BRE Properties Reports Fourth Quarter and Full Year 2012 Results

  BRE Properties Reports Fourth Quarter and Full Year 2012 Results                         2013 Core FFO Guidance Provided                    Common and Preferred Dividends Declared  Business Wire  SAN FRANCISCO -- February 4, 2013  BRE Properties, Inc. (NYSE:BRE), a leading owner, operator and developer of high-quality apartment communities in targeted growth markets in California and Seattle, today reported Core Funds From Operations (Core FFO) of $0.61 per share for the quarter ended December 31, 2012, and $2.39 per share for the year ended December 31, 2012. The per share results reflect an increase of 7.0% and 8.6% compared to the fourth quarter and full year periods in 2011, respectively. Core FFO is used to facilitate comparisons of the Company’s earnings results and excludes certain non-core items that by their nature are not comparable when comparing periods or earnings performance between periods. All per share results are reported on a fully diluted basis.  Funds From Operations (FFO) on a per share basis were $0.61 per share for the fourth quarter ended December 31, 2012 and $2.19 per share for the year ended December 31, 2012. A reconciliation of FFO and Core FFO can be found in Exhibit C of the Company’s Supplemental Financial Information package.  Fourth Quarter, 2012 Highlights and 2013 Outlook    *Fourth quarter same-store revenues and net operating income (NOI)     increased 5.6% and 6.2%, respectively, compared to the fourth quarter     2011. During the quarter, physical occupancy averaged 95.7%; annualized     turnover was 55.5%; and average revenue per occupied home was $1,645.   *For the full year 2012, same-store revenues and net operating income (NOI)     increased 5.5% and 6.4% over 2011, respectively.   *During the fourth quarter, BRE completed the sale of two San Diego     apartment communities for a combined gross sales price of $77.0 million.     For the full year 2012, the Company sold six communities, including three     in which it owned joint venture interests, for aggregate net proceeds to     the company of $115.1 million.   *During the fourth quarter, the Company completed construction of Lawrence     Station, a 336-home community located in Sunnyvale, California. The     project was completed on time and on budget at a total cost of     approximately $110.0 million. Also in the fourth quarter, the Company     commenced construction of Radius, a 264-unit luxury apartment community     located in Redwood City, California, with a projected total cost of $98     million.   *2013 Core FFO guidance announced in a range of $2.35 to $2.45 per share.     Same-store revenue and NOI are expected to increase within the ranges of     3.50% to 4.75% and 3.40% to 5.55%, respectively.  “We finished 2012 on a strong note, producing solid results for the year,” commented Constance Moore, Chief Executive Officer of BRE Properties. “In addition, during the fourth quarter we completed $77 million of strategic dispositions; delivered our Lawrence Station development on time and on budget; and commenced construction of our Radius community in Redwood City, California. Our key initiatives as we enter 2013 remain unchanged: to build on our successful implementation of LRO last year and drive operating performance from our portfolio; and to successfully execute on our development program that is financed with proceeds from our capital recycling efforts through strategic dispositions.While our outlook reflects the impact of these expected dispositions, we believe this strategy preserves our balance sheet strength while improving our portfolio quality which will result in positioning BRE to generate sustainable sector-leading growth and achieve a premium valuation in the coming years.”  Fourth Quarter 2012  Funds from operations, the generally accepted measure of operating performance for real estate investment trusts, totaled $46.9 million, or $0.61 per share, for the fourth quarter 2012, compared with $43.3 million, or $0.57 per share, for the fourth quarter 2011. Core FFO was also $0.61 per share for the quarter. (A reconciliation of net income available to common shareholders to FFO is provided at the end of this release.)  Net income available to common shareholders for the fourth quarter 2012 totaled $73.8 million, or $0.96 per share, compared with net income of $33.6 million, or $0.44 per share, for the same period 2011. The fourth quarter 2012 results included a gain on sale of real estate totaling $53.9 million or, $0.70 per share. The fourth quarter 2011 results included gains on sales of approximately $16.5 million, or $0.22 per share.  BRE’s fourth quarter year-over-year earnings and FFO results reflect the impact of the following during 2012: (1) increases in same-store property-level operating results over 2011 levels; (2) incremental NOI from acquired and newly completed properties in the last 24 months; and (3) a reduction in interest expense due to lower leverage levels and higher levels of capitalized interest; which were offset by (1) a higher level of outstanding shares from equity issued in 2011 and the first quarter of 2012 and (2) a reduction in NOI from properties sold in 2011 and 2012.  12-Month Period Ended December 31, 2012  For the annual period, FFO totaled $168.9 million, or $2.19 per share, compared with $154.4 million, or $2.14 per share, for 2011. FFO for the annual period in 2012 includes a $15.0 million, or $0.195 per share, impairment charge for land held for sale recorded in the third quarter of 2012. FFO for the annual period in 2011 included: (1) acquisition-related expenses totaling $402,000, or $0.006 per share; and (2) a $3.8 million, or $0.05 per share, preferred stock redemption charge. Core FFO for 2012 was $2.39 per share compared to $2.20 per share in 2011.  Net income available to common shareholders for 2012 totaled $133.5 million, or $1.74 per diluted share, compared with $66.5 million, or $0.93 per diluted share, for the same period in 2011. Annual 2012 results included gains on sales of real estate of approximately $68.2 million, or $0.89 per share and the impairment charge cited above. Annual 2011 results included gains on sales of real estate of approximately $18.8 million, or $0.26 per share and the acquisition-related expenses and preferred stock redemption charge cited above.  