Exhibit 99.2
NYSE: IRT
WWW.IRTLIVING.COM
Q3 2017 Earnings Release &
Supplemental Information
TABLE OF CONTENTS
Company Information | | 3 |
| | |
Forward-Looking Statements | | 4 |
| | |
Earnings Release Text | | 5 |
| | |
Financial & Operating Highlights | | 9 |
| | |
Balance Sheets | | 10 |
| | |
Statements of Operations, FFO & CORE FFO | | |
Trailing 5 Quarters | | 11 |
Three and Nine Months Ended September 30, 2017 and 2016 | | 12 |
| | |
Adjusted EBITDA Reconciliations and Coverage Ratio | | |
Trailing 5 Quarters | | 13 |
Three and Nine Months Ended September 30, 2017 and 2016 | | 13 |
| | |
Same-Store Portfolio Net Operating Income | | |
Trailing 5 Quarters | | 14 |
Three and Nine Months Ended September 30, 2017 and 2016 | | 15 |
| | |
Net Operating Income Bridge | | 16 |
| | |
Capital Recycling Activity | | 17 |
| | |
Property Summary | | 18 |
| | |
NOI Exposure by Market | | 19 |
| | |
Debt Summary | | 20 |
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Definitions | | 21 |
2
Independence Realty Trust
September 30, 2017
Company Information:
Independence Realty Trust (NYSE: IRT) is a real estate investment trust. Upon completion of the previously announced nine community portfolio acquisition, IRT will own and operate 55 multifamily apartment properties, totaling 15,165 units, across non-gateway U.S. markets, including Louisville, Memphis, Atlanta and Raleigh. IRT’s investment strategy is focused on gaining scale within key amenity rich submarkets that offer good school districts, high-quality retail and major employment centers. IRT aims to provide stockholders attractive risk-adjusted returns through diligent portfolio management, strong operational performance, and a consistent return of capital through distributions and capital appreciation.
Corporate Headquarters | | Two Liberty Place |
| | 50 S. 16th Street, Suite 3575 |
| | Philadelphia, Pa 19102 |
| | 267.270.4800 |
| |
Trading Symbol | | NYSE: “IRT” |
| |
Investor Relations Contact | | Edelman Financial Communications & Capital Markets |
| | Ted McHugh and Lauren Tarola |
| | 212-277-4322 |
| | IRT@edelman.com |
| | |
3
Forward-Looking Statements
This supplemental information may contain certain forward-looking statements 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. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “seek,” “outlook,” “assumption,” “projected,” “strategy”, “guidance” or other similar words. Because such statements include risks, uncertainties and contingencies, actual results may differ materially from the expectations, intentions, beliefs, plans or predictions of the future expressed or implied by such forward-looking statements. These forward-looking statements are based upon the current beliefs and expectations of IRT’s management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and generally not within IRT’s control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Such forward-looking statements include, but are not limited to, IRT’s 2017 EPS and CFFO guidance; the assumptions underlying such guidance; the anticipated benefits and the expected financial impact of IRT’s internalization of its management; changes in financial markets and interest rates, or to the business or financial condition of IRT; changes in market demand for rental apartment homes and competitive pricing from projected apartment industry dynamics, demographic and employment information; IRT’s maintenance of real estate investment trust (“REIT”) status; availability of financing and capital; dividends are subject to the discretion of IRT’s Board of Directors, and will depend on IRT’s financial condition, results of operations, capital requirements, compliance with applicable laws and agreements and any other factors deemed relevant by IRT’s Board; risks associated with pursuing additional strategic acquisitions, including risks associated with the need to raise additional capital to fund the acquisitions; and those additional risks and factors discussed in reports filed with the Securities and Exchange Commission (“SEC”) by IRT from time to time, including those discussed under the heading “Risk Factors” in IRT’s most recently filed reports on Forms 10-K and 10-Q. IRT undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as may be required by law.
4
Independence Realty Trust Announces Third Quarter 2017 Financial Results
PHILADELPHIA – (BUSINESS WIRE) – October 31, 2017 — Independence Realty Trust, Inc. (“IRT”) (NYSE: IRT), a multi-family apartment REIT, today announced its third quarter 2017 financial results.
Results for the Quarter
| • | Net income available to common shareholders was $1.1 million for the quarter ended September 30, 2017 as compared to $2.3 million for the quarter ended September 30, 2016. |
| • | Core Funds from Operations (“CFFO”) per share of $0.19 for the quarter ended September 30, 2017 as compared to $0.21 for the quarter ended September 30, 2016. |
| • | Adjusted EBITDA of $20.2 million for the quarter ended September 30, 2017 as compared to $18.4 million for the quarter ended September 30, 2016. |
Results for the Nine Months
| • | Net income available to common shareholders was $23.9 million for the nine months ended September 30, 2017 as compared to $31.2 million for the nine months ended September 30, 2016. |
| • | Core Funds from Operations (“CFFO”) per share of $0.55 for the nine months ended September 30, 2017 as compared to $0.63 for the nine months ended September 30, 2016. |
| • | Adjusted EBITDA of $59.2 million for the nine months ended September 30, 2017 as compared to $56.0 million for the nine months ended September 30, 2016. |
Same-Store Property Operating Results
| | |
| Third Quarter 2017 Compared to Third Quarter 2016(1) | Nine Months Ended 9/30/17 Compared to Nine Months Ended 9/30/16(1) |
Rental income | 2.5% increase | 3.5% increase |
Total revenues | 3.0% increase | 4.0% increase |
Property level operating expenses | 1.5% increase | 2.6% increase |
Net operating income (“NOI”) | 4.0% increase | 4.9% increase |
Portfolio average occupancy | 40 bps increase to 94.7% | 100 bps increase to 94.5% |
Portfolio average rental rate | 2.2% increase to $1,020 | 3.0% increase to $1,014 |
NOI Margin | 60 bps increase to 59.5% | 50 bps increase to 59.9% |
| (1) | Same store portfolio for the three and nine months ended September 30, 2017 and 2016 includes 42 properties, which represent 11,676 units. |
“Our third quarter performance reflects our ongoing commitment to drive organic growth while continuing to transform the portfolio,” said Scott Schaeffer, IRT’s Chairman and CEO. “Sound market fundamentals combined with a proactive approach to property management led to 4.0% year-over-year same-store NOI growth for the third quarter and 4.9% for the first nine months of the year. Our recently announced portfolio acquisition aligns perfectly with our investment strategy and will enable us to increase scale in core markets and strengthen our balance sheet over time. The year-to-date execution of our strategic initiatives has put IRT on track to deliver on our full-year objectives and enter 2018 from a position of strength as we work to unlock additional portfolio value.”
5
Property Acquisitions
On September 3, 2017, IRT reached an agreement to acquire a portfolio of nine communities, totaling 2,353 units, for a gross purchase price of $228.1 million. The acquisition accelerates IRT’s penetration into a number of core existing markets, including Columbus, OH, Indianapolis, IN, and Atlanta, GA, while providing entry into two new markets. The portfolio contains nine communities that were built or renovated between 2000 and 2011, had period end occupancy of 95% as of July 31, 2017, and had an average effective rent per unit of $884 for the three months ended July 31, 2017. On September 26, 2017, IRT closed on four of these multifamily apartment communities, totaling 917 units: two in Columbus, OH, and the remaining two in Indianapolis, IN and Myrtle Beach, SC. On October 25, 2017, IRT closed on a 264-unit community in Baton Rouge, LA, representing the fifth community in the portfolio. The acquisition of the remaining four communities are expected to close in succession during the fourth quarter of 2017, after and subject to the satisfaction of customary closing conditions, as well as the debt assumption process on three of the four.
Public Stock Offering
On September 11, 2017, IRT announced the closing of its public offering of 12,500,000 shares of its common stock at a public offering price of $9.25 per share. IRT also closed on the underwriters’ option to purchase an additional 1,875,000 shares of common stock at the public offering price. As a result of the offering and the exercise of the underwriters’ option, IRT received approximately $126.1 million in net proceeds, after deducting the underwriting discount and estimated offering expenses. IRT is using the net proceeds from the offering to pay a portion of the purchase price for the nine-community portfolio acquisition. Any remaining proceeds will be used for general corporate purposes.
Capital Expenditures
For the three months ended September 30, 2017, recurring capital expenditures for the total portfolio were $2.1 million, or $161 per unit. For the nine months ended September 30, 2017, recurring capital expenditures for the total portfolio were $5.4 million, or $418 per unit.
2017 EPS and CFFO Guidance
IRT is adjusting 2017 full year EPS per diluted share guidance due to additional depreciation and acquisition related costs from the previously announced nine-community portfolio acquisition. EPS per diluted share is projected to be in a range of $0.38 to $0.41, compared to $0.54 to $0.57 previously. CFFO per diluted share is projected to be in the range of $0.73 to $0.76, unchanged from the prior quarter. A reconciliation of IRT's projected net income available to common shares to its projected CFFO per share, a non-GAAP financial measure, is included below. Also included below are the primary assumptions underlying this estimate. See Schedule II to this release for further information regarding how IRT calculates CFFO and Schedule V to this release for management’s definition and rationale for the usefulness of CFFO.
| | | |
2017 Full Year EPS and CFFO Guidance (1) | Low | | High |
Net income available to common shares | $0.38 | | $0.41 |
Earnings per share | $0.38 | | $0.41 |
| | | |
2017 EPS and CFFO Guidance | | | |
Net income available to common shares | $0.38 | | $0.41 |
Adjustments: | | | |
Depreciation and amortization | 0.47 | | 0.47 |
Gains on asset sales | (0.24) | | (0.24) |
Share base compensation | 0.03 | | 0.03 |
Amortization of deferred financing fees | 0.02 | | 0.02 |
Acquisition, integration, and debt extinguishment expenses | 0.07 | | 0.07 |
CORE FFO per diluted share allocated to common shareholders | $0.73 | | $0.76 |
| (1) | This guidance, including the underlying assumptions, constitutes forward-looking information. Actual full 2017 EPS and CFFO could vary significantly from the projections presented. See “Forward-Looking Statements” below. Our estimate is based on the following key operating assumptions for IRT’s 2017 performance: |
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| | |
| | |
Same Store Communities | Previous 2017 Outlook | Revised 2017 Outlook |
Number of properties/units | 42 properties /11,676 units | 42 properties /11,676 units |
Property revenue growth | 4.0% to 4.5% | 4.0% |
Controllable property operating expense growth | 1.6% to 2.0% | 1.6% to 2.0% |
Real estate tax and insurance expense increase | 4.5% to 5.5% | 4.5% to 5.5% |
Property NOI growth | 4.5% to 5.5% | 4.5% to 5.5% |
| | |
Corporate Expenses | | |
General and administrative expenses (excluding stock based compensation) | $7.3 to $7.7 million | $7.3 to $7.7 million |
| | |
Transaction/Investment Volume | | |
Acquisition volume | $87 million | $315 to $355 million |
Disposition volume | $87 million | $87 million |
| | |
Capital Expenditures | | |
Recurring | $6.5 to $6.8 million | $6.5 to $6.8 million |
Value Add | $5.5 to $6.0 million | $5.5 to $6.0 million |
Selected Financial Information
See Schedule I to this Release for selected financial information for IRT.
