Preferred Apartment Communities, Inc. Reports Results for Fourth Quarter 2020
03/01/2021 - 04:20 PM
ATLANTA , March 1, 2021 /PRNewswire/ -- Preferred Apartment Communities, Inc. (NYSE: APTS) ("we," "our," the "Company," "Preferred Apartment Communities" or "PAC") today reported results for the quarter and year ended December 31, 2020 . Unless otherwise indicated, all per share results are reported based on the basic weighted average shares of Common Stock and Class A Units ("Class A Units") of the Preferred Apartment Communities Operating Partnership (our "Operating Partnership") outstanding. See Definitions of Non-GAAP Measures.
"We are very pleased with our fourth quarter and full year operational results across our entire portfolio which demonstrate the durability and quality of these assets located in the thriving Sunbelt region. Our rent collections were very strong, and we credit this to our best in class teams and our focused Sunbelt strategy. Our Class A suburban multifamily portfolio continues to demonstrate solid growth due to broad positive economic and migration trends," stated Joel Murphy , Preferred Apartment Communities' President and Chief Executive Officer.
"2020 was also a transformational year for PAC. We went on offense and focused on several key strategic initiatives designed to streamline our business and position PAC for future growth. We completed our internalization, which simplified our platform, and completed the sale of our student housing portfolio for $478 million $277 million
Our operating results are presented below.
Three months ended
Year ended December 31,
2020
2019
% change
2020
2019
% change
Revenues (in thousands)
$
121,121
$
124,866
(3.0)
%
$
502,197
$
470,427
6.8
%
Per share data:
Net income (loss) (1)
$
(0.77)
$
(0.71)
(8.5)
%
$
(6.95)
$
(2.73)
—
FFO (2)
$
(0.20)
$
0.31
—
$
(3.36)
$
1.37
—
Core FFO (2)
$
0.31
$
0.35
(11.4)
%
$
1.07
$
1.49
(28.2)
%
AFFO (2)
$
0.25
$
0.35
(28.6)
%
$
0.83
$
1.02
(18.6)
%
Dividends (3)
$
0.175
$
0.2625
(33.3)
%
$
0.7875
$
1.0475
(24.8)
%
(1)
Per weighted average share of Common Stock outstanding for the periods indicated.
(2)
FFO, Core FFO and AFFO results are presented per basic weighted average share of Common Stock and Class A Unit in our Operating Partnership outstanding for the periods indicated. See Reconciliations of FFO Attributable to Common Stockholders and Unitholders, Core FFO and AFFO to Net Income (Loss) Attributable to Common Stockholders and Definitions of Non-GAAP Measures.
(3)
Per share of Common Stock and Class A Unit outstanding.
Financial
Our total revenues for the year ended December 31, 2020 increased 6.8% to approximately $502.2 million December 31, 2019 , largely due to incremental revenues from newly acquired real estate assets. Our total revenues declined for the quarter ended December 31, 2020 versus the 2019 period due to the sale on November 3, 2020 of our eight student housing properties. Our net loss per share was $(0.77) $(0.71) December 31, 2020 and 2019, respectively. Funds From Operations, or FFO, was $(0.20) $0.31 December 31, 2020 and 2019, respectively. The decline in FFO per share was driven by: deemed dividends resulting from our call of preferred stock and other cash redemptions of preferred stock in the fourth quarter 2020 that totaled approximately $0.49 decreased interest revenue from our smaller portfolio of real estate loan investments and lines of credit of approximately $0.06 a gain from the sale of mortgage-backed securities in 2019 which did not recur in 2020 of approximately $0.03 partially offset by an increase of approximately $0.06 Our Core FFO per share result increased to $0.31 19.2% from $0.26 higher purchase option termination revenue of approximately $0.02 land easement proceeds received in the fourth quarter 2020 of approximately $0.01 reduced monthly preferred stock dividends following the call of 208,786 shares of preferred stock of approximately $0.01 Our AFFO per share increased to $0.25 $0.07 an increase of accrued interest received of approximately $0.07 higher purchase option termination revenue of approximately $0.02 land easement proceeds received in the fourth quarter 2020 of approximately $0.01 reduced monthly preferred stock dividends following the call of 208,786 shares of preferred stock of approximately $0.01 lower recurring capital expenditures on our real estate properties of approximately $0.02 Our Core FFO payout ratio to Common Stockholders and Unitholders was approximately 57.9% and our Core FFO payout ratio to our preferred stockholders was approximately 78.4% for the fourth quarter 2020. (A) Our AFFO payout ratio to our preferred stockholders improved to approximately 81.7% for the fourth quarter 2020 from 90.9% for the third quarter 2020.(A) Our fourth quarter 2020 AFFO payout ratio reflects an increase of accrued interest received on our real estate loan investment portfolio of approximately $3.5 million $22.5 million As of December 31, 2020 , our total assets were approximately $4.3 billion $4.8 billion December 31, 2019 that mainly resulted from the sale of our student housing portfolio during the fourth quarter 2020 and the utilization of proceeds to fund a call of 208,786 shares of our preferred stock. (A)
We calculate the Core FFO and AFFO payout ratios to Common Stockholders as the ratio of Common Stock dividends and distributions to Core FFO and AFFO. We calculate the Core FFO and AFFO payout ratios to preferred stockholders as the ratio of Preferred Stock dividends to the sum of Preferred Stock dividends and Core FFO and AFFO. Since our operations resulted in a net loss from continuing operations for the periods presented, a payout ratio based on net loss is not calculable. See Definitions of Non-GAAP Measures.
The following chart details monthly cash collections of rental revenues before and after the effect of rent deferrals across all our operating business lines as of February 25, 2021 :
Cash Collections of 2020 Recurring Rental Revenues (1)
Unadjusted for rent
First
Second
Third
October
November
December
Multifamily
99.9
%
98.8
%
99.0
%
99.0
%
99.1
%
99.1
%
Office
99.9
%
98.1
%
99.7
%
99.9
%
100.0
%
99.4
%
Grocery-anchored retail (2)
99.5
%
91.7
%
95.9
%
97.3
%
97.2
%
97.8
%
Cash Collections of 2020 Recurring Rental Revenues (1)
Adjusted for rent deferrals:
First
Second
quarter
Third
October
November
December
Multifamily
99.9
%
99.4
%
99.0
%
99.0
%
99.1
%
99.1
%
Office
99.9
%
99.9
%
100.0
%
99.9
%
100.0
%
99.4
%
Grocery-anchored retail (2)
99.6
%
96.8
%
97.6
%
98.2
%
98.0
%
97.9
%
(1)
Percent of revenue billed includes recurring charges for base rent, operating expense escalations, pet, garage, parking and storage rent, as well as receivables from U.S. Government tenants, from which collection is reasonably assured.
(2)
Includes an investment in an unconsolidated joint venture that is not prorated for our ownership percentage.
The following chart details monthly occupancy and percent leased rates across all our operating business lines:
2020 Monthly Occupancy and Percentages Leased
First
Second
Third
October
November
December
Occupancy:
Multifamily (stabilized) (1)
95.5
%
94.7
%
95.6
%
95.4
%
95.8
%
95.6
%
Percent leased: (2)
Office
96.7
%
96.2
%
95.5
%
95.4
%
95.4
%
94.7
%
Grocery-anchored retail (3)
92.6
%
92.7
%
92.5
%
92.4
%
91.1
%
91.0
%
(1)
For quarterly periods, calculated as the average of the number of occupied units on the 20th day of each of the trailing three months from the period end date.
(2)
Percent of total area leased as of the period end date.
(3)
Includes an investment in an unconsolidated joint venture that is not prorated for our ownership percentage.
Operational
Our multifamily communities' same store rental and other property revenues increased 0.6% and our same store net operating income increased 0.7% for the year ended December 31, 2020 versus 2019. For the fourth quarter, same store revenues increased 0.1% and same store net operating income decreased 1.9% . Real estate taxes and insurance costs increased 22% and 24% , respectively for the quarter and 6% and 26% respectively for the year to date periods in 2020 due to our increased exposure from property tax judgements that are currently in litigation or under appeal and from increased insurance costs related to adjustments for replacement cost underwriting results. Decreases in property operating and maintenance expense resulted from cost savings realized from the absence of property management fees to our Former Manager following Internalization and reduced advertising and marketing expenditures. We collected 99% of rental revenues from residents in our multifamily communities for each month in 2020. Our average recurring rental revenue collections before and after any effect of rent deferrals for the fourth quarter 2020 were approximately 99.1% and 99.1% for multifamily communities, 97.4% and 98.1% for grocery-anchored retail properties and 99.7% and 99.7% for office properties, respectively. Rent deferments provided to our residents and tenants are limited and are primarily related to a change of timing of rent payments with no significant changes to total payments or term. As of December 31, 2020 , we have deferred $1.9 million 2.7% cumulatively over the last three quarters. Including this deferred rent, we have accounted for 97.5% , 97.2% and 96.4% of fourth quarter, third quarter and second quarter retail recurring rental revenue, respectively. In addition to the deferrals, we granted approximately $542,000 0.8% of retail recurring rental revenues cumulatively over the last three quarters. These rental abatements were generally accompanied by an increase in the tenant's lease term or the lease terms were amended to be more favorable to us. Our total retail reserves held steady at $2.5 million 2.3% of total retail revenues year to date, which is 0.6% of total company rental and other property revenues. During the fourth quarter 2020, we received the full principal amounts totaling $44.6 million $4.2 million $48.8 million For the full year 2020, we originated three real estate investment loans with a total commitment of $44.1 million As of December 31, 2020 , the average age of our multifamily communities was approximately 6.3 years, which is the youngest in the public multifamily REIT industry. As of December 31, 2020 , all of our owned multifamily communities had achieved stabilization except for our two fourth quarter acquisitions, which we define as reaching 93% physical occupancy for three full months in a quarter. One fourth quarter multifamily acquisition will achieve stabilization on March 31, 2021 , at which time we will have owned it for a full fiscal quarter. The physical occupancy of our same-store multifamily communities increased to 95.4% at December 31, 2020 from 95.3% at December 31, 2019 . Financing and Capital Markets
As of December 31, 2020 , approximately 97.4% of our permanent property-level mortgage debt has fixed interest rates and approximately 0.8% has variable interest rates which are capped. We believe we are well protected against potential increases in market interest rates. Our overall weighted average interest rate for our mortgage debt portfolio was 3.55% for multifamily communities, 4.13% for office properties, 3.91% for grocery-anchored retail properties and 3.77% in the aggregate. At December 31, 2020 , our leverage, as measured by the ratio of our debt to the undepreciated book value of our total assets, was approximately 55.6% . At December 31, 2020 , we had $178.0 million $75.7 million During the fourth quarter 2020, we issued and sold an aggregate of 52,333 shares of Preferred Stock and redeemed an aggregate of 49,105 shares of Preferred Stock, resulting in a net issuance of 3,228 shares of Preferred Stock. Also during the fourth quarter 2020, we called 208,786 shares of Preferred Stock for a net decrease of 205,558 shares of Preferred Stock outstanding and a net cash disbursement of approximately $209.3 Significant Transactions
On November 3, 2020 , we announced via a press release the closing on that day of the sale of all of our student housing properties and one student housing related real estate loan investment to an unrelated third party for a sales price of $478.7 million During the fourth quarter 2020, we acquired The Blake, a 281-unit multifamily community located in Orlando, Florida and The Menlo , a 332-unit multifamily community located in Jacksonville, Florida . On November 12, 2020 , we closed on the sale of the Avenues at Creekside, a 395-unit multifamily community located in San Antonio, Texas that resulted in a gain of approximately $17.3 million On November 19, 2020 , we announced an approval by our common stockholders of a reduction of our call option on our Series A Redeemable Preferred Stock from 10 years to 5 years. On November 19, 2020 , we announced a call of approximately $208.8 million During the fourth quarter 2020, we received approximately $48.8 million Real Estate Assets
At December 31, 2020 , our portfolio of owned real estate assets and potential additions from purchase options we held from our real estate loan investments consisted of:
Owned as of (1)
Potential (2) (3)
Potential total
Residential properties:
Properties
37
10
47
Units
11,143
2,808
13,951
Grocery-anchored shopping centers:
Properties
54
—
54
Gross leasable area (square feet)
6,208,278
—
6,208,278
Office buildings:
Properties
9
1
10
Rentable square feet
3,169,000
195,000
3,364,000
Development properties
2
—
2
Rentable square feet
35,000
—
35,000
(1)
One multifamily community, two grocery-anchored shopping centers and two office buildings are owned through consolidated joint ventures. One grocery-anchored shopping center is an investment in an unconsolidated joint venture.
