EX-99.1 2 q1-2014earningspressrelease.htm PRESS RELEASE Q1 - 2014 Earnings Press Release



SILVER BAY REALTY TRUST CORP.
REPORTS FIRST QUARTER 2014 FINANCIAL RESULTS
Operational Progress Continues with Aggregate Occupancy Growth to 92%


NEW YORK, May 7, 2014 - Silver Bay Realty Trust Corp. (NYSE: SBY) or “Silver Bay,” or “the Company,” today announced its financial results for the quarter ended March 31, 2014.

Highlights

▪
Funds From Operations increased 42% quarter-over-quarter to $2.1 million, or $0.05 per common share
▪
Total revenue increased 9% quarter-over-quarter to $18.1 million
▪
Net operating income increased 11% quarter-over-quarter to $9.2 million
▪
Estimated net asset value increased quarter-over-quarter to $20.35 per common share from $20.21 per common share
▪
Aggregate occupancy increased to 92% from 88% on portfolio of 5,748 single-family properties

“We are pleased with our results in the first quarter of 2014 as we continue to make solid operational progress," said David N. Miller, Silver Bay’s President and Chief Executive Officer. “Silver Bay is committed to increasing cash flow generation and growing our net asset value in order to maximize shareholder value."


Financial Results

Silver Bay reported total revenue of $18.1 million for the first quarter of 2014, a 9% increase compared to total revenue of $16.7 million for the fourth quarter of 2013. This sequential quarterly increase was primarily attributable to an additional 327 leased properties generating rental income during the quarter. Net loss attributable to common stockholders for the first quarter of 2014 was $4.4 million, or $(0.11) per common share, compared to net loss attributable to common stockholders for the fourth quarter of 2013 of $5.1 million, or $(0.13) per common share.

The Company reported net operating income, or NOI, of $9.2 million for the first quarter of 2014, a 11% increase compared to NOI of $8.3 million for the fourth quarter of 2013. Funds From Operations, or FFO, for the first quarter 2014 was $2.1 million, or $0.05 per common share, compared to FFO for the fourth quarter 2013 of $1.5 million, or $0.04 per common share. NOI and FFO are non-GAAP financial measures. A reconciliation of net loss to NOI and net loss attributable to common stockholders to FFO are included in the financial and operating tables accompanying this press release.


Portfolio Summary and Operating Metrics

Silver Bay owned a portfolio of 5,748 single-family properties as of March 31, 2014. The following table provides a summary of Silver Bay’s portfolio and operating metrics for the first quarter of 2014 and fourth quarter of 2013:


1

PORTFOLIO AND OPERATING SUMMARY
 
 
As of March 31, 2014
 
As of December 31, 2013
Estimated net asset value per share
 
$
20.35

 
$
20.21

Book value per share
 
$
16.90

 
$
17.06

 
 
 
 
 
 
 
As of March 31, 2014
 
As of December 31, 2013
Occupancy Rate
 
 
 
 
Stabilized properties
 
95
%
 
93
%
Aggregate portfolio
 
92
%
 
88
%
Average monthly rent on the aggregate portfolio
 
$
1,163

 
$
1,162


Estimated Net Asset Value

Silver Bay reported an estimated net asset value, or Estimated NAV, per share of $20.35 based on an estimated fair market value, or Estimated Portfolio Value, of the Company’s properties of $904.0 million as of March 31, 2014. The Company’s book value per share was $16.90 as of March 31, 2014. The difference between Estimated NAV and book value per share is attributable to multiple factors, including aggregate appreciation in the underlying assets of the Company’s portfolio of single-family properties, the Company’s purchasing of single-family properties at discounts to market prices, value created by renovations in excess of the cost of renovations, and the exclusion of accumulated depreciation in the calculation of the Company’s Estimated Portfolio Value.

