Preferred Apartment Communities, Inc. Reports Results for Third Quarter 2020
ATLANTA, Nov. 9, 2020 /PRNewswire/ -- Preferred Apartment Communities, Inc. (NYSE: APTS) ("we," "our," the "Company," "Preferred Apartment Communities" or "PAC") today reported results for the quarter ended September 30, 2020. Unless otherwise indicated, all per share results are reported based on the basic weighted average shares of Common Stock and Class A Units ("Class A Units") of the Preferred Apartment Communities Operating Partnership (our "Operating Partnership") outstanding. See Definitions of Non-GAAP Measures.
Our operating results are presented below.
Three months ended |
Nine months ended |
||||||||||||||||||||||
2020 |
2019 |
% change |
2020 |
2019 |
% change |
||||||||||||||||||
Revenues (in thousands) |
$ |
126,697 |
$ |
120,203 |
5.4 |
% |
$ |
381,076 |
$ |
345,561 |
10.3 |
% |
|||||||||||
Per share data: |
|||||||||||||||||||||||
Net income (loss) (1) |
$ |
(0.79) |
$ |
(0.71) |
— |
$ |
(6.21) |
$ |
(2.02) |
— |
|||||||||||||
FFO (2) |
$ |
0.17 |
$ |
0.31 |
(45.2) |
% |
$ |
(3.17) |
$ |
1.06 |
— |
||||||||||||
Core FFO (2) |
$ |
0.26 |
$ |
0.35 |
(25.7) |
% |
$ |
0.77 |
$ |
1.14 |
(32.5) |
% |
|||||||||||
AFFO (2) |
$ |
0.07 |
$ |
0.12 |
(41.7) |
% |
$ |
0.58 |
$ |
0.66 |
(12.1) |
% |
|||||||||||
Dividends (3) |
$ |
0.1750 |
$ |
0.2625 |
(33.3) |
% |
$ |
0.6125 |
$ |
0.785 |
(22.0) |
% |
|||||||||||
(1) Per weighted average share of Common Stock outstanding for the periods indicated. |
|||||||||||||||||||||||
(2) FFO, Core FFO and AFFO results are presented per basic weighted average share of Common Stock and Class A Unit in our Operating Partnership outstanding for the periods indicated. See Reconciliations of FFO Attributable to Common Stockholders and Unitholders, Core FFO and AFFO to Net Income (Loss) Attributable to Common Stockholders and Definitions of Non-GAAP Measures. |
|||||||||||||||||||||||
(3) Per share of Common Stock and Class A Unit outstanding. |
"We are very pleased to report another quarter of operational outperformance across all of our product types, as our high quality, Sunbelt-focused portfolio of Class A multifamily, grocery-anchored retail and office, continued to be a market leader in the third quarter. Our collections of recurring rent were in excess of 99%, 96%, and 99% for our multi-housing, grocery anchored retail, and office portfolios, respectively, adjusted for deferrals. While we continue to navigate the short and long term economic and human impacts of the COVID-19 pandemic, we believe that our best-in- class asset management, combined with our suburban Sunbelt focus, and its associated broad positive economic drivers, provides stability for our portfolio, in the current environment and over the longer term.
Due to our operational success, we were able to focus our efforts on furthering key strategic goals for PAC, which includes closing the sale of our student housing assets for approximately $478 million. With our student housing rents and occupancy outperforming prior year, we were able to harvest meaningful capital for balance sheet enhancement and for investment in suburban, Sunbelt multifamily acquisitions. In September we also put two proposals to a common stockholder vote: the approval to give common stockholders the ability to amend the Company's bylaws and to reduce the Company's call option on its Series A Redeemable Preferred stock from 10 years to 5 years. Having recently extended the date for our stockholder meeting, we are very pleased with the significant support so far for these measures which we believe are both shareholder friendly and will allow us to better manage our balance sheet and cost structure. We believe all of these efforts should ultimately help drive long term earnings growth and value creation for our stockholders," stated Joel Murphy, Preferred Apartment Communities' President and Chief Executive Officer.
Financial
- Our net loss per share was $(0.79) and $(0.71) for the three-month periods ended September 30, 2020 and 2019, respectively. Funds From Operations, or FFO, for the three months ended September 30, 2020 was $0.17 per weighted average share of Common Stock and Class A Unit outstanding and reflects lower purchase option termination revenues, lower interest income, higher preferred dividends and a higher share count. Core FFO was $0.26 for the three months ended September 30, 2020 as compared to $0.35 for the three months ended September 30, 2019 and was similarly impacted by the items listed above.
- Our FFO per share result increased to $0.17 for the third quarter 2020 from $(0.01) for the second quarter 2020; our Core FFO per share result increased to $0.26 for the third quarter 2020 from $0.22 for the second quarter 2020 and our AFFO per share result increased to $0.07 for the third quarter 2020 from $0.05 for the second quarter 2020. Core FFO increased 22.1% for the third quarter 2020 from the second quarter 2020.
- Our Core FFO payout ratio to Common Stockholders and Unitholders was approximately 67.8% and our Core FFO payout ratio to our preferred stockholders was approximately 73.0%. (A)
- Our AFFO payout ratio to Common Stockholders and Unitholders was approximately 95.1% for the trailing twelve months ended September 30, 2020. Our AFFO payout ratio to our preferred stockholders was approximately 90.9% for the third quarter 2020, 78.5% for the nine months ended September 30, 2020 and 75.1% for the trailing twelve months ended September 30, 2020.(A) Our AFFO payout ratios were negatively impacted by the reduced level of accrued interest received on our real estate loan investment portfolio and increased property insurance rates. We have approximately $24.8 million of accrued interest revenue on our real estate loan investment portfolio, which will positively impact AFFO when collected.
- As of September 30, 2020, our total assets were approximately $4.7 billion. Our total assets at September 30, 2019 of approximately $5.3 billion included approximately $585.8 million of VIE mortgage pool assets attributable to other mortgage pool participants that were consolidated due to our investments in the Freddie Mac K Program. During the fourth quarter 2019 we sold our K Program investments, realizing an internal rate of return of approximately 18%. Excluding the consolidated VIE mortgage pool assets from the September 30, 2019 total, our total assets grew approximately $49.3 million.
(A) We calculate the Core FFO and AFFO payout ratios to Common Stockholders as the ratio of Common Stock dividends and distributions to Core FFO and AFFO. We calculate the Core FFO and AFFO payout ratios to preferred stockholders as the ratio of Preferred Stock dividends to the sum of Preferred Stock dividends and Core FFO and AFFO. Since our operations resulted in a net loss from continuing operations for the periods presented, a payout ratio based on net loss is not calculable. See Definitions of Non-GAAP Measures.
The following chart details monthly cash collections of rental revenues before and after the effect of rent deferrals across all our operating business lines as of November 9, 2020: |
||||||||||||||||||||||||
2020 Cash Collections of Recurring Rental Revenues (1) |
||||||||||||||||||||||||
Unadjusted for rent |
First |
April |
May |
June |
July |
August |
September |
October |
||||||||||||||||
Multifamily |
99.9 |
% |
98.8 |
% |
98.8 |
% |
98.8 |
% |
98.8 |
% |
99.0 |
% |
99.0 |
% |
98.5 |
% |
||||||||
Student housing |
99.9 |
% |
97.9 |
% |
97.0 |
% |
97.4 |
% |
97.0 |
% |
98.6 |
% |
98.8 |
% |
98.9 |
% |
||||||||
Office |
99.8 |
% |
98.8 |
% |
97.3 |
% |
97.8 |
% |
98.9 |
% |
99.7 |
% |
99.9 |
% |
99.8 |
% |
||||||||
Grocery-anchored retail (2) |
99.4 |
% |
91.5 |
% |
89.7 |
% |
91.5 |
% |
94.1 |
% |
95.0 |
% |
96.4 |
% |
95.6 |
% |
||||||||
2020 Cash Collections of Recurring Rental Revenues (1) |
||||||||||||||||||||||||
Adjusted for rent deferrals: |
First |
April |
May |
June |
July |
August |
September |
October |
||||||||||||||||
Multifamily |
99.9 |
% |
99.7 |
% |
99.5 |
% |
98.9 |
% |
98.9 |
% |
99.0 |
% |
99.0 |
% |
98.5 |
% |
||||||||
Student housing |
99.9 |
% |
98.4 |
% |
97.4 |
% |
97.4 |
% |
97.0 |
% |
98.6 |
% |
98.8 |
% |
98.9 |
% |
||||||||
Office |
99.8 |
% |
99.7 |
% |
99.8 |
% |
99.9 |
% |
99.8 |
% |
99.7 |
% |
99.9 |
% |
99.8 |
% |
||||||||
Grocery-anchored retail (2) |
99.5 |
% |
96.8 |
% |
95.2 |
% |
95.7 |
% |
96.7 |
% |
96.0 |
% |
97.0 |
% |
96.5 |
% |
||||||||
(1) Percent of revenue billed includes recurring charges for base rent, operating expense escalations, pet, garage, parking and storage rent, as well as receivables from U.S. Government tenants, from which collection is reasonably assured. |
||||||||||||||||||||||||
(2) Includes an investment in an unconsolidated joint venture that is not prorated for our ownership percentage. |
The following chart details monthly occupancy and percent leased rates across all our operating business lines: |
||||||||||||||||||||||||
2020 Monthly Occupancy and Percentages Leased |
||||||||||||||||||||||||
First |
April |
May |
June |
July |
August |
September |
October |
|||||||||||||||||
Occupancy: |
||||||||||||||||||||||||
Multifamily (stabilized) |
95.5 |
% |
94.4 |
% |
94.4 |
% |
95.2 |
% |
95.1 |
% |
96.0 |
% |
95.6 |
% |
95.4 |
% |
||||||||
Student housing |
96.1 |
% |
96.0 |
% |
95.8 |
% |
95.8 |
% |
95.9 |
% |
95.1 |
% |
95.3 |
% |
95.5 |
% |
||||||||
Percent leased: |
||||||||||||||||||||||||
Office |
96.7 |
% |
95.9 |
% |
96.2 |
% |
96.2 |
% |
96.1 |
% |
95.9 |
% |
95.5 |
% |
95.4 |
% |
||||||||
Grocery-anchored retail (1) |
92.6 |
% |
92.5 |
% |
92.5 |
% |
92.7 |
% |
92.8 |
% |
92.8 |
% |
92.5 |
% |
92.4 |
% |
||||||||
(1) Includes an investment in an unconsolidated joint venture that is not prorated for our ownership percentage. |
Operational
- Our average recurring rental revenue collections before and after any effect of rent deferrals for the third quarter 2020 were approximately 99.0% and 99.0% for multifamily communities, 99.5% and 99.8% for office properties and 95.2% and 96.5% for grocery-anchored retail properties, respectively. Rent deferments provided to our residents/tenants primarily related to a change of timing of rent payments with no significant changes to total payments or term.
- As of September 30, 2020, we have deferred $1.5 million of retail recurring rental revenue, or approximately 3.1% cumulatively over the last two quarters. Including this deferred rent, we have accounted for 96.6% and 95.9% of third quarter and second quarter retail recurring rental revenue, respectively. In addition to the deferrals, we granted approximately $324,000 of Covid related rental abatements, or approximately 0.7% of retail recurring rental revenues cumulatively over the last two quarters. These rental abatements were generally accompanied by an increase in the tenant's lease term or the lease terms were amended to be more favorable to us. We have also reserved $928,000 or 3.4% of total retail revenues (inclusive of straight line rent) in the third quarter, increasing our total reserves to $2.5 million or 3.0% of total retail revenues year to date, which is 0.7% of total company and other property revenues.
- On July 31, 2020, we received approximately $18.7 million in full satisfaction of the principal and all interest due on our Palisades real estate loan investment. Included in this total was the receipt of approximately $375,000 of deferred interest revenue on the loan, which was additive to AFFO for the quarter.
- As of September 30, 2020, the average age of our multifamily communities was approximately 6.3 years, which is the youngest in the public multifamily REIT industry.
- As of September 30, 2020, all of our owned multifamily communities had achieved stabilization, which we define as reaching 93% physical occupancy for three full months in a quarter.
Financing and Capital Markets
- On July 10, 2020, we closed on a refinancing of the mortgage on our Citrus Village multifamily community. The new instrument has a principal amount of $40.9 million, bears interest at a fixed rate of 2.95% per annum and matures on August 1, 2027. Monthly interest-only payments are due through August 31, 2022.
- As of September 30, 2020, approximately 94.1% of our permanent property-level mortgage debt has fixed interest rates and approximately 4.2% has variable interest rates which are capped. We believe we are well protected against potential increases in market interest rates. Our overall weighted average interest rate for our mortgage debt portfolio was 3.68% for residential properties, 4.13% for office properties and 3.91% for grocery-anchored retail properties.
- At September 30, 2020, our leverage, as measured by the ratio of our debt to the undepreciated book value of our total assets, was approximately 54.0%.
- During the third quarter 2020, we issued and sold an aggregate of 34,603 shares of Series A1 Redeemable Preferred Stock, resulting in net proceeds of approximately $31.1 million after commissions and other fees. During the third quarter 2020, we issued and sold an aggregate of 7,862 shares of Series M1 Redeemable Preferred Stock, resulting in net proceeds of approximately $7.6 million after dealer manager fees. During the third quarter 2020, we issued approximately 617,000 shares of Common Stock through our ATM program, and collected net proceeds of approximately $4.5 million.
- During the third quarter 2020, we issued a total of 42,465 shares of preferred stock and redeemed 37,391 shares of preferred stock for a net total of 5,074 shares issued.
Significant Transactions
- On July 15, 2020, we contributed our Neapolitan Way grocery-anchored shopping center into an unconsolidated 50/50 joint venture from which we collected approximately $19.2 million of proceeds and realized a gain on the transaction of approximately $3.3 million. Subsequently, the joint venture obtained a mortgage on the property, reducing our investment to approximately $6.9 million. We retain a 50% financial and voting interest in the property.
- On September 3, 2020, we closed on a real estate loan investment of up to approximately $20.7 million to partially finance the development and construction of a 320-unit multifamily community to be located in suburban Atlanta, Georgia. The aggregate carrying amount of our real estate loan investment portfolio was approximately $309.6 million at September 30, 2020.
Business Update Related to COVID-19
Since the onset of COVID-19, the Company has taken various actions in response to the pandemic, including offering extended rent deferral options and abatements in only very limited circumstances. While the effects and trends in the pandemic range from market to market, we continue to adjust our business operations to address the needs of our residents, tenants and associates on an asset by asset basis. Our property management and asset management teams continuously respond and adapt appropriately to any onsite, tenant and/or property management request, while following all applicable safety and social distancing guidelines as the situation continues to evolve and change. All of our multifamily communities, student housing properties, grocery-anchored shopping centers and office buildings have operated throughout the pandemic and in compliance with government-imposed COVID-19 guidelines and mandates. While we expect the impacts of COVID-19 generally to continue into 2021, the effects on our operations have been manageable and we believe this will continue barring a dramatic change in the trajectory of the pandemic.
