Bluerock Residential Growth REIT Announces Third Quarter 2021 Results

Rhea-AI Summary

Bluerock Residential Growth REIT (BRG) reported a significant recovery for Q3 2021 with net income of $12.5 million or $0.45 per diluted share, bouncing back from a loss of $17.1 million in Q3 2020. Total revenues increased marginally by 2.3% to $49.8 million, while same-store revenues surged by 7.7%. The company sold three investments generating $100 million in net proceeds and completed 368 unit upgrades with an average ROI of 20.8%. The balance sheet showed $300.7 million in cash, and the company reaffirmed its 2021 CFFO guidance between $0.65 to $0.70 per share.

Positive

• Q3 2021 net income of $12.5 million, compared to a loss of $17.1 million in Q3 2020.
• Rental revenues up 2.3% to $49.8 million; same-store revenues grew 7.7%.
• Sold three investments, netting $100 million in proceeds.
• Completed 368 value-add unit upgrades with 20.8% average ROI.

Negative

• Core funds from operations (CFFO) remained flat at $5.4 million compared to the prior year.
• Average rental rate growth was less impressive at 4.9% for total revenues.

NEW YORK, Nov. 4, 2021 /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 September 30, 2021.

"The accelerated improvement in lease growth, same store revenue and NOI growth continues to validate our strategy focusing on building a highly amenitized Class A affordable first-ring suburban portfolio in knowledge economy growth markets," said Ramin Kamfar, Company Chairman and CEO. "In addition, we increased our investment pace throughout the quarter and expect it to carryforward into the end of the year.  We also sold three investments at attractive cap rates below third-party NAV estimates which generated almost $100 million in net proceeds and will produce solid returns for shareholders upon capital reinvestment."

Third Quarter Highlights

Financial Results

• Net income attributable to common stockholders for the third quarter of 2021 was $12.5 million or $0.45 per diluted share, as compared to net loss attributable to common stockholders of ($17.1) million or ($0.71) per diluted share in the prior year period.
  
  
• Core funds from operations attributable to common stockholders and unit holders ("CFFO") was $5.4 million, or $0.15 per diluted share, compared to $5.4 million, or $0.16 per diluted share, in the prior year period. This year's results were impacted by significant planned capital on the balance sheet in the first half of the quarter and is in the process of being fully invested into an attractive pipeline of opportunities through the year end.

 Portfolio Performance

• Rental revenues grew 2.3% to $49.8 million from $48.7 million in the prior year period.
  
  
• Property Net Operating Income ("NOI") increased 5.3% to $30.6 million from $29.1 million in the prior year period.
  
  
• Same store revenues grew 7.7% and same store NOI increased 9.2%, as compared to the prior year period.
  
  
• Same store average rent increased 7.1% and same store average occupancy expanded 30 basis points, as compared to the prior year period.
  
  
• Blended lease rate growth was 16.5%, up 620 basis points on a sequential quarter-over-quarter basis. 
  
  
• September 2021 average lease growth accelerated to 17.9%, with renewals at 9.0% and new leases at 25.8%.  Average lease growth was 17.8% in October.
  
  
• Portfolio occupancy was 96.2% at September 30, 2021, up 110 basis points from the prior year.
  
  
• Property operating margins improved 180 basis points to 61.6% compared to 59.8% in the prior year period.

Portfolio Activity

• Consolidated real estate investments, at cost, were approximately $2.1 billion.
  
  
• Invested $83 million in operating assets with investment across multiple tranches of the capital structure.
  
  
• Invested $33 million of preferred equity into unconsolidated operating properties.
  
  
• Committed $68 million for four new preferred equity investments in development properties, of which $8 million has been funded.
  
  
• Funded $8 million for seven existing preferred equity and mezzanine loan investments.
  
  
• Sold two operating assets and one development property for $228 million with net proceeds of $100 million.
  
  
• Completed 368 value-add unit upgrades during the quarter achieving an average 20.8% ROI through an average monthly rent premium of $137 per unit.
  
  
• Subsequent to quarter end, we closed additional investments totaling $28 million in BRG equity.

Balance Sheet and Market Activity

• $300.7 million of unrestricted cash and availability under revolving credit facilities and $1.3 billion of indebtedness outstanding as of September 30, 2021.
  
