EX-99.2 3 tv526672_ex99-2.htm EXHIBIT 99.2

 

Exhibit 99.2 

 

   

 

 

 

Bluerock Residential Growth REIT, Inc.

Second Quarter 2019

Supplemental Financial Information

(Unaudited)

 

 

Table of Contents

 

Second Quarter Earnings Release 3
   
Financial and Operating Highlights 16
   
Share and Unit Information 17
   
EBITDAre and Interest Information 18
   
Financial Statistics 19
   
Recent Acquisitions and Investments 20
   
Recent Dispositions 21
   
Investments in Unconsolidated Real Estate Joint Ventures and Notes and Accrued Interest Receivable from Related Parties 22
   
Portfolio Information 23
   
Renovation Table 24
   
Mezzanine/Preferred Investments 25
   
Condensed Consolidated Balance Sheets 26
   
Consolidated Statements of Operations 27
   
Reconciliation of Funds from Operations (FFO) and Core Funds from Operations (CFFO) 28
   
Mortgages Payable Summary Information 29
   
2019 Outlook 31
   
Definitions of Non-GAAP Financial Measures 32

 

This document 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, including statements relating to the Company’s operating environment, operating trends, and outlook. 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, including our periodic reports. We claim the safe harbor protection for forward looking statements contained in the Private Securities Litigation Reform Act of 1995.

 

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Bluerock Residential Growth REIT, Inc.

Second Quarter Earnings Release

 

  

 

 

For Immediate Release

 

Bluerock Residential Growth REIT Announces Second Quarter 2019 Results

 

- Total Revenues Grew 16.6% to $52.4 Million -

- Increases Midpoint of Full Year 2019 CFFO Guidance -

 

New York, NY (August 6, 2019) – 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 June 30, 2019.

 

Highlights

 

•Total revenues grew 16.6% to $52.4 million for the quarter from $45.0 million in the prior year period.

 

•Net loss attributable to common stockholders for the second quarter of 2019 was ($0.50) per share, as compared to net loss attributable to common stockholders of ($0.44) per share in the prior year period.

 

•Property Net Operating Income (“NOI”) grew 22.9% to $27.6 million, from $22.5 million in the prior year period.

 

•Same store revenue and NOI increased 5.3% and 9.0% respectively, as compared to the prior year period.

 

•Core funds from operations attributable to common shares and units (“CFFO”) grew 12.4% to $6.7 million, from $5.9 million in the prior year period. CFFO per share is $0.22 for the quarter as compared to $0.19 in second quarter 2018.

 

•Paid quarterly common stock dividend of $0.1625, a 74% payout on a CFFO basis.

 

•Consolidated real estate investments, at cost, increased approximately $119.4 million to $1.9 billion, from year end.

 

•Including activity completed subsequent to quarter end, invested approximately $108.0 million, comprising $106.1 million in four multifamily communities totaling 1,499 units with total purchase prices of $303.3 million, and $1.9 million to buy out minority ownership interests in two assets. The four new acquisitions are projected to yield a year one economic cap rate of 4.9%.

 

•Completed the sale of four assets subsequent to quarter end, with an additional property expected to close in August, totaling approximately $274 million and an economic cap rate of 4.5%.

 

•Completed 232 value-add unit upgrades during the quarter achieving a 23.8% ROI.

 

•Repurchased 749,648 shares of stock during the second quarter at an average price of $11.13 per share, for a total cost of approximately $8.3 million.

 

•Increased the midpoint of its full year 2019 CFFO guidance by narrowing it to a range of $0.81 to $0.84 per share from the prior range of $0.80 to $0.84 per share.

 

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Bluerock Residential Growth REIT, Inc.

Second Quarter Earnings Release

 

  

“We continued to produce strong operating results in the second quarter with property NOI up 23%, same store NOI that increased 9.0% and CFFO increasingly exceeding our dividend payment,” said Ramin Kamfar, Company Chairman and CEO. “Subsequent to quarter end, we executed an accretive portfolio sale and recycled the proceeds into attractive assets with a stronger long-term growth profile and immediate value-add renovation opportunity. We remain focused on ongoing operational improvements and creating value through our value-add unit upgrade programs. Furthermore, with access to accretive capital with our Series B redeemable preferred stock issuance, we continue to identify attractive investments to grow our portfolio of highly amenitized communities in targeted growth markets.”

 

Financial Results

 

Net loss attributable to common stockholders for the second quarter of 2019 was $11.0 million, compared to a net loss of $10.2 million in the prior year period. Net loss attributable to common stockholders included non-cash expenses of $15.9 million or $0.72 per share in the second quarter of 2019 compared to $14.4 million or $0.62 per share for the prior year period.

 

CFFO for the second quarter of 2019 was $6.7 million, or $0.22 per diluted share, compared to $5.9 million, or $0.19 per diluted share in the prior year period. CFFO was primarily driven by growth in property NOI of $5.1 million and interest income of $0.3 million arising from investment activity. This was primarily offset by a year-over-year rise in interest expense of $2.2 million and preferred stock dividends of $2.4 million.

 

Total Portfolio Performance

 

$ In thousands, except average rental rates  2Q19   2Q18   Variance   YTD19   YTD18   Variance 
Total Revenues (1)  $52,437   $44,959    16.6%  $103,902   $86,828    19.7%
Property Operating Expenses  $18,868   $16,874    11.8%  $37,470   $32,533    15.2%
NOI  $27,596   $22,450    22.9%  $54,683   $43,465    25.8%
Operating Margin   59.4%   57.1%   230 bps   59.3%   57.2%   210bps
Occupancy Percentage   93.8%   93.9%   (10)bps   93.8%   93.7%   10bps
Average Rental Rate  $1,312   $1,239    5.9%  $1,306   $1,233    5.9%

 

(1) Including interest income from related parties

 

For the second quarter of 2019, property revenues increased by 16.6% compared to the same prior year period primarily attributable to the increased size of the portfolio. Total portfolio NOI was $27.6 million, an increase of $5.1 million, or 22.9%, compared to the same period in the prior year.

 

Property NOI margins were 59.4% of revenue for the quarter, compared to 57.1% of revenue in the prior year quarter. Property operating expenses were up primarily due to the increased size of the portfolio.

 

Same Store Portfolio Performance

 

$ In thousands, except average rental rates  2Q19   2Q18   Variance   YTD19   YTD18   Variance 
Revenues  $40,441   $38,414    5.3%  $78,023   $73,908    5.6%
Property Operating Expenses  $16,597   $16,535    0.4%  $32,059   $31,825    0.7%
NOI  $23,844   $21,879    9.0%  $45,964   $42,083    9.2%
Operating Margin   59.0%   57.0%   200bps   58.9%   56.9%   200bps
Occupancy Percentage   93.9%   93.8%   10bps   94.0%   93.7%   30bps
Average Rental Rate  $1,305   $1,237    5.5%  $1,296   $1,229    5.5%

 

The Company’s same store portfolio for the quarter ended June 30, 2019 included 29 properties. For the second quarter of 2019, same store NOI was $23.8 million, an increase of $2.0 million, or 9.0%, compared to the same period in the prior year. Same store property revenues increased by 5.3% compared to the same prior year period, primarily attributable to a 5.5% increase in average rental rates and average occupancy increasing 10 basis points to 93.9%. Same store expenses increased $0.06 million primarily due to increased real estate taxes due to higher valuations by municipalities.

 

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Bluerock Residential Growth REIT, Inc.

Second Quarter Earnings Release

 

 

Renovation Activity

 

The Company completed 232 value-add unit upgrades during the second quarter achieving a 23.8% ROI.

 

Since inception within the existing portfolio, the Company has completed 2,171 value-add unit upgrades at an average cost of $4,944 per unit and achieved an average monthly rental rate increase of $107 per unit, equating to a 26.1% ROI on all unit upgrades leased as of June 30, 2019. The Company has identified approximately 4,567 remaining units within the existing portfolio for value-add upgrades with similar projected economics to the completed renovations. The Company expects to complete between 900 and 1,200 unit renovations in 2019.

 

Portfolio Activity

 

During and subsequent to quarter end, the Company completed investments totaling $305.2 million. These investments include the following:

 

•On June 25, 2019, invested approximately $1.9 million to increase our ownership stake to 100% in each of our Sorrel and Sovereign properties.

 

•On June 27, 2019, acquired a 100% interest in a 200-unit apartment community located in Las Vegas, Nevada, known as Element. The total purchase price was approximately $41.8 million, funded in part by a $29.3 million mortgage loan secured by the Element property.

 

•On June 27, 2019, acquired a 100% interest in a 334-unit apartment community located in Mount Juliet, Tennessee, known as Providence Trail. The total purchase price was approximately $68.5 million, funded in part by a $48.0 million mortgage loan secured by the Providence Trail property.