Real Estate Assets
At September 30, 2020, our portfolio of owned real estate assets and potential additions from purchase options we held from our real estate loan investments consisted of:
Owned as of |
Potential investment portfolio (2) (3) |
Potential total |
||||||||
Residential properties: |
||||||||||
Properties |
44 |
12 |
56 |
|||||||
Units |
12,936 |
3,315 |
16,251 |
|||||||
Beds |
6,095 |
543 |
6,638 |
|||||||
Grocery-anchored shopping centers: |
||||||||||
Properties |
54 |
— |
54 |
|||||||
Gross leasable area (square feet) |
6,208,278 |
— |
6,208,278 |
|||||||
Office buildings: |
||||||||||
Properties |
9 |
(4) |
1 |
10 |
||||||
Rentable square feet |
3,169,000 |
195,000 |
3,364,000 |
|||||||
(1) |
One multifamily community, two student housing properties, two grocery-anchored shopping centers and two office |
|||||||||
buildings are owned through consolidated joint ventures. One grocery-anchored shopping center is an investment in |
||||||||||
an unconsolidated joint venture. |
||||||||||
(2) |
We evaluate each project individually and we make no assurance that we will acquire any of the underlying properties |
|||||||||
from our real estate loan investment portfolio. |
||||||||||
(3) |
The Company has terminated various purchase option agreements in exchange for termination fees. These properties |
|||||||||
are excluded from the potential additions from our real estate loan investment portfolio. |
||||||||||
(4) |
Excludes our 251 Armour property, comprising 35,000 rentable square feet that is under development and our 4th and |
|||||||||
Brevard land parcel that is slated for future development. |
Same-Store Multifamily Communities Financial Data
The following chart presents same-store operating results for the Company's multifamily communities. We define our population of same-store multifamily communities as those that have achieved occupancy at or above 93% for all three consecutive months within a single quarter (stabilized) before the beginning of the prior year and that have been owned for at least 15 full months as of the end of the first quarter of the current year, enabling comparisons of the current year quarterly and annual reporting periods to the prior year comparative periods. The Company excludes the operating results of properties for which construction of adjacent phases has commenced and properties which are undergoing significant capital projects, have sustained significant casualty losses, or are being marketed for sale as of the end of the reporting period. For the periods presented, same-store operating results consist of the operating results of the following multifamily communities containing an aggregate 8,694 units, or 79.6% of our multifamily units:
Aster at Lely Resort |
Avenues at Cypress |
Avenues at Northpointe |
||
Citi Lakes |
Lenox Village |
Retreat at Lenox Village |
||
Overton Rise |
Sorrel |
Venue at Lakewood Ranch |
||
Avenues at Creekside |
525 Avalon Park |
Vineyards |
||
Citrus Village |
Retreat at Greystone |
City Vista |
||
Founders Village |
Luxe at Lakewood Ranch |
Adara at Overland Park |
||
Summit Crossing I |
Summit Crossing II |
Aldridge at Town Village |
||
City Park View |
Crosstown Walk |
Claiborne Crossing |
||
Reserve at Summit Crossing |
Colony at Centerpointe |
Lux at Sorrel |
||
Green Park |
Vestavia Reserve |
Same-store net operating income is a non-GAAP measure that is most directly comparable to net income (loss), as shown in the reconciliations below. See Definitions of Non-GAAP Measures.
Reconciliation of Net Income (Loss) to Multifamily Communities' Same-Store Net Operating Income (NOI) |
||||||||
Three months ended: |
||||||||
(in thousands) |
9/30/2020 |
9/30/2019 |
||||||
Net loss |
$ |
(3,602) |
$ |
(2,137) |
||||
Add: |
||||||||
Equity stock compensation |
582 |
305 |
||||||
Depreciation and amortization |
51,794 |
46,239 |
||||||
Interest expense |
29,879 |
28,799 |
||||||
Management fees |
— |
8,611 |
||||||
Corporate G&A and other |
7,898 |
1,364 |
||||||
Management Internalization |
577 |
818 |
||||||
Provision for expected credit losses |
(152) |
— |
||||||
Waived asset management and general and administrative expense fees |
— |
(3,081) |
||||||
Less: |
||||||||
Interest revenue on notes receivable |
10,649 |
12,608 |
||||||
Interest revenue on related party notes receivable |
609 |
2,546 |
||||||
Miscellaneous revenues |
608 |
— |
||||||
Income from consolidated VIEs |
— |
591 |
||||||
Loss from unconsolidated joint venture |
(120) |
— |
||||||
Loss on extinguishment of debt |
(518) |
(15) |
||||||
Gains on sale of real estate and land condemnation |
3,310 |
— |
||||||
Property net operating income |
72,438 |
65,188 |
||||||
Less: |
||||||||
Non-same-store property revenues |
(77,447) |
(67,559) |
||||||
Add: |
||||||||
Non-same-store property operating expenses |
26,524 |
23,872 |
||||||
Same-store net operating income |
$ |
21,515 |
$ |
21,501 |
Multifamily Communities' Same Store Net Operating Income |
|||||||||||||||
Three months ended: |
|||||||||||||||
(in thousands) |
9/30/2020 |
9/30/2019 |
$ change |
% change |
|||||||||||
Revenues: |
|||||||||||||||
Rental and other property revenues |
$ |
37,383 |
$ |
37,490 |
$ |
(107) |
(0.3) |
% |
|||||||
Operating expenses: |
|||||||||||||||
Property operating and maintenance |
6,733 |
7,167 |
(434) |
(6.1) |
% |
||||||||||
Payroll |
3,022 |
3,019 |
3 |
0.1 |
% |
||||||||||
Real estate taxes and insurance |
6,113 |
5,803 |
310 |
5.3 |
% |
||||||||||
Total operating expenses |
15,868 |
15,989 |
(121) |
(0.8) |
% |
||||||||||
Same-store net operating income |
$ |
21,515 |
$ |
21,501 |
$ |
14 |
0.1 |
% |
|||||||
Same-store average physical occupancy |
95.6 |
% |
95.6 |
% |
|||||||||||
Corporate level expenses related to the management and operations of the Multifamily and Student housing property portfolios are allocated on a per unit basis to Property NOI and are included in Multifamily Same Store NOI. |
Reconciliation of Net Income (Loss) to Multifamily Communities' Same-Store Net Operating Income (NOI) |
||||||||
Nine months ended: |
||||||||
(in thousands) |
9/30/2020 |
9/30/2019 |
||||||
Net loss |
$ |
(199,075) |
$ |
(6,094) |
||||
Add: |
||||||||
Equity stock compensation |
1,058 |
922 |
||||||
Depreciation and amortization |
153,096 |
137,191 |
||||||
Interest expense |
90,608 |
83,166 |
||||||
Management fees |
3,099 |
24,649 |
||||||
Corporate G&A and other |
23,109 |
4,171 |
||||||
Management Internalization |
179,828 |
1,143 |
||||||
Provision for expected credit losses |
5,463 |
— |
||||||
Waived asset management and general and administrative expense fees |
(1,136) |
(8,505) |
||||||
Less: |
||||||||
Interest revenue on notes receivable |
34,495 |
35,989 |
||||||
Interest revenue on related party notes receivable |
3,750 |
9,980 |
||||||
Miscellaneous revenues |
4,560 |
1,023 |
||||||
Income from consolidated VIEs |
— |
1,316 |
||||||
Loss from unconsolidated joint venture |
(120) |
— |
||||||
Loss on extinguishment of debt |
(6,674) |
(84) |
||||||
Gains on sale of real estate and land condemnation |
3,789 |
751 |
||||||
Property net operating income |
216,250 |
187,668 |
||||||
Less: |
||||||||
Non-same-store property revenues |
(226,417) |
(187,737) |
||||||
Add: |
||||||||
Non-same-store property operating expenses |
75,318 |
64,282 |
||||||
Same-store net operating income |
$ |
65,151 |
$ |
64,213 |
Multifamily Communities' Same Store Net Operating Income |
|||||||||||||||
Nine months ended: |
|||||||||||||||
(in thousands) |
9/30/2020 |
9/30/2019 |
$ change |
% change |
|||||||||||
Revenues: |
|||||||||||||||
Rental and other property revenues |
$ |
111,855 |
$ |
110,833 |
$ |
1,022 |
0.9 |
% |
|||||||
Operating expenses: |
|||||||||||||||
Property operating and maintenance |
19,473 |
20,388 |
(915) |
(4.4) |
% |
||||||||||
Payroll |
8,817 |
8,711 |
106 |
1.2 |
% |
||||||||||
Real estate taxes and insurance |
18,414 |
17,521 |
893 |
5.1 |
% |
||||||||||
Total operating expenses |
46,704 |
46,620 |
84 |
0.2 |
% |
||||||||||
Same-store net operating income |
$ |
65,151 |
$ |
64,213 |
$ |
938 |
1.5 |
% |
|||||||
Corporate level expenses related to the management and operations of the Multifamily and Student housing property portfolios are allocated on a per unit basis to Property NOI and are included in Multifamily Same Store NOI. |
Dividends
Quarterly Dividends on Common Stock and Class A OP Units
On August 6, 2020, we declared a quarterly dividend on our Common Stock of $0.175 per share for the third quarter 2020. The third quarter dividend was paid on October 15, 2020 to all stockholders of record on September 15, 2020. In conjunction with the Common Stock dividend, the Company's operating partnership declared a distribution on its Class A Units of $0.175 per unit for the third quarter 2020, which was paid on October 15, 2020 to all Class A Unit holders of record as of September 15, 2020.
Monthly Dividends on Preferred Stock
We declared monthly dividends of $5.00 per share on our Series A Redeemable Preferred Stock, which totaled approximately $33.0 million for the third quarter 2020 and represents a 6% annual yield. We declared monthly dividends of $5.00 per share on our Series A1 Redeemable Preferred Stock, which totaled approximately $1.2 million for the third quarter 2020 and also represents a 6% annual yield. We declared dividends totaling approximately $1.5 million on our Series M Redeemable Preferred Stock, or mShares, for the third quarter 2020. The mShares have a dividend rate that escalates from 5.75% in year one of issuance to 7.50% in year eight and thereafter. We declared dividends totaling approximately $157,000 on our Series M1 Redeemable Preferred Stock for the third quarter 2020. The Series M1 Redeemable Preferred Stock has a dividend rate that escalates from 6.1% in year one of issuance to 7.1% in year ten and thereafter.
Subsequent to Quarter End
Between October 1, 2020 and October 31, 2020, we issued 13,986 shares of Series A1 Preferred Stock and collected net proceeds of approximately $12.6 million after commissions and fees and we issued 2,914 shares of Series M1 Preferred Stock and collected net proceeds of approximately $2.8 million after commissions and fees. During the same period, we redeemed 23,468 shares of Series A Preferred Stock and 862 shares of Series M Preferred Stock, or mShares.
On November 3, 2020, we announced via a press release the closing on that day of the sale of student housing assets to an unrelated third party for a sales price of $478.7 million.
On November 9, 2020, the Company adjourned its Special Meeting of Stockholders to November 19, 2020 to provide stockholders with additional time to vote on Proposal 1 (Approval of the Articles of Amendment to the Company's charter to give bylaw access to stockholders) and Proposal 2 (Approval of the Articles of Amendment to the Company's charter to reduce the Company's call period on its Series A Redeemable Preferred Stock from 10 years to 5 years). The required vote to approve each Proposal is two-thirds of the Company's outstanding shares entitled to vote. As of November 5, 2020, approximately 65.4% of the Company's outstanding shares had been voted on Proposal 1 and Proposal 2 and, of these shares, approximately 97.9% and 95.7% had been voted in favor of Proposal 1 and Proposal 2, respectively.
On November 2, 2020, we closed on the acquisition of The Blake, a 281-unit multifamily community located in Orlando, Florida.
On November 5, 2020, our board of directors declared a quarterly dividend on our Common Stock of $0.175 per share, payable on January 15, 2021 to stockholders of record on December 15, 2020. Even though this dividend will be paid in 2021, if and to the extent this dividend is taxable, the Company intends for this dividend to be taxable in 2020.
Conference Call and Supplemental Data
We will hold our quarterly conference call on Tuesday, November 10, 2020 at 11:00 a.m. Eastern Time to discuss our third quarter 2020 results. To participate in the conference call, please dial in to the following:
Live Conference Call Details
Domestic Dial-in Number: 1-877-883-0383
International Dial-in Number: 1-412-902-6506
Company: Preferred Apartment Communities, Inc.
Date: Tuesday, November 10, 2020
Time: 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time)
Passcode: 2463393
The live broadcast of PAC's third quarter 2020 conference call will be available online on a listen-only basis at the company's website, www.pacapts.com, under "Investors" and then click on the "News and Events" heading. A replay of the call will be available from 3:00 PM Eastern Time on Tuesday, November 10, through 11:59 PM Eastern Time on Wednesday, December 9, 2020. The replay can be accessed by dialing 1-877-344-7529 or 1-412-317-0088 for international participants. The passcode for the replay is 10149020. A replay of the webcast will also be available on the Company's website for a limited time.
A replay of the call will be archived on PAC's' website under Investors/News and Events/Events.
2020 Guidance:
Net income (loss) per share - We are actively adding properties and real estate loan investments to our real estate portfolio and the specific timing of the closing of acquisitions is difficult to predict. Acquisition activity by its nature can cause material variation in our reported depreciation and amortization expense and interest income. Since net income (loss) per share is calculated net of depreciation and amortization expense, our net income (loss) results can fluctuate, possibly significantly, depending upon the timing of the closing of acquisitions. For this reason, we are unable to reasonably forecast this measure or provide a reconciliation of our projected FFO per share to this measure.
FFO per share - Due to the inherent uncertainty of the scope, duration and rapidly evolving nature of the economic and social disruption from the COVID-19 pandemic, we have withdrawn our guidance for 2020.
AFFO, Core FFO and FFO are calculated after deductions for all preferred stock dividends. Reconciliations of net income (loss) attributable to common stockholders to FFO, Core FFO and AFFO for the three-month and nine-month periods ended September 30, 2020 and 2019 appear in the attached report, as well as on our website using the following link:
https://investors.pacapts.com/q3-2020-quarterly-supplemental-financial-data
Forward-Looking Statements
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Estimates of future earnings, guidance, goals and performance are, by definition, and certain other statements in this Earnings Release and Supplemental Financial Data Report may constitute, "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance, achievements or transactions to be materially different from the results, guidance, goals, performance, achievements or transactions expressed or implied by the forward-looking statements. These statements may be identified by the use of forward-looking terminology such as "may," "trend," "will," "expects," "plans," "estimates," "anticipates," "projects," "intends," "believes," "strategy," "goals," "objectives," "outlook" and similar expressions. These risks, uncertainties and contingencies include, but are not limited to, (a) the impact of the COVID-19 pandemic and related federal, state and local government actions on PAC's business operations and the economic conditions in the markets in which PAC operates; (b) PAC's ability to mitigate the impacts arising from COVID-19 and (c) those disclosed in PAC's filings with the SEC. Factors that impact such forward-looking statements include, among others, our business and investment strategy; legislative or regulatory actions; the state of the U.S. economy generally or in specific geographic areas; economic trends and economic recoveries; changes in operating costs, including real estate taxes, utilities and insurance costs; our ability to obtain and maintain debt or equity financing; financing and advance rates for our target assets; our leverage level; changes in the values of our assets; the occurrence of natural or man-made disasters; availability of attractive investment opportunities in our target markets; our ability to maintain our qualification as a real estate investment trust, or REIT, for U.S. federal income tax purposes; our ability to maintain our exemption from registration under the Investment Company Act of 1940, as amended; availability of quality personnel; our understanding of our competition and market trends in our industry; and interest rates, real estate values, the debt securities markets and the general economy.
Except as otherwise required by the federal securities laws, we assume no liability to update the information in this Earnings Release and Supplemental Financial Data Report.
We refer you to the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2019 that was filed with the SEC on March 3, 2020, which discuss various factors that could adversely affect our financial results. Such risk factors and information may be updated or supplemented by our Form 10-K, Form 10-Q and Form 8-K filings and other documents filed from time to time with the SEC.
Additional Information
The SEC has declared effective the registration statement filed by the Company for each of the offerings to which this communication may relate. Before you invest, you should read the final prospectus, and any prospectus supplements, forming a part of the registration statement and other documents the Company has filed with the SEC for more complete information about the Company and the offering to which this communication may relate. In particular, you should carefully read the risk factors described in the final prospectus and in any related prospectus supplement and in the documents incorporated by reference in the final prospectus and any related prospectus supplement to which this communication may relate. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the Company or its dealer manager, Preferred Capital Securities, LLC, will arrange to send you a prospectus with respect to the Series A1/M1 Offering upon request by contacting John A. Isakson at (770) 818-4109, 3284 Northside Parkway NW, Suite 150, Atlanta, Georgia 30327.
