05.11.2018 22:19:00
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Preferred Apartment Communities, Inc. Reports Results for Third Quarter Ended 2018
ATLANTA, Nov. 5, 2018 /PRNewswire/ -- Preferred Apartment Communities, Inc. (NYSE: APTS) ("we," "our," the "Company" or "Preferred Apartment Communities") today reported results for the quarter ended September 30, 2018. Unless otherwise indicated, all per share results are reported based on the basic weighted average shares of Common Stock and Class A Units of the Company's operating partnership ("Class A Units") outstanding. See Definitions of Non-GAAP Measures.
"In the third quarter and subsequent to quarter end, we were able to capture approximately $35.5 million in realized gains on the sales of two of our older assets. This was somewhat offset by an approximate $3.0 million ($0.07 per share) loan loss allowance that we recorded on a real estate loan investment we made in Irvine, California. This loan paid over $21.1 million in interest, allowing us to book an approximate 12.9% IRR over the life of the loan. When the property is sold to a third party buyer, however, the total distributable proceeds will not cover all the interest we had accrued. As a result, we are reducing our guidance range for 2018 FFO per share from $1.43 - $1.47 (midpoint $1.45 per share) to $1.39 - $1.42 (midpoint $1.405 per share)," said Daniel M. DuPree, Preferred Apartment Communities' Chairman and Chief Executive Officer.
Financial Highlights
Our operating results for the three-month and nine-month periods ended September 30, 2018 were:
Three months ended | Nine months ended | ||||||||||||||||||||||
2018 | 2017 | % change | 2018 | 2017 | % change | ||||||||||||||||||
Revenues (in thousands) | $ | 104,232 | $ | 74,900 | 39.2 | % | $ | 290,991 | $ | 212,352 | 37.0 | % | |||||||||||
Per share data: | |||||||||||||||||||||||
Net income (loss) (1) | $ | (0.35) | $ | (0.49) | — | $ | (1.16) | $ | (0.46) | — | |||||||||||||
FFO (2) | $ | 0.28 | $ | 0.36 | (22.2) | % | $ | 1.03 | $ | 1.01 | 2.0 | % | |||||||||||
AFFO (2) | $ | 0.21 | $ | 0.28 | (25.0) | % | $ | 0.84 | $ | 0.85 | (1.2) | % | |||||||||||
Dividends (3) | $ | 0.255 | $ | 0.235 | 8.5 | % | $ | 0.76 | $ | 0.69 | 10.1 | % | |||||||||||
(1) | Per weighted average share of Common Stock outstanding for the periods indicated. |
(2) | FFO and AFFO results are presented per weighted average share of Common Stock and Class A Unit in our Operating Partnership outstanding for the periods indicated. See Reconciliation of FFO and AFFO to Net Income (Loss) Attributable to Common Stockholders on page S-3 and Definitions of Non-GAAP Measures beginning on page S-21. |
(3) | Per share of Common Stock and Class A Unit outstanding. |
- For the third quarter 2018, our FFO payout ratio to Common Stockholders and Unitholders was approximately 92.8% and our FFO payout ratio (before the deduction of preferred dividends) to our preferred stockholders was approximately 66.1%. For the nine months ended September 30, 2018, our FFO payout ratio to Common Stockholders and Unitholders was approximately 74.5% and our FFO payout ratio (before the deduction of preferred dividends) to our preferred stockholders was approximately 60.1%.
- For the third quarter 2018, our AFFO payout ratio to Common Stockholders and Unitholders was approximately 124.3% and our AFFO payout ratio (before the deduction of preferred dividends) to our preferred stockholders was approximately 72.3%. For the nine months ended September 30, 2018, our AFFO payout ratio to Common Stockholders and Unitholders was approximately 91.2% and our AFFO payout ratio (before the deduction of preferred dividends) to our preferred stockholders was approximately 64.8%. (A)
- For the third quarter 2018, our same store net operating income for our established multifamily communities increased approximately 2.7% as compared to the third quarter 2017. (B) For the third quarter 2018, our average established multifamily communities' physical occupancy was 95.3% and our same-store rental revenue grew 3.8% from the third quarter 2017. For the nine-month period ended September 30, 2018, our same store net operating income for our established multifamily communities increased approximately 6.5% as compared to the nine-month period ended September 30, 2017.
- At September 30, 2018, the market value of our common stock was $17.58 per share. A hypothetical investment in our Common Stock in our initial public offering on April 5, 2011, assuming the reinvestment of all dividends and no transaction costs, would have resulted in an average annual return of approximately 24.4% through September 30, 2018.
- As of September 30, 2018, the average age of our multifamily communities was approximately 5.3 years, which is the youngest in the public multifamily REIT industry.
- Approximately 84.0% of our permanent property-level mortgage debt has fixed interest rates and approximately 6.4% has variable interest rates which are capped. We believe we are well protected against potential increases in market interest rates.
- At September 30, 2018, our leverage, as measured by the ratio of our debt to the undepreciated book value of our total assets, was approximately 54.4 %. Our leverage calculation excludes the gross assets of approximately $262.2 million and liabilities of approximately $257.3 million that we consolidated as a result of our investment in the ML-04 pool from the Freddie Mac K program.
- As of September 30, 2018, our total assets were approximately $4.1 billion compared to approximately $2.9 billion as of September 30, 2017, an increase of approximately $1.2 billion, or approximately 41.9%. This growth was driven primarily by the acquisition of 22 real estate properties (net of the sale of 2 properties). In addition, our assets increased due to the consolidation of the ML-04 pool from the Freddie Mac K program.
- Cash flow from operations for the quarter ended September 30, 2018 was approximately $38.8 million, an increase of approximately $10.7 million, or 38.1%, compared to approximately $28.1 million for the quarter ended September 30, 2017. Cash flow from operations for the third quarter 2018 was more than sufficient to fund our aggregate dividends and distributions for the period, which totaled approximately $33.0 million.
- On August 31, 2018, we closed on two real estate loan investments aggregating up to approximately $12.3 million in support of a multifamily community project in Fredericksburg, Virginia.
- On September 28, 2018, we sold our Stone Rise multifamily community located in Philadelphia, Pennsylvania for a net gain of approximately $18.6 million, which resulted in an internal rate of return of approximately 21.5% from April 15, 2011, the date the property was acquired.
(A) We calculate the AFFO payout ratio to Common Stockholders as the ratio of Common Stock dividends and distributions to AFFO. We calculate the AFFO payout ratio to preferred stockholders as the ratio of Preferred Stock dividends to the sum of Preferred Stock dividends 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. | |
(B) Same store net operating income is a non-GAAP measure. See Definitions of Non-GAAP Measures. |
Acquisitions of Properties
During the third quarter 2018, we acquired the following properties:
Property | Location (MSA) | Units / Leasable square | ||||||
Office building: | ||||||||
150 Fayetteville | Raleigh, NC | 560,000 | LSF | |||||
Multifamily Community: | ||||||||
The Lodge at Hidden River | Tampa, FL | 300 | units | |||||
Grocery-anchored shopping center: | ||||||||
Brawley Commons | Charlotte, NC | 122,028 | LSF | |||||
Real Estate Assets
Owned as of | Potential additions | Potential total | ||||||||
Multifamily communities: | ||||||||||
Properties | 31 | 11 | 42 | |||||||
Units | 9,852 | 2,915 | 12,767 | |||||||
Grocery-anchored shopping centers: | ||||||||||
Properties | 44 | — | 44 | |||||||
Gross leasable area (square feet) | 4,571,888 | — | 4,571,888 | |||||||
Student housing properties: | ||||||||||
Properties | 7 | 1 | 8 | |||||||
Units | 1,679 | 248 | 1,927 | |||||||
Beds | 5,208 | 816 | 6,024 | |||||||
Office buildings: | ||||||||||
Properties | 6 | — | 6 | |||||||
Rentable square feet | 2,099,000 | — | 2,099,000 | |||||||
(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) On May 7, 2018, we terminated purchase options on three multifamily communities and two student housing properties in exchange for aggregate termination fees of approximately $12.5 million. Potential additions to our real estate asset portfolio excludes the properties supported by these five loans. |
Subsequent to Quarter End
On October 23, 2018, we sold our Stoneridge Farms at Hunt Club multifamily community located in Nashville, Tennessee for a gain on the sale of approximately $16.9 million, which resulted in an average annual return of approximately 22% from September 26, 2014, the date the property was acquired.
On October 31, 2018, we refinanced the variable rate mortgage on our Sol student housing community into a $36.2 million mortgage maturing on November 1, 2028 and which bears interest at a fixed rate of 4.71% per annum.
On November 1, 2018, our board of directors declared a quarterly dividend on our Common Stock of $0.26 per share, payable on January 15, 2019 to stockholders of record on December 14, 2018.
Multifamily Established Communities Financial Data
The following chart presents same store operating results for the Company's established communities.We define our population of established communities as those that have achieved occupancy at or above 93% occupancy for all 3 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 established communities:
Aster at Lely Resort | Avenues at Cypress | Avenues at Northpointe | ||
Citi Lakes | Lenox Portfolio | Venue at Lakewood Ranch | ||
Overton Rise | Sorrel | Vineyards |
At September 30, 2018, our Stoneridge Farms at Hunt Club and McNeil Ranch multifamily communities were being marketed for sale and are therefore excluded from our established communities same store population.
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.
