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

Attached files

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8-K - FORM 8-K - BRE PROPERTIES INC /MD/	d387972d8k.htm
EX-99.1 - PRESS RELEASE - BRE PROPERTIES INC /MD/	d387972dex991.htm

Exhibit 99.2

LOGO

BRE Properties, Inc.

Second Quarter 2012

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 and Year to Date Periods		3

Consolidated Statements of Income—Past Five Quarters		4

Reconciliation of FFO, Non Operating Expense Items and Capital Expenditures		5

Market Summaries “Same-Store” Data

—Quarter vs. Quarter		6

—YTD 2012 vs. YTD 2011		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 2012

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

Selected Financial Results


	Quarter ending June 30,
	2012		2011
Total revenues⁽¹⁾	$	98,123	$	91,369
Total real estate expenses⁽¹⁾	$	30,875	$	29,232
G&A expense	$	6,211	$	5,159
EBITDA ⁽²⁾	$	62,574	$	59,563
Interest expense	$	16,272	$	18,739
Net income	$	28,696	$	6,172
Funds from operations ⁽²⁾	$	45,790	$	34,853
Net income per share ⁽³⁾	$	0.37	$	0.09
FFO per share^{(2), (3)}	$	0.59	$	0.49


	Six Months ending June 30,
	2012		2011
Total revenues⁽¹⁾	$	194,743	$	179,858
Total real estate expenses⁽¹⁾	$	61,725	$	57,824
G&A expense	$	12,058	$	10,394
EBITDA ⁽²⁾	$	123,948	$	116,788
Interest expense	$	33,490	$	38,487
Net income	$	46,804	$	15,816
Funds from operations ⁽²⁾	$	89,425	$	69,635
Net income per share ⁽³⁾	$	0.61	$	0.23
FFO per share^{(2), (3)}	$	1.17	$	1.01

Financial Metrics


	Quarter ending June 30,
	2012		2011
Debt-to-EBITDA		6.7x		6.8x
Debt plus preferred stock-to-EBITDA		6.9x		7.2x
Debt-to-total market capitalization		30.2%		29.9%
Debt-to-gross assets		40.2%		40.8%
Secured debt-to-gross assets		19.8%		20.2%
Interest coverage ratio ⁽⁴⁾		2.9x		2.7x
Fixed charge coverage ratio⁽⁴⁾		2.8x		2.3x

Capitalization


BRE common share price, 3/31/12	$	50.55
BRE common share price, 6/30/12	$	50.02
Common shares and units—Outstanding
Period End (excluding dilutive equity awards)		76,796
Total funded debt	$	1,683,481
Preferred equity (liquidation value)	$	53,993
Common equity (at market)	$	3,841,336
Total market capitalization	$	5,578,810
Total assets (gross)	$	4,184,649

Same-Store Operating Results


	Quarter ending June 30,
	Quarter ending June 30,
	2012		2011
Revenue growth (%)		5.1%		2.9%	⁽⁵⁾
Expense growth (%)		4.1%		-0.4%	⁽⁵⁾
NOI growth (%)		5.6%		4.4%	⁽⁵⁾
Operating margin		68.7%		68.4%
Occupancy (avg. physical)		95.4%		95.7%
Annualized turnover ratio		64.8%		63.6%


	Six Months ending June 30,
	2012		2011
Revenue growth (%)		5.5%		2.2%	⁽⁵⁾
Expense growth (%)		4.0%		0.0%	⁽⁵⁾
NOI growth (%)		6.2%		3.2%	⁽⁵⁾
Operating margin		68.7%		68.2%
Occupancy (avg. physical)		95.4%		95.4%
Annual turnover ratio		59.9%		58.7%


Non Same-Store Operating Results
	Quarter ending June 30,
	Quarter ending June 30,
	2012			2011
Revenues	$	6,935		$	4,666
NOI	$	4,857		$	3,145
Occupancy (avg. physical)		96.1	%		93.0	%
Gross asset value	$	298,287		$	240,444
Homes		1,362			1,212	⁽⁶⁾

	Six months ending June 30,
	Six months ending June 30,
	2012			2011
Revenues	$	13,690		$	8,160
NOI	$	9,312		$	5,506
Occupancy (avg. physical)		95.7	%		91.9	%


Community Information

As of June 30, 2012
	Communities		Homes		NOI % ⁽⁷⁾
Operating:
Wholly or majority owned
Same-store		70		19,878		91	%
Non same-store		5		1,362		8	%

Total		75		21,240		99	%
Joint venture		11		3,592		1	%
Development Pipeline:
Under construction		4		1,260
Land owned for development		4		1,265
Land under contract		2		621

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

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

(3)	Represents diluted per share amounts.

(4)	Includes GAAP interest and capitalized interest (gross interest incurred). Fixed charges include gross interest incurred, preferred dividends and recurring cash amortization on secured debt.

(5)	For comparison purposes, 2012 data represents results for same-store pool established 1/1/2012; 2011 data represents results for same-store pool established 1/1/2011.

(6)	Represents Q2’12 non-same-store homes present as of Q2’11.

(7)	Represents percentage of total NOI for the six months ended June 30, 2012.

Page 1

BRE Properties, Inc.

Consolidated Balance Sheets

Second Quarter 2012

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


	June 30, 2012			December 31, 2011
ASSETS
Real estate portfolio:
Direct investments in real estate:
Investments in rental communities	$	3,630,399		$	3,607,045
Construction in progress		310,231			246,347
Less: accumulated depreciation		(775,909	)		(729,151	)

		3,164,721			3,124,241

Equity in real estate joint ventures:
Investments		62,118			63,313
Land under development		124,288			101,023

Total real estate portfolio		3,351,127			3,288,577
Cash		2,968			9,600
Other assets		54,645			54,444

TOTAL ASSETS	$	3,408,740		$	3,352,621

LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Unsecured senior notes	$	690,018		$	724,957
Unsecured line of credit		251,000			129,000
Mortgage loans payable		742,463			808,714
Accounts payable and accrued expenses		65,715			63,273

Total liabilities		1,749,196			1,725,944

Redeemable and other noncontrolling interests		8,107			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 June 30, 2012 and December 31, 2011, respectively.		22			22
Common stock, $0.01 par value, 100,000,000 shares authorized. Shares issued and outstanding: 76,795,641 and 75,556,167 at June 30, 2012 and December 31, 2011, respectively.		768			756
Additional paid-in capital		1,650,647			1,609,671

Total shareholders’ equity		1,651,437			1,610,449

TOTAL LIABILITIES AND SHAREHOLDER’S EQUITY	$	3,408,740		$	3,352,621

Page 2

BRE Properties, Inc.

