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Preferred Apartment Communities, Inc. Reports Results for Fourth Quarter 2021

02/28/2022

Total Revenues

$105.7 million for Q4 2021; $451.1 million for the year ended December 31, 2021

————————

Net Loss Per Share

$(0.31) per share for Q4 2021; $(2.59) per share for the year ended December 31, 2021

————————

Core FFO per Share*

$0.24 per share for Q4 2021; $1.10 per share for the year ended December 31, 2021

————————

AFFO Per Share*

$0.18 per share for Q4 2021; $0.93 per share for the year ended December 31, 2021

————————

Multifamily Same Store Results*

Same-store rental and other property revenues increased 9.6% and same-store net operating income increased 14.8% for Q4 year over year;

Same-store rental and other property revenues increased 5.9% and same-store net operating income increased 7.2% for the full year 2021 over 2020

————————

PAC Enters Into a Definitive Agreement with Blackstone Real Estate Income Trust, Inc.

Cash transaction of $25 per share of Common Stock;

Closing expected during second quarter 2022

————————

Two Real Estate Loans and One Land Loan Closed During Fourth Quarter 2021

Aggregate commitment amount of $32.0 million

934 multifamily units added to PAC's acquisition pipeline

————————

Brookwood Center Office Sale Closed During Fourth Quarter 2021

Total consideration of $55.0 million, net proceeds of $25.1 million

Realized gain on sale of $12.4 million

*Core FFO and AFFO results are per weighted-average share and Class A OP Unit outstanding. Core FFO, AFFO and same-store net operating income are non-GAAP measures that are defined below.

ATLANTA--(BUSINESS WIRE)-- Preferred Apartment Communities, Inc. (NYSE: APTS) ("we," "our," the "Company," "Preferred Apartment Communities" or "PAC") today reported results for the quarter and year ended December 31, 2021. Unless otherwise indicated, all per share results are reported based on the basic weighted average shares of Common Stock and Class A Units ("Class A Units") of the Preferred Apartment Communities Operating Partnership (our "Operating Partnership") outstanding. See Definitions of Non-GAAP Measures.

“The fourth quarter marked a continuation of our solid operating performance throughout the entirety of 2021 and capped off an exciting and transformational year. For 2021 as a whole, we continued to grow our high quality apartment portfolio and real estate investment loan book while population, job, and income growth across our Sunbelt markets provided an excellent fundamental backdrop for our business. These fundamentals and the quality and vintage of our multifamily portfolio produced strong fourth quarter results, with top line year over year same store revenue growth of 9.6% and year over year same store NOI growth of 14.8%.   Also for the fourth quarter, our same store properties had 22.0% rent growth for new leases and 12.5% for renewals for a blended 17.0% increase. These solid results caused us to end the year at 7.2% same store NOI growth for the full year, above the high end of our full year guidance. This rent growth has continued into January as our new leases are up 17.4% and renewals have increased 12.1% for a blended 14.3% increase,” stated Joel Murphy, Preferred Apartment Communities Chairman and Chief Executive Officer.

“Importantly, we achieved key milestones in our corporate simplification efforts that began two years ago, ending 2021 as a focused owner and operator of high quality multifamily and grocery anchored retail properties in suburban Sunbelt markets, operated by our best in class team. Additionally, I’m proud to say we furthered our commitment to the principles of ESG, ensuring that we are responsible partners for our community, the environment and all stakeholders.  Finally, I want to thank our entire team for their hard work and dedication this past year, their collective contributions produced our excellent results.”

Conference Call

As announced in a press release on February 22, 2022, as a result of our entering into a definitive agreement with Blackstone Real Estate Income Trust, Inc. ("BREIT"), we have canceled our conference call to discuss our fourth quarter and year ended 2021 earnings.

For Further Information

Paul Cullen
Executive Vice President-Investor Relations
Chief Marketing Officer
investorrelations@pacapts.com
770-818-4144

Operating Results

Our operating results are presented below.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended December 31,

 

% change

 

Year ended December 31,

 

% change

 

 

2021

 

2020

 

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues (in thousands)

$

105,724

 

 

$

120,871

 

 

(12.5

) %

 

$

451,142

 

 

$

501,185

 

 

(10.0

) %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per share data:

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) (1)

$

(0.31

)

 

$

(0.77

)

 

 

 

$

(2.59

)

 

$

(6.95

)

 

 

 

FFO (2)

$

0.19

 

 

$

(0.20

)

 

 

 

$

0.27

 

 

$

(3.36

)

 

 

 

Core FFO (2)

$

0.24

 

 

$

0.31

 

 

(22.6

) %

 

$

1.10

 

 

$

1.07

 

 

2.8

%

 

AFFO (2)

$

0.18

 

 

$

0.25

 

 

(28.0

) %

 

$

0.93

 

 

$

0.83

 

 

12.0

%

 

Dividends (3)

$

0.175

 

 

$

0.175

 

 

%

 

$

0.70

 

 

$

0.7875

 

 

(11.1

) %

(1) Per weighted average share of Common Stock outstanding for the periods indicated.

(2) FFO, Core FFO and AFFO results are presented per basic weighted average share of Common Stock and Class A Unit in our Operating Partnership outstanding for the periods indicated. See Reconciliations of FFO Attributable to Common Stockholders and Unitholders, Core FFO and AFFO to Net Income (Loss) Attributable to Common Stockholders and Definitions of Non-GAAP Measures.

(3) Per share of Common Stock and Class A Unit outstanding.

Financial

  • Our total revenues for the quarter ended December 31, 2021 decreased approximately $15.1 million, or 12.5%, to $105.7 million from the quarter ended December 31, 2020, due to the absence of revenues from the eight student housing properties that we sold on November 3, 2020 and the eight office properties and one real estate loan investment that we sold during the third and fourth quarters of 2021. The student housing properties contributed approximately $4.5 million, or 3.7% of our total revenues and the disposed office properties and real estate loan investment contributed approximately $18.8 million, or 15.6% of our total revenues for the quarter ended December 31, 2020.
  • Our net loss per share was $(0.31) and $(0.77) for the three-month periods ended December 31, 2021 and 2020, respectively. Funds From Operations, or FFO, was $0.19 and $(0.20) per weighted average share of Common Stock and Class A Unit outstanding for the three months ended December 31, 2021 and 2020, respectively. The improvement in FFO per share was driven by:

* Lower deemed dividends due to a lower volume of calls and cash redemptions of our preferred stock during the fourth quarter 2021 versus the fourth quarter 2020 of $0.45 per share;

* Lower operating results as a result of the sale of our student housing and office properties of $(0.21) per share;

* Lower cash dividend requirements on our preferred stock of $0.15 per share;

* Lower revenues from the real estate loan portfolio of $(0.07) per share; and

* Improved multifamily same-store results of $0.04 per share.

  • Our Core FFO per share decreased to $0.24 for the fourth quarter 2021 from $0.31 for the fourth quarter 2020, due to:

* Lower operating results as a result of the sale of our student housing and office properties of $(0.21) per share;

* Reduced cash dividend requirements on our preferred stock of $0.15 per share;

* Lower revenues from the real estate loan portfolio of $(0.07) per share; and

* Improved multifamily same-store results of $0.04 per share.

  • Our AFFO per share decreased to $0.18 for the fourth quarter 2021 from $0.25 for the fourth quarter 2020 due to the four factors above driving the Core FFO decrease, and also:

* Lower accrued interest income received on real estate loans of $(0.07);

* Lower noncash loan interest income of $0.02; and

* Decreased noncash amortization of deferred revenues, straight-line rent adjustments, above and below market leases and tenant lease inducements of $0.05.

  • Our Core FFO payout ratio to Common Stockholders and Unitholders was approximately 65.3% and our Core FFO payout ratio to our preferred stockholders was approximately 72.8% for the full year 2021. Our Core FFO payout ratio to Common Stockholders and Unitholders was approximately 74.0% and our Core FFO payout ratio to our preferred stockholders was approximately 68.3% for the fourth quarter 2021. (A)
  • Our AFFO payout ratio to Common Stockholders and Unitholders was approximately 77.6% and our AFFO payout ratio to our preferred stockholders was approximately 76.0% for the full year 2021. Our AFFO payout ratio to Common Stockholders and Unitholders was approximately 99.6% and our AFFO payout ratio to our preferred stockholders was approximately 74.3% for the fourth quarter 2021.
  • As of December 31, 2021, our total assets were approximately $3.6 billion, a decrease from our total assets of approximately $4.3 billion at December 31, 2020, that resulted primarily from the sale of eight office properties and one real estate loan investment that sold for approximately $780 million during the third and fourth quarter 2021.

(A) We calculate the Core FFO and AFFO payout ratios to Common Stockholders as the ratio of Common Stock dividends and distributions to Core FFO and AFFO. We calculate the Core FFO and AFFO payout ratios to preferred stockholders as the ratio of Preferred Stock dividends to the sum of Preferred Stock dividends and Core FFO and AFFO. Since our operations resulted in a net loss from continuing operations for the periods presented, a payout ratio based on net loss is not calculable. See Definitions of Non-GAAP Measures.

Operational

  • Our multifamily communities' same-store rental and other property revenues increased 9.6%, same-store property operating expenses increased 2.7% and same-store net operating income increased 14.8% for the quarter ended December 31, 2021 versus 2020. Our same-store multifamily communities include all our multifamily communities except Artisan at Viera, The Menlo, The Blake, Parkside at the Beach, Horizon at Wiregrass, The Ellison, Alleia at Presidio, The Anson, The Kingson, and Chestnut Farm, all of which were acquired in the last 29 months. For the year ended December 31, 2021, same-store rental and other property revenues increased 5.9%, same-store property operating expenses increased 4.2% and same-store net operating income increased 7.2% versus 2020.
  • Our rental rates for our multifamily same-store properties for new and renewal leases increased 22.0% and 12.5% respectively and 17.0% blended for fourth quarter 2021 as compared to the expiring leases, excluding shorter-term leases of six months or less.
  • Our rental rates for our multifamily same-store properties for new and renewal leases increased 17.4% and 12.1% respectively and 14.3% blended for January 2022 as compared to the expiring leases, excluding shorter-term leases of two months or less.
  • As of December 31, 2021, the average age of our multifamily communities was approximately 6.3 years, which we believe is the youngest in the public multifamily REIT industry.
  • As of December 31, 2021, all of our owned multifamily communities had achieved stabilization except for The Kingson and Chestnut Farm, which were acquired during the third quarter 2021. We define stabilization as reaching 93% occupancy for all three months within a single quarter.
  • The average physical occupancy of our same-store multifamily communities increased to 96.2% for the three-month period ended December 31, 2021 from 95.7% for the three-month period ended December 31, 2020 but decreased from 97.1% for the three-month period ended September 30, 2021.
  • Our average recurring rental revenue collections were approximately 99.0% for multifamily communities and 99.0% for grocery-anchored retail properties for the fourth quarter 2021.
  • Effective December 10, 2021, we elected Daphne Bryson Jackson as an additional independent member of our board of directors.

Financing and Capital Markets

  • As of December 31, 2021, approximately 96.1% of our permanent property-level mortgage debt has fixed interest rates and approximately 0.9% has variable interest rates which are capped. We believe we are well protected against potential increases in market interest rates. Our overall weighted average interest rate for our mortgage debt portfolio was 3.32% for multifamily communities, 4.35% for office properties, 3.90% for grocery-anchored retail properties and 3.54% in the aggregate.
     
  • During the fourth quarter 2021, we issued and sold an aggregate of 9,518 shares of preferred stock and redeemed or called an aggregate of 23,684 shares of preferred stock, resulting in a net reduction of 14,166 outstanding shares of preferred stock, for a net redemption of approximately $14.2 million.
     
  • During the fourth quarter 2021, we issued and sold an aggregate of 49,049 shares of common stock at an average price of $12.43 under the 2019 ATM Offering.
     
  • At December 31, 2021, our leverage, as measured by the ratio of our debt to the undepreciated book value of our total assets, was approximately 57.5%.
     
  • At December 31, 2021, we had $200.0 million available to be drawn on our revolving line of credit.
     
