Jernigan Capital, Inc. (NYSE: JCAP), an owner of self-storage
facilities and a leading capital partner for self-storage
entrepreneurs nationwide, today announced results for the quarter
ended June 30, 2020.
Second Quarter Highlights include:
- Reported $(0.24) loss per share and adjusted earnings per share
of $0.04
- Increased the number of wholly owned self-storage facilities on
its balance sheet or in its SL1 Joint Venture from 29 to 37 through
developer buyouts of eight development property investments
including the Jacksonville 3, Raleigh, Louisville 2, Baltimore 1,
Minneapolis 1, Minneapolis 2, Minneapolis 3 and Columbia
development property investments.
Subsequent Events include:
- Entered into a definitive merger agreement with an affiliate of
NexPoint Advisors, LLC (“NexPoint”), in an all-cash transaction
valued at approximately $900 million, including debt and preferred
stock to be assumed or refinanced. Under the terms of the merger
agreement, holders of JCAP's common stock will receive $17.30 per
share in cash. Jernigan Capital's Board of Directors has
unanimously approved the transaction.
- Acquired 100% of the Class A membership units of the LLCs that
own the New York City 2, Orlando 3 and Denver 1 development
property investments. With these acquisitions, the Company now
wholly owns 40 facilities on its balance sheet or in its SL1 Joint
Venture, representing approximately 53% of its total portfolio by
net rentable square feet.
- Received repayment of the Boston 3 development property
investment totaling $2.9 million, one of the five previously
announced forgone investments.
Financial Highlights
Total revenues for the quarter ended June 30, 2020 were $11.7
million representing an increase of $0.8 million, or 8%, over total
revenues for the quarter ended June 30, 2019. Total interest income
from investments for the three months ended June 30, 2020 was $6.8
million, a decrease of approximately $2.3 million, or 26%, from the
three months ended June 30, 2019. The decrease is primarily
attributable to a decrease in the principal amount of development
loans and bridge loans outstanding as a result of the Company’s
acquisitions of developer interests in 23 additional self-storage
facilities. At the same time, rental revenue was $4.8 million for
the three months ended June 30, 2020, an increase of $3.2 million,
or 194%, over rental revenue of $1.6 million reported for the same
period in 2019. This increase is the result of the Company’s
acquisition of the developers’ interests in 23 facilities since
April 1, 2020, along with increased property net operating income
on existing real estate owned resulting from higher occupancy and
rental rates.
For the first full quarter, the Company no longer incurred fees
to its former external advisor, JCAP Advisor LLC, as a result of
the Internalization transaction on February 20, 2020. Total general
and administrative expenses for the three months ended June 30,
2020 were $3.5 million, a decrease of $1.0 million, or 22%, from
the three months ended June 30, 2019 (which included $2.1 million
of fees to manager). There was an increase in certain elements of
general and administrative expenses primarily stemming from annual
compensation increases and additional headcount. On a quarter over
quarter basis (second quarter 2020 compared to first quarter 2020),
total general and administrative expenses declined approximately
13%, from $4.0 million in the first quarter 2020 (which included
$1.2 million of fees to manager) to $3.5 million in the second
quarter 2020. Compensation and benefits included non-cash expense
of stock-based compensation of $0.8 million for the three months
ended June 30, 2020 and 2019.
The Company incurred a net unrealized gain on investments of
$0.8 million for the three months ended June 30, 2020, compared to
a net unrealized gain of $12.0 million for the comparable period in
2019. The decrease compared to prior year, is primarily driven by
the fact that fewer properties have attained certificates of
occupancy in 2020 and there has been an increased pace of
acquisitions of developers’ interests since June 30, 2019. In
addition, the reduction in the fair value increase was also driven
by elongated economic stabilization timelines (i.e., slower
physical lease-up and lower realized rates) of the majority of the
underlying properties in the Company’s development investment
portfolio caused primarily by the COVID-19 pandemic and the ongoing
impact of new supply. Net unrealized gain on investments was $0.8
million in the second quarter of 2020 as compared to net unrealized
loss on investments of $11.0 million in the first quarter of 2020,
as values stabilized due to strong leasing activity in May and June
following the initial onset of COVID-19 and a stabilizing of
interest rate spreads.
