Bluerock Residential Growth REIT, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1

Attached files

file	filename
EX-99.2 - EXHIBIT 99.2 - Bluerock Residential Growth REIT, Inc.	v452299_ex99-2.htm
8-K - 8-K - Bluerock Residential Growth REIT, Inc.	v452299_8k.htm

Exhibit 99.1

Corporate Headquarters

712 Fifth Ave., 9th Floor

New York, NY 10019

877.826.BLUE

PRESS RELEASE

For Immediate Release

Bluerock Residential Growth REIT Announces Third Quarter 2016 Results

New York, NY (November 7, 2016) – Bluerock Residential Growth REIT, Inc. (NYSE MKT: BRG, BRG PrA, BRG PrC and BRG PrD) (“the Company”) announced today its financial results for the quarter ended September 30, 2016.

Highlights

•

Total revenues grew 69% to $19.6 million for the quarter from $11.6 million for the prior year quarter primarily as a result of significant investment activity in the past year.

•

Net loss attributable to common stockholders for the third quarter of 2016 was $2.6 million, or $(0.12) per share, as compared to a net loss of $0.6 million, or $(0.03) per share, in the prior year period. Net loss attributable to common stockholders included non-cash expenses of $8.3 million in the third quarter of 2016 vs. $4.8 million for the prior year period.

•

Adjusted funds from operations attributable to common stockholders (“AFFO”) was $4.3 million for the quarter compared to $4.4 million for the prior year quarter.

•

AFFO per diluted share is $0.21 for the third quarter of 2016 as compared to $0.22 for the third quarter of 2015, and exceeded guidance of $0.08 - $0.10.

•

Pro forma AFFO per share of $0.40 for the third quarter exceeded pro forma guidance of $0.28 to $0.30 per share.

•

The Company paid the full amount of the third quarter’s management fee of $1.9 million in LTIP Units in lieu of cash payment. This favorably impacted both AFFO per share and pro forma AFFO per share by $0.09.

•

Property Net Operating Income (NOI) grew 75% to $12.1 million for the quarter, from $6.9 million in the prior year quarter.

•

Property NOI margins improved 220 basis points to 61.6% of revenue for the quarter, from 59.4% of revenue in the prior year quarter.

•

Same store NOI increased 8.1% for the quarter, as compared to the prior year quarter.

•

Consolidated real estate investments, at cost, increased 32% to $738 million at September 30, 2016 from $557 million at December 31, 2015.

•

The Company invested in one operating property totaling 336 units for a total purchase price of approximately $74.5 million and one property for the development of 90 units during the third quarter. In addition, the Company invested in two operating properties totaling 800 units for a total purchase price of $106.6 million subsequent to end of the quarter.

•

The Company declared a quarterly cash dividend on the 8.250% Series A preferred stock of $0.515625 per share for the third quarter, which was paid in cash on October 5, 2016.

•

The Company declared monthly dividends for the fourth quarter of 2016 equal to a quarterly rate of $0.29 per share on the Company's Class A common stock. This equates to an 8.9% annualized yield based on the closing price of $13.00 for the Class A common stock as of September 30, 2016.

•

The Company sold 6,937 shares of Series B preferred stock with associated warrants at a public offering price of $1,000 per share, for gross proceeds of approximately $7.0 million during the third quarter.

•

The Company declared monthly dividends for the fourth quarter of 2016 of $5.00 per share on the Company’s Series B preferred stock.

•

On July 19, 2016, the Company completed an underwritten offering of 2,300,000 shares of 7.625% Series C preferred stock at a public offering price of $25.00 per share, including the full exercise of the underwriter’s allotment for gross proceeds of $57.5 million.

•

On August 8, 2016, the Company entered into an At-the-Market offering for Class A common stock up to $100,000,000.

•

On September 14, 2016, the Company commenced an At-the-Market 7.6250% Series C preferred stock offering (“ATM”) for up to $36,000,000. The Company sold 23,750 shares of Series C preferred stock under the At-the-Market offering during the third quarter for gross proceeds of approximately $0.6 million.