  • Our outstanding shares of Preferred Stock have decreased over the last three years, as summarized in the following chart:

Shares of Preferred Stock

 

 

 

 

 

 

 

 

 

 

 

 

2019

 

2020

 

2021

Issued

552,938

 

 

228,788

 

 

122,297

 

Redeemed by holder

(68,512

)

 

(164,286

)

 

(100,946

)

Called by PAC

 

 

(208,786

)

 

(320,746

)

 

 

 

 

 

 

Net increase (decrease)

484,426

 

 

(144,284

)

 

(299,395

)

 

 

 

 

 

 

Total outstanding at year end

2,136,257

 

 

1,991,973

 

 

1,692,578

 

Significant Transactions

  • On October 14, 2021, we closed on a real estate loan investment of up to approximately $16.6 million supporting a 337-unit second phase of The Menlo multifamily community in Jacksonville, Florida.
  • On October 21, 2021, we completed a supplemental financing on (i) our Retreat at Greystone multifamily community in the amount of approximately $7.3 million, that bears interest of 3.47% per annum and matures on December 1, 2024, and (ii) our Aldridge at Town Village multifamily community in the amount of approximately $3.7 million, that bears interest of 3.46% per annum and matures on November 1, 2024.
  • On November 1, 2021, we repaid the mortgage debt in the amount of $27.4 million supporting our Champions Village grocery-anchored shopping center, and on November 2, 2021, we financed our Woodstock Crossing grocery-anchored shopping center with a $5.3 million mortgage bearing interest at a fixed rate of 2.89% per annum that matures on December 1, 2026.
  • On November 3, 2021, we closed on a real estate loan investment of up to $9.1 million, in support of a 246-unit multifamily community located in the Atlanta, Georgia MSA.
  • On November 12, 2021, we closed on the sale of our Brookwood Center office building located in Birmingham, Alabama and in doing so, recognized a gain of $12.4 million and collected net proceeds of approximately $25.1 million.
  • On December 8, 2021, we financed our Fairview Market grocery-anchored shopping center with a $7.1 million mortgage bearing interest at a fixed rate of 2.87% per annum that matures on December 15, 2028.
  • On December 17, 2021, we closed on a land acquisition bridge loan of up to $6.3 million, in support of a 351-unit multifamily community located in the Charleston, South Carolina MSA.
  • Effective December 21, 2021, we entered into a $2.0 million equity commitment to partially finance the development and construction of a grocery-anchored shopping center to be located in the Charleston, South Carolina MSA. We will earn a fixed return of 12% per annum over an anticipated investment life of between 24 and 36 months from the development project and we will have a five year right of first offer to purchase the interests of the other investors in the project.

Subsequent to Quarter End

  • On February 11, 2022, we closed on a real estate loan investment of up to $16.7 million, in support of a 286-unit multifamily community located in the Orlando, Florida MSA.
     
  • On February 24, 2022, our board of directors declared a quarterly dividend on our Common Stock of $0.175 per share, payable on April 14, 2022 to stockholders of record on March 15, 2022.
     
  • Between January 1, 2022 and February 25, 2022, we issued no shares of Common Stock under the 2019 ATM Offering.
     
  • Between January 1, 2022 and February 10, 2022, we issued 3,167 shares of Series M1 Preferred Stock and collected net proceeds of approximately $3.1 million after commissions and fees. During the same period, we redeemed 9,453 shares of Series A Preferred Stock, 204 mShares, 212 shares of Series A1 Preferred Stock, and 267 shares of Series M1 Preferred Stock.
     
  • On February 10, 2022, we amended our real estate loan investment supporting The Platform, a 551-unit multifamily community located in San Jose, California. The maturity date of the instrument was extended to August 13, 2022 and a second extension option of December 31, 2022 was added. The all-in interest rate was reduced to 9.5% per annum beginning on the original maturity date of February 13, 2022 and it increases in steps each three-month period up to 11.0% per annum. As of January 31, 2022, the property's physical occupancy was 91.1%.
     
  • On February 15, 2022, we refinanced our Chestnut Farm multifamily community with permanent mortgage financing in the amount of approximately $52.3 million, that bears interest at a rate of 3.25% and matures on March 1, 2032.
     
  • On February 16, 2022, we entered into a definitive agreement by which Blackstone Real Estate Income Trust, Inc. ("BREIT") will acquire all our outstanding shares of our common stock for $25.00 in cash. Once and if the acquisition is completed, the Company will cease to be a publicly-traded company on the New York Stock Exchange. The holders of each series of our shares of preferred stock will receive the $1,000 per share liquidation preference for each share plus accrued but unpaid dividends. The transaction has been unanimously approved by our Board of Directors and is expected to close in the second quarter of 2022, although there is no guarantee that it will occur by that date, or at all, and the transaction is subject to approval by our stockholders and other customary closing conditions.
     
  • On February 25, 2022, the Company closed on the acquisition of Lirio at Rafina, a 280-unit multifamily community located in the Orlando, Florida MSA.
     
  • On February 28, 2022, we closed on a real estate loan investment of up to $17.2 million, in support of a 242-unit multifamily community located in the Naples, Florida MSA.
     
  • Between January 1, 2022 and February 25, 2022, we issued 3,358,780 shares of Common Stock from exercises of our outstanding Warrants.

2022 Guidance

Due to the pending acquisition by BREIT, we are not issuing guidance at this time with respect to our 2022 financial outlook.

Real Estate Assets

At December 31, 2021, our portfolio of owned real estate assets and potential additions from purchase options we held from our real estate loan investments consisted of:

 

 

 

 

 

 

 

 

 

 

Owned as of
December 31,
2021 (1)

 

Potential
additions (2)

 

Potential total

 

 

Residential properties:

 

 

 

 

 

 

 

Properties

41

 

9

 

50

 

 

Units

12,052

 

2,859

 

14,911

 

 

Grocery-anchored shopping centers:

 

 

 

 

 

 

 

Properties

54

 

1

 

55

 

 

Gross leasable area (square feet)

6,210,778

 

85,500

( 4)

6,296,278

 

 

Office buildings: (3)

 

 

 

 

 

 

 

Properties

2

 

 

2

 

 

Rentable square feet

1,072,000

 

 

1,072,000

 

 

Land

1

 

 

1

 

 

 

 

 

 

 

 

 

 

(1) One multifamily community and two grocery-anchored shopping centers are owned through consolidated joint ventures. One grocery-anchored shopping center is an investment in an unconsolidated joint venture.

 

(2) We evaluate each project individually and we make no assurance that we will acquire any of the underlying properties from our real estate loan investment portfolio.

 

(3) Eight of our office properties and a real estate loan investment supporting the 8West office building were sold during the third and fourth quarters of 2021.

 

(4) Estimated square footage of Nexton Shopping Center development.

Same-Store Financial Data

The following charts present same-store operating results for the Company’s multifamily communities. We define our population of same-store multifamily communities as those that have achieved occupancy at or above 93% for all three months within a single quarter ("stabilized") before the beginning of the prior year and that have been owned for at least 15 full months as of the end of the first quarter of the current year, enabling comparisons of the current year quarterly and annual reporting periods to the prior year comparative periods. The Company excludes the operating results of properties for which construction of adjacent phases has commenced and properties which are undergoing significant capital projects, have sustained significant casualty losses, or are being held for sale as of the end of the reporting period.

For the periods presented, same-store operating results consist of the operating results of the multifamily communities listed below, comprising an aggregate 9,222 units, or 76.5% of our multifamily units.

Same-store net operating income is a non-GAAP measure that is most directly comparable to net income (loss), as shown in the reconciliation below. See Definitions of Non-GAAP Measures.

Reconciliation of Net Income (Loss) to Multifamily Communities' Same-Store Net Operating Income ("NOI")

 

 

 

 

 

 

 

Three months ended:

(in thousands)

 

12/31/2021

 

12/31/2020

 

 

 

 

 

Net income

 

$

11,659

 

 

$

17,472

 

Add:

 

 

 

 

Equity stock compensation

 

 

973

 

 

 

586

 

Depreciation and amortization

 

 

38,995

 

 

 

48,581

 

Interest expense

 

 

23,280

 

 

 

27,950

 

General and administrative

 

6,137

 

 

 

7,556

 

Loss from unconsolidated joint venture

 

 

109

 

 

 

194

 

Management Internalization

 

 

243

 

 

 

288

 

Allowance for expected credit losses

 

 

932

 

 

 

640

 

Less:

 

 

 

 

Interest revenue on notes receivable

 

 

9,252

 

 

 

12,115

 

Interest revenue on related party notes receivable

 

 

414

 

 

 

485

 

Miscellaneous revenues

 

 

147

 

 

 

727

 

Gain on sale of real estate

 

 

12,369

 

 

 

20,195

 

Loss on sale of real estate loan investment

 

 

 

 

 

(11

)

 

 

 

 

 

Property net operating income

 

 

60,146

 

 

 

69,756

 

Less:

 

 

 

 

Non same-store property revenues

 

 

(51,185

)

 

 

(66,745

)

Add:

 

 

 

 

Non same-store property operating expenses

 

17,748

 

 

 

20,247

 

 

 

 

 

Same-store net operating income

 

$

26,709

 

 

$

23,258

 

Multifamily Communities' Same-Store NOI

 

 

 

 

 

 

 

 

 

 

 

Three months ended:

 

 

 

 

(in thousands)

 

12/31/2021

 

12/31/2020

 

$ change

 

% change

Revenues:

 

 

 

 

 

 

 

 

Rental and other property revenues

 

$

44,727

 

 

$

40,800

 

 

$

3,927

 

 

9.6

%

Operating expenses:

 

 

 

 

 

 

 

 

Property operating and maintenance

 

 

7,197

 

 

 

6,782

 

 

 

415

 

 

6.1

%

Payroll

 

 

3,335

 

 

 

3,232

 

 

 

103

 

 

3.2

%

Real estate taxes and insurance

 

 

7,486

 

 

 

7,528

 

 

 

(42

)

 

(0.6

) %

Total operating expenses

 

 

18,018

 

 

 

17,542

 

 

 

476

 

 

2.7

%

 

 

 

 

 

 

 

 

 

Same-store net operating income

 

$

26,709

 

 

$

23,258

 

 

$

3,451

 

 

14.8

%

 

 

 

 

 

 

 

 

 

Same-store average physical occupancy

 

 

96.2

%

 

 

95.7

%

 

 

 

0.5

%

 

 

 

 

 

 

 

 

 

Corporate level expenses related to the management and operations of the multifamily portfolio are allocated on a per unit basis to property NOI and are included in Multifamily Same-Store NOI.

Reconciliation of Net Income (Loss) to Multifamily Communities' Same-Store Net Operating Income ("NOI")

 

 

 

 

 

 

 

Years ended:

(in thousands)

 

12/31/2021

 

12/31/2020

 

 

 

 

 

Net income (loss)

 

$

20,532

 

 

$

(181,603

)

Add:

 

 

 

 

Equity stock compensation

 

 

3,289

 

 

 

1,644

 

Depreciation and amortization

 

 

169,193

 

 

 

201,677

 

Interest expense

 

 

102,414

 

 

 

118,558

 

Management fees

 

 

 

 

 

3,099

 

General and administrative

 

29,144

 

 

 

28,534

 

Loss from unconsolidated joint venture

 

 

665

 

 

 

314

 

Management Internalization

 

 

970

 

 

 

180,116

 

Allowance for expected credit losses

 

 

874

 

 

 

6,103

 

Waived asset management and general and administrative expense fees

 

 

 

 

 

(1,136

)

Less:

 

 

 

 

Interest revenue on notes receivable

 

 

43,819

 

 

 

46,610

 

Interest revenue on related party notes receivable

 

 

1,644

 

 

 

4,235

 

Miscellaneous revenues

 

 

1,098

 

 

 

4,525

 

Gain on sale of real estate

 

 

21,109

 

 

 

23,456

 

Gain on sale of land

 

 

 

 

 

528

 

Loss on sale of real estate loan investment

 

 

(12

)

 

 

(11

)

Loss on extinguishment of debt

 

 

 

 

 

(6,674

)

 

 

 

 

 

Property net operating income

 

 

259,423

 

 

 

284,637

 

Less:

 

 

 

 

Non same-store property revenues

 

 

(232,767

)

 

 

(283,616

)

Add:

 

 

 

 

Non same-store property operating expenses

 

73,914

 

 

 

92,837

 

 

 

 

 

Same-store net operating income

 

$

100,570

 

 

$

93,858

 

Multifamily Communities' Same-Store NOI

 

 

 

 

 

 

 

 

 

 

 

Years ended:

 

 

 

 

(in thousands)

 

12/31/2021

 

12/31/2020

 

$ change

 

% change

Revenues:

 

 

 

 

 

 

 

 

Rental and other property revenues

 

$

171,812

 

$

162,200

 

$

9,612

 

5.9

%

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Property operating and maintenance

 

 

28,881

 

 

27,439

 

 

1,442

 

5.3

%

Payroll

 

 

13,163

 

 

12,690

 

 

473

 

3.7

%

Real estate taxes and insurance

 

 

29,198

 

 

28,213

 

 

985

 

3.5

%

Total operating expenses

 

 

71,242

 

 

68,342

 

 

2,900

 

4.2

%

 

 

 

 

 

 

 

 

 

Same-store net operating income

 

$

100,570

 

$

93,858

 

$

6,712

 

7.2

%

 

 

 

 

 

 

 

 

 

Corporate level expenses related to the management and operations of the multifamily portfolio are allocated on a per unit basis to property NOI and are included in Multifamily Same-Store NOI.

