Press Release

Bluerock Residential Growth REIT Announces First Quarter 2019 Results

- Total Revenues Grew 23% YoY -

- Same Store Revenues Grew 5.8% YoY -

Company Release - 5/7/2019 8:30 AM ET

NEW YORK, May 7, 2019 /PRNewswire/ -- Bluerock Residential Growth REIT, Inc. (NYSE American: BRG) ("the Company"), an owner of highly amenitized multifamily apartment communities, announced today its financial results for the quarter ended March 31, 2019.

(PRNewsfoto/Bluerock Residential Growth REI)

First Quarter Highlights 

  • Total revenues grew 23% to $51.5 million for the quarter, from $41.9 million in the prior year period.
  • Net loss attributable to common stockholders for the first quarter of 2019 was ($0.53) per share, as compared to ($0.40) per share in the prior year period.  Net loss attributable to common stockholders includes non-cash items, including depreciation and amortization expense, of $0.74 per share in the first quarter of 2019 compared to $0.59 per share for the prior year period.
  • Property Net Operating Income ("NOI") grew 29% to $27.1 million, from $21.0 million in the prior year period.
  • Same store revenue and NOI increased 5.8% and 9.0% respectively, as compared to the prior year period.
  • Core funds from operations attributable to common shares and units ("CFFO") increased 3% to $6.3 million, from $6.1 million in the prior year period.  CFFO per share was $0.20 for the first quarter as compared to $0.20 in the prior year period. 
  • Paid quarterly common stock dividend of $0.1625, an 81% payout ratio on a CFFO basis.
  • Consolidated real estate investments, at cost, were approximately $1.8 billion. 
  • Completed 273 value-add unit upgrades during the quarter achieving a 26.3% ROI.
  • Invested $7.8 million to buy out the noncontrolling interest in one asset and invested $8.6 million in senior and mezzanine loans for a redevelopment property.
  • Repurchased 505,797 shares of common stock during the first quarter at an average price of $10.01 per share, for a total cost of approximately $5.1 million.

"We are pleased to deliver another strong quarter of operating results, further validating our investment thesis of owning highly amenitized apartment communities in knowledge economy growth markets," said Ramin Kamfar, Company Chairman and CEO.  "Property NOI is up over 29% and same store NOI is up 9.0% over the prior year.  These results demonstrate the continued success of our strategic initiatives and the ability to realize attractive returns on our value-add unit renovation investments. With a robust pipeline of opportunities, we remain committed to our investment strategy and are optimistic about our outlook."

Financial Results

Net loss attributable to common stockholders for the first quarter of 2019 was $12.1 million, compared to $9.4 million in the prior year period.  Net loss attributable to common stockholders included non-cash expenses of $17.2 million or $0.74 per share in the first quarter of 2019 compared to $14.2 million or $0.59 per share for the prior year period. 

CFFO for the first quarter of 2019 was $6.3 million, or $0.20 per diluted share, compared to $6.1 million, or $0.20 per diluted share, in the prior year period.  CFFO adds back non-cash, non-operating expenses such as accretion on the Company's Series B preferred stock.  CFFO was primarily driven by growth in property NOI of $6.1 million and interest income of $0.6 million arising from significant investment activity. This was primarily offset by a year-over-year increase in interest expense of $4.0 million, general and administrative expenses of $0.3 million, and preferred stock dividends of $2.1 million.

Total Portfolio Performance


$ In thousands, except average rental
rates

1Q19


1Q18


Variance


Total Revenues (1)

$ 51,466


$ 41,871


22.9%


Property Operating Expenses

$ 18,602


$ 15,658


18.8%


NOI

$ 27,088


$ 21,017


28.9%


Operating Margin

59.3%


57.3%


200

bps

Occupancy Percentage

93.9%


93.5%


40

bps

Average Rental Rate

$    1,299


$    1,227


5.9%


(1) Including interest income from related parties



 

For the first quarter of 2019, property revenues increased by 24.6% compared to the same prior year period primarily attributable to the increased size of the portfolio.  Total portfolio NOI was $27.1 million, an increase of $6.1 million, or 28.9%, compared to the same period in the prior year.  Property operating expenses were up primarily due to the increased size of the portfolio.

