x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Maryland | 27-1712193 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of each class | Trading Symbol | Name of each exchange on which registered |
Common Stock, par value $.01 per share | APTS | NYSE |
PART I - FINANCIAL INFORMATION | ||||
INDEX | ||||
Item 1. | Financial Statements | Page No. | ||
2 | ||||
3 | ||||
Item 2. | ||||
Item 3. | ||||
Item 4. | ||||
Item 1. | Legal Proceedings | 68 | ||
Item 1A. | Risk Factors | 68 | ||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 68 | ||
Item 3. | Defaults Upon Senior Securities | 68 | ||
Item 4. | Mine Safety Disclosures | 68 | ||
Item 5. | Other Information | 68 | ||
Item 6. | 68 | |||
Preferred Apartment Communities, Inc. | ||||||||
Condensed Consolidated Balance Sheets | ||||||||
(Unaudited) | ||||||||
(In thousands, except per-share par values) | March 31, 2019 | December 31, 2018 | ||||||
Assets | ||||||||
Real estate | ||||||||
Land | $ | 535,698 | $ | 519,300 | ||||
Building and improvements | 2,826,609 | 2,738,085 | ||||||
Tenant improvements | 131,117 | 128,914 | ||||||
Furniture, fixtures, and equipment | 296,926 | 278,151 | ||||||
Construction in progress | 9,268 | 8,265 | ||||||
Gross real estate | 3,799,618 | 3,672,715 | ||||||
Less: accumulated depreciation | (308,004 | ) | (272,042 | ) | ||||
Net real estate | 3,491,614 | 3,400,673 | ||||||
Real estate loan investments, net of deferred fee income and allowance for loan loss | 311,661 | 282,548 | ||||||
Real estate loan investments to related parties, net | 24,477 | 51,663 | ||||||
Total real estate and real estate loan investments, net | 3,827,752 | 3,734,884 | ||||||
Cash and cash equivalents | 80,403 | 38,958 | ||||||
Restricted cash | 45,482 | 48,732 | ||||||
Notes receivable | 16,340 | 14,440 | ||||||
Note receivable and revolving lines of credit due from related parties | 24,980 | 32,867 | ||||||
Accrued interest receivable on real estate loans | 23,540 | 23,340 | ||||||
Acquired intangible assets, net of amortization of $122,735 and $113,199 | 131,560 | 135,961 | ||||||
Deferred loan costs on Revolving Line of Credit, net of amortization of $346 and $180 | 1,753 | 1,916 | ||||||
Deferred offering costs | 6,346 | 6,468 | ||||||
Tenant lease inducements, net of amortization of $2,261 and $1,833 | 20,371 | 20,698 | ||||||
Receivable from sale of mortgage-backed security | — | 41,181 | ||||||
Tenant receivables (net of allowance of $0 and $1,662) and other assets | 54,662 | 41,567 | ||||||
Variable Interest Entity ("VIE") assets from mortgage-backed pool, at fair value | 568,725 | 269,946 | ||||||
Total assets | $ | 4,801,914 | $ | 4,410,958 | ||||
Liabilities and equity | ||||||||
Liabilities | ||||||||
Mortgage notes payable, net of deferred loan costs and | ||||||||
mark-to-market adjustment of $40,314 and $40,127 | $ | 2,359,939 | $ | 2,299,625 | ||||
Revolving line of credit | 17,000 | 57,000 | ||||||
Real estate loan investment participation obligation | — | 5,181 | ||||||
Unearned purchase option termination fees | 7,276 | 2,050 | ||||||
Deferred revenue | 42,544 | 43,484 | ||||||
Accounts payable and accrued expenses | 40,525 | 38,618 | ||||||
Accrued interest payable | 7,494 | 6,711 | ||||||
Dividends and partnership distributions payable | 20,285 | 19,258 | ||||||
Acquired below market lease intangibles, net of amortization of $17,280 and $15,254 | 46,638 | 47,149 | ||||||
Security deposits and other liabilities | 15,775 | 17,611 | ||||||
VIE liabilities from mortgage-backed pool, at fair value | 544,869 | 264,886 | ||||||
Total liabilities | 3,102,345 | 2,801,573 | ||||||
Commitments and contingencies (Note 11) | ||||||||
Equity | ||||||||
Stockholders' equity | ||||||||
Series A Redeemable Preferred Stock, $0.01 par value per share; 3,050 | ||||||||
shares authorized; 1,804 and 1,674 shares issued; 1,720 and 1,608 | ||||||||
shares outstanding at March 31, 2019 and December 31, 2018, respectively | 17 | 16 | ||||||
Series M Redeemable Preferred Stock, $0.01 par value per share; 500 | ||||||||
shares authorized; 57 and 44 shares issued; 56 and 44 shares outstanding | ||||||||
at March 31, 2019 and December 31, 2018, respectively | 1 | — | ||||||
Common Stock, $0.01 par value per share; 400,067 shares authorized; | ||||||||
43,238 and 41,776 shares issued and outstanding at | ||||||||
March 31, 2019 and December 31, 2018, respectively | 432 | 418 | ||||||
Additional paid-in capital | 1,698,810 | 1,607,712 | ||||||
Accumulated (deficit) earnings | — | — | ||||||
Total stockholders' equity | 1,699,260 | 1,608,146 | ||||||
Non-controlling interest | 309 | 1,239 | ||||||
Total equity | 1,699,569 | 1,609,385 | ||||||
Total liabilities and equity | $ | 4,801,914 | $ | 4,410,958 |
Preferred Apartment Communities, Inc. | ||||||||
Condensed Consolidated Statements of Operations | ||||||||
(unaudited) | ||||||||
Three months ended March 31, | ||||||||
(In thousands, except per-share figures) | 2019 | 2018 | ||||||
Revenues: | ||||||||
Rental revenues | $ | 92,238 | $ | 74,261 | ||||
Other property revenues | 2,178 | 1,544 | ||||||
Interest income on loans and notes receivable | 11,288 | 10,300 | ||||||
Interest income from related parties | 5,802 | 4,265 | ||||||
Total revenues | 111,506 | 90,370 | ||||||
Operating expenses: | ||||||||
Property operating and maintenance | 10,792 | 8,805 | ||||||
Property salary and benefits (including reimbursements of $4,079 and $3,609 to related party) | 4,657 | 3,899 | ||||||
Property management fees (including $2,467 and $2,105 to related parties) | 3,267 | 2,756 | ||||||
Real estate taxes | 12,500 | 9,975 | ||||||
General and administrative | 2,614 | 1,841 | ||||||
Equity compensation to directors and executives | 311 | 1,135 | ||||||
Depreciation and amortization | 45,289 | 40,616 | ||||||
Asset management and general and administrative expense fees to related party | 7,829 | 6,241 | ||||||
Insurance, professional fees and other expenses | 2,528 | 1,445 | ||||||
Total operating expenses | 89,787 | 76,713 | ||||||
Waived asset management and general and administrative expense fees | (2,629 | ) | (1,220 | ) | ||||
Net operating expenses | 87,158 | 75,493 | ||||||
Operating income before gains on sales of real estate and trading investment | 24,348 | 14,877 | ||||||
Gains on sales of real estate and trading investment | 4 | 20,354 | ||||||
Operating income | 24,352 | 35,231 | ||||||
Interest expense | 26,756 | 20,968 | ||||||
Change in fair value of net assets of consolidated VIEs from mortgage-backed pools | 141 | — | ||||||
Loss on extinguishment of debt | (17 | ) | — | |||||
Net (loss) income | (2,280 | ) | 14,263 | |||||
Consolidated net loss (income) attributable to non-controlling interests | (492 | ) | (380 | ) | ||||
Net (loss) income attributable to the Company | (2,772 | ) | 13,883 | |||||
Dividends declared to preferred stockholders | (25,539 | ) | (19,517 | ) | ||||
Earnings attributable to unvested restricted stock | (2 | ) | (2 | ) | ||||
Net loss attributable to common stockholders | $ | (28,313 | ) | $ | (5,636 | ) | ||
Net loss per share of Common Stock available | ||||||||
to common stockholders, basic and diluted | $ | (0.66 | ) | $ | (0.14 | ) | ||
Weighted average number of shares of Common Stock outstanding, | ||||||||
basic and diluted | 42,680 | 39,098 |
Preferred Apartment Communities, Inc. | ||||||||||||||||||||||||||||
Condensed Consolidated Statements of Stockholders' Equity | ||||||||||||||||||||||||||||
For the three-month periods ended March 31, 2019 and 2018 | ||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||
(In thousands, except dividend per-share figures) | Series A and Series M Redeemable Preferred Stock | Common Stock | Additional Paid in Capital | Accumulated Earnings | Total Stockholders' Equity | Non-Controlling Interest | Total Equity | |||||||||||||||||||||
Balance at January 1, 2019 | $ | 16 | $ | 418 | $ | 1,607,712 | $ | — | $ | 1,608,146 | $ | 1,239 | $ | 1,609,385 | ||||||||||||||
Issuance of Units | 2 | — | 128,680 | — | 128,682 | — | 128,682 | |||||||||||||||||||||
Issuance of mShares | — | — | 12,472 | — | 12,472 | — | 12,472 | |||||||||||||||||||||
Redemptions of Series A Preferred Stock | — | 10 | (2,015 | ) | — | (2,005 | ) | — | (2,005 | ) | ||||||||||||||||||
Exercises of warrants | — | 3 | 4,245 | — | 4,248 | — | 4,248 | |||||||||||||||||||||
Syndication and offering costs | — | — | (14,281 | ) | — | (14,281 | ) | — | (14,281 | ) | ||||||||||||||||||
Equity compensation to executives and directors | — | — | 159 | — | 159 | — | 159 | |||||||||||||||||||||
Conversion of Class A Units to Common Stock | — | 1 | 526 | — | 527 | (527 | ) | — | ||||||||||||||||||||
Current period amortization of Class B Units | — | — | — | — | — | 152 | 152 | |||||||||||||||||||||
Net income | — | — | — | (2,772 | ) | (2,772 | ) | 492 | (2,280 | ) | ||||||||||||||||||
Reallocation adjustment to non-controlling interests | — | — | 818 | — | 818 | (818 | ) | — | ||||||||||||||||||||
Distributions to non-controlling interests | — | — | — | — | — | (229 | ) | (229 | ) | |||||||||||||||||||
Dividends to series A preferred stockholders | ||||||||||||||||||||||||||||
($5.00 per share per month) | — | — | (27,418 | ) | 2,685 | (24,733 | ) | — | (24,733 | ) | ||||||||||||||||||
Dividends to mShares preferred stockholders | ||||||||||||||||||||||||||||
($4.79 - $6.25 per share per month) | — | — | (893 | ) | 87 | (806 | ) | — | (806 | ) | ||||||||||||||||||
Dividends to common stockholders ($0.26 per share) | — | — | (11,195 | ) | — | (11,195 | ) | — | (11,195 | ) | ||||||||||||||||||
Balance at March 31, 2019 | $ | 18 | $ | 432 | $ | 1,698,810 | $ | — | $ | 1,699,260 | $ | 309 | $ | 1,699,569 |
Preferred Apartment Communities, Inc. | ||||||||||||||||||||||||||||
Condensed Consolidated Statements of Stockholders' Equity, continued | ||||||||||||||||||||||||||||
For the three-month periods ended March 31, 2019 and 2018 | ||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||
(In thousands, except dividend per-share figures) | Series A and Series M Redeemable Preferred Stock | Common Stock | Additional Paid in Capital | Accumulated Earnings | Total Stockholders' Equity | Non-Controlling Interest | Total Equity | |||||||||||||||||||||
Balance at January 1, 2018 | $ | 12 | $ | 386 | $ | 1,271,040 | $ | 4,449 | $ | 1,275,887 | $ | 4,879 | $ | 1,280,766 | ||||||||||||||
Issuance of Units | 1 | — | 97,394 | — | 97,395 | — | 97,395 | |||||||||||||||||||||
Issuance of mshares | — | — | 5,209 | — | 5,209 | — | 5,209 | |||||||||||||||||||||
Redemptions of Series A Preferred Stock | — | — | (5,766 | ) | — | (5,766 | ) | — | (5,766 | ) | ||||||||||||||||||
Exercises of Warrants | — | 5 | 7,185 | — | 7,190 | — | 7,190 | |||||||||||||||||||||
Syndication and offering costs | — | — | (9,772 | ) | — | (9,772 | ) | — | (9,772 | ) | ||||||||||||||||||
Equity compensation to executives and directors | — | — | 138 | — | 138 | — | 138 | |||||||||||||||||||||
Conversion of Class A Units to Common Stock | — | 1 | 850 | — | 851 | (851 | ) | — | ||||||||||||||||||||
Current period amortization of Class B Units | — | — | — | — | — | 996 | 996 | |||||||||||||||||||||
Net income | — | — | — | 13,883 | 13,883 | 380 | 14,263 | |||||||||||||||||||||
Reallocation adjustment to non-controlling interests | — | — | 2,434 | — | 2,434 | (2,434 | ) | — | ||||||||||||||||||||
Distributions to non-controlling interests | — | — | — | — | — | (268 | ) | (268 | ) | |||||||||||||||||||
Dividends to Series A preferred stockholders | ||||||||||||||||||||||||||||
($5.00 per share per month) | — | — | (1,166 | ) | (18,038 | ) | (19,204 | ) | — | (19,204 | ) | |||||||||||||||||
Dividends to mShares preferred stockholders | ||||||||||||||||||||||||||||
($4.79 - $6.25 per share per month) | — | — | (19 | ) | (294 | ) | (313 | ) | — | (313 | ) | |||||||||||||||||
Dividends to common stockholders ($0.25 per share) | — | — | (9,802 | ) | — | (9,802 | ) | — | (9,802 | ) | ||||||||||||||||||
Balance at March 31, 2018 | $ | 13 | $ | 392 | $ | 1,357,725 | $ | — | $ | 1,358,130 | $ | 2,702 | $ | 1,360,832 |
Preferred Apartment Communities, Inc. | ||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||
(unaudited) | ||||||||
(In thousands) | Three Months Ended March 31, | |||||||
2019 | 2018 | |||||||
Operating activities: | ||||||||
Net (loss) income | $ | (2,280 | ) | $ | 14,263 | |||
Reconciliation of net (loss) income to net cash provided by operating activities: | ||||||||
Depreciation and amortization expense | 45,289 | 40,616 | ||||||
Amortization of above and below market leases | (1,436 | ) | (1,178 | ) | ||||
Deferred revenues and fee income amortization | (1,357 | ) | (943 | ) | ||||
Purchase option termination fee amortization | (4,233 | ) | — | |||||
Noncash interest income amortization on MBS, net of amortized costs | (141 | ) | — | |||||
Amortization of market discount on assumed debt and lease incentives | 494 | 323 | ||||||
Deferred loan cost amortization | 1,552 | 1,480 | ||||||
(Increase) in accrued interest income on real estate loan investments | (3,551 | ) | (2,828 | ) | ||||
Equity compensation to executives and directors | 311 | 1,135 | ||||||
Gains on sales of real estate and trading investment | (4 | ) | (20,354 | ) | ||||
Cash received for purchase option terminations | 1,330 | — | ||||||
Loss on extinguishment of debt | 17 | — | ||||||
Mortgage interest received from consolidated VIEs | 2,598 | — | ||||||
Mortgage interest paid to other participants of consolidated VIEs | (2,598 | ) | — | |||||
Changes in operating assets and liabilities: | ||||||||
(Increase) decrease in tenant receivables and other assets | (8,376 | ) | 625 | |||||
(Increase) in tenant lease incentives | (102 | ) | (2,149 | ) | ||||
Increase (decrease) in accounts payable and accrued expenses | 1,290 | (1,074 | ) | |||||
(Decrease) increase in accrued interest, prepaid rents and other liabilities | (2,441 | ) | 1,502 | |||||
Net cash provided by operating activities | 26,362 | 31,418 | ||||||
Investing activities: | ||||||||
Investments in real estate loans | (29,795 | ) | (68,929 | ) | ||||
Repayments of real estate loans | — | 42,312 | ||||||
Notes receivable issued | (1,890 | ) | (472 | ) | ||||
Notes receivable repaid | — | 5,618 | ||||||
Note receivable issued to and draws on line of credit by related parties | (13,952 | ) | (14,419 | ) | ||||
Repayments of line of credit by related parties | 8,330 | 9,034 | ||||||
Origination fees received on real estate loan investments | 801 | 1,600 | ||||||
Origination fees paid to Manager on real estate loan investments | (401 | ) | (800 | ) | ||||
Purchases of mortgage-backed securities (K program), net of acquisition costs | (18,656 | ) | — | |||||
Mortgage principal received from consolidated VIEs | 679 | — | ||||||
Purchases of mortgage-backed securities | (12,278 | ) | — | |||||
Proceeds from sales of mortgage-backed securities | 53,445 | — | ||||||
Acquisition of properties | (32,540 | ) | (170,072 | ) | ||||
Disposition of properties, net | — | 42,266 | ||||||
Receipt of insurance proceeds for capital improvements | 746 | 412 | ||||||
Additions to real estate assets - improvements | (7,917 | ) | (7,637 | ) | ||||
Deposits (paid) refunded on acquisitions | (511 | ) | 4,021 | |||||
Net cash used in investing activities | (53,939 | ) | (157,066 | ) | ||||
Financing activities: | ||||||||
Proceeds from mortgage notes payable | 57,275 | 123,275 | ||||||
Repayments of mortgage notes payable | (38,324 | ) | (27,350 | ) | ||||
Payments for deposits and other mortgage loan costs | (996 | ) | (1,733 | ) | ||||
Proceeds from real estate loan participants | — | 5 | ||||||
Payments to real estate loan participants | (5,223 | ) | (3,314 | ) | ||||
Proceeds from lines of credit | 126,200 | 86,200 | ||||||
Payments on lines of credit | (166,200 | ) | (114,800 | ) | ||||
Repayment of the Term Loan | — | (11,000 | ) | |||||
Mortgage principal paid to other participants of consolidated VIEs | (679 | ) | — | |||||
Proceeds from repurchase agreements | 4,857 | — | ||||||
Repayments of repurchase agreements | (4,857 | ) | — | |||||
Proceeds from sales of Units, net of offering costs | 128,573 | 93,234 | ||||||
Proceeds from exercises of Warrants | 3,921 | 11,169 | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements. | ||||||||
Preferred Apartment Communities, Inc. | ||||||||
Condensed Consolidated Statements of Cash Flows - continued | ||||||||
(unaudited) | ||||||||
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Payments for redemptions of preferred stock | (2,006 | ) | (5,744 | ) | ||||
Common Stock dividends paid | (10,840 | ) | (9,576 | ) | ||||
Preferred stock dividends paid | (24,869 | ) | (18,963 | ) | ||||
Distributions to non-controlling interests | (228 | ) | (221 | ) | ||||
Payments for deferred offering costs | (832 | ) | (1,152 | ) | ||||
Net cash provided by financing activities | 65,772 | 120,030 | ||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 38,195 | (5,618 | ) | |||||
Cash, cash equivalents and restricted cash, beginning of year | 87,690 | 73,012 | ||||||
Cash, cash equivalents and restricted cash, end of year | $ | 125,885 | $ | 67,394 | ||||
Supplemental cash flow information: | ||||||||
Cash paid for interest | $ | 24,318 | $ | 18,938 | ||||
Supplemental disclosure of non-cash investing and financing activities: | ||||||||
Accrued capital expenditures | $ | 7,308 | $ | 1,735 | ||||
Writeoff of fully depreciated or amortized assets and liabilities | $ | 158 | $ | 135 | ||||
Writeoff of fully amortized deferred loan costs | $ | 415 | $ | 1,331 | ||||
Lessee-funded tenant improvements, capitalized as landlord assets | $ | — | $ | 3,602 | ||||
Consolidation of VIEs (VIE asset / liability additions) | $ | 544,869 | $ | — | ||||
Dividends payable - Common Stock | $ | 11,195 | $ | 9,802 | ||||
Dividends payable - Series A Preferred Stock | $ | 8,447 | $ | 6,456 | ||||
Dividends payable - mShares Preferred Stock | $ | 549 | $ | 96 | ||||
Dividends declared but not yet due and payable | $ | 93 | $ | 106 | ||||
Partnership distributions payable to non-controlling interests | $ | 229 | $ | 268 | ||||
Accrued and payable deferred offering costs | $ | 740 | $ | 342 | ||||
Offering cost reimbursement to related party | $ | 465 | $ | 475 | ||||
Reclass of offering costs from deferred asset to equity | $ | 1,700 | $ | 446 | ||||
Loan receivables converted to equity for property acquisition | $ | 47,797 | $ | — | ||||
Fair value issuances of equity compensation | $ | 384 | $ | 4,612 | ||||
Mortgage loans assumed on acquisitions | $ | 41,550 | $ | — | ||||
Noncash repayment of mortgages through refinance | $ | — | $ | 37,485 |
1. | Organization and Basis of Presentation |
2. | Summary of Significant Accounting Policies |
Standard | Description | Date of Adoption | Effect on the Consolidated Financial Statements |
Recently Adopted Accounting Guidance | |||
ASU 2016-02, Leases (Topic 842) ASU 2018-11, Leases (Topic 842) Targeted Improvements | ASU 2016-02 requires a lessor to separate lease components from non-lease components, such as maintenance services or other activities that transfer a good or service to our residents and tenants in a contract. In July 2018, the FASB issued ASU 2018-11 which allowed for a practical expedient for lessors to elect, by class of underlying assets, to not separate lease and non-lease components if both (1) the timing and pattern of revenue recognition are the same for the non-lease component(s) and related lease component and (2) the combined single lease component would be classified as an operating lease. Additional practical expedients were also provided for under ASU 2018-11 related to expired or existing leases. | January 1, 2019 | Having met the criteria that (i) the timing and pattern of transfer for the lease component and associated non-lease components are the same and (ii) that the lease component, if accounted for separately would be classified as an operating lease, the Company has elected the practical expedient within ASU 2018-11, as codified under ASC 842-10-15-42A, to elect reporting the lease component and non-lease components as one single component under “Rental Revenues” recognized in accordance with ASC 842. This change had no material effect on the timing of revenue recognition. The Company has also elected to implement the package of practical expedients provided within ASU 2018-11, as codified under ASC 842-10-65-1(f), which allows the Company not to reassess whether expired or existing contracts contain leases, its lease classification, and any related initial direct costs. |
ASU 2018-20, Leases (ASC 842), Narrow-Scope Improvements for Lessors | ASU 2018-20 eliminates the requirement to record income and offsetting expense for certain variable costs paid for by lessees on behalf of lessors. | January 1, 2019 | The Company no longer records income and expense for property taxes paid directly to the taxing authority by a lessee based on this standard. The effect is a reduction of other property revenues and of property tax expense, with no effect upon net income/loss. |
Recently Issued Accounting Guidance Not Yet Adopted | |||
ASU 2016-13, Financial Instruments - Credit Losses (ASC 326) | ASU 2016-13 requires that financial assets measured at amortized cost basis be presented at the net amount expected to be collected, with the establishment of an allowance for credit losses expected overall, based on relevant information from historical events. | January 1, 2020 | The Company has not yet determined whether its adoption of ASU 2016-13 will have a material impact on its financial statements. |
As of: | ||||||
March 31, 2019 | December 31, 2018 | |||||
Multifamily communities: | ||||||
Properties (1) | 32 | 32 | ||||
Units | 9,768 | 9,768 | ||||
New Market Properties: (2) | ||||||
Properties | 46 | 45 | ||||
Gross leasable area (square feet) (3) | 4,889,011 | 4,730,695 | ||||
Student housing properties: | ||||||
Properties | 8 | 7 | ||||
Units | 2,011 | 1,679 | ||||
Beds | 6,095 | 5,208 | ||||
Preferred Office Properties: | ||||||
Properties | 7 | 7 | ||||
Rentable square feet | 2,578,000 | 2,578,000 | ||||
(1) The acquired second phases of CityPark View and Crosstown Walk communities are managed in combination with the initial phases and so together are considered a single property, as are the Lenox Village and Regent at Lenox Village assets within the Lenox Portfolio. | ||||||
(2) See Note 13, Segment information. | ||||||
(3) The Company also owns approximately 47,600 square feet of gross leasable area of ground floor retail space which is embedded within the Lenox Portfolio and is not included in the totals above for New Market Properties. |
Lake Cameron | ||||
(in thousands) | March 20, 2018 | |||
Real estate assets: | ||||
Land | $ | 4,000 | ||
Building and improvements | 21,519 | |||
Furniture, fixtures and equipment | 3,687 | |||
Accumulated depreciation | (7,220 | ) | ||
Total assets | $ | 21,986 | ||
Liabilities: | ||||
Mortgage note payable | $ | 19,736 | ||
Supplemental mortgage note | — | |||
Total liabilities | $ | 19,736 |
Acquisition date | Property | Location | Units | ||||
1/9/2018 | The Lux at Sorrel | Jacksonville, Florida | 265 | ||||
2/28/2018 | Green Park | Atlanta, Georgia | 310 | ||||
575 |
Multifamily Communities acquired during the three-month period ended | ||||
(in thousands, except amortization period data) | March 31, 2018 | |||
Land | $ | 12,810 | ||
Buildings and improvements | 73,773 | |||
Furniture, fixtures and equipment | 17,969 | |||
Lease intangibles | 4,307 | |||
Prepaids & other assets | 193 | |||
Accrued taxes | (167 | ) | ||
Security deposits, prepaid rents, and other liabilities | (183 | ) | ||
Net assets acquired | $ | 108,702 | ||
Cash paid | $ | 37,427 | ||
Mortgage debt, net | 71,275 | |||
Total consideration | $ | 108,702 | ||
Three-month period ended March 31, 2019: | ||||
Revenue | $ | 2,557 | ||
Net income (loss) | $ | (1,300 | ) | |