Dividends

Quarterly Dividends on Common Stock and Class A OP Units

On October 28, 2021, our board of directors declared a quarterly dividend on our Common Stock of $0.175 per share, which was paid on January 14, 2022 to stockholders of record as of December 15, 2021. In conjunction with the Common Stock dividend, our operating partnership declared a distribution on its Class A Units of $0.175 per unit for the fourth quarter 2021, which was paid on January 14, 2022 to all Class A Unit holders of record as of December 15, 2021.

Monthly Dividends on Preferred Stock

We declared monthly dividends of $5.00 per share on our Series A Preferred Stock, which totaled approximately $22.1 million for the fourth quarter 2021 and represents a 6% annual yield. We declared monthly dividends of $5.00 per share on our Series A1 Preferred Stock, which totaled approximately $3.7 million for the fourth quarter 2021 and also represents a 6% annual yield. We declared dividends totaling approximately $1.4 million on our Series M Preferred Stock, or mShares, for the fourth quarter 2021. The mShares have a dividend rate that escalates from 5.75% in year one of issuance to 7.50% in year eight and thereafter. We declared dividends totaling approximately $605,000 on our Series M1 Preferred Stock for the fourth quarter 2021. The Series M1 Preferred Stock has a dividend rate that escalates from 6.1% in year one of issuance to 7.1% in year ten and thereafter.

Forward-Looking Statements

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: redemptions of Series A Preferred Stock, potential additions of properties from purchase options and rights of first offer from our real estate loan investments, goals and performance are, by definition, and certain other statements in this Earnings Release and Supplemental Financial Data Report may constitute, “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance, achievements or transactions to be materially different from the results, guidance, goals, performance, achievements or transactions expressed or implied by the forward-looking statements. These statements may be identified by the use of forward-looking terminology such as "may," "trend," "will," "expects," "plans," "estimates," "anticipates," "projects," "intends," "believes," "strategy," "goals," "objectives," "outlook" and similar expressions. These risks, uncertainties and contingencies include, but are not limited to, (a) the impact of the COVID-19 pandemic, including any variants, and related federal, state and local government actions on PAC’s business operations and the economic conditions in the markets in which PAC operates; (b) PAC’s ability to mitigate the impacts arising from COVID-19 or any variants thereof; (c) risks related to the proposed acquisition by BREIT, including the possibility that the consummation of the transaction could be delayed or not completed, and the effect of the announcement or pendency of the transaction on our business; (d) PAC's ability to make distributions to its stockholders in the future; and (e) those disclosed in PAC's filings with the SEC. Factors that impact such forward-looking statements include, among others, our business and investment strategy; legislative or regulatory actions; the state of the U.S. economy generally or in specific geographic areas; economic trends and economic recoveries; changes in operating costs, including real estate taxes, utilities and insurance costs; our ability to obtain and maintain debt or equity financing; financing and advance rates for our target assets; our leverage level; changes in the values of our assets; the occurrence of natural or man-made disasters; availability of attractive investment opportunities in our target markets; our ability to maintain our qualification as a real estate investment trust, or REIT, for U.S. federal income tax purposes; availability of quality personnel; our understanding of our competition and market trends in our industry; and interest rates, real estate values, the debt securities markets and the general economy.

Except as otherwise required by the federal securities laws, we assume no liability to update the information in this Earnings Release and Supplemental Financial Data Report.

We refer you to the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2021 that was filed with the SEC on February 28, 2022, which discuss various factors that could adversely affect our financial results. Such risk factors and information may be updated or supplemented by our Form 10-K, Form 10-Q and Form 8-K filings and other documents filed from time to time with the SEC.

COVID-19

Our percentages of rent collected remained stabilized at or near pre-pandemic levels during the fourth quarter 2021. While the impacts of COVID-19 and its variants are continuing, the effects on our operations have been manageable and we believe this condition will persist, barring a dramatic change in the trajectory of the pandemic. We are continuing to monitor the spread and impact of the variants of COVID-19 as well as vaccination rates in our markets.

Preferred Apartment Communities, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

 

 

 

 

 

 

 

Three months ended December 31,

 

Years ended December 31,

(In thousands, except per-share figures)

2021

 

2020

 

2021

 

2020

Revenues:

 

 

 

 

 

 

 

Rental and other property revenues

$

95,911

 

 

$

107,544

 

 

$

404,581

 

 

$

445,815

 

Interest income on loans and notes receivable

 

9,252

 

 

 

12,115

 

 

 

43,819

 

 

 

46,610

 

Interest income from related parties

 

414

 

 

 

485

 

 

 

1,644

 

 

 

4,235

 

Miscellaneous revenues

 

147

 

 

 

727

 

 

 

1,098

 

 

 

4,525

 

 

 

 

 

 

 

 

 

Total revenues

 

105,724

 

 

 

120,871

 

 

 

451,142

 

 

 

501,185

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Property operating and maintenance

 

15,732

 

 

 

16,426

 

 

 

61,517

 

 

 

69,992

 

Property salary and benefits

 

4,787

 

 

 

5,412

 

 

 

19,451

 

 

 

22,377

 

Property management costs

 

674

 

 

 

961

 

 

 

3,463

 

 

 

4,989

 

Real estate taxes and insurance

 

14,572

 

 

 

14,989

 

 

 

60,727

 

 

 

63,820

 

General and administrative

 

6,137

 

 

 

7,556

 

 

 

29,144

 

 

 

28,534

 

Equity compensation to directors and executives

 

973

 

 

 

586

 

 

 

3,289

 

 

 

1,644

 

Depreciation and amortization

 

38,995

 

 

 

48,581

 

 

 

169,193

 

 

 

201,677

 

Management fees to related party

 

 

 

 

 

 

 

 

 

 

3,099

 

Allowance for expected credit losses

 

932

 

 

 

640

 

 

 

874

 

 

 

6,103

 

Management Internalization expense

 

243

 

 

 

288

 

 

 

970

 

 

 

180,116

 

 

 

 

 

 

 

 

 

Total operating expenses

 

83,045

 

 

 

95,439

 

 

 

348,628

 

 

 

582,351

 

 

 

 

 

 

 

 

 

Waived asset management and general and administrative expense fees

 

 

 

 

 

 

 

 

 

 

(1,136

)

Net operating expenses

 

83,045

 

 

 

95,439

 

 

 

348,628

 

 

 

581,215

 

Operating income (loss) before loss from unconsolidated joint venture and gains on sales of real estate

 

22,679

 

 

 

25,432

 

 

 

102,514

 

 

 

(80,030

)

Loss from unconsolidated joint venture

 

(109

)

 

 

(194

)

 

 

(665

)

 

 

(314

)

Gain on sale of real estate, net

 

12,369

 

 

 

20,195

 

 

 

21,109

 

 

 

23,456

 

Operating income (loss)

 

34,939

 

 

 

45,433

 

 

 

122,958

 

 

 

(56,888

)

Interest expense

 

23,280

 

 

 

27,950

 

 

 

102,414

 

 

 

118,558

 

Loss on extinguishment of debt

 

 

 

 

 

 

 

 

 

 

(6,674

)

Gain on sale of land

 

 

 

 

 

 

 

 

 

 

528

 

Loss on sale of real estate loan investment

 

 

 

 

(11

)

 

 

(12

)

 

 

(11

)

 

 

 

 

 

 

 

 

Net income (loss)

 

11,659

 

 

 

17,472

 

 

 

20,532

 

 

 

(181,603

)

Net (income) loss attributable to non-controlling interests

 

(97

)

 

 

300

 

 

 

(86

)

 

 

3,815

 

Net income (loss) attributable to the Company

 

11,562

 

 

 

17,772

 

 

 

20,446

 

 

 

(177,788

)

 

 

 

 

 

 

 

 

Dividends to preferred stockholders

 

(27,756

)

 

 

(56,307

)

 

 

(153,418

)

 

 

(160,908

)

Dividends to holders of unvested restricted stock

 

(117

)

 

 

(96

)

 

 

(514

)

 

 

(205

)

 

 

 

 

 

 

 

 

Net loss attributable to common stockholders

$

(16,311

)

 

$

(38,631

)

 

$

(133,486

)

 

$

(338,901

)

 

 

 

 

 

 

 

 

Net loss per share of Common Stock available to common stockholders, basic and diluted

$

(0.31

)

 

$

(0.77

)

 

$

(2.59

)

 

$

(6.95

)

 

 

 

 

 

 

 

 

Weighted average number of shares of Common Stock outstanding, basic and diluted

 

52,948

 

 

 

49,912

 

 

 

51,499

 

 

 

48,743

 

Reconciliation of FFO Attributable to Common Stockholders and Unitholders, Core FFO and AFFO

to Net (Loss) Income Attributable to Common Stockholders

 

 

 

Three months ended December 31,

(In thousands, except per-share figures)

2021

 

2020

 

 

 

 

 

 

Net loss attributable to common stockholders (See note 1)

$

(16,311

)

 

$

(38,631

)

 

 

 

 

 

 

Add:

Depreciation of real estate assets

 

32,861

 

 

 

39,447

 

 

Amortization of acquired intangible assets and deferred leasing costs

 

5,916

 

 

 

8,742

 

 

Net loss attributable to Class A Unitholders (See note 2)

 

107

 

 

 

260

 

 

Gain on sale of real estate

 

(12,369

)

 

 

(20,195

)

FFO attributable to common stockholders and Unitholders

 

10,204

 

 

 

(10,377

)

 

 

 

 

 

 

 

Acquisition and pursuit costs

 

16

 

 

 

2

 

 

Loan cost amortization on acquisition line of credit and loan coordination fees (See note 3)

 

322

 

 

 

451

 

 

Internalization costs (See note 4)

 

243

 

 

 

288

 

 

Deemed dividends for redemptions of and non-cash dividends on preferred stock, plus

 

 

 

 

expenses incurred on calls of preferred stock (See note 5)

 

2,106

 

 

 

25,113

 

 

Expenses related to the COVID-19 global pandemic (See note 6)

 

6

 

 

 

77

 

Core FFO attributable to common stockholders and Unitholders

 

12,897

 

 

 

15,554

 

 

 

 

 

 

Add:

Non-cash equity compensation to directors and executives

 

973

 

 

 

586

 

 

Non-cash income for current expected credit losses (See note 13)

 

518

 

 

 

155

 

 

Amortization of loan closing costs (See note 7)

 

1,264

 

 

 

1,255

 

 

Depreciation/amortization of non-real estate assets

 

456

 

 

 

541

 

 

Net loan origination fees received (See note 8)

 

494

 

 

 

16

 

 

Deferred interest income received (See note 9)

 

479

 

 

 

3,852

 

 

Amortization of lease inducements (See note 10)

 

447

 

 

 

448

 

 

Cash received in excess of (exceeded by) amortization of purchase option termination revenues (See note 11)

 

 

 

 

560

 

Less:

Non-cash loan interest income (See note 12)

 

(2,276

)

 

 

(3,193

)

 

Cash paid for loan closing costs

 

 

 

 

(16

)

 

Amortization of acquired real estate intangible liabilities and straight-line rent adjustments (See note 14)

 

(1,695

)

 

 

(4,333

)

 

Amortization of deferred revenues (See note 15)

 

(941

)

 

 

(941

)

 

Normally recurring capital expenditures (See note 16)

 

(3,026

)

 

 

(1,903

)

 

 

 

 

 

 

AFFO attributable to common stockholders and Unitholders

$

9,590

 

 

$

12,581

 

 

 

 

 

 

Common Stock dividends and distributions to Unitholders declared:

 

 

 

 

Common Stock dividends

$

9,460

 

 

$

8,973

 

 

Distributions to Unitholders (See note 2)

 

87

 

 

 

34

 

 

Total

 

$

9,547

 

 

$

9,007

 

 

 

 

 

 

 

Common Stock dividends and Unitholder distributions per share

$

0.1750

 

 

$

0.175

 

 

 

 

 

 

 

FFO per weighted average basic share of Common Stock and Unit outstanding

$

0.19

 

 

$

(0.20

)

Core FFO per weighted average basic share of Common Stock and Unit outstanding

$

0.24

 

 

$

0.31

 

AFFO per weighted average basic share of Common Stock and Unit outstanding

$

0.18

 

 

$

0.25

 

 

 

 

 

Weighted average shares of Common Stock and Units outstanding:

 

 

 

 

Basic:

 

 

 

 

 

Common Stock

 

52,948

 

 

 

49,912

 

 

Class A Units

 

493

 

 

 

731

 

 

Common Stock and Class A Units

 

53,441

 

 

 

50,643

 

 

 

 

 

 

 

 

Diluted Common Stock and Class A Units (See note 17)

 

54,205

 

 

 

50,708

 

 

 

 

 

 

 

Actual shares of Common Stock outstanding, including 664 and 548 unvested shares

 

 

 

of restricted Common Stock at December 31, 2021 and 2020, respectively.

