BLUEROCK RESIDENTIAL GROWTH REIT, INC. The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements ofBluerock Residential Growth REIT, Inc. , and the notes thereto. As used herein, the terms "we," "our" and "us" refer toBluerock Residential Growth REIT, Inc. , aMaryland corporation, and, as required by context,Bluerock Residential Holdings, L.P. , aDelaware limited partnership, which we refer to as our "Operating Partnership," and to their subsidiaries. We refer toBluerock Real Estate, L.L.C. , aDelaware limited liability company, andBluerock Real Estate Holdings, LLC , aDelaware limited liability company, together as "Bluerock", and we refer to our former external manager, BRG Manager, LLC, as our "former Manager." Both Bluerock and our former Manager are affiliated with the Company. See also "Forward-Looking Statements" preceding Part I. Overview We were incorporated as aMaryland corporation onJuly 25, 2008 . Our principal business objective is to generate attractive risk-adjusted investment returns by assembling a high-quality portfolio of multifamily apartment communities and single-family residential homes located in demographically attractive growth markets and by implementing our investment strategies and our "Live/Work/Play Initiatives" to achieve sustainable long-term growth in both our funds from operations and net asset value.
On
We conduct our operations through ourOperating Partnership , of which we are the sole general partner. The consolidated financial statements include our accounts and those of theOperating Partnership . 71
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As ofDecember 31, 2021 , we held an aggregate of 20,263 units, comprised of 16,837 multifamily units and 3,426 single-family residential units. The aggregate number of units are held through seventy-eight real estate investments, consisting of forty-nine consolidated operating investments and twenty-nine investments held through preferred equity, loan or ground lease investments. As ofDecember 31, 2021 , our consolidated operating investments were approximately 95.9% occupied. We have elected to be taxed as a Real Estate Investment Trust ("REIT") under Sections 856 through 860 of the Code and have qualified as a REIT commencing with our taxable year endedDecember 31, 2010 . In order to continue to qualify as a REIT, we must distribute to our stockholders each calendar year at least 90% of our taxable income (excluding net capital gains). If we qualify as a REIT for federal income tax purposes, we generally will not be subject to federal income tax on income that we distribute to our stockholders. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax on our taxable income at regular corporate rates and will not be permitted to qualify as a REIT for four years following the year in which our qualification is denied. Such an event could materially and adversely affect our net income and results of operations. We intend to continue to organize and operate in such a manner as to remain qualified as a REIT.
Proposed Merger
OnDecember 20, 2021 , we entered into an Agreement and Plan of Merger (the "Merger Agreement") withBadger Parent LLC ("Parent") andBadger Merger Sub LLC ("Merger Sub"). The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, the Company will be merged with and into Merger Sub (the "Merger"), with Merger Sub surviving the Merger. The Merger and the other transactions contemplated by the Merger Agreement were unanimously approved by the Board. Parent and Merger Sub are affiliates ofBlackstone Real Estate Partners IX L.P. , an affiliate of Blackstone Inc. Pursuant to the terms and conditions in the Merger Agreement, at the effective time of the Merger (the "Effective Time"), each share of common stock, par value$0.01 per share, of the Company (the "Company Common Stock"), that is issued and outstanding immediately prior to the Effective Time will automatically be converted into the right to receive$24.25 in cash, without interest (the "Per Share Merger Consideration"). We will deliver a notice of redemption (the "Preferred Stock Redemption Notice") to the holders of our Series B Redeemable Preferred Stock, par value$0.01 per share ("Series B Preferred Stock"), 7.625% Series C Cumulative Redeemable Preferred Stock, par value$0.01 per share ("Series C Preferred Stock"), 7.125% Series D Cumulative Preferred Stock, par value$0.01 per share ("Series D Preferred Stock"), and Series T Redeemable Preferred Stock, par value$0.01 per share ("Series T Preferred Stock"), in accordance with their respective Articles Supplementary, in order to provide that such preferred stock will be redeemed effective as of the Effective Time. Each share of Series C Preferred Stock, Series D Preferred Stock and Series T Preferred Stock will be redeemed for an amount equal to$25.00 plus an amount equal to all accrued and unpaid dividends to and including the redemption date set forth in the Preferred Stock Redemption Notice, without interest. Each share of Series B Preferred Stock will be redeemed for an amount equal to$1,000.00 plus an amount equal to all accrued and unpaid dividends to and including the redemption date set forth in the Preferred Stock Redemption Notice, without interest. The outstanding warrants to purchase Class A common stock of the Company (the "Company Warrants") will remain outstanding following the Effective Time in accordance with their terms, but the Exercise Price (as defined in the Warrant Agreements with respect to the Company Warrants) will be adjusted so that the holder of any Company Warrant exercised after the Effective Time will be entitled to receive in cash the amount of the Per Share Merger Consideration which, if the Company Warrant had been exercised immediately prior to the Closing, such holder would have been entitled to receive upon the consummation of the Merger. In addition, each award of shares of restricted Class A common stock of the Company that is outstanding immediately prior to the Effective Time will be cancelled in exchange for a cash payment in an amount equal to (i) the number of shares of Company Common Stock subject to such award immediately prior to the Effective Time multiplied by (ii) the Per Share Merger Consideration, without interest and less any applicable withholding taxes. Prior to the consummation of the Merger, we will complete the separation of our single-family residential real estate business (the "SFR Business") from our multi-family residential real estate business (the "Separation"). Following the Separation, the SFR Business will be indirectly held byBluerock Homes Trust, Inc. ("BHM"), aMaryland corporation, and theOperating Partnership , and, prior to the consummation of the Merger, we will distribute the common stock of BHM to our stockholders as of the record date for such distribution in a taxable distribution (the "Distribution"). 72
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In connection with the Separation, theOperating Partnership will exchange its interests in an entity holding its multi-family residential real estate business with the Company as consideration for a redemption of all of our preferred interests in theOperating Partnership and a portion of our common units in theOperating Partnership (the "Redemption"). As a result, following the Redemption, theOperating Partnership will cease to hold interests in the Company's multi-family residential real estate business, and will hold the assets related to the SFR Business. Most members of our senior management, along with certain entities related to them, have agreed to retain their interests in theOperating Partnership until the earlier of the Effective Time and the termination of the Merger Agreement, rather than redeeming their interests for cash or shares of Company Common Stock that will receive the Per Share Merger Consideration. As a result, following the Separation and the Distribution, our stockholders who receive shares of BHM in the Distribution are expected to indirectly own approximately 35% of the SFR Business, with holders of units in theOperating Partnership (other than BHM) expected to indirectly own an interest of approximately 65% of the SFR Business. In connection with the Separation and the Distribution, BHM and theOperating Partnership will enter into a management agreement with an affiliate of Bluerock providing for it to be externally managed thereby. The Merger Agreement contains customary representations, warranties and covenants, including, among others, covenants by the Company to use commercially reasonable efforts to conduct its business in all material respects in the ordinary course, subject to certain exceptions, during the period between the execution of the Merger Agreement and the consummation of the Merger. The obligations of Parent and Merger Sub to consummate the Merger are not subject to any financing condition or the receipt of any financing by Parent or Merger Sub. The consummation of the Merger is conditioned on the consummation of the Separation and the Distribution, as well as certain customary closing conditions, including, among others, approval of the Merger by the affirmative vote of the stockholders entitled to cast a majority of all the votes entitled to be cast on the Merger by the holders of issued and outstanding Company Common Stock (the "Company Requisite Vote"). The Merger Agreement requires the Company to convene a stockholders' meeting for purposes of obtaining the Company Requisite Vote. The Company has agreed not to solicit or enter into an agreement regarding a Company Takeover Proposal (as defined in the Merger Agreement), and, subject to certain exceptions, is not permitted to enter into discussions or negotiations concerning, or provide information to a third party in connection with, any Company Takeover Proposal. However, the Company may, prior to obtaining the Company Requisite Vote, engage in discussions or negotiations and provide information to a third party which has made an unsolicited bona fide written Company Takeover Proposal that did not result from a breach of the non-solicit provisions of the Merger Agreement if the Board determines in good faith, after consultation with its independent financial advisors and outside legal counsel, that such Company Takeover Proposal constitutes or could reasonably be expected to lead to a Company Superior Proposal (as defined in the Merger Agreement).
Prior to the time the Company Requisite Vote is obtained, the Board may, in certain circumstances, effect a Company Adverse Recommendation Change (as defined in the Merger Agreement), subject to complying with specified notice and other conditions set forth in the Merger Agreement.
The Merger Agreement may be terminated under certain circumstances by the Company, including prior to obtaining the Company Requisite Vote, if, after following certain procedures and adhering to certain restrictions, the Board effects a Company Adverse Recommendation Change in connection with a Company Superior Proposal and the Company enters into a definitive agreement providing for the implementation of a Company Superior Proposal. In addition, Parent may terminate the Merger Agreement under certain circumstances and subject to certain restrictions, including if the Board effects a Company Adverse Recommendation Change. The Merger Agreement also may be terminated by either the Company or Parent if the Merger has not been completed on or prior to the date that is nine months after the date of the Merger Agreement, which date may be extended to complete the Separation and the Distribution, by the Company, up to the date that is ten months after the date of the Merger Agreement, or by Parent, up to the date that is twelve months after the date of the Merger Agreement. Upon a termination of the Merger Agreement, under certain circumstances, the Company will be required to pay a termination fee to Parent of$60 million . Upon termination of the Merger Agreement in certain other circumstances, Parent will be required to pay the Company a termination fee of$200 million . The foregoing description of the Merger Agreement is only a summary, does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which is filed as Exhibit 2.1 to our current report on Form 8-K filed with theSecurities and Exchange Commission (the "SEC") onDecember 21, 2021 , and is incorporated herein by reference. 73 Table of Contents Significant Developments
Acquisitions of and Investments in Real Estate
During the year endedDecember 31, 2021 , we acquired one multifamily operating property representing 276 units and eighteen operating portfolios of single-family residential homes representing an aggregate of 1,613 homes, for total purchase prices of$336.9 million .