 

•Subsequent to quarter end, on July 24, 2019, acquired a 100% interest in a 645-unit apartment community located in Scottsdale, Arizona, known as Denim. The total purchase price was approximately $141.3 million, funded in part by a $91.6 million mortgage loan secured by the Denim property.

 

•Also subsequent to quarter end, on July 31, 2019, acquired a 100% interest in a 320-unit apartment community located in Las Vegas, Nevada, known as The Sanctuary. The total purchase price was approximately $51.8 million, funded in part by a $33.7 million mortgage loan secured by the Sanctuary property.

 

Subsequent to quarter end, the Company completed the following dispositions:

 

•On July 15, 2019, closed on the portfolio sale of its investments in Sorrel, Sovereign, Preston View and Leigh House, for approximately $226.9 million. ARIUM Palms, the fifth property in the portfolio, is expected to close in August 2019 for approximately $46.8 million.

 

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Bluerock Residential Growth REIT, Inc.

Second Quarter Earnings Release

 

 

Balance Sheet

 

During the second quarter, the Company raised gross proceeds of approximately $51.1 million through the issuance of 51,137 shares of Series B preferred stock with associated warrants at $1,000 per unit.

 

As of June 30, 2019, the Company had $28.5 million of unrestricted cash on its balance sheet, approximately $29.9 million available among its revolving credit facilities, and $1.4 billion of debt outstanding.

 

Dividend Details

 

The Board of Directors authorized, and the Company declared, a quarterly dividend for the second 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 June 25, 2019, which was paid in cash on July 5, 2019. 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 second quarter of 2019, in the amount of $0.515625 per share. In addition, the Company declared a quarterly cash dividend on its 7.625% Series C Cumulative Redeemable Preferred Stock for the second quarter of 2019, in the amount of $0.4765625 per share. Further, the Company declared a quarterly cash dividend on its 7.125% Series D Cumulative Preferred Stock for the second quarter of 2019, in the amount of $0.4453125 per share. The dividends were payable to the stockholders of record on June 25, 2019, and were paid on July 5, 2019.

 

On July 12, 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 July 25, 2019, which was paid in cash on August 5, 2019, and as of August 23, 2019, and September 25, 2019, which will be paid in cash on September 5, 2019 and October 4, 2019, respectively.

 

2019 Guidance

 

Based on the Company’s current outlook and market conditions, the Company is increasing the midpoint of its 2019 CFFO guidance by narrowing it to a range of $0.81 to $0.84 per share from the prior range of $0.80 to $0.84 per share. For additional guidance details, please see page 31 of Company’s Second 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 Tuesday, August 6, 2019 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 September 6, 2019 at http://services.choruscall.com/links/brg190806.html, as well as by dialing +1 (877) 344-7529 in the U.S., or +1 (412) 317-0088 internationally, and requesting conference number 10133456.

 

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.

 

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Bluerock Residential Growth REIT, Inc.

Second Quarter Earnings Release

 

 

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.

 

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Bluerock Residential Growth REIT, Inc.

Second Quarter Earnings Release

 

 

Portfolio Summary

 

The following is a summary of our operating real estate and mezzanine/preferred investments as of June 30, 2019:

 

Consolidated Operating Properties  Location  Number
of Units		   Year Built/
Renovated (1)		  Ownership
Interest		  

Average

Rent (2)

   %
Occupied (3)		 
ARIUM at Palmer Ranch  Sarasota, FL   320   2016   100%  $1,319    96%
ARIUM Glenridge  Atlanta, GA   480   1990   90%   1,241    94%
ARIUM Grandewood  Orlando, FL   306   2005   100%   1,416    94%
ARIUM Gulfshore  Naples, FL   368   2016   100%   1,324    90%
ARIUM Hunter’s Creek  Orlando, FL   532   1999   100%   1,409    97%
ARIUM Metrowest  Orlando, FL   510   2001   100%   1,392    94%
ARIUM Palms  Orlando, FL   252   2008   100%   1,359    97%
ARIUM Pine Lakes  Port St. Lucie, FL   320   2003   100%   1,307    92%
ARIUM Westside  Atlanta, GA   336   2008   90%   1,530    87%
Ashford Belmar  Lakewood, CO   512   1988/1993   85%   1,627    92%
Ashton Reserve  Charlotte, NC   473   2015   100%   1,121    96%
Citrus Tower  Orlando, FL   336   2006   97%   1,330    92%
Element  Las Vegas, NV   200   1995   100%   1,233    94%
Enders Place at Baldwin Park  Orlando, FL   220   2003   92%   1,768    98%
James on South First  Austin, TX   250   2016   90%   1,277    98%
Marquis at Crown Ridge  San Antonio, TX   352   2009   90%   1,026    92%
Marquis at Stone Oak  San Antonio, TX   335   2007   90%   1,460    95%
Marquis at The Cascades  Tyler, TX   582   2009   90%   1,219    91%
Marquis at TPC  San Antonio, TX   139   2008   90%   1,499    96%
Outlook at Greystone  Birmingham, AL   300   2007   100%   991    95%
Park & Kingston  Charlotte, NC   168   2015   100%   1,304    96%
Plantation Park  Lake Jackson, TX   238   2016   80%   1,400    89%
Preston View  Morrisville, NC   382   2000   100%   1,124    96%
Providence Trail  Mount Juliet, TN   334   2007   100%   1,219    94%
Roswell City Walk  Roswell, GA   320   2015   98%   1,542    96%
Sands Parc  Daytona Beach, FL   264   2017   100%   1,370    96%
Sorrel  Frisco, TX   352   2015   100%   1,196    90%
Sovereign  Fort Worth, TX   322   2015   100%   1,391    92%
The Brodie  Austin, TX   324   2001   93%   1,277    98%
The Links at Plum Creek  Castle Rock, CO   264   2000   88%   1,433    93%
The Mills  Greenville, SC   304   2013   100%   1,048    94%
The Preserve at Henderson Beach  Destin, FL   340   2009   100%   1,440    97%
Veranda at Centerfield  Houston, TX   400   1999   93%   945    94%
Villages at Cypress Creek  Houston, TX   384   2001   80%   1,137    93%
Wesley Village  Charlotte, NC   301   2010   100%   1,378    94%
Consolidated Operating Properties Subtotal/Average      11,820           $1,312    94%
                           
Mezzanine/Preferred Investments  Location  Actual/
Planned
Number
of Units		          Pro
Forma
Average
Rent		     
Alexan CityCentre  Houston, TX   340         $1,747(2)     
Alexan Southside Place  Houston, TX   270            1,660(2)     
Arlo  Charlotte, NC   286            1,507      
Cade Boca Raton  Boca Raton, FL   90            2,549      
Domain at The One Forty  Garland, TX   299            1,469      
Flagler Village  Fort Lauderdale, FL   385            2,352      
Helios  Atlanta, GA   282            1,458(2)     
Leigh House  Raleigh, NC   245            1,291(2)     
North Creek Apartments  Leander, TX   259            1,358      
Novel Perimeter  Atlanta, GA   320            1,749      
Riverside Apartments  Austin, TX   222            1,408      
The Park at Chapel Hill  Chapel Hill, SC    *             *      
Vickers Historic Roswell  Roswell, GA   79            3,176      
Wayforth at Concord  Concord, NC   150            1,707      
Whetstone Apartments  Durham, NC   204            1,294(2)     
Mezzanine and Preferred Investments Subtotal/Average      3,431           $1,682      
                           
Portfolio Properties Total/Average      15,251           $1,398      

 

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

(2) Represents the average effective monthly rent per occupied unit for the three months ended June 30, 2019.

(3) Percent occupied is calculated as (i) the number of units occupied as of June 30, 2019, divided by (ii) total number of units, expressed as a percentage.

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

 

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Bluerock Residential Growth REIT, Inc.

