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Preferred Apartment Communities, Inc. Reports Results for Fourth Quarter and Year Ended 2018

ATLANTA, Feb. 25, 2019 /PRNewswire/ -- Preferred Apartment Communities, Inc. (APTS) ("we," "our," the "Company" or "Preferred Apartment Communities") today reported results for the quarter and year ended December 31, 2018. 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.

Preferred Apartment Communities

Financial Highlights

     Our operating results are presented below.





Three months ended December 31,




Years ended December 31,






2018


2017


% change


2018


2017


% change

















Revenues (in thousands)

$

106,280


$

81,652


30.2%


$

397,271


$

294,005


35.1%

















Per share data:














Net income (loss) (1)

$

0.06


$

(0.60)



$

(1.08)


$

(1.13)


















FFO (2)

$

0.38


$

0.31


22.6%


$

1.41


$

1.32


6.8%

















AFFO (2)

$

0.48


$

0.31


54.8%


$

1.33


$

1.17


13.7%

















Dividends (3)

$

0.26


$

0.25


4.0%


$

1.02


$

0.94


8.5%

















(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.

"We had an outstanding fourth quarter and delivered FFO per share growth of 22.6% as compared to the fourth quarter 2017. For the year, we increased FFO per share by 6.8%, we increased our dividend again by over 8% and we achieved multifamily same store NOI growth of 3.4%, reflecting our intensified focus on operational results. We are very proud of the performance of our team as we navigated our way through an emotional start to the year," said Daniel M. DuPree, Preferred Apartment Communities' Chairman and Chief Executive Officer.

  • For the year ended December 31, 2018, our FFO payout ratio to Common Stockholders and Unitholders was approximately 73.0% and our FFO payout ratio (before the deduction of preferred dividends) to our preferred stockholders was approximately 60.0%. For the fourth quarter 2018, our FFO payout ratio to Common Stockholders and Unitholders was approximately 68.9% and our FFO payout ratio (before the deduction of preferred dividends) to our preferred stockholders was approximately 59.9%. (A)
  • For the year ended December 31, 2018, our AFFO payout ratio to Common Stockholders and Unitholders was approximately 77.5% and our AFFO payout ratio (before the deduction of preferred dividends) to our preferred stockholders was approximately 61.4%. For the fourth quarter 2018, our AFFO payout ratio to Common Stockholders and Unitholders was approximately 54.4% and our AFFO payout ratio (before the deduction of preferred dividends) to our preferred stockholders was approximately 54.1%. (B)
  • For the year ended December 31, 2018, our same store net operating income for our established multifamily communities increased approximately 3.4% as compared to the year ended December 31, 2017.(C) For the fourth quarter 2018, our average established multifamily communities' physical occupancy was 94.3% and for the year ended December 31, 2018, our same-store rental revenue grew 3.2% from the year ended December 31, 2017.
  • At December 31, 2018, the market value of our common stock was $14.06 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 16.7% through December 31, 2018.
  • As of December 31, 2018, the average age of our multifamily communities was approximately 4.3 years, which is the youngest in the public multifamily REIT industry.
  • Approximately 90.0% of our permanent property-level mortgage debt has fixed interest rates and approximately 6.0% has variable interest rates which are capped. In addition, we plan to refinance the remaining uncapped variable rate mortgage debt into new fixed rate instruments during 2019. We believe we are well protected against potential increases in market interest rates.
  • At December 31, 2018, our leverage, as measured by the ratio of our debt to the undepreciated book value of our total assets, was approximately 54.4 %. Our leverage calculation excludes the gross assets of approximately $269.9 million and liabilities of approximately $264.9 million that we consolidated as a result of our investment in the ML-04 pool from the Freddie Mac K program.
  • As of December 31, 2018, our total assets were approximately $4.4 billion compared to approximately $3.3 billion as of December 31, 2017, an increase of approximately $1.1 billion, or approximately 35.6%. This growth was driven primarily by the acquisition of 17 real estate properties (partially offset by the sale of 4 properties). In addition, our assets increased due to the consolidation of the ML-04 pool from the Freddie Mac K program. Excluding the assets consolidated from the ML-04 pool, our assets grew approximately $893.7 million, or 27.5% since December 31, 2017.
  • Cash flow from operations for the year ended December 31, 2018 was approximately $145.4 million, an increase of approximately $59.1 million, or 68.4%, compared to cash flow provided by operations of approximately $86.3 million for the year ended December 31, 2017. Cash flow from operations for the year 2018 was more than sufficient to fund our aggregate dividends and distributions for the year, which totaled approximately $128.9 million. Cash flow from operations for the quarter ended December 31, 2018 was approximately $33.4 million, an increase of approximately $17.6 million, or 110.9%, compared to cash flow provided by operations of approximately $15.8 million for the quarter ended December 31, 2017.
  • On November 30, 2018, we closed on a real estate loan investment of up to approximately $30.3 million and a senior construction loan of up to approximately $37.3 million, both in support of the development of a Class A office building with approximately 187,000 rentable square feet in Atlanta, Georgia.
  • During the fourth quarter 2018, we closed on two real estate loan investments aggregating approximately $30.3 million, one supporting a multifamily community to be located in Jacksonville, Florida and another supporting a student housing property to be located in Atlanta, Georgia.
  • On October 23, 2018, we sold our Stoneridge Farms at Hunt Club multifamily community located in Nashville, Tennessee for a net gain of approximately $16.8 million, which resulted in an internal rate of return of approximately 21% from September 26, 2014, the date the property was acquired. (D)
  • On December 11, 2018, we sold our McNeil Ranch multifamily community located in Austin, Texas for a net gain of approximately $13.9 million, which resulted in an internal rate of return of approximately 19% from January 24, 2013, the date the property was acquired. (D)

(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.