Property NOI margins expanded by 200 basis points to 59.3% of revenue for the quarter, compared to 57.3% of revenue in the prior year quarter. 

Same Store Portfolio Performance


$ In thousands, except average rental
rates

1Q19


1Q18


Variance


Revenues

$   38,725


$   36,612


5.8%


Property Operating Expenses

$   15,854


$   15,628


1.4%


NOI

$   22,871


$   20,984


9.0%


Operating Margin

59.1%


57.3%


180

bps

Occupancy Percentage

93.9%


93.5%


40

bps

Average Rental Rate

$     1,290


$     1,225


5.3%


 

The Company's same store portfolio for the quarter ended March 31, 2019 included 28 properties.  For the first quarter of 2019, same store NOI was $22.9 million, an increase of $1.9 million, or 9.0%, compared to the same period in the prior year. Same store property revenues increased by 5.8% compared to the same prior year period, primarily attributable to a 5.3% increase in average rental rates, as well as average occupancy increasing 40 basis points to 93.9%.  Same store expenses increased $0.23 million, primarily due to $0.11 million increase in trash, cable and landscaping, $0.06 million of additional real estate taxes due to higher valuations by municipalities, and $0.05 million increase in insurance.

Renovation Activity

The Company completed 273 value-add unit upgrades during the first quarter achieving a 26.3% rent premium. 

Since inception within the existing portfolio, the Company has completed 1,939 value-add unit upgrades at an average cost of $4,902 per unit and achieved an average monthly rental rate increase of $108 per unit, equating to a 26.3% ROI on all unit upgrades leased as of March 31, 2019.  The Company has identified approximately 4,550 remaining units within the existing portfolio for value-add upgrades with similar projected economics to the completed renovations. The Company expects to complete between 900 and 1,200 unit renovations in 2019. 

Acquisition Activity

On January 23, 2019, the Company provided a $7.8 million senior loan and a $0.8 million mezzanine loan for a multifamily property undergoing redevelopment.

On January 29, 2019, the Company invested approximately $7.8 million to increase its ownership interest from 85% to 100% in its ARIUM Pine Lakes property.

Balance Sheet

During the first quarter, the Company raised gross proceeds of approximately $44.0 million through the issuance of 43,955 shares of Series B preferred stock with associated warrants at $1,000 per unit. 

As of March 31, 2019, the Company had $24.3 million of unrestricted cash on its balance sheet, approximately $54.4 million available among its revolving and term credit facilities, and $1.3 billion of debt outstanding.

Dividend 

The Board of Directors authorized, and the Company declared, a quarterly dividend for the first quarter of 2019 equal to a quarterly rate of $0.1625 per share on its Class A common stock, payable to the stockholders of record as of March 25, 2019, which was paid in cash on April 5, 2019. A portion of each dividend may constitute a return of capital for tax purposes. 

The Board of Directors authorized, and the Company declared a quarterly cash dividend on its 8.250% Series A Cumulative Redeemable Preferred Stock for the first quarter of 2019, in the amount of $0.515625 per share. In addition, the Company declared a quarterly cash dividend on its 7.625% Series C Cumulative Redeemable Preferred Stock for the first quarter of 2019, in the amount of $0.4765625 per share. Further, the Company declared a quarterly cash dividend on its 7.125% Series D Cumulative Preferred Stock for the first quarter of 2019, in the amount of $0.4453125 per share.  The dividends were payable to the stockholders of record on March 25, 2019, and were paid on April 5, 2019.

On April 12, 2019, the Board of Directors authorized, and the Company declared, a monthly dividend of $5.00 per share of Series B preferred stock, payable to the stockholders of record as of April 25, 2019, which was paid in cash on May 3, 2019, and as of May 24, 2019 and June 25, 2019 which will be paid in cash on June 5, 2019, and July 5, 2019, respectively.

2019 Guidance

The Company is reaffirming its prior guidance.  Based on the Company's current outlook and market conditions, the Company anticipates 2019 CFFO in the range of $0.80 to $0.84 per share.  For additional guidance details underlying earnings guidance, please see page 30 of Company's First Quarter 2019 Earnings Supplement available under Investor Relations on the Company's website (www.bluerockresidential.com).

