- Rental Revenue
Increases 12.4% - - Acquired Two Multi-Family
Properties with 489 Units for $51.3 Million -
BRT APARTMENTS CORP. (NYSE:BRT), today announced operating results
for the three months ended June 30, 2018, the Company’s third
quarter of fiscal 2018.
Fiscal Third Quarter Highlights:
- Rental revenue increased 12.4% to $30.0 million in the current
quarter from $26.7 million in the corresponding 2017 quarter.
- Net loss of $0.33 per diluted share compared to a net loss of
$0.24 in the same quarter in 2017. Net loss includes $0.49
and $0.41 per diluted share of non-cash depreciation expense during
the three months ended June 30, 2018 and 2017, respectively, after
giving effect to $0.22 and $0.13 per diluted share, respectively,
of depreciation expense allocated to non-controlling
interests.
- Increased FFO per diluted share to $0.20 from $0.19 in the same
2017 quarter.
- Grew AFFO per diluted share 4.3% to $0.24 from $0.23 in the
same 2017 quarter.
Jeffrey A. Gould, President and Chief Executive Officer, stated:
“BRT had another strong quarter as we were able to grow our rental
revenues by more than 12% driven by our acquisition activity.
We remain disciplined in our capital deployment and intend to
allocate funds primarily to acquire value add properties in growth
markets. During the quarter, we added 489 units at properties
located in Daytona, Florida and Grand Prairie, Texas. Our
pipeline remains full and our ability to acquire additional
properties will benefit from the capital raised through our
at-the-market equity sales program. We remain focused on
consistently improving our portfolio to grow our dividend and
increase stockholder value.”
Financial
Results:
Net loss attributable to common stockholders was $4.7 million, or
$0.33 per diluted share, for the current three months, as compared
to net loss of $3.4 million, or $0.24 per diluted share, for the
three months ended June 30, 2017. Net loss includes $0.49 and
$0.41 per diluted share of non-cash depreciation expense in the
2018 and 2017 quarters, respectively, after giving effect to $0.22
and $0.13 per diluted share, respectively, of depreciation expense
allocated to non-controlling interests.
Funds from Operations, or FFO1, for the three months ended June
30, 2018 grew to $2.7 million, or $0.20 per diluted share, an
increase of 5.3% per diluted share from $2.6 million, or $0.19 per
diluted share, in the third quarter of 2017. Adjusted Funds
from Operations, or AFFO, for the three months ended June 30, 2018
was $3.4 million, or $0.24 per diluted share, an increase of 4.3%
per diluted share from $3.3 million, or $0.23 per diluted share, in
the year ago period.
____________________1 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, 2018, BRT owns or has interests in 39
multi-family properties with 11,147 units, including 1,428 units at
properties under development or owned by unconsolidated joint
ventures, located across 11 states. As of July 31, 2018, six
properties are wholly-owned by BRT and the balance of the
properties is generally owned through consolidated joint ventures
in which BRT owns a substantial equity interest.
The weighted average occupancy at stabilized properties during
the current quarter was 93.7% compared to 94% for the third quarter
2017. Average rental rate per occupied unit at stabilized
properties during the current quarter was approximately $964
compared to $936 in the year-ago period. Stabilized
properties include all our consolidated properties, other than our
Katy, Texas property, that was damaged by Hurricane Harvey and
properties that were in lease-up or development during the current
quarter.
Rental and other revenues from real estate properties for the
three months ended June 30, 2018 grew 12.4% to $30.0 million, from
$26.7 million for the three months ended June 30, 2017, primarily
due to properties acquired since July 1, 2017.
Total expenses for the quarter ended June 30, 2018 were $35.9
million compared to $30.3 million for the quarter ended June 30,
2017, primarily due to additional operating, depreciation and
interest expense related to properties acquired since July 1,
2017.
Portfolio Activity:
During the current quarter, BRT acquired two multi-family
properties with 489 units for $51.3 million, including mortgage
debt of $32.6 million.