  
• Paid quarterly dividend of $0.1625 in cash per share of common stock.
  
  
• Raised $115 million through the continuous registered Series T Preferred Stock offering with the issuance of 4.6 million shares at $25.00 per share.
  
  
• Redeemed 673 shares of Series B Preferred Stock through the issuance of 58,552 shares of Class A common stock at an average price of $11.49 per share. Redeemed 24,476 shares of Series T Preferred Stock through the issuance of 54,170 shares of Class A common stock at an average price of $11.30 per share.
  
  
• Repurchased 2,977,477 shares of Class A common stock during the quarter at an average price of $11.34 per share.

Included later in this release are definitions of NOI, CFFO and other Non-GAAP financial measures and reconciliations of such measures to their most comparable financial measures as calculated and presented under GAAP.

Third Quarter 2021 Financial Results

Net income attributable to common stockholders for the third quarter of 2021 was $12.5 million, compared to net loss attributable to common stockholders of ($17.1) million in the prior year period.  Net income in 2021 was positively impacted by gain on sales of real estate investments.  Net income attributable to common stockholders included non-cash expenses of $19.3 million or $0.73 per share in the third quarter of 2021 compared to $19.4 million or $0.79 per share for the prior year period.

CFFO for the third quarter of 2021 was $5.4 million, or $0.15 per diluted share, compared to $5.4 million, or $0.16 per diluted share, in the prior year period.  CFFO was positively impacted by an increase in property NOI of $1.6 million, an increase in preferred returns of $0.4 million, and a reduction in interest expense of $0.3 million.  This was primarily offset by a year-over-year reduction of $0.9 million in interest income from mezzanine loan and ground lease investments, $0.4 million increase in general and administrative expense, and preferred stock dividend increase of $0.8 million.

 

Total Portfolio Performance
$ In thousands, except average rental rates	3Q21		3Q20		Variance		YTD21		YTD20		Variance
Total Revenues (1)	$ 53,796		$ 54,589		(1.5%)		$163,434		$ 163,862		(0.3%)
Property Operating Expenses	$ 19,138		$ 19,571		(2.2%)		$  57,978		$   57,441		0.9%
NOI	$ 30,645		$ 29,095		5.3%		$  92,608		$   89,272		3.7%
Operating Margin	61.6%		59.8%		180	bps	61.5%		60.8%		70	bps
Average Occupancy Percentage	95.8%		95.1%		70	bps	95.6%		94.6%		100	bps
Average Rental Rate	$    1,384		$    1,319		4.9%		$    1,350		$     1,326		1.8%
(1) Including interest income from loan and ground lease investments.

For the third quarter of 2021, property revenues increased by 2.3% compared to the same prior year period.  Total portfolio NOI was $30.6 million, an increase of $1.6 million, or 5.3%, compared to the same period in the prior year.  Property NOI margins were 61.6% for the quarter, compared to 59.8% in the prior year quarter. 

 

Same Store Portfolio Performance
$ In thousands, except average rental rates	3Q21		3Q20		Variance		YTD21		YTD20		Variance
Revenues	$   40,011		$   37,138		7.7%		$ 113,222		$ 107,479		5.3%
Property Operating Expenses	$   15,422		$   14,620		5.5%		$   43,306		$   41,089		5.4%
NOI	$   24,589		$   22,518		9.2%		$   69,916		$   66,390		5.3%
Operating Margin	61.5%		60.6%		90	bps	61.8%		61.8%		0	bps
Average Occupancy Percentage	95.5%		95.2%		30	bps	95.5%		94.7%		80	bps
Average Rental Rate	$     1,410		$     1,317		7.1%		$     1,366		$     1,319		3.6%

The Company's same store portfolio for the quarter ended September 30, 2021 included 25 properties.  For the third quarter of 2021, same store NOI was $24.6 million, an increase of $2.1 million, or 9.2%, compared to the 2020 period. Same store property revenues grew by 7.7% compared to the 2020 period, primarily driven by a 7.1% increase in average rental rates and a 30-basis point increase in occupancy; all of the Company's 25 same store properties recognized rental rate increases and 14 recognized occupancy increases during the period.  In addition, ancillary income, such as termination fees and late fees, increased $0.3 million.

