The following excerpt is from the company's SEC filing.
Total Revenues Grew 6.6% YoY
Same Store Average Occupancy Increased 1.4%
Collected 97% of Fourth Quarter Rents
New York, NY (February 11, 2021) –
Bluerock Residential Growth REIT, Inc. (NYSE American: BRG) (“the Company”), an owner of highly amenitized multifamily
apartment communities, announced today its financial results for the quarter ended December 31, 2020.
“We continue to drive solid same
store occupancy, average rent, and operating margins performance in our investments in highly amenitized, live/work/play apartment
communities, even with the challenges of COVID-19,” said Ramin Kamf ar, Company Chairman and CEO. “Our increased occupancy,
sequential quarterly rent growth improvement, and consistent elevated rental collections throughout the pandemic reflect a resilient
Class A affordable suburban based portfolio well positioned to outperform in the coming quarters. We will also continue to opportunistically
allocate capital through dispositions and new investments, as well as opportunistic share repurchases and redemption of our preferred
Fourth Quarter Highlights
Total revenues grew 6.6% to $56.0 million for
the quarter from $52.5 million in the prior year period.
Net loss attributable to common stockholders
for the fourth quarter of 2020 was ($1.13) per diluted share, as compared to net loss attributable to common stockholders of ($0.62)
per diluted share in the prior year period.
Property Net Operating Income (“NOI”) grew 9.7% to $30.9
million from $28.2 million in the prior year period.
Portfolio occupancy was 95.4% at December 31,
2020, up 140 basis points from the prior year.
Same store average occupancy increased 140
basis points and same store average rent increased 0.2%, as compared to the prior year period.
Same store revenue increased 0.6% and same
store NOI increased 0.2%, as compared to the prior year period.
Improved operating margins by 50 basis points
year over year to 62.1%.
Blended lease rate growth of 1.0%, up 60 basis
points on a sequential quarter-over-quarter basis. January 2021 average lease growth accelerated to 1.4%, led by renewals at 4.4%
and new leases at negative 1%.
Collected 97% of rents from its multifamily
properties for the three months ended December 31, 2020.
Core funds from operations attributable to
common shares and units (“CFFO”) was $6.1 million, compared to $6.7 million in the prior year period. CFFO per diluted
share was $0.18 for the fourth quarter as compared to $0.21
in the prior year period.
Consolidated real estate investments, at cost, were approximately
Acquired three multifamily communities totaling 968 units for a total
purchase price of $166 million.
Made two additional Strategic Portfolio preferred equity investments
in stabilized properties totaling $5 million and committed to another preferred equity investment in a development project for
Completed additional funding for eleven preferred equity, mezzanine
loan, and ground lease investments totaling $20 million.
Sold one operating asset for a sale price of
$38 million and net proceeds of $10 million. The asset was sold at an in-place cap rate of 3.3% adjusting for the buyer’s
year one taxes and $300 per unit replacement reserves.
Sold three development investments for gross
sales pricing of $218 million netting the Company proceeds of $70 million – two mezzanine loan repayments yielded $55 million
and one preferred equity investment returned $15 million in net proceeds to the Company.
Completed 65 value-add unit upgrades during the quarter achieving an average 23.9% ROI.
Paid quarterly dividend of $0.1625 in cash
per share of common stock.
Raised $76.2 million through its continuous registered Series T Preferred Stock offering in the quarter.
Completed partial redemptions of its 8.25% Series A Cumulative Redeemable Preferred Stock
totaling $85 million, including accrued and unpaid dividends. Subsequent to quarter end, the Company announced it will redeem the
remaining $55 million outstanding on February 26
Repurchased 2,851,975 shares of Class A common stock during the quarter at an average price of $9.81 per share.
As of December 31, 2020, had $208.3 million of unrestricted cash and availability under its revolving credit facilities.
Full Year Highlights
Total revenues grew 4.7% to $219.8 million
for the year from $210.0 million in the prior year.
