2Q 2018 SUPPLEMENTAL FINANCIAL INFORMATION May 8, 2018 BRT APARTMENTS CORP. 60 Cutter Mill Rd., Great Neck, NY 11021
Forward Looking Statements The information set forth herein contains Forward-Looking information within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking information included herein that is not historical fact is subject to a number of risks and uncertainties, depending upon the risks and uncertainties described in the Company's filings with the Securities and Exchange Commission (SEC), and actual results realized by the Company could differ materially from the forward-looking information included herein. Existing and prospective investors are cautioned not to place undue reliance on this forward-looking information, which speak only as of the date hereof. The Company undertakes no obligation to update or revise the information herein, whether as a result of new information, future events or circumstances, or otherwise. The Company recommends that existing and prospective investors review the information set forth in its Annual Report on Form 10-K for the year ended September 30, 2017 (filed December 14, 2017) and the Quarterly Report on Form 10-Q filed contemporaneously herewith. Our fiscal year ends on September 30 and unless otherwise indicated or the context otherwise requires, all references to a quarter or year refer to the applicable fiscal quarter or year.
Table of Contents Table of Contents Page Number Financial Highlights 1 Operating Results 2 Funds From Operations 3 Consolidated Balance Sheets 4 Pro Rata Operating Results 5 Pro Rata Balance Sheets 6 Portfolio Data by State 7 Same Store Comparison ( First Quarter) 8 Same Store Comparison (Fiscal YTD) 9 Multi -Family Acquisitions and Dispositions 10 Debt Analysis 11 Non -GAAP Financial Measures, Definitions, and 12-13 Reconciliations Portfolio Table 14
Financial Highlights March 31, As of September 30, 2018 2017 2017 2016 2015 Market Information Market capitalization $ 167,799,412 $ 116,677,054 $ 150,320,535 $ 111,190,680 $ 99,976,487 Shares outstanding 14,280,801 14,040,560 14,022,438 13,898,835 14,101,056 Closing share price $ 11.75 $ 8.31 $ 10.72 $ 8.00 $ 7.09 Quarterly dividend declared per share $ 0.20 $ - $ - $ - $ - Portfolio Multi-family properties owned 34 32 33 33 28 Units (1) 9,632 8,805 9,568 9,420 8,300 Average occupancy (2) 92.8 % 93.3 % 93.8 % 92.8 % 94.5 % Average monthly rental revenue per occupied unit (2) $977 $906 $933 $852 $810 Quarter ended March 31, Six Months ended March 31, 2018 2017 2018 2017 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Per Share Data Earnings per share (basic) $ 1.77 $ (0.30) $ 2.23 $ 0.83 Earnings per share (diluted) $ 1.75 $ (0.30) $ 2.20 $ 0.83 FFO per share of common stock (diluted) (3) $ 0.37 $ 0.12 $ 0.58 $ 0.26 AFFO per share of common stock (diluted) (3) $ 0.26 $ 0.16 $ 0.53 $ 0.37 (1) Includes units at properties engaged in lease-up and proerties under development. (2) Average includes stabilized properties and, for the quarters ended March 31, 2017 and 2018, excludes Retreat at Cinco Ranch due to damage suffered from Hurricane Harvey. (3) See the reconciliation of Funds From Operations, or FFO, and Adjusted Funds From Operations, or AFFO, to net income, as calculated in accordance with GAAP, on page 3, and the definitions of such terms at page 13. 1
