Exhibit 99.2

  

 

 

 

 

 

BRE Properties, Inc.

Third Quarter 2013

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 - Trailing Five Quarters			4
Reconciliation of FFO and Core FFO			5
Capital Improvement Activity Detail			6
Market Summaries "Same-Store" Data
- Quarter vs. Quarter			7
- YTD 2013 vs. YTD 2012			8
- Same-Store Operating Expense Summary and Joint Venture Disclosure			9
- Sequential "Same-Store" Operating Data			10
- Summary of Revenue and Occupancy Changes			11
- Operating, Renewal and Leasing Metrics			12
Debt Summary			13
Development Communities and Land Held for Development			14
Exhibit A - Share Analysis			15
Exhibit B - Non-GAAP Financial Measure Reconciliations and Definitions			16-17

 

 

"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 its operating 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.

 

Information included in this supplemental package is unaudited.

 

 

 

BRE Properties, Inc.

Financial and Operating Highlights

Third Quarter 2013

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

  

 

Selected Financial Results							Same-Store Operating Results
		Quarter ending									Quarter ending
		September 30,									September 30,
		2013		2012							2013		2012
	Total revenues (1)	$104,618		$97,531				Revenue growth (%)			4.6%		5.3%	(6)
	Total real estate expenses (1)	$32,592		$30,827				Expense growth (%)			3.2%		2.4%	(6)
	G&A expense	$5,055		$5,093				NOI growth (%)			5.3%		6.6%	(6)
	EBITDA (2)	$67,158		$64,976				Operating margin			69.2%		68.7%
	Interest expense	$15,948		$16,998				Occupancy (avg. physical)			94.6%		95.5%
	Net income	$22,123		$12,890				Annualized turnover ratio			71.3%		70.2%
	Funds from Operations (2)	$49,713		$32,474				Average revenue per occupied home			$1,734		$1,641
	Net income per share (3)	$0.29		$0.17
	FFO per share (2) , (3)	$0.64		$0.42
											Nine months ending
	Core FFO per share (2) , (3)	$0.65		$0.62							September 30,
											2013		2012
	Core FFO per share growth (%)	4.8%		12.7%
								Revenue growth (%)			4.7%		5.4%	(6)
														(5)
								Expense growth (%)			2.1%		3.4%	(6)
		Nine months ending						NOI growth (%)			5.9%		6.3%	(6)
		September 30,
		2013		2012				Operating margin			69.4%		68.6%
	Total revenues (1)	$306,318		$286,642				Occupancy (avg. physical)			94.9%		95.4%
	Total real estate expenses (1)	$94,913		$90,803				Annual turnover ratio			63.3%		63.0%
	G&A expense	$17,393		$17,152				Average revenue per occupied home			$1,697		$1,612
	EBITDA (2)	$196,677		$188,924
	Interest expense	$49,935		$50,488
	Net income	$99,757		$59,694			Non Same-Store Operating Results
	Funds from Operations (2)	$143,726		$121,899
	Net income per share (3)	$1.29		$0.78
	FFO per share (2) , (3)	$1.86		$1.59							Quarter ending
											September 30,
	Core FFO per share (2) , (3)	$1.87		$1.78							2013		2012
	Core FFO per share growth (%)	5.1%		9.2%				Revenues			$2,835		$262
								NOI			$1,989		$161
Financial Metrics
		Quarter ending									Nine months ending
		September 30,									September  30,
		2013		2012							2013		2012
	Debt-to-EBITDA(4)	6.8x		6.5x				Revenues			$6,268		$262
	Debt plus preferred stock-to-EBITDA(4)	7.0x		6.8x				NOI			$4,122		$156
	Debt-to-total market capitalization	31.6%		32.1%
	Debt-to-gross assets	40.8%		40.8%				Gross asset value			$268,859		$50,473
	Secured debt-to-gross assets	15.8%		17.5%				Homes			772		336	(7)
	Interest coverage ratio(5)	3.0x		2.8x				Communities			3		1	(7)
	Fixed charge coverage ratio(5)	2.9x		2.7x
Capitalization							Community Information
	BRE common share price, 6/30/13	$50.02						As of September 30, 2013
	BRE common share price, 9/30/13	$50.76						Operating:	Communities		Homes		NOI %(8)
								Wholly or majority owned
	Common shares and units - Outstanding							Same-store	72		20,624		97%
									8
	Period end (excluding dilutive equity awards)	77,188						Non same-store	3		772		3%
								Total	75		21,396		100%
								Joint venture	1		252		0%
	Total funded debt	$1,838,527
	Preferred equity (liquidation value)	$53,993						Development Pipeline:
	Common equity  (at market)	$3,918,063						Under  construction	4		1,382
	Total market capitalization	$5,810,583						Land owned for development	2		506
	Total assets (gross)	$4,506,165						Land under contract	1		358

 

(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)	For the purpose of this calculation, EBITDA excludes NOI from communities sold during the quarter. The company borrowed approximately $120.5 million on September 30, 2013 in order to fund the acquisition of Jefferson at Hollywood, a 270 home community located in Los Angeles, California. Excluding the debt impact of the acquisition Debt-to-EBITDA and Debt plus preferred stock -to-EBITDA was 6.4x and 6.6x, respectively, for the quarter ended September 30, 2013.
(5)	Includes GAAP interest and capitalized interest (gross interest incurred). Fixed charges include gross interest incurred, preferred dividends and recurring cash amortization on secured debt.
(6)	For comparison purposes, 2013 data represents results for same-store pool established 1/1/2013; 2012 data represents results for same-store pool established 1/1/2012.
(7)	Represents Q3'13 non same-store homes as of the end of each period presented. Excludes partially delivered communities. Non same-store communities may not be consistent in each period.
(8)	Represents percentage of total NOI for the nine months ended September 30, 2013.

 

 

 

BRE Properties, Inc.

Consolidated Balance Sheets

Third Quarter 2013

(Unaudited, in thousands, except per share data)

  

		September 30,				December 31,
ASSETS		2013				2012
Real estate portfolio:
Direct investments in real estate:
Investments in rental communities		$	3,897,982			$	3,722,838
Construction in progress			483,481				302,263
Less: accumulated depreciation			(879,640	)			(811,187	)
			3,501,823				3,213,914
Equity investment in real estate joint ventures			6,451				40,753
Real estate held for sale, net			23,481				23,065
Land under development			38,382				104,675
Total real estate portfolio			3,570,137				3,382,407
Cash			7,876				62,241
Other assets			48,512				54,334
TOTAL ASSETS		$	3,626,525			$	3,498,982
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Unsecured senior notes		$	950,000			$	990,018
Unsecured revolving credit facility			177,000				-
Mortgage loans payable			711,527				741,942
Accounts payable and accrued expenses			81,374				75,789
Total liabilities			1,919,901				1,807,749
Redeemable noncontrolling interests			4,751				4,751
Shareholders' equity:
Preferred Stock, $0.01 par value; 20,000,000 shares authorized:  2,159,715 shares with $25 liquidation preference issued and outstanding at September 30, 2013 and December 31, 2012, respectively.			22				22
Common stock, $0.01 par value, 100,000,000 shares authorized. Shares issued and outstanding: 77,187,542 and 76,925,351 at September 30, 2013 and December 31, 2012, respectively.			772				769
Additional paid-in capital			1,701,079				1,685,691
Total shareholders' equity			1,701,873				1,686,482
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	3,626,525			$	3,498,982

  

  

BRE Properties, Inc.

