- Rental Income Grows 12.7% over the
Prior Year Quarter -- 9.6% Increase in Average
Monthly Revenue per Occupied Unit at
Stabilized Properties Compared to Third Quarter 2016 -
BRT APARTMENTS CORP. (NYSE:BRT), today announced operating results
for the three months ended June 30, 2017, the Company’s third
quarter of fiscal 2017.
“The favorable performance of our stabilized properties reflects
the benefit of our active management,” commented Jeffrey A. Gould,
President and Chief Executive Officer: “In the quarter, average
monthly rental revenue increased 9.6% to $936 per occupied unit at
stabilized properties, with strong occupancy of 94%. Our
ongoing efforts to enhance our portfolio by owning and operating
quality multi-family properties in attractive markets should, over
time, result in improved FFO and AFFO. Our ability to
associate with strong local partners allows us to expand our
geographic footprint across growth markets as we work to add value
for our stockholders.”
Financial
Results:
Net loss attributable to common stockholders was $3.4 million, or
$0.24 per diluted share, for the current three months, compared to
net income of $5.5 million, or $0.39 per diluted share, for the
three months ended June 30, 2016. The 2017 period includes
$5.7 million of non-cash depreciation expense, net of the minority
interest’s share of such expense, compared to $4.6 million of such
expense for the 2016 period, net of the minority interest’s share
of such expense. In addition, the 2017 period does not
include any gains from the sale of real estate compared to $7.9
million of gains from sales of multi-family properties, net of the
minority interest’s share of such gains, included in the 2016
period.
Funds from Operations, or FFO, for the three months ended June
30, 2017 grew to $2.6 million, or $0.19 per diluted share, an
increase of 46.2% per diluted share from $1.8 million, or $0.13 per
diluted share, in the third quarter of 2016. Adjusted Funds
from Operations, or AFFO, for the three months ended June 30, 2017
was $3.3 million, or $0.23 per diluted share, an increase of 35.3%
per diluted share from $2.3 million, or $0.17 per diluted share, in
the 2016 quarter. The improvement in FFO and AFFO was
primarily due to the capitalization of property acquisition costs
as a result of a change in accounting standards, with no
acquisition costs expensed in the current quarter compared to $1.4
million of acquisition costs expensed in the corresponding 2016
quarter. A description and reconciliation of non-GAAP
financial measures to GAAP financial measures is presented later in
this release.
Operating
Results:
As of June 30, 2017, BRT owns 35 multi-family properties with 9,890
units, including 445 units at two properties in lease-up and 402
units at a property under construction, located across 11
states. Many of these properties are owned through
consolidated joint ventures in which BRT generally owns a 70% to
80% equity interest. Average occupancy at stabilized
properties during the quarter was 94% compared to 94.1% for the
2016 quarter. The average rental rate per occupied unit at
stabilized properties during the quarter increased 9.6% to $936
from $854 for the 2016 quarter. For the current quarter,
stabilized properties represent 32 of our 35 multi-family
properties - excluded are two properties in lease up and a property
under construction.
Rental and other revenues from real estate properties for the
current three months grew 12.7% to $26.7 million from $23.7 million
for the quarter ended June 30, 2016, primarily due to property
acquisitions.
Total expenses for the quarter ended June 30, 2017 were $30.3
million compared to $27.7 million for the quarter ended June 30,
2016, primarily due to additional expenses related to property
acquisitions.
Portfolio Activity:
During the quarter ended June 30, 2017, the
Company acquired, with joint venture partners, three multi-family
properties with an aggregate of 1,085 units for $130.5 million,
including mortgage debt of $84.2 million obtained in connection
with the acquisitions. These acquisitions, which were
previously reported, include: a Class A newly constructed property
in the St Louis suburbs with 174 units that is currently in
lease-up, a land parcel at which the Company contemplates
developing a 402 unit multifamily property in West Nashville,
Tennessee and a 509 unit Class A stabilized property near Dallas,
Texas.
