Attached files
| file | filename |
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| EX-99.1 - EXHIBIT 99.1 - BRT Apartments Corp. | exhibit991q42018.htm |
| 8-K - 8-K - BRT Apartments Corp. | a8-kxq42018nextgen.htm |
4Q 2018 SUPPLEMENTAL FINANCIAL INFORMATION December 10, 2018 BRT APARTMENTS CORP. 60 Cutter Mill Rd., Great Neck, NY 11021
Forward Looking Statements The information set forth herein contains forward-looking information 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. Forward-looking information included herein that is not historical fact is subject to a number of risks and uncertainties, depending upon the risks and uncertainties described in the Company's filings with the Securities and Exchange Commission (SEC), and actual results realized by the Company could differ materially from the forward-looking information included herein. Existing and prospective investors are cautioned not to place undue reliance on this forward-looking information, which speak only as of the date hereof. The Company undertakes no obligation to update or revise the information herein, whether as a result of new information, future events or circumstances, or otherwise. The Company recommends that current and prospective investors review the information set forth in its Annual Report on Form 10-K for the year ended September 30, 2018 to be filed contemporaneously herewith. Our fiscal year ends on September 30 and unless otherwise indicated or the context otherwise requires, all references to a quarter or year refer to the applicable fiscal quarter or year. Units under rehabilitation for which we have received or accrued rental income from business interruption insurance, while not physically occupied, are treated as leased (i.e., occupied) at rental rates in effect at the time of the casualty.
Table of Contents Table of Contents Page Number Financial Highlights 1 Operating Results 2 Funds From Operations 3 Consolidated Balance Sheets 4 Pro Rata Operating Results 5 Pro Rata Balance Sheets 6 Portfolio Data by State 7 Same Store Comparison (First Quarter) 8 Same Store Comparison (Fiscal YTD) 9 Multi-Family Acquisitions and Dispositions 10 Value-Add Information 11 Debt Analysis 12 Non-GAAP Financial Measures, Definitions, and 13-14 Reconciliations Portfolio Table 15
Financial Highlights September 30, 2018 2017 2016 2015 Market Information Market capitalization $ 189,681,411 $ 150,320,535 $ 111,190,680 $ 99,976,487 Shares outstanding 15,754,270 14,022,438 13,898,835 14,101,056 Closing share price $ 12.04 $ 10.72 $ 8.00 $ 7.09 Annual dividends declared per share $ 0.78 $ 0.18 (4) $ - $ - Portfolio Multi-family properties owned 36 33 33 28 Units 10,121 (1) 9,568 (1) 9,420 8,300 Average occupancy (2) 93.69 % 93.80 % 92.80 % 94.50 % Average monthly rental revenue per occupied unit (2) $964 $933 $852 $810 Quarter ended September 30, Year ended September 30, 2018 2017 2018 2017 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Per Share Data Earnings per share (basic) $ (0.20) $ 0.39 $ 1.63 $ 0.97 Earnings per share (diluted) $ (0.20) $ 0.39 $ 1.61 $ 0.97 FFO per share of common stock (diluted) (3) $ 0.26 $ 0.22 $ 1.03 $ 0.67 AFFO per share of common stock (diluted) (3) $ 0.21 $ 0.27 $ 0.97 $ 0.88 (1) Includes 402 units at a property under development. (2) Average includes stabilized properties for the period presented. See definition of stabilized properties on page 14. (3) See the reconciliation of Funds From Operations, or FFO, and Adjusted Funds From Operations, or AFFO, to net income, as calculated in accordance with GAAP, on page 3, and the definitions of such terms at page 14. (4) Dividend of $0.18 was initiated in September 2017. 1
