x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Maryland | 27-1712193 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
PART I - FINANCIAL INFORMATION | ||||
INDEX | ||||
Item 1. | Financial Statements | Page No. | ||
Item 2. | ||||
Item 3. | ||||
Item 4. | ||||
Item 1. | ||||
Item 1A. | ||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 69 | ||
Item 3. | Defaults Upon Senior Securities | 70 | ||
Item 4. | Mine Safety Disclosures | 70 | ||
Item 5. | Other Information | 70 | ||
Item 6. | Exhibits | 70 | ||
Preferred Apartment Communities, Inc. | ||||||||
Consolidated Balance Sheets | ||||||||
(Unaudited) | ||||||||
(In thousands, except per-share par values) | June 30, 2018 | December 31, 2017 | ||||||
Assets | ||||||||
Real estate | ||||||||
Land | $ | 470,014 | $ | 406,794 | ||||
Building and improvements | 2,345,033 | 2,043,853 | ||||||
Tenant improvements | 84,988 | 63,425 | ||||||
Furniture, fixtures, and equipment | 255,096 | 210,779 | ||||||
Construction in progress | 18,546 | 10,491 | ||||||
Gross real estate | 3,173,677 | 2,735,342 | ||||||
Less: accumulated depreciation | (222,785 | ) | (172,756 | ) | ||||
Net real estate | 2,950,892 | 2,562,586 | ||||||
Real estate loans, net of deferred fee income | 314,440 | 255,345 | ||||||
Real estate loans to related parties, net | 59,768 | 131,451 | ||||||
Total real estate and real estate loan investments, net | 3,325,100 | 2,949,382 | ||||||
Cash and cash equivalents | 21,303 | 21,043 | ||||||
Restricted cash | 53,982 | 51,969 | ||||||
Notes receivable | 9,400 | 17,318 | ||||||
Note receivable and revolving line of credit due from related party | 27,956 | 22,739 | ||||||
Accrued interest receivable on real estate loans | 32,126 | 26,865 | ||||||
Acquired intangible assets, net of amortization of $96,660 and $73,521 | 99,878 | 102,743 | ||||||
Deferred loan costs on Revolving Line of Credit, net of amortization of $406 and $1,153 | 1,353 | 1,385 | ||||||
Deferred offering costs | 7,876 | 6,544 | ||||||
Tenant lease inducements, net of amortization of $1,021 and $452 | 18,827 | 14,425 | ||||||
Tenant receivables (net of allowance of $742 and $715) and other assets | 43,752 | 37,957 | ||||||
Variable Interest Entity ("VIE") assets from mortgage-backed pool, at fair value | 266,673 | — | ||||||
Total assets | $ | 3,908,226 | $ | 3,252,370 | ||||
Liabilities and equity | ||||||||
Liabilities | ||||||||
Mortgage notes payable, net of deferred loan costs and | $ | 1,998,514 | $ | 1,776,652 | ||||
mark-to-market adjustment of $37,378 and $35,397 | ||||||||
Revolving line of credit | 38,500 | 41,800 | ||||||
Term note payable, net of deferred loan costs of $0 and $6 | — | 10,994 | ||||||
Real estate loan participation obligation | 10,920 | 13,986 | ||||||
Unearned purchase option termination fees | 10,234 | — | ||||||
Deferred revenue | 34,352 | 27,947 | ||||||
Accounts payable and accrued expenses | 43,573 | 31,253 | ||||||
Accrued interest payable | 5,998 | 5,028 | ||||||
Dividends and partnership distributions payable | 17,338 | 15,680 | ||||||
Acquired below market lease intangibles, net of amortization of $11,014 and $8,095 | 40,350 | 38,857 | ||||||
Security deposits and other liabilities | 13,091 | 9,407 | ||||||
VIE liabilities from mortgage-backed pool, at fair value | 261,879 | — | ||||||
Total liabilities | 2,474,749 | 1,971,604 | ||||||
Commitments and contingencies (Note 11) | ||||||||
Equity | ||||||||
Stockholders' equity | ||||||||
Series A Redeemable Preferred Stock, $0.01 par value per share; 3,050 | ||||||||
shares authorized; 1,463 and 1,250 shares issued; 1,418 and 1,222 | ||||||||
shares outstanding at June 30, 2018 and December 31, 2017, respectively | 14 | 12 | ||||||
Series M Redeemable Preferred Stock, $0.01 par value per share; 500 | ||||||||
shares authorized; 29 and 15 shares issued and outstanding | ||||||||
at June 30, 2018 and December 31, 2017, respectively | — | — | ||||||
Common Stock, $0.01 par value per share; 400,067 shares authorized; | ||||||||
39,726 and 38,565 shares issued and outstanding at | ||||||||
June 30, 2018 and December 31, 2017, respectively | 397 | 386 | ||||||
Additional paid-in capital | 1,430,713 | 1,271,040 | ||||||
Accumulated earnings (deficit) | — | 4,449 | ||||||
Total stockholders' equity | 1,431,124 | 1,275,887 | ||||||
Non-controlling interest | 2,353 | 4,879 | ||||||
Total equity | 1,433,477 | 1,280,766 | ||||||
Total liabilities and equity | $ | 3,908,226 | $ | 3,252,370 |
Preferred Apartment Communities, Inc. | |||||||||||||||
Consolidated Statements of Operations | |||||||||||||||
(Unaudited) | |||||||||||||||
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
(In thousands, except per-share figures) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Revenues: | |||||||||||||||
Rental revenues | $ | 66,199 | $ | 48,241 | $ | 130,276 | $ | 93,605 | |||||||
Other property revenues | 12,158 | 8,821 | 23,886 | 17,257 | |||||||||||
Interest income on loans and notes receivable | 13,658 | 8,490 | 23,958 | 16,438 | |||||||||||
Interest income from related parties | 4,374 | 5,338 | 8,639 | 10,152 | |||||||||||
Total revenues | 96,389 | 70,890 | 186,759 | 137,452 | |||||||||||
Operating expenses: | |||||||||||||||
Property operating and maintenance | 10,107 | 7,198 | 18,912 | 13,737 | |||||||||||
Property salary and benefits (including reimbursements of $3,930, $3,018, | |||||||||||||||
$7,539 and $5,795 to related party) | 4,228 | 3,219 | 8,127 | 6,247 | |||||||||||
Property management fees (including $2,156, $1,571 | |||||||||||||||
$4,260 and $3,006 to related parties) | 2,776 | 2,061 | 5,532 | 3,963 | |||||||||||
Real estate taxes | 10,063 | 7,680 | 20,038 | 15,584 | |||||||||||
General and administrative | 1,957 | 1,654 | 3,798 | 3,159 | |||||||||||
Equity compensation to directors and executives | 950 | 871 | 2,085 | 1,744 | |||||||||||
Depreciation and amortization | 42,095 | 28,457 | 82,711 | 53,283 | |||||||||||
Acquisition and pursuit costs | — | 5 | — | 14 | |||||||||||
Asset management fees to related party | 6,621 | 4,864 | 12,862 | 9,377 | |||||||||||
Insurance, professional fees and other expenses | 2,008 | 1,377 | 3,453 | 2,669 | |||||||||||
Total operating expenses | 80,805 | 57,386 | 157,518 | 109,777 | |||||||||||
Waived asset management and general and administrative expense fees | (1,429 | ) | (171 | ) | (2,649 | ) | (346 | ) | |||||||
Net operating expenses | 79,376 | 57,215 | 154,869 | 109,431 | |||||||||||
Operating income | 17,013 | 13,675 | 31,890 | 28,021 | |||||||||||
Interest expense | 22,347 | 16,398 | 43,315 | 31,406 | |||||||||||
Change in fair value of net assets of consolidated VIE | |||||||||||||||
from mortgage-backed pool | 54 | — | 54 | — | |||||||||||
Loss on extinguishment of debt | — | 888 | — | 888 | |||||||||||
Net (loss) before gain on sale of real estate | (5,280 | ) | (3,611 | ) | (11,371 | ) | (4,273 | ) | |||||||
Gain on sale of real estate, net of disposition expenses | 2 | 6,915 | 20,356 | 37,639 | |||||||||||
Net (loss) income | (5,278 | ) | 3,304 | 8,985 | 33,366 | ||||||||||
Consolidated net income (loss) attributable to non-controlling interests | 140 | (97 | ) | (240 | ) | (1,096 | ) | ||||||||
Net (loss) income attributable to the Company | (5,138 | ) | 3,207 | 8,745 | 32,270 | ||||||||||
Dividends declared to preferred stockholders | (20,924 | ) | (15,235 | ) | (40,441 | ) | (29,621 | ) | |||||||
Earnings attributable to unvested restricted stock | (6 | ) | (6 | ) | (8 | ) | (8 | ) | |||||||
Net (loss) income attributable to common stockholders | $ | (26,068 | ) | $ | (12,034 | ) | $ | (31,704 | ) | $ | 2,641 | ||||
Net (loss) income per share of Common Stock available | |||||||||||||||
to common stockholders, basic and diluted | $ | (0.66 | ) | $ | (0.40 | ) | $ | (0.81 | ) | $ | 0.09 | ||||
Dividends per share declared on Common Stock | $ | 0.255 | $ | 0.235 | $ | 0.505 | $ | 0.455 | |||||||
Weighted average number of shares of Common Stock outstanding, | |||||||||||||||
Basic and diluted | 39,383 | 29,894 | 39,241 | 28,423 |
Preferred Apartment Communities, Inc. | ||||||||||||||||||||||||||||
Consolidated Statements of Stockholders' Equity | ||||||||||||||||||||||||||||
For the six-month periods ended June 30, 2018 and 2017 | ||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||
(In thousands, except dividend per-share figures) | Series A and Series M Redeemable Preferred Stock | Common Stock | Additional Paid in Capital | Accumulated Earnings | Total Stockholders' Equity | Non-Controlling Interest | Total Equity | |||||||||||||||||||||
Balance at January 1, 2018 | $ | 12 | $ | 386 | $ | 1,271,040 | $ | 4,449 | $ | 1,275,887 | $ | 4,879 | $ | 1,280,766 | ||||||||||||||
Issuance of Units | 2 | — | 210,842 | — | 210,844 | — | 210,844 | |||||||||||||||||||||
Issuance of mShares | — | — | 13,569 | — | 13,569 | — | 13,569 | |||||||||||||||||||||
Redemptions of Series A Preferred Stock | — | 4 | (9,063 | ) | — | (9,059 | ) | — | (9,059 | ) | ||||||||||||||||||
Exercises of warrants | — | 6 | 8,371 | — | 8,377 | — | 8,377 | |||||||||||||||||||||
Syndication and offering costs | — | — | (21,201 | ) | — | (21,201 | ) | — | (21,201 | ) | ||||||||||||||||||
Equity compensation to executives and directors | — | — | 278 | — | 278 | — | 278 | |||||||||||||||||||||
Vesting of restricted stock | — | — | — | — | — | — | — | |||||||||||||||||||||
Conversion of Class A Units to Common Stock | — | 1 | 850 | — | 851 | (851 | ) | — | ||||||||||||||||||||
Current period amortization of Class B Units | — | — | — | — | — | 1,807 | 1,807 | |||||||||||||||||||||
Net income | — | — | — | 8,745 | 8,745 | 240 | 8,985 | |||||||||||||||||||||
Reallocation adjustment to non-controlling interests | — | — | 3,180 | — | 3,180 | (3,180 | ) | — | ||||||||||||||||||||
Distributions to non-controlling interests | — | — | — | — | — | (542 | ) | (542 | ) | |||||||||||||||||||
Dividends to series A preferred stockholders | ||||||||||||||||||||||||||||
($5.00 per share per month) | — | — | (26,772 | ) | (12,965 | ) | (39,737 | ) | — | (39,737 | ) | |||||||||||||||||
Dividends to mShares preferred stockholders | ||||||||||||||||||||||||||||
($4.79 - $6.25 per share per month) | — | — | (475 | ) | (229 | ) | (704 | ) | — | (704 | ) | |||||||||||||||||
Dividends to common stockholders ($0.505 per share) | — | — | (19,906 | ) | — | (19,906 | ) | — | (19,906 | ) | ||||||||||||||||||
Balance at June 30, 2018 | $ | 14 | $ | 397 | $ | 1,430,713 | $ | — | $ | 1,431,124 | $ | 2,353 | $ | 1,433,477 |
Preferred Apartment Communities, Inc. | ||||||||||||||||||||||||||||
Consolidated Statements of Stockholders' Equity, continued | ||||||||||||||||||||||||||||
For the six-month periods ended June 30, 2018 and 2017 | ||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||
(In thousands, except dividend per-share figures) | Series A and Series M Redeemable Preferred Stock | Common Stock | Additional Paid in Capital | Accumulated Earnings | Total Stockholders' Equity | Non-Controlling Interest | Total Equity | |||||||||||||||||||||
Balance at January 1, 2017 | $ | 9 | $ | 265 | $ | 906,737 | $ | (23,232 | ) | $ | 883,779 | $ | 1,481 | $ | 885,260 | |||||||||||||
Issuance of Units | 2 | — | 146,846 | — | 146,848 | — | 146,848 | |||||||||||||||||||||
Redemptions of Series A Preferred Stock | — | 3 | (3,913 | ) | — | (3,910 | ) | — | (3,910 | ) | ||||||||||||||||||
Issuance of common stock | — | 39 | 58,345 | — | 58,384 | — | 58,384 | |||||||||||||||||||||
Exercises of Warrants | — | 15 | 17,677 | — | 17,692 | — | 17,692 | |||||||||||||||||||||
Syndication and offering costs | — | — | (18,299 | ) | — | (18,299 | ) | — | (18,299 | ) | ||||||||||||||||||
Equity compensation to executives and directors | — | — | 247 | — | 247 | — | 247 | |||||||||||||||||||||
Vesting of restricted stock | — | — | — | — | — | — | — | |||||||||||||||||||||
Conversion of Class A Units to Common Stock | — | 2 | 1,676 | — | 1,678 | (1,678 | ) | — | ||||||||||||||||||||
Current period amortization of Class B Units | — | — | — | — | — | 1,497 | 1,497 | |||||||||||||||||||||
Net income | — | — | — | 32,270 | 32,270 | 1,096 | 33,366 | |||||||||||||||||||||
Reallocation adjustment to non-controlling interests | — | — | (661 | ) | — | (661 | ) | 661 | — | |||||||||||||||||||
Distributions to non-controlling interests | — | — | — | — | — | (411 | ) | (411 | ) | |||||||||||||||||||
Dividends to Series A preferred stockholders | ||||||||||||||||||||||||||||
($5.00 per share per month) | — | — | (29,674 | ) | — | (29,674 | ) | — | (29,674 | ) | ||||||||||||||||||
Dividends to mShares preferred stockholders | ||||||||||||||||||||||||||||
($4.79 - $6.25 per share per month) | — | — | (89 | ) | — | (89 | ) | — | (89 | ) | ||||||||||||||||||
Dividends to common stockholders ($0.455 per share) | — | — | (13,510 | ) | — | (13,510 | ) | — | (13,510 | ) | ||||||||||||||||||
Balance at June 30, 2017 | $ | 11 | $ | 324 | $ | 1,065,382 | $ | 9,038 | $ | 1,074,755 | $ | 2,646 | $ | 1,077,401 |
Preferred Apartment Communities, Inc. | ||||||||
Consolidated Statements of Cash Flows | ||||||||
(Unaudited) | ||||||||
Six months ended June 30, | ||||||||
(In thousands) | 2018 | 2017 | ||||||
Operating activities: | ||||||||
Net income | $ | 8,985 | $ | 33,366 | ||||
Reconciliation of net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization expense | 82,711 | 53,283 | ||||||
Amortization of above and below market leases | (2,387 | ) | (1,562 | ) | ||||
Deferred revenues and fee income amortization | (2,154 | ) | (804 | ) | ||||
Purchase option termination income amortization | (2,236 | ) | — | |||||
Amortization of market discount on assumed debt and lease incentives | 699 | 92 | ||||||
Deferred loan cost amortization | 3,279 | 2,650 | ||||||
(Increase) in accrued interest income on real estate loans | (5,261 | ) | (2,976 | ) | ||||
Change in fair value of net assets of consolidated VIE | (54 | ) | — | |||||
Equity compensation to executives and directors | 2,085 | 1,744 | ||||||
Gain on sale of real estate | (20,356 | ) | (37,639 | ) | ||||
Cash received for purchase option terminations | 5,100 | — | ||||||
Loss on extinguishment of debt | — | 888 | ||||||
Mortgage interest received from consolidated VIE | 861 | — | ||||||
Mortgage interest paid to other participants of consolidated VIE | (861 | ) | — | |||||
Other | — | 189 | ||||||
Changes in operating assets and liabilities: | ||||||||
Increase in tenant receivables and other assets | (1,718 | ) | (3,619 | ) | ||||
Inrease in tenant lease incentives | (4,972 | ) | (7,239 | ) | ||||
Increase in accounts payable and accrued expenses | 7,474 | 4,137 | ||||||
Increase (decrease) in accrued interest, prepaid rents and other liabilities | 1,968 | (160 | ) | |||||
Net cash provided by operating activities | 73,163 | 42,350 | ||||||
Investing activities: | ||||||||
Investments in real estate loans | (117,771 | ) | (70,320 | ) | ||||
Repayments of real estate loans | 130,185 | 9,866 | ||||||
Notes receivable issued | (716 | ) | (3,729 | ) | ||||
Notes receivable repaid | 8,640 | 1,967 | ||||||
Note receivable issued to and draws on line of credit by related parties | (24,093 | ) | (14,979 | ) | ||||
Repayments of line of credit by related parties | 18,652 | 14,254 | ||||||
Loan origination fees received | 2,422 | 835 | ||||||
Loan origination fees paid to Manager | (1,211 | ) | (417 | ) | ||||
Investment in mortgage-backed securities | (4,739 | ) | — | |||||
Mortgage principal received from consolidated VIE from mortgage-backed pool | 171 | — | ||||||
Mortgage principal paid to other participants of consolidated VIE from mortgage-backed pool | (171 | ) | — | |||||
Acquisition of properties | (405,870 | ) | (222,435 | ) | ||||
Disposition of properties, net | 42,269 | 148,105 | ||||||
Receipt of insurance proceeds for capital improvements | 412 | — | ||||||
Additions to real estate assets - improvements | (18,268 | ) | (7,563 | ) | ||||
(Deposits) on acquisitions | (1,538 | ) | (920 | ) | ||||
Net cash used in investing activities | (371,626 | ) | (145,336 | ) | ||||
Financing activities: | ||||||||
Proceeds from mortgage notes payable | 211,949 | 156,280 | ||||||
Payments for mortgage notes payable | (35,231 | ) | (116,053 | ) | ||||
Payments for deposits and other mortgage loan costs | (4,359 | ) | (6,039 | ) | ||||
Payments for mortgage prepayment costs | — | (817 | ) | |||||
Proceeds from real estate loan participants | 5 | 166 | ||||||
Payments to real estate loan participants | (3,664 | ) | (2,467 | ) | ||||
Proceeds from lines of credit | 237,100 | 97,000 | ||||||
Payments on lines of credit | (240,400 | ) | (186,000 | ) | ||||
Repayment of the Term Loan | (11,000 | ) | — | |||||
Proceeds from sales of Units, net of offering costs and redemptions | 204,201 | 132,620 | ||||||
Proceeds from sales of Common Stock | — | 56,116 | ||||||
Proceeds from exercises of Warrants | 12,374 | 14,901 | ||||||
Payments for redemptions of preferred stock | (8,994 | ) | (3,921 | ) | ||||
Common Stock dividends paid | (19,378 | ) | (11,711 | ) | ||||
Preferred stock dividends paid | (39,310 | ) | (28,990 | ) | ||||
(Continued on next page) |
Preferred Apartment Communities, Inc. | ||||||||
Consolidated Statements of Cash Flows - continued | ||||||||
(Unaudited) | ||||||||
Six months ended June 30, | ||||||||
(In thousands) | 2018 | 2017 | ||||||
Distributions to non-controlling interests | (489 | ) | (394 | ) | ||||
Payments for deferred offering costs | (2,068 | ) | (4,459 | ) | ||||
Net cash provided by financing activities | 300,736 | 96,232 | ||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 2,273 | (6,754 | ) | |||||
Cash, cash equivalents and restricted cash, beginning of period | 73,012 | 67,715 | ||||||
Cash, cash equivalents and restricted cash, end of period | $ | 75,285 | $ | 60,961 | ||||
Supplemental cash flow information: | ||||||||
Cash paid for interest | $ | 38,875 | $ | 28,812 | ||||
Supplemental disclosure of non-cash activities: | ||||||||
Accrued capital expenditures | $ | 1,621 | $ | 2,132 | ||||
Writeoff of fully depreciated or amortized assets and liabilities | $ | 245 | $ | 387 | ||||
Writeoff of fully amortized deferred loan costs | $ | 1,331 | $ | — | ||||
Lessee-funded tenant improvements, capitalized as landlord assets | $ | 7,490 | $ | 16,200 | ||||
Dividends payable - Common Stock | $ | 10,104 | $ | 7,539 | ||||
Dividends payable - Series A Preferred Stock | $ | 6,952 | $ | 5,145 | ||||
Dividends payable - mShares Preferred Stock | $ | 129 | $ | 47 | ||||
Dividends declared but not yet due and payable | $ | 153 | $ | 12 | ||||
Partnership distributions payable to non-controlling interests | $ | 273 | $ | 212 | ||||
Accrued and payable deferred offering costs | $ | 415 | $ | 431 | ||||
Offering cost reimbursement to related party | $ | 966 | $ | 220 | ||||
Reclass of offering costs from deferred asset to equity | $ | 1,053 | $ | 1,752 | ||||
Proceeds of like-kind exchange funds for dispositions | $ | — | $ | 31,288 | ||||
Use of like-kind exchange funds for acquisitions | $ | — | $ | 31,288 | ||||
Fair value issuances of equity compensation | $ | 4,972 | $ | 4,088 | ||||
Mortgage loans assumed on acquisitions | $ | 47,125 | $ | 57,324 | ||||
Noncash repayment of mortgages through refinance | $ | 37,485 | $ | 65,000 | ||||
Reconciliation of cash, cash equivalents and restricted cash: | ||||||||
Cash and cash equivalents | $ | 21,303 | $ | 13,056 | ||||
Restricted cash | 53,982 | 47,905 | ||||||
Cash, cash equivalents and restricted cash, end of period | $ | 75,285 | $ | 60,961 | ||||
1. | Organization and Basis of Presentation |
2. | Summary of Significant Accounting Policies |
As of: | ||||||
June 30, 2018 | December 31, 2017 | |||||
Multifamily communities: | ||||||
Properties (1) | 31 | 30 | ||||
Units | 9,768 | 9,521 | ||||
New Market Properties: (2) | ||||||
Properties | 43 | 39 | ||||
Gross leasable area (square feet) (3) | 4,449,860 | 4,055,461 | ||||
Student housing properties: | ||||||
Properties | 7 | 4 | ||||
Units | 1,679 | 891 | ||||
Beds | 5,208 | 2,950 | ||||
Preferred Office Properties: | ||||||
Properties | 5 | 4 | ||||
Rentable square feet | 1,539,000 | 1,352,000 | ||||
(1) The acquired second and third phase of the Summit Crossing community is managed in combination with the initial phase and so together are considered a single property, as are the three assets that comprise the Lenox Portfolio. | ||||||
(2) See Note 12, Segment information. | ||||||
(3) The Company also owns approximately 47,600 square feet of gross leasable area of ground floor retail space which is embedded within the Lenox Portfolio and not included in the totals above for New Market Properties. |
Lake Cameron | Sandstone Creek | Ashford Park | Enclave at Vista Ridge | |||||||||||||
(in thousands) | March 20, 2018 | January 20, 2017 | March 7, 2017 | May 25, 2017 | ||||||||||||
Real estate assets: | ||||||||||||||||
Land | $ | 4,000 | $ | 2,846 | $ | 10,600 | $ | 4,705 | ||||||||
Building and improvements | 21,519 | 41,860 | 24,075 | 29,916 | ||||||||||||
Furniture, fixtures and equipment | 3,687 | 5,278 | 4,223 | 2,874 | ||||||||||||
Accumulated depreciation | (7,220 | ) | (4,809 | ) | (6,816 | ) | (3,556 | ) | ||||||||
Total assets | $ | 21,986 | $ | 45,175 | $ | 32,082 | $ | 33,939 | ||||||||
Liabilities: | ||||||||||||||||
Mortgage note payable | $ | 19,736 | $ | 30,840 | $ | 25,626 | $ | 24,862 | ||||||||
Supplemental mortgage note | — | — | 6,374 | — | ||||||||||||
Total liabilities | $ | 19,736 | $ | 30,840 | $ | 32,000 | $ | 24,862 |
Acquisition date | Property | Location | Units | ||||
1/9/2018 | The Lux at Sorrel | Jacksonville, Florida | 265 | ||||
2/28/2018 | Green Park | Atlanta, Georgia | 310 | ||||
575 | |||||||
3/3/2017 | Broadstone at Citrus Village | Tampa, Florida | 224 | ||||
3/24/2017 | Retreat at Greystone | Birmingham, Alabama | 312 | ||||
3/31/2017 | Founders Village | Williamsburg, Virginia | 247 | ||||
4/26/2017 | Claiborne Crossing | Louisville, Kentucky | 242 | ||||
1,025 |
Multifamily Communities acquired during the six months ended: | ||||||||
(in thousands, except amortization period data) | June 30, 2018 | June 30, 2017 | ||||||
Land | $ | 12,810 | $ | 16,348 | ||||
Buildings and improvements | 73,773 | 132,861 | ||||||
Furniture, fixtures and equipment | 17,969 | 28,421 | ||||||
Lease intangibles | 4,306 | 6,159 | ||||||
Prepaids & other assets | 193 | 357 | ||||||
Accrued taxes | (166 | ) | (363 | ) | ||||
Security deposits, prepaid rents, and other liabilities | (183 | ) | (367 | ) | ||||
Net assets acquired | $ | 108,702 | $ | 183,416 | ||||
Cash paid | $ | 37,427 | $ | 64,618 | ||||
Mortgage debt, net | 71,275 | 118,798 | ||||||
Total consideration | $ | 108,702 | $ | 183,416 | ||||
Three months ended June 30, 2018: | ||||||||
Revenue | $ | 2,514 | $ | 4,563 | ||||
Net income (loss) | $ | (2,028 | ) | $ | (1,223 | ) | ||
Six months ended June 30, 2018: | ||||||||
Revenue | $ | 3,980 | $ | 8,956 | ||||
Net income (loss) | $ | (3,543 | ) | $ | (3,715 | ) | ||
Capitalized acquisition costs incurred by the Company | $ | 2,347 | $ | 2,237 | ||||
Acquisition costs paid to related party (included above) | $ | 1,094 | $ | 110 | ||||
Remaining amortization period of intangible | ||||||||
assets and liabilities (months) | 9.9 | 0.0 |
Acquisition date | Property | Location | Units | Beds | ||||||
5/10/2018 | The Tradition | College Station, Texas | 427 | 808 | ||||||
5/31/2018 | The Retreat at Orlando | Orlando, Florida | 221 | 894 | ||||||
6/27/2018 | The Bloc | Lubbock, Texas | 140 | 556 | ||||||
788 | 2,258 | |||||||||
2/28/2017 | Sol | Tempe, Arizona | 224 | 639 |
Student housing properties acquired during the six months ended: | ||||||||
(in thousands, except amortization period data) | June 30, 2018 | June 30, 2017 | ||||||
Land | $ | 23,149 | $ | 7,441 | ||||
Buildings and improvements | 146,856 | 40,059 | ||||||
Furniture, fixtures and equipment | 27,211 | 3,771 | ||||||
Lease intangibles | 2,493 | 2,344 | ||||||
Below market leases | (54 | ) | — | |||||
Prepaids & other assets | 309 | 51 | ||||||
Accrued taxes | (942 | ) | (72 | ) | ||||
Security deposits, prepaid rents, and other liabilities | (719 | ) | (377 | ) | ||||
Net assets acquired | $ | 198,303 | $ | 53,217 | ||||
Cash paid | $ | 92,212 | $ | 15,732 | ||||
Mortgage debt, net | 106,091 | 37,485 | ||||||
Total consideration | $ | 198,303 | $ | 53,217 | ||||
Three months ended June 30, 2018: | ||||||||
Revenue | $ | 1,486 | $ | 1,363 | ||||
Net income (loss) | $ | (2,019 | ) | $ | (398 | ) | ||
Six months ended June 30, 2018: | ||||||||
Revenue | $ | 1,486 | $ | 2,707 | ||||
Net income (loss) | $ | (2,019 | ) | $ | (693 | ) | ||
Capitalized acquisition costs incurred by the Company | $ | 2,555 | $ | 290 | ||||
Acquisition costs paid to related party (included above) | $ | 1,970 | $ | 60 | ||||
Remaining amortization period of intangible | ||||||||
assets and liabilities (months) | 5.2 | 0.0 |
Acquisition date | Property | Location | Gross leasable area (square feet) | ||||
4/27/2018 | Greensboro Village | Nashville, Tennessee | 70,203 | ||||
4/27/2018 | Governors Towne Square | Atlanta, Georgia | 68,658 | ||||
6/26/2018 | Neapolitan Way | Naples, Florida | 137,580 | ||||