Second Quarter Earnings Release

 

 

Consolidated Statement of Operations

For the Three and Six Months Ended June 30, 2019 and 2018

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

 

   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   2019   2018   2019   2018 
Revenues                
Rental and other property revenues  $46,464   $39,324   $92,153   $75,998 
Interest income from related parties   5,973    5,635    11,749    10,830 
Total revenues   52,437    44,959    103,902    86,828 
Expenses                    
Property operating   18,868    16,874    37,470    32,533 
Property management fees   1,235    1,074    2,451    2,067 
General and administrative   5,046    4,528    10,674    9,197 
Acquisition and pursuit costs   70    28    128    71 
Weather-related losses, net   291    —    291    168 
Depreciation and amortization   16,226    14,819    33,454    30,460 
Total expenses   41,736    37,323    84,468    74,496 
Operating income   10,701    7,636    19,434    12,332 
Other income (expense)                    
Preferred returns on unconsolidated real estate joint ventures   2,492    2,626    4,781    5,088 
Gain on sale of non-depreciable real estate investments   —    —    679    — 
Loss on extinguishment of debt and debt modification costs   —    (653)   —    (653)
Interest expense, net   (15,125)   (13,041)   (31,191)   (23,158)
Total other expense   (12,633)   (11,068)   (25,731)   (18,723)
Net loss   (1,932)   (3,432)   (6,297)   (6,391)
Preferred stock dividends   (11,019)   (8,643)   (21,403)   (16,890)
Preferred stock accretion   (2,316)   (1,400)   (4,203)   (2,510)
Net loss attributable to noncontrolling interests                    
Operating Partnership units   (3,887)   (3,010)   (7,938)   (5,685)
Partially owned properties   (390)   (253)   (882)   (468)
Net loss attributable to noncontrolling interests   (4,277)   (3,263)   (8,820)   (6,153)
Net loss attributable to common stockholders  $(10,990)  $(10,212)  $(23,083)  $(19,638)
                     
Net loss per common share - Basic  $(0.50)  $(0.44)  $(1.03)  $(0.83)
                     
Net loss per common share – Diluted  $(0.50)  $(0.44)  $(1.03)  $(0.83)
                     
Weighted average basic common shares outstanding   22,430,619    23,800,770    22,775,203    23,971,129 
Weighted average diluted common shares outstanding   22,430,619    23,800,770    22,775,203    23,971,129 

 

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Bluerock Residential Growth REIT, Inc.

Second Quarter Earnings Release

 

 

Consolidated Balance Sheets

Second Quarter 2019

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

 

   June 30,
2019		   December 31,
2018		 
ASSETS          
Net Real Estate Investments          
Land  $191,192   $200,385 
Buildings and improvements   1,480,761    1,546,244 
Furniture, fixtures and equipment   54,148    55,050 
Construction in progress   155    989 
Total Gross Real Estate Investments   1,726,256    1,802,668 
Accumulated depreciation   (117,115)   (108,911)
Total Net Operating Real Estate Investments   1,609,141    1,693,757 
Operating real estate held for sale, net   172,555    — 
Total Net Real Estate Investments   1,781,696    1,693,757 
Cash and cash equivalents   28,534    24,775 
Restricted cash   26,615    27,469 
Notes and accrued interest receivable from related parties   175,768    164,084 
Due from affiliates   3,542    2,854 
Accounts receivable, prepaids and other assets   16,582    14,395 
Preferred equity investments and investments in unconsolidated real estate joint ventures   100,704    89,033 
In-place lease intangible assets, net   1,786    1,768 
Non-real estate assets associated with operating real estate held for sale   481    — 
Total Assets  $2,135,708   $2,018,135 
           
LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY          
Mortgages payable  $1,142,635   $1,206,136 
Mortgages payable associated with operating real estate held for sale   137,394    — 
Revolving credit facilities   101,300    82,209 
Accounts payable   949    1,486 
Other accrued liabilities   27,446    31,690 
Due to affiliates   773    726 
Distributions payable   12,527    12,073 
Liabilities associated with operating real estate held for sale   3,024    — 
Total Liabilities   1,426,048    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 as of June 30, 2019 and December 31, 2018   139,912    139,545 
6.000% Series B Redeemable Preferred Stock, liquidation preference $1,000 per share, 1,225,000 shares authorized; 399,502 and 306,009 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively   357,346    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 June 30, 2019 and December 31, 2018   56,626    56,485 
Equity          
Stockholders’ Equity          
Preferred stock, $0.01 par value, 229,900,000 shares authorized; no shares issued and outstanding   —    — 
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 as of June 30, 2019 and December 31, 2018   68,705    68,705 
Common stock - Class A, $0.01 par value, 747,509,582 shares authorized; 22,294,327 and 23,322,211 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively   223    233 
Common stock - Class C, $0.01 par value, 76,603 shares authorized; 76,603 shares issued and outstanding as of June 30, 2019 and December 31, 2018   1    1 
Additional paid-in-capital   295,444    307,938 
Distributions in excess of cumulative earnings   (248,988)   (218,531)
Total Stockholders’ Equity   115,385    158,346 
Noncontrolling Interests          
Operating Partnership units   15,405    27,613 
 Partially owned properties   24,986    28,984 
Total Noncontrolling Interests   40,391    56,597 
Total Equity   155,776    214,943 
TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY  $2,135,708   $2,018,135 
           

 

 10 

 

 

 

Bluerock Residential Growth REIT, Inc.

Second Quarter Earnings Release

 

 

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 Shares and Units

 

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 shares and units 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.

 

 11 

 

 

 

Bluerock Residential Growth REIT, Inc.

Second Quarter Earnings Release

 

 

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 four operating properties and four properties held through preferred equity or mezzanine loan investments subsequent to June 30, 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, the most directly comparable GAAP financial measure, for the three and six months ended June 30, 2019 and 2018 (in thousands, except per share amounts):

 

   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   2019   2018   2019   2018 
Net loss attributable to common shares  $(10,990)  $(10,212)  $(23,083)  $(19,638)
Add back: Net loss attributable to Operating Partnership units   (3,887)   (3,010)   (7,938)   (5,685)
Net loss attributable to common shares and units   (14,877)   (13,222)   (31,021)   (25,323)
Common stockholders and Operating Partnership units pro-rata share of:                    
Real estate depreciation and amortization (1)   15,290    13,990    31,432    28,821 
FFO Attributable to Common Shares and Units   413    768    411    3,498 
Common stockholders and Operating Partnership units pro-rata share of:                    
Acquisition and pursuit costs   70    28    128    71 
 Non-cash interest expense   786    1,602    1,561    2,062 
Unrealized loss on derivatives   652    —    2,287    — 
Loss on extinguishment of debt and debt modification costs   —    653    —    653 
Weather-related losses, net   249    —    249    165 
Non-real estate depreciation and amortization   84    75    170    139 
Gain on sale of non-depreciable real estate investments   —    —    (679)   — 
Shareholder activism   55    —    393    — 
Non-cash preferred returns on unconsolidated real estate joint ventures   (386)   (233)   (598)   (464)
Non-cash equity compensation   2,427    1,638    4,819    3,418 
Preferred stock accretion   2,316    1,400    4,203    2,510 
CFFO Attributable to Common Shares and Units  $6,666   $5,931   $12,944   $12,052 
                     
Per Share and Unit Information:                    
FFO Attributable to Common Shares and Units - diluted  $0.01   $0.02   $0.01   $0.11 
CFFO Attributable to Common Shares and Units - diluted  $0.22   $0.19   $0.42   $0.39 
                     
Weighted average common shares and units outstanding - diluted   30,550,863    30,814,839    30,704,271    30,873,023 

 

(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.

 

 12 

 

 

 

Bluerock Residential Growth REIT, Inc.

Second Quarter Earnings Release

 

 

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   Six Months Ended 
   June 30,   June 30, 
   2019   2018   2019   2018 
Net loss attributable to common stockholders  $(10,990)  $(10,212)  $(23,083)  $(19,638)
Net loss income attributable to noncontrolling interests   (4,277)   (3,263)   (8,820)   (6,153)
Preferred stock dividends   11,019    8,643    21,403    16,890 
Preferred stock accretion   2,316    1,400    4,203    2,510 
Interest expense, net   15,125    13,041    31,191    23,158 
Depreciation and amortization   16,142    14,744    33,284    30,321 
Loss on extinguishment of debt and debt modification costs   -    653    -    653 
EBITDAre  $29,335   $25,006   $58,178   $47,741 
Acquisition and pursuit costs   70    28    128    71 
Non-real estate depreciation and amortization   84    75    170    139 
Weather-related losses, net   291    -    291    168 
Gain on sale of non-depreciable real estate investments   -    -    (679)   - 
Shareholder activism   55    -    393    - 
Non-cash equity compensation   2,427    1,638    4,819    3,418 
Non-cash preferred returns on unconsolidated real estate joint ventures   (386)   (233)   (598)   (464)
Adjusted EBITDAre  $31,876   $26,514   $62,702   $51,073 

 

 13 

 

 

 

Bluerock Residential Growth REIT, Inc.

Second Quarter Earnings Release

 

 

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 rental and other 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.

 

 14 

 

 

 

Bluerock Residential Growth REIT, Inc.