The Estimated Portfolio Value of the Company’s properties is calculated by Silver Bay’s proprietary automated valuation model, or AVM, which estimates the value of the Company’s properties on an individual basis based on comparable sales in the residential real estate market, without reference to the intended use for the properties. Estimated NAV does not ascribe any value to in-place leases or to the portfolio as a whole (as compared to the sum of the values of the individual properties), nor does it consider cash flow or other yield metrics. Estimated NAV and Estimated Portfolio Value are non-GAAP financial measures. A reconciliation of book value to Estimated NAV is included in the financial and operating tables accompanying this press release.

Operating Metrics

Silver Bay reported an occupancy rate of 95% on properties that were stabilized as of March 31, 2014, which increased from 93% in the prior quarter. Silver Bay reported an occupancy rate of 92% for the aggregate portfolio as of March 31, 2014, an increase of four percentage points compared to an occupancy rate of 88% on the aggregate portfolio as of December 31, 2013. The sequential quarter increase in the occupancy rate for the aggregate portfolio is primarily attributed to favorable leasing activity in the Company’s Columbus market and, to a lesser extent, the Dallas and Atlanta markets. A summary of Silver Bay’s occupancy rates is included in the financial and operating tables accompanying this press release.

Silver Bay reported an average monthly rent for the aggregate portfolio of $1,163 for the first quarter of 2014, compared to an average monthly rent of $1,162 for the fourth quarter of 2013.


Dividend Declaration

The Company’s Board of Directors declared a quarterly dividend of $0.03 per share of common stock for the quarter ended March 31, 2014. The dividend was paid April 4, 2014 to common stockholders of record at the close of business on March 24, 2014.






2


Financing and Liquidity

As of March 31, 2014, Silver Bay had $198.5 million outstanding on its $350.0 million revolving credit facility. The Company had $40.8 million in cash, $32.3 million in escrow deposits and $151.5 million available under its $350.0 million revolving credit facility as of March 31, 2014.


Share Repurchase Plan

During the first quarter of 2014, 155,657 shares were repurchased by the Company under the share repurchase program at an average price of $15.66 per common share, including commissions.


Conference Call
 
Silver Bay will host a conference call on May 8, 2014 at 10:00 a.m. EDT to discuss first quarter 2014 financial results and business highlights. To participate in the teleconference, please call toll-free (888) 317-6016 (or (412) 317-6016 for international callers and (855) 669-9657 for Canadian callers) approximately 10 minutes prior to the above start time. You may also listen to the teleconference live via the internet on the Company's website at www.silverbayrealtytrustcorp.com in the Investor Relations section under the Events Calendar link. For those unable to attend, a telephone playback will be available beginning at 12:00 p.m. EDT on May 8, 2014 through 9:00 a.m. EDT on May 30, 2014. The playback can be accessed by calling (877) 344-7529 (or (412) 317-0088 for international callers and (855) 669-9658 for Canadian callers) and providing Conference Number 10045090. The call will also be archived on the Company's website in the Investor Relations section under the Events Calendar link.


Silver Bay Realty Trust Corp.

Silver Bay Realty Trust Corp. is a Maryland corporation focused on the acquisition, renovation, leasing and management of single-family properties for rental income and long-term capital appreciation. Silver Bay owns single-family properties in Arizona, California, Florida, Georgia, Nevada, North Carolina, Ohio and Texas. Silver Bay has elected to be taxed as a REIT for U.S. federal tax purposes.


Forward-Looking Statements

This press release includes “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Actual results may differ from expectations, estimates and projections and, consequently, readers should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “target,” “assume,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believe,” “predicts,” “potential,” “continue,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from expected results. Factors that could cause actual results to differ include: Silver Bay’s ability to execute share repurchases upon terms acceptable to the company; adverse economic or real estate developments in Silver Bay’s markets; defaults on, early terminations of or non-renewal of leases by residents; difficulties in identifying properties to acquire and completing acquisitions; increased time and/or expense to gain possession and renovate properties; increased vacancy, resident turnover, or turnover costs; Silver Bay’s ability to control or reduce operating expenses, including repairs and maintenance expense and other costs such as real estate taxes, homeowners’ association fees, insurance and other costs outside the Company’s control; Silver Bay’s failure to successfully operate its properties; Silver Bay’s ability to obtain financing arrangements; Silver Bay’s failure to meet the conditions to draw under the credit facility;


3

general volatility of the markets in which it participates; interest rates and the market value of Silver Bay’s assets; the impact of changes in governmental regulations, tax law and rates, and similar matters.