(D) Our IRR calculations are based on equity invested and are net of fees paid to the Manager and disposition costs.

Acquisitions of Properties

During the fourth quarter 2018, we acquired the following properties:











Property


Location (MSA)


Units / Leasable square

feet












Office building:









Capitol Towers


Charlotte, NC


479,000


LSF












Multifamily Communities:









CityPark View South


Charlotte, NC


200


units



Vestavia Reserve


Birmingham, AL


272


units












Grocery-anchored shopping center:









Hollymead Town Center


Charlottesville, VA


158,807


LSF











Real Estate Assets











Owned as of
December 31,
2018


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


Potential total



Multifamily communities:








Properties

32


10


42



Units

9,768


3,047


12,815



Grocery-anchored shopping centers:








Properties

45



45



Gross leasable area (square feet)

4,730,695



4,730,695



Student housing properties:








Properties

7


2


9



Units

1,679


423


2,102



Beds

5,208


1,359


6,567



Office buildings:








Properties

7


1


8



Rentable square feet

2,578,000


187,000


2,765,000











(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 January 17, 2019, we acquired Gayton Crossing, a grocery-anchored shopping center consisting of 158,316 square feet of gross leasable area in Richmond, Virginia.

On February 21, 2019, our board of directors declared a quarterly dividend on our Common Stock of $0.26 per share, payable on April 15, 2019 to stockholders of record on March 15, 2019.

Multifamily Established Communities Financial Data

The following chart presents same store operating results for the Company's established communities. We define our population of established communities as those that have achieved occupancy at or above 93% occupancy 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 established communities containing an aggregate 2,838 units:

Aster at Lely Resort


Avenues at Cypress


Avenues at Northpointe

Citi Lakes


Lenox Village


Retreat at Lenox Village

Venue at Lakewood Ranch


Overton Rise


Vineyards

Sorrel





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 Multifamily Established Communities' Net Income (Loss) to Same Store Net Operating
Income (NOI)




Three months ended:

(in thousands)


12/31/2018


12/31/2017






Net income (loss)


$

27,199


$

(4,742)

Add:





Equity stock compensation


(1,178)


862

Depreciation and amortization


43,926


34,590

Interest expense


26,592


19,383

Management fees


7,445


5,702

Insurance, professional fees and other expenses


979


2,131

Loan loss allowance


(496)


Waived asset management and general and administrative expense fees


(2,073)


(728)

Less:





Interest revenue on notes receivable


12,614


9,586

Interest revenue on related party notes receivable


3,306


5,232

Income from consolidated VIEs


135


Gain on sale of real estate


30,744







Property net operating income


55,595


42,380

Less:





Non-same-store property revenues


(78,434)


(54,997)

Add:





Non-same-store property operating expenses


29,458


19,593






Same store net operating income


$

6,619


$

6,976

 

 

Multifamily Established Communities' Same Store Net Operating Income




Three months ended:





(in thousands)


12/31/2018


12/31/2017


$ change


% change

Revenues:









Rental revenues


$

10,870


$

10,780


$

90


0.8%

Other property revenues


1,056


1,055


1


—%

Total revenues


11,926


11,835


91

(1)

0.8%










Operating expenses:









Property operating and maintenance


1,502


1,336


166


12.4%

Payroll


995


929


66


7.1%

Property management fees


477


477



—%

Real estate taxes


1,803


1,618


185

(2)

11.4%

Other


530


499


31


6.2%

Total operating expenses


5,307


4,859


448


9.2%










Same store net operating income


$

6,619


$

6,976


$

(357)


(5.1)%

(1) Three of our ten established same store properties are located in Houston, Texas that were not damaged by Hurricane Harvey and the resulting short-term housing shortage caused the combined properties to achieve 97.7% physical occupancy during fourth quarter 2017. Occupancy for those properties normalized as damaged housing stocks came back online. Those properties achieved physical occupancy of 94.3% during fourth quarter 2018.

(2) The increase in real estate taxes for the fourth quarter 2018 versus 2017 was due to a successful tax appeal of our Overton Rise multifamily community which resulted in a 2017 beneficial accrual adjustment coupled with a reassessment in 2018 of our Venue at Lakewood Ranch multifamily community for the first time since we acquired the property.