Three-month period ended March 31, 2018: | ||||
Revenue | $ | 1,469 | ||
Net income (loss) | $ | (1,523 | ) | |
Capitalized acquisition costs incurred by the Company | $ | 2,347 | ||
Acquisition costs paid to related party (included above) | $ | 1,094 | ||
Remaining amortization period of intangible | ||||
assets and liabilities (months) | 1.5 |
Student housing property acquired during the three-month period ended: | ||||
(in thousands, except amortization period data) | March 31, 2019 | |||
Land | $ | 7,289 | ||
Buildings and improvements | 68,163 | |||
Furniture, fixtures and equipment | 16,966 | |||
Lease intangibles | 983 | |||
Accrued taxes | (158 | ) | ||
Security deposits, prepaid rents, and other liabilities | (2,579 | ) | ||
Net assets acquired | $ | 90,664 | ||
Satisfaction of loan receivables | $ | 46,397 | ||
Cash paid | 2,717 | |||
Mortgage debt, net | 41,550 | |||
Total consideration | $ | 90,664 | ||
Three-month period ended March 31, 2019: | ||||
Revenue | $ | 81 | ||
Net income (loss) | $ | (274 | ) | |
Capitalized acquisition costs incurred by the Company | $ | 1,016 | ||
Acquisition costs to related party | $ | 936 | ||
Remaining amortization period of intangible | ||||
assets and liabilities (months) | 3.5 |
New Market Properties' acquisition during the three-month period ended: | ||||
(in thousands, except amortization period data) | March 31, 2019 | |||
Land | $ | 9,109 | ||
Buildings and improvements | 17,093 | |||
Tenant improvements | 698 | |||
In-place leases | 2,609 | |||
Above market leases | 754 | |||
Leasing costs | 769 | |||
Below market leases | (1,515 | ) | ||
Other assets | 34 | |||
Security deposits, prepaid rents, and other | (146 | ) | ||
Net assets acquired | $ | 29,405 | ||
Cash paid | $ | 11,405 | ||
Mortgage debt | 18,000 | |||
Total consideration | $ | 29,405 | ||
Three-month period ended March 31, 2019: | ||||
Revenue | $ | 595 | ||
Net income (loss) | $ | (141 | ) | |
Capitalized acquisition costs incurred by the Company | $ | 569 | ||
Capitalized acquisition costs paid to related party (included above) | $ | 300 | ||
Remaining amortization period of intangible | ||||
assets and liabilities (years) | 7.8 |
Preferred Office Properties' acquisition during the three-month periods ended: | ||||
(in thousands, except amortization period data) | March 31, 2018 | |||
Land | $ | 6,756 | ||
Buildings and improvements | 48,332 | |||
Tenant improvements | 6,201 | |||
In-place leases | 3,762 | |||
Above-market leases | 61 | |||
Leasing costs | 2,181 | |||
Below-market leases | (1,594 | ) | ||
Security deposits, prepaid rents, and other liabilities | (4,335 | ) | ||
Net assets acquired | $ | 61,364 | ||
Cash paid | $ | 21,364 | ||
Mortgage debt, net | 40,000 | |||
Total consideration | $ | 61,364 | ||
Three-month period ended March 31, 2019: | ||||
Revenue | $ | 1,535 | ||
Net income (loss) | $ | (5 | ) | |
Three-month period ended March 31, 2018: | ||||
Revenue | $ | 955 | ||
Net income (loss) | $ | (170 | ) | |
Capitalized acquisition costs incurred by the Company | $ | 817 | ||
Acquisition costs paid to related party (included above) | $ | 665 | ||
Remaining amortization period of intangible | ||||
assets and liabilities (years) | 7.2 |
Three-month periods ended March 31, | ||||||||
(in thousands) | 2019 | 2018 | ||||||
Depreciation: | ||||||||
Buildings and improvements | $ | 22,987 | $ | 17,478 | ||||
Furniture, fixtures, and equipment | 13,133 | 10,512 | ||||||
36,120 | 27,990 | |||||||
Amortization: | ||||||||
Acquired intangible assets | 8,945 | 12,500 | ||||||
Deferred leasing costs | 178 | 91 | ||||||
Website development costs | 46 | 35 | ||||||
Total depreciation and amortization | $ | 45,289 | $ | 40,616 |
(Dollars in thousands) | March 31, 2019 | December 31, 2018 | ||||||
Number of loans | 19 | 19 | ||||||
Drawn amount | $ | 338,343 | $ | 336,329 | ||||
Deferred loan origination fees | (2,205 | ) | (2,118 | ) | ||||
Carrying value | $ | 336,138 | $ | 334,211 | ||||
Unfunded loan commitments | $ | 145,879 | $ | 164,913 | ||||
Weighted average current interest, per annum (paid monthly) | 8.47 | % | 8.47 | % | ||||
Weighted average accrued interest, per annum | 4.10 | % | 5.34 | % |
(Dollars in thousands) | Principal balance | Deferred loan origination fees | Loan loss allowance | Carrying value | ||||||||||||
Balances as of December 31, 2018 | $ | 336,329 | $ | (2,118 | ) | $ | — | $ | 334,211 | |||||||
Loan fundings | 29,795 | — | — | 29,795 | ||||||||||||
Loan repayments | (27,781 | ) | — | — | (27,781 | ) | ||||||||||
Loan origination fees collected | — | (403 | ) | — | (403 | ) | ||||||||||
Amortization of loan origination fees | — | 316 | — | 316 | ||||||||||||
Balances as of March 31, 2019 | $ | 338,343 | $ | (2,205 | ) | $ | — | $ | 336,138 |
Property type | Number of loans | Carrying value | Commitment amount | Percentage of portfolio | ||||||||||
(Dollars in thousands) | ||||||||||||||
Multifamily communities | 14 | $ | 289,610 | $ | 363,338 | 86 | % | |||||||
Student housing properties | 3 | 33,671 | 40,448 | 10 | % | |||||||||
New Market Properties | 1 | 12,857 | 12,857 | 4 | % | |||||||||
Preferred Office Properties | 1 | — | 67,579 | — | % | |||||||||
Balances as of March 31, 2019 | 19 | $ | 336,138 | $ | 484,222 |
(In thousands) | ||||||||||||||||
Rating indicator | Principal balance | Accrued interest | Receivables for purchase option terminations | Total | ||||||||||||
A | $ | 273,870 | $ | 16,064 | $ | 7,900 | $ | 297,834 | ||||||||
B | 58,357 | 6,268 | — | 64,625 | ||||||||||||
C | 6,116 | 1,208 | — | 7,324 | ||||||||||||
D | — | — | — | — | ||||||||||||
$ | 338,343 | $ | 23,540 | $ | 7,900 | $ | 369,783 |
Borrower | Date of loan | Maturity date | Total loan commitments | Outstanding balance as of: | Interest rate | |||||||||||||||
March 31, 2019 | December 31, 2018 | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Preferred Capital Marketing Services, LLC (1) | 1/24/2013 | 12/31/2019 | $ | 1,500 | $ | 763 | $ | 763 | 10 | % | ||||||||||
Preferred Apartment Advisors, LLC (1,2) | 8/21/2012 | 12/31/2019 | 18,000 | 15,843 | 9,778 | 7.5 | % | (3) | ||||||||||||
Haven Campus Communities, LLC (1,4) | 6/11/2014 | 12/31/2018 | 11,660 | 8,374 | 11,620 | 8 | % | |||||||||||||
Oxford Capital Partners, LLC (5) | 10/5/2015 | 6/30/2019 | 8,000 | 4,144 | 4,022 | 12 | % | |||||||||||||
Newport Development Partners, LLC | 6/17/2014 | 6/30/2019 | 2,000 | 1,330 | — | 12 | % | |||||||||||||
Mulberry Development Group, LLC (6) | 3/31/2016 | 6/30/2019 | 500 | 465 | 465 | 12 | % | |||||||||||||
360 Capital Company, LLC (6) | 5/24/2016 | 12/31/2019 | 3,400 | 3,194 | 3,100 | 12 | % | |||||||||||||
360 Capital Company, LLC (1,7) | 7/24/2018 | 12/31/2020 | 8,000 | 7,267 | 6,923 | 8.5 | % | |||||||||||||
Haven Campus Communities Charlotte Member, LLC (1) | 8/31/2018 | N/A | — | — | 10,788 | 15 | % | |||||||||||||
Unamortized loan fees | (60 | ) | (152 | ) | ||||||||||||||||
$ | 53,060 | $ | 41,320 | $ | 47,307 | |||||||||||||||
(1) See related party disclosure in Note 6. | ||||||||||||||||||||
(2) The amounts payable under this revolving credit line were collateralized by an assignment of the Manager's rights to fees due under the Sixth Amended and Restated Management Agreement between the Company and the Manager, or the Management Agreement. | ||||||||||||||||||||
(3) Effective January 1, 2019, the interest rate was increased from 6.0% per annum to 7.5% per annum and the maturity date was extended to December 31, 2019. | ||||||||||||||||||||
(4) The amount payable under this note is collateralized by one of the principals of the borrower's 49.49% interest in an unrelated shopping center located in Atlanta, Georgia and a personal guaranty of repayment by the principals of the borrower. | ||||||||||||||||||||
(5) The amounts payable under the terms of this revolving credit line, up to the lesser of 25% of the loan balance or $2.0 million, are collateralized by a personal guaranty of repayment by the principals of the borrower. | ||||||||||||||||||||
(6) The amounts payable under the terms of these revolving credit lines are collateralized by a personal guaranty of repayment by the principals of the borrower. | ||||||||||||||||||||
(7) The amount payable under the note is collateralized by the developer's interest in the Fort Myers multifamily community project and a personal guaranty of repayment by the principals of the borrower. |
Interest income | Three months ended March 31, | |||||||
(in thousands) | 2019 | 2018 | ||||||
Real estate loans: | ||||||||
Current interest payments | $ | 7,469 | $ | 8,506 | ||||
Additional accrued interest | 3,385 | 4,726 | ||||||
Origination fee amortization | 315 | 431 | ||||||
Purchase option termination fee amortization | 4,233 | — | ||||||
Total real estate loan revenue | 15,402 | 13,663 | ||||||
Interest income on notes and lines of credit | 1,490 | 902 | ||||||
Interest income from agency mortgage-backed securities | 198 | — | ||||||
Interest income on loans and notes receivable | $ | 17,090 | $ | 14,565 |
• | an offering of a maximum of 1,500,000 Units, with each Unit consisting of one share of Series A Redeemable Preferred Stock and one Warrant to purchase up to 20 shares of Common Stock (the "$1.5 Billion Unit Offering"); |
• | an offering of up to a maximum of 500,000 shares of Series M Redeemable Preferred Stock (“mShares”), par value $0.01 per share (the “mShares Offering”); and |
• | an offering of up to $300 million of equity or debt securities (the "Shelf Offering"), including an offering of up to $150 million of Common Stock from time to time in an "at the market" offering (the "2016 ATM Offering"). |
(In thousands) | Deferred Offering Costs | ||||||||||||||||||||||||||||||
Offering | Total offering | Gross proceeds as of March 31, 2019 | Reclassified as reductions of stockholders' equity | Recorded as deferred assets | Total | Specifically identifiable offering costs (2) | Total offering costs | ||||||||||||||||||||||||
$1.5 Billion Unit Offering | $ | 1,500,000 | $ | 814,332 | $ | 4,686 | 65 | % | $ | 2,507 | $ | 7,193 | $ | 76,886 | $ | 84,079 | |||||||||||||||
mShares Offering | 500,000 | 56,698 | 1,671 | 45 | % | 2,013 | 3,684 | 2,369 | 6,053 | ||||||||||||||||||||||
2016 Shelf Offering | 300,000 | (1 | ) | 98,080 | 693 | 33 | % | 1,360 | 2,053 | 3,001 | 5,054 | ||||||||||||||||||||
2019 Shelf Offering | — | (3 | ) | — | — | 466 | 466 | — | 466 | ||||||||||||||||||||||
Total | $ | 2,300,000 | $ | 969,110 | $ | 7,050 | $ | 6,346 | $ | 13,396 | $ | 82,256 | $ | 95,652 |
(In thousands) | Three-month periods ended March 31, | |||||||||
Type of Compensation | Basis of Compensation | 2019 | 2018 | |||||||
Acquisition fees | 1.0% of the gross purchase price of real estate assets | $ | 1,400 | $ | 1,759 | |||||
Loan origination fees | 1.0% of the maximum commitment of any real estate loan, note or line of credit receivable | 401 | 800 | |||||||
Loan coordination fees | 0.6% of any assumed, new or supplemental debt incurred in connection with an acquired property. | 344 | 740 | |||||||
Asset management fees | Monthly fee equal to one-twelfth of 0.50% of the total book value of assets, as adjusted | 3,725 | 3,665 | |||||||
Property management fees | Monthly fee up to 4% of the monthly gross revenues of the properties managed | 2,457 | 2,093 | |||||||
General and administrative expense fees | Monthly fee equal to 2% of the monthly gross revenues of the Company | 1,486 | 1,433 | |||||||
Construction management fees | Quarterly fee for property renovation and takeover projects | 57 | 131 | |||||||
Disposition fees | 1% of the sale price of a real estate asset | — | 435 | |||||||
$ | 9,870 | $ | 11,056 |
(in thousands) | ||||||
Three-month periods ended March 31, | ||||||
2019 | 2018 | |||||
$ | 4,079 | $ | 3,609 |
Dividends and distributions declared | ||||||||
For the three months ended March 31, | ||||||||
2019 | 2018 | |||||||
(in thousands) | ||||||||
Series A Preferred Stock | $ | 24,734 | $ | 19,204 | ||||
mShares | 806 | 313 | ||||||
Common Stock | 11,195 | 9,802 | ||||||
Class A OP Units | 229 | 268 | ||||||
Total | $ | 36,964 | $ | 29,587 |
Three-month period ended March 31, | Unamortized expense as of March 31, | ||||||||||||
(in thousands) | 2019 | 2018 | 2019 | ||||||||||
Class B Unit awards: | |||||||||||||
Executive officers - 2016 | $ | 2 | $ | 74 | $ | — | |||||||
Executive officers - 2017 | 78 | 107 | 238 | ||||||||||
Executive officers - 2018 | 72 | 816 | 501 | ||||||||||
Restricted stock grants: | |||||||||||||
2017 | — | 90 | — | ||||||||||
2018 | 90 | — | 30 | ||||||||||
Restricted stock units: | |||||||||||||
2017 | 18 | 21 | 57 | ||||||||||
2018 | 19 | 27 | 168 | ||||||||||
2019 | 32 | — | 346 | ||||||||||
Total | $ | 311 | $ | 1,135 | $ | 1,340 |
Service year | Shares | Fair value per share | Total compensation cost (in thousands) | ||||||||
2017 | 24,408 | $ | 14.75 | $ | 360 | ||||||
2018 | 24,810 | $ | 14.51 | $ | 360 |
Grant dates | 1/2/2018 | |||
Stock price | $ | 20.19 | ||
Dividend yield | 4.95 | % | ||
Expected volatility | 25.70 | % | ||
Risk-free interest rate | 2.71 | % | ||
Number of Units granted: | ||||
One year vesting period | 171,988 | |||
Three year vesting period | 84,099 | |||
256,087 | ||||
Calculated fair value per Unit | $ | 16.66 | ||
Total fair value of Units | $ | 4,266,409 | ||
Target market threshold increase | $ | 5,660,580 |
Grant date | 1/2/2019 | 1/2/2018 | 1/3/2017 | ||||||||
Service period | 2019-2021 | 2018-2020 | 2017-2019 | ||||||||
RSU activity: | |||||||||||
Granted | 27,760 | 20,720 | 26,900 | ||||||||
Vested | — | — | 14,154 | ||||||||
Forfeited | 520 | 3,480 | 6,575 | ||||||||
Outstanding and unvested | 27,240 | 17,240 | 6,171 | ||||||||
Fair value per RSU | $ | 13.85 | $ | 16.66 | $ | 11.92 | |||||
Total fair value of RSU grant | $ | 384,476 | $ | 345,195 | $ | 320,648 |
Property | Date | Initial principal amount (in thousands) | Fixed/Variable rate | Rate | Maturity date | ||||||||
Gayton Crossing | 1/17/2019 | $ | 18,000 | Fixed | 4.71 | % | 2/1/2029 | ||||||
Haven49 (1) | 3/27/2019 | $ | 41,550 | Variable | 6.24 | % | 12/22/2019 | ||||||
$ | 59,550 |
(dollars in thousands) | ||||||||||
Fixed rate mortgage debt: | Principal balances due | Weighted-average interest rate | Weighted average remaining life (years) | |||||||
Multifamily communities | $ | 1,037,051 | 3.92 | % | 9.7 | |||||
New Market Properties | 442,274 | 3.97 | % | 7.0 | ||||||
Preferred Office Properties | 485,841 | 4.32 | % | 14.9 | ||||||
Student housing properties | 160,862 | 4.13 | % | 6.3 | ||||||
Total fixed rate mortgage debt | 2,126,028 | 4.04 | % | 10.1 | ||||||
Variable rate mortgage debt: | ||||||||||
Multifamily communities | 80,876 | 4.39 | % | 4.7 | ||||||
New Market Properties | 61,433 | 5.11 | % | 2.4 | ||||||
Preferred Office Properties | — | — | — | |||||||
Student housing properties | 131,916 | 6.08 | % | 1.4 | ||||||
Total variable rate mortgage debt | 274,225 | 5.36 | % | 2.6 | ||||||
Total mortgage debt: | ||||||||||
Multifamily communities | 1,117,927 | 3.95 | % | 9.3 | ||||||
New Market Properties | 503,707 | 4.11 | % | 6.5 | ||||||
Preferred Office Properties | 485,841 | 4.32 | % | 14.9 | ||||||
Student housing properties | 292,778 | 5.01 | % | 4.1 | ||||||
Total principal amount | 2,400,253 | 4.19 | % | 9.2 | ||||||
Deferred loan costs | (35,495 | ) | ||||||||
Mark to market loan adjustment | (4,819 | ) | ||||||||
Mortgage notes payable, net | $ | 2,359,939 |
Covenant (1) | Requirement | Result | ||
Net worth | Minimum $1.6 billion | (2) | $1.7 billion | |
Debt yield | Minimum 8.25% | 10% | ||
Payout ratio | Maximum 95% | (3) | 86.5% | |
Total leverage ratio | Maximum 65% | 57.3% | ||
Debt service coverage ratio | Minimum 1.50x | 2.02X |
Three-month periods ended March 31, | ||||||||
(in thousands) | 2019 | 2018 | ||||||
Multifamily communities | $ | 11,455 | $ | 10,936 | ||||
New Market Properties | 5,586 | 4,356 | ||||||
Preferred Office Properties | 5,351 | 2,541 | ||||||
Student housing properties | 3,345 | 1,691 | ||||||
Interest paid to real estate loan participants | 110 | 386 | ||||||
Total | 25,847 | 19,910 | ||||||
Credit Facility and Acquisition Facility | 909 | 1,058 | ||||||
Interest Expense | $ | 26,756 | $ | 20,968 |
Period | Future principal payments (in thousands) | ||||
2019 | $ | 144,720 | (1) | ||
2020 | 80,172 | ||||
2021 | 199,663 | ||||
2022 | 215,843 | ||||
2023 | 191,947 | ||||
thereafter | 1,584,908 | ||||
Total | $ | 2,417,253 | |||
(1) Includes the principal amount of $17.0 million due on the Company's Revolving Line of Credit. |
For the year ending December 31: | Future Minimum Rents as of March 31, 2019 | |||||||||||
(in thousands) | New Market Properties | Preferred Office Properties | Total | |||||||||
2019 (1) | $ | 45,661 | $ | 43,265 | $ | 88,926 | ||||||
2020 | 56,357 | 62,460 | 118,817 | |||||||||
2021 | 47,238 | 59,332 | 106,570 | |||||||||
2022 | 38,956 | 58,568 | 97,524 | |||||||||
2023 | 33,096 | 57,804 | 90,900 | |||||||||
Thereafter | 86,664 | 298,949 | 385,613 | |||||||||
Total | $ | 307,972 | $ | 580,378 | $ | 888,350 | ||||||
(1) Remaining nine months |
For the year ending December 31: | Future Minimum Rents as of December 31, 2018 | |||||||||||
(in thousands) | New Market Properties | Preferred Office Properties | Total | |||||||||
2019 | $ | 58,143 | $ | 56,564 | $ | 114,707 | ||||||
2020 | 51,949 | 61,704 | 113,653 | |||||||||
2021 | 43,152 | 58,805 | 101,957 | |||||||||
2022 | 35,218 | 58,108 | 93,326 | |||||||||
2023 | 29,562 | 57,343 | 86,905 | |||||||||
Thereafter | 79,747 | 298,469 | 378,216 | |||||||||
Total | $ | 297,771 | $ | 590,993 | $ | 888,764 |
(in thousands) | March 31, 2019 | December 31, 2018 | ||||||
Assets: | ||||||||
Multifamily communities | $ | 1,488,544 | $ | 1,503,648 | ||||
Student housing properties | 499,793 | 411,102 | ||||||
Financing | 468,103 | 448,617 | ||||||
New Market Properties | 903,086 | 883,594 | ||||||
Preferred Office Properties | 879,389 | 884,648 | ||||||
Other (including $544,869 and $264,886 of consolidated assets of VIEs) | 562,999 | 279,349 | ||||||
Consolidated assets | $ | 4,801,914 | $ | 4,410,958 |
Three-month periods ended March 31, | ||||||||
(in thousands) | 2019 | 2018 | ||||||
Capitalized expenditures: | ||||||||
Multifamily communities | $ | 1,212 | $ | 4,839 | ||||
Student housing properties | 913 | 281 | ||||||
New Market Properties | 1,577 | 785 | ||||||
Total | $ | 3,702 | $ | 5,905 |
Three-month periods ended March 31, | |||||||
(in thousands) | 2019 | 2018 | |||||
Revenues | |||||||
Rental revenues: | |||||||
Multifamily communities | $ | 40,314 | $ | 38,860 | |||
Student housing properties | 10,024 | 5,670 | |||||
New Market Properties | 21,529 | 17,339 | |||||
Preferred Office Properties (1) | 20,371 | 12,392 | |||||
Total rental revenues | 92,238 | 74,261 | |||||
Other revenues: | |||||||
Multifamily communities | 1,294 | 1,293 | |||||
Student housing properties | 194 | 83 | |||||
New Market Properties | 530 | 576 | |||||
Preferred Office Properties | 571 | 88 | |||||
Total other revenues | 2,589 | 2,040 | |||||
Financing revenues | 16,679 | 14,069 | |||||
Consolidated revenues | $ | 111,506 | $ | 90,370 | |||
(1) Included in rental revenues for our Preferred Office Properties segment is the amortization of deferred revenue for tenant-funded leasehold improvements from a major tenant in our Three Ravinia and Westridge office buildings. As of March 31, 2019, the Company has deferred revenue in an aggregate amount of $47.0 million in connection with such improvements. The remaining balance to be recognized is approximately $42.5 million which is included in the deferred revenues line on the consolidated balance sheets at March 31, 2019. These total costs will be amortized over the lesser of the useful lives of the improvements or the individual lease terms. The Company recorded non-cash revenue of approximately $0.9 million and $0.5 million for the three-month periods ended March 31, 2019 and 2018, respectively. |
Three-month periods ended March 31, | |||||||
(in thousands) | 2019 | 2018 | |||||
Segment net operating income (Segment NOI) | |||||||
Multifamily communities | $ | 24,244 | $ | 23,523 | |||
Student housing properties | 5,091 | 3,036 | |||||
Financing | 16,679 | 14,069 | |||||
New Market Properties | 15,805 | 12,672 | |||||
Preferred Office Properties | 14,805 | 9,062 | |||||
Consolidated segment net operating income | 76,624 | 62,362 | |||||
Interest expense: | |||||||
Multifamily communities | 11,455 | 10,935 | |||||
Student housing properties | 3,345 | 1,691 | |||||
New Market Properties | 5,586 | 4,356 | |||||
Preferred Office Properties | 5,351 | 2,541 | |||||
Financing | 1,019 | 1,445 | |||||
Depreciation and amortization: | |||||||
Multifamily communities | 20,411 | 21,702 | |||||
Student housing properties | 5,454 | 5,105 | |||||
New Market Properties | 10,335 | 8,880 | |||||
Preferred Office Properties | 9,089 | 4,929 | |||||
Professional fees | 887 | 474 | |||||
Management fees, net of forfeitures | 5,200 | 5,020 | |||||
Loan loss allowance | — | — | |||||
Equity compensation to directors and executives | 311 | 1,135 | |||||
Gain on sale of real estate | — | (20,354 | ) | ||||
Gain on noncash net assets of consolidated VIEs | (141 | ) | — | ||||
Loss on extinguishment of debt | 17 | — | |||||
Gain on trading investment, net | (4 | ) | — | ||||
Other | 589 | 240 | |||||
Net income (loss) | $ | (2,280 | ) | $ | 14,263 |
Three-month periods ended March 31, | |||||||||
(in thousands, except per-share figures) | 2019 | 2018 | |||||||
Numerator: | |||||||||
Operating income before gains on sales of real estate and trading investment | $ | 24,348 | $ | 14,877 | |||||
Gains on sales of real estate and trading investment | 4 | 20,354 | |||||||
Operating income | 24,352 | 35,231 | |||||||
Interest expense | 26,756 | 20,968 | |||||||
Change in fair value of net assets of consolidated VIEs from mortgage-backed pools | 141 | — | |||||||
Loss on extinguishment of debt | (17 | ) | — | ||||||
Net (loss) income | (2,280 | ) | 14,263 | ||||||
Consolidated net loss (income) attributable to non-controlling interests | (492 | ) | (380 | ) | |||||
Net (loss) income attributable to the Company | (2,772 | ) | 13,883 | ||||||
Dividends declared to preferred stockholders | (25,539 | ) | (19,517 | ) | |||||
Earnings attributable to unvested restricted stock | (2 | ) | (2 | ) | |||||
Net loss attributable to common stockholders | (28,313 | ) | (5,636 | ) | |||||
Denominator: | |||||||||
Weighted average number of shares of Common Stock - basic | 42,680 | 39,098 | |||||||
Effect of dilutive securities: (D) | — | — | |||||||
Weighted average number of shares of Common Stock - basic and diluted | 42,680 | 39,098 | |||||||
Net loss per share of Common Stock attributable to | |||||||||
common stockholders, basic and diluted | $ | (0.66 | ) | $ | (0.14 | ) |
As of March 31, 2019 | |||||||||||||||||||
Carrying value | Fair value measurements using fair value hierarchy | ||||||||||||||||||
(in thousands) | Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||
Financial Assets: | |||||||||||||||||||
Real estate loans | $ | 336,138 | $ | 368,758 | $ | — | $ | — | $ | 368,758 | |||||||||
Notes receivable and line of credit receivable | 41,320 | 41,320 | — | — | 41,320 | ||||||||||||||
$ | 377,458 | $ | 410,078 | $ | — | $ | — | $ | 410,078 | ||||||||||
Financial Liabilities: | |||||||||||||||||||
Mortgage notes payable | $ | 2,400,253 | $ | 2,396,840 | $ | — | $ | — | $ | 2,396,840 | |||||||||
Revolving credit facility | 17,000 | 17,000 | — | — | 17,000 | ||||||||||||||
Loan participation obligations | — | — | — | — | — | ||||||||||||||
$ | 2,417,253 | $ | 2,413,840 | $ | — | $ | — | $ | 2,413,840 |
As of December 31, 2018 | |||||||||||||||||||
Carrying value | Fair value measurements using fair value hierarchy | ||||||||||||||||||
(in thousands) | Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||
Financial Assets: | |||||||||||||||||||
