Owens Realty Mortgage, Inc. Reports Fourth Quarter and Full Year 2015 Financial Results

Mar 14, 2016, 09:00 ET from Owens Realty Mortgage, Inc.

WALNUT CREEK, Calif., March 14, 2016 /PRNewswire/ -- Owens Realty Mortgage, Inc. (the "Company") (NYSE MKT: ORM) today reported financial results for the fourth quarter and year ended December 31, 2015.

Fourth Quarter 2015 Financial Highlights

  • Net income attributable to common stockholders of $8,272,299, or $0.80 per average number of diluted common shares
  • Book value attributable to common stockholders of $19.03 per common share at December 31, 2015 as compared to $18.36 per common share at September 30, 2015 and $17.14 per common share at December 31, 2014
  • Declared a regular quarterly dividend of $0.08 per share of common stock
  • FFO of $2,749,393, or $0.27 per diluted common share and AFFO of $702,460, or $0.07 per diluted common share (see Non-GAAP Financial Measures)
  • Repurchased 160,261 shares of our common stock during the quarter for a total cost of $2,250,000 and an average cost of $14.04 per share
  • Originated thirteen new loans during the quarter totaling $43,103,000 (note commitment amount) and received full or partial payoffs on four loans totaling $3,489,000
  • Sold four real estate properties for aggregate net sales proceeds of $13,737,000 and a carryback loan of $4,650,000, resulting in gain on sales of real estate totaling $6,787,000
  • Recorded $1,499,000 in net reversal of allowance for loan losses

Year 2015 Highlights

  • Net income attributable to common stockholders of $23,569,116, or $2.22 per average number of diluted common shares
  • Declared 2015 common dividends totaling $0.41 per share
  • FFO of $8,449,451, or $0.80 per diluted common share and AFFO of $6,554,919, or $0.62 per diluted common share (see Non-GAAP Financial Measures)
  • Repurchased 520,524 shares of our common stock during the year for a total cost of $7,503,000 and an average cost of $14.41 per share
  • Originated thirty-eight new loans during 2015 totaling $84,099,000 (note commitment amount) and received full or partial payoffs on twenty loans totaling $35,119,000
  • Net increase in loan investments from 34 with an average balance of $2,001,000 as of December 31, 2014 to 56 with an average loan balance of $1,906,000 as of December 31, 2015
  • Sold eight real estate properties for net aggregate sales proceeds of $48,602,000 and a carryback loan of $4,650,000, resulting in gain on sales totaling $21,666,000. The sale of one property resulted in the repayment of a note payable in the amount of $9,771,000.
  • Recorded $1,904,000 in reversals of allowance for loan losses on two impaired loans and an increase in the general allowance for loan losses of $877,000 ($1,027,000 net reversal)
  • Recorded $1,589,000 in impairment losses on one real estate property

Summary of Fourth Quarter and Year-to-Date 2015 Financial Results

The Company reported net income attributable to common stockholders of $8,272,299 or $0.80 per average number of basic and diluted common shares for the three months ended December 31, 2015 as compared to net income of $3,574,359 or $0.33 per average number of basic and diluted common shares for the corresponding quarter of 2014. The increase in net income was primarily the result of the sales of four real estate properties during the fourth quarter of 2015 resulting in aggregate gain on sales of approximately $6,787,000. During the fourth quarter of 2014, the Company recognized gain on sales of real estate and from foreclosure of a loan totaling a combined amount of approximately $711,000.

For the year ended December 31, 2015, the Company reported net income attributable to common stockholders of $23,569,116 or $2.22 per average number of basic and diluted common shares as compared to net income of $7,929,629 or $0.74 per average number of basic and diluted common shares for the year ended December 31, 2014. The increase in net income was primarily the result of the sales of eight real estate properties and recognition of deferred gain under the installment method during 2015 resulting in aggregate gain on sales of approximately $21,819,000 (or $19,340,000 net of $2,479,000 attributable to a noncontrolling interest). During 2014, the Company recognized gain on sales of real estate and from foreclosure of loans totaling a combined amount of approximately $3,708,000.

Quarter End Loan Portfolio Summary

The following tables set forth certain information regarding the Company's loan portfolio at December 31, 2015 and 2014.



December 31,

2015


December 31,

2014

By Property Type:





Commercial


$

76,800,297


$

52,531,537

Residential



24,675,867



13,491,906

Land



5,267,643



2,010,068



$

106,743,807


$

68,033,511

By Position:







Senior loans


$

103,716,010


$

65,533,511

Junior loans*



3,027,797



2,500,000



$

106,743,807


$

68,033,511


* The junior loan in our portfolio at December 31, 2014 was junior to an existing senior loan held by us and was secured by the same collateral. This loan was paid off during 2015.

