EX-99.2 3 tv520649_ex99-2.htm EXHIBIT 99.2

 

Exhibit 99.2

 

 

 

 

Bluerock Residential Growth REIT, Inc.
First Quarter 2019
Supplemental Financial Information
(Unaudited)

 

Table of Contents

 

First Quarter Earnings Release 3
   
Financial and Operating Highlights 15
   
Share and Unit Information 16
   
EBITDAre and Interest Information 17
   
Financial Statistics 18
   
Recent Investments 19
   
Recent Dispositions 20
   
Investments in Unconsolidated Real Estate Joint Ventures and Notes and Accrued Interest Receivable from Related Parties 21
   
Portfolio Information 22
   
Renovation Table 23
   
Mezzanine/Preferred Investments 24
   
Condensed Consolidated Balance Sheets 25
   
Consolidated Statements of Operation 26
   
Reconciliation of Funds from Operations (FFO) and Core Funds from Operations (CFFO) 27
   
Mortgages Payable Summary Information 28
   
2019 Outlook 30
   
Definitions of Non-GAAP Financial Measures 31

 

This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements are based upon the Company’s present expectations, but these statements are not guaranteed to occur, including statements relating to the Company’s operating environment, operating trends, and outlook. Furthermore, the Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. Investors should not place undue reliance upon forward-looking statements. For further discussion of the factors that could affect outcomes, please refer to the “Risk Factors” set forth in Item 1A of the Company’s Annual Report on Form 10-K filed by the Company with the U.S. Securities and Exchange Commission (“SEC”) on February 27, 2019, and subsequent filings by the Company with the SEC, including our periodic reports. We claim the safe harbor protection for forward looking statements contained in the Private Securities Litigation Reform Act of 1995.

 

2

 

 

Bluerock Residential Growth REIT, Inc.
First Quarter Earnings Release

 

 

For Immediate Release

Bluerock Residential Growth REIT Announces First Quarter 2019 Results

 

-       Total Revenues Grew 23% YoY     -

-       Same Store Revenues Grew 5.8% YoY     -

 

New York, NY (May 7, 2019) – Bluerock Residential Growth REIT, Inc. (NYSE American: BRG) (“the Company”), an owner of highly amenitized multifamily apartment communities, announced today its financial results for the quarter ended March 31, 2019.

 

First Quarter Highlights

 

•Total revenues grew 23% to $51.5 million for the quarter, from $41.9 million in the prior year period.

 

•Net loss attributable to common stockholders for the first quarter of 2019 was ($0.53) per share, as compared to ($0.40) per share in the prior year period. Net loss attributable to common stockholders includes non-cash items, including depreciation and amortization expense, of $0.74 per share in the first quarter of 2019 compared to $0.59 per share for the prior year period.

 

•Property Net Operating Income (“NOI”) grew 29% to $27.1 million, from $21.0 million in the prior year period.

 

•Same store revenue and NOI increased 5.8% and 9.0% respectively, as compared to the prior year period.

 

•Core funds from operations attributable to common shares and units (“CFFO”) increased 3% to $6.3 million, from $6.1 million in the prior year period. CFFO per share was $0.20 for the first quarter as compared to $0.20 in the prior year period.

 

•Paid quarterly common stock dividend of $0.1625, an 81% payout ratio on a CFFO basis.

 

•Consolidated real estate investments, at cost, were approximately $1.8 billion.

 

•Completed 273 value-add unit upgrades during the quarter achieving a 26.3% ROI.

 

•Invested $7.8 million to buy out the noncontrolling interest in one asset and invested $8.6 million in senior and mezzanine loans for a redevelopment property.

 

•Repurchased 505,797 shares of common stock during the first quarter at an average price of $10.01 per share, for a total cost of approximately $5.1 million.

 

“We are pleased to deliver another strong quarter of operating results, further validating our investment thesis of owning highly amenitized apartment communities in knowledge economy growth markets,” said Ramin Kamfar, Company Chairman and CEO. “Property NOI is up over 29% and same store NOI is up 9.0% over the prior year. These results demonstrate the continued success of our strategic initiatives and the ability to realize attractive returns on our value-add unit renovation investments. With a robust pipeline of opportunities, we remain committed to our investment strategy and are optimistic about our outlook.”

 

3

 

 

Bluerock Residential Growth REIT, Inc.
First Quarter Earnings Release

 

Financial Results

 

Net loss attributable to common stockholders for the first quarter of 2019 was $12.1 million, compared to $9.4 million in the prior year period. Net loss attributable to common stockholders included non-cash expenses of $17.2 million or $0.74 per share in the first quarter of 2019 compared to $14.2 million or $0.59 per share for the prior year period.

 

CFFO for the first quarter of 2019 was $6.3 million, or $0.20 per diluted share, compared to $6.1 million, or $0.20 per diluted share, in the prior year period. CFFO adds back non-cash, non-operating expenses such as accretion on the Company’s Series B preferred stock. CFFO was primarily driven by growth in property NOI of $6.1 million and interest income of $0.6 million arising from significant investment activity. This was primarily offset by a year-over-year increase in interest expense of $4.0 million, general and administrative expenses of $0.3 million, and preferred stock dividends of $2.1 million.

 

Total Portfolio Performance

 

$ In thousands, except average rental rates  1Q19  1Q18  Variance 
Total Revenues (1)  $51,466   $41,871    22.9%
Property Operating Expenses  $18,602   $15,658    18.8%
NOI  $27,088   $21,017    28.9%
Operating Margin   59.3%   57.3%   200bps
Occupancy Percentage   93.9%   93.5%   40bps
Average Rental Rate  $1,299   $1,227    5.9%

 

(1) Including interest income from related parties

 

For the first quarter of 2019, property revenues increased by 24.6% compared to the same prior year period primarily attributable to the increased size of the portfolio. Total portfolio NOI was $27.1 million, an increase of $6.1 million, or 28.9%, compared to the same period in the prior year. Property operating expenses were up primarily due to the increased size of the portfolio.

 

Property NOI margins expanded by 200 basis points to 59.3% of revenue for the quarter, compared to 57.3% of revenue in the prior year quarter.

 

Same Store Portfolio Performance

 

$ In thousands, except average rental rates  1Q19  1Q18  Variance 
Revenues  $38,725   $36,612    5.8%
Property Operating Expenses  $15,854   $15,628    1.4%
NOI  $22,871   $20,984    9.0%
Operating Margin   59.1%   57.3%   180bps
Occupancy Percentage   93.9%   93.5%   40bps
Average Rental Rate  $1,290   $1,225    5.3%

 

The Company’s same store portfolio for the quarter ended March 31, 2019 included 28 properties. For the first quarter of 2019, same store NOI was $22.9 million, an increase of $1.9 million, or 9.0%, compared to the same period in the prior year. Same store property revenues increased by 5.8% compared to the same prior year period, primarily attributable to a 5.3% increase in average rental rates, as well as average occupancy increasing 40 basis points to 93.9%. Same store expenses increased $0.23 million, primarily due to $0.11 million increase in trash, cable and landscaping, $0.06 million of additional real estate taxes due to higher valuations by municipalities, and $0.05 million increase in insurance.

 

4

 

 

Bluerock Residential Growth REIT, Inc.
First Quarter Earnings Release

 

Renovation Activity

 

The Company completed 273 value-add unit upgrades during the first quarter achieving a 26.3% rent premium.