6/29/2018 | Conway Plaza | Orlando, Florida | 117,705 | ||||
394,146 | |||||||
4/21/2017 | Castleberry-Southard | Atlanta, Georgia | 80,018 | ||||
6/6/2017 | Rockbridge Village | Atlanta, Georgia | 102,432 | ||||
182,450 | |||||||
New Market Properties acquired during the six months ended: | ||||||||
(in thousands, except amortization period data) | June 30, 2018 | June 30, 2017 | ||||||
Land | $ | 24,504 | $ | 6,165 | ||||
Buildings and improvements | 50,086 | 29,137 | ||||||
Tenant improvements | 4,018 | 949 | ||||||
In-place leases | 6,177 | 2,240 | ||||||
Above market leases | 1,383 | 182 | ||||||
Leasing costs | 2,011 | 767 | ||||||
Below market leases | (2,765 | ) | (1,414 | ) | ||||
Other assets | — | 76 | ||||||
Other liabilities | (812 | ) | (252 | ) | ||||
Net assets acquired | $ | 84,622 | $ | 37,850 | ||||
Cash paid | $ | 54,914 | $ | 8,339 | ||||
Use of 1031 proceeds | — | 3,761 | ||||||
Mortgage debt | 29,708 | 25,750 | ||||||
Total consideration | $ | 84,622 | $ | 37,850 | ||||
Three months ended June 30, 2018: | ||||||||
Revenue | $ | 513 | $ | 875 | ||||
Net income (loss) | $ | (248 | ) | $ | (54 | ) | ||
Six months ended June 30, 2018: | ||||||||
Revenue | $ | 513 | $ | 1,763 | ||||
Net income (loss) | $ | (248 | ) | $ | (45 | ) | ||
Capitalized acquisition costs incurred by the Company | $ | 1,229 | $ | 201 | ||||
Capitalized acquisition costs paid to related party (included above) | $ | 869 | $ | 42 | ||||
Remaining amortization period of intangible | ||||||||
assets and liabilities (years) | 6.0 | 8.5 | ||||||
Preferred Office Properties acquired during the six months ended: | ||||
(in thousands, except amortization period data) | June 30, 2018 | |||
Land | $ | 6,756 | ||
Buildings and improvements | 48,332 | |||
Tenant improvements | 6,201 | |||
In-place leases | 3,762 | |||
Above-market leases | 61 | |||
Leasing costs | 2,181 | |||
Below-market leases | (1,594 | ) | ||
Security deposits, prepaid rents, and other liabilities | (4,335 | ) | ||
Net assets acquired | $ | 61,364 | ||
Cash paid | $ | 21,364 | ||
Mortgage debt, net | 40,000 | |||
Total consideration | $ | 61,364 | ||
Three months ended June 30, 2018: | ||||
Revenue | $ | 1,418 | ||
Net income (loss) | $ | (84 | ) | |
Six months ended June 30, 2018: | ||||
Revenue | $ | 2,373 | ||
Net income (loss) | $ | (254 | ) | |
Capitalized acquisition costs incurred by the Company | $ | 817 | ||
Acquisition costs paid to related party (included above) | $ | 665 | ||
Remaining amortization period of intangible | ||||
assets and liabilities (years) | 7.4 |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Depreciation: | ||||||||||||||||
Buildings and improvements | $ | 18,356 | $ | 13,424 | $ | 35,834 | $ | 25,845 | ||||||||
Furniture, fixtures, and equipment | 11,398 | 7,352 | 21,910 | 13,219 | ||||||||||||
29,754 | 20,776 | 57,744 | 39,064 | |||||||||||||
Amortization: | ||||||||||||||||
Acquired intangible assets | 12,209 | 7,521 | 24,709 | 14,020 | ||||||||||||
Deferred leasing costs | 105 | 149 | 196 | 182 | ||||||||||||
Website development costs | 27 | 11 | 62 | 17 | ||||||||||||
Total depreciation and amortization | $ | 42,095 | $ | 28,457 | $ | 82,711 | $ | 53,283 |
(Dollars in thousands) | June 30, 2018 | December 31, 2017 | ||||||
Number of loans | 21 | 23 | ||||||
Drawn amount | $ | 376,091 | $ | 388,506 | ||||
Deferred loan origination fees | (1,883 | ) | (1,710 | ) | ||||
Carrying value | $ | 374,208 | $ | 386,796 | ||||
Unfunded loan commitments | $ | 136,720 | $ | 67,063 | ||||
Weighted average current interest, per annum (paid monthly) | 8.48 | % | 8.53 | % | ||||
Weighted average accrued interest, per annum | 5.82 | % | 4.99 | % |
(In thousands) | Principal balance | Deferred loan origination fees | Carrying value | |||||||||
Balances as of December 31, 2017 | $ | 388,506 | $ | (1,710 | ) | $ | 386,796 | |||||
Loan fundings | 117,771 | — | 117,771 | |||||||||
Loan repayments | (53,165 | ) | — | (53,165 | ) | |||||||
Loans settled with property acquisitions | (77,021 | ) | — | (77,021 | ) | |||||||
Origination fees collected | — | (1,210 | ) | (1,210 | ) | |||||||
Amortization of commitment fees | — | 1,037 | 1,037 | |||||||||
Balances as of June 30, 2018 | $ | 376,091 | $ | (1,883 | ) | $ | 374,208 |
Property type | Number of loans | Carrying value | Commitment amount | Percentage of portfolio | ||||||||||
(Dollars in thousands) | ||||||||||||||
Multifamily communities | 15 | $ | 297,475 | $ | 432,016 | 79 | % | |||||||
Student housing properties | 4 | 60,764 | 64,438 | 16 | % | |||||||||
Grocery-anchored shopping centers | 1 | 12,855 | 12,857 | 3 | % | |||||||||
Other | 1 | 3,114 | 3,500 | 2 | % | |||||||||
Balances as of June 30, 2018 | 21 | $ | 374,208 | $ | 512,811 |
Borrower | Date of loan | Maturity date | Total loan commitments | Outstanding balance as of: | Interest rate | |||||||||||||||
June 30, 2018 | December 31, 2017 | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
360 Residential, LLC (1) | 3/20/2013 | $ | — | $ | — | $ | 2,000 | 12 | % | |||||||||||
Preferred Capital Marketing Services, LLC (3) | 1/24/2013 | 12/31/2018 | 1,500 | 803 | 926 | 10 | % | |||||||||||||
Preferred Apartment Advisors, LLC (2,3,4) | 8/21/2012 | 12/31/2018 | 18,000 | 15,533 | 14,488 | 6 | % | |||||||||||||
Haven Campus Communities, LLC (2,3) | 6/11/2014 | 12/31/2018 | 11,660 | 11,620 | 7,325 | 8 | % | (5) | ||||||||||||
Oxford Capital Partners, LLC (2,6) | 10/5/2015 | 6/30/2019 | 8,000 | 5,988 | 6,628 | 12 | % | |||||||||||||
Newport Development Partners, LLC (7) | 6/17/2014 | 6/30/2019 | 2,000 | — | — | 12 | % | |||||||||||||
360 Residential, LLC II (1) | 12/30/2015 | — | — | 3,255 | 15 | % | ||||||||||||||
Mulberry Development Group, LLC (2) | 3/31/2016 | 6/30/2019 | 500 | 495 | 479 | 12 | % | |||||||||||||
Mulberry Alexandria Group, LLC (8) | 7/31/2017 | — | — | 1,921 | 12 | % | ||||||||||||||
360 Capital Company, LLC (2) | 5/24/2016 | 12/31/2019 | 3,400 | 2,917 | 3,041 | 12 | % | |||||||||||||
Unamortized loan fees | — | (6 | ) | |||||||||||||||||
$ | 45,060 | $ | 37,356 | $ | 40,057 | |||||||||||||||
(1) The amount payable under the note was repaid during the first quarter 2018. | ||||||||||||||||||||
(2) The amounts payable under the terms of these revolving credit lines are collateralized by a personal guaranty of repayment by the principals of the borrower. | ||||||||||||||||||||
(3) See related party disclosure in Note 6. | ||||||||||||||||||||
(4) The amounts payable under this revolving credit line were collateralized by an assignment of the Manager's rights to fees due under the Sixth Amended and Restated Management Agreement between the Company and the Manager, or the Management Agreement. | ||||||||||||||||||||
(5) Effective January 1, 2018, the interest rate was lowered from 12.0% per annum to 8.0% per annum. | ||||||||||||||||||||
(6) The amounts payable under the terms of this revolving credit line, up to the lesser of 25% of the loan balance or $2.0 million, are collateralized by a personal guaranty of repayment by the principals of the borrower. | ||||||||||||||||||||
(7) A revolving line of credit, the maturity of which was extended as shown during the second quarter 2018. | ||||||||||||||||||||
(8) The amount payable under the note was repaid during the second quarter 2018. |
Interest income | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Real estate loans: | ||||||||||||||||
Current interest payments | $ | 8,686 | $ | 7,979 | $ | 17,191 | $ | 15,041 | ||||||||
Additional accrued interest | 5,469 | 4,475 | 10,195 | 8,888 | ||||||||||||
Deferred origination fee amortization | 607 | 328 | 1,038 | 587 | ||||||||||||
Deferred purchase option termination fee revenue | 2,470 | — | 2,470 | — | ||||||||||||
Total real estate loan revenue | 17,232 | 12,782 | 30,894 | 24,516 | ||||||||||||
Interest income on notes and lines of credit | 800 | 1,046 | 1,703 | 2,074 | ||||||||||||
Interest income on loans and notes receivable | $ | 18,032 | $ | 13,828 | $ | 32,597 | $ | 26,590 |
• | an offering of a maximum of 1,500,000 Units, with each Unit consisting of one share of Series A Redeemable Preferred Stock and one Warrant to purchase up to 20 shares of Common Stock (the "$1.5 Billion Unit Offering"); |
• | an offering of up to a maximum of 500,000 shares of Series M Redeemable Preferred Stock (“mShares”), par value $0.01 per share (the “mShares Offering”); and |
• | an offering of up to $300 million of equity or debt securities (the "Shelf Offering"), including an offering of up to $150 million of Common Stock from time to time in an "at the market" offering (the "2016 ATM Offering"). |
(In thousands) | Deferred Offering Costs | ||||||||||||||||||||||||||||||
Offering | Total offering | Gross proceeds as of June 30, 2018 | % collected of total offering | Reclassified as reductions of stockholders' equity | Recorded as deferred assets | Total | Specifically identifiable offering costs (2) | Total offering costs | |||||||||||||||||||||||
$1.5 Billion Unit Offering | $ | 1,500,000 | $ | 473,590 | 32 | % | $ | 1,490 | $ | 3,230 | $ | 4,720 | $ | 44,821 | $ | 49,541 | |||||||||||||||
mShares Offering | 500,000 | 28,844 | 6 | % | 205 | 3,344 | 3,549 | 1,363 | 4,912 | ||||||||||||||||||||||
Shelf Offering | 300,000 | (1) | 98,080 | 33 | % | 664 | 1,302 | 1,966 | 3,001 | 4,967 | |||||||||||||||||||||
Total | $ | 2,300,000 | $ | 600,514 | $ | 2,359 | $ | 7,876 | $ | 10,235 | $ | 49,185 | $ | 59,420 |
(In thousands) | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||
Type of Compensation | Basis of Compensation | 2018 | 2017 | 2018 | 2017 | |||||||||||||
Acquisition fees | As of July 1, 2017, 1.0% of the gross purchase price of real estate assets | $ | 2,861 | $ | — | $ | 4,620 | $ | — | |||||||||
Loan origination fees | 1.0% of the maximum commitment of any real estate loan, note or line of credit receivable | 411 | 417 | 1,211 | 417 | |||||||||||||
Loan coordination fees | 1.6% of any assumed, new or supplemental debt incurred in connection with an acquired property. Effective July 1, 2017, the fee was reduced to 0.6% of any such debt | 814 | 956 | 1,554 | 3,010 | |||||||||||||
Asset management fees | Monthly fee equal to one-twelfth of 0.50% of the total book value of assets, as adjusted | 3,600 | 3,059 | 7,265 | 6,122 | |||||||||||||
Property management fees | Monthly fee up to 4% of the monthly gross revenues of the properties managed | 2,148 | 1,560 | 4,241 | 2,985 | |||||||||||||
General and administrative expense fees | Monthly fee equal to 2% of the monthly gross revenues of the Company | 1,535 | 1,260 | 2,968 | 2,544 | |||||||||||||
Construction management fees | Quarterly fee for property renovation and takeover projects | 142 | 89 | 273 | 160 | |||||||||||||
$ | 11,511 | $ | 7,341 | $ | 22,132 | $ | 15,238 |
(in thousands) | ||||||||||||||
Three months ended June 30, | Six months ended June 30, | |||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||
$ | 3,930 | $ | 3,018 | $ | 7,539 | $ | 5,795 |
Dividends and distributions declared | ||||||||
For the six months ended June 30, | ||||||||
2018 | 2017 | |||||||
(in thousands) | ||||||||
Series A Preferred Stock | $ | 39,737 | $ | 29,609 | ||||
mShares | 704 | — | ||||||
Common Stock | 19,906 | 13,510 | ||||||
Class A OP Units | 542 | 411 | ||||||
Total | $ | 60,889 | $ | 43,530 |
Three months ended June 30, | Six months ended June 30, | Unamortized expense as of June 30, | |||||||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | 2018 | ||||||||||||||||
Class B Unit awards: | |||||||||||||||||||||
Executive officers - 2016 | $ | 74 | $ | 74 | $ | 148 | $ | 163 | $ | 151 | |||||||||||
Executive officers - 2017 | 88 | 679 | 195 | 1,334 | 529 | ||||||||||||||||
Executive officers - 2018 | 648 | — | 1,464 | — | 2,166 | ||||||||||||||||
Restricted stock grants: | |||||||||||||||||||||
2016 | — | 34 | — | 137 | — | ||||||||||||||||
2017 | 30 | 60 | 120 | 60 | — | ||||||||||||||||
2018 | 60 | — | 60 | — | 300 | ||||||||||||||||
Restricted stock units: | |||||||||||||||||||||
2017 | 22 | 24 | 43 | 50 | 130 | ||||||||||||||||
2018 | 28 | — | 55 | — | 275 | ||||||||||||||||
Total | $ | 950 | $ | 871 | $ | 2,085 | $ | 1,744 | $ | 3,551 |
Service year | Shares | Fair value per share | Total compensation cost (in thousands) | ||||||||
2016 | 30,990 | $ | 13.23 | $ | 410 | ||||||
2017 | 24,408 | $ | 14.75 | $ | 360 | ||||||
2018 | 24,810 | $ | 14.51 | $ | 360 |
Grant dates | 1/2/2018 | 1/3/2017 | ||||||
Stock price | $ | 20.19 | $ | 14.79 | ||||
Dividend yield | 4.95 | % | 5.95 | % | ||||
Expected volatility | 25.70 | % | 26.40 | % | ||||
Risk-free interest rate | 2.71 | % | 2.91 | % | ||||
Number of Units granted: | ||||||||
One year vesting period | 171,988 | 198,184 | ||||||
Three year vesting period | 84,099 | 88,208 | ||||||
256,087 | 286,392 | |||||||
Calculated fair value per Unit | $ | 16.66 | $ | 11.92 | ||||
Total fair value of Units | $ | 4,266,409 | $ | 3,413,793 | ||||
Target market threshold increase | $ | 5,660,580 | $ | 4,598,624 |
Property | Date | Initial principal amount (in thousands) | Fixed/Variable rate | Rate | Maturity date | ||||||||
Lux at Sorrel | 1/9/2018 | $ | 31,525 | Fixed | 3.91 | % | 2/1/2030 | ||||||
Green Park | 2/28/2018 | 39,750 | Fixed | 4.09 | % | 3/10/2028 | |||||||
Armour Yards | 1/29/2018 | 40,000 | Fixed | 4.10 | % | 2/1/2028 | |||||||
Anderson Central (1) | 3/16/2018 | 12,000 | Fixed | 4.32 | % | 4/1/2028 | |||||||
Greensboro Village | 5/22/2018 | 8,550 | Fixed | 4.20 | % | 6/1/2028 | |||||||
Governors Towne Square | 5/22/2018 | 11,375 | Fixed | 4.20 | % | 6/1/2028 | |||||||
Conway Plaza | 6/29/2018 | 9,783 | Fixed | 4.29 | % | 7/5/2028 | |||||||
The Tradition | 5/10/2018 | 30,000 | 400 + LIBOR | 6.09 | % | 6/6/2021 | |||||||
Retreat at Orlando (2) | 5/31/2018 | 47,125 | Fixed | 4.09 | % | 9/1/2025 | |||||||
The Bloc | 6/27/2018 | 28,966 | 355 + LIBOR | 5.64 | % | 7/9/2021 | |||||||
$ | 259,074 | ||||||||||||
(dollars in thousands) | |||||||||
Fixed rate mortgage debt: | Principal balances due | Weighted-average interest rate | Weighted average remaining life (years) | ||||||
Multifamily communities | $ | 927,782 | 3.76 | % | 7.4 | ||||
New Market Properties | 385,555 | 3.87 | % | 7.3 | |||||
Preferred Office Properties | 246,782 | 4.20 | % | 16.6 | |||||
Student housing properties | 126,026 | 3.97 | % | 3.4 | |||||
Total fixed rate mortgage debt | $ | 1,686,145 | 3.87 | % | 8.7 | ||||
Variable rate mortgage debt: | |||||||||
Multifamily communities | $ | 159,885 | 4.18 | % | 3.0 | ||||
New Market Properties | 62,011 | 4.61 | % | 3.1 | |||||
Preferred Office Properties | — | — | 0 | ||||||
Student housing properties | 127,851 | 5.19 | % | 1.9 | |||||
Total variable rate mortgage debt | $ | 349,747 | 4.62 | % | 2.6 | ||||
Total mortgage debt: | |||||||||
Multifamily communities | $ | 1,087,667 | 3.82 | % | 6.8 | ||||
New Market Properties | 447,566 | 3.97 | % | 6.8 | |||||
Preferred Office Properties | 246,782 | 4.20 | % | 16.6 | |||||
Student housing properties | 253,877 | 4.58 | % | 4.0 | |||||
Total principal amount | 2,035,892 | 4.00 | % | 7.6 | |||||
Deferred loan costs | (32,361 | ) | |||||||
Mark to market loan adjustment | (5,017 | ) | |||||||
Mortgage notes payable, net | $ | 1,998,514 |
Covenant (1) | Requirement | Result | ||
Net worth | Minimum $1.35 billion | (2) | $1.43 billion | |
Debt yield | Minimum 8.0% | 9.8% | ||
Payout ratio | Maximum 95.0% | (3) | 89.4% | |
Total leverage ratio | Maximum 65.0% | 58.0% | ||
Debt service coverage ratio | Minimum 1.50x | 1.92x |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Multifamily communities | $ | 11,252 | $ | 8,501 | $ | 22,188 | $ | 15,909 | ||||||||
New Market Properties | 4,629 | 3,510 | 8,985 | 6,840 | ||||||||||||
Preferred Office Properties | 2,666 | 1,677 | 5,207 | 3,354 | ||||||||||||
Student housing properties | 2,384 | 719 | 4,075 | 1,196 | ||||||||||||
Interest paid to real estate loan participants | 557 | 586 | 944 | 1,256 | ||||||||||||
Total | 21,488 | 14,993 | 41,399 | 28,555 | ||||||||||||
Credit Facility and Acquisition Facility | 859 | 1,405 | 1,916 | 2,851 | ||||||||||||
Interest Expense | $ | 22,347 | $ | 16,398 | $ | 43,315 | $ | 31,406 |
Period | Future principal payments (in thousands) | ||||
2018 | $ | 54,733 | (1) | ||
2019 | 282,775 | ||||
2020 | 85,809 | ||||
2021 | 190,404 | ||||
2022 | 206,228 | ||||
thereafter | 1,254,443 | ||||
Total | $ | 2,074,392 | |||
(1) Includes the principal amount of $38.5 million due on the Company's Revolving Line of Credit. |
(in thousands) | June 30, 2018 | December 31, 2017 | ||||||
Assets: | ||||||||
Multifamily communities | $ | 1,462,473 | $ | 1,410,187 | ||||
Student housing properties | 420,615 | 227,198 | ||||||
Financing (including $266,673 of consolidated assets of VIE) | 703,601 | 439,824 | ||||||
New Market Properties | 815,139 | 742,492 | ||||||
Preferred Office Properties | 491,482 | 413,666 | ||||||
Other | 14,916 | 19,003 | ||||||
Consolidated assets | $ | 3,908,226 | $ | 3,252,370 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Capitalized expenditures: | |||||||||||||||
Multifamily communities | $ | 5,859 | $ | 3,584 | $ | 10,698 | $ | 5,773 | |||||||
Student housing properties | 927 | 151 | 1,208 | 335 | |||||||||||
New Market Properties | 1,002 | 1,217 | 1,787 | 1,539 | |||||||||||
Total | $ | 7,788 | $ | 4,952 | $ | 13,693 | $ | 7,647 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Revenues | |||||||||||||||
Rental revenues: | |||||||||||||||
Multifamily communities | $ | 36,226 | $ | 28,786 | $ | 72,508 | $ | 55,992 | |||||||
Student housing properties | 6,882 | 2,720 | 12,394 | 4,589 | |||||||||||
New Market Properties | 13,352 | 10,133 | 26,315 | 19,916 | |||||||||||
Preferred Office Properties (1) | 9,739 | 6,602 | 19,059 | 13,108 | |||||||||||
Total rental revenues | 66,199 | 48,241 | 130,276 | 93,605 | |||||||||||
Other revenues: | |||||||||||||||
Multifamily communities | 4,106 | 3,331 | 7,979 | 6,309 | |||||||||||
Student housing properties | 321 | 174 | 562 | 240 | |||||||||||
New Market Properties | 4,860 | 3,632 | 9,812 | 7,285 | |||||||||||
Preferred Office Properties | 3,372 | 2,123 | 6,531 | 4,292 | |||||||||||
Total other revenues | 12,659 | 9,260 | 24,884 | 18,126 | |||||||||||
Financing revenues | 17,531 | 13,389 | 31,599 | 25,721 | |||||||||||
Consolidated revenues | $ | 96,389 | $ | 70,890 | $ | 186,759 | $ | 137,452 | |||||||
(1) Included in rental revenues for our Preferred Office Properties segment is the amortization of deferred revenue for tenant-funded leasehold improvements from a major tenant in our Three Ravinia office building. As of June 30, 2018, the Company has deferred revenue in an aggregate amount of $36.3 million in connection with such improvements. The remaining balance to be recognized is approximately $34.4 million which is included in the deferred revenues line on the consolidated balance sheets at June 30, 2018. These total costs will be amortized over the lesser of the useful lives of the improvements or the individual lease terms. The Company recorded noncash revenue of approximately $1.1 million and $0.2 million for the six-month periods ended June 30, 2018 and 2017. |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Segment net operating income (Segment NOI) | |||||||||||||||
Multifamily communities | $ | 22,744 | $ | 17,621 | $ | 46,268 | $ | 33,935 | |||||||
Student housing properties | 3,905 | 1,635 | 6,941 | 2,651 | |||||||||||
Financing | 17,531 | 13,389 | 31,599 | 25,721 | |||||||||||
New Market Properties | 12,812 | 9,659 | 25,485 | 19,084 | |||||||||||
Preferred Office Properties | 9,334 | 6,286 | 18,397 | 12,504 | |||||||||||
Consolidated segment net operating income | 66,326 | 48,590 | 128,690 | 93,895 | |||||||||||
Interest and loss on early debt extinguishment: | |||||||||||||||
Multifamily communities | 11,253 | 8,502 | 22,188 | 15,910 | |||||||||||
Student housing properties | 2,384 | 719 | 4,075 | 1,196 | |||||||||||
New Market Properties | 4,629 | 3,510 | 8,985 | 6,840 | |||||||||||
Preferred Office Properties | 2,666 | 1,677 | 5,207 | 3,354 | |||||||||||
Financing | 1,415 | 1,990 | 2,860 | 4,106 | |||||||||||
Depreciation and amortization: | |||||||||||||||
Multifamily communities | 20,320 | 15,611 | 42,023 | 29,277 | |||||||||||
Student housing properties | 7,496 | 2,537 | 12,601 | 3,554 | |||||||||||
New Market Properties | 9,177 | 7,062 | 18,057 | 14,103 | |||||||||||
Preferred Office Properties | 5,102 | 3,247 | 10,030 | 6,349 | |||||||||||
Professional fees | 768 | 499 | 1,243 | 1,026 | |||||||||||
Management fees, net of forfeitures | 5,192 | 4,693 | 10,213 | 9,031 | |||||||||||
Acquisition costs: | |||||||||||||||
Multifamily communities | — | — | — | (20 | ) | ||||||||||
Student housing properties | — | — | — | — | |||||||||||
New Market Properties | — | — | — | 25 | |||||||||||
Preferred Office Properties | — | 5 | — | 9 | |||||||||||
Equity compensation to directors and executives | 950 | 871 | 2,085 | 1,744 | |||||||||||
Gain on sale of real estate | 2 | 6,915 | 20,356 | 37,639 | |||||||||||
Gain on noncash net assets of consolidated VIEs | 54 | — | 54 | — | |||||||||||
Loss on extinguishment of debt | — | 888 | — | 888 | |||||||||||
Other | 308 | 390 | 548 | 776 | |||||||||||
Net income (loss) | $ | (5,278 | ) | $ | 3,304 | 8,985 | 33,366 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||
(in thousands, except per-share figures) | 2018 | 2017 | 2018 | 2017 | |||||||||||||
Numerator: | |||||||||||||||||
Net income (loss) before gain on sale of real estate | $ | (5,280 | ) | $ | (3,611 | ) | $ | (11,371 | ) | $ | (4,273 | ) | |||||
Gain on sale of real estate, net of disposition expenses | 2 | 6,915 | 20,356 | 37,639 | |||||||||||||
Net income (loss) | (5,278 | ) | 3,304 | 8,985 | 33,366 | ||||||||||||
Consolidated net (income) loss attributable to non-controlling | |||||||||||||||||
interests (A) | 140 | (97 | ) | (240 | ) | (1,096 | ) | ||||||||||
Net income (loss) attributable to the Company | (5,138 | ) | 3,207 | 8,745 | 32,270 | ||||||||||||
Dividends declared to preferred stockholders (B) | (20,924 | ) | (15,235 | ) | (40,441 | ) | (29,621 | ) | |||||||||
Earnings attributable to unvested restricted stock (C) | (6 | ) | (6 | ) | (8 | ) | (8 | ) | |||||||||
Net income (loss) attributable to common stockholders | $ | (26,068 | ) | $ | (12,034 | ) | $ | (31,704 | ) | $ | 2,641 | ||||||
Denominator: | |||||||||||||||||
Weighted average number of shares of Common Stock - basic | 39,383 | 29,894 | 39,241 | 28,423 | |||||||||||||
Effect of dilutive securities: (D) | — | — | — | — | |||||||||||||
Weighted average number of shares of Common Stock, | |||||||||||||||||
basic and diluted | 39,383 | 29,894 | 39,241 | 28,423 | |||||||||||||
Net loss per share of Common Stock attributable to | |||||||||||||||||
common stockholders, basic and diluted | $ | (0.66 | ) | $ | (0.40 | ) | $ | (0.81 | ) | $ | 0.09 |
As of June 30, 2018 | |||||||||||||||||||
Carrying value | Fair value measurements using fair value hierarchy | ||||||||||||||||||
(in thousands) | Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||
Financial Assets: | |||||||||||||||||||
Real estate loans (1) | $ | 374,208 | $ | 425,927 | $ | — | $ | — | $ | 425,927 | |||||||||
Notes receivable and line of credit receivable | 37,356 | 37,356 | — | — | 37,356 | ||||||||||||||
$ | 411,564 | $ | 463,283 | $ | — | $ | — | $ | 463,283 | ||||||||||
Financial Liabilities: | |||||||||||||||||||
Mortgage notes payable | $ | 2,035,892 | $ | 2,007,868 | $ | — | $ | — | $ | 2,007,868 | |||||||||
Revolving credit facility | 38,500 | 38,500 | — | — | 38,500 | ||||||||||||||
Loan participation obligations | 10,920 | 11,001 | — | — | 11,001 | ||||||||||||||
$ | 2,085,312 | $ | 2,057,369 | $ | — | $ | — | $ | 2,057,369 |
As of December 31, 2017 | |||||||||||||||||||
Carrying value | Fair value measurements using fair value hierarchy | ||||||||||||||||||
(in thousands) | Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||
Financial Assets: | |||||||||||||||||||
Real estate loans (1) | $ | 386,796 | $ | 432,982 | $ | — | $ | — | $ | 432,982 | |||||||||
Notes receivable and line of credit receivable | 40,057 | 40,057 | — | — | 40,057 | ||||||||||||||
$ | 426,853 | $ | 473,039 | $ | — | $ | — | $ | 473,039 | ||||||||||
Financial Liabilities: | |||||||||||||||||||
Mortgage notes payable | $ | 1,806,901 | 1,806,024 | $ | — | $ | — | $ | 1,806,024 | ||||||||||
Revolving credit facility | 41,800 | 41,800 | — | — | 41,800 | ||||||||||||||
Term loan | 11,000 | 11,000 | — | — | 11,000 | ||||||||||||||
Loan participation obligations | 13,986 | 14,308 | — | — | 14,308 | ||||||||||||||
$ | 1,873,687 | $ | 1,873,132 | $ | — | $ | — | $ | 1,873,132 |
Assets | Liabilities | ||||||||||
(in thousands) | Multifamily mortgage loans held in VIEs at fair value | VIE liabilities, at fair value | Net | ||||||||
Balance as of December 31, 2017 | $ | — | $ | — | $ | — | |||||
Initial consolidation of ML-04 trust: | 267,705 | 262,965 | 4,740 | ||||||||
Gains (losses) included in net income due to change in fair value of net assets of VIE: | (861 | ) | (915 | ) | 54 | ||||||
Repayments of underlying mortgage principal amounts and repayments to Class A holders | (171 | ) | (171 | ) | — | ||||||
