EX-99.1 2 tm207763d1_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

 

 

For Immediate Release

 

Bluerock Residential Growth REIT Announces Fourth Quarter 2019 Results

 

- Total Fourth Quarter Revenues Grew 5.0% to $52.5 Million -

- Full Year 2019 Same Store Revenue Grew 4.8% -

 

New York, NY (February 13, 2020) – Bluerock Residential Growth REIT, Inc. (NYSE American: BRG) (“the Company”), an owner of highly amenitized multi-family apartment communities, announced today its financial results for the quarter ended December 31, 2019.

 

Fourth Quarter Highlights

 

•Total revenues grew 5.0% to $52.5 million for the quarter from $50.0 million in the prior year period.

 

•Net loss attributable to common stockholders for the fourth quarter of 2019 was ($0.62) per diluted share, as compared to net loss attributable to common stockholders of ($0.55) per diluted share in the prior year period.

 

•Property Net Operating Income (“NOI”) grew 5.2% to $28.2 million from $26.8 million in the prior year period.

 

•Same store revenue increased 2.4% and same store NOI decreased 0.2%, as compared to the prior year period due to one-time events detailed below. Full year same store revenue and NOI increased 4.8% and 5.8%, respectively.

 

•Completed 211 value-add unit upgrades during the quarter producing a 19.3% ROI through increased monthly rental rates.

 

•Improved operating margin by 110 basis points year over year to 61.6%.

 

•Core funds from operations attributable to common stockholders and unit holders (“CFFO”) was $6.7 million, compared to $6.3 million in the prior year period. CFFO per diluted share was $0.21 for the quarter as compared to $0.20 in fourth quarter 2018.

 

•Invested in three multifamily communities totaling 866 units for a total purchase price of $222 million.

 

•Invested $48 million in debt and preferred equity investments, including three multifamily communities totaling 481 units in Atlanta and Smyrna, Georgia and additional fundings of seven development projects.

 

•Paid quarterly common stock dividend of $0.1625, a 77% payout on a CFFO basis.

 

•Terminated the Series B Preferred Stock offering, and initiated sales of Series T preferred stock in December 2019.

 

•Consolidated real estate investments, at cost, increased approximately $286 million to $2.1 billion, from December 31, 2018.

 

 

 

 


Full Year 2019 Highlights

 

·Total revenues grew 13.7% to $210.0 million for the year from $184.7 million in the prior year.

 

·Net loss attributable to common stockholders for 2019 was ($0.91) per share, as compared to ($1.82) per share in the prior year.

 

·Property NOI grew 17.4% to $110.9 million, from $94.5 million in the prior year.

 

·Same store revenue and NOI increased 4.8% and 5.8%, respectively, as compared to the prior year.

 

·Completed 979 value-add unit upgrades during the year producing a 22.7% ROI through increased monthly rental rates.

 

·Improved operating margin by 170 basis points year over year to 59.8%.

 

·CFFO increased 2.6% to $25.4 million, from $24.8 million in the prior year. CFFO per share increased 2.5% to $0.82 for the year from $0.80 in the prior year.

 

·For the full year, the Company made investments in seven multifamily communities with 2,365 total units for a total purchase price of $526 million.

 

·Completed the sale of eight assets during 2019, totaling approximately $370 million.

 

·Invested $94 million in debt and preferred equity investments, including five operating multifamily communities totaling 785 units, one development community, and additional fundings of eleven development projects.

 

·Invested $10 million to buyout the noncontrolling interests in three assets.

 

“The fourth quarter topped a productive year for BRG, as we delivered same-store NOI growth of 5.8% for the year, and completed over $629 million of investments to fuel our ongoing growth. This included an active fourth quarter where we acquired three operating assets and invested in three preferred equity investments,” said Ramin Kamfar, Chairman and CEO. “We continued to target growth markets and expanded our geographic footprint in the West with acquisitions in Arizona and Washington. We are excited about the growth we anticipate as 2020 progresses and we realize the benefits of our recent acquisitions and proven value-add upgrade program.”  

 

Financial Results

 

Net loss attributable to common stockholders for the fourth quarter of 2019 was ($13.8) million, or ($0.62) per diluted share, compared to a net loss attributable to common stockholders of ($12.8) million, or ($0.55) per diluted share, in the prior year period. Net income attributable to common stockholders included non-cash expenses of $18.6 million, or $0.83 per share in the fourth quarter of 2019 compared to non-cash expenses of $17.7 million or $0.75 per share for the prior year period.