 

Since inception within the existing portfolio, the Company has completed 1,939 value-add unit upgrades at an average cost of $4,902 per unit and achieved an average monthly rental rate increase of $108 per unit, equating to a 26.3% ROI on all unit upgrades leased as of March 31, 2019. The Company has identified approximately 4,550 remaining units within the existing portfolio for value-add upgrades with similar projected economics to the completed renovations. The Company expects to complete between 900 and 1,200 unit renovations in 2019.

 

Acquisition Activity

 

On January 23, 2019, the Company provided a $7.8 million senior loan and a $0.8 million mezzanine loan for a multifamily property undergoing redevelopment.

 

On January 29, 2019, the Company invested approximately $7.8 million to increase its ownership interest from 85% to 100% in its ARIUM Pine Lakes property.

 

Balance Sheet

 

During the first quarter, the Company raised gross proceeds of approximately $44.0 million through the issuance of 43,955 shares of Series B preferred stock with associated warrants at $1,000 per unit.

 

As of March 31, 2019, the Company had $24.3 million of unrestricted cash on its balance sheet, approximately $54.4 million available among its revolving and term credit facilities, and $1.3 billion of debt outstanding.

 

Dividend

 

The Board of Directors authorized, and the Company declared, a quarterly dividend for the first quarter of 2019 equal to a quarterly rate of $0.1625 per share on its Class A common stock, payable to the stockholders of record as of March 25, 2019, which was paid in cash on April 5, 2019. A portion of each dividend may constitute a return of capital for tax purposes.

 

The Board of Directors authorized, and the Company declared a quarterly cash dividend on its 8.250% Series A Cumulative Redeemable Preferred Stock for the first quarter of 2019, in the amount of $0.515625 per share. In addition, the Company declared a quarterly cash dividend on its 7.625% Series C Cumulative Redeemable Preferred Stock for the first quarter of 2019, in the amount of $0.4765625 per share. Further, the Company declared a quarterly cash dividend on its 7.125% Series D Cumulative Preferred Stock for the first quarter of 2019, in the amount of $0.4453125 per share. The dividends were payable to the stockholders of record on March 25, 2019, and were paid on April 5, 2019.

 

On April 12, 2019, the Board of Directors authorized, and the Company declared, a monthly dividend of $5.00 per share of Series B preferred stock, payable to the stockholders of record as of April 25, 2019, which was paid in cash on May 3, 2019, and as of May 24, 2019 and June 25, 2019 which will be paid in cash on June 5, 2019, and July 5, 2019, respectively.

 

5

 

 

Bluerock Residential Growth REIT, Inc.
First Quarter Earnings Release

 

2019 Guidance

 

The Company is reaffirming its prior guidance. Based on the Company’s current outlook and market conditions, the Company anticipates 2019 CFFO in the range of $0.80 to $0.84 per share. For additional guidance details underlying earnings guidance, please see page 30 of Company’s First Quarter 2019 Earnings Supplement available under Investor Relations on the Company’s website (www.bluerockresidential.com).

 

Conference Call

 

All interested parties can listen to the live conference call at 11:00 AM ET on Tuesday, May 7, 2019 by dialing +1 (866) 843-0890 within the U.S., or +1 (412) 317-6597, and requesting the "Bluerock Residential Conference."

 

For those who are not available to listen to the live call, the conference call will be available for replay on the Company’s website two hours after the call concludes, and will remain available until July 7, 2019 at http://services.choruscall.com/links/brg190507.html, as well as by dialing +1 (877) 344-7529 in the U.S., or +1 (412) 317-0088 internationally, and requesting conference number 10130647.

 

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

 

About Bluerock Residential Growth REIT, Inc.

 

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

 

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

 

Forward Looking Statements

 

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements are based upon the Company’s present expectations, but these statements are not guaranteed to occur. Furthermore, the Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. Investors should not place undue reliance upon forward-looking statements. For further discussion of the factors that could affect outcomes, please refer to the risk factors set forth in Item 1A of the Company’s Annual Report on Form 10-K filed by the Company with the U.S. Securities and Exchange Commission (“SEC”) on February 27, 2019, and subsequent filings by the Company with the SEC. We claim the safe harbor protection for forward looking statements contained in the Private Securities Litigation Reform Act of 1995.

 

6

 

 

Bluerock Residential Growth REIT, Inc.
First Quarter Earnings Release

 

Portfolio Summary

 

The following is a summary of our operating real estate and mezzanine/preferred investments as of March 31, 2019:

 

Consolidated Operating Properties  Location  Number
of Units		   Year Built/
Renovated
(1)		   Ownership
Interest		   Average
Rent (2)		   % Occupied
(3)		 
ARIUM at Palmer Ranch  Sarasota, FL   320    2016    100%  $1,311    97%
ARIUM Glenridge  Atlanta, GA   480    1990    90%   1,215    95%
ARIUM Grandewood  Orlando, FL   306    2005    100%   1,394    94%
ARIUM Gulfshore  Naples, FL   368    2016    100%   1,325    95%
ARIUM Hunter’s Creek  Orlando, FL   532    1999    100%   1,401    97%
ARIUM Metrowest  Orlando, FL   510    2001    100%   1,382    94%
ARIUM Palms  Orlando, FL   252    2008    100%   1,315    94%
ARIUM Pine Lakes  Port St. Lucie, FL   320    2003    100%   1,287    94%
ARIUM Westside  Atlanta, GA   336    2008    90%   1,532    94%
Ashford Belmar  Lakewood, CO   512    1988/1993    85%   1,607    92%
Ashton Reserve  Charlotte, NC   473    2015    100%   1,122    94%
Citrus Tower  Orlando, FL   336    2006    97%   1,292    94%
Enders Place at Baldwin Park  Orlando, FL   220    2003    92%   1,778    93%
James on South First  Austin, TX   250    2016    90%   1,244    93%
Marquis at Crown Ridge  San Antonio, TX   352    2009    90%   1,014    91%
Marquis at Stone Oak  San Antonio, TX   335    2007    90%   1,444    95%
Marquis at The Cascades  Tyler, TX   582    2009    90%   1,206    92%
Marquis at TPC  San Antonio, TX   139    2008    90%   1,485    92%
Outlook at Greystone  Birmingham, AL   300    2007    100%   954    94%
Park & Kingston  Charlotte, NC   168    2015    100%   1,294    98%
Plantation Park  Lake Jackson, TX   238    2016    80%   1,393    92%
Preston View  Morrisville, NC   382    2000    100%   1,121    94%
Roswell City Walk  Roswell, GA   320    2015    98%   1,526    98%
Sands Parc  Daytona Beach, FL   264    2017    100%   1,354    97%
Sorrel  Frisco, TX   352    2015    95%   1,279    85%
Sovereign  Fort Worth, TX   322    2015    95%   1,365    93%
The Brodie  Austin, TX   324    2001    93%   1,247    94%
The Links at Plum Creek  Castle Rock, CO   264    2000    88%   1,411    94%
The Mills  Greenville, SC   304    2013    100%   1,037    96%
The Preserve at Henderson Beach  Destin, FL   340    2009    100%   1,412    97%
Veranda at Centerfield  Houston, TX   400    1999    93%   947    90%
Villages of Cypress Creek  Houston, TX   384    2001    80%   1,129    96%
Wesley Village  Charlotte, NC   301    2010    100%   1,371    95%
Consolidated Operating Properties Subtotal/Average   11,286             $1,299    94%

 