Subsequent Events:
In July 2017, the Company sold three multi-family properties
located near Houston, Texas for an aggregate of $39 million and
estimates that in the fourth fiscal quarter of 2017, the aggregate
gain the Company will recognize, net of a mortgage prepayment
charge and minority interest, will be approximately $8.9
million.
Balance Sheet:
At June 30, 2017, BRT had $9.8 million of cash and cash
equivalents, total assets of $979.4 million, total debt of $728.4
million and total stockholders’ equity of $162.9 million.
At August 1, 2017, BRT had approximately $23.4 million of cash
and cash equivalents.
Non-GAAP Financial Measures:
BRT discloses FFO and AFFO because it believes that such metrics
are widely recognized and appropriate measures of the performance
of an equity REIT.
BRT computes FFO in accordance with the "White Paper on Funds
From Operations" issued by the National Association of Real Estate
Investment Trusts ("NAREIT") and NAREIT's related guidance. FFO is
defined in the White Paper as net income (loss) (computed in
accordance with generally accepting accounting principles),
excluding gains (or losses) from sales of property, plus
depreciation and amortization, 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 funds from operations on the same basis. In computing
FFO, BRT does not add back to net income the amortization of costs
in connection with its financing activities or depreciation of
non-real estate assets. BRT computes AFFO by adjusting FFO
for loss on extinguishment of debt; straight-line rent accruals;
restricted stock and restricted stock unit expense and deferred
mortgage costs (including its share of its unconsolidated joint
ventures). Since the NAREIT White Paper only provides guidelines
for computing FFO, the computation of AFFO may vary from one REIT
to another.
BRT believes that FFO and AFFO are useful and standard
supplemental measures of the operating performance for equity REITs
and are used frequently by securities analysts, investors and other
interested parties in evaluating equity REITs, many of which
present FFO and AFFO when reporting their operating results. FFO
and AFFO are intended to exclude GAAP historical cost depreciation
and amortization of real estate assets, which assures that the
value of real estate assets diminish predictability over
time. In fact, real estate values have historically risen and
fallen with market conditions. As a result, BRT believes that
FFO and AFFO provide a performance measure that when compared year
over year, should reflect the impact to operations from trends in
occupancy rates, rental rates, operating costs, interest costs and
other matters without the inclusion of depreciation and
amortization, providing a perspective that may not be necessarily
apparent from net income. BRT also considers FFO and AFFO to
be useful in evaluating potential property acquisitions.
FFO and AFFO do not represent net income or cash flows from
operations as defined by GAAP. FFO and AFFO should not be
considered to be an alternative to net income as a reliable measure
of our operating performance; nor should FFO and AFFO be considered
an alternative to cash flows from operating, investing or financing
activities (as defined by GAAP) as measures of liquidity.
FFO and AFFO do not measure whether cash flow is sufficient to
fund all of our cash needs, including principal amortization and
capital improvements.
Management recognizes that there are limitations in the use of
FFO and AFFO. In evaluating BRT’s performance, management is
careful to examine GAAP measures such as net income (loss) and cash
flows from operating, investing and financing activities.
Management also reviews the reconciliation of net income (loss) to
FFO and AFFO.
Forward Looking Information:
Certain information contained herein is forward looking within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, including statements regarding the apparent improvement in
the economic environment and BRT’s ability to originate additional
loans. BRT intends such forward looking statements to be
covered by the safe harbor provisions for forward looking
statements contained in the Private Securities Litigation Reform
Act of 1995 and includes this statement for purposes of complying
with these safe harbor provisions. Forward-looking
statements, which are based on certain assumptions and describe our
future plans, strategies and expectations, are generally
identifiable by use of the words “may,” “will,” “believe,”
“expect,” “intend,” “anticipate,” “estimate,” “project,”
“apparent,” “experiencing” or similar expressions or variations
thereof. Forward looking statements, including statements
with respect to BRT’s multi-family property acquisition and
ownership activities, involve known and unknown risks,
uncertainties and other factors, which, in some cases, are beyond
BRT’s control and could materially affect actual results,
performance or achievements. Investors are cautioned not to
place undue reliance on any forward-looking statements and to
carefully review the section entitled “Item 1A. Risk Factors” in
our Annual Report on Form 10-K for the year ended September 30,
2016.
