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To: patron_anejo_por_favor who wrote (116023)	8/8/2001 10:56:43 AM
From: Perspective	Respond to of 436258

Check out PPS (Post Properties) as a way to short the commercial RE bubble; counts on Atlanta apartment revenue "for about 60 percent of its income after operating expenses"; has also been getting a kicker out of selling off appreciated RE: accessatlanta.com Apartment occupancy falls Slower job growth cited Tony Wilbert - Staff Wednesday, August 8, 2001 Atlanta's apartment market is in a free fall. During the first six months of the year, the occupancy rate for the metro area's 350,000 apartments dropped nearly 2 percentage points to 93.7 percent, according to apartment consultant Dale Henson. If job growth totals less than 30,000 this year as he projects, the occupancy rate for Atlanta's apartments could drop to 91.5 percent, the lowest level since 1992. The current slowdown in job growth is critical, Henson said, because new jobs create demand for apartments. Developers have responded by slowing new construction, but they're still building more apartments than needed, Henson said. He expects about 10,000 apartments to be built this year. "We just came charging out of the gate this year," he said. "The trouble in apartments, as in all real estate, is that we just can't seem to put the brakes on fast enough." The reduction in occupancy rates should be good news for renters because apartment owners are offering more concessions, such as free rent, to attract residents. The slowdown in Atlanta's apartment market is hurting Post Properties, which counts on the area for about 60 percent of its income after operating expenses. The Atlanta-based apartment developer said Tuesday that the nation's weak economy, and Atlanta's in particular, will result in flat income growth and slower leasing activity this year. Post Properties also said its full-year funds from operations would be below Wall Street expectations. Its new estimate is $3.55 to $3.62 per share, down from $3.68 to $3.76. Funds from operations is a key cash flow indicator used to gauge a real estate investment trust. Late Monday, Post Properties reported that its funds from operations fell to $39.6 million, or 90 cents per share, during the second quarter, down from $44.6 million, or $1 per share, the year before. Net income after preferred dividends increased to $33.1 million, up 28 percent from $25.9 million the year before. Net per share was 85 cents in the latest quarter vs. 65 cents a year ago. The increase in net income was attributed to the sale of $191 million worth of properties. Post Properties has responded to Atlanta's weak apartment market by reducing development in the area to 397 units in two complexes. That's the lowest level since 1990, when it had one complex under construction, Post Chairman and Chief Executive Officer John Williams said. Cutting back development in Atlanta is prudent, given current conditions, Wachovia Securities analyst Jessica Tully said. If developers scale back, the market could rebound in 18 months, she said. Williams said Post expects Atlanta's economy to improve next year. "I feel very good about Atlanta's future," he said. "This is just a case of one of those down cycles where we got ahead of ourselves with production and at the same time had a (dropoff) in employment." He acknowledged, however, that the "mixed signals" are reason for caution. "Every time we pick up the paper and every time we see a foreclosed apartment development in Atlanta or hear about somebody not being able to pay their bills or going broke, we get a little bit nervous," he said. "We're trying to be pretty conservative with what could happen to Atlanta for the rest of the year, and we're hopeful our projections will hold. "But the fall could be pretty tough if the economy rolls over." POST PROPERTIES The stock fell sharply last October when the company issued a warning about the economy and about its own outlook. Tuesday's close: $37.27, down 39 cents Source: Bloomberg News / VERNON CARNE / Staff APARTMENT OCCUPANCY Rates for Atlanta market. Year......Occupied 1991...........88% 1992...........91% 1993...........94% 1994...........96% 1995...........96% 1996...........94% 1997.........94.2% 1998.........95.3% 1999.........95.4% 2000.........95.5% 2001......91.5%(1) (1) Projection based on job growth of less than 30,000. Source: Dale Henson Associates BC