The final prospectus for the Series A1/M1 Offering, dated October 22, 2019, can be accessed through the following link:
https://www.sec.gov/Archives/edgar/data/1481832/000148183219000097/a424b5-2019seriesamshares.htm
Preferred Apartment Communities, Inc. |
||||||||
Condensed Consolidated Statements of Operations |
||||||||
(Unaudited) |
||||||||
Three months ended |
||||||||
(In thousands, except per-share figures) |
2020 |
2019 |
||||||
Revenues: |
||||||||
Rental and other property revenues |
$ |
114,831 |
$ |
105,049 |
||||
Interest income on loans and notes receivable |
10,649 |
12,608 |
||||||
Interest income from related parties |
609 |
2,546 |
||||||
Miscellaneous revenues |
608 |
— |
||||||
Total revenues |
126,697 |
120,203 |
||||||
Operating expenses: |
||||||||
Property operating and maintenance |
19,278 |
16,493 |
||||||
Property salary and benefits |
6,054 |
5,360 |
||||||
Property management costs |
983 |
3,534 |
||||||
Real estate taxes and insurance |
16,078 |
14,474 |
||||||
General and administrative |
7,898 |
1,364 |
||||||
Equity compensation to directors and executives |
582 |
305 |
||||||
Depreciation and amortization |
51,794 |
46,239 |
||||||
Asset management and general and administrative expense |
||||||||
fees to related party |
— |
8,611 |
||||||
Provision for expected credit losses |
(152) |
— |
||||||
Management internalization expense |
577 |
818 |
||||||
Total operating expenses |
103,092 |
97,198 |
||||||
Waived asset management and general and administrative |
||||||||
expense fees |
— |
(3,081) |
||||||
Net operating expenses |
103,092 |
94,117 |
||||||
Operating income before gain on sale of real estate and loss from |
||||||||
unconsolidated joint venture |
23,605 |
26,086 |
||||||
Loss from unconsolidated joint venture |
(120) |
— |
||||||
Gain on sale of real estate, net |
3,261 |
— |
||||||
Operating income |
26,746 |
26,086 |
||||||
Interest expense |
29,879 |
28,799 |
||||||
Change in fair value of net assets of consolidated |
||||||||
VIEs from mortgage-backed pools |
— |
591 |
||||||
Loss on extinguishment of debt |
(518) |
(15) |
||||||
Gain on land condemnation |
49 |
— |
||||||
Net loss |
(3,602) |
(2,137) |
||||||
Consolidated net loss attributable to non-controlling interests |
108 |
59 |
||||||
Net loss attributable to the Company |
(3,494) |
(2,078) |
||||||
Dividends declared to preferred stockholders |
(35,909) |
(29,446) |
||||||
Earnings attributable to unvested restricted stock |
(96) |
(5) |
||||||
Net loss attributable to common stockholders |
$ |
(39,499) |
$ |
(31,529) |
||||
Net loss per share of Common Stock available to |
||||||||
common stockholders, basic and diluted |
$ |
(0.79) |
$ |
(0.71) |
||||
Weighted average number of shares of Common Stock outstanding, |
||||||||
basic and diluted |
49,689 |
44,703 |
Reconciliation of FFO Attributable to Common Stockholders and Unitholders, Core FFO and AFFO |
|||||||||||
to Net (Loss) Income Attributable to Common Stockholders (A) |
|||||||||||
Three months ended September 30, |
|||||||||||
(In thousands, except per-share figures) |
2020 |
2019 |
|||||||||
Net loss attributable to common stockholders (See note 1) |
$ |
(39,499) |
$ |
(31,529) |
|||||||
Add: |
Depreciation of real estate assets |
41,282 |
37,381 |
||||||||
Amortization of acquired intangible assets and deferred leasing costs |
9,978 |
8,386 |
|||||||||
Net loss attributable to Class A Unitholders (See note 2) |
(50) |
(59) |
|||||||||
Gain on sale of real estate |
(3,261) |
— |
|||||||||
FFO attributable to common stockholders and unitholders |
8,450 |
14,179 |
|||||||||
Acquisition and pursuit costs |
3 |
— |
|||||||||
Loan cost amortization on acquisition term notes and loan coordination fees (See note 3) |
505 |
511 |
|||||||||
Payment of costs related to property refinancing |
509 |
170 |
|||||||||
Internalization costs (See note 4) |
577 |
818 |
|||||||||
Deemed dividends for redemptions of and non-cash dividends on preferred stock |
3,061 |
152 |
|||||||||
Expenses incurred on the potential call of preferred stock (See note 5) |
46 |
— |
|||||||||
Expenses related to the COVID-19 global pandemic (See note 6) |
138 |
— |
|||||||||
Core FFO attributable to common stockholders and unitholders |
13,289 |
15,830 |
|||||||||
Add: |
Non-cash equity compensation to directors and executives |
582 |
305 |
||||||||
Non-cash (income) expense for current expected credit losses (See note 7) |
(761) |
— |
|||||||||
Amortization of loan closing costs (See note 8) |
1,288 |
1,168 |
|||||||||
Depreciation/amortization of non-real estate assets |
621 |
472 |
|||||||||
Net loan origination fees received (See note 9) |
415 |
148 |
|||||||||
Deferred interest income received (See note 10) |
375 |
— |
|||||||||
Amortization of lease inducements (See note 11) |
448 |
435 |
|||||||||
Less: |
Amortization of purchase option termination revenues in excess of cash received (See note 12) |
(421) |
(1,283) |
||||||||
Non-cash loan interest income (See note 10) |
(3,317) |
(3,763) |
|||||||||
Cash received for sale of K Program securities in excess of noncash revenues |
— |
(281) |
|||||||||
Cash paid for loan closing costs |
(106) |
(29) |
|||||||||
Amortization of acquired real estate intangible liabilities and SLR (See note 13) |
(4,887) |
(4,293) |
|||||||||
Amortization of deferred revenues (See note 14) |
(940) |
(940) |
|||||||||
Normally recurring capital expenditures (See note 15) |
(2,983) |
(2,379) |
|||||||||
AFFO attributable to common stockholders and Unitholders |
$ |
3,603 |
$ |
5,390 |
|||||||
Common Stock dividends and distributions to Unitholders declared: |
|||||||||||
Common Stock dividends |
$ |
8,780 |
$ |
11,823 |
|||||||
Distributions to Unitholders (See note 2) |
226 |
225 |
|||||||||
Total |
$ |
9,006 |
$ |
12,048 |
|||||||
Common Stock dividends and Unitholder distributions per share |
$ |
0.1750 |
$ |
0.2625 |
|||||||
FFO per weighted average basic share of Common Stock and Unit outstanding |
$ |
0.17 |
$ |
0.31 |
|||||||
Core FFO per weighted average basic share of Common Stock and Unit outstanding |
$ |
0.26 |
$ |
0.35 |
|||||||
AFFO per weighted average basic share of Common Stock and Unit outstanding |
$ |
0.07 |
$ |
0.12 |
|||||||
Weighted average shares of Common Stock and Units outstanding: (A) |
|||||||||||
Basic: |
|||||||||||
Common Stock |
49,689 |
44,703 |
|||||||||
Class A Units |
742 |
868 |
|||||||||
Common Stock and Class A Units |
50,431 |
45,571 |
|||||||||
Diluted Common Stock and Class A Units (B) |
50,433 |
45,768 |
|||||||||
Actual shares of Common Stock outstanding, including 548 and 20 unvested shares |
|||||||||||
of restricted Common Stock at September 30, 2020 and 2019, respectively. |
50,449 |
45,355 |
|||||||||
Actual Class A Units outstanding at September 30, 2020 and 2019, respectively. |
742 |
856 |
|||||||||
Total |
51,191 |
46,211 |
|||||||||
(A) Units and Unitholders refer to Class A Units in our Operating Partnership (as defined in note 2), or Class A Units, and holders of Class A Units, respectively. Unitholders include recipients of awards of Class B Units in our Operating Partnership, or Class B Units, for annual service which became vested and earned and automatically converted to Class A Units. Unitholders also include the entity that contributed the Wade Green grocery-anchored shopping center. The Class A Units collectively represent an approximate 1.47% weighted average non-controlling interest in the Operating Partnership for the three-month period ended September 30, 2020. |
|||||||||||
(B) Since our AFFO results are positive for the periods reflected above, we are presenting recalculated diluted weighted average shares of Common Stock and Class A Units for these periods for purposes of this table, which includes the dilutive effect of common stock equivalents from grants of the Class B Units, warrants included in units of Series A Preferred Stock issued, as well as annual grants of restricted Common Stock and restricted stock units. The weighted average shares of Common Stock outstanding presented on the Consolidated Statements of Operations are the same for basic and diluted for any period for which we recorded a net loss available to common stockholders. |
|||||||||||
See Notes to Reconciliation of FFO, Core FFO and AFFO to Net Income (Loss) Attributable to Common Stockholders |
Reconciliation of FFO Attributable to Common Stockholders and Unitholders, Core FFO and AFFO |
|||||||||||
to Net (Loss) Income Attributable to Common Stockholders (A) |
|||||||||||
Nine months ended September 30, |
|||||||||||
(In thousands, except per-share figures) |
2020 |
2019 |
|||||||||
Net loss attributable to common stockholders (See note 1) |
$ |
(300,270) |
$ |
(88,497) |
|||||||
Add: |
Depreciation of real estate assets |
122,053 |
109,408 |
||||||||
Amortization of acquired intangible assets and deferred leasing costs |
28,933 |
26,402 |
|||||||||
Net loss attributable to Class A Unitholders (See note 2) |
(3,393) |
(138) |
|||||||||
Gain on sale of real estate |
(3,261) |
— |
|||||||||
FFO attributable to common stockholders and unitholders |
(155,938) |
47,175 |
|||||||||
Acquisition and pursuit costs |
381 |
— |
|||||||||
Loan cost amortization on acquisition term notes and loan coordination fees (See note 3) |
1,711 |
1,491 |
|||||||||
Payment of costs related to property refinancing |
7,372 |
594 |
|||||||||
Internalization costs (See note 4) |
179,828 |
1,143 |
|||||||||
Deemed dividends for redemptions of and non-cash dividends on preferred stock |
6,377 |
371 |
|||||||||
Expenses incurred on the potential call of preferred stock (See note 5) |
46 |
— |
|||||||||
Expenses related to the COVID-19 global pandemic (See note 6) |
586 |
— |
|||||||||
Earnest money forfeited by prospective asset purchaser |
(2,750) |
— |
|||||||||
Core FFO attributable to common stockholders and unitholders |
37,613 |
50,774 |
|||||||||
Add: |
Non-cash equity compensation to directors and executives |
1,058 |
922 |
||||||||
Non-cash (income) expense for current expected credit losses (See note 7) |
3,647 |
— |
|||||||||
Amortization of loan closing costs (See note 8) |
3,631 |
3,458 |
|||||||||
Depreciation/amortization of non-real estate assets |
1,793 |
1,381 |
|||||||||
Net loan origination fees received (See note 9) |
882 |
674 |
|||||||||
Deferred interest income received (See note 10) |
8,652 |
5,078 |
|||||||||
Amortization of lease inducements (See note 11) |
1,334 |
1,295 |
|||||||||
Amortization of purchase option termination revenues in excess of cash received (See note 12) |
(96) |
(2,370) |
|||||||||
Non-operating miscellaneous revenues |
2,750 |
— |
|||||||||
Less: |
Non-cash loan interest income (See note 10) |
(9,445) |
(10,745) |
||||||||
Non-cash revenues from mortgage-backed securities |
— |
(696) |
|||||||||
Cash paid for loan closing costs |
(106) |
(37) |
|||||||||
Amortization of acquired real estate intangible liabilities and SLR (See note 13) |
(13,684) |
(12,375) |
|||||||||
Amortization of deferred revenues (See note 14) |
(2,821) |
(2,821) |
|||||||||
Normally recurring capital expenditures (See note 15) |
(6,525) |
(5,122) |
|||||||||
AFFO attributable to common stockholders and Unitholders |
$ |
28,683 |
$ |
29,416 |
|||||||
Common Stock dividends and distributions to Unitholders declared: |
|||||||||||
Common Stock dividends |
29,895 |
34,599 |
|||||||||
Distributions to Unitholders (See note 2) |
559 |
683 |
|||||||||
Total |
30,454 |
35,282 |
|||||||||
Common Stock dividends and Unitholder distributions per share |
$ |
0.6125 |
$ |
0.785 |
|||||||
FFO per weighted average basic share of Common Stock and Unit outstanding |
$ |
(3.17) |
$ |
1.06 |
|||||||
Core FFO per weighted average basic share of Common Stock and Unit outstanding |
$ |
0.77 |
$ |
1.14 |
|||||||
AFFO per weighted average basic share of Common Stock and Unit outstanding |
$ |
0.58 |
$ |
0.66 |
|||||||
Weighted average shares of Common Stock and Units outstanding: (A) |
|||||||||||
Basic: |
|||||||||||
Common Stock |
48,351 |
43,703 |
|||||||||
Class A Units |
776 |
875 |
|||||||||
Common Stock and Class A Units |
49,127 |
44,578 |
|||||||||
Diluted Common Stock and Class A Units (B) |
49,144 |
45,235 |
|||||||||
Actual shares of Common Stock outstanding, including 548 and 20 unvested shares |
|||||||||||
of restricted Common Stock at September 30, 2020 and 2019, respectively. |
50,449 |
45,355 |
|||||||||
Actual Class A Units outstanding at September 30, 2020 and 2019, respectively. |
742 |
856 |
|||||||||
Total |
51,191 |
46,211 |
|||||||||
(A) Units and Unitholders refer to Class A Units in our Operating Partnership (as defined in note 2), or Class A Units, and holders of Class A Units, respectively. Unitholders include recipients of awards of Class B Units in our Operating Partnership, or Class B Units, for annual service which became vested and earned and automatically converted to Class A Units. Unitholders also include the entity that contributed the Wade Green grocery-anchored shopping center. The Class A Units collectively represent an approximate 1.58% weighted average non-controlling interest in the Operating Partnership for the nine-month period ended September 30, 2020. |
|||||||||||
(B) Since our AFFO results are positive for the periods reflected above, we are presenting recalculated diluted weighted average shares of Common Stock and Class A Units for these periods for purposes of this table, which includes the dilutive effect of common stock equivalents from grants of the Class B Units, warrants included in units of Series A Preferred Stock issued, as well as annual grants of restricted Common Stock and restricted stock units. The weighted average shares of Common Stock outstanding presented on the Consolidated Statements of Operations are the same for basic and diluted for any period for which we recorded a net loss available to common stockholders. |
|||||||||||
See Notes to Reconciliation of FFO, Core FFO and AFFO to Net Income (Loss) Attributable to Common Stockholders. |
Notes to Reconciliations of FFO Attributable to Common Stockholders and Unitholders, Core FFO and AFFO to Net Loss Attributable to Common Stockholders |
|
1) |
Rental and other property revenues and property operating expenses for the three-month and nine-month periods ended September 30, 2020 include activity for the properties acquired during the period only from their respective dates of acquisition. In addition, these periods include activity for the properties acquired since September 30, 2019. Rental and other property revenues and expenses for the three-month and nine-month periods ended September 30, 2019 include activity for the acquisitions made during that period only from their respective dates of acquisition. |