Non-GAAP Financial Measures and Definitions
IRT discloses the following non-GAAP financial measures in this release: FFO, CFFO, Adjusted EBITDA and NOI. A reconciliation of IRT’s reported net income (loss) to its FFO and CFFO is included as Schedule II to this release. A reconciliation of IRT’s same store NOI to its reported net income (loss) is included as Schedule III to this release. A reconciliation of IRT’s Adjusted EBITDA to net income (loss) is included as Schedule IV to this release. See Schedule V to this release for management’s respective definitions and rationales for the usefulness of each of these non-GAAP financial measures and other definitions used in this release.
Distributions
On October 17, 2017, IRT’s Board of Directors declared monthly cash dividends for the fourth quarter of 2017 on IRT’s shares of common stock in the amount of $0.06 per share per month. The monthly dividends total $0.18 per share for the fourth quarter. The month for which each dividend was declared is set forth below, with the relevant amount per share, record date and payment date set forth opposite the month:
| | | | | | | | | | | | |
Month | | | | Amount | | | | Record Date | | | | Payment Date |
October 2017 | | | | $0.06 | | | | 10/31/2017 | | | | 11/15/2017 |
November 2017 | | | | $0.06 | | | | 11/30/2017 | | | | 12/15/2017 |
December 2017 | | | | $0.06 | | | | 12/29/2017 | | | | 01/15/2018 |
IRT will be transitioning to a quarterly distribution of cash dividends, effective the first quarter of 2018.
Conference Call
All interested parties can listen to the live conference call webcast at 9:30 AM ET on Tuesday, October 31, 2017 from the investor relations section of the IRT website at www.irtliving.com or by dialing 1.844.775.2542, access code 99812647. For those who are not available to listen to the live call, the replay will be available shortly following the live call from the investor relations section of IRT’s website and telephonically until Tuesday, November 7, 2017 by dialing 1.855.859.2056, access code 99812647.
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Supplemental Information
IRT produces supplemental information that includes details regarding the performance of the portfolio, financial information, non-GAAP financial measures, same-store information and other useful information for investors. The supplemental information is available via the Company's website, www.irtliving.com, through the "Investor Relations" section.
About Independence Realty Trust, Inc.
Independence Realty Trust (NYSE: IRT) is a real estate investment trust. Upon completion of the previously announced nine community portfolio acquisition, IRT will own and operate 55 multifamily apartment properties, totaling 15,165 units, across non-gateway U.S. markets, including Louisville, Memphis, Atlanta and Raleigh. IRT’s investment strategy is focused on gaining scale within key amenity rich submarkets that offer good school districts, high-quality retail and major employment centers. IRT aims to provide stockholders attractive risk-adjusted returns through diligent portfolio management, strong operational performance, and a consistent return of capital through distributions and capital appreciation.
Independence Realty Trust, Inc. Contact
Edelman Financial Communications & Capital Markets
Ted McHugh and Lauren Tarola
212-277-4322
IRT@edelman.com
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FINANCIAL & OPERATING HIGHLIGHTS
Dollars in thousands, except share and per share data
| | For the Three Months Ended | | |
| | September 30, 2017 | | | June 30, 2017 | | | March 31, 2017 | | | December 31, 2016 | | | September 30, 2016 | | |
Selected Financial Information: | | | | | | | | | | | | | | | | | | | | | |
Operating Statistics: | | | | | | | | | | | | | | | | | | | | | |
Net income available to common shares | | $ | 1,097 | | | $ | 18,739 | | | $ | 4,077 | | | $ | (40,980 | ) | | $ | 2,267 | | |
Earnings (loss) per share -- diluted | | $ | 0.02 | | | $ | 0.27 | | | $ | 0.06 | | | $ | (0.61 | ) | | $ | 0.05 | | |
Total property revenue | | $ | 39,864 | | | $ | 39,431 | | | $ | 38,895 | | | $ | 38,002 | | | $ | 38,364 | | |
Total property operating expenses | | $ | 16,196 | | | $ | 15,918 | | | $ | 15,992 | | | $ | 15,560 | | | $ | 16,107 | | |
Net operating income | | $ | 23,668 | | | $ | 23,513 | | | $ | 22,903 | | | $ | 22,442 | | | $ | 22,257 | | |
NOI margin | | | 59.4 | % | | | 59.6 | % | | | 58.9 | % | | | 59.1 | % | | | 58.0 | % | |
Adjusted EBITDA | | $ | 20,220 | | | $ | 19,493 | | | $ | 19,512 | | | $ | 18,544 | | | $ | 18,373 | | |
FFO per share -- diluted | | $ | 0.13 | | | $ | 0.12 | | | $ | 0.17 | | | $ | (0.50 | ) | | $ | 0.20 | | |
CORE FFO per share -- diluted | | $ | 0.19 | | | $ | 0.19 | | | $ | 0.18 | | | $ | 0.17 | | | $ | 0.21 | | |
Dividends per share | | $ | 0.18 | | | $ | 0.18 | | | $ | 0.18 | | | $ | 0.18 | | | $ | 0.18 | | |
CORE FFO payout ratio | | | 94.7 | % | | | 94.7 | % | | | 100.0 | % | | | 105.9 | % | | | 85.7 | % | |
Portfolio Data: | | | | | | | | | | | | | | | | | | | | | |
Total gross assets | | $ | 1,497,546 | | | $ | 1,400,864 | | | $ | 1,390,589 | | | $ | 1,370,243 | | | $ | 1,374,353 | | |
Total number of properties | | | 50 | | | | 46 | | | | 47 | | | | 46 | | | | 46 | | |
Total units | | | 13,729 | | | | 12,812 | | | | 13,198 | | | | 12,982 | | | | 12,982 | | |
Period end occupancy | | | 94.8 | % | | | 94.5 | % | | | 94.7 | % | | | 94.5 | % | | | 94.3 | % | |
Total portfolio average occupancy | | | 94.7 | % | | | 94.9 | % | | | 93.8 | % | | | 93.8 | % | | | 94.1 | % | |
Total portfolio average effective monthly rent, per unit | | $ | 1,004 | | | $ | 1,010 | | | $ | 978 | | | $ | 977 | | | $ | 977 | | |
Same store period end occupancy (a) | | | 94.9 | % | | | 94.6 | % | | | 94.8 | % | | | 93.9 | % | | | 93.7 | % | |
Same store portfolio average occupancy (a) | | | 94.7 | % | | | 95.0 | % | | | 93.9 | % | | | 93.7 | % | | | 94.3 | % | |
Same store portfolio average effective monthly rent, per unit (a) | | $ | 1,020 | | | $ | 1,013 | | | $ | 1,007 | | | $ | 998 | | | $ | 999 | | |
Capitalization: | | | | | | | | | | | | | | | | | | | | | |
Total debt | | $ | 731,625 | | | $ | 764,521 | | | $ | 765,695 | | | $ | 743,817 | | | $ | 880,581 | | |
Common share price, period end | | $ | 10.17 | | | $ | 9.87 | | | $ | 9.37 | | | $ | 8.92 | | | $ | 9.00 | | |
Market equity capitalization | | $ | 880,257 | | | $ | 712,413 | | | $ | 674,591 | | | $ | 641,393 | | | $ | 453,823 | | |
Total market capitalization | | $ | 1,611,882 | | | $ | 1,476,934 | | | $ | 1,440,286 | | | $ | 1,385,210 | | | $ | 1,334,404 | | |
Total debt/total gross assets | | | 48.9 | % | | | 54.6 | % | | | 55.1 | % | | | 54.3 | % | | | 64.1 | % | |
Net debt to adjusted EBITDA | | | 8.9 | x | (b) | | 9.7 | x | | | 9.7 | x | | | 9.7 | x | | | 11.6 | x | |
Interest coverage | | | 2.9 | x | | | 2.7 | x | | | 2.6 | x | | | 2.4 | x | | | 2.1 | x | |
Common shares and OP Units: | | | | | | | | | | | | | | | | | | | | | |
Shares outstanding | | | 83,518,603 | | | | 69,143,955 | | | | 69,125,681 | | | | 68,996,070 | | | | 47,509,731 | | |
OP units outstanding | | | 3,035,654 | | | | 3,035,654 | | | | 2,869,050 | | | | 2,908,949 | | | | 2,915,008 | | |
Common shares and OP units outstanding | | | 86,554,257 | | | | 72,179,609 | | | | 71,994,731 | | | | 71,905,019 | | | | 50,424,739 | | |
Weighted average common shares and units | | | 75,009,859 | | | | 71,703,735 | | | | 71,656,205 | | | | 70,036,948 | | | | 50,229,637 | | |
(a) | Same store portfolio consists of 42 properties, which represent 11,676 units. |
(b) | Net debt to adjusted EBITDA would be 9.2x if adjusted for timing of acquisitions and the sale of Crossings. |
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BALANCE SHEETS
Dollars in thousands, except per share data
| | As of | |
| | September 30, 2017 | | | June 30, 2017 | | | March 31, 2017 | | | December 31, 2016 | | | September 30, 2016 | |
Assets | | | | | | | | | | | | | | | | | | | | |
Investments in real estate at cost | | $ | 1,427,057 | | | $ | 1,340,573 | | | $ | 1,280,840 | | | $ | 1,249,356 | | | $ | 1,316,725 | |
Less: accumulated depreciation | | | (75,084 | ) | | | (66,853 | ) | | | (59,055 | ) | | | (51,511 | ) | | | (52,824 | ) |
Investments in real estate, net | | | 1,351,973 | | | | 1,273,720 | | | | 1,221,785 | | | | 1,197,845 | | | | 1,263,901 | |