 

CFFO for the fourth quarter of 2019 was $6.7 million, or $0.21 per diluted share, compared to $6.3 million, or $0.20 per diluted share, in the prior year period. CFFO was primarily driven by growth in property NOI of $1.4 million, interest income of $1.0 million, preferred returns on unconsolidated real estate of $0.2 million arising from investment activity and decreases of $0.7 million and $0.3 million in cash general and administrative expenses and interest expense, respectively. This was primarily offset by a year-over-year rise in preferred stock dividends of $3.2 million.

 

 

 

 

Total Portfolio Performance

$ In thousands, except average rental rates  4Q19   4Q18   Variance   YTD19   YTD18   Variance 
Total Revenues (1)  $52,520   $50,011    5.0%  $209,971   $184,716    13.7%
Property Operating Expenses  $17,600   $17,493    0.6%  $74,449   $67,997    9.5%
NOI  $28,200   $26,795    5.2%  $110,927   $94,464    17.4%
Operating Margin   61.6%   60.5%   110bps   59.8%   58.1%   170bps
Occupancy Percentage   93.6%   94.5%   (90)bps   93.8%   94.1%   (30)bps
Average Rental Rate  $1,319   $1,280    3.0%  $1,311   $1,251    4.8%

 

(1)Including interest income from related parties

 

For the fourth quarter of 2019, property revenues increased by 5.0% compared to the same prior year period primarily attributable to the increased size of the portfolio. Total portfolio NOI was $28.2 million, an increase of $1.4 million, or 5.2%, compared to the same period in the prior year.

Property NOI margins were 61.6% of revenue for the quarter, an increase of 110 basis points compared to 60.5% of revenue in the prior year quarter. Property operating expenses were up primarily due to non-controllable expenses increases.

 

Same Store Portfolio Performance

$ In thousands, except average rental rates  4Q19   4Q18   Variance   YTD19   YTD18   Variance 
Revenues  $36,319   $35,472    2.4%  $126,568   $120,770    4.8%
Property Operating Expenses  $14,569   $13,681    6.5%  $51,012   $49,340    3.4%
NOI  $21,750   $21,791    (0.2%)  $75,556   $71,430    5.8%
Operating Margin   59.9%   61.4%   (150)bps   59.7%   59.1%   60bps
Occupancy Percentage   93.6%   94.8%   (120)bps   94.1%   94.3%   (20)bps
Average Rental Rate  $1,324   $1,278    3.6%  $1,320   $1,255    5.2%

 

Same store NOI for the three months ended December 31, 2019 decreased 0.2%, or $0.04 million, compared to the 2018 period. Same store property revenues increased 2.4% as compared to the 2018 period, primarily driven by a 3.6% increase in average rental rates as twenty-four of our twenty-six same store properties recognized rental rate increases during the period. Revenues were moderated by a 120 basis points decrease in average occupancy to 93.6% primarily due to a loss of 27 corporate leases in one asset, and the transition of property management at three assets necessitated by performance issues. Occupancy at the above assets have recovered to 96.2% as of end of January 2020.

 

Same store expenses for the three months ended December 31, 2019 increased 6.5%, or $0.9 million, compared to the 2018 period, primarily due to non-controllable expense increases.  Real estate taxes increased $0.6 million from prior year due to $0.3 million in municipality tax increases and to a $0.3 million real estate tax income item recognized in the prior year.  In addition, insurance expenses increased $0.2 million due to industrywide price increases stemming from hurricanes, wildfires, and hail over the past two years.

 

Renovation Activity

 

The Company completed 211 value-add unit upgrades during the fourth quarter producing a 19.3% ROI through increased monthly rental rates. The Company completed 979-unit renovations in 2019 producing a 22.7% ROI through increased monthly rental rates.

 

 

 

 

Since inception, within the existing portfolio, the Company has completed 2,645 value-add unit upgrades at an average cost of $5,682 per unit and achieved an average monthly rental rate increase of $111 per unit, equating to a 23.5% ROI on all unit upgrades leased as of December 31, 2019. The Company has identified approximately 4,515 remaining units within the existing portfolio for value-add upgrades with similar projected economics to the completed renovations.

 

Portfolio Activity

 

During the fourth quarter, the Company completed investments totaling $270 million. These investments include the following:

 

•Funded $26 million in increased development loans related to The Park at Chapel Hill, a development located in Chapel Hill, North Carolina.

 

•Acquired a 90% interest in a 358-unit apartment community located in Atlanta, Georgia, known as Chattahoochee Ridge. The total purchase price was $70 million, funded in part by a $45 million mortgage loan secured by the property.

 

•Invested $4 million to increase its interest in the Helios development in Atlanta, Georgia.

