BRE PROPERTIES INC /MD/ - FORM 8-K - EX-99.2 - SUPPLEMENTAL FINANCIAL DATA

Attached files

file	filename
8-K - FORM 8-K - BRE PROPERTIES INC /MD/	d8k.htm
EX-99.1 - PRESS RELEASE - BRE PROPERTIES INC /MD/	dex991.htm

Exhibit 99.2

LOGO

BRE Properties, Inc.

Second Quarter 2011

Earnings Release and

Supplemental Financial Data


Table of Contents	Page

Financial and Operating Highlights		1

Consolidated Balance Sheets		2

Consolidated Statements of Income - Comparative Quarters		3

Consolidated Statements of Income - Past Five Quarters		4

Reconciliation of FFO, Capital Expenditures, and Continuing and Discontinued Operations		5

Market Summaries “Same-Store” Data

- Quarter vs. Quarter		6

- YTD 2011 vs. YTD 2010		7

- Same-Store Operating Expense Summary and Joint Venture Disclosure		8

- Sequential “Same-Store” Operating Data		9

- Summary of Revenue and Occupancy Changes		10

- Operating, Renewal and Leasing Metrics		11

Debt Summary		12

Development Communities and Land Held for Development		13

Exhibit A - Share Analysis		14

Exhibit B - Non-GAAP Financial Measure Reconciliations and Definitions		15-16

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: Except for the historical information contained herein, this document contains forward-looking statements regarding BRE and property performance, and is based on BRE’s current expectations and judgment. Actual results could vary materially depending on risks and uncertainties inherent to general and local real estate conditions, future interest rate levels or capital market conditions. For more details, please refer to BRE’s SEC filings, including its most recent Annual Report on Form 10-K and quarterly report on Form 10-Q.

BRE Properties, Inc.

Financial and Operating Highlights

Second Quarter 2011

(Unaudited; in thousands, except per share, ratio and community data)


	Quarter ending June 30,
	2011			2010
Selected Financial Results

Total revenues ⁽¹⁾	$	93,462		$	83,949
Total real estate expenses ⁽¹⁾	$	30,069		$	27,713
G&A expense	$	5,159		$	5,233
EBITDA ⁽²⁾	$	59,562		$	54,556
Interest expense	$	18,739		$	20,727
Net income	$	6,172		$	16,297
Funds from operations ⁽²⁾	$	34,852		$	28,928
Net income per share ⁽³⁾	$	0.09		$	0.26
FFO per share ⁽²⁾	$	0.49		$	0.46

	Six Months ending June 30,
	2011			2010
Total revenues ⁽¹⁾	$	184,066		$	165,610

Total real estate expenses ⁽¹⁾	$	59,459		$	54,287
G&A expense	$	10,394		$	10,439
EBITDA ⁽²⁾	$	116,787		$	108,537
Interest expense	$	38,487		$	41,826
Net income	$	15,816		$	21,822
Funds from operations ⁽²⁾	$	69,634		$	58,307
Net income per share ⁽³⁾	$	0.23		$	0.37
FFO per share ⁽²⁾	$	1.01		$	0.97

	Q2 2011			Q2 2010
Financial Metrics

Debt-to-EBITDA		6.8x			7.5x
Debt-to-total market capitalization		29.9	%		39.0	%
Debt-to-gross assets		40.8	%		45.4	%
Secured debt-to-gross assets		20.2	%		21.4	%
Interest coverage ratio ⁽⁴⁾		2.7x			2.3x
Fixed charge coverage ratio ⁽⁴⁾		2.3x			2.0x


Capitalization

BRE common share price, 3/31/11	$	47.18
BRE common share price, 6/30/11	$	49.88

Common shares and units - Outstanding

period end		75,312
quarter average		70,640
year-to-date average		68,375
Total funded debt	$	1,637,536
Preferred equity (liquidation value)	$	75,000
Common equity (at market)	$	3,756,563
Total market capitalization	$	5,469,099
Total assets, gross at 6/30/11	$	4,011,106


	Quarter ending June 30,
	2011			2010
Same-Store Operating Results

Revenue growth (%)		2.9	%		-2.7	%
Expense growth (%)		-0.4	%		2.3	%
NOI growth (%)		4.4	%		-4.9	%
Operating margin		68.5	%		67.6	%
Occupancy (avg. physical)		95.7	%		95.9	%
Annual turnover ratio		64.9	%		65.5	%

	Six Months ending June 30,
	2011			2010
Revenue growth (%)		2.2	%		-3.8	%
Expense growth (%)		0.0	%		2.2	%
NOI growth (%)		3.2	%		-6.4	%
Operating margin		68.4	%		67.8	%
Occupancy (avg. physical)		95.5	%		95.5	%
Annual turnover ratio		59.7	%		61.3	%

	Quarter ending June 30,
	2011			2010
Non Same-Store Operating Results

Revenues	$	11,529		$	4,188
NOI	$	7,579		$	2,700
Occupancy (avg. physical)		93.6	%		72.2	%
Gross asset value	$	627,219		$	230,927
Units		2,545			1,317	(5)

	Six Months ending June 30,
	2011			2010
Revenues	$	21,757		$	6,587
NOI	$	14,285		$	4,260
Occupancy (avg. physical)		93.3	%		69.2	%
Community Information

As of June 30, 2011
Operating:		Properties			Units

Wholly or majority owned
Same-store		68			19,275
Non same-store		9			2,545

Total		77			21,820
Joint venture		13			4,080

Development Pipeline:
Under construction		1			336
Land owned for development		6			1,938
Land under contract		3			880

(1)	Revenues reported exclude results from discontinued operations, partnership income and other income. Expenses exclude discontinued operations.

(2)	Please refer to Exhibit C for definitions and reconciliations of all non-GAAP financial measures presented in this package.

(3)	Represents diluted per share amounts.

(4)	GAAP interest expense is grossed up by adding back capitalized interest. Fixed charges include gross interest incurred, preferred dividends and recurring cash amortization on secured debt.

(5)	Represents Q2’11 non-same-store units present as of Q2’10.

Page 1

BRE Properties, Inc.