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




Years ended:

(in thousands)


12/31/2018


12/31/2017






Net income


$

44,538


$

28,667

Add:





Equity stock compensation


1,703


3,470

Depreciation and amortization


171,136


116,777

Interest expense


95,564


67,468

Acquisition costs



14

Management fees


27,541


20,226

Insurance, professional fees and other expenses

3,467


4,529

Loan loss allowance


2,533


Waived asset management and general and administrative expense fees


(6,656)


(1,729)

Loss on extinguishment of debt



888

Less:





Interest revenue on notes receivable


50,190


35,698

Interest revenue on related party notes receivable


15,616


21,204

Income from consolidated VIEs


320


Gain on sale of real estate


69,705


37,635






Property net operating income


203,995


145,773

Less:





Non-same-store property revenues


(283,750)


(190,847)

Add:





Non-same-store property operating expenses

106,601


71,033





Same store net operating income


$

26,846


$

25,959

 

 

Multifamily Established Communities' Same Store Net Operating Income




Years ended:





(in thousands)


12/31/2018


12/31/2017


$ change


% change

Revenues:









Rental revenues


$

43,352


$

42,132


$

1,220


2.9%

Other property revenues


4,363


4,124


239


5.8%

Total revenues


47,715


46,256


1,459


3.2%










Operating expenses:









Property operating and maintenance


5,999


5,736


263


4.6%

Payroll


3,847


3,818


29


0.8%

Property management fees


1,911


1,865


46


2.5%

Real estate taxes


7,054


6,854


200


2.9%

Other


2,058


2,024


34


1.7%

Total operating expenses


20,869


20,297


572


2.8%










Same store net operating income


$

26,846


$

25,959


$

887


3.4%

For periods beginning on or after January 1, 2019, the following multifamily established communities containing an aggregate 6,172 units will be included in our calculations of same store net operating income:

Aster at Lely Resort


Avenues at Cypress


Avenues at Northpointe

Citi Lakes


Lenox Village


Retreat at Lenox Village

Overton Rise


Sorrel


Venue at Lakewood Ranch

Avenues at Creekside


525 Avalon Park


Vineyards

Citrus Village


Retreat at Greystone


City Vista

Founders' Village


Luxe at Lakewood Ranch


Adara at Overland Park

Summit Crossing I


Summit Crossing II


Aldridge at Town Village

Capital Markets Activities

During the fourth quarter 2018, we issued and sold an aggregate of 109,446 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 $98.5 million after commissions and other fees. In addition, during the fourth quarter 2018, we issued 263,500 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 $3.1 million.

During the fourth quarter 2018, we issued and sold an aggregate of 7,183 shares of Series M Redeemable Preferred Stock ("mShares"), resulting in net proceeds of approximately $7.0 million after dealer manager fees.

Dividends

Quarterly Dividends on Common Stock and Class A OP Units

On November 1, 2018, we declared a quarterly dividend on our Common Stock of $0.26 per share for the fourth quarter 2018. This represents a 4.0% increase in our common stock dividend from our fourth quarter 2017 common stock dividend of $0.25 per share, and an average annual dividend growth rate of 14.4% since June 30, 2011, the first quarter end following our initial public offering in April 2011. The fourth quarter dividend was paid on January 15, 2019 to all stockholders of record on December 14, 2018. In conjunction with the Common Stock dividend, the Company's operating partnership declared a distribution on its Class A Units of $0.26 per unit for the fourth quarter 2018, which was paid on January 15, 2019 to all Class A Unit holders of record as of December 14, 2018.

Monthly Dividends on Preferred Stock

We declared and paid monthly dividends of $5.00 per share on our Series A Redeemable Preferred Stock, which totaled approximately $23.3 million for the quarter ended December 31, 2018 and represent a 6% annual yield. We declared and paid dividends totaling approximately $584,000 on our Series M Redeemable Preferred Stock, or mShares, for the quarter ended December 31, 2018. The mShares have an escalating dividend rate 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, February 26, 2019 at 11:00 a.m. Eastern Time to discuss our fourth quarter 2018 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, February 26, 2019
Time: 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time)

The live broadcast of our fourth quarter 2018 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 periods and years ended December 31, 2018 and 2017 appear in the attached report, as well as on our website using the following link:

http://investors.pacapts.com/download/4Q18_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, 2017 that was filed with the Securities and Exchange Commission, or SEC, on March 1, 2018, 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      

FOURTH QUARTER AND YEAR ENDED 2018 - SUPPLEMENTAL FINANCIAL DATA

 


Preferred Apartment Communities, Inc.

Consolidated Statements of Operations

(Unaudited)










Three months ended December 31,


Years ended December 31,

(In thousands, except per-share figures)


2018


2017


2018


2017

Revenues:









Rental revenues


$

76,163



$

56,785



$

280,079



$

200,462


Other property revenues


14,197



10,049



51,386



36,641


Interest income on loans and notes receivable


12,614



9,586



50,190



35,698


Interest income from related parties


3,306



5,232



15,616



21,204


Total revenues


106,280



81,652



397,271



294,005











Operating expenses:









Property operating and maintenance


12,260



8,266



44,065



29,903


Property salary and benefits

4,728



3,622



17,766



13,272


Property management fees

3,151



2,313



11,681



8,329


Real estate taxes


11,400



7,991



42,035



31,281


General and administrative


2,205



1,629



8,224



6,490


Equity compensation to directors and executives

(1,178)



