<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-5305
BRE PROPERTIES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 94-1722214
- -------------------------------- -------------------
(State or other jurisdiction of (I.R.S Employer
incorporation or organization) Identification No.)
One Montgomery Street
Telesis Tower, Suite 2500
San Francisco, CA 94104-5525
- ----------------------------- ------------
(Address of principal office) (Zip Code)
Registrant's telephone number,
including area code (415) 445-6530
Inapplicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
-------- --------
Number of shares of Class A common stock
outstanding as of January 31, 1996 10,970,865
----------
<PAGE>
PART I FINANCIAL INFORMATION
Item 1 - FINANCIAL STATEMENTS
--------------------
BRE PROPERTIES, INC.
BALANCE SHEETS (Dollar amounts in thousands) (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
January 31, 1996 July 31, 1995
------------------ ---------------
<S> <C> <C>
ASSETS
Equity investments in real estate $370,242 $377,175
Less: Accumulated depreciation and amortization (48,690) (47,811)
------------------ ---------------
321,552 329,364
Investments in limited partnerships 1,154 1,181
------------------ ---------------
Real estate portfolio 322,706 330,545
Mortgage loans 6,952 7,409
Allowance for possible losses (1,250) (1,250)
------------------ ---------------
328,408 336,704
Cash and short-term investments 14,736 4,462
Funds in escrow for tax-deferred exchange 3,854
Other assets 9,490 6,720
------------------ ---------------
Total assets $356,488 $347,886
------------------ ---------------
------------------ ---------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and other liabilities $ 3,494 $ 4,116
Mortgage loans payable 112,176 100,828
------------------ ---------------
Total liabilities 115,670 104,944
------------------ ---------------
Shareholders' equity
Class A common stock, $0.01 par value, 50,000,000
shares authorized. Shares issued and outstanding
10,970,865 at January 31, 1996 and 10,962,065 at
July 31, 1995 109 109
Additional paid-in capital 212,246 212,127
Undistributed net realized gain on sales of properties 28,463 30,706
------------------ ---------------
Total shareholders' equity 240,818 242,942
------------------ ---------------
Total liabilities and shareholders' equity $356,488 $347,886
------------------ ---------------
------------------ ---------------
</TABLE>
See notes to financial statements.
2
<PAGE>
BRE PROPERTIES, INC.
STATEMENTS OF INCOME (unaudited)
(Amounts in thousands, except in per share data)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Three For the Six Months
Months Ended Ended
January 31 January 31
------------------- ---------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUE
Rental Income $16,221 $15,209 $32,305 $29,319
Interest on short-term investments 266 112 405 354
Interest income on mortgage loans 204 165 413 303
Interest from limited partnerships 173 149 313 231
Other income 215 156 358 273
------- ------- ------- -------
Total Revenue 17,079 15,791 33,794 30,480
------- ------- ------- -------
EXPENSES
Real Estate expenses 5,485 5,283 11,322 10,050
Provision for depreciation and
amortization 1,960 1,955 3,947 3,740
Interest expense 2,197 1,889 4,273 3,340
General and administrative 858 722 1,773 1,951
------- ------- ------- -------
Total expenses 10,500 9,849 21,315 19,081
------- ------- ------- -------
Income before gain on sales of investments 6,579 5,942 12,479 11,399
Gain (loss) on sales of investments 1,389 (899) 1,389
Less: Related advisory fee (139) (139)
------- ------- ------- -------
Net gain (loss)on sales of investments 1,250 (899) 1,250
------- ------- ------- -------
NET INCOME $ 6,579 $ 7,192 $11,580 $12,649
------- ------- ------- -------
------- ------- ------- -------
Income per share
Primary
Income before gain on
sales of investments $.60 $.55 $1.13 $1.05
Net gain on sales of investments .11 (.08) .11
------- ------- ------- -------
Net income $.60 $.66 $1.05 $1.16
------- ------- ------- -------
------- ------- ------- -------
Dividends declared $.63 $.63 $1.26 $1.23
------- ------- ------- -------
------- ------- ------- -------
Weighted shares outstanding 10,997 10,934 10,996 10,933
------- ------- ------- -------
------- ------- ------- -------
See notes to financial statements.