Consolidated Balance Sheets

Second Quarter 2011

(Unaudited, dollar amounts in thousands except per share data)


	June 30, 2011			December 31, 2010
ASSETS

Real estate portfolio:
Direct investments in real estate:

Investments in rental properties	$	3,601,749		$	3,464,466
Construction in progress		41,065			29,095
Less: accumulated depreciation		(691,921	)		(640,456	)

		2,950,893			2,853,105

Equity in real estate joint ventures:
Investments		69,295			61,132

Real estate held for sale, net		—			—

Land under development		242,600			183,291


Total real estate portfolio		3,262,788			3,097,528

Cash		6,829			6,357
Other assets		49,568			52,362


TOTAL ASSETS	$	3,319,185		$	3,156,247


LIABILITIES AND SHAREHOLDERS’ EQUITY

Liabilities:
Unsecured senior notes	$	724,744		$	773,076
Unsecured line of credit		103,000			209,000
Mortgage loans payable		809,792			810,842
Accounts payable and accrued expenses		49,922			52,070


Total liabilities		1,687,458			1,844,988


Redeemable noncontrolling interests		38,791			34,866


Shareholders’ equity:

Preferred Stock, $0.01 par value; 20,000,000 shares authorized: 3,000,000 and 7,000,000 shares with $25 liquidation preference issued and outstanding at June 30, 2011 and December 31, 2010, respectively.		30			70

Common stock, $0.01 par value, 100,000,000 shares authorized. Shares issued and outstanding: 74,696,845 and 64,675,815 at June 30, 2011 and December 31, 2010, respectively.		747			647

Additional paid-in capital		1,592,159			1,275,676


Total shareholders’ equity		1,592,936			1,276,393


TOTAL LIABILITIES AND SHAREHOLDERS EQUITY	$	3,319,185		$	3,156,247

Page 2

BRE Properties, Inc.

Consolidated Statements of Income

Quarters Ended June 30, 2011 and 2010

(Unaudited, dollar and share amounts in thousands)


	Quarter ended 6/30/11		Quarter ended 6/30/10			Six months ended 6/30/11		Six months ended 6/30/10
REVENUES

Rental income	$	89,909	$	80,829		$	177,254	$	159,366
Ancillary income		3,553		3,120			6,812		6,244

Total revenues		93,462		83,949			184,066		165,610

EXPENSES

Real estate	$	30,069	$	27,713		$	59,459		54,287
Provision for depreciation		27,936		22,470			52,337		44,352
Interest		18,739		20,727			38,487		41,826
General and administrative		5,159		5,233			10,394		10,439
Other expenses ⁽¹⁾		111		1,771			254		2,696

Total expenses		82,014		77,914			160,931		153,600

Other income		597		788			1,202		1,512

Net (loss) from extinguishment of debt		—		(558	)		—		(558	)

Net income before noncontrolling interests, partnership income and discontinued operations		12,045		6,265			24,337		12,964

Income from unconsolidated entities		731		526			1,372		1,073

Income from continuing operations		12,776		6,791			25,709		14,037

Discontinued operations:
Discontinued operations, net ⁽²⁾		—		1,151			—		2,755
Net gain on sales of discontinued operations		—		11,681			—		11,681


Income from discontinued operations		—		12,832			—		14,436

NET INCOME	$	12,776	$	19,623		$	25,709	$	28,473

Redeemable noncontrolling interest in income		335		373			671		745
Redemption related preferred stock issuance cost		3,616		—			3,616		—

Dividends attributable to preferred stock		2,653		2,953			5,606		5,906


NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	6,172	$	16,297		$	15,816	$	21,822


Net income per common share - basic	$	0.09	$	0.26		$	0.23	$	0.37


Net income per common share - diluted	$	0.09	$	0.26		$	0.23	$	0.37


Weighted average shares outstanding - basic⁽³⁾		70,025		61,820			67,760		58,985


Weighted average shares outstanding - diluted ⁽³⁾		70,250		61,990			67,980		59,130

(1)

For the quarter ended June 30, 2011; $111,000 of acquisition costs were reported in other expenses. For the quarter ended June 30, 2010 other expenses include a $1,300,000 one-time charge associated with the resignation of our COO and $470,000 related to acquisition costs. For the six months ended June 30, 2011; $254,000 of acquisition costs were reported in other expenses. For the six months ended June 30, 2010 other expenses include a $1,300,000 one-time charge associated with the resignation of our COO and $1,395,000 related to acquisition costs.

(2)	For 2010, includes four operating properties sold during the twelve months ending December 31, 2010.


	Quarter ended 6/30/11		Quarter ended 6/30/10			Quarter ended 6/30/11		Quarter ended 6/30/10
Rental and ancillary income		—	$	3,703			—	$	8,163
Real estate expenses		—		(1,464	)		—		(3,095	)
Provision for depreciation		—		(1,088	)		—		(2,313	)

Income from discontinued operations, net		—	$	1,151			—	$	2,755

(3)	See analysis of weighted average shares and ending shares in Exhibit A.

Page 3

BRE Properties, Inc.

Consolidated Statements of Income

Past Five Quarters

(Unaudited, dollar amounts in thousands)


	June 30, 2011		Mar. 31, 2011		Dec. 31, 2010			Sept. 30, 2010		June 30, 2010
REVENUES

Rental income	$	89,909	$	87,345	$	86,162		$	83,752	$	80,829
Ancillary income		3,553		3,259		3,012			3,436		3,120

Total revenues		93,462		90,604		89,174			87,188		83,949

EXPENSES

Real estate	$	30,069	$	29,390	$	28,704		$	28,337	$	27,713
Provision for depreciation		27,936		24,401		24,223			23,209		22,470
Interest		18,739		19,748		21,428			21,639		20,727
General and administrative		5,159		5,234		5,116			5,015		5,233
Other expenses		111		143		211			2,391		1,771

Total expenses		82,014		78,916		79,682			80,591		77,914

Other income		597		605		681			741		788
Net (loss) from extinguishment of debt		—		—		(22,949	)		—		(558	)
Income/(loss) from continuing operations and discontinued operations		12,045		12,293		(12,776	)		7,338		6,265

Income from unconsolidated entities		731		640		586			520		526


Income/(loss) from continuing operations		12,776		12,933		(12,190	)		7,858		6,791
Discontinued operations:
Discontinued operations, net ⁽¹⁾		—		—		401			1,862		1,151
Net gain on sales of discontinued operations		—		—		15,226			13,203		11,681

Income from discontinued operations		—		—		15,627			15,065		12,832

NET INCOME	$	12,776	$	12,933	$	3,437		$	22,923	$	19,623

Redeemable noncontrolling interest in income		335		335		335			365		373
Redemption related preferred stock issuance cost		3,616		—		—			—		—
Dividends attributable to preferred stock		2,653		2,953		2,953			2,953		2,953

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	6,172	$	9,645	$	149		$	19,605	$	16,297


Net income per common share - basic	$	0.09	$	0.15	$	0.00		$	0.30	$	0.26


Net income per common share - diluted	$	0.09	$	0.15	$	0.00		$	0.30	$	0.26


Weighted average shares outstanding - basic⁽²⁾		70,025		64,890		64,305			64,050		61,820


Weighted average shares outstanding - diluted⁽²⁾		70,250		65,105		64,305			64,210		61,990

(1)	Details of earnings from discontinued operations, net:


	June 30, 2011		Mar. 31, 2011		Dec. 31, 2010			Sept. 30, 2010			June 30, 2010
Rental and ancillary income		—		—	$	885		$	3,410		$	3,703
Real estate expenses		—		—		(369	)		(1,376	)		(1,464	)
Provision for depreciation		—		—		(115	)		(172	)		(1,088	)

Income from discontinued operations, net		—		—	$	401		$	1,862		$	1,151

(2)	See analysis of weighted average shares and ending shares in Exhibit A.