Operating Results (Unaudited) (dollars in thousands, except per share amounts) Quarter ended March 31, Six Months ended March 31, 2018 2017 2018 2017 Revenues Rental and other revenue from real estate properties $ 29,476 $ 24,702 $ 57,638 $ 49,731 Other income 175 181 362 792 Total revenues 29,651 24,883 58,000 50,523 Expenses Real estate operating expenses 14,198 11,909 27,545 24,355 Interest expense 8,657 6,402 16,637 13,089 General and administrative 2,453 2,390 4,756 4,987 Depreciation 9,240 7,772 17,888 14,069 Total expenses 34,548 28,473 66,826 56,500 Total revenues less total expenses (4,897) (3,590) (8,826) (5,977) Equity in loss of unconsolidated joint ventures (63) - (88) - Gain on sale of real estate 51,981 - 64,500 35,838 Gain on insurance recovery 3,227 3,227 - Loss on extinguishment of debt (593) - (850) (799) Income (loss) from continuing operations 49,655 (3,590) 57,963 29,062 Income tax (benefit) provision (253) 1,108 (147) 1,458 Income (loss) from continuing operations, net of taxes 49,908 (4,698) 58,110 27,604 Net (income) loss attributable to non-controlling interests (24,686) 469 (26,537) (16,063) Net income (loss) attributable to common stockholders$ 25,222 $ (4,229) $ 31,573 $ 11,541 Per share amounts attributable to common stockholders: Basic $ 1.77 $ (0.30) $ 2.23 $ 0.83 Diluted $ 1.75 $ (0.30) $ 2.20 $ 0.83 Weighted average number of shares of common stock outstanding: Basic 14,242,076 14,018,099 14,131,050 13,957,706 Diluted 14,442,076 14,018,099 14,331,050 13,957,706 2
Funds From Operations (Unaudited) (dollars in thousands, except per share amounts) Quarter Ended March 31, Six Months ended March, 31 2018 2017 2018 2017 GAAP Net income (loss) attributable to common stockholders$ 25,222 $ (4,229) $ 31,573 $ 11,541 Add: depreciation of properties 9,240 7,772 17,888 14,069 Add: our share of depreciation in unconsoliated joint ventures 447 130 816 213 Deduct: gain on sales of real estate and partnership interests (51,981) - (64,500) (35,838) Adjustment for non-controlling interest 22,406 (1,923) 22,596 13,651 Funds from operations (FFO) attributable to 5,334 1,750 8,373 3,636 common stockholders Adjust for straight line rent accruals (10) (14) (20) (36) Add: loss on extinguishment of debt 593 - 850 799 Add: amortization of restricted stock and RSU expense 297 386 612 710 Add: amortization of deferred mortgage costs 373 224 732 525 Deduct: gain on insurance recovery (3,227) - (3,227) - Adjustment for non-controlling interest 434 (44) 307 (469) Adjusted funds from operations (AFFO) $ 3,794 $ 2,302 $ 7,627 $ 5,165 attributable to common stockholders Per share data GAAP Net income (loss) attributable to common stockholders$ 1.75 $ (0.30) $ 2.21 $ 0.83 Add: depreciation of properties 0.64 0.55 1.23 1.01 Add: our share of depreciation in unconsoliated joint ventures 0.03 0.01 0.06 0.02 Deduct: gain on sales of real estate and partnership interests (3.60) - (4.50) (2.58) Adjustment for non-controlling interest 1.55 (0.14) 1.58 0.98 Funds from operations (FFO) attributable to 0.37 0.12 0.58 0.26 common stockholders Adjust for straight line rent accruals - - - - Add: loss on extinguishment of debt 0.04 - 0.06 0.06 Add: amortization of restricted stock and RSU expense 0.01 0.03 0.04 0.05 Add: amortization of deferred mortgage costs 0.03 0.02 0.05 0.04 Deduct: gain on insurance recovery (0.22) (0.22) Adjustment for non-controlling interest 0.03 (0.01) 0.02 (0.04) Adjusted funds from operations (AFFO) $ 0.26 $ 0.16 $ 0.53 $ 0.37 attributable to common stockholders 3
