Total Revenues
$104.9 million for Q1 2022; down 9.4% from Q1
2021 due primarily to absence of $18.7 million of office property
revenues
_____________
Net Loss per Share
$(0.62) per share for Q1 2022; $0.11 per share
improvement over Q1 2021
_____________
Core FFO per Share*
$0.19 per share for Q1 2022 versus $0.25 per
share for Q1 2021
_____________
AFFO per Share*
$0.15 per share for Q1 2022 versus $0.18 per
share for Q1 2021
_____________
Multifamily Same Store Results*
Same-store rental and other property revenues
increased 11.9% and same-store net operating income increased 15.9%
for Q1 2022 versus Q1 2021
_____________
Two Real Estate Loans and One Preferred
Equity Investment Closed During First Quarter 2022
Aggregate commitment amount of $48.1
million
780 multifamily units added to PAC's
acquisition pipeline
_____________
One Multifamily Community Acquired During
First Quarter 2022
Lirio at Rafina, a 280-unit community located
in Orlando, Florida
_____________
PAC Enters Multifamily Development
Space
PAC to develop a 262-unit community in
Wilmington, North Carolina, will invest $14.8 million in equity to
capitalize the project
_____________
PAC Enters into a Definitive Agreement with
Blackstone Real Estate Income Trust, Inc.
Cash transaction of $25 per share of Common
Stock Closing expected during Q2 2022
*Core FFO and AFFO results are per weighted-average share and
Class A OP Unit outstanding. Core FFO, AFFO and same-store net
operating income are non-GAAP measures that are defined herein.
Preferred Apartment Communities, Inc. (NYSE: APTS) ("we," "our,"
the "Company," "Preferred Apartment Communities" or "PAC") today
reported results for the quarter ended March 31, 2022. Unless
otherwise indicated, all per share results are reported based on
the basic weighted average shares of our common stock, par value
$0.01 per share ("Common Stock"), Class A Units ("Class A Units")
of the Preferred Apartment Communities Operating Partnership (our
"Operating Partnership") outstanding. See Definitions of Non-GAAP
Measures.
Conference Call
As a result of our entering into a definitive merger agreement
with affiliates of Blackstone Real Estate Income Trust, Inc.
("BREIT"), we will not have a conference call to discuss our first
quarter ended 2022 earnings. For more details on the merger, see
our 8-K filed on February 16, 2022.
For Further Information
Paul Cullen
Executive Vice President-Investor Relations
Chief Marketing Officer
investorrelations@pacapts.com
770-818-4144
Operating Results
Our operating results are presented below.
Three months ended March 31,
% change
2022
2021
Revenues (in thousands)
$
104,880
$
115,700
(9.4
) %
Per share data:
Net loss (1)
$
(0.62
)
$
(0.73
)
—
FFO (2)
$
0.05
$
0.16
(68.8
) %
Core FFO (2)
$
0.19
$
0.25
(24.0
) %
AFFO (2)
$
0.15
$
0.18
(16.7
) %
Dividends (3)
$
0.175
$
0.175
—
(1) Per weighted average share of
Common Stock outstanding for the periods indicated.
(2) FFO, Core FFO and AFFO
results are presented per basic weighted average share of Common
Stock and Class A Unit in our Operating Partnership outstanding for
the periods indicated. See Reconciliations of FFO Attributable to
Common Stockholders and Unitholders, Core FFO and AFFO to Net Loss
Attributable to Common Stockholders and Definitions of Non-GAAP
Measures.
(3) Per share of Common Stock and
Class A Unit outstanding.
Financial
- Our total revenues for the quarter ended March 31, 2022
decreased approximately $10.8 million, or 9.4%, to $104.9 million
from the quarter ended March 31, 2021, due primarily to the absence
of revenues from the eight office properties and one real estate
loan investment that we sold during the third and fourth quarters
of 2021. The disposed office properties contributed approximately
$18.7 million, or 16.1% of our total revenues for the quarter ended
March 31, 2021.
- Our net loss per share was $(0.62) and $(0.73) for the
three-month periods ended March 31, 2022 and 2021, respectively.
Funds From Operations, or FFO, was $0.05 and $0.16 per weighted
average share of Common Stock and Class A Unit outstanding for the
three months ended March 31, 2022 and 2021, respectively. The
decline in FFO per share was driven by:
* Lower operating results following the sale
of our office properties of $(0.17) per share;
* Lower cash dividend requirements on our
preferred stock of $0.14 per share;
* Lower revenues from our real estate loan
portfolio of $(0.10) per share;
* Merger-related costs incurred of $(0.09)
per share;
* Improved property operating performance,
lower interest expense and other items of $0.06 per share; and
* Deemed dividends due to calls and cash
redemptions of our preferred stock of $0.05 per share.
- Our Core FFO per share decreased to $0.19 for the first quarter
2022 from $0.25 for the first quarter 2021, due to:
* Lower operating results following the sale
of our office properties of $(0.17) per share;
* Lower cash dividend requirements on our
preferred stock of $0.14 per share;
* Lower revenues from our real estate loan
portfolio of $(0.10) per share; and
* Improved property operating performance,
lower interest expense and other items of $0.06 per share.
- Our AFFO per share decreased to $0.15 for the first quarter
2022, from $0.18 for the first quarter 2021, due to:
* Lower operating results following the sale
of our office properties of $(0.17) per share;
* Lower cash dividend requirements on our
preferred stock of $0.14 per share;
* Lower revenues from our real estate loan
portfolio of $(0.10) per share;
* Improved property operating performance,
lower interest expense and other items of $0.06 per share; and
* Lower recurring capital expenditures of
$0.03 per share.
- Our Core FFO payout ratio to Common Stockholders and
Unitholders was approximately 102.1% and our Core FFO payout ratio
to our preferred stockholders was approximately 71.4% for the first
quarter 2022. (A)
- Our AFFO payout ratio to Common Stockholders and Unitholders
was approximately 126.9% and our AFFO payout ratio to our preferred
stockholders was approximately 75.6% for the first quarter
2022.
(A)
We calculate the Core FFO and AFFO payout
ratios to Common Stockholders as the ratio of Common Stock
dividends and distributions to Core FFO and AFFO. We calculate the
Core FFO and AFFO payout ratios to preferred stockholders as the
ratio of preferred stock dividends to the sum of preferred stock
dividends and Core FFO and AFFO. Since our operations resulted in a
net loss from continuing operations for the periods presented, a
payout ratio based on net loss is not calculable. See Definitions
of Non-GAAP Measures.
Operational
- Our multifamily communities' same-store rental and other
property revenues increased 11.9%, same-store property operating
expenses increased 6.3% and same-store net operating income
increased 15.9% for the quarter ended March 31, 2022 versus 2021.
Our same-store multifamily communities include 10,442 units, or
84.7% of our aggregate 12,322 units in our multifamily community
portfolio.
- Our rental rates for our multifamily same-store properties for
new and renewal leases increased 16.6% and 11.9%, respectively, and
14.1% blended for first quarter 2022 as compared to the expiring
leases, excluding shorter-term leases of two months or less.
- Our rental rates for our multifamily same-store properties for
new and renewal leases increased 15.7% and 11.9%, respectively, and
13.7% blended for April 2022 as compared to the expiring leases,
excluding shorter-term leases of two months or less.
- As of March 31, 2022, the average age of our multifamily
communities was approximately 6.6 years, which we believe is the
youngest in the public multifamily REIT industry.
- As of March 31, 2022, all of our owned multifamily communities
had achieved stabilization except for Lirio at Rafina, which was
acquired during the first quarter 2022. We define stabilization as
reaching 93% occupancy for all three months within a single
quarter.
- The average physical occupancy of our same-store multifamily
communities increased to 96.3% for the three-month period ended
March 31, 2022 from 95.8% for the three-month period ended March
31, 2021 but was unchanged from the three-month period ended
December 31, 2021.
Financing and Capital
Markets
- As of March 31, 2022, approximately 98.3% of our permanent
property-level mortgage debt had fixed interest rates and
approximately 0.9% had variable interest rates which are capped. We
believe we are well protected against potential increases in market
interest rates. Our overall weighted average interest rate for our
mortgage debt portfolio was 3.37% for multifamily communities,
4.35% for our remaining office properties, 3.91% for
grocery-anchored retail properties and 3.57% in the aggregate.
- During the first quarter 2022, we issued and sold an aggregate
of 3,167 shares of preferred stock prior to February 10, 2022, when
we ceased issuing new shares of preferred stock. We redeemed or
called an aggregate of 21,189 shares of preferred stock, resulting
in a net reduction of 18,022 outstanding shares of preferred stock,
for a net cash outflow of approximately $17.7 million.
- During the first quarter 2022, warrants were exercised by the
holders at a weighted average price of $19.68 per share and, as a
result, we collected approximately $194.0 million from the issuance
of an aggregate of 9,858,480 shares of Common Stock. We issued no
shares of Common Stock under the 2019 ATM Offering during the first
quarter 2022.
- At March 31, 2022, our leverage, as measured by the ratio of
our debt to the undepreciated book value of our total assets, was
approximately 55.8%.
- At March 31, 2022, we had no outstanding balance and $200.0
million available to be drawn on our revolving line of credit.