Page 4

BRE Properties, Inc.

Reconciliation of Funds from Operations (FFO), and Capital Expenditures

(In thousands, except per share, unit and per unit data)


	June 31, 2011			Mar. 31, 2011			Dec. 31, 2010			Sept. 30, 2010			June 30, 2010
CALCULATION OF FFO

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	6,172		$	9,645		$	149		$	19,605		$	16,297
Add back/ exclude:
Depreciation from continuing operations		27,936			24,401			24,223			23,209			22,470
Depreciation from discontinued operations		—			—			115			172			1,088
Redeemable noncontrolling interest in income ⁽¹⁾		335			335			—			365			373
Depreciation from unconsolidated entities		514			506			501			524			486
Net (gain) on sales of discontinued operations		—			—			(15,226	)		(13,203	)		(11,681	)
Less: Redeemable noncontrolling interests in income not convertible to common ⁽¹⁾		(105	)		(105	)		—			(105	)		(105	)

FUNDS FROM OPERATIONS ⁽²⁾	$	34,852		$	34,782		$	9,762		$	30,567		$	28,928


Allocation to participating securities ⁽³⁾	($	145	)	($	195	)	($	35	)	($	161	)	($	199	)

Weighted average shares and equivalents outstanding - diluted		70,865			65,720			64,500			64,850			62,685


Funds from operations (per share) - diluted	$	0.49		$	0.53		$	0.15		$	0.47		$	0.46

(1)	OP units were dilutive for the quarters ending June 30, 2011, March 31, 2011, September 30, 2010, and June 30, 2010. OP units were anti-dilutive for the quarter ending December 31, 2010, but dilutive for the twelve months ending December 31, 2010.

(2)	Funds From Operations (FFO) is calculated in accordance with the White Paper adopted by the National Association of Real Estate Investment Trusts in October 1999 (as amended in April 2002). See Exhibit C for further definition.

(3)	Adjustment to the numerators for diluted FFO per common share and diluted net income per common share calculations when applying the two class method for calculating EPS.


	June 30, 2011		Mar. 31, 2011		Dec. 31, 2010		Sept. 30, 2010		June 30, 2010
NON OPERATING EXPENSE ITEMS INCLUDED IN FFO

Net loss on extinguishment of debt		—		—	$	22,949		—	$	558

Net loss extinguishment of debt - per share	$	0.00	$	0.00	$	0.36	$	0.00	$	0.01
Acquisition costs	$	111	$	143	$	211	$	2,391	$	471

Acquisition costs - per share	$	0.00	$	0.00	$	0.00	$	0.04	$	0.01
Severance cost		—		—		—		—	$	1,300

Severance cost - per share	$	0.00	$	0.00	$	0.00	$	0.00	$	0.02
Redemption related preferred stock issuance cost	$	3,616		—		—		—		—

Redemption related preferred stock issuance cost - per share	$	0.05	$	0.00	$	0.00	$	0.00	$	0.00

	June 30, 2011		Mar. 31, 2011		Dec. 31, 2010		Sept. 30, 2010		June 30, 2010
CAPITAL EXPENDITURES
Recurring capital expenditures	$	4,990	$	4,956	$	7,129	$	5,679	$	6,446

Average apartment units in period		21,622		21,423		21,615		21,906		21,649
Capital expenditures per apartment unit in period	$	231	$	231	$	330	$	259	$	300
Capital expenditures per apartment unit-trailing four quarters	$	1,051	$	1,120	$	1,065	$	973	$	986
Revenue enhancing rehabilitation costs	$	3,472	$	1,659	$	1,801	$	1,840	$	1,178

Page 5

BRE Properties, Inc.

“Same-Store” Markets Summary

For the Quarters ended June 30, 2011 and 2010

(Dollar amounts in thousands)


			Revenues							Expenses
	No. of Units		Q2 2011		Q2 2010		% Change			Q2 2011		Q2 2010		% Change
California
San Diego		3,958	$	17,510	$	17,208		1.8	%	$	5,145	$	4,925		4.5	%
Inland Empire		1,807		6,553		6,491		1.0	%		2,220		2,254		-1.5	%
Orange County		3,349		14,651		14,262		2.7	%		4,649		4,541		2.4	%
Los Angeles		2,547		11,981		11,783		1.7	%		3,780		4,053		-6.7	%
San Francisco		3,152		16,065		15,305		5.0	%		4,470		4,500		-0.7	%

Subtotal; California		14,813	$	66,760	$	65,049		2.6	%	$	20,264	$	20,273		0.0	%

Washington
Seattle		3,160		11,237		10,858		3.5	%		4,116		4,180		-1.5	%

Non-Core Markets⁽¹⁾		1,302		3,771		3,578		5.4	%		1,372		1,398		-1.9	%


Total Same-Store⁽²⁾		19,275	$	81,768	$	79,485		2.9	%	$	25,752	$	25,851		-0.4	%


					Net Operating Income
	No. of Communities		No. of Units		Q2 2011		Q2 2010		% Change			% of Total
California
San Diego		13		3,958	$	12,365	$	12,283		0.7	%		22.1	%
Inland Empire		7		1,807		4,333		4,237		2.3	%		7.7	%
Orange County		11		3,349		10,002		9,721		2.9	%		17.9	%
Los Angeles		12		2,547		8,201		7,730		6.1	%		14.6	%
San Francisco		10		3,152		11,595		10,805		7.3	%		20.7	%

Subtotal; California		53		14,813	$	46,496	$	44,776		3.8	%		83.0	%

Washington
Seattle		12		3,160		7,121		6,678		6.6	%		12.7	%

Non-Core Markets⁽¹⁾		3		1,302		2,399		2,180		10.0	%		4.3	%


Total Same-Store ⁽²⁾		68		19,275	$	56,016	$	53,634		4.4	%		100.0	%


							Net Operating Income						Avg. Physical Occupancy			Gross Carrying Value
	No. of Communities			No. of Units			Q2 2011			Q2 2010			Q2 2011			Q2 2011
“Non Same-Store” Summary
Acquired properties⁽³⁾		6			1,539		$	4,514		$	972			92.8	%	$	417,671
Lease up properties⁽⁴⁾		2			566			1,822			544			95.5	%		179,615
Rehabilitation properties ⁽⁵⁾		1			440			1,243			1,184			94.1	%		29,933
Joint venture income⁽⁶⁾		13			4,080			731			526
Commercial and Other⁽⁷⁾		n/a			n/a			(202	)		(98	)
Other income		n/a			n/a			597			788
Discontinued operations⁽⁸⁾		4			1,530			—			2,239

Total Non Same-Store		26			8,155		$	8,705		$	6,155			93.6	%	$	627,219


Less Properties Sold 2010		(4	)		(1,530	)

Total All Units / NOI		90			25,900		$	64,721		$	59,789

(1)	Consists of one property in Sacramento, CA (400 Units) and two properties in Phoenix, AZ (902 units).

