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Avalon Bay Communities, Inc. (NYSE:AVB)
Q2 2009 Earnings Call
July 30, 2009 1:00 pm ET
John Christie – Director Investor Relations, Research
Bryce Blair – Chairman, Chief Executive Officer
Timothy Naughton - President
Leo Horey – VP Operations
Thomas Sargeant – Chief Financial Officer
Michelle Ko – Merrill Lynch
Robert Stevenson – Fox-Pitt Kelton
[David Brody – Citigroup]
Ian Hunter – Oppenheimer
Jonathan Habermann – Goldman Sachs
Alexander Goldfarb – Sandler O'Neill
[David Dai – ISI]
Richard Anderson – BMO Capital Markets
Mike Salinsky – RBC Capital Markets
Michael Levy – Macquarie Research
[Dustin Seigal – UBS]
[Andrew McCollough – Greenstreet Advisors]
Paula Poskin – Robert W. Baird
[Rich Fitzgerald – Castletine]
[Chris – Greenlight]
Welcome to the Avalon Bay Communities second quarter earnings conference call. (Operator Instructions) I would now like to introduce your host for today's conference call, Mr. John Christie, Director Investor Relations and Research.
John Christie
Welcome to Avalon Bay Communities second quarter 2009 conference call. Before we begin, please note that forward-looking statements may be made during this discussion. There are a variety of risks and uncertainties associated with forward-looking statements and actual results may differ materially. There is a discussion of these risks and uncertainties in yesterday afternoon's press release as well as in the company's Form 10-K and Form 10-Q filed with the SEC.
As usual, the press release does include an attachment with definitions of reconciliations of non-GAAP financial measures and other items which may be used in today's discussion. The attachment is available on our web site at www.Avalon Bay.com/earnings and we encourage you to refer to this information during your review of our operating results and financial performance.
And with that, I'll turn the call over the Bryce Blair, Chairman and CEO of Avalon Bay Communities for his remarks.
Bryce Blair
With me on the call today are Tim Naughton, our President, Leo Horey, our VP of Operations and Tom Sargeant our Chief Financial Officer. Tim and I will have some initial prepared remarks and then all four of us will be available to answer any questions you may have.
Last evening we reported EPS of $0.22 and FFO per share of $0.90. Our results this quarter were impacted by several non routine items, the most significant of which related to impairment and write offs of some development rights and related severance charges. Adjusting for non routine items, our operating FFO was $1.18 which equaled the mid point of the range that we provided in last quarter's outlook.
Clearly the economy remains weak and despite lots of talk about green shoots, there are many signs of continued stress. Job losses continue, losing an additional 1.3 million in the second quarter. Job losses for the full year are now expected to exceed five million. Unemployment stands at 9.5% and many expect it to approach 11% early next year.
Home inventories remain high at nine to ten months supply with as many as one third of the houses on the market being bank owned. While June sales of new homes were up over the prior month, a more relevant comparison is versus the same period last year. According to recently released census data, the volume of new home sales for June were down over 20% on a year over year basis.
While home prices may be stabilizing on a sequential monthly basis, they're still down significantly on a year over year basis. According to the Census Bureau data, June data shows median home prices down 12% while the [inaudible] data show a year over year decline of 17%.
The Commerce Board's consumer confidence index fell to 47 in July. A reading below 60 is generally considered to reflect recession like pessimism and this is the 15th month the index has been below 60. Business investment remains low. A recent report showed spending on business equipment and software during the first quarter was down almost 40% on a year over year basis.
So while there may be a green shoot here, overall we're still losing jobs, and unemployment is rising. The housing market remains very weak and consumer confidence and business investment remains very low.
Given the continued weakness in the economy, it's no surprise that we continue to experience deteriorating apartment fundamentals which will continue to put downward pressure on rental rates for the balance of this year and 2010.
So what actions are we taking to respond to the near term challenges while ensuring that we're well positioned for future opportunities? I want to share with you some thoughts in three areas of our business; operations, development and G&A, and I'll start with operations.
While the operating results for the quarter were as expected, it is clear that the rate of revenue decline will accelerate in the second half of the year as the toll from the cumulative job losses rolls through the portfolio. Nonetheless, we believe we are maximizing NOI in these difficult economic conditions by carefully managing occupancy based on individual sub market conditions, and by minimizing expenses through the re-negotiation of service agreements and aggressively pursuing tax appeals where warranted.
Despite this market weakness, which is expected to carry over into 2010, according to Axiom Metrics, our markets are expected to show the strongest revenue performance of any apartment REIT by 2011.
In the second quarter report, Avalon Bay is ranked number one or number two in terms of projected revenue performance for the 2011 to 2013 time period. I think this is important as we're often questioned about our high entry strategy and whether we would consider some of the higher growth sunbelt markets.
Our commitment to our supply constrained markets remains strong as our experience and third-party forecasts continue to show long term performance for those companies focused on supply constrained markets.
Turning to development, over the years we have created significant value from our development activities. Today we're not. As rents have fallen and Cap rates have risen, many development deals simply don't make sense today. We continue to evaluate our development pipeline and this quarter we made the decision to write off or impair three development rights.
Including the reductions at the end of last year, we have now reduced the size of our development right pipeline by almost half, writing off or impairing 20 development rights. I think we've acted prudently to reduce the size of our pipeline, yet we remain committed to development as a core component of our value creation strategy.
We continue to have the largest pipeline and the most experienced development and construction executives in the sector. These are assets that while out of favor today, will be significant sources of future growth.
And finally, regarding G&A, given the current economic climate and our reduced development activity, we've taken the necessary steps to reduce our overhead costs. At the end of last year, we announced some overhead reductions and in last evening's press release we announced further reductions in overhead, and a related $2 million severance charge.
Adjustments such as these are never easy, yet we believe they are the appropriate response to the current market realities, and while we've made some organizational reductions, we have preserved the core productive capacity to pursue growth opportunities as they emerge.
I'll now turn it over to Tim who will provide an update on investment activity and regional market performance.
Timothy Naughton
I'll focus my remarks on three areas. First I'll provide some color on apartment market conditions and portfolio performance. Second, I'll discuss what we're seeing in the transaction market where activity has increased as of late, and finally, I'll provide some additional perspective on how we're thinking about the development platform given the current conditions.
So far in 2009, apartment market conditions and portfolio performance has certainly felt the impact of the deteriorating job market we've experienced since Q4 of last year. In fact, any benefit in net apartment demand that we've seen over the last two to three years, due to declining home ownership is now overshadowed by the bleak employment picture.
We're seeing significant household consolidation, particularly in the younger renter oriented age where the unemployment rate has risen faster than the general population. This has translated into lower traffic and higher turnover in our portfolio which in turn has put pressure on rental rates as year over year new move in and renewal rates turn negative in the same store portfolio for the first time.
While demand is likely to stay weak for the near term, supply should continue to fall across our markets. Total net new additions to supply after taking into account units removed from service due to obsolescence or obstruction will approach zero by the end of 2010 and be at levels not seen in decades.
Given capital market conditions, and projected returns on new developments, new deliveries should stay in check through at least 2012 which bodes well for market conditions once economic recovery takes hold and the job picture begins to improve.
Regionally, the west coast is showing the most pressure as both Northern and Southern California have experienced significant job losses to date, and are projected to lose about 8% of their job base by 2010. On the for sale side, the entire State of California is undergoing a significant and well publicized housing correction with pricing down by 30% to 40% over the last year alone, and half of the sales occurring via foreclosure and short sales.
On the rental side, Northern California is weakening the most of all our regions with same store revenues down sequentially from Q1 to Q2 by about 3.5% and effective rents rolling down year over year by more than 10%.
Southern California, which started to decline earlier than other regions still remains but experienced more modest erosion sequentially than either Northern California or Seattle. Of the Southern California markets, San Diego is projected to recover first with little supply on the horizon.
In Seattle the employment outlook is better, however supply is a concern and new deliveries there are projected to be the highest as a percentage of inventory than any of our markets across the country.
On the east coast, the portfolio is holding up better led by D.C. and followed by Boston. D.C. is obviously benefiting from increased government expenditures while Boston is benefiting from its exposure to the education and health care sectors, two parts of the economy still growing.
New York and Northern New Jersey are experiencing pressure on the rental rate side, but occupancies have held up reasonably well despite the number of financial service jobs lost in those markets.
So overall, apartment conditions are weak and should remain challenging through 2009 and into 2010. All parts of our portfolio are being impacted by weaker economic conditions than originally projected.
For stabilized portfolio, we've reduced our projections for same store revenue to decline from our original outlook by about 1.5%. In addition, on new development, rental rates are trailing pro forma putting pressure on yields that will continue for the balance of the year as a response to the declining market conditions.
I want to shift now to the transaction market where we have started to see some pick up in activity. After essentially shutting down for two to three quarters, the transaction market has started to show some signs of life. In most cases, deals are being brought to market by partnerships or institutions that are looking to bolster liquidity or lower their exposure to real estate.
Given the presence of the GSE's, we continue to provide significant liquidity on the debt side. Real estate owners are viewing apartments as a safe trade, where the asset class where transactional execution is most probable and therefore the most reliable way to raise liquidity and/or reduce real estate exposure through asset sales.
Much of what is being brought to market is of higher quality, often core product in many of the best long term performing markets which in a seller's mind, further reduces transaction risk. In addition, most assets are smaller in size, widening the buyer pool and potentially appealing to buyers who either aren't ready to make big bets or the more entrepreneurial private investors who have practical limits on what they can buy.
Distressed transactions are rare as most sellers to date are consciously choosing to sell rather than being forced to sell. Most truly distressed assets such as failed condo deals if brought to market, have not traded as most owners of these assets have opted to restructure rather than sell it with what they view bottom of cycle pricing.
The number of bidders varies by opportunity, but often sellers receiving more than ten offers from qualified buyers. In fact, two dispositions that we have priced so far this year, we received 12 offers on one transaction and 25 on the other. Despite the number of qualified bids, the market remains somewhat fragile as oftentimes it takes moving through two to three buyers before a transaction is completed.
Although activity has increased, pricing is quite variable with wide spreads in the range of bidding which is what you might expect during the early parts of the price discovery process. In our markets, it appears that assets are trading at cap rates ranging from the low to mid 6% to low 7% range or roughly 6.5% to 7%.
Given the declining NOI environment however, it's probably more helpful to talk about IRR's. Based upon our estimate of cash flow growth for an investment horizon, assets are trading at projected unlevered IRR's of 9% to 10% and levered IRR's in the mid teens. Asset values are off by about 25% to 30% from their peak which is fairly close to tracking trends on the single family side. So while we're early in the valuation process, liquidity and confidence is starting to creep back into the transaction market.