Readers are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made. Silver Bay does not undertake or accept any obligation to release publicly any updates or revisions to any forward-looking statement to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based. Additional information concerning these and other risk factors is contained in Silver Bay’s most recent filings with the Securities and Exchange Commission. All subsequent written and oral forward looking statements concerning Silver Bay or matters attributable to Silver Bay or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above.


Non-GAAP Financial Measures

Estimated Portfolio and Estimated Net Asset Value

The Estimated Portfolio Value reflects the value of Silver Bay’s properties calculated by the Company’s proprietary AVM, less the Company’s estimate of the remaining cost to renovate such properties, or Estimated Renovation Reserve. The AVM estimates the value of the Company’s properties on an individual basis based on prior comparable sales in the residential real estate market, without reference to the intended use for the properties. These individual property values are then aggregated and reduced by the Estimated Renovation Reserve, which accounts for the AVM assumption that renovations for all properties have been completed, to derive the Estimated Portfolio Value of the Company’s properties. The difference between the Estimated Portfolio Value and net investments in real estate as of March 31, 2014 is attributable to multiple factors, including home price appreciation in Silver Bay markets, purchasing at discounts to market prices, value created by the Company’s renovations in excess of the cost of the renovations, and the exclusion of accumulated depreciation in the calculation of Estimated Portfolio Value.

Estimated NAV is intended to be an estimate of the value of all of the Company’s assets net of liabilities. To calculate Estimated NAV, the Company starts with its historical book value, subtracts its historical net investments in real estate and adds its Estimated Portfolio Value. For purposes of calculating Estimated Portfolio Value and estimated NAV, the Company does not deduct the estimated costs of selling the properties in the portfolio, including commissions and closing costs. Further, the Company ascribes no value to existing leases or to the portfolio as a whole (as compared to the sum of the values of the individual properties), nor does it consider cash flow or other yield metrics.

Estimated Portfolio Value and Estimated NAV are non-GAAP financial measures. Silver Bay provides the Estimated Portfolio Value and Estimated NAV as additional tools for investors seeking to value the Company. These metrics should be considered along with other available information in valuing and assessing Silver Bay, including the Company’s GAAP financial measures and other cash flow and yield metrics, and these metrics should not be viewed as a substitute for book value, net investments in real estate, equity, net income or cash flows from operations prepared in accordance with GAAP, or as a measure of the Company’s profitability or liquidity.

Net Operating Income

NOI is defined by the Company as total revenue less property operating and maintenance, real estate taxes, homeowners’ association fees and property management expenses and certain other non-recurring, non-cash or unrelated non-operating expenses. NOI excludes depreciation and amortization, advisory management fees, general and administrative expenses, interest expense and other expenses. Additionally, NOI excludes the 5% property management fee on certain costs and expenses incurred by its Manager’s operating subsidiary that are reimbursed by the Company because it more closely represents additional advisory management fee, non-cash share based property management stock compensation, expensed acquisition fees and costs, and certain other non-recurring costs.



4

NOI should not be considered an alternative to net loss or net cash flows from operating activities, as determined in accordance with GAAP, as indications of Silver Bay’s performance or as measures of liquidity. Although the Company uses this non-GAAP measure for comparability in assessing its performance against other REITs, not all REITs compute the same non-GAAP measure. Accordingly, there can be no assurance that the Company’s basis for computing this non-GAAP measure is comparable with that of other REITs.