Balance as of June 30, 2018 | $ | 266,673 | $ | 261,879 | $ | 4,794 |
Fair value | Valuation methodology | Unobservable input | ||||||||
Assets: | ||||||||||
Multifamily mortgage loans held in VIEs at fair value | $ | 266,673 | Discounted cash flow | Discount rate | 4.9 | % | ||||
Liabilities: | ||||||||||
VIE liabilities, at fair value | $ | 261,879 | Discounted cash flow | Discount rate | 4.9 | % |
As of June 30, 2018 | |||||||||||||||||||
Carrying value | Fair value measurements using fair value hierarchy | ||||||||||||||||||
(in thousands) | Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||
Financial Assets: | |||||||||||||||||||
VIE assets from mortgage-backed pool | $ | 266,673 | $ | 266,673 | $ | — | $ | — | $ | 266,673 | |||||||||
Financial Liabilities: | |||||||||||||||||||
VIE liabilities from mortgage-backed pool | $ | 261,879 | $ | 261,879 | $ | — | $ | — | $ | 261,879 |
• | actions and initiatives of the U.S. Government and changes to U.S. Government policies and the execution and impact of these actions, initiatives and policies; |
• | our ability to obtain and maintain financing arrangements, including through the Federal National Mortgage Association, or Fannie Mae, and the Federal Home Loan Mortgage Corporation, or Freddie Mac; |
• | weakness in the national, regional and local economies, which could adversely impact consumer spending and retail sales and in turn tenant demand for space and could lead to increased store closings; |
• | changes in market rental rates; |
• | changes in demographics (including the number of households and average household income) surrounding our shopping centers; |
• | adverse financial conditions for grocery anchors and other retail, service, medical or restaurant tenants; |
• | continued consolidation in the grocery-anchored shopping center sector; |
• | excess amount of retail space in our markets; |
• | reduction in the demand by tenants to occupy our shopping centers as a result of reduced consumer demand for certain retail formats; |
• | the growth of super-centers and warehouse club retailers, such as those operated by Wal-Mart and Costco, and their adverse effect on traditional grocery chains; |
• | the entry of new market participants into the food sales business, such as Amazon's acquisition of Whole Foods, the growth of online food delivery services and online supermarket retailers and their collective adverse effect on traditional grocery chains; |
• | our ability to aggregate a critical mass of grocery-anchored shopping centers or to spin-off, sell or distribute them; |
• | the impact of an increase in energy costs on consumers and its consequential effect on the number of shopping visits to our centers; and |
• | consequences of any armed conflict involving, or terrorist attack against, the United States. |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
2018 | 2017 | % change | 2018 | 2017 | % change | ||||||||||||||||||
Revenues (in thousands) | $ | 96,389 | $ | 70,890 | 36.0 | % | $ | 186,759 | $ | 137,452 | 35.9 | % | |||||||||||
Per share data: | |||||||||||||||||||||||
Net income (loss) (1) | $ | (0.66 | ) | $ | (0.40 | ) | — | $ | (0.81 | ) | $ | 0.09 | — | ||||||||||
FFO (2) | $ | 0.38 | $ | 0.31 | 22.6 | % | $ | 0.75 | $ | 0.65 | 15.4 | % | |||||||||||
AFFO (2) | $ | 0.37 | $ | 0.31 | 19.4 | % | $ | 0.63 | $ | 0.58 | 8.6 | % | |||||||||||
Dividends (3) | $ | 0.255 | $ | 0.235 | 8.5 | % | $ | 0.505 | $ | 0.455 | 11.0 | % | |||||||||||
• | For the second quarter 2018, our FFO payout ratio to Common Stockholders and Unitholders was approximately 66.8% and our FFO payout ratio (before the deduction of preferred dividends) to our preferred stockholders was approximately 57.4%. |
• | For the second quarter 2018, our AFFO payout ratio to Common Stockholders and Unitholders was approximately 68.6% and our AFFO payout ratio (before the deduction of preferred dividends) to our preferred stockholders was approximately 58.0%.(A) |
• | At June 30, 2018, the market value of our common stock was $16.99 per share. A hypothetical investment in our Common Stock in our initial public offering on April 5, 2011, assuming the reinvestment of all dividends and no transaction costs, would have resulted in an average annual return of approximately 23.4% through June 30, 2018. |
• | As of June 30, 2018, the average age of our multifamily communities was approximately 5.6 years, which is the youngest in the public multifamily REIT industry. |
• | Approximately 89.8% of our permanent property-level mortgage debt has fixed interest rates or has variable interest rates which are capped. We believe we are well protected against potential increases in market interest rates. |
• | In the second quarter, PAC closed on its first “B” piece investment in the Freddie Mac K program. This investment was approximately $4.6 million and used to purchase a zero coupon security in the ML-04 pool of multifamily mortgages securitized by Freddie Mac. Due to accounting rules, we were required to include the assets, liabilities and cash flows of the entire ML-04 pool on our consolidated balance sheets and consolidated statements of cash flows. Our maximum amount at risk is $4.6 million, the amount of our investment. |
• | At June 30, 2018, our leverage, as measured by the ratio of our debt to the undepreciated book value of our total assets, was approximately 53.9%. Our leverage calculation excludes the gross assets of approximately $266.7 million and liabilities of approximately $261.9 million that we consolidated as a result of our investment in the Freddie Mac K program. |
• | As of June 30, 2018, our total assets were approximately $3.9 billion compared to approximately $2.6 billion as of June 30, 2017, an increase of approximately $1.3 billion, or approximately 48.5%. This growth was driven primarily by the acquisition of 23 real estate properties (net of the sale of one property). In addition, our assets increased due to the consolidation of the ML-04 pool. |
• | Cash flow from operations for the quarter ended June 30, 2018 was approximately $41.7 million, an increase of approximately $17.7 million, or 73.4%, compared to approximately $24.1 million for the quarter ended June 30, 2017. Cash flow from operations for the second quarter 2018 was more than sufficient to fund our aggregate dividends and distributions for the period, which totaled approximately $31.3 million. |
• | On April 11, 2018, we closed on two real estate loan investments aggregating up to approximately $30.2 million in support of a multifamily community project in Alexandria, Virginia. On May 24, 2018, we closed on two real estate loan investments aggregating up to approximately $11.9 million in support of a multifamily community project in Nashville, Tennessee. |
• | On May 7, 2018, we terminated our existing purchase options on the Encore, Bishop Street and Hidden River multifamily communities and the Haven 46 and Haven Charlotte student housing properties, all of which are partially supported by real estate loan investments held by us. In exchange, we received termination fees aggregating approximately $12.5 million from the developers. These fees are treated as additional interest revenue and are amortized over the period ending with the earlier of the sale of the underlying property or the maturity of the associated real estate loan. For the second quarter 2018, we recorded approximately $2.2 million of interest revenue related to these transactions. |
Property | Location (MSA) | Units | Beds | Leasable square feet | |||||||||
Student housing properties: | |||||||||||||
The Tradition | College Station, TX | 427 | 808 | n/a | |||||||||
The Retreat at Orlando | Orlando, FL | 221 | 894 | n/a | |||||||||
The Bloc | Lubbock, TX | 140 | 556 | n/a | |||||||||
788 | 2,258 | ||||||||||||
Grocery-anchored shopping centers: | |||||||||||||
Greensboro Village | Nashville, TN | n/a | 70,203 | ||||||||||
Governors Towne Square | Atlanta, GA | n/a | 68,658 | ||||||||||
Neapolitan Way | Naples, FL | n/a | 137,580 | ||||||||||
Conway Plaza | Orlando, FL | n/a | 117,705 | ||||||||||
394,146 | |||||||||||||
Owned as of June 30, 2018 | Potential additions from real estate loan investment portfolio (1) (2) | Potential total | ||||||||
Multifamily communities: | ||||||||||
Properties | 31 | 11 | 42 | |||||||
Units | 9,768 | 3,226 | 12,994 | |||||||
Grocery-anchored shopping centers: | ||||||||||
Properties | 43 | — | 43 | |||||||
Gross leasable area (square feet) | 4,449,860 | — | 4,449,860 | |||||||
Student housing properties: | ||||||||||
Properties | 7 | 1 | 8 | |||||||
Units | 1,679 | 248 | 1,927 | |||||||
Beds | 5,208 | 816 | 6,024 | |||||||
Office buildings: | ||||||||||
Properties | 5 | — | 5 | |||||||
Rentable square feet | 1,539,000 | — | 1,539,000 | |||||||
(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) On May 7, 2018, we terminated purchase options on three multifamily communities and two student housing properties in exchange for aggregate termination fees of approximately $12.5 million. Potential additions to our real estate asset portfolio excludes the properties supported by these five loans. |
Total units upon | Purchase option window | ||||||||
Project/Property | Location | completion (1) | Begin | End | |||||
Multifamily communities: | |||||||||
Encore | Atlanta, GA | (2) | — | N/A | N/A | ||||
Palisades | Northern VA | 304 | 1/1/2019 | 5/31/2019 | |||||
Fusion | Irvine, CA | 280 | 10/1/2018 | 1/1/2019 | |||||
Bishop Street | Atlanta, GA | (2) | — | N/A | N/A | ||||
Hidden River | Tampa, FL | (2) | — | N/A | N/A | ||||
CityPark II | Charlotte, NC | 200 | 9/30/2018 | 12/31/2018 | |||||
Park 35 on Clairmont | Birmingham, AL | 271 | 8/1/2018 | 9/1/2018 | |||||
Fort Myers | Fort Myers, FL | 224 | S + 90 days (3) | S + 150 days (3) | |||||
Wiregrass | Tampa, FL | 392 | S + 90 days (3) | S + 150 days (3) | |||||
360 Forsyth | Atlanta, GA | 356 | S + 90 days (3) | S + 150 days (3) | |||||
Morosgo | Atlanta, GA | 258 | S + 90 days (3) | S + 150 days (3) | |||||
University City Gateway | Charlotte, NC | 338 | S + 90 days (3) | S + 150 days (3) | |||||
Berryessa | San Jose, CA | — | N/A | N/A | |||||
The Anson | Nashville, TN | 301 | S + 90 days (3) | S + 150 days (3) | |||||
North Augusta Ballpark | North Augusta, SC | — | N/A | N/A | |||||
Cameron Park | Alexandria, VA | 302 | S + 90 days (3) | S + 150 days (3) | |||||
Student housing properties: | |||||||||
Haven12 | Starkville, MS | — | 4/1/2019 | 6/30/2019 | |||||
Haven46 | Tampa, FL | (2) | — | N/A | N/A | ||||
Haven Charlotte | Charlotte, NC | (2) | — | N/A | N/A | ||||
Solis Kennesaw | Atlanta, GA | 248 | (4) | (4) | |||||
3,474 | |||||||||
(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. The Berryessa and North Augusta Ballpark projects do not include exclusive purchase options, but we hold a Right of First Offer on these projects at prices acceptable to us and the developer. | |||||||||
(2) On May 7, 2018, these five purchase options were terminated, in exchange for an aggregate $12.5 million in termination fees from the developers. | |||||||||
(3) 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. | |||||||||
(4) The option period begins on October 1 of the second academic year following project completion and ends on the following December 31. The developer may elect to expedite the option period to begin December 1, 2019 and end on December 31, 2019. |
Preferred Apartment Communities, Inc. | Three months ended June 30, | Change inc (dec) | |||||||||||||
(in thousands) | 2018 | 2017 | Amount | Percentage | |||||||||||
Revenues: | |||||||||||||||
Rental revenues | $ | 66,199 | $ | 48,241 | $ | 17,958 | 37.2 | % | |||||||
Other property revenues | 12,158 | 8,821 | 3,337 | 37.8 | % | ||||||||||
Interest income on loans and notes receivable | 13,658 | 8,490 | 5,168 | 60.9 | % | ||||||||||
Interest income from related parties | 4,374 | 5,338 | (964 | ) | (18.1 | )% | |||||||||
Total revenues | 96,389 | 70,890 | 25,499 | 36.0 | % | ||||||||||
Operating expenses: | |||||||||||||||
Property operating and maintenance | 10,107 | 7,198 | 2,909 | 40.4 | % | ||||||||||
Property salary and benefits reimbursement to related party | 4,228 | 3,219 | 1,009 | 31.3 | % | ||||||||||
Property management fees | 2,776 | 2,061 | 715 | 34.7 | % | ||||||||||
Real estate taxes | 10,063 | 7,680 | 2,383 | 31.0 | % | ||||||||||
General and administrative | 1,957 | 1,654 | 303 | 18.3 | % | ||||||||||
Equity compensation to directors and executives | 950 | 871 | 79 | 9.1 | % | ||||||||||
Depreciation and amortization | 42,095 | 28,457 | 13,638 | 47.9 | % | ||||||||||
Acquisition and pursuit costs | — | 5 | (5 | ) | — | ||||||||||
Asset management fees to related parties | 6,621 | 4,864 | 1,757 | 36.1 | % | ||||||||||
Insurance, professional fees and other expenses | 2,008 | 1,377 | 631 | 45.8 | % | ||||||||||
Total operating expenses | 80,805 | 57,386 | 23,419 | 40.8 | % | ||||||||||
Waived asset management and general and administrative | |||||||||||||||
expense fees | (1,429 | ) | (171 | ) | (1,258 | ) | 735.7 | % | |||||||
Net operating expenses | 79,376 | 57,215 | 22,161 | 38.7 | % | ||||||||||
Operating income | 17,013 | 13,675 | 3,338 | 24.4 | % | ||||||||||
Interest expense | 22,347 | 16,398 | 5,949 | 36.3 | % | ||||||||||
Change in fair value of net assets of consolidated VIE | |||||||||||||||
from mortgage-backed pool | 54 | — | 54 | — | |||||||||||
Loss on debt extinguishment | — | 888 | (888 | ) | — | ||||||||||
Net (loss) before gain on real estate | (5,280 | ) | (3,611 | ) | (1,669 | ) | 46.2 | % | |||||||
Gain on sale of real estate, net of disposition expenses | 2 | 6,915 | (6,913 | ) | — | ||||||||||
Net (loss) income | $ | (5,278 | ) | $ | 3,304 | $ | (8,582 | ) | (259.7 | )% |
Preferred Apartment Communities, Inc. | Six months ended June 30, | Change inc (dec) | |||||||||||||
(in thousands) | 2018 | 2017 | Amount | Percentage | |||||||||||
Revenues: | |||||||||||||||
Rental revenues | $ | 130,276 | $ | 93,605 | $ | 36,671 | 39.2 | % | |||||||
Other property revenues | 23,886 | 17,257 | 6,629 | 38.4 | % | ||||||||||
Interest income on loans and notes receivable | 23,958 | 16,438 | 7,520 | 45.7 | % | ||||||||||
Interest income from related parties | 8,639 | 10,152 | (1,513 | ) | (14.9 | )% | |||||||||
Total revenues | 186,759 | 137,452 | 49,307 | 35.9 | % | ||||||||||
Operating expenses: | |||||||||||||||
Property operating and maintenance | 18,912 | 13,737 | 5,175 | 37.7 | % | ||||||||||
Property salary and benefits reimbursement to related party | 8,127 | 6,247 | 1,880 | 30.1 | % | ||||||||||
Property management fees | 5,532 | 3,963 | 1,569 | 39.6 | % | ||||||||||
Real estate taxes | 20,038 | 15,584 | 4,454 | 28.6 | % | ||||||||||
General and administrative | 3,798 | 3,159 | 639 | 20.2 | % | ||||||||||
Equity compensation to directors and executives | 2,085 | 1,744 | 341 | 19.6 | % | ||||||||||
Depreciation and amortization | 82,711 | 53,283 | 29,428 | 55.2 | % | ||||||||||
Acquisition and pursuit costs | — | 14 | (14 | ) | — | ||||||||||
Asset management fees to related parties | 12,862 | 9,377 | 3,485 | 37.2 | % | ||||||||||
Insurance, professional fees and other expenses | 3,453 | 2,669 | 784 | 29.4 | % | ||||||||||
Total operating expenses | 157,518 | 109,777 | 47,741 | 43.5 | % | ||||||||||
Waived asset management and general and administrative | |||||||||||||||
expense fees | (2,649 | ) | (346 | ) | (2,303 | ) | 665.6 | % | |||||||
Net operating expenses | 154,869 | 109,431 | 45,438 | 41.5 | % | ||||||||||
Operating income | 31,890 | 28,021 | 3,869 | 13.8 | % | ||||||||||
Interest expense | 43,315 | 31,406 | 11,909 | 37.9 | % | ||||||||||
Change in fair value of net assets of consolidated VIE | |||||||||||||||
from mortgage-backed pool | 54 | — | 54 | — | |||||||||||
Loss on extinguishment of debt | — | 888 | (888 | ) | — | ||||||||||
Net (loss) before gain on real estate | (11,371 | ) | (4,273 | ) | (7,098 | ) | 166.1 | % | |||||||
Gain on sale of real estate, net of disposition expenses | 20,356 | 37,639 | (17,283 | ) | (45.9 | )% | |||||||||
Net income | $ | 8,985 | $ | 33,366 | $ | (24,381 | ) | (73.1 | )% |
New Market Properties, LLC | Three months ended June 30, | Change inc (dec) | |||||||||||||
(in thousands) | 2018 | 2017 | Amount | Percentage | |||||||||||
Revenues: | |||||||||||||||
Rental revenues | $ | 13,352 | $ | 10,133 | $ | 3,219 | 31.8 | % | |||||||
Other property revenues | 4,359 | 3,193 | 1,166 | 36.5 | % | ||||||||||
Interest income on loans and notes receivable | 501 | 440 | 61 | 13.9 | % | ||||||||||
Total revenues | 18,212 | 13,766 | 4,446 | 32.3 | % | ||||||||||
Operating expenses: | |||||||||||||||
Property operating and maintenance | 2,184 | 1,456 | 728 | 50.0 | % | ||||||||||
Property management fees | 632 | 471 | 161 | 34.2 | % | ||||||||||
Real estate taxes | 2,173 | 1,892 | 281 | 14.9 | % | ||||||||||
General and administrative | 163 | 182 | (19 | ) | (10.4 | )% | |||||||||
Equity compensation to directors and executives | 148 | 107 | 41 | 38.3 | % | ||||||||||
Depreciation and amortization | 9,177 | 7,062 | 2,115 | 29.9 | % | ||||||||||
Asset management fees to related parties | 1,363 | 1,025 | 338 | 33.0 | % | ||||||||||
Insurance, professional fees and other expenses | 285 | 200 | 85 | 42.5 | % | ||||||||||
Total operating expenses | 16,125 | 12,395 | 3,730 | 30.1 | % | ||||||||||
Waived asset management and general and administrative | |||||||||||||||
expense fees | (56 | ) | (26 | ) | (30 | ) | 115.4 | % | |||||||
Net operating expenses | 16,069 | 12,369 | 3,700 | 29.9 | % | ||||||||||
Operating income | 2,143 | 1,397 | 746 | 53.4 | % | ||||||||||
Interest expense | 4,629 | 3,510 | 1,119 | 31.9 | % | ||||||||||
Net loss | $ | (2,486 | ) | $ | (2,113 | ) | $ | (373 | ) | 17.7 | % |
New Market Properties, LLC | Six months ended June 30, | Change inc (dec) | |||||||||||||
(in thousands) | 2018 | 2017 | Amount | Percentage | |||||||||||
Revenues: | |||||||||||||||
Rental revenues | $ | 26,315 | $ | 19,916 | $ | 6,399 | 32.1 | % | |||||||
Other property revenues | 8,815 | 6,416 | 2,399 | 37.4 | % | ||||||||||
Interest income on loans and notes receivable | 997 | 869 | 128 | 14.7 | % | ||||||||||
Total revenues | 36,127 | 27,201 | 8,926 | 32.8 | % | ||||||||||
Operating expenses: | |||||||||||||||
Property operating and maintenance | 3,831 | 2,778 | 1,053 | 37.9 | % | ||||||||||
Property management fees | 1,360 | 922 | 438 | 47.5 | % | ||||||||||
Real estate taxes | 4,741 | 3,856 | 885 | 23.0 | % | ||||||||||
General and administrative | 310 | 318 | (8 | ) | (2.5 | )% | |||||||||
Equity compensation to directors and executives | 296 | 211 | 85 | 40.3 | % | ||||||||||
Depreciation and amortization | 18,057 | 14,103 | 3,954 | 28.0 | % | ||||||||||
Acquisition and pursuit costs | — | 25 | (25 | ) | (100.0 | )% | |||||||||
Asset management fees to related parties | 2,679 | 2,039 | 640 | 31.4 | % | ||||||||||
Insurance, professional fees and other expenses | 516 | 403 | 113 | 28.0 | % | ||||||||||
Total operating expenses | 31,790 | 24,655 | 7,135 | 28.9 | % | ||||||||||
Waived asset management and general and administrative | |||||||||||||||
expense fees | (123 | ) | (48 | ) | (75 | ) | 156.3 | % | |||||||
Net operating expenses | 31,667 | 24,607 | 7,060 | 28.7 | % | ||||||||||
Operating income | 4,460 | 2,594 | 1,866 | 71.9 | % | ||||||||||
Interest expense | 8,985 | 6,840 | 2,145 | 31.4 | % | ||||||||||
Net loss | $ | (4,525 | ) | $ | (4,246 | ) | $ | (279 | ) | 6.6 | % |
Acquisition date | Property | Location | Units | Beds | Leasable square feet | ||||||||||
Multifamily communities: | |||||||||||||||
7/26/2017 | Luxe at Lakewood Ranch | Sarasota, FL | 280 | n/a | n/a | ||||||||||
9/27/2017 | Adara Overland Park | Kansas City, KS | 260 | n/a | n/a | ||||||||||
9/29/2017 | Aldridge at Town Village | Atlanta, GA | 300 | n/a | n/a | ||||||||||
9/29/2017 | The Reserve at Summit Crossing | Atlanta, GA | 172 | n/a | n/a | ||||||||||
11/21/2017 | Overlook at Crosstown Walk | Tampa, FL | 180 | n/a | n/a | ||||||||||
12/20/2017 | Colony at Centerpointe | Richmond, VA | 255 | n/a | n/a | ||||||||||
1/9/2018 | The Lux at Sorrel | Jacksonville, FL | 265 | n/a | n/a | ||||||||||
2/28/2018 | Green Park | Atlanta, GA | 310 | n/a | n/a | ||||||||||
Grocery-anchored shopping centers: | |||||||||||||||
7/26/2017 | Irmo Station | Columbia, SC | n/a | n/a | 99,384 | ||||||||||
8/25/2017 | Maynard Crossing | Raleigh, NC | n/a | n/a | 122,781 | ||||||||||
9/8/2017 | Woodmont Village | Atlanta, GA | n/a | n/a | 85,639 | ||||||||||
9/22/2017 | West Town Market | Charlotte, NC | n/a | n/a | 67,883 | ||||||||||
11/30/2017 | Roswell Wieuca Shopping Center | Atlanta, GA | n/a | n/a | 74,370 | ||||||||||
12/5/2017 | Crossroads Market | Naples, FL | n/a | n/a | 126,895 | ||||||||||
4/27/2018 | Greensboro Village | Nashville, TN | n/a | n/a | 70,203 | ||||||||||
4/27/2018 | Governors Towne Square | Atlanta, GA | n/a | n/a | 68,658 | ||||||||||
6/26/2018 | Neapolitan Way | Naples, FL | n/a | n/a | 137,580 | ||||||||||
6/29/2018 | Conway Plaza | Orlando, FL | n/a | n/a | 117,705 | ||||||||||
Student housing properties: | |||||||||||||||
10/27/2017 | Stadium Village (1) | Atlanta, GA | 198 | 792 | n/a | ||||||||||
12/18/2017 | Ursa (1) | Waco, TX | 250 | 840 | n/a | ||||||||||
5/10/2018 | The Tradition | College Station, TX | 427 | 808 | n/a | ||||||||||
5/31/2018 | The Retreat at Orlando | Orlando, FL | 221 | 894 | n/a | ||||||||||
6/27/2018 | The Bloc | Lubbock, TX | 140 | 556 | n/a | ||||||||||
Office properties: | |||||||||||||||
11/13/2017 | Westridge at La Cantera | San Antonio, TX | n/a | n/a | 258,000 | ||||||||||
1/29/2018 | Armour Yards | Atlanta, GA | n/a | n/a | 187,000 | ||||||||||
3,258 | 3,890 | 1,416,098 | |||||||||||||
(1) The Company acquired and owns an approximate 99% equity interest in a joint venture which owns both Stadium Village and Ursa. | |||||||||||||||
Three months ended June 30, | Six months ended June 30, | |||||||||||||
2018 versus 2017 | 2018 versus 2017 | |||||||||||||
(in thousands) | Increase | Increase | ||||||||||||
Rental revenues | Amount | Percent of increase | Amount | Percent of increase | ||||||||||
Multifamily communities: | ||||||||||||||
Acquired during 2017-2018 | $ | 8,283 | 46.1 | % | $ | 18,598 | 50.7 | % | ||||||
Acquired during 2011-2016 | 560 | 3.1 | % | 1,710 | 4.7 | % | ||||||||
Properties sold | (1,402 | ) | (7.8 | )% | (3,791 | ) | (10.3 | )% | ||||||
Student housing properties | 4,162 | 23.2 | % | 7,804 | 21.3 | % | ||||||||
New Market Properties | 3,219 | 17.9 | % | 6,399 | 17.4 | % | ||||||||
Preferred Office Properties | 3,136 | 17.5 | % | 5,951 | 16.2 | % | ||||||||
Total | $ | 17,958 | 100.0 | % | $ | 36,671 | 100.0 | % |
Three months ended June 30, | Six months ended June 30, | |||||||||||||
2018 versus 2017 | 2018 versus 2017 | |||||||||||||
(in thousands) | Increase | Increase | ||||||||||||
Property operating and maintenance | Amount | Percent of increase | Amount | Percent of increase | ||||||||||
Multifamily communities: | ||||||||||||||
Acquired during 2017-2018 | $ | 1,118 | 38.4 | % | $ | 2,678 | 51.8 | % | ||||||
Acquired during 2011-2016 | 200 | 6.9 | % | 167 | 3.2 | % | ||||||||
Properties sold | (233 | ) | (8.0 | )% | (633 | ) | (12.2 | )% | ||||||
Student housing properties | 747 | 25.7 | % | 1,403 | 27.1 | % | ||||||||
New Market Properties | 728 | 25.0 | % | 1,053 | 20.3 | % | ||||||||
Preferred Office Properties | 349 | 12.0 | % | 507 | 9.8 | % | ||||||||
Total | $ | 2,909 | 100.0 | % | $ | 5,175 | 100.0 | % |
Three months ended June 30, | Six months ended June 30, | |||||||||||||
2018 versus 2017 | 2018 versus 2017 | |||||||||||||
(in thousands) | Increase | Increase | ||||||||||||
Property salary and benefits reimbursement | Amount | Percent of increase | Amount | Percent of increase | ||||||||||
Multifamily communities: | ||||||||||||||
Acquired during 2017-2018 | $ | 751 | 74.4 | % | $ | 1,661 | 88.4 | % | ||||||
Acquired during 2011-2016 | 70 | 6.9 | % | (111 | ) | (5.9 | )% | |||||||
Properties sold | (251 | ) | (24.9 | )% | (509 | ) | (27.1 | )% | ||||||
Student housing properties | 343 | 34.0 | % | 703 | 37.4 | % | ||||||||
Preferred Office Properties | 96 | 9.6 | % | 136 | 7.2 | % | ||||||||
Total | $ | 1,009 | 100.0 | % | $ | 1,880 | 100.0 | % |
Three months ended June 30, | Six months ended June 30, | |||||||||||||
2018 versus 2017 | 2018 versus 2017 | |||||||||||||
(in thousands) | Increase | Increase | ||||||||||||
Property management fees | Amount | Percent of increase | Amount | Percent of increase | ||||||||||
Multifamily communities: | ||||||||||||||
Acquired during 2017-2018 | $ | 365 | 51.1 | % | $ | 812 | 51.7 | % | ||||||
Acquired during 2011-2016 | 18 | 2.5 | % | 37 | 2.4 | % | ||||||||
Properties sold | (70 | ) | (9.8 | )% | (189 | ) | (12.0 | )% | ||||||
Student housing properties | 144 | 20.1 | % | 290 | 18.5 | % | ||||||||
New Market Properties | 161 | 22.5 | % | 438 | 27.9 | % | ||||||||
Preferred Office Properties | 97 | 13.6 | % | 181 | 11.5 | % | ||||||||
Total | $ | 715 | 100.0 | % | $ | 1,569 | 100.0 | % |
Three months ended June 30, | Six months ended June 30, | |||||||||||||
