NEW YORK, May 8, 2017 /PRNewswire/ -- Bluerock
Residential Growth REIT, Inc. (NYSE MKT: BRG) ("the Company")
announced today its financial results for the quarter ended
March 31, 2017.
Highlights
- Total revenues grew 61% to $26.7
million for the quarter from $16.6
million for the prior year quarter primarily as a result of
significant investment activity in the past year.
- Net loss attributable to common stockholders for the first
quarter of 2017 was $(0.20) per
share, as compared to $(0.20) per
share in the prior year period. Net loss attributable to common
stockholders included non-cash expenses of $0.55 per share in the first quarter of 2017 vs.
$0.41 per share for the prior year
period.
- Adjusted funds from operations attributable to common
stockholders ("AFFO") was $4.6
million for the quarter compared to $5.3 million for the prior year quarter.
- AFFO per share is $0.18 for the
first quarter of 2017 as compared to $0.26 for the first quarter of 2016, and exceeded
guidance of $0.03 - $0.04.
- Pro forma AFFO per share of $0.38
for the first quarter exceeded pro forma guidance of $0.27 to $0.29 per share.
- The Company paid the full amount of the first quarter's
management fees of $2.8 million in
LTIP Units in lieu of cash payment. This favorably impacted both
AFFO per share and pro forma AFFO per share by $0.09.
- Property Net Operating Income (NOI) grew 53% to $15.3 million for the quarter, from $10.0 million in the prior year quarter.
- Property NOI margins were 60.9% of revenue for the quarter, an
improvement from 60.4% of revenue in the prior year quarter.
- Same store NOI increased 10.9% for the quarter, as compared to
the prior year quarter.
- Consolidated real estate investments, at cost, increased 7% to
$1.1 billion at March 31, 2017 from $1.0
billion at December 31,
2016.
- The Company invested in two operating properties totaling 683
units for a total purchase price of approximately $116.7 million during the first quarter.
- The Company declared monthly dividends for the second quarter
of 2017 equal to a quarterly rate of $0.29 per share on the Company's Class A common
stock. This equates to an 9.4% annualized yield based on the
closing price of $12.31 for the Class
A common stock as of March 31,
2017.
- The Company sold 23,569 shares of Series B preferred stock with
associated warrants at a public offering price of $1,000 per unit, for gross proceeds of
approximately $23.6 million during
the first quarter, an increase of 86% over the fourth quarter.
- On January 17, 2017, the Company
completed an underwritten offering of 4.6 million shares of Class A
common stock at a public offering price of $13.15 per share for gross proceeds of
$60.5 million, including the
underwriters' overallotment option, which closed on January 24, 2017.
Management Commentary
"We are pleased to report the acquisition of two operating
properties totaling 683 units for approximately $117 million, a Class A common stock capital
raise with gross proceeds of approximately $60 million and solid portfolio performance
during the first quarter," said Ramin
Kamfar, the Company's Chairman and CEO. "We continue
to build a high quality portfolio in our current footprint of
growth markets in the Sunbelt, from the Carolinas to Florida and Texas."
First Quarter Acquisition, Development and Disposition
Activity
- On December 29, 2016, the Company
was redeemed of its preferred equity interest in the West Morehead
development in Charlotte, North
Carolina, and in exchange obtained a 0.5% common equity
interest and provided an approximately $21.3
million mezzanine loan for the development. On January 5, 2017, the Company increased the
mezzanine loan amount to approximately $24.6
million.
- On January 6, 2017, the Company
was redeemed of the substantial majority of its common equity
ownership interest in the APOK Townhomes development in
Boca Raton, Florida, and in
exchange provided an approximately $11.2
million mezzanine loan for the development.
- On February 17, 2017, the Company
acquired a 91.8% interest in a 382-unit apartment community located
in Morrisville, North Carolina,
which is part of the Raleigh-Durham Combined Statistical Area,
known as Preston View Apartments at a total purchase price of
approximately $59.5 million.
- On March 3, 2017, the Company was
redeemed of its preferred equity interest in the Domain development
located in Garland, Texas, and in
exchange obtained a 0.5% common equity interest and provided an
approximately $20.3 million mezzanine
loan for the development.
