UDR Announces Second Quarter 2020 Results
July 28, 2020
DENVER–(BUSINESS WIRE)–UDR, Inc. (the “Company”) Second Quarter 2020 Highlights:
- Net income per share was $0.19, Funds from Operations (“FFO”) per share was $0.51, FFO as Adjusted (“FFOA”) per share was $0.51, and Adjusted FFO (“AFFO”) per share was $0.47.
- Net income attributable to common stockholders was $56.7 million as compared to $34.6 million in the prior year period. The increase was primarily due to net operating income (“NOI”) growth and gains from the sale of communities during the quarter, partially offset by increased depreciation from communities acquired during 2019 and 2020 as well as the Company recording bad debt reserves against its residential and retail revenues of $5.5 million and $3.5 million, respectively.
- Year-over-year (“YOY”) Combined Same-Store revenue, expense and NOI growth / (decline) was (2.1) percent, 2.5 percent and (4.0) percent, respectively. The Company’s second quarter Combined Same-Store bad debt reserve totaled $4.5 million. Absent this reserve, Combined Same-Store revenue and NOI growth / (decline) would have been (0.4) percent and (1.6) percent, respectively.
- The Company continues to implement its Next Generation Operating Platform, which drove a Combined Same-Store controllable expense decline of (2.0) percent YOY and helped to maintain controllable operating margin of 84.3 percent, equal to the prior year period despite a decline in Combined Same-Store revenue due to the impact of COVID-19.
- The Company’s Combined Same-Store operating margin (property NOI divided by property rental income) was 70.2 percent as compared to 71.5 percent in the prior year period. The decrease is primarily due to a decline in Combined Same-Store revenue and increases in real estate taxes and reserves for bad debt.
- As previously announced, the Company sold Waterscape, a 196-home community located in Kirkland, WA, for gross proceeds of $92.9 million and Borgata Apartment Homes, a 71-home community located in Bellevue, WA, for gross proceeds of $49.7 million.
- The Company executed a rate lock agreement to refinance its only remaining 2020 maturity, a $79.5 million, 4.35 percent fixed rate mortgage loan, with a $160.9 million, 2.62 percent 10.5-year secured loan. The Company expects to close on the refinancing transaction during the third quarter of 2020.
Subsequent to Quarter-End Highlights:
- The Company is providing a summary of recent operations, as of July 24, which can be found on page 4 of this Press Release. Highlights include: (1) total revenue billed remained relatively consistent throughout the second quarter, (2) cash collections were 97.5 percent on a base of $322.6 million in billed revenue, (3) weighted average physical occupancy was 96.3 percent, and (4) traffic, qualified leads, and applications showed sequential monthly improvement.
- As previously announced, the Company issued $400.0 million of unsecured debt at an effective interest rate of 2.11 percent with 12.0 years to maturity. A portion of the proceeds were / will be used to prepay $245.8 million of 4.64 percent secured debt originally due in 2023 and to purchase $116.9 million of 3.75 percent unsecured debt originally due in 2024 pursuant to the previously-announced tender offer.
- The Company, through its Developer Capital Program, invested $40.0 million into a 534-home community in Queens, NY. The investment yields 13.0 percent on the Company’s capital outstanding with 5.0 years until expected redemption and includes profit participation upon a liquidity event.
- The Company amended its $75.0 million working capital credit facility to extend its maturity from January 2021 to January 2022. The interest rate on the facility remains LIBOR plus a spread of 82.5 basis points.
“UDR continues to operate at a high level due to the capabilities of our Next Generation Operating Platform, and is in a strong liquidity position to execute on the diverse set of opportunities our experienced teams continue to identify. However, ongoing regulatory impediments as well as the uncertainties surrounding the cadence of state re-openings limit our ability to provide guidance for the remainder of 2020,” said Tom Toomey, UDR’s Chairman and CEO. “I commend our associates for the hard work, dedication, and compassion they have shown in collaboration with our residents through this difficult time.”