</TABLE>
3
<PAGE>
BRE PROPERTIES, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS (Dollar amounts in thousands)
- ------------------------------------------------------------------------------------------------------------
For the Six Months Ended Jan. 31
--------------------------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $11,580 $12,649
Non-cash revenues and expenses included in income:
Provision for depreciation and amortization 3,947 3,740
Loss on sales of investments 899
Net gain on tax-deferred exchanges (1,250)
Decrease (increase) in other assets (476) 1,325
Increase (decrease) in accounts payable and other liabilities (622) 229
Other (increase) decrease (17) (219)
-------- --------
CASH FLOWS GENERATED BY OPERATING ACTIVITIES 15,311 16,474
-------- --------
Cash flows from investing activities:
Equity investments:
Apartments purchased (18,041)
Cash invested in apartments acquired through tax
deferred exchange (108)
Option payments on apartments being developed (840)
Capitalized costs of proposed merger (1,454)
Apartment expansion (1,687)
Improvements to apartments (207) (144)
Space preparation and tenant improvements:
Shopping centers (520) (1,891)
Light industrial and warehouse (9) (721)
Funds in escrow for tax-deferred exchange 3,854
Advances on mortgage loans receivable (1,500)
Repayments on mortgage loans receivable 457 120
-------- --------
NET CASH FLOWS GENERATED BY (USED IN) INVESTING ACTIVITIES 1,173 (23,864)
-------- --------
Cash flows from financing activities:
Mortgage loans payable:
New mortgage loans 12,000
Principal payments (652) (579)
Proceeds from grants of restricted shares and
exercises of stock options 119 279
Dividends paid (13,823) (13,110)
-------- --------
NET CASH FLOWS USED IN FINANCING ACTIVITIES (2,356) (13,410)
-------- --------
Increase (decrease) in cash and short-term investments 14,128 (20,800)
Balance at beginning of year 4,462 28,938
-------- --------
Balance at end of period $18,590 $ 8,138
-------- --------
-------- --------
</TABLE>
4
<PAGE>
BRE PROPERTIES, INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited)
- --------------------------------------------------------------------------------
January 31, 1996
NOTE A - BASIS OF PRESENTATION
- ------------------------------
The accompanying unaudited financial statements have been prepared in accordance
with the instructions to Form 10-Q and should be read in conjunction with the
company's Annual Report on Form 10-K for the fiscal year ended July 31, 1995,
together with the portions of the company's 1995 Annual Report to shareholders
incorporated therein by reference. In the opinion of management, all
adjustments (consisting of normal recurring adjustments only) have been made
which are necessary for a fair statement of the results for the interim period
presented herein.
Certain reclassifications have been made to the 1995 financial statements to
conform to the presentation of the 1996 financial statements.
NOTE B - NET INCOME PER SHARE
- -----------------------------
Primary net income per share is based upon the average weighted number of shares
outstanding during the periods, increased for the assumed exercise of vested,
in-the-money stock options.
NOTE C - LITIGATION
- -------------------
The company, because of the nature of its business, is sometimes subject to
various threatened or filed legal claims, including certain environmental
actions. While it is not feasible to predict or determine the ultimate outcome
of these matters, in the opinion of management, none of these actions,
individually or in the aggregate, will have a material effect on the company's
results of operations, cash flows, liquidity or financial position.