Loss per share and adjusted earnings per share for the quarter
ended June 30, 2020 were $(0.24) and $0.04, respectively. Net loss
attributable to common stockholders for the quarter ended June 30,
2020 was $5.6 million, compared to $9.8 million net income
attributable to common stockholders for the comparable quarter in
2019. The decrease is largely attributable to a year over year
reduction in the net unrealized gain on investments carried at fair
value, as previously discussed.
Capital Markets, Capital Recycling & Liquidity
Update
On May 4, 2020 and May 6, 2020, the Company entered into a $100
million interest rate swap and a $100 million interest rate cap on
the Company’s senior secured line of credit, respectively, locking
in a maximum one-month LIBOR of 0.43% on $200 million of
outstanding credit facility through March 24, 2023 (the maturity
date of the credit facility). With these contracts in place, the
Company has locked in a maximum cost of debt on $200 million of
debt capital at approximately 3.1%, which it expects to decline as
the assets constituting the borrowing base mature.
In July, the Company received full repayment of the Boston 3
development property investment totaling $2.9 million, one of the
Company’s previously announced five forgone investments. The
principal balance on the remaining four forgone investments is
$14.0 million. The Company expects these loans to be fully
repaid.
Dividends
On May 7, 2020, the Company declared cash and stock dividends on
its Series A Preferred Stock. The cash dividend of $2.4 million was
paid on July 15, 2020 to holders of record on July 1, 2020. A stock
dividend of 2,125 shares of additional Series A Preferred Stock was
issued on July 15, 2020 to holders of record on July 1, 2020 for an
aggregate value of $2.1 million pursuant to the terms of the Stock
Purchase Agreement.
On May 7, 2020, the Company declared a cash dividend on its
Series B Preferred Stock. The cash dividend of $0.7 million was
paid on July 15, 2020 to holders of record on July 1, 2020.
On May 7, 2020, the Company declared a dividend of $0.23 per
common share. The dividend was paid on July 15, 2020 to common
stockholders of record on July 1, 2020.
Per the definitive merger agreement with an affiliate of
NexPoint Advisors, LLC announced on August 3, 2020, the Company
will discontinue its regular quarterly dividends on its common
stock.
Conference Call and Webcast Information
As a result of the announcement on August 3,2020 that the
Company entered into a definitive merger agreement with an
affiliate of NexPoint Advisors, LLC, the conference call originally
scheduled for August 7, 2020 will no longer occur.
About Jernigan Capital, Inc.
Jernigan Capital is a New York Stock Exchange-listed real estate
investment trust (NYSE: JCAP) that provides debt and equity capital
to private developers, owners and operators of self-storage
facilities with a view to eventual outright ownership of facilities
the Company finances. The Company’s mission is to maximize
shareholder value by accumulating a multi-billion dollar investment
portfolio consisting of the newest, most attractive and best
located self-storage facilities in the United States through a
talented and experienced team demonstrating the highest levels of
integrity, dedication, excellence and community.
About NexPoint Advisors, L.P.
NexPoint Advisors, L.P. ("NexPoint") is a registered investment
adviser to a suite of funds and investment offerings, including a
closed-end fund, a business development company, an interval fund,
and various real estate vehicles. NexPoint is part of a
multibillion-dollar global alternative investment platform. For
more information visit www.nexpointgroup.com.
Forward-Looking Statements
This press release includes “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of
1995, including statements relating to the duration, severity and
impact of the COVID-19 pandemic and resulting economic downturn,
the Company’s proposed merger with an affiliate NexPoint Advisors,
LLC, fair value measurements, the Company’s ability to acquire its
developers’ interests in additional properties, the Company’s
management team’s views of the self-storage market generally, the
Company’s ability to successfully source, structure, negotiate and
close investments in and acquisitions of self-storage facilities,
the market dynamics of the MSAs in which the Company’s investments
are located, the Company’s ability to fund its outstanding future
investment commitments, the Company’s ability to own and manage its
real estate assets, the availability, and the terms and the
Company’s rate of deployment of equity capital and its ability to
increase the borrowing base and use the accordion feature of its
credit facility. The ultimate occurrence of events and results
referenced in these forward-looking statements is subject to known
and unknown risks and uncertainties, many of which are beyond the
Company’s control. These forward-looking statements are based upon
the Company's present intentions and expectations, but the events
and results referenced in these statements are not guaranteed to
occur. The Company undertakes no duty or responsibility to publicly
update or revise any forward-looking statement to reflect future
events or circumstances or to reflect the occurrence of unexpected
events. Investors should not place undue reliance upon
forward-looking statements. For a discussion of these and other
risks facing the Company’s business, see the information under the
heading “Risk Factors” in the Company’s Annual Report on Form 10-K
and subsequent Quarterly Reports on form 10-Q, and those set forth
in the Company’s other reports and information filed with the
Securities and Exchange Commission (“SEC”), including the Company’s
Current Report on Form 8-K filed with the SEC on August 3, 2020,
which are accessible on the SEC’s website at www.sec.gov.
