WALNUT CREEK, Calif.,
Nov. 7, 2018 /PRNewswire/
-- Owens Realty Mortgage, Inc. (the "Company") (NYSE American:
ORM) today reported financial results for the third quarter ended
September 30, 2018.
Third Quarter 2018 Financial Highlights
- Net income of $2,249,239, or
$0.26 per fully-diluted common
share
- Book value of $22.54 per common
share at September 30, 2018 as
compared to $22.10 per common share
at December 31, 2017
- Declared a quarterly dividend of $0.20 per share of common stock
Third Quarter 2018 Operational Highlights
- Originated three new loans in the quarter totaling
approximately $7,150,000 (note
amount), received full or partial payoffs on eighteen loans
totaling approximately $36,098,000
and extended the maturity dates of two loans with principal
balances aggregating approximately $3,340,000
- Average balance of performing loans for the three months ended
September 30, 2018 as compared to the
three months ended September 30, 2017
increased by approximately 3%
- Sold seven real estate properties (including four condominium
units at Zalanta) for net proceeds totaling approximately
$8,708,000 (including approximately
$2,703,000 notes receivable) and net
gain totaling approximately $1,373,000
- Repurchased 250,684 shares of Common Stock pursuant to the 2018
Repurchase Plan, at a total cost of approximately $4,262,000 (including commissions) and an average
cost of $17.00 per share. The Plan
was terminated during the quarter as the funds authorized pursuant
to the Plan were fully utilized to purchase Common Stock.
Subsequent Events
- In October 2018, sold the
unimproved residential and commercial land located in Bethel Island, California and two units in the
office condominium complex located in Roseville, California for net sale proceeds
totaling approximately $3,326,000 and
gain totaling approximately $620,000.
- In October 2018, the Zalanta
Loan, with a balance of approximately $2,925,000 as of September
30, 2018, was repaid in full.
Summary of Third Quarter 2018 Financial Results
The
Company reported net income of approximately $2,249,000, or $0.26 per fully-diluted common share, for the
quarter ended September 30, 2018 as
compared to net income of approximately $156,000, or $0.02
per fully-diluted common share, for the quarter ended September 30, 2017. These variances were
primarily a result of the items below.
Items that increased net income during the three months ended
September 30, 2018 included primarily
the following:
- An increase in interest and related income from loans of
approximately $475,000 for the three
months ended September 30, 2018, as
compared to the corresponding period in 2017, primarily due to an
increase in the average balance of performing loans between the
three months ended September 30, 2018
and 2017 of approximately 3% and due to discount and loan fee
amortization and late charges collected by the Company on certain
loans beginning in 2018.
- An increase in rental and other income from real estate
properties net of expenses on such properties of approximately
$186,000 for the three months ended
September 30, 2018 (from income of
approximately $15,000 during the
three months ended September 30, 2017
to income of approximately $201,000
during the three months ended September 30,
2018) due primarily to the sale of certain properties with
operating losses in 2017 and 2018.
- An increase in other income of approximately $96,000 for the three months ended September 30, 2018, as compared to the
corresponding period in 2017, primarily due to increased income
from our investment in 1850 De La Cruz, LLC as the applicable lease
was extended in July 2018 at the
current market rate which resulted in an increase in monthly rental
income of approximately $74,000 per
month of which 50% ($37,000) is
earned by the Company.
- An increase in gain on sales of real estate of approximately
$790,000 for the three months ended
September 30, 2018, as compared to
the corresponding period in 2017, as a result of the sales of seven
real estate properties during 2018, resulting in gain on sales of
real estate totaling approximately $1,373,000. We sold two properties during the
three months ended September 30,
2017, resulting in gain on sales of real estate totaling
approximately $582,000.
- A decrease in management fees of approximately $109,000 and servicing fees of approximately
$93,000 for the three months ended
September 30, 2018, as compared to
the corresponding period in 2017, due to the Interim Management Fee
adjustment that reduced management fees in the first quarter of
2018 and the subsequent Amendment to the Management Agreement,
effective April 1, 2018, that
permanently changed the management fee calculation, eliminated
servicing fees paid to the Manager and to make additional changes
to the compensation of the Manager (as described in Note 9 –
"Transactions with Affiliates"). Management fees for the three
months ended September 30, 2018 were
approximately $384,000 lower than the
fees that would have been payable to the Manager using the Prior
Management Fee calculation.