2) |
Non-controlling interests in Preferred Apartment Communities Operating Partnership, L.P., or our Operating Partnership, consisted of a total of 742,413 Class A Units as of September 30, 2020. Included in this total are 419,228 Class A Units which were granted as partial consideration to the seller in conjunction with the seller's contribution to us on February 29, 2016 of the Wade Green grocery-anchored shopping center. The remaining Class A units were awarded primarily to our key executive officers. The Class A Units are apportioned a percentage of our financial results as non-controlling interests. The weighted average ownership percentage of these holders of Class A Units was calculated to be 1.47% and 1.90% for the three-month periods ended September 30, 2020 and 2019, respectively. |
3) |
We paid loan coordination fees to Preferred Apartment Advisors, LLC, or our Former Manager, to reflect the administrative effort involved in arranging debt financing for acquired properties prior to the Internalization. The fees were calculated as 0.6% of the amount of any mortgage indebtedness on newly-acquired properties or refinancing and are amortized over the lives of the respective mortgage loans. This non-cash amortization expense is an addition to FFO in the calculation of Core FFO and AFFO. At September 30, 2020, aggregate unamortized loan coordination fees were approximately $12.8 million, which will be amortized over a weighted average remaining loan life of approximately 10.2 years. |
4) |
This adjustment reflects the add-back of (i) consideration paid to the owners of the Former Manager and Former Sub-Manager, (ii) accretion of the discount on the deferred liability payable to the owners of the Former Manager and (iii) due diligence and pursuit costs incurred by the Company related to the internalization of the functions performed by the Former Manager. |
5) |
This adjustment adds back expenses incurred by us to effect an amendment of the Company's charter necessary to allow us to redeem outstanding shares of our Series A Preferred Stock beginning on the fifth anniversary of the date of issuance of the shares of Series A Preferred Stock, rather than the tenth anniversary. |
6) |
This additive adjustment to FFO consists of one-time costs for signage, cleaning and supplies necessary to create and maintain work environments necessary to adhere to CDC guidelines during the current COVID-19 pandemic. Since we do not expect to incur similar costs once the COVID-19 pandemic has subsided, we add these costs back to FFO in our calculation of Core FFO. |
7) |
Effective January 1, 2020, we adopted ASU 2016-03, which requires us to estimate the amount of future credit losses we expect to incur over the lives of our real estate loan investments at the inception of each loan. This loss reserve may be adjusted upward or downward over the lives of our loans and therefore the aggregate net adjustment for each period could be positive (removing the non-cash effect of a net increase in aggregate loss reserves) or negative (removing the non-cash effect of a net decrease in aggregate loss reserves) in these adjustments to FFO in calculating Core FFO. |
8) |
We incur loan closing costs on our existing mortgage loans, which are secured on a property-by-property basis by each of our acquired real estate assets, and also for occasional amendments to our syndicated revolving line of credit with Key Bank National Association, or our Revolving Line of Credit. Effective April 13, 2018, the maximum borrowing capacity on the Revolving Line of Credit was increased from $150 million to $200 million. These loan closing costs are also amortized over the lives of the respective loans and the Revolving Line of Credit, and this non-cash amortization expense is an addition to FFO in the calculation of AFFO. Neither we nor the Operating Partnership have any recourse liability in connection with any of the mortgage loans, nor do we have any cross-collateralization arrangements with respect to the assets securing the mortgage loans, other than security interests in 49% of the equity interests of the subsidiaries owning such assets, granted in connection with our Revolving Line of Credit, which provides for full recourse liability. At September 30, 2020, unamortized loan costs on all the Company's indebtedness were approximately $32.3 million, which will be amortized over a weighted average remaining loan life of approximately 8.9 years. |
9) |
We receive loan origination fees in conjunction with the origination of certain real estate loan investments. These fees are then recognized as revenue over the lives of the applicable loans as adjustments of yield using the effective interest method. The total fees received are additive adjustments in the calculation of AFFO. Correspondingly, the amortized non-cash income is a deduction in the calculation of AFFO. Over the lives of certain loans, we accrue additional interest amounts that become due to us at the time of repayment of the loan or refinancing of the property, or when the property is sold. This non-cash interest income is subtracted from Core FFO in our calculation of AFFO. The amount of additional accrued interest becomes an additive adjustment to FFO once received from the borrower (see note 10). |
10) |
This adjustment reflects the receipt during the periods presented of additional interest income (described in note 9 above) which was earned and accrued on various real estate loans prior to those periods and previously deducted in our calculation of AFFO. |
11) |
This adjustment removes the non-cash amortization of costs incurred to induce tenants to lease space in our office buildings and grocery-anchored shopping centers. |
12) |
Effective March 6, 2020, our purchase option on the Falls at Forsyth multifamily community was extinguished in conjunction with the loan repayment; effective January 1, 2019, we terminated our purchase options on the Sanibel Straits, Newbergh, Wiregrass and Cameron Square multifamily communities and the Solis Kennesaw student housing property; on May 7, 2018, we terminated our purchase options on the Bishop Street multifamily community and the Haven Charlotte student housing property, both of which are (or were) partially supported by real estate loan investments held by us. In exchange, we arranged to receive termination fees aggregating approximately $17.2 million from the developers, which are recorded as revenue over the period beginning on the date of election until the earlier of (i) the maturity of the real estate loan investment and (ii) the sale of the property. The receipt of the cash termination fees are an additive adjustment in our calculation of AFFO and the removal of non-cash revenue from the recognition of the termination fees are a reduction to Core FFO in our calculation of AFFO; both of these adjustments are presented in a single net number within this line. For all periods presented, we had recognized termination fee revenues in excess of cash received, resulting in the negative adjustments shown to Core FFO in our calculation of AFFO. |
13) |
This adjustment reflects straight-line rent adjustments and the reversal of the non-cash amortization of below-market and above-market lease intangibles, which were recognized in conjunction with our acquisitions and which are amortized over the estimated average remaining lease terms from the acquisition date for multifamily communities and over the remaining lease terms for grocery-anchored shopping center assets and office buildings. At September 30, 2020, the balance of unamortized below-market lease intangibles was approximately $54.5 million, which will be recognized over a weighted average remaining lease period of approximately 8.7 years. |
14) |
This adjustment removes the non-cash amortization of deferred revenue recorded by us in conjunction with Company-owned lessee-funded tenant improvements in our office buildings. |
15) |
We deduct from Core FFO normally recurring capital expenditures that are necessary to maintain our assets' revenue streams in the calculation of AFFO. This adjustment also deducts from Core FFO capitalized amounts for third party costs during the period to originate or renew leases in our grocery-anchored shopping centers and office buildings. This adjustment includes approximately $28,000 and $100,000 of recurring capitalized expenditures incurred at our corporate offices during the three-month and nine-month periods ended September 30, 2020, respectively. No adjustment is made in the calculation of AFFO for nonrecurring capital expenditures. See Capital Expenditures, Grocery-Anchored Shopping Center Portfolio, and Office Buildings Portfolio sections for definitions of these terms. |
See Definitions of Non-GAAP Measures. |
||||||||
Preferred Apartment Communities, Inc. |
||||||||
Condensed Consolidated Balance Sheets |
||||||||
(Unaudited) |
||||||||
(In thousands, except per-share par values) |
September 30, |
December 31, |
||||||
Assets |
||||||||
Real estate |
||||||||
Land |
$ |
657,286 |
$ |
635,757 |
||||
Building and improvements |
3,361,174 |
3,256,223 |
||||||
Tenant improvements |
175,400 |
167,275 |
||||||
Furniture, fixtures, and equipment |
357,010 |
323,381 |
||||||
Construction in progress |
23,677 |
11,893 |
||||||
Gross real estate |
4,574,547 |
4,394,529 |
||||||
Less: accumulated depreciation |
(542,161) |
(421,551) |
||||||
Net real estate |
4,032,386 |
3,972,978 |
||||||
Real estate loan investments, net |
307,033 |
325,790 |
||||||
Real estate loan investments to related parties, net |
2,568 |
23,692 |
||||||
Total real estate and real estate loan investments, net |
4,341,987 |
4,322,460 |
||||||
Cash and cash equivalents |
30,337 |
94,381 |
||||||
Restricted cash |
65,690 |
42,872 |
||||||
Notes receivable |
2,894 |
17,079 |
||||||
Note receivable and revolving lines of credit due from related parties |
9,011 |
24,838 |
||||||
Accrued interest receivable on real estate loans |
24,784 |
25,755 |
||||||
Acquired intangible assets, net of amortization |
133,297 |
154,803 |
||||||
Deferred loan costs on Revolving Line of Credit, net of amortization |
879 |
1,286 |
||||||
Deferred offering costs |
4,721 |
2,147 |
||||||
Tenant lease inducements, net |
18,655 |
19,607 |
||||||
Investment in unconsolidated joint venture |
6,851 |
— |
||||||
Tenant receivables and other assets |
91,956 |
65,332 |
||||||
Total assets |
$ |
4,731,062 |
$ |
4,770,560 |
||||
Liabilities and equity |
||||||||
Liabilities |
||||||||
Mortgage notes payable, net of deferred loan costs and mark-to-market adjustment |
$ |
2,765,793 |
$ |
2,567,022 |
||||
Revolving line of credit |
33,000 |
— |
||||||
Term note payable, net of deferred loan costs |
— |
69,489 |
||||||
Unearned purchase option termination fees |
1,164 |
2,859 |
||||||
Deferred revenue |
36,909 |
39,722 |
||||||
Accounts payable and accrued expenses |
66,283 |
42,191 |
||||||
Deferred liability to Former Manager |
23,373 |
— |
||||||
Contingent liability due to Former Manager |
14,867 |
— |
||||||
Accrued interest payable |
8,538 |
8,152 |
||||||
Dividends and partnership distributions payable |
20,971 |
23,519 |
||||||
Acquired below market lease intangibles, net of amortization |
54,483 |
62,611 |
||||||
Prepaid rent, security deposits and other liabilities |
34,823 |
20,879 |
||||||
Total liabilities |
3,060,204 |
2,836,444 |
||||||
Commitments and contingencies |
||||||||
Equity |
||||||||
Stockholders' equity |
||||||||
Series A Redeemable Preferred Stock, $0.01 par value per share; 3,050 shares authorized; 2,226 and 2,161 shares |
||||||||
issued; 1,991 and 2,028 shares outstanding at September 30, 2020 and December 31, 2019, respectively |
20 |
20 |
||||||
Series A1 Redeemable Preferred Stock, $0.01 par value per share; up to 1,000 shares authorized; |
||||||||
103 and 5 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively |
— |
— |
||||||
Series M Redeemable Preferred Stock, $0.01 par value per share; 500 shares authorized; 106 shares |
||||||||
issued; 91 and 103 shares outstanding at September 30, 2020 and December 31, 2019, respectively |
1 |
1 |
||||||
Series M1 Redeemable Preferred Stock, $0.01 par value per share; up to 1,000 shares authorized; |
||||||||
13 and zero shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively |
— |
— |
||||||
Common Stock, $0.01 par value per share; 400,067 shares authorized; 49,901 and 46,443 shares issued |
||||||||
and outstanding at September 30, 2020 and December 31, 2019, respectively |
499 |
464 |
||||||
Additional paid-in capital |
1,882,149 |
1,938,057 |
||||||
Accumulated (deficit) earnings |
(210,218) |
(7,244) |
||||||
Total stockholders' equity |
1,672,451 |
1,931,298 |
||||||
Non-controlling interest |
(1,593) |
2,818 |
||||||
Total equity |
1,670,858 |
1,934,116 |
||||||
Total liabilities and equity |
$ |
4,731,062 |
$ |
4,770,560 |
Preferred Apartment Communities, Inc. |
||||||||
Consolidated Statements of Cash Flows |
||||||||
(Unaudited) |
||||||||
Nine-month periods ended |
||||||||
(In thousands) |
2020 |
2019 |
||||||
Operating activities: |
||||||||
Net (loss) income |
$ |
(199,075) |
$ |
(6,094) |
||||
Reconciliation of net (loss) income to net cash provided by operating activities: |
||||||||
Depreciation and amortization expense |
153,096 |
137,191 |
||||||
Amortization of above and below market leases |
(6,145) |
(4,525) |
||||||
Deferred revenues and other noncash revenues amortization |
(3,710) |
(4,720) |
||||||
Purchase option termination fee amortization |
(4,896) |
(6,900) |
||||||
Amortization of equity compensation, lease incentives and other non-cash expenses |
3,027 |
2,414 |
||||||
Deferred loan cost amortization |
5,177 |
4,752 |
||||||
Non-cash accrued interest income on real estate loan investments |
(9,208) |
(10,206) |
||||||
Receipt of accrued interest income on real estate loans |
10,179 |
2,318 |
||||||
Gains on sales of real estate loan investments, net |
— |
(751) |
||||||
Gain on sale of real estate loan and land condemnation |
(3,789) |
— |
||||||
Loss from unconsolidated joint ventures |
120 |
— |
||||||
Cash received for purchase option terminations |
4,800 |
1,330 |
||||||
Loss on extinguishment of debt |
6,674 |
84 |
||||||
Non-cash payment of interest on related party line of credit |
— |
(637) |
||||||
Mortgage interest received from consolidated VIEs |
— |
(13,398) |
||||||