So how does this affect our transaction activity? We began the year with modest expectations to sell around $150 million without really having much confidence about the state of the market. We're now marketing four communities and have selected buyers on two properties.
Based upon market reception, we expect that we may sell a bit more than originally planned and have increased the mid point of our outlook for dispositions by $100 million to $250 million which is about two-thirds of what we've averaged over the last few years.
Our motivation to sell assets at this point in the cycle is driven by the portfolio management objectives as well as our view that dispositions is a source of liquidity that is both balance sheet neutral and reasonably priced compared to other alternatives. In a sense, asset sales are another way to tap the most cost effective form of capital right now in the marketplace, that being GSE debt without increasing leverage.
Lastly, I'd like to expand on Bryce's remarks about how we're thinking about new development. As Bryce mentioned, it is difficult to make new development underwrite with yields deteriorating and cap rates rising by about 175 to 200 basis points.
Our existing development community portfolio is seeing yields erode to sub 6% which is clearly diluted today, and we've not started any new development in 2009.
Given the combination of land values, construction costs and operating fundamentals, we've chosen to abandon a number of opportunities in our development portfolio. As you recall, at the end of last year, we abandoned 14 deals resulting in impairments, abandoned pursuit costs and related severance.
This past quarter we've completed another comprehensive review of our development portfolio and have determined that there are three additional deals that are not probable and as a result, we've recognized additional impairments, abandoned pursuit costs and severance of just over $20 million.
So while development is challenging today, for those of you who have followed or invested in Avalon Bay for a number of years, you know that it has been a great source of value creation for much of our existence as a public company, as Bryce referred to in his remarks.
It has allowed us to build one of the best portfolios in the sector. It's been a unique competitive advantage admittedly had little value today. Having said that, we believe that the economic recovery combined with the elimination of many merchant builders which should continue to contribute to historically low supply will result in many compelling opportunities for us in the future and that we need to be positioned to take advantage of this.
Some of these opportunities may simply be developing from our remaining development right pipeline, much of which is being re-planned and in some cases, where the land is optioned, repriced.
In addition to these deals, we believe that more opportunities will emerge often on entitled land owned by financial institutions or equity partners that need to be re-entitled or re-planned for more practical and economic programs.
With respect to new activity over the next year or so, much of the focus will be on securing low cost land options. However, we believe that there may be opportunities to take advantage of falling construction prices and start construction on a few deals as well. Time for them to deliver and what is projected could be a better offering environment in late 2011 and 2012.
Overall, we believe it is critical to maintain the core productive capacity of our development and constructions groups while responding to the reality from the marketplace. We've written some deals off, reduced our overall pipeline and cut back overhead. We've also made a conscious decision to hold on to other deals, re-work them to be better positioned when an economic recovery takes hold.
Clearly a single approach doesn't fit every deal or every part of the cycle. We recognize that transition points in the real estate cycle requires bifocal vision, the ability to see what's right in front of you and react to it while not losing sight of what opportunities may emerge on the horizon and not stripping the organization's capability to respond to them.
Our view on development probably embodies this notion more than anything we do, so I thought it would be helpful to give you a little more perspective on our thoughts and approach to this part of our business.
Now I'd like to turn it back to Bryce for some summary remarks.
Bryce Blair
As we sit here at mid year it's clear that the magnitude and duration of this recession will be deeper and longer than most expected at the beginning of the year. Job loss estimates for the year have increased from approximately three million at the beginning of the year to over five million today with sustained job growth not expected until the second half of next year.
The weaker than expected economic environment has resulted in some revisions to the previous financial outlook that we provided in February. While we provided a road map outlining these revisions in last evening's press release, let me highlight a few of the changes.
First, as you know, changes in revenue are highly correlated to changes in employment. The significantly larger than expected year to date job losses will negatively impact our portfolio in the second half of the year and into 2010. As a result, we expect revenue declines for the year between 3.5% and 4.5% as compared to about 2.5% in our original outlook that we provided in February.
Second, we expect to increase our disposition activity to approximately $250 million which is an increase of $100 million from our original outlook. Extending dispositions will have a nominal earnings impact due to the timing of the planned sales but they could result in a special dividend.
Third, the reduction in G&A is in large part offset by a reduction in capitalized interest. And finally, our reduction in planned development activity resulted in a non cash impairment and write off for a total of $0.28 a share.
In total, the first three changes resulted in expected operation FFO at the mid point of our range of approximately $4.50 which is a$0.15 decline from the mid point of our February outlook. When factoring in the non cash impairment and write offs, we expect our FFO per share for the full year to fall within a range of $4.15 to $4.30.
Downturns are inevitable and each one is unique. Our executive team has worked together for almost 20 years and we've managed our business through a number of down turns. We managed through the real estate driven recession of the early 90's which in large part led to the modern REIT era as private companies embrace the public equity markets.
We managed through the tech led recession of '01 to '03. While the economic contraction then was not as severe nationally as the current downturn, the pain was very significant in Avalon Bay's markets given our heavy concentration of tech and financial services jobs.
Also during the period the housing market remained quite strong which negatively affected rental demand, particularly at the higher income levels.
This time, the economic contraction is not only more severe, it's also more evenly distributed. Virtually no industry and no geographic market has been spared. The capital markets are fragile and the housing market is going through a fundamental reset in terms of pricing and volume.
In each of the past downturns we had to make some difficult choices in terms of how to respond to the challenges and opportunities, and in each case, I believe we emerged an even stronger company with an enhanced competitive position, and I think that will be particularly true this time.
Our markets are expected to be top performers as the economy improves. Our development organization and pipeline will be a key source of future value creation. We've enhanced our acquisition redevelopment platform through the creation of our fund business, and our balance sheet and dividend coverage remain among the strongest in the sector.
With that operator, we'll be glad to take any questions.
Question-and-Answer Session
(Operator Instructions) Your first question comes from Michelle Ko – Merrill Lynch.
Michelle Ko – Merrill Lynch
In terms of your lower revenue and NOI expectations for the year, can you tell us which markets in particular you expect the most weakness?
Leo Horey
I'll break it down generally into three different areas. The most favorable areas will be in Washington D.C. and in Boston, kind of consistent with Tim's comments. They will be negative but just marginally negative during the second half of the year.
Then moving to the New York metropolitan area, I expect those to be at the average for the back half of the year and then the most challenged markets, also as Tim's comments related will come from the west coast markets, Seattle, Northern California and from Southern California all of which will be above the average that will occur in the back half of the year to get to our guidance.
Michelle Ko – Merrill Lynch
Can you give us more color New York City and Seattle for the quarter? Rental revenues were higher than we had anticipated so I was just wondering if you could give us a little color of what's going on in those markets.
Leo Horey
In Seattle, basically what's going on there as Tim alluded, the rate of job losses is somewhat abating, but there still is quite a bit of supply coming in that market. To break it down, I would tell you that the northern suburbs up near Everett and Bothell are the most challenged areas. I'd also tell you that the Bellevue area, because of the supply and the amount of supply is challenged. The best areas in the Seattle market are downtown followed by Redmond.
On the New York side, in our portfolio, just to remind you, our same store portfolio is not Manhattan assets. It's assets from Long Island City, Westchester and Rockland county, so when you look at the results, you have to keep that in mind.
But to speak more broadly about the New York Metropolitan area, we do have stable assets in New York City. Those assets occupancies are exceeding 97% and while as we've discussed the last couple of quarters, the rents are absolutely down in the 15% plus range, we are seeing some stability there where concessions have been offered are either stable or coming down a little bit.
So New York City or Manhattan specifically, is pretty stable.
Moving to the other markets around the city, Stanford is more challenged where southern Fairfield County, and that's really for two reasons. One, because they have a bunch of financial services jobs, but secondly, we are seeing people with reduced rates in New York City move back into the city. A similar situation is occurring along the Jersey waterfront. So that's what's going on in the New York Area.
Bryce Blair
One other comment, I think part of your question about New York is a question we've had for many quarters where many people have expected New York to fall off the proverbial cliff in terms of performance, and certainly it is weak, as Leo has commented.
But when you look on a relative basis across the nation and across our other markets, New York is expected to lose about 2.5% of its jobs for calendar year '09 compared to about 4% job loss nationally. And most of our California markets are seeing job losses 4% to in excess of 5%.
So I think we all tend to get a little too myopic on New York thinking about the financial services, the impact of the financial services sector on New York, which is a significant component of that economy, but it's still not the key driver.
We looked at some stuff earlier, you look at FIREA jobs, finance, insurance and real estate, you have comprised about 6% of jobs nationally. In our portfolio it's about 9% of our residents' employment, where they're employed, and in New York it's about 18%. So obviously significantly higher than the national average, but it's still obviously the majority of our residents are not employed in that sector.
So to just offer some perspective because we follow it very carefully because we're concerned about it and we know you all are as well.
Michelle Ko – Merrill Lynch
I was wondering if you could us more color on renewals, what the spread and rates have been between renewals and leases. Some of your peers are seeing spreads of 800 basis points, and I was wondering historically, what's been the widest spread that you've seen?
Leo Horey
In the most recent quarter, we've seen new move in rents stable at about 12% down. On the renewal side, we've actually seen them decline over the past quarter and within the quarter. For the entire quarter they were about .6% less with each renewal.
So that spread is really about 12% to 13%. Historically if you went back a couple of years, the spread has really been more like 700 basis points or 7% and while we are seeing new move in rents stabilize, we are seeing the renewals, more pressure on renewals and they're coming more into alignment.
The blended number, just so you know between the renewals and the new move ins for the last quarter was about 7.5% down. So when you take the 12% and minus one effectively, based on the number of renewals and the number of renewals, it gets to a negative 7.5%.
Michelle Ko – Merrill Lynch
Negative 700 basis points you said was historical, was that the widest range, or is that just on average.
Leo Horey
That was more typical.
Michelle Ko – Merrill Lynch
What has been the widest in the past?
Leo Horey
I just don't have that figure at hand.
Michelle Ko – Merrill Lynch
And what kinds of concessions are you giving on renewals?
Leo Horey
Almost in all cases we don't use concessions on renewals. We use just effective rents. That's not to say it couldn't happen in select circumstances, but in general and as we talked about last quarter, we really move more to an effective rent both with new leases and renewals.
