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Section 1: 8-K (FORM 8-K)

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): February 14, 2019

 

Bluerock Residential Growth REIT, Inc.
(Exact Name of Registrant as Specified in Its Charter)

 

Maryland 001-36369 26-3136483
(State or other jurisdiction of incorporation
or organization)
(Commission File Number) (I.R.S. Employer
Identification No.)

 

712 Fifth Avenue, 9th Floor

New York, NY 10019

(Address of principal executive offices)
 
(212) 843-1601
(Registrant’s telephone number, including area code)
 
None.
(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

 

 

 

ITEM 2.02RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

 

On February 14, 2019, Bluerock Residential Growth REIT, Inc., a Maryland corporation, or the Company, issued a press release announcing its financial results for the fourth quarter ended December 31, 2018. Additionally, the Company is furnishing certain supplemental financial information, or the Supplemental Financial Information. Copies of the press release and the Supplemental Financial Information are furnished as Exhibit 99.1 and Exhibit 99.2 to this Current Report on Form 8-K and is hereby incorporated by reference herein. In accordance with General Instruction B.2 of Form 8-K, the information in this Item 2.02 shall not be deemed to be “filed” for purposes of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and shall not be incorporated by reference into any registration statement or other document filed under the Exchange Act or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

 

ITEM 7.01REGULATION FD DISCLOSURE.

 

As disclosed above in Item 2.02 of this Current Report on Form 8-K, on February 14, 2019, the Company issued the press release and Supplemental Financial Information attached hereto as Exhibit 99.1 and Exhibit 99.2 announcing the Company’s financial results for the fourth quarter ended December 31, 2018 and certain other supplemental financial information. In accordance with General Instruction B.2 of Form 8-K, the information set forth herein, in the press release is deemed to be “furnished” and shall not be deemed to be “filed” for purposes of the Exchange Act. The information set forth in this Item 7.01 of this Current Report on Form 8-K shall not be deemed an admission as to the materiality of any information in this Current Report on Form 8-K that is required to be disclosed solely to satisfy the requirements of Regulation FD.

 

ITEM 9.01FINANCIAL STATEMENTS AND EXHIBITS.

 

(d)Exhibits.

 

The following exhibits relating to Items 2.02 and 7.01 of this Current Report on Form 8-K are intended to be furnished to, not filed with, the SEC pursuant to Regulation FD.

 

Exhibit No.   Description
     
99.1   Press Release, dated February 14, 2019.
99.2   Supplemental Financial Information.

 

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  BLUEROCK RESIDENTIAL GROWTH REIT, INC.
     
Dated: February 14, 2019 By: /s/Christopher J. Vohs
    Christopher J. Vohs
    Chief Financial Officer and Treasurer

 

 

 

 

Exhibit Index

 

Exhibit No.   Description
     
99.1   Press Release, dated February 14, 2019.
99.2   Supplemental Financial Information.

 

 

 

(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

 

Exhibit 99.1

 

 

For Immediate Release

 

Bluerock Residential Growth REIT Announces Fourth Quarter 2018 Results

 

Total Revenues Grew 37% YoY to $50.0 Million -

Same Store Revenue Growth of 5.5% YoY -

 

New York, NY (February 14, 2019) – Bluerock Residential Growth REIT, Inc. (NYSE American: BRG) (“the Company”), an owner of highly amenitized multifamily apartment communities, announced today its financial results for the quarter ended December 31, 2018.

 

Fourth Quarter Highlights

 

Total revenues grew 37% to $50.0 million for the quarter from $36.6 million in the prior year period.

 

Net loss attributable to common stockholders for the fourth quarter of 2018 was ($0.55) per share, as compared to ($1.87) per share in the prior year period.

 

Property Net Operating Income (“NOI”) grew 32% to $26.8 million, from $20.2 million in the prior year period.

 

Same store revenue and NOI increased 5.5% and 7.6% respectively, as compared to the prior year period.

 

Core funds from operations attributable to common shares and units (“CFFO”) increased 47% to $6.3 million, from $4.3 million in the prior year period. CFFO per share is $0.20 for the fourth quarter as compared to $0.14 in the prior year period. Dividend payout on a CFFO basis improved to 81% during the fourth quarter.

 

Adjusted funds from operations attributable to common shares and units (“AFFO”) grew 48% to $5.6 million, from $3.8 million in the prior year period. AFFO per share is $0.18 for the quarter as compared to $0.13 in fourth quarter 2017.

 

Consolidated real estate investments, at cost, increased approximately $349.9 million to $1.8 billion, from December 31, 2017.

 

The Company invested approximately $39.7 million for an 85% interest in a multifamily community totaling 512 units with a total purchase price of $143.4 million.

 

The Company completed 339 value-add unit upgrades during the quarter.

 

Full Year 2018 Highlights

 

Total revenues grew 49% to $184.7 million for the year from $123.6 million in the prior year.

 

Net loss attributable to common stockholders for 2018 was ($1.82) per share, as compared to ($1.79) per share in the prior year.

 

Property NOI grew 40% to $94.5 million, from $67.3 million in the prior year.

 

   

 

 

Same store revenue and NOI increased 4.5% and 4.9% respectively, as compared to the prior year.

 

CFFO increased 49% to $24.8 million, from $16.7 million in the prior year. CFFO per share increased 29% to $0.80 for the year from $0.62 in the prior year.

 

AFFO grew 46% to $22.2 million, from $15.2 million in the prior year. AFFO per share grew 29% to $0.72 from $0.56 in the prior year.

 

For the full year, the Company made investments in eight properties with 2,309 total units for a total purchase price of $366.5 million.

 

The Company completed 1,186 value-add unit upgrades during the year.

 

“We are pleased to announce another strong quarter of operating results. Property NOI is up over 32% and same store NOI is up 7.6% over the prior year. These results demonstrate the ongoing successful execution of our strategic initiatives. We continue to realize attractive returns on our value-add unit renovation investments along with accretively growing our portfolio with well-located, high quality properties,” said Ramin Kamfar, Company Chairman and CEO. “We again covered our dividend and are pleased with our industry-leading performance. With a robust pipeline of opportunities, we remain committed to our investment strategy and are optimistic about our outlook.”

 

Financial Results

 

Net loss attributable to common stockholders for the fourth quarter of 2018 was $12.8 million, compared to $46.2 million in the prior year period. Net loss attributable to common stockholders included non-cash expenses of $17.7 million or $0.75 per share in the fourth quarter of 2018 compared to $49.8 million or $2.02 per share for the prior year period.

 

CFFO for the fourth quarter of 2018 was $6.3 million, or $0.20 per diluted share, compared to $4.3 million, or $0.14 per diluted share in the prior year period. CFFO adds back non-cash, non-operating expenses such as accretion on the Company’s Series B preferred stock. CFFO was primarily driven by growth in property NOI of $6.6 million and interest income of $3.5 million arising from significant investment activity. This was primarily offset by a year-over-year increase in interest expense of $4.4 million, general and administrative expenses of $1.5 million, and preferred stock dividends of $1.9 million.

 

AFFO for the fourth quarter of 2018 was $5.6 million, or $0.18 per diluted share, compared to $3.8 million, or $0.13 per diluted share in the prior year period.

 

Total Portfolio Performance

 

$ In thousands, except average rental rates  4Q18   4Q17   Variance  FY18   FY17   Variance
Total Revenues (1)  $50,001   $36,574    36.7 %  $184,716   $123,576    49.5 %
Property Operating Expenses  $17,493   $14,142    23.7 %  $67,997   $48,346    40.6 %
NOI  $26,795   $20,243    32.4 %  $94,464   $67,300    40.4 %
Operating Margin   60.5%   58.9%   160  bps   58.1%   58.2%   (10 )bps
Occupancy Percentage   94.5%   94.1%   40  bps   94.1%   94.3%   (20 )bps
Average Rental Rate  $1,280   $1,222    4.7 %  $1,251   $1,220    2.5 %

 

(1) Including interest income from related parties

 

   

 

 

For the fourth quarter of 2018, property revenues increased by 36.7% compared to the same prior year period primarily attributable to the increased size of the portfolio. Total portfolio NOI was $26.8 million, an increase of $6.6 million, or 32.4%, compared to the same period in the prior year. Property operating expenses were up primarily due to the increased size of the portfolio.

 

Property NOI margins expanded by 160 basis points to 60.5% of revenue for the quarter, compared to 58.9% of revenue in the prior year quarter.

 

Same Store Portfolio Performance

 

$ In thousands, except average rental rates  4Q18   4Q17   Variance  FY18   FY17   Variance
Revenues  $31,984   $30,313    5.5 %  $84,504   $80,828    4.5 %
Property Operating Expenses  $12,871   $12,558    2.5 %  $34,967   $33,585    4.1 %
NOI  $19,113   $17,755    7.6 %  $49,537   $47,243    4.9 %
Operating Margin   59.8%   58.6%   120  bps   58.6%   58.4%   20  bps
Occupancy Percentage   94.6%   93.8%   80  bps   94.1%   94.4%   (30 )bps
Average Rental Rate  $1,285   $1,226    4.8 %  $1,300   $1,244    4.5 %

 

The Company’s same store portfolio for the quarter ended December 31, 2018 included 24 properties. For the fourth quarter of 2018, same store NOI was $19.1 million, an increase of $1.3 million, or 7.6%, compared to the same period in the prior year. Same store property revenues increased by 5.5% compared to the same prior year period, primarily attributable to a 4.8% increase in average rental rates, as well as average occupancy increasing 80 basis points to 94.6%. Same store expenses increased $0.3 million, primarily due to $0.15 million related to payroll, $0.11 million in maintenance, and $0.09 million of increased real estate taxes.

 

Renovation Activity

 

The Company completed 1,186 value-add unit upgrades during the year, including 339 units during the fourth quarter.

 

Since inception within the existing portfolio, the Company has completed 1,666 value-add unit upgrades at an average cost of $4,824 per unit and achieved an average monthly rental rate increase of $104 per unit, equating to a 25.9% ROI on all unit upgrades leased as of December 31, 2018. The Company has identified approximately 4,800 remaining units within the existing portfolio for value-add upgrades with similar projected economics to the completed renovations. The Company expects to complete between 900 and 1,200 unit renovations in 2019.

 

Acquisition Activity

 

On November 15, 2018, the Company acquired an 85% interest in a 512-unit apartment community located in Lakewood, Colorado, known as Ashford Belmar. The total purchase price was approximately $143.4 million, funded in part by a $100.7 million mortgage loan secured by the Ashford Belmar property.

 

The Company also entered into three development joint ventures with unrelated third parties in the fourth quarter. The development joint ventures are for apartment communities with a total of 631 units in Leander, Texas, Austin, Texas, and Concord, North Carolina. The Company contributed approximately $9.5 million out of total preferred commitments of $40.0 million.

 

   

 

 

Balance Sheet

 

During the fourth quarter, the Company raised gross proceeds of approximately $43.7 million through the issuance of 43,656 shares of Series B preferred stock with associated warrants at $1,000 per unit. For the full year 2018, the Company raised gross proceeds of approximately $123.6 million through the issuance of 123,592 shares of Series B preferred stock.

 

As of December 31, 2018, the Company had $24.8 million of unrestricted cash on its balance sheet, approximately $48.3 million available among its revolving and term credit facilities, and $1.3 billion of debt outstanding.

 

Dividend

 

The Board of Directors authorized, and the Company declared, a quarterly dividend for the fourth quarter of 2018 equal to a quarterly rate of $0.1625 per share on its Class A common stock, payable to the stockholders of record as of December 24, 2018, which was paid in cash on January 4, 2019. A portion of each dividend may constitute a return of capital for tax purposes.

 

On October 12, 2018, the Board of Directors authorized, and the Company declared, a monthly dividend of $5.00 per share of Series B preferred stock, payable to the stockholders of record as of October 25, 2018, November 23, 2018, and December 24, 2018 which were paid in cash on November 5, 2018, December 5, 2018, and January 4, 2019, respectively.

 

2019 Guidance

 

Based on the Company’s current outlook and market conditions, the Company anticipates 2019 CFFO in the range of $0.80 to $0.84 per share. For additional guidance details underlying earnings guidance, please see page 31 of Company’s Fourth Quarter 2018 Earnings Supplement available under Investor Relations on the Company’s website (www.bluerockresidential.com).

 

Conference Call

 

All interested parties can listen to the live conference call at 11:00 AM ET on Thursday, February 14, 2019 by dialing +1 (866) 843-0890 within the U.S., or +1 (412) 317-6597, and requesting the "Bluerock Residential Conference."

 

For those who are not available to listen to the live call, the conference call will be available for replay on the Company’s website two hours after the call concludes, and will remain available until March 14, 2019 at http://services.choruscall.com/links/brg190214.html, as well as by dialing +1 (877) 344-7529 in the U.S., or +1 (412) 317-0088 internationally, and requesting conference number 10127798.

 

The full text of this Earnings Release and additional Supplemental Information is available in the Investor Relations section on the Company’s website at http://www.bluerockresidential.com.

 

About Bluerock Residential Growth REIT, Inc.

 

Bluerock Residential Growth REIT, Inc. (NYSE American: BRG) is a real estate investment trust that focuses on developing and acquiring a diversified portfolio of institutional-quality highly amenitized live/work/play apartment communities in demographically attractive knowledge economy growth markets to appeal to the renter by choice. The Company’s objective is to generate value through off-market/relationship-based transactions and, at the asset level, through value add improvements to properties and operations. The Company is included in the Russell 2000 and Russell 3000 Indexes. BRG has elected to be taxed as a real estate investment trust (REIT) for U.S. federal income tax purposes.

 

   

 

 

For more information, please visit the Company’s website at www.bluerockresidential.com.

 

Forward Looking Statements

 

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements are based upon the Company’s present expectations, but these statements are not guaranteed to occur. Furthermore, the Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. Investors should not place undue reliance upon forward-looking statements. For further discussion of the factors that could affect outcomes, please refer to the risk factors set forth in Item 1A of the Company’s Annual Report on Form 10-K filed by the Company with the U.S. Securities and Exchange Commission (“SEC”) on March 13, 2018, and subsequent filings by the Company with the SEC. We claim the safe harbor protection for forward looking statements contained in the Private Securities Litigation Reform Act of 1995.