Consolidated Statements of Income

Quarters and Nine Months Ended September 30, 2013 and 2012

(Unaudited, in thousands, except per share data)

  

		Quarter ended				Quarter ended				Nine months ended				Nine months ended
REVENUES		9/30/13				9/30/13				9/30/12				9/30/13
Rental income		$	100,314			$	93,755			$	294,248			$	275,602
Ancillary income			4,304				3,776				12,070				11,040
Total revenues		$	104,618			$	97,531			$	306,318			$	286,642
EXPENSES
Real estate		$	32,592			$	30,827			$	94,913			$	90,803
Provision for depreciation			27,543				24,501				79,183				73,103
Interest			15,948				16,998				49,935				50,488
General and administrative			5,055				5,093				17,393				17,152
Other expenses(1)			585				15,000				585				15,000
Total expenses			81,723				92,419				242,009				246,546
Other income			93				740				746				1,966
Net income before noncontrolling interests,
partnership income and discontinued operations			22,988				5,852				65,055				42,062
Income from unconsolidated entities			94				669				523				2,125
Net gain on sale of unconsolidated entities (2)			-				6,025				18,633				6,025
Income from continuing operations			23,082				12,546				84,211				50,212
Discontinued operations:
Discontinued operations, net (3)			-				1,360				1,028				4,251
Net gain on sales of discontinued operations (3)			-				-				17,394				8,279
Income from discontinued operations			-				1,360				18,422				12,530
NET INCOME		$	23,082			$	13,906			$	102,633			$	62,742
Redeemable noncontrolling interest in income			48				105				143				315
Dividends attributable to preferred stock			911				911				2,733				2,733
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS		$	22,123			$	12,890			$	99,757			$	59,694
Net income per common share - basic		$	0.29			$	0.17			$	1.29			$	0.78
Net income per common share - diluted		$	0.29			$	0.17			$	1.29			$	0.78
Weighted average shares outstanding - basic (4)			77,170				76,813				77,086				76,471
Weighted average shares outstanding - diluted (4)			77,350				77,130				77,310				76,840

  

(1)	During the three and nine months ended September 30, 2013, Other expenses related to acquisition costs for the community acquired during Q3'13 located in Los Angeles, California. During the three months and nine months ended September 30, 2012, Other expenses related to an impairment charge on land owned in Anaheim, California, that is no longer held for development. The land is recorded in Real estate held for sale, net at $23.5 million as of September 30, 2013 on the consolidated balance sheet.
(2)	During the nine months ended September 30, 2013, seven joint venture interests were sold for $53.4 million resulting in a net gain of $18.6 million. During the three months and nine months ended September 30, 2012, three joint venture communities were sold for $26.9 million resulting in a net gain of $6.0 million.
(3)	Includes one community sold in June 2013 and three communities sold during 2012.

 

 

		Quarter ended				Quarter ended				Nine months ended				Nine months ended
		9/30/13				9/30/12				9/30/13				9/30/12
Rental and ancillary income			-			$	2,819			$	2,113			$	8,950
Real estate expenses			-				(863	)			(717	)			(2,804	)
Provision for depreciation			-				(596	)			(368	)			(1,895	)
Discontinued operations, net			-			$	1,360			$	1,028			$	4,251

 

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

 

 

 

BRE Properties, Inc.

Consolidated Statements of Income

Past Five Quarters

(Unaudited, in thousands, except per share data)

 

		Sept. 30,				Jun. 30,				Mar. 31,				Dec. 31,				Sept. 30,
REVENUES		2013				2013				2013				2012				2012
Rental income		$	100,314			$	97,817			$	96,117			$	95,269			$	93,755
Ancillary income			4,304				4,083				3,683				3,957				3,776
Total revenues		$	104,618			$	101,900			$	99,800			$	99,226			$	97,531
EXPENSES
Real estate		$	32,592			$	30,622			$	31,698			$	30,825			$	30,827
Provision for depreciation			27,543				26,090				25,551				26,237				24,501
Interest			15,948				16,655				17,332				17,979				16,998
General and administrative			5,055				5,956				6,382				5,696				5,093
Other expenses			585				-				-				-				15,000
Total expenses			81,723				79,323				80,963				80,737				92,419
Other income			93				290				363				565				740
Net income before noncontrolling interests,
partnership income and discontinued operations			22,988				22,867				19,200				19,054				5,852
Income from unconsolidated entities			94				112				318				519				669
Net gain on sale of unconsolidated entities			-				3,608				15,025				-				6,025
Income from continuing operations			23,082				26,587				34,543				19,573				12,546
Discontinued operations:
Discontinued operations, net (1)			-				585				443				1,386				1,360
Net gain on sales of discontinued operations			-				17,394				-				53,856				-
Income from discontinued operations			-				17,979				443				55,242				1,360
NET INCOME		$	23,082			$	44,566			$	34,986			$	74,815			$	13,906
Redeemable noncontrolling interest in income			48				48				48				99				105
Dividends attributable to preferred stock			911				911				911				911				911
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS		$	22,123			$	43,607			$	34,027			$	73,805			$	12,890
Net income per common share - basic		$	0.29			$	0.56			$	0.44			$	0.96			$	0.17
Net income per common share - diluted		$	0.29			$	0.56			$	0.44			$	0.96			$	0.17
Weighted average shares outstanding - basic (2)			77,170				77,106				76,990				76,872				76,813
Weighted average shares outstanding - diluted (2)			77,350				77,280				77,250				77,180				77,130
(1) Details of earnings from discontinued operations, net:			Sept. 30,				Jun. 30,				Mar. 31,				Dec. 31,				Sept. 30,
			2013				2013				2013				2012				2012
Rental and ancillary income			-			$	1,035			$	1,077			$	2,620			$	2,819
Real estate expenses			-				(359	)			(358	)			(850	)			(863	)
Provision for depreciation			-				(91	)			(276	)			(384	)			(596	)
Income from discontinued operations, net			-			$	585			$	443			$	1,386			$	1,360

 

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

 

 

Reconciliation of Funds from Operations (FFO)

(Unaudited, in thousands, except per share data)

 

 