 

•Acquired a 100% interest in a 332-unit apartment community located in Scottsdale, Arizona, known as The District at Scottsdale. The total purchase price was approximately $124 million, funded in part by a $82 million mortgage loan secured by the property. The asset was 60% leased at purchase, as a result of which the Company realized a 50 to 75 basis point cap rate benefit on its purchase price.

 

•Acquired a 90% interest in a 176-unit apartment community located in Pasco, Washington, known as Navigator Villas. The total purchase price was approximately $28 million, funded in part by the assumption of a $15 million mortgage loan secured by the property, along with a $6 million supplemental mortgage loan. The Company believes this community has significant value-add renovation upside opportunity.

 

•Made preferred equity investments totaling $10 million into three Atlanta, Georgia MSA operating assets with 481-units called Belmont Crossing, Sierra Terrace, and Sierra Village.

 

•Funded $8 million under existing preferred and mezzanine commitments in five developments.

  

•In addition, contributed its remaining mezzanine loan of $10 million to Cade Boca Raton for an 81.0% interest in the Cade Boca Raton development.

 

•Subsequent to year-end, acquired a 100% interest in a 254-unit apartment community in Phoenix, Arizona known as Avenue 25 for a total purchase price of $56 million. The asset offers significant operational upside through institutional property management and substantial value-add opportunity.

 

 

 

Balance Sheet

 

During the fourth quarter, the Company raised gross proceeds of approximately $84.3 million through the issuance of 84,293 shares of Series B Preferred Stock with associated warrants at $1,000 per unit. The Company terminated the offering of Series B Preferred Stock and warrants effective December 20, 2019.

 

The Company initiated sales of the Series T Preferred Stock in December 2019 and issued 17,400 Series T Preferred shares with gross proceeds of $0.4 million. The Series T Preferred Stock continuous offering offers 20,000,000 preferred shares in the primary offering, along with 12,000,000 preferred shares pursuant to a dividend reinvestment plan. The preferred shares are offered at $25.00 per share and pay cumulative monthly dividends at a 6.15% annual rate, along with an annual stock dividend of up to 0.2% annually for five years.

 

The Company initiated redemptions of its Series B Preferred Stock during November 2019. The Company redeemed 7,300 shares of Series B Preferred Stock representing a stated value of $7.3 million plus accrued and unpaid dividends by issuing 613,153 shares of Class A common stock.

 

The Company repurchased 57,883 shares of its Class A common stock at an average price of $11.79 per share, for a total cost of approximately $0.7 million under its $50.0 million share repurchase plan announced in December 2019.

 

The Company sold 454,237 shares of its Class A common stock at an average price of $11.98 per share, for total proceeds of approximately $5.4 million under its Class A common stock ATM (“At-the-Market”) offering announced in September 2019.

 

As of December 31, 2019, the Company had $31.7 million of unrestricted cash on its balance sheet, approximately $83.0 million available among its revolving credit facilities, and $1.4 billion of debt outstanding.

 

Dividend

 

The Board of Directors authorized, and the Company declared, a quarterly dividend for the fourth quarter of 2019 equal to a quarterly rate of $0.1625 per share on its Class A common stock, payable to the stockholders of record as of December 24, 2019, which was paid in cash on January 3, 2020. A portion of each dividend may constitute a return of capital for tax purposes. There is no assurance that the Company will continue to declare dividends or at this rate.

 

The Board of Directors authorized, and the Company declared, a quarterly cash dividend on its 8.250% Series A Cumulative Redeemable Preferred Stock for the fourth quarter of 2019, in the amount of $0.515625 per share. In addition, the Board of Directors authorized, and the Company declared, a quarterly cash dividend on its 7.625% Series C Cumulative Redeemable Preferred Stock for the fourth quarter of 2019, in the amount of $0.4765625 per share. Further, the Board of Directors authorized, and the Company declared, a quarterly cash dividend on its 7.125% Series D Cumulative Preferred Stock for the fourth quarter of 2019, in the amount of $0.4453125 per share. The dividends were payable to the stockholders of record on December 24, 2019 and were paid in cash on January 3, 2020.

 

On October 14, 2019, the Board of Directors authorized, and the Company declared, a monthly dividend of $5.00 per share of Series B Preferred Stock, payable to the stockholders of record as of October 25, 2019, which was paid in cash on November 5, 2019. On October 31, 2019, the Board of Directors authorized, and the Company declared, monthly dividends of $5.00 per share, each prorated on the basis of the actual number of days in the applicable dividend period during which each such share was outstanding.  Such prorated dividends were paid in cash on each of (i) December 5, 2019 (to holders of record on November 25, 2019), and (ii) January 3, 2020 (to holders of record on December 24, 2019).

