NEW YORK, Aug. 8, 2017 /PRNewswire/ -- Bluerock Residential
Growth REIT, Inc. (NYSE MKT: BRG) ("the Company") announced today
its financial results for the quarter ended June 30, 2017.
Highlights
- Total revenues grew 47% to $27.0
million for the quarter from $18.4
million for the prior year quarter primarily as a result of
significant investment activity in the past year, offset by the
sales of four properties in 2017 and one in 2016.
- Net income attributable to common stockholders for the second
quarter of 2017 was $0.67 per share,
as compared to net loss attributable to common shareholders of
$(0.24) per share in the prior year
period. Net income (loss) attributable to common stockholders
included non-cash expenses of $0.66
per share in the second quarter of 2017 vs. $0.45 per share for the prior year period.
- Adjusted funds from operations attributable to common
stockholders ("AFFO") was $3.3
million for the quarter compared to $4.4 million for the prior year
quarter.
- AFFO per share is $0.13 for
the second quarter of 2017 as compared to $0.21 for the second quarter of 2016, and
exceeded guidance of $0.01 -
$0.02.
- Pro forma AFFO per share of $0.36
for the second quarter exceeded pro forma guidance of $0.26 to $0.28 per share.
- The Company paid the full amount of the second quarter's base
management fees in LTIP Units in lieu of cash payment. This
favorably impacted AFFO per share and pro forma AFFO per share by
$0.10 and $0.09, respectively.
- Property Net Operating Income (NOI) grew 30% to $14.3 million for the quarter, from $11.0 million in the prior year quarter.
- Property NOI margins were 57.3% of revenue for the quarter,
compared to 59.8% of revenue in the prior year quarter.
Property NOI margins were impacted by the sales of more stabilized
assets with proceeds being recycled into replacement properties
with higher growth opportunities, which require time to realize
margin improvement.
- Same store NOI increased 2.3% for the quarter, as compared to
the prior year quarter. The sales of Fox Hill, Lansbrook
Village and MDA Apartments during the second quarter have impacted
the same store comparisons since the first quarter of 2017.
- Consolidated real estate investments, at cost, increased 10% to
$1.1 billion at June 30, 2017 from $1.0
billion at December 31,
2016.
- The Company invested in a portfolio of five operating
properties totaling 1,408 units for a total purchase price of
approximately $188.9 million during
the second quarter.
- The Company declared a monthly dividend for July 2017 of $0.096666 per share on the Company's Class A
common stock.
- The Company sold 50,501 shares of Series B preferred stock with
associated warrants at a public offering price of $1,000 per unit, for gross proceeds of
approximately $50.5 million during
the second quarter, an increase in gross proceeds of 114% over the
first quarter.
Management Commentary
"We are pleased to report the acquisition of a portfolio of five
operating properties totaling 1,408 units for approximately
$189 million, continued momentum in
the Series B preferred continuous offering raise with second
quarter gross proceeds of over $50
million and the recycling of capital through the disposition
of interests in three properties at significant gains during the
second quarter," said Ramin Kamfar,
the Company's Chairman and CEO. "Importantly, on August 4, 2017, we also signed definitive
agreements to effect the Company's internalization of its external
management function, which will be subject to a vote of our common
stockholders at our upcoming annual meeting of stockholders."
Second Quarter Acquisition and Disposition Activity
- On April 26, 2017, the Company
sold its interest in the Lansbrook Village apartments in
Palm Harbor, Florida at a total
sale price of approximately $82.4
million, recognized a pro rata gain of $16.1 million, with net proceeds of approximately
$19.1 million to the Company,
generating an internal rate of return of 25% on BRG's equity
investment in the project, for an equity multiple of 1.71x.
- On May 24, 2017, the Company sold
its interest in the Fox Hill apartments in Austin, Texas at a total sale price of
approximately $46.5 million,
recognized a pro rata gain of $10.3
million, with net proceeds of approximately $16.4 million to the Company, generating an
internal rate of return of 26% on BRG's equity investment in the
project, for an equity multiple of 1.62x.
- On June 9, 2017, the Company
acquired a 90% investment in a 1,408-unit five-property portfolio
of multifamily communities located in San
Antonio and Tyler,
Texas. The total purchase price of approximately $188.9 million includes the assumption of
approximately $146.4 million of
existing mortgage debt.
- On June 30, 2017, the Company
sold its interest in the MDA apartments in Chicago, Illinois at a total sale price of
approximately $18.3 million,
recognized a pro rata gain of $6.4
million, with net proceeds of approximately $11.0 million to the Company, generating an
internal rate of return of 22% on BRG's equity investment in the
project, for an equity multiple of 2.23x.
Pending Investments at June 30,
2017
- The Company has an agreement which entitles the Company to make
a 80% investment in a 384-unit apartment community located in
Houston, Texas, known as Villages
at Cypress Creek, subject to certain conditions. The total purchase
price is expected to be approximately $40.7
million.
- The Company has an agreement which entitles the Company to make
a 98% investment in a 336-unit apartment community located in
Orlando, Florida, known as Citrus
Tower, subject to certain conditions. The total purchase price is
expected to be approximately $55.3
million.
Second Quarter 2017 Financial Results
Net income attributable to common stockholders for the second
quarter of 2017 was $17.6 million,
compared to a net loss of $5.0
million in the prior year period. The change was primarily
driven by positive increases in property NOI of $3.3 million, interest income of $2.1 million and a gain on sale of real estate
investments of $43.8 million, offset
by increases in management fees of $4.7
million, depreciation and amortization expense of
$2.6 million, interest expense of
$3.2 million, loss on extinguishment
of debt of $1.6 million, preferred
stock dividends and accretion of $3.8
million and non-controlling income allocation of
$10.2 million.