862



1,703



3,470


Depreciation and amortization


43,926



34,590



171,136



116,777


Acquisition and pursuit costs








14


Asset management and general and administrative expense









fees to related party


7,445



5,702



27,541



20,226


Loan loss allowance


(496)





2,533




Insurance, professional fees, and other expenses


2,000



2,764



7,166



6,584











Total operating expenses


85,441



67,739



333,850



236,346


Waived asset management and general and administrative








expense fees

(2,073)



(728)



(6,656)



(1,729)











Net operating expenses


83,368



67,011



327,194



234,617


Operating income before gains on sales of









real estate and trading investment


22,912



14,641



70,077



59,388


Gains on sales of real estate and trading investment


30,744





69,705



37,635


Operating income


53,656



14,641



139,782



97,023











Interest expense


26,592



19,383



95,564



67,468


Change in fair value of net assets of consolidated









VIE from mortgage-backed pool


135





320




Loss on extinguishment of debt








888











Net income (loss)


27,199



(4,742)



44,538



28,667


Consolidated net (income) loss attributable to non-controlling interests

(615)



111



(1,071)



(986)











Net income (loss) attributable to the Company


26,584



(4,631)



43,467



27,681











Dividends declared to preferred stockholders


(23,940)



(17,609)



(86,741)



(63,651)


Earnings attributable to unvested restricted stock


(3)



(3)



(16)



(15)











Net income (loss) attributable to common stockholders


$

2,641



$

(22,243)



$

(43,290)



$

(35,985)


Net income (loss) per share of Common Stock available to








 common stockholders:









Basic


$

0.06



$

(0.60)



$

(1.08)



$

(1.13)











Diluted


$

0.06



$

(0.60)



$

(1.08)



$

(1.13)











Weighted average number of shares of Common Stock outstanding:








Basic


41,320



37,205



40,032



31,926











Diluted


42,046



37,205



40,032



31,926


 

 


Reconciliation of FFO Attributable to Common Stockholders and Unitholders and AFFO

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






Three months ended December 31,

(In thousands, except per-share figures)



2018


2017









Net income (loss) attributable to common stockholders (See note 1)

$

2,641



$

(22,243)










Add:

Depreciation of real estate assets


34,309



24,941



Amortization of acquired real estate intangible assets and deferred leasing costs

9,173



9,386



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


615



(111)


Less:

Gain on sale of real estate


(30,682)




FFO attributable to common stockholders and unitholders

16,056



11,973










Add:

Loan cost amortization on acquisition term note

20



29



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

707



421



(Insurance recoveries in excess of) weather-related property operating losses (See note 4)

(237)



681



Contingent management fees recognized

206





Payment of costs related to property refinancing

227



684



Non-cash equity compensation to directors and executives

(1,178)



863



Amortization of loan closing costs (See note 5)


1,234



793



Depreciation/amortization of non-real estate assets


444



263



Net loan fees received (See note 6)


707



18



Accrued interest income received (See note 7)


12,266



4,697



(Decrease in) loan loss allowance (See note 8)


(496)





Amortization of lease inducements (See note 9)


426



200



Non-cash dividends on Preferred Stock


17



30



Cash received in excess of amortization of purchase option termination revenues (See note 10)

1,044




Less:

Non-cash loan interest income (See note 7)


(4,611)



(4,557)



Non-cash revenues from mortgage-backed securities


(135)





Cash paid for loan closing costs


(1,073)



(28)



Amortization of acquired above and below market lease intangibles

 





and straight-line rental revenues (See note 11)


(2,909)



(2,679)



Amortization of deferred revenues (See note 12)


(901)



(398)



Normally recurring capital expenditures and leasing costs (See note 13)

(1,485)



(1,026)










AFFO

$

20,329



$

11,964








Common Stock dividends and distributions to Unitholders declared:





Common Stock dividends



$

10,840



$

9,576



Distributions to Unitholders (See note 2)


228



221



Total




$

11,068



$

9,797










Common Stock dividends and Unitholder distributions per share


$

0.26



$

0.25










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

$

0.38



$

0.31


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

$

0.48



$

0.31






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





Basic:








Common Stock



41,320



37,205



Class A Units




954



895



Common Stock and Class A Units


42,274



38,100











Diluted Common Stock and Class A Units (B)


43,000



43,355










Actual shares of Common Stock outstanding, including 12 and 12 unvested shares




 of restricted Common Stock at December 31, 2018 and 2017, respectively

41,788



38,577


Actual Class A Units outstanding at December 31, 2018 and 2017, respectively.

877



885



Total




42,665



39,462



(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 2.26% weighted average non-controlling interest in the Operating Partnership for the three-month period ended December 31, 2018.