 

 

 

 

On December 20, 2019, the Board of Directors authorized, and the Company declared a monthly dividend of $0.128125 per share of Series T Preferred Stock, prorated on the basis of the actual number of days in the applicable dividend period during which each share was outstanding.  Such pro-rated dividends were payable to the stockholders of record on December 24, 2019 and were paid in cash on January 3, 2020.

 

2020 Guidance

 

Based on the Company’s current outlook and market conditions, the Company anticipates 2020 CFFO in the range of $0.83 to $0.86 per share. The Company anticipates that earnings growth will be more heavily weighted towards the second half of 2020 as it realizes the upside opportunity from implementation of institutional property management, lease-ups, and value-add renovations at its recent acquisitions. For additional guidance details underlying earnings guidance, please see page 32 of Company’s Fourth Quarter 2019 Earnings Supplement available under Investors on the Company’s website (www.bluerockresidential.com).

 

Conference Call

 

All interested parties can listen to the live conference call at 11:00 AM ET on Thursday, February 13, 2020 by dialing +1 (866) 843-0890 within the U.S., or +1 (412) 317-6597, and requesting the "Bluerock Residential Conference."

 

For those who are not available to listen to the live call, the conference call will be available for replay on the Company’s website two hours after the call concludes, and will remain available until March 13, 2020 at http://services.choruscall.com/links/brg200213.html, as well as by dialing +1 (877) 344-7529 in the U.S., or +1 (412) 317-0088 internationally, and requesting conference number 10138317.

 

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

 

About Bluerock Residential Growth REIT, Inc.

 

Bluerock Residential Growth REIT, Inc. (NYSE American: BRG) is a real estate investment trust that focuses on developing and acquiring a diversified portfolio of institutional-quality highly amenitized live/work/play apartment communities in demographically attractive knowledge economy growth markets to appeal to the renter by choice. The Company’s objective is to generate value through off-market/relationship-based transactions and, at the asset level, through value add improvements to properties and operations. The Company is included in the Russell 2000 and Russell 3000 Indexes. BRG has elected to be taxed as a real estate investment trust (REIT) for U.S. federal income tax purposes.

 

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

 

Forward Looking Statements

 

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements are based upon the Company’s present expectations, but these statements are not guaranteed to occur. Furthermore, the Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. Investors should not place undue reliance upon forward-looking statements. For further discussion of the factors that could affect outcomes, please refer to the risk factors set forth in Item 1A of the Company’s Annual Report on Form 10-K filed by the Company with the U.S. Securities and Exchange Commission (“SEC”) on February 27, 2019, and subsequent filings by the Company with the SEC. We claim the safe harbor protection for forward looking statements contained in the Private Securities Litigation Reform Act of 1995.

 

 

 

 

Portfolio Summary

 

The following is a summary of our operating real estate and mezzanine/preferred investments as of December 31, 2019:

 

Consolidated Operating Properties  Location  Number of Units  

Year Built/

Renovated (1)

   Ownership Interest  

Average

Rent (2)

   % Occupied (3) 
ARIUM Glenridge  Atlanta, GA   480    1990    90%  $1,262    92.9%
ARIUM Grandewood  Orlando, FL   306    2005    100%   1,435    94.1%
ARIUM Hunter’s Creek  Orlando, FL   532    1999    100%   1,445    94.7%
ARIUM Metrowest  Orlando, FL   510    2001    100%   1,418    93.5%
ARIUM Westside  Atlanta, GA   336    2008    90%   1,571    97.0%
Ashford Belmar  Lakewood, CO   512    1988/1993   85%   1,658    91.8%
Ashton Reserve  Charlotte, NC   473    2015    100%   1,125    95.8%
Cade Boca Raton  Boca Raton, FL   90    2019    81%   2,639    92.2%
Chattahoochee Ridge  Atlanta, GA   358    1996    90%   1,370    91.3%
Citrus Tower  Orlando, FL   336    2006    97%   1,328    92.6%
Denim  Scottsdale, AZ   645    1979    100%   1,177    97.2%
Element  Las Vegas, NV   200    1995    100%   1,259    94.5%
Enders Place at Baldwin Park  Orlando, FL   220    2003    92%   1,799    96.4%
Gulfshore Apartment Homes, formerly ARIUM Gulfshore  Naples, FL   368    2016    100%   1,316    92.9%
James on South First  Austin, TX   250    2016    90%   1,325    94.0%
Marquis at The Cascades  Tyler, TX   582    2009    90%   1,238    93.8%
Marquis at TPC  San Antonio, TX   139    2008    90%   1,494    97.1%
Navigator Villas  Pasco, WA   176    2013    90%   1,087    95.5%
Outlook at Greystone  Birmingham, AL   300    2007    100%   1,018    95.3%
Park & Kingston  Charlotte, NC   168    2015    100%   1,331    94.6%
Pine Lakes Preserve, formerly ARIUM Pine Lakes  Port St. Lucie, FL   320    2003    100%   1,333    94.7%
Plantation Park  Lake Jackson, TX   238    2016    80%   1,362    91.6%
Providence Trail  Mount Juliet, TN   334    2007    100%   1,256    91.0%
Roswell City Walk  Roswell, GA   320    2015    98%   1,549    94.4%
Sands Parc  Daytona Beach, FL   264    2017    100%   1,374    94.7%
The Brodie  Austin, TX   324    2001    93%   1,321    96.0%
The District at Scottsdale  Scottsdale, AZ   332    2018    100%   2,161    61.1%
The Links at Plum Creek  Castle Rock, CO   264    2000    88%   1,456    90.9%
The Mills  Greenville, SC   304    2013    100%   1,071    93.4%
The Preserve at Henderson Beach  Destin, FL   340    2009    100%   1,474    93.5%
The Reserve at Palmer Ranch, formerly ARIUM at Palmer Ranch  Sarasota, FL   320    2016    100%   1,305    96.9%
The Sanctuary  Las Vegas, NV   320    1988    100%   1,026    89.4%
Veranda at Centerfield  Houston, TX   400    1999    93%   981    96.3%
Villages at Cypress Creek  Houston, TX   384    2001    80%   1,155    93.8%
Wesley Village  Charlotte, NC   301    2010    100%   1,372    92.4%
Consolidated Operating Properties Subtotal/Average      11,746             $1,319(4)   94.0%(4)
                             