•

On October 13, 2016, the Company completed an underwritten offering of 2,700,000 shares of 7.125% Series D perpetual preferred stock at a public offering price of $25.00 per share for gross proceeds of $67.5 million, and on November 3, 2016, the Company closed on the sale of 150,602 shares of Series D preferred stock for gross proceeds of approximately $3.8 million pursuant to the underwriters’ exercise of the overallotment option.

Management Commentary

“We are pleased to report our portfolio continued to perform well during the third quarter with same store NOI growth of 8.1% and AFFO per share above the high end of our guidance,” said Ramin Kamfar, the Company’s Chairman and CEO. “We remain focused on reducing our cost of capital, and building a high quality portfolio in our current footprint of growth markets in the Sunbelt, from the Carolinas to Florida and Texas.”

Third Quarter Acquisition, Development and Disposition Activity

•

On July 14, 2016, the Company acquired a 90% leasehold interest in a 336-unit, Class A, mixed-use apartment community located in Atlanta, Georgia, known as Tenside Apartment Homes. The property was rebranded as ARIUM Westside. The total purchase price was approximately $74.5 million, funded in part with a $52.2 million senior mortgage loan secured by the leasehold interest in the property.

•

On August 10, 2016, the Company disposed of Springhouse at Newport News for a sales price of approximately $38.0 million, generating net proceeds to the Company of $9.0 million, an IRR of 17% and a return on equity of 1.8x.

•

On September 1, 2016, the Company made an investment in a 90-unit to-be-built Class A apartment community located in Boca Raton, Florida. This investment is for approximately $9.1 million, of which approximately $1.1 million was funded as of September 30, 2016.

Pending Investments at September 30, 2016

•

On October 13, 2016, the Company acquired a 90% interest in a 480-unit apartment community located in Atlanta, Georgia, known as Nevadan Apartments. The total purchase price was approximately $68.3 million, funded in part with a $48.4 million senior mortgage secured by the property.

•

On October 31, 2016, the Company acquired an 85% interest in a 320-unit, garden-style apartment community in Port St. Lucie, Florida, known as Apex Prima Vista Apartments. The total purchase price was $38.3 million, funded in part with a senior mortgage loan secured by the property of approximately $27.0 million.

•

The Company has an agreement to acquire a 92.5% interest in a 324-unit, garden-style apartment community located in Austin, Texas, known as Deerfield Apartments. The total purchase price is expected to be approximately $48.9 million, to be funded in part with a mortgage loan of approximately $34.2 million.

•

The Company has an agreement which entitles the Company to invest in a 266-unit to-be-built Class A apartment community located in Jacksonville, Florida. The investment of approximately $24.4 million is expected to be structured as a convertible mezzanine loan with an option to convert into majority indirect ownership of the underlying property upon stabilization.

•

The Company has an agreement to acquire a 90% interest in a 250-unit apartment community located in Austin, Texas, known as Legacy at Southpark. The total purchase price is expected to be approximately $36.8 million, to be funded in part with a mortgage loan of approximately $26.5 million.

•

The Company has an agreement to acquire a 98% interest in a 320-unit apartment community in the Roswell submarket of Atlanta, Georgia, known as Roswell City Walk. The total purchase price is expected to be approximately $76.0 million, to be funded in part with a mortgage loan of approximately $50.9 million.

Third Quarter 2016 Financial Results

Net loss attributable to common stockholders for the third quarter of 2016 was $2.6 million, as compared to a net loss of $0.6 million in the prior year period. The change in net loss was primarily driven by positive increases in property NOI of $5.2 million and income of unconsolidated real estate joint ventures of $0.7 million due to the increase in the size of our invest-to-own portfolio, a gain on sale of real estate investments of $4.9 million offset by related increases in management fees of $1.0 million, interest expense of $2.3 million, depreciation and amortization expense of $3.2 million, loss on early extinguishment of debt of $2.4 million, and the preferred stock income and accretion allocation of $4.2 million.

AFFO for the third quarter of 2016 was $4.3 million, or $0.21 per diluted share, as compared to $4.4 million, or $0.22 per share in the prior year period. AFFO was impacted by increases in property NOI of $5.2 million arising from significant investment activity in the past year and in income of unconsolidated real estate joint ventures of $0.7 million caused by expanding the size of our invest-to-own portfolio, offset by higher interest expense of $2.0 million and the preferred stock income allocation of $3.9 million.

