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, as "Bluerock", and we refer to our former external manager, BRG Manager, LLC, aDelaware limited liability company, as our "former Manager."
Both Bluerock and our former Manager are affiliated with the Company.
Forward-Looking Statements
Statements included in this Quarterly Report on Form 10-Q that are not
historical facts (including any statements concerning investment objectives,
other plans and objectives of management for future operations or economic
performance, or assumptions or forecasts related thereto) are "forward-looking
statements," within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements are only predictions. We caution that forward-looking
statements are not guarantees. Actual events or our investments and results of
operations could differ materially from those expressed or implied in any
forward-looking statements. Forward-looking statements are typically identified
by the use of terms such as "may," "should," "expect," "could," "intend,"
"plan," "anticipate," "estimate," "believe," "continue," "predict," "potential"
or the negative of such terms and other comparable terminology.
The forward-looking statements included herein are based upon our current
expectations, plans, estimates, assumptions and beliefs that involve numerous
risks and uncertainties. Assumptions relating to the foregoing involve judgments
with respect to, among other things, future economic, competitive and market
conditions and future business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond our control.
Although we believe that the expectations reflected in such forward-looking
statements are based on reasonable assumptions, our actual results and
performance could differ materially from those set forth in the forward-looking
statements.
Currently, one of the most significant factors, however, is the potential
adverse effect of the current pandemic of the novel coronavirus ("COVID-19") on
the financial condition, results of operations, cash flows and performance of
the Company and its tenants of our properties, business partners within our
network and service providers, as well as the real estate market and the global
economy and financial markets. The extent to which COVID-19 impacts the Company
and its tenants will depend on future developments, which are highly uncertain
and cannot be predicted with confidence, including the scope, severity and
duration of the pandemic, the actions taken to contain the pandemic or mitigate
its impact (including governmental actions that may vary by jurisdiction, such
as mandated business closing; "stay-at-home" orders; limits on group activity;
and actions to protect residential tenants from eviction), and the direct and
indirect economic effects of the pandemic and containment measures, among
others. Moreover, you should interpret many of the risks identified in this
Quarterly Report on Form 10-Q, as well as the risks set forth below, as being
heightened as a result of the ongoing and numerous adverse impacts of COVID-19.
Additional factors that could have a material adverse effect on our operations and future prospects include, but are not limited to:
the factors included in this Quarterly Report on Form 10-Q, including those set
? forth under the heading "Management's Discussion and Analysis of Financial
Condition and Results of Operations";
? use of proceeds of the Company's securities offerings;
? the competitive environment in which we operate;
? real estate risks, including fluctuations in real estate values and the general
economic climate in local markets and competition for tenants in such markets;
? risks associated with geographic concentration of our investments;
? decreased rental rates or increasing vacancy rates;
? our ability to lease units in newly acquired or newly constructed apartment
properties;
33
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? potential defaults on or non-renewal of leases by tenants;
? creditworthiness of tenants;
? our ability to obtain financing for and complete acquisitions under contract at
the contemplated terms, or at all;
development and acquisition risks, including rising and unanticipated costs,
? delays in timing, abandonment of opportunities, and failure of such
acquisitions and developments to perform in accordance with projections;
? the timing of acquisitions and dispositions;
the performance of our network of leading regional apartment owner/operators
? with which we invest, including through controlling positions in joint
ventures;
? potential natural disasters such as hurricanes, tornadoes and floods;
? national, international, regional and local economic conditions;
? Board determination as to timing and payment of dividends, and our ability to
pay future distributions at the dividend rates we have paid historically;
? the general level of interest rates;
potential changes in the law or governmental regulations that affect us and
? interpretations of those laws and regulations, including changes in real estate
and zoning or tax laws, and potential increases in real property tax rates;
financing risks, including the risks that our cash flows from operations may be
? insufficient to meet required payments of principal and interest and we may be
unable to refinance our existing debt upon maturity or obtain new financing on
attractive terms or at all;
? lack of or insufficient amounts of insurance;
? our ability to maintain our qualification as a REIT;
? litigation, including costs associated with prosecuting or defending claims and
any adverse outcomes; and
possible environmental liabilities, including costs, fines or penalties that
? may be incurred due to necessary remediation of contamination of properties
presently owned or previously owned by us or a subsidiary owned by us or
acquired by us.
