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Colonial Properties Trust (NYSE:CLP)

Q2 2011 Earnings Conference Call

July 28, 2011 14:00 ET

Executives

Jerry Brewer – Executive Vice President, Finance

Tom Lowder – Chairman and Chief Executive Officer

Reynolds Thompson – President and Chief Financial Officer

Paul Earle – Chief Operating Officer

Analysts

Jana Galan – Merrill Lynch

Michael Bilerman – Citi

Gaurav Mehta – FBR

Alex Goldfarb – Sandler O’Neill

Michael Salinsky – RBC Capital Markets

Andrew McCulloch -- Green Street Advisors

Rich Anderson -- BMO Capital Markets

Haendel St. Juste – KBW

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Colonial Properties Trust Second Quarter 2011 Earnings Conference Call. During the presentation all participants will be in a listen-only mode. Afterwards we will conduct a question-and-answer session. (Operator Instructions)

As a reminder this conference is being recorded Thursday, July 28, 2011. I would now like to turn the conference over to Jerry Brewer, Executive Vice President of Finance. Please go ahead, sir.

Jerry Brewer – Executive Vice President, Finance

Thank you, Donald. Welcome to everyone joining us today. We released our earnings this morning via Business Wire. A copy of this earnings release maybe found on our website at colonialprop.com. We are also webcasting this call for your convenience. A replay will be available at our website after the call.

Tom Lowder, our Chairman and Chief Executive Officer and Reynolds Thompson, our President and Chief Financial Officer will lead today’s call. On the call, they will discuss our business developments, financial results for the second quarter and our guidance for 2011. After their comments, we will open up to take your questions. Paul Earle, our Chief Operating Officer, is also here to field the questions.

Let me remind you that much of the information we discuss on this call, including answers we give in response to your questions may include forward-looking statements regarding our beliefs and current expectations with respect to various matters. These forward-looking statements are intended to fall under the Safe Harbor provisions of the Securities Law. These estimates are also based on a number of assumptions, any of which, unrealized, could adversely affect our accuracy. Please see our latest SEC filings for the detail and explanation of risk. Any non-GAAP financial measures we discuss are reconciled to the closest GAAP measures and filings that can be found on our website. None of the statements we make during this call shall not constitute in offer to sale or solicit to buy any of the company’s common shares.

I will now turn the call over to Tom.

Tom Lowder – Chairman and Chief Executive Officer

Thank you, Jerry and welcome to everyone joining us. Today we will discuss our second quarter results and review our outlook for 2011. Our three CEO focus directives for the year are to grow the company, improve operations and achieve our balance sheet target. We have said that our internal growth is coming from growing our core multifamily revenue during increasing our rental rents. We did exactly that in this quarter with solid revenue growth of 3.9% maintained in a high level of occupancy and efficiently managing our properties resulting in a strong NOI growth of 7.5%.

Our external growth is coming from the development of multifamily apartment communities on the land that we have an inventory, improve acquisitions and multifamily assets in our core Sunbelt markets. We started multifamily developments in Tampa and Austin. Next month or early September, we will break around on a 232 unit multifamily development on land that we own and are mixed use development in North Orlando.

Relating to our third CEO directive we are changing our balance sheet targets. With our release today, we announced the closing of seven-year $250 million unsecured term loan, which was used to pay down the substantial portion of the outstanding balance on our line of credit. Also in July, we completed our $75 million ATM program that we announced in May. So, we have completed our equity issuances and finalized our debt restructuring for this year.

Reynolds will provide additional comments on these accomplishments in just a moment. Our goal continues to be to regain our investment grade rating and we believe our progress on the balance sheet over the past 2.5 years has put us in a position to achieve our rating in the near future. With continued improvement in fundamentals with our multifamily properties, we feel very bullish about our growth at this point in the business cycle.

Now Reynolds will provide more details on our operating performance and activity during the quarter and I will conclude the call with our updated guidance. Reynolds?