Mezzanine/Preferred Investments  Location  Planned
Number
of Units		           Pro Forma
Average Rent		     
Alexan CityCentre  Houston, TX   340             $1,733(2)     
Alexan Southside Place  Houston, TX   270              2,012      
Arlo  Charlotte, NC   286              1,507      
Cade Boca Raton  Boca Raton, FL   90              2,549      
Domain at The One Forty  Garland, TX   299              1,469      
Flagler Village  Fort Lauderdale, FL   385              2,352      
Helios  Atlanta, GA   282              1,436(2)     
Leigh House  Raleigh, NC   245              1,271      
North Creek Apartments  Leander, TX   259              1,358      
Novel Perimeter  Atlanta, GA   320              1,749      
Riverside Apartments  Austin, TX   222              1,408      
The Park at Chapel Hill  Chapel Hill, NC   *              *      
Vickers Historic Roswell  Roswell, GA   79              3,176      
Wayforth at Concord  Concord, NC   150              1,707      
Whetstone Apartments  Durham, NC   204              1,278(2)     
Mezzanine and Preferred Investments Subtotal/Average  3,431             $1,704      
                             
Portfolio Properties Total/Average      14,717             $1,393      

 

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

(2) Represents the average effective monthly rent per occupied unit for the three months ended March 31, 2019.

(3) Percent occupied is calculated as (i) the number of units occupied as of March 31, 2019, divided by (ii) total number of units, expressed as a percentage.

* The development is in the planning phase; project specifications are in process.

 

7

 

 

Bluerock Residential Growth REIT, Inc.
First Quarter Earnings Release

 

Consolidated Statement of Operations

For the Three Months Ended March 31, 2019 and 2018

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

 

   Three Months Ended 
   March 31, 
   2019   2018 
Revenues          
Rental and other property revenues  $45,690   $36,675 
Interest income from related parties   5,776    5,196 
Total revenues   51,466    41,871 
Expenses          
Property operating   18,602    15,658 
Property management fees   1,215    992 
General and administrative   5,627    4,669 
Acquisition and pursuit costs   58    43 
Weather-related losses, net   —    168 
Depreciation and amortization   17,230    15,640 
Total expenses   42,732    37,170 
Operating income   8,734    4,701 
Other income (expense)          
Preferred returns on unconsolidated real estate joint ventures   2,289    2,461 
Gain on sale of non-depreciable real estate investments   679    — 
Interest expense, net   (16,067)   (10,117)
Total other expense   (13,099)   (7,656)
Net loss   (4,365)   (2,955)
Preferred stock dividends   (10,384)   (8,248)
Preferred stock accretion   (1,887)   (1,112)
Net loss attributable to noncontrolling interests          
Operating partnership units   (4,051)   (2,675)
Partially owned properties   (492)   (215)
Net loss attributable to noncontrolling interests   (4,543)   (2,890)
Net loss attributable to common stockholders  $(12,093)  $(9,425)
           
Net loss per common share - Basic  $(0.53)  $(0.40)
           
Net loss per common share – Diluted  $(0.53)  $(0.40)
           
Weighted average basic common shares outstanding   23,123,616    24,143,382 
Weighted average diluted common shares outstanding   23,123,616    24,143,382 

 

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Bluerock Residential Growth REIT, Inc.
First Quarter Earnings Release

 

Consolidated Balance Sheets

First Quarter 2019

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

 

   March 31,
2019		   December 31,
2018		 
ASSETS          
Net Real Estate Investments          
Land  $200,114   $200,385 
Buildings and improvements   1,548,167    1,546,244 
Furniture, fixtures and equipment   58,422    55,050 
Construction in progress   659    989 
Total Gross Real Estate Investments   1,807,362    1,802,668 
Accumulated depreciation   (124,605)   (108,911)
Total Net Real Estate Investments   1,682,757    1,693,757 
Cash and cash equivalents   24,337    24,775 
Restricted cash   22,659    27,469 
Notes and accrued interest receivable from related parties   174,068    164,084 
Due from affiliates   3,123    2,854 
Accounts receivable, prepaids and other assets   12,332    14,395 
Preferred equity investments and investments in unconsolidated real estate joint ventures   93,728    89,033 
In-place lease intangible assets, net   443    1,768 
Total Assets  $2,013,447   $2,018,135 
           
LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY          
Mortgages payable  $1,204,905   $1,206,136 
Revolving credit facilities   78,000    82,209 
Accounts payable   1,215    1,486 
Other accrued liabilities   25,444    31,690 
Due to affiliates   798    726 
Distributions payable   12,317    12,073 
Total Liabilities   1,322,679    1,334,320 
8.250% Series A Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share, 10,875,000 shares authorized; 5,721,460 shares issued and outstanding as of March 31, 2019 and December 31, 2018   139,698    139,545 
6.000% Sseries B Redeemable Preferred Stock, liquidation preference $1,000 per share, 1,225,000 shares authorized; 349,423 and 306,009 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively   311,555    272,842 
7.625% Series C Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share, 4,000,000 shares authorized; 2,323,750 shares issued and outstanding as of March 31, 2019 and December 31, 2018   56,545    56,485 
Equity          
Stockholders’ Equity          
Preferred stock, $0.01 par value, 229,900,000 shares authorized; no shares issued and outstanding   —    — 
7.125% Series D Cumulative Preferred Stock, liquidation preference $25.00 per share, 4,000,000 shares authorized; 2,850,602 shares issued and outstanding as of March 31, 2019 and December 31, 2018   68,705    68,705 
Common stock - Class A, $0.01 par value, 747,509,582 shares authorized; 22,861,084 and 23,322,211 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively   228    233 
Common stock - Class C, $0.01 par value, 76,603 shares authorized; 76,603 shares issued and outstanding as of March 31, 2019 and December 31, 2018   1    1 
Additional paid-in-capital   300,407    307,938 
Distributions in excess of cumulative earnings   (234,363)   (218,531)
Total Stockholders’ Equity   134,978    158,346 
Noncontrolling Interests          
Operating partnership units   21,143    27,613 
Partially owned properties   26,849    28,984 
Total Noncontrolling Interests   47,992    56,597 
Total Equity   182,970    214,943 
TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY  $2,013,447   $2,018,135 

 

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Bluerock Residential Growth REIT, Inc.
First Quarter Earnings Release

 

Non-GAAP Financial Measures

 

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

 

Funds from Operations and Core Funds from Operations

 

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

 

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

 

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

 

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

 

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

 

10

 

 

Bluerock Residential Growth REIT, Inc.
First Quarter Earnings Release

 

We have acquired four operating properties and four properties held through preferred equity or mezzanine loan investments subsequent to March 31, 2018. Therefore, the results presented in the table below are not directly comparable and should not be considered an indication of our future operating performance.