 

   

 

 

Portfolio Summary

 

The following is a summary of our operating real estate and mezzanine/preferred investments as of December 31, 2018:

 

Consolidated Operating Properties  Location 

Number

of Units

  

Year Built/

Renovated (1)

  

Ownership

Interest

  

Average

Rent (2)

  

% Occupied

(3)

 
ARIUM at Palmer Ranch  Sarasota, FL   320    2016    100%  $1,301    97%
ARIUM Glenridge  Atlanta, GA   480    1990    90%   1,195    93%
ARIUM Grandewood  Orlando, FL   306    2005    100%   1,384    95%
ARIUM Gulfshore  Naples, FL   368    2016    100%   1,261    98%
ARIUM Hunter’s Creek  Orlando, FL   532    1999    100%   1,387    95%
ARIUM Metrowest  Orlando, FL   510    2001    100%   1,368    94%
ARIUM Palms  Orlando, FL   252    2008    100%   1,335    92%
ARIUM Pine Lakes  Port St. Lucie, FL   320    2003    85%   1,267    95%
ARIUM Westside  Atlanta, GA   336    2008    90%   1,537    99%
Ashford Belmar  Lakewood, CO   512    1988/1993   85%   1,612    92%
Ashton Reserve  Charlotte, NC   473    2015    100%   1,116    93%
Citrus Tower  Orlando, FL   336    2006    97%   1,279    93%
Enders Place at Baldwin Park  Orlando, FL   220    2003    92%   1,762    97%
James on South First  Austin, TX   250    2016    90%   1,277    94%
Marquis at Crown Ridge  San Antonio, TX   352    2009    90%   1,006    93%
Marquis at Stone Oak  San Antonio, TX   335    2007    90%   1,425    94%
Marquis at The Cascades  Tyler, TX   582    2009    90%   1,201    96%
Marquis at TPC  San Antonio, TX   139    2008    90%   1,499    94%
Outlook at Greystone  Birmingham, AL   300    2007    100%   958    91%
Park & Kingston  Charlotte, NC   168    2015    100%   1,243    98%
Plantation Park  Lake Jackson, TX   238    2016    80%   1,408    93%
Preston View  Morrisville, NC   382    2000    100%   1,093    95%
Roswell City Walk  Roswell, GA   320    2015    98%   1,509    95%
Sands Parc  Daytona Beach, FL   264    2017    100%   1,323    97%
Sorrel  Frisco, TX   352    2015    95%   1,279    87%
Sovereign  Fort Worth, TX   322    2015    95%   1,347    95%
The Brodie  Austin, TX   324    2001    93%   1,271    95%
The Links at Plum Creek  Castle Rock, CO   264    2000    88%   1,428    94%
The Mills  Greenville, SC   304    2013    100%   1,019    96%
The Preserve at Henderson Beach  Destin, FL   340    2009    100%   1,350    94%
Veranda at Centerfield  Houston, TX   400    1999    93%   926    94%
Villages of Cypress Creek  Houston, TX   384    2001    80%   1,107    93%
Wesley Village  Charlotte, NC   301    2010    100%   1,326    93%
Consolidated Operating Properties Subtotal/Average      11,286             $1,280    94%

 

Mezzanine/Preferred Investments  Location 

Planned

Number

of Units

            

Pro Forma

Average Rent

(4)

      
Alexan CityCentre  Houston, TX   340             $1,566(2)     
Alexan Southside Place  Houston, TX   270              2,012      
Arlo, formerly West Morehead  Charlotte, NC   286              1,507      
Cade Boca Raton, formerly APOK Townhomes  Boca Raton, FL   90              2,549      
Domain at The One Forty, formerly Domain  Garland, TX   299              1,469      
Flagler Village  Fort Lauderdale, FL   385              2,352      
Helios  Atlanta, GA   282              1,486      
Leigh House, formerly Lake Boone Trail  Raleigh, NC   245              1,271      
North Creek Apartments  Leander, TX   259              1,358      
Novel Perimeter, formerly Crescent Perimeter  Atlanta, GA   320              1,749      
Riverside Apartments  Austin, TX   222              1,408      
Vickers Historic Roswell, formerly Vickers Village  Roswell, GA   79              3,176      
Wayforth at Concord  Concord, NC   150              1,707      
Whetstone Apartments  Durham, NC   204              1,284(2)     
Mezzanine and Preferred Investments Subtotal/Average   3,431             $1,692      
                             
Portfolio Properties Total/Average   14,717             $1,377      

 

(1) Represents date of last significant renovation or year built if there were no renovations.

(2) Represents the average effective monthly rent per occupied unit for the three months ended December 31, 2018.

(3) Percent occupied is calculated as (i) the number of units occupied as of December 31, 2018, divided by (ii) total number of units, expressed as a percentage.

(4) Alexan CityCentre, Alexan Southside Place, Helios, Leigh House, North Creek Apartments, Riverside Apartments, Wayforth at Concord, and Whetstone Apartments are preferred equity investments. Leigh House has the option to convert to indirect common interest in the property once the property reaches 70% occupancy. North Creek Apartments, Riverside Apartments, and Wayforth at Concord have the option to purchase the property at stabilization. Arlo, Cade Boca Raton, Domain at The One Forty, Flagler Village, Novel Perimeter, and Vickers Historic Roswell are mezzanine loan investments. Additionally, Arlo, Cade Boca Raton, Domain at The One Forty, and Vickers Historic Roswell have an option to purchase indirect property interest upon maturity.

   

 

 

Consolidated Statement of Operations

For the Three and Twelve Months Ended December 31, 2018 and 2017

(Unaudited and dollars in thousands except for share and per share data)

 

   Three Months Ended   Year Ended 
   December 31,   December 31, 
   2018   2017   2018   2017 
Revenues                    
Net rental income  $39,534   $30,568   $144,325   $102,806 
Other property revenues   4,754    3,817    18,136    12,840 
Interest income from related parties   5,723    2,189    22,255    7,930 
Total revenues   50,011    36,574    184,716    123,576 
Expenses                    
Property operating   17,493    14,142    67,997    48,346 
Property management fees   1,184    934    4,391    3,185 
General and administrative   5,623    3,292    19,553    7,541 
Management fees to related parties       993        12,726 
Acquisition and pursuit costs   37    19    116    3,233 
Management internalization       41,907        43,554 
Weather-related losses, net   107    336    288    1,014 
Depreciation and amortization   16,839    15,530    62,683    48,624 
Total expenses   41,283    77,153    155,028    168,223 
Operating income (loss)   8,728    (40,579)   29,688    (44,647)
Other income (expense)                    
Other income               17 
Preferred returns and equity in income of unconsolidated real estate joint ventures   2,435    2,472    10,312    10,336 
Gain on sale of real estate investments       123        50,163 
Gain on sale of real estate joint venture interests       24        10,262 
Loss on extinguishment of debt and debt modification costs           (2,277)   (1,639)
Interest expense, net   (16,935)   (9,181)   (52,998)   (31,520)
Total other (expense) income   (14,500)   (6,562)   (44,963)   37,619 
Net loss   (5,772)   (47,141)   (15,275)   (7,028)
Preferred stock dividends   (9,642)   (7,753)   (35,637)   (27,023)
Preferred stock accretion   (1,829)   (1,123)   (5,970)   (3,011)
Net (loss) income attributable to noncontrolling interests                    
Operating partnership units   (3,998)   (9,376)   (12,839)   (9,372)
Partially owned properties   (460)   (400)   (1,284)   17,989 
Net (loss) income attributable to noncontrolling interests   (4,458)   (9,776)   (14,123)   8,617 
Net loss attributable to common stockholders  $(12,785)  $(46,241)  $(42,759)  $(45,679)
                     
Net loss per common share – Basic  $(0.55)  $(1.87)  $(1.82)  $(1.79)
                     
Net loss per common share – Diluted  $(0.55)  $(1.87)  $(1.82)  $(1.79)
                     
Weighted average basic common shares outstanding   23,702,897    24,701,535    23,845,800    25,561,673 
Weighted average diluted common shares outstanding   23,702,897    24,701,535    23,845,800    25,561,673 

 

   

 

 

Consolidated Balance Sheets

Fourth Quarter 2018

(Unaudited and dollars in thousands except for share and per share amounts)

 

   December 31,
2018
   December 31,
2017
 
ASSETS          
Net Real Estate Investments          
Land  $200,385   $169,135 
Buildings and improvements   1,546,244    1,244,193 
Furniture, fixtures and equipment   55,050    38,446 
Construction in progress   989    985 
Total Gross Real Estate Investments   1,802,668    1,452,759 
Accumulated depreciation   (108,911)   (55,177)
Total Net Real Estate Investments   1,693,757    1,397,582 
Cash and cash equivalents   24,775    35,015 
Restricted cash   27,469    29,575 
Notes and accrued interest receivable from related parties   164,084    140,903 
Due from affiliates   2,854    2,003 
Accounts receivable, prepaids and other assets   14,395    9,689 
Preferred equity investments and investments in unconsolidated real estate joint ventures   89,033    71,145 
In-place lease intangible assets, net   1,768    4,635 
TOTAL ASSETS  $2,018,135   $1,690,547 
           
LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY          
Mortgages payable  $1,206,136   $939,494 
Revolving credit facilities   82,209    67,670 
Accounts payable   1,486    1,652 
Other accrued liabilities   31,690    22,952 
Due to affiliates   726    1,575 
Distributions payable   12,073    14,287 
Total Liabilities   1,334,320    1,047,630 
8.250% Series A Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share, 10,875,000 shares authorized; and 5,721,460 issued and outstanding as of December 31, 2018 and 2017   139,545    138,801 
6.000% Series B Redeemable Preferred Stock, liquidation preference $1,000 per share, 1,225,000 and 725,000 shares authorized; 306,009 and 184,130 issued and outstanding as of December 31, 2018 and 2017, respectively   272,842    161,742 
7.625% Series C Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share, 4,000,000 shares authorized; and 2,323,750 issued and outstanding as of December 31, 2018 and 2017   56,485    56,196 
Equity          
Stockholders’ Equity          
Preferred stock, $0.01 par value, 229,900,000 and 230,400,000 shares authorized; none issued and outstanding as of December 31, 2018 and 2017, respectively        
7.125% Series D Cumulative Preferred Stock, liquidation preference $25.00 per share, 4,000,000 shares authorized; 2,850,602 issued and outstanding at December 31, 2018 and 2017   68,705    68,705 
Common stock - Class A, $0.01 par value, 747,509,582 shares authorized; 23,322,211 and 24,218,359 shares issued and outstanding as of December 31, 2018 and 2017, respectively   233    242 
Common stock - Class C, $0.01 par value, 76,603 shares authorized; 76,603 shares issued and outstanding as of December 31, 2018 and 2017   1    1 
Additional paid-in-capital   307,938    318,170 
Distributions in excess of cumulative earnings   (218,531)   (164,286)
Total Stockholders’ Equity   158,346    222,832 
Noncontrolling Interests          
Operating partnership units   27,613    42,999 
Partially owned properties   28,984    20,347 
Total Noncontrolling Interests   56,597    63,346 
Total Equity   214,943    286,178 
TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY  $2,018,135   $1,690,547 

 

   

 

 

Non-GAAP Financial Measures

 

The foregoing supplemental financial data includes certain non-GAAP financial measures that we believe are helpful in understanding our business and performance, as further described below. Our definition and calculation of these non-GAAP financial measures may differ from those of other REITs, and may, therefore, not be comparable.

 

Funds from Operations, Core Funds from Operations, and Adjusted Funds from Operations

 

We believe that funds from operations (“FFO”), as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), core funds from operations (“CFFO”), and adjusted funds from operations (“AFFO”) are important non-GAAP supplemental measures of operating performance for a REIT.

 

FFO attributable to common shares and units is a non-GAAP financial measure that is widely recognized as a measure of REIT operating performance. We consider FFO to be an appropriate supplemental measure of our operating performance as it is based on a net income analysis of property portfolio performance that excludes non-cash items such as depreciation. The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, which implies that the value of real estate assets diminishes predictably over time. Since real estate values historically rise and fall with market conditions, presentations of operating results for a REIT, using historical accounting for depreciation, could be less informative. We define FFO, consistent with the NAREIT definition, as net income, computed in accordance with GAAP, excluding gains (or losses) from sales of property, plus depreciation and amortization of real estate assets, plus impairment write-downs of depreciable real estate, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect FFO on the same basis.

 

CFFO makes certain adjustments to FFO, removing the effect of items that do not reflect ongoing property operations such as stock compensation expense, acquisition expenses, unrealized gains and losses on derivatives, losses on extinguishment of debt and debt modification costs (includes prepayment penalties incurred and the write-off of unamortized deferred financing costs and fair market value adjustments of assumed debt), non-cash interest, one-time weather-related costs, and preferred stock accretion. We believe that CFFO is helpful to investors as a supplemental performance measure because it excludes the effects of certain items which can create significant earnings volatility, but which do not directly relate to our core recurring property operations. As a result, we believe that CFFO can help facilitate comparisons of operating performance between periods and provides a more meaningful predictor of future earnings potential.

 

AFFO makes certain adjustments to CFFO in order to arrive at a more refined measure of the operating performance of our portfolio. There is no industry standard definition of AFFO and practice is divergent across the industry. AFFO adjusts CFFO for items that impact our ongoing operations, such as subtracting recurring capital expenditures (and while we were externally managed, when calculating the quarterly incentive fee paid to our former Manager only, we further adjusted FFO to include any realized gains or losses on our real estate investments).  We believe that AFFO is helpful to investors as a meaningful supplemental indicator of our operational performance.

 

Our calculation of CFFO and AFFO differs from the methodology used for calculating CFFO and AFFO by certain other REITs and, accordingly, our CFFO and AFFO may not be comparable to CFFO and AFFO reported by other REITs. Our management utilizes FFO, CFFO, and AFFO as measures of our operating performance after adjustment for certain non-cash items, such as depreciation and amortization expenses, and acquisition and pursuit costs that are required by GAAP to be expensed but may not necessarily be indicative of current operating performance and that may not accurately compare our operating performance between periods. Furthermore, although FFO, CFFO, AFFO and other supplemental performance measures are defined in various ways throughout the REIT industry, we also believe that FFO, CFFO, and AFFO may provide us and our stockholders with an additional useful measure to compare our financial performance to certain other REITs. While we were externally managed, we also used AFFO for purposes of determining the quarterly incentive fee paid to our former Manager in prior periods.

 

   

 

 

Neither FFO, CFFO, nor AFFO is equivalent to net income, including net income attributable to common stockholders, or cash generated from operating activities determined in accordance with GAAP. Furthermore, FFO, CFFO, and AFFO do not represent amounts available for management's discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments or uncertainties. Neither FFO, CFFO, nor AFFO should be considered as an alternative to net income, including net income attributable to common stockholders, as an indicator of our operating performance or as an alternative to cash flow from operating activities as a measure of our liquidity.

 

We have acquired interests in five additional operating properties and three investments accounted for on the equity method of accounting subsequent to December 31, 2017. Therefore, the results presented in the table below are not directly comparable and should not be considered an indication of our future operating performance.

 

   

 

 

The table below reconciles our calculations of FFO, CFFO and AFFO to net loss, the most directly comparable GAAP financial measure, for the three and twelve months ended December 31, 2018 and 2017 (in thousands, except per share amounts):

 

   Three Months Ended   Year Ended 
   December 31,   December 31, 
   2018   2017   2018   2017 
Net loss attributable to common shares  $(12,785)  $(46,241)  $(42,759)  $(45,679)
Add back: Net loss attributable to operating partnership units   (3,998)   (9,376)   (12,839)   (9,372)
Net loss attributable to common shares and units   (16,783)   (55,617)   (55,598)   (55,051)
                     
Common stockholders and operating partnership units pro-rata share of:                    
Real estate depreciation and amortization (1)   15,785    14,520    59,103    44,741 
Gain on sale of real estate investments       (123)       (34,436)
Gain on sale of joint venture interests, net       (15)       (6,414)
FFO Attributable to Common Shares and Units   (998)   (41,235)   3,505    (51,160)
Common stockholders and operating partnership units pro-rata share of:                    
Acquisition and pursuit costs   37    19    116    3,091 
Non-cash interest expense   780    428    3,757    1,939 
Unrealized loss on derivatives   3,001        2,776     
Loss on extinguishment of debt and debt modification costs           2,226    1,551 
Weather-related losses, net   102    315    280    956 
Non-real estate depreciation and amortization (1)   85    6    301    6 
Non-recurring income               (16)
Non-cash preferred returns and equity in income of unconsolidated real estate joint ventures   (280)   (253)   (980)   (1,243)
Management internalization       41,907        43,554 
Non-cash equity compensation   1,768    1,972    6,807    15,022 
Preferred stock accretion   1,829    1,123    5,970    3,011 
CFFO Attributable to Common Shares and Units  $6,324   $4,282   $24,758   $16,711 
                     
Common stockholders and operating partnership units pro-rata share of:                    
Normally recurring capital expenditures   (735)   (520)   (2,569)   (1,541)
AFFO Attributable to Common Shares and Units  $5,589   $3,762   $22,189   $15,170 
                     
Per Share and Unit Information:                    
FFO Attributable to Common Shares and Units - diluted  $(0.03)  $(1.39)  $0.11   $(1.89)
                     
CFFO Attributable to Common Shares and Units - diluted  $0.20   $0.14   $0.80   $0.62 
                     
AFFO Attributable to Common Shares and Units - diluted  $0.18   $0.13   $0.72   $0.56 
                     
Weighted average common shares and units outstanding - diluted   31,113,092    29,710,465    30,995,249    27,032,354 

 

(1) The real estate depreciation and amortization amount includes our share of consolidated real estate-related depreciation and amortization of intangibles, less amounts attributable to noncontrolling interests – partially owned properties, and our similar estimated share of unconsolidated depreciation and amortization, which is included in earnings of our unconsolidated real estate joint venture investments. 