Funds From Operations

Funds From Operations, or FFO, is a non-GAAP financial measure that the Company believes, when considered with the financial statements determined in accordance with GAAP, is helpful to investors in understanding the Company’s performance because it captures features particular to real estate performance by recognizing that real estate generally appreciates over time or maintains residual value to a much greater extent than do other depreciable assets. The National Association of Real Estate Investment Trusts, or NAREIT, defines FFO as net income (loss), computed in accordance with GAAP, excluding gains (losses) from sales of, and impairment losses recognized with respect to, depreciable property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated on the same basis to determine FFO. The Company calculates FFO attributable to common stockholders (diluted) by subtracting, if dilutive, redemption or repurchase related preferred stock issuance costs and dividends on preferred stock and adding back dividends/distributions on dilutive preferred securities and premiums or discounts on preferred stock redemptions or repurchases.

FFO should not be considered an alternative to net income (loss) or net cash flows from operating activities, as determined in accordance with GAAP, as indications of the Company’s performance or as measures of liquidity. This non-GAAP measure is not necessarily indicative of cash available to fund future cash needs. In addition, although the Company uses this non-GAAP measure for comparability in assessing its performance against other REITs, not all REITs compute the same non-GAAP measure.


Additional Information

Stockholders of Silver Bay, and other interested persons, may find additional information regarding the Company at the SEC's internet site at www.sec.gov or by directing requests to: Silver Bay Realty Trust Corp., Attn: Investor Relations, 601 Carlson Parkway, Suite 250, Minnetonka, MN 55305, telephone (952) 358-4400.


















5

SUPPLEMENTAL FINANCIAL AND OPERATING DATA
FIRST QUARTER 2014

TABLE OF CONTENTS

ITEM
 
Page
CONDENSED CONSOLIDATED BALANCE SHEETS
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
 
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
PORTFOLIO SUMMARY OF SINGLE-FAMILY PROPERTIES
 
PORTFOLIO SUMMARY OF LEASING STATUS OF PROPERTIES
 
DEFINITIONS AND RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
 



6

SILVER BAY REALTY TRUST CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)
 
March 31, 2014(unaudited)
 
December 31, 2013
Assets
 
 
 
Investments in real estate:
 
 
 
Land
$
140,402

 
$
137,349

Building and improvements
655,479

 
638,955

 
795,881

 
776,304

Accumulated depreciation
(24,649
)
 
(18,897
)
Investments in real estate, net
771,232

 
757,407

Assets held for sale
5,393

 
6,382

Cash
40,761

 
43,717

Escrow deposits
32,336

 
24,461

Resident security deposits
7,386

 
6,848

In-place lease and deferred lease costs, net
628

 
749

Deferred financing costs, net
4,024

 
3,225

Other assets
3,553

 
3,289

Total assets
$
865,313

 
$
846,078

Liabilities and Equity
 
 
 
Liabilities:
 
 
 
Revolving credit facility
$
198,475

 
$
164,825

Accounts payable and accrued property expenses
6,755

 
6,072

Resident prepaid rent and security deposits
8,779

 
8,357

Amounts due to the manager and affiliates
208

 
6,866

Amounts due to previous owners
—

 
998

Total liabilities
214,217

 
187,118

10% cumulative redeemable preferred stock, $.01 par; 50,000,000 authorized, 1,000 issued and outstanding
1,000

 
1,000

Equity:
 
 
 
Stockholders' equity:
 
 
 
Common stock $.01 par; 450,000,000 shares authorized; 38,458,865 and 38,561,468, respectively shares issued and outstanding
383

 
385

Additional paid-in capital
687,408

 
689,646

Accumulated other comprehensive loss
(362
)
 
(276
)
Cumulative deficit
(37,333
)
 
(31,795
)
Total equity
650,096

 
657,960

Total liabilities and equity
$
865,313

 
$
846,078









7

SILVER BAY REALTY TRUST CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)
(AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)
 
Three Months Ended March 31,
 
2014
 
2013
Revenue:
 
 
 
Rental income
$
17,671

 
$
7,296

Other income
460

 
385

Total revenue
18,131

 
7,681

Expenses:
 
 
 