Same-Store Results  BRE defines same-store communities as stabilized apartment communities owned by the Company for two comparable calendar year periods. Of the 21,160 apartment homes owned directly by BRE, same-store homes totaled 19,462 for the fourth quarter.  On a year-over-year basis, fourth quarter same-store revenues increased 5.6% compared to fourth quarter 2011. The revenue increase was driven by a 5.5% increase in revenue earned per occupied unit during the period, coupled with a 10-basis-point increase in year-over-year financial occupancy levels. Operating expenses increased 4.4%, resulting in a 6.2% increase in NOI.  On a sequential basis, same-store revenue increased 1.0%, NOI increased 2.1% and expenses decreased 1.2% over third quarter 2012 levels. The sequential quarter increase in revenues was driven by a 0.9% increase in revenue earned per occupied unit during the fourth quarter, coupled with a 10-basis-point increase in financial occupancy.  Company Initiatives    *Dispositions. In December 2012, the Company completed the sale of two     apartment communities in San Diego for a combined gross sales price of     $77.0 million. The combined gross sales price of the communities     represents a 6.2% weighted average seller’s capitalization rate based on     the communities’ annualized NOI. The implied capitalization rate, after     giving effect to the reassessed value upon sale under Proposition 13, is     estimated at 5.6%. The sale of these two communities resulted in a total     gain of approximately $53.9 million in the fourth quarter. Both     communities were owned on an unencumbered basis.      For the full year 2012, BRE sold three wholly-owned communities, for total     net proceeds of $88.2 million and sold three communities in which it     maintained joint venture interests for total net proceeds of $26.9     million. The sale of these communities and interests resulted in an     aggregate gain of approximately $68.2 million. Gains related to the sales     of these communities are included in the Company’s net income. FFO and     Core FFO included no gains from the sale of these properties and     interests.    *Development. In December 2012, the Company completed development of     Lawrence Station, a 336-unit luxury apartment community located in     Sunnyvale, California. Lawrence Station is centrally located to many of     Silicon Valley’s largest employers including Apple, Yahoo, Intel, Google,     and Cisco Systems; and enjoys easy access to light rail, Amtrak and San     Jose International Airport. The community was built for a total cost of     $110 million and was completed on time and on budget. As of December 31,     2012, the community had 158 occupied homes and a total of 183 leased     homes.      In October, the Company commenced construction of Radius, a 264-unit     luxury apartment community located in Redwood City, California. Radius is     projected to be completed in the fourth quarter of 2014, at a total cost     of $98 million, or $371,000 per unit. At December 31, 2012, the Company     had funded $24 million of the development costs.  As previously communicated, the Company expects to reduce its outstanding development commitments through the completion of its active development projects, the disposition of its land site in Anaheim, California and the contribution of its two Pleasanton, California land parcels into a joint venture. The Anaheim land site is currently being marketed for sale and an update will be provided when a sale has been completed. The Company is completing construction documentation for the Pleasanton sites. It expects to commence the search for a joint venture partner in the first quarter of 2013.  The Company remains committed to creating long-term value through a targeted development program, focused on core in-fill submarkets, appropriately sized for the balance sheet. BRE continues to review potential development opportunities and expects to target a stabilized development program going forward within a range of 10% to 15% of its real estate portfolio base.  As of December 31, 2012, the Company’s active and wholly-owned development pipeline has a total estimated cost of $770 million, of which approximately $395 million remains to be funded through the first quarter of 2015. The active and wholly-owned pipeline consists of the Company’s Aviara, Solstice, Wilshire La Brea, Redwood City and Mission Bay projects.  The Company intends to fund the existing capital commitments related to its current development projects primarily with proceeds from strategic asset sales of certain older, slower growth communities in its existing portfolio, as well as from funds available under its $750 million unsecured revolving credit facility which had no outstanding balance as of the date of this release.  The Company also expects to continue to identify properties within its portfolio that no longer meet its investment criteria. Management believes the disposition of these slower-growth assets over time will contribute to a portfolio with greater concentrations in targeted markets and infill submarkets that can produce a sustainable, sector-leading growth rate. The Company expects to be prudent in the execution of its disposition plans, balancing strategic portfolio goals with capital needs, tax implications, and balance sheet metrics.  2013 Earnings Guidance  Earnings per share (EPS) for the full year 2013 are estimated to be within a range of $1.00 to $1.10.  Management estimates Core FFO per share for 2013 to range from $2.35 to $2.45. At the midpoint, Core FFO is $0.01 ahead of 2012 Core FFO, reflecting: (1) an expected increase in NOI from same-store operations; and (2) increased NOI from communities in lease-up in 2012; (3) offset by the loss of NOI from communities sold in 2012 and expected community sales in 2013.  For the first quarter of 2013, the Company estimates FFO per share to range from $0.54 to $0.58. The difference between the Company’s fourth quarter 2012 FFO of $0.61 per share and the midpoint of the first quarter 2013 guidance range of $0.56 is primarily due to: (1) loss of NOI from San Diego communities sold in the fourth quarter; (2) a sequential increase in both general and administrative expenses and operating expenses in Q1 2013; and (3) the potential loss of NOI from community disposition activity.  