 

The table below reconciles our calculations of FFO and CFFO to net loss, the most directly comparable GAAP financial measure, for the three months ended March 31, 2019 and 2018 (in thousands, except per share amounts):

 

   Three Months Ended 
   March 31, 
   2019   2018 
Net loss attributable to common shares  $(12,093)  $(9,425)
Add back: Net loss attributable to operating partnership units   (4,051)   (2,675)
Net loss attributable to common shares and units   (16,144)   (12,100)
Common stockholders and operating partnership units pro-rata share of:          
Real estate depreciation and amortization (1)   16,142    14,831 
FFO Attributable to Common Shares and Units   (2)   2,731 
Common stockholders and operating partnership units pro-rata share of:          
Acquisition and pursuit costs   58    43 
Non-cash interest expense   775    461 
Unrealized loss on derivatives   1,635    — 
Weather-related losses, net   —    165 
Non-real estate depreciation and amortization   86    64 
Gain on sale of non-depreciable real estate investments   (679)   — 
Shareholder activism   338    — 
Non-cash preferred returns on unconsolidated real estate joint ventures   (212)   (231)
Non-cash equity compensation   2,391    1,780 
Preferred stock accretion   1,887    1,112 
CFFO Attributable to Common Shares and Units  $6,277   $6,125 
           
Per Share and Unit Information:          
FFO Attributable to Common Shares and Units - diluted  $(0.00)  $0.09 
CFFO Attributable to Common Shares and Units - diluted  $0.20   $0.20 
           
Weighted average common shares and units outstanding - diluted   30,885,006    30,995,775 

 

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

 

11

 

 

Bluerock Residential Growth REIT, Inc.
First Quarter Earnings Release

 

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

 

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

 

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

 

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

 

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

 

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

 

   Three Months Ended 
   March 31, 
   2019   2018 
Net loss attributable to common stockholders  $(12,093)  $(9,425)
Net loss income attributable to noncontrolling interests   (4,543)   (2,890)
Preferred stock dividends   10,384    8,248 
Preferred stock accretion   1,887    1,112 
Interest expense, net   16,067    10,117 
Depreciation and amortization   17,144    15,576 
EBITDAre  $28,846   $22,738 
Acquisition and pursuit costs   58    43 
Non-real estate depreciation and amortization   86    64 
Weather-related losses, net   -    168 
Gain on sale of non-depreciable real estate investments   (679)   — 
Shareholder activism   338    — 
Non-cash equity compensation   2,391    1,780 
Non-cash preferred returns on unconsolidated real estate joint ventures   (212)   (231)
Adjusted EBITDAre  $30,828   $24,562 

 

12

 

 

Bluerock Residential Growth REIT, Inc.
First Quarter Earnings Release

 

Same Store Properties

 

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

 

Property Net Operating Income ("Property NOI")

 

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

 

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

 

   Three Months Ended 
   March 31, 
   2019   2018 
Net loss attributable to common shares  $(12,093)  $(9,425)
Add back: Net loss attributable to operating partnership units   (4,051)   (2,675)
Net loss attributable to common shares and units   (16,144)   (12,100)
Add common stockholders and operating partnership units pro-rata share of:          
Depreciation and amortization   16,142    14,831 
Non-real estate depreciation and amortization   86    64 
Non-cash interest expense   775    461 
Unrealized loss on derivatives   1,635    — 
Property management fees   1,148    939 
Acquisition and pursuit costs   58    43 
Corporate operating expenses   5,554    4,669 
Weather-related losses, net   —    165 
Preferred dividends   10,384    8,248 
Preferred stock accretion   1,887    1,112 
Less common stockholders and operating partnership units pro-rata share of:          
Preferred returns on unconsolidated real estate joint ventures   2,289    2,461 
Interest income from related parties   5,776    5,196 
Gain on sale of non-depreciable real estate investments   679    — 
Pro-rata share of properties’ income   12,781    10,775 
Add:          
Noncontrolling interest pro-rata share of partially owned property income   729    607 
Total property income   13,510    11,382 
Add:          
Interest expense   13,578    9,635 
Net operating income   27,088    21,017 
Less:          
Non-same store net operating income   4,217    33 
Same store net operating income (1)  $22,871   $20,984 

 

(1) Same store portfolio for the three months ended March 31, 2019 consists of 28 properties, which represent 9,608 units.

 

13

 

 

Bluerock Residential Growth REIT, Inc.
First Quarter Earnings Release

 

Contact

Investors:

(888) 558.1031
investor.relations@bluerockre.com

 

Media:

Josh Hoffman

(208) 475.2380

jhoffman@bluerockre.com

##

 

14

 

 

Bluerock Residential Growth REIT, Inc.
Financial and Operating Highlights
For the Three Months Ended March 31, 2019
(Unaudited and dollars in thousands except for share and per share data)

 

   Three Months Ended     
   March 31,     
   2019   2018   % Change 
             
Total revenue  $51,466   $41,871    22.9%
                
Total assets  $2,013,447   $1,759,828    14.4%
                
Property NOI (1)  $27,088   $21,017    28.9%
                
Property NOI margins   59.3%   57.3%   3.5%
                
Net loss per common share - Diluted  $(0.53)  $(0.40)   - 
                
CFFO attributable to common shares and units per share (2)  $0.20   $0.20    0.0%

 

 

 

(1) See page 33 for the Company's definition of this non-GAAP measurement and reasons for using it.

 

(2) See page 31 for the Company's definition of this non-GAAP measurement and reasons for using it.

 

15

 

 

Bluerock Residential Growth REIT, Inc.
Share and Unit Information
First Quarter 2019
(Unaudited)

 

Weighted Average Common Stock and Units Outstanding for the quarter ended March 31, 2019     
Class A Common Stock   23,047,013 
Class C Common Stock   76,603 
Weighted Average Common Stock Outstanding, Diluted   23,123,616 
Warrants (1)   12,299 
Weighted Average Common Stock Outstanding, Diluted   23,135,915 
LTIP Units   1,362,914 
OP Units   6,386,177 
Weighted Average Common Stock and Total Units Outstanding, Diluted   30,885,006 
      
Outstanding Common Stock and Units at March 31, 2019   31,674,786 
      
Outstanding 8.250% Series A Cumulative Redeemable Preferred Stock at March 31, 2019   5,721,460 
      
Outstanding 6.000% Series B Redeemable Preferred Stock at March 31, 2019   349,423 
      
Outstanding 7.625% Series C Cumulative Redeemable Preferred Stock at March 31, 2019   2,323,750 
      
Outstanding 7.125% Series D Cumulative Preferred Stock at March 31, 2019   2,850,602 

 

(1) Potential dilution from warrants outstanding from issuance of Series B Preferred Stock offering that are potentially exercisable into 12,299 shares of common stock.

 

The following table reflects the impact of various LTIP Unit issuances, share repurchases, and other share/unit changes subsequent to December 31, 2018:

 

Share Type  Shares and units
outstanding
December 31,
2018		   LTIP Issuances   Share
Repurchases		   Other   Shares and units
outstanding
March 31, 2019		   Ownership
%		 
Class A Common Stock   23,322,211    -    (505,797)   44,669    22,861,083    72.18%
Class C Common Stock   76,603    -    -    -    76,603    0.24%
Total share equivalents   23,398,814    -    (505,797)   44,669    22,937,686    72.42%
OP Units   6,386,842    -    -    (1,128)   6,385,714    20.16%
LTIP Units   1,796,029    555,357    -    -    2,351,386    7.42%
Total noncontrolling interest   8,182,871    555,357    -    (1,128)   8,737,100    27.58%
Total shares, OP and LTIP Units   31,581,685    555,357    (505,797)   43,541    31,674,786    100.00%

 

 

16

 

 

Bluerock Residential Growth REIT, Inc.
EBITDAre and Interest Information
First Quarter 2019
(Unaudited and dollars in thousands)

 

   Three Months Ended 
   March 31, 
   2019 
Q1 EBITDAre Calculation     
Net loss attributable to common stockholders  $(12,093)
Net loss attributable to noncontrolling interests   (4,543)
Preferred stock dividends   10,384 
Preferred stock accretion   1,887 
Interest expense, net   16,067 
Depreciation and amortization   17,144 
EBITDAre (1)  $28,846 
Acquisition and pursuit costs   58 
Non-real estate depreciation and amortization   86 
Gain on sale of non-depreciable real estate investments   (679)
Shareholder activism   338 
Non-cash equity compensation   2,391 
Non-cash preferred returns on unconsolidated real estate joint ventures   (212)
Adjusted EBITDAre  $30,828 
      
Modified Q1 EBITDAre Calculation (2)     
Adjusted EBITDAre  $30,828 
Adjustment   151 
Modified Q1 EBITDAre  $30,979 
Modified Q1 EBITDAre annualized  $123,916 
      
Modified Q1 Interest Calculation (2)(3)     
Interest expense  $13,578 
Adjustment   - 
Modified Q1 interest expense  $13,578 
Modified Q1 interest expense annualized  $54,312 

 

(1) See page 32 for a reconciliation of net income attributable to common stockholders to EBITDAre and the Company's definition of EBITDAre and reasons for using it.

