BRE Properties Reports First Quarter 2013 Results

  BRE Properties Reports First Quarter 2013 Results

                   Common and Preferred Dividends Declared

Business Wire

SAN FRANCISCO -- April 30, 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 $0.58 per
share for the quarter ended March 31, 2013. The per share results reflect an
increase of 1.8% over the comparable period in 2012. 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.

A reconciliation of FFO and Core FFO can be found in Exhibit B of the
Company’s Supplemental Operating and Financial Data. During the quarters ended
March 31, 2013 and 2012 there were no reconciling differences between FFO and
Core FFO.

First Quarter 2013 Highlights

  *First quarter same-store revenues and net operating income (NOI) increased
    4.9% and 5.3%, respectively, compared to the first quarter 2012. During
    the quarter, physical occupancy averaged 95.2%; annualized turnover was
    54%; and average revenue per occupied home was $1,666.
  *BRE completed the sale of six joint venture interests (four in Denver and
    two in Phoenix) to its joint venture partner for a total sales price of
    $47.4 million and a gain on sale of $15.0 million.
  *The Company delivered the first 54 homes at Aviara, a 166-home community
    located on Mercer Island in Seattle, Washington. Also during the quarter,
    the Company commenced construction of MB360, a 360-home luxury apartment
    community located in San Francisco, California.
  *Second quarter 2013 FFO per share guidance announced in a range of $0.56 -
    $0.60.

“We are pleased with the progress we have achieved in executing our strategic
initiatives so far in 2013,” commented Constance B. Moore, Chief Executive
Officer of BRE Properties. “During the first quarter, we completed the
disposition of $47 million of interests in non-core communities; delivered the
first homes at our Mercer Island development as planned; and commenced
construction of our Mission Bay community in San Francisco. As we move
forward, we remain focused on our key initiatives: maximizing the operating
performance of our portfolio, and successfully executing on our development
and strategic disposition programs. We believe this strategy preserves our
balance sheet strength while improving our portfolio quality, which should
position BRE to generate strong sustainable returns in the coming years.”

First Quarter 2013

Funds from operations, the generally accepted measure of operating performance
for real estate investment trusts, totaled $45.1 million, or $0.58 per share,
for the first quarter 2013, compared with $43.6 million, or $0.57 per share,
for the first quarter 2012. Core FFO was also $0.58 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 first quarter 2013 totaled
$34.0 million, or $0.44 per share, compared with net income of $18.1 million,
or $0.24 per share, for the same period 2012. The first quarter 2013 results
included a gain on sale of joint venture interests totaling $15.0 million or,
$0.19 per share.

BRE’s first quarter year-over-year earnings and FFO results reflect the impact
of the following during 2013: (1) increases in same-store property-level
operating results over 2012 levels; and (2) incremental NOI from newly
completed properties in the last 24 months; offset by (1) a reduction in NOI
from operating properties sold in 2012; (2) a reduction of partnership and
management fee income from joint venture interests sold in 2012 and 2013; and
(3) a higher level of outstanding shares from equity issued in the first
quarter of 2012.

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 20,824 for the
first quarter.

On a year-over-year basis, first quarter same-store revenues increased 4.9%
compared to first quarter 2012. The revenue increase was driven by a 5.0%
increase in revenue earned per occupied unit during the period, coupled with a
10-basis-point decrease in year-over-year financial occupancy levels.
Operating expenses increased 4.0%, resulting in a 5.3% increase in NOI.
Operating expenses were driven by increases in property taxes in the Seattle
market and an overall higher level of utility and insurance costs.

On a sequential basis, same-store revenue increased 0.1%, expenses increased
2.1% and NOI decreased 0.8% over fourth quarter 2012 levels. The sequential
quarter increase in revenues was driven by a 0.4% increase in revenue earned
per occupied unit during the fourth quarter, coupled with a 30-basis-point
decrease in financial occupancy.

Company Initiatives

  *Dispositions. In February 2013, the Company completed the sale of its 15%
    interest in six joint venture communities to its venture partner in the
    communities; four in Denver and two in Phoenix for a combined gross sales
    price of $47.4 million. The combined gross sales price of the communities
    represents a 5.7% weighted average seller’s capitalization rate based on
    the communities’ 2012 NOI. The ventures contributed $3.8 million in FFO in
    2012 through the combination of BRE’s equity share in the NOI and
    management fees earned as a third party manager.
  *Development. In March 2013, the Company delivered first homes at Aviara, a
    166-unit luxury apartment community located in Mercer Island, Washington.
    The community has a total estimated cost of $44.5 million and has $2.9
    million left to fund. As of April 29, 2013, the community had 25 occupied
    homes and a total of 47 leased homes. Construction is expected to be
    completed in the second quarter of 2013.