Non-GAAP Financial Measures
Adjusted earnings (loss) is a non-GAAP measure and is defined as
net income (loss) attributable to common stockholders plus stock
dividends to preferred stockholders, stock-based compensation
expense, net loss attributable to non-controlling interests, fees
to Manager, depreciation and amortization on real estate assets,
depreciation and amortization on SL1 Venture real estate assets,
goodwill impairment loss and internalization expenses which are
generally non-comparable and which represent expenses not
substantially related to the Company’s ongoing business operations.
Fees to manager have been included in Adjusted Earnings for all
periods through December 31, 2019 as at that time they related to
the Company’s then-ongoing business operations as an
externally-managed company. For periods subsequent to December 31,
2019, Fees to manager are not included in Adjusted Earnings as they
no longer relate to the Company’s ongoing business operations as an
internally-managed company following the Internalization. The
Company paid a prorated management fee to the Manager for the
period during the first quarter of 2020 prior to the completion of
the Internalization and will no longer pay management fees going
forward. Management uses Adjusted earnings (loss) and Adjusted
earnings (loss) per share as key performance indicators in
evaluating the operations of the Company's business. The Company is
a capital provider to self-storage developers and believes that
these measures are useful to management and investors as a starting
point in measuring its operational performance because they exclude
various equity-based payments (including stock dividends) and other
items included in net income (loss) that do not relate to or are
not indicative of its present and future operating performance,
which can make periodic and peer analyses of operating performance
more difficult. The Company’s computation of Adjusted earnings
(loss) and Adjusted earnings (loss) per share may not be comparable
to other key performance indicators reported by other REITs or real
estate companies. Reconciliations of Adjusted earnings (loss) and
Adjusted earnings (loss) per share to Net income (loss)
attributable to common stockholders and Earnings (loss) per share,
respectively, are provided in the attached table entitled
“Calculation of Adjusted Earnings (Loss).”
JERNIGAN CAPITAL, INC.
CONSOLIDATED BALANCE
SHEETS
(in thousands)
As of
June 30, 2020
December 31, 2019
Assets:
Cash and cash equivalents
$
15,459
$
3,278
Self-Storage Investment Portfolio:
Development property investments at fair
value
364,688
549,684
Self-storage real estate owned, net
467,950
230,844
Investment in and advances to self-storage
real estate venture
6,096
11,247
Other loans, at cost
216
4,713
Deferred financing costs
7,389
4,154
Prepaid expenses and other assets
10,237
8,654
Fixed assets, net
137
203
Total assets
$
872,172
$
812,777
Liabilities:
Secured revolving credit facility
$
230,000
$
162,000
Term loans, net of unamortized costs
40,912
40,791
Due to Manager
—
3,164
Accounts payable, accrued expenses and
other liabilities
10,727
4,817
Dividends payable
11,029
13,131
Total liabilities
292,668
223,903
Equity:
7.00% Series A preferred stock, $0.01 par
value, 300,000 shares authorized; 137,750 and 133,500 shares issued
and outstanding at June 30, 2020 and December 31, 2019,
respectively, at liquidation preference of $137.8 million and
$133.5 million, net of offering costs, respectively
134,887
130,637
7.00% Series B cumulative redeemable
perpetual preferred stock, $0.01 par value, 3,750,000 shares
authorized; 1,571,734 shares issued and outstanding as of June 30,
2020 and December 31, 2019, at liquidation preference of $39.3
million, net of offering costs
37,298
37,298
Common stock, $0.01 par value, 500,000,000
