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Preferred Apartment Communities, Inc. Reports Results for Second Quarter 2019

ATLANTA, July 29, 2019 /PRNewswire/ -- Preferred Apartment Communities, Inc. (APTS) ("we," "our," the "Company" or "Preferred Apartment Communities") today reported results for the quarter ended June 30, 2019. Unless otherwise indicated, all per share results are reported based on the basic weighted average shares of Common Stock and Class A Units of the Company's operating partnership ("Class A Units") outstanding. See Definitions of Non-GAAP Measures.

"The company hit on all operational cylinders in the second quarter while we continued to make strategic moves to strengthen our business model and to seek to make long-term market overperformance an attainable goal," said Daniel M. DuPree, Preferred Apartment Communities' Chairman and Chief Executive Officer.

Preferred Apartment Communities

Financial Highlights


Our operating results are presented below.


















Three months ended June 30,




Six months ended June 30,






2019


2018


% change


2019


2018


% change

















Revenues (in thousands)

$

113,852


$

96,389


18.1

%


$

225,358


$

186,759


20.7

%

















Per share data:














Net income (loss) (1)

$

(0.66)


$

(0.66)




$

(1.32)


$

(0.81)



















FFO (2)

$

0.36


$

0.38


(5.3)

%


$

0.75


$

0.75



















AFFO (2)

$

0.22


$

0.37


(40.5)

%


$

0.55


$

0.63


(12.7)

%

















Dividends (3)

$

0.2625


$

0.255


2.9

%


$

0.5225


$

0.505


3.5

%


















(1)

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

(2)

FFO and AFFO results are presented per 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 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.

 

  • For the second quarter 2019, our FFO payout ratio to Common Stockholders and Unitholders was approximately 73.9% and our FFO payout ratio (before the deduction of preferred dividends) to our preferred stockholders was approximately 63.3%. (A)
  • Our AFFO payout ratio to Common Stockholders and Unitholders was approximately 119.4% for the second quarter 2019 and 85.0% for the trailing twelve-month period ended June 30, 2019. Our AFFO payout ratio (before the deduction of preferred dividends) to our preferred stockholders was approximately 73.6% for the second quarter 2019 and 65.3% for the trailing twelve-month period ended June 30, 2019. (B)
  • For the quarter ended June 30, 2019, our rental revenue increased approximately 3.4% and our operating expenses increased 1.5%, resulting in an increase in net operating income of approximately 3.9% for our same-store multifamily communities as compared to the quarter ended June 30, 2018.(C) For the second quarter 2019, our average same-store multifamily communities' physical occupancy was 95.6%.
  • At June 30, 2019, the market value of our common stock was $14.95 per share. A hypothetical investment in our Common Stock in our initial public offering on April 5, 2011, assuming the reinvestment of all dividends and no transaction costs, would have resulted in an average annual return of approximately 19.1% through June 30, 2019.
  • As of June 30, 2019, the average age of our multifamily communities was approximately 5.4 years, which is the youngest in the public multifamily REIT industry.
  • At the end of the second quarter 2019, we had $0 drawn on our $200 million revolving line of credit.
  • Approximately 90.3% of our permanent property-level mortgage debt has fixed interest rates and approximately 5.7% has variable interest rates which are capped. In addition, we are continuing to refinance the remaining uncapped variable rate mortgage debt into new fixed rate instruments during the remainder of 2019. We believe we are well protected against potential increases in market interest rates.
  • Over the next six quarters, the company has ten mortgage loans with balloon payments due at their maturity of approximately $130 million: eight retail assets and two student housing assets. Six of the eight retail assets have already acquired new debt and we have locked rate for a third quarter closing. For the remaining two retail assets, we plan to pay off the loans at their maturity and have them remain unencumbered. For the two student housing assets, we plan to refinance them shortly before their maturity.
  • At June 30, 2019, our leverage, as measured by the ratio of our debt to the undepreciated book value of our total assets, was approximately 52.0%. Included in our total assets were our investments in the Series 2018-ML04 and Series 2019-ML05 from the Freddie Mac K program. Our leverage calculation excludes the gross assets and liabilities of approximately $572.0 million that are owned by other pool participants in the Freddie Mac K program that we consolidated under the VIE rules.
  • As of June 30, 2019, our total assets were approximately $5.0 billion compared to approximately $3.9 billion as of June 30, 2018, an increase of approximately $1.1 billion, or approximately 27.4%. This growth was driven by (i) the acquisition of nine real estate properties (partially offset by the sale of three properties) and (ii) the consolidation of the mortgage pools from the Freddie Mac K program. Excluding the VIE mortgage pool assets from other participants in the K Program, our total assets grew approximately $762.2 million, or 20.9% since June 30, 2018.
  • On April 12, 2019, we closed on a real estate loan investment of up to approximately $7.2 million in connection with the development of a 204-unit second phase of our Lodge at Hidden River multifamily community located in Tampa, Florida.
  • On April 12, 2019, we refinanced the variable-rate mortgage on our Royal Lakes Marketplace grocery-anchored shopping center into a new 10 year, $9,700,000 loan with a fixed rate of 4.29%.
  • On April 12, 2019, we refinanced the variable-rate mortgage on our Cherokee Plaza grocery-anchored shopping center into a new 8 year, $25,200,000 loan with a fixed rate of 4.28%.
  • Effective June 30, 2019, we amended and sold the senior construction loan held by us on the 8West office development to a third party and collected a gross fee of $1.55 million from the buyer.

 

(A)

We calculate the FFO payout ratio to Common Stockholders as the ratio of Common Stock dividends and distributions to FFO Attributable to Common Stockholders and Unitholders. We calculate the FFO payout ratio to preferred stockholders as the ratio of Preferred Stock dividends to the sum of Preferred Stock dividends and FFO. 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.



(B)

We calculate the AFFO payout ratio to Common Stockholders as the ratio of Common Stock dividends and distributions to AFFO. We calculate the AFFO payout ratio to preferred stockholders as the ratio of Preferred Stock dividends to the sum of Preferred Stock dividends and AFFO.



(C)

Same store net operating income is a non-GAAP measure. See Definitions of Non-GAAP Measures.