- A decrease in depreciation and amortization of approximately
$129,000 for the three months ended
September 30, 2018, as compared to
the corresponding period in 2017, due to the sale of certain
properties during 2017 and 2018 and the discontinuation of
depreciation on certain properties that were moved to Held for Sale
in 2017 and 2018.
- A decrease in income tax expense of approximately $1,125,000 for the three months ended
September 30, 2018, as compared to
the corresponding period in 2017, primarily as a result of a larger
increase in the valuation allowance recorded against deferred tax
assets in 2017, due to higher construction costs and lower expected
gains from the sales of the Zalanta TRS assets in the future. See
also discussion of income tax contingency in "Note 12 – Income
Taxes" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations – Commitments and
Contingencies" in the September 30,
2018 Form 10-Q.
The items that increased net income during the three months
ended September 30, 2018 were
partially offset by the following:
- An increase in interest expense of approximately $239,000 for the three months ended September 30, 2018, as compared to the
corresponding period in 2017, due primarily to higher balances
outstanding and a higher average interest rate on the CB&T line
of credit during 2018.
- An increase in impairment losses on real estate properties of
approximately $378,000 for the three
months ended September 30, 2018, as
compared to the corresponding period in 2017, due primarily to a
reduction of the listing price of our marina property located in
Isleton, California at a price
that was lower than book value which resulted in an impairment loss
of approximately $692,000 recorded
during 2018.
- An increase in general and administrative expense of
approximately $140,000 for the three
months ended September 30, 2018, as
compared to the corresponding period in 2017, due primarily to
increased legal costs and increased director fees in the third
quarter, net of the elimination of the salary related expense
reimbursements to the Manager beginning April 1, 2018 pursuant to the Amendment to the
Management Agreement.
We believe, from period to period in the near term, there could
be fluctuations in earnings and net income resulting from the lag
time between the sale of our real estate assets and deployment of
the proceeds into new loan investments.
Quarter End Loan Portfolio Summary
The following
tables set forth certain information regarding the Company's loan
portfolio at September 30, 2018 and
December 31, 2017.
|
|
September
30,
2018
|
|
|
December 31,
2017
|
|
By Property
Type:
|
|
|
|
|
|
|
Commercial
|
|
$
|
133,117,592
|
|
|
$
|
127,873,281
|
|
Residential
|
|
|
7,669,017
|
|
|
|
13,170,795
|
|
Land
|
|
|
4,935,200
|
|
|
|
5,127,574
|
|
|
|
$
|
145,721,809
|
|
|
$
|
146,171,650
|
|
By
Position:
|
|
|
|
|
|
|
|
|
Senior
loans
|
|
$
|
142,072,738
|
|
|
$
|
142,782,492
|
|
Junior
loans
|
|
|
3,649,071
|
|
|
|
3,389,158
|
|
|
|
$
|
145,721,809
|
|
|
$
|
146,171,650
|
|
The types of property securing the Company's commercial real
estate loans are as follows:
|
|
September
30,
2018
|
|
December
31,
2017
|
|
Commercial Real
Estate Loans:
|
|
|
|
|
|
|
|
Office
|
|
$
|
26,052,765
|
|
$
|
29,480,103
|
|
Retail
|
|
|
51,889,629
|
|