Additionally, we entered into sixteen preferred equity investments in both
multifamily apartment communities and single-family residential homes,
committing
We made mortgage loan investments in two portfolios of single-family residential
homes amounting to
In addition to the investments summarized in the tables below, we increased our mezzanine loan investments inAvondale Hills , Domain at The One Forty, Motif,Reunion Apartments and Vickers Historic Roswell by approximately$24.1 million in aggregate, increased our preferred equity investments in Alexan CityCentre, Chandler, TheConley andThornton Flats by approximately$7.5 million in aggregate, and provided increased funding for the Zoey Ground Lease of approximately$8.3 million . 74 Table of Contents
The following is a summary of our real estate investments made during the year
ended
Number of Ownership Purchase
Name - Operating Location / Market Date of Investment Units / Homes Interest Price
Multifamily
Windsor Falls Raleigh, NC June 17, 2021 276 100 % $ 48.8
Single-Family Residential (1)
Yauger Park Villas Olympia, WA April 14, 2021 80 95 % 24.5
Wayford at Concord (2) Concord, NC June 4, 2021 150 83 % 44.4
Indy Indianapolis, IN August 12, 2021 44 60 % 3.8
Springfield Springfield, MO August 18, 2021 290 60 % 49.0
Springtown Springtown, TX September 15, 2021 70 80 % 9.4
Texarkana Texarkana, TX September 21, 2021 29 80 % 3.1
Lubbock Lubbock, TX September 24, 2021 60 80 % 5.6
Granbury Granbury, TX September 30, 2021 36 80 % 8.1
ILE TX / SE US October 4, 2021 279 95 % 57.1
Axelrod Garland, TX October 5, 2021 22 80 % 4.1
Springtown 2.0 Springtown, TX October 26, 2021 14 80 % 3.0
Lubbock 2.0 Lubbock, TX October 28, 2021 75 80 % 9.3
Lynnwood Lubbock, TX November 16, 2021 20 80 % 2.4
Golden Pacific KS / MO November 23, 2021 7 97 % 1.2
Lynnwood 2.0 Lubbock, TX December 1, 2021 20 80 % 2.5
Lubbock 3.0 Lubbock, TX December 8, 2021 45 80 % 4.6
Texas Portfolio 183 Various / TX December 22, 2021 183 80 % 28.3
DFW 189 Dallas-Fort Worth, TX December 29, 2021 189 56 % 27.7
Total Operating
1,889 $ 336.9
Actual/Planned
Number of Commitment InvestmentName - Preferred Equity Location / Market Date of
Investment Units / Homes Amount Amount Multifamily The Riley
Richardson, TX March 1, 2021 262 $ 7.0 $ 7.0
The Reserve at Palmer Ranch (3) Sarasota, FL June 10,2021 320 11.4 11.4 Deerwood Apartments Houston, TX June 16, 2021 330 16.5 9.2 Deercross Indianapolis, IN June 25, 2021 372 4.0 4.0 Spring Parc Dallas, TX July 13, 2021 304 8.0 8.0
The Crossings of Dawsonville Dawsonville, GA July 14,
2021 216 10.5 10.5 Lower Broadway San Antonio, TX July 15, 2021 386 15.8 0.9 Orange City Apartments Orange City, FL July 26, 2021 298 15.1 - Renew 3030 Mesa, AZ August 31, 2021 126 7.1 7.1 Single-Family Residential (1) Peak Housing (4) IN / MO / TX April 12, 2021 (5) 474 20.3 20.3 Wayford at Innovation Park Charlotte, NC June 17, 2021 210 13.4 - Willow Park Willow Park, TX June 17, 2021 46 3.8 2.5 The Cottages of Port St. Lucie Port St. Lucie, FL August 26, 2021 286 18.8 7.3 The Cottages at Myrtle Beach Myrtle Beach, SC September 9, 2021 294 17.9 9.0 The Cottages at Warner Robins Warner Robins, GA December 8, 2021 251 13.3 - The Woods at Forest Hill Forest Hill, TX December 20, 2021 76 3.3 0.4 Total Preferred Equity 4,251$ 97.6 Number of Commitment Investment Name - Mortgage Loan Market Date of Investment Homes Amount Amount Single-Family Residential Corpus (6) Corpus Christi, TX July 9, 2021 81 6.8 6.8 Jolin (6) Weatherford, TX August 6, 2021 24 3.1 3.1 Total Mortgage Loan 105$ 9.9 Total 6,245$ 444.4
(1) Single-Family Residential includes single-family residential homes and
attached townhomes/flats.
(2) We purchased the Wayford at
venture partner, and as part of the transaction, our preferred equity
investment was redeemed.
(3) We sold The Reserve at
partner, and as part of the sale, we simultaneously made a preferred equity
investment in the property as part of the Strategic Portfolio.
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(4)
single-family home REIT. Unit count excludes consolidated operating
investment units which are presented separately.
(5) The date of investment represents the initial investment of
There were additional investments of
(6) We recapitalized Corpus and Jolin on
payoffs of the loans. As part of the recapitalization, both Corpus and Jolin,
along with two portfolios of homes previously owned solely by our joint
venture partner, were combined into one portfolio known as Texas Portfolio
183.
Sale of Real Estate Assets and Investments
We sold seven operating properties for net proceeds of
The following is a summary of our real estate sales, mezzanine loan payoffs and redemption of preferred equity investments during the year endedDecember 31, 2021 (dollars in millions): Number of Ownership Sale BRG Net Property Location Date Sold Units Interest Price Proceeds Operating ARIUM Grandewood Orlando, FL January 28, 2021 306 100 %$ 65.3 $ 25.1 James at South First Austin, TX February 24, 2021 250 90 % 50.0 18.1
Marquis at The Cascades Tyler, TX March 1, 2021 582 90 % 90.9 32.6 Plantation Park Lake Jackson, TX April 26, 2021 238 80 % 32.0 2.7 The Reserve at Palmer Ranch (1) Sarasota, FL June 10, 2021 320 100 % 57.6 16.6 Park & Kingston Charlotte, NC July 7, 2021 168 100 % 44.9 24.7 The District at Scottsdale Scottsdale, AZ July 7, 2021
332 99 % 150.5 69.5
Total Operating 2,196 491.2 189.3
Mezzanine LoanVickers Historic Roswell Roswell, GA June 29, 2021
79 - 40.3 12.9
Corpus (2) Corpus Christi, TX December 22, 2021 81 - - 6.8
Jolin (2) Weatherford, TX December 22, 2021 24 - - 3.1
Total Mezzanine Loan 184 40.3 22.8
Preferred Equity
The Conley Leander, TX March 18, 2021 259 - 52.1 16.5Alexan Southside Place Houston, TX March 25, 2021 270 - 45.1 10.1 Wayford at Concord (3) Concord, NC June 4, 2021
150 - 44.4 7.0
Mira Vista Austin, TX September 23, 2021 200 - 32.6 5.6
Thornton Flats Austin, TX December 14, 2021 104 - - 5.5
Belmont Crossing Smyrna, GA December 29, 2021 192 - 28.1 2.8
Sierra Terrace Atlanta, GA December 29, 2021 135 - 27.6 3.8
Sierra Village Atlanta, GA December 29, 2021 154 - 27.9 3.8Total Preferred Equity
1,464 257.8 55.1
Total 3,844 $ 789.3 $ 267.2 (1) We sold The Reserve at
partner, and as part of the sale, we simultaneously made a preferred equity
investment in the property as part of the Strategic Portfolio.
(2) We recapitalized Corpus and Jolin on
payoffs for the loans. As part of the recapitalization, both Corpus and
Jolin, along with two portfolios of homes previously owned solely by our
joint venture partner, were combined into one portfolio known as Texas
Portfolio 183.
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(3) We purchased the Wayford at
venture partner, and as part of the transaction, our preferred equity
investment was redeemed.
Series T Preferred Stock Continuous Offering
During the year ended
Redemption of 8.250% Series A Cumulative Redeemable Preferred Stock
OnFebruary 26, 2021 , we redeemed all 2,201,547 outstanding shares of our Series A Preferred Stock at a redemption price of$25.00 per share, plus accrued and unpaid dividends up to, and including, the date of redemption in an amount equal to$0.320833 per share, for a total payment of$25.320833 per share, in cash.
Redemptions of Series B Redeemable Preferred Stock
During the year ended
InDecember 2019 , our Board authorized the repurchase of up to an aggregate of$50 million of our outstanding shares of Class A common stock over a period of one year pursuant to stock repurchase plans. OnMay 9, 2020 , our Board authorized the modification of the stock repurchase plans to provide for the repurchase, from time to time, of up to an aggregate of$50 million in shares of its Class A common stock, 8.250% Series A Cumulative Redeemable Preferred Stock,$0.01 par value per share ("Series A Preferred Stock"), 7.625% Series C Cumulative Redeemable Preferred Stock,$0.01 par value per share ("Series C Preferred Stock"), and/or 7.125% Series D Cumulative Preferred Stock,$0.01 par value per share ("Series D Preferred Stock"). OnOctober 29, 2020 , our Board authorized new stock repurchase plans for the repurchase, from time to time, of up to an aggregate of$75 million in shares of the Company's Class A common stock, Series A Preferred Stock, Series C Preferred Stock and/or Series D Preferred Stock to be conducted in accordance with Rules 10b5-1 and 10b-18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). OnFebruary 9, 2021 , our Board authorized the modification of the stock repurchase plans to provide for the repurchase, from time to time, of up to an aggregate of$150 million in shares of our Class A common stock, Series C Preferred Stock and/or Series D Preferred Stock. The repurchase plans terminated at the close of the NYSE American trading day onNovember 8, 2021 (the date on which we filed our Form 10-Q with theSEC for the quarter endedSeptember 30, 2021 ). The extent to which we repurchased shares of our Class A common stock, Series A Preferred Stock, Series C Preferred Stock, and/or Series D Preferred Stock under the repurchase plans, and the timing of any such repurchases, depended on a variety of factors including general business and market conditions and other corporate considerations. Stock repurchases under the repurchase plans were made in the open market or through privately negotiated transactions, subject to certain price limitations and other conditions established under the plans. Open market repurchases were structured to occur in conformity with the method, timing, price and volume requirements of Rule 10b-18 of the Exchange Act. During the year endedDecember 31, 2021 , we repurchased 11,140,637 shares of Class A common stock under the repurchase plans for a total purchase price of approximately$119.6 million . During the year endedDecember 31, 2020 , we repurchased shares under the repurchase plans as follows: 3,983,842 shares of Class A common stock, 163,068 shares of Series A Preferred Stock, 27,905 shares of Series C Preferred Stock and 76,264 shares of Series D Preferred Stock for a total purchase price of approximately$46.4 million . During the life of all repurchase plans, the total purchase price of shares we repurchased is approximately$189.1 million . Our total stockholders' equity increased$25.5 million from$58.4 million as ofDecember 31, 2020 to$83.9 million as ofDecember 31, 2021 . The increase in our total stockholders' equity is primarily attributable to the issuance of shares of Class A common stock for the redemptions of shares of Series B Preferred Stock of$154.0 million (of which,$150.7 million relates to Company-initiated redemptions) and net income of$91.7 million , offset by dividends declared of$81.0 million , the repurchase of shares of Class A common stock of$119.6 million and preferred stock accretion of$24.6 million during the year endedDecember 31, 2021 . 77 Table of Contents COVID-19 We continue to monitor the impact of the ongoing COVID-19 pandemic on all aspects of our business, apartment communities, and single-family residential homes including how it will impact our tenants and business partners. While, consistent with prior quarters, we did not incur any significant impact on our performance during the three months endedDecember 31, 2021 from the COVID-19 pandemic, going forward we cannot predict the impact that the COVID-19 pandemic will have on our financial condition, results of operations and cash flows due to the numerous uncertainties. These uncertainties include the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact and the direct and indirect economic effects of the pandemic and containment measures, among others. The outbreak of COVID-19 across the globe, includingthe United States , has significantly and adversely impacted global economic activity and has contributed to significant volatility and negative pressure in financial markets. The global impact of the outbreak evolved rapidly and, as cases of COVID-19 and new variants thereof have continued to be identified, many countries, includingthe United States , have reacted by instituting quarantines, mandating business and school closures and restricting travel. Certain states and cities, including where we own communities, have developments and where our Company has places of business located, have also reacted by instituting quarantines, restrictions on travel, "stay-at-home" orders, restrictions on types of business that may continue to operate, and/or restrictions on the types of construction projects that may continue. While many of these measures have been lifted, additional cases of COVID-19 and new variants thereof have resulted in, and may continue to result in, governments reinstating these or similar measures. We cannot predict if additional states and cities will implement similar restrictions or when restrictions currently in place will expire. Further, while vaccines have been developed and are being administered, it is unclear when or if vaccines may allow a return to full pre-pandemic activity levels. While some operations have been allowed to fully or partially re-open, the long-term impact of COVID-19 onthe United States and world economies remains uncertain and may continue to adversely impact the global economy, the duration and scope of which cannot currently be predicted. As a result, the COVID-19 pandemic is negatively impacting almost every industry directly or indirectly, including industries in which our tenants are employed. Further, the impacts of a potential worsening of global economic conditions and the continued disruptions to, and volatility in, the credit and financial markets, consumer spending as well as other unanticipated consequences remain unknown. We also are unable to predict the impact that COVID-19 will have on our tenants, business partners within our network, and our service providers; and therefore, any material effect on these parties could adversely impact us. As ofDecember 31, 2021 , we collected 97% of rents from our properties for the three months endedDecember 31, 2021 . As ofJanuary 31, 2022 , we collected 97% of January rents from our properties. In 2020, we had provided rent deferral payment plans as a result of hardships certain tenants experienced due to the impact of COVID-19; for the year endedDecember 31, 2021 , the Company did not provide rent deferral payment plans, compared to the onset of the COVID-19 pandemic (quarter endedJune 30, 2020 ) in which 1% of our tenant base was on payment plans. Although we may receive tenant requests for rent deferrals in the coming months, we do not expect to waive our contractual rights under our lease agreements. Further, while occupancy remains strong at 95.9% and 95.8% as ofDecember 31, 2021 andJanuary 31, 2022 , respectively, in future periods, we may experience reduced levels of tenant retention, and reduced foot traffic and lease applications from prospective tenants, as a result of the impact of COVID-19. The impact of the ongoing COVID-19 pandemic on our rental revenue for 2022 and thereafter cannot be determined at present. The situation surrounding the COVID-19 pandemic remains uncertain, and we continue to actively manage our response in collaboration with business partners in our network and service providers, and to assess potential impacts to our financial position and operating results, as well as potential adverse developments in our business. While we expect COVID-19 may continue to adversely impact our tenants, we believe the knowledge economy renter by choice targeted by our Class A affordable rent strategy should be less impacted by COVID-19 related job loss, which should provide a downside buffer in the interim and allow us to reaccelerate rent growth more quickly once more economic certainty exists around the COVID-19 pandemic. Since the beginning of the COVID-19 pandemic, we have taken actions to prioritize the health and well-being of our tenants and our employees, while maintaining our high standard of service. As ofDecember 31, 2021 , all our properties are open and are complying with federal, state and local government orders. In keeping with such orders, we have implemented, and will continue to implement, operational changes, including the adoption of social distancing practices, additional use of PPE equipment and a virtual leasing/virtual office structure. Our property offices are now open to the public and to residents by appointment and with strict social distancing protocols in place. Work orders are now being completed, also with strict safety protocols in place including PPE equipment and a safety questionnaire of each resident at time of request. Generally, the outdoor amenity areas at our communities, including pools, pet parks, and outdoor social areas, have re-opened with strict social distancing protocols, limited capacity and cleaning protocols implemented. Our properties continue the cleaning protocols for the sanitization of all community common areas (including handrails, doors and elevators). 78
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In response to shelter-in-place orders, our corporate offices have also transitioned to a remote work environment. There can be no assurances that the continuation of such remote work arrangements for an extended period of time will not strain our business continuity plans, introduce operational risk, including cybersecurity risks, or impair our ability to manage our business. Industry Outlook Single-family residential The single-family rental industry has historically been more resilient to economic cycles than the multi-family sector and is currently benefiting from significant industry tailwinds that have accelerated during the pandemic. We believe industry dynamics present a compelling investment opportunity for us, including:
Supply at accessible price points remains extremely tight, with little new
affordable rental product coming on-line over the last decade. These supply and
? affordability gaps have been in place and intensifying since the wind-down of
the Great Recession, with rental prices continuing to increase in step with
home price appreciation. Limited institutional ownership of single-family rental stock, currently
estimated to be approximately 2%, creates potential for outsized growth. Our
? institutionally operated properties benefit from experienced regional
owner-operators and a technology-aided platform, delivering not only a
competitive market advantage but also operating growth potential that can
benefit investors.