Mortgage interest paid to other participants of consolidated VIEs |
— |
13,398 |
||||||
Increase in provision for expected credit losses |
5,463 |
— |
||||||
Changes in operating assets and liabilities: |
||||||||
(Increase) in tenant receivables and other assets |
(15,769) |
(12,379) |
||||||
(Increase) in tenant lease incentives |
(382) |
(570) |
||||||
Increase in accounts payable and accrued expenses |
46,821 |
22,399 |
||||||
Increase in deferred liability to Former Manager |
22,851 |
— |
||||||
Increase in contingent liability |
15,013 |
— |
||||||
Decrease in accrued interest, prepaid rents and other liabilities |
(249) |
730 |
||||||
Net cash provided by (used in) operating activities |
29,998 |
124,436 |
||||||
Investing activities: |
||||||||
Investments in real estate loans |
(42,193) |
(74,668) |
||||||
Repayments of real estate loans |
71,146 |
— |
||||||
Notes receivable issued |
(793) |
(5,399) |
||||||
Notes receivable repaid |
15,012 |
2,169 |
||||||
Notes receivable issued and draws on lines of credit by related parties |
(9,624) |
(30,434) |
||||||
Repayments of notes receivable and lines of credit by related parties |
4,546 |
26,222 |
||||||
Sale of real estate loan investment |
— |
747 |
||||||
Origination fees received on real estate loan investments |
882 |
1,347 |
||||||
Origination fees paid to Former Manager on real estate loan investments |
— |
(674) |
||||||
Purchases of mortgage backed securities (K program), net of acquisition costs |
— |
(18,656) |
||||||
Mortgage principal received from consolidated VIEs |
— |
5,024 |
||||||
Purchases of mortgage-backed securities |
— |
(12,278) |
||||||
Proceeds from sales of mortgage-backed securities |
— |
53,445 |
||||||
Acquisition of properties |
(185,970) |
(442,415) |
||||||
Proceeds from sale of interest in unconsolidated joint venture |
19,221 |
— |
||||||
Return of capital from investment in unconsolidated joint venture |
12,250 |
— |
||||||
Proceeds from land condemnation |
787 |
— |
||||||
Receipt of insurance proceeds for capital improvements |
— |
746 |
||||||
Additions to real estate assets - improvements |
(39,158) |
(34,251) |
||||||
Investment in property development |
(50) |
— |
||||||
Deposits paid on acquisitions |
(1,227) |
(952) |
||||||
Net cash used in investing activities |
(155,171) |
(530,027) |
||||||
Preferred Apartment Communities, Inc. |
||||||||
Consolidated Statements of Cash Flows - continued |
||||||||
(Unaudited) |
||||||||
Nine-month periods ended |
||||||||
(In thousands) |
2020 |
2019 |
||||||
Financing activities: |
||||||||
Proceeds from mortgage notes payable |
377,749 |
329,905 |
||||||
Repayments of mortgage notes payable |
(173,409) |
(106,728) |
||||||
Payments for deposits and other mortgage loan costs |
(10,911) |
(6,738) |
||||||
Debt prepayment and other debt extinguishment costs |
(5,733) |
— |
||||||
Payments to real estate loan participants |
— |
(5,223) |
||||||
Proceeds from lines of credit |
321,000 |
240,200 |
||||||
Payments on lines of credit |
(288,000) |
(247,200) |
||||||
Repayment of Term Loan |
(70,000) |
— |
||||||
Mortgage principal paid to other participants of consolidated VIEs |
— |
(5,024) |
||||||
Proceeds from repurchase agreements |
— |
4,857 |
||||||
Payments for repurchase agreements |
— |
(4,857) |
||||||
Proceeds from sales of preferred stock and Units, net of offering costs and redemptions |
159,096 |
380,016 |
||||||
Proceeds from sales of Common Stock |
4,522 |
— |
||||||
Proceeds from exercises of Warrants |
24 |
9,875 |
||||||
Payments for redemptions of preferred stock |
(82,003) |
(7,995) |
||||||
Common Stock dividends paid |
(33,271) |
(33,617) |
||||||
Preferred stock dividends and Class A Unit distributions paid |
(104,428) |
(81,025) |
||||||
Payments for deferred offering costs |
(10,669) |
(3,386) |
||||||
Contributions from non-controlling interests |
99 |
2,050 |
||||||
Distributions to non-controlling interests |
(119) |
— |
||||||
Net cash provided by financing activities |
83,947 |
465,110 |
||||||
Net (decrease) increase in cash, cash equivalents and restricted cash |
(41,226) |
59,519 |
||||||
Cash, cash equivalents and restricted cash, beginning of year |
137,253 |
87,690 |
||||||
Cash, cash equivalents and restricted cash, end of period |
$ |
96,027 |
$ |
147,209 |
Real Estate Loan Investments |
||||||||||||||||||||
The following tables present details pertaining to our portfolio of fixed rate, interest-only real estate loan investments. |
||||||||||||||||||||
Project/Property |
Location |
Maturity |
Optional |
Total loan |
Carrying amount (1) as of |
Current / |
||||||||||||||
September 30, |
December 31, |
|||||||||||||||||||
Residential Properties: |
(in thousands) |
|||||||||||||||||||
Palisades |
Northern VA |
5/17/2021 |
N/A |
$ |
— |
$ |
— |
$ |
17,250 |
(2) |
||||||||||
Wiregrass |
Tampa, FL |
N/A |
N/A |
— |
— |
14,976 |
— |
|||||||||||||
Wiregrass Capital |
Tampa, FL |
N/A |
N/A |
— |
— |
4,240 |
— |
|||||||||||||
Berryessa |
San Jose, CA |
2/13/2021 |
2/13/2023 |
137,616 |
123,533 |
115,819 |
8.5 / 3 |
|||||||||||||
The Anson |
Nashville, TN |
11/24/2021 |
11/24/2023 |
6,240 |
6,240 |
6,240 |
8.5 / 4.5 |
|||||||||||||
The Anson Capital |
Nashville, TN |
11/24/2021 |
11/24/2023 |
5,659 |
4,736 |
4,440 |
8.5 / 4.5 |
|||||||||||||
Sanibel Straights |
Fort Myers, FL |
2/3/2021 |
2/3/2022 |
9,416 |
9,416 |
8,846 |
8.5 / 5.5 |
|||||||||||||
Sanibel Straights Capital |
Fort Myers, FL |
2/3/2021 |
2/3/2022 |
6,193 |
6,193 |
5,930 |
8.5 / 5.5 |
|||||||||||||
Falls at Forsyth |
Atlanta, GA |
N/A |
N/A |
— |
— |
21,513 |
— |
|||||||||||||
Newbergh |
Atlanta, GA |
1/31/2021 |
1/31/2022 |
11,749 |
11,749 |
11,699 |
8.5 / 5.5 |
|||||||||||||
Newbergh Capital |
Atlanta, GA |
1/31/2021 |
1/31/2022 |
6,176 |
6,176 |
5,653 |
8.5 / 5.5 |
|||||||||||||
V & Three |
Charlotte, NC |
8/15/2021 |
8/15/2022 |
10,336 |
10,335 |
10,336 |
8.5 / 5 |
|||||||||||||
V & Three Capital |
Charlotte, NC |
8/18/2021 |
8/18/2022 |
7,338 |
7,008 |
6,571 |
8.5 / 5 |
|||||||||||||
Cameron Square |
Alexandria, VA |
10/11/2021 |
10/11/2023 |
21,340 |
19,887 |
18,582 |
8.5 / 3 |
|||||||||||||
Cameron Square Capital |
Alexandria, VA |
10/11/2021 |
10/11/2023 |
8,850 |
8,783 |
8,235 |
8.5 / 3 |
|||||||||||||
Southpoint |
Fredericksburg, VA |
2/28/2022 |
2/28/2024 |
7,348 |
7,348 |
7,348 |
8.5 / 4 |
|||||||||||||
Southpoint Capital |
Fredericksburg, VA |
2/28/2022 |
2/28/2024 |
4,962 |
4,527 |
4,245 |
8.5 / 4 |
|||||||||||||
E-Town |
Jacksonville, FL |
6/14/2022 |
6/14/2023 |
16,697 |
15,519 |
14,550 |
8.5 / 3.5 |
|||||||||||||
Vintage |
Destin, FL |
3/24/2022 |
3/24/2024 |
10,763 |
9,529 |
8,932 |
8.5 / 4 |
|||||||||||||
Hidden River II |
Tampa, FL |
10/11/2022 |
10/11/2024 |
4,462 |
4,462 |
3,012 |
8.5 / 3.5 |
|||||||||||||
Hidden River II Capital |
Tampa, FL |
10/11/2022 |
10/11/2024 |
2,763 |
2,408 |
2,258 |
8.5 / 3.5 |
|||||||||||||
Kennesaw Crossing |
Atlanta, GA |
9/1/2023 |
9/1/2024 |
14,810 |
12,746 |
7,616 |
8.5 / 5.5 |
|||||||||||||
Vintage Horizon West |
Orlando, FL |
10/11/2022 |
10/11/2024 |
10,900 |
8,826 |
8,275 |
8.5 / 5.5 |
|||||||||||||
Chestnut Farms |
Charlotte, NC |
2/28/2025 |
N/A |
13,372 |
8,968 |
— |
8.5 / 5.5 |
|||||||||||||
Vintage Jones Franklin |
Raleigh, NC |
11/14/2023 |
5/14/2025 |
10,000 |
3,251 |
— |
8.5 / 5.5 |
|||||||||||||
Solis Cumming Town Center |
Atlanta, GA |
9/3/2024 |
9/3/2026 |
20,681 |
1,983 |
— |
8.5 / 5.5 |
|||||||||||||
Haven 12 |
Starkville, MS |
11/30/2020 |
N/A |
6,116 |
6,116 |
6,116 |
8.5 / 0 |
|||||||||||||
Solis Kennesaw II |
Atlanta, GA |
5/5/2022 |
5/5/2024 |
13,613 |
13,227 |
12,489 |
8.5 / 4 |
|||||||||||||
New Market Properties: |
||||||||||||||||||||
Dawson Marketplace |
Atlanta, GA |
N/A |
N/A |
— |
— |
12,857 |
— |
|||||||||||||
Office property: |
||||||||||||||||||||
8West |
Atlanta, GA |
11/29/2022 |
11/29/2024 |
19,193 |
10,663 |
4,554 |
8.5 / 5 |
|||||||||||||
$ |
386,593 |
323,629 |
352,582 |
|||||||||||||||||
Unamortized loan origination fees |
(1,567) |
(1,476) |
||||||||||||||||||
Allowances for expected loan losses and doubtful accounts |
(12,461) |
(1,624) |
||||||||||||||||||
Carrying amount |
$ |
309,601 |
$ |
349,482 |
||||||||||||||||
(1) Carrying amounts presented per loan are amounts drawn, exclusive of deferred fee revenue. |
||||||||||||||||||||
(2) On July 31, 2020, we received approximately $18.7 million in full satisfaction of the principal and all interest due on the loan. |
We hold options or rights of first offer, but not obligations, to purchase some of the properties which are partially financed by our real estate loan investments. Certain option purchase prices may be negotiated at the time of the loan closing and are to be calculated based upon market cap rates at the time of exercise of the purchase option, with discounts up to 15 basis points (if any), depending on the loan. As of September 30, 2020, potential property acquisitions and units from projects in our real estate loan investment portfolio consisted of:
Total units |
Purchase option window |
||||||||
Project/Property |
Location |
completion (1) |
Begin |
End |
|||||
Residential properties: |
|||||||||
V & Three |
Charlotte, NC |
338 |
S + 90 days (2) |
S + 150 days (2) |
|||||
The Anson |
Nashville, TN |
301 |
S + 90 days (2) |
S + 150 days (2) |
|||||
Southpoint |
Fredericksburg, VA |
240 |
S + 90 days (2) |
S + 150 days (2) |
|||||
E-Town |
Jacksonville, FL |
332 |
S + 90 days (3) |
S + 150 days (3) |
|||||
Vintage |
Destin, FL |
282 |
(4) |
(4) |
|||||
Hidden River II |
Tampa, FL |
204 |
S + 90 days (2) |
S + 150 days (2) |
|||||
Kennesaw Crossing |
Atlanta, GA |
250 |
(5) |
(5) |
|||||
Vintage Horizon West |
Orlando, FL |
340 |
(4) |
(4) |
|||||
Solis Chestnut Farm |
Charlotte, NC |
256 |
(5) |
(5) |
|||||
Vintage Jones Franklin |
Raleigh, NC |
277 |
(4) |
(4) |
|||||
Solis Kennesaw II |
Atlanta, GA |
175 |
(6) |
(6) |
|||||
Solis Cumming Town Center |
Atlanta, GA |
320 |
(5) |
(5) |
|||||
Office property: |
|||||||||
8West |
Atlanta, GA |
(7) |
(7) |
(7) |
|||||
3,315 |
|||||||||
(1) We evaluate each project individually and we make no assurance that we will acquire any of the underlying properties from our real estate loan investment portfolio. |
|||||||||
(2) The option period window begins and ends at the number of days indicated beyond the achievement of a 93% physical occupancy rate by the underlying property. |
|||||||||
(3) The option period window begins on the earlier of June 21, 2024 and the number of days indicated beyond the achievement of a 93% physical occupancy rate by the underlying property. |
|||||||||
(4) The option period window begins on the later of one year following receipt of final certificate of occupancy or 90 days beyond the achievement of a 93% physical occupancy rate by the underlying property and ends 60 days beyond the option period beginning date. |
|||||||||
(5) We hold a right of first offer on the property. |
|||||||||
(6) The option period begins on October 1 of the second academic year following project completion and ends on the following December 31. The developer may elect to expedite the option period to begin December 1, 2020 and end on December 31, 2020. |
|||||||||
(7) The project plans are for the construction of a class A office building consisting of approximately 195,000 rentable square feet; our purchase option window opens 90 days following the achievement of 90% lease commencement and ends on November 30, 2024 (subject to adjustment). Our purchase option is at the to-be-agreed-upon market value. In the event the property is sold to a third party, we would be due a fee based on a minimum multiple of 1.15 times the total commitment amount of the real estate loan investment, less the amounts actually paid by the borrower, up to and including payment of accrued interest and repayment of principal at the time of the sale. |
Mortgage Indebtedness |
||||||||||||||||||
The following table presents certain details regarding our mortgage notes payable: |
||||||||||||||||||
Principal balance as of |
||||||||||||||||||
Acquisition/ |
September 30, |
December 31, |
Maturity |
Interest |
Basis point |
Interest only |
||||||||||||
Multifamily communities: |
(in thousands) |
|||||||||||||||||
Summit Crossing |
10/31/2017 |
$ |
37,115 |
$ |
37,651 |
11/1/2024 |
3.99 |
% |
Fixed rate |
N/A |
||||||||
Summit Crossing II |
6/30/2020 |
20,700 |
13,221 |
7/1/2030 |
2.94 |
% |
278 |
7/31/2022 |
||||||||||
Vineyards |
9/26/2014 |
32,877 |
33,382 |
10/1/2021 |
3.68 |
% |
Fixed rate |
N/A |
||||||||||
Avenues at Cypress |
6/30/2020 |
28,366 |
20,704 |
7/1/2027 |
2.96 |
% |
Fixed rate |
7/31/2022 |
||||||||||
Avenues at Northpointe |
6/29/2020 |
33,546 |
26,313 |
7/1/2027 |
2.79 |
% |
Fixed rate |
7/31/2022 |
||||||||||
Venue at Lakewood Ranch |
6/30/2020 |
36,555 |
28,076 |
7/1/2030 |
2.99 |
% |
Fixed rate |
7/31/2022 |
||||||||||
Aster at Lely Resort |
6/29/2020 |
50,400 |
31,094 |
7/1/2030 |
2.95 |
% |
Fixed rate |
7/31/2022 |
||||||||||
CityPark View |
6/25/2020 |
29,000 |
20,089 |
7/1/2030 |
2.75 |
% |
Fixed rate |
7/31/2023 |
||||||||||
Avenues at Creekside |
7/31/2015 |
38,251 |
38,871 |
8/1/2024 |
1.76 |
% |
160 |
N/A |
||||||||||
Citi Lakes |
7/29/2019 |
40,517 |
41,079 |
8/1/2029 |
3.66 |
% |
Fixed rate |
N/A |
||||||||||
Stone Creek |
6/22/2017 |
19,539 |
19,800 |
7/1/2052 |
3.22 |
% |
Fixed rate |
N/A |
||||||||||
Lenox Village Town Center |
2/28/2019 |
38,335 |
38,813 |
3/1/2029 |
4.34 |
% |
Fixed rate |
N/A |
||||||||||
Retreat at Lenox |
12/21/2015 |
16,844 |
17,114 |
1/1/2023 |
4.04 |
% |
Fixed rate |
N/A |
||||||||||
Overton Rise |
2/1/2016 |
37,818 |
38,428 |
8/1/2026 |
3.98 |
% |
Fixed rate |
N/A |
||||||||||
Village at Baldwin Park |
7/31/2020 |
69,881 |
70,607 |
1/1/2054 |
3.59 |
% |
Fixed rate |
N/A |
||||||||||
Crosstown Walk |
6/30/2020 |
46,500 |
30,246 |
7/1/2027 |
2.92 |
% |
Fixed rate |
7/31/2022 |
||||||||||
525 Avalon Park |
6/15/2017 |
63,580 |
64,519 |
7/1/2024 |
3.98 |
% |
Fixed rate |
N/A |
||||||||||
City Vista |
7/1/2016 |
33,126 |
33,674 |
7/1/2026 |
3.68 |
% |
Fixed rate |
N/A |
||||||||||
Sorrel |
8/24/2016 |
30,921 |
31,449 |
9/1/2023 |
3.44 |
% |
Fixed rate |
N/A |
||||||||||
Citrus Village |
7/10/2020 |
40,900 |
28,796 |
8/1/2027 |
2.95 |
% |
Fixed rate |
8/31/2022 |
||||||||||
Retreat at Greystone |
11/21/2017 |
33,597 |
34,053 |
12/1/2024 |
4.31 |
% |
Fixed rate |
N/A |
||||||||||
Founders Village |
3/31/2017 |
29,781 |
30,202 |
4/1/2027 |
4.31 |
% |
Fixed rate |
N/A |
||||||||||
Claiborne Crossing |
4/26/2017 |
25,615 |
25,948 |
6/1/2054 |
2.89 |
% |
Fixed rate |
N/A |
||||||||||