Consolidated Statements of Income

Quarters and Six Months Ended June 30, 2012 and 2011

(Unaudited, dollar and share amounts in thousands)


	Quarter ended 6/30/12		Quarter ended 6/30/11		Six months ended 6/30/12		Six months ended 6/30/11
REVENUES
Rental income	$	94,299	$	87,913	$	187,201	$	173,234
Ancillary income		3,824		3,456		7,542		6,624

Total revenues		98,123		91,369		194,743		179,858

EXPENSES
Real estate	$	30,875	$	29,232	$	61,725	$	57,824
Provision for depreciation		24,850		27,421		49,825		51,311
Interest		16,272		18,739		33,490		38,487
General and administrative		6,211		5,159		12,058		10,394
Other expenses ⁽¹⁾		—		111		—		254

Total expenses		78,208		80,662		157,098		158,270
Other income		706		597		1,225		1,202
Net income before noncontrolling interests, partnership income and discontinued operations		20,621		11,304		38,870		22,790
Income from unconsolidated entities		728		731		1,456		1,372

Income from continuing operations		21,349		12,035		40,326		24,162
Discontinued operations:
Discontinued operations, net ⁽²⁾		84		741		231		1,547
Net gain on sales of discontinued operations		8,279		—		8,279		—

Income from discontinued operations		8,363		741		8,510		1,547
NET INCOME	$	29,712	$	12,776	$	48,836	$	25,709

Redeemable and other noncontrolling interest in income		105		335		210		671
Redemption related preferred stock issuance cost		—		3,616		—		3,616
Dividends attributable to preferred stock		911		2,653		1,822		5,606

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	28,696	$	6,172	$	46,804	$	15,816

Net income per common share—basic	$	0.37	$	0.09	$	0.61	$	0.23

Net income per common share—diluted	$	0.37	$	0.09	$	0.61	$	0.23

Weighted average shares outstanding—basic⁽³⁾		76,735		70,025		76,323		67,760

Weighted average shares outstanding—diluted⁽³⁾		77,070		70,285		76,700		68,190

(1)	For the quarter and six months ended June 30, 2011, Other expenses included $111,000 and $254,000, respectively, related to acquisition costs.

(2)	Includes one community sold during 2012 and two communities sold during 2011.


	Quarter ended 6/30/12			Quarter ended 6/30/11			Six months ended 6/30/12			Six months ended 6/30/11
Rental and ancillary income	$	175		$	2,094		$	498		$	4,210
Real estate expenses		(72	)		(837	)		(191	)		(1,636	)
Provision for depreciation		(19	)		(516	)		(76	)		(1,027	)

Income from discontinued operations, net	$	84		$	741		$	231		$	1,547

(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, 2012		Mar. 31, 2012		Dec. 31, 2011		Sept. 30, 2011		June 30, 2011
REVENUES
Rental income	$	94,299	$	92,902	$	92,033	$	91,036	$	87,913
Ancillary income		3,824		3,718		3,629		3,532		3,456

Total revenues		98,123		96,620		95,662		94,568		91,369
EXPENSES
Real estate	$	30,875	$	30,850	$	30,149	$	30,773	$	29,232
Provision for depreciation		24,850		24,975		25,616		25,413		27,421
Interest		16,272		17,218		18,103		18,374		18,739
General and administrative		6,211		5,847		5,697		5,678		5,159
Other expenses		—		—		—		149		111

Total expenses		78,208		78,890		79,565		80,387		80,662
Other income		706		520		657		677		597

Income from continuing operations and discontinued operations		20,621		18,250		16,754		14,858		11,304
Income from unconsolidated entities		728		727		726		791		731
Net gain on sale of unconsolidated entities		—		—		2,022		2,248		—

Income from continuing operations		21,349		18,977		19,502		17,897		12,035
Discontinued operations:
Discontinued operations, net ⁽¹⁾		84		147		659		799		741
Net gain on sales of discontinued operations		8,279		—		14,489		—		—

Income from discontinued operations		8,363		147		15,148		799		741

NET INCOME	$	29,712	$	19,124	$	34,650	$	18,696	$	12,776
Redeemable and other noncontrolling interest in income		105		105		165		332		335
Redemption related preferred stock issuance cost		—		—		—		155		3,616
Dividends attributable to preferred stock		911		911		911		1,138		2,653

NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	28,696	$	18,108	$	33,574	$	17,071	$	6,172

Net income per common share—basic	$	0.37	$	0.24	$	0.45	$	0.23	$	0.09

Net income per common share—diluted	$	0.37	$	0.24	$	0.44	$	0.23	$	0.09

Weighted average shares outstanding—basic ⁽²⁾		76,735		76,000		75,415		74,965		70,025

Weighted average shares outstanding—diluted ⁽²⁾		77,070		76,380		75,830		75,390		70,285

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


	June 30, 2012			Mar. 31, 2012			Dec. 31, 2011			Sept. 30, 2011			June 30, 2011
Rental and ancillary income	$	175		$	324		$	1,246		$	2,080		$	2,094
Real estate expenses		(72	)		(120	)		(531	)		(763	)		(837	)
Provision for depreciation		(19	)		(57	)		(56	)		(518	)		(516	)