Net loss attributable to common stockholders
for 2020 was ($1.91) per diluted share, as compared to ($0.91) per diluted share in the prior year.
Property NOI grew 8.4% to $120.2 million, from
$110.9 million in the prior year.
Same store revenue and NOI increased 0.9% and
0.3%, respectively, as compared to the prior year.
Completed 310 value-add unit upgrades during
the year producing an average 23.3% ROI through increased monthly rental rates.
Improved operating margin by 140 basis points
year over year to 61.2%.
CFFO was $23.7 million, compared to $25.4 million
in the prior year. CFFO per diluted share was $0.72 for the year as compared to $0.82 in the prior year.
Acquired six multifamily communities totaling 1,898 units for a total
purchase price of $338 million.
Made five additional Strategic Portfolio preferred
equity investments in stabilized properties totaling $17 million and committed to another preferred equity investment in a development
project for $10 million.
Committed to two mezzanine loan investments
in development properties for $22 million.
Purchased land for a ground lease for $3 million
and committed $20 million for the ground lease tenant’s multifamily development.
Completed additional funding for thirteen preferred
equity, mezzanine loan, and ground lease investments totaling $38 million and invested $4 million to buyout the noncontrolling
interests in an asset.
Sold five operating assets for a sales price
of $245 million and net proceeds of $90 million.
Sold four development investments for gross
sales pricing of $283 million netting the Company proceeds of $92 million – two mezzanine loan repayments yielded $55 million
and two preferred equity investments returned $38 million in net proceeds to the Company.
Paid quarterly dividends amounting to $0.65
on an annual basis in cash per share of common stock.
Raised $243 million through its continuous registered Series T Preferred Stock offering during the year.
Included later in this release are definitions
of NOI, CFFO and other Non-GAAP financial measures and reconciliations of such measures to their most comparable financial measures
as calculated and presented under GAAP.
COVID-19 Pandemic Update
Since the beginning of the COVID-19 pandemic,
the Company has executed on actions to prioritize the health and well-being of its tenants, business partners, service providers
and employees, while striving to provide the highest quality living experience possible and facilitating virtual leasing and services.
Post-Quarter Operational Performance
As of January 31, 2021, the Company had collected 97% of January rents from its multifamily properties.
Occupancy and availability remains strong at 95.6% and 7.4%, respectively, as of January 31, 2021.
In January, average lease rate grew 1.4% year over year.
Due to the uncertainties presented by the
COVID-19 pandemic, the Company continues to take measures to ensure an appropriate level of liquidity and believes it has sufficient
liquidity through this uncertain period.
The Company has approximately $158 million in unrestricted cash and availability under its revolving credit facilities as of
January 31, 2021.
Over $43 million was raised from the Company’s continuous registered Series T Preferred Stock offering to date in 2021.
Fourth Quarter 2020 Financial Results
Net loss attributable to common
stockholders for the fourth quarter of 2020 was ($26.2) million, compared to net loss attributable to common stockholders of ($13.8)
million in the prior year period. Net loss attributable to common stockholders included non-cash expenses of $31.2 million or $1.33
per share in the fourth quarter of 2020 compared to $18.6 million or $0.83 per share for the prior year period, which included
a $16.4 million provision for credit loss on a preferred equity investment, primarily due to the submarket conditions in Houston,
Texas impacting the underlying property operations.
CFFO for the fourth quarter
of 2020 was $6.1 million, or $0.18 per diluted share, compared to $6.7 million, or $0.21 per diluted share, in the prior year period.
CFFO was positively impacted by growth in property NOI of $2.7 million and preferred returns of $0.7 million. This was primarily
offset by a year-over-year decrease in interest income of $0.5 million, an increase in general and administrative expense of $0.1
million, and preferred stock dividends of $2.8 million.
Total Portfolio Performance
$ In thousands, except average rental rates
Property Operating Expenses
Average Occupancy Percentage
Average Rental Rate
For the fourth quarter of 2020, property
revenues increased by 8.8% compared to the same prior year period. Total portfolio NOI was $30.9 million, an increase of $2.7 million,
or 9.7%, compared to the same period in the prior year. Property NOI margins expanded by 50 basis points to 62.1% of revenue for
the quarter, compared to 61.6% of revenue in the prior year quarter.