2018 versus 2017 | 2018 versus 2017 | |||||||||||||
(in thousands) | Increase | Increase | ||||||||||||
Real estate taxes | Amount | Percent of increase | Amount | Percent of increase | ||||||||||
Multifamily communities: | ||||||||||||||
Acquired during 2017-2018 | $ | 1,045 | 43.9 | % | $ | 2,438 | 54.8 | % | ||||||
Acquired during 2011-2016 | (100 | ) | (4.2 | )% | (475 | ) | (10.7 | )% | ||||||
Properties sold | (181 | ) | (7.6 | )% | (711 | ) | (16.0 | )% | ||||||
Student housing properties | 608 | 25.5 | % | 1,122 | 25.2 | % | ||||||||
New Market Properties | 281 | 11.8 | % | 885 | 19.9 | % | ||||||||
Preferred Office Properties | 730 | 30.6 | % | 1,195 | 26.8 | % | ||||||||
Total | $ | 2,383 | 100.0 | % | $ | 4,454 | 100.0 | % |
Three months ended June 30, | Six months ended June 30, | |||||||||||||
2018 versus 2017 | 2018 versus 2017 | |||||||||||||
(in thousands) | Increase | Increase | ||||||||||||
General and administrative expense | Amount | Percent of increase | Amount | Percent of increase | ||||||||||
Multifamily communities: | ||||||||||||||
Taxes, licenses and fees | $ | 13 | 4.2 | % | $ | 12 | 2.0 | % | ||||||
Acquired during 2017-2018 | 161 | 53.1 | % | 399 | 62.4 | % | ||||||||
Acquired during 2011-2016 | 85 | 28.1 | % | 26 | 4.1 | % | ||||||||
Properties sold | (54 | ) | (17.8 | )% | (106 | ) | (16.6 | )% | ||||||
Student housing properties | 102 | 33.7 | % | 142 | 22.2 | % | ||||||||
New Market Properties | (19 | ) | (6.3 | )% | (8 | ) | (1.3 | )% | ||||||
Preferred Office Properties | 15 | 5.0 | % | 174 | 27.2 | % | ||||||||
Total | $ | 303 | 100.0 | % | $ | 639 | 100.0 | % |
Three months ended June 30, | Six months ended June 30, | |||||||||||||
2018 versus 2017 | 2018 versus 2017 | |||||||||||||
(in thousands) | Increase | Increase | ||||||||||||
Depreciation and amortization | Amount | Percent of increase | Amount | Percent of increase | ||||||||||
Multifamily communities: | ||||||||||||||
Acquired during 2017-2018 | $ | 6,562 | 48.1 | % | $ | 17,228 | 58.6 | % | ||||||
Acquired during 2011-2016 | (1,396 | ) | (10.2 | )% | (3,416 | ) | (11.6 | )% | ||||||
Properties sold | (458 | ) | (3.4 | )% | (1,066 | ) | (3.6 | )% | ||||||
Student housing properties | 4,959 | 36.4 | % | 9,047 | 30.7 | % | ||||||||
New Market Properties | 2,115 | 15.5 | % | 3,954 | 13.4 | % | ||||||||
Preferred Office Properties | 1,856 | 13.6 | % | 3,681 | 12.5 | % | ||||||||
Total | $ | 13,638 | 100.0 | % | $ | 29,428 | 100.0 | % |
Three months ended June 30, | Six months ended June 30, | |||||||||||||
2018 versus 2017 | 2018 versus 2017 | |||||||||||||
(in thousands) | Increase | Increase | ||||||||||||
Insurance, professional fees, and other expenses | Amount | Percent of increase | Amount | Percent of increase | ||||||||||
Audit and tax fees | 139 | 22.0 | % | 98 | 12.5 | % | ||||||||
Insurance premiums | 315 | 49.9 | % | 1,318 | 168.1 | % | ||||||||
Legal and other professional fees | 177 | 28.1 | % | (632 | ) | (80.6 | )% | |||||||
Total | $ | 631 | 100.0 | % | $ | 784 | 100.0 | % |
Three months ended June 30, | Six months ended June 30, | |||||||||||||
2018 versus 2017 | 2018 versus 2017 | |||||||||||||
(in thousands) | Increase | Increase | ||||||||||||
Interest expense | Amount | Percent of increase | Amount | Percent of increase | ||||||||||
Multifamily communities: | ||||||||||||||
Acquired during 2017-2018 | $ | 2,811 | 47.3 | % | $ | 6,456 | 54.2 | % | ||||||
Acquired during 2011-2016 | 266 | 4.5 | % | 705 | 5.9 | % | ||||||||
Properties sold | (326 | ) | (5.5 | )% | (883 | ) | (7.4 | )% | ||||||
Student housing properties | 1,665 | 28.0 | % | 2,879 | 24.2 | % | ||||||||
New Market Properties | 1,119 | 18.8 | % | 2,145 | 18.0 | % | ||||||||
Preferred Office Properties | 989 | 16.6 | % | 1,853 | 15.6 | % | ||||||||
KeyBank Operating LOC & Term Notes | (547 | ) | (9.2 | )% | (935 | ) | (7.9 | )% | ||||||
Loan Participants | (28 | ) | (0.5 | )% | (311 | ) | (2.6 | )% | ||||||
Total | $ | 5,949 | 100.0 | % | $ | 11,909 | 100.0 | % |
• | excluding impairment charges on and gains/losses from sales of depreciable property; |
• | plus depreciation and amortization of real estate assets and deferred leasing costs; and |
• | after adjustments for the Company's proportionate share of unconsolidated partnerships and joint ventures. |
Reconciliation of FFO and AFFO | |||||||||||
to Net (Loss) Income Attributable to Common Stockholders (A) | |||||||||||
Three months ended June 30, | |||||||||||
(In thousands, except per-share figures) | 2018 | 2017 | |||||||||
Net (loss) income attributable to common stockholders (See note 1) | $ | (26,068 | ) | $ | (12,034 | ) | |||||
Add: | Depreciation of real estate assets | 29,441 | 20,616 | ||||||||
Amortization of acquired real estate intangible assets and deferred leasing costs | 12,314 | 7,670 | |||||||||
Income attributable to non-controlling interests (See note 2) | (140 | ) | 97 | ||||||||
Less: | Gain on sale of real estate | (2 | ) | (6,915 | ) | ||||||
FFO | 15,545 | 9,434 | |||||||||
Add: | Acquisition and pursuit costs | — | 5 | ||||||||
Loan cost amortization on acquisition term note | 19 | 43 | |||||||||
Amortization of loan coordination fees paid to the Manager (See note 3) | 631 | 416 | |||||||||
Mortgage loan refinancing and extinguishment costs | 20 | 1,058 | |||||||||
Insurance recovery in excess of weather-related property operating losses (See note 4) | 66 | — | |||||||||
Contingent management fees recognized | — | 387 | |||||||||
Non-cash equity compensation to directors and executives | 950 | 871 | |||||||||
Amortization of loan closing costs (See note 5) | 1,213 | 1,053 | |||||||||
Depreciation/amortization of non-real estate assets | 340 | 171 | |||||||||
Net loan fees received (See note 6) | 411 | 417 | |||||||||
Accrued interest income received (See note 7) | 2,769 | 2,795 | |||||||||
Cash received for termination of purchase options (See note 8) | 2,514 | — | |||||||||
Deemed dividends from cash redemptions of preferred stock | 201 | — | |||||||||
Non-cash dividends on Series M Preferred Stock | 47 | — | |||||||||
Amortization of lease inducements (See note 9) | 311 | 93 | |||||||||
Less: | Non-cash loan interest income (See note 7) | (5,690 | ) | (4,349 | ) | ||||||
Amortization of acquired above and below market lease intangibles | |||||||||||
and straight-line rental revenues (See note 10) | (2,505 | ) | (1,740 | ) | |||||||
Amortization of deferred revenues (See note 11) | (642 | ) | (170 | ) | |||||||
Normally recurring capital expenditures and leasing costs (See note 12) | (1,080 | ) | (972 | ) | |||||||
AFFO | $ | 15,120 | $ | 9,512 | |||||||
Common Stock dividends and distributions to Unitholders declared: | |||||||||||
Common Stock dividends | $ | 10,104 | $ | 7,539 | |||||||
Distributions to Unitholders (See note 2) | 273 | 212 | |||||||||
Total | $ | 10,377 | $ | 7,751 | |||||||
Common Stock dividends and Unitholder distributions per share | $ | 0.255 | $ | 0.235 | |||||||
FFO per weighted average basic share of Common Stock and Unit outstanding | $ | 0.38 | $ | 0.31 | |||||||
AFFO per weighted average basic share of Common Stock and Unit outstanding | $ | 0.37 | $ | 0.31 | |||||||
Weighted average shares of Common Stock and Units outstanding: (A) | |||||||||||
Basic: | 39,383 | 29,894 | |||||||||
Common Stock | 1,070 | 902 | |||||||||
Class A Units | 40,453 | 30,796 | |||||||||
Common Stock and Class A Units | |||||||||||
Diluted Common Stock and Class A Units (B) | 41,009 | 32,627 | |||||||||
Actual shares of Common Stock outstanding, including 25 and 24 unvested shares | |||||||||||
of restricted Common Stock at June 30, 2018 and 2017, respectively | 39,750 | 32,445 | |||||||||
Actual Class A Units outstanding at June 30, 2018 and 2017, respectively. | 1,070 | 901 | |||||||||
Total | 40,820 | 33,346 | |||||||||
(A) Units and Unitholders refer to Class A Units in our Operating Partnership, 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. The Class A Units collectively represent an approximate 2.64% weighted average non-controlling interest in the Operating Partnership for the three-month period ended June 30, 2018. | |||||||||||
(B) Since our FFO and AFFO results are positive for the periods reflected above, 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. 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, excluding any gains from sales of real estate assets. |
Reconciliation of FFO and AFFO | |||||||||||
to Net (Loss) Income Attributable to Common Stockholders (A) | |||||||||||
Six months ended June 30, | |||||||||||
(In thousands, except per-share figures) | 2018 | 2017 | |||||||||
Net (loss) income attributable to common stockholders (See note 1) | $ | (31,704 | ) | $ | 2,641 | ||||||
Add: | Depreciation of real estate assets | 57,153 | 38,748 | ||||||||
Amortization of acquired real estate intangible assets and deferred leasing costs | 24,905 | 14,202 | |||||||||
Income attributable to non-controlling interests (See note 2) | 240 | 1,096 | |||||||||
Less: | Gain on sale of real estate | (20,356 | ) | (37,639 | ) | ||||||
FFO | 30,238 | 19,048 | |||||||||
Add: | Acquisition and pursuit costs | — | 14 | ||||||||
Loan cost amortization on acquisition term note | 44 | 70 | |||||||||
Amortization of loan coordination fees paid to the Manager (See note 3) | 1,107 | 771 | |||||||||
Mortgage loan refinancing and extinguishment costs | 61 | 1,058 | |||||||||
Insurance recovery in excess of weather-related property operating losses (See note 4) | (194 | ) | — | ||||||||
Contingent management fees recognized | — | 387 | |||||||||
Non-cash equity compensation to directors and executives | 2,085 | 1,744 | |||||||||
Amortization of loan closing costs (See note 5) | 2,258 | 1,851 | |||||||||
Depreciation/amortization of non-real estate assets | 653 | 333 | |||||||||
Net loan fees received (See note 6) | 1,211 | 417 | |||||||||
Accrued interest income received (See note 7) | 4,112 | 5,319 | |||||||||
Cash received for termination of purchase options (See note 8) | 2,514 | — | |||||||||
Deemed dividends from cash redemptions of preferred stock | 519 | — | |||||||||
Non-cash dividends on Series M Preferred Stock | 153 | — | |||||||||
Amortization of lease inducements (See note 9) | 568 | 93 | |||||||||
Less: | Non-cash loan interest income (See note 7) | (10,622 | ) | (8,648 | ) | ||||||
Cash paid for loan closing costs | (391 | ) | — | ||||||||
Amortization of acquired above and below market lease intangibles | (5,694 | ) | (3,556 | ) | |||||||
and straight-line rental revenues (See note 10) | |||||||||||
Amortization of deferred revenues (See note 11) | (1,139 | ) | (170 | ) | |||||||
Normally recurring capital expenditures and leasing costs (See note 12) | (1,954 | ) | (1,817 | ) | |||||||
AFFO | $ | 25,529 | $ | 16,914 | |||||||
Common Stock dividends and distributions to Unitholders declared: | |||||||||||
Common Stock dividends | $ | 19,906 | $ | 13,510 | |||||||
Distributions to Unitholders (See note 2) | 540 | 411 | |||||||||
Total | $ | 20,446 | $ | 13,921 | |||||||
Common Stock dividends and Unitholder distributions per share | $ | 0.505 | $ | 0.455 | |||||||
FFO per weighted average basic share of Common Stock and Unit outstanding | $ | 0.75 | $ | 0.65 | |||||||
AFFO per weighted average basic share of Common Stock and Unit outstanding | $ | 0.63 | $ | 0.58 | |||||||
Weighted average shares of Common Stock and Units outstanding: (A) | |||||||||||
Basic: | 39,241 | 28,423 | |||||||||
Common Stock | 1,070 | 914 | |||||||||
Class A Units | 40,311 | 29,337 | |||||||||
Common Stock and Class A Units | |||||||||||
Diluted Common Stock and Class A Units (B) | 41,273 | 30,855 | |||||||||
Actual shares of Common Stock outstanding, including 25 and 24 unvested shares | |||||||||||
of restricted Common Stock at June 30, 2018 and 2017, respectively | 39,750 | 32,445 | |||||||||
Actual Class A Units outstanding at June 30, 2018 and 2017, respectively. | 1,070 | 901 | |||||||||
Total | 40,820 | 33,346 | |||||||||
(A) Units and Unitholders refer to Class A Units in our Operating Partnership, 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. The Class A Units collectively represent an approximate 2.65% weighted average non-controlling interest in the Operating Partnership for the six-month period ended June 30, 2018. | |||||||||||
(B) Since our FFO and AFFO results are positive for the periods reflected above, 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. 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, excluding any gains from sales of real estate assets. |
1) | Rental and other property revenues and property operating expenses for the quarter ended June 30, 2018 include activity for the four grocery-anchored shopping centers and three student housing properties acquired during the quarter only from their respective dates of acquisition. In addition, the second quarter 2018 period includes a full quarter of activity for the seven multifamily communities, six grocery-anchored shopping centers, two student housing properties and two office buildings acquired during the third and fourth quarters 2017 and first quarter 2018. Rental and other property revenues and expenses for the second quarter 2017 include activity for the acquisitions made during that period only from their respective dates of acquisition. |
2) | Non-controlling interests in our Operating Partnership consisted of a total of 1,070,103 Class A Units as of June 30, 2018. 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 2.64% and 2.93% for the three-month periods ended June 30, 2018 and 2017, respectively. |
3) | As of January 1, 2016, we pay loan coordination fees to Preferred Apartment Advisors, LLC, our Manager, related to obtaining mortgage financing for acquired properties. Loan coordination fees were introduced to reflect the administrative effort involved in arranging debt financing for acquired properties. The portion of the loan coordination fees paid up until July 1, 2017 attributable to the financing were amortized over the lives of the respective mortgage loans, and this non-cash amortization expense is an addition to FFO in the calculation of AFFO. Beginning effective July 1, 2017, the loan coordination fee was lowered from 1.6% to 0.6% of the amount of any mortgage indebtedness on newly-acquired properties or refinancing. All of the loan coordination fees paid to our Manager subsequent to July 1, 2017 are amortized over the life of the debt. At June 30, 2018, aggregate unamortized loan coordination fees were approximately $12.6 million, which will be amortized over a weighted average remaining loan life of approximately 10.2 years. |
4) | We sustained weather-related operating losses due to Hurricane Harvey at our Stone Creek multifamily community during the first and second quarters 2018; these costs are added back to FFO in our calculation of AFFO. Included in these adjustments are the receipt from our insurance carrier during the first quarter 2018 of claims proceeds for lost rental revenues incurred in 2017 that totaled approximately $588,000, which was recognized in our statements of operations for the six months ended June 30, 2018. Lost rent and other operating costs incurred during the three-month period ended June 30, 2018 totaled approximately $66,000. |
5) | 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. On March 23, 2018, but effective April 13, 2018, the maximum borrowing capacity on the Revolving Line of Credit was increased from $150 million to $200 million. 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 June 30, 2018, aggregate unamortized loan costs were approximately $20.8 million, which will be amortized over a weighted average remaining loan life of approximately 7.7 years. |
6) | 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 after the payment of loan origination fees to our Manager 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 FFO in our calculation of AFFO. |
7) | This adjustment reflects the receipt during the periods presented of additional interest income (described in note 6 above) which was earned and accrued prior to those periods presented on various real estate loans. |
8) | On May 7, 2018, we terminated our existing purchase options on the Encore, Bishop Street and Hidden River multifamily communities and the Haven 46 and Haven Charlotte student housing properties, all of which are partially supported by real estate loan investments held by us. In exchange, we are to receive termination fees aggregating approximately $12.5 million from the developers. During the second quarter, we received $2.5 million in cash in excess of the recognized termination fees, which are added to FFO in our calculation of AFFO. |
9) | This adjustment removes the non-cash amortization of costs incurred to induce tenants to lease space in our office buildings and grocery-anchored shopping centers. |
10) | 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 |
11) | 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, as well as non-cash revenue earned from our investment in the collateralized mortgage-backed security in th Freddie Mac K Program. |
12) | We deduct from FFO normally recurring capital expenditures that are necessary to maintain our assets’ revenue streams in the calculation of AFFO. This adjustment also deducts from FFO capitalized amounts for third party costs during the period to originate or renew leases in our grocery-anchored shopping centers and office buildings. 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. |
• | operating expenses directly related to our portfolio of multifamily communities, grocery-anchored shopping centers and office buildings (including regular maintenance items); |
• | capital expenditures incurred to lease our multifamily communities, grocery-anchored shopping centers and office buildings; |
• | interest expense on our outstanding property level debt; |
• | amounts due on our Credit Facility; |
• | distributions that we pay to our preferred stockholders, common stockholders, and unitholders; |
• | cash redemptions that we may pay to our preferred stockholders; and |
• | committed investments. |
Capital Expenditures - Multifamily Communities | |||||||||||||||||||||||||
Recurring | Non-recurring | Total | |||||||||||||||||||||||
(in thousands, except per-unit figures) | Amount | Per Unit | Amount | Per Unit | Amount | Per Unit | |||||||||||||||||||
Appliances | $ | 165 | $ | 34.04 | $ | — | $ | — | $ | 165 | $ | 34.04 | |||||||||||||
Carpets | 584 | 120.80 | — | — | 584 | 120.80 | |||||||||||||||||||
Wood / vinyl flooring | 131 | 27.18 | — | — | 131 | 27.18 | |||||||||||||||||||
Mini blinds and ceiling fans | 48 | 10.02 | — | — | 48 | 10.02 | |||||||||||||||||||
Fire safety | 13 | 2.70 | 113 | 23.38 | 126 | 26.08 | |||||||||||||||||||
HVAC | 146 | 30.22 | — | — | 146 | 30.22 | |||||||||||||||||||
Computers, equipment, misc. | 23 | 4.75 | 143 | 29.68 | 166 | 34.43 | |||||||||||||||||||
Elevators | — | — | 15 | 3.05 | 15 | 3.05 | |||||||||||||||||||
Exterior painting | — | — | 61 | 12.57 | 61 | 12.57 | |||||||||||||||||||
Leasing office and other common amenities | 42 | 8.60 | 511 | 105.84 | 553 | 114.44 | |||||||||||||||||||
Major structural projects | — | — | 561 | 116.01 | 561 | 116.01 | |||||||||||||||||||
Cabinets and countertop upgrades | — | — | 548 | 113.38 | 548 | 113.38 | |||||||||||||||||||
Landscaping and fencing | 5 | 0.93 | 214 | 44.28 | 219 | 45.21 | |||||||||||||||||||
Parking lot | 76 | 15.68 | 295 | 61.05 | 371 | 76.73 | |||||||||||||||||||
Common area items | — | — | 42 | 8.76 | 42 | 8.76 | |||||||||||||||||||
Totals | $ | 1,233 | $ | 254.92 | $ | 2,503 | $ | 518 | $ | 3,736 | $ | 772.92 |
Capital Expenditures - Student Housing Properties | |||||||||||||||||||||||||
Recurring | Non-recurring | Total | |||||||||||||||||||||||
(in thousands, except per-unit figures) | Amount | Per Unit | Amount | Per Unit | Amount | Per Unit | |||||||||||||||||||
Appliances | $ | 17 | $ | 31.83 | $ | — | $ | — | $ | 17 | $ | 31.83 | |||||||||||||
Carpets | 6 | 11.61 | — | — | 6 | 11.61 | |||||||||||||||||||
Wood / vinyl flooring | 5 | 9.78 | — | — | 5 | 9.78 | |||||||||||||||||||
Mini blinds and ceiling fans | 1 | 1.00 | — | — | 1 | 1.00 | |||||||||||||||||||
Fire safety | — | — | 3 | 6.16 | 3 | 6.16 | |||||||||||||||||||
HVAC | 26 | 50.47 | — | — | 26 | 50.47 | |||||||||||||||||||
Computers, equipment, misc. | 12 | 23.82 | 14 | 26.11 | 26 | 49.93 | |||||||||||||||||||
Elevators | — | — | — | — | — | — | |||||||||||||||||||
Exterior painting | — | — | 11 | 20.53 | 11 | 20.53 | |||||||||||||||||||
Leasing office and other common amenities | 20 | 38.18 | 231 | 445.5 | 251 | 483.68 | |||||||||||||||||||
Major structural projects | 1 | 2.82 | 135 | 260.86 | 136 | 263.68 | |||||||||||||||||||
Cabinets and counter top upgrades | — | — | 1 | 1.41 | 1 | 1.41 | |||||||||||||||||||
Landscaping and fencing | — | — | 55 | 106.31 | 55 | 106.31 | |||||||||||||||||||
Parking lot | — | — | 11 | 20.29 | 11 | 20.29 | |||||||||||||||||||
Common area items | 2 | 4.49 | 19 | 36 | 21 | 40.49 | |||||||||||||||||||
Totals | $ | 90 | $ | 174.00 | $ | 480 | $ | 923.17 | $ | 570 | $ | 1,097.17 |
• | the principal amount of our long-term debt as it becomes due or matures; |
• | capital expenditures needed for our multifamily communities and retail shopping centers; |
• | costs associated with current and future capital raising activities; |
• | costs to acquire additional multifamily communities, retail assets or other real estate and enter into new and fund existing lending opportunities; and |
• | our minimum distributions necessary to maintain our REIT status. |
(in thousands) | Total | Less than one year | 1-3 years | 3-5 years | More than five years | |||||||||||||||
Mortgage debt obligations: | ||||||||||||||||||||
Interest | $ | 538,384 | $ | 79,110 | $ | 137,902 | $ | 109,438 | $ | 211,934 | ||||||||||
Principal | 2,035,892 | 177,180 | 296,317 | 432,261 | 1,130,134 | |||||||||||||||
Line of Credit: | ||||||||||||||||||||
Interest | 30 | 30 | — | — | — | |||||||||||||||
Principal | 38,500 | 38,500 | — | — | — | |||||||||||||||
Total | $ | 2,612,806 | $ | 294,820 | $ | 434,219 | $ | 541,699 | $ | 1,342,068 |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Balance | LIBOR Cap | All-in Cap | |||||||
Avenues at Creekside | $ | 40,110 | 5.0 | % | 6.6 | % | |||
Citi Lakes | 41,974 | 4.3 | % | 6.5 | % | ||||
Village at Baldwin Park | 77,800 | N/A | N/A | ||||||
SoL | 37,485 | N/A | N/A | ||||||
Ursa | 31,400 | N/A | N/A | ||||||
The Tradition | 30,000 | 3.3 | % | 7.3 | % | ||||
The Bloc | 28,966 | 3.3 | % | 6.8 | % | ||||
Royal Lakes | 9,617 | N/A | N/A | ||||||
Cherokee Plaza | 24,994 | N/A | N/A | ||||||
Champions Village | 27,400 | N/A | N/A | ||||||
Total | $ | 349,746 |
• | maintain a reasonable ratio of fixed-rate, long-term debt to total debt so that floating-rate exposure is kept at an acceptable level; |
• | place interest rate caps on floating-rate debt where appropriate; and |
• | take advantage of favorable market conditions for long-term debt and/or equity financings. |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Item 3. | Defaults Upon Senior Securities |
Item 4. | Mine Safety Disclosures |
Item 5. | Other Information |
Item 6. | Exhibits |
EXHIBIT INDEX | ||
Exhibit Number | Description | |
10.1 | ||
10.2 | (1) | |
12.1 | * | |
31.1 | * | |
31.2 | * | |
32.1 | * | |
32.2 | * | |
101 | * | XBRL (eXtensible Business Reporting Language). The following materials from Preferred Apartment Communities, Inc.’s Quarterly Report on Form 10-Q for the period ended June 30, 2018, formatted in XBRL: (i) Consolidated balance sheets at June 30, 2018 and December 31, 2017, (ii) consolidated statements of operations for the three months and six months ended June 30, 2018 and 2017, (iii) consolidated statement of stockholders' equity, (iv) consolidated statement of cash flows and (v) notes to consolidated financial statements. |
* | Filed or Furnished herewith | |
(1) | Management contract or compensatory plan, contract or arrangement. |
SIGNATURES | |||||||
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. | |||||||
PREFERRED APARTMENT COMMUNITIES, INC. | |||||||
Date: August, 3, 2018 | By: | /s/ Daniel M. DuPree | |||||
Daniel M. DuPree | |||||||
Chief Executive Officer | |||||||
(Principal Executive Officer) | |||||||
Date: August 3, 2018 | By: | /s/ John Isakson | |||||
John A. Isakson | |||||||
Chief Financial Officer | |||||||
(Principal Financial Officer) |
Exhibit 12 | ||||||||||||||||||||||||
Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Dividends | ||||||||||||||||||||||||
Preferred Apartment Communities, Inc. | ||||||||||||||||||||||||
Six months ended June 30, | Year ended December 31, | |||||||||||||||||||||||
(in thousands) | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||
Earnings: | ||||||||||||||||||||||||
Net income (loss) | $ | 8,985 | $ | 28,667 | $ | (9,843 | ) | $ | (2,426 | ) | $ | 2,127 | $ | (4,205 | ) | |||||||||
Add: | ||||||||||||||||||||||||
Fixed charges | 43,315 | 67,468 | 44,284 | 21,316 | 10,188 | 5,780 | ||||||||||||||||||
Less: Net (income) loss attributable to | ||||||||||||||||||||||||