Your next question comes from Robert Stevenson – Fox-Pitt Kelton.
Robert Stevenson – Fox-Pitt Kelton
Can you talk about on the development side these days where you are versus your expectations on lease up on some of the more difficult areas? Obviously California, given the comments there would expect to be challenging from a lease up perspective. Are you needing the numbers but having to give a lot on rental rates? Can you help me understand where you are on the give and take there?
Leo Horey
Just so you know, right now we have 11 communities actively in lease up. For the second quarter, we averaged about 23 net leases per month per community. To give you some perspective, the in the fourth quarter of '08, we averaged about 16 lease per month per community and in the first quarter we averaged about 17.
I will tell you from an absorption perspective, we're meeting our expectations. Clearly however, as Tim's comments alluded, we've had to adjust rate to get there, so you understand we are closing about 30% of the traffic that comes through.
And to give you a perspective of where things are going well as opposed to where things are more challenged, the lease ups that are in the market that we've already talked about that are under pressure, those being the west coast or around the New York metropolitan area are the lease ups that are most challenged.
The lease ups that are in Boston, or the lease ups that are lower priced points like in Charles Pond, are performing better.
Robert Stevenson – Fox-Pitt Kelton
If I think back to the last recession that recession there was a lot more supply that was in the pipeline at the time that the market turned down so there was a very rapid hitting of development lease ups spilling over and affecting stabilizes communities. Have you started to see that as of yet or is really still very segmented development, lots of concessions and difficult time leasing up but not really moving in like Northern California and New York areas to see the concession from development really affecting the stabilized communities?
Leo Horey
It just depends on where the communities are located. If there's a new lease up, it's immediately adjacent to our stabilized communities, it is having some impact. Just so you we're not using a lot of concessions so I wouldn't look to concessions. We're leasing at effective rents.
In any set of circumstances, when new supply comes into the market, especially when demand has been so challenged by the economy, it causes some impact to the surrounding communities.
Timothy Naughton
As you see on our Attachment A, the effective leases particularly on the California community came down pretty significantly this past quarter. I think they're all down double digits just from Q1 between 10% to 15% or so. We clearly haven't seen that kind of degradation in market rents on the stabilized portfolio.
So I think it's probably hurting the development portfolio more than the stabilized portfolio, probably for some obvious reasons. They tend to be higher price points and the availability, the increase in availability is dramatic when you're delivering in batches of floors at one time into a market where demand is relatively thin.
So I think it's probably affected the overall market, but clearly the prices are more impacted on the development portfolio.
Robert Stevenson – Fox-Pitt Kelton
Where was bad debt during the quarter and where was that versus the last few quarters?
Leo Horey
Bad debt for the quarter was about 1.25%. Just to give you the context, in Q4 '08 it was about .08% and in Q1 '09 it was about .9% and one year ago, so the same quarter a year ago it was about .7%.
Your next question comes from [David Brody – Citigroup]
[David Brody – Citigroup]
Michael Bilerman is here with me as well. On the development pipeline, the expected yield continues to tick down a little bit every quarter. Do you have a sense of where those could level off given what you're seeing in your operating portfolio and where the most recent rent levels have been in those developments?
Timothy Naughton
As you mentioned, the average yield did come down by 20 basis points driven largely by what we're seeing in the California markets. Just to remind everyone, the current yields to reflect, basically the current leases in place for those developments.
They have been coming down so I would say there is risk but the average yield on the development portfolio will continue to trend down just based upon what we're projecting to happen just even within a stabilized portfolio.
In terms of where that might go, frankly it's unclear what's happening within those California communities.
[David Brody – Citigroup]
I also noticed that none of your stabilization or delivery dates have really changed, so can we infer that you're more willing to sacrifice on the rent side than push out the stabilization dates in terms of strategy?
Timothy Naughton
That's generally the case. As we have mentioned, we average about 23 leases per community per month and that would be pretty typical. When you have an average community size of about 300, you're going to want to get it leased up in about a year's time, so you've got to price absorb within that year or you'll just be competing with yourself.
[David Brody – Citigroup]
Is there any way for you to quantify your development spend expectations for 2010 or provide a range?
Thomas Sargeant
2010 is kind of an open book right now in terms of we haven't released any outlook for 2010. What we did provide you on an attachment 10 is the current amount that remains to be funded from what's under development and that number as of the second quarter for what's under construction is about $395 million.
That's second quarter and you can see it falling off to the point where in the fourth quarter there's only $169 million to fund in 2010 with respect to development and we have some re-development you can see below that.
We haven't decided what we will start if anything the rest of the year. If we have any starts, they would likely be modest, but that's the best indicator we can give you for 2010 right now. Fairly modest level of development spend.
[David Brody – Citigroup]
Michael Bilerman speaking. Tim, you had talked a little bit about the potential to maybe start development if construction prices come down. You sort of have this picture towards '11 and '12 that looked a little bit better as markets start to recover that you may get tempted to put the shovel in the ground and what we're trying to figure out is how do you underwrite the expected return that you need baking in a certain level of risk that if things and rents don't drive to those levels, that we're not back in the same spot.
Thomas Sargeant
It clearly wouldn't be every market that we would consider starting something in. Frankly more likely to be suburban northeastern communities that are a little bit more protected. But at the end of the day it's going upon our projections of the IRR's taking into account the direction and cash flows over a reasonable investment horizon of seven to ten years.
So if you start something in 2010 and you expect rents to trend down for another year, we would incorporate that into our anticipated cash flows and it would just need to be an adequate projected return in the form of an IRR to justify the investment and the risk.
[David Brody – Citigroup]
Do you have a sense of if the current projects today are financed which doesn't take into account the projects that are not yet in lease up, that if you were to do something, that your initial target would be and eighth?
Timothy Naughton
I think that's about right. It would need to be in the neighborhood of 8% in order to get to an IRR that justifies the investment.
[David Brody – Citigroup]
And that would be on today's rents or what your forecast is in the future in terms of rent levels?
Timothy Naughton
It would be on today's rents. It might potentially be a little less that. Again it depends on your view of the market over the next year or two. If you're assuming a more robust recovery in a market, that obviously would factor into what you underwrite from a current yield standpoint. But again, I just really point you back to the IRR's and I know we haven't typically disclosed projected IRR's, we've just tried to disclose based upon what we know which is current rents. It would be projected IRR that would really drive a lot of that investment decision.
[David Brody – Citigroup]
I can't remember if it was Tim or Bryce, you talked about either last quarter or a couple of quarters ago that while you're disappointed in terms of the yields on the development given the dramatic decline in rents, that you build these things once and you lease them every year and that a short term hit could be a long term positive.
As you look at the stuff that got delivered last year, you had about $1.1 billion of development. This year you have about $850 million, and if you peel back to 2007 you've got $500 million. Where are those current yields today if you took the composite of the last two and a half years of completed development, about $2.5 billion? Where is that current yield today?
Timothy Naughton
I don't have those numbers in front of me. They would be north of where we're projecting the existing basket just based upon most of them have cost basis that were less given where construction pricing was going at the time. But I suspect it's in the sixes, again not clearly diluted or accretive from a perspective based upon prevailing cap rates as it relates to the years you mentioned, which is going back to '08 and '07
[David Brody – Citigroup]
I'm wondering from a high level if you look at the multi-family space, do you think there's any danger in an over alliance on the GSE? The GSE capital is obviously under writing current values and providing some liquidity to the market. Do you foresee a danger in this almost 100% market share?
Bryce Blair
I can answer from two perspectives; one from an industry perspective and from an Avalon Bay perspective. From an industry perspective, clearly the agencies have provided an important source of liquidity at a time when it was certainly desperately needed and has been a stabilizer in terms of asset values for the apartment sector.
So it's been a good thing and it is one of the only properly functioning areas of the credit markets so I think that extends even beyond the apartment sector to the extent that the apartment sector has a source of liquidity. That means we're not tapping other sources of liquidity to help other sectors needs.
So I think it's been good for the apartment sector. I think it's been good for real estate in general and while there has been a fair amount of discussion a few years ago about reigning in the agencies, a lot of that discussion has dramatically quieted down at a period where the administration is desperately trying to get capital moving, not constrain it.
In terms of from Avalon Bay's perspective as you all know we have been and remain committed to being an unsecured borrower. That doesn't mean that we don't take on secured debt on occasion, and this happens to be certainly a time where it's absolutely the right thing to do, but to the extent that the GSE's did go away, that would certainly be much more problematic for the private companies who don't have access to the unsecured market or public companies who don't have a corporate rating.
So we remain to one of our principals from the day we went public which is to have a variety of sources of capital, debt and equity and not over reliant on any one particular component. So a long winded way of saying GSE's have been good for Avalon Bay, apartments, real estate in general.
I personally don't think there's a huge danger of them going away or being severely constrained any time soon. But our business model is not predicated on them being a significant source of ongoing capital for us.
Your next question comes from Ian Hunter – Oppenheimer.
Ian Hunter – Oppenheimer
Can you provide a little more color on the acquisition that the company's fund two made during the quarter and what is the status of the fund two balance sheet?
Timothy Naughton
The acquisition was a community built in the mid 90's in downtown Bellevue. It's actually adjacent to an existing community that we developed a number of years ago so the sub market, we felt like we had a fair bit of insight into and we like this particular community because it was an interesting price point relative to what else is available right now within the Bellevue market.
The purchase price was around $150,000 per unit and cap rate around the 7% range based upon the next 12 months which would have had rents trending down.
Ian Hunter – Oppenheimer
What about other opportunities that you're seeing for the company's fund two?
Timothy Naughton
We are evaluating a number of other deals but I would say we've been a bit selective in terms of the ones we've taken a little bit more of a rifle shot approach, particularly early in the fund investment period. We think pricing is relatively rational today based upon the 25% to 30% movement in asset values and just the return thresholds that seem to be clearing the market today.
So we intent to continue to be active, obviously not in every market. We are focusing on a few markets in particular where we think valuations may be more attractive relative to long term potential.
Ian Hunter – Oppenheimer
Do you have an objective for an amount to invest for the rest of the year with that fund?
Timothy Naughton
Not to say, no. We're being a little bit more opportunity driven at the moment. While there's still some life in the transaction market, what you're seeing is a number of sellers pulling back their offerings when they're not willing to take up the kind of values and cap rates that are on the market right now. We're not trying to force a certain amount of dollars out the door between now and the end of the year.