 

   

 

 

Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate ("EBITDAre")

 

NAREIT defines earnings before interest, taxes, depreciation and amortization for real estate ("EBITDAre") (September 2017 White Paper) as net income, computed in accordance with GAAP, before interest expense, income taxes, depreciation and amortization expense, and further adjusted for gains and losses from sales of depreciated operating properties, and impairment write-downs of depreciated operating properties.

 

We consider EBITDAre to be an appropriate supplemental measure of our performance because it eliminates depreciation, income taxes, interest and non-recurring items, which permits investors to view income from operations unobscured by non-cash items such as depreciation, amortization, the cost of debt or non-recurring items.

 

Adjusted EBITDAre represents EBITDAre further adjusted for non-comparable items and it is not intended to be a measure of free cash flow for our management’s discretionary use, as it does not consider certain cash requirements such as income tax payments, debt service requirements, capital expenditures and other fixed charges.

 

EBITDAre and Adjusted EBITDAre are not recognized measurements under GAAP. Because not all companies use identical calculations, our presentation of EBITDAre and Adjusted EBITDAre may not be comparable to similarly titled measures of other companies.

 

Below is a reconciliation of net loss attributable to common stockholders to EBITDAre (unaudited and dollars in thousands).

 

   Three Months Ended   Year Ended 
   December 31,   December 31, 
   2018   2017   2018   2017 
Net loss attributable to common stockholders  $(12,785)  $(46,241)  $(42,759)  $(45,679)
Net (loss) income attributable to noncontrolling interests   (4,458)   (9,776)   (14,123)   8,617 
Preferred stock dividends   9,642    7,753    35,637    27,023 
Preferred stock accretion   1,829    1,123    5,970    3,011 
Interest expense, net   16,935    9,181    52,998    31,520 
Depreciation and amortization   16,754    15,524    62,382    48,618 
Gain on sale of real estate investments   -    (123)   -    (50,163)
Gain on sale of joint venture interests, net   -    (24)   -    (10,262)
Loss on extinguishment of debt and debt modification costs   -    -    2,277    1,639 
EBITDAre  $27,917   $(22,583)  $102,382   $14,324 
Acquisition and pursuit costs   37    19    116    3,233 
Management internalization   -    41,907    -    43,554 
Non-real estate depreciation and amortization   85    6    301    6 
Weather-related losses, net   107    336    288    1,014 
Non-cash equity compensation   1,768    1,972    6,807    15,022 
Non-recurring income   -    -    -    (17)
Non-cash preferred returns and equity in income of unconsolidated real estate joint ventures   (280)   (253)   (980)   (1,243)
Adjusted EBITDAre  $29,634   $21,404   $108,914   $75,893 

 

   

 

 

Recurring Capital Expenditures

 

We define recurring capital expenditures as expenditures that are incurred at every property and exclude development, investment, revenue enhancing and non-recurring capital expenditures.

 

Non-Recurring Capital Expenditures

 

We define non-recurring capital expenditures as expenditures for significant projects that upgrade units or common areas and projects that are revenue enhancing.

 

Same Store Properties

 

Same store properties are conventional multifamily residential apartments which were owned and operational for the entire periods presented, including each comparative period.

 

Property Net Operating Income ("Property NOI")

 

We believe that net operating income, or NOI, is a useful measure of our operating performance. We define NOI as total property revenues less total property operating expenses, excluding depreciation and amortization and interest. Other REITs may use different methodologies for calculating NOI, and accordingly, our NOI may not be comparable to other REITs. We believe that this measure provides an operating perspective not immediately apparent from GAAP operating income or net income. We use NOI to evaluate our performance on a same store and non-same store basis; NOI measures the core operations of property performance by excluding corporate level expenses and other items not related to property operating performance and captures trends in rental housing and property operating expenses. However, NOI should only be used as a supplemental measure of our financial performance.

 

Certain amounts in prior periods, including related to tenant reimbursements for utility expenses amounting to zero and $3.0 million for the three and twelve months ended December 31, 2017, have been reclassified to other property revenues from property operating expenses, to conform to the current period.  In addition, property management fees have been reclassified from property operating expenses.

 

   

 

 

The following table reflects net loss attributable to common stockholders together with a reconciliation to NOI and to same store and non-same store contributions to consolidated NOI, as computed in accordance with GAAP for the periods presented (unaudited and amounts in thousands):

 

   Three Months Ended   Year Ended 
   December 31,   December 31, 
   2018   2017   2018   2017 
Net loss attributable to common shares  $(12,785)  $(46,241)  $(42,759)  $(45,679)
Add back: Net loss attributable to operating partnership units   (3,998)   (9,376)   (12,839)   (9,372)
Net loss attributable to common shares and units   (16,783)   (55,617)   (55,598)   (55,051)
Add common stockholders and operating partnership units pro-rata share of:                    
Depreciation and amortization   15,785    14,520    59,103    44,741 
Non-real estate depreciation and amortization   85    6    301    6 
Non-cash interest expense   780    428    3,757    1,939 
Unrealized loss on derivatives   3,001    -    2,776    - 
Property management fees   1,118    873    4,151    2,915 
Management fees to related parties   -    993    -    12,726 
Acquisition and pursuit costs   37    19    116    3,091 
Loss on extinguishment of debt and debt modification costs   -    -    2,226    1,551 
Corporate operating expenses   5,552    3,292    19,416    7,541 
Management internalization   -    41,907    -    43,554 
Weather-related losses, net   102    315    280    956 
Preferred dividends   9,642    7,753    35,637    27,023 
Preferred stock accretion   1,829    1,123    5,970    3,011 
Less common stockholders and operating partnership units pro-rata share of:                    
Other income   -    -    -    16 
Preferred returns and equity in income of unconsolidated real estate joint ventures   2,435    2,472    10,312    10,336 
Interest income from related parties   5,723    2,189    22,255    7,930 
Gain on sale of joint venture interests, net   -    15    -    6,414 
Gain on sale of real estate investments   -    123    -    34,436 
Pro-rata share of properties' income   12,990    10,813    45,568    34,871 
Add:                    
Noncontrolling interest pro-rata share of partially owned property income   774    707    2,629    3,112 
Total property income   13,764    11,520    48,197    37,983 
Add:                    
Interest expense   13,031    8,723    46,267    29,317 
Net operating income   26,795    20,243    94,464    67,300 
Less:                    
Non-same store net operating income   7,682    2,488    44,927    20,057 
Same store net operating income (1)  $19,113   $17,755   $49,537   $47,243 

 

(1) Same store portfolio for the three months ended December 31, 2018 consists of 24 properties, which represent 7,962 units. Same store portfolio for the year ended December 31, 2018 consists of 16 properties, which represent 5,151 units.

 

Contact

Investors:

(888) 558.1031
investor.relations@bluerockre.com

 

Media:

Josh Hoffman

(208) 475.2380

jhoffman@bluerockre.com

##

 

   

(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

 

Exhibit 99.2

 

 

 

 

 

Bluerock Residential Growth REIT, Inc.
Fourth Quarter 2018
Supplemental Financial Information
(Unaudited)

 

Table of Contents

 

Fourth Quarter Earnings Release 3
   
Financial and Operating Highlights 17
   
Share and Unit Information 18
   
EBITDAre and Interest Information 19
   
Financial Statistics 20
   
Recent Acquisitions and Investments 21
   
Investments in Unconsolidated Real Estate Joint Ventures and Notes and Accrued Interest Receivable from Related Parties 22
   
Portfolio Information 23
   
Renovation Table 24
   
Mezzanine/Preferred Investments 25
   
Condensed Consolidated Balance Sheets 26
   
Consolidated Statements of Operations 27
   
Reconciliation of Funds from Operations (FFO), Core Funds from Operations (CFFO), and Adjusted Funds from Operations (AFFO) 28
   
Mortgages Payable Summary Information 29
   
2019 Outlook 31
   
Definitions of Non-GAAP Financial Measures 32

 

This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements are based upon the Company’s present expectations, but these statements are not guaranteed to occur, including statements relating to the Company’s operating environment, operating trends, and outlook. Furthermore, the Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. Investors should not place undue reliance upon forward-looking statements. For further discussion of the factors that could affect outcomes, please refer to the “Risk Factors” set forth in Item 1A of the Company’s Annual Report on Form 10-K filed by the Company with the U.S. Securities and Exchange Commission (“SEC”) on March 13, 2018, and subsequent filings by the Company with the SEC, including our periodic reports. We claim the safe harbor protection for forward looking statements contained in the Private Securities Litigation Reform Act of 1995.

 

 2 

 

 

Bluerock Residential Growth REIT, Inc.
Fourth Quarter Earnings Release

  

 

For Immediate Release

 

Bluerock Residential Growth REIT Announces Fourth Quarter 2018 Results

 

Total Revenues Grew 37% YoY to $50.0 Million -

Same Store Revenue Growth of 5.5% YoY -

 

New York, NY (February 14, 2019) – Bluerock Residential Growth REIT, Inc. (NYSE American: BRG) (“the Company”), an owner of highly amenitized multifamily apartment communities, announced today its financial results for the quarter ended December 31, 2018.

 

Fourth Quarter Highlights

 

Total revenues grew 37% to $50.0 million for the quarter from $36.6 million in the prior year period.

 

Net loss attributable to common stockholders for the fourth quarter of 2018 was ($0.55) per share, as compared to ($1.87) per share in the prior year period.

 

Property Net Operating Income (“NOI”) grew 32% to $26.8 million, from $20.2 million in the prior year period.

 

Same store revenue and NOI increased 5.5% and 7.6% respectively, as compared to the prior year period.

 

Core funds from operations attributable to common shares and units (“CFFO”) increased 47% to $6.3 million, from $4.3 million in the prior year period. CFFO per share is $0.20 for the fourth quarter as compared to $0.14 in the prior year period. Dividend payout on a CFFO basis improved to 81% during the fourth quarter.

 

Adjusted funds from operations attributable to common shares and units (“AFFO”) grew 48% to $5.6 million, from $3.8 million in the prior year period. AFFO per share is $0.18 for the quarter as compared to $0.13 in fourth quarter 2017.

 

Consolidated real estate investments, at cost, increased approximately $349.9 million to $1.8 billion, from December 31, 2017.

 

The Company invested approximately $39.7 million for an 85% interest in a multifamily community totaling 512 units with a total purchase price of $143.4 million.

 

The Company completed 339 value-add unit upgrades during the quarter.

 

Full Year 2018 Highlights

 

Total revenues grew 49% to $184.7 million for the year from $123.6 million in the prior year.

 

Net loss attributable to common stockholders for 2018 was ($1.82) per share, as compared to ($1.79) per share in the prior year.

 

Property NOI grew 40% to $94.5 million, from $67.3 million in the prior year.

 

 3 

 

 

Bluerock Residential Growth REIT, Inc.
Fourth Quarter Earnings Release

 

Same store revenue and NOI increased 4.5% and 4.9% respectively, as compared to the prior year.

 

CFFO increased 49% to $24.8 million, from $16.7 million in the prior year. CFFO per share increased 29% to $0.80 for the year from $0.62 in the prior year.

 

AFFO grew 46% to $22.2 million, from $15.2 million in the prior year. AFFO per share grew 29% to $0.72 from $0.56 in the prior year.

 

For the full year, the Company made investments in eight properties with 2,309 total units for a total purchase price of $366.5 million.

 

The Company completed 1,186 value-add unit upgrades during the year.

 

“We are pleased to announce another strong quarter of operating results. Property NOI is up over 32% and same store NOI is up 7.6% over the prior year. These results demonstrate the ongoing successful execution of our strategic initiatives. We continue to realize attractive returns on our value-add unit renovation investments along with accretively growing our portfolio with well-located, high quality properties,” said Ramin Kamfar, Company Chairman and CEO. “We again covered our dividend and are pleased with our industry-leading performance. With a robust pipeline of opportunities, we remain committed to our investment strategy and are optimistic about our outlook.”

 

Financial Results

 

Net loss attributable to common stockholders for the fourth quarter of 2018 was $12.8 million, compared to $46.2 million in the prior year period. Net loss attributable to common stockholders included non-cash expenses of $17.7 million or $0.75 per share in the fourth quarter of 2018 compared to $49.8 million or $2.02 per share for the prior year period.

 

CFFO for the fourth quarter of 2018 was $6.3 million, or $0.20 per diluted share, compared to $4.3 million, or $0.14 per diluted share in the prior year period. CFFO adds back non-cash, non-operating expenses such as accretion on the Company’s Series B preferred stock. CFFO was primarily driven by growth in property NOI of $6.6 million and interest income of $3.5 million arising from significant investment activity. This was primarily offset by a year-over-year increase in interest expense of $4.4 million, general and administrative expenses of $1.5 million, and preferred stock dividends of $1.9 million.

 

AFFO for the fourth quarter of 2018 was $5.6 million, or $0.18 per diluted share, compared to $3.8 million, or $0.13 per diluted share in the prior year period.

 

Total Portfolio Performance

 

$ In thousands, except average rental rates  4Q18   4Q17   Variance  FY18   FY17   Variance
Total Revenues (1)  $50,001   $36,574    36.7 %  $184,716   $123,576    49.5 %
Property Operating Expenses  $17,493   $14,142    23.7 %  $67,997   $48,346    40.6 %
NOI  $26,795   $20,243    32.4 %  $94,464   $67,300    40.4 %
Operating Margin   60.5%   58.9%   160  bps   58.1%   58.2%   (10 )bps
Occupancy Percentage   94.5%   94.1%   40  bps   94.1%   94.3%   (20 )bps
Average Rental Rate  $1,280   $1,222    4.7 %  $1,251   $1,220    2.5 %

 

(1) Including interest income from related parties

 

 4 

 

 

Bluerock Residential Growth REIT, Inc.
Fourth Quarter Earnings Release

 

For the fourth quarter of 2018, property revenues increased by 36.7% compared to the same prior year period primarily attributable to the increased size of the portfolio. Total portfolio NOI was $26.8 million, an increase of $6.6 million, or 32.4%, compared to the same period in the prior year. Property operating expenses were up primarily due to the increased size of the portfolio.

 

Property NOI margins expanded by 160 basis points to 60.5% of revenue for the quarter, compared to 58.9% of revenue in the prior year quarter.