non-controlling interests | (240 | ) | (986 | ) | 310 | 25 | (33 | ) | 222 | |||||||||||||||
Total earnings | $ | 52,060 | $ | 95,149 | $ | 34,751 | $ | 18,915 | $ | 12,282 | $ | 1,797 | ||||||||||||
Fixed charges: | ||||||||||||||||||||||||
Interest expense | $ | 39,976 | $ | 62,384 | $ | 40,689 | $ | 19,842 | $ | 9,183 | $ | 4,922 | ||||||||||||
Amortization of deferred loan costs | ||||||||||||||||||||||||
related to mortgage indebtedness | 3,339 | 5,084 | 3,595 | 1,474 | 1,005 | 859 | ||||||||||||||||||
Total fixed charges | 43,315 | 67,468 | 44,284 | 21,316 | 10,188 | 5,781 | ||||||||||||||||||
Preferred dividends | 40,441 | 63,651 | 41,081 | 18,752 | 7,382 | 3,963 | ||||||||||||||||||
Total Combined fixed charges and | ||||||||||||||||||||||||
preferred dividends | $ | 83,756 | $ | 131,119 | $ | 85,365 | $ | 40,068 | $ | 17,570 | $ | 9,744 | ||||||||||||
Ratio of Earnings to Combined fixed | ||||||||||||||||||||||||
charges and preferred dividends (A) | 0.62 | 0.73 | 0.41 | 0.47 | 0.70 | 0.18 | ||||||||||||||||||
1. | I have reviewed this quarterly report on Form 10-Q of Preferred Apartment Communities, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: August 3, 2018 | /s/ Daniel M. DuPree |
Daniel M. DuPree | |
Chief Executive Officer |
Date: August 3, 2018 | /s/ John A. Isakson |
John A. Isakson | |
Chief Financial Officer |
Date: August 3, 2018 | /s/ Daniel M. DuPree | |
Daniel M. DuPree | ||
Chief Executive Officer |
Date: August 3, 2018 | /s/ John A. Isakson | |
John A. Isakson | ||
Chief Financial Officer |
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Document and Entity Information Document - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jul. 26, 2018 |
|
Document and Entity Information | ||
entity registrant name | PREFERRED APARTMENT COMMUNITIES INC | |
entity CIK | 0001481832 | |
Current fiscal year end date | --12-31 | |
document type | 10-Q | |
document period end date | Jun. 30, 2018 | |
document fiscal year focus | 2018 | |
entity filer category | Accelerated Filer | |
document fiscal period focus | Q2 | |
Entity Well-known Seasoned Issuer | No | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
amendment flag | false | |
entity common stock, shares outstanding | 40,038,578 |
Statements of Operations - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Revenues: | ||||
Rental revenues | $ 66,199,000 | $ 48,241,000 | $ 130,276,000 | $ 93,605,000 |
Other property revenues | 12,158,000 | 8,821,000 | 23,886,000 | 17,257,000 |
Interest income on loan and note receivable | 13,658,000 | 8,490,000 | 23,958,000 | 16,438,000 |
Revenue from Related Parties | 4,374,000 | 5,338,000 | 8,639,000 | 10,152,000 |
Total revenues | 96,389,000 | 70,890,000 | 186,759,000 | 137,452,000 |
Operating expenses: | ||||
Property operating and maintenance | 10,107,000 | 7,198,000 | 18,912,000 | 13,737,000 |
property salaries related party | 4,228,000 | 3,219,000 | 8,127,000 | 6,247,000 |
Property management fees | 2,776,000 | 2,061,000 | 5,532,000 | 3,963,000 |
Real estate taxes | 10,063,000 | 7,680,000 | 20,038,000 | 15,584,000 |
General and administrative | 1,957,000 | 1,654,000 | 3,798,000 | 3,159,000 |
Share-based Compensation | 950,000 | 871,000 | 2,085,000 | 1,744,000 |
Depreciation and amortization | 42,095,000 | 28,457,000 | 82,711,000 | 53,283,000 |
Acquisition costs | 0 | 5,000 | 0 | 14,000 |
Management fees | 6,621,000 | 4,864,000 | 12,862,000 | 9,377,000 |
Other Expenses | 2,008,000 | 1,377,000 | 3,453,000 | 2,669,000 |
Total operating expenses | 80,805,000 | 57,386,000 | 157,518,000 | 109,777,000 |
manager's fees deferred | (1,429,000) | (171,000) | (2,649,000) | (346,000) |
Operating Expenses | 79,376,000 | 57,215,000 | 154,869,000 | 109,431,000 |
Operating Income (Loss) | 17,013,000 | 13,675,000 | 31,890,000 | 28,021,000 |
Interest Expense | 22,347,000 | 16,398,000 | 43,315,000 | 31,406,000 |
Gain (Loss) on Extinguishment of Debt | 0 | 888,000 | 0 | 888,000 |
Income (Loss) before Gain (Loss) on Sale of Properties | (5,280,000) | (3,611,000) | (11,371,000) | (4,273,000) |
Gains (Losses) on Sales of Investment Real Estate | 2,000 | 6,915,000 | 20,356,000 | 37,639,000 |
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | (5,278,000) | 3,304,000 | 8,985,000 | 33,366,000 |
Income (Loss) from Continuing Operations, Including Portion Attributable to Noncontrolling Interest | (5,278,000) | 3,304,000 | 8,985,000 | 33,366,000 |
net loss attributable to non-controlling interests | 140,000 | (97,000) | (240,000) | (1,096,000) |
Net loss attributable to the Company | (5,138,000) | 3,207,000 | 8,745,000 | 32,270,000 |
Dividends to preferred stockholders | (20,924,000) | (15,235,000) | (40,441,000) | (29,621,000) |
Deemed noncash dividend | 153,000 | 12,000 | ||
NetIncomeAllocatedToUnvestedRestrictedShares | (6,000) | (6,000) | (8,000) | (8,000) |
Net Income (Loss) Available to Common Stockholders, Basic | $ (26,068,000) | $ (12,034,000) | $ (31,704,000) | $ 2,641,000 |
Earnings Per Share, Basic | $ (0.66) | $ (0.40) | $ (0.81) | $ 0.09 |
Dividends, Common Stock, Cash | $ 19,906,000 | $ 13,510,000 | ||
Common Stock, Dividends, Per Share, Declared | $ 0.255 | $ 0.2350 | $ 0.505 | $ 0.455 |
Weighted Average Number of Shares Outstanding, Basic and Diluted | 39,383,000 | 29,894,000 | ||
Weighted Average Number of Shares Outstanding, Diluted | 39,383,000 | 29,894,000 | 39,241,000 | 28,423,000 |
Fair Value, Assets Measured on Recurring Basis, Change in Unrealized Gain (Loss) | $ 54,000 | $ 0 | $ 54,000 | $ 0 |
Statements of Operations (Parenthetical) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Income Statement Parentheticals [Abstract] | ||||
property management fees paid to related party | $ 2,156,000 | $ 1,571,000 | $ 4,260,000 | $ 3,006,000 |
acquisition fees paid to related party | $ 3,930,000 | $ 3,018,000 | $ 7,539,000 | $ 5,795,000 |
Statements of Equity and Accumulated Deficit - USD ($) |
Total |
Series A Preferred Stock [Member] |
Series M Preferred Stock [Member] |
Common Stock [Member] |
Common Stock [Member]
Series A Preferred Stock [Member]
|
Common Stock [Member]
Series M Preferred Stock [Member]
|
Additional Paid-in Capital [Member] |
Additional Paid-in Capital [Member]
Series A Preferred Stock [Member]
|
Additional Paid-in Capital [Member]
Series M Preferred Stock [Member]
|
Accumulated Deficit [Member] |
Accumulated Deficit [Member]
Series A Preferred Stock [Member]
|
Accumulated Deficit [Member]
Series M Preferred Stock [Member]
|
Total Stockholders' Equity [Member] |
Total Stockholders' Equity [Member]
Series A Preferred Stock [Member]
|
Total Stockholders' Equity [Member]
Series M Preferred Stock [Member]
|
Noncontrolling Interest [Member] |
Noncontrolling Interest [Member]
Series A Preferred Stock [Member]
|
Noncontrolling Interest [Member]
Series M Preferred Stock [Member]
|
Preferred Stock [Member]
Series A Preferred Stock [Member]
|
Preferred Stock [Member]
Series M Preferred Stock [Member]
|
ClassBUnits [Member] |
ClassBUnits [Member]
Common Stock [Member]
|
ClassBUnits [Member]
Additional Paid-in Capital [Member]
|
ClassBUnits [Member]
Accumulated Deficit [Member]
|
ClassBUnits [Member]
Total Stockholders' Equity [Member]
|
ClassBUnits [Member]
Noncontrolling Interest [Member]
|
ClassBUnits [Member]
Preferred Stock [Member]
Series A Preferred Stock [Member]
|
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Proceeds from Issuance of Preferred Stock and Preference Stock | $ 146,848,000 | $ 146,846,000 | $ 146,848,000 | $ 2,000 | |||||||||||||||||||||||
Balance at Dec. 31, 2016 | 885,260,000 | $ 265,000 | 906,737,000 | $ (23,232,000) | 883,779,000 | $ 1,481,000 | 9,000 | ||||||||||||||||||||
Stock Redeemed or Called During Period, Value | (3,910,000) | 3,000 | (3,913,000) | (3,910,000) | |||||||||||||||||||||||
Stock Issued During Period, Value, New Issues | 58,384,000 | 39,000 | 58,345,000 | 58,384,000 | |||||||||||||||||||||||
exercise of warrants | 17,692,000 | 15,000 | 17,677,000 | 0 | 17,692,000 | 0 | 0 | ||||||||||||||||||||
restricted stock vesting | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Stock Issued During Period, Value, Conversion of Units | 0 | 2,000 | 1,676,000 | 0 | 1,678,000 | (1,678,000) | 0 | ||||||||||||||||||||
amortization of Class A Unit awards | $ 1,497,000 | $ 0 | $ 0 | $ 0 | $ 0 | $ 1,497,000 | $ 0 | ||||||||||||||||||||
Syndication and offering costs | (18,299,000) | 0 | (18,299,000) | 0 | (18,299,000) | 0 | 0 | ||||||||||||||||||||
Stock Issued During Period, Value, Share-based Compensation, Gross | 247,000 | 0 | 247,000 | 0 | 247,000 | 0 | 0 | ||||||||||||||||||||
Dividends, Common Stock, Cash | (13,510,000) | (13,510,000) | (13,510,000) | ||||||||||||||||||||||||
Balance at Jun. 30, 2017 | 1,077,401,000 | 324,000 | 1,065,382,000 | 9,038,000 | 1,074,755,000 | 2,646,000 | 11,000 | ||||||||||||||||||||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | 33,366,000 | 0 | 0 | 32,270,000 | 32,270,000 | 1,096,000 | 0 | ||||||||||||||||||||
non-controlling interest equity adjustment | 0 | 0 | (661,000) | 0 | (661,000) | 661,000 | 0 | ||||||||||||||||||||
Payments to Noncontrolling Interests | (411,000) | 0 | 0 | 0 | 0 | (411,000) | 0 | ||||||||||||||||||||
Dividends, Preferred Stock | (89,000) | $ (29,674,000) | $ 0 | (89,000) | $ (29,674,000) | $ 0 | (89,000) | $ (29,674,000) | $ 0 | 0 | |||||||||||||||||
Proceeds from Issuance of Preferred Stock and Preference Stock | 210,844,000 | 210,842,000 | 210,844,000 | 2,000 | 13,569,000 | 13,569,000 | 13,569,000 | ||||||||||||||||||||
Balance at Dec. 31, 2017 | 1,280,766,000 | 386,000 | 1,271,040,000 | 4,449,000 | 1,275,887,000 | 4,879,000 | 12,000 | ||||||||||||||||||||
Stock Redeemed or Called During Period, Value | (9,059,000) | 4,000 | (9,063,000) | (9,059,000) | |||||||||||||||||||||||
exercise of warrants | 8,377,000 | 6,000 | 8,371,000 | 0 | 8,377,000 | 0 | 0 | ||||||||||||||||||||
restricted stock vesting | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Stock Issued During Period, Value, Conversion of Units | 0 | 1,000 | 850,000 | 0 | 851,000 | (851,000) | 0 | ||||||||||||||||||||
amortization of Class A Unit awards | $ 1,807,000 | $ 0 | $ 0 | $ 0 | $ 0 | $ 1,807,000 | $ 0 | ||||||||||||||||||||
Syndication and offering costs | (21,201,000) | 0 | (21,201,000) | 0 | (21,201,000) | 0 | 0 | ||||||||||||||||||||
Stock Issued During Period, Value, Share-based Compensation, Gross | 278,000 | 0 | 278,000 | 0 | 278,000 | 0 | 0 | ||||||||||||||||||||
Dividends, Common Stock, Cash | (19,906,000) | (19,906,000) | (19,906,000) | ||||||||||||||||||||||||
Balance at Jun. 30, 2018 | 1,433,477,000 | 397,000 | 1,430,713,000 | 0 | 1,431,124,000 | 2,353,000 | 14,000 | ||||||||||||||||||||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | 8,985,000 | 0 | 0 | 8,745,000 | 8,745,000 | 240,000 | 0 | ||||||||||||||||||||
non-controlling interest equity adjustment | 0 | 0 | 3,180,000 | 0 | 3,180,000 | (3,180,000) | 0 | ||||||||||||||||||||
Payments to Noncontrolling Interests | $ (542,000) | $ 0 | $ 0 | $ 0 | $ 0 | $ (542,000) | 0 | ||||||||||||||||||||
Dividends, Preferred Stock | $ (39,737,000) | $ (704,000) | $ 0 | $ 0 | $ (26,772,000) | $ (475,000) | $ (12,965,000) | $ (229,000) | $ (39,737,000) | $ (704,000) | $ 0 | $ 0 | $ 0 | $ 0 |
Statements of Equity and Accumulated Deficit Parenthetical |
6 Months Ended |
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Jun. 30, 2018
$ / shares
| |
Common Stock, Dividends, Per Share, Declared | $ 0.505 |
Series A Preferred Stock [Member] | |
Preferred Stock, Dividends Per Share, Declared | 5.00 |
Maximum [Member] | |
Common Stock, Dividends, Per Share, Declared | $ 6.25 |
Organization |
6 Months Ended |
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Jun. 30, 2018 | |
Organization [Abstract] | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | Organization and Basis of Presentation Preferred Apartment Communities, Inc. was formed as a Maryland corporation on September 18, 2009, and elected to be taxed as a real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended, or the Code, effective with its tax year ended December 31, 2011. Unless the context otherwise requires, references to the "Company", "we", "us", or "our" refer to Preferred Apartment Communities, Inc., together with its consolidated subsidiaries, including Preferred Apartment Communities Operating Partnership, L.P., or the Operating Partnership. The Company was formed primarily to acquire and operate multifamily properties in select targeted markets throughout the United States. As part of its business strategy, the Company may enter into forward purchase contracts or purchase options for to-be-built multifamily communities and may make real estate related loans, provide deposit arrangements, or provide performance assurances, as may be necessary or appropriate, in connection with the development of multifamily communities and other properties. As a secondary strategy, the Company also may acquire or originate senior mortgage loans, subordinate loans or real estate loan investments secured by interests in multifamily properties, membership or partnership interests in multifamily properties and other multifamily related assets and invest a lesser portion of its assets in other real estate related investments, including other income-producing property types, senior mortgage loans, subordinate loans or real estate loan investments secured by interests in other income-producing property types, or membership or partnership interests in other income-producing property types as determined by its Manager (as defined below) as appropriate for the Company. The Company is externally managed and advised by Preferred Apartment Advisors, LLC, or its Manager, a Delaware limited liability company and related party (see Note 6). As of June 30, 2018, the Company had 39,725,664 shares of common stock, par value $0.01 per share, or Common Stock, issued and outstanding and was the approximate 97.4% owner of the Operating Partnership at that date. The number of partnership units not owned by the Company totaled 1,070,103 at June 30, 2018 and represented Class A OP Units of the Operating Partnership, or Class A OP Units. The Class A OP Units are convertible at any time at the option of the holder into the Operating Partnership's choice of either cash or Common Stock. In the case of cash, the value is determined based upon the trailing 20-day volume weighted average price of the Company's Common Stock. The Company controls the Operating Partnership through its sole general partner interest and conducts substantially all of its business through the Operating Partnership. The Company has determined the Operating Partnership is a variable interest entity, or VIE, of which the Company is the primary beneficiary. The Company is involved with other VIEs, such as its investment in the Freddie Mac Series 2018-ML04 mortgage loan pool, as discussed in Note 4. New Market Properties, LLC owns and conducts the business of our portfolio of grocery-anchored shopping centers. Preferred Office Properties, LLC owns and conducts the business of our portfolio of office buildings. Preferred Campus Communities, LLC owns and conducts the business of our portfolio of off-campus student housing communities. Each of these entities are wholly-owned subsidiaries of the Operating Partnership. Basis of Presentation These consolidated financial statements include all of the accounts of the Company and the Operating Partnership presented in accordance with accounting principles generally accepted in the United States of America, or GAAP. All significant intercompany transactions have been eliminated in consolidation. Certain adjustments have been made consisting of normal recurring accruals, which, in the opinion of management, are necessary for a fair presentation of the Company's financial condition and results of operations. The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all the disclosures required by GAAP. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's 2017 Annual Report on Form 10-K filed with the Securities and Exchange Commission, or the SEC, on March 1, 2018. Amounts are presented in thousands where indicated. |
Significant Accounting Policies |
6 Months Ended |
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Jun. 30, 2018 | |
Summary of Significant Accounting Policies [Abstract] | |
Significant Accounting Policies [Text Block] | Summary of Significant Accounting Policies Variable Interest Entities A variable interest entity, or “VIE” is an entity that lacks sufficient equity to finance its activities without additional subordinated financial support from other parties, or whose equity holders lack the characteristics of a controlling financial interest. A VIE is consolidated by its primary beneficiary, which is defined as the party who has a controlling financial interest in the VIE through the (a) power to direct the activities of the VIE that most significantly affect the VIE’s economic performance, and (b) obligation to absorb losses or right to receive benefits of the VIE that could be significant to the VIE. The Company assesses whether it meets the power and benefits criteria and in performing this analysis, the Company considers both qualitative and quantitative factors, including the Company’s ability to control or significantly influence key decisions of the VIE and the obligation or likelihood for the Company to fund operating losses of the VIE. The determination of whether an entity is a VIE, and whether the Company is the primary beneficiary, may involve significant judgment, including the determination of which activities most significantly affect the entities’ performance, and estimates about the current and future fair values and performance of assets held by the VIE. If the Company determines that it meets both the power and benefits criteria of the VIE, the Company is deemed to be the primary beneficiary of the VIE and the Company consolidates the entire VIE entity in its consolidated financial statements. For those VIEs which arise from the Company's investment in mortgage-backed securities and which the Company consolidates, it elects the fair value option, under which the assets and liabilities of the consolidated VIE are carried at fair value. The periodic changes in fair value are included in the earnings of the Company and are reported on the line entitled Change in fair value of net assets of consolidated VIE from mortgage-backed pool on the Company's Consolidated Statements of Operations. See note 4 for discussion related to the Company’s investment in a subordinate tranche of a collateralized mortgage-backed pool during the second quarter 2018 and Note 14 for fair value disclosures related to a consolidated VIE related to this investment. Purchase Option Terminations The Company will occasionally receive a purchase option on the underlying property in conjunction with extending a real estate loan investment to the developer of the property. The purchase option is often at a discount to the to-be-agreed-upon market value of the property, once stabilized. If the Company elects not to exercise the purchase option and acquire the property, it may negotiate to sell the purchase option back to the developer and receive a termination fee in consideration. The amount of the termination fee is accounted for as additional interest on the real estate loan investment and is recognized as interest revenue utilizing the effective interest method over the period beginning from the date of election until the earlier of (i) the maturity of the real estate loan investment and (ii) the sale of the property. New Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update 2014-09 ("ASU 2014-09"), Revenue from Contracts with Customers (Topic 606). ASU 2014-09 provides a single comprehensive revenue recognition model for contracts with customers (excluding certain contracts, such as lease contracts) to improve comparability within industries. ASU 2014-09 requires an entity to recognize revenue to reflect the transfer of goods or services to customers at an amount the entity expects to be paid in exchange for those goods and services and provide enhanced disclosures, all to provide more comprehensive guidance for transactions such as service revenue and contract modifications. The new standard may be applied retrospectively to each prior period presented or prospectively with the cumulative effect, if any, recognized as of the date of adoption. The Company adopted the new standard on January 1, 2018 utilizing the modified retrospective transition method with a cumulative effect recognized as of the date of adoption. In addition, the evaluation of non-lease components under ASU 2014-09 will not be effective until Accounting Standards Update No. 2016-02, Leases (Topic 842), ("ASU 2016-02") becomes effective (see further discussion below), which will be January 1, 2019 for the Company. The Company has determined that approximately 90% of its consolidated revenues are derived from either long-term leases with its tenants and reimbursement of related property tax and insurance expenses (considered executory costs of leases) or its mezzanine loan interest income, which are excluded from the scope of the ASU 2014-09. Of the remaining approximately 10% of the Company’s revenues, the majority is comprised of common area maintenance ("CAM") reimbursements and utility reimbursements, which are non-lease components. The Company has concluded that the adoption of ASU 2014-09 will have no material effect upon the timing of the recognition of reimbursement revenue and other miscellaneous income. The Company also evaluated its amenity and ancillary services to its multifamily and student housing residents and does not expect the timing and recognition of revenue to change as a result of implementing ASU 2014-09. Additional required disclosures regarding the nature and timing of the Company's revenue transactions will be provided upon adoption of ASU 2016-02. In July 2018, the FASB issued Accounting Standards Update 2018-11 (“ASU 2018-11”), which provides lessors with a practical expedient in combining lease and non-lease components, if certain criteria are met. The Company believes that adoption of the practical expedient will result in changes in presentation and disclosure of revenue being combined into one revenue component, but will have no material effect on the timing of revenue recognition. In January 2016, the FASB issued Accounting Standards Update 2016-01 ("ASU 2016-01"), Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Liabilities. The new standard's applicable provisions to the Company include an elimination of the disclosure requirement of the significant inputs and assumptions underlying the fair value calculations of its financial instruments which are carried at amortized cost. The Company adopted ASU 2016-01 on January 1, 2018. The adoption of ASU 2016-01 did not impact the Company's results of operations or financial condition but did reduce the required disclosures concerning financial instruments. In February 2016, the FASB issued Accounting Standards Update 2016-02 ("ASU 2016-02"), Leases (ASC 842), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessees and lessors). The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases and supersedes the previous standard, ASC 840 Leases. The standard is effective on January 1, 2019, with early adoption permitted. The new lease guidance requires an entity to separate lease components from non-lease components, such as maintenance services or other activities that transfer a good or service to our residents and tenants in a contract; it also considers the reimbursement of real estate taxes and insurance as executory costs of the lease and requires that such amounts be consolidated with the base rent revenue. For lessors, the consideration in the contract is allocated to the lease and non-lease components on a relative standalone price basis in accordance with the allocation guidance in the new revenue standard. The Company concluded that adoption of ASU 2016-02 does not change the timing of revenue recognition over the lease component, which remains over a straight line method, though the reimbursement of property tax and insurance, considered executory costs of leasing, will be combined with the base rent revenue and presented within rental income instead of other income within the Company’s income statement. Non-lease components are evaluated under ASU 2014-09, Revenue from Contracts with Customers (Topic 606), discussed above. In its March 2018 meeting, the FASB approved a practical expedient for lessors to elect, by class of underlying assets, to not separate lease and non-lease components if both (1) the timing and pattern of revenue recognition are the same for the non-lease component(s) and related lease component and (2) the combined single lease component would be classified as an operating lease. The Company anticipates adopting ASC 842 utilizing this practical expedient as it relates to its common area maintenance services. In June 2016, the FASB issued Accounting Standards Update 2016-13 ("ASU 2016-13"), Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The new standard requires financial instruments carried at amortized cost to be presented at the net amount expected to be collected, utilizing a valuation account which reflects the cumulative net adjustments from the gross amortized cost value. Under existing GAAP, entities would not record a valuation allowance until a loss was probable of occurring. The standard will become effective for the Company on January 1, 2020. The Company is currently evaluating methods of deriving initial valuation accounts to be applied to its real estate loan investment portfolio and is also revising its policies for credit losses on resident and tenant receivables to comply with the expected credit loss model under this guidance. The Company is continuing to evaluate the pending guidance to gauge the materiality of the impact, if any, on its results of operations or financial condition. In August 2016, the FASB issued Accounting Standards Update 2016-15 ("ASU 2016-15"), Statement of Cash Flows—(Topic 326): Classification of Certain Cash Receipts and Cash Payments. The new standard clarifies or establishes guidance for the presentation of various cash transactions on the statement of cash flows. The portion of the guidance applicable to the Company's business activities include the requirement that cash payments for debt prepayment or debt extinguishment costs be presented as cash out flows for financing activities. The Company adopted ASU 2016-15 on January 1, 2018. The adoption of ASU 2016-15 did not impact the Company’s consolidated financial statements, since its current policy is to classify such costs as cash out flows for financing activities. In November 2016, the FASB issued Accounting Standards Update 2016-18 ("ASU 2016-18"), Statement of Cash Flows—(Topic 230): Restricted Cash, which requires restricted cash to be presented with cash and cash equivalents when reconciling the beginning and ending amounts in the statements of cash flows. The Company adopted ASU 2016-18 on January 1, 2018 and its adoption of ASU 2016-18 did not impact its results of operations or financial condition, but did change the line upon which changes in restricted cash are presented. In February 2017, the FASB issued Accounting Standards Update 2017-05 (“ASU 2017-05”), Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets, which provides guidance for recognizing gains and losses from the transfer of nonfinancial assets and for partial sales of nonfinancial assets, and is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2017. The Company adopted this guidance on January 1, 2018. The new standard clarifies that an entity should identify each distinct nonfinancial asset or in substance nonfinancial asset promised to a counterparty and derecognize each asset when a counterparty obtains control of it. The amendments also clarify that an entity should allocate consideration to each distinct asset by applying the guidance in Topic 606 on allocating the transaction price to performance obligations for sales to customers. The Company’s sales of nonfinancial real estate assets are generally made to non-customers, which is a scope exception under Topic 606. The Company elected to adopt this practical expedient and the proceeds from real estate sales continue to be recognized as gain or loss on sale of real estate in the Consolidated Statement of Operations. |