 

Commercial loans by property type:



December 31,

2015


December 31,

2014

Commercial Real Estate Loans:







Retail


$

9,206,415


$

7,591,592

Office



28,210,997



25,742,246

Apartment



13,094,806



9,622,580

Industrial



3,483,318



3,080,000

Marina



3,500,000



3,200,000

Church



1,175,000



1,175,000

Restaurant



400,000



1,058,567

Golf course



1,145,000



1,061,552

Hotel



7,985,000



Storage



7,652,116



Assisted care



947,645





$

76,800,297


$

52,531,537

 

Loans by geographic location:



December 31, 2015


Portfolio


December 31, 2014


Portfolio



Balance


Percentage


Balance


Percentage

Arizona


$

10,103,722


9.47%


$

8,788,098


12.92%

California



82,406,162


77.20%



54,685,345


80.38%

Hawaii



1,450,000


1.36%



1,450,000


2.13%

Michigan



6,335,000


5.93%




—%

Nevada



6,298,923


5.90%




—%

Oregon



150,000


0.14%



1,250,000


1.84%

Washington




0.00%



1,860,068


2.73%



$

106,743,807


100.00%


$

68,033,511


100.00%

 

Quarter End Real Estate Property Portfolio

The following tables set forth certain information regarding the Company's real estate portfolio at December 31, 2015 and 2014.

Real Estate Held for Sale:



December 31,

2015


December 31,

2014

Residential


$

51,942,601


$

Land (including land under development)



42,071,143



36,263,330

Retail





16,494,440

Golf course





2,020,410

Office



4,716,487



4,716,159

Industrial



1,460,935





$

100,191,166


$

59,494,339

 

Real Estate Held for Investment:



December 31,

2015


December 31,

2014

Land


$

8,112,676


$

10,797,656

Residential



6,673,540



48,154,258

Retail



23,122,714



23,211,896

Office



4,315,608



4,416,108

Industrial





4,486,797

Storage





3,847,884

Marina



4,079,087



3,602,867

Assisted care



5,402,376



5,005,000

Golf course



1,941,245





$

53,647,246


$

103,522,466

 

Non-GAAP Financial Measures

Funds from Operations

We utilize supplemental non-GAAP measures of operating performance, including funds from operations ("FFO"), an industry-wide standard measure of REIT operating performance, and adjusted funds from operations ("AFFO"). We believe FFO and AFFO provide investors with additional information concerning our operating performance and a basis to compare our performance with those of other REITs. We determine FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts ("NAREIT"), as net income attributable to common stockholders (computed in accordance with GAAP), excluding real estate-related depreciation and amortization, impairment losses on depreciable real estate, gains or losses on the sales of depreciable real estate, and after adjustments for unconsolidated ventures.

We calculate AFFO by adding or subtracting from FFO the impact of non-cash accounting items, as well as gains/losses on sales of other real estate. We adjust for these items to analyze our ability to produce cash flow from on-going operations, which we use to pay dividends to our shareholders. Non-cash adjustments to FFO include the following: provisions for (reversals of) loan losses; amortization of deferred financing costs; depreciation of other assets; impairment of other real estate; accretion of loan discount; gain on foreclosure of loans; and straight-line rental adjustments.

Our calculations of FFO and AFFO may not be comparable to similar measures reported by other REITs. These non‐GAAP financial measures should not be considered as alternatives to net income as a measure of our operating performance or to cash flows computed in accordance with GAAP as a measure of liquidity, nor are they indicative of cash flows from operating and financial activities.

We urge investors to carefully review the GAAP financial information included as part of the Annual Report on Form 10-K, as well as in the Company's Quarterly Reports on Form 10-Q and quarterly earnings releases.

The following table reconciles FFO and AFFO to comparable GAAP financial measures:



For the Three Months Ended



For the Twelve Months Ended



December 31,

2015



December 31,

 2014



December 31,

 2015



December 31,

 2014

Funds from Operations












 Net income attributable to common stockholders

$

8,272,299



3,574,359


$

23,569,116


$

7,929,629

 Adjustments:












    Depreciation and amortization of real estate


333,837



609,445



2,014,462



2,221,528

    Depreciation allocated to non-controlling interests




(29,179)



(86,401)



(125,921)

    Impairment losses on depreciable real estate








179,040

    Gain on sales of depreciable real estate


(5,809,712)





(19,525,445)



(2,926,904)

    Gain on sale of depreciable real estate allocated to non-controlling interest






2,479,268



    Adjustments for unconsolidated ventures


(47,031)