The Company’s 2013 financial outlook is based on a number of assumptions and estimates, which are outlined in Attachment B to this release. The primary assumptions and estimates include:  Same-Store Operations    *An increase in same-store revenue in a range of 3.50% to 4.75%;   *An increase in same-store expenses in a range of 3.00% to 3.75%; and   *An increase in same-store NOI in a range of 3.40% to 5.55%.  Projected Investment Activity    *Development advances are estimated to range from $190 to $225 million;     capitalized interest is estimated to range from $22.0 to $23.5 million.   *Proceeds from property dispositions are expected to be the primary source     of capital. The Company currently anticipates that proceeds from community     / land sales proceeds will total $150 to $250 million in 2013. At this     time, the Company does not expect to call for redemption its outstanding     Series D preferred shares during 2013.   *Core FFO guidance does not include any non-routine income or expense items     (including gains or losses associated with the sale of land).  Common and Preferred Dividends Declared  On February 4, 2013, BRE’s Board of Directors approved common and preferred stock dividends for the quarter ending March 31, 2013. All common and preferred dividends will be payable on Friday, March 29, 2013 to shareholders of record on Friday, March 15, 2013.  The board also approved a 2.6% increase for the 2013 common dividend to $0.395 per share quarterly. The quarterly dividend payment is equivalent to $1.58 per share on an annualized basis, and represents a yield of approximately 3.17% on Friday’s closing price of $49.77 per share. BRE has paid uninterrupted quarterly dividends to shareholders since the Company’s founding in 1970.  The Company’s 6.75% Series D quarterly preferred dividend is $0.421875 per share.  Q4 2012 Analyst Conference Call  The Company will hold an analyst conference call on Tuesday, February 5, 2013 at 11:00 a.m. Eastern (8:00 a.m. Pacific) to review these results. The dial-in number to participate in the United States and Canada is 877.723.9511; the international number is 719.325.4815 Enter Conf. ID# 5089643. A telephone replay of the call will be available for 14 days at 877.870.5176 or 858.384.5517 international, using the same ID# 5089643. A link to the live webcast of the call will be posted on www.breproperties.com in the Investors section. A webcast replay will be available for 90 days following the call.  About BRE Properties  BRE Properties, based in San Francisco, California, focuses on the development, acquisition and management of apartment communities located primarily in the major metropolitan markets of Southern and Northern California and Seattle. BRE directly owns 74 multifamily communities (totaling 21,160 units) and has joint venture interests in an additional 8 apartment communities (totaling 2,864 units). BRE Properties is a real estate investment trust (REIT) listed in the S&P MidCap 400 Index. For more information on BRE Properties, please visit our website at www.breproperties.com.  “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: Except for the historical information contained herein, this news release contains forward-looking statements regarding the Company’s capital resources, portfolio performance and results of operations, and is based on the Company’s current expectations and judgment. You should not rely on these statements as predictions of future events because there is no assurance that the events or circumstances reflected in the statements can be achieved or will occur. Forward-looking statements are identified by words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “pro forma,” “estimates,” or “anticipates” or their negative form or other variations, or by discussions of strategy, plans or intentions. The following factors, among others, could affect actual results and future events: defaults or nonrenewal of leases, increased interest rates and operating costs, failure to obtain necessary outside financing, difficulties in identifying properties to acquire and in effecting acquisitions, failure to successfully integrate acquired properties and operations, inability to dispose of assets that no longer meet our investment criteria under applicable terms and conditions, risks and uncertainties affecting property development and construction (including construction delays, cost overruns, inability to obtain necessary permits and public opposition to such activities), failure to qualify as a real estate investment trust under the Internal Revenue Code of 1986, as amended, and increases in real property tax rates. The Company’s success also depends on general economic trends, including interest rates, tax laws, governmental regulation, legislation, population changes and other factors, including those risk factors discussed in the section entitled “Risk Factors” in the Company’s most recent Annual Report on Form 10-K as they may be updated from time to time by the Company’s subsequent filings with the Securities and Exchange Commission, or SEC. Do not rely solely on forward-looking statements, which only reflect management’s analysis. The Company assumes no obligation to update this information. For more details, refer to the Company’s SEC filings, including its most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.                                                                  BRE Properties, Inc. Consolidated Balance Sheets Fourth Quarter 2012 (Unaudited, in thousands, except per share, unit                and per unit data)                                                                                                                    December 31,    December 31, ASSETS                                           2012         2011                                                                         Real estate portfolio: Direct investments in real estate:                                                                   Investments in rental communities                $ 3,722,838     $ 3,607,045 Construction in progress                           302,263         246,347 Less: accumulated depreciation                    (811,187  )    (729,151  )                                                   3,213,914     3,124,241  Equity in real estate joint ventures: Investments                                        40,753          63,313                                                                   Real estate held for sale, net                     23,065          -                                                                   Land under