 

(2) Adjustment to EBITDAre and interest expense represents the estimated impact over the full period of the following activity assuming the transactions had occurred on January 1, 2019: (i) investment in The Park at Chapel Hill and (ii) additional investments at Alexan CityCentre, Alexan Southside Place, Cade Boca Raton, Domain at The One Forty, Leigh House, North Creek Apartments, and Vickers Historic Roswell. Actual results may differ significantly from the presented, adjusted amounts including annualized amounts.

 

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

 

17

 

 

Bluerock Residential Growth REIT, Inc.
Financial Statistics
First Quarter 2019
(Unaudited and dollars in thousands)

 

   Three Months Ended 
   March 31, 
   2019 
Interest Coverage Ratio     
Modified Q1 EBITDAre *  $30,979 
Modified Q1 interest expense (4) *   13,578 
Interest coverage ratio   2.28 x 
      
Quarterly Fixed Charge Coverage Ratio     
Modified Q1 interest expense (4) *  $13,578 
Preferred stock dividends   10,384 
Total fixed charges  $23,962 
Modified Q1 EBITDAre *   30,979 
Modified Q1 EBITDAre fixed charge coverage ratio   1.29 x 
      
Net Debt / Modified EBITDAre Ratio     
Total debt (1)  $1,291,741 
Less: cash (3)   (46,996)
Net debt (total debt less cash)  $1,244,745 
Modified Q1 EBITDAre (annualized)*   123,916 
Net debt / modified EBITDAre ratio   10.05 x 
      
Leverage as a Percentage of Assets     
Total debt (1)  $1,291,741 
Total undepreciated assets (2)   2,138,052 
Total debt / total undepreciated assets   60.4%
Net debt / net undepreciated assets (less cash)   59.5%
      
Leverage as a Percentage of Enterprise Value     
Total market cap (5)  $970,032 
Total debt (1)   1,291,741 
Total enterprise value  $2,261,773 
Total debt / total enterprise value   57.1%
Net debt / total enterprise value   55.0%
      

 

(1) Total debt excludes amortization of fair market value adjustments of $2.1 million and deferred financing costs of $10.9 million.

 

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

 

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

 

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

 

(5) Total market cap is calculated by using common shares, preferred shares, and equivalents (OP Units/LTIP Units) multiplied by the March 31, 2019 closing share prices.

 

* Adjustment to EBITDAre and interest expense represents the estimated impact over the full period of the following activity assuming the transactions had occurred on January 1, 2019: (i) investment in The Park at Chapel Hill and (ii) additional investments at Alexan CityCentre, Alexan Southside Place, Cade Boca Raton, Domain at The One Forty, Leigh House, North Creek Apartments, and Vickers Historic Roswell. Actual results may differ significantly from the presented, adjusted amounts including annualized amounts. See prior page for calculations.

 

18

 

 

Bluerock Residential Growth REIT, Inc.
Recent Investments
(Unaudited)

 

Property  Location  Date of
Investment		  Type of Investment   Amount
(in millions)		 
The Park at Chapel Hill  Chapel Hill, NC  01/23/2019  Mezzanine  $8.6(1)

 

(1) The investment includes a $7.8 million senior loan and a $0.8 million mezzanine loan. The development is in the planning phase; project specifications are in process.

 

19

 

 

Bluerock Residential Growth REIT, Inc.
Recent Dispositions
(Unaudited and dollars in millions))

 

Property  Location  Date Sold  Number
of Units		   Ownership
Interest in
Property		   Sale
Price		   BRG Net
Proceeds		   IRR   Equity
Multiple		 
Wesley Village II  Charlotte, NC  3/1/2019   -    100.0%  $1.0   $1.0    91%   3.62 

 

20

 

 

Bluerock Residential Growth REIT, Inc.
Investments in Unconsolidated Real Estate Joint Ventures and Notes and Accrued Interest Receivable from Related Parties
For the Three Months Ended March 31, 2019
(Unaudited and dollars in thousands)

 

Multifamily Community Name  Investment
Balance as of
January 1, 2019		   Change  

Investment Balance
as of

March 31, 2019

  

Return

as of

March 31, 2019

   CFFO Earned for the
Three Months Ended
March 31, 2019		 
Preferred and Equity Investments                         
Alexan CityCentre  $11,205   $275   $11,480    17.2%  $485 
Alexan Southside Place   22,801    1,240    24,041    6.5%   383 
Helios   19,189    -    19,189    7.0%   331 
Leigh House   13,319    855    14,174    15.8%   524 
North Creek Apartments   5,892    2,325    8,217    8.5% current + 4.0% accrued    151 
Riverside Apartments   3,600    -    3,600    8.5% current + 4.0% accrued    77 
Wayforth at Concord   -    -    -    9.0% current + 4.0% accrued    - 
Whetstone Apartments   12,932    -    12,932    7.2% accrued (1)    126 
Other   95    -    95    (2)   - 
   $89,033   $4,695   $93,728        $2,077 
                          
Mezzanine Loans                         
Arlo (2)  $24,893   $-   $24,893    15.0%  $909 
Cade Boca Raton (2)   11,854    484    12,338    15.0%   437 
Domain at The One Forty (2)   20,536    638    21,174    15.0%   752 
Flagler Village (2)   75,436    -    75,436    12.9%   2,373 
Novel Perimeter (2)   20,867    -    20,867    15.0%   762 
The Park at Chapel Hill (3)   -    8,572    8,572    10.0%   156 
Vickers Historic Roswell (2)   10,498    290    10,788    15.0%   387 
   $164,084   $9,984   $174,068        $5,776 

 

(1) Effective April 1, 2017, the preferred income is being accrued, except for a $0.1 million payment in March 2019.

 

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

 

(3) The investment includes a $7.8 million senior loan and a $0.8 million mezzanine loan.