Real estate held for sale | | | 22,031 | | | | 21,964 | | | | 61,102 | | | | 60,786 | | | | — | |
Cash and cash equivalents | | | 10,128 | | | | 6,271 | | | | 10,065 | | | | 20,892 | | | | 29,247 | |
Restricted cash | | | 6,665 | | | | 5,690 | | | | 5,575 | | | | 5,518 | | | | 8,028 | |
Accounts receivable and other assets | | | 9,416 | | | | 5,114 | | | | 3,794 | | | | 5,211 | | | | 5,066 | |
Derivative assets | | | 3,581 | | | | 3,619 | | | | 4,292 | | | | 3,867 | | | | — | |
Intangible assets, net | | | 1,418 | | | | 799 | | | | 373 | | | | 118 | | | | — | |
Total assets | | $ | 1,405,212 | | | $ | 1,317,177 | | | $ | 1,306,986 | | | $ | 1,294,237 | | | $ | 1,306,242 | |
Liabilities and Equity | | | | | | | | | | | | | | | | | | | | |
Total indebtedness | | $ | 731,625 | | | $ | 764,521 | | | $ | 765,695 | | | $ | 743,817 | | | $ | 880,581 | |
Accounts payable and accrued expenses | | | 23,236 | | | | 16,940 | | | | 13,154 | | | | 14,028 | | | | 22,231 | |
Accrued interest payable | | | 134 | | | | 176 | | | | 540 | | | | 491 | | | | 830 | |
Dividends payable | | | 5,176 | | | | 4,313 | | | | 4,301 | | | | 4,297 | | | | 3,009 | |
Derivative liabilities | | | — | | | | — | | | | — | | | | — | | | | 696 | |
Other liabilities | | | 3,063 | | | | 2,906 | | | | 2,952 | | | | 2,913 | | | | 2,857 | |
Total liabilities | | | 763,234 | | | | 788,856 | | | | 786,642 | | | | 765,546 | | | | 910,204 | |
Equity | | | | | | | | | | | | | | | | | | | | |
Shareholders' Equity: | | | | | | | | | | | | | | | | | | | | |
Preferred shares, $0.01 par value per share | | | — | | | | — | | | | — | | | | — | | | | — | |
Common shares, $0.01 par value per share | | | 835 | | | | 691 | | | | 691 | | | | 690 | | | | 475 | |
Additional paid in capital | | | 691,550 | | | | 565,372 | | | | 565,006 | | | | 564,633 | | | | 381,106 | |
Accumulated other comprehensive income (loss) | | | 3,466 | | | | 3,468 | | | | 4,097 | | | | 3,683 | | | | (727 | ) |
Retained earnings (deficit) | | | (76,419 | ) | | | (64,260 | ) | | | (70,608 | ) | | | (62,181 | ) | | | (8,833 | ) |
Total shareholders' equity | | | 619,432 | | | | 505,271 | | | | 499,186 | | | | 506,825 | | | | 372,021 | |
Noncontrolling Interests | | | 22,546 | | | | 23,050 | | | | 21,158 | | | | 21,866 | | | | 24,017 | |
Total equity | | | 641,978 | | | | 528,321 | | | | 520,344 | | | | 528,691 | | | | 396,038 | |
Total liabilities and equity | | $ | 1,405,212 | | | $ | 1,317,177 | | | $ | 1,306,986 | | | $ | 1,294,237 | | | $ | 1,306,242 | |
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STATEMENTS OF OPERATIONS, FFO & CORE FFO
TRAILING 5 QUARTERS
Dollars in thousands, except per share data
| | For the Three Months Ended | |
| | September 30, 2017 | | | June 30, 2017 | | | March 31, 2017 | | | December 31, 2016 | | | September 30, 2016 | |
Revenue: | | | | | | | | | | | | | | | | | | | | |
Rental income | | $ | 35,531 | | | $ | 35,176 | | | $ | 34,737 | | | $ | 34,145 | | | $ | 34,333 | |
Reimbursement and other property income | | | 4,333 | | | | 4,255 | | | | 4,158 | | | | 3,857 | | | | 4,031 | |
Total property revenue | | | 39,864 | | | | 39,431 | | | | 38,895 | | | | 38,002 | | | | 38,364 | |
Property management and other income | | | 202 | | | | 130 | | | | 247 | | | | 29 | | | | — | |
Total revenue | | | 40,066 | | | | 39,561 | | | | 39,142 | | | | 38,031 | | | | 38,364 | |
Expenses: | | | | | | | | | | | | | | | | | | | | |
Real estate operating expenses | | | 16,196 | | | | 15,918 | | | | 15,992 | | | | 15,560 | | | | 16,107 | |
Property management expenses | | | 1,328 | | | | 1,444 | | | | 1,538 | | | | 1,137 | | | | 1,219 | |
General and administrative expenses | | | 2,322 | | | | 2,706 | | | | 2,100 | | | | 2,790 | | | | 2,665 | |
Acquisition and integration expenses | | | 569 | | | | 265 | | | | 122 | | | | 6 | | | | 19 | |
Depreciation and amortization expense | | | 8,671 | | | | 8,011 | | | | 7,607 | | | | 7,897 | | | | 7,765 | |
Total expenses | | | 29,086 | | | | 28,344 | | | | 27,359 | | | | 27,390 | | | | 27,775 | |
Operating Income (loss) | | | 10,980 | | | | 11,217 | | | | 11,783 | | | | 10,641 | | | | 10,589 | |
Interest expense | | | (6,963 | ) | | | (7,162 | ) | | | (7,448 | ) | | | (7,720 | ) | | | (8,820 | ) |
Hedge ineffectiveness | | | 12 | | | | (12 | ) | | | — | | | | — | | | | — | |
Other income (expense) | | | — | | | | — | | | | (5 | ) | | | (2 | ) | | | (2 | ) |
Net gains (losses) on sale of assets | | | (92 | ) | | | 16,050 | | | | (85 | ) | | | 3 | | | | (1 | ) |
Gains (losses) on extinguishment of debt | | | — | | | | (572 | ) | | | — | | | | (652 | ) | | | — | |
Acquisition related debt extinguishment expenses | | | (2,781 | ) | | | — | | | | — | | | | — | | | | — | |
Gains (losses) on TSRE merger | | | — | | | | — | | | | — | | | | — | | | | 641 | |
Management internalization expense | | | — | | | | — | | | | — | | | | (44,976 | ) | | | — | |
Net income (loss) | | | 1,156 | | | | 19,521 | | | | 4,245 | | | | (42,706 | ) | | | 2,407 | |
(Income) loss allocated to noncontrolling interests | | | (59 | ) | | | (782 | ) | | | (168 | ) | | | 1,726 | | | | (140 | ) |
Net income (loss) available to common shares | | $ | 1,097 | | | $ | 18,739 | | | $ | 4,077 | | | $ | (40,980 | ) | | $ | 2,267 | |
EPS - basic | | $ | 0.02 | | | $ | 0.27 | | | $ | 0.06 | | | $ | (0.61 | ) | | $ | 0.05 | |
Weighted-average shares outstanding - Basic | | | 71,972,394 | | | | 68,832,855 | | | | 68,787,155 | | | | 67,126,993 | | | | 47,215,918 | |
EPS - diluted | | $ | 0.02 | | | $ | 0.27 | | | $ | 0.06 | | | $ | (0.61 | ) | | $ | 0.05 | |
Weighted-average shares outstanding - Diluted | | | 72,144,544 | | | | 68,943,869 | | | | 68,958,786 | | | | 67,126,993 | | | | 47,314,629 | |
Funds From Operations (FFO): | | | | | | | | | | | | | | | | | | | | |
Net Income (loss) | | $ | 1,156 | | | $ | 19,521 | | | $ | 4,245 | | | $ | (42,706 | ) | | $ | 2,407 | |
Add-Back (Deduct): | | | | | | | | | | | | | | | | | | | | |
Real estate depreciation and amortization | | | 8,645 | | | | 7,987 | | | | 7,595 | | | | 7,897 | | | | 7,765 | |
Net (gains) losses on sale of assets excluding defeasance costs | | | 92 | | | | (18,798 | ) | | | 85 | | | | (3 | ) | | | 1 | |
FFO | | $ | 9,893 | | | $ | 8,710 | | | $ | 11,925 | | | $ | (34,812 | ) | | $ | 10,173 | |
FFO per share--diluted | | | 0.13 | | | $ | 0.12 | | | $ | 0.17 | | | $ | (0.50 | ) | | $ | 0.20 | |
CORE Funds From Operations (CFFO): | | | | | | | | | | | | | | | | | | | | |
FFO | | $ | 9,893 | | | $ | 8,710 | | | $ | 11,925 | | | $ | (34,812 | ) | | $ | 10,173 | |
Add-Back (Deduct): | | | | | | | | | | | | | | | | | | | | |
Stock compensation expense | | | 422 | | | | 738 | | | | 388 | | | | 390 | | | | 247 | |
Amortization of deferred financing costs | | | 282 | | | | 359 | | | | 519 | | | | 521 | | | | 597 | |
Acquisition and integration expenses | | | 569 | | | | 265 | | | | 122 | | | | 6 | | | | 19 | |
Other depreciation and amortization | | | 26 | | | | 24 | | | | 12 | | | | — | | | | — | |
Hedge ineffectiveness | | | (12 | ) | | | 12 | | | | — | | | | — | | | | — | |
(Gains) losses on extinguishment of debt | | | — | | | | 572 | | | | — | | | | 652 | | | | — | |
Defeasance costs included in net gains (losses) on sale of assets | | | — | | | | 2,748 | | | | — | | | | — | | | | — | |
Management internalization expense | | | — | | | | — | | | | — | | | | 44,976 | | | | — | |
Acquisition related debt extinguishment expenses | | | 2,781 | | | | — | | | | — | | | | — | | | | — | |
Gains (losses) on TSRE merger | | | — | | | | — | | | | — | | | | - | | | | (641 | ) |
CFFO | | $ | 13,961 | | | $ | 13,428 | | | $ | 12,966 | | | $ | 11,733 | | | $ | 10,395 | |
CFFO per share--diluted | | | 0.19 | | | $ | 0.19 | | | $ | 0.18 | | | $ | 0.17 | | | $ | 0.21 | |
Weighted-average shares and units outstanding | | | 75,009,859 | | | | 71,703,735 | | | | 71,656,205 | | | | 70,036,948 | | | | 50,229,637 | |
11
STATEMENTS OF OPERATIONS, FFO & CORE FFO
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2017 and 2016
Dollars in thousands, except per share data
| | For the Three Months Ended September 30, | | | For the Nine Months Ended September 30, | |
| | 2017 | | | 2016 | | | 2017 | | | 2016 | |
Revenue: | | | | | | | | | | | | | | | | |
Rental income | | $ | 35,531 | | | $ | 34,333 | | | $ | 105,444 | | | $ | 103,271 | |
Reimbursement and other property income | | | 4,333 | | | | 4,031 | | | | 12,746 | | | | 12,086 | |
