Exhibit 99.2







 

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Table of Contents

 





 







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Forward Looking Statements

 

This Supplemental Information package contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). These forward-looking statements include, without limitation, statements about our estimates, expectations, predictions and forecasts of our future business plans and financial and operating performance and/or results, including our first quarter and full-year 2018 earnings guidance, our ability to successfully source, structure, negotiate and close investments in self-storage facilities, our ability to fund our outstanding future investment commitments, the availability, terms and our rate of deployment of equity capital and our ability to increase borrowing base of our credit facility, as well as statements of management’s goals and objectives and other similar expressions concerning matters that are not historical facts. When we use the words “may,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” or similar expressions or their negatives, as well as statements in future tense, we intend to identify forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, beliefs and expectations, such forward-looking statements are not predictions of future events or guarantees of future performance and our actual financial and operating results could differ materially from those set forth in the forward-looking statements. Some factors that might cause such differences are described in the section entitled “Risk Factors” in our most recent Annual Report on Form 10-K for the year ended December 31, 2016, and those set forth in our other reports and information filed with the Securities and Exchange Commission (“SEC”), which factors include, without limitation, the following:

 

 

Given these uncertainties, undue reliance should not be placed on our forward-looking statements. We assume no duty or responsibility to publicly update or revise any forward-looking statement that may be made to reflect future events or circumstances or to reflect the occurrence of unanticipated events. We urge you to review the disclosures concerning risks in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our most recent Annual Report on Form 10-K for the year ended December 31, 2016 and in other documents that we file from time-to-time with the SEC.

 

Non-GAAP Financial Measures

 

Adjusted Earnings is a non-GAAP measure and is defined as net income attributable to common stockholders plus stock dividends payable to preferred stockholders, stock-based compensation expense, depreciation and amortization on real estate assets, loss on modification of debt, transaction and other expenses, restructuring costs, and deferred termination fee to manager. Management uses Adjusted Earnings and Adjusted Earnings per diluted 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 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 and Adjusted Earnings per share may not be comparable to other key performance indicators reported by other REITs or real estate companies.  Reconciliations of Adjusted Earnings and Adjusted Earnings per share to Net income attributable to common stockholders and Earnings per share, respectively, are provided in the attached table entitled “Calculation of Adjusted Earnings.”

 

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Press Release – February 2018

 



Jernigan Capital Reports 2017 Earnings per Share of $1.10 and Adjusted Earnings per Share of $1.31

- Provides 2018 Earnings per Share and Adjusted Earnings per Share Guidance -



MEMPHIS, Tennessee, February 28, 2018 / Business Wire / Jernigan Capital, Inc. (NYSE: JCAP), a leading capital partner for self-storage entrepreneurs nationwide, today announced results for the quarter and year ended December 31, 2017 and initiated earnings per share and adjusted earnings per share guidance for the first quarter and full year 2018. Highlights include:









 

“2017 was an outstanding year for the Company,” stated Dean Jernigan, Chairman and Chief Executive Officer of Jernigan Capital, Inc. “We closed 32 new investments in state-of-the-art Generation V self-storage development projects in some of the best submarkets in the country. We matched those commitments with dedicated sources of capital funding, including a new revolving credit facility. We have now launched an attractive bridge investment program designed to sustain our earnings momentum and provide us the opportunity to ultimately own additional top quality properties through the exercise of our rights of first refusal on bridge investments. Our initial bridge investment transaction of approximately $82 million is set to close at the end of this week. Finally, over the past three quarters, we have acquired from developers their 50.1% interests in five newly developed facilities, fulfilling our oft-stated goal to ultimately own self-storage developments we financed.”



John Good, President and Chief Operating Officer of Jernigan Capital, Inc. added, “We achieved year-over-year growth in total revenues of 87% while holding G&A increases (excluding stock-based compensation) to 1.4%, further demonstrating the scalability of our platform. We have entered 2018 with an investment pipeline exceeding $500 million and have adapted to a changing self-storage cycle by creating new, innovative and entrepreneurial investment opportunities that position us to take advantage of each stage of the real estate cycle. From a capital perspective, we continue to be extremely focused on maximizing shareholder value by properly matching investments with the optimal capital sources for those investments, and this will remain a top priority for us in 2018.”





Financial Highlights

 

Net income attributable to common stockholders for the three months ended December 31, 2017 was $2.7 million, or $0.19 per share, and adjusted earnings was $3.3 million, or $0.23 per share. Net income attributable to common stockholders for the year ended December 31, 2017 was $13.1 million, or $1.10 per share, and adjusted earnings was $15.6 million, or $1.31 per share.

 

Total revenues for the quarter and year ended December 31, 2017 were $3.9 million and $12.2 million, respectively, representing increases of $1.8 million, or 82.1%, and $5.7 million, or 86.6%, over revenues for the comparable periods in 2016. The increase in revenues is primarily attributed to the increase in the outstanding principal balances on the Company’s investment portfolio and other assets.