Balance Sheet:
At June 30, 2018, BRT had $25.1 million of cash and cash
equivalents, total assets of $1.1 billion, total debt of $820.6
million, including $37.0 million of subordinated debt maturing in
2036, and total stockholders’ equity of $198.6 million. At
August 1, 2018 cash and cash equivalents were $24.1 million.
BRT’s mortgage debt of $783.5 million, net of deferred costs of
$6.7 million, has a weighted average interest rate of 4.15% and a
weighted average remaining term to maturity of 7.2 years.
Approximately 90.2% of the mortgage debt bears interest at a fixed
rate and the balance represents short term or construction
financing for properties in development or that recently completed
lease up. BRT intends to replace its short-term floating rate
mortgage debt with long-term fixed rate debt, as warranted by
property and market conditions.
During the current quarter, BRT sold 835,374 shares of its
common stock through its at-the-market equity offering program for
proceeds, net of commissions, of approximately $10.5 million.
Subsequent Events
- Acquired, on July 6, 2018, the 20% equity interest in Kilburn
Crossing previously owned by a joint venture partner for
approximately $4.5 million; and
- From July 1 through August 2, 2018, the Company sold 558,777
shares of its common stock through its at-the-market equity sales
program for proceeds, net of commissions, of approximately $7.4
million.
Supplemental Financial Information:
In an effort to enhance its financial disclosures to investors,
BRT has posted a supplemental financial information report which
can be accessed on the Company’s website at www.brtapartments.com
under the caption “Investor Relations - Financial Statements and
SEC Filings.”
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); and gains on insurance recoveries. 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.
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 BRT’s ability to acquire,
develop or manage multi-family properties. 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 our Annual Report on Form 10-K for the year ended
September 30, 2017 and Quarterly Reports on Form 10-Q filed
thereafter (including the section of each such report entitled
“Item 1A. Risk Factors”).
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, or to be
filed, with the Securities and Exchange Commission for the quarter
ended June 30, 2018 and the supplemental disclosures regarding the
quarter on the investor relations section of the Company’s website
at: http://brtapartments.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.brtapartments.com.
Contact: Investor Relations – (516) 466-3100
BRT APARTMENTS CORP.60 Cutter Mill RoadSuite 303Great Neck, New
York 11021Telephone (516) 466-3100Telecopier (516)
466-3132www.BRTapartments.com
BRT APARTMENTS CORP. AND
SUBSIDIARIESCONDENSED BALANCE
SHEETS(Dollars in thousands)
|
June 30, 2018 (Unaudited) |
|
September 30, 2017 |
ASSETS |
|
|
|
Real estate properties,
net of accumulated depreciation |
$ |
1,054,484 |
|
|
$ |
902,281 |
|
Real estate loan |
5,050 |
|
|
5,500 |
|
Cash and cash
equivalents |
25,061 |
|
|
12,383 |
|
Restricted cash |
7,630 |
|
|
6,151 |
|
Deposits and