    In March, the Company commenced construction of MB360, a 360-home luxury
    apartment community located within the Mission Bay sub-market in San
    Francisco, California. MB360 is projected to be completed in the fourth
    quarter of 2014, at a total cost of $227 million, or $630,000 per home. At
    March 31, 2013, the Company had funded $77.4 million of the development
    costs.

As of March 31, 2013, the Company’s active and wholly-owned development
pipeline has a total estimated cost of approximately $770 million, of which
approximately $349 million remains to be funded through the fourth quarter of
2014. The active and wholly-owned pipeline consists of the Company’s Aviara,
Solstice, Wilshire La Brea, Radius and MB360 projects.

The Company intends to fund the capital commitments related to its active and
wholly-owned development projects primarily with proceeds from strategic asset
sales of certain 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 end of the quarter.
Management believes the disposition of 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.

During the first quarter, the company did not issue any stock under its
at-the-market (ATM) equity program. The remaining capacity under the equity
distribution agreements total $123.6 million.

Earnings Guidance

The Company reaffirms its outlook for Core FFO per diluted share and operating
guidance for the full year 2013 previously included in its February 4, 2013
earnings release. The Company also intends to update its annual Core FFO per
share and operating guidance ranges in conjunction with its second quarter
2013 earnings release. The Company has established an FFO guidance range of
$0.56 to $0.60 per share for the second quarter of 2013. The mid-point of the
second quarter guidance range compared to first quarter results reflects
higher levels of same-store NOI, offset by lost income from the sale of six
joint venture communities and the disposition of another community that is
under contract to be sold during the second quarter.

Second quarter and annual FFO guidance does not include any non-routine income
or expense items.

Common and Preferred Dividends Declared

On April 30, 2013, BRE’s Board of Directors approved regular common and
preferred stock dividends for the quarter ending June 30, 2013. All common and
preferred dividends will be payable on Friday, June 28, 2013 to shareholders
of record on Friday, June 14, 2013. The quarterly common dividend payment of
$0.395 is equivalent to $1.58 per share on an annualized basis and represents
a yield of approximately 3.2% on Monday’s closing price of $50.05 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.

Q1 2013 Analyst Conference Call

The Company will hold an analyst conference call on Wednesday, May 1, 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 877.681.3377; the
international number is 719.325.4934 Enter Conf. ID# 4226556. 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# 4226556. 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 homes) and has joint venture interests in an additional 2 apartment
communities (totaling 684 homes). 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
First Quarter 2013
(Unaudited, in thousands, except per share, unit and per unit data)
                                                               
                                                     March 31,    December 31,
ASSETS                                              2013        2012
                                                                  
Real estate portfolio:
Direct investments in real estate:
                                                                  
Investments in rental communities                    $3,748,602   $3,722,838
Construction in progress                             404,778      302,263
Less: accumulated depreciation                       (836,827)    (811,187)
                                                     3,316,553    3,213,914
Equity in real estate joint ventures:
Investments                                          8,854        40,753
                                                                  
Real estate held for sale, net                       23,347       23,065
                                                                  
Land under development                               35,498       104,675
                                                                  
Total real estate portfolio                          3,384,252    3,382,407
                                                                  
                                                                  
Cash                                                 21,680       62,241
Other assets                                         52,550       54,334
                                                                  
TOTAL ASSETS                                         $3,458,482   $3,498,982
                                                                  
                                                                  
LIABILITIES AND SHAREHOLDERS' EQUITY                           
                                                                  
Liabilities:
                                                                  
Unsecured senior notes                               $950,000     $990,018
Unsecured revolving credit facility                  -            -
Mortgage loans payable                               741,636      741,942
Accounts payable and accrued expenses                72,737       75,789
                                                                  
Total liabilities                                    1,764,373    1,807,749
                                                                  
Redeemable noncontrolling interests                  4,751        4,751
                                                                  
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
March 31, 2013 and December 31, 2012,
respectively.
Common stock, $0.01 par value, 100,000,000 shares
authorized. Shares issued and outstanding:           771          769
77,057,622 and 76,925,351 at March 31, 2013 and
December 31, 2012, respectively.
Additional paid-in capital                           1,688,565    1,685,691
                                                                  