Acquisitions of Properties

During the second quarter 2019, we acquired the following properties:









Property


Location (MSA)


Gross leasable
area (square
feet)










Grocery-anchored shopping centers:







Free State Shopping Center


Washington, DC


264,152



Disston Plaza


Tampa-St. Petersburg, FL


129,150



Polo Grounds Mall


West Palm Beach,  FL


130,015














523,317









Real Estate Assets











Owned as of
June 30, 2019


Potential
additions from
real estate loan
investment
portfolio (1) (2)


Potential total



Multifamily communities:








Properties

32


7


39



Units

9,768


2,053


11,821



Grocery-anchored shopping centers:








Properties

49



49



Gross leasable area (square feet)

5,412,328



5,412,328



Student housing properties:








Properties

8


1


9



Units

2,011


175


2,186



Beds

6,095


543


6,638



Office buildings:








Properties

7


1


8



Rentable square feet

2,578,000


192,000


2,770,000










(1) 

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

(2)

The Company has terminated various purchase option agreements in exchange for termination fees.  These properties are excluded from the potential additions from our real estate loan investment portfolio

Subsequent to Quarter End

On July 25, 2019, we acquired CAPTRUST Tower, a class A office building in Raleigh, North Carolina comprising 300,389 rentable square feet.

On July 29, 2019, we refinanced the mortgage on our Citilakes multifamily community from a floating to a fixed interest rate of 3.66%.

On July 29, 2019, we entered into a purchase and sale agreement pursuant to which we will sell six of our student housing properties to a third party. We anticipate receiving a non-refundable security deposit within three days and expect the sale to close during fourth quarter 2019. We expect to realize a book gain on the sale.

Same-Store Multifamily Communities Financial Data

The following chart presents same-store operating results for the Company's multifamily communities. We define our population of same-store multifamily communities as those that have achieved occupancy at or above 93% for all three consecutive months within a single quarter (stabilized) before the beginning of the prior year and that have been owned for at least 15 full months as of the end of the first quarter of the current year, enabling comparisons of the current year quarterly and annual reporting periods to the prior year comparative periods. The Company excludes the operating results of properties for which construction of adjacent phases has commenced and properties which are undergoing significant capital projects, have sustained significant casualty losses, or are being marketed for sale as of the end of the reporting period. For the periods presented, same-store operating results consist of the operating results of the following multifamily communities containing an aggregate 6,172 units:

Aster at Lely Resort


Avenues at Cypress


Avenues at Northpointe

Citi Lakes


Lenox Village


Retreat at Lenox Village

Summit Crossing I


Sorrel


Venue at Lakewood Ranch

Overton Rise


525 Avalon Park


Vineyards

Avenues at Creekside


Retreat at Greystone


City Vista

Citrus Village


Luxe at Lakewood Ranch


Adara at Overland Park

Founders Village


Summit Crossing II


Aldridge at Town Village






Same-store net operating income is a non-GAAP measure that is most directly comparable to net income (loss), as shown in the reconciliations below.

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








Three months ended:

(in thousands)


6/30/2019


6/30/2018






Net loss


$

(1,677)


$

(5,278)

Add:





Equity stock compensation


306


950

Depreciation and amortization


45,663


42,095

Interest expense


27,611


22,347

Management fees


8,209


6,621

Insurance, professional fees and other expenses


1,475


1,070

Waived asset management and general and administrative expense fees


(2,795)


(1,429)

Less:





Interest revenue on notes receivable


12,093


13,658

Interest revenue on related party notes receivable


1,632


4,374

Income from consolidated VIEs


584


54

Miscellaneous revenues (1)


1,023


Gain on sale of real estate



2

Gain on sale of real estate loan investment


747


Loss on extinguishment of debt


(52)







Property net operating income


62,765


48,288

Less:





Non-same-store property revenues


(72,857)


(52,725)

Add:





Non-same-store property operating expenses


25,164


18,937






Same-store net operating income


$

15,072


$

14,500






(1) Revenue from a forfeited earnest money deposit from prospective property purchaser.

 

Multifamily Communities' Same Store Net Operating Income












Three months ended:





(in thousands)


6/30/2019


6/30/2018


$ change


% change

Revenues:









Rental revenues


$

25,401



$

24,569



$

832



3.4

%

Other property revenues


845



938



(93)



(9.9)

%

Total revenues


26,246



25,507



739



2.9

%










Operating expenses:









Property operating and maintenance


3,304



3,452



(148)



(4.3)

%

Payroll


2,034



2,099



(65)



(3.1)

%

Property management fees


1,051



1,020



31



3.0

%

Real estate taxes


3,682



3,342



340



10.2

%

Other


1,103



1,094



9



0.8

%

Total operating expenses


11,174



11,007



167



1.5

%










Same-store net operating income


$

15,072



$

14,500



$

572



3.9

%










Same-store average physical occupancy


95.6

%


95.2

%





 

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








Six months ended:

(in thousands)


6/30/2019


6/30/2018






Net income (loss)


$

(3,957)


$

8,985

Add:





Equity stock compensation


617


2,085

Depreciation and amortization


90,952


82,711

Interest expense


54,367


43,315

Management fees


16,038


12,862

Insurance, professional fees and other expenses


2,941


1,774

Waived asset management and general and administrative expense fees


(5,424)


(2,649)

Less:





Interest revenue on notes receivable


23,381


23,958

Interest revenue on related party notes receivable


7,434


8,639

Income from consolidated VIEs


725


54

Miscellaneous revenues


1,023


Loss on extinguishment of debt


(69)


Gain on sale of real estate loan investment


747


Gain on sale of real estate



20,356

Gain on sale of trading investment


4







Property net operating income


122,289


96,076

Less:





Non-same-store property revenues


(141,443)


(103,415)

Add:





Non-same-store property operating expenses


49,430


36,582






Same-store net operating income


$

30,276


$

29,243

 

Multifamily Communities' Same-Store Net Operating Income












Six months ended:






(in thousands)


6/30/2019


6/30/2018


$ change


% change

Revenues:









Rental revenues


$

50,398


$

48,809


$

1,589


3.3

%

Other property revenues


1,678


1,826


(148)


(8.1)

%

Total revenues


52,076


50,635


1,441


2.8

%










Operating expenses:









Property operating and maintenance


6,240


6,471


(231)


(3.6)

%

Payroll


4,076


4,003


73


1.8

%

Property management fees


2,082


2,025


57


2.8

%

Real estate taxes


7,244


6,812


432


6.3

%

Other


2,158


2,081


77


3.7

%

Total operating expenses


21,800


21,392


408


1.9

%










Same-store net operating income


$

30,276


$

29,243


$

1,033


3.5

%

Capital Markets Activities

During the second quarter 2019, we issued and sold an aggregate of 125,093 Units from our offering of up to 1,500,000 Units, with each Unit consisting of one share of Series A Redeemable Preferred Stock and one Warrant to purchase up to 20 shares of Common Stock (the "$1.5 Billion Series A Unit Offering"), resulting in net proceeds of approximately $112.6 million after commissions and other fees.

In addition, during the second quarter 2019, we issued 252,300 shares of Common Stock pursuant to the exercise of warrants issued under our Series A Preferred Stock offering, resulting in aggregate gross proceeds of approximately $3.3 million. We also issued approximately 746,100 shares of Common Stock for redemptions of 11,916 shares of our Series A Redeemable Preferred Stock.

During the second quarter 2019, we issued and sold an aggregate of 17,137 shares of Series M Redeemable Preferred Stock ("mShares"), resulting in net proceeds of approximately $16.6 million after dealer manager fees.

Dividends

Quarterly Dividends on Common Stock and Class A OP Units

On May 2, 2019, we declared a quarterly dividend on our Common Stock of $0.2625 per share for the second quarter 2019. This represents a 2.9% increase in our common stock dividend from our second quarter 2018 common stock dividend of $0.255 per share, and an average annual dividend growth rate of 13.8% since June 30, 2011, the first quarter end following our initial public offering in April 2011. The second quarter dividend was paid on July 15, 2019 to all stockholders of record on June 14, 2019. In conjunction with the Common Stock dividend, the Company's operating partnership declared a distribution on its Class A Units of $0.2625 per unit for the second quarter 2019, which was paid on July 15, 2019 to all Class A Unit holders of record as of June 14, 2019.

Monthly Dividends on Preferred Stock

We declared monthly dividends of $5.00 per share on our Series A Redeemable Preferred Stock, which totaled approximately $26.5 million for the second quarter 2019 and represent a 6% annual yield. We declared dividends totaling approximately $1.0 million on our Series M Redeemable Preferred Stock, or mShares, for the second quarter 2019. The mShares have a dividend rate that escalates from 5.75% in year one of issuance to 7.50% in year eight and thereafter.

Conference Call and Supplemental Data

We will hold our quarterly conference call on Tuesday, July 30, 2019 at 11:00 a.m. Eastern Time to discuss our second quarter 2019 results. To participate in the conference call, please dial in to the following:

Live Conference Call Details
Domestic Dial-in Number: 1-844-890-1791
International Dial-in Number: 1-412-380-7408
Company: Preferred Apartment Communities, Inc.
Date: Tuesday, July 30, 2019
Time: 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time)

The live broadcast of our second quarter 2019 conference call will be available online, on a listen-only basis, at our website, www.pacapts.com, under "Investors" and then click on the "Upcoming Events" link. A replay of the call will be archived on under the Investors/Audio Archive section.

2019 Guidance:

Net income (loss) per shareWe are actively adding properties and real estate loan investments to our real estate portfolio and the specific timing of the closing of acquisitions is difficult to predict. Acquisition activity by its nature can cause material variation in our reported depreciation and amortization expense and interest income. Since net income (loss) per share is calculated net of depreciation and amortization expense, our net income (loss) results can fluctuate, possibly significantly, depending upon the timing of the closing of acquisitions. For this reason, we are unable to reasonably forecast this measure or provide a reconciliation of our projected FFO per share to this measure.

FFO per share  -   We currently project FFO to be in the range of $1.44 - $1.50 per share for the full year 2019.

AFFO and FFO are calculated after deductions for all preferred stock dividends. Reconciliations of net income (loss) attributable to common stockholders to FFO and AFFO for the three-month and six-month periods ended June 30, 2019 and 2018 appear in the attached report, as well as on our website using the following link:

http://investors.pacapts.com/download/2Q19_Earnings_and_Supplemental_Data.pdf  

Forward-Looking Statements

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995:  Estimates of future earnings, guidance, goals and performance are, by definition, and certain other statements in this Earnings Release and Supplemental Financial Data Report may constitute, "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance, achievements or transactions to be materially different from the results, guidance, goals, performance, achievements or transactions expressed or implied by the forward-looking statements. 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; our ability to maintain our exemption from registration under the Investment Company Act of 1940, as amended; 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, 2018 that was filed with the Securities and Exchange Commission, or SEC, on March 1, 2019, 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.

Additional Information

The SEC has declared effective the registration statement filed by the Company for each of the offerings to which this communication may relate. Before you invest, you should read the final prospectus, and any prospectus supplements, forming a part of the registration statement and other documents the Company has filed with the SEC for more complete information about the Company and the offering to which this communication may relate. In particular, you should carefully read the risk factors described in the final prospectus and in any related prospectus supplement and in the documents incorporated by reference in the final prospectus and any related prospectus supplement to which this communication may relate. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the Company or its dealer manager, Preferred Capital Securities, LLC, will arrange to send you a prospectus with respect to the mShares Offering and/or the $1.5 Billion Unit Offering upon request by contacting Leonard A. Silverstein at (770) 818-4100, 3284 Northside Parkway NW, Suite 150, Atlanta, Georgia 30327.

The final prospectus for the mShares Offering, dated January 19, 2017, can be accessed through the following link:

https://www.sec.gov/Archives/edgar/data/1481832/000148183217000008/a424prospectus-mshares1.htm

The final prospectus for the $1.5 Billion Unit Offering, dated March 16, 2017, can be accessed through the following link:

https://www.sec.gov/Archives/edgar/data/1481832/000148183217000061/a424prospectus-15bseriesar.htm

Preferred Apartment Communities, Inc.