AFFO for the second quarter of 2017 was $3.3 million, or $0.13 per diluted share, compared to $4.4 million, or $0.21 per share in the prior year period.
AFFO was primarily impacted by increases in property NOI of
$3.3 million arising from significant
investment activity offset by sales of properties, interest income
of $2.1 million and offset by
interest expense of $2.5 million and
preferred stock dividends of $3.4
million.
Same Store Portfolio Performance
- Same store NOI for the second quarter of 2017 increased by 2.3%
from the same period in the prior year. There was a 2.4% increase
in same store property revenues compared to the same prior year
period, primarily attributable to a 3.5% increase in average rental
rates offset by a 52 basis point decrease in average
occupancy. Same store expenses increased 2.6% due to an
increase in repair and maintenance across the portfolio.
- The sales of Fox Hill, Lansbrook Village and MDA Apartments
during the second quarter have impacted the same store comparisons
since the first quarter of 2017.
Management Internalization
On August 4, 2017, the Company
announced that it had entered into definitive agreements providing
for the Company's internalization of the external management
function currently provided by the Manager and the direct
employment of the Manager's existing management team and certain
other employees. The internalization consideration will be
calculated pursuant to a formula established in the Management
Agreement at the time of the Company's initial public offering in
April 2014 and is expected to be
approximately $41-$42 million.
To further align the interests of the Company's management team
with those of the Company's stockholders, 99.9% of the
consideration will be paid in equity, comprised of units of limited
partnership interest ("OP Units") in the Company's operating
partnership, and shares of Class C Common Stock, which are being
issued to provide the recipients with a voting franchise
commensurate with their economic interest in the OP Units.
Upon closing of the internalization, which is expected to close in
the fourth quarter of 2017, the Company will become a self-managed
real estate investment trust. The proposed transaction was
unanimously approved by the Special Committee of independent
directors and the Company's full board of directors, but remains
subject to approval of the issuances of equity by a majority of
disinterested stockholders voting at the Company's annual meeting
of stockholders and other customary closing conditions.
Dividend Details
On July 10, 2017, our board of
directors authorized, and we declared, a monthly dividend for
July 2017 of $0.096666 per share on our Class A common stock,
payable to the stockholders of record as of July 25, 2017, which was paid in cash on
August 4, 2017. Holders of OP and
LTIP Units are entitled to receive "distribution equivalents" at
the same time as dividends are paid to holders of our Class A
common stock. A portion of each dividend may constitute a
return of capital for tax purposes. There is no assurance that we
will continue to declare dividends or at this rate.
On August 4, 2017, we announced
that our board of directors has initiated, in conjunction with a
financial advisor, a review of the appropriate Company's dividend
policy for the Company's Class A Common stock. The board's
evaluation will consider factors including, but not limited to,
achieving a sustainable dividend covered by current recurring AFFO
(vs. pro forma AFFO), multifamily and small cap peer ratios,
providing financial flexibility for the Company, and achieving an
appropriate balance between the retention of capital to invest and
grow net asset value, and the importance of current
distributions. The board is expected to complete its review
of the dividend policy for the Company's Class A Common Stock in
the fourth quarter of 2017.
On July 10, 2017, our board of
directors authorized, and we declared, a monthly dividend of
$5.00 per share of Series B preferred
stock, payable to the stockholders of record as of July 25, 2017, which was paid in cash on
August 4, 2017, and as of
August 25, 2017, and September 25, 2017, which will be paid in cash on
September 5, 2017 and October 5, 2017, respectively.
The board's review of dividend policy will address the dividend
policy for the Company's Class A Common Stock only. The terms
of each series of the Company's issued and outstanding preferred
stock provide for fixed annual dividend rates, and are not subject
to adjustment at the board's discretion.
Q3 2017 Outlook
For the third quarter of 2017, the Company anticipates AFFO in
the range of ($0.03) to ($0.02) per
share, and $0.25 to $0.27 per share
on a pro forma basis. For assumptions underlying earnings guidance,
please see page 29 of Company's Q2 2017 Earnings Supplement
available under Investor Relations on the Company's website
(www.bluerockresidential.com). Pro forma AFFO is used for
illustrative purposes only, is hypothetical and does not represent
historical performance or management's estimates or projections for
future performance.
Conference Call
All interested parties can listen to the live conference call at
11:00 AM ET on Tuesday, August 8, 2017 by dialing +1 (866)
843-0890 within the U.S., or +1 (412) 317-6597, and requesting the
"Bluerock Residential Conference."
For those who are not available to listen to the live call, the
conference call will be available for replay on the Company's
website two hours after the call concludes, and will remain
available until September 8, 2017 at
http://services.choruscall.com/links/brg170808.html, as well as by
dialing +1 (877) 344-7529 in the U.S., or +1 (412) 317-0088
internationally, and requesting conference number 10111174.
The full text of this Earnings Release and additional
Supplemental Information is available in the Investor Relations
section on the Company's website at
http://www.bluerockresidential.com.
About Bluerock Residential Growth REIT, Inc.