Your next question comes from Jonathan Habermann – Goldman Sachs.
Jonathan Habermann – Goldman Sachs
You talked about the spreads on new leases and renewals. Can you comment a bit about the pricing for class A apartments versus the D's and where the gap is today versus where it's been either a year ago or historically?
Leo Horey
With respect to A's and B's, as we discussed in the past, we typically find that B's do outperform A's in the early part of the cycle. We've also talked about the fact that our new product has been somewhat under more pressure.
To quantify it, I don't know, I would probably say on the revenue side, maybe 50 to 75 basis points, something like that.
Jonathan Habermann – Goldman Sachs
But in terms of the gap today versus where you've seen it historically, do you see it much wider, i.e., rents went up more significantly in the last couple of years?
Leo Horey
I wouldn't say we see it significantly higher. I would tell you as we get further into the cycle it collapses and when things get better, I think A's will outperform B's as they have in the past.
Jonathan Habermann – Goldman Sachs
And turning to guidance, I guess based on your Q3 forecast and then going down to Q4, it looks like you're at $0.90, $1.05 run rate. Can you give us some specific there? Is it truly NOI? Is it development drag? Just sort of help us think about as we switch to 2010.
Thomas Sargeant
We gave you a road map of the changes in the outlook for 2009 and the components that break that out so I don't know that I could really add much to answer your question other than to point you to that road map that we provided.
And a lot of that obviously deals with NOI declines. The $0.16 NOI and others. Capitalized interest is going to hit us by about $0.04 per share and obviously the impairments, one time charges make up the majority of the revised outlook. And that's on the fourth page of the press release.
Jonathan Habermann – Goldman Sachs
You don't see the development drag growing significantly into next year?
Thomas Sargeant
I don't know how you define development drag. We will lease up these assets in the normal course. We may have rent concessions that would be more than we'd like to have during a lease up but then those will stabilize and start growing in 2011. So it's hard to speak to a development drag.
As you wind down your development pipeline, there actually is in terms of FFO changes somewhat of a positive because you don't have the negative lease up deficits that you would otherwise have as you ramp up development. So it actually is a little counter intuitive.
You're likely to see less impact on FFO per share from the development because we're reducing the amount of development activity, not picking it up.
Jonathan Habermann – Goldman Sachs
You mentioned being proactive on taxes. Can you talk a little bit about your property operating expenses and there is a jump year over year and perhaps some opportunity toward the later half of the year?
Leo Horey
For the quarter, basically what drove the expenses was bad debt and we talked about that, and then some maintenance related expenses. In this quarter, it was offset. Those increases were offset by insurance and interest in property taxes. But the property tax issue was one community where we received a refund that exceeded our expectations.
For the year, I expect property taxes to actually be one of the factors that is driving up our expenses. When we talked about property taxes in the past, we are very vigilant about fighting property taxes and appealing the assessments that we receive. Unfortunately that process frequently takes at least a year and pushes any success into subsequent years.
So I think any relief that we'll see based on market conditions are more likely to manifest themselves in 2010 than 2009. For the full year, I still expect property taxes and bad debt to be driving expenses and also landscaping. That may seem unique, but we actually had a multi year agreement with a vendor that we had to replace, and in replacing that it drove expenses up disproportionately.
We still are achieving success on the marketing side by focusing and being diligent about our marketing expenses. That serves to offset some of the growth as does insurance this year.
Jonathan Habermann – Goldman Sachs
Can you comment on dispositions? I know you raised the target by $100 million but can you talk about which markets and obviously price sensitivity?
Timothy Naughton
It's a bit of a mix of markets. We're looking at selling some assets in the northeast and the west coast and there's been a pretty strong reception to the west coast assets despite some of the weakness we've seen in those markets.
In terms of the range of pricing, I mentioned in my remarks, we expect that to close over time. It's just that a lot of these deals go to settlement and pricing just becomes more transparent in the market place. But right now you will see some people bidding and their pricing may be 15% to 20% off where the prevailing price is.
But what we are seeing, if you're getting 11 to 15 bids on assets, there tends to be four or five prices that are clumped together towards the top. So there is pricing support at the numbers for which these things are trading, but there's till a pretty wide gap from top to bottom.
Jonathan Habermann – Goldman Sachs
You mentioned sales as an attractive source of funding. Where to you think unsecured would be issued today?
Timothy Naughton
Obviously sales are going to have a different impact on the balance sheet with respect to they're leverage neutral.
Thomas Sargeant
The unsecured markets continue to cover and right now a 10 year offering could be probably achieved 7% to 7.25%. I'm probably on the lower end of that range compared to GSE financing which is a pretty good market data point with another company in the 5.6%, probably high five range. So you're seeing about 125 basis points to 150 basis points difference between the two markets.
Your next question comes from Alexander Goldfarb – Sandler O'Neill.
Alexander Goldfarb – Sandler O'Neill
Just want to go to the impairments for a second and understand the parameters, the filters that you use when you took impairments in the fourth quarter and then now. What's changed in your view of those developments that caused you to mark them down now versus before? Is it tighter underwriting? Is it rents? What's changed?
Bryce Blair
Certainly as we mentioned in our remarks, the economy is worse than we'd anticipated at the beginning of the year, and with those two particular deals that were impaired, different sets of circumstances. One was in a sub market and a market that's eroded more dramatically than we'd anticipated and therefore we just viewed the likelihood of being able to develop that deal economically was quite low. And that had changed in the last six to nine months.
And the other deal had frankly, there were both entitlement and market issues that again essentially resulted in our belief that development was probable in that particular case and therefore we needed to take the impairment.
Alexander Goldfarb – Sandler O'Neill
But the factors that drove those decisions are you seeing those continue to decline such that you may have concerns about further impairment or has the decline from the fourth quarter till now sort of moderated that you feel more comfortable with where you are as far as your development portfolio?
Bryce Blair
A lot of this turns on whether you think it's probable that the development will be economic at some point in the future so we do take into account our view of the future in terms of whether we think it's probable. To the extent it's probable; essentially you're not going to have an impairment situation.
Alexander Goldfarb – Sandler O'Neill
It sound like it may be leveling off. It's not continuing? I'm just trying to get a sense for you had some big write downs in the fourth quarter. You just had another batch six months later. I'm just trying to get a sense for the reasonableness that this may be behind us or there's continuing risk because the fundamentals are continuing to decline at such a rate that it's possible that this stuff continues in another six months.
Bryce Blair
I think it depends on the direction of the economy relative to expectations. To some extent, all land deals are sort of out of the money options right now and how far out the money they are is going to depend upon your belief of the opportunity down the road in that particular market.
We've done a pretty comprehensive assessment of our development portfolio and our view of the world today and how likely to shape over the next couple of years. These represent what we think represent low probability that we move forward.
Alexander Goldfarb – Sandler O'Neill
Jumping to interest coverage, in the first quarter it was 4.4 times and now in the second quarter its 2.9, but debt only went up by $200 million or $300 million. What was driving the jump on the interest coverage?
Thomas Sargeant
It's a non routine charge.
Alexander Goldfarb – Sandler O'Neill
They're included in there.
Thomas Sargeant
Alexander Goldfarb – Sandler O'Neill
The $2 million, the severance and the legal settlement, which line items, are those in?
Thomas Sargeant
G&A and its all set.
Alexander Goldfarb – Sandler O'Neill
So they're both in G&A.
Thomas Sargeant
Operator, before we take the next question, we do have a number of people still in the queue, so just out of respect to everybody try to limit your question and follow up to no more than 12. Seriously, if we could try to keep the question a little bit more brief so others can move through we'd appreciate it.
Your next question comes from [David Dai – ISI]
[David Dai – ISI]
I wanted to follow up on something that you brought up earlier which was the third party study that suggests a stronger recovery for your portfolio in 2011 through 2013. I wanted to ask you for your thoughts on that. Do you view that as supply driven, or do you also have a view that there's going to be stronger employment recovery in your markets and also that your price points?
Bryce Blair
The study that we referred to was Axion Metrics. I'm sure many of you are familiar with them, but there's a lot of people who obviously do projections and I'm sure you'll find some that have different projections.
I think what their study does point out is for us always to be reminded that it is not demand that drives revenue performance, it's the relationship between demand and supply, and that's been an underpinning of our strategy since the day we went public.
Tom commented in his comments, we're seeing a period where supply is virtually coming to a stop. When the markets return to demand growth, I think its fair to say that markets that we'll see get increase in supply first are not supply constrained markets.
So what their study does is look at those relationships and then to project forth changes in revenue. What they do, if you're familiar with the study, they look at the market concentration by REIT so they'll look at what our concentration is in X market, what varies in Y markets and then they roll up to get a revenue projections.
So I think it does pass the smell test if you will, and it does reflect a similar performance to when we came out of the '02, '03 recession where we saw strong revenue growth in our markets that was not primarily driven by job growth.
[David Dai – ISI]
In the IRR models that you discussed, what's your willingness to model a spike and then why during that time period?
Timothy Naughton
We often refer to a number of third party forecasts and then make judgments of our own based upon if we feel like we've got a different insight than perhaps the market forecasts might have. Most third party groups will forecast revenue growth by market for the three to five year period, so we'll generally look at it as best we can on third party forecasts, and then we'll look at some sensitivity cases particularly if we feel like we've got an insight into that market. So to the extent that they're forecasting a spike, we'll incorporate that.
Your next question comes from Richard Anderson – BMO Capital Markets.
Richard Anderson – BMO Capital Markets
On the special dividend, if you could tell me or give a sense of how close you are to a potential special dividend vis a vis your disposition program.
Thomas Sargeant
Dividend policy is something we review each year with the Board and we review that in February. We do keep ongoing dialogue with the Board on dividend policy. But we really haven't vetted with the Board a special dividend.
What we're trying to suggest is that if we expand our disposition program, and if it is successful, it will put upward pressure on dividend levels and could lead to another special dividend. So that's really what we're trying to suggest, is that if we're successful with this program, you may see another special dividend sometime between now and September 2010 which is when we file our tax return.
But nothing is set in stone and those discussions with the Board aren't that far along. But we just want to telegraph that there is pressure on dividends and it's because we've historically been very successful on our investment and operating strategy and we are in a nice tax position that requires us to distribute more not less.
Richard Anderson – BMO Capital Markets
But if you do what you have communicated to us at this point, that wouldn't require. You're not that close.
Thomas Sargeant
If we do what we said we'd do in terms of expanding the disposition activity, it would make a special dividend more likely than not.
Richard Anderson – BMO Capital Markets
How do you feel about stock for the special dividend? Has that been vetted with the Board?
Thomas Sargeant