(42,358)



(1,549)



  FFO attributable to common stockholders

$

2,749,393



4,112,267


$

8,449,451


$

 

7,277,372

  Basic and diluted FFO per common share

$

0.27



0.38


$

0.80


$

0.68

























Adjusted Funds from Operations












FFO attributable to common stockholders

$

2,749,393


$

4,112,267


$

8,449,451


$

7,277,372

Adjustments:












Non-cash items:












Reversal of loan losses


(1,499,268)



(2,010,765)



(1,026,909)



(1,869,733)

Amortization of deferred financing costs


100,610



54,462



367,471



132,723

Depreciation of other assets


6,208



3,210



37,719



34,049

Impairment of other real estate


333,000





1,589,434



Accretion of discount to interest income




(36,601)



(536,816)



(122,004)

Gain on foreclosure of loans




(207,734)





(464,754)

Straight-line rental adjustments


(9,941)



4,588



(32,324)



49,161

Less:












Gain on sale of other real estate, net


(977,542)



(503,254)



(2,293,107)



(316,455)

AFFO attributable to common stockholders

$

702,460


$

1,416,173


$

6,554,919


$

4,270,359

Basic and diluted FFO per common share

$

0.07


$

0.13


$

0.62


$

0.44


 

Conference Call

The Company will host a conference call to discuss the results on Monday, March 14, 2016, at 10:00 a.m. PT / 1:00 p.m. ET.

To participate in the call, please dial (877) 407-0784 (United States) or (201) 689-8560 (International) and request the Owens Realty Mortgage call or provide confirmation code: 13631836. A live webcast of the call will also be available on the Company's website at www.owensmortgage.com.  Please allow 10 minutes prior to the call to visit this site to download and install any necessary audio software.

An archive of the webcast will be available approximately one hour after completion of the live event and will be accessible on the Company's website at www.owensmortgage.com until April 13th.  To access the replay, dial (877) 870-5176 (United States) or (858) 384-5517 (International) and enter code: 13631836.

About Owens Realty Mortgage, Inc.

Owens Realty Mortgage, Inc., a Maryland corporation, is a specialty finance mortgage company organized to qualify as a real estate investment trust ("REIT") that focuses on the origination, investment, and management of small balance and middle-market commercial real estate loans. We provide customized, short-term acquisition and transition capital to commercial real estate investors that require speed and flexibility. Our primary objective is to provide investors with attractive current income and long-term shareholder value. Owens Realty Mortgage, Inc., is headquartered in Walnut Creek, California, and is externally managed and advised by Owens Financial Group, Inc.

Additional information can be found on the Company's website at www.owensmortgage.com.

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements about Owens Realty Mortgage Inc.'s plans, strategies, prospects, and anticipated events, including the maximum borrowings available under its credit facilities, anticipated construction progress and completion, potential leasing activities, and repositioning and possible sale of real estate assets, are based on current information, estimates, and projections; they are subject to, risks and uncertainties, as well as known and unknown risks, which could cause actual results to differ from expectations, estimates and projections and, consequently, readers should not rely on these forward-looking statements as predictions of future events. Words such as "expect," "target," "assume," "estimate," "project," "budget," "forecast," "anticipate," "intend," "plan," "may," "will," "could," "should," "believe," "predicts," "potential," "continue," and similar expressions are intended to identify such forward-looking statements.

Readers are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made. The Company does not undertake or accept any obligation to release publicly any updates or revisions to any forward-looking statement to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based. Additional information concerning these and other risk factors is contained in the Company's most recent filings with the Securities and Exchange Commission. All subsequent written and oral forward-looking statements concerning the Company or matters attributable to the Company or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above.


Selected Financial Data:

OWENS REALTY MORTGAGE, INC.


Consolidated Balance Sheets

December 31,


Assets

2015


2014

Cash and cash equivalents

$

1,255,842


$

1,413,545

Restricted cash


7,225,371



6,248,746

Loans, net of allowance for loan losses of $1,842,446 in 2015 and $2,869,355 in 2014


104,901,361



65,164,156

Interest and other receivables


1,764,918



1,482,380

Other assets, net of accumulated depreciation and amortization of $275,277 in 2015 and $1,065,172 in 2014


741,001



1,138,123

Deferred financing costs, net of accumulated amortization of $828,433 in 2015 and $253,675 in 2014


784,502



1,317,585

Investment in limited liability company


2,141,032



2,142,581

Real estate held for sale


100,191,166



59,494,339

Real estate held for investment, net of accumulated depreciation of $2,915,596 in 2015 and $6,075,287 in 2014