 

53,639

 

 

 

50,542

 

Actual Class A Units outstanding at December 31, 2021 and 2020, respectively.

 

468

 

 

 

649

 

 

Total

 

 

54,107

 

 

 

51,191

 

 

 

 

 

 

 

See Notes to Reconciliation of FFO, Core FFO and AFFO to Net Income (Loss) Attributable to Common Stockholders.

Reconciliation of FFO Attributable to Common Stockholders and Unitholders, Core FFO and AFFO

to Net (Loss) Income Attributable to Common Stockholders

 

 

 

Years ended December 31,

(In thousands, except per-share figures)

2021

 

2020

 

 

 

 

 

 

Net loss attributable to common stockholders (See note 1)

$

(133,486

)

 

$

(338,901

)

 

 

 

 

 

 

Add:

Depreciation of real estate assets

 

138,477

 

 

 

161,500

 

 

Amortization of acquired intangible assets and deferred leasing costs

 

29,725

 

 

 

37,675

 

 

Net (income) loss attributable to Class A Unitholders (See note 2)

 

184

 

 

 

(3,133

)

 

Gain on sale of real estate

 

(21,109

)

 

 

(23,456

)

FFO attributable to common stockholders and Unitholders

 

13,791

 

 

 

(166,315

)

 

Acquisition and pursuit costs

 

21

 

 

 

383

 

 

Loan cost amortization on acquisition line of credit and loan coordination fees (See note 3)

 

1,608

 

 

 

2,162

 

 

Payment of costs related to property refinancing

 

506

 

 

 

7,372

 

 

Internalization costs (See note 4)

 

970

 

 

 

180,116

 

 

Deemed dividends for redemptions of and non-cash dividends on preferred stock, plus

 

 

 

 

expenses incurred on calls of preferred stock (See note 5)

 

40,375

 

 

 

31,536

 

 

Expenses related to the COVID-19 global pandemic (See note 6)

 

121

 

 

 

663

 

 

Earnest money forfeited by prospective asset purchaser

 

 

 

 

(2,750

)

Core FFO attributable to common stockholders and Unitholders

 

57,392

 

 

 

53,167

 

 

 

 

 

 

Add:

Non-cash equity compensation to directors and executives

 

3,289

 

 

 

1,644

 

 

Amortization of loan closing costs (See note 7)

 

4,965

 

 

 

4,886

 

 

Depreciation/amortization of non-real estate assets

 

1,792

 

 

 

2,334

 

 

Net loan origination fees received (See note 8)

 

2,381

 

 

 

898

 

 

Deferred interest income received (See note 9)

 

14,059

 

 

 

12,504

 

 

Amortization of lease inducements (See note 10)

 

1,796

 

 

 

1,782

 

 

Earnest money forfeited by prospective asset purchaser

 

 

 

 

2,750

 

 

Cash received in excess of (exceeded by) amortization of purchase option termination revenues (See note 11)

 

2,777

 

 

 

464

 

Less:

Non-cash loan interest income (See note 12)

 

(10,389

)

 

 

(12,638

)

 

Non-cash (income) expense for current expected credit losses (See note 13)

 

(770

)

 

 

3,802

 

 

Cash paid for loan closing costs

 

(2,041

)

 

 

(122

)

 

Amortization of acquired real estate intangible liabilities and straight-line rent adjustments (See note 14)

 

(10,659

)

 

 

(18,017

)

 

Amortization of deferred revenues (See note 15)

 

(3,762

)

 

 

(3,762

)

 

Normally recurring capital expenditures (See note 16)

 

(12,501

)

 

 

(8,428

)

 

 

 

 

 

 

AFFO attributable to common stockholders and Unitholders

$

48,329

 

 

$

41,264

 

Common Stock dividends and distributions to Unitholders declared:

 

 

 

 

Common Stock dividends

 

37,143

 

 

 

38,868

 

 

Distributions to Unitholders (See note 2)

 

357

 

 

 

593

 

 

Total

 

 

37,500

 

 

 

39,461

 

 

 

 

 

 

 

Common Stock dividends and Unitholder distributions per share

$

0.70

 

 

$

0.7875

 

 

 

 

 

 

 

FFO per weighted average basic share of Common Stock and Unit outstanding

$

0.27

 

 

$

(3.36

)

Core FFO per weighted average basic share of Common Stock and Unit outstanding

$

1.10

 

 

$

1.07

 

AFFO per weighted average basic share of Common Stock and Unit outstanding

$

0.93

 

 

$

0.83

 

Weighted average shares of Common Stock and Units outstanding:

 

 

 

 

Basic:

 

 

 

 

 

Common Stock

 

51,499

 

 

 

48,743

 

 

Class A Units

 

 

533

 

 

 

765

 

 

Common Stock and Class A Units

 

52,032

 

 

 

49,508

 

 

 

 

 

 

 

 

Diluted Common Stock and Class A Units (See note 17)

 

52,532

 

 

 

49,549

 

 

 

 

 

 

 

Actual shares of Common Stock outstanding, including 664 and 548 unvested shares

 

 

 

of restricted Common Stock at December 31, 2021 and 2020, respectively.

 

53,639

 

 

 

50,542

 

Actual Class A Units outstanding at December 31, 2021 and 2020, respectively.

 

468

 

 

 

649

 

 

Total

 

 

54,107

 

 

 

51,191

 

 

See Notes to Reconciliation of FFO, Core FFO and AFFO to Net Income (Loss) Attributable to Common Stockholders.

Notes to Reconciliations of FFO Attributable to Common Stockholders and Unitholders, Core FFO and AFFO to Net Loss Attributable to Common Stockholders

 

1)

Rental and other property revenues and property operating expenses for the three months and year ended December 31, 2021 include activity for the properties acquired since December 31, 2020. Rental and other property revenues and expenses for the quarterly and annual periods ended December 31, 2020 include activity for the acquisitions made during those periods only from their respective dates of acquisition.

 

2)

Non-controlling interests in our Operating Partnership, consisted of a total of 467,662 Class A Units as of December 31, 2021. Included in this total are 419,228 Class A Units which were granted as partial consideration to the seller in conjunction with theseller'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 0.92% and 1.44% for the three-month periods ended December 31, 2021 and 2020, respectively.

 

3)

We paid loan coordination fees to Preferred Apartment Advisors, LLC, (our "Former Manager") to reflect the administrative effort involved in arranging debt financing for acquired properties prior to the Internalization Transaction (defined in note 4 below). The fees were calculated as 0.6% of the amount of any mortgage indebtedness on newly-acquired properties or refinancing and are amortized over the lives of the respective mortgage loans. This non-cash amortization expense is an addition to FFO in the calculation of Core FFO and AFFO. At December 31, 2021, aggregate unamortized loan coordination fees were approximately $7.7 million, which will be amortized over a weighted average remaining loan life of approximately 10.2 years.

 

4)

This adjustment reflects the add-back of (i) consideration paid to the owners of the Former Manager and NMP Advisors, LLC (our "Former Sub-Manager"), (ii) accretion of the discount on the deferred liability payable to the owners of the Former Manager and (iii) due diligence and pursuit costs incurred by the Company related to the internalization of the functions performed by the Former Manager and Former Sub-Manager (the "Internalization Transaction").

 

5)

This additive adjustment removes the effect of deemed dividends that arise from cash calls and redemptions of preferred stock. For preferred stock shares that are called by the Company or redeemed by the holder, the Company records a deemed dividend for the difference between the redemption of the share at its face value, net of any redemption discount, as compared to the carrying value of the share on the Company’s consolidated balance sheets. Also included in this adjustment is the adding back of expenses incurred related to effecting calls of preferred stock.

 

6)

This additive adjustment to FFO consists of non-recurring costs for signage, cleaning and supplies necessary to create and maintain work environments necessary to adhere to CDC guidelines during the current COVID-19 pandemic. Since we do not expect to incur similar costs once the COVID-19 pandemic has subsided, we add these costs back to FFO in our calculation of Core FFO.

 

7)

We incur loan closing costs on our existing mortgage loans, which are secured on a property-by-property basis by each of our acquired real estate assets, and also for occasional amendments to our syndicated revolving line of credit with Key Bank National Association, or our Revolving Line of Credit. These loan closing costs are also amortized over the lives of the respective loans and the Revolving Line of Credit, and this non-cash amortization expense is an addition to FFO in the calculation of AFFO. Neither we nor the Operating Partnership have any recourse liability in connection with any of the mortgage loans, nor do we have any cross-collateralization arrangements with respect to the assets securing the mortgage loans, other than security interests in 49% of the equity interests of the subsidiaries owning such assets, granted in connection with our Revolving Line of Credit, which provides for full recourse liability. At December 31, 2021, unamortized loan costs on all the Company's indebtedness were approximately $29.5 million, which will be amortized over a weighted average remaining loan life of approximately 7.9 years.

 

8)

We receive loan origination fees in conjunction with the origination of certain real estate loan investments. The total fees received are additive adjustments to Core FFO in our calculation of AFFO.

 

9)

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. Once received from the borrower, the amount of additional accrued interest becomes an additive adjustment to Core FFO in our calculation of AFFO.

 

10)

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.

 

11)

Occasionally we receive fees in exchange for the termination of our purchase options related to certain multifamily communities. These fees are recorded as revenue over the period beginning on the date of termination until the earlier of (i) the maturity of the real estate loan investment and (ii) the sale of the property. The receipt of the cash termination fees are an additive adjustment in our calculation of AFFO and the removal of non-cash revenue from the recognition of the termination fees are a reduction to Core FFO in our calculation of AFFO; both of these adjustments are presented in a single net number within this line. For periods in which recognized termination fee revenues exceeded the amount of cash received, a negative adjustment is shown to Core FFO in our calculation of AFFO; for periods in which cash received exceeded the amount of recognized termination fee revenues, an additive adjustment is shown to Core FFO in our calculation of AFFO.

 

12)

Loan origination fees (described in note 8 above) are recognized as revenue over the lives of the applicable loans as adjustments of yield using the effective interest method. Similarly, the accrual of additional interest amounts (described in note 9 above) are recognized beginning from loan inception through the repayment of the loan or the refinancing or sale of the underlying property. This adjustment removes the effect of both these types of non-cash loan interest income from Core FFO in our calculation of AFFO.

 

13)

Effective January 1, 2020, we adopted ASU 2016-03, which requires us to estimate the amount of future credit losses we expect to incur over the lives of our real estate loan investments at the inception of each loan. This loss reserve may be adjusted upward or downward over the lives of our loans and therefore the aggregate net adjustment for each period could be positive (removing the non-cash effect of a net increase in aggregate loss reserves) or negative (removing the non-cash effect of a net decrease in aggregate loss reserves) in these adjustments to Core FFO in calculating AFFO.