Conference Call

All interested parties can listen to the live conference call at 11:00 AM ET on Tuesday, May 7, 2019 by dialing +1 (866) 843-0890 within the U.S., or +1 (412) 317-6597, and requesting the "Bluerock Residential Conference." 

For those who are not available to listen to the live call, the conference call will be available for replay on the Company's website two hours after the call concludes, and will remain available until July 7, 2019 at http://services.choruscall.com/links/brg190507.html, as well as by dialing +1 (877) 344-7529 in the U.S., or +1 (412) 317-0088 internationally, and requesting conference number 10130647.

The full text of this Earnings Release and additional Supplemental Information is available in the Investor Relations section on the Company's website at http://www.bluerockresidential.com.

About Bluerock Residential Growth REIT, Inc.

Bluerock Residential Growth REIT, Inc. (NYSE American: BRG) is a real estate investment trust that focuses on developing and acquiring a diversified portfolio of institutional-quality highly amenitized live/work/play apartment communities in demographically attractive knowledge economy growth markets to appeal to the renter by choice. The Company's objective is to generate value through off-market/relationship-based transactions and, at the asset level, through value add improvements to properties and operations.  The Company is included in the Russell 2000 and Russell 3000 Indexes.  BRG has elected to be taxed as a real estate investment trust (REIT) for U.S. federal income tax purposes.

For more information, please visit the Company's website at www.bluerockresidential.com.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements are based upon the Company's present expectations, but these statements are not guaranteed to occur.  Furthermore, the Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. Investors should not place undue reliance upon forward-looking statements. For further discussion of the factors that could affect outcomes, please refer to the risk factors set forth in Item 1A of the Company's Annual Report on Form 10-K filed by the Company with the U.S. Securities and Exchange Commission ("SEC") on February 27, 2019, and subsequent filings by the Company with the SEC. We claim the safe harbor protection for forward looking statements contained in the Private Securities Litigation Reform Act of 1995.

 

Portfolio Summary 


The following is a summary of our operating real estate and mezzanine/preferred investments as of March 31, 2019:


Consolidated Operating Properties


Location


Number
of Units


Year Built/
Renovated
(1)


Ownership
Interest


Average

Rent (2)


% Occupied
(3)

