Post Properties, Inc. (PPS)

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Post Properties Inc. (PPS)

Q1 2010 Earnings Call

May 4, 2010 10:00 am ET

Executives

Dave Stockert - President and CEO

Jamie Teabo - EVP Property Management

Chris Papa - CFO

Analysts

Eric Wolf - Citigroup

Michelle Coff - Bank of America-Merrill Lynch

Austin Wurschmidt- KeyBanc

Presentation

Operator

Good day everyone and welcome to the post properties first quarter 2010 earnings conference call. As a reminder this call is being recorded. (Operator Instructions).

At this time, I will turn the call over to Post Properties' President and Chief Executive Officer, Mr. Dave Stockert, for opening remarks and introduction. Please go ahead.

Dave Stockert

Thank you, very much and good morning. This is Dave Stockert. Welcome to post property's first quarter conference call. With me are Chris Papa, Chief Financial Officer and Jamie Teabo, Executive Vice President, at Property Management.

Before we begin the business of this call, I'll reference the Safe Harbor statement. Statements contained in this conference call regarding expected operating results and other events are forward-looking statements that involve risks and uncertainties.

Actual future events or results may differ materially from these statements. Such forward-looking statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 and are made based on our current expectations, assumptions and beliefs as well as information available to us at this time.

A variety of factors could cause actual results to differ materially from those anticipated, including those discussed in the risk factor section of our Annual Report on Form 10-K, dated December 31st, 2009. Post Properties undertakes no obligation to update any information discussed on this conference call.

During this call, we will discuss certain non-GAAP financial measures. Reconciliations to comparable GAAP financial measures can be found in our earnings release and our supplemental financial data.

I'll now begin the business of this call.

We're very pleased with our financial and operating results for the first quarter. Funds from operations of $0.31 a share, we are ahead of our plan, as were same store results. Although, we're not providing new detailed guidance at this time, we do currently believe we're on pace to produce results within the upper end of our existing guidance for FFO and for same store revenues and NOI.

Revenues for the same store portfolio were nearly flat on a sequential basis in the first quarter, primarily because we've been able to raise occupancy on generally higher demand for apartments. In the month of April, the overall rent roll also turned modestly positive for the first time since the downturn began. So, barring something unforeseen, we believe fundamental [spend to drop] in the fourth quarter of 2009 and should generally improve over the course of the year.

Increasing the cash flow from our stabilized portfolio, and our properties and lease-up is the most important near-term driver of value and we're very focused on doing so. Our on-site staffs are doing a great job in that regard. We've added some information to our supplemental financial data to ad analysts and investors and understanding our operations. You can find new detailed same store revenue and expense line item information on pages seven and nine of the supplement and a new margin analysis on page 25.

We have not yet issued any shares under our after market equity program, although, we expect to use it to grow and strengthen the capital base overtime, we are mindful of the share price cost of capital and use of proceeds. To date, we've been satisfied for let the stock reflect increasingly favorable supply and demand conditions for multi-family along with improving asset prices.

As to external investment, we believe that our most attractive value creating opportunity is the development of the second phase of Post Carlyle Square in Alexandria, Virginia and we're working toward a start of that project in the second half of the year.

We're also focused on delivering the four seasons condominium project in Austin with closing scheduled to begin shortly and are negotiating resolution to the construction loan on the Ritz-Carlton Residences in Atlanta that would let us begin signing contracts and closing units of that project.

We still expect to record an impairment in the second quarter, about the $40 million related to our condominium projects. We will have more detailed analysis of those projects in our 10-Q filing this Monday.

Finally, we were delighted with the recent Circuit Court ruling regarding land Pentagon Row, the value and cash flow of that asset are improved by owning the fee interest in the land particularly at an attractive an attractive price. As we expect to rest of this year, we continue to see immediate supply and improving demand. We expect to revisit our FFO and same store guidance with our second quarter earnings release, once we have more information on the actual recorded impairments of our condominium projects and a clearer picture of the spring and summer leasing season. Until then, we'll enjoy what increasingly feels like a breeze at our backs.

That concludes our prepared remarks. Operator, will you open up the phones to Q&A.

Question-and-Answer Session

Operator

(Operator Instructions). And our first question comes from Eric Wolf with Citigroup.

Eric Wolf - Citigroup

Michael is on the line with me as well. David, you mentioned that operating results exceeded your expectations. Could you just share what specifically be your expectations was it just the occupancy or was it high renewal rates and new lease rates, lower operating expenses or just a combination of everything?

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