LA JOLLA, Calif., Aug. 15, 2017 /PRNewswire/ -- Reven Housing REIT, Inc. (the "Company", "Reven Housing", "RVEN") (NASDAQ: RVEN), an owner and operator of single-family residential properties, today reported financial results for the second quarter ended June 30, 2017.
Second Quarter Highlights
Reported net loss of $289,884, or $(0.03) per share, as compared to a net loss of $270,362, or $(0.04) per share, in the prior year period
Increased Core FFO to $188,035, or $0.02 per share, from $73,473, or $0.01 per share, in the prior year period due to the acquisition of 227 single-family homes in the last 12 months
Increased rental income by 45.6% to $2.03 million from $1.4 million in the prior year period due to the acquisition of 227 single family homes in the last 12 months
Achieved portfolio occupancy of 97.5%
Acquired 68 single family homes in Birmingham, Alabama for an average price of $77,100 per home
Sold one property for a gain of $36,823
Reported net loss of $654,562, or $(0.06) per share, compared to a net loss of $648,242, or $(0.09) per share, in the prior year period
Increased Core FFO to $175,739 from $109,199 in the prior year period
Increased rental revenue to $3.8 million from $2.8 million due to the acquisition of 227 single family homes over the last 12 months
Achieved portfolio occupancy of 97.5%
Acquired 132 single family homes in Atlanta, Georgia, Birmingham, Alabama, and Memphis Tennessee for approximately $10.0 million
Sold two properties for a gain of $75,796
Chad Carpenter, Chief Executive Officer of Reven Housing REIT, stated, "We've had a strong first half of the year, deploying over $10 million of capital into three, high-quality portfolios and successfully integrating 132 homes on to our growing platform. The supply and demand dynamics of the SFR industry present a compelling investment opportunity and our potential to participate in the institutionalization of our industry is enormous given the estimated 15 million single-family homes available for rent in the United States. Our size allows Reven to grow earnings faster in a consolidating industry; and, we are diligently working toward finding additional accretive acquisitions and the required capital to build scale, enhance earnings growth and increase shareholder value over time."
Second Quarter Financial Results
For the second quarter ended June 30, 2017, Reven Housing reported rental income growth of 45.6% to $2.03 million. The main driver for the year-over-year increase in rental revenue is due to the acquisition of 227 homes, which brought the Company's portfolio to 754 homes. As of June 30, 2017, the portfolio was 97.5% occupied which represents a 510 bps increase from the quarter ended June 30, 2016.
Net operating income (NOI) from rentals was $1.07 million, or 52.9% of revenue, versus NOI from rentals of $0.78 million, or 55.9% of revenue, in 2016. The reason for the 300 bps decrease in NOI margin is primarily due to higher real estate taxes as a percentage of total income.
Net loss for the second quarter 2017 was $0.29 million, or ($0.03) per share, compared to a net loss of $0.27 million, or ($0.04) per share, in the prior year period. Per share loss decreased while the overall loss widened due to an increase in the weighted average shares outstanding associated with the issuance of additional shares during the second half of 2016 associated with the Company's public offering.
Year-to-Date Financial Results
For the six months ended June 30, 2017, total rental income increased 36% to $3.77 million, due to the increase in rental homes.
NOI for the first six months of 2017 was $2.03 million, or 53.8% of rental revenue, compared to NOI of $1.54 million, or 55.7% of rental revenue, in the prior year period. The 190-bps reduction in NOI margin was due primarily to higher real estate taxes as a percentage of rental income.
Net loss for the six months ended June 30, 2017 was $0.65 million, or ($0.06) per share, compared to a net loss of $0.65 million, or ($0.09) per share, for the six months ended June 30, 2016. The decrease in per share loss while the overall loss was relatively flat is due to a higher share count associated with the Company's public offering in 2016.
Operations, Acquisitions and Dispositions
At the end of the second quarter of 2017, Reven Housing REIT owned 754 homes in major metropolitan areas across the southwest and southeast regions of the United States. At quarter-end, the portfolio was 97.5% occupied and had an average monthly rent of $978.00 per month.
As previously communicated on April 20, Reven purchased a 68-home portfolio located in the Birmingham, Alabama metropolitan area. The contract purchase price for the 68 acquired properties was approximately $5,241,667, exclusive of closing costs. The Company funded 100% of the purchase with cash. The acquired properties average 1,297 square feet and are mostly three-bedroom, 1.5-bath homes. Of the acquired properties, 62 are currently subject to one-year leases and five are subject to month-to-month leases.