Demand fundamentals are strong and strengthening further, particularly from
rental-biased and debt-burdened millennials now reaching peak single-family
? house consumption age. We believe that a continued upswing in propensity to
rent, coupled with the limited and depleting supply at the middle-income range,
signals significant opportunity.
Multifamily communities
We believe that the apartment sector will continue to deliver attractive performance for the foreseeable future due to favorable underlying demographics and supply and demand fundamentals.
Large demographic trends, including the Millennial generation of 90 million entering prime rental age through 2030, followed by the Gen-Z generation of 82 million, are projected to form more households than the Baby Boomer and the Gen-X generations, which should drive significant renter demand over the coming decades. As one data point, new research from theNational Multifamily Housing Council (the "NMHC") indicates that approximately 4.6 million new rental units will be needed to meet projected demand by 2030, and that current construction trends indicate that only 3 million new units will be delivered. We believe that a significant amount of institutional capital and public REITs are primarily focused on investing in the big six Gateway Markets ofBoston, New York ,Washington, D.C. ,Seattle ,San Francisco , andLos Angeles , and that many other primary markets are underinvested by institutional/public capital. As a result, we believe that our target "next generation, knowledge economy" markets, which are primary markets below the "big six," provide the opportunity to source investments at cap rates that have the potential to provide not only significant current income, but also attractive capital appreciation. Further, given that a significant portion of the nation's apartment stock was built prior to 1980, we believe that a number of our target markets are underserved by institutional quality highly amenitized live/work/play apartment properties desired by Millennials as they continue to move into their prime rental years. We also believe that rising construction costs will continue to limit supply in the near to intermediate term, and as such, there is opportunity in our target markets for development and/or redevelopment to deliver institutional quality highly amenitized live/work/play product and capture premium rental rates and generate value.
Results of Operations
Note 3, "Sale of Real Estate Assets"; Note 4, "Investments in Real Estate"; Note 5, "Acquisition of Real Estate"; Note 6, "Notes and Interest Receivable"; and Note 7, "Preferred Equity Investments and Investments inUnconsolidated Real Estate Joint Ventures ," to our Consolidated Financial Statements provide discussion of the various purchases and sales of properties and joint venture equity interests. These transactions have resulted in material changes to the presentation of our financial statements. 79
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The following is a summary of our stabilized consolidated operating real estate
investments as of
Year Number Ownership Occupancy
Name Built/Renovated(1) of Units Interest % (2)
Multifamily
ARIUM Glenridge 1990 480 90 % 93.1 %
ARIUM Westside 2008 336 90 % 94.0 %
Ashford Belmar 1988/1993 512 85 % 95.9 %
Avenue 25 2013 254 100 % 95.7 %Burano Hunter's Creek, formerly ARIUM Hunter's Creek 1999 532 100 % 98.5 % Carrington at Perimeter Park 2007
266 100 % 97.7 %
Chattahoochee Ridge 1996 358 90 % 96.4 %
Chevy Chase 1971 320 92 % 96.3 %
Cielo on Gilbert 1985 432 90 % 96.3 %
Citrus Tower 2006 336 97 % 95.8 %
Denim 1979 645 100 % 97.2 %
Elan 2007 270 100 % 97.8 %
Element 1995 200 100 % 95.5 %
Falls at Forsyth 2019 356 100 % 96.1 %
Gulfshore Apartment Homes 2016 368 100 % 97.0 %
Outlook at Greystone 2007 300 100 % 97.7 %
Pine Lakes Preserve 2003 320 100 % 96.3 %
Providence Trail 2007 334 100 % 97.3 %
Roswell City Walk 2015 320 98 % 94.7 %
Sands Parc 2017 264 100 % 96.2 %
The Brodie 2001 324 100 % 96.0 %The Debra Metrowest, formerly ARIUM Metrowest 2001
510 100 % 97.3 %
The Links at Plum Creek 2000 264 88 % 96.6 %
The Mills 2013 304 100 % 97.0 %The Preserve at Henderson Beach 2009
340 100 % 95.6 %
The Sanctuary 1988 320 100 % 95.9 %
Veranda at Centerfield 1999 400 93 % 97.0 %
Villages of Cypress Creek 2001 384 80 % 95.8 %
Wesley Village 2010 301 100 % 97.3 %
Windsor Falls 1994 276 100 % 96.7 %
Total Multifamily Units 10,626
Average Year
Single-Family Residential (3) Built
Golden Pacific 1977 7 97 % 42.9 %
ILE 1990 279 95 % 84.3 %(4)
Navigator Villas 2013 176 90 % 96.0 %
Peak
Axelrod 1959 22 80 % 100.0 %
DFW 189 1962 189 56 % 98.4 %
Granbury 2020-2021 36 80 % 97.2 %
Indy 1958 44 60 % 86.4 %
Lubbock 1955 60 80 % 86.7 %
Lubbock 2.0 1972 75 80 % 92.0 %
Lubbock 3.0 1945 45 80 % 95.6 %
Lynnwood 2005 20 80 % 95.0 %
Lynnwood 2.0 2003 20 80 % 100.0 %
Springfield 2004 290 60 % 99.3 %
Springtown 1991 70 80 % 87.1 %
Springtown 2.0 2018 14 80 % 92.9 %
Texarkana 1967 29 80 % 75.9 %
Texas Portfolio 183 1975 183 80 % 92.3 %
Wayford at Concord 2019 150 83 % 94.7 %
Yauger Park Villas 2010 80 95 % 98.8 %Total Single-Family Units
1,789 Total Units/Average 12,415 95.9 %
(1) Represents date of most recent significant renovation or date built if no
renovations.
(2) Percent occupied is calculated as (i) the number of units occupied as of
percentage.
(3) Single-Family Residential includes single-family residential homes and
attached townhomes/flats.
(4) Excludes 50 down units under renovation.
80
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Year ended
Revenue
Rental and other property revenues increased$7.2 million , or 4%, to$203.7 million for the year endedDecember 31, 2021 as compared to$196.5 million for the same prior year period. This was due to a$28.0 million increase from the acquisition of nineteen investments in 2021 and the full year impact of six investments acquired in 2020, and a$10.1 million increase from same store properties, partially offset by a$30.9 million decrease driven by the sales of seven investments in 2021 and the full period impact of four investments sold in 2020. See Item 1. Business "Summary of Investments and Dispositions". Interest income from mezzanine loan and ground lease investments decreased$6.3 million , or 27%, to$17.0 million for the year endedDecember 31, 2021 as compared to$23.3 million for the same prior year period primarily due to sales of three underlying investments in 2021 and 2020 and decreases in interest rates in 2021, partially offset by increases in the average outstanding balance of mezzanine loans in 2021. Expenses Property operating expenses decreased$0.3 million , or 0.4%, to$76.0 million for the year endedDecember 31, 2021 as compared to$76.3 million for the same prior year period. This was primarily due to a$13.0 million decrease from sold investments, partially offset by a$10.5 million increase from the acquisition of investments in 2021 and 2020 and a$2.2 million increase from same store properties. Property NOI margins increased to 62.7% of total revenues for the year endedDecember 31, 2021 , from 61.2% in the prior year period. Property NOI margins are computed as total property revenues less property operating expenses, divided by total property revenues. Property management fees expense increased$0.4 million , or 8%, to$5.4 million for the year endedDecember 31, 2021 as compared to$5.0 million in the same prior year period. Property management fees incurred are based on property level revenues; an increase in property management fees was due to the increase in rental and other property revenues. General and administrative expenses increased$3.7 million , or 15%, to$27.8 million for the year endedDecember 31, 2021 as compared to$24.1 million for the same prior year period. Acquisition and pursuit costs amounted to$0.4 million for the year endedDecember 31, 2021 as compared to$4.2 million for the same prior year period. The 2020 expense primarily related to the write-off of pre-acquisition costs from abandoned deals due to the uncertainty from COVID-19, of which$3.3 million of the total costs related to two abandoned deals. Abandoned pursuit costs can vary greatly, and the costs incurred in any given period may be significantly different in future periods.
Weather-related losses, net amounted to
Depreciation and amortization expenses increased$0.6 million , or 1%, to$80.1 million for the year endedDecember 31, 2021 as compared to$79.5 million for the same prior year period. This was due to a$12.2 million increase from the acquisition of investments in 2021 and 2020 and a$0.4 million increase from same store properties, partially offset by a$12.0 million decrease driven by the sales of investments in 2021 and 2020.