Same Store Portfolio Performance

Same store NOI for the third quarter of 2016 increased by 8.1% from the same period in the prior year. There was a 7.5% increase in same store property revenues as compared to the same prior year period, primarily attributable to a 4.7% increase in average rent per occupied unit, a 39 basis point increase in average occupancy and an additional 17 units acquired at our Lansbrook property and 15 additional units at Park & Kingston. Same store expenses increased 6.5%.

Dividend Details

On October 4, 2016, our board of directors authorized, and we declared, monthly dividends for the fourth quarter of 2016 equal to a quarterly rate of $0.29 per share on our Class A common stock, payable to the stockholders of record as of October 25, 2016, which was paid in cash on November 4, 2016, and as of November 25, 2016 and December 23, 2016, which will be paid in cash on December 5, 2016 and January 5, 2016, respectively. Holders of OP and LTIP Units are entitled to receive "distribution equivalents" at the same time as dividends are paid to holders of our Class A common stock.

The declared dividends equal a monthly dividend on the Class A common stock as follows: $0.096666 per share for the dividend paid to stockholders of record as of October 25, 2016, $0.096667 per share for the dividend which will be paid to stockholders of record as of November 25, 2016, and December 23, 2016. A portion of each dividend may constitute a return of capital for tax purposes. There is no assurance that we will continue to declare dividends or at this rate.

On October 4, 2016, our board of directors authorized, and we declared, a monthly dividend of $5.00 per Series B preferred stock, payable to the stockholders of record as of October 25, 2016, which was paid in cash on November 4, 2016 and as of November 25, 2016 and December 23, 2016, which will be paid in cash on December 5, 2016 and January 5, 2017.

Q4 2016 Outlook

For the fourth quarter of 2016, the Company anticipates AFFO in the range of $0.05 to $0.07 per share, and $0.31 to $0.33 per share on a pro forma basis. For assumptions underlying earnings guidance, please see page 29 of Company’s Q3 2016 Earnings Supplement available under Investor Relations on the Company’s website (www.bluerockresidential.com). Pro forma AFFO is used for illustrative purposes only, is hypothetical and does not represent historical performance or management’s estimates or projections for future performance.

Conference Call

All interested parties can listen to the live conference call at 11:00 AM ET on Monday, November 7, 2016 by dialing +1 (866) 843-0890 within the U.S., or +1 (412) 317-6597, and requesting the "Bluerock Residential Conference."

For those who are not available to listen to the live call, the conference call will be available for replay on the Company’s website two hours after the call concludes, and will remain available until December 7, 2016 at http://services.choruscall.com/links/brg161107.html, as well as by dialing +1 (877) 344-7529 in the U.S., or +1 (412) 317-0088 internationally, and requesting conference number 10095582.

The full text of this Earnings Release and additional Supplemental Information is available in the Investor Relations section on the Company’s website at http://www.bluerockresidential.com.

About Bluerock Residential Growth REIT, Inc.

Bluerock Residential Growth REIT, Inc. (NYSE MKT: BRG) is a real estate investment trust that focuses on acquiring a diversified portfolio of Class A institutional-quality apartment properties in demographically attractive growth markets to appeal to the renter by choice. The Company’s objective is to generate value through off-market/relationship-based transactions and, at the asset level, through improvements to operations and properties. BRG generally invests with strategic regional partners, including some of the best-regarded private owner-operators in the United States, making it possible to operate as a local sharpshooter in each of its markets while enhancing off-market sourcing capabilities. The Company is included in the Russell 2000 and Russell 3000 Indexes. BRG has elected to be taxed as a real estate investment trust (REIT) for U.S. federal income tax purposes.

For more information, please visit the Company’s website at www.bluerockresidential.com.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements are based upon the Company’s present expectations, but these statements are not guaranteed to occur. Furthermore, the Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. Investors should not place undue reliance upon forward-looking statements. For further discussion of the factors that could affect outcomes, please refer to the risk factors set forth in Item 1A of the Company’s Annual Report on Form 10-K filed by the Company with the U.S. Securities and Exchange Commission (“SEC”) on February 24, 2016, and subsequent filings by the Company with the SEC. We claim the safe harbor protection for forward looking statements contained in the Private Securities Litigation Reform Act of 1995.

