EX-99.1 2 aptssfd3q2021.htm APTS 3Q2021 PRESS RELEASE AND SUPPLEMENTAL FINANCIAL DATA Document

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Preferred Apartment Communities, Inc. Reports Results
for Third Quarter 2021

Total Revenues
$111.0 million for Q3 2021; $345.4 million for the nine months ended September 30, 2021
______________
Net Loss Per Share
($0.92) per share for Q3 2021; ($2.30) per share for the nine months ended September 30, 2021
______________
Core FFO per Share*
$0.28 per share for Q3 2021; $0.86 per share for the nine months ended September 30, 2021
______________
AFFO Per Share*
$0.40 per share for Q3 2021; $0.75 per share for the nine months ended September 30, 2021
______________
Multifamily Same Store Results*
Same-store rental and other property revenues increased 7.5% and
same-store net operating income increased 8.8% for Q3 year over year
______________
Four Multifamily Communities Acquired
During Third Quarter 2021
12,052 multifamily units now owned by PAC
______________
Sale of Seven Office Assets Closed During Third Quarter 2021
Transaction also included one office real estate loan investment
Total consideration of $725 million
______________
Guidance Raised
Core FFO range raised to $1.00 - $1.07 for full year 2021


*Core FFO and AFFO results are per weighted-average share and Class A OP Unit outstanding. Core FFO, AFFO and same-store net operating income are non-GAAP measures that are defined beginning on page S-19.
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Atlanta, GA, November 8, 2021
    Preferred Apartment Communities, Inc. (NYSE: APTS) ("we," "our," the "Company," "Preferred Apartment Communities" or "PAC") today reported results for the quarter ended September 30, 2021. Unless otherwise indicated, all per share results are reported based on the basic weighted average shares of Common Stock and Class A Units ("Class A Units") of the Preferred Apartment Communities Operating Partnership (our "Operating Partnership") outstanding. See Definitions of Non-GAAP Measures on page S-19.

“The third quarter was an extremely active one for PAC as we continue to execute on our strategic capital recycling initiatives. After completing the sale of the vast majority of our office properties, we immediately put into play our plan to recycle capital into high-quality Sunbelt multifamily assets and with calls and redemptions of Series A Preferred stock in excess of $300 million. As a result of our redeployment efforts, we now have a simplified portfolio with higher embedded organic growth opportunities and lower capital requirements, as well as improved balance sheet flexibility. Our Sunbelt market focus continues to provide an excellent fundamental backdrop in the form of long-term population and job growth, which contributes to sustained high occupancy and NOI growth in our assets. These fundamentals and the quality and vintage of our multifamily portfolio are continuing to produce strong results, with top line same store revenue growth of 7.5% and same-store NOI growth of 8.8%. For the third quarter, our same-store properties had 24.1% rent growth for new leases and 8.8% for renewals for a blended 15.6% increase. This rent growth we saw in the third quarter has continued into October as our new leases are up 25.6% and our renewals have increased 13.3% for a blended 18.6% increase. We look forward to building on these achievements for the balance of the year and into 2022 and beyond.” stated Joel Murphy, Preferred Apartment Communities Chairman and Chief Executive Officer.


Conference Call and Supplemental Data

    We will hold our quarterly conference call on Tuesday, November 9, 2021 at 11:00 a.m. Eastern Time to discuss our third quarter 2021 results. To participate in the conference call, please dial in to the following:

Live Conference Call Details
Dial-in Number: 1-877-883-0383
International Dial-in Number: 1-412-902-6506
Company: Preferred Apartment Communities, Inc.
Date: Tuesday, November 9, 2021
Time: 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time)
Passcode: 5239504

    The live broadcast of PAC's third quarter 2021 conference call will be available online on a listen-only basis at the company's website, www.pacapts.com, under "Investors" and then click on the "News and Events" heading.

A replay of the call will be archived on PAC's' website under Investors/News and Events/Events.


For Further Information

Paul Cullen
Executive Vice President-Investor Relations    
Chief Marketing Officer
investorrelations@pacapts.com
770-818-4144





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Operating Results
    
    Our operating results are presented below.
Three months ended September 30,% changeNine months ended September 30,% change
2021202020212020
Revenues (in thousands)
$111,012 $126,452 (12.2)%$345,418 $380,314 (9.2)%
Per share data:
Net income (loss) (1)
$(0.92)$(0.79)— $(2.30)$(6.21)— 
FFO (2)
$(0.31)$0.17 — $0.07 $(3.17)— 
Core FFO (2)
$0.28 $0.26 7.7 %$0.86 $0.77 11.7 %
AFFO (2)
$0.40 $0.07 471.4 %$0.75 $0.58 29.3 %
Dividends (3)
$0.175 $0.175 — $0.525 $0.6125 (14.3)%
(1) Per weighted average share of Common Stock outstanding for the periods indicated.
(2) FFO, Core FFO and AFFO results are presented per basic weighted average share of Common Stock and Class A Unit in our Operating Partnership outstanding for the periods indicated. See Reconciliations of FFO Attributable to Common Stockholders and Unitholders, Core FFO and AFFO to Net Income (Loss) Attributable to Common Stockholders beginning on page S-3 and Definitions of Non-GAAP Measures beginning on page S-19.
(3) Per share of Common Stock and Class A Unit outstanding.


Financial

Our total revenues for the quarter ended September 30, 2021 decreased approximately $15.4 million, or 12.2%, to $111.0 million from the quarter ended September 30, 2020, due to the absence of revenues from the eight student housing properties that we sold on November 3, 2020 and the seven office properties and one real estate loan investment that we sold during the third quarter 2021. The student housing properties contributed approximately $12.5 million, or 9.9% of our total revenues and the disposed office properties and real estate loan investment contributed approximately $17.3 million, or 13.7% of our total revenues for the quarter ended September 30, 2020. Excluding the contributions of these disposed assets, our year-over-year total revenues would have increased $7.7 million, or 8%.

Our net loss per share was $(0.92) and $(0.79) for the three-month periods ended September 30, 2021 and 2020, respectively. Funds From Operations, or FFO, was $(0.31) and $0.17 per weighted average share of Common Stock and Class A Unit outstanding for the three months ended September 30, 2021 and 2020, respectively. The decrease in FFO per share was driven by:

*deemed dividends due to calls and cash redemptions of our preferred stock of $(0.51) per share;
*lower FFO resulting from the sale of our student housing properties in the fourth quarter 2020 and seven office properties and one real estate loan investment in the third quarter of 2021 of $(0.14) per share;
*partially offset by lower cash dividend requirements on our preferred stock of $0.13 per share; and
*improved multifamily same-store results of $0.04 per share.

Our Core FFO per share increased to $0.28 for the third quarter 2021 from $0.26 for the third quarter 2020, due to:

*lower cash dividend requirements on our preferred stock of $0.13 per share;
*improved multifamily same-store results of $0.04 per share; and
*lower FFO resulting from the sale of our student housing properties in the fourth quarter 2020 and seven office properties and one real estate loan investment in the third quarter of 2021 of $(0.14) per share.

Our AFFO per share increased to $0.40 for the third quarter 2021 from $0.07 for the third quarter 2020 due to:

*accrued interest income received of $0.16 per share;
*lower cash dividend requirements on our preferred stock of $0.13 per share;
*cash received from purchase option termination agreements of $0.06 per share;
*smaller adjustments to remove non-cash revenues from amortization of deferred revenues, straight-line rent adjustments, above and below market leases and lease inducements of $0.05;
*improved multifamily same-store results of $0.04 per share; and
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*lower FFO resulting from the sale of our student housing properties in the fourth quarter 2020 and seven office properties and one real estate loan investment in the third quarter of 2021 of $(0.14) per share.


Our Core FFO payout ratio to Common Stockholders and Unitholders was approximately 63.7% and our Core FFO payout ratio to our preferred stockholders was approximately 79.5% for the third quarter 2021. (A)

Our AFFO payout ratio to Common Stockholders and Unitholders was approximately 44.6% and our AFFO payout ratio to our preferred stockholders was approximately 73.1% for the third quarter 2021.

As of September 30, 2021, our total assets were approximately $3.7 billion, a net decrease from our total assets of approximately $4.7 billion at September 30, 2020, that primarily resulted from the sale of seven office properties during the third quarter 2021 and of our student housing portfolio during the fourth quarter 2020, offset by the acquisition of five multifamily communities (net of dispositions).