Property operating and maintenance
3,610

 
1,702

Real estate taxes
2,486

 
1,420

Homeowners’ association fees
304

 
281

Property management
2,959

 
2,431

Depreciation and amortization
6,145

 
3,518

Advisory management fee - affiliates
2,201

 
2,852

General and administrative
2,053

 
1,528

Interest expense
2,327

 
—

Other
411

 
331

Total expenses
22,496

 
14,063

Net loss
(4,365
)
 
(6,382
)
Net loss attributable to noncontrolling interests - Operating Partnership
—

 
5

Net loss attributable to controlling interests
(4,365
)
 
(6,377
)
Preferred stock distributions
(25
)
 
(25
)
Net loss attributable to common stockholders
$
(4,390
)
 
$
(6,402
)
Loss per share - basic and diluted:
 
 
 
Net loss attributable to common shares
$
(0.11
)
 
$
(0.16
)
Weighted average common shares outstanding
38,542,728

 
39,182,153

Comprehensive Loss:
 
 
 
Net loss
$
(4,365
)
 
$
(6,382
)
Other comprehensive loss:
 
 
 
Change in fair value of interest rate cap derivatives
(86
)
 
—

Other comprehensive loss
$
(86
)
 
$
—

Comprehensive loss
(4,451
)
 
(6,382
)
Less comprehensive loss attributable to noncontrolling interests - Operating Partnership
—

 
5

Comprehensive loss attributable to controlling interests
$
(4,451
)
 
$
(6,377
)



8

SILVER BAY REALTY TRUST CORP.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
(AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)


 
Common Stock
 
 
 
 
 
 
 
Shares
 
Par Value
Amount
 
Additional Paid-In
Capital
 
Accumulated 
Other
Comprehensive Loss
 
Cumulative
Deficit
 
Total
Equity
Balance at January 1, 2014
38,561,468

 
$
385

 
$
689,646

 
$
(276
)
 
$
(31,795
)
 
$
657,960

Non-cash equity awards, net
53,054

 
—

 
198

 
—

 
—

 
198

Repurchase of common stock
(155,657
)
 
(2
)
 
(2,436
)
 
—

 
—

 
(2,438
)
Dividends declared
—

 
—

 
—

 
—

 
(1,173
)
 
(1,173
)
Net loss
—

 
—

 
—

 
—

 
(4,365
)
 
(4,365
)
Other comprehensive loss
—

 
—

 
—

 
(86
)
 
—

 
(86
)
Balance at March 31, 2014
38,458,865

 
$
383

 
$
687,408

 
$
(362
)
 
$
(37,333
)
 
$
650,096
























9

SILVER BAY REALTY TRUST CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(AMOUNTS IN THOUSANDS)
 
Three Months Ended March 31,
 
2014
 
2013
Cash Flows From Operating Activities:
 

 
 

Net loss
$
(4,365
)
 
$
(6,382
)
Adjustments to reconcile net loss to net cash used by operating activities:
 
 
 
Depreciation and amortization
6,145

 
3,518

Non-cash stock compensation
198

 
288

Amortization of deferred financing costs
460

 
—

Other
541

 
416

Net change in assets and liabilities:
 
 
 
Increase in escrow cash for operating activities and reserves under the credit facility
(7,839
)
 
(3,048
)
(Increase) decrease in deferred lease fees and other assets
(672
)
 
42

Increase in accounts payable, accrued property expenses, and prepaid rent
465

 
442

Decrease in related party payables, net
(7,656
)
 
(299
)
Net cash used by operating activities
(12,723
)
 
(5,023
)
Cash Flows From Investing Activities:
 
 
 
Purchase of investments in real estate
(13,065
)
 
(141,744
)
Capital improvements of investments in real estate
(7,789
)
 
(20,289
)
Increase in escrow cash for investing activities
(35
)
 
(3,834
)
Proceeds from sale of real estate
1,232

 
656

Other
(19
)
 
(107
)
Net cash used by investing activities
(19,676
)
 
(165,318
)
Cash Flows From Financing Activities:
 
 
 
Proceeds from revolving credit facility
33,650

 
—

Deferred financing costs paid
(1,260
)
 
(125
)
Purchase of interest rate cap agreements
(100
)
 