Reconciliation of Multifamily Established Communities' Net Income (Loss) to Same Store Net Operating Income (NOI) | ||||||||
Three months ended: | ||||||||
(in thousands) | 9/30/2018 | 9/30/2017 | ||||||
Net income | $ | 8,354 | $ | 42 | ||||
Add: | ||||||||
Equity stock compensation | 796 | 863 | ||||||
Depreciation and amortization | 44,499 | 28,904 | ||||||
Interest expense | 25,657 | 16,678 | ||||||
Management fees | 7,234 | 5,148 | ||||||
Insurance, professional fees and other expenses | 715 | 581 | ||||||
Loan loss allowance | 3,029 | — | ||||||
Waived asset management and general and administrative expense fees | (1,934) | (656) | ||||||
Less: | ||||||||
Interest revenue on notes receivable | 13,618 | 9,674 | ||||||
Interest revenue on related party notes receivable | 3,671 | 5,820 | ||||||
Income from consolidated VIEs | 131 | — | ||||||
Gain on sale of real estate | 18,605 | — | ||||||
Property net operating income | 52,325 | 36,066 | ||||||
Less: | ||||||||
Non-same-store property revenues | 74,937 | 47,843 | ||||||
Add: | ||||||||
Non-same-store property operating expenses | 29,305 | 18,296 | ||||||
Same store net operating income | $ | 6,693 | $ | 6,519 |
Multifamily Established Communities' Same Store Net Operating Income | |||||||||||||||
Three months ended: | |||||||||||||||
(in thousands) | 9/30/2018 | 9/30/2017 | $ change | % change | |||||||||||
Revenues: | |||||||||||||||
Rental revenues | $ | 10,907 | $ | 10,519 | $ | 388 | 3.7 | % | |||||||
Other property revenues | 1,099 | 1,044 | 55 | 5.3 | % | ||||||||||
Total revenues | 12,006 | 11,563 | 443 | 3.8 | % | ||||||||||
Operating expenses: | |||||||||||||||
Property operating and maintenance | 1,594 | 1,588 | 6 | 0.4 | % | ||||||||||
Payroll | 991 | 967 | 24 | 2.5 | % | ||||||||||
Property management fees | 482 | 465 | 17 | 3.7 | % | ||||||||||
Real estate taxes | 1,748 | 1,517 | 231 | 15.2 | % | ||||||||||
Other | 498 | 507 | (9) | (1.8) | % | ||||||||||
Total operating expenses | 5,313 | 5,044 | 269 | 5.3 | % | ||||||||||
Same store net operating income | $ | 6,693 | $ | 6,519 | $ | 174 | 2.7 | % |
Reconciliation of Multifamily Established Communities' Net Income (Loss) to Same Store Net Operating Income (NOI) | ||||||||
Nine months ended: | ||||||||
(in thousands) | 9/30/2018 | 9/30/2017 | ||||||
Net income | $ | 17,339 | $ | 33,409 | ||||
Add: | ||||||||
Equity stock compensation | 2,881 | 2,608 | ||||||
Depreciation and amortization | 127,210 | 82,187 | ||||||
Interest expense | 68,972 | 48,085 | ||||||
Acquisition costs | — | 14 | ||||||
Management fees | 20,096 | 14,525 | ||||||
Insurance, professional fees and other expenses | 2,487 | 2,395 | ||||||
Loan loss allowance | 3,029 | — | ||||||
Waived asset management and general and administrative expense fees | (4,583) | (1,002) | ||||||
Loss on extinguishment of debt | — | 888 | ||||||
Less: | ||||||||
Interest revenue on notes receivable | 37,576 | 26,112 | ||||||
Interest revenue on related party notes receivable | 12,310 | 15,971 | ||||||
Income from consolidated VIEs | 185 | — | ||||||
Gain on sale of real estate | 38,961 | 37,635 | ||||||
Property net operating income | 148,399 | 103,391 | ||||||
Less: | ||||||||
Non-same-store property revenues | 205,316 | 135,848 | ||||||
Add: | ||||||||
Non-same-store property operating expenses | 77,144 | 51,441 | ||||||
Same store net operating income | $ | 20,227 | $ | 18,984 |
Multifamily Established Communities' Same Store Net Operating Income | |||||||||||||||
Nine months ended: | |||||||||||||||
(in thousands) | 9/30/2018 | 9/30/2017 | $ change | % change | |||||||||||
Revenues: | |||||||||||||||
Rental revenues | $ | 32,481 | $ | 31,352 | $ | 1,129 | 3.6 | % | |||||||
Other property revenues | 3,308 | 3,069 | 239 | 7.8 | % | ||||||||||
Total revenues | 35,789 | 34,421 | 1,368 | 4.0 | % | ||||||||||
Operating expenses: | |||||||||||||||
Property operating and maintenance | 4,497 | 4,400 | 97 | 2.2 | % | ||||||||||
Payroll | 2,852 | 2,889 | (37) | (1.3) | % | ||||||||||
Property management fees | 1,435 | 1,387 | 48 | 3.5 | % | ||||||||||
Real estate taxes | 5,251 | 5,236 | 15 | 0.3 | % | ||||||||||
Other | 1,527 | 1,525 | 2 | 0.1 | % | ||||||||||
Total operating expenses | 15,562 | 15,437 | 125 | 0.8 | % | ||||||||||
Same store net operating income | $ | 20,227 | $ | 18,984 | $ | 1,243 | 6.5 | % |
Capital Markets Activities
During the third quarter 2018, we issued and sold an aggregate of 101,616 Units from our offering of up to 1,500,000 Units, with each Unit consisting of one share of Series A Redeemable Preferred Stock and one Warrant to purchase up to 20 shares of Common Stock (the "$1.5 Billion Series A Unit Offering"), resulting in net proceeds of approximately $91.4 million after commissions and other fees. In addition, during the third quarter 2018, we issued 358,040 shares of Common Stock pursuant to the exercise of warrants issued under our Series A Preferred Stock offering, resulting in aggregate gross proceeds of approximately $4.6 million.
During the third quarter 2018, we issued and sold an aggregate of 8,199 shares of Series M Redeemable Preferred Stock ("mShares"), resulting in net proceeds of approximately $8.0 million after dealer manager fees.
Our outstanding shares of Common Stock totaled approximately 40.8 million shares at September 30, 2018. The market value of our Common Stock was $17.58 per share on September 30, 2018 versus $18.88 on September 30, 2017. Our total equity book value increased 29.2% to approximately $1.5 billion at September 30, 2018 from $1.2 billion at September 30, 2017.
Dividends
Quarterly Dividends on Common Stock and Class A OP Units
On August 2, 2018, we declared a quarterly dividend on our Common Stock of $0.255 per share for the third quarter 2018. This represents a 8.5% increase in our common stock dividend from our third quarter 2017 common stock dividend of $0.235 per share, and an annualized dividend growth rate of 14.4% since September 30, 2011, the first quarter end following our initial public offering in April 2011. The third quarter dividend was paid on October 15, 2018 to all stockholders of record on September 14, 2018. In conjunction with the Common Stock dividend, the Company's operating partnership declared a distribution on its Class A Units of $0.255 per unit for the third quarter 2018, which was paid on October 15, 2018 to all Class A Unit holders of record as of September 14, 2018.
Monthly Dividends on Preferred Stock
We declared and paid monthly dividends of $5.00 per share on our Series A Redeemable Preferred Stock, which totaled approximately $21.8 million for the quarter ended September 30, 2018 and represent a 6% annual yield. We declared and paid dividends totaling approximately $466,000 on our Series M Redeemable Preferred Stock, or mShares, for the quarter ended September 30, 2018. The mShares have an escalating dividend rate from 5.75% in year one of issuance to 7.50% in year eight and thereafter.
Conference Call and Supplemental Data
We will hold our quarterly conference call on Tuesday, November 6, 2018 at 11:00 a.m. Eastern Time to discuss our third quarter 2018 results. To participate in the conference call, please dial in to the following:
Live Conference Call Details
Domestic Dial-in Number: 1-844-890-1791
International Dial-in Number: 1-412-380-7408
Company: Preferred Apartment Communities, Inc.
Date: Tuesday, November 6, 2018
Time: 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time)
The live broadcast of our third quarter 2018 conference call will be available online, on a listen-only basis, at our website, www.pacapts.com, under "Investors" and then click on the "Upcoming Events" link. A replay of the call will be archived on under the Investors/Audio Archive section.
2018 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 - We currently project FFO to be in the range of $1.39 - $1.42 per share for the full year 2018.
Revenue - We currently project total revenues to be in the range of $400 million - $415 million for the full year 2018.
AFFO and FFO are calculated after deductions for all preferred stock dividends. Reconciliations of net income (loss) attributable to common stockholders to FFO and AFFO for the three-month and nine-month periods ended September 30, 2018 and 2017 appear on page S-3 of the attached report, as well as on our website using the following link:
http://investors.pacapts.com/download/3Q18_Earnings_and_Supplemental_Data.pdf
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. 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, 2017 that was filed with the Securities and Exchange Commission, or SEC, on March 1, 2018, 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, with respect to the mShares Offering and the $1.5 Billion Unit Offering, and JonesTrading Institutional Services LLC, with respect to the Common Stock ATM Offering, will arrange to send you a prospectus if you request it by contacting Leonard A. Silverstein at (770) 818-4100, 3284 Northside Parkway NW, Suite 150, Atlanta, Georgia 30327.
The prospectus supplement for the Common Stock ATM Offering, dated July 10, 2017, including a base prospectus, dated May 17, 2016, can be accessed through the following link:
https://www.sec.gov/Archives/edgar/data/1481832/000148183217000110/atmprospectusspring2017.htm
The final prospectus for the mShares Offering, dated January 19, 2017, can be accessed through the following link:
https://www.sec.gov/Archives/edgar/data/1481832/000148183217000008/a424prospectus-mshares1.htm
The final prospectus for the $1.5 Billion Unit Offering, dated March 16, 2017, can be accessed through the following link:
https://www.sec.gov/Archives/edgar/data/1481832/000148183217000061/a424prospectus-15bseriesar.htm
THIRD QUARTER 2018 - SUPPLEMENTAL FINANCIAL DATA
Preferred Apartment Communities, Inc. | ||||||||
Consolidated Statements of Operations | ||||||||
(Unaudited) | ||||||||
Three months ended September 30, | ||||||||
(In thousands, except per-share figures) | 2018 | 2017 | ||||||
Revenues: | ||||||||
Rental revenues | $ | 73,640 | $ | 50,072 | ||||
Other property revenues | 13,303 | 9,335 | ||||||
Interest income on loans and notes receivable | 13,618 | 9,673 | ||||||
Interest income from related parties | 3,671 | 5,820 | ||||||
Total revenues | 104,232 | 74,900 | ||||||
Operating expenses: | ||||||||