Mezzanine/Preferred Investments  Location  Actual/Planned Number of Units             Pro Forma Average Rent      
Alexan CityCentre  Houston, TX   340             $1,721(2)     
Alexan Southside Place  Houston, TX   270              1,710(2)     
Arlo  Charlotte, NC   286              1,507      
Belmont Crossing  Smyrna, GA   192              789(2)     
Domain at The One Forty  Garland, TX   299              1,469      
Helios  Atlanta, GA   282              1,443(2)     
Mira Vista  Austin, TX   200              977(2)     
Motif, formerly Flagler Village  Fort Lauderdale, FL   385              2,352      
North Creek Apartments  Leander, TX   259              1,358      
Novel Perimeter  Atlanta, GA   320              1,749      
Riverside Apartments  Austin, TX   222              1,408      
Sierra Terrace  Atlanta, GA   135              1,159(2)     
Sierra Village  Atlanta, GA   154              1,073(2)     
The Park at Chapel Hill  Chapel Hill, NC               *                            *      
Thornton Flats  Austin, TX   104              1,551(2)     
Vickers Historic Roswell  Roswell, GA   79              3,176      
Wayforth at Concord  Concord, NC   150              1,707      
Whetstone Apartments  Durham, NC   204              1,327(2)     
Mezzanine and Preferred Investments Subtotal/Average      3,881             $1,631      
                             
Portfolio Properties Total/Average      15,627             $1,394(4)     

 

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

(2) Represents the average effective monthly rent per occupied unit for the three months ended December 31, 2019.

(3) Percent occupied is calculated as (i) the number of units occupied as of December 31, 2019, divided by (ii) total number of units, expressed as a percentage.

(4) Excludes District at Scottsdale, which is in lease-up and Cade Boca Raton, which was consolidated on December 31, 2019 and had no operations for the quarter.

* The development is in the planning phase, project specifications are in process.

 

 

 


Consolidated Statement of Operations

For the Three and Nine Months Ended December 31, 2019 and 2018

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

 