—

Repurchase of common stock
(2,438
)
 
—

Dividends paid
(409
)
 
—

Proceeds from issuance of common stock, net of offering costs
—

 
34,530

Net cash provided by financing activities
29,443

 
34,405

Net change in cash
(2,956
)
 
(135,936
)
Cash at beginning of period
43,717

 
228,139

Cash at end of period
$
40,761

 
$
92,203

Supplemental disclosure of cash flow information:
 
 
 
Cash paid for interest
$
1,890

 
$
—

Decrease in fair value of interest rate cap agreements
$
86

 
$
—

Noncash investing and financing activities:
 
 
 
Common stock and unit dividends declared, but not paid
$
1,150

 
$
392

Advisory management fee - additional basis
$
—

 
$
395

Capital improvements in accounts payable
$
903

 
$
1,262



10

SILVER BAY REALTY TRUST CORP.
PORTFOLIO SUMMARY OF SINGLE-FAMILY PROPERTIES
AS OF MARCH 31, 2014
Market
 
Number of Properties(1)
 
Aggregate Cost Basis (thousands)(2)
 
Average Cost Basis per Property (thousands)
 
Average Age (in years)(3)
 
Average Square Footage
Phoenix
 
1,424

 
$
199,382

 
$
140

 
25.2

 
1,636

Atlanta
 
1,012

 
126,111

 
125

 
17.9

 
2,011

Tampa
 
926

 
131,878

 
142

 
24.5

 
1,655

Northern CA(4)
 
384

 
72,067

 
188

 
45.4

 
1,401

Las Vegas
 
290

 
40,924

 
141

 
17.7

 
1,719

Columbus
 
284

 
31,402

 
111

 
36.7

 
1,417

Dallas
 
259

 
32,885

 
127

 
21.4

 
1,654

Orlando
 
231

 
34,731

 
150

 
25.9

 
1,658

Tucson
 
209

 
17,156

 
82

 
41.0

 
1,330

Southeast FL(5)
 
189

 
38,102

 
202

 
36.3

 
1,636

Southern CA(6)
 
156

 
23,521

 
151

 
44.0

 
1,346

Jacksonville
 
152

 
19,479

 
128

 
30.3

 
1,552

Charlotte
 
130

 
17,041

 
131

 
12.8

 
1,980

Houston
 
102

 
11,202

 
110

 
30.7

 
1,685

     Totals
 
5,748

 
$
795,881

 
$
138

 
26.6

 
1,672


(1)
Total properties exclude properties held for sale or sold by the Company’s taxable REIT subsidiary and any properties acquired in previous periods in sales that have been subsequently rescinded or vacated.

(2)
Aggregate cost includes all capitalized costs, determined in accordance with U.S. generally accepted accounting principles, incurred through March 31, 2014 for the acquisition, stabilization, and significant post-stabilization renovation of properties, including land, building, possession costs and renovation costs. Aggregate cost includes $3.6 million in capital improvements, incurred from our formation through March 31, 2014, to properties that had been previously renovated, but does not include accumulated depreciation.
 
 (3)
As of March 31, 2014, approximately 14% of the properties in the aggregate portfolio were less than 10 years old, 29% were between 10 and 20 years old, 18% were between 20 and 30 years old, 18% were between 30 and 40 years old, 9% were between 40 and 50 years old and 12% were more than 50 years old.
 
(4)
Northern California market currently consists of Contra Costa, Napa and Solano counties.
 
(5)
Southeast Florida market currently consists of Miami-Dade, Broward and Palm Beach counties.

(6)
Southern California market currently consists of Riverside and San Bernardino counties.