- Our outstanding shares of preferred stock have decreased since
January 1, 2019, as summarized in the following chart:
Shares of Preferred Stock
2019
2020
2021
First Quarter
2022
Issued
552,938
228,788
122,297
3,167
Redeemed by holders
(68,512)
(164,286)
(100,946)
(21,189)
Called by PAC
—
(208,786)
(320,746)
—
Net increase (decrease)
484,426
(144,284)
(299,395)
(18,022)
Total outstanding at year end
2,136,257
1,991,973
1,692,578
1,674,556
Significant Transactions
- On February 10, 2022, we amended our real estate loan
investment supporting The Platform, a 551-unit multifamily
community located in San Jose, California. The maturity date of the
instrument was extended to August 13, 2022 and a second extension
option of December 31, 2022 was added. The all-in interest rate was
reduced to 9.5% per annum beginning on the original maturity date
of February 13, 2022 and increases in steps each three-month period
up to 11.0% per annum on November 14, 2022. As of April 30, 2022,
the property's physical occupancy was 92.6%.
- On February 11, 2022, we closed on a real estate loan
investment of up to approximately $16.7 million supporting a
286-unit multifamily community in the Orlando, Florida MSA.
- On February 15, 2022, we refinanced our Chestnut Farm
multifamily community with permanent mortgage financing in the
amount of approximately $52.3 million, which bears interest at a
rate of 3.25% and matures on March 1, 2032.
- As previously announced, on February 16, 2022, we entered into
an agreement and plan of merger (the “Merger Agreement”) with Pike
Parent LLC (“Parent”), Pike Merger Sub I LLC (“Merger Sub I”), Pike
Merger Sub II LLC (“Merger Sub II”), Pike Merger Sub III LLC
(“Merger Sub III” and, together with Parent, Merger Sub I and
Merger Sub II, the “Parent Parties”), the Operating Partnership and
PAC Operations, LLC (“Operations”). The Parent Parties are
affiliates of BREIT, which is an affiliate of Blackstone Inc.
Pursuant to the Merger Agreement, (i) Merger Sub II will merge with
and into the Operating Partnership (the “Partnership Merger”) with
the Operating Partnership being the surviving entity and
immediately following the consummation of the Partnership Merger,
(ii) Operations will merge with and into Merger Sub III (the
“Operations Merger”) with Merger Sub III being the surviving entity
and immediately following the Operations Merger, (iii) the Company
will merge with and into Merger Sub I (the “Company Merger” and,
together with the Partnership Merger and the Operations Merger, the
“Mergers”) with Merger Sub I being the surviving entity. Pursuant
to the Merger Agreement, (i) each share of Common Stock that is
issued and outstanding immediately prior to the Mergers will be
automatically cancelled and converted into the right to receive
$25.00 in cash and (ii) each share of preferred stock that is
issued and outstanding immediately prior to the Mergers will be
automatically cancelled and converted into the right to receive
$1,000 in cash, plus any accrued but unpaid dividends, if any, to
and including the closing date of the Mergers. Notwithstanding the
forgoing, any shares of Common Stock or preferred stock held by the
Company or any subsidiary of the Company or by the Parent Parties
or any of their respective subsidiaries, if any, will no longer be
outstanding and will automatically be retired and will cease to
exist, and no consideration will be paid in connection with the
Mergers.
The Mergers are subject to customary closing
conditions, including approval by the Company’s common stockholders
at a special meeting to be held on June 7, 2022. The Mergers are
expected to close on the third business day after the conditions to
closing are satisfied or waived, including approval of the
Company’s stockholders of the Mergers. The Company can provide no
assurances regarding whether the Mergers will close as expected
during the second quarter of 2022, or at all. The board of
directors of the Company has unanimously approved the Merger
Agreement and has recommended approval of the Mergers by the
Company’s common stockholders.
- On February 25, 2022, we closed on the acquisition of Lirio at
Rafina, a 280-unit multifamily community located in the Orlando,
Florida MSA.
- On February 28, 2022, we closed on a real estate loan
investment of up to approximately $17.2 million supporting a
242-unit multifamily community in Naples, Florida.
- On March 2, 2022, we closed on a 65% interest in a $65.0
million joint venture project to develop The Helmsman, a 262-unit
multifamily community to be located in Wilmington, North Carolina.
This transaction represents our entry into the multifamily
development space.
- On March 31, 2022, we closed on a preferred equity investment
of up to approximately $14.3 million supporting The Shoals, a
252-unit multifamily community in Greenville, South Carolina. The
investment will pay a fixed return of 12.0% per annum and has a
term of 42 months, with a one-year extension option.
Subsequent to Quarter
End
- On April 5, 2022, we sold our Champions Village
grocery-anchored shopping center in Houston, Texas for $45.0
million and recorded a gain on the sale of approximately $1.9
million.
- On April 20, 2022, we sold our Sweetgrass Corner
grocery-anchored shopping center in Charleston, South Carolina for
$17.0 million and recorded a gain on the sale of approximately $4.3
million.
- Between April 1, 2022 and April 30, 2022, the Company issued
1,451,700 shares of Common Stock at an average price of $19.70 per
share from exercises of Warrants and collected approximately $28.6
million.
- On April 12, 2022, our Vintage Horizon West real estate loan
investment was repaid in full.
2022 Guidance
Due to the pending merger with affiliates of BREIT, we are not
issuing guidance at this time with respect to our 2022 financial
outlook.
Real Estate Assets
At March 31, 2022, our portfolio of owned real estate assets and
potential additions from purchase options we held from our real
estate loan investments (and one multifamily development project
currently under construction) consisted of:
Owned as of
March 31, 2022 (1)
Potential additions
(2)
Potential total
Residential properties:
Properties
42
12
54
Units
12,332
3,639
15,971
Development properties
1
( 4)
—
1
Units
—
262
262
Grocery-anchored shopping
centers:
Properties
54
1
55
Gross leasable area (square feet)
6,210,778
85,500
( 3)
6,296,278
Office buildings:
Properties
2
—
2
Rentable square feet
1,072,000
—
1,072,000
Land
1
—
1
(1) One multifamily community and two
grocery-anchored shopping centers are owned through consolidated
joint ventures. One grocery-anchored shopping center is an
investment in an unconsolidated joint venture.
(2) We evaluate each project individually
and we make no assurance that we will acquire any of the underlying
properties from our real estate loan investment portfolio.
(3) Estimated square footage of Nexton
Shopping Center development.
(4) The Helmsman, a 262-unit multifamily
development, will consist of approximately 2,600 square feet of
gross leasable area of ground floor retail space which is not
included in the totals above for grocery-anchored shopping
centers.
Same-Store Financial
Data
The following charts present same-store operating results for
the Company’s multifamily communities. We define our population of
same-store multifamily communities as those that have achieved
occupancy at or above 93% for all three months within a single
quarter ("stabilized") before the beginning of the prior year and
that have been owned for at least 15 full months as of the end of
the first quarter of the current year, enabling comparisons of the
current year quarterly and annual reporting periods to the prior
year comparative periods. The Company excludes the operating
results of properties for which construction of adjacent phases has
commenced and properties which are undergoing significant capital
projects, have sustained significant casualty losses, or are being
held for sale as of the end of the reporting period.
For the periods presented, same-store operating results consist
of the operating results of our multifamily communities, comprising
an aggregate 10,442 units, or 84.7% of our multifamily units.
Same-store net operating income is a non-GAAP measure that is
most directly comparable to net loss, as shown in the
reconciliation below. See Definitions of Non-GAAP Measures.
Reconciliation of Net Loss to
Multifamily Communities' Same-Store Net Operating Income
("NOI")
Three months ended:
(in thousands)
3/31/2022
3/31/2021
Net loss
$
(7,844
)
$
(2,709
)
Add:
Equity stock compensation
1,223
574
Depreciation and amortization
38,161
45,827
Interest expense
23,160
26,991
General and administrative
7,842
7,539
Merger-related costs
4,913
—
Loss from unconsolidated joint venture
108
194
Management Internalization
244
245
Allowance for expected credit losses
572
522
Less:
Interest revenue on notes receivable
6,583
10,512
Interest revenue on related party notes
receivable
197
405
Miscellaneous revenues
198
324
Gain on sale of real estate
—
798
Loss on sale of land
(22
)
—
Loss on extinguishment of debt
(363
)
—
Property net operating income
61,786
67,144
Less:
Non same-store property revenues
(45,355
)
(57,498
)
Add:
Non same-store property operating
expenses
15,151
17,600
Same-store net operating income
$
31,582
$
27,246
Multifamily Communities'
Same-Store NOI
Three months ended:
(in thousands)
3/31/2022
3/31/2021
$ change
% change
Revenues:
Rental and other property revenues
$
52,546
$
46,961
$
5,585
11.9
%
Operating expenses:
Property operating and maintenance
8,358
7,746
612
7.9
%
Payroll
3,697
3,574
123
3.4
%
Real estate taxes and insurance
8,909
8,395
514
6.1
%
Total operating expenses
20,964
19,715
1,249
6.3
%
Same-store net operating income
$
31,582
$
27,246
$
4,336
15.9
%
Same-store average physical occupancy
96.3
%
95.8
%
0.5
%
Corporate level expenses related to the
management and operations of the multifamily portfolio are
allocated on a per unit basis to property NOI and are included in
Multifamily Same-Store NOI.
