by Calculated Risk on 2/06/2008 11:00:00 AM

BRE is an apartment REIT in the West. Here are some comments from their conference call (hat tip Brian):

“Essentially we have two distinct operational dynamics going on. Two-thirds of our operations, San Francisco, Seattle, Los Angeles, San Diego, are operating a fairly high level. Revenue growth is ranging 4.5 to 9%, occupancy levels are at or about 95%. We have a pretty tight 30-day available levels running between 6 and 7%. It is a little early in the year to start talking about rent growth, but in these markets we have pricing power and we're not being shy about exercising it where we can.

There is another slice of the operations with a single-family housing recession is playing out in full as we expected. Sacramento , inland Empire in Phoenix which represented about 21% of the same store net operating income, operations are struggling, and we expect the struggle to continue throughout the year. We seem to be able to maintain about 92, 93% occupancy but rents are flat year-over-year. We certainly are not expecting rent growth this year. There may be modest revenue growth from these markets, but it will be occupancy driven over our '06 levels.

For the moment Orange County lies somewhere in between with a stronger operating profile than we and maybe others expected at this point. Orange County represents about 14% of same store net operating income, currently 95% occupied, 30 day available stands at less than 7%. Our market rent growth in '07 was just over 3%, about half normal growth levels. Some of this was of our own making. It took almost six months to get our occupancy in a position to grow rents. The loss of jobs certainly triggered a deceleration in traffic and rent growth in the second half of the year. Orange County remains unaffordable from a housing standpoint. Median home prices for existing stock are more than 620,000, and new home prices average more than 850,000. Information on jobs that came out at the end of the year indicated a year-over-year drop of about half a point. Certainly not great, but probably not enough to shake the home prices materially. This market is holding up very well and could generate maybe 2 to 4% revenue growth in rent growth in 2008 which could be a really great performance.”

Q: My second question pertains to single-family moveouts. How is it trending and can you quantify what impact it may be having on your occupancy overall?

BRE CFO: Well, I think coastal California is really a tale of two markets. In coastal California the numbers really haven't budged. Moveouts when we look at our resident turnover and to the extent that the exit interviews or the exit data is correct, moveouts in coastal California are for purchasing a home remain very sticky around that 15 to 20% number. It is like typically 15 to 17%. When you get to an Inland Empire, Sacramento , Phoenix , that number will jump up to 25 and 30%. Look, in Phoenix right now you can rent a 2 to 3 bedroom home for $900 a month. That competes with an apartment every day of the week. We're getting a much higher level -- and that number is probably where historically hugged right around 25% is now in the 30, 35% range, and it is not just move out for home purchases. We have move outs for people going to go rent a single-family house.”
emphasis added