- On March 9, 2017, the Company
acquired a 91.8% interest in a 301-unit apartment community in
Charlotte, North Carolina, known
as Wesley Village Apartments at a total purchase price of
approximately $57.2 million.
- On February 22, 2017, the Company
sold its interest in the Village Green of Ann Arbor apartments in Ann Arbor, Michigan at a total sale price of
approximately $71.4 million,
recognized a pro rata gain of $7.8
million, with net proceeds of approximately $13.6 million to the Company, generating an
internal rate of return of 38% on BRG's equity investment in the
project, for a return on equity of 2.32x.
- The Company has determined to abandon the pursuit of the East
San Marco proposed development in Jacksonville, Florida and has expensed all
predevelopment expenditures amounting to approximately $2.9 million which is included in acquisition and
pursuit costs on the statement of operations.
Pending Investments and Pending Sales at March 31, 2017
- The Company has an agreement which entitles the Company to make
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 $147.7 million of
existing mortgage debt.
- On April 26, 2017, the Company
closed on the sale of Lansbrook Village, located in Palm Harbor, Florida after all sale
contingencies were met. The 90% owned property was sold for
approximately $82.4 million. After
deduction for assumption of the existing mortgage indebtedness of
$57.2 million and payment of closing
costs and fees, the sale of the property generated net proceeds to
the Company of approximately $19.1
million, generating an internal rate of return of 23% on
BRG's equity investment, for a return on equity of 1.5x.
First Quarter 2017 Financial Results
Net loss attributable to common stockholders for the first
quarter of 2017 was $5.0 million,
compared to a net loss of $4.1
million in the prior year period. The change in net loss was
primarily driven by positive increases in property NOI of
$5.3 million, interest income of
$1.5 million and a gain on sale of
real estate investments of $16.5
million, offset by increases in management fees of
$1.6 million, acquisition and pursuit
costs of $2.0 million, management
internalization process expense of $0.5
million, depreciation and amortization expense of
$3.4 million, interest expense of
$2.9 million, preferred stock expense
of $4.6 million and non-controlling
income allocation of $8.8
million.
AFFO for the first quarter of 2017 was $4.6 million, or $0.18 per diluted share, compared to $5.3 million, or $0.26 per share in the prior year period.
AFFO was positively impacted by increases in property NOI of
$5.3 million arising from significant
investment activity, interest income of $1.5
million and offset by interest expense of $2.5 million and the expense of preferred stock
dividends of $4.4 million.
Same Store Portfolio Performance
Same store NOI for the first quarter of 2017 increased by 10.9%
from the same period in the prior year. There was a 6.2% increase
in same store property revenues compared to the same prior year
period, primarily attributable to a 4.7% increase in average rental
rates, an 80 basis point increase in average occupancy and an
additional 12 units acquired at our Lansbrook property. Same
store expenses decreased 0.8% due to lower real estate tax expense
in 2017.
Management Internalization
On November 7, 2016, the Company
announced that it had begun the process of internalizing the
management of the Company by forming a special committee of the
board of directors comprised solely of the independent directors of
the board to pursue the internalization, along with hiring other
advisors. The Company is targeting internalizing the
management of the Company in the third quarter of 2017, though it
provides no assurance as to the timing or completion of the
internalization process.
Dividend Details
On April 7, 2017, our board of
directors authorized, and we declared, monthly dividends for the
second quarter of 2017 equal to a quarterly rate of $0.29 per share on our Class A common stock,
payable to the stockholders of record as of April 25, 2017, which was paid in cash on
May 5, 2017, and as of May 25, 2017 and June 23,
2017, which will be paid in cash on June 5, 2017 and July 5,
2017, respectively. 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.
The declared dividends equal a monthly dividend on the Class A
common stock as follows: $0.096666
per share for the dividend paid to stockholders of record as of
April 25, 2017, $0.096667 per share for the dividend which will
be paid to stockholders of record as of May
25, 2017, and June 23, 2017. 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 April 7, 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 April 25, 2017, which was paid in cash on
May 5, 2017, and as of May 25, 2017, and June 23,
2017, which will be paid in cash on June 5, 2017 and July 5,
2017, respectively.