|
32,329,395
|
|
Storage
|
|
|
8,227,439
|
|
|
15,807,016
|
|
Apartment
|
|
|
17,877,633
|
|
|
24,582,181
|
|
Hotel
|
|
|
8,985,000
|
|
|
11,777,351
|
|
Industrial
|
|
|
2,855,602
|
|
|
2,690,000
|
|
Warehouse
|
|
|
3,000,000
|
|
|
3,000,000
|
|
Marina
|
|
|
3,580,000
|
|
|
3,580,000
|
|
Assisted
care
|
|
|
7,132,855
|
|
|
1,650,000
|
|
Golf
course
|
|
|
3,116,669
|
|
|
1,212,851
|
|
Restaurant
|
|
|
400,000
|
|
|
1,764,384
|
|
|
|
$
|
133,117,592
|
|
$
|
127,873,281
|
|
Loans by geographic location:
|
|
September 30,
2018
|
|
December 31,
2017
|
|
|
|
Balance
|
|
Percentage
|
|
Balance
|
|
Percentage
|
|
California
|
|
$
|
101,563,409
|
|
69.70%
|
|
$
|
110,884,117
|
|
75.86%
|
|
Arizona
|
|
|
—
|
|
—%
|
|
|
815,890
|
|
0.56%
|
|
Colorado
|
|
|
4,854,906
|
|
3.33%
|
|
|
4,380,616
|
|
3.00%
|
|
Hawaii
|
|
|
1,443,789
|
|
0.99%
|
|
|
1,450,000
|
|
0.99%
|
|
Illinois
|
|
|
—
|
|
—%
|
|
|
1,364,384
|
|
0.93%
|
|
Indiana
|
|
|
3,702,031
|
|
2.54%
|
|
|
388,793
|
|
0.27%
|
|
Michigan
|
|
|
8,985,000
|
|
6.17%
|
|
|
10,714,764
|
|
7.33%
|
|
Nevada
|
|
|
513,107
|
|
0.35%
|
|
|
1,653,107
|
|
1.13%
|
|
Ohio
|
|
|
—
|
|
—%
|
|
|
3,755,000
|
|
2.57%
|
|
Pennsylvania
|
|
|
5,482,855
|
|
3.76%
|
|
|
—
|
|
—%
|
|
Texas
|
|
|
16,788,048
|
|
11.52%
|
|
|
6,625,000
|
|
4.53%
|
|
Washington
|
|
|
—
|
|
—%
|
|
|
3,159,460
|
|
2.16%
|
|
Wisconsin
|
|
|
2,388,664
|
|
1.64%
|
|
|
980,519
|
|
0.67%
|
|
|
|
$
|
145,721,809
|
|
100.00%
|
|
$
|
146,171,650
|
|
100.00%
|
|
Quarter End Real Estate Property Portfolio
The following tables set forth certain information regarding the
Company's real estate portfolio at September
30, 2018 and December 31,
2017.
Real Estate Held for Sale:
|
|
September
30,
2018
|
|
December
31,
2017
|
|
Residential
|
|
$
|
16,168,337
|
|
$
|
24,627,710
|
|
Land
|
|
|
9,704,533
|
|
|
14,389,620
|
|
Retail
|
|
|
7,674,211
|
|
|
7,632,893
|
|
Golf
course
|
|
|
—
|
|
|
1,999,449
|
|
Marina
|
|
|
1,516,000
|
|
|
2,207,675
|
|
Office
|
|
|
1,963,012
|
|
|
—
|
|
Assisted
care
|
|
|
—
|
|
|
5,253,125
|
|
|
|
$
|
37,026,093
|
|
$
|
56,110,472
|
|
Real Estate Held for Investment:
|
|
September
30,
2018
|
|
December
31,
2017
|
|
Retail
|
|
$
|
16,148,516
|
|
$
|
16,623,238
|
|
Land
|
|
|
6,561,023
|
|
|
2,018,068
|
|
Residential
|
|
|
—
|
|
|
2,356,995
|
|
Office
|
|
|
—
|
|
|
3,357,352
|
|
|
|
$
|
22,709,539
|
|
$
|
24,355,653
|
|
Conference Call
The Company has cancelled its
previously announced conference call scheduled for Friday, November 9, 2018, at 10:00 a.m. PT / 1:00 p.m.
ET.
About Owens Realty Mortgage, Inc.
Owens Realty
Mortgage, Inc., a Maryland
corporation, is a specialty finance mortgage company organized to
qualify as a real estate investment trust that focuses on the
origination, investment, and management of small balance and
middle-market commercial real estate loans. We provide customized,
short-term acquisition and transition capital to commercial real
estate investors that require speed and flexibility. Our primary
objective is to provide investors with attractive current income
and long-term shareholder value. Owens Realty Mortgage, Inc., is
headquartered in Walnut Creek,
California, and is externally managed and advised by Owens
Financial Group, Inc.
Additional information can be found on the Company's website at
www.owensmortgage.com.