escrows |
23,265 |
|
|
27,839 |
|
Investments in
unconsolidated joint ventures |
20,542 |
|
|
21,415 |
|
Other assets |
8,573 |
|
|
9,359 |
|
Real estate property
held for sale |
— |
|
|
8,969 |
|
Real
estate loan |
$ |
1,144,605 |
|
|
$ |
993,897 |
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
Mortgages
payable, net of deferred costs |
$ |
783,532 |
|
|
$ |
697,826 |
|
Junior
subordinated notes, net of deferred costs |
37,033 |
|
|
37,018 |
|
Accounts
payable and accrued liabilities |
22,554 |
|
|
22,348 |
|
Total
Liabilities |
843,119 |
|
|
757,192 |
|
|
|
|
|
Total BRT Apartments
Corp. stockholders’ equity |
198,642 |
|
|
165,996 |
|
Non-controlling
interests |
102,844 |
|
|
70,709 |
|
Total Equity |
301,486 |
|
|
236,705 |
|
Total
Liabilities and Equity |
$ |
1,144,605 |
|
|
$ |
993,897 |
|
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, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Revenues: |
|
|
|
|
|
|
|
Rental
and other revenues from real estate properties |
$ |
29,951 |
|
|
$ |
26,673 |
|
|
$ |
87,589 |
|
|
$ |
76,404 |
|
Other
income |
203 |
|
|
188 |
|
|
565 |
|
|
980 |
|
Total
revenues |
30,154 |
|
|
26,861 |
|
|
88,154 |
|
|
77,384 |
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
Real
estate operating expenses |
14,459 |
|
|
13,283 |
|
|
42,004 |
|
|
37,638 |
|
Interest
expense |
8,786 |
|
|
7,180 |
|
|
25,423 |
|
|
20,269 |
|
General
and administrative |
2,452 |
|
|
2,309 |
|
|
7,208 |
|
|
7,296 |
|
Depreciation |
10,200 |
|
|
7,561 |
|
|
28,088 |
|
|
21,630 |
|
Total
expenses |
35,897 |
|
|
30,333 |
|
|
102,723 |
|
|
86,833 |
|
Total revenue less
total expenses |
(5,743 |
) |
|
(3,472 |
) |
|
(14,569 |
) |
|
(9,449 |
) |
Equity in
loss of unconsolidated joint ventures |
(127 |
) |
|
(307 |
) |
|
(215 |
) |
|
(307 |
) |
Gain on
sale of real estate |
— |
|
|
— |
|
|
64,500 |
|
|
35,838 |
|
Gain on
insurance recovery |
— |
|
|
— |
|
|
3,227 |
|
|
— |
|
Loss on
extinguishment of debt |
— |
|
|
— |
|
|
(850 |
) |
|
(799 |
) |
(Loss) income from
continuing operations |
(5,870 |
) |
|
(3,779 |
) |
|
52,093 |
|
|
25,283 |
|
Income
tax provision (benefit) |
101 |
|
|
41 |
|
|
(46 |
) |
|
1,499 |
|
Net (loss) income from
continuing operations, net of taxes |
(5,971 |
) |
|
(3,820 |
) |
|
52,139 |
|
|
23,784 |
|
Net loss (income)
attributable to non-controlling interests |
1,282 |
|
|
418 |
|
|
(25,255 |
) |
|
(15,645 |
) |
Net (loss) income
attributable to common stockholders |
$ |
(4,689 |
) |
|
$ |
(3,402 |
) |
|
$ |
26,884 |
|
|
$ |
8,139 |
|
|
|
|
|
|
|
|
|
Per share amounts
attributable to common stockholders: |
|
|
|
|
|
|
|
Basic |
$ |
(0.33 |
) |
|
$ |
(0.24 |
) |
|
$ |
1.89 |
|
|
$ |
0.58 |
|
Diluted |
$ |
(0.33 |
) |
|
$ |
(0.24 |
) |
|
$ |
1.87 |
|
|
$ |
0.58 |
|
|
|
|
|
|
|
|
|
Funds from operations -
Note 1 |
$ |
2,736 |
|
|
$ |
2,633 |
|
|
$ |
11,109 |
|
|
$ |
6,269 |
|
Funds from operations
per common share - diluted - Note 2 |
$ |
0.20 |
|
|
$ |
0.19 |
|
|
$ |
0.77 |
|
|
$ |
0.45 |
|
|
|
|
|
|
|
|
|
Adjusted funds from
operations - Note 1 |
$ |
3,383 |
|
|
$ |
3,253 |
|
|
$ |
11,010 |
|
|
$ |
8,418 |
|
Adjusted funds from
operations per common share - diluted -Note 2 |
$ |
0.24 |
|
|
$ |
