PLANO, Texas, May 9, 2017 /PRNewswire/ -- Monogram
Residential Trust, Inc. (NYSE: MORE) ("Monogram" or the "Company"),
an owner, operator and developer of luxury apartment communities
with a significant presence in select coastal markets across
the United States, today reported
operational and financial results for the first quarter 2017.
"We are pleased with our first quarter results, including net
income of $76.0 million as well as a
12.2% increase in total proportionate portfolio NOI over the prior
year quarter. Our results reflect the continued execution of our
development program, which we believe will continue to contribute
meaningful value to our high quality portfolio. As we head into the
peak summer leasing season, we expect that our leasing velocity
will accelerate, resulting in occupancy gains, despite significant
new supply in our core coastal markets given the ongoing strength
of rental demand," stated Mark T.
Alfieri, Chief Executive Officer of Monogram.
Mr. Alfieri continued, "Year to date, we have executed on
the strategic disposition of three properties totaling
$247 million, including our exit from
the Orlando market, and acquired
$248 million of high quality assets
located in two of our existing coastal markets. It is our
continuing belief that we can opportunistically harvest gains
through selective dispositions and reallocate the capital in
investments that should improve our long-term growth in AFFO and
NAV per share."
First Quarter 2017 Summary
- Net income attributable to common stockholders of $76.0 million as compared to net loss
attributable to common stockholders of $8.3
million in the first quarter of 2016. The increase is
primarily due to GAAP gains on property sales in the first quarter
of 2017 of $86.7 million.
- Stabilized one community, OLUME, in San Francisco, California.
- Sold three communities, Grand Reserve in Dallas, Texas, The District in Orlando, Florida, and Skye 2905 in
Denver, Colorado for a total gross
sales price of $246.5 million.
- Acquired Desmond at Wilshire in Los
Angeles, California as part of a 1031 exchange for a gross
contract purchase price of $105.0
million.
- Total portfolio proportionate share Net Operating Income
("NOI") increased 12.2% to $30.7
million from $27.4 million in
the first quarter of 2016. The increase is primarily due to the
lease up of development communities.
- Reported decrease in proportionate Same Store NOI of 0.3% as
compared to the first quarter of 2016.
- Achieved consolidated weighted average occupancy in the
Company's Same Store portfolio of 94.6% with monthly rental revenue
per unit of $1,925, an increase of
0.2% as compared to rental revenue per unit in the first quarter of
2016.
- Entered into a new $300 million
unsecured joint venture credit facility, comprised of a
$200 million revolving credit
facility and a $100 million term
loan.
- Declared a $0.075 per share
dividend which was paid on April 7,
2017 to common stockholders of record on March 31, 2017.
- Subsequent to quarter end, acquired Latitude, in Arlington, Virginia as part of a 1031 exchange
for a gross contract purchase price of $143.0 million.
Financial Results for the First Quarter 2017
The Company reported net income attributable to common
stockholders of $76.0 million, or
$0.45 per fully diluted share, which
included $86.7 million of GAAP gains
on sales of real estate, compared to net loss attributable to
common stockholders of $8.3 million,
or $(0.05) per fully diluted share,
for the quarter ended March 31, 2016.
The year over year difference is primarily due to the GAAP gains on
sales of real estate in 2017.
Core FFO totaled $14.7 million or
$0.09 per fully diluted share, as
compared to $12.6 million or
$0.08 per fully diluted share, for
the same period in 2016. AFFO totaled $15.5
million or $0.09 per fully
diluted share, as compared to $12.9
million or $0.08 per fully
diluted share, for the same period in 2016.
The quarter over quarter increase in Core FFO and AFFO is
primarily due to an increase in the Company's proportionate share
of NOI from stabilized non-comparable and lease up properties,
which more than offset a decrease in NOI related to properties sold
over the same period.
Operating Portfolio Results
Total consolidated revenues for the first quarter 2017 increased
11.9% to $73.3 million from
$65.5 million in the same period in
2016. Total portfolio operating expenses increased to $31.1 million from $29.4
million. Both increases are primarily attributed to the
lease up and stabilization of the Company's new development
communities.
For the 35 Same Store communities, the Company's proportionate
share of first quarter 2017 Same Store NOI decreased 0.3%, compared
to the first quarter of 2016. The Company's proportionate
share of Same Store revenue increased 0.4% and expenses increased
1.7% compared to the same period in 2016.