Any of the assumptions underlying forward-looking statements could be inaccurate. You are cautioned not to place undue reliance on any forward-looking statements included in this report. All forward-looking statements are made as of the date of this report and the risk that actual results will differ materially from the expectations expressed in this report will increase with the passage of time. Except as otherwise required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements after the date of this report, whether as a result of new information, future events, changed circumstances or any other reason. The forward-looking statements should be read in light of the risk factors set forth in Item 1A of this Quarterly Report on Form 10-Q, in Item 1A of our Annual Report on Form 10-K filed with theSecurities and Exchange Commission ("SEC") onFebruary 23, 2021 , and subsequent filings by us with theSEC , or ("Risk Factors"). 34 Table of Contents Overview We were incorporated as aMaryland corporation onJuly 25, 2008 . Our objective is to maximize long-term stockholder value by acquiring and developing well-located institutional-quality apartment properties in knowledge economy growth markets acrossthe United States . We seek to maximize returns through investments where we believe we can drive substantial growth in our core funds from operations and net asset value primarily through our Value-Add and Invest-to-Own investment strategies. We conduct our operations throughBluerock Residential Holdings, L.P. , our operating partnership (the "Operating Partnership"), of which we are the sole general partner. The consolidated financial statements include our accounts and those of theOperating Partnership and its subsidiaries. As ofMarch 31, 2021 , our portfolio consisted of investments held in fifty-five real estate properties, consisting of thirty-four consolidated operating properties and twenty-one properties through preferred equity, mezzanine loan or ground lease investments. Of the property interests held through preferred equity, mezzanine loan or ground lease investments, five are under development, one is in lease-up and fifteen properties are stabilized. The fifty-five properties contain an aggregate of 16,457 units, comprised of 11,584 consolidated operating units and 4,873 units through preferred equity, mezzanine loan or ground lease investments. As ofMarch 31, 2021 , our consolidated operating properties were approximately 95.8% occupied. We have elected to be taxed as a 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. COVID-19 We are closely monitoring the impact of the COVID-19 pandemic on all aspects of our business and apartment communities, including how it will impact our tenants and business partners. While we did not incur any significant impact on our performance during the three months endedMarch 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 has been rapidly evolving and, as cases of COVID-19, including mutating variants of COVID-19, have continued to be identified in additional countries, 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. We cannot predict if additional states and cities will implement similar restrictions or when restrictions currently in place will expire. 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. 35
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As ofMarch 31, 2021 , we collected 97% of rents from our multifamily properties for the three months endedMarch 31, 2021 . As ofApril 30, 2021 , we collected 98% of April rents from our multifamily properties. In prior quarters, we had provided rent deferral payment plans as a result of hardships certain tenants experienced due to the impact of COVID-19; for the quarter endedMarch 31, 2021 , the Company did not provide any 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 95.8% and 96.3% as ofMarch 31, 2021 andApril 30, 2021 , 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 COVID-19 pandemic on our rental revenue for the second quarter of 2021 and thereafter cannot be determined at present. The situation surrounding the COVID-19 pandemic remains uncertain, and we are actively managing our response in collaboration with business partners in our network and service providers and assessing potential impacts to our financial position and operating results, as well as potential adverse developments in our business. For further information regarding the impact of COVID-19 on the Company, see Part II, Item 1A titled "Risk Factors." While we expect COVID-19 to adversely impact our tenants in the short term, 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 ofMarch 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). 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.
Other Significant Developments
During the three months ended
We provided increased mezzanine funding toAvondale Hills , Domain at The One Forty, Motif,Reunion Apartments and Vickers Historic Roswell of approximately$11.5 million .
We provided increased funding to the Zoey Ground Lease of approximately
We sold three operating properties and, together with unaffiliated joint venture partners, sold two assets underlying our preferred equity investments for net proceeds of$102.5 million , of which$10.1 million is to be received subsequent toMarch 31, 2021 related to the sale ofAlexan Southside Place (refer to the below disclosure for further information). 36 Table of Contents Sale of ARIUM Grandewood OnJanuary 28, 2021 , we closed on the sale of ARIUM Grandewood located inOrlando, Florida . The property was sold for approximately$65.3 million , subject to certain prorations and adjustments typical in such real estate transactions. ARIUM Grandewood was encumbered by a$39.1 million senior mortgage through the Master Credit Facility Agreement (refer to Note 8 in our consolidated financial statements for further information). Under the agreement, we had the option to forgo the repayment of the principal balance and any related prepayment penalties and costs by substituting the collateral securing the senior mortgage with collateral of the same or higher value. We elected to substitute the ARIUM Grandewood collateral with our Falls atForsyth property and the transaction was completed onFebruary 18, 2021 . After consideration of the$39.1 million senior mortgage and payment of closing costs and fees of$1.1 million , the sale of ARIUM Grandewood generated net proceeds of approximately$25.1 million and a gain on sale of approximately$27.7 million . We recorded debt modification costs of$0.1 million related to the collateral substitution transaction.
