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

May 12, 2014, 17:00 ET from American Residential Properties, Inc.

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.



RELATED LINKS

http://www.amresprop.com