Real estate loans (1) | $ | 334,211 | $ | 366,328 | $ | — | $ | — | $ | 366,328 | |||||||||
Notes receivable and line of credit receivable | 47,307 | 47,307 | — | — | 47,307 | ||||||||||||||
$ | 381,518 | $ | 413,635 | $ | — | $ | — | $ | 413,635 | ||||||||||
Financial Liabilities: | |||||||||||||||||||
Mortgage notes payable | $ | 2,339,752 | 2,313,405 | $ | — | $ | — | $ | 2,313,405 | ||||||||||
Revolving credit facility | 57,000 | 57,000 | — | — | 57,000 | ||||||||||||||
Loan participation obligations | 5,181 | 5,181 | — | — | 5,181 | ||||||||||||||
$ | 2,401,933 | $ | 2,375,586 | $ | — | $ | — | $ | 2,375,586 |
Assets | Liabilities | ||||||||||
(in thousands) | Multifamily mortgage loans held in VIEs at fair value | VIE liabilities, at fair value | Net | ||||||||
Balance as of December 31, 2018 | $ | 269,946 | $ | 264,886 | $ | 5,060 | |||||
Initial consolidation of ML-05 trust: | 289,325 | 270,670 | 18,655 | ||||||||
Gains (losses) included in net income due to change in fair value of net assets of VIE: | 10,133 | 9,992 | 141 | ||||||||
Repayments of underlying mortgage principal amounts and repayments to Class A holders: | (679 | ) | (679 | ) | — | ||||||
Balance as of March 31, 2019 | $ | 568,725 | $ | 544,869 | $ | 23,856 |
(in thousands) | Fair value | Valuation methodology | Unobservable input | |||||||
Assets: | ||||||||||
Multifamily mortgage loans held in VIEs at fair value | $ | 568,725 | Discounted cash flow | Discount rate | 4.5 | % | ||||
Liabilities: | ||||||||||
VIE liabilities, at fair value | $ | 544,869 | Discounted cash flow | Discount rate | 4.5 | % |
As of March 31, 2019 | |||||||||||||||||||
Carrying value | Fair value measurements using fair value hierarchy | ||||||||||||||||||
(in thousands) | Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||
Financial Assets: | |||||||||||||||||||
VIE assets from mortgage-backed pools | $ | 568,725 | $ | 568,725 | $ | — | $ | — | $ | 568,725 | |||||||||
Financial Liabilities: | |||||||||||||||||||
VIE liabilities from mortgage-backed pools | $ | 544,869 | $ | 544,869 | $ | — | $ | — | $ | 544,869 |
December 31, 2018 | |||||||||||||||||||
Carrying value | Fair value measurements using fair value hierarchy | ||||||||||||||||||
(in thousands) | Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||
Financial Assets: | |||||||||||||||||||
VIE assets from mortgage-backed pools | $ | 269,946 | $ | 269,946 | $ | — | $ | — | $ | 269,946 | |||||||||
Financial Liabilities: | |||||||||||||||||||
VIE liabilities from mortgage-backed pools | $ | 264,886 | $ | 264,886 | $ | — | $ | — | $ | 264,886 |
Item 1B. | Unresolved Staff Comments |
• | actions and initiatives of the U.S. Government and changes to U.S. Government policies and the execution and impact of these actions, initiatives and policies; |
• | our ability to obtain and maintain financing arrangements, including through Fannie Mae and Freddie Mac; |
• | weakness in the national, regional and local economies, which could adversely impact consumer spending and retail sales and in turn tenant demand for space and could lead to increased store closings; |
• | changes in market rental rates; |
• | changes in demographics (including the number of households and average household income) surrounding our shopping centers; |
• | adverse financial conditions for grocery anchors and other retail, service, medical or restaurant tenants; |
• | continued consolidation in the grocery-anchored shopping center sector; |
• | excess amount of retail space in our markets; |
• | reduction in the demand by tenants to occupy our shopping centers as a result of reduced consumer demand for certain retail formats; |
• | the growth of super-centers and warehouse club retailers, such as those operated by Wal-Mart and Costco, and their adverse effect on traditional grocery chains; |
• | the entry of new market participants into the food sales business, such as Amazon's acquisition of Whole Foods, the growth of online food delivery services and online supermarket retailers and their collective adverse effect on traditional grocery chains; |
• | our ability to aggregate a critical mass of grocery-anchored shopping centers; |
• | the impact of an increase in energy costs on consumers and its consequential effect on the number of shopping visits to our centers; and |
• | consequences of any armed conflict involving, or terrorist attack against, the United States. |
Three months ended March 31, | ||||||||||||
2019 | 2018 | % change | ||||||||||
Revenues (in thousands) | $ | 111,506 | $ | 90,370 | 23.4 | % | ||||||
Per share data: | ||||||||||||
Net income (loss) (1) | $ | (0.66 | ) | $ | (0.14 | ) | — | |||||
FFO (2) | $ | 0.39 | $ | 0.37 | 5.4 | % | ||||||
AFFO (2) | $ | 0.32 | $ | 0.26 | 23.1 | % | ||||||
Dividends (3) | $ | 0.26 | $ | 0.25 | 4.0 | % | ||||||
• | For the first quarter 2019, our FFO payout ratio to Common Stockholders and Unitholders was approximately 67.1% and our FFO payout ratio (before the deduction of preferred dividends) to our preferred stockholders was approximately 60.0%. (A) |
• | For the first quarter 2019, our AFFO payout ratio to Common Stockholders and Unitholders was approximately 80.8% and our AFFO payout ratio (before the deduction of preferred dividends) to our preferred stockholders was approximately 64.4%. (B) |
• | At March 31, 2019, the market value of our common stock was $14.82 per share. A hypothetical investment in our Common Stock in our initial public offering on April 5, 2011, assuming the reinvestment of all dividends and no transaction costs, would have resulted in an average annual return of approximately 18.2% through March 31, 2019. |
• | As of March 31, 2019, the average age of our multifamily communities was approximately 5.2 years, which is the youngest in the public multifamily REIT industry. |
• | Approximately 88.6% of our permanent property-level mortgage debt has fixed interest rates and approximately 5.8% has variable interest rates which are capped. After the refinancing of the variable rate mortgages on our Royal Lakes Marketplace and Cherokee Plaza properties in April 2019, 90.0% of our mortgage debt has fixed interest rates. In addition, we plan to refinance the remaining uncapped variable rate mortgage debt into new fixed rate instruments during the remainder of 2019. We believe we are well protected against potential increases in market interest rates. |
• | At March 31, 2019, our leverage, as measured by the ratio of our debt to the undepreciated book value of our total assets, was approximately 53.0%. Our leverage calculation excludes the gross assets and liabilities of approximately $544.9 million that are owned by other pool participants in the Freddie Mac K program, that we consolidated under the VIE rules. |
• | As of March 31, 2019, our total assets were approximately $4.8 billion compared to approximately $3.4 billion as of March 31, 2018, an increase of approximately $1.4 billion, or approximately 41.5%. This growth was driven by (i) the acquisition of 16 real estate properties (partially offset by the sale of three properties) and (ii) the consolidation of the mortgage pools from the Freddie Mac K program. Excluding the consolidated mortgage pool assets from other participants, our total assets grew approximately $862.9 million, or 25.4% since March 31, 2018. |
• | On March 25, 2019, we closed on a real estate loan investment aggregating approximately $10.8 million in support of a multifamily community to be located in Destin, Florida. |
Total units upon | Purchase option window | ||||||||
Project/Property | Location | completion (1) | Begin | End | |||||
Multifamily communities: | |||||||||
Palisades | Northern VA | 304 | 5/1/2019 | 5/31/2019 | |||||
Falls at Forsyth | Atlanta, GA | 356 | S + 90 days (2) | S + 150 days (2) | |||||
V & Three | Charlotte, NC | 338 | S + 90 days (2) | S + 150 days (2) | |||||
The Anson | Nashville, TN | 301 | S + 90 days (2) | S + 150 days (2) | |||||
Southpoint | Fredericksburg, VA | 240 | S + 90 days (2) | S + 150 days (2) | |||||
E-Town | Jacksonville, FL | 332 | S + 90 days (3) | S + 150 days (3) | |||||
Vintage | Destin, FL | 282 | (4) | (4) | |||||
Student housing properties: | |||||||||
Solis Kennesaw II | Atlanta, GA | 175 | (5) | (5) | |||||
Office property: | |||||||||
8West | Atlanta, GA | (6) | (6) | (6) | |||||
2,328 | |||||||||
(1) We evaluate each project individually and we make no assurance that we will acquire any of the underlying properties from our real estate loan investment portfolio. The purchase options held by us on the Sanibel Straights, Wiregrass, Newbergh, Cameron Square and Solis Kennesaw projects were terminated, in exchange for an aggregate $7.9 million in termination fees from the developers. | |||||||||
(2) The option period window begins and ends at the number of days indicated beyond the achievement of a 93% physical occupancy rate by the underlying property. | |||||||||
(3) The option period window begins on the earlier of June 21, 2024 and the number of days indicated beyond the achievement of a 93% physical occupancy rate by the underlying property. | |||||||||
(4) The option period window begins on the later of one year following receipt of final certificate of occupancy or 90 days beyond the achievement of a 93% physical occupancy rate by the underlying property and ends 60 days beyond the option period beginning date, | |||||||||
(5) The option period begins on October 1 of the second academic year following project completion and ends on the following December 31. The developer may elect to expedite the option period to begin December 1, 2020 and end on December 31, 2020. | |||||||||
(6) The project plans are for the construction of a class A office building consisting of approximately 191,000 rentable square feet; our purchase option window opens 90 days following the achievement of 90% lease commencement and ends on November 30, 2024 (subject to adjustment). Our purchase option is at the to-be-agreed-upon market value. In the event the property is sold to a third party, we would be due a fee based on a minimum multiple of 1.15 times the the total commitment amount of the real estate loan investment, less the amounts actually paid by borrower, up to and including payment of accrued interest and repayment of principal at the time of the sale |
Preferred Apartment Communities, Inc. | Three months ended March 31, | Change inc (dec) | |||||||||||||
2019 | 2018 | Amount | Percentage | ||||||||||||
Revenues: | |||||||||||||||
Rental revenues | $ | 92,238 | $ | 74,261 | $ | 17,977 | 24.2 | % | |||||||
Other property revenues | 2,178 | 1,544 | 634 | 41.1 | % | ||||||||||
Interest income on loans and notes receivable | 11,288 | 10,300 | 988 | 9.6 | % | ||||||||||
Interest income from related parties | 5,802 | 4,265 | 1,537 | 36.0 | % | ||||||||||
Total revenues | 111,506 | 90,370 | 21,136 | 23.4 | % | ||||||||||
Operating expenses: | |||||||||||||||
Property operating and maintenance | 10,792 | 8,805 | 1,987 | 22.6 | % | ||||||||||
Property salary and benefits | 4,657 | 3,899 | 758 | 19.4 | % | ||||||||||
Property management fees | 3,267 | 2,756 | 511 | 18.5 | % | ||||||||||
Real estate taxes | 12,500 | 9,975 | 2,525 | 25.3 | % | ||||||||||
General and administrative | 2,614 | 1,841 | 773 | 42.0 | % | ||||||||||
Equity compensation to directors and executives | 311 | 1,135 | (824 | ) | (72.6 | )% | |||||||||
Depreciation and amortization | 45,289 | 40,616 | 4,673 | 11.5 | % | ||||||||||
Asset management and general and administrative | |||||||||||||||
expense fees to related parties | 7,829 | 6,241 | 1,588 | 25.4 | % | ||||||||||
Insurance, professional fees and other expenses | 2,528 | 1,445 | 1,083 | 74.9 | % | ||||||||||
Total operating expenses | 89,787 | 76,713 | 13,074 | 17.0 | % | ||||||||||
Waived asset management and general and administrative | |||||||||||||||
expense fees | (2,629 | ) | (1,220 | ) | (1,409 | ) | — | ||||||||
Net operating expenses | 87,158 | 75,493 | 11,665 | 15.5 | % | ||||||||||
Operating income before gains on sales of | |||||||||||||||
real estate and trading investments | 24,348 | 14,877 | 9,471 | 63.7 | % | ||||||||||
Gain on sale of real estate and trading investment | 4 | 20,354 | (20,350 | ) | (100.0 | )% | |||||||||
Operating income | 24,352 | 35,231 | (10,879 | ) | (30.9 | )% | |||||||||
Interest expense | 26,756 | 20,968 | 5,788 | 27.6 | % | ||||||||||
Change in fair value of net assets of consolidated | |||||||||||||||
VIE from mortgage-backed pool | 141 | — | 141 | — | |||||||||||
Loss on debt extinguishment | (17 | ) | — | (17 | ) | — | |||||||||
Net (loss) income | (2,280 | ) | 14,263 | (16,543 | ) | — | |||||||||
Consolidated net loss attributable to non-controlling interests | (492 | ) | (380 | ) | (112 | ) | — | ||||||||
Net (loss) income attributable to the Company | $ | (2,772 | ) | $ | 13,883 | $ | (16,655 | ) | — | ||||||
New Market Properties, LLC | Three months ended March 31, | Change inc (dec) | |||||||||||||
2019 | 2018 | Amount | Percentage | ||||||||||||
Revenues: | |||||||||||||||
Rental revenues | $ | 21,529 | $ | 17,339 | $ | 4,190 | 24.2 | % | |||||||
Other property revenues | 95 | 80 | 15 | 18.8 | % | ||||||||||
Interest income on loans and notes receivable | 435 | 496 | (61 | ) | (12.3 | )% | |||||||||
Total revenues | 22,059 | 17,915 | 4,144 | 23.1 | % | ||||||||||
Operating expenses: | |||||||||||||||
Property operating and maintenance | 2,058 | 1,647 | 411 | 25.0 | % | ||||||||||
Property management fees | 767 | 728 | 39 | 5.4 | % | ||||||||||
Real estate taxes | 2,797 | 2,568 | 229 | 8.9 | % | ||||||||||
General and administrative | 358 | 147 | 211 | 143.5 | % | ||||||||||
Equity compensation to directors and executives | 18 | 148 | (130 | ) | (87.8 | )% | |||||||||
Depreciation and amortization | 10,335 | 8,880 | 1,455 | 16.4 | % | ||||||||||
Asset management and general and administrative | |||||||||||||||
expense fees to related parties | 1,657 | 1,316 | 341 | 25.9 | % | ||||||||||
Insurance, professional fees and other expenses | 383 | 231 | 152 | 65.8 | % | ||||||||||
Total operating expenses | 18,373 | 15,665 | 2,708 | 17.3 | % | ||||||||||
Waived asset management and general and administrative | |||||||||||||||
expense fees | (99 | ) | (67 | ) | (32 | ) | 47.8 | % | |||||||
Net operating expenses | 18,274 | 15,598 | 2,676 | 17.2 | % | ||||||||||
Operating income | 3,785 | 2,317 | 1,468 | 63.4 | % | ||||||||||
Interest expense | 5,586 | 4,356 | 1,230 | 28.2 | % | ||||||||||
Net loss | $ | (1,801 | ) | $ | (2,039 | ) | $ | 238 | (11.7 | )% |
Acquisition date | Property | Location | Units | Beds | Leasable square feet | ||||||||||
Multifamily communities: | |||||||||||||||
1/9/2018 | The Lux at Sorrel | Jacksonville, FL | 265 | n/a | n/a | ||||||||||
2/28/2018 | Green Park | Atlanta, GA | 310 | n/a | n/a | ||||||||||
9/27/2018 | The Lodge at Hidden River | Tampa, FL | 300 | n/a | n/a | ||||||||||
11/9/2018 | Vestavia Reserve | Birmingham, AL | 272 | n/a | n/a | ||||||||||
11/15/2018 | CityPark View South (1) | Charlotte, NC | 200 | n/a | n/a | ||||||||||
New Market Properties: | |||||||||||||||
4/27/2018 | Greensboro Village | Nashville, TN | n/a | n/a | 70,203 | ||||||||||
4/27/2018 | Governors Towne Square | Atlanta, GA | n/a | n/a | 68,658 | ||||||||||
6/26/2018 | Neapolitan Way | Naples, FL | n/a | n/a | 137,580 | ||||||||||
6/29/2018 | Conway Plaza | Orlando, FL | n/a | n/a | 117,705 | ||||||||||
7/6/2018 | Brawley Commons | Charlotte, NC | n/a | n/a | 122,028 | ||||||||||
12/21/2018 | Hollymead Town Center | Charlottesville, VA | n/a | n/a | 158,807 | ||||||||||
1/17/2019 | Gayton Crossing | Richmond, VA | n/a | n/a | 158,316 | ||||||||||
Student housing properties: | |||||||||||||||
5/10/2018 | The Tradition | College Station, TX | 427 | 808 | n/a | ||||||||||
5/31/2018 | The Retreat at Orlando | Orlando, FL | 221 | 894 | n/a | ||||||||||
6/27/2018 | The Bloc | Lubbock, TX | 140 | 556 | n/a | ||||||||||
3/27/2019 | Haven49 | Charlotte, NC | 322 | 887 | n/a | ||||||||||
Preferred Office Properties: | |||||||||||||||
1/29/2018 | Armour Yards | Atlanta, GA | n/a | n/a | 187,000 | ||||||||||
7/31/2018 | 150 Fayetteville | Raleigh, NC | n/a | n/a | 560,000 | ||||||||||
12/20/2018 | Capitol Towers | Charlotte, NC | n/a | n/a | 479,000 | ||||||||||
2,457 | 3,145 | 2,059,297 |
Disposition date | Property | Location | Units | ||||||
3/20/2018 | Lake Cameron | Raleigh, NC | 328 | ||||||
9/28/2018 | Stone Rise | Philadelphia, PA | 216 | ||||||
10/23/2018 | Stoneridge Farms at the Hunt Club | Nashville, TN | 364 | ||||||
12/11/2018 | McNeil Ranch | Austin, TX | 192 |
Three-month Period Ended March 31, | |||||||
2019 versus 2018 | |||||||
Increase | |||||||
Rental revenues | Amount (rounded to 000s): | Percent of increase | |||||
Properties acquired since January 1, 2018 | $ | 21,167 | 117.7 | % | |||
Properties sold since January 1, 2018 | (3,802 | ) | (21.1 | )% | |||
Properties acquired in 2011 - 2017 | 612 | 3.4 | % | ||||
Total | $ | 17,977 | 100.0 | % |
Three-month Period Ended March 31, | |||||||
2019 versus 2018 | |||||||
Increase | |||||||
Property operating and maintenance expense | Amount (rounded to 000s): | Percent of increase | |||||
Properties acquired since January 1, 2018 | $ | 2,753 | 138.6 | % | |||
Properties sold since January 1, 2018 | (620 | ) | (31.2 | )% | |||
Properties acquired in 2011 - 2017 | (146 | ) | (7.4 | )% | |||
Total | $ | 1,987 | 100.0 | % |
Three-month Period Ended March 31, | |||||||
2019 versus 2018 | |||||||
Increase | |||||||
Property salary and benefits | Amount (rounded to 000s): | Percent of increase | |||||
Properties acquired since January 1, 2018 | $ | 934 | 123.2 | % | |||
Properties sold since January 1, 2018 | (375 | ) | (49.5 | )% | |||
Properties acquired in 2011 - 2017 | 199 | 26.3 | % | ||||
Total | $ | 758 | 100.0 | % |
Three-month Period Ended March 31, | |||||||
2019 versus 2018 | |||||||
Increase | |||||||
Property management fees | Amount (rounded to 000s): | Percent of increase | |||||
Properties acquired since January 1, 2018 | $ | 699 | 136.8 | % | |||
Properties sold since January 1, 2018 | (163 | ) | (31.9 | )% | |||
Properties acquired in 2011 - 2017 | (25 | ) | (4.9 | )% | |||
Total | $ | 511 | 100.0 | % |
Three-month Period Ended March 31, | |||||||
2019 versus 2018 | |||||||
Increase | |||||||
Real estate taxes | Amount (rounded to 000s): | Percent of increase | |||||
Properties acquired since January 1, 2018 | $ | 2,685 | 106.4 | % | |||
Properties sold since January 1, 2018 | (391 | ) | (15.5 | )% | |||
Properties acquired in 2011 - 2017 | 231 | 9.1 | % | ||||
Total | $ | 2,525 | 100.0 | % |
Three-month Period Ended March 31, | |||||||
2019 versus 2018 | |||||||
Increase | |||||||
General and administrative expense | Amount (rounded to 000s): | Percent of increase | |||||
Taxes, licenses and fees | $ | 241 | 31.3 | % | |||
Properties acquired since January 1, 2018 | 478 | 61.8 | % | ||||
Properties sold since January 1, 2018 | (87 | ) | (11.3 | )% | |||
Properties acquired in 2011 - 2017 | 141 | 18.2 | % | ||||
Total | $ | 773 | 100.0 | % |
Three-month Period Ended March 31, | |||||||
2019 versus 2018 | |||||||
Increase | |||||||
Depreciation and amortization | Amount (rounded to 000s): | Percent of increase | |||||
Properties acquired since January 1, 2018 | $ | 13,299 | 284.6 | % | |||
Properties sold since January 1, 2018 | (900 | ) | (19.3 | )% | |||
Properties acquired in 2011 - 2017 | (7,726 | ) | (165.3 | )% | |||
Total | $ | 4,673 | 100.0 | % |
Three-month Period Ended March 31, | |||||||
2019 versus 2018 | |||||||
Increase | |||||||
Insurance, professional fees and other expenses | Amount (rounded to 000s): | Percent of increase | |||||
Audit and tax fees | $ | 111 | 10.2 | % | |||
Insurance premiums and claims | 692 | 63.9 | % | ||||
Legal fees | 34 | 3.1 | % | ||||
Internalization costs | 45 | 4.2 | % | ||||
Other professional fees | 201 | 18.6 | % | ||||
Total | $ | 1,083 | 100.0 | % |
Three-month Period Ended March 31, | |||||||
2019 versus 2018 | |||||||
Increase | |||||||
Interest expense | Amount (rounded to 000s): | Percent of increase | |||||
Properties acquired since January 1, 2018 | $ | 6,953 | 120.2 | % | |||
Properties sold since January 1, 2018 | (686 | ) | (11.9 | )% | |||
Properties acquired in 2011 - 2017 | (53 | ) | (0.9 | )% | |||
KeyBank operating LOC and Term Notes | (149 | ) | (2.6 | )% | |||
Loan participants | (277 | ) | (4.8 | )% | |||
Total | $ | 5,788 | 100.0 | % |
• | depreciation and amortization related to real estate; |
• | gains and losses from the sale of certain real estate assets; |
• | gains and losses from change in control and |
• | impairment writedowns of certain real estate assets and investments in entities where the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. |
Reconciliation of FFO Attributable to Common Stockholders and Unitholders and AFFO | |||||||||||
to Net (Loss) Income Attributable to Common Stockholders (A) | |||||||||||
Three months ended March 31, | |||||||||||
(In thousands, except per-share figures) | 2019 | 2018 | |||||||||
Net income (loss) attributable to common stockholders (See note 1) | $ | (28,313 | ) | $ | (5,636 | ) | |||||
Add: | Depreciation of real estate assets | 35,717 | 27,712 | ||||||||
Amortization of acquired real estate intangible assets and deferred leasing costs | 9,123 | 12,591 | |||||||||
Net income (loss) attributable to non-controlling interests (See note 2) | 492 | 380 | |||||||||
Less: | Gains on sales of trading investment and real estate | — | (20,354 | ) | |||||||
FFO attributable to common stockholders and unitholders | 17,019 | 14,693 | |||||||||
Add: | Loan cost amortization on acquisition term note | 19 | 25 | ||||||||
Amortization of loan coordination fees paid to the Manager (See note 3) | 468 | 476 | |||||||||
Weather-related property operating losses (See note 4) | — | (260 | ) | ||||||||
Payment of costs related to property refinancing | 55 | 41 | |||||||||
Non-cash equity compensation to directors and executives | 311 | 1,135 | |||||||||
Amortization of loan closing costs (See note 5) | 1,131 | 1,045 | |||||||||
Depreciation/amortization of non-real estate assets | 449 | 313 | |||||||||
Net loan fees received (See note 6) | 401 | 800 | |||||||||
Accrued interest income received (See note 7) | 2,760 | 1,343 | |||||||||
Internalization costs (See note 8) | 45 | — | |||||||||
Deemed dividends from cash redemptions of preferred stock | 3 | 318 | |||||||||
Amortization of lease inducements (See note 9) | 428 | 257 | |||||||||
Non-cash dividends on Preferred Stock | 93 | 106 | |||||||||
Cash received in excess of amortization of purchase option termination revenues (See note 10) | 296 | — | |||||||||
Less: | Non-cash loan interest income (See note 7) | (3,324 | ) | (4,932 | ) | ||||||
Non-cash revenues from mortgage-backed securities | (141 | ) | — | ||||||||
Cash paid for loan closing costs | (3 | ) | (391 | ) | |||||||
Amortization of acquired above and below market lease intangibles | |||||||||||
and straight-line rental revenues (See note 11) | (3,758 | ) | (3,189 | ) | |||||||
Amortization of deferred revenues (See note 12) | (940 | ) | (497 | ) | |||||||
Normally recurring capital expenditures and leasing costs (See note 13) | (1,180 | ) | (874 | ) | |||||||
AFFO | $ | 14,132 | $ | 10,409 | |||||||
Common Stock dividends and distributions to Unitholders declared: | |||||||||||
Common Stock dividends | $ | 11,195 | $ | 9,802 | |||||||
Distributions to Unitholders (See note 2) | 229 | 268 | |||||||||
Total | $ | 11,424 | $ | 10,070 | |||||||
Common Stock dividends and Unitholder distributions per share | $ | 0.26 | $ | 0.25 | |||||||
FFO per weighted average basic share of Common Stock and Unit outstanding | $ | 0.39 | $ | 0.37 | |||||||
AFFO per weighted average basic share of Common Stock and Unit outstanding | $ | 0.32 | $ | 0.26 | |||||||
Weighted average shares of Common Stock and Units outstanding: (A) | |||||||||||
Basic: | |||||||||||