Dividends
Quarterly Dividends on Common Stock and Class A OP Units
On February 24, 2022, our board of directors declared a
quarterly dividend on our Common Stock of $0.175 per share, that
was paid on April 14, 2022 to stockholders of record on March 15,
2022. In conjunction with the Common Stock dividend, our Operating
Partnership declared a distribution on its Class A Units of $0.175
per unit for the first quarter 2022, which was paid on April 14,
2022 to all Class A Unit holders of record as of March 15, 2022.
The Merger Agreement prohibits us from declaring additional
dividends on our Common Stock prior to the closing of the
Mergers.
Monthly Dividends on Preferred Stock
We declared monthly dividends of $5.00 per share on our Series A
Preferred Stock, which totaled approximately $21.2 million for the
first quarter 2022 and represents a 6% annual yield. We declared
monthly dividends of $5.00 per share on our Series A1 Preferred
Stock, which totaled approximately $3.7 million for the first
quarter 2022 and also represents a 6% annual yield. We declared
dividends totaling approximately $1.4 million on our Series M
Preferred Stock, or mShares, for the first quarter 2022. The
mShares have a dividend rate that escalates from 5.75% in year one
of issuance to 7.50% in year eight and thereafter. We declared
dividends totaling approximately $723,000 on our Series M1
Preferred Stock for the first quarter 2022. The Series M1 Preferred
Stock has a dividend rate that escalates from 6.1% in year one of
issuance to 7.1% in year ten and thereafter.
Forward-Looking
Statements
“Safe Harbor” Statement under the Private Securities Litigation
Reform Act of 1995: redemptions of Series A Preferred Stock,
potential additions of properties from purchase options and rights
of first offer from our real estate loan investments, development
properties, goals and performance are, by definition, and certain
other statements in this Earnings Release and Supplemental
Financial Data Report may constitute, “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995 and involve known and unknown risks, uncertainties and
other factors that may cause our actual results, performance,
achievements or transactions to be materially different from the
results, guidance, goals, performance, achievements or transactions
expressed or implied by the forward-looking statements. These
statements may be identified by the use of forward-looking
terminology such as "may," "trend," "will," "expects," "plans,"
"estimates," "anticipates," "projects," "intends," "believes,"
"strategy," "goals," "objectives," "outlook" and similar
expressions. These risks, uncertainties and contingencies include,
but are not limited to, (a) the impact of the COVID-19 pandemic,
including any variants, and related federal, state and local
government actions on PAC’s business operations and the economic
conditions in the markets in which PAC operates; (b) PAC’s ability
to mitigate the impacts arising from COVID-19 or any variants
thereof; (c) risks related to the proposed acquisition by BREIT,
including the possibility that the consummation of the transaction
could be delayed or not completed, and the effect of the
announcement or pendency of the transaction on our business; (d)
PAC's ability to make distributions to its stockholders in the
future and (e) those disclosed in PAC's filings with the SEC.
Factors that impact such forward-looking statements include, among
others, our business and investment strategy; legislative or
regulatory actions; the state of the U.S. economy generally or in
specific geographic areas; economic trends and economic recoveries;
changes in operating costs, including real estate taxes, utilities
and insurance costs; our ability to obtain and maintain debt or
equity financing; financing and advance rates for our target
assets; our leverage level; changes in the values of our assets;
the occurrence of natural or man-made disasters; availability of
attractive investment opportunities in our target markets; our
ability to maintain our qualification as a real estate investment
trust, or REIT, for U.S. federal income tax purposes; availability
of quality personnel; our understanding of our competition and
market trends in our industry; and interest rates, real estate
values, the debt securities markets and the general economy.
Except as otherwise required by the federal securities laws, we
assume no liability to update the information in this Earnings
Release and Supplemental Financial Data Report.
We refer you to the sections entitled “Risk Factors” and
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations” in our Annual Report on Form 10-K for the
year ended December 31, 2021 that was filed with the SEC on
February 28, 2022, which includes a discussion of various factors
that could adversely affect our financial results. Such risk
factors and information may be updated or supplemented by our Form
10-K, Form 10-Q and Form 8-K filings and other documents filed from
time to time with the SEC.
COVID-19
Our percentages of rent collected remained stabilized at or near
pre-pandemic levels during the first quarter 2022. While the
impacts of COVID-19 and its variants are continuing, the effects on
our operations have been manageable and we believe this condition
will persist, barring a dramatic change in the trajectory of the
pandemic. We are continuing to monitor the spread and impact of the
variants of COVID-19 as well as vaccination rates in our
markets.
Preferred Apartment
Communities, Inc.
Condensed Consolidated
Statements of Operations
(Unaudited)
Three months ended March
31,
(In thousands, except per-share
figures)
2022
2021
Revenues:
Rental and other property revenues
$
97,902
$
104,459
Interest income on loans and notes
receivable
6,583
10,512
Interest income from related parties
197
405
Miscellaneous revenues
198
324
Total revenues
104,880
115,700
Operating expenses:
Property operating and maintenance
14,863
15,249
Property salary and benefits
4,655
4,821
Property management costs
792
1,105
Real estate taxes and insurance
15,806
16,140
General and administrative
7,842
7,539
Merger-related costs
4,913
—
Equity compensation to directors and
executives
1,223
574
Depreciation and amortization
38,161
45,827
Allowance for expected credit losses
572
522
Management Internalization expense
244
245
Total operating expenses
89,071
92,022
Operating income before loss from
unconsolidated joint
venture and gain on sale of real
estate
15,809
23,678
Loss from unconsolidated joint venture
(108
)
(194
)
Gain on sale of real estate, net
—
798
Operating income
15,701
24,282
Interest expense
23,160
26,991
Loss on extinguishment of debt
(363
)
—
Loss on sale of land
(22
)
—
Net loss
(7,844
)
(2,709
)
Net loss attributable to non-controlling
interests
30
62
Net loss attributable to the Company
(7,814
)
(2,647
)
Dividends to preferred stockholders
(27,033
)
(33,820
)
Dividends to holders of unvested
restricted stock
(137
)
(142
)
Net loss attributable to common
stockholders
$
(34,984
)
$
(36,609
)
Net loss per share of Common Stock
available to
common stockholders, basic and diluted
$
(0.62
)
$
(0.73
)
Weighted average number of shares of
Common Stock outstanding,
basic and diluted
56,255
50,033
Reconciliation of FFO
Attributable to Common Stockholders and Unitholders, Core FFO and
AFFO
to Net Loss Attributable to
Common Stockholders
Three months ended March
31,
(In thousands, except per-share
figures)
2022
2021
Net loss attributable to common
stockholders (See note 1)
$
(34,984
)
$
(36,609
)
Add:
Depreciation of real estate assets
32,274
36,832
Amortization of acquired intangible assets
and deferred leasing costs
5,620
8,710
Net loss attributable to Class A
Unitholders (See note 2)
(64
)
(33
)
Gain on sale of real estate
—
(798
)
FFO attributable to common stockholders
and Unitholders
2,846
8,102
Acquisition and pursuit costs
100
4
Loan cost amortization on acquisition line
of credit and loan coordination fees (See note 3)
301
424
Payment of costs related to property
refinancing
363
—
Internalization costs (See note 4)
244
245
Corporate governance and merger-related
costs
5,291
—
Deemed dividends for redemptions of and
non-cash dividends on preferred stock, plus
expenses incurred on calls of preferred
stock (See note 5)
1,682
3,827
Expenses related to the COVID-19 global
pandemic
—
54
Core FFO attributable to common
stockholders and Unitholders
10,827
12,656
Add:
Non-cash equity compensation to directors
and executives
1,223
574
Non-cash income for current expected
credit losses (See note 12)
240
117
Amortization of loan closing costs (See
note 6)
1,294
1,212
Depreciation/amortization of non-real
estate assets
451
444
Net loan origination fees received (See
note 7)
683
817
Deferred interest income received (See
note 8)
—
2,917
Amortization of lease inducements (See
note 9)
447
448
Cash received in excess of (exceeded by)
amortization of purchase option termination revenues (See note
10)
—
250
Less:
Non-cash loan interest income (See note
11)
(2,027
)
(2,874
)
Cash paid for loan closing costs
—
(10
)
Amortization of acquired real estate
intangible liabilities and straight-line rent adjustments (See note
13)
(1,604
)
(3,315
)
Amortization of deferred revenues (See
note 14)
(940
)
(940
)
Normally recurring capital expenditures
(See note 15)
(1,883
)
(3,353
)
AFFO attributable to common stockholders
and Unitholders
$
8,711
$
8,943
Common Stock dividends and distributions
to Unitholders declared:
Common Stock dividends
$
10,976
$
8,991
Distributions to Unitholders (See note
2)
82
96
Total
$
11,058
$
9,087
Common Stock dividends and Unitholder
distributions per share
$
0.175
$
0.175
FFO per weighted average basic share of
Common Stock and Unit outstanding
$
0.05
$
0.16
Core FFO per weighted average basic
share of Common Stock and Unit outstanding
$
0.19
$
0.25
AFFO per weighted average basic share
of Common Stock and Unit outstanding
$
0.15
$
0.18
Weighted average shares of Common Stock
and Units outstanding:
Basic:
Common Stock
56,255
50,033
Class A Units
468
610
Common Stock and Class A Units
56,723
50,643
Diluted Common Stock and Class A Units
(See note 16)
62,457
50,971
Actual shares of Common Stock outstanding,
including 782 and 809 unvested shares
of restricted Common Stock at March 31,
2022 and 2021, respectively.