0.23 |
|
|
$ |
0.77 |
|
|
$ |
0.61 |
|
|
|
|
|
|
|
|
|
Weighted average number
of shares of common stock outstanding: |
|
|
|
|
|
|
|
Basic |
14,411,940 |
|
|
14,035,074 |
|
|
14,224,680 |
|
|
13,983,495 |
|
Diluted |
14,411,940 |
|
|
14,035,074 |
|
|
14,358,013 |
|
|
13,983,495 |
|
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, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Note 1: |
|
|
|
|
|
|
|
|
Funds from operations
is summarized in the following table: |
|
|
|
|
|
|
|
|
GAAP Net (loss) income
attributable to common stockholders |
|
$ |
(4,689 |
) |
|
$ |
(3,402 |
) |
|
26,884 |
|
|
8,139 |
|
Add: depreciation of
properties |
|
10,200 |
|
|
7,561 |
|
|
28,088 |
|
|
21,630 |
|
Add: our share of
depreciation in unconsolidated joint ventures |
|
385 |
|
|
308 |
|
|
1,201 |
|
|
521 |
|
Deduct: gain on sale of
real estate |
|
— |
|
|
— |
|
|
(64,500 |
) |
|
(35,838 |
) |
Adjustments for
non-controlling interests |
|
(3,160 |
) |
|
(1,834 |
) |
|
19,436 |
|
|
11,817 |
|
NAREIT Funds
from operations attributable to common stockholders |
|
2,736 |
|
|
2,633 |
|
|
11,109 |
|
|
6,269 |
|
|
|
|
|
|
|
|
|
|
Adjustments for:
straight-line rent accruals |
|
(10 |
) |
|
(10 |
) |
|
(30 |
) |
|
(46 |
) |
Add: loss on
extinguishment of debt |
|
— |
|
|
— |
|
|
850 |
|
|
799 |
|
Add: amortization of
restricted stock and restricted stock units |
|
361 |
|
|
353 |
|
|
973 |
|
|
1,063 |
|
Add: amortization of
deferred mortgage costs |
|
383 |
|
|
349 |
|
|
1,115 |
|
|
874 |
|
Deduct gain on
insurance recovery |
|
— |
|
|
— |
|
|
(3,227 |
) |
|
— |
|
Adjustments for
non-controlling interests |
|
(87 |
) |
|
$ |
(72 |
) |
|
220 |
|
|
(541 |
) |
Adjusted funds
from operations attributable to common stockholders |
|
$ |
3,383 |
|
|
$ |
3,253 |
|
|
$ |
11,010 |
|
|
$ |
8,418 |
|
|
|
|
|
|
|
|
|
|
Note 2: |
|
|
|
|
|
|
|
|
GAAP Net (loss) income
attributable to common stockholders |
|
$ |
(0.33 |
) |
|
$ |
(0.24 |
) |
|
$ |
1.87 |
|
|
$ |
0.58 |
|
Add: depreciation of
properties |
|
0.71 |
|
|
0.54 |
|
|
1.95 |
|
|
1.55 |
|
Add: our share of
depreciation in unconsolidated joint ventures |
|
0.03 |
|
|
0.02 |
|
|
0.08 |
|
|
0.04 |
|
Deduct: gain on sale of
real estate |
|
— |
|
|
— |
|
|
(4.50 |
) |
|
(2.56 |
) |
Adjustment for
non-controlling interests |
|
(0.21 |
) |
|
(0.13 |
) |
|
1.37 |
|
|
0.84 |
|
NAREIT Funds
from operations per common stock basic and diluted |
|
0.20 |
|
|
0.19 |
|
|
0.77 |
|
|
0.45 |
|
|
|
|
|
|
|
|
|
|
Adjustments for:
straight line rent accruals |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Add: loss on
extinguishment of debt |
|
— |
|
|
— |
|
|
0.06 |
|
|
0.06 |
|
Add: amortization of
restricted stock and restricted stock units |
|
0.02 |
|
|
0.03 |
|
|
0.06 |
|
|
0.08 |
|
Add: amortization
of deferred mortgage costs |
|
0.03 |
|
|
0.02 |
|
|
0.08 |
|
|
0.06 |
|
Deduct gain on
insurance recovery |
|
— |
|
|
— |
|
|
(0.22 |
) |
|
— |
|
Adjustments for
non-controlling interests |
|
(0.01 |
) |
|
(0.01 |
) |
|
0.02 |
|
|
(0.04 |
) |
Adjusted funds
from operations per common stock basic and diluted |
|
$ |
0.24 |
|
|
$ |
0.23 |
|
|
$ |
0.77 |
|
|
$ |
0.61 |
|
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