Common Stock | 42,680 | 39,098 | |||||||||
Class A Units | 880 | 1,070 | |||||||||
Common Stock and Class A Units | 43,560 | 40,168 | |||||||||
Diluted Common Stock and Class A Units (B) | 44,199 | 41,226 | |||||||||
Actual shares of Common Stock outstanding, including 6 unvested shares | |||||||||||
of restricted Common Stock at both March 31, 2019 and 2018. | 43,244 | 39,215 | |||||||||
Actual Class A Units outstanding at March 31, 2019 and 2018, respectively. | 879 | 1,070 | |||||||||
Total | 44,123 | 40,285 | |||||||||
(A) Units and Unitholders refer to Class A Units in our Operating Partnership (as defined in note 2), or Class A Units, and holders of Class A Units, respectively. Unitholders include recipients of awards of Class B Units in our Operating Partnership, or Class B Units, for annual service which became vested and earned and automatically converted to Class A Units. Unitholders also include the entity that contributed the Wade Green grocery-anchored shopping center. The Class A Units collectively represent an approximate 2.02% weighted average non-controlling interest in the Operating Partnership for the three-month period ended March 31, 2019. | |||||||||||
(B) Since our FFO and AFFO results are positive for the periods reflected above, we are presenting recalculated diluted weighted average shares of Common Stock and Class A Units for these periods for purposes of this table, which includes the dilutive effect of common stock equivalents from grants of the Class B Units, warrants included in units of Series A Preferred Stock issued, as well as annual grants of restricted Common Stock. The weighted average shares of Common Stock outstanding presented on the Consolidated Statements of Operations are the same for basic and diluted for any period for which we recorded a net loss available to common stockholders. |
1) | Rental and other property revenues and property operating expenses for the quarter ended March 31, 2019 include activity for the properties acquired during the quarter only from their respective dates of acquisition. In addition, the first quarter 2019 period includes activity for the properties acquired since March 31, 2018. Rental and other property revenues and expenses for the first quarter 2018 include activity for the acquisitions made during that period only from their respective dates of acquisition. |
2) | Non-controlling interests in Preferred Apartment Communities Operating Partnership, L.P., or our Operating Partnership, consisted of a total of 879,335 Class A Units as of March 31, 2019. Included in this total are 419,228 Class A Units which were granted as partial consideration to the seller in conjunction with the seller's contribution to us on February 29, 2016 of the Wade Green grocery-anchored shopping center. The remaining Class A units were awarded primarily to our key executive officers. The Class A Units are apportioned a percentage of our financial results as non-controlling interests. The weighted average ownership percentage of these holders of Class A Units was calculated to be 2.02% and 2.67% for the three-month periods ended March 31, 2019 and 2018, respectively. |
3) | We pay loan coordination fees to Preferred Apartment Advisors, LLC, our Manager, to reflect the administrative effort involved in arranging debt financing for acquired properties. The fees are calculated as 0.6% of the amount of any mortgage indebtedness on newly-acquired properties or refinancing and are amortized over the lives of the respective mortgage loans. This non-cash amortization expense is an addition to FFO in the calculation of AFFO. At March 31, 2019, aggregate unamortized loan coordination fees were approximately $13.4 million, which will be amortized over a weighted average remaining loan life of approximately 10.7 years. |
4) | We sustained weather-related operating losses due to Hurricane Harvey at our Stone Creek multifamily community during the first quarter 2018; these costs are added back to FFO in our calculation of AFFO. Included in these adjustments are the receipt from our insurance carrier during the first quarter 2018 of claims proceeds for lost rental revenues incurred during the third and fourth quarters of 2017 that totaled approximately $588,000, which was recognized in our statements of operations for the first quarter 2018. |
5) | We incur loan closing costs on our existing mortgage loans, which are secured on a property-by-property basis by each of our acquired real estate assets, and also for occasional amendments to our syndicated revolving line of credit with Key Bank National Association, or our Revolving Line of Credit. Effective April 13, 2018, the maximum borrowing capacity on the Revolving Line of Credit was increased from $150 million to $200 million. These loan closing costs are also amortized over the lives of the respective loans and the Revolving Line of Credit, and this non-cash amortization expense is an addition to FFO in the calculation of AFFO. Neither we nor the Operating Partnership have any recourse liability in connection with any of the mortgage loans, nor do we have any cross-collateralization arrangements with respect to the assets securing the mortgage loans, other than security interests in 49% of the equity interests of the subsidiaries owning such assets, granted in connection with our Revolving Line of Credit, which provides for full recourse liability. At March 31, 2019, aggregate unamortized loan costs were approximately $23.6 million, which will be amortized over a weighted average remaining loan life of approximately 9.1 years. |
6) | We receive loan origination fees in conjunction with the origination of certain real estate loan investments. These fees are then recognized as revenue over the lives of the applicable loans as adjustments of yield using the effective interest method. The total fees received after the payment of loan origination fees to our Manager are additive adjustments in the calculation of AFFO. Correspondingly, the amortized non-cash income is a deduction in the calculation of AFFO. Over the lives of certain loans, we accrue additional interest amounts that become due to us at the time of repayment of the loan or refinancing of the property, or when the property is sold. This non-cash interest income is subtracted from FFO in our calculation of AFFO. The amount of additional accrued interest becomes an additive adjustment to FFO once received from the borrower (see note 7). |
7) | This adjustment reflects the receipt during the periods presented of additional interest income (described in note 6 above) which was earned and accrued prior to those periods presented on various real estate loans. |
8) | This adjustment reflects the add-back of exploratory expenses incurred by the Company related to the potential internalization of the functions performed by its Manager. |
9) | This adjustment removes the non-cash amortization of costs incurred to induce tenants to lease space in our office buildings and grocery-anchored shopping centers. |
10) | Effective January 1, 2019, we terminated our purchase options on the Sanibel Straits, Newbergh, Wiregrass and Cameron Square multifamily communities and the Solis Kennesaw student housing property, all of which are partially supported by real estate loan investments held by us. In exchange for termination fees aggregating $7.9 million from the developers, which are recorded as revenue over the period beginning on the date of election until the earlier of (i) the maturity of the real estate loan investment and (ii) the sale of the property. The receipt of the cash termination fees are an additive adjustment in our calculation of AFFO and the removal of non-cash revenue from the recognition of the termination fees are a reduction to FFO in our calculation of AFFO; both of these adjustments are presented in a single net number within this line. As of March 31, 2019, we had received cash in excess of recognized termination fee revenues of approximately $296,000. This difference is an additive adjustment to FFO in our calculation of AFFO. |
11) | This adjustment reflects straight-line rent adjustments and the reversal of the non-cash amortization of below-market and above-market lease intangibles, which were recognized in conjunction with our acquisitions and which are amortized over the estimated average |
12) | This adjustment removes the non-cash amortization of deferred revenue recorded by us in conjunction with Company-owned lessee-funded tenant improvements in our office buildings. |
13) | We deduct from FFO normally recurring capital expenditures that are necessary to maintain our assets’ revenue streams in the calculation of AFFO. This adjustment also deducts from FFO capitalized amounts for third party costs during the period to originate or renew leases in our grocery-anchored shopping centers and office buildings. No adjustment is made in the calculation of AFFO for nonrecurring capital expenditures. See Capital Expenditures, Grocery-Anchored Shopping Center Portfolio, and Office Buildings Portfolio sections for definitions of these terms. |
• | operating expenses directly related to our portfolio of multifamily communities, student housing properties, grocery-anchored shopping centers and office properties (including regular maintenance items); |
• | capital expenditures incurred to lease our multifamily communities, student housing properties, grocery-anchored shopping centers and office properties; |
• | interest expense on our outstanding property level debt; |
• | amounts due on our Credit Facility; |
• | distributions that we pay to our preferred stockholders, common stockholders, and unitholders; |
• | cash redemptions that we may pay to our preferred stockholders, and |
• | committed investments. |
Capital Expenditures | |||||||||||||||||||||||
Recurring | Non-recurring | Total | |||||||||||||||||||||
(in thousands, except per-unit amounts) | Amount | Per Unit | Amount | Per Unit | Amount | Per Unit | |||||||||||||||||
Appliances | $ | 111 | $ | 11.14 | $ | — | $ | — | $ | 111 | $ | 11.14 | |||||||||||
Carpets | 263 | 26.39 | — | — | 263 | 26.39 | |||||||||||||||||
Wood flooring / vinyl | 73 | 7.36 | — | — | 73 | 7.36 | |||||||||||||||||
Blinds and ceiling fans | 27 | 2.72 | — | — | 27 | 2.72 | |||||||||||||||||
Fire safety | — | — | 24 | 2.37 | 24 | 2.37 | |||||||||||||||||
Furnace, air (HVAC) | 64 | 6.34 | 11 | 1.15 | 75 | 7.49 | |||||||||||||||||
Computers, equipment, misc. | 5 | 0.51 | 26 | 2.58 | 31 | 3.09 | |||||||||||||||||
Elevators | — | — | 23 | 2.27 | 23 | 2.27 | |||||||||||||||||
Exterior painting | — | — | 32 | 3.17 | 32 | 3.17 | |||||||||||||||||
Leasing office / common amenities | 79 | 7.95 | 550 | 55.26 | 629 | 63.21 | |||||||||||||||||
Major structural | — | — | 828 | 83.16 | 828 | 83.16 | |||||||||||||||||
Cabinets & countertop upgrades | — | — | 344 | 34.57 | 344 | 34.57 | |||||||||||||||||
Landscaping & fencing | — | — | 536 | 53.84 | 536 | 53.84 | |||||||||||||||||
Parking lot | — | — | 165 | 16.56 | 165 | 16.56 | |||||||||||||||||
Signage and sanitation | — | — | 48 | 4.86 | 48 | 4.86 | |||||||||||||||||
$ | 622 | $ | 62.41 | $ | 2,587 | $ | 259.79 | $ | 3,209 | $ | 322.20 |
Capital Expenditures | |||||||||||||||||||||||
Recurring | Non-recurring | Total | |||||||||||||||||||||
(in thousands, except per-unit amounts) | Amount | Per Bed | Amount | Per Bed | Amount | Per Bed | |||||||||||||||||
Appliances | $ | 19 | $ | 3.56 | $ | — | $ | — | $ | 19 | $ | 3.56 | |||||||||||
Carpets | 4 | 0.81 | — | — | 4 | 0.81 | |||||||||||||||||
Wood flooring / vinyl | 1 | 0.27 | — | — | 1 | 0.27 | |||||||||||||||||
Blinds and ceiling fans | 1 | 0.28 | — | — | 1 | 0.28 | |||||||||||||||||
Fire safety | — | — | 46 | 8.67 | 46 | 8.67 | |||||||||||||||||
Furnace, air (HVAC) | 2 | 0.29 | — | — | 2 | 0.29 | |||||||||||||||||
Computers, equipment, misc. | 2 | 0.38 | 51 | 9.65 | 53 | 10.03 | |||||||||||||||||
Elevators | — | — | — | — | — | — | |||||||||||||||||
Exterior painting | — | — | 221 | 42.10 | 221 | 42.10 | |||||||||||||||||
Leasing office / common amenities | 22 | 4.20 | 101 | 19.24 | 123 | 23.44 | |||||||||||||||||
Major structural | — | — | 483 | 91.93 | 483 | 91.93 | |||||||||||||||||
Cabinets & countertop upgrades | 93 | 17.66 | 7 | 1.25 | 100 | 18.91 | |||||||||||||||||
Landscaping & fencing | — | — | 163 | 30.99 | 163 | 30.99 | |||||||||||||||||
Parking lot | — | — | 43 | 8.24 | 43 | 8.24 | |||||||||||||||||
Signage and sanitation | — | — | 63 | 11.95 | 63 | 11.95 | |||||||||||||||||
$ | 144 | $ | 27.45 | $ | 1,178 | $ | 224.02 | $ | 1,322 | $ | 251.47 |
• | the principal amount of our long-term debt as it becomes due or matures; |
• | capital expenditures needed for our multifamily communities, student housing properties, grocery-anchored shopping centers and office properties; |
• | costs associated with current and future capital raising activities; |
• | costs to acquire additional multifamily communities, student housing properties, grocery-anchored shopping centers, office properties or other real estate and enter into new and fund existing lending opportunities; and |
• | our minimum distributions necessary to maintain our REIT status. |
(in thousands) | Total | Less than one year | 1-3 years | 3-5 years | More than five years | |||||||||||||||
Mortgage debt obligations: | ||||||||||||||||||||
Interest | $ | 773,625 | $ | 98,856 | $ | 177,905 | $ | 144,204 | $ | 352,660 | ||||||||||
Principal | 2,400,253 | 168,633 | 274,871 | 381,563 | 1,575,186 | |||||||||||||||
Line of Credit: | ||||||||||||||||||||
Interest | 11 | 11 | — | — | — | |||||||||||||||
Principal | 17,000 | 17,000 | — | — | — | |||||||||||||||
Total | $ | 3,190,889 | $ | 284,500 | $ | 452,776 | $ | 525,767 | $ | 1,927,846 |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Balance (in thousands) | Percentage of total mortgage indebtedness | LIBOR Cap | All-in Cap | |||||||||
Avenues at Creekside | $ | 39,491 | 5.0 | % | 6.6 | % | ||||||
Citi Lakes | 41,385 | 4.3 | % | 6.5 | % | |||||||
The Tradition | 30,000 | 3.3 | % | 7.3 | % | |||||||
The Bloc | 28,966 | 3.3 | % | 6.8 | % | |||||||
Total capped floating-rate debt | 139,842 | 5.8 | % | |||||||||
Ursa | 31,400 | n/a | n/a | |||||||||
Haven 49 | 41,550 | n/a | n/a | |||||||||
Royal Lakes | 9,507 | n/a | n/a | |||||||||
Cherokee Plaza | 24,526 | n/a | n/a | |||||||||
Champions Village | 27,400 | n/a | n/a | |||||||||
Total uncapped floating-rate debt | 134,383 | 5.6 | % | |||||||||
Total floating-rate debt | $ | 274,225 | 11.4 | % |
• | maintain a reasonable ratio of fixed-rate, long-term debt to total debt so that floating-rate exposure is kept at an acceptable level; |
• | place interest rate caps on floating-rate debt where appropriate; and |
• | take advantage of favorable market conditions for long-term debt and/or equity financings. |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Item 3. | Defaults Upon Senior Securities |
Item 4. | Mine Safety Disclosures |
Item 5. | Other Information |
Item 6. | Exhibits |
EXHIBIT INDEX | ||
Exhibit Number | Description | |
31.1 | * | |
31.2 | * | |
32.1 | * | |
32.2 | * | |
101 | * | XBRL (eXtensible Business Reporting Language). The following materials from Preferred Apartment Communities, Inc.’s Quarterly Report on Form 10-Q for the period ended March 31, 2019, formatted in XBRL: (i) Consolidated balance sheets at March 31, 2019 and December 31, 2018, (ii) consolidated statements of operations for the three months ended March 31, 2019 and 2018, (iii) consolidated statement of stockholders' equity, (iv) consolidated statement of cash flows and (v) notes to consolidated financial statements. |
* | Filed or Furnished herewith |
SIGNATURES | |||||||
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. | |||||||
PREFERRED APARTMENT COMMUNITIES, INC. | |||||||
Date: May 2, 2019 | By: | /s/ Daniel M. DuPree | |||||
Daniel M. DuPree | |||||||
Chief Executive Officer | |||||||
(Principal Executive Officer) | |||||||
Date: May 2, 2019 | By: | /s/ John A. Isakson | |||||
John A. Isakson | |||||||
Chief Financial Officer | |||||||
(Principal Financial Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Preferred Apartment Communities, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: May 2, 2019 | /s/ Daniel M. DuPree |
Daniel M. DuPree | |
Chief Executive Officer |
Date: May 2, 2019 | /s/ John A. Isakson |
John A. Isakson | |
Chief Financial Officer |
Date: May 2, 2019 | /s/ Daniel M. DuPree | |
Daniel M. DuPree | ||
Chief Executive Officer |
Date: May 2, 2019 | /s/ John A. Isakson | |
John A. Isakson | ||
Chief Financial Officer |
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Document and Entity Information Document - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Apr. 22, 2019 |
|
Document and Entity Information | ||
entity registrant name | PREFERRED APARTMENT COMMUNITIES INC | |
entity CIK | 0001481832 | |
Current fiscal year end date | --12-31 | |
document type | 10-Q | |
document period end date | Mar. 31, 2019 | |
document fiscal year focus | 2019 | |
entity filer category | Accelerated Filer | |
document fiscal period focus | Q1 | |
Entity Well-known Seasoned Issuer | No | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
amendment flag | false | |
entity common stock, shares outstanding | 43,355,637 |
Statements of Operations - USD ($) |
3 Months Ended | 9 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Sep. 30, 2018 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Operating expenses: | ||||||
Share-based Compensation | $ 311,000 | $ 1,135,000 | ||||
Depreciation and amortization | 45,289,000 | 40,616,000 | ||||
Allowance for Loan and Lease Losses, Loans Acquired | 0 | 0 | ||||
Gain (Loss) on Extinguishment of Debt | 17,000 | 0 | ||||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | (2,280,000) | 14,263,000 | ||||
Income (Loss) from Continuing Operations, Including Portion Attributable to Noncontrolling Interest | (2,280,000) | 14,263,000 | ||||
Deemed noncash dividend | $ 93,000 | $ 106,000 | ||||
Dividends, Common Stock, Cash | $ 11,195,000 | $ 9,802,000 | ||||
Common Stock, Dividends, Per Share, Declared | $ 0.26 | $ 0.25 | $ 0.260 | $ 0.8175 | ||
Fair Value, Assets Measured on Recurring Basis, Change in Unrealized Gain (Loss) | $ 141,000 | $ 0 |
Statements of Operations (Parenthetical) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Income Statement Parentheticals [Abstract] | ||
property management fees paid to related party | $ 4,079,000 | $ 3,609,000 |
acquisition fees paid to related party | $ 2,467,000 | $ 2,105,000 |
Statements of Equity and Accumulated Deficit - USD ($) |
Total |
Series A Preferred Stock [Member] |
Series M Preferred Stock [Member] |
Common Stock [Member] |
Common Stock [Member]
Series A Preferred Stock [Member]
|
Common Stock [Member]
Series M Preferred Stock [Member]
|
Additional Paid-in Capital [Member] |
Additional Paid-in Capital [Member]
Series A Preferred Stock [Member]
|
Additional Paid-in Capital [Member]
Series M Preferred Stock [Member]
|
Accumulated Deficit [Member] |
Accumulated Deficit [Member]
Series A Preferred Stock [Member]
|
Accumulated Deficit [Member]
Series M Preferred Stock [Member]
|
Total Stockholders' Equity [Member] |
Total Stockholders' Equity [Member]
Series A Preferred Stock [Member]
|
Total Stockholders' Equity [Member]
Series M Preferred Stock [Member]
|
Noncontrolling Interest [Member] |
Noncontrolling Interest [Member]
Series A Preferred Stock [Member]
|
Noncontrolling Interest [Member]
Series M Preferred Stock [Member]
|
Preferred Stock [Member] |
Preferred Stock [Member]
Series A Preferred Stock [Member]
|
Preferred Stock [Member]
Series M Preferred Stock [Member]
|
ClassBUnits [Member] |
ClassBUnits [Member]
Common Stock [Member]
|
ClassBUnits [Member]
Additional Paid-in Capital [Member]
|
ClassBUnits [Member]
Accumulated Deficit [Member]
|
ClassBUnits [Member]
Total Stockholders' Equity [Member]
|
ClassBUnits [Member]
Noncontrolling Interest [Member]
|
ClassBUnits [Member]
Preferred Stock [Member]
Series A Preferred Stock [Member]
|
ClassBUnits [Member]
Preferred Stock [Member]
Series M Preferred Stock [Member]
|
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Proceeds from Issuance of Preferred Stock and Preference Stock | $ 5,209,000 | $ 97,395,000 | $ 0 | $ 0 | $ 5,209,000 | $ 97,394,000 | $ 0 | $ 0 | $ 5,209,000 | $ 97,395,000 | $ 1,000 | $ 0 | |||||||||||||||||
Balance at Dec. 31, 2017 | 1,280,766,000 | $ 386,000 | 1,271,040,000 | 4,449,000 | 1,275,887,000 | $ 4,879,000 | 12,000 | ||||||||||||||||||||||
Stock Redeemed or Called During Period, Value | (5,766,000) | 0 | (5,766,000) | 0 | (5,766,000) | 0 | 0 | ||||||||||||||||||||||
exercise of warrants | 7,190,000 | 5,000 | 7,185,000 | 0 | 7,190,000 | 0 | 0 | ||||||||||||||||||||||
Stock Issued During Period, Value, Conversion of Units | 0 | 1,000 | 850,000 | 0 | 851,000 | (851,000) | 0 | ||||||||||||||||||||||
amortization of Class A Unit awards | $ 996,000 | $ 0 | $ 0 | $ 0 | $ 0 | $ 996,000 | $ 0 | ||||||||||||||||||||||
Syndication and offering costs | (9,772,000) | 0 | (9,772,000) | 0 | (9,772,000) | 0 | 0 | ||||||||||||||||||||||
Stock Issued During Period, Value, Share-based Compensation, Gross | 138,000 | 0 | 138,000 | 0 | 138,000 | 0 | 0 | ||||||||||||||||||||||
Dividends, Common Stock, Cash | (9,802,000) | 0 | (9,802,000) | 0 | (9,802,000) | 0 | $ 0 | ||||||||||||||||||||||
Balance at Mar. 31, 2018 | 1,360,832,000 | 392,000 | 1,357,725,000 | 0 | 1,358,130,000 | 2,702,000 | 13,000 | ||||||||||||||||||||||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | 14,263,000 | 0 | 0 | 13,883,000 | 13,883,000 | 380,000 | 0 | ||||||||||||||||||||||
non-controlling interest equity adjustment | 0 | 0 | 2,434,000 | 0 | 2,434,000 | (2,434,000) | 0 | ||||||||||||||||||||||
Payments to Noncontrolling Interests | (268,000) | 0 | 0 | 0 | 0 | (268,000) | 0 | ||||||||||||||||||||||
Dividends, Preferred Stock | (313,000) | (19,204,000) | 0 | (19,000) | (1,166,000) | (294,000) | (18,038,000) | (313,000) | (19,204,000) | 0 | $ 0 | 0 | 0 | ||||||||||||||||
Proceeds from Issuance of Preferred Stock and Preference Stock | 128,682,000 | 0 | 128,680,000 | 128,682,000 | 2,000 | 12,472,000 | 0 | 12,472,000 | 0 | 12,472,000 | 0 | $ 0 | |||||||||||||||||
Balance at Dec. 31, 2018 | 1,609,385,000 | 418,000 | 1,607,712,000 | 0 | 1,608,146,000 | 1,239,000 | 16,000 | ||||||||||||||||||||||
Stock Redeemed or Called During Period, Value | (2,005,000) | 10,000 | (2,015,000) | 0 | (2,005,000) | 0 | |||||||||||||||||||||||
exercise of warrants | 4,248,000 | 3,000 | 4,245,000 | 0 | 4,248,000 | 0 | 0 | ||||||||||||||||||||||
Stock Issued During Period, Value, Conversion of Units | 0 | 1,000 | 526,000 | 0 | 527,000 | (527,000) | 0 | ||||||||||||||||||||||
amortization of Class A Unit awards | $ 152,000 | $ 0 | $ 0 | $ 0 | $ 0 | $ 152,000 | $ 0 | ||||||||||||||||||||||
Syndication and offering costs | 14,281,000 | 0 | 14,281,000 | 0 | 14,281,000 | 0 | 0 | ||||||||||||||||||||||
Stock Issued During Period, Value, Share-based Compensation, Gross | 159,000 | 0 | 159,000 | 0 | 159,000 | 0 | 0 | ||||||||||||||||||||||
Dividends, Common Stock, Cash | (11,195,000) | 0 | (11,195,000) | 0 | (11,195,000) | 0 | |||||||||||||||||||||||
Balance at Mar. 31, 2019 | 1,699,569,000 | 432,000 | 1,698,810,000 | 0 | 1,699,260,000 | 309,000 | 18,000 | ||||||||||||||||||||||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | (2,280,000) | 0 | 0 | (2,772,000) | (2,772,000) | 492,000 | 0 | ||||||||||||||||||||||
non-controlling interest equity adjustment | 0 | 0 | 818,000 | 0 | 818,000 | (818,000) | 0 | ||||||||||||||||||||||
Payments to Noncontrolling Interests | $ (229,000) | $ 0 | $ 0 | $ 0 | $ 0 | $ (229,000) | 0 | ||||||||||||||||||||||
Dividends, Preferred Stock | $ (24,733,000) | $ (806,000) | $ 0 | $ 0 | $ (27,418,000) | $ (893,000) | $ 2,685,000 | $ 87,000 | $ (24,733,000) | $ (806,000) | $ 0 | $ 0 | $ 0 | $ 0 |