Portfolio Summary

The following is a summary of our investments, operating properties and convertible preferred equity investments, as of September 30, 2016:

Operating Properties	Location	Year Built/ Renovated ⁽¹⁾		Ownership Interest			Units		Average Rent ⁽²⁾		% Occupied
ARIUM at Palmer Ranch	Sarasota, FL		2016		95	%		320	$	1,144		93	%
ARIUM Grandewood	Orlando, FL		2005		95	%		306		1,220		96	%
ARIUM Gulfshore	Naples, FL		2016		95	%		368		1,121		94	%
ARIUM Palms	Orlando, FL		2008		95	%		252		1,211		95	%
ARIUM Westside	Atlanta, GA		2008		90	%		336		1,453		96	%
Ashton Reserve	Charlotte, NC		2015		100	%		473		1,063		94	%
Enders Place at Baldwin Park	Orlando, FL		2003		90	%		220		1,651		95	%
Fox Hill	Austin, TX		2010		95	%		288		1,196		95	%
Lansbrook Village	Palm Harbor, FL		2004		90	%		618		1,241		91	%
MDA Apartments	Chicago, IL		2006		35	%		190		2,283		98	%
Park & Kingston	Charlotte, NC		2015		96	%		168		1,196		95	%
Sorrel	Frisco, TX		2015		95	%		352		1,286		90	%
Sovereign	Fort Worth, TX		2015		95	%		322		1,296		97	%
The Preserve at Henderson Beach	Destin, FL		2009		100	%		340		1,293		91	%
Village Green of Ann Arbor	Ann Arbor, MI		2013		49	%		520		1,205		98	%
Operating Properties Subtotal/Average								5,073	$	1,281		94	%

Convertible Preferred Equity Investments				Anticipated Ownership Interest After Conversion ⁽³⁾					Pro Forma Average Rent ⁽³⁾
Alexan CityCentre⁽⁵⁾	Houston, TX		2017		17	%		340	$	2,144		-
Alexan Southside Place ⁽⁵⁾	Houston, TX		2018		62	%		270		2,019		-
APOK Townhomes⁽⁵⁾	Boca Raton, FL		2018		*			90		2,316		-
Cheshire Bridge ⁽⁵⁾	Atlanta, GA		2017		78	%		285		1,559		-
Domain Phase 1 ⁽⁵⁾	Garland, TX		2018		90	%		301		1,425		-
EOS ⁽⁴⁾	Orlando, FL		2015		26	%		296		1,211		92	%
Flagler Village ⁽⁵⁾	Fort Lauderdale, FL		2020		*			400		2,483		-
Lake Boone Trail ⁽⁵⁾	Raleigh, NC		2018		72	%		245		1,402		-
West Morehead ⁽⁵⁾	Charlotte, NC		2018		80	%		286		1,601		-
Whetstone	Durham, NC		2015		93	%		204		1,252		85	%
Convertible Preferred Equity Investments Subtotal/Average								2,717	$	1,754

Operating Properties and Convertible Preferred Equity Investments Total/Average								7,790	$	1,454

⁽¹⁾ Represents date of last significant renovation or year built if there were no renovations.

⁽²⁾ Represents the average monthly rent per occupied unit for all occupied units for the three months ended September 30, 2016.

⁽³⁾ The Company has made a convertible preferred equity investment that is convertible into a common membership interest at BRG's option upon stabilization. The preferred investment earns a preferred return of 15%. Average rent is pro forma based on underwriting.

⁽⁴⁾ EOS is currently a preferred equity investment providing a stated investment return and was in lease-up during the three months ended September 30, 2016. Actual average rent was $1,244 net of upfront lease-up concessions.

⁽⁵⁾ Property is currently in development.

* The property is currently an equity method investment with common ownership.

Consolidated Statement of Operations

For the Three Months and Nine Months Ended September 30, 2016 and 2015

(Unaudited and dollars in thousands except for share and per share data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenues
Net rental income	$	18,572		$	11,049		$	52,013		$	29,611
Other property revenues		1,052			511			2,644			1,454
Total revenues		19,624			11,560			54,657			31,065
Expenses
Property operating		7,538			4,698			21,519			12,924
General and administrative		1,177			1,246			4,155			2,912
Management fees		1,866			896			4,495			3,051
Acquisition costs		689			739			2,143			1,409
Depreciation and amortization		7,166			3,993			22,465			10,499
Total expenses		18,436			11,572			54,777			30,795
Operating income (loss)		1,188			(12	)		(120	)		270
Other income (expense)
Other income		26			-			26			62
Preferred returns and equity in income of unconsolidated real estate joint ventures		3,074			2,366			8,617			4,391
Equity in gain on sale of unconsolidated real estate joint venture interests		-			11			-			11,303
Gain on sale of real estate investments		4,947			-			4,947			-
Loss on early extinguishment of debt		(2,393	)		-			(2,393	)		-
Interest expense, net		(5,274	)		(2,967	)		(14,091	)		(7,985	)
Total other income (expense)		380			(590	)		(2,894	)		7,771

Net income (loss)		1,568			(602	)		(3,014	)		8,041

Preferred stock dividends		(3,940	)		-			(8,391	)		-
Preferred stock accretion		(275	)		-			(568	)		-

Net (loss) income attributable to noncontrolling interests
Operating partnership units		(37	)		(8	)		(173	)		57
Partially-owned properties		(59	)		(20	)		(73	)		5,827
Net (loss) income attributable to noncontrolling interests		(96	)		(28	)		(246	)		5,884
Net (loss) income attributable to common stockholders	$	(2,551	)	$	(574	)	$	(11,727	)	$	2,157

Consolidated Balance Sheets

Third Quarter 2016

(Unaudited and dollars in thousands except for share and per share amounts)

	September 30,			December 31,
	2016			2015
	(Unaudited)
ASSETS
Net Real Estate Investments
Land	$	89,330		$	65,057
Building and improvements		626,854			474,608
Furniture, fixtures and equipment		21,615			17,155
Total Gross Real Estate Investments		737,799			556,820
Accumulated depreciation		(35,266	)		(23,437	)
Total Net Real Estate Investments		702,533			533,383
Cash and cash equivalents		130,521			68,960
Restricted cash		24,751			11,669
Due from affiliates		961			861
Accounts receivable, prepaid and other assets		10,313			6,742
Preferred equity investments and investments in unconsolidated real estate joint ventures		92,558			75,223
In-place lease intangible assets, net		1,269			2,389
Total Assets	$	962,906		$	699,227

LIABILITIES AND EQUITY
Mortgages payable	$	525,036		$	380,102
Accounts payable		514			587
Other accrued liabilities		14,350			7,013
Due to affiliates		2,152			1,485
Distributions payable		5,973			3,163
Total Liabilities		548,025			392,350

8.250% Series A Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share, 10,875,000 and 2,875,000 shares authorized; and 5,721,460 and 2,875,000 issued and outstanding, as of September 30, 2016 and December 31, 2015, respectively		138,130			69,165
Series B Redeemable Preferred Stock, liquidation preference $1,000 per share, 150,000 shares authorized, 8,827 and none issued and outstanding, as of September 30, 2016 and December 31, 2015, respectively		7,698			-
7.6250% Series C Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share, 4,000,000 and none shares authorized; and 2,323,750 and none issued and outstanding as of September 30, 2016 and December 31, 2015, respectively		56,076			-

Stockholders' Equity
Preferred stock, $0.01 par value, 234,975,000 shares authorized; none issued and outstanding		-			-
Common stock - Class A, $0.01 par value, 747,586,185 shares authorized; 19,566,437 and 19,202,112 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively		196			192
Common stock - Class B-3, $0.01 par value, 804,605 shares authorized; none and 353,629 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively		-			4
Additional paid-in-capital		254,770			248,484
Distributions in excess of cumulative earnings		(71,249	)		(41,496	)
Total Stockholders' Equity		183,717			207,184

Noncontrolling Interests
Operating partnership units		2,432			2,908
Partially owned properties		26,828			27,620
Total Noncontrolling Interests		29,260			30,528
Total Equity		212,977			237,712
TOTAL LIABILITIES AND EQUITY	$	962,906		$	699,227

Non-GAAP Financial Measures

The foregoing supplemental financial data includes certain non-GAAP financial measures that we believe are helpful in understanding our business and performance, as further described below. Our definition and calculation of these non-GAAP financial measures may differ from those of other REITs, and may, therefore, not be comparable.