|
|
Q2 2020 |
Q2 2019 |
YTD 2020 |
YTD 2019 |
|
Net income per common share, diluted |
$0.19 |
$0.12 |
$0.21 |
$0.21 |
|
Conversion from GAAP share count |
(0.015) |
(0.010) |
(0.016) |
(0.018) |
|
Net gain on the sale of depreciable real estate owned, incl. JVs |
(0.191) |
(0.017) |
(0.191) |
(0.017) |
|
Depreciation and amortization, including JVs |
0.511 |
0.432 |
1.024 |
0.852 |
|
Noncontrolling interests and preferred dividends |
0.017 |
0.012 |
0.021 |
0.022 |
|
FFO per common share and unit, diluted |
$0.51 |
$0.54 |
$1.04 |
$1.05 |
|
Promoted interest on settlement of note receivable, net of tax |
– |
– |
– |
(0.021) |
|
Legal and other costs |
0.005 |
– |
0.007 |
0.012 |
|
Net gain on the sale of non-depreciable real estate owned |
– |
(0.017) |
– |
(0.017) |
|
Unrealized (gain)/loss on unconsolidated technology investments, net of tax |
(0.010) |
– |
(0.010) |
(0.001) |
|
Severance costs and other restructuring expense |
– |
– |
0.005 |
– |
|
Casualty-related charges/(recoveries), including JVs, net |
0.001 |
0.001 |
0.005 |
0.002 |
|
FFOA per common share and unit, diluted |
$0.51 |
$0.52 |
$1.05 |
$1.02 |
|
Recurring capital expenditures |
(0.039) |
(0.041) |
(0.068) |
(0.065) |
|
AFFO per common share and unit, diluted |
$0.47 |
$0.48 |
$0.98 |
$0.96 |
A reconciliation of FFO, FFOA and AFFO to GAAP Net income attributable to common stockholders can be found on Attachment 2 of the Company’s second quarter Supplemental Financial Information.
Operations
In the second quarter, total revenue increased by $25.9 million year-over-year, or 9.2 percent, to $307.3 million. This increase was primarily attributable to growth in revenue from acquisition communities.
Second quarter Combined Same-Store NOI decreased 4.0 percent year-over-year, driven by a Combined Same-Store revenue decline of 2.1 percent and Combined Same-Store expense growth of 2.5 percent. Absent the Company’s bad debt reserve, Combined Same-Store revenue would have declined 0.4 percent. Weighted average Combined Same-Store physical occupancy decreased by 50 basis points to 96.3 percent versus the prior year period. The second quarter annualized rate of turnover decreased by 620 basis points versus the prior year period to 48.9 percent.
Summary of Combined Same-Store Results Second Quarter 2020 versus Second Quarter 2019
|
Region |
Revenue Growth / (Decline) |
Expense Growth / (Decline) |
NOI Growth / (Decline) |
% of Combined Same-Store Portfolio(1) |
Physical Occupancy(2) |
Number of Homes(3) |
||||||
|
West |
(3.0 |
)% |
1.5 |
% |
(4.4 |
)% |
39.7 |
% |
95.6 |
% |
13,086 |
|
|
Mid-Atlantic |
(0.9 |
)% |
2.5 |
% |
(2.3 |
)% |
23.6 |
% |
97.0 |
% |
10,762 |
|
|
Northeast |
(6.6 |
)% |
4.7 |
% |
(11.4 |
)% |
13.7 |
% |
94.2 |
% |
4,080 |
|
|
Southeast |
1.5 |
% |
9.6 |
% |
(2.0 |
)% |
11.2 |
% |
97.3 |
% |
7,428 |
|
|
Southwest |
0.9 |
% |
(2.9 |
)% |
3.6 |
% |
7.1 |
% |
96.9 |
% |
5,136 |
|
|
Other Markets |
(1.0 |
)% |
(1.5 |
)% |
(0.8 |
)% |
4.7 |
% |
96.4 |
% |
2,147 |
|
|
Total |
(2.1 |
)% |
2.5 |
% |
(4.0 |
)% |
100.0 |
% |
96.3 |
% |
42,639 |
|
|
(1) |
Based on Q2 2020 Combined Same-Store NOI. |
|
|
(2) |
Weighted average Combined Same-Store physical occupancy for the quarter. |
|
|
(3) |
During the second quarter, 42,639 apartment homes were classified as Combined Same-Store. The Company defines QTD Combined Same-Store Communities as those communities stabilized for five full consecutive quarters, including the 11 Joint Venture communities acquired in 2019 totaling 3,619 homes as if they were 100 percent owned by UDR during all periods presented. Combined Same-Store communities were owned and had stabilized physical occupancy and operating expenses as of the beginning of the quarter in the prior year, were not in process of any substantial redevelopment activities, and were not held for disposition. |
In the second quarter, sequential Combined Same-Store NOI decreased 5.1 percent, driven by a Combined Same-Store revenue decline of 3.7 percent and a Combined Same-Store expense decline of 0.4 percent. Weighted average Combined Same-Store physical occupancy decreased by 70 basis points sequentially to 96.3 percent.