shares authorized at June 30, 2020 and December 31, 2019;
23,263,130 and 22,423,283 issued and outstanding at June 30, 2020
and December 31, 2019, respectively
232
224
Additional paid-in capital
450,745
426,129
Accumulated deficit
(79,354)
(5,021)
Accumulated other comprehensive income
(loss)
(1,268)
(393)
Total Jernigan Capital, Inc. stockholders'
equity
542,540
588,874
Non-controlling interests
36,964
—
Total equity
579,504
588,874
Total liabilities and equity
$
872,172
$
812,777
JERNIGAN CAPITAL, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except per share
data)
Three months ended
Six months ended
June 30,
June 30,
2020
2019
2020
2019
Revenues:
Interest income from investments
$
6,806
$
9,150
$
14,564
$
17,362
Rental and other property-related income
from real estate owned
4,817
1,638
8,695
3,087
Other revenues
44
44
105
267
Total revenues
11,667
10,832
23,364
20,716
Costs and expenses:
General and administrative expenses
3,462
2,373
6,226
4,136
Fees to Manager
—
2,069
1,230
4,072
Property operating expenses of real estate
owned
2,626
786
4,673
1,549
Depreciation and amortization of real
estate owned
4,320
1,090
7,904
2,119
Goodwill impairment loss
—
—
4,738
—
Internalization expenses
5
—
37,788
—
Total costs and expenses
10,413
6,318
62,559
11,876
Operating income (loss)
1,254
4,514
(39,195)
8,840
Other income (expense):
Equity in earnings (losses) from
unconsolidated real estate venture
12
85
(154)
242
Net unrealized gain (loss) on
investments
791
12,043
(10,170)
20,873
Interest expense
(3,067)
(1,776)
(6,279)
(2,989)
Other interest income
17
8
23
21
Total other income (loss)
(2,247)
10,360
(16,580)
18,147
Net income (loss)
$
(993)
$
14,874
$
(55,775)
$
26,987
Net income attributable to preferred
stockholders
(5,245)
(5,094)
(10,451)
(10,126)
Less: Net loss attributable to
non-controlling interests
652
—
2,598
—
Net income (loss) attributable to common
stockholders
$
(5,586)
$
9,780
$
(63,628)
$
16,861
Basic earnings (loss) per share
attributable to common stockholders
$
(0.24)
$
0.46
$
(2.77)
$
0.81
Diluted earnings (loss) per share
attributable to common stockholders
$
(0.24)
$
0.46
$
(2.77)
$
0.81
Dividends declared per share of common
stock
$
0.23
$
0.35
$
0.46
$
0.70
JERNIGAN CAPITAL, INC.
CALCULATION OF ADJUSTED
EARNINGS (LOSS)
(in thousands, except share and
per share data)
(unaudited)
Three months ended
June 30, 2020
June 30, 2019
Net income (loss) attributable to common
stockholders
$
(5,586)
$
9,780
Plus: stock dividends to preferred
stockholders
2,125
2,125
Plus: stock-based compensation
814
719
Plus: net loss attributable to
non-controlling interests
(652)
—
Plus: depreciation and amortization on
real estate assets
4,320
1,090
Plus: depreciation and amortization on SL1
Venture real estate assets
48
82
Plus: internalization expenses
5
—
Adjusted Earnings
$
1,074
$
13,796
Adjusted Earnings per share attributable
to common stockholders – diluted
$
0.04
$
0.65
Weighted average shares of common stock
and units outstanding – diluted
24,951,684
21,387,462
Six months ended
June 30, 2020
June 30, 2019
Net income (loss) attributable to common
stockholders
$
(63,628)
$
16,861
Plus: stock dividends to preferred
stockholders
4,250
4,250
Plus: stock-based compensation
1,421
1,047
Plus: net loss attributable to
non-controlling interests
(2,598)
—
Plus: fees to Manager
1,230
—
Plus: depreciation and amortization on
real estate assets
7,904
2,119
Plus: depreciation and amortization on SL1
Venture real estate assets
111
137
Plus: goodwill impairment loss
4,738
—
Plus: internalization expenses
37,788
—
Adjusted Earnings (loss)
$
(8,784)
$
24,414
Adjusted Earnings (loss) per share
attributable to common stockholders – diluted
$
(0.36)
$
1.17
Weighted average shares of common stock
and units outstanding – diluted
24,389,820
20,923,865
JERNIGAN CAPITAL, INC.
