SILVER BAY REALTY TRUST CORP.
REPORTS FOURTH QUARTER 2013 FINANCIAL RESULTS
Generated Positive Funds From Operations of $0.04 per Common Share and 13% NAV Growth Year-Over-Year
NEW YORK, March 5, 2014 - Silver Bay Realty Trust Corp. (NYSE: SBY) or “Silver Bay,” or “the Company,” today announced its financial results for the quarter ended December 31, 2013.
Highlights
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| ▪ | Generated Funds From Operations of $0.04 per common share |
| |
| ▪ | Total revenue increased 15% quarter-over-quarter to $16.7 million |
| |
| ▪ | Net operating income outpaced revenue growth, increasing 48% quarter-over-quarter to $8.3 million |
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| ▪ | Estimated net asset value increased 4% quarter-over-quarter to $20.21 per share |
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| ▪ | Increased aggregate occupancy to 88% from 81% on portfolio of 5,642 single-family properties |
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| ▪ | Completed $150.0 million increase to credit facility subsequent to quarter-end |
“Our fourth quarter results demonstrate continued progress in our operating efficiency and leasing,” said David N. Miller, Silver Bay’s President and Chief Executive Officer. “We are pleased to have generated positive cash flow each month this quarter while achieving substantial growth in our estimated net asset value. These are the key drivers of total return and our goal of creating enduring value for our stockholders.”
Financial Results
Silver Bay reported total revenue of $16.7 million for the fourth quarter of 2013, a 15% increase compared to total revenue of $14.5 million for the third quarter of 2013. This sequential quarterly increase was primarily attributable to an additional 452 leased properties generating rental income during the quarter. Net loss attributable to common stockholders for the fourth quarter of 2013 was $5.1 million, or ($0.13) per common share, compared to net loss attributable to common stockholders for the third quarter of 2013 of $6.4 million, or ($0.16) per common share.
The Company reported net operating income, or NOI, of $8.3 million for the fourth quarter of 2013, a 48% increase compared to NOI of $5.6 million for the third quarter of 2013. Funds From Operations, or FFO, a generally accepted measure of operating performance for real estate investment trusts, for the fourth quarter 2013 were $1.5 million, or $0.04 per common share, compared to negative FFO for the third quarter 2013 of $0.6 million, or ($0.02) per common share. NOI and FFO are non-GAAP financial measures. A reconciliation of net loss to NOI and net loss attributable to common stockholders to FFO are included in the financial and operating tables accompanying this press release.
Portfolio Summary and Operating Metrics
Silver Bay owned a portfolio of 5,642 single-family properties as of December 31, 2013. The following table provides a summary of Silver Bay’s portfolio and operating metrics for the third and fourth quarter of 2013:
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| | | | | | | | |
PORTFOLIO AND OPERATING SUMMARY
|
| | | As of December 31, 2013 | | As of September 30, 2013 |
| Estimated net asset value per share | |
| $20.21 |
| |
| $19.50 |
|
| Book value per share | |
| $17.06 |
| |
| $17.16 |
|
| | | | | |
| | | As of December 31, 2013 | | As of September 30, 2013 |
| Occupancy Rate | | | | |
| Stabilized properties | | 93 | % | | 95 | % |
| Properties owned six months or longer | | 89 | % | | 89 | % |
| Aggregate portfolio | | 88 | % | | 81 | % |
| Average monthly rent on the aggregate portfolio | |
| $1,162 |
| |
| $1,161 |
|
Estimated Net Asset Value
Silver Bay reported an estimated net asset value, or Estimated NAV, per share of $20.21 based on an estimated fair market value, or Estimated Portfolio Value, of the Company’s properties of $878.7 million as of December 31, 2013. The Company’s book value per share was $17.06 as of December 31, 2013. The difference between Estimated NAV and book value per share is attributable to multiple factors, including appreciation in the underlying assets of the Company’s portfolio of single-family properties, the Company’s purchasing of single-family properties at discounts to market prices, value created by renovations in excess of the cost of renovations, and the exclusion of accumulated depreciation in the calculation of the Company’s Estimated Portfolio Value.
The Estimated Portfolio Value of the Company’s properties is calculated by Silver Bay’s proprietary automated valuation model, or AVM, which estimates the value of the Company’s properties on an individual basis based on comparable sales in the residential real estate market, without reference to the intended use for the properties. Estimated NAV does not ascribe any value to in-place leases or to the portfolio as a whole (as compared to the sum of the values of the individual properties), nor does it consider cash flow or other yield metrics. Estimated NAV and Estimated Portfolio Value are non-GAAP financial measures. A reconciliation of book value to Estimated NAV is included in the financial and operating tables accompanying this press release.
Operating Metrics
Silver Bay reported an occupancy rate of 93% on properties that were stabilized as of December 31, 2013, which decreased slightly from 95% in the prior quarter.
For properties that were owned for six months or longer, the Company reported an occupancy rate of 89% as of December 31, 2013, which remained consistent with the prior quarter. Silver Bay reported an occupancy rate of 88% for the aggregate portfolio as of December 31, 2013, an increase of seven percentage points compared to an occupancy rate of 81% on the aggregate portfolio as of September 30, 2013. The sequential quarter increase in the occupancy rate for the aggregate portfolio is primarily attributable to renovation and leasing activity exceeding acquisition activity. A summary of Silver Bay’s occupancy rates is included in the financial and operating tables accompanying this press release.