development                            104,675       101,023                                                                      Total real estate portfolio                        3,382,407       3,288,577                                                                                                                                     Cash                                               62,241          9,600 Other assets                                      54,334        54,444                                                                       TOTAL ASSETS                                     $ 3,498,982    $ 3,352,621                                                                                                                                      LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                              Liabilities:                                                                   Unsecured senior notes                           $ 990,018       $ 724,957 Unsecured line of credit                           -               129,000 Mortgage loans payable                             741,942         808,714 Accounts payable and accrued expenses             75,789        63,273                                                                       Total liabilities                                 1,807,749     1,725,944                                                                    Redeemable and other noncontrolling interests     4,751         16,228                                                                       Shareholders' equity: Preferred Stock, $0.01 par value; 20,000,000 shares authorized: 2,159,715 shares with $25 liquidation preference issued and outstanding at   22              22 December 31, 2012 and December 31, 2011, respectively.                                                                               Common stock, $0.01 par value, 100,000,000 shares authorized. Shares issued and outstanding: 76,925,351 and 75,556,167 at          769             756 December 31, 2012 and December 31, 2011, respectively.                                                                               Additional paid-in capital                        1,685,691     1,609,671                                                                    Total shareholders' equity                        1,686,482     1,610,449                                                                    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY       $ 3,498,982    $ 3,352,621    BRE Properties, Inc. Consolidated Statements of Income Quarters and Twelve Months Ended December 31, 2012 and 2011 (Unaudited, in thousands, except per share, unit and per unit data)                                                                                   Quarter        Quarter          Twelve         Twelve                     ended          ended            months ended   months ended REVENUES            12/31/12     12/31/11      12/31/12     12/31/11                                                                      Rental income       $ 96,295       $ 90,367         $ 374,982      $ 349,667 Ancillary income     4,000        3,527          15,156       13,392                                                                        Total revenues        100,295        93,894           390,138        363,059                                       EXPENSES                                                                                                                           Real estate         $ 31,162       $ 29,712         $ 122,996      $ 116,814 Provision for         26,519         25,301           100,518        101,047 depreciation Interest              17,979         18,103           68,467         74,964 General and           5,696          5,697            22,848         21,768 administrative Other expenses       -            -              15,000       402       ^(1) Total expenses        81,356         78,813           329,829        314,995                                                                     Other income          565            657              2,530          2,536                                                                   Net income before noncontrolling interests, partnership           19,504         15,738           62,839         50,600 income and discontinued operations                                                                     Income from unconsolidated        519            726              2,644          2,888 entities Net gain on sale of unconsolidated    -            2,022          6,025       4,270     entities Income from continuing            20,023         18,486           71,508         57,758 operations                                                                     Discontinued operations:      Discontinued      operations,      936            1,675            3,913          6,808      net ^(2)      Net gain on      sales of        53,856       14,489         62,136       14,489         discontinued      operations Income from discontinued          54,792         16,164           66,049         21,297 operations                                                                  NET INCOME          $ 74,815       $ 34,650         $ 137,557      $ 79,055                                                                     Redeemable and other noncontrolling        99             165              413            1,168 interest in income                                                                     Redemption related preferred     -              -                -              3,771 stock issuance cost                                                                     Dividends attributable to      911          911            3,645        7,655     preferred stock                                                                     NET INCOME AVAILABLE TO        $ 73,805      $ 33,574        $ 133,499     $ 66,461    COMMON SHAREHOLDERS                                                                     Net income per common share -      $ 0.96        $ 0.45          $ 1.74        $ 0.93      basic                                                                     Net income per common share -      $ 0.96        $ 0.44          $ 1.74        $ 0.93      diluted                                                                                                                                         Weighted average shares               76,872       75,415         76,567       71,220    outstanding - basic                                                                     Weighted average shares               77,180       75,830         76,920       71,670    outstanding - diluted                                                                          For the twelve months ended December 31, 2012, Other expenses included a      $15,000,000 impairment charge related to a land parcel in Land under ^(1) development that was transferred to Real estate held for sale, net. For      the twelve months ended December 31, 2011, Other expenses included      $402,000 related to acquisition costs. ^(2) Includes three communities sold during 2012 and two      communities sold during 2011.                                                                                         