ARIUM at Palmer Ranch


Sarasota, FL


320


2016


100%


$           1,311


97%

ARIUM Glenridge


Atlanta, GA


480


1990


90%


1,215


95%

ARIUM Grandewood


Orlando, FL


306


2005


100%


1,394


94%

ARIUM Gulfshore


Naples, FL


368


2016


100%


1,325


95%

ARIUM Hunter's Creek


Orlando, FL


532


1999


100%


1,401


97%

ARIUM Metrowest


Orlando, FL


510


2001


100%


1,382


94%

ARIUM Palms


Orlando, FL


252


2008


100%


1,315


94%

ARIUM Pine Lakes


Port St. Lucie, FL


320


2003


100%


1,287


94%

ARIUM Westside


Atlanta, GA


336


2008


90%


1,532


94%

Ashford Belmar


Lakewood, CO


512


1988/1993


85%


1,607


92%

Ashton Reserve


Charlotte, NC


473


2015


100%


1,122


94%

Citrus Tower


Orlando, FL


336


2006


97%


1,292


94%

Enders Place at Baldwin Park


Orlando, FL


220


2003


92%


1,778


93%

James on South First


Austin, TX


250


2016


90%


1,244


93%

Marquis at Crown Ridge


San Antonio, TX


352


2009


90%


1,014


91%

Marquis at Stone Oak


San Antonio, TX


335


2007


90%


1,444


95%

Marquis at The Cascades


Tyler, TX


582


2009


90%


1,206


92%

Marquis at TPC


San Antonio, TX


139


2008


90%


1,485


92%

Outlook at Greystone


Birmingham, AL


300


2007


100%


954


94%

Park & Kingston


Charlotte, NC


168


2015


100%


1,294


98%

Plantation Park


Lake Jackson, TX


238


2016


80%


1,393


92%

Preston View


Morrisville, NC


382


2000


100%


1,121


94%

Roswell City Walk


Roswell, GA


320


2015


98%


1,526


98%

Sands Parc


Daytona Beach, FL


264


2017


100%


1,354


97%

Sorrel


Frisco, TX


352


2015


95%


1,279


85%

Sovereign


Fort Worth, TX


322


2015


95%


1,365


93%

The Brodie


Austin, TX


324


2001


93%


1,247


94%

The Links at Plum Creek


Castle Rock, CO


264


2000


88%


1,411


94%

The Mills


Greenville, SC


304


2013


100%


1,037


96%

The Preserve at Henderson Beach


Destin, FL


340


2009


100%


1,412


97%

Veranda at Centerfield


Houston, TX


400


1999


93%


947


90%

Villages of Cypress Creek


Houston, TX


384


2001


80%


1,129


96%

Wesley Village


Charlotte, NC


301


2010


100%


1,371


95%

Consolidated Operating Properties Subtotal/Average


11,286






$         1,299


94%














Mezzanine/Preferred Investments


Location


Planned
Number
of Units






Pro Forma
Average Rent




Alexan CityCentre


Houston, TX


340






$         1,733

(2)



Alexan Southside Place


Houston, TX


270






2,012




Arlo


Charlotte, NC


286






1,507




Cade Boca Raton


Boca Raton, FL


90






2,549




Domain at The One Forty


Garland, TX


299






1,469




Flagler Village


Fort Lauderdale, FL


385






2,352




Helios


Atlanta, GA


282






1,436

(2)



Leigh House


Raleigh, NC


245






1,271




North Creek Apartments


Leander, TX


259






1,358




Novel Perimeter


Atlanta, GA


320






1,749




Riverside Apartments


Austin, TX


222






1,408




The Park at Chapel Hill


Chapel Hill, NC


*






*




Vickers Historic Roswell


Roswell, GA


79






3,176




Wayforth at Concord


Concord, NC


150






1,707




Whetstone Apartments


Durham, NC


204






1,278

(2)



Mezzanine and Preferred Investments Subtotal/Average


3,431






$         1,704


















Portfolio Properties Total/Average


14,717






$         1,393




















(1) Represents date of last significant renovation or year built if there were no renovations. 

(2) Represents the average effective monthly rent per occupied unit for the three months ended March 31, 2019.

(3) Percent occupied is calculated as (i) the number of units occupied as of March 31, 2019, divided by (ii) total number of units, expressed as a percentage.

* The development is in the planning phase; project specifications are in process.

 

 

Consolidated Statement of Operations

For the Three Months Ended March 31, 2019 and 2018

(Unaudited and dollars in thousands except for share and per share data)













Three Months Ended







March 31,










2019



2018


Revenues

















Rental and other property revenues










$

45,690



$

36,675


Interest income from related parties











5,776




5,196


Total revenues











51,466




41,871


Expenses

















Property operating











18,602




15,658


Property management fees











1,215




992


General and administrative











5,627




4,669


Acquisition and pursuit costs











58




43


Weather-related losses, net














168


Depreciation and amortization











17,230




15,640


Total expenses











42,732




37,170


Operating income











8,734




4,701


Other income (expense)

















Preferred returns on unconsolidated real estate joint ventures











2,289




2,461


Gain on sale of non-depreciable real estate investments











679





Interest expense, net











(16,067)




(10,117)


Total other expense











(13,099)




(7,656)


Net loss











(4,365)




(2,955)


Preferred stock dividends











(10,384)




(8,248)


Preferred stock accretion











(1,887)




(1,112)


Net loss attributable to noncontrolling interests

















Operating partnership units











(4,051)




(2,675)


Partially owned properties











(492)




(215)


Net loss attributable to noncontrolling interests











(4,543)




(2,890)


Net loss attributable to common stockholders










$

(12,093)



$

(9,425)



















Net loss per common share - Basic










$

(0.53)



$

(0.40)



















Net loss per common share – Diluted










$

(0.53)



$

(0.40)



















Weighted average basic common shares outstanding











23,123,616




24,143,382


Weighted average diluted common shares outstanding











23,123,616




24,143,382


 

 

Consolidated Balance Sheets

First Quarter 2019

(Unaudited and dollars in thousands except for share and per share amounts)