Luxe at Lakewood Ranch |
7/26/2017 |
37,112 |
37,662 |
8/1/2027 |
3.93 |
% |
Fixed rate |
N/A |
||||||||||
Adara at Overland Park |
9/27/2017 |
30,178 |
30,624 |
4/1/2028 |
3.90 |
% |
Fixed rate |
N/A |
||||||||||
Aldridge at Town Village |
10/31/2017 |
36,066 |
36,569 |
11/1/2024 |
4.19 |
% |
Fixed rate |
N/A |
||||||||||
Reserve at Summit Crossing |
9/29/2017 |
18,992 |
19,276 |
10/1/2024 |
3.87 |
% |
Fixed rate |
N/A |
||||||||||
Overlook at Crosstown Walk |
11/21/2017 |
21,144 |
21,450 |
12/1/2024 |
3.95 |
% |
Fixed rate |
N/A |
||||||||||
Colony at Centerpointe |
12/20/2017 |
31,616 |
32,120 |
10/1/2026 |
3.68 |
% |
Fixed rate |
N/A |
||||||||||
Lux at Sorrel |
1/9/2018 |
30,022 |
30,474 |
2/1/2030 |
3.91 |
% |
Fixed rate |
N/A |
||||||||||
Green Park |
2/28/2018 |
37,973 |
38,525 |
3/10/2028 |
4.09 |
% |
Fixed rate |
N/A |
||||||||||
The Lodge at Hidden River |
9/27/2018 |
40,384 |
40,903 |
10/1/2028 |
4.32 |
% |
Fixed rate |
N/A |
||||||||||
Vestavia Reserve |
11/9/2018 |
36,671 |
37,130 |
12/1/2030 |
4.40 |
% |
Fixed rate |
N/A |
||||||||||
CityPark View South |
11/15/2018 |
23,479 |
23,767 |
6/1/2029 |
4.51 |
% |
Fixed rate |
N/A |
||||||||||
Artisan at Viera |
8/8/2019 |
39,287 |
39,824 |
9/1/2029 |
3.93 |
% |
Fixed rate |
N/A |
||||||||||
Five Oaks at Westchase |
10/17/2019 |
30,978 |
31,448 |
11/1/2031 |
3.27 |
% |
Fixed rate |
N/A |
||||||||||
Horizon at Wiregrass Ranch |
4/23/2020 |
51,636 |
— |
5/1/2030 |
2.90 |
% |
Fixed rate |
N/A |
||||||||||
Parkside at the Beach |
4/30/2020 |
45,037 |
— |
5/1/2030 |
2.95 |
% |
Fixed rate |
N/A |
||||||||||
Total multifamily communities |
1,344,339 |
1,173,901 |
||||||||||||||||
Grocery-anchored shopping centers: |
||||||||||||||||||
Spring Hill Plaza |
9/17/2019 |
8,016 |
8,167 |
10/1/2031 |
3.72 |
% |
Fixed rate |
N/A |
||||||||||
Parkway Town Centre |
9/17/2019 |
7,917 |
8,067 |
10/1/2031 |
3.72 |
% |
Fixed rate |
N/A |
||||||||||
Woodstock Crossing |
8/8/2014 |
2,833 |
2,877 |
9/1/2021 |
4.71 |
% |
Fixed rate |
N/A |
||||||||||
Deltona Landings |
8/16/2019 |
6,178 |
6,289 |
9/1/2029 |
4.18 |
% |
Fixed rate |
N/A |
||||||||||
Powder Springs |
8/13/2019 |
7,800 |
7,951 |
9/1/2029 |
3.65 |
% |
Fixed rate |
(3) |
||||||||||
Barclay Crossing |
8/16/2019 |
6,124 |
6,233 |
9/1/2029 |
4.18 |
% |
Fixed rate |
N/A |
||||||||||
Parkway Centre |
8/16/2019 |
4,450 |
4,530 |
9/1/2029 |
4.18 |
% |
Fixed rate |
N/A |
||||||||||
The Market at Salem Cove |
10/6/2014 |
8,936 |
9,075 |
11/1/2024 |
4.21 |
% |
Fixed rate |
N/A |
||||||||||
Independence Square |
8/27/2015 |
11,253 |
11,455 |
9/1/2022 |
3.93 |
% |
Fixed rate |
N/A |
||||||||||
Royal Lakes Marketplace |
4/12/2019 |
9,403 |
9,572 |
5/1/2029 |
4.29 |
% |
Fixed rate |
N/A |
||||||||||
The Overlook at Hamilton Place |
12/22/2015 |
19,195 |
19,509 |
1/1/2026 |
4.19 |
% |
Fixed rate |
N/A |
||||||||||
Summit Point |
10/30/2015 |
11,213 |
11,494 |
11/1/2022 |
3.57 |
% |
Fixed rate |
N/A |
||||||||||
East Gate Shopping Center |
4/29/2016 |
5,158 |
5,277 |
5/1/2026 |
3.97 |
% |
Fixed rate |
N/A |
||||||||||
Fury's Ferry |
4/29/2016 |
5,959 |
6,096 |
5/1/2026 |
3.97 |
% |
Fixed rate |
N/A |
||||||||||
Rosewood Shopping Center |
4/29/2016 |
4,002 |
4,095 |
5/1/2026 |
3.97 |
% |
Fixed rate |
N/A |
||||||||||
Southgate Village |
4/29/2016 |
7,115 |
7,279 |
5/1/2026 |
3.97 |
% |
Fixed rate |
N/A |
||||||||||
The Market at Victory Village |
5/16/2016 |
8,792 |
8,911 |
9/11/2024 |
4.40 |
% |
Fixed rate |
N/A |
||||||||||
Wade Green Village |
4/7/2016 |
7,530 |
7,655 |
5/1/2026 |
4.00 |
% |
Fixed rate |
N/A |
||||||||||
Lakeland Plaza |
7/15/2016 |
26,842 |
27,459 |
8/1/2026 |
3.85 |
% |
Fixed rate |
N/A |
||||||||||
University Palms |
8/8/2016 |
12,129 |
12,421 |
9/1/2026 |
3.45 |
% |
Fixed rate |
N/A |
||||||||||
Cherokee Plaza |
4/12/2019 |
24,427 |
24,867 |
5/1/2027 |
4.28 |
% |
Fixed rate |
N/A |
||||||||||
Sandy Plains Exchange |
8/8/2016 |
8,473 |
8,676 |
9/1/2026 |
3.45 |
% |
Fixed rate |
N/A |
||||||||||
Thompson Bridge Commons |
8/8/2016 |
11,326 |
11,599 |
9/1/2026 |
3.45 |
% |
Fixed rate |
N/A |
||||||||||
Heritage Station |
8/8/2016 |
8,383 |
8,585 |
9/1/2026 |
3.45 |
% |
Fixed rate |
N/A |
||||||||||
Oak Park Village |
8/8/2016 |
8,651 |
8,859 |
9/1/2026 |
3.45 |
% |
Fixed rate |
N/A |
||||||||||
Shoppes of Parkland |
8/8/2016 |
15,489 |
15,702 |
9/1/2023 |
4.67 |
% |
Fixed rate |
N/A |
||||||||||
Champions Village |
10/18/2016 |
27,400 |
27,400 |
11/1/2021 |
3.25 |
% |
300 |
(4) |
11/1/2021 |
|||||||||
Castleberry-Southard |
4/21/2017 |
10,791 |
10,959 |
5/1/2027 |
3.99 |
% |
Fixed rate |
N/A |
||||||||||
Rockbridge Village |
6/6/2017 |
13,383 |
13,597 |
7/5/2027 |
3.73 |
% |
Fixed rate |
N/A |
||||||||||
Irmo Station |
7/26/2017 |
9,829 |
10,038 |
8/1/2030 |
3.94 |
% |
Fixed rate |
N/A |
||||||||||
Maynard Crossing |
8/25/2017 |
17,079 |
17,449 |
9/1/2032 |
3.74 |
% |
Fixed rate |
N/A |
||||||||||
Woodmont Village |
9/8/2017 |
8,153 |
8,320 |
10/1/2027 |
4.13 |
% |
Fixed rate |
N/A |
||||||||||
West Town Market |
9/22/2017 |
8,321 |
8,503 |
10/1/2025 |
3.65 |
% |
Fixed rate |
N/A |
||||||||||
Crossroads Market |
12/5/2017 |
17,746 |
18,112 |
1/1/2030 |
3.95 |
% |
Fixed rate |
N/A |
||||||||||
Anderson Central |
3/16/2018 |
11,320 |
11,539 |
4/1/2028 |
4.32 |
% |
Fixed rate |
N/A |
||||||||||
Greensboro Village |
5/22/2018 |
8,093 |
8,250 |
6/1/2028 |
4.20 |
% |
Fixed rate |
N/A |
||||||||||
Governors Towne Square |
5/22/2018 |
10,768 |
10,976 |
6/1/2028 |
4.20 |
% |
Fixed rate |
N/A |
||||||||||
Conway Plaza |
6/29/2018 |
9,419 |
9,549 |
7/5/2028 |
4.29 |
% |
Fixed rate |
N/A |
||||||||||
Brawley Commons |
7/6/2018 |
17,632 |
17,963 |
8/1/2028 |
4.36 |
% |
Fixed rate |
N/A |
||||||||||
Hollymead Town Center |
12/21/2018 |
26,296 |
26,758 |
1/1/2029 |
4.64 |
% |
Fixed rate |
N/A |
||||||||||
Gayton Crossing |
1/17/2019 |
17,379 |
17,679 |
2/1/2029 |
4.71 |
% |
Fixed rate |
N/A |
||||||||||
Free State Shopping Center |
5/28/2019 |
45,763 |
46,391 |
6/1/2029 |
3.99 |
% |
Fixed rate |
N/A |
||||||||||
Polo Grounds Mall |
6/12/2019 |
13,047 |
13,227 |
7/1/2034 |
3.93 |
% |
Fixed rate |
N/A |
||||||||||
Disston Plaza |
6/12/2019 |
17,661 |
17,905 |
7/1/2034 |
3.93 |
% |
Fixed rate |
N/A |
||||||||||
Fairfield Shopping Center |
8/16/2019 |
19,750 |
19,750 |
8/16/2026 |
2.21 |
% |
205 |
8/16/2022 |
||||||||||
Berry Town Center |
11/14/2019 |
11,852 |
12,025 |
12/1/2034 |
3.49 |
% |
Fixed rate |
N/A |
||||||||||
Hanover Shopping Center |
12/19/2019 |
31,417 |
32,000 |
12/19/2026 |
3.62 |
% |
Fixed rate |
N/A |
||||||||||
Wakefield Crossing |
1/29/2020 |
7,777 |
— |
2/1/2032 |
3.66 |
% |
Fixed rate |
N/A |
||||||||||
Total grocery-anchored shopping centers (5) |
618,470 |
621,090 |
||||||||||||||||
Student housing properties: |
||||||||||||||||||
North by Northwest |
6/1/2016 |
30,594 |
31,209 |
10/1/2022 |
4.02 |
% |
Fixed rate |
N/A |
||||||||||
SoL |
10/31/2018 |
35,238 |
35,656 |
11/1/2028 |
4.71 |
% |
Fixed rate |
N/A |
||||||||||
Stadium Village |
10/27/2017 |
44,561 |
45,228 |
11/1/2024 |
3.80 |
% |
Fixed rate |
N/A |
||||||||||
Ursa |
12/18/2017 |
— |
31,400 |
1/5/2020 |
N/A |
N/A |
N/A |
|||||||||||
The Tradition |
5/10/2018 |
30,000 |
30,000 |
6/6/2021 |
5.45 |
% |
375 |
(6) |
6/6/2021 |
|||||||||
Knightshade |
5/31/2018 |
47,125 |
47,125 |
9/1/2025 |
4.09 |
% |
Fixed rate |
9/30/2020 |
||||||||||
The Bloc |
6/27/2018 |
28,966 |
28,966 |
7/9/2021 |
5.25 |
% |
355 |
(7) |
7/9/2021 |
|||||||||
Total student housing properties |
216,484 |
249,584 |
||||||||||||||||
Office buildings: |
||||||||||||||||||
Brookwood Center |
8/29/2016 |
30,124 |
30,716 |
9/10/2031 |
3.52 |
% |
Fixed rate |
N/A |
||||||||||
Galleria 75 |
11/4/2016 |
5,184 |
5,340 |
7/1/2022 |
4.25 |
% |
Fixed rate |
N/A |
||||||||||
Three Ravinia |
12/30/2016 |
115,500 |
115,500 |
1/1/2042 |
4.46 |
% |
Fixed rate |
1/31/2022 |
||||||||||
Westridge at La Cantera |
11/13/2017 |
50,801 |
51,834 |
12/10/2028 |
4.10 |
% |
Fixed rate |
N/A |
||||||||||
Armour Yards |
1/29/2018 |
39,600 |
40,000 |
2/1/2028 |
4.10 |
% |
Fixed rate |
N/A |
||||||||||
150 Fayetteville |
7/31/2018 |
114,243 |
114,400 |
8/10/2028 |
4.27 |
% |
Fixed rate |
9/9/2020 |
||||||||||
Capitol Towers |
12/20/2018 |
123,252 |
124,814 |
1/10/2037 |
4.60 |
% |
Fixed rate |
N/A |
||||||||||
CAPTRUST Tower |
7/25/2019 |
82,650 |
82,650 |
8/1/2029 |
3.61 |
% |
Fixed rate |
7/31/2029 |
||||||||||
Morrocroft Centre |
3/19/2020 |
70,000 |
— |
4/10/2033 |
3.40 |
% |
Fixed rate |
4/10/2025 |
||||||||||
251 Armour Yards (8) |
1/22/2020 |
3,522 |
— |
1/22/2025 |
4.50 |
% |
Fixed rate |
1/21/2023 |
||||||||||
Total office buildings |
634,876 |
565,254 |
||||||||||||||||
Grand total |
2,814,169 |
2,609,829 |
||||||||||||||||
Less: deferred loan costs |
(44,338) |
(38,185) |
||||||||||||||||
Less: below market debt adjustment |
(4,038) |
(4,622) |
||||||||||||||||
Mortgage notes, net |
$ |
2,765,793 |
$ |
2,567,022 |
Footnotes to Mortgage Notes Table |
|
(1) Following the indicated interest only period (where applicable), monthly payments of accrued interest and principal are based on a 25 to 35-year amortization period through the maturity date. |
|
(2) The mortgage instrument was assumed as part of the sales transaction; the 1 Month LIBOR index is capped at 5.0%, resulting in a cap on the combined rate of 6.6%. |
|
(3) The mortgage has interest-only payment terms for the periods of June 1, 2023 through May 1, 2024 and from June 1, 2028 through May 1, 2029. |
|
(4) The interest rate has a floor of 3.25%. |
|
(5) Excludes mortgage debt on the Neapolitan Way grocery-anchored shopping center, which is held in an unconsolidated joint venture. |
|
(6) The interest rate has a floor of 5.45%. |
|
(7) The interest rate has a floor of 5.25%. |
|
(8) A construction loan financing redevelopment of the property. |
Multifamily Communities |
||||||||||||||||
As of September 30, 2020, our multifamily community portfolio consisted of the following properties: |
||||||||||||||||
Three months ended |
||||||||||||||||
Property |
Location |
Number of units |
Average unit size (sq. ft.) |
Average physical occupancy |
Average rent per unit |
|||||||||||
Same-Store Communities: |
||||||||||||||||
Aldridge at Town Village |
Atlanta, GA |
300 |
969 |
96.1 |
% |
$ |
1,409 |
|||||||||
Green Park |
Atlanta, GA |
310 |
985 |
96.7 |
% |
$ |
1,483 |
|||||||||
Overton Rise |
Atlanta, GA |
294 |
1,018 |
97.6 |
% |
$ |
1,593 |
|||||||||
Summit Crossing I |
Atlanta, GA |
345 |
1,034 |
97.6 |
% |
$ |
1,242 |
|||||||||
Summit Crossing II |
Atlanta, GA |
140 |
1,100 |
97.9 |
% |
$ |
1,337 |
|||||||||
The Reserve at Summit Crossing |
Atlanta, GA |
172 |
1,002 |
95.5 |
% |
$ |
1,374 |
|||||||||
Avenues at Cypress |
Houston, TX |
240 |
1,170 |
95.8 |
% |
$ |
1,454 |
|||||||||
Avenues at Northpointe |
Houston, TX |
280 |
1,167 |
95.4 |
% |
$ |
1,408 |
|||||||||
Vineyards |
Houston, TX |
369 |
1,122 |
95.1 |
% |
$ |
1,205 |
|||||||||
Avenues at Creekside |
San Antonio, TX |
395 |
974 |
95.6 |
% |
$ |
1,201 |
|||||||||
Aster at Lely Resort |
Naples, FL |
308 |
1,071 |
94.0 |
% |
$ |
1,438 |
|||||||||
Sorrel |
Jacksonville, FL |
290 |
1,048 |
94.9 |
% |
$ |
1,336 |
|||||||||
Lux at Sorrel |
Jacksonville, FL |
265 |
1,025 |
95.1 |
% |
$ |
1,394 |
|||||||||
525 Avalon Park |
Orlando, FL |
487 |
1,394 |
94.4 |
% |
$ |
1,512 |
|||||||||
Citi Lakes |
Orlando, FL |
346 |
984 |
94.0 |
% |
$ |
1,465 |
|||||||||
Luxe at Lakewood Ranch |
Sarasota, FL |
280 |
1,105 |
96.0 |
% |
$ |
1,492 |
|||||||||
Venue at Lakewood Ranch |
Sarasota, FL |
237 |
1,001 |
92.3 |
% |
$ |
1,536 |
|||||||||
Crosstown Walk |
Tampa, FL |
342 |
1,070 |
96.0 |
% |
$ |
1,334 |
|||||||||
Overlook at Crosstown Walk |
Tampa, FL |
180 |
986 |
96.9 |
% |
$ |
1,404 |
|||||||||
Citrus Village |
Tampa, FL |
296 |
980 |
95.6 |
% |
$ |
1,336 |
|||||||||
Lenox Village |
Nashville, TN |
273 |
906 |
95.5 |
% |
$ |
1,319 |
|||||||||
Regent at Lenox |
Nashville, TN |
18 |
1,072 |
98.1 |
% |
$ |
1,359 |
|||||||||
Retreat at Lenox |
Nashville, TN |
183 |
773 |
96.0 |
% |
$ |
1,254 |
|||||||||
CityPark View |
Charlotte, NC |
284 |
948 |
96.0 |
% |
$ |
1,169 |
|||||||||
CityPark View South |
Charlotte, NC |
200 |
1,005 |
93.7 |
% |
$ |
1,283 |
|||||||||
Colony at Centerpointe |
Richmond, VA |
255 |
1,149 |
98.3 |
% |
$ |
1,383 |
|||||||||
Founders Village |
Williamsburg, VA |
247 |
1,070 |
96.1 |
% |
$ |
1,397 |
|||||||||
Retreat at Greystone |
Birmingham, AL |
312 |
1,100 |
97.0 |
% |
$ |
1,356 |
|||||||||
Vestavia Reserve |
Birmingham, AL |
272 |
1,113 |
97.1 |
% |
$ |
1,561 |
|||||||||
Adara Overland Park |
Kansas City, KS |
260 |
1,116 |
94.6 |
% |
$ |
1,403 |
|||||||||
Claiborne Crossing |
Louisville, KY |
242 |
1,204 |
97.1 |
% |
$ |
1,342 |
|||||||||
City Vista |
Pittsburgh, PA |
272 |
1,023 |
92.4 |
% |
$ |
1,450 |
|||||||||
Total/Average Same-Store Communities |
8,694 |
95.6 |
% |
|||||||||||||
Stabilized Communities: |
||||||||||||||||
Stone Creek |
Houston, TX |
246 |
852 |
94.4 |
% |
$ |
1,203 |
|||||||||
Artisan at Viera |
Melbourne, FL |
259 |
1,070 |
94.3 |
% |
$ |
1,694 |
|||||||||
Village at Baldwin Park |
Orlando, FL |
528 |
1,069 |
94.9 |
% |
$ |
1,677 |
|||||||||
Parkside at the Beach |
Panama City Beach, FL |
288 |
1,041 |
95.5 |
% |
$ |
1,398 |
|||||||||
Lodge at Hidden River |
Tampa, FL |
300 |
980 |
95.4 |
% |
$ |
1,387 |
|||||||||
Five Oaks at Westchase |
Tampa, FL |
218 |
983 |
94.6 |
% |
$ |
1,510 |
|||||||||
Wiregrass Ranch |
Tampa, FL |
392 |
973 |
96.9 |
% |
$ |
1,479 |
|||||||||
Total/Average Stabilized Communities |
2,231 |
95.6 |
% |
|||||||||||||
Total multifamily community units |
10,925 |
|||||||||||||||
For the three-month period ended September 30, 2020, our average same-store multifamily communities' physical occupancy was 95.6%. We calculate average same-store physical occupancy for quarterly periods as the average number of occupied units on the 20th day of each of the trailing three months from the reporting period end date and that have been owned for at least 15 full months as of the end of the first quarter of each year. We exclude the operating results of properties for which construction of adjacent phases has commenced, properties which are undergoing significant capital projects, have sustained significant casualty losses, or are being marketed for sale as of the end of the reporting period. We believe "Same Property" information is useful as it allows both management and investors to gauge our management effectiveness via comparisons of financial and operational results between interim and annual periods for those subsets of multifamily communities owned for current and prior comparative periods.