Silver Bay reported an average monthly rent for the aggregate portfolio of $1,162 for the fourth quarter of 2013, compared to an average monthly rent of $1,161 for the third quarter of 2013.
Dividend Declaration
The Company’s Board of Directors declared a quarterly dividend of $0.01 per share of common stock for the quarter ended December 31, 2013. The dividend was paid January 10, 2014 to common stockholders of record at the close of business on December 30, 2013.
Financing and Liquidity
As of December 31, 2013, Silver Bay had $164.8 million outstanding on its $200.0 million revolving credit facility. The Company had $43.7 million in cash, $24.5 million in escrow deposits and $35.2 million available under its $200.0 million revolving credit facility as of December 31, 2013.
Events Subsequent to Fourth Quarter 2013
On January 16, 2014, Silver Bay completed an amendment to its credit facility increasing its borrowing capacity to $350.0 million from $200.0 million. All other material terms of the credit agreement remain unchanged. The credit facility is being used for the acquisition, financing and renovation of properties and other general purposes.
Share Repurchase Plan
During the fourth quarter of 2013, 250,768 shares were repurchased by the Company under the share repurchase program at an average price of $15.35 per common share, including commissions.
Conference Call
Silver Bay will host a conference call on March 6, 2014 at 10:00 a.m. EST to discuss fourth quarter 2013 financial results and business highlights. To participate in the teleconference, please call toll-free (888) 317-6016 (or (412) 317-6016 for international callers and (855) 669-9657 for Canadian callers) approximately 10 minutes prior to the above start time. You may also listen to the teleconference live via the Internet on the Company's website at www.silverbayrealtytrustcorp.com in the Investor Relations section under the Events Calendar link. For those unable to attend, a telephone playback will be available beginning at 12:00 p.m. EST on March 6, 2014 through 9:00 a.m. EDT on March 21, 2014. The playback can be accessed by calling (877) 344-7529 (or (412) 317-0088 for international callers and (855) 669-9658 for Canadian callers) and providing Conference Number 10040454. The call will also be archived on the Company's website in the Investor Relations section under the Events Calendar link.
Silver Bay Realty Trust Corp.
Silver Bay Realty Trust Corp. is a Maryland corporation focused on the acquisition, renovation, leasing and management of single-family properties for rental income and long-term capital appreciation. Silver Bay currently owns single-family properties in Arizona, California, Florida, Georgia, Nevada, North Carolina, Ohio and Texas. Silver Bay has elected to be taxed as a REIT for U.S. federal tax purposes.
Forward-Looking Statements
This press release includes “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Actual results may differ from expectations, estimates and projections and, consequently, readers should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “target,” “assume,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believe,” “predicts,” “potential,” “continue,” and
similar expressions are intended to identify such forward-looking statements. These forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from expected results. Factors that could cause actual results to differ include: Silver Bay’s ability to execute share repurchases upon terms acceptable to the company; adverse economic or real estate developments in Silver Bay’s markets; defaults on, early terminations of or non-renewal of leases by residents; difficulties in identifying properties to acquire and completing acquisitions; increased time and/or expense to gain possession and renovate properties; increased vacancy, resident turnover , or turnover costs; Silver Bay’s ability to control or reduce operating expenses, including repairs and maintenance expense and other costs such as real estate taxes, homeowners’ association fees, insurance and other costs outside the Company’s control; Silver Bay’s failure to successfully operate its properties; Silver Bay’s ability to obtain financing arrangements; Silver Bay’s failure to meet the conditions to draw under the credit facility; general volatility of the markets in which it participates; interest rates and the market value of Silver Bay’s assets; the impact of changes in governmental regulations, tax law and rates, and similar matters.
Readers are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made. Silver Bay does not undertake or accept any obligation to release publicly any updates or revisions to any forward-looking statement to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based. Additional information concerning these and other risk factors is contained in Silver Bay’s most recent filings with the Securities and Exchange Commission. All subsequent written and oral forward looking statements concerning Silver Bay or matters attributable to Silver Bay or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above.
Non-GAAP Financial Measures
Estimated Portfolio and Estimated Net Asset Value
The Estimated Portfolio Value reflects the value of Silver Bay’s properties calculated by the Company’s proprietary AVM, less the Company’s estimate of the remaining cost to renovate such properties, or Estimated Renovation Reserve. The AVM estimates the value of the Company’s properties on an individual basis based on prior comparable sales in the residential real estate market, without reference to the intended use for the properties. These individual property values are then aggregated and reduced by the Estimated Renovation Reserve, which accounts for the AVM assumption that renovations for all properties have been completed, to derive the Estimated Portfolio Value of the Company’s properties. The difference between the Estimated Portfolio Value and net investments in real estate as of December 31, 2013 is attributable to multiple factors, including home price appreciation in Silver Bay markets, purchasing at discounts to market prices, value created by the Company’s renovations in excess of the cost of the renovations, and the exclusion of accumulated depreciation in the calculation of Estimated Portfolio Value.