Operating Results (dollars in thousands, except per share amounts) Quarter ended September 30, Year ended September 30, 2018 2017 2018 2017 Revenues Rental and other revenue from real estate properties $ 31,283 $ 28,073 $ 118,872 $ 104,477 Other income 198 314 763 1,294 Total revenues 31,481 28,387 119,635 105,771 Expenses Real estate operating expenses 15,661 13,640 57,665 51,279 Interest expense 8,966 7,902 34,389 28,171 General and administrative 2,002 2,101 9,210 9,396 Depreciation 10,416 8,861 38,504 30,491 Total expenses 37,045 32,504 139,768 119,337 Total revenues less total expenses (5,564) (4,117) (20,133) (13,566) Equity in loss of unconsolidated joint ventures (173) (77) (388) (384) Gain on sale of real estate 424 16,763 64,924 52,601 Gain on insurance recovery 1,271 4,498 - Loss on extinguishment of debt - (664) (850) (1,463) (Loss) income from continuing operations (4,042) 11,905 48,051 37,188 Income tax provision 96 61 50 1,560 (Loss) income from continuing operations, net of taxes (4,138) 11,844 48,001 35,628 Net loss (income) attributable to non-controlling interests 1,027 (6,383) (24,228) (22,028) Net (loss) income attributable to common stockholders $ (3,111) $ 5,461 $ 23,773 $ 13,600 Weighted average number of shares of common stock outstanding: Basic 15,635,953 14,023,735 14,580,398 13,993,638 Diluted 15,635,953 14,123,735 14,780,398 14,018,843 Per share amounts attributable to common stockholders: Basic $ (0.20) $ 0.39 $ 1.63 $ 0.97 Diluted $ (0.20) $ 0.39 $ 1.61 $ 0.97 2
Funds From Operations (Unaudited) (dollars in thousands, except per share amounts) Quarter ended September 30, Year ended June 30, 2018 2017 2018 2017 GAAP Net (loss) income attributable to common stockholders $ (3,111) $ 5,461 $ 23,773 $ 13,600 Add: depreciation of properties 10,416 8,861 38,504 30,491 Add: our share of depreciation in unconsoliated joint ventures 386 216 1,587 737 Deduct: gain on sales of real estate (424) (16,763) (64,924) (52,601) Adjustment for non-controlling interests (3,187) 5,305 16,249 17,122 Funds from operations (FFO) attributable to common stockholders 4,080 3,080 15,189 9,349 Adjust for straight line rent accruals (10) (10) (40) (56) Add: loss on extinguishment of debt - 664 850 1,463 Add: amortization of restricted stock and Restricted Stock Units 15 155 988 1,218 Add: amortization of deferred mortgage costs 297 370 1,432 1,244 Deduct: gain on insurance recovery (1,271) - (4,498) - Adjustment for non-controlling interests 249 (379) 469 (920) Adjusted funds from operations (AFFO) attributable to common stockholders $ 3,360 $ 3,880 $ 14,390 $ 12,298 Per share data GAAP Net (loss) income attributable to common stockholders $ (0.20) $ 0.39 $ 1.61 $ 0.97 Add: depreciation of properties 0.67 0.62 2.60 2.18 Add: our share of depreciation in unconsoliated joint ventures 0.02 0.02 0.11 0.05 Deduct: gain on sales of real estate (0.03) (1.19) (4.39) (3.75) Adjustment for non-controlling interests (0.20) 0.38 1.10 1.22 Funds from operations (FFO) attributable to common stockholders 0.26 0.22 1.03 0.67 Adjust for straight line rent accruals - - - - Add: loss on extinguishment of debt - 0.04 0.06 0.10 Add: amortization of restricted stock and Restricted Stock Units (0.01) 0.01 0.05 0.09 Add: amortization of deferred mortgage costs 0.02 0.03 0.10 0.09 Deduct: gain on insurance recovery (0.08) (0.30) Adjustment for non-controlling interests 0.02 (0.03) 0.03 (0.07) Adjusted funds from operations (AFFO) attributable to common stockholders $ 0.21 $ 0.27 $ 0.97 $ 0.88 3