Income from discontinued operations, net	$	84		$	147		$	659		$	799		$	741

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

Page 4

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

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


CALCULATION OF FFO	Jun. 30, 2012			Mar. 31, 2012			Dec. 31, 2011			Sept. 30, 2011			Jun. 30, 2011
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	28,696		$	18,108		$	33,574		$	17,071		$	6,172
Add back/ exclude:
Depreciation from continuing operations		24,850			24,975			25,616			25,413			27,421
Depreciation from discontinued operations		19			57			56			518			516
Redeemable and other noncontrolling interest in income		105			105			165			332			335
Depreciation from unconsolidated entities		504			495			512			519			514
Net (gain) on sales from unconsolidated entity		—			—			(2,022	)		(2,248	)		—
Net (gain) on sales of discontinued operations		(8,279	)		—			(14,489	)		—			—
Less: Other noncontrolling interests in income not convertible to common		(105	)		(105	)		(105	)		(105	)		(105	)

FUNDS FROM OPERATIONS ⁽¹⁾	$	45,790		$	43,635		$	43,307		$	41,500		$	34,853

Weighted average shares and equivalents outstanding—diluted		77,070			76,440			76,100			76,000			70,900

Funds from operations (per share)—diluted	$	0.59		$	0.57		$	0.57		$	0.55		$	0.49

(1)	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 B for further definition.


NON OPERATING EXPENSE ITEMS INCLUDED IN FFO	Jun. 30, 2012		Mar. 31, 2012		Dec. 31, 2011		Sept. 30, 2011		Jun. 30, 2011
Acquisition costs		—		—		—	$	149	$	111

Acquisition costs—per share	$	0.00	$	0.00	$	0.00	$	0.00	$	0.00
Redemption related preferred stock issuance cost		—		—		—	$	155	$	3,616

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


CAPITAL EXPENDITURES	Jun. 30, 2012		Mar. 31, 2012		Dec. 31, 2011		Sep. 30 2011		June 30, 2011
Recurring capital expenditures	$	5,496	$	2,537	$	6,033	$	5,183	$	4,990

Average apartment homes in period		21,288		21,336		21,654		21,946		21,622
Capital expenditures per apartment home in period	$	258	$	119	$	279	$	236	$	231
Capital expenditures per apartment home-trailing four quarters	$	892	$	865	$	977	$	1,028	$	1,051
Revenue enhancing rehabilitation and other	$	8,922	$	3,760	$	6,982	$	3,756	$	3,472

Page 5

BRE Properties, Inc.

“Same-Store” Markets Summary

For the Quarters ended June 30, 2012 and 2011

(Dollar amounts in thousands)


					Revenues							Expenses
Region	No. of Communities		No. of Homes		Q2’12		Q2’11		% Change			Q2’12		Q2’11		% Change
California
San Diego		13		4,056	$	18,499	$	18,208		1.6	%	$	5,615	$	5,369		4.6	%
Inland Empire		5		1,173		4,891		4,782		2.3	%		1,557		1,509		3.2	%
Orange County		11		3,349		15,098		14,557		3.7	%		4,695		4,625		1.5	%
Los Angeles		13		3,047		15,664		14,814		5.7	%		5,008		4,895		2.3	%
San Francisco Bay Area		12		3,495		19,193		17,755		8.1	%		5,289		5,000		5.8	%

Subtotal; California		54		15,120	$	73,345	$	70,116		4.6	%	$	22,164	$	21,398		3.6	%

Washington
Seattle		13		3,456		13,437		12,419		8.2	%		4,784		4,513		6.0	%
Non-Core Markets ⁽¹⁾		3		1,302		3,920		3,771		4.0	%		1,443		1,372		5.2	%

Total Same-Store ⁽²⁾		70		19,878	$	90,702	$	86,306		5.1	%	$	28,391	$	27,283		4.1	%


					Net Operating Income
Region	No. of Communities		No. of Homes		Q2’12		Q2’11		% Change			% of Total
California
San Diego		13		4,056	$	12,884	$	12,839		0.4	%		20.7	%
Inland Empire		5		1,173		3,334		3,273		1.9	%		5.4	%
Orange County		11		3,349		10,403		9,932		4.7	%		16.7	%
Los Angeles		13		3,047		10,656		9,919		7.4	%		17.1	%
San Francisco Bay Area		12		3,495		13,904		12,755		9.0	%		22.3	%

Subtotal; California		54		15,120	$	51,181	$	48,718		5.1	%		82.2	%

Washington
Seattle		13		3,456		8,653		7,906		9.4	%		13.9	%
Non-Core Markets ⁽¹⁾		3		1,302		2,477		2,399		3.3	%		3.9	%

Total Same-Store ⁽²⁾		70		19,878	$	62,311	$	59,023		5.6	%		100.0	%


							Net Operating Income					Avg. Physical Occupancy			Gross Carrying Value
“Non Same-Store” Summary	No. of Communities			No. of Homes			Q2’12		Q2’11			Q2’12			Q2’12
Acquired communities ⁽³⁾		3			652		$	2,303	$	955			96.0	%	$	172,041
Lease up communities ⁽⁴⁾		1			270			1,202		947			96.3	%		89,539
Rehabilitation communities ⁽⁵⁾		1			440			1,352		1,243			96.0	%		36,706
Joint venture income ⁽⁶⁾		11			3,592			728		731
Commercial and other ⁽⁷⁾		n/a			n/a			80		(31	)
Other income		n/a			n/a			706		597
Discontinued operations ⁽⁸⁾		3			730			103		1,257

Total Non Same-Store		19			5,684		$	6,474	$	5,699			96.1	%	$	298,286

Less Communities Sold in 2011 and 2012		(3	)		(730	)
Total All Homes / NOI		86			24,832		$	68,785	$	64,722

(1)	Consists of one community in Sacramento, CA (400 homes) and two communities in Phoenix, AZ (902 homes).

(2)	Consists of communities completed, stabilized and owned by BRE for at least two twelve month periods. The term stabilized refers to communities that have reached a physical occupancy of at least 93%.

(3)	Consists of NOI from three communities acquired after January 1, 2011.

(4)	Consists of NOI from one fully delivered community and under lease up.

(5)	Consists of NOI from one community under significant rehabilitation.