11

SILVER BAY REALTY TRUST CORP.
PORTFOLIO SUMMARY OF LEASING STATUS OF PROPERTIES
AS OF MARCH 31, 2014
Market
 
Number of Properties
 
Number of Stabilized Properties
 
Properties Leased
 
Properties Vacant
 
Aggregate Portfolio Occupancy Rate
 
Stabilized Occupancy Rate
 
Average Monthly Rent(1)
Phoenix
 
1,424

 
1,424

 
1,362

 
62

 
95.6
%
 
95.6
%
 
$
1,032

Atlanta
 
1,012

 
989

 
894

 
118

 
88.3
%
 
90.4
%
 
1,164

Tampa
 
926

 
924

 
895

 
31

 
96.7
%
 
96.9
%
 
1,217

Northern CA
 
384

 
384

 
376

 
8

 
97.9
%
 
97.9
%
 
1,478

Las Vegas
 
290

 
290

 
284

 
6

 
97.9
%
 
97.9
%
 
1,150

Columbus
 
284

 
269

 
214

 
70

 
75.4
%
 
79.6
%
 
1,029

Dallas
 
259

 
227

 
224

 
35

 
86.5
%
 
98.7
%
 
1,257

Orlando
 
231

 
213

 
209

 
22

 
90.5
%
 
98.1
%
 
1,240

Tucson
 
209

 
208

 
204

 
5

 
97.6
%
 
98.1
%
 
834

Southeast FL
 
189

 
147

 
144

 
45

 
76.2
%
 
98.0
%
 
1,742

Southern CA
 
156

 
155

 
149

 
7

 
95.5
%
 
96.1
%
 
1,147

Jacksonville
 
152

 
133

 
129

 
23

 
84.9
%
 
97.0
%
 
1,090

Charlotte
 
130

 
127

 
117

 
13

 
90.0
%
 
92.1
%
 
1,156

Houston
 
102

 
100

 
99

 
3

 
97.1
%
 
99.0
%
 
1,192

     Totals
 
5,748

 
5,590

 
5,300

 
448

 
92.2
%
 
94.8
%
 
$
1,163

(1)
Average monthly rent for leased properties was calculated as the average of the contracted monthly rent for all leased properties as of March 31, 2014 and reflects rent concessions amortized over the life of the related lease.


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SILVER BAY REALTY TRUST CORP.
DEFINITIONS AND RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)

Estimated Portfolio and Estimated Net Asset Value

Estimated Portfolio Value and Estimated NAV are non-GAAP financial measures. Silver Bay provides the Estimated Portfolio Value and Estimated NAV and believes such metrics are useful as additional tools for investors seeking to value the Company. These metrics should be considered along with other available information in valuing and assessing Silver Bay, including the Company’s GAAP financial measures or other cash flow or yield metrics and should not be viewed as a substitute for book value, net investments in real estate, equity, net income or cash flows from operations prepared in accordance with GAAP, or as a measure of the Company’s profitability or liquidity.
 
A description of the Company’s AVM along with certain assumptions and limitations related to its AVM and its calculations of Estimated Portfolio Value and Estimated NAV can be found on the Company’s website at www.silverbayrealtytrustcorp.com in the Investor Relations section under the non-GAAP Reconciliations link.

The following is a reconciliation of the Company’s investments in real estate to Estimate Portfolio Value and book value to Estimated NAV:
(amounts in thousands except share data)
 
March 31, 2014
 
 
Amount
 
Per Share(1)
Investments in real estate, gross
 
$
795,881

 
$
20.69

Accumulated depreciation
 
(24,649
)
 
(0.64
)
Investments in real estate, net
 
771,232

 
20.05

Add: Increase in estimated fair market value of investments in real estate(2)
 
135,371

 
3.52

Less: Estimated Renovation Reserve(3)
 
(2,614
)
 
(0.07
)
Estimated Portfolio Value
 
$
903,989

 
$
23.50

 
 
 
 
 
Book value(4)
 
$
650,096

 
$
16.90

Less: Investments in real estate, net
 
(771,232
)
 
(20.05
)
Add: Estimated Portfolio Value
 
903,989

 
23.50

Estimated Net Asset Value
 
$
782,853

 
$
20.35


(1)
Per share amounts are based upon common shares outstanding of 38,458,865 as of March 31, 2014.
(2)
Difference between AVM derived value of the Company’s portfolio of properties of $906,603, which assumes all properties are fully renovated, and net investments in real estate.
(3)
Estimated renovation reserve is calculated on properties in the portfolio that are not currently stabilized and for which the initial renovation has not been completed.
(4)
Book value as defined by U.S. generally accepted accounting principles represents total assets less total liabilities and less preferred stock in mezzanine or total equity.