(2)	Consists of stabilized properties owned by BRE for two comparable twelve month periods, starting January 1, 2010.

(3)	Consists of NOI from six properties acquired after January 1, 2010.

(4)	Consists of NOI from two properties fully delivered and under lease up.

(5)	Consists of NOI from one property under rehabilitation.

(6)	Consists of our percentage of net income derived from joint venture investments in rental properties. See page 8 for a reconciliation of the components of BRE’s share of joint venture net income.

(7)	Consists of NOI from commercial properties that will later be developed as multi-family and other real estate expenses. For the three months ended June 30, 2011 and 2010 other real estate expenses exceeded the NOI from commercial.

(8)	Includes results from four properties sold in 2010.

Page 6

BRE Properties, Inc.

“Same-Store” Markets Summary

For the Six Months ended June 30, 2011 and 2010

(Dollar amounts in thousands)


			Revenues							Expenses
	No. of Units		YTD 2011		YTD 2010		% Change			YTD 2011		YTD 2010		% Change
California
San Diego		3,958	$	34,802	$	34,483		0.9	%	$	10,220	$	10,071		1.5	%
Inland Empire		1,807		13,111		12,934		1.4	%		4,264		4,462		-4.4	%
Orange County		3,349		28,988		28,558		1.5	%		9,327		9,008		3.5	%
Los Angeles		2,547		23,791		23,602		0.8	%		7,758		7,984		-2.8	%
San Francisco		3,152		31,632		30,283		4.5	%		9,011		8,838		2.0	%

Subtotal; California		14,813	$	132,324	$	129,860		1.9	%	$	40,580	$	40,363		0.5	%

Washington
Seattle		3,160		22,116		21,504		2.8	%		7,904		7,965		-0.8	%

Non-Core Markets⁽¹⁾		1,302		7,479		7,111		5.2	%		2,732		2,882		-5.2	%


Total Same-Store⁽²⁾		19,275	$	161,919	$	158,475		2.2	%	$	51,216	$	51,210		0.0	%


					Net Operating Income
	No. of Communities		No. of Units		YTD 2011		YTD 2010		% Change			% of Total
California
San Diego		13		3,958	$	24,582	$	24,412		0.7	%		22.1	%
Inland Empire		7		1,807		8,847		8,472		4.4	%		8.0	%
Orange County		11		3,349		19,661		19,550		0.6	%		17.8	%
Los Angeles		12		2,547		16,033		15,618		2.7	%		14.5	%
San Francisco		10		3,152		22,621		21,445		5.5	%		20.4	%

Subtotal; California		53		14,813	$	91,744	$	89,497		2.5	%		82.9	%

Washington
Seattle		12		3,160		14,212		13,539		5.0	%		12.8	%

Non-Core Markets⁽¹⁾		3		1,302		4,747		4,229		12.2	%		4.3	%


Total Same-Store ⁽²⁾		68		19,275	$	110,703	$	107,265		3.2	%		100.0	%


							Net Operating Income						Avg. Physical Occupancy			Gross Carrying Value
	No. of Communities			No. of Units			YTD 2011			YTD 2010			YTD 2011			YTD 2011
“Non Same-Store” Summary
Acquired properties⁽³⁾		6			1,539		$	8,175		$	1,046			92.8	%	$	417,671
Lease up properties⁽⁴⁾		2			566			3,626			795			93.9	%		179,615
Rehabilitation properties ⁽⁵⁾		1			440			2,484			2,418			94.2	%		29,933
Joint venture income⁽⁶⁾		13			4,080			1,372			1,073
Commercial and Other⁽⁷⁾		n/ a			n/a			(381	)		(201	)
Other income		n/ a			n/a			1,202			1,512
Discontinued operations⁽⁸⁾		4			1,530			—			5,068

Total Non Same-Store		26			8,155		$	16,478		$	11,711			93.3	%	$	627,219


Less Properties Sold 2010		(4	)		(1,530	)

Total All Units / NOI		90			25,900		$	127,181		$	118,976

(1)	Consists of one property in Sacramento, CA (400 Units) and two properties in Phoenix, AZ (902 units).

(2)	Consists of stabilized properties owned by BRE for two comparable twelve month periods, starting January 1, 2010.

(3)	Consists of NOI from six properties acquired after January 1, 2010.

(4)	Consists of NOI from two properties fully delivered and under lease up.

(5)	Consists of NOI from one property under rehabilitation.

(6)	Consists of our percentage of net income derived from joint venture investments in rental properties. See page 8 for a reconciliation of the components of BRE’s share of joint venture net income.

(7)	Consists of NOI from commercial properties that will later be developed as multi-family and other real estate expenses. For the six months ended June 30, 2011 and 2010 other real estate expenses exceeded the NOI from commercial.

(8)	Includes results from four properties sold in 2010.

Page 7

BRE Properties, Inc.

Same Store Operating Expense Summary and Joint Venture Disclosure

(Dollar amounts in thousands)

SAME-STORE OPERATING EXPENSES (19,275 Units)


Quarter Ended June 30, 2011	Q2 2011		Q2 2010		$ Change			% Change			% of Q2 2011 Operating Expenses
Property taxes	$	7,112	$	7,709	$	(597	)		-7.7	%		27.5	%
Insurance		997		1,011		(14	)		-1.4	%		3.9	%
Utilities		2,103		2,061		42			2.0	%		8.2	%
Property management fees ⁽¹⁾		2,698		2,547		151			5.9	%		10.5	%
Other operating expenses ⁽²⁾		12,842		12,523		319			2.5	%		49.9	%

Total operating expenses	$	25,752	$	25,851	$	(99	)		-0.4	%		100.0	%


Six Months Ended June 30, 2011	YTD 2011		YTD 2010		$ Change			% Change			% of YTD 2011 Operating Expenses
Property taxes	$	14,335	$	15,176	$	(841	)		-5.5	%		27.9	%
Insurance		1,988		1,920		68			3.5	%		3.9	%
Utilities		3,890		3,794		96			2.5	%		7.6	%
Property management fees ⁽¹⁾		5,262		5,071		191			3.8	%		10.3	%
Other operating expenses ⁽²⁾		25,741		25,249		492			1.9	%		50.3	%

Total operating expenses	$	51,216	$	51,210	$	6			0.0	%		100.0	%

(1)	Management fees based on a percentage of total revenues. Amount approximates the corporate cost to support on-site personnel. Corporate G&A is reduced by the allocation.

(2)	Includes advertising, payroll, property level administrative costs, repairs & maintenance and unit turnover costs.