Consolidated Balance Sheets (amounts in thousands, except per share amounts) At September 30, 2018 2017 2016 2015 Assets Real estate properties, net of accumulated depreciation $ 1,020,874 $ 902,281 $ 759,576 $ 591,727 Real estate loan 4,900 5,500 19,500 - Cash and cash equivalents 27,360 12,383 27,399 15,556 Restricted cash 6,686 6,151 7,383 6,518 Deposits and escrows 24,458 27,839 18,972 12,782 Investments in unconsolidated joint ventures 20,078 21,415 298 - Other assets 10,080 9,359 7,775 6,882 Assets of discontinued operations - - - 163,545 Real estate properties held for sale 38,928 8,969 33,996 23,859 Total Assets $ 1,153,364 $ 993,897 $ 874,899 $ 820,869 Liabilities and equity Liabilities Mortgages payable, net of deferred costs $ 792,432 $ 697,826 $ 588,457 $ 451,159 Junior subordinated notes, net of deferred costs 37,038 37,018 36,998 36,978 Accounts payable and accrued liabilities 27,409 22,348 20,716 14,780 Liabilities of discontinued operations - - - 138,530 Mortgage payable held for sale - - 27,052 19,248 Total liabilities 856,879 757,192 673,223 660,695 Equity Common Stock, $.01 par value, 300,000 shares authorized; 15,048 and 13,333 Issued at September 30, 2018 and 2017 150 133 - - Shares of beneficial interest, $3 par value per share - - 39,696 40,285 Additional paid in capital 220,135 201,910 161,321 161,842 Accumulated other comprehensive income (loss) 2,629 1,000 (1,602) (58) Accumulated deficit (24,927) (37,047) (48,125) (79,414) Total BRT Apartments Corp. stockholders' equity 197,987 165,996 151,290 122,655 Non-controlling interests 98,498 70,709 50,386 37,519 Total Equity 296,485 236,705 201,676 160,174 Total Liabilities and Equity $ 1,153,364 $ 993,897 $ 874,899 $ 820,869 4
Pro Rata Operating Results (dollars in thousands) Three Months ended September 30, 2018 Consolidated Noncontrolling BRT Proportionate Amount Interest Amount (1) Revenues Rental and other revenue from real estate properties $ 31,283 $ 8,582 $ 22,701 Other income 198 - 198 Total revenues 31,481 8,582 22,899 Expenses Real estate operating expenses 15,661 4,315 11,346 Interest expense 8,966 2,417 6,549 General and administrative 2,002 - 2,002 Depreciation 10,416 3,195 7,221 Total expenses 37,045 9,927 27,118 Total revenues less total expenses (5,564) (1,345) (4,219) Equity in loss of unconsolidated joint ventures (173) - (173) Gain on sale of real estate 424 - 424 Gain on insurance recovery 1,271 318 953 Loss on extinguishment of debt - - - Loss from continuing operations (4,042) (1,027) (3,015) Income Tax Provision 96 - 96 Net loss $ (4,138) $ (1,027) $ (3,111) Year ended September 30, 2018 Consolidated Noncontrolling BRT Proportionate Amount Interest Amount (1) Revenues Rental and other revenue from real estate properties $ 118,872 $ 31,843 $ 87,029 Other income 763 - 763 Total revenues 119,635 31,843 87,792 Expenses Real estate operating expenses 57,665 15,502 42,163 Interest expense 34,389 9,092 25,297 General and administrative 9,210 - 9,210 Depreciation 38,504 11,446 27,058 Total expenses 139,768 36,040 103,728 Total revenues less total expenses (20,133) (4,197) (15,936) Equity in loss of unconsolidated joint ventures (388) - (388) Gain on sale of real estate 64,924 27,645 37,279 Gain on insurance recovery 4,498 1,125 3,373 Loss on extinguishment of debt (850) (345) (505) Income from continuing operations 48,051 24,228 23,823 Income tax (benefit) provision 50 - 50 Net income $ 48,001 $ 24,228 $ 23,773 (1) This column reflects BRT’s share of the applicable line item, after deducting the non-controlling interest applicable to such line item. Except with respect to the gain on sale of real estate and loss on extinguishment of debt, the impact of the non-controlling interest on such line item was calculated based on each joint venture partner’s percentage equity interest in the applicable joint venture. Gain on sale of real estate and loss on extinguishment of debt were calculated in accordance with the allocation/distribution provisions of the joint venture operating agreement with respect to the properties sold. Generally, in the event of the sale of a multi-family property owned by a joint venture, as a result of allocation/distribution provisions of the applicable joint venture operating agreement, the allocation and distribution of cash and profits to BRT will be less than that implied by BRT's percentage equity interest in the property. 5
Pro Rata Consolidated Balance Sheets (amounts in thousands, except per share amounts) At September 30, 2018 BRT Consolidated Noncontrolling Proportionate Amount Interest Amount (1) Assets Real estate properties, net of accumulated depreciation $ 1,020,874 $ 303,200 $ 717,674 Real estate loan 4,900 - 4,900 Cash and cash equivalents 27,360 3,337 24,023 Restricted cash 6,686 - 6,686 Deposits and escrows 24,458 9,515 14,943 Investments in unconsolidated joint ventures 20,078 - 20,078 Other assets 10,080 4,348 5,732 Real estate properties held for sale 38,928 13,598 25,330 Total Assets $ 1,153,364 $ 333,998 $ 819,366 Liabilities and equity Liabilities Mortgages payable, net of deferred costs $ 792,432 $ 228,851 $ 563,581 Junior subordinated notes, net of deferred costs 37,038 - 37,038 Accounts payable and accrued liabilities 27,409 6,649 20,760 Total liabilities 856,879 235,500 621,379 Equity Common Stock, $.01 par value, 300,000 shares authorized; 15,048 issued 150 - 150 Additional paid in capital 220,135 - 220,135 Accumulated other comprehensive income 2,629 - 2,629 Accumulated deficit (24,927) - (24,927) Total BRT Apartments Corp. stockholders' equity 197,987 - 197,987 Non-controlling interest 98,498 98,498 - Total equity 296,485 98,498 197,987 Total Liabilities and Equity $ 1,153,364 $ 333,998 $ 819,366 (1) This column reflects BRT’s share of the applicable line item, after deducting the non-controlling interest applicable to such line item. 6
Portfolio Data by State (dollars in thousands, except monthly rent amounts) Year Ended September 30, 2018 Weighted Average % of NOI Average Monthly Rent per Units (1) Revenues Expenses NOI (2) Contribution Occupancy (3) Occupied Unit (3) Texas 3,096 $ 36,357 $ 19,832 $ 16,525 27% 92.3% $ 1,001 Georgia 1,545 16,761 7,566 9,195 15% 93.3% 986 Florida 1,248 12,383 5,424 6,959 11% 93.6% 983 Mississippi 776 8,616 3,239 5,377 9% 96.8% 887 Missouri 775 10,622 5,127 5,495 9% 92.8% 987 South Carolina 683 8,717 4,564 4,153 7% 92.5% 1,002 Alabama 412 3,769 1,740 2,029 3% 95.0% 775 Indiana 400 3,689 2,187 1,502 2% 96.2% 686 Tennessee 300 4,215 1,590 2,625 4% 98.6% 1,113 Ohio 264 2,804 1,246 1,558 3% 96.9% 840 Virginia 220 3,589 1,297 2,292 4% 95.4% 1,287 Other - 1,532 545 987 2% N/A N/A Current Portfolio Totals 9,719 $ 113,054 $ 54,357 $ 58,697 96% 93.9% $ 964 Properties sold during Fiscal 2018 5,817 3,308 2,509 4% Totals $ 118,871 $ 57,665 $ 61,206 100% (1) Excludes 402 units under development in West Nashville, TN. (2) See the reconciliation of NOI to net income, as calculated in accordance with GAAP, at page 13 and the definition at page 14. (3) Excludes sold properties and properties that were not stabilized for the full period presented. 7