Estimated NAV is intended to be an estimate of the value of all of the Company’s assets net of liabilities. To calculate Estimated NAV, the Company starts with its historical book value, subtracts its historical net investments in real estate and adds its Estimated Portfolio Value. For purposes of calculating Estimated Portfolio Value and estimated NAV, the Company does not deduct the estimated costs of selling the properties in the portfolio, including commissions and closing costs. Further, the Company ascribes no value to existing leases or to the portfolio as a whole (as compared to the sum of the values of the individual properties), nor does it consider cash flow or other yield metrics.
Estimated Portfolio Value and Estimated NAV are non-GAAP financial measures. Silver Bay provides the Estimated Portfolio Value and Estimated NAV as additional tools for investors seeking to value the Company. These metrics should be considered along with other available information in valuing and assessing Silver Bay, including the Company’s GAAP financial measures and other cash flow and yield metrics, and these metrics should not be viewed as a substitute for book value, net investments in real estate, equity, net income or cash flows from operations prepared in accordance with GAAP, or as a measure of the Company’s profitability or liquidity.
Net Operating Income
NOI is defined by the Company as total revenue less property operating and maintenance, real estate taxes, homeowners’ association fees and property management expenses and certain other non-recurring, non-cash or unrelated non-operating expenses. NOI excludes depreciation and amortization, advisory management fees, general and administrative expenses, interest expense and other expenses. During the fourth quarter of 2013, the Company refined its definition of NOI to exclude the 5% property management fee on certain costs and expenses incurred by its Manager’s operating subsidiary that are reimbursed by the Company because it more closely represents additional advisory management fee, non-cash share based property management stock compensation, expensed acquisition fees and costs, and certain other non-recurring costs. Prior quarter NOI has been recomputed to conform to the current period presentation.
NOI should not be considered an alternative to net loss or net cash flows from operating activities, as determined in accordance with GAAP, as indications of Silver Bay’s performance or as measures of liquidity. Although the Company uses this non-GAAP measure for comparability in assessing its performance against other REITs, not all REITs compute the same non-GAAP measure. Accordingly, there can be no assurance that the Company’s basis for computing this non-GAAP measure is comparable with that of other REITs.
Funds From Operations
Funds From Operations, or FFO, is a non-GAAP (in accordance with accounting principles generally accepted in the United States) financial measure that the Company believes, when considered with the financial statements determined in accordance with GAAP, is helpful to investors in understanding the Company’s performance because it captures features particular to real estate performance by recognizing that real estate generally appreciates over time or maintains residual value to a much greater extent than do other depreciable assets. The National Association of Real Estate Investment Trusts, or NAREIT, defines FFO as net income (loss), computed in accordance with GAAP, excluding gains (losses) from sales of, and impairment losses recognized with respect to, depreciable property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated on the same basis to determine FFO. The Company calculates FFO attributable to common stockholders (diluted) by subtracting, if dilutive, redemption or repurchase related preferred stock issuance costs and dividends on preferred stock and adding back dividends/distributions on dilutive preferred securities and premiums or discounts on preferred stock redemptions or repurchases.
FFO should not be considered an alternative to net income (loss) or net cash flows from operating activities, as determined in accordance with GAAP, as indications of the Company’s performance or as measures of liquidity. This non-GAAP measure is not necessarily indicative of cash available to fund future cash needs. In addition, although the Company uses this non-GAAP measure for comparability in assessing its performance against other REITs, not all REITs compute the same non-GAAP measure.
Additional Information
Stockholders of Silver Bay, and other interested persons, may find additional information regarding the Company at the SEC's Internet site at www.sec.gov or by directing requests to: Silver Bay Realty Trust Corp., Attn: Investor Relations, 601 Carlson Parkway, Suite 250, Minnetonka, MN 55305, telephone (952) 358-4400.