Sale of James at South First
OnFebruary 24, 2021 , we closed on the sale of James at South First located inAustin, Texas . The property was sold for$50.0 million , subject to certain prorations and adjustments typical in such real estate transactions. After deduction for the payoff of existing mortgage indebtedness encumbering the property in the amount of$25.6 million , the payment of early extinguishment of debt costs of$2.5 million and payment of closing costs and fees of$0.5 million , the sale of the property generated net proceeds of approximately$21.1 million and a gain on sale of approximately$17.4 million , of which our pro rata share of the proceeds was approximately$18.1 million and pro rata share of the gain was approximately$14.5 million . We recorded a loss on extinguishment of debt of$2.6 million related to the sale.
Sale of Marquis at The Cascades
OnMarch 1, 2021 , we closed on the sale of the Marquis at The Cascades properties, located inTyler, Texas , pursuant to the terms and conditions of two separate purchase and sales agreements. The properties were sold for approximately$90.9 million , subject to certain prorations and adjustments typical in such real estate transactions. After deduction for the payoff of the existing mortgage indebtedness encumbering the properties in the amount of$53.6 million and payment of closing costs and fees of$0.3 million , the sale of the properties generated net proceeds of approximately$37.3 million and a gain on sale of approximately$23.7 million , of which our pro rata share of the proceeds was approximately$32.6 million and pro rata share of the gain was approximately$20.1 million . We recorded a loss on extinguishment of debt of$0.3 million related to the sale.
The Riley Interests
OnMarch 1, 2021 , we made a$7.0 million preferred equity investment in a joint venture (the "Riley JV") with an unaffiliated third party for a stabilized property inRichardson, Texas known as The Riley. We earn a 6.0% current return and a 5.0% accrued return for a total preferred return of 11.0%. The Riley JV is required to redeem our preferred membership interest plus any accrued but unpaid preferred return on the earlier date which is: (i)(a) the refinancing or (b) maturity of the property loan, detailed below, (ii) the sale of the property, or (iii) any other acceleration event. In conjunction with The Riley investment, The Riley property owner, which is owned by an entity in which we have an equity interest, entered into a$44.1 million senior mortgage loan. The loan matures onMarch 9, 2024 , contains two (2) one-year extension options, subject to certain conditions, and is secured by the fee simple interest in The Riley property. The loan bears interest at a floating basis of the greater of LIBOR or 0.15%, plus 3.35%, with interest-only payments during the initial term of the loan. The loan can only be prepaid in full and is subject to yield maintenance throughJune 9, 2022 .
Sale of The Conley Interests
OnMarch 18, 2021 , TheConley , the underlying asset of an unconsolidated joint venture located inLeander, Texas , was sold. Upon the sale, our preferred equity investment was redeemed by the joint venture for$16.5 million , which included our original preferred investment of$15.2 million and accrued preferred return of$1.3 million . 37 Table of Contents
Sale of Alexan Southside Place Interests
OnMarch 25, 2021 ,Alexan Southside Place , the underlying asset of an unconsolidated joint venture located inHouston, Texas , was sold. Our preferred equity investment of$10.1 million , which is net of the$15.9 million provision for credit loss recorded in the fourth quarter 2020, was classified as a related party receivable atMarch 31, 2021 as certain proceeds from the sale were not distributed by quarter end. The receivable is included in due from affiliates in our consolidated balance sheet. Of the$10.1 million investment, we received$9.8 million inApril 2021 with the remaining$0.3 million expected to be received before year end. The remaining amount represents a holdback for a six-month representations and warranty period related to the sale.
Held for Sale
We entered into a purchase and sale agreement for the sale ofPlantation Park , located inLake Jackson, Texas , and we have classified the property as held for sale as ofMarch 31, 2021 . OnApril 26, 2021 , we closed on the sale ofPlantation Park for$32.0 million , subject to certain prorations and adjustments typical in such real estate transactions. After deduction for the transfer of existing mortgage indebtedness encumbering the property in the amount of$26.6 million and payment of closing costs and fees of$0.4 million , an immaterial loss on the sale was incurred. The sale of the property generated net proceeds of approximately$4.9 million , of which our pro rata share of the proceeds was approximately$2.7 million .