Consolidated Statements of Operations

(Unaudited)






Three months ended June 30,

(In thousands, except per-share figures)


2019


2018

Revenues:





Rental revenues


$

95,592


$

76,552

Other property revenues


3,512


1,805

Interest income on loans and notes receivable


12,093


13,658

Interest income from related parties


1,632


4,374

Miscellaneous revenues


1,023







Total revenues


113,852


96,389






Operating expenses:





Property operating and maintenance


12,466


10,107

Property salary and benefits


4,828


4,228

Property management fees


3,373


2,776

Real estate taxes


12,544


10,063

General and administrative


1,913


1,957

Equity compensation to directors and executives


306


950

Depreciation and amortization


45,663


42,095

Asset management and general and administrative expense





fees to related party


8,209


6,621

Insurance, professional fees, and other expenses


2,690


2,008






Total operating expenses


91,992


80,805

Waived asset management and general and administrative





expense fees


(2,795)


(1,429)






Net operating expenses


89,197


79,376

Operating income before (loss) gain on sales of





real estate and trading investment


24,655


17,013

(Loss) gain on sales of real estate and trading investment



2

Operating income


24,655


17,015






Interest expense


27,611


22,347

Change in fair value of net assets of consolidated





VIEs from mortgage-backed pools


584


54

Loss on extinguishment of debt


(52)


Gain on sale of real estate loan investment


747







Net loss


(1,677)


(5,278)

Consolidated net loss attributable to non-controlling interests


571


140






Net loss attributable to the Company


(1,106)


(5,138)






Dividends declared to preferred stockholders


(27,542)


(20,924)

Earnings attributable to unvested restricted stock


(7)


(6)






Net loss attributable to common stockholders


$

(28,655)


$

(26,068)






Net loss per share of Common Stock available to





 common stockholders, basic and diluted


$

(0.66)


$

(0.66)






Weighted average number of shares of Common Stock outstanding,





basic and diluted


43,703


39,383

 

Reconciliation of FFO Attributable to Common Stockholders and Unitholders and AFFO

to Net (Loss) Income Attributable to Common Stockholders (A)






Three months ended June 30,

(In thousands, except per-share figures)



2019


2018









Net loss attributable to common stockholders (See note 1)

$

(28,655)


$

(26,068)









Add:

Depreciation of real estate assets


36,310


29,441


Amortization of acquired real estate intangible assets and deferred leasing costs

8,893


12,314


Net loss attributable to non-controlling interests (See note 2)


(571)


(140)

Less:

(Gain) loss on sale of real estate



(2)

FFO attributable to common stockholders and unitholders

15,977


15,545









Add:

Loan cost amortization on acquisition term note

20


19


Amortization of loan coordination fees paid to the Manager (See note 3)

473


631


Payment of costs related to property refinancing

369


20


Weather-related property operating losses


66


Non-cash equity compensation to directors and executives

306


950


Amortization of loan closing costs (See note 4)


1,159


1,213


Depreciation/amortization of non-real estate assets


460


340


Net loan fees received (See note 5)


125


411


Accrued interest income received (See note 6)


2,318


2,769


Internalization costs (See note 7)


280



Deemed dividends from cash redemptions of preferred stock


4


201


Amortization of lease inducements (See note 8)


432


311


Non-cash dividends on Preferred Stock


119


47


Purchase option termination fees received and related revenue adjustments (See note 9)

(1,383)


2,514

Less:

Non-cash loan interest income (See note 6)


(3,658)


(5,690)


Non-cash revenues from mortgage-backed securities


(274)


(53)


Cash paid for loan closing costs

(5)



Amortization of acquired above and below market lease intangibles

 





and straight-line rental revenues (See note 10)


(4,324)


(2,505)


Amortization of deferred revenues (See note 11)


(941)


(589)


Normally recurring capital expenditures and leasing costs (See note 12)

(1,563)


(1,080)









AFFO

$

9,894


$

15,120







Common Stock dividends and distributions to Unitholders declared:





Common Stock dividends



$

11,581


$

10,104


Distributions to Unitholders (See note 2)


230


273


Total




$

11,811


$

10,377









Common Stock dividends and Unitholder distributions per share


$

0.2625


$

0.255









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

$

0.36


$

0.38

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

$

0.22


$

0.37





Weighted average shares of Common Stock and Units outstanding: (A)





Basic:




43,703


39,383


Common Stock



877


1,070


Class A Units




44,580


40,453


Common Stock and Class A Units














Diluted Common Stock and Class A Units (B)


45,027


41,009









Actual shares of Common Stock outstanding, including 26 and 25 unvested shares




 of restricted Common Stock at June 30, 2019 and 2018, respectively.

44,273


39,750

Actual Class A Units outstanding at June 30, 2019 and 2018, respectively.

875


1,070


Total




45,148


40,820









(A) Units and Unitholders refer to Class A Units in our Operating Partnership (as defined in note 2), or Class A Units, and holders of Class A Units, respectively. Unitholders include recipients of awards of Class B Units in our Operating Partnership, or Class B Units, for annual service which became vested and earned and automatically converted to Class A Units. Unitholders also include the entity that contributed the Wade Green grocery-anchored shopping center. The Class A Units collectively represent an approximate 1.97% weighted average non-controlling interest in the Operating Partnership for the three-month period ended June 30, 2019.