Reynolds Thompson – President and Chief Financial Officer

Thank you, Tom. FFO for the second quarter was $0.32 per share, compared with $0.27 a year ago. The increase is primarily related to an improvement in same property net operating income and contribution from recent acquisitions. Multifamily fundamentals remained strong in all of our major markets as evidenced by same property NOI increase of 7.5%, compared to the second quarter of 2010. Our top performing markets were Austin, Charlotte, Dallas, Phoenix and Raleigh.

Second quarter revenue grew 3.9% versus prior year and 2.8% sequentially. Our strongest revenue markets are Austin, Charlotte, Phoenix, Raleigh and Savannah. Revenue was driven higher about 3.3% increase in rent per occupied unit. The variety of methods used by our peers to measure the change in new lease and renewal lease rates.

We define a change in the renewal lease rate as a percent change in rent from the expiring lease in a month that the renewed lease takes effect. We defined a change in the new lease rate as a percent change in rent compared to the prior rent for the same apartment upon movement. This methodology allows us to tie the changes in rent to our financial statements.

With that said our second quarter renewal rates are up by 5.7% and new lease rates were up 2.8%. With physical occupancy above 96%, we expect these trends to continue. July’s renewal rates are up 5.7% and new lease rates are up 6%. Expenses decreased 0.8% compared to the second quarter 2010 and on trending below our 2011 guidance in three key areas advertizing, taxes and insurance.

Our self insurance claims have been lower than last year and lower than our current expectations. Our tax of fieldwork has resulted in additional savings for the quarter and full year 2011. Turnover has improved 400 basis points over last year, primarily as a result of our interaction an intercompany transfers and move outs from home purchases.

With favorable Sunbelt fundamentals and limited new supply, we expect to produce strong operating results in the second half of this year. Accordingly, we have increased our same-store NOI guidance, which Tom will discuss in a moment. Our second quarter results include $400,000 in acquisition related cost and a $150,000 casualty loss due to the tornado damage.

During the quarter, we acquired the mortgage notes secured by venture property Colonial Grand Traditions and Gulf Shores Alabama. We made a payment of $21.1 million. $17.6 was allocated to the purchase of note and $3.5 million for the guarantee, which had been reserved for in the third quarter of 2009. As a result of the note purchase, we are now consolidating the property results in our financial statements.

We continue to make progress on our developments. Construction at Hampton, (indiscernible), in Tampa and Double Creek and Austin are on schedule. We plan to start Colonial Grand at Lake Mary in Orlando during the third quarter. On the dispositions front, we continue to work on a number of commercial asset dispositions and to have to be in a position to discuss our progress on these before the end of the third quarter.

Also earlier this week, we announced the signing of an agreement to sell up to $338 million of our multifamily assets. This asset recycling program includes portfolio of 18 properties with an average age of 25 years. Our strategy is to recycle older multifamily assets to improve the company’s average age, margin and capital expenditure requirements. We will not sell any assets without having a multifamily reinvestment property. The agreement is structured to give us the option to sell these assets, when we are able to identify reinvestment opportunities.

The market for quality multifamily assets remains competitive. Based on our experience year-to-date, it is our expectation that we would complete a third to a half of these dispositions. The agreement provides us the option to cancel the contract at any point in time upon termination or payment of up to $250,000 to reimburse the buyer for due diligence costs.

We have made further progress toward achieving our balance sheet targets. As Tom mentioned, in early July we successfully completed the $75 million ATM program at an average price of $20.67 per share. We also closed on a $250 million seven-year unsecured term loan. Term loan has an initial rate of LIBOR plus 245 basis points and has been swapped to a fixed rate.

Based on the initial spread of 245 basis points, the all in fixed rate is 5%. One attractive feature of the term loan is the ability to improve our pricing with an improvement in our unsecured credit rate.

When we regain in investment grate rating, the pricing for the term loan will improve about 45 basis points. Additionally the term loan can be prepaid after the third year with no penalty. The term loan extends our maturity schedule and fits nicely within our maturity profile as we have no other consolidated debt maturing in 2018.