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

(7)

Consists of NOI from retail tenants associated with our operating communities and NOI from commercial communities that will later be developed as multi-family and other real estate expenses. For the three months ended June 30, 2011 other real estate expenses exceeded the NOI from retail and commercial.

(8)	Includes results from one community sold in Q2’12 and two communities sold in 2011.

Page 6

BRE Properties, Inc.

“Same-Store” Markets Summary

For the Six Months Ended June 30, 2012 and 2011

(Dollar amounts in thousands)


					Revenues							Expenses
Region	No. of Communities		No. of Homes		YTD 2012		YTD 2011		% Change			YTD 2012		YTD 2011		% Change
California
San Diego		13		4,056	$	36,987	$	36,194		2.2	%	$	11,037	$	10,677		3.4	%
Inland Empire		5		1,173		9,782		9,544		2.5	%		3,093		2,868		7.8	%
Orange County		11		3,349		29,986		28,789		4.2	%		9,507		9,293		2.3	%
Los Angeles		13		3,047		31,206		29,422		6.1	%		10,259		10,075		1.8	%
San Francisco Bay Area		12		3,495		38,066		34,990		8.8	%		10,496		10,131		3.6	%

Subtotal; California		54		15,120	$	146,027	$	138,939		5.1	%	$	44,392	$	43,044		3.1	%

Washington
Seattle		13		3,456		26,418		24,430		8.1	%		9,219		8,548		7.8	%
Non-Core Markets⁽¹⁾		3		1,302		7,732		7,479		3.4	%		2,873		2,732		5.2	%

Total Same-Store⁽²⁾		70		19,878	$	180,177	$	170,848		5.5	%	$	56,484	$	54,324		4.0	%


					Net Operating Income
Region	No. of Communities		No. of Homes		YTD 2012		YTD 2011		% Change			% of Total
California
San Diego		13		4,056	$	25,950	$	25,517		1.7	%		21.0	%
Inland Empire		5		1,173		6,689		6,676		0.2	%		5.4	%
Orange County		11		3,349		20,479		19,496		5.0	%		16.6	%
Los Angeles		13		3,047		20,947		19,347		8.3	%		16.9	%
San Francisco Bay Area		12		3,495		27,570		24,859		10.9	%		22.3	%

Subtotal; California		54		15,120	$	101,635	$	95,895		6.0	%		82.2	%

Washington
Seattle		13		3,456		17,199		15,882		8.3	%		13.9	%
Non-Core Markets⁽¹⁾		3		1,302		4,859		4,747		2.4	%		3.9	%

Total Same-Store ⁽²⁾		70		19,878	$	123,693	$	116,524		6.2	%		100.0	%


							Net Operating Income				Avg. Physical Occupancy			Gross Carrying Value
“Non Same-Store” Summary	No. of Communities			No. of Homes			YTD 2012		YTD 2011		YTD 2012			YTD 2012
Acquired properties⁽³⁾		3			652		$	4,390	$	1,271		95.7	%	$	172,041
Lease up properties⁽⁴⁾		1			270			2,264		1,753		95.7	%		89,539
Rehabilitation properties ⁽⁵⁾		1			440			2,656		2,485		95.6	%		36,706
Joint venture income⁽⁶⁾		11			3,592			1,456		1,372
Commercial and Other⁽⁷⁾		n/a			n/a			15		1
Other income		n/a			n/a			1,225		1,202
Discontinued operations⁽⁸⁾		3			730			307		2,574

Total Non Same-Store		19			5,684		$	12,313	$	10,658		95.7	%	$	298,286

Less Communities Sold in 2011 and 2012		(3	)		(730	)
Total All Homes / NOI		86			24,832		$	136,006	$	127,182

(1)	Consists of one community in Sacramento, CA (400 homes) and two communities in Phoenix, AZ (902 homes).

(2)	Consists of communities completed, stabilized and owned by BRE for at least two twelve month periods. The term stabilized refers to communities that have reached a physical occupancy of at least 93%.

(3)	Consists of NOI from three communities acquired after January 1, 2011.

(4)	Consists of NOI from one fully delivered community under lease up.

(5)	Consists of NOI from one community under significant rehabilitation.

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

(7)	Consists of NOI from retail tenants associated with our operating communities and NOI from commercial communities that will later be developed as multi-family and other real estate expenses.

(8)	Includes results from one community sold in Q2’12 and two communities sold in 2011.

Page 7

BRE Properties, Inc.

Same Store Operating Expense Summary and Joint Venture Disclosure

(Dollar amounts in thousands)

SAME-STORE OPERATING EXPENSES (19,878 homes)


Quarter Ended June 30, 2012	Q2’12		Q2’11		$ Change			% Change			% of Q2’12 Operating Expenses
Property taxes	$	8,185	$	7,921	$	264			3.3	%		28.8	%
Insurance		1,192		1,030		162			15.7	%		4.2	%
Utilities		1,823		2,199		(376	)		-17.1	%		6.4	%
Property management fees ⁽¹⁾		2,944		2,856		88			3.1	%		10.4	%
Other operating expenses ⁽²⁾		14,247		13,277		970			7.3	%		50.2	%

Total operating expenses	$	28,391	$	27,283	$	1,108			4.1	%		100.0	%


Six Months Ended June 30, 2012	YTD 2012		YTD 2011		$ Change			% Change			% of YTD 2012 Operating Expenses
Property taxes	$	16,726	$	15,843	$	883			5.6	%		29.6	%
Insurance		2,370		2,055		315			15.3	%		4.2	%
Utilities		3,829		4,276		(447	)		-10.5	%		6.8	%
Property management fees ⁽¹⁾		5,852		5,567		285			5.1	%		10.3	%
Other operating expenses ⁽²⁾		27,707		26,583		1,124			4.2	%		49.1	%

Total operating expenses	$	56,484	$	54,324	$	2,160			4.0	%		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 Ended June 30, 2012


