BRT - Earnings call transcript Q3 2019

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Operator

Good day and welcome to BRT Apartment Corp. Conference Call for the Third Quarter of 2019. Today’s conference is being recorded. At this time, I would like to turn the conference over to Morey Marcus of ICR. Thank you.

begin. may You

Morey Marcus

day, conference Good welcome the to Thank everyone Apartments call. BRT you. and

call Gould, Financial On Executive is Ryan today the Jeffrey President. Vice available Senior President; George Baltimore, Kalish, Senior Officer. President are Zweier, David Chief Officer; Vice and Also Chief and

a call webcast is As through at website company’s reminder, this www.brtapartments.com. being the

the available for BRT’s Relations the company’s and Additionally, supplemental and information review Investor the the earnings will website. your later be company’s section on of release are available today XX-Q

we forward-looking meaning remind Reform call Private Before and are would that everyone assumptions to Litigation expectations, that beliefs. begin, like statements I based this conference current on Act Securities of contains of XXXX the management’s within the

risks of update by could believe, forward-looking the future that assumptions or subject publicly are and those factors anticipate, complete any affect are statements. other and but undue strategy statements company’s similar They expressions Form statements. obligation not forward-looking more of and does negatives BRT law, should the not statements future. review with the SEC are company’s expressed expect, BRT’s on required statements. statements and most estimate, XX-K and to not forward-looking Except revise cause in often can forward-looking place Listeners forward-looking a could any not that such as and discussion recent any Forward-looking risks, be annual statements on variations encouraged intend of undertake the reliance for or words. to guarantees differ these to identified results report these other These filings actual any expectations materially by regarding to to, include, limited for are as and uncertainties for results words and

from FFO; be computed measures of substitute non-GAAP income, a net in accordance used This of or supplement conference GAAP. to funds discussion These NOI, net or operations, a non-GAAP and should and or performance. with include are income financial operations, adjusted measures operating from AFFO; not of funds all also a call which as for

complete more today. that in were NOI AFFO and will filed later the release a yesterday For FFO, the company’s discussion XX-Q and be earnings of that supplemental filed see

changed that on As year the it fiscal its ends so December company a XX. reminder,

now call Gould, turn would to and I go Jeff. Apartments to of the Jeffrey Corp. like BRT President over ahead, CEO Please

Jeffrey Gould

Morey. would I Thank to BRT’s everyone call. to conference you, third welcome like quarter

we and properties joint high me are multifamily start employment generally a operation business Let are the XX% of ventures owned Southeast in an is which and the contribute Texas properties ownership, model. to with focused United properties. through multifamily and These the in primarily consolidated differentiated of States development secondary in extent of on markets The overview primarily XX% our growth. BRT limited located to with population concentrated equity.

owns a As of wholly owned own balance properties we unconsolidated including properties, which in of substantial are by lease-up the XX properties in ventures November through states, BRT joint owned in interest. are consisting joint ventures. X, Eight multifamily XX and consolidated XX,XXX generally or BRT by equity owned units

the acquisition an best our for waste likely management our that do close. very returns resources not partners act We expertise. us already local under currently target that platforms most with local deals to partners’ team. These – win off-market a risk-adjusted ventures operators and focus through us valuable of properties to we acquiring as efficient transactions, transactions We record on to joint are that additional our We’ve operators that opportunities with and believe proven may experience stockholders. leverage We properties allows as the select are contract, possess aligning is present property not deals that we pursuing produce with strategy. which

space, this Our this we efficiencies approach in believe in and relationships. but other models approach acquiring multifamily assets our is resources, maximizes unlike

in per the a was share loss or $X.XX $X.X results, and per fee compared portion to as XXXX XXXX by share a compared On million revenues million quarter as the Moving was $XX.X charge real quarter. $XX.X diluted the ended $XXX,XXX or million a XX.X% for our AFFO charge of diluted to to $X.XX increased $X.XX termination $XX.X quarter XXXX $X.X XXXX in reduced the million quarter X% in FFO the mortgage will referring to quarter current in million $X.XX million and in quarter or loss per for relating quarter the and of XXXX quarter. Rental The income a operating the was or was was September million the the to XX, $X.XX per quarter per September for $X.XX diluted non-controlling quarter diluted to per $X.X such XX, current share. NOI X.X% quarter. $X million be current current Net the million million in increased quarter quarter XXXX from from XXXX XXXX expenses XXXX swap $XX.X in and current versus the diluted XX% or FFO the the we from grew $X.XX million the prepayment quarter $XX.X in the from the of to for AFFO million quarter. the $X.X $XX.X estate for on third $X.X XXXX million to share quarter. diluted quarter ended XXXX or share share. current quarter. increased to fee. net $X.XX basis, XXXX $X.X per share diluted