For the three-month period ended September 30, 2020, our average stabilized physical occupancy was 95.6%. We calculate average stabilized physical occupancy for quarterly periods as the average number of occupied units on the 20th day of each of the trailing three months from the reporting period end date.
For the three-month period ended September 30, 2020, our average economic occupancy was 95.4%. We define average economic occupancy as market rent reduced by vacancy losses, expressed as a percentage. All of our multifamily properties are included in these calculations except for properties which are not yet stabilized (which we define as properties having first achieved 93% physical occupancy for three full months in a quarter), properties which are owned for less than the entire reporting period and properties which are undergoing significant capital projects, have sustained significant casualty losses or are adding additional phases. We also exclude properties which are currently being marketed for sale, of which we had none at September 30, 2020. Average economic occupancy is useful both to management and investors as a gauge of our effectiveness in realizing the full revenue generating potential of our multifamily communities given market rents and occupancy rates.All of our multifamily communities were stabilized for the three-month period ended September 30, 2020.
Student Housing Properties |
||||||||||||||||||
As of September 30, 2020, our student housing portfolio consisted of the following properties: |
||||||||||||||||||
Three months ended |
||||||||||||||||||
Property |
Location |
Number of units |
Number of beds |
Average unit size (sq. ft.) |
Average physical occupancy |
Average rent per bed |
||||||||||||
Student housing properties: |
||||||||||||||||||
North by Northwest |
Tallahassee, FL |
219 |
679 |
1,250 |
92.2 |
% |
$ |
696 |
||||||||||
SoL |
Tempe, AZ |
224 |
639 |
1,296 |
99.3 |
% |
$ |
740 |
||||||||||
Stadium Village (1) |
Atlanta, GA |
198 |
792 |
1,466 |
93.0 |
% |
$ |
721 |
||||||||||
Ursa (1) |
Waco, TX |
250 |
840 |
1,634 |
98.6 |
% |
$ |
600 |
||||||||||
The Tradition |
College Station, TX |
427 |
808 |
539 |
92.6 |
% |
$ |
567 |
||||||||||
Knightshade |
Orlando, FL |
221 |
894 |
2,036 |
95.8 |
% |
$ |
787 |
||||||||||
The Bloc |
Lubbock, TX |
140 |
556 |
1,394 |
93.5 |
% |
$ |
523 |
||||||||||
Rush |
Charlotte, NC |
332 |
887 |
1,224 |
97.7 |
% |
$ |
765 |
||||||||||
Total/Average |
2,011 |
6,095 |
95.4 |
% |
$ |
681 |
||||||||||||
(1) The Company acquired and owns an approximate 99% equity interest in a joint venture which owns both Stadium Village and Ursa. |
Capital Expenditures
We regularly incur capital expenditures related to our owned multifamily communities and student housing properties. Capital expenditures may be nonrecurring and discretionary, as part of a strategic plan intended to increase a property's value and corresponding revenue-generating ability, or may be normally recurring and necessary to maintain the income streams and present value of a property. Certain capital expenditures may be budgeted and reserved for upon acquiring a property as initial expenditures necessary to bring a property up to our standards or to add features or amenities that we believe make the property a compelling value to prospective residents in its individual market. These budgeted nonrecurring capital expenditures in connection with an acquisition are funded from the capital source(s) for the acquisition and are not dependent upon subsequent property operating cash flows for funding. Since the onset of COVID, all nonrecurring and discretionary capital expenditures have been reviewed individually and approved on as needed basis. There are regular recurring and life safety/operational capital expenditures which remain necessary for the continued normal operation of our properties. These have continued without interruption.
For the three-month period ended September 30, 2020, our capital expenditures for student housing properties consisted of: |
|||||||||||||||||||||||||
Capital Expenditures - Multifamily Communities |
|||||||||||||||||||||||||
Recurring |
Non-recurring |
Total |
|||||||||||||||||||||||
(in thousands, except per-unit figures) |
Amount |
Per Unit |
Amount |
Per Unit |
Amount |
Per Unit |
|||||||||||||||||||
Appliances |
$ |
178 |
$ |
16.28 |
$ |
— |
$ |
— |
$ |
178 |
$ |
16.28 |
|||||||||||||
Carpets |
531 |
48.90 |
— |
— |
531 |
48.90 |
|||||||||||||||||||
Wood / vinyl flooring |
42 |
3.94 |
125 |
11.51 |
167 |
15.45 |
|||||||||||||||||||
Mini blinds and ceiling fans |
72 |
6.66 |
— |
— |
72 |
6.66 |
|||||||||||||||||||
Fire safety |
— |
— |
220 |
20.40 |
220 |
20.40 |
|||||||||||||||||||
HVAC |
254 |
23.49 |
— |
— |
254 |
23.49 |
|||||||||||||||||||
Computers, equipment, misc. |
25 |
2.22 |
109 |
10.08 |
134 |
12.30 |
|||||||||||||||||||
Elevators |
— |
— |
25 |
2.24 |
25 |
2.24 |
|||||||||||||||||||
Exterior painting |
— |
— |
53 |
4.24 |
53 |
4.24 |
|||||||||||||||||||
Leasing office and other common amenities |
11 |
1.02 |
292 |
26.88 |
303 |
27.90 |
|||||||||||||||||||
Major structural projects |
— |
— |
1,073 |
99.80 |
1,073 |
99.80 |
|||||||||||||||||||
Cabinets and countertop upgrades |
— |
— |
416 |
38.66 |
416 |
38.66 |
|||||||||||||||||||
Landscaping and fencing |
— |
— |
15 |
1.09 |
15 |
1.09 |
|||||||||||||||||||
Parking lot |
— |
— |
36 |
3.32 |
36 |
3.32 |
|||||||||||||||||||
Signage and sanitation |
— |
— |
58 |
5.37 |
58 |
5.37 |
|||||||||||||||||||
Totals |
$ |
1,113 |
$ |
102.51 |
$ |
2,422 |
$ |
223.59 |
$ |
3,535 |
$ |
326.10 |
For the three-month period ended September 30, 2020, our capital expenditures for student housing properties consisted of: |
|||||||||||||||||||||||||
Capital Expenditures - Student Housing Properties |
|||||||||||||||||||||||||
Recurring |
Non-recurring |
Total |
|||||||||||||||||||||||
(in thousands, except per-bed figures) |
Amount |
Per Bed |
Amount |
Per Bed |
Amount |
Per Bed |
|||||||||||||||||||
Appliances |
$ |
49 |
$ |
8.16 |
$ |
— |
$ |
— |
$ |
49 |
$ |
8.16 |
|||||||||||||
Carpets |
198 |
32.45 |
— |
— |
198 |
32.45 |
|||||||||||||||||||
Wood / vinyl flooring |
9 |
1.50 |
— |
— |
9 |
1.50 |
|||||||||||||||||||
Mini blinds and ceiling fans |
17 |
2.81 |
— |
— |
17 |
2.81 |
|||||||||||||||||||
Fire safety |
— |
— |
41 |
6.76 |
41 |
6.76 |
|||||||||||||||||||
HVAC |
101 |
16.52 |
— |
— |
101 |
16.52 |
|||||||||||||||||||
Computers, equipment, misc. |
42 |
6.94 |
58 |
9.54 |
100 |
16.48 |
|||||||||||||||||||
Elevators |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||
Exterior painting |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||
Leasing office and other common amenities |
— |
— |
46 |
7.68 |
46 |
7.68 |
|||||||||||||||||||
Major structural projects |
— |
— |
150 |
24.49 |
150 |
24.49 |
|||||||||||||||||||
Cabinets and counter top upgrades |
— |
— |
8 |
1.26 |
8 |
1.26 |
|||||||||||||||||||
Landscaping and fencing |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||
Parking lot |
— |
— |
5 |
0.88 |
5 |
0.88 |
|||||||||||||||||||
Signage and sanitation |
— |
— |
14 |
2.17 |
14 |
2.17 |
|||||||||||||||||||
Unit furniture |
127 |
20.72 |
— |
— |
127 |
20.72 |
|||||||||||||||||||
Totals |
$ |
543 |
$ |
89.10 |
$ |
322 |
$ |
52.78 |
$ |
865 |
$ |
141.88 |
Grocery-Anchored Shopping Center Portfolio |
|||||||||||
As of September 30, 2020, our grocery-anchored shopping center portfolio consisted of the following properties: |
|||||||||||
Property name |
Location |
Year built |
GLA (1) |
Percent leased |
Grocery anchor tenant |
||||||
Castleberry-Southard |
Atlanta, GA |
2006 |
80,018 |
100.0 |
% |
Publix |
|||||
Cherokee Plaza |
Atlanta, GA |
1958 |
102,864 |
100.0 |
% |
Kroger |
|||||
Governors Towne Square |
Atlanta, GA |
2004 |
68,658 |
95.9 |
% |
Publix |
|||||
Lakeland Plaza |
Atlanta, GA |
1990 |
301,711 |
95.3 |
% |
Sprouts |
|||||
Powder Springs |
Atlanta, GA |
1999 |
77,853 |
92.5 |
% |
Publix |
|||||
Rockbridge Village |
Atlanta, GA |
2005 |
102,432 |
84.4 |
% |
Kroger |
|||||
Roswell Wieuca Shopping Center |
Atlanta, GA |
2007 |
74,370 |
100.0 |
% |
The Fresh Market |
|||||
Royal Lakes Marketplace |
Atlanta, GA |
2008 |
119,493 |
93.9 |
% |
Kroger |
|||||
Sandy Plains Exchange |
Atlanta, GA |
1997 |
72,784 |
93.8 |
% |
Publix |
|||||
Summit Point |
Atlanta, GA |
2004 |
111,970 |
88.2 |
% |
Publix |
|||||
Thompson Bridge Commons |
Atlanta, GA |
2001 |
92,587 |
97.5 |
% |
Kroger |
|||||
Wade Green Village |
Atlanta, GA |
1993 |
74,978 |
88.7 |
% |
Publix |
|||||
Woodmont Village |
Atlanta, GA |
2002 |
85,639 |
97.2 |
% |
Kroger |
|||||
Woodstock Crossing |
Atlanta, GA |
1994 |
66,122 |
100.0 |
% |
Kroger |
|||||
East Gate Shopping Center |
Augusta, GA |
1995 |
75,716 |
92.2 |
% |
Publix |
|||||
Fury's Ferry |
Augusta, GA |
1996 |
70,458 |
98.0 |
% |
Publix |
|||||
Parkway Centre |
Columbus, GA |
1999 |
53,088 |
95.1 |
% |
Publix |
|||||
Greensboro Village |
Nashville, TN |
2005 |
70,203 |
98.3 |
% |
Publix |
|||||
Spring Hill Plaza |
Nashville, TN |
2005 |
66,693 |
100.0 |
% |
Publix |
|||||
Parkway Town Centre |
Nashville, TN |
2005 |
65,587 |
100.0 |
% |
Publix |
|||||
The Market at Salem Cove |
Nashville, TN |
2010 |
62,356 |
100.0 |
% |
Publix |
|||||
The Market at Victory Village |
Nashville, TN |
2007 |
71,300 |
97.9 |
% |
Publix |
|||||
The Overlook at Hamilton Place |
Chattanooga, TN |
1992 |
213,095 |
99.3 |
% |
The Fresh Market |
|||||
Shoppes of Parkland |
Miami-Ft. Lauderdale, FL |
2000 |
145,720 |
100.0 |
% |
BJ's Wholesale Club |
|||||
Crossroads Market |
Naples, FL |
1993 |
126,895 |
100.0 |
% |
Publix |
|||||
Neapolitan Way (5) |
Naples, FL |
1985 |
137,580 |
90.6 |
% |
Publix |
|||||
Berry Town Center |
Orlando, FL |
2003 |
99,441 |
84.2 |
% |
Publix |
|||||
Deltona Landings |
Orlando, FL |
1999 |
59,966 |
98.4 |
% |
Publix |
|||||
University Palms |
Orlando, FL |
1993 |
99,172 |
98.9 |
% |
Publix |
|||||
Disston Plaza |
Tampa-St. Petersburg, FL |
1954 |
129,150 |
97.5 |
% |
Publix |
|||||
Barclay Crossing |
Tampa, FL |
1998 |
54,958 |
100.0 |
% |
Publix |
|||||
Polo Grounds Mall |
West Palm Beach, FL |
1966 |
130,285 |
100.0 |
% |
Publix |
|||||
Kingwood Glen |
Houston, TX |
1998 |
103,397 |
97.1 |
% |
Kroger |
|||||
Independence Square |
Dallas, TX |
1977 |
140,218 |
86.1 |
% |
Tom Thumb |
|||||
Midway Market |
Dallas, TX |
2002 |
85,599 |
90.3 |
% |
Kroger |
|||||
Oak Park Village |
San Antonio, TX |
1970 |
64,855 |
100.0 |
% |
H.E.B. |
|||||
Irmo Station |
Columbia, SC |
1980 |
99,384 |
90.8 |
% |
Kroger |
|||||
Rosewood Shopping Center |
Columbia, SC |
2002 |
36,887 |
93.5 |
% |
Publix |
|||||
Anderson Central |
Greenville Spartanburg, SC |
1999 |
223,211 |
93.3 |
% |
Walmart |
|||||
Fairview Market |
Greenville Spartanburg, SC |
1998 |
46,303 |
97.0 |
% |
Aldi |
|||||
Brawley Commons |
Charlotte, NC |
1997 |
122,028 |
99.2 |
% |
Publix |
|||||
West Town Market |
Charlotte, NC |
2004 |
67,883 |
97.7 |
% |
Harris Teeter |
|||||
Heritage Station |
Raleigh, NC |
2004 |
72,946 |
100.0 |
% |
Harris Teeter |
|||||
Maynard Crossing |
Raleigh, NC |
1996 |
122,781 |
92.7 |
% |
Harris Teeter |
|||||
Wakefield Crossing |
Raleigh, NC |
2001 |
75,927 |
98.2 |
% |
Food Lion |
|||||
Southgate Village |
Birmingham, AL |
1988 |
75,092 |
96.8 |
% |
Publix |
|||||
Hollymead Town Center |
Charlottesville, VA |
2005 |
158,807 |
92.8 |
% |
Harris Teeter |
|||||
Free State Shopping Center |
Washington, DC |
1970 |
264,152 |
97.3 |
% |
Giant |
|||||
4,922,612 |
95.6 |
% |
|||||||||
Redevelopment properties: |
|||||||||||
Champions Village |
Houston, TX |
1973 |
383,346 |
78.8 |
% |
Randalls |
|||||
Sweetgrass Corner |
Charleston, SC |
1999 |
89,124 |
29.1 |
% |
(2) |
|||||
Conway Plaza |
Orlando, FL |
1966 |
117,705 |
83.4 |
% |
Publix |
|||||
Hanover Center (4) |
Wilmington, NC |
1954 |
305,346 |
93.5 |
% |
Harris Teeter |
|||||
Gayton Crossing |
Richmond, VA |
1983 |
158,316 |
(3) |
78.7 |
% |
Kroger |
||||
Fairfield Shopping Center (4) |
Virginia Beach, VA |
1985 |
231,829 |
86.5 |
% |
Food Lion |
|||||
1,285,666 |
80.6 |
% |
|||||||||
Grand total/weighted average |
6,208,278 |
92.5 |
% |
(1) |
Gross leasable area, or GLA, represents the total amount of property square footage that can be leased to tenants. |
(2) |
Bi-Lo (the former anchor tenant) had extended their term through April 30, 2019 and had no further right or option to extend their lease. |
(3) |
The GLA figure shown excludes the GLA of the Kroger store, which is owned by others. |
(4) |
Property is owned through a consolidated joint venture. |
(5) |
Investment in an unconsolidated joint venture that is not prorated for our ownership percentage. |
As of September 30, 2020, our grocery-anchored shopping center portfolio was 92.5% leased. We define percent leased as the percentage of gross leasable area that is leased, including non-cancelable lease agreements that have been signed which have not yet commenced. This metric is used by management to gauge the extent to which our grocery-anchored shopping centers are delivering their total potential rental and other revenues.