Real Estate Assets (Notes) |
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Real Estate Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination Disclosure | Real Estate Assets The Company's real estate assets consisted of:
Multifamily communities sold On March 20, 2018, the Company closed on the sale of its 328-unit multifamily community in Raleigh, North Carolina, or Lake Cameron, to an unrelated third party for a purchase price of approximately $43.5 million, exclusive of closing costs and resulting in a gain of $20.4 million. Lake Cameron contributed approximately $0.2 million and $0.2 million of net income to the consolidated operating results of the Company for the six-month periods ended June 30, 2018 and 2017, respectively. On January 20, 2017, the Company closed on the sale of its 364-unit multifamily community in Kansas City, Kansas, or Sandstone Creek, to an unrelated third party for a purchase price of $48.1 million, exclusive of closing costs and resulting in a gain of $0.3 million. Sandstone Creek contributed approximately $0.1 million of net loss to the consolidated operating results of the Company for the six-month period ended June 30, 2017. On March 7, 2017, the Company closed on the sale of its 408-unit multifamily community in Atlanta, Georgia, or Ashford Park, to an unrelated third party for a purchase price of $65.5 million, exclusive of closing costs and resulting in a gain of $30.4 million. Ashford Park contributed approximately $0.4 million of net income to the consolidated operating results of the Company for the six-month period ended June 30, 2017. On May 25, 2017, the Company closed on the sale of its 300-unit multifamily community in Dallas, Texas, or Enclave at Vista Ridge, to an unrelated third party for a purchase price of $44.0 million, exclusive of closing costs and resulting in a gain of $6.9 million. Enclave at Vista Ridge contributed approximately $(0.1) million of net loss to the consolidated operating results of the Company for the six-month period ended June 30, 2017. Each of the gains recorded for these sales transactions were net of disposition expenses and debt defeasance-related costs and prepayment premiums, as described in Note 9. The carrying amounts of the significant assets and liabilities of the disposed properties at the dates of sale were:
Multifamily communities acquired During the six-month periods ended June 30, 2018 and 2017, the Company completed the acquisition of the following multifamily communities:
The aggregate purchase price of the multifamily acquisitions for the six months ended June 30, 2018 was approximately $106.5 million. The aggregate purchase price of the multifamily acquisitions for the six months ended June 30, 2017 was approximately $187.0 million. Purchase prices shown are exclusive of acquired escrows, security deposits, prepaids, capitalized acquisition costs and other miscellaneous assets and assumed liabilities. |
Real Estate Loans, Notes Receivable, and Lines of Credit |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | he Company's real estate loan investments are subject to loan participation agreements with unaffiliated third parties. The Company's Palisades loan is subject to such an agreement, under which the syndicate is to fund approximately 25% of the loan commitment amount and collectively receive approximately 25% of interest payments, returns of principal and purchase option discount (if applicable). The Company's Encore loan is subject to a loan participation agreement of 49% of the loan commitment amount, interest payments, and return of principal. The aggregate amount of the Company's unearned purchase option terminations is presented in the liabilities section of the Consolidated Balance Sheets. At June 30, 2018, the balance was approximately $10.9 million. The Company's real estate loan investments are collateralized by 100% of the membership interests of the underlying project entity, and, where considered necessary, by unconditional joint and several repayment guaranties and performance guaranties by the principal(s) of the borrowers. These guaranties generally remain in effect until the receipt of a final certificate of occupancy. All of the guaranties are subject to the rights held by the senior lender pursuant to a standard intercreditor agreement. Prepayment of the real estate loans are permitted in whole, but not in part, without the Company's consent. Management monitors the credit quality of the obligors under each of the Company's real estate loans by tracking the timeliness of scheduled interest and principal payments relative to the due dates as specified in the loan documents, as well as draw requests on the loans relative to the project budgets. In addition, management monitors the actual progress of development and construction relative to the construction plan, as well as local, regional and national economic conditions that may bear on our current and target markets. The credit quality of the Company’s borrowers is primarily based on their payment history on an individual loan basis, and as such, the Company does not assign quantitative credit value measures or categories to its real estate loans and notes receivable in credit quality categories. At June 30, 2018, none of the Company's real estate loans were delinquent. At June 30, 2018, our portfolio of notes and lines of credit receivable consisted of:
The Company recorded interest income and other revenue from these instruments as follows:
The Company extends loans for purposes such as to partially finance the development of multifamily residential communities, to acquire land in anticipation of developing and constructing multifamily residential communities, and for other real estate or real estate related projects. Certain of these loans include characteristics such as exclusive options to purchase the project within a specific time window following project completion and stabilization, the sufficiency of the borrowers' investment at risk and the existence of payment and performance guaranties provided by the borrowers, can cause the loans to create variable interests to the Company and require further evaluation as to whether the variable interest creates a VIE, which would necessitate consolidation of the project. The Company considers the facts and circumstances pertinent to each entity borrowing under the loan, including the relative amount of financing the Company is contributing to the overall project cost, decision making rights or control held by the Company, guarantees provided by third parties, and rights to expected residual gains or obligations to absorb expected residual losses that could be significant from the project. If the Company is deemed to be the primary beneficiary of a VIE, consolidation treatment would be required. The Company has no decision making authority or power to direct activity, except normal lender rights, which are subordinate to the senior loans on the projects. The Company has concluded that it is not the primary beneficiary of the borrowing entities and therefore it has not consolidated these entities in its consolidated financial statements. The Company's maximum exposure to loss from these loans is their drawn amount as of June 30, 2018 of approximately $376.1 million. The maximum aggregate amount of loans to be funded as of June 30, 2018 was approximately $512.8 million, which includes approximately $136.7 million of loan committed amounts not yet funded. The Company has evaluated its real estate loans, where appropriate, for accounting treatment as loans versus real estate development projects, as required by ASC 310. For each loan, the characteristics and the facts and circumstances indicate that loan accounting treatment is appropriate. The Company is also subject to a geographic concentration of risk that could be considered significant with regard to the Encore, Encore Capital, Bishop Street, Dawsonville Marketplace, 360 Forsyth, Morosgo, Morosgo Capital, TP Kennesaw and TP Kennesaw Capital loans, all of which are partially supporting proposed various real estate projects in or near Atlanta, Georgia. The drawn amount of these loans as of June 30, 2018 totaled approximately $96.9 million (with a total commitment amount of approximately $107.3 million) and in the event of a total failure to perform by the borrowers and guarantors, would subject the Company to a total possible loss of the drawn amount. Subordinate mortgage pool investment On May 23, 2018, the Company purchased a subordinate tranche of Series 2018-ML04, a pool of 20 multifamily mortgages with a total pool size of approximately $276.3 million, from the Federal Home Loan Mortgage Corporation, or "Freddie Mac". The purchase price of the subordinate tranche was approximately $4.7 million and has a weighted average maturity of approximately 16 years, at which time the Company will collect the face value of its tranche of $27.6 million. The yield to maturity of the subordinate tranche is approximately 11.5% per annum. The Company has evaluated the structure of the investment under the VIE rules and has determined that, due to the Company's position as directing certificate holder of 2018-ML04, it is in the position most able to influence the financial performance of the trust. As the subordinate tranche holder, the Company also holds the first loss position of 2018-ML04. As such, the Company is deemed to be the primary beneficiary of the VIE and has consolidated the assets, liabilities, revenues, expenses and cash flows of the entire trust in its consolidated financial statements as of and for the periods ended June 30, 2018. The Company's maximum exposure to loss is approximately $4.6 million. The Company has no recourse liability to either the creditors or other beneficial interest holders of 2018-ML04. |
Redeemable Preferred Stock |
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Redeemable Stock, Preferred [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred Stock [Text Block] | Redeemable Preferred Stock and Equity Offerings At June 30, 2018, the Company's active equity offerings consisted of:
Certain offering costs are specifically identifiable to offering closing transactions, such as commissions, dealer manager fees, and other registration fees. These costs are reflected as a reduction of stockholders' equity at the time of closing. Other offering costs are not related to specific closing transactions and are recognized as a reduction of stockholders' equity in the proportion of the number of instruments issued to the maximum number of Units anticipated to be issued. Any offering costs not yet reclassified as reductions of stockholders' equity are are reflected in the asset section of the consolidated balance sheets as deferred offering costs. As of June 30, 2018, cumulative gross proceeds and offering costs for our active equity offerings consisted of:
(1) A total of $150 million of the $300 million Shelf Offering is allocated exclusively to the 2016 ATM Offering. (2) These offering costs specifically identifiable to Unit offering closing transactions, such as commissions, dealer manager fees, and other registration fees, are reflected as a reduction of stockholders' equity at the time of closing. Aggregate offering expenses of the $1.5 Billion Unit Offering, including selling commissions and dealer manager fees, and of the mShares Offering, including dealer manager fees, are each individually capped at 11.5% of the aggregate gross proceeds of the two offerings, of which the Company will reimburse its Manager up to 1.5% of the gross proceeds of such offerings for all organization and offering expenses incurred, excluding selling commissions and dealer manager fees for the $1.5 Billion Unit Offering and excluding dealer manager fees for the mShares Offering; however, upon approval by the conflicts committee of the board of directors, the Company may reimburse its Manager for any such expenses incurred above the 1.5% amount as permitted by the Financial Industry Regulatory Authority, or FINRA. |
Related Party Transactions |
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Related Party Transactions Disclosure [Text Block] | Related Party Transactions On April 16, 2018, John A. Williams, the Company's Chief Executive Officer and Chairman of the Board, passed away. The Company's Haven 12, Haven 46, and Haven Charlotte real estate loans and the Haven Campus Communities' line of credit are supported in part by guaranties of repayment and performance by John A. Williams, Jr., John A. Williams' son. Because the terms of these loans were negotiated and agreed upon while John A. Williams was the Chief Executive Officer of the Company, these instruments will continue to be reported as related party transactions until the loans are repaid. The Company named Daniel M. DuPree as Chairman of the Board of Directors and Chief Executive Officer of the Company. Leonard A. Silverstein was named Vice Chairman of the Board of Directors and continues as the Company's President and Chief Operating Officer. As of June 30, 2018, Daniel M. DuPree and Leonard A. Silverstein are also executive officers and directors of NELL Partners, Inc., which controls the Manager. As of June 30, 2018, Mr. DuPree and Mr. Silverstein comprised the board of directors of Nell Partners, Inc. Mr. DuPree is the Chief Executive Officer and Mr. Silverstein is the President and Chief Operating Officer of the Manager. The Management Agreement entitles the Manager to receive compensation for various services it performs related to acquiring assets and managing properties on the Company's behalf:
The Manager may, in its discretion, waive some or all of the asset management, property management, or general and administrative fees for properties owned by the Company. The waived fees are converted at the time of waiver into contingent fees, which are earned by the Manager only in the event of a sales transaction, and whereby the Company’s capital contributions for the property being sold exceed a 7% annual rate of return. The Company will recognize in future periods to the extent, if any, it determines that the sales transaction is probable, and that the estimated net sale proceeds would exceed the annual rate of return hurdle. A cumulative total of approximately $8.5 million of combined asset management and general and administrative fees related to acquired properties as of June 30, 2018 have been waived by the Manager. A total of $7.7 million remains contingent and could possibly be earned by the Manager in the future. As of July 1, 2017, the Manager reduced the loan coordination fee from 1.6% to 0.6% of the amount of assumed, new or incremental debt which leverages acquired real estate assets. In addition, the Manager reinstated a 1% acquisition fee charged on the cost of acquired real estate assets, which had historically been charged prior to its replacement effective January 1, 2016 by the 1.6% loan coordination fee. These changes were put in place to reflect a shift in the efforts of the Manager in property acquisitions. In addition to property management fees, the Company incurred the following reimbursable on-site personnel salary and related benefits expenses at the properties, which are listed on the Consolidated Statements of Operations:
The Manager utilizes its own and its affiliates' personnel to accomplish certain tasks related to raising capital that would typically be performed by third parties, including, but not limited to, legal and marketing functions. As permitted under the Management Agreement, the Manager was reimbursed $238,538 and $220,182 for the six-month periods ended June 30, 2018 and 2017, respectively and Preferred Capital Securities, LLC, or PCS, was reimbursed $727,601 and $511,390 for the six-month periods ended June 30, 2018 and 2017, respectively. These costs are recorded as deferred offering costs until such time as additional closings occur on the $1.5 Billion Unit Offering, mShares Offering or the Shelf Offering, at which time they are reclassified on a pro-rata basis as a reduction of offering proceeds within stockholders’ equity. In addition to the fees described above, the Management Agreement also entitles the Manager to other potential fees, including a disposition fee of 1% of the sale price of a real estate asset. The Manager earned disposition fees totaling $434,500 for the six-month period ended June 30, 2018 on the sale of the Lake Cameron property, and $1,576,000 for the six-month period ended June 30, 2017 on the sale of the Ashford Park, Sandstone Creek and Enclave at Vista Ridge properties. These fees are included in the Gain on sale of real estate, net of disposition expenses line on the Consolidated Statements of Operations. The Manager also receives leasing commission fees. Retail leasing commission fees (a) for new retail leases are equal to the greater of (i) $4.00 per square foot, and (ii) 4.0% of the aggregate base rental payments to be made by the tenant for the first 10 years of the original lease term; and (b) for lease renewals are equal to the greater of (i) $2.00 per square foot, and (ii) 2.0% of the aggregate base rental payments to be made by the tenant for the first 10 years of the newly renewed lease term. There are no commissions payable on retail lease renewals thereafter. Office leasing commission fees (a) for new office leases are equal to 50.0% of the first month’s gross rent plus 2.0% of the remaining fixed gross rent on the guaranteed lease term, (b) in the event of co-broker participation in a new lease, the leasing commission determined for a new lease are equal to 150.0% of the first month’s gross rent plus 6% of the remaining fixed gross rent of the guaranteed lease term, and (c) for lease renewals, are equal to 2% of the fixed gross rent of the guaranteed lease term or, in the event of a co-broker, 6% of the fixed gross rent of the guaranteed lease term. Office leasing commission fees may not exceed market rates for office leasing services. The Company holds a promissory note in the amount of approximately $803,000 due from Preferred Capital Marketing Services, LLC, or PCMS, which is a wholly-owned subsidiary of NELL Partners. The Company has extended a revolving line of credit with a maximum borrowing amount of $18.0 million to its Manager. |
Dividends |
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Dividends [Text Block] | Dividends and Distributions The Company declares and pays monthly cash dividend distributions on its Series A Preferred Stock in the amount of $5.00 per share per month and beginning in March 2017, on its Series M Preferred Stock, on an escalating scale of $4.79 per month in year one, increasing to $6.25 per month in year eight and beyond. All preferred stock dividends are prorated for partial months at issuance as necessary. The Company declared quarterly cash dividends on its Common Stock of $0.505 and $0.455 per share for the six-month periods ended June 30, 2018 and 2017, respectively. The holders of Class A OP Units of the Operating Partnership are entitled to equivalent distributions as those declared on the Common Stock. At June 30, 2018, the Company had 1,070,103 Class A OP Units outstanding, which are exchangeable on a one-for-one basis for shares of Common Stock or the equivalent amount of cash. The Company's dividend and distribution activity consisted of:
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dividends and distributions [Text Block] | Dividends and Distributions The Company declares and pays monthly cash dividend distributions on its Series A Preferred Stock in the amount of $5.00 per share per month and beginning in March 2017, on its Series M Preferred Stock, on an escalating scale of $4.79 per month in year one, increasing to $6.25 per month in year eight and beyond. All preferred stock dividends are prorated for partial months at issuance as necessary. The Company declared quarterly cash dividends on its Common Stock of $0.505 and $0.455 per share for the six-month periods ended June 30, 2018 and 2017, respectively. The holders of Class A OP Units of the Operating Partnership are entitled to equivalent distributions as those declared on the Common Stock. At June 30, 2018, the Company had 1,070,103 Class A OP Units outstanding, which are exchangeable on a one-for-one basis for shares of Common Stock or the equivalent amount of cash. The Company's dividend and distribution activity consisted of:
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Equity Compensation |
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Equity Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | Equity Compensation Stock Incentive Plan On February 25, 2011, the Company’s board of directors adopted, and the Company’s stockholders approved, the Preferred Apartment Communities, Inc. 2011 Stock Incentive Plan to incentivize, compensate and retain eligible officers, consultants, and non-employee directors. On May 7, 2015, the Company's stockholders approved the third amendment to the Preferred Apartment Communities, Inc. 2011 Stock Incentive Plan, or, as amended, the 2011 Plan, which amendment increased the aggregate number of shares of Common Stock authorized for issuance under the 2011 Plan from 1,317,500 to 2,617,500 and extended the expiration date of the 2011 Plan to December 31, 2019. Equity compensation expense by award type for the Company was:
Restricted Stock Grants The following annual grants of restricted stock were made to members of the Company's independent directors, as payment of the annual retainer fees. The restricted stock grants for the 2016, 2017 and 2018 service years vested (or are scheduled to vest) on a pro-rata basis over the four consecutive 90-day periods following the date of grant.