Second Quarter Earnings Release

 

 

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   Six Months Ended 
   June 30,   June 30, 
   2019   2018   2019   2018 
Net loss attributable to common shares  $(10,990)  $(10,212)  $(23,083)  $(19,638)
Add back: Net loss attributable to Operating Partnership units   (3,887)   (3,010)   (7,938)   (5,685)
Net loss attributable to common shares and units   (14,877)   (13,222)   (31,021)   (25,323)
Add common stockholders and Operating Partnership units pro-rata share of:                    
Depreciation and amortization   15,290    13,990    31,432    28,821 
Non-real estate depreciation and amortization   84    75    170    139 
Non-cash interest expense   786    1,602    1,561    2,062 
Unrealized loss on derivatives   652    —    2,287    — 
Loss on extinguishment of debt and debt modification costs   —    653    —    653 
Property management fees   1,170    1,017    2,318    1,956 
Acquisition and pursuit costs   70    28    128    71 
Corporate operating expenses   4,975    4,528    10,529    9,197 
Weather-related losses, net   249    —    249    165 
Preferred dividends   11,019    8,643    21,403    16,890 
Preferred stock accretion   2,316    1,400    4,203    2,510 
Less common stockholders and Operating Partnership units pro-rata share of:                    
Preferred returns on unconsolidated real estate joint ventures   2,492    2,626    4,781    5,088 
Interest income from related parties   5,973    5,635    11,749    10,830 
Gain on sale of non-depreciable real estate investments   —    —    679    — 
Pro-rata share of properties’ income   13,269    10,453    26,050    21,223 
Add:                    
Noncontrolling interest pro-rata share of partially owned property income   690    542    1,418    1,152 
Total property income   13,959    10,995    27,468    22,375 
Add:                    
Interest expense   13,637    11,455    27,215    21,090 
Net operating income   27,596    22,450    54,683    43,465 
Less:                    
Non-same store net operating income   3,752    571    8,719    1,382 
Same store net operating income (1)  $23,844   $21,879   $45,964   $42,083 

 

(1) Same store portfolio for the three months ended June 30, 2019 consists of 29 properties, which represent 9,872 units. Same store portfolio for the six months ended June 30, 2019 consists of 28 properties, which represent 9,608 units.

 

Contact

Investors:

(888) 558.1031

investor.relations@bluerockre.com

 

Media:

Josh Hoffman

(208) 475.2380

jhoffman@bluerockre.com

## 

 

 15 

 

 

 

Bluerock Residential Growth REIT, Inc.

Financial and Operating Highlights

For the Three and Six Months Ended June 30, 2019

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

 

 

   Three Months Ended       Six Months Ended     
   June 30,       June 30,     
OPERATING INFORMATION  2019   2018   % Change   2019   2018   % Change 
                         
Total revenue  $52,437   $44,959    16.6%  $103,902   $86,828    19.7%
                               
Total assets  $2,135,708   $1,838,165    16.2%  $2,135,708   $1,838,165    16.2%
                               
Property NOI (1)  $27,596   $22,450    22.9%  $54,683   $43,465    25.8%
                               
Property NOI margins   59.4%   57.1%   4.0%   59.3%   57.2%   3.7%
                               
Net loss per common share - Diluted  $(0.50)  $(0.44)   -   $(1.03)  $(0.83)   - 
                               
CFFO attributable to common shares and units per share (2)  $0.22   $0.19    15.8%  $0.42   $0.39    7.7%

 

 

(1) See page 34 for the Company's definition of this non-GAAP measurement and reasons for using it.

 

(2) See page 32 for the Company's definition of this non-GAAP measurement and reasons for using it.

 

 16 

 

 

 

Bluerock Residential Growth REIT, Inc.

Share and Unit Information

Second Quarter 2019

(Unaudited)

 

 

Weighted Average Common Stock and Units Outstanding for the quarter ended June 30, 2019    
Class A Common Stock   22,354,016 
Class C Common Stock   76,603 
Weighted Average Common Stock Outstanding, Diluted   22,430,619 
Warrants (1)   125,274 
Restricted Stock Grants (2)   11,944 
Weighted Average Common Stock Outstanding, Diluted   22,567,837 
LTIP Units   1,598,329 
OP Units   6,384,697 
Weighted Average Common Stock and Total Units Outstanding, Diluted   30,550,863 
      
Outstanding Common Stock and Units at June 30, 2019   31,169,602 
      
Outstanding 8.250% Series A Cumulative Redeemable Preferred Stock at June 30, 2019   5,721,460 
      
Outstanding 6.000% Series B Redeemable Preferred Stock at June 30, 2019   399,502 
      
Outstanding 7.625% Series C Cumulative Redeemable Preferred Stock at June 30, 2019   2,323,750 
      
Outstanding 7.125% Series D Cumulative Preferred Stock at June 30, 2019   2,850,602 

 

(1) Potential dilution from warrants outstanding from issuance of Series B Preferred Stock offering that are potentially exercisable into 125,274 shares of common stock.

 

(2) Potential dilution from vesting of restricted stock grants issued to employees for 11,944 shares of common stock.

 

The following table reflects the impact of various LTIP Unit issuances, share repurchases, and other share/unit changes subsequent to March 31, 2019:

 

Share Type  Shares and units
outstanding
March 31, 2019		   LTIP Issuances   Share
Repurchases		   Other   Shares and units
outstanding
June 30, 2019		  

Ownership

%

 
Class A Common Stock   22,861,083    -    (749,648)   182,892    22,294,327    71.52%
Class C Common Stock   76,603    -    -    -    76,603    0.25%
Total share equivalents   22,937,686    -    (749,648)   182,892    22,370,930    71.77%
OP Units   6,385,713    -    -    (1,201)   6,384,512    20.48%
LTIP Units   2,351,386    62,774    -    -    2,414,160    7.75%
Total noncontrolling interest   8,737,099    62,774    -    (1,201)   8,798,672    28.23%
Total shares, OP and LTIP Units   31,674,785    62,774    (749,648)   181,691    31,169,602    100.00%

 

 17 

 

  

 

Bluerock Residential Growth REIT, Inc.

EBITDAre and Interest Information

Second Quarter 2019

(Unaudited and dollars in thousands)

 

 

   Three Months Ended 
   June 30, 
   2019 
Q2 EBITDAre Calculation     
Net loss attributable to common stockholders  $(10,990)
Net loss attributable to noncontrolling interests   (4,277)
Preferred stock dividends   11,019 
Preferred stock accretion   2,316 
Interest expense, net   15,125 
Depreciation and amortization   16,142 
EBITDAre (1)  $29,335 
Acquisition and pursuit costs   70 
Non-real estate depreciation and amortization   84 
Weather-related losses, net   291 
Shareholder activism   55 
Non-cash equity compensation   2,427 
Non-cash preferred returns on unconsolidated real estate joint ventures   (386)
Adjusted EBITDAre  $31,876 
      
Modified Q2 EBITDAre Calculation (2)     
Adjusted EBITDAre  $31,876 
Adjustment   1,422 
Modified Q1 EBITDAre  $33,298 
Modified Q2 EBITDAre annualized  $133,192 
      
Modified Q2 Interest Calculation (2)(3)     
Interest expense  $13,637 
Adjustment   665 
Modified Q2 interest expense  $14,302 
Modified Q2 interest expense annualized  $57,208 

 

(1) See page 33 for a reconciliation of net income attributable to common stockholders to EBITDAre and the Company's definition of EBITDAre and reasons for using it.

 

(2) Adjustment to EBITDAre and interest expense represents the estimated impact over the full period of the following activity assuming the transactions had occurred on April 1, 2019: (i) acquisitions of Element and Providence Trail and (ii) additional investments at Alexan CityCentre, Cade Boca Raton, Domain at The One Forty, North Creek Apartments, and Riverside Apartments. Actual results may differ significantly from the presented, adjusted amounts including annualized amounts.

 

(3) Interest expense excludes non-cash interest expense.

 

 18 

 

  

 

Bluerock Residential Growth REIT, Inc.

Financial Statistics

Second Quarter 2019

(Unaudited and dollars in thousands)

 

 

   Three Months Ended 
   June 30, 
   2019 
Interest Coverage Ratio     
Modified Q2 EBITDAre *  $33,298 
Modified Q2 interest expense (4) *   14,302 
Interest coverage ratio   2.33x
      
Quarterly Fixed Charge Coverage Ratio     
Modified Q2 interest expense (4) *  $14,302 
Preferred stock dividends   11,019 
Total fixed charges  $25,321 
Modified Q2 EBITDAre *   33,298 
Modified Q2 EBITDAre fixed charge coverage ratio   1.32x
      
Net Debt / Modified EBITDAre Ratio     
Total debt (1)  $1,390,483 
Less: cash (3)   (55,149)
Net debt (total debt less cash)  $1,335,334 
Modified Q2 EBITDAre (annualized)*   133,192 
Net debt / modified EBITDAre ratio   10.03x
      
Leverage as a Percentage of Assets     
Total debt (1)  $1,390,483 
Total undepreciated assets (2)   2,276,095 
Total debt / total undepreciated assets   61.1%
Net debt / net undepreciated assets (less cash)   60.1%
      
Leverage as a Percentage of Enterprise Value     
Total market cap (5)  $1,049,855 
Total debt (1)   1,390,483 
Total enterprise value  $2,440,338 
Total debt / total enterprise value   57.0%
Net debt / total enterprise value   54.7%

 

(1) Total debt excludes amortization of fair market value adjustments of $2.0 million and deferred financing costs of $11.1 million.