Bluerock Residential Growth REIT, Inc. (NYSE MKT: BRG) is a real
estate investment trust that focuses on acquiring a diversified
portfolio of Class A institutional-quality apartment properties in
demographically attractive growth markets to appeal to the renter
by choice. The Company's objective is to generate value through
off-market/relationship-based transactions and, at the asset level,
through improvements to operations and properties. BRG
generally invests with strategic regional partners, including some
of the best-regarded private owner-operators in the United States, making it possible to
operate as a local sharpshooter in each of its markets while
enhancing off-market sourcing capabilities. The Company is included
in the Russell 2000 and Russell 3000 Indexes. BRG has elected
to be taxed as a real estate investment trust (REIT) for U.S.
federal income tax purposes.
For more information, please visit the Company's website at
www.bluerockresidential.com.
Forward Looking Statements
This press release contains
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 and other federal
securities laws. These forward-looking statements are based upon
the Company's present expectations, but these statements are not
guaranteed to occur, including, without limitation, with respect to
the completion of the proposed internalization on the terms
described or at all and the expected benefits of the proposed
internalization. Among others, the following uncertainties
and other factors could cause actual results to differ from those
set forth in the forward-looking statements: the failure to
receive, on a timely basis or otherwise, the required approval by
the Company's stockholders, governmental or regulatory agencies and
third parties; the risk that a condition to closing of the proposed
internalization may not be satisfied; and the Company's ability to
consummate the proposed internalization. Furthermore, the
Company disclaims any obligation to publicly update or revise any
forward-looking statement to reflect changes in underlying
assumptions or factors, of new information, data or methods, future
events or other changes. Investors should not place undue reliance
upon forward-looking statements. For further discussion of the
factors that could affect outcomes, please refer to the risk
factors set forth in Item 1A of the Company's Annual Report on Form
10-K filed by the Company with the U.S. Securities and Exchange
Commission ("SEC") on February 22,
2017, and subsequent filings by the Company with the SEC. We
claim the safe harbor protection for forward looking statements
contained in the Private Securities Litigation Reform Act of
1995.
Portfolio Summary
The following is a
summary of our operating real estate and development properties as
of June 30, 2017:
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Operating
Properties
|
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Location
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|
Number
of Units
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Year Built/
Renovated (1)
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Ownership
Interest
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Average
Rent (2)
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%
Occupied (3)
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ARIUM at Palmer
Ranch
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Sarasota,
FL
|
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320
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2016
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95%
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$
1,212
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95%
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ARIUM
Grandewood
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Orlando,
FL
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306
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2005
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95%
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1,246
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95%
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ARIUM
Gulfshore
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Naples, FL
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368
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2016
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95%
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1,242
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94%
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ARIUM
Palms
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Orlando,
FL
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252
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2008
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95%
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1,232
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96%
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ARIUM Pine
Lakes
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Port St. Lucie,
FL
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320
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2003
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85%
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1,116
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95%
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ARIUM
Westside
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Atlanta,
GA
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336
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2008
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90%
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1,415
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95%
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Ashton
Reserve
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Charlotte,
NC
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473
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2015
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100%
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1,045
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97%
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Enders Place at
Baldwin Park
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Orlando,
FL
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220
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2003
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90%
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1,648
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96%
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James on South
First
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Austin, TX
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250
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2016
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90%
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1,189
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96%
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Marquis at Crown
Ridge
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San Antonio,
TX
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352
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2009
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90%
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968
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96%
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Marquis at Stone
Oak
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San Antonio,
TX
|
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335
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|
2007
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90%
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1,403
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90%
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Marquis at The
Cascades I
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Tyler, TX
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328
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2007
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90%
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1,123
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97%
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Marquis at The
Cascades II
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Tyler, TX
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254
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2009
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90%
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1,026
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93%
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Marquis at
TPC
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San Antonio,
TX
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139
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2008
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90%
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1,459
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91%
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Nevadan
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Atlanta,
GA
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480
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1990
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90%
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1,090
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95%
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Park &
Kingston
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Charlotte,
NC
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168
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2015
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96%
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1,174
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97%
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Preston
View
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Morrisville,
NC
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382
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2000
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92%
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1,013
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96%
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Roswell City
Walk
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Roswell,
GA
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320
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2015
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98%
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1,462
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96%
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Sorrel
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Frisco, TX
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352
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2015
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95%
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1,199
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92%
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Sovereign
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Fort Worth,
TX
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322
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2015
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95%
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1,269
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95%
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The Brodie
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Austin, TX
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324
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2001
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93%
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1,100
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96%
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The Preserve at
Henderson Beach
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Destin, FL
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340
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2009
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100%
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1,312
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99%
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Wesley
Village
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Charlotte,
NC
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301
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2010
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92%
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1,270
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97%
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|
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Whetstone
|
|
Durham, NC
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|
204
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2015
|
|
(4)
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1,196
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94%
|
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|
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Operating
Properties Subtotal/Average
|
|
7,446
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|
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$
1,208
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|
95%
|
|
|
|
|
|
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|
|
|
|
|
|
Development
Properties
|
|
Location
|
|
Planned
Number
of Units
|
|
|
|
|
|
Pro Forma
Average
Rent (5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
Alexan
CityCentre
|
|
Houston,
TX
|
|
340
|
|
|
|
|
|
$
2,144
|
|
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|
|
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|
Alexan Southside
Place
|
|
Houston,
TX
|
|
270
|
|
|
|
|
|
2,012
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
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|
|
APOK
Townhomes
|
|
Boca Raton,
FL
|
|
90
|
|
|
|
|
|
2,549
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Crescent
Perimeter
|
|
Atlanta,
GA
|
|
320
|
|
|
|
|
|
1,749
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domain Phase
1
|
|
Garland,
TX
|
|
299
|
|
|
|
|
|
1,469
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Flagler
Village
|
|
Fort Lauderdale,
FL
|
|
384
|
|
|
|
|
|
2,481
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Helios
|
|
Atlanta,
GA
|
|
282
|
|
|
|
|
|
1,486
|
|
|
|
|
|
|
|
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|
|
|
Lake Boone
Trail
|
|
Raleigh,
NC
|
|
245
|
|
|
|
|
|
1,271
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vickers
Village
|
|
Roswell,
GA
|
|
79
|
|
|
|
|
|
3,176
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
West
Morehead
|
|
Charlotte,
NC
|
|
286
|
|
|
|
|
|
1,507
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development
Properties Subtotal/Average
|
|
2,595
|
|
|
|
|
|
$
1,876
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating and
Development Properties Total/Average
|
|
10,041
|
|
|
|
|
|
$
1,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Represents date of last
significant renovation or year built if there were no
renovations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2)Represents the average effective
monthly rent per occupied unit for all occupied units for the three
months ended June 30, 2017.