Quarter        Quarter          Twelve         Twelve                     ended          ended            months ended   months ended                      12/31/12     12/31/11      12/31/12     12/31/11       Rental and      ancillary      $ 1,551        $ 3,014          $ 7,299        $ 14,561      income      Real estate      (513     )     (968     )       (2,286   )     (4,860   )      expenses      Provision      for             (102     )    (371     )      (1,100   )    (2,893   )      depreciation      Discontinued      operations,    $ 936         $ 1,675         $ 3,913       $ 6,808          net                                                              Exhibit B: 2013 Financial Outlook (page 1 of 2)  (dollars in thousands, except per share   amounts)   2013: EPS & FFO per share                                 guidance                                                                                                Low End           High End   Earnings per share          $ 1.00            $ 1.10   Depreciation per share      $ 1.35            $ 1.35   Funds from operations       $ 2.35            $ 2.45   per share                                                                    2013: Same-store                                         outlook                                                                                                Low End           High End   Same-store revenue (2013 vs   3.50    %         4.75    %   2012)   Same-store expense (2013 vs   3.75    %         3.00    %   2012)   Same-store net operating      3.40    %         5.55    %   income (2013 vs 2012)                                                                    Regional breakdown of same                                    % of Total   store revenues              Low End           High End       Same                                                                 Store Revenues   Seattle                       5.00    %         6.25    %     14       %   San Francisco Bay Area        5.50    %         6.75    %     25       %   Southern California           2.50    %         3.75    %     57       %   Non Core markets             1.00    %     2.00    %   4        %   Total                        3.50    %     4.75    %   100      %                                                                                                                                                                                                      2013: Other elements of                                     guidance                                                                    2013 Same-store and non   same-store pools                               Communities       Homes   Ending 2012 communities   Same-store                    68                19,462                                                                    Non same-store   Acquisition communities       3                 652   Lease-up communities          2                 606   Renovation communities       1               440        Total wholly or majority     74              21,160     owned communities                                                                    2012 pool adjustments   2012 acquisition   communities moved to 2013     3                 652   same store   2012 lease-up community       1                 270   moved to 2013 same-store   2012 renovation community     1                 440   moved to 2013 same store                                                                    2013 Communities   Same-store                    73                20,824                                                                    Non same-store   Lease-up communities         1               336        Total wholly or majority     74              21,160     owned communities                                                                    Operating and capital       Level / Range   elements   Occupancy (same-store)      95.0% - 95.3%   LIBOR (average)             35 - 50 bps   Weighted average cost of    5.35% - 5.40%   debt outstanding                                                                    Operating property            -                 -   acquisitions   Development advances        $ 190,000   -     $ 225,000   Capitalized interest        $ 22,000    -     $ 23,500   Debt maturities             $ 70,000    -     $ 70,000   Revenue enhancing rehab     $ 35,000    -     $ 50,000   & other   Recurring capital           $ 22,000    -     $ 25,000   expenditures                                                                    Common stock                $ -         -     $ 50,000   Community sales / land      $ 150,000   -     $ 250,000   sales   Debt issuance               $ -         -     $ -                                                                    Detail of increase in       Low End           High End   shares outstanding   Diluted shares outstanding    77,255            77,255   12/31/12   Weighted average impact of   545             745        shares issued in 2013   2013 Outlook weighted         77,800            78,000   average shares outstanding                                                                              Exhibit B: 2013 Financial Outlook (page 2 of 2)                                           2013: Detail of financial outlook line items against comparable 2012 actual      results (dollar amounts in thousands except per share amounts)                                                                                                                                                                           2012               2013                  