Total property revenue | | | 39,864 | | | | 38,364 | | | | 118,190 | | | | 115,357 | |
Property management and other income | | | 202 | | | | — | | | | 579 | | | | — | |
Total revenue | | | 40,066 | | | | 38,364 | | | | 118,769 | | | | 115,357 | |
Expenses: | | | | | | | | | | | | | | | | |
Real estate operating expenses | | | 16,196 | | | | 16,107 | | | | 48,106 | | | | 47,588 | |
Property management expenses | | | 1,328 | | | | 1,219 | | | | 4,310 | | | | 3,710 | |
General and administrative expenses | | | 2,322 | | | | 2,665 | | | | 7,128 | | | | 8,074 | |
Acquisition and integration expenses | | | 569 | | | | 19 | | | | 956 | | | | 37 | |
Depreciation and amortization expense | | | 8,671 | | | | 7,765 | | | | 24,289 | | | | 26,927 | |
Total expenses | | | 29,086 | | | | 27,775 | | | | 84,789 | | | | 86,336 | |
Operating Income (loss) | | | 10,980 | | | | 10,589 | | | | 33,980 | | | | 29,021 | |
Interest expense | | | (6,963 | ) | | | (8,820 | ) | | | (21,573 | ) | | | (27,815 | ) |
Hedge ineffectiveness | | | 12 | | | | — | | | | — | | | | — | |
Other income (expense) | | | — | | | | (2 | ) | | | (5 | ) | | | (2 | ) |
Net gains (losses) on sale of assets | | | (92 | ) | | | (1 | ) | | | 15,873 | | | | 31,773 | |
Gains (losses) on extinguishment of debt | | | — | | | | — | | | | (572 | ) | | | (558 | ) |
Acquisition related debt extinguishment expenses | | | (2,781 | ) | | | — | | | | (2,781 | ) | | | — | |
Gains (losses) on TSRE merger | | | — | | | | 641 | | | | — | | | | 732 | |
Net income (loss) | | | 1,156 | | | | 2,407 | | | | 24,922 | | | | 33,151 | |
(Income) loss allocated to noncontrolling interests | | | (59 | ) | | | (140 | ) | | | (1,009 | ) | | | (1,972 | ) |
Net income (loss) available to common shares | | $ | 1,097 | | | $ | 2,267 | | | $ | 23,913 | | | $ | 31,179 | |
EPS - basic | | $ | 0.02 | | | $ | 0.05 | | | $ | 0.34 | | | $ | 0.66 | |
Weighted-average shares outstanding - Basic | | | 71,972,394 | | | | 47,215,918 | | | | 69,875,802 | | | | 47,164,543 | |
EPS - diluted | | $ | 0.02 | | | $ | 0.05 | | | $ | 0.34 | | | $ | 0.66 | |
Weighted-average shares outstanding - Diluted | | | 72,144,544 | | | | 47,314,629 | | | | 70,105,571 | | | | 47,190,139 | |
| | | | | | | | | | | | | | | | |
Funds From Operations (FFO): | | | | | | | | | | | | | | | | |
Net Income (loss) | | $ | 1,156 | | | $ | 2,407 | | | $ | 24,922 | | | $ | 33,151 | |
Adjustments: | | | | | | | | | | | | | | | | |
Real estate depreciation and amortization | | | 8,645 | | | | 7,765 | | | | 24,227 | | | | 26,927 | |
Net (gains) losses on sale of assets excluding defeasance costs | | | 92 | | | | 1 | | | | (18,621 | ) | | | (33,169 | ) |
Funds From Operations | | $ | 9,893 | | | $ | 10,173 | | | $ | 30,528 | | | $ | 26,909 | |
FFO per share--diluted | | $ | 0.13 | | | $ | 0.20 | | | $ | 0.42 | | | $ | 0.54 | |
Core Funds From Operations (CFFO): | | | | | | | | | | | | | | | | |
Funds From Operations | | $ | 9,893 | | | $ | 10,173 | | | $ | 30,528 | | | $ | 26,909 | |
Adjustments: | | | | | | | | | | | | | | | | |
Stock compensation expense | | | 422 | | | | 247 | | | | 1,548 | | | | 832 | |
Amortization of deferred financing costs | | | 282 | | | | 597 | | | | 1,160 | | | | 2,543 | |
Acquisition and integration expenses | | | 569 | | | | 19 | | | | 956 | | | | 37 | |
Other depreciation and amortization | | | 26 | | | | — | | | | 62 | | | | — | |
Hedge ineffectiveness | | | (12 | ) | | | — | | | | — | | | | — | |
(Gains) losses on extinguishment of debt | | | — | | | | — | | | | 572 | | | | 558 | |
Defeasance costs included in net gains (losses) on sale of assets | | | — | | | | — | | | | 2,748 | | | | 1,396 | |
Acquisition related debt extinguishment expenses | | | 2,781 | | | | — | | | | 2,781 | | | | — | |
Gains (losses) on TSRE merger | | | — | | | | (641 | ) | | | — | | | | (732 | ) |
Core Funds From Operations | | $ | 13,961 | | | $ | 10,395 | | | $ | 40,355 | | | $ | 31,543 | |
CFFO per share--diluted | | $ | 0.19 | | | $ | 0.21 | | | $ | 0.55 | | | $ | 0.63 | |
Weighted-average shares and units outstanding | | | 75,009,859 | | | | 50,229,637 | | | | 72,801,899 | | | | 50,105,147 | |
12
ADJUSTED EBITDA RECONCILIATION AND COVERAGE RATIO
Dollars in thousands
| | Three Months Ended | |
ADJUSTED EBITDA: | | September 30, 2017 | | | June 30, 2017 | | | March 31, 2017 | | | December 31, 2016 | | | September 30, 2016 | |
Net income (loss) | | $ | 1,156 | | | $ | 19,521 | | | $ | 4,245 | | | $ | (42,706 | ) | | $ | 2,407 | |
Add-Back (Deduct): | | | | | | | | | | | | | | | | | | | | |
Depreciation and amortization | | | 8,671 | | | | 8,011 | | | | 7,607 | | | | 7,897 | | | | 7,765 | |
Interest expense | | | 6,963 | | | | 7,162 | | | | 7,448 | | | | 7,720 | | | | 8,820 | |
Hedging ineffectiveness | | | (12 | ) | | | 12 | | | | — | | | | — | | | | — | |
Other (income) expense | | | — | | | | — | | | | 5 | | | | 2 | | | | 2 | |
Acquisition and integration expenses | | | 569 | | | | 265 | | | | 122 | | | | 6 | | | | 19 | |
Net (gains) losses on sale of assets | | | 92 | | | | (16,050 | ) | | | 85 | | | | (3 | ) | | | 1 | |
(Gains) losses on extinguishment of debt | | | — | | | | 572 | | | | — | | | | 652 | | | | — | |
Management internalization expense | | | — | | | | — | | | | — | | | | 44,976 | | | | — | |
Acquisition related debt extinguishment expenses | | | 2,781 | | | | — | | | | — | | | | — | | | | — | |
Gains (losses) on TSRE merger | | | — | | | | — | | | | — | | | | - | | | | (641 | ) |
Adjusted EBITDA | | $ | 20,220 | | | $ | 19,493 | | | $ | 19,512 | | | $ | 18,544 | | | $ | 18,373 | |
| | | | | | | | | | | | | | | | | | | | |
INTEREST COST: | | | | | | | | | | | | | | | | | | | | |
Interest expense | | $ | 6,963 | | | $ | 7,162 | | | $ | 7,448 | | | $ | 7,720 | | | $ | 8,820 | |
| | | | | | | | | | | | | | | | | | | | |
INTEREST COVERAGE: | | | 2.9 | x | | | 2.7 | x | | | 2.6 | x | | | 2.4 | x | | | 2.1 | x |
| | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | | Nine Months Ended September 30, | |
ADJUSTED EBITDA: | | 2017 | | | 2016 | | | 2017 | | | 2016 | |
Net income (loss) | | $ | 1,156 | | | $ | 2,407 | | | $ | 24,922 | | | $ | 33,151 | |
Add-Back (Deduct): | | | | | | | | | | | | | | | | |
Depreciation and amortization | | | 8,671 | | | | 7,765 | | | | 24,289 | | | | 26,927 | |
Interest expense | | | 6,963 | | | | 8,820 | | | | 21,573 | | | | 27,815 | |
Hedging ineffectiveness | | | (12 | ) | | | — | | | | - | | | | — | |
Other (income) expense | | | — | | | | 2 | | | | 5 | | | | 2 | |
Acquisition and integration expenses | | | 569 | | | | 19 | | | | 956 | | | | 37 | |
Net (gains) losses on sale of assets | | | 92 | | | | 1 | | | | (15,873 | ) | | | (31,773 | ) |
(Gains) losses on extinguishment of debt | | | — | | | | — | | | | 572 | | | | 558 | |
Management internalization expense | | | — | | | | — | | | | — | | | | — | |
Acquisition related debt extinguishment expenses | | | 2,781 | | | | — | | | | 2,781 | | | | — | |
Gains (losses) on TSRE merger | | | — | | | | (641 | ) | | | — | | | | (732 | ) |
Adjusted EBITDA | | $ | 20,220 | | | $ | 18,373 | | | $ | 59,225 | | | $ | 55,985 | |
| | | | | | | | | | | | | | | | |
INTEREST COST: | | | | | | | | | | | | | | | | |
Interest expense | | $ | 6,963 | | | $ | 8,820 | | | $ | 21,573 | | | $ | 27,815 | |
| | | | | | | | | | | | | | | | |
INTEREST COVERAGE: | | | 2.9 | x | | | 2.1 | x | | | 2.7 | x | | | 2.0 | x |
| | | | | | | | | | | | | | | | |
13
SAME STORE PORTFOLIO NET OPERATING INCOME
TRAILING 5 QUARTERS
Dollars in thousands, except per unit data
| | For the Three-Months Ended (a) | |
| | September 30, 2017 | | | June 30, 2017 | | | March 31, 2017 | | | December 31, 2016 | | | September 30, 2016 | |
Revenue: | | | | | | | | | | | | | | | | | | | | |
Rental income | | $ | 32,483 | | | $ | 32,342 | | | $ | 31,762 | | | $ | 31,456 | | | $ | 31,698 | |
Reimbursement and other property income | | | 3,913 | | | | 3,881 | | | | 3,719 | | | | 3,476 | | | | 3,645 | |
Total revenue | | | 36,396 | | | | 36,223 | | | | 35,481 | | | | 34,932 | | | | 35,343 | |
Operating Expenses: | | | | | | | | | | | | | | | | | | | | |
Real estate taxes | | | 4,388 | | | | 4,384 | | | | 4,381 | | | | 4,193 | | | | 4,280 | |
Property insurance | | | 747 | | | | 781 | | | | 820 | | | | 796 | | | | 748 | |
Personnel expenses | | | 3,573 | | | | 3,483 | | | | 3,400 | | | | 3,376 | | | | 3,449 | |
Utilities | | | 2,353 | | | | 2,123 | | | | 2,223 | | | | 2,235 | | | | 2,280 | |
