UPFRONT: WALL STREET WATCH

APARTMENT FINANCE TODAY • JANUARY 2008

Markets Continue South, AFT Index Rallies

By Margot Crabtree

The AFT Index bounced back this session with all but two components in the index logging gains as our session ended Feb. 11, 2008. Two companies posted double digit point gains in the session. Eleven companies reported quarterly results during the session, and of those, seven reported increases in funds from operations (FFO), the traditional metric for determining performance of a real estate investment trust (REIT). Municipal Mortgage, a component of the index since June 2006, ceased trading on the New York Stock Exchange on Feb. 5, 2008, and was removed from the index. Of the 14 stocks now tracked on the AFT Index, advancing issues handily outpaced declining issues by a 12-to-2 count.

The AFT Index defied national markets, which were flattened in the session despite two rate cuts by the Federal Reserve Board. The first cut, which took the benchmark overnight bank lending rate down by three-quarters of a point, was an emergency move that occurred before the Fed’s regularly scheduled meeting. A few days later, the Fed cut rates again, this time by half a point. Even so, worrisome news continued to dog the markets, with jobs numbers sinking and bond insurers also revealing heavy losses in the market downturn. Even modest earnings gains did little to boost confidence on Wall Street. “The absolute seizure of the credit markets in the corporate arena is going to put enormous pressure on American companies,” said George Feiger, CEO of Contango Capital Advisors. “And this is really bad news for the economy.”

Shares of Essex climbed after the company reported a 12.7 percent increase in its FFO for the quarter ended Dec. 31, 2007. FFO was $34.7 million, or $1.25 per share, versus $31.6 million, or $1.19 per share earned in the year-ago quarter. Essex also said that it anticipates earnings for 2008 to be in line with analysts’ expectations, but that its FFO will be above analysts’ expectations. Essex said its FFO for 2008 will range between $5.85 per share and $6.15 per share. Analysts expect Essex FFO for the year at $5.84 per share. Essex jumped $13.28, or 14.84 percent and was the top dollar gainer. Essex closed at $102.76.

Forest City tumbled $5.51, or 13.30 percent, and ended at $35.93. Forest City said it has expanded its credit facility to $750 million, a $150 million increase in its previous credit facility. Forest City was the top dollar and percentage loser.

Post Properties reported that its fourth quarter FFO rose to $22.7 million, or 51 cents per share, compared to FFO of $20.3 million, or 45 cents per share, in the year-earlier quarter. The results include a one-time gain of $1.2 million, or 3 cents per share, for a sale of land in Dallas. Analysts polled by Thomson Financial were expecting FFO of 47 cents per share; analysts typically do not count one-time gains or losses in their calculations. Post Properties ended the session at $41.98, an increase of $10.14, or 31.85 percent. PPS was the top percentage gainer.

AFT Index Gainers and Losers

$ Gainer — Essex Property Trust, Inc. — $13.28
$ Loser — Forest City Enterprises, Inc. — -$5.51

% Gainer — Post Properties, Inc. — 31.85%
% Loser — Forest City Enterprises, Inc. — -13.30%

Advancers 12
Decliners 2

Source: Trade Trends, Inc., (509) 327-1279