JOINT VENTURE DISCLOSURE- Quarter and Six Months Ended June 30, 2011


Joint Ventures	Communities		Regional Breakdown	Units		BRE equity investment ⁽³⁾
Relationship 1 - 15% BRE equity ownership		11	Phx. (3) Den. (8)		3,592	$	48,814
Relationship 2 - 35% BRE equity ownership		2	Phx. (1) Sac. (1)		488		20,481

Total		13			4,080	$	69,295


BRE share	Q2 2011		Q2 2010	YTD 2011		YTD 2010
Revenues	$	2,019	$1,878	$	4,023	$	3,736
Expenses		725	748		1,469		1,464

Net Operating Income		1,294	1,130		2,554		2,272
Depreciation		515	486		1,020		966
Interest		47	118		161		234

Net Income	$	731	$526	$	1,372	$	1,072
Third party management fees earned	$	456	$425	$	903	$	843

(3)

During the quarter ending June 30, 2011, the Company paid the remaining debt upon maturity inside its 35% equity investment. As a result of the debt maturity, the Company’s basis in the investment increased by approximately $8,600.000. As of June 30, 2011, all of the Company’s equity investments were unlevered.

Page 8

BRE Properties, Inc.

Sequential “Same-Store” Multifamily Markets Summary

Last five quarters

REVENUES


	Q2’ 11			Q1’ 11			Q4’ 10			Q3’ 10			Q2’ 10
California
San Diego		1.3	%		0.7	%		-0.5	%		0.3	%		-0.4	%
Inland Empire		-0.1	%		0.2	%		0.5	%		0.3	%		0.7	%
Orange County		2.2	%		0.3	%		-0.6	%		0.8	%		-0.2	%
Los Angeles		1.5	%		0.1	%		-1.1	%		1.2	%		-0.3	%
San Francisco		3.2	%		0.9	%		-1.5	%		2.3	%		2.2	%

Subtotal; California		1.8	%		0.5	%		-0.8	%		1.1	%		0.4	%

Washington
Seattle		3.3	%		2.2	%		-1.5	%		-0.5	%		2.0	%
Non-Core Markets⁽¹⁾		1.7	%		1.7	%		0.0	%		2.0	%		1.3	%

Total Same Store ⁽³⁾		2.0	%		0.8	%		-0.8	%		0.9	%		0.6	%


EXPENSES ⁽²⁾
	Q2’ 11			Q1’ 11			Q4’ 10			Q3’ 10			Q2’ 10
California
San Diego		1.4	%		6.0	%		-3.7	%		1.0	%		-4.3	%
Inland Empire		8.6	%		-0.7	%		-11.0	%		2.7	%		2.1	%
Orange County		-0.6	%		0.9	%		-2.8	%		5.1	%		1.7	%
Los Angeles		-5.0	%		-3.2	%		6.1	%		-4.4	%		3.1	%
San Francisco		-1.6	%		6.6	%		-3.1	%		-2.3	%		3.7	%

Subtotal; California		-0.3	%		2.3	%		-2.3	%		0.3	%		0.9	%

Washington
Seattle		8.7	%		-0.6	%		-3.8	%		-5.2	%		10.4	%
Non-Core Markets⁽¹⁾		0.9	%		0.1	%		-7.6	%		5.2	%		-5.8	%

Total Same Store ⁽³⁾		1.1	%		1.8	%		-2.9	%		-0.3	%		1.9	%


NET OPERATING INCOME
	Q2’ 11			Q1’ 11			Q4’ 10			Q3’ 10			Q2’ 10
California
San Diego		1.2	%		-1.4	%		-0.8	%		0.1	%		1.3	%
Inland Empire		-4.0	%		0.7	%		6.8	%		-0.9	%		0.0	%
Orange County		3.6	%		0.0	%		0.5	%		-1.2	%		-1.1	%
Los Angeles		4.7	%		1.8	%		-4.5	%		4.2	%		-2.0	%
San Francisco		5.2	%		-1.2	%		-0.9	%		4.2	%		1.6	%

Subtotal; California		2.8	%		-0.3	%		0.1	%		1.4	%		0.1	%

Washington
Seattle		0.4	%		3.8	%		-0.2	%		2.5	%		-2.7	%
Non-Core Markets⁽¹⁾		2.2	%		2.6	%		5.1	%		-0.1	%		6.4	%

Total Same Store ⁽³⁾		2.4	%		0.3	%		0.1	%		1.5	%		0.0	%

(1)	Consists of one property in Sacramento, CA (400 Units) and two properties in Phoenix, AZ (902 units).

(2)	Expenses fluctuate from quarter to quarter due to timing of repairs and maintenance, utilities and other items.

(3)	Data reflects sequential results for the company’s current same-store pool totaling 19,275 units for all periods shown.

Page 9

BRE Properties, Inc.

Summary of Revenue and Occupancy Changes - “Same-Store” properties

For the period ending June 30, 2011


Q2’11 vs. Q1’11 Change			Average Revenue per Unit ⁽¹⁾							Financial Occupancy⁽²⁾									Rental Revenue
	units		Q2’ 11		Q1’ 11		% Change			Q2’ 11			Q1’ 11			% Change			Q2’ 11		Q1’ 11		% Change
San Diego		3,958	$	1,542	$	1,531		0.7	%		95.6	%		95.1	%		0.5	%	$	17,510	$	17,292		1.3	%
Inland Empire		1,807		1,274		1,266		0.7	%		94.9	%		95.6	%		-0.7	%		6,553		6,558		-0.1	%
Orange County		3,349		1,514		1,505		0.6	%		96.3	%		94.8	%		1.5	%		14,651		14,337		2.2	%
Los Angeles		2,547		1,659		1,637		1.3	%		94.5	%		94.4	%		0.1	%		11,981		11,809		1.5	%
San Francisco		3,152		1,777		1,735		2.4	%		95.6	%		94.9	%		0.7	%		16,065		15,567		3.2	%
Seattle		3,160		1,235		1,204		2.5	%		96.0	%		95.3	%		0.7	%		11,237		10,879		3.3	%
Non Core Markets		1,302		1,016		991		2.5	%		95.0	%		95.8	%		-0.8	%		3,771		3,708		1.7	%


Same Store		19,275	$	1,481	$	1,459		1.5	%		95.5	%		95.0	%		0.5	%	$	81,766	$	80,152		2.0	%