(2)
We evaluate each project individually and we make no assurance that we will acquire any of the underlying properties from our real estate loan investment portfolio.
(3)
The Company has terminated various purchase option agreements in exchange for termination fees. These properties are excluded from the potential additions from our real estate loan investment portfolio.
Same-Store Multifamily Communities Financial Data
The following chart presents same-store operating results for the Company's multifamily communities. We define our population of same-store multifamily communities as those that have achieved occupancy at or above 93% for all three consecutive months within a single quarter (stabilized) before the beginning of the prior year and that have been owned for at least 15 full months as of the end of the first quarter of the current year, enabling comparisons of the current year quarterly and annual reporting periods to the prior year comparative periods. The Company excludes the operating results of properties for which construction of adjacent phases has commenced and properties which are undergoing significant capital projects, have sustained significant casualty losses, or are being marketed for sale as of the end of the reporting period. For the periods presented, same-store operating results consist of the operating results of the following multifamily communities containing an aggregate 8,299 units, or 74.5% of our multifamily units:
Aster at Lely Resort
Avenues at Cypress
Avenues at Northpointe
Citi Lakes
Lenox Village
Retreat at Lenox Village
Overton Rise
Sorrel
Venue at Lakewood Ranch
Citrus Village
525 Avalon Park
Vineyards
Founders Village
Retreat at Greystone
City Vista
Summit Crossing I
Luxe at Lakewood Ranch
Adara at Overland Park
City Park View
Summit Crossing II
Aldridge at Town Village
Reserve at Summit Crossing
Crosstown Walk
Claiborne Crossing
Green Park
Colony at Centerpointe
Lux at Sorrel
Vestavia Reserve
Same-store net operating income is a non-GAAP measure that is most directly comparable to net income (loss), as shown in the reconciliations below. See Definitions of Non-GAAP Measures.
Reconciliation of Net Income (Loss) to Multifamily Communities' Same-Store Net Operating Income (NOI)
Three months ended:
(in thousands)
12/31/2020
12/31/2019
Net income (loss)
$
17,472
$
(1,364)
Add:
Equity stock compensation
586
301
Depreciation and amortization
48,581
47,874
Interest expense
27,950
28,798
Management fees
—
8,867
Corporate G&A and other
7,700
1,603
(Income) loss from unconsolidated joint venture
194
—
Management Internalization
288
1,844
Allowance for expected credit losses
640
2,038
Waived asset management and general and administrative expense fees
—
(3,259)
Less:
Interest revenue on notes receivable
12,115
13,553
Interest revenue on related party notes receivable
485
1,966
Miscellaneous revenues
977
1,000
Change in fair value of net assets of consolidated
VIEs from mortgage-backed pools
—
515
Gains on sales of real estate and mortgage-backed securities, net
20,195
1,563
Gain (loss) on sale of real estate loan investment and land condemnation, net
(11)
207
Property net operating income
69,650
67,898
Less:
Non-same-store property revenues
(71,468)
(72,312)
Add:
Non-same-store property operating expenses
22,591
25,579
Same-store net operating income
$
20,773
$
21,165
Multifamily Communities' Same Store Net Operating Income
Three months ended:
(in thousands)
12/31/2020
12/31/2019
$ change
% change
Revenues:
Rental and other property revenues
$
36,077
$
36,036
$
41
0.1
%
Operating expenses:
Property operating and maintenance
6,078
6,843
(765)
(11.2)
%
Payroll
2,887
2,849
38
1.3
%
Real estate taxes and insurance
6,339
5,179
1,160
22.4
%
Total operating expenses
15,304
14,871
433
2.9
%
Same-store net operating income
$
20,773
$
21,165
$
(392)
(1.9)
%
Same-store average physical occupancy
95.6
%
95.1
%
Corporate level expenses related to the management and operations of the Multifamily and Student housing property portfolios are allocated
Reconciliation of Net Income (Loss) to Multifamily Communities' Same-Store Net Operating Income (NOI)
Years ended:
(in thousands)
12/31/2020
12/31/2019
Net loss
$
(181,603)
$
(7,458)
Add:
Equity stock compensation
1,644
1,223
Depreciation and amortization
201,677
185,065
Interest expense
118,558
111,964
Management fees
3,099
33,516
Corporate G&A and other
30,809
5,773
(Income) loss from unconsolidated joint venture
314
—
Management Internalization
180,116
2,987
Allowance for expected credit losses
6,103
2,038
Waived asset management and general and administrative expense fees
(1,136)
(11,764)
Less:
Interest revenue on notes receivable
46,610
49,542
Interest revenue on related party notes receivable
4,235
11,946
Miscellaneous revenues
5,537
2,023
Change in fair value of net assets of consolidated
VIEs from mortgage-backed pools
—
1,831
Loss on extinguishment of debt
(6,674)
(84)
Gains on sales of real estate and mortgage-backed securities, net
23,456
1,567
Gains on sale of real estate loan investment and land condemnation
517
954
Property net operating income
285,900
255,565
Less:
Non-same-store property revenues
(302,300)
(264,292)
Add:
Non-same-store property operating expenses
99,950
91,729
Same-store net operating income
$
83,550
$
83,002
Multifamily Communities' Same Store Net Operating Income
Years ended:
(in thousands)
12/31/2020
12/31/2019
$ change
% change
Revenues:
Rental and other property revenues
$
143,514
$
142,624
$
890
0.6
%
Operating expenses:
Property operating and maintenance
24,714
26,439
(1,725)
(6.5)
%
Payroll
11,364
11,217
147
1.3
%
Real estate taxes and insurance
23,886
21,966
1,920
8.7
%
Total operating expenses
59,964
59,622
342
0.6
%
Same-store net operating income
$
83,550
$
83,002
$
548
0.7
%
Corporate level expenses related to the management and operations of the multifamily and student housing property portfolios are allocated on
Dividends Quarterly Dividends on Common Stock and Class A OP Units
On November 5, 2020 , our board of directors declared a quarterly dividend on our Common Stock of $0.17 5January 15, 2021 to stockholders of record on December 15, 2020 . In conjunction with the Common Stock dividend, our operating partnership declared a distribution on its Class A Units of $0.17 5January 15, 2021 to all Class A Unit holders of record as of December 15, 2020 .
Monthly Dividends on Preferred Stock
We declared monthly dividends of $5.00 $52.7 million 6% annual yield. We declared monthly dividends of $5.00 $1.9 million 6% annual yield. We declared dividends totaling approximately $1.5 million 5.75% in year one of issuance to 7.50% in year eight and thereafter. We declared dividends totaling approximately $271,000 6.1% in year one of issuance to 7.1% in year ten and thereafter.
Subsequent to Quarter End
Between January 1, 2021 and February 28, 2021 , we issued 35,040 shares of Series A1 Preferred Stock and collected net proceeds of approximately $31.5 million $2.8 million
On February 24, 2021 , our board of directors declared a quarterly dividend on our Common Stock of $0.17 5April 15, 2021 to stockholders of record on March 15, 2021 .
Conference Call and Supplemental Data
We will hold our quarterly conference call on Tuesday, March 2, 2021 at 11:00 a.m. Eastern Time to discuss our fourth quarter and year ended 2020 results. To participate in the conference call, please dial in to the following:
Live Conference Call Details Tuesday, March 2, 2021 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time )
The live broadcast of PAC's fourth quarter and year ended 2020 conference call will be available online on a listen-only basis at the company's website, www.pacapts.com , under "Investors" and then click on the "News and Events" heading.
A replay of the call will be archived on PAC's' website under Investors/News and Events/Events.
2021 Guidance:
Net income (loss) per share
Core FFO $0.81 $0.89 per weighted average share and unit.
Assumptions for our 2021 Core FFO guidance:
Same-store NOI growth for multifamily communities of 1.5% - 3.0% Real estate loan investment originations of $50 million $100 million This guidance also includes the impact of a material decline in purchase option termination revenues. Please note that our guidance does not include any additional calls of our Series A Preferred Stock. We will update this guidance if, as and when it becomes appropriate.
We expect the growth in NOI for multifamily communities and the new investment loan originations to be weighted towards the second half of 2021. We will be active in the acquisition market for multifamily assets but will maintain investment discipline in a very competitive environment.
AFFO, Core FFO and FFO are calculated after deductions for all preferred stock dividends. Reconciliations of net income (loss) attributable to common stockholders to FFO, Core FFO and AFFO for the three-months and years ended December 31, 2020 and 2019 appear in the attached report, as well as on our website using the following link:
https://investors.pacapts.com/q4-2020-quarterly-supplemental-financial-data
Forward-Looking Statements
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Estimates of future earnings, guidance, goals and performance are, by definition, and certain other statements in this Earnings Release and Supplemental Financial Data Report may constitute, "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance, achievements or transactions to be materially different from the results, guidance, goals, performance, achievements or transactions expressed or implied by the forward-looking statements. These statements may be identified by the use of forward-looking terminology such as "may," "trend," "will," "expects," "plans," "estimates," "anticipates," "projects," "intends," "believes," "strategy," "goals," "objectives," "outlook" and similar expressions. These risks, uncertainties and contingencies include, but are not limited to, (a) the impact of the COVID-19 pandemic and related federal, state and local government actions on PAC's business operations and the economic conditions in the markets in which PAC operates; (b) PAC's ability to mitigate the impacts arising from COVID-19 and (c) those disclosed in PAC's filings with the SEC. Factors that impact such forward-looking statements include, among others, our business and investment strategy; legislative or regulatory actions; the state of the U.S. economy generally or in specific geographic areas; economic trends and economic recoveries; changes in operating costs, including real estate taxes, utilities and insurance costs; our ability to obtain and maintain debt or equity financing; financing and advance rates for our target assets; our leverage level; changes in the values of our assets; the occurrence of natural or man-made disasters; availability of attractive investment opportunities in our target markets; our ability to maintain our qualification as a real estate investment trust, or REIT, for U.S. federal income tax purposes; availability of quality personnel; our understanding of our competition and market trends in our industry; and interest rates, real estate values, the debt securities markets and the general economy.
Except as otherwise required by the federal securities laws, we assume no liability to update the information in this Earnings Release and Supplemental Financial Data Report.
We refer you to the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2020 that was filed with the SEC on March 1, 2021 , which discuss various factors that could adversely affect our financial results. Such risk factors and information may be updated or supplemented by our Form 10-K, Form 10-Q and Form 8-K filings and other documents filed from time to time with the SEC.
COVID-19
Our percentages of rent collected have stabilized at or near pre-pandemic levels during the fourth quarter 2020. While the impacts of COVID-19 are continuing into 2021, the effects on our operations have been manageable and we believe this condition will persist, barring a dramatic change in the trajectory of the pandemic.
Additional Information
The SEC has declared effective the registration statement filed by the Company for each of our public offerings. Before you invest, you should read the final prospectus, and any prospectus supplements forming a part of the registration statement and other documents the Company has filed with the SEC for more complete information about the Company and the offering. In particular, you should carefully read the risk factors described in the final prospectus and in any related prospectus supplement and in the documents incorporated by reference in the final prospectus and any related prospectus supplement. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov . Alternatively, the Company or its dealer manager, Preferred Capital Securities, LLC, will arrange to send you a prospectus with respect to the Series A1/M1 Offering upon request by contacting John A. Isakson at (770) 818-4109, 3284 Northside Parkway NW, Suite 150, Atlanta, Georgia 30327.
