MINOT, N.D., June 27, 2018 /PRNewswire/ -- IRET (NYSE:
IRET) announced today its fiscal fourth quarter 2018 financial and
operating results. Net income and Funds from Operations
("FFO") per share for the three and twelve months ended
April 30, 2018, are detailed below. Core FFO adjusts FFO
for certain non-routine items, and both FFO and Core FFO are
reconciled to net income in the tables accompanying this earnings
release.
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
April
30,
|
|
April
30,
|
Per
Share
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net Income
(Loss)
|
|
$
|
(0.19)
|
|
|
$
|
0.23
|
|
|
$
|
0.87
|
|
|
$
|
0.26
|
|
FFO
|
|
0.06
|
|
|
0.07
|
|
|
0.27
|
|
|
0.40
|
|
Core FFO
|
|
0.08
|
|
|
0.11
|
|
|
0.38
|
|
|
0.47
|
|
|
|
Quarterly Comparison
|
|
Sequential Comparison
|
|
YTD Comparison
|
Multifamily
Same-Store Results
|
|
4Q18 vs.
4Q17
|
|
4Q18 vs.
3Q18
|
|
4Q18 vs.
4Q17
|
Revenues
|
|
5.2
|
%
|
|
1.3
|
%
|
|
4.3
|
%
|
Expenses
|
|
5.8
|
%
|
|
(0.2)
|
%
|
|
9.5
|
%
|
Net Operating Income
("NOI")
|
|
4.7
|
%
|
|
2.4
|
%
|
|
0.4
|
%
|
|
|
|
|
|
|
|
|
|
|
Multifamily
Same-Store Results
|
|
4Q18
|
|
3Q18
|
|
4Q17
|
Physical
Occupancy
|
|
96.5
|
%
|
|
95.2
|
%
|
|
93.8
|
%
|
Weighted Average
Occupancy
|
|
95.1
|
%
|
|
93.9
|
%
|
|
91.6
|
%
|
"The last twelve months were pivotal in positioning ourselves as
a multifamily company," said Mark O.
Decker, Jr., IRET's President and CEO. "The next
twelve months and beyond will be as pivotal in our quest to be the
premier provider of apartment homes in our markets."
IRET also announced that it has promoted Anne Olson to Chief Operating Officer and that
Andrew Martin has resigned from his
position as Executive Vice President, Property Operations, of the
Company effective June 25, 2018. Mr.
Martin will assist with his transition through July 31, 2018. Ms. Olson has served as Executive
Vice President, General Counsel and Secretary since April 30,
2017, overseeing the Asset Management and Legal Departments, and
will continue in her capacity as General Counsel and Secretary.
"Anne has been an integral part of our leadership team over the
last 14 months, and I am confident that she can assist us in
leveraging the progress we have made and continue to demonstrate
our commitment to improve our residents' experience and our
company's financial results."
Fourth Quarter Fiscal Year 2018 Highlights
- Achieved quarterly same-store revenue growth of 5.2% over the
same period in the prior year, driven by a 3.8% increase in
occupancy and 1.4% growth in revenue per occupied home.
- Experienced elevated quarterly same-store expense growth of
5.8% over the same period in the prior year, driven by previously
disclosed changes to capitalization policies, additional costs
related to increasing occupancy, higher labor costs, and increased
real estate taxes primarily attributable to higher levy rates in
select markets.
- Grew quarterly same-store NOI growth by 4.7% over the same
period in the prior year, driven by the aforementioned revenue
growth of 5.2% offset by the 5.8% increase in expenses.
- Closed the acquisition of Westend, a 390-home apartment
community in Denver, Colorado,
completing our second investment in this top-25 MSA where we now
have 664 apartment homes.
- Closed a $6.0 million operating
line of credit to manage cash balances more effectively and enhance
treasury management activities.