Class B OP Units On January 4, 2016, the Company caused the Operating Partnership to grant 265,931 Class B Units of the Operating Partnership or Class B OP units, for service to be rendered during 2016, 2017 and 2018. On January 3, 2017, the Company caused the Operating Partnership to grant 286,392 Class B OP Units, for service to be rendered during 2017, 2018 and 2019. On January 2, 2018, the Company caused the Operating Partnership to grant 256,087 Class B OP Units, for service to be rendered during 2018, 2019 and 2020. On January 2, 2018, John A. Williams, the late Chief Executive Officer of the Company, was granted 53,746 Class B OP Units. On April 16, 2018, Mr. Williams passed away and his granted Class B OP Units were modified on a pro-rata basis as of the date of his death. Of the 53,746 Class B OP Units granted to Mr. Williams, 38,284 Class B OP Units with a total fair value of approximately $638,000 were forfeited. The remaining 15,462 Class B OP Units will become Vested Class B Units on January 2, 2019, and will remain subject to the earning provision of all Class B Unit grants in order to convert to Class A OP Units. Because of the market condition vesting requirement that determines the transition of the Vested Class B Units to Earned Class B Units, a Monte Carlo simulation was utilized to calculate the total fair values, which will be amortized as compensation expense over the periods beginning on the grant dates through the Initial Valuation Dates. On January 3, 2017, all of the 265,931 Class B OP Units granted on January 3, 2016 became earned and 206,534 automatically vested and converted to Class A Units. Of the remaining earned Class B OP Units, 29,699 vested and automatically converted to Class A Units on January 2, 2018 and the final 29,698 earned Class B OP Units will vest and automatically convert to Class A Units on January 2, 2019, assuming each grantee fulfills the requisite service requirement. On January 2, 2018, all of the 286,392 Class B OP Units granted on January 2, 2017 became vested and 227,599 automatically became earned and converted to Class A Units. Of the remaining earned Class B OP Units, 29,401 will vest and automatically convert to Class A Units on January 2, 2019 and the final 29,392 earned Class B OP Units will vest and automatically convert to Class A Units on January 2, 2020, assuming each grantee fulfills the requisite service requirement. The underlying valuation assumptions and results for the Class B OP Unit awards were:
The expected dividend yield assumptions were derived from the Company’s closing prices of the Common Stock on the grant dates and the projected future quarterly dividend payments per share of $0.22 for the 2017 awards and $0.25 for the 2018 awards. For the 2017 and 2018 awards, the Company's own stock price history was utilized as the basis for deriving the expected volatility assumption. The risk-free rate assumptions were obtained from the Federal Reserve yield table and were calculated as the interpolated rate between the 20 and 30 year yield percentages on U. S. Treasury securities on the grant dates. Since the Class B OP Units have no expiration date, a derived service period of one year was utilized, which equals the period of time from the grant date to the initial valuation date. Restricted Stock Units On January 3, 2017, the Company caused the Operating Partnership to grant 26,900 restricted stock units, or RSUs to certain employees of affiliates of the Company, for service to be rendered during 2017, 2018 and 2019. On January 2, 2018, the Company caused the Operating Partnership to grant 20,720 restricted stock units, or RSUs, for service to be rendered during 2018, 2019 and 2020. The RSUs vest in three equal consecutive one-year tranches from the date of grant. For each grant, on the Initial Valuation Date, the market capitalization of the number of shares of Common Stock at the date of grant is compared to the market capitalization of the same number of shares of Common Stock at the Initial Valuation Date. If the market capitalization measure results in an increase which exceeds the target market threshold, the Vested RSUs become earned RSUs and automatically convert into Common Stock on a one-to-one basis. Vested RSUs may become Earned RSUs on a pro-rata basis should the result of the market capitalization test be an increase of less than the target market threshold. Any Vested RSUs that do not become Earned RSUs on the Initial Valuation Date are subsequently remeasured on a quarterly basis until such time as all Vested RSUs become Earned RSUs or are forfeited due to termination of continuous service due to an event other than as a result of a qualified event, which is generally the death or disability of the holder. Continuous service through the final valuation date is required for the Vested RSUs to qualify to become fully Earned RSUs. Because RSUs are valued using the identical market condition vesting requirement that determines the transition of the Vested Class B Units to Earned Class B Units, the same valuation assumptions and Monte Carlo result of $16.66 and $11.92 per RSU were utilized to calculate the total fair values of the RSUs of $345,195 and $320,648 for the 2018 and 2017 grants, respectively. The total fair value amounts pertaining to grants of RSUs, net of forfeitures, are amortized as compensation expense over the three one-year periods ending on the three successive anniversaries of the grant dates. As of June 30, 2018, a total of 4,760 RSUs have been forfeited from the 2017 grant and a total of 880 RSUs have been forfeited from the 2018 grant. |
Indebtedness |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Text Block] | Indebtedness Mortgage Notes Payable Mortgage Financing of Property Acquisitions The Company partially financed the real estate properties acquired during the six-month period ended June 30, 2018 with mortgage debt as shown in the following table:
(1) Anderson Central was acquired in 2016 and subsequent financing was obtained in March 2018. (2) The mortgage for the Retreat at Orlando was assumed at acquisition. Repayments and Refinancings The sale of Lake Cameron on March 20, 2018 resulted in $0.4 million of debt defeasance related costs, which were netted against the gain on the sale of the property. The sale of Sandstone Creek on January 20, 2017, resulted in $1.4 million of debt defeasance related costs. The sale of Ashford Park on March 7, 2017, resulted in $1.1 million of debt defeasance related costs plus a prepayment premium of approximately $0.4 million, which were netted against the gain on the sale of the property. On March 29, 2018, the Company refinanced the mortgage on its Sol student housing property. A short-term bridge loan was used to replace the mortgage being held on the Acquisition Facility. The mortgage principal balance of approximately $37.5 million remained the same under the new financing arrangement, and the existing variable interest rate decreased 10 basis points, to 210 basis points over LIBOR. As a result of the refinance, the Company incurred expenses of approximately $41,000, which are included within the Interest Expense line of the Consolidated Statements of Operations. The following table summarizes our mortgage notes payable at June 30, 2018:
The Company has placed interest rate caps on the variable rate mortgages on its Avenues at Creekside and Citi Lakes multifamily communities. Under guidance provided by ASC 815-10, these interest rate caps fall under the definition of derivatives, which are embedded in their debt hosts. Because these interest rate caps are deemed to be clearly and closely related to their debt hosts, bifurcation and fair value accounting treatment is not required. The mortgage note secured by our Independence Square property is a seven year term with an anticipated repayment date of September 1, 2022. If the Company elects not to pay its principal balance at the anticipated repayment date, the term will be extended for an additional five years, maturing on September 1, 2027. The interest rate from September 1, 2022 to September 1, 2027 will be the greater of (i) the Initial Interest Rate of 3.93% plus 200 basis points or (ii) the yield on the seven year U.S. treasury security rate plus approximately 400 basis points. The mortgage note secured by our Royal Lakes Marketplace property has a maximum commitment of approximately $11.1 million. As of June 30, 2018, the Company has an outstanding principal balance of $9.6 million on this loan. Additional advances of the mortgage commitment will be drawn as the Company achieves incremental leasing benchmarks specified under the loan agreement. This mortgage has a variable interest of 1 Month LIBOR plus 250 basis points, which was 4.48% as of June 30, 2018. The mortgage note secured by our Champions Village property has a maximum commitment of approximately $34.2 million. As of June 30, 2018, the Company has an outstanding principal balance of $27.4 million. Additional advances of the mortgage commitment will be drawn as the Company achieves leasing activity, if elected by the Company. Additional advances are available through October 2019. This mortgage note has a variable interest of the greater of (i) 3.25% or (ii) the sum of the 3.00% plus the LIBOR Rate, which was 4.99% as of June 30, 2018. As of June 30, 2018, the weighted-average remaining life of deferred loan costs related to the Company's mortgage indebtedness was approximately 8.7 years. Credit Facility The Company has a credit facility, or Credit Facility, with KeyBank National Association, or KeyBank, which defines a revolving line of credit, or Revolving Line of Credit, which is used to fund investments, capital expenditures, dividends (with consent of KeyBank), working capital and other general corporate purposes on an as needed basis. The maximum borrowing capacity on the Revolving Line of Credit was increased to $200 million pursuant to an accordion feature within the Fourth Amended and Restated Credit Agreement, as amended on March 23, 2018, but effective as of April 13, 2018, or the Amended and Restated Credit Agreement. The accordion feature permits the maximum borrowing capacity to be expanded or contracted without amending any further terms of the instrument. The Revolving Line of Credit accrues interest at a variable rate of one month LIBOR plus 3.25% per annum and matures on August 5, 2019, with an option to extend the maturity date to August 5, 2020, subject to certain conditions described therein. The weighted average interest rate for the Revolving Line of Credit was 5.05% for the six-month period ended June 30, 2018. The Revolving Line of Credit also bears a commitment fee on the average daily unused portion of the Revolving Line of Credit of 0.35% per annum. On May 26, 2016, the Company entered into a $11.0 million interim term loan with KeyBank, or the Interim Term Loan, to partially finance the acquisition of Anderson Central, a grocery-anchored shopping center located in Anderson, South Carolina. The Interim Term Loan accrued interest at a rate of LIBOR plus 2.5% per annum until it was repaid and extinguished during the first quarter 2018. The Fourth Amended and Restated Credit Agreement contains certain affirmative and negative covenants, including negative covenants that limit or restrict secured and unsecured indebtedness, mergers and fundamental changes, investments and acquisitions, liens and encumbrances, dividends, transactions with affiliates, burdensome agreements, changes in fiscal year and other matters customarily restricted in such agreements. The amount of dividends that may be paid out by the Company is restricted to a maximum of 95% of AFFO for the trailing rolling four quarters without the lender's consent; solely for purposes of this covenant, AFFO is calculated as earnings before interest, taxes, depreciation and amortization expense, plus reserves for capital expenditures, less normally recurring capital expenditures, less consolidated interest expense. As of June 30, 2018, the Company was in compliance with all covenants related to the Revolving Line of Credit, as shown in the following table:
(1) All covenants are as defined in the credit agreement for the Revolving Line of Credit. (2) Minimum of $686.9 million plus 75% of the net proceeds of any equity offering, which totaled approximately $1.35 billion as of June 30, 2018. (3) Calculated on a trailing four-quarter basis. For the twelve-month period ended June 30, 2018, the maximum dividends and distributions allowed under this covenant was approximately $120.1 million. Loan fees and closing costs for the establishment and subsequent amendments of the Credit Facility are amortized utilizing the straight line method over the life of the Credit Facility. At June 30, 2018, unamortized loan fees and closing costs for the Credit Facility were approximately $1.1 million, which will be amortized over a remaining loan life of approximately 1.2 years. Loan fees and closing costs for the mortgage debt on the Company's properties are amortized utilizing the effective interest rate method over the lives of the loans. Acquisition Facility On February 28, 2017, the Company entered into a credit agreement, or Acquisition Credit Agreement, with Freddie Mac through KeyBank to obtain an acquisition revolving credit facility, or Acquisition Facility, with a maximum borrowing capacity of $200 million. The purpose of the Acquisition Facility is to finance acquisitions of multifamily communities and student housing communities. The maximum borrowing capacity on the Acquisition Facility may be increased at the Company's request up to $300 million at any time prior to March 1, 2021. The Acquisition Facility accrues interest at a variable rate of one month LIBOR plus a margin of between 1.75% per annum and 2.20% per annum, depending on the type of assets acquired and the resulting property debt service coverage ratio. The Acquisition Facility has a maturity date of March 1, 2022 and has two one-year extension options, subject to certain conditions described therein. At June 30, 2018, unamortized loan fees and closing costs for the establishment of the Acquisition Facility were approximately $0.3 million, which will be amortized over a remaining loan life of approximately 3.8 years. Interest Expense Interest expense, including amortization of deferred loan costs was:
Future Principal Payments The Company’s estimated future principal payments due on its debt instruments as of June 30, 2018 were:
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Income Taxes |
6 Months Ended |
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Jun. 30, 2018 | |
Income Taxes [Abstract] | |
Income Tax Disclosure [Text Block] | Income Taxes The Company elected to be taxed as a REIT effective with its tax year ended December 31, 2011, and therefore, the Company will not be subject to federal and state income taxes after this effective date, so long as it distributes 100% of the Company's annual REIT taxable income (which does not equal net income as calculated in accordance with GAAP and determined without regard for the deduction for dividends paid and excluding net capital gains) to its shareholders. For the period preceding this election date, the Company's operations resulted in a tax loss. As of December 31, 2010, the Company had deferred federal and state tax assets totaling approximately $298,100, none of which were based upon tax positions deemed to be uncertain. These deferred tax assets will most likely not be used since the Company elected REIT status; therefore, management has determined that a 100% valuation allowance is appropriate as of June 30, 2018 and December 31, 2017. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies Disclosure [Text Block] | Commitments and Contingencies On March 28, 2014, the Company entered into a payment guaranty in support of its Manager's eleven-year office lease, which began on October 9, 2014. As of June 30, 2018, the amount guarantied by the Company was $6.1 million and is reduced by $619,304 per lease year over the term of the lease. Certain officers and employees of the Manager have been assigned company credit cards. As of June 30, 2018, the Company guarantied up to $640,000 on these credit cards. The Company is otherwise currently subject to neither any known material commitments or contingencies from its business operations, nor any material known or threatened litigation. A total of approximately $8.5 million of asset management and general and administrative fees related to acquired properties as of June 30, 2018 have been waived by the Manager. The waived fees are converted at the time of waiver into contingent fees, which are earned by the Manager only in the event of a sales transaction, and whereby the Company’s capital contributions for the property being sold exceed a 7% annual rate of return. The Company will recognize in future periods to the extent, if any, it determines that the sales transaction is probable, and that the estimated net sale proceeds would exceed the annual rate of return hurdle. As of June 30, 2018, a total of $7.7 million remains contingent and could possibly be earned by the Manager in the future. At June 30, 2018, the Company had unfunded balances on its real estate loan portfolio of approximately $136.7 million. At June 30, 2018, the Company had unfunded contractual commitments for tenant improvements of approximately $1.9 million. |
Segment information |
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Segment Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting Disclosure [Text Block] | Segment Information The Company's Chief Operating Decision Maker, or CODM, evaluates the performance of the Company's business operations and allocates financial and other resources by assessing the financial results and outlook for future performance across five distinct segments: multifamily communities, student housing properties, real estate related financing, New Market Properties and Preferred Office Properties. Multifamily Communities - consists of the Company's portfolio of owned residential multifamily communities Student Housing Properties - consists of the Company's portfolio of owned student housing properties. Financing - consists of the Company's portfolio of real estate loans, bridge loans, and other instruments deployed by the Company to partially finance the development, construction, and prestabilization carrying costs of new multifamily communities and other real estate and real estate related assets, as well as the Company's investment in the Series 2018-ML04 mortgage-backed pool. Excluded from the financing segment are financial results of the Company's Dawson Marketplace grocery-anchored shopping center real estate loan, which are included in the New Market Properties segment. New Market Properties - consists of the Company's portfolio of grocery-anchored shopping centers, which are owned by New Market Properties, LLC, a wholly-owned subsidiary of the Company, as well as the financial results from the Company's grocery-anchored shopping center real estate loans. Preferred Office Properties - consists of the Company's portfolio of office buildings. The CODM monitors net operating income (“NOI”) on a segment and a consolidated basis as a key performance measure for its operating segments. NOI is defined as rental and other property revenue from real estate assets plus interest income from its loan portfolio less total property operating and maintenance expenses, property management fees, real estate taxes, property insurance, and general and administrative expenses. The CODM uses NOI as a measure of operating performance because it provides a measure of the core operations, rather than factoring in depreciation and amortization, financing costs, acquisition expenses, and other expenses generally incurred at the corporate level. The following tables present the Company's assets, revenues, and NOI results by reportable segment, as well as a reconciliation from NOI to net income (loss). The assets attributable to 'Other' primarily consist of deferred offering costs recorded but not yet reclassified as reductions of stockholders' equity and cash balances at the Company and Operating Partnership levels. As of June 30, 2018, the Company's student housing properties segment is presented separately because the assets of the student housing properties segment exceeded 10% of the Company's consolidated assets. Prior period data has been adjusted from that which was previously reported to reflect this development. In prior periods, student housing properties and multifamily communities were combined.
Total capitalized expenditures (inclusive of additions to construction in progress, but exclusive of the purchase price of acquisitions) for the three months and six months ended June 30, 2018 and 2017 were as follows:
Second-generation capital expenditures exclude those expenditures made in our office building portfolio (i) to lease space to "first generation" tenants (i.e. leasing capital for existing vacancies and known move-outs at the time of acquisition), (ii) to bring recently acquired properties up to our Class A ownership standards (and which amounts were underwritten into the total investment at the time of acquisition), (iii) for property re-developments and repositionings and (iv) for building improvements that are recoverable from future operating cost savings.
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Loss per Share |
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Loss per share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Text Block] | The following is a reconciliation of weighted average basic and diluted shares outstanding used in the calculation of income (loss) per share of Common Stock:
(A) The Company's outstanding Class A Units of the Operating Partnership (1,070 and 902 Units at June 30, 2018 and 2017, respectively) contain rights to distributions in the same amount per unit as for dividends declared on the Company's Common Stock. The impact of the Class A Unit distributions on earnings per share has been calculated using the two-class method whereby earnings are allocated to the Class A Units based on dividends declared and the Class A Units' participation rights in undistributed earnings. (B) The Company’s shares of Series A Preferred Stock outstanding accrue dividends at an annual rate of 6% of the stated value of $1,000 per share, payable monthly. The Company had 1,418 and 1,044 outstanding shares of Series A Preferred Stock at June 30, 2018 and 2017, respectively. The Company's shares of Series M preferred stock, or mShares, accrue dividends at an escalating rate of 5.75% in year one to 7.50% in year eight and thereafter. The Company had 29 mShares outstanding at June 30, 2018. (C) The Company's outstanding unvested restricted share awards (25 and 24 shares of Common Stock at June 30, 2018 and 2017, respectively) contain non-forfeitable rights to distributions or distribution equivalents. The impact of the unvested restricted share awards on earnings per share has been calculated using the two-class method whereby earnings are allocated to the unvested restricted share awards based on dividends declared and the unvested restricted shares' participation rights in undistributed earnings. Given the Company incurred a net loss from continuing operations for the three-month and six-month periods ended June 30, 2018 and 2017, the dividends declared for that period are adjusted in determining the calculation of loss per share of Common Stock since the unvested restricted share awards are defined as participating securities. (D) Potential dilution from (i) warrants outstanding from issuances of Units from our Series A Preferred Stock offerings that are potentially exercisable into 19,805 shares of Common Stock; (ii) 1,070 Class B Units; (iii) 25 shares of unvested restricted common stock; and (iv) 34 outstanding Restricted Stock Units are excluded from the diluted shares calculations because the effect was antidilutive. Class A Units were excluded from the denominator because earnings were allocated to non-controlling interests in the calculation of the numerator. |
Fair Values of Financial Instruments |
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Fair Values of Financial Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Text Block] | Fair Values of Financial Instruments Fair value is defined as the price at which an asset or liability is exchanged between market participants in an orderly transaction at the reporting date. The Company’s cash equivalents, notes receivable, accounts receivable and payables and accrued expenses all approximate fair value due to their short term nature. The following tables provide estimated fair values of the Company’s financial instruments. The carrying values of the Company's real estate loans include accrued interest receivable from additional interest or exit fee provisions and are presented net of deferred loan fee revenue, where applicable.
(1) The carrying value of real estate assets includes the Company's balance of the Palisades and Encore real estate loan investments, which includes the amounts funded by unrelated participants. The loan participation obligations are the amounts due to the participants under these arrangements. Accrued interest included in the carrying values of the Company's loan participation obligations was approximately $1.3 million and $1.5 million at June 30, 2018 and December 31, 2017, respectively. The following table presents activity of the ML-04 VIE for the three-month and six-month period ended June 30, 2018:
The following table presents the level 3 input used to calculate the fair value of the consolidated assets and liabilities of the ML-04 VIE:
The following table presents the estimated fair values of the consolidated assets and liabilities from the ML-04 VIE, for which the Company has elected the fair value option.
Disclosure guidance under GAAP requires the Company to determine whether the fair value of the financial assets or the fair value of the financial liabilities of the ML-04 trust is more observable. The VIE assets within the ML-04 Trust consist of mortgage loans which finance 20 multifamily communities. The fair value of the VIE assets within the level 3 hierarchy are comprised of the fair value of the mortgages as estimated by the Company, which were developed utilizing a discounted cash flow model over the remaining terms of the mortgages until their maturity dates and utilizing discount rates believed to approximate the market risk factor for instruments of similar type and duration. The fair value of the notes are categorized within the level 3 hierarchy of fair value estimation as the discount rate primary input assumption is unobservable. |
Subsequent Events |
6 Months Ended |
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Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | Subsequent Events Between July 1, 2018 and July 30, 2018, the Company issued 34,234 Units and collected net proceeds of approximately $30.8 million after commissions and fees under its $1.5 Billion Unit Offering. Between July 1, 2018 and July 30, 2018, the Company issued 1,654 shares of Series M Preferred Stock and collected net proceeds of approximately $1.6 million after commissions and fees under the mShares offering. On July 6, 2018, the Company acquired a grocery-anchored shopping center located in the Charlotte, North Carolina MSA comprising 122,028 square feet of gross leasable area. The allocation of this transaction to the fair value of individual assets and liabilities is not presented as the calculations of the allocation were not complete at the date of filing of this report. On August 2, 2018, the Company's board of directors declared a quarterly dividend on our Common Stock of $0.255 per share, payable on October 15, 2018 to stockholders of record on September 14, 2018. On July 31, 2018, the Company acquired a Class A office building located in Raleigh, North Carolina comprising 559,591 feet of gross leasable area. |
Significant Accounting Policies Basis of Presentation (Policies) |
6 Months Ended |
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Jun. 30, 2018 | |
Summary of Significant Accounting Policies [Abstract] | |
Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block] | |
Discontinued Operations, Policy [Policy Text Block] | |
Goodwill and Intangible Assets, Policy [Policy Text Block] | |
Revenue Recognition Leases, Operating [Policy Text Block] | |
New Accounting Pronouncements, Policy [Policy Text Block] | New Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update 2014-09 ("ASU 2014-09"), Revenue from Contracts with Customers (Topic 606). ASU 2014-09 provides a single comprehensive revenue recognition model for contracts with customers (excluding certain contracts, such as lease contracts) to improve comparability within industries. ASU 2014-09 requires an entity to recognize revenue to reflect the transfer of goods or services to customers at an amount the entity expects to be paid in exchange for those goods and services and provide enhanced disclosures, all to provide more comprehensive guidance for transactions such as service revenue and contract modifications. The new standard may be applied retrospectively to each prior period presented or prospectively with the cumulative effect, if any, recognized as of the date of adoption. The Company adopted the new standard on January 1, 2018 utilizing the modified retrospective transition method with a cumulative effect recognized as of the date of adoption. In addition, the evaluation of non-lease components under ASU 2014-09 will not be effective until Accounting Standards Update No. 2016-02, Leases (Topic 842), ("ASU 2016-02") becomes effective (see further discussion below), which will be January 1, 2019 for the Company. The Company has determined that approximately 90% of its consolidated revenues are derived from either long-term leases with its tenants and reimbursement of related property tax and insurance expenses (considered executory costs of leases) or its mezzanine loan interest income, which are excluded from the scope of the ASU 2014-09. Of the remaining approximately 10% of the Company’s revenues, the majority is comprised of common area maintenance ("CAM") reimbursements and utility reimbursements, which are non-lease components. The Company has concluded that the adoption of ASU 2014-09 will have no material effect upon the timing of the recognition of reimbursement revenue and other miscellaneous income. The Company also evaluated its amenity and ancillary services to its multifamily and student housing residents and does not expect the timing and recognition of revenue to change as a result of implementing ASU 2014-09. Additional required disclosures regarding the nature and timing of the Company's revenue transactions will be provided upon adoption of ASU 2016-02. In July 2018, the FASB issued Accounting Standards Update 2018-11 (“ASU 2018-11”), which provides lessors with a practical expedient in combining lease and non-lease components, if certain criteria are met. The Company believes that adoption of the practical expedient will result in changes in presentation and disclosure of revenue being combined into one revenue component, but will have no material effect on the timing of revenue recognition. In January 2016, the FASB issued Accounting Standards Update 2016-01 ("ASU 2016-01"), Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Liabilities. The new standard's applicable provisions to the Company include an elimination of the disclosure requirement of the significant inputs and assumptions underlying the fair value calculations of its financial instruments which are carried at amortized cost. The Company adopted ASU 2016-01 on January 1, 2018. The adoption of ASU 2016-01 did not impact the Company's results of operations or financial condition but did reduce the required disclosures concerning financial instruments. In February 2016, the FASB issued Accounting Standards Update 2016-02 ("ASU 2016-02"), Leases (ASC 842), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessees and lessors). The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases and supersedes the previous standard, ASC 840 Leases. The standard is effective on January 1, 2019, with early adoption permitted. The new lease guidance requires an entity to separate lease components from non-lease components, such as maintenance services or other activities that transfer a good or service to our residents and tenants in a contract; it also considers the reimbursement of real estate taxes and insurance as executory costs of the lease and requires that such amounts be consolidated with the base rent revenue. For lessors, the consideration in the contract is allocated to the lease and non-lease components on a relative standalone price basis in accordance with the allocation guidance in the new revenue standard. The Company concluded that adoption of ASU 2016-02 does not change the timing of revenue recognition over the lease component, which remains over a straight line method, though the reimbursement of property tax and insurance, considered executory costs of leasing, will be combined with the base rent revenue and presented within rental income instead of other income within the Company’s income statement. Non-lease components are evaluated under ASU 2014-09, Revenue from Contracts with Customers (Topic 606), discussed above. In its March 2018 meeting, the FASB approved a practical expedient for lessors to elect, by class of underlying assets, to not separate lease and non-lease components if both (1) the timing and pattern of revenue recognition are the same for the non-lease component(s) and related lease component and (2) the combined single lease component would be classified as an operating lease. The Company anticipates adopting ASC 842 utilizing this practical expedient as it relates to its common area maintenance services. In June 2016, the FASB issued Accounting Standards Update 2016-13 ("ASU 2016-13"), Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The new standard requires financial instruments carried at amortized cost to be presented at the net amount expected to be collected, utilizing a valuation account which reflects the cumulative net adjustments from the gross amortized cost value. Under existing GAAP, entities would not record a valuation allowance until a loss was probable of occurring. The standard will become effective for the Company on January 1, 2020. The Company is currently evaluating methods of deriving initial valuation accounts to be applied to its real estate loan investment portfolio and is also revising its policies for credit losses on resident and tenant receivables to comply with the expected credit loss model under this guidance. The Company is continuing to evaluate the pending guidance to gauge the materiality of the impact, if any, on its results of operations or financial condition. In August 2016, the FASB issued Accounting Standards Update 2016-15 ("ASU 2016-15"), Statement of Cash Flows—(Topic 326): Classification of Certain Cash Receipts and Cash Payments. The new standard clarifies or establishes guidance for the presentation of various cash transactions on the statement of cash flows. The portion of the guidance applicable to the Company's business activities include the requirement that cash payments for debt prepayment or debt extinguishment costs be presented as cash out flows for financing activities. The Company adopted ASU 2016-15 on January 1, 2018. The adoption of ASU 2016-15 did not impact the Company’s consolidated financial statements, since its current policy is to classify such costs as cash out flows for financing activities. In November 2016, the FASB issued Accounting Standards Update 2016-18 ("ASU 2016-18"), Statement of Cash Flows—(Topic 230): Restricted Cash, which requires restricted cash to be presented with cash and cash equivalents when reconciling the beginning and ending amounts in the statements of cash flows. The Company adopted ASU 2016-18 on January 1, 2018 and its adoption of ASU 2016-18 did not impact its results of operations or financial condition, but did change the line upon which changes in restricted cash are presented. In February 2017, the FASB issued Accounting Standards Update 2017-05 (“ASU 2017-05”), Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets, which provides guidance for recognizing gains and losses from the transfer of nonfinancial assets and for partial sales of nonfinancial assets, and is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2017. The Company adopted this guidance on January 1, 2018. The new standard clarifies that an entity should identify each distinct nonfinancial asset or in substance nonfinancial asset promised to a counterparty and derecognize each asset when a counterparty obtains control of it. The amendments also clarify that an entity should allocate consideration to each distinct asset by applying the guidance in Topic 606 on allocating the transaction price to performance obligations for sales to customers. The Company’s sales of nonfinancial real estate assets are generally made to non-customers, which is a scope exception under Topic 606. The Company elected to adopt this practical expedient and the proceeds from real estate sales continue to be recognized as gain or loss on sale of real estate in the Consolidated Statement of Operations. |
Real Estate Assets (Tables) |
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Business Acquisition | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination Disclosure | Real Estate Assets The Company's real estate assets consisted of:
Multifamily communities sold On March 20, 2018, the Company closed on the sale of its 328-unit multifamily community in Raleigh, North Carolina, or Lake Cameron, to an unrelated third party for a purchase price of approximately $43.5 million, exclusive of closing costs and resulting in a gain of $20.4 million. Lake Cameron contributed approximately $0.2 million and $0.2 million of net income to the consolidated operating results of the Company for the six-month periods ended June 30, 2018 and 2017, respectively. On January 20, 2017, the Company closed on the sale of its 364-unit multifamily community in Kansas City, Kansas, or Sandstone Creek, to an unrelated third party for a purchase price of $48.1 million, exclusive of closing costs and resulting in a gain of $0.3 million. Sandstone Creek contributed approximately $0.1 million of net loss to the consolidated operating results of the Company for the six-month period ended June 30, 2017. On March 7, 2017, the Company closed on the sale of its 408-unit multifamily community in Atlanta, Georgia, or Ashford Park, to an unrelated third party for a purchase price of $65.5 million, exclusive of closing costs and resulting in a gain of $30.4 million. Ashford Park contributed approximately $0.4 million of net income to the consolidated operating results of the Company for the six-month period ended June 30, 2017. On May 25, 2017, the Company closed on the sale of its 300-unit multifamily community in Dallas, Texas, or Enclave at Vista Ridge, to an unrelated third party for a purchase price of $44.0 million, exclusive of closing costs and resulting in a gain of $6.9 million. Enclave at Vista Ridge contributed approximately $(0.1) million of net loss to the consolidated operating results of the Company for the six-month period ended June 30, 2017. Each of the gains recorded for these sales transactions were net of disposition expenses and debt defeasance-related costs and prepayment premiums, as described in Note 9. The carrying amounts of the significant assets and liabilities of the disposed properties at the dates of sale were:
Multifamily communities acquired During the six-month periods ended June 30, 2018 and 2017, the Company completed the acquisition of the following multifamily communities:
The aggregate purchase price of the multifamily acquisitions for the six months ended June 30, 2018 was approximately $106.5 million. The aggregate purchase price of the multifamily acquisitions for the six months ended June 30, 2017 was approximately $187.0 million. Purchase prices shown are exclusive of acquired escrows, security deposits, prepaids, capitalized acquisition costs and other miscellaneous assets and assumed liabilities. |
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schedule of depreciation and amortization expense [Table Text Block] |
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real estate sold [Table Text Block] | The carrying amounts of the significant assets and liabilities of the disposed properties at the dates of sale were:
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real estate owned [Table Text Block] | The Company's real estate assets consisted of:
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multifamily community [Domain] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination Disclosure |
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Table of Properties Acquired | During the six-month periods ended June 30, 2018 and 2017, the Company completed the acquisition of the following multifamily communities:
The aggregate purchase price of the multifamily acquisitions for the six months ended June 30, 2018 was approximately $106.5 million. The aggregate purchase price of the multifamily acquisitions for the six months ended June 30, 2017 was approximately $187.0 million. Purchase prices shown are exclusive of acquired escrows, security deposits, prepaids, capitalized acquisition costs and other miscellaneous assets and assumed liabilities. |
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student housing community [Domain] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisition | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination Disclosure | The Company allocated the purchase prices and capitalized acquisition costs to the acquired assets and liabilities based upon their fair values, as shown in the following table. The purchase price allocations were based upon the Company's best estimates of the fair values of the acquired assets and liabilities.