Same Store revenue was impacted by a deceleration in rental
revenue growth and lower weighted-average occupancy due to
significant new supply in several markets. Same Store expenses
increased primarily due to higher real estate taxes.
Average rental revenue per unit within the Same Store
consolidated portfolio increased 0.2% to $1,925 as of March 31,
2017 from $1,921 as of
March 31, 2016, and weighted average
occupancy decreased to 94.6% as of March 31,
2017 from 95.4% as of March 31,
2016.
The Company defines Same Store communities as those that are
stabilized and comparable for both the current and the prior
reporting year. The Company considers a property to be
stabilized generally upon achieving 90% occupancy.
Development and Lease Up Activity
One development community was stabilized during the first
quarter:
- OLUME, located in San Francisco,
California, contains 121 units and was 92% occupied at the
end of the first quarter. The Company's proportionate
ownership is 55%.
The following three operating communities were in lease up at
the end of the first quarter:
- Nouvelle, located in Tysons Corner,
Virginia, contains 461 units and was 77% occupied at quarter
end. The Company's proportionate ownership is 55% and the
property is expected to be stabilized by the end of the third
quarter of 2017.
- Zinc, located in Cambridge,
Massachusetts, contains 392 units and was 74% occupied at
quarter end. The Company's proportionate ownership is 55% and
the property is expected to be stabilized by the end of the third
quarter of 2017.
- The Alexan, located in Dallas,
Texas, contains 365 units and was 45% occupied at quarter
end. The Company's proportionate ownership is 50%. The
property is expected to be stabilized by the end of the fourth
quarter of 2017.
One acquisition community, which had just completed construction
at the time of our acquisition, was in lease up at the end of the
first quarter:
- Desmond at Wilshire, located in Los
Angeles, California, contains 175 units and was 18% occupied
at quarter end. The Company wholly owns this asset. The
property is expected to be stabilized by the end of the fourth
quarter of 2017.
As of March 31, 2017, Monogram's
existing development program, which consists of five communities in
lease up or under construction with 1,874 planned units is 83%
complete based on the Company's proportionate share of total
economic costs. The Company's share of estimated remaining
development costs to complete the existing development program
totals $74 million. All but one
of these projects are expected to be completed and stabilized by
the end of 2017. Three of these communities are currently leasing
and are 66% occupied on a weighted average basis and two
communities, Lucé in Huntington Beach,
California and Caspian Delray Beach in Delray Beach, Florida are under
construction.
The cumulative development program that was outlined at the time
of Monogram's listing, on November 21,
2014, is 92% complete based on the Company's proportionate
share of total economic costs.
Transaction Activity
In January 2017, the Company
acquired Desmond at Wilshire, a 175 unit development asset located
in Los Angeles, California through
a 1031 exchange for an aggregate gross contract purchase price of
$105.0 million, excluding closing
costs.
In February 2017, the Company sold
Grand Reserve in Dallas, Texas for
a total gross sales price of $42.0
million.
In March 2017, the Company sold
The District in Orlando, Florida
for a total gross sales price of $78.5
million. This sale represents our exit from the Orlando market.
In March 2017, the Company sold
Skye 2905 in Denver, Colorado for
a total gross sales price of $126.0
million.
Subsequent to quarter end, the Company acquired Latitude, a 265
unit multifamily asset located in Arlington, Virginia for a gross contract
purchase price of $143.0 million,
excluding closing costs. The property is currently 20%
occupied.
Balance Sheet
At the end of the first quarter, the Company had total
consolidated debt outstanding of $1.5
billion, including debt held at the co-investment venture
level. The Company's proportionate share of contractual debt
totaled $934.3 million. The Company's
net debt to Adjusted EBITDA was 9.4x as compared to 11.6x at
March 31, 2016. The Company continues
to expect that as properties in development and lease-up reach
stabilized occupancy, leverage as measured by net debt to Adjusted
EBITDA will decrease. The Company's consolidated debt had a
weighted average interest rate of 3.28%.
As of March 31, 2017, on a
proportionate share basis, the Company had approximately
$220 million in total availability
comprised of cash and undrawn capacity on its two credit
facilities. Subsequent to March 31,
2017, the Company utilized its credit facility to initially
fund, in part, the acquisition of Latitude, thereby reducing its
total availability to approximately $150
million.