Other Income and Expense
Other income and expense amounted to net income of$75.2 million for the year endedDecember 31, 2021 compared to net expense of$16.1 million for the same prior year period. This was primarily due to an increase in gains on sale of real estate investments of$77.9 million , a decrease in allowance for credit losses of$16.0 million , a decrease in loss on early extinguishment of debt of$7.9 million , and a$3.3 million net decrease in interest expense. This was partially offset by an increase in Merger transaction costs of$15.0 million . In addition, the Company recorded a$16.4 million provision for credit losses in the fourth quarter 2020; the provision for credit losses primarily related to a decline in the collectability of the Alexan Southside preferred equity investment since the onset of COVID-19 and its impact on the value of the property. 81 Table of Contents
Year ended
Revenue
Rental and other property revenues increased$11.1 million , or 6%, to$196.5 million for the year endedDecember 31, 2020 as compared to$185.4 million for the same prior year period. This was due to a$36.2 million increase from the acquisition of six properties in 2020 and the full year impact of eight properties acquired in 2019, and a$1.3 million increase from same store properties, partially offset by a$26.4 million decrease driven by the sales of four properties in 2020 and the full period impact of six properties sold in 2019. See Item 1. Business "Summary of Investments and Dispositions". Interest income from mezzanine loan and ground lease investments decreased$1.3 million , or 5%, to$23.3 million for the year endedDecember 31, 2020 as compared to$24.6 million for the same prior year period primarily due to the consolidation of Cade Boca Raton and a decreased interest rate at Domain at The One Forty, partially offset by increases in the average balance of mezzanine loans outstanding. Expenses
Property operating expenses increased$1.9 million , or 2%, to$76.3 million for the year endedDecember 31, 2020 as compared to$74.4 million for the same prior year period. This was due to a$13.2 million increase from the acquisition of properties in 2020 and 2019, and a$1.1 million increase from same store properties, partially offset by a$12.4 million decrease driven by the sales of properties in 2020 and 2019. Property NOI margins increased to 61.2% of total revenues for the year endedDecember 31, 2020 , from 59.8% in the prior year period. Property NOI margins are computed as total property revenues less property operating expenses, divided by total property revenues. Property management fees expense increased$0.1 million , or 2%, to$5.0 million for the year endedDecember 31, 2020 as compared to$4.9 million in the same prior year period. Property management fees incurred are based on property level revenues; an increase in property management fees was due to the increase in rental and other property revenues.
General and administrative expenses increased
Acquisition and pursuit costs amounted to$4.2 million for the year endedDecember 31, 2020 as compared to$0.6 million for the same prior year period. Acquisition and pursuit costs incurred for the year endedDecember 31, 2020 were primarily related to the write-off of pre-acquisition costs from abandoned deals due to the uncertainty from COVID-19, of which$3.3 million of the total costs related to two abandoned deals. Abandoned pursuit costs can vary greatly, and the costs incurred in any given period may be significantly different in future periods. Weather-related losses, net amounted to$0.4 million for the year endedDecember 31, 2019 . The 2019 expense primarily related to hail damage at one property inTexas and lightning damage at one property inFlorida , partially offset by insurance reimbursements related to prior year storms. No weather-related losses were recorded in 2020. Depreciation and amortization expenses increased to$79.5 million for the year endedDecember 31, 2020 as compared to$70.5 million for the same prior year period. This was due to a$16.6 million increase from the acquisition of properties in 2020 and 2019 and a$0.7 million increase from same store properties, partially offset by a$8.3 million decrease driven by the sales
of properties in 2020 and 2019. Other Income and Expense Other income and expense amounted to net expense of$16.1 million for the year endedDecember 31, 2020 as compared to net expense of$7.6 million for the same prior year period. This was primarily due to an allowance for credit losses of$16.4 million in 2020 combined with an increase in loss from extinguishment of debt of$7.4 million . This was partially offset by an increase in gains on sale of real estate investments of$10.1 million , increase in preferred returns on unconsolidated real estate joint ventures of$1.5 million and a decrease of$3.6 million in interest expense. The Company recorded a$16.4 million provision for credit losses in the fourth quarter of 2020. The provision for credit losses primarily related to a decline in the collectability of the Alexan Southside preferred equity investment since the onset of COVID-19 and its impact on the value of the property. 82 Table of Contents Property Operations We define "same store" properties as those that we owned and operated for the entirety of both periods being compared, except for properties that are in the construction or lease-up phases, or properties that are undergoing development or significant redevelopment, or properties held for sale. We move properties previously excluded from our same store portfolio for these reasons into the same store designation once they have stabilized or the development or redevelopment is complete and such status has been reflected fully in all quarters during the applicable periods of comparison. For newly constructed or lease-up properties or properties undergoing significant redevelopment, we consider a property stabilized upon attainment of 90.0% physical occupancy. For comparison of our three months endedDecember 31, 2021 and 2020, the same store properties included properties owned atOctober 1, 2020 . Our same store properties for the three months endedDecember 31, 2021 and 2020 consisted of 27 properties, representing 9,558 units. For comparison of our twelve months endedDecember 31, 2021 and 2020, the same store properties included properties owned atJanuary 1, 2020 . Our same store properties for the twelve months endedDecember 31, 2021 and 2020 consisted of 24 properties, representing 8,628 units. Because of the limited number of same store properties as compared to the number of properties in our portfolio in 2021 and 2020, respectively, our same store performance measures may be of limited usefulness. The following table presents the same store and non-same store results from operations for the three months endedDecember 31, 2021 and 2020 (dollars in thousands): Three Months Ended December 31, Change 2021 2020 $ % Property Revenues Same Store$ 44,311 $ 39,566 $ 4,745 12.0 % Non-Same Store 8,792 10,244 (1,452) (14.2) % Total property revenues 53,103 49,810 3,293 6.6 % Property Expenses Same Store 14,949 15,027 (78) (0.5) % Non-Same Store 3,073 3,834 (761) (19.8) % Total property expenses 18,022 18,861 (839) (4.4) % Same Store NOI 29,362 24,539 4,823 19.7 % Non-Same Store NOI 5,719 6,410 (691) (10.8) % Total NOI (1)$ 35,081 $ 30,949 $ 4,132 13.4 %
(1) See "Net Operating Income" below for a reconciliation of Same Store NOI,
Non-Same Store NOI and Total NOI to net income (loss) and a discussion of how
management uses this non-GAAP financial measure.
83
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The following table presents the same store and non-same store results from
operations for the years ended December 31, 2021 and 2020 (dollars in
thousands):
Year Ended
December 31, Change
2021 2020 $ %
Property Revenues
Same Store $ 153,578 $ 143,441 $ 10,137 7.1 %
Non-Same Store 50,111 53,081 (2,970) (5.6) %
Total property revenues 203,689 196,522 7,167 3.6 %
Property Expenses
Same Store 56,983 54,751 2,232 4.1 %
Non-Same Store 19,019 21,550 (2,531) (11.7) %
Total property expenses 76,002 76,301 (299) (0.4) %
Same Store NOI 96,595 88,690 7,905 8.9 %
Non-Same Store NOI 31,092 31,531 (439) (1.4) %
Total NOI (1) $ 127,687 $ 120,221 $ 7,466 6.2 %
See "Net Operating Income" below for a reconciliation of Same Store NOI, (1) Non-Same Store NOI and Total NOI to net income (loss) and a discussion of how
management uses this non-GAAP financial measure.
Three Months Ended
Same store NOI for the three months endedDecember 31, 2021 increased 19.7%, or$4.8 million , compared to the 2020 period. Same store property revenues increased 12.0%, or$4.7 million , as compared to the 2020 period, primarily attributable to a 10.5% increase in average rental rates and a 70-basis point increase in occupancy. Of our twenty-seven same store properties, all twenty-seven recognized rental rate increases and fifteen recognized increases in occupancy during the period. In addition, ancillary income, such as termination fees, late fees, and pet fees, increased$0.4 million and bad debt decreased$0.2 million . Same store expenses for the three months endedDecember 31, 2021 decreased 0.5%, or$0.08 million , compared to the 2020 period. The decrease was partially due to non-controllable expenses; real estate taxes decreased due to a$0.5 million credit in the current year offset by a$0.2 million increase in insurance due to industrywide multifamily price increases. The remaining increase was due to controllable expenses;$0.2 million increase in utilities,$0.2 million increase in payroll related expenses,$0.06 million increase in seasonal maintenance, offset by a$0.24 million decrease in turnover costs. Non-same store property revenues and property expenses for the three months endedDecember 31, 2021 decreased$1.5 million and$0.8 million , respectively, compared to the 2020 period due to the timing and volume of operating property transactions. We acquired twenty-two operating investments representing 2,857 units, of which ten operating investments were acquired during the three months endedDecember 31, 2021 and have a partial period of operations, and we sold eight operating investments representing 2,286 units sinceOctober 1, 2020 .
Twelve Months Ended
Same store NOI for the twelve months endedDecember 31, 2021 increased 8.9%, or$7.9 million , compared to the 2020 period. Same store property revenues increased 7.1%, or$10.1 million , as compared to the 2020 period, primarily attributable to a 5.3% increase in average rental rates and an 80-basis point increase in occupancy. Of our twenty-four same store properties, all twenty-four recognized increases in rental rates and eighteen recognized increases in occupancy during the period. In addition, ancillary income, such as termination fees, late fees, and pet fees, increased$1.3 million and bad debt decreased$0.7 million . 84 Table of Contents
Same store expenses for the twelve months endedDecember 31, 2021 increased 4.1%, or$2.2 million , compared to the 2020 period. The increase was primarily due to non-controllable expenses; insurance increased$0.6 million due to industrywide multifamily price increases and real estate taxes increased$0.3 million due to municipality tax increases. The remaining increase was due to the following increases:$0.45 million in repairs and maintenance,$0.44 million in administrative costs,$0.2 million in marketing, and$0.2 million in payroll related expenses. Non-same store property revenues and property expenses for the twelve months endedDecember 31, 2021 decreased$3.0 million and$2.5 million , respectively, compared to the 2020 period due to the timing and volume of operating property transactions. We acquired twenty-five operating investments representing 3,787 units, of which nineteen operating investments were acquired during the year endedDecember 31, 2021 and have a partial period of operations, and we sold eleven operating investments representing 3,118 units sinceJanuary 1, 2020 .
Prior year's comparisons
For comparison of our three months endedDecember 31, 2020 and 2019, the same store properties included properties owned atOctober 1, 2019 . Our same store properties for the three months endedDecember 31, 2020 and 2019 consisted of 28 properties, representing 9,958 units. For comparison of our twelve months endedDecember 31, 2020 and 2019, the same store properties included properties owned atJanuary 1, 2019 . Our same store properties for the twelve months endedDecember 31, 2020 and 2019 consisted of 24 properties, representing 8,459 units. Because of the limited number of same store properties as compared to the number of properties in our portfolio in 2020 and 2019, respectively, our same store performance measures may be of limited usefulness. The following table presents the same store and non-same store results from operations for the three months endedDecember 31, 2020 and 2019 (dollars in thousands): Three Months Ended December 31, Change 2020 2019 $ % Property Revenues Same Store$ 41,325 $ 41,092 $ 233 0.6 % Non-Same Store 8,485 4,708 3,777 80.2 % Total property revenues 49,810 45,800 4,010 8.8 % Property Expenses Same Store 15,779 15,609 170 1.1 % Non-Same Store 3,082 1,991 1,091 54.8 % Total property expenses 18,861 17,600 1,261 7.2 % Same Store NOI 25,546 25,483 63 0.2 % Non-Same Store NOI 5,403 2,717 2,686 98.9 % Total NOI (1)$ 30,949 $ 28,200 $ 2,749 9.7 %
(1) See "Net Operating Income" below for a reconciliation of Same Store NOI,
Non-Same Store NOI and Total NOI to net income (loss) and a discussion of how
management uses this non-GAAP financial measure.
85
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The following table presents the same store and non-same store results from
operations for the years ended December 31, 2020 and 2019 (dollars in
thousands):
Year Ended
December 31, Change
2020 2019 $ %
Property Revenues
Same Store $ 142,199 $ 140,900 $ 1,299 0.9 %
Non-Same Store 54,323 44,476 9,847 22.1 %
Total property revenues 196,522 185,376 11,146 6.0 %
Property Expenses
Same Store 56,660 55,598 1,062 1.9 %
Non-Same Store 19,641 18,851 790 4.2 %
Total property expenses 76,301 74,449 1,852 2.5 %
Same Store NOI 85,539 85,302 237 0.3 %
Non-Same Store NOI 34,682 25,625 9,057 35.3 %
Total NOI (1) $ 120,221 $ 110,927 $ 9,294 8.4 %
(1) See "Net Operating Income" below for a reconciliation of Same Store NOI,
Non-Same Store NOI and Total NOI to net income (loss) and a discussion of how
management uses this non-GAAP financial measure.
