Q4 2021 BRT Apartments Corp Earnings Call
Good day and welcome to the BRT apartments Corp, fourth quarter and year end 2021 earnings Conference call. Today's conference is being recorded at this time I would like to turn the floor over to Mr. Stephen Swett Investor Relations. Thank you you may begin.
Thank you for joining us today for BRT apartment Corporation's fourth quarter and year end 2021 earnings conference call on the call today is Jeffrey Gould President and Chief Executive Officer also available are George why our Chief Financial Officer, Ryan Baltimore, Chief Operating Officer, David <unk> Senior Vice President.
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.
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 or negatives of these words.
These forward looking statements include but are not limited to statements regarding brt's strategy and expectations for the future.
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.
Sept as required by law BRT does not undertake any obligation to publicly update 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 Brt'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.
Yes, 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 see the company's earnings release and supplemental information, which are available which are currently available under the Investor Relations tab at our web site and the 10-K, which BRT intends to file later today.
All amounts are approximate and among other things reflect rounded unless otherwise indicated or context, otherwise requires references to brt's portfolio or its multifamily portfolio and references to revenues expenses NOI assets and liabilities refer to results and accounts of Brt's wholly owned subsidiaries and its pro rata.
Share of unconsolidated subsidiaries.
To use its pro rata share to help provide a better understanding of our unconsolidated joint ventures.
Over the use of pro rata information has certain limitations and is not representative of our operations and accounts as presented in accordance with GAAP.
Accordingly pro rata information should be used with caution and in conjunction with the GAAP data presented in our supplemental and in our reports filed with the SEC.
Further references to the current quarter referred to the quarter ended December 31, 2021, and references to the 2020 quarter referred to the quarter ended December 31 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 BRT apartments Dot com.
I'd now like to turn the call over to President and Chief Executive Officer Jeffrey Gould. Please go ahead Jeff.
And welcome to the call.
Fourth quarter was another strong quarter for BRT capping off a solid year during which we continued to make progress on our goal is to increase our wholly owned portfolio unlock value decreased debt to enterprise value and strengthen our multifamily platform, while continuing to simplify our balance sheet.
Let me give begin with our results for the fourth quarter of 2021.
Net loss attributable to common stockholders was $1 million to $5 million or eight cents per diluted share compared to a net loss of $3.3 million or <unk> 19 per diluted share in the same quarter of 2020.
F F O was $6 $3 million or <unk> 35 cents per diluted share compared to $4 $96 million or 29 cents per diluted share in the same quarter last year.
So the net increase in S. F O our higher operating margins at the same store properties and the effects of our acquisition of our partner's interest in several joint ventures.
<unk> was $7 $5 million or 41 cents per diluted share compared to $5 six $4 million or 33 cents per diluted share in the fourth quarter of 2020.
This 24% increase per share for the same reasons as mentioned before it was not affected by debt prepayment charges noncash amortization of restricted stock expenses and insurance recoveries.
For the full year of 2021 net income attributable to common stockholders was $29, one $1 million or $1 62 per diluted share compared to a net loss of $19 $86 million or $1.16 per diluted share in 2020.
S F O was $17 $43 million or <unk> 97 per diluted share compared to $17 million for 99 cents per diluted share in 2020.
Contributing to the F O increase on an absolute basis for higher operating margins at same store properties and the effect of our acquisition of our partner's interest in several joint ventures.
<unk> was $23 eight $1 million or $1.33 per diluted share.
The $19 to $1 million or $1 12 per diluted share in 2020 is.
18, 8% increase per share was primarily due to the same reason as contributing to the increase in S. F O, but was not affected by debt prepayment costs noncash amortization of restricted stock expense and insurance recoveries.
Turning to our portfolio. That's at December 31, 2021, our wholly owned portfolio consists of 10 multifamily communities totaling 2576 units. We also owned interest in the unconsolidated entities and another 23 communities.
<unk> 6000, and 697 units.
Average occupancy was 96, 4% for the quarter ended December 31, 2021 up one 9% compared to the 2020 quarter.
Average rents in the fourth quarter 2021, $1233 per month up 13, 3% compared to the 2020 quarter.
Or at least have signed in the fourth quarter of 2021, we saw favorable spreads on new leases at 10, 7% renewal spreads of seven 9% and overall spreads of nine 3%.
In the fourth quarter 2021, our same store pool included 8305 units comprised of 1608 wholly owned units and 6697 units in our unconsolidated joint ventures for.
Are these properties same store revenue grew nine 2% compared to the 2020 quarter.
Same store expenses increased five 3% compared to the 2020 quarter and same store NOI increased 12, 3% compared to the 2020 quarter.
For the full year 2021, our same store pool included 7390 units comprised of 1000 and 608 units wholly owned and 5070 782 units in our unconsolidated joint ventures.
But these properties 2021 same store revenue grew 7% compared to the prior year.
Same store expenses increased five 6% and same store NOI increased eight 2% compared to the prior year.
Regarding transactions, both during and subsequent to the fourth quarter, we continued to execute on our unique ability to add to our wholly owned portfolio by buying out joint venture partners in October we purchased for $1 $6 million. The remaining 10% interest in the venture that owns Crestmont a thorn blood.
206% to six unit multifamily property in Greenville, South Carolina.
In November we sold our interest in two underperforming properties located in St. Louis for a sale price of $3 million in December we purchased for $16 $1 million. The remaining 20% interest in the venture that owns crossings of Bellevue 300 unit property in Nashville, Tennessee.
During the first quarter of 2022, we sold the 288 unit property in San Antonio, Texas, and will recognize a gain of approximately $12 $7 million and an internal rate of return of over 18%.
Also we announced that we entered into separate agreements to acquire the remaining venture partners' interest at five multifamily properties with an aggregate of approximately 1100 units.