Consolidated Balance Sheets (dollars in thousands) At March 31, At September 30, 2018 (Unaudited) 2017 2016 2015 Assets Real estate properties, net of accumulated depreciation$ 993,250 $ 902,281 $ 759,576 $ 591,727 Real estate loan 5,200 5,500 19,500 - Cash and cash equivalents 30,974 12,383 27,399 15,556 Restricted cash 7,702 6,151 7,383 6,518 Deposits and escrows 23,655 27,839 18,972 12,782 Investments in unconsolidated joint ventures 20,845 21,415 298 - Other assets 7,005 9,359 7,775 6,882 Assets of discontinued operations - - - 163,545 Real estate properties held for sale - 8,969 33,996 23,859 Total Assets $ 1,088,631 $ 993,897 $ 874,899 $ 820,869 Liabilities and equity Liabilities Mortgages payable, net of deferred costs$ 743,225 $ 697,826 $ 588,457 $ 451,159 Junior subordinated notes, net of deferred costs 37,028 37,018 36,998 36,978 Accounts payable and accrued liabilities 17,002 22,348 20,716 14,780 Liabilities of discontinued operations - - - 138,530 Mortgage payable held for sale - - 27,052 19,248 Total liabilities 797,255 757,192 673,223 660,695 Equity Common Stock, $.01 par value, 300,000 shares authorized; 13,575 and 13,333 outstanding 136 133 - - Shares of beneficial interest, $3 per value - - 39,696 40,285 Additional paid in capital 203,838 201,910 161,321 161,842 Accumulated other comprehensive income (loss) 2,132 1,000 (1,602) (58) Accumulated deficit (10,967) (37,047) (48,125) (79,414) Total BRT Apartments Corp. stockholders' equity 195,139 165,996 151,290 122,655 Non-controlling interests 96,237 70,709 50,386 37,519 Total Equity 291,376 236,705 201,676 160,174 Total Liabilities and Equity $ 1,088,631 $ 993,897 $ 874,899 $ 820,869 4
Pro Rata Operating Results (Unaudited) (dollars in thousands) Three Months ended March 31, 2018 Consolidated BRT Proportionate Amount Noncontrolling Interest Amount (1) Revenues Rental and other revenue from real estate properties $ 29,476 $ 7,927 $ 21,549 Other income 175 - 175 Total revenues 29,651 7,927 21,724 Expenses Real estate operating expenses 14,198 3,868 10,330 Interest expense 8,657 2,298 6,359 General and administrative 2,453 - 2,453 Depreciation 9,240 2,731 6,509 Total expenses 34,548 8,897 25,651 Total revenues less total expenses (4,897) (970) (3,927) Equity in loss of unconsolidated joint ventures (63) - (63) Gain on sale of real estate 51,981 25,141 26,840 Gain on insurance recovery 3,227 807 2,420 Loss on extinguishment of debt (593) (292) (301) Income from continuing operations 49,655 24,686 24,969 Income Tax (Benefit) Provision (253) - (253) Net income $ 49,908 $ 24,686 $ 25,222 Six Months ended March 31, 2018 Consolidated BRT Proportionate Amount Noncontrolling Interest Amount (1) Revenues Rental and other revenue from real estate properties $ 57,638 $ 14,868 $ 42,770 Other income 362 - 362 Total revenues 58,000 14,868 43,132 Expenses Real estate operating expenses 27,545 7,178 20,367 Interest expense 16,637 4,232 12,405 General and administrative 4,756 - 4,756 Depreciation 17,888 5,029 12,859 Total expenses 66,826 16,439 50,387 Total revenues less total expenses (8,826) (1,571) (7,255) Equity in loss of unconsolidated joint ventures (88) - (88) Gain on sale of real estate 64,500 27,645 36,855 Gain on insurance recovery 3,227 807 2,420 Loss on extinguishment of debt (850) (344) (506) Income from continuing operations 57,963 26,537 31,426 Income tax (benefit) provision (147) - (147) Net income $ 58,110 $ 26,537 $ 31,573 (1) This column reflects BRT’s share of the applicable line item, after deducting the non-controlling interest