|
|
|
|
|
(3)Percent
occupied is calculated as (i) the number of units occupied as of
June 30, 2017, divided by (ii) total number of units, expressed as
a percentage.
|
|
|
|
|
(4)Whetstone is currently a preferred
equity investment providing a stated investment return.
|
|
|
|
|
(5)The
Company holds a preferred equity investment with an option to
convert into partial ownership of the underlying asset upon
stabilization, except Flagler Village. APOK Townhomes, Domain
Phase 1, and West Morehead are mezzanine loan investments with an
option to purchase indirect property interest upon maturity.
Pro forma average rent represents the average pro forma effective
monthly rent per occupied unit for all expected occupied units upon
stabilization.
|
|
|
|
|
Consolidated
Statement of Operations For the Three and Six Months
Ended June 30, 2017 and 2016 (Unaudited and dollars in
thousands except for share and per share data)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
|
June
30,
|
|
|
June
30,
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net rental
income
|
|
$
|
23,615
|
|
|
$
|
17,513
|
|
|
$
|
47,482
|
|
|
$
|
33,441
|
Other property
revenues
|
|
|
1,336
|
|
|
|
886
|
|
|
|
2,608
|
|
|
|
1,592
|
Interest income from
related parties
|
|
|
2,097
|
|
|
|
—
|
|
|
|
3,620
|
|
|
|
—
|
Total
revenues
|
|
|
27,048
|
|
|
|
18,399
|
|
|
|
53,710
|
|
|
|
35,033
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
operating
|
|
|
10,646
|
|
|
|
7,389
|
|
|
|
20,476
|
|
|
|
13,982
|
General and
administrative
|
|
|
1,696
|
|
|
|
1,704
|
|
|
|
3,146
|
|
|
|
2,978
|
Management
fees
|
|
|
6,163
|
|
|
|
1,415
|
|
|
|
8,931
|
|
|
|
2,629
|
Acquisition and
pursuit costs
|
|
|
18
|
|
|
|
249
|
|
|
|
3,200
|
|
|
|
1,457
|
Management
internalization
|
|
|
340
|
|
|
|
—
|
|
|
|
820
|
|
|
|
—
|
Depreciation and
amortization
|
|
|
10,387
|
|
|
|
7,789
|
|
|
|
21,331
|
|
|
|
15,298
|
Total
expenses
|
|
|
29,250
|
|
|
|
18,546
|
|
|
|
57,904
|
|
|
|
36,344
|
Operating
loss
|
|
|
(2,202)
|
|
|
|
(147)
|
|
|
|
(4,194)
|
|
|
|
(1,311)
|
Other income
(expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income
|
|
|
17
|
|
|
|
—
|
|
|
|
17
|
|
|
|
—
|
Preferred returns and
equity in income of unconsolidated real estate
joint ventures
|
|
|
2,605
|
|
|
|
2,775
|
|
|
|
5,177
|
|
|
|
5,543
|
Gain on sale of real
estate investments
|
|
|
33,574
|
|
|
|
—
|
|
|
|
50,040
|
|
|
|
—
|
Gain on sale of real
estate joint venture interest
|
|
|
10,238
|
|
|
|
—
|
|
|
|
10,238
|
|
|
|
—
|
Loss on early
extinguishment of debt
|
|
|
(1,639)
|
|
|
|
—
|
|
|
|
(1,639)
|
|
|
|
—
|
Interest expense,
net
|
|
|
(7,825)
|
|
|
|
(4,589)
|
|
|
|
(14,943)
|
|
|
|
(8,817)
|
Total other income
(expense)
|
|
|
36,970
|
|
|
|
(1,814)
|
|
|
|
48,890
|
|
|
|
(3,274)
|
Net income
(loss)
|
|
|
34,768
|
|
|
|
(1,961)
|
|
|
|
44,696
|
|
|
|
(4,585)
|
Preferred stock
dividends
|
|
|
(6,381)
|
|
|
|
(2,968)
|
|
|
|
(12,233)
|
|
|
|
(4,451)
|
Preferred stock
accretion
|
|
|
(647)
|
|
|
|
(168)
|
|
|
|
(984)
|
|
|
|
(293)
|
Net income (loss)
attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating partnership
units
|
|
|
186
|
|
|
|
(75)
|
|
|
|
129
|
|
|
|
(136)
|
Partially-owned
properties
|
|
|
9,985
|
|
|
|
21
|
|
|
|
18,771
|
|
|
|
(14)
|
Net income (loss)
attributable to noncontrolling interests
|
|
|
10,171
|
|
|
|
(54)
|
|
|
|
18,900
|
|
|
|
(150)
|
Net income (loss)
attributable to common stockholders
|
|
$
|
17,569
|
|
|
$
|
(5,043)
|
|
|
$
|
12,579
|
|
|
$
|
(9,179)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
per common share - Basic
|
|
$
|
0.67
|
|
|
$
|
(0.24)
|
|
|
$
|
0.49
|
|
|
$
|
(0.45)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
per common share – Diluted
|
|
$
|
0.67
|
|
|
$
|
(0.24)
|
|
|
$
|
0.49
|
|
|
$
|
(0.45)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
basic common shares outstanding
|
|
|
26,075,911
|
|
|
|
20,686,652
|
|
|
|
25,535,178
|
|
|
|
