American Residential Properties, Inc. Reports First Quarter 2014 Financial Results

SCOTTSDALE, Ariz., May 12, 2014 /PRNewswire/ -- American Residential Properties, Inc. (NYSE: ARPI) (the "Company") reported today its results for the quarter ended March 31, 2014.

First Quarter 2014 Highlights

  • Exceeded $1 billion in total assets.
  • 32% increase in total revenue to $17.5 million compared to the prior quarter.
  • Invested $109 million to acquire 689 single-family homes. 
  • 15% increase in the aggregate investment in single-family homes.
  • 11% increase in the number of homes owned compared to the prior quarter, bringing total portfolio to 6,762.
  • 22% increase in the number of leased properties, or 974 properties, compared to the prior quarter.
  • Achieved an occupancy rate of 81% on the total portfolio and 89% on properties owned six months or longer.
  • Increased rents by an average of 2.7% on renewals.
  • Owned $36 million in short-term private mortgage loans with a weighted-average interest rate of 11.8%.
  • Core FFO attributable to common stockholders was $2.2 million, or $0.07 per diluted share.
  • FFO attributable to common stockholders was $1.5 million, or $0.05 per diluted share.

"We are off to a great start in 2014, and our first quarter results demonstrated strong execution on several fronts. We invested $109 million in 689 single-family homes, increasing our total portfolio 11% to 6,762 homes, and we still see a robust supply of high-quality homes. We remained extremely focused on leveraging our internalized operating platform to drive efficiencies by expanding our portfolio and building critical mass in our core markets," said Stephen G. Schmitz, Chairman and Chief Executive Officer of American Residential Properties, Inc. "Rental demand in our core markets and our resident-centric operating philosophy drove higher occupancy rates and strong leasing activity."

"We are making progress towards completing a securitization transaction, which will add lower-cost, medium-term debt to our balance sheet and reduce our cost of capital. This additional funding source coupled with our existing credit facility will give us the financial flexibility to support robust growth in our core markets," said Mr. Schmitz.

Financial Results

Total Revenue

Total revenue for the quarter ended March 31, 2014 increased $4.3 million to $17.5 million, compared to $13.2 million for the quarter ended December 31, 2013, and increased $12.2 million compared to $5.2 million for the quarter ended March 31, 2013. The increase in total revenue from the prior quarter is primarily attributable to higher rental income generated from the leases of an additional 974 homes.

Net Loss Attributable to Common Stockholders

Net loss attributable to common stockholders for the quarter ended March 31, 2014 decreased $0.7 million to $(7.7) million, or $(0.24) per diluted share, compared to $(8.4) million, or $(0.26) per diluted share, for the quarter ended December 31, 2013, and increased $(3.7) million compared to $(4.0) million, or $(0.22) per diluted share, for the quarter ended March 31, 2013.

FFO and Core FFO Attributable to Common Stockholders

Funds from operations ("FFO") attributable to common stockholders for the quarter ended March 31, 2014 increased $2.3 million to $1.5 million, or $0.05 per diluted share, compared to $(0.8) million, or $(0.03) per diluted share, for the quarter ended December 31, 2013, and increased $2.4 million compared to $(0.9) million, or $(0.05) per diluted share, for the quarter ended March 31, 2013. 

Core funds from operations ("Core FFO") attributable to common stockholders for the quarter ended March 31, 2014 increased $2.2 million to $2.2 million, or $0.07 per diluted shares, compared to break-even for the quarter ended December 31, 2013, and increased $1.4 million compared to $0.8 million, or $0.04 per diluted share, for the quarter ended March 31, 2013.

Portfolio Highlights

Real Estate Acquisitions

From January 1, 2014 to March 31, 2014, the Company acquired 689 single-family homes, of which 248 are in Texas, 143 are in Tennessee, 130 are in Georgia, 56 are in Indiana, 52 are in Florida, 44 are in North Carolina, 15 are in Illinois and 1 is in Ohio, and incurred renovation costs on the Company's existing portfolio, for a total capital investment of approximately $117 million.

Portfolio

As of March 31, 2014, the Company owned 6,762 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 $921 million. As of March 31, 2014, approximately 81% of the Company's portfolio was leased.