Series T Preferred Stock Continuous Offering
During the three months 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 three months ended
Our total stockholders' equity increased$47.9 million from$58.4 million as ofDecember 31, 2020 to$106.3 million as ofMarch 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$72.5 million (of which,$71.2 million relates to Company-initiated redemptions) and net income of$45.2 million , offset by dividends declared of$18.6 million , the repurchase of shares of Class A common stock of$40.7 million and preferred stock accretion of$7.0 million during the three months ended
March 31, 2021 . 38 Table of Contents Results of Operations
The following is a summary of our stabilized consolidated operating real estate
investments as of
Date Built Ownership Average
Multifamily Community
Name Location Number of units /Renovated (1) Interest Rent (2) % Occupied (3)
ARIUM Glenridge Atlanta, GA 480 1990 90 % $ 1,293 94.6 %
ARIUM Hunter's Creek Orlando, FL 532 1999 100 % 1,417 96.4 %
ARIUM Metrowest Orlando, FL 510 2001 100 % 1,412 96.7 %
ARIUM Westside Atlanta, GA 336 2008 90 % 1,503 93.5 %
Ashford Belmar Lakewood, CO 512 1988/1993 85 % 1,674 92.8 %
Avenue 25 Phoenix, AZ 254 2013 100 % 1,252 96.9 %
Carrington at
Perimeter Park Morrisville, NC 266 2007 100 % 1,263 95.9 %
Chattahoochee Ridge Atlanta, GA 358 1996 90 % 1,387 97.5 %
Chevy Chase Austin, TX 320 1971 92 % 964 98.1 %
Cielo on Gilbert Mesa, AZ 432 1985 90 % 1,087 97.2 %
Citrus Tower Orlando, FL 336 2006 97 % 1,364 95.5 %
Denim Scottsdale, AZ 645 1979 100 % 1,246 97.2 %
Elan Austin, TX 270 2007 100 % 1,134 95.6 %
Element Las Vegas, NV 200 1995 100 % 1,274 94.5 %
Falls at Forsyth Cumming, GA 356 2019 100 % 1,408 98.6 %
Gulfshore Apartment
Homes Naples, FL 368 2016 100 % 1,287 95.4 %
Navigator Villas Pasco, WA 176 2013 90 % 1,143 99.4 %
Outlook at Greystone Birmingham, AL 300 2007 100 % 1,090 93.7 %
Park & Kingston Charlotte, NC 168 2015 100 % 1,303 97.0 %
Pine Lakes Preserve Port St. Lucie, FL 320 2003 100 % 1,380 97.8 %
Plantation Park Lake Jackson, TX 238 2016 80 % 1,232 94.5 %
Providence Trail Mount Juliet, TN 334 2007 100 % 1,264 95.5 %
Roswell City Walk Roswell, GA 320 2015 98 % 1,586 95.9 %
Sands Parc Daytona Beach, FL 264 2017 100 % 1,374 94.7 %
The Brodie Austin, TX 324 2001 100 % 1,313 95.1 %
The District at
Scottsdale Scottsdale, AZ 332 2018 100 % 1,799 91.6 %
The Links at Plum
Creek Castle Rock, CO 264 2000 88 % 1,466 95.5 %
The Mills Greenville, SC 304 2013 100 % 1,051 95.1 %
The Preserve at
Henderson Beach Destin, FL 340 2009 100 % 1,498 97.9 %
The Reserve at Palmer
Ranch Sarasota, FL 320 2016 100 % 1,376 96.6 %
The Sanctuary Las Vegas, NV 320 1988 100 % 1,132 95.3 %
Veranda at Centerfield Houston, TX 400 1999 93 % 1,021 95.5 %
Villages of Cypress
Creek Houston, TX 384 2001 80 % 1,181 95.1 %
Wesley Village Charlotte, NC 301 2010 100 % 1,373 96.0 %
Total/Average 11,584 $ 1,318 (4) 95.8 %
(1)Represents date of last significant renovation or year built if there were no
renovations.
(2) Represents the average effective monthly rent per occupied unit for the three
months ended
(3) Percent occupied is calculated as (i) the number of units occupied as of
percentage.
(4) The average effective monthly rent including sold properties was
the three months ended March 31, 2021 .