The final prospectus for the Series A1/M1 Offering, dated October 22, 2019 , can be accessed through the following link:
https://www.sec.gov/Archives/edgar/data/1481832/000148183219000097/a424b5-2019seriesamshares.htm
Preferred Apartment Communities, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three months ended
Years ended December 31,
(In thousands, except per-share figures)
2020
2019
2020
2019
Revenues:
Rental and other property revenues
$
107,544
$
108,347
$
445,815
$
406,916
Interest income on loans and notes receivable
12,115
13,553
46,610
49,542
Interest income from related parties
485
1,966
4,235
11,946
Miscellaneous revenues
977
1,000
5,537
2,023
Total revenues
121,121
124,866
502,197
470,427
Operating expenses:
Property operating and maintenance
16,336
16,608
69,255
59,845
Property salary and benefits
5,412
5,848
22,377
20,693
Property management costs
961
3,807
4,989
13,981
Real estate taxes and insurance
15,185
14,186
63,294
56,832
General and administrative
7,700
1,603
30,809
5,773
Equity compensation to directors and executives
586
301
1,644
1,223
Depreciation and amortization
48,581
47,874
201,677
185,065
Asset management and general and administrative expense
fees to related party
—
8,867
3,099
33,516
Allowance for expected credit losses
640
2,038
6,103
2,038
Management Internalization expense
288
1,844
180,116
2,987
Total operating expenses
95,689
102,976
583,363
381,953
Waived asset management and general and administrative
expense fees
—
(3,259)
(1,136)
(11,764)
Net operating expenses
95,689
99,717
582,227
370,189
Operating income (loss) before gain on sale of real estate and loss from
unconsolidated joint venture
25,432
25,149
(80,030)
100,238
Loss from unconsolidated joint venture
(194)
—
(314)
—
Gains on sales of real estate and mortgage-backed securities, net
20,195
1,563
23,456
1,567
Operating income (loss)
45,433
26,712
(56,888)
101,805
Interest expense
27,950
28,798
118,558
111,964
Change in fair value of net assets of consolidated
VIEs from mortgage-backed pools
—
515
—
1,831
Loss on extinguishments of debt
—
—
(6,674)
(84)
Gain (loss) on sale of real estate loan investment and land condemnation
(11)
207
517
954
Net income (loss)
17,472
(1,364)
(181,603)
(7,458)
Net (income) loss attributable to non-controlling interests
300
76
3,815
214
Net income (loss) attributable to the Company
17,772
(1,288)
(177,788)
(7,244)
Dividends declared to preferred stockholders
(56,307)
(31,245)
(160,908)
(113,772)
Earnings attributable to unvested restricted stock
(96)
(3)
(205)
(17)
Net loss attributable to common stockholders
$
(38,631)
$
(32,536)
$
(338,901)
$
(121,033)
Net loss per share of Common Stock available to
common stockholders, basic and diluted
$
(0.77)
$
(0.71)
$
(6.95)
$
(2.73)
Weighted average number of shares of Common Stock outstanding,
basic and diluted
49,912
45,934
48,743
44,265
Reconciliation of FFO Attributable to Common Stockholders and Unitholders, Core FFO and AFFO
to Net (Loss) Income Attributable to Common Stockholders (A)
Three months ended December 31,
(In thousands, except per-share figures)
2020
2019
Net loss attributable to common stockholders (See note 1)
$
(38,631)
$
(32,536)
Add:
Depreciation of real estate assets
39,447
38,626
Amortization of acquired intangible assets and deferred leasing costs
8,742
8,588
Net gain (loss) attributable to Class A Unitholders (See note 2)
260
(6)
Gain on sale of real estate
(20,195)
—
FFO attributable to common stockholders and unitholders
(10,377)
14,672
Acquisition and pursuit costs
2
—
Loan cost amortization on acquisition term notes and loan coordination fees (See note 3)
451
604
Contingent management fees recognized upon property sales
—
11
Internalization costs (See note 4)
288
1,844
Deemed dividends for redemptions of and non-cash dividends on preferred stock
24,593
206
Expenses incurred on the call of preferred stock (See note 5)
520
—
Expenses related to the COVID-19 global pandemic (See note 6)
77
—
Earnest money forfeited by prospective asset purchaser
—
(1,000)
Core FFO attributable to common stockholders and unitholders
15,554
16,337
Add:
Non-cash equity compensation to directors and executives
586
301
Non-cash (income) expense for current expected credit losses (See note 7)
155
1,400
Amortization of loan closing costs (See note 8)
1,255
1,160
Depreciation/amortization of non-real estate assets
541
488
Net loan origination fees received (See note 9)
16
109
Deferred interest income received (See note 10)
3,852
5,436
Cash received for sale of K Program securities in excess of noncash revenues
—
1,474
Amortization of lease inducements (See note 11)
448
439
Cash received in excess of amortization of purchase option
termination revenues (See note 12)
560
49
Earnest money forfeited by prospective asset purchaser
—
1,000
Less:
Non-cash loan interest income (See note 10)
(3,193)
(3,686)
Cash paid for loan closing costs
(16)
—
Amortization of acquired real estate intangible liabilities and SLR (See note 13)
(4,333)
(4,268)
Amortization of deferred revenues (See note 14)
(941)
(941)
Normally recurring capital expenditures (See note 15)
(1,903)
(2,765)
AFFO attributable to common stockholders and Unitholders
$
12,581
$
16,533
Common Stock dividends and distributions to Unitholders declared:
Common Stock dividends
$
8,877
$
12,156
Distributions to Unitholders (See note 2)
130
225
Total
$
9,007
$
12,381
Common Stock dividends and Unitholder distributions per share
$
0.1750
$
0.2625
FFO per weighted average basic share of Common Stock and Unit outstanding
$
(0.20)
$
0.31
Core FFO per weighted average basic share of Common Stock and Unit outstanding
$
0.31
$
0.35
AFFO per weighted average basic share of Common Stock and Unit outstanding
$
0.25
$
0.35
Weighted average shares of Common Stock and Units outstanding: (See note 16)
Basic:
Common Stock
49,912
45,934
Class A Units
731
856
Common Stock and Class A Units
50,643
46,790
Diluted Common Stock and Class A Units (See note 17)
50,708
46,894
Actual shares of Common Stock outstanding, including 548 and 13 unvested shares
of restricted Common Stock at December 31, 2020 and 2019, respectively.
50,542
46,457
Actual Class A Units outstanding at December 31, 2020 and 2019, respectively.
649
856
Total
51,191
47,313
See Notes to Reconciliation of FFO, Core FFO and AFFO to Net Income (Loss) Attributable to Common Stockholders.
Reconciliation of FFO Attributable to Common Stockholders and Unitholders, Core FFO and AFFO
to Net (Loss) Income Attributable to Common Stockholders (A)
Years ended December 31,
(In thousands, except per-share figures)
2020
2019
Net loss attributable to common stockholders (See note 1)
$
(338,901)
$
(121,033)
Add:
Depreciation of real estate assets
161,500
148,034
Amortization of acquired intangible assets and deferred leasing costs
37,675
34,990
Net loss attributable to Class A Unitholders (See note 2)
(3,133)
(144)
Gain on sale of real estate
(23,456)
—
FFO attributable to common stockholders and unitholders
(166,315)
61,847
Acquisition and pursuit costs
383
—
Loan cost amortization on acquisition term notes and loan coordination fees (See note 3)
2,162
2,095
Contingent management fees recognized upon property sales
—
11
Payment of costs related to property refinancing
7,372
594
Internalization costs (See note 4)
180,116
2,987
Deemed dividends for redemptions of and non-cash dividends on preferred stock
30,970
577
Expenses incurred on the call of preferred stock (See note 5)
566
—
Expenses related to the COVID-19 global pandemic (See note 6)
663
—
Earnest money forfeited by prospective asset purchaser
(2,750)
(1,000)
Core FFO attributable to common stockholders and unitholders
53,167
67,111
Add:
Non-cash equity compensation to directors and executives
1,644
1,223
Non-cash (income) expense for current expected credit losses (See note 7)
3,802
1,400
Amortization of loan closing costs (See note 8)
4,886
4,618
Depreciation/amortization of non-real estate assets
2,334
1,869
Net loan origination fees received (See note 9)
898
783
Deferred interest income received (See note 10)
12,504
10,514
Amortization of lease inducements (See note 11)
1,782
1,734
Cash received in excess of (exceeded by) amortization of purchase option
termination revenues (See note 12)
464
(2,321)
Non-cash revenues from mortgage-backed securities
—
778
Earnest money forfeited by prospective asset purchaser
2,750
1,000
Less:
Non-cash loan interest income (See note 10)
(12,638)
(14,431)
Cash paid for loan closing costs
(122)
(37)
Amortization of acquired real estate intangible liabilities and SLR (See note 13)
(18,017)
(16,643)
Amortization of deferred revenues (See note 14)
(3,762)
(3,762)
Normally recurring capital expenditures (See note 15)
(8,428)
(7,887)
AFFO attributable to common stockholders and Unitholders
$
41,264
$
45,949
Common Stock dividends and distributions to Unitholders declared:
Common Stock dividends
$
38,868
$
46,755
Distributions to Unitholders (See note 2)
593
908
Total
$
39,461
$
47,663
Common Stock dividends and Unitholder distributions per share
$
0.7875
$
1.0475
FFO per weighted average basic share of Common Stock and Unit outstanding
$
(3.36)
$
1.37
Core FFO per weighted average basic share of Common Stock and Unit outstanding
$
1.07
$
1.49
AFFO per weighted average basic share of Common Stock and Unit outstanding
$
0.83
$
1.02
Weighted average shares of Common Stock and Units outstanding: (See note 16)
Basic:
Common Stock
48,743
44,265
Class A Units
765
870
Common Stock and Class A Units
49,508
45,135
Diluted Common Stock and Class A Units (See note 17)
49,549
45,772
Actual shares of Common Stock outstanding, including 548 and 13 unvested shares
of restricted Common Stock at December 31, 2020 and 2019, respectively.
50,542
46,457
Actual Class A Units outstanding at December 31, 2020 and 2019, respectively.
649
856
Total
51,191
47,313
See Notes to Reconciliation of FFO, Core FFO and AFFO to Net Income (Loss) Attributable to Common Stockholders.
Notes to Reconciliations of FFO Attributable to Common Stockholders and Unitholders, Core FFO and AFFO to
Net Loss Attributable to Common Stockholders
1)
Rental and other property revenues and property operating expenses for the three-months and year ended December 31, 2020 include activity for the properties acquired during the period only from their respective dates of acquisition. In addition, these periods include activity for the properties acquired since December 31, 2019. Rental and other property revenues and expenses for the three-months and year ended December 31, 2019 include activity for the acquisitions made during that period only from their respective dates of acquisition.
2)
Non-controlling interests in Preferred Apartment Communities Operating Partnership, L.P., or our Operating Partnership, consisted of a total of 648,936 Class A Units as of December 31, 2020. Included in this total are 419,228 Class A Units which were granted as partial consideration to the seller in conjunction with the seller's contribution to us on February 29, 2016 of the Wade Green grocery-anchored shopping center. The remaining Class A units were awarded primarily to our key executive officers. The Class A Units are apportioned a percentage of our financial results as non-controlling interests. The weighted average ownership percentage of these holders of Class A Units was calculated to be 1.44% and 1.54% for the three-month periods ended December 31, 2020 and 2019, respectively.
3)
We paid loan coordination fees to Preferred Apartment Advisors, LLC, or our Former Manager, to reflect the administrative effort involved in arranging debt financing for acquired properties prior to the Internalization. The fees were calculated as 0.6% of the amount of any mortgage indebtedness on newly-acquired properties or refinancing and are amortized over the lives of the respective mortgage loans. This non-cash amortization expense is an addition to FFO in the calculation of Core FFO and AFFO. At December 31, 2020, aggregate unamortized loan coordination fees were approximately $11.7 million , which will be amortized over a weighted average remaining loan life of approximately 10.5 years.