NOTE D - COMMITMENTS
- --------------------
BRE has entered into a development and option agreement with Picerne Development
Corporation (Picerne), an Arizona corporation, which is a wholly owned
subsidiary of Picerne Investment Corporation, a privately held apartment
developer headquartered in Rhode Island. Picerne is developing Arcadia Cove, a
432-unit apartment complex in Phoenix, Arizona. The development is being
financed through two loans to Picerne made by Wells Fargo Bank. The amounts
available under the two loans are $4,226,000 (standing loan) and $19,125,000
(construction loan), for a total of $23,351,000. As of January 31, 1996,
$13,646,000 was outstanding under the loans. BRE has guaranteed repayment of the
loans and has the right to acquire the property at or before completion of
construction, which is currently expected in mid-1996.
5
<PAGE>
BRE has made, or is committed to make, monthly option payments to Picerne as
follows:
<TABLE>
<CAPTION>
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C>
December 94 $220
February 95 - July 95 $60 x 6 months 360
August 95 - December 95 160 x 5 months 800
January 96 - March 96 100 x 3 months 300
April 96 - May 96 20 x 2 month 40
------
Estimated total option payments $1,720
------
------
</TABLE>
BRE's estimated total cost for the property, including interest expense and
marketing expenses during construction, is $24,280,000.
In addition, BRE has committed to purchase Phase II of Newport Landing
Apartments, in Glendale, Arizona. BRE purchased the adjacent 240-unit Phase I in
September 1995, for $9,235,000. Phase II, also planned for 240 units, is
currently being developed, with construction expected to be completed mid-1996.
Picerne, which developed Phase I, is also developing Phase II for BRE. The cost
for Phase II is projected to be $12,940,000.
The company has also committed to purchase an apartment complex with 266 units
under construction near Portland, Oregon at a price of $16,410,000. Construction
is underway, with completion expected in the spring of 1996. BRE will purchase
the property following its completion in accordance with plans and
specifications.
In addition, BRE has committed to purchase Sycamore Valley Apartments, 440 units
located in Fountain Valley, California at a price of $23,593,000. Previously
known as the Shakewood Apartments, BRE owned the land under the improvements
until 1991, when BRE sold the land to the current owners, who own both the land
and the improvements. The owners are a public limited partnership, with
approximately 1,500 investors, whose approval is required for the sale of the
property to BRE. Such approval is anticipated by late March 1996.
BRE has also committed to purchase Candlewood North Apartments, 189 units
located in Northridge, California at a price of $10,600,000. The property,
originally constructed in 1964, was fully rebuilt following the 1994 earthquake.
The purchase is expected to be completed on February 29, 1996.
6
<PAGE>
The summary of total commitments outstanding is as follows:
<TABLE>
<CAPTION>
Dollar Amounts in
Units thousands
----- ---------
<S> <C> <C>
Arcadia Cove 432 $24,280
Newport Landing II 240 12,940
Apartment complex,
Portland, Oregon 266 16,410
Sycamore Valley 440 23,593
Candlewood North 189 10,600
------- -------
1,567 $87,823
------- -------
------- -------
</TABLE>
NOTE E - RECENT DEVELOPMENT
- ---------------------------
On October 11, 1995, BRE entered into an Agreement and Plan of Merger (the
"Merger Agreement") by and among BRE, Real Estate Investment Trust of California
("REIT-Cal") and a newly-formed Maryland subsidiary of REIT-Cal ("REIT-Cal
Sub"). The Merger Agreement, which has been approved by the Board of Directors
and Boards of Trustees of each of the parties, would result in the acquisition
of REIT-Cal by BRE through (i) a merger of REIT-Cal with and into REIT-Cal Sub
followed by (ii) a merger of REIT-Cal Sub with and into BRE (the "Merger").
Following consummation of the Merger, it is contemplated that BRE would change
its state of corporate domicile from Delaware to Maryland.