Q2 2017 Outlook
For the second quarter of 2017, the Company anticipates AFFO in
the range of $0.01 to $0.02 per
share, and $0.26 to $0.28 per share
on a pro forma basis. For assumptions underlying earnings guidance,
please see page 29 of Company's Q1 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 Monday, May 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 June 8, 2017 at
http://services.choruscall.com/links/brg170508.html, as well as by
dialing +1 (877) 344-7529 in the U.S., or +1 (412) 317-0088
internationally, and requesting conference number 10105342.
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. 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 investments, operating properties and convertible
preferred equity investments, as of March 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Properties
|
|
Location
|
|
Year Built/
Renovated (1)
|
|
Ownership
Interest
|
|
Units
|
|
Average Rent
(2)
|
|
%
Occupied
|
|
ARIUM at Palmer
Ranch
|
|
Sarasota,
FL
|
|
2016
|
|
95%
|
|
320
|
|
$
1,182
|
|
98%
|
|
ARIUM
Grandewood
|
|
Orlando,
FL
|
|
2005
|
|
95%
|
|
306
|
|
1,232
|
|
96%
|
|
ARIUM
Gulfshore
|
|
Naples, FL
|
|
2016
|
|
95%
|
|
368
|
|
1,209
|
|
95%
|
|
ARIUM
Palms
|
|
Orlando,
FL
|
|
2008
|
|
95%
|
|
252
|
|
1,240
|
|
94%
|
|
ARIUM Pine
Lakes
|
|
Port St. Lucie,
FL
|
|
2003
|
|
85%
|
|
320
|
|
1,087
|
|
98%
|
|
ARIUM
Westside
|
|
Atlanta,
GA
|
|
2008
|
|
90%
|
|
336
|
|
1,451
|
|
99%
|
|
Ashton
Reserve
|
|
Charlotte,
NC
|
|
2015
|
|
100%
|
|
473
|
|
1,032
|
|
97%
|
|
Enders Place at
Baldwin Park
|
|
Orlando,
FL
|
|
2003
|
|
90%
|
|
220
|
|
1,629
|
|
97%
|
|
Fox Hill
|
|
Austin, TX
|
|
2010
|
|
95%
|
|
288
|
|
1,202
|
|
96%
|
|
Lansbrook
Village
|
|
Palm Harbor,
FL
|
|
2004
|
|
90%
|
|
621
|
|
1,233
|
|
93%
|
|
Legacy at
Southpark
|
|
Austin, TX
|
|
2016
|
|
90%
|
|
250
|
|
1,200
|
|
96%
|
|
MDA
Apartments
|
|
Chicago,
IL
|
|
2006
|
|
35%
|
|
190
|
|
2,299
|
|
94%
|
|
Nevadan
|
|
Atlanta,
GA
|
|
1990
|
|
90%
|
|
480
|
|
1,057
|
|
96%
|
|
Park &
Kingston
|
|
Charlotte,
NC
|
|
2015
|
|
96%
|
|
168
|
|
1,172
|
|
95%
|
|
Preston
View
|
|
Morrisville,
NC
|
|
2000
|
|
92%
|
|
382
|
|
1,060
|
|
93%
|
|
Roswell City
Walk
|
|
Roswell,
GA
|
|
2015
|
|
98%
|
|
320
|
|
1,403
|
|
95%
|
|
Sorrel
|
|
Frisco, TX
|
|
2015
|
|
95%
|
|
352
|
|
1,230
|
|
92%
|
|
Sovereign
|
|
Fort Worth,
TX
|
|
2015
|
|
95%
|
|
322
|
|
1,292
|
|
94%
|
|
The Brodie
|
|
Austin, TX
|
|
2001
|
|
93%
|
|
324
|
|
1,135
|
|
94%
|
|
The Preserve at
Henderson Beach
|
|
Destin, FL
|
|
2009
|
|
100%
|
|
340
|
|
1,312
|
|
94%
|
|
Wesley
Village
|
|
Charlotte,
NC
|
|
2010
|
|
92%
|
|
301
|
|
1,299
|
|
95%
|
|
Operating
Properties Subtotal/Average
|
|
|
|
|
|
6,933
|
|
$
1,254
|
|
95%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible
Preferred Equity/Mezzanine Loan Investments
|
|
|
|
|
|
|
|
Pro Forma Average
Rent (3)
|
|
|
|
Alexan
CityCentre(4)
|
|
Houston,
TX
|
|
2017
|
|
|
|
340
|
|
$
2,144
|
|
-
|
|
Alexan Southside
Place (4)
|
|
Houston,
TX
|
|
2018
|
|
|
|
270
|
|
2,012
|
|
-
|
|
APOK Townhomes
(4)
|
|
Boca Raton,
FL
|
|
2019
|
|
|
|
90
|
|
2,549
|
|
-
|
|