With this financing we have been able to reduce the borrowings outstanding on our credit facility to around $100 million, which gives us a very strong liquidity position in approximately 90% of our debt is now fixed. Leverage at quarter end was 46% of net debt plus preferred gross assets compared with 53% a year ago. Fixed charge ratio is all also improved to 2.3 times at quarter end. We have no our remaining consolidated debt maturities for 2011. Finally, consistent with last quarter, our board declared a quarterly cash dividend of $0.15.

I will turn the call back over to Tom.

Tom Lowder – Chairman and Chief Executive Officer

Thanks Reynolds. We revised our full year 2011 FFO and operating FFO to $1.12 to $1.16 per share, which is an increase of $0.03 per share at the midpoint. Our estimates now include a full year multifamily same property net operating income increase of 5.5% to 7% percent with same property revenues expected to increase in the range of 3.25% to 5%.

We have lowered our same property expense range to an increase of 0.25% to 2.25%. Our current guidance does not contemplate the issuance of any more equity this year. Our development spending is anticipated to be between $50 million and $75 million, which includes two multifamily developments currently underway and at least two more additional a multifamily starts before year end.

The acquisitions we continue to estimate between $100 million and $150 million on dispositions remain unchanged to $50 million to $150 million. These guidance numbers do not include the multifamily recycling program we just announced.

If all of our portion of the multifamily recycling program that we discussed is executed, we will need to revisit our guidance inputs, but we do not anticipate a material impact on our FFO guidance range for this year. Our current guidance includes the shares issued from our latest ATM program and the $250 million financing we closed last week.

These items were not included in our previous guidance, combined they have impacted earnings by approximately $0.06 per share this year, but our strong operating performance is more than offset both of these advance allowing us to raise our full year FFO guidance.

Operator, we would now like to open up the call for questions.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question will come from the line of Jana Galan with Merrill Lynch. Please proceed with your question.

Jana Galan – Merrill Lynch

Hi, good afternoon. I was curious the multifamily recycling program with option agreement it sounds like a pretty unique deal and I was curious how it came about? And then can the potential buyer cancel the agreement in anytime and is, do they have a termination fee?

Paul Earle

This is Paul. No, there is not a provision for the buyer to cancel until the end of the year and in our provision allows us to on a per property basis, remove properties able to cost up to $250,000 to remove all the properties from the contract.

Jana Galan – Merrill Lynch

And I guess did you have a relationship with the buyer or how did they approach you or you approach them?

Paul Earle

We had a relationship with the buyer dating back to 2004.

Jana Galan – Merrill Lynch

Okay.

Tom Lowder

And to finish Paul’s comments about they approached us.

Jana Galan – Merrill Lynch

Thank you. And then just quickly on you mentioned some good renewal on new lease rent growth for July, I was curious what type of increases where you asking for the August expiration?

Reynolds Thompson

Well, our offer letters for August for now that’s 7.1% we have not tallied our full renewal count at this point, but the offer letters went out at 7.1%.

Jana Galan – Merrill Lynch

Great. Thank you very much.

Tom Lowder

Thank you.

Operator

Our next question will come from the line of Michael Bilerman with Citi. Please proceed with your question.

Michael Bilerman – Citi

To make sure I understood your comments about the $340 million asset sales all of the proceeds from that sale are going to be reinvested into multi-family acquisitions right?

Reynolds Thompson

That’s correct.

Tom Lowder

Yes.

Michael Bilerman – Citi

And do you have anything under contract right now that you could share with us and just wondering how comfortable you are that you are going to be able to find that level of acquisition opportunities given how competitive the market is right now?

Tom Lowder

Well, as I mentioned, yeah, we do have different opportunities that we are working on, but as I mentioned that because of the challenging market out there and what we’ve been able to accomplish in the first half of the year we don’t anticipate being able to accomplish the entire program. We think it’s likely that we could get a third maybe half of it done, but we do not expect to get all $340 million done.

Reynolds Thompson

And I want to add that we have been very clear that our long-term plans part to get to this 9010 relationship between multifamily and commercial and we have talked about that explain in our business plan from the last two and a half years and we want to be consistent with what we are saying. So, it’s not our intention to change that directive or to shrink the company in such a way that we would end up being more of a commercial operator. So, it’s important to for us to match all these multifamily dispositions with new multifamily opportunities.