(A) We calculate the Core FFO and AFFO payout ratios to Common Stockholders as the ratio of Common Stock dividends and distributions to Core FFO and AFFO. We calculate the Core FFO and AFFO payout ratios to preferred stockholders as the ratio of Preferred Stock dividends to the sum of Preferred Stock dividends and Core FFO and AFFO. Since our operations resulted in a net loss from continuing operations for the periods presented, a payout ratio based on net loss is not calculable. See Definitions of Non-GAAP Measures on page S-19.


Operational

Our multifamily communities' same-store rental and other property revenues increased 7.5%, same-store property operating expenses increased 5.7% and same-store net operating income increased 8.8% for the quarter ended September 30, 2021 versus 2020. Our same-store multifamily communities include all our multifamily communities except Artisan at Viera, The Menlo, The Blake, Parkside at the Beach, Horizon at Wiregrass, The Ellison, Alleia at Presidio, The Anson, The Kingson, and Chestnut Farm, all of which were acquired in the last 26 months.

Our rental rates for our multifamily same-store properties for new and renewal leases increased 24.1% and 8.8% respectively and 15.6% blended for third quarter 2021 as compared to the expiring leases, excluding shorter-term leases of six months or less.

Our rental rates for our multifamily same-store properties for new and renewal leases increased 25.6% and 13.3% respectively and 18.6% blended for October 2021 as compared to the expiring leases, excluding shorter-term leases of six months or less.

As of September 30, 2021, the average age of our multifamily communities was approximately 6.1 years, which we believe is the youngest in the public multifamily REIT industry.

As of September 30, 2021, all of our owned multifamily communities had achieved stabilization except for The Ellison (that was acquired on June 30, 2021), and Alleia at Presidio, The Anson, The Kingson, and Chestnut Farm, which were all acquired during the third quarter 2021. We define stabilization as reaching 93% occupancy for all three consecutive months within a single quarter.

The average physical occupancy of our same-store multifamily communities increased to 97.1% for the three-month period ended September 30, 2021 from 95.6% for the three-month period ended September 30, 2020 and 96.8% for the three-month period ended June 30, 2021.

Our average recurring rental revenue collections were approximately 99.2% for multifamily communities and 99.2% for grocery-anchored retail properties for the third quarter 2021.


Financing and Capital Markets

As of September 30, 2021, approximately 95.1% of our permanent property-level mortgage debt has fixed interest rates and approximately 0.9% has variable interest rates which are capped. We believe we are well protected against potential increases in market interest rates. Our overall weighted average interest rate for our mortgage debt portfolio was 3.3% for multifamily communities, 4.2% for office properties, 3.9% for grocery-anchored retail properties and 3.5% in the aggregate.
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During the third quarter 2021, we issued and sold an aggregate of 37,009 shares of preferred stock and redeemed or called an aggregate of 305,802 shares of preferred stock, resulting in a net reduction of 268,793 outstanding shares of preferred stock, for a net redemption of approximately $272.0 million.

At September 30, 2021, our leverage, as measured by the ratio of our debt to the undepreciated book value of our total assets, was approximately 57.6%.

At September 30, 2021, we had $200.0 million available to be drawn on our revolving line of credit.

During the third quarter 2021, we issued and sold an aggregate of 1,167,626 shares of Common Stock under our 2019 ATM Offering, generating gross proceeds of approximately $12.9 million and, after deducting commissions and other costs, net proceeds of approximately $12.7 million.


Significant Transactions
During the third quarter 2021, we closed on the acquisition of four multifamily communities and the disposition of one multifamily community:

Multifamily CommunityLocationUnits
Acquisitions:
Alleia at PresidioFort Worth, Texas231 
The AnsonNashville, Tennessee301 
The KingsonFredericksburg, Virginia240 
Chestnut FarmCharlotte, North Carolina256 
Total1,028 
Disposition:
VineyardsHouston, Texas369 

During the third quarter 2021, we closed on the disposition of the following office buildings:

PropertyLocationGross Leasable Area ("GLA"), SF
Galleria 75Atlanta, Georgia111,000 
150 FayettevilleRaleigh, North Carolina560,000 
Capitol TowersCharlotte, North Carolina479,000 
CAPTRUST TowerRaleigh, North Carolina300,000 
Morrocroft CentreCharlotte, North Carolina291,000 
Armour Yards Portfolio (1)
Atlanta, Georgia222,000 
Total1,963,000 
(1) Includes the Armour Yards and the 251 Armour Yards assets.



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During the third quarter 2021, we received the full principal and interest amounts due from the repayment of eleven real estate loan investments associated with six properties that totaled approximately $114.1 million, plus purchase option termination fee proceeds of approximately $5.4 million. These transactions collectively returned approximately $119.5 million of capital to us during the third quarter for investment, preferred stock redemptions, or other corporate purposes. Of the six properties represented by these loan payoffs, we acquired three of the assets.

On August 11, 2021, we originated a real estate loan investment of up to approximately $23.2 million, in support of the development of a 352-unit multifamily community in suburban Atlanta, Georgia.

Subsequent to Quarter End

On October 14, 2021, we closed on a real estate loan investment of up to approximately $16.6 million supporting a 337-unit second phase of The Menlo multifamily community in Jacksonville, Florida.

On October 21, 2021, we closed on supplemental notes payable (i) with a principal amount of approximately $7.3 million supporting our Retreat at Greystone multifamily community that bears a fixed interest rate of 3.47% per annum and matures on December 1, 2024 and (ii) with a principal amount of approximately $3.7 million supporting our Aldridge at Town Village multifamily community that bears a fixed interest rate of 3.46% per annum and matures on November 1, 2024.

On October 28, 2021, our board of directors declared a quarterly dividend on our Common Stock of $0.175 per share, payable on January 14, 2022 to stockholders of record on December 15, 2021.

Between October 1, 2021 and October 31, 2021, we issued 49,049 shares of Common Stock under the 2019 ATM Offering at an average price of $12.43 per share, for aggregate gross proceeds of approximately $610,000 and, after deducting commissions and other costs, net proceeds of approximately $600,000.

Between October 1, 2021 and October 31, 2021, we issued 2,882 shares of Series M1 Preferred Stock and collected net proceeds of approximately $2.8 million after commissions and fees. During the same period, we redeemed 2,001 shares of Series A Preferred Stock, 267 mShares, 8 shares of Series A1 Preferred Stock, and 193 shares of Series M1 Preferred Stock.

On November 1, 2021, we repaid the mortgage debt in the amount of $27.4 million supporting our Champions Village grocery-anchored shopping center, and on November 2, 2021, we financed our Woodstock Crossing grocery-anchored shopping center with a $5.3 million mortgage bearing interest at a fixed rate of 2.89% per annum that matures on December 1, 2026.

On November 3, 2021, we closed on a real estate loan investment of up to $9.1 million, in support of a 246-unit multifamily community located in the Atlanta, Georgia MSA.


2021 Guidance

    Net income (loss) per share - We are continuing to add properties and real estate loan investments to our real estate portfolio and the specific timing of the closing of acquisitions is difficult to predict. Acquisition activity by its nature can cause material variation in our reported depreciation and amortization expense and interest income. Since net income (loss) per share is calculated net of depreciation and amortization expense, our net income (loss) results can fluctuate, possibly significantly, depending upon the timing of the closing of acquisitions. For this reason, we are unable to reasonably forecast this measure or provide a reconciliation of our projected FFO per share to this measure.
    Core FFO - We are revising our guidance today to reflect the impact of the third quarter’s performance and milestones. We now expect Core FFO per share in the range of $1.00 to $1.07 for the full year 2021, reflecting a general increase in our expectation and a tightening of the range as we close in on the end of the year.

Underpinning this guidance are the following updated assumptions:

Same Store Multifamily NOI Growth of 5.5% to 7% -- We are raising the low end of the range from our prior range of 5.0% to 7.0%,
$300MM to $400MM of acquisitions of multifamily properties, unchanged from previous guidance and
New real estate loan investment originations of $50-$100MM, which is also unchanged from previous guidance.

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Our guidance continues to include the impact of purchase option terminations revenues and CECL reserve reversals as a result of real estate loan investments being repaid, which in combination with the accelerating growth in the multifamily portfolio, is helping to offset the dilution of the office portfolio sale in the short term. The increase in purchase option revenue represents a significant acceleration of payoffs and acquisitions of properties that were originally contemplated in 2022. This acceleration will have a material benefit to our results in 2021, to the detriment of the results in 2022. These one-time items will be very difficult to replace going forward, as we have fewer purchase option termination revenue opportunities in our loan investment portfolio today. In addition, as we discussed last quarter, our largest loan investment in San Jose, California is scheduled to mature in Q1 2022. There is a chance it will pay off in Q4 2021, which would have a dramatic impact on both 2021 results to the positive, and 2022 results to the negative.

