American Residential Properties, Inc. Reports First Quarter 2015 Financial Results

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May 6, 2015 5:08 PM EDT

SCOTTSDALE, Ariz., May 6, 2015 /PRNewswire/ -- American Residential Properties, Inc. (NYSE: ARPI) (the "Company") today reported its results for the quarter ended March 31, 2015.

First Quarter 2015 Highlights

  • Increased the leased rate on the total portfolio to 89%, up from 81% as of year-end.
  • Reached a leased rate of 93% on stabilized properties, up from 92% as of year-end.
  • Increased total leased properties by 867 homes, producing a 12% increase in the number of leased properties compared to the prior quarter.
  • Achieved rent increases averaging 3.8% on renewals with an overall resident retention rate of 72%.
  • Increased rents on new leases by an average of 4.0% nationwide.
  • Closed on prior commitments to acquire an additional 149 single-family homes, bringing the total portfolio of homes owned to 9,038.
  • Owned $19 million in short-term private mortgage loans with a weighted-average interest rate of 11.95%.
  • Increased total revenue by 9% to $27.5 million compared to the prior quarter.
  • Achieved Core FFO attributable to common stockholders of $4.5 million, or $0.14 per diluted share.
  • Produced FFO attributable to common stockholders of $3.6 million, or $0.11 per diluted share.

"We are pleased to report strong financial and operating results for the first quarter of 2015. Due to solid execution of our strategic plan, we delivered revenue of $27.5 million, an increase of 9% over the prior quarter, and core FFO attributable to common stockholders of $4.5 million, or $0.14 per diluted share, an increase of 60% over the prior quarter," said Stephen G. Schmitz, Chairman and Chief Executive Officer of American Residential Properties.

"In line with our strategy, we continued to focus our efforts on driving operational excellence and efficiencies across our portfolio and operating platform in the first quarter. These efforts contributed to an occupancy rate of 89% on the total portfolio, an 800 basis point increase over the prior quarter, and an occupancy rate of 93% on stabilized properties. We also redeployed some of our most talented acquisitions people to leasing and their top priority is achieving a level of customer satisfaction that translates into improved occupancy, revenue growth through rental increases, and continued strong retention. We are excited about the progress we are making in executing our strategy and expect to deliver continued strong performance in the coming quarters," concluded Mr. Schmitz.

Financial Results

Total Revenue

Total revenue for the quarter ended March 31, 2015 increased $2.3 million to $27.5 million, compared to $25.2 million for the quarter ended December 31, 2014, and increased $10.0 million compared to $17.5 million for the quarter ended March 31, 2014. The increase in total revenue from the prior quarter is primarily attributable to higher rental income generated from the leases of an additional 867 homes.

Net Loss Attributable to Common Stockholders

Net loss attributable to common stockholders for the quarter ended March 31, 2015 decreased $1.6 million to $(10.9) million, or $(0.34) per diluted share, compared to $(12.5) million, or $(0.39) per diluted share, for the quarter ended December 31, 2014, and increased $3.2 million compared to $(7.7) million, or $(0.24) per diluted share, for the quarter ended March 31, 2014.

FFO and Core FFO Attributable to Common Stockholders

Funds from operations ("FFO") attributable to common stockholders for the quarter ended March 31, 2015 increased $2.5 million to $3.6 million, or $0.11 per diluted share, compared to $1.2 million, or $0.04 per diluted share, for the quarter ended December 31, 2014, and increased $2.2 million compared to $1.5 million, or $0.05 per diluted share, for the quarter ended March 31, 2014. 

Core funds from operations ("Core FFO") attributable to common stockholders for the quarter ended March 31, 2015 increased $1.7 million to $4.5 million, or $0.14 per diluted share, compared to $2.8 million, or $0.09 per diluted share, for the quarter ended December 31, 2014, and increased $2.3 million compared to $2.2 million, or $0.07 per diluted share, for the quarter ended March 31, 2014.