 

21

 

 

Bluerock Residential Growth REIT, Inc.
Portfolio Information
First Quarter 2019
(Unaudited)

 

Multifamily Community Name  Location  Number of
Units		   Year Built/
Renovated (1)		   Average
Rent (2)		   Revenue per
Occupied
Unit (3)		   Average
Occupancy		 
Consolidated Operating Properties:                            
ARIUM at Palmer Ranch  Sarasota, FL   320    2016   $1,311   $1,454    96.5%
ARIUM Glenridge  Atlanta, GA   480    1990    1,215    1,352    92.8%
ARIUM Grandewood  Orlando, FL   306    2005    1,394    1,498    94.6%
ARIUM Gulfshore  Naples, FL   368    2016    1,325    1,464    95.4%
ARIUM Hunter’s Creek  Orlando, FL   532    1999    1,401    1,558    94.4%
ARIUM Metrowest  Orlando, FL   510    2001    1,382    1,566    93.8%
ARIUM Palms  Orlando, FL   252    2008    1,315    1,450    92.7%
ARIUM Pine Lakes  Port St. Lucie, FL   320    2003    1,287    1,464    94.3%
ARIUM Westside  Atlanta, GA   336    2008    1,532    1,655    95.1%
Ashford Belmar  Lakewood, CO   512    1988/1993   1,607    1,780    91.7%
Ashton Reserve  Charlotte, NC   473    2015    1,122    1,262    93.3%
Citrus Tower  Orlando, FL   336    2006    1,292    1,426    94.1%
Enders Place at Baldwin Park  Orlando, FL   220    2003    1,778    1,889    96.1%
James on South First  Austin, TX   250    2016    1,244    1,403    93.6%
Marquis at Crown Ridge  San Antonio, TX   352    2009    1,014    1,118    92.4%
Marquis at Stone Oak  San Antonio, TX   335    2007    1,444    1,553    95.1%
Marquis at The Cascades  Tyler, TX   582    2009    1,206    1,288    93.4%
Marquis at TPC  San Antonio, TX   139    2008    1,485    1,561    95.4%
Outlook at Greystone  Birmingham, AL   300    2007    954    1,155    91.7%
Park & Kingston  Charlotte, NC   168    2015    1,294    1,376    97.1%
Plantation Park  Lake Jackson, TX   238    2016    1,393    1,487    94.2%
Preston View  Morrisville, NC   382    2000    1,121    1,211    93.7%
Roswell City Walk  Roswell, GA   320    2015    1,526    1,748    96.7%
Sands Parc  Daytona Beach, FL   264    2017    1,354    1,509    96.3%
Sorrel  Frisco, TX   352    2015    1,279    1,414    82.1%
Sovereign  Fort Worth, TX   322    2015    1,365    1,493    94.2%
The Brodie  Austin, TX   324    2001    1,247    1,415    93.8%
The Links at Plum Creek  Castle Rock, CO   264    2000    1,411    1,540    95.1%
The Mills  Greenville, SC   304    2013    1,037    1,168    94.9%
The Preserve at Henderson Beach  Destin, FL   340    2009    1,412    1,538    96.5%
Veranda at Centerfield  Houston, TX   400    1999    947    1,040    91.8%
Villages of Cypress Creek  Houston, TX   384    2001    1,129    1,226    93.9%
Wesley Village  Charlotte, NC   301    2010    1,371    1,466    94.5%
                             
Total Consolidated Operating Properties   11,286        $1,299   $1,432    93.9%
                             
Mezzanine/Preferred Investments:                            
Alexan CityCentre  Houston, TX   340        $1,733   $1,857    93.8%
Alexan Southside Place  Houston, TX   270         2,012(4)    N/A      N/A  
Arlo  Charlotte, NC   286         1,507(4)    N/A      N/A  
Cade Boca Raton  Boca Raton, FL   90         2,549(4)    N/A      N/A  
Domain at The One Forty  Garland, TX   299         1,469(4)    N/A      N/A  
Flagler Village  Fort Lauderdale, FL   385         2,352(4)    N/A      N/A  
Helios  Atlanta, GA   282         1,436    1,585    89.8%
Leigh House  Raleigh, NC   245         1,271(4)    N/A      N/A  
North Creek Apartments  Leander, TX   259         1,358(4)    N/A      N/A  
Novel Perimeter  Atlanta, GA   320         1,749(4)    N/A      N/A  
Riverside Apartments  Austin, TX   222         1,408(4)    N/A      N/A  
The Park at Chapel Hill  Chapel Hill, NC   *         *     N/A      N/A  
Vickers Historic Roswell  Roswell, GA   79         3,176(4)    N/A      N/A  
Wayforth at Concord  Concord, NC   150         1,707(4)    N/A      N/A  
Whetstone Apartments  Durham, NC   204         1,278    1,462    96.1%
                             
Total Mezzanine/Preferred Investments      3,431        $1,704   $1,667    93.0%
                             
Total Portfolio      14,717        $1,393   $1,448    93.8%

 

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

(2) Represents the average effective monthly rent per occupied unit for the three months ended March 31, 2019.

(3) Revenue per occupied unit is total revenue divided by average number of occupied units for the three months ended March 31, 2019.

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

* The development is in the planning phase; project specifications are in process.

 

22

 

 

Bluerock Residential Growth REIT, Inc.
Renovation Table
As of March 31, 2019
(Unaudited)

 

Units and Investment                    
   2019   To Date 
   Completed   Completed   Total Expected   Total   Unrenovated Units 
   in 1Q   Year-to-date   Completions in 2019   Completed   Remaining 
Number of Renovations   273    273     900 - 1,200     1,939    4,550 
Renovation Cost per Unit  $5,501   $5,501    $6,000 - $7,000           
                          
Returns                         
   Cost   Monthly Rent   Return on         
   per Unit   Premium   Investment         
Weighted Average Returns to Date  $4,902   $108    26.3%          

 

23

 

 

Bluerock Residential Growth REIT, Inc.
Mezzanine/Preferred Investments  
As of March 31, 2019
(Unaudited)

 

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

 

                       Actual/Estimated Dates for
Multifamily Community Name  Actual/
Planned
Number
of Units		   Total Actual/
Estimated
Construction
Cost (in
millions)		   Cost to
Date (in
millions)		   Actual/
Estimated
Construction
Cost Per
Unit		   Total
Available
Financing
(in
millions)		   Construction
Start		  Initial
Occupancy		  Construction
Completion		  Stabilized
Operations
(3)
Whetstone Apartments (1)   204   $37.0   $37.0   $181,373   $26.3   N/A  3Q14  3Q15  4Q16
Alexan CityCentre (1)   340   $83.5   $80.7   $245,588   $55.1   4Q14  2Q17  4Q17  3Q18
Helios (1)   282   $51.8   $50.7   $183,688   $39.5   4Q15  2Q17  4Q17  4Q18
Alexan Southside Place (1)   270   $49.4   $47.0   $182,963   $31.6   4Q15  4Q17  1Q18  1Q19
Leigh House (1)   245   $40.2   $39.3   $164,082   $25.2   2Q16  3Q17  3Q18  1Q19
Vickers Historic Roswell (2)   79   $31.9   $29.9   $403,797   $18.0   2Q16  2Q18  3Q18  1Q20
Domain at The One Forty (2)   299   $53.3   $50.1   $178,261   $36.7   1Q17  2Q18  4Q18  4Q19
Arlo (2)   286   $60.0   $58.0   $209,790   $41.8   4Q16  2Q18  1Q19  1Q20
Novel Perimeter (2)   320   $71.0   $68.4   $221,875   $44.7   4Q16  3Q18  1Q19  1Q20
Cade Boca Raton (2)   90   $30.1   $28.4   $334,444   $18.7   2Q17  4Q18  2Q19  1Q20
Flagler Village (2)   385   $135.4   $80.0   $351,688   $70.4   1Q18  2Q20  3Q20  2Q22
North Creek Apartments (1)   259   $44.0   $8.9   $169,884   $23.6   4Q18  1Q20  3Q20  1Q21
Riverside Apartments (1)   222   $37.9   $7.1   $170,721   $20.2   2Q19  3Q20  4Q20  2Q21
Wayforth at Concord (1)   150   $33.5   $4.1   $223,333   $22.3   4Q18  2Q20  3Q21  3Q21
The Park at Chapel Hill   *    *    *    *    *   *  *  *  *

 

(1) Represents a preferred equity investment. North Creek Apartments, Riverside Apartments, and Wayforth at Concord have the option to purchase the property at stabilization.