As previously announced, the Company closed a $300 million unsecured credit facility, comprised
of a $200 million revolving credit
facility and a $100 million term
loan. Additionally, the credit facility contains an accordion
feature which allows for an additional $200
million of capacity, subject to the satisfaction of certain
terms and conditions, bringing total availability to $500 million. This unsecured facility was
completed through the Company's existing joint venture with PGGM.
At closing, $100 million under the
term loan and $93 million under the
revolving credit facility was drawn primarily to repay all of the
Company's 2017 and certain of the Company's 2018 joint venture
construction loan maturities. The Company's proportionate share of
total proceeds drawn at closing totaled $107
million.
Quarterly Dividend Declaration
On March 10, 2017, the Company
declared a cash dividend of $0.075
per common share. The dividend was paid on April 7, 2017 to common stockholders of record on
March 31, 2017.
Outlook
For the full year 2017, the Company reaffirms its Same Store
growth outlook and earnings guidance ranges to be as follows (per
common share) (unaudited):
|
|
|
|
2017 Full Year
Guidance Range
|
|
|
|
|
|
|
|
Proportionate
Share - Same Store Growth:
|
|
|
|
Rental
revenue
|
|
|
1.25%
|
to
|
2.75%
|
Property operating
expenses
|
|
3.5%
|
to
|
4.5%
|
NOI
|
|
|
|
0.0%
|
to
|
2.0%
|
|
|
|
|
|
|
|
Core FFO
|
|
|
|
$ 0.37
|
to
|
$ 0.42
|
AFFO
|
|
|
|
0.39
|
to
|
0.44
|
Conference Call
The Company will hold a conference call on Tuesday, May 9, 2017 at 5:00 p.m. Eastern Time to review its first
quarter 2017 results and discuss its outlook for future
performance. To participate in the call, please dial 1-877-407-9039
(Domestic) or 1-201-689-8470 (International), or join the live
webcast of the conference call by accessing the Investor Relations
section of the Company's website at www.monogramres.com.
Please log on at least 15 minutes prior to the scheduled
start time in order to register, download and install any necessary
audio software. Select the "First Quarter 2017 Earnings Conference
Call" link. The webcast will be archived for 90 days.
Forward-Looking Statements
Certain statements made in this press release and other written
or oral statements made by or on behalf of the Company, may
constitute "forward-looking statements" 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. Statements
regarding future events and developments and the Company's future
performance, as well as management's expectations, beliefs, plans,
estimates or projections relating to the future, are
forward-looking statements within the meaning of these laws.
Examples of such statements in this press release and in the
Company's outlook include, expectations regarding apartment market
conditions and expectations regarding future operating conditions,
including the Company's current outlook as to expected funds from
operations, core funds from operations, adjusted funds from
operations, revenue, operating expenses, net operating income,
capital expenditures, depreciation, gains on sales and net income
and anticipated development activities (including projected
construction expenditures and timing). We intend these
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 are including this
statement for purposes of complying with those safe harbor
provisions. All forward-looking statements are subject to
certain risks and uncertainties that could cause actual events to
differ materially from those projected. Management believes that
these forward-looking statements are reasonable; however, you
should not place undue reliance on such statements. These
statements are based on current expectations and speak only as of
the date of such statements. The Company undertakes no obligation
to publicly update or revise any forward-looking statement, whether
as a result of future events, new information or otherwise.
The following are some of the factors that could cause the
Company's actual results and its expectations to differ materially
from those described in the Company's forward-looking statements:
we may abandon or defer development opportunities for a number of
reasons, including, without limitation, changes in local market
conditions which make development less desirable, increases in
costs of development, increases in the cost of capital or lack of
capital availability, resulting in losses; construction costs of a
community may exceed our original estimates; we may not complete
construction and lease up of communities under development or
redevelopment on schedule, resulting in increased interest costs
and construction costs and a decrease in our expected rental
revenues; we may dispose of multifamily communities due to factors
including changes in local market conditions, better net earnings
opportunities or capital reallocation, where the redeployment of
the capital, including into properties currently in lease-up, may
negatively impact our financial results, cash flows and guidance;
newly acquired properties may not stabilize according to our
estimated schedule, which may negatively impact our financial
results, cash flows and guidance; occupancy rates and market rents
may be adversely affected by competition and local economic and
market conditions which are beyond our control; financing may not
be available on favorable terms or at all, and our cash flows from
operations and access to cost effective capital may be
insufficient for the growth of our development program which could
limit our pursuit of opportunities; our cash flows may be
insufficient to meet required payments of principal and interest,
or to make dividend payments, and we may be unable to refinance
existing indebtedness or the terms of such refinancing may not be
as favorable as the terms of existing indebtedness; and we may be
unsuccessful in managing changes in our portfolio composition.