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The following is a summary of our preferred equity, mezzanine loan and ground
lease investments as of
Total Actual/ Actual/
Estimated Estimated Actual/ Pro
Construction Construction Actual/ Estimated Estimated Forma
Actual/ Planned Cost Cost to Date Cost Per Initial Construction AverageMultifamily Community Name Location Number of Units (in millions) (in millions) Unit Occupancy Completion Rent (1) Lease-up Investments (2) Motif Fort Lauderdale, FL 385 $ 138.4$ 133.3 $ 359,481 1Q 2020 2Q 2020 $ 2,352 Total lease-up units 385 Development Investments (2) Zoey Austin, TX 307 59.5 37.1 193,811 1Q 2022 2Q 2022 1,762 Reunion Apartments Orlando, FL 280 47.6 31.2 170,000 1Q 2022 3Q 2022 1,366 Avondale Hills Decatur, GA 240 51.8 16.1 215,833 1Q 2023 1Q 2023 1,538 TheHartley at Blue Hill, formerly The Park at Chapel Hill Chapel Hill, NC 414 99.2 42.1 239,614 4Q 2021 1Q 2023 1,599 Encore Chandler Chandler, AZ 208 47.7 7.3 229,327 2Q 2023 3Q 2023 1,457 Total development units 1,449 Multifamily Community Name Location Number of Units Average Rent (1) Operating Investments (2) Alexan CityCentre Houston, TX 340 1,525 Belmont Crossing Smyrna, GA 192 863 Domain at The One Forty Garland, TX 299 1,290 Georgetown Crossing Savannah, GA 168 993 Hunter's Pointe Pensacola, FL 204 983 Mira Vista Austin, TX 200 1,087 Park on the Square Pensacola, FL 240 1,140 Sierra Terrace Atlanta, GA 135 1,278 Sierra Village Atlanta, GA 154 1,224 The Commons Jacksonville, FL 328 902 The Riley Richardson, TX 262 1,430 Thornton Flats Austin, TX 104 1,499 Vickers Historic Roswell Roswell, GA 79 3,134 Water's Edge Pensacola, FL 184 1,141 Wayford at Concord Concord, NC 150 1,707 Total operating units 3,039 Total 4,873 $ 1,432
(1) For lease-up and development investments, represents the average pro forma
effective monthly rent per occupied unit for all expected occupied units upon
stabilization. For operating investments, represents the average effective
monthly rent per occupied unit.
(2) Properties in which the Company has a mezzanine loan, preferred equity or
ground lease investment. Operating investments represent stabilized operating
properties. Refer to Note 5, Note 6 and Note 13 in our consolidated financial
statements for further information.
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Three Months Ended
Revenue
Rental and other property revenues increased$0.7 million , or 1%, to$51.1 million for the three months endedMarch 31, 2021 as compared to$50.4 million for the same prior year period. This was due to a$6.0 million increase from the full period impact of six properties acquired in 2020, a$0.8 million increase from same store properties, and a$0.4 million increase from non-same store properties, partially offset by a$6.5 million decrease driven by the sales of three properties in 2021 and the full period impact of four properties sold in 2020. Interest income from mezzanine loan and ground lease investments decreased$1.2 million , or 20%, to$4.7 million for the three months endedMarch 31, 2021 as compared to$5.9 million for the same prior year period due to the sales of two underlying properties in 2020, partially offset by increases in the average balance of mezzanine loans outstanding.
Expenses
Property operating expenses increased$0.6 million , or 3%, to$19.9 million for the three months endedMarch 31, 2021 as compared to$19.3 million for the same prior year period. This was primarily due to a$2.4 million increase from the acquisition of properties in 2020, a$0.6 million increase from same store properties, and a$0.1 million increase from non-same store properties, partially offset by a$2.5 million decrease from sold properties. Property NOI margins decreased to 61.0% of total revenues for the three months endedMarch 31, 2021 from 61.7% in the prior year quarter. Property NOI margins are computed as total rental and other property revenues less property operating expenses, divided by total rental and other property revenues. Property management fees expense remained relatively flat at$1.3 million for the three months endedMarch 31, 2021 as compared to the same prior year period. Property management fees incurred are based on property level revenues.
General and administrative expenses amounted to
Acquisition and pursuit costs amounted to$0.01 million for the three months endedMarch 31, 2021 as compared to$1.3 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$1.0 million of the total costs related to one abandoned deal. 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 three months endedMarch 31, 2021 . The 2021 expense related to freeze damages at eight properties inTexas . No weather-related losses were recorded in 2020. Depreciation and amortization expenses were$20.3 million for the three months endedMarch 31, 2021 as compared to$20.9 million for the same prior year period. This was due to a$2.2 million decrease from sold properties, a$0.8 million decrease from same store properties, and a$0.8 million decrease from non-same store properties, partially offset by a$3.2 million increase from the acquisition of properties in 2020.