Operating Metrics

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



As of March 31,

2014


As of December 31,

2013



Number

of Homes


%

Leased


Number

of Homes


%

Leased

Portfolio of single-family homes













Self-managed


6,152



80

%


5,478



72

%

Preferred operator program


610



100

%


595



100

%

Total


6,762



81

%


6,073



75

%














Portfolio of single-family homes owned for six months or longer













Self-managed


4,904



88

%


3,660



84

%

Preferred operator program


536



100

%


429



100

%

Total


5,440



89

%


4,089



86

%

Recent Developments

From April 1, 2014 to April 30, 2014, the Company acquired 232 single-family homes for a total purchase price of approximately $36 million and contracted to acquire 197 additional homes for a total purchase price of approximately $32 million. Of these 429 homes the Company acquired or contracted to acquire during this period, 197 are in Georgia, 81 are in Tennessee, 69 are in Texas,  66 are in Florida, 9 are in North Carolina and 7 are in Indiana. There is no assurance that the Company will close on the properties it has under contract.

Conference Call

The Company will host a conference call commencing at 11:00 a.m. Eastern Time on Tuesday, May 13, 2014, to discuss its financial results for the quarter ended March 31, 2014 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 37236140. 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.amresprop.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 13, 2014 at 1:30 PM Eastern Time, until May 27, 2014 at 11:59 PM Eastern Time. To access the replay, dial (888) 843-7419 and use conference ID 37236140#. 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, or REIT, performance. The Company calculates FFO as defined by the National Association of Real Estate Investment Trusts, or NAREIT. FFO represents net income (loss) (as computed in accordance with U.S. generally accepted accounting principles, or GAAP), excluding gains from disposition 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.amresprop.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 the Company's plans for future growth, efficiencies and a securitization transaction. 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, 2014

(unaudited)


December 31,

2013


Assets







Investment in real estate:







Land


$

180,319



$

158,795


Building and improvements


722,848



627,881


Furniture, fixtures and equipment


7,456



6,930




910,623



793,606


Less: accumulated depreciation


(25,996)



(18,058)


Investment in real estate, net


884,627



775,548


Mortgage financings


36,656



43,512


Cash and cash equivalents


50,855



24,294


Acquisition deposits


4,609



282


Rents and other receivables, net


3,178



2,906


Due from related party


5



43


Deferred leasing costs and lease intangibles, net


3,144



2,454


Deferred financing costs, net


5,689



6,558


Investment in unconsolidated ventures


26,561



26,611


Goodwill


3,500



3,500


Other, net


4,695



8,494


Total assets


$

1,023,519



$

894,202









Liabilities and Equity







Liabilities:







Revolving credit facility


$

303,000



$

169,000


Exchangeable senior notes


100,041



99,377


Accounts payable and accrued expenses


12,437



12,862


Security deposits


5,405



3,995


Prepaid rent


2,344



1,549


Total liabilities


423,227



286,783


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; 32,171,102 shares issued and outstanding at March 31, 2014 and December 31, 2013


322



322


Additional paid-in capital


628,289



628,210


Accumulated deficit


(38,791)



(31,122)


Total American Residential Properties, Inc. stockholders' equity


589,820



597,410


Non-controlling interests


10,472



10,009


Total equity


600,292



607,419


Total liabilities and equity


$

1,023,519



$

894,202


 


AMERICAN RESIDENTIAL PROPERTIES, INC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

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

(unaudited)




Three Months Ended
 March 31,



2014



2013


Revenue:







   Self-managed rental revenue


$

14,562



$

2,951


   Preferred operator rental revenue


1,368



1,371


   Management services (related party)


113



104


   Interest and other


1,411



821


Total revenue


17,454



5,247


Expenses:







   Property operating and maintenance


4,146



923


   Real estate taxes


3,111



497


   Homeowners' association fees


460



153


   Acquisition


67



1,775


   Depreciation and amortization


9,464



3,140


   General, administrative and other


3,720



2,537


   Interest


4,230



371


Total expenses


25,198



9,396


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


(7,744)



(4,149)


Equity in net (loss) income of unconsolidated ventures


(50)



90


Net loss and comprehensive loss


(7,794)



(4,059)


Net loss and comprehensive loss attributable to non-controlling interests


125



40


Net loss and comprehensive loss attributable to common stockholders


$

(7,669)



$

(4,019)


Basic and diluted loss per share:







   Net loss attributable to common stockholders


$

(0.24)



$

(0.22)


Weighted-average number of shares of common stock outstanding


32,130,733



18,414,830


 


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,



2014



2013


Net loss


$

(7,794)



$

(4,059)


Add: Depreciation and amortization of real estate assets


9,292



3,101


FFO


$

1,498



$

(958)


FFO attributable to common stockholders(1)


$

1,474



$

(948)


FFO per share of common stock, basic and diluted


$

0.05



$

(0.05)


Weighted-average number of shares of common stock outstanding:







Basic


32,130,733



18,414,830


Diluted(2)


32,755,110



18,414,830


______________







(1) Based on a weighted-average interest in the Company's operating partnership of approximately 98.39% and 99.00%, for the three months ended March 31, 2014 and 2013, 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,



2014



2013


FFO


$

1,498



$

(958)


        Add: Acquisition expense(1)


67



1,775


Add: Non-cash interest expense related to amortization of discount on exchangeable senior notes


664




Core FFO


$

2,229



$

817


Core FFO attributable to common stockholders(2)


$

2,193



$

809


Core FFO per share of common stock, basic and diluted


$

0.07



$

0.04


Weighted-average number of shares of common stock outstanding:







Basic


32,130,733



18,414,830


Diluted(3)


32,755,110



18,816,994


______________







(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 98.39% and 99.00%, for the three months ended March 31, 2014 and 2013, 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 of the Company's entire portfolio of single-family homes by metropolitan statistical area, or MSA, and metropolitan division, or metro division, as of March 31, 2014, in descending order of aggregate investment














MSA/Metro Division


 Number of

Homes


 Aggregate Investment (thousands)


 Average Investment Per Home(1)


 Percentage Leased(2)


 Average Age

(years)


 Average Size

(square feet)

Phoenix, AZ


1,380



$

199,116



$

144,287



93

%


17



1,714


Houston, TX


1,042



$

151,736



$

145,620



86

%


7



1,920


Dallas-Fort Worth, TX


698



$

111,352



$

159,530



86

%


11



2,106


Chicago, IL


511



$

66,774



$

130,673



100

%


55



1,404


Nashville, TN


367



$

56,856



$

154,921



62

%


11



1,821


Other Texas


297



$

51,072



$

171,960



82

%


10



1,965


Atlanta, GA


390



$

42,724



$

109,549



49

%


18



1,870


Inland Empire, CA


213



$

38,163



$

179,169



86

%


16



1,915


Indianapolis, IN


549



$

34,408



$

62,674



63

%


53



1,306


Charlotte, NC-SC


218



$

32,427



$

148,748



68

%


9



1,984


Raleigh, NC


205



$

30,126



$

146,956



77

%


9



1,709


Winston-Salem, NC


232



$

29,008



$

125,034



91

%


12



1,415


Florida


285



$

26,596



$

93,319



69

%


12



1,449


Other California


82



$

10,509



$

128,159



87

%


36



1,336


Las Vegas, NV


68



$

7,310



$

107,500



82

%


15



1,553


Other


225



$

32,712



$

145,387



76

%


9



1,605


Total/Weighted Average


6,762



$

920,889



$

136,186



81

%


19



1,739


______________





















(1) For self-managed homes, represents average purchase price (including broker commissions and closing costs) plus average capital expenditures. For preferred operator program homes, represents purchase price (including broker commissions and closing costs) paid by the Company 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 the Company's investment. The preferred operator is obligated to pay for all taxes, insurance, other expenses and capital expenditures (including significant capital improvements) required for the management, operation and maintenance of the properties. Accordingly, absent a default by the preferred operator under a long-term lease agreement with the Company, the Company expects to incur no expenses related to properties under the Company's preferred operator program, other than general and administrative expenses associated with ongoing monitoring activities of the Company's investment.




(2) Includes both self-managed homes and preferred operator program homes. The Company classifies homes in its preferred operator program as 100% leased, because each preferred operator is obligated to pay the Company 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 preferred operators are occupied by residential sub-tenants. If a preferred operator is unable to lease a material portion of the homes it leases from the Company to residential sub-tenants, it may adversely affect the operator's ability to pay rent to the Company under the lease.


 


AMERICAN RESIDENTIAL PROPERTIES, INC

Portfolio of Self-Managed Single-Family Homes—Summary Statistics

(unaudited)


The following table presents summary statistics on the Company's portfolio of single-family homes that the Company manages by MSA and metro division as of March 31, 2014, in descending order of aggregate investment




















Leased Homes

MSA/Metro Division


 Number

of Homes


 Average Purchase Price Per Home(1)


 Average Capital Expenditures Per Home(2)


 Average Investment Per Home(3)


 Aggregate Investment (thousands)


 Percentage Leased


 Average Age (years)


 Average Size (square feet)


 Average Monthly Rent Per Leased Home


Annual Average Rent per Leased Home as a Percentage of Average Investment Per Leased Home(4)