AFFO, Core FFO and FFO are calculated after deductions for all preferred stock dividends. Reconciliations of net income (loss) attributable to common stockholders to FFO, Core FFO and AFFO for the three-month and nine-month periods ended September 30, 2021 and 2020 appear beginning on page S-3 of the attached report, as well as on our website using the following link:

    https://investors.pacapts.com/q3-2021-quarterly-supplemental-financial-data


Real Estate Assets

    At September 30, 2021, our portfolio of owned real estate assets and potential additions from purchase options or rights of first offer we held from our real estate loan investments consisted of:
Owned as of September 30, 2021 (1)
Potential additions (2)
Potential total
Residential properties:
Properties41 48 
Units12,052 2,129 14,181 
Grocery-anchored shopping centers:
Properties54 — 54 
Gross leasable area (square feet)6,208,278 — 6,208,278 
Office buildings: (3)
Properties— 
Rentable square feet1,241,000 — 1,241,000 
Land1— 
(1) One multifamily community and two grocery-anchored shopping centers are owned through consolidated joint ventures. One grocery-anchored shopping center is an investment in an unconsolidated joint venture.
(2) We evaluate each project individually and we make no assurance that we will acquire any of the underlying properties from our real estate loan investment portfolio.
(3) Seven of our office properties and a real estate loan investment supporting the 8West office building were sold during the third quarter 2021.


Same-Store Financial Data

    The following charts present same-store operating results for the Company’s multifamily communities. We define our population of same-store multifamily communities as those that have achieved occupancy at or above 93% for all three consecutive months within a single quarter ("stabilized") before the beginning of the prior year and that have been owned for at least 15 full months as of the end of the first quarter of the current year, enabling comparisons of the current year quarterly and annual reporting periods to the prior year comparative periods. The Company excludes the operating results of properties for which construction of adjacent phases has commenced and properties which are undergoing significant capital projects, have sustained significant casualty losses, or are being marketed for sale as of the end of the reporting period.

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For the periods presented, same-store operating results consist of the operating results of the multifamily communities listed on page S-13, comprising an aggregate 9,222 units, or 76.5% of our multifamily units.

Same-store net operating income is a non-GAAP measure that is most directly comparable to net income (loss), as shown in the reconciliation below. See Definitions of Non-GAAP Measures on page S-19.
Reconciliation of Net Income (Loss) to Multifamily Communities' Same-Store Net Operating Income ("NOI")
Three months ended:
(in thousands)9/30/20219/30/2020
Net income (loss)$10,025 $(3,602)
Add:
Equity stock compensation817 582 
Depreciation and amortization39,639 51,794 
Interest expense24,847 29,879 
Corporate G&A and other7,772 7,203 
(Income) loss from unconsolidated joint venture187 120 
Management Internalization242 577 
Allowance for expected credit losses265 (152)
Less:
Interest revenue on notes receivable11,241 10,649 
Interest revenue on related party notes receivable415 609 
Miscellaneous revenues306 363 
Gain on sale of real estate7,942 3,261 
Gain on land condemnation— 49 
Loss on sale of real estate loan investment(12)— 
Loss on extinguishment of debt— (518)
Property net operating income63,902 71,988 
Less:
Non same-store property revenues(55,479)(74,285)
Add:
Non same-store property operating expenses16,965 25,640 
Same-store net operating income$25,388 $23,343 


Multifamily Communities' Same-Store NOI
Three months ended:
(in thousands)9/30/20219/30/2020$ change% change
Revenues:
Rental and other property revenues$43,573 $40,546 $3,027 7.5 %
Operating expenses:
Property operating and maintenance7,554 7,130 424 5.9 %
Payroll3,451 3,247 204 6.3 %
Real estate taxes and insurance7,180 6,826 354 5.2 %
Total operating expenses18,185 17,203 982 5.7 %
Same-store net operating income$25,388 $23,343 $2,045 8.8 %
Same-store average physical occupancy 97.1 %95.6 %1.5 %
Corporate level expenses related to the management and operations of the multifamily portfolio are allocated on a per unit basis to property NOI and are included in Multifamily Same-Store NOI.

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Reconciliation of Net Income (Loss) to Multifamily Communities' Same-Store Net Operating Income ("NOI")
Nine months ended:
(in thousands)9/30/20219/30/2020
Net income (loss)$8,873 $(199,075)
Add:
Equity stock compensation2,316 1,058 
Depreciation and amortization130,198 153,096 
Interest expense79,134 90,608 
Management fees— 3,099 
Corporate G&A and other23,007 20,978 
(Income) loss from unconsolidated joint venture556 120 
Management Internalization727 179,828 
Allowance for expected credit losses(58)5,463 
Waived asset management and general and administrative expense fees— (1,136)
Less:
Interest revenue on notes receivable34,567 34,495 
Interest revenue on related party notes receivable1,230 3,750 
Miscellaneous revenues951 3,798 
Gain on sale of real estate8,740 3,261 
Gain on land condemnation— 528 
Loss on sale of real estate loan investment(12)— 
Loss on extinguishment of debt— (6,674)
Property net operating income199,277 214,881 
Less:
Non same-store property revenues(181,586)(216,870)
Add:
Non same-store property operating expenses56,169 72,590 
Same-store net operating income$73,860 $70,601 

Multifamily Communities' Same-Store NOI
Nine months ended:
(in thousands)9/30/20219/30/2020$ change% change
Revenues:
Rental and other property revenues$127,085 $121,401 $5,684 4.7 %
Operating expenses:
Property operating and maintenance21,684 20,658 1,026 5.0 %
Payroll9,828 9,457 371 3.9 %
Real estate taxes and insurance21,713 20,685 1,028 5.0 %
Total operating expenses53,225 50,800 2,425 4.8 %
Same-store net operating income$73,860 $70,601 $3,259 4.6 %
Corporate level expenses related to the management and operations of the multifamily portfolio are allocated on a per unit basis to property NOI and are included in Multifamily Same-Store NOI.

Dividends

Quarterly Dividends on Common Stock and Class A OP Units

    On August 6, 2021, our board of directors declared a quarterly dividend on our Common Stock of $0.175 per share, which was paid on October 15, 2021 to stockholders of record as of September 15, 2021. In conjunction with the Common Stock dividend, our operating partnership declared a distribution on its Class A Units of $0.175 per unit for the third quarter 2021, which was paid on October 15, 2021 to all Class A Unit holders of record as of September 15, 2021.

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Monthly Dividends on Preferred Stock

    We declared monthly dividends of $5.00 per share on our Series A Preferred Stock, which totaled approximately $52.3 million for the third quarter 2021 and represents a 6% annual yield. We declared monthly dividends of $5.00 per share on our Series A1 Preferred Stock, which totaled approximately $3.6 million for the third quarter 2021 and also represents a 6% annual yield. We declared dividends totaling approximately $1.4 million on our Series M Preferred Stock, or mShares, for the third quarter 2021. The mShares have a dividend rate that escalates from 5.75% in year one of issuance to 7.50% in year eight and thereafter. We declared dividends totaling approximately $0.5 million on our Series M1 Preferred Stock for the third quarter 2021. The Series M1 Preferred Stock has a dividend rate that escalates from 6.1% in year one of issuance to 7.1% in year ten and thereafter.


Forward-Looking Statements

    “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: Estimates of future earnings, guidance, redemptions of Series A Preferred Stock, potential additions of properties from purchase options and rights of first offer from our real estate loan investments, goals and performance are, by definition, and certain other statements in this Earnings Release and Supplemental Financial Data Report may constitute, “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance, achievements or transactions to be materially different from the results, guidance, goals, performance, achievements or transactions expressed or implied by the forward-looking statements. These statements may be identified by the use of forward-looking terminology such as "may," "trend," "will," "expects," "plans," "estimates," "anticipates," "projects," "intends," "believes," "strategy," "goals," "objectives," "outlook" and similar expressions. These risks, uncertainties and contingencies include, but are not limited to, (a) the impact of the COVID-19 pandemic, including any variants, and related federal, state and local government actions on PAC’s business operations and the economic conditions in the markets in which PAC operates; (b) PAC’s ability to mitigate the impacts arising from COVID-19 or any variants thereof; and (c) those disclosed in PAC's filings with the SEC. Factors that impact such forward-looking statements include, among others, our business and investment strategy; legislative or regulatory actions; the state of the U.S. economy generally or in specific geographic areas; economic trends and economic recoveries; changes in operating costs, including real estate taxes, utilities and insurance costs; our ability to obtain and maintain debt or equity financing; financing and advance rates for our target assets; our leverage level; changes in the values of our assets; the occurrence of natural or man-made disasters; availability of attractive investment opportunities in our target markets; our ability to maintain our qualification as a real estate investment trust, or REIT, for U.S. federal income tax purposes; availability of quality personnel; our understanding of our competition and market trends in our industry; and interest rates, real estate values, the debt securities markets and the general economy.