current Our renewals, leases, increases. we renewal rental new was X.X% on and quarter averaged X.X% rate we averaged increases, for rate rental XX.X%. On the percentage

units, rental the rate value-add new increases. averaged X.X% our approximately leases Excluding

approximately a repositioned On XX%. the for per of value-add front, on XX investment unit quarter, and properties, approximately at achieving we $X,XXX current the average XXX return spending on units

but is prior report return As in when unit a the portion of on financial supplemental the incurred period, reflected we our been have released. investment may in a information, costs the

our pleased very of the in several over estimate performance are value-add approximately we units we that program. the We the years. with have pipeline will X,XXX next renovation Overall,

be to to continue factor in NOI a growth to ability strategy same-store our this long-term. the expect and rent We over drive

same-store for NOI units. million rate properties, lower $X,XXX Virginia, the XXXX Our current prior our Same-store year $X,XXX grew Same-store increased per same-store same-store expenses the grew in from in the X.X% and totaling by growth in which led markets X.X%. on appeals comprised the The in expenses. one the Same-store year X,XXX reimbursements Ohio, quarter. XX.X% X.X% unit for Florida, quarter by rate quarter was tax received X.X%; a $XX.X revenue pool X.X%; and quarter resulted property, from We X.X% increased current from to per for current rose earlier. XXXX quarter. rental which rental operating rate to up unit up increases XX driven

these responded be positively This has a and market Downtown not As working. remain With for growth however, we previous shared rent Louis the is that long-term appears challenging us, most maximize our market on the said, our St. saw strong currently adjustments. our in NOI asset. to hold occupancy revenue NOI properties calls, to efforts and a interim, as to assets our gains by driven the

the in in BRT rate also of property fixed in $XX.X mortgage During value-add of mortgage the to million to charge, quarter, with a X XXXX. giving to and XXX-unit $XXX,XXX after Houston, allocated obtained partner. $XX.X bears the allocated with the X.XX% matures of connection acquired interest Alabama, which sold was $X.X The million, Auburn, In net Texas debt to gain the prepayment properties million a BRT BRT for incurred $XXX,XXX acquisition. for BRT of including non-controlling a $X a non-controlling effect connection sales, million partner.

Turning cash and million, operating of amounts assets property improvements for $X.X of under $XXX.X purposes. including at $XX.X September and for restricted $X.X include its million Cash $XXX.X to up of total equivalents the capital debt At was facility. cash million $XX.X X, XXXX, approximately BRT’s and at sheet, million we and cash available property had and stockholders’ balance of equivalents, cash million cash equivalents, million. billion, level held available November XX, liquidity $XX.X the total of working XXXX, million to of $XX.X equity credit cash

average maturity rate. remaining weighted Our mortgage the at has Approximately XX% interest of interest of of million and property to years. bears a average a fixed weighted X.X a debt rate debt of term mortgage $XXX.X X.XX%

We progress make and great the team’s to I continue efforts. am proud of

on value. will look the multifamily to to focus add ahead, our portfolio finding incremental we we right extract As assets we can where

operator you Thank call. over I joining Operator? our questions. With conference your will for for the us that, turn the to today call on

Operator

you. [Operator proceed. Please Mehta question Instructions] Thank is with Gaurav National from Securities. Our first

Gaurav Mehta

what I acquisition if morning. you’re Good hoping your on provide these could seeing some days? color you pipeline, in the market was

Jeffrey Gould

definitely do strong, years we’re very even bit down The would the we competitive more they market. Yes. at. are pipeline, and Definitely, we where are is opportunities. ago. but are The see about ago we deals seeing fairly actually deals selective Yields from looking say, were pipeline, months and I being a a

that Our consider to that partners, good and but are in the more focus us selective. Southeast, finding still more I are for think, in much deals remains having we difficulty being

a than a while. So, competitive been it’s marketplace more definitely it’s quite for

Gaurav Mehta

the the And few acquisition? that Okay. What to you where and next some cap Auburn, rate details you stabilize Alabama going years? on do provide X over was year the can then expect in

Jeffrey Gould

Yes.