Other important risk factors regarding the Company are included
under the caption "Risk Factors" in the Company's Annual Report on
Form 10-K for the year ended December 31,
2016 and may be discussed in subsequent filings with the
SEC.
About Monogram
Monogram is a fully integrated self-managed real estate
investment trust that invests in, develops and operates high
quality multifamily communities offering location and lifestyle
amenities. Monogram invests in stabilized operating properties and
properties in various phases of development, with a focus on
communities in select markets across the
United States. As of March 31,
2017, Monogram's portfolio includes investments in 49
multifamily communities in 10 states comprising 13,674 apartment
homes.
Consolidated
Balance Sheet
|
|
(in thousands)
(unaudited)
|
|
|
|
|
|
|
March 31,
2017
|
|
December 31,
2016
|
Assets
|
|
|
|
|
|
Real
estate
|
|
|
|
|
|
Land
|
$
539,312
|
|
$
527,944
|
|
|
Buildings and
improvements
|
2,717,792
|
|
2,814,221
|
|
|
Gross operating real
estate
|
3,257,104
|
|
3,342,165
|
|
|
Less: accumulated
depreciation
|
(452,439)
|
|
(461,869)
|
|
|
Net operating real
estate
|
2,804,665
|
|
2,880,296
|
|
|
Construction in
progress, including land
|
133,005
|
|
120,423
|
|
Total real estate,
net
|
2,937,670
|
|
3,000,719
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
59,150
|
|
74,396
|
|
Tax like-kind
exchange escrow
|
110,917
|
|
56,762
|
|
Intangibles,
net
|
16,287
|
|
16,977
|
|
Other assets,
net
|
54,963
|
|
51,248
|
Total
assets
|
$
3,178,987
|
|
$
3,200,102
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Mortgages and notes
payable, net
|
$
1,228,920
|
|
$
1,522,207
|
|
Credit facilities
payable, net
|
230,137
|
|
8,023
|
|
Construction costs
payable
|
23,148
|
|
26,859
|
|
Accounts payable and
other liabilities
|
25,646
|
|
32,707
|
|
Deferred revenues and
other gains
|
22,000
|
|
22,077
|
|
Distributions
payable
|
12,606
|
|
12,512
|
|
Tenant security
deposits
|
6,027
|
|
6,205
|
Total
liabilities
|
1,548,484
|
|
1,630,590
|
|
|
|
|
|
|
|
Redeemable,
noncontrolling interests
|
29,073
|
|
29,073
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
Common
stock
|
17
|
|
17
|
|
Additional paid-in
capital
|
1,440,003
|
|
1,439,199
|
|
Cumulative
distributions and net income (loss)
|
(246,670)
|
|
(310,124)
|
|
|
Total equity
attributable to common stockholders
|
1,193,350
|
|
1,129,092
|
|
Non-redeemable
noncontrolling interests
|
408,080
|
|
411,347
|
Total
equity
|
1,601,430
|
|
1,540,439
|
Total liabilities
and equity
|
$
3,178,987
|
|
$
3,200,102
|
Consolidated
Statements of Operations
|
|
|
|
|
(in thousands, except
per share amounts) (unaudited)
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended
|
|
|
March
31,
|
|
|
2017
|
|
2016
|
|
|
|
|
|
Rental
revenues
|
$ 73,338
|
|
$ 65,547
|
|
|
|
|
|
Expenses:
|
|
|
|
|
Property operating
expenses
|
19,138
|
|
18,806
|
|
Real estate
taxes
|
11,964
|
|
10,622
|
|
General and
administrative expenses
|
6,870
|
|
6,510
|
|
Acquisition,
investment and development expenses
|
64
|
|
278
|
|
Interest
expense
|
11,704
|
|
10,366
|
|
Amortization of
deferred financing costs
|
1,549
|
|
1,536
|
|
Depreciation and
amortization
|
31,859
|
|
30,056
|
Total
expenses
|
83,148
|
|
78,174
|
|
|
|
