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Colonial Properties Trust Inc. (CLP)

Q4 2012 Earnings Call

January 24, 2013 14:00 pm ET

Executives

Jerry A. Brewer – Executive VP, Finance

Bradley P. Sandidge – Interim Chief Financial Officer and Chief Accounting Officer

Thomas H. Lowder – Chairman, Chief Executive Officer

Paul F. Earle – Chief Operating Officer

Analysts

Eric Wolfe – Citigroup

Jana Galan – Bank of America Merrill Lynch

Derek Bower – UBS

Andrew Schaffer – Sandler O'Neill

Jeff Donnelly – Wells Fargo Securities

Tom Truxillo – Bank of America Merrill Lynch

Presentation

Operator

Ladies and gentlemen thank you for standing by. Welcome to the Colonial Properties Trust Fourth Quarter 2012 Conference Call. (Operator Instructions) As a reminder this conference is being recorded Thursday, January 24, 2013.

I would now like to turn the conference over to Jerry Brewer, Executive Vice President of Finance. Please go ahead sir.

Jerry A. Brewer

Thank you, Nicky, and welcome to everyone joining us today. We released our earnings this morning via Business Wire. A copy of this earnings release maybe found on our website.

Let me remind you that much of the information we discuss on this call, including answers we give in response to your questions, may include forward-looking statements regarding our beliefs and current expectations with respect to various matters. These estimates are based on a number of assumptions, any of which unrealized could adversely affect their accuracy. Please see our latest SEC filings for the detail on explanation of risk. Any non-GAAP financial measures we discuss are reconciled to the closest GAAP measures in filings that can be found on our website.

Tom Lowder, our Chairman and Chief Executive Officer will lead today's call. Joining us will be Brad Sandidge, our Interim Chief Financial Officer; Paul Earle, our Chief Operating Officer is also here to field questions.

On the call, we will discuss our business developments, financial results for the fourth quarter and our guidance for 2013. After our comments, we'll open up the call to take your questions.

I'll now turn the call over to Tom.

Thomas H. Lowder

Thank you, Jerry, and welcome to everyone joining us. Our message throughout 2012 was to grow the company, achieve our investment grade rating and improve the portfolio.

Our growth came internally from our multifamily same-property portfolio, which posted net operating income increases of 6.7% for the quarter and 7.6% for the full year. This represents our best year-over-year same-property NOI growth in the Company's history surpassing our record that was established just one year ago.

Our core business continues to produce solid results with our ability to continue to push lease rates and occupancy remaining around 96%. Our primarily avenue for external growth is coming from our development pipeline. During 2012, we faced two properties into service representing 718 units, and we have another five developments underway representing 1,300 units, an investment of approximately $107 million. We have four additional sites on our balance sheet on which we will start construction in 2013. As we discussed in our last call, we reached our second objective as both Moody’s and Standard & Poor's have recognized progress we’ve made on our balance sheet in the simplification of the business with an investment grade unsecured credit rating.

During the fourth quarter, with the third directive to improve the portfolio, we sold four older properties and used the proceeds to purchase three newer apartment communities with higher revenue per unit. These transactions reduced the average age of our entire portfolio by approximately one year and improved the average revenue per unit, two important metrics in our game plan.

We also sold the wholly owned commercial asset of proceeds of over $37 million and exited one additional commercial joint venture. Since the start of this year, we sold another commercial joint venture interest which has further helped us to simplify the company. Currently, we have 87% of our income being derived from our multifamily portfolio as we head into 2013. Our multifamily portfolio will produce more than 90% of our total revenue and net operating income this year achieving another important milestone.

The board has increased the common dividend 17% to $0.21 per quarter as a result of these improving operations and a stronger balance sheet. During the quarter, we had a couple of one-time charges related to legacy for-sale residential litigation and previously sold merchant build shopping centers that Brad will discuss in just a moment.

While we are disappointed we are having to record these charges, we believe this will resolve some ongoing litigation and allows to focus on more growth opportunities. Before Brad Sandidge, our Chief Accounting Officer and Interim Chief Financial Officer discuss the fourth quarter financials, I’d like to recognize Reynolds Thompson for his 15 years of service and for his many contributions to the company most recently as President and CFO.

When I returned to Active Management after three years at the end of 2008, Reynolds agreed to stay on as Chief Financial Officer to help me implement our reduction, restructure, renewal program. He’s worked to help us simplify and strengthen the business. I appreciate his loyalty to stay and rebuild the company. The board and I wish him well on his new pursuits.

Now, Brad will provide more details on our operating performance during the quarter. Brad?

Bradley P. Sandidge

Thanks, Tom. FFO for the fourth quarter was $0.19 per share as compared to $0.28 per share a year-ago. Our fourth quarter results include $0.15 per share of one-time charges that I will discuss in further detail in just a moment.

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