Property operating and maintenance | 12,893 | 7,901 | ||||||
Property salary and benefits | 4,911 | 3,403 | ||||||
Property management fees | 2,998 | 2,053 | ||||||
Real estate taxes | 10,597 | 7,706 | ||||||
General and administrative | 2,221 | 1,702 | ||||||
Equity compensation to directors and executives | 796 | 863 | ||||||
Depreciation and amortization | 44,499 | 28,904 | ||||||
Asset management and general and administrative expense | ||||||||
fees to related party | 7,234 | 5,148 | ||||||
Loan loss allowance | 3,029 | — | ||||||
Insurance, professional fees, and other expenses | 1,713 | 1,156 | ||||||
Total operating expenses | 90,891 | 58,836 | ||||||
Waived asset management and general and administrative | ||||||||
expense fees | (1,934) | (656) | ||||||
Net operating expenses | 88,957 | 58,180 | ||||||
Operating income | 15,275 | 16,720 | ||||||
Interest expense | 25,657 | 16,678 | ||||||
Change in fair value of net assets of consolidated VIE | 131 | — | ||||||
Net income (loss) before gain on sale of real estate | (10,251) | 42 | ||||||
Gain on sale of real estate | 18,605 | — | ||||||
Net income | 8,354 | 42 | ||||||
Consolidated net (income) attributable to non-controlling interests | (216) | (1) | ||||||
Net income attributable to the Company | 8,138 | 41 | ||||||
Dividends declared to preferred stockholders | (22,360) | (16,421) | ||||||
Earnings attributable to unvested restricted stock | (5) | (4) | ||||||
Net loss attributable to common stockholders | $ | (14,227) | $ | (16,384) | ||||
Net loss per share of Common Stock available to common stockholders, | ||||||||
basic and diluted | $ | (0.35) | $ | (0.49) | ||||
Weighted average number of shares of Common Stock outstanding, | ||||||||
basic and diluted | 40,300 | 33,540 |
Reconciliation of FFO and AFFO | |||||||||||
to Net (Loss) Income Attributable to Common Stockholders (A) | |||||||||||
Three months ended September 30, | |||||||||||
(In thousands, except per-share figures) | 2018 | 2017 | |||||||||
Net loss attributable to common stockholders (See note 1) | $ | (14,227) | $ | (16,384) | |||||||
Add: | Depreciation of real estate assets | 33,037 | 21,597 | ||||||||
Amortization of acquired real estate intangible assets and deferred leasing costs | 11,058 | 7,106 | |||||||||
Net income attributable to non-controlling interests (See note 2) | 216 | 1 | |||||||||
Less: | Gain on sale of real estate | (18,605) | — | ||||||||
FFO | 11,479 | 12,320 | |||||||||
Add: | Loan cost amortization on acquisition term note | 19 | 29 | ||||||||
Amortization of loan coordination fees paid to the Manager (See note 3) | 673 | 407 | |||||||||
Weather-related property operating losses (See note 4) | 161 | 217 | |||||||||
Non-cash equity compensation to directors and executives | 796 | 863 | |||||||||
Amortization of loan closing costs (See note 5) | 1,309 | 905 | |||||||||
Depreciation/amortization of non-real estate assets | 404 | 202 | |||||||||
Net loan fees received (See note 6) | 248 | 879 | |||||||||
Accrued interest income received (See note 7) | 4,298 | 1,797 | |||||||||
Loan loss allowance (See note 8) | 3,029 | — | |||||||||
Deemed dividends from cash redemptions of preferred stock | 2 | — | |||||||||
Amortization of lease inducements (See note 9) | 387 | 145 | |||||||||
Non-cash dividends on Series M Preferred Stock | 63 | 33 | |||||||||
Less: | Non-cash loan interest income (See note 7) | (4,104) | (4,860) | ||||||||
Non-cash revenues from mortgage-backed securities | (131) | ||||||||||
Amortization of purchase option termination revenues in excess of cash received (See note 10) | (4,478) | — | |||||||||
Cash paid for loan closing costs | (25) | — | |||||||||
Amortization of acquired above and below market lease intangibles | |||||||||||
and straight-line rental revenues (See note 11) | (3,353) | (1,941) | |||||||||
Amortization of deferred revenues (See note 12) | (680) | (287) | |||||||||
Normally recurring capital expenditures and leasing costs (See note 13) | (1,528) | (1,214) | |||||||||
AFFO | $ | 8,569 | $ | 9,495 | |||||||
Common Stock dividends and distributions to Unitholders declared: | |||||||||||
Common Stock dividends | $ | 10,377 | $ | 8,158 | |||||||
Distributions to Unitholders (See note 2) | 272 | 212 | |||||||||
Total | $ | 10,649 | $ | 8,370 | |||||||
Common Stock dividends and Unitholder distributions per share | $ | 0.255 | $ | 0.235 | |||||||
FFO per weighted average basic share of Common Stock and Unit outstanding | $ | 0.28 | $ | 0.36 | |||||||
AFFO per weighted average basic share of Common Stock and Unit outstanding | $ | 0.21 | $ | 0.28 | |||||||
Weighted average shares of Common Stock and Units outstanding: (A) | |||||||||||
Basic: | |||||||||||
Common Stock | 40,300 | 33,540 | |||||||||
Class A Units | 1,069 | 901 | |||||||||
Common Stock and Class A Units | 41,369 | 34,441 | |||||||||
Diluted Common Stock and Class A Units (B) | 42,890 | 37,820 | |||||||||
Actual shares of Common Stock outstanding, including 19 and 18 unvested shares | |||||||||||
of restricted Common Stock at September 30, 2018 and 2017, respectively | 40,804 | 35,616 | |||||||||
Actual Class A Units outstanding at September 30, 2018 and 2017, respectively. | 1,068 | 901 | |||||||||
Total | 41,872 | 36,517 | |||||||||
(A) Units and Unitholders refer to Class A Units in our Operating Partnership, 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 2.58% weighted average non-controlling interest in the Operating Partnership for the three-month period ended September 30, 2018. | |||||||||||
(B) Since our FFO and 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. 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, excluding any gains from sales of real estate assets. | |||||||||||
See Notes to Reconciliation of FFO and AFFO to Net Income (Loss) Attributable to Common Stockholders on page S-5. |
Reconciliation of FFO and AFFO | |||||||||||
to Net (Loss) Income Attributable to Common Stockholders (A) | |||||||||||
Nine months ended September 30, | |||||||||||
(In thousands, except per-share figures) | 2018 | 2017 | |||||||||
Net loss attributable to common stockholders (See note 1) | $ | (45,931) | $ | (13,742) | |||||||
Add: | Depreciation of real estate assets | 90,190 | 60,344 | ||||||||
Amortization of acquired real estate intangible assets and deferred leasing costs | 35,963 | 21,308 | |||||||||
Net income attributable to non-controlling interests (See note 2) | 456 | 1,097 | |||||||||
Less: | Gain on sale of real estate | (38,961) | (37,635) | ||||||||
FFO | 41,717 | 31,372 | |||||||||
Add: | Acquisition and pursuit costs | — | 14 | ||||||||
Loan cost amortization on acquisition term notes | 63 | 99 | |||||||||
Amortization of loan coordination fees paid to the Manager (See note 3) | 1,780 | 1,178 | |||||||||
Mortgage loan refinancing and extinguishment costs | 61 | 1,058 | |||||||||
(Insurance recovery in excess of) weather-related property operating losses (See note 4) | (33) | 217 | |||||||||
Contingent management fees recognized | — | 387 | |||||||||
Non-cash equity compensation to directors and executives | 2,881 | 2,608 | |||||||||
Amortization of loan closing costs (See note 5) | 3,567 | 2,757 | |||||||||
Depreciation/amortization of non-real estate assets | 1,057 | 535 | |||||||||
Net loan fees received (See note 6) | 1,459 | 1,296 | |||||||||
Accrued interest income received (See note 7) | 8,410 | 7,115 | |||||||||
Loan loss allowance (See note 8) | 3,029 | — | |||||||||
Deemed dividends from cash redemptions of preferred stock | 522 | — | |||||||||
Non-cash dividends on Series M Preferred Stock | 216 | 33 | |||||||||
Amortization of lease inducements (See note 9) | 955 | 237 | |||||||||
Less: | Non-cash loan interest income (See note 7) | (14,726) | (13,507) | ||||||||
Cash paid for loan closing costs | (416) | — | |||||||||
Amortization of purchase option termination revenues in excess of cash received (See note 10) | (1,964) | — | |||||||||
Non-cash revenues from mortgage-backed securities | (185) | — | |||||||||
Amortization of acquired above and below market lease intangibles
| |||||||||||
and straight-line rental revenues (See note 11) | (9,047) | (5,497) | |||||||||
Amortization of deferred revenues (See note 12) | (1,765) | (457) | |||||||||
Normally recurring capital expenditures and leasing costs (See note 13) | (3,482) | (3,032) | |||||||||
AFFO | $ | 34,099 | $ | 26,413 | |||||||
Common Stock dividends and distributions to Unitholders declared: | |||||||||||
Common Stock dividends | 30,283 | 21,668 | |||||||||
Distributions to Unitholders (See note 2) | 813 | 622 | |||||||||
Total | 31,096 | 22,290 | |||||||||
Common Stock dividends and Unitholder distributions per share | $ | 0.76 | $ | 0.69 | |||||||
FFO per weighted average basic share of Common Stock and Unit outstanding | $ | 1.03 | $ | 1.01 | |||||||
AFFO per weighted average basic share of Common Stock and Unit outstanding | $ | 0.84 | $ | 0.85 | |||||||
Weighted average shares of Common Stock and Units outstanding: (A) | |||||||||||
Basic: | |||||||||||
Common Stock | 39,598 | 30,147 | |||||||||
Class A Units | 1,070 | 910 | |||||||||
Common Stock and Class A Units | 40,668 | 31,057 | |||||||||
Diluted Common Stock and Class A Units (B) | 41,936 | 33,645 | |||||||||
Actual shares of Common Stock outstanding, including 19 and 18 unvested shares | |||||||||||
of restricted Common Stock at September 30, 2018 and 2017, respectively | 40,804 | 35,616 | |||||||||
Actual Class A Units outstanding at September 30, 2018 and 2017, respectively. | 1,068 | 901 | |||||||||
Total | 41,872 | 36,517 | |||||||||
(A) Units and Unitholders refer to Class A Units in our Operating Partnership, 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 2.63% weighted average non-controlling interest in the Operating Partnership for the nine-month period ended September 30, 2018. | |||||||||||
(B) Since our FFO and 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. 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, excluding any gains from sales of real estate assets. | |||||||||||
See Notes to Reconciliation of FFO and AFFO to Net Income (Loss) Attributable to Common Stockholders on page S-5. |
Notes to Reconciliations of FFO and AFFO to Net Income (Loss) Attributable to Common Stockholders