 

(2) Total undepreciated assets is calculated as total assets plus accumulated depreciation on real estate assets.

 

(3) Cash includes cash, cash equivalents, and restricted cash.

 

(4) Interest expense excludes non-cash interest expense.

 

(5) Total market cap is calculated by using common shares, preferred shares, and equivalents (OP Units/LTIP Units) multiplied by the June 30, 2019 closing share prices.

 

* Adjustment to EBITDAre and interest expense represents the estimated impact over the full period of the following activity assuming the transactions had occurred on April 1, 2019: (i) acquisitions of Element and Providence Trail and (ii) additional investments at Alexan CityCentre, Cade Boca Raton, Domain at The One Forty, North Creek Apartments, and Riverside Apartments. Actual results may differ significantly from the presented, adjusted amounts including annualized amounts. See prior page for calculations.

 

 19 

 

 

 

Bluerock Residential Growth REIT, Inc.

Recent Acquisitions and Investments

(Unaudited)

 

 

Property  Location  Date of
Investment		   Year Built/
Renovated (1)		   Number
of Units		   Ownership
Interest in
Property		   Purchase
Price (in
millions)		   Average
Rent (2)		 
                            
The Park at Chapel Hill (3)  Chapel Hill, NC   01/23/2019    *    *    *    *    * 
                                  
Element  Las Vegas, NV   06/27/2019    1995    200    100%  $41.8   $1,233 
                                  
Providence Trail  Mount Juliet, TN   06/27/2019    2007    334    100%   68.5    1,219 
                                  
Total/Average                534        $110.3   $1,224 

 

(1) All dates are for the year construction was completed or expects to be completed, or the date that a significant renovation has or will be completed.

 

(2) Represents the average effective monthly rent per occupied unit for the three months ended June 30, 2019.

 

(3) Property is a development project.

 

* The investment includes a $7.8 million senior loan and a $0.8 million mezzanine loan. The development is in the planning phase; project specifications are in process.

 

 20 

 

 

 

Bluerock Residential Growth REIT, Inc.

Recent Dispositions

(Unaudited and dollars in millions)

 

 

Property  Location  Date Sold  Number
of Units		   Ownership
Interest in
Property		   Sale
Price		   BRG Net
Proceeds		   IRR   Equity
Multiple		 
Wesley Village II  Charlotte, NC  3/1/2019   -    100.0%  $1.0   $1.0    91%   3.62 

 

 21 

 

  

 

Bluerock Residential Growth REIT, Inc.

Investments in Unconsolidated Real Estate Joint Ventures and Notes and Accrued Interest Receivable from Related Parties

For the Three and Six Months Ended June 30, 2019

(Unaudited and dollars in thousands)

 

 

Multifamily Community
Name		  Investment
Balance as of
April 1, 2019		   Change   Investment
Balance as of 
June 30, 2019		   Return 
as of 
June 30, 2019		   CFFO Earned
for the Three
Months Ended
June 30, 2019		   CFFO Earned
for the Six
Months Ended
June 30, 2019		 
Preferred and Equity Investments                              
Alexan CityCentre  $11,480   $1,308   $12,788    17.5%  $497   $982 
Alexan Southside Place   24,041    -    24,041    6.5%   390    773 
Helios   19,189    -    19,189    7.0%   335    666 
Leigh House   14,174    -    14,174    15.8%   558    1,082 
North Creek Apartments   8,217    1,993    10,210    8.5% current + 4.0% accrued    196    347 
Riverside Apartments   3,600    3,674    7,274    8.5% current + 4.0% accrued    130    207 
Wayforth at Concord   -    -    -    9.0% current + 4.0% accrued    -    - 
Whetstone Apartments   12,932    -    12,932    7.2% accrued(1)   -    126 
Other   95    1    96    (2)   -    - 
   $93,728   $6,976   $100,704        $2,106   $4,183 
                               
Mezzanine Loans                              
Arlo (2)  $24,893   $(10)  $24,883    15.0%  $919   $1,828 
Cade Boca Raton (2)   12,338    556    12,894    15.0%   467    904 
Domain at The One Forty (2)   21,174    1,196    22,370    15.0%   805    1,557 
Flagler Village (2)   75,436    (27)   75,409    12.9%   2,400    4,773 
Novel Perimeter (2)   20,867    (8)   20,859    15.0%   771    1,533 
The Park at Chapel Hill (3)   8,572    (2)   8,570    10.0%   212    368 
Vickers Historic Roswell (2)   10,788    (5)   10,783    15.0%   399    786 
   $174,068   $1,700   $175,768        $5,973   $11,749 

 

(1) Effective April 1, 2017, the preferred income is being accrued, except for a $0.1 million payment in March 2019.

 

(2) The Company also holds an equity method investment with 0.5% common ownership.

 

(3) The investment includes a $7.8 million senior loan and a $0.8 million mezzanine loan.

 

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Bluerock Residential Growth REIT, Inc.

Portfolio Information

Second Quarter 2019

(Unaudited)

 

 

Multifamily Community Name  Location  Number
of Units		  Year Built/
Renovated (1)		  Average
Rent (2)		   Revenue per
Occupied
Unit (3)		   Average
Occupancy		 
Consolidated Operating Properties:                        
ARIUM at Palmer Ranch  Sarasota, FL  320  2016  $1,319   $1,479    95.2%
ARIUM Glenridge  Atlanta, GA  480  1990   1,241    1,397    93.0%
ARIUM Grandewood  Orlando, FL  306  2005   1,416    1,538    94.1%
ARIUM Gulfshore  Naples, FL  368  2016   1,324    1,472    93.0%
ARIUM Hunter’s Creek  Orlando, FL  532  1999   1,409    1,559    96.2%
ARIUM Metrowest  Orlando, FL  510  2001   1,392    1,601    93.6%
ARIUM Palms  Orlando, FL  252  2008   1,359    1,507    96.4%
ARIUM Pine Lakes  Port St. Lucie, FL  320  2003   1,307    1,517    94.0%
ARIUM Westside  Atlanta, GA  336  2008   1,530    1,698    91.5%
Ashford Belmar  Lakewood, CO  512  1988/1993   1,627    1,800    92.7%
Ashton Reserve  Charlotte, NC  473  2015   1,121    1,260    93.6%
Citrus Tower  Orlando, FL  336  2006   1,330    1,465    93.9%
Element  Las Vegas, NV  200  1995   1,233    1,398    93.5%
Enders Place at Baldwin Park  Orlando, FL  220  2003   1,768    1,877    96.7%
James on South First  Austin, TX  250  2016   1,277    1,452    95.4%
Marquis at Crown Ridge  San Antonio, TX  352  2009   1,026    1,137    91.7%
Marquis at Stone Oak  San Antonio, TX  335  2007   1,460    1,554    95.8%
Marquis at The Cascades  Tyler, TX  582  2009   1,219    1,311    91.9%
Marquis at TPC  San Antonio, TX  139  2008   1,499    1,621    94.0%
Outlook at Greystone  Birmingham, AL  300  2007   991    1,178    93.8%
Park & Kingston  Charlotte, NC  168  2015   1,304    1,391    93.0%
Plantation Park  Lake Jackson, TX  238  2016   1,400    1,502    92.5%
Preston View  Morrisville, NC  382  2000   1,124    1,225    94.5%
Providence Trail  Mount Juliet, TN  334  2007   1,219    1,327    93.1%
Roswell City Walk  Roswell, GA  320  2015   1,542    1,763    95.6%
Sands Parc  Daytona Beach, FL  264  2017   1,370    1,601    95.1%
Sorrel  Frisco, TX  352  2015   1,196    1,318    87.5%
Sovereign  Fort Worth, TX  322  2015   1,391    1,513    92.9%
The Brodie  Austin, TX  324  2001   1,277    1,464    95.6%
The Links at Plum Creek  Castle Rock, CO  264  2000   1,433    1,568    92.0%
The Mills  Greenville, SC  304  2013   1,048    1,206    93.4%
The Preserve at Henderson Beach  Destin, FL  340  2009   1,440    1,596    96.9%
Veranda at Centerfield  Houston, TX  400  1999   945    1,076    90.5%
Villages of Cypress Creek  Houston, TX  384  2001   1,137    1,230    94.7%
Wesley Village  Charlotte, NC  301  2010   1,378    1,514    94.6%
                         