Forward-Looking Statements
This press release includes
"forward-looking statements" within the meaning of the safe harbor
provisions of the United States Private Securities Litigation
Reform Act of 1995. Forward-looking statements about Owens Realty
Mortgage Inc.'s plans, strategies, prospects, and anticipated
events, including repositioning and possible sale of real estate
assets, are based on current information, estimates, and
projections; they are subject to, risks and uncertainties, as well
as known and unknown risks, which could cause actual results to
differ from expectations, estimates and projections and,
consequently, readers should not rely on these forward-looking
statements as predictions of future events. Words such as "expect,"
"target," "assume," "estimate," "project," "budget," "forecast,"
"anticipate," "intend," "plan," "may," "will," "could," "should,"
"believe," "predicts," "potential," "continue," and similar
expressions are intended to identify such forward-looking
statements.
Readers are cautioned not to place undue reliance upon any
forward-looking statements, which speak only as of the date made.
The Company does not undertake or accept any obligation to release
publicly any updates or revisions to any forward-looking statement
to reflect any change in its expectations or any change in events,
conditions or circumstances on which any such statement is based.
Additional information concerning these, and other risk factors is
contained in the Company's most recent filings with the Securities
and Exchange Commission. All subsequent written and oral
forward-looking statements concerning the Company or matters
attributable to the Company or any person acting on its behalf are
expressly qualified in their entirety by the cautionary statements
above.
Selected Financial Data:
OWENS REALTY
MORTGAGE, INC.
|
Consolidated Balance
Sheets
|
(UNAUDITED)
|
|
|
|
September
30,
|
|
December
31,
|
|
|
|
2018
|
|
2017
|
|
ASSETS
|
|
|
|
|
|
|
|
Cash, cash
equivalents and restricted cash
|
|
$
|
20,162,292
|
|
$
|
5,670,816
|
|
Loans, net of
allowance for losses of $1,509,678 in 2018 and $1,827,806 in
2017
|
|
|
144,212,131
|
|
|
144,343,844
|
|
Interest and other
receivables
|
|
|
1,082,536
|
|
|
2,430,457
|
|
Other assets, net of
accumulated depreciation and amortization of $229,236 in 2018 and
$309,686 in 2017
|
|
|
430,650
|
|
|
725,341
|
|
Deferred financing
costs, net of accumulated amortization of $20,659 in 2018 and
$265,276 in 2017
|
|
|
413,176
|
|
|
26,823
|
|
Deferred tax assets,
net
|
|
|
2,940,602
|
|
|
3,207,322
|
|
Investment in limited
liability company
|
|
|
2,283,558
|
|
|
2,140,545
|
|
Real estate held for
sale
|
|
|
37,026,093
|
|
|
56,110,472
|
|
Real estate held for
investment, net of accumulated depreciation of $2,519,004 in 2018
and $3,316,753 in 2017
|
|
|
22,709,539
|
|
|
24,355,653
|
|
Total
assets
|
|
$
|
231,260,577
|
|
$
|
239,011,273
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
|
LIABILITIES:
|
|
|
|
|
|
|
|
Dividends
payable
|
|
$
|
1,696,576
|
|
$
|
1,572,047
|
|
Due to
Manager
|
|
|
238,917
|
|
|
277,671
|
|
Accounts payable and
accrued liabilities
|
|
|
1,347,598
|
|
|
1,390,329
|
|
Deferred gains on
sales of real estate
|
|
|
—
|
|
|
302,895
|
|
Forward contract
liability – share repurchase
|
|
|
—
|
|
|
2,731,171
|
|
Lines of credit
payable
|
|
|
20,942,700
|
|
|
1,555,000
|
|
Notes and loans
payable on real estate
|
|
|
15,807,566
|
|
|
30,192,433
|
|
Total
liabilities
|
|
|
40,033,357
|
|
|
38,021,546
|
|
Commitments and
Contingencies
|
|
|
|
|
|
|
|
EQUITY:
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
Preferred stock, $.01
par value per share, 5,000,000 shares authorized, no shares issued
and outstanding at September 30, 2018 and December 31,
2017
|
|
|
—
|
|
|
—
|
|
Common stock, $.01
par value per share, 50,000,000 shares authorized, 11,198,119
shares issued, 8,482,880 and 9,095,454 shares outstanding at
September 30, 2018 and December 31, 2017
|
|
|
111,981
|
|
|
111,981
|
|
Additional paid-in
capital
|
|
|
182,437,522
|
|
|
182,437,522
|
|
Treasury stock, at
cost – 2,715,239 and 2,102,665 shares at September 30, 2018 and
December 31, 2017
|
|
|
(41,753,190)
|
|
|
(31,655,119)
|
|
Retained
earnings
|
|
|
50,430,907
|
|
|
50,095,343
|
|
Total stockholders'
equity
|
|
|
191,227,220
|
|
|
200,989,727
|
|
Total
liabilities and equity
|
|
$
|
231,260,577
|
|
$
|
239,011,273
|
|
OWENS REALTY
MORTGAGE, INC.