applicable to such line item. Except with respect to the gain on sale of real estate and loss on extinguishment of debt, the impact of the non-controlling interest on such line item was calculated based on each joint venture partner’s percentage equity interest in the applicable joint venture. Gain on sale of real estate and loss on extinguishment of debt were calculated in accordance with the allocation/distribution provisions of the joint venture operating agreement with respect to the properties sold. Generally, in the event of the sale of a multi-family property owned by a joint venture, as a result of allocation/distribution provisions of the applicable joint venture operating agreement, the allocation and distributions of cash and profits to BRT (as opposed to BRT's joint venture partner) will be less than that implied by BRT's percentage equity interest in the property. 5
Pro Rata Consolidated Balance Sheets (Unaudited) (dollars in thousands) At March 31, 2018 BRT Consolidated Noncontrolling Proportionate Amount Interest Amount (1) Assets Real estate properties, net of accumulated depreciation$ 993,250 $ 304,235 $ 689,015 Real estate loan 5,200 - 5,200 Cash and cash equivalents 30,974 4,166 26,808 Restricted cash 7,702 - 7,702 Deposits and escrows 23,655 10,187 13,468 Investments in unconsolidated joint ventures 20,845 - 20,845 Other assets 7,005 1,888 5,117 Total Assets $ 1,088,631 $ 320,476 $ 768,155 Liabilities and equity Liabilities Mortgages payable, net of deferred costs$ 743,225 $ 220,210 $ 523,015 Junior subordinated notes, net of deferred costs 37,028 - 37,028 Accounts payable and accrued liabilities 17,002 4,029 12,973 Total liabilities 797,255 224,239 573,016 Equity Common Stock, $.01 par value, 300,000 shares authorized; 13,575 and 13,333 outstanding 136 - 136 Additional paid in capital 203,838 - 203,838 Accumulated other comprehensive income (loss) 2,132 - 2,132 Accumulated deficit (10,967) - (10,967) Non-controlling interest 96,237 96,237 - Total equity 291,376 96,237 195,139 Total Liabilities and Equity $ 1,088,631 $ 320,476 $ 768,155 (1) This column reflects BRT’s share of the applicable line item, after deducting the non-controlling interest applicable to such line item. 6
Portfolio Data by State (dollars in thousands, except monthly rent amounts) Quarter Ended March 31, 2018 Weighted Average % of NOI Average Monthly Rent per Units (1) Revenues Expenses NOI (2) Contribution Occupancy (3) Occupied Unit (3) Texas 2,815 $ 8,825 $ 4,745 $ 4,080 27% 92.1%$ 990 Georgia 1,545 3,847 (4) 1,525 (4) 2,321 15% 92.9% 903 Florida 1,040 3,288 (5) 1,404 (5) 1,884 12% 92.8% 1,240 Mississippi 776 2,112 825 1,287 8% 96.4% 871 Missouri 775 2,607 1,260 1,347 9% 91.3% 995 South Carolina 683 2,151 1,190 961 6% 91.8% 971 Alabama 412 1,008 469 539 4% 95.4% 737 Indiana 400 887 516 371 2% 94.3% 663 Tennessee 300 1,060 370 690 5% 99.0% 1,121 Ohio 264 683 304 380 2% 95.6% 832 Virginia 220 963 281 682 4% 96.4% 1,307 Other - 378 146 232 2% N/A N/A Totals 9,230 $ 27,809 $ 13,034 $ 14,775 96% 93.4%$ 973 Sold Properties 1,160 1,667 1,164 503 4% 86.8% 1,200 Totals $ 29,476 $ 14,198 $ 15,278 100% 92.8%$ 977 (1) Excludes 402 units under development in West Nashville, TN. (2) See the reconciliation of NOI to net income, as calculated in accordance with GAAP, at page 12 and the definition at page 13. (3) Excludes properties that are not stabilized and Retreat at Cinco Ranch. (4) Includes $955 and $443 in revenues and expenses, respectively, relating to a property purchased during the three months ended March 31, 2018. (5) Includes $1,777 and $720 in revenues and expenses, respectively, relating to a property purchased during the three months ended March 31, 2018. 7