|
|
Interest
income
|
1,181
|
|
1,682
|
Loss on early
extinguishment of debt
|
(3,901)
|
|
-
|
Other expense,
net
|
(88)
|
|
(115)
|
Loss from
continuing operations before gains on sales of real
estate
|
(12,618)
|
|
(11,060)
|
Gains on sales of
real estate
|
86,723
|
|
-
|
|
|
|
|
|
Net income
(loss)
|
74,105
|
|
(11,060)
|
|
|
|
|
|
Net loss attributable
to non-redeemable noncontrolling interests
|
1,880
|
|
2,755
|
Net income (loss)
available to the Company
|
75,985
|
|
(8,305)
|
|
Dividends to
preferred stockholders
|
-
|
|
(2)
|
Net income (loss)
attributable to common stockholders
|
$ 75,985
|
|
$ (8,307)
|
|
|
|
|
|
Weighted average
number of common shares outstanding - basic
|
167,001
|
|
166,743
|
Weighted average
number of common shares outstanding - diluted
|
167,791
|
|
166,743
|
|
|
|
|
|
Basic and diluted
earnings (loss) per common share
|
$
0.45
|
|
$
(0.05)
|
Non-GAAP Performance Financial Measures and
Definitions
In addition to amounts presented in accordance with GAAP, we
also present certain supplemental non-GAAP measurements.
These measurements are not to be considered more relevant or
accurate than the measurements presented in accordance with
GAAP. In compliance with SEC requirements, our non-GAAP
measurements are reconciled to net income, the most directly
comparable GAAP performance measure. For all non-GAAP
measurements, neither the SEC nor any other regulatory body has
passed judgment on these non-GAAP measurements.
NOI and Same Store NOI
We define NOI as rental revenue, less direct property operating
expenses and real estate taxes. We believe that NOI provides
a useful supplemental measure of our operating performance because
NOI reflects the operating performance of our properties and
excludes items that are not associated with real estate industry
defined property operations, including property management
revenues, interest income, property management expenses,
depreciation, interest and other finance expense, corporate general
and administrative expenses, overhead allocations and other
non-onsite operations. NOI may be helpful in evaluating all
of our multifamily operations and providing comparability to other
real estate companies. NOI is also a useful measurement because it
is included as a basis for certain of our loan covenant
calculations.
We define Same Store NOI as NOI for our stabilized multifamily
communities that are comparable between periods. We view Same
Store NOI as an important measure of the operating performance of
our properties because it allows us to compare operating results of
properties owned for the entirety of the current and comparable
periods and therefore eliminates variations caused by lease up
activity, acquisitions or dispositions during the periods.
NOI and Same Store NOI should not be considered as replacements
for GAAP net income as they exclude certain income and expenses
that are material to our operations. Additionally, NOI and
Same Store NOI may not be useful in evaluating net asset value or
impairments as they also exclude certain GAAP income and expenses
and non-comparable properties. Investors are cautioned that
NOI and Same Store NOI should only be used to assess the operating
performance trends for the properties included within the
definition.