During the second quarter, Reven sold one single-family home in Houston, Texas for a gain of $36,823.
On August 1, 2017, the Company received loans proceeds and issued a promissory note worth approximately $1.8 million at a fixed interest rate of 4.5%.
About Reven Housing REIT, Inc.
Reven Housing REIT, Inc. (NASDAQ: RVEN) engages in the acquisition and ownership of portfolios of occupied single family rental properties in the United States. Reven currently owns and operates single family rental properties in Alabama, Florida, Georgia, Mississippi, Tennessee and Texas.
This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements may include, but are not limited to, statements related to our expectations regarding the performance of our business, our financial results, our liquidity and capital resources, and other non-historical statements. In some cases, you can identify these forward-looking statements by the use of words such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "should," "could," "seeks," "projects," "predicts," "intends," "plans," "estimates," "anticipates" or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties, including, among others, risks inherent to the single-family rental industry sector and our business model; macroeconomic factors beyond our control; competition in identifying and acquiring our properties; competition in the leasing market for quality residents; increasing property taxes; homeowners' association ("HOA") and insurance costs; our dependence on third parties for key services; risks related to evaluation of properties; poor resident selection and defaults and non-renewals by our residents; performance of our information technology systems; our ability to raise the capital required to acquire additional properties; risks related to our indebtedness and those other risk factors described under Part I. Item 1A. "Risk Factors," in our Annual Report on Form 10-K for the year ended December 31, 2016, as such factors may be updated from time to time in our periodic filings with the Securities and Exchange Commission. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in the Annual Report on Form 10-K and in our other periodic filings. The forward-looking statements speak only as of the date made, and we expressly disclaim any obligation or undertaking to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except to the extent otherwise required by law.
Use of Non-GAAP Financial Measures
In this release, we refer to net operating income, or NOI, and Funds From Operations, or FFO, each of which is a non-GAAP financial measure that we believe, when considered with our financial statements determined in accordance with GAAP, is helpful to investors in understanding our performance. We define NOI as total revenue less property operating and maintenance and real estate taxes. NOI is a non-GAAP measurement that excludes acquisition costs, depreciation and amortization, general and administration, legal and accounting, and interest expenses. We define Core FFO as net income, computed in accordance with GAAP, excluding gains (or losses) from sales of, and impairment losses recognized with respect to, depreciable property, depreciation and amortization, acquisition fees and costs, share-based compensation, non-cash interest expense related to amortization of deferred financing costs, and certain other non-comparable costs.
We consider NOI and Core FFO to be meaningful financial measures when considered with our financial statements determined in accordance with GAAP. We believe NOI is helpful to investors in understanding the amount of income after operating expenses which is generated in a given period and we believe Core FFO is helpful to investors in understanding our performance because it captures features particular to real estate performance by recognizing that real estate generally appreciates over time or maintains residual value to a much greater extent than do other depreciable assets.
The following is a reconciliation of our NOI to net loss as determined in accordance with GAAP for the three and six month periods ended June 30, 2017 and 2016:
Three Months ended June 30,
Six Months ended June 30,
Depreciation and amortization
General and administration
Interest expense and other income
Net operating income
Net operating income as a percentage of total revenue
The following table sets forth a reconciliation of our net loss as determined in accordance with GAAP and our calculations Core FFO for the three and six months ended June 30, 2017 and 2016:
Three Months ended June 30,
Six Months ended June 30,
Add back depreciation and amortization
Less gain on sale of residential property
Funds from (used in) operations
Add back noncash amortization of deferred loan fees
Less net casualty gain
Add back acquisition costs
Core funds from (used in) operations
NOI and Core FFO should not be considered as alternatives to net loss or net cash flows from operating activities, as determined in accordance with GAAP, as indications of our performance or as measures of liquidity. Nor is NOI or Core FFO necessarily indicative of cash available to fund future cash needs or distributions to shareholders. In addition, although we use NOI and Core FFO for comparability in assessing our performance against other REITs, not all REITs compute the same non-GAAP measure of NOI or Core FFO. Accordingly, our basis for computing this non- GAAP measure may not be comparable with that of other REITs.