SUPPLEMENTAL FINANCIAL AND OPERATING DATA
FOURTH QUARTER 2013
TABLE OF CONTENTS
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| ITEM | | PAGE |
| | | |
| CONSOLIDATED BALANCE SHEETS | | 7 |
| CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | | 8 |
| CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | | 9 |
| CONSOLIDATED STATEMENTS OF CASH FLOWS | | 10 |
| PORTFOLIO SUMMARY OF SINGLE-FAMILY PROPERTIES | | 11 |
| PORTFOLIO SUMMARY OF STABILIZED PROPERTIES AND THOSE OWNED SIX MONTHS OR LONGER | | 12 |
| DEFINITIONS AND RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES | | 13-14 |
SILVER BAY REALTY TRUST CORP.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)
|
| | | | | | |
| | | December 31, 2013 | | | December 31, 2012 |
| | Assets |
| Investments in real estate: | | | | | |
| Land | $ | 137,349 | | $ | 82,310 |
| Building and improvements | | 638,955 | | | 338,252 |
| | | 776,304 | | | 420,562 |
| Accumulated depreciation | | (18,897) | | | (1,869) |
| Investments in real estate, net | | 757,407 | | | 418,693 |
| | | | | | |
| Assets held for sale | | 6,382 | | | - |
| Cash | | 43,717 | | | 228,139 |
| Escrow deposits | | 24,461 | | | 19,727 |
| Resident security deposits | | 6,848 | | | 2,266 |
| In-place lease and deferred lease costs, net | | 749 | | | 2,363 |
| Deferred financing costs, net | | 3,225 | | | - |
| Other assets | | 3,289 | | | 6,114 |
| Total assets | $ | 846,078 | | $ | 677,302 |
| | | | | | |
| | Liabilities and Equity |
| Liabilities: | | | | | |
| Revolving credit facility | $ | 164,825 | | $ | - |
| Accounts payable and accrued property expenses | | 6,072 | | | 4,550 |
| Resident prepaid rent and security deposits | | 8,357 | | | 2,713 |
| Amounts due to the manager and affiliates | | 6,866 | | | 3,071 |
| Amounts due to previous owners | | 998 | | | 6,555 |
| Total liabilities | | 187,118 | | | 16,889 |
| | | | | | |
10% cumulative redeemable preferred stock, $.01 par; 50,000,000 authorized, 1,000 issued and outstanding | | 1,000 | | | 1,000 |
| | | | | | |
| Equity: | | | | | |
| Stockholders' Equity: | | | | | |
Common stock $.01 par; 450,000,000 shares authorized; 38,561,468 and 37,328,213, respectively shares issued and outstanding | | 385 | | | 372 |
| Additional paid-in capital | | 689,646 | | | 664,146 |
| Accumulated other comprehensive loss | | (276) | | | - |
| Cumulative deficit | | (31,795) | | | (5,609) |
| Total Stockholders' Equity | | 657,960 | | | 658,909 |
| Noncontrolling interests - Operating Partnership | | - | | | 504 |
| Total equity | | 657,960 | | | 659,413 |
| Total liabilities and equity | $ | 846,078 | | $ | 677,302 |
SILVER BAY REALTY TRUST CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)
|
| | | | | | | | | | | |
| | | Three Months Ended December 31, | | | Year Ended December 31, |
| Revenue: | | 2013 (unaudited) | | | 2012 (unaudited) | | | 2013 | | | 2012 |
| Rental income | $ | 16,409 | | $ | 2,773 | | $ | 47,953 | | $ | 3,584 |
| Other income | | 300 | | | 10 | | | 1,640 | | | 32 |
| Total revenue | | 16,709 | | | 2,783 | | | 49,593 | | | 3,616 |
| | | | | | | | | | | | |
| Expenses: | | | | | | | | | | | |
| Property operating and maintenance | | 3,848 | | | 1,094 | | | 12,472 | | | 1,868 |
| Real estate taxes | | 2,000 | | | 747 | | | 6,893 | | | 1,273 |
| Homeowners’ association fees | | 282 | | | 229 | | | 1,129 | | | 391 |
| Property management | | 2,818 | | | 395 | | | 11,991 | | | 459 |
| Depreciation and amortization | | 6,174 | | | 1,623 | | | 20,235 | | | 2,106 |
| Advisory management fee - affiliates | | 2,179 | | | 1,355 | | | 9,775 | | | 2,159 |
| General and administrative | | 2,110 | | | 585 | | | 7,453 | | | 881 |
| Interest expense | | 1,764 | | | - | | | 2,911 | | | - |
| Other | | 594 | | | - | | | 1,284 | | | - |
| Total expenses | | 21,769 | | | 6,028 | | | 74,143 | | | 9,137 |
| Net loss | | (5,060) | | | (3,245) | | | (24,550) | | | (5,521) |
| | | | | | | | | | | | |
| Net loss attributable to noncontrolling interests - Operating Partnership | | 3 | | | 4 | | | 17 | | | 4 |
| Net loss attributable to controlling interests | | (5,057) | | | (3,241) | | | (24,533) | | | (5,517) |
| Preferred stock distributions | | (25) | | | (3) | | | (100) | | | (3) |
| Net loss attributable to common stockholders | $ | (5,082) | | $ | (3,244) | | $ | (24,633) | | $ | (5,520) |
| | | | | | | | | | | | |
Loss per share – basic and diluted(1): | | | | | | | | | | | |
| Net loss attributable to common shares | $ | (0.13) | | $ | (0.04) | | $ | (0.63) | | $ | (0.04) |
| Weighted average common shares outstanding | | 38,705,311 | | | 37,328,213 | | | 39,073,994 | | | 37,328,213 |
| | | | | | | | | | | | |
| Comprehensive Loss: | | | | | | | | | | | |
| Net loss | $ | (5,060) | | $ | (3,245) | | $ | (24,550) | | $ | (5,521) |
| Other comprehensive loss: | | | | | | | | | | | |
| Change in fair value of interest rate cap derivatives | | (33) | | | - | | | (276) | | | - |
| Other comprehensive loss | $ | (33) | | $ | - | | $ | (276) | | $ | - |
| Comprehensive loss | | (5,093) | | | (3,245) | | | (24,826) | | | (5,521) |
| Less comprehensive loss attributable to noncontrolling interests – Operating Partnership | | 3 | | | 4 | | | 17 | | | 4 |
| Comprehensive loss attributable to controlling interests | $ | (5,090) | | $ | (3,241) | | $ | (24,809) | | $ | (5,517) |
| |