Statements of Equity and Accumulated Deficit Parenthetical - $ / shares |
3 Months Ended | 12 Months Ended | |
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Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2016 |
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Common Stock, Dividends, Per Share, Declared | $ 0.26 | $ 0.25 | $ 0.8175 |
Series A Preferred Stock [Member] | |||
Preferred Stock, Dividends Per Share, Declared | 5.00 | 5.00 | 5.00 |
Minimum [Member] | Series M Preferred Stock [Member] | |||
Preferred Stock, Dividends Per Share, Declared | 4.79 | 4.79 | 0.00 |
Maximum [Member] | Series M Preferred Stock [Member] | |||
Preferred Stock, Dividends Per Share, Declared | $ 6.25 | $ 6.25 | $ 0.00 |
Organization |
3 Months Ended |
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Mar. 31, 2019 | |
Organization [Abstract] | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | Organization and Basis of Presentation Preferred Apartment Communities, Inc. is a Maryland corporation formed primarily to own and operate multifamily properties and, to a lesser extent, own and operate student housing properties, grocery-anchored shopping centers and strategically located, well leased class A office buildings, all in select targeted markets throughout the United States. As part of our business strategy, we may enter into forward purchase contracts or purchase options for to-be-built multifamily communities and we may make real estate related loans, provide deposit arrangements, or provide performance assurances, as may be necessary or appropriate, in connection with the development of multifamily communities. As a secondary strategy, we may acquire or originate senior mortgage loans, subordinate loans or real estate loans secured by interests in multifamily properties, membership or partnership interests in multifamily properties and other multifamily related assets and invest a lesser portion of our assets in other real estate related investments, including other income-producing property types, senior mortgage loans, subordinate loans or real estate loans secured by interests in other income-producing property types, membership or partnership interests in other income-producing property types as determined by our manager as appropriate for us. At December 31, 2018, the Company was the approximate 97.9% owner of Preferred Apartment Communities Operating Partnership, L.P., the Company's operating partnership. Preferred Apartment Communities, Inc. has elected to be taxed as a real estate investment trust under the Internal Revenue Code of 1986, as amended, commencing with its tax year ended December 31, 2011. The Company is externally managed and advised by Preferred Apartment Advisors, LLC, or its Manager, a Delaware limited liability company and related party (see Note 6). As of March 31, 2019, the Company had 43,237,726 shares of common stock, par value $0.01 per share, or Common Stock, issued and outstanding and was the approximate 98.0% owner of the Operating Partnership at that date. The number of partnership units not owned by the Company totaled 879,335 at March 31, 2019 and represented Class A OP Units of the Operating Partnership, or Class A OP Units. The Class A OP Units are convertible at any time at the option of the holder into the Operating Partnership's choice of either cash or Common Stock. In the case of cash, the value is determined based upon the trailing 20-day volume weighted average price of the Company's Common Stock. The Company controls the Operating Partnership through its sole general partner interest and conducts substantially all of its business through the Operating Partnership. The Company has determined the Operating Partnership is a variable interest entity, or VIE, of which the Company is the primary beneficiary. The Company is involved with other VIEs, such as through its investments in mortgage pools from the Freddie Mac K Program, as discussed in Note 4. New Market Properties, LLC owns and conducts the business of our portfolio of grocery-anchored shopping centers. Preferred Office Properties, LLC owns and conducts the business of our portfolio of office buildings. Preferred Campus Communities, LLC owns and conducts the business of our portfolio of off-campus student housing communities. Each of these entities are wholly-owned subsidiaries of the Operating Partnership. Basis of Presentation These consolidated financial statements include all of the accounts of the Company and the Operating Partnership presented in accordance with accounting principles generally accepted in the United States of America, or GAAP. The year end condensed balance sheet data was derived from audited financial statements, but does not contain all the disclosures required by GAAP. All significant intercompany transactions have been eliminated in consolidation. Certain adjustments have been made consisting of normal recurring accruals, which, in the opinion of management, are necessary for a fair presentation of the Company's financial condition and results of operations. The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Amounts are presented in thousands where indicated. As permitted by the practical expedient within ASC 842, Leases, the Company has elected to report the lease component and non-lease components as one single component within the line entitled Rental Revenues on the Company's Consolidated Statements of Operations. Reimbursement revenue was previously presented in the Company’s Other Property Revenues line item. For presentation purposes, the Company has reclassified its revenue from reimbursements from the Other Property Revenues line into the Rental Revenues line for all periods presented. |
Significant Accounting Policies |
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Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||
Significant Accounting Policies [Text Block] | Summary of Significant Accounting Policies Variable Interest Entities A variable interest entity, or “VIE” is an entity that lacks sufficient equity to finance its activities without additional subordinated financial support from other parties, or whose equity holders lack the characteristics of a controlling financial interest. A VIE is consolidated by its primary beneficiary, which is defined as the party who has a controlling financial interest in the VIE through the (a) power to direct the activities of the VIE that most significantly affect the VIE’s economic performance, and (b) obligation to absorb losses or right to receive benefits of the VIE that could be significant to the VIE. The Company assesses whether it meets the power and benefits criteria and in performing this analysis, the Company considers both qualitative and quantitative factors, including the Company’s ability to control or significantly influence key decisions of the VIE and the obligation or likelihood for the Company to fund operating losses of the VIE. The determination of whether an entity is a VIE, and whether the Company is the primary beneficiary, may involve significant judgment, including the determination of which activities most significantly affect the entities’ performance, and estimates about the current and future fair values and performance of assets held by the VIE. If the Company determines that it meets both the power and benefits criteria of the VIE, the Company is deemed to be the primary beneficiary of the VIE and the Company consolidates the entire VIE entity in its consolidated financial statements. For those VIEs which arise from the Company's investment in mortgage-backed securities and which the Company consolidates, it elects the fair value option, under which the assets and liabilities of the consolidated VIE are carried at fair value. The periodic changes in fair value are included in the earnings of the Company and are reported on the line entitled Change in fair value of net assets of consolidated VIE from mortgage-backed pool on the Company's Consolidated Statements of Operations. See Note 4 for discussion related to the Company’s investment in a subordinate tranche of a collateralized mortgage-backed pool during the second quarter 2018 and Note 15 for fair value disclosures related to a consolidated VIE related to this investment. Real Estate Loans The Company carries its investments in real estate loans at amortized cost with assessments made for possible loan loss allowances in the event recoverability of the principal amount becomes doubtful. If, upon testing for possible loan loss allowances, the fair value result of the loan or its collateral is lower than the carrying amount of the loan, an allowance is recorded to lower the carrying amount to fair value, with a loss recorded in earnings. The balances of real estate loans presented on the consolidated balance sheets consist of drawn amounts on the loans, net of unamortized deferred loan origination fees and loan loss allowances. Interest income on real estate loans and notes receivable is recognized on an accrual basis over the lives of the loans or notes. In the event that a loan or note is refinanced with the proceeds of another loan issued by the Company, any unamortized loan fee revenue from the first loan will be recognized as interest revenue at the date of refinancing. Loan origination fees applicable to real estate loans are amortized over the lives of the loans as adjustments to interest income using the effective interest rate method. The accrual of interest on all these instruments ceases when there is concern as to the ultimate collection of principal or interest. Certain real estate loan assets include limited purchase options and either exit fees or additional amounts of accrued interest. Exit fees or accrued interest due will be treated as additional consideration for the acquired project if the Company purchases the subject property. Additional accrued interest becomes due in cash to the Company on the earliest to occur of: (i) the maturity of the loan, (ii) any uncured event of default as defined in the associated loan agreement, (iii) the sale of the project or the refinancing of the loan (other than a refinancing loan by the Company or one of its affiliates) and (iv) any other repayment of the loan. Evaluations for the possible need for loan loss allowances are performed for each real estate loan investment at least quarterly. Loan loss allowances are needed when it is deemed probable that all amounts due will not be collected according to the contractual terms of the loan. Depending upon the circumstances and significance of risk related to the collectability of the loan, management may determine that (i) the loan should be accounted for as a non-accrual loan because recovery of all contractual amounts due are deemed improbable and that any amounts subsequently received will be used to reduce the loan’s principal balance, (ii) in the event of a modification to the loan granted by the Company as a concession to the borrower who is experiencing financial difficulty, result in the need to apply troubled debt restructuring (“TDR”) accounting guidance, and/or (iii) an allowance for loan loss is required for the loan based upon the value of the underlying collateral and the Company’s evaluation of a possible shortfall with regards to the loan’s repayment based upon an estimated sales price, additional costs (if necessary), estimated selling costs, and amounts due to all lenders. In connection with the surveillance review process, the Company’s real estate loan investments are assigned an internal risk rating. The internal risk ratings are based on the loan’s current status as compared to underwriting for certain metrics such as total expected construction cost if overruns are noted, construction completion timing if there are delays, current cap rates within the MSA, leasing status, rental rates, net operating income, expected free cash flow, and other factors management deems important related to the ultimate collectability of the loan. The final internal risk ratings are influenced by other quantitative and qualitative factors that can result in an adjustment to the ratings. Each loan is given an internal risk rating from “A” to “D”. Loans rated an “A” meet all present contractual obligations and there are no indicators which would cause concern for the borrower’s ability to meet all present contractual obligations. Loans rated a “B” meet all present contractual obligations, but exhibited at least one indication of a negative variation from the underwriting for the loan and/or project. Loans rated a “C” exhibit some weakness that deserves management’s close attention and if uncorrected, may result in deterioration of repayment prospects. For these loans, management performs analyses to verify the borrower’s ability to meet all present contractual obligations, including obtaining an appraisal of the underlying collateral for the loan. Based on the available collateral to satisfy the Company’s outstanding principal and interest contractually due, we may provide for an allowance, move the loan to non-accrual status for future interest recognition or continue monitoring the loan. For loans rated a “D”, the collection of all contractual principal and interest is improbable and management has determined to account for the loan as a non-accrual loan and, if appropriate under the circumstances record a loan loss allowance. The Company's real estate loan investments are collateralized by real estate development projects and secured further by guaranties of repayment from one or more of the borrowers. The Company's lines of credit receivable are typically only collateralized by personal guaranties, but occasionally may be cross-collateralized by interests in other real estate projects. As a result, the Company regularly evaluates the extent and impact of any credit deterioration associated with the performance and/or value of the underlying collateral property, as well as the financial and operating capability of the borrower. Specifically, a property’s operating results and any cash reserves are analyzed and used to assess (i) whether cash from operations is sufficient to cover the debt service requirements currently and into the future, (ii) the ability of the borrower to refinance the loan, and/or (iii) the property’s liquidation value. The Company also evaluates the financial wherewithal of any loan guarantors as well as the borrower’s competency in managing and operating the properties. In addition, the overall economic environment, real estate sector, and geographic sub‑market in which the borrower operates are considered. Such impairment analyses are completed and reviewed by management, utilizing various data sources, including periodic financial data such as property operating statements, occupancy, tenant profile, rental rates, operating expenses, the borrower’s exit plan, capitalization and discount rates and site inspections. See the "Revenue Recognition" section of this Note for other loan-related policy disclosures required by ASC 310-10-50-6. Purchase Option Terminations The Company will occasionally receive a purchase option on the underlying property in conjunction with extending a real estate loan investment to the developer of the property. The purchase option is often at a discount to the to-be-agreed-upon market value of the property, once stabilized. If the Company elects not to exercise the purchase option and acquire the property, it may negotiate to sell the purchase option back to the developer and receive a termination fee in consideration. The amount of the termination fee is accounted for as additional interest on the real estate loan investment and is recognized as interest revenue utilizing the effective interest method over the period beginning from the date of election until the earlier of (i) the maturity of the real estate loan investment and (ii) the sale of the property. Revenue Recognition Multifamily communities and student housing properties Rental revenue is recognized when earned from residents of the Company's multifamily communities, which is over the terms of the rental agreements, typically of 9 to 15 months’ duration. The Company evaluates the collectability of amounts due from residents and recognizes revenue from residents when collectability is deemed probable, in accordance with ASC 842-30-25-12. The Company disclosed bad debt expense within the Property Operating and Maintenance expense line item in prior periods, but recorded the reduction in revenue against Rental Revenues and Other Property Revenues, as applicable, for the current period. The Company evaluated the various ancillary revenues within its multifamily leases, including resident utility reimbursements. Having met the criteria that (i) the timing and pattern of transfer for the lease component and associated non-lease components are the same and (ii) that the lease component, if accounted for separately would be classified as an operating lease, the Company has elected the practical expedient under Lease Accounting, ASC 842, paragraph 10-15-42A, to elect reporting the lease component and non-lease components as one single component under “Rental Revenues” recognized in accordance with ASC 842. Lease components such as pet rental fees and parking rental fees as well as non-lease components such as utility reimbursements were previously presented in the Company’s “Other Property Revenues” line item. For presentation purposes, the Company has reclassified its revenue from these revenue sources into “Rental Revenues” for all periods presented, for comparability. Revenue from utility reimbursements are considered variable lease payments and are recognized in the period in which the related expenses are incurred. Grocery-anchored shopping centers and office properties Our retail leases have original lease terms which generally range from three to seven years for spaces under 5,000 square feet and from 10 to 20 years for spaces over 10,000 square feet. Anchor leases generally contain renewal options for one or more additional periods whereas in-line tenant leases may or may not have renewal options. With the exception of anchor leases, the leases generally contain contractual increases in base rent rates over the lease term and the base rent rates for renewal periods are generally based upon the rental rate for the primary term, which may be adjusted for inflation or market conditions. Anchor leases generally do not contain contractual increases in base rent rates over the lease term and the renewal periods. Our leases generally provide for the payment of fixed monthly rentals and may also provide for the payment of additional rent based upon a percentage of the tenant’s gross sales above a certain threshold level (“percentage rent”). Our leases also generally include tenant reimbursements for common area expenses, insurance, and real estate taxes. Utilities are generally paid by tenants either directly through separate meters or through payment of tenant reimbursements. The foregoing general description of the characteristics of the leases in our centers is not intended to describe all leases and material variations in lease terms may exist. Our office building leases have original lease terms which generally range from 5 to 15 years and generally contain contractual, annual base rental rate escalations ranging from 2% to 3%. These leases may be structured as “gross” where the tenant’s base rental rate is all inclusive and there is no additional obligation to reimburse building operating expenses, “net” or “NNN” where in addition to base rent the tenant is also responsible for its pro rata share of reimbursable building operating expenses, or “modified gross” where in addition to base rent the tenant is also responsible for its pro rata share of reimbursable building operating expense increases over a base year amount (typically calculated as the actual reimbursable operating expenses in year one of the original lease term). Base rental revenue from tenants' operating leases is a lease component revenue in the Company's grocery-anchored shopping centers and office properties and is recognized on a straight-line basis over the term of the lease. Revenue based on "percentage rent" provisions that provide for additional rents that become due upon achievement of specified sales revenue targets (as specified in each lease agreement) is recognized only after the tenant exceeds its specified sales revenue target. Revenue from reimbursements of the tenants' share of real estate taxes, insurance and common area maintenance, or CAM, costs represent non-lease component revenue. Having met the criteria that (i) the timing and pattern of transfer for the lease component and associated non-lease components are the same and (ii) that the lease component, if accounted for separately would be classified as an operating lease, the Company has elected the practical expedient under ASC 842, Leases, paragraph 10-15-42A, to elect reporting the lease component and non-lease components as one single component under Rental Revenues recognized in accordance with ASC 842. Reimbursement revenue and percentage rent were previously presented in the Company’s Other Property Revenues line item. For presentation purposes, the Company has reclassified its revenue from reimbursements into Rental Revenues for all periods presented, for comparability. Revenue from reimbursements are considered variable lease payments and are recognized in the period in which the related expenses are incurred. The Company does not record income and offsetting expense for certain variable costs paid directly to third parties by lessees on behalf of lessors. Non-lease components which do not qualify under the practical expedient primarily include percentage rent, lease termination income and other ancillary revenue (e.g. storage revenue, license fees, late fees, tenant billbacks). These items are recorded under Other property revenues. Lease termination revenues are recognized ratably over the revised remaining lease term after giving effect to the termination notice or when tenant vacates and the Company has no further obligations under the lease. Rents and tenant reimbursements collected in advance are recorded as prepaid rent within other liabilities in the accompanying consolidated balance sheets. The Company evaluated the collectability of the tenant receivable related to rental and reimbursement billings due from tenants and straight-line rent receivables, which represent the cumulative amount of future adjustments necessary to present rental revenue on a straight-line basis, by taking into consideration the Company's historical write-off experience, tenant credit-worthiness, current economic trends, and remaining lease terms. The Company evaluates the collectability of these amounts and recognizes revenue related to tenants where collectability is deemed probable, in accordance with ASC 842-30-25-12. The Company previously recorded bad debt expense within the Property operating and maintenance expense line item, and upon adoption of ASC 842 on January 1, 2019, began recording amounts not deemed probable of collection as a reduction of rental revenues and other property revenues, as applicable. The Company may provide grocery-anchored shopping center and office building tenants an allowance for the construction of leasehold improvements. These leasehold improvements are capitalized and depreciated over the shorter of the useful life of the improvements or the remaining lease term. If the allowance represents a payment for a purpose other than funding leasehold improvements, or in the event the Company is not considered the owner of the improvements, the allowance is considered to be a lease incentive and is recognized over the lease term as a reduction of rental revenue. Determination of the appropriate accounting for the payment of a tenant allowance is made on a lease-by-lease basis, considering the facts and circumstances of the individual tenant lease. When the Company is the owner of the leasehold improvements, recognition of rental revenue commences when the lessee is given possession of the leased space upon completion of tenant improvements. However, when the leasehold improvements are owned by the tenant, the lease inception date is the date the tenant obtains possession of the leased space for purposes of constructing its leasehold improvements. For our office properties, if the improvement is deemed to be a “landlord asset,” and the tenant funded the tenant improvements, the cost is amortized over the term of the underlying lease with a corresponding recognition of rental revenues. In order to qualify as a landlord asset, the specifics of the tenant’s assets are reviewed, including the Company's approval of the tenant’s detailed expenditures, whether such assets may be usable by other future tenants, whether the Company has consent to alter or remove the assets from the premises and generally remain the Company's property at the end of the lease. Gains on sales of real estate assets The Company recognizes gains on sales of real estate based on the difference between the consideration received and the carrying amount of the distinct asset, including the carrying amount of any liabilities relieved or assumed by the purchasing counterparty and net of disposition expenses. Lessee accounting The Company has evaluated its leases for which it is the lessee to determine the value of any right of use assets and related lease liabilities. The Company has three ground leases related to our office and grocery-anchored shopping center assets, one of which had been recorded at fair value on the Company's balance sheet at acquisition due to a purchase option the Company deemed probable of exercising. These ground leases generally have extended terms (e.g. over 20 years with multiple renewal options) and generally have base rent with CPI-based increases. The Company evaluated its renewal option periods in quantifying its asset and liability related to these ground leases. In determining the value of its right of use asset and lease liability, the Company used discount rates comparable to recent loan rates obtained on comparative properties within its portfolio. The Company’s right of use asset and related lease liability in accordance with ASC 842-20-30 related to these ground leases are recorded within the Tenant Receivables and Other Assets and the Security Deposits and Other Liabilities line items of the balance sheet, respectively. The Company is also the lessee of furniture and equipment leases such as office equipment, which generally are three to five years with minimal rent increases. The Company determined that the related right of use asset and lease liability for its furniture and equipment leases were immaterial. New Accounting Pronouncements