Michael Bilerman – Citi

Understood. And as you look at the opportunities, I mean, what sort of yield spread can we expect between where you are buying and selling, you disclosed that in aggregate the sale is going to occur around 6%. So, just curious where you think the acquisitions might come in and how you are underwriting them?

Reynolds Thompson

Sure. What we have seen year-to-date is opportunities that are in the mid-to-low 5s and we would anticipate that the opportunities we are looking at in the future are going to be priced in a similar way, which is probably going to leave us somewhere around 100 basis points spread between where we are selling in bank.

Michael Bilerman – Citi

Okay. And then I guess last question along the same lines, it seems like you are making a fairly big push to improve the quality in edge of your portfolio, I am just wondering if you have any specific goals around what you would like to average age or rent portfolio to be and how much dilution you are willing to accept to achieve those goals?

Reynolds Thompson

Well, we’ve got a – we’ve kind of got a two-pronged approach, where as we have talked about with our acquisitions strategy earlier this year, that’s exactly what we have been working on as looking for younger product that has higher rents, better margins, lower CapEx expenses and that idea with our acquisition strategy hasn’t change at all. We have also got the development pipeline, which is continuing to grow and that will also help us on all of those counts as well. So, it’s not we haven’t set on any specific targets, but it’s way we are going to run the business. And as we look forward that’s something we’ll continue to work on with the new activity externally into the development pipeline.

Michael Bilerman – Citi

All right, thank you.

Operator

Our next question will come from the line of David Toti with FBR. Please proceed with your question.

Gaurav Mehta – FBR

Hi, this is actually Gaurav Mehta with David Toti. First question on your guidance, could you talk a bit about the reduction and just seems to our expense expectations for the year, what are the key drivers and how much decline are you expecting in each other drivers?

Tom Lowder

Same-store expenses in the reductions.

Reynolds Thompson

Yes. We are finding that turnover is running lower than we expected typically coming out of the recession and going into recovery periods where rents start to grow, you will find that rent increases will create a little higher turnover and so that’s not happening in this recovery cycle which is a positive, so that’s going to save us the money. We are having some success – greater success on our tax appeals and again another thing coming out of our recession going into the recoveries typically find real estate taxes will increase and that hasn’t happened and the newest rates have been recently flat. So we are not forecasting an increase in real estate taxes to same degree. And then our web initiative is proven to be more successful than we originally thought. And so we are cutting back on some advertising and promotion costs. So those items make up bulk of our change in the expense forecast.

Gaurav Mehta – FBR

That’s helpful. So do you think that you might see an increase in the real estate access maybe next year?

Tom Lowder

Well, it’s history is any guide. As you go deeper into recovery you will see value increase and the real estate increases flow through into the real estate tax amount. So, I think that it be a reasonable assumption in 2012 and 2013 to see some increased real estate access.

Gaurav Mehta – FBR

That’s helpful. And second question, could you talk a little bit about supply conditions in your cold markets if you are seeing an increase in permit activities and land prices?

Tom Lowder

Well, there is some development activity out there. In our markets, we are seeing some activity in Fort Worth, Wallace, Raleigh, Tampa, and Charlotte. All that activity represents about 1% or slightly less than 1% of the apartment stock in those given cities. So there is some supply starting to be developed. There is a lot of conversation about additional supply that may come in ‘012 and ‘013. The distribution of those properties across the different markets currently is such that it shouldn’t put a lot of pressure on pricing or absorb not much there spread throughout the MSAs in all the given cities. There is one outlay Wallace has a pretty heavy concentration in Midtown and just north of Downtown and up the rail line court order. So we don’t have any assets there, but there is a slight concentration in Wallace in one area. Land prices are across the board. You can go out West still by some very discounted multifamily sites that are zoned and ready to go meaning Phoenix in Vegas and anything out west. It go, turn back to the Texas in East or to the Carolina’s multifamily sites that are zoned, that are well-located are back to not peak pricing, but back to what we call fully priced sites. So, we are going to track permits and starts very closely, but currently we don’t think it’s going to make a material impact until we start going into 2013.