 

General and administrative expenses and stock-based compensation expense (“SBE”), for the quarter and year ended December 31, 2017 and 2016 were as follows (dollars in thousands):







 

 

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The increase in SBE for the quarter and year ended December 31, 2017 was primarily due to additional restricted stock grants to certain officers and employees of the Company’s external manager during the second quarter of 2017.

 

Net income attributable to common stockholders and adjusted earnings for the quarter and year ended December 31, 2017 also include increases in the fair value of investments of $1.7 million and $10.8 million, respectively, compared to increases of $4.2 million and $18.4 million for the comparable periods in 2016. These results reflect the impact of the limited number of on-balance sheet investment closings in 2016 resulting in modest fair value adjustments in 2017 on the 2016 investments.  As detailed in the 2018 guidance discussion below, fair value increases are expected to substantially increase in 2018, reflecting the record year of on-balance sheet development investments we experienced in 2017.



Subsequent Events



In an effort to enhance its product offering and develop an investment vehicle that is well positioned for the current stage of the self-storage development cycle, the Company launched an innovative bridge loan program. This program allows the Company to function as a knowledgeable, later-stage capital partner for developers who desire to retire construction debt and take out capital partners but retain their own interests as projects lease up. The Company expects this program to create a future “off-market” pipeline of acquisition opportunities through additional rights of first refusal.



On January 15, 2018, the Company executed non-binding term sheets to provide an aggregate principal amount of approximately $82 million of first mortgage bridge financing with respect to five separate self-storage facilities in the Miami, Florida metropolitan statistical area. Under the term sheets, three bridge loans amounting to an aggregate principal amount of  approximately $47 million will be secured by first priority mortgages on self-storage properties with an aggregate of over 203,000 net rentable square feet that were completed and began lease up in 2016, which loans will bear interest at an annual rate of 6.9%, payable monthly in cash. The term sheets also provide the Company with 49.9% of positive operating cash flows and 49.9% of capital proceeds.



Two bridge loans aggregating a principal amount of approximately $35 million will be secured by first priority mortgages on self-storage properties with an expected aggregate of over 160,000 net rentable square feet that are expected to be completed and begin lease up in the first quarter of 2018, which loans will bear interest at an annual rate of 9.5%, with 6.5% payable monthly in cash and 3.0% accruing and payable upon maturity of the loan. The Company will also receive 49.9% of positive operating cash flows and 49.9% of capital proceeds, after the other members of the borrower receive $1.0 million of preferential payments per loan.



All five loans will mature five years from the date of closing, with the borrower having two extension options for one year each. Approximately $75 million of the aggregate principal amount of the five loans is expected to be advanced upon closing on or around March 2, 2018, with the balance to be advanced as requested by the borrower to pay interest and operating and other expenses during the lease up period. Each of the term sheets is non-binding, and the loans are conditioned upon the execution of definitive loan documents and other customary closing conditions.



The Company can provide no assurance that it will enter into definitive agreements for these loans or that the loans will close on the expected timeline or at all. Further, no assurance can be provided that the two projects under construction will reach C/O status on the expected timeline or at all.



Capital Markets Activities

 

During the quarter ended December 31, 2017, under the Company’s at-the-market equity program (“ATM program”), the Company issued and sold 186,504 shares of common stock at a weighted average price of $20.36, receiving net proceeds after commissions of approximately $3.7 million.  As of December 31, 2017, the Company had approximately $21.4 million available for issuance under the ATM program.



During the quarter ended December 31, 2017, the Company issued $30.0 million of its Series A Preferred Stock. Additionally, on February 16, 2018, the Company issued $20.0 million of additional Series A Preferred Stock for a total of $60.0 million of Series A Preferred Stock outstanding.  The Company has $65.0 million of Series A Preferred Stock available for issuance under its stock purchase agreement with affiliates of Highland Capital Management, LLC (the “Stock Purchase Agreement”).



On January 26, 2018, the Company issued and sold 1,500,000 shares of its newly designated 7.00% Series B Preferred Stock (“Series B Preferred Stock”) at a public offering price of $25.00 per share for net proceeds, after underwriting discounts, but before offering expenses, of approximately $36.3 million. The Company intends to use the net proceeds from the offering to partially fund our approximately $82 million bridge loan investment.



As of December 31, 2017, the Company had no borrowings under its secured revolving credit facility.  As of February 27, 2018, the Company had $30.0 million outstanding out of its $40.8 million in total availability under its secured revolving credit facility.

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Dividends



On November 1, 2017, the Company declared cash and stock dividends on its Series A Preferred Stock. The cash dividend of $0.4 million was paid on January 12, 2018 to holders of record on January 1, 2018. A stock dividend of 2,222 shares of common stock was issued on January 12, 2018 to holders of record on January 1, 2018 for an aggregate value of $44,000 pursuant to the terms of the Stock Purchase Agreement.



Additionally, on November 1, 2017, the Company declared a dividend of $0.35 per common share. The dividend was paid on January 12, 2018 to common stockholders of record on January 2, 2018.