Crescent Perimeter
(4)
|
|
Atlanta,
GA
|
|
2019
|
|
|
|
320
|
|
1,749
|
|
-
|
|
Domain Phase 1
(4)
|
|
Garland,
TX
|
|
2019
|
|
|
|
299
|
|
1,469
|
|
-
|
|
Flagler Village
(4)
|
|
Fort Lauderdale,
FL
|
|
2020
|
|
|
|
384
|
|
2,481
|
|
-
|
|
Helios
(4)
|
|
Atlanta,
GA
|
|
2017
|
|
|
|
282
|
|
1,486
|
|
-
|
|
Lake Boone Trail
(4)
|
|
Raleigh,
NC
|
|
2018
|
|
|
|
245
|
|
1,271
|
|
-
|
|
Vickers Village
(4)
|
|
Roswell,
GA
|
|
2018
|
|
|
|
79
|
|
3,176
|
|
-
|
|
West Morehead
(4)
|
|
Charlotte,
NC
|
|
2019
|
|
|
|
286
|
|
1,507
|
|
-
|
|
Whetstone
|
|
Durham, NC
|
|
2015
|
|
|
|
204
|
|
1,202
|
|
92%
|
|
Convertible
Preferred Equity/Mezzanine Loan Investments
Subtotal/Average
|
|
|
|
2,799
|
|
$
1,828
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Properties and Convertible Preferred Equity/Mezzanine Loan
Investments Total/Average
|
|
9,732
|
|
$
1,422
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Represents date of last
significant renovation or year built if there were no
renovations.
|
|
(2)
Represents the average monthly rent per occupied unit for all
occupied units for the three months ended March 31,
2017.
|
|
(3) 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.
Average rent is pro forma based on underwriting.
|
|
(4) Property is currently in
development.
|
|
Consolidated
Statement of Operations
|
For the Three
Months Ended March 31, 2017 and 2016
|
(Unaudited and
dollars in thousands except for share and per share
data)
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
March
31,
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
Net rental
income
|
|
$
|
23,867
|
|
|
$
|
15,928
|
|
|
|
Other property
revenues
|
|
|
1,272
|
|
|
|
706
|
|
|
|
Interest income from
related parties
|
|
|
1,523
|
|
|
|
—
|
|
|
|
Total
revenues
|
|
|
26,662
|
|
|
|
16,634
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
Property
operating
|
|
|
9,830
|
|
|
|
6,593
|
|
|
|
General and
administrative
|
|
|
1,449
|
|
|
|
1,273
|
|
|
|
Management
fees
|
|
|
2,768
|
|
|
|
1,214
|
|
|
|
Acquisition and
pursuit costs
|
|
|
3,182
|
|
|
|
1,209
|
|
|
|
Management
internalization process
|
|
|
481
|
|
|
|
—
|
|
|
|
Depreciation and
amortization
|
|
|
10,944
|
|
|
|
7,510
|
|
|
|
Total
expenses
|
|
|
28,654
|
|
|
|
17,799
|
|
|
|
Operating
loss
|
|
|
(1,992)
|
|
|
|
(1,165)
|
|
|
|
Other income
(expense)
|
|
|
|
|
|
|
|
|
|
|
Preferred returns and
equity in income of unconsolidated real estate joint
ventures
|
|
|
2,572
|
|
|
|
2,768
|
|
|
|
Gain on sale of real
estate investments
|
|
|
16,466
|
|
|
|
—
|
|
|
|
Interest expense,
net
|
|
|
(7,118)
|
|
|
|
(4,228)
|
|
|
|
Total other income
(expense)
|
|
|
11,920
|
|
|
|
(1,460)
|
|
|
|
Net income
(loss)
|
|
|
9,928
|
|
|
|
(2,625)
|
|
|
|
Preferred stock
dividends
|
|
|
(5,851)
|
|
|
|
(1,482)
|
|
|
|
Preferred stock
accretion
|
|
|
(338)
|
|
|
|
(125)
|
|
|
|
Net income (loss)
attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
Operating partnership
units
|
|
|
(56)
|
|
|
|
(62)
|
|
|
|
Partially-owned
properties
|
|
|
8,785
|
|
|
|
(35)
|
|
|
|
Net income (loss)
attributable to noncontrolling interests