4)
This adjustment reflects the add-back of (i) consideration paid to the owners of the Former Manager and Former Sub-Manager, (ii) accretion of the discount on the deferred liability payable to the owners of the Former Manager and (iii) due diligence and pursuit costs incurred by the Company related to the internalization of the functions performed by the Former Manager.
5)
This adjustment adds back expenses incurred by us to effect an amendment of the Company's charter necessary to allow us to redeem outstanding shares of our Series A Preferred Stock beginning on the fifth anniversary of the date of issuance of the shares of Series A Preferred Stock, rather than the tenth anniversary.
6)
This additive adjustment to FFO consists of non-recurring costs for signage, cleaning and supplies necessary to create and maintain work environments necessary to adhere to CDC guidelines during the current COVID-19 pandemic. Since we do not expect to incur similar costs once the COVID-19 pandemic has subsided, we add these costs back to FFO in our calculation of Core FFO.
7)
Effective January 1, 2020, we adopted ASU 2016-03, which requires us to estimate the amount of future credit losses we expect to incur over the lives of our real estate loan investments at the inception of each loan. This loss reserve may be adjusted upward or downward over the lives of our loans and therefore the aggregate net adjustment for each period could be positive (removing the non-cash effect of a net increase in aggregate loss reserves) or negative (removing the non-cash effect of a net decrease in aggregate loss reserves) in these adjustments to FFO in calculating Core FFO. More information on our expected credit loss reserves may be found in note 4 of our consolidated financial statements.
8)
We incur loan closing costs on our existing mortgage loans, which are secured on a property-by-property basis by each of our acquired real estate assets, and also for occasional amendments to our syndicated revolving line of credit with Key Bank National Association, or our Revolving Line of Credit. These loan closing costs are also amortized over the lives of the respective loans and the Revolving Line of Credit, and this non-cash amortization expense is an addition to FFO in the calculation of AFFO. Neither we nor the Operating Partnership have any recourse liability in connection with any of the mortgage loans, nor do we have any cross-collateralization arrangements with respect to the assets securing the mortgage loans, other than security interests in 49% of the equity interests of the subsidiaries owning such assets, granted in connection with our Revolving Line of Credit, which provides for full recourse liability. At December 31, 2020, unamortized loan costs on all the Company's indebtedness were approximately $31.1 million , which will be amortized over a weighted average remaining loan life of approximately 9.0 years.
9)
We receive loan origination fees in conjunction with the origination of certain real estate loan investments. These fees are then recognized as revenue over the lives of the applicable loans as adjustments of yield using the effective interest method. The total fees received are additive adjustments in the calculation of AFFO. Correspondingly, the amortized non-cash income is a deduction in the calculation of AFFO. Over the lives of certain loans, we accrue additional interest amounts that become due to us at the time of repayment of the loan or refinancing of the property, or when the property is sold. This non-cash interest income is subtracted from Core FFO in our calculation of AFFO. The amount of additional accrued interest becomes an additive adjustment to FFO once received from the borrower (see note 10).
10)
This adjustment reflects the receipt during the periods presented of additional interest income (described in note 9 above) which was earned and accrued on various real estate loans prior to those periods and previously deducted in our calculation of AFFO.
11)
This adjustment removes the non-cash amortization of costs incurred to induce tenants to lease space in our office buildings and grocery-anchored shopping centers.
12)
Occasionally we receive fees in exchange for the termination of our purchase options related to certain multifamily and student housing properties. These fees are recorded as revenue over the period beginning on the date of termination until the earlier of (i) the maturity of the real estate loan investment and (ii) the sale of the property. The receipt of the cash termination fees are an additive adjustment in our calculation of AFFO and the removal of non-cash revenue from the recognition of the termination fees are a reduction to Core FFO in our calculation of AFFO; both of these adjustments are presented in a single net number within this line. For periods in which recognized termination fee revenues exceeded the amount of cash received, a negative adjustment is shown to Core FFO in our calculation of AFFO; for periods in which cash received exceeded the amount of recognized termination fee revenues, an additive adjustment is shown to Core FFO in our calculation of AFFO.
13)
This adjustment reflects straight-line rent adjustments and the reversal of the non-cash amortization of below-market and above-market lease intangibles, which were recognized in conjunction with our acquisitions and which are amortized over the estimated average remaining lease terms from the acquisition date for multifamily communities and over the remaining lease terms for grocery-anchored shopping center assets and office buildings. At December 31, 2020, the balance of unamortized below-market lease intangibles was approximately $51.9 million , which will be recognized over a weighted average remaining lease period of approximately 8.7 years.
14)
This adjustment removes the non-cash amortization of deferred revenue recorded by us in conjunction with Company-owned lessee-funded tenant improvements in our office buildings.
15)
We deduct from Core FFO normally recurring capital expenditures that are necessary to maintain our assets' revenue streams in the calculation of AFFO. This adjustment also deducts from Core FFO capitalized amounts for third party costs during the period to originate or renew leases in our grocery-anchored shopping centers and office buildings. This adjustment includes approximately $31,000 and $131,000 of recurring capitalized expenditures incurred at our corporate offices during the three-months and year ended December 31, 2020, respectively. No adjustment is made in the calculation of AFFO for nonrecurring capital expenditures. See Capital Expenditures, Grocery-Anchored Shopping Center Portfolio, and Office Buildings Portfolio sections for definitions of these terms.
16)
Units and Unitholders refer to Class A Units in our Operating Partnership (as defined in note 2), or Class A Units, and holders of Class A Units, respectively. Unitholders include recipients of awards of Class B Units in our Operating Partnership, or Class B Units, for annual service which became vested and earned and automatically converted to Class A Units. Unitholders also include the entity that contributed the Wade Green grocery-anchored shopping center.
17)
Since our AFFO results are positive for the periods reflected, we are presenting recalculated diluted weighted average shares of Common Stock and Class A Units for these periods for purposes of this table, which includes the dilutive effect of common stock equivalents from grants of the Class B Units, warrants included in units of Series A Preferred Stock issued, as well as annual grants of restricted Common Stock and restricted stock units. The weighted average shares of Common Stock outstanding presented on the Consolidated Statements of Operations are the same for basic and diluted for any period for which we recorded a net loss available to common stockholders.
See Definitions of Non-GAAP Measures.
Preferred Apartment Communities, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except per-share par values)
December 31,
December 31,
Assets
Real estate
Land
$
605,282
$
635,757
Building and improvements
3,034,727
3,256,223
Tenant improvements
184,288
167,275
Furniture, fixtures, and equipment
306,725
323,381
Construction in progress
12,269
11,893
Gross real estate
4,143,291
4,394,529
Less: accumulated depreciation
(509,547)
(421,551)
Net real estate
3,633,744
3,972,978
Real estate loan investments, net
279,895
325,790
Real estate loan investments to related parties, net
—
23,692
Total real estate and real estate loan investments, net
3,913,639
4,322,460
Cash and cash equivalents
28,657
94,381
Restricted cash
47,059
42,872
Notes receivable
1,863
17,079
Note receivable and revolving line of credit due from related party
9,011
24,838
Accrued interest receivable on real estate loans
22,528
25,755
Acquired intangible assets, net of amortization
127,138
154,803
Deferred loan costs on Revolving Line of Credit, net of amortization
714
1,286
Deferred offering costs
4,786
2,147
Tenant lease inducements, net
18,206
19,607
Investment in unconsolidated joint venture
6,657
—
Tenant receivables and other assets
100,821
65,332
Total assets
$
4,281,079
$
4,770,560
Liabilities and equity
Liabilities
Mortgage notes payable, net of deferred loan costs and mark-to-market adjustment
$
2,594,464
$
2,567,022
Revolving line of credit
22,000
—
Term note payable, net of deferred loan costs
—
69,489
Unearned purchase option termination fees
723
2,859
Deferred revenue
36,010
39,722
Accounts payable and accrued expenses
41,912
42,191
Deferred liability to Former Manager
23,335
—
Contingent liability due to Former Manager
14,814
—
Accrued interest payable
7,877
8,152
Dividends and partnership distributions payable
20,137
23,519
Acquired below market lease intangibles, net of amortization
51,934
62,611
Prepaid rent, security deposits and other liabilities
29,425
20,879
Total liabilities
2,842,631
2,836,444
Commitments and contingencies
Equity
Stockholders' equity
Series A Redeemable Preferred Stock, $0.01 par value per share; 3,050 shares authorized; 2,226 and 2,161 shares
issued; 1,735 and 2,028 shares outstanding at December 31, 2020 and December 31, 2019, respectively
17
20
Series A1 Redeemable Preferred Stock, $0.01 par value per share; up to 1,000 shares authorized;
149 and 5 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively
1
—
Series M Redeemable Preferred Stock, $0.01 par value per share; 500 shares authorized; 106 shares
issued; 89 and 103 shares outstanding at December 31, 2020 and December 31, 2019, respectively
1
1
Series M1 Redeemable Preferred Stock, $0.01 par value per share; up to 1,000 shares authorized;
19 and zero shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively
—
—
Common Stock, $0.01 par value per share; 400,067 shares authorized; 49,994 and 46,443 shares issued
and outstanding at December 31, 2020 and December 31, 2019, respectively
500
464
Additional paid-in capital
1,631,646
1,938,057
Accumulated (deficit) earnings
(192,446)
(7,244)
Total stockholders' equity
1,439,719
1,931,298
Non-controlling interest
(1,271)
2,818
Total equity
1,438,448
1,934,116
Total liabilities and equity
$
4,281,079
$
4,770,560
Preferred Apartment Communities, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
Years ended December 31,
(In thousands)
2020
2019
Operating activities:
Net (loss) income
$
(181,603)
$
(7,458)
Reconciliation of net (loss) income to net cash provided by operating activities:
Depreciation and amortization expense
201,677
185,065
Amortization of above and below market leases
(8,021)
(5,765)
Deferred revenues and other non-cash revenues amortization
(5,059)
(6,275)
Purchase option termination fee amortization
(6,536)
(9,111)
Amortization of equity compensation, lease incentives and other non-cash expenses
4,267
3,220
Deferred loan cost amortization
6,855
6,450
Non-cash accrued interest income on real estate loan investments
(12,372)
(13,828)
Receipt of accrued interest income on real estate loan investments
14,391
8,063
Gains on the sales of real estate and mortgage-backed securities
(23,456)
(1,567)
Gains on the sales of real estate loan investments and land condemnation
(517)
(954)
Loss from unconsolidated joint ventures
314
—
Cash received for purchase option terminations
7,000
3,591
Loss on extinguishment of debt
6,674
84
Noncash settlement of related party line of credit from Internalization
20,864
—
Non-cash payment of interest on related party line of credit
—
(637)
Mortgage interest received from consolidated VIEs
—
18,750
Mortgage interest paid to other participants of consolidated VIEs
—
(18,750)
Increase in allowance for expected credit losses
6,103
2,038
Changes in operating assets and liabilities:
(Increase) in tenant receivables and other assets
(24,437)
(20,565)
(Increase) in tenant lease incentives
(382)
(644)
Increase in accounts payable and accrued expenses
7,084
1,518
Increase in deferred liability to Former Manager
22,851
—
Increase in contingent liability
15,000
—
(Decrease) increase in accrued interest, prepaid rents and other liabilities
(2,805)
2,406
Net cash provided by operating activities
47,892
145,631
Investing activities:
Investments in real estate loans
(59,417)
(98,418)
Repayments of real estate loans
115,726
54,384
Notes receivable issued
(1,044)
(5,692)
Notes receivable repaid
16,293
3,089
Notes receivable issued to and draws on lines of credit by related parties
(9,624)
(40,458)
Repayments of notes receivable and lines of credit by related parties
4,546
35,239
Proceeds from sale of real estate loan investment, net
3,898
747
Origination fees received on real estate loan investments
898
1,565
Origination fees paid to Former Manager on real estate loan investments
—
(783)
Mortgage principal received from consolidated VIEs
—
6,570
Purchases of mortgage-backed securities
—
(30,841)
Proceeds from sales of mortgage-backed securities
—
79,558
Acquisition of properties
(321,962)
(619,089)
Dispositions of properties
515,477
—
Proceeds from sale of interest in unconsolidated joint venture
19,221
—
Return of capital from investment in unconsolidated joint venture
12,250
—
Receipt of insurance proceeds for capital improvements
—
746
Proceeds from land condemnation
787
643
Equity investment in property development
(50)
(100)
Capital improvements to real estate assets
(52,809)
(48,071)
Deposits paid on acquisitions
(65)
(146)
Net cash provided by (used in) investing activities
244,125
(661,057)
Financing activities:
Proceeds from mortgage notes payable
469,184
405,430
Repayments of mortgage notes payable
(438,308)
(176,903)
Payments for deposits and other mortgage loan costs
(12,140)
(8,705)
Debt prepayment and other debt extinguishment costs
(5,733)
—
Payments to real estate loan participants
—
(5,223)
Proceeds from lines of credit
442,000
265,200
Payments on lines of credit
(420,000)
(322,200)
Proceeds from (repayment of) Term Loan
(70,000)
70,000
Mortgage principal paid to other participants of consolidated VIEs
—
(6,570)
Proceeds from repurchase agreements
—
4,857
Repayments of repurchase agreements
—
(4,857)
Proceeds from sales of preferred stock and Units, net of offering costs
206,381
501,076
Proceeds from sales of Common Stock
4,522
—
Proceeds from exercises of Warrants
24
11,659
Payments for redemptions of preferred stock
(314,154)
(12,124)
Common Stock dividends paid
(42,100)
(45,439)
Preferred stock dividends and Class A Unit distributions paid
(161,746)
(111,738)
Distributions to non-controlling interests
(161)
—
Payments for deferred offering costs
(11,509)
(4,013)
Contributions from non-controlling interests
186
4,539
Net cash (used in) provided by financing activities
(353,554)
564,989
Net (decrease) increase in cash, cash equivalents and restricted cash
(61,537)
49,563
Cash, cash equivalents and restricted cash, beginning of year
137,253
87,690
Cash, cash equivalents and restricted cash, end of period
$
75,716
$
137,253
Real Estate Loan Investments
The following tables present details pertaining to our portfolio of fixed rate, interest-only real estate loan investments.