Three Months Ended
Same store NOI for the three months endedDecember 31, 2020 increased 0.2%, or$0.06 million , compared to the 2019 period. Same store property revenues increased 0.6%, or$0.2 million , as compared to the 2019 period, primarily attributable to a 140 basis point increase in occupancy and a 0.2% increase in average rental rates; of our twenty-eight same store properties, twenty-two recognized occupancy increases and fifteen recognized rental rate increases during the period. This increase in revenue was partially offset by a$0.3 million increase in bad debt expense due to the impact of COVID-19. Same store expenses for the three months endedDecember 31, 2020 increased 1.1%, or$0.2 million , compared to the 2019 period. The increase was primarily due to the timing of repairs and maintenance expense in 2020. Non-controllable expenses were essentially flat compared to the 2019 period; insurance expenses increased$0.16 million due to industrywide multifamily price increases offset by a$0.19 million decrease in real estate taxes. Real estate tax decrease was due to a$0.35 million credit in the current year offset by$0.16 million of municipality tax increases. Property revenues and property expenses for our non-same store properties increased due to our investment activity sinceOctober 1, 2019 : the acquisition of six properties in 2020 and the full period impact of four properties acquired in 2019, partially offset by the sale of four properties in 2020. The results of operations for acquired properties have been included in our consolidated statements of operations from the date of acquisition and the results of operations for disposed properties have been excluded from the consolidated statements of operations since the date of disposition.
Twelve Months Ended
Same store NOI for the twelve months endedDecember 31, 2020 increased 0.3%, or$0.2 million , compared to the 2019 period. Same store property revenues increased 0.9% as compared to the 2019 period, primarily attributable to a 90-basis point increase in average occupancy and a 1.2% increase in average rental rates; of our twenty-four same store properties, seventeen recognized occupancy increases and sixteen recognized rental rate increases during the period. The increases were partially offset by a$0.95 million increase in bad debt expense and$0.37 million less ancillary income, such as termination fees and late fees, due to the impact of COVID-19. 86
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Same store expenses for the twelve months endedDecember 31, 2020 increased 1.9%, or$1.06 million , compared to the 2019 period. The expense increase was primarily due to non-controllable expenses; insurance expenses increased$0.7 million due to industrywide multifamily price increases and real estate taxes increased$0.6 million from prior year due to municipality tax increases. The increases were partially offset by a$0.3 million decrease in discretionary expenses, such as seasonal maintenance, resident functions, and travel due to COVID-19. Property revenues and property expenses for our non-same store properties increased due to our investment activity sinceJanuary 1, 2019 : the acquisition of six properties in 2020 and the full period impact of eight properties acquired in 2019, partially offset by the sale of four properties in 2020 and the full period impact of six properties sold in 2019. The results of operations for acquired properties have been included in our consolidated statements of operations from the date of acquisition and the results of operations for disposed properties have been excluded from the consolidated statements of operations since the date of disposition.
Net Operating Income
We believe that net operating income ("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. NOI also is a
computation made by analysts and investors to measure a real estate company's
operating performance.
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.
87
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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 (amounts in thousands):
Year Ended
2021 2020 2019
Net income (loss) attributable to common stockholders$ 3,473 $ (44,674) $ (19,751) Add back: Net income (loss) attributable to Operating Partnership Units 2,250 (17,313)
(6,779)
Net income (loss) attributable to common stockholders and unit holders 5,723 (61,987)
(26,530)
Add common stockholders and Operating Partnership Units pro-rata share of: Real estate depreciation and amortization 75,877 75,727
66,670
Non-real estate depreciation and amortization 487 486
448
Non-cash interest expense 1,869 3,025
3,174
Unrealized (gain) loss on derivatives (73) 115
2,450
Impairment on preferred investment - 15,930
-
Loss on extinguishment of debt and debt modification costs 6,148 14,238 7,199 Provision for credit losses 384 439 - Property management fees 5,086 4,751 4,645
Acquisition and pursuit costs 448 4,152
556
Corporate operating expenses 27,486 23,770
22,261
Transaction costs 15,036 -
-
Weather-related losses, net 967 -
313
Preferred dividends 63,606 58,463 46,159
Preferred stock accretion 24,633 16,851 10,335
Less common stockholders and Operating
Partnership units pro-rata share of:
Other income, net 432 74 68
Preferred returns on unconsolidated real estate joint ventures 12,067 11,381
9,797
Interest income from loan and ground lease investments 17,488 23,326
24,595
Gain on sale of real estate investments 124,547 56,777
48,172
Gain on sale of non-depreciable real estate investments - -
679
Pro-rata share of properties' income 73,143 64,402
54,369
Add:
Noncontrolling interest pro-rata share of partially owned property income 3,692 3,074
2,810
Total property income 76,835 67,476 57,179
Add:
Interest expense 50,852 52,745 53,748
Net operating income 127,687 120,221 110,927
Less:Non-same store net operating income 31,092 31,531
25,625
Same store net operating income$ 96,595 $ 88,690
Liquidity and Capital Resources
Liquidity is a measure of our ability to meet potential cash requirements, both short- and long-term. Our primary short-term liquidity requirements historically have related to (a) our operating expenses and other general business needs, (b) distributions to our stockholders, (c) committed investments and capital requirements to fund development and renovations at existing properties, (d) ongoing commitments to repay borrowings, including our credit facilities and our maturing short-term debt, (e) the redemption of our Series A Preferred Stock, and (f) Class A common stock, Series A Preferred Stock, Series C Preferred Stock and Series D Preferred Stock repurchases under our stock repurchase plans. Our ability to access capital on favorable terms as well as to use cash from operations to continue to meet our short-term liquidity needs could be affected by various risks and uncertainties, including, but not limited to, the effects of the COVID-19 pandemic and other risks detailed in Part II, Item 1A titled "Risk Factors" and in the other reports we have filed with theSEC . 88
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We believe we currently have a stable financial condition; as ofDecember 31, 2021 , we collected 97% of rents from our properties for the three months endedDecember 31, 2021 . As ofJanuary 31, 2022 , we collected 97% of January rents from our properties. In addition, we have provided rent deferral payment plans as a result of hardships certain tenants experienced due to the COVID-19 impact, decreasing from 1% in the quarter endedJune 30, 2020 , to none in the quarter endedDecember 31, 2021 . Although we expect to continue to receive tenant requests for rent deferrals in the coming months, we do not expect to waive our contractual rights under our lease agreements. Further, while occupancy remains strong at 95.9% and 95.8% as ofDecember 31, 2021 andJanuary 31, 2022 , respectively, in future periods we may experience reduced levels of tenant retention as well as reduced foot traffic and lease applications from prospective tenants as a result of COVID-19 impact. We believe the stabilized properties underlying our consolidated real estate investments are performing well with an occupancy of 95.9%, exclusive of our development properties, atDecember 31, 2021 . OnMay 17, 2018 , we filed, and onMay 23, 2018 , theSEC declared effective on Form S-3 (File No. 333-224990), a shelf registration statement that expired inMay 2021 (the "May 2018 Shelf Registration Statement"). The securities covered by theMay 2018 Shelf Registration Statement cannot exceed$2,500,000,000 in the aggregate and include common stock, preferred stock, depositary shares representing preferred stock, debt securities, warrants to purchase stock or debt securities and units. We may periodically offer one or more of these securities in amounts, prices and on terms to be announced when and if these securities are offered. The specifics of any future offerings, along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement, or other offering materials, at the time of the offering. OnOctober 31, 2019 , based on general market conditions and related considerations, our Board determined it to be in the best interest of us and our stockholders to replace the Series B Preferred Offering with an offering of up to 32,000,000 shares of a new Series T Redeemable Preferred Stock (the "Series T Preferred Stock"), with a maximum of 20,000,000 shares of Series T Redeemable Preferred Stock offered in the primary offering and an additional 12,000,000 shares of Series T Preferred Stock offered pursuant to a dividend reinvestment plan (collectively, the "Series T Preferred Offering"). OnNovember 13, 2019 , we filed a prospectus supplement to ourMay 2018 Shelf Registration Statement for the Series T Preferred Offering, and onDecember 20, 2019 , we made the initial issuance of Series T Preferred Stock pursuant to the Series T Preferred Offering. As ofDecember 31, 2021 , we have issued and outstanding 28,272,134 shares of Series T Preferred Stock. OnSeptember 13, 2019 , we and ourOperating Partnership entered into an At Market Issuance Sales Agreement with respect to the offering and sale of up to$100,000,000 in shares of Class A common stock in "at the market offerings" as defined in Rule 415 under the Securities Act, including without limitation sales made directly on or through the NYSE American, or on any other existing trading market for Class A common stock or through a market maker (the "Class A ATM Offering"). The Company did not issue any shares through the Class A Common Stock ATM Offering during the year before its expiration inNovember 2021 .
During the life of the Class A Common Stock Offering, the Company had issued a total of 621,110 shares of Class A common stock.
OnNovember 18, 2021 , we filed Pre-Effective Amendment No. 1 to the Form S-3 filed onApril 20, 2021 , and onNovember 22, 2021 , theSEC declared effective on Form S-3 (File No. 333-255388), a shelf registration statement that expires inNovember 2024 (the "November 2021 Shelf Registration Statement"). The securities covered by theNovember 2021 Shelf Registration Statement cannot exceed approximately$4.1 billion in the aggregate and include common stock, preferred stock, depositary shares representing preferred stock, debt securities, warrants to purchase stock or debt securities and units. We may periodically offer one or more of these securities in amounts, prices and on terms to be announced when and if these securities are offered. The specifics of any future offerings, along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement, or other offering materials, at the time of the offering. We have approximately$128.0 million of cash and$143.3 million of capacity on our credit facilities as ofJanuary 31, 2022 . AtDecember 31, 2021 , we were in compliance with all covenants under our credit facilities. We continue to communicate with our key lenders and believe access to capacity under our credit facilities will remain available for the uses set forth in their terms. As we did in 2021 and to date in 2022, we expect to maintain a proactive capital allocation process and selectively sell assets at appropriate cap rates, which would be expected to generate cash sources for both our short-term and long-term liquidity needs. Due to the uncertainty surrounding the COVID-19 impact, we had temporarily suspended interior renovations at several properties as part of assuming a more conservative posture; however, we have selectively restarted the program at various properties as we gained more visibility on the economic recovery nationally and within our specific markets. 89
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Our total stockholders' equity increased$25.5 million from$58.4 million as ofDecember 31, 2020 to$83.9 million as ofDecember 31, 2021 . The increase in our total stockholders' equity is primarily attributable to the issuance of shares of Class A common stock for the redemptions of shares of Series B Preferred Stock of$154.0 million (of which,$150.7 million relates to Company-initiated redemptions ) and net income of$91.7 million , offset by dividends declared of$81.0 million , the repurchase of shares of Class A common stock of$119.6 million and preferred stock accretion of$24.6 million during the year endedDecember 31, 2021 . In general, we believe our available cash balances, the Senior andJunior Credit Facilities, the Fannie Facility (each as defined below), other financing arrangements and cash flows from operations will be sufficient to fund our liquidity requirements with respect to our existing portfolio for the next 12 months. We expect that properties added to our portfolio from the proceeds of the Series T Preferred Offering and from the credit facilities will have a positive impact on our future results of operations. In general, we expect that our results related to our portfolio will improve in future periods as a result of anticipated future investments in and acquisitions of real estate. However, there can be no assurance that the worldwide economic disruptions arising from the COVID-19 pandemic will not cause conditions in the lending, capital and other financial markets to deteriorate, nor that our future revenues or access to capital and other sources of funding will not become constrained, which could reduce the amount of liquidity and credit available for use in acquiring and further diversifying our portfolio of multifamily assets. We cannot provide any assurances that we will be able to add properties to our portfolio at the anticipated pace, or at all.
We believe we will be able to meet our primary liquidity requirements going forward through:
?
?
? cash generated from operating activities; and
proceeds from future borrowings and potential offerings, including potential
? offerings of common and preferred stock through underwritten offerings, as well
as issuances of units of limited partnership interest in our Operating
Partnership, or OP Units.
At the current time, we do not anticipate the need to establish any material
contingency reserves related to the COVID-19 pandemic, other than the provision
for credit loss referred to earlier, but continue to assess along with our
network of business partners the possible need for such contingencies, whether
at the corporate or property level.
Our primary long-term liquidity requirements relate to (a) costs for additional
apartment community and single-family residential homes investments, (b)
repayment of long-term debt and our credit facilities, (c) capital expenditures,
and (d) cash redemption requirements related to our Series B Preferred Stock,
Series C Preferred Stock and Series T Preferred Stock.