$X.X years. plan the increases And and it. We of X-year bought X look to we a that pretty plan return. excited well spend a it, typically be over about with and back improvements, a getting do was get that renovation to started we to under to about. going with underwriting that are strategy plan typical it’s to held And opportunity which with The continue year push X We of most forward about value-add we value-add the the that or plan – to capital as units. it’s we for is our we it So we is value-added we for accurate. were it X.X% think going at on out deals, million most that

Gaurav Mehta

Okay. Thank you.

Operator

proceed. with next Wunderlich question from Craig Our is Securities. Please Kucera

Craig Kucera

you any assets for Actually B. FBR. Riley currently marketing sale? Are

Jeffrey Gould

you any marketing we Are assets, said?

Craig Kucera

Are sale? you marketing for any assets

Jeffrey Gould

not for sale. marketing now, Right no, we’re assets any

portfolio as some we high we’re gotten to gotten we a expenses looking through have completed the – operating that consider or have makes costly we have margins the see too sales. to where older, and are value-add properties where sense or are do We it do always, that’s

on aspect But over we will that. happen themselves situations that there of number and are of considering, think are are yes. months, like the focusing our occasion opportunities the So I to next a slow, what’s few but on going business a few we transactional

Craig Kucera

more my actually and pricing a sales the function kind it. side. several has I or question, been leads or with transactionally years, less acquisition because today? the where Got being a the that portfolio than to you Is the bit quite mean purchase pleased been next more of last of slower this on That year too both has challenging then is

Jeffrey Gould

I the would latter. more say

my We even I are pleased I pleased St. in one very asset’s with, improved. as Downtown with portfolio. mean the Louis statements, earlier that but we’re the not particularly mentioned that

markets, We good Just rates good portfolio generally we speaking, and core we everything. in we’re think seeing the are like. and renewal

So slowed. the definitely activity has

we cash we have it I of purchase – see and we pipeline depends transactions. earlier, really As said are when these deals, available just to do a on

from been we next think of So have definitely portfolio. couple speaking, but as we we X with the of why are buying the the deals. with years been far to over pretty generally earlier, the new cash have results the one do sales a much, from opportunities tight haven’t transactional ago, core going But the aspect may I And of And X, really comfortable slowed. we running years. reasons that’s few years as on

Craig Kucera

purchasing sort for assets, maybe are – is of capital that balance assets. Right. volume of of given And where been new in the selling them constraint, and some you’ve understanding cash of lieu your assets

to dispositions or keep is in future to do existing recycle below thoughts maybe you ownership capital, assets do, you structures XXX% likely that have that you any consolidating there that to Assuming more ownership of in place? maybe the of some the significantly the are

Jeffrey Gould

we grow outright, said have I that in own And from and good we have It’s earlier others. would to they speak a we as We small of minority that have interest we if we statements, see – do question. a my fact, in or And as X interest partners, sure. for No. been selling out, a in like properties much. now, and concerted see where we our effort assets they these very go like matter make to assets, participating interest to are that would strong to

time, assets think So we will. in we wholly on trying buyback I are very to and own focused more and

Craig Kucera

Okay, thanks.

Jeffrey Gould

Sure.

Operator

I session. like management reached for our of back over to would have the turn end question-and-answer We remarks. conference to closing the

Jeffrey Gould

I being just today. the call want everyone on for to thank

myself have Ryan being you further Baltimore and always, We to at on. reach can out As thank it. or for anytime you you questions, appreciate if

Operator

conference. today’s concludes This

you You may lines time participation. at this your for disconnect and thank your

Morey Marcus	Investor Relations
Jeffrey Gould	President and Chief Executive Officer
George Zweier	Chief Financial Officer
David Kalish	Senior Vice President
Ryan Baltimore	Senior Vice President
Gaurav Mehta	National Securities
Craig Kucera	B. Riley FBR

BRT Apartments (BRT) 11 Nov 192019 Q3 Earnings call transcript