Same Store Portfolio Performance
The Company’s same store
portfolio for the quarter ended December 31, 2020 included 28 properties. For the fourth quarter of 2020, same store NOI was
$25.5 million, an increase of $0.1 million, or 0.2%, compared to the 2019 period. Same store property revenues increased by
0.6% compared to the 2019 period, primarily driven by a 140-basis point increase in occupancy and 0.2% increase in average
rental rates; of our 28 same store properties, 22 recognized occupancy increases and 15 recognized rental rate increases
during the period. This was offset by $0.3 million increase in bad debt expense due to the impact of COVID-19.
Same store expenses increased 1.1%, or
$0.2 million, primarily because of a $0.2 million repairs and maintenance expense increase due to timing. Non-controllable expenses
were essentially flat; insurance expenses increased $0.2 million due to industrywide multifamily price increases offset by a $0.2
million real estate tax decrease from prior year. Real estate tax decrease was due to a $0.4 million credit in the current year
offset by $0.2 million of municipality tax increases.
The Company completed 65 value-add unit
upgrades during the fourth quarter achieving an average 23.9% ROI. Since inception, within the existing portfolio, the Company
has completed 2,955 value-add unit upgrades at an average cost of $5,916 per unit and achieved an average monthly rental rate increase
of $116 per unit, equating to an average 23.6% ROI on all unit upgrades leased as of December 31, 2020. The Company has identified
approximately 4,421 remaining units within the existing portfolio for value-add upgrades with similar projected economics to the
completed the following investments:
Acquired a 100% interest in a 266-unit apartment
community located in Morrisville, North Carolina, known as Carrington at Perimeter Park. The total purchase price was $52.0 million,
funded in part by a $31.3 million mortgage loan secured by the property.
Acquired a 100% interest in a 270-unit apartment
community located in Austin, Texas, known as Elan. The total purchase price was $39.5 million, funded in part by a $25.6 million
mortgage loan secured by the property.
Acquired a 90% interest in a 432-unit apartment
community located in Mesa, Arizona, known as Cielo on Gilbert. The total purchase price was $74.3 million, funded in part by a
$58.0 million mortgage loan secured by the property.
Made additional Strategic Portfolio preferred
equity investments totaling $5 million in two stabilized assets with 388-units called Water’s Edge and Hunter’s Pointe,
both located in Pensacola, Florida.
Entered into a preferred equity commitment
to invest $10.2 million in a 208-unit development called Encore Chandler located in Chandler, Arizona.
Funded $20 million under existing preferred
equity, mezzanine loan, and ground lease commitments in eleven investments.
completed the following activity subsequent to December 31, 2020:
On January 28, 2021, the Company sold ARIUM
Grandewood for a gross sales price of $65 million and net proceeds to the Company of $25 million.
Announced the redemption of its remaining outstanding
Series A Preferred Stock totaling $55 million.
As of December 31, 2020, the Company had
$208.3 million of unrestricted cash and availability under its revolving credit facilities, and $1.6 billion of indebtedness outstanding.
During the fourth quarter, the Company
raised gross proceeds of approximately $76.2 million through the issuance of 3.0 million shares of Series T Preferred Stock at
$25.00 per share. The Series T Preferred Stock continuous offering offers 20,000,000 preferred shares in the primary offering,
along with 12,000,000 preferred shares pursuant to a dividend reinvestment plan. The preferred shares are offered at $25.00 per
share and pay cumulative monthly dividends at a 6.15% annual rate, along with an annual stock dividend of up to 0.2% for five years.
The Company repurchased 2,851,975 shares
of Class A Common Stock during the fourth quarter at an average price of $9.81 per share.