 

14)

This adjustment reflects straight-line rent adjustments and the reversal of the non-cash amortization of below-market and above-market lease intangibles, which were recognized in conjunction with our acquisitions and which are amortized over the estimated average remaining lease terms from the acquisition date for multifamily communities and over the remaining lease terms for grocery-anchored shopping center assets and office buildings. At December 31, 2021, the balance of unamortized below-market lease intangibles was approximately $34.6 million, which will be recognized over a weighted average remaining lease period of approximately 8.1 years.

 

15)

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.

 

16)

We deduct from Core FFO normally recurring capital expenditures that are necessary to maintain our assets’ revenue streams in the calculation of AFFO. This adjustment also deducts from Core FFO capitalized amounts for third party costs during the period to originate or renew leases in our grocery-anchored shopping centers and office buildings. This adjustment includes approximately $58,000 and $117,000 of recurring capitalized expenditures incurred at our corporate offices during the quarterly and annual periods ended December 31, 2021, respectively. No adjustment is made in the calculation of AFFO for nonrecurring capital expenditures. See Capital Expenditures, Grocery-Anchored Shopping Center Portfolio, and Office Building Portfolio sections for definitions of these terms.

 

17)

Since our AFFO results are positive for the periods reflected, we are presenting recalculated diluted weighted average shares of Common Stock and Class A Units for these periods for purposes of this table, which includes the dilutive effect of common stock equivalents from grants of the Class B Units, warrants included in units of Series A Preferred Stock issued, as well as annual grants of restricted Common Stock and restricted stock units. The weighted average shares of Common Stock outstanding presented on the Consolidated Statements of Operations are the same for basic and diluted for any period for which we recorded a net loss available to common stockholders.

 
See Definitions of Non-GAAP Measures.

Preferred Apartment Communities, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except per-share par values)

 

December 31,
2021

 

December 31,
2020

Assets

 

 

 

 

Real estate

 

 

 

Land

 

$

551,378

 

 

$

605,282

 

Building and improvements

 

2,671,535

 

 

 

3,034,727

 

Tenant improvements

 

119,331

 

 

 

184,288

 

Furniture, fixtures, and equipment

 

359,743

 

 

 

306,725

 

Construction in progress

 

5,151

 

 

 

12,269

 

Gross real estate

 

3,707,138

 

 

 

4,143,291

 

Less: accumulated depreciation

 

(578,496

)

 

 

(509,547

)

Net real estate

 

3,128,642

 

 

 

3,633,744

 

Real estate loan investments, net

 

196,420

 

 

 

279,895

 

Total real estate and real estate loan investments, net

 

3,325,062

 

 

 

3,913,639

 

 

 

 

 

 

Cash and cash equivalents

 

30,205

 

 

 

28,657

 

Restricted cash

 

32,675

 

 

 

47,059

 

Note receivable and revolving line of credit (including $9,011 from related party at December 31, 2021 and 2020)

 

9,011

 

 

 

10,874

 

Accrued interest receivable on real estate loans

 

17,038

 

 

 

22,528

 

Acquired intangible assets, net of amortization

 

59,622

 

 

 

127,138

 

Tenant lease inducements, net

 

16,420

 

 

 

18,206

 

Investment in unconsolidated joint venture

 

 

5,992

 

 

 

6,657

 

Tenant receivables and other assets

 

67,343

 

 

 

106,321

 

 

 

 

 

 

Total assets

$

3,563,368

 

 

$

4,281,079

 

 

 

 

 

 

Liabilities and equity

 

 

 

Liabilities

 

 

 

Mortgage notes payable, net of deferred loan costs and mark-to-market adjustment

$

2,343,364

 

 

$

2,594,464

 

Revolving line of credit

 

 

 

 

22,000

 

Deferred revenues

 

35,523

 

 

 

36,733

 

Accounts payable and accrued expenses

 

36,517

 

 

 

41,912

 

Deferred liability to Former Manager

 

24,037

 

 

 

23,335

 

Contingent liability due to Former Manager

 

14,631

 

 

 

14,814

 

Accrued interest payable

 

7,086

 

 

 

7,877

 

Dividends and partnership distributions payable

 

19,912

 

 

 

20,137

 

Acquired below market lease intangibles, net of amortization

 

34,585

 

 

 

51,934

 

Prepaid rent, security deposits and other liabilities

 

25,679

 

 

 

29,425

 

Total liabilities

 

2,541,334

 

 

 

2,842,631

 

 

 

 

 

 

Commitments and contingencies

 

 

 

Equity

 

 

 

 

Stockholders' equity

 

 

 

 

Series A Redeemable Preferred Stock, $0.01 par value per share; 3,050 shares authorized; 2,226 shares

 

 

 

issued; 1,321 and 1,735 shares outstanding at December 31, 2021 and December 31, 2020, respectively

 

13

 

 

 

17

 

Series A1 Redeemable Preferred Stock, $0.01 par value per share; up to 1,000 shares authorized; 247 and 149

 

 

 

shares issued; 246 and 149 shares outstanding at December 31, 2021 and December 31, 2020, respectively

 

2

 

 

 

1

 

Series M Redeemable Preferred Stock, $0.01 par value per share; 500 shares authorized; 106 shares issued;

 

 

 

84 and 89 shares outstanding at December 31, 2021 and December 31, 2020, respectively

 

1

 

 

 

1

 

Series M1 Redeemable Preferred Stock, $0.01 par value per share; up to 1,000 shares authorized; 43 and 19 shares

 

 

 

issued; 41 and 19 shares outstanding at December 31, 2021 and December 31, 2020, respectively

 

 

 

 

 

Common Stock, $0.01 par value per share; 400,067 shares authorized; 52,975 and 49,994 shares issued and

 

 

 

outstanding at December 31, 2021 and December 31, 2020, respectively

 

530

 

 

 

500

 

Additional paid-in capital

 

 

1,195,775

 

 

 

1,631,646

 

Accumulated (deficit) earnings

 

 

(172,000

)

 

 

(192,446

)

Total stockholders' equity

 

 

1,024,321

 

 

 

1,439,719

 

Non-controlling interest

 

 

(2,287

)

 

 

(1,271

)

Total equity

 

 

1,022,034

 

 

 

1,438,448

 

 

 

 

 

 

Total liabilities and equity

 

$

3,563,368

 

 

$

4,281,079

 

Preferred Apartment Communities, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

Years ended December 31,

(In thousands)

 

2021

 

2020

Operating activities:

 

 

 

 

Net income (loss)

 

$

20,532

 

 

$

(181,603

)

Reconciliation of net income (loss) to net cash provided by operating activities:

 

 

 

Depreciation and amortization expense

 

169,193

 

 

 

201,677

 

Amortization of above and below market leases

 

(5,706

)

 

 

(8,021

)

Amortization of deferred and other non-cash revenues

 

(5,660

)

 

 

(5,059

)

Amortization of purchase option termination fees

 

(9,712

)

 

 

(6,536

)

Amortization of equity compensation, lease incentives and other non-cash expenses

 

5,914

 

 

 

4,267

 

Deferred loan cost amortization

 

6,461

 

 

 

6,855

 

Non-cash accrued interest income on real estate loan investments

 

(9,769

)

 

 

(12,372

)

Receipt of accrued interest income on real estate loan investments

 

15,258

 

 

 

14,391

 

Gains on sales of real estate, net

 

(21,109

)

 

 

(23,456

)

Gains on sales of land and other, net

 

12

 

 

 

(517

)

Loss from unconsolidated joint venture

 

665

 

 

 

314

 

Cash received for purchase option terminations

 

12,489

 

 

 

7,000

 

Loss on extinguishment of debt

 

 

 

 

 

6,674

 

Noncash settlement of related party line of credit from Internalization

 

 

 

 

20,864

 

Increase in allowance for expected credit losses

 

672

 

 

 

6,103

 

Changes in operating assets and liabilities:

 

 

 

(Increase) in tenant receivables and other assets

 

(5,432

)

 

 

(24,819

)

Increase in accounts payable and accrued expenses

 

3,208

 

 

 

7,084

 

Increase in deferred liability to Former Manager

 

 

 

 

22,851

 

Increase in contingent liability

 

 

 

 

15,000

 

Increase (decrease) in accrued interest, prepaid rents and other liabilities

 

5,026

 

 

 

(2,805

)

 

 

 

 

 

Net cash provided by operating activities

 

182,042

 

 

 

47,892

 

 

 

 

 

 

Investing activities:

 

 

 

 

Investments in real estate loans, net of origination fees

 

(66,562

)

 

 

(58,519

)

Repayments of real estate loans and receipt of origination fees

 

140,094

 

 

 

115,726

 

Notes receivable repaid, net

 

 

1,863

 

 

 

15,249

 

Related party notes receivable and lines of credit (issued) repaid, net

 

 

 

 

(5,078

)

Proceeds from sale of real estate loan investment, net of transaction costs

 

12,706

 

 

 

3,898

 

Acquisition of properties

 

 

(335,252

)

 

 

(322,027

)

Disposition of properties, net

 

 

354,241

 

 

 

516,264

 

Investment in property development

 

 

(2,742

)

 

 

(50

)

Capital improvements to real estate assets

 

(30,313

)

 

 

(52,809

)

Proceeds from sale of interest in unconsolidated joint venture

 

 

 

 

19,221

 

Return of capital from investment in unconsolidated joint venture

 

 

 

 

12,250

 

 

 

 

 

 

Net cash provided by investing activities

 

74,035

 

 

 

244,125

 

 

 

 

 

 

Preferred Apartment Communities, Inc.

Consolidated Statements of Cash Flows - continued

(Unaudited)

 

 

 

 

 

 

 

Years ended December 31,

(In thousands)

 

2021

 

2020

 

 

 

 

 

Financing activities:

 

 

 

 

Proceeds from mortgage notes payable

 

309,839

 

 

 

469,184

 

Repayments of mortgage notes payable

 

(113,083

)

 

 

(438,308

)

Payments for deposits and other mortgage loan costs

 

(5,859

)

 

 

(12,140

)

Payments for mortgage prepayment costs

 

 

 

 

 

(5,733

)

Proceeds from Revolving Line of Credit

 

 

293,000

 

 

 

442,000

 

Payments on Revolving Line of Credit

 

 

(315,000

)

 

 

(420,000

)

Repayment of Term Loan

 

 

 

 

(70,000

)

Proceeds from sales of Preferred Stock, net of offering costs

 

110,991

 

 

 

206,381

 

Proceeds from sales of common stock

 

28,154

 

 

 

4,546

 

Payments for redemptions and calls of preferred stock

 

 

(379,997

)

 

 

(314,154

)

Common Stock dividends paid

 

 

(36,282

)

 

 

(42,100

)

Preferred stock dividends and Class A Unit distributions paid

 

(154,904

)

 

 

(161,746

)

Payments for deferred offering costs

 

 

(3,557

)

 

 

(11,509

)

Distributions to non-controlling interests

 

 

(2,215

)

 

 

(161

)

Contributions from non-controlling interests

 

 

 

 

 

186

 

 

 

 

 

 

Net cash (used in) financing activities

 

(268,913

)

 

 

(353,554

)

 

 

 

 

Net (decrease) in cash, cash equivalents and restricted cash

 

(12,836

)

 

 

(61,537

)

Cash, cash equivalents and restricted cash, beginning of year

 

75,716

 

 

 

137,253

 

Cash, cash equivalents and restricted cash, end of period

$

62,880

 

 

$

75,716

 

Real Estate Loan Investments

The following tables present details pertaining to our portfolio of fixed rate, interest-only real estate loan investments.