Same store expenses increased 5.5%, or $0.8 million, partially due to non-controllable real estate tax increase of $0.2 million and insurance expense increase of $0.1 million due to industrywide multifamily insurance price increases.  The remaining increase was due to a $0.2 million increase in repairs and maintenance and an increase of $0.3 million in administrative and marketing expenses.

Renovation Activity

The Company completed 368 value-add unit upgrades during the third quarter of 2021 achieving an average 20.8% ROI through an average monthly rent premium of $137 per unit. Since inception, the Company has completed 3,643 value-add unit upgrades at an average cost of $6,249 per unit and achieved an average monthly rental rate increase of $121 per unit, equating to an average 23.2% ROI on all unit upgrades leased as of September 30, 2021.  The Company has identified approximately 5,096 remaining units within the existing portfolio for value-add upgrades with similar projected economics to the completed renovations.

Dividend 

Through September 30, 2021, the Board of Directors has authorized, and the Company has declared, quarterly cash dividends as reflected in the following table.

Declaration Date		Payable to stockholders of record as of	Amount	Date Paid or Payable
Class A Common Stock
June 11, 2021		June 25, 2021	$0.162500	July 2, 2021
September 10, 2021		September 24, 2021	$0.162500	October 5, 2021
Class C Common Stock
June 11, 2021		June 25, 2021	$0.162500	July 2, 2021
September 10, 2021		September 24, 2021	$0.162500	October 5, 2021
Series B Preferred Stock
April 12, 2021		June 25, 2021	$5.00	July 2, 2021
July 12, 2021		July 23, 2021	$5.00	August 5, 2021
July 12, 2021		August 25, 2021	$5.00	September 3, 2021
July 12, 2021		September 24, 2021	$5.00	October 5, 2021
Series C Preferred Stock
June 11, 2021		June 25, 2021	$0.4765625	July 2, 2021
September 10, 2021		September 24, 2021	$0.4765625	October 5, 2021
Series D Preferred Stock
June 11, 2021		June 25, 2021	$0.4453125	July 2, 2021
September 10, 2021		September 24, 2021	$0.4453125	October 5, 2021
Series T Preferred Stock (1)
April 12, 2021		June 25, 2021	$0.128125	July 2, 2021
July 12, 2021		July 23, 2021	$0.128125	August 5, 2021
July 12, 2021		August 25, 2021	$0.128125	September 3, 2021
July 12, 2021		September 24, 2021	$0.128125	October 5, 2021
(1)	Shares of newly issued Series T Preferred Stock that are held only a portion of the applicable monthly dividend period receive a prorated dividend based on the actual number of days in the applicable dividend period during which each such share of Series T Preferred Stock was outstanding.

 

2021 Guidance

The Company is reaffirming its prior 2021 CFFO guidance.  Based on the Company's current outlook and market conditions, the Company anticipates 2021 CFFO in the range of $0.65 to $0.70 per share.  For additional guidance details underlying earnings guidance, please see page 35 of Company's Third Quarter 2021 Earnings Supplement available under the Investors section 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 Thursday, November 4, 2021 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 December 4, 2021 at  https://services.choruscall.com/mediaframe/webcast.html?webcastid=zZxaUQU8, as well as by dialing +1 (877) 344-7529 in the U.S., or +1 (412) 317-0088 internationally, and requesting conference number 10159493.

The full text of this Earnings Release and additional Supplemental Information is available in the Investors 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 primarily affordable Class A 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.  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. Although the Company believes that the expectations reflected in these forward-looking statements are based on reasonable assumptions, the Company's actual results and performance could differ materially from those set forth in these forward-looking statements due to numerous factors. Currently, one of the most significant factors is the potential adverse effect of the COVID-19 pandemic on the financial condition, results of operations, cash flows and performance of the Company and its tenants, partners and employees, as well as the real estate market and the global economy and financial markets. The extent to which COVID-19 impacts the Company and its tenants, partners and employees will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact (including governmental actions that may vary by jurisdiction, such as mandated business closing; stay-at-home orders; limits on group activity; and actions to protect residential tenants from eviction), and the direct and indirect economic effects of the pandemic and containment measures, including national and local employment rates and the corresponding impact on the Company's tenants' ability to pay their rent on time or at all, among others.  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 23, 2021, 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 preferred equity/loan/ground lease investments as of September 30, 2021:

	Name				Location		Number of Units		Year Built/ Renovated (1)		Ownership Interest		Average Rent (2)		% Occupied (3)
Consolidated Operating Investments:
	Multifamily
	ARIUM Glenridge				Atlanta, GA		480		1990		90%		$    1,408		93.5%
	ARIUM Westside				Atlanta, GA		336		2008		90%		1,566		94.9%
	Ashford Belmar				Lakewood, CO		512		1988/1993		85%		1,732		95.9%
	Avenue 25				Phoenix, AZ		254		2013		100%		1,351		94.1%
	Burano Hunter's Creek, formerly ARIUM Hunter's Creek				Orlando, FL		532		1999		100%		1,471		95.7%
	Carrington at Perimeter Park				Morrisville, NC		266		2007		100%		1,330		97.4%
	Chattahoochee Ridge				Atlanta, GA		358		1996		90%		1,453		97.5%
	Chevy Chase				Austin, TX		320		1971		92%		1,008		98.8%
	Cielo on Gilbert				Mesa, AZ		432		1985		90%		1,178		97.0%
	Citrus Tower				Orlando, FL		336		2006		97%		1,436		95.2%
	Denim				Scottsdale, AZ		645		1979		100%		1,344		96.1%
	Elan				Austin, TX		270		2007		100%		1,192		97.0%
	Element				Las Vegas, NV		200		1995		100%		1,365		94.5%
	Falls at Forsyth				Cumming, GA		356		2019		100%		1,491		98.3%
	Gulfshore Apartment Homes				Naples, FL		368		2016		100%		1,347		98.4%
	Outlook at Greystone				Birmingham, AL		300		2007		100%		1,196		95.7%
	Pine Lakes Preserve				Port St. Lucie, FL		320		2003		100%		1,524		95.9%
	Providence Trail				Mount Juliet, TN		334		2007		100%		1,355		97.9%
	Roswell City Walk				Roswell, GA		320		2015		98%		1,705		97.2%
	Sands Parc				Daytona Beach, FL		264		2017		100%		1,455		98.5%
	The Brodie				Austin, TX		324		2001		100%		1,392		96.0%
	The Debra Metrowest, formerly ARIUM Metrowest				Orlando, FL		510		2001		100%		1,477		95.5%
	The Links at Plum Creek				Castle Rock, CO		264		2000		88%		1,531		95.1%
	The Mills				Greenville, SC		304		2013		100%		1,099		98.7%
	The Preserve at Henderson Beach				Destin, FL		340		2009		100%		1,665		95.9%
	The Sanctuary				Las Vegas, NV		320		1988		100%		1,232		93.1%
	Veranda at Centerfield				Houston, TX		400		1999		93%		1,062		94.5%
	Villages of Cypress Creek				Houston, TX		384		2001		80%		1,222		96.4%
	Wesley Village				Charlotte, NC		301		2010		100%		1,429		95.7%
	Windsor Falls				Raleigh, NC		276		1994		100%		1,170		95.3%
	Total Units						10,626
	Single-Family Residential (4)				Market		Number of Homes		Average Year Built
	Granbury				Granbury, TX		36		2020-2021		80%		1,556		97.2%
	Indy				Indianapolis, IN		44		1958		60%		753		88.6%
	Lubbock				Lubbock, TX		60		1955		80%		969		93.3%
	Navigator Villas				Pasco, WA		176		2013		90%		1,215		97.2%
	Springfield				Springfield, MO		290		2004		60%		1,126		96.2%
	Springtown				Springtown, TX		70		1991		80%		1,216		100.0%
	Texarkana				Texarkana, TX		29		1967		80%		940		93.1%
	Wayford at Concord				Concord, NC		150		2019		83%		1,868		98.0%
	Yauger Park Villas				Olympia, WA		80		2010		95%		2,043		97.5%
	Total Homes						935
	Total/Average Consolidated Operating Investments						11,561						$    1,384	(5)	96.2%
Preferred Equity/Loan/Ground Lease Investments:
	Multifamily
	Alexan CityCentre				Houston, TX		340						$    1,628
	Avondale Hills				Decatur, GA		240						1,538
	Belmont Crossing				Smyrna, GA		192						924
	Chandler				Chandler, AZ		208						1,457
	Deercross				Indianapolis, IN		372						771
	Deerwood Apartments				Houston, TX		330						1,590
	Domain at The One Forty				Garland, TX		299						1,416
	Georgetown Crossing				Savannah, GA		168						1,105
	Hunter's Pointe				Pensacola, FL		204						1,009
	Lower Broadway				San Antonio, TX		386						1,769
	Motif				Fort Lauderdale, FL		385						2,263
	Orange City Apartments				Orange City, FL		298						1,457
	Park on the Square				Pensacola, FL		240						1,233
	Renew 3030				Mesa, AZ		126						1,098
	Reunion Apartments				Orlando, FL		280						1,366
	Sierra Terrace				Atlanta, GA		135						1,292
	Sierra Village				Atlanta, GA		154						1,254
	Spring Parc				Dallas, TX		304						953
	The Commons				Jacksonville, FL		328						933
	The Crossings at Dawsonville				Dawsonville, GA		216						1,447
	The Hartley at Blue Hill, formerly The Park at Chapel Hill				Chapel Hill, NC		414						1,599
	The Reserve at Palmer Ranch				Sarasota, FL		320						1,448
	The Riley				Richardson, TX		262						1,485
	Thornton Flats				Austin, TX		104						1,628
	Water's Edge				Pensacola, FL		184						1,214
	Wayford at Innovation Park				Charlotte, NC		210						1,994
	Zoey				Austin, TX		307						1,762
	Total Units						7,006
	Single-Family Residential
	Corpus				Corpus Christi, TX		81						1,146
	Jolin				Weatherford, TX		24						1,360
	Peak Housing				Various (6)		474						968
	The Cottages at Myrtle Beach				Myrtle Beach, SC		294						1,743
	The Cottages of Port St. Lucie				Port St. Lucie, FL		286						2,133
	Willow Park				Willow Park, TX		46						2,362
	Total Homes						1,205
	Total/Average Preferred Equity/Loan/Ground Lease Investments						8,211						$    1,440	(7)
	Total/Average Portfolio						19,772						$    1,407	(8)