Gaurav Mehta – FBR

That’s helpful. Thank you.

Operator

Our next question will come from the line of Alex Goldfarb with Sandler O’Neill. Please proceed with your question.

Alex Goldfarb – Sandler O’Neill

Yes, good afternoon. Just going back to the Elco portfolio, first, the third to half that you think could be done, you mean could be done this year not in total, correct?

Tom Lowder

That’s correct.

Alex Goldfarb – Sandler O’Neill

Okay. And then what’s the leverage on that portfolio, how much of it is encumbered?

Tom Lowder

There is only one asset. It’s a Fannie Mae, I believe, Fannie Mae or Freddie Mac, I believe it’s Fannie Mae and it could be substituted.

Alex Goldfarb – Sandler O’Neill

Okay. So it’s just – so it’s essentially an unlevered pool?

Tom Lowder

Yes.

Reynolds Thompson

Yes.

Alex Goldfarb – Sandler O’Neill

Okay. And then just switching terms for a second, you guys did the term loan it sounds like you are not planning on coming back to any sort of debt needs until you regain your investment grade rating, but just curious given your discussions with the banks there how would you rate it as far as is doing a term loan on a go-forward basis is something that maybe more attractive than doing unsecured debt or maybe sort of you maybe one and the other, because it would seem like the term loan you can negotiate flexible terms to customize it, to exactly what you need versus I am imagining traditional corporate debt has sort of generic parameters that the investor base want. So, if you could just sort of give us your thoughts?

Tom Lowder

In our particular situation, where we were non-investment grade rated, this term loan was a great opportunity for exactly what you mentioned. It gave us flexibility. And most importantly and let’s just take the advantage of improving our credit profile during the term of the loan if we have done an unsecured bond we would not have had an opportunity to improve the rate throughout the term. Our game plan is to earn the rating back say that we will have an opportunity to go back to the bond market with that rating and participate in an unsecured bond offering when we have earned that rating back. I think, yeah, the flexibility that we want to have is what’s important to us and having all of those options open to us, but we certainly plan to head back to the bond market once we have earned our rating back.

Alex Goldfarb – Sandler O’Neill

Okay, thank you.

Operator

Our next question will come from the line of Michael Salinsky with RBC Capital Markets. Please proceed with your question.

Michael Salinsky – RBC Capital Markets

Good afternoon guys. I jumped on a couple of minutes late, so I apologize if you addressed this in your commentary. Can you touch a little bit up on your update commercial recycling plans here kind of we should expect for the second half of the year?

Tom Lowder

Yes, we are still – we have kept our disposition guidance out there. We are still working on some commercial dispositions and we hope to have something to report when we’re on the phone with you at the end of the third quarter, but we do have some things in the market.

Michael Salinsky – RBC Capital Markets

Are these on balance sheet or are these because they are joint venture assets?

Tom Lowder

Some of that.

Michael Salinsky – RBC Capital Markets

Fair enough. Second of all, curious to what the rating agencies are telling you right now, I mean, you have made progress on the leveraging front fixed up, build up the unencumbered portfolio just how much further you have to go to get that unsecured rating back?

Tom Lowder

We have last time we visited with our agencies versus the end of the first quarter. We’re going to go back and see their agencies before the end of the third quarter. And we think we have got some very good numbers to show him and we have made great progress toward the targets that they have laid out for us. The specifics are our leverage, our fixed charge coverage, and our debt to EBITDA. Those are the three areas that we have been focused on and have then made some big progress there. So we are very helpful that what we have done is a big staff in the right direction and we think we have put ourselves in a position to ask for that rating and that’s what we planned to do when we see the agencies in the next few weeks.

Reynolds Thompson

Yeah, I feel very bullish about that. The balance sheet really looks good. Now it’s up to operations to continue to kind of growth in our FFO and our operating income and with couple of more quarters of that, I would just see as look at very strong in regard to earning back and upgrade.