The following table presents a reconciliation of our net income
(loss) to Proportionate NOI and Proportionate Same Store NOI for
our multifamily communities for the quarters ended March 31, 2017 and 2016:
(in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended
|
|
|
|
|
March
31,
|
|
|
|
|
2017
|
|
2016
|
|
Reconciliation of net
income (loss) to Proportionate NOI and Proportionate Same Store
NOI:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss
)
|
|
$ 74,105
|
|
$ (11,060)
|
|
|
|
|
|
|
|
|
Adjustments to
reconcile net income (loss) to Proportionate NOI:
|
|
|
|
|
|
|
Corporate property
management expenses
|
|
2,536
|
|
2,601
|
|
|
General and
administrative expenses
|
|
6,870
|
|
6,510
|
|
|
Interest
expense
|
|
11,704
|
|
10,366
|
|
|
Amortization of
deferred financing costs
|
|
1,549
|
|
1,536
|
|
|
Depreciation and
amortization
|
|
31,859
|
|
30,056
|
|
|
Interest
income
|
|
(1,181)
|
|
(1,682)
|
|
|
Gains on sales of
real estate
|
|
(86,723)
|
|
-
|
|
|
Loss on early
extinguishment of debt
|
|
3,901
|
|
-
|
|
|
Other, net
|
|
152
|
|
393
|
|
|
Less: Noncontrolling
interests adjustments
|
|
(14,045)
|
|
(11,325)
|
|
Proportionate
NOI
|
|
30,727
|
|
27,395
|
|
|
|
|
|
|
|
|
Less:
non-comparable
|
|
|
|
|
|
|
Rental
revenue
|
|
(13,711)
|
|
(9,531)
|
|
|
Property operating
expenses, including real estate taxes
|
|
6,159
|
|
5,387
|
|
Proportionate Same
Store NOI
|
|
$ 23,175
|
|
$
23,251
|
|
FFO, Core FFO and AFFO
FFO is a non-GAAP performance financial measure that is widely
recognized as a measure of REIT operating performance. We use
FFO as currently defined by NAREIT to be net income (loss),
computed in accordance with GAAP excluding gains (or losses) from
sales of property (including deemed sales (if any) and settlements
of pre-existing relationships), plus depreciation and amortization
on real estate assets, impairment write-downs of depreciable real
estate or of investments in unconsolidated real estate
partnerships, joint ventures and subsidiaries (if any) that are
driven by measurable decreases in the fair value of depreciable
real estate assets, and after related adjustments for
unconsolidated partnerships, joint ventures and subsidiaries and
noncontrolling interests.
Core FFO is calculated starting from FFO adjusted for loss on
early extinguishment of debt, start up and pursuit expenses, fair
value adjustments and non-recurring expenses.
AFFO is calculated starting from Core FFO adjusted for recurring
capital expenditures, straight-line rents and stock compensation
expense.
We believe that FFO, Core FFO, and AFFO are helpful to our
investors and our management as measures of operating performance
because they exclude real estate-related depreciation and
amortization, impairments of depreciable real estate, and gains and
losses from property dispositions, and as a result, when compared
year to year, highlights the impact on operations from trends in
occupancy rates, rental rates, operating costs, development
activities (including capitalized interest and other costs during
the development period), general and administrative expenses, and
interest costs, which may not be immediately apparent from net
income. Historical cost accounting for real estate assets in
accordance with GAAP assumes that the value of real estate and
intangibles diminishes predictably over time independent of market
conditions or the physical condition of the asset. Since real
estate values have historically risen or fallen with market
conditions (which includes property level factors such as
capitalization rates, rental rates, occupancy, capital
improvements, status of developments and competition, as well as
macro-economic factors such as economic growth, interest rates,
demand and supply for real estate and inflation), many industry
investors and analysts have considered the presentation of
operating results for real estate companies that use historical
cost accounting alone to be insufficient. FFO, Core FFO and AFFO
are also useful measurements because they are included as a basis
for certain of our loan covenants. As a result, our
management believes that the use of FFO, together with the required
GAAP presentations, is helpful for our investors in understanding
our performance. Factors that impact FFO include property
operations, start-up costs, fixed costs, pursuit expenses, interest
on cash held in accounts or loan investments, income from portfolio
properties, operating costs during the lease up of developments,
interest rates on acquisition financing and general and
administrative expenses. In addition, FFO will be affected by
the types of investments in our and our co-investment ventures'
portfolios, which may include, but are not limited to, equity and
mezzanine, and bridge loan investments in existing operating
properties and properties in various stages of development and the
accounting treatment of the investments in accordance with our
accounting policies. Core FFO is useful because it adjusts
for one-time items which increases comparability to other REITs.
AFFO is useful as it is the basis for certain debt covenant
calculations.
FFO, Core FFO, and AFFO should not be considered as alternatives
to GAAP net income (loss), nor as an indication of our liquidity,
nor are they indicative of funds available to fund our cash needs,
including our ability to fund distributions. FFO, Core FFO,
and AFFO are also not useful measures in evaluating net asset value
because impairments are taken into account in determining net asset
value but not in determining FFO, Core FFO, and AFFO.