Neither a dividend nor how we would pay it has been vetted, but as you know in the past we did have a special dividend and it was paid in stock, and we maintained our current dividend level which resulted in an actual dividend increase of 3.5% for 2009. So we've done it in the past and can't say we would do it again in the future. It depends on a lot of things, but we're comfortable going down that path because we've done it before.
Your next question comes from Mike Salinsky – RBC Capital Markets.
Mike Salinsky – RBC Capital Markets
Can you touch upon trends throughout the quarter, where you saw renewal rates, rent and rates on new leases drop as the quarter progressed and how July has played out so far relative to expectations?
Leo Horey
The new move in rents remained flat for the quarter so if you were to look at the figures for April, May and June, it was basically around 12% each of those months. On the renewal side, they started slightly positive and by June they had gone negative. So started positive by a little more than half a percent and in June they were negative by a little more than a percent which got us to that minus .6 number that I gave you earlier. But again, running those two together, they average to about 7.5% for the quarter.
I don't have statistics yet on July. The month is not closed out yet.
Mike Salinsky – RBC Capital Markets
Are there any projects remaining in the pre-development pipeline that have a sensitivity in terms of time or financing that would need to be started in the next six to 12 months. And also, just a clarification on the tax expense, the $3.2 million tax expense. Is that expected to occur in the fourth quarter?
Thomas Sargeant
The excise tax would be required if we did not have a special dividend, if we did not declare a special dividend in 2009 and therefore that would be accrued in the fourth quarter once we've determined that we're not going to accrue that special dividend. So that would hit in the fourth quarter as it did last year.
Timothy Naughton
I can't think of anything off the top of my head that has any performance obligation in that kind of time period. From time to time we have permits that expire, but for the most part we've been able to get those extended when we've needed to when we haven't' been ready to move forward because of economic or capital market considerations.
The only thing I could think of is maybe a land closing. I think we mentioned on the book of lands, there's still some additional land that essentially closed through a land lease structure that might get converted to fee in the next 12 months at the seller's option, but that's the only thing I can think of that would impact liquidity.
Your next question comes from Michael Levy – Macquarie Research.
Michael Levy – Macquarie Research
I was wondering if you could talk a bit about turn over during the quarter, whether it varied by markets and whether it was particularly weak or particularly better than you had thought in certain markets.
Leo Horey
Turn over for the quarter was at 64%. It was up 5%, same as the similar period for the previous year. That's about the rate at which it's increased over the last three or four quarters just to give you some perspective. We saw the biggest increases in turn over on a year over year basis in both of the California markets on the order of 10% higher, so in Northern California and Southern California, it was approximately 10% higher than it was in the previous period a year ago.
Interestingly, in the Pacific Northwest it was down just slightly.
Your next question comes from [Dustin Seigal – UBS]
[Dustin Seigal – UBS]
I'm trying to figure out a way to gauge the performance of the roughly 17,000 units that are not in the established same store pool. I know you talked a little bit about what was going on in Manhattan. Is there any way to give us a sense of what's going on?
Leo Horey
I would tell you that the other stabilized communities, because they are newer can be a little bit more volatile than the same store. We just don't have the same operating history. But in general their performance tracks the sub markets in which they are located. So a little more volatile, but we watch the performance and we expect the performance to be consistent with the same store portfolio. I think that's probably indication I can give you.
[Dustin Seigal – UBS]
So we shouldn't assume because they're new that there's more volatility in terms of the decision making of the tenants of those properties.
Leo Horey
I wouldn't say there's more volatility in the decision making. I would point you to the fact that we said that the upper end product which is typically the newer product is under a little more pressure.
Thomas Sargeant
You raise a good point and that is we have a large basket of assets that are not in the same store pool because we pull those out. They're either under redevelopment or if they're newly added, but don't have a comparable period to qualify them for same store basket, we reset that same store basket once per year and we pull assets out that are under redevelopment so that we are not buying NOI from new capital expended.
So we try to keep that basket clean. One thing we are looking at to try to get more of those assets as an indicator of performance is looking at if it's possible to change our basket quarterly. We haven't come to a conclusion yet because we have so many assets that are in that basket, we're trying to find a way to get more visibility to the investment community.
So stay tuned. If we can find a way to do that that's meaningful and relatively easy to administer, we're going to try to do that for you.
Your next question comes from [Andrew McCollough – Greenstreet Advisors]
[Andrew McCollough – Greenstreet Advisors]
On the impairment, what was the magnitude of the impairment versus book value and how does that break out between land option and pursuit costs?
Timothy Naughton
The impairment was on the land. It represented just under 50% of the book value of assets of roughly $20 million of impairment against $40 million book value.
[Andrew McCollough – Greenstreet Advisors]
On the dividend, you run a fairly conservative dividend policy and balance sheet policy overall. How comfortable are you with the dividend level once it starts getting close to your cash flow for CapEx.
Thomas Sargeant
A couple of comments on the dividend overall. If they exclude non routine items, our FFO coverage was about 1.3 times which is probably one of the strongest in the industry, certainly the strongest in the sector.
We went into the downturn with one of the strongest ever dividend coverage levels. We paid a special dividend this year. We actually increased the dividend levels by 3.5% in connection with those additional shares as I mentioned earlier.
If you look at the last downturn, we covered the dividend from recurring cash flow throughout the entire downturn. We never paid out more than we took in on a recurring cash basis. But during that period, we took some steps to enhance our ability to cover the dividend during the downturn.
What did we do? One, we expanded our use of tax exempt and floating rate debt knowing that there's a natural hedge between revenue declines and interest rate declines. We added the investment management platform and related fee stream that comes from that business. And we did diversify the portfolio to add more moderately priced product.
So as we went into this downturn, we're in a better position to cover our dividend from recurring cash flow and it's very difficult for us to model a downturn that would cause us to really have to rethink that dividend level.
Certainly if the downturn becomes more severe or more extended that anticipated, all bets are off, but for now, we're pretty comfortable with our current dividend level. As I've said before the expanded disposition program does put some upward pressure on dividends and there could be a special dividend, but I think you could expect that our dividend policy is going to remain fluid as we work through the impact of sales and as we work through the impact of the economy on our portfolio and as we review this with the Board over time.
I wanted to address to some extent what was different about this time and what we've done to make sure that we feel that we're comfortable with current dividend levels.
Your next question comes from Paula Poskin – Robert W. Baird.
Paula Poskin – Robert W. Baird
The severance charges were they most cash or non cash charges.
Thomas Sargeant
At this point they're non cash because they haven't been paid but they will result in cash. That's why we didn't designate them as non cash.
Paula Poskin – Robert W. Baird
What was the nature of the legal proceeds?
Thomas Sargeant
Those were legal settlements in connection with some previously disclosed legal actions that we were involved in with vendors, and those were net payments to Avalon Bay, just to make sure, they were cash in not cash out.
Paula Poskin – Robert W. Baird
I think you had said those offset one another essentially in the G&A line.
Thomas Sargeant
Paula Poskin – Robert W. Baird
What's the more normalized run rate for G&A going forward?
Thomas Sargeant
Let me just give you the three G&A lines. You've got G&A that you see an attachment to. Probably a good run rate for that would be about $6 million per quarter. RS overhead or property management, I think it's referred to as property management and other indirect operating expenses; probably $8 million is a pretty good run rate. And then investment management is about $1 million quarterly.
Your next question comes from [Rich Fitzgerald – Castletine]
[Rich Fitzgerald – Castletine]
With respect to your debt covenants, correct me if I'm wrong but the coverage and other metrics you provided in the earnings release, those are slightly different than the covenants that are part of your credit agreements right?
Thomas Sargeant
There's a lot of detail. There's two different set of covenants. One is for the unsecured notes and one is for the unsecured revolving credit facility. So yes they are different.
[Rich Fitzgerald – Castletine]
So the disclosure in the appendix of the earnings release is different than our legal covenants. I was just hoping to get a sense of to what extent are you close to any of those whether it's in the notes or the facility and which covenant it was, whether it was leverage or interest coverage.
Thomas Sargeant
We are very comfortable in all our covenants. The one covenant that is always the tightest is the debt to under appreciated book value, but even that covenant, we have a very strong position in that covenant as well.
Your next question comes from [Chris – Greenlight]
[Chris – Greenlight]
I wanted to go back to the dividend coverage point and maybe we can talk about maintenance CapEx going forward, but a year ago when you were running north of $1.25 per share, your dividend was about the same or maybe a little lower, and your guidance kind implies that you're leaving the year close to $1.00 per share of FFO and the dividend is $0.90, so the wriggle room is much less than before, and I appreciate that income is more diversified these days, but it seems that 2010 is similar to '09, what can you do there to help maintain that dividend and make sure that cash flow is in excess of the dividend payout.
Thomas Sargeant
You've done a bunch of rounding on these numbers. Adjusted for the non routines, we're at $1.18. Our dividend is $1.8725 per share, so that's a 1.3 coverage.
In terms of the things we can do, I've outlined the steps that we've already taken that take years to put in place. You're getting your floating rate debt up, getting your investment management platform in place and diversifying your portfolio. The other things that we pursue is making sure that we control our expense growth.
The markets give us whatever revenue we can get from the markets and we control our overhead. The other component to being able to cover your dividend is making sure that you are executing in the capital markets environment and making sure that every layers of capital that you add to the capital structure is cost effective.
I think we're doing all of those things and I think we're doing them pretty well. But there's nothing certain in life and we think that we're as well positioned as anybody in terms of our dividend and I think if you're looking at the overall dividend coverage from Avalon Bay, I think you'd find that we're probably at the top of the sector.
Your next question comes from [David Brody – Citigroup]
[David Brody – Citigroup]
On the 17,500 [inaudible] communities, can you break that out between recent develop, redevelopment and then what's in your bucket.
Timothy Naughton
We don't have that breakout. If you wanted to follow up, I'm sure John could provide that to you offline.
[David Brody – Citigroup]
You're effectively taking out the '08 developments or you go back to '07 just as we try to think about it.
Bryce Blair
You go back to the point where at the beginning of 1/1 2008 the asset was stabilized so that your 1/1 2009 comparison is accurate. So it's whatever was stabilized on new development as of 1/1 2008.
[David Brody – Citigroup]
So it would have been some of the '07 development.
Bryce Blair
Had not stabilized as of 1/1 2008.
There are no further questions. I'd like to turn the call back over to you.
Bryce Blair
Thank you all for your interest. We'll sign off at this point.
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text:
Will Cornish is the No. 1 triathlete in the country in the USA Triathalon Junior Elite national rankings, but few of his Naperville friends know he holds the title.
"I never really talked about it. They don't know how hard I train," Cornish, 18, said of his daily workouts of swimming, biking or running or any combination of the three.
Cornish will be competing Saturday with the USA Triathlon team in the 2017 CAMTRI Triathlon Junior American Championships in Magog, Canada, a race that draws triathletes from throughout North, Central and South America.
For the race, he'll swim a half mile (750 meters), bicycle 12.4 miles (20 kilometers) and run 3.1 miles (5...