|
|
|
8,729
|
|
|
|
(97)
|
|
|
|
Net loss
attributable to common stockholders
|
|
$
|
(4,990)
|
|
|
$
|
(4,135)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per
common share - Basic
|
|
$
|
(0.20)
|
|
|
$
|
(0.20)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per
common share – Diluted
|
|
$
|
(0.20)
|
|
|
$
|
(0.20)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
basic common shares outstanding
|
|
|
24,989,621
|
|
|
|
20,521,596
|
|
|
|
Weighted average
diluted common shares outstanding
|
|
|
24,989,621
|
|
|
|
20,521,596
|
|
|
|
Consolidated
Balance Sheets
|
First Quarter
2017
|
(Unaudited and
dollars in thousands except for share and per share
amounts)
|
|
|
|
March 31,
2017
|
|
|
December 31,
2016
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Net Real Estate
Investments
|
|
|
|
|
|
|
|
|
Land
|
|
$
|
152,768
|
|
|
$
|
142,274
|
|
Buildings and
improvements
|
|
|
897,890
|
|
|
|
848,445
|
|
Furniture, fixtures
and equipment
|
|
|
28,774
|
|
|
|
27,617
|
|
Construction in
progress
|
|
|
16,768
|
|
|
|
10,878
|
|
Total Gross Real Estate
Investments
|
|
|
1,096,200
|
|
|
|
1,029,214
|
|
Accumulated
depreciation
|
|
|
(44,535)
|
|
|
|
(42,137)
|
|
Total Net Real Estate
Investments
|
|
|
1,051,665
|
|
|
|
987,077
|
|
Cash and cash
equivalents
|
|
|
109,971
|
|
|
|
82,047
|
|
Restricted
cash
|
|
|
22,954
|
|
|
|
45,402
|
|
Notes and accrued
interest receivable from related parties
|
|
|
56,847
|
|
|
|
21,267
|
|
Due from
affiliates
|
|
|
890
|
|
|
|
948
|
|
Accounts receivable,
prepaid and other assets
|
|
|
7,946
|
|
|
|
8,610
|
|
Preferred equity
investments and investments in unconsolidated real estate joint
ventures
|
|
|
92,186
|
|
|
|
91,132
|
|
In-place lease
intangible assets, net
|
|
|
3,713
|
|
|
|
4,839
|
|
Total
Assets
|
|
$
|
1,346,172
|
|
|
$
|
1,241,322
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES,
REDEEMABLE PREFERRED STOCK AND EQUITY
|
|
|
|
|
|
|
|
|
Mortgages
payable
|
|
$
|
750,811
|
|
|
$
|
710,575
|
|
Accounts
payable
|
|
|
1,862
|
|
|
|
1,669
|
|
Other accrued
liabilities
|
|
|
14,451
|
|
|
|
13,431
|
|
Due to
affiliates
|
|
|
3,587
|
|
|
|
2,409
|
|
Distributions
payable
|
|
|
8,089
|
|
|
|
7,328
|
|
Total
Liabilities
|
|
|
778,800
|
|
|
|
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 March 31, 2017 and December 31,
2016
|
|
|
138,431
|
|
|
|
138,316
|
|
|
Series B Redeemable
Preferred Stock, liquidation preference $1,000 per share, 150,000
shares authorized, 45,051 and 21,482 issued and outstanding as of
March 31, 2017 and December 31, 2016, respectively
|
|
|
39,653
|
|
|
|
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 March 31, 2017 and December 31, 2016
|
|
|
56,138
|
|
|
|
56,095
|
|
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 March
31, 2017 and December 31,
2016
|
|
|
68,710
|
|
|
|
68,760
|
|
Common stock - Class
A, $0.01 par value, 747,586,185 shares authorized; 24,190,914 and
19,567,506 shares issued and outstanding as of March 31, 2017 and
December 31, 2016, respectively
|
|
|
242
|
|
|
|
196
|
|
Additional
paid-in-capital
|
|
|
317,665
|
|
|
|
257,403
|