On October 21, 2020, the Company redeemed
1,393,294 shares of its 8.25% Series A Cumulative Redeemable Preferred Stock, representing approximately 25% of the total outstanding
shares of Series A Preferred Stock. The total cost to redeem the shares was $35 million, including accrued and unpaid dividends.
In addition, on December 21, 2020, the Company redeemed 1,963,551 shares of its 8.25% Series A Cumulative Redeemable Preferred
Stock, representing approximately 47% of the then total outstanding shares of Series A Preferred Stock. The total cost to redeem
the shares was $50 million, including accrued and unpaid dividends.
The Board of Directors authorized,
and the Company declared, a quarterly cash dividend for the fourth quarter of 2020 equal to a quarterly rate of $0.1625 per share
on its Class A and Class C Common Stock, payable to the stockholders of record as of December 24, 2020, which was paid on January
5, 2021. A portion of each dividend may constitute a return of capital for tax purposes.
The Board of Directors authorized,
and the Company declared, a quarterly cash dividend on its 8.250% Series A Cumulative Redeemable Preferred Stock for the fourth
quarter of 2020, in the amount of $0.515625 per share. In addition, the Board of Directors authorized, and the Company declared,
a quarterly cash dividend on its 7.625% Series C Cumulative Redeemable Preferred Stock for the fourth quarter of 2020, in the amount
of $0.4765625 per share. Further, the Board of Directors authorized, and the Company declared, a quarterly cash dividend on its
7.125% Series D Cumulative Preferred Stock for the fourth quarter of 2020, in the amount of $0.4453125 per share. The dividends
were payable to the stockholders of record as of December 24, 2020, and were paid on January 5, 2021.
The Board of Directors authorized,
and the Company declared, a monthly dividend of $5.00 per share of Series B Preferred Stock, payable to the stockholders of record
as of October 23, 2020, November 25, 2020, and December 24, 2020, which were paid in cash on November 5, 2020, December 4, 2020
and January 5, 2021, respectively.
The Board of Directors authorized,
and the Company declared, a monthly dividend of $0.128125 per share of Series T Preferred Stock, prorated on the basis of the actual
number of days in the applicable dividend period during which each share was outstanding. Such pro-rated dividends were payable
to the stockholders of record as of October 23, 2020, November 25, 2020, and December 24, 2020, and were paid in cash on November
5, 2020, December 4, 2020 and January 5, 2021, respectively.
The Board authorized, and
the Company declared, an annual Series T Preferred Stock dividend of 0.20% per share of Series T Preferred Stock. Shares of
Series T Preferred Stock that are held only for a portion of the applicable annual stock dividend period received a prorated
Series T Preferred Stock dividend based on the actual number of months in the applicable annual stock dividend period during
which each such share of Series T Preferred Stock was outstanding. The annual stock dividend was payable to stockholders of
record on December 24, 2020 and was paid on December 29, 2020.
On January 13, 2021, the Board
of Directors authorized, and the Company declared, a monthly dividend of $5.00 per share of Series B Preferred Stock, payable to
the stockholders of record as of January 25, 2021, which was paid in cash on February 5, 2021, and as of February 25, 2021, and
March 25, 2021, which will be paid in cash on March 5, 2021 and April 5, 2021, respectively.
On January 13, 2021, the Board
of Directors authorized, and the Company declared, a monthly dividend of $0.128125 per share of Series T Preferred Stock, prorated
on the basis of the actual number of days in the applicable dividend period during which each share was outstanding. Such
pro-rated dividends are payable to the stockholders of record as of January 25, 2021, which was paid in cash on February 5, 2021,
and as of February 25, 2021, and March 25, 2021, which will be paid in cash on March 5, 2021 and April 5, 2021, respectively.