    Except as otherwise required by the federal securities laws, we assume no liability to update the information in this Earnings Release and Supplemental Financial Data Report.

    We refer you to the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2020 that was filed with the SEC on March 1, 2021, which discuss various factors that could adversely affect our financial results. Such risk factors and information may be updated or supplemented by our Form 10-K, Form 10-Q and Form 8-K filings and other documents filed from time to time with the SEC.

COVID-19

Our percentages of rent collected remained stabilized at or near pre-pandemic levels during the third quarter 2021. While the impacts of COVID-19 and its variants are continuing, the effects on our operations have been manageable and we believe this condition will persist, barring a dramatic change in the trajectory of the pandemic. The Company is continuing to monitor the spread and impact of the variants of COVID-19 as well as vaccination rates in its markets.




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Additional Information

    The SEC has declared effective the registration statement filed by the Company for each of our public offerings. Before you invest, you should read the final prospectus, and any prospectus supplements forming a part of the registration statement and other documents the Company has filed with the SEC for more complete information about the Company and the offering. In particular, you should carefully read the risk factors described in the final prospectus and in any related prospectus supplement and in the documents incorporated by reference in the final prospectus and any related prospectus supplement. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the Company or its dealer manager, Preferred Capital Securities, LLC, will arrange to send you a prospectus with respect to the Series A1/M1 Offering upon request by contacting John A. Isakson at (770) 818-4109, 3284 Northside Parkway NW, Suite 150, Atlanta, Georgia 30327.
    
The final prospectus for the Series A1/M1 Offering, dated October 22, 2019, can be accessed through the following link:







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Table of Contents
Consolidated Statements of Operations
S-2
Reconciliations of FFO Attributable to Common Stockholders and Unitholders, Core FFO and AFFO to Net Income (Loss) Attributable to Common StockholdersS-3
Notes to Reconciliation of FFO Attributable to Common Stockholders and Unitholders, Core FFO and AFFO to Net Income (Loss) Attributable to Common StockholdersS-5
Consolidated Balance SheetsS-7
Consolidated Statements of Cash FlowsS-8
Real Estate Loan Investment PortfolioS-10
Mortgage IndebtednessS-12
Multifamily CommunitiesS-13
Capital ExpendituresS-15
Grocery-Anchored Shopping Center PortfolioS-16
Office Building PortfolioS-18
Definitions of Non-GAAP MeasuresS-19
















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Preferred Apartment Communities, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three months ended September 30,
(In thousands, except per-share figures)20212020
Revenues:
Rental and other property revenues $99,050 $114,831 
Interest income on loans and notes receivable11,241 10,649 
Interest income from related parties415 609 
Miscellaneous revenues306 363 
Total revenues111,012 126,452 
Operating expenses:
Property operating and maintenance14,956 19,437 
Property salary and benefits4,929 6,054 
Property management costs757 983 
Real estate taxes and insurance14,506 16,369 
General and administrative7,772 7,203 
Equity compensation to directors and executives817 582 
Depreciation and amortization39,639 51,794 
Allowance for expected credit losses265 (152)
Management Internalization expense242 577 
Total operating expenses83,883 102,847 
Operating income before loss from unconsolidated joint venture and
gains on sales of real estate27,129 23,605 
Loss from unconsolidated joint venture(187)(120)
Gain on sale of real estate, net7,942 3,261 
Operating income34,884 26,746 
Interest expense24,847 29,879 
Loss on extinguishment of debt— (518)
Gain on land condemnation— 49 
Loss on sale of real estate loan investment(12)— 
Net income (loss)10,025 (3,602)
Net (income) loss attributable to non-controlling interests(48)108 
Net income (loss) attributable to the Company9,977 (3,494)
Dividends to preferred stockholders(57,859)(35,909)
Earnings attributable to unvested restricted stock(117)(96)
Net loss attributable to common stockholders(47,999)$(39,499)
Net loss per share of Common Stock available to
 common stockholders, basic and diluted$(0.92)$(0.79)
Weighted average number of shares of Common Stock outstanding,
basic and diluted52,455 49,689 



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Reconciliation of FFO Attributable to Common Stockholders and Unitholders, Core FFO and AFFO
to Net (Loss) Income Attributable to Common Stockholders
Three months ended September 30,
(In thousands, except per-share figures)20212020
Net loss attributable to common stockholders (See note 1)$(47,999)$(39,499)
Add:Depreciation of real estate assets32,807 41,282 
Amortization of acquired intangible assets and deferred leasing costs6,613 9,978 
Net (income) loss attributable to Class A Unitholders (See note 2)94 (50)
Gain on sale of real estate(7,942)(3,261)
FFO attributable to common stockholders and unitholders(16,427)8,450 
Acquisition and pursuit costs— 
Loan cost amortization on acquisition line of credit and loan coordination fees (See note 3)380 505 
Payment of costs related to property refinancing388 509 
Internalization costs (See note 4)242 577 
Deemed dividends for redemptions of and non-cash dividends on preferred stock, plus
expenses incurred on calls of preferred stock (See note 5)30,332 3,107 
Expenses related to the COVID-19 global pandemic (See note 6)34 138 
Core FFO attributable to common stockholders and unitholders 14,949 13,289 
Add:Non-cash equity compensation to directors and executives817 582 
Amortization of loan closing costs (See note 7)1,244 1,288 
Depreciation/amortization of non-real estate assets445 621 
Net loan origination fees received (See note 8)684 415 
Deferred interest income received (See note 9)9,094 375 
Amortization of lease inducements (See note 10)449 448 
Cash received in excess of (exceeded by) amortization of purchase option termination revenues (See note 11)2,754 (421)
Less:Non-cash loan interest income (See note 12)(2,330)(3,317)
Non-cash income for current expected credit losses (See note 13)(149)(761)
Cash paid for loan closing costs(150)(106)
Amortization of acquired real estate intangible liabilities and straight-line rent adjustments (See note 14)(2,401)(4,887)
Amortization of deferred revenues (See note 15)(940)(940)
Normally recurring capital expenditures (See note 16)(3,145)(2,983)
AFFO attributable to common stockholders and Unitholders$21,321 $3,603 
Common Stock dividends and distributions to Unitholders declared:
Common Stock dividends $9,432 $8,876 
Distributions to Unitholders (See note 2)87 130 
Total$9,519 $9,006 
Common Stock dividends and Unitholder distributions per share$0.1750 $0.1750 
FFO per weighted average basic share of Common Stock and Unit outstanding$(0.31)$0.17 
Core FFO per weighted average basic share of Common Stock and Unit outstanding$0.28 $0.26 
AFFO per weighted average basic share of Common Stock and Unit outstanding$0.40 $0.07 
Weighted average shares of Common Stock and Units outstanding:
Basic:
Common Stock52,455 49,689 
Class A Units497 742 
Common Stock and Class A Units52,952 50,431 
Diluted Common Stock and Class A Units (See note 17)
53,472 50,433 
Actual shares of Common Stock outstanding, including 662 and 548 unvested shares
 of restricted Common Stock at September 30, 2021 and 2020, respectively.53,559 50,449 
Actual Class A Units outstanding at September 30, 2021 and 2020, respectively. 496 742 
Total54,055 51,191 