Details regarding lease expirations (assuming no exercises of tenant renewal options) within our grocery-anchored shopping center portfolio as of September 30, 2020 were: |
|||||||||
Totals |
|||||||||
Number of leases |
Leased GLA |
Percent of leased GLA |
|||||||
Month to |
15 |
26,829 |
0.5 |
% |
|||||
2020 |
28 |
65,785 |
1.2 |
% |
|||||
2021 |
163 |
543,700 |
9.5 |
% |
|||||
2022 |
179 |
623,975 |
10.9 |
% |
|||||
2023 |
141 |
675,024 |
11.8 |
% |
|||||
2024 |
126 |
1,157,997 |
20.2 |
% |
|||||
2025 |
115 |
961,966 |
16.8 |
% |
|||||
2026 |
37 |
311,271 |
5.4 |
% |
|||||
2027 |
29 |
204,881 |
3.6 |
% |
|||||
2028 |
29 |
359,151 |
6.3 |
% |
|||||
2029 |
25 |
151,566 |
2.6 |
% |
|||||
2030 + |
33 |
658,168 |
11.2 |
% |
|||||
Total |
920 |
5,740,313 |
5740313 |
100.0 |
% |
The Company's grocery-anchored shopping center portfolio contained the following anchor tenants as of September 30, 2020: |
|||||
Tenant |
GLA |
Percent of total GLA |
|||
Publix |
1,179,030 |
19.0% |
|||
Kroger |
581,593 |
9.4% |
|||
Harris Teeter |
273,273 |
4.4% |
|||
Wal-Mart |
183,211 |
3.0% |
|||
BJ's Wholesale Club |
108,532 |
1.7% |
|||
Food Lion |
76,523 |
1.2% |
|||
Giant |
73,149 |
1.2% |
|||
Randall's |
61,604 |
1.0% |
|||
H.E.B |
54,844 |
0.9% |
|||
Tom Thumb |
43,600 |
0.7% |
|||
The Fresh Market |
43,321 |
0.7% |
|||
Sprouts |
29,855 |
0.5% |
|||
Aldi |
23,622 |
0.4% |
|||
Total |
2,732,157 |
44.1% |
|||
The Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 will present income statements of New Market Properties, LLC within the Results of Operations section of Management's Discussion and Analysis of Financial Condition and Results of Operations.
Second-generation capital expenditures within our grocery-anchored shopping center portfolio by property for the third quarter 2020 totaled approximately $1.1 million. Second-generation capital expenditures exclude those expenditures made in our grocery-anchored shopping center and office building portfolios (i) to lease space to "first generation" tenants (i.e. leasing capital for existing vacancies and known move-outs at the time of acquisition), (ii) to bring recently acquired properties up to our ownership standards, and (iii) for property redevelopments and repositioning.
Office Building Portfolio |
||||||||
As of September 30, 2020, our office building portfolio consisted of the following properties: |
||||||||
Property Name |
Location |
GLA |
Percent leased |
|||||
Three Ravinia |
Atlanta, GA |
814,000 |
95 |
% |
||||
150 Fayetteville |
Raleigh, NC |
560,000 |
91 |
% |
||||
Capitol Towers |
Charlotte, NC |
479,000 |
98 |
% |
||||
CAPTRUST Tower |
Raleigh, NC |
300,000 |
99 |
% |
||||
Westridge at La Cantera |
San Antonio, TX |
258,000 |
100 |
% |
||||
Morrocroft Centre |
Charlotte, NC |
291,000 |
92 |
% |
||||
Armour Yards |
Atlanta, GA |
187,000 |
91 |
% |
||||
Brookwood Center |
Birmingham, AL |
169,000 |
100 |
% |
||||
Galleria 75 |
Atlanta, GA |
111,000 |
97 |
% |
||||
Total/Average |
3,169,000 |
96 |
% |
|||||
The Company's office building portfolio includes the following significant tenants: |
|||||||||||
Rentable square |
Percent of |
Annual Base |
|||||||||
InterContinental Hotels Group |
520,000 |
14.2 |
% |
$ |
12,276 |
||||||
Albemarle |
162,000 |
6.7 |
% |
5,727 |
|||||||
CapFinancial |
105,000 |
4.3 |
% |
3,733 |
|||||||
USAA |
129,000 |
3.7 |
% |
3,196 |
|||||||
Vericast |
129,000 |
3.4 |
% |
2,953 |
|||||||
Total |
1,045,000 |
32.3 |
% |
$ |
27,885 |
The Company defines Annual Base Rent as the current monthly base rent annualized under the respective leases. |
||||||
The Company's leased square footage of its office building portfolio expires according to the following schedule: |
||||||
Office building portfolio |
||||||
Percent of |
||||||
Year of lease expiration |
Rented square |
rented |
||||
feet |
square feet |
|||||
2020 |
48,000 |
1.6 |
% |
|||
2021 |
224,000 |
7.5 |
% |
|||
2022 |
112,000 |
3.7 |
% |
|||
2023 |
127,000 |
4.3 |
% |
|||
2024 |
268,000 |
9.0 |
% |
|||
2025 |
255,000 |
8.5 |
% |
|||
2026 |
266,000 |
8.9 |
% |
|||
2027 |
328,000 |
11.0 |
% |
|||
2028 |
239,000 |
8.0 |
% |
|||
2029 |
57,000 |
1.9 |
% |
|||
2030+ |
1,064,000 |
35.6 |
% |
|||
Total |
2,988,000 |
100.0 |
% |
The Company recognized second-generation capital expenditures within its office building portfolio of approximately $211,000 during the third quarter 2020.
Definitions of Non-GAAP Measures
We disclose FFO, Core FFO, AFFO and NOI, each of which meet the definition of a "non-GAAP financial measure", as set forth in Item 10(e) of Regulation S-K promulgated by the SEC. As a result we are required to include in this filing a statement of why the Company believes that presentation of these measures provides useful information to investors. The non-GAAP measures of FFO, Core FFO, AFFO and NOI should be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our performance, and we believe that to understand our performance further FFO, Core FFO, AFFO and NOI should be compared with our reported net income or net loss and considered in addition to cash flows in accordance with GAAP, as presented in our consolidated financial statements. FFO, Core FFO and AFFO are not considered measures of liquidity and are not alternatives to measures calculated under GAAP.
Funds From Operations Attributable to Common Stockholders and Unitholders ("FFO")
FFO is one of the most commonly utilized Non-GAAP measures currently in practice. In its 2002 "White Paper on Funds From Operations," which was restated in 2018, the National Association of Real Estate Investment Trusts, or NAREIT, standardized the definition of how Net income/loss should be adjusted to arrive at FFO, in the interests of uniformity and comparability. We have adopted the NAREIT definition for computing FFO as a meaningful supplemental gauge of our operating results, and as is most often presented by other REIT industry participants.
The NAREIT definition of FFO (and the one reported by the Company) is:
Net income/loss, excluding:
- depreciation and amortization related to real estate;
- gains and losses from the sale of certain real estate assets;
- gains and losses from change in control and
- impairment writedowns of certain real estate assets and investments in entities where the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity.
Not all companies necessarily utilize the standardized NAREIT definition of FFO, so caution should be taken in comparing the Company's reported FFO results to those of other companies. The Company's FFO results are comparable to the FFO results of other companies that follow the NAREIT definition of FFO and report these figures on that basis. FFO is a non-GAAP measure that is reconciled to its most comparable GAAP measure, net income/loss available to common stockholders.
Core Funds From Operations Attributable to Common Stockholders and Unitholders ("Core FFO")
The Company makes adjustments to FFO to remove costs incurred and revenues recorded that are singular in nature and outside the normal operations of the Company and portray its primary operational results. The Company calculates Core FFO as:
FFO, plus:
- acquisition and pursuit (dead deal) costs;
- Loan cost amortization on acquisition term notes and loan coordination fees;
- losses on debt extinguishments or refinancing costs;
- internalization costs;
- expenses incurred on the potential call of preferred stock;
- deemed dividends for redemptions of and non-cash dividends on preferred stock;
- Expenses related to the COVID-19 global pandemic; and
Less:
- earnest money forfeitures by prospective asset purchasers.
Core FFO figures reported by us may not be comparable to Core FFO figures reported by other companies. We utilize Core FFO as a supplemental measure of the operating performance of our portfolio of real estate assets. We believe Core FFO is useful to investors as a supplemental gauge of our operating performance and may be useful in comparing our operating performance with other real estate companies. Since our calculation of Core FFO removes costs incurred and revenues recorded that are often singular in nature and outside the normal operations of the Company, we believe it improves comparability to investors in assessing our core operating results across periods. Core FFO is a non-GAAP measure that is reconciled to its most comparable GAAP measure, net income/loss available to common stockholders.
Adjusted Funds From Operations Attributable to Common Stockholders and Unitholders ("AFFO")
AFFO makes further adjustments to Core FFO results in order to arrive at a more refined measure of operating and financial performance. There is no industry standard definition of AFFO and practice is divergent across the industry. The Company calculates AFFO as:
Core FFO, plus:
- non-cash equity compensation to directors and executives;
- amortization of loan closing costs;
- weather-related property operating losses;
- amortization of loan coordination fees paid to the Manager;
- depreciation and amortization of non-real estate assets;
- non-cash (income) expense for current expected credit losses;
- net loan origination fees received;
- accrued interest income received;
- cash received for purchase option terminations;
- non-operating miscellaneous revenues;
- non-cash dividends on Series M Preferred Stock and mShares; and
- amortization of lease inducements;
Less:
- non-cash loan interest income;
- cash paid for loan closing costs;
- amortization of acquired real estate intangible liabilities;
- amortization of straight line rent adjustments and deferred revenues; and
- normally-recurring capital expenditures and capitalized second generation leasing costs.
AFFO figures reported by us may not be comparable to those AFFO figures reported by other companies. We utilize AFFO as another measure of the operating performance of our portfolio of real estate assets. We believe AFFO is useful to investors as a supplemental gauge of our operating performance and may be useful in comparing our operating performance with other real estate companies. Since our calculation of AFFO removes other significant non-cash charges and revenues and other costs which are not representative of our ongoing business operations, we believe it improves comparability to investors in assessing our core operating results across periods. AFFO is a non-GAAP measure that is reconciled to its most comparable GAAP measure, net income/loss available to common stockholders. FFO, Core FFO and AFFO are not considered measures of liquidity and are not alternatives to measures calculated under GAAP.
Multifamily Communities' Same-Store Net Operating Income ("NOI")
We use same store net operating income as an operational metric for our same-store communities, enabling comparisons of those properties' operating results between the current reporting period and the prior year comparative period. We define our population of same-store communities as those that are stabilized and that have been owned for at least 15 full months, as of the end of the first quarter of each year, and exclude the operating results of properties for which construction of adjacent phases has commenced, and properties which are undergoing significant capital projects, have sustained significant casualty losses, or are being marketed for sale as of the end of the reporting period. We define net operating income as rental and other property revenues, less total property and maintenance expenses, property management fees, real estate taxes, general and administrative expenses, and property insurance. We believe that net operating income is an important supplemental measure of operating performance for REITs because it provides measures of core operations, rather than factoring in depreciation and amortization, financing costs, acquisition costs, and other corporate expenses. Net operating income is a widely utilized measure of comparative operating performance in the REIT industry, but is not a substitute for the most comparable GAAP-compliant measure, net income/loss.
About Preferred Apartment Communities, Inc.
Preferred Apartment Communities, Inc. (NYSE: APTS) is a real estate investment trust engaged primarily in the ownership and operation of Class A multifamily properties, with select investments in grocery anchored shopping centers, Class A office buildings, and student housing properties. Preferred Apartment Communities' investment objective is to generate attractive, stable returns for stockholders by investing in income-producing properties and acquiring or originating real estate loans for multifamily properties. As of September 30, 2020, the Company owned or was invested in 125 properties in 15 states, predominantly in the Southeast region of the United States.
SOURCE Preferred Apartment Communities, Inc.
Related Links
WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?
Newsrooms &
Influencers
Digital Media
Outlets
Journalists
Opted In
Share this article