CALCULATION OF EARNINGS (LOSS)
PER SHARE AND ADJUSTED EARNINGS (LOSS) PER SHARE
(in thousands, except share and
per share data)
(unaudited)
Three months ended June
30,
Six months ended June
30,
2020
2019
2020
2019
Shares outstanding:
Weighted average common shares - basic
23,069,783
21,185,484
23,021,405
20,743,971
Effect of dilutive securities(1)
—
201,978
—
179,894
Weighted average common shares
23,069,783
21,387,462
23,021,405
20,923,865
Calculation of Earnings per Share -
basic
Net income (loss)
$
(993)
$
14,874
$
(55,775)
$
26,987
Less:
Net income allocated to preferred
stockholders
5,245
5,094
10,451
10,126
Net loss attributable to non-controlling
interest
(652)
—
(2,598)
—
Net income allocated to unvested
restricted shares (2)
—
92
—
145
Dividends declared on unvested restricted
shares
35
n/a
92
n/a
Net income (loss) attributable to common
shareholders, adjusted
$
(5,621)
$
9,688
$
(63,720)
$
16,716
Weighted average common shares - basic
23,069,783
21,185,484
23,021,405
20,743,971
Earnings (loss) per share - basic
$
(0.24)
$
0.46
$
(2.77)
$
0.81
Calculation of Earnings per Share -
diluted
Net income (loss)
$
(993)
$
14,874
$
(55,775)
$
26,987
Less:
Net income allocated to preferred
stockholders
5,245
5,094
10,451
10,126
Net loss attributable to non-controlling
interest
(652)
—
(2,598)
—
Dividends declared on unvested restricted
shares
35
n/a
92
n/a
Net income (loss) attributable to common
shareholders, adjusted
$
(5,621)
$
9,780
$
(63,720)
$
16,861
Weighted average common shares -
diluted(1)
23,069,783
21,387,462
23,021,405
20,923,865
Earnings (loss) per share - diluted
$
(0.24)
$
0.46
$
(2.77)
$
0.81
Calculation of Adjusted Earnings per
Share - basic
Adjusted Earnings (loss)
$
1,074
$
13,796
$
(8,784)
$
24,414
Less:
Adjusted Earnings allocated to unvested
restricted shares (3)
8
130
—
210
Dividends declared on unvested restricted
shares
—
n/a
92
n/a
Adjusted Earnings (loss) attributable to
common stockholders – two-class method
$
1,066
$
13,666
$
(8,876)
$
24,204
Weighted average common shares and OC
units – basic(4)
24,951,684
21,185,484
24,389,820
20,743,971
Adjusted Earnings (loss) per share –
basic
$
0.04
$
0.65
$
(0.36)
$
1.17
Calculation of Adjusted Earnings per
Share - diluted
Adjusted Earnings (loss) attributable to
common stockholders – two-class method
$
1,066
$
13,796
$
(8,784)
$
24,414
Weighted average common shares and OC
Units – diluted(4)
24,951,684
21,387,462
24,389,820
20,923,865
Adjusted Earnings (loss) per share –
diluted
$
0.04
$
0.65
$
(0.36)
$
1.17
(1) Diluted earnings per share is calculated on the more
dilutive of the treasury stock method or two-class method. For the
three and six months ended June 30, 2020, 1,881,901 OC Units and
1,368,415 OC Units respectively as well as their related losses
were excluded from the calculation of diluted shares as they are
not dilutive. 199,042 and 215,937 unvested restricted shares for
the three and six months ended June 30, 2020, respectively were
also excluded as they are not dilutive. (2) Unvested restricted
shares of common stock with vesting based on service participate in
dividends with unrestricted shares of common stock on a 1:1 basis
and thus are considered participating securities under the
two-class method for the three and six months ended June 30, 2020
and 2019. Under the two-class method, losses are not allocated to
participating securities, therefore no loss was allocated to
unvested restricted shares for the three and six months ended June
30, 2020. (3) Unvested restricted shares of common stock with
vesting based on service participate in dividends with unrestricted
shares of common stock on a 1:1 basis and thus are considered
participating securities under the two-class method for the three
months ended June 30, 2020 and 2019. Under the two-class method,
losses are not allocated to participating securities, therefore no
loss was allocated to unvested restricted shares for the six months
ended June 30, 2020. (4) For the three months and six months ended
June 30, 2020, includes 1,881,901 OC Units and 1,368,415 OC Units
respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200806006009/en/
Jernigan Capital, Inc. David Corak (901) 567-9580
Investorrelations@jernigancapital.com
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