Repairs and maintenance | | | 1,550 | | | | 1,334 | | | | 1,233 | | | | 1,194 | | | | 1,460 | |
Contract services | | | 1,074 | | | | 1,090 | | | | 1,043 | | | | 1,029 | | | | 1,060 | |
Advertising expenses | | | 397 | | | | 382 | | | | 382 | | | | 395 | | | | 399 | |
Other expenses | | | 662 | | | | 703 | | | | 791 | | | | 703 | | | | 844 | |
Total operating expenses | | | 14,744 | | | | 14,280 | | | | 14,273 | | | | 13,921 | | | | 14,520 | |
Same-store net operating income (a) | | $ | 21,652 | | | $ | 21,943 | | | $ | 21,208 | | | $ | 21,011 | | | $ | 20,823 | |
Same-store NOI margin | | | 59.5 | % | | | 60.6 | % | | | 59.8 | % | | | 60.1 | % | | | 58.9 | % |
Average occupancy | | | 94.7 | % | | | 95.0 | % | | | 93.9 | % | | | 93.7 | % | | | 94.3 | % |
Average effective monthly rent, per unit | | $ | 1,020 | | | $ | 1,013 | | | $ | 1,007 | | | $ | 998 | | | $ | 999 | |
Reconciliation of same-store net operating income to net income (loss) | | | | | | | | | | | | | | | | | | | | |
Same-store net operating income | | $ | 21,652 | | | $ | 21,943 | | | $ | 21,208 | | | $ | 21,011 | | | $ | 20,823 | |
Non same-store net operating income | | | 2,016 | | | | 1,570 | | | | 1,695 | | | | 1,431 | | | | 1,434 | |
Property management income | | | 202 | | | | 130 | | | | 247 | | | | 29 | | | | — | |
Property management expenses | | | (1,328 | ) | | | (1,444 | ) | | | (1,538 | ) | | | (1,137 | ) | | | (1,219 | ) |
General and administrative expenses | | | (2,322 | ) | | | (2,706 | ) | | | (2,100 | ) | | | (2,790 | ) | | | (2,665 | ) |
Acquisition and integration expenses | | | (569 | ) | | | (265 | ) | | | (122 | ) | | | (6 | ) | | | (19 | ) |
Depreciation and amortization expense | | | (8,671 | ) | | | (8,011 | ) | | | (7,607 | ) | | | (7,897 | ) | | | (7,765 | ) |
Interest expense | | | (6,963 | ) | | | (7,162 | ) | | | (7,448 | ) | | | (7,720 | ) | | | (8,820 | ) |
Hedge ineffectiveness | | | 12 | | | | (12 | ) | | | — | | | | — | | | | — | |
Other income (expense) | | | — | | | | — | | | | (5 | ) | | | (2 | ) | | | (2 | ) |
Net gains (losses) on sale of assets | | | (92 | ) | | | 16,050 | | | | (85 | ) | | | 3 | | | | (1 | ) |
Gains (losses) on extinguishment of debt | | | — | | | | (572 | ) | | | — | | | | (652 | ) | | | — | |
Acquisition related debt extinguishment expenses | | | (2,781 | ) | | | — | | | | — | | | | — | | | | — | |
Gains (losses) on TSRE merger | | | — | | | | — | | | | — | | | | — | | | | 641 | |
Management internalization expense | | | — | | | | — | | | | — | | | | (44,976 | ) | | | — | |
Net income (loss) | | $ | 1,156 | | | $ | 19,521 | | | $ | 4,245 | | | $ | (42,706 | ) | | $ | 2,407 | |
(a) | Same store portfolio consists of 42 properties, which represent 11,676 units. |
14
SAME STORE PORTFOLIO NET OPERATING INCOME
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2017 and 2016
Dollars in thousands, except per unit data
| | Three-Months Ended September 30 | | | Nine-Months Ended September 30 | |
| | 2017 | | | 2016 | | | % change | | | 2017 | | | 2016 | | | % change | |
Revenue: | | | | | | | | | | | | | | | | | | | | | | | |
Rental income | | $ | 32,483 | | | $ | 31,698 | | | | 2.5 | % | | $ | 96,587 | | | $ | 93,313 | | | | 3.5 | % |
Reimbursement and other property income | | | 3,913 | | | | 3,645 | | | | 7.4 | % | | | 11,513 | | | | 10,640 | | | | 8.2 | % |
Total revenue | | | 36,396 | | | | 35,343 | | | | 3.0 | % | | | 108,100 | | | | 103,953 | | | | 4.0 | % |
Operating Expenses: | | | | | | | | | | | | | | | | | | | | | | | |
Real estate taxes | | | 4,388 | | | | 4,280 | | | | 2.5 | % | | | 13,153 | | | | 12,845 | | | | 2.4 | % |
Property insurance | | | 747 | | | | 748 | | | | -0.1 | % | | | 2,348 | | | | 2,254 | | | | 4.2 | % |
Personnel expenses | | | 3,573 | | | | 3,449 | | | | 3.6 | % | | | 10,456 | | | | 10,038 | | | | 4.2 | % |
Utilities | | | 2,353 | | | | 2,280 | | | | 3.2 | % | | | 6,699 | | | | 6,540 | | | | 2.4 | % |
Repairs and maintenance | | | 1,550 | | | | 1,460 | | | | 6.2 | % | | | 4,117 | | | | 3,816 | | | | 7.9 | % |
Contract services | | | 1,074 | | | | 1,060 | | | | 1.3 | % | | | 3,207 | | | | 3,254 | | | | -1.4 | % |
Advertising expenses | | | 397 | | | | 399 | | | | -0.5 | % | | | 1,161 | | | | 1,198 | | | | -3.1 | % |
Other expenses | | | 662 | | | | 844 | | | | -21.6 | % | | | 2,156 | | | | 2,254 | | | | -4.3 | % |
Total operating expenses | | | 14,744 | | | | 14,520 | | | | 1.5 | % | | | 43,297 | | | | 42,199 | | | | 2.6 | % |
Same-store net operating income (a) | | $ | 21,652 | | | $ | 20,823 | | | | 4.0 | % | | $ | 64,803 | | | $ | 61,754 | | | | 4.9 | % |
Same-store NOI margin | | | 59.5 | % | | | 58.9 | % | | | 0.6 | % | | | 59.9 | % | | | 59.4 | % | | | 0.5 | % |
Average occupancy | | | 94.7 | % | | | 94.3 | % | | | 0.4 | % | | | 94.5 | % | | | 93.5 | % | | | 1.0 | % |
Average effective monthly rent, per unit | | $ | 1,020 | | | $ | 999 | | | | 2.2 | % | | $ | 1,014 | | | $ | 984 | | | | 3.0 | % |
Reconciliation of same-store net operating income to net income (loss) | | | | | | | | | | | | | | | | | | | | | | | | |
Same-store portfolio net operating income | | $ | 21,652 | | | $ | 20,823 | | | | | | | $ | 64,803 | | | $ | 61,754 | | | | | |
Non same-store net operating income | | | 2,016 | | | | 1,434 | | | | | | | | 5,281 | | | | 6,015 | | | | | |
Property management income | | | 202 | | | | — | | | | | | | | 579 | | | | — | | | | | |
Property management expenses | | | (1,328 | ) | | | (1,219 | ) | | | | | | | (4,310 | ) | | | (3,710 | ) | | | | |
General and administrative expenses | | | (2,322 | ) | | | (2,665 | ) | | | | | | | (7,128 | ) | | | (8,074 | ) | | | | |
Acquisition and integration expenses | | | (569 | ) | | | (19 | ) | | | | | | | (956 | ) | | | (37 | ) | | | | |
Depreciation and amortization expense | | | (8,671 | ) | | | (7,765 | ) | | | | | | | (24,289 | ) | | | (26,927 | ) | | | | |
Interest expense | | | (6,963 | ) | | | (8,820 | ) | | | | | | | (21,573 | ) | | | (27,815 | ) | | | | |
Hedge ineffectiveness | | | 12 | | | | — | | | | | | | | — | | | | — | | | | | |
Other income (expense) | | | — | | | | (2 | ) | | | | | | | (5 | ) | | | (2 | ) | | | | |
Net gains (losses) on sale of assets | | | (92 | ) | | | (1 | ) | | | | | | | 15,873 | | | | 31,773 | | | | | |
Gains (losses) on extinguishment of debt | | | — | | | | — | | | | | | | | (572 | ) | | | (558 | ) | | | | |
Acquisition related debt extinguishment expenses | | | (2,781 | ) | | | — | | | | | | | | (2,781 | ) | | | — | | | | | |
Gains (losses) on TSRE merger | | | — | | | | 641 | | | | | | | | — | | | | 732 | | | | | |
Net income (loss) | | $ | 1,156 | | | $ | 2,407 | | | | | | | $ | 24,922 | | | $ | 33,151 | | | | | |
(a) | Same store portfolio consists of 42 properties, which represent 11,676 units. |
15
NET OPERATING INCOME (NOI) BRIDGE
TRAILING 5 QUARTERS
Dollars in thousands
| | For the Three-Months Ended | |
| | September 30, 2017 | | | June 30, 2017 | | | March 31, 2017 | | | December 31, 2016 | | | September 30, 2016 | |
Property revenue | | | | | | | | | | | | | | | | | | | | |
Same store (a) | | $ | 36,396 | | | $ | 36,223 | | | $ | 35,481 | | | $ | 34,932 | | | $ | 35,343 | |
Non same-store | | | 3,468 | | | | 3,208 | | | | 3,414 | | | | 3,070 | | | | 3,021 | |
Total property revenue | | | 39,864 | | | | 39,431 | | | | 38,895 | | | | 38,002 | | | | 38,364 | |
Property expenses | | | | | | | | | | | | | | | | | | | | |
Same store (a) | | | 14,744 | | | | 14,280 | | | | 14,273 | | | | 13,921 | | | | 14,520 | |
Non same-store | | | 1,452 | | | | 1,638 | | | | 1,719 | | | | 1,639 | | | | 1,587 | |
Total property expenses | | | 16,196 | | | | 15,918 | | | | 15,992 | | | | 15,560 | | | | 16,107 | |
Net operating income | | | | | | | | | | | | | | | | | | | | |
Same-store (a) | | | 21,652 | | | | 21,943 | | | | 21,208 | | | | 21,011 | | | | 20,823 | |
Non same-store | | | 2,016 | | | | 1,570 | | | | 1,695 | | | | 1,431 | | | | 1,434 | |
Total property net operating income | | $ | 23,668 | | | $ | 23,513 | | | $ | 22,903 | | | $ | 22,442 | | | $ | 22,257 | |
Reconciliation of NOI to net income (loss) | | | | | | | | | | | | | | | | | | | | |
Total property net operating income | | $ | 23,668 | | | $ | 23,513 | | | $ | 22,903 | | | $ | 22,442 | | | $ | 22,257 | |
Property management and other income | | | 202 | | | | 130 | | | | 247 | | | | 29 | | | | — | |
Property management expenses | | | (1,328 | ) | | | (1,444 | ) | | | (1,538 | ) | | | (1,137 | ) | | | (1,219 | ) |