1) | Rental and other property revenues and property operating expenses for the quarter ended September 30, 2018 include activity for the multifamily community, office building and grocery-anchored shopping center acquired during the quarter only from their respective dates of acquisition. In addition, the third quarter 2018 period includes activity for the five multifamily communities, seven grocery-anchored shopping centers, five student housing properties and three office buildings acquired since September 30, 2017. Rental and other property revenues and expenses for the third quarter 2017 include activity for the acquisitions made during that period only from their respective dates of acquisition. |
2) | Non-controlling interests in our Operating Partnership consisted of a total of 1,068,400 Class A Units as of September 30, 2018. 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 2.59% and 2.62% for the three-month periods ended September 30, 2018 and 2017, respectively. |
3) | As of January 1, 2016, we pay loan coordination fees to Preferred Apartment Advisors, LLC, our Manager, related to obtaining mortgage financing for acquired properties. Loan coordination fees were introduced to reflect the administrative effort involved in arranging debt financing for acquired properties. The portion of the loan coordination fees paid up until July 1, 2017 attributable to the financing were amortized over the lives of the respective mortgage loans, and this non-cash amortization expense is an addition to FFO in the calculation of AFFO. Beginning effective July 1, 2017, the loan coordination fee was lowered from 1.6% to 0.6% of the amount of any mortgage indebtedness on newly-acquired properties or refinancing. All of the loan coordination fees paid to our Manager subsequent to July 1, 2017 are amortized over the life of the debt. At September 30, 2018, aggregate unamortized loan coordination fees were approximately $13.0 million, which will be amortized over a weighted average remaining loan life of approximately 10.2 years. |
4) | We sustained weather related operating losses due to Hurricane Harvey at our Stone Creek multifamily community during the nine months ended September 30, 2018; these costs are added back to FFO in our calculation of AFFO. Lost rent and other operating costs incurred during the nine-month period ended September 30, 2018 totaled approximately $555,000. This number is offset the receipt from our insurance carrier of approximately $588,000 for recoveries of lost rent, which was recognized in our statements of operations for the nine months ended September 30, 2018. |
5) | 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. On March 23, 2018, but 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, 2018, aggregate unamortized loan costs were approximately $21.2 million, which will be amortized over a weighted average remaining loan life of approximately 7.6 years. |
6) | 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 after the payment of loan origination fees to our Manager 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 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 7). |
7) | This adjustment reflects the receipt during the periods presented of additional interest income (described in note 6 above) which was earned and accrued prior to those periods presented on various real estate loans. |
8) | During the third quarter 2018, we recorded a $3.0 million allowance for loss on our real estate loan investment to the developer of Fusion Apartments in Irvine, California, which is reflected on our statements of operations. |
9) | 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. |
10) | On May 7, 2018, we terminated our existing purchase options on the Encore, Bishop Street and Hidden River multifamily communities and the Haven 46 and Haven Charlotte student housing properties, all of which are partially supported by real estate loan investments held by us. In exchange, we are to receive termination fees aggregating approximately $12.5 million from the developers. As of September 30, 2018, we have received approximately $4.6 million in cash in excess of the recognized termination fees, which are added to FFO in our calculation of AFFO. |
11) | 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, 2018, the balance of unamortized below-market lease intangibles was approximately $43.2 million, which will be recognized over a weighted average remaining lease period of approximately 8.9 years. |
12) | 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, as well as non-cash revenue earned from our investment in the collateralized mortgage-backed security in the ML-04 pool from the Freddie Mac K program. |
13) | We deduct from FFO normally recurring capital expenditures that are necessary to maintain our assets' revenue streams in the calculation of AFFO. This adjustment also deducts from FFO capitalized amounts for third party costs during the period to originate or renew leases in our grocery-anchored shopping centers and office buildings. 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. | |||||||||
Consolidated Balance Sheets | |||||||||
(Unaudited) | |||||||||
(In thousands, except per-share par values) | September 30, 2018 | December 31, 2017 | |||||||
Assets | |||||||||
Real estate | |||||||||
Land | $ | 490,394 | $ | 406,794 | |||||
Building and improvements | 2,494,904 | 2,043,853 | |||||||
Tenant improvements | 105,390 | 63,425 | |||||||
Furniture, fixtures, and equipment | 261,806 | 210,779 | |||||||
Construction in progress | 5,353 | 10,491 | |||||||
Gross real estate | 3,357,847 | 2,735,342 | |||||||
Less: accumulated depreciation | (242,579) | (172,756) | |||||||
Net real estate | 3,115,268 | 2,562,586 | |||||||
Real estate loan investments, net of deferred fee income and allowance for loan loss | 326,765 | 255,345 | |||||||
Real estate loan investments to related parties, net | 60,635 | 131,451 | |||||||
Real estate assets held for sale, net | 36,360 | — | |||||||
Total real estate and real estate loan investments, net | 3,539,028 | 2,949,382 | |||||||
Cash and cash equivalents | 26,840 | 21,043 | |||||||
Restricted cash | 59,531 | 51,969 | |||||||
Notes receivable | 14,285 | 17,318 | |||||||
Note receivable and revolving lines of credit due from related parties | 33,140 | 22,739 | |||||||
Accrued interest receivable on real estate loans | 31,250 | 26,865 | |||||||
Acquired intangible assets, net of amortization | 112,914 | 102,743 | |||||||
Deferred loan costs on Revolving Line of Credit, net of amortization | 1,118 | 1,385 | |||||||
Deferred offering costs | 7,741 | 6,544 | |||||||
Tenant lease inducements, net | 20,275 | 14,425 | |||||||
Tenant receivables and other assets | 41,632 | 37,957 | |||||||
Variable Interest Entity ("VIE") assets, at fair value | 262,228 | — | |||||||
Total assets | $ | 4,149,982 | $ | 3,252,370 | |||||
Liabilities and equity | |||||||||
Liabilities | |||||||||
Mortgage notes payable, net of deferred loan costs | $ | 2,140,583 | $ | 1,776,652 | |||||
Revolving line of credit | 55,700 | 41,800 | |||||||
Term note payable, net of deferred loan costs | — | 10,994 | |||||||
Real estate loan investment participation obligation | 10,495 | 13,986 | |||||||
Unearned purchase option termination fees | 5,756 | — | |||||||
Deferred revenue | 37,964 | 27,947 | |||||||
Accounts payable and accrued expenses | 47,548 | 31,253 | |||||||
Accrued interest payable | 6,322 | 5,028 | |||||||
Dividends and partnership distributions payable | 18,188 | 15,680 | |||||||
Acquired below market lease intangibles, net of amortization | 43,155 | 38,857 | |||||||
Security deposits and other liabilities | 14,586 | 9,407 | |||||||
VIE liabilities, at fair value | 257,303 | — | |||||||
Total liabilities | 2,637,600 | 1,971,604 | |||||||
Commitments and contingencies | |||||||||
Equity | |||||||||
Stockholders' equity | |||||||||
Series A Redeemable Preferred Stock, $0.01 par value per share; 3,050 | |||||||||
shares authorized; 1,565 and 1,250 shares issued; 1,508 and 1,222 | |||||||||
shares outstanding at September 30, 2018 and December 31, 2017, respectively | 15 | 12 | |||||||
Series M Redeemable Preferred Stock, $0.01 par value per share; 500 | |||||||||
shares authorized; 37 and 15 shares issued and outstanding | |||||||||
at September 30, 2018 and December 31, 2017, respectively | — | — | |||||||
Common Stock, $0.01 par value per share; 400,067 shares authorized; | |||||||||
40,785 and 38,565 shares issued and outstanding at | |||||||||
September 30, 2018 and December 31, 2017, respectively | 408 | 386 | |||||||
Additional paid-in capital | 1,509,411 | 1,271,040 | |||||||
Accumulated earnings | — | 4,449 | |||||||
Total stockholders' equity | 1,509,834 | 1,275,887 | |||||||
Non-controlling interest | 2,548 | 4,879 | |||||||
Total equity | 1,512,382 | 1,280,766 | |||||||
Total liabilities and equity | $ | 4,149,982 | $ | 3,252,370 |
Preferred Apartment Communities, Inc. | ||||||||
Consolidated Statements of Cash Flows | ||||||||
(Unaudited) | ||||||||
Nine months ended September 30, | ||||||||
(In thousands) | 2018 | 2017 | ||||||
Operating activities: | ||||||||
Net income | $ | 17,339 | $ | 33,409 | ||||
Reconciliation of net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization expense | 127,210 | 82,187 | ||||||
Amortization of above and below market leases | (4,297) | (2,394) | ||||||
Deferred revenues and fee income amortization | (3,103) | (1,526) | ||||||
Purchase option termination fee amortization | (6,554) | — | ||||||
Amortization of market discount on assumed debt and lease incentives | 1,152 | 364 | ||||||
Deferred loan cost amortization | 5,213 | 3,907 | ||||||
(Increase) in accrued interest income on real estate loans | (4,385) | (5,832) | ||||||
Change in fair value of net assets of consolidated VIE | (185) | — | ||||||
Equity compensation to executives and directors | 2,881 | 2,608 | ||||||
Gain on sale of real estate | (38,961) | (37,635) | ||||||
Cash received for purchase option terminations | 5,100 | — | ||||||
Loss on extinguishment of debt | — | 888 | ||||||
Mortgage interest received from consolidated VIE | 3,429 | — | ||||||
Mortgage interest paid to other participants of consolidated VIE | (3,429) | — | ||||||
Increase in loan loss allowance | 3,029 | — | ||||||
Other | — | 189 | ||||||