		Sept. 30,				Jun. 30,				Mar. 31,				Dec. 31,				Sept. 30,
CALCULATION OF FFO		2013				2013				2013				2012				2012
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS		$	22,123			$	43,607			$	34,027			$	73,805			$	12,890
Add back/ exclude:
Depreciation from continuing operations			27,543				26,090				25,551				26,237				24,501
Depreciation from discontinued operations			-				91				276				384				596
Depreciation from unconsolidated entities			47				101				297				392				512
Net (gain) on sales from unconsolidated entities			-				(3,608	)			(15,025	)			-				(6,025	)
Net (gain) on sales of discontinued operations			-				(17,394	)			-				(53,856	)			-
Funds from Operations (1)		$	49,713			$	48,887			$	45,126			$	46,962			$	32,474
Non core items in periods presented
Acquisition costs(2)			585				-				-				-				-
Non cash asset impairment charge(3)			-				-				-				-				15,000
Core Funds from Operations(4)		$	50,298			$	48,887			$	45,126			$	46,962			$	47,474
Weighted average shares and equivalents outstanding - diluted			77,350				77,280				77,250				77,180				77,130
Funds from Operations  (per share) -  diluted (5)		$	0.64			$	0.63			$	0.58			$	0.61			$	0.42
Core Funds from Operations  (per share) -  diluted		$	0.65			$	0.63			$	0.58			$	0.61			$	0.62

 

(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.
(2)	For the quarter ended September 30, 2013, EPS and FFO totals included $585,000 of costs related to the acquisition of Jefferson at Hollywood.
(3)	For the quarter ended September 30, 2012,  EPS and FFO totals included a $15 million impairment charge on land owned in Anaheim, California, that is no longer held for development. The land is recorded in Real estate held for sale, net at $23.5 million as of September 30, 2013 on the consolidated balance sheet.
(4)	Core Funds from Operations ("Core FFO") begins with FFO as defined by the NAREIT White Paper and is adjusted for the following:
	- The impact of any expenses relating to non-operating asset impairment and valuation allowances;
	- Property acquisition costs and pursuit cost write-offs (other expenses);
	- Gains and losses from early debt extinguishment, including prepayment penalties and preferred share redemptions;
	- Executive level severance costs;
	- Gains and losses on the sales of non-operating assets, and
	- Other non-comparable items
(5)	See analysis of weighted average shares and ending shares in Exhibit A.

 

 

BRE Properties, Inc.

Capital improvement activity detail

(Dollar amounts in thousands, except per home data)

  

CAPITAL EXPENDITURES		Q3 '13				Q2 '13				Q1 '13				Q4 '12				Q3 '12
Recurring capital expenditures		$	7,087			$	7,665			$	3,334			$	5,698			$	6,378
Average apartment homes in period			21,178				21,321				21,160				21,101				21,240
Capital expenditures per apartment home in period		$	335			$	359			$	158			$	270			$	300
Capital expenditures per apartment home-trailing four quarters		$	1,122			$	1,087			$	986			$	947			$	956
Revenue enhancing rehabilitation and other		$	13,435			$	10,135			$	8,508			$	12,564			$	9,174

  

Recurring Capital Expenditure Detail for Q3'13		Q3 '13				Cost per Home				YTD 2013				Cost per Home
Exteriors (roof, structural, paint etc.)		$	2,633			$	124			$	5,418			$	255
Common Areas (clubhouse, parking, pool, other infrastructure)			1,539				73				4,971				235
Equipment			776				37				2,344				110
Turnover related			2,139				101				5,353				252
Total Recurring Capital Expenditures		$	7,087			$	335			$	18,086			$	852
Revenue enhancing rehabilitation and other (1)		$	13,435				n/a			$	32,078				n/a

 

(1)

Includes rehab programs on the stabilized portfolio including properties renovated in conjunction with an acquisition.  The details associated with communities currently undergoing significant rehab are noted below. May include large scale items that represent unusual out of cycle deferred maintenance.

  

Community specific detail on significant revenue enhancing rehab

(Dollar amounts in thousands, except cost per home data)

 

 

		Homes				Estimated Cost				Cost per Home				Costs Incurred Project to Date				Balance to Fund				Costs Incurred Q3 '13				Project Start Date		Estimated Completion		Physical Occupancy Q3 '13
Orange County
The Havens			440			$	20,789			$	47,000			$	19,171			$	1,618			$	2,069			Q4'11		Q4'14			93.6	%
Fountain Valley, CA
Pinnacle at MacArthur Place			253				4,612				18,000				3,086				1,526				364			Q3'12		Q3'15			92.0	%
South Coast Metro, CA
Los Angeles
The Fairways at Westridge			234				4,326				9,000				2,942				1,384				650			Q3'12		Q3'15			91.0	%
Valencia, CA
Aqua Marina Del Rey			500				12,640				40,000				2,452				10,188				1,873			Q2'13		Q2'16			91.9	%
Marina Del Rey, CA
San Diego
Cambridge Park			320				6,137				19,000				3,607				2,530				703			Q3'12		Q3'15			91.8	%
San Diego, CA
Carmel Creek			348				8,882				26,000				1,843				7,039				1,563			Q2'13		Q2'16			90.3	%
San Diego, CA
Seattle
Parkwood at Mill Creek			240				7,010				29,000				4,810				2,200				599			Q3'12		Q3'15			91.7	%
Millcreek, WA
BellCentre			248				5,519				22,000				3,792				1,727				511			Q3'12		Q3'15			94.8	%
Bellevue, WA
San Francisco
Foster's Landing			490				12,517				26,000				2,235				10,282				1,965			Q2'13		Q2'16			92.3	%
Foster City, CA
Lakeshore Landing			308				9,398				31,000				99				9,299				99			Q3'13		Q3'16			93.7	%
San Mateo, CA
The Landing at Jack London Square			282				6,481				23,000				1,716				4,765				1,480			Q2'13		Q2'16			91.6	%
Oakland, CA
Total			3,663			$	98,311			$	27,000			$	45,753			$	52,558			$	11,876								92.3	%

  

 

BRE Properties, Inc.

"Same-Store" Markets Summary

For the Quarters ended September 30, 2013 and 2012

(Dollar amounts in thousands)

 

 

										Revenues												Expenses
		No. of				No. of												%												%
Region		Communities				Homes				Q3'13				Q3'12				Change				Q3'13				Q3'12				Change
California
San Diego			11				3,640			$	17,233			$	17,044				1.1	%		$	5,174			$	5,089				1.7	%
Inland Empire			5				1,173				5,044				4,943				2.0	%			1,722				1,649				4.4	%
Orange County			12				3,789				17,794				17,108				4.0	%			5,592				5,366				4.2	%
Los Angeles			13				3,067				16,687				16,066				3.9	%			5,463				5,504				-0.7	%
San Francisco Bay Area			15				4,197				25,987				24,005				8.3	%			6,899				6,721				2.6	%
Subtotal; California			56				15,866			$	82,745			$	79,166				4.5	%		$	24,850			$	24,329				2.1	%
Washington
Seattle			13				3,456				14,611				13,770				6.1	%			4,854				4,436				9.4	%
Non Core Markets (1)			3				1,302				3,944				3,901				1.1	%			1,522				1,501				1.4	%
Total Same-Store (2)			72				20,624			$	101,300			$	96,837				4.6	%		$	31,226			$	30,266				3.2	%

 