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


     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)






Years ended December 31,

(In thousands, except per-share figures)



2018


2017









Net loss attributable to common stockholders (See note 1)

$

(43,290)



$

(35,985)










Add:

Depreciation of real estate assets


124,499



85,285



Amortization of acquired real estate intangible assets and deferred leasing costs

45,136



30,693



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


1,071



986


Less:

Gain on sale of real estate


(69,643)



(37,635)


FFO attributable to common stockholders and unitholders

57,773



43,344










Add:

Acquisition and pursuit costs





14



Loan cost amortization on acquisition term notes


83



128



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

2,487



1,599



Mortgage loan refinancing and extinguishment costs

288



1,742



(Insurance recovery in excess of) weather-related property operating losses  (See note 4)

(270)



898



Contingent management fees recognized



206



387



Non-cash equity compensation to directors and executives

1,703



3,470



Amortization of loan closing costs (See note 5)


4,801



3,550



Depreciation/amortization of non-real estate assets


1,501



799



Net loan fees received (See note 6)


2,166



1,314



Accrued interest income received (See note 7)


20,676



11,813



Loan loss allowance (See note 8)


2,533





Non-cash dividends on Preferred Stock


755



63



Amortization of lease inducements (See note 9)


1,381



437


Less:

Non-cash loan interest income (See note 7)


(19,337)



(18,064)



Cash paid for loan closing costs


(1,489)



(28)



Amortization of purchase option termination revenues in excess of cash received (See note 10)

(920)





Non-cash revenues from mortgage-backed securities

(320)





Amortization of acquired above and below market lease intangibles

 





and straight-line rental revenues (See note 11)

(11,956)



(8,176)



Amortization of deferred revenues (See note 12)


(2,666)



(855)



Normally recurring capital expenditures and leasing costs (See note 13)

(4,966)



(4,058)


AFFO

$

54,429



$

38,377






Common Stock dividends and distributions to Unitholders declared:





Common Stock dividends



41,129



31,244



Distributions to Unitholders (See note 2)


1,041



844



Total




42,170



32,088


Common Stock dividends and Unitholder distributions per share


$

1.02



$

0.94










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

$

1.41



$

1.32


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

$

1.33



$

1.17






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





Basic:








Common Stock



40,032



31,927



Class A Units




1,040



906



Common Stock and Class A Units


41,072



32,833











Diluted Common Stock and Class A Units (B)


42,390



36,939










Actual shares of Common Stock outstanding, including 12 and 12 unvested shares




 of restricted Common Stock at December 31, 2018 and 2017, respectively

41,788



38,577


Actual Class A Units outstanding at December 31, 2018 and 2017, respectively.

877



885



Total




42,665



39,462



(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 2.53% weighted average non-controlling interest in the Operating Partnership for the twelve-month period ended December 31, 2018.

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


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 December 31, 2018 include activity for the properties acquired during the quarter only from their respective dates of acquisition and the activity for the properties sold during the period only through the date of the sale. In addition, the fourth quarter 2018 period includes activity for the properties acquired since December 31, 2017. Rental and other property revenues and expenses for the fourth quarter 2017 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 877,454 Class A Units as of December 31, 2018. Included in this total are 419,228 Class A Units which were granted as partial consideration to the seller in conjunction with the seller's contribution to us on February 29, 2016 of the Wade Green grocery-anchored shopping center. The remaining Class A units were awarded primarily to our key executive officers. The Class A Units are apportioned a percentage of our financial results as non-controlling interests. The weighted average ownership percentage of these holders of Class A Units was calculated to be 2.26% and 2.35% for the three-month periods ended December 31, 2018 and 2017, respectively and 2.53% and 2.76% for the years ended December 31, 2018 and 2017, respectively.



3)

Beginning on January 1, 2016, we pay loan coordination fees to Preferred Apartment Advisors, LLC, our Manager, related to obtaining mortgage financing for acquired properties. Loan coordination fees were introduced to reflect the administrative effort involved in arranging debt financing for acquired properties. The portion of the loan coordination fees paid up until July 1, 2017 attributable to the financing were amortized over the lives of the respective mortgage loans, and this non-cash amortization expense is an addition to FFO in the calculation of AFFO. Beginning effective July 1, 2017, the loan coordination fee was lowered from 1.6%  to 0.6% of the amount of any mortgage indebtedness on newly-acquired properties or refinancing. All of the loan coordination fees paid to our Manager subsequent to July 1, 2017 are amortized over the life of the debt. At December 31, 2018, aggregate unamortized loan coordination fees were approximately $13.6 million, which will be amortized over a weighted average remaining loan life of approximately 10.8 years.



4)

We sustained weather related operating losses due to hurricanes (primarily due to Hurricane Harvey at our Stone Creek multifamily community) during the year ended December 31, 2018; these costs are added back to FFO in our calculation of AFFO.  Lost rent and other operating costs incurred during the year ended December 31, 2018 totaled approximately $563,000. This number is offset by the receipt from our insurance carrier of approximately $833,000 for recoveries of lost rent, which was recognized in our consolidated statements of operations for the year ended December 31, 2018.



5)

We incur loan closing costs on our existing mortgage loans, which are secured on a property-by-property basis by each of our acquired real estate assets, and also for occasional amendments to our syndicated revolving line of credit with Key Bank National Association, or our Revolving Line of Credit. 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 December 31, 2018, aggregate unamortized loan costs were approximately $23.4 million, which will be amortized over a weighted average remaining loan life of approximately 9.1 years.