See Notes to Reconciliation of FFO, Core FFO and AFFO to Net Income (Loss) Attributable to Common Stockholders on page S-5.
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Reconciliation of FFO Attributable to Common Stockholders and Unitholders, Core FFO and AFFO
to Net (Loss) Income Attributable to Common Stockholders
Nine months ended September 30,
(In thousands, except per-share figures)20212020
Net loss attributable to common stockholders (See note 1)$(117,175)$(300,270)
Add:Depreciation of real estate assets105,616 122,053 
Amortization of acquired intangible assets and deferred leasing costs23,809 28,933 
Net (income) loss attributable to Class A Unitholders (See note 2)77 (3,393)
Gain on sale of real estate(8,740)(3,261)
FFO attributable to common stockholders and unitholders3,587 (155,938)
Acquisition and pursuit costs381 
Loan cost amortization on acquisition line of credit and loan coordination fees (See note 3)1,286 1,711 
Payment of costs related to property refinancing506 7,372 
Internalization costs (See note 4)727 179,828 
Deemed dividends for redemptions of and non-cash dividends on preferred stock, plus
expenses incurred on calls of preferred stock (See note 5)38,269 6,423 
Expenses related to the COVID-19 global pandemic (See note 6)115 586 
Earnest money forfeited by prospective asset purchaser— (2,750)
Core FFO attributable to common stockholders and unitholders 44,495 37,613 
Add:Non-cash equity compensation to directors and executives2,316 1,058 
Non-cash (income) expense for current expected credit losses (See note 13)(1,288)3,647 
Amortization of loan closing costs (See note 7)3,701 3,631 
Depreciation/amortization of non-real estate assets1,336 1,793 
Net loan origination fees received (See note 8)1,887 882 
Deferred interest income received (See note 9)13,580 8,652 
Amortization of lease inducements (See note 10)1,349 1,334 
Earnest money forfeited by prospective asset purchaser— 2,750 
Cash received in excess of (exceeded by) amortization of purchase option termination revenues (See note 11)2,777 (96)
Less:Non-cash loan interest income (See note 12)(8,113)(9,445)
Cash paid for loan closing costs(2,041)(106)
Amortization of acquired real estate intangible liabilities and straight-line rent adjustments (See note 14)(8,964)(13,684)
Amortization of deferred revenues (See note 15)(2,821)(2,821)
Normally recurring capital expenditures (See note 16)(9,475)(6,525)
AFFO attributable to common stockholders and Unitholders$38,739 $28,683 
Common Stock dividends and distributions to Unitholders declared:
Common Stock dividends 27,682 29,991 
Distributions to Unitholders (See note 2)270 463 
Total27,952 30,454 
Common Stock dividends and Unitholder distributions per share$0.5250 $0.6125 
FFO per weighted average basic share of Common Stock and Unit outstanding$0.07 $(3.17)
Core FFO per weighted average basic share of Common Stock and Unit outstanding$0.86 $0.77 
AFFO per weighted average basic share of Common Stock and Unit outstanding$0.75 $0.58 
Weighted average shares of Common Stock and Units outstanding:
Basic:
Common Stock51,011 48,351 
Class A Units547 776 
Common Stock and Class A Units51,558 49,127 
Diluted Common Stock and Class A Units (See note 17)
51,945 49,144 
Actual shares of Common Stock outstanding, including 662 and 548 unvested shares
 of restricted Common Stock at September 30, 2021 and 2020, respectively.53,559 50,449 
Actual Class A Units outstanding at September 30, 2021 and 2020, respectively. 496 742 
Total54,055 51,191 

See Notes to Reconciliation of FFO, Core FFO and AFFO to Net Income (Loss) Attributable to Common Stockholders on page S-5.
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Notes to Reconciliations of FFO Attributable to Common Stockholders and Unitholders, Core FFO and AFFO to
Net Loss Attributable to Common Stockholders

1)Rental and other property revenues and property operating expenses for the three months ended September 30, 2021 include activity for the properties acquired since September 30, 2020. Rental and other property revenues and expenses for the three-month and nine-month periods ended September 30, 2020 include activity for the acquisitions made during that period only from their respective dates of acquisition.

2)Non-controlling interests in our Operating Partnership, consisted of a total of 496,269 Class A Units as of September 30, 2021. 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 0.94% and 1.47% for the three-month periods ended September 30, 2021 and 2020, respectively.

3)     We paid loan coordination fees to Preferred Apartment Advisors, LLC, (our "Former Manager") to reflect the administrative effort involved in arranging debt financing for acquired properties prior to the Internalization Transaction (defined in note 4 below). The fees were calculated as 0.6% of the amount of any mortgage indebtedness on newly-acquired properties or refinancing and are amortized over the lives of the respective mortgage loans. This non-cash amortization expense is an addition to FFO in the calculation of Core FFO and AFFO. At September 30, 2021, aggregate unamortized loan coordination fees were approximately $8.3 million, which will be amortized over a weighted average remaining loan life of approximately 10.2 years.

4)    This adjustment reflects the add-back of (i) consideration paid to the owners of the Former Manager and NMP Advisors, LLC (our "Former Sub-Manager"), (ii) accretion of the discount on the deferred liability payable to the owners of the Former Manager and (iii) due diligence and pursuit costs incurred by the Company related to the internalization of the functions performed by the Former Manager and Former Sub-Manager (the "Internalization Transaction").

5)    This additive adjustment removes the effect of deemed dividends that arise from cash calls and redemptions of preferred stock. For preferred stock shares that are called by the Company or redeemed by the holder, the Company records a deemed dividend for the difference between the redemption of the share at its face value, net of any redemption discount, as compared to the carrying value of the share on the Company’s consolidated balance sheets. Also included in this adjustment is the adding back of expenses incurred related to effecting calls of preferred stock.

6)    This additive adjustment to FFO consists of non-recurring costs for signage, cleaning and supplies necessary to create and maintain work environments necessary to adhere to CDC guidelines during the current COVID-19 pandemic. Since we do not expect to incur similar costs once the COVID-19 pandemic has subsided, we add these costs back to FFO in our calculation of Core FFO.

7)    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. These loan closing costs are also amortized over the lives of the respective loans and the Revolving Line of Credit, and this non-cash amortization expense is an addition to FFO in the calculation of AFFO. Neither we nor the Operating Partnership have any recourse liability in connection with any of the mortgage loans, nor do we have any cross-collateralization arrangements with respect to the assets securing the mortgage loans, other than security interests in 49% of the equity interests of the subsidiaries owning such assets, granted in connection with our Revolving Line of Credit, which provides for full recourse liability. At September 30, 2021, unamortized loan costs on all the Company's indebtedness were approximately $30.4 million, which will be amortized over a weighted average remaining loan life of approximately 8.0 years.

8) We receive loan origination fees in conjunction with the origination of certain real estate loan investments. The total fees received are additive adjustments to Core FFO in our calculation of AFFO.

9) 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. Once received from the borrower, the amount of additional accrued interest becomes an additive adjustment to Core FFO in our calculation of AFFO.

10)    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.

11)    Occasionally we receive fees in exchange for the termination of our purchase options related to certain multifamily communities. These fees are recorded as revenue over the period beginning on the date of termination until the earlier of (i) the maturity of the real estate loan investment and (ii) the sale of the property. The receipt of the cash termination fees are an additive adjustment in our calculation of AFFO and the removal of non-cash revenue from the recognition of the termination fees are a reduction to Core FFO in our calculation of AFFO; both of these adjustments are presented in a single net number within this line. For periods in which recognized termination fee revenues exceeded the amount of cash received, a negative adjustment is shown to Core FFO in our calculation of AFFO; for periods in which cash received exceeded the amount of recognized termination fee revenues, an additive adjustment is shown to Core FFO in our calculation of AFFO.

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12) Loan origination fees (described in note 8 above) are recognized as revenue over the lives of the applicable loans as adjustments of yield using the effective interest method. Similarly, the accrual of additional interest amounts (described in note 9 above) are recognized beginning from loan inception through the repayment of the loan or the refinancing or sale of the underlying property. This adjustment removes the effect of both these types of non-cash loan interest income from Core FFO in our calculation of AFFO.

13)    Effective January 1, 2020, we adopted ASU 2016-03, which requires us to estimate the amount of future credit losses we expect to incur over the lives of our real estate loan investments at the inception of each loan. This loss reserve may be adjusted upward or downward over the lives of our loans and therefore the aggregate net adjustment for each period could be positive (removing the non-cash effect of a net increase in aggregate loss reserves) or negative (removing the non-cash effect of a net decrease in aggregate loss reserves) in these adjustments to Core FFO in calculating AFFO.

14)    This adjustment reflects straight-line rent adjustments and the reversal of the non-cash amortization of below-market and above-market lease intangibles, which were recognized in conjunction with our acquisitions and which are amortized over the estimated average remaining lease terms from the acquisition date for multifamily communities and over the remaining lease terms for grocery-anchored shopping center assets and office buildings. At September 30, 2021, the balance of unamortized below-market lease intangibles was approximately $37.1 million, which will be recognized over a weighted average remaining lease period of approximately 8.3 years.

15)    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.
    
16)    We deduct from Core FFO normally recurring capital expenditures that are necessary to maintain our assets’ revenue streams in the calculation of AFFO. This adjustment also deducts from Core FFO capitalized amounts for third party costs during the period to originate or renew leases in our grocery-anchored shopping centers and office buildings. This adjustment includes approximately $21,000 and $59,000 of recurring capitalized expenditures incurred at our corporate offices during the three-month and nine-month periods ended September 30, 2021, respectively. No adjustment is made in the calculation of AFFO for nonrecurring capital expenditures. See Capital Expenditures, Grocery-Anchored Shopping Center Portfolio, and Office Building Portfolio sections for definitions of these terms.