Additional Information:
BRT is a real estate investment trust that primarily owns,
operates and develops multi-family properties. Interested
parties are encouraged to review the Form 10-Q filed with the
Securities and Exchange Commission for the quarter ended June 30,
2017 and the supplemental disclosures regarding the quarter on the
investor relations section of the Company’s website at:
http://brtrealty.com/investor_relations for further details.
The Form 10-Q can also be linked through the “Investor Relations”
section of BRT’s website. For additional information on BRT’s
operations, activities and properties, please visit its website at
www.brtrealty.com.
| BRT APARTMENTS CORP. AND
SUBSIDIARIESCONDENSED BALANCE
SHEETS(Dollars in thousands) |
| |
|
|
|
| |
June 30, 2017 (Unaudited) |
|
September 30, 2016 |
|
ASSETS |
|
|
|
| Real estate properties,
net of accumulated depreciation and amortization of $57,997
and $41,995 |
$ |
890,100 |
|
|
$ |
759,576 |
|
| Real estate loan |
5,650 |
|
|
19,500 |
|
| Cash and cash
equivalents |
9,795 |
|
|
27,399 |
|
| Restricted cash |
5,791 |
|
|
7,383 |
|
| Other assets |
46,533 |
|
|
27,045 |
|
| Real estate properties
held for sale |
21,515 |
|
|
33,996 |
|
| Total
Assets |
$ |
979,384 |
|
|
$ |
874,899 |
|
| |
|
|
|
| LIABILITIES AND
EQUITY |
|
|
|
| Mortgages
payable, net of deferred costs of $6,754 and $5,873 |
$ |
691,337 |
|
|
$ |
588,457 |
|
| Junior
subordinated notes, net of deferred costs of $387 and $402 |
37,013 |
|
|
36,998 |
|
| Accounts
payable and accrued liabilities |
17,095 |
|
|
20,716 |
|
| Mortgage
payable held for sale |
— |
|
|
27,052 |
|
| Total
Liabilities |
745,445 |
|
|
673,223 |
|
| |
|
|
|
| Total BRT Apartments
Corp. stockholders’ equity |
162,942 |
|
|
151,290 |
|
| Non-controlling
interests |
70,997 |
|
|
50,386 |
|
| Total Equity |
233,939 |
|
|
201,676 |
|
| Total
Liabilities and Equity |
$ |
979,384 |
|
|
$ |
874,899 |
|
| BRT APARTMENTS CORP. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (Dollars in thousands, except per
share data) |
|
|
| |
Three Months Ended June
30, |
|
Nine Months Ended June
30, |
| |
|
| |
2017 |
|
2016 |
|
2017 |
|
2016 |
| Revenues: |
|
|
|
|
|
|
|
| Rental
and other revenues from real estate properties |
$ |
26,673 |
|
|
$ |
23,679 |
|
|
$ |
76,404 |
|
|
$ |
69,991 |
|
| Other
income |
188 |
|
|
608 |
|
|
980 |
|
|
2,641 |
|
| Total
revenues |
26,861 |
|
|
24,287 |
|
|
77,384 |
|
|
72,632 |
|
| |
|
|
|
|
|
|
|
| Expenses: |
|
|
|
|
|
|
|
| Real
estate operating expenses |
13,283 |
|
|
11,986 |
|
|
37,638 |
|
|
35,177 |
|
| Interest
expense |
7,180 |
|
|
6,014 |
|
|
20,269 |
|
|
17,594 |
|
| Advisor’s
fees, related party |
— |
|
|
— |
|
|
— |
|
|
693 |
|
| Property
acquisition costs |
— |
|
|
1,408 |
|
|
— |
|
|
2,418 |
|
| General
and administrative |
2,309 |
|
|
2,373 |
|
|