Portfolio Highlights

Real Estate Acquisitions

From January 1, 2015 to March 31, 2015, the Company acquired 149 single-family homes, of which 89 are in Tennessee, 28 are in Georgia, 26 are in Texas, 4 are in North Carolina and 2 are in Florida and incurred renovation costs on the Company's acquired homes and existing portfolio, for a total capital investment of approximately $39 million. During the quarter, four properties were sold in Florida. As of March 31, 2015, the Company had no homes under contract.

Portfolio

As of March 31, 2015, the Company owned 9,038 single-family homes in Arizona, California, Colorado, Florida, Georgia, Illinois, Indiana, Nevada, North Carolina, Ohio, South Carolina, Tennessee and Texas for a total investment of approximately $1.35 billion. As of March 31, 2015, approximately 89% of the Company's portfolio was leased.

Operating Metrics

The following table summarizes the Company's portfolio and operating metrics:

March 31, 2015

December 31, 2014

September30, 2014

June 30, 2014

March 31, 2014

Total portfolio of single-family homes

Self-managed homes

8,444

8,299

7,613

6,595

6,152

Self-managed % leased

88.2

%

79.3

%

80.1

%

87.6

%

79.5

%

Local operator homes

594

594

610

610

610

Local operator % leased

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

Total Homes

9,038

8,893

8,223

7,205

6,762

Total % Leased

89.0

%

80.7

%

81.6

%

88.6

%

81.4

%

Portfolio of stabilized single-family homes (1)

Self-managed homes

8,059

7,247

6,572

6,099

5,277

Self-managed % leased

92.4

%

90.8

%

92.8

%

94.7

%

92.7

%

Local operator homes

594

594

610

610

610

Local operator % leased

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

Total Homes

8,653

7,841

7,182

6,709

5,887

Total % Leased

92.9

%

91.5

%

93.4

%

95.2

%

93.4

%

______________

(1) Properties are considered stabilized when renovations have been completed and the properties have been leased or available for rent for a period of greater than 90 days. Properties with in-place leases at the date of acquisition are also considered stabilized even though these properties have not been renovated by us and may require future renovations to meet our standards.

 

Conference Call

The Company will host a conference call commencing at 11:00 a.m. Eastern Daylight Time on Thursday, May 7, 2015, to discuss its financial results for the quarter ended March 31, 2015 and to provide a Company update. To participate in the event by telephone, please dial (800) 446-2782 approximately ten minutes prior to the start time (to allow time for registration) and use conference ID 39575337. International callers should dial (847) 413-3235 and enter the same conference ID number.

You may listen to the teleconference via live webcast on the Internet on the Company's website at www.americanresidentialproperties.com in the Investor Relations section under the Calendar of Events link.

A replay of the conference call will be available for two weeks, beginning May 7, 2015 at 1:30 p.m. Eastern Daylight Time, until May 21, 2015 at 11:59 p.m. Eastern Daylight Time. To access the replay, dial (888) 843-7419 and use conference ID 35088377#. International callers should dial (630) 652-3042 and enter the same conference ID number.

Non-GAAP Financial Measures

FFO and Core FFO

FFO is a widely recognized measure of real estate investment trust ("REIT") performance. The Company calculates FFO as defined by the National Association of Real Estate Investment Trusts ("NAREIT"). FFO represents net income (loss) (as computed in accordance with U.S. generally accepted accounting principles ("GAAP)), excluding gains from dispositions of property, plus real estate-related depreciation and amortization (including capitalized leasing costs).

The Company also presents Core FFO, which is FFO excluding acquisition costs and items that are non-recurring or not related to the Company's core business activities. FFO and Core FFO are supplemental non-GAAP financial measures. Management uses FFO and Core FFO as supplemental performance measures because FFO and Core FFO account for trends in occupancy rates, rental rates and operating costs. The Company also believes that, as widely recognized measures of the performance of REITs, FFO and Core FFO will be used by investors as a basis to compare the Company's operating performance with that of other REITs.