(1)	Represents date of last significant renovation or year built if no renovations.
(2)	For operating investments, represents the average effective monthly rent per occupied unit for the three months ended September 30, 2021.  For development investments, represents the average pro forma effective monthly rent per occupied unit for all expected occupied units upon stabilization.
(3)	Percent occupied is calculated as (i) the number of units occupied as of September 30, 2021, divided by (ii) total number of units, expressed as a percentage.
(4)	Single-Family Residential includes single-family residential homes and attached townhomes/flats.
(5)	The average effective monthly rent including sold properties was $1,384 for the three months ended September 30, 2021.
(6)	Peak Housing includes portfolios of homes located in Indiana, Missouri and Texas.
(7)	The average effective monthly rent including sold properties was $1,434 for the three months ended September 30, 2021.
(8)	The average effective monthly rent including sold properties was $1,405 for the three months ended September 30, 2021.

 

Consolidated Statement of Operations For the Three and Nine Months Ended September 30, 2021 and 2020 (Unaudited and dollars in thousands except for share and per share data)
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2021				2020				2021				2020
Revenues
Rental and other property revenues		$	49,783			$	48,666			$	150,586			$	146,713
Interest income from loan and ground lease investments			4,013				5,923				12,848				17,149
Total revenues			53,796				54,589				163,434				163,862
Expenses
Property operating			19,138				19,571				57,978				57,441
Property management fees			1,259				1,231				3,787				3,719
General and administrative			6,856				5,901				20,097				17,575
Acquisition and pursuit costs			413				2,242				428				3,933
Weather-related losses, net			140				—				540				—
Depreciation and amortization			19,204				19,216				59,454				60,206
Total expenses			47,010				48,161				142,284				142,874
Operating income			6,786				6,428				21,150				20,988
Other income (expense)
Other income			208				60				418				119
Preferred returns on unconsolidated real estate joint ventures			3,322				2,963				7,938				8,213
Provision for credit losses			(17)				—				(584)				—
Gain on sale of real estate investments			48,943				—				137,285				58,096
Loss on extinguishment of debt and debt modification costs			(3,053)				—				(6,740)				(13,985)
Interest expense, net			(12,755)				(13,520)				(40,050)				(42,294)
Total other income (expense)			36,648				(10,497)				98,267				10,149
Net income (loss)			43,434				(4,069)				119,417				31,137
Preferred stock dividends			(15,772)				(15,003)				(44,756)				(42,787)
Preferred stock accretion			(4,840)				(4,451)				(19,152)				(11,978)
Net income (loss) attributable to noncontrolling interests
Operating Partnership units			4,994				(6,270)				13,176				(6,679)
Partially owned properties			5,284				(195)				11,637				1,512
Net income (loss) attributable to noncontrolling interests			10,278				(6,465)				24,813				(5,167)
Net income (loss) attributable to common stockholders		$	12,544			$	(17,058)			$	30,696			$	(18,461)
Net income (loss) per common share - Basic		$	0.46			$	(0.71)			$	1.14			$	(0.80)
Net income (loss) per common share – Diluted		$	0.45			$	(0.71)			$	1.13			$	(0.80)
Weighted average basic common shares outstanding			26,567,269				24,566,196				25,941,571				24,321,282
Weighted average diluted common shares outstanding			26,795,507				24,566,196				26,032,592				24,321,282

 