6)

We receive loan origination fees in conjunction with the origination of certain real estate loan investments. These fees are then recognized as revenue over the lives of the applicable loans as adjustments of yield using the effective interest method. The total fees received after the payment of loan origination fees to our Manager are additive adjustments in the calculation of AFFO. Correspondingly, the amortized non-cash income is a deduction in the calculation of AFFO. Over the lives of certain loans, we accrue additional interest amounts that become due to us at the time of repayment of the loan or refinancing of the property, or when the property is sold. This non-cash interest income is subtracted from FFO in our calculation of AFFO. The amount of additional accrued interest becomes an additive adjustment to FFO once received from the borrower (see note 7).



7)

This adjustment reflects the receipt during the periods presented of additional interest income (described in note 6 above) which was earned and accrued prior to those periods presented on various real estate loans.

8)

During the year ended December 31, 2018, we recorded a $2.5 million loss on our real estate loan investment to the developer of Fusion Apartments in Irvine, California which is reflected on our statements of operations.  This loss was reduced from the previously reported $3.0 million for the nine months ended September 30, 2018 because of the application of accounting guidance pertaining to troubled debt restructuring, which requires any cash received to be applied as a reduction in the principal balance of the loan, not as interest revenue. The Company received interest payments during the fourth quarter of 2018, which reduced the allowance for loan loss on our consolidated balance sheet as well as the bad debt charge presented on our consolidated statements of operations.



9)

This adjustment removes the non-cash amortization of costs incurred to induce tenants to lease space in our office buildings and grocery-anchored shopping centers.



10)

On May 7, 2018, we terminated our purchase options on the Encore, Bishop Street and Hidden River multifamily communities and the Haven 46 and Haven Charlotte student housing properties, all of which were partially supported by real estate loan investments held by us. In exchange for termination fees aggregating approximately $10.7 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. As of December 31, 2018, we had recognized termination fee revenues in excess of the cash received by approximately $920,000. This difference is a reduction to FFO in our calculation of AFFO.



11)

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, 2018, the balance of unamortized below-market lease intangibles was approximately $47.1 million, which will be recognized over a weighted average remaining lease period of approximately 9.2 years.



12)

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.



13)

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)


December 31, 2018


December 31, 2017

Assets





Real estate




Land


$

519,300



$

406,794


Building and improvements

2,738,085



2,043,853


Tenant improvements

128,914



63,425


Furniture, fixtures, and equipment

278,151



210,779


Construction in progress

8,265



10,491


Gross real estate

3,672,715



2,735,342


Less: accumulated depreciation

(272,042)



(172,756)


Net real estate

3,400,673



2,562,586


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

282,548



255,345


Real estate loan investments to related parties, net

51,663



131,451


Total real estate and real estate loan investments, net

3,734,884



2,949,382







Cash and cash equivalents

38,958



21,043


Restricted cash

48,732



51,969


Notes receivable

14,440



17,318


Note receivable and revolving lines of credit due from related parties

32,867



22,739


Accrued interest receivable on real estate loans

23,340



26,865


Acquired intangible assets, net of amortization

135,961



102,743


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

1,916



1,385


Deferred offering costs

6,468



6,544


Tenant lease inducements, net

20,698



14,425


Receivable from sale of mortgage-backed security

41,181




Tenant receivables and other assets

41,567



37,957


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

269,946




Total assets

$

4,410,958



$

3,252,370







Liabilities and equity




Liabilities




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

$

2,299,625



$

1,776,652


Revolving line of credit

57,000



41,800


Term note payable, net of deferred loan costs



10,994


Real estate loan investment participation obligation

5,181



13,986


Unearned purchase option termination fees

2,050




Deferred revenue

43,484



27,947


Accounts payable and accrued expenses

38,618



31,253


Accrued interest payable

6,711



5,028


Dividends and partnership distributions payable

19,258



15,680


Acquired below market lease intangibles, net of amortization

47,149



38,857


Security deposits and other liabilities

17,611



9,407


VIE liabilities from mortgage-backed pool, at fair value

264,886




Total liabilities

2,801,573



1,971,604







Commitments and contingencies




Equity





Stockholders' equity





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




   shares authorized; 1,674 and 1,250 shares issued; 1,608 and 1,222




shares outstanding at December 31, 2018 and December 31, 2017, respectively

16



12


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




   shares authorized; 44 and 15 shares issued and outstanding




at December 31, 2018 and December 31, 2017, respectively




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




41,776 and 38,565 shares issued and outstanding at




December 31, 2018 and December 31, 2017, respectively

418



386


Additional paid-in capital

1,607,712



1,271,040


Accumulated earnings



4,449


      Total stockholders' equity

1,608,146



1,275,887


Non-controlling interest

1,239



4,879


Total equity

1,609,385



1,280,766


Total liabilities and equity

$

4,410,958



$

3,252,370


 

 

Preferred Apartment Communities, Inc.