| (1) | The Company calculated the 2012 loss per share only for the period its common stock was outstanding during the year, referred to as the post-formation period. Prior to its initial public offering and formation transactions, the Company did not have any publicly issued common stock. The formation transactions closed on December 19, 2012, therefore the Company has defined the post-formation period to be the date of the formation transactions through December 31, 2012, or twelve days of activity. |
SILVER BAY REALTY TRUST CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Common Stock | | | | | | | | | | | | | |
| | | Shares | | Par Value Amount | | Additional Paid-In
Capital | | Accumulated Other Comprehensive Loss | | Cumulative
Deficit | | Total Stockholders'
Equity | | Noncontrolling Interests - Operating Partnership | | Parent Equity | | Total Equity |
| | | | | | | | | | | | | | | | | | | |
| Balance at January 1, 2012 | | - | $ | - | $ | - | $ | - | $ | (89) | $ | (89) | $ | - | $ | 250 | $ | 161 |
| Parent contributions through December 19, 2012 | | - | | - | | - | | - | | - | | - | | - | | 321,773 | | 321,773 |
| Net proceeds from Initial Public Offering | | 13,250,000 | | 133 | | 228,384 | | - | | - | | 228,517 | | - | | - | | 228,517 |
| Formation Transactions | | 23,917,642 | | 239 | | 435,713 | | - | | - | | 435,952 | | 508 | | (322,023) | | 114,437 |
| Non-cash equity awards | | 160,571 | | - | | - | | - | | - | | - | | - | | - | | - |
| Other | | - | | - | | 49 | | - | | - | | 49 | | - | | - | | 49 |
| Net loss | | - | | - | | - | | - | | (5,520) | | (5,520) | | (4) | | - | | (5,524) |
| Balance at December 31, 2012 | | 37,328,213 | | 372 | | 664,146 | | - | | (5,609) | | 658,909 | | 504 | | - | | 659,413 |
| Net proceeds from sale of common stock | | 1,987,500 | | 20 | | 34,368 | | - | | - | | 34,388 | | - | | - | | 34,388 |
| Non-cash equity awards, net | | (23,351) | | 1 | | 1,062 | | - | | - | | 1,063 | | - | | - | | 1,063 |
| Repurchase of common stock | | (758,353) | | (8) | | (11,752) | | - | | - | | (11,760) | | - | | - | | (11,760) |
| Dividends declared | | - | | - | | - | | - | | (1,653) | | (1,653) | | - | | - | | (1,653) |
| Other | | - | | - | | 1,335 | | - | | - | | 1,335 | | - | | - | | 1,335 |
| Net loss | | - | | - | | - | | - | | (24,533) | | (24,533) | | (17) | | - | | (24,550) |
| Other comprehensive loss | | - | | - | | - | | (276) | | - | | (276) | | - | | - | | (276) |
| Conversion of Operating Partnership units into common shares | | 27,459 | | - | | 487 | | - | | - | | 487 | | (487) | | - | | - |
| Balance at December 31, 2013 | | 38,561,468 | $ | 385 | $ | 689,646 | $ | (276) | $ | (31,795) | $ | 657,960 | $ | - | $ | - | $ | 657,960 |
SILVER BAY REALTY TRUST CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS) |
| | | | | | |
| | | Year Ended December 31, |
| Cash Flows From Operating Activities: | | 2013 | | 2012 |
| | Net loss | $ | (24,550) | $ | (5,521) |
| | Adjustments to reconcile net loss to net cash used by operating activities: | | | | |
| | | Depreciation and amortization | | 20,235 | | 2,106 |
| | | Non-cash stock compensation | | 921 | | 38 |
| | | Amortization of deferred financing costs | | 815 | | - |
| | | Bad debt expense | | 771 | | 27 |
| | | Other | | 678 | | - |
| | | Net change in assets and liabilities: | | | | |
| | | Increase in escrow reserves under the credit facility | | (12,216) | | - |
| | | Increase in escrow cash for operating activities | | (3,895) | | (7,318) |
| | | Decrease (increase) in deferred lease fees and other assets | | 779 | | (2,410) |
| | | Increase in accounts payable, accrued property expenses, and prepaid rent | | 1,150 | | 3,669 |
| | | (Decrease) increase in related party payables, net | | (39) | | 3,693 |
| | Net cash used by operating activities | | (15,351) | | (5,716) |
| | | | | | |
| Cash Flows From Investing Activities: | | | | |
| | Purchase of investments in real estate | | (267,799) | | (276,730) |
| | Capital improvements of investments in real estate | | (100,159) | | (30,527) |
| | Decrease (increase) in escrow cash for investing activities | | 11,377 | | (11,637) |
| | Proceeds from sale of investments in real estate | | 5,939 | | - |
| | Other | | (299) | | - |
| | Net cash used by investing activities | | (350,941) | | (318,894) |
| | | | | | |
| Cash Flows From Financing Activities: | | | | |
| | Proceeds from issuance of common stock, net of offering costs | | 34,513 | | 228,517 |
| | Proceeds from revolving credit facility | | 164,825 | | - |
| | Deferred financing costs paid | | (4,040) | | - |
| | Interest rate cap agreements | | (533) | | - |
| | Repurchase of common stock | | (11,639) | | - |
| | Dividends paid | | (1,256) | | - |
| | Capital contribution of parent, net | | - | | 323,982 |
| | Net cash provided by financing activities | | 181,870 | | 552,499 |
| | | | | | |
| Net change in cash | | (184,422) | | 227,889 |
| Cash at beginning of year | | 228,139 | | 250 |
| Cash at end of year | $ | 43,717 | $ | 228,139 |
| | | | | |
| Supplemental disclosure of cash flow information: | | | | |
| | Cash paid for interest | $ | 2,957 | $ | - |
| | Board of directors stock compensation | $ | 125 | $ | - |
| | Decrease in fair value of interest rate cap agreements | $ | 276 | $ | - |
| | | | | |
| Noncash investing and financing activities: | | | | |
| | Common stock and unit dividends declared, but not paid | $ | 385 | $ | - |
| | Advisory management fee – additional basis | $ | 1,335 | $ | 49 |
| | Change in contingent consideration | $ | 388 | $ | - |
| | Conversion of Operating Partnership units into common shares | $ | 487 | $ | - |
| | Capital improvements in accounts payable | $ | 1,630 | $ | 680 |
| | Formation transactions | $ | - | $ | 126,083 |
SILVER BAY REALTY TRUST CORP.