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

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

 

 

Reconciliation of FFO Attributable to Common Stockholders and Unitholders and AFFO

to Net (Loss) Income Attributable to Common Stockholders (A)






Six months ended June 30,

(In thousands, except per-share figures)



2019


2018









Net loss attributable to common stockholders (See note 1)

$

(56,968)


$

(31,704)









Add:

Depreciation of real estate assets


72,027


57,153


Amortization of acquired real estate intangible assets and deferred leasing costs

18,016


24,905


Net loss attributable to non-controlling interests (See note 2)


(79)


240

Less:

(Gain) loss on sale of real estate



(20,356)

FFO attributable to common stockholders and unitholders

32,996


30,238









Add:

Loan cost amortization on acquisition term note

39


44


Amortization of loan coordination fees paid to the Manager (See note 3)

941


1,107


Payment of costs related to property refinancing

424


61


Weather-related property operating losses


(194)


Non-cash equity compensation to directors and executives

617


2,085


Amortization of loan closing costs (See note 4)


2,290


2,258


Depreciation/amortization of non-real estate assets


909


653


Net loan fees received (See note 5)


526


1,211


Accrued interest income received (See note 6)


5,078


4,112


Internalization costs (See note 7)


325



Deemed dividends from cash redemptions of preferred stock


7


519


Amortization of lease inducements (See note 8)


860


568


Non-cash dividends on Preferred Stock


212


153


Purchase option termination fees received and related revenue adjustments (See note 9)

(1,087)


2,514

Less:

Non-cash loan interest income (See note 6)


(6,982)


(10,622)


Non-cash revenues from mortgage-backed securities


(415)


(54)


Cash paid for loan closing costs


(8)


(391)


Amortization of acquired above and below market lease intangibles





and straight-line rental revenues (See note 10)


(8,082)


(5,694)


Amortization of deferred revenues (See note 11)


(1,881)


(1,085)


Normally recurring capital expenditures and leasing costs (See note 12)

(2,743)


(1,954)









AFFO

$

24,026


$

25,529







Common Stock dividends and distributions to Unitholders declared:





Common Stock dividends



$

22,776


$

19,906


Distributions to Unitholders (See note 2)


458


540


Total




$

23,234


$

20,446









Common Stock dividends and Unitholder distributions per share


$

0.5225


$

0.505









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

$

0.75


$

0.75

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

$

0.55


$

0.63





Weighted average shares of Common Stock and Units outstanding: (A)





Basic:




43,194


39,241


Common Stock



879


1,070


Class A Units




44,073


40,311


Common Stock and Class A Units














Diluted Common Stock and Class A Units (B)


44,755


41,273









Actual shares of Common Stock outstanding, including 26 and 25 unvested shares




 of restricted Common Stock at June 30, 2019 and 2018, respectively.

44,273


39,750

Actual Class A Units outstanding at June 30, 2019 and 2018, respectively.

875


1,070


Total




45,148


40,820









(A) Units and Unitholders refer to Class A Units in our Operating Partnership (as defined in note 2), or Class A Units, and holders of Class A Units, respectively. Unitholders include recipients of awards of Class B Units in our Operating Partnership, or Class B Units, for annual service which became vested and earned and automatically converted to Class A Units. Unitholders also include the entity that contributed the Wade Green grocery-anchored shopping center. The Class A Units collectively represent an approximate 1.99% weighted average non-controlling interest in the Operating Partnership for the six-month period ended June 30, 2019.

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

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

Notes to Reconciliations of FFO Attributable to Common Stockholders and Unitholders and AFFO to Net Income (Loss) Attributable to Common Stockholders

  1. Rental and other property revenues and property operating expenses for the quarter ended June 30, 2019 include activity for the properties acquired during the quarter only from their respective dates of acquisition. In addition, the second quarter 2019 period includes activity for the properties acquired since June 30, 2018. Rental and other property revenues and expenses for the second quarter 2018 include activity for the acquisitions made during that period only from their respective dates of acquisition.
  2. Non-controlling interests in Preferred Apartment Communities Operating Partnership, L.P., or our Operating Partnership, consisted of a total of 874,937 Class A Units as of June 30, 2019. Included in this total are 419,228 Class A Units which were granted as partial consideration to the seller in conjunction with the seller's contribution to us on February 29, 2016 of the Wade Green grocery-anchored shopping center. The remaining Class A units were awarded primarily to our key executive officers. The Class A Units are apportioned a percentage of our financial results as non-controlling interests. The weighted average ownership percentage of these holders of Class A Units was calculated to be 1.97% and 2.64% for the three-month periods ended June 30, 2019 and 2018, respectively.
  3. We pay loan coordination fees to Preferred Apartment Advisors, LLC, our Manager, to reflect the administrative effort involved in arranging debt financing for acquired properties. The fees are 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 AFFO. At June 30, 2019, aggregate unamortized loan coordination fees were approximately $13.5 million, which will be amortized over a weighted average remaining loan life of approximately 10.5 years.
  4. 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. Effective April 13, 2018, the maximum borrowing capacity on the Revolving Line of Credit was increased from $150 million to $200 million. These loan closing costs are also amortized over the lives of the respective loans and the Revolving Line of Credit, and this non-cash amortization expense is an addition to FFO in the calculation of AFFO. Neither we nor the Operating Partnership have any recourse liability in connection with any of the mortgage loans, nor do we have any cross-collateralization arrangements with respect to the assets securing the mortgage loans, other than security interests in 49% of the equity interests of the subsidiaries owning such assets, granted in connection with our Revolving Line of Credit, which provides for full recourse liability. At June 30, 2019, aggregate unamortized loan costs were approximately $23.7 million, which will be amortized over a weighted average remaining loan life of approximately 9.2 years.
  5. We receive loan origination fees in conjunction with the origination of certain real estate loan investments. These fees are then recognized as revenue over the lives of the applicable loans as adjustments of yield using the effective interest method. The total fees received after the payment of loan origination fees to our Manager are additive adjustments in the calculation of AFFO. Correspondingly, the amortized non-cash income is a deduction in the calculation of AFFO. Over the lives of certain loans, we accrue additional interest amounts that become due to us at the time of repayment of the loan or refinancing of the property, or when the property is sold. This non-cash interest income is subtracted from FFO in our calculation of AFFO. The amount of additional accrued interest becomes an additive adjustment to FFO once received from the borrower (see note 6).
  6. This adjustment reflects the receipt during the periods presented of additional interest income (described in note 5 above) which was earned and accrued prior to those periods presented on various real estate loans.
  7. This adjustment reflects the add-back of exploratory expenses incurred by the Company related to the potential internalization of the functions performed by its Manager.
  8. 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.
  9. Effective January 1, 2019, we terminated our purchase options on the Sanibel Straits, Newbergh, Wiregrass and Cameron Square multifamily communities and the Solis Kennesaw student housing property; on May 7, 2018, we terminated our purchase options on the Encore, Bishop Street and Hidden River multifamily communities and the Haven46 and Haven Charlotte student housing properties, all of which are (or were) partially supported by real estate loan investments held by us. In exchange, we arranged to receive termination fees aggregating approximately $20.2 million from the developers, which are recorded as revenue over the period beginning on the date of election 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 FFO in our calculation of AFFO; both of these adjustments are presented in a single net number within this line. For the three-month and six month periods ended June 30, 2019, we had recognized termination fee revenues in excess of cash received, resulting in the negative adjustments shown; for the three-month and six month periods ended June 30, 2018, we had received cash in excess of recognized termination fee revenues, resulting in the additive adjustments to FFO in our calculation of AFFO.
  10. This adjustment reflects straight-line rent adjustments and the reversal of the non-cash amortization of below-market and above-market lease intangibles, which were recognized in conjunction with our acquisitions and which are amortized over the estimated average remaining lease terms from the acquisition date for multifamily communities and over the remaining lease terms for grocery-anchored shopping center assets and office buildings. At June 30, 2019, the balance of unamortized below-market lease intangibles was approximately $51.8 million, which will be recognized over a weighted average remaining lease period of approximately 9.4 years.
  11. This adjustment removes the non-cash amortization of deferred revenue recorded by us in conjunction with Company-owned lessee-funded tenant improvements in our office buildings.
  12. We deduct from FFO normally recurring capital expenditures that are necessary to maintain our assets' revenue streams in the calculation of AFFO. This adjustment also deducts from FFO capitalized amounts for third party costs during the period to originate or renew leases in our grocery-anchored shopping centers and office buildings. No adjustment is made in the calculation of AFFO for nonrecurring capital expenditures. See Capital Expenditures, Grocery-Anchored Shopping Center Portfolio, and Office Buildings Portfolio sections for definitions of these terms.