Q2’11 vs. Q2’10 Change			Average Revenue per Unit ⁽¹⁾							Financial Occupancy⁽²⁾									Rental Revenue
	units		Q2’ 11		Q2’ 10		% Change			Q2’ 11			Q2’ 10			% Change			Q2’ 11		Q2’ 10		% Change
San Diego		3,958	$	1,542	$	1,517		1.6	%		95.6	%		95.5	%		0.1	%	$	17,510	$	17,208		1.8	%
Inland Empire		1,807		1,274		1,242		2.5	%		94.9	%		96.4	%		-1.5	%		6,553		6,491		1.0	%
Orange County		3,349		1,514		1,485		2.0	%		96.3	%		95.6	%		0.7	%		14,651		14,262		2.7	%
Los Angeles		2,547		1,659		1,606		3.3	%		94.5	%		96.0	%		-1.5	%		11,981		11,783		1.7	%
San Francisco		3,152		1,777		1,669		6.5	%		95.6	%		97.0	%		-1.4	%		16,065		15,305		5.0	%
Seattle		3,160		1,235		1,196		3.3	%		96.0	%		95.8	%		0.2	%		11,237		10,858		3.5	%
Non Core Markets		1,302		1,016		955		6.4	%		95.0	%		95.9	%		-0.9	%		3,771		3,578		5.4	%


Same Store		19,275	$	1,481	$	1,432		3.4	%		95.5	%		96.0	%		-0.5	%	$	81,766	$	79,483		2.9	%


YTD 2011 vs. YTD 2010 Change			Average Revenue per Unit ⁽¹⁾							Financial Occupancy⁽²⁾									Rental Revenue
	units		YTD 6/30/11		YTD 6/30/10		% Change			YTD 6/30/11			YTD 6/30/10			% Change			YTD 6/30/11		YTD 6/30/10		% Change
San Diego		3,958	$	1,537	$	1,516		1.3	%		95.4	%		95.8	%		-0.4	%	$	34,802	$	34,483		0.9	%
Inland Empire		1,807		1,269		1,243		2.1	%		95.3	%		96.0	%		-0.7	%		13,111		12,934		1.4	%
Orange County		3,349		1,510		1,490		1.3	%		95.5	%		95.4	%		0.2	%		28,988		28,558		1.5	%
Los Angeles		2,547		1,648		1,605		2.7	%		94.5	%		96.2	%		-1.8	%		23,791		23,602		0.8	%
San Francisco		3,152		1,757		1,667		5.4	%		95.2	%		96.1	%		-0.9	%		31,632		30,283		4.5	%
Seattle		3,160		1,219		1,192		2.3	%		95.7	%		95.2	%		0.5	%		22,116		21,504		2.8	%
Non Core Markets		1,302		2,007		1,908		5.2	%		95.4	%		95.4	%		0.0	%		7,479		7,111		5.2	%

Same Store		19,275	$	1,470	$	1,431		2.7	%		95.3	%		95.7	%		-0.5	%	$	161,919	$	158,475		2.2	%

(1)	Average revenue per unit includes rental and ancillary income earned on occupied units during the period. Ancillary income per occupied unit totals approximately $55 per unit per month. Amounts reflect the effect of concessions amortized over the average lease term.

(2)

Financial occupancy is defined as gross potential rent less vacancy loss as a percentage of gross potential rent. Gross potential rent is determined by valuing occupied units at contract rates and vacant units at market rents. Vacancy loss is determined by valuing vacant units at current market rents.

Page 10

BRE Properties, Inc.

“Same -Store” Operating Metrics

As of June 30, 2011 and 2010


	No. of Units		Market Rent per Unit ⁽²⁾							Occupancy⁽³⁾						Turnover Ratio ⁽⁴⁾
	No. of Units		Q2’11		Q2’10		% Change			Q2’11			Q2’10			2011			2010
California
San Diego		3,958	$	1,527	$	1,496		2.1	%		95.7	%		95.4	%		66	%		70	%
Inland Empire		1,807		1,279		1,218		5.2	%		95.0	%		95.9	%		62	%		62	%
Orange County		3,349		1,519		1,531		-0.8	%		96.2	%		95.4	%		64	%		61	%
Los Angeles		2,547		1,674		1,644		1.7	%		94.7	%		96.0	%		59	%		60	%
San Francisco		3,152		1,886		1,684		12.0	%		96.3	%		97.0	%		53	%		54	%

Subtotal; California		14,813	$	1,597	$	1,535		4.0	%		95.7	%		95.9	%		61	%		62	%

Washington

Seattle		3,160		1,276		1,149		11.1	%		96.1	%		95.5	%		52	%		57	%

Non-Core Markets⁽¹⁾		1,302		1,029		920		11.9	%		95.9	%		95.9	%		69	%		67	%


Total/Average Same Store ⁽⁵⁾		19,275	$	1,506	$	1,430		5.3	%		95.7	%		95.9	%		60	%		61	%

(1)	Consists of one property in Sacramento, CA (400 Units) and two properties in Phoenix, AZ (902 units).

(2)	Represents, by region, weighted average market level rents across the quarter.

(3)	Represents average physical occupancy for the quarter.

(4)	Represents the annualized number of units turned over for the six month period, divided by the number of units in the region.

(5)	Consists of stabilized properties owned by BRE for two comparable twelve month periods, starting January 1, 2010.

“Same -Store” New Lease and Renewal Transactions


	New Leases									Renewals									Total New Leases/Renewals
	Q2’11		New Leases Effective ⁽⁶⁾		Previous Resident Effective ⁽⁷⁾		% Change			Q2’11		Renewal Effective ⁽⁶⁾		Expiring Effective ⁽⁸⁾		% Change			Q2’11		Current Effective ⁽⁶⁾		Prior Effective		% Change
California
San Diego		720	$	1,474	$	1,457		1.1	%		497	$	1,531	$	1,485		3.1	%		1,217	$	1,497	$	1,469		1.9	%
Inland Empire		262		1,188		1,174		1.2	%		269		1,231		1,195		3.0	%		531		1,209		1,184		2.1	%
Orange County		489		1,497		1,453		3.0	%		477		1,486		1,456		2.1	%		966		1,492		1,454		2.6	%
Los Angeles		390		1,620		1,576		2.8	%		302		1,694		1,632		3.8	%		692		1,653		1,601		3.2	%
San Francisco		487		1,825		1,679		8.7	%		494		1,782		1,689		5.5	%		981		1,803		1,684		7.1	%

Subtotal; California		2,348	$	1,544	$	1,491		3.6	%		2,039	$	1,566	$	1,511		3.6	%		4,387	$	1,554	$	1,500		3.6	%

Washington
Seattle		501		1,214		1,118		8.6	%		537		1,207		1,137		6.2	%		1,038		1,211		1,128		7.4	%
Non-Core Markets		203		988		922		7.2	%		194		988		929		6.4	%		397		988		925		6.8	%

Total Same Store		3,052	$	1,453	$	1,392		4.4	%		2,770	$	1,456	$	1,398		4.2	%		5,822	$	1,454	$	1,395		4.3	%

⁽⁶⁾	Represents leased rent per unit less the monthly value of concessions awarded on leases and renewals signed during the quarter.

⁽⁷⁾	Represents leased rent per unit less the monthly value of concessions awarded on the prior resident for the same unit that was leased during the quarter.

⁽⁸⁾	Represents leased rent per unit less the monthly value of concessions awarded on the prior lease that expired during the quarter.