Project/Property
Location
Maturity
Optional
Total loan
Carrying amount (1) as of
December 31,
December 31,
Current /
Residential properties:
(in thousands)
Palisades
Northern VA
N/A
N/A
$
—
$
—
$
17,250
(2)
Horizon at Wiregrass
Tampa, FL
N/A
N/A
—
—
14,976
(3)
Horizon at Wiregrass
Tampa, FL
N/A
N/A
—
—
4,240
(4)
Berryessa
San Jose, CA
2/13/2022
2/13/2023
137,616
126,237
115,819
8.5 / 3
The Anson
Nashville, TN
11/24/2021
11/24/2023
6,240
6,240
6,240
8.5 / 4.5
The Anson Capital
Nashville, TN
11/24/2021
11/24/2023
5,659
4,839
4,440
8.5 / 4.5
Sanibel Straights
Fort Myers, FL
N/A
N/A
—
—
8,846
(5)
Sanibel Straights Capital
Fort Myers, FL
N/A
N/A
—
—
5,930
(6)
Falls at Forsyth
Atlanta, GA
N/A
N/A
—
—
21,513
(7)
Newbergh
Atlanta, GA
3/31/2021
N/A
11,749
11,749
11,699
8.5 / 5.5
Newbergh Capital
Atlanta, GA
3/31/2021
N/A
6,176
6,176
5,653
8.5 / 5.5
V & Three
Charlotte, NC
8/15/2021
8/15/2022
10,336
10,335
10,336
8.5 / 5
V & Three Capital
Charlotte, NC
8/18/2021
8/18/2022
7,338
7,162
6,571
8.5 / 5
Cameron Square
Alexandria, VA
10/11/2021
10/11/2023
21,340
20,874
18,582
8.5 / 3
Cameron Square Capital
Alexandria, VA
10/11/2021
10/11/2023
8,850
8,850
8,235
8.5 / 3
Southpoint
Fredericksburg, VA
2/28/2022
2/28/2024
7,348
7,348
7,348
8.5 / 4
Southpoint Capital
Fredericksburg, VA
2/28/2022
2/28/2024
4,962
4,626
4,245
8.5 / 4
E-Town
Jacksonville, FL
N/A
N/A
—
—
14,550
(8)
Vintage Destin
Destin, FL
3/24/2022
3/24/2024
10,763
9,736
8,932
8.5 / 4
Hidden River II
Tampa, FL
10/11/2022
10/11/2024
4,462
4,462
3,012
8.5 / 3.5
Hidden River II Capital
Tampa, FL
10/11/2022
10/11/2024
2,763
2,461
2,258
8.5 / 3.5
Kennesaw Crossing
Atlanta, GA
9/1/2023
9/1/2024
14,810
13,025
7,616
8.5 / 5.5
Vintage Horizon West
Orlando, FL
10/11/2022
10/11/2024
10,900
9,019
8,275
8.5 / 5.5
Chestnut Farms
Charlotte, NC
2/28/2025
N/A
13,372
11,671
—
8.5 / 5.5
Vintage Jones Franklin
Raleigh, NC
11/14/2023
5/14/2025
10,000
7,904
—
8.5 / 5.5
Solis Cumming Town
Center
Atlanta, GA
9/3/2024
9/3/2026
20,681
5,584
—
8.5 / 5.5
Haven 12
Starkville, MS
N/A
N/A
—
—
6,116
(9)
Solis Kennesaw II
Atlanta, GA
N/A
N/A
—
—
12,489
(10)
New Market Properties:
Dawson Marketplace
Atlanta, GA
N/A
N/A
—
—
12,857
(11)
Office property:
8West
Atlanta, GA
11/29/2022
11/29/2024
19,193
11,858
4,554
8.5 / 5
$
334,558
290,156
352,582
Unamortized loan origination fees
(1,194)
(1,476)
Allowances for expected credit losses and doubtful accounts
(9,067)
(1,624)
Carrying amount
$
279,895
$
349,482
(1) Carrying amounts presented per loan are amounts drawn.
(2) On July 31, 2020, we received approximately $18.7 million in full satisfaction of the principal and all interest due on the loan.
(3) On March 31, 2020, we received approximately $20.1 million in full satisfaction of the principal, purchase option termination fee, and all interest due on the loan.
(4) On March 31, 2020, we received approximately $5.1 million in full satisfaction of the principal and all interest due on the loan.
(5) On November 30, 2020, we received approximately $11.9 million in full satisfaction of the principal, purchase option termination fee, and all interest due on the loan.
(6) On November 30, 2020, we received approximately $7.3 million in full satisfaction of the principal and all interest due on the loan.
(7) On March 6, 2020, we received approximately $27.0 million in full satisfaction of the principal, purchase option termination fee, and all interest due on the loan.
(8) On December 15, 2020, we received approximately $16.7 million in full satisfaction of the principal and all interest due on the loan.
(9) The Company's Starkville loan had been in default since August 20, 2019 under the terms of the underlying mezzanine loan agreement. The Company recorded$1.4 million , reducing its net investment in the Starkville loan from $7.3 million , including accrued interest of $1.2 $5.9 million as of December 31, 2019. This loan was included in the sale of the Company's eight student properties that closed
on November 3, 2020.
(10) On December 10, 2020, we received approximately $15.4 million in full satisfaction of the principal, purchase option termination fee, and all interest due on the loan.
(11) On February 3, 2020, we received approximately $15.7 million in full satisfaction of the principal and all interest due on the loan.
We hold options or rights of first offer, but not obligations, to purchase some of the properties which are partially financed by our real estate loan investments. Certain option purchase prices may be negotiated at the time of the loan closing and are to be calculated based upon market cap rates at the time of exercise of the purchase option, with discounts up to 15 basis points (if any), depending on the loan. As of December 31, 2020 , potential property acquisitions and units from projects in our real estate loan investment portfolio consisted of:
Total units
upon
Purchase option window
Project/Property
Location
completion (1)
Begin
End
Multifamily communities:
V & Three
Charlotte, NC
338
S + 90 days (2)
S + 150 days (2)
The Anson
Nashville, TN
301
S + 90 days (2)
S + 150 days (2)
Southpoint
Fredericksburg, VA
240
S + 90 days (2)
S + 150 days (2)
Vintage Destin
Destin, FL
282
(3)
(3)
Hidden River II
Tampa, FL
204
S + 90 days (2)
S + 150 days (2)
Kennesaw Crossing
Atlanta, GA
250
(4)
(4)
Vintage Horizon West
Orlando, FL
340
(3)
(3)
Solis Chestnut Farm
Charlotte, NC
256
(4)
(4)
Vintage Jones Franklin
Raleigh, NC
277
(3)
(3)
Solis Cumming Town Center
Atlanta, GA
320
(4)
(4)
Office property:
8West
Atlanta, GA
(5)
(5)
(5)
2,808
(1) We evaluate each project individually and we make no assurance that we will acquire any of the underlying properties from our real estate loan investment portfolio.
(2) The option period window begins and ends at the number of days indicated beyond the achievement of a 93% physical occupancy rate by the underlying property.
(3) The option period window begins on the later of one year following receipt of final certificate of occupancy or 90 days beyond the achievement of a 93% physical
(4) We hold a right of first offer on the property.
(5) The project plans are for the construction of a class A office building consisting of approximately 195,000 rentable square feet; our purchase option window opens 90 days90% lease commencement and ends on November 30, 2024 (subject to adjustment). Our purchase option is at the to-be-agreed-upon market value.