53,647,246



103,522,466







Total assets

$

272,652,439


$

241,923,921

Liabilities and Equity






Liabilities:






Dividends payable

$

2,133,455


$

1,292,160

Due to Manager


408,643



283,644

Accounts payable and accrued liabilities


3,359,294



2,219,674

Deferred gains


209,662



362,283

Lines of credit payable


20,915,500



11,450,000

Notes and loans payable on real estate


46,117,038



37,569,549

             Total liabilities


73,143,592



53,177,310

Commitments and Contingencies






Equity:






Stockholders' equity:






Preferred stock, $.01 par value per share, 5,000,000 shares authorized, no shares issued and outstanding at December 31, 2015 and 2014




Common stock, $.01 par value per share, 50,000,000 shares authorized, 11,198,119 shares issued, 10,247,477 and 10,768,001 shares outstanding at December 31, 2015 and 2014, respectively


111,981



111,981

Additional paid-in capital


182,437,522



182,437,522

Treasury stock, at cost – 950,642 and 430,118 shares at December 31, 2015 and 2014, respectively


(12,852,058)



(5,349,156)

Retained earnings


25,282,553



7,371,511

             Total stockholders' equity


194,979,998



184,571,858

Noncontrolling interests


4,528,849



4,174,753

Total equity


199,508,847



188,746,611







Total liabilities and equity

$

272,652,439


$

241,923,921

 

OWENS REALTY MORTGAGE, INC.


Consolidated Statements of Income

Years Ended December 31,




2015



2014








Revenues:







Interest income on loans

$

8,277,004


$

5,382,019


Rental and other income from real estate properties


12,791,096



12,268,214


Income from investment in limited liability company


175,451



169,999


Other income




19


Total revenues


21,243,551



17,820,251


Expenses:







Management fees to Manager


2,051,134



1,726,945


Servicing fees to Manager


186,467



156,995


General and administrative expense


1,278,994



1,661,210


Rental and other expenses on real estate properties


8,510,110



8,158,038


Depreciation and amortization


2,052,181



2,255,577


Interest expense


1,938,113



1,161,822


Bad debt expense from uncollectible rent


152,805



3,396


Recovery of loan losses


(1,026,909)



(1,869,733)


Impairment losses on real estate properties


1,589,434



179,040


Total expenses


16,732,329



13,433,290


Operating income


4,511,222



4,386,961


Gain on sales of real estate, net


21,818,553



3,243,359


Gain on foreclosure of loans




464,754


Net income before income tax expense


26,329,775



8,095,074


Income tax expense


93,335




Net income


26,236,440



8,095,074


Less: Net income attributable to noncontrolling interests


(2,667,324)



(165,445)









Net income attributable to common stockholders

$

23,569,116


$

7,929,629









Per common share data:







Basic and diluted earnings per common share

$

2.22


$

0.74


Basic and diluted weighted average number of common shares outstanding


10,594,807



10,768,370


Dividends declared per share of common stock

$

0.41


$

0.27









 

OWENS REALTY MORTGAGE, INC.


Consolidated Statements of Income

Three Months Ended December 31,




2015



2014








Revenues:







Interest income on loans

$

1,579,528


$

1,817,177


Rental and other income from real estate properties


2,807,958



3,331,291


Income from investment in limited liability company


44,968



43,642


Total revenues


4,462,454



5,192,110


Expenses:







Management fees to Manager


640,841



451,044


Servicing fees to Manager


58,259



41,004


General and administrative expense


327,415



570,334


Rental and other expenses on real estate properties


2,089,620



2,204,263


Depreciation and amortization


340,045



612,655


Interest expense


525,004



443,115


Bad debt expense from uncollectible rent


2,268



3,396


Recovery of loan losses


(1,499,268)



(2,010,765)


Impairment losses on real estate properties


333,000




Total expenses


2,817,184



2,315,046


Operating income


1,615,270



2,877,064


Gain on sales of real estate, net


6,787,254



503,254


Gain on foreclosure of loans




207,734


Net income before income tax expense


8,402,524



3,588,052


Income tax expense


93,335




Net income


8,309,189



3,588,052


Less: Net income attributable to noncontrolling interests


(36,890)



(13,693)









Net income attributable to common stockholders

$

8,272,299


$

3,574,359









Per common share data:







Basic and diluted earnings per common share

$

0.80


$

0.33


Basic and diluted weighted average number of common shares outstanding


10,310,149



10,768,001


Dividends declared per share of common stock

$

0.08


$

0.12









 

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SOURCE Owens Realty Mortgage, Inc.



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http://www.owensmortgage.com