PORTFOLIO SUMMARY OF SINGLE-FAMILY PROPERTIES
The following table provides a summary of Silver Bay’s portfolio of single-family properties as of December 31, 2013.
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| Market | | Number of Properties(1) | | Aggregate Cost Basis(2) (thousands) | | Average Cost Basis Per Property (thousands) | | Average Age (in years)(3) | | Average Square Footage | | Number of Leased Properties | | Number of Vacant Properties(4) | | Average Monthly Rent for Leased Properties(5) |
| Phoenix | | 1,424 | | $ | 198,889 |
| | $ | 140 |
| | 24.2 | | 1,636 | | 1,350 | | 74 | | $ | 1,026 |
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| Atlanta | | 1,000 | | 123,938 |
| | 124 |
| | 16.9 | | 2,011 | | 840 | | 160 | | 1,165 |
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| Tampa | | 924 | | 130,791 |
| | 142 |
| | 23.5 | | 1,657 | | 902 | | 22 | | 1,215 |
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Northern CA(6) | | 384 | | 71,902 |
| | 187 |
| | 44.4 | | 1,401 | | 370 | | 14 | | 1,478 |
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| Las Vegas | | 290 | | 40,800 |
| | 141 |
| | 16.7 | | 1,719 | | 278 | | 12 | | 1,150 |
|
| Columbus | | 284 | | 29,651 |
| | 104 |
| | 35.7 | | 1,417 | | 104 | | 180 | | 1,112 |
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| Dallas | | 227 | | 28,804 |
| | 127 |
| | 20.2 | | 1,652 | | 186 | | 41 | | 1,241 |
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| Orlando | | 215 | | 32,632 |
| | 152 |
| | 24.9 | | 1,681 | | 189 | | 26 | | 1,247 |
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| Tucson | | 209 | | 17,134 |
| | 82 |
| | 40.0 | | 1,330 | | 192 | | 17 | | 829 |
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Southeast FL(7) | | 165 | | 33,262 |
| | 202 |
| | 34.3 | | 1,688 | | 117 | | 48 | | 1,760 |
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Southern CA(8) | | 156 | | 23,383 |
| | 150 |
| | 43.0 | | 1,346 | | 145 | | 11 | | 1,148 |
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| Jacksonville | | 131 | | 17,002 |
| | 130 |
| | 30.4 | | 1,568 | | 101 | | 30 | | 1,083 |
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| Charlotte | | 130 | | 16,961 |
| | 130 |
| | 11.8 | | 1,980 | | 112 | | 18 | | 1,155 |
|
| Houston | | 103 | | 11,155 |
| | 108 |
| | 29.8 | | 1,698 | | 87 | | 16 | | 1,180 |
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Totals | | 5,642 | | $ | 776,304 |
| | $ | 138 |
| | 25.6 | | 1,675 | | 4,973 | | 669 | | $ | 1,162 |
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| (1) | Total properties exclude properties held for sale or sold by the Company’s taxable REIT subsidiary and any properties acquired in previous periods in sales that have been subsequently rescinded or vacated. |
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| (2) | Aggregate cost includes all capitalized costs, determined in accordance with U.S. generally accepted accounting principles, incurred through December 31, 2013 for the acquisition, stabilization, and significant post-stabilization renovation of properties, including land, building, possession costs and renovation costs. Aggregate cost does not include accumulated depreciation. |
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| (3) | As of December 31, 2013, approximately 19% of the properties in the aggregate portfolio were less than 10 years old, 26% were between 10 and 20 years old, 18% were between 20 and 30 years old, 17% were between 30 and 40 years old, 9% were between 40 and 50 years old and 11% were more than 50 years old. |
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| (4) | Total number of vacant properties includes properties in the process of stabilization as well as those available for lease. |
(5) Average monthly rent for leased properties was calculated as the average of the contracted monthly rent for all leased properties as of December 31, 2013 and reflects rent concessions amortized over the life of the related lease.