Total shareholders' equity                           1,689,358    1,686,482
                                                                  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY           $3,458,482   $3,498,982
                                                                  


BRE Properties, Inc.
Consolidated Statements of Income
Quarter Ended March 31, 2013 and 2012
(Unaudited, in thousands, except per share, unit and per unit data)
                                                            
                                              Quarter ended     Quarter ended
REVENUES                                     3/31/13           3/31/12
                                                                
Rental income                                 $97,165           $91,249
Ancillary income                              3,712             3,615
Total revenues                                100,877           94,864
                                                                
EXPENSES                                                      
                                                                
Real estate                                   $32,056           $30,312
Provision for depreciation                    25,827            24,667
Interest                                      17,332            17,218
General and administrative                    6,382             5,847
Total expenses                                81,597            78,044
                                                                
Other income                                  363               520
                                                               
Net income before noncontrolling
interests, partnership income and             19,643            17,340
discontinued operations
                                                                
Income from unconsolidated entities           318               727
Net gain on sale of unconsolidated            15,025            -
entities ^(1)
Income from continuing operations             34,986            18,067
                                                                
Discontinued operations:
Discontinued operations, net ^(2)             -                 1,057
Income from discontinued operations           -                 1,057
NET INCOME                                    $34,986           $19,124
                                                                
Redeemable noncontrolling interest in         48                105
income
Dividends attributable to preferred stock     911               911
NET INCOME AVAILABLE TO COMMON                $34,027           $18,108
SHAREHOLDERS
                                                                
Net income per common share - basic           $0.44             $0.24
Net income per common share - diluted         $0.44             $0.24
                                                                
                                                                
Weighted average shares outstanding -         76,990            76,000
basic
Weighted average shares outstanding -         77,250            76,380
diluted
                                                                
^(1)During the three months ended March 31, 2013, six joint venture
interests were sold for $47.4 million resulting in a net gain of $15.0
million.
^(2)Includes three communities sold during 2012.
                                                                
                                              Quarter ended     Quarter ended
                                              3/31/13           3/31/12
Rental and ancillary income                   $0                $2,080
Real estate expenses                          -                 (658)
Provision for depreciation                    -                 (365)
Discontinued operations, net                  $0                $1,057
                                                                


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
                                     3/31/2013                3/31/2012
                                                              
Net income available to              $34,027                  $18,108
common shareholders
Depreciation from continuing         25,827                   24,667
operations
Depreciation from                    -                        365
discontinued operations
Depreciation from                    297                      495
unconsolidated entities
Net gain on sale of                  (15,025)                -
unconsolidated entities
Funds from operations                $45,126                 $43,635
                                                            
Core Funds from operations           $45,126                 $43,635
                                                              
Diluted shares outstanding -         77,250                   76,380
EPS
Net income per common share          $0.44                   $0.24
- diluted
                                                              
Diluted shares outstanding -         77,250                   76,440
FFO
FFO per common share -               $0.58                   $0.57
diluted
                                                              
Diluted shares outstanding -         77,250                   76,440
Core FFO
Core FFO per common share -          $0.58                   $0.57
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
                                      3/31/2013               3/31/2012
                                                              
Net income available to common        $34,027                 $18,108
shareholders
Interest, including                   17,332                  17,218
discontinued operations
Depreciation, including               25,827                 25,032
discontinued operations
EBITDA                                77,186                  60,358
Redeemable noncontrolling             48                      105
interest in income
Dividends on preferred stock          911                     911
Net gain on sale of                   (15,025)               -
unconsolidated entities
Adjusted EBITDA                       $63,120                $61,374
                                                              
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
                                      3/31/2013               3/31/2012
                                                              
Net income available to common        $34,027                 $18,108
shareholders
Interest, including                   17,332                  17,218
discontinued operations
Depreciation, including               25,827                  25,032
discontinued operations
Redeemable noncontrolling             48                      105
interest in income
Net gain on sale of                   (15,025)                -
unconsolidated entities
Dividends on preferred stock          911                     911
General and administrative            6,382                  5,847
expense
NOI                                   $69,502                $67,221
Less Non Same-Store NOI               1,476                  2,603
Same-Store NOI                        $68,026                $64,618
                                                              

Contact:

BRE Properties, Inc.
Investor Contact:
Stephanie T. Andre, 415-445-3745
 
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