63,711
50,904
Actual Class A Units outstanding at March
31, 2022 and 2021, respectively.
526
548
Total
64,237
51,452
See Notes to Reconciliation of FFO, Core
FFO and AFFO to Net Loss Attributable to Common Stockholders.
Notes to Reconciliations of
FFO Attributable to Common Stockholders and Unitholders, Core FFO
and AFFO to
Net Loss Attributable to
Common Stockholders
1)
Rental and other property revenues and
property operating expenses for the three months ended March 31,
2022 include activity for the properties acquired since March 31,
2021.
2)
Non-controlling interests in our Operating
Partnership consisted of a total of 526,128 Class A Units as of
March 31, 2022. Included in this total are 419,228 Class A Units
which were granted as partial consideration to the seller in
conjunction with the seller's contribution to us on February 29,
2016 of the Wade Green grocery-anchored shopping center. The
remaining Class A Units were awarded primarily to our key executive
officers. The Class A Units are apportioned a percentage of our
financial results as non-controlling interests. The weighted
average ownership percentage of these holders of Class A Units was
calculated to be 0.83% and 1.20% for the three-month periods ended
March 31, 2022 and 2021, respectively.
3)
We paid loan coordination fees to
Preferred Apartment Advisors, LLC (our "Former Manager") to reflect
the administrative effort involved in arranging debt financing for
acquired properties prior to the Internalization Transaction
(defined in note 4 below). The fees were calculated as 0.6% of the
amount of any mortgage indebtedness on newly-acquired properties or
refinancing and are amortized over the lives of the respective
mortgage loans. This non-cash amortization expense is an addition
to FFO in the calculation of Core FFO and AFFO. At March 31, 2022,
aggregate unamortized loan coordination fees were approximately
$7.4 million, which will be amortized over a weighted average
remaining loan life of approximately 10.1 years.
4)
This adjustment reflects the add-back of
accretion of the discount on the deferred liability payable to the
owners of the Former Manager and other professional fees related to
the internalization of the functions performed by the Former
Manager and Former Sub-Manager (the "Internalization
Transaction").
5)
This additive adjustment removes the
effect of deemed dividends that arise from cash calls and
redemptions of preferred stock. For shares of preferred stock that
are called by the Company or redeemed by the holder, the Company
records a deemed dividend for the difference between the redemption
of the share at its face value, net of any redemption discount, as
compared to the carrying value of the share on the Company’s
consolidated balance sheets. Also included in this adjustment is
the adding back of expenses incurred related to effecting calls of
preferred stock.
6)
We incur loan closing costs on our
existing mortgage loans, which are secured on a
property-by-property basis by each of our acquired real estate
assets, and also for occasional amendments to our syndicated
revolving line of credit with Key Bank National Association, or our
Revolving Line of Credit. These loan closing costs are also
amortized over the lives of the respective loans and the Revolving
Line of Credit, and this non-cash amortization expense is an
addition to FFO in the calculation of AFFO. Neither we nor the
Operating Partnership has any recourse liability in connection with
any of the mortgage loans, nor do we have any
cross-collateralization arrangements with respect to the assets
securing the mortgage loans, other than security interests in 49%
of the equity interests of the subsidiaries owning such assets,
granted in connection with our Revolving Line of Credit, which
provides for full recourse liability. At March 31, 2022,
unamortized loan costs on all the Company's indebtedness were appro
ximately $28.8 million, which will be amortized over a weighted
average remaining loan life of approximately 7.8 years.
7)
We receive loan origination fees in
conjunction with the origination of certain real estate loan
investments. The total fees received are additive adjustments to
Core FFO in our calculation of AFFO.
8)
Over the lives of certain loans, we accrue
additional interest amounts that become due to us at the time of
repayment of the loan or refinancing of the property, or when the
property is sold. Once received from the borrower, the amount of
additional accrued interest becomes an additive adjustment to Core
FFO in our calculation of AFFO.
9)
This adjustment removes the non-cash
amortization of costs incurred to induce tenants to lease space in
our office buildings and grocery-anchored shopping centers.
10)
Occasionally we receive fees in exchange
for the termination of our purchase options related to certain
multifamily communities. These fees are recorded as revenue over
the period beginning on the date of termination until the earlier
of (i) the maturity of the real estate loan investment and (ii) the
sale of the property. The receipt of the cash termination fees are
an additive adjustment in our calculation of AFFO and the removal
of non-cash revenue from the recognition of the termination fees
are a reduction to Core FFO in our calculation of AFFO; both of
these adjustments are presented in a single net number within this
line. For periods in which recognized termination fee revenues
exceeded the amount of cash received, a negative adjustment is
shown to Core FFO in our calculation of AFFO; for periods in which
cash received exceeded the amount of recognized termination fee
revenues, an additive adjustment is shown to Core FFO in our
calculation of AFFO.
11)
Loan origination fees (described in note 7
above) are recognized as revenue over the lives of the applicable
loans as adjustments of yield using the effective interest method.
Similarly, the accrual of additional interest amounts (described in
note 8 above) are recognized beginning from loan inception through
the repayment of the loan or the refinancing or sale of the
underlying property. This adjustment removes the effect of both
these types of non-cash loan interest income from Core FFO in our
calculation of AFFO.
12)
Effective January 1, 2020, we adopted ASU
2016-03, which requires us to estimate the amount of future credit
losses we expect to incur over the lives of our real estate loan
investments at the inception of each loan. This loss reserve may be
adjusted upward or downward over the lives of our loans and
therefore the aggregate net adjustment for each period could be
positive (removing the non-cash effect of a net increase in
aggregate loss reserves) or negative (removing the non-cash effect
of a net decrease in aggregate loss reserves) in these adjustments
to Core FFO in calculating AFFO.
13)
This adjustment reflects straight-line
rent adjustments and the reversal of the non-cash amortization of
below-market and above-market lease intangibles, which were
recognized in conjunction with our acquisitions and which are
amortized over the estimated average remaining lease terms from the
acquisition date for multifamily communities and over the remaining
lease terms for grocery-anchored shopping center assets and office
buildings. At March 31, 2022, the balance of unamortized
below-market lease intangibles was approximately $32.9 million,
which will be recognized over a weighted average remaining lease
period of approximately 8.2 years.
14)
This adjustment removes the non-cash
amortization of deferred revenue recorded by us in conjunction with
Company-owned lessee-funded tenant improvements in our office
buildings.
15)
We deduct from Core FFO normally recurring
capital expenditures that are necessary to maintain our assets’
revenue streams in the calculation of AFFO. This adjustment also
deducts from Core FFO capitalized amounts for third party costs
during the period to originate or renew leases in our
grocery-anchored shopping centers and office buildings. This
adjustment includes approximately $41,000 of recurring capitalized
expenditures incurred at our corporate offices during the
three-month period ended March 31, 2022. No adjustment is made in
the calculation of AFFO for nonrecurring capital expenditures. See
Capital Expenditures, Grocery-Anchored Shopping Center Portfolio,
and Office Building Portfolio sections for definitions of these
terms.
16)
Since our AFFO results are positive for
the periods reflected, we are presenting recalculated diluted
weighted average shares of Common Stock and Class A Units for these
periods for purposes of this table, which includes the dilutive
effect of common stock equivalents from grants of the Class B
Units, warrants included in units of Series A Preferred Stock
issued, as well as annual grants of restricted Common Stock and
restricted stock units. The weighted average shares of Common Stock
outstanding presented on the Consolidated Statements of Operations
are the same for basic and diluted for any period for which we
recorded a net loss available to common stockholders.
See Definitions of Non-GAAP Measures.
Preferred Apartment
Communities, Inc.