Same Store Comparisons Quarter Ended March 31, 2018 and 2017 (dollars in thousands, except monthly rent amounts) Quarter ended March 31, 2018 Revenues Property Operating Expenses NOI (2) Units Q2 2018 Q2 2017 Growth Q2 2018 Q2 2017 Growth Q2 2018 Q2 2017 Growth Texas (1) 1,918 $ 5,741 $ 5,488 4.6% $ 3,195 $ 3,106 2.8% $ 2,546 $ 2,382 6.9% Florida 276 782 775 0.8% 348 283 23.1% 433 492 (12.0%) Alabama 208 483 462 4.5% 225 217 3.6% 258 245 5.2% Georgia 959 2,891 2,745 5.3% 1,083 1,273 (14.9%) 1,809 1,472 22.9% Missouri 420 1,098 1,060 3.6% 535 504 6.1% 563 555 1.3% South Carolina 412 1,263 1,313 (3.8%) 707 649 8.9% 556 663 (16.2%) Indiana 400 887 836 6.1% 516 493 4.6% 371 343 8.3% Mississippi 776 2,112 2,040 3.5% 825 808 2.1% 1,286 1,233 4.3% Tennessee 300 1,060 994 6.6% 370 399 (7.4%) 690 595 16.0% Virginia 220 963 869 10.8% 281 255 10.2% 682 614 11.1% Ohio 264 683 672 1.7% 304 252 20.6% 380 420 (9.5%) Totals 6,153 $ 17,963 $ 17,254 4.1% $ 8,389 $ 8,240 1.8% $ 9,574 $ 9,014 6.2% Weighted Average Monthly Rent per Occupied Quarter ended March 31, 2018 Weighted Average Occupancy Unit Q2 2018 Q2 2017 Growth Q2 2018 Q2 2017 Growth Texas (1) 94.3% 91.6% 3.0% $ 931 $ 921 1.1% Florida 87.4% 86.3% 1.3% 978 977 0.1% Alabama 95.4% 95.4% 0.0% 720 686 5.0% Georgia 93.2% 93.6% (0.5%) 967 918 5.3% Missouri 94.7% 91.1% 4.0% 770 755 2.1% South Carolina 91.8% 95.0% (3.4%) 971 993 (2.2%) Indiana 94.3% 91.7% 2.8% 663 635 4.4% Mississippi 96.4% 95.1% 1.4% 871 852 2.2% Tennessee 99.0% 97.6% 1.4% 1,121 1,072 4.5% Virginia 96.4% 94.1% 2.4% 1,307 1,253 4.3% Ohio 95.6% 97.4% (1.8%) 832 796 4.5% Totals 93.8% 93.2% 0.6% $ 917 $ 896 2.3% (1) Excludes Retreat at Cinco Ranch in Katy, TX that suffered significant damage as a result of Hurricane Harvey. (2) Generally, negative variances in NOI are, among other things, due to higher turnover, changes in occupancy, increases in real estate taxes, and/or increases in insurance. See definition of Same Store on page 13 8
Same Store Comparisons Six Months ended March 31, 2018 and 2017 (dollars in thousands, except monthly rent amounts) 2018 YTD Results Revenues Property Operating Expenses NOI (1) Units 2018 2017 Growth 2018 2017 Growth 2018 2017 Growth Texas 1,918 $ 11,347 $ 10,812 (2) 4.9% $ 6,482 $ 6,145 5.5% $ 4,865 $ 4,667 4.2% Florida 234 1,573 1,606 (2.1%) 691 730 (5.3%) 882 877 0.6% Georgia 959 5,787 5,474 5.7% 2,327 2,590 (10.1%) 3,460 2,884 20.0% Mississippi 776 4,236 4,100 3.3% 1,549 1,603 (3.4%) 2,687 2,497 7.6% Missouri 420 2,189 2,065 6.0% 1,175 907 29.6% 1,014 1,158 (12.4%) South Carolina 412 2,535 2,610 (2.9%) 1,414 1,347 5.0% 1,121 1,262 (11.2%) Indiana 400 1,800 1,643 9.5% 1,056 981 7.7% 744 663 12.2% Tennessee 300 2,107 2,008 4.9% 776 784 (1.0%) 1,332 1,223 8.9% Ohio 264 1,376 1,309 5.1% 604 559 8.0% 772 750 3.0% Alabama 208 978 936 4.5% 439 405 8.3% 539 530 1.6% Totals 5,891 $ 33,929 $ 32,563 4.2% $ 16,513 $ 16,051 2.9% $ 17,416 $ 16,512 5.5% Weighted Average Monthly Rent per 2018 YTD Results Weighted Average Occupancy Occupied Unit 2018 2017 Growth 2018 2017 Growth Florida 88.4% 89.0% (0.7%) $ 985 $ 990 (0.4%) Texas 93.9% 91.0% 3.3% 931 915 1.7% Alabama 95.9% 96.2% (0.3%) 722 685 5.4% Missouri 94.1% 90.8% 3.6% 771 789 (2.4%) Mississippi 96.6% 96.1% 0.4% 874 853 2.4% Indiana 95.3% 89.7% 6.2% 676 641 5.5% Tennessee 98.9% 97.7% 1.2% 1,115 1,075 3.7% Ohio 96.9% 96.8% 0.1% 826 782 5.6% Georgia 93.8% 93.8% (0.0%) 958 916 4.6% South Carolina 91.6% 94.5% (3.1%) 989 998 (0.9%) Totals 93.1% 94.0% (0.9%) $ 903 $ 883 2.3% (1) Generally, negative variances in NOI are, among other things, due to higher turnover, changes in occupancy, and/or increases in taxes. (2) Includes $156 of expenses relating to casualty loss from Hurricane Harvey 9