										Net Operating Income
		No. of				No. of												%				%
Region		Communities				Homes				Q3'13				Q3'12				Change				of Total
California
San Diego			11				3,640			$	12,059			$	11,955				0.9	%			17.2	%
Inland Empire			5				1,173				3,322				3,294				0.9	%			4.8	%
Orange County			12				3,789				12,202				11,742				3.9	%			17.4	%
Los Angeles			13				3,067				11,224				10,562				6.3	%			16.0	%
San Francisco Bay Area			15				4,197				19,088				17,284				10.4	%			27.2	%
Subtotal; California			56				15,866			$	57,895			$	54,837				5.6	%			82.6	%
Washington
Seattle			13				3,456				9,757				9,334				4.5	%			13.9	%
Non Core Markets (1)			3				1,302				2,422				2,400				0.9	%			3.5	%
Total Same-Store (2)			72				20,624			$	70,074			$	66,571				5.3	%			100.0	%

  

										Net Operating  Income								Avg. Physical Occupancy				Gross Carrying Value
"Non Same-Store" Summary		No. of Communities				No. of Homes				Q3'13				Q3'12				Q3'13				Q3'13
Lease up communities (3)			2				502			$	1,973			$	161				90.7	%		$	148,359
Acquired communities (4)			1				270				16				-				N/A				120,500
Joint venture income (5)			1				252				94				669
Commercial and Other (6)			n/a				n/a				(37	)			(28	)
Other income			n/a				n/a				93				740
Discontinued operations (7)			4				712				-				1,956
Total  Non Same-Store			8				1,736			$	2,139			$	3,498				90.7	%		$	268,859
Less: Communities Sold in 2012 and 2013			(4	)			(712)
Total All Homes / NOI			76				21,648			$	72,213			$	70,069

 

(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 comparable calendar year periods. The term stabilized refers to communities that have reached a physical occupancy of at least 93% as of January 1, 2012.
(3)	Consists of NOI from two fully delivered communities under lease up.
(4)	Consists of NOI from one community located in Los Angeles, CA (270 homes) that was acquired on September 30, 2013.
(5)	Consists of the percentage of net income derived from joint venture investments in rental communities.  See page 9 for a reconciliation of the components of BRE's share of joint venture net income (including BRE's proportionate share of NOI).
(6)	Consists of NOI from retail tenants associated with the operating communities and NOI from commercial properties that will later be developed as multifamily communities and other real estate expenses.
(7)	Includes results from three communities sold in 2012 and one community sold in 2013.

 

 

BRE Properties, Inc.

"Same-Store" Markets Summary

For the Nine months ended September 30, 2013 and 2012

(Dollar amounts in thousands)

 

										Revenues												Expenses
		No. of				No. of												%												%
Region		Communities				Homes				YTD 2013				YTD 2012				Change				YTD 2013				YTD 2012				Change
California
San Diego			11				3,640			$	51,272			$	50,539				1.5	%		$	15,025			$	15,057				-0.2	%
Inland Empire			5				1,173				15,011				14,725				1.9	%			4,859				4,742				2.5	%
Orange County			12				3,789				52,555				50,711				3.6	%			16,478				15,835				4.1	%
Los Angeles			13				3,067				49,244				47,285				4.1	%			15,694				15,827				-0.8	%
San Francisco Bay Area			15				4,197				75,763				70,002				8.2	%			20,134				19,897				1.2	%
Subtotal; California			56				15,866			$	243,845			$	233,262				4.5	%		$	72,190			$	71,358				1.2	%
Washington
Seattle			13				3,456				42,859				40,188				6.6	%			14,681				13,656				7.5	%
Non Core Markets (1)			3				1,302				11,853				11,634				1.9	%			4,434				4,374				1.4	%
Total Same-Store (2)			72				20,624			$	298,557			$	285,084				4.7	%		$	91,305			$	89,388				2.1	%

  

										Net Operating Income
		No. of				No. of												%				%
Region		Communities				Homes				YTD 2013				YTD 2012				Change				of Total
California
San Diego			11				3,640			$	36,247			$	35,482				2.2	%			17.5	%
Inland Empire			5				1,173				10,152				9,983				1.7	%			4.9	%
Orange County			12				3,789				36,077				34,876				3.4	%			17.4	%
Los Angeles			13				3,067				33,550				31,458				6.7	%			16.2	%
San Francisco Bay Area			15				4,197				55,629				50,105				11.0	%			26.8	%
Subtotal; California			56				15,866			$	171,655			$	161,904				6.0	%			82.8	%
Washington
Seattle			13				3,456				28,178				26,532				6.2	%			13.6	%
Non Core Markets (1)			3				1,302				7,419				7,260				2.2	%			3.6	%
Total Same-Store (2)			72				20,624			$	207,252			$	195,696				5.9	%			100.00	%

  

										Net Operating  Income								Avg. Physical Occupancy				Gross Carrying Value
"Non Same-Store" Summary		No. of Communities				No. of Homes				YTD 2013				YTD 2012				YTD 2013				YTD 2013
Lease up communities (3)			2				502			$	4,106			$	156				70.8	%		$	148,359
Acquired communities (4)			1				270				16				-				N/A				120,500
Joint venture income (5)			1				252				523				2,125
Commercial and Other (6)			n/a				n/a				31				(13	)
Other income			n/a				n/a				746				1,966
Discontinued operations (7)			4				712				1,396				6,146
Total  Non Same-Store			8				1,736			$	6,818			$	10,380				70.8	%		$	268,859
Less: Communities Sold in 2012 and 2013			(4	)			(712	)
Total All Homes / NOI			76				21,648			$	214,070			$	206,076

 

(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 comparable calendar year periods. The term stabilized refers to communities that have reached a physical occupancy of at least 93% as of January 1, 2012.
(3)	Consists of NOI from two fully delivered communities under lease up.
(4)	Consists of NOI from one community located in Los Angeles, CA (270 homes) that was acquired on September 30, 2013.
(5)	Consists of the percentage of net income derived from joint venture investments in rental communities.  See page 9 for a reconciliation of the components of BRE's share of joint venture net income (including BRE's proportionate share of NOI).
(6)	Consists of NOI from retail tenants associated with the operating communities and NOI from commercial properties that will later be developed as multifamily communities and other real estate expenses.
(7)	Includes results from three communities sold in 2012 and one community sold in 2013.

 

 

BRE Properties, Inc.