In the table below, the Company has provided components of revenue contribution that drove the year-over-year and sequential decreases in Combined Same-Store revenue. The decreases are a result of the following:
|
|
Year-Over-Year |
Sequential |
||||||
|
Revenue Components |
Q2 2019 ($ millions) (1) |
Contribution to Growth / (Decline)(1) |
Q1 2020 ($ millions) (1) |
Contribution to Growth / (Decline)(1) |
||||
|
Combined Same-Store Revenue |
$271.1 |
|
|
$275.7 |
|
|
||
|
Gross Rents |
$4.6 |
|
1.7 |
% |
$0.6 |
|
0.2 |
% |
|
Concessions |
$(1.6 |
) |
(0.6 |
)% |
$(1.9 |
) |
(0.7 |
)% |
|
Economic Occupancy Loss |
$(2.8 |
) |
(1.0 |
)% |
$(3.3 |
) |
(1.2 |
)% |
|
Bad Debt Reserve |
$(4.5 |
) |
(1.7 |
)% |
$(4.5 |
) |
(1.6 |
)% |
|
Fee and Other Income |
$(1.3 |
) |
(0.5 |
)% |
$(1.2 |
) |
(0.4 |
)% |
|
Q2 2020 |
$265.4 |
|
(2.1 |
)% |
$265.4 |
|
(3.7 |
)% |
|
(1) |
Totals may not sum to $265.4 million, (2.1)% and (3.7)%, respectively, due to rounding. |
Year-to-date, for the six months ended June 30, 2020, total revenue increased by $76.8 million year-over-year, or 13.9 percent, to $628.7 million. This increase was primarily attributable to growth in revenue from acquisition communities.
Year-to-date, for the six months ended June 30, 2020, Combined Same-Store NOI decreased (0.4) percent year-over-year, driven by Combined Same-Store revenue growth of 0.3 percent and Combined Same-Store expense growth of 2.1 percent. Weighted average Combined Same-Store physical occupancy decreased by 20 basis points to 96.6 percent versus the prior year period. The year-to-date annualized rate of turnover decreased by 310 basis points versus the prior year period to 43.7 percent.
Summary of Combined Same-Store Results Year-To-Date 2020 versus Year-To-Date 2019
|
Region |
Revenue Growth / (Decline) |
Expense Growth / (Decline) |
NOI Growth / (Decline) |
% of Combined Same-Store Portfolio(1) |
Physical Occupancy(2) |
Number of Homes(3) |
||||||
|
West |
0.1 |
% |
2.5 |
% |
(0.6 |
)% |
39.4 |
% |
96.2 |
% |
12,545 |
|
|
Mid-Atlantic |
0.8 |
% |
1.5 |
% |
0.5 |
% |
24.0 |
% |
97.1 |
% |
10,762 |
|
|
Northeast |
(2.1 |
)% |
5.8 |
% |
(5.7 |
)% |
13.6 |
% |
95.5 |
% |
3,892 |
|
|
Southeast |
1.8 |
% |
5.4 |
% |
0.4 |
% |
10.9 |
% |
97.0 |
% |
7,047 |
|
|
Southwest |
2.4 |
% |
(4.0 |
)% |
7.0 |
% |
7.3 |
% |
97.0 |
% |
5,136 |
|
|
Other Markets |
0.6 |
% |
(0.9 |
)% |
1.3 |
% |
4.8 |
% |
96.3 |
% |
2,147 |
|
|
Total |
0.3 |
% |
2.1 |
% |
(0.4 |
)% |
100.0 |
% |
96.6 |
% |
41,529 |
|
|
(1) |
Based on YTD 2020 Combined Same-Store NOI. |
|
|
(2) |
Weighted average Combined Same-Store physical occupancy for YTD 2020. |
|
|
(3) |
For the six months ended June 30, 2020, 41,529 apartment homes were classified as Combined Same-Store. The Company defines YTD Combined Same-Store Communities as those communities stabilized for two full consecutive calendar years, including the 11 Joint Venture communities acquired in 2019 totaling 3,619 homes as if they were 100 percent owned by UDR during all periods presented. Combined Same-Store communities were owned and had stabilized physical occupancy and operating expenses as of the beginning of the prior year, were not in process of any substantial redevelopment activities, and were not held for disposition. |
Recent Operating Trends
Due to economic challenges and related government actions and regulations as a result of COVID-19, the Company is providing a selection of operational trends through Q2 2020. Additionally, July cash revenue received as a percentage of billed revenue is consistent with April, May, and June at corresponding times of prior months.