Under the terms of the Merger Agreement, each issued and outstanding share of
beneficial interest, without par value, of REIT-Cal would be converted into the
right to receive 0.57 (the "Exchange Ratio") of a share of BRE common stock in a
tax-free transaction. In the event that either (i) (a) the average closing
price per share of BRE common stock as reported by the New York Stock Exchange
(the "NYSE") for the ten consecutive trading days ending on (and including) the
trading day immediately preceding the date of REIT-Cal's stockholders meeting to
consider the Merger (the "BRE Average Price") is less than $28.575, and (b) the
difference between the BRE Average Price and the closing price of BRE common
stock on the NYSE on September 11, 1995, expressed as a percent of the closing
price of BRE common stock on the NYSE on September 11, 1995, is at least 10%
greater than the percentage decline in the value of the NAREIT Equity REIT Index
over the period from September 11, 1995 to the trading day immediately preceding
the date of the REIT-Cal stockholders meeting to consider the Merger, or (ii)
the BRE Average Price is less than $28.07, the agreement may be terminated by
REIT-Cal unless BRE increases the Exchange Ratio so that the Exchange Ratio as
adjusted would equal a fraction the numerator of which is the product of 0.57
times (x) $28.575 in the case of a proposed termination under clause (i) above,
or (y) $28.07 in the case of a proposed termination under clause (ii) above, and
the denominator of which is the BRE Average Price.
7
<PAGE>
The Merger will be treated as a purchase for accounting purposes. Upon the
closing, Frank C. McDowell would continue to serve as President and Chief
Executive Officer of BRE. Three executives of REIT-Cal would also be added
to BRE management: Jay W. Pauly as Senior Executive Vice President and Chief
Operating Officer; LeRoy E. Carlson as Executive Vice President and Chief
Financial Officer; and John H. Nunn as Senior Vice President, Property
Management. In addition, three directors of REIT-Cal would be appointed to
the BRE Board of Directors, increasing BRE's Board from six to nine members.
NOTE F - SUBSEQUENT EVENTS
- --------------------------
On February 26, 1996, the Directors declared a dividend of $.63 per share,
payable March 28, 1996 to shareholders of record March 8, 1996.
In addition, pursuant to the Merger Agreement, on February 26, 1996, the
Directors declared a special dividend of $.049 per share, payable March 28,
1996, to shareholders of record March 14, 1996. The special dividend will be
paid only if the Merger with REIT-Cal is completed. The Merger is expected
to close on March 15, 1996.
As discussed in Note D, BRE acquired the 189 unit Candlewood North Apartments in
Northridge, California for $10,600,000 on February 29, 1996. In the purchase,
BRE used the proceeds from the recent sale of a light industrial property as
part of a tax-deferred exchange transaction.
On March 12, 1996, shareholders of BRE and REIT-Cal approved the Merger of
the two companies. The Merger, in which BRE Properties will be the surviving
entity, is expected to close on March 15, 1996.
8
<PAGE>
BRE PROPERTIES, INC.
- --------------------------------------------------------------------------------
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
January 31, 1996
LIQUIDITY AND CAPITAL RESOURCES
The company's cash and short-term investments totaled $14,736,000 at January 31,
1996, up from $4,462,000 at July 31, 1995. In addition to the $14,736,000 in
cash and short-term investments, $3,854,000 was in escrow for completion of a
tax-deferred exchange.
During the six months ended January 31, 1996, BRE borrowed, on a non-recourse
basis, $12,000,000 secured by the Verandas Apartments in Union City, California.
The loan has a 10-year term, with amortization based on 30 years, and a fixed
interest rate of 7.3%. The balloon payment at maturity is $10,372,000. Depending
on market conditions at maturity, the company may choose, among other things, to
renegotiate the terms with the existing lender, refinance the property with
another lender or sell assets to repay the balloon amounts.
Also during the first six months of fiscal 1996, BRE completed the tax-deferred
exchange of the vacant Pomona Warehouse property in Pomona, California for the
240-unit Phase I of Newport Landing Apartments in Glendale, Arizona. The loss on
the disposition of the Pomona Warehouse was $93,000.
