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Colonial Properties Trust (CLP)

Q1 2011 Earnings Call

April 28, 2011 2:00 p.m. ET

Executives

Jerry Brewer - Executive Vice President, Finance

Thomas Lowder – Chairman, Chief Executive Officer

Reynolds Thompson – President, Chief Financial Officer

Paul Earle - Chief Operating Officer

Analysts

Eric Wolfe – Citigroup

Jana Galan – Bank of America, Merrill Lynch

Alexander Goldfarb – Sandler O’Neill

David Toti – FBR

Haendel St. Juste – KBW

Richard Anderson – BMO Capitals Markets

Presentation

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Colonial Properties Trust First Quarter 2011 Earnings Conference Call. During the presentation all participants will be in a listen-only mode. Afterwards we will conduct a question-and-answer session. (Operator Instructions) As a reminder this conference is being recorded Thursday, April 28, 2011.

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

Jerry Brewer

Thank you, Mara 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 at colonialprop.com. We’re also webcasting this call for your convenience. A replay will be available for your convenience at our website after the call.

Tom Lowder, our Chairman and Chief Executive Officer and Reynolds Thompson, President and Chief Financial Officer will lead today’s call. On the call, they will discuss our business developments, financial results for the first quarter and our guidance for 2011. After their comments, we’ll open up the call to take your questions. Paul Earle, our Chief Operating Officer, is also here to field the questions.

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 forward-looking statements are intended to fall under the Safe Harbor provisions of the Securities Law. These estimates are also based on a number of assumptions, any of which, unrealized, could adversely affect our accuracy. Please see our latest SEC filings for the detail and explanation of risk. Any non-GAAP financial measures we discuss are reconciled to the closest GAAP measures and filings that can be found on our website. None of the statements we make during this call shall not constitute in offer to sale or solicitation and offer to buy any of the Company’s common shares.

I’ll now turn the call over to Tom.

Thomas Lowder

Thank you, Jerry and welcome to everyone joining us. On the call today we’ll discuss our first quarter results and update our outlook for 2011. Before we get into our first quarter results, I’d like to present an initial report of the storms that passed through the south east over the past couple of days. While there has been devastating damage with these storms, our residents, tenants and properties only experienced minor damage. A few of our properties sustained wind damage with down trees and power outages, but we do not have any major structural damage to our properties. Our initial estimate is that the clean-up and repairs that are not covered by our insurance will be somewhere in the range of $100,000 to $150,000. Once we’re able to receive a full assessment of all the damage, we’ll give you an update if there is any change to our current estimate.

Now, to our first quarter earnings. I’d like to characterize the business cycle that we had experienced in this way there are three phases that we have moved for reduction, restructure and now renewal. Having managed our way through the reduction phase and now with only a few targets left to be achieved in the restructuring phase, we’re well within the renewal or growth phase in building momentum.

Three CEO focus items for this year are, first of all, to grow the company, next, improve operations and last, achieve our balance sheet targets. As I discussed on our last quarterly call, our internal growth will come from growing our core multifamily through increasing our rental rates. Externally we will grow our asset base through the development of multifamily apartment communities on the land if we have any inventory and by acquiring young well located multifamily assets in our core Sunbelt markets.

During the first quarter, we executed in each of these areas with an increase in same store revenues of 2.4% over the prior year, an increase in same store net operating income of 5.7%, the acquisition of three class A multifamily properties for $93 million and the start of a new multifamily development in Austin, Texas.

The multifamily fundamentals continue to improve. Resident turnover continues to decline. The home ownership rate continues to fall. New supply remains virtually non-existent. And new jobs are being created. All of these factors have allowed us to push both new and renewal rents higher resulting in the improved margins. We’re close to achieving our balance sheet targets as well. The $100 million at the market equity program, we announced in the fourth quarter of last year was substantially completed in the first quarter and we finished the full $100 million program in early April.

Now, I’d like to ask Reynolds, to provide more detail on our operating performance and activity during the quarter. I’ll conclude the call with our 2011 guidance and update. Reynolds?

Reynolds Thompson

Thank you, Tom. FFO and operating FFO for the first quarter was $0.27 per share, compared with $0.28 a year ago. As Tom mentioned, we continue to see improvement in our multifamily fundamentals as evidenced throughout the same property NOI increase of 5.7% compared to the first quarter of 2010. Half of our major markets achieved NOI growth of 7% or better, to include, Austin, Charlotte, Dallas, Fort Worth, Orlando, Phoenix and Raleigh.

Read the rest of this transcript for free on seekingalpha.com