Summary of Second Quarter Operational Trends(1)
|
Residential Operating Metric |
Q2 2019 |
April 2020 |
May 2020 |
June 2020 |
Q2 2020 |
|||||
|
Total revenue billed ($ millions) |
$277.8 |
$108.5 |
$106.9 |
$107.2 |
$322.6 |
|||||
|
Revenue recognized / reserved(2) |
N/A |
N/A |
N/A |
N/A |
98.3% / 1.7% |
|||||
|
Cash revenue collected (as % of billed) |
99.6% |
98.6% |
97.6% |
96.2% |
97.5% |
|||||
|
Leasing Traffic(3) |
1,009 |
782 |
1,059 |
1,191 |
1,011 |
|||||
|
Visits or Qualified Leads(3) |
28,821 |
3,949 |
7,040 |
11,395 |
22,384 |
|||||
|
Applications(3) |
7,759 |
2,148 |
3,027 |
3,818 |
8,993 |
|||||
|
Lease Closing Ratio(3) |
26.9% |
54.4% |
43.0% |
33.5% |
40.2% |
|||||
|
Combined Same-Store Metrics |
|
|
|
|
|
|||||
|
Weighted Average Physical Occupancy |
96.9% |
96.6% |
96.1% |
96.1% |
96.3% |
|||||
|
Effective Blended Lease Rate Growth(4) |
4.4% |
2.0% |
0.7% |
0.0% |
0.8% |
|||||
|
(1) |
Metrics shown here are for the Company’s total portfolio, unless otherwise indicated, and are as of July 24, 2020. |
|
|
(2) |
As of June 30, 2020, the Company had collected 96.1% of Q2 2020 billed residential revenue. Of the 3.9% not collected, and based on probability of collection, the Company reserved (reflected as a reduction to revenue) approximately 1.7%, or $5.5 million, for bad debt, comprising $4.5 million from Combined Same-Store communities, $0.6 million from non-Combined Same-Store communities, and $0.4 million from the Company’s share from unconsolidated joint ventures. |
|
|
(3) |
The Company defines (a) Leasing Traffic as average daily leads; (b) Visits or Qualified Leads as the summation of tours taken by current and prospective residents, whether in-person (where allowed) or by virtual means, for the period indicated; (c) Applications as the total (or gross) number of applications received for the period indicated; and (d) Lease Closing Ratio as leases signed as a percentage of Visits. |
|
|
(4) |
The Company defines Effective Blended Lease Rate Growth as the combined proportional growth as a result of Effective New Lease Rate Growth (the increase in gross potential rent realized less concessions for the new lease term, or current effective rent, versus prior resident effective rent for the prior lease term on new leases commenced during the current quarter) and Effective Renewal Lease Rate Growth (the increase in gross potential rent realized less concessions for the new lease term, or current effective rent, versus prior effective rent for the prior lease term on renewed leases commenced during the current quarter). |
Retail tenant income accounts for less than 2 percent of the Company’s consolidated NOI. During the second quarter, the Company collected 70.8 percent of billed retail revenue and reserved $3.5 million, including $0.1 million for UDR’s share from unconsolidated joint ventures, of its retail revenue based on probability of collection. Of the total retail reserve amount, $0.6 million is attributable to accounts receivable with the remainder attributable to straight-line rent receivables.
Wholly Owned Transactional Activity
As previously announced, during the quarter the Company:
- Sold Waterscape, a 196-home community located in Kirkland, WA, for gross proceeds of $92.9 million, or $474,000 per home. At the time of sale, the 6-year-old community had a weighted average monthly revenue per occupied home of $2,476 and physical occupancy of 97 percent.
- Sold Borgata Apartment Homes, a 71-home community located in Bellevue, WA, for $49.7 million, or $700,000 per home. At the time of sale, the 19-year-old community had a weighted average monthly revenue per occupied home of $3,301 and physical occupancy of 97 percent.