Project/Property

 

Location

 

Maturity
date

 

Optional
extension
date

 

Total loan
commitments

 

Carrying amount (1) as of

 

Current / deferred interest % per annum

 

 

 

 

 

December 31, 2021

 

December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Multifamily communities:

 

 

 

 

 

(in thousands)

 

 

The Platform

 

San Jose, CA

 

8/13/2022

 

(2)

 

$

137,616

 

$

136,061

 

 

$

126,237

 

 

(2)

Vintage Horizon West

 

Orlando, FL

 

10/11/2022

 

10/11/2024

 

 

10,900

 

 

9,828

 

 

 

9,019

 

 

8.5 / 5.5

Vintage Jones Franklin

 

Raleigh, NC

 

11/14/2023

 

5/14/2025

 

 

10,000

 

 

8,989

 

 

 

7,904

 

 

8.5 / 5.5

Solis Cumming Town

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Center

 

Atlanta, GA

 

9/3/2024

 

9/3/2026

 

 

20,681

 

 

18,153

 

 

 

5,584

 

 

8.5 / 5.5

Hudson at Metro West

 

Orlando, FL

 

9/1/2024

 

3/1/2026

 

 

16,791

 

 

13,873

 

 

 

 

 

8.5 / 4.5

Oxford Club Drive

 

Atlanta, GA

 

2/11/2025

 

2/11/2027

 

 

23,150

 

 

5,551

 

 

 

 

 

8.5 / 4.5

Populus at Pooler

 

Savannah, GA

 

5/27/2025

 

5/27/2026

 

 

15,907

 

 

2,104

 

 

 

 

 

8.5 / 4.25

Populus at Pooler Capital

 

Savannah, GA

 

5/27/2025

 

5/27/2026

 

 

1,169

 

 

946

 

 

 

 

 

8.5 / 4.25

Menlo II

 

Jacksonville, FL

 

4/14/2025

 

4/14/2027

 

 

16,610

 

 

4,500

 

 

 

 

 

8.5 / 3.5

Beaver Ruin

 

Atlanta, GA

 

5/3/2025

 

11/3/2026

 

 

9,133

 

 

 

 

 

 

 

8.5 / 4.5

Nexton

 

Charleston, SC

 

12/16/2022

 

N/A

 

 

6,265

 

 

6,265

 

 

 

 

 

(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Repaid multifamily communities:

 

 

 

 

 

 

 

 

 

 

 

 

Newbergh

 

Atlanta, GA

 

N/A

 

N/A

 

 

N/A

 

 

 

 

 

11,749

 

 

(4)

Newbergh Capital

 

Atlanta, GA

 

N/A

 

N/A

 

 

N/A

 

 

 

 

 

6,176

 

 

(4)

Vintage Destin

 

Destin, FL

 

N/A

 

N/A

 

 

N/A

 

 

 

 

 

9,736

 

 

(4)

Kennesaw Crossing

 

Atlanta, GA

 

N/A

 

N/A

 

 

N/A

 

 

 

 

 

13,025

 

 

(4)

The Anson

 

Nashville, TN

 

N/A

 

N/A

 

 

N/A

 

 

 

 

 

6,240

 

 

(5)

The Anson Capital

 

Nashville, TN

 

N/A

 

N/A

 

 

N/A

 

 

 

 

 

4,839

 

 

(5)

Chestnut Farm

 

Charlotte, NC

 

N/A

 

N/A

 

 

N/A

 

 

 

 

 

11,671

 

 

(5)

Southpoint

 

Fredericksburg, VA

N/A

 

N/A

 

 

N/A

 

 

 

 

 

7,348

 

 

(5)

Southpoint Capital

 

Fredericksburg, VA

N/A

 

N/A

 

 

N/A

 

 

 

 

 

4,626

 

 

(5)

Cameron Square

 

Alexandria, VA

 

N/A

 

N/A

 

 

N/A

 

 

 

 

 

20,874

 

 

(4)

Cameron Square Capital

 

Alexandria, VA

 

N/A

 

N/A

 

 

N/A

 

 

 

 

 

8,850

 

 

(4)

V & Three

 

Charlotte, NC

 

N/A

 

N/A

 

 

N/A

 

 

 

 

 

10,335

 

 

(4)

V & Three Capital

 

Charlotte, NC

 

N/A

 

N/A

 

 

N/A

 

 

 

 

 

7,162

 

 

(4)

Hidden River II

 

Tampa, FL

 

N/A

 

N/A

 

 

N/A

 

 

 

 

 

4,462

 

 

(4)

Hidden River II Capital

 

Tampa, FL

 

N/A

 

N/A

 

 

N/A

 

 

 

 

 

2,461

 

 

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Office property:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8West

 

Atlanta, GA

 

N/A

 

N/A

 

 

N/A

 

 

 

 

 

11,858

 

 

(6)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

268,222

 

 

206,270

 

 

 

290,156

 

 

 

Unamortized loan origination fees

 

 

 

 

 

 

 

 

(1,755

)

 

 

(1,194

)

 

 

Allowances for expected credit losses and doubtful accounts

 

 

 

 

 

 

(8,095

)

 

 

(9,067

)

 

 

Carrying amount

 

 

 

 

 

 

 

 

 

$

196,420

 

 

$

279,895

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Carrying amounts presented per loan are amounts drawn.

(2) Effective February 10, 2022, the Third Amendment to the loan agreement provided for extension options until August 13, 2022 and December 31, 2022. The interest rate was amended to 8.5% current interest and 1.0% deferred interest per annum until May 13, 2022, then 8.5% current interest and 1.5% deferred interest per annum until August 13, 2022. If the second extension option is exercised, the rate increases to 8.5% current interest and 2.0% deferred interest per annum until November 13, 2022, then 8.5% current interest and 2.5% deferred interest per annum until December 31, 2022.

(3) Loan accrues interest at 11% per annum until June 16, 2022, then 13% per annum until December 16, 2022; all interest is paid monthly.

(4) The loan was repaid in full satisfaction of the principal amount and all interest due.

(5) All principal and interest due on the loan was received as a credit against the purchase price in conjunction with our acquisition of the underlying property.

(6) This loan was sold at par plus accrued interest to Highwoods Properties, an unrelated party, on July 29, 2021.

We hold options or rights of first offer, but not obligations, to purchase some of the properties which are partially financed by our real estate loan investments. Option purchase prices are generally the market value of the property, as negotiated and agreed upon by the purchasing and selling parties and are derived utilizing market cap rates. As of December 31, 2021, potential property acquisitions and units from projects in our real estate loan investment portfolio consisted of:

 

 

 

Total units upon

 

Purchase option window

 

Project/Property

Location

 

completion (1)

 

Begin

 

End

 

 

 

 

 

 

 

 

 

 

Multifamily communities

 

 

 

 

 

 

 

 

Hudson at Metro West

Orlando, FL

 

320

 

S + 90 days (2)

 

S + 150 days (2)

 

Vintage Horizon West

Orlando, FL

 

340

 

(3)

 

(3)

 

Vintage Jones Franklin

Raleigh, NC

 

277

 

(3)

 

(3)

 

Solis Cumming Town Center

Atlanta, GA

 

320

 

(4)

 

(4)

 

Club Drive

Atlanta, GA

 

352

 

(5)

 

(5)

 

Populus at Pooler

Savannah, GA

 

316

 

(6)

 

(6)

 

Menlo II

Jacksonville, FL

 

337

 

(7)

 

(7)

 

Beaver Ruin

Atlanta, GA

 

246

 

S + 90 days (8)

 

S + 150 days (8)

 

One Nexton

Charleston, SC

 

351

 

(9)

 

(9)

 

 

 

 

 

 

 

 

 

 

 

 

 

2,859

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) We evaluate each project individually and we make no assurance that we will acquire any of the underlying properties from our real estate loan investment portfolio.

 

(2) The option period window begins and ends at the number of days indicated beyond the achievement of a 93% occupancy threshold by the underlying property.

 

(3) The option period window begins on the later of one year following receipt of final certificate of occupancy or 90 days beyond the achievement of a 93% occupancy threshold by the underlying property and ends 60 days beyond the option period beginning date.

 

(4) We hold a right of first offer on the property.

 

(5) The option period window begins upon the property's achievement of an 85% occupancy threshold. If we are unable to reach an agreement on the property's market value, we have a right of first offer.

 

(6) The option period window begins upon the property's achievement of an 80% occupancy threshold. If we are unable to reach an agreement on the property's market value, we have a right of first offer.

 

(7) The option period window begins either by notice from the seller upon the property's achievement of an 70% occupancy threshold or by notice from the purchaser upon the property's achievement of an 93% occupancy threshold and expires 90 days beyond. If we are unable to reach an agreement on the property's market value, we have a right of first offer.

 

(8) The option period window begins and ends at the number of days indicated beyond the achievement of an 85% occupancy threshold by the underlying property. If we are unable to reach an agreement on the property's market value, we have a right of first offer.

 

(9) The underlying loan is a land acquisition bridge loan that is anticipated to be converted to a real estate loan investment in the future with a purchase option or right of first offer.

 

Mortgage Indebtedness

As of December 31, 2021, our mortgage note principal repayment obligations were:

(in thousands)

 

Total

 

 

 

Maturity dates occurring in:

 

 

 

 

 

2022

 

$

116,739

2023

 

 

81,850

2024

 

 

300,323

2025

 

 

56,875

2026

 

 

337,740

2027

 

 

318,035

2028

 

 

250,127

2029

 

 

243,970

2030

 

 

354,912

2031

 

 

94,460

Thereafter

 

 

227,621

 

 

 

Totals

 

$

2,382,652

Multifamily Communities

As of December 31, 2021, our multifamily community portfolio consisted of the following properties:

 

 

 

 

 

 

 

 

Three months ended
December 31, 2021

Property

 

Location

 

Number of units

 

Average unit size (sq. ft.)

 

Average physical occupancy

 

Average rent per unit

 

 

 

 

 

 

 

 

 

 

 

Same-Store Communities:

 

 

 

 

 

 

 

 

 

 

Aldridge at Town Village

 

Atlanta, GA

 

300

 

969

 

96.7

%

 

$

1,582

Green Park

 

Atlanta, GA

 

310

 

985

 

97.7

%

 

$

1,621

Overton Rise

 

Atlanta, GA

 

294

 

1,018

 

96.9

%

 

$

1,681

Summit Crossing I

 

Atlanta, GA

 

345

 

1,034

 

97.5

%

 

$

1,393

Summit Crossing II

 

Atlanta, GA

 

140

 

1,100

 

95.7

%

 

$

1,523

The Reserve at Summit Crossing

 

Atlanta, GA

 

172

 

1,002

 

98.3

%

 

$

1,487

Avenues at Cypress

 

Houston, TX

 

240

 

1,170

 

96.9

%

 

$

1,559

Avenues at Northpointe

 

Houston, TX

 

280

 

1,167

 

95.1

%

 

$

1,503

Stone Creek

 

Houston, TX

 

246

 

852

 

94.7

%

 

$

1,220

Aster at Lely Resort

 

Naples, FL

 

308

 

1,071

 

97.8

%

 

$

1,626

Sorrel

 

Jacksonville, FL

 

290

 

1,048

 

95.6

%

 

$

1,468

Lux at Sorrel

 

Jacksonville, FL

 

265

 

1,025

 

96.5

%

 

$

1,496

525 Avalon Park

 

Orlando, FL

 

487

 

1,394

 

96.0

%

 

$

1,636

Citi Lakes

 

Orlando, FL

 

346

 

984

 

95.8

%

 

$

1,552

Village at Baldwin Park

 

Orlando, FL

 

528

 

1,069

 

95.9

%

 

$

1,824

Luxe at Lakewood Ranch

 

Sarasota, FL

 

280

 

1,105

 

96.3

%

 

$

1,706

Venue at Lakewood Ranch

 

Sarasota, FL

 

237

 

1,001

 

96.1

%

 

$

1,751

Crosstown Walk

 

Tampa, FL

 

342

 

1,070

 

94.8

%

 

$

1,525

Overlook at Crosstown Walk

 

Tampa, FL

 

180

 

986

 

94.6

%

 

$

1,600

Citrus Village

 

Tampa, FL

 

296

 

980

 

96.3

%

 

$

1,517

Five Oaks at Westchase

 

Tampa, FL

 

218

 

983

 

97.4

%

 

$

1,688

Lodge at Hidden River

 

Tampa, FL

 

300

 

980

 

95.8

%

 

$

1,575

Lenox Village

 

Nashville, TN

 

273

 

906

 

96.1

%

 

$

1,400

Regent at Lenox

 

Nashville, TN

 

18

 

1,072

 

98.1

%

 

$

1,452

Retreat at Lenox

 

Nashville, TN

 

183

 

773

 

97.3

%

 

$

1,333

CityPark View

 

Charlotte, NC

 

284

 

948

 

95.4

%

 

$

1,242

CityPark View South

 

Charlotte, NC

 

200

 

1,005

 

97.0

%

 

$

1,364

Colony at Centerpointe

 

Richmond, VA

 

255

 

1,149

 