subset: commoncrawl


text:
Don't get me wrong, the weekend itself was amazing: all cottage and lake and family loveliness for three delightful days. I ... we ... had a terrific time. But once we returned home and I was submerged again in the process of dealing with the insurance company and therapy and the search for a(nother) new car and trying to overcome my new fear of driving, I was completely absorbed and very depressed about it. I couldn't find the energy to make dinner [or, on some days, brush my hair!] let alone drum up the creativity to attend the blog. I couldn't find anything to say.
Fast forward to today, and I figure there's no better time to
My curtains have finally arrived! After a delay of many, many weeks (back-order is an evil thing) the good folks at Tonic Living received my fabric and kindly expedited my order - it was on my doorstep less than a week after the fabric was delivered to them. Talk about service! I haven't actually taken them out of the box yet ~ until I pick up the rod and finials this weekend, I don't want to risk any abuse or injury to them at the hands of my lovely, but sometimes slightly grubby, family ~ so here's a snap of them sitting pretty in their box:
So pretty, no? YES. Soooo pretty. I can't wait to get these bad boys up in my dining room window, and you can bet that when I do, I'll be posting a picture of their picture-perfection.
I am also aware that I'm woefully behind in producing such classics as the Inspiration Galleries and Design This Dish: I'll be working on these in the next few days with an eye to getting back on track with this little blog, sooner rather than later. And since, as the old proverb says, there's no rest for the wicked, I'm also grinding out a boat load of school projects in the coming weeks, which I'll share with you as well. Like I said ages ago: you're knee-deep in it with me for as long as it takes to get through this program! Here's my first effort, if you're curious: a poster, for a mythical event. Totally got my craft on, and how.
You can't really see it all too well, but there are totally 3D elements to this bad boy. That laundry line? Those laundry pegs? Yeah, all real, baby. And I personally cut each and every square of that quilt to size and scale on a pattern I drew. Yeah. I'm that committed.
Anyhoo, this is as good a restart as any, I think. Hopefully the word will get out that I'm baa-aaack, and we can all ride off into the blogger sunset together. It's good to be back.


text:
Rm.Shanmugam Chettiar.
Rm.Shanmugam Chettiar. Poems
A Woman Forty Plus Aspires
I must be the centre of attention
And reaffirm my desirability.
I must feel validated as a woman
And re-experience the romance of love.
Let be burnt the ennui of monogamy.
Let come again the sexual excitement
That I went through at my first night.
Need not the man in focus be a prince,
An emperor nor a millionaire.
Let him be the one I want to be with,
In accordance with my safety,
Proximity and convenience.
Just for a 'love you leave you alliance.'
Yes, I must waste no time to test my worth
And remain faithful with my husband.
Relief Is A Joy
To regret is a kind of joy.
To repent is a kind of joy.
To render yourself pitiable
And to lament the loss of yours
Too is a kind of joy.
To long for someone you loved
And pine is also a kind of joy.
They relieve you of the burden.


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(CNSNews.com) - New Jersey Gov. Chris Christie, re-elected Tuesday with at least 60 percent of the vote, said he's a model for getting things done that Washington politicians should emulate:
"The biggest thing I've learned over the last four years about leadership is that leadership is much less about talking than it is about listening, about bringing people around the table, listening to each other, showing them respect, doing what needed to be done to be able to bring people together and to achieve what we needed to achieve to move our state forward.
"Now, listen, I know that if we can do this in Trenton, New Jersey, maybe the folks in Washington, D.C. should tune in their TVs right now, see how it's done."
Later in his acceptance speech he portrayed New Jersey as a beacon for a "dispirited America."
"I know that tonight a dispirited America, angry with their dysfunctional government in Washington -- looks to New Jersey to say, is what I think happening really happening? Are people really coming together? Are we really working, African-Americans and Hispanics, suburbanites and city dwellers, farmers and teachers? Are we really all working together? Let me give the answer to everyone who is watching tonight. Under this government, our first job is to get the job done. And as long as I'm governor, that job will always, always be finished."
Christie is widely expected to run for president in 2016.
Yet he promised New Jerseyans that for the next four years, he will fight to make his first-term accomplishments permanent. He listed those accomplishments as cutting taxes, reducing government spending, reforming pensions, benefits, and a broken education system and creating opportunity for New Jerseyans.
"And for the next four years, for the next four years, we will fight to make those changes permanent, and we will fight to make them bigger. I did not seek a second term to do small things. I sought a second term to finish the job. Now, watch me do it."
Christie said Hurricane Sandy turned his job as governor into a sacred "mission."
"You see, a mission is different than a job. A mission is something that's sacred. It's a sacred trust that was thrust upon me and you on October 29th of last year.
And that mission, that mission is to make sure that everyone, everyone in New Jersey who's affected by Sandy is returned to normalcy in their life. And I want to promise you tonight, I will not let anyone, anything, any political party, any governmental entity, or any force get in between me and the completion of my mission."
Christie called his re-election a "big, big win."
"What people have told me over the last four years is more than anything else, they want the truth. They want the truth. You know, we don't always agree with each other, New Jersey. Some folks don't agree with some of the things do I, and certainly they don't agree with some of the things I say sometimes. (laughter)
"But they know -- they know they never have to wonder. They never have to wonder. When they walked into the voting booth today, they didn't say hey, I wonder who this guy is and what he stands for, what he's willing to fight for, what he's willing to do when the chips are down."