Changes in operating assets and liabilities: | ||||||||
(Increase) in tenant receivables and other assets | (3,518) | (7,818) | ||||||
(Increase) in tenant lease incentives | (6,786) | (11,890) | ||||||
Increase in accounts payable and accrued expenses | 14,470 | 11,641 | ||||||
Increase in accrued interest, prepaid rents and other liabilities | 3,369 | 2,348 | ||||||
Net cash provided by operating activities | 111,974 | 70,446 | ||||||
Investing activities: | ||||||||
Investment in real estate loans | (145,413) | (119,226) | ||||||
Repayments of real estate loans | 141,729 | 42,495 | ||||||
Notes receivable issued | (5,949) | (6,250) | ||||||
Notes receivable repaid | 8,941 | 3,507 | ||||||
Note receivable issued to and draws on line of credit by related parties | (39,377) | (25,740) | ||||||
Repayments of line of credit by related parties | 28,566 | 23,468 | ||||||
Loan origination fees received | 2,919 | 2,593 | ||||||
Loan origination fees paid to Manager | (1,459) | (1,296) | ||||||
Investment in mortgage-backed securities | (4,739) | — | ||||||
Mortgage principal received from consolidated VIE | 705 | — | ||||||
Acquisition of properties | (662,918) | (485,010) | ||||||
Disposition of properties, net | 83,636 | 148,101 | ||||||
Receipt of insurance proceeds for capital improvements | 412 | — | ||||||
Additions to real estate assets - improvements | (36,288) | (12,031) | ||||||
(Deposits) on acquisitions | 3,552 | 2,429 | ||||||
Net cash used in investing activities | (625,683) | (426,960) | ||||||
Financing activities: | ||||||||
Proceeds from mortgage notes payable | 386,559 | 332,428 | ||||||
Payments for mortgage notes payable | (66,875) | (121,066) | ||||||
Payments for deposits and other mortgage loan costs | (7,150) | (11,580) | ||||||
Payments for mortgage prepayment costs | — | (817) | ||||||
Proceeds from real estate loan participants | 5 | 224 | ||||||
Payments to real estate loan participants | (4,372) | (3,467) | ||||||
Proceeds from lines of credit | 362,100 | 190,000 | ||||||
Payments on lines of credit | (348,200) | (274,500) | ||||||
Repayment of the Term Loan | (11,000) | — | ||||||
Mortgage principal paid to other participants of consolidated VIE | (705) | — | ||||||
Proceeds from sales of Units, net of offering costs and redemptions | 303,391 | 206,312 | ||||||
Proceeds from sales of Common Stock | — | 74,213 | ||||||
Proceeds from exercises of warrants | 16,553 | 39,430 | ||||||
Payments for redemptions of preferred stock | (9,033) | (4,512) | ||||||
Common Stock dividends paid | (29,488) | (19,251) | ||||||
Preferred stock dividends paid | (61,093) | (44,890) | ||||||
Distributions to non-controlling interests | (762) | (605) | ||||||
Payments for deferred offering costs | (2,862) | (5,420) | ||||||
Net cash provided by financing activities | 527,068 | 356,499 | ||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 13,359 | (15) | ||||||
Cash, cash equivalents and restricted cash, beginning of period | 73,012 | 67,715 | ||||||
Cash, cash equivalents and restricted cash, end of period | $ | 86,371 | $ | 67,700 |
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 date | Optional | Total loan commitments | Carrying amount (1) as of | Current / deferred per annum | ||||||||||||||
September 30, 2018 | December 31, 2017 | |||||||||||||||||||
Multifamily communities: | (in thousands) | |||||||||||||||||||
Encore | Atlanta, GA | 12/31/2018 | 10/9/2020 | $ | 10,958 | $ | 10,958 | $ | 10,958 | 8.5 / 5 | ||||||||||
Encore Capital | Atlanta, GA | 4/8/2019 | 10/9/2020 | 9,758 | 8,145 | 7,521 | 8.5 / 5 | |||||||||||||
Palisades | Northern VA | 5/17/2019 | N/A | 17,270 | 17,132 | 17,111 | 8 / 5 | |||||||||||||
Fusion | Irvine, CA | 12/1/2018 | 5/31/2020 | 70,835 | 66,365 | 58,447 | 8.5 / 0 | |||||||||||||
Green Park | Atlanta, GA | 2/28/2018 | N/A | — | — | 11,464 | 8.5 / 5.83 | |||||||||||||
Bishop Street | Atlanta, GA | 2/18/2020 | N/A | 12,693 | 12,693 | 12,145 | 8.5 / 6.5 | |||||||||||||
Hidden River (3) | Tampa, FL | 12/3/2018 | N/A | — | — | 4,735 | 8.5 / 6.5 | |||||||||||||
Hidden River Capital (3) | Tampa, FL | 12/4/2018 | N/A | — | — | 5,041 | 8.5 / 6.5 | |||||||||||||
CityPark II | Charlotte, NC | 1/7/2019 | 1/7/2021 | 3,365 | 3,365 | 3,365 | 8.5 / 6.5 | |||||||||||||
CityPark II Capital | Charlotte, NC | 1/8/2019 | 1/31/2021 | 3,916 | 3,864 | 3,624 | 8.5 / 6.5 | |||||||||||||
Park 35 on Clairmont | Birmingham, AL | 6/26/2019 | 6/26/2020 | 21,060 | 21,060 | 21,060 | 8.5 / 2 | |||||||||||||
Wiregrass | Tampa, FL | 5/15/2020 | 5/15/2023 | 14,976 | 13,833 | 12,972 | 8.5 / 6.5 | |||||||||||||
Wiregrass Capital | Tampa, FL | 5/15/2020 | 5/15/2023 | 4,244 | 3,808 | 3,561 | 8.5 / 6.5 | |||||||||||||
Berryessa | San Jose, CA | 4/19/2018 | N/A | — | — | 30,571 | 10.5 / 0 | |||||||||||||
Berryessa | San Jose, CA | 2/13/2021 | 2/13/2023 | 137,616 | 67,822 | — | 8.5 / 6 | |||||||||||||
The Anson (2) | Nashville, TN | 6/1/2018 | N/A | — | — | 2,261 | 12 / 0 | |||||||||||||
The Anson | Nashville, TN | 11/24/2021 | 11/24/2023 | 6,240 | — | — | 8.5 / 4.5 | |||||||||||||
The Anson | Nashville, TN | 11/24/2021 | 11/24/2023 | 5,659 | 824 | — | 8.5 / 4.5 | |||||||||||||
Fort Myers | Fort Myers, FL | 2/3/2021 | 2/3/2022 | 9,416 | 7,944 | 3,521 | 8.5 / 5.5 | |||||||||||||
Fort Myers Capital | Fort Myers, FL | 2/3/2021 | 2/3/2022 | 6,193 | 5,325 | 4,994 | 8.5 / 5.5 | |||||||||||||
360 Forsyth | Atlanta, GA | 7/11/2020 | 7/11/2022 | 22,412 | 19,320 | 13,400 | 8.5 / 5.5 | |||||||||||||
Morosgo | Atlanta, GA | 1/31/2021 | 1/31/2022 | 11,749 | 10,507 | 4,951 | 8.5 / 5.5 | |||||||||||||
Morosgo Capital | Atlanta, GA | 1/31/2021 | 1/31/2022 | 6,176 | 5,077 | 4,761 | 8.5 / 5.5 | |||||||||||||
University City Gateway | Charlotte, NC | 8/15/2021 | 8/15/2022 | 10,336 | 10,335 | 850 | 8.5 / 5 | |||||||||||||
University City Gateway | ||||||||||||||||||||
Capital | Charlotte, NC | 8/18/2021 | 8/18/2022 | 7,338 | 5,901 | 5,530 | 8.5 / 5 | |||||||||||||
Cameron Park | Alexandria, VA | 10/11/2021 | 10/11/2023 | 21,340 | 9,874 | — | 8.5 / 3 | |||||||||||||
Cameron Park Capital | Alexandria, VA | 10/11/2021 | 10/11/2023 | 8,850 | 7,395 | — | 8.5 / 3 | |||||||||||||
Southpoint | Fredericksburg, VA | 2/28/2022 | 2/28/2024 | 7,348 | — | — | 8.5 / 4 | |||||||||||||
Southpoint Capital | Fredericksburg, VA | 2/28/2022 | 2/28/2024 | 4,962 | 2,668 | — | 8.5 / 4 | |||||||||||||
Student housing properties: | ||||||||||||||||||||
Haven 12 | Starkville, MS | 12/17/2018 | 11/30/2020 | 6,116 | 6,116 | 5,816 | 8.5 / 0 | |||||||||||||
Haven46 | Tampa, FL | 3/29/2019 | 9/29/2020 | 9,820 | 9,820 | 9,820 | 8.5 / 5 | |||||||||||||
Haven Northgate (3) | College Station, TX | 6/20/2019 | N/A | — | — | 65,724 | (4) / 1.5 | |||||||||||||
Lubbock II (3) | Lubbock, TX | 4/20/2019 | N/A | — | — | 9,357 | 8.5 / 0 | |||||||||||||
Haven Charlotte | Charlotte, NC | 12/22/2019 | 12/22/2021 | 19,582 | 19,045 | 17,039 | 8.5 / 6.5 | |||||||||||||
Haven Charlotte Member | Charlotte, NC | 12/22/2019 | 12/22/2021 | 8,201 | 8,201 | 7,795 | 8.5 / 6.5 | |||||||||||||
Solis Kennesaw | Atlanta, GA | 9/26/2020 | 9/26/2022 | 12,359 | 11,100 | 1,610 | 8.5 / 5.5 | |||||||||||||
Solis Kennesaw Capital | Atlanta, GA | 10/1/2020 | 10/1/2022 | 8,360 | 7,619 | 7,145 | 8.5 / 5.5 | |||||||||||||
New Market Properties: | ||||||||||||||||||||
Dawson Marketplace | Atlanta, GA | 9/24/2020 | 9/24/2022 | 12,857 | 12,857 | 12,857 | 8.5 / 6.9 (5) | |||||||||||||
Other: | ||||||||||||||||||||
Crescent Avenue (6) | Atlanta, GA | 4/13/2018 | N/A | — | — | 8,500 | 10 / 5 | |||||||||||||
North Augusta Ballpark | North Augusta, SC | 1/15/2021 | 1/15/2024 | 3,500 | 3,216 | — | 9 / 6 | |||||||||||||
$ | 515,505 | 392,189 | 388,506 | |||||||||||||||||
Unamortized loan origination fees | (1,760) | (1,710) | ||||||||||||||||||
Allowance for loan losses | (3,029) | |||||||||||||||||||
Carrying amount | $ | 387,400 | $ | 386,796 | ||||||||||||||||
(1) Carrying amounts presented per loan are amounts drawn, exclusive of deferred fee revenue. | ||||||||||||||||||||
(2) Effective May 24, 2018, the land acquisition bridge loan was converted into a real estate loan and a capital loan, shown below. | ||||||||||||||||||||
(3) The loan was repaid in full in connection with our acquisition of the underlying property. | ||||||||||||||||||||
(4) The current interest rate on the Haven Northgate loan was a variable rate of 600 basis points over LIBOR. | ||||||||||||||||||||
(5) Effective January 1, 2018, the deferred interest rate increased to 6.9% per annum until the accumulated accrued interest balance reaches $250, at which point the deferred interest rate reverts to 5.0%. | ||||||||||||||||||||
(6) The loan was repaid in full on June 20, 2018. |
We hold options, but not obligations, to purchase certain of the properties which are partially financed by our real estate loan investments. The option purchase prices are 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, less a discount ranging from between 10 and 60 basis points, depending on the loan. As of September 30, 2018, 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 | |||||
Multifamily communities: | |||||||||
Encore | Atlanta, GA | (2) | — | N/A | N/A | ||||
Palisades | Northern VA | 304 | 1/1/2019 | 5/31/2019 | |||||
Bishop Street | Atlanta, GA | (2) | — | N/A | N/A | ||||
Hidden River | Tampa, FL | (2) | — | N/A | N/A | ||||
CityPark II | Charlotte, NC | 200 | 1/1/2019 | 4/1/2019 | |||||
Park 35 on Clairmont | Birmingham, AL | (3) | — | N/A | N/A | ||||
Fort Myers | Fort Myers, FL | 224 | S + 90 days (4) | S + 150 days (4) | |||||
Wiregrass | Tampa, FL | 392 | S + 90 days (4) | S + 150 days (4) | |||||
360 Forsyth | Atlanta, GA | 356 | S + 90 days (4) | S + 150 days (4) | |||||
Morosgo | Atlanta, GA | 258 | S + 90 days (4) | S + 150 days (4) | |||||
University City Gateway | Charlotte, NC | 338 | S + 90 days (4) | S + 150 days (4) | |||||
Berryessa | San Jose, CA | — | N/A | N/A | |||||
The Anson | Nashville, TN | 301 | S + 90 days (4) | S + 150 days (4) | |||||
North Augusta Ballpark | North Augusta, SC | — | N/A | N/A | |||||
Cameron Park | Alexandria, VA | 302 | S + 90 days (4) | S + 150 days (4) | |||||
Southpoint | Fredericksburg, VA | 240 | S + 90 days (4) | S + 150 days (4) | |||||
Student housing properties: | |||||||||
Haven46 | Tampa, FL | (2) | — | N/A | N/A | ||||
Haven Charlotte | Charlotte, NC | (2) | — | N/A | N/A | ||||