Multi -Family Acquisitions and Dispositions Quarter Ended March 31, 2018 (dollars in thousands) Acquisitions Purchase Contract Acquisition Ownership Capitalized Location Date No. of Units Purchase Price Mortgage Debt Initial BRT Equity Percentage Acquisition Costs Ocoee, FL 2/7/2018 522$ 71,347 $ 53,060 $ 12,370 50%$ 1,047 Lawrenceville, GA 2/15/2018 586 77,229 54,447 15,179 50% 767 1,108$ 148,576 $ 107,507 $ 27,549 $ 1,814 Acquisitions Subsequent to March 31, 2018 Purchase Contract Acquisition Ownership Capitalized Location Date No. of Units Purchase Price Mortgage Debt Initial BRT Equity Percentage Acquisition Costs Daytona Beach, FL 4/30/2018 208$ 20,500 $ 13,608 $ 6,900 80%$ 383 Dispositions Mortgage BRT Portion of BRT Portion of Prepayment Mortgage Location Sale Date No. of Units Sales Price Gain on Sale Gain on Sale (1) Charge Prepayment Charge Palm Beach Gardens, FL 2/5/2018 542$ 97,200 $ 41,830 $ 21,237 $ 593 $ 304 Valley, AL 2/23/2018 618$ 51,000 $ 9,712 $ 5,165 $ - $ - 1,160$ 148,200 $ 51,542 $ 26,402 $ 593 $ 304 (1) BRT's share of the gain equals the property gain of $51,542 less the non-controlling interest of $20,593 for Palm Beach Gardens, FL and $4,547 for Valley, AL. 10
Debt Analysis As of March 31, 2018 (in thousands, except property data amounts) Mortgage Debt Percent of Total Principal Weighted Total Principal Scheduled Principal Payments Payments Due At Average Interest Year Payments Amortization Due at Maturity Maturity Rate (1) 2018$ 31,642 $ 2,642 $ 29,000 4% 4.30% 2019 5,821 5,821 - - - 2020 62,172 6,803 55,369 8% 3.53% 2021 22,386 8,384 14,002 2% 4.29% 2022 40,593 8,521 32,072 5% 4.40% Thereafter 587,160 43,868 543,292 81% 4.13% Total$ 749,774 $ 76,039 $ 673,735 100% Weighted Average Remaining Term to Maturity 7.4 years Weighted Average Interest Rate 4.10% Debt Service Coverage Ratio (2) 1.37 (1) Based on balloon payments at maturity. (2) See definition of Debt Service Coverage Ratio on page 13. Junior Subordinated Notes Principal Balance $37,400 Interest Rate 3 month LIBOR + 2.00% ( i.e, 3.77% at 3/31/2018) Maturity April 30, 2036 11
NON -GAAP FINANCIAL MEASURES DEFINITIONS AND RECONCILIATIONS (dollars in thousands) We define NOI as total property revenues less total property operating expenses. Property operating expenses exclude, among other things, depreciation and interest expense on the related property. Other REIT’s may use different methodologies for calculating NOI, and accordingly, our NOI may not be comparable to other REIT’s. We believe NOI provides an operating perspective not immediately apparent from GAAP operating income or net (loss) income. NOI is one of the measures we use to evaluate our performance because it (i) measures the core operations of property performance by excluding corporate level expenses and other items unrelated to property operating performance and (ii) captures trends in rental housing and property operating expenses. However, NOI should only be used as an alternative measure of our financial