BRE’s 2008 Results
The closing price for BRE common shares at the end of 2008 was $27.98; only 90 days earlier the share price was about $50. In the face of a deteriorating economic climate, investors sold securities largely on the basis of liquidity to raise cash. The price erosion and volatility associated with our stock is not consistent with the company’s operating performance in 2008 and overshoots the weakness we anticipate for 2009. Before heading into our views for 2009 and beyond, our performance and highlights for 2008 are as follows:

• We met our operating objectives for the year. Funds from operations (FFO) were reported at $2.82 per share for 2008. Excluding the nonroutine income and expense items reported in 2007 and 2008, core FFO growth for the year was 6.5%, which met our estimates set at the start of the year. For the past three years, BRE has generated average annual FFO growth of 10%, one of the leading growth rates in the apartment sector.
• The company realized year-over-year income growth both from same-store operations and newly completed communities. For 2008, same-store revenue growth was 3.4% and net operating income (NOI) growth was 3.2%. As expected, for most of the year we enjoyed favorable operating conditions in San Francisco, Seattle and San Diego. A combination of job losses and the oversupply of single-family homes contributed to weak fundamentals in Orange County, Los Angeles, the Inland Empire, Sacramento and Phoenix. The fourth quarter represented an inflection point in this economic cycle, when the spike in job losses impacted operating conditions and results across all markets, shaping our views for 2009 and 2010.
• During the year, we completed unit deliveries and leasing at three development locations in California: (1) Renaissance at Uptown Orange, a 460-unit community in Orange; (2) Avenue 64, a 224-unit community located in Emeryville; and (3) The Stuart at Sierra Madre Villa, a 188-unit community in Pasadena. These properties represent more than $240 million of invested capital; all have achieved the first phase of economic stabilization – physical occupancy at or about 95%. The second phase of stabilization requires the elimination of rent concessions used during the leasing phase. Current economic conditions will not permit the elimination of concessions or allow market rents to be increased. Until market conditions firm, the communities will remain in this partially stabilized state – sufficient NOI to cover debt costs, but not yet fully accretive.
• At the end of 2008, we had five additional communities under construction, representing 1,367 units and an aggregate investment of approximately $457 million upon completion. Two of the properties – 5600 Wilshire in Los Angeles and Park Viridian in Anaheim – have commenced unit deliveries. We expect to complete construction and leasing at these communities during 2009. The two developments in Seattle – Taylor 28 in downtown Seattle and Belcarra in Bellevue, Washington – will deliver units during 2009; the initial leasing effort will run into 2010. The fifth property is located in Santa Clara, California, and started construction during the second half of 2008; unit deliveries are expected during 2010. The balance of our development pipeline comprises either land that we own or sites under our control through purchase option agreements. The pipeline consists of seven communities in Northern and Southern California and Seattle, with 2,075 units and an estimated future investment of approximately $872 million. As we announced previously, there will be no new construction starts during 2009.