sold an excess parcel of land in Santa Clara, California, classified as held for sale at December 31, 2008, for gross sales proceeds totaling $17,100,000.

For the six months ended June 30, 2009, the net gain on sales and combined results of operations generated by the one operating apartment community held for sale and the property sold during the quarter ended June 30, 2009, were included in discontinued operations on the consolidated statements of income and totaled $16,571,000. For the six months ended June 30, 2008, the net gain on sales and combined results of operations generated by the one operating apartment community held for sale, the one property sold during June, 2009, and the six properties sold during 2008 were included in the discontinued operations line on the consolidated statements of income and totaled $7,288,000.

Dividends attributable to preferred stock

Dividends attributable to preferred stock for the first six months of 2009 and 2008 represent the dividends on our 6.75% Series C and 6.75% Series D Cumulative Redeemable Preferred Stock. All of our currently outstanding series of preferred stock have a $25.00 per share liquidation preference.

Net Income available to common shareholders

As a result of the various factors mentioned above, net income available to common shareholders for the six months ended June 30, 2009 was $41,215,000, or $0.79 per diluted share, as compared with $27,086,000 or $0.52 per diluted share, for the comparable period in 2008.

Liquidity and Capital Resources

During the past two years, a confluence of many factors have contributed to diminish expectations for the U.S. economy and increase market volatility for publicly traded securities, including the common shares of publicly owned companies. These factors include the availability and cost of credit, limited liquidity in the U.S. home mortgage market, declining real estate fundamentals and market valuations, declining business and consumer confidence, and increased unemployment. These conditions have combined to create an unprecedented level of market volatility, which has influenced the price of our shares.

As a result of these market conditions, the cost and availability of credit has been and may continue to be adversely affected by illiquid credit markets and wider credit spreads. Our access to funds under our credit facility is dependent on the ability of the lenders that are parties to the facility to meet their funding commitments to us. In addition, we may not be able to obtain other financing on terms satisfactory to us or at all.

In the event that we do not have sufficient cash available to us from our operations to continue operating our business as usual, we may need to find alternative ways to increase our liquidity. Such alternatives may include, without limitation: (a) divesting ourselves of properties at less than optimal terms; (b) issuing and selling our debt and equity in public or private transactions under less than optimal conditions; (c) entering into leases with new tenants at lower rental rates or less than optimal terms; (d) entering into lease renewals with our existing tenants without an increase in rental rates at turnover; (e) reducing the level of dividends to common shareholders to the minimum level necessary to maintain our corporate REIT status under the Internal Revenue Code; or (f) paying a portion of our dividends in stock rather than cash. Taking such measures to increase liquidity may have a materially adverse effect on us and our ability to make distributions to our shareholders and pay amounts due on our debt.

Depending upon the availability and cost of external capital, we anticipate making additional investments in multifamily apartment communities. These investments are expected to be funded through a variety of sources. These sources may include internally generated cash, temporary borrowings under our revolving unsecured line of credit, proceeds from asset sales, public and private offerings of debt and equity securities, and in some cases the assumption of secured borrowings. To the extent that these additional investments are initially financed with temporary borrowings under our revolving unsecured line of credit, we anticipate that permanent financing will be provided through a combination of public and private offerings of debt and equity securities, proceeds from asset sales and secured debt. However, permanent financing may not be available on favorable terms, or at all. We believe our liquidity and various sources of available capital are sufficient to fund operations, meet debt service and dividend requirements, and finance future investments. For the six months ended June 30, 2009, cash flows generated from operating activities were lower than distributions to common shareholders, preferred

shareholders and noncontrolling interest members by approximately $6,000,000. Due to the timing associated with operating cash flows, there may be certain periods where cash flows generated by operating activities are less than distributions. We believe our unsecured credit facility provides adequate liquidity to address temporary cash shortfalls. We expect that annual cash flows from operations will exceed annual distributions to equity holders, which is consistent with prior years. Annual cash flows from operating activities exceeded annual distributions to common shareholders, preferred shareholders and noncontrolling interest members by approximately $37,000,000 and $30,000,000 for the years ended December 31, 2008 and 2007, respectively.

We had a total of $948,906,000 carrying amount in unsecured senior notes at June 30, 2009, consisting of the following:


Maturity	Unsecured Senior Note Balance		Interest Rate
September 2009		88,593,000	5.750	%
May 2010		30,579,000	4.875	%
January 2011		48,545,000	7.450	%
February 2012⁽¹⁾		391,171,000	6.005	%
February 2013		40,018,000	7.125	%
March 2014		50,000,000	4.700	%
March 2017		300,000,000	5.500	%

Total / Weighted Average Interest Rate	$	948,906,000	5.838	%

(1)

The notes are putable by holders on February 21, 2012, August 15, 2013, August 15, 2016, and August 15, 2021. This principal amount is the $409,511,000 of our 4.125% convertible unsecured debt with a final contractual maturity of August 15, 2026. The notes are callable by the Company on or after February 21, 2012. The interest rate and note balance have been adjusted in accordance with APB 14-1.