Based on the
Company’s current outlook and market conditions, the Company anticipates 2021 CFFO in the range of $0.65 to $0.70 per
share. The Company anticipates that earnings growth will be more heavily weighted towards the second half of 2021 as it
realizes the upside opportunity from deploying the proceeds from opportunistic dispositions in late 2020 and early 2021, plus
the implementation of institutional property management, lease-ups, and value-add renovations at its recent acquisitions. For
additional guidance details underlying earnings guidance, please see page 35 of Company’s Fourth Quarter 2020 Earnings
Supplement available under the Investors section on the Company’s website
All interested parties can listen to the
live conference call at 11:00 AM ET on Thursday, February 11, 2021 by dialing +1 (866) 843-0890 within the U.S., or +1 (412) 317-6597,
and requesting the "Bluerock Residential Conference."
For those who are not available to listen
to the live call, the conference call will be available for replay on the Company’s website two hours after the call concludes,
and will remain available until March 11, 2021 at
, as well as by dialing
+1 (877) 344-7529 in the U.S., or +1 (412) 317-0088 internationally, and requesting conference number 10151415.
The full text of this Earnings Release
and additional Supplemental Information is available in the Investors section on the Company’s website at
About Bluerock Residential Growth REIT,
Bluerock Residential Growth REIT,
Inc. (NYSE American: BRG) is a real estate investment trust that focuses on developing and acquiring a diversified portfolio of
institutional-quality highly amenitized live/work/play apartment communities in demographically attractive knowledge economy growth
markets to appeal to the renter by choice. The Company’s objective is to generate value through off-market/relationship-based
transactions and, at the asset level, through value add improvements to properties and operations. The Company is included in the
Russell 2000 and Russell 3000 Indexes. BRG has elected to be taxed as a real estate investment trust (REIT) for U.S. federal income
For more information, please
visit the Company’s website at
Forward Looking Statements
This press release contains
forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities
laws. These forward-looking statements are based upon the Company’s present expectations, but these statements are not guaranteed
to occur. Furthermore, the Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect
changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. Investors should
not place undue reliance upon forward-looking statements. Although the Company believes that the expectations reflected in these
forward-looking statements are based on reasonable assumptions, the Company’s actual results and performance could differ
materially from those set forth in these forward-looking statements due to numerous factors. Currently, one of the most significant
factors is the potential adverse effect of the COVID-19 pandemic on the financial condition, results of operations, cash flows
and performance of the Company and its tenants, partners and employees, as well as the real estate market and the global economy
and financial markets. The extent to which COVID-19 impacts the Company and its tenants, partners and employees will depend on
future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration
of the pandemic, the actions taken to contain the pandemic or mitigate its impact (including governmental actions that may vary
by jurisdiction, such as mandated business closing; stay-at-home orders; limits on group activity; and actions to protect residential
tenants from eviction), and the direct and indirect economic effects of the pandemic and containment measures, including national
and local employment rates and the corresponding impact on the Company’s tenants’ ability to pay their rent on time
or at all, among others. For further discussion of the factors that could affect outcomes, please refer to the risk factors set
forth in Item 1A of the Company’s Annual Report on Form 10-K filed by the Company with the U.S. Securities and Exchange Commission
(“SEC”) on February 24, 2020, and subsequent filings by the Company with the SEC. We claim the safe harbor protection
for forward looking statements contained in the Private Securities Litigation Reform Act of 1995.
The following is a summary of our operating real estate and
mezzanine/preferred/ground lease investments as of December 31, 2020:
Consolidated Operating Properties
ARIUM Hunter’s Creek
Las Vegas, NV
Falls at Forsyth
Gulfshore Apartment Homes
James on South First
Marquis at The Cascades
Outlook at Greystone
Park & Kingston
Pine Lakes Preserve
Port St. Lucie, FL
Lake Jackson, TX
Mount Juliet, TN
Roswell City Walk
Daytona Beach, FL
The District at Scottsdale
The Links at Plum Creek
Castle Rock, CO
The Preserve at Henderson Beach
The Reserve at Palmer Ranch
Veranda at Centerfield
Villages of Cypress Creek
Number of Units
Forma Average Rent
Alexan Southside Place
Domain at The One Forty
Fort Lauderdale, FL
Park on the Square
The Conley, formerly North Creek Apartments
The Park at Chapel Hill
Chapel Hill, NC
Vickers Historic Roswell
Wayford at Concord, formerly Wayforth at Concord
Portfolio Properties Total/Average
Represents date of last significant renovation or year built if there were no renovations.