Solis Kennesaw | Atlanta, GA | 248 | (5) | (5) | |||||
3,163 | |||||||||
(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. The Berryessa and North Augusta Ballpark projects do not include exclusive purchase options, but we hold a Right of First Offer on these projects at prices acceptable to us and the developer. | |||||||||
(2) On May 7, 2018, these five purchase options were terminated, in exchange for an aggregate $12.5 million in termination fees from the developers. | |||||||||
(3) The option period on the loan expired unexercised on September 1, 2018. | |||||||||
(4) 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. | |||||||||
(5) 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, 2019 and end on December 31, 2019. |
Mortgage Indebtedness
The following table presents certain details regarding our mortgage notes payable:
Principal balance as of | ||||||||||||||||||
Acquisition/ refinancing | September 30, | December 31, | Maturity | Interest | Basis point | Interest only | ||||||||||||
Multifamily communities: | (in thousands) | |||||||||||||||||
Stone Rise | 7/3/2014 | $ | — | (2) | $ | 23,939 | 8/1/2019 | 2.89 | % | Fixed rate | 8/31/2015 | |||||||
Summit Crossing | 10/31/2017 | 38,520 | 39,019 | 11/1/2024 | 3.99 | % | Fixed rate | N/A | ||||||||||
Summit Crossing II | 3/20/2014 | 13,357 | 13,357 | 4/1/2021 | 4.49 | % | Fixed rate | 4/30/2019 | ||||||||||
McNeil Ranch | 1/24/2013 | 13,487 | 13,646 | 2/1/2020 | 3.13 | % | Fixed rate | 2/28/2018 | ||||||||||
Lake Cameron | 1/24/2013 | — | (3) | 19,773 | 2/1/2020 | 3.13 | % | Fixed rate | 2/28/2018 | |||||||||
Stoneridge | 9/26/2014 | 25,679 | 26,136 | 10/1/2019 | 3.18 | % | Fixed rate | N/A | ||||||||||
Vineyards | 9/26/2014 | 34,201 | 34,672 | 10/1/2021 | 3.68 | % | Fixed rate | 10/31/2017 | ||||||||||
Avenues at Cypress | 2/13/2015 | 21,319 | 21,675 | 9/1/2022 | 3.43 | % | Fixed rate | N/A | ||||||||||
Avenues at Northpointe | 2/13/2015 | 27,043 | 27,467 | 3/1/2022 | 3.16 | % | Fixed rate | 3/31/2017 | ||||||||||
Venue at Lakewood Ranch | 5/21/2015 | 28,882 | 29,348 | 12/1/2022 | 3.55 | % | Fixed rate | N/A | ||||||||||
Aster at Lely Resort | 6/24/2015 | 31,967 | 32,471 | 7/5/2022 | 3.84 | % | Fixed rate | N/A | ||||||||||
CityPark View | 6/30/2015 | 20,690 | 21,038 | 7/1/2022 | 3.27 | % | Fixed rate | N/A | ||||||||||
Avenues at Creekside | 7/31/2015 | 39,904 | 40,523 | 8/1/2024 | 3.86 | % | 160 | (4) | 8/31/2016 | |||||||||
Citi Lakes | 9/3/2015 | 41,779 | 42,396 | 4/1/2023 | 4.43 | % | 217 | (5) | N/A | |||||||||
Stone Creek | 6/22/2017 | 20,222 | 20,467 | 7/1/2052 | 3.22 | % | Fixed rate | N/A | ||||||||||
Lenox Village Town Center | 12/21/2015 | 29,461 | 30,009 | 5/1/2019 | 3.82 | % | Fixed rate | N/A | ||||||||||
Lenox Village III | 12/21/2015 | 17,551 | 17,802 | 1/1/2023 | 4.04 | % | Fixed rate | N/A | ||||||||||
Overton Rise | 2/1/2016 | 39,414 | 39,981 | 8/1/2026 | 3.98 | % | Fixed rate | N/A | ||||||||||
Baldwin Park | 1/5/2016 | 77,800 | 77,800 | 1/5/2019 | 4.56 | % | 230 | 1/4/2019 | ||||||||||
Crosstown Walk | 1/15/2016 | 31,033 | 31,486 | 2/1/2023 | 3.90 | % | Fixed rate | N/A | ||||||||||
525 Avalon Park | 6/15/2017 | 66,039 | 66,912 | 7/1/2024 | 3.98 | % | Fixed rate | N/A | ||||||||||
City Vista | 7/1/2016 | 34,562 | 35,073 | 7/1/2026 | 3.68 | % | Fixed rate | N/A | ||||||||||
Sorrel | 8/24/2016 | 32,306 | 32,801 | 9/1/2023 | 3.44 | % | Fixed rate | N/A | ||||||||||
Citrus Village | 3/3/2017 | 29,539 | 29,970 | 6/10/2023 | 3.65 | % | Fixed rate | 6/09/2017 | ||||||||||
Retreat at Greystone | 11/21/2017 | 34,789 | 35,210 | 12/1/2024 | 4.31 | % | Fixed rate | N/A | ||||||||||
Founders Village | 3/31/2017 | 30,882 | 31,271 | 4/1/2027 | 4.31 | % | Fixed rate | N/A | ||||||||||
Claiborne Crossing | 4/26/2017 | 26,487 | 26,801 | 6/1/2054 | 2.89 | % | Fixed rate | N/A | ||||||||||
Luxe at Lakewood Ranch | 7/26/2017 | 38,554 | 39,066 | 8/1/2027 | 3.93 | % | Fixed rate | N/A | ||||||||||
Adara at Overland Park | 9/27/2017 | 31,345 | 31,760 | 4/1/2028 | 3.90 | % | Fixed rate | N/A | ||||||||||
Aldridge at Town Village | 10/31/2017 | 37,381 | 37,847 | 11/1/2024 | 4.19 | % | Fixed rate | (6) | N/A | |||||||||
Reserve at Summit Crossing | 9/29/2017 | 19,746 | 20,017 | 10/1/2024 | 3.87 | % | Fixed rate | N/A | ||||||||||
Overlook at Crosstown Walk | 11/21/2017 | 21,946 | 22,231 | 12/1/2024 | 3.95 | % | Fixed rate | N/A | ||||||||||
Colony at Centerpointe | 12/20/2017 | 32,929 | 33,346 | 10/1/2026 | 3.68 | % | Fixed rate | N/A | ||||||||||
Lux at Sorrel | 1/9/2018 | 31,199 | — | 2/1/2030 | 3.91 | % | Fixed rate | N/A | ||||||||||
Green Park | 2/28/2018 | 39,409 | — | 3/10/2028 | 4.09 | % | Fixed rate | N/A | ||||||||||
The Lodge at Hidden River | 9/27/2018 | 41,685 | — | 10/1/2028 | 4.32 | % | Fixed rate | N/A | ||||||||||
Total multifamily communities | 1,101,107 | 1,045,310 | ||||||||||||||||
Grocery-anchored shopping centers: | ||||||||||||||||||
Spring Hill Plaza | 9/5/2014 | 9,314 | 9,470 | 10/1/2019 | 3.36 | % | Fixed rate | 10/31/2015 | ||||||||||
Parkway Town Centre | 9/5/2014 | 6,774 | 6,887 | 10/1/2019 | 3.36 | % | Fixed rate | 10/31/2015 | ||||||||||
Woodstock Crossing | 8/8/2014 | 2,949 | 2,989 | 9/1/2021 | 4.71 | % | Fixed rate | N/A | ||||||||||
Deltona Landings | 9/30/2014 | 6,661 | 6,778 | 10/1/2019 | 3.48 | % | Fixed rate | N/A | ||||||||||
Powder Springs | 9/30/2014 | 7,029 | 7,152 | 10/1/2019 | 3.48 | % | Fixed rate | N/A | ||||||||||
Kingwood Glen | 9/30/2014 | 11,145 | 11,340 | 10/1/2019 | 3.48 | % | Fixed rate | N/A | ||||||||||
Barclay Crossing | 9/30/2014 | 6,266 | 6,376 | 10/1/2019 | 3.48 | % | Fixed rate | N/A | ||||||||||
Sweetgrass Corner | 9/30/2014 | 7,600 | 7,731 | 10/1/2019 | 3.58 | % | Fixed rate | N/A | ||||||||||
Parkway Centre | 9/30/2014 | 4,364 | 4,441 | 10/1/2019 | 3.48 | % | Fixed rate | N/A | ||||||||||
The Market at Salem Cove | 10/6/2014 | 9,296 | 9,423 | 11/1/2024 | 4.21 | % | Fixed rate | 11/30/2016 | ||||||||||
Independence Square | 8/27/2015 | 11,780 | 11,967 | 9/1/2022 | 3.93 | % | Fixed rate | 9/30/2016 | ||||||||||
Royal Lakes Marketplace | 9/4/2015 | 9,580 | 9,690 | 9/4/2020 | 4.61 | % | 250 | 4/3/2017 | ||||||||||
The Overlook at Hamilton Place | 12/22/2015 | 20,012 | 20,301 | 1/1/2026 | 4.19 | % | Fixed rate | N/A | ||||||||||
Summit Point | 10/30/2015 | 11,947 | 12,208 | 11/1/2022 | 3.57 | % | Fixed rate | N/A | ||||||||||
East Gate Shopping Center | 4/29/2016 | 5,468 | 5,578 | 5/1/2026 | 3.97 | % | Fixed rate | N/A | ||||||||||
Fury's Ferry | 4/29/2016 | 6,317 | 6,444 | 5/1/2026 | 3.97 | % | Fixed rate | N/A | ||||||||||
Rosewood Shopping Center | 4/29/2016 | 4,243 | 4,328 | 5/1/2026 | 3.97 | % | Fixed rate | N/A | ||||||||||
Southgate Village | 4/29/2016 | 7,542 | 7,694 | 5/1/2026 | 3.97 | % | Fixed rate | N/A | ||||||||||
The Market at Victory Village | 5/16/2016 | 9,104 | 9,214 | 9/11/2024 | 4.40 | % | Fixed rate | 10/10/2017 | ||||||||||
Wade Green Village | 4/7/2016 | 7,854 | 7,969 | 5/1/2026 | 4.00 | % | Fixed rate | N/A | ||||||||||
Lakeland Plaza | 7/15/2016 | 28,450 | 29,023 | 8/1/2026 | 3.85 | % | Fixed rate | N/A | ||||||||||
University Palms | 8/8/2016 | 12,890 | 13,162 | 9/1/2026 | 3.45 | % | Fixed rate | N/A | ||||||||||
Cherokee Plaza | 8/8/2016 | 24,839 | 25,322 | 9/1/2021 | 4.35 | % | 225 | (7) | N/A | |||||||||
Sandy Plains Exchange | 8/8/2016 | 9,004 | 9,194 | 9/1/2026 | 3.45 | % | Fixed rate | N/A | ||||||||||
Thompson Bridge Commons | 8/8/2016 | 12,037 | 12,291 | 9/1/2026 | 3.45 | % | Fixed rate | N/A | ||||||||||
Heritage Station | 8/8/2016 | 8,909 | 9,097 | 9/1/2026 | 3.45 | % | Fixed rate | N/A | ||||||||||
Oak Park Village | 8/8/2016 | 9,194 | 9,388 | 9/1/2026 | 3.45 | % | Fixed rate | N/A | ||||||||||
Shoppes of Parkland | 8/8/2016 | 16,045 | 16,241 | 9/1/2023 | 4.67 | % | Fixed rate | N/A | ||||||||||
Champions Village | 10/18/2016 | 27,400 | 27,400 | 11/1/2021 | 5.11 | % | 300 | (8) | 11/1/2021 | |||||||||
Castleberry-Southard | 4/21/2017 | 11,227 | 11,383 | 5/1/2027 | 3.99 | % | Fixed rate | N/A | ||||||||||
Rockbridge Village | 6/6/2017 | 13,942 | 14,142 | 7/5/2027 | 3.73 | % | Fixed rate | N/A | ||||||||||
Irmo Station | 7/26/2017 | 10,373 | 10,566 | 8/1/2030 | 3.94 | % | Fixed rate | N/A | ||||||||||
Maynard Crossing | 8/25/2017 | 18,044 | 18,388 | 9/1/2032 | 3.74 | % | Fixed rate | N/A | ||||||||||
Woodmont Village | 9/8/2017 | 8,587 | 8,741 | 10/1/2027 | 4.125 | % | Fixed rate | N/A | ||||||||||
West Town Market | 9/22/2017 | 8,794 | 8,963 | 10/1/2025 | 3.65 | % | Fixed rate | N/A | ||||||||||
Crossroads Market | 12/5/2017 | 18,699 | 19,000 | 1/1/2030 | 3.95 | % | Fixed rate | N/A | ||||||||||
Anderson Central | 3/16/2018 | 11,888 | — | 4/1/2028 | 4.32 | % | Fixed rate | N/A | ||||||||||
Greensboro Village | 5/22/2018 | 8,501 | — | 6/1/2028 | 4.20 | % | Fixed rate | N/A | ||||||||||
Governors Towne Square | 5/22/2018 | 11,310 | — | 6/1/2028 | 4.20 | % | Fixed rate | N/A | ||||||||||
Conway Plaza | 6/29/2018 | 9,756 | — | 7/5/2028 | 4.29 | % | Fixed rate | N/A | ||||||||||
Brawley Commons | 7/6/2018 | 18,491 | — | 8/1/2028 | 4.36 | % | Fixed rate | N/A | ||||||||||
Total grocery-anchored shopping centers | 463,625 | 410,281 | ||||||||||||||||
Student housing properties: | ||||||||||||||||||
North by Northwest | 6/1/2016 | 32,198 | 32,767 | 10/1/2022 | 4.02 | % | Fixed rate | N/A | ||||||||||
SoL | 3/29/2018 | 37,485 | 37,485 | 1/29/2019 | 4.36 | % | 210 | 1/29/2019 | ||||||||||
Stadium Village | 10/27/2017 | 46,308 | 46,930 | 11/1/2024 | 3.80 | % | Fixed rate | N/A | ||||||||||
Ursa | 12/18/2017 | 31,400 | 31,400 | 1/5/2020 | 5.26 | % | 300 | 1/5/2020 | ||||||||||
The Tradition | 5/10/2018 | 30,000 | — | 6/6/2021 | 6.26 | % | 400 | (9) | 6/6/2021 | |||||||||
Retreat at Orlando | 5/31/2018 | 47,125 | — | 9/1/2025 | 4.09 | % | Fixed rate | 9/1/2020 | ||||||||||
The Bloc | 6/27/2018 | 28,966 | — | 7/9/2021 | 5.81 | % | 355 | (10) | 7/9/2021 | |||||||||
Total student housing properties | 253,482 | 148,582 | ||||||||||||||||
Office buildings: | ||||||||||||||||||
Brookwood Center | 8/29/2016 | 31,668 | 32,219 | 9/10/2031 | 3.52 | % | Fixed rate | 10/9/2017 | ||||||||||
Galleria 75 | 11/4/2016 | 5,588 | 5,716 | 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 | 53,488 | 54,440 | 12/10/2028 | 4.10 | % | Fixed rate | N/A | ||||||||||