Other Income and Expense
Other income and expense amounted to income of$53.9 million for the three months endedMarch 31, 2021 compared to expense of$12.2 million for the same prior year period. This was primarily due to an increase in gains on sale of real estate investments of$68.7 million and a net decrease in interest expense of$1.1 million , partially offset by a loss on early extinguishment of debt
of$3.0 million . 41 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, 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 endedMarch 31, 2021 and 2020, the same store properties included properties owned atJanuary 1, 2020 . Our same store properties for the three months endedMarch 31, 2021 and 2020 consisted of 26 properties, representing 9,116 units. The following table presents the same store and non-same store results from operations for the three months endedMarch 31, 2021 and 2020 (dollars in thousands): Three Months Ended March 31, Change 2021 2020 $ % Property Revenues Same Store$ 38,798 $ 38,028 $ 770 2.0 % Non-Same Store 12,283 12,325 (42) -0.3 % Total property revenues 51,081 50,353 728 1.4 % Property Expenses Same Store 14,837 14,209 628 4.4 % Non-Same Store 5,095 5,090 5 0.1 % Total property expenses 19,932 19,299 633 3.3 % Same Store NOI 23,961 23,819 142 0.6 % Non-Same Store NOI 7,188 7,235 (47) -0.6 % Total NOI (1)$ 31,149 $ 31,054 $ 95 0.3 %
(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 endedMarch 31, 2021 increased 0.6%, or$0.1 million , compared to the 2020 period. Same store property revenues increased 2.0%, or$0.8 million , as compared to the 2020 period, primarily attributable to a 120-basis point increase in occupancy and a 1.0% increase in average rental rates; of our twenty-six same store properties, twenty-one recognized increases in occupancy and eighteen recognized rental rate increases during the period. In addition, resident fees, such as early termination, pet, and administrative fees, increased$0.2 million . 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 endedMarch 31, 2021 increased 4.4%, or$0.6 million , compared to the 2020 period. The increase was primarily due to non-controllable expenses: real estate taxes increased$0.26 million due to municipality tax increases and insurance increased$0.16 million due to industrywide multifamily price increases. The remaining increase was due to a$0.13 million increase in administrative expenses and$0.06 million increase in repairs and maintenance.
Property revenues, property expenses, and property NOI for our non-same store
properties were essentially flat, recognizing a
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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.
However, NOI should only be used as a supplemental measure of our financial
performance. The following table reflects net income 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):
Three Months Ended
March 31,
2021 2020
Net income (loss) attributable to common stockholders
10,160 (5,822)
Net income (loss) attributable to common stockholders and unit holders
33,741 (22,315)
Add common stockholders andOperating Partnership Units pro-rata share of: Real estate depreciation and amortization 19,405
19,900
Non-real estate depreciation and amortization 122
120
Non-cash interest expense 604
845
Unrealized gain on derivatives (30)
(26)
Loss on extinguishment of debt and debt modification costs 2,564 - Provision for credit losses 542 - Property management fees 1,223 1,232
Acquisition and pursuit costs 11
1,269
Corporate operating expenses 6,570
6,296
Weather-related losses, net 360
-
Preferred dividends 14,617 13,547
Preferred stock accretion 7,022 3,925Less common stockholders and Operating Partnership Units pro-rata share of: Other income, net
51 40
Preferred returns on unconsolidated real estate joint ventures 2,287
2,574
Interest income from mezzanine loan and ground lease investments 4,721
5,888
Gain on sale of real estate investments 62,427
110
Pro-rata share of properties' income 17,265
16,181
Add:
Noncontrolling interest pro-rata share of partially owned property income 637 803 Total property income 17,902 16,984 Add: Interest expense 13,247 14,070 Net operating income 31,149 31,054 Less:
Non-same store net operating income 7,188
7,235
Same store net operating income$ 23,961 $
23,819
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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, and (e) Class A common stock, Series C Preferred Stock and Series D Preferred Stock repurchases under our stock repurchase program. 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 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 . We believe we currently have a stable financial condition; as ofMarch 31, 2021 , we collected 97% of rents from our multifamily properties for the three months endedMarch 31, 2021 . As ofApril 30, 2021 , we collected 98% of April rents from our multifamily properties. In prior quarters, we had provided rent deferral payment plans as a result of hardships certain tenants experienced due to the impact of COVID-19; for the quarter endedMarch 31, 2021 , the Company did not provide any 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 95.8% and 96.3% as ofMarch 31, 2021 andApril 30, 2021 , 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 COVID-19 impact. As we did in 2020 and to date in 2021, 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 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. In general, we believe our available cash balances, the proceeds from our continuous Series T Preferred Offering, the Amended Senior and Second Amended Junior Credit Facilities, the Fannie Facility, 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 with the proceeds from our continuous 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
our continuous Series T Preferred Offering, 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 ourOperating Partnership , or OP Units.
Only 5.6%, or
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In October 2020 , our Board authorized new stock repurchase plans for the
repurchase, from time to time, of up to an aggregate of $75 million in
outstanding shares of our Class A common stock, Series A Preferred Stock, Series
C Preferred Stock and/or Series D Preferred Stock. On February 9, 2021 , our
Board authorized the modification of the stock repurchase plans to increase the
maximum repurchase amount from an aggregate of $75 million in shares to $150
million in shares. The repurchase plans will terminate upon the earliest to
occur of certain specified events as set forth therein. During the three months
ended March 31, 2021 , we purchased 3,557,562 shares of Class A common stock for
a total purchase price of approximately $40.7 million . As of March 31, 2021 , the
value of shares that may yet be purchased under the repurchase plans is $90.3
million .