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Factor XII (Hageman factor) deficiency
Factor XII deficiency is an inherited disorder that affects a protein (factor XII) involved in blood clotting.
When you bleed, the body launches a series of reactions that help the blood clot. This is called the coagulation cascade. The process involves special proteins called coagulation factors. (Factor XII is a coagulation factor in this series of reactions.)
Each factor has a reaction that triggers the next reaction. The final product of the coagulation cascade is the blood clot. When one or more of these clotting factors are missing, there is usually a higher chance of bleeding.
A lack of factor XII does not cause the affected person to bleed abnormally, but the blood takes longer than normal to clot in a test tube.
Factor XII deficiency is a rare inherited disorder.
There are usually no symptoms.
Exams and Tests
Factor XII deficiency is usually found when clotting tests are done for routine screening.
Tests may include:
- Factor XII assay
- Partial thromboplastin time (PTT)
Treatment is usually not needed.
Outlook (Prognosis)
The outcome is expected to be good without treatment.
Possible Complications
There are usually no complications.
When to Contact a Medical Professional
The health care provider usually discovers this condition after noticing prolonged clotting in the process of running other laboratory tests.
This is an inherited disorder. There is no known way to prevent it.
Gailani D, Neff AT. Rare coagulation factor deficiencies. In: Hoffman R, Benz EJ Jr, Shattil SJ, et al, eds. Hoffman Hematology: Basic Principles and Practice. 5th ed. Philadelphia, Pa: Churchill Livingstone Elsevier;2008:chap 127.
Kessler C. Hemorrhagic disorders: Coagulation factor deficiencies. In: Goldman L, Ausiello D, eds. Cecil Medicine. 23rd ed. Philadelphia, Pa: Saunders Elsevier;2007:chap 180.
Review Date: 2/28/2011
Reviewed By: David C. Dugdale, III, MD, Professor of Medicine, Division of General Medicine, Department of Medicine, University of Washington School of Medicine; and Yi-Bin Chen, MD, Leukemia/Bone Marrow Transplant Program, Massachusetts General Hospital. Also reviewed by David Zieve, MD, MHA, Medical Director, A.D.A.M., Inc.


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Archive: News / Features / Odds & Ends (7 Stories)
Danish cinnamon rolls too spicy for EU rules
01/09/2014 5:08amEasy on the cinnamon! That advice from Denmark's food authority has rankled pastry chefs whose cinnamon rolls were found to violate the European Union's spice rules.
Sarajevo pays tribute to its last shoe shiner
01/09/2014 6:42amThousands of Bosnians have signed a petition urging authorities to erect a monument to Sarajevo's last shoe shiner, who died at 83 after charming generations.
Mexican fishermen find conjoined gray whale calves
01/09/2014 7:08amThe Mexican government says fishermen found two rare conjoined gray whale calves that died shortly after being born.
Man crashes into Conn. gas station, steals banana
01/09/2014 1:24pmCall it the case of the banana-eating bandit.
Pair accused of smuggling rare Brazilian snake
01/09/2014 4:27pmFederal prosecutors this week indicted a brother and sister from Utah on charges of illegally importing a rare boa constrictor from Brazil.
Cold weather means early ice harvest at NH camps
01/09/2014 6:33pmThe tradition of harvesting lake ice at a New Hampshire campground is off to a cold and early start.
Texas firefighter uses beer to put out tire blaze
01/09/2014 6:40pmAn off-duty Houston firefighter made the best of his resources when trying to put out a truck tire fire: He used beer the rig was hauling.


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Paternal City: Every Friday
I happened upon Dan Yaccarinos's Every Friday in the library last week; I love finding good books by accident. Every Friday is the tale of a weekly ritual between father and son. Leaving mom and baby at home, the pair set off through their city neighborhood, encountering familiar faces and bustling urban life on their way to their favorite diner for breakfast. I especially loved Yaccarino's illustrations and the way the people stand out against simple line drawings of an appealing urban landscape creating a sense of intimacy, even in the crowded city. The uncomplicated text and simple color scheme lend a nostalgic but very appealing flavor to this charming book. The final line of the book will strike a special note with any child or parent who knows the joy of bond-developing rituals.
Big Kid says: I like walks with dad, too.
Little Kid says: Truck!
13 comments:
- Zoe @ Playing by the book said...
Finding books by accident is always such a treat isn't it. And this sounds like a lovely book - like you say, bond forming rituals (like pancakes for breakfast!) are special.
- January 7, 2011 at 9:09 AM
- Rachel @ Even in Australia said...
Fellow New Yorker here, born-and-bred in fact. We have a bunch of favorite NYC books although I don't have that many picture book faves that are set in NYC, as opposed to being ABOUT NYC. THe only one that comes to mind immediately is the Knuffle Bunny series (assuming you count Brooklyn as "the city") so I'm looking forward to finding more on your blog!
- January 7, 2011 at 12:42 PM
- Madigan McGillicuddy said...
I love this book... I'm rather fond of Dan Yaccarino.
If you liked this one, you might like What Happens on Wednesdays by Emily Jenkins and Lauren Castillo.
- January 7, 2011 at 12:59 PM
- Storied Cities said...
Rachel: I'm finding that there are a lot of books in which the backdrop is clearly inspired by New York City. I agree that book set in, rather than being about NYC are much nicer. The trick of course, is ferreting them out from the stacks. Be sure to click on the label "New York" to see which ones I've posted about so far.
- January 7, 2011 at 1:41 PM
- LS Murphy said...
What a find! My 2 year old would love this.
- January 7, 2011 at 1:48 PM
- Caroline Starr Rose said...
What a great site you have. Thanks for stopping by!
- January 7, 2011 at 2:02 PM
- Lindsay N. Currie said...
What a beautiful concept for a book - thank you for bringing it to our attention!! Thanks for stopping by my blog as well:)
- January 7, 2011 at 3:00 PM
- Rachel @ Even in Australi said...
I second the What Happens on Wednesdays recommendation, although I think it could be in any big city. I don't own it, so maybe I'm forgetting some NYC-specific hints.
- January 7, 2011 at 4:04 PM
- Rachel @ Even in Australia said...
One more thing - you might enjoy the NYPL family benefit on Sunday January 23rd. The theme is books set in New York. If you email me I can forward you the information. You do have to pay for tickets, though.
- January 7, 2011 at 5:13 PM
- Elizabeth O. Dulemba, a.k.a. "e" said...
I love the 60's look of the art. Dan is so talented! :) e
- January 8, 2011 at 9:27 AM
- Alex said...
I love books about NYC and this one sounds particularly interesting. I used to have a Friday ritual with my mom that has always meant so much to me. And I had one with my daughter, so I am especially interested in reading this book.
Thanks for the review.
- January 9, 2011 at 9:16 AM
- Christy said...
This sounds like a good one. I love the cover.
- January 9, 2011 at 6:58 PM
- LitLass said...
My boys would love this one. And I agree, the illustrations are great.
- January 10, 2011 at 1:28 AM


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LONDON – Queen Elizabeth II is so fond of her corgis that she personally supervises their daily meal and pours the gravy for them herself, according to a new book on British royal pets since the 16th century.
"Pets by Royal Appointment," by Brian Hoey, who has written about Buckingham Palace for more than 40 years, suggests the monarch prefers animal company to that of humans. The book says the royals "are suspicious of practically everyone outside their own family, so the only creatures they really trust are not of the human variety," according to a statement released with the book's publication.
The dogs' meals of fillet steak and chicken breast are prepared by a footman and served at 5 p.m. sharp every day, with the queen pouring the gravy on the feast. She has two corgis and two "dorgis," a cross with a dachshund, and has kept more than 30 corgis during her reign.
Prince Philip, however, loathes the waddling, short-legged animals because they yap too much, according to Hoey.
The 300-page book traces the five century love affair between the royals and their animals, starting with Henry VIII, a keen rider. He says the royals are known to have an aversion to cats.
Queen Victoria, who died in 1901, had 88 dogs and also received a number of exotic animals from foreign rulers.


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Nancy Pelosi, Symbol of the West
"Sarah Palin knows how to hunt wolves. She can skin a moose. She lives way up there on America's last frontier. So, we might think, here's a national candidate who represents the "real" American West, not its Hollywood imitation.
That's a tempting image, but it's flat-out wrong. Nancy Pelosi, fast-talking, hard-edged urbanite from San Francisco, is a much better stand-in for the real American West. So is the sister team of Linda Sanchez and Loretta Sanchez, who represent parts of Los Angeles County and Orange County in the U.S. Congress.
Add to the list Washington state Gov. Christine Gregoire, from the busy urban corridor along Puget Sound. And then there's Arizona Gov. Janet Napolitano, a New Yorker happily transplanted to Phoenix.
Many Americans like to imagine the West as a vast land of sagebrush and deserts, mountains and forests, cougars and caribou. Sure, it has plenty of landscapes to match the Western movie image, but almost nobody lives out there in the empty West. For more than a century, the West has been the most urbanized part of the country."


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You see, the flow of credit is the lifeblood of our economy.
Negotiation and compromise are the lifeblood of democracy, not poison to the body politic.
This is because immigrants are the lifeblood of the U.S. economy.
This winnowing stream represents the lifeblood for Wall Street, for businesses large and small, and for our economy as a whole.
Healthy banks are to economies as healthy hearts are to people: They keep them alive with the "lifeblood" of credit.
We depend on others for their agricultural productions; we live by manufactures and commerce, of which credit is the lifeblood.
One reference each of "lifeblood" and "life-blood" were retained.
Let the wounds of Africa first be stopped,—let her lifeblood stay to enrich her own veins.
The curse impels her to attack him, to seek to drain his lifeblood.
And it was as if Dworn's own lifeblood had been drained and his own heart had stopped beating.