March 31,
2019



December 31,
2018


ASSETS









Net Real Estate Investments









Land


$

200,114



$

200,385


Buildings and improvements



1,548,167




1,546,244


Furniture, fixtures and equipment



58,422




55,050


Construction in progress



659




989


Total Gross Real Estate Investments



1,807,362




1,802,668


Accumulated depreciation



(124,605)




(108,911)


Total Net Real Estate Investments



1,682,757




1,693,757


Cash and cash equivalents



24,337




24,775


Restricted cash



22,659




27,469


Notes and accrued interest receivable from related parties



174,068




164,084


Due from affiliates



3,123




2,854


Accounts receivable, prepaids and other assets



12,332




14,395


Preferred equity investments and investments in unconsolidated real estate joint ventures



93,728




89,033


In-place lease intangible assets, net



443




1,768


Total Assets


$

2,013,447



$

2,018,135











LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY









Mortgages payable


$

1,204,905



$

1,206,136


Revolving credit facilities



78,000




82,209


Accounts payable



1,215




1,486


Other accrued liabilities



25,444




31,690


Due to affiliates



798




726


Distributions payable



12,317




12,073


Total Liabilities



1,322,679




1,334,320



8.250% Series A Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share,
10,875,000 shares authorized; 5,721,460 shares issued and outstanding as of March 31, 2019 and
December 31, 2018



139,698




139,545




6.000% Series B Redeemable Preferred Stock, liquidation preference $1,000 per share, 1,225,000 shares
authorized; 349,423 and 306,009 shares issued and outstanding as of March 31, 2019 and December 31,
2018, respectively



311,555




272,842




7.625% Series C Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share,
4,000,000 shares authorized; 2,323,750 shares issued and outstanding as of March 31, 2019 and
December 31, 2018



56,545




56,485


Equity









Stockholders' Equity









Preferred stock, $0.01 par value, 229,900,000 shares authorized; no shares issued and outstanding







7.125% Series D Cumulative Preferred Stock, liquidation preference $25.00 per share, 4,000,000 shares
authorized; 2,850,602 shares issued and outstanding as of March 31, 2019 and December 31, 2018



68,705




68,705


Common stock - Class A, $0.01 par value, 747,509,582 shares authorized; 22,861,084 and 23,322,211
shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively



228




233


Common stock - Class C, $0.01 par value, 76,603 shares authorized; 76,603 shares issued and
outstanding as of March 31, 2019 and December 31, 2018



1




1


Additional paid-in-capital



300,407




307,938


Distributions in excess of cumulative earnings



(234,363)




(218,531)


Total Stockholders' Equity



134,978




158,346


Noncontrolling Interests









Operating partnership units



21,143




27,613


    Partially owned properties



26,849




28,984


Total Noncontrolling Interests



47,992




56,597


Total Equity



182,970




214,943


TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY


$

2,013,447



$

2,018,135


 

Non-GAAP Financial Measures

The foregoing supplemental financial data includes certain non-GAAP financial measures that we believe are helpful in understanding our business and performance, as further described below. Our definition and calculation of these non-GAAP financial measures may differ from those of other REITs, and may, therefore, not be comparable.

Funds from Operations and Core Funds from Operations

We believe that funds from operations ("FFO"), as defined by the National Association of Real Estate Investment Trusts ("NAREIT") and core funds from operations ("CFFO) are important non-GAAP supplemental measures of operating performance for a REIT.

FFO attributable to common shares and units is a non-GAAP financial measure that is widely recognized as a measure of REIT operating performance. We consider FFO to be an appropriate supplemental measure of our operating performance as it is based on a net income analysis of property portfolio performance that excludes non-cash items such as depreciation. The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, which implies that the value of real estate assets diminishes predictably over time. Since real estate values historically rise and fall with market conditions, presentations of operating results for a REIT, using historical accounting for depreciation, could be less informative. We define FFO, consistent with the NAREIT definition, as net income, computed in accordance with GAAP, excluding gains or losses on sales of depreciable real estate property, plus depreciation and amortization of real estate assets, plus impairment write-downs of depreciable real estate, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect FFO on the same basis.