At the current time, we do not anticipate the need to establish any material
contingency reserves related to the COVID-19 pandemic, but we continue to assess
along with our network of business partners the possible need for such
contingencies, whether at the corporate or property level.
As equity capital market conditions permit, we may supplement our capital for
short-term liquidity needs with proceeds of our Class A ATM Offering and
potential offerings of common and preferred stock through underwritten
offerings, as well as issuance of units of limited partnership interest in our
Operating Partnership , or OP Units. Given the significant volatility in the
trading price of our Class A common stock and REIT equities generally associated
with the COVID-19 pandemic and our otherwise stable financial condition and
liquidity position, we cannot provide assurances that these offerings are a
likely source of capital to meet short-term liquidity needs.
Our primary long-term liquidity requirements relate to (a) costs for additional
apartment community investments, (b) repayment of long-term debt and our credit
facilities, (c) capital expenditures, (d) cash redemption requirements related
to our Series B Preferred Stock, Series C Preferred Stock and Series T Preferred
Stock, and (e) Class A common stock repurchases under our stock repurchase
plans.
We intend to finance our long-term liquidity requirements with net proceeds of
additional issuances of common and preferred stock, including our continuous
Series T Preferred Offering, 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 2020 and to date in 2021, 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 Amended
Senior and Second Amended 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 Amended Senior and Second Amended
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. At March 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.
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 to maintain our REIT qualification and Investment Company
Act exemption.
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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
through March 31, 2021 have been paid from cash flow from operations, proceeds
from our continuous preferred stock offerings, including our Series T Preferred
Stock, sales of assets, proceeds from underwritten securities offerings, 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 generally 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.
Off-Balance Sheet Arrangements
As ofMarch 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 ofMarch 31, 2021 , we own interests in ten joint ventures that are accounted for as held to maturity debt securities or loans.
Cash Flows from Operating Activities
As ofMarch 31, 2021 , we owned indirect equity interests in fifty-five real estate properties, consisting of thirty-four consolidated operating properties and twenty-one through preferred equity, mezzanine loan or ground lease investments. During the three months endedMarch 31, 2021 , net cash provided by operating activities was$17.5 million after net income of$61.1 million was adjusted for the following:
• non-cash items of
• an increase in accounts receivable, prepaids and other assets of
and
• an increase in notes and accrued interest receivable of
by:
• distributions and preferred returns from unconsolidated joint ventures of
million;
• an increase in loss on extinguishment of debt and debt modification costs of
$3.0 million ; and
• an increase in accounts payable and other accrued liabilities of
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Cash Flows from Investing Activities
During the three months ended
•
•
estate joint ventures, offset by:
•
ventures, notes receivable and a ground lease; and
•
Cash Flows from Financing Activities
During the three months ended
•
•
•
•
•
•
•
•
•
• partially offset by net proceeds of
Series T Preferred Stock;
• net proceeds of
• net borrowings of
• net proceeds of
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Capital Expenditures
The following table summarizes our total capital expenditures for the three
months ended
Three Months Ended
March 31,
2021 2020
Redevelopment/renovations $ 2,879 $ 4,400
Routine capital expenditures 594 747
Normally recurring capital expenditures 725 770
Total capital expenditures $ 4,198 $ 5,917
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.
CFFO makes certain adjustments to FFO, removing the effect of items that do not
reflect ongoing property operations such as acquisition expenses, non-cash
interest expense, unrealized gains or losses on derivatives, losses on
extinguishment of debt and debt modification costs (includes prepayment
penalties incurred and the write-off of unamortized deferred financing costs and
fair market value adjustments of assumed debt), one-time weather-related costs,
stock compensation expense and preferred stock accretion. 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.
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Neither FFO nor CFFO is equivalent to net income (loss), including net income (loss) attributable to common stockholders, or cash generated from operating activities determined in accordance with GAAP. Furthermore, FFO and CFFO do not represent amounts available for management's discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments or uncertainties. Neither FFO nor CFFO should be considered as an alternative to net income (loss), including net income (loss) attributable to common stockholders, as an indicator of our operating performance or as an alternative to cash flow from operating activities as a measure of our liquidity. We have acquired four operating properties, made six property investments through preferred equity or mezzanine loan investments, sold seven operating properties and received our full mezzanine loan or preferred equity in four investments subsequent toMarch 31, 2020 . We paid a quarterly common stock dividend of$0.1625 during the three months endedMarch 31, 2021 , a 102% payout on a CFFO basis. The results presented in the table below are not directly comparable and should not be considered an indication of our future operating performance.