Mortgage Indebtedness
The following table presents certain details regarding our mortgage notes payable:
Principal balance as of
Acquisition/ refinancing
December 31,
December 31,
Maturity
Interest
rate
Basis point
Interest only (1 )
Multifamily communities:
(in thousands)
Summit Crossing
10/31/2017
$
36,929
$
37,651
11/1/2024
3.99
%
Fixed rate
N/A
Summit Crossing II
6/30/2020
20,700
13,221
7/1/2030
2.93
%
278
7/31/2022
Vineyards
9/26/2014
32,703
33,382
10/1/2021
3.68
%
Fixed rate
N/A
Avenues at Cypress
6/30/2020
28,366
20,704
7/1/2027
2.96
%
Fixed rate
7/31/2022
Avenues at Northpointe
6/29/2020
33,546
26,313
7/1/2027
2.79
%
Fixed rate
7/31/2022
Venue at Lakewood Ranch
6/30/2020
36,555
28,076
7/1/2030
2.99
%
Fixed rate
7/31/2022
Aster at Lely Resort
6/29/2020
50,400
31,094
7/1/2030
2.95
%
Fixed rate
7/31/2022
CityPark View
6/25/2020
29,000
20,089
7/1/2030
2.75
%
Fixed rate
7/31/2023
Avenues at Creekside
7/31/2015
—
38,871
N/A
N/A
N/A
N/A
Citi Lakes
7/29/2019
40,324
41,079
8/1/2029
3.66
%
Fixed rate
N/A
Stone Creek
6/22/2017
19,451
19,800
7/1/2052
3.22
%
Fixed rate
N/A
Lenox Village Town Center
2/28/2019
38,169
38,813
3/1/2029
4.34
%
Fixed rate
N/A
Retreat at Lenox
12/21/2015
16,751
17,114
1/1/2023
4.04
%
Fixed rate
N/A
Overton Rise
2/1/2016
37,607
38,428
8/1/2026
3.98
%
Fixed rate
N/A
Village at Baldwin Park
7/31/2020
69,608
70,607
1/1/2054
3.59
%
Fixed rate
N/A
Crosstown Walk
6/30/2020
46,500
30,246
7/1/2027
2.92
%
Fixed rate
7/31/2022
525 Avalon Park
6/15/2017
63,256
64,519
7/1/2024
3.98
%
Fixed rate
N/A
City Vista
7/1/2016
32,938
33,674
7/1/2026
3.68
%
Fixed rate
N/A
Sorrel
8/24/2016
30,740
31,449
9/1/2023
3.44
%
Fixed rate
N/A
Citrus Village
7/10/2020
40,900
28,796
8/1/2027
2.95
%
Fixed rate
8/31/2022
Retreat at Greystone
11/21/2017
33,439
34,053
12/1/2024
4.31
%
Fixed rate
N/A
Founders Village
3/31/2017
29,635
30,202
4/1/2027
4.31
%
Fixed rate
N/A
Claiborne Crossing
4/26/2017
25,503
25,948
6/1/2054
2.89
%
Fixed rate
N/A
Luxe at Lakewood Ranch
7/26/2017
36,922
37,662
8/1/2027
3.93
%
Fixed rate
N/A
Adara at Overland Park
9/27/2017
30,024
30,624
4/1/2028
3.90
%
Fixed rate
N/A
Aldridge at Town Village
10/31/2017
35,892
36,569
11/1/2024
4.19
%
Fixed rate
N/A
Reserve at Summit Crossing
9/29/2017
18,893
19,276
10/1/2024
3.87
%
Fixed rate
N/A
Overlook at Crosstown Walk
11/21/2017
21,038
21,450
12/1/2024
3.95
%
Fixed rate
N/A
Colony at Centerpointe
12/20/2017
31,445
32,120
10/1/2026
3.68
%
Fixed rate
N/A
Lux at Sorrel
1/9/2018
29,868
30,474
2/1/2030
3.91
%
Fixed rate
N/A
Green Park
2/28/2018
37,785
38,525
3/10/2028
4.09
%
Fixed rate
N/A
The Lodge at Hidden River
9/27/2018
40,204
40,903
10/1/2028
4.32
%
Fixed rate
N/A
Vestavia Reserve
11/9/2018
36,511
37,130
12/1/2030
4.40
%
Fixed rate
N/A
CityPark View South
11/15/2018
23,379
23,767
6/1/2029
4.51
%
Fixed rate
N/A
Artisan at Viera
8/8/2019
39,104
39,824
9/1/2029
3.93
%
Fixed rate
N/A
Five Oaks at Westchase
10/17/2019
30,818
31,448
11/1/2031
3.27
%
Fixed rate
N/A
Horizon at Wiregrass Ranch
4/23/2020
51,360
—
5/1/2030
2.90
%
Fixed rate
N/A
Parkside at the Beach
4/30/2020
45,037
—
5/1/2030
2.95
%
Fixed rate
N/A
The Blake
11/2/2020
44,435
—
5/1/2030
2.82
%
Fixed rate
12/31/2025
The Menlo
12/15/2020
47,000
—
1/1/2031
2.68
%
Fixed rate
1/31/2024
Total multifamily communities
1,392,735
1,173,901
Grocery-anchored shopping centers:
Spring Hill Plaza
9/17/2019
7,962
8,167
10/1/2031
3.72
%
Fixed rate
N/A
Parkway Town Centre
9/17/2019
7,866
8,067
10/1/2031
3.72
%
Fixed rate
N/A
Woodstock Crossing
8/8/2014
2,818
2,877
9/1/2021
4.71
%
Fixed rate
N/A
Deltona Landings
8/16/2019
6,141
6,289
9/1/2029
4.18
%
Fixed rate
N/A
Powder Springs
8/13/2019
7,749
7,951
9/1/2029
3.65
%
Fixed rate
(2)
Barclay Crossing
8/16/2019
6,086
6,233
9/1/2029
4.18
%
Fixed rate
N/A
Parkway Centre
8/16/2019
4,423
4,530
9/1/2029
4.18
%
Fixed rate
N/A
The Market at Salem Cove
10/6/2014
8,889
9,075
11/1/2024
4.21
%
Fixed rate
N/A
Independence Square
8/27/2015
11,184
11,455
9/1/2022
3.93
%
Fixed rate
N/A
Royal Lakes Marketplace
4/12/2019
9,345
9,572
5/1/2029
4.29
%
Fixed rate
N/A
The Overlook at Hamilton Place
12/22/2015
19,088
19,509
1/1/2026
4.19
%
Fixed rate
N/A
Summit Point
10/30/2015
11,118
11,494
11/1/2022
3.57
%
Fixed rate
N/A
East Gate Shopping Center
4/29/2016
5,118
5,277
5/1/2026
3.97
%
Fixed rate
N/A
Fury's Ferry
4/29/2016
5,912
6,096
5/1/2026
3.97
%
Fixed rate
N/A
Rosewood Shopping Center
4/29/2016
3,971
4,095
5/1/2026
3.97
%
Fixed rate
N/A
Southgate Village
4/29/2016
7,059
7,279
5/1/2026
3.97
%
Fixed rate
N/A
The Market at Victory Village
5/16/2016
8,751
8,911
9/11/2024
4.40
%
Fixed rate
N/A
Wade Green Village
4/7/2016
7,488
7,655
5/1/2026
4.00
%
Fixed rate
N/A
Lakeland Plaza
7/15/2016
26,632
27,459
8/1/2026
3.85
%
Fixed rate
N/A
University Palms
8/8/2016
12,030
12,421
9/1/2026
3.45
%
Fixed rate
N/A
Cherokee Plaza
4/12/2019
24,277
24,867
5/1/2027
4.28
%
Fixed rate
N/A
Sandy Plains Exchange
8/8/2016
8,404
8,676
9/1/2026
3.45
%
Fixed rate
N/A
Thompson Bridge Commons
8/8/2016
11,234
11,599
9/1/2026
3.45
%
Fixed rate
N/A
Heritage Station
8/8/2016
8,315
8,585
9/1/2026
3.45
%
Fixed rate
N/A
Oak Park Village
8/8/2016
8,580
8,859
9/1/2026
3.45
%
Fixed rate
N/A
Shoppes of Parkland
8/8/2016
15,414
15,702
9/1/2023
4.67
%
Fixed rate
N/A
Champions Village
10/18/2016
27,400
27,400
11/1/2021
3.25
%
300
(3)
11/1/2021
Castleberry-Southard
4/21/2017
10,734
10,959
5/1/2027
3.99
%
Fixed rate
N/A
Rockbridge Village
6/6/2017
13,310
13,597
7/5/2027
3.73
%
Fixed rate
N/A
Irmo Station
7/26/2017
9,758
10,038
8/1/2030
3.94
%
Fixed rate
N/A
Maynard Crossing
8/25/2017
16,953
17,449
9/1/2032
3.74
%
Fixed rate
N/A
Woodmont Village
9/8/2017
8,096
8,320
10/1/2027
4.13
%
Fixed rate
N/A
West Town Market
9/22/2017
8,260
8,503
10/1/2025
3.65
%
Fixed rate
N/A
Crossroads Market
12/5/2017
17,622
18,112
1/1/2030
3.95
%
Fixed rate
N/A
Anderson Central
3/16/2018
11,246
11,539
4/1/2028
4.32
%
Fixed rate
N/A
Greensboro Village
5/22/2018
8,040
8,250
6/1/2028
4.20
%
Fixed rate
N/A
Governors Towne Square
5/22/2018
10,696
10,976
6/1/2028
4.20
%
Fixed rate
N/A
Conway Plaza
6/29/2018
9,375
9,549
7/5/2028
4.29
%
Fixed rate
N/A
Brawley Commons
7/6/2018
17,519
17,963
8/1/2028
4.36
%
Fixed rate
N/A
Hollymead Town Center
12/21/2018
26,139
26,758
1/1/2029
4.64
%
Fixed rate
N/A
Gayton Crossing
1/17/2019
17,276
17,679
2/1/2029
4.71
%
Fixed rate
N/A
Free State Shopping Center
5/28/2019
45,549
46,391
6/1/2029
3.99
%
Fixed rate
N/A
Polo Grounds Mall
6/12/2019
12,986
13,227
7/1/2034
3.93
%
Fixed rate
N/A
Disston Plaza
6/12/2019
17,578
17,905
7/1/2034
3.93
%
Fixed rate
N/A
Fairfield Shopping Center
8/16/2019
19,750
19,750
8/16/2026
2.21
%
205
8/16/2022
Berry Town Center
11/14/2019
11,794
12,025
12/1/2034
3.49
%
Fixed rate
N/A
Hanover Shopping Center
12/19/2019
31,217
32,000
12/19/2026
3.62
%
Fixed rate
N/A
Wakefield Crossing
1/29/2020
7,728
—
2/1/2032
3.66
%
Fixed rate
N/A
Total grocery-anchored shopping centers (4)
614,880
621,090
Student housing properties:
North by Northwest
6/1/2016
—
31,209
N/A
N/A
N/A
N/A
SoL
10/31/2018
—
35,656
N/A
N/A
N/A
N/A
Stadium Village
10/27/2017
—
45,228
N/A
N/A
N/A
N/A
Ursa
12/18/2017
—
31,400
N/A
N/A
N/A
N/A
The Tradition
5/10/2018
—
30,000
N/A
N/A
N/A
N/A
Knightshade
5/31/2018
—
47,125
N/A
N/A
N/A
N/A
The Bloc
6/27/2018
—
28,966
N/A
N/A
N/A
N/A
Total student housing properties
—
249,584
Office buildings:
Brookwood Center
8/29/2016
29,925
30,716
9/10/2031
3.52
%
Fixed rate
N/A
Galleria 75
11/4/2016
5,131
5,340
7/1/2022
4.25
%
Fixed rate
N/A
Three Ravinia
12/30/2016
115,500
115,500
1/1/2042
4.46
%
Fixed rate
1/31/2022
Westridge at La Cantera
11/13/2017
50,449
51,834
12/10/2028
4.10
%
Fixed rate
N/A
Armour Yards
1/29/2018
39,425
40,000
2/1/2028
4.10
%
Fixed rate
N/A
150 Fayetteville
7/31/2018
113,768
114,400
8/10/2028
4.27
%
Fixed rate
N/A
Capitol Towers
12/20/2018
122,720
124,814
1/10/2037
4.60
%
Fixed rate
N/A
CAPTRUST Tower
7/25/2019
82,650
82,650
8/1/2029
3.61
%
Fixed rate
7/31/2029
Morrocroft Centre
3/19/2020
70,000
—
4/10/2033
3.40
%
Fixed rate
4/10/2025
251 Armour Yards (5)
1/22/2020
3,522
—
1/22/2025
4.50
%
Fixed rate
1/21/2023
Total office buildings
633,090
565,254
Grand total
2,640,705
2,609,829
Less: deferred loan costs
(42,233)
(38,185)
Less: below market debt adjustment
(4,008)
(4,622)
Mortgage notes, net
$
2,594,464
$
2,567,022
Footnotes to Mortgage Notes Table
(1) Following the indicated interest only period (where applicable), monthly payments of accrued interest and principal are based on a 25 to 35-year amortization period through the maturity date.
(2) The mortgage has interest-only payment terms for the periods of June 1, 2023 through May 1, 2024 and from June 1, 2028 through May 1, 2029.
(3) The interest rate has a floor of 3.25% .
(4) Excludes mortgage debt on the Neapolitan Way grocery-anchored shopping center, which is held in an unconsolidated joint venture.
(5) A construction loan financing redevelopment of the property.
Multifamily Communities
As of December 31, 2020, our multifamily community portfolio consisted of the following properties:
Three months ended December 31, 2020
Property
Location
Number of
Average unit
size (sq. ft.)