Represents the average effective monthly rent per occupied unit for the three months ended December 31, 2020.
Percent occupied is calculated as (i) the number of units occupied as of December 31, 2020, divided by (ii) total number of units, expressed as a percentage.
For the Three and Twelve
Months Ended December 31, 2020 and 2019
(Unaudited and dollars
in thousands except for share and per share data)
Three Months Ended
Rental and other property revenues
Interest income from mezzanine loan and ground lease investments
Property management fees
General and administrative
Acquisition and pursuit costs
Weather-related losses, net
Depreciation and amortization
Other income (expense)
Preferred returns on unconsolidated real estate joint ventures
Provision for credit losses
Gain on sale of real estate investments
Gain on sale of non-depreciable real estate investments
Loss on extinguishment of debt and debt modification costs
Interest expense, net
Total other expense
Net (loss) income
Preferred stock dividends
Preferred stock accretion
Net (loss) income attributable to noncontrolling interests
Operating Partnership units
Net loss attributable to noncontrolling interests
Net loss per common share - Basic
Net loss per common share – Diluted
Weighted average basic common shares outstanding
Weighted average diluted common shares outstanding
Consolidated Balance Sheets
(Unaudited and dollars
in thousands except for share and per share amounts)
Net Real Estate Investments
Buildings and improvements
Furniture, fixtures and equipment
Total Gross Real Estate Investments
Total Net Operating Real Estate Investments
Operating real estate held for sale, net
Total Net Real Estate Investments
Cash and cash equivalents
Notes and accrued interest receivable, net
Due from affiliates
Accounts receivable, prepaids and other assets, net
Preferred equity investments and investments in unconsolidated real estate joint ventures, net
In-place lease intangible assets, net
Non-real estate assets associated with operating real estate held for sale
LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY
Mortgages payable associated with operating real estate held for sale
Revolving credit facilities
Other accrued liabilities
Due to affiliates
Liabilities associated with operating real estate held for sale
8.250% Series A Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share, 10,875,000 shares authorized; 2,201,547 and 5,721,460 shares issued and outstanding at December 31, 2020 and 2019, respectively
6.000% Series B Redeemable Preferred Stock, liquidation preference $1,000 per share, 1,225,000 shares authorized; 513,489 and 536,695 shares issued and outstanding at December 31, 2020 and 2019, respectively
7.625% Series C Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share, 4,000,000 shares authorized; 2,295,845 and 2,323,750 shares issued and outstanding at December 31, 2020 and 2019, respectively
6.150% Series T Redeemable Preferred Stock, liquidation preference $25.00 per share, 32,000,000 shares authorized; 9,717,917 and 17,400 shares issued and outstanding at December 31, 2020 and 2019, respectively
Preferred stock, $0.01 par value, 197,900,000 shares authorized; no shares issued and outstanding at December 31, 2020 and 2019
7.125% Series D Cumulative Preferred Stock, liquidation preference $25.00 per share, 4,000,000 shares authorized; 2,774,338 and 2,850,602 shares issued and outstanding at December 31, 2020 and 2019, respectively
Common stock - Class A, $0.01 par value, 747,509,582 shares authorized; 22,020,950 and 23,422,557 shares issued and outstanding at December 31, 2020 and 2019, respectively
Common stock - Class C, $0.01 par value, 76,603 shares authorized; 76,603 shares issued and outstanding at December 31, 2020 and 2019
Distributions in excess of cumulative earnings
Total Stockholders’ Equity
Operating partnership units
Partially owned properties
Total Noncontrolling Interests
TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY
Non-GAAP Financial Measures
The foregoing supplemental financial
data includes certain non-GAAP financial measures that we believe are helpful in understanding our business and performance, as
further described below. Our definition and calculation of these non-GAAP financial measures may differ from those of other REITs,
and may, therefore, not be comparable.
