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

Aug 10, 2015, 09:00 ET from Owens Realty Mortgage, Inc.

WALNUT CREEK, Calif., Aug. 10, 2015 /PRNewswire/ -- Owens Realty Mortgage, Inc. (the "Company") (NYSE MKT: ORM) today reported financial results for the second quarter ended June 30, 2015.

Second Quarter 2015 Financial Highlights

  • Net income attributable to common stockholders of $13,760,776, or $1.28 per diluted common share
  • Book value attributable to common stockholders of $18.28 per common share at June 30, 2015 as compared to $17.14 per common share at December 31, 2014
  • Declared quarterly dividends of $0.18 per share of common stock, which included a regular dividend of $0.08 per share and a special dividend of $0.10 per share
  • FFO of $2,587,332, or $0.24 per diluted common share (see Non-GAAP Financial Measures)

Second Quarter 2015 Operational Highlights

  • Originated eleven new loans in the quarter totaling $18,223,000 (note amount) and received full payoffs on three loans totaling $5,828,000
  • Completed the sale of three real estate properties for net proceeds of $33,756,000 and gain on sale of $14,826,000, net of gain on sale in the amount of $2,479,000 attributable to non-controlling interest
  • Collected $1,346,000 in past due interest related to one impaired loan that we foreclosed on during 2014

"During the second quarter of this year we passed the two year safe harbor for the sales of property that have taxable gains," said William Owens, the Company's Chairman and CEO.  "In the quarter we closed escrow on the sale of three properties with a GAAP basis of approximately $18,444,000.  These properties were sold for approximately $33,756,000 resulting in an aggregate net gain of approximately $14,826,000.  The proceeds of these sales were used to pay down our lines of credit and to make new loans.  Loan production for the quarter was approximately $18,200,000, bringing total year to date loan production to just above $30,000,000."  

Summary of Second Quarter 2015 Financial Results

The Company reported net income attributable to common stockholders of $13,760,776, or $1.28 per basic and diluted common share, for the quarter ended June 30, 2015 as compared to a net income of $2,810,884, or $0.26 per basic and diluted common share, for the quarter ended June 30, 2014. The increase was primarily a result of the sales of three real estate properties, resulting in net gains totaling approximately $14,826,000.  A portion of the aggregate gain on sale in the amount of approximately $2,479,000 was attributable to our joint venture partner in 720 University, LLC (as the shopping center owned by this entity was sold in June 2015), which was the primary reason for an approximately $2,565,000 increase in net income attributable to non-controlling interests for the three months ended June 30, 2015 as compared to the three months ended June 30, 2014.

Quarter End Loan Portfolio Summary

The following tables set forth certain information regarding the Company's loan portfolio at June 30, 2015 and December 31, 2014.




June 30,

2015


December 31,

2014

By Property Type:





Commercial


$

46,950,622


$

52,531,537

Residential



15,593,227



13,491,906

Land



6,042,548



2,010,068



$

69,586,397


$

68,033,511

By Position:







Senior loans


$

68,875,902


$

65,533,511

Junior loans*



710,495



2,500,000



$

69,586,397


$

68,033,511


* The junior loans in our portfolio at June 30, 2015 and December 31, 2014 are junior to existing senior loans held by us and are secured by the same collateral.

 

The types of property securing the Company's commercial real estate loans are as follows:



June 30,

2015


December 31,

2014

Commercial Real Estate Loans:







Retail


$

10,785,682


$

7,591,592

Office



10,598,330



25,742,246

Apartment



13,332,206



9,622,580

Industrial



3,065,850



3,080,000

Marina



3,500,000



3,200,000

Church



1,175,000



1,175,000

Restaurant



1,242,702



1,058,567

Storage



2,135,119



Golf course



1,115,733



1,061,552



$

46,950,622


$

52,531,537

Loans by geographic location:



June 30, 2015


Portfolio


December 31, 2014


Portfolio



Balance


Percentage


Balance


Percentage

Arizona


$

9,670,119


13.90%


$

8,788,098


12.92%

California



54,723,730


78.64%



54,685,345


80.38%

Hawaii



1,450,000


2.08%



1,450,000


2.13%

Nevada



2,200,000


3.16%




—%

Oregon



150,000


0.22%



1,250,000


1.84%

Washington



1,392,548


2.00%



1,860,068


2.73%



$

69,586,397


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 June 30, 2015 and December 31, 2014.

Real Estate Held for Sale:



June 30,

2015


December 31,

2014

Land (including land under development)


$

38,192,874


$

36,263,330

Retail





16,494,440

Residential



6,852,989



Office



4,716,159



4,716,159

Golf course





2,020,410



$

49,762,022


$

59,494,339

 

Real Estate Held for Investment:



June 30,

2015


December 31,

2014

Land


$

8,839,256


$

10,797,656

Residential



49,807,765



48,154,258

Retail



23,284,901



23,211,896

Assisted care



5,062,200



5,005,000

Office



4,340,844



4,416,108

Industrial



1,435,965



4,486,797

Storage



3,799,937



3,847,884

Marina



3,994,040



3,602,867

Golf course



1,953,677





$

102,518,585


$

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 non-GAAP 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 Six Months Ended



June 30,

2015



June 30,

 2014



June 30,

 2015



June 30,

 2014

Funds from Operations












 Net income attributable to common stockholders

$

13,760,776


$

2,810,884


$

14,912,496


$

3,571,447

 Adjustments:












    Depreciation and amortization of real estate assets


583,572



547,635



1,185,958



1,093,733

    Depreciation allocated to non-controlling interests


(30,780)