CFFO makes certain adjustments to FFO, removing the effect of items that do not reflect ongoing property operations such as stock compensation expense, acquisition expenses, unrealized gains and losses on derivatives, losses on extinguishment of debt and debt modification costs (includes prepayment penalties incurred and the write-off of unamortized deferred financing costs and fair market value adjustments of assumed debt), non-cash interest, one-time weather-related costs, gain or losses on sales of non-depreciable real estate property, and preferred stock accretion. We believe that CFFO is helpful to investors as a supplemental performance measure because it excludes the effects of certain items which can create significant earnings volatility, but which do not directly relate to our core recurring property operations. As a result, we believe that CFFO can help facilitate comparisons of operating performance between periods and provides a more meaningful predictor of future earnings potential.

Our calculation of CFFO differs from the methodology used for calculating CFFO by certain other REITs and, accordingly, our CFFO may not be comparable to CFFO reported by other REITs. Our management utilizes FFO and CFFO as measures of our operating performance after adjustment for certain non-cash items, such as depreciation and amortization expenses, and acquisition and pursuit costs that are required by GAAP to be expensed but may not necessarily be indicative of current operating performance and that may not accurately compare our operating performance between periods. Furthermore, although FFO and CFFO and other supplemental performance measures are defined in various ways throughout the REIT industry, we also believe that FFO and CFFO may provide us and our stockholders with an additional useful measure to compare our financial performance to certain other REITs.

Neither FFO nor CFFO is equivalent to net income, including net income attributable to common stockholders, or cash generated from operating activities determined in accordance with GAAP. Furthermore, FFO and CFFO do not represent amounts available for management's discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments or uncertainties. Neither FFO nor CFFO should be considered as an alternative to net income, including net income attributable to common stockholders, as an indicator of our operating performance or as an alternative to cash flow from operating activities as a measure of our liquidity.

We have acquired four operating properties and four properties held through preferred equity or mezzanine loan investments subsequent to March 31, 2018.  Therefore, the results presented in the table below are not directly comparable and should not be considered an indication of our future operating performance.

The table below reconciles our calculations of FFO and CFFO to net loss, the most directly comparable GAAP financial measure, for the three months ended March 31, 2019 and 2018 (in thousands, except per share amounts):





Three Months Ended






March 31,









2019



2018


Net loss attributable to common shares









$

(12,093)



$

(9,425)


Add back: Net loss attributable to operating partnership units










(4,051)




(2,675)


Net loss attributable to common shares and units










(16,144)




(12,100)


Common stockholders and operating partnership units pro-rata share of:
















Real estate depreciation and amortization (1)










16,142




14,831


FFO Attributable to Common Shares and Units










(2)




2,731


Common stockholders and operating partnership units pro-rata share of:
















Acquisition and pursuit costs










58




43


 Non-cash interest expense










775




461


Unrealized loss on derivatives










1,635





Weather-related losses, net













165


Non-real estate depreciation and amortization










86




64


Gain on sale of non-depreciable real estate investments










(679)





Shareholder activism










338





Non-cash preferred returns on unconsolidated real estate joint ventures










(212)




(231)


Non-cash equity compensation










2,391




1,780


Preferred stock accretion










1,887




1,112


CFFO Attributable to Common Shares and Units









$

6,277



$

6,125


















Per Share and Unit Information:
















FFO Attributable to Common Shares and Units - diluted









$

(0.00)



$

0.09


CFFO Attributable to Common Shares and Units - diluted









$

0.20



$

0.20


















Weighted average common shares and units outstanding - diluted










30,885,006




30,995,775



(1) The real estate depreciation and amortization amount includes our share of consolidated real estate-related depreciation and amortization of intangibles, less amounts attributable to
noncontrolling interests – partially owned properties, and our similar estimated share of unconsolidated depreciation and amortization, which is included in earnings of our unconsolidated
real estate joint venture investments. 

 

Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate ("EBITDAre")

NAREIT defines earnings before interest, taxes, depreciation and amortization for real estate ("EBITDAre") (September 2017 White Paper) as net income (loss), computed in accordance with GAAP, before interest expense, income taxes, depreciation and amortization expense, and further adjusted for gains and losses from sales of depreciated operating properties, and impairment write-downs of depreciated operating properties. 