7,296 |
|
|
6,402 |
|
|
Depreciation |
7,561 |
|
|
5,871 |
|
|
21,630 |
|
|
16,487 |
|
| Total
expenses |
30,333 |
|
|
27,652 |
|
|
86,833 |
|
|
78,771 |
|
| Total revenue less
total expenses |
(3,472 |
) |
|
(3,365 |
) |
|
(9,449 |
) |
|
(6,139 |
) |
| Equity in loss of
unconsolidated joint ventures |
(307 |
) |
|
— |
|
|
(307 |
) |
|
— |
|
| Gain on sale of real
estate |
— |
|
|
10,263 |
|
|
35,838 |
|
|
35,098 |
|
| Gain on sale of
partnership interest |
— |
|
|
386 |
|
|
— |
|
|
386 |
|
| Loss on extinguishment
of debt |
— |
|
|
— |
|
|
(799 |
) |
|
(2,668 |
) |
| (Loss) income from
continuing operations |
(3,779 |
) |
|
7,284 |
|
|
25,283 |
|
|
26,677 |
|
| Provision
for taxes |
41 |
|
|
— |
|
|
1,499 |
|
|
— |
|
| (Loss) income from
continuing operations, net of taxes |
(3,820 |
) |
|
7,284 |
|
|
23,784 |
|
|
26,677 |
|
| |
|
|
|
|
|
|
|
| Income from
discontinued operations |
— |
|
|
— |
|
|
— |
|
|
12,679 |
|
| Net (loss) income |
(3,820 |
) |
|
7,284 |
|
|
23,784 |
|
— |
|
39,356 |
|
| Net loss (income)
attributable to non-controlling interests |
418 |
|
|
(1,804 |
) |
|
(15,645 |
) |
|
(10,974 |
) |
| Net (loss) income
attributable to common stockholders |
$ |
(3,402 |
) |
|
$ |
5,480 |
|
|
$ |
8,139 |
|
|
$ |
28,382 |
|
| |
|
|
|
|
|
|
|
| Basic and diluted per
share amounts attributable to common stockholders: |
|
|
|
|
|
|
|
| (Loss)
income from continuing operations |
$ |
(0.24 |
) |
|
$ |
0.39 |
|
|
$ |
0.58 |
|
|
$ |
1.00 |
|
| Income
from discontinued operations |
— |
|
|
— |
|
|
— |
|
|
1.02 |
|
| Basic and
diluted (loss) earnings per share |
$ |
(0.24 |
) |
|
$ |
0.39 |
|
|
$ |
0.58 |
|
|
$ |
2.02 |
|
| |
|
|
|
|
|
|
|
| Funds from operations -
Note 1 |
$ |
2,633 |
|
|
$ |
1,798 |
|
|
$ |
6,269 |
|
|
$ |
5,626 |
|
| Funds from operations
per common share - diluted - Note 2 |
$ |
0.19 |
|
|
$ |
0.13 |
|
|
$ |
0.45 |
|
|
$ |
0.40 |
|
| |
|
|
|
|
|
|
|
| Adjusted funds from
operations - Note 1 |
$ |
3,253 |
|
|
$ |
2,267 |
|
|
$ |
8,418 |
|
|
$ |
8,304 |
|
| Adjusted funds from
operations per common share - diluted -Note 2 |
$ |
0.23 |
|
|
$ |
0.17 |
|
|
$ |
0.61 |
|
|
$ |
0.59 |
|
| Weighted average number
of common shares outstanding: |
|
|
|
|
|
|
|
| Basic and diluted |
14,035,074 |
|
|
13,932,515 |
|
|
13,983,495 |
|
|
14,055,436 |
|
| BRT APARTMENTS CORP. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (Dollars in thousands, except per
share data) |
|
|
| |
Three Months Ended June
30, |
|
Nine Months EndedJune
30, |
| |
|
| |
2017 |
|
2016 |
|
2017 |
|
2016 |
| Note 1: |
|
|
|
|
|
|
|
| Funds from operations
is summarized in the following table: |
|
|
|
|
|
|
|
| GAAP Net (loss) income
attributable to common shareholders |
$ |
(3,402 |
) |
|
$ |
5,480 |
|
|
$ |
8,139 |
|
|
$ |
28,382 |
|
| Add: depreciation of
properties |
7,561 |
|
|
5,871 |
|
|
21,630 |