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

(Dollar amounts in thousands)

 

 

SAME-STORE OPERATING EXPENSES (20,624 homes)

 

Quarters ended September 30, 2013 and 2012

 

																		% of Q3 '13
										$				%				Operating
		Q3'13				Q3'12				Change				Change				Expenses
Property taxes		$	9,380			$	8,945			$	435				4.9	%			30.0	%
Insurance			1,403				1,326				77				5.8	%			4.5	%
Utilities			2,358				2,119				239				11.3	%			7.7	%
Property management fees (2)			3,293				3,152				141				4.5	%			10.5	%
Other operating expenses (3)			14,792				14,724				68				0.5	%			47.3	%
Total operating expenses		$	31,226			$	30,266			$	960				3.2	%			100.0	%

 

Nine months ended September 30, 2013 and 2012  

 

																		% of YTD 2013
										$				%				Operating
		Q3'13				Q3'12				Change				Change				Expenses
			YTD 2013				YTD 2012				Change				Change				Expenses
Property taxes(1)		$	27,048			$	26,839			$	209				0.8	%			29.6	%
Insurance			4,170				3,833				337				8.8	%			4.6	%
Utilities			6,624				6,151				473				7.7	%			7.3	%
Property management fees (2)			9,703				9,265				438				4.7	%			10.6	%
Other operating expenses (3)			43,760				43,300				460				1.1	%			47.9	%
Total operating expenses		$	91,305			$	89,388			$	1,917				2.1	%			100.0	%

 

(1)

During the nine months ended September 30, 2013, property tax refunds of approximately $1.0 million were received from appeals related to the 2010 and 2011 tax years.

(2)

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.

(3)

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

 

 

JOINT VENTURE DISCLOSURE- Quarters and Nine Months Ended September 30, 2013

 

 

Joint Ventures		Communities				Regional Breakdown				Homes				BRE equity investment				BRE share of JV Debt
Relationship - 35% BRE equity ownership			1				PHX				252			$	6,451			$	-
BRE share of:			Q3'13				Q3'12				YTD 2013				YTD 2012
Revenues		$	249			$	1,934			$	1,703			$	5,763
Expenses			107				753				734				2,127
Net Operating Income			142				1,181				969				3,636
Depreciation			48				512				446				1,511
Net Income		$	94			$	669			$	523			$	2,125
Joint Venture Sales			Q3'13				Q3'12 (4)				YTD 2013 (4)				YTD 2012 (4)
Communities			-				3				7				3
Homes			-				728				2,612				728
BRE share			Q3'13				Q3'12 (4)				YTD 2013 (4)				YTD 2012 (4)
Net Proceeds			-			$	26,919			$	53,408			$	26,919
Net Gain on Sale			-			$	6,025			$	18,633			$	6,025
			Q3'13				Q3'12				YTD 2013				YTD 2012
Management fees earned		$	28			$	438			$	355			$	1,289

 

(4)

During the nine months ended September 30, 2013, seven joint venture interests were sold of which six were sold  to the Company's joint venture partner. The sales consisted of four joint venture communities located in Denver, CO and three joint venture communities located in Phoenix, AZ. The Company maintained a 15% equity ownership in all seven joint venture communities prior to the sale.  During the three months and nine months ended September 30, 2012, three joint venture communities were sold with one community located in Sacramento, CA with 236 homes and two communities located in Denver, CO with 492 homes. Net proceeds from the three sales were $26.9 million and a gain on sale of $6.0 million.

 

 

BRE Properties, Inc.

Sequential "Same-Store" Multifamily Markets Summary

Last five quarters

  

REVENUES

  

		Q3'13				Q2'13				Q1'13				Q4'12				Q3'12
California
San Diego			1.0	%			0.5	%			-0.8	%			0.4	%			1.7	%
Inland Empire			1.8	%			-1.2	%			0.1	%			1.3	%			1.1	%
Orange County			1.7	%			1.3	%			0.1	%			0.8	%			1.1	%
Los Angeles			2.2	%			0.5	%			0.5	%			0.5	%			2.5	%
San Francisco Bay Area			3.4	%			1.9	%			0.4	%			2.3	%			3.4	%
Subtotal; California			2.2	%			1.0	%			0.1	%			1.1	%			2.2	%
Washington
Seattle			1.9	%			3.0	%			-0.4	%			1.5	%			2.5	%
Non Core Markets (1)			0.0	%			-0.5	%			1.3	%			0.3	%			-0.5	%
Total Same-Store (3)			2.1	%			1.2	%			0.1	%			1.2	%			2.1	%
EXPENSES (2)
			Q3'13				Q2'13				Q1'13				Q4'12				Q3'12
California
San Diego			5.6	%			-1.1	%			-1.5	%			-1.2	%			0.1	%
Inland Empire			10.8	%			-1.8	%			-2.5	%			-1.5	%			5.9	%
Orange County			3.1	%			-0.7	%			0.9	%			0.9	%			3.7	%
Los Angeles			14.0	%			-11.9	%			3.1	%			-4.2	%			9.1	%
San Francisco Bay Area			7.9	%			-6.6	%			1.1	%			0.7	%			3.2	%
Subtotal; California			7.7	%			-5.0	%			0.7	%			-0.9	%			4.1	%
Washington
Seattle			-1.4	%			0.4	%			5.7	%			4.5	%			-7.3	%
Non Core Markets (1)			10.3	%			-9.9	%			12.3	%			-9.2	%			4.0	%
Total Same-Store (3)			6.3	%			-4.4	%			2.0	%			-0.5	%			2.3	%
NET OPERATING INCOME
			Q3'13				Q2'13				Q1'13				Q4'12				Q3'12
California
San Diego			-0.9	%			1.2	%			-0.5	%			1.0	%			2.4	%
Inland Empire			-2.3	%			-0.8	%			1.3	%			2.8	%			-1.2	%
Orange County			1.1	%			2.3	%			-0.2	%			0.7	%			-0.1	%
Los Angeles			-2.6	%			6.8	%			-0.7	%			3.0	%			-0.7	%
San Francisco Bay Area			1.9	%			5.2	%			0.1	%			3.0	%			3.5	%
Subtotal; California			0.0	%			3.6	%			-0.2	%			2.1	%			1.4	%
Washington
Seattle			3.7	%			4.4	%			-3.5	%			0.0	%			7.9	%
Non Core Markets (1)			-5.6	%			5.4	%			-4.6	%			6.3	%			-3.1	%
Total Same-Store (3)			0.3	%			3.8	%			-0.8	%			1.9	%			2.1	%

 

 

(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 20,624 homes for all periods shown.

 

 

BRE Properties, Inc.