|
Consolidated
Statements of Income
|
(UNAUDITED)
|
|
|
|
For the Three
Months Ended
|
|
For the Nine
Months Ended
|
|
|
|
September 30,
2018
|
|
September 30,
2017
|
|
September 30,
2018
|
|
September 30,
2017
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and related
income from loans
|
|
$
|
3,438,441
|
|
$
|
2,963,394
|
|
$
|
9,414,838
|
|
$
|
8,151,798
|
|
Rental and other
income from real estate properties
|
|
|
1,140,429
|
|
|
1,265,961
|
|
|
3,420,818
|
|
|
3,392,168
|
|
Other
income
|
|
|
144,635
|
|
|
48,138
|
|
|
225,815
|
|
|
138,222
|
|
Total
revenues
|
|
|
4,723,505
|
|
|
4,277,493
|
|
|
13,061,471
|
|
|
11,682,188
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management fees to
Manager
|
|
|
718,284
|
|
|
827,281
|
|
|
2,185,999
|
|
|
2,781,474
|
|
Servicing fees to
Manager
|
|
|
—
|
|
|
93,179
|
|
|
95,143
|
|
|
270,834
|
|
General and
administrative expense
|
|
|
650,825
|
|
|
510,574
|
|
|
1,570,759
|
|
|
1,540,260
|
|
Rental and other
expenses on real estate properties
|
|
|
939,337
|
|
|
1,251,217
|
|
|
3,348,088
|
|
|
3,890,536
|
|
Depreciation and
amortization
|
|
|
173,640
|
|
|
302,925
|
|
|
596,840
|
|
|
916,668
|
|
Interest
expense
|
|
|
710,569
|
|
|
471,942
|
|
|
1,833,275
|
|
|
1,120,917
|
|
Reversal of provision
for loan losses
|
|
|
(242,022)
|
|
|
(396,980)
|
|
|
(207,654)
|
|
|
(221,700)
|
|
Impairment losses on
real estate properties
|
|
|
745,648
|
|
|
367,831
|
|
|
745,648
|
|
|
649,457
|
|
Total
expenses
|
|
|
3,696,281
|
|
|
3,427,969
|
|
|
10,168,098
|
|
|
10,948,446
|
|
Operating
income
|
|
|
1,027,224
|
|
|
849,524
|
|
|
2,893,373
|
|
|
733,742
|
|
Gain on sales of real
estate, net
|
|
|
1,372,925
|
|
|
582,496
|
|
|
2,484,740
|
|
|
14,460,030
|
|
Income before
income taxes
|
|
|
2,400,149
|
|
|
1,432,020
|
|
|
5,378,113
|
|
|
15,193,772
|
|
Income tax
expense
|
|
|
(150,910)
|
|
|
(1,275,700)
|
|
|
(316,720)
|
|
|
(2,089,827)
|
|
Net
income
|
|
$
|
2,249,239
|
|
$
|
156,320
|
|
$
|
5,061,393
|
|
$
|
13,103,945
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per common share
data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
earnings per common share
|
|
$
|
0.26
|
|
$
|
0.02
|
|
$
|
0.57
|
|
$
|
1.28
|
|
Basic and diluted
weighted average number of common shares outstanding
|
|
|
8,572,614
|
|
|
10,173,448
|
|
|
8,859,495
|
|
|
10,222,529
|
|
Dividends declared per
share of common stock
|
|
$
|
0.20
|
|
$
|
0.10
|
|
$
|
0.56
|
|
$
|
0.28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/owens-realty-mortgage-inc-reports-third-quarter-2018-financial-results-300746310.html
SOURCE Owens Realty Mortgage, Inc.