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Real Estate Assets (Notes) |
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Real Estate Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination Disclosure | Real Estate Assets The Company's real estate assets consisted of:
Multifamily communities sold The Company had no sales of multifamily community assets during the three-month period ended March 31, 2019. On March 20, 2018, the Company closed on the sale of its 328-unit multifamily community in Raleigh, North Carolina, or Lake Cameron, to an unrelated third party for a purchase price of approximately $43.5 million, exclusive of closing costs, and debt defeasance-related costs and resulted in a gain of $20.4 million. Lake Cameron contributed approximately $0.2 million of net income to the consolidated operating results of the Company for the three-month period ended March 31, 2018. The carrying amounts of the significant assets and liabilities of the disposed property at the date of sale were:
Multifamily communities acquired The Company had no acquisitions of multifamily community assets during the three-month period ended March 31, 2019. During the three-month period ended March 31, 2018, the Company completed the acquisition of the following multifamily communities:
The aggregate purchase prices of the multifamily acquisitions were approximately $106.5 million, exclusive of acquired escrows, security deposits, prepaids, capitalized acquisition costs and other miscellaneous assets and assumed liabilities. |
Real Estate Loans, Notes Receivable, and Lines of Credit |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate Loans, Notes Receivable, and Line of Credit | he Company's Palisades real estate loan investment was subject to a loan participation agreement with an unaffiliated third party, under which the syndicate was to fund approximately 25% of the loan commitment amount and collectively receive approximately 25% of interest payments, returns of principal and purchase option discount (if applicable). On March 13, 2019, the Company repurchased the loan participant's 25% balance in the loan from the loan participant and at March 31, 2019, carried the entire loan balance on its consolidated balance sheet without reflection of any liability to any third party. The Company's real estate loan investments are collateralized by 100% of the membership interests of the underlying project entity, and, where considered necessary, by unconditional joint and several repayment guaranties and performance guaranties by the principal(s) of the borrowers. These guaranties generally remain in effect until the receipt of a final certificate of occupancy. All of the guaranties are subject to the rights held by the senior lender pursuant to a standard intercreditor agreement. Prepayment of the real estate loans are permitted in whole, but not in part, without the Company's consent. Management monitors the credit quality of the obligors under each of the Company's real estate loans by tracking the timeliness of scheduled interest and principal payments relative to the due dates as specified in the loan documents, as well as draw requests on the loans relative to the project budgets. In addition, management monitors the actual progress of development and construction relative to the construction plan, as well as local, regional and national economic conditions that may bear on our current and target markets. The credit quality of the Company’s borrowers is primarily based on their payment history on an individual loan basis, and the Company assigns risk ratings to its real estate loans and notes receivable in credit quality categories as described in Note 2. The Company continues to monitor each loan and note receivable for potential deterioration of risk ratings and can make no assurances that economic or industry conditions or other circumstances will not lead to future loan loss allowances. At March 31, 2019, the Company's portfolio of real estate loan investments by credit quality indicator was:
At March 31, 2019, our portfolio of notes and lines of credit receivable consisted of:
On March 27, 2019, the Company entered into a negotiated agreement with the borrowers of the Haven Campus Communities, LLC and Haven Campus Communities Charlotte Member, LLC lines of credit, both of which were in default as of December 31, 2018. The Company received the membership interests of the Haven49 project in exchange for complete settlement of the Haven Campus Communities Charlotte Member, LLC line of credit and the Haven49 mezzanine and member loans. As part of the agreement, payments and credits totaling approximately $3.3 million were applied against the outstanding balance of the Haven Campus Communities, LLC line of credit. The Company retains a pledge of a 49.49% interest in an unrelated shopping center located in Atlanta, Georgia as additional collateral on the Haven Campus Communities, LLC line of credit. The Company recorded interest income and other revenue from these instruments as follows:
The Company extends loans for purposes such as to partially finance the development of multifamily residential communities, to acquire land in anticipation of developing and constructing multifamily residential communities, and for other real estate or real estate related projects. Certain of these loans include characteristics such as exclusive options to purchase the project within a specific time window following project completion and stabilization, the sufficiency of the borrowers' investment at risk and the existence of payment and performance guaranties provided by the borrowers, any of which can cause the loans to create variable interests to the Company and require further evaluation as to whether the variable interest creates a VIE, which would necessitate consolidation of the project. The Company considers the facts and circumstances pertinent to each entity borrowing under the loan, including the relative amount of financing the Company is contributing to the overall project cost, decision making rights or control held by the Company, guarantees provided by third parties, and rights to expected residual gains or obligations to absorb expected residual losses that could be significant from the project. If the Company is deemed to be the primary beneficiary of a VIE, consolidation treatment would be required. The Company has no decision making authority or power to direct activity, except normal lender rights, which are subordinate to the senior loans on the projects. The Company has concluded that it is not the primary beneficiary of the borrowing entities and therefore it has not consolidated these entities in its consolidated financial statements. The Company's maximum exposure to loss from these loans is their drawn amount as of March 31, 2019 of approximately $338.3 million. The maximum aggregate amount of loans to be funded as of March 31, 2019 was approximately $484.2 million, which includes approximately $145.9 million of loan committed amounts not yet funded. The Company has evaluated its real estate loans, where appropriate, for accounting treatment as loans versus real estate development projects, as required by ASC 310. For each loan, the characteristics and the facts and circumstances indicate that loan accounting treatment is appropriate. The Company is also subject to a geographic concentration of risk that could be considered significant with regard to the 464 Bishop, Dawsonville Marketplace, Falls at Forsyth, Newbergh, Newbergh Capital, Solis Kennesaw, Solis Kennesaw Capital, Solis Kennesaw II, 8West and 8West construction loans, all of which are partially supporting various real estate projects in or near Atlanta, Georgia. The drawn amount of these loans as of March 31, 2019 totaled approximately $89.7 million (with a total commitment amount of approximately $167.8 million) and in the event of a total failure to perform by the borrowers and guarantors, would subject the Company to a total possible loss of the drawn amount. Freddie Mac K Program investments On May 23, 2018, the Company purchased a subordinate tranche of Series 2018-ML04, a pool of 20 multifamily mortgages with a total pool size of approximately $276.3 million, from Freddie Mac. The purchase price of the subordinate tranche was approximately $4.7 million and has a weighted average maturity of approximately 16 years, at which time the Company will collect the face value of its tranche of $27.6 million. The yield to maturity of the subordinate tranche is expected to be approximately 11.5% per annum. On March 28, 2019, the Company purchased a subordinate tranche of Series 2019-ML05, a pool of 21 multifamily mortgages with a total pool size of approximately $295.7 million, from Freddie Mac. The Company's tranche of the 2019-ML05 pool pays monthly interest of approximately $103,000. The purchase price of the subordinate tranche was approximately $18.4 million and has a weighted average maturity of approximately 16.1 years, at which time the Company will collect the face value of its tranche of $29.6 million. The yield to maturity of the subordinate tranche is expected to be approximately 8.9% per annum. The Company has evaluated the structure of the investments under the VIE rules and has determined that, due to the Company's position as directing certificate holder of the two mortgage pools, it is in the position most able to influence the financial performance of the trusts. As the subordinate tranche holder, the Company also holds the first loss position of the mortgage pools. As such, the Company is deemed to be the primary beneficiary of the VIEs and has consolidated the assets, liabilities, revenues, expenses and cash flows of both trusts in its consolidated financial statements as of and for the three-month period ended March 31, 2019. The Company's maximum exposure to loss from the combined mortgage pools from the Freddie Mac K program is approximately $23.9 million. The Company has no recourse liability to either the creditors or other beneficial interest holders of either investment. Agency Mortgage-Backed Securities investments In December 2018, the Company began investing in Agency Mortgage-Backed Securities representing undivided (or “pass-through”) beneficial interests in specified pools of fixed-rate mortgage loans. The investments are classified as trading securities. On December 20, 2018, the Company sold its entire position of a pool with associated premium amounts totaling $41.1 million. At December 31, 2018, the Company held a receivable related to this sale transaction of $41.2 million, which was collected upon the settlement of the transaction in January 2019. Additionally, for the quarter ended March 31, 2019, the Company recorded approximately $198,000 in interest income related to these investments. |
Redeemable Preferred Stock |
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Preferred Stock [Text Block] | Redeemable Preferred Stock and Equity Offerings At March 31, 2019, the Company's active equity offerings consisted of:
Certain offering costs are not related to specific closing transactions and are recognized as a reduction of stockholders' equity in the proportion of the number of instruments issued to the maximum number of Units anticipated to be issued. Any offering costs not yet reclassified as reductions of stockholders' equity are are reflected in the asset section of the consolidated balance sheets as deferred offering costs. As of March 31, 2019, cumulative gross proceeds and offering costs for our active equity offerings consisted of:
(1) Included in the $300 million Shelf Offering is a total of $150 million allocated for the 2016 ATM Offering, which is not listed separately. (2) These offering costs specifically identifiable to Unit offering closing transactions, such as commissions, dealer manager fees, and other registration fees, are reflected as a reduction of stockholders' equity at the time of closing. (3) On April 25, 2019, the Company's 2019 Shelf Registration Statement was declared effective. Aggregate offering expenses of the $1.5 Billion Unit Offering, including selling commissions and dealer manager fees, and of the mShares Offering, including dealer manager fees, are each individually capped at 11.5% of the aggregate gross proceeds of the two offerings, of which the Company will reimburse its Manager up to 1.5% of the gross proceeds of such offerings for all organization and offering expenses incurred, excluding selling commissions and dealer manager fees for the $1.5 Billion Unit Offering and excluding dealer manager fees for the mShares Offering; however, upon approval by the conflicts committee of the board of directors, the Company may reimburse its Manager for any such expenses incurred above the 1.5% amount as permitted by the Financial Industry Regulatory Authority, or FINRA. |
Related Party Transactions |
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Related Party Transactions Disclosure [Text Block] | Related Party Transactions On April 16, 2018, John A. Williams, the Company's Chief Executive Officer and Chairman of the Board, passed away. The Company's Haven 12 real estate loan investment and Haven Campus Communities LLC line of credit are both supported in part by a guaranty of repayment and performance by John A. Williams, Jr., John A. Williams' son. Because the terms of these loans were negotiated and agreed upon while John A. Williams was the Chief Executive Officer of the Company, these instruments will continue to be reported as related party transactions until the loans are repaid. The Company named Daniel M. DuPree as Chairman of the Board of Directors and Chief Executive Officer of the Company. Leonard A. Silverstein was named Vice Chairman of the Board of Directors and continues as the Company's President and Chief Operating Officer. On March 27, 2019, the Company's Haven49 and Haven49 Member real estate loan investments and the Haven Campus Communities Charlotte Member LLC line of credit were deemed satisfied in full in connection with the Company's acceptance of the borrowers' membership interests in the underlying Haven49 project. Mr. Silverstein is an executive officer and Messrs. DuPree and Silverstein are also directors of NELL Partners, Inc., which controls the Manager. Mr. DuPree is the Chief Executive Officer and Mr. Silverstein is the President and Chief Operating Officer of the Manager. The Company's Wiregrass and Wiregrass Capital real estate loan investments are partially financing the development of a multifamily community in Tampa, Florida by the Altman Companies. Timothy A. Peterson is a member of management of the Altman Companies as well as Chairman of the Audit Committee of the Company's Board of Directors. The Wiregrass loans therefore qualify as related party transactions. The Management Agreement entitles the Manager to receive compensation for various services it performs related to acquiring assets and managing properties on the Company's behalf:
The Manager may, in its discretion, waive some or all of the asset management, property management, or general and administrative fees in the current period for properties owned by the Company. The waived fees may become earned by the Manager as an additional disposition fee only in the event of a sales transaction, and whereby the Company’s capital contributions for the property being sold exceed a 7% annual rate of return. The Company will recognize in future periods to the extent, if any, it determines that the sales transaction is probable, and that the estimated net sale proceeds would exceed the annual rate of return hurdle. A cumulative total of approximately $15.3 million of combined asset management and general and administrative fees related to acquired properties as of March 31, 2019 have been waived by the Manager. A total of $13.8 million remaining waived fees could possibly be earned by the Manager in the future. In addition to property management fees, the Company incurred the following reimbursable on-site personnel salary and related benefits expenses at the properties, which are listed on the Consolidated Statements of Operations:
The Manager utilizes its own and its affiliates' personnel to accomplish certain tasks related to raising capital that would typically be performed by third parties, including, but not limited to, legal and marketing functions. As permitted under the Management Agreement, the Manager was reimbursed $128,081 and $119,269 for the three-month periods ended March 31, 2019 and 2018, respectively and Preferred Capital Securities, LLC, or PCS, was reimbursed $337,344 and $356,022 for the three-month periods ended March 31, 2019 and 2018 , respectively. These costs are recorded as deferred offering costs until such time as additional closings occur on the $1.5 Billion Unit Offering, mShares Offering or the Shelf Offering, at which time they are reclassified on a pro-rata basis as a reduction of offering proceeds within stockholders’ equity. The Manager also receives leasing commission fees. Retail leasing commission fees (a) for new retail leases are equal to the greater of (i) $4.00 per square foot, and (ii) 4.0% of the aggregate base rental payments to be made by the tenant for the first 10 years of the original lease term; and (b) for lease renewals are equal to the greater of (i) $2.00 per square foot, and (ii) 2.0% of the aggregate base rental payments to be made by the tenant for the first 10 years of the newly renewed lease term. There are no commissions payable on retail lease renewals thereafter. Office leasing commission fees (a) for new office leases are equal to 50.0% of the first month’s gross rent plus 2.0% of the remaining fixed gross rent on the guaranteed lease term, (b) in the event of co-broker participation in a new lease, the leasing commission determined for a new lease are equal to 150.0% of the first month’s gross rent plus 6% of the remaining fixed gross rent of the guaranteed lease term, and (c) for lease renewals, are equal to 2% of the fixed gross rent of the guaranteed lease term or, in the event of a co-broker, 6% of the fixed gross rent of the guaranteed lease term. Office leasing commission fees may not exceed market rates for office leasing services. The Company holds a promissory note in the amount of approximately $763,030 due from Preferred Capital Marketing Services, LLC, or PCMS, which is a wholly-owned subsidiary of NELL Partners. The Company has extended a revolving line of credit with a maximum borrowing amount of $18.0 million to its Manager. |
Dividends |
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dividends and distributions [Text Block] | Dividends and Distributions The Company declares and pays monthly cash dividend distributions on its Series A Preferred Stock in the amount of $5.00 per share per month and beginning in March 2017, on its Series M Preferred Stock, on an escalating scale of $4.79 per month in year one, increasing to $6.25 per month in year eight and beyond. All preferred stock dividends are prorated for partial months at issuance as necessary. The Company declared aggregate quarterly cash dividends on its Common Stock of $0.26 and $0.25 per share for the three-month periods ended March 31, 2019 and 2018, respectively. The holders of Class A OP Units of the Operating Partnership are entitled to equivalent distributions as the dividends declared on the Common Stock. At March 31, 2019, the Company had 879,335 Class A OP Units outstanding, which are exchangeable on a one-for-one basis for shares of Common Stock or the equivalent amount of cash. The Company's dividend and distribution activity consisted of:
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Equity Compensation |
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Equity Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | Equity Compensation Stock Incentive Plan On February 25, 2011, the Company’s board of directors adopted, and the Company’s stockholders approved, the Preferred Apartment Communities, Inc. 2011 Stock Incentive Plan to incentivize, compensate and retain eligible officers, consultants, and non-employee directors. On May 7, 2015, the Company's stockholders approved the third amendment to the Preferred Apartment Communities, Inc. 2011 Stock Incentive Plan, or, as amended, the 2011 Plan, which amendment increased the aggregate number of shares of Common Stock authorized for issuance under the 2011 Plan from 1,317,500 to 2,617,500 and extended the expiration date of the 2011 Plan to December 31, 2019. Equity compensation expense by award type for the Company was:
Restricted Stock Grants The following annual grants of restricted stock were made to members of the Company's independent directors, as payment of the annual retainer fees. The restricted stock grants for the 2017 and 2018 service years vested (or are scheduled to vest) on a pro-rata basis over the four consecutive 90-day periods following the date of grant.