Development Activity
At the end of the second quarter, the Company’s development pipeline totaled $278.5 million, of which 47 percent of this cost had been incurred. The Company’s active pipeline includes 3 development communities, 1 each in Addison, TX, Denver, CO, and Dublin, CA, for a combined total of 878 homes. Leasing commenced at Vitruvian West Phase 2 (in Addison, TX) during the quarter.
Developer Capital Program (“DCP”) Activity
At the end of the second quarter, the Company’s DCP investments, including accrued return, totaled $419.6 million with a weighted average return rate of 9.8 percent and weighted average expected remaining term of 2.5 years.
Subsequent to quarter-end, the Company:
- Invested $40.0 million into a 534-home multifamily development located in Queens, NY. The investment yields 13.0 percent on the Company’s capital outstanding with 5.0 years until expected redemption and includes profit participation upon a liquidity event. The community is fully capitalized, inclusive of $61.7 million of developer equity (or approximately 18 percent of the $341.7 million total project cost), and construction commenced during the fourth quarter of 2019.
Capital Markets and Balance Sheet Activity
During the quarter the Company:
- Executed a rate lock agreement to refinance its only remaining 2020 maturity, a $79.5 million, 4.35 percent fixed rate loan due in 2020, with a $160.9 million, 2.62 percent fixed rate secured loan due in 2031. The Company expects to close on the refinancing transaction during the third quarter of 2020. The incremental proceeds are anticipated to be used to reduce the Company’s borrowings under its unsecured commercial paper program.
Subsequent to quarter-end, the Company:
- As previously announced, issued $400.0 million of unsecured debt at an effective interest rate of 2.11 percent with 12.0 years to maturity. A portion of the proceeds were / will be used to prepay $245.8 million of 4.64 percent secured debt due in 2023 and to purchase $116.9 million of 3.75 percent unsecured debt due in 2024 pursuant to the previously-announced tender offer. The combined prepayment and make-whole amounts, netted against fair market value adjustments, totaled approximately $24.0 million.
- Amended its $75.0 million working capital credit facility. The amendment extends the maturity date from January 2021 to January 2022. The interest rate on the facility remains equal to LIBOR plus a spread of 82.5 basis points.
At June 30, 2020, the Company had $973.7 million of liquidity through a combination of cash and undrawn capacity on its credit facilities, plus an approximate $105.0 million of incremental capital sources from the potential settlement of previously-announced forward equity sales agreements. Please see Attachment 15 of the Company’s second quarter Supplemental Financial Information for additional details on projected capital sources and uses.
The Company’s total indebtedness as of June 30, 2020 was $4.8 billion and, after completion of the aforementioned secured debt refinancing, the Company will have no remaining consolidated maturities through 2022, excluding principal amortization, amounts on the Company’s commercial paper program and amounts on the Company’s working capital credit facility. The Company ended the quarter with fixed-rate debt representing 94.4 percent of its total debt, a total blended interest rate of 3.24 percent and a weighted average years to maturity of 7.0 years. The Company’s consolidated leverage was 34.2 percent versus 32.1 percent a year ago, its consolidated net-debt-to-EBITDAre was 6.2x versus 5.4x a year ago and its consolidated fixed charge coverage ratio was 4.6x versus 4.9x a year ago.
Dividend
As previously announced, the Company’s Board of Directors declared a regular quarterly dividend on its common stock for the second quarter of 2020 in the amount of $0.36 per share. The dividend will be paid in cash on July 31, 2020 to UDR common stock shareholders of record as of July 10, 2020. The second quarter 2020 dividend will represent the 191st consecutive quarterly dividend paid by the Company on its common stock.
Supplemental Information
The Company offers Supplemental Financial Information that provides details on the financial position and operating results of the Company which is available on the Company’s website at ir.udr.com.
Conference Call and Webcast Information
UDR will host a webcast and conference call at 1:00 p.m. Eastern Time on July 29, 2020 to discuss second quarter results as well as high-level views for 2020.
The webcast will be available on UDR’s website at ir.udr.com. To listen to a live broadcast, access the site at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software.
To participate in the teleconference dial 877-705-6003 for domestic and 201-493-6725 for international. A passcode is not necessary.
This quarter, given the combination of a high volume of conference calls occurring during this time of year generally and the impact that the COVID-19 pandemic has had on staffing and capacity at our conference call provider, we anticipate potential delays if you dial in to be connected to the live call. As a result, we encourage stockholders and interested parties to join us for the Company’s earnings results discussion via the webcast link. If you choose to dial in to the live call, please allow extra time to be connected to the call.
