Post Properties Inc. (NYSE:PPS) Q2 2015 Earnings Conference Call - Final Transcript

Aug 04, 2015 • 10:00 am ET

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Post Properties Inc. (NYSE:PPS) Q2 2015 Earnings Conference Call - Final Transcript

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Presentation
Operator
operator

Good day, everyone and welcome to the Post Properties' Second Quarter 2015 Earnings Conference Call. Today's conference is being recorded. Today's question-and-answer session will be conducted electronically. (Operator Instructions) At this time, I would like to turn the conference over to Dave Stockert, President and CEO for opening remarks and introductions. Please go ahead.

Executive
Dave Stockert

Thanks, Anthony. Good morning. This is Dave Stockert. With me are Chris Papa, our CFO and Jamie Teabo, Head of Property Management. Welcome to the Post Properties' second quarter earnings call.

(Forward-looking Cautionary Statements) During this call, we will discuss certain non-GAAP financial measures. Reconciliations to comparable GAAP financial measures can be found in our earnings release and supplemental financial data.

I will now begin the business of this call. For the second quarter, we produced just over 12% growth in FFO per share adjusting for debt extinguishment cost in the 2014 period. This exceeds the apartment peer group average of a little over 10% normalized per share FFO growth for the same period. And year-over-year in the second quarter, we produced more than 16% growth in AFFO per share. We continue to derive a strong bottom line reflecting the broad-based performance of our business.

Solid first half operating results lead us to upwardly revise guidance for FFO and AFFO for all of 2015. Our expectation at the midpoint for full year per share FFO growth is 8.5%, again adjusting for debt extinguishment cost in 2014. This growth is consistent with the average bottom line growth expectations of the apartment peers. Our upward guidance revision does not take into account any impact of perspective share repurchases. Apartment market conditions remain quite good and the cycle appears to have plenty of room to run. Jamie will speak to portfolio performance in a moment.

Our primary focus today is on operations and on driving value through development, where we create excellent new assets that yield attractive profit margins and that improve the age and quality of our portfolio. We are currently underway on our $370 million pipeline that we are really excited about and to which we expect to add over the coming months.

Our high rise of Post Alexander is a terrific example of what we can achieve with strong early leasing at rents that are more than 10% above our pro forma. That development is on track to produce an initial yield north of 7% creating substantial value. And as you can see from the photos on the cover of the supplement is a flagship asset for us in Atlanta.

With the balance sheet flexibility we have created through well-timed and executed asset sales, we can readily finance our development ambitions with capacity left over to do other things to drive value which brings me to our announcement to commit $100 million of capital over roughly the next year to repurchase common stock.

As we think about capital allocation today, we take into account acquisition pricing that remains full. Land and construction pricing that put upward pressure