17)    Since our AFFO results are positive for the periods reflected, we are presenting recalculated diluted weighted average shares of Common Stock and Class A Units for these periods for purposes of this table, which includes the dilutive effect of common stock equivalents from grants of the Class B Units, warrants included in units of Series A Preferred Stock issued, as well as annual grants of restricted Common Stock and restricted stock units. The weighted average shares of Common Stock outstanding presented on the Consolidated Statements of Operations are the same for basic and diluted for any period for which we recorded a net loss available to common stockholders.



See Definitions of Non-GAAP Measures beginning on page S-19.













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Preferred Apartment Communities, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except per-share par values)September 30, 2021December 31, 2020
Assets
Real estate
Land$553,123 $605,282 
Building and improvements2,705,489 3,034,727 
Tenant improvements122,341 184,288 
Furniture, fixtures, and equipment358,002 306,725 
Construction in progress5,595 12,269 
Gross real estate3,744,550 4,143,291 
Less: accumulated depreciation(553,697)(509,547)
Net real estate 3,190,853 3,633,744 
Real estate loan investments, net 181,623 279,895 
Total real estate and real estate loan investments, net3,372,476 3,913,639 
Cash and cash equivalents54,568 28,657 
Restricted cash54,010 47,059 
Note receivable and revolving line of credit due from related party9,011 10,874 
Accrued interest receivable on real estate loans15,754 22,528 
Acquired intangible assets, net of amortization 67,897 127,138 
Tenant lease inducements, net16,863 18,206 
Investment in unconsolidated joint venture6,101 6,657 
Tenant receivables and other assets62,355 106,321 
Total assets$3,659,035 $4,281,079 
Liabilities and equity
Liabilities
Mortgage notes payable, net of deferred loan costs and mark-to-market adjustment$2,384,583 $2,594,464 
Revolving line of credit— 22,000 
Deferred revenue33,139 36,733 
Accounts payable and accrued expenses51,380 41,912 
Deferred liability to Former Manager23,856 23,335 
Contingent liability due to Former Manager14,682 14,814 
Accrued interest payable6,638 7,877 
Dividends and partnership distributions payable19,797 20,137 
Acquired below market lease intangibles, net of amortization 37,097 51,934 
Prepaid rent, security deposits and other liabilities27,769 29,425 
Total liabilities2,598,941 2,842,631 
Commitments and contingencies
Equity
Stockholders' equity
Series A Redeemable Preferred Stock, $0.01 par value per share; 3,050 shares authorized; 2,226 shares
 issued; 1,344 and 1,735 shares outstanding at September 30, 2021 and December 31, 2020, respectively13 17 
Series A1 Redeemable Preferred Stock, $0.01 par value per share; up to 1,000 shares authorized; 247 and 149
shares issued and 246 and 149 shares outstanding at September 30, 2021 and December 31, 2020, respectively
Series M Redeemable Preferred Stock, $0.01 par value per share; 500 shares authorized; 106 shares
  issued; 84 and 89 shares outstanding at September 30, 2021 and December 31, 2020, respectively
Series M1 Redeemable Preferred Stock, $0.01 par value per share; up to 1,000 shares authorized; 34 and 19
  shares issued; 32 and 19 shares outstanding at September 30, 2021 and December 31, 2020, respectively— — 
Common Stock, $0.01 par value per share; 400,067 shares authorized; 52,897 and 49,994 shares issued
and outstanding at September 30, 2021 and December 31, 2020, respectively529 500 
Additional paid-in capital1,245,640 1,631,646 
Accumulated (deficit) earnings (183,562)(192,446)
Total stockholders' equity1,062,623 1,439,719 
Non-controlling interest(2,529)(1,271)
Total equity1,060,094 1,438,448 
Total liabilities and equity$3,659,035 $4,281,079 





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Preferred Apartment Communities, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
Nine months ended September 30,
(In thousands)20212020
Operating activities:
Net income (loss)$8,873 $(199,075)
Reconciliation of net loss to net cash provided by (used in) operating activities:
Depreciation and amortization expense130,198 153,096 
Amortization of above and below market leases(4,374)(6,145)
Amortization of deferred revenues and other non-cash revenues (4,195)(3,710)
Amortization of purchase option termination fees(7,074)(4,896)
Amortization of equity compensation, lease incentives and other non-cash expenses4,284 3,027 
Deferred loan cost amortization4,903 5,177 
Non-cash accrued interest income on real estate loan investments(7,958)(9,208)
Receipt of accrued interest income on real estate loan investments14,732 10,179 
Gains on sale of real estate and real estate loan investment, net(8,728)(3,789)
Loss from unconsolidated joint venture556 120 
Cash received for purchase option terminations9,851 4,800 
Loss on extinguishment of debt— 6,674 
(Decrease) increase in allowance for expected credit losses(260)5,463 
Changes in operating assets and liabilities:
Decrease (increase) in tenant receivables and other assets2,344 (16,151)
Increase in accounts payable and accrued expenses19,160 46,821 
Increase in deferred liability to Former Manager— 22,851 
Increase in contingent liability— 15,013 
Increase (decrease) in accrued interest, prepaid rents and other liabilities2,573 (249)
Net cash provided by operating activities164,885 29,998 
Investing activities:
Investments in real estate loans, net of origination fees(44,635)(41,311)
Repayments of real estate loans and receipt of origination fees132,970 71,146 
Proceeds from sale of real estate loan investment12,706 — 
Notes receivable (issued) repaid, net1,863 14,219 
Related party notes receivable and lines of credit (issued) repaid, net— (5,078)
Acquisition of properties(335,206)(187,197)
Disposition of properties330,856 787 
Proceeds from sale of interest in a joint venture— 19,221 
Return of capital from investment in unconsolidated joint venture— 12,250 
Capital improvements to real estate assets(24,457)(38,784)
Investment in property development(546)(424)
Net cash provided by (used in) investing activities73,551 (155,171)
 (Continued on next page)
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Preferred Apartment Communities, Inc.
Consolidated Statements of Cash Flows - continued
(Unaudited)
Nine months ended September 30,
(In thousands)20212020
Financing activities:
Proceeds from mortgage notes payable286,495 377,749 
Repayments of mortgage notes payable(76,343)(173,409)
Payments for deposits and other mortgage loan costs(5,461)(10,911)
Payments for mortgage prepayment costs— (5,733)
Proceeds from Revolving Line of Credit283,000 321,000 
Payments on Revolving Line of Credit(305,000)(288,000)
Repayment of Term Loan— (70,000)
Proceeds from sales of Preferred Stock, net of offering costs 101,960 159,096 
Payments for redemptions and calls of preferred stock(358,620)(82,003)
Proceeds from sales of common stock27,553 4,546 
Common Stock dividends paid(26,911)(33,271)
Preferred stock dividends and Class A Unit distributions paid(127,086)(104,428)
Payments for deferred offering costs(2,946)(10,669)
 Distributions to non-controlling interests(2,215)(20)
Net cash (used in) provided by financing activities(205,574)83,947 
Net increase (decrease) in cash, cash equivalents and restricted cash32,862 (41,226)
Cash, cash equivalents and restricted cash, beginning of year75,716 137,253 
Cash, cash equivalents and restricted cash, end of period$108,578 $96,027 

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Real Estate Loan Investments