Funds from Operations and Adjusted Funds from Operations

Funds from operations attributable to common stockholders (“FFO”) is a non-GAAP financial measure that is widely recognized as a measure of REIT operating performance. We consider FFO to be an appropriate supplemental measure of our operating performance as it is based on a net income analysis of property portfolio performance that excludes non-cash items such as depreciation. The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, which implies that the value of real estate assets diminishes predictably over time. Since real estate values historically rise and fall with market conditions, presentations of operating results for a REIT, using historical accounting for depreciation, could be less informative. We define FFO, consistent with the National Association of Real Estate Investment Trusts, or (“NAREIT's”) definition, as net income, computed in accordance with GAAP, excluding gains (or losses) from sales of property, plus depreciation and amortization of real estate assets, plus impairment write-downs of depreciable real estate, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect FFO on the same basis.

In addition to FFO, we use adjusted funds from operations attributable to common stockholders (“AFFO”). AFFO is a computation made by analysts and investors to measure a real estate company's operating performance by removing the effect of items that do not reflect ongoing property operations. To calculate AFFO, we further adjust FFO by adding back certain items that are not added to net income in NAREIT's definition of FFO, such as acquisition expenses, equity based compensation expenses, and any other non-recurring or non-cash expenses, which are costs that do not relate to the operating performance of our properties, and subtracting recurring capital expenditures (and when calculating the quarterly incentive fee payable to our Manager only, we further adjust FFO to include any realized gains or losses on our real estate investments).

Our calculation of AFFO differs from the methodology used for calculating AFFO by certain other REITs and, accordingly, our AFFO may not be comparable to AFFO reported by other REITs. Our management utilizes FFO and AFFO as measures of our operating performance after adjustment for certain non-cash items, such as depreciation and amortization expenses, and acquisition expenses and pursuit costs that are required by GAAP to be expensed but may not necessarily be indicative of current operating performance and that may not accurately compare our operating performance between periods. Furthermore, although FFO, AFFO and other supplemental performance measures are defined in various ways throughout the REIT industry, we also believe that FFO and AFFO may provide us and our stockholders with an additional useful measure to compare our financial performance to certain other REITs. We also use AFFO for purposes of determining the quarterly incentive fee, if any, payable to our Manager.

Neither FFO nor AFFO is equivalent to net income, including net income attributable to common stockholders, or cash generated from operating activities determined in accordance with GAAP. Furthermore, FFO and AFFO do not represent amounts available for management's discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments or uncertainties. Neither FFO nor AFFO should be considered as an alternative to net income, including net income attributable to common stockholders, as an indicator of our operating performance or as an alternative to cash flow from operating activities as a measure of our liquidity.

We have acquired interests in six additional properties and five investments accounted for on the equity method of accounting and sold two properties subsequent to September 30, 2015. The results presented in the table below are not directly comparable and should not be considered an indication of our future operating performance.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Net (loss) income attributable to common stockholders	$	(2,551	)	$	(574	)	$	(11,727	)	$	2,157

Common stockholders pro-rata share of:
Real estate depreciation and amortization⁽¹⁾		6,197			3,082			19,436			7,641
Loss (gain) on sale of joint venture interests		-			2			-			(5,320	)
Gain on sale of real estate assets		(4,876	)		-			(4,876	)		-
FFO Attributable to Common Stockholders	$	(1,230	)	$	2,510		$	2,833		$	4,478