Average
Average rent
Same-Store Communities:
Aldridge at Town Village
Atlanta, GA
300
969
97.6
%
$
1,419
Green Park
Atlanta, GA
310
985
97.2
%
$
1,489
Overton Rise
Atlanta, GA
294
1,018
96.4
%
$
1,595
Summit Crossing I
Atlanta, GA
345
1,034
98.4
%
$
1,253
Summit Crossing II
Atlanta, GA
140
1,100
96.2
%
$
1,366
The Reserve at Summit Crossing
Atlanta, GA
172
1,002
96.1
%
$
1,344
Avenues at Cypress
Houston, TX
240
1,170
95.6
%
$
1,455
Avenues at Northpointe
Houston, TX
280
1,167
96.8
%
$
1,395
Vineyards
Houston, TX
369
1,122
96.2
%
$
1,202
Aster at Lely Resort
Naples, FL
308
1,071
95.3
%
$
1,439
Sorrel
Jacksonville, FL
290
1,048
95.1
%
$
1,342
Lux at Sorrel
Jacksonville, FL
265
1,025
95.1
%
$
1,383
525 Avalon Park
Orlando, FL
487
1,394
94.7
%
$
1,512
Citi Lakes
Orlando, FL
346
984
92.9
%
$
1,468
Luxe at Lakewood Ranch
Sarasota, FL
280
1,105
94.9
%
$
1,490
Venue at Lakewood Ranch
Sarasota, FL
237
1,001
91.6
%
$
1,515
Crosstown Walk
Tampa, FL
342
1,070
96.3
%
$
1,341
Overlook at Crosstown Walk
Tampa, FL
180
986
95.6
%
$
1,413
Citrus Village
Tampa, FL
296
980
95.5
%
$
1,353
Lenox Village
Nashville, TN
273
906
95.4
%
$
1,309
Regent at Lenox
Nashville, TN
18
1,072
90.7
%
$
1,399
Retreat at Lenox
Nashville, TN
183
773
94.5
%
$
1,254
CityPark View
Charlotte, NC
284
948
95.4
%
$
1,166
CityPark View South
Charlotte, NC
200
1,005
96.8
%
$
1,274
Colony at Centerpointe
Richmond, VA
255
1,149
95.9
%
$
1,397
Founders Village
Williamsburg, VA
247
1,070
95.8
%
$
1,399
Retreat at Greystone
Birmingham, AL
312
1,100
95.4
%
$
1,376
Vestavia Reserve
Birmingham, AL
272
1,113
97.8
%
$
1,554
Adara Overland Park
Kansas City, KS
260
1,116
95.1
%
$
1,374
Claiborne Crossing
Louisville, KY
242
1,204
96.8
%
$
1,345
City Vista
Pittsburgh, PA
272
1,023
93.5
%
$
1,457
Total/Average Same-Store Communities
8,299
95.6
%
Stabilized Communities:
Stone Creek
Houston, TX
246
852
96.2
%
$
1,201
Artisan at Viera
Melbourne, FL
259
1,070
92.7
%
$
1,682
The Menlo
Jacksonville, FL
332
966
—
—
Village at Baldwin Park
Orlando, FL
528
1,069
95.6
%
$
1,661
The Blake
Orlando, FL
281
908
—
—
Parkside at the Beach
Panama City Beach, FL
288
1,041
95.1
%
$
1,390
Lodge at Hidden River
Tampa, FL
300
980
96.6
%
$
1,397
Five Oaks at Westchase
Tampa, FL
218
983
96.2
%
$
1,504
Horizon at Wiregrass
Tampa, FL
392
973
95.6
%
$
1,505
Total/Average Stabilized Communities
2,844
95.6
%
Total multifamily community units
11,143
For the three-month period ended December 31, 2020 , our average same-store multifamily communities' physical occupancy was 95.6% . We calculate average same-store physical occupancy for quarterly periods as the average of the number of occupied units on the 20th day of each of the trailing three months from the reporting period end date and that have been owned for at least 15 full months as of the end of the first quarter of each year. We exclude the operating results of properties for which construction of adjacent phases has commenced, properties which are undergoing significant capital projects, have sustained significant casualty losses, or are being marketed for sale as of the end of the reporting period. We believe "Same Property" information is useful as it allows both management and investors to gauge our management effectiveness via comparisons of financial and operational results between interim and annual periods for those subsets of multifamily communities owned for current and prior comparative periods.
For the three-month period ended December 31, 2020 , our average stabilized physical occupancy was 95.6% . We calculate average stabilized physical occupancy for quarterly periods as the average number of occupied units on the 20th day of each of the trailing three months from the reporting period end date. All of our multifamily communities were stabilized for the three-month period ended December 31, 2020 except The Blake and The Menlo that were both acquired during the fourth quarter 2020.
For the three-month period ended December 31, 2020 , our average economic occupancy was 95.5% . We define average economic occupancy as market rent reduced by vacancy losses, expressed as a percentage. All of our multifamily properties are included in these calculations except for properties which are not yet stabilized (which we define as properties having first achieved 93% physical occupancy for three full months in a quarter), properties which are owned for less than the entire reporting period and properties which are undergoing significant capital projects, have sustained significant casualty losses or are adding additional phases. We also exclude properties which are currently being marketed for sale, of which we had none at December 31, 2020 . Average economic occupancy is useful both to management and investors as a gauge of our effectiveness in realizing the full revenue generating potential of our multifamily communities given market rents and occupancy rates.
Capital Expenditures
We regularly incur capital expenditures related to our owned multifamily communities and student housing properties. Capital expenditures may be nonrecurring and discretionary, as part of a strategic plan intended to increase a property's value and corresponding revenue-generating ability, or may be normally recurring and necessary to maintain the income streams and present value of a property. Certain capital expenditures may be budgeted and reserved for upon acquiring a property as initial expenditures necessary to bring a property up to our standards or to add features or amenities that we believe make the property a compelling value to prospective residents in its individual market. These budgeted nonrecurring capital expenditures in connection with an acquisition are funded from the capital source(s) for the acquisition and are not dependent upon subsequent property operating cash flows for funding. Since the onset of the COVID-19 pandemic, all nonrecurring and discretionary capital expenditures have been reviewed individually and approved on as-needed basis. Certain recurring safety-related operational capital expenditures have continued without interruption as they remain necessary for the continued normal operation of our properties.
For the three-month period ended December 31, 2020, our capital expenditures for multifamily communities consisted of:
Capital Expenditures - Multifamily Communities
Recurring
Non-recurring
Total
(in thousands, except per-unit figures)
Amount
Per Unit
Amount
Per Unit
Amount
Per Unit
Appliances
$
131
$
11.87
$
—
$
—
$
131
$
11.87
Carpets
490
44.85
—
—
490
44.85
Wood / vinyl flooring
36
3.34
72
6.44
108
9.78
Mini blinds and ceiling fans
29
2.60
—
—
29
2.60
Fire safety
—
—
117
10.63
117
10.63
HVAC
128
11.63
—
—
128
11.63
Computers, equipment, misc.
40
3.70
29
2.62
69
6.32
Elevators
—
—
29
2.68
29
2.68
Exterior painting
—
—
101
9.03
101
9.03
Leasing office and other common amenities
36
3.24
101
8.98
137
12.22
Major structural projects
—
—
704
64.51
704
64.51
Cabinets and countertop upgrades
—
—
376
34.42
376
34.42
Landscaping and fencing
—
—
203
18.65
203
18.65
Parking lot
—
—
224
20.79
224
20.79
Signage and sanitation
—
—
45
4.15
45
4.15
Totals
$
890
$
81.23
$
2,001
$
182.90
$
2,891
$
264.13
For the three-month period ended December 31, 2020, our capital expenditures for student housing properties consisted of:
Capital Expenditures - Student Housing Properties
Recurring
Non-recurring
Total
(in thousands, except per-bed figures)
Amount
Per Bed
Amount
Per Bed
Amount
Per Bed
Appliances
$
15
$
5.70
$
—
$
—
$
15
$
5.70
Carpets
2
6.70
—
—
2
6.70
Wood / vinyl flooring
1
0.28
1
0.28
2
0.56
Mini blinds and ceiling fans
2
0.98
—
—
2
0.98
Fire safety
—
—
29
7.85
29
7.85
HVAC
42
12.78
—
—
42
12.78
Computers, equipment, misc.
2
1.91
2
2.83
4
4.74
Elevators
—
—
7
1.84
7
1.84
Exterior painting
—
—
—
—
—
—
Leasing office and other common amenities
—
—
1
3.79
1
3.79
Major structural projects
—
—
6
27.10
6
27.10
Cabinets and counter top upgrades
—
—
—
—
—
—
Landscaping and fencing
—
—
1
1.65
1
1.65
Parking lot
—
—
—
—
—
—
Signage and sanitation
—
—
—
—
—
—
Unit furniture
54
25.17
—
—
54
25.17
Totals
$
118
$
53.52
$
47
$
45.34
$
165
$
98.86
Grocery-Anchored Shopping Center Portfolio
As of December 31, 2020, our grocery-anchored shopping center portfolio consisted of the following properties:
Property name
Location
Year built
GLA (1)
Percent
Grocery anchor
Castleberry-Southard
Atlanta, GA
2006
80,018
98.3
%
Publix
Cherokee Plaza
Atlanta, GA
1958
102,864
100.0
%
Kroger
Governors Towne Square
Atlanta, GA
2004
68,658
95.9
%
Publix
Lakeland Plaza
Atlanta, GA
1990
301,711
95.3
%
Sprouts
Powder Springs
Atlanta, GA
1999
77,853
92.5
%
Publix
Rockbridge Village
Atlanta, GA
2005
102,432
84.4
%
Kroger
Roswell Wieuca Shopping Center
Atlanta, GA
2007
74,370
97.8
%
The Fresh Market
Royal Lakes Marketplace
Atlanta, GA
2008
119,493
91.4
%
Kroger
Sandy Plains Exchange
Atlanta, GA
1997
72,784
98.8
%
Publix
Summit Point
Atlanta, GA
2004
111,970
83.9
%
Publix
Thompson Bridge Commons
Atlanta, GA
2001
92,587
97.5
%
Kroger
Wade Green Village
Atlanta, GA
1993
74,978
95.9
%
Publix
Woodmont Village
Atlanta, GA
2002
85,639
98.6
%
Kroger
Woodstock Crossing
Atlanta, GA
1994
66,122
100.0
%
Kroger
East Gate Shopping Center
Augusta, GA
1995
75,716
90.4
%
Publix
Fury's Ferry
Augusta, GA
1996
70,458
93.2
%
Publix
Parkway Centre
Columbus, GA
1999
53,088
97.7
%
Publix
Greensboro Village
Nashville, TN
2005
70,203
98.3
%
Publix
Spring Hill Plaza
Nashville, TN
2005
66,693
100.0
%
Publix
Parkway Town Centre
Nashville, TN
2005
65,587
100.0
%
Publix
The Market at Salem Cove
Nashville, TN
2010
62,356
100.0
%
Publix
The Market at Victory Village
Nashville, TN
2007
71,300
100.0
%
Publix
The Overlook at Hamilton Place
Chattanooga, TN
1992
213,095
99.3
%
The Fresh Market
Shoppes of Parkland
Miami-Ft. Lauderdale, FL
2000
145,720
100.0
%
BJ's Wholesale Club
Crossroads Market
Naples, FL
1993
126,895
98.6
%
Publix
Neapolitan Way (2)
Naples, FL
1985
137,580
91.5
%
Publix
Berry Town Center
Orlando, FL
2003
99,441
83.0
%
Publix
Deltona Landings
Orlando, FL
1999
59,966
98.4
%
Publix
University Palms
Orlando, FL
1993
99,172
98.9
%
Publix
Disston Plaza
Tampa-St. Petersburg, FL
1954
129,150
97.5
%
Publix
Barclay Crossing
Tampa, FL
1998
54,958
100.0
%
Publix
Polo Grounds Mall
West Palm Beach, FL
1966
130,285
100.0
%
Publix
Kingwood Glen
Houston, TX
1998
103,397
97.1
%
Kroger
Independence Square
Dallas, TX
1977
140,218
86.6
%
Tom Thumb
Midway Market
Dallas, TX
2002
85,599
90.3
%
Kroger
Oak Park Village
San Antonio, TX
1970
64,855
100.0
%
H.E.B.