 

Same Store Portfolio Performance

 

$ In thousands, except average rental rates  4Q18   4Q17   Variance  FY18   FY17   Variance
Revenues  $31,984   $30,313    5.5 %  $84,504   $80,828    4.5 %
Property Operating Expenses  $12,871   $12,558    2.5 %  $34,967   $33,585    4.1 %
NOI  $19,113   $17,755    7.6 %  $49,537   $47,243    4.9 %
Operating Margin   59.8%   58.6%   120  bps   58.6%   58.4%   20  bps
Occupancy Percentage   94.6%   93.8%   80  bps   94.1%   94.4%   (30 )bps
Average Rental Rate  $1,285   $1,226    4.8 %  $1,300   $1,244    4.5 %

 

The Company’s same store portfolio for the quarter ended December 31, 2018 included 24 properties. For the fourth quarter of 2018, same store NOI was $19.1 million, an increase of $1.3 million, or 7.6%, compared to the same period in the prior year. Same store property revenues increased by 5.5% compared to the same prior year period, primarily attributable to a 4.8% increase in average rental rates, as well as average occupancy increasing 80 basis points to 94.6%. Same store expenses increased $0.3 million, primarily due to $0.15 million related to payroll, $0.11 million in maintenance, and $0.09 million of increased real estate taxes.

 

Renovation Activity

 

The Company completed 1,186 value-add unit upgrades during the year, including 339 units during the fourth quarter.

 

Since inception within the existing portfolio, the Company has completed 1,666 value-add unit upgrades at an average cost of $4,824 per unit and achieved an average monthly rental rate increase of $104 per unit, equating to a 25.9% ROI on all unit upgrades leased as of December 31, 2018. The Company has identified approximately 4,800 remaining units within the existing portfolio for value-add upgrades with similar projected economics to the completed renovations. The Company expects to complete between 900 and 1,200 unit renovations in 2019.

 

Acquisition Activity

 

On November 15, 2018, the Company acquired an 85% interest in a 512-unit apartment community located in Lakewood, Colorado, known as Ashford Belmar. The total purchase price was approximately $143.4 million, funded in part by a $100.7 million mortgage loan secured by the Ashford Belmar property.

 

The Company also entered into three development joint ventures with unrelated third parties in the fourth quarter. The development joint ventures are for apartment communities with a total of 631 units in Leander, Texas, Austin, Texas, and Concord, North Carolina. The Company contributed approximately $9.5 million out of total preferred commitments of $40.0 million.

 

 5 

 

 

Bluerock Residential Growth REIT, Inc.
Fourth Quarter Earnings Release

 

Balance Sheet

 

During the fourth quarter, the Company raised gross proceeds of approximately $43.7 million through the issuance of 43,656 shares of Series B preferred stock with associated warrants at $1,000 per unit. For the full year 2018, the Company raised gross proceeds of approximately $123.6 million through the issuance of 123,592 shares of Series B preferred stock.

 

As of December 31, 2018, the Company had $24.8 million of unrestricted cash on its balance sheet, approximately $48.3 million available among its revolving and term credit facilities, and $1.3 billion of debt outstanding.

 

Dividend

 

The Board of Directors authorized, and the Company declared, a quarterly dividend for the fourth quarter of 2018 equal to a quarterly rate of $0.1625 per share on its Class A common stock, payable to the stockholders of record as of December 24, 2018, which was paid in cash on January 4, 2019. A portion of each dividend may constitute a return of capital for tax purposes.

 

On October 12, 2018, the Board of Directors authorized, and the Company declared, a monthly dividend of $5.00 per share of Series B preferred stock, payable to the stockholders of record as of October 25, 2018, November 23, 2018, and December 24, 2018 which were paid in cash on November 5, 2018, December 5, 2018, and January 4, 2019, respectively.

 

2019 Guidance

 

Based on the Company’s current outlook and market conditions, the Company anticipates 2019 CFFO in the range of $0.80 to $0.84 per share. For additional guidance details underlying earnings guidance, please see page 31 of Company’s Fourth Quarter 2018 Earnings Supplement available under Investor Relations on the Company’s website (www.bluerockresidential.com).

 

Conference Call

 

All interested parties can listen to the live conference call at 11:00 AM ET on Thursday, February 14, 2019 by dialing +1 (866) 843-0890 within the U.S., or +1 (412) 317-6597, and requesting the "Bluerock Residential Conference."

 

For those who are not available to listen to the live call, the conference call will be available for replay on the Company’s website two hours after the call concludes, and will remain available until March 14, 2019 at http://services.choruscall.com/links/brg190214.html, as well as by dialing +1 (877) 344-7529 in the U.S., or +1 (412) 317-0088 internationally, and requesting conference number 10127798.

 

The full text of this Earnings Release and additional Supplemental Information is available in the Investor Relations section on the Company’s website at http://www.bluerockresidential.com.

 

About Bluerock Residential Growth REIT, Inc.

 

Bluerock Residential Growth REIT, Inc. (NYSE American: BRG) is a real estate investment trust that focuses on developing and acquiring a diversified portfolio of institutional-quality highly amenitized live/work/play apartment communities in demographically attractive knowledge economy growth markets to appeal to the renter by choice. The Company’s objective is to generate value through off-market/relationship-based transactions and, at the asset level, through value add improvements to properties and operations. The Company is included in the Russell 2000 and Russell 3000 Indexes. BRG has elected to be taxed as a real estate investment trust (REIT) for U.S. federal income tax purposes.

 

 6 

 

 

Bluerock Residential Growth REIT, Inc.
Fourth Quarter Earnings Release

 

For more information, please visit the Company’s website at www.bluerockresidential.com.

 

Forward Looking Statements

 

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements are based upon the Company’s present expectations, but these statements are not guaranteed to occur. Furthermore, the Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. Investors should not place undue reliance upon forward-looking statements. For further discussion of the factors that could affect outcomes, please refer to the risk factors set forth in Item 1A of the Company’s Annual Report on Form 10-K filed by the Company with the U.S. Securities and Exchange Commission (“SEC”) on March 13, 2018, and subsequent filings by the Company with the SEC. We claim the safe harbor protection for forward looking statements contained in the Private Securities Litigation Reform Act of 1995.

 

 7 

 

Bluerock Residential Growth REIT, Inc.
Fourth Quarter Earnings Release

 

Portfolio Summary

 

The following is a summary of our operating real estate and mezzanine/preferred investments as of December 31, 2018:

 

Consolidated Operating Properties  Location 

Number

of Units

  

Year Built/

Renovated (1)

  

Ownership

Interest

  

Average

Rent (2)

  

% Occupied

(3)

 
ARIUM at Palmer Ranch  Sarasota, FL   320    2016    100%  $1,301    97%
ARIUM Glenridge  Atlanta, GA   480    1990    90%   1,195    93%
ARIUM Grandewood  Orlando, FL   306    2005    100%   1,384    95%
ARIUM Gulfshore  Naples, FL   368    2016    100%   1,261    98%
ARIUM Hunter’s Creek  Orlando, FL   532    1999    100%   1,387    95%
ARIUM Metrowest  Orlando, FL   510    2001    100%   1,368    94%
ARIUM Palms  Orlando, FL   252    2008    100%   1,335    92%
ARIUM Pine Lakes  Port St. Lucie, FL   320    2003    85%   1,267    95%
ARIUM Westside  Atlanta, GA   336    2008    90%   1,537    99%
Ashford Belmar  Lakewood, CO   512    1988/1993   85%   1,612    92%
Ashton Reserve  Charlotte, NC   473    2015    100%   1,116    93%
Citrus Tower  Orlando, FL   336    2006    97%   1,279    93%
Enders Place at Baldwin Park  Orlando, FL   220    2003    92%   1,762    97%
James on South First  Austin, TX   250    2016    90%   1,277    94%
Marquis at Crown Ridge  San Antonio, TX   352    2009    90%   1,006    93%
Marquis at Stone Oak  San Antonio, TX   335    2007    90%   1,425    94%
Marquis at The Cascades  Tyler, TX   582    2009    90%   1,201    96%
Marquis at TPC  San Antonio, TX   139    2008    90%   1,499    94%
Outlook at Greystone  Birmingham, AL   300    2007    100%   958    91%
Park & Kingston  Charlotte, NC   168    2015    100%   1,243    98%
Plantation Park  Lake Jackson, TX   238    2016    80%   1,408    93%
Preston View  Morrisville, NC   382    2000    100%   1,093    95%
Roswell City Walk  Roswell, GA   320    2015    98%   1,509    95%
Sands Parc  Daytona Beach, FL   264    2017    100%   1,323    97%
Sorrel  Frisco, TX   352    2015    95%   1,279    87%
Sovereign  Fort Worth, TX   322    2015    95%   1,347    95%
The Brodie  Austin, TX   324    2001    93%   1,271    95%
The Links at Plum Creek  Castle Rock, CO   264    2000    88%   1,428    94%
The Mills  Greenville, SC   304    2013    100%   1,019    96%
The Preserve at Henderson Beach  Destin, FL   340    2009    100%   1,350    94%
Veranda at Centerfield  Houston, TX   400    1999    93%   926    94%
Villages of Cypress Creek  Houston, TX   384    2001    80%   1,107    93%
Wesley Village  Charlotte, NC   301    2010    100%   1,326    93%
Consolidated Operating Properties Subtotal/Average      11,286             $1,280    94%

 

Mezzanine/Preferred Investments  Location 

Planned

Number

of Units

            

Pro Forma

Average Rent

(4)

      
Alexan CityCentre  Houston, TX   340             $1,566(2)     
Alexan Southside Place  Houston, TX   270              2,012      
Arlo, formerly West Morehead  Charlotte, NC   286              1,507      
Cade Boca Raton, formerly APOK Townhomes  Boca Raton, FL   90              2,549      
Domain at The One Forty, formerly Domain  Garland, TX   299              1,469      
Flagler Village  Fort Lauderdale, FL   385              2,352      
Helios  Atlanta, GA   282              1,486      
Leigh House, formerly Lake Boone Trail  Raleigh, NC   245              1,271      
North Creek Apartments  Leander, TX   259              1,358      
Novel Perimeter, formerly Crescent Perimeter  Atlanta, GA   320              1,749      
Riverside Apartments  Austin, TX   222              1,408      
Vickers Historic Roswell, formerly Vickers Village  Roswell, GA   79              3,176      
Wayforth at Concord  Concord, NC   150              1,707      
Whetstone Apartments  Durham, NC   204              1,284(2)     
Mezzanine and Preferred Investments Subtotal/Average   3,431             $1,692      
                             
Portfolio Properties Total/Average   14,717             $1,377      

 

(1) Represents date of last significant renovation or year built if there were no renovations.

(2) Represents the average effective monthly rent per occupied unit for the three months ended December 31, 2018.

(3) Percent occupied is calculated as (i) the number of units occupied as of December 31, 2018, divided by (ii) total number of units, expressed as a percentage.

(4) Alexan CityCentre, Alexan Southside Place, Helios, Leigh House, North Creek Apartments, Riverside Apartments, Wayforth at Concord, and Whetstone Apartments are preferred equity investments. Leigh House has the option to convert to indirect common interest in the property once the property reaches 70% occupancy. North Creek Apartments, Riverside Apartments, and Wayforth at Concord have the option to purchase the property at stabilization. Arlo, Cade Boca Raton, Domain at The One Forty, Flagler Village, Novel Perimeter, and Vickers Historic Roswell are mezzanine loan investments. Additionally, Arlo, Cade Boca Raton, Domain at The One Forty, and Vickers Historic Roswell have an option to purchase indirect property interest upon maturity. 

 8 

 

 

Bluerock Residential Growth REIT, Inc.
Fourth Quarter Earnings Release

 

Consolidated Statement of Operations

For the Three and Twelve Months Ended December 31, 2018 and 2017

(Unaudited and dollars in thousands except for share and per share data)

 

   Three Months Ended   Year Ended 
   December 31,   December 31, 
   2018   2017   2018   2017 
Revenues                    
Net rental income  $39,534   $30,568   $144,325   $102,806 
Other property revenues   4,754    3,817    18,136    12,840 
Interest income from related parties   5,723    2,189    22,255    7,930 
Total revenues   50,011    36,574    184,716    123,576 
Expenses                    
Property operating   17,493    14,142    67,997    48,346 
Property management fees   1,184    934    4,391    3,185 
General and administrative   5,623    3,292    19,553    7,541 
Management fees to related parties       993        12,726 
Acquisition and pursuit costs   37    19    116    3,233 
Management internalization       41,907        43,554 
Weather-related losses, net   107    336    288    1,014 
Depreciation and amortization   16,839    15,530    62,683    48,624 
Total expenses   41,283    77,153    155,028    168,223 
Operating income (loss)   8,728    (40,579)   29,688    (44,647)
Other income (expense)                    
Other income               17 
Preferred returns and equity in income of unconsolidated real estate joint ventures   2,435    2,472    10,312    10,336 
Gain on sale of real estate investments       123        50,163 
Gain on sale of real estate joint venture interests       24        10,262 
Loss on extinguishment of debt and debt modification costs           (2,277)   (1,639)
Interest expense, net   (16,935)   (9,181)   (52,998)   (31,520)
Total other (expense) income   (14,500)   (6,562)   (44,963)   37,619 
Net loss   (5,772)   (47,141)   (15,275)   (7,028)
Preferred stock dividends   (9,642)   (7,753)   (35,637)   (27,023)
Preferred stock accretion   (1,829)   (1,123)   (5,970)   (3,011)
Net (loss) income attributable to noncontrolling interests                    
Operating partnership units   (3,998)   (9,376)   (12,839)   (9,372)
Partially owned properties   (460)   (400)   (1,284)   17,989 
Net (loss) income attributable to noncontrolling interests   (4,458)   (9,776)   (14,123)   8,617 
Net loss attributable to common stockholders  $(12,785)  $(46,241)  $(42,759)  $(45,679)
                     
Net loss per common share – Basic  $(0.55)  $(1.87)  $(1.82)  $(1.79)
                     
Net loss per common share – Diluted  $(0.55)  $(1.87)  $(1.82)  $(1.79)
                     
Weighted average basic common shares outstanding   23,702,897    24,701,535    23,845,800    25,561,673 
Weighted average diluted common shares outstanding   23,702,897    24,701,535    23,845,800    25,561,673 

 

 9 

 

 

Bluerock Residential Growth REIT, Inc.
Fourth Quarter Earnings Release

 

Consolidated Balance Sheets

Fourth Quarter 2018

(Unaudited and dollars in thousands except for share and per share amounts)

 

   December 31,
2018
   December 31,
2017
 
ASSETS          
Net Real Estate Investments          
Land  $200,385   $169,135 
Buildings and improvements   1,546,244    1,244,193 
Furniture, fixtures and equipment   55,050    38,446 
Construction in progress   989    985 
Total Gross Real Estate Investments   1,802,668    1,452,759 
Accumulated depreciation   (108,911)   (55,177)
Total Net Real Estate Investments   1,693,757    1,397,582 
Cash and cash equivalents   24,775    35,015 
Restricted cash   27,469    29,575 
Notes and accrued interest receivable from related parties   164,084    140,903 
Due from affiliates   2,854    2,003 
Accounts receivable, prepaids and other assets   14,395    9,689 
Preferred equity investments and investments in unconsolidated real estate joint ventures   89,033    71,145 
In-place lease intangible assets, net   1,768    4,635 
TOTAL ASSETS  $2,018,135   $1,690,547 
           
LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY          
Mortgages payable  $1,206,136   $939,494 
Revolving credit facilities   82,209    67,670 
Accounts payable   1,486    1,652 
Other accrued liabilities   31,690    22,952 
Due to affiliates   726    1,575 
Distributions payable   12,073    14,287 
Total Liabilities   1,334,320    1,047,630 
8.250% Series A Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share, 10,875,000 shares authorized; and 5,721,460 issued and outstanding as of December 31, 2018 and 2017   139,545    138,801 
6.000% Series B Redeemable Preferred Stock, liquidation preference $1,000 per share, 1,225,000 and 725,000 shares authorized; 306,009 and 184,130 issued and outstanding as of December 31, 2018 and 2017, respectively   272,842    161,742 
7.625% Series C Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share, 4,000,000 shares authorized; and 2,323,750 issued and outstanding as of December 31, 2018 and 2017   56,485    56,196 
Equity          
Stockholders’ Equity          
Preferred stock, $0.01 par value, 229,900,000 and 230,400,000 shares authorized; none issued and outstanding as of December 31, 2018 and 2017, respectively        
7.125% Series D Cumulative Preferred Stock, liquidation preference $25.00 per share, 4,000,000 shares authorized; 2,850,602 issued and outstanding at December 31, 2018 and 2017   68,705    68,705 
Common stock - Class A, $0.01 par value, 747,509,582 shares authorized; 23,322,211 and 24,218,359 shares issued and outstanding as of December 31, 2018 and 2017, respectively   233    242 
Common stock - Class C, $0.01 par value, 76,603 shares authorized; 76,603 shares issued and outstanding as of December 31, 2018 and 2017   1    1 
Additional paid-in-capital   307,938    318,170 
Distributions in excess of cumulative earnings   (218,531)   (164,286)
Total Stockholders’ Equity   158,346    222,832 
Noncontrolling Interests          
Operating partnership units   27,613    42,999 
Partially owned properties   28,984    20,347 
Total Noncontrolling Interests   56,597    63,346 
Total Equity   214,943    286,178 
TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY  $2,018,135   $1,690,547 

 

 10 

 

 

Bluerock Residential Growth REIT, Inc.
Fourth Quarter Earnings Release

 

Non-GAAP Financial Measures

 

The foregoing supplemental financial data includes certain non-GAAP financial measures that we believe are helpful in understanding our business and performance, as further described below. Our definition and calculation of these non-GAAP financial measures may differ from those of other REITs, and may, therefore, not be comparable.