Consolidated Statements of Cash Flows

(Unaudited)




Years ended December 31,

(In thousands)


2018


2017

Operating activities:





Net income


$

44,538



$

28,667


Reconciliation of net income to net cash provided by operating activities:




Depreciation and amortization expense

171,136



116,777


Amortization of above and below market leases

(5,905)



(3,335)


Deferred revenues and fee income amortization

(4,325)



(2,347)


Purchase option termination fee amortization

(8,660)




Change in fair value of net assets of consolidated VIE

(320)




Amortization of market discount on assumed debt and lease incentives

1,644



631


Deferred loan cost amortization

7,108



5,084


Decrease (increase) in accrued interest income on real estate loan investments

3,524



(4,970)


Equity compensation to executives and directors

1,703



3,470


Gains on sale of real estate and trading investment

(69,703)



(37,635)


Cash received for purchase option terminations

7,740




Loss on extinguishment of debt




888


Mortgage interest received from consolidated VIE

6,049




Mortgage interest paid to other participants of consolidated VIE

(6,049)




Increase in loan loss allowance

2,533




Other




189


Changes in operating assets and liabilities:




(Increase) in tenant receivables and other assets

(7,631)



(12,105)


(Increase) in tenant lease incentives

(7,607)



(14,260)


Increase in accounts payable and accrued expenses

2,876



2,382


Increase in accrued interest, prepaid rents and other liabilities

6,730



2,853


Net cash provided by operating activities

145,381



86,289







Investing activities:





Investment in real estate loans


(200,806)



(148,346)


Repayments of real estate loans


250,448



94,410


Notes receivable issued


(9,946)



(7,864)


Notes receivable repaid


12,759



6,100


Note receivable issued to and draws on line of credit by related parties

(51,789)



(35,281)


Repayments of line of credit by related parties

41,117



34,229


Origination fees received on real estate loan investments

4,331



2,634


Origination fees paid to Manager on real estate loan investments

(2,166)



(1,320)


Purchases of mortgage-backed securities

(45,927)




Mortgage principal received from consolidated VIE

1,255




Acquisition of properties


(1,007,048)



(779,643)


Disposition of properties, net


164,838



116,813


Receipt of insurance proceeds for capital improvements

978



4,719


Additions to real estate assets - improvements

(44,383)



(11,594)


Deposits refunded (paid) on acquisitions

4,534



(2,034)


Net cash used in investing activities

(881,805)



(727,177)







Financing activities:





Proceeds from mortgage notes payable

602,375



517,489


Repayments of mortgage notes payable

(121,797)



(124,040)


Payments for deposits and other mortgage loan costs

(12,299)



(14,772)


Payments for mortgage prepayment costs



(817)


Proceeds from real estate loan participants

5



224


Payments to real estate loan participants

(10,425)



(7,883)


Proceeds from lines of credit


550,300



275,000


Payments on lines of credit


(535,100)



(360,700)










Repayment of the Term Loan

(11,000)




Mortgage principal paid to other participants of consolidated VIE

(1,255)




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

408,644



306,947


Proceeds from sales of Common Stock



74,213


Proceeds from exercises of warrants

20,052



80,970


Payments for redemptions of preferred stock

(9,367)



(4,480)


Common Stock dividends paid


(39,865)



(27,409)


Preferred stock dividends paid


(84,427)



(61,966)


Distributions to non-controlling interests

(1,034)



(817)


Payments for deferred offering costs

(3,705)



(6,314)


Contribution from non-controlling interests



540


Net cash provided by financing activities

751,102



646,185






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

14,678



5,297


Cash, cash equivalents and restricted cash, beginning of year

73,012



67,715


Cash, cash equivalents and restricted cash, end of year

$

87,690



$

73,012


 

 

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,
2018


December 31,
2017

















Multifamily communities:






(in thousands)



Encore


Atlanta, GA


12/31/2018


N/A


$



$



$

10,958



8.5 / 5

Encore Capital


Atlanta, GA


4/8/2019


N/A






7,521



8.5 / 5

Palisades


Northern VA


5/17/2019


N/A


17,270



17,132



17,111



8 / 5

Fusion


Irvine, CA


12/1/2018


N/A






58,447



8.5 / 0

Green Park


Atlanta, GA


2/28/2018


N/A






11,464



8.5 / 5.83

Bishop Street


Atlanta, GA


6/30/2019


N/A


12,693



12,693



12,145



8.5 / 6.5

Hidden River (3)


Tampa, FL


12/3/2018


N/A






4,735



8.5 / 6.5

Hidden River Capital (3)


Tampa, FL


12/4/2018


N/A






5,041



8.5 / 6.5

CityPark II (3)


Charlotte, NC


1/7/2019


N/A






3,365



8.5 / 6.5

CityPark II Capital (3)


Charlotte, NC


1/8/2019


N/A






3,624



8.5 / 6.5

Park 35 on Clairmont


Birmingham, AL


6/26/2019


6/26/2020


21,060



21,060



21,060



8.5 / 2

Wiregrass


Tampa, FL


5/15/2020


5/15/2023


14,976



14,136



12,972



8.5 / 6.5

Wiregrass Capital


Tampa, FL


5/15/2020


5/15/2023


4,244



3,891



3,561



8.5 / 6.5

Berryessa


San Jose, CA


4/19/2018


N/A






30,571



10.5 / 0

Berryessa


San Jose, CA


2/13/2021


2/13/2023


137,616



95,349





8.5 / 6

The Anson (2)