Joint Ventures	Communities		Regional Breakdown	Homes ⁽³⁾		BRE equity investment		BRE share of JV Debt
Relationship 1—15% BRE equity ownership		9	Phx. (3) Den. (6)		3,104	$	42,310	$	—
Relationship 2—35% BRE equity ownership		2	Phx. (1) Sac. (1)		488		19,808		—

Total		11			3,592	$	62,118	$	—


BRE share	Q2’12		Q2’11		YTD 2012		YTD 2011
Revenues	$	1,935	$	2,019	$	3,829	$	4,023
Expenses		703		725		1,374		1,469

Net Operating Income		1,232		1,294		2,455		2,554
Depreciation		504		515		999		1,020
Interest		—		48		—		162

Net Income	$	728	$	731	$	1,456	$	1,372
Third party management fees earned	$	431	$	456	$	851	$	903

(3)

During the quarter ended December 31, 2011, a joint venture community with 264 homes was sold. The community was located in Denver, CO, the Company had a 15% equity ownership. BRE’s share of the total proceeds totaled $4.7 million. A $2.0 million gain on sale was recorded during the fourth quarter of 2011. During the quarter ended September 30, 2011, a joint venture community with 224 homes was sold. The community was located in Denver, CO, the Company had a 15% equity ownership. BRE’s share of the total proceeds totaled $4.6 million. A $2.3 million gain on sale was recorded during the third quarter of 2011.

Page 8

BRE Properties, Inc.

Sequential “Same-Store” Multifamily Markets Summary

Last five quarters

REVENUES


California	Q2’12		Q1’12		Q4’11		Q3’11		Q2’11
San Diego		0.1%		-0.1%		-0.3%		1.9%		1.2%
Inland Empire		0.0%		0.1%		1.0%		1.2%		0.4%
Orange County		1.4%		0.5%		1.3%		0.5%		2.3%
Los Angeles		0.8%		0.7%		2.2%		1.9%		1.4%
San Francisco Bay Area		1.7%		2.5%		0.7%		3.0%		3.0%

Subtotal; California		0.9%		0.9%		0.9%		1.9%		1.9%

Washington
Seattle		3.5%		1.8%		0.4%		2.2%		3.4%
Non-Core Markets⁽¹⁾		2.8%		-0.2%		0.9%		0.3%		1.7%

Total Same Store ⁽³⁾		1.4%		1.0%		0.8%		1.8%		2.1%


EXPENSES ⁽²⁾

California	Q2’12		Q1’12		Q4’11		Q3’11		Q2’11
San Diego		3.6%		4.1%		-4.2%		1.3%		1.2%
Inland Empire		1.4%		0.2%		-4.0%		5.8%		11.1%
Orange County		-2.4%		0.3%		-0.4%		4.2%		-0.9%
Los Angeles		-4.6%		8.5%		-10.0%		9.8%		-5.5%
San Francisco Bay Area		1.6%		3.4%		-0.9%		1.6%		-2.6%

Subtotal; California		-0.3%		3.8%		-4.0%		4.3%		-1.1%

Washington
Seattle		7.9%		-2.8%		-0.9%		2.0%		11.8%
Non-Core Markets⁽¹⁾		1.0%		4.3%		1.0%		-1.2%		0.9%

Total Same Store ⁽³⁾		1.1%		2.7%		-3.3%		3.6%		0.9%


NET OPERATING INCOME

California	Q2’12		Q1’12		Q4’11		Q3’11		Q2’11
San Diego		-1.4%		-1.7%		1.3%		2.2%		1.3%
Inland Empire		-0.6%		0.0%		3.5%		-0.9%		-3.8%
Orange County		3.2%		0.5%		2.1%		-1.2%		3.9%
Los Angeles		3.5%		-2.8%		9.0%		-2.0%		5.2%
San Francisco Bay Area		1.7%		2.2%		1.3%		3.6%		5.4%

Subtotal; California		1.4%		-0.4%		3.1%		0.8%		3.3%

Washington
Seattle		1.3%		4.4%		1.2%		2.4%		-0.9%
Non-Core Markets⁽¹⁾		4.0%		-2.7%		0.9%		1.2%		2.1%

Total Same Store ⁽³⁾		1.5%		0.2%		2.8%		1.0%		2.6%

(1)	Consists of one community in Sacramento, CA (400 homes) and two communities in Phoenix, AZ (902 homes).

(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 19,878 homes for all periods shown.

Page 9

BRE Properties, Inc.

Summary of Revenue and Occupancy Changes—“Same-Store” Communities

For the period ending June 30, 2012

Q2’12 vs. Q1’12 Change


			Average Revenue per Home ⁽¹⁾							Financial Occupancy⁽²⁾									Rental Revenue
	Homes		Q2’12		Q1’12		% Change			Q2’12			Q1’12			% Change			Q2’12		Q1’12		% Change
San Diego		4,056	$	1,600	$	1,596		0.3	%		95.0	%		95.2	%		-0.2	%	$	18,499	$	18,488		0.1	%
Inland Empire		1,173		1,475		1,463		0.8	%		94.2	%		95.0	%		-0.8	%		4,891		4,891		0.0	%
Orange County		3,349		1,574		1,557		1.1	%		95.5	%		95.2	%		0.3	%		15,098		14,889		1.4	%
Los Angeles		3,047		1,800		1,779		1.2	%		95.2	%		95.6	%		-0.4	%		15,664		15,542		0.8	%
San Francisco Bay Area		3,495		1,933		1,889		2.3	%		94.7	%		95.3	%		-0.6	%		19,193		18,873		1.7	%
Seattle		3,456		1,356		1,310		3.5	%		95.6	%		95.6	%		0.0	%		13,437		12,981		3.5	%
Non Core Markets		1,302		1,050		1,032		1.8	%		95.6	%		94.6	%		1.0	%		3,920		3,812		2.8	%

Same Store		19,878	$	1,599	$	1,574		1.6	%		95.1	%		95.3	%		-0.2	%	$	90,702	$	89,476		1.4	%