Michael Salinsky – RBC Capital Markets

Okay. Third question relates to development there would you relate to that disposition announcement there? Would you look to sell some of the assets and then use the money to fund development or is it strictly for acquisitions?

Tom Lowder

Our game plan as we sit here today is strictly for acquisitions.

Michael Salinsky – RBC Capital Markets

Okay.

Tom Lowder

We got the balance sheet and the liquidity to fund the development pipeline that we haven in front us and the asset recycling program is about portfolio improvement, improving our growth rate going forward.

Michael Salinsky – RBC Capital Markets

Okay. Then finally on the Colonial grant traditions you had recognized a $3.5 million consistency liabilities, I think back in 2009 on this because you purchased the noted discount does that get reversed here in the future.

Reynolds Thompson

No, what happened there was repay $21.1 million for the net. $3.5 million of that $21 million was related to the guarantee payment instead of the note is actually gone on to add books at $17.6 million.

Michael Salinsky – RBC Capital Markets

Okay. So, there is no gain it just book keeping adjustment there correct?

Reynolds Thompson

Exactly.

Michael Salinsky – RBC Capital Markets

Thank you very much.

Reynolds Thompson

Thank you.

Operator

(Operator Instructions) Our next question will come from the line of Andrew McCulloch with Green Street Advisors. Please proceed with your question.

Andrew McCulloch – Green Street Advisors

Hey guys just a few quick modeling questions. On your option and retail NOI, how do you expect that the trends for the balance of year?

Reynolds Thompson

Fairly it can flat from the operating results of the first six months going though our third and fourth quarter.

Andrew McCulloch – Green Street Advisors

Okay. And then what’s on the Colonial Grand Traditions, what’s your effective ownership of that now?

Tom Lowder

We still own a 35% interest in the joint venture that because we are related party and own the note is consolidated.

Andrew McCulloch – Green Street Advisors

Got it, okay. Okay I’m sorry if I missed this, on the two development approach you have underway do you believe the yield is still right around 7 maybe high 6s?

Reynolds Thompson

Yes.

Andrew McCulloch – Green Street Advisors

That’s on impaired land and trend rents right correct?

Reynolds Thompson

Correct.

Andrew McCulloch – Green Street Advisors

Okay and then lastly, on your guidance, I your guidance doesn’t have any more equity in it, but you’re going to put new ATM in place or you comfortable with the new disposition program and that being sufficient for your capital earnings this year?

Tom Lowder

We do not plan to put new ATM program in place and yes, we feel comfortable with the recycling program that’s in front of our office.

Andrew McCulloch – Green Street Advisors

Great, that’s all I had. Thanks.

Operator

Our next question will come from the line Rich Anderson with BMO Capital Markets. Please proceed with your question.

Rich Anderson – BMO Capital Markets

Thanks. Good afternoon everybody.

Tom Lowder

Hello Rich,

Rich Anderson – BMO Capital Markets

Just a question on the new renewals comparison it was 2.8 new, 5.7 renewal and then its like flip flop pretty dramatically in July to new being higher than renewals in terms of the growth. How do you reconcile that? I mean is that kind of a one-time event in terms its how significantly changed or you’re going to be able to keep new rents above renewals on a go forward basis.

Reynolds Thompson

It’s really more about the comps. The new deal right here we have seen some good increases in rents and last I guess some spring and summer we saw some pressure on those numbers and the comps actually get a little better for us as we look into the third quarter. So, we expect those spreads kind of remain in that area as we look through the third quarter based on the way rents look when we kind of trend things out through LRO .

Rich Anderson – BMO Capital Markets

Fair enough. In terms of the balance sheet in the absolute level of debt 46% of gross assets, are you there in terms of, you know, that remind me that the target you are comfortable now its time to go and customer talking and get rated again is that the process or do you have more to do?

Tom Lowder

No, actually we feel like, we are kind of wind sheet for something around 45% in that area and we feel like we have got and where we need to be. The other metrics are largely driven by the operating side and we are making some great progress on those numbers, fixed charge covers in well above two that was another metric that we were very focused on and our target that the agencies are talked about and then driving our debt to EBITDA to 8 or below and we finish this quarter at 8.2 and we have got some nice operating trends in front of us. So, we feel very good about having our credit metrics in the target ranges that have been laid out for us.