Net Operating Income

Net operating income, or NOI, is a non-GAAP financial measure defined by the Company as total revenue less property operating and maintenance, real estate taxes, homeowners’ association fees, property management expenses, and certain other non-recurring, non-cash or unrelated non-operating expenses. NOI excludes depreciation and amortization, advisory management fees, general and administrative expenses, interest expense, and other expenses. Additionally, NOI excludes the 5% property management fee because it more closely represents additional advisory management fee, non-cash share based property management stock compensation, expensed acquisition fees and costs, and certain other non-recurring costs.

The Company considers NOI to be a meaningful financial measure, when considered with the financial statements determined in accordance with U.S. generally accepted accounting principles. The Company believes NOI is helpful to investors in understanding the core performance of the real estate operations of the Company.


13

 
 
The following is a reconciliation of the Company’s NOI to net loss as determined in accordance with GAAP:


Three Months Ended March 31, 2014
 
Three Months Ended December 31, 2013
Net loss
 
$
(4,365
)
 
 
$
(5,060
)
Depreciation and amortization
 
6,145

 
 
6,174

Advisory management fee - affiliates
 
2,201

 
 
2,179

General and administrative
 
2,053

 
 
2,110

Interest expense
 
2,327

 
 
1,764

Other
 
411

 
 
594

Property operating and maintenance add back:
 

 
 

Market ready costs prior to initial lease
 
89

 
 
—

Property management add backs:
 

 
 

5% property management fee
$
111

 
 
$
116

 
Acquisition fees and costs expensed
60

 
 
130

 
Non-recurring system implementation costs
124

 
 
278

 
Other
67

 
 
7

 
Total property management add backs
 
362

 
 
531

Net operating income
 
$
9,223

 
 
$
8,292

Net operating income as a percentage of total revenue
 
50.9
%
 
 
49.6
%


Funds From Operations

Funds From Operations, or FFO, is a non-GAAP financial measure that the Company believes, when considered with the financial statements determined in accordance with GAAP, is helpful to investors in understanding the Company’s performance because it captures features particular to real estate performance by recognizing that real estate generally appreciates over time or maintains residual value to a much greater extent than do other depreciable assets. The National Association of Real Estate Investment Trusts, or NAREIT, defines FFO as net income (loss), computed in accordance with GAAP, excluding gains (losses) from sales of, and impairment losses recognized with respect to, depreciable property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated on the same basis to determine FFO. The Company calculates FFO attributable to common stockholders (diluted) by subtracting, if dilutive, redemption or repurchase related preferred stock issuance costs and dividends on preferred stock and adding back dividends/distributions on dilutive preferred securities and premiums or discounts on preferred stock redemptions or repurchases.

FFO should not be considered an alternative to net income (loss) or net cash flows from operating activities, as determined in accordance with GAAP, as indications of the Company’s performance or as measures of liquidity. This non-GAAP measure is not necessarily indicative of cash available to fund future cash needs. In addition, although the Company uses this non-GAAP measure for comparability in assessing its performance against other REITs, not all REITs compute the same non-GAAP measure.

The following is a reconciliation of the Company’s net loss attributable to common stockholders as determined in accordance with GAAP and its calculation of FFO:


14


Three Months Ended March 31, 2014
 
Three Months Ended December 31, 2013
Net loss attributable to common stockholders
$
(4,390
)
 
$
(5,082
)
Noncontrolling interests - Operating Partnership
—

 
(3
)
Preferred distributions
25

 
25

Depreciation and amortization
6,145

 
6,174

Other
295

 
345

Funds from operations
$
2,075

 
$
1,459

Basic and diluted weighted average common shares outstanding
38,542,728

 
38,705,311

FFO per common share - basic and diluted
$
0.05

 
$
0.04



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