96.9

%

 

$

1,546

Founders Village

 

Williamsburg, VA

 

247

 

1,070

 

94.3

%

 

$

1,600

Retreat at Greystone

 

Birmingham, AL

 

312

 

1,100

 

95.5

%

 

$

1,528

Vestavia Reserve

 

Birmingham, AL

 

272

 

1,113

 

97.7

%

 

$

1,665

Adara Overland Park

 

Kansas City, KS

 

260

 

1,116

 

94.9

%

 

$

1,413

Claiborne Crossing

 

Louisville, KY

 

242

 

1,204

 

97.1

%

 

$

1,416

City Vista

 

Pittsburgh, PA

 

272

 

1,023

 

95.7

%

 

$

1,535

 

 

 

 

 

 

 

 

 

 

 

Total/Average Same-Store Communities

 

 

 

9,222

 

 

 

96.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Stabilized Communities:

 

 

 

 

 

 

 

 

 

 

Artisan at Viera

 

Melbourne, FL

 

259

 

1,070

 

97.0

%

 

$

1,784

The Menlo

 

Jacksonville, FL

 

332

 

966

 

94.5

%

 

$

1,633

The Blake

 

Orlando, FL

 

281

 

908

 

96.0

%

 

$

1,556

Parkside at the Beach

 

Panama City Beach, FL

 

288

 

1,041

 

98.8

%

 

$

1,526

Horizon at Wiregrass

 

Tampa, FL

 

392

 

973

 

96.4

%

 

$

1,685

The Ellison

 

Atlanta, GA

 

250

 

1,064

 

99.3

%

 

$

1,637

Alleia at Presidio

 

Fort Worth, TX

 

231

 

1,022

 

95.4

%

 

$

1,628

The Anson

 

Nashville, TN

 

301

 

989

 

96.7

%

 

$

1,577

 

 

 

 

 

 

 

 

 

 

 

Total/Average Stabilized Communities

 

 

 

2,334

 

 

 

96.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

The Kingson

 

Fredericksburg, VA

 

240

 

993

 

 

 

$

1,702

Chestnut Farm

 

Charlotte, NC

 

256

 

995

 

 

 

$

1,628

Total Multifamily Community Units

 

 

 

12,052

 

 

 

 

 

 

For the three-month period ended December 31, 2021, our average same-store multifamily communities' physical occupancy was 96.2%. We calculate average same-store physical occupancy for quarterly periods as the average of the number of occupied units on the 20th day of each of the trailing three months from the reporting period end date and that have been owned for at least 15 full months as of the end of the first quarter of each year. We exclude the operating results of properties for which construction of adjacent phases has commenced, properties which are undergoing significant capital projects, have sustained significant casualty losses, or are being marketed for sale as of the end of the reporting period. We believe "Same Property" information is useful as it allows both management and investors to gauge our management effectiveness via comparisons of financial and operational results between interim and annual periods for those subsets of multifamily communities owned for current and prior comparative periods.

For the three-month period ended December 31, 2021, our average stabilized physical occupancy was 96.3%. We calculate average stabilized physical occupancy for quarterly periods as the average number of occupied units on the 20th day of each of the trailing three months from the reporting period end date. All of our multifamily communities were stabilized for the three-month period ended December 31, 2021 except The Kingson and Chestnut Farm.

For the three-month period ended December 31, 2021, our average stabilized economic occupancy was 95.9%. We define average economic occupancy as market rent reduced by vacancy losses, expressed as a percentage. All of our multifamily properties are included in these calculations except for properties which are not yet stabilized (which we define as properties having first achieved 93% physical occupancy for three full months in a quarter), properties which are owned for less than the entire reporting period and properties which are undergoing significant capital projects, have sustained significant casualty losses or are adding additional phases. We also exclude properties which are currently being held for sale, of which we had none at December 31, 2021. Average economic occupancy is useful both to management and investors as a gauge of our effectiveness in realizing the full revenue generating potential of our multifamily communities given market rents and occupancy rates.

Capital Expenditures

We regularly incur capital expenditures related to our owned multifamily communities. Capital expenditures may be nonrecurring and discretionary, as part of a strategic plan intended to increase a property’s value and corresponding revenue-generating ability, or may be normally recurring and necessary to maintain the income streams and present value of a property. Certain capital expenditures may be budgeted and reserved for upon acquiring a property as initial expenditures necessary to bring a property up to our standards or to add features or amenities that we believe make the property a compelling value to prospective residents in its individual market. These budgeted nonrecurring capital expenditures in connection with an acquisition are funded from the capital source(s) for the acquisition and are not dependent upon subsequent property operating cash flows for funding.

For the three-month period ended December 31, 2021, our capital expenditures for multifamily communities consisted of:

 

 

 

Capital Expenditures - Multifamily Communities

 

 

 

Recurring

 

Non-recurring

 

Total

(in thousands, except per-unit figures)

Amount

 

Per Unit

 

Amount

 

Per Unit

 

Amount

 

Per Unit

Appliances

$

203

 

$

16.72

 

$

 

$

 

$

203

 

$

16.72

Carpets

 

 

 

498

 

 

40.72

 

 

 

 

 

 

498

 

 

40.72

Wood / vinyl flooring

 

42

 

 

3.18

 

 

148

 

 

12.27

 

 

190

 

 

15.45

Mini blinds and ceiling fans

 

35

 

 

2.79

 

 

 

 

 

 

35

 

 

2.79

Fire safety

 

 

 

 

 

 

80

 

 

6.02

 

 

80

 

 

6.02

HVAC

 

 

153

 

 

12.23

 

 

 

 

 

 

153

 

 

12.23

Computers, equipment, misc.

 

4

 

 

0.32

 

 

37

 

 

2.97

 

 

41

 

 

3.29

Elevators

 

 

 

 

 

4

 

 

0.27

 

 

4

 

 

0.27

Exterior painting and lighting

 

 

 

 

 

444

 

 

35.11

 

 

444

 

 

35.11

Leasing office and other common amenities

 

40

 

 

3.32

 

 

303

 

 

25.23

 

 

343

 

 

28.55

Major structural projects

 

 

 

 

 

68

 

 

3.61

 

 

68

 

 

3.61

Cabinets, countertops and unit upgrades

 

 

 

 

 

320

 

 

25.30

 

 

320

 

 

25.30

Landscaping and fencing

 

 

 

 

 

267

 

 

22.26

 

 

267

 

 

22.26

Parking lots and sidewalks

 

 

2

 

 

 

 

17

 

 

1.22

 

 

19

 

 

1.22

Signage and sanitation

 

 

 

 

 

54

 

 

4.60

 

 

54

 

 

4.60

Totals

 

 

$

977

 

$

79.28

 

$

1,742

 

$

138.86

 

$

2,719

 

$

218.14

Grocery-Anchored Shopping Center Portfolio

As of December 31, 2021, our grocery-anchored shopping center portfolio consisted of the following properties:

Property name

Location

 

Year built

 

GLA (1)

 

Percent leased

 

Grocery anchor tenant

 

 

 

 

 

 

 

 

 

 

Castleberry-Southard

Atlanta, GA

 

2006

 

80,018

 

100.0 %

 

Publix

Cherokee Plaza

Atlanta, GA

 

1958

 

102,864

 

100.0 %

 

Kroger

Governors Towne Square

Atlanta, GA

 

2004

 

68,658

 

100.0 %

 

Publix

Lakeland Plaza

Atlanta, GA

 

1990

 

301,711

 

95.9 %

 

Sprouts

Powder Springs

Atlanta, GA

 

1999

 

77,853

 

98.2 %

 

Publix

Rockbridge Village

Atlanta, GA

 

2005

 

102,432

 

91.4 %

 

Kroger

Roswell Wieuca Shopping Center

Atlanta, GA

 

2007

 

74,370

 

97.8 %

 

The Fresh Market

Royal Lakes Marketplace

Atlanta, GA

 

2008

 

119,493

 

97.7 %

 

Kroger

Sandy Plains Exchange

Atlanta, GA

 

1997

 

72,784

 

100.0 %

 

Publix

Summit Point

Atlanta, GA

 

2004

 

111,970

 

89.2 %

 

Publix

Thompson Bridge Commons

Atlanta, GA

 

2001

 

92,587

 

96.2 %

 

Kroger

Wade Green Village

Atlanta, GA

 

1993

 

74,978

 

94.5 %

 

Publix

Woodmont Village

Atlanta, GA

 

2002

 

85,639

 

97.7 %

 

Kroger

Woodstock Crossing

Atlanta, GA

 

1994

 

66,122

 

98.5 %

 

Kroger

East Gate Shopping Center

Augusta, GA

 

1995

 

75,716

 

93.7 %

 

Publix

Fury's Ferry

Augusta, GA

 

1996

 

70,458

 

100.0 %

 

Publix

Parkway Centre

Columbus, GA

 

1999

 

53,088

 

97.7 %

 

Publix

Greensboro Village

Nashville, TN

 

2005

 

70,203

 

100.0 %

 

Publix

Spring Hill Plaza

Nashville, TN

 

2005

 

66,693

 

100.0 %

 

Publix

Parkway Town Centre

Nashville, TN

 

2005

 

65,587

 

100.0 %

 

Publix

The Market at Salem Cove

Nashville, TN

 

2010

 

62,356

 

97.8 %

 

Publix

The Market at Victory Village

Nashville, TN

 

2007

 

71,300

 

100.0 %

 

Publix

The Overlook at Hamilton Place

Chattanooga, TN

 

1992

 

213,095

 

99.5 %

 

The Fresh Market

Shoppes of Parkland

Miami-Ft. Lauderdale, FL

 

2000

 

145,720

 

100.0 %

 

BJ's Wholesale Club

Crossroads Market

Naples, FL

 

1993

 

126,895

 

100.0 %

 

Publix

Neapolitan Way (2)

Naples, FL

 

1985

 

137,580

 

95.7 %

 

Publix

Berry Town Center

Orlando, FL

 

2003

 

99,441

 

86.8 %

 

Publix

Deltona Landings

Orlando, FL

 

1999

 

59,966

 

98.4 %

 

Publix

University Palms

Orlando, FL

 

1993

 

99,172

 

100.0 %

 

Publix

Disston Plaza

Tampa-St. Petersburg, FL

 

1954

 

129,150

 

96.6 %

 

Publix

Barclay Crossing

Tampa, FL

 

1998

 

54,958

 

100.0 %

 

Publix

Polo Grounds Mall

West Palm Beach, FL

 

1966

 

130,285

 

97.3 %

 

Publix

Kingwood Glen

Houston, TX

 

1998

 

103,397

 

97.1 %

 

Kroger

Independence Square

Dallas, TX

 

1977

 

140,218

 

93.6 %

 

Tom Thumb

Midway Market

Dallas, TX

 

2002

 

85,599

 

94.9 %

 

Kroger

Oak Park Village

San Antonio, TX

 

1970

 

64,855

 

100.0 %

 

H.E.B.

Irmo Station

Columbia, SC

 

1980

 

99,384

 

90.8 %

 

Kroger

Rosewood Shopping Center

Columbia, SC

 

2002

 

36,887

 

93.5 %

 

Publix

Anderson Central

Greenville Spartanburg, SC

 

1999

 

223,211

 

95.6 %

 

Walmart

Fairview Market

Greenville Spartanburg, SC

 

1998

 

46,303

 

100.0 %

 

Aldi

Brawley Commons

Charlotte, NC

 

1997

 

122,028

 

94.1 %

 

Publix

West Town Market

Charlotte, NC

 

2004

 

67,883

 

100.0 %

 

Harris Teeter

Heritage Station

Raleigh, NC

 

2004

 

72,946

 

100.0 %

 

Harris Teeter

Maynard Crossing

Raleigh, NC

 

1996

 

122,781

 

88.6 %

 

Harris Teeter

Wakefield Crossing

Raleigh, NC

 

2001

 

75,927

 

98.2 %

 

Food Lion

Southgate Village

Birmingham, AL

 

1988

 

75,092

 

96.8 %

 

Publix

Hollymead Town Center

Charlottesville, VA

 

2005

 

158,807

 

86.5 %

 

Harris Teeter

Free State Shopping Center

Washington, DC

 

1970

 

264,152

 

87.2 %

 

Giant

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,922,612

 

95.9 %

 

 

Redevelopment properties:

 

 

 

 

 

 

 

 

 

Champions Village

Houston, TX

 

1973

 

383,346

 

66.3 %

 

Randalls

Sweetgrass Corner

Charleston, SC

 

1999

 

89,124

 

32.9 %

 

Conway Plaza

Orlando, FL

 

1966

 

117,705

 

80.6 %

 

Publix

Hanover Center (3)

Wilmington, NC

 

1954

 

305,346

 

81.7 %

 

Harris Teeter

Gayton Crossing

Richmond, VA

 

1983

 

160,816

(4)

74.2 %

 

Kroger

Fairfield Shopping Center (3)

Virginia Beach, VA

 

1985

 

231,829

 

82.2 %

 

Food Lion

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,288,166

 

72.8 %

 

 

 

 

 

 

 

 

 

 

 

 

Grand total/weighted average

 

 

 

 

6,210,778

 

91.1 %

 

 

(1)

Gross leasable area, or GLA, represents the total amount of property square footage that can be leased to tenants.