Total Consolidated Operating Properties     11,820     $1,312   $1,458    93.8%
                         
Mezzanine/Preferred Investments:                        
Alexan CityCentre  Houston, TX  340     $1,747   $1,841    92.7%
Alexan Southside Place  Houston, TX  270      1,660    1,791    93.7%
Arlo  Charlotte, NC  286      1,507(4)    N/A      N/A  
Cade Boca Raton  Boca Raton, FL  90      2,549(4)    N/A      N/A  
Domain at The One Forty  Garland, TX  299      1,469(4)    N/A      N/A  
Flagler Village  Fort Lauderdale, FL  385      2,352(4)    N/A      N/A  
Helios  Atlanta, GA  282      1,458    1,587    93.1%
Leigh House  Raleigh, NC  245      1,291    1,358    91.2%
North Creek Apartments  Leander, TX  259      1,358(4)    N/A      N/A  
Novel Perimeter  Atlanta, GA  320      1,749(4)    N/A      N/A  
Riverside Apartments  Austin, TX  222      1,408(4)    N/A      N/A  
The Park at Chapel Hill  Chapel Hill, NC  *      *     N/A      N/A  
Vickers Historic Roswell  Roswell, GA  79      3,176(4)    N/A      N/A  
Wayforth at Concord  Concord, NC  150      1,707(4)    N/A      N/A  
Whetstone Apartments  Durham, NC  204      1,294    1,491    96.3%
                         
Total Mezzanine/Preferred Investments     3,431     $1,682   $1,637    93.2%
                         
Total Portfolio     15,251     $1,398   $1,477    93.7%

 

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

(2) Represents the average effective monthly rent per occupied unit for the three months ended June 30, 2019.

(3) Revenue per occupied unit is total revenue divided by average number of occupied units for the three months ended June 30, 2019.

(4) Represents the average pro forma effective monthly rent per occupied unit for all expected units upon stabilization.

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

 

 23 

 

 

 

Bluerock Residential Growth REIT, Inc.

Renovation Table

As of June 30, 2019

(Unaudited)

 

 

Units and Investment                    
   2019   To Date 
   Completed   Completed   Total Expected   Total   Unrenovated Units 
   in 2Q   Year-to-date   Completions in 2019 (1)   Completed   Remaining (1) 
Number of Renovations   232    505     900 - 1,200     2,171    4,567 
Renovation Cost per Unit  $5,357   $5,435    $6,000 - $7,000           
                          
Returns                         
   Cost   Monthly Rent   Return on           
   per Unit   Premium   Investment           
Weighted Average Returns to Date  $4,944   $107    26.1%          

 

(1) Excludes properties disposed in Q3 2019 and includes properties acquired or under contract in 2019.

 

 24 

 

 

 

Bluerock Residential Growth REIT, Inc.

Mezzanine/Preferred Investments

As of June 30, 2019

(Unaudited)

 

 

This table includes forward-looking statements based on current judgments and current knowledge of management, which are subject to certain risks, trends and uncertainties that could cause results to vary from those projected. Please see the paragraph on forward-looking statements on page 2 of this document for a discussion of risks and uncertainties.

 

                       Actual/Estimated Dates for
Multifamily Community
Name		  Actual/
Planned
Number
of Units		   Total
Actual/
Estimated
Construction
Cost (in
millions)		   Cost to
Date (in
millions)		   Actual/
Estimated
Construction
Cost Per
Unit		   Total
Available
Financing
(in
millions)		   Construction
Start		  Initial
Occupancy		  Construction
Completion		  Stabilized
Operations
(3)
Whetstone Apartments (1)   204   $37.0   $37.0   $181,373   $26.3   N/A  3Q14  3Q15  4Q16
Alexan CityCentre (1)   340   $83.5   $80.7   $245,588   $60.0   4Q14  2Q17  4Q17  3Q18
Helios (1)   282   $51.8   $50.7   $183,688   $39.5   4Q15  2Q17  4Q17  4Q18
Alexan Southside Place (1)   270   $49.4   $47.0   $182,963   $36.0   4Q15  4Q17  1Q18  1Q19
Leigh House (1)   245   $40.2   $39.4   $164,082   $25.2   2Q16  3Q17  3Q18  1Q19
Vickers Historic Roswell (2)   79   $31.9   $29.9   $403,797   $18.0   2Q16  2Q18  3Q18  1Q20
Domain at The One Forty (2)   299   $53.3   $51.5   $178,261   $36.7   1Q17  2Q18  4Q18  4Q19
Arlo (2)   286   $60.0   $58.0   $209,790   $41.8   4Q16  2Q18  1Q19  1Q20
Novel Perimeter (2)   320   $71.0   $68.7   $221,875   $44.7   4Q16  3Q18  1Q19  1Q20
Cade Boca Raton (2)   90   $30.1   $29.3   $334,444   $18.7   2Q17  4Q18  2Q19  4Q19
Flagler Village (2)   385   $135.4   $93.5   $351,688   $70.4   1Q18  2Q20  3Q20  2Q22
North Creek Apartments (1)   259   $44.0   $12.2   $169,884   $23.6   4Q18  2Q20  4Q20  2Q21
Riverside Apartments (1)   222   $37.9   $8.5   $170,721   $20.2   2Q19  4Q20  1Q21  3Q21
Wayforth at Concord (1)   150   $33.5   $5.5   $223,333   $22.3   4Q18  2Q20  3Q21  3Q21
The Park at Chapel Hill   *    *    *    *    *   *  *  *  *

 

(1) Represents a preferred equity investment. North Creek Apartments, Riverside Apartments, and Wayforth at Concord have an option to purchase the property at stabilization.

 

(2) Represents a mezzanine loan investment. Arlo, Cade Boca Raton, and Vickers Historic Roswell have an option to purchase indirect property interest upon maturity. 

 

(3) We defined stabilized occupancy as attainment of 90% physical occupancy.

 

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

 

 25 

 

 

 

Bluerock Residential Growth REIT, Inc.

Condensed Consolidated Balance Sheets

Second Quarter 2019

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

 

 

   June 30,
2019		   December 31,
2018		 
ASSETS          
Net Real Estate Investments          
Land  $191,192   $200,385 
Buildings and improvements   1,480,761    1,546,244 
Furniture, fixtures and equipment   54,148    55,050 
Construction in progress   155    989 
Total Gross Real Estate Investments   1,726,256    1,802,668 
Accumulated depreciation   (117,115)   (108,911)
Total Net Operating Real Estate Investments   1,609,141    1,693,757 
Operating real estate held for sale, net   172,555    — 
Total Net Real Estate Investments   1,781,696    1,693,757 
Cash and cash equivalents   28,534    24,775 
Restricted cash   26,615    27,469 
Notes and accrued interest receivable from related parties   175,768    164,084 
Due from affiliates   3,542    2,854 
Accounts receivable, prepaids and other assets   16,582    14,395 
Preferred equity investments and investments in unconsolidated real estate joint ventures   100,704    89,033 
In-place lease intangible assets, net   1,786    1,768 
Non-real estate assets associated with operating real estate held for sale   481    — 
Total Assets  $2,135,708   $2,018,135 
           
LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY          
Mortgages payable  $1,142,635   $1,206,136 
Mortgages payable associated with operating real estate held for sale   137,394    — 
Revolving credit facilities   101,300    82,209 
Accounts payable   949    1,486 
Other accrued liabilities   27,446    31,690 
Due to affiliates   773    726 
Distributions payable   12,527    12,073 
Liabilities associated with operating real estate held for sale   3,024    — 
Total Liabilities   1,426,048    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 as of June 30, 2019 and December 31, 2018   139,912    139,545 
6.000% Series B Redeemable Preferred Stock, liquidation preference $1,000 per share, 1,225,000 shares authorized; 399,502 and 306,009 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively   357,346    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 June 30, 2019 and December 31, 2018   56,626    56,485 
Equity          
Stockholders’ Equity          
Preferred stock, $0.01 par value, 229,900,000 shares authorized; no shares issued and outstanding   —    — 
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 as of June 30, 2019 and December 31, 2018   68,705    68,705 
Common stock - Class A, $0.01 par value, 747,509,582 shares authorized; 22,294,327 and 23,322,211 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively   223    233 
Common stock - Class C, $0.01 par value, 76,603 shares authorized; 76,603 shares issued and outstanding as of June 30, 2019 and December 31, 2018   1    1 
Additional paid-in-capital   295,444    307,938 
Distributions in excess of cumulative earnings   (248,988)   (218,531)
Total Stockholders’ Equity   115,385    158,346 
Noncontrolling Interests          
Operating Partnership units   15,405    27,613 
Partially owned properties   24,986    28,984 
Total Noncontrolling Interests   40,391    56,597 
Total Equity   155,776    214,943 
TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY  $2,135,708   $2,018,135 

 

 26 

 

 

 

Bluerock Residential Growth REIT, Inc.