|
Distributions in
excess of cumulative earnings
|
|
|
(97,131)
|
|
|
|
(84,631)
|
|
Total Stockholders'
Equity
|
|
|
289,486
|
|
|
|
241,728
|
|
Noncontrolling
Interests
|
|
|
|
|
|
|
|
|
Operating partnership
units
|
|
|
1,911
|
|
|
|
2,216
|
|
Partially owned properties
|
|
|
41,753
|
|
|
|
48,617
|
|
Total Noncontrolling
Interests
|
|
|
43,664
|
|
|
|
50,833
|
|
Total
Equity
|
|
|
333,150
|
|
|
|
292,561
|
|
TOTAL LIABILITIES,
REDEEMABLE PREFERRED STOCK AND EQUITY
|
|
$
|
1,346,172
|
|
|
$
|
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 expenses, 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 eight additional operating
properties and one investment accounted for on the equity method of
accounting and sold three properties subsequent to March 31, 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
|
|
|
|
March
31,
|
|
|
|
2017
|
|
|
2016
|
|
Net (loss) income
attributable to common stockholders
|
|
$
|
(4,990)
|
|
|
$
|
(4,135)
|
|
Common stockholders
pro-rata share of:
|
|
|
|
|
|
|
|
|
Real estate
depreciation and amortization(1)
|
|
|
9,802
|
|
|
|
6,470
|
|
Gain on sale of real
estate assets
|
|
|
(7,397)
|
|
|
|
—
|
|
FFO Attributable
to Common Stockholders
|
|
$
|
(2,585)
|
|
|
$
|
2,335
|
|
Common stockholders
pro-rata share of:
|
|
|
|
|
|
|
|
|
Amortization of non-cash
interest expense
|
|
|
474
|
|
|
|
83
|
|
Acquisition and pursuit costs
|
|
|
3,006
|
|
|
|
1,147
|
|
Normally recurring
capital expenditures
|
|
|
(291)
|
|
|
|
(208)
|
|
Management
internalization process
|
|
|
475
|
|
|
|
—
|
|
Preferred stock
accretion
|
|
|
333
|
|
|
|
123
|
|
Non-cash equity
compensation
|
|
|
3,165
|
|
|
|
1,818
|
|
AFFO Attributable
to Common Stockholders
|
|
$
|
4,577
|
|
|
$
|
5,298
|
|
Weighted average
common shares outstanding
|
|
|
24,990,282
|
|
|
|
20,534,974
|
|
|
|
|
|
|
|
|
|
|
PER SHARE
INFORMATION:
|
|
|
|
|
|
|
|
|
FFO Attributable
to Common Stockholders – diluted
|
|
$
|
(0.10)
|
|
|
$
|
0.11
|
|
AFFO Attributable
to Common Stockholders – diluted
|
|
$
|
0.18
|
|
|
$
|
0.26
|
|
Pro forma AFFO
Attributable to Common Stockholders –
diluted(2)
|
|
$
|
0.38
|
|
|
|
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 March 31, 2017 assumes
the investment of $150 million in estimated available cash had
occurred on January 1, 2017:
|
|
|
|
|
Investment
|
#
|
Investment
|
MSA
|
#
Units
|
Amount
($MM's)
|
1
|
Additional
Investment - Lake Boone Preferred Equity
|
Raleigh,
NC
|
245
|
$
2
|
2
|
Additional Investment
- West Morehead Mezzanine Loan
|
Charlotte,
NC
|
286
|
3
|
3
|
Mezzanine Loan -
Identified Developments
|
Dallas, TX; Boca
Raton, Jacksonville & Ft. Lauderdale, FL; Atlanta,
GA
|
1,438
|
61
|
4
|
Acquisition -
Identified Assets
|
Morrisville &
Charlotte, NC
|
683
|
35
|
5
|
Acquisition -
Unidentified Assets, assumes 5.75% cap rate
|
-
|
-
|
27
|
6
|
Mezzanine Loan -
Unidentified
|
-
|
-
|
22
|
|
Total
|
|
|
$
150
|
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 January 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 loss attributable to common
stockholders to EBITDA (unaudited and dollars in thousands).