The following tables present details pertaining to our portfolio of fixed rate, interest-only real estate loan investments.
Project/PropertyLocationMaturity dateOptional extension dateTotal loan commitments
Carrying amount (1) as of
Current / deferred interest % per annum
September 30, 2021December 31, 2020
Multifamily communities:(in thousands)
BerryessaSan Jose, CA2/13/20222/13/2023$137,616 $135,052 $126,237 8.5 / 3
Hidden River IITampa, FL10/11/202210/11/20244,462 4,462 4,462 8.5 / 3.5
Hidden River II CapitalTampa, FL10/11/202210/11/20242,763 2,624 2,461 8.5 / 3.5
Vintage Horizon WestOrlando, FL10/11/202210/11/202410,900 9,618 9,019 8.5 / 5.5
Vintage Jones FranklinRaleigh, NC11/14/20235/14/202510,000 8,797 7,904 8.5 / 5.5
Solis Cumming Town
CenterAtlanta, GA9/3/20249/3/202620,681 17,764 5,584 8.5 / 5.5
Hudson at Metro WestOrlando, FL9/1/20243/1/202616,791 7,803 — 8.5 / 4.5
Oxford Club DriveAtlanta, GA2/11/20252/11/202723,150 3,925 — 8.5 / 4.5
Populus at PoolerSavannah, GA5/27/20255/27/202615,907 — 8.5 / 4.25
Populus at Pooler CapitalSavannah, GA5/27/20255/27/20261,169 925 — 8.5 / 4.25
Repaid multifamily communities:
NewberghAtlanta, GAN/AN/AN/A— 11,749 
(2)
Newbergh CapitalAtlanta, GAN/AN/AN/A— 6,176 
(2)
Vintage DestinDestin, FLN/AN/AN/A— 9,736 
(2)
Kennesaw CrossingAtlanta, GAN/AN/AN/A— 13,025 
(2)
The AnsonNashville, TNN/AN/AN/A— 6,240 
(3)
The Anson CapitalNashville, TNN/AN/AN/A— 4,839 
(3)
Chestnut FarmCharlotte, NCN/AN/AN/A— 11,671 
(3)
SouthpointFredericksburg, VAN/AN/AN/A— 7,348 
(3)
Southpoint CapitalFredericksburg, VAN/AN/AN/A— 4,626 
(3)
Cameron SquareAlexandria, VAN/AN/AN/A— 20,874 
(2)
Cameron Square CapitalAlexandria, VAN/AN/AN/A— 8,850 
(2)
V & ThreeCharlotte, NCN/AN/AN/A— 10,335 
(2)
V & Three CapitalCharlotte, NCN/AN/AN/A— 7,162 
(2)
Office property:
8West Atlanta, GAN/AN/AN/A— 11,858 
(4)
$243,439 190,973 290,156 
Unamortized loan origination fees(1,773)(1,194)
Allowances for expected credit losses and doubtful accounts(7,577)(9,067)
Carrying amount$181,623 $279,895 
(1) Carrying amounts presented per loan are amounts drawn.
(2) The loan was repaid in full satisfaction of the principal amount and all interest due.
(3) All principal and interest due on the loan was received as a credit against the purchase price in conjunction with our acquisition of the underlying property.
(4) This loan was sold at par plus accrued interest to Highwoods Properties, an unrelated party, on July 29, 2021.














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We hold options or rights of first offer, but not obligations, to purchase some of the properties which are partially financed by our real estate loan investments. Certain option purchase prices may be negotiated at the time of the loan closing and are to be calculated based upon market cap rates at the time of exercise of the purchase option, with discounts up to 15 basis points (if any), depending on the loan. As of September 30, 2021, potential property acquisitions and units from projects in our real estate loan investment portfolio for which we hold a purchase option or right of first offer consisted of:
Total units uponPurchase option window
Project/PropertyLocation
completion (1)
BeginEnd
Multifamily communities
Purchase options at discount to market:
Hidden River IITampa, FL204 
S + 90 days (2)
S + 150 days (2)
Purchase options at market or with rights of first offer:
Hudson at Metro WestOrlando, FL320 
S + 90 days (2)
S + 150 days (2)
Vintage Horizon WestOrlando, FL340 
(3)
(3)
Vintage Jones FranklinRaleigh, NC277 
(3)
(3)
Solis Cumming Town CenterAtlanta, GA320 
(4)
(4)
Club DriveAtlanta, GA352 
(5)
(5)
Populus at PoolerSavannah, GA316 
(6)
(6)
2,129 
(1) We evaluate each project individually and we make no assurance that we will acquire any of the underlying properties from our real estate loan investment portfolio.
(2) The option period window begins and ends at the number of days indicated beyond the achievement of a 93% occupancy threshold by the underlying property.
(3) 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% occupancy threshold by the underlying property and ends 60 days beyond the option period beginning date.
(4) We hold a right of first offer on the property.
(5) The option period begins upon the property's achievement of an 85% occupancy threshold. If we are unable to reach an agreement on the property's market value, we have a right of first offer.
(6) The option period begins upon the property's achievement of an 80% occupancy threshold. If we are unable to reach an agreement on the property's market value, we have a right of first offer.


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Mortgage Indebtedness

    As of September 30, 2021,our mortgage note principal repayment obligations were:
(in thousands)Total
Maturity dates occurring in:
2021$36,855 
2022117,045 
202382,205 
2024290,414 
202557,492 
2026335,024 
2027317,639 
2028245,105 
2029245,056 
2030356,042 
Thereafter342,344 
Totals$2,425,221 

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Multifamily Communities

As of September 30, 2021, our multifamily community portfolio consisted of the following properties:
Three months ended
September 30, 2021
PropertyLocationNumber of unitsAverage unit size (sq. ft.)Average physical occupancyAverage rent per unit
Same-Store Communities:
Aldridge at Town VillageAtlanta, GA300969 97.6 %$1,520 
Green ParkAtlanta, GA310985 98.0 %$1,577 
Overton RiseAtlanta, GA294 1,018 96.9 %$1,637 
Summit Crossing IAtlanta, GA345 1,034 98.8 %$1,340 
Summit Crossing IIAtlanta, GA140 1,100 98.1 %$1,444 
The Reserve at Summit CrossingAtlanta, GA1721,002 99.6 %$1,432 
Avenues at CypressHouston, TX240 1,170 98.1 %$1,529 
Avenues at NorthpointeHouston, TX280 1,167 97.9 %$1,456 
Stone CreekHouston, TX246 852 96.3 %$1,186 
Aster at Lely ResortNaples, FL308 1,071 98.3 %$1,539 
SorrelJacksonville, FL290 1,048 96.7 %$1,420 
Lux at SorrelJacksonville, FL2651,025 96.5 %$1,458 
525 Avalon ParkOrlando, FL487 1,394 96.5 %$1,586 
Citi LakesOrlando, FL346 984 97.0 %$1,494 
Village at Baldwin ParkOrlando, FL528 1,069 96.4 %$1,755 
Luxe at Lakewood RanchSarasota, FL2801,105 95.1 %$1,601 
Venue at Lakewood RanchSarasota, FL237 1,001 97.3 %$1,638 
Crosstown WalkTampa, FL342 1,070 97.9 %$1,445 
Overlook at Crosstown WalkTampa, FL180986 96.9 %$1,527 
Citrus VillageTampa, FL296 980 96.5 %$1,443 
Five Oaks at WestchaseTampa, FL218983 96.9 %$1,601 
Lodge at Hidden RiverTampa, FL300980 97.7 %$1,509 
Lenox VillageNashville, TN273 906 96.1 %$1,369 
Regent at LenoxNashville, TN18 1,072 98.1 %$1,420 
Retreat at LenoxNashville, TN183 773 98.0 %$1,298 
CityPark ViewCharlotte, NC284 948 94.6 %$1,208 
CityPark View SouthCharlotte, NC2001,005 96.2 %$1,331 
Colony at CenterpointeRichmond, VA2551,149 96.7 %$1,496 
Founders VillageWilliamsburg, VA247 1,070 97.6 %$1,523 
Retreat at GreystoneBirmingham, AL312 1,100 97.6 %$1,478 
Vestavia ReserveBirmingham, AL2721,113 96.9 %$1,608 
Adara Overland ParkKansas City, KS2601,116 94.6 %$1,395 
Claiborne CrossingLouisville, KY242 1,204 98.1 %$1,400 
City VistaPittsburgh, PA272 1,023 96.9 %$1,502 
Total/Average Same-Store Communities9,222 97.1 %
Stabilized Communities:
Artisan at VieraMelbourne, FL2591,070 97.4 %$1,737 
The MenloJacksonville, FL332 966 96.3 %$1,553 
The BlakeOrlando, FL281908 97.5 %$1,515 
Parkside at the BeachPanama City Beach, FL2881,041 99.3 %$1,487 
Horizon at Wiregrass Tampa, FL392973 98.7 %$1,600 
Total/Average Stabilized Communities1,552 97.2 %
The EllisonAtlanta, GA250 1,064 — $1,626 
Alleia at PresidioFort Worth, TX231 1,022 — $— 
The AnsonNashville, TN301 989 — $— 
The KingsonFredericksburg, VA240 993 — $— 
Chestnut FarmCharlotte, NC256 995 — $— 
Total Multifamily Community Units12,052 

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For the three-month period ended September 30, 2021, our average same-store multifamily communities' physical occupancy was 97.1%. We calculate average same-store physical occupancy for quarterly periods as the average of the number of occupied units on the 20th day of each of the trailing three months from the reporting period end date and that have been owned for at least 15 full months as of the end of the first quarter of each year. We exclude the operating results of properties for which construction of adjacent phases has commenced, properties which are undergoing significant capital projects, have sustained significant casualty losses, or are being marketed for sale as of the end of the reporting period. We believe "Same Property" information is useful as it allows both management and investors to gauge our management effectiveness via comparisons of financial and operational results between interim and annual periods for those subsets of multifamily communities owned for current and prior comparative periods.