A replay of the conference call will be available through August 28, 2020, by dialing 844-512-2921 for domestic and 412-317-6671 for international and entering the confirmation number, 13706590, when prompted for the passcode.
A replay of the call will also be available for 30 days on UDR’s website at ir.udr.com.
Full Text of the Earnings Report and Supplemental Data
The full text of the earnings report and Supplemental Financial Information will be available on the Company’s website at ir.udr.com.
|
Attachment 16(A) |
||||||||
|
UDR, Inc. Definitions and Reconciliations June 30, 2020 (Unaudited) |
||||||||
| Acquired Communities: The Company defines Acquired Communities as those communities acquired by the Company, other than development and redevelopment activity, that did not achieve stabilization as of the most recent quarter. | ||||||||
| Acquired JV Same-Store Portfolio Communities: Represents the Acquired JV Same-Store Portfolio Communities as if these communities were 100% owned by UDR since January 1, 2019. These communities were Stabilized for five full consecutive quarters and had stabilized operating expenses as of the beginning of the quarter in the prior year, were not in process of any substantial redevelopment activities, and were not held for disposition. Because these communities became wholly owned by UDR in 2019 (the 11 communities and 3,619 homes were previously owned by UDR unconsolidated JVs), they are not included in the UDR Same-Store Communities. See UDR Same-Store Communities for more information regarding inclusion. These communities have been identified in certain tables to provide Combined Same-Store results as if these communities were 100% owned by UDR in prior periods. These 11 communities will be eligible to join the UDR Same-Store Communities on January 1, 2021. | ||||||||
| Adjusted Funds from Operations (“AFFO”) attributable to common stockholders and unitholders: The Company defines AFFO as FFO as Adjusted attributable to common stockholders and unitholders less recurring capital expenditures on consolidated communities that are necessary to help preserve the value of and maintain functionality at our communities. | ||||||||
| Management considers AFFO a useful supplemental performance metric for investors as it is more indicative of the Company’s operational performance than FFO or FFO as Adjusted. AFFO is not intended to represent cash flow or liquidity for the period, and is only intended to provide an additional measure of our operating performance. The Company believes that net income/(loss) attributable to common stockholders is the most directly comparable GAAP financial measure to AFFO. Management believes that AFFO is a widely recognized measure of the operations of REITs, and presenting AFFO will enable investors to assess our performance in comparison to other REITs. However, other REITs may use different methodologies for calculating AFFO and, accordingly, our AFFO may not always be comparable to AFFO calculated by other REITs. AFFO should not be considered as an alternative to net income/(loss) (determined in accordance with GAAP) as an indication of financial performance, or as an alternative to cash flows from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make distributions. A reconciliation from net income/(loss) attributable to common stockholders to AFFO is provided on Attachment 2. | ||||||||
| Consolidated Fixed Charge Coverage Ratio – adjusted for non-recurring items: The Company defines Consolidated Fixed Charge Coverage Ratio – adjusted for non-recurring items as Consolidated Interest Coverage Ratio – adjusted for non-recurring items divided by total consolidated interest, excluding the impact of costs associated with debt extinguishment, plus preferred dividends. | ||||||||
| Management considers Consolidated Fixed Charge Coverage Ratio – adjusted for non-recurring items a useful metric for investors as it provides ratings agencies, investors and lending partners with a widely-used measure of the Company’s ability to service its consolidated debt obligations as well as compare leverage against that of its peer REITs. A reconciliation of the components that comprise Consolidated Fixed Charge Coverage Ratio – adjusted for non-recurring items is provided on Attachment 4(C) of the Company’s quarterly supplemental disclosure. | ||||||||
| Consolidated Interest Coverage Ratio – adjusted for non-recurring items: The Company defines Consolidated Interest Coverage Ratio – adjusted for non-recurring items as Consolidated EBITDAre – adjusted for non-recurring items divided by total consolidated interest, excluding the impact of costs associated with debt extinguishment. | ||||||||
| Management considers Consolidated Interest Coverage Ratio – adjusted for non-recurring items a useful metric for investors as it provides ratings agencies, investors and lending partners with a widely-used measure of the Company’s ability to service its consolidated debt obligations as well as compare leverage against that of its peer REITs. A reconciliation of the components that comprise Consolidated Interest Coverage Ratio – adjusted for non-recurring items is provided on Attachment 4(C) of the Company’s quarterly supplemental disclosure. | ||||||||