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| (6) | Northern California market currently consists of Contra Costa, Napa and Solano counties. |
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| (7) | Southeast Florida market currently consists of Miami-Dade, Broward and Palm Beach counties. |
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| (8) | Southern California market currently consists of Riverside and San Bernardino counties. |
SILVER BAY REALTY TRUST CORP.
PORTFOLIO SUMMARY OF STABILIZED PROPERTIES AND
THOSE OWNED SIX MONTHS OR LONGER
The following table summarizes Silver Bay’s stabilized properties and those owned six months or longer as of December 31, 2013.
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| | | Stabilized Properties | | Properties Owned at Least Six Months |
| Market | | Number of Stabilized Properties | | Properties Leased | | Properties Vacant | | Occupancy Rate | | Average Monthly Rent for Leased Stabilized Properties(1) | | Properties Owned 6 Months or Longer | | Properties Leased | | Properties Vacant | | Occupancy Rate | | Average Monthly Rent for Properties Owned at Least 6 Months(2) |
| Phoenix | | 1,423 | | 1,350 | | 73 | | 95 | % | | $ | 1,026 |
| | 1,421 | | 1,348 | | 73 | | 95 | % | | $ | 1,026 |
|
| Atlanta | | 950 | | 840 | | 110 | | 88 | % | | 1,165 |
| | 960 | | 815 | | 145 | | 85 | % | | 1,170 |
|
| Tampa | | 916 | | 902 | | 14 | | 99 | % | | 1,215 |
| | 922 | | 900 | | 22 | | 98 | % | | 1,215 |
|
| Northern CA | | 383 | | 370 | | 13 | | 97 | % | | 1,478 |
| | 384 | | 370 | | 14 | | 96 | % | | 1,478 |
|
| Las Vegas | | 290 | | 278 | | 12 | | 96 | % | | 1,150 |
| | 290 | | 278 | | 12 | | 96 | % | | 1,150 |
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| Columbus | | 193 | | 104 | | 89 | | 54 | % | | 1,112 |
| | 271 | | 102 | | 169 | | 38 | % | | 1,118 |
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| Dallas | | 207 | | 186 | | 21 | | 90 | % | | 1,241 |
| | 204 | | 180 | | 24 | | 88 | % | | 1,242 |
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| Orlando | | 194 | | 189 | | 5 | | 97 | % | | 1,247 |
| | 199 | | 187 | | 12 | | 94 | % | | 1,247 |
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| Tucson | | 207 | | 192 | | 15 | | 93 | % | | 829 |
| | 208 | | 192 | | 16 | | 92 | % | | 829 |
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| Southeast FL | | 124 | | 117 | | 7 | | 94 | % | | 1,760 |
| | 146 | | 109 | | 37 | | 75 | % | | 1,761 |
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| Southern CA | | 155 | | 145 | | 10 | | 94 | % | | 1,148 |
| | 156 | | 145 | | 11 | | 93 | % | | 1,148 |
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| Jacksonville | | 112 | | 101 | | 11 | | 90 | % | | 1,083 |
| | 115 | | 93 | | 22 | | 81 | % | | 1,078 |
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| Charlotte | | 120 | | 112 | | 8 | | 93 | % | | 1,155 |
| | 129 | | 111 | | 18 | | 86 | % | | 1,156 |
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| Houston | | 91 | | 87 | | 4 | | 96 | % | | 1,180 |
| | 101 | | 85 | | 16 | | 84 | % | | 1,184 |
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Totals | | 5,365 | | 4,973 | | 392 | | 93 | % | | $ | 1,162 |
| | 5,506 | | 4,915 | | 591 | | 89 | % | | $ | 1,163 |
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| (1) | Average monthly rent for leased stabilized properties was calculated as the average of the contracted monthly rent for all stabilized leased properties as of December 31, 2013 and reflects rent concessions amortized over the life of the related lease. |
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| (2) | Average monthly rent for properties owned at least six months was calculated as the average of the contracted monthly rent for all properties owned at least six months as of December 31, 2013 and reflects rent concessions amortized over the life of the related lease. |
SILVER BAY REALTY TRUST CORP.
DEFINITIONS AND RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)
Estimated Portfolio and Estimated Net Asset Value
Estimated Portfolio Value and Estimated NAV are non-GAAP financial measures. Silver Bay provides the Estimated Portfolio Value and Estimated NAV and believes such metrics are useful as additional tools for investors seeking to value the Company. These metrics should be considered along with other available information in valuing and assessing Silver Bay, including the Company’s GAAP financial measures or other cash flow or yield metrics and should not be viewed as a substitute for book value, net investments in real estate, equity, net income or cash flows from operations prepared in accordance with GAAP, or as a measure of the Company’s profitability or liquidity.
A description of the Company’s AVM along with certain assumptions and limitations related to its AVM and its calculations of Estimated Portfolio Value and Estimated NAV can be found on the Company’s website at www.silverbayrealtytrustcorp.com in the Investor Relations section under the non-GAAP Reconciliations link.