Condensed Consolidated Balance
Sheets
(Unaudited)
(In thousands, except per-share par
values)
March 31, 2022
December 31, 2021
Assets
Real estate
Land
$
553,900
$
551,378
Building and improvements
2,745,749
2,671,535
Tenant improvements
119,989
119,331
Furniture, fixtures, and equipment
372,288
359,743
Construction in progress
11,723
5,151
Gross real estate
3,803,649
3,707,138
Less: accumulated depreciation
(611,111
)
(578,496
)
Net real estate
3,192,538
3,128,642
Real estate loan investments, net
210,280
196,420
Total real estate and real estate loan
investments, net
3,402,818
3,325,062
Cash and cash equivalents
117,221
30,205
Restricted cash
33,474
32,675
Note receivable from related party
8,875
9,011
Accrued interest receivable on real estate
loans
18,569
17,038
Acquired intangible assets, net of
amortization
55,432
59,622
Tenant lease inducements, net
15,976
16,420
Investment in unconsolidated joint
venture
5,884
5,992
Tenant receivables and other assets
82,023
67,343
Total assets
$
3,740,272
$
3,563,368
Liabilities and equity
Liabilities
Mortgage notes payable, net of deferred
loan costs and mark-to-market adjustment
$
2,388,772
$
2,343,364
Deferred revenues
34,612
35,523
Accounts payable and accrued expenses
35,046
36,517
Deferred liability to Former Manager
24,219
24,037
Contingent liability due to Former
Manager
14,564
14,631
Accrued interest payable
6,990
7,086
Dividends and partnership distributions
payable
21,509
19,912
Acquired below market lease intangibles,
net of amortization
32,936
34,585
Prepaid rent, security deposits and other
liabilities
27,004
25,679
Total liabilities
2,585,652
2,541,334
Commitments and contingencies
Equity
Stockholders' equity
Series A Redeemable Preferred Stock, $0.01
par value per share; 3,050 shares authorized; 2,226 shares
issued; 1,302 and 1,321 shares outstanding
at March 31, 2022 and December 31, 2021, respectively
13
13
Series A1 Redeemable Preferred Stock,
$0.01 par value per share; up to 1,000 shares authorized; 247
shares issued; 246 shares outstanding at
March 31, 2022 and December 31, 2021, respectively
2
2
Series M Redeemable Preferred Stock, $0.01
par value per share; 500 shares authorized; 106 shares issued;
83 and 84 shares outstanding at March 31,
2022 and December 31, 2021, respectively
1
1
Series M1 Redeemable Preferred Stock,
$0.01 par value per share; up to 1,000 shares authorized; 47 and 43
shares
issued; 44 and 41 shares outstanding at
March 31, 2022 and December 31, 2021, respectively
—
—
Common Stock, $0.01 par value per share;
400,067 shares authorized; 62,929 and 52,975 shares issued and
outstanding at March 31, 2022 and December
31, 2021, respectively
629
530
Additional paid-in capital
1,333,284
1,195,775
Accumulated (deficit) earnings
(179,814
)
(172,000
)
Total stockholders' equity
1,154,115
1,024,321
Non-controlling interest
505
(2,287
)
Total equity
1,154,620
1,022,034
Total liabilities and equity
$
3,740,272
$
3,563,368
Preferred Apartment
Communities, Inc.
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
(In thousands)
Three-month periods ended
March 31,
2022
2021
Operating activities:
Net loss
$
(7,844
)
$
(2,709
)
Reconciliation of net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization expense
38,161
45,827
Amortization of above and below market
leases
(1,369
)
(1,399
)
Amortization of deferred revenues and
other non-cash revenues
(1,449
)
(1,195
)
Amortization of purchase option
termination fees
—
(1,229
)
Amortization of equity compensation, lease
incentives and other non-cash expenses
1,628
1,229
Deferred loan cost amortization
1,566
1,609
Non-cash accrued interest income on real
estate loan investments
(1,531
)
(2,822
)
Receipt of accrued interest income on real
estate loan investments
—
3,109
Gains on the sales of real estate, net
—
(798
)
Losses on the sales of land and other,
net
22
—
Loss from unconsolidated joint
ventures
108
194
Cash received for purchase option
terminations
—
1,479
Loss on extinguishment of debt
363
—
Increase in allowance for expected credit
losses
572
522
Changes in operating assets and
liabilities:
Decrease (increase) in tenant receivables
and other assets
(3,445
)
4,766
Decrease in accounts payable and accrued
expenses
(429
)
(2,787
)
Increase in accrued interest, prepaid
rents and other liabilities
1,874
2,589
Net cash provided by operating
activities
28,227
48,385
Investing activities:
Investments in real estate loans, net of
origination fees received
(13,605
)
(18,840
)
Repayments of real estate loans
—
17,925
Notes receivable repaid
—
79
Acquisition of properties
(90,203
)
(289
)
Disposition of properties and proceeds
from land sales, net
(260
)
4,798
Investment into property development
(2,718
)
—
Capital improvements to real estate
assets
(4,875
)
(10,263
)
Net cash used in investing activities
(111,661
)
(6,590
)
Financing activities:
Proceeds from mortgage notes
106,310
2,152
Repayment of mortgage notes
(61,745
)
(10,340
)
Payments for deposits and other mortgage
loan costs
(589
)
(285
)
Payments for debt prepayment and other
debt extinguishment costs
(324
)
—
Proceeds from Revolving Line of Credit
185,000
105,000
Payments on Revolving Line of Credit
(185,000
)
(87,000
)
Proceeds from sales of Preferred Stock,
net of offering costs
2,800
34,109
Payments for redemptions and calls of
Preferred Stock
(19,162
)
(40,018
)
Proceeds from sale of Common Stock and
warrant exercises
179,213
—
Common Stock dividends paid
(9,382
)
(8,829
)
Preferred Stock dividends and Class A Unit
distributions paid
(27,118
)
(33,840
)
Payments for deferred offering costs
(1,143
)
(1,030
)
Contributions from non-controlling
interests
2,625
—
Distributions to non-controlling
interests
(236
)
(56
)
Net cash (used in) provided by financing
activities
171,249
(40,137
)
Net increase in cash, cash equivalents and
restricted cash
87,815
1,658
Cash, cash equivalents and restricted
cash, beginning of year
62,880
75,716
Cash, cash equivalents and restricted
cash, end of period
$
150,695
$
77,374
Real Estate Loan
Investments
The following tables present details pertaining to our portfolio
of fixed rate, interest-only real estate loan investments.
Project/Property
Location
Maturity date
Optional extension
date
Total loan commitments
Carrying amount (1) as
of
Current / deferred interest %
per annum
March 31, 2022
December 31, 2021
Multifamily communities:
(in thousands)
The Platform
San Jose, CA
8/13/2022
(2)
$
137,616
$
137,616
$
136,061
(2)
Vintage Horizon West
Orlando, FL
10/11/2022
10/11/2024
10,900
10,038
9,828
8.5 / 5.5
Nexton
Charleston, SC
12/16/2022
N/A
6,265
6,265
6,265
(3)
Vintage Jones Franklin
Raleigh, NC
11/14/2023
5/14/2025
10,000
9,182
8,989
8.5 / 5.5
Solis Cumming Town
Center
Atlanta, GA
9/3/2024
9/3/2026
20,681
18,542
18,153
8.5 / 5.5
Hudson at Metro West
Orlando, FL
9/1/2024
3/1/2026
16,791
14,176
13,873
8.5 / 4.5
Oxford Club Drive
Atlanta, GA
2/11/2025
2/11/2027
23,150
7,513
5,551
8.5 / 4.5
Populus at Pooler
Savannah, GA
5/27/2025
5/27/2026
15,907
7,030
2,104
8.5 / 4.25
Populus at Pooler Capital
Savannah, GA
5/27/2025
5/27/2026
1,169
966
946
8.5 / 4.25
Menlo II
Jacksonville, FL
4/14/2025
4/14/2027
16,610
6,470
4,500
8.5 / 3.5
Beaver Ruin
Atlanta, GA
5/3/2025
11/3/2026
9,133
1,098
—
8.5 / 4.5
Prado
Orlando, FL
8/11/2025
8/11/2027
16,650
1,661
—
8.5 / 3.5
Altis
Naples, FL
2/27/2026
2/27/2028
17,151
—
—
8.5 / 4.25
302,023
220,557
206,270
Preferred equity: (4)
The Shoals
Greenville, SC
3/31/2026
3/31/2027
14,284
—
—
8.5 / 3.5
$
316,307
220,557
206,270
Unamortized loan origination fees
(1,942
)
(1,755
)
Allowances for expected credit losses and
doubtful accounts
(8,335
)
(8,095
)
Carrying amount
$
210,280
$
196,420
(1) Carrying amounts presented per loan
are amounts drawn.
(2) Effective February 10, 2022, the Third
Amendment to the loan agreement provided for extension options
until August 13, 2022 and December 31, 2022. The interest rate was
amended to 8.5% current interest and 1.0% deferred interest per
annum until May 13, 2022, then 8.5% current interest and 1.5%
deferred interest per annum until August 13, 2022. If the second
extension option is exercised, the rate increases to 8.5% current
interest and 2.0% deferred interest per annum until November 13,
2022, then 8.5% current interest and 2.5% deferred interest per
annum until December 31, 2022.
(3) Loan accrues interest at 11% per annum
until June 16, 2022, then 13% per annum until December 16, 2022;
all interest is paid monthly.
(4) A fixed-return component of the
capital stack in a multifamily community development project that
is economically equivalent to our real estate loan investments,
with features and terms as shown.
