BRE Properties Inc.
), a real estate investment trust (REIT), reported first quarter
2012 fund from operations (FFO) of $43.6 million or 57 cents per
share compared with $34.8 million or 53 cents in the year-earlier
quarter. Fund from operations, a widely used metric to gauge the
performance of REITs, is obtained after adding depreciation and
amortization and other non-cash expenses to net income. FFO in the
reported quarter was in line with the Zacks Consensus Estimate.
The improved quarterly performance is due to increases in
same-store property-level operating results, incremental NOI from
newly acquired and completed communities and a reduction in
interest expense, which was offset by a higher level of outstanding
Total revenue during the quarter was $96.9 million versus $88.8
million in the year-ago quarter. Adjusted earnings before interest,
tax, depreciation, and amortization (EBITDA) were $61.4 million for
the reported quarter compared with $57.2 million in the
Overall same-store revenues and net operating income (NOI)
increased 5.8% and 6.7%, respectively, driven by higher rental
rates per unit during the quarter (up 5.4%) and a 40 basis points
increase in financial occupancy. Average physical occupancy in the
same-store portfolio was 95.3% in first quarter 2012.
During the reported quarter, BRE had four communities under
construction, totaling 1,260 homes, with an estimated investment of
$554 million. Additionally, BRE owns three land parcels
representing 1,014 homes for future development, with an estimated
investment of $424 million upon completion.
In accordance with its 'at-the-market' equity offering, BRE
issued 815,000 common shares at an average price of $49.09, raising
total gross proceeds of $40.0 million. During the quarter, the
company entered into a new $750 million unsecured line of credit,
replacing its previous $750 million unsecured line of credit
scheduled to mature in April 2015. The funds from the
line of credit will be used for acquisition and development
During the quarter, the company redeemed the remaining $35.0
million of 4.125% convertible senior notes due 2026 and also repaid
a secured mortgage loan totaling $65.5 million.
As of March 31, 2012, balance on the revolving credit facility
stood at $222.0 million and cash stood at $7.3 million. For second
quarter 2012, BRE expects FFO in the range of 56 cents - 58 cents
per share and maintained its annual FFO guidance in the range of
$2.30 -$2.40 per share.
The Company also maintained its same-store revenue guidance in
the range of 5.00% to 6.75%, same-store expenses guidance in a
range of 4.00% to 4.50% and same-store NOI guidance in the range of
5.25% to 8.00% for FY12.
BRE currently retains a Zacks #3 Rank, which translates
into a short-term Hold rating. We are also maintaining our
long-term Neutral recommendation on the stock. One of its
Equity Residential (
also holds a Zacks #3 Rank
BRE PROPERTIES (BRE): Free Stock Analysis
EQUITY RESIDENT (EQR): Free Stock Analysis
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