In addition, at June 30, 2009, we had mortgage indebtedness with a total principal amount outstanding of $443,390,000, at an average interest rate of 5.67%, and remaining terms ranging from one year to ten years.

As of June 30, 2009, we had total outstanding debt balances of approximately $1,889,296,000 and total outstanding consolidated shareholders’ equity and redeemable noncontrolling interest of approximately $1,020,457,000, representing a debt to total book capitalization ratio of 65%.

On July 15, 2009, we sold one operating community, Arbor Pointe, a 240-unit property located in Sacramento, California, which was reported as held for sale at June 30, 2009. The sales price totaled approximately $16,000,000 resulting in a net gain on sale of approximately $7,200,000 to be recognized during the third quarter of 2009.

On July 30, 2009, our Board of Directors approved a reduction in the quarterly common dividend to $0.375 from $0.5625 per share for the third and fourth quarters of 2009. The quarterly common dividend payment of $0.375 is equivalent to $1.50 per common share on an annualized basis.

On May 14, 2009, we entered into an equity distribution agreement under which we may offer and sell shares of our common stock having an aggregate offering price of up to $125,000,000 over time through our sales agent. During the three months ended June 30, 2009, 1,517,808 shares were issued for approximately $37,600,000 with an average share price of $24.80 under the Company’s distribution plan.

During the three months ended June 30, 2009, through as series of open market transactions, we repurchased $40,089,000 of our 4.125% convertible senior unsecured notes with an aggregate price of 89% of par, or approximately $35,809,000.

On April 15, 2009, we closed a fixed price cash tender offer for any and all of our outstanding 5.75% Senior Notes due 2009 and any and all of our outstanding 4.875% Senior Notes due 2010. As a result, $61,407,000 and $119,421,000 in aggregate principal amount of the 5.75% Senior Notes due 2009 and 4.875% Senior Notes due 2010, respectively, were validly tendered and we accepted, purchased and subsequently cancelled the notes. After giving effect to the purchase of the tendered Notes, an aggregate principal amount of $88,593,000 and $30,579,000 of the 5.75% Senior Notes due 2009 and 4.875% Senior Notes due 2010, respectively, remain outstanding.

On April 7, 2009, we closed a $620,000,000 secured credit facility with Fannie Mae. The facility consists of two $310,000,000 tranches; the first was drawn in full upon closing; the second was drawn in full on August 3, 2009. The first tranche has a fixed rate terms of 10 years and the second will have an 11 year maturity. Together, the effective composite annual cost of debt is 5.6%. Fifteen multifamily properties totaling 4,651 units with a net carrying value of $607,500,000 secured the credit facility at the time of closing.

On April 1, 2009, we closed a fixed price cash tender offer for any and all of our outstanding 7.45% Senior Notes due 2011 and any and all of our outstanding 7.125% Senior Notes due 2013. As a result, $201,455,000 and $89,982,000 in aggregate principal amount of the 7.45% Senior Notes due 2011 and 7.125% Senior Notes due 2013, respectively, were validly tendered and we accepted, purchased and subsequently cancelled the notes. After giving effect to the purchase of the tendered Notes, an aggregate principal amount of $48,545,000 and $40,018,000 of the 7.45% Senior Notes due 2011 and 7.125% Senior Notes due 2013, respectively, remain outstanding.

We may from time to time seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity securities in open market purchases or privately negotiated transactions. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Our indebtedness contains financial covenants as to minimum net worth, interest coverage ratios, maximum secured debt, total debt to capital, and cash on hand among others. We were in compliance with all such financial covenants during the three months ended June 30, 2009 and 2008.

We anticipate that we will continue to require outside sources of financing to meet our long-term liquidity needs beyond 2009, such as scheduled debt repayments, construction funding and property acquisitions. At June 30, 2009, we had an estimated cost of approximately $51,200,000 to complete existing construction in progress, with funding estimated from 2009 through 2010. Scheduled debt repayments through December 31, 2009 as of the date of this filing totaled approximately $90,000,000.

During the third quarter of 2007, we filed a new shelf registration statement with the Securities and Exchange Commission under which we may issue securities, including debt securities, common stock and preferred stock. Depending upon market conditions, we may issue securities under this or under future registration statements.

On April 26, 2007, our Board of Directors authorized us to purchase an aggregate of up to $100,000,000 in shares of our common stock. As of August 7, 2009, we have not purchased any shares under this authorization.

We continue to consider other sources of possible funding, including further joint ventures and additional secured construction and term debt. We own unencumbered real estate assets that could be sold, contributed to joint ventures or used as collateral for financing purposes (subject to certain lender restrictions). We also own encumbered assets with significant equity that could be further encumbered should other sources of capital not be available (subject to certain lender restrictions).