20,604,124
|
Weighted average
diluted common shares outstanding
|
|
|
26,076,572
|
|
|
|
20,686,652
|
|
|
|
25,535,839
|
|
|
|
20,604,124
|
Consolidated
Balance Sheets Second Quarter 2017 (Unaudited
and dollars in thousands except for share and per share
amounts)
|
|
|
|
|
|
|
|
June 30,
2017
|
|
December 31,
2016
|
ASSETS
|
|
|
|
|
|
|
Net Real Estate
Investments
|
|
|
|
|
|
|
Land
|
|
$
|
147,562
|
|
$
|
142,274
|
Buildings and
improvements
|
|
|
930,471
|
|
|
848,445
|
Furniture, fixtures
and equipment
|
|
|
29,148
|
|
|
27,617
|
Construction in
progress
|
|
|
24,890
|
|
|
10,878
|
Total
Gross Real Estate Investments
|
|
|
1,132,071
|
|
|
1,029,214
|
Accumulated
depreciation
|
|
|
(35,269)
|
|
|
(42,137)
|
Total Net Real Estate
Investments
|
|
|
1,096,802
|
|
|
987,077
|
Cash and cash
equivalents
|
|
|
139,292
|
|
|
82,047
|
Restricted
cash
|
|
|
41,048
|
|
|
45,402
|
Notes and accrued
interest receivable from related parties
|
|
|
56,849
|
|
|
21,267
|
Due from
affiliates
|
|
|
1,240
|
|
|
948
|
Accounts receivable,
prepaid and other assets
|
|
|
6,193
|
|
|
8,610
|
Preferred equity
investments and investments in unconsolidated real estate joint
ventures
|
|
|
94,184
|
|
|
91,132
|
In-place lease
intangible assets, net
|
|
|
5,175
|
|
|
4,839
|
Total
Assets
|
|
$
|
1,440,783
|
|
$
|
1,241,322
|
|
|
|
|
|
|
|
LIABILITIES,
REDEEMABLE PREFERRED STOCK AND EQUITY
|
|
|
|
|
|
|
Mortgages
payable
|
|
$
|
775,591
|
|
$
|
710,575
|
Accounts
payable
|
|
|
3,416
|
|
|
1,669
|
Other accrued
liabilities
|
|
|
19,006
|
|
|
13,431
|
Due to
affiliates
|
|
|
6,831
|
|
|
2,409
|
Distributions
payable
|
|
|
8,326
|
|
|
7,328
|
Total
Liabilities
|
|
|
813,170
|
|
|
735,412
|
8.250% Series A
Cumulative Redeemable Preferred Stock, liquidation preference
$25.00 per share,
|
|
|
|
|
|
|
10,875,000
shares authorized, and 5,721,460 issued and outstanding as of June
30, 2017 and
December 31, 2016
|
|
|
138,605
|
|
|
138,316
|
Series B Redeemable
Preferred Stock, liquidation preference $1,000 per share, 150,000
shares
|
|
|
|
|
|
|
authorized, 95,552 and 21,482 issued and outstanding as of June 30,
2017 and December 31,
2016, respectively
|
|
|
84,058
|
|
|
18,938
|
7.6250% Series C
Cumulative Redeemable Preferred Stock, liquidation preference
$25.00 per
share,
|
|
|
|
|
|
|
4,000,000 shares
authorized, 2,323,750 issued and outstanding as of June 30, 2017
and December
31, 2016
|
|
|
56,202
|
|
|
56,095
|
Equity
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
Preferred stock, $0.01 par value, 230,975,000 shares authorized;
none issued and outstanding
|
|
|
—
|
|
|
—
|
7.125% Series D
Cumulative Preferred Stock, liquidation preference $25.00 per
share, 4,000,000 shares authorized, 2,850,602 issued and
outstanding as of June 30, 2017 and December 31, 2016
|
|
|
68,710
|
|
|
68,760
|
Common stock - Class
A, $0.01 par value, 747,586,185 shares authorized; 24,191,951
and
19,567,506 shares issued and outstanding as of June 30, 2017 and
December 31, 2016,
respectively
|
|
|
242
|
|
|
196
|
Additional
paid-in-capital
|
|
|
321,948
|
|
|
257,403
|
Distributions in
excess of cumulative earnings
|
|
|
(87,130)
|
|
|
(84,631)
|
Total Stockholders'
Equity
|
|
|
303,770
|
|
|
241,728
|
Noncontrolling
Interests
|
|
|
|
|
|
|
Operating partnership
units
|
|
|
2,017
|
|
|
2,216
|
Partially owned properties
|
|
|
42,961
|
|
|
48,617
|
Total Noncontrolling
Interests
|
|
|
44,978
|
|
|
50,833
|
Total
Equity
|
|
|
348,748
|
|
|
292,561
|
TOTAL LIABILITIES,
REDEEMABLE PREFERRED STOCK AND EQUITY
|
|
$
|
1,440,783
|
|
$
|
1,241,322
|
Non-GAAP Financial Measures
The foregoing supplemental financial data includes certain
non-GAAP financial measures that we believe are helpful in
understanding our business and performance, as further described
below. Our definition and calculation of these non-GAAP financial
measures may differ from those of other REITs, and may, therefore,
not be comparable.