Q2’12 vs. Q2’11 Change


			Average Revenue per Home ⁽¹⁾							Financial Occupancy⁽²⁾									Rental Revenue
	Homes		Q2’12		Q2’11		% Change			Q2’12			Q2’11			% Change			Q2’12		Q2’11		% Change
San Diego		4,056	$	1,600	$	1,565		2.2	%		95.0	%		95.6	%		-0.6	%	$	18,499	$	18,208		1.6	%
Inland Empire		1,173		1,475		1,427		3.4	%		94.2	%		95.2	%		-1.0	%		4,891		4,782		2.3	%
Orange County		3,349		1,574		1,505		4.6	%		95.5	%		96.3	%		-0.8	%		15,098		14,557		3.7	%
Los Angeles		3,047		1,800		1,720		4.6	%		95.2	%		94.2	%		1.0	%		15,664		14,814		5.7	%
San Francisco Bay Area		3,495		1,933		1,775		8.9	%		94.7	%		95.4	%		-0.7	%		19,193		17,755		8.1	%
Seattle		3,456		1,356		1,249		8.5	%		95.6	%		95.9	%		-0.3	%		13,437		12,419		8.2	%
Non Core Markets		1,302		1,051		1,016		3.4	%		95.5	%		95.0	%		0.5	%		3,920		3,771		4.0	%

Same Store		19,878	$	1,599	$	1,517		5.4	%		95.1	%		95.4	%		-0.3	%	$	90,702	$	86,306		5.1	%

YTD 2012 vs. YTD 2011 Change


			Average Revenue per Home⁽¹⁾							Financial Occupancy⁽²⁾									Rental Revenue
	Homes		YTD 6/30/12		YTD 6/30/11		% Change			YTD 6/30/12			YTD 6/30/11			% Change			YTD 6/30/12		YTD 6/30/11		% Change
San Diego		4,056	$	1,599	$	1,559		2.5	%		95.1	%		95.4	%		-0.3	%	$	36,987	$	36,194		2.2	%
Inland Empire		1,173		1,469		1,422		3.2	%		94.6	%		95.3	%		-0.7	%		9,782		9,544		2.5	%
Orange County		3,349		1,565		1,499		4.4	%		95.3	%		95.5	%		-0.2	%		29,986		28,789		4.2	%
Los Angeles		3,047		1,789		1,708		4.7	%		95.4	%		94.2	%		1.2	%		31,206		29,422		6.1	%
San Francisco Bay Area		3,495		1,911		1,753		9.0	%		95.0	%		95.2	%		-0.2	%		38,066		34,990		8.8	%
Seattle		3,456		1,332		1,233		8.1	%		95.6	%		95.6	%		0.1	%		26,418		24,430		8.1	%
Non Core Markets		1,302		1,041		1,004		3.7	%		95.1	%		95.4	%		-0.3	%		7,732		7,479		3.4	%

Same Store		19,878	$	1,587	$	1,505		5.4	%		95.2	%		95.2	%		0.0	%	$	180,177	$	170,848		5.5	%

(1)

Average revenue per home includes rental and ancillary income earned on occupied homes during the period. Ancillary income per occupied home totals approximately $62 per home per month for the six month ended June 30, 2012. 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 homes at contract rates and vacant homes at market rents. Vacancy loss is determined by valuing vacant homes at current market rents.

Page 10

BRE communities, Inc.

“Same -Store” Operating Metrics

As of June 30, 2012 and 2011


	No. of Homes		Occupancy⁽²⁾						Occupancy⁽³⁾						Turnover Ratio⁽⁴⁾						Turnover Ratio⁽⁴⁾
California	No. of Homes		Q2’12			Q2’11			YTD’12			YTD’11			Q2’12			Q2’11			YTD’12			YTD’11
San Diego		4,056		94.9	%		95.7	%		94.9	%		95.4	%		70	%		68	%		66	%		64	%
Inland Empire		1,173		94.2	%		95.2	%		94.6	%		95.3	%		71	%		61	%		61	%		56	%
Orange County		3,349		95.8	%		96.2	%		95.5	%		95.6	%		66	%		62	%		62	%		63	%
Los Angeles		3,047		95.4	%		94.4	%		95.6	%		94.5	%		66	%		67	%		63	%		58	%
San Francisco Bay Area		3,495		95.3	%		96.1	%		95.4	%		95.8	%		61	%		59	%		58	%		54	%

Subtotal; California		15,120		95.2	%		95.6	%		95.3	%		95.3	%		66	%		64	%		62	%		60	%

Washington
Seattle		3,456		96.0	%		96.0	%		95.9	%		95.7	%		57	%		60	%		50	%		53	%
Non-Core Markets⁽¹⁾		1,302		95.4	%		95.5	%		95.0	%		95.8	%		67	%		71	%		80	%		63	%

Total/Average Same Store ⁽⁵⁾		19,878		95.4	%		95.7	%		95.4	%		95.4	%		65	%		64	%		60	%		59	%

(1)	Consists of one community in Sacramento, CA (400 homes) and two communities in Phoenix, AZ (902 homes).

(2)	Represents average physical occupancy for the quarter.

(3)	Represents average physical occupancy for the year to date period.

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

(5)	Consists of stabilized communities owned by BRE since January 1, 2011.

“Same -Store” New Lease and Renewal Transactions


	New Leases									Renewals									Total New Leases/Renewals
California	Q2’12		New Leases Effective ⁽⁶⁾		Previous Resident Effective ⁽⁷⁾		% Change			Q2’12		Renewal Effective ⁽⁶⁾		Expiring Effective ⁽⁸⁾		% Change			Q2’12		Current Effective ⁽⁶⁾		Prior Effective		% Change
San Diego		709	$	1,560	$	1,550		0.6	%		578	$	1,564	$	1,525		2.5	%		1,287	$	1,562	$	1,539		1.5	%
Inland Empire		169		1,428		1,409		1.4	%		166		1,433		1,400		2.4	%		335		1,430		1,404		1.9	%
Orange County		502		1,573		1,512		4.0	%		494		1,535		1,484		3.4	%		996		1,554		1,498		3.7	%
Los Angeles		484		1,851		1,768		4.7	%		424		1,841		1,756		4.8	%		908		1,846		1,762		4.8	%
San Francisco Bay Area		522		1,988		1,819		9.3	%		529		1,926		1,805		6.7	%		1,051		1,957		1,812		8.0	%