General and administrative expenses | | | (2,322 | ) | | | (2,706 | ) | | | (2,100 | ) | | | (2,790 | ) | | | (2,665 | ) |
Acquisition and integration expenses | | | (569 | ) | | | (265 | ) | | | (122 | ) | | | (6 | ) | | | (19 | ) |
Depreciation and amortization expense | | | (8,671 | ) | | | (8,011 | ) | | | (7,607 | ) | | | (7,897 | ) | | | (7,765 | ) |
Interest expense | | | (6,963 | ) | | | (7,162 | ) | | | (7,448 | ) | | | (7,720 | ) | | | (8,820 | ) |
Hedge ineffectiveness | | | 12 | | | | (12 | ) | | | — | | | | — | | | | — | |
Other income (expense) | | | — | | | | — | | | | (5 | ) | | | (2 | ) | | | (2 | ) |
Net gains (losses) on sale of assets | | | (92 | ) | | | 16,050 | | | | (85 | ) | | | 3 | | | | (1 | ) |
Gains (losses) on extinguishment on debt | | | — | | | | (572 | ) | | | — | | | | (652 | ) | | | — | |
Acquisition related debt extinguishment expenses | | | (2,781 | ) | | | — | | | | — | | | | — | | | | — | |
Gains (losses) on TSRE merger | | | — | | | | — | | | | — | | | | — | | | | 641 | |
Management internalization expense | | | — | | | | — | | | | — | | | | (44,976 | ) | | | — | |
Net income (loss) | | $ | 1,156 | | | $ | 19,521 | | | $ | 4,245 | | | $ | (42,706 | ) | | $ | 2,407 | |
(a) | Same store portfolio consists of 42 properties, which represent 11,676 units. |
16
CAPITAL RECYCLING ACTIVITY
SUMMARY OF APARTMENT COMMUNITY ACQUISITION AND DISPOSITION ACTIVITY | |
YEAR TO DATE AS OF SEPTEMBER 30, 2017 | |
Dollars in thousands with respect to Contract Price and Price per Unit
| | | | | | | | | | | | | | | | | | | | |
Acquisitions | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Property Name | | Location | | Units | | | Acquisition Date | | Contract Price | | | Price per Unit | | | Average Rent Per Unit | |
Lakes at Northdale | | Tampa, FL | | 216 | | | February 27, 2017 | | $ | 29,750 | | | $ | 138 | | | $ | 1,192 | |
Haverford Place | | Lexington, KY | | 160 | | | May 24, 2017 | | $ | 14,240 | | | $ | 89 | | | $ | 874 | |
South Terrace | | Durham, NC | | 328 | | | June 30, 2017 | | $ | 42,950 | | | $ | 131 | | | $ | 1,039 | |
Cherry Grove Commons | | North Myrtle Beach, SC | | 172 | | | September 26, 2017 | | $ | 16,157 | | | $ | 94 | | | $ | 949 | |
Riverchase Apts | | Indianapolis, IN | | 217 | | | September 26, 2017 | | $ | 18,899 | | | $ | 87 | | | $ | 800 | |
Kensington Commons | | Canal Winchester, OH | | 264 | | | September 26, 2017 | | $ | 24,409 | | | $ | 92 | | | $ | 852 | |
Schirm Farms | | Canal Winchester, OH | | 264 | | | September 26, 2017 | | $ | 23,749 | | | $ | 90 | | | $ | 831 | |
Total - Completed Acquisitions | | | | | 1,621 | | | | | $ | 170,154 | | | $ | 105 | | | $ | 961 | |
| | | | | | | | | | | | | | | | | | | | |
Live Oak Trace | | Baton Rouge, LA | | 264 | | | Pending | | $ | 28,501 | | | $ | 108 | | | $ | 983 | |
Brunswick Point | | Wilmington, NC | | 288 | | | Pending | | $ | 30,661 | | | $ | 106 | | | $ | 817 | |
Hartshire Lakes | | Indianapolis, IN | | 272 | | | Pending | | $ | 27,597 | | | $ | 101 | | | $ | 917 | |
Creekside Corners Apts | | Atlanta, GA | | 444 | | | Pending | | $ | 43,901 | | | $ | 99 | | | $ | 931 | |
Tides at Calabash | | Wilmington, NC | | 168 | | | Pending | | $ | 14,269 | | | $ | 85 | | | $ | 838 | |
Total - Pending Acquisitions | | | | | 1,436 | | | | | $ | 144,929 | | | $ | 101 | | | $ | 905 | |
| | | | | | | | | | | | | | | | | | | | |
Total - Acquisitions | | | | | 3,057 | | | | | $ | 315,083 | | | $ | 103 | | | $ | 935 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Dispositions | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Property Name | | Location | | Units | | | Disposition Date | | Contract Price | | | Price per Unit | | | Average Rent Per Unit | |
Copper Mill | | Austin, TX | | 320 | | | May 5, 2017 | | $ | 32,000 | | | $ | 100 | | | $ | 1,016 | |
Heritage Trace | | Newport News, VA | | 200 | | | June 1, 2017 | | $ | 11,600 | | | $ | 58 | | | $ | 750 | |
Berkshire Square | | Indianapolis, IN | | 354 | | | June 9, 2017 | | $ | 16,000 | | | $ | 45 | | | $ | 651 | |
Total - Completed Dispositions | | | | 874 | | | | | $ | 59,600 | | | $ | 68 | | | $ | 866 | |
| | | | | | | | | | | | | | | | | | | | |
The Crossings | | Jackson, MS | | 432 | | | Pending | | $ | 27,200 | | | $ | 63 | | | $ | 790 | |
Total - Pending Dispositions | | | | 432 | | | | | $ | 27,200 | | | $ | 63 | | | $ | 790 | |
| | | | | | | | | | | | | | | | | | | | |
Total - Dispositions | | | | | 1,306 | | | | | $ | 86,800 | | | $ | 66 | | | $ | 845 | |
17
PROPERTY SUMMARY
Dollars in thousands, except per unit data
| | | | | | Investments in Real Estate | | | | | | | | | | | | | |
Property Name | Location | Acquisition Date | Year Built / Renovated (a) | | Gross Cost | | Accumulated Depreciation | | Net Book Value | | Units (b) | | Period End Occupancy (c) | | Average Occupancy (d) | | Average Effective Rent per Occupied Unit (e) | |
The Crossings | Jackson, MS | 11/22/2013 | | 2012 | | | 23,611 | | | (1,580 | ) | | 22,031 | | | 432 | | | 94.0% | | | 91.3% | | | 790 | |
TOTAL PROPERTIES HELD-FOR-SALE | | | | | $ | 23,611 | | $ | (1,580 | ) | $ | 22,031 | | | 432 | | | 94.0% | | | 91.3% | | $ | 790 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Same Store Properties: | | | | | | | | | | | | | | | | | | | | | | | | | |
Crestmont | Marietta, GA | 4/29/2011 | | 2010 | | | 17,315 | | | (3,676 | ) | | 13,639 | | | 228 | | | 95.6% | | | 94.8% | | | 928 | |
Runaway Bay | Indianapolis, IN | 10/11/2012 | | 2002 | | | 16,222 | | | (1,880 | ) | | 14,342 | | | 192 | | | 95.8% | | | 96.4% | | | 1,003 | |
Reserve at Eagle Ridge | Waukegan, IL | 1/31/2014 | | 2008 | | | 29,385 | | | (2,299 | ) | | 27,086 | | | 370 | | | 93.8% | | | 95.0% | | | 1,007 | |
Windrush | Edmond, OK | 2/28/2014 | | 2011 | | | 9,552 | | | (775 | ) | | 8,777 | | | 160 | | | 88.8% | | | 89.3% | | | 760 | |
Heritage Park | Oklahoma City, OK | 2/28/2014 | | 2011 | | | 17,719 | | | (1,444 | ) | | 16,275 | | | 453 | | | 92.9% | | | 91.9% | | | 649 | |
Raindance | Oklahoma City, OK | 2/28/2014 | | 2011 | | | 14,575 | | | (1,196 | ) | | 13,379 | | | 504 | | | 93.5% | | | 93.9% | | | 550 | |
Augusta | Oklahoma City, OK | 2/28/2014 | | 2011 | | | 11,810 | | | (1,054 | ) | | 10,756 | | | 197 | | | 93.9% | | | 93.4% | | | 726 | |
Invitational | Oklahoma City, OK | 2/28/2014 | | 2011 | | | 19,600 | | | (1,756 | ) | | 17,844 | | | 344 | | | 92.7% | | | 91.5% | | | 665 | |
King's Landing | Creve Coeur, MO | 3/31/2014 | | 2005 | | | 32,967 | | | (2,702 | ) | | 30,265 | | | 152 | | | 92.8% | | | 92.2% | | | 1,568 | |
Carrington Park | Little Rock, AR | 5/7/2014 | | 1999 | | | 22,340 | | | (1,920 | ) | | 20,420 | | | 202 | | | 95.5% | | | 94.8% | | | 1,050 | |
Arbors at the Reservoir | Ridgeland, MS | 6/4/2014 | | 2000 | | | 21,088 | | | (1,631 | ) | | 19,457 | | | 170 | | | 94.1% | | | 92.6% | | | 1,153 | |
Walnut Hill | Cordova, TN | 8/28/2014 | | 2001 | | | 28,327 | | | (2,201 | ) | | 26,126 | | | 362 | | | 93.6% | | | 93.8% | | | 986 | |
Lenoxplace | Raleigh, NC | 9/5/2014 | | 2012 | | | 24,582 | | | (1,720 | ) | | 22,862 | | | 268 | | | 95.5% | | | 94.8% | | | 930 | |
Stonebridge Crossing | Cordova, TN | 9/15/2014 | | 1994 | | | 30,568 | | | (2,253 | ) | | 28,315 | | | 500 | | | 94.8% | | | 95.7% | | | 834 | |
Bennington Pond | Groveport, OH | 11/24/2014 | | 2000 | | | 17,971 | | | (1,245 | ) | | 16,726 | | | 240 | | | 95.8% | | | 96.5% | | | 894 | |
Prospect Park | Louisville, KY | 12/8/2014 | | 1990 | | | 14,279 | | | (828 | ) | | 13,451 | | | 138 | | | 93.5% | | | 93.0% | | | 944 | |
Brookside | Louisville, KY | 12/8/2014 | | 1987 | | | 21,021 | | | (1,255 | ) | | 19,766 | | | 224 | | | 96.9% | | | 96.6% | | | 869 | |
Jamestown | Louisville, KY | 12/8/2014 | 1970 (f) | | | 36,310 | | | (2,214 | ) | | 34,096 | | | 355 | | | 95.8% | | | 96.3% | | | 1,017 | |
Meadows | Louisville, KY | 12/8/2014 | | 1988 | | | 38,155 | | | (2,293 | ) | | 35,862 | | | 400 | | | 94.5% | | | 93.8% | | | 842 | |
Oxmoor | Louisville, KY | 12/8/2014 | 1999-2000 | | | 55,650 | | | (3,506 | ) | | 52,144 | | | 432 | | | 94.2% | | | 94.7% | | | 1,021 | |
Stonebridge at the Ranch | Little Rock, AR | 12/16/2014 | | 2005 | | | 31,958 | | | (2,010 | ) | | 29,948 | | | 260 | | | 94.2% | | | 93.1% | | | 946 | |
Iron Rock Ranch | Austin, TX | 12/30/2014 | 2001-2002 | | | 35,471 | | | (2,166 | ) | | 33,305 | | | 300 | | | 95.0% | | | 94.3% | | | 1,276 | |