See Definitions of Non-GAAP Measures.

Preferred Apartment Communities, Inc.

Consolidated Balance Sheets

(Unaudited)

(In thousands, except per-share par values)


June 30, 2019


December 31, 2018

Assets





Real estate




Land


$

571,776


$

519,300

Building and improvements

2,902,740


2,738,085

Tenant improvements

141,339


128,914

Furniture, fixtures, and equipment

298,891


278,151

Construction in progress

9,418


8,265

Gross real estate

3,924,164


3,672,715

Less: accumulated depreciation

(344,702)


(272,042)

Net real estate

3,579,462


3,400,673

Real estate loan investments, net of deferred fee income and allowance for loan loss

335,292


282,548

Real estate loan investments to related parties, net

24,888


51,663

Total real estate and real estate loan investments, net

3,939,642


3,734,884






Cash and cash equivalents

94,081


38,958

Restricted cash

50,478


48,732

Notes receivable

19,241


14,440

Note receivable and revolving lines of credit due from related parties

25,902


32,867

Accrued interest receivable on real estate loans

24,406


23,340

Acquired intangible assets, net of amortization

138,418


135,961

Deferred loan costs on Revolving Line of Credit, net of amortization

1,591


1,916

Deferred offering costs

3,684


6,468

Tenant lease inducements, net

20,151


20,698

Receivable from sale of mortgage-backed security


41,181

Tenant receivables and other assets

66,795


41,567

Variable Interest Entity ("VIE") assets mortgage-backed pool, at fair value

596,129


269,946

Total assets

$

4,980,518


$

4,410,958






Liabilities and equity




Liabilities




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

$

2,429,242


$

2,299,625

Revolving line of credit


57,000

Real estate loan investment participation obligation


5,181

Unearned purchase option termination fees

5,893


2,050

Deferred revenue

41,603


43,484

Accounts payable and accrued expenses

49,819


38,618

Accrued interest payable

7,492


6,711

Dividends and partnership distributions payable

21,425


19,258

Acquired below market lease intangibles, net of amortization

51,801


47,149

Security deposits and other liabilities

17,074


17,611

VIE liabilities from mortgage-backed pool, at fair value

571,999


264,886

Total liabilities

3,196,348


2,801,573






Commitments and contingencies




Equity





Stockholders' equity





Series A Redeemable Preferred Stock, $0.01 par value per share; 3,050




   shares authorized; 1,929 and 1,674 shares issued; 1,829 and 1,608




shares outstanding at June 30, 2019 and December 31, 2018, respectively

18


16

Series M Redeemable Preferred Stock, $0.01 par value per share; 500




   shares authorized; 74 and 44 shares issued and 73 and 44 shares outstanding




at June 30, 2019 and December 31, 2018, respectively

1


Common Stock, $0.01 par value per share; 400,067 shares authorized;




44,247 and 41,776 shares issued and outstanding at




June 30, 2019 and December 31, 2018, respectively

442


418

Additional paid-in capital

1,784,197


1,607,712

Accumulated (deficit) earnings


      Total stockholders' equity

1,784,658


1,608,146

Non-controlling interest

(488)


1,239

Total equity

1,784,170


1,609,385





Total liabilities and equity

$

4,980,518


$

4,410,958

 

Preferred Apartment Communities, Inc.

Consolidated Statements of Cash Flows

(Unaudited)




Six months ended June 30,

(In thousands)


2019


2018

Operating activities:





Net (loss) income


$

(3,957)


$

8,985

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




Depreciation and amortization expense

90,952


82,711

Amortization of above and below market leases

(3,179)


(2,387)

Deferred revenues and fee income amortization

(2,782)


(2,154)

Purchase option termination fee amortization

(5,617)


(2,236)

Non-cash interest income amortization on MBS, net of amortized costs

(415)


(54)

Amortization of market discount on assumed debt and lease incentives

991


699

Deferred loan cost amortization

3,139


3,279

(Increase) in accrued interest income on real estate loan investments

(4,416)


(5,261)

Equity compensation to executives and directors

617


2,085

Gains on sales of real estate and trading investment

(4)


(20,356)

Cash received for purchase option terminations

1,330


5,100

Loss on extinguishment of debt


69


Gain on sale of real estate loan investment

(747)


