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Colonial Properties Trust (CLP)

Q1 2012 Results Earnings Call

April 25, 2013 2:30 PM ET

Executives

Jerry Brewer - Executive Vice President, Finance

Tom Lowder - Chairman and CEO

Brad Sandidge - Interim CFO

Paul Earle - Chief Operating Officer

Analysts

Jana Galan - Bank of America

Rich Anderson - BMO Capital

Presentation

Operator

Ladies and gentlemen thank you for standing by. Welcome to the Colonial Properties Trust First Quarter 2013 Conference Call. During the presentation all participants will be in a listen-only mode. Afterwards, we will conduct the question-and-answer session. (Operator Instructions)

As a reminder, this conference is being recorded, Thursday, April 25, 2013. I would now like to turn the conference over to Jerry Brewer, Executive Vice President of Finance. Please go ahead, sir.

Jerry Brewer

Thank you, Jenny, and welcome to everyone joining us today. We released our earnings this morning via Business Wire.

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 CFO; 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 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.

Tom Lowder

Thank you, Jerry, and welcome to everyone joining us. As I outlined last quarter, the CEO directives for 2013 are to first of all advance the company, secondly, fortify the balance sheet, and last, enhance the portfolio.

We are off to another strong start this year on all of these directives. We are advancing the company with our development pipeline and growing core operations. In the first quarter, we completed two new apartment communities, adding another 404 units and four more communities are currently under construction.

Our multifamily same property net operating income increased 6.8% for the first quarter, which is on top of an 8.3% growth in the first quarter last and a 5.7% growth in the first quarter of 2011.

In fortifying the balance sheet, we are lowering our overall debt levels through our commercial asset sales resulting an improved balance sheet metrics. As Jerry will discuss in a moment, we demonstrated continue improvement and have already eliminated our only consolidated debt maturity for this year.

With the four developments we have completed over the past 12 months and our asset recycling in the multifamily portfolio, we’ve enhanced our overall quality of our portfolio.

The acquisition of Colonial Grand at Windermere in March is the latest example of the benefits of this strategy. Through selling our older multifamily assets and acquiring new assets we continue to bring down the average age of our portfolio, increase the average revenue per unit, position ourselves in strong market, since market and leverage strong occupancy to drive rents higher.

With this activity and the commercial disposition we completed, we’ve achieved our goal of having at least 90% of our net operating income coming from the multifamily portfolio.

The operating fundamentals in the multifamily business continue to be strong, primarily driven by continue job growth in our Sunbelt markets. Throughout the first quarter our new lease rates gain momentum in each month and our renewal rates remain strong. With our occupancy level at 96%, we are well-positioned to enter the spring leasing season to build on our momentum and continue to push rents.

We will take this opportunity and thank our shareholders who attended our Annual Meeting yesterday, as well as our Colonial star performing employees. Also congratulations to all of our annual award winners last night, especially Amber Fairbanks, our Senior Vice President for our North Carolina Portfolio who received our top E. L. Lowder Founder Award.

Now Brad will provide more details on our operating performance during the quarter and I’ll come back at the end of the call to talk about outlook for the year. Brad?

Brad Sandidge

Thank you, Tom. FFO for the first quarter was $0.34 per share compared with $0.30 per share a year ago. Our first quarter same property net operating income increased 6.8%, while revenue increased 5.2% and expenses increased 2.8% versus the prior year.

The increase in revenue was primarily driven by our higher average revenue per occupied unit of $959, which is up 4.6% from the first quarter of 2012 and 0.6%, sequentially. Dallas, Charlotte, Fort Worth and Raleigh all posted revenue growth above 7% for the quarter.

Financial occupancy increased 50 basis points to 95.7% for the quarter. Physical occupancy at quarter end was 96.1%, giving us continued pricing power as we head into leasing season.

Renewal rates were up 7% in the first quarter, while new lease rates were down slightly, resulting in a blended rental rate growth of 2.9% for the quarter. New lease rates were up 0.8% in March, in line with historical seasonal trend. Month-to-date new lease rates for April are up 1.8% and renewal rates are up 6.4% for April as well.

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