Summary of Revenue and Occupancy Changes - "Same-Store" Communities

 

Q3'13 vs. Q2'13 Change						Avg. Revenue per Occupied Home (1)										Financial Occupancy (2)										Rental Revenue
			Homes			Q3'13				Q3'12			%  Change				Q3'13				Q2'13			%  Change			Q3'13				Q2'13				%  Change
San Diego			3,640			$	1,677			$1,657			1.2	%			94.1	%			94.3	%		-0.2%		$	17,233			$	17,066				1.0	%
Inland Empire			1,173				1,510			1,488			1.5	%			94.9	%			94.6	%		0.3%			5,044				4,955				1.8	%
Orange County			3,789				1,657			1,629			1.7	%			94.5	%			94.5	%		0.0%			17,794				17,494				1.7	%
Los Angeles			3,067				1,923			1,889			1.8	%			94.3	%			93.9	%		0.4%			16,687				16,321				2.2	%
San Francisco Bay Area			4,197				2,186			2,098			4.2	%			94.4	%			95.1	%		-0.7%			25,987				25,125				3.4	%
Seattle			3,456				1,487			1,446			2.8	%			94.8	%			95.6	%		-0.8%			14,611				14,333				1.9	%
Non Core Markets			1,302				1,071			1,070			0.1	%			94.3	%			94.4	%		-0.1%			3,944				3,944				0.0	%
Same-Store			20,624			$	1,734			$1,694			2.4	%			94.4	%			94.7	%		-0.3%		$	101,300			$	99,238				2.1	%
Q3'13 vs. Q2'13 Change						Avg. Revenue per Occupied Home (1)										Financial Occupancy (2)										Rental Revenue
			Homes			Q3'13				Q3'12			%  Change				Q3'13				Q2'12			%  Change			Q3'13				Q2'12				%  Change
San Diego			3,640			$	1,677			$1,628			3.0	%			94.1	%			95.9	%		-1.8%		$	17,233			$	17,044				1.1	%
Inland Empire			1,173				1,510			1,466			3.0	%			94.9	%			95.8	%		-0.9%			5,044				4,943				2.0	%
Orange County			3,789				1,657			1,586			4.5	%			94.5	%			94.9	%		-0.4%			17,794				17,108				4.0	%
Los Angeles			3,067				1,923			1,826			5.3	%			94.3	%			95.6	%		-1.3%			16,687				16,066				3.9	%
San Francisco Bay Area			4,197				2,186			2,003			9.2	%			94.4	%			95.2	%		-0.8%			25,987				24,005				8.3	%
Seattle			3,456				1,487			1,394			6.6	%			94.8	%			95.3	%		-0.5%			14,611				13,770				6.1	%
Non Core Markets			1,302				1,071			1,054			1.6	%			94.3	%			94.8	%		-0.5%			3,944				3,901				1.1	%
Same-Store			20,624			$	1,734			$1,641			5.7	%			94.4	%			95.4	%		-1.0%		$	101,300			$	96,837				4.6	%
YTD 2013 vs. YTD 2012 Change						Avg. Revenue per Occupied Home (1)										Financial Occupancy (2)										Rental Revenue
			Homes			YTD 9/30/13				YTD 9/30/12			%  Change				YTD 9/30/13				YTD 9/30/12			%  Change			YTD 9/30/13				YTD 9/30/12				%  Change
San Diego			3,640			$	1,656			$1,618			2.4	%			94.5	%			95.4	%		-0.9%		$	51,272			$	50,539				1.4	%
Inland Empire			1,173				1,496			1,468			2.0	%			95.0	%			95.0	%		0.0%			15,011				14,725				1.9	%
Orange County			3,789				1,628			1,562			4.2	%			94.6	%			95.2	%		-0.5%			52,555				50,711				3.6	%
Los Angeles			3,067				1,888			1,794			5.2	%			94.5	%			95.5	%		-1.0%			49,244				47,285				4.1	%
San Francisco Bay Area			4,197				2,113			1,949			8.4	%			94.9	%			95.1	%		-0.1%			75,763				70,002				8.2	%
Seattle			3,456				1,450			1,353			7.2	%			95.0	%			95.5	%		-0.5%			42,859				40,188				6.7	%
Non Core Markets			1,302				1,064			1,045			1.8	%			95.1	%			95.0	%		0.1%			11,853				11,634				1.9	%
Same-Store			20,624			$	1,697			$1,612			5.3	%			94.8	%			95.3	%		-0.5%		$	298,557			$	285,084				4.7	%

 

	(1)	Average revenue per occupied home includes rental and ancillary income earned on occupied homes during the period.  Ancillary income per occupied home totals approximately $67 per home per month for the nine months ended September 30, 2013 and $62 per home per month for the nine months ended September 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.

 

 

BRE Properties, Inc.

"Same-Store" Operating Metrics

 

 

		No. of				Occupancy (2)								Occupancy (3)								Turnover Ratio (4)								Turnover Ratio (4)
California			Homes				Q3'13				Q3'12				YTD'13				YTD'12				Q3'13				Q3'12				YTD'13				YTD'12
San Diego			3,640				94.2	%			95.9	%			94.7	%			95.3	%			77.0	%			76.0	%			66.4	%			68.9	%
Inland Empire			1,173				94.7	%			95.4	%			94.9	%			94.9	%			67.5	%			62.1	%			62.2	%			61.5	%
Orange County			3,789				94.5	%			95.1	%			94.7	%			95.4	%			74.1	%			74.0	%			65.1	%			65.3	%
Los Angeles			3,067				94.6	%			95.7	%			94.8	%			95.7	%			70.3	%			72.5	%			65.9	%			66.0	%
San Francisco Bay Area			4,197				95.0	%			95.7	%			95.3	%			95.5	%			71.9	%			65.9	%			62.6	%			60.4	%
Subtotal; California			15,866				94.6	%			95.6	%			94.9	%			95.4	%			73.0	%			71.1	%			64.7	%			64.7	%
Washington
Seattle			3,456				95.1	%			95.5	%			95.3	%			95.7	%			68.1	%			67.0	%			59.1	%			55.4	%
Non Core Markets (1)			1,302				94.0	%			94.8	%			94.8	%			94.9	%			59.6	%			67.6	%			57.1	%			63.3	%
Total/Average Same-Store (5)			20,624				94.6	%			95.5	%			94.9	%			95.4	%			71.3	%			70.2	%			63.3	%			63.0	%
Communities with significant rehab (6)			3,663				92.3	%			94.7	%			93.1	%			95.1	%
Total/Average Same-Store excluding rehab (7)			16,961				95.2	%			95.7	%			95.3	%			95.5	%

 

(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, 2012.

(6)

Consists of stabilized communities under significant revenue enhancing rehab during the quarter and the year to date period. See page 6 for community detail of revenue enhancing rehab.

(7)

Consists of stabilized communities owned by BRE since January 1, 2012 and excludes communities under significant revenue enhancing renovation.

  

"Same -Store" New Lease and Renewal Transactions

 

						New Leases												Renewals																Total New Leases/Renewals
						New  Leases				Previous Resident				%								Renewal				Expiring				%								Current				Prior				%
California		Q3'13				Effective (8)				Effective (9)				Change				Q3'13				Effective (8)				Effective (10)				Change				Q3'13				Effective (8)				Effective				Change
San Diego			730			$	1,660			$	1,618				2.6	%			565			$	1,676			$	1,598				4.9	%			1,295			$	1,667			$	1,609				3.6	%
Inland Empire			214				1,438				1,455				-1.2	%			221				1,486				1,440				3.2	%			435				1,463				1,448				1.0	%
Orange County			720				1,610				1,597				0.8	%			596				1,641				1,568				4.7	%			1,316				1,624				1,584				2.5	%
Los Angeles			619				1,961				1,901				3.2	%			441				1,919				1,825				5.2	%			1,060				1,944				1,869				4.0	%
San Francisco Bay Area			756				2,354				2,115				11.3	%			657				2,233				2,059				8.5	%			1,413				2,298				2,089				10.0	%
Subtotal; California			3,039			$	1,866			$	1,783				4.7	%			2,480			$	1,841			$	1,739				5.9	%			5,519			$	1,855			$	1,763				5.2	%
Washington
Seattle			571				1,482				1,422				4.2	%			528				1,446				1,347				7.3	%			1,099				1,465				1,386				5.7	%
Non Core Markets (1)			218				1,009				1,030				-2.0	%			236				1,074				1,040				3.3	%			454				1,043				1,035				0.7	%
Total Same-Store (11)			3,828			$	1,760			$	1,686				4.4	%			3,244			$	1,721			$	1,624				6.0	%			7,072			$	1,742			$	1,658				5.1	%

  

(8)

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

(9)

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.