Funds from Operations and Core Funds
We believe that funds from operations (“FFO”),
as defined by the National Association of Real Estate Investment Trusts (“NAREIT”) and core funds from operations (“CFFO”)
are important non-GAAP supplemental measures of operating performance for a REIT.
FFO attributable to common
shares and units is a non-GAAP financial measure that is widely recognized as a measure of REIT operating performance. We
consider FFO to be an appropriate supplemental measure of our operating performance as it is based on a net income analysis
of property portfolio performance that excludes non-cash items such as depreciation. The historical accounting convention
used for real estate assets requires straight-line depreciation of buildings and improvements, which implies that the value
of real estate assets diminishes predictably over time. Since real estate values historically rise and fall with market
conditions, presentations of operating results for a REIT, using historical accounting for depreciation, could be less
informative. We define FFO, consistent with the NAREIT definition, as net income (loss), computed in accordance with GAAP,
excluding gains or losses on sales of depreciable real estate property, plus depreciation and amortization of real estate
assets, plus impairment write-downs of certain real estate assets and investments in entities where the impairment is
directly attributable to decreases in the value of depreciable real estate held by the entity, and after adjustments for
unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be
calculated to reflect FFO on the same basis.
CFFO makes certain adjustments
to FFO, removing the effect of items that do not reflect ongoing property operations such as acquisition expenses, non-cash interest,
unrealized gains and losses on derivatives, losses on extinguishment of debt and debt modification costs (includes prepayment penalties
incurred and the write-off of unamortized deferred financing costs and fair market value adjustments of assumed debt), one-time
weather-related costs, gain or losses on sales of non-depreciable real estate property, shareholder activism, stock compensation
expense and preferred stock accretion. Commencing January 1, 2020, we did not deduct the accrued portion of the preferred income
on our preferred equity investments from FFO to determine CFFO as the income is deemed fully collectible. The accrued portion of
the preferred income totaled $0.3 million and $1.5 million for the three and twelve months ended December 31, 2020, respectively.
We believe that CFFO is helpful to investors as a supplemental performance measure because it excludes the effects of certain items
which can create significant earnings volatility, but which do not directly relate to our core recurring property operations. As
a result, we believe that CFFO can help facilitate comparisons of operating performance between periods and provides a more meaningful
predictor of future earnings potential.
Our calculation of CFFO differs
from the methodology used for calculating CFFO by certain other REITs and, accordingly, our CFFO may not be comparable to CFFO
reported by other REITs. Our management utilizes FFO and CFFO as measures of our operating performance after adjustment for certain
non-cash items, such as depreciation and amortization expenses, and acquisition and pursuit costs that are required by GAAP to
be expensed but may not necessarily be indicative of current operating performance and that may not accurately compare our operating
performance between periods. Furthermore, although FFO and CFFO and other supplemental performance measures are defined in various
ways throughout the REIT industry, we also believe that FFO and CFFO may provide us and our stockholders with an additional useful
measure to compare our financial performance to certain other REITs.
Neither FFO nor CFFO is
equivalent to net income, including net income attributable to common stockholders, or cash generated from operating
activities determined in accordance with GAAP. Furthermore, FFO and CFFO do not represent amounts available for management's
discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments or
uncertainties. Neither FFO nor CFFO should be considered as an alternative to net income, including net income attributable
to common stockholders, as an indicator of our operating performance or as an alternative to cash flow from operating
activities as a measure of our liquidity.
We have acquired six operating properties, made eight
investments through mezzanine loans, preferred equity interests or ground lease investments, and sold six operating properties
subsequent to December 31, 2019. The results presented in the table below are not directly comparable and should not be considered
an indication of our future operating performance.
