(BRE) BRE Properties Beats Estimates

BRE Properties Inc (BRE) reported second quarter 2011 funds from operations (FFO) of $34.9 million or 49 cents per share versus $28.9 million or 46 cents per share 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.  Recurring FFO in the quarter inched past the Zacks Consensus Estimate by a penny.

Total revenue from continuing operations during the second quarter was $93.5 million versus $84.0 million in the year-ago quarter. Adjusted earnings before interest, tax depreciation and amortization (EBITDA) were $59.6 million in second quarter 2011 compared with $54.6 million in the year-earlier quarter.

Overall same-store revenues and net operating income increased 2.9% and 4.4%, respectively, driven by a 3.4% increase in revenue earned per unit during the quarter. Average physical occupancy in the same-store portfolio was 95.7%. Of the 21,820 apartment units owned directly by BRE, same-store units totaled 19,275 for the quarter. Average revenue per occupied unit in the reported quarter was $1,481.

The company acquired two land parcels in San Francisco’s Mission Bay district, representing 360 units of future development for anaggregate investment of $220 million. Additionally, the company acquired The Landing at Jack London Square, a 282-unit community in Oakland, California for $64.9 million. The property is currently 97.0% occupied.

At quarter end, BRE had a 336 unit community under construction in Sunnyvale, California, which is expected to be completed by the first quarter of 2013.  Following the completion of the second quarter, the company commenced construction on Aviara, a 166-unit community in Mercer Island, Washington.

During the quarter, BRE closed an offering of 9.2 million shares at a price of $48.00 per share generating proceeds of $424 million.

The company declared a quarterly dividend of 37.5 cents per share, equivalent to $1.50 on an annualized basis. Since its inception in 1970, BRE has paid quarterly dividends uninterruptedly.

For the third quarter of 2011, BRE expects FFO in the range of 52 cents to 55 cents per share. For full-year 2011, BRE revised the guidance range from $2.08-$2.18 per share to $2.09-$2.17 per share.

BRE currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, Equity Residential (EQR) also holds a Zacks #3 Rank.

BRE PROPERTIES (BRE): Free Stock Analysis Report

EQUITY RESIDENT (EQR): Free Stock Analysis Report

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