Subtotal; California		2,386	$	1,706	$	1,635		4.3	%		2,191	$	1,688	$	1,619		4.3	%		4,577	$	1,698	$	1,627		4.3	%

Washington
Seattle		487		1,423		1,253		13.6	%		647		1,303		1,231		5.8	%		1,134		1,354		1,241		9.2	%
Non-Core Markets		212		1,017		1,015		0.2	%		202		1,028		1,001		2.7	%		414		1,022		1,008		1.4	%

Total Same Store⁽⁹⁾		3,085	$	1,614	$	1,532		5.3	%		3,040	$	1,562	$	1,495		4.5	%		6,125	$	1,588	$	1,514		4.9	%

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

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

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

(9)	The Q2’12 total same-store pool consists of 19,878 homes.

Page 11

BRE Properties, Inc.

Debt Summary as of June 30, 2012

(Dollar amounts in thousands)

DEBT MATURITY SCHEDULE


	Secured Debt				Unsecured Debt							Weighted Avg. Rate⁽¹⁾			% of Debt
	Amortization		Balloon		Floating			Fixed		Total		Weighted Avg. Rate⁽¹⁾			% of Debt
Year
2012	$	491	$	—	$	—		$	—	$	491		5.55	%		0.0	%
2013		872		29,639		—			40,018		70,529		6.48	%		4.2	%
2014		3,839		—		—			50,000		53,839		4.82	%		3.2	%
2015		7,962		—		251,000	⁽²⁾		—		258,962		3.31	%⁽³⁾		15.4	%
2016		9,041		—		—			—		9,041		5.65	%		0.5	%
2017		9,307		—		—			300,000		309,307		5.61	%		18.4	%
2018		9,853		—		—			—		9,853		5.65	%		0.6	%
2019		6,492		317,975		—			—		324,467		5.60	%		19.3	%
2020		3,346		343,646		—			—		346,992		5.62	%		20.6	%
2021		—		—		—			300,000		300,000		5.31	%		17.8	%

Total	$	51,203	$	691,260	$	251,000		$	690,018	$	1,683,481		5.21	%		100	%

WEIGHTED AVERAGE COST OF DEBT


	Balance			Weighted Avg. Term		Weighted Avg. Rate			Percentage Total Debt
Fixed Rate
Unsecured	$	690,018			6.00		5.51	%		41.0	%
Secured		742,463			6.49		5.61	%		44.1	%

	$	1,432,481			6.25		5.56	%		85.1	%
Floating Rate
Unsecured		251,000	⁽²⁾		2.76		3.23	%⁽³⁾		14.9	%
Total debt	$	1,683,481			5.73		5.21	%		100.0	%

CAPITALIZED INTEREST


	Q2 2012		Q2 2011
Capitalized Interest	$	5,369	$	3,554

	YTD 2012		YTD 2011
Capitalized Interest	$	10,218	$	6,286

SENIOR UNSECURED DEBT RATING

As of July 31, 2012


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

SUMMARY OF COMPLIANCE—Senior Unsecured Notes


	Requirement		Actual
Total Debt to Gross Assets		<60%		40%
Debt Service Test		>1.5		2.74
Total Secured Debt to Total Assets		<40%		18%
Total Unecumbered Assets to Unsecured Debt		>1.5		3.28

SUMMARY OF COMPLIANCE—Line of Credit


	Requirement		Actual
Leverage Ratio		<60%		36%
Maximum Secured Indebtness		<40%		15%
Minimum Unsecured Leverage		>1.65		3.70
Minimum Fixed Charge Coverage		>1.5		2.70

SUMMARY OF PREFERRED SHARES


	Q2 2012
Total preferred shares outstanding		2,160
Liquidation value	$	53,993
Dividend yield at par		6.75%

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

(2) Outstanding balance under the $750 million senior unsecured line of credit priced at LIBOR plus 120 bp plus an annual 20 bps facility fee on the capacity of the facility, maturing on April 3, 2015.

(3)	Rate includes amortization of all fees associated with the facility (including upfront and annual fees).

Page 12

BRE Properties, Inc.

Development Summary

June 30, 2012

(Dollar amounts in millions)


CONSTRUCTION IN PROGRESS	Number of Homes		Cost Incurred		Estimated Cost		Balance to Fund		Product Type		First CO ⁽²⁾		Final CO ⁽²⁾
Lawrence Station⁽¹⁾
Sunnyvale, CA		336	$	89.4	$	110.0	$	20.6		Wrap		Q2’12		Q1’13
Aviara⁽³⁾
Mercer Island, WA		166		20.4		44.5		24.1		Podium		Q1’13		Q2’13
Solstice
Sunnyvale, CA		280		55.4		121.9		66.5		Podium		Q4’13		Q1’14
Wilshire La Brea
Los Angeles, CA		478		153.9		277.3		123.4		Podium		Q4’13		Q4’14

Total CIP		1,260	$	319.1	$	553.7	$	234.6

LAND UNDER DEVELOPMENT ⁽⁴⁾

Number
of Homes

Cost
Incurred

Estimated
Cost⁽⁵⁾

Balance to
Fund

Product
Type

Estimated
Start
Date

Mission Bay ⁽⁶⁾

San Francisco, CA

360

54.2

TBR

Podium

2H ’12

Pleasanton I

Pleasanton, CA

254

19.5

TBR

Garden

TBD

Pleasanton II⁽⁷⁾

Pleasanton, CA

251

13.2

TBR

Garden

TBD

Park Viridian II

Anaheim, CA

400

37.4

TBR

Garden

TBD

Total Land Owned

1,265

124.3

513.2

388.9


LAND UNDER CONTRACT ⁽⁸⁾	Number of Homes		Cost Incurred⁽⁹⁾		Estimated Cost ⁽⁵⁾		Balance to Fund		Product Type
Redwood City
Redwood City, CA		263	$	4.7		TBR		TBR		Podium
Walnut Creek BART
Walnut Creek, CA		358		11.0		TBR		TBR		Podium

Total		621	$	15.7	$	236.8	$	221.1

(1)

Reflects all recorded costs incurred as of June 30, 2012, recorded on our consolidated balance sheet as “Direct investments in real estate-Construction in progress.” Included in this amount is $8.9 million of costs for the completed units as of June 30, 2012 which, is reflected in our consolidated balance sheet as “Direct Investments in real estate—Investment in rental communities.”