Construction in progress and land under development

The following table provides data on our multifamily properties that are currently under various stages of development and construction. Completion of the development properties is subject to a number of risks and uncertainties, including construction delays and cost overruns. We cannot provide assurance that these properties will be completed, or that they will be completed by the estimated dates, or for the estimated amounts, or will contain the number of proposed units shown in the table below. In addition to the properties below, we have predevelopment and deposits on land under contract for potential projects totaling approximately $27,000,000 recorded in Other assets on the Consolidated Balance Sheet.

(Dollar amounts in millions)


Property Name	Location	Number of Units	Costs Incurred As of June 30, 2009¹		Estimated Total Cost		Estimated Cost to Complete		Estimated Completion Date²
Construction in Progress
Belcarra Apartments	Bellevue, WA	296	$	70.8	$	86.4	$	15.6	1Q/2010
Villa Granada	Santa Clara, CA	270		54.1		89.7		35.6	3Q/2010

Total Construction in Progress		566	$	124.9	$	176.1	$	51.2


Property Name	Location	Number of Units	Costs Incurred As of June 30, 2009		Estimated Total Cost ⁴		Estimated Construction Start
Land Under Development³
Wilshire La Brea	Los Angeles, CA	470	$	91.5		TBR		TBD
Pleasanton	Pleasanton, CA	240		13.9		TBR		TBD
Stadium Park II	Anaheim, CA	250		23.4		TBR		TBD

Total Land Under Development		960	$	128.8	$	455.0

(1)	Reflects all recorded costs incurred as of June 30, 2009, recorded on our Consolidated Balance Sheets as “Direct investments in real estate” - Construction in progress.

(2)

“Completion” is defined as our estimate of when an entire project will have a final certificate of occupancy issued and be ready for occupancy. Completion dates have been updated to reflect our current estimates of receipt of final certificates of occupancy, which are dependent on several factors, including construction delays and the inability to obtain necessary public approvals.

(3)

Land Under Development represents projects in various stages of pre-development, development and initial construction for which construction or supply contracts have not yet been finalized. As these contracts are finalized, projects are transferred to Construction in Progress on our Consolidated Balance Sheet.

(4)	Reflects the aggregate cost estimates at year-end 2008, specific property cost estimates to be reported (TBR) once entitlement approvals are received and the Company is prepared to begin construction.

Dividends Paid to Common and Preferred Shareholders and Distributions to Noncontrolling Interest Members

A cash dividend has been paid to common shareholders each quarter since our inception in 1970. Our dividend per share amounts for each of the quarters ended June 30, 2009 and 2008 was $0.5625 per share. Total dividends paid to common shareholders for the six months ended June 30, 2009 and 2008 were $59,197,000 and $57,901,000, respectively. In addition, we paid $5,906,000 in aggregate on our 6.75% Series C and 6.75% Series D Cumulative Redeemable Preferred Stock during the six months ended June 30, 2009 and 2008, respectively.

Total distributions to redeemable noncontrolling interests were $879,000 and $949,000 for the six months ended June 30, 2009 and 2008. Total distributions to other noncontrolling interests of our consolidated subsidiaries were $212,000 for the six months ended June 30, 2009 and 2008, respectively.

ITEM 3 – Quantitative and Qualitative Disclosures About Market Risk.

Information concerning market risk is incorporated herein by reference to Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2008. There has been no material change in the quantitative and qualitative disclosure about market risk since December 31, 2008.

ITEM 4 – Controls and Procedures.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our Chief Executive Officer and Chief Financial Officer have concluded that there are reasonable assurances that our controls and procedures will achieve the desired control objectives. Also, we have investments in certain unconsolidated entities. As we do not control these entities, our disclosure controls and procedures with respect to such entities are necessarily substantially more limited than those we maintain with respect to our consolidated subsidiaries.

As of June 30, 2009, the end of the quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level.

There have been no changes in our internal control over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. Legal Proceedings.

As of June 30, 2009, there were no pending legal proceedings to which we are a party, or of which any of our properties is the subject, which management anticipates would have a material adverse effect upon our consolidated financial condition and results of operations.

ITEM 1A. Risk Factors.

There have been no material changes to the risk factors previously disclosed under Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2008.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.

During the six months ended June 30, 2009, there were no limited partnership units in BRE Property Investors LLC exchanged for shares of BRE common stock.

On April 26, 2007, our Board of Directors authorized an increase in the aggregate value of shares of our common stock that we may repurchase from $60,000,000 to up to $100,000,000. The timing of repurchase activity is dependent upon the market price of our shares of common stock and other market conditions and factors. No shares were repurchased during the three months ended June 30, 2009.