The table below presents our calculation of FFO and CFFO for the three months
ended
Three Months Ended
March 31,
2021 2020
Net income (loss) attributable to common stockholders
10,160 (5,822)
Net income (loss) attributable to common stockholders and unit holders 33,741
(22,315)
Common stockholders and Operating Partnership Units pro-rata share of: Real estate depreciation and amortization
19,405 19,900
Provision for credit losses 542 - Gain on sale of real estate investments (62,427)
(110)
FFO Attributable to Common Stockholders and Unit Holders (8,739)
(2,525)
Common stockholders and Operating Partnership Units pro-rata share of: Acquisition and pursuit costs
11 1,269
Non-cash interest expense 604
845
Unrealized gain on derivatives (30)
(26)
Loss on extinguishment of debt and debt modification costs 2,564 - Weather-related losses, net 360 - Non-real estate depreciation and amortization 122
120
Other expense (income), net 98 (40)
Non-cash equity compensation 3,311 3,547
Preferred stock accretion 7,022 3,925
CFFO Attributable to Common Stockholders and Unit Holders
Per Share and Unit Information: FFO Attributable to Common Stockholders and Unit Holders - diluted
$ (0.26)
$ 0.16 $ 0.22 Weighted average common shares and units outstanding - diluted 33,319,020 32,668,294
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 ofMarch 31, 2021 which consisted of mortgage notes secured by our properties. AtMarch 31, 2021 , our estimated future required payments on these obligations were as follows
(amounts in thousands):
Remainder of
Total 2021 2022-2023 2024-2025 ThereafterMortgages Payable (Principal)$ 1,465,355 $ 81,986 $ 139,844 $ 570,682 $ 672,843 Estimated Interest Payments on Mortgages Payable 288,807 38,208 98,300 76,493 75,806 Total$ 1,754,162 $ 120,194 $ 238,144 $ 647,175 $ 748,649 Estimated interest payments are based on the stated rates for mortgage notes payable assuming the interest rate in effect for the most recent quarter remains in effect through the respective maturity dates. 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 ClassC Common Stock December 11, 2020 December 24, 2020$ 0.162500 January 5, 2021 March 12, 2021 March 25, 2021$ 0.162500 April 5, 2021 Series A Preferred Stock December 11, 2020 December 24, 2020$ 0.515625 January 5, 2021 January 27, 2021 (1) February 26, 2021$ 0.320833 February 26, 2021 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 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 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 Series 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
(1) The dividend was paid on the date indicated to stockholders in conjunction
with the redemption of shares of Series A Preferred Stock.
(2) Shares of newly issued Series T Preferred Stock that are held only a portion
of the applicable monthly dividend period will receive a prorated dividend
based on the actual number of days in the applicable dividend period during
which each such share of Series T Preferred Stock was outstanding.
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 have a dividend reinvestment plan that allows for participating stockholders
to have their Class A common stock dividend distributions automatically
reinvested in additional shares of Class A common stock based on the average
price of the Class A common stock on the investment date. We plan to issue
shares of Class A common stock to cover shares required for investment.
We also have a dividend reinvestment plan that allows 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. We plan to issue shares of Series T Preferred Stock
to cover shares required for investment.
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Our Board will determine the amount of dividends to be paid to our stockholders. The Board's determination 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. Distributions paid were funded from cash provided by operating activities except with respect to$3.9 million for the three months endedMarch 31, 2021 which was funded from sales of real estate, borrowings, and/or proceeds from our equity offerings. Three Months EndedMarch 31, 2021 2020 (in thousands)
Cash provided by operating activities$ 17,540
Cash distributions to preferred stockholders$ (15,620) $ (13,323) Cash distributions to common stockholders (3,642)
(3,828)
Cash distributions to noncontrolling interests, excluding$7.7 million from the sale of real estate investments in 2021 (2,152) (1,790) Total distributions (21,414) (18,941) (Shortfall) excess$ (3,874) $ 175 Proceeds from sale of real estate investments, net of noncontrolling distributions of$7.7 million in 2021$ 75,794 $ 253 Proceeds from sale and redemption of our preferred equity investment in unconsolidated real estate joint ventures$ 15,233
$ 35,542
Significant Accounting Policies and Critical Accounting Estimates
Our significant accounting policies and critical accounting estimates are
disclosed in our Annual Report on Form 10-K for the year ended
Subsequent Events
Other than the items disclosed in Note 14 "Subsequent Events" to our interim Consolidated Financial Statements for the period endedMarch 31, 2021 , no material events have occurred that required recognition or disclosure in these financial statements. Refer to Note 14 of our interim Consolidated Financial Statements for discussion.
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