2013                         Actual           Low End               High End                                                                                       Rental and      ancillary      revenues      Same-store          $ 387,313          $ 400,869     3.50%   $ 405,710     4.75%      ^(1)                              Non same-store          ^ (1)      Lease-up             1,062              8,750                 9,000      communities      Acquisition          -                  -                     -      communities      Commercial &         1,763            1,770               1,800         other      Total rental      and ancillary         390,138            411,389               416,510      revenues                                                                                       Real estate      expenses      Same-store            120,862            125,394     3.75%     124,488     3.00%      ^(1)                                                                                       Non same-store      ^ (1)      Lease-up              456                3,400                 3,200      communities      Acquisition           -                  -                     -      communities      Commercial &         1,678            1,850               1,750         other      Total real      estate                122,996            130,644               129,438      expenses                                                                                       Property level      net operating      income      Same-store            266,451            275,475     3.40%     281,223     5.55%      ^(1)                                                                                       Non same-store      ^ (1)      Lease-up              606                5,350                 5,800      communities      Acquisition           -                  -                     -      communities      Commercial &         85               (80     )            50            other      Total property      level net             267,142            280,745               287,073      operating      income                                                                                       2013      acquisition           -                  -                     -      communities      (net)                                                                                       Non real      estate      expenses      Provision for         100,518            105,000               105,000      depreciation      General &             22,848             24,250                23,250      administrative      Interest              68,467             69,000                68,000      expense      Other expenses        15,000             -                     -      Loss on      retirement of        -                -                   -             debt      Total non real      estate                206,833            198,250               196,250      expenses                                                                                       Partnership      and other      income      Partnership           2,644              2,000                 2,300      income      Net gain on      sale of               6,025              -                     -      unconsolidated      entity      Other income      non property         2,530            1,600               1,650         related      Total      partnership           11,199             3,600                 3,950      and other      income                                                                                       Discontinued      operations -      communities      sold      Net operating         5,013     ^(2)     (6,000  ) ^(3)        (6,000  ) ^(3)      income      Depreciation          (1,100  )          -                     -      Gain on sales      of discontinued      62,136           -                   -             operations      Total      discontinued          66,049             (6,000  )             (6,000  )      operations                                                                                       Redeemable      noncontrolling        413                300                   300      interest in      income      Preferred      stock                 3,645              3,645                 3,645      dividends      Redemption related      preferred stock      -                -                   -             issuance costs      Net income      available to common $ 133,499         $ 76,150             $ 84,828        shareholders                                                                                       Reconciliation      to funds from      operations      Depreciation from      continuing and        101,618            105,000               105,000      discontinued ops      Depreciation      from                  1,903              1,400                 1,500      unconsolidated      entities      Convertible      redeemable      noncontrolling                           -                     -      interests in      income      Gain on sales      of discontinued       (62,136 )          -                     -      operations      Net gain on      sale of              (6,025  )         -                   -             unconsolidated      entity      Funds from          $ 168,859         $ 182,550            $ 191,328       operations                                                                                       Diluted shares      outstanding -         76,940             77,800                78,000      FFO                                                                       FFO per common      $ 2.19            $ 2.35               $ 2.45          share                                                                       Core FFO per        $ 2.39            $ 2.35               $ 2.45          common share                                                                                                                            ^(1) 2012 Actual Same-store and Non Same-store communities are presented to reflect      results for the comparable 2013 community pool composition.            Net operating income from three San Diego assets sold in 2012. Countryside ^(2) Village sold on May 17, 2012 for $12.6 million and Terra Nova and Canyon Villa      sold on December 20, 2012 for $77.0 million.            