Page 11

BRE Properties, Inc.

Debt Summary as of June 30, 2011

(Dollar amounts in thousands)


DEBT MATURITY SCHEDULE
	Secured Debt				Unsecured Debt								Weighted
	Amortization		Balloon		Floating			Fixed			Total		Avg. Rate ⁽¹⁾			% of Debt
Year
2011	$	1,077	$	—	$	—					$	1,077		5.49	%		0.1	%
2012		1,236		65,507		103,000	(2)		35,000	(3)		204,743		3.59	%		12.4	%
2013		872		29,639		—			40,018			70,529		6.48	%		4.3	%
2014		3,839		—		—			50,000			53,839		4.82	%		3.3	%
2015		7,962		—		—			—			7,962		5.65	%		0.5	%
2016		9,041		—		—			—			9,041		5.65	%		0.6	%
2017		9,307		—		—			300,000			309,307		5.61	%		18.9	%
2018		9,853		—		—			—			9,853		5.65	%		0.6	%
2019		6,492		317,975		—			—			324,467		5.60	%		19.8	%
2020		3,346		343,646		—			—			346,992		5.62	%		21.2	%
2021		—		—		—			300,000			300,000		5.31	%		18.3	%

Total	$	53,025	$	756,767	$	103,000		$	725,018		$	1,637,810		5.32	%		100	%


WEIGHTED AVERAGE COST OF DEBT
	Balance			Weighted Avg. Term		Weighted Avg. Rate			Percentage Total Debt
Fixed Rate
Unsecured	$	690,018			7.00		5.51	%		42.1	%
Convertible (unsecured)		34,726	(3)		0.65		6.01	%		2.1	%
Secured		809,792			7.51		5.60	%		49.5	%

	$	1,534,536			7.13		5.57	%		93.7	%
Floating Rate
Unsecured		103,000			1.25		1.56	%		6.3	%

Total debt	$	1,637,536			6.76		5.32	%		100.0	%


CAPITALIZED INTEREST
	Q2 2011		Q2 2010
Capitalized Interest	$	3,554	$	3,231

	YTD 2011		YTD 2010
Capitalized Interest	$	6,286	$	6,364


SENIOR UNSECURED DEBT RATING As of August 3, 2011

Moody’s	Baa2	(stable	)
Standard & Poor’s	BBB	(stable	)
Fitch	BBB	(stable	)


SELECTED DEBT COVENANTS AND CREDIT RATIOS

	Requirement			Actual
Total Debt to Gross Assets		<60	%		40.8	%
Total Secured Debt to Total Assets		<40	%		20.2	%
Total Unencumbered Assets to Unsecured Debt		>1.6			3.47
Minimum Fixed Charge Coverage		>1.5			2.35
Unencumbered NOI		N/A			68.9	%


SUMMARY OF PREFERRED SHARES

	Q2 2011
Total preferred shares outstanding		3,000
Liquidation value	$	75,000
Dividend yield at par		6.75	%

(1)	Represents the weighted average effective interest rates of BRE’s debt maturities in the year in which they become due.

(2)	Outstanding balance under $750 million senior unsecured line of credit priced at LIBOR plus 47.5 bp, maturing in September 2012.

(3)	Represents $35 million cash principal with 4.125% coupon adjusted to reflect convertible debt accounting guidance effective January 2009.

Page 12

BRE Properties, Inc.

Development Summary

June 30, 2011

(Dollar amounts in millions)


CONSTRUCTION IN PROGRESS	Number of Units		Cost Incurred		Estimated Cost		Balance to Fund		Product Type		First CO ⁽¹⁾		Final CO ⁽¹⁾
Lawrence Station
Sunnyvale, CA		336	$	41.1	$	109.9	$	68.8		Wrap		Q2 ‘12		Q1 ‘13

Total CIP		336	$	41.1	$	109.9	$	68.8

LAND UNDER DEVELOPMENT ⁽²⁾

Number
of Units

Cost
Incurred

Estimated
Cost⁽³⁾

Balance
to Fund

Product
Type

Estimated
Start Date

Wilshire La Brea

Los Angeles, CA

478

113.0

TBR

Podium

2H ‘11

Town and Country

Sunnyvale, CA

280

29.0

TBR

Podium

2H ‘11

Aviara⁽⁴⁾

Mercer Island, WA

166

6.3

TBR

Podium

2H ‘11

Pleasanton I

Pleasanton, CA

254

17.2

TBR

Garden

TBD

Park Viridian II⁽⁵⁾

Anaheim, CA

400

33.7

TBR

Garden

TBD

Mission Bay ⁽⁶⁾

San Francisco, CA

360

43.4

TBR

Podium

2H ‘12

Total Land Owned

1,938

242.6

856.6

614.0

LAND UNDER CONTRACT ⁽⁷⁾

Number
of Units

Cost
Incurred⁽⁸⁾

Estimated
Cost

Balance
to Fund

Product
Type

Walnut Creek BART

358

9.1

TBR

Podium

Walnut Creek, CA

Redwood City

271

1.5

TBR

Podium

Redwood City, CA

Pleasanton II

251

0.8

TBR

Garden

Pleasanton, CA

Total

880

11.4

303.4

293.5

(1)	Represents estimated quarter in which first and final certificates of occupancy will be received. Projects generally received phased certificates of occupancy during the final six to nine months of construction.

(2)	Represents projects in various stages of predevelopment, development and initial construction, for which construction or supply contracts have not yet been finalized. When construction commences, projects are transferred to construction in progress.

(3)	Reflects the aggregate cost estimates including land. Specific property cost estimates To Be Reported (TBR) once entitlement approvals are received and the company is prepared to begin construction.

(4)	During the fourth quarter of 2010, the Company entered into a ground lease for the Mercer Island site. The ground lease has an initial term of 60 years, two 15-year extensions followed by a 10-year extension. The annualized GAAP expense is approximately $664,000.

(5)	During the first quarter of 2011, the Company purchased for $5.1 million, a 4.4 acre site contiguous to its existing Park Viridian operating community and an existing phase 2 land site in Anaheim. The combined undeveloped phases now total 400 units (185 units were added).

(6)	This acquisition is for two parcels of land in the Mission Bay district that are entitled for residential use and can be developed in phases.

(7)

Land under contract represents land parcels for which: 1) the Company has a signed agreement and the right to acquire the land (but not the obligation), 2) made a non refundable deposit and 3) commenced the entitlement process. Costs incurred on these projects are recorded in Other assets on the Consolidated Balance Sheets.

(8)	Represents deposits, contractual costs, and entitlement expenses incurred to date.

(9)

Development pipeline totals above do not include a potential future redevelopment site in Emeryville, California. The site consists of two existing occupied office buildings. The net book value of this investment is $10.2 million and it is recorded in Investment in rental properties. Predevelopment costs associated with this site total $3 million and are recorded in Other assets.