First Quarter and Full-Year 2018 Guidance



The following tables reflect earnings per share and adjusted earnings per share guidance ranges for the three months ending March 31, 2018 and for the full-year 2018. Such guidance is based on management's current expectations of Company investment activity (including fair value appreciation and the expected timing of construction progress and receipts of certificates of occupancy), the operational and new supply dynamics of the self-storage markets in which the Company has invested, and overall economic conditions. Adjusted earnings is a performance measure that is not specifically defined by accounting principles generally accepted in the United States (“GAAP”) and is defined as net income attributable to common stockholders (computed in accordance with GAAP) plus stock dividends payable to preferred stockholders, stock-based compensation expense, and depreciation and amortization on real estate assets. For more information about our calculation of adjusted earnings, see “Non-GAAP Financial Measures” below.



 













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The guidance above is based on the following key assumptions regarding the Company’s business activities in 2018:

























Additionally, the Company updated its 2018 fair value guidance to reflect the recent increase in interest rates thus far in 2018, the impact of the Company’s acquisitions of four of its development partners’ interests, and the updated estimates of construction progress and timing of the receipt of certificates of occupancy from its development partners. Together, this resulted in a reduction and/or shifting of fair value recognition out of 2018, which in turn is expected to positively impact 2019. These were partially offset by expected fair value accretion on the Company’s aforementioned bridge investment. Of the estimated $41.0 million to $47.0 million of fair value appreciation in 2018, the Company expects $1.5 million to $2.0 million to be recognized during the first quarter, $9.3 million to $10.5 million to be recognized in the second quarter, $13.0 million to $15.0 million to be recognized in the third quarter, and $17.2 million to $19.5 million to be recognized in the fourth quarter. Timing of fair value appreciation is heavily dependent upon construction progress and the timing of receipt of certificates of occupancy, both of which are subject to factors outside the control of the Company’s development partners. As such, the exact timing of fair value recognition is subject to change.



Refer to the Company’s Fourth Quarter 2017 Supplemental Information Package for more information.









 





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Jernigan Capital, Inc.

Financial Highlights- Trailing Five Quarters

(unaudited, in thousands, except share and per share data) 















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Jernigan Capital, Inc.

Consolidated Balance Sheets- Trailing Five Quarters

(unaudited, in thousands)

 















 





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Jernigan Capital, Inc.

Consolidated Statements of Operations

(unaudited, in thousands, except per share data)

 











 





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Jernigan Capital, Inc.  

Calculation of Adjusted Earnings and Reconciliation to Net Income Attributable to

Common Stockholders

(unaudited, in thousands, except share and per share data)

 







































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Jernigan Capital, Inc.  

First Quarter and Full-Year 2018 Guidance

(in thousands, except share and per share data)







Key Assumptions:



Additionally, the Company updated its 2018 fair value guidance to reflect the recent increase in interest rates thus far in 2018, the impact of the Company’s acquisitions of four of its development partners’ interests, and the updated estimates of construction progress and timing of the receipt of certificates of occupancy from its development partners. Together, this resulted in a reduction and/or shifting of fair value recognition out of 2018, which in turn is expected to positively impact 2019. These were partially offset by expected fair value accretion on the Company’s aforementioned bridge investment. Of the estimated $41.0 million to $47.0 million of fair value appreciation in 2018, the Company expects $1.5 million to $2.0 million to be recognized during the first quarter, $9.3 million to $10.5 million to be recognized in the second quarter, $13.0 million to $15.0 million to be recognized in the third quarter, and $17.2 million to $19.5 million to be recognized in the fourth quarter. Timing of fair value appreciation is heavily dependent upon construction progress and the timing of receipt of certificates of occupancy, both of which are subject to factors outside the control of the Company’s development partners. As such, the exact timing of fair value recognition is subject to change.

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Jernigan Capital, Inc.  

Changes to Preliminary 2018 Guidance





Primary factors impacting changes to preliminary 2018 guidance ranges:













Change in Fair Value of Investments Bridge







2018 Quarterly Expected Timing of Certificates of Occupancy and Fair Value Recognition

































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Jernigan Capital, Inc.

Schedule of Completed Development Projects

As of December 31, 2017

(unaudited, dollars in thousands)   

 



 

































 



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Schedule of Development Projects in Progress

As of December 31, 2017

(unaudited, dollars in thousands)



















 

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Schedule of Heitman JV Development Projects Completed and in Progress

As of December  31, 2017

(unaudited, dollars in thousands)   



Development Projects Completed:











Development Projects In Progress:















 





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Closed Investments by Geography

As of December  31, 2017







 

   

 







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Investment Pipeline by Geography

 









 













 





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Jernigan Capital, Inc.

 

Company Information

 



 



 

Executive Management

 



 



 

Independent Directors

 



 



 

Equity Research Coverage

 



 

 

Any opinions, estimates, forecasts or predictions regarding Jernigan Capital’s performance made by these analysts are theirs alone and do not represent opinions, estimates, forecasts or predictions of Jernigan Capital or its management. Jernigan Capital does not by its reference above or distribution imply its endorsement of or concurrence with such opinions, estimates, forecasts or predictions.



 







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