Armour Yards | 1/29/2018 | 40,000 | — | 2/1/2028 | 4.10 | % | Fixed rate | 2/29/2020 | ||||||||||
150 Fayetteville | 7/31/2018 | 114,400 | — | 8/10/2028 | 4.27 | % | Fixed rate | 9/9/2020 | ||||||||||
Total office buildings | 360,644 | 207,875 | ||||||||||||||||
Grand total | 2,178,858 | 1,812,048 | ||||||||||||||||
Less: deferred loan costs | (33,775) | (30,249) | ||||||||||||||||
Less: below market debt adjustment | (4,500) | (5,147) | ||||||||||||||||
Mortgage notes, net | $ | 2,140,583 | $ | 1,776,652 | ||||||||||||||
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) On September 28, 2018, the Company legally defeased the mortgage loan in conjunction with the sale of its Stone Rise property located in Philadelphia, PA. In connection with the defeasance, the mortgage and other liens on the property were extinguished and all existing collateral, including various guarantees, were released. As a result of the defeasance, the Company incurred costs associated with a defeasance premium of approximately $71,000. |
(3) On March 20, 2018, the Company legally defeased the mortgage loan in conjunction with the sale of its Lake Cameron property, located in Raleigh, NC. In connection with the defeasance, the mortgage and other liens on the property were extinguished and all existing collateral, including various guarantees, were released. As a result of the defeasance, the Company incurred costs associated with a defeasance premium of approximately $355,000. |
(4) 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%. |
(5) The 1 Month LIBOR index is capped at 4.33% resulting in a cap on the combined rate of 6.5%. |
(6) The property was temporarily financed through a credit facility sponsored by the Federal Home Loan Mortgage Corporation; the Company obtained permanent mortgage financing subsequent to the closing as shown. |
(7) The interest rate has a floor of 2.7%. |
(8) The interest rate has a floor of 3.25%. |
(9) The interest rate has a floor of 5.6%. |
(10) The interest rate has a floor of 5.25%. |
Multifamily Communities
As of September 30, 2018, our multifamily community portfolio consisted of the following properties:
Three months ended | ||||||||||||||||
Property | Location | Number of | Average unit | Average | Average | |||||||||||
Established Communities: | ||||||||||||||||
Avenues at Cypress | Houston, TX | 240 | 1,170 | 96.8 | % | $ | 1,436 | |||||||||
Avenues at Northpointe | Houston, TX | 280 | 1,167 | 96.2 | % | $ | 1,382 | |||||||||
Vineyards | Houston, TX | 369 | 1,122 | 96.3 | % | $ | 1,167 | |||||||||
Aster at Lely Resort | Naples, FL | 308 | 1,071 | 93.9 | % | $ | 1,480 | |||||||||
Venue at Lakewood Ranch | Sarasota, FL | 237 | 1,001 | 94.0 | % | $ | 1,561 | |||||||||
Citi Lakes | Orlando, FL | 346 | 984 | 93.4 | % | $ | 1,419 | |||||||||
Lenox Portfolio | Nashville, TN | 474 | 861 | 95.7 | % | $ | 1,205 | |||||||||
Overton Rise | Atlanta, GA | 294 | 1,018 | 95.4 | % | $ | 1,541 | |||||||||
Sorrel | Jacksonville, FL | 290 | 1,048 | 95.6 | % | $ | 1,270 | |||||||||
Total/Average Established Communities | 2,838 | 95.3 | % | |||||||||||||
Summit Crossing | Atlanta, GA | 485 | 1,053 | 97.1 | % | $ | 1,187 | |||||||||
McNeil Ranch | Austin, TX | 192 | 1,071 | — | $ | 1,246 | ||||||||||
CityPark View | Charlotte, NC | 284 | 948 | — | $ | 1,099 | ||||||||||
Avenues at Creekside | San Antonio, TX | 395 | 974 | — | $ | 1,147 | ||||||||||
Stone Creek | Houston, TX | 246 | 852 | — | $ | 1,078 | ||||||||||
525 Avalon Park | Orlando, FL | 487 | 1,394 | 96.0 | % | $ | 1,438 | |||||||||
Retreat at Greystone | Birmingham, AL | 312 | 1,100 | 96.5 | % | $ | 1,234 | |||||||||
Broadstone at Citrus Village | Tampa, FL | 296 | 980 | 97.0 | % | $ | 1,288 | |||||||||
Stoneridge Farms at the Hunt Club | Nashville, TN | 364 | 1,153 | — | $ | 1,103 | ||||||||||
Founders Village | Williamsburg, VA | 247 | 1,070 | 96.5 | % | $ | 1,373 | |||||||||
Crosstown Walk | Tampa, FL | 342 | 981 | 94.6 | % | $ | 1,293 | |||||||||
Claiborne Crossing | Louisville, KY | 242 | 1,204 | 96.6 | % | $ | 1,334 | |||||||||
Luxe at Lakewood Ranch | Sarasota, FL | 280 | 1,105 | — | $ | 1,505 | ||||||||||
Adara Overland Park | Kansas City, KS | 260 | 1,116 | 96.3 | % | $ | 1,335 | |||||||||
Aldridge at Town Village | Atlanta, GA | 300 | 969 | 95.6 | % | $ | 1,350 | |||||||||
The Reserve at Summit Crossing | Atlanta, GA | 172 | 1,002 | 95.7 | % | $ | 1,347 | |||||||||
Overlook at Crosstown Walk | Tampa, FL | 180 | 986 | 94.1 | % | $ | 1,385 | |||||||||
Colony at Centerpointe | Richmond, VA | 255 | 1,149 | 95.9 | % | $ | 1,370 | |||||||||
Lux at Sorrel | Jacksonville, FL | 265 | 1,025 | 94.0 | % | $ | 1,385 | |||||||||
Green Park | Atlanta, GA | 310 | 985 | 94.0 | % | $ | 1,453 | |||||||||
Lodge at Hidden River | Tampa, FL | 300 | 980 | — | — | |||||||||||
Value-add project: | ||||||||||||||||
Village at Baldwin Park | Orlando, FL | 528 | 1,069 | — | $ | 1,646 | ||||||||||
6,742 | ||||||||||||||||
Joint venture: | ||||||||||||||||
City Vista | Pittsburgh, PA | 272 | 1,023 | 96.2 | % | $ | 1,357 | |||||||||
Total PAC Non-Established Communities | 7,014 | |||||||||||||||
Average stabilized physical occupancy | 95.6 | % | ||||||||||||||
Total multifamily community units | 9,852 | |||||||||||||||
For the three-month period ended September 30, 2018, our average established multifamily communities' physical occupancy was 95.3%. We calculate average established 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. For the three-month period ended September 30, 2018, 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, 2018, our average economic occupancy was 95.5%. 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 (Stone Creek, Village at Baldwin Park, Luxe at Lakewood Ranch, CityPark View and Avenues at Creekside). We also exclude properties which are currently being marketed for sale, which included Stoneridge Farms at Hunt Club at September 30, 2018.
Student Housing Properties
As of September 30, 2018, our student housing portfolio consisted of the following properties:
Three months ended | ||||||||||||||||||
Property | Location | Number | Number | Average unit | Average | Average rent | ||||||||||||
Student housing properties: | ||||||||||||||||||
North by Northwest | Tallahassee, FL | 219 | 679 | 1,250 | 95.2 | % | $ | 730 | ||||||||||
SoL | Tempe, AZ | 224 | 639 | 1,296 | 95.1 | % | $ | 701 | ||||||||||
Stadium Village (1) | Atlanta, GA | 198 | 792 | 1,466 | 97.2 | % | $ | 700 | ||||||||||
Ursa (1) | Waco, TX | 250 | 840 | 1,634 | — | n/a | ||||||||||||
The Tradition | College Station, TX | 427 | 808 | 549 | — | n/a | ||||||||||||
The Retreat at Orlando | Orlando, FL | 221 | 894 | 2,036 | — | n/a | ||||||||||||
The Bloc | Lubbock, TX | 140 | 556 | 1,394 | — | n/a | ||||||||||||
1,679 | 5,208 | |||||||||||||||||
(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.
For the three-month period ended September 30, 2018, our capital expenditures for multifamily communities 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 | $ | 117 | $ | 11.96 | $ | — | $ | — | $ | 117 | $ | 11.96 | |||||||||||||
Carpets | 418 | 42.78 | — | — | 418 | 42.78 | |||||||||||||||||||
Wood / vinyl flooring | 87 | 8.87 | — | — | 87 | 8.87 | |||||||||||||||||||
Mini blinds and ceiling fans | 31 | 3.17 | — | — | 31 | 3.17 | |||||||||||||||||||
Fire safety | — | — | 34 | 3.46 | 34 | 3.46 | |||||||||||||||||||
HVAC | 143 | 14.60 | — | — | 143 | 14.60 | |||||||||||||||||||
Computers, equipment, misc. | 3 | 0.34 | 83 | 8.50 | 86 | 8.84 | |||||||||||||||||||
Elevators | — | — | — | — | — | — | |||||||||||||||||||
Exterior painting | — | — | 159 | 16.28 | 159 | 16.28 | |||||||||||||||||||
Leasing office and other common amenities | 38 | 3.92 | 1,741 | 178.08 | 1,779 | 182.00 | |||||||||||||||||||
Major structural projects | — | — | 5,532 | 565.93 | 5,532 | 565.93 | |||||||||||||||||||
Cabinets and countertop upgrades | — | — | 769 | 78.63 | 769 | 78.63 | |||||||||||||||||||
Landscaping and fencing | — | — | 293 | 29.99 | 293 | 29.99 | |||||||||||||||||||
Parking lot | — | — | 279 | 28.54 | 279 | 28.54 | |||||||||||||||||||
Common area items | — | — | 95 | 9.72 | 95 | 9.72 | |||||||||||||||||||
Totals | $ | 837 | $ | 85.64 | $ | 8,985 | $ | 919.13 | $ | 9,822 | $ | 1,004.77 |
For the three-month period ended September 30, 2018, our capital expenditures for student housing properties consisted of:
Capital Expenditures - Student Housing Properties | |||||||||||||||||||||||||
Recurring | Non-recurring | Total | |||||||||||||||||||||||
(in thousands, except per-unit figures) | Amount | Per Bed | Amount | Per Bed | Amount | Per Bed | |||||||||||||||||||
Appliances | $ | 23 | $ | 4.47 | $ | — | $ | — | $ | 23 | $ | 4.47 | |||||||||||||
Carpets | 73 | 13.95 | — | — | 73 | 13.95 | |||||||||||||||||||
Wood / vinyl flooring | 1 | 0.16 | — | — | 1 | 0.16 | |||||||||||||||||||
Mini blinds and ceiling fans | 9 | 1.76 | — | — | 9 | 1.76 | |||||||||||||||||||
Fire safety | — | — | — | — | — | — | |||||||||||||||||||
HVAC | 31 | 5.96 | — | — | 31 | 5.96 | |||||||||||||||||||
Computers, equipment, misc. | 3 | 0.50 | 44 | 8.46 | 47 | 8.96 | |||||||||||||||||||
Elevators | — | — | — | — | — | — | |||||||||||||||||||
Exterior painting | — | — | — | — | — | — | |||||||||||||||||||
Leasing office and other common amenities | 66 | 12.76 | 29 | 5.56 | 95 | 18.32 | |||||||||||||||||||
Major structural projects | — | — | 3 | 0.56 | 3 | 0.56 | |||||||||||||||||||
Cabinets and counter top upgrades | 1 | 0.12 | 227 | 43.56 | 228 | 43.68 | |||||||||||||||||||
Landscaping and fencing | — | — | 6 | 1.06 | 6 | 1.06 | |||||||||||||||||||
Parking lot | — | — | — | — | — | — | |||||||||||||||||||
Common area items | — | — | 36 | 6.83 | 36 | 6.83 | |||||||||||||||||||
Totals | $ | 207 | $ | 39.68 | $ | 345 | $ | 66.03 | $ | 552 | $ | 105.71 |
Grocery-Anchored Shopping Center Portfolio
As of September 30, 2018, our grocery-anchored shopping center portfolio consisted of the following properties:
Property name | Location | Year built | GLA (1) | Percent | Grocery | ||||||
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 | 94.6 | % | Sprouts | |||||
Powder Springs | Atlanta, GA | 1999 | 77,853 | 96.9 | % | Publix | |||||
Rockbridge Village | Atlanta, GA | 2005 | 102,432 | 94.2 | % | Kroger | |||||
Roswell Wieuca Shopping Center | Atlanta, GA | 2007 | 74,370 | 100.0 | % | The Fresh Market | |||||