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InDecember 2019 , our Board authorized the repurchase of up to an aggregate of$50 million of our outstanding shares of Class A common stock over a period of one year pursuant to stock repurchase plans. OnMay 9, 2020 , our Board authorized the modification of the stock repurchase plans to provide for the repurchase, from time to time, of up to an aggregate of$50 million in shares of our Class A common stock, 8.250% Series A Cumulative Redeemable Preferred Stock,$0.01 par value per share ("Series A Preferred Stock"), 7.625% Series C Cumulative Redeemable Preferred Stock,$0.01 par value per share ("Series C Preferred Stock"), and/or 7.125% Series D Cumulative Preferred Stock,$0.01 par value per share ("Series D Preferred Stock"). OnOctober 29, 2020 , our Board authorized new stock repurchase plans for the repurchase, from time to time, of up to an aggregate of$75 million in shares of our Class A common stock, Series A Preferred Stock, Series C Preferred Stock and/or Series D Preferred Stock to be conducted in accordance with Rules 10b5-1 and 10b-18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). OnFebruary 9, 2021 , our Board authorized the modification of the stock repurchase plans to provide for the repurchase, from time to time, of up to an aggregate of$150 million in shares of our Class A common stock, Series C Preferred Stock and/or Series D Preferred Stock. The repurchase plans terminated at the close of the NYSE American trading day onNovember 8, 2021 (the date on which we filed our Form 10-Q with theSEC for the quarter endedSeptember 30, 2021 ). The extent to which we repurchased shares of our Class A common stock, Series C Preferred Stock, and/or Series D Preferred Stock under the repurchase plans, and the timing of such repurchases, depended on a variety of factors including general business and market conditions and other corporate considerations. Stock repurchases under the repurchase plans were made in the open market or through privately negotiated transactions, subject to certain price limitations and other conditions established under the plans. Open market repurchases were structured to occur in conformity with the method, timing, price and volume requirements of Rule 10b-18 of the Exchange Act. During the year endedDecember 31, 2021 , we repurchased 11,140,637 shares of Class A common stock under the repurchase plans for a total purchase price of approximately$119.6 million . During the year endedDecember 31, 2020 , we repurchased shares under the repurchase plans as follows: 3,983,842 shares of Class A common stock, 163,068 shares of Series A Preferred Stock, 27,905 shares of Series C Preferred Stock and 76,264 shares of Series D Preferred Stock for a total purchase price of approximately$46.4 million . During the life of all repurchase plans, the total purchase price of shares we repurchased is approximately$189.1 million . We intend to finance our long-term liquidity requirements with net proceeds of additional issuances of common and preferred stock, our credit facilities, as well as future borrowings. Our success in meeting these requirements will therefore depend upon our ability to access capital. Further, our ability to access equity capital is dependent upon, among other things, general market conditions for REITs and the capital markets generally, market perceptions about us and our asset class, and current trading prices of our securities , all of which may continue to be adversely impacted by COVID-19 pandemic. As we did in 2021 and 2020, we may also selectively sell assets at appropriate times, which would be expected to generate cash sources for both our short-term and long-term liquidity needs. We may also meet our long-term liquidity needs through borrowings from a number of sources, either at the corporate or project level. We believe the Senior and Junior Credit Facilities, as well as the Fannie Facility, will continue to enable us to deploy our capital more efficiently and provide capital structure flexibility as we grow our asset base. We expect the combination of these facilities to provide us flexibility by allowing us, among other things, to use borrowings under our Senior and Junior Credit Facilities to acquire properties pending placement of permanent mortgage indebtedness, including under the Fannie Facility. In addition to restrictive covenants, these credit facilities contain material financial covenants. AtDecember 31, 2021 , we were in compliance with all covenants under our credit facilities. We will continue to monitor the debt markets, including Fannie Mae and Freddie Mac, and as market conditions permit, access borrowings that are advantageous to us. We intend to continue to use prudent amounts of leverage in making our investments, which we define as having total indebtedness of approximately 65% of the fair market value of the properties in which we have invested. For purposes of calculating our leverage, we assume full consolidation of all of our real estate investments, whether or not they would be consolidated under GAAP, include assets we have classified as held for sale, and include any joint venture level indebtedness in our total indebtedness. However, we are not subject to any limitations on the amount of leverage we may use, and accordingly, the amount of leverage we use may be significantly less or greater than we currently anticipate. We expect our leverage to decline commensurately as we execute our business plan to grow our net asset value. 91
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If we are unable to obtain financing on favorable terms or at all, we would likely need to curtail our investment activities, including acquisitions and improvements to and developments of, real properties, which could limit our growth prospects. This, in turn, could reduce cash available for distribution to our stockholders and may hinder our ability to raise capital by issuing more securities or borrowing more money. We also may be forced to dispose of assets at inopportune times in order to maintain our REIT qualification and Investment Company Act exemption. We expect to maintain distributions paid to our Series B Preferred Stock, our Series C Preferred Stock, our Series D Preferred Stock and our Series T Preferred Stock in accordance with the terms of those securities which require monthly or quarterly dividends depending on the series. While our policy is generally to pay distributions from cash flow from operations, our distributions throughDecember 31, 2021 have been paid from cash flow from operations, proceeds from our continuous preferred stock offerings, including our Series T Preferred Stock, proceeds from underwritten securities offerings, and sales of assets and may in the future be paid from additional sources, such as from borrowings. We have notes receivable in conjunction with properties that are in various stages of development, in lease-up and operating. To date, these investments have been structured as mezzanine loans, and in the future, we may also provide mortgage financing to these types of projects. The notes receivable provide a current stated return, and in certain cases, an accrued return, and required repayment based on a fixed maturity date, generally in relation to the property's construction loan or mortgage loan maturity. If the property does not repay the notes receivable upon maturity, our income, FFO, CFFO and cash flows could be reduced below the stated returns currently being recognized if the property does not produce sufficient cash flow to pay its operating expenses and debt service, or to refinance its debt obligations. In addition, we have, in certain cases, an option to purchase up to 100% of the common interest which holds an interest in the entity that owns the property. If we were to convert into common ownership, our income, FFO, CFFO and cash flows would be reflective of our pro rata share of the property's results, which could be a reduction from what our notes receivable currently generate. We also have preferred membership interests in properties that are in various stages of development, in lease-up and operating. Our preferred equity investments are structured to provide a current preferred return, and in some cases an accrued return, during all phases. Each joint venture in which we own a preferred membership interest is required to redeem our preferred membership interests, plus any accrued but unpaid preferred return, based on a fixed maturity date, generally in relation to the property's construction loan or mortgage loan maturity. Upon redemption of the preferred membership interests, our income, FFO, CFFO and cash flows could be reduced below the preferred returns currently being recognized. Alternatively, if the joint ventures do not redeem our preferred membership interest when required, our income, FFO, CFFO and cash flows could be reduced if the property does not produce sufficient cash flow to pay its operating expenses, debt service and preferred return obligations. As we evaluate our capital position and capital allocation strategy, we may consider alternative means of financing the loan and preferred equity investment activities at the subsidiary level.
Cash Flows
Year ended
As ofDecember 31, 2021 , we held seventy-eight real estate investments, consisting of forty-nine consolidated operating investments and twenty-nine investments held through preferred equity, loan or ground lease investments. During the year endedDecember 31, 2021 , net cash provided by operating activities was$82.1 million after net income of$105.2 million was adjusted for the following:
? an increase in accounts payable and other accrued liabilities of
? distributions and preferred returns from unconsolidated joint ventures of
million;
? loss on extinguishment of debt of
? amortization of deferred interest income on mezzanine loan of
offset by
? non-cash items of
? an increase in accounts receivable, prepaids and other assets of$5.5 million ; and 92 Table of Contents
? an increase in notes and accrued interest receivable of
Cash Flows from Investing Activities
During the year ended
?
?
estate joint ventures; and
?
?
?
and notes receivable; and
?
Cash Flows from Financing Activities
During the year ended
?
?
?
?
?
?
?
?
?
?
?
? partially offset by net proceeds of
T Redeemable Preferred Stock;
? proceeds of
? capital contributions of
? borrowings of
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? net proceeds of
Operating Activities
Net cash flow provided by operating activities increased
? Increase in accounts payable and other accrued liabilities of
? Decrease in accounts receivable, prepaid expenses and other assets of
million; and
? An increase in amortization of deferred interest income on mezzanine loan of
? Decrease of
? Increase in notes and accrued interest receivable of
? Net decrease in net due to affiliates of
? Decrease in net distributions of income and preferred returns from preferred
equity investments of
? Operating income, adjusted for non-cash activity, decreased
result of our acquisitions (net of dispositions).
Investing Activities
Net cash provided by investing activities increased
? Higher proceeds from the sales of real estate investments of
? Decrease in investment in notes receivable of
? Lower purchases from noncontrolling interests of
? Higher proceeds from sale and redemption of unconsolidated real estate joint
ventures of
? Higher investments in unconsolidated real estate joint venture interests of
? Decreased repayments on notes receivable of
? Acquisition of real estate investments and capital expenditures increased
million. Financing Activities
Net cash used in financing activities was
? An increase in net mortgage repayments of
? An increase in Class A common stock repurchases of
? An increase in revolving credit facility repayments of
? An increase in distributions paid of
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? A decrease in Class A common stock offering of
? An increase of miscellaneous offering costs of
? An increase in proceeds from the Series T Preferred Stock continuous offering
of
? A decrease in the redemption of Series A Preferred Stock of
? An increase in capital contributions of
interests;
? An increase in net proceeds of
? A decrease in the repurchase of Series A, Series C and Series D Preferred Stock
of
? A decrease in deferred financing costs of
Capital Expenditures
The following table summarizes our total capital expenditures incurred for
the years ended
2021 2020 2019
Redevelopment/renovations $ 20,467 $ 10,164 $ 13,124 Normally recurring capital expenditures 3,246 3,093 3,209 Routine capital expenditures
6,321 3,869 4,229
Total capital expenditures $ 30,034 $ 17,126 $ 20,562
Redevelopment and renovation costs are non-recurring capital expenditures for
significant projects that are revenue enhancing through unit or common area
upgrades, such as clubhouse renovations and kitchen remodels. Routine capital
expenditures are necessary non-revenue generating improvements that extend the
useful life of the property and that are less frequent in nature, such as roof
repairs and asphalt resurfacing. Normally recurring capital expenditures are
necessary non-revenue generating improvements that occur on a regular ongoing
basis, such as carpet and appliances.
Funds from Operations and Core Funds from Operations Attributable to Common Stockholders and Unit Holders
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.
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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, unrealized gains or losses on derivatives, provision for credit losses, 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, gains or losses on sales of non-depreciable real estate property, shareholder activism, stock compensation expense and preferred stock accretion. Commencing in 2020, we do not deduct the accrued portion of income on our loan and preferred equity investments from FFO to determine CFFO as the income is deemed fully collectible. The accrued portion of the income totaled$2.7 million and$1.1 million , and$7.4 million and$2.3 million for the three and twelve months endedDecember 31, 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, 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 nineteen operating investments, made fifteen investments through preferred equity or loans, sold seven operating investments and received payoffs of our loan or preferred equity in eleven investments subsequent toDecember 31, 2020 . As ofDecember 31, 2020 , we had acquired six operating investments, made eight investments through preferred equity, loans or ground lease, sold six operating investments and received payoffs of our loan or preferred equity in three investments subsequent toDecember 31, 2019 . The results presented in the table below are not directly comparable and should not be considered an indication of our future operating performance. 96
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The table below presents our calculation of FFO and CFFO for the years ended
2021 2020 2019
Net income (loss) attributable to common stockholders $
3,473
2,250 (17,313) (6,779) Net income (loss) attributable to common stockholders and unit holders
5,723 (61,987) (26,530)
Common stockholders and Operating Partnership Units pro-rata
share of:
Real estate depreciation and amortization 75,877 75,727 66,670
Impairment on preferred investment - 15,930 -
Gain on sale of real estate investments (124,547) (56,777) (48,172)
FFO attributable to Common Stockholders and Unit Holders (42,947) (27,107) (8,032)
Common stockholders and Operating Partnership Units pro-rata
share of:
Acquisition and pursuit costs 448 4,152 556
Non-cash interest expense 1,869 3,025 3,174
Unrealized (gain) loss on derivatives (73) 115 2,450
Provision for credit losses 384 439 -
Loss on extinguishment of debt and debt modification costs 6,148 14,238 7,199
Amortization of deferred interest income on mezzanine loan 2,996 - -
Weather-related losses, net 967 - 313
Non-real estate depreciation and amortization 487 486 448
Transaction costs 15,036 - -
Gain on sale of non-depreciable real estate investments - - (679)
Shareholder activism - - 393
Other expense (income), net 284 (400) (68)
Non-cash preferred returns on unconsolidated real estate
joint ventures - - (1,291)
Non-cash equity compensation 13,512 11,917 10,615
Preferred stock accretion 24,633 16,851 10,335
CFFO Attributable to Common Stockholders and Unit Holders $ 23,744 $ 23,716 $ 25,413
Per Share and Unit Information:
FFO attributable to Common Stockholders and Unit Holders -
diluted $
(1.17)
$
0.65
Weighted average common shares and units outstanding - diluted
36,805,455 33,116,871 30,899,927
Operating cash flow, FFO and CFFO may also be used to fund all or a portion of certain capitalizable items that are excluded from FFO and CFFO.