   Three Months Ended   Year Ended 
   December 31,   December 31, 
   2019   2018   2019   2018 
Revenues                    
Net rental income  $40,565   $39,534   $164,498   $144,325 
Other property revenues   5,235    4,754    20,878    18,136 
Rental and other property revenues   45,800    44,288    185,376    162,461 
Interest income from related parties   6,720    5,723    24,595    22,255 
Total revenues   52,520    50,011    209,971    184,716 
Expenses                    
Property operating   17,600    17,493    74,449    67,997 
Property management fees   1,192    1,184    4,899    4,391 
General and administrative   5,620    5,623    22,553    19,553 
Acquisition and pursuit costs   210    37    556    116 
Weather-related losses, net   7    107    355    288 
Depreciation and amortization   19,355    16,839    70,452    62,683 
Total expenses   43,984    41,283    173,264    155,028 
Operating income   8,536    8,728    36,707    29,688 
Other income (expense)                    
Other income   68    —    68    — 
Preferred returns on unconsolidated real estate joint ventures   2,700    2,435    9,797    10,312 
Gain on sale of real estate investments   —    —    48,680    — 
Gain on sale of non-depreciable real estate investments   —    —    679    — 
Loss on extinguishment of debt and debt modification costs   (335)   —    (7,258)   (2,277)
Interest expense, net   (13,728)   (16,935)   (59,554)   (52,998)
Total other (expense) income   (11,295)   (14,500)   (7,588)   (44,963)
Net (loss) income   (2,759)   (5,772)   29,119    (15,275)
Preferred stock dividends   (12,868)   (9,642)   (46,159)   (35,637)
Preferred stock accretion   (3,415)   (1,829)   (10,335)   (5,970)
Net loss attributable to noncontrolling interests                    
Operating Partnership units   (5,032)   (3,998)   (6,779)   (12,839)
Partially owned properties   (183)   (460)   (845)   (1,284)
Net loss attributable to noncontrolling interests   (5,215)   (4,458)   (7,624)   (14,123)
Net loss attributable to common stockholders  $(13,827)  $(12,785)  $(19,751)  $(42,759)
                     
Net loss per common share - Basic  $(0.62)  $(0.55)  $(0.91)  $(1.82)
                     
Net loss per common share – Diluted  $(0.62)  $(0.55)  $(0.91)  $(1.82)
                     
Weighted average basic common shares outstanding   22,729,882    23,702,897    22,649,222    23,845,800 
Weighted average diluted common shares outstanding   22,729,882    23,702,897    22,649,222    23,845,800 

 

 

 

 

Consolidated Balance Sheets

Fourth Quarter 2019

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

 

   December 31,
2019		   December 31,
2018		 
ASSETS          
Net Real Estate Investments          
Land  $268,244   $200,385 
Buildings and improvements   1,752,738    1,546,244 
Furniture, fixtures and equipment   67,836    55,050 
Construction in progress   68    989 
Total Gross Real Estate Investments   2,088,886    1,802,668 
Accumulated depreciation   (141,566)   (108,911)
Total Net Real Estate Investments   1,947,320    1,693,757 
Cash and cash equivalents   31,683    24,775 
Restricted cash   19,085    27,469 
Notes and accrued interest receivable from related parties   193,781    164,084 
Due from affiliates   4,077    2,854 
Accounts receivable, prepaids and other assets   15,209    14,395 
Preferred equity investments and investments in unconsolidated real estate joint ventures   126,444    89,033 
In-place lease intangible assets, net   3,098    1,768 
TOTAL ASSETS  $2,340,697   $2,018,135 
           
LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY          
Mortgages payable  $1,425,257   $1,206,136 
Revolving credit facilities   18,000    82,209 
Accounts payable   1,488    1,486 
Other accrued liabilities   27,499    31,690 
Due to affiliates   790    726 
Distributions payable   13,541    12,073 
Total Liabilities   1,486,575    1,334,320 
8.250% Series A Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share, 10,875,000 shares authorized; 5,721,460 shares issued and outstanding at December 31, 2019 and 2018   140,355    139,545 
6.000% Series B Redeemable Preferred Stock, liquidation preference $1,000 per share, 1,225,000 shares authorized; 536,695 and 306,009 shares issued and outstanding as of December 31, 2019 and 2018, respectively   480,921    272,842 
7.625% Series C Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share, 4,000,000 shares authorized; 2,323,750 shares issued and outstanding as of December 31, 2019 and 2018   56,797    56,485 
6.150% Series T Redeemable Preferred Stock, liquidation preference $25.00 per share, 32,000,000 shares authorized; 17,400 and no shares issued and outstanding as of December 31, 2019 and 2018, respectively   388    — 
Equity          
Stockholders’ Equity          
Preferred stock, $0.01 par value, 197,900,000 shares authorized; no shares issued and outstanding as of December 31, 2019 and 2018   —    — 
7.125% Series D Cumulative Preferred Stock, liquidation preference $25.00 per share, 4,000,000 shares authorized; 2,850,602 shares issued and outstanding at December 31, 2019 and 2018   68,705    68,705 
Common stock - Class A, $0.01 par value, 747,509,582 shares authorized; 23,422,557 and 23,322,211 shares issued and outstanding as of December 31, 2019 and 2018, respectively   234    233 
Common stock - Class C, $0.01 par value, 76,603 shares authorized; 76,603 shares issued and outstanding as of December 31, 2019 and 2018   1    1 
Additional paid-in-capital   311,683    307,938 
Distributions in excess of cumulative earnings   (253,132)   (218,531)
Total Stockholders’ Equity   127,491    158,346 
Noncontrolling Interests          
Operating partnership units   19,331    27,613 
Partially owned properties   28,839    28,984 
Total Noncontrolling Interests   48,170    56,597 
Total Equity   175,661    214,943 
TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY  $2,340,697   $2,018,135 

 

 

 

 

Non-GAAP Financial Measures

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

 

Funds from Operations and Core Funds from Operations Attributable to Common Stockholders and Unit Holders

 

We believe that funds from operations (“FFO”), as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), and core funds from operations (“CFFO) are important non-GAAP supplemental measures of operating performance for a REIT.