 

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

 

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

 

* The development is in the planning phase; project specifications are in process.

 

24

 

 

Bluerock Residential Growth REIT, Inc.
Condensed Consolidated Balance Sheets
First Quarter 2019
(Unaudited and dollars in thousands except for share and per share data)

 

   March 31,
2019		   December 31,
2018		 
ASSETS          
Net Real Estate Investments          
Land  $200,114   $200,385 
Buildings and improvements   1,548,167    1,546,244 
Furniture, fixtures and equipment   58,422    55,050 
Construction in progress   659    989 
Total Gross Real Estate Investments   1,807,362    1,802,668 
Accumulated depreciation   (124,605)   (108,911)
Total Net Real Estate Investments   1,682,757    1,693,757 
Cash and cash equivalents   24,337    24,775 
Restricted cash   22,659    27,469 
Notes and accrued interest receivable from related parties   174,068    164,084 
Due from affiliates   3,123    2,854 
Accounts receivable, prepaids and other assets   12,332    14,395 
Preferred equity investments and investments in unconsolidated real estate joint ventures   93,728    89,033 
In-place lease intangible assets, net   443    1,768 
Total Assets  $2,013,447   $2,018,135 
           
LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY          
Mortgages payable  $1,204,905   $1,206,136 
Revolving credit facilities   78,000    82,209 
Accounts payable   1,215    1,486 
Other accrued liabilities   25,444    31,690 
Due to affiliates   798    726 
Distributions payable   12,317    12,073 
Total Liabilities   1,322,679    1,334,320 
8.250% Series A Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share, 10,875,000 shares authorized; 5,721,460 shares issued and outstanding as of March 31, 2019 and December 31, 2018   139,698    139,545 
6.000% Series B Redeemable Preferred Stock, liquidation preference $1,000 per share, 1,225,000 shares authorized; 349,423 and 306,009 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively   311,555    272,842 
7.625% Series C Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share, 4,000,000 shares authorized; 2,323,750 shares issued and outstanding as of March 31, 2019 and December 31, 2018   56,545    56,485 
Equity          
Stockholders’ Equity          
Preferred stock, $0.01 par value, 229,900,000 shares authorized; no shares issued and outstanding   —    — 
7.125% Series D Cumulative Preferred Stock, liquidation preference $25.00 per share, 4,000,000 shares authorized; 2,850,602 shares issued and outstanding as of March 31, 2019 and December 31, 2018   68,705    68,705 
Common stock - Class A, $0.01 par value, 747,509,582 shares authorized; 22,861,084 and 23,322,211 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively   228    233 
Common stock - Class C, $0.01 par value, 76,603 shares authorized; 76,603 shares issued and outstanding as of March 31, 2019 and December 31, 2018   1    1 
Additional paid-in-capital   300,407    307,938 
Distributions in excess of cumulative earnings   (234,363)   (218,531)
Total Stockholders’ Equity   134,978    158,346 
Noncontrolling Interests          
Operating partnership units   21,143    27,613 
Partially owned properties   26,849    28,984 
Total Noncontrolling Interests   47,992    56,597 
Total Equity   182,970    214,943 
TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY  $2,013,447   $2,018,135 

 

25

 

 

Bluerock Residential Growth REIT, Inc.
Consolidated Statements of Operations
For the Three Months Ended March 31, 2019 and 2018
(Dollars in thousands)

 

   Three Months Ended 
   March 31, 
   2019   2018 
Revenues          
Net rental income  $40,713   $32,665 
Other property revenues   4,977    4,010 
Rental and other property revenues   45,690    36,675 
Interest income from related parties   5,776    5,196 
Total revenues   51,466    41,871 
Expenses          
Property operating   18,602    15,658 
Property management fees   1,215    992 
General and administrative   5,627    4,669 
Acquisition and pursuit costs   58    43 
Weather-related losses, net   —    168 
Depreciation and amortization   17,230    15,640 
Total expenses   42,732    37,170 
Operating income   8,734    4,701 
Other income (expense)          
Preferred returns on unconsolidated real estate joint ventures   2,289    2,461 
Gain on sale of non-depreciable real estate investments   679    — 
Interest expense, net   (16,067)   (10,117)
Total other expense   (13,099)   (7,656)
Net loss   (4,365)   (2,955)
Preferred stock dividends   (10,384)   (8,248)
Preferred stock accretion   (1,887)   (1,112)
Net loss attributable to noncontrolling interests          
Operating partnership units   (4,051)   (2,675)
Partially owned properties   (492)   (215)
Net loss attributable to noncontrolling interests   (4,543)   (2,890)
Net loss attributable to common stockholders  $(12,093)  $(9,425)
           
Net loss per common share - Basic  $(0.53)  $(0.40)
           
Net loss per common share – Diluted  $(0.53)  $(0.40)
           
Weighted average basic common shares outstanding   23,123,616    24,143,382 
Weighted average diluted common shares outstanding   23,123,616    24,143,382 

 

26

 

 

Bluerock Residential Growth REIT, Inc.
Reconciliation of Funds from Operations (FFO) and Core FFO (CFFO) Attributable to Common Shares and Units
For the Three Months Ended March 31, 2019 and 2018
(Unaudited and dollars in thousands except for share and per share data)

 

   Three Months Ended 
   March 31, 
   2019   2018 
Net loss attributable to common shares  $(12,093)  $(9,425)
Add back: Net loss attributable to operating partnership units   (4,051)   (2,675)
Net loss attributable to common shares and units   (16,144)   (12,100)
Common stockholders and operating partnership units pro-rata share of:          
Real estate depreciation and amortization (1)   16,142    14,831 
FFO Attributable to Common Shares and Units   (2)   2,731 
Common stockholders and operating partnership units pro-rata share of:          
Acquisition and pursuit costs   58    43 
Non-cash interest expense   775    461 
Unrealized loss on derivatives   1,635    — 
Weather-related losses, net   —    165 
Non-real estate depreciation and amortization   86    64 
Gain on sale of non-depreciable real estate investments   (679)   — 
Shareholder activism   338    — 
Non-cash preferred returns on unconsolidated real estate joint ventures   (212)   (231)
Non-cash equity compensation   2,391    1,780 
Preferred stock accretion   1,887    1,112 
CFFO Attributable to Common Shares and Units  $6,277   $6,125 
           
Per Share and Unit Information:          
FFO Attributable to Common Shares and Units - diluted  $(0.00)  $0.09 
CFFO Attributable to Common Shares and Units - diluted  $0.20   $0.20 
           
Weighted average common shares and units outstanding - diluted   30,885,006    30,995,775 

 

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

 

27

 

 

Bluerock Residential Growth REIT, Inc.
Mortgages Payable Summary Information
As of March 31, 2019
(Unaudited and dollars in thousands)

 