However, because FFO and Core FFO exclude depreciation and amortization and capture neither the changes in the value of the Company's properties that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of the Company's properties, all of which have real economic effects and could materially impact the Company's results of operations, the utility of FFO and Core FFO as measures of the Company's performance is limited. Other equity REITs may not calculate FFO in accordance with the NAREIT definition and, accordingly, the Company's FFO and Core FFO may not be comparable to those of other REITs. As a result, FFO and Core FFO should be considered only as supplements to net income (loss) as a measure of the Company's performance. FFO and Core FFO should not be used as measures of the Company's liquidity, nor is either indicative of funds available to fund the Company's cash needs, including the Company's ability to pay dividends or make distributions. FFO and Core FFO also should not be used as supplements to or substitutes for net income (loss) or net cash flows from operating activities (as computed in accordance with GAAP).

About American Residential Properties, Inc.

American Residential Properties, Inc. is an internally managed real estate company, organized as a REIT for federal income tax purposes, that acquires, owns and manages single-family homes as rental properties in select communities nationwide. The Company's primary business strategy is to acquire, restore, lease and manage single-family homes as well-maintained investment properties to generate attractive, risk-adjusted returns over the long-term. With a vertically integrated real estate acquisition and management platform incorporating disciplined acquisition criteria, extensive research, seasoned personnel and comprehensive operations, the Company is well-positioned to execute its strategy.

Additional information about American Residential Properties, Inc. can be found on the Company's website at www.americanresidentialproperties.com.

Forward-Looking Statements

This press release contains statements that are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, pursuant to the safe harbor provisions of the Private Securities Reform Act of 1995. Forward-looking statements are generally identifiable by use of forward-looking terminology such as "may," "will," "should," "potential," "intend," "expect," "seek," "anticipate," "estimate," "approximately," "believe," "could," "project," "predict," "forecast," "continue," "plan" or other similar words or expressions. Forward-looking statements are based on certain assumptions and can include future expectations, future plans and strategies, financial and operating projections or other forward-looking information. Examples of forward-looking statements include descriptions of performance, customer satisfaction, revenue growth and retention. These forward-looking statements are subject to various risks and uncertainties, not all of which are known to the Company and many of which are beyond the Company's control, which could cause actual results to differ materially from such statements. These risks and uncertainties include, but are not limited to, the state of the U.S. economy, supply and demand in the single-family rental industry and other factors as are described in greater detail in the Company's filings with the Securities and Exchange Commission.

All information in this press release is current as of the date of this release. The Company undertakes no obligation to update the statements in this release to conform the statements to actual results or changes in the Company's expectations.

AMERICAN RESIDENTIAL PROPERTIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except share amounts)

March 31, 2015

(unaudited)

December 31,

2014

Assets

Investment in real estate:

Land

$

254,557

$

249,151

Building and improvements

1,075,715

1,042,954

Furniture, fixtures and equipment

10,136

9,508

1,340,408

1,301,613

Less: accumulated depreciation

(71,316)

(58,010)

Investment in real estate, net

1,269,092

1,243,603

Mortgage financings

19,458

21,097

Cash and cash equivalents

23,144

21,270

Restricted cash

15,381

11,473

Acquisition deposits

4

2,561

Rents and other receivables, net

4,406

4,583

Deferred leasing costs and lease intangibles, net

3,454

3,391

Deferred financing costs, net

13,101

13,037

Investment in unconsolidated ventures

25,427

25,691

Goodwill

3,500

3,500

Other, net

10,196

10,567

Total assets

$

1,387,163

$

1,360,773

Liabilities and Equity

Liabilities:

Revolving credit facility

$

350,000

$

311,000

Exchangeable senior notes, net

102,898

102,188

Securitization loan, net

340,757

340,675

Accounts payable and accrued expenses

19,104

23,507

Security deposits

9,008

7,919

Prepaid rent

3,288

2,919

Total liabilities

825,055

788,208

Equity:

American Residential Properties, Inc. stockholders' equity:

Preferred stock, $0.01 par value, 100,000,000 shares authorized; no shares issued and outstanding

—

—

Common stock, $0.01 par value, 500,000,000 shares authorized; 32,195,280 shares issued and outstanding at March 31, 2015 and December 31, 2014

322

322

Additional paid-in capital

628,758

628,662

Accumulated other comprehensive loss

(139)

(96)

Accumulated deficit

(79,003)