Consolidated Statements of Operations

For the Three and Six Months Ended June 30, 2019 and 2018

(Dollars in thousands)

 

 

   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   2019   2018   2019   2018 
Revenues                
Net rental income  $41,261   $34,719   $81,973   $67,383 
Other property revenues   5,203    4,605    10,180    8,615 
Rental and other property revenues   46,464    39,324    92,153    75,998 
Interest income from related parties   5,973    5,635    11,749    10,830 
Total revenues   52,437    44,959    103,902    86,828 
Expenses                    
Property operating   18,868    16,874    37,470    32,533 
Property management fees   1,235    1,074    2,451    2,067 
General and administrative   5,046    4,528    10,674    9,197 
Acquisition and pursuit costs   70    28    128    71 
Weather-related losses, net   291    —    291    168 
Depreciation and amortization   16,226    14,819    33,454    30,460 
Total expenses   41,736    37,323    84,468    74,496 
Operating income   10,701    7,636    19,434    12,332 
Other income (expense)                    
Preferred returns on unconsolidated real estate joint ventures   2,492    2,626    4,781    5,088 
Gain on sale of non-depreciable real estate investments   —    —    679    — 
Loss on extinguishment of debt and debt modification costs   —    (653)   —    (653)
Interest expense, net   (15,125)   (13,041)   (31,191)   (23,158)
Total other expense   (12,633)   (11,068)   (25,731)   (18,723)
Net loss   (1,932)   (3,432)   (6,297)   (6,391)
Preferred stock dividends   (11,019)   (8,643)   (21,403)   (16,890)
Preferred stock accretion   (2,316)   (1,400)   (4,203)   (2,510)
Net loss attributable to noncontrolling interests                    
Operating Partnership units   (3,887)   (3,010)   (7,938)   (5,685)
Partially owned properties   (390)   (253)   (882)   (468)
Net loss attributable to noncontrolling interests   (4,277)   (3,263)   (8,820)   (6,153)
Net loss attributable to common stockholders  $(10,990)  $(10,212)  $(23,083)  $(19,638)
                     
Net loss per common share - Basic  $(0.50)  $(0.44)  $(1.03)  $(0.83)
                     
Net loss per common share – Diluted  $(0.50)  $(0.44)  $(1.03)  $(0.83)
                     
Weighted average basic common shares outstanding   22,430,619    23,800,770    22,775,203    23,971,129 
Weighted average diluted common shares outstanding   22,430,619    23,800,770    22,775,203    23,971,129 

 

 27 

 

 

 

Bluerock Residential Growth REIT, Inc.

Reconciliation of Funds from Operations (FFO) and Core FFO (CFFO) Attributable to Common Shares and Units

For the Three and Six Months Ended June 30, 2019 and 2018

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

 

 

   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   2019   2018   2019   2018 
Net loss attributable to common shares  $(10,990)  $(10,212)  $(23,083)  $(19,638)
Add back: Net loss attributable to Operating Partnership units   (3,887)   (3,010)   (7,938)   (5,685)
Net loss attributable to common shares and units   (14,877)   (13,222)   (31,021)   (25,323)
Common stockholders and Operating Partnership units pro-rata share of:                    
Real estate depreciation and amortization (1)   15,290    13,990    31,432    28,821 
FFO Attributable to Common Shares and Units   413    768    411    3,498 
Common stockholders and Operating Partnership units pro-rata share of:                    
Acquisition and pursuit costs   70    28    128    71 
Non-cash interest expense   786    1,602    1,561    2,062 
Unrealized loss on derivatives   652    —    2,287    — 
Loss on extinguishment of debt and debt modification costs   —    653    —    653 
Weather-related losses, net   249    —    249    165 
Non-real estate depreciation and amortization   84    75    170    139 
Gain on sale of non-depreciable real estate investments   —    —    (679)   — 
Shareholder activism   55    —    393    — 
Non-cash preferred returns on unconsolidated real estate joint ventures   (386)   (233)   (598)   (464)
Non-cash equity compensation   2,427    1,638    4,819    3,418 
Preferred stock accretion   2,316    1,400    4,203    2,510 
CFFO Attributable to Common Shares and Units  $6,666   $5,931   $12,944   $12,052 
                     
Per Share and Unit Information:                    
FFO Attributable to Common Shares and Units - diluted  $0.01   $0.02   $0.01   $0.11 
CFFO Attributable to Common Shares and Units - diluted  $0.22   $0.19   $0.42   $0.39 
                     
Weighted average common shares and units outstanding - diluted   30,550,863    30,814,839    30,704,271    30,873,023 

 

(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. 

 

 28 

 

 

 

Bluerock Residential Growth REIT, Inc.

Mortgages Payable Summary Information

As of June 30, 2019

(Unaudited and dollars in thousands)

 

 

Property  Outstanding
Principal		   Interest Rate   Fixed/ Floating  Maturity Date
ARIUM at Palmer Ranch  $41,348    4.41%  Fixed  May 1, 2025
ARIUM Glenridge   49,500    3.76%  L + 1.33% subject to Cap (1)  September 1, 2025
ARIUM Grandewood   39,385    4.09%  (2)  July 1, 2025
ARIUM Hunter’s Creek   72,294    3.65%  Fixed  November 1, 2024
ARIUM Metrowest   64,559    4.43%  Fixed  May 1, 2025
ARIUM Pine Lakes   26,950    3.95%  Fixed  November 1, 2023
ARIUM Westside   52,150    3.68%  Fixed  August 1, 2023
Ashford Belmar   100,675    4.53%  Fixed  December 1, 2025
Ashton Reserve I   30,607    4.67%  Fixed  December 1, 2025
Ashton Reserve II   15,213    3.93%  L + 1.50% subject to Cap (1)  August 1, 2025
Citrus Tower   41,438    4.07%  Fixed  October 1, 2024
Element   29,260    3.63%  Fixed  July 1, 2026
Enders Place at Baldwin Park (3)   23,581    4.30%  Fixed  November 1, 2022
James on South First   26,323    4.35%  Fixed  January 1, 2024
Marquis at Crown Ridge   28,342    4.04%  L + 1.61% subject to Cap (1)  June 1, 2024
Marquis at Stone Oak   42,326    4.04%  L + 1.61% subject to Cap (1)  June 1, 2024
Marquis at The Cascades I   32,592    4.04%  L + 1.61% subject to Cap (1)  June 1, 2024
Marquis at The Cascades II   22,745    4.04%  L + 1.61% subject to Cap (1)  June 1, 2024
Marquis at TPC   16,647    4.04%  L + 1.61% subject to Cap (1)  June 1, 2024
Outlook at Greystone   22,105    4.30%  Fixed  June 1, 2025
Park & Kingston (4)   18,432    3.41%  Fixed  April 1, 2020
Plantation Park   26,625    4.64%  Fixed  July 1, 2028
Providence Trail   47,950    3.54%  Fixed  July 1, 2026
Roswell City Walk   51,000    3.63%  Fixed  December 1, 2026
The Brodie   34,513    3.71%  Fixed  December 1, 2023
The Links at Plum Creek   40,000    4.31%  Fixed  October 1, 2025
The Mills   26,050    4.21%  Fixed  January 1, 2025
The Preserve at Henderson Beach   35,235    4.65%  Fixed  January 5, 2023
Veranda at Centerfield   26,100    3.69%  L + 1.25% subject to Cap (1)  July 26, 2023
Villages of Cypress Creek   26,200    3.23%  Fixed  October 1, 2022
Wesley Village   40,438    4.25%  Fixed  April 1, 2024
Total   1,150,583            
Fair value adjustments   1,987            
Deferred financing costs, net   (9,935)           
Total continuing operations  $1,142,635            
Held for sale                
ARIUM Palms  $30,320    3.83%  L + 1.40% subject to Cap (1)  September 1, 2025
Preston View   41,657    3.93%  L + 1.50% subject to Cap (1)  August 1, 2025
Sorrel   38,684    4.72%  L + 2.29% subject to Cap (1)  May 1, 2023
Sovereign   27,939    3.46%  Fixed  November 10, 2022
Deferred financing costs, net   (1,206)           
Total held for sale  $137,394            
Total  $1,280,029            
Weighted Average Interest Rate   4.05%           

 

(1) In June 2019, one month LIBOR in effect was 2.43%. LIBOR rate is subject to a LIBOR rate cap of 2.50% until at earliest July 1, 2021.