Class B OP Units On January 4, 2016, the Company caused the Operating Partnership to grant 265,931 Class B Units of the Operating Partnership, or Class B OP units, for service to be rendered during 2016, 2017 and 2018. On January 3, 2017, the Company caused the Operating Partnership to grant 286,392 Class B OP Units, for service to be rendered during 2017, 2018 and 2019. On January 2, 2018, the Company caused the Operating Partnership to grant 256,087 Class B OP Units, for service to be rendered during 2018, 2019 and 2020. The Company did not grant any Class B OP Units during the three-month period ended March 31, 2019. On January 2, 2018, John A. Williams, the late Chief Executive Officer of the Company, was granted 53,746 Class B OP Units. On April 16, 2018, Mr. Williams passed away and his granted Class B OP Units were modified on a pro-rata basis as of the date of his death. Of the 53,746 Class B OP Units granted to Mr. Williams, 38,284 Class B OP Units with a total fair value of approximately 638,000 were forfeited. The remaining 15,462 Class B OP Units became vested Class B Units on January 2, 2019, and remained subject to the earning provision of all Class B OP Unit grants in order to convert to Class A OP Units. An additional 156,306 Class B OP Units granted to individuals other than Mr. Williams with an aggregate fair value of $2.6 million were forfeited in 2018. Because of the market condition vesting requirement that determines the transition of the vested Class B OP Units to earned Class B OP Units, a Monte Carlo simulation was utilized to calculate the total fair values, which will be amortized as compensation expense over the periods beginning on the grant dates through the Initial Valuation Dates. On January 3, 2017, all of the 265,931 Class B OP Units granted on January 3, 2016 became earned and 206,534 automatically vested and converted to Class A OP Units. Of the remaining earned Class B OP Units, 29,699 vested and automatically converted to Class A OP Units on January 2, 2018 and the final 29,698 earned Class B OP Units vested and automatically converted to Class A OP Units on January 2, 2019. On January 2, 2018, all of the 286,392 Class B OP Units granted on January 2, 2017 became earned and 227,599 automatically became vested and converted to Class A Units. Of the remaining earned Class B OP Units, 27,131 vested and automatically converted to Class A OP Units on January 2, 2019 and the final 27,122 earned Class B OP Units will vest and automatically convert to Class A OP Units on January 2, 2020, assuming each grantee fulfills the requisite service requirement. The underlying valuation assumptions and results for the 2018 Class B OP Unit awards were:
The expected dividend yield assumptions were derived from the Company’s closing prices of the Common Stock on the grant dates and the projected future quarterly dividend payments per share of $0.25 for the 2018 awards. For the 2018 awards, the Company's own stock price history was utilized as the basis for deriving the expected volatility assumption. The risk-free rate assumptions were obtained from the Federal Reserve yield table and were calculated as the interpolated rate between the 20 and 30 year yield percentages on U. S. Treasury securities on the grant date. Since the Class B OP Units have no expiration date, a derived service period of one year was utilized, which equals the period of time from the grant date to the initial valuation date. Restricted Stock Units The Company, through its Operating Partnership, has granted restricted stock units, or RSUs, to certain employees of affiliates of the Company, as shown in the following table:
The RSUs vest in three equal consecutive one-year tranches from the date of grant. For each grant, on the Initial Valuation Date, the market capitalization of the number of shares of Common Stock at the date of grant is compared to the market capitalization of the same number of shares of Common Stock at the Initial Valuation Date. If the market capitalization measure results in an increase which exceeds the target market threshold, the Vested RSUs become earned RSUs and automatically convert into Common Stock on a one-to-one basis. Vested RSUs may become Earned RSUs on a pro-rata basis should the result of the market capitalization test be an increase of less than the target market threshold. Any Vested RSUs that do not become Earned RSUs on the Initial Valuation Date are subsequently remeasured on a quarterly basis until such time as all Vested RSUs become Earned RSUs or are forfeited due to termination of continuous service due to an event other than as a result of a qualified event, which is generally the death or disability of the holder. Continuous service through the final valuation date is required for the Vested RSUs to qualify to become fully Earned RSUs. Because RSUs are valued using the identical market condition vesting requirement that determines the transition of the Vested Class B Units to Earned Class B Units, the same valuation assumptions per RSU were utilized to calculate the total fair values of the RSUs. The total fair value amounts pertaining to grants of RSUs, net of forfeitures, are amortized as compensation expense over the three one-year periods ending on the three successive anniversaries of the grant dates. |
Indebtedness |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Text Block] | Indebtedness Mortgage Notes Payable Mortgage Financing of Property Acquisitions The Company partially financed the real estate properties acquired during the three-month period ended March 31, 2019 with mortgage debt as shown in the following table:
(1) The Company assumed the existing construction loan on this property. Repayments and Refinancings On February 28, 2019, the Company refinanced the mortgage on its Lenox Village Town Center multifamily community. The existing $29.2 million mortgage bore interest at a fixed rate of 3.82% and was refinanced into a $39.3 million mortgage which bears interest at a fixed rate of 4.34%. As a result of the refinance, the Company incurred approximately $0.6 million of expenses which were capitalized as deferred loan costs, and accelerated approximately $16,000 of remaining unamortized deferred loan costs associated with the prior loan, which is included within the interest expense line of the Consolidated Statements of Operations. The sale of Lake Cameron on March 20, 2018 resulted in $402,000 of debt defeasance related costs, which were netted against the gain on the sale of the property. On March 29, 2018, the Company refinanced the mortgage on its Sol student housing property. A short-term bridge loan was used to replace the mortgage being held on the Acquisition Facility. The mortgage principal balance of approximately $37.5 million remained the same under the new financing arrangement, and the existing variable interest rate increased 10 basis points, to 210 basis points over LIBOR. As a result of the refinance, the Company incurred expenses of approximately $41,000, which are included within the Interest Expense line of the Consolidated Statements of Operations. The following table summarizes our mortgage notes payable at March 31, 2019:
The Company has placed interest rate caps on the variable rate mortgages on its Avenues at Creekside and Citi Lakes multifamily communities. Under guidance provided by ASC 815-10, these interest rate caps fall under the definition of derivatives, which are embedded in their debt hosts. Because these interest rate caps are deemed to be clearly and closely related to their debt hosts, bifurcation and fair value accounting treatment is not required. The mortgage note secured by our Independence Square property is a seven year term with an anticipated repayment date of September 1, 2022. If the Company elects not to pay its principal balance at the anticipated repayment date, the term will be extended for an additional five years, maturing on September 1, 2027. The interest rate from September 1, 2022 to September 1, 2027 will be the greater of (i) the Initial Interest Rate of 3.93% plus 200 basis points or (ii) the yield on the seven year U.S. treasury security rate plus approximately 400 basis points. See Note 16 regarding the Company's refinancing of the mortgage debt on the Royal Lakes Marketplace property. The mortgage note secured by our Champions Village property has a maximum commitment of approximately $34.2 million. As of March 31, 2019, the Company has an outstanding principal balance of $27.4 million. Additional advances of the mortgage commitment may be drawn as the Company achieves leasing activity, if elected by the Company. Additional advances are available through October 2019. This mortgage note has a variable interest of the greater of (i) 3.25% or (ii) the sum of the 3.00% plus the LIBOR Rate, which was 5.49% as of March 31, 2019. As of March 31, 2019, the weighted-average remaining life of deferred loan costs related to the Company's mortgage indebtedness was approximately 9.7 years. Our mortgage notes have maturity dates between October 1, 2019 and June 1, 2054. Credit Facility The Company has a credit facility, or Credit Facility, with KeyBank National Association, or KeyBank, which defines a revolving line of credit, or Revolving Line of Credit, which is used to fund investments, capital expenditures, dividends (with consent of KeyBank), working capital and other general corporate purposes on an as needed basis. On March 23, 2018, the maximum borrowing capacity on the Revolving Line of Credit was increased to $200 million pursuant to an accordion feature. The accordion feature permits the maximum borrowing capacity to be expanded or contracted without amending any further terms of the instrument. On December 12, 2018, the Fourth Amended and Restated Credit Agreement, or the Amended and Restated Credit Agreement, was amended to extend the maturity to December 12, 2021, with an option to extend the maturity date to December 12, 2022, subject to certain conditions described therein. The Revolving Line of Credit accrues interest at a variable rate of one month LIBOR plus an applicable margin of 2.75% to 3.50% per annum, depending upon the Company’s leverage ratio. The weighted average interest rate for the Revolving Line of Credit was 5.60% for the three-month period ended March 31, 2019. The Amended and Restated Credit Agreement also reduced the commitment fee on the average daily unused portion of the Revolving Line of Credit to 0.25% or 0.30% per annum, depending upon the Company’s outstanding Credit Facility balance. On May 26, 2016, the Company entered into a $11.0 million interim term loan with KeyBank, or the Interim Term Loan, to partially finance the acquisition of Anderson Central, a grocery-anchored shopping center located in Anderson, South Carolina. The Interim Term Loan accrued interest at a rate of LIBOR plus 2.5% per annum until it was repaid and extinguished during the first quarter of 2018. The Fourth Amended and Restated Credit Agreement contains certain affirmative and negative covenants, including negative covenants that limit or restrict secured and unsecured indebtedness, mergers and fundamental changes, investments and acquisitions, liens and encumbrances, dividends, transactions with affiliates, burdensome agreements, changes in fiscal year and other matters customarily restricted in such agreements. The amount of dividends that may be paid out by the Company is restricted to a maximum of 95% of AFFO for the trailing four quarters without the lender's consent; solely for purposes of this covenant, AFFO is calculated as earnings before interest, taxes, depreciation and amortization expense, plus reserves for capital expenditures, less normally recurring capital expenditures, less consolidated interest expense. As of March 31, 2019, the Company was in compliance with all covenants related to the Revolving Line of Credit, as shown in the following table:
(1) All covenants are as defined in the credit agreement for the Revolving Line of Credit. (2) Minimum of $686.9 million plus 75% of the net proceeds of any equity offering, which totaled approximately $922.0 million as of March 31, 2019. (3) Calculated on a trailing four-quarter basis. For the three-month period ended March 31, 2019, the maximum dividends and distributions allowed under this covenant was approximately $149.6 million. Loan fees and closing costs for the establishment and subsequent amendments of the Credit Facility are amortized utilizing the straight line method over the life of the Credit Facility. At March 31, 2019, unamortized loan fees and closing costs for the Credit Facility were approximately $1.5 million, which will be amortized over a remaining loan life of approximately 2.7 years. Loan fees and closing costs for the mortgage debt on the Company's properties are amortized utilizing the effective interest rate method over the lives of the loans. Acquisition Facility On February 28, 2017, the Company entered into a credit agreement, or Acquisition Credit Agreement, with Freddie Mac through KeyBank to obtain an acquisition revolving credit facility, or Acquisition Facility, with a maximum borrowing capacity of $200 million. The purpose of the Acquisition Facility is to finance acquisitions of multifamily communities and student housing communities. The maximum borrowing capacity on the Acquisition Facility may be increased at the Company's request up to $300 million at any time prior to March 1, 2021. On March 25, 2019, the maximum borrowing capacity was decreased to $90 million by agreement between the Company and KeyBank.The Acquisition Facility accrues interest at a variable rate of one month LIBOR plus a margin of between 1.75% per annum and 2.20% per annum, depending on the type of assets acquired and the resulting property debt service coverage ratio. The Acquisition Facility has a maturity date of March 1, 2022 and has two one-year extension options, subject to certain conditions described therein. At March 31, 2019, unamortized loan fees and closing costs for the establishment of the Acquisition Facility were approximately $0.2 million, which will be amortized over a remaining loan life of approximately 2.9 years. Interest Expense Interest expense, including amortization of deferred loan costs was:
Future Principal Payments The Company’s estimated future principal payments due on its debt instruments as of March 31, 2019 were:
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Income Taxes |
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Mar. 31, 2019 | |
Income Taxes [Abstract] | |
Income Tax Disclosure [Text Block] | Income Taxes The Company elected to be taxed as a REIT effective with its tax year ended December 31, 2011, and therefore, the Company will not be subject to federal and state income taxes, so long as it distributes 100% of the Company's annual REIT taxable income (which does not equal net income as calculated in accordance with GAAP and determined without regard for the deduction for dividends paid and excluding net capital gains) to its stockholders. For the Company's tax years prior to its REIT election year, its operations resulted in a tax loss. As of December 31, 2010, the Company had deferred federal and state tax assets totaling approximately $298,100, none of which were based upon tax positions deemed to be uncertain. These deferred tax assets will most likely not be used since the Company elected REIT status; therefore, management has determined that a 100% valuation allowance is appropriate as of March 31, 2019 and December 31, 2018. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies Disclosure [Text Block] | Commitments and Contingencies On March 28, 2014, the Company entered into a payment guaranty in support of its Manager's eleven-year office lease, which began on October 9, 2014. As of March 31, 2019, the amount guarantied by the Company was $5.5 million and is reduced by $0.6 million per lease year over the term of the lease. Certain officers and employees of the Manager have been assigned company credit cards. As of March 31, 2019, the Company guarantied up to $640,000 on these credit cards. The Company is otherwise currently subject to neither any known material commitments or contingencies from its business operations, nor any material known or threatened litigation. A total of approximately $15.3 million of asset management and general and administrative fees related to acquired properties as of March 31, 2019 have been waived by the Manager. The waived fees are converted at the time of waiver into contingent fees, which are earned by the Manager as an additional disposition fee only in the event of a sales transaction, and whereby the Company’s capital contributions for the property being sold exceed a 7% annual rate of return. The Company will recognize in future periods to the extent, if any, it determines that the sales transaction is probable, and that the estimated net sale proceeds would exceed the annual rate of return hurdle. As of March 31, 2019, a total of $13.8 million remaining waived fees could possibly be earned by the Manager in the future. At March 31, 2019, the Company had unfunded balances on its real estate loan portfolio of approximately $145.9 million. At March 31, 2019, the Company had unfunded contractual commitments for tenant, leasing, and capital improvements of approximately $9.2 million. |
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Segment Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting Disclosure [Text Block] | Segment Information The Company's Chief Operating Decision Maker, or CODM, evaluates the performance of the Company's business operations and allocates financial and other resources by assessing the financial results and outlook for future performance across five distinct segments: multifamily communities, student housing properties, real estate related financing, New Market Properties and Preferred Office Properties. Multifamily Communities - consists of the Company's portfolio of owned residential multifamily communities Student Housing Properties - consists of the Company's portfolio of owned student housing properties. Financing - consists of the Company's portfolio of real estate loans, bridge loans, and other instruments deployed by the Company to partially finance the development, construction, and prestabilization carrying costs of new multifamily communities and other real estate and real estate related assets, as well as the Company's investments in the Series 2018-ML04 and Series 2019-ML05 mortgage-backed pools. Excluded from the financing segment are consolidated assets of VIEs and financial results of the Company's Dawson Marketplace grocery-anchored shopping center real estate loan, which are included in the New Market Properties segment. New Market Properties - consists of the Company's portfolio of grocery-anchored shopping centers, which are owned by New Market Properties, LLC, a wholly-owned subsidiary of the Company, as well as the financial results from the Company's grocery-anchored shopping center real estate loans. Preferred Office Properties - consists of the Company's portfolio of office buildings. The CODM monitors net operating income (“NOI”) on a segment and a consolidated basis as a key performance measure for its operating segments. NOI is defined as rental and other property revenue from real estate assets plus interest income from its loan portfolio less total property operating and maintenance expenses, property management fees, real estate taxes, property insurance, and general and administrative expenses. The CODM uses NOI as a measure of operating performance because it provides a measure of the core operations, rather than factoring in depreciation and amortization, financing costs, acquisition expenses, and other expenses generally incurred at the corporate level. The following tables present the Company's assets, revenues, and NOI results by reportable segment, as well as a reconciliation from NOI to net income (loss). The assets attributable to 'Other' primarily consist of deferred offering costs recorded but not yet reclassified as reductions of stockholders' equity and cash balances at the Company and Operating Partnership levels.
Total capitalized expenditures (inclusive of additions to construction in progress, but exclusive of the purchase price of acquisitions) for the three-month periods ended March 31, 2019 and 2018 were as follows:
Second-generation capital expenditures exclude those expenditures made in our office building portfolio (i) to lease space to "first generation" tenants (i.e. leasing capital for existing vacancies and known move-outs at the time of acquisition), (ii) to bring recently acquired properties up to our Class A ownership standards (and which amounts were underwritten into the total investment at the time of acquisition), (iii) for property re-developments and repositionings and (iv) for building improvements that are recoverable from future operating cost savings. Total revenues by reportable segment of the Company were:
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Loss per Share |
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Earnings Per Share [Text Block] | The following is a reconciliation of weighted average basic and diluted shares outstanding used in the calculation of income (loss) per share of Common Stock:
(A) The Company's outstanding Class A Units of the Operating Partnership (879 and 1,070 Units at March 31, 2019 and 2018, respectively) contain rights to distributions in the same amount per unit as for dividends declared on the Company's Common Stock. The impact of the Class A Unit distributions on earnings per share has been calculated using the two-class method whereby earnings are allocated to the Class A Units based on dividends declared and the Class A Units' participation rights in undistributed earnings. (B) The Company’s shares of Series A Preferred Stock outstanding accrue dividends at an annual rate of 6% of the stated value of $1,000 per share, payable monthly. The Company had 1,720 and 1,313 outstanding shares of Series A Preferred Stock at March 31, 2019 and 2018, respectively. The Company's shares of Series M preferred stock, or mShares, accrue dividends at an escalating rate of 5.75% in year one to 7.50% in year eight and thereafter. The Company had 56 and 20 mShares outstanding at March 31, 2019 and 2018, respectively. (C) The Company's outstanding unvested restricted share awards (6 and 6 shares of Common Stock at March 31, 2019 and 2018, respectively) contain non-forfeitable rights to distributions or distribution equivalents. The impact of the unvested restricted share awards on earnings per share has been calculated using the two-class method whereby earnings are allocated to the unvested restricted share awards based on dividends declared and the unvested restricted shares' participation rights in undistributed earnings. Given the Company's unvested restricted share awards are defined as participating securities, the dividends declared for that period are adjusted in determining the calculation of loss per share of Common Stock. (D) Potential dilution from (i) warrants outstanding from issuances of Units from our Series A Preferred Stock offerings that are potentially exercisable into 25,284 shares of Common Stock; (ii) 93 Class B Units; (iii) 6 shares of unvested restricted common stock; and (iv) 51 outstanding Restricted Stock Units are excluded from the diluted shares calculations because the effect was antidilutive. Class A Units were excluded from the denominator because earnings were allocated to non-controlling interests in the calculation of the numerator. |
Fair Values of Financial Instruments |
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Fair Value Disclosures [Text Block] | Fair Values of Financial Instruments Fair value is defined as the price at which an asset or liability is exchanged between market participants in an orderly transaction at the reporting date. The Company’s cash equivalents, notes receivable, accounts receivable and payables and accrued expenses all approximate fair value due to their short term nature. The following tables provide estimated fair values of the Company’s financial instruments. The carrying values of the Company's real estate loans include accrued interest receivable from additional interest or exit fee provisions and are presented net of deferred loan fee revenue, where applicable.
(1) The carrying value of real estate assets at December 31, 2018 included the Company's balance of the Palisades real estate loan investment, which included the amounts funded by an unrelated participant. On March 13, 2019, the Company repurchased the loan participant's 25% balance in the loan from the loan participant and at March 31, 2019, carried the entire loan balance on its consolidated balance sheet without reflection of any liability to any third party. The fair value of the real estate loans within the level 3 hierarchy are comprised of estimates of the fair value of the notes, which were developed utilizing a discounted cash flow model over the remaining terms of the notes until their maturity dates and utilizing discount rates believed to approximate the market risk factor for notes of similar type and duration. The fair values also contain a separately-calculated estimate of any applicable additional interest payment due the Company at the maturity date of the loan, based on the outstanding loan balances at March 31, 2019, discounted to the reporting date utilizing a discount rate believed to be appropriate for multifamily development projects. The fair values of the fixed rate mortgages on the Company’s properties were developed using market quotes of the fixed rate yield index and spread for 4, 5, 6, 7, 10, 15, 25 and 35 year notes as of the reporting date. The present values of the cash flows were calculated using the original interest rate in place on the fixed rate mortgages and again at the current market rate. The difference between the two results was applied as a fair market adjustment to the carrying value of the mortgages. The following table presents activity of the two mortgage pools from the Freddie Mac K Program as of and for the three-month period ended March 31, 2019:
The following table presents the level 3 input used to calculate the fair value of the consolidated assets and liabilities of the two VIEs:
The following tables present the estimated fair values of the consolidated assets and liabilities from the two VIEs, for which the Company has elected the fair value option.
Disclosure guidance under GAAP requires the Company to determine whether the fair value of the financial assets or the fair value of the financial liabilities of the two mortgage pools is more observable. The VIE assets within the two mortgage pools consist of mortgage loans which finance 40 and 20 multifamily communities at March 31, 2019 and December 31, 2018, respectively. The fair value of the VIE assets within the level 3 hierarchy are comprised of the fair value of the mortgages as estimated by the Company, which were developed utilizing a discounted cash flow model over the remaining terms of the mortgages until their maturity dates and utilizing discount rates believed to approximate the market risk factor for instruments of similar type and duration. The fair values of the notes are categorized within the level 3 hierarchy of fair value estimation as the discount rate primary input assumption is unobservable. |
Subsequent Events |
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Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | Subsequent Events Between April 1, 2019 and April 30, 2019, the Company issued 41,962 Units under its $1.5 Billion Unit Offering and collected net proceeds of approximately $37.7 million after commissions and fees and issued 3,482 shares of Series M Preferred Stock under the mShares offering and collected net proceeds of approximately $3.4 million after commissions and fees. On April 12, 2019, the Company closed on two real estate loan investments of up to approximately $7.2 million in support of a planned second phase of the Company's Lodge at Hidden River multifamily community located in Tampa, Florida. On April 12, 2019, the Company refinanced the variable-rate mortgage on its Royal Lakes Marketplace grocery-anchored shopping center into a new 10 year, $9.7 million loan with a fixed rate of 4.29%. On April 12, 2019, the Company refinanced the variable-rate mortgage on its Cherokee Plaza grocery-anchored shopping center into a new 8 year, $25.2 million loan with a fixed rate of 4.28%. On April 25, 2019, the Company's 2019 Shelf Registration Statement was declared effective. |
Significant Accounting Policies Basis of Presentation (Policies) |
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New Accounting Pronouncements, Policy [Policy Text Block] | New Accounting Pronouncements
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Real Estate Assets (Tables) |
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Business Acquisition | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination Disclosure | Real Estate Assets The Company's real estate assets consisted of:
Multifamily communities sold The Company had no sales of multifamily community assets during the three-month period ended March 31, 2019. On March 20, 2018, the Company closed on the sale of its 328-unit multifamily community in Raleigh, North Carolina, or Lake Cameron, to an unrelated third party for a purchase price of approximately $43.5 million, exclusive of closing costs, and debt defeasance-related costs and resulted in a gain of $20.4 million. Lake Cameron contributed approximately $0.2 million of net income to the consolidated operating results of the Company for the three-month period ended March 31, 2018. The carrying amounts of the significant assets and liabilities of the disposed property at the date of sale were:
Multifamily communities acquired The Company had no acquisitions of multifamily community assets during the three-month period ended March 31, 2019. During the three-month period ended March 31, 2018, the Company completed the acquisition of the following multifamily communities:
The aggregate purchase prices of the multifamily acquisitions were approximately $106.5 million, exclusive of acquired escrows, security deposits, prepaids, capitalized acquisition costs and other miscellaneous assets and assumed liabilities. |
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schedule of depreciation and amortization expense [Table Text Block] |
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real estate sold [Table Text Block] | The carrying amounts of the significant assets and liabilities of the disposed property at the date of sale were:
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real estate owned [Table Text Block] | The Company's real estate assets consisted of:
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multifamily community [Domain] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination Disclosure |
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Table of Properties Acquired | The Company had no acquisitions of multifamily community assets during the three-month period ended March 31, 2019. During the three-month period ended March 31, 2018, the Company completed the acquisition of the following multifamily communities:
The aggregate purchase prices of the multifamily acquisitions were approximately $106.5 million, exclusive of acquired escrows, security deposits, prepaids, capitalized acquisition costs and other miscellaneous assets and assumed liabilities. |
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student housing community [Domain] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination Disclosure | The Company allocated the asset's fair value and capitalized acquisition costs to the acquired assets and liabilities based upon their fair values, as shown in the following table. The purchase price allocations were based upon the Company's best estimates of the fair values of the acquired assets and liabilities.