(68,101)

Total American Residential Properties, Inc. stockholders' equity

549,938

560,787

Non-controlling interests

12,170

11,778

Total equity

562,108

572,565

Total liabilities and equity

$

1,387,163

$

1,360,773

 

 

AMERICAN RESIDENTIAL PROPERTIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands, except share and per-share amounts)

(unaudited)

Three Months Ended March 31,

2015

2014

Revenue:

   Self-managed rental revenue

$

25,289

$

14,562

   Local operator rental revenue

1,353

1,368

   Management services (related party)

68

113

   Interest and other

782

1,411

Total revenue

27,492

17,454

Expenses:

   Property operating and maintenance

6,207

4,146

   Real estate taxes

5,009

3,111

   Homeowners' association fees

658

460

   Acquisition

57

67

   Depreciation and amortization

15,145

9,464

   General, administrative and other

4,220

3,720

   Interest

7,316

4,230

Total expenses

38,612

25,198

Loss from continuing operations before equity in net income (loss) of unconsolidated ventures

(11,120)

(7,744)

Equity in net income (loss) of unconsolidated ventures

10

(50)

Net loss

(11,110)

(7,794)

Net loss attributable to non-controlling interests

208

125

Net loss attributable to common stockholders

$

(10,902)

$

(7,669)

Basic and diluted loss per share:

   Net loss attributable to common stockholders

$

(0.34)

$

(0.24)

Weighted-average number of shares of common stock outstanding

32,160,983

32,130,733

 

 

AMERICAN RESIDENTIAL PROPERTIES, INC.

Reconciliation of Net Loss to Funds from Operations (FFO)

(amounts in thousands, except share and per-share amounts)

(unaudited)

Three Months Ended March 31,

2015

2014

Net loss

$

(11,110)

$

(7,794)

Add: Depreciation and amortization of real estate assets

14,861

9,292

Less: Gain on sale of real estate

(40)

—

FFO

$

3,711

$

1,498

FFO attributable to common stockholders(1)

$

3,642

$

1,474

FFO per share of common stock

Basic

$

0.11

$

0.05

Diluted(2)

$

0.11

$

0.05

Weighted-average number of shares of common stock outstanding:

Basic

32,160,983

32,130,733

Diluted(2)

32,850,721

32,755,110

______________

(1) Based on a weighted-average interest in the Company's operating partnership of approximately 98.13% and 98.39%, for the three months ended March 31, 2015 and 2014, respectively.

(2) Assumes the issuance of potentially issuable shares unless the result would be anti-dilutive. Potentially issuable shares include operating partnership units, vested LTIP unit interests in the Company's operating partnership ("LTIP units"), unvested LTIP units and unvested restricted common stock.

 

 

AMERICAN RESIDENTIAL PROPERTIES, INC.

Reconciliation of Funds From Operations (FFO) to Core Funds From Operations (Core FFO)

(amounts in thousands, except share and per-share amounts)

(unaudited)

Three Months Ended March 31,

2015

2014

FFO

$

3,711

$

1,498

Add: Acquisition expense(1)

57

67

Add: Non-cash interest expense related to amortization of discount on debt

791

664

Core FFO

$

4,559

$

2,229

Core FFO attributable to common stockholders(2)

$

4,474

$

2,193

Core FFO per share of common stock

Basic

$

0.14

$

0.07

Diluted(3)

$

0.14

$

0.07

Weighted-average number of shares of common stock outstanding:

Basic

32,160,983

32,130,733

Diluted(3)

32,850,721

32,755,110

______________

(1) Includes acquisition expenses primarily related to costs incurred on acquired properties subject to an existing lease and accounted for as a business combination, in accordance with GAAP.

(2) Based on a weighted-average interest in the Company's operating partnership of approximately 98.13% and 98.39%, for the three months ended March 31, 2015 and 2014, respectively.

(3) Assumes the issuance of potentially issuable shares unless the result would be anti-dilutive. Potentially issuable shares include operating partnership units, vested LTIP units, unvested LTIP units and unvested restricted common stock.

 

 

AMERICAN RESIDENTIAL PROPERTIES, INC.