We consider EBITDAre to be an appropriate supplemental measure of our performance because it eliminates depreciation, income taxes, interest and non-recurring items, which permits investors to view income from operations unobscured by non-cash items such as depreciation, amortization, the cost of debt or non-recurring items.

Adjusted EBITDAre represents EBITDAre further adjusted for non-comparable items and it is not intended to be a measure of free cash flow for our management's discretionary use, as it does not consider certain cash requirements such as income tax payments, debt service requirements, capital expenditures and other fixed charges.

EBITDAre and Adjusted EBITDAre are not recognized measurements under GAAP. Because not all companies use identical calculations, our presentation of EBITDAre and Adjusted EBITDAre may not be comparable to similarly titled measures of other companies.

Below is a reconciliation of net loss attributable to common stockholders to EBITDAre (unaudited and dollars in thousands).




Three Months Ended





March 31,





2019


2018


Net loss attributable to common stockholders


$

(12,093)



$

(9,425)




Net loss income attributable to noncontrolling interests



(4,543)




(2,890)




Preferred stock dividends



10,384




8,248




Preferred stock accretion



1,887




1,112




Interest expense, net



16,067




10,117




Depreciation and amortization



17,144




15,576



EBITDAre


$

28,846



$

22,738




Acquisition and pursuit costs



58




43




Non-real estate depreciation and amortization



86




64




Weather-related losses, net



-




168




Gain on sale of non-depreciable real estate investments



(679)







Shareholder activism



338







Non-cash equity compensation



2,391




1,780




Non-cash preferred returns on unconsolidated real estate joint ventures



(212)




(231)



Adjusted EBITDAre


$

30,828



$

24,562














 

Same Store Properties

Same store properties are conventional multifamily residential apartments which were owned and operational for the entire periods presented, including each comparative period.

Property Net Operating Income ("Property NOI")

We believe that net operating income, or NOI, is a useful measure of our operating performance. We define NOI as total property revenues less total property operating expenses, excluding depreciation and amortization and interest. Other REITs may use different methodologies for calculating NOI, and accordingly, our NOI may not be comparable to other REITs. We believe that this measure provides an operating perspective not immediately apparent from GAAP operating income or net income. We use NOI to evaluate our performance on a same store and non-same store basis; NOI measures the core operations of property performance by excluding corporate level expenses and other items not related to property operating performance and captures trends in rental housing and property operating expenses. However, NOI should only be used as a supplemental measure of our financial performance.

The following table reflects net loss attributable to common stockholders together with a reconciliation to NOI and to same store and non-same store contributions to consolidated NOI, as computed in accordance with GAAP for the periods presented (unaudited and amounts in thousands):













Three Months Ended













March 31, 













2019



2018


Net loss attributable to common shares











$

(12,093)



$

(9,425)



Add back: Net loss attributable to operating partnership units












(4,051)




(2,675)


Net loss attributable to common shares and units












(16,144)




(12,100)


Add common stockholders and operating partnership units pro-rata share of:



















Depreciation and amortization












16,142




14,831



Non-real estate depreciation and amortization












86




64



Non-cash interest expense












775




461



Unrealized loss on derivatives












1,635






Property management fees












1,148




939



Acquisition and pursuit costs












58




43



Corporate operating expenses












5,554




4,669



Weather-related losses, net















165



Preferred dividends












10,384




8,248



Preferred stock accretion












1,887




1,112


Less common stockholders and operating partnership units pro-rata share of:



















Preferred returns on unconsolidated real estate joint ventures












2,289




2,461



Interest income from related parties












5,776




5,196



Gain on sale of non-depreciable real estate investments












679





Pro-rata share of properties' income












12,781




10,775


Add:



















Noncontrolling interest pro-rata share of partially owned property income












729




607


Total property income












13,510




11,382


Add:



















Interest expense












13,578




9,635


Net operating income












27,088




21,017


Less:



















Non-same store net operating income












4,217




33


Same store net operating income (1)











$

22,871



$

20,984




















(1) Same store portfolio for the three months ended March 31, 2019 consists of 28 properties, which represent 9,608 units.

 

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SOURCE Bluerock Residential Growth REIT, Inc.