Common stockholders pro-rata share of:
Amortization of non-cash interest expense		472			148			620			243
Acquisition and disposition costs		619			682			1,993			1,367
Loss on early extinguishment of debt		2,269			-			2,269			-
Normally recurring capital expenditures		(239	)		(215	)		(656	)		(513	)
Preferred stock accretion		271			-			560			-
Non-cash equity compensation		2,382			1,529			6,600			3,821
Non-recurring equity in earnings of unconsolidated joint ventures		(231	)		(289	)		(231	)		(289	)
AFFO Attributable to Common Stockholders	$	4,313		$	4,365		$	13,988		$	9,107

Weighted average common shares outstanding-diluted		20,909,727			20,181,656			20,711,836			16,396,038

PER SHARE INFORMATION:
FFO Attributable to Common Stockholders - diluted	$	(0.06	)	$	0.12		$	0.14		$	0.27
AFFO Attributable to Common Stockholders - diluted	$	0.21		$	0.22		$	0.68		$	0.56
Pro forma AFFO Attributable to Common Stockholders - diluted⁽²⁾	$	0.40			N/A			N/A			N/A

⁽¹⁾ The real estate depreciation and amortization amount includes our share of consolidated real estate-related depreciation and amortization of intangibles, less amounts attributable to noncontrolling interests, and our similar estimated share of unconsolidated depreciation and amortization, which is included in earnings of our unconsolidated real estate joint venture investments.

⁽²⁾ Pro forma AFFO for the three months ended September 30, 2016 assumes the investment of $155 million (consisting of available cash, earnest money deposits, expected loan proceeds, and net offering proceeds) had occurred on July 1, 2016: (i) additional investment of approximately $2 million in the Lake Boone convertible preferred equity investment; (ii) additional investment of approximately $17 million in the West Morehead convertible preferred equity investment; (iii) investment of approximately $23 million in a convertible mezzanine loan structure in connection with a joint venture, which entitles us to invest in Jacksonville MSA; (iv) investment of approximately $17 million in convertible preferred equity in the development asset in the Dallas MSA; (v) investment of approximately $3 million in a convertible mezzanine loan structure in connection with a joint venture, which entitles us to invest in Ft. Lauderdale FL; (vi) investment of approximately $9 million in a convertible mezzanine loan structure in a development asset the Company has under binding LOI in Boca Raton MSA; (vii) investment of approximately $22 million in Tenside Apartments in Georgia which closed on July 14, 2016; and (viii) investment of approximately $24 million in an operating asset located in the Atlanta MSA. Proforma guidance also assumes that $38 million is invested 65% in stabilized properties at a nominal 5.75% cap rate with interest expense at a rate of 3.75%, and 35% invested in convertible preferred equity development assets. The pro forma guidance is being presented solely for purposes of illustrating the potential impact of these pipeline transactions, as well as future investments to be made with funds we have available for investment, as if they had occurred at July 1, 2016, based on information currently available to management and assumptions management has made with respect to our future pipeline. The Company is providing no assurances that any of the above transactions are probable, or that they will close or that management will identify or acquire investments consistent with our pipeline assumptions, and the failure to do so would significantly impact pro forma guidance. The actual timing of these investments, if and when made, will vary materially from the assumed timing reflected in the pro forma guidance, and actual quarterly results will differ significantly from the pro forma guidance shown above. Investors should not rely on pro forma guidance as a forecast of the actual performance of the Company.

Earnings Before Interest, Income Taxes, Depreciation and Amortization ("EBITDA")

EBITDA is defined as earnings before interest, income taxes, depreciation and amortization, calculated on a consolidated basis. We consider EBITDA to be an appropriate supplemental measure of our performance because it eliminates depreciation, income taxes, interest and non-recurring items, which permits investors to view income from operations unclouded by non-cash items such as depreciation, amortization, the cost of debt or non-recurring items. Below is a reconciliation of net (loss) income attributable to common stockholders to EBITDA (unaudited and dollars in thousands).