Mortgages Payable

Property  Outstanding
Principal		   Interest Rate   Fixed/ Floating  Maturity Date
ARIUM at Palmer Ranch  $41,348    4.41%  Fixed  May 1, 2025
ARIUM Glenridge   49,500    3.82%  L + 1.33% subject to Cap (1)  September 1, 2025
ARIUM Grandewood   39,385    4.12%  (2)  July 1, 2025
ARIUM Hunter’s Creek   72,294    3.65%  Fixed  November 1, 2024
ARIUM Metrowest   64,559    4.43%  Fixed  May 1, 2025
ARIUM Palms   30,320    3.89%  L + 1.40% subject to Cap (1)  September 1, 2025
ARIUM Pine Lakes   26,950    3.95%  Fixed  November 1, 2023
ARIUM Westside   52,150    3.68%  Fixed  August 1, 2023
Ashford Belmar   100,675    4.53%  Fixed  December 1, 2025
Ashton Reserve I   30,743    4.67%  Fixed  December 1, 2025
Ashton Reserve II   15,213    3.99%  L + 1.50% subject to Cap (1)  August 1, 2025
Citrus Tower   41,438    4.07%  Fixed  October 1, 2024
Enders Place at Baldwin Park (3)   23,699    4.30%  Fixed  November 1, 2022
James on South First   26,425    4.35%  Fixed  January 1, 2024
Marquis at Crown Ridge   28,488    4.10%  L + 1.61% subject to Cap (1)  June 1, 2024
Marquis at Stone Oak   42,526    4.10%  L + 1.61% subject to Cap (1)  June 1, 2024
Marquis at The Cascades I   32,745    4.10%  L + 1.61% subject to Cap (1)  June 1, 2024
Marquis at The Cascades II   22,853    4.10%  L + 1.61% subject to Cap (1)  June 1, 2024
Marquis at TPC   16,736    4.10%  L + 1.61% subject to Cap (1)  June 1, 2024
Outlook at Greystone   22,105    4.30%  Fixed  June 1, 2025
Park & Kingston (4)   18,432    3.41%  Fixed  April 1, 2020
Plantation Park   26,625    4.64%  Fixed  July 1, 2028
Preston View   41,657    3.99%  L + 1.50% subject to Cap (1)  August 1, 2025
Roswell City Walk   51,000    3.63%  Fixed  December 1, 2026
Sorrel   38,684    4.78%  L + 2.29% subject to Cap (1)  May 1, 2023
Sovereign   28,084    3.46%  Fixed  November 10, 2022
The Brodie   34,666    3.71%  Fixed  December 1, 2023
The Links at Plum Creek   40,000    4.31%  Fixed  October 1, 2025
The Mills   26,174    4.21%  Fixed  January 1, 2025
The Preserve at Henderson Beach   35,422    4.65%  Fixed  January 5, 2023
Veranda at Centerfield   26,100    3.74%  L + 1.25% subject to Cap (1)  July 26, 2023
Villages of Cypress Creek   26,200    3.23%  Fixed  October 1, 2022
Wesley Village   40,545    4.25%  Fixed  April 1, 2024
Total   1,213,741            
Fair value adjustments   2,095            
Deferred financing costs, net   (10,931)           
Total  $1,204,905            
Weighted Average Interest Rate   4.10%           

 

(1) In March 2019, one month LIBOR in effect was 2.49%. LIBOR rate is subject to a LIBOR rate cap of 2.50% until at earliest July 1, 2021.

(2) The principal balance includes a $19.7 million advance at a fixed rate of 4.35% and a $19.7 million advance at a variable rate of 3.89% as of March 31, 2019.

(3) The principal balance includes a $16.1 million loan at a fixed rate of 3.97% and a $7.6 million supplemental loan at a fixed rate of 5.01%.

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

 

28

 

 

Bluerock Residential Growth REIT, Inc.
Mortgages Payable Summary Information Continued
As of March 31, 2019
(Unaudited and dollars in thousands)

 

Mortgages Payable Maturity Schedules

 

 

Year  Fixed Rate   Floating Rate   Total   % of Total 
2019  $3,591   $2,136   $5,727    0.47%
2020   27,109    3,620    30,729    2.53%
2021   11,251    4,609    15,860    1.31%
2022   85,568    5,841    91,409    7.53%
2023   153,084    68,135    221,219    18.23%
Thereafter   568,644    280,153    848,797    69.93%
   $849,247   $364,494   $1,213,741    100.00%
Fair Value Adjustments   2,095    -    2,095      
Subtotal  $851,342   $364,494   $1,215,836      
Deferred Financing Costs, net   (7,267)   (3,664)   (10,931)     
Total  $844,075   $360,830   $1,204,905      

 

   Amounts   % of Total   Weighted Average
Interest Rates		   Weighted
Average
Maturities
(years)		 
Secured Fixed Rate Debt  $851,342    70.0%   4.12%   5.6 
Secured Floating Rate Debt (1)   364,494    30.0%   4.06%   5.5 
Total/Average  $1,215,836    100.0%   4.10%   5.6 

 

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

 

29

 

 

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

 

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

 

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

 

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

 

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

 

30

 

 

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

 

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

 

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

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

 

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

 

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

 

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

 

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

 

We have acquired four operating properties and four properties held through preferred equity or mezzanine loan investments subsequent to March 31, 2018. The results presented are not directly comparable and should not be considered an indication of our future operating performance (unaudited and dollars in thousands, except share and per share data).

 

Same Store Properties

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

   Three Months Ended 
   March 31, 
   2019   2018 
Net loss attributable to common stockholders  $(12,093)  $(9,425)
Net loss income attributable to noncontrolling interests   (4,543)   (2,890)
Preferred stock dividends   10,384    8,248 
Preferred stock accretion   1,887    1,112 
Interest expense, net   16,067    10,117 
Depreciation and amortization   17,144    15,576 
EBITDAre  $28,846   $22,738 
Acquisition and pursuit costs   58    43 
Non-real estate depreciation and amortization   86    64 
Weather-related losses, net   -    168 
Gain on sale of non-depreciable real estate investments   (679)   - 
Shareholder activism   338    - 
Non-cash equity compensation   2,391    1,780 
Non-cash preferred returns on unconsolidated real estate joint ventures   (212)   (231)
Adjusted EBITDAre  $30,828   $24,562 
           

 

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

 

Property Net Operating Income ("Property NOI")

 

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

 

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

 

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

 

   Three Months Ended 
   March 31, 
   2019   2018 
Net loss attributable to common shares  $(12,093)  $(9,425)
Add back: Net loss attributable to operating partnership units   (4,051)   (2,675)
Net loss attributable to common shares and units   (16,144)   (12,100)
Add common stockholders and operating partnership units pro-rata share of:          
Depreciation and amortization   16,142    14,831 
Non-real estate depreciation and amortization   86    64 
Non-cash interest expense   775    461 
Unrealized loss on derivatives   1,635    — 
Property management fees   1,148    939 
Acquisition and pursuit costs   58    43 
Corporate operating expenses   5,554    4,669 
Weather-related losses, net   —    165 
Preferred dividends   10,384    8,248 
Preferred stock accretion   1,887    1,112 
Less common stockholders and operating partnership units pro-rata share of:          
Preferred returns on unconsolidated real estate joint ventures   2,289    2,461 
Interest income from related parties   5,776    5,196 
Gain on sale of non-depreciable real estate investments   679    — 
Pro-rata share of properties’ income   12,781    10,775 
Add:          
Noncontrolling interest pro-rata share of partially owned property income   729    607 
Total property income   13,510    11,382 
Add:          
Interest expense   13,578    9,635 
Net operating income   27,088    21,017 
Less:          
Non-same store net operating income   4,217    33 
Same store net operating income (1)  $22,871   $20,984 

 

(1) Same store portfolio for the three months ended March 31, 2019 consists of 28 properties, which represent 9,608 units.

 

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