|
Three Months
Ended
|
|
March
31,
|
|
2017
|
2016
|
Net (loss) income
attributable to common stockholders
|
$
|
(4,990)
|
$
|
(4,135)
|
Net (loss) income
attributable to noncontrolling interest
|
|
8,729
|
|
(97)
|
Interest
expense
|
|
7,118
|
|
4,228
|
Depreciation and
amortization
|
|
10,944
|
|
7,510
|
Acquisition and
pursuit costs
|
|
3,182
|
|
1,209
|
Management
internalization process expense
|
|
481
|
|
-
|
Preferred stock
accretion
|
|
338
|
|
125
|
Non-cash equity
compensation
|
|
3,201
|
|
1,845
|
Gain on sale of real
estate investments
|
|
(16,466)
|
|
-
|
|
|
|
|
|
EBITDA
|
$
|
12,537
|
$
|
10,685
|
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 same store and non-same store
contributions to consolidated NOI together with a reconciliation of
NOI to net loss attributable to common stockholders as computed in
accordance with GAAP for the periods presented (unaudited and
amounts in thousands):
|
|
Three Months Ended
(1)
|
|
|
March
31,
|
|
|
2017
|
2016
|
Net loss attributable
to common stockholders
|
$
(4,990)
|
$
(4,135)
|
Add pro-rata
share:
|
|
|
|
Depreciation and
amortization
|
9,802
|
6,470
|
|
Amortization of
non-cash interest expense
|
474
|
83
|
|
Management
fees
|
2,737
|
1,197
|
|
Acquisition and
pursuit costs
|
3,006
|
1,147
|
|
Corporate operating
expenses
|
1,433
|
1,269
|
|
Management
internalization process
|
475
|
-
|
|
Preferred
dividends
|
5,786
|
1,461
|
|
Preferred stock
accretion
|
333
|
123
|
Less pro-rata
share:
|
|
|
|
Preferred returns and
equity in income of unconsolidated real estate joint
ventures
|
2,543
|
2,730
|
|
Interest income from
related parties
|
1,506
|
-
|
|
Gain on sale of real
estate assets
|
7,397
|
-
|
Pro-rata share of
properties' income
|
7,610
|
4,885
|
Add:
|
|
|
|
|
Noncontrolling
interest pro-rata share of property income
|
1,246
|
1,015
|
Total property
income
|
8,856
|
5,900
|
Add:
|
|
|
|
|
Interest expense,
net
|
6,453
|
4,141
|
Net operating
income
|
15,309
|
10,041
|
Less:
|
|
|
|
|
Non-same store net
operating income
|
7,031
|
2,578
|
Same store net
operating income
|
$
8,278
|
$
7,463
|
|
(1) Same
Store sales for the three months ended March 31, 2017 related to
the following properties: Enders Place at Baldwin Park, MDA
Apartments, Lansbrook Village, ARIUM Grandewood, Fox Hill, Park
& Kingston, ARIUM Palms, Ashton Reserve, Sovereign, ARIUM at
Palmer Ranch, and ARIUM Gulfshore.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/bluerock-residential-growth-reit-announces-first-quarter-2017-results-300452815.html
SOURCE Bluerock Residential Growth REIT, Inc.