Irmo Station
Columbia, SC
1980
99,384
90.8
%
Kroger
Rosewood Shopping Center
Columbia, SC
2002
36,887
93.5
%
Publix
Anderson Central
Greenville Spartanburg, SC
1999
223,211
94.2
%
Walmart
Fairview Market
Greenville Spartanburg, SC
1998
46,303
97.0
%
Aldi
Brawley Commons
Charlotte, NC
1997
122,028
99.2
%
Publix
West Town Market
Charlotte, NC
2004
67,883
100.0
%
Harris Teeter
Heritage Station
Raleigh, NC
2004
72,946
100.0
%
Harris Teeter
Maynard Crossing
Raleigh, NC
1996
122,781
92.7
%
Harris Teeter
Wakefield Crossing
Raleigh, NC
2001
75,927
98.2
%
Food Lion
Southgate Village
Birmingham, AL
1988
75,092
96.8
%
Publix
Hollymead Town Center
Charlottesville, VA
2005
158,807
92.8
%
Harris Teeter
Free State Shopping Center
Washington, DC
1970
264,152
97.3
%
Giant
4,922,612
95.6
%
Redevelopment properties:
Champions Village
Houston, TX
1973
383,346
68.8
%
Randalls
Sweetgrass Corner
Charleston, SC
1999
89,124
29.1
%
(3)
Conway Plaza
Orlando, FL
1966
117,705
76.3
%
Publix
Hanover Center (4)
Wilmington, NC
1954
305,346
81.1
%
Harris Teeter
Gayton Crossing
Richmond, VA
1983
158,316
(5)
76.1
%
Kroger
Fairfield Shopping Center (4)
Virginia Beach, VA
1985
231,829
86.2
%
Food Lion
1,285,666
73.7
%
Grand total/weighted average
6,208,278
91.0
%
(1)
Gross leasable area, or GLA, represents the total amount of property square footage that can be leased to tenants.
(2)
Investment in an unconsolidated joint venture that is not prorated for our ownership percentage.
(3)
Bi-Lo (the former anchor tenant) had extended their term through April 30, 2019 and had no further right or option to extend their lease.
(4)
Property is owned through a consolidated joint venture.
(5)
The GLA figure shown excludes the GLA of the Kroger store, which is owned by others.
As of December 31, 2020 , our grocery-anchored shopping center portfolio was 91.0% leased (95.6% excluding redevelopment properties). We define percent leased as the percentage of gross leasable area that is leased as of the period end date, including non-cancelable lease agreements that have been signed which have not yet commenced. This metric is used by management to gauge the extent to which our grocery-anchored shopping centers are delivering their total potential rental and other revenues.
Details regarding lease expirations (assuming no exercises of tenant renewal options) within our grocery-anchored shopping center portfolio as of December 31, 2020 were:
Totals
Number
Leased
Percent of
Month to month
14
26,085
0.5
%
2021
150
430,821
7.6
%
2022
183
634,522
11.3
%
2023
149
650,023
11.5
%
2024
129
1,184,959
21.0
%
2025
122
981,750
17.4
%
2026
48
368,268
6.5
%
2027
29
193,733
3.4
%
2028
28
357,227
6.3
%
2029
25
151,566
2.7
%
2030
16
114,687
2.0
%
2031 +
20
547,821
9.8
%
Total
913
5,641,462
5641462
100.0
%
The Company's grocery-anchored shopping center portfolio contained the following anchor tenants as of December 31, 2020:
Tenant
GLA
Percent of
Publix
1,179,030
19.0
%
Kroger
581,593
9.4
%
Harris Teeter
273,273
4.4
%
Wal-Mart
183,211
3.0
%
BJ's Wholesale Club
108,532
1.7
%
Food Lion
76,523
1.2
%
Giant
73,149
1.2
%
Randall's
61,604
1.0
%
H.E.B
54,844
0.9
%
Tom Thumb
43,600
0.7
%
The Fresh Market
43,321
0.7
%
Sprouts
29,855
0.5
%
Aldi
23,622
0.4
%
Total
2,732,157
44.1%
The Company's Annual Report on Form 10-K for the year ended December 31, 2020 will present income statements of New Market Properties, LLC within the Results of Operations section of Management's Discussion and Analysis of Financial Condition and Results of Operations.
Second-generation capital expenditures within our grocery-anchored shopping center portfolio by property for the fourth quarter 2020 totaled approximately $501,000
Office Building Portfolio
As of December 31, 2020, our office building portfolio consisted of the following properties:
Property Name
Location
GLA
Percent leased
Three Ravinia
Atlanta, GA
814,000
92
%
150 Fayetteville
Raleigh, NC
560,000
91
%
Capitol Towers
Charlotte, NC
479,000
98
%
CAPTRUST Tower
Raleigh, NC
300,000
98
%
Westridge at La Cantera
San Antonio, TX
258,000
100
%
Morrocroft Centre
Charlotte, NC
291,000
95
%
Armour Yards
Atlanta, GA
187,000
93
%
Brookwood Center
Birmingham, AL
169,000
100
%
Galleria 75
Atlanta, GA
111,000
90
%
Total/Average
3,169,000
95
%
The Company's office building portfolio includes the following significant tenants:
Rentable square
Percent of
Annual Base
thousands)
InterContinental Hotels Group
495,000
13.8
%
$
11,876
Albemarle
162,000
6.6
%
5,727
CapFinancial
105,000
4.3
%
3,738
USAA
129,000
3.7
%
3,196
Vericast
129,000
3.4
%
2,953
Total
1,020,000
31.8
%
$
27,490
The Company defines Annual Base Rent as the current monthly base rent annualized under the respective leases.
The Company's leased square footage of its office building portfolio expires according to the following schedule:
Percent of
Year of lease
Rented square
rented
feet
square feet
2021
215,000
7.3
%
2022
128,000
4.3
%
2023
124,000
4.2
%
2024
279,000
9.4
%
2025
255,000
8.6
%
2026
265,000
8.9
%
2027
328,000
11.1
%
2028
246,000
8.3
%
2029
57,000
1.9
%
2030
177,000
6.0
%
2031 +
888,000
30.0
%
Total
2,962,000
100.0
%
The Company recognized second-generation capital expenditures within its office building portfolio of approximately $366,000
Definitions of Non-GAAP Measures
We disclose FFO, Core FFO, AFFO and NOI, each of which meet the definition of a "non-GAAP financial measure", as set forth in Item 10(e) of Regulation S-K promulgated by the SEC. As a result we are required to include in this filing a statement of why the Company believes that presentation of these measures provides useful information to investors. The non-GAAP measures of FFO, Core FFO, AFFO and NOI should be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our performance, and we believe that to understand our performance further FFO, Core FFO, AFFO and NOI should be compared with our reported net income or net loss and considered in addition to cash flows in accordance with GAAP, as presented in our consolidated financial statements. FFO, Core FFO and AFFO are not considered measures of liquidity and are not alternatives to measures calculated under GAAP.
Funds From Operations Attributable to Common Stockholders and Unitholders ("FFO")
FFO is one of the most commonly utilized Non-GAAP measures currently in practice. In its 2002 "White Paper on Funds From Operations," which was restated in 2018, the National Association of Real Estate Investment Trusts, or NAREIT, standardized the definition of how Net income/loss should be adjusted to arrive at FFO, in the interests of uniformity and comparability. We have adopted the NAREIT definition for computing FFO as a meaningful supplemental gauge of our operating results, and as is most often presented by other REIT industry participants.
The NAREIT definition of FFO (and the one reported by the Company) is:
Net income/loss, excluding:
depreciation and amortization related to real estate; gains and losses from the sale of certain real estate assets; gains and losses from change in control and impairment writedowns of certain real estate assets and investments in entities where the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. Not all companies necessarily utilize the standardized NAREIT definition of FFO, so caution should be taken in comparing the Company's reported FFO results to those of other companies. The Company's FFO results are comparable to the FFO results of other companies that follow the NAREIT definition of FFO and report these figures on that basis. FFO is a non-GAAP measure that is reconciled to its most comparable GAAP measure, net income/loss available to common stockholders.
Core Funds From Operations Attributable to Common Stockholders and Unitholders ("Core FFO")
The Company makes adjustments to FFO to remove costs incurred and revenues recorded that are singular in nature and outside the normal operations of the Company and portray its primary operational results. The Company calculates Core FFO as:
FFO, plus:
acquisition and pursuit (dead deal) costs; loan cost amortization on acquisition term notes and loan coordination fees; contingent management fees recognized upon property sales; losses on debt extinguishments or refinancing costs; internalization costs; expenses incurred on calls of preferred stock; deemed dividends for redemptions of and non-cash dividends on preferred stock; expenses related to the COVID-19 global pandemic; and Less:
earnest money forfeitures by prospective asset purchasers. Core FFO figures reported by us may not be comparable to Core FFO figures reported by other companies. We utilize Core FFO as a supplemental measure of the operating performance of our portfolio of real estate assets. We believe Core FFO is useful to investors as a supplemental gauge of our operating performance and may be useful in comparing our operating performance with other real estate companies. Since our calculation of Core FFO removes costs incurred and revenues recorded that are often singular in nature and outside the normal operations of the Company, we believe it improves comparability to investors in assessing our core operating results across periods. Core FFO is a non-GAAP measure that is reconciled to its most comparable GAAP measure, net income/loss available to common stockholders.
Adjusted Funds From Operations Attributable to Common Stockholders and Unitholders ("AFFO")
AFFO makes further adjustments to Core FFO results in order to arrive at a more refined measure of operating and financial performance. There is no industry standard definition of AFFO and practice is divergent across the industry. The Company calculates AFFO as:
Core FFO, plus:
non-cash equity compensation to directors and executives; non-cash (income) expense for current expected credit losses; amortization of loan closing costs; depreciation and amortization of non-real estate assets; net loan origination fees received; deferred interest income received; amortization of lease inducements; cash received in excess of (exceeded by) amortization of purchase option termination revenues; earnest money forfeiture from prospective asset purchaser; Less:
non-cash loan interest income; cash paid for loan closing costs; amortization of acquired real estate intangible liabilities and straight-line rent adjustments; amortization of deferred revenues; and normally-recurring capital expenditures and capitalized second generation leasing costs. AFFO figures reported by us may not be comparable to those AFFO figures reported by other companies. We utilize AFFO as another measure of the operating performance of our portfolio of real estate assets. We believe AFFO is useful to investors as a supplemental gauge of our operating performance and may be useful in comparing our operating performance with other real estate companies. Since our calculation of AFFO removes other significant non-cash charges and revenues and other costs which are not representative of our ongoing business operations, we believe it improves comparability to investors in assessing our core operating results across periods. AFFO is a non-GAAP measure that is reconciled to its most comparable GAAP measure, net income/loss available to common stockholders. FFO, Core FFO and AFFO are not considered measures of liquidity and are not alternatives to measures calculated under GAAP.
Multifamily Communities' Same-Store Net Operating Income ("NOI")
We use same store net operating income as an operational metric for our same-store communities, enabling comparisons of those properties' operating results between the current reporting period and the prior year comparative period. We define our population of same-store communities as those that are stabilized and that have been owned for at least 15 full months, as of the end of the first quarter of each year, and exclude the operating results of properties for which construction of adjacent phases has commenced, and properties which are undergoing significant capital projects, have sustained significant casualty losses, or are being marketed for sale as of the end of the reporting period. We define net operating income as rental and other property revenues, less total property and maintenance expenses, property management fees, real estate taxes, general and administrative expenses, and property insurance. We believe that net operating income is an important supplemental measure of operating performance for REITs because it provides measures of core operations, rather than factoring in depreciation and amortization, financing costs, acquisition costs, and other corporate expenses. Net operating income is a widely utilized measure of comparative operating performance in the REIT industry, but is not a substitute for the most comparable GAAP-compliant measure, net income/loss.
About Preferred Apartment Communities, Inc. December 31, 2020 , the Company owned or was invested in 116 properties in 13 states, predominantly in the Southeast region of the United States .
http://www.prnewswire.com/news-releases/preferred-apartment-communities-inc-reports-results-for-fourth-quarter-2020-301237825.html
SOURCE Preferred Apartment Communities, Inc.