(2)	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.

(3)	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 9-year extension. The annualized GAAP expense is $664,000.

(4)	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.

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

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

(7)	During Q2’2012, the company closed on the Pleasanton II land parcel and the land was transferred to land under development.

(8)

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.

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

Note:

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 communities. Predevelopment costs associated with this site total $3.6 million and are recorded in Other assets.

Page 13

Exhibit A

BRE Properties, Inc.

Share Analysis as of June 30, 2012

(Dollar and share amounts in thousands)

SUMMARY OF COMMON SHARES


Weighted Average	Qtr. Ended 6/30/2012			Qtr. Ended 3/31/2012			Qtr. Ended 12/31/2011			Qtr. Ended 9/30/2011			Qtr. Ended 6/30/2011
Weighted average shares outstanding ⁽¹⁾		76,735			76,000			75,415			74,965			70,025
Weighted average OP units		—			60			270			610			615
Dilutive effect of stock based awards		335			380			415			425			260

Diluted shares—FFO		77,070			76,440			76,100			76,000			70,900
Less: Anti-dilutive OP Units ⁽²⁾		—			(60	)		(270	)		(610	)		(615	)

Diluted shares—EPS⁽³⁾		77,070			76,380			75,830			75,390			70,285

Weighted Average	YTD 6/30/2012			YTD 6/30/2011
Weighted average shares outstanding ⁽¹⁾		76,323			67,760
Weighted average OP units		40			620
Dilutive effect of stock based awards		377			430

Diluted shares—FFO		76,740			68,810
Less: Anti-dilutive OP Units ⁽²⁾		(40	)		(620	)

Diluted shares—EPS⁽³⁾		76,700			68,190


Ending	As of 6/30/2012		As of 3/31/2012		As of 12/31/2011		As of 9/30/2011		As of 6/30/2011
Shares outstanding at end of period		76,796		76,679		75,556		75,266		74,697
OP units at end of period		—		—		160		606		615
Dilutive effect of stock based awards		287		297		446		401		413

Total		77,083		76,976		76,162		76,273		75,725

SUMMARY OF PREFERRED SHARES


	Qtr. Ended 6/30/2012		Qtr. Ended 3/31/2012		Qtr. Ended 12/31/2011		Qtr. Ended 9/30/2011		Qtr. Ended 6/30/2011
6.75% Series D, $25 per share liquidation preference		2,160		2,160		2,160		2,160		3,000

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

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

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

Page 14

Exhibit B

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.


	Quarter Ended 6/30/2012			Quarter Ended 6/30/2011			Six Months Ended 6/30/2012			Six Months Ended 6/30/2011
Net income available to common shareholders	$	28,696		$	6,172		$	46,804		$	15,816
Depreciation from continuing operations		24,850			27,421			49,825			51,311
Depreciation from discontinued operations		19			516			76			1,027
Redeemable and other noncontrolling interest in income		105			335			210			671
Depreciation from unconsolidated entities		504			514			999			1,020
Net gain on sales of discontinued operations		(8,279	)		—			(8,279	)		—
Less: Redeemable noncontrolling interest in income not convertible into common shares		(105	)		(105	)		(210	)		(210	)

Funds from operations	$	45,790		$	34,853		$	89,425		$	69,635

Diluted shares outstanding—EPS ⁽¹⁾		77,070			70,285			76,700			68,190
Net income per common share—diluted	$	0.37		$	0.09		$	0.61		$	0.23

Diluted shares outstanding—FFO ⁽¹⁾		77,070			70,900			76,740			68,810
FFO per common share—diluted	$	0.59		$	0.49		$	1.17		$	1.01

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

Page 15

Exhibit B, continued

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 6/30/2012			Quarter Ended 6/30/2011		Six Month Ended 6/30/2012			Six Month Ended 6/30/2011
Net income available to common shareholders	$	28,696		$	6,172	$	46,804		$	15,816
Interest, including discontinued operations		16,272			18,739		33,490			38,487
Depreciation, including discontinued operations		24,869			27,937		49,901			52,338

EBITDA		69,837			52,848		130,195			106,641
Redeemable and other noncontrolling interest in income		105			335		210			671
Net gain on sales		(8,279	)		—		(8,279	)		—
Dividends on preferred stock		911			2,653		1,822			5,606
Other expenses		—			111		—			254
Redemption related to preferred stock issuance cost		—			3,616		—			3,616

Adjusted EBITDA	$	62,574		$	59,563	$	123,948		$	116,788

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 6/30/2012			Quarter Ended 6/30/2011		Six Month Ended 6/30/2012			Six Month Ended 6/30/2011
Net income available to common shareholders	$	28,696		$	6,172	$	46,804		$	15,816
Interest, including discontinued operations		16,272			18,739		33,490			38,487
Depreciation, including discontinued operations		24,869			27,937		49,901			52,338
Redeemable and other noncontrolling interest in income		105			335		210			671
Net gain on sales		(8,279	)		—		(8,279	)		—
Dividends on preferred stock		911			2,653		1,822			5,606
General and administrative expense		6,211			5,159		12,058			10,394
Other expenses		—			111		—			254
Redemption related to preferred stock issuance cost		—			3,616		—			3,616

NOI	$	68,785		$	64,722	$	136,006		$	127,182

Less Non Same-Store NOI		6,474			5,699		12,313			10,658

Same-Store NOI	$	62,311		$	59,023	$	123,693		$	116,524

Page 16

Attached files

BRE PROPERTIES INC /MD/ Reports

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