The purchase price for these interest is approximately $30 million and we intend to assume approximately $98 million of nonrecourse mortgage debt.
With a weighted average remaining term to maturity of seven one years and a weighted average interest rate of 4.17%.
The completion of these purchases is subject to customary closing conditions and no purchase is contingent on the completion of the others. We are very excited about completing these transactions in the coming months further extending our growth program to consolidate interest in our assets on.
On the value add front.
We repositioned 60 private units.
At an average investment of approximately 5900 per unit.
And an estimated annualized return on investment of approximately 44%.
As reflected in our supplemental financial information a portion of the cost may have been incurred in the prior period, but we will report the return on investment when the unit is released.
Across our entire portfolio, we have approximately 700 units available for innovation over the next several years.
Turning to the balance sheet.
During the fourth quarter, we entered into an amended credit facility, allowing the company subject to certain conditions to borrow up to $35 million and up to a potential $60 million pursuant to an uncommitted accordion feature for the acquisition of multifamily properties, the repayment of mortgage debt and up to 15 million.
May be used for working capital and secured.
Facility Bears an interest annual interest rate of 25 basis points over the prime rate with a floor of three 5% and matures in 2024, we.
We are pleased with this new credit facility, which provides enhanced ability to pursue attractive opportunities that will grow our portfolio.
At December 31, 2021, we had total assets of $460 million total debt of $237 million and total PRP stockholder equity of $203 million available liquidity at quarter end included $32 $3 million of cash and cash equivalents restricted.
Cash of $6 $6 million, primarily for capital improvements and up to $35 million available under our credit facility.
In addition, our unconsolidated joint ventures had approximately $13 $7 million of cash and cash equivalents, which is used for the applicable ventures day to day working capital purposes and renovations.
The aggregate your aggregate mortgage debt for our wholly owned properties combined with our pro rata share of mortgage debt for our unconsolidated joint ventures totaled $580 million with a weighted average interest rate of 392% and a weighted average remaining term to maturity of eight two years our debt to enterprise.
As of December 31, 2021 was 61% down from 75% at December 31 2020.
This was due in part to the repayment of mortgage debt on wholly owned properties as we continue to focus on our leverage.
In 2021, we sold approximately 529000 shares pursuant to our ATM sales program at an average price of $18 47 per share net proceeds after commissions and fees were approximately $9 $6 million.
Subsequent to the fourth quarter, we sold 100000 shares pursuant to our ATM sales program at a weighted average price per share of $22 <unk>.
Proceeds were approximately $2 $2 million.
Finally on March 19, 2022, we declared our quarterly dividend up 23 per share the current dividend equates to an annualized yield of 4.02% based on our stock price of $22 91.
As of the close of business on March 11th 2022.
In conclusion 2021 was a very solid year for BRT, our portfolio of delivered excellent results and we continue to advance our efforts to grow our wholly owned portfolio portfolio of prudently, while also enhancing our financial flexibility our geographic focus primarily in the south east has proven to be successful.
As we directly benefit from the historic migratory wave with jobs and families to these markets. As we look ahead to 2022 I'm excited about the opportunities in front of us and finally I want to thank the entire beer BRT team for their hard work and dedication.
That completes our call we will now open the call to your questions operator.
At this time well be conducting a question and answer session. If you would like to ask a question. Please classic star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You might put starts huge you move your question from the queue for participants using speaker.
It may be necessary to pick up your handset before pressing the star keys, one moment please call for questions.
First question comes from the line of Gaurav Mehta with Yep.
With your question.
Thanks, Good morning, guys.
Good morning first question first question I have alone.
Acquisition to acquire JV interest for them to find properties that you have under contract.
Can you provide some color on on those acquisitions, how those transactions came about and then maybe comment on how the valuation on those acquisitions are as compared to the current market cap rates.
Yes sure.
Good morning.
So how they come about and we've been talking to a bunch of our different JV partners and they.
They do come about in different ways. These particular.
Understandings and contracts came about just from negotiations and conversations with them there are times, where.
<unk> is necessary from the partners there are times when we go to a full marketing.
But there are also times, where you can conduct can have been understandable amongst us together when we come to value and we think if we think it's a goodbye and we can move ahead and do so in this particular case in these particular cases, that's more or less what happens as the market. We think we're executing at a at a bit better than what we can get in the in the market obviously there's.
No other pursuers of joint venture partners. So we have sort of exclusive access to them and that allows for us to do a little bit better than what we can do in the market and we think that's obviously beneficial to consolidate.
Okay.
Okay, Great and then Jeff in your prepared remarks, you talked about few gold for your company and one of that was to lower debt on your balance sheet you have done that over the last work.
In the last year or so.
Can you maybe provide some color on what's your target leverage or do you expect your balance sheet to end up.
<unk> made progress towards Delevering of the balance sheet.
Sure Yeah, we do focus on that quite a bit we've heard from investors that there's a bit of a concern and it's also something that we watch carefully.
We do have one other piece.
He is a mortgage debt that we're considering are paying off.
But generally speaking I would say, we're very focused on our loan to enterprise value loans and mortgages to enterprise value as our stock increases in time that will.
And.
As I said, we've done a good job in lowering those ratios and we're going to continue to focus on that so I think we will see.
Some more.
Decline in the loan to loan to equities and the loan to enterprise value as we move forward.
Okay. Thank you for taking my questions.
Thank you.
Ladies and gentlemen, we have reached the end of today's question and answer session I would like to turn the call back over to Mr. Jeffrey Gould for closing remarks.
Yeah I just wanted to thank everyone for attending this morning. We appreciate your continued interest in PRT.
If you have any further questions you can always reach out to Ron or myself and just asking them all to have a great day and thank you for your time.
Okay.
This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation enjoyed the rest of your day.
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