 

Funds from Operations, Core Funds from Operations, and Adjusted Funds from Operations

 

We believe that funds from operations (“FFO”), as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), core funds from operations (“CFFO”), and adjusted funds from operations (“AFFO”) are important non-GAAP supplemental measures of operating performance for a REIT.

 

FFO attributable to common shares and units is a non-GAAP financial measure that is widely recognized as a measure of REIT operating performance. We consider FFO to be an appropriate supplemental measure of our operating performance as it is based on a net income analysis of property portfolio performance that excludes non-cash items such as depreciation. The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, which implies that the value of real estate assets diminishes predictably over time. Since real estate values historically rise and fall with market conditions, presentations of operating results for a REIT, using historical accounting for depreciation, could be less informative. We define FFO, consistent with the NAREIT definition, as net income, computed in accordance with GAAP, excluding gains (or losses) from sales of property, plus depreciation and amortization of real estate assets, plus impairment write-downs of depreciable real estate, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect FFO on the same basis.

 

CFFO makes certain adjustments to FFO, removing the effect of items that do not reflect ongoing property operations such as stock compensation expense, acquisition expenses, unrealized gains and losses on derivatives, losses on extinguishment of debt and debt modification costs (includes prepayment penalties incurred and the write-off of unamortized deferred financing costs and fair market value adjustments of assumed debt), non-cash interest, one-time weather-related costs, and preferred stock accretion. We believe that CFFO is helpful to investors as a supplemental performance measure because it excludes the effects of certain items which can create significant earnings volatility, but which do not directly relate to our core recurring property operations. As a result, we believe that CFFO can help facilitate comparisons of operating performance between periods and provides a more meaningful predictor of future earnings potential.

 

AFFO makes certain adjustments to CFFO in order to arrive at a more refined measure of the operating performance of our portfolio. There is no industry standard definition of AFFO and practice is divergent across the industry. AFFO adjusts CFFO for items that impact our ongoing operations, such as subtracting recurring capital expenditures (and while we were externally managed, when calculating the quarterly incentive fee paid to our former Manager only, we further adjusted FFO to include any realized gains or losses on our real estate investments).  We believe that AFFO is helpful to investors as a meaningful supplemental indicator of our operational performance.

 

Our calculation of CFFO and AFFO differs from the methodology used for calculating CFFO and AFFO by certain other REITs and, accordingly, our CFFO and AFFO may not be comparable to CFFO and AFFO reported by other REITs. Our management utilizes FFO, CFFO, and AFFO as measures of our operating performance after adjustment for certain non-cash items, such as depreciation and amortization expenses, and acquisition and pursuit costs that are required by GAAP to be expensed but may not necessarily be indicative of current operating performance and that may not accurately compare our operating performance between periods. Furthermore, although FFO, CFFO, AFFO and other supplemental performance measures are defined in various ways throughout the REIT industry, we also believe that FFO, CFFO, and AFFO may provide us and our stockholders with an additional useful measure to compare our financial performance to certain other REITs. While we were externally managed, we also used AFFO for purposes of determining the quarterly incentive fee paid to our former Manager in prior periods.

 

 11 

 

 

Bluerock Residential Growth REIT, Inc.
Fourth Quarter Earnings Release

 

Neither FFO, CFFO, nor AFFO is equivalent to net income, including net income attributable to common stockholders, or cash generated from operating activities determined in accordance with GAAP. Furthermore, FFO, CFFO, and AFFO do not represent amounts available for management's discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments or uncertainties. Neither FFO, CFFO, nor AFFO should be considered as an alternative to net income, including net income attributable to common stockholders, as an indicator of our operating performance or as an alternative to cash flow from operating activities as a measure of our liquidity.

 

We have acquired interests in five additional operating properties and three investments accounted for on the equity method of accounting subsequent to December 31, 2017. Therefore, the results presented in the table below are not directly comparable and should not be considered an indication of our future operating performance.

 

 12 

 

 

Bluerock Residential Growth REIT, Inc.
Fourth Quarter Earnings Release

 

The table below reconciles our calculations of FFO, CFFO and AFFO to net loss, the most directly comparable GAAP financial measure, for the three and twelve months ended December 31, 2018 and 2017 (in thousands, except per share amounts):

 

   Three Months Ended   Year Ended 
   December 31,   December 31, 
   2018   2017   2018   2017 
Net loss attributable to common shares  $(12,785)  $(46,241)  $(42,759)  $(45,679)
Add back: Net loss attributable to operating partnership units   (3,998)   (9,376)   (12,839)   (9,372)
Net loss attributable to common shares and units   (16,783)   (55,617)   (55,598)   (55,051)
                     
Common stockholders and operating partnership units pro-rata share of:                    
Real estate depreciation and amortization (1)   15,785    14,520    59,103    44,741 
Gain on sale of real estate investments       (123)       (34,436)
Gain on sale of joint venture interests, net       (15)       (6,414)
FFO Attributable to Common Shares and Units   (998)   (41,235)   3,505    (51,160)
Common stockholders and operating partnership units pro-rata share of:                    
Acquisition and pursuit costs   37    19    116    3,091 
Non-cash interest expense   780    428    3,757    1,939 
Unrealized loss on derivatives   3,001        2,776     
Loss on extinguishment of debt and debt modification costs           2,226    1,551 
Weather-related losses, net   102    315    280    956 
Non-real estate depreciation and amortization (1)   85    6    301    6 
Non-recurring income               (16)
Non-cash preferred returns and equity in income of unconsolidated real estate joint ventures   (280)   (253)   (980)   (1,243)
Management internalization       41,907        43,554 
Non-cash equity compensation   1,768    1,972    6,807    15,022 
Preferred stock accretion   1,829    1,123    5,970    3,011 
CFFO Attributable to Common Shares and Units  $6,324   $4,282   $24,758   $16,711 
                     
Common stockholders and operating partnership units pro-rata share of:                    
Normally recurring capital expenditures   (735)   (520)   (2,569)   (1,541)
AFFO Attributable to Common Shares and Units  $5,589   $3,762   $22,189   $15,170 
                     
Per Share and Unit Information:                    
FFO Attributable to Common Shares and Units - diluted  $(0.03)  $(1.39)  $0.11   $(1.89)
                     
CFFO Attributable to Common Shares and Units - diluted  $0.20   $0.14   $0.80   $0.62 
                     
AFFO Attributable to Common Shares and Units - diluted  $0.18   $0.13   $0.72   $0.56 
                     
Weighted average common shares and units outstanding - diluted   31,113,092    29,710,465    30,995,249    27,032,354 

 

(1) The real estate depreciation and amortization amount includes our share of consolidated real estate-related depreciation and amortization of intangibles, less amounts attributable to noncontrolling interests – partially owned properties, and our similar estimated share of unconsolidated depreciation and amortization, which is included in earnings of our unconsolidated real estate joint venture investments. 

 

 13 

 

 

Bluerock Residential Growth REIT, Inc.
Fourth Quarter Earnings Release

 

Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate ("EBITDAre")

 

NAREIT defines earnings before interest, taxes, depreciation and amortization for real estate ("EBITDAre") (September 2017 White Paper) as net income, computed in accordance with GAAP, before interest expense, income taxes, depreciation and amortization expense, and further adjusted for gains and losses from sales of depreciated operating properties, and impairment write-downs of depreciated operating properties.

 

We consider EBITDAre to be an appropriate supplemental measure of our performance because it eliminates depreciation, income taxes, interest and non-recurring items, which permits investors to view income from operations unobscured by non-cash items such as depreciation, amortization, the cost of debt or non-recurring items.

 

Adjusted EBITDAre represents EBITDAre further adjusted for non-comparable items and it is not intended to be a measure of free cash flow for our management’s discretionary use, as it does not consider certain cash requirements such as income tax payments, debt service requirements, capital expenditures and other fixed charges.

 

EBITDAre and Adjusted EBITDAre are not recognized measurements under GAAP. Because not all companies use identical calculations, our presentation of EBITDAre and Adjusted EBITDAre may not be comparable to similarly titled measures of other companies.

 

Below is a reconciliation of net loss attributable to common stockholders to EBITDAre (unaudited and dollars in thousands).

 

   Three Months Ended   Year Ended 
   December 31,   December 31, 
   2018   2017   2018   2017 
Net loss attributable to common stockholders  $(12,785)  $(46,241)  $(42,759)  $(45,679)
Net (loss) income attributable to noncontrolling interests   (4,458)   (9,776)   (14,123)   8,617 
Preferred stock dividends   9,642    7,753    35,637    27,023 
Preferred stock accretion   1,829    1,123    5,970    3,011 
Interest expense, net   16,935    9,181    52,998    31,520 
Depreciation and amortization   16,754    15,524    62,382    48,618 
Gain on sale of real estate investments   -    (123)   -    (50,163)
Gain on sale of joint venture interests, net   -    (24)   -    (10,262)
Loss on extinguishment of debt and debt modification costs   -    -    2,277    1,639 
EBITDAre  $27,917   $(22,583)  $102,382   $14,324 
Acquisition and pursuit costs   37    19    116    3,233 
Management internalization   -    41,907    -    43,554 
Non-real estate depreciation and amortization   85    6    301    6 
Weather-related losses, net   107    336    288    1,014 
Non-cash equity compensation   1,768    1,972    6,807    15,022 
Non-recurring income   -    -    -    (17)
Non-cash preferred returns and equity in income of unconsolidated real estate joint ventures   (280)   (253)   (980)   (1,243)
Adjusted EBITDAre  $29,634   $21,404   $108,914   $75,893 

 

 14 

 

 

Bluerock Residential Growth REIT, Inc.
Fourth Quarter Earnings Release

 

Recurring Capital Expenditures

 

We define recurring capital expenditures as expenditures that are incurred at every property and exclude development, investment, revenue enhancing and non-recurring capital expenditures.

 

Non-Recurring Capital Expenditures

 

We define non-recurring capital expenditures as expenditures for significant projects that upgrade units or common areas and projects that are revenue enhancing.

 

Same Store Properties

 

Same store properties are conventional multifamily residential apartments which were owned and operational for the entire periods presented, including each comparative period.

 

Property Net Operating Income ("Property NOI")

 

We believe that net operating income, or NOI, is a useful measure of our operating performance. We define NOI as total property revenues less total property operating expenses, excluding depreciation and amortization and interest. Other REITs may use different methodologies for calculating NOI, and accordingly, our NOI may not be comparable to other REITs. We believe that this measure provides an operating perspective not immediately apparent from GAAP operating income or net income. We use NOI to evaluate our performance on a same store and non-same store basis; NOI measures the core operations of property performance by excluding corporate level expenses and other items not related to property operating performance and captures trends in rental housing and property operating expenses. However, NOI should only be used as a supplemental measure of our financial performance.

 

Certain amounts in prior periods, including related to tenant reimbursements for utility expenses amounting to zero and $3.0 million for the three and twelve months ended December 31, 2017, have been reclassified to other property revenues from property operating expenses, to conform to the current period.  In addition, property management fees have been reclassified from property operating expenses.

 

 15 

 

 

Bluerock Residential Growth REIT, Inc.
Fourth Quarter Earnings Release

 

The following table reflects net loss attributable to common stockholders together with a reconciliation to NOI and to same store and non-same store contributions to consolidated NOI, as computed in accordance with GAAP for the periods presented (unaudited and amounts in thousands):

 

   Three Months Ended   Year Ended 
   December 31,   December 31, 
   2018   2017   2018   2017 
Net loss attributable to common shares  $(12,785)  $(46,241)  $(42,759)  $(45,679)
Add back: Net loss attributable to operating partnership units   (3,998)   (9,376)   (12,839)   (9,372)
Net loss attributable to common shares and units   (16,783)   (55,617)   (55,598)   (55,051)
Add common stockholders and operating partnership units pro-rata share of:                    
Depreciation and amortization   15,785    14,520    59,103    44,741 
Non-real estate depreciation and amortization   85    6    301    6 
Non-cash interest expense   780    428    3,757    1,939 
Unrealized loss on derivatives   3,001    -    2,776    - 
Property management fees   1,118    873    4,151    2,915 
Management fees to related parties   -    993    -    12,726 
Acquisition and pursuit costs   37    19    116    3,091 
Loss on extinguishment of debt and debt modification costs   -    -    2,226    1,551 
Corporate operating expenses   5,552    3,292    19,416    7,541 
Management internalization   -    41,907    -    43,554 
Weather-related losses, net   102    315    280    956 
Preferred dividends   9,642    7,753    35,637    27,023 
Preferred stock accretion   1,829    1,123    5,970    3,011 
Less common stockholders and operating partnership units pro-rata share of:                    
Other income   -    -    -    16 
Preferred returns and equity in income of unconsolidated real estate joint ventures   2,435    2,472    10,312    10,336 
Interest income from related parties   5,723    2,189    22,255    7,930 
Gain on sale of joint venture interests, net   -    15    -    6,414 
Gain on sale of real estate investments   -    123    -    34,436 
Pro-rata share of properties' income   12,990    10,813    45,568    34,871 
Add:                    
Noncontrolling interest pro-rata share of partially owned property income   774    707    2,629    3,112 
Total property income   13,764    11,520    48,197    37,983 
Add:                    
Interest expense   13,031    8,723    46,267    29,317 
Net operating income   26,795    20,243    94,464    67,300 
Less:                    
Non-same store net operating income   7,682    2,488    44,927    20,057 
Same store net operating income (1)  $19,113   $17,755   $49,537   $47,243 

 

(1) Same store portfolio for the three months ended December 31, 2018 consists of 24 properties, which represent 7,962 units. Same store portfolio for the year ended December 31, 2018 consists of 16 properties, which represent 5,151 units.