We hold options or rights of first offer, but not obligations,
to purchase some of the properties which are partially financed by
our real estate loan investments. Option purchase prices are
generally the market value of the property, as negotiated and
agreed upon by the purchasing and selling parties and are derived
utilizing market cap rates. As of March 31, 2022, potential
property acquisitions and units from projects in our real estate
loan investment portfolio consisted of:
Total units upon
Purchase option window
Project/Property
Location
completion (1)
Begin
End
Multifamily communities
Hudson at Metro West
Orlando, FL
320
S + 90 days (2)
S + 150 days (2)
Vintage Horizon West
Orlando, FL
340
(10)
(3)
(3)
Vintage Jones Franklin
Raleigh, NC
277
(3)
(3)
Solis Cumming Town Center
Atlanta, GA
320
(4)
(4)
Club Drive
Atlanta, GA
352
(5)
(5)
Populus at Pooler
Savannah, GA
316
(6)
(6)
Menlo II
Jacksonville, FL
337
(7)
(7)
Beaver Ruin
Atlanta, GA
246
S + 90 days (8)
S + 150 days (8)
One Nexton
Charleston, SC
351
(9)
(9)
Prado
Orlando, FL
286
S + 90 days
S + 180 days
Altis
Naples, FL
242
S + 90 days (2)
S + 150 days (2)
The Shoals
Greenville, SC
252
(4)
(4)
3,639
(1) We evaluate each project individually
and we make no assurance that we will acquire any of the underlying
properties from our real estate loan investment portfolio.
(2) The option period window begins and
ends at the number of days indicated beyond the achievement of a
93% occupancy threshold by the underlying property.
(3) The option period window begins on the
later of one year following receipt of final certificate of
occupancy or 90 days beyond the achievement of a 93% occupancy
threshold by the underlying property and ends 60 days beyond the
option period beginning date.
(4) We hold a right of first offer on the
property.
(5) The option period window begins upon
the property's achievement of an 85% occupancy threshold. If we are
unable to reach an agreement on the property's market value, we
have a right of first offer.
(6) The option period window begins upon
the property's achievement of an 80% occupancy threshold. If we are
unable to reach an agreement on the property's market value, we
have a right of first offer.
(7) The option period window begins either
by notice from the seller upon the property's achievement of a 70%
occupancy threshold or by notice from the purchaser upon the
property's achievement of a 93% occupancy threshold and expires 90
days beyond either event. If we are unable to reach an agreement on
the property's market value, we have a right of first offer.
(8) The option period window begins and
ends at the number of days indicated beyond the achievement of an
85% occupancy threshold by the underlying property. If we are
unable to reach an agreement on the property's market value, we
have a right of first offer.
(9) The underlying loan is a land
acquisition bridge loan that is anticipated to be converted to a
real estate loan investment in the future with a purchase option or
right of first offer.
(10) The purchase option was voided in
conjunction with the repayment of the loan on April 12, 2022.
Mortgage Indebtedness
As of March 31, 2022, our mortgage note principal repayment
obligations were:
Period
Future principal
payments
(in thousands)
2022
$
54,993
2023
81,841
2024
300,318
2025
57,692
2026
339,105
2027
320,122
2028
252,544
2029
246,473
2030
357,317
2031
97,107
Thereafter
319,705
Totals
$
2,427,217
Multifamily Communities
As of March 31, 2022, our multifamily community portfolio
consisted of the following properties:
Three months ended
March 31, 2022
Property
Location
Number of
units
Average unit
size (sq. ft.)
Average
physical occupancy
Average rent
per unit
Same-Store Communities:
Aldridge at Town Village
Atlanta, GA
300
969
95.7 %
$ 1,628
Green Park
Atlanta, GA
310
985
97.1 %
$ 1,657
Overton Rise
Atlanta, GA
294
1,018
95.0 %
$ 1,728
Summit Crossing I
Atlanta, GA
345
1,034
97.1 %
$ 1,435
Summit Crossing II
Atlanta, GA
140
1,100
97.1 %
$ 1,582
The Reserve at Summit Crossing
Atlanta, GA
172
1,002
97.3 %
$ 1,529
Avenues at Cypress
Houston, TX
240
1,170
96.4 %
$ 1,612
Avenues at Northpointe
Houston, TX
280
1,167
94.2 %
$ 1,540
Stone Creek
Houston, TX
246
852
95.7 %
$ 1,241
Aster at Lely Resort
Naples, FL
308
1,071
96.4 %
$ 1,724
Sorrel
Jacksonville, FL
290
1,048
95.6 %
$ 1,508
Lux at Sorrel
Jacksonville, FL
265
1,025
96.4 %
$ 1,557
Artisan at Viera
Melbourne, FL
259
1,070
96.5 %
$ 1,842
525 Avalon Park
Orlando, FL
487
1,394
95.5 %
$ 1,694
The Blake
Orlando, FL
281
908
96.4 %
$ 1,601
Citi Lakes
Orlando, FL
346
984
97.4 %
$ 1,594
Village at Baldwin Park
Orlando, FL
528
1,069
96.7 %
$ 1,880
Parkside at the Beach
Panama City Beach, FL
288
1,041
98.8 %
$ 1,563
Luxe at Lakewood Ranch
Sarasota, FL
280
1,105
95.0 %
$ 1,808
Venue at Lakewood Ranch
Sarasota, FL
237
1,001
97.2 %
$ 1,888
Crosstown Walk
Tampa, FL
342
1,070
96.6 %
$ 1,599
Overlook at Crosstown Walk
Tampa, FL
180
986
97.6 %
$ 1,641
Citrus Village
Tampa, FL
296
980
97.1 %
$ 1,579
Five Oaks at Westchase
Tampa, FL
218
983
97.6 %
$ 1,750
Horizon at Wiregrass
Tampa, FL
392
973
96.9 %
$ 1,755
Lodge at Hidden River
Tampa, FL
300
980
96.7 %
$ 1,623
Lenox Village
Nashville, TN
273
906
96.8 %
$ 1,431
Regent at Lenox
Nashville, TN
18
1,072
100.0 %
$ 1,481
Retreat at Lenox
Nashville, TN
183
773
96.9 %
$ 1,370
CityPark View
Charlotte, NC
284
948
94.7 %
$ 1,276
CityPark View South
Charlotte, NC
200
1,005
95.2 %
$ 1,394
Colony at Centerpointe
Richmond, VA
255
1,149
97.5 %
$ 1,571
Founders Village
Williamsburg, VA
247
1,070
96.2 %
$ 1,615
Retreat at Greystone
Birmingham, AL
312
1,100
94.4 %
$ 1,560
Vestavia Reserve
Birmingham, AL
272
1,113
95.1 %
$ 1,721
Adara Overland Park
Kansas City, KS
260
1,116
96.4 %
$ 1,427
Claiborne Crossing
Louisville, KY
242
1,204
95.6 %
$ 1,448
City Vista
Pittsburgh, PA
272
1,023
94.5 %
$ 1,541
Total/Average Same-Store
Communities
10,442
96.3 %
Stabilized Communities:
The Menlo
Jacksonville, FL
332
966
95.2 %
$ 1,654
The Ellison
Atlanta, GA
250
1,064
99.1 %
$ 1,650
Chestnut Farm
Charlotte, NC
256
995
98.6 %
$ 1,642
Alleia at Presidio
Fort Worth, TX
231
1,022
95.7 %
$ 1,661
The Anson
Nashville, TN
301
989
96.7 %
$ 1,595
The Kingson
Fredericksburg, VA
240
993
95.7 %
$ 1,739
Total/Average Stabilized
Communities
1,610
96.3 %
Lirio at Rafina
Orlando, FL
280
974
—
—
Total Multifamily Community
Units
12,332
For the three-month period ended March 31, 2022, our average
same-store multifamily communities' physical occupancy was 96.3%.
We calculate average same-store physical occupancy for quarterly
periods as the average of the number of occupied units on the 20th
day of each of the trailing three months from the reporting period
end date and that have been owned for at least 15 full months as of
the end of the first quarter of each year. We exclude the operating
results of properties for which construction of adjacent phases has
commenced and properties which are undergoing significant capital
projects, have sustained significant casualty losses, or are being
marketed for sale as of the end of the reporting period. We believe
"Same Property" information is useful as it allows both management
and investors to gauge our management effectiveness via comparisons
of financial and operational results between interim and annual
periods for those subsets of multifamily communities owned for
current and prior comparative periods.
For the three-month period ended March 31, 2022, our average
stabilized physical occupancy was 96.3%. We calculate average
stabilized physical occupancy for quarterly periods as the average
number of occupied units on the 20th day of each of the trailing
three months from the reporting period end date. All of our
multifamily communities were stabilized for the three-month period
ended March 31, 2022 except Lirio at Rafina.
For the three-month period ended March 31, 2022, our average
stabilized economic occupancy was 96.1%. We define average economic
occupancy as market rent reduced by vacancy losses, expressed as a
percentage. All of our multifamily properties are included in these
calculations except for properties which are not yet stabilized,
properties which are owned for less than the entire reporting
period and properties which are undergoing significant capital
projects, have sustained significant casualty losses or are adding
additional phases. We also exclude properties which are currently
being held for sale, of which we had none within the multifamily
community portfolio at March 31, 2022. Average economic occupancy
is useful both to management and investors as a gauge of our
effectiveness in realizing the full revenue generating potential of
our multifamily communities given market rents and occupancy
rates.