|
|
17,636 |
|
| Add: our share of
depreciation in unconsolidated joint ventures |
308 |
|
|
5 |
|
|
521 |
|
|
15 |
|
| Add: amortization of
deferred leasing costs |
— |
|
|
— |
|
|
— |
|
|
15 |
|
| Deduct: gain on sale of
real estate |
— |
|
|
(10,649 |
) |
|
(35,838 |
) |
|
(50,951 |
) |
| Adjustments for
non-controlling interests |
(1,834 |
) |
|
1,091 |
|
|
11,817 |
|
|
10,529 |
|
| NAREIT
Funds from operations attributable to common
shareholders |
$ |
2,633 |
|
|
$ |
1,798 |
|
|
$ |
6,269 |
|
|
$ |
5,626 |
|
| |
|
|
|
|
|
|
|
| Adjustments for
straight line rent accruals |
(10 |
) |
|
(1 |
) |
|
(46 |
) |
|
(130 |
) |
| Add: loss on
extinguishment of debt |
— |
|
|
— |
|
|
799 |
|
|
2,668 |
|
| Add: amortization of
restricted stock and restricted stock units |
353 |
|
|
271 |
|
|
1,063 |
|
|
689 |
|
| Add: amortization of
deferred mortgage costs |
349 |
|
|
248 |
|
|
874 |
|
|
1,416 |
|
| Adjustments for
non-controlling interests |
(72 |
) |
|
(49 |
) |
|
(541 |
) |
|
(1,965 |
) |
| Adjusted
funds from operations attributable to common
shareholders |
$ |
3,253 |
|
|
$ |
2,267 |
|
|
$ |
8,418 |
|
|
$ |
8,304 |
|
| |
|
|
|
|
|
|
|
| Note 2: |
|
|
|
|
|
|
|
| Funds from operations
per share is summarized in the following table: |
|
|
|
|
|
|
|
| GAAP Net (loss) income
attributable to common shareholders |
$ |
(0.24 |
) |
|
$ |
0.39 |
|
|
$ |
0.58 |
|
|
$ |
2.02 |
|
| Add: depreciation of
properties |
0.54 |
|
|
0.42 |
|
|
1.55 |
|
|
1.25 |
|
| Add: our share of
depreciation in unconsolidated joint ventures |
0.02 |
|
|
— |
|
|
0.04 |
|
|
— |
|
| Add: amortization of
deferred leasing costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
| Deduct: gain on sale of
real estate asset |
— |
|
|
(0.76 |
) |
|
(2.56 |
) |
|
(3.62 |
) |
| Adjustments for
non-controlling interests |
(0.13 |
) |
|
0.08 |
|
|
0.84 |
|
|
0.75 |
|
| NAREIT
Funds from operations per common share basic and
diluted |
$ |
0.19 |
|
|
$ |
0.13 |
|
|
$ |
0.45 |
|
|
$ |
0.40 |
|
| |
|
|
|
|
|
|
|
| Adjustments for
straight line rent accruals |
— |
|
|
— |
|
|
— |
|
|
(0.01 |
) |
| Add: loss on
extinguishment of debt |
— |
|
|
— |
|
|
0.06 |
|
|
0.19 |
|
| Add: amortization of
restricted stock and restricted stock units |
0.03 |
|
|
0.02 |
|
|
0.08 |
|
|
0.05 |
|
| Add: amortization of
deferred mortgage costs |
0.02 |
|
|
0.02 |
|
|
0.06 |
|
|
0.10 |
|
| Adjustments for
non-controlling interests |
(0.01 |
) |
|
— |
|
|
(0.04 |
) |
|
(0.14 |
) |
| Adjusted
funds from operations per common share basic and
diluted |
$ |
0.23 |
|
|
$ |
0.17 |
|
|
$ |
0.61 |
|
|
$ |
0.59 |
|
Contact: Investor Relations - (516) 466-3100
BRT APARTMENTS CORP.
60 Cutter Mill Road
Suite 303
Great Neck, New York 11021
Telephone (516) 466-3100
Telecopier (516) 466-3132
www.BRTRealty.com
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