 

Contact

Investors:

(888) 558.1031
investor.relations@bluerockre.com

 

Media:

Josh Hoffman

(208) 475.2380

jhoffman@bluerockre.com

##

 

 16 

 

 

Bluerock Residential Growth REIT, Inc.
Financial and Operating Highlights
For the Three and Twelve Months Ended December 31, 2018
(Unaudited and dollars in thousands except for share and per share data)

 

   Three Months Ended       Year Ended     
   December 31,       December 31,     
OPERATING INFORMATION  2018   2017   % Change   2018   2017   % Change 
                         
Total revenue  $50,011   $36,574    36.7%  $184,716   $123,576    49.5%
                               
Total assets  $2,018,135   $1,690,547    19.4%  $2,018,135   $1,690,547    19.4%
                               
Property NOI (1)  $26,795   $20,243    32.4%  $94,464   $67,300    40.4%
                               
Property NOI margins   60.5%   58.9%   2.7%   58.1%   58.2%   (0.2)%
                               
Net loss per common share - Diluted  $(0.55)  $(1.87)   -   $(1.82)  $(1.79)   - 
                               
CFFO attributable to common shares and units per share (2)  $0.20   $0.14    42.9%  $0.80   $0.62    29.0%
                               
AFFO attributable to common shares and units per share (2)  $0.18   $0.13    38.5%  $0.72   $0.56    28.6%

 

 

 

(1) See page 35 for the Company's definition of this non-GAAP measurement and reasons for using it.

 

(2) See page 32 for the Company's definition of this non-GAAP measurement and reasons for using it.

 

 17 

 

 

Bluerock Residential Growth REIT, Inc.
Share and Unit Information
Fourth Quarter 2018
(Unaudited)

 

Weighted Average Common Stock and Units Outstanding for the quarter ended December 31, 2018     
Class A Common Stock   23,626,294 
Class C Common Stock   76,603 
Weighted Average Common Stock Outstanding, Diluted   23,702,897 
LTIP Units   1,159,359 
OP Units   6,250,836 
Weighted Average Common Stock and Total Units Outstanding, Diluted   31,113,092 
      
Outstanding Common Stock and Units at December 31, 2018   31,581,685 
      
Outstanding 8.250% Series A Cumulative Redeemable Preferred Stock at December 31, 2018   5,721,460 
      
Outstanding 6.000% Series B Redeemable Preferred Stock at December 31, 2018   306,009 
      
Outstanding 7.625% Series C Cumulative Redeemable Preferred Stock at December 31, 2018   2,323,750 
      
Outstanding 7.125% Series D Cumulative Preferred Stock at December 31, 2018   2,850,602 

 

The following table reflects the impact of various LTIP Unit issuances, share repurchases, and other share/unit changes subsequent to September 30, 2018:

 

Share Type  Shares and
units
outstanding
September 30,
2018
   LTIP
Issuances
   LTIP
conversions
to OP Units
   Share
Repurchases
   Other   Shares and
units
outstanding
December 31,
2018
   Ownership % 
Class A Common Stock   23,672,080    -    -    (417,324)   67,455    23,322,211    73.85%
Class C Common Stock   76,603    -    -    -    -    76,603    0.24%
Total share equivalents   23,748,683    -    -    (417,324)   67,455    23,398,814    74.09%
OP Units   6,230,667    -    156,671    -    (496)   6,386,842    20.22%
LTIP Units   1,829,150    123,550    (156,671)   -    -    1,796,029    5.69%
Total noncontrolling interest   8,059,817    123,550    -    -    (496)   8,182,871    25.91%
Total shares, OP and LTIP Units   31,808,500    123,550    -    (417,324)   66,959    31,581,685    100.00%

 

 18 

 

 

Bluerock Residential Growth REIT, Inc.
EBITDAre and Interest Information
Fourth Quarter 2018
(Unaudited and dollars in thousands)

 

   Consolidated 
   Three Months Ended 
   December 31, 2018 
Q4 EBITDAre CALCULATION     
Net loss attributable to common stockholders  $(12,785)
Net loss attributable to noncontrolling interests   (4,458)
Preferred stock dividends   9,642 
Preferred stock accretion   1,829 
Interest expense, net   16,935 
Depreciation and amortization   16,754 
EBITDAre (1)  $27,917 
Acquisition and pursuit costs   37 
Non-real estate depreciation and amortization   85 
Weather-related losses, net   107 
Non-cash equity compensation   1,768 
Non-cash preferred returns and equity in income of unconsolidated real estate joint ventures   (280)
Adjusted EBITDAre  $29,634 
      
Modified Q4 EBITDAre calculation (2)     
Adjusted EBITDAre  $29,634 
Adjustment   471 
Modified Q4 EBITDAre  $30,105 
Modified Q4 EBITDAre annualized  $120,420 
      
Modified Q4 interest calculation (2)(3)     
Interest Expense  $13,031 
Adjustment   545 
Modified Q4 interest expense  $13,576 
Modified Q4 interest expense annualized  $54,304 

 

(1) See page 34 for a reconciliation of net income attributable to common stockholders to EBITDAre and the Company's definition of EBITDAre and reasons for using it.

 

(2) Adjustment to EBITDAre and interest expense represents the estimated impact over the full period of the following activity assuming the transactions had occurred on October 1, 2018: (i) acquisition of Ashford Belmar, (ii) preferred investments in North Creek Apartments and Riverside Apartments, and (iii) amended agreements and additional investments at Alexan CityCentre, Alexan Southside, Cade Boca Raton, Helios, Leigh House, and Vickers Historic Roswell. Actual results may differ significantly from the presented, adjusted amounts including annualized amounts.

 

(3) Interest expense excludes non-cash interest expense.

 

 19 

 

 

Bluerock Residential Growth REIT, Inc.
Financial Statistics
Fourth Quarter 2018
(Unaudited and dollars in thousands)

 

   Consolidated   
   Three Months Ended   
   December 31, 2018   
       
Interest Coverage Ratio       
Modified Q4 EBITDAre *  $30,105   
Modified Q4 interest expense (4) *  $13,576   
Interest Coverage Ratio   2.22 x
        
Quarterly Fixed Charge Coverage Ratio       
Modified Q4 interest expense (4) *  $13,576   
Preferred stock dividends  $9,642   
Total fixed charges  $23,218   
Modified Q4 EBITDAre *  $30,105   
Modified Q4 EBITDAre fixed charge coverage ratio   1.30 x
        
Net Debt / Modified EBITDAre Ratio       
Total debt (1)  $1,297,585   
Less: cash (3)  $(52,244)  
Net debt (total debt less cash)  $1,245,341   
Modified Q4 EBITDAre, (annualized)*  $120,420   
Net Debt / Modified EBITDAre Ratio   10.34
        
Leverage as a Percentage of assets       
Total debt (1)  $1,297,585   
Total undepreciated assets (2)  $2,127,046   
Total Debt / Total Undepreciated Assets   61.0%  
Net Debt / Net Undepreciated Assets (less cash)   60.0%  
        
Leverage as a Percentage of Enterprise Value       
Total market cap (5)  $849,854   
Total debt (1)  $1,297,585   
Total Enterprise Value  $2,147,439   
Total Debt / Total Enterprise Value   60.4%  
Net Debt / Total Enterprise Value   58.0%  

 

(1) Total debt excludes amortization of fair market value adjustments of $2.2 million and deferred financing costs of $11.4 million.

 

(2) Total undepreciated assets is calculated as total assets plus accumulated depreciation on real estate assets.

 

(3) Cash includes cash, cash equivalents, and restricted cash.

 

(4) Interest expense excludes non-cash interest expense.

 

(5) Total market cap is calculated by using common shares, preferred shares, and equivalents (OP Units/LTIP Units) multiplied by the December 31, 2018 closing share prices.

 

* Adjustment to EBITDAre and interest expense represents the estimated impact over the full period of the following activity assuming the transactions had occurred on October 1, 2018: (i) acquisition of Ashford Belmar, (ii) preferred investments in North Creek Apartments and Riverside Apartments, and (iii) amended agreements and additional investments at Alexan CityCentre, Alexan Southside, Cade Boca Raton, Helios, Leigh House, and Vickers Historic Roswell. Actual results may differ significantly from the presented, adjusted amounts including annualized amounts. See prior page for calculations.

 

 20 

 

 

Bluerock Residential Growth REIT, Inc.

Recent Acquisitions

(Unaudited)
 
Summary of Recent Acquisitions and Investments

 

Property  Location  Date of
Investment
  Year Built/
Renovated(1)
   Number
of Units
   Indirect
Ownership
Interest in
Property
   Purchase
Price (in
millions)
   Average
Rent(2)
 
                           
The Links at Plum Creek  Castle Rock, CO  3/26/2018   2000    264    88%  $61.1   $1,428 
                                
Sands Parc  Daytona Beach, FL  5/01/2018   2017    264    100%   46.2    1,323 
                                
Plantation Park  Lake Jackson, TX  6/14/2018   2016    238    80%   35.6    1,408 
                                
Veranda at Centerfield  Houston, TX  7/26/2018   1999    400    93%   40.2    926 
                                
North Creek Apartments(3)  Leander, TX  10/29/2018   2020    259    *    17.9    1,358 
                                
Wayforth at Concord(3)  Concord, NC  11/09/2018   2021    150    *    6.5    1,707 
                                
Ashford Belmar  Lakewood, CO  11/15/2018   1988/1993   512    85%   143.4    1,612 
                                
Riverside Apartments(3)  Austin, TX  12/06/2018   2020    222    *    15.6    1,408 
                                
Total/Average              2,309        $366.5   $1,347 

 

(1) All dates are for the year construction was completed or expects to be completed, or the date that a significant renovation has or will be completed.

 

(2) Represents the average effective monthly rent per occupied unit for the three months ended December 31, 2018. The average rent for the development projects represents the average pro forma effective monthly rent per occupied unit for all expected units upon stabilization.

 

(3) Property is a development project. Purchase price represents estimated preferred equity investment committed for the development.

 

* The Company has made a preferred equity investment with an option to purchase the property upon stabilization. The preferred investment earns a preferred return.

 

 21 

 

 

Bluerock Residential Growth REIT, Inc.
Investments in Unconsolidated Real Estate Joint Ventures and Notes and Accrued Interest Receivable from Related Parties
For the Three Months Ended and Twelve Months Ended December 31, 2018
(Unaudited and dollars in thousands)

 

Multifamily Community Name  Investment
Balance as of
October 1, 2018
   Change   Investment
Balance as of
December 31, 2018
   Return as of
December 31,
2018
   AFFO Earned
for the Three
Months Ended
December 31,
2018
   AFFO Earned
for the Year
Ended
December 31,
2018
 
Preferred and Equity Investments                              
Alexan CityCentre  $10,277   $928   $11,205    (1)  $447   $1,668 
Alexan Southside   22,376    425    22,801    6.5%   606    3,201 
Helios   18,868    321    19,189    7.0%   502    2,459 
Leigh House, formerly Lake Boone Trail   12,917    402    13,319    (2)   506    1,910 
North Creek Apartments   -    5,892    5,892    (3)   108    108 
Riverside Apartments   -    3,600    3,600    (3)   31    31 
Wayforth at Concord   -    -    -    (4)   -    - 
Whetstone Apartments   12,932    -    12,932    (5)   -    - 
Other   96    (1)   95    (6)   -    - 
   $77,466   $11,567   $89,033        $2,200   $9,377 
                               
Mezzanine Loans (6)                               
Arlo, formerly West Morehead  $24,883   $10   $24,893    15.0%  $929   $3,687 
Cade Boca Raton, formerly APOK Townhomes   11,361    493    11,854    15.0%   435    1,694 
Domain at The One Forty, formerly Domain   20,528    8    20,536    15.0%   767    3,042 
Flagler Village   75,408    28    75,436    12.9%   2,427    9,249 
Novel Perimeter, formerly Crescent Perimeter   20,859    8    20,867    15.0%   779    3,091 
Vickers Historic Roswell, formerly Vickers Village   10,202    296    10,498    15.0%   386    1,492 
   $163,241   $843   $164,084        $5,723   $22,255 

 

(1) The preferred investment includes $6.5 million earning a 15% return and $4.7 million earning a 20% return.

 

(2) The preferred investment includes $11.9 million earning a 15% return and $1.4 million earning a 20% return.

 

(3) The preferred investment is currently earning an 8.5% current return and a 4.0% accrued return.

 

(4) Once funded, the preferred investment will earn a 9.0% current return and a 4.0% accrued return.

 

(5) Commencing April 1, 2017, the preferred income is being accrued. As of December 31, 2018, $12.2 million is earning a 6.5% accrued return and $0.7 million is earning a 20% accrued return.

 

(6) The Company also holds an equity method investment with 0.5% common ownership.

 

 22 

 

Bluerock Residential Growth REIT, Inc.
Portfolio Information
Fourth Quarter 2018
(Unaudited)

 

Multifamily Community Name  Location  Number
of Units
   Year Built/
Renovated (1)
   Average
Rent(2)
   Revenue per
Occupied
Unit(3)
   Average
Occupancy
 
Consolidated Operating Properties:                            
ARIUM at Palmer Ranch  Sarasota, FL   320    2016   $1,301   $1,452    94.5%
ARIUM Glenridge  Atlanta, GA   480    1990    1,195    1,350    91.0%
ARIUM Grandewood  Orlando, FL   306    2005    1,384    1,499    95.9%
ARIUM Gulfshore  Naples, FL   368    2016    1,261    1,390    95.9%
ARIUM Hunter’s Creek  Orlando, FL   532    1999    1,387    1,546    93.3%
ARIUM Metrowest  Orlando, FL   510    2001    1,368    1,552    94.6%
ARIUM Palms  Orlando, FL   252    2008    1,335    1,459    92.8%
ARIUM Pine Lakes  Port St. Lucie, FL   320    2003    1,267    1,439    92.9%
ARIUM Westside  Atlanta, GA   336    2008    1,537    1,689    97.9%
Ashford Belmar  Lakewood, CO   512    1988/1993   1,612    1,757    93.2%
Ashton Reserve  Charlotte, NC   473    2015    1,116    1,246    92.9%
Citrus Tower  Orlando, FL   336    2006    1,279    1,409    93.1%
Enders Place at Baldwin Park  Orlando, FL   220    2003    1,762    1,849    95.0%
James on South First  Austin, TX   250    2016    1,277    1,430    94.5%
Marquis at Crown Ridge  San Antonio, TX   352    2009    1,006    1,119    93.5%
Marquis at Stone Oak  San Antonio, TX   335    2007    1,425    1,511    95.6%
Marquis at The Cascades  Tyler, TX   582    2009    1,201    1,297    97.2%
Marquis at TPC  San Antonio, TX   139    2008    1,499    1,607    94.9%
Outlook at Greystone  Birmingham, AL   300    2007    958    1,167    93.3%
Park & Kingston  Charlotte, NC   168    2015    1,243    1,331    96.4%
Plantation Park  Lake Jackson, TX   238    2016    1,408    1,483    96.5%
Preston View  Morrisville, NC   382    2000    1,093    1,199    95.2%
Roswell City Walk  Roswell, GA   320    2015    1,509    1,727    94.6%
Sands Parc  Daytona Beach, FL   264    2017    1,323    1,462    97.5%
Sorrel  Frisco, TX   352    2015    1,279    1,377    89.1%
Sovereign  Fort Worth, TX   322    2015    1,347    1,478    94.3%
The Brodie  Austin, TX   324    2001    1,271    1,435    96.8%
The Links at Plum Creek  Castle Rock, CO   264    2000    1,428    1,572    93.8%
The Mills  Greenville, SC   304    2013    1,019    1,150    95.1%
The Preserve at Henderson Beach  Destin, FL   340    2009    1,350    1,484    95.5%
Veranda at Centerfield  Houston, TX   400    1999    926    1,045    93.8%
Villages of Cypress Creek  Houston, TX   384    2001    1,107    1,201    95.2%
Wesley Village  Charlotte, NC   301    2010    1,326    1,413    95.2%
                             