Capital Expenditures
We regularly incur capital expenditures related to our owned
multifamily communities. Capital expenditures may be nonrecurring
and discretionary, as part of a strategic plan intended to increase
a property’s value and corresponding revenue-generating ability, or
may be normally recurring and necessary to maintain the income
streams and present value of a property. Certain capital
expenditures may be budgeted and reserved for upon acquiring a
property as initial expenditures necessary to bring a property up
to our standards or to add features or amenities that we believe
make the property a compelling value to prospective residents in
its individual market. These budgeted nonrecurring capital
expenditures in connection with an acquisition are funded from the
capital source(s) for the acquisition and are not dependent upon
subsequent property operating cash flows for funding.
For the three-month period ended March 31, 2022, our capital
expenditures for multifamily communities consisted of:
Capital Expenditures -
Multifamily Communities
Recurring
Non-recurring
Total
(in thousands, except per-unit
figures)
Amount
Per
Unit
Amount
Per
Unit
Amount
Per
Unit
Appliances
$
227
$
18.53
$
—
$
—
$
227
$
18.53
Carpets
501
40.85
—
—
501
40.85
Wood / vinyl flooring
30
2.47
121
9.83
151
12.30
Mini blinds and ceiling fans
36
2.95
—
—
36
2.95
Fire safety
—
—
79
6.44
79
6.44
HVAC
128
10.44
—
—
128
10.44
Computers, equipment, misc.
56
4.55
59
4.82
115
9.37
Elevators
—
—
20
1.60
20
1.60
Exterior painting and lighting
—
—
1,101
89.83
1,101
89.83
Leasing office and other common
amenities
—
—
257
20.97
257
20.97
Major structural projects
—
—
551
44.97
551
44.97
Cabinets, countertops and unit
upgrades
—
—
487
39.73
487
39.73
Landscaping and fencing
—
—
89
7.28
89
7.28
Parking lots and sidewalks
—
—
56
4.58
56
4.58
Signage and sanitation
—
—
11
0.87
11
0.87
Totals
$
978
$
79.79
$
2,831
$
230.92
$
3,809
$
310.71
Grocery-Anchored Shopping Center
Portfolio
As of March 31, 2022, our grocery-anchored
shopping center portfolio consisted of the following
properties:
Property name
Location
Year built
GLA (1)
Percent leased
Grocery anchor tenant
Castleberry-Southard
Atlanta, GA
2006
80,018
100.0 %
Publix
Cherokee Plaza
Atlanta, GA
1958
102,864
100.0 %
Kroger
Governors Towne Square
Atlanta, GA
2004
68,658
100.0 %
Publix
Lakeland Plaza
Atlanta, GA
1990
301,711
95.5 %
Sprouts
Powder Springs
Atlanta, GA
1999
77,853
98.2 %
Publix
Rockbridge Village
Atlanta, GA
2005
102,432
91.4 %
Kroger
Roswell Wieuca Shopping Center
Atlanta, GA
2007
74,370
97.8 %
The Fresh Market
Royal Lakes Marketplace
Atlanta, GA
2008
119,493
97.7 %
Kroger
Sandy Plains Exchange
Atlanta, GA
1997
72,784
100.0 %
Publix
Summit Point
Atlanta, GA
2004
111,970
89.2 %
Publix
Thompson Bridge Commons
Atlanta, GA
2001
92,587
96.2 %
Kroger
Wade Green Village
Atlanta, GA
1993
74,978
94.5 %
Publix
Woodmont Village
Atlanta, GA
2002
85,639
100.0 %
Kroger
Woodstock Crossing
Atlanta, GA
1994
66,122
98.5 %
Kroger
East Gate Shopping Center
Augusta, GA
1995
75,716
93.7 %
Publix
Fury's Ferry
Augusta, GA
1996
70,458
98.6 %
Publix
Parkway Centre
Columbus, GA
1999
53,088
97.7 %
Publix
Greensboro Village
Nashville, TN
2005
70,203
98.3 %
Publix
Spring Hill Plaza
Nashville, TN
2005
66,693
100.0 %
Publix
Parkway Town Centre
Nashville, TN
2005
65,587
100.0 %
Publix
The Market at Salem Cove
Nashville, TN
2010
62,356
100.0 %
Publix
The Market at Victory Village
Nashville, TN
2007
71,300
100.0 %
Publix
The Overlook at Hamilton Place
Chattanooga, TN
1992
213,095
99.5 %
The Fresh Market
Shoppes of Parkland
Miami-Ft. Lauderdale, FL
2000
145,720
98.6 %
BJ's Wholesale Club
Crossroads Market
Naples, FL
1993
126,895
100.0 %
Publix
Neapolitan Way (2)
Naples, FL
1985
137,580
97.5 %
Publix
Berry Town Center
Orlando, FL
2003
99,441
89.9 %
Publix
Deltona Landings
Orlando, FL
1999
59,966
94.8 %
Publix
University Palms
Orlando, FL
1993
99,172
100.0 %
Publix
Disston Plaza
Tampa-St Petersburg, FL
1954
129,150
96.6 %
Publix
Barclay Crossing
Tampa, FL
1998
54,958
100.0 %
Publix
Polo Grounds Mall
West Palm Beach, FL
1966
130,285
97.3 %
Publix
Kingwood Glen
Houston, TX
1998
103,397
97.1 %
Kroger
Independence Square
Dallas, TX
1977
140,218
92.6 %
Tom Thumb
Midway Market
Dallas, TX
2002
85,599
94.9 %
Kroger
Oak Park Village
San Antonio, TX
1970
64,855
100.0 %
H.E.B.
Irmo Station
Columbia, SC
1980
99,384
89.0 %
Kroger
Rosewood Shopping Center
Columbia, SC
2002
36,887
93.5 %
Publix
Anderson Central
Greenville Spartanburg, SC
1999
223,211
95.6 %
Walmart
Fairview Market
Greenville Spartanburg, SC
1998
46,303
100.0 %
Aldi
Brawley Commons
Charlotte, NC
1997
122,028
98.6 %
Publix
West Town Market
Charlotte, NC
2004
67,883
100.0 %
Harris Teeter
Heritage Station
Raleigh, NC
2004
72,946
97.9 %
Harris Teeter
Maynard Crossing
Raleigh, NC
1996
122,781
86.8 %
Harris Teeter
Wakefield Crossing
Raleigh, NC
2001
75,927
98.2 %
Food Lion
Southgate Village
Birmingham, AL
1988
75,092
96.8 %
Publix
Hollymead Town Center
Charlottesville, VA
2005
158,807
90.5 %
Harris Teeter
Free State Shopping Center
Washington, D.C.
1970
264,152
87.6 %
Giant
4,922,612
96.0 %
Redevelopment Properties:
Champions Village
Houston, TX
1973
383,346
64.9 %
Randalls
Sweetgrass Corner
Charleston, SC
1999
89,124
32.9 %
—
Conway Plaza
Orlando, FL
1966
117,705
80.6 %
Publix
Hanover Center (3)
Wilmington, NC
1954
305,346
79.8 %
Harris Teeter
Gayton Crossing
Richmond, VA
1983
160,816
(4)
74.2 %
Kroger
Fairfield Shopping Center (3)
Virginia Beach, VA
1985
231,829
83.0 %
Food Lion
1,288,166
72.1 %
6,210,778
91.0 %
(1) Gross leasable area, or GLA,
represents the total amount of property square footage that can be
leased to tenants.
(2) Investment in an
unconsolidated joint venture that is not prorated for our ownership
percentage.
(3) Property is owned through a
consolidated joint venture.
(4) The GLA figure shown excludes
the GLA of the Kroger store, which is owned by others.
As of March 31, 2022, our grocery-anchored shopping center
portfolio was 91.0% leased (96.0% excluding redevelopment
properties). We define percent leased as the percentage of gross
leasable area that is leased as of the period end date, including
non-cancelable lease agreements that have been signed which have
not yet commenced. This metric is used by management to gauge the
extent to which our grocery-anchored shopping centers are
delivering their total potential rental and other revenues.
Details regarding lease expirations (assuming no exercises of
tenant renewal options) within our grocery-anchored shoppng center
portfolio as of March 31, 2022 were:
Totals
Number
of leases
Leased
GLA
Percent of
leased GLA
Month to month
22
65,031
1.2 %
2022
113
318,146
5.6 %
2023
147
614,369
10.9 %
2024
149
1,142,969
20.2 %
2025
133
943,070
16.7 %
2026
129
560,981
9.9 %
2027
91
462,094
8.2 %
2028
32
404,649
7.2 %
2029
30
249,842
4.4 %
2030
18
185,300
3.3 %
2031
24
259,613
4.6 %
2032 +
31
442,570
7.8 %
Total
919
5,648,634
100.0 %
Our grocery-anchored shopping center portfolio contained the
following anchor tenants as of March 31, 2022:
Tenant
GLA
Percent of
total GLA
Publix
1,179,030
19.0 %
Kroger
581,593
9.4 %
Harris Teeter
273,273
4.4 %
Wal-Mart
183,211
2.9 %
BJ's Wholesale Club
108,532
1.7 %
Food Lion
76,523
1.2 %
Giant
73,149
1.2 %
Randall's
61,604
1.0 %
H.E.B
54,844
0.9 %
Tom Thumb
43,600
0.7 %
The Fresh Market
43,321
0.7 %
Sprouts
29,855
0.5 %
Aldi
23,622
0.4 %
Total
2,732,157
44.0 %
Our Quarterly Report on Form 10-Q for the period ended March 31,
2022 will present income statements of New Market Properties, LLC
within the Results of Operations section of Management's Discussion
and Analysis of Financial Condition and Results of Operations.
