BRE Properties Inc. (BRE) reported first quarter 2011 fund from operations (FFO) of $34.8 million or 53 cents per share versus $29.4 million or 52 cents in the year-earlier quarter.
Funds from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income. The recurring FFO for the quarter marginally beat the Zacks Consensus Estimate by 2 cents.
Total revenues from continuing operations during the first quarter 2011 were $90.6 million versus $81.7 million in the year-ago quarter. Total revenues during the reported quarter were slightly ahead of the Zacks Consensus Estimate of $90.0 million. Adjusted earnings before interest, tax depreciation and amortization (EBITDA) were $57.2 million for first quarter 2011 compared with $53.9 million in the year-earlier quarter.
Overall same-store revenues and net operating income increased 1.5% and 2.0% respectively, driven by a 2.0% increase in rental rates per unit during the quarter. Average physical occupancy in the same-store portfolio was 95.3%. Of the 21,538 apartment units owned directly by BRE, same-store units totaled 19,275 for the quarter. Annualized turnover during the first quarter of 2011 was 54% compared with 57% from the year earlier quarter.
During the quarter, BRE acquired The Vistas of West Hills, a 220-unit property in California for $56.5 million. The property is 81% occupied currently. BRE underwent construction at Lawrence Station, a 336-unit community in Sunnyvale, California, during the quarter. BRE purchased a 4.4-acre site for $5.1 million, next to its Park Viridian community in the Anaheim Platinum Triangle.
The company acquired two land parcels in San Francisco’s Mission Bay district representing 360 units of future development, with an aggregate investment of $220 million. As of March 31, 2011, the company owned or leased land that supports the development of five communities representing approximately 1,600 units of future development, and an investment of approximately $635 million upon completion.
During the quarter, BRE issued approximately 545,000 common shares at an average price of $45.84, raising total gross proceeds of $25.0 million.
The company declared a quarterly dividend of 37.5 cents per share, equivalent to $1.50 on an annualized basis and representing a yield of 3.0%. Since its inception in 1970, BRE has paid quarterly dividends uninterruptedly.
For the second quarter of 2011, BRE expects FFO to be in the range of $ 0.52–$0.55 per share. For full year 2011, BRE updated the guidance range from $2.06-$2.18 per share to $2.08 to $2.18 per share.
BRE currently retains a Zacks #2 Rank, which translates into a short-term Buy rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, Equity Residential (EQR) currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.
BRE PROPERTIES (BRE): Free Stock Analysis Report
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