performance. The following table provides a reconciliation of NOI to net income attributable to common stock holders as computed in accordance with GAAP for the periods presented: Three Months ended March 31, 2018 2017 (Unaudited) (Unaudited) GAAP Net income attributable to common stockholders$ 25,222 $ (4,229) Less: Other Income (175) (181) Add: Interest expense 8,657 6,402 General and administrative 2,453 2,390 Depreciation 9,240 7,772 Less: Gain on sale of real estate (51,981) - Gain on insurance proceeds (3,227) Add: Loss on extinguishment of debt 593 - Equity in loss of unconsolidated joint ventures 63 - Provision for taxes (253) 1,108 Add: Net income attributable to non-controlling interests 24,686 (469) Net Operating Income $ 15,278 $ 12,793 Six Months ended March 31, 2018 2017 (Unaudited) (Unaudited) GAAP Net income attributable to common stockholders$ 31,573 $ 11,541 Less: Other Income (362) (792) Add: Interest expense 16,637 13,089 General and administrative 4,756 4,987 Depreciation 17,888 14,069 Less: Gain on sale of real estate (64,500) (35,838) Gain on insurance proceeds (3,227) - Add: Loss on extinguishment of debt 850 799 Equity in loss of unconsolidated joint ventures 88 - Provision for taxes (147) 1,458 Add: Net income attributable to non-controlling interests 26,537 16,063 Net Operating Income $ 30,093 $ 25,376 12
NON -GAAP FINANCIAL MEASURES DEFINITIONS AND RECONCILIATIONS (dollars in thousands) Funds from Operations (FFO) FFO is a non-GAAP financial performance measure defined by the National Association of Real Estate Investment Trusts and is widely recognized by investors and analysts as one measure of operating performance of a REIT. The FFO calculation excludes items such as real estate depreciation and amortization, gains and losses on the sale of real estate assets and impairment on depreciable assets. Historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, which implies that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, it is management’s view, and we believe the view of many industry investors and analysts, that the presentation of operating results for a REIT using the historical accounting for depreciation is insufficient. FFO excludes gains and losses from the sale of real estate, which we believe provides management and investors with a helpful additional measure of the performance of our real estate portfolio, as it allows for comparisons, year to year, that reflect the impact on operations from trends in items such as occupancy rates, rental rates, operating costs, general, administrative and other expenses, and interest expenses. Adjusted Funds from Operations (AFFO) AFFO, as defined by us, excludes from FFO straight line rent adjustments, loss on extinguishment of debt, amortization of restricted stock and RSU expense, amortization of deferred mortgage costs and gain on insurance recovery. Management believes that excluding acquisition-related expenses from AFFO provides investors with supplemental performance information that is consistent with the performance models and analysis used by management and provides investors a view of the performance of our portfolio over time, including after the time we cease to acquire properties on a frequent and regular basis. We believe that AFFO enables investors to compare the performance of our portfolio with other REITs that have not recently engaged in acquisitions, as well as a comparison of our performance with that of other non-traded