Same Store Comparisons Quarter Ended September 30, 2018 and 2017 (dollars in thousands, except monthly rent amounts) Quarter ended September 30, 2018 Revenues Property Operating Expenses NOI (1) Units Q4 2018 Q4 2017 Growth Q4 2018 Q4 2017 Growth Q4 2018 Q4 2017 Growth Texas 2,427 $ 7,773 $ 7,500 3.6% $ 4,336 $ 4,106 5.6% $ 3,437 $ 3,394 1.3% Georgia 959 3,004 2,900 3.6% 1,431 1,288 11.1% 1,573 1,612 (2.4%) Mississippi 776 2,216 2,117 4.7% 873 855 2.1% 1,343 1,262 6.4% Missouri 601 1,947 1,947 (0.0%) 1,043 1,082 (3.7%) 904 865 4.6% South Carolina 412 1,330 1,324 0.4% 760 686 10.8% 570 639 (10.8%) Indiana 400 955 935 2.2% 583 562 3.8% 372 373 (0.3%) Tennessee 300 1,076 1,020 5.5% 434 345 25.5% 642 675 (4.9%) Florida 276 922 829 11.2% 391 370 5.6% 531 459 15.8% Ohio 264 711 680 4.5% 332 291 14.1% 379 389 (2.6%) Virginia 220 899 904 (0.5%) 381 325 17.2% 518 579 (10.5%) Alabama 208 530 489 8.6% 235 237 (0.7%) 295 252 17.0% Totals 6,843 $ 21,363 $ 20,645 3.5% $ 10,799 $ 10,147 6.4% $ 10,564 $ 10,498 0.6% Quarter ended September 30, 2018 Weighted Average Occupancy Weighted Average Monthly Rent per Occupied Unit Q4 2018 Q4 2017 Growth Q4 2018 Q4 2017 Growth Texas 92.3% 92.7% (0.3%) $ 1,014 $ 984 3.1% Georgia 94.3% 96.0% (1.8%) 978 939 4.1% Mississippi 96.8% 97.4% (0.6%) 909 868 4.8% Missouri 95.7% 94.2% 1.5% 980 997 (1.7%) South Carolina 93.1% 92.8% 0.4% 1,019 1,004 1.5% Indiana 97.8% 97.7% 0.1% 707 682 3.8% Tennessee 99.0% 97.7% 1.3% 1,122 1,077 4.2% Florida 97.7% 94.2% 3.7% 1,020 967 5.5% Ohio 96.3% 96.9% (0.6%) 858 827 3.8% Virginia 96.8% 94.8% 2.1% 1,287 1,262 2.1% Alabama 95.1% 96.3% (1.2%) 785 702 11.8% Totals 94.72% 94.46% 0.28% $ 977 $ 946 3.3% (1) Generally, negative variances in NOI are, among other things, due to higher turnover, changes in occupancy and/or rental rates, increases in real estate taxes, and/or increases in insurance expense. With regards to taxes, when a property is re-assessed at a higher value, we generally appeal the re-assessment if we feel that we can obtain a reduction in the taxes - if successful, the reduction will typically be reflected in the following year. See definition of Same Store on page 14 8
Same Store Comparisons Year ended September 30, 2018 and 2017 (dollars in thousands, except monthly rent amounts) 2018 Results Revenues Property Operating Expenses NOI (1) Units 2018 2017 Growth 2018 2017 Growth 2018 2017 Growth Texas 1,918 $ 22,912 $ 22,102 3.7% $ 12,911 (2) $ 12,428 3.9% $ 10,001 $ 9,674 3.4% Georgia 959 11,720 11,251 4.2% 5,198 5,198 0.0% 6,522 6,053 7.7% Mississippi 776 8,616 8,310 3.7% 3,239 3,248 (0.3%) 5,377 5,062 6.2% Missouri 420 4,518 4,328 4.4% 2,344 2,022 15.9% 2,174 2,306 (5.7%) South Carolina 412 5,199 5,296 (1.8%) 2,913 2,722 7.0% 2,286 2,574 (11.2%) Indiana 400 3,689 3,418 7.9% 2,187 2,082 5.0% 1,502 1,336 12.4% Tennessee 300 4,216 3,991 5.6% 1,590 1,562 1.8% 2,626 2,429 8.1% Florida 276 3,362 3,219 4.4% 1,438 1,507 (4.6%) 1,924 1,712 12.4% Ohio 264 2,804 2,671 5.0% 1,246 1,220 2.1% 1,558 1,451 7.4% Alabama 208 1,991 1,898 4.9% 892 862 3.5% 1,099 1,036 6.1% Totals 5,933 $ 69,027 $ 66,484 3.8% $ 33,958 $ 32,851 3.4% $ 35,069 $ 33,633 4.3% Weighted Average Monthly Rent per Occupied 2018 Results Weighted Average Occupancy Unit 2018 2017 Growth 2018 2017 Growth Texas 93.4% 91.8% 1.7% $ 936 $ 923 1.4% Georgia 93.5% 94.7% (1.2%) 967 927 4.4% Mississippi 96.8% 96.5% 0.3% 887 858 3.4% Missouri 95.5% 92.9% 2.8% 