The following is a reconciliation of the Company’s investments in real estate to Estimate Portfolio Value and book value to Estimated NAV:
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| | | | | |
| | December 31, 2013 |
| | | Amount | | | Per Share(1) |
| Investments in real estate, gross | $ | 776,304 | | $ | 20.13 |
| Accumulated depreciation | | (18,897) | | | (0.49) |
| Investments in real estate, net | | 757,407 | | | 19.64 |
Add: Increase in estimated fair market value of investments in real estate(2) | | 124,475 | | | 3.23 |
Less: Estimated Renovation Reserve(3) | | (3,180) | | | (0.08) |
| Estimated Portfolio Value | $ | 878,702 | | $ | 22.79 |
| | | | | | |
Book value(4) | $ | 657,960 | | $ | 17.06 |
| Less: Investments in real estate, net | | (757,407) | | | (19.64) |
| Add: Estimated Portfolio Value | | 878,702 | | | 22.79 |
| Estimated Net Asset Value | $ | 779,255 | | $ | 20.21 |
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| (1) | Per share amounts are based upon common shares outstanding of 38,561,468 as of December 31, 2013. |
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| (2) | Difference between AVM derived value of the Company’s portfolio of properties of $881,882, which assumes all properties are fully renovated, and net investments in real estate. |
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| (3) | Estimated renovation reserve is calculated on properties in the portfolio that are not currently stabilized and for which the initial renovation has not been completed. |
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| (4) | Book value as defined by U.S. generally accepted accounting principles represents total assets less total liabilities and less preferred stock in mezzanine or total equity. |
Net Operating Income
Net operating income, or NOI, is a non-GAAP financial measure defined by the Company as total revenue less property operating and maintenance, real estate taxes, homeowners’ association fees and property management expenses. NOI excludes depreciation and amortization, advisory management fees, general and administrative expenses, interest expense, and other expenses. During the fourth quarter of 2013, the Company refined its definition of NOI to exclude the 5% property management fee on certain costs and expenses incurred by its Manager’s operating subsidiary that are reimbursed by the Company because it more closely represents additional advisory management fee, non-cash share based property management stock compensation, expensed acquisition fees and costs, and certain other non-recurring costs. Prior quarter NOI has been recomputed to conform to the current period presentation.
The Company considers NOI to be a meaningful financial measure, when considered with the financial statements determined in accordance with U.S. generally accepted accounting principles. The Company believes NOI is helpful to investors in understanding the core performance of the real estate operations of the Company.
The following is a reconciliation of the Company’s NOI to net loss as determined in accordance with GAAP:
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| | | | | |
| | Three Months Ended December 31, 2013 | | Three Months Ended September 30, 2013 |
| Net loss | $ | (5,060) | | $ | (6,362) |
| Depreciation and amortization | | 6,174 | | | 5,683 |
| Advisory management fee | | 2,179 | | | 2,166 |
| General and administrative | | 2,110 | | | 1,866 |
| Other | | 594 | | | 142 |
| Interest expense | | 1,764 | | | 989 |
| 5% property management fee | | 116 | | | 202 |
| Acquisition fees and costs expensed | | 130 | | | 469 |
| Non-recurring system implementation costs | | 278 | | | 403 |
| Other property management adjustments | | 7 | | | 61 |
| Net operating income | $ | 8,292 | | $ | 5,619 |
Funds From Operations
Funds From Operations, or FFO, is a non-GAAP financial measure that the Company believes, when considered with the financial statements determined in accordance with GAAP, is helpful to investors in understanding the Company’s performance because it captures features particular to real estate performance by recognizing that real estate generally appreciates over time or maintains residual value to a much greater extent than do other depreciable assets. The National Association of Real Estate Investment Trusts, or NAREIT, defines FFO as net income (loss), computed in accordance with GAAP, excluding gains (losses) from sales of, and impairment losses recognized with respect to, depreciable property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated on the same basis to determine FFO. The Company calculates FFO attributable to common stockholders (diluted) by subtracting, if dilutive, redemption or repurchase related preferred stock issuance costs and dividends on preferred stock and adding back dividends/distributions on dilutive preferred securities and premiums or discounts on preferred stock redemptions or repurchases.
FFO should not be considered an alternative to net income (loss) or net cash flows from operating activities, as determined in accordance with GAAP, as indications of the Company’s performance or as measures of liquidity. This non-GAAP measure is not necessarily indicative of cash available to fund future cash needs. In addition, although the Company uses this non-GAAP measure for comparability in assessing its performance against other REITs, not all REITs compute the same non-GAAP measure.
The following is a reconciliation of the Company’s net loss attributable to common stockholders as determined in accordance with GAAP and its calculation of FFO: |
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| | | Three Months Ended | | Three Months Ended | |
| | | December 31, 2013 | | September 30, 2013 | |
| Net loss attributable to common stockholders | | $ | (5,082) | | $ | (6,382) | |
| Noncontrolling interests - Operating Partnership | | (3) | | (5) | |
| Preferred distributions | | 25 | | 25 | |
| Depreciation and amortization | | 6,174 | | 5,683 | |
| Other | | 345 | | 51 | |
| Funds From Operations | | | 1,459 | | | (628) | |
| Basic and diluted weighted average common shares outstanding | | | 38,705,311 | | | 39,095,200 | |
| FFO per common share – basic and diluted | | $ | 0.04 | | $ | (0.02) | |