Funds from Operations and Adjusted Funds from
Operations
Funds from operations attributable to common stockholders
("FFO") is a non-GAAP financial measure that is widely recognized
as a measure of REIT operating performance. We consider FFO to be
an appropriate supplemental measure of our operating performance as
it is based on a net income analysis of property portfolio
performance that excludes non-cash items such as depreciation. The
historical accounting convention used for real estate assets
requires straight-line depreciation of buildings and improvements,
which implies that the value of real estate assets diminishes
predictably over time. Since real estate values historically rise
and fall with market conditions, presentations of operating results
for a REIT, using historical accounting for depreciation, could be
less informative. We define FFO, consistent with the National
Association of Real Estate Investment Trusts, or ("NAREIT's")
definition, as net income, computed in accordance with GAAP,
excluding gains (or losses) from sales of property, plus
depreciation and amortization of real estate assets, plus
impairment write-downs of depreciable real estate, and after
adjustments for unconsolidated partnerships and joint ventures.
Adjustments for unconsolidated partnerships and joint ventures will
be calculated to reflect FFO on the same basis.
In addition to FFO, we use adjusted funds from operations
attributable to common stockholders ("AFFO"). AFFO is a computation
made by analysts and investors to measure a real estate company's
operating performance by removing the effect of items that do not
reflect ongoing property operations. To calculate AFFO, we further
adjust FFO by adding back certain items that are not added to net
income in NAREIT's definition of FFO, such as acquisition and
pursuit costs, equity based compensation expenses, and any other
non-recurring or non-cash expenses, which are costs that do not
relate to the operating performance of our properties, and
subtracting recurring capital expenditures (and when calculating
the quarterly incentive fee payable to our Manager only, we further
adjust FFO to include any realized gains or losses on our real
estate investments).
Our calculation of AFFO differs from the methodology used for
calculating AFFO by certain other REITs and, accordingly, our AFFO
may not be comparable to AFFO reported by other REITs. Our
management utilizes FFO and AFFO as measures of our operating
performance after adjustment for certain non-cash items, such as
depreciation and amortization expenses, and acquisition and pursuit
costs that are required by GAAP to be expensed but may not
necessarily be indicative of current operating performance and that
may not accurately compare our operating performance between
periods. Furthermore, although FFO, AFFO and other supplemental
performance measures are defined in various ways throughout the
REIT industry, we also believe that FFO and AFFO may provide us and
our stockholders with an additional useful measure to compare our
financial performance to certain other REITs. We also use AFFO for
purposes of determining the quarterly incentive fee, if any,
payable to our Manager.
Neither FFO nor AFFO is equivalent to net income, including net
income attributable to common stockholders, or cash generated from
operating activities determined in accordance with GAAP.
Furthermore, FFO and AFFO do not represent amounts available for
management's discretionary use because of needed capital
replacement or expansion, debt service obligations or other
commitments or uncertainties. Neither FFO nor AFFO should be
considered as an alternative to net income, including net income
attributable to common stockholders, as an indicator of our
operating performance or as an alternative to cash flow from
operating activities as a measure of our liquidity.
We have acquired interests in thirteen additional operating
properties and three development investments and sold six
properties subsequent to June 30,
2016. The results presented in the table below are not
directly comparable and should not be considered an indication of
our future operating performance.