(10)

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

(11)

The Q3'13 total same-store pool consists of 20,624 homes. Average lease term for leases signed during the quarter was 10 months. Annualized growth for total new leases/renewals totals 6.1%.

  

  

BRE Properties, Inc.

Debt Summary as of September 30, 2013

(Dollar amounts in thousands)

 

DEBT MATURITY SCHEDULE

 

		Secured Debt								Unsecured Debt								Weighted
			Amortization				Balloon				Floating				Fixed				Total				Avg. Rate (1)				% of Debt
Year
2013		$	66			$	-			$	-			$	-			$	66				5.74	%			0.0	%
2014			3,839				-				-				50,000				53,839				4.77	%			2.9	%
2015			7,962				-				177,000				-				184,962				1.56	%			10.2	%
2016			9,041				-				-				-				9,041				5.64	%			0.5	%
2017			9,307				-				-				300,000				309,307				5.50	%			16.8	%
2018			9,853				-				-				-				9,853				5.63	%			0.5	%
2019			6,492				317,975				-				-				324,467				5.59	%			17.6	%
2020			3,346				343,646				-				-				346,992				5.61	%			18.9	%
2021			-				-				-				300,000				300,000				5.20	%			16.3	%
2022			-				-				-				-				-				-				-
2023			-				-				-				300,000				300,000				3.38	%			16.3	%
Total		$	49,906			$	661,621			$	177,000			$	950,000			$	1,838,527				4.72	%			100	%

  

 

WEIGHTED AVERAGE COST OF DEBT

  

						Weighted				Weighted				Percentage of
		Balance				Avg. Term				Avg. Rate				Total Debt
Fixed Rate
Unsecured		$	950,000				6.41				4.69	%			51.7	%
Secured			711,527				6.12				5.60	%			38.7	%
		$	1,661,527				6.29				5.08	%			90.4	%
Floating Rate
Unsecured(2)		$	177,000				1.51				1.38	%			9.6	%
Total Debt Before Loan Fees		$	1,838,527				5.83				4.72	%			100.0	%
Loan Fees(3)											0.26	%
Total Debt		$	1,838,527				5.83				4.98	%			100.0	%

 

CAPITALIZED INTEREST

SENIOR UNSECURED DEBT RATING As of October 28, 2013

Q3'13

Q3'12

Capitalized Interest

$

6,550

$

5,806

Moody's

Baa2

(stable)

Standard & Poor's

BBB

(stable)

Fitch

BBB+

(stable)

YTD 2013

YTD 2012

Capitalized Interest

$

18,199

$

16,023

 

 

SUMMARY OF COMPLIANCE- Senior Unsecured Notes

SUMMARY OF COMPLIANCE - Line of Credit

Requirement

Actual

Requirement

Actual

Total Debt to Gross Assets

< 60%

41%

Leverage Ratio

< 60%

35%

Debt Service Test

> 1.50

2.78

Maximum Secured Indebtedness

< 40%

13%

Total Secured Debt  to Total Assets

< 40%

16%

Minimum Unsecured Leverage

> 1.65

3.67

Total Unencumbered Assets to Unsecured Debt

> 1.50

3.11

Minimum Fixed Charge Coverage

> 1.50

2.80

SUMMARY OF PREFERRED SHARES

Q3'13

Total preferred shares outstanding

2,160

Liquidation value

$53,993

Dividend yield at par

6.75%

 

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

(2)

The $750 million senior unsecuredrevolving credit facility priced at LIBOR plus 120 bps plus an annual 20 bps facility fee on the total commitment of the facility, which matures on April 3, 2015, and has a one year extension option.

(3)

Includes amortization of all fees associated with all outstanding debt (including annual facility fees on the unsecured revolving credit facility).

 

 

BRE Properties, Inc.
Development Summary
September 30, 2013
(Dollar amounts in millions)

 

 

Number

Cost

Estimated

Balance to

Product

First

Final

CONSTRUCTION IN PROGRESS

of Homes

Incurred

Cost

Fund

Type

CO (1)

CO (1)

Solstice

Sunnyvale, CA

280

$

102.9

$

121.9

$

19.0

Podium

Q4'13

Q1'14

Wilshire La Brea

Los Angeles, CA

478

232.7

277.3

44.6

Podium

Q4'13

Q4'14

Radius

Redwood City, CA

264

44.9

97.8

52.9

Podium

Q2'14

Q4'14

MB360

San Francisco, CA

360

103.0

227.2

124.2

Podium

Q2'14

Q4'14

Total CIP

1,382

$

483.5

$

724.2

$

240.7

Number

Cost

Estimated

Balance to

Product

First

Final

LAND UNDER DEVELOPMENT (2)

of Homes

Incurred

Cost (3)

Fund

Type

Start Date

Pleasanton I

Pleasanton, CA

251

$

22.5

TBR

TBR

Garden

1H'14

Pleasanton II

Pleasanton, CA

255

15.9

TBR

TBR

Garden

2H'14

Total Land Owned

506

$

38.4

$

171.0

$

132.6

Number

Cost

Estimated

Balance to

Product

LAND UNDER CONTRACT (4)

of Homes

Incurred (5)

Cost (3)

Fund

Type

Walnut Creek BART

Walnut Creek, CA

358

$

13.0

TBR

TBR

Podium

 

(1)

Represents estimated quarters in which first and final certificates of occupancy will be received. Projects generally receive phased certificates of occupancy  during the final six to twelve months of construction.

(2)

Represents projects in various stages of pre-construction development. Projects are transferred to Construction in progress when construction contracts are finalized and construction activity has commenced.

(3)

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.

(4)

Land under contract represents land parcels for which the Company: 1) 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.

(5)

Represents deposits, contractual costs, and internal and external 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 $3.8 million and are recorded in Other assets.