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Table of Properties Acquired | During the three-month period ended March 31, 2019, the Company completed the acquisition of Haven49, a 322-unit, 887-bed student housing property adjacent to the University of North Carolina at Charlotte. The Company effectuated the acquisition via a negotiated agreement whereby the Company accepted the membership interest in the Haven49 project entity in satisfaction of the project indebtedness owed to the Company. See Note 4. |
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Retail Segment [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination Disclosure | Preferred Office Properties assets acquired The Company had no acquisitions of office building assets during the three-month period ended March 31, 2019. On January 29, 2018, the Company acquired Armour Yards, a collection of four adaptive re-use office buildings comprised of approximately 187,000 square feet of office space in Atlanta, Georgia. The aggregate purchase price was approximately $66.5 million, exclusive of acquired escrows, security deposits, prepaids, capitalized acquisition costs and other miscellaneous assets and assumed liabilities. The Company allocated the purchase price and capitalized acquisition costs to the acquired assets and liabilities based upon their fair values, as shown in the following table. The purchase price allocations were based upon the Company's best estimates of the fair values of the acquired assets and liabilities.
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Real Estate Loans, Notes Receivable, and Lines of Credit (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block] |
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Financing Receivable Credit Quality Indicators [Table Text Block] | At March 31, 2019, the Company's portfolio of real estate loan investments by credit quality indicator was:
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Notes receivable [Table Text Block] | ur portfolio of notes and lines of credit receivable consisted of:
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interest income [Table Text Block] | The Company recorded interest income and other revenue from these instruments as follows:
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Redeemable Preferred Stock Proceeds and offering costs (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stockholders Equity [Table Text Block] | As of March 31, 2019, cumulative gross proceeds and offering costs for our active equity offerings consisted of:
(1) Included in the $300 million Shelf Offering is a total of $150 million allocated for the 2016 ATM Offering, which is not listed separately. (2) These offering costs specifically identifiable to Unit offering closing transactions, such as commissions, dealer manager fees, and other registration fees, are reflected as a reduction of stockholders' equity at the time of closing. (3) On April 25, 2019, the Company's 2019 Shelf Registration Statement was declared effective. Aggregate offering expenses of the $1.5 Billion Unit Offering, including selling commissions and dealer manager fees, and of the mShares Offering, including dealer manager fees, are each individually capped at 11.5% of the aggregate gross proceeds of the two offerings, of which the Company will reimburse its Manager up to 1.5% of the gross proceeds of such offerings for all organization and offering expenses incurred, excluding selling commissions and dealer manager fees for the $1.5 Billion Unit Offering and excluding dealer manager fees for the mShares Offering; however, upon approval by the conflicts committee of the board of directors, the Company may reimburse its Manager for any such expenses incurred above the 1.5% amount as permitted by the Financial Industry Regulatory Authority, or FINRA. |
Related Party Transactions (Tables) |
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Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Related Party Transactions [Table Text Block] | In addition to property management fees, the Company incurred the following reimbursable on-site personnel salary and related benefits expenses at the properties, which are listed on the Consolidated Statements of Operations:
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Dividends Dividend characterization (Tables) |
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Dividend characterization [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
dividends and distributions [Text Block] | Dividends and Distributions The Company declares and pays monthly cash dividend distributions on its Series A Preferred Stock in the amount of $5.00 per share per month and beginning in March 2017, on its Series M Preferred Stock, on an escalating scale of $4.79 per month in year one, increasing to $6.25 per month in year eight and beyond. All preferred stock dividends are prorated for partial months at issuance as necessary. The Company declared aggregate quarterly cash dividends on its Common Stock of $0.26 and $0.25 per share for the three-month periods ended March 31, 2019 and 2018, respectively. The holders of Class A OP Units of the Operating Partnership are entitled to equivalent distributions as the dividends declared on the Common Stock. At March 31, 2019, the Company had 879,335 Class A OP Units outstanding, which are exchangeable on a one-for-one basis for shares of Common Stock or the equivalent amount of cash. The Company's dividend and distribution activity consisted of:
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Equity Compensation (Tables) |
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Equity Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] | The underlying valuation assumptions and results for the 2018 Class B OP Unit awards were:
The expected dividend yield assumptions were derived from the Company’s closing prices of the Common Stock on the grant dates and the projected future quarterly dividend payments per share of $0.25 for the 2018 awards. For the 2018 awards, the Company's own stock price history was utilized as the basis for deriving the expected volatility assumption. The risk-free rate assumptions were obtained from the Federal Reserve yield table and were calculated as the interpolated rate between the 20 and 30 year yield percentages on U. S. Treasury securities on the grant date. Since the Class B OP Units have no expiration date, a derived service period of one year was utilized, which equals the period of time from the grant date to the initial valuation date. Restricted Stock Units The Company, through its Operating Partnership, has granted restricted stock units, or RSUs, to certain employees of affiliates of the Company, as shown in the following table:
The RSUs vest in three equal consecutive one-year tranches from the date of grant. For each grant, on the Initial Valuation Date, the market capitalization of the number of shares of Common Stock at the date of grant is compared to the market capitalization of the same number of shares of Common Stock at the Initial Valuation Date. If the market capitalization measure results in an increase which exceeds the target market threshold, the Vested RSUs become earned RSUs and automatically convert into Common Stock on a one-to-one basis. Vested RSUs may become Earned RSUs on a pro-rata basis should the result of the market capitalization test be an increase of less than the target market threshold. Any Vested RSUs that do not become Earned RSUs on the Initial Valuation Date are subsequently remeasured on a quarterly basis until such time as all Vested RSUs become Earned RSUs or are forfeited due to termination of continuous service due to an event other than as a result of a qualified event, which is generally the death or disability of the holder. Continuous service through the final valuation date is required for the Vested RSUs to qualify to become fully Earned RSUs. Because RSUs are valued using the identical market condition vesting requirement that determines the transition of the Vested Class B Units to Earned Class B Units, the same valuation assumptions per RSU were utilized to calculate the total fair values of the RSUs. The total fair value amounts pertaining to grants of RSUs, net of forfeitures, are amortized as compensation expense over the three one-year periods ending on the three successive anniversaries of the grant dates. |
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equity compensation expense [Table Text Block] | Equity compensation expense by award type for the Company was:
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ClassBUnitGrantsvaluationassumptions [Table Text Block] | The underlying valuation assumptions and results for the 2018 Class B OP Unit awards were:
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Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block] | Restricted Stock Grants The following annual grants of restricted stock were made to members of the Company's independent directors, as payment of the annual retainer fees. The restricted stock grants for the 2017 and 2018 service years vested (or are scheduled to vest) on a pro-rata basis over the four consecutive 90-day periods following the date of grant.
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Equity Compensation RSUs (Tables) |
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Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block] | Restricted Stock Grants The following annual grants of restricted stock were made to members of the Company's independent directors, as payment of the annual retainer fees. The restricted stock grants for the 2017 and 2018 service years vested (or are scheduled to vest) on a pro-rata basis over the four consecutive 90-day periods following the date of grant.
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Indebtedness (Tables) |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments [Table Text Block] | he following table summarizes our mortgage notes payable at March 31, 2019:
Mortgage Financing of Property Acquisitions The Company partially financed the real estate properties acquired during the three-month period ended March 31, 2019 with mortgage debt as shown in the following table:
(1) The Company assumed the existing construction loan on this property. |
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debt covenant [Table Text Block] | As of March 31, 2019, the Company was in compliance with all covenants related to the Revolving Line of Credit, as shown in the following table:
(1) All covenants are as defined in the credit agreement for the Revolving Line of Credit. (2) Minimum of $686.9 million plus 75% of the net proceeds of any equity offering, which totaled approximately $922.0 million as of March 31, 2019. (3) Calculated on a trailing four-quarter basis. For the three-month period ended March 31, 2019, the maximum dividends and distributions allowed under this covenant was approximately $149.6 million. |
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mortgage interest [Table Text Block] | c |
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Schedule of Maturities of Long-term Debt [Table Text Block] | of March 31, 2019 were:
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Schedule of Debt [Table Text Block] | Interest expense, including amortization of deferred loan costs was:
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Segment information (Tables) |
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Segment Reporting Information [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Revenue from Segments to Consolidated [Table Text Block] | Total revenues by reportable segment of the Company were:
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Segment Reporting Disclosure [Text Block] | Segment Information The Company's Chief Operating Decision Maker, or CODM, evaluates the performance of the Company's business operations and allocates financial and other resources by assessing the financial results and outlook for future performance across five distinct segments: multifamily communities, student housing properties, real estate related financing, New Market Properties and Preferred Office Properties. Multifamily Communities - consists of the Company's portfolio of owned residential multifamily communities Student Housing Properties - consists of the Company's portfolio of owned student housing properties. Financing - consists of the Company's portfolio of real estate loans, bridge loans, and other instruments deployed by the Company to partially finance the development, construction, and prestabilization carrying costs of new multifamily communities and other real estate and real estate related assets, as well as the Company's investments in the Series 2018-ML04 and Series 2019-ML05 mortgage-backed pools. Excluded from the financing segment are consolidated assets of VIEs and financial results of the Company's Dawson Marketplace grocery-anchored shopping center real estate loan, which are included in the New Market Properties segment. New Market Properties - consists of the Company's portfolio of grocery-anchored shopping centers, which are owned by New Market Properties, LLC, a wholly-owned subsidiary of the Company, as well as the financial results from the Company's grocery-anchored shopping center real estate loans. Preferred Office Properties - consists of the Company's portfolio of office buildings. The CODM monitors net operating income (“NOI”) on a segment and a consolidated basis as a key performance measure for its operating segments. NOI is defined as rental and other property revenue from real estate assets plus interest income from its loan portfolio less total property operating and maintenance expenses, property management fees, real estate taxes, property insurance, and general and administrative expenses. The CODM uses NOI as a measure of operating performance because it provides a measure of the core operations, rather than factoring in depreciation and amortization, financing costs, acquisition expenses, and other expenses generally incurred at the corporate level. The following tables present the Company's assets, revenues, and NOI results by reportable segment, as well as a reconciliation from NOI to net income (loss). The assets attributable to 'Other' primarily consist of deferred offering costs recorded but not yet reclassified as reductions of stockholders' equity and cash balances at the Company and Operating Partnership levels.
Total capitalized expenditures (inclusive of additions to construction in progress, but exclusive of the purchase price of acquisitions) for the three-month periods ended March 31, 2019 and 2018 were as follows:
Second-generation capital expenditures exclude those expenditures made in our office building portfolio (i) to lease space to "first generation" tenants (i.e. leasing capital for existing vacancies and known move-outs at the time of acquisition), (ii) to bring recently acquired properties up to our Class A ownership standards (and which amounts were underwritten into the total investment at the time of acquisition), (iii) for property re-developments and repositionings and (iv) for building improvements that are recoverable from future operating cost savings. Total revenues by reportable segment of the Company were:
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segment assets [Table Text Block] |
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Schedule of Segment Reporting Information, by Segment [Table Text Block] |
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Loss per Share (Tables) |
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earnings loss per share [Table Text Block] |
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Fair Values of Financial Instruments (Tables) |
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Fair Value Measurements, Nonrecurring [Table Text Block] |
(1) The carrying value of real estate assets at December 31, 2018 included the Company's balance of the Palisades real estate loan investment, which included the amounts funded by an unrelated participant. On March 13, 2019, the Company repurchased the loan participant's 25% balance in the loan from the loan participant and at March 31, 2019, carried the entire loan balance on its consolidated balance sheet without reflection of any liability to any third party. The fair value of the real estate loans within the level 3 hierarchy are comprised of estimates of the fair value of the notes, which were developed utilizing a discounted cash flow model over the remaining terms of the notes until their maturity dates and utilizing discount rates believed to approximate the market risk factor for notes of similar type and duration. The fair values also contain a separately-calculated estimate of any applicable additional interest payment due the Company at the maturity date of the loan, based on the outstanding loan balances at March 31, 2019, discounted to the reporting date utilizing a discount rate believed to be appropriate for multifamily development projects. The fair values of the fixed rate mortgages on the Company’s properties were developed using market quotes of the fixed rate yield index and spread for 4, 5, 6, 7, 10, 15, 25 and 35 year notes as of the reporting date. The present values of the cash flows were calculated using the original interest rate in place on the fixed rate mortgages and again at the current market rate. The difference between the two results was applied as a fair market adjustment to the carrying value of the mortgages. The following table presents activity of the two mortgage pools from the Freddie Mac K Program as of and for the three-month period ended March 31, 2019:
The following table presents the level 3 input used to calculate the fair value of the consolidated assets and liabilities of the two VIEs:
The following tables present the estimated fair values of the consolidated assets and liabilities from the two VIEs, for which the Company has elected the fair value option.
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Operating Leases (Tables) |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block] |
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Organization (Details) |
Mar. 31, 2019
$ / shares
shares
|
Dec. 31, 2018
$ / shares
shares
|
---|---|---|
Class of Stock [Line Items] | ||
Common Stock, Par or Stated Value Per Share | $ / shares | $ 0.01 | |
Common Stock, Shares, Outstanding | 43,237,726 | |
Noncontrolling Interest, Ownership Percentage by Parent | 98.00% | |
minority interest partnership units outstanding | 879,335 | |
daycountvolweightedavgcalcformarketvalue | 20 | |
Common Stock [Member] | ||
Class of Stock [Line Items] | ||
Common Stock, Par or Stated Value Per Share | $ / shares | $ 0.01 | $ 0.01 |
Common Stock, Shares, Outstanding | 43,238,000 | 41,776,000 |
Significant Accounting Policies (Details) - shares |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Series M Preferred Stock [Member] | ||
Real Estate Properties [Line Items] | ||
preferred stock | 57,000 | 44,000 |
Series A Preferred Stock [Member] | ||
Real Estate Properties [Line Items] | ||
preferred stock | 1,804,000 | 1,674,000 |
Real Estate Assets Contributions to revenue and net income (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Business Combination, Separately Recognized Transactions [Line Items] | ||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | $ (2,280) | $ 14,263 |
Real Estate Assets Real estate assets correction (Details) - USD ($) |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Investment Building and Building Improvements | $ 2,826,609,000 | $ 2,738,085,000 |
Tenant Improvements | $ 131,117,000 | $ 128,914,000 |
Real Estate Assets purchase options (Details) - USD ($) |
3 Months Ended | 6 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Jun. 30, 2018 |
Dec. 31, 2018 |
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Property, Plant and Equipment [Line Items] | ||||
purchase option termination fees received | $ 7,900,000 | |||
amortization of purchase option termination fee income | $ 4,233,000 | $ 0 | $ 3,100,000 | $ 1,200,000 |
Acquired Intangible Assets amortization (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Finite-Lived Intangible Assets [Line Items] | ||
Finite-Lived Intangible Liabilities | $ 63,900 | |
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | $ (2,280) | $ 14,263 |
Real Estate Loans, Notes Receivable, and Lines of Credit Interest income (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Jun. 30, 2018 |
Dec. 31, 2018 |
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Receivables [Abstract] | ||||
interest revenue current pay | $ 7,469 | $ 8,506 | ||
Accrued exit fee revenue | 3,385 | 4,726 | ||
Deferred Revenue, Revenue Recognized | 315 | 431 | ||
amortization of purchase option termination fee income | 4,233 | 0 | $ 3,100 | $ 1,200 |
Net loan fee revenue | 15,402 | 13,663 | ||
interest revenue notes receivable | 1,490 | 902 | ||
Interest income on loans and notes receivable | $ 17,090 | $ 14,565 |
Real Estate Loans, Notes Receivable, and Lines of Credit phantom facts (Details) - USD ($) |
3 Months Ended | ||||
---|---|---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
Sep. 30, 2018 |
Jan. 01, 2018 |
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Mortgage Loans on Real Estate [Line Items] | |||||
loan commitment guaranty limit amount | $ 2,000,000 | ||||
line of credit receivable | $ 41,320,000 | ||||
Deferred interest rate | 4.10% | 5.34% | |||
current interest rate | 8.47% | 8.47% | |||
loan commitment guaranty percent | 25.00% | ||||
Oxford Capital Partners LLC [Member] | |||||
Mortgage Loans on Real Estate [Line Items] | |||||
line of credit receivable | $ 8,000,000 | ||||
interest rate note receivable | 12.00% | ||||
360 Residential [Member] | |||||
Mortgage Loans on Real Estate [Line Items] | |||||
interest rate note receivable | 12.00% | 8.00% |
Real Estate Loans, Notes Receivable, and Lines of Credit CMBS (Details) $ in Millions |
Mar. 28, 2019
USD ($)
|
Mar. 23, 2018
USD ($)
|
Mar. 31, 2019
USD ($)
|
---|---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Variable Interest Entity, Reporting Entity Involvement, Maximum Loss Exposure, Amount | $ 338.3 | ||
Mortgage Backed Securities, Other [Member] | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
number of loans in CMBS trust | 21 | 20 | |
total maturity amount of CMBS pool | $ 295.7 | $ 276.3 | |
CMBS b piece maturity | 16 years 1 month | 16 years | |
CMBS B piece maturity amount | $ 29.6 | ||
yield to maturity CMBS | 0.00% | 0.00% | |
2018-ML04 [Domain] | Mortgage Backed Securities, Other [Member] | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
CMBS B piece maturity amount | $ 27.6 |
Dividends (Details) - USD ($) |
3 Months Ended | 9 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Sep. 30, 2018 |
Dec. 31, 2016 |
|
Dividends Payable [Line Items] | ||||
minority interest partnership units outstanding | 879,335 | |||
Common Stock, Dividends, Per Share, Declared | $ 0.26 | $ 0.25 | $ 0.260 | $ 0.8175 |
dividends common stock declared | $ 11,195,000 | $ 9,802,000 | ||
Dividends, Preferred Stock, Cash | $ 36,964,000 | 29,587,000 | ||
Common Stock, Shares, Outstanding | 43,237,726 | |||
Series A Preferred Stock [Member] | ||||
Dividends Payable [Line Items] | ||||
Preferred Stock, Dividend Rate, Per-Dollar-Amount | $ 5.00 | |||
Dividends, Preferred Stock, Cash | $ 24,734,000 | $ 19,204,000 | ||
Minimum [Member] | mShares [Domain] | ||||
Dividends Payable [Line Items] | ||||
Preferred Stock, Dividend Rate, Per-Dollar-Amount | $ 4.79 | |||
Maximum [Member] | mShares [Domain] | ||||
Dividends Payable [Line Items] | ||||
Preferred Stock, Dividend Rate, Per-Dollar-Amount | $ 6.25 |
Dividends Series A Preferred Dividends (Details) - USD ($) |
3 Months Ended | 9 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Sep. 30, 2018 |
Dec. 31, 2016 |
|
Dividends Payable [Line Items] | ||||
Common Stock, Dividends, Per Share, Declared | $ 0.26 | $ 0.25 | $ 0.260 | $ 0.8175 |
Dividends, Preferred Stock, Cash | $ 36,964,000 | $ 29,587,000 | ||
Distribution Made to Limited Partner, Cash Distributions Declared | 229,000 | 268,000 | ||
dividends common stock declared | 11,195,000 | 9,802,000 | ||
Series A Preferred Stock [Member] | ||||
Dividends Payable [Line Items] | ||||
Dividends, Preferred Stock, Cash | 24,734,000 | 19,204,000 | ||
Series M Preferred Stock [Member] | ||||
Dividends Payable [Line Items] | ||||
Dividends, Preferred Stock, Cash | $ 806,000 | $ 313,000 |
Dividends NCI (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Equity [Abstract] | ||
Distribution Made to Limited Partner, Cash Distributions Declared | $ 229,000 | $ 268,000 |
Equity Compensation Warrant (Details) - $ / shares |
3 Months Ended | 9 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Sep. 30, 2018 |
Dec. 31, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Common Stock, Dividends, Per Share, Declared | $ 0.26 | $ 0.25 | $ 0.260 | $ 0.8175 |
Indebtedness debt covenants (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Sep. 30, 2016 |
|
debt covenants [Line Items] | ||
dividend restriction AFFO | 95.00% | |
Line of Credit Facility, Maximum Borrowing Capacity | $ 200,000,000 | |
minimum equity debt covenants | $ 687,000,000 | |
equity raise above min equity required | 75.00% | |
total debt covenant min equity | $ 922,000,000 | |
maximum dividends debt covenant | 149,600,000 | |
Minimum Net Worth Required for Compliance | $ 1,700,000,000 | |
debt yield | 10.00% | |
payout ratio | 86.50% | |
Total leverage ratio | 57.30% |
Indebtedness New mortgages (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Mar. 31, 2019 |
Sep. 30, 2018 |
Dec. 31, 2018 |
|
Debt Instrument [Line Items] | |||
Long-term Debt | $ 2,359,939,000 | $ 2,299,625,000 | |
Debt Issuance Costs, Net | 1,753,000 | $ 1,916,000 | |
Mortgages [Member] | |||
Debt Instrument [Line Items] | |||
Long-term Debt | 2,400,253,000 | ||
SoL [Member] | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Basis Spread on Variable Rate | 20000.00% | ||
Long-term Debt | 37,500,000 | ||
Debt Issuance Costs, Net | $ 41,000 | ||
retreat at greystone [Member] | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Basis Spread on Variable Rate | 18500.00% | ||
Aldridge at Town Village [Member] | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Basis Spread on Variable Rate | 18500.00% | ||
SoL [Member] | Mortgages [Member] | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Basis Spread on Variable Rate | 21000.00% |
Income Taxes (Details) - USD ($) |
Mar. 31, 2019 |
Dec. 31, 2010 |
---|---|---|
Operating Loss Carryforwards [Line Items] | ||
Deferred Tax Assets, Net of Valuation Allowance | $ 298,100 | |
DeferredTaxAssetsValuationAllowancePercentage | 100.00% |
Commitments and Contingencies (Details) - USD ($) |
3 Months Ended | 9 Months Ended |
---|---|---|
Mar. 31, 2019 |
Sep. 30, 2018 |
|
Commitments and Contingencies Disclosure [Abstract] | ||
lease term | 11 years | |
guaranty cap amount | $ 5,500,000 | |
Annual reduction in guaranty cap | 600,000 | |
guaranty cap amount credit cards | 640,000 | |
cumulative manager's fees deferred | $ 15,300,000 | $ 15,300,000 |
real estate loan balances unfunded | 145,900,000 | |
Unfunded Tenant Leasing Commissions and Tenant Allowances | $ 9,000,000 |
Schedule IV (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Mortgage Loans on Real Estate [Line Items] | ||
current interest rate | 8.47% | 8.47% |
Deferred interest rate | 4.10% | 5.34% |
Mortgage Loans on Real Estate, Carrying Amount of Mortgages | $ 336,138,000 |
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