Post Properties Inc. (PPS, Financial) filed Quarterly Report for the period ended 2009-06-30.
Post Properties Inc. is one of the largest developers and operators of upscale multifamily apartment communities in the Southeastern andSouthwestern United States. The company owns a number of stabilizedcommunities containing apartment units located primarily in metropolitan Atlanta Georgia; Dallas Texas and Tampa Florida. Post Properties Inc. has a market cap of $751.77 million; its shares were traded at around $16.95 with a P/E ratio of 11.3 and P/S ratio of 2.67. The dividend yield of Post Properties Inc. stocks is 4.72%.
As of June 30, 2009, the Companys aggregate pipeline of development projects under construction (apartments and condominiums) and in lease-up (before the impact of impairment charges described below) totaled approximately $487,000. As of the same date, approximately $133,000 of estimated construction costs remained to be funded, including construction payables, by the Company (or approximately $89,000, excluding committed construction loan financing). In addition, the Company is underway with an initiative to remediate communities with stucco exteriors or exterior insulation finishing systems (EIFS). The Company currently estimates that the aggregate cost of this initiative will be approximately $45,000, of which approximately $14,884 has been incurred through June 30, 2009. The Company expects to fund future estimated construction and remediation expenditures primarily by utilizing available cash and cash equivalents and borrowing capacity under its unsecured revolving lines of credit. See Liquidity and Capital Resources below where discussed further.
The aggregate projected capital cost of the Atlanta Condominium Project and the Austin Condominium Project is approximately $250,000, of which approximately $86,500 of costs remained to be incurred as of June 30, 2009. Additionally, of the total projected investment, approximately $74,700 was deemed impaired and written down as an impairment charge during the second quarter of 2009, as described further below, which the Company currently projects will result in an aggregate net carrying value of approximately $175,000 for these two condominium developments when complete. There can be no assurances, however, that actual costs will not exceed these estimates or that additional impairment charges will not be recorded in subsequent periods as described further below. As of July 28, 2009, the Company had 67 units under contract at the Austin Condominium Project and had no units under contract at the Atlanta Condominium Project. There can be no assurance that units under contract for sale will actually close.
Since the beginning of 2009, the Company has observed a continued worsening of conditions in the U.S. economy and the housing markets, generally, and in the Atlanta upper-end single family and condominium markets, specifically, including the price discounting of competitive products in the Atlanta/Buckhead market. In addition, the government-sponsored mortgage agencies have imposed tighter restrictions on mortgage lending to condominium projects which the Company believes may adversely impact sales at its two luxury condominium developments. As such, management revised its current expectations regarding the timing and projected future cash flows from its condominium projects under development, and as a result, recorded non-cash impairment charges of approximately $76,317 (net of noncontrolling interests of $8,074) for the three and six months ended June 30, 2009 to write-down the carrying value of its investment in the Atlanta Condominium Project joint venture development and adjacent land. The estimated fair value of the condominium project was derived from the present value of the Companys estimated future cash flows using a 23% discount rate. The Companys cash flow assumptions reflect reduced list prices for the condominium units and also assume an extended sell out period, consistent with current market conditions.
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Post Properties Inc. is one of the largest developers and operators of upscale multifamily apartment communities in the Southeastern andSouthwestern United States. The company owns a number of stabilizedcommunities containing apartment units located primarily in metropolitan Atlanta Georgia; Dallas Texas and Tampa Florida. Post Properties Inc. has a market cap of $751.77 million; its shares were traded at around $16.95 with a P/E ratio of 11.3 and P/S ratio of 2.67. The dividend yield of Post Properties Inc. stocks is 4.72%.
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At June 30, 2009, the Company was marketing for sale two apartment communities, totaling 798 units, including one community located in Atlanta, Georgia and one community located in the northern Virginia submarket of greater Washington, D.C. A third community, containing 530 units, was sold in April 2009 for a gross sales price of approximately $47,400. In July 2009, the two communities held for sale at June 30, 2009 were sold and generated aggregate gross proceeds of approximately $102,300. Those proceeds are expected to be utilized in a manner consistent with the Companys liquidity and balance sheet strategy discussed below.As of June 30, 2009, the Companys aggregate pipeline of development projects under construction (apartments and condominiums) and in lease-up (before the impact of impairment charges described below) totaled approximately $487,000. As of the same date, approximately $133,000 of estimated construction costs remained to be funded, including construction payables, by the Company (or approximately $89,000, excluding committed construction loan financing). In addition, the Company is underway with an initiative to remediate communities with stucco exteriors or exterior insulation finishing systems (EIFS). The Company currently estimates that the aggregate cost of this initiative will be approximately $45,000, of which approximately $14,884 has been incurred through June 30, 2009. The Company expects to fund future estimated construction and remediation expenditures primarily by utilizing available cash and cash equivalents and borrowing capacity under its unsecured revolving lines of credit. See Liquidity and Capital Resources below where discussed further.
The aggregate projected capital cost of the Atlanta Condominium Project and the Austin Condominium Project is approximately $250,000, of which approximately $86,500 of costs remained to be incurred as of June 30, 2009. Additionally, of the total projected investment, approximately $74,700 was deemed impaired and written down as an impairment charge during the second quarter of 2009, as described further below, which the Company currently projects will result in an aggregate net carrying value of approximately $175,000 for these two condominium developments when complete. There can be no assurances, however, that actual costs will not exceed these estimates or that additional impairment charges will not be recorded in subsequent periods as described further below. As of July 28, 2009, the Company had 67 units under contract at the Austin Condominium Project and had no units under contract at the Atlanta Condominium Project. There can be no assurance that units under contract for sale will actually close.
Since the beginning of 2009, the Company has observed a continued worsening of conditions in the U.S. economy and the housing markets, generally, and in the Atlanta upper-end single family and condominium markets, specifically, including the price discounting of competitive products in the Atlanta/Buckhead market. In addition, the government-sponsored mortgage agencies have imposed tighter restrictions on mortgage lending to condominium projects which the Company believes may adversely impact sales at its two luxury condominium developments. As such, management revised its current expectations regarding the timing and projected future cash flows from its condominium projects under development, and as a result, recorded non-cash impairment charges of approximately $76,317 (net of noncontrolling interests of $8,074) for the three and six months ended June 30, 2009 to write-down the carrying value of its investment in the Atlanta Condominium Project joint venture development and adjacent land. The estimated fair value of the condominium project was derived from the present value of the Companys estimated future cash flows using a 23% discount rate. The Companys cash flow assumptions reflect reduced list prices for the condominium units and also assume an extended sell out period, consistent with current market conditions.
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