Total Portfolio of Single-Family Homes—Summary Statistics

(unaudited)

The following table presents summary statistics on the Company's total portfolio of single-family homes, including the portfolio of self-managed homes and the portfolio of local operator homes, by MSA and metro division as of March 31, 2015.

Leased Homes

MSA/Metro Division

 Numberof Homes

 Average Purchase Price PerHome(1)

 Average Capital Expenditures Per Home(2)

 AverageInvestment Per Home(3)

 AggregateInvestment (thousands)(4)

 Percentage Leased(5)

 Average Age (years)

 AverageSize

(square feet)

 Average Monthly Rent(6)

Annual Average Rent as aPercentage ofAverage Investment(7)

Phoenix, AZ

1,380

$

138,109

$

9,349

$

147,458

$

203,492

97.5

%

17

1,713

$

1,044

8.5

%

Dallas-Fort Worth, TX

1,119

$

153,478

$

12,634

$

166,112

$

185,879

88.9

%

11

2,103

$

1,507

11.0

%

Houston, TX

1,106

$

141,260

$

7,981

$

149,241

$

165,061

90.2

%

7

1,934

$

1,419

11.4

%

Atlanta, GA

1,089

$

136,919

$

14,622

$

151,541

$

165,028

79.0

%

16

2,080

$

1,258

10.2

%

Nashville, TN

833

$

166,175

$

12,278

$

178,453

$

148,651

84.3

%

11

1,864

$

1,433

9.7

%

Florida

623

$

127,630

$

13,943

$

141,573

$

88,200

86.7

%

14

1,726

$

1,184

10.2

%

Other Texas

375

$

166,908

$

12,260

$

179,168

$

67,188

88.8

%

10

1,978

$

1,630

11.0

%

Charlotte, NC-SC

379

$

153,571

$

8,347

$

161,918

$

61,367

76.5

%

10

2,047

$

1,248

9.6

%

Inland Empire, CA

213

$

156,562

$

24,494

$

181,056

$

38,565

97.2

%

16

1,915

$

1,431

9.5

%

Raleigh, NC

241

$

145,303

$

8,564

$

153,867

$

37,082

82.6

%

9

1,746

$

1,233

9.8

%

Indianapolis, IN

455

$

65,441

$

10,675

$

76,116

$

34,633

91.0

%

50

1,351

$

802

12.5

%

Winston-Salem, NC

234

$

122,619

$

4,005

$

126,624

$

29,630

85.5

%

12

1,426

$

1,106

10.6

%

Other California

80

$

110,754

$

22,159

$

132,913

$

10,633

98.8

%

36

1,335

$

1,068

9.7

%

Las Vegas, NV

68

$

97,738

$

12,938

$

110,676

$

7,526

97.1

%

15

1,553

$

1,055

11.3

%

Other MSAs/Metro Divisions

249

$

140,949

$

8,280

$

149,229

$

37,158

87.6

%

10

1,639

$

1,248

10.2

%

Total/Weighted Average

Portfolio of Self-Managed Homes

8,444

$

140,199

$

11,399

$

151,598

$

1,280,093

88.2

%

15

1,855

$

1,272

10.2

%

Chicago, IL

511

$

130,705

$

66,790

100.0

%

55

1,406

$

794

7.3

%

Indianapolis, IN

83

$

47,302

$

3,926

100.0

%

59

1,160

$

354

9.0

%

Total/Weighted Average

Portfolio of Local Operator Homes

594

$

119,051

$

70,716

100.0

%

56

1,372

$

733

7.4

%

Total/Weighted Average

Total Portfolio

9,038

$

149,459

$

1,350,809

89.0

%

17

1,823

$

1,232

______________

(1) Average purchase price includes acquisition costs.

(2) Represents average capital expenditures per home as of March 31, 2015. Does not include additional expected or future capital expenditures.