Mortgage interest received from consolidated VIEs

8,015


861

Mortgage interest paid to other participants of consolidated VIEs

(8,015)


(861)

Changes in operating assets and liabilities:




(Increase) in tenant receivables and other assets

(11,306)


(1,718)

(Increase) in tenant lease incentives

(314)


(4,972)

Increase in accounts payable and accrued expenses

11,691


7,474

(Decrease) increase in accrued interest, prepaid rents and other liabilities

(1,416)


1,968

Net cash provided by operating activities

74,636


73,163






Investing activities:





Investments in real estate loans


(53,497)


(117,771)

Repayments of real estate loans



130,185

Notes receivable issued


(4,792)


(716)

Notes receivable repaid


10


8,640

Notes receivable issued and draws on lines of credit by related parties

(22,766)


(24,093)

Repayments of notes receivable and lines of credit by related parties

16,103


18,652

Origination fees received on real estate loan investments

1,051


2,422

Origination fees paid to Manager on real estate loan investments

(526)


(1,211)

Purchases of mortgage-backed securities (K program), net of acquisition costs

(18,656)


(4,739)

Mortgage principal received from consolidated VIEs

2,073


Purchases of mortgage-backed securities

(12,278)


Sales of mortgage-backed securities

53,445


(171)

Acquisition of properties


(154,579)


(405,870)

Disposition of properties, net



42,269

Receipt of insurance proceeds for capital improvements

746


412

Additions to real estate assets - improvements

(20,647)


(18,268)

Deposits paid on acquisitions

(8,202)


(1,538)

Net cash used in investing activities

(222,515)


(371,455)






Financing activities:





Proceeds from mortgage notes payable

145,861


211,949

Repayments of mortgage notes payable

(57,318)


(35,231)

Payments for deposits and other mortgage loan costs

(3,267)


(4,359)

Proceeds from real estate loan participants


5

Payments to real estate loan participants

(5,223)


(3,664)

Proceeds from lines of credit


162,200


237,100

Payments on lines of credit


(219,200)


(240,400)

Repayment of the Term Loan


(11,000)

Mortgage principal paid to other participants of consolidated VIEs

(2,073)


(171)

Proceeds from repurchase agreements

4,857


Payments for repurchase agreements

(4,857)


Proceeds from sales of Units, net of offering costs and redemptions

257,466


204,201

Proceeds from exercises of warrants

7,433


12,374

Payments for redemptions of preferred stock

(5,115)


(8,994)

Common Stock dividends paid


(22,036)


(19,378)

Preferred stock dividends paid


(51,655)


(39,310)

Distributions to non-controlling interests

(457)


(489)

Payments for deferred offering costs

(1,868)


(2,068)

Net cash provided by financing activities

204,748


300,565





Net increase in cash, cash equivalents and restricted cash

56,869


2,273

Cash, cash equivalents and restricted cash, beginning of year

87,690


73,012

Cash, cash equivalents and restricted cash, end of period

$

144,559


$

75,285

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





June 30, 2019


 

December 31,
2018
















Multifamily communities:






(in thousands)



Palisades


Northern VA


5/17/2020


N/A


$

17,270


$

17,251


$

17,132


8 / 0  (2)

464 Bishop


Atlanta, GA


9/30/2019


N/A


12,693


12,693


12,693


8.5 / 0 (3)

Park 35 on Clairmont


Birmingham, AL


6/26/2020


N/A


21,060


21,060


21,060


8.5 / 2

Wiregrass


Tampa, FL


5/15/2020


5/15/2023


14,976


14,751


14,136


8.5 / 6.5

Wiregrass Capital


Tampa, FL


5/15/2020


5/15/2023


4,244


4,060


3,891


8.5 / 6.5

Berryessa


San Jose, CA


2/13/2021


2/13/2023


137,616


110,911


95,349


8.5 / 3 (4)

The Anson


Nashville, TN


11/24/2021


11/24/2023


6,240


6,240



8.5 / 4.5

The Anson Capital


Nashville, TN


11/24/2021


11/24/2023


5,659


4,252


3,160


8.5 / 4.5

Sanibel Straights


Fort Myers, FL


2/3/2021


2/3/2022


9,416


8,471


8,118


8.5 / 5.5

Sanibel Straights Capital


Fort Myers, FL


2/3/2021


2/3/2022


6,193


5,679


5,442


8.5 / 5.5

Falls at Forsyth


Atlanta, GA


7/11/2020


7/11/2022


22,412


20,601


19,742


8.5 / 5.5

Newbergh


Atlanta, GA


1/31/2021


1/31/2022


11,749


11,204


10,736


8.5 / 5.5

Newbergh Capital


Atlanta, GA


1/31/2021


1/31/2022


6,176


5,414


5,188


8.5 / 5.5

V & Three


Charlotte, NC


8/15/2021


8/15/2022


10,336


10,335


10,335


8.5 / 5

V & Three Capital


Charlotte, NC


8/18/2021


8/18/2022


7,338


6,292


6,030


8.5 / 5

Cameron Square


Alexandria, VA


10/11/2021


10/11/2023


21,340


17,795


17,050


8.5 / 3

Cameron Square Capital


Alexandria, VA


10/11/2021


10/11/2023


8,850


7,885


7,557


8.5 / 3

Southpoint


Fredericksburg, VA


2/28/2022


2/28/2024


7,348


5,592


896


8.5 / 4

Southpoint Capital


Fredericksburg, VA


2/28/2022


2/28/2024


4,962


4,065


3,895


8.5 / 4

E-Town


Jacksonville, FL


6/14/2022


6/14/2023


16,697


9,289


3,886


8.5 / 3.5

Vintage


Destin, FL


3/24/2022


3/24/2024


10,763


2,965



8.5 / 4

Hidden River II


Tampa, FL


10/11/2022


10/11/2024


4,462




8.5 / 3.5

Hidden River II Capital


Tampa, FL


10/11/2022


10/11/2024


2,763


1,089



8.5 / 3.5
















Student housing properties:









Haven 12


Starkville, MS


11/30/2020


N/A


6,116


6,116


6,116


8.5 / 0

Haven Charlotte (5)