782 789 (0.9%) South Carolina 92.5% 94.1% (1.7%) 1,001 1,003 (0.2%) Indiana 96.2% 92.0% 4.6% 686 652 5.3% Tennessee 98.6% 97.3% 1.3% 1,113 1,066 4.3% Florida 91.9% 90.9% 1.1% 997 969 2.9% Ohio 96.9% 96.8% 0.1% 840 801 4.8% Alabama 94.3% 95.9% (1.7%) 743 690 7.6% Totals 94.5% 93.7% 0.8% $ 912 $ 889 2.6% (1) Generally, negative variances in NOI are, among other things, due to higher turnover, changes in occupancy and/or rental rates, increases in real estate taxes, and/or increases in insurance expense. With regards to taxes, when a property is re-assessed at a higher value, we generally appeal the re-assessment if we feel that we can obtain a reduction in the taxes - if successful, the reduction will typically be reflected in the following year. 9
Acquisitions and Dispositions Year Ended September 30, 2018 (dollars in thousands) 10
Value-Add Program Quarter Ended September 30, 2018 Estimated Estimated Units Rehab Average Estimated Completed Estimated Rehab Costs Per Monthly Rent Annualized (1) Costs (2) unit Increase (3) ROI (3) 342 $1,360,638 $3,978 $85 25.6% (1) Refers to rehabilitated units at 18 properties with respect to which a new lease or renewal lease was entered into during the period. (2) Reflects costs incurred during the current and prior periods with respect to units completed, in which a new lease or renewal lease was entered into during the current period. (3) These results are not necessarily indicative of the results that would be generated if such improvements were made across our portfolio of properties or at any particular property. Rents at a property may increase for reasons wholly unrelated to property improvements, such as changes in demand for rental units in a particular market or sub-market. 11
Debt Analysis As of September 30, 2018 (dollars in thousands) Mortgage Debt Percent of Total Principal Principal Weighted Total Principal Scheduled Payments Due at Payments Due Average Interest Year Payments Amortization Maturity At Maturity Rate (1) 2019 34,819 5,819 29,000 4% 4.68% 2020 62,621 6,877 55,744 8% 3.74% 2021 22,622 8,620 14,002 2% 4.29% 2022 59,496 8,767 50,729 7% 4.63% 2023 92,478 8,557 83,921 12% 3.95% Thereafter 526,769 37,712 489,057 67% 4.17% Total $ 798,805 $ 76,352 $ 722,453 100% Weighted Average Remaining Term to Maturity 6.7 years Weighted Average Interest Rate 4.14% Debt Service Coverage Ratio for the quarter ended September 30, 2018 (2) 1.42 (1) Based on balloon payments at maturity. (2) See definition on page 14. Junior Subordinated Notes Principal Balance $37,400 Interest Rate 3 month LIBOR + 2.00% (i.e, 4.34% at 9/30/2018) Maturity April 30, 2036 12
NON-GAAP FINANCIAL MEASURES DEFINITIONS AND RECONCILIATIONS (dollars in thousands) We define NOI as total property revenues less total property operating expenses. Property operating expenses exclude, among other things, depreciation and interest expense on the related property. Other REIT’s may use different methodologies for calculating NOI, and accordingly, our NOI may not be comparable to other REIT’s. We believe NOI provides an operating perspective not immediately apparent from GAAP operating income or net (loss) income. NOI is one of the measures we use to evaluate our performance because it (i) measures the core operations of property performance by excluding corporate level expenses and other items unrelated to property operating performance and (ii) 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 provides a reconciliation of NOI to net income attributable to common stock holders as computed