In addition, $3,854,000 has been placed in escrow from the proceeds from
disposition of the vacant Irvine Spectrum property in Irvine, California. The
proceeds were invested on a tax-deferred basis in Candlewood North Apartments.
The loss on the disposition of the Irvine Spectrum Property was $819,000.
An additional $520,000 was invested during the quarter ended January 31, 1996 in
tenant improvements at shopping centers.
Cash commitments at January 31, 1996 include the March 28, 1996 dividend payment
of approximately $6,912,000 and a special dividend of approximately $538,000
that will be paid if the merger is consumated, as described in Note E of the
notes to Financial Statements.
In addition, as more fully discussed in Note D of Notes to Financial Statements,
BRE has committed a total of $87,823,000 for the purchase of five apartment
communities. One of these apartment communities, Candlewood North, was
purchased on February 29, 1996 for $10,600,000 with cash and proceeds from a
tax-deferred exchange. The remaining acquisitions may be funded through a
combination of tax-deferred exchanges, cash and borrowings.
9
<PAGE>
BRE has announced an agreement to sell 47 acres of land under a large apartment
complex in Daly City, California to the owner of the improvements for a cash
purchase price of $58 million. The sale is subject to certain contingencies,
including a five-month due diligence period during which the purchaser may
review the property, seek to arrange financing and, at the purchaser's election
without penalty, terminate the purchase agreement. Assuming satisfaction of
closing conditions, the purchase agreement contemplates a closing of the sale
between June 14 and September 14, 1996, with the sale intended to be treated by
BRE as a series of tax-deferred exchanges into apartment properties. BRE's
basis in the land for both book and tax purposes is $7.4 million; accordingly,
the company would realize a one-time non-recurring gain on sale of $50.6
million.
In addition to cash and short-term investments, the company has available a bank
line of credit totaling $15,000,000. There were no borrowings under the line of
credit at January 31, 1996. The company expects to increase its bank lines of
credit. The company also expects to use a portion of the lines of credit to
fund the cash portion of the purchase price for the apartment acquisitions
described above.
RESULTS OF OPERATIONS
Net income for the quarter and six months ended January 31, 1996 was $6,579,000
($.60 per share) and $11,580,000 ($1.05 per share), compared to $7,192,000 ($.66
per share) and $12,649,000 ($1.16 per share) for the same quarter and six months
last year. Included in the January 31, 1996 six months results were net losses
on sales of investments of $899,000 ($.08 per share), compared to net gains on
sales of investments of $1,250,000 ($.11 per share) for both the quarter and six
months ended January 31, 1995.
Funds from operations totaled $8,539,000 and $16,426,000 for the quarter and six
months ended January 31, 1996, up 8% and 9% from the same periods last year.
Funds from operations is defined as net income (computed in accordance with
generally accepted accounting principles), excluding gains (or losses) from debt
restructuring and sales of property, plus provisions for depreciation,
amortization and possible investment losses. Because income-producing
properties are typically evaluated without taking into account non-cash charges
such as provisions for depreciation, amortization and possible investment
losses, management believes that funds from operations is an appropriate
supplemental measure of the company's operating performance.
10
<PAGE>
At January 31, 1996, overall occupancy levels by class of property were as
follows:
<TABLE>
<CAPTION>
PROPERTY TYPE OVERALL OCCUPANCY
- ----------------------------------------------------
<S> <C>
Apartments 95%
Shopping centers 94
Other 97
--
WEIGHTED AVERAGE 95%
---
---
</TABLE>
The weighted average occupancy is calculated by multiplying the occupancy for
each property by its square footage and dividing by the total square footage in
the portfolio.
REVENUE
Rental income, comprising approximately 96% of total revenue, rose 7% for the
quarter and 10% for the six months ended January 31, 1996 from the comparable
periods last year. Apartments acquired since August 1, 1994 (and therefore
owned less than two years) generated gross rents of $2,353,000 and $4,538,000
for the quarter and six months, up from $1,602,000 and $2,048,000 for the
comparable periods last year. Apartments owned for two or more years contributed
$283,000 and $781,000, respectively, in higher revenue (up 3% and 4%,
respectively).