Page 13


BRE Properties, Inc.			Exhibit A

Share Analysis as of June 30, 2011

(Dollar and share amounts in thousands)

SUMMARY OF COMMON SHARES


	Qtr. Ended 6/30/2011			Qtr. Ended 3/31/2011			Qtr. Ended 12/31/2010			Qtr. Ended 9/30/2010			Qtr. Ended 6/30/2010
Weighted Average
Weighted average shares outstanding ⁽¹⁾		70,025			64,890			64,305			64,050			61,820
Weighted average OP units⁽²⁾		615			615			—			640			695
Dilutive effect of stock based awards		225			215			195			160			170


Diluted shares - FFO ⁽²⁾		70,865			65,720			64,500			64,850			62,685
Less: Anti-dilutive OP Units ⁽³⁾		(615	)		(615	)		—			(640	)		(695	)
Less: Anti-dilutive stock based awards ⁽³⁾		—			—			(195	)		—			—

Diluted shares - EPS⁽⁴⁾		70,250			65,105			64,305			64,210			61,990

	YTD			YTD
Weighted Average	6/30/2011			6/30/2010
Weighted average shares outstanding ⁽¹⁾		67,760			58,985
Weighted average OP units		615			730
Dilutive effect of stock based awards		220			145

Diluted shares - FFO		68,595			59,860
Less: Anti-dilutive OP Units ⁽³⁾		(615	)		(730	)

Diluted shares - EPS⁽⁴⁾		67,980			59,130

	As of 6/30/2011			As of 3/31/2011			As of 12/31/2010			As of 9/30/2010			As of 6/30/2010
Ending
Shares outstanding at end of period		74,697			65,341			64,675			64,088			64,022
OP units at end of period		615			615			615			639			639
Dilutive effect of stock based awards		220			215			170			160			175

Total		75,532			66,171			65,460			64,887			64,836

SUMMARY OF PREFERRED SHARES
	Qtr. Ended 6/30/2011			Qtr. Ended 3/31/2011			Qtr. Ended 12/31/2010			Qtr. Ended 9/30/2010			Qtr. Ended 6/30/2010
6.75% Series C, $25 per share liquidation preference		—			4,000			4,000			4,000			4,000
6.75% Series D, $25 per share liquidation preference		3,000			3,000			3,000			3,000			3,000

		3,000			7,000			7,000			7,000			7,000

(1)	Represents denominator for shares in the calculation of basic earnings per share.

(2)	OP Units are anti-dilutive for FFO and EPS for the quarter ended December 31, 2010, and therefore are not included in shares calculation.

(3)	Under FASB guidance, common share equivalents deemed to be anti-dilutive are excluded from the diluted earnings per share calculations.

(4)	Represents denominator for shares in the calculation of diluted EPS.

Page 14


BRE Properties, Inc.		Exhibit B

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 property, 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 properties that result from use or market conditions nor the level of capital expenditures to maintain the operating performance of our properties, 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.


	Quarter Ended 6/30/2011			Quarter Ended 6/30/2010			Six Months Ended 6/30/2011			Six Months Ended 6/30/2010
Net income available to common shareholders	$	6,172		$	16,297		$	15,816		$	21,822
Depreciation from continuing operations		27,936			22,470			52,337			44,352
Depreciation from discontinued operations		—			1,088			—			2,313
Redeemable noncontrolling interest in income		335			373			671			745
Depreciation from unconsolidated entities		514			486			1,020			966
Net gain on investments		—			(11,681	)		—			(11,681	)
Redemption related preferred stock issuance cost		—						—
Less: Redeemable noncontrolling interest in income not convertible into common shares		(105	)		(105	)		(210	)		(210	)

Funds from operations	$	34,852		$	28,928		$	69,634		$	58,307


Allocation to participating securities - diluted FFO ⁽¹⁾	$	(145	)	$	(199	)	$	(225	)	$	(433	)


Allocation to participating securities - diluted EPS ⁽¹⁾	$	(3	)	$	(94	)	$	(39	)	$	(116	)


Diluted shares outstanding - EPS ⁽²⁾		70,250			61,990			67,980			59,130
Net income per common share - diluted	$	0.09		$	0.26		$	0.23		$	0.37


Diluted shares outstanding - FFO ⁽²⁾		70,865			62,685			68,595			59,860
FFO per common share - diluted	$	0.49		$	0.46		$	1.01		$	0.97

⁽¹⁾	Adjustment to the numerators for diluted FFO per common share and diluted net income per common share calculations when applying the two class method for calculating EPS.

⁽²⁾	See analysis of weighted average shares and ending shares at Exhibit A.

Page 15


BRE Properties, Inc.		Exhibit B, continued

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 property 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 properties that result from use or market conditions nor the level of capital expenditures to maintain the operating performance of our properties, 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 6/30/2011		Quarter Ended 6/30/2010			Six Months Ended 6/30/2011		Six Months Ended 6/30/2010
Net income available to common shareholders	$	6,172	$	16,297		$	15,816	$	21,822
Interest, including discontinued operations		18,739		20,727			38,487		41,826
Depreciation, including discontinued operations		27,936		23,558			52,337		46,665

EBITDA		52,847		60,582			106,640		110,313
Redeemable noncontrolling interest in income		335		373			671		745
Net gain on sales		—		(11,681	)		—		(11,681	)
Dividends on preferred stock		2,653		2,953			5,606		5,906
Other expenses		111		1,771			254		2,696
Net loss on extinguishment of debt		—		558			—		558
Redemption related to preferred stock issuance cost		3,616		—			3,616		—

Adjusted EBITDA	$	59,562	$	54,556		$	116,787	$	108,537

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 property 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 6/30/2011		Quarter Ended 6/30/2010			Six Months Ended 6/30/2011		Six Months Ended 6/30/2010
Net income available to common shareholders	$	6,172	$	16,297		$	15,816	$	21,822
Interest, including discontinued operations		18,739		20,727			38,487		41,826
Depreciation, including discontinued operations		27,936		23,558			52,337		46,665
Redeemable noncontrolling interest in income		335		373			671		745
Net gain on sales		—		(11,681	)		—		(11,681	)
Dividends on preferred stock		2,653		2,953			5,606		5,906
General and administrative expense		5,159		5,233			10,394		10,439
Other expenses		111		1,771			254		2,696
Net loss on extinguishment of debt		—		558			—		558
Redemption related to preferred stock issuance cost		3,616		—			3,616		—

NOI	$	64,721	$	59,789		$	127,181	$	118,976

Less Non Same-Store NOI		8,705		6,155			16,478		11,711

Same-Store NOI	$	56,016	$	53,634		$	110,703	$	107,265

Page 16

BRE PROPERTIES INC /MD/ - FORM 8-K - EX-99.2 - SUPPLEMENTAL FINANCIAL DATA - August 2, 2011

Attached files

BRE PROPERTIES INC /MD/ Reports