Second-generation capital expenditures within our
grocery-anchored shopping center portfolio by property for the
first quarter 2022 totaled approximately $713,000.
Second-generation capital expenditures exclude those expenditures
made in our grocery-anchored shopping center and office building
portfolios (i) to lease space to "first generation" tenants (i.e.
leasing capital for existing vacancies and known move-outs at the
time of acquisition), (ii) to bring recently acquired properties up
to our ownership standards, and (iii) for property redevelopments
and repositioning.
Office Building
Portfolio
As of March 31, 2022, our office building portfolio consisted of
the following properties:
Property Name
Location
GLA
Percent leased
Three Ravinia
Atlanta, GA
814,000
93 %
Westridge at La Cantera
San Antonio, TX
258,000
100 %
Total/Average
1,072,000
95 %
As of March 31, 2022, our office building portfolio included the
following significant tenants:
Rentable square
footage
Percent of
Annual Base Rent
Annual Base
Rent (in thousands)
InterContinental Hotels Group
467,000
44.8
%
$
11,429
USAA
129,000
13.1
%
3,357
Vericast
129,000
12.2
%
3,102
Hapag Lloyd
127,000
17.5
%
4,455
Lease Query
53,000
3.8
%
968
Total
905,000
91.4
%
$
23,311
We define Annual Base Rent as the current monthly base rent
annualized under the respective leases.
As of March 31, 2022, the leased square footage of our office
building portfolio expires according to the following schedule:
Percent of
Year of lease
expiration
Rented square
rented
feet
square feet
2022
—
—
2023
8,000
0.8 %
2024
5,000
0.5 %
2025
53,000
5.3 %
2026
—
—
2027
329,000
33.0 %
2028
—
—
2029
—
—
2030
—
—
2031
467,000
46.8 %
2032 +
136,000
13.6 %
Total
998,000
100.0 %
The Company recognized second-generation capital expenditures
within its office building portfolio of approximately $151,000
during the first quarter 2022.
Definitions of Non-GAAP
Measures
We disclose FFO, Core FFO, AFFO and NOI, each of which meets the
definition of a “non-GAAP financial measure”, as set forth in Item
10(e) of Regulation S-K promulgated by the SEC. As a result we are
required to include in this filing a statement of why the Company
believes that presentation of these measures provides useful
information to investors. The non-GAAP measures of FFO, Core FFO,
AFFO and NOI should be considered as an alternative to net income
(determined in accordance with GAAP) as an indication of our
performance, and we believe that to understand our performance
further FFO, Core FFO, AFFO and NOI should be compared with our
reported net income or net loss and considered in addition to cash
flows in accordance with GAAP, as presented in our consolidated
financial statements. FFO, Core FFO and AFFO are not considered
measures of liquidity and are not alternatives to measures
calculated under GAAP.
Funds From Operations Attributable to Common Stockholders and
Unitholders (“FFO”)
FFO is one of the most commonly utilized Non-GAAP measures
currently in practice. In its 2002 “White Paper on Funds From
Operations,” which was restated in 2018, the National Association
of Real Estate Investment Trusts, or NAREIT, standardized the
definition of how net income/loss should be adjusted to arrive at
FFO, in the interests of uniformity and comparability. We have
adopted the NAREIT definition for computing FFO as a meaningful
supplemental gauge of our operating results, and as is most often
presented by other REIT industry participants.
The NAREIT definition of FFO (and the one reported by the
Company) is:
Net income/loss, excluding:
- depreciation and amortization related to real estate;
- gains and losses from the sale of certain real estate
assets;
- gains and losses from change in control; and
- impairment writedowns of certain real estate assets and
investments in entities where the impairment is directly
attributable to decreases in the value of depreciable real estate
held by the entity.
Not all companies necessarily utilize the standardized NAREIT
definition of FFO, so caution should be taken in comparing our
reported FFO results to those of other companies. Our FFO results
are comparable to the FFO results of other companies that follow
the NAREIT definition of FFO and report these figures on that
basis. FFO is a non-GAAP measure that is reconciled to its most
comparable GAAP measure, net income/loss available to common
stockholders.
Core Funds From Operations Attributable to Common
Stockholders and Unitholders (“Core FFO”)
We make adjustments to FFO to remove costs incurred and revenues
recorded that are singular in nature and outside our normal
operations and portray our primary operational results. We
calculate Core FFO as:
FFO, plus:
- acquisition and pursuit (dead deal) costs;
- loan cost amortization on acquisition line of credit and loan
coordination fees;
- losses on debt extinguishments or refinancing costs;
- Internalization costs;
- Corporate governance and merger-related costs;
- expenses incurred on calls of preferred stock;
- deemed dividends for redemptions of and non-cash dividends on
preferred stock; and
- expenses related to the COVID-19 global pandemic;
Less:
- earnest money forfeitures by prospective asset purchasers.
Core FFO figures reported by us may not be comparable to Core
FFO figures reported by other companies. We utilize Core FFO as a
supplemental measure of the operating performance of our portfolio
of real estate assets. We believe Core FFO is useful to investors
as a supplemental gauge of our operating performance and may be
useful in comparing our operating performance with other real
estate companies. Since our calculation of Core FFO removes costs
incurred and revenues recorded that are often singular in nature
and outside our normal operations, we believe it improves
comparability to investors in assessing our core operating results
across periods. Core FFO is a non-GAAP measure that is reconciled
to its most comparable GAAP measure, net income/loss available to
common stockholders.
Adjusted Funds From Operations Attributable to Common
Stockholders and Unitholders (“AFFO”)
AFFO makes further adjustments to Core FFO results in order to
arrive at a more refined measure of operating and financial
performance. There is no industry standard definition of AFFO and
practice is divergent across the industry. We calculate AFFO
as:
Core FFO, plus:
- non-cash equity compensation to directors and executives;
- non-cash (income) expense for current expected credit
losses;
- amortization of loan closing costs;
- depreciation and amortization of non-real estate assets;
- net loan origination fees received;
- deferred interest income received;
- amortization of lease inducements;
- cash received in excess of (exceeded by) amortization of
purchase option termination revenues;
- non-cash dividends on Series M1 Preferred Stock and mShares;
and
- earnest money forfeiture from prospective asset purchaser;
Less:
- non-cash loan interest income;
- cash paid for loan closing costs;
- amortization of straight-line rent adjustments and acquired
real estate intangible assets and/or liabilities;
- amortization of deferred revenues; and
- normally-recurring capital expenditures and capitalized second
generation leasing costs.
AFFO figures reported by us may not be comparable to those AFFO
figures reported by other companies. We utilize AFFO as another
measure of the operating performance of our portfolio of real
estate assets. We believe AFFO is useful to investors as a
supplemental gauge of our operating performance and may be useful
in comparing our operating performance with other real estate
companies. Since our calculation of AFFO removes other significant
non-cash charges and revenues and other costs which are not
representative of our ongoing business operations, we believe it
improves comparability to investors in assessing our core operating
results across periods. AFFO is a non-GAAP measure that is
reconciled to its most comparable GAAP measure, net income/loss
available to common stockholders. FFO, Core FFO and AFFO are not
considered measures of liquidity and are not alternatives to
measures calculated under GAAP.
Same-Store Net Operating Income (“NOI”)
We use same-store NOI as an operational metric for our
same-store multifamily communities, enabling comparisons of those
properties’ operating results between the current reporting period
and the prior year comparative period. We define our population of
same-store multifamily communities as those that are stabilized and
that have been owned for at least 15 full months as of the end of
the first quarter of each year, and exclude the operating results
of properties for which construction of adjacent phases has
commenced and properties which are undergoing significant capital
projects, have sustained significant casualty losses, or are being
marketed for sale as of the end of the reporting period. We define
NOI as rental and other property revenues, less total property and
maintenance expenses, property management fees, real estate taxes,
general and administrative expenses, and property insurance. We
believe that NOI is an important supplemental measure of operating
performance for REITs because it provides measures of core
operations, rather than factoring in depreciation and amortization,
financing costs, acquisition costs, and other corporate expenses.
NOI is a widely utilized measure of comparative operating
performance in the REIT industry, but is not a substitute for the
most comparable GAAP-compliant measure, net income/loss.
About Preferred Apartment Communities,
Inc.
Preferred Apartment Communities, Inc. (NYSE: APTS) is a real
estate investment trust engaged primarily in the ownership and
operation of Class A multifamily properties, with select
investments in grocery-anchored shopping centers. Preferred
Apartment Communities’ investment objective is to generate
attractive, stable returns for stockholders by investing in
income-producing properties and acquiring or originating real
estate loans. As of March 31, 2022, the Company owned or was
invested in 113 properties in 13 states, predominantly in the
Southeast region of the United States.
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version on businesswire.com: https://www.businesswire.com/news/home/20220509005086/en/
Paul Cullen Executive Vice President-Investor Relations Chief
Marketing Officer investorrelations@pacapts.com 770-818-4144
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