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by Staff Writers
Wallops Island, VA (SPX) Jun 21, 2011
A U.S. Air Force Minotaur 1 rocket carrying the Department of Defense's Operationally Responsive Space office's ORS-1 satellite is scheduled for launch June 28 from NASA's Launch Range at the Wallops Flight Facility and the Mid-Atlantic Regional Spaceport in Virginia.
ORS-1 is the Operationally Responsive Space Office's first operational satellite. Rapidly developing and fielding ORS-1 is an important step to demonstrate the capability to meet emerging and persistent war-fighter needs on operationally relevant timelines.
The Minotaur 1 rocket, integrated by Orbital Sciences Corporation (OSC), is a four-stage vehicle, two stages being refurbished Minuteman II stages and the other two stages being OSC developed. The Minotaur is about 70 feet tall and 5 feet wide. The U.S. Air Force Space and Missile Systems Center's Space Development and Test Wing has overall mission management responsibility.
This will be the fourth Minotaur 1 rocket launched from NASA's Wallops Flight Facility and the Spaceport since December 2006.
Based on the approved range schedule, the rocket is set for launch between 8:28 and 11:28 p.m. EDT. The backup launch days are June 29 - July 10 . The launch may be visible, depending on cloud cover and one's viewing location, in the eastern United States from southern New York to North Carolina. It may be seen as far west from the Atlantic Coast as West Virginia and western Pennsylvania.
Related Links
Operationally Responsive Space
Military Space News at SpaceWar.com
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Since a lot of you seemed to enjoy my lips in the other post I'll try to do a tutorial on how I do my lips! Sounds good?
For this look I got some inspiration from ancient bronze. And I must say I really like this combo. It's rather dark but the bronze detail makes it softer.


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Type of Document Master's Thesis Author Whitmore, Maria J Author's Email Address email@example.com URN etd-05042006-135604 Title Internal and External Attentional Biases in Social Anxiety: The Effect of Effortful Control Degree Master of Science Department Psychology Advisory Committee
Advisor Name Title Ollendick, Thomas H. Committee Chair Friedman, Bruce H. Committee Member Scarpa-Friedman, Angela Committee Member Keywords
- attention
- executive functioning
- social anxiety
Date of Defense 2006-04-21 Availability restricted AbstractTwo cognitive processes have been proposed to play a role in social anxiety: self-focused attention and threat perception bias. Mansell, Clark, and Ehlers (2003) devised a novel dot-probe paradigm to simultaneously measure on-line attention to internal and external events among socially anxious adults. Their results indicated that high speech anxious individuals show an internal attention bias specific to a social threat condition. They did not find any differences between groups in a no-threat condition; however, the researchers did not account for processes of effortful control of attention. The current study replicated the Mansell et al. study with an added condition to control for effortful processes of attention. Fifty young adults (mean age = 19.8) were assessed using a self-report measure of social anxiety, as well as the Mansell et al. dot-probe paradigm. Half of the subjects were randomly assigned to a brief (250ms) stimulus presentation time with the other half to a 25 second condition, as used by Mansell et al. In addition, subjects were randomly assigned to social threat and non-threat conditions. A three-way interaction of anxiety x threat x length of stimulus presentation was predicted, such that socially anxious individuals would show an external attention bias when not under social threat (threat perception bias). However, under threat, it was hypothesized that anxious individuals would shift their attention internally (self-focused attention). Results of the current study did not support the hypothesized interaction, and provided only equivocal evidence for both self-focused attention and threat perception bias. Files
Filename Size Approximate Download Time (Hours:Minutes:Seconds)
28.8 Modem 56K Modem ISDN (64 Kb) ISDN (128 Kb) Higher-speed Access thesisrevisedmw.pdf 274.61 Kb 00:01:16 00:00:39 00:00:34 00:00:17 00:00:01indicates that a file or directory is accessible from the Virginia Tech campus network only.
If you have questions or technical problems, please Contact DLA.


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Personalized Stationery
In-store stationery can be purchased with the assistance of on-site consultants, who will help you navigate the various template designs. Many retailers offer free proofs so you can catch mistakes; others charge $5 to $20 per proof. Be sure to ask for a few extra envelopes (in case you make an error when addressing).
Online stationery often comes in styles your neighborhood shop may not carry. After choosing a pattern, type in your wording (before you hit "Purchase," make sure to spell-check). If you're worried about judging colors on-screen, request paper-and-ink samples; many companies will send them for free. If you'd like to do the printing yourself, opt for imprintables (sold at many online outlets), which are blank, predesigned invitations that can be made at home on your computer and printer.
Shown counterclockwise from upper left:
Personal Calling Cards by Felix Doolittle
Select from 144 designs. Rounded edges.
To buy: $50 for 40, felixdoolittle.com.
Little Fish Birth Announcements by Linda & Harriett
Shown in orange and sea blue; custom colors available. Soy ink.
To buy: Unfortunately, this product is no longer available.
Espadrille Bright Note Pads by Boatman Geller
To buy: $9, boatmangeller.com.
Blossom Folded Notes by Carrot & Stick Press
Envelopes are printed with the return address.
To buy: Unfortunately, this design is no longer available. Find similar designs at carrotstickpress.com.
Still on the lookout for the perfect cards? Find even more personal stationery options.


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Get an overview of this hotel3-star hotel with bar/lounge and coffee shop/café
Collecting Nectar Points
Special Offer: Book by 2 August 2017 and collect double Nectar points!
Simply enter your Nectar card number when you check out. Your points will be credited 35 days after you return from your trip.
*Terms and conditions apply.
Popular property highlights
Situated in Reykjavik, this hotel is 0.5 mi (0.8 km) from Laugardalsholl and within 3 mi (5 km) of Hallgrimskirkja and Perlan. Reykjavik City Hall and National Museum of Iceland are also within 3 mi (5 km).
Hotel Features
This smoke-free hotel features a bar/lounge, a coffee shop/café, and a 24-hour front desk. Free WiFi in public areas and free self parking are also provided. Other amenities include a computer station, free newspapers, and tour/ticket assistance.
Room Amenities
All 56 rooms provide conveniences like refrigerators and coffee makers, plus free WiFi and TVs with satellite channels. Other amenities available to guests include hair dryers, showers, and phones.Information missing or incorrect? Tell us!Opens in a new window
Arctic Comfort Hotel
Hotel Amenities
Hotel Amenities
The hotel offers a coffee shop/café. A bar/lounge is on site where guests can unwind with a drink. A computer station is located on site and wireless Internet access is complimentary. For a surcharge, a roundtrip airport shuttle (available 24 hours) is offered to guests. This Reykjavik hotel also offers tour/ticket assistance, multilingual staff, and complimentary newspapers in the lobby. Complimentary self parking is available on site.
Arctic Comfort Hotel is a smoke-free property.
- Free newspapers in lobby
- Bar/lounge
- Breakfast available (surcharge)
- Coffee shop or café
- Total number of rooms - 56
- 24-hour front desk
- Multilingual staff
- Number of floors - 3
- Television in common areas
- Computer station
- Tours/ticket assistance
- Luggage storage
- Safe-deposit box at front desk
- Free self parking
- Smoke-free property
- Airport transportation (surcharge)
- Free WiFi
Family Friendly Amenities
- Family Hotel
- Free Wi-Fi
- Refrigerator
Available in all rooms: Free WiFi
Available in some public areas: Free WiFi
Free self parking
Room Amenities
- Phone
- Refrigerator
- Coffee/tea maker
- Daily housekeeping
- Private bathroom
- Hair dryer
- Shower only
- Satellite TV service
- Television
- Desk
- Iron/ironing board (on request)
- Free WiFi
Where to Eat
Buffet breakfasts are available for a surcharge and are served each morning between 7 AM and 10 AM.
Nearby Things to Do
The recreational activities listed below are available either on site or nearby; fees may apply.
- Golfing nearby
- Bicycle rentals nearby
- Hiking/biking trails nearby
If you have requests for specific accessibility needs, please note them at check-out when you book your room.
Hotel Policies
Minimum check-in age is 18
Check-in time ends at midnight
Check-in time starts at 3 PM
Special check-in instructions:
Check-out time is 11 AM
Payment types
Children and extra beds
- Children are welcome.
- Kids stay free! One child 2 years old or younger stays free when using existing bedding.
- Rollaway/extra beds are not available.
- Pets not allowed
You need to know
Extra-person charges may apply and vary depending on property policy.
Government-issued photo identification and a credit card or cash deposit are required at check-in for incidental charges.
Special requests are subject to availability upon check-in and may incur additional charges. Special requests cannot be guaranteed.
No rollaway/extra beds available
No elevators
- A tax is imposed by the city: ISK 111 per accommodation, per night
Optional extras
- Fee for buffet breakfast: ISK 2000 per person (approximately)
- Airport shuttle fee: ISK 2500 per person (one way)
- Airport shuttle fee per child: ISK 1250 (from 12 to 15 years old)
Hotel Name
- Arctic Comfort
- Arctic Comfort Hotel
- Arctic Comfort Hotel Reykjavik
- Arctic Comfort Reykjavik
- Comfort Hotel Arctic
- Hotel Arctic Comfort
- Vik Arctic Comfort Hotel
We should mention
One child 2 years old or younger stays free when occupying the parent or guardian's room, using existing bedding.


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Looking camera-ready after a photo shoot at Highline Studio, Miranda Kerr was spotted walking in New York City on Wednesday (November 21).
The Aussie model was smokin' in a green top, black leather jacket, black maxi skirt with a high side slit, and black boots.
Recently, the 29-year-old Victoria's Secret Angel landed an impressive new gig. Taking the place of supermodel Kate Moss, Miranda will be the new face of Spanish fashion giant Mango's spring/summer 2013 collection.
In a statement, Ms. Kerr commented, "I am delighted to be collaborating with Mango for the Spring/Summer 2013 season. We had a great time shooting the campaign and it was very easy working with the entire team. What's more, Mango is a brand that I love. You always find the perfect garment for every occasion!"
Enjoy the pictures of Miranda Kerr leaving Highline Studio (November 21).
Photo Credit: AKM-GSI