Presentation of this information is intended to assist the reader in comparing
the sustainability of the operating performance of different REITs, although it
should be noted that not all REITs calculate FFO or CFFO the same way, so
comparisons with other REITs may not be meaningful. FFO or CFFO should not be
considered as an alternative to net income (loss) attributable to common
stockholders or as an indication of our liquidity, nor is either indicative of
funds available to fund our cash needs, including our ability to make
distributions. Both FFO and CFFO should be reviewed in connection with other
GAAP measurements.
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Contractual Obligations
The following table summarizes our contractual obligations as of December 31,
2021 which consisted of mortgage notes secured by our properties and revolving
credit facilities. At December 31, 2021 , our estimated future required payments
on these obligations were as follows (amounts in thousands):
Less than
Total one year 2022-2023 2024-2025 Thereafter
Mortgages Payable (Principal) $ 1,365,975 $ 17,896 $ 331,547 $ 488,732 $ 527,800
Revolving Credit Facilities
(Principal) - - 33,000 - -
Estimated Interest Payments on
Mortgages Payable and Revolving
Credit Facilities 229,446 48,928 90,122 54,328 36,068
Total $ 1,595,421 $ 66,824 $ 421,669 $ 543,064 $ 563,868
Estimated interest payments are based on the stated rates for mortgage notes
payable and revolving credit facility assuming the interest rate in effect for
the most recent quarter remains in effect through the respective maturity dates.
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Distributions
Payable to stockholders Date
Declaration Date of record as of Amount Paid or Payable
Class A Common Stock
December 11, 2020 December 24, 2020 $ 0.162500 January 5, 2021
March 12, 2021 March 25, 2021 $ 0.162500 April 5, 2021
June 11, 2021 June 25, 2021 $ 0.162500 July 2, 2021
September 10, 2021 September 24, 2021 $ 0.162500 October 5, 2021
December 10, 2021 December 23, 2021 $ 0.162500 January 5, 2022
Class C Common Stock
December 11, 2020 December 24, 2020 $ 0.162500 January 5, 2021
March 12, 2021 March 25, 2021 $ 0.162500 April 5, 2021
June 11, 2021 June 25, 2021 $ 0.162500 July 2, 2021
September 10, 2021 September 24, 2021 $ 0.162500 October 5, 2021
December 10, 2021 December 23, 2021 $ 0.162500 January 5, 2022Series A Preferred Stock
December 11, 2020 December 24, 2020 $
0.515625
January 27, 2021 (1) February 26, 2021 $
0.320833
Series B Preferred Stock
October 9, 2020 December 24, 2020 $ 5.00 January 5, 2021
January 13, 2021 January 25, 2021 $ 5.00 February 5, 2021
January 13, 2021 February 25, 2021 $ 5.00 March 5, 2021
January 13, 2021 March 25, 2021 $ 5.00 April 5, 2021
April 12, 2021 April 23, 2021 $ 5.00 May 5, 2021
April 12, 2021 May 25, 2021 $ 5.00 June 4, 2021
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
October 11, 2021 October 25, 2021 $ 5.00 November 5, 2021
October 11, 2021 November 24, 2021 $ 5.00 December 3, 2021
October 11, 2021 December 23, 2021 $ 5.00 January 5, 2022
Series C Preferred Stock
December 11, 2020 December 24, 2020 $
0.4765625 January 5, 2021
March 12, 2021 March 25, 2021 $ 0.4765625 April 5, 2021
June 11, 2021 June 25, 2021 $ 0.4765625 July 2, 2021
September 10, 2021 September 24, 2021 $ 0.4765625 October 5, 2021
December 10, 2021 December 23, 2021 $
0.4765625
Series D Preferred Stock
December 11, 2020 December 24, 2020 $ 0.4453125 January 5, 2021
March 12, 2021 March 25, 2021 $ 0.4453125 April 5, 2021
June 11, 2021 June 25, 2021 $ 0.4453125 July 2, 2021
September 10, 2021 September 24, 2021 $ 0.4453125 October 5, 2021
December 10, 2021 December 23, 2021 $ 0.4453125 January 5, 2022Series T Preferred Stock (2)
October 9, 2020 December 24, 2020 $ 0.128125 January 5, 2021
January 13, 2021 January 25, 2021 $ 0.128125 February 5, 2021
January 13, 2021 February 25, 2021 $ 0.128125 March 5, 2021
January 13, 2021 March 25, 2021 $ 0.128125 April 5, 2021
April 12, 2021 April 23, 2021 $ 0.128125 May 5, 2021
April 12, 2021 May 25, 2021 $ 0.128125 June 4, 2021
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
October 11, 2021 October 25, 2021 $ 0.128125 November 5, 2021
October 11, 2021 November 24, 2021 $ 0.128125 December 3, 2021
October 11, 2021 December 23, 2021 $ 0.128125 January 5, 2022
December 10, 2021 (3) December 23, 2021 $
0.050000
(1) This dividend was paid on the date indicated to shareholders in conjunction
with the redemption of Series A preferred shares.
(2) Shares of newly issued Series T Preferred Stock that are held only a portion
of the applicable monthly dividend period receive a prorated monthly 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.(3) The Board authorized, and the Company declared, an annual Series T Preferred
Stock dividend of 0.20% per share of Series T Preferred Stock. Shares of
Series T Preferred Stock that were held only for a portion of the applicable
annual stock dividend period receive a prorated Series T Preferred Stock
dividend based on the actual number of months in the applicable annual stock
dividend period during which each such share of Series T Preferred Stock was
outstanding. The annual stock dividend equates to $0.05 per share of Series T
Preferred Stock.
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A portion of each dividend may constitute a return of capital for tax purposes.
There is no assurance that we will continue to declare dividends or at this
rate. Holders of OP Units and LTIP Units are entitled to receive "distribution
equivalents" at the same time as dividends are paid to holders of our Class A
common stock.
We had a dividend reinvestment plan that allowed for participating stockholders
to have their Class A common stock dividend distributions automatically
reinvested in additional Class A common shares based on the average price of the
Class A common shares on the investment date.
We also had a dividend reinvestment plan that allowed for participating
stockholders to have their Series T Preferred Stock dividend distributions
automatically reinvested in additional shares of Series T Preferred Stock at a
price of $25.00 per share. In December 2021 , the Board approved the suspension
of the dividend reinvestment plans until further notice.
Our Board will determine the amount of dividends to be paid to our stockholders,
subject to operating restrictions included in the Merger Agreement. The
determination of our Board will be based on several factors, including funds
available from operations, our capital expenditure requirements and the annual
distribution requirements necessary to maintain our REIT status under the
Internal Revenue Code. As a result, our distribution rate and payment frequency
may vary from time to time. However, to qualify as a REIT for tax purposes, we
must make distributions equal to at least 90% of our "REIT taxable income" each
year. While our policy is generally to pay distributions from cash flow from
operations, we may declare distributions in excess of funds from operations.
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Distributions for the year ended December 31, 2021 were as follows (amounts in
thousands):
Distributions
2021 Declared Paid
First Quarter
Class A Common Stock $ 3,943 $ 3,630
Class C Common Stock 12 12Series A Preferred Stock 706 1,842
Series B Preferred Stock 7,089 7,400 Series C Preferred Stock 1,094 1,094 Series D Preferred Stock 1,235 1,235 Series T Preferred Stock 4,493 4,049 OP Units
1,027 1,027
LTIP Units 814 510
Total first quarter 2021
12 12
Series B Preferred Stock 5,818 6,273 Series C Preferred Stock 1,094 1,094 Series D Preferred Stock 1,235 1,235 Series T Preferred Stock 6,220 5,616 OP Units
1,027 1,025
LTIP Units 721 836
Total second quarter 2021
12 12
Series B Preferred Stock 5,404 5,407 Series C Preferred Stock 1,094 1,094 Series D Preferred Stock 1,235 1,235 Series T Preferred Stock 8,039 7,439 OP Units
1,027 1,025
LTIP Units 836 631
Total third quarter 2021
Fourth Quarter Class A Common Stock$ 4,363 $ 4,245 Class C Common Stock 12 12 Series B Preferred Stock 5,393 5,396 Series C Preferred Stock 1,094 1,094 Series D Preferred Stock 1,235 1,235 Series T Preferred Stock 11,128 10,281 OP Units 1,027 1,025 LTIP Units 843 639 Total fourth quarter 2021$ 25,095 $ 23,927 Total$ 88,279 $ 86,355
Critical Accounting Policies and Estimates
Below is a discussion of the accounting policies that we consider critical to an
understanding of our financial condition and operating results that may require
complex or significant judgment in their application or require estimates about
matters which are inherently uncertain.
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Principles of Consolidation and Basis of Presentation
Our consolidated financial statements include our accounts and the accounts of
other subsidiaries over which we have control. All inter-company transactions,
balances, and profits have been eliminated in consolidation. Interests in
entities acquired will be evaluated based on applicable GAAP, which includes the
requirement to consolidate entities deemed to be variable interest entities
("VIE") in which we are the primary beneficiary. If the entity in which we hold
an interest is determined not to be a VIE, then the entity will be evaluated for
consolidation based on legal form, economic substance, and the extent to which
we have control and/or substantive participating rights under the respective
ownership agreement.
There are judgments and estimates involved in determining if an entity in which
we have made an investment is a VIE and, if so, whether we are the primary
beneficiary. The entity is evaluated to determine if it is a VIE by, among other
things, calculating the percentage of equity being risked compared to the total
equity of the entity. A change in the judgments, assumptions, and estimates used
could result in consolidating an entity that should not be consolidated or
accounting for an investment using the equity method that should in fact be
consolidated, the effects of which could be material to our financial
statements.
Real Estate Purchase Price Allocations
Upon the acquisition of real estate properties which do not constitute the definition of a business, we recognize the assets acquired, the liabilities assumed, and any noncontrolling interest as of the acquisition date, measured at their relative fair values. Acquisition-related costs are capitalized in the period incurred and are recorded to the components of the real estate assets acquired. In determining fair values for multifamily apartment community acquisitions, we assess the acquisition-date fair values of all tangible assets, identifiable intangible assets and assumed liabilities using methods like those used by independent appraisers (e.g., discounted cash flow analysis) and which utilize appropriate discount and/or capitalization rates and available market information. In determining fair values for single-family residential home acquisitions, we utilize information obtained from county tax assessment records to assist in the determination of the fair value of land and building. Estimates of future cash flows are based on several factors including historical operating results, known and anticipated trends, and market and economic conditions. The fair value of tangible assets of an acquired property considers the value of the property as if it was vacant. Intangible assets include the value of in-place leases, which represents the estimated fair value of the net cash flows of leases in place at the time of acquisition, as compared to the net cash flows that would have occurred had the property been vacant at the time of acquisition and subject to lease-up. We amortize the value of in-place leases to expense over the remaining non-cancelable term of the respective leases, which on average is six months. Estimates of the fair values of the tangible assets, identifiable intangible assets and assumed liabilities require us to make significant assumptions to estimate market lease rates, property operating expenses, carrying costs during lease-up periods, discount rates, market absorption periods, prevailing interest rates and the number of years the property will be held for investment. The use of inappropriate assumptions could result in an incorrect valuation of acquired tangible assets, identifiable intangible assets and assumed liabilities, which could impact the amount of our net income (loss). Differences in the amount attributed to the fair value estimate of the various assets acquired can be significant based on the assumptions made in calculating these estimates.