 

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

 

CFFO makes certain adjustments to FFO, removing the effect of items that do not reflect ongoing property operations such as acquisition expenses, non-cash interest, unrealized gains or losses on derivatives, losses on extinguishment of debt and debt modification costs (includes prepayment penalties incurred and the write-off of unamortized deferred financing costs and fair market value adjustments of assumed debt), one-time weather-related costs, gains or losses on sales of non-depreciable real estate property, shareholder activism, stock compensation expense and preferred stock accretion. We believe that CFFO is helpful to investors as a supplemental performance measure because it excludes the effects of certain items which can create significant earnings volatility, but which do not directly relate to our core recurring property operations. As a result, we believe that CFFO can help facilitate comparisons of operating performance between periods and provides a more meaningful predictor of future earnings potential.

 

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

 

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

 

 

 

 

We have acquired seven operating properties, made six property investments through preferred equity interests or mezzanine loans, and sold seven operating properties subsequent to December 31, 2018. Therefore, the results presented in the table below are not directly comparable and should not be considered an indication of our future operating performance.

 

The table below reconciles our calculations of FFO and CFFO to net loss attributable to common stockholders, the most directly comparable GAAP financial measure, for the three and nine months ended December 31, 2019 and 2018 (in thousands, except per share amounts):

 

   Three Months Ended   Year Ended 
   December 31,   December 31, 
   2019   2018   2019   2018 
Net loss attributable to common stockholders  $(13,827)  $(12,785)  $(19,751)  $(42,759)
Add back: Net loss attributable to Operating Partnership units   (5,032)   (3,998)   (6,779)   (12,839)
Net loss attributable to common stockholders and unit holders   (18,859)   (16,783)   (26,530)   (55,598)
Common stockholders and Operating Partnership units pro-rata share of:                    
Real estate depreciation and amortization (1)   18,483    15,785    66,670    59,103 
Gain on sale of real estate investments   —    —    (48,172)   — 
FFO Attributable to Common Stockholders and Unit Holders   (376)   (998)   (8,032)   3,505 
Common stockholders and Operating Partnership units pro-rata share of:                    
Acquisition and pursuit costs   210    37    556    116 
 Non-cash interest expense   826    780    3,174    3,757 
Unrealized loss on derivatives   32    3,001    2,450    2,776 
Loss on extinguishment of debt and debt modification costs   335    —    7,199    2,226 
Weather-related losses, net   7    102    313    280 
Non-real estate depreciation and amortization   121    85    448    301 
Gain on sale of non-depreciable real estate investments   —    —    (679)   — 
Shareholder activism   —    —    393    — 
Non-recurring income   (68)   —    (68)   — 
Non-cash preferred returns on unconsolidated real estate joint ventures   (353)   (280)   (1,291)   (980)
Non-cash equity compensation   2,506    1,768    10,615    6,807 
Preferred stock accretion   3,415    1,829    10,335    5,970 
CFFO Attributable to Common Stockholders and Unit Holders  $6,655   $6,324   $25,413   $24,758 
                     
Per Share and Unit Information:                    
FFO Attributable to Common Stockholders and Unit Holders - diluted  $(0.01)  $(0.03)  $(0.26)  $0.11 
CFFO Attributable to Common Stockholders and Unit Holders - diluted  $0.21   $0.20   $0.82   $0.80 
                     
Weighted average common shares and units outstanding - diluted   31,455,630    31,113,092    30,899,927    30,995,249 

 

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

 

 

 

 

Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate ("EBITDAre")

 

NAREIT defines earnings before interest, taxes, depreciation and amortization for real estate ("EBITDAre") (September 2017 White Paper) as net income, computed in accordance with GAAP, before interest expense, income taxes, depreciation and amortization expense, and further adjusted for gains and losses from sales of depreciated operating properties, and impairment write-downs of depreciated operating properties.

 

We consider EBITDAre to be an appropriate supplemental measure of our performance because it eliminates depreciation, income taxes, interest and non-recurring items, which permits investors to view income from operations unobscured by non-cash items such as depreciation, amortization, the cost of debt or non-recurring items.