Although the Company has not historically incurred any significant
impairment charges, investors are cautioned that we may not recover
any impairment charges in the future. Accordingly, FFO, Core
FFO, and AFFO should be reviewed in connection with GAAP
measurements. We believe our presentation of FFO is in
accordance with the NAREIT definition, however, our FFO, Core FFO,
and AFFO as presented may not be comparable to amounts calculated
by other REITs.
The following table presents our calculation of FFO, Core FFO,
and AFFO, net of noncontrolling interests, and provides additional
information related to our operations for the quarters ended
March 31, 2017 and 2016:
|
|
|
|
|
(in thousands, except
per share amounts) (unaudited)
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended
|
|
|
March
31,
|
|
|
2017
|
|
2016
|
FFO:
|
|
|
|
Net income (loss)
attributable to common stockholders
|
$ 75,985
|
|
$ (8,307)
|
Add (deduct) NAREIT
defined adjustments:
|
|
|
|
|
Real estate
depreciation and amortization
|
31,721
|
|
29,922
|
|
Gains on sales of
real estate
|
(86,723)
|
|
-
|
|
Less: Noncontrolling
interests adjustments
|
(10,116)
|
|
(9,258)
|
FFO - NAREIT
defined
|
10,867
|
|
12,357
|
|
|
|
|
|
Add (deduct)
adjustments to arrive at Core FFO:
|
|
|
|
|
Loss on early
extinguishment of debt
|
3,901
|
|
-
|
|
Fair value
adjustments (derivatives and business combinations)
|
70
|
|
-
|
|
Start up and pursuit
expenses
|
128
|
|
225
|
|
Less: Noncontrolling
interests adjustments
|
(305)
|
|
(30)
|
Core FFO
|
14,661
|
|
12,552
|
|
|
|
|
|
Add (deduct)
adjustments to arrive at AFFO:
|
|
|
|
|
Recurring capital
expenditures
|
(594)
|
|
(482)
|
|
Straight-line
rents
|
227
|
|
242
|
|
Stock compensation
expense
|
1,121
|
|
580
|
|
Less: Noncontrolling
interests adjustments
|
69
|
|
5
|
AFFO
|
$ 15,484
|
|
$ 12,897
|
|
|
|
|
|
Weighted average
number of common shares outstanding - basic
|
167,001
|
|
166,743
|
Weighted average
number of common shares outstanding - diluted
|
167,791
|
|
167,309
|
|
|
|
|
|
Per common share
amounts - basic and diluted:
|
|
|
|
|
Net income (loss)
attributable to common stockholders
|
$
0.45
|
|
$
(0.05)
|
|
FFO attributable to
common stockholders - NAREIT Defined
|
$
0.06
|
|
$
0.07
|
|
Core FFO attributable
to common stockholders
|
$
0.09
|
|
$
0.08
|
|
AFFO attributable to
common stockholders
|
$
0.09
|
|
$
0.08
|
Reconciliation of
Full Year 2017 Guidance
|
|
|
|
|
|
|
|
|
|
|
|
Guidance Range -
Per Share
|
|
|
|
|
|
|
|
Proforma annualized
net income (loss) attributable to common stockholders
|
|
$ 0.33
|
|
$ 0.40
|
Add (deduct) NAREIT
defined adjustments:
|
|
|
|
|
|
Real estate
depreciation and amortization
|
|
0.77
|
|
0.79
|
|
Gains on sales of
real estate
|
|
(0.52)
|
|
(0.57)
|
|
Less:
Noncontrolling interests adjustments
|
|
(0.25)
|
|
(0.24)
|
Proforma FFO
annualized - NAREIT defined
|
|
0.33
|
|
0.38
|
|
|
|
|
|
|
|
Add (deduct)
adjustments to arrive at Proforma Core FFO annualized:
|
|
|
|
|
|
Other (primarily
workforce reduction)
|
|
|
0.04
|
|
0.04
|
|
Less:
Noncontrolling interests adjustments
|
|
-
|
|
-
|
Proforma Core
FFO annualized
|
|
0.37
|
|
0.42
|
|
|
|
|
|
|
|
Add (deduct)
adjustments to arrive at Proforma AFFO annualized:
|
|
|
|
|
|
Other (primarily
stock compensation expense and recurring capital
expenditures)
|
|
0.02
|
|
0.02
|
|
Less:
Noncontrolling interests adjustments
|
|
-
|
|
-
|
Proforma AFFO
annualized
|
|
$ 0.39
|
|
$ 0.44
|
|
|
|
|
|
|
|
Proforma weighted
average number of common shares outstanding - diluted (in
millions)
|
|
168.4
|
|
168.4
|
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP performance measurement of
earnings before interest, taxes, depreciation, amortization, and
other non-recurring items. Its purpose is to highlight
earnings without finance, depreciation and certain amortization
expenses and its use is limited to specialized analysis.