Phoenix, AZ


1,380



$

138,362



$

5,925



$

144,287



$

199,116



93

%


17



1,714



$

1,013



8.4

%

Houston, TX


1,042



$

140,920



$

4,700



$

145,620



$

151,736



86

%


7



1,920



$

1,354



11.3

%

Dallas-Fort Worth, TX


698



$

150,500



$

9,030



$

159,530



$

111,352



86

%


11



2,106



$

1,433



10.8

%

Nashville, TN


367



$

148,436



$

6,485



$

154,921



$

56,856



62

%


11



1,821



$

1,258



10.8

%

Other Texas


297



$

162,536



$

9,424



$

171,960



$

51,072



82

%


10



1,965



$

1,535



10.8

%

Atlanta, GA


390



$

106,026



$

3,523



$

109,549



$

42,724



49

%


18



1,870



$

1,002



12.6

%

Inland Empire, CA


213



$

156,736



$

22,433



$

179,169



$

38,163



86

%


16



1,915



$

1,404



9.3

%

Charlotte, NC-SC


218



$

142,672



$

6,076



$

148,748



$

32,427



68

%


9



1,984



$

1,184



9.6

%

Raleigh, NC


205



$

141,176



$

5,780



$

146,956



$

30,126



77

%


9



1,709



$

1,222



9.8

%

Indianapolis, IN


450



$

64,659



$

1,552



$

66,211



$

29,795



55

%


51



1,338



$

770



16.0

%

Winston-Salem, NC


232



$

122,611



$

2,423



$

125,034



$

29,008



91

%


12



1,415



$

1,077



10.3

%

Florida


285



$

89,916



$

3,403



$

93,319



$

26,596



69

%


12



1,449



$

845



12.3

%

Other California


82



$

108,500



$

19,659



$

128,159



$

10,509



87

%


36



1,336



$

1,046



9.8

%

Las Vegas, NV


68



$

97,787



$

9,713



$

107,500



$

7,310



82

%


15



1,553



$

1,025



11.4

%

Other


225



$

139,703



$

5,684



$

145,387



$

32,712



76

%


9



1,605



$

1,242



10.2

%

Total/Weighted Average


6,152



$

131,747



$

6,339



$

138,086



$

849,502



80

%


15



1,776



$

1,183



10.2

%

______________




































(1) Average purchase price includes broker commissions and closing costs.


(2) Represents average capital expenditures per home as of March 31, 2014. Does not include additional expected or future capital expenditures.


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


(4) Represents annualized average monthly rent per leased home as a percentage of the Company's 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 (such as insurance, taxes, homeowners' association fees and maintenance) or an allocation of the Company's general and administrative expense, all of which materially impact the Company's results. Accordingly, it should not be interpreted as a measure of profitability, and its utility in evaluating the Company's business is limited. Average monthly rent for leased homes may not be indicative of average rents the Company may achieve on its vacant homes.

 

AMERICAN RESIDENTIAL PROPERTIES, INC

Total Portfolio of Single-Family Homes

Owned for Six Months or Longer—Summary Statistics

(unaudited)


The following table presents summary statistics of the Company's portfolio of single-family homes owned for at least six months as of March 31, 2014, in descending order of number of homes


MSA/Metro Division


 Number
of Homes


 Average Investment Per Home(1)


 Homes Leased


 Homes Vacant(2)


 Percentage Leased

Phoenix, AZ


1,363



$

143,720



1,270



93



93

%

Houston, TX


830



$

141,947



761



69



92

%

Indianapolis, IN


470



$

52,291



337



133



72

%

Dallas-Fort Worth, TX


455



$

158,958



434



21



95

%

Chicago, IL


437



$

130,785



437





100

%

Atlanta, GA


230



$

83,792



164



66



71

%

Florida


226



$

77,966



191



35



85

%

Inland Empire, CA


213



$

179,171



184



29



86

%

Other Texas


213



$

170,081



203



10



95

%

Winston-Salem, NC


207



$

125,064



198



9



96

%

Raleigh, NC


189



$

146,667



149



40



79

%

Charlotte, NC-SC


146



$

146,771



117



29



80

%

Nashville, TN


121



$

99,025



111



10



92

%

Other California


82



$

128,155



71



11



87

%

Las Vegas, NV


66



$

105,533



55



11



83

%

Other


192



$

141,747



154



38



80

%

Total/Weighted Average


5,440



$

130,653



4,836



604



89

%

______________

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


(2) As of March 31, 2014, 237 homes were available for rent, 318 homes were undergoing renovation and 49 homes were occupied with no lease.

 

SOURCE American Residential Properties, Inc.



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http://www.amresprop.com

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