in accordance with GAAP for the periods presented: Three Months ended September 30, 2018 2017 GAAP Net loss attributable to common stockholders $ (3,111) $ 5,461 Less: Other Income (198) (314) Add: Interest expense 8,965 7,902 General and administrative 2,003 2,101 Depreciation 10,416 8,861 Less: Gain on sale of real estate (424) (16,763) Gain on insurance proceeds (1,271) Add: Loss on extinguishment of debt - 664 Equity in loss of unconsolidated joint ventures 173 77 Provision for taxes 96 61 Add: Net income attributable to non-controlling interests (1,027) 6,383 Net Operating Income $ 15,622 $ 14,433 Year ended September 30, 2018 2017 GAAP Net loss attributable to common stockholders $ 23,773 $ 13,600 Less: Other Income (763) (1,294) Add: Interest expense 34,389 28,171 General and administrative 9,210 9,396 Depreciation 38,504 30,491 Less: Gain on sale of real estate (64,924) (52,601) Gain on insurance proceeds (4,498) - Add: Loss on extinguishment of debt 850 1,463 Equity in loss of unconsolidated joint ventures 388 384 Provision for taxes 50 1,560 Add: Net income attributable to non-controlling interests 24,228 22,028 Net Operating Income $ 61,207 $ 53,198 13
NON-GAAP FINANCIAL MEASURES DEFINITIONS AND RECONCILIATIONS (dollars in thousands) Funds from Operations (FFO) FFO is a non-GAAP financial performance measure defined by the National Association of Real Estate Investment Trusts and is widely recognized by investors and analysts as one measure of operating performance of a REIT. The FFO calculation excludes items such as real estate depreciation and amortization, gains and losses on the sale of real estate assets and impairment on depreciable assets. 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 have historically risen or fallen with market conditions, it is management’s view, and we believe the view of many industry investors and analysts, that the presentation of operating results for a REIT using the historical accounting for depreciation is insufficient. FFO excludes gains and losses from the sale of real estate, which we believe provides management and investors with a helpful additional measure of the performance of our real estate portfolio, as it allows for comparisons, year to year, that reflect the impact on operations from trends in items such as occupancy rates, rental rates, operating costs, general, administrative and other expenses, and interest expenses. Adjusted Funds from Operations (AFFO) AFFO, as defined by us, excludes from FFO straight line rent adjustments, loss on extinguishment of debt, amortization of restricted stock and RSU expense, amortization of deferred mortgage costs and gain on insurance recovery. Management believes that excluding acquisition-related expenses from AFFO provides investors with supplemental performance information that is consistent with the performance models and analysis used by management and provides investors a view of the performance of our portfolio over time, including after the time we cease to acquire properties on a frequent and regular basis. We believe that AFFO enables investors to compare the performance of our portfolio with other REITs that have not recently engaged in acquisitions, as well as a comparison of our performance with that of other non-traded REITs, as AFFO, or an equivalent measure is routinely reported by non-traded REITs, and we believe often used by analysts and investors for comparison purposes. Debt Service Coverage Ratio Debt service coverage ratio is net operating income ("NOI") divided by total