Charlotte, NC


N/A


N/A




19,462


Haven Charlotte Member (5)

Charlotte, NC


N/A


N/A




8,201


Solis Kennesaw


Atlanta, GA


9/26/2020


9/26/2022


12,359


11,837


11,343


8.5 / 5.5

Solis Kennesaw Capital


Atlanta, GA


10/1/2020


10/1/2022


8,360


8,125


7,786


8.5 / 5.5

Solis Kennesaw II


Atlanta, GA


5/5/2022


5/5/2024


13,613


11,956


4,268


8.5 / 4
















New Market Properties:















Dawson Marketplace


Atlanta, GA


9/24/2020


9/24/2022


12,857


12,857


12,857


8.5 / 5.0 (6)
















Preferred Office Properties:













8West


Atlanta, GA


11/29/2022


11/29/2024


19,193


3,260



8.5 / 5

8West construction loan


Atlanta, GA


N/A


N/A





(7)
























$

443,061


362,045


336,329



Unamortized loan origination fees








(1,865)


(2,118)



Allowance for loan losses
























Carrying amount










$

360,180


$

334,211









































(1) Carrying amounts presented per loan are amounts drawn, exclusive of deferred fee revenue.

(2) Pursuant to an amendment of the loan agreement, effective January 1, 2019, the loan ceased accruing deferred interest.

(3) Effective January 1, 2019, the loan ceased accruing deferred interest.

(4) Effective January 1, 2019, the deferred interest rate decreased from 6.0% to 3.0%.

(5) The Company assumed the membership interests of the project from the developer in satisfaction of the project indebtedness owed to the Company.

(6) Per the terms of the loan documents, the deferred interest rate reverted to 5.0% from 6.9% per annum in January 2019.

(7) The 8West construction loan was amended and sold to a third party effective June 30, 2019.

We hold options, but not obligations, to purchase some of the properties which are partially financed by our real estate loan investments. The option purchase prices are negotiated at the time of the loan closing and are to be calculated based upon market cap rates at the time of exercise of the purchase option, less a discount ranging from between 10 and 60 basis points (if any), depending on the loan. As of June 30, 2019, 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:









Falls at Forsyth

Atlanta, GA


356


S + 90 days (2)


S + 150 days (2)


V & Three

Charlotte, NC


338


S + 90 days (2)


S + 150 days (2)


The Anson

Nashville, TN


301


S + 90 days (2)


S + 150 days (2)


Southpoint

Fredericksburg, VA


240


S + 90 days (2)


S + 150 days (2)


E-Town

Jacksonville, FL


332


S + 90 days (3)


S + 150 days (3)


Vintage

Destin, FL


282


(4)


(4)


Hidden River II

Tampa, FL


204


S + 90 days (2)


S + 150 days (2)











Student housing properties:









Solis Kennesaw II

Atlanta, GA


175


(5)


(5)











Office property:









8West

Atlanta, GA


(6)


(6)


(6)














2,228















(1) We evaluate each project individually and we make no assurance that we will acquire any of the underlying properties from our real estate loan investment portfolio. The purchase options held by us on the 464 Bishop, Haven Charlotte, Sanibel Straights, Wiregrass, Newbergh, Cameron Square and Solis Kennesaw projects were terminated, in exchange for an aggregate $20.2 million in termination fees from the developers, net of amounts due to third party loan participants.


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


(3) The option period window begins on the earlier of June 21, 2024 and the number of days indicated beyond the achievement of a 93% physical occupancy rate by the underlying property.


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


(5) The option period begins on October 1 of the second academic year following project completion and ends on the following December 31. The developer may elect to expedite the option period to begin December 1, 2020 and end on December 31, 2020.


(6) The project plans are for the construction of a class A office building consisting of approximately 192,000 rentable square feet; our purchase option window opens 90 days following the achievement of 90% lease commencement and ends on November 30, 2024 (subject to adjustment). Our purchase option is at the to-be-agreed-upon market value. In the event the property is sold to a third party, we would be due a fee based on a minimum multiple of 1.15 times the total commitment amount of the real estate loan investment, less the amounts actually paid by the borrower, up to and including payment of accrued interest and repayment of principal at the time of the sale.


Mortgage Indebtedness

The following table presents certain details regarding our mortgage notes payable:

...



Principal balance as of










Acquisition/

refinancing
date


June 30, 2019


December 31,
2018


Maturity
date


Interest
rate


Basis point
spread over
1 Month
LIBOR


Interest only
through date
(1)















Multifamily communities:



(in thousands)









Summit Crossing

10/31/2017


$

38,001



$

38,349



11/1/2024


3.99

%


Fixed rate


N/A

Summit Crossing II

3/20/2014


13,323



13,357



4/1/2021


4.49

%


Fixed rate


4/30/2019

Vineyards

9/26/2014


33,712



34,039



10/1/2021


3.68

%


Fixed rate


10/31/2017

Avenues at Cypress

2/13/2015


20,952



21,198



9/1/2022


3.43

%


Fixed rate


N/A

Avenues at Northpointe

2/13/2015


26,607



26,899



3/1/2022


3.16

%


Fixed rate


3/31/2017

Venue at Lakewood Ranch

5/21/2015


28,401



28,723



12/1/2022


3.55

%


Fixed rate


N/A

Aster at Lely Resort

6/24/2015


31,448



31,796



7/5/2022


3.84

%


Fixed rate


N/A

CityPark View

6/30/2015


20,331



20,571



7/1/2022


3.27

%


Fixed rate


N/A

Avenues at Creekside

7/31/2015


39,284



39,697



8/1/2024


4.00

%


160

(2)

8/31/2016

Citi Lakes

9/3/2015


41,198



41,582



4/1/2023


4.57

%


217

(3)

N/A

Stone Creek

6/22/2017


19,971



20,139



7/1/2052


3.22

%


Fixed rate


N/A

Lenox Village Town Center

2/28/2019


39,124



29,274



3/1/2029


4.34

%


Fixed rate


N/A

Retreat at Lenox

12/21/2015


17,291



17,465



1/1/2023