Consolidated Balance Sheets Third Quarter 2021 (Unaudited and dollars in thousands except for share and per share amounts)
			September 30, 2021				December 31, 2020
ASSETS
Net Real Estate Investments
Land			$	263,361			$	279,481
Buildings and improvements				1,772,822				1,889,471
Furniture, fixtures and equipment				84,221				78,438
Total Gross Real Estate Investments				2,120,404				2,247,390
Accumulated depreciation				(205,124)				(186,426)
Total Net Operating Real Estate Investments				1,915,280				2,060,964
Operating real estate held for sale, net				—				36,213
Total Net Real Estate Investments				1,915,280				2,097,177
Cash and cash equivalents				163,349				83,868
Restricted cash				35,483				35,093
Notes and accrued interest receivable, net				179,395				157,734
Due from affiliates				682				339
Accounts receivable, prepaids and other assets, net				43,315				29,502
Preferred equity investments and investments in unconsolidated real estate joint ventures, net				127,421				83,485
In-place lease intangible assets, net				1,748				2,594
Non-real estate assets associated with operating real estate held for sale				—				145
Total Assets			$	2,466,673			$	2,489,937
LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY
Mortgages payable			$	1,341,241			$	1,490,932
Mortgages payable associated with operating real estate held for sale				—				38,773
Revolving credit facilities				—				33,000
Accounts payable				2,073				1,317
Other accrued liabilities				44,254				31,025
Due to affiliates				595				618
Distributions payable				14,177				13,421
Liabilities associated with operating real estate held for sale				—				383
Total Liabilities				1,402,340				1,609,469
	8.250% Series A Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share, 10,875,000 shares authorized; no shares and 2,201,547 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively			—				54,332
	6.000% Series B Redeemable Preferred Stock, liquidation preference $1,000 per share, 1,225,000 shares authorized; 359,925 and 513,489 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively			328,781				469,907
	7.625% Series C Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share, 4,000,000 shares authorized; 2,295,845 shares issued and outstanding as of September 30, 2021 and December 31, 2020			56,728				56,462
	6.150% Series T Redeemable Preferred Stock, liquidation preference $25.00 per share, 32,000,000 shares authorized; 22,920,168 and 9,717,917 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively			520,704				219,967
Equity
Stockholders' Equity
Preferred stock, $0.01 par value, 197,900,000 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; 2,774,338 shares issued and outstanding as of September 30, 2021 and December 31, 2020				66,867				66,867
Common stock - Class A, $0.01 par value, 747,509,582 shares authorized; 26,120,780 and 22,020,950 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively				261				220
Common stock - Class C, $0.01 par value, 76,603 shares authorized; 76,603 shares issued and outstanding as of September 30, 2021 and December 31, 2020				1				1
Additional paid-in-capital				339,815				304,710
Distributions in excess of cumulative earnings				(295,672)				(313,392)
Total Stockholders' Equity				111,272				58,406
Noncontrolling Interests
Operating Partnership units				15,730				(3,272)
Partially owned properties				31,118				24,666
Total Noncontrolling Interests				46,848				21,394
Total Equity				158,120				79,800
TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY			$	2,466,673			$	2,489,937