Similar to other non-GAAP measurements, Adjusted EBITDA is
presented on our Proportionate Share. Our presentation may be
different than other companies.
Reconciliation of net
income (loss) available to the Company to Adjusted Proportionate
EBITDA:
|
(in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
March 31,
2017
|
|
March 31,
2016
|
Total Debt per
Consolidated Balance Sheet
|
|
$
1,459,057
|
|
$
1,518,658
|
|
Less:
Unamortized adjustments from business combinations
|
|
(1)
|
|
(2,076)
|
|
Plus: Deferred
financing costs, net
|
|
11,849
|
|
13,724
|
|
Less:
noncontrolling interests share of adjustments
|
|
(536,643)
|
|
(513,259)
|
Proportionate Share
of Contractual Debt
|
|
934,262
|
|
1,017,047
|
|
Less:
Proportionate share of cash and cash equivalents
|
|
(45,601)
|
|
(53,439)
|
Net Proportionate
Share of Contractual Debt
|
|
$
888,661
|
|
$
963,608
|
|
|
|
|
|
|
Total Cash and cash
equivalents per Consolidated Balance Sheet
|
|
$
59,150
|
|
$
67,847
|
|
Less:
noncontrolling interests share of adjustments
|
|
(13,549)
|
|
(14,408)
|
Proportionate share
of cash and cash equivalents
|
|
$
45,601
|
|
$
53,439
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
Ended
|
|
|
|
March 31,
|
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
Net income (loss)
available to the Company
|
|
$
75,985
|
|
$
(8,305)
|
|
Less: Gains on
sales of real estate
|
|
(86,723)
|
|
-
|
|
Depreciation and
amortization
|
|
33,652
|
|
31,836
|
|
Interest
expense
|
|
11,228
|
|
9,774
|
|
Loss on early
extinguishment of debt
|
|
3,901
|
|
-
|
|
Other, net
|
|
188
|
|
210
|
|
Less: noncontrolling
interests share of adjustments
|
|
(14,668)
|
|
(12,818)
|
Adjusted
Proportionate EBITDA
|
|
$
23,563
|
|
$
20,697
|
|
|
|
|
|
|
Annualized Adjusted
Proportionate EBITDA
|
|
$
94,252
|
|
$
82,788
|
|
|
|
|
|
|
Net Proportionate
Share of Contractual Debt to Annualized Adjusted Proportionate
EBITDA
|
|
9.4x
|
|
11.6x
|
Other Definitions
Proportionate Share — A non-GAAP presentation of
financial amounts at our effective cash share based on our
participation in distributable operating cash. The amounts exclude
noncontrolling interest in consolidated joint ventures.
Proportionate Share presentations may be useful in analyzing our
financial information by providing revenues, expenses, assets and
liabilities attributable only to our common stockholders.
Proportionate Share presentations are also relevant to our
investors and lenders as they highlight operations and capital
available for our lenders and investors and is the basis used for
several of our loan covenants. However, our proportionate share
does not include amounts related to our consolidated operations and
should not be considered as a replacement for corresponding GAAP
amounts presented on a consolidated basis. Investors are
cautioned that our proportionate share amounts should only be used
to assess financial information in the limited context of
evaluating amounts attributable to common stockholders. We
present our proportionate share along with the corresponding GAAP
balance.
Total Economic Costs — A non-GAAP measure
representing costs for all on-site development and construction
costs recognized for GAAP, but including certain items expensed for
GAAP (primarily specific financing and operating expenses incurred
during lease up) and excluding certain GAAP costs related to
consolidated allocated costs, former sponsor-related fees and other
non-cash capitalized cost items.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/monogram-residential-trust-announces-first-quarter-2017-results-300454619.html
SOURCE Monogram Residential Trust, Inc.