debt service. Total Debt Service Total debt service is the cash required to cover the repayment of interest and principal on a debt for a particular period. Total debt service is used in the calculation of the debt service coverage ratio which is used to determine the borrower’s ability to make debt service payments. Stabilized Properties For all periods presented, stabilized properties include all our consolidated properties, other than those in lease-up or development, and for the three and nine months ended June 30, 2018, also excludes a Katy, Texas property that was damaged by Hurricane Harvey. Same Store Same store refers to stabilized properties that we and our consolidated joint ventures owned and operated for the entirety of both periods being compared. 14
Portfolio Table As of 12/10/2018 2018 Avg Year Property 2018 Average Rent per Occ. % Property City State Year BuiltAcquired Age No. of Units Occupancy Unit Ownership Silvana Oaks North Charleston SC 2010 2012 9 208 94.5% $ 1,135 100% Avondale Station Decatur GA 1950 2012 69 212 95.2% 1,038 100% Stonecrossing Houston TX 1978 2013 41 240 93.4% 874 91% Pathway Houston TX 1979 2013 40 144 92.9% 909 91% Brixworth at Bridgestreet Huntsville AL 1985 2013 34 208 94.3% 743 80% Newbridge Commons Columbus OH 1999 2013 20 264 96.9% 840 100% Waterside at Castleton Indianapolis IN 1983 2014 36 400 96.2% 686 80% Crossings of Bellevue Nashville TN 1985 2014 34 300 98.6% 1,113 80% Kendall Manor Houston TX 1981 2014 38 272 93.6% 819 80% Avalon Pensacola FL 2008 2014 11 276 91.9% 997 100% Parkway Grande San Marcos TX 2014 2015 5 192 93.5% 1,064 80% Cedar Lakes Lake St. Louis MO 1985 2015 34 420 95.5% 782 80% Woodland Trails LaGrange GA 2010 2015 9 236 95.5% 929 100% Retreat at Cinco Ranch Katy TX 2008 2016 11 268 97.1% 1,012 75% Grove at River Place Macon GA 1988 2016 31 240 93.9% 707 80% Civic Center 1 Southaven MS 2002 2016 17 392 97.0% 862 60% Verandas at Shavano Park San Antonio TX 2014 2016 5 288 95.1% 1,004 65% Chatham Court and Reflections Dallas TX 1986 2016 33 494 92.3% 920 50% Waters Edge at Harbison Columbia SC 1996 2016 23 204 90.5% 860 80% Pointe at Lenox Park Atlanta GA 1989 2016 30 271 90.2% 1,184 74% Civic Center 2 Southaven MS 2005 2016 14 384 96.6% 913 60% Verandas at Alamo Ranch San Antonio TX 2015 2016 4 288 93.3% 988 72% Kilburn Crossing Fredericksburg VA 2005 2016 14 220 95.4% 1,287 100% OPOP Towers St. Louis MO 2014 2017 5 128 85.8% 1,544 76% OPOP Lofts St. Louis MO 2014 2017 5 53 88.5% 1,435 76% Vanguard Heights Creve Coeur MO 2016 2017 3 174 88.0% 1,534 78% Mercer Crossing Dallas TX 2014/2016 2017 5 509 88.1% 1,277 50% Jackson Square Tallahassee FL 1996 2017 23 242 92.0% 1,000 80% Magnolia Pointe Madison AL 1991 2017 28 204 95.8% 815 80% Woodland Apartments Boerne TX 2007 2017 12 120 91.6% 946 80% The Avenue Ocoee FL 1998 2018 21 522 95.7% 986 50% Parc at 980 Lawrenceville GA 1997 2018 22 586 92.6% 1,037 50% Anatole Apartments Daytona Beach FL 1986 2018 33 208 95.3% 885 80% Landings of Carrier Parkway Grand Prairie (Dallas)TX 2001 2018 18 281 93.9% 964 50% Crestmont at Thornblade Greenville SC 1998 2018 21 266 N/A N/A 90% Total/Weighted Average 22.1 9,714 Development Projects Bell's Bluff Nashville TN N/A N/A 402 N/A N/A 58% Total (Including Development Projects) 10,116 Property Unconsolidated Joint Ventures City State Year Built Age No. of Units% Ownership Canalside Sola (1) Columbia SC N/A N/A 338 46% Canalside Lofts Columbia SC 2008/2013 11 374 32% Gateway Oaks Forney TX 2016 3 313 50% Total 1,025 (1) Development project 15