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
June
30,
|
|
|
June
30,
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
Net income (loss)
attributable to common stockholders
|
|
$
|
17,569
|
|
|
$
|
(5,043)
|
|
|
$
|
12,579
|
|
|
$
|
(9,179)
|
Common stockholders
pro-rata share of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate
depreciation and amortization(1)
|
|
|
9,326
|
|
|
|
6,769
|
|
|
|
19,129
|
|
|
|
13,239
|
Gain on sale of real
estate assets
|
|
|
(26,548)
|
|
|
|
—
|
|
|
|
(33,945)
|
|
|
|
—
|
Gain on sale of joint
venture interests
|
|
|
(6,332)
|
|
|
|
—
|
|
|
|
(6,332)
|
|
|
|
—
|
FFO Attributable
to Common Stockholders
|
|
$
|
(5,985)
|
|
|
$
|
1,726
|
|
|
$
|
(8,569)
|
|
|
$
|
4,060
|
Common stockholders
pro-rata share of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
non-cash interest expense
|
|
|
773
|
|
|
|
65
|
|
|
|
1,246
|
|
|
|
148
|
Acquisition and
pursuit costs
|
|
|
18
|
|
|
|
227
|
|
|
|
3,024
|
|
|
|
1,373
|
Management
internalization process expense
|
|
|
336
|
|
|
|
—
|
|
|
|
811
|
|
|
|
—
|
Loss on early
extinguishment of debt
|
|
|
1,534
|
|
|
|
—
|
|
|
|
1,534
|
|
|
|
—
|
Non-recurring
income
|
|
|
(16)
|
|
|
|
—
|
|
|
|
(16)
|
|
|
|
—
|
Non-cash preferred
returns and equity in income of unconsolidated real estate joint
ventures
|
|
|
(487)
|
|
|
|
—
|
|
|
|
(487)
|
|
|
|
—
|
Normally recurring
capital expenditures
|
|
|
(331)
|
|
|
|
(208)
|
|
|
|
(622)
|
|
|
|
(416)
|
Preferred stock
accretion
|
|
|
641
|
|
|
|
166
|
|
|
|
974
|
|
|
|
289
|
Non-cash equity
compensation
|
|
|
6,846
|
|
|
|
2,400
|
|
|
|
10,011
|
|
|
|
4,218
|
AFFO Attributable
to Common Stockholders
|
|
$
|
3,329
|
|
|
$
|
4,376
|
|
|
$
|
7,906
|
|
|
$
|
9,672
|
Weighted average
common shares outstanding - diluted
|
26,076,572
|
|
20,688,631
|
|
25,535,839
|
|
20,611,802
|
|
|
|
|
|
|
|
|
PER SHARE
INFORMATION:
|
|
|
|
|
|
|
|
FFO Attributable
to Common Stockholders - diluted
|
$
(0.23)
|
|
$
0.08
|
|
$
(0.34)
|
|
$
0.20
|
AFFO Attributable
to Common Stockholders - diluted
|
$
0.13
|
|
$
0.21
|
|
$
0.31
|
|
$
0.47
|
Pro forma AFFO
Attributable to Common Stockholders - diluted
(2)
|
$
0.36
|
|
N/A
|
|
N/A
|
|
N/A
|
__________________________________________________________________________________________________
|
(1 The
real estate depreciation and amortization amount includes our share
of consolidated real estate-related depreciation and amortization
of intangibles, less amounts attributable to noncontrolling
interests, and our similar estimated share of unconsolidated
depreciation and amortization, which is included in earnings of our
unconsolidated real estate joint venture
investments.
(2) Pro
forma AFFO for the three months ended June 30, 2017 assumes the
investment of $104 million in estimated available cash had occurred
on April 1, 2017:
|
|
|
|
|
Investment
|
#
|
Investment
|
MSA
|
#
Units
|
Amount
($MM's)
|
1
|
Acquisition -
Identified Assets
|
San Antonio &
Tyler, TX
|
1,408
|
$
48
|
2
|
Mezzanine Loan -
Identified Developments
|
Atlanta,
GA
|
399
|
7
|
3
|
Acquisition -
Unidentified Assets, assumes 5.75% cap rate
|
-
|
-
|
17
|
4
|
Mezzanine Loan -
Unidentified
|
-
|
-
|
32
|
|
Total
|
|
|
$
104
|
The pro forma guidance is being presented solely for purposes of
illustrating the potential impact of these pipeline transactions,
as well as future investments to be made with funds we have
available for investment, as if they had occurred at April 1, 2017, based on information currently
available to management and assumptions management has made with
respect to our future pipeline.
The Company is providing no assurances that any of the above
transactions are probable, or that they will close or that
management will identify or acquire investments consistent with our
pipeline assumptions, and the failure to do so would significantly
impact pro forma guidance. The actual timing of these investments,
if and when made, will vary materially from the assumed timing
reflected in the pro forma guidance, and actual quarterly results
will differ significantly from the pro forma guidance shown above.
Investors should not rely on pro forma guidance as a forecast of
the actual performance of the Company.
Earnings Before Interest, Income Taxes, Depreciation and
Amortization ("EBITDA")
EBITDA is defined as earnings before interest, income taxes,
depreciation and amortization, calculated on a consolidated basis.
We consider EBITDA to be an appropriate supplemental measure of our
performance because it eliminates depreciation, income taxes,
interest and non-recurring items, which permits investors to view
income from operations unobscured by non-cash items such as
depreciation, amortization, the cost of debt or non-recurring
items. Below is a reconciliation of net income (loss) attributable
to common stockholders to EBITDA (unaudited and dollars in
thousands).
|
Three Months
Ended
|
|
Six Months
Ended
|
|
June
30,
|
|
June
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to common stockholders
|
$
17,569
|
|
$
(5,043)
|
|
$
12,579
|
|
$
(9,179)
|
Net income (loss)
attributable to noncontrolling interest
|
10,171
|
|
(54)
|
|
18,900
|
|
(150)
|
Preferred stock
dividends
|
6,381
|
|
2,968
|
|
12,233
|
|
4,451
|
Preferred stock
accretion
|
647
|
|
168
|
|
984
|
|
293
|
Interest expense,
net
|
7,825
|
|
4,589
|
|
14,943
|
|
8,817
|
Depreciation and
amortization
|
10,387
|
|
7,789
|
|
21,331
|
|
15,298
|
EBITDA
|
$
52,980
|
|
$
10,417
|
|
$
80,970
|
|
$
19,530
|
Acquisition and
pursuit costs
|
18
|
|
249
|
|
3,200
|
|
1,457
|
Management
internalization process expense
|
340
|
|
-
|
|
820
|
|
-
|
Non-cash equity
compensation
|
6,919
|
|
2,436
|
|
10,119
|
|
4,281
|
Non-recurring
income
|
(17)
|
|
-
|
|
(17)
|
|
-
|
Gain on sale of real
estate investments
|
(33,574)
|
|
-
|
|
(50,040)
|
|
-
|
Gain on sale of real
estate joint venture interest
|
(10,238)
|
|
-
|
|
(10,238)
|
|
-
|
Loss on early
extinguishment of debt
|
1,639
|
|
-
|
|
1,639
|
|
-
|
Non-cash preferred
returns and equity in income of
unconsolidated real estate joint ventures
|
(491)
|
|
-
|
|
(491)
|
|
-
|
Adjusted
EBITDA
|
$
17,576
|
|
$
13,102
|
|
$
35,962
|
|
$
25,268
|
Recurring Capital Expenditures
We define recurring capital expenditures as expenditures that
are incurred at every property and exclude development, investment,
revenue enhancing and non-recurring capital expenditures.