The table below reconciles our calculations of FFO and CFFO
to net loss, the most directly comparable GAAP financial measure, for the three and twelve months ended December 31, 2020 and 2019
(in thousands, except per share amounts):
Three Months Ended
Add back: Net loss attributable to Operating Partnership Units
Net loss attributable to common stockholders and unit holders
Common stockholders and Operating Partnership Units pro-rata share of:
Real estate depreciation and amortization
FFO Attributable to Common Stockholders and Unit Holders
Non-cash interest expense
Unrealized loss on derivatives
Non-real estate depreciation and amortization
Other income, net
Non-cash preferred returns on unconsolidated real estate joint ventures
Non-cash equity compensation
CFFO Attributable to Common Stockholders and Unit Holders
Per Share and Unit Information:
FFO Attributable to Common Stockholders and Unit Holders - diluted
CFFO Attributable to Common Stockholders and Unit Holders - diluted
Weighted average common shares and units outstanding - diluted
The real estate depreciation and amortization amount includes our share of consolidated real estate-related depreciation and amortization of intangibles, less amounts attributable to noncontrolling interests for partially owned properties, and our similar estimated share of unconsolidated depreciation and amortization, which is included in earnings of our unconsolidated real estate joint venture investments.
Earnings Before Interest, Taxes, Depreciation
and Amortization for Real Estate ("EBITDAre")
NAREIT defines earnings before interest,
taxes, depreciation and amortization for real estate ("EBITDAre") (September 2017 White Paper) as net income (loss),
computed in accordance with GAAP, before interest expense, income taxes, depreciation and amortization expense, and further adjusted
for gains and losses from sales of depreciated operating properties, and impairment write-downs of depreciated operating properties.
We consider EBITDAre to be an appropriate
supplemental measure of our performance because it eliminates depreciation, income taxes, interest and non-recurring items, which
permits investors to view income from operations unobscured by non-cash items such as depreciation, amortization, the cost of debt
or non-recurring items.
Adjusted EBITDAre represents EBITDAre further
adjusted for non-comparable items and it is not intended to be a measure of free cash flow for our management’s discretionary
use, as it does not consider certain cash requirements such as income tax payments, debt service requirements, capital expenditures
and other fixed charges.
EBITDAre and Adjusted EBITDAre are not
recognized measurements under GAAP. Because not all companies use identical calculations, our presentation of EBITDAre and Adjusted
EBITDAre may not be comparable to similarly titled measures of other companies.
Below is a reconciliation of
net (loss) income attributable to common stockholders to EBITDAre (unaudited and dollars in thousands).
Same Store Properties
Same store properties are
conventional multifamily residential apartments which were owned and operational for the entire periods presented, including each
Property Net Operating
Income ("Property NOI")
We believe that net operating
income, or NOI, is a useful measure of our operating performance. We define NOI as total property revenues less total property
operating expenses, excluding depreciation and amortization and interest. Other REITs may use different methodologies for calculating
NOI, and accordingly, our NOI may not be comparable to other REITs. We believe that this measure provides an operating perspective
not immediately apparent from GAAP operating income or net income. We use NOI to evaluate our performance on a same store and non-same
store basis; NOI measures the core operations of property performance by excluding corporate level expenses and other items not
related to property operating performance and captures trends in rental housing and property operating expenses. However, NOI should
only be used as a supplemental measure of our financial performance.
The following table reflects
net loss attributable to common stockholders together with a reconciliation to NOI and to same store and non-same store contributions
to consolidated NOI, as computed in accordance with GAAP for the periods presented (unaudited and amounts in thousands):
Add common stockholders and Operating Partnership Units pro-rata share of:
Real estate depreciation and
Corporate operating expenses
Less common stockholders and Operating Partnership Units pro-rata share of:
Pro-rata share of properties’ income
Noncontrolling interest pro-rata share of partially owned property income
Total property income
Net operating income
Non-same store net operating income
Same store net operating income
Same store portfolio for the three months ended December 31, 2020 consists of 28 properties, which represent 9,958 units. Same store portfolio for the year ended December 31, 2020 consists of 24 properties, which represent 8,459 units.
The above information was disclosed in a filing to the SEC. To see the filing, click here.
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