Nashville, TN


6/1/2018


N/A






2,261



12 / 0

The Anson


Nashville, TN


11/24/2021


11/24/2023


6,240







8.5 / 4.5

The Anson


Nashville, TN


11/24/2021


11/24/2023


5,659



3,160





8.5 / 4.5

Fort Myers


Fort Myers, FL


2/3/2021


2/3/2022


9,416



8,118



3,521



8.5 / 5.5

Fort Myers Capital


Fort Myers, FL


2/3/2021


2/3/2022


6,193



5,442



4,994



8.5 / 5.5

360 Forsyth


Atlanta, GA


7/11/2020


7/11/2022


22,412



19,742



13,400



8.5 / 5.5

Morosgo


Atlanta, GA


1/31/2021


1/31/2022


11,749



10,736



4,951



8.5 / 5.5

Morosgo Capital


Atlanta, GA


1/31/2021


1/31/2022


6,176



5,188



4,761



8.5 / 5.5

University City Gateway


Charlotte, NC


8/15/2021


8/15/2022


10,336



10,335



850



8.5 / 5

University City Gateway















Capital


Charlotte, NC


8/18/2021


8/18/2022


7,338



6,030



5,530



8.5 / 5

Cameron Park


Alexandria, VA


10/11/2021


10/11/2023


21,340



17,050





8.5 / 3

Cameron Park Capital


Alexandria, VA


10/11/2021


10/11/2023


8,850



7,557





8.5 / 3

Southpoint


Fredericksburg, VA


2/28/2022


2/28/2024


7,348



896





8.5 / 4

Southpoint Capital


Fredericksburg, VA


2/28/2022


2/28/2024


4,962



3,895





8.5 / 4

Duval


Jacksonville, FL


6/14/2022


6/14/2023


16,697



3,886





8.5 / 3.5
















Student housing properties:









Haven 12


Starkville, MS


11/30/2020


N/A


6,116



6,116



5,816



8.5 / 0

Haven46


Tampa, FL


3/29/2019


N/A






9,820



8.5 / 5

Haven Northgate (3)


College Station, TX


6/20/2019


N/A






65,724



(4)  / 1.5

Lubbock II (3)


Lubbock, TX


4/20/2019


N/A






9,357



8.5 / 0

Haven Charlotte


Charlotte, NC


12/22/2019


12/22/2021


19,582



19,462



17,039



8.5 / 6.5

Haven Charlotte Member

Charlotte, NC


12/22/2019


12/22/2021


8,201



8,201



7,795



8.5 / 6.5

Solis Kennesaw


Atlanta, GA


9/26/2020


9/26/2022


12,359



11,343



1,610



8.5 / 5.5

Solis Kennesaw Capital


Atlanta, GA


10/1/2020


10/1/2022


8,360



7,786



7,145



8.5 / 5.5

Solis Kennesaw II


Atlanta, GA


5/5/2022


5/5/2024


13,613



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 / 6.9 (5)
















Preferred Office Properties:













8West


Atlanta, GA


11/29/2022


11/29/2024


30,329







8.5 / 5

8West construction loan


Atlanta, GA


11/29/2022


11/29/2024


37,250







(6)

Other:















Crescent Avenue (7)


Atlanta, GA


4/13/2018


N/A






8,500



10 / 5

North Augusta Ballpark (8)

North Augusta, SC


1/15/2021


1/15/2024








9 / 6
























$

501,242



336,329



388,506




Unamortized loan origination fees








(2,118)



(1,710)




Allowance for loan losses


























Carrying amount










$

334,211



$

386,796




















































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

(2) Effective May 24, 2018, the land acquisition bridge loan was converted into a real estate loan and a capital loan, shown below.

(3) The loan was repaid in full in connection with our acquisition of the underlying property.

(4) The current interest rate on the Haven Northgate loan was a variable rate of 600 basis points over LIBOR.

(5) Effective January 1, 2018, the deferred interest rate increased to 6.9% per annum until the accumulated accrued interest balance reaches $250, at which
point the deferred interest rate reverts to 5.0%.

(6) The current interest rate on the 8West construction loan is a variable rate of 400 basis points over LIBOR.

(7) The loan was repaid in full on June 20, 2018.

(8) The loan was repaid in full on December 21, 2018.

We hold options, but not obligations, to purchase certain 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 December 31, 2018, 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:








Palisades

Northern VA


304



5/1/2019


5/31/2019

Fort Myers

Fort Myers, FL


224



S + 90 days (2)


S + 150 days (2)

Wiregrass

Tampa, FL


392



S + 90 days (2)


S + 150 days (2)

360 Forsyth

Atlanta, GA


356



S + 90 days (2)


S + 150 days (2)

Morosgo

Atlanta, GA


258



S + 90 days (2)


S + 150 days (2)

University City Gateway

Charlotte, NC


338



S + 90 days (2)


S + 150 days (2)

The Anson

Nashville, TN


...