| Consolidated Net Debt-to-EBITDAre – adjusted for non-recurring items: The Company defines Consolidated Net Debt-to-EBITDAre – adjusted for non-recurring items as total consolidated debt net of cash and cash equivalents divided by annualized Consolidated EBITDAre – adjusted for non-recurring items. Consolidated EBITDAre – adjusted for non-recurring items is defined as EBITDAre excluding the impact of income/(loss) from unconsolidated entities, adjustments to reflect the Company’s share of EBITDAre of unconsolidated joint ventures and other non-recurring items including, but not limited to casualty-related charges/(recoveries), net of wholly owned communities. | ||||||||
| Management considers Consolidated Net Debt-to-EBITDAre – adjusted for non-recurring items a useful metric for investors as it provides ratings agencies, investors and lending partners with a widely-used measure of the Company’s ability to service its consolidated debt obligations as well as compare leverage against that of its peer REITs. A reconciliation between net income/(loss) and Consolidated EBITDAre – adjusted for non-recurring items is provided on Attachment 4(C) of the Company’s quarterly supplemental disclosure. | ||||||||
| Controllable Expenses: The Company refers to property operating and maintenance expenses as Controllable Expenses. | ||||||||
| Controllable Operating Margin: The Company defines Controllable Operating Margin as (i) rental income less Controllable Expenses (ii) divided by rental income. Management considers Controllable Operating Margin a useful metric as it provides investors with an indicator of the Company’s ability to limit the growth of expenses that are within the control of the Company. | ||||||||
| Development Communities: The Company defines Development Communities as those communities recently developed or under development by the Company, that are currently majority owned by the Company and have not achieved stabilization as of the most recent quarter. | ||||||||
| Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate (EBITDAre): The Company defines EBITDAre as net income/(loss) (computed in accordance GAAP), plus interest expense, including costs associated with debt extinguishment, plus real estate depreciation and amortization, plus other depreciation and amortization, plus (minus) income tax provision/(benefit), net, (minus) plus net gain/(loss) on the sale of depreciable real estate owned, plus impairment write-downs of depreciable real estate, plus the adjustments to reflect the Company’s share of EBITDAre of unconsolidated joint ventures. The Company computes EBITDAre in accordance with standards established by the National Association of Real Estate Investment Trusts, or Nareit, which may not be comparable to EBITDAre reported by other REITs that do not compute EBITDAre in accordance with the Nareit definition, or that interpret the Nareit definition differently than the Company does. The White Paper on EBITDAre was approved by the Board of Governors of Nareit in September 2017. | ||||||||
| Management considers EBITDAre a useful metric for investors as it provides an additional indicator of the Company’s ability to incur and service debt, and will enable investors to assess our performance against that of its peer REITs. EBITDAre should be considered along with, but not as an alternative to, net income and cash flow as a measure of the Company’s activities in accordance with GAAP. EBITDAre does not represent cash generated from operating activities in accordance with GAAP and is not necessarily indicative of funds available to fund our cash needs. A reconciliation between net income/(loss) and EBITDAre is provided on Attachment 4(C) of the Company’s quarterly supplemental disclosure. | ||||||||
| Effective New Lease Rate Growth: The Company defines Effective New Lease Rate Growth as the increase in gross potential rent realized less concessions for the new lease term (current effective rent) versus prior resident effective rent for the prior lease term on new leases commenced during the current quarter. | ||||||||
| Management considers Effective New Lease Rate Growth a useful metric for investors as it assesses market-level new demand trends. | ||||||||
| Effective Renewal Lease Rate Growth: The Company defines Effective Renewal Lease Rate Growth as the increase in gross potential rent realized less concessions for the new lease term (current effective rent) versus prior effective rent for the prior lease term on renewed leases commenced during the current quarter. | ||||||||
| Management considers Effective Renewal Lease Rate Growth a useful metric for investors as it assesses market-level, in-place demand trends. | ||||||||
| Estimated Quarter of Completion: The Company defines Estimated Quarter of Completion of a development or redevelopment project as the date on which construction is expected to be completed, but it does not represent the date of stabilization. | ||||||||
Contacts
Trent Trujillo
Phone: 720-283-6135