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Table of Properties Acquired | During the six-month periods ended June 30, 2018 and 2017, the Company completed the acquisition of the following student housing properties:
The aggregate purchase price of the student housing acquisitions for the six months ended June 30, 2018 was approximately $197.0 million. The aggregate purchase price of the student housing acquisitions for the six months ended June 30, 2017 was approximately $53.3 million. Purchase prices shown are exclusive of acquired escrows, security deposits, prepaids, capitalized acquisition costs and other miscellaneous assets and assumed liabilities. |
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Retail Segment [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Business Combination Disclosure | Preferred Office Properties On January 29, 2018, the Company acquired Armour Yards, a collection of four adaptive re-use office buildings comprised of approximately 187,000 square feet of office space in Atlanta, Georgia. The gross purchase price was $66.5 million, exclusive of credited unfunded leasing costs, security deposits, prepaids, capitalized acquisition costs and other miscellaneous assets and assumed liabilities. The Company allocated the purchase prices and capitalized acquisition costs to the acquired assets and liabilities based upon their fair values, as shown in the following table. The purchase price allocations were based upon the Company's best estimates of the fair values of the acquired assets and liabilities.
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Real Estate Loans, Notes Receivable, and Lines of Credit Real estate loans (Tables) |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block] |
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Notes receivable [Table Text Block] | ur portfolio of notes and lines of credit receivable consisted of:
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interest income [Table Text Block] | The Company recorded interest income and other revenue from these instruments as follows:
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Redeemable Preferred Stock Proceeds and offering costs (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stockholders Equity [Table Text Block] | As of June 30, 2018, cumulative gross proceeds and offering costs for our active equity offerings consisted of:
(1) A total of $150 million of the $300 million Shelf Offering is allocated exclusively to the 2016 ATM Offering. (2) These offering costs specifically identifiable to Unit offering closing transactions, such as commissions, dealer manager fees, and other registration fees, are reflected as a reduction of stockholders' equity at the time of closing. Aggregate offering expenses of the $1.5 Billion Unit Offering, including selling commissions and dealer manager fees, and of the mShares Offering, including dealer manager fees, are each individually capped at 11.5% of the aggregate gross proceeds of the two offerings, of which the Company will reimburse its Manager up to 1.5% of the gross proceeds of such offerings for all organization and offering expenses incurred, excluding selling commissions and dealer manager fees for the $1.5 Billion Unit Offering and excluding dealer manager fees for the mShares Offering; however, upon approval by the conflicts committee of the board of directors, the Company may reimburse its Manager for any such expenses incurred above the 1.5% amount as permitted by the Financial Industry Regulatory Authority, or FINRA. |
Related Party Transactions (Tables) |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Related Party Transactions [Table Text Block] |
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Dividends (Tables) |
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dividend activity [Table Text Block] | The Company's dividend and distribution activity consisted of:
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Dividends Series A Preferred Stock (Tables) |
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Series A Preferred Stock [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
dividend activity [Table Text Block] | The Company's dividend and distribution activity consisted of:
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Dividends Class A Distributions (Tables) |
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partnership unit distributions [Table Text Block] |
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Dividends Dividend characterization (Tables) |
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Dividend characterization [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
dividends and distributions [Text Block] | Dividends and Distributions The Company declares and pays monthly cash dividend distributions on its Series A Preferred Stock in the amount of $5.00 per share per month and beginning in March 2017, on its Series M Preferred Stock, on an escalating scale of $4.79 per month in year one, increasing to $6.25 per month in year eight and beyond. All preferred stock dividends are prorated for partial months at issuance as necessary. The Company declared quarterly cash dividends on its Common Stock of $0.505 and $0.455 per share for the six-month periods ended June 30, 2018 and 2017, respectively. The holders of Class A OP Units of the Operating Partnership are entitled to equivalent distributions as those declared on the Common Stock. At June 30, 2018, the Company had 1,070,103 Class A OP Units outstanding, which are exchangeable on a one-for-one basis for shares of Common Stock or the equivalent amount of cash. The Company's dividend and distribution activity consisted of:
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Equity Compensation (Tables) |
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Equity Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] | The underlying valuation assumptions and results for the Class B OP Unit awards were:
The expected dividend yield assumptions were derived from the Company’s closing prices of the Common Stock on the grant dates and the projected future quarterly dividend payments per share of $0.22 for the 2017 awards and $0.25 for the 2018 awards. For the 2017 and 2018 awards, the Company's own stock price history was utilized as the basis for deriving the expected volatility assumption. The risk-free rate assumptions were obtained from the Federal Reserve yield table and were calculated as the interpolated rate between the 20 and 30 year yield percentages on U. S. Treasury securities on the grant dates. Since the Class B OP Units have no expiration date, a derived service period of one year was utilized, which equals the period of time from the grant date to the initial valuation date. Restricted Stock Units On January 3, 2017, the Company caused the Operating Partnership to grant 26,900 restricted stock units, or RSUs to certain employees of affiliates of the Company, for service to be rendered during 2017, 2018 and 2019. On January 2, 2018, the Company caused the Operating Partnership to grant 20,720 restricted stock units, or RSUs, for service to be rendered during 2018, 2019 and 2020. The RSUs vest in three equal consecutive one-year tranches from the date of grant. For each grant, on the Initial Valuation Date, the market capitalization of the number of shares of Common Stock at the date of grant is compared to the market capitalization of the same number of shares of Common Stock at the Initial Valuation Date. If the market capitalization measure results in an increase which exceeds the target market threshold, the Vested RSUs become earned RSUs and automatically convert into Common Stock on a one-to-one basis. Vested RSUs may become Earned RSUs on a pro-rata basis should the result of the market capitalization test be an increase of less than the target market threshold. Any Vested RSUs that do not become Earned RSUs on the Initial Valuation Date are subsequently remeasured on a quarterly basis until such time as all Vested RSUs become Earned RSUs or are forfeited due to termination of continuous service due to an event other than as a result of a qualified event, which is generally the death or disability of the holder. Continuous service through the final valuation date is required for the Vested RSUs to qualify to become fully Earned RSUs. Because RSUs are valued using the identical market condition vesting requirement that determines the transition of the Vested Class B Units to Earned Class B Units, the same valuation assumptions and Monte Carlo result of $16.66 and $11.92 per RSU were utilized to calculate the total fair values of the RSUs of $345,195 and $320,648 for the 2018 and 2017 grants, respectively. The total fair value amounts pertaining to grants of RSUs, net of forfeitures, are amortized as compensation expense over the three one-year periods ending on the three successive anniversaries of the grant dates. As of June 30, 2018, a total of 4,760 RSUs have been forfeited from the 2017 grant and a total of 880 RSUs have been forfeited from the 2018 grant. |
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equity compensation expense [Table Text Block] | Equity compensation expense by award type for the Company was:
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ClassBUnitGrantsvaluationassumptions [Table Text Block] | The underlying valuation assumptions and results for the Class B OP Unit awards were:
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Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block] | Restricted Stock Grants The following annual grants of restricted stock were made to members of the Company's independent directors, as payment of the annual retainer fees. The restricted stock grants for the 2016, 2017 and 2018 service years vested (or are scheduled to vest) on a pro-rata basis over the four consecutive 90-day periods following the date of grant.
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Indebtedness (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments [Table Text Block] | The following table summarizes our mortgage notes payable at June 30, 2018:
Mortgage Financing of Property Acquisitions The Company partially financed the real estate properties acquired during the six-month period ended June 30, 2018 with mortgage debt as shown in the following table:
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mortgage debt summary by segment [Table Text Block] |
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debt covenant [Table Text Block] | As of June 30, 2018, the Company was in compliance with all covenants related to the Revolving Line of Credit, as shown in the following table:
(1) All covenants are as defined in the credit agreement for the Revolving Line of Credit. (2) Minimum of $686.9 million plus 75% of the net proceeds of any equity offering, which totaled approximately $1.35 billion as of June 30, 2018. (3) Calculated on a trailing four-quarter basis. For the twelve-month period ended June 30, 2018, the maximum dividends and distributions allowed under this covenant was approximately $120.1 million. |
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mortgage interest [Table Text Block] |
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Schedule of Maturities of Long-term Debt [Table Text Block] |
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Schedule of Debt [Table Text Block] |
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Segment information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Reconciliation of Revenue from Segments to Consolidated [Table Text Block] |
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Segment Reporting Disclosure [Text Block] | Segment Information The Company's Chief Operating Decision Maker, or CODM, evaluates the performance of the Company's business operations and allocates financial and other resources by assessing the financial results and outlook for future performance across five distinct segments: multifamily communities, student housing properties, real estate related financing, New Market Properties and Preferred Office Properties. Multifamily Communities - consists of the Company's portfolio of owned residential multifamily communities Student Housing Properties - consists of the Company's portfolio of owned student housing properties. Financing - consists of the Company's portfolio of real estate loans, bridge loans, and other instruments deployed by the Company to partially finance the development, construction, and prestabilization carrying costs of new multifamily communities and other real estate and real estate related assets, as well as the Company's investment in the Series 2018-ML04 mortgage-backed pool. Excluded from the financing segment are financial results of the Company's Dawson Marketplace grocery-anchored shopping center real estate loan, which are included in the New Market Properties segment. New Market Properties - consists of the Company's portfolio of grocery-anchored shopping centers, which are owned by New Market Properties, LLC, a wholly-owned subsidiary of the Company, as well as the financial results from the Company's grocery-anchored shopping center real estate loans. Preferred Office Properties - consists of the Company's portfolio of office buildings. The CODM monitors net operating income (“NOI”) on a segment and a consolidated basis as a key performance measure for its operating segments. NOI is defined as rental and other property revenue from real estate assets plus interest income from its loan portfolio less total property operating and maintenance expenses, property management fees, real estate taxes, property insurance, and general and administrative expenses. The CODM uses NOI as a measure of operating performance because it provides a measure of the core operations, rather than factoring in depreciation and amortization, financing costs, acquisition expenses, and other expenses generally incurred at the corporate level. The following tables present the Company's assets, revenues, and NOI results by reportable segment, as well as a reconciliation from NOI to net income (loss). The assets attributable to 'Other' primarily consist of deferred offering costs recorded but not yet reclassified as reductions of stockholders' equity and cash balances at the Company and Operating Partnership levels. As of June 30, 2018, the Company's student housing properties segment is presented separately because the assets of the student housing properties segment exceeded 10% of the Company's consolidated assets. Prior period data has been adjusted from that which was previously reported to reflect this development. In prior periods, student housing properties and multifamily communities were combined.
Total capitalized expenditures (inclusive of additions to construction in progress, but exclusive of the purchase price of acquisitions) for the three months and six months ended June 30, 2018 and 2017 were as follows:
Second-generation capital expenditures exclude those expenditures made in our office building portfolio (i) to lease space to "first generation" tenants (i.e. leasing capital for existing vacancies and known move-outs at the time of acquisition), (ii) to bring recently acquired properties up to our Class A ownership standards (and which amounts were underwritten into the total investment at the time of acquisition), (iii) for property re-developments and repositionings and (iv) for building improvements that are recoverable from future operating cost savings.
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Schedule of Segment Reporting Information, by Segment [Table Text Block] |
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Loss per Share (Tables) |
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earnings loss per share [Table Text Block] |
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Fair Values of Financial Instruments (Tables) |
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Fair Value, Assets Measured on Recurring Basis [Table Text Block] | e following table presents the estimated fair values of the consolidated assets and liabilities from the ML-04 VIE, for which the Company has elected the fair value option.
Disclosure guidance under GAAP requires the Company to determine whether the fair value of the financial assets or the fair value of the financial liabilities of the ML-04 trust is more observable. The VIE assets within the ML-04 Trust consist of mortgage loans which finance 20 multifamily communities. The fair value of the VIE assets within the level 3 hierarchy are comprised of the fair value of the mortgages as estimated by the Company, which were developed utilizing a discounted cash flow model over the remaining terms of the mortgages until their maturity dates and utilizing discount rates believed to approximate the market risk factor for instruments of similar type and duration. The fair value of the notes are categorized within the level 3 hierarchy of fair value estimation as the discount rate primary input assumption is unobservable. |
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Fair Value Measurements, Nonrecurring [Table Text Block] |
(1) The carrying value of real estate assets includes the Company's balance of the Palisades and Encore real estate loan investments, which includes the amounts funded by unrelated participants. The loan participation obligations are the amounts due to the participants under these arrangements. Accrued interest included in the carrying values of the Company's loan participation obligations was approximately $1.3 million and $1.5 million at June 30, 2018 and December 31, 2017, respectively. The following table presents activity of the ML-04 VIE for the three-month and six-month period ended June 30, 2018:
The following table presents the level 3 input used to calculate the fair value of the consolidated assets and liabilities of the ML-04 VIE:
The following table presents the estimated fair values of the consolidated assets and liabilities from the ML-04 VIE, for which the Company has elected the fair value option.
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Organization (Details) |
Jun. 30, 2018
$ / shares
shares
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Dec. 31, 2017
$ / shares
shares
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Class of Stock [Line Items] | ||
Common Stock, Par or Stated Value Per Share | $ / shares | $ 0.01 | |
Common Stock, Shares, Outstanding | 39,725,664 | |
Noncontrolling Interest, Ownership Percentage by Parent | 97.40% | |
minority interest partnership units outstanding | 1,070,103 | |
daycountvolweightedavgcalcformarketvalue | 20 | |
Common Stock [Member] | ||
Class of Stock [Line Items] | ||
Common Stock, Par or Stated Value Per Share | $ / shares | $ 0.01 | $ 0.01 |
Common Stock, Shares, Outstanding | 39,726,000 | 38,565,000 |
Real Estate Assets Contributions to revenue and net income (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
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Business Combination, Separately Recognized Transactions [Line Items] | ||||
Revenues | $ 96,389,000 | $ 70,890,000 | $ 186,759,000 | $ 137,452,000 |
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | $ (5,278,000) | $ 3,304,000 | $ 8,985,000 | $ 33,366,000 |
Real Estate Assets Real estate assets correction (Details) - USD ($) |
Jun. 30, 2018 |
Dec. 31, 2017 |
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Property, Plant and Equipment [Line Items] | ||
Investment Building and Building Improvements | $ 2,345,033,000 | $ 2,043,853,000 |
Tenant Improvements | $ 84,988,000 | $ 63,425,000 |
Acquired Intangible Assets amortization (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
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Finite-Lived Intangible Assets [Line Items] | ||||
Revenues | $ 96,389,000 | $ 70,890,000 | $ 186,759,000 | $ 137,452,000 |
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | $ (5,278,000) | $ 3,304,000 | $ 8,985,000 | $ 33,366,000 |
Real Estate Loans, Notes Receivable, and Lines of Credit Interest income (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
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Interest income [Abstract] | ||||
interest revenue current pay | $ 8,686,000 | $ 7,979,000 | $ 17,191,000 | $ 15,041,000 |
Accrued exit fee revenue | 5,469,000 | 4,475,000 | 10,195,000 | 8,888,000 |
Deferred Revenue, Revenue Recognized | 607,000 | 328,000 | 1,038,000 | 587,000 |
Net loan fee revenue | 17,232,000 | 12,782,000 | 30,894,000 | 24,516,000 |
interest revenue notes receivable | 800,000 | 1,046,000 | 1,703,000 | 2,074,000 |
Interest revenue on real estate loans | $ 18,032,000 | $ 13,828,000 | $ 32,597,000 | $ 26,590,000 |
Real Estate Loans, Notes Receivable, and Lines of Credit Real Estate Loans Narrative (Details) - USD ($) |
Jun. 30, 2018 |
Dec. 31, 2017 |
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Mortgage Loans on Real Estate [Line Items] | ||
real estate loan participation percentage | 25.00% | |
Variable Interest Entity, Reporting Entity Involvement, Maximum Loss Exposure, Amount | $ 376,100,000 | |
variable interest entity loans amount to be funded | 512,800,000 | |
Participating Mortgage Loans, Participation Liabilities, Amount | $ 10,920,000 | $ 13,986,000 |
Encore [Member] | ||
Mortgage Loans on Real Estate [Line Items] | ||
real estate loan participation percentage | 49.00% | |
Geographic Concentration Risk [Member] | Oxford [Member] | ||
Mortgage Loans on Real Estate [Line Items] | ||
amount drawn under loan agreement | $ 96,900,000 | |
loan commitment amount | $ 107,300,000 |
Real Estate Loans, Notes Receivable, and Lines of Credit phantom facts (Details) - USD ($) |
6 Months Ended | 12 Months Ended | ||
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Jun. 30, 2018 |
Dec. 31, 2016 |
Jan. 01, 2018 |
Dec. 31, 2017 |
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Mortgage Loans on Real Estate [Line Items] | ||||
loan commitment guaranty limit amount | $ 2,000,000 | |||
line of credit receivable | $ 37,356,000 | |||
Deferred interest rate | 5.82% | 4.99% | ||
current interest rate | 8.48% | 8.53% | ||
loan commitment guaranty percent | 25.00% | |||
Oxford Capital Partners LLC [Member] | ||||
Mortgage Loans on Real Estate [Line Items] | ||||
line of credit receivable | $ 8,000,000 | |||
interest rate note receivable | 12.00% | |||
360 Residential [Member] | ||||
Mortgage Loans on Real Estate [Line Items] | ||||
line of credit receivable | $ 0 | |||
interest rate note receivable | 12.00% | 8.00% | 12.00% |
Real Estate Loans, Notes Receivable, and Lines of Credit CMBS (Details) $ in Millions |
6 Months Ended |
---|---|
Jun. 30, 2018
USD ($)
| |
Receivables [Abstract] | |
number of loans in CMBS trust | 20 |
total maturity amount of CMBS pool | $ 276.3 |
CMBS b piece maturity | 16 years |
CMBS B piece maturity amount | $ 27.6 |
yield to maturity CMBS | 0.00% |
Dividends Series A Preferred Dividends (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Dividends Payable [Line Items] | ||
Dividends, Preferred Stock, Cash | $ 60,889,000 | $ 43,530,000 |
Distribution Made to Limited Partner, Cash Distributions Declared | 542,000 | 411,000 |
dividends common stock declared | 19,906,000 | 13,510,000 |
Series A Preferred Stock [Member] | ||
Dividends Payable [Line Items] | ||
Dividends, Preferred Stock, Cash | 39,737,000 | 29,609,000 |
Series M Preferred Stock [Member] | ||
Dividends Payable [Line Items] | ||
Dividends, Preferred Stock, Cash | $ 704,000 | $ 0 |
Dividends NCI (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Equity [Abstract] | ||
Distribution Made to Limited Partner, Cash Distributions Declared | $ 542,000 | $ 411,000 |
Equity Compensation Committee Fee Grants (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 20,720 | 26,900 | ||
Share-based Compensation | $ 950,000 | $ 871,000 | $ 2,085,000 | $ 1,744,000 |
Restricted Stock [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based Compensation | $ 25,000 |
Equity Compensation Warrant (Details) - $ / shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Common Stock, Dividends, Per Share, Declared | $ 0.255 | $ 0.2350 | $ 0.505 | $ 0.455 |
Indebtedness debt covenants (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Dec. 31, 2016 |
Jun. 30, 2018 |
Sep. 30, 2016 |
|
debt covenants [Line Items] | |||
dividend restriction AFFO | 95.00% | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 200,000,000 | ||
minimum equity debt covenants | $ 687,000,000 | ||
equity raise above min equity required | 75.00% | ||
total debt covenant min equity | $ 1,350,000,000 | ||
maximum dividends debt covenant | $ 120,100,000 | ||
Minimum Net Worth Required for Compliance | $ 1,430,000,000 | ||
debt yield | 9.80% | ||
payout ratio | 89.40% | ||
Total leverage ratio | 58.00% |
Indebtedness Credit Facility (Details) - USD ($) |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2018 |
Sep. 30, 2016 |
May 26, 2016 |
|
Line of Credit Facility [Line Items] | |||
Indebtedness Weighted Average Remaining Maturity | 8 years 8 months | ||
Short-term Debt | $ 11,000,000 | ||
Short-term Debt, Weighted Average Interest Rate, at Point in Time | 5.05% | ||
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage | 0.35% | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 200,000,000 | ||
Revolving Credit Facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Indebtedness Weighted Average Remaining Maturity | 1 year 2 months | ||
Loans Receivable, Basis Spread on Variable Rate | 3.25% | ||
term loan [Member] [Member] | |||
Line of Credit Facility [Line Items] | |||
Loans Receivable, Basis Spread on Variable Rate | 2.50% | ||
Royal Lakes [Member] | Mortgages [Member] | |||
Line of Credit Facility [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 4.48% |
Income Taxes (Details) - USD ($) |
Jun. 30, 2018 |
Dec. 31, 2010 |
---|---|---|
Operating Loss Carryforwards [Line Items] | ||
Deferred Tax Assets, Net of Valuation Allowance | $ 298,100 | |
DeferredTaxAssetsValuationAllowancePercentage | 100.00% |
Commitments and Contingencies (Details) - USD ($) |
3 Months Ended | 6 Months Ended | 21 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Sep. 30, 2017 |
|
Commitments and Contingencies Disclosure [Abstract] | |||||
lease term | 11 years | ||||
guaranty cap amount | $ 6,100,000 | $ 6,100,000 | |||
Annual reduction in guaranty cap | 619,304 | 619,304 | |||
guaranty cap amount credit cards | 640,000 | ||||
manager's fees deferred | 1,429,000 | $ 171,000 | 2,649,000 | $ 346,000 | $ 7,700,000 |
cumulative manager's fees deferred | 8,500,000 | ||||
real estate loan balances unfunded | 136,700,000 | 136,700,000 | |||
Unfunded Tenant Leasing Commissions and Tenant Allowances | $ 2,000,000 | $ 2,000,000 |
Pro Forma Financial Information (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | ||||
Revenues | $ 96,389,000 | $ 70,890,000 | $ 186,759,000 | $ 137,452,000 |
Weighted average number of shares of Common Stock outstanding, basic and diluted | 39,383,000 | 29,894,000 | ||
Weighted Average Number of Shares Outstanding, Diluted | 39,383,000 | 29,894,000 | 39,241,000 | 28,423,000 |
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