(3) For self-managed homes, represents average purchase price plus average capital expenditures. For homes leased to our local operators, represents purchase price paid by us for the portfolio divided by the number of homes in the portfolio and does not include past, expected or budgeted general and administrative expenses associated with ongoing monitoring activities of our investment. The local operator is obligated to pay for all taxes, insurance, other expenses and capital expenditures required for the management, operation and maintenance of the properties. Accordingly, absent a default by the local operator under a long-term lease agreement with us, we expect to incur no expenses related to properties leased to our local operators, other than general and administrative expenses associated with ongoing monitoring activities of our investment.

(4) Represents purchase price including acquisition costs and purchase price allocated to lease intangibles and acquisition costs expensed, if any, as incurred for homes acquired with an existing lease or homes acquired in portfolios comprised of properties substantially leased, and recorded as a business combination.

(5) We classify homes leased to our local operators as 100% leased, because each local operator is obligated to pay us 100% of the base rent specified in the applicable lease irrespective of whether or not the homes are occupied by residential sub-tenants. This does not mean that 100% of the homes leased to local operators are occupied by residential sub-tenants. If a local operator is unable to lease a material number of the homes it leases from us to residential sub-tenants, it may adversely affect the operator's ability to pay rent to us under the lease.

(6) For self-managed homes, represents the average monthly rent per leased home. For homes leased to our local operators, represents the initial annual base rent payable to us by the local operator pursuant to the portfolio lease divided by 12 and then divided by the number of homes included in the lease. Average monthly rent for leased homes may not be indicative of average rents we may achieve on our vacant homes.

(7) For self-managed homes, represents annualized average monthly rent per leased home as a percentage of our average investment (average purchase price per home plus average capital expenditures) per leased home. Does not include a provision for payment of ongoing property expenses. Accordingly, it should not be interpreted as a measure of profitability, and its utility in evaluating the Company's business is limited. Average annual rent for leased homes may not be indicative of average rents we may achieve on our vacant homes.

 

 

AMERICAN RESIDENTIAL PROPERTIES, INC.

Total Portfolio of Stabilized(1) Single-Family Homes—Summary Statistics

(unaudited)

MSA/Metro Division

 Number of Homes

 Average Investment Per Home (2)

 Homes Leased

 Homes Vacant (3)

 Percentage Leased

Phoenix, AZ

1,379

$

147,506

1,345

34

97.5

%

Houston, TX

1,101

$

149,157

998

103

90.6

%

Dallas-Fort Worth, TX

1,074

$

165,461

995

79

92.6

%

Atlanta, GA

942

$

148,629

860

82

91.3

%

Nashville, TN

751

$

176,737

702

49

93.5

%

Florida

589

$

139,452

540

49

91.7

%

Indianapolis, IN

444

$

76,614

414

30

93.2

%

Other Texas

371

$

178,815

333

38

89.8

%

Charlotte, NC-SC

336

$

159,242

290

46

86.3

%

Winston-Salem, NC

234

$

126,625

200

34

85.5

%

Raleigh, NC

231

$

152,268

199

32

86.1

%

Inland Empire, CA

213

$

181,055

207

6

97.2

%

Other California

80

$

132,911

79

1

98.8

%

Las Vegas, NV

68

$

110,676

66

2

97.1

%

Other MSAs/Metro Divisions

246

$

149,069

218

28

88.6

%

Total/Weighted Average Self-Managed Portfolio

8,059

$

150,425

7,446

613

92.4

%

Chicago, IL

511

$

130,705

511

—

100.0

%

Indianapolis, IN

83

$

47,302

83

—

100.0

%

Total/Weighted Average Local Operator Portfolio

594

$

119,051

594

—

100.0

%

Total/Weighted Average Total Portfolio

8,653

$

148,271

8,040

613

92.9

%

______________

(1) Properties are considered stabilized when renovations have been completed and the properties have been leased or available for rent for a period of greater than 90 days. Properties with in-place leases at the date of acquisition are also considered stabilized even though these properties have not been renovated by us and may require future renovations to meet our standards.

(2) Represents average purchase price plus average capital expenditures.

(3) As of March 31, 2015, 548 homes were available for rent and 65 homes were undergoing renovation.

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/american-residential-properties-inc-reports-first-quarter-2015-financial-results-300079046.html

SOURCE American Residential Properties, Inc.


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