Total Consolidated Operating Properties      11,286        $1,280   $1,412    94.5%
                             
Mezzanine/Preferred Investments:                            
Alexan CityCentre  Houston, TX   340        $1,566   $1,648    92.4%
Alexan Southside Place  Houston, TX   270         2,012(4)    N/A      N/A  
Arlo, formerly West Morehead  Charlotte, NC   286         1,507(4)    N/A      N/A  
Cade Boca Raton, formerly APOK Townhomes  Boca Raton, FL   90         2,549(4)    N/A      N/A  
Domain at The One Forty, formerly Domain  Garland, TX   299         1,469(4)    N/A      N/A  
Flagler Village  Fort Lauderdale, FL   385         2,352(4)    N/A      N/A  
Helios  Atlanta, GA   282         1,486(4)    N/A      N/A  
Leigh House, formerly Lake Boone Trail  Raleigh, NC   245         1,271(4)    N/A      N/A  
North Creek Apartments  Leander, TX   259         1,358(4)    N/A      N/A  
Novel Perimeter, formerly Crescent Perimeter  Atlanta, GA   320         1,749(4)    N/A      N/A  
Riverside Apartments  Austin, TX   222         1,408(4)    N/A      N/A  
Vickers Historic Roswell, formerly Vickers Village  Roswell, GA   79         3,176(4)    N/A      N/A  
Wayforth at Concord  Concord, NC   150         1,707(4)    N/A      N/A  
Whetstone Apartments  Durham, NC   204         1,284    1,471    95.6%
                             
Total Mezzanine/Preferred Investments      3,431        $1,692   $1,585    93.6%
                             
Total Portfolio      14,717        $1,377   $1,420    94.5%

 

(1) Represents date of last significant renovation or year built if there were no renovations.

(2) Represents the average effective monthly rent per occupied unit for the three months ended December 31, 2018.

(3) Revenue per occupied unit is total revenue divided by average number of occupied units for the three months ended December 31, 2018.

(4) Represents the average pro forma effective monthly rent per occupied unit for all expected units upon stabilization. 

 23 

 

 

Bluerock Residential Growth REIT, Inc.
Renovation Table
As of December 31, 2018
(Unaudited)

 

Units and Investment

 

   2018   To Date 
   Completed   Completed   Total   Unrenovated Units 
   in 4Q   Year-to-date   Completed   Remaining 
Number of Renovations   339    1,186    1,666    4,796 
Renovation Cost per Unit  $4,827   $4,695           

 

Returns

 

   Cost   Monthly Rent   Return on    
   per Unit   Premium   Investment     
Weighted Average Returns to Date  $4,824   $104    25.9%    

 

 24 

 

 

Bluerock Residential Growth REIT, Inc.

Mezzanine/Preferred Investments

As of December 31, 2018
(Unaudited)

 

This table includes forward-looking statements based on current judgments and current knowledge of management, which are subject to certain risks, trends and uncertainties that could cause results to vary from those projected. Please see the paragraph on forward-looking statements on page 2 of this document for a discussion of risks and uncertainties.

 

                       Actual/Estimated Dates for
Multifamily Community Name  Actual/
Planned
Number
of Units
   Total Actual/
Estimated
Construction
Cost (in
millions)
   Cost to
Date (in
millions)
   Actual/
Estimated
Construction
Cost Per
Unit
   Total
Available
Financing
(in millions)
   Construction
Start
  Initial
Occupancy
  Construction
Completion
  Stabilized
Operations (3)
Whetstone Apartments (1)   204   $37.0   $37.0   $181,373   $26.3   N/A  3Q14  3Q15  4Q16
Alexan CityCentre (1)   340   $83.5   $80.7   $245,588   $55.1   4Q14  2Q17  4Q17  3Q18
Helios (1)   282   $51.8   $50.4   $183,688   $39.5   4Q15  2Q17  4Q17  4Q18
Alexan Southside Place (1)   270   $49.4   $47.0   $182,963   $31.6   4Q15  4Q17  1Q18  2Q19
Leigh House (1)   245   $40.2   $39.4   $164,082   $25.2   2Q16  3Q17  3Q18  1Q19
Vickers Historic Roswell (2)   79   $31.5   $29.9   $398,734   $18.0   2Q16  2Q18  3Q18  1Q20
Domain at The One Forty (2)   299   $52.6   $48.6   $175,920   $36.7   1Q17  2Q18  4Q18  4Q19
Arlo (2)   286   $60.0   $54.9   $209,790   $41.8   4Q16  2Q18  2Q19  1Q20
Cade Boca Raton (2)   90   $29.5   $27.7   $327,778   $18.7   2Q17  4Q18  2Q19  1Q20
Novel Perimeter (2)   320   $71.0   $68.4   $221,875   $44.7   4Q16  3Q18  2Q19  1Q20
Flagler Village (2)   385   $135.4   $66.5   $351,688   $70.4   1Q18  2Q20  3Q20  2Q22
North Creek Apartments (1)   259   $44.0   $7.0   $169,884   $23.6   4Q18  4Q19  3Q20  1Q21
Riverside Apartments (1)   222   $37.9   $6.2   $170,721   $20.2   2Q19  3Q20  4Q20  2Q21
Wayforth at Concord (1)   150   $33.5   $2.8   $223,333   $22.3   4Q18  1Q20  2Q21  2Q21

 

(1) Represents a preferred equity investment. Leigh House has the option to convert to indirect common interest in the property once the property reaches 70% occupancy.  North Creek Apartments, Riverside Apartments, and Wayforth at Concord have the option to purchase the property at stabilization.

 

(2) Represents a mezzanine loan investment. Arlo, Cade Boca Raton, Domain at The One Forty, and Vickers Historic Roswell have an option to purchase indirect property interest upon maturity. 

 

(3) We defined stabilized occupancy as attainment of 90% physical occupancy.

 

 25 

 

 

Bluerock Residential Growth REIT, Inc.
Condensed Consolidated Balance Sheets
Fourth Quarter 2018
(Unaudited and dollars in thousands except for share and per share data)

 

   December 31,
2018
   December 31,
2017
 
ASSETS          
Net Real Estate Investments          
Land  $200,385   $169,135 
Buildings and improvements   1,546,244    1,244,193 
Furniture, fixtures and equipment   55,050    38,446 
Construction in progress   989    985 
Total Gross Real Estate Investments   1,802,668    1,452,759 
Accumulated depreciation   (108,911)   (55,177)
Total Net Real Estate Investments   1,693,757    1,397,582 
Cash and cash equivalents   24,775    35,015 
Restricted cash   27,469    29,575 
Notes and accrued interest receivable from related parties   164,084    140,903 
Due from affiliates   2,854    2,003 
Accounts receivable, prepaids and other assets   14,395    9,689 
Preferred equity investments and investments in unconsolidated real estate joint ventures   89,033    71,145 
In-place lease intangible assets, net   1,768    4,635 
TOTAL ASSETS  $2,018,135   $1,690,547 
           
LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY          
Mortgages payable  $1,206,136   $939,494 
Revolving credit facilities   82,209    67,670 
Accounts payable   1,486    1,652 
Other accrued liabilities   31,690    22,952 
Due to affiliates   726    1,575 
Distributions payable   12,073    14,287 
Total Liabilities   1,334,320    1,047,630 
8.250% Series A Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share, 10,875,000 shares authorized; and 5,721,460 issued and outstanding as of December 31, 2018 and 2017   139,545    138,801 
6.000% Series B Redeemable Preferred Stock, liquidation preference $1,000 per share, 1,225,000 and 725,000 shares authorized; 306,009 and 184,130 issued and outstanding as of December 31, 2018 and 2017, respectively   272,842    161,742 
7.625% Series C Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share, 4,000,000 shares authorized; and 2,323,750 issued and outstanding as of December 31, 2018 and 2017   56,485    56,196 
Equity          
Stockholders’ Equity          
Preferred stock, $0.01 par value, 229,900,000 and 230,400,000 shares authorized; none issued and outstanding as of December 31, 2018 and 2017, respectively        
7.125% Series D Cumulative Preferred Stock, liquidation preference $25.00 per share, 4,000,000 shares authorized; 2,850,602 issued and outstanding at December 31, 2018 and 2017   68,705    68,705 
Common stock - Class A, $0.01 par value, 747,509,582 shares authorized; 23,322,211 and 24,218,359 shares issued and outstanding as of December 31, 2018 and 2017, respectively   233    242 
Common stock - Class C, $0.01 par value, 76,603 shares authorized; 76,603 shares issued and outstanding as of December 31, 2018 and 2017   1    1 
Additional paid-in-capital   307,938    318,170 
Distributions in excess of cumulative earnings   (218,531)   (164,286)
Total Stockholders’ Equity   158,346    222,832 
Noncontrolling Interests          
Operating partnership units   27,613    42,999 
Partially owned properties   28,984    20,347 
Total Noncontrolling Interests   56,597    63,346 
Total Equity   214,943    286,178 
TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY  $2,018,135   $1,690,547 

 

 26 

 

 

Bluerock Residential Growth REIT, Inc.
Consolidated Statements of Operations
For the Three and Twelve Months Ended December 31, 2018 and 2017
(Dollars in thousands)

 

   Three Months Ended   Year Ended 
   December 31,   December 31, 
   2018   2017   2018   2017 
Revenues                    
Net rental income  $39,534   $30,568   $144,325   $102,806 
Other property revenues   4,754    3,817    18,136    12,840 
Interest income from related parties   5,723    2,189    22,255    7,930 
Total revenues   50,011    36,574    184,716    123,576 
Expenses                    
Property operating   17,493    14,142    67,997    48,346 
Property management fees   1,184    934    4,391    3,185 
General and administrative   5,623    3,292    19,553    7,541 
Management fees to related parties       993        12,726 
Acquisition and pursuit costs   37    19    116    3,233 
Management internalization       41,907        43,554 
Weather-related losses, net   107    336    288    1,014 
Depreciation and amortization   16,839    15,530    62,683    48,624 
Total expenses   41,283    77,153    155,028    168,223 
Operating income (loss)   8,728    (40,579)   29,688    (44,647)
Other income (expense)                    
Other income               17 
Preferred returns and equity in income of unconsolidated real estate joint ventures   2,435    2,472    10,312    10,336 
Gain on sale of real estate investments       123        50,163 
Gain on sale of real estate joint venture interests       24        10,262 
Loss on extinguishment of debt and debt modification costs           (2,277)   (1,639)
Interest expense, net   (16,935)   (9,181)   (52,998)   (31,520)
Total other (expense) income   (14,500)   (6,562)   (44,963)   37,619 
Net loss   (5,772)   (47,141)   (15,275)   (7,028)
Preferred stock dividends   (9,642)   (7,753)   (35,637)   (27,023)
Preferred stock accretion   (1,829)   (1,123)   (5,970)   (3,011)
Net (loss) income attributable to noncontrolling interests                    
Operating partnership units   (3,998)   (9,376)   (12,839)   (9,372)
Partially owned properties   (460)   (400)   (1,284)   17,989 
Net (loss) income attributable to noncontrolling interests   (4,458)   (9,776)   (14,123)   8,617 
Net loss attributable to common stockholders  $(12,785)  $(46,241)  $(42,759)  $(45,679)
                     
Net loss per common share - Basic  $(0.55)  $(1.87)  $(1.82)  $(1.79)
                     
Net loss per common share – Diluted  $(0.55)  $(1.87)  $(1.82)  $(1.79)
                     
Weighted average basic common shares outstanding   23,702,897    24,701,535    23,845,800    25,561,673 
Weighted average diluted common shares outstanding   23,702,897    24,701,535    23,845,800    25,561,673 

 

 27 

 

 

Bluerock Residential Growth REIT, Inc.
Reconciliation of Funds from Operations (FFO), Core FFO (CFFO), and Adjusted Funds from Operations (AFFO) Attributable to Common Shares and Units
For the Three and Twelve Months Ended December 31, 2018 and 2017
(Unaudited and dollars in thousands except for share and per share data)

 

   Three Months Ended   Year Ended 
   December 31,   December 31, 
   2018   2017   2018   2017 
Net loss attributable to common shares  $(12,785)  $(46,241)  $(42,759)  $(45,679)
Add back: Net loss attributable to operating partnership units   (3,998)   (9,376)   (12,839)   (9,372)
Net loss attributable to common shares and units   (16,783)   (55,617)   (55,598)   (55,051)
                     
Common stockholders and operating partnership units pro-rata share of:                    
Real estate depreciation and amortization (1)   15,785    14,520    59,103    44,741 
Gain on sale of real estate investments       (123)       (34,436)
Gain on sale of joint venture interests, net       (15)       (6,414)
FFO Attributable to Common Shares and Units   (998)   (41,235)   3,505    (51,160)
Common stockholders and operating partnership units pro-rata share of:                    
Acquisition and pursuit costs   37    19    116    3,091 
 Non-cash interest expense   780    428    3,757    1,939 
 Unrealized loss on derivatives   3,001        2,776     
Loss on extinguishment of debt and debt modification costs           2,226    1,551 
Weather-related losses, net   102    315    280    956 
Non-real estate depreciation and amortization (1)   85    6    301    6 
Non-recurring income               (16)
Non-cash preferred returns and equity in income of unconsolidated real estate joint ventures   (280)   (253)   (980)   (1,243)
Management internalization       41,907        43,554 
Non-cash equity compensation   1,768    1,972    6,807    15,022 
Preferred stock accretion   1,829    1,123    5,970    3,011 
CFFO Attributable to Common Shares and Units  $6,324   $4,282   $24,758   $16,711 
                     
Common stockholders and operating partnership units pro-rata share of:                    
Normally recurring capital expenditures   (735)   (520)   (2,569)   (1,541)
AFFO Attributable to Common Shares and Units  $5,589   $3,762   $22,189   $15,170 
                     
Per Share and Unit Information:                    
FFO Attributable to Common Shares and Units - diluted  $(0.03)  $(1.39)  $0.11   $(1.89)
                     
CFFO Attributable to Common Shares and Units - diluted  $0.20   $0.14   $0.80   $0.62 
                     
AFFO Attributable to Common Shares and Units - diluted  $0.18   $0.13   $0.72   $0.56 
                     
Weighted average common shares and units outstanding - diluted   31,113,092    29,710,465    30,995,249    27,032,354 

 

(1) The real estate depreciation and amortization amount includes our share of consolidated real estate-related depreciation and amortization of intangibles, less amounts attributable to noncontrolling interests – partially owned properties, and our similar estimated share of unconsolidated depreciation and amortization, which is included in earnings of our unconsolidated real estate joint venture investments.