(2)

Investment in an unconsolidated joint venture that is not prorated for our ownership percentage.

(3)

Property is owned through a consolidated joint venture.

(4)

The GLA figure shown excludes the GLA of the Kroger store, which is owned by others.

As of December 31, 2021, our grocery-anchored shopping center portfolio was 91.1% leased (95.9% excluding redevelopment properties). We define percent leased as the percentage of gross leasable area that is leased as of the period end date, including non-cancelable lease agreements that have been signed which have not yet commenced. This metric is used by management to gauge the extent to which our grocery-anchored shopping centers are delivering their total potential rental and other revenues.

Details regarding lease expirations (assuming no exercises of tenant renewal options) within our grocery-anchored shopping center portfolio as of December 31, 2021 were:

 

 

Totals

 

 

Number
of leases

 

Leased
GLA

 

Percent of
leased GLA

 

 

 

 

 

 

 

Month to month

 

15

 

33,592

 

0.6 %

2022

 

163

 

513,143

 

9.1 %

2023

 

146

 

618,886

 

11.0 %

2024

 

149

 

1,193,853

 

21.1 %

2025

 

125

 

926,384

 

16.4 %

2026

 

129

 

559,759

 

9.9 %

2027

 

65

 

344,905

 

6.1 %

2028

 

31

 

392,268

 

6.9 %

2029

 

28

 

183,253

 

3.2 %

2030

 

18

 

185,300

 

3.3 %

2031

 

25

 

261,785

 

4.6 %

2032 +

 

29

 

433,661

 

7.8 %

 

 

 

 

 

 

 

Total

 

923

 

5,646,789

 

100.0 %

Our grocery-anchored shopping center portfolio contained the following anchor tenants as of December 31, 2021:

Tenant

 

GLA

 

Percent of
total GLA

Publix

 

1,179,030

 

19.0 %

Kroger

 

581,593

 

9.4 %

Harris Teeter

 

273,273

 

4.4 %

Wal-Mart

 

183,211

 

2.9 %

BJ's Wholesale Club

 

108,532

 

1.7 %

Food Lion

 

76,523

 

1.2 %

Giant

 

73,149

 

1.2 %

Randall's

 

61,604

 

1.0 %

H.E.B

 

54,844

 

0.9 %

Tom Thumb

 

43,600

 

0.7 %

The Fresh Market

 

43,321

 

0.7 %

Sprouts

 

29,855

 

0.5 %

Aldi

 

23,622

 

0.4 %

 

 

 

 

 

Total

 

2,732,157

 

44.0 %

 

 

 

 

 

Our Annual Report on Form 10-K for the period ended December 31, 2021 will present income statements of New Market Properties, LLC within the Results of Operations section of Management's Discussion and Analysis of Financial Condition and Results of Operations.

Second-generation capital expenditures within our grocery-anchored shopping center portfolio by property for the fourth quarter 2021 totaled approximately $1.4 million. Second-generation capital expenditures exclude those expenditures made in our grocery-anchored shopping center and office building portfolios (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 ownership standards, and (iii) for property redevelopments and repositioning.

Office Building Portfolio

As of December 31, 2021, our office building portfolio consisted of the following properties:

Property Name

 

Location

 

GLA

 

Percent
leased

Three Ravinia

 

Atlanta, GA

 

814,000

 

94 %

Westridge at La Cantera

 

San Antonio, TX

 

258,000

 

100 %

 

 

 

 

 

 

 

Total/Average

 

 

 

1,072,000

 

95 %

As of December 31, 2021, our office building portfolio includes the following significant tenants:

 

 

 

Rentable square
footage

 

Percent of
Annual Base
Rent

 

Annual Base
Rent (in
thousands)

InterContinental Hotels Group

467,000

 

44.6 %

 

$ 11,429

USAA

129,000

 

12.8 %

 

3,276

Vericast

129,000

 

11.8 %

 

3,027

Hapag Lloyd

127,000

 

17.4 %

 

4,455

Lease Query

53,000

 

3.7 %

 

968

 

 

 

 

 

 

 

 

Total

905,000

 

90.3 %

 

$ 23,155

 

 

 

 

 

 

 

 

We define Annual Base Rent as the current monthly base rent annualized under the respective leases.

As of December 31, 2021, the leased square footage of our office building portfolio expires according to the following schedule:

 

 

 

 

Percent of

Year of lease expiration

 

Rented square

 

rented

 

feet

 

square feet

2022

 

9,000

 

0.9 %

2023

 

8,000

 

0.8 %

2024

 

5,000

 

0.5 %

2025

 

53,000

 

5.3 %

2026

 

 

2027

 

329,000

 

32.7 %

2028

 

 

2029

 

 

2030

 

 

2031

 

467,000

 

46.4 %

2032 +

 

135,000

 

13.4 %

 

 

 

 

 

Total

 

1,006,000

 

100.0 %

The Company recognized second-generation capital expenditures within its office building portfolio of approximately $636,000 during the fourth quarter 2021.

Definitions of Non-GAAP Measures

We disclose FFO, Core FFO, AFFO and NOI, each of which meet the definition of a “non-GAAP financial measure”, as set forth in Item 10(e) of Regulation S-K promulgated by the SEC. As a result we are required to include in this filing a statement of why the Company believes that presentation of these measures provides useful information to investors. The non-GAAP measures of FFO, Core FFO, AFFO and NOI should be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our performance, and we believe that to understand our performance further FFO, Core FFO, AFFO and NOI should be compared with our reported net income or net loss and considered in addition to cash flows in accordance with GAAP, as presented in our consolidated financial statements. FFO, Core FFO and AFFO are not considered measures of liquidity and are not alternatives to measures calculated under GAAP.

Funds From Operations Attributable to Common Stockholders and Unitholders (“FFO”)

FFO is one of the most commonly utilized Non-GAAP measures currently in practice. In its 2002 “White Paper on Funds From Operations,” which was restated in 2018,the National Association of Real Estate Investment Trusts, or NAREIT, standardized the definition of how net income/loss should be adjusted to arrive at FFO, in the interests of uniformity and comparability. We have adopted the NAREIT definition for computing FFO as a meaningful supplemental gauge of our operating results, and as is most often presented by other REIT industry participants.

The NAREIT definition of FFO (and the one reported by the Company) is:

Net income/loss, excluding:

  • depreciation and amortization related to real estate;
  • gains and losses from the sale of certain real estate assets;
  • gains and losses from change in control; and
  • impairment writedowns of certain real estate assets and investments in entities where the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity.

Not all companies necessarily utilize the standardized NAREIT definition of FFO, so caution should be taken in comparing our reported FFO results to those of other companies. Our FFO results are comparable to the FFO results of other companies that follow the NAREIT definition of FFO and report these figures on that basis. FFO is a non-GAAP measure that is reconciled to its most comparable GAAP measure, net income/loss available to common stockholders.

Core Funds From Operations Attributable to Common Stockholders and Unitholders (“Core FFO”)

We make adjustments to FFO to remove costs incurred and revenues recorded that are singular in nature and outside our normal operations and portray our primary operational results. We calculate Core FFO as:

FFO, plus:

• acquisition and pursuit (dead deal) costs;

• loan cost amortization on acquisition line of credit and loan coordination fees;

• losses on debt extinguishments or refinancing costs;

• Internalization costs;

• expenses incurred on calls of preferred stock;

• deemed dividends for redemptions of and non-cash dividends on preferred stock; and

• expenses related to the COVID-19 global pandemic;

Less:

• earnest money forfeitures by prospective asset purchasers.

Core FFO figures reported by us may not be comparable to Core FFO figures reported by other companies. We utilize Core FFO as a supplemental measure of the operating performance of our portfolio of real estate assets. We believe Core FFO is useful to investors as a supplemental gauge of our operating performance and may be useful in comparing our operating performance with other real estate companies. Since our calculation of Core FFO removes costs incurred and revenues recorded that are often singular in nature and outside our normal operations, we believe it improves comparability to investors in assessing our core operating results across periods. Core FFO is a non-GAAP measure that is reconciled to its most comparable GAAP measure, net income/loss available to common stockholders.

Adjusted Funds From Operations Attributable to Common Stockholders and Unitholders (“AFFO”)

AFFO makes further adjustments to Core FFO results in order to arrive at a more refined measure of operating and financial performance. There is no industry standard definition of AFFO and practice is divergent across the industry. We calculate AFFO as:

Core FFO, plus:

• non-cash equity compensation to directors and executives;

• non-cash (income) expense for current expected credit losses;

• amortization of loan closing costs;

• depreciation and amortization of non-real estate assets;

• net loan origination fees received;

• deferred interest income received;

• amortization of lease inducements;

• cash received in excess of (exceeded by) amortization of purchase option termination revenues;

• non-cash dividends on Series M1 Preferred Stock and mShares; and

• earnest money forfeiture from prospective asset purchaser;

Less:

• non-cash loan interest income;

• cash paid for loan closing costs;

• amortization of straight-line rent adjustments and acquired real estate intangible assets and/or liabilities;

• amortization of deferred revenues; and

• normally-recurring capital expenditures and capitalized second generation leasing costs.

AFFO figures reported by us may not be comparable to those AFFO figures reported by other companies. We utilize AFFO as another measure of the operating performance of our portfolio of real estate assets. We believe AFFO is useful to investors as a supplemental gauge of our operating performance and may be useful in comparing our operating performance with other real estate companies. Since our calculation of AFFO removes other significant non-cash charges and revenues and other costs which are not representative of our ongoing business operations, we believe it improves comparability to investors in assessing our core operating results across periods. AFFO is a non-GAAP measure that is reconciled to its most comparable GAAP measure, net income/loss available to common stockholders. FFO, Core FFO and AFFO are not considered measures of liquidity and are not alternatives to measures calculated under GAAP.

Same-Store Net Operating Income (“NOI”)

We use same-store NOI as an operational metric for our same-store multifamily communities, enabling comparisons of those properties’ operating results between the current reporting period and the prior year comparative period. We define our population of same-store multifamily communities as those that are stabilized and that have been owned for at least 15 full months as of the end of the first quarter of each year, and exclude the operating results of properties for which construction of adjacent phases has commenced, and properties which are undergoing significant capital projects, have sustained significant casualty losses, or are being marketed for sale as of the end of the reporting period. We define NOI as rental and other property revenues, less total property and maintenance expenses, property management fees, real estate taxes, general and administrative expenses, and property insurance. We believe that NOI is an important supplemental measure of operating performance for REITs because it provides measures of core operations, rather than factoring in depreciation and amortization, financing costs, acquisition costs, and other corporate expenses. NOI is a widely utilized measure of comparative operating performance in the REIT industry, but is not a substitute for the most comparable GAAP-compliant measure, net income/loss.

About Preferred Apartment Communities, Inc.

Preferred Apartment Communities, Inc. (NYSE: APTS) is a real estate investment trust engaged primarily in the ownership and operation of Class A multifamily properties, with select investments in grocery-anchored shopping centers. Preferred Apartment Communities’ investment objective is to generate attractive, stable returns for stockholders by investing in income-producing properties and acquiring or originating real estate loans. As of December 31, 2021, the Company owned or was invested in 109 properties in 13 states, predominantly in the Southeast region of the United States.

Paul Cullen
Executive Vice President-Investor Relations
Chief Marketing Officer
investorrelations@pacapts.com
770-818-4144

Source: Preferred Apartment Communities, Inc.

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