Assumes midpoint ($200 million) of estimated 2013 range of sales proceeds ^(3) closing on July 1, at a 6.0% cap rate. Annual NOI from properties anticipated to      be sold are included in Same-store totals above, deduction in this line      represents NOI lost post the July 1 assumed sale date.                                                          BRE Properties, Inc. Non-GAAP Financial Measure Reconciliations and Definitions (Dollar amounts in                                             thousands)                                                                    This document includes certain non-GAAP financial measures that management believes are helpful in understanding our business, as further described below. BRE's definition and calculation of non-GAAP financial measures may differ from those of other REITs, and may, therefore, not be comparable. The non-GAAP financial measures should not be considered an alternative to net income or any other GAAP measurement of performance and should not be considered an alternative to cash flows from operating, investing or financing activities as a measure of liquidity.                                                                    Funds from Operations (FFO) FFO is used by industry analysts and investors as a supplemental performance measure of an equity REIT. FFO is defined by the National Association of Real Estate Investment Trusts as net income or loss (computed in accordance with accounting principles generally accepted in the United States) excluding extraordinary items as defined under GAAP and gains or losses from sales of previously depreciated real estate assets, plus depreciation and amortization of real estate assets and adjustments for unconsolidated partnerships and joint ventures. We calculate FFO in accordance with the NAREIT definition.  We believe that FFO is a meaningful supplemental measure of our operating performance because historical cost accounting for real estate assets in accordance with GAAP assumes that the value of real estate assets diminishes predictably over time, as reflected through depreciation. Because real estate values have historically risen or fallen with market conditions, management considers FFO an appropriate supplemental performance measure because it excludes historical cost depreciation, as well as gains or losses related to sales of previously depreciated community, from GAAP net income. By excluding depreciation and gains or losses on sales of real estate, management uses FFO to measure returns on its investments in real estate assets. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our communities that result from use or market conditions nor the level of capital expenditures to maintain the operating performance of our communities, all of which have real economic effect and could materially impact our results from operations, the utility of FFO as a measure of our performance is limited.  Management also believes that FFO, combined with the required GAAP presentations, is useful to investors in providing more meaningful comparisons of the operating performance of a company’s real estate between periods or as compared to other companies. FFO does not represent net income or cash flows from operations as defined by GAAP and is not intended to indicate whether cash flows will be sufficient to fund cash needs. It should not be considered an alternative to net income as an indicator of the REIT’s operating performance or to cash flows as a measure of liquidity. Our FFO may not be comparable to the FFO of other REITs due to the fact that not all REITs use the NAREIT definition.                                                                    Core Funds from Operation ("Core FFO") Core funds from operations ("Core FFO") begins with FFO as defined by the NAREIT White Paper and is adjusted for: the impact of any expenses relating to non-operating asset impairment and valuation allowances; property acquisition costs and pursuit cost write-offs (other expenses); gains and losses from early debt extinguishment, including prepayment penalties and preferred share redemptions; executive level severance costs; gains and losses on the sales of non-operating assets, and other non-comparable items.                                                                                        Quarter Ended  Quarter Ended    Twelve Months Twelve                     12/31/2012     12/31/2011       Ended         Months Ended                                                     12/31/2012    12/31/2011                                                                                                                                    Net income available to common $73,805        $33,574          $133,499      $66,461 shareholders Depreciation from continuing          26,519         25,301           100,518       101,047 operations Depreciation from discontinued        102            371              1,100         2,893 operations Redeemable and other               99             165              413           1,168 noncontrolling interest in income Depreciation from unconsolidated      392            512              1,903         2,052 entities Net gain on sales of discontinued     (53,856)       (14,489)         (62,136)      (14,489) operations Net gain on sale of unconsolidated      -              (2,022)          (6,025)       (4,270) entities Less: Redeemable noncontrolling interest in income  (99)           (105)            (413)         (420) not convertible into common shares Funds from          $46,962        $43,307          $168,859      $154,442 operations                                                                    Non core items in the periods         -              -                15,000        4,173 presented Core Funds from     $46,962        $43,307          $183,859      $158,615 operations                                                                    Diluted shares      77,180         75,830           76,920        71,670 outstanding - EPS                                                                    Net income per common share -      $0.96          $0.44            $1.74         $0.93 diluted                                                                    Diluted shares      77,180         76,100           76,940        72,180 outstanding - FFO FFO per common      $0.61          $0.57            $2.19         $2.14 share - diluted                                                                    Diluted shares outstanding - Core  77,180         