 

Adjusted EBITDAre represents EBITDAre further adjusted for non-comparable items and it is not intended to be a measure of free cash flow for our management’s discretionary use, as it does not consider certain cash requirements such as income tax payments, debt service requirements, capital expenditures and other fixed charges.

 

EBITDAre and Adjusted EBITDAre are not recognized measurements under GAAP. Because not all companies use identical calculations, our presentation of EBITDAre and Adjusted EBITDAre may not be comparable to similarly titled measures of other companies.

 

Below is a reconciliation of net loss attributable to common stockholders to EBITDAre (unaudited and dollars in thousands).

 

   Three Months Ended   Year Ended 
   December 31,   December 31, 
   2019   2018   2019   2018 
Net loss attributable to common stockholders  $(13,827)  $(12,785)  $(19,751)  $(42,759)
Net loss attributable to noncontrolling interests   (5,215)   (4,458)   (7,624)   (14,123)
Preferred stock dividends   12,868    9,642    46,159    35,637 
Preferred stock accretion   3,415    1,829    10,335    5,970 
Interest expense, net   13,728    16,935    59,554    52,998 
Depreciation and amortization   19,309    16,754    70,079    62,382 
Gain on sale of real estate investments   —    —    (48,680)   — 
Loss on extinguishment of debt and debt modification costs   335    —    7,258    2,277 
EBITDAre  $30,613   $27,917   $117,330   $102,382 
Acquisition and pursuit costs   210    37    556    116 
Non-real estate depreciation and amortization   121    85    448    301 
Weather-related losses, net   7    107    355    288 
Gain on sale of non-depreciable real estate investments   —    —    (679)   — 
Shareholder activism   —    —    393    — 
Non-cash equity compensation   2,506    1,768    10,615    6,807 
Non-recurring income   (68)   —    (68)   — 
Non-cash preferred returns on unconsolidated real estate joint ventures   (353)   (280)   (1,291)   (980)
Adjusted EBITDAre  $33,036   $29,634   $127,659   $108,914 

  

 

 

 

Same Store Properties

 

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

 

Property Net Operating Income ("Property NOI")

 

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

 

 

 

 

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

 

   Three Months Ended   Year Ended 
   December 31,   December 31, 
   2019   2018   2019   2018 
Net loss attributable to common stockholders  $(13,827)  $(12,785)  $(19,751)  $(42,759)
Add back: Net loss attributable to Operating Partnership units   (5,032)   (3,998)   (6,779)   (12,839)
Net loss attributable to common stockholders and unit holders   (18,859)   (16,783)   (26,530)   (55,598)
Add common stockholders and Operating Partnership units pro-rata share of:                    
Depreciation and amortization   18,483    15,785    66,670    59,103 
Non-real estate depreciation and amortization   121    85    448    301 
Non-cash interest expense   826    780    3,174    3,757 
Unrealized loss on derivatives   32    3,001    2,450    2,776 
Loss on extinguishment of debt and debt modification costs   335    —    7,199    2,226 
Property management fees   1,135    1,118    4,645    4,151 
Acquisition and pursuit costs   210    37    556    116 
Corporate operating expenses   5,545    5,552    22,261    19,416 
Weather-related losses, net   7    102    313    280 
Preferred dividends   12,868    9,642    46,159    35,637 
Preferred stock accretion   3,415    1,829    10,335    5,970 
Less common stockholders and Operating Partnership units pro-rata share of:                    
Other income   68    —    68    — 
Preferred returns on unconsolidated real estate joint ventures   2,700    2,435    9,797    10,312 
Interest income from related parties   6,720    5,723    24,595    22,255 
Gain on sale of real estate investments   —    —    48,172    — 
Gain on sale of non-depreciable real estate investments   —    —    679    — 
Pro-rata share of properties’ income   14,630    12,990    54,369    45,568 
Add:                    
Noncontrolling interest pro-rata share of partially owned property income   724    774    2,810    2,629 
Total property income   15,354    13,764    57,179    48,197 
Add:                    
Interest expense   12,846    13,031    53,748    46,267 
Net operating income   28,200    26,795    110,927    94,464 
Less:                    
Non-same store net operating income   6,450    5,004    35,371    23,034 
Same store net operating income (1)  $21,750   $21,791   $75,556   $71,430 

 

(1) Same store portfolio for the three months ended December 31, 2019 consists of 26 properties, which represent 8,779 units. Same store portfolio for the year ended December 31, 2019 consists of 22 properties, which represent 7,613 units.

 

Contact

Investors:

(888) 558.1031
investor.relations@bluerockre.com

 

Media:

Josh Hoffman

(208) 475.2380

jhoffman@bluerockre.com

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