 

 

BRE Properties, Inc. Share Analysis as of September 30, 2013 (Share amounts in thousands)

Exhibit A

 

 

SUMMARY OF COMMON SHARES
		Qtr. Ended		Qtr. Ended		Qtr. Ended		Qtr. Ended		Qtr. Ended
Weighted Average		9/30/2013		6/30/2013		3/31/2013		12/31/2012		9/30/2012
Weighted average shares outstanding (1)		77,170		77,106		76,990		76,872		76,813
Dilutive effect of stock based awards		180		174		260		308		317
Diluted shares - FFO		77,350		77,280		77,250		77,180		77,130
Diluted shares - EPS(2)		77,350		77,280		77,250		77,180		77,130
		YTD		YTD
Weighted Average		9/30/2013		9/30/2012
Weighted average shares outstanding (1)		77,086		76,471
Weighted average OP units		-		20
Dilutive effect of stock based awards		224		369
Diluted shares - FFO		77,310		76,860
Less: Anti-dilutive average OP units(3)		-		(20)
Diluted shares - EPS(2)		77,310		76,840
		As of		As of		As of		As of		As of
Ending		9/30/2013		6/30/2013		3/31/2013		12/31/2012		9/30/2012
Shares outstanding at end of period		77,188		77,155		77,058		76,925		76,831
Dilutive effect of stock based awards		209		134		172		330		313
Total		77,397		77,289		77,230		77,255		77,144
SUMMARY OF PREFERRED  SHARES
		As of		As of		As of		As of		As of
		9/30/2013		6/30/2013		3/31/2013		12/31/2012		9/30/2012
6.75% Series D, $25 per share liquidation preference		2,160		2,160		2,160		2,160		2,160

 

 

(1)

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

(2)

Represents denominator for shares in the calculation of diluted EPS.

(3)

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

 

 

  

BRE Properties, Inc.  Non-GAAP Financial Measure Reconciliations and Definitions (Dollar amounts in thousands)

Exhibit B

 

 

 

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)

Funds from Operations ("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 (NAREIT) 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. The Company calculates FFO in accordance with the NAREIT definition.

The Company believes that FFO is a  meaningful supplemental measure of the Company's 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 the communities that result from use or market conditions nor the level of capital expenditures to maintain the operating performance of the communities, all of which have real economic effect and could materially impact the Company's 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. The Company's FFO may not be comparable to the FFO of other REITs due to the fact that not all REITs use the NAREIT definition.

Core Funds from Operations ("Core FFO")

The Company believes that Core Funds from Operations ("Core FFO") is a meangingful supplemental measure of our operating performance for the same reasons as FFO and adjusting for non-routine items that when excluded allows for more comparable periods. Core FFO begins with FFO as defined by the NAREIT White Paper and is adjusted for: the impact of any expenses relating to non-operating asset impairment and valuation allowances; property acquisition costs and pursuit cost write-offs (other expenses); gains and losses from early debt extinguishment, including prepayment penalties and preferred share redemptions; executive level severance costs; gains and losses on the sales of non-operating assets, and other non-comparable items. 

		Quarter Ended 9/30/2013				Quarter Ended 9/30/2012				Nine Months Ended 9/30/2013				Nine Months Ended 9/30/2012
Net income available to common shareholders		$	22,123			$	12,890			$	99,757			$	59,694
Depreciation from continuing operations			27,543				24,501				79,183				73,103
Depreciation from discontinued operations			-				596				368				1,895
Depreciation from unconsolidated entities			47				512				445				1,511
Net gain on sales of discontinued operations			-				-				(17,394	)			(8,279	)
Net gain on sale of unconsolidated entities			-				(6,025	)			(18,633	)			(6,025	)
Funds from Operations		$	49,713			$	32,474			$	143,726			$	121,899
Acquisition costs			585				-				585				-
Non cash asset impairment charge			-				15,000				-				-
Core Funds from Operations		$	50,298			$	47,474			$	144,311			$	121,899
Diluted shares outstanding - EPS (1)			77,350				77,130				77,310				76,840
Net income per common share - diluted		$	0.29			$	0.17			$	1.29			$	0.78
Diluted shares outstanding - FFO (1)			77,350				77,130				77,310				76,860
FFO per common share - diluted		$	0.64			$	0.42			$	1.86			$	1.59
Diluted shares outstanding -  Core FFO (1)			77,350				77,130				77,310				76,860
Core FFO per common share - diluted		$	0.65			$	0.62			$	1.87			$	1.59

 

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

 

 

BRE Properties, Inc.  Non-GAAP Financial Measure Reconciliations and Definitions (Dollar amounts in thousands)

Exhibit B, continued

 

 

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 the Company as EBITDA, excluding minority interests, gains (losses) from sales of investments, preferred stock dividends and other expenses. BRE considers EBITDA and Adjusted EBITDA to be appropriate supplemental measures of the Company's performance because they eliminate depreciation, interest, and, with respect to Adjusted EBITDA,  gains (losses) from sales of investments and other charges, which permits investors to view income from operations without the impact of non cash 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 the Company's results from operations, the utility of EBITDA and Adjusted EBITDA as measures of the Company's performance is limited. Below is a reconciliation of net income available to common shareholders to EBITDA and Adjusted EBITDA:

		Quarter Ended 9/30/2013				Quarter Ended 9/30/2012				Nine Months Ended  9/30/2013				Nine Months Ended 9/30/2012
Net income available to common shareholders		$	22,123			$	12,890			$	99,757			$	59,694
Interest, including discontinued operations			15,948				16,998				49,935				50,488
Depreciation, including discontinued operations			27,543				25,097				79,551				74,998
EBITDA			65,614				54,985				229,243				185,180
Redeemable noncontrolling interest in income			48				105				143				315
Net gain on sales of discontinued operations			-				-				(17,394	)			(8,279	)
Net gain on sale of unconsolidated entities			-				(6,025	)			(18,633	)			(6,025	)
Dividends on preferred stock			911				911				2,733				2,733
Other expenses			585				15,000				585				15,000
Adjusted EBITDA		$	67,158				64,976			$	196,677			$	188,924

 

Net Operating Income (NOI)

The Company considers 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 the 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 the Company's results from operations), the utility of NOI as a measure of our performance is limited. Other equity REITs may not calculate NOI consistently with the Company's definition and, accordingly, the Company's 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 the Company's performance. NOI should not be used as a measure of the Company's liquidity, nor is it indicative of funds available to fund the Company's cash needs, including its 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  9/30/2013				Quarter Ended  9/30/2012				Nine Months Ended 9/30/2013				Nine Months Ended  9/30/2012
Net income available to common shareholders		$	22,123			$	12,890			$	99,757			$	59,694
Interest, including discontinued operations			15,948				16,998				49,935				50,488
Depreciation, including discontinued operations			27,543				25,097				79,551				74,998
Redeemable noncontrolling interest in income			48				105				143				315
Net gain on sales of discontinued operations			-				-				(17,394	)			(8,279	)
Net gain on sale of unconsolidated entities			-				(6,025	)			(18,633	)			(6,025	)
Dividends on preferred stock			911				911				2,733				2,733
General and administrative expense			5,055				5,093				17,393				17,152
Other expenses			585				15,000				585				15,000
NOI		$	72,213			$	70,069			$	214,070			$	206,076
Less Non Same-Store NOI			2,139				3,498				6,818				10,380
Same-Store NOI		$	70,074			$	66,571			$	207,252			$	195,696