(32,232)



(61,769)



(64,608)

    Amortization of deferred financing costs


90,693



35,925



170,112



35,925

    Accretion of discount on loan to interest income




(36,600)



(536,817)



(48,800)

    Provisions for impairment of real estate assets


147,000



48,000



1,256,434



55,540

    Provision for (reversal of) loan losses


340,477



(103,820)



428,043



23,352

    Gain on sales of real estate assets


(14,825,858)



(2,349,808)



(15,031,299)



(2,626,992)

    Gain on sale allocated to non-controlling interest


2,479,268





2,479,268



    Gain on foreclosure of loan








(257,020)

    Adjustments for unconsolidated ventures


42,184



43,024



(877)



1,328

  FFO attributable to common stockholders

$

2,587,332


$

963,008


$

4,801,549


$

1,783,905

  Basic and diluted FFO per common share

$

0.24


$

0.09


$

0.45


$

0.17


Note: FFO for the three and six months ended June 30, 2015 includes the one-time collection of past due interest related to one impaired loan that the Company foreclosed on during 2014 of approximately $1,346,000 and $1,723,000, respectively.

Conference Call

The Company will host a conference call to discuss the results on Monday, August 10, 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. 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 September 10th.  To access the replay, dial (877) 870-5176 (United States) or (858) 384-5517 (International) and enter code: 13592599.

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) 




June 30,


December 31,



2015


2014

ASSETS







Cash and cash equivalents


$

8,739,592


$

1,413,545

Restricted cash



7,356,136



6,248,746

Loans, net of allowance for loan losses of $3,297,398 in 2015 and $2,869,355 in 2014



66,288,999



65,164,156

Interest and other receivables



2,002,793



1,482,380

Other assets, net of accumulated depreciation and amortization of $238,822 in 2015 and $1,065,172 in 2014



651,554



1,138,123

Deferred financing costs, net of accumulated amortization of $527,460 in 2015 and $253,675 in 2014



1,085,534



1,317,585

Investment in limited liability company



2,143,458



2,142,581

Real estate held for sale



49,762,022



59,494,339

Real estate held for investment, net of accumulated depreciation of $5,899,931 in 2015 and $6,075,287 in 2014



102,518,585



103,522,466

   Total assets


$

240,548,673


$

241,923,921

LIABILITIES AND EQUITY







LIABILITIES:







Dividends payable


$

1,938,240


$

1,292,160

Due to Manager



217,111



283,644

Accounts payable and accrued liabilities



4,567,832



2,219,674

Deferred gains on sales of real estate



209,662



362,283

Lines of credit payable





11,450,000

Notes and loans payable on real estate



32,254,565



37,569,549

Total liabilities



39,187,410



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 June 30, 2015 and December 31, 2014





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



111,981



111,981

Additional paid-in capital



182,437,522



182,437,522

Treasury stock, at cost – 430,118 shares at June 30, 2015 and December 31,2014



(5,349,156)



(5,349,156)

Retained earnings



19,592,007



7,371,511

Total stockholders' equity



196,792,354



184,571,858

Non-controlling interests



4,568,909



4,174,753

   Total equity



201,361,263



188,746,611

   Total liabilities and equity


$

240,548,673


$

241,923,921

 


OWENS REALTY MORTGAGE, INC.

Consolidated Statements of Income

(UNAUDITED)




For the Three Months Ended


For the Six Months Ended



June 30, 2015


June 30, 2014


June 30, 2015


June 30, 2014

Revenues:













Interest income on loans


$

2,500,866


$

1,028,936


$

5,324,738


$

2,165,720

Rental and other income from real estate properties



3,443,366



2,984,399



6,986,264



5,674,373

Income from investment in limited liability company



42,816



40,976



85,877



82,672

Other income









19

Total revenues



5,987,048



4,054,311



12,396,879



7,922,784

Expenses:













Management fees to Manager



440,611



419,943



897,000



840,249

Servicing fees to Manager



40,055



38,177



81,546



76,386

General and administrative expense



280,078



389,464



659,048



805,207

Rental and other expenses on real estate properties



2,159,533



1,977,330



4,349,945



3,892,446

Depreciation and amortization



583,572



547,635



1,185,958



1,093,733

Interest expense



471,920



253,097



1,058,946



380,481

Provision for (reversal of) loan losses



340,477



(103,820)



428,043



23,352

Impairment losses on real estate properties



147,000



48,000



1,256,434



55,540

Total expenses



4,463,246



3,569,826



9,916,920



7,167,394

Operating income



1,523,802



484,485



2,479,959



755,390

Gain on sales of real estate, net



14,825,858



2,349,808



15,031,299



2,626,992

Gain on foreclosure of loan









257,020

Net income



16,349,660



2,834,293



17,511,258



3,639,402

Less: Net income attributable to non-controlling interests



(2,588,884)



(23,409)



(2,598,762)



(67,955)

Net income attributable to common  stockholders


$

13,760,776


$

2,810,884


$

14,912,496


$

3,571,447














Per common share data:













Basic and diluted earnings per common share


$

1.28


$

0.26


$

1.38


$

0.33

Basic and diluted weighted average number of common shares outstanding



10,768,001



10,768,001



10,768,001



10,768,746

Dividends declared per share of common stock


$

0.18


$

0.05


$

0.25


$

0.10














 

Logo - http://photos.prnewswire.com/prnh/20131114/AQ16647LOGO

 

SOURCE Owens Realty Mortgage, Inc.



RELATED LINKS

http://www.owensmortgage.com