Issuer Purchases of Equity Securities


Period	(a) Total Number of Shares (or Units) Purchased¹	(b) Average Price Paid per Share (or Unit)²		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Traded Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs

April 1, 2009 though April 30, 2009	—		—	—	—
May 1, 2009 though May 31, 2009	—		—	—	—
June 1, 2009 though June 30, 2009	13,875	$	24.79	—	—

Total	13,875	$	24.79	—	—

¹	During the three months ended June 30, 2009, we withheld an aggregate of 13,875 shares of restricted stock to pay taxes due upon vesting of such restricted stock.

²	Average price paid per share owned and forfeited by employees to satisfy tax withholding requirements in the vesting of restricted shares is calculated based on the share price on the day of vesting.

ITEM 3. Defaults Upon Senior Securities.

None

ITEM 4. At the Annual Meeting of Shareholders held on May 21, 2009, the Shareholders approved the two proposals noted below by the following votes:


	FOR					AGAINST	WITHHELD/ ABSTAINED
	No. of Shares	% of shares Voted for this item		% of outstanding		No. of Shares	No. of Shares
Proposal No. I Election of Directors for a one-year term:
Paula F. Downey	44,365,465	99.14	%	85.17	%		386,731
Edward F Lange, Jr.	43,518,016	97.24	%	83.55	%		1,234,180
Irving F. Lyons, III	44,404,907	99.22	%	85.25	%		347,289
Edward E. Mace	44,199,959	98.77	%	84.86	%		552,237
Christopher J. McGurk	44,390,468	99.19	%	85.22	%		361,728
Matthew T. Medeiros	44,350,229	99.10	%	85.14	%		401,967
Constance B. Moore	44,332,068	99.06	%	85.11	%		420,128
Jeanne R. Myerson	44,387,860	99.19	%	85.22	%		364,336
Tomas E. Robinson	44,397,540	99.21	%	85.24	%		354,656
Dennis E. Singleton	44,396,272	99.20	%	85.23	%		355,924

Proposal No. II Ratification of Ernst & Young LLP as auditors for the year ended December 31, 2009:
	44,461,015	99.35	%	85.36	%	205,165	86,016

ITEM 5. Other Information.

None

ITEM 6. Exhibits.

10.1

Master Credit Facility Agreement by and among BRE-FMCA, LLC and BRE-FMAZ, LLC, as borrowers, BRE Properties, Inc., as guarantor, and Deutsche Bank Berkshire Mortgage, Inc., as lender, entered into as of April 7, 2009 (previously filed on April 7, 2009 as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K and incorporated by reference herein).

10.2

$310,000,000 Fixed Facility Note (Standard Maturity), dated as of April 7, 2009 (previously filed on April 7, 2009 as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K and incorporated by reference herein).

10.3

Equity Distribution Agreement, dated as of May 14, 2009, between the Registrant and Goldman Sachs & Co. (previously filed on May 14, 2009 as Exhibit 1.1 to the Registrants Current Report on the Form 8-K and incorporated by reference herein).

Statement Re: Computation of Per Share Earnings.

Statement of Computation of Ratios of Earnings to Fixed Charges and Earnings to Combined Fixed Charges and Preferred Stock Dividends.

31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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 thereunto duly authorized.


		BRE PROPERTIES, INC. (Registrant)

Date: August 7, 2009		/s/ Edward F. Lange, Jr.
		Edward F. Lange, Jr.
		Executive Vice President,
		Chief Operating Officer and Chief Financial Officer (principal financial and accounting officer)

Exhibit Index

Exhibits.


10.1		Master Credit Facility Agreement by and among BRE-FMCA, LLC and BRE-FMAZ, LLC, as borrowers, BRE Properties, Inc., as guarantor, and Deutsche Bank Berkshire Mortgage, Inc., as lender, entered into as of April 7, 2009 (previously filed on April 7, 2009 as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K and incorporated by reference herein).

10.2		$310,000,000 Fixed Facility Note (Standard Maturity), dated as of April 7, 2009 (previously filed on April 7, 2009 as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K and incorporated by reference herein).

10.3		Equity Distribution Agreement, dated as of May 14, 2009, between the Registrant and Goldman Sachs & Co. (previously filed on May 14, 2009 as Exhibit 1.1 to the Registrants Current Report on the Form 8-K and incorporated by reference herein).

10.4		Direct Stock Purchase and Dividend Reinvestment Plan (previously filed on November 28, 2008 pursuant to Rule 424(b)(5) under the Securities Act of 1933, as amended, as Prospectus Supplement to the Registrant’s Prospectus dated November 8, 2007 (File No. 333-147238) and incorporated by reference herein).

11		Statement Re: Computation of Per Share Earnings.

12		Statement of Computation of Ratios of Earnings to Fixed Charges and Earnings to Combined Fixed Charges and Preferred Stock Dividends.

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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