(2) The principal balance includes a $19.7 million advance at a fixed rate of 4.35% and a $19.7 million advance at a variable rate of 3.83% as of June 30, 2019.

(3) The principal balance includes a $16.0 million loan at a fixed rate of 3.97% and a $7.6 million supplemental loan at a fixed rate of 5.01%.

(4) The principal balance includes a $15.3 million loan at a fixed rate of 3.21% and a $3.2 million supplemental loan at a fixed rate of 4.34%.

 

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Bluerock Residential Growth REIT, Inc.

Mortgages Payable Summary Information Continued

As of June 30, 2019

(Unaudited and dollars in thousands)

 

 

Mortgages Payable Maturity Schedules

 

Year  Fixed Rate   Floating Rate   Total   % of Total 
2019  $2,519   $1,441   $3,960    0.31%
2020   27,109    3,630    30,739    2.38%
2021   11,614    4,627    16,241    1.26%
2022   86,689    5,867    92,556    7.18%
2023   154,563    68,133    222,696    17.27%
Thereafter   642,891    280,100    922,991    71.60%
   $925,385   $363,798   $1,289,183    100.00%
Fair Value Adjustments   1,987    -    1,987      
Subtotal  $927,372   $363,798   $1,291,170      
Deferred Financing Costs, net   (7,653)   (3,488)   (11,141)     
Total  $919,719   $360,310   $1,280,029      

 

   Amounts   % of Total   Weighted
Average Interest
Rates		   Weighted
Average
Maturities
(years)		 
Continuing Operations                    
Secured Fixed Rate Debt  $899,433    78.0%   4.09%   5.5 
Secured Floating Rate Debt (1)   253,137    22.0%   3.93%   5.2 
   Total/Average Secured Continuing Operations  $1,152,570    100.0%   4.06%   5.5 
                     
Held for Sale                    
Secured Fixed Rate Debt  $27,939    20.2%   3.46%   3.4 
Secured Floating Rate Debt (1)   110,661    79.8%   4.18%   5.3 
   Total/Average Secured Held for Sale  $138,600    100.0%   4.03%   4.9 
                     
Total  $1,291,170    100.0%   4.05%   5.4 

 

(1) 100% of the floating rate debt is subject to a LIBOR rate cap of 2.50% until at earliest July 1, 2021.

 

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Bluerock Residential Growth REIT, Inc.

2019 Projected Guidance

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

 

 

   2019 Outlook (3) 
   Low   High 
Core Funds from Operations Attributable to Common Shares and Units per share  $0.81   $0.84 
           
Same Store NOI Growth   5.0%   6.5%
Property management fee as a % of revenue   2.7%   2.7%
General and administrative expenses (1)   11,500    11,000 
Income from preferred equity & mezzanine investments   33,500    33,500 
Normal recurring capital expenditures (2)   2,500    2,500 
           
Value-add Upgrades          
Forecasted unit count   900    1,200 
Return on investment   20%   20%
           
Dispositions          
Total Gross Asset Value   200,000    400,000 
           
Noncontrolling Interest, Preferred Stock and Share Count Assumptions          
Noncontrolling interest % of CFFO - Partially owned properties   5.0%   4.7%
Series B Raise   135,000    185,000 
Preferred stock dividends   44,000    45,300 
Estimated weighted average diluted common shares and units outstanding   31,500    31,500 

 

(1) General and administrative expenses exclude non-cash expenses, such as depreciation and non-cash equity compensation.

 

(2) Normally recurring capital expenditures exclude development, investment, revenue enhancing and non-recurring capital expenditures.

 

(3) The Company has not reconciled projected Core Funds from Operations Attributable to Common Shares and Units per share (“CFFO”) guidance to the corresponding GAAP financial measure because it does not provide guidance for various reconciling items. The Company is unable to provide guidance for these reconciling items since certain items that impact net income are outside of its control and cannot be reasonably predicted. Accordingly, reconciliations to the corresponding GAAP financial measures are not available.

 

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Bluerock Residential Growth REIT, Inc.

Definitions of Non-GAAP Financial Measures

 

 

The foregoing supplemental financial data includes certain non-GAAP financial measures that we believe are helpful in understanding our business, 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 Shares and Units

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 shares and units 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 four operating properties and four properties held through preferred equity or mezzanine loan investments subsequent to June 30, 2018. The results presented are not directly comparable and should not be considered an indication of our future operating performance (unaudited and dollars in thousands, except share and per share data).

 

Same Store Properties

Same store properties are conventional multifamily residential apartments which were owned and operational for the entire periods presented.

 

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Bluerock Residential Growth REIT, Inc.

Definitions of Non-GAAP Financial Measures

(Unaudited and dollars in thousands)

 

 

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.

 

The reconciliations of net loss attributable to common stockholders to EBITDAre and Adjusted EBITDAre are presented in the table below:

 

   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   2019   2018   2019   2018 
Net loss attributable to common stockholders  $(10,990)  $(10,212)  $(23,083)  $(19,638)
Net loss income attributable to noncontrolling interests   (4,277)   (3,263)   (8,820)   (6,153)
Preferred stock dividends   11,019    8,643    21,403    16,890 
Preferred stock accretion   2,316    1,400    4,203    2,510 
Interest expense, net   15,125    13,041    31,191    23,158 
Depreciation and amortization   16,142    14,744    33,284    30,321 
Loss on extinguishment of debt and debt modification costs   -    653    -    653 
EBITDAre  $29,335   $25,006   $58,178   $47,741 
Acquisition and pursuit costs   70    28    128    71 
Non-real estate depreciation and amortization   84    75    170    139 
Weather-related losses, net   291    -    291    168 
Gain on sale of non-depreciable real estate investments   -    -    (679)   - 
Shareholder activism   55    -    393    - 
Non-cash equity compensation   2,427    1,638    4,819    3,418 
Non-cash preferred returns on unconsolidated real estate joint ventures   (386)   (233)   (598)   (464)
Adjusted EBITDAre  $31,876   $26,514   $62,702   $51,073 

 

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Bluerock Residential Growth REIT, Inc.

Definitions of Non-GAAP Financial Measures

(Unaudited and dollars in thousands)

 

 

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.

 

We have acquired four operating properties and four properties held through preferred equity or mezzanine loan investments subsequent to June 30, 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 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:

 

   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   2019   2018   2019   2018 
Net loss attributable to common shares  $(10,990)  $(10,212)  $(23,083)  $(19,638)
Add back: Net loss attributable to Operating Partnership units   (3,887)   (3,010)   (7,938)   (5,685)
Net loss attributable to common shares and units   (14,877)   (13,222)   (31,021)   (25,323)
Add common stockholders and Operating Partnership units pro-rata share of:                    
Depreciation and amortization   15,290    13,990    31,432    28,821 
Non-real estate depreciation and amortization   84    75    170    139 
Non-cash interest expense   786    1,602    1,561    2,062 
Unrealized loss on derivatives   652    —    2,287    — 
Loss on extinguishment of debt and debt modification costs   —    653    —    653 
Property management fees   1,170    1,017    2,318    1,956 
Acquisition and pursuit costs   70    28    128    71 
Corporate operating expenses   4,975    4,528    10,529    9,197 
Weather-related losses, net   249    —    249    165 
Preferred dividends   11,019    8,643    21,403    16,890 
Preferred stock accretion   2,316    1,400    4,203    2,510 
Less common stockholders and Operating Partnership units pro-rata share of:                    
Preferred returns on unconsolidated real estate joint ventures   2,492    2,626    4,781    5,088 
Interest income from related parties   5,973    5,635    11,749    10,830 
Gain on sale of non-depreciable real estate investments   —    —    679    — 
Pro-rata share of properties’ income   13,269    10,453    26,050    21,223 
Add:                    
Noncontrolling interest pro-rata share of partially owned property income   690    542    1,418    1,152 
Total property income   13,959    10,995    27,468    22,375 
Add:                    
Interest expense   13,637    11,455    27,215    21,090 
Net operating income   27,596    22,450    54,683    43,465 
Less:                    
Non-same store net operating income   3,752    571    8,719    1,382 
Same store net operating income (1)  $23,844   $21,879   $45,964   $42,083 

 

(1) Same store portfolio for the three months ended June 30, 2019 consists of 29 properties, which represent 9,872 units. Same store portfolio for the six months ended June 30, 2019 consists of 28 properties, which represent 9,608 units.

 

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