Royal Lakes Marketplace | Atlanta, GA | 2008 | 119,493 | 89.3 | % | Kroger | |||||
Sandy Plains Exchange | Atlanta, GA | 1997 | 72,784 | 93.2 | % | Publix | |||||
Summit Point | Atlanta, GA | 2004 | 111,970 | 86.9 | % | Publix | |||||
Thompson Bridge Commons | Atlanta, GA | 2001 | 92,587 | 96.1 | % | Kroger | |||||
Wade Green Village | Atlanta, GA | 1993 | 74,978 | 93.2 | % | Publix | |||||
Woodmont Village | Atlanta, GA | 2002 | 85,639 | 94.6 | % | 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 | 98.6 | % | Publix | |||||
Parkway Centre | Columbus, GA | 1999 | 53,088 | 100.0 | % | Publix | |||||
Spring Hill Plaza | Nashville, TN | 2005 | 61,570 | 100.0 | % | Publix | |||||
Parkway Town Centre | Nashville, TN | 2005 | 65,587 | 98.2 | % | Publix | |||||
The Market at Salem Cove | Nashville, TN | 2010 | 62,356 | 97.8 | % | Publix | |||||
The Market at Victory Village | Nashville, TN | 2007 | 71,300 | 98.5 | % | Publix | |||||
Greensboro Village | Nashville, TN | 2005 | 70,203 | 98.3 | % | Publix | |||||
The Overlook at Hamilton Place | Chattanooga, TN | 1992 | 213,095 | 100.0 | % | The Fresh Market | |||||
Shoppes of Parkland | Miami-Ft. Lauderdale, FL | 2000 | 145,720 | 98.4 | % | BJ's Wholesale Club | |||||
Barclay Crossing | Tampa, FL | 1998 | 54,958 | 100.0 | % | Publix | |||||
Deltona Landings | Orlando, FL | 1999 | 59,966 | 100.0 | % | Publix | |||||
University Palms | Orlando, FL | 1993 | 99,172 | 100.0 | % | Publix | |||||
Conway Plaza | Orlando, FL | 1966 | 117,705 | 98.0 | % | Publix | |||||
Crossroads Market | Naples, FL | 1993 | 126,895 | 100.0 | % | Publix | |||||
Neapolitan Way | Naples, FL | 1985 | 137,580 | 91.6 | % | Publix | |||||
Champions Village | Houston, TX | 1973 | 383,346 | 78.9 | % | Randalls | |||||
Kingwood Glen | Houston, TX | 1998 | 103,397 | 97.9 | % | Kroger | |||||
Independence Square | Dallas, TX | 1977 | 140,218 | 84.9 | % | Tom Thumb | |||||
Oak Park Village | San Antonio, TX | 1970 | 64,855 | 100.0 | % | H.E.B. | |||||
Sweetgrass Corner | Charleston, SC | 1999 | 89,124 | 96.2 | % | Bi-Lo | |||||
Irmo Station | Columbia, SC | 1980 | 99,384 | 95.3 | % | Kroger | |||||
Anderson Central | Greenville Spartanburg, SC | 1999 | 223,211 | 96.1 | % | Walmart | |||||
Fairview Market | Greenville Spartanburg, SC | 1998 | 53,888 | 73.5 | % | Aldi | |||||
Rosewood Shopping Center | Columbia, SC | 2002 | 36,887 | 90.2 | % | Publix | |||||
Brawley Commons | Charlotte, NC | 1997 | 122,028 | 97.4 | % | Publix | |||||
West Town Market | Charlotte, NC | 2004 | 67,883 | 100.0 | % | Harris Teeter | |||||
Heritage Station | Raleigh, NC | 2004 | 72,946 | 100.0 | % | Harris Teeter | |||||
Maynard Crossing | Raleigh, NC | 1996 | 122,781 | 96.9 | % | Harris Teeter | |||||
Southgate Village | Birmingham, AL | 1988 | 75,092 | 98.0 | % | Publix | |||||
Grand total/weighted average | 4,571,888 | 94.6 | % |
(1) Gross leasable area, or GLA, represents the total amount of property square footage that can be leased to tenants.
As of September 30, 2018, our grocery-anchored shopping center portfolio was 94.6% leased. We define percent leased as the percentage of gross leasable area that is leased, including noncancelable lease agreements that have been signed which have not yet commenced.
Details regarding lease expirations (assuming no exercises of tenant renewal options) within our grocery-anchored shopping center portfolio as of September 30, 2018 were:
Total grocery-anchored shopping center portfolio | ||||||||
Number of leases | Leased GLA | Percent of leased | ||||||
Month to month | 10 | 25,107 | 0.6 | % | ||||
2018 | 18 | 34,746 | 0.8 | % | ||||
2019 | 105 | 578,975 | 13.4 | % | ||||
2020 | 125 | 535,312 | 12.4 | % | ||||
2021 | 123 | 557,261 | 12.9 | % | ||||
2022 | 106 | 351,053 | 8.1 | % | ||||
2023 | 92 | 378,994 | 8.8 | % | ||||
2024 | 28 | 610,914 | 14.1 | % | ||||
2025 | 26 | 429,810 | 9.9 | % | ||||
2026 | 12 | 143,420 | 3.3 | % | ||||
2027 | 19 | 121,651 | 2.8 | % | ||||
2028+ | 36 | 553,131 | 12.9 | % | ||||
Total | 700 | 4,320,374 | 100.0 | % |
The Company's Quarterly Report on Form 10-Q for third quarter 2018 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 2018 totaled approximately $469,000. Second-generation capital expenditures exclude those expenditures made in our grocery-anchored shopping center portfolio (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 re-developments and repositioning.
Office Building Portfolio
As of September 30, 2018, our office building portfolio consisted of the following properties:
Property Name | Location | GLA | Percent | |||||
Three Ravinia | Atlanta, GA | 814,000 | 91 | % | ||||
150 Fayetteville | Raleigh, NC | 560,000 | 89 | % | ||||
Westridge at La Cantera | San Antonio, TX | 258,000 | 100 | % | ||||
Armour Yards | Atlanta, GA | 187,000 | 94 | % | ||||
Brookwood Center | Birmingham, AL | 169,000 | 100 | % | ||||
Galleria 75 | Atlanta, GA | 111,000 | 96 | % | ||||
2,099,000 | 93 | % |
The Company's office building portfolio includes the following significant tenants:
Rentable square | Percent of | Annual Base | |||||||||
InterContinental Hotels Group | 520,039 | 25.4 | % | $ | 11,821 | ||||||
State Farm Mutual Automobile Insurance Company | 183,168 | 7.1 | % | 3,300 | |||||||
United Services Automobile Association | 129,015 | 6.5 | % | 3,042 | |||||||
Harland Clarke Corporation | 129,016 | 6.0 | % | 2,811 | |||||||
Smith Anderson | 91,998 | 5.9 | % | 2,768 | |||||||
1,053,236 | 50.9 | % | $ | 23,742 |
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 | Rentable square | rented | ||||
feet | square feet | |||||
2018 | 23,128 | 1.2 | % | |||
2019 | 50,109 | 2.6 | % | |||
2020 | 62,478 | 3.2 | % | |||
2021 | 241,325 | 12.5 | % | |||
2022 | 58,922 | 3.1 | % | |||
2023 | 109,036 | 5.6 | % | |||
2024 | 203,703 | 10.5 | % | |||
2025 | 125,987 | 6.5 | % | |||
2026 | 91,998 | 4.8 | % | |||
2027 | 259,700 | 13.4 | % | |||
2028+ | 707,166 | 36.6 | % | |||
Total | 1,933,552 | 100.0 | % |
The Company recognized second-generation capital expenditures within its office building portfolio of approximately $16,000 during the third quarter 2018. Second-generation capital expenditures exclude those expenditures made in our office building portfolio (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 Class A ownership standards (and which amounts were underwritten into the total investment at the time of acquisition) and (iii) for property re-developments and repositionings.
Definitions of Non-GAAP Measures
We disclose 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. None of 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, 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 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 most recently revised in 2012, 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 impairment charges on and gains/losses from sales of depreciable property;
- plus depreciation and amortization of real estate assets and deferred leasing costs; and
- after adjustments for the Company's proportionate share of unconsolidated partnerships and joint ventures.
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.
Adjusted Funds From Operations Attributable to Common Stockholders and Unitholders ("AFFO")
AFFO makes further adjustments to 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:
FFO, plus:
- non-cash equity compensation to directors and executives;
- amortization of loan closing costs;
- losses on debt extinguishments or refinancing costs;
- weather-related property operating losses;
- amortization of loan coordination fees paid to the Manager;
- depreciation and amortization of non-real estate assets;
- net loan fees received;
- accrued interest income received;
- allowances for loan loss reserves;
- cash received for purchase option terminations;
- deemed dividends on preferred stock redemptions;
- non-cash dividends on Series M Preferred Stock; 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 retail direct 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. AFFO is a non-GAAP measure that is reconciled to its most comparable GAAP measure, net income/loss available to common stockholders. FFO and AFFO are not considered measures of liquidity and are not alternatives to measures calculated under GAAP.
Multifamily Established Communities' Same Store Net Operating Income (NOI)
We use same store net operating income as an operational metric for our established communities, enabling comparisons of those properties' operating results between the current reporting period and the prior year comparative period. We define our population of established 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), or the Company, is a Maryland corporation formed primarily to acquire and operate multifamily properties in select targeted markets throughout the United States. As part of our business strategy, we may enter into forward purchase contracts or purchase options for to-be-built multifamily communities and we may make real estate related loans, provide deposit arrangements or provide performance assurances, as may be necessary or appropriate, in connection with the development of multifamily communities and other properties. As a secondary strategy, we may acquire or originate senior mortgage loans, subordinate loans or real estate loans secured by interests in multifamily properties, membership or partnership interests in multifamily properties and other multifamily related assets and invest a lesser portion of our assets in other real estate related investments, including other income-producing property types, senior mortgage loans, subordinate loans or real estate loans secured by interests in other income-producing property types or membership or partnership interests in other income-producing property types as determined by Preferred Apartment Advisors, LLC, or our Manager, as appropriate for us. At September 30, 2018, the Company was the approximate 97.4% owner of Preferred Apartment Communities Operating Partnership, L.P., or the Operating Partnership. We elected to be taxed as a real estate investment trust under the Internal Revenue Code of 1986, as amended, commencing with our tax year ended December 31, 2011.
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SOURCE Preferred Apartment Communities, Inc.
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