Bayview Club | Indianapolis, IN | 5/1/2015 | | 2004 | | | 25,786 | | | (1,462 | ) | | 24,324 | | | 236 | | | 97.9% | | | 95.2% | | | 981 | |
Arbors River Oaks | Memphis, TN | 9/17/2015 | | 2010 | | | 21,856 | | | (1,072 | ) | | 20,784 | | | 191 | | | 97.4% | | | 94.9% | | | 1,240 | |
Aston | Wake Forest, NC | 9/17/2015 | | 2013 | | | 37,986 | | | (1,745 | ) | | 36,241 | | | 288 | | | 95.5% | | | 95.7% | | | 1,083 | |
Avenues at Craig Ranch | McKinneuy, TX | 9/17/2015 | | 2013 | | | 47,793 | | | (2,138 | ) | | 45,655 | | | 334 | | | 95.5% | | | 96.2% | | | 1,287 | |
Bridge Pointe | Huntsville, AL | 9/17/2015 | | 2002 | | | 16,070 | | | (756 | ) | | 15,314 | | | 178 | | | 98.3% | | | 97.3% | | | 849 | |
Creekstone at RTP | Durham, NC | 9/17/2015 | | 2013 | | | 38,320 | | | (1,671 | ) | | 36,649 | | | 256 | | | 93.0% | | | 94.9% | | | 1,213 | |
Fountains Southend | Charlotte, NC | 9/17/2015 | | 2013 | | | 41,749 | | | (1,880 | ) | | 39,869 | | | 208 | | | 93.8% | | | 94.3% | | | 1,461 | |
Fox Trails | Plano, TX | 9/17/2015 | | 1981 | | | 28,257 | | | (1,188 | ) | | 27,069 | | | 286 | | | 95.8% | | | 96.2% | | | 1,050 | |
Lakeshore on the Hill | Chattanooga, TN | 9/17/2015 | | 2015 | | | 11,483 | | | (557 | ) | | 10,926 | | | 123 | | | 97.6% | | | 97.8% | | | 975 | |
Millenia 700 | Orlando, FL | 9/17/2015 | | 2012 | | | 47,517 | | | (2,128 | ) | | 45,389 | | | 297 | | | 94.9% | | | 93.3% | | | 1,380 | |
Miller Creek at German Town | Memphis, TN | 9/17/2015 | | 2013 | | | 57,026 | | | (2,702 | ) | | 54,324 | | | 330 | | | 95.5% | | | 95.8% | | | 1,249 | |
Pointe at Canyon Ridge | Atlanta, GA | 9/17/2015 | 2007 (f) | | | 49,637 | | | (2,030 | ) | | 47,607 | | | 494 | | | 96.6% | | | 94.5% | | | 981 | |
St James at Goose Creek | Goose Creek, SC | 9/17/2015 | | 2009 | | | 31,839 | | | (1,470 | ) | | 30,369 | | | 244 | | | 95.1% | | | 95.3% | | | 1,131 | |
Talison Row at Daniel Island | Daniel Island, SC | 9/17/2015 | | 2013 | | | 47,190 | | | (2,118 | ) | | 45,072 | | | 274 | | | 96.4% | | | 96.4% | | | 1,474 | |
The Aventine Greenville | Greenville, SC | 9/17/2015 | | 2013 | | | 48,176 | | | (2,208 | ) | | 45,968 | | | 346 | | | 93.9% | | | 92.1% | | | 1,092 | |
Trails at Signal Mountain | Chattanooga, TN | 9/17/2015 | | 2015 | | | 14,468 | | | (709 | ) | | 13,759 | | | 172 | | | 94.8% | | | 97.3% | | | 951 | |
Vue at Knoll Trail | Dallas, TX | 9/17/2015 | | 2015 | | | 9,340 | | | (331 | ) | | 9,009 | | | 114 | | | 97.4% | | | 97.4% | | | 922 | |
Waterstone at Brier Creek | Raleigh, NC | 9/17/2015 | | 2014 | | | 39,019 | | | (1,760 | ) | | 37,259 | | | 232 | | | 96.1% | | | 96.8% | | | 1,259 | |
Waterstone Big Creek | Alpharetta, GA | 9/17/2015 | | 2014 | | | 69,729 | | | (3,122 | ) | | 66,607 | | | 370 | | | 95.7% | | | 96.5% | | | 1,379 | |
Westmont Commons | Asheville, NC | 9/17/2015 | 2003, 2008 | | | 28,291 | | | (1,319 | ) | | 26,972 | | | 252 | | | 94.8% | | | 96.5% | | | 1,054 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Non-Same Store Properties: | | | | | | | | | | | | | | | | | | | | | | | | | |
Lakes of Northdale | Tampa, FL | 2/27/2017 | | 2016 | | | 29,735 | | | (376 | ) | | 29,359 | | | 216 | | | 92.6% | | | 93.5% | | | 1,212 | |
Haverford Place | Lexington, KY | 5/24/2017 | 2001 (f) | | | 14,142 | | | (86 | ) | | 14,056 | | | 160 | | | 92.5% | | | 96.6% | | | 898 | |
South Terrace | Durham, NC | 6/30/2017 | | 2002 | | | 42,604 | | | (232 | ) | | 42,372 | | | 328 | | | 96.0% | | | 96.2% | | | 1,057 | |
Cherry Grove | North Myrtle Beach, SC | 9/26/2017 | | 2001 | | | 15,919 | | | - | | | 15,919 | | | 172 | | | 95.9% | | | 97.7% | | | 942 | |
Kensington Commons | Canal Winchester, OH | 9/26/2017 | | 2004 | | | 24,220 | | | - | | | 24,220 | | | 264 | | | 97.0% | | | 96.7% | | | 833 | |
Schirm Farms | Canal Winchester, OH | 9/26/2017 | | 2002 | | | 23,448 | | | - | | | 23,448 | | | 264 | | | 96.6% | | | 96.6% | | | 839 | |
Riverchase | Indianapolis, IN | 9/26/2017 | | 2000 | | | 18,592 | | | - | | | 18,592 | | | 217 | | | 91.2% | | | 90.0% | | | 804 | |
TOTAL PROPERTIES HELD-FOR-USE | | | | | $ | 1,427,057 | | $ | (75,084 | ) | $ | 1,351,973 | | | 13,297 | | | 94.9% | | | 94.8% | | $ | 1,011 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
TOTAL | | | | | | $ | 1,450,668 | | $ | (76,664 | ) | $ | 1,374,004 | | | 13,729 | | | 94.8% | | | 94.7% | | $ | 1,004 | |
(a) | All dates are for the later of (i) the year in which construction was completed or (ii) the year in which a significant renovation program was completed. |
(b) | Units represent the total number of apartment units available for rent at September 30, 2017. |
(c) | Physical occupancy for each of our properties is calculated as (i) total units rented as of September 30, 2017 divided by (ii) total units available as of September 30, 2017, expressed as a percentage. |
(d) | Average occupancy represents the daily average occupied units for the three-month period ended September 30, 2017. |
(e) | Average monthly effective rent, per unit, represents the average monthly rent for all occupied units for the three-month period ended September 30, 2017. |
(f) | Properties are undergoing renovation. |
18
NOI EXPOSURE BY MARKET
Dollars in thousands, except rent per unit
| | | | | | | | | | | | | | For the Three Months Ended September 30, 2017 | |
Market | | Units | | | Gross Real Estate Assets | | | Period End Occupancy | | | Average Effective Monthly Rent per Unit | | | Net Operating Income (a) | | | % of NOI | |
Louisville. KY | | | 1,709 | | | $ | 179,557 | | | | 94.7 | % | | $ | 941 | | | $ | 2,945 | | | | 12.4 | % |
Memphis, TN | | | 1,383 | | | | 137,777 | | | | 95.0 | % | | | 1,029 | | | | 2,549 | | | | 10.8 | % |
Atlanta, GA | | | 1,092 | | | | 136,681 | | | | 96.1 | % | | | 1,105 | | | | 2,419 | | | | 10.2 | % |
Raleigh, NC | | | 1,372 | | | | 182,511 | | | | 95.3 | % | | | 1,101 | | | | 2,907 | | | | 12.3 | % |
Oklahoma City, OK | | | 1,658 | | | | 73,256 | | | | 92.8 | % | | | 642 | | | | 1,595 | | | | 6.7 | % |
Dallas, TX | | | 734 | | | | 85,390 | | | | 95.9 | % | | | 1,138 | | | | 1,480 | | | | 6.3 | % |
Charleston, SC | | | 690 | | | | 94,948 | | | | 95.8 | % | | | 1,220 | | | | 1,217 | | | | 5.1 | % |
Jackson, MS (b) | | | 602 | | | | 44,699 | | | | 94.0 | % | | | 892 | | | | 924 | | | | 3.9 | % |
Little Rock, AR | | | 462 | | | | 54,298 | | | | 94.8 | % | | | 992 | | | | 849 | | | | 3.6 | % |
Orlando, FL | | | 297 | | | | 47,517 | | | | 94.9 | % | | | 1,380 | | | | 760 | | | | 3.2 | % |
Chicago, IL | | | 370 | | | | 29,385 | | | | 93.8 | % | | | 1,007 | | | | 675 | | | | 2.9 | % |
Indianapolis, IN | | | 645 | | | | 60,600 | | | | 95.0 | % | | | 928 | | | | 710 | | | | 3.0 | % |
Greenville, SC | | | 346 | | | | 48,176 | | | | 93.9 | % | | | 1,092 | | | | 687 | | | | 2.9 | % |
Austin, TX | | | 300 | | | | 35,471 | | | | 95.0 | % | | | 1,276 | | | | 625 | | | | 2.6 | % |
Charlotte, NC | | | 208 | | | | 41,749 | | | | 93.8 | % | | | 1,461 | | | | 628 | | | | 2.7 | % |
Asheville, NC | | | 252 | | | | 28,291 | | | | 94.8 | % | | | 1,054 | | | | 576 | | | | 2.4 | % |
Chattanooga, TN | | | 295 | | | | 25,951 | | | | 95.9 | % | | | 961 | | | | 486 | | | | 2.1 | % |
Tampa-St. Petersburg, FL | | | 216 | | | | 29,735 | | | | 92.6 | % | | | 1,212 | | | | 489 | | | | 2.1 | % |
St. Louis, MO | | | 152 | | | | 32,967 | | | | 92.8 | % | | | 1,568 | | | | 450 | | | | 1.9 | % |
Columbus, OH | | | 768 | | | | 65,639 | | | | 96.5 | % | | | 854 | | | | 409 | | | | 1.7 | % |
Huntsville, AL | | | 178 | | | | 16,070 | | | | 98.3 | % | | | 849 | | | | 277 | | | | 1.2 | % |
Total/Weighted Average | | | 13,729 | | | $ | 1,450,668 | | | | 94.8 | % | | $ | 1,004 | | | $ | 23,657 | | | | 100.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
(a) | Net operating income for the three months ended September 30, 2017 excludes $11 primarily related to sold properties. |
(b) | Includes $23,611 of properties classified as held-for-sale. |
19
DEBT SUMMARY AS OF SEPTEMBER 30, 2017
Dollars in thousands
| | Amount | | | Rate | | | Type | | Weighted Average Maturity (in years) | | |
Debt: | | | | | | | | | | | | | | | |
Credit facility (a) | | $ | 159,690 | | | | 2.7 | % | | Floating | | | 3.9 | | |
Mortgages-Fixed rate | | | 577,632 | | | | 3.7 | % | | Fixed | | | 6.0 | | |
Unamortized deferred financing costs | | | (5,697 | ) | | | | | | | | | | | |
Total Debt | | | 731,625 | | | | 3.5 | % | | | | | 5.6 | | |