REITs, as AFFO, or an equivalent measure is routinely reported by non-traded REITs, and we believe often used by analysts and investors for comparison purposes. Debt Service Coverage Ratio Debt service coverage ratio is net operating income ("NOI") divided by total debt service. Total Debt Service Total debt service is the cash required to cover the repayment of interest and principal on a debt for a particular period. Total debt service is used in the calculation of the debt service coverage ratio which is used to determine the borrower’s ability to make debt service payments. Stabilized Properties For all periods presented, stabilized properties include all our consolidated properties, other than those in lease-up or development, and for the three and six months ended March 31, 2018, also excludes a Katy, Texas property that was damaged by Hurricane Harvey. Same Store Same store refers to stabilized properties that we and our consolidated joint ventures owned and operated for the entirety of both periods being compared. 13
Portfolio Table As of 5/8/2018 Q2 2018 Q2 2018 Avg Avg. Rent per % Property City State Year Built Property Age No. of Units Occupancy Occ. Unit Ownership Silvana Oaks North Charleston SC 2010 9 208 95%$ 1,115 100% Avondale Station Decatur GA 1950 69 212 95% 1,034 100% Stonecrossing Houston TX 1978 41 240 96% 868 91% Pathway Houston TX 1979 40 144 94% 895 91% Brixworth at Bridgestreet Huntsville AL 1985 34 208 95% 720 80% Newbridge Commons Columbus OH 1999 20 264 96% 832 100% Waterside at Castleton Indianapolis IN 1983 36 400 94% 663 80% Crossings of Bellevue Nashville TN 1985 34 300 99% 1,121 80% Kendall Manor Houston TX 1981 38 272 96% 815 80% Avalon Pensacola FL 2008 11 276 87% 978 100% Parkway Grande San Marcos TX 2014 5 192 93% 1,066 80% Cedar Lakes Lake St. Louis MO 1985 34 420 95% 770 80% Factory at Garco North Charleston SC 2017 2 271 85% 1,180 65% Woodland Trails LaGrange GA 2010 9 236 98% 910 100% Retreat at Cinco Ranch Katy TX 2008 11 268 62% 1,606 75% Grove at River Place Macon GA 1988 31 240 92% 702 80% Civic Center 1 Southaven MS 2002 17 392 96% 850 60% Verandas at Shavano Park San Antonio TX 2014 5 288 97% 1,003 65% Chatham Court and Reflections Dallas TX 1986 33 494 93% 911 50% Waters Edge at Harbison Columbia SC 1996 23 204 88% 813 80% Pointe at Lenox Park Atlanta GA 1989 30 271 89% 1,206 74% Civic Center 2 Southaven MS 2005 14 384 96% 893 60% Verandas at Alamo Ranch San Antonio TX 2015 4 288 93% 986 72% Kilburn Crossing Fredericksburg VA 2005 14 220 96% 1,307 80% OPOP Towers St. Louis MO 2014 5 128 83% 1,617 76% OPOP Lofts St. Louis MO 2014 5 53 85% 1,515 76% Vanguard Heights Creve Coeur MO 2016 3 174 86% 1,525 78% Mercer Crossing Dallas TX 2014/2016 5 509 85% 1,277 50% Jackson Square Tallahassee FL 1996 23 242 91% 1,006 80% Magnolia Pointe Madison AL 1991 28 204 95% 790 80% Woodland Apartments Boerne TX 2007 12 120 91% 847 80% The Avenue Ocoee FL 1998 21 522 96% 1,588 50% Parc at 980 Lawrenceville GA 1997 22 586 92% 742 50% Anatole Apartments Daytona FL 1986 33 208 N/A N/A 80% Total/Weighted Average 21.7 9,438 Development Projects Bell's Bluff Nashville TN N/A N/A 402 N/A N/A 58% Total (Including Development Projects) 9,840 % Unconsolidated Joint Ventures City State Year Built Property Age No. of Units Ownership Canalside Sola (1) Columbia SC N/A N/A 338 46% Canalside Lofts Columbia SC 2008/2013 11 374 32% Gateway Oaks Forney TX 2016 3 313 50% Total 1,025 (1) Development project 14