EXPENSES
Operating expenses of equity investments increased 4% and 13% for the quarter
and six months ended January 31, 1996 from the year earlier periods, primarily
due to expenses on the new apartment acquisitions.
General and administrative expenses were $858,000 for the quarter ended January
31,1996, up from $722,000 for the comparable quarter last year. For the six
months ended January 31, 1996, general and administrative expenses were
$1,773,000, down from $1,951,000 for the period last year, which had included
$437,000 in legal costs of which $363,000 were substantially recovered from
insurance carriers. Excluding this litigation-related expense, general and
administrative expenses rose for the quarter and six months ended January 31,
1996 as a result of higher salaries and employee benefits due to a larger staff
to accommodate growth.
Commencing August 1, 1995, BRE began allocating a portion of its salaries,
employee benefits and other personnel costs to the real estate expense of the
properties in the portfolio. While this reclassification does not change the
company's net income or funds from operations, such an allocation reduces
reported general and administrative expenses and increases real estate expense
by an equal amount. Management believes that this allocation is consistent with
industry practices and will provide a better matching of the revenue generated
by the properties and the expenses required to generate that revenue. The
amounts reclassified from general and administrative expenses to real estate
expenses
11
<PAGE>
under this allocation method were $400,000 and $799,000 for the quarter and six
months ended January 31, 1996 respectively.
As more fully discussed in Note E of Notes to Financial Statements, on October
11, 1995, BRE entered into the Merger Agreement with REIT-Cal. Through January
31,1996, BRE has paid investment banking, legal, accounting and other costs
related to the Merger aggregating $1,454,000. This amount has been capitalized
in anticipation of the Merger. Included in the $1,454,000 is $222,000 which had
originally been expensed during the fiscal year ended July 31, 1995. This
$222,000 was credited against general and administrative expenses during the
quarter ended October 31, 1995.
Interest expense was up $308,000 and $933,000 from the comparable quarter and
six months last year. This increase reflected new mortgage loans, assumed since
August 1,1994, on Camino Seco Village, Colonia del Rio, Fountain Plaza, Hacienda
del Rio, Oracle Village, SpringHill and Verandas Apartments. The principal of
these loans totaled approximately $27,939,000.
GAIN (LOSS) ON SALES
No gain on sales of investments was recorded during the quarter ended January
31, 1996. The company has recorded in its financial statements gains totaling
$62,307,000 which have been deferred for tax purposes since the company's 1970
inception through January 31, 1996.
The losses on the previously discussed sales of Pomona Warehouse and Irvine
Spectrum aggregated $912,000 for the six months ended January 31, 1996.
Offsetting the losses was the $13,000 increase in the reported gain on Marymoor
Warehouse, sold in November 1994.
DIVIDENDS
The $.63 per share dividend for the quarter ended January 31, 1996 was
approximately 81% of funds from operations. The dividend exceeded reportable
net income.
The special dividend of $.049 per share, payable March 28, 1996 to shareholders
of record March 14, 1996, was approximately 6% of funds from operations for the
second quarter. The special dividend will be paid only if the merger with REIT-
Cal described above is completed which is expected on March 15, 1996.
12
<PAGE>
BRE PROPERTIES, INC.
PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits
The following exhibits are submitted herewith:
11. Computation of Earnings Per Share
(b) Reports on Form 8-K. The company did not file any reports on
Form 8-K during the quarter for which this report is filed.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BRE PROPERTIES, INC.
(Registrant)
DATE MARCH 14, 1996 /S/ HOWARD E. MASON, JR.
------------------------
Howard E. Mason, Jr.
Senior Vice President, Finance
and Assistant Secretary
14
<PAGE>
BRE PROPERTIES, INC.
- --------------------------------------------------------------------------------
EXHIBIT 11 - COMPUTATION OF EARNINGS PER SHARE
- --------------------------------------------------------------------------------
STATEMENT OF EARNINGS PER SHARE
Average shares outstanding are computed by adding the shares outstanding at each
month end and dividing that result by the number of months elapsed in the year-
to-date period.
<TABLE>
<CAPTION>
For the three months ended For the six months ended
January 31 January 31
--------------------------------- ---------------------------------
Computation: 1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Shares outstanding at
beginning of year 10,962,065 10,916,483 10,962,065 10,916,483
Averaged for dates of grants
or exercises:
Exercisable, in-the-money,
stock options 26,187 8,581 26,187 8,581
Restricted shares granted,
less forfeitures 2,800 9,000 2,400 7,714
Exercise of stock options 6,000 5,142
------------- ------------- ------------- -------------
Average shares outstanding 10,997,052 10,934,064 10,995,794 10,932,778
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Net income before gain (loss)
on sales of investments $6,578,846 $5,942,169 $12,479,131 $11,399,328
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Computation $.60 $.55 $1.13 $1.05
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Net gain (loss) on sales of
investments ----- $1,249,762 $ (899,258) $1,249,762
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Computation ----- $.11 $ (.08) $.11
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
PRIMARY EARNINGS
PER SHARE $.60 $.66 $1.05 $1.16
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
15
<PAGE>
BRE PROPERTIES, INC.
- --------------------------------------------------------------------------------
EXHIBIT 11 - COMPUTATION OF EARNINGS PER SHARE (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the three months ended For the six months ended
January 31 January 31
-------------------------------- ---------------------------------
1996 1995 1996 1995
---- ---- ---- ----
FULLY DILUTED EARNINGS PER SHARE
<S> <C> <C> <C> <C>
Shares outstanding at
end of period 10,970,865 10,925,483 10,970,865 10,925,483
Exercisable, in-the-money
stock options 26,187 8,581 26,187 8,581
------------- ------------- ------------- -------------
Total shares 10,997,052 10,934,064 10,997,052 10,934,064
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Income before gain on sales of
investments $6,578,846 $5,942,169 $12,479,131 $11,399,328
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
As computed $.60 $.55 $1.13 $1.05
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Net gain (loss) on sales of
investments -------- $1,249,762 $ (899,258) $ 1,249,762
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
As computed -------- $.11 $(. 08) $.11
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Fully diluted earnings
per share $.60 $.66 $1.05 $1.16
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-START> AUG-01-1995
<PERIOD-END> JAN-31-1996
<CASH> 18,590
<SECURITIES> 0
<RECEIVABLES> 16,442
<ALLOWANCES> (1,250)
<INVENTORY> 0
<CURRENT-ASSETS> 33,782
<PP&E> 371,396
<DEPRECIATION> (48,690)
<TOTAL-ASSETS> 356,488
<CURRENT-LIABILITIES> 3,494
<BONDS> 112,176
0
0
<COMMON> 109
<OTHER-SE> 240,709
<TOTAL-LIABILITY-AND-EQUITY> 356,488
<SALES> 33,794<F1>
<TOTAL-REVENUES> 33,794
<CGS> 11,322<F2>
<TOTAL-COSTS> 11,322
<OTHER-EXPENSES> 5,720<F3>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,273
<INCOME-PRETAX> 12,479
<INCOME-TAX> 0
<INCOME-CONTINUING> 12,479
<DISCONTINUED> 0
<EXTRAORDINARY> (899)<F4>
<CHANGES> 0
<NET-INCOME> 11,580
<EPS-PRIMARY> 1.05
<EPS-DILUTED> 1.05
<FN>
<F1>Rental and other revenue
<F2>Real estate expenses
<F3>Includes $3,947 of depreciation expense, a non-cash charge
<F4>Net gain (loss) on sales of investments
</FN>
</TABLE>