Non-Recurring Capital Expenditures
We define non-recurring capital expenditures as expenditures for
significant projects that upgrade units or common areas and
projects that are revenue enhancing.
Same Store Properties
Same store properties are conventional multifamily residential
apartments which were owned and operational for the entire periods
presented, including each comparative period.
Property Net Operating Income ("Property NOI")
We believe that net operating income, or NOI, is a useful
measure of our operating performance. We define NOI as total
property revenues less total property operating expenses, excluding
depreciation and amortization and interest. Other REITs may use
different methodologies for calculating NOI, and accordingly, our
NOI may not be comparable to other REITs. We believe that this
measure provides an operating perspective not immediately apparent
from GAAP operating income or net income. We use NOI to evaluate
our performance on a same store and non-same store basis because
NOI measures the core operations of property performance by
excluding corporate level expenses and other items not related to
property operating performance and captures trends in rental
housing and property operating expenses. However, NOI should only
be used as an alternative measure of our financial performance.
The following table reflects net income (loss) attributable to
common stockholders together with a reconciliation to NOI and to
same store and non-same store contributions to consolidated NOI, as
computed in accordance with GAAP for the periods presented
(unaudited and amounts in thousands):
|
|
Three Months Ended
(1)
|
Six Months Ended
(2)
|
|
|
June
30,
|
June
30,
|
|
|
2017
|
2016
|
2017
|
2016
|
Net income (loss)
attributable to common stockholders
|
$
17,569
|
$
(5,043)
|
$
12,579
|
$
(9,179)
|
Add pro-rata
share:
|
|
|
|
|
|
Depreciation and
amortization
|
9,326
|
6,769
|
19,129
|
13,239
|
|
Amortization of
non-cash interest expense
|
773
|
65
|
1,246
|
148
|
|
Management
fees
|
6,099
|
1,394
|
8,836
|
2,591
|
|
Acquisition and
pursuit costs
|
18
|
227
|
3,024
|
1,373
|
|
Loss on early
extinguishment of debt
|
1,534
|
-
|
1,534
|
-
|
|
Corporate operating
expenses
|
1,679
|
1,666
|
3,112
|
2,935
|
|
Management
internalization process expense
|
336
|
-
|
811
|
-
|
|
Preferred
dividends
|
6,314
|
2,924
|
12,101
|
4,385
|
|
Preferred stock
accretion
|
641
|
166
|
974
|
289
|
Less pro-rata
share:
|
|
|
|
|
|
Other
income
|
16
|
-
|
16
|
-
|
|
Preferred returns and
equity in income of unconsolidated real estate joint
ventures
|
2,577
|
2,733
|
5,121
|
5,462
|
|
Interest income from
related parties
|
2,075
|
-
|
3,581
|
-
|
|
Gain on sale of joint
venture interest
|
6,332
|
-
|
6,332
|
-
|
|
Gain on sale of real
estate assets
|
26,548
|
-
|
33,945
|
-
|
Pro-rata share of
properties' income
|
6,741
|
5,435
|
14,351
|
10,319
|
Add:
|
|
|
|
|
|
|
Noncontrolling
interest pro-rata share of property income
|
856
|
1,065
|
2,103
|
2,081
|
Total property
income
|
7,597
|
6,500
|
16,454
|
12,400
|
Add:
|
|
|
|
|
|
|
Interest expense,
net
|
6,708
|
4,510
|
13,160
|
8,651
|
Net operating
income
|
14,305
|
11,010
|
29,614
|
21,051
|
Less:
|
|
|
|
|
|
|
Non-same store net
operating income
|
8,112
|
4,955
|
18,806
|
10,941
|
Same store net
operating income
|
$
6,193
|
$
6,055
|
$
10,808
|
$
10,110
|
|
(1) Same
Store sales for the three months ended June 30, 2017 related to the
following properties: Enders Place at Baldwin Park, ARIUM
Grandewood, Park & Kingston, ARIUM Palms, Ashton Reserve,
Sovereign, ARIUM at Palmer Ranch, ARIUM Gulfshore, and The Preserve
at Henderson Beach.
(2) Same Store sales for the six months ended June 30,
2017 related to the following properties: Enders Place at Baldwin
Park, ARIUM Grandewood, Park & Kingston, ARIUM Palms, Ashton
Reserve, Sovereign, ARIUM at Palmer Ranch, and ARIUM
Gulfshore.
|
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content:http://www.prnewswire.com/news-releases/bluerock-residential-growth-reit-announces-second-quarter-2017-results-300501047.html
SOURCE Bluerock Residential Growth REIT, Inc.