 

 28 

 

 

Bluerock Residential Growth REIT, Inc.
Mortgages Payable Summary Information
As of December 31, 2018
(Unaudited and dollars in thousands)

 

Mortgages Payable

 

Property  Outstanding
Principal
   Interest Rate   Fixed/ Floating  Maturity Date
ARIUM at Palmer Ranch  $41,348    4.41%  Fixed  May 1, 2025
ARIUM Glenridge   49,500    3.68%  L + 1.33% subject to Cap (1)  September 1, 2025
ARIUM Grandewood   39,385    4.05%  (2)  July 1, 2025
ARIUM Hunter’s Creek   72,294    3.65%  Fixed  November 1, 2024
ARIUM Metrowest   64,559    4.43%  Fixed  May 1, 2025
ARIUM Palms   30,320    3.75%  L + 1.40% subject to Cap (1)  September 1, 2025
ARIUM Pine Lakes   26,950    3.95%  Fixed  November 1, 2023
ARIUM Westside   52,150    3.68%  Fixed  August 1, 2023
Ashford Belmar   100,675    4.53%  Fixed  December 1, 2025
Ashton Reserve I   30,878    4.67%  Fixed  December 1, 2025
Ashton Reserve II   15,213    3.85%  L + 1.50% subject to Cap (1)  August 1, 2025
Citrus Tower   41,438    4.07%  Fixed  October 1, 2024
Enders Place at Baldwin Park (3)   23,822    4.30%  Fixed  November 1, 2022
James on South First   26,500    4.35%  Fixed  January 1, 2024
Marquis at Crown Ridge   28,634    3.96%  L + 1.61% subject to Cap (1)  June 1, 2024
Marquis at Stone Oak   42,725    3.96%  L + 1.61% subject to Cap (1)  June 1, 2024
Marquis at The Cascades I   32,899    3.96%  L + 1.61% subject to Cap (1)  June 1, 2024
Marquis at The Cascades II   22,960    3.96%  L + 1.61% subject to Cap (1)  June 1, 2024
Marquis at TPC   16,826    3.96%  L + 1.61% subject to Cap (1)  June 1, 2024
Outlook at Greystone   22,105    4.30%  Fixed  June 1, 2025
Park & Kingston (4)   18,432    3.41%  Fixed  April 1, 2020
Plantation Park   26,625    4.64%  Fixed  July 1, 2028
Preston View   41,657    3.85%  L + 1.50% subject to Cap (1)  August 1, 2025
Roswell City Walk   51,000    3.63%  Fixed  December 1, 2026
Sorrel   38,684    4.64%  L + 2.29% subject to Cap (1)  May 1, 2023
Sovereign   28,227    3.46%  Fixed  November 10, 2022
The Brodie   34,825    3.71%  Fixed  December 1, 2023
The Links at Plum Creek   40,000    4.31%  Fixed  October 1, 2025
The Mills   26,298    4.21%  Fixed  January 1, 2025
The Preserve at Henderson Beach   35,602    4.65%  Fixed  January 5, 2023
Veranda at Centerfield   26,100    3.60%  L + 1.25% subject to Cap (1)  July 26, 2023
Villages of Cypress Creek   26,200    3.23%  Fixed  October 1, 2022
Wesley Village   40,545    4.25%  Fixed  April 1, 2024
Total   1,215,376            
Fair value adjustments   2,204            
Deferred financing costs, net   (11,444)           
Total  $1,206,136            
Weighted Average Interest Rate   4.06%           

 

(1) In December 2018, one month LIBOR in effect was 2.35%. One month LIBOR at December 31, 2018 was 2.50%. LIBOR rate is subject to a LIBOR rate cap of 2.50% until at earliest July 1, 2021.

(2) The principal balance includes a $19.7 million advance at a fixed rate of 4.35% and a $19.7 million advance at a variable rate of 3.75% as of December 31, 2018.

(3) The principal balance includes a $16.2 million loan at a fixed rate of 3.97% and a $7.6 million supplemental loan at a fixed rate of 5.01%.

(4) The principal balance includes a $15.3 million loan at a fixed rate of 3.21% and a $3.2 million supplemental loan at a fixed rate of 4.34%.

 

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Bluerock Residential Growth REIT, Inc.
Mortgages Payable Summary Information Continued
As of December 31, 2018
(Unaudited and dollars in thousands)

 

Mortgages Payable Maturity Schedules

 

Year  Fixed Rate   Floating Rate   Total   % of Total 
2019  $4,530   $2,835   $7,365    0.61%
2020   27,109    3,644    30,753    2.53%
2021   11,251    4,654    15,905    1.31%
2022   85,568    5,904    91,472    7.53%
2023   153,084    68,131    221,215    18.20%
Thereafter   568,644    280,022    848,666    69.82%
   $850,186   $365,190   $1,215,376    100.00%
Fair Value Adjustments   2,204    -    2,204      
Subtotal  $852,390   $365,190   $1,217,580      
Deferred Financing Costs, net   (7,611)   (3,833)   (11,444)     
Total  $844,779   $361,357   $1,206,136      

 

   Amounts   % of Total   Weighted
Average Interest
Rates
   Weighted
Average
Maturities
(years)
 
Secured Fixed Rate Debt  $852,390    70.0%   4.12%   5.8 
Secured Floating Rate Debt (1)   365,190    30.0%   3.92%   5.8 
Total/Average  $1,217,580    100.0%   4.06%   5.8 

 

(1) 100% of the floating rate debt is subject to a LIBOR rate cap of 2.50% until at earliest July 1, 2021.

 

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Bluerock Residential Growth REIT, Inc.
2019 Projected Guidance
(Unaudited and dollars in thousands except for per share data)

  

   2019 Outlook (3) 
   Low   High 
         
Core Funds From Operations Attributable to Common Shares and Units per share  $0.80   $0.84 
           
Same Store NOI Growth   3.0%   4.0%
Property management fee as a % of revenue   2.7%   2.7%
General and administrative expenses (1)   10,300    10,000 
Income from preferred equity & mezzanine investments   33,500    33,500 
Normally recurring capital expenditures (2)   2,500    2,300 
           
Value-add Upgrades          
Forecasted unit count   900    1,200 
Return on investment   20%   20%
           
Dispositions          
Total Gross Asset Value   200,000    400,000 
           
Non-Controlling Interest, Preferred Stock and Share Count Assumptions          
Noncontrolling interest % of CFFO - Partially owned properties   5.0%   4.7%
Series B Raise   135,000    185,000 
Preferred stock dividends   44,000    45,300 
Estimated weighted average diluted common shares and units outstanding   31,500    31,500 

 

Amounts in thousands except per share.

 

(1) General and administrative expenses exclude non-cash expenses, such as depreciation and non-cash equity compensation.

 

(2) Normally recurring capital expenditures exclude development, investment, revenue enhancing and non-recurring capital expenditures.

 

(3) The Company has not reconciled projected Core Funds From Operations Attributable to Common Shares and Units per share (“CFFO”) guidance to the corresponding GAAP financial measure because it does not provide guidance for various reconciling items. The Company is unable to provide guidance for these reconciling items since certain items that impact net income are outside of its control and cannot be reasonably predicted. Accordingly, reconciliations to the corresponding GAAP financial measures are not available.

 

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Bluerock Residential Growth REIT, Inc.
Definitions of Non-GAAP Financial Measures

 

The foregoing supplemental financial data includes certain non-GAAP financial measures that we believe are helpful in understanding our business, as further described below. Our definition and calculation of these non-GAAP financial measures may differ from those of other REITs, and may, therefore, not be comparable.

 

Funds from Operations, Core Funds from Operations and Adjusted Funds from Operations, Attributable to Common Shares and Units

We believe that funds from operations (“FFO”), as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), core funds from operations (“CFFO”), and adjusted funds from operations (“AFFO”) are important non-GAAP supplemental measures of operating performance for a REIT.

 

FFO attributable to common shares and units is a non-GAAP financial measure that is widely recognized as a measure of REIT operating performance. We consider FFO to be an appropriate supplemental measure of our operating performance as it is based on a net income analysis of property portfolio performance that excludes non-cash items such as depreciation. The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, which implies that the value of real estate assets diminishes predictably over time. Since real estate values historically rise and fall with market conditions, presentations of operating results for a REIT, using historical accounting for depreciation, could be less informative. We define FFO, consistent with the NAREIT definition, as net income, computed in accordance with GAAP, excluding gains (or losses) from sales of property, plus depreciation and amortization of real estate assets, plus impairment write-downs of depreciable real estate, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect FFO on the same basis.

 

CFFO makes certain adjustments to FFO, removing the effect of items that do not reflect ongoing property operations such as stock compensation expense, acquisition expenses, unrealized gains or losses on derivatives, losses on extinguishment of debt and debt modification costs (includes prepayment penalties incurred and the write-off of unamortized deferred financing costs and fair market value adjustments of assumed debt), non-cash interest, one-time weather-related costs, and preferred stock accretion. We believe that CFFO is helpful to investors as a supplemental performance measure because it excludes the effects of certain items which can create significant earnings volatility, but which do not directly relate to our core recurring property operations. As a result, we believe that CFFO can help facilitate comparisons of operating performance between periods and provides a more meaningful predictor of future earnings potential.

 

AFFO makes certain adjustments to CFFO in order to arrive at a more refined measure of the operating performance of our portfolio. There is no industry standard definition of AFFO and practice is divergent across the industry. AFFO adjusts CFFO for items that impact our ongoing operations, such as subtracting recurring capital expenditures (and while we were externally managed, when calculating the quarterly incentive fee paid to our former Manager only, we further adjusted FFO to include any realized gains or losses on our real estate investments).  We believe that AFFO is helpful to investors as a meaningful supplemental indicator of our operational performance.

 

Our calculation of CFFO and AFFO differs from the methodology used for calculating CFFO and AFFO by certain other REITs and, accordingly, our CFFO and AFFO may not be comparable to CFFO and AFFO reported by other REITs. Our management utilizes FFO, CFFO, and AFFO as measures of our operating performance after adjustment for certain non-cash items, such as depreciation and amortization expenses, and acquisition and pursuit costs that are required by GAAP to be expensed but may not necessarily be indicative of current operating performance and that may not accurately compare our operating performance between periods. Furthermore, although FFO, CFFO, AFFO and other supplemental performance measures are defined in various ways throughout the REIT industry, we also believe that FFO, CFFO, and AFFO may provide us and our stockholders with an additional useful measure to compare our financial performance to certain other REITs. While we were externally managed, we also used AFFO for purposes of determining the quarterly incentive fee paid to our former Manager in prior periods.

 

Neither FFO, CFFO, nor AFFO is equivalent to net income, including net income attributable to common stockholders, or cash generated from operating activities determined in accordance with GAAP. Furthermore, FFO, CFFO, and AFFO do not represent amounts available for management's discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments or uncertainties. Neither FFO, CFFO, nor AFFO should be considered as an alternative to net income, including net income attributable to common stockholders, as an indicator of our operating performance or as an alternative to cash flow from operating activities as a measure of our liquidity.

 

We have acquired interests in five additional operating properties and three investments accounted for on the equity method of accounting subsequent to December 31, 2017. The results presented are not directly comparable and should not be considered an indication of our future operating performance (unaudited and dollars in thousands, except share and per share data).

 

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Recurring Capital Expenditures

We define recurring capital expenditures as expenditures that are incurred at every property and exclude development, investment, revenue enhancing and non-recurring capital expenditures.

 

Non-Recurring Capital Expenditures

We define non-recurring capital expenditures as expenditures for significant projects that upgrade units or common areas and projects that are revenue enhancing.

 

Same Store Properties

Same store properties are conventional multifamily residential apartments which were owned and operational for the entire periods presented.

 

 33 

 

 

Bluerock Residential Growth REIT, Inc.
Definitions of Non-GAAP Financial Measures
(Unaudited and dollars in thousands)

 

Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate ("EBITDAre")

 

NAREIT defines earnings before interest, taxes, depreciation and amortization for real estate ("EBITDAre") (September 2017 White Paper) as net income, computed in accordance with GAAP, before interest expense, income taxes, depreciation and amortization expense, and further adjusted for gains and losses from sales of depreciated operating properties, and impairment write-downs of depreciated operating properties.

 

We consider EBITDAre to be an appropriate supplemental measure of our performance because it eliminates depreciation, income taxes, interest and non-recurring items, which permits investors to view income from operations unobscured by non-cash items such as depreciation, amortization, the cost of debt or non-recurring items.

 

Adjusted EBITDAre represents EBITDAre further adjusted for non-comparable items and it is not intended to be a measure of free cash flow for our management’s discretionary use, as it does not consider certain cash requirements such as income tax payments, debt service requirements, capital expenditures and other fixed charges.

 

EBITDAre and Adjusted EBITDAre are not recognized measurements under GAAP. Because not all companies use identical calculations, our presentation of EBITDAre and Adjusted EBITDAre may not be comparable to similarly titled measures of other companies.

 

The reconciliations of net loss attributable to common stockholders to EBITDAre and Adjusted EBITDAre are presented in the table below:

 

   Three Months Ended   Year Ended 
   December 31,   December 31, 
   2018   2017   2018   2017 
Net loss attributable to common stockholders  $(12,785)  $(46,241)  $(42,759)  $(45,679)
Net (loss) income attributable to noncontrolling interests   (4,458)   (9,776)   (14,123)   8,617 
Preferred stock dividends   9,642    7,753    35,637    27,023 
Preferred stock accretion   1,829    1,123    5,970    3,011 
Interest expense, net   16,935    9,181    52,998    31,520 
Depreciation and amortization   16,754    15,524    62,382    48,618 
Gain on sale of real estate investments   -    (123)   -    (50,163)
Gain on sale of joint venture interests, net   -    (24)   -    (10,262)
Loss on extinguishment of debt and debt modification costs   -    -    2,277    1,639 
EBITDAre  $27,917   $(22,583)  $102,382   $14,324 
Acquisition and pursuit costs   37    19    116    3,233 
Management internalization   -    41,907    -    43,554 
Non-real estate depreciation and amortization   85    6    301    6 
Weather-related losses, net   107    336    288    1,014 
Non-cash equity compensation   1,768    1,972    6,807    15,022 
Non-recurring income   -    -    -    (17)
Non-cash preferred returns and equity in income of unconsolidated real estate joint ventures   (280)   (253)   (980)   (1,243)
Adjusted EBITDAre  $29,634   $21,404   $108,914   $75,893 

 

 34 

 

 

Bluerock Residential Growth REIT, Inc.
Definitions of Non-GAAP Financial Measures
(Unaudited and dollars in thousands)

 

Property Net Operating Income ("Property NOI")

 

We believe that net operating income, or NOI, is a useful measure of our operating performance. We define NOI as total property revenues less total property operating expenses, excluding depreciation and amortization and interest. Other REITs may use different methodologies for calculating NOI, and accordingly, our NOI may not be comparable to other REITs. We believe that this measure provides an operating perspective not immediately apparent from GAAP operating income or net income. We use NOI to evaluate our performance on a same store and non-same store basis; NOI measures the core operations of property performance by excluding corporate level expenses and other items not related to property operating performance and captures trends in rental housing and property operating expenses. However, NOI should only be used as a supplemental measure of our financial performance.

 

We have acquired interests in five additional operating properties and three investments accounted for on the equity method of accounting subsequent to December 31, 2017. Therefore, the results presented in the table below are not directly comparable and should not be considered an indication of our future operating performance.

 

The following table reflects net loss attributable to common stockholders together with a reconciliation to NOI and to same store and non-same store contributions to consolidated NOI, as computed in accordance with GAAP for the periods presented:

 

   Three Months Ended   Year Ended 
   December 31,   December 31, 
   2018   2017   2018   2017 
Net loss attributable to common shares  $(12,785)  $(46,241)  $(42,759)  $(45,679)
Add back: Net loss attributable to operating partnership units   (3,998)   (9,376)   (12,839)   (9,372)