Q3 2021 BRT Apartments Corp Earnings Call
Good day and welcome to the BRT Apartments Corp, third quarter 2021 earnings Conference call.
Today's conference is being recorded.
At this time I would like to turn the floor over to Steven Swett at ICR. Thank you you may begin.
Thank you for joining us today for BRT apartment Corp's third quarter 2021 earnings conference call on the call today is Jeffrey Gould, President and Chief Executive Officer, and also available are George Lai, Our Chief Financial Officer, and Senior Vice President, David Kailash and Ryan Baltimore.
I'd like to remind everyone that this conference call contains forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 that are based on management's current expectations assumptions and beliefs.
Forward looking statements can often be identified by words, such as believe expect estimate anticipate intend and similar expressions and variations were negatives of these words.
Forward looking statements include but are not limited to statements regarding brt's strategy and expectations for the future.
They are not guarantees of future results and are subject to risks uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward looking statements.
Listeners should not place undue reliance on any forward looking statements and are encouraged to review the company's SEC filings, including its Form 10-K and Form 10-Q for a more complete discussion of risks and other factors that could affect these forward looking statements except as required by law BRT does not undertake any obligation to update publicly or revise.
Any forward looking statements.
This conference call also includes a discussion of funds from operations or <unk> adjusted funds from operations or <unk> net operating income or NOI and information regarding our pro rata share of revenues expenses NOI assets and liabilities of Brg's unconsolidated subsidiaries, all of which are non-GAAP financial measures of performance.
These non-GAAP measures should be used as a supplement to and not a substitute for.
Net income computed in accordance with GAAP.
Unless otherwise indicated or the context, otherwise requires discussions with respect to operating results at the unconsolidated ventures reflect brt's pro rata share of search results.
For a more complete discussion of our financial results as reported in accordance with GAAP.
The company's earnings release, and supplemental information, which are currently available under the Investor Relations tab at our website and the 10-Q, which BRT intends to file shortly.
All amounts are approximate and among other things it looks like rounding unless otherwise indicated or the context, otherwise requires references to brt's portfolio or its multifamily portfolio and references to revenue expenses NOI assets and liabilities refer to results and accounts <unk> wholly owned subsidiaries and its pro rata share.
Of unconsolidated subsidiaries.
We are to use its pro rata share to help provide a better understanding of our unconsolidated joint ventures.
They use a pro rata information has certain limitations is not representative of our operations and accounts as presented in accordance with GAAP.
<unk> pro rata information should be used with caution and in conjunction with GAAP data presented in our supplemental and in our reports filed with the SEC.
Further references to the current quarter refer to the quarter ended September 30th 2021 and references to the 'twenty 'twenty quarter refer to the quarter ended September 30th 2020.
As a reminder, the company's supplemental information and earnings release have been posted on the Investor Relations section of Brt's website at Www Dot B R. T apartments Dot com the company plans to file its 10-Q shortly.
Like to now turn the call over to President and CEO Jeffrey Gould. Please go ahead Jeff.
Thank you and welcome to the call. We are pleased with our results in the third quarter as our portfolio continues to perform very well and we continue to make progress on our initiatives to increase our wholly owned portfolio.
<unk> value reduce leverage and strengthen our multifamily platform.
Let me begin with our results for the third quarter of 2021.
Net income attributable to common stockholders was $28 $1 million or $1.54 per diluted share compared to a net loss of $7 $5 million or 44 cents per diluted share in the same quarter of 2020.
<unk> was 7000 hours or less than a penny per diluted share compared to $4 $6 million or 27, seven cents per diluted share in the same quarter last year. The decline reflects a $4 $6 million share of the loss on extinguishment of debt incurred by an unconsolidated joint venture in connection with.
Two property sales it.
It also reflects our share of the loss on extinguishment of debt of 900 in $2000 incurred and paying off mortgage debt and the principal amount of $31 $9 million at several consolidated properties.
<unk> was $5 $7 million or <unk> 31 cents per diluted share compared to $4 $9 million or 28 cents per diluted share in the third quarter of 2020. This 10, 7% increase per share. It was primarily due to reduced interest expense and improved operating margins occupancy.
And rental rates across our portfolio.
Turning to our portfolio at September 32021, our wholly owned portfolio consists of eight multifamily communities containing 2010 units.
Also own interest through unconsolidated entities and another 27 communities.
Containing 7444 units.
In the third quarter rental revenues, including our pro rata share of unconsolidated entities were $27 $3 million versus $27 $5 million in the 2020 quarter. This decrease was primarily due to the sale of assets during the current quarter port.
Portfolio, NOI was $14 $4 million up approximately 3% compared to $13 $9 million for the 2020 quarter.
Average occupancy was 96, 2% for the core for the quarter ended September 32021 up 170 basis points compared to the 2020 quarter.