Revenue Recognition
We recognize rental revenue on a straight-line basis over the terms of the rental agreements and in accordance with ASC Topic 842 Leases. Rental revenue is recognized on an accrual basis and when the collectability of the amounts due from tenants is deemed probable. Rental revenue is included within rental and other property revenues on our consolidated statements of operations. Amounts received in advance are recorded as a liability within other accrued liabilities on our consolidated balance sheets.
Other property revenues are recognized in the period earned.
We recognize a gain or loss on the sale of real estate assets when the criteria for an asset to be derecognized are met, which include when (i) a contract exists and (ii) the buyer obtains control.
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Preferred Equity Investments and Investments in
We analyze an investment to determine if it is a variable interest entity (a "VIE") in accordance with Topic ASC 810 and, if so, whether we are the primary beneficiary requiring consolidation. A VIE is an entity that has (i) insufficient equity to permit it to finance its activities without additional subordinated financial support or (ii) equity holders that lack the characteristics of a controlling financial interest. VIEs are consolidated by the primary beneficiary, which is the entity that has both the power to direct the activities that most significantly impact the entity's economic performance and the obligation to absorb losses of the entity or the right to receive benefits from the entity that potentially could be significant to the entity. Variable interests in a VIE are contractual, ownership, or other financial interests in a VIE that change in value with changes in the fair value of the VIE's net assets. We continuously re-assess at each level of the investment whether the entity is (i) a VIE, and (ii) if we are the primary beneficiary of the VIE. If it was determined that the entity in which we hold an interest qualified as a VIE and we were the primary beneficiary, the entity would be consolidated. If after consideration of the VIE accounting literature, we have determined that an entity is not a VIE, we assess the need for consolidation under all other provisions of ASC 810. These provisions provide for consolidation of majority-owned entities where majority voting interest held by us provides control. In assessing whether we are in control of and requiring consolidation of the limited liability company and partnership venture structures we evaluate the respective rights and privileges afforded each member or partner (collectively referred to as "member"). Our member would not be deemed to control the entity if any of the other members have either (i) substantive kickout rights providing the ability to dissolve (liquidate) the entity or otherwise remove the managing member or general partner without cause or (ii) has substantive participating rights in the entity. Substantive participating rights (whether granted by contract or law) provide for the ability to effectively participate in significant decisions of the entity that would be expected to be made in the ordinary course business. If it has been determined that we do not have control but do have the ability to exercise significant influence over the entity, we account for these investments as preferred equity investments and investments in unconsolidated real estate joint ventures in our consolidated balance sheets. In accordance with ASC 320 Investments -Debt Securities , we classify each preferred equity investment as a held to maturity debt security as we have the intention and ability to hold the investment until redemption. We earn a fixed return on these investments which is included within preferred returns on unconsolidated real estate joint ventures in our consolidated statements of operations. We evaluate the collectability of each preferred equity investment and estimates a provision for credit loss, as applicable. Refer to the Current Expected Credit Losses ("CECL") section below for further information regarding CECL and our provision for credit losses.
Mezzanine Loan Investments
We analyze each loan arrangement that involves real estate development to consider whether the loan qualifies for accounting as a loan or as an investment in a real estate development project. We have evaluated our real estate loans, where appropriate, for accounting treatment as loans versus real estate development projects, as required by ASC 310-10 Receivables. For each loan, we have concluded that the characteristics and the facts and circumstances indicate that loan accounting treatment is appropriate. We recognize interest income on our notes receivable on the accrual method unless a significant uncertainty of collection exists. If a significant uncertainty exists, interest income is recognized as collected. Costs incurred to originate our notes receivable are deferred and amortized using the effective interest method over the term of the related notes receivable. We evaluate the collectability of each mezzanine loan investment and estimate a provision for credit loss, as applicable. Refer to CECL section below for further information regarding CECL and our provision for credit losses.
Current Expected Credit Losses ("CECL")
We estimate provision for credit losses on our mezzanine loan and preferred
equity investments under CECL. This method is based on expected credit losses
for the life of the investment as of each balance sheet date. The method for
calculating the estimate of expected credit loss takes into account historical
experience and current conditions for similar loans and reasonable and
supportable forecasts about the future.
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We estimate our provision for credit losses using a collective (pool) approach for investments with similar risk characteristics, such as collateral and duration of investment. In measuring the CECL provision for investments that share similar characteristics, we apply a default rate to the investments for the remaining mezzanine loan or preferred equity investment hold period. As we do not have a significant historical population of loss data on our mezzanine loans and preferred equity investments, our default rate utilized for CECL is based on an external historical loss rate for commercial real estate loans. In addition to analyzing investments as a pool, we perform an individual investment assessment of expected credit losses. If it is determined that the borrower is experiencing financial difficulty, or a foreclosure is probable, or we expect repayment through the sale of the collateral, we calculate expected credit losses based on the value of the underlying collateral as of the reporting date. During this review process, if we determine that it is probable that we will not be able to collect all amounts due for both principal and interest according to the contractual terms of an investment, that mezzanine loan or preferred equity investment is not considered fully recoverable and a provision for credit loss is recorded. In estimating the value of the underlying collateral when determining if a mezzanine loan or preferred equity investment is fully recoverable, we evaluate estimated future cash flows to be generated from the collateral underlying the investment. The inputs and assumptions utilized to estimate the future cash flows of the underlying collateral are based upon our evaluation of the operating results, economy, market trends, and other factors, including judgments regarding costs to complete any construction activities, lease up and occupancy rates, rental rates, and capitalization rates utilized to estimate the projected cash flows at the disposition. We may also obtain a third-party valuation which may value the collateral through an "as-is" or "stabilized value" methodology. If upon completion of the valuation the fair value of the underlying collateral securing the investment is less than the net carrying value, we record a provision for credit loss on that mezzanine loan or preferred equity investment. As the investment no longer displays the characteristics that are similar to those of the pool of mezzanine loans or preferred equity investments, the investment is removed from the CECL collective (pool) analysis described above. Our significant accounting policies are more fully described in Note 2, "Basis of Presentation and Summary of Significant Accounting Policies," to our Notes to the Consolidated Financial Statements. Certain of our accounting policies require management to make estimates and judgments regarding uncertainties that may affect the reported amounts presented and disclosed in our consolidated financial statements. These estimates and judgments are affected by management's application of accounting policies. These judgments affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. We base these estimates on historical experience and various other factors that are believed to be reasonable, the results of which form the basis for making judgments under the circumstances. Due to the inherent uncertainty involved in making these estimates, actual results reported may differ from these estimates under different situations or conditions. Additionally, other companies may utilize different estimates that may impact the comparability of our results of operations to those of companies in similar businesses. We consider an accounting estimate to be significant if it requires us to make assumptions about matters that were uncertain at the time the estimate was made and changes in the estimate would have had a significant impact on our consolidated financial position or results of operations.
Off-Balance Sheet Arrangements
As ofDecember 31, 2021 , we have off-balance sheet arrangements that may have a material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital resources or capital expenditures. As ofDecember 31, 2021 , we own interests in twenty joint ventures that are accounted for as held to maturity debt securities or loans as we exercise significant influence over, but do not control, the investee.
New Accounting Pronouncements
See Note 2, "Basis of Presentation and Summary of Significant Accounting Policies," to our Notes to the Consolidated Financial Statements for a description of accounting pronouncements. We do not believe these new pronouncements will have a significant impact on our Consolidated Financial Statements, cash flows or results of operations.
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Subsequent Events
Issuance of LTIP Units under the Fourth Amended 2014 Incentive Plans
OnJanuary 1, 2022 , we granted an aggregate of 134,131 time-based LTIP Units and an aggregate of 268,265 performance-based LTIP Units to various executive officers under the Fourth Amended 2014 Incentive Plans pursuant to the executive officers' employment or service agreements. The time-based LTIP Units vest over approximately three years, while the performance-based LTIP Units subject to a three-year performance period and will thereafter vest upon successful achievement of performance-based conditions. All such LTIP Unit grants require continuous employment for vesting. In addition, onJanuary 1, 2022 , we granted 3,546 LTIP Units pursuant to the Fourth Amended 2014 Incentive Plans to each independent member of the Board in payment of the equity portion of their respective annual retainers. The LTIP Units vested immediately upon issuance. Distributions Declared Payable to stockholders Declaration Date of record as of Amount Paid / Payable Date Series B Preferred Stock January 14, 2022 January 25, 2022$ 5.00 February 4, 2022 January 14, 2022 February 25, 2022$ 5.00 March 4, 2022 January 14, 2022 March 25, 2022$ 5.00 April 5, 2022 Series T Preferred Stock January 14, 2022 January 25, 2022$ 0.128125 February 4, 2022 January 14, 2022 February 25, 2022$ 0.128125 March 4, 2022 January 14, 2022 March 25, 2022$ 0.128125 April 5, 2022 Distributions Paid
The following distributions have been paid subsequent to
Distributions Paid
January 5, 2022 (to stockholders of record as of December 23, 2021 )
Class A Common Stock $ 4,363
Class C Common Stock 12
Series B Preferred Stock 1,796
Series C Preferred Stock 1,094
Series D Preferred Stock 1,235
Series T Preferred Stock 3,619
OP Units 1,027
LTIP Units 646
Total $ 13,792
February 4, 2022 (to stockholders of record as of January 25, 2022 )
Series B Preferred Stock $ 1,795
Series T Preferred Stock 3,621
Total $ 5,416
March 4, 2022 (to stockholders of record as of February 25, 2022 )
Series B Preferred Stock $ 1,794
Series T Preferred Stock 3,620
Total $ 5,414
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Stock Activity
Subsequent toDecember 31, 2021 and as ofFebruary 28, 2022 , we have issued 1,266,444 shares of Class A common stock upon the exercise of 106,502 Warrants and there are 29,242,107 shares of Class A common stock outstanding and 138,583 Warrants outstanding (refer to Note 13 - Stockholders' Equity of our consolidated financial statements for further information).
Sale of Alexan CityCentre Interests
OnJanuary 20, 2022 , Alexan CityCentre, the underlying asset of an unconsolidated joint venture located inHouston, Texas , was sold. Upon the sale, our preferred equity investment was redeemed by the joint venture for$18.7 million , which included its original preferred investment of$18.2 million and accrued preferred return of$0.5 million .
Weatherford Loan Financing
OnFebruary 15, 2022 , we provided a$9.6 million mezzanine loan (the "Weatherford Mezz Loan") to an unaffiliated third party for land to be used in the development of 185-build for rent, single-family residential homes inWeatherford, Texas . The Weatherford Mezz Loan matures onMay 16, 2022 and contains three (3) thirty-day extension options, subject to certain conditions, and can be prepaid without penalty. The Weatherford Mezz Loan bears interest at 12.0% per annum with interest-only payments during the term of the loan.
Sale of
OnFebruary 25, 2022 ,Reunion Apartments , a property located inOrlando, Florida , was sold. Upon the sale, the mezzanine loan that we provided was paid off for$12.5 million , which included principal repayment of$10.0 million , accrued interest of$1.5 million and an incremental payment of$1.0 million to achieve the minimum interest per the terms of the loan agreement.
Sale of The
OnFebruary 28, 2022 , TheHartley at Blue Hill, a property located inChapel Hill, North Carolina , was sold. The mezzanine loan that we provided was paid off for$34.4 million , which included principal repayment of$31.0 million and accrued interest of$3.4 million . The$5.0 million senior loan that we provided, which is secured by a parcel of land adjacent to TheHartley at Blue Hill property, remains outstanding.
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