    For the three-month period ended September 30, 2021, our average stabilized physical occupancy was 97.2%. We calculate average stabilized physical occupancy for quarterly periods as the average number of occupied units on the 20th day of each of the trailing three months from the reporting period end date. All of our multifamily communities were stabilized for the three-month period ended September 30, 2021 except The Ellison, Alleia at Presidio, The Anson, The Kingson and Chestnut Farm.

    For the three-month period ended September 30, 2021, our average stabilized economic occupancy was 96.6%. We define average economic occupancy as market rent reduced by vacancy losses, expressed as a percentage. All of our multifamily properties are included in these calculations except for properties which are not yet stabilized (which we define as properties having first achieved 93% physical occupancy for three full months in a quarter), properties which are owned for less than the entire reporting period and properties which are undergoing significant capital projects, have sustained significant casualty losses or are adding additional phases. We also exclude properties which are currently being marketed for sale, of which we had none at September 30, 2021. Average economic occupancy is useful both to management and investors as a gauge of our effectiveness in realizing the full revenue generating potential of our multifamily communities given market rents and occupancy rates.


























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Capital Expenditures

    We regularly incur capital expenditures related to our owned multifamily communities. Capital expenditures may be nonrecurring and discretionary, as part of a strategic plan intended to increase a property’s value and corresponding revenue-generating ability, or may be normally recurring and necessary to maintain the income streams and present value of a property. Certain capital expenditures may be budgeted and reserved for upon acquiring a property as initial expenditures necessary to bring a property up to our standards or to add features or amenities that we believe make the property a compelling value to prospective residents in its individual market. These budgeted nonrecurring capital expenditures in connection with an acquisition are funded from the capital source(s) for the acquisition and are not dependent upon subsequent property operating cash flows for funding.

For the three-month period ended September 30, 2021, our capital expenditures for multifamily communities consisted of:
    
Capital Expenditures - Multifamily Communities
Recurring Non-recurring Total
(in thousands, except per-unit figures)AmountPer UnitAmountPer UnitAmountPer Unit
Appliances$177 $15.51 $— $— $177 $15.51 
Carpets570 49.91 — — 570 49.91 
Wood / vinyl flooring 74 6.53 143 12.43 217 18.96 
Mini blinds and ceiling fans73 6.38 — — 73 6.38 
Fire safety— — 277 24.52 277 24.52 
HVAC314 27.58 — — 314 27.58 
Computers, equipment, misc.— — 31 2.73 31 2.73 
Elevators0.18 32 2.78 34 2.96 
Exterior painting and lighting— — 654 57.00 654 57.00 
Leasing office and other common amenities
0.15 243 21.20 245 21.35 
Major structural projects
— — 360 31.29 360 31.29 
Cabinets, countertops and unit upgrades— — 1,046 92.68 1,046 92.68 
Landscaping and fencing— — 187 16.36 187 16.36 
Parking lots and sidewalks144 12.73 17 1.36 161 14.09 
Signage and sanitation— — 60 5.29 60 5.29 
Totals$1,356 $118.97 $3,050 $267.64 $4,406 $386.61 
    


















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Grocery-Anchored Shopping Center Portfolio
    
As of September 30, 2021, our grocery-anchored shopping center portfolio consisted of the following properties:
Property nameLocationYear built
GLA (1)
Percent leasedGrocery anchor tenant
Castleberry-Southard Atlanta, GA200680,018 100.0 %Publix
Cherokee Plaza Atlanta, GA1958102,864 100.0 %Kroger
Governors Towne Square Atlanta, GA200468,658 100.0 %Publix
Lakeland Plaza Atlanta, GA 1990301,711 95.3 %Sprouts
Powder Springs Atlanta, GA 199977,853 98.2 %Publix
Rockbridge Village Atlanta, GA 2005102,432 83.0 %Kroger
Roswell Wieuca Shopping Center Atlanta, GA 200774,370 97.8 %The Fresh Market
Royal Lakes Marketplace Atlanta, GA 2008119,493 95.3 %Kroger
Sandy Plains Exchange Atlanta, GA 199772,784 100.0 %Publix
Summit Point Atlanta, GA 2004111,970 83.4 %Publix
Thompson Bridge Commons Atlanta, GA 200192,587 96.2 %Kroger
Wade Green Village Atlanta, GA 199374,978 94.5 %Publix
Woodmont Village Atlanta, GA 200285,639 97.7 %Kroger
Woodstock Crossing Atlanta, GA 199466,122 98.5 %Kroger
East Gate Shopping Center Augusta, GA 199575,716 93.7 %Publix
Fury's Ferry Augusta, GA 199670,458 98.0 %Publix
Parkway Centre Columbus, GA 199953,088 97.7 %Publix
Greensboro Village Nashville, TN 200570,203 100.0 %Publix
Spring Hill Plaza Nashville, TN 200566,693 100.0 %Publix
Parkway Town Centre Nashville, TN 200565,587 100.0 %Publix
The Market at Salem Cove Nashville, TN 201062,356 97.8 %Publix
The Market at Victory Village Nashville, TN 200771,300 100.0 %Publix
The Overlook at Hamilton Place Chattanooga, TN 1992213,095 100.0 %The Fresh Market
Shoppes of Parkland Miami-Ft. Lauderdale, FL2000145,720 100.0 %BJ's Wholesale Club
Crossroads Market Naples, FL1993126,895 100.0 %Publix
Neapolitan Way (2)
 Naples, FL1985137,580 92.3 %Publix
Berry Town Center Orlando, FL 200399,441 85.4 %Publix
Deltona Landings Orlando, FL 199959,966 98.4 %Publix
University Palms Orlando, FL 199399,172 98.9 %Publix
Disston Plaza Tampa-St. Petersburg, FL 1954129,150 96.1 %Publix
Barclay Crossing Tampa, FL 199854,958 100.0 %Publix
Polo Grounds Mall West Palm Beach, FL1966130,285 97.3 %Publix
Kingwood Glen Houston, TX 1998103,397 97.1 %Kroger
Independence Square Dallas, TX 1977140,218 93.0 %Tom Thumb
Midway Market Dallas, TX 200285,599 94.9 %Kroger
Oak Park Village San Antonio, TX197064,855 100.0 %H.E.B.
Irmo Station Columbia, SC 198099,384 90.8 %Kroger
Rosewood Shopping Center Columbia, SC 200236,887 93.5 %Publix
Anderson Central Greenville Spartanburg, SC 1999223,211 95.6 %Walmart
Fairview Market Greenville Spartanburg, SC 199846,303 97.0 %Aldi
Brawley Commons Charlotte, NC 1997122,028 97.5 %Publix
West Town Market Charlotte, NC 200467,883 100.0 %Harris Teeter
Heritage Station Raleigh, NC200472,946 100.0 %Harris Teeter
Maynard Crossing Raleigh, NC 1996122,781 88.6 %Harris Teeter
Wakefield Crossing Raleigh, NC 200175,927 98.2 %Food Lion
Southgate Village Birmingham, AL 198875,092 96.8 %Publix
Hollymead Town Center Charlottesville, VA2005158,807 88.4 %Harris Teeter
Free State Shopping Center Washington, DC1970264,152 88.3 %Giant
4,922,612 95.4 %
Redevelopment properties:
Champions Village Houston, TX 1973383,346 66.3 %Randalls
Sweetgrass Corner Charleston, SC 199989,124 32.9 %
Conway Plaza Orlando, FL 1966117,705 76.3 %Publix
Hanover Center (3)
 Wilmington, NC1954305,346 81.7 %Harris Teeter
Gayton Crossing Richmond, VA1983158,316 
 (4)
74.0 %Kroger
Fairfield Shopping Center (3)
Virginia Beach, VA1985231,829 82.2 %Food Lion
1,285,666 72.4 %
Grand total/weighted average6,208,278 90.7 %



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(1) Gross leasable area, or GLA, represents the total amount of property square footage that can be leased to tenants.
(2) Investment in an unconsolidated joint venture that is not prorated for our ownership percentage.
(3) Property is owned through a consolidated joint venture.
(4) The GLA figure shown excludes the GLA of the Kroger store, which is owned by others.

    As of September 30, 2021, our grocery-anchored shopping center portfolio was 90.7% leased (95.4% excluding redevelopment properties). We define percent leased as the percentage of gross leasable area that is leased as of the period end date, including non-cancelable lease agreements that have been signed which have not yet commenced. This metric is used by management to gauge the extent to which our grocery-anchored shopping centers are delivering their total potential rental and other revenues.

    Details regarding lease expirations (assuming no exercises of tenant renewal options) within our grocery-anchored shopping center portfolio as of September 30, 2021 were: