Owens Realty Mortgage, Inc. Reports Third Quarter 2015 Financial Results

09 Nov, 2015, 09:00 ET from Owens Realty Mortgage, Inc.

WALNUT CREEK, Calif., Nov. 9, 2015 /PRNewswire/ -- Owens Realty Mortgage, Inc. (the "Company") (NYSE MKT: ORM) today reported financial results for the third quarter ended September 30, 2015.

Third Quarter 2015 Financial Highlights

  • Net income attributable to common stockholders of $384,321, or $0.04 per diluted common share
  • Book value attributable to common stockholders of $18.36 per common share at September 30, 2015 as compared to $17.14 per common share at December 31, 2014
  • Declared a regular quarterly dividends of $0.08 per share of common stock
  • FFO of $978,159, or $0.09 per diluted common share (see Non-GAAP Financial Measures)
  • Repurchased 360,263 shares of our common stock during the quarter for a total cost of $5,253,000 and an average cost of $14.58 per share

Third Quarter 2015 Operational Highlights

  • Originated nine new loans in the quarter totaling $10,836,500 (note amount) and received full or partial payoffs on five loans totaling $3,944,000
  • Average balance of performing loans for the nine months ended September 30, 2015 as compared to the nine months ended September 30, 2014 increased by approximately 78%

Summary of Third Quarter and Year-to-Date 2015 Financial Results
Net income attributable to our common stockholders decreased approximately $400,000 and increased approximately $10,942,000 during the three and nine months ended September 30, 2015, respectively, as compared to the same periods in 2014.

The decrease in net income during the three months ended September 30, 2015 was primarily a result of (i) a decrease in net income from real estate properties of approximately $129,000 as a result of the sales of two operating properties during the second quarter of 2015, (ii) the write-off of rent receivable as bad debt expense in the amount of $150,000 related to one real estate property during the quarter and (iii) a decrease in gain on sale of real estate of $113,000, as there were no sales during the quarter ended September 30, 2015.

The increase in net income during the nine months ended September 30, 2015 was primarily a result of the sales of four real estate properties offset by a decrease in the recognition of deferred gain under the installment method. The total gain on sales of real estate was approximately $15,031,000 for the nine months ended September 30, 2015.  The gain on sales of real estate was reduced by a portion of the gain in the amount of approximately $2,479,000 that was attributable to our joint venture partner in 720 University, LLC (as the shopping center owned by this entity was sold in June 2015). During the nine months ended September 30, 2014, we sold an improved, residential lot for $175,000, resulting in a gain of $105,000 and recognized $2,626,000 in deferred gains under the installment method related to the sales of certain properties in 2012 and 2013 due to full or partial principal repayments received on the carry back loans in 2014.

Quarter End Loan Portfolio Summary
The following tables set forth certain information regarding the Company's loan portfolio at September 30, 2015 and December 31, 2014.




September 30,

2015



December 31,

2014

By Property Type:






Commercial


$

51,011,804



$

52,531,537

Residential



19,779,734




13,491,906

Land



6,042,548




2,010,068



$

76,834,086



$

68,033,511

By Position:








Senior loans


$

73,805,384



$

65,533,511

Junior loans*



3,028,702




2,500,000



$

76,834,086



$

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:



September 30,

2015


December 31,

2014

Commercial Real Estate Loans:







Retail


$

9,195,944


$

7,591,592

Office



13,748,033



25,742,246

Apartment



14,460,827



9,622,580

Industrial



3,065,130



3,080,000

Marina



3,500,000



3,200,000

Church



1,175,000



1,175,000

Restaurant



400,000



1,058,567

Storage



2,673,021



Hotel



1,650,000



Golf course



1,143,849



1,061,552



$

51,011,804


$

52,531,537

Loans by geographic location:



September 30, 2015


Portfolio


December 31, 2014


Portfolio



Balance


Percentage


Balance


Percentage

Arizona


$

10,208,021


13.29%


$

8,788,098


12.92%

California



61,433,517


79.96%



54,685,345


80.38%

Hawaii



1,450,000


1.89%



1,450,000


2.13%

Nevada



2,200,000


2.86%




—%

Oregon



150,000


0.19%



1,250,000


1.84%

Washington



1,392,548


1.81%



1,860,068


2.73%



$

76,834,086


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 September 30, 2015 and December 31, 2014.

Real Estate Held for Sale:



September 30,

2015


December 31,

2014

Land (including land under development)


$

40,300,887


$

36,263,330

Retail





16,494,440

Residential



54,222,726



Office



4,716,159



4,716,159

Industrial



1,422,308



Storage



3,782,526



Marina



236,500



Golf course





2,020,410



$

104,681,106


$

59,494,339

Real Estate Held for Investment:



September 30,

2015


December 31,

2014

Land


$

8,839,255


$

10,797,656

Residential



6,721,923



48,154,258

Retail



23,278,649



23,211,896

Assisted care



5,073,316



5,005,000

Office



4,300,543



4,416,108

Industrial





4,486,797

Storage





3,847,884

Marina



3,740,468



3,602,867

Golf course



1,951,253





$

53,905,407


$

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. We believe FFO provides investors with additional information concerning our operating performance and a basis to compare our performance with that 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 (loss) attributable to common stockholders (computed in accordance with GAAP), plus depreciation and amortization of real estate and other assets, amortization of deferred financing costs, impairments of real estate and other assets, provisions for loan losses and losses from sales of real estate, reduced by gains from sales of real estate and foreclosures of loans, accretion of discounts on loans and extraordinary items, and after adjustments for unconsolidated ventures.

Our calculation of FFO may not be comparable to similar measures reported by other REITs. This nonGAAP financial measure should not be considered as an alternative 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 is it indicative of cash flows from operating and financial activities.

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

The following table reconciles FFO to comparable GAAP financial measures:

 




For the Three Months Ended



For the Nine Months Ended



September 30,

2015



September 30,

 2014



September 30,

 2015



September 30,

 2014

Funds from Operations












 Net income attributable to common stockholders

$

384,321


$

783,823


$

15,296,817


$

4,355,270

 Adjustments:












    Depreciation and amortization of real estate and other assets


526,178



549,189



1,712,136



1,642,922

    Depreciation allocated to non-controlling interests


(28,800)



(32,241)



(90,569)



(96,806)

    Amortization of deferred financing costs


96,749



42,335



266,862



78,261

    Accretion of discount on loan to interest income




(36,600)



(536,816)



(85,403)

    Provisions for impairment of real estate assets




123,500



1,256,434



179,040

    Provision for loan losses


44,316



117,680



472,359



141,032

    Gain on sales of real estate assets




(113,113)



(15,031,299)



(2,740,105)

    Gain on sale allocated to non-controlling interest






2,479,268



    Gain on foreclosure of loan








(257,020)

    Adjustments for unconsolidated ventures


(44,605)



(43,686)



(45,483)



(42,357)

  FFO attributable to common stockholders

$

978,159


$

1,390,887


$

5,779,709


$

3,174,834

  Basic and diluted FFO per common share

$

0.09


$

0.13


$

0.54


$

0.29














Note: FFO for the nine months ended September 30, 2015 includes the collection of past due interest related to an impaired loan that
the Company foreclosed on during 2014 of approximately $1,723,000.

Conference Call
The Company will host a conference call to discuss the results on Monday, November 9, 2015, 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: 13623999. 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 for 30 days.  A dial-in replay of the call will also be available to those interested until December 10th.  To access the replay, dial (877) 870-5176 (United States) or (858) 384-5517 (International) and enter code: 13623999.

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
(UNAUDITED)








September 30,


December 31,



2015


2014

ASSETS







Cash and cash equivalents


$

6,707,686


$

1,413,545

Restricted cash



7,495,337



6,248,746

Loans, net of allowance for loan losses of $3,341,714 in 2015 and $2,869,355 in 2014



73,492,372



65,164,156

Interest and other receivables



1,688,948



1,482,380

Other assets, net of accumulated depreciation and amortization of $259,597 in 2015 and $1,065,172 in 2014



681,715



1,138,123

Deferred financing costs, net of accumulated amortization of $676,047 in 2015 and $253,675 in 2014



936,948



1,317,585

Investment in limited liability company



2,188,064



2,142,581

Real estate held for sale



104,681,106



59,494,339

Real estate held for investment, net of accumulated depreciation of $2,591,431 in 2015 and $6,075,287 in 2014



53,905,407



103,522,466

   Total assets


$

251,777,583


$

241,923,921

LIABILITIES AND EQUITY







LIABILITIES:







Dividends payable


$

835,533


$

1,292,160

Due to Manager



234,588



283,644

Accounts payable and accrued liabilities



4,654,230



2,219,674

Deferred gains on sales of real estate



209,662



362,283

Lines of credit payable



8,954,000



11,450,000

Notes and loans payable on real estate



41,197,782



37,569,549

Total liabilities



56,085,795



53,177,310

Commitments and Contingencies (Note 13)







EQUITY:







Stockholders' equity:







Preferred stock, $.01 par value per share, 5,000,000 shares authorized, no shares issued and outstanding at September 30, 2015 and December 31, 2014





Common stock, $.01 par value per share, 50,000,000 shares authorized, 11,198,119 shares issued, 10,407,738 and 10,768,001 shares outstanding at September 30, 2015 and December 31, 2014



111,981



111,981

Additional paid-in capital



182,437,522



182,437,522

Treasury stock, at cost – 790,381 and 430,118 shares at September 30, 2015 and December 31, 2014



(10,602,004)



(5,349,156)

Retained earnings



19,143,709



7,371,511

Total stockholders' equity



191,091,208



184,571,858

Non-controlling interests



4,600,580



4,174,753

   Total equity



195,691,788



188,746,611

   Total liabilities and equity


$

251,777,583


$

241,923,921

 

OWENS REALTY MORTGAGE, INC.
Consolidated Statements of Income
(UNAUDITED)








For the Three Months Ended


For the Nine Months Ended



September 30, 2015


September 30, 2014


September 30, 2015


September 30, 2014

Revenues:













Interest income on loans


$

1,372,739


$

1,399,122


$

6,697,476


$

3,564,842

Rental and other income from real estate properties



2,996,873



3,262,549



9,983,138



8,936,923

Income from investment in limited liability company



44,605



43,686



130,483



126,357

Other income









19

Total revenues



4,414,217



4,705,357



16,811,097



12,628,141

Expenses:













Management fees to Manager



513,292



435,652



1,410,293



1,275,901

Servicing fees to Manager



46,663



39,605



128,208



115,991

General and administrative expense



292,531



285,669



951,579



1,090,876

Rental and other expenses on real estate properties



2,070,680



2,060,670



6,420,490



5,952,479

Depreciation and amortization



526,178



549,189



1,712,136



1,642,922

Interest expense



354,163



338,225



1,413,109



718,707

Bad debt expense



150,402



660



150,537



1,296

Provision for loan losses



44,316



117,680



472,359



141,032

Impairment losses on real estate properties





123,500



1,256,434



179,040

Total expenses



3,998,225



3,950,850



13,915,145



11,118,244

Operating income



415,992



754,507



2,895,952



1,509,897

Gain on sales of real estate, net





113,113



15,031,299



2,740,105

Gain on foreclosure of loan









257,020

Net income



415,992



867,620



17,927,251



4,507,022

Less: Net income attributable to non-controlling interests



(31,671)



(83,797)



(2,630,434)



(151,752)

Net income attributable to common  stockholders


$

384,321


$

783,823


$

15,296,817


$

4,355,270














Per common share data:













Basic and diluted earnings per common share


$

0.04


$

0.07


$

1.43


$

0.40

Basic and diluted weighted average number of common shares outstanding



10,538,735



10,768,001



10,690,736



10,768,495

Dividends declared per share of common stock


$

0.08


$

0.05


$

0.33


$

0.15














 

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SOURCE Owens Realty Mortgage, Inc.



RELATED LINKS

http://www.owensmortgage.com