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 stockholders and unit holders 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 (loss), 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 certain real estate assets and investments in entities where the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for notes receivable, 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 acquisition expenses, non-cash interest expense, 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), one-time weather-related costs, non-cash equity compensation and preferred stock accretion. Commencing in 2020, we do not deduct the accrued portion of the preferred income on our preferred equity investments from FFO to determine CFFO as the income is deemed fully collectible. The accrued portion of the preferred income totaled $1.9 million and $0.4 million, and $4.6 million and $1.2 million for the three and nine months ended September 30, 2021 and 2020, respectively.  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 (loss), including net income (loss) 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 (loss), including net income (loss) 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 twelve operating investments, made fifteen investments through preferred equity or loans, sold eight operating investments and received payoffs of our loan or preferred equity in eight investments subsequent to September 30, 2020. 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 income (loss), the most directly comparable GAAP financial measure, for the three and nine months ended September 30, 2021 and 2020 (in thousands, except per share amounts):

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2021				2020				2021				2020
Net income (loss) attributable to common stockholders		$	12,544			$	(17,058)			$	30,696			$	(18,461)
Add back: Net income (loss) attributable to Operating Partnership Units			4,994				(6,270)				13,176				(6,679)
Net income (loss) attributable to common stockholders and unit holders			17,538				(23,328)				43,872				(25,140)
Common stockholders and Operating Partnership Units pro-rata share of:
Real estate depreciation and amortization			18,187				18,309				56,627				57,353
Provision for credit losses			17				—				584				—
Gain on sale of real estate investments			(43,359)				—				(124,416)				(55,360)
FFO Attributable to Common Stockholders and Unit Holders			(7,617)				(5,019)				(23,333)				(23,147)
Common stockholders and Operating Partnership Units pro-rata share of:
Acquisition and pursuit costs			413				2,242				428				3,933
Non-cash interest expense			363				731				1,517				2,323
Unrealized loss on derivatives			41				98				31				67
Loss on extinguishment of debt and debt modification costs			2,975				—				6,148				13,590
Amortization of deferred interest income on mezzanine loan			984				—				1,981				—
Weather-related losses, net			140				—				500				—
Non-real estate depreciation and amortization			122				122				365				364
Other income, net			(216)				(52)				(168)				(49)
Non-cash equity compensation			3,395				2,850				10,184				8,589
Preferred stock accretion			4,840				4,451				19,152				11,978
CFFO Attributable to Common Stockholders and Unit Holders		$	5,440			$	5,423			$	16,805			$	17,648
Per Share and Unit Information:
FFO Attributable to Common Stockholders and Unit Holders - diluted		$	(0.20)			$	(0.15)			$	(0.64)			$	(0.70)
CFFO Attributable to Common Stockholders and Unit Holders - diluted		$	0.15			$	0.16			$	0.46			$	0.53
Weighted average common shares and units outstanding - diluted			37,461,558				33,688,877				36,360,295				33,187,360

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 income (loss) attributable to common stockholders to EBITDAre and Adjusted EBITDAre (unaudited and dollars in thousands).

 

			Three Months Ended								Nine Months Ended
			September 30,								September 30,
			2021				2020				2021				2020
Net income (loss) attributable to common stockholders			$	12,544			$	(17,058)			$	30,696			$	(18,461)
	Net income (loss) attributable to noncontrolling interests			10,278				(6,465)				24,813				(5,167)
	Preferred stock dividends			15,772				15,003				44,756				42,787
	Preferred stock accretion			4,840				4,451				19,152				11,978
	Interest expense, net			12,755				13,520				40,050				42,294
	Real estate depreciation and amortization			19,157				19,169				59,315				60,068
	Provision for credit losses			17				—				584				—
	Gain on sale of real estate investments			(48,943)				—				(137,285)				(58,096)
	Loss on extinguishment of debt and debt modification costs			3,053				—				6,740				13,985
EBITDAre			$	29,473			$	28,620			$	88,821			$	89,388
	Acquisition and pursuit costs			413				2,242				428				3,933
	Amortization of deferred interest income on mezzanine loan			984				—				1,981				—
	Non-real estate depreciation and amortization			122				122				365				364
	Weather-related losses, net			140				—				540				—
	Non-cash equity compensation			3,395				2,850				10,184				8,589
	Other income, net			(216)				(52)				(168)				(49)
Adjusted EBITDAre			$	34,311			$	33,782			$	102,151			$	102,225

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 allows us to evaluate the operating performance of our properties because it 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 income (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								Nine Months Ended
				September 30,								September 30,
				2021				2020				2021				2020
Net income (loss) attributable to common stockholders				$	12,544			$	(17,058)			$	30,696			$	(18,461)
Add back: Net income (loss) attributable to Operating       Partnership Units					4,994				(6,270)				13,176				(6,679)
Net income (loss) attributable to common stockholders and unit holders					17,538				(23,328)				43,872				(25,140)
Add common stockholders and Operating Partnership Units pro-rata share of:
		Real estate depreciation and amortization			18,187				18,309				56,627				57,353
		Non-real estate depreciation and amortization			122				122				365				364
		Non-cash interest expense			363				731				1,517				2,323
		Unrealized loss on derivatives			41				98				31				67
		Loss on extinguishment of debt and debt modification costs			2,975				—				6,148				13,590
		Provision for credit losses			17				—				584				—
		Property management fees			1,191				1,173				3,608				3,540
		Acquisition and pursuit costs			413				2,242				428				3,933
		Corporate operating expenses			6,781				5,817				19,871				17,279
		Weather-related losses, net			140				—				500				—
		Preferred dividends			15,772				15,003				44,756				42,787
		Preferred stock accretion			4,840				4,451				19,152				11,978
Less common stockholders and Operating Partnership Units pro-rata share of:
		Other income, net			216				52				324				49
		Preferred returns on unconsolidated real estate joint ventures			3,322				2,935				7,938				8,343
		Interest income from loan and ground lease investments			4,149				5,923				12,984				17,149
		Gain on sale of real estate investments			43,359				—				124,416				55,360
Pro-rata share of properties' income					17,334				15,708				51,797				47,173
Add:
		Noncontrolling interest pro-rata share of partially owned property income			977				725				2,356				2,278
Total property income					18,311				16,433				54,153				49,451
Add:
		Interest expense			12,334				12,662				38,455				39,821
Net operating income					30,645				29,095				92,608				89,272
Less:
		Non-same store net operating income			6,056				6,577				22,692				22,882
Same store net operating income (1)				$	24,589			$	22,518			$	69,916			$	66,390
(1)	Same store portfolio for the three months ended September 30, 2021 consists of 25 properties, which represent 8,882 units.  Same store portfolio for the nine months ended September 30, 2021 consists of 24 properties, which represent 8,628 units.

 

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SOURCE Bluerock Residential Growth REIT, Inc.

FAQ

What were Bluerock Residential Growth REIT's (BRG) Q3 2021 financial results?

Bluerock Residential (BRG) reported Q3 2021 net income of $12.5 million, or $0.45 per diluted share, a recovery from a loss of $17.1 million in Q3 2020.

How did BRG perform in terms of rental revenues in Q3 2021?

In Q3 2021, Bluerock reported a 2.3% increase in rental revenues to $49.8 million, with same-store revenues rising 7.7%.

What capital activities did BRG engage in during Q3 2021?

BRG sold three investments, generating nearly $100 million in net proceeds, and completed 368 unit upgrades with a 20.8% average ROI.

What is the CFFO guidance for Bluerock Residential (BRG) in 2021?

Bluerock has reaffirmed its 2021 CFFO guidance in the range of $0.65 to $0.70 per share.

What was the average occupancy rate for BRG's portfolio as of September 30, 2021?

Bluerock's portfolio occupancy stood at 96.2% as of September 30, 2021, an increase of 110 basis points year-over-year.