Rich Anderson – BMO Capital Markets

Okay. And then quick modeling question, interest income will trend up right with the consolidation of that note right. Is that correct?

Tom Lowder

Yes.

Rich Anderson – BMO Capital Markets

Can you give some guidance on interest income just quick modeling question?

Paul Earle

That was correct. Hold on a second, Rich.

Jerry Brewer

Rich this is Jerry. The property gets consolidated. The note is it’s not going to come across on our balance sheet as a note receivable, the property and it has come across. So, you can’t see it. It gets eliminated in consolidation.

Rich Anderson – BMO Capital Markets

Okay, got you. Thank you. Finally, with the assets sale program with the outside buyer, what is the timeframe for them to say, okay, I’m kind of done with this, is it that a year that you have to use the $338 million. Is it less than that, more than that or can you can not say?

Paul Earle

The contractor is actually spells out year end 2012.

Rich Anderson – BMO Capital Markets

2012, okay. And so, until that point, you are free to investigate finding use of proceeds and there is no cost to you if it even takes you to December 31st 2012. There is no like kind of fees in process or anything like that. Okay. Thank you.

Operator

Our next question will come from the line of Haendel St. Juste with KBW. Please proceed with your question.

Haendel St. Juste – KBW

Hey guys, good Afternoon.

Tom Lowder

Good Afternoon.

Haendel St. Juste – KBW

So, few quarters back you guys mentioned that you would not contemplate raising the dividend, while you were raising equity, now that’s you are not going to put a new ATM in place. Doe that suggest that’s your thoughts on the dividend year have regular dividend year might be a little different clearly than it was a long back?

Tom Lowder

I think the board will revisit this after the first of the year. Saying our January made in after we will have a couple of more quarters behind U.S. Hopefully will be having get conversation with rating agencies, we would have accomplished a lot and at that point in our adjusted FFO and all of our metrics I think will be aligned where we could give a good increase, but it would be well within our peers in the percentages and metrics of a good increase.

Haendel St. Juste – KBW

Okay. At best this is in early 2012 consideration?

Tom Lowder

Yes.

Haendel St. Juste – KBW

What type of payout ratio are you thinking about here either on a short or long-term basis, when you talk about with the levels you are considering relative to your peers?

Tom Lowder

Certainly less than 90% of FFO and I think the peers probably around 80%. So, you could take a guess about our FFO for next year and work some numbers around that.

Haendel St. Juste – KBW

Got it, okay. Thank you, guys.

Tom Lowder

Thanks.

Operator

We do have a follow-up question from the line of Michael Bilerman with Citi. Please proceed with your question.

Michael Bilerman – Citi

Thanks. Just a follow-up on Mike’s question, could you share with us the amount of commercial assets you are currently marketing in terms of Colonial percentage share?

Reynolds Thompson

It is between $80 million and $100 million worth.

Michael Bilerman – Citi

Okay and that is your percentage share?

Reynolds Thompson

Correct.

Michael Bilerman – Citi

Okay. And then just last question, could you tell us what is your same store revenues comes in are for the third and fourth quarter. Just curious how you expect that the trends the rest of the year?

Reynolds Thompson

We don’t give quarter guidance. We are scrambling a little bit here.

Michael Bilerman – Citi

Okay.

Reynolds Thompson

We expect something within the guidance range that we have given for the full year. It does not materially different than what we have experienced.

Michael Bilerman – Citi

Okay, all right. I probably could try to figure it out. Thank you.

Reynolds Thompson

You calls up last. Thanks.

Operator

There are no further questions from the phone line at this time.

Jerry Brewer – Executive Vice President, Finance

Thank you all for joining us today. We look forward to seeing you soon. Have a great day.

Operator

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.

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Source: Colonial Properties Trust's CEO Discusses Q2 2011 Results - Earnings Call Transcript
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