76,100           76,940        72,180 FFO Core FFO per common $0.61          $0.57            $2.39         $2.20 share - diluted                                                              BRE Properties,                                Inc. Non-GAAP Financial Measure Reconciliations and Definitions (Dollar amounts                                              in thousands)                                                                  Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined by BRE as EBITDA, excluding minority interests, gains or losses from sales of investments, preferred stock dividends and other expenses. We consider EBITDA and Adjusted EBITDA to be appropriate supplemental measures of our performance because they eliminate depreciation, interest, and, with respect to Adjusted EBITDA, gains (losses) from community dispositions and other charges, which permits investors to view income from operations without the impact of noncash depreciation or the cost of debt, or with respect to Adjusted EBITDA, other non-operating items described above.  Because EBITDA and Adjusted EBITDA exclude depreciation and amortization and capture neither the changes in the value of our communities that result from use or market conditions nor the level of capital expenditures to maintain the operating performance of our communities, all of which have real economic effect and could materially impact our results from operations, the utility of EBITDA and Adjusted EBITDA as measures of our performance is limited. Below is a reconciliation of net income available to common shareholders to EBITDA and Adjusted EBITDA:                  Quarter Ended  Quarter Ended     Twelve Months  Twelve Months                 12/31/2012     12/31/2011        Ended          Ended                                                  12/31/2012     12/31/2011                                                                                                                                Net income available to    $  73,805      $  33,574         $  133,499     $  66,461 common shareholders Interest, including          17,979         18,103            68,467         74,964 discontinued operations Depreciation, including         26,621       25,672          101,618      103,940   discontinued operations EBITDA             118,405        77,349            303,584        245,365 Redeemable and other noncontrolling     99             165               413            1,168 interest in income Net gain on        (53,856  )     (14,489  )        (62,136  )     (14,489  ) sales Dividends on       911            911               3,645          7,655 preferred stock Other expenses     -              -                 15,000         402 Net gain on sale of            -              (2,022   )        (6,025   )     (4,270   ) unconsolidated entities Redemption related to        -            -               -            3,771     preferred stock issuance cost Adjusted EBITDA $  65,559     $  61,914        $  254,481      239,602                                                                    Net Operating Income (NOI) We consider community level and portfolio-wide NOI to be an appropriate supplemental measure to net income because it helps both investors and management to understand the core community operations prior to the allocation of general and administrative costs. This is more reflective of the operating performance of the real estate, and allows for an easier comparison of the operating performance of single assets or groups of assets. In addition, because prospective buyers of real estate have different overhead structures, with varying marginal impact to overhead from acquiring real estate, NOI is considered by many in the real estate industry to be a useful measure for determining the value of a real estate asset or groups of assets.  Because NOI excludes depreciation and does not capture the change in the value of our communities resulting from operational use and market conditions, nor the level of capital expenditures required to adequately maintain the communities (all of which have real economic effect and could materially impact our results from operations), the utility of NOI as a measure of our performance is limited. Other equity REITs may not calculate NOI consistently with our definition and, accordingly, our NOI may not be comparable to such other REITs' NOI. Accordingly, NOI should be considered only as a supplement to net income as a measure of our performance. NOI should not be used as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends or make distributions. NOI also should not be used as a supplement to or substitute for cash flow from operating activities (computed in accordance with GAAP).                  Quarter Ended  Quarter Ended     Twelve Months  Twelve Months                 12/31/2012     12/31/2011        Ended          Ended                                                  12/31/2012     12/31/2011                                                                                                                                Net income available to    $  73,805      $  33,574         $  133,499     $  66,461 common shareholders Interest, including          17,979         18,103            68,467         74,964 discontinued operations Depreciation, including          26,621         25,672            101,618        103,940 discontinued operations Redeemable and other noncontrolling     99             165               413            1,168 interest in income Net gain on        (53,856  )     (14,489  )        (62,136  )     (14,489  ) sales Net gain on sale of            -              (2,022   )        (6,025   )     (4,270   ) unconsolidated entities Dividends on       911            911               3,645          7,655 preferred stock General and administrative     5,696          5,697             22,848         21,768 expense Other expenses     -              -                 15,000         402 Redemption related to        -            -               -            3,771     preferred stock issuance cost NOI             $  71,255     $  67,611        $  277,329    $  261,370   Less Non          7,629        7,674           30,096       29,051    Same-Store NOI Same-Store NOI  $  63,626     $  59,937        $  247,233    $  232,319    Contact:  BRE Properties, Inc. Investor Contact: Stephanie T. Andre, 415-445-3745  
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