Average rents in the third quarter, 2021, well $1152 per month up 6% compared to the 2020 quarter for leases signed in the third quarter of 2021, we saw a favorable spreads on new leases at 10, 7%.
Renewal spreads of six 1% and overall spreads of eight 4%.
In the third quarter 2021, our same store pool for the portfolio included 9052 units comprised of 1608 wholly owned units and 7444 units in our unconsolidated joint ventures for the current quarter same store revenue grew 7% compared.
To the 2020 quarter same store expenses increased five 1% compared to the 2020 quarter and same store NOI increased eight 9% compared to the 2020 quarter.
Regarding transactions in the quarter, we continued to execute on our unique ability to add to our wholly owned portfolio by buying out joint venture partners. We believe this approach will be successful as we are well positioned to understand the true value and potential of an asset prior to owning it outright.
As previously announced we completed the purchase of our partner's remaining 41, 49% interest in the joint venture that owns bells Bluff, a 402 unit multifamily property located in West Nashville, Tennessee.
Purchase price for such interests was approximately $27 $9 million and the property is now wholly owned by B R. A T.
In connection with the closing we obtained a $52 million 20 year fixed rate mortgage loan bearing an interest rate of 344, 8%.
Subsequent to the quarter end in October we purchased for $1 $6 million. The remaining 10% interest in the venture that owns Crestmont Ann Thornton Blade, a 266 unit multifamily property in Greenville, South Carolina.
Also as previously announced we completed the sale of park at 980, located in Lawrenceville, Georgia, and the Avenue apartments, located in Ocala, Florida, We had a 50% interest in the unconsolidated joint venture that own. These properties as a result of these sales we recognized a $35 million share of the gain after a 4.6.
Million dollar share of the loss on the extinguishment of debt. These properties produced an IRR of approximately 25% over the three years that they were owned.
Additionally in November we completed the sale of our interest in two underperforming properties located in St. Louis for $3 million in the second quarter of 2021, we had recorded a $520000 impairment charge with respect to this transaction.
On the value add front, we repositioned 67 units at an average investment of approximately $6500 per unit, yielding an estimated annualized return on investment of approximately 42%.
As reflected in our supplemental financial information a portion of the cost may have been incurred in the prior period, but we report the return on investment when the Union has released across our entire portfolio. We have approximately 750 units slated for renovation of over the next several years.
Turning to the balance sheet.
During the third quarter, we paid off $31 $9 million of mortgage debt on our consolidated properties. This mortgage that was scheduled to mature in the first quarter of 2022 and bore a weighted average interest rate of 453%.
Also we reduced our mortgage debt within our unconsolidated subsidiaries by $107 million in connection with the sales of park at 980, and the Avenue apartments. The mortgages on these so properties were scheduled to mature in 2028 and borrow a weighted average interest rate of 394%.
At September 32021, we had total assets of $398 million total debt of $171 million in total BRT stockholder equity of $206 million.
Available liquidity at quarter end included $29 $6 million of cash and cash equivalents.
Restricted cash of $7 $6 million and up to $15 million available under our credit facility.
In addition, our unconsolidated joint ventures had approximately $13 $3 million of cash and cash cash equivalents, which is used for the apical ventures day to day working capital purposes and renovations.
The aggregate mortgage debt for our wholly owned properties combined with our pro rata share of mortgage debt for our unconsolidated joint ventures totaled $578 $1 million has a weighted average interest rate of 4% and a weighted average remaining term to maturity of eight two years, our debt to enterprise value as of September 32.
'twenty, one was 66% down from 80% at September 32020, we hope to continue to bring our leverage down over time.
During the quarter ended September 30 of 2021, we sold approximately 59000 shares procured pursuant to our ATM sales program at an average price of $18 23 per share net proceeds after commissions and fees were $1 $1 million.
Finally on October 7th we paid our quarterly dividend of 23 per share a four 5% increase from the prior dividend current dividend equates to an annualized yield of four 4% based on our stock price of $20.92 as of the close of business on November five 2021.
In conclusion, our results this year reflect the value we continue to build our portfolio is performing very well and we continue our efforts to grow our wholly owned portfolio and strengthen our balance sheet. Our focus on properties in the south Eastern Sun belt has been successful and I am excited with the opportunity we have.
As we look to the balance of 2021 and into the next year.
Want to thank the entire BRT team for their hard work and dedication.
That completes our call we will now open the call to your questions operator.
Thank you.
We will now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad, you will hear a tone and all the junior request.
If youre using a speakerphone please pick up your handset before pressing any keys.
To withdraw your question. Please press Star then two.
We will pause for a moment, let's call has joined the queue.
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Once again, if you have a question. Please press Star then one.
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There are no questions registered at this time I would like to turn the conference back over to Geoff gold for any closing remarks.
I just wanted to say thank you all for your time and we appreciate your continued interest in B R. A T.
Have a good day and thanks very much.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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