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015

Net (loss) income attributable to common stockholders	$	(2,551	)	$	(574	)	$	(11,727	)	$	2,157
Net (loss) income attributable to noncontrolling interest		(96	)		(28	)		(246	)		5,884
Interest expense		5,274			2,967			14,091			7,985
Depreciation and amortization		7,166			3,993			22,465			10,499
Preferred stock accretion		275			-			568			-
Non-cash equity compensation		2,417			1,543			6,698			3,875
Non-recurring equity in earnings of unconsolidated joint ventures		(234	)		(289	)		(234	)		(289	)
Acquisition costs		689			739			2,143			1,409
Loss on early extinguishment of debt		2,393			-			2,393			-
Gain on sale of unconsolidated real estate joint venture interest		-			(11	)		-			(11,303	)
Gain on sale of real estate assets		(4,947	)		-			(4,947	)		-
EBITDA	$	10,386		$	8,340		$	31,204		$	20,217

Recurring Capital Expenditures

We define recurring capital expenditures as expenditures that are incurred at every property and exclude development, investment, revenue enhancing and non-recurring capital expenditures.

Non-Recurring Capital Expenditures

We define non-recurring capital expenditures as expenditures for significant projects that upgrade units or common areas and projects that are revenue enhancing.

Same Store Properties

Same store properties are conventional multifamily residential apartments which were owned and operational for the entire periods presented, including each comparative period.

Property Net Operating Income ("Property NOI")

We believe that net operating income, or NOI, is a useful measure of our operating performance. We define NOI as total property revenues less total property operating expenses, excluding depreciation and amortization and interest. Other REITs may use different methodologies for calculating NOI, and accordingly, our NOI may not be comparable to other REITs. We believe that this measure provides an operating perspective not immediately apparent from GAAP operating income or net income. We use NOI to evaluate our performance on a same store and non-same store basis because NOI measures the core operations of property performance by excluding corporate level expenses and other items not related to property operating performance and captures trends in rental housing and property operating expenses. However, NOI should only be used as an alternative measure of our financial performance.

The following table reflects same store and non-same store contributions to consolidated NOI together with a reconciliation of NOI to net (loss) income attributable to common stockholders as computed in accordance with GAAP for the periods presented (unaudited and amounts in thousands):

	Three Months Ended⁽¹⁾						Nine Months Ended ⁽²⁾
	September 30,						September 30,
	2016			2015			2016			2015
Net income (loss) attributable to common stockholders	$	(2,551	)	$	(574	)	$	(11,727	)	$	2,157
Add pro-rata share:
Depreciation and amortization		6,197			3,082			19,436			7,641
Amortization of non-cash interest expense		472			148			620			243
Management fees		1,839			890			4,430			3,011
Acquisition and disposition costs		619			682			1,993			1,367
Loss on early extinguishment of debt		2,269			-			2,269			-
Corporate operating expenses		1,169			1,245			4,101			2,886
Preferred dividends		3,883			-			8,268			-
Preferred stock accretion		271			-			560			-
Less pro-rata share:
Other income		26			23			26			91
Preferred returns and equity in income of unconsolidated real estate joint ventures		3,030			2,327			8,491			4,331
(Loss) gain on sale of joint venture interest, net of fees		-			(2	)		-			5,320
Gain on sale of real estate assets		4,876			-			4,876			-
Pro-rata share of properties' income (loss)		6,236			3,125			16,557			7,563
Add:
Noncontrolling interest pro-rata share of property income		1,120			752			3,200			2,673
Other (income) loss related to JV/MM entities		-			14			-			66
Total property income (loss)		7,356			3,891			19,757			10,302
Add:
Interest expense		4,730			2,942			13,381			7,980
Net operating income		12,086			6,833			33,138			18,282
Less:
Non-same store net operating income		6,338			1,516			19,228			5,330
Same store net operating income	$	5,748		$	5,317		$	13,910		$	12,952

⁽¹⁾ Same Store sales for the three months ended September 30, 2016 related to the following properties: Enders Place at Baldwin Park, MDA Apartments, Village Green of Ann Arbor, Lansbrook Village, ARIUM Grandewood, Fox Hill, and Park & Kingston.

⁽²⁾Same Store sales for the nine months ended September 30, 2016 related to the following properties: Enders Place at Baldwin Park, MDA Apartments,Village Green of Ann Arbor, Lansbrook Village, and ARIUM Grandewood.

Contact

(Media)

Josh Hoffman

(208) 475.2380

jhoffman@bluerockre.com

Bluerock Residential Growth REIT, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - November 7, 2016

Attached files

Bluerock Residential Growth REIT, Inc. Reports