Market Equity Capitalization, at period end | | | 880,257 | | | | | | | | | | | | |
Total Capitalization | | $ | 1,611,882 | | | | | | | | | | | | |
| (a) | Credit facility total capacity is $300,000, of which $159,690 was drawn as of September 30, 2017, comprised of a $50,000 term loan and a revolving commitment of up to $250,000. The maturity date on the term loan is May 1, 2022, and the maturity date on borrowings outstanding under the revolving commitment is May 1, 2021. |
| (b) | As of September 30, 2017, IRT maintained a float-to-fixed interest swap with a $150,000 notional amount. This swap, which expires on June 17, 2021 and has a fixed rate of 1.1325%, has converted $150,000 of our floating rate debt to fixed rate debt. |
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Definitions
Average Effective Monthly Rent per Unit
Average effective rent per unit represents the average of gross rent amounts, divided by the average occupancy (in units) for the period presented. We believe average effective rent is a helpful measurement in evaluating average pricing. This metric, when presented, reflects the average effective rent per month.
Average Occupancy
Average occupancy represents the average of the daily physical occupancy for the period presented.
Adjusted EBITDA
EBITDA is defined as net income before interest expense including amortization of deferred financing costs, income tax expense, and depreciation and amortization expenses. Adjusted EBITDA is EBITDA before acquisition and integration expenses and certain other non-operating gains or losses related to items such as asset sales, debt extinguishments, acquisition related debt extinguishment expenses, gains on the TSRE merger, and management internalization expenses. EBITDA and Adjusted EBITDA are each non-GAAP measures. We consider each of EBITDA and Adjusted EBITDA to be an appropriate supplemental measure of our performance because it eliminates interest, income taxes, depreciation and amortization, acquisition and integration expenses and other non-operating gains and losses, which permits investors to view income from operations without these non-cash or non-operating items. IRT’s calculation of Adjusted EBITDA differs from the methodology used for calculating Adjusted EBITDA by certain other REITs and, accordingly, IRT’s Adjusted EBITDA may not be comparable to Adjusted EBITDA reported by other REITs.
Funds From Operations (“FFO”) and Core Funds From Operations (“CFFO”)
IRT believes that FFO and CFFO, each of which is a non-GAAP measure, are additional appropriate measures of the operating performance of a REIT and IRT in particular. IRT computes FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts, or NAREIT, as net income or loss (computed in accordance with GAAP), excluding real estate-related depreciation and amortization expense, gains or losses on sales of real estate and the cumulative effect of changes in accounting principles.
CFFO is a computation made by analysts and investors to measure a real estate company’s operating performance by removing the effect of items that do not reflect ongoing property operations, including stock compensation expense, depreciation and amortization of other items not included in FFO, amortization of deferred financing costs, acquisition and integration expenses, and other non-operating gains or losses related to items such as hedge ineffectiveness, defeasance costs we incur when we sell a property subject to secured debt, asset sales, debt extinguishments, acquisition related debt extinguishment expenses, gains on the TSRE merger, and management internalization expenses, from the determination of FFO. IRT incurs acquisition expenses in connection with acquisitions of real estate properties and expenses those costs when incurred in accordance with U.S. GAAP. As these expenses are one-time and reflective of investing activities rather than operating performance, IRT adds back these costs to FFO in determining CFFO.
IRT’s calculation of CFFO differs from the methodology used for calculating CFFO by certain other REITs and, accordingly, IRT’s CFFO may not be comparable to CFFO reported by other REITs. IRT’s management utilizes FFO and CFFO as measures of IRT’s operating performance, and believes they are also useful to investors, because they facilitate an understanding of IRT’s operating performance after adjustment for certain non-cash or non-operating items that are required by GAAP to be expensed but may not necessarily be indicative of current operating performance and that may not accurately compare IRT’s operating performance between periods. Furthermore, although FFO, CFFO and other supplemental performance measures are defined in various ways throughout the REIT industry, IRT believes that FFO and CFFO may provide IRT and our investors with an additional useful measure to compare IRT’s financial performance to certain other REITs. Neither FFO nor CFFO is equivalent to net income 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 as an indicator of IRT’s operating performance or as an alternative to cash flow from operating activities as a measure of IRT’s liquidity.
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Interest Coverage
Interest coverage is a ratio computed by dividing our Adjusted EBITDA by our interest expense.
Net Debt
Net debt, a non-GAAP measure, equals total debt less cash and cash equivalents. The following table provides a reconciliation of total debt to net debt.
IRT presents net debt because management believes it is a useful measure of IRT’s credit position and progress toward reducing leverage. The calculation is limited in that IRT may not always be able to use cash to repay debt on a dollar for dollar basis (Dollars in thousands).
| As of | |
| September 30, 2017 | | | June 30, 2017 | | | March 31, 2017 | | | December 31, 2016 | | | September 30, 2016 | |
Total debt | $ | 731,625 | | | $ | 764,521 | | | $ | 765,695 | | | $ | 743,817 | | | $ | 880,581 | |
Less: cash and cash equivalents | | (10,128 | ) | | | (6,271 | ) | | | (10,065 | ) | | | (20,892 | ) | | | (29,247 | ) |
Total net debt | $ | 721,497 | | | $ | 758,250 | | | $ | 755,630 | | | $ | 722,925 | | | $ | 851,334 | |
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Net Operating Income
IRT believes that Net Operating Income (“NOI”), a non-GAAP measure, is a useful measure of its operating performance. IRT defines NOI as total property revenues less total property operating expenses, excluding depreciation and amortization, asset management fees, property management fees, acquisition expenses and general administrative expenses. In connection with our management internalization which was completed in the fourth quarter of 2016, we modified our calculation of NOI to exclude property management expenses. We retrospectively adjusted previously reported NOI to conform to this change. 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 because 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 an alternative measure of our financial performance.
Same Store Properties and Same Store Portfolio
IRT reviews its same store properties or portfolio at the beginning of each calendar year. Properties are added into the same store portfolio if they were owned at the beginning of the previous year. Properties that are held-for-sale or have been sold are excluded from the same store portfolio.
Total Gross Assets
Total Gross Assets equals total assets plus accumulated depreciation and accumulated amortization, including fully depreciated or amortized real estate and real estate related assets. The following table provides a reconciliation of total assets to total gross assets (Dollars in thousands).
| As of | |
| September 30, 2017 | | | June 30, 2017 | | | March 31, 2017 | | | December 31, 2016 | | | September 30, 2016 | |
Total assets | $ | 1,405,212 | | | $ | 1,317,177 | | | $ | 1,306,986 | | | $ | 1,294,237 | | | $ | 1,306,242 | |
Plus: accumulated depreciation (a) | | 76,664 | | | | 68,433 | | | | 68,262 | | | | 60,719 | | | | 52,824 | |
Plus: accumulated amortization | | 15,670 | | | | 15,254 | | | | 15,341 | | | | 15,287 | | | | 15,287 | |
Total gross assets | $ | 1,497,546 | | | $ | 1,400,864 | | | $ | 1,390,589 | | | $ | 1,370,243 | | | $ | 1,374,353 | |
| (a) | Includes previously recognized depreciation on properties that are classified as held-for-sale. |
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