Fiscal Year 2018 Highlights
- Substantially completed our transformation into a focused
multifamily company by selling 50 commercial and other non-core
multifamily properties for an aggregate sales price of $515.1 million. We used a portion of the proceeds
from these sales to purchase four apartment communities with 1,355
homes for $373.1 million.
- Achieved same-store revenue growth of 4.3% over the prior
fiscal year, driven by a 2.4% increase in occupancy and 1.9%
increase in revenue per occupied home. Realized these increases
through a combination of initiatives, including better revenue
management across the portfolio and the expansion of utility
billings and ancillary revenue programs.
- Experienced elevated same-store expense growth of 9.5% over the
prior fiscal year, driven by previously disclosed changes to
capitalization policies, additional costs related to increasing
occupancy, higher labor costs, and increased real estate
taxes.
- Posted same-store NOI growth of 0.4% over the prior fiscal
year, driven by the aforementioned revenue growth of 4.3% but
offset by the 9.5% increase in expenses.
- Issued 4,118,460 shares of 6.625% Series C preferred shares for
gross proceeds of $103.0 million and
redeemed all 4,600,000 shares of 7.95% Series B preferred shares
for an aggregate cost, including accrued dividends, of $115.8 million, which will result in a reduction
of $2.3 million in annual preferred
dividend payments.
- Increased the commitments to our unsecured line of credit by
$50 million to a current total of
$300 million. Closed a $70 million unsecured term loan and executed a
swap agreement to synthetically fix the interest rate for the full
duration of the loan.
- Established a new senior management team to complete the
portfolio transition and continue the operational improvements
while achieving a $1.6 million
year-over-year reduction in general and administrative
expenses.
- Strengthened our board with two new trustees who add expertise
in customer-facing service operations and technology application as
well as public company leadership experience in both board and
management roles.
Acquisitions
We added one new community to our
portfolio during the quarter:
|
|
|
|
|
|
(in
thousands)
|
|
|
Community
Name
|
|
Location
|
|
Apartment
Homes
|
|
Total
Cost
|
|
%
Occupied as of
4/30/2018
|
Westend
|
|
Denver, CO
|
|
390
|
|
$
|
128,700
|
|
|
93.8
|
%
|
Dispositions
During the quarter, we sold one
commercial property and adjacent parcel of unimproved land in
Bismarck, ND for an aggregate
sales price of $5.5 million.
Balance Sheet
At the end of the fourth quarter, we had
$193.9 million of total
liquidity on our balance sheet, including $176.0 million available on our corporate
revolver and $6.0 million on our
operating line of credit.
During the quarter, we repurchased and retired approximately
548,000 common shares and redeemed approximately 39,000 Units for
an aggregate cost of approximately $3.0
million, representing an average price of approximately
$5.09 per share.
During fiscal year 2018, we incurred a loss of $18.1 million due to impairment of one apartment
community, three other commercial properties, and four parcels of
land.
Quarterly Distributions
On June 5, 2018, IRET's
Board of Trustees declared a regular quarterly distribution of
$0.07 per share/unit payable on
July 2, 2018, to common shareholders and unitholders of record
on June 15, 2018. This distribution will be the 189th
consecutive quarterly distribution paid by IRET since its inception
in 1970. It represents an annualized rate of $0.28 per share/unit with an annualized yield of
4.7% based on IRET's closing share price as of June 26, 2018.
The Board of Trustees also declared a distribution of
$0.4140625 per share on the 6.625%
Series C Cumulative Redeemable Preferred Shares (NYSE:
IRET PRC) payable on July 2, 2018, to holders of record
on June 15, 2018. Series C preferred share distributions
are cumulative and payable quarterly in arrears at an annual rate
of $1.65625 per share.
Earnings Call
Live webcast and
replay: http://ir.iretapartments.com
|
|
|
|
Live Conference
Call
|
|
Conference Call
Replay
|
Thursday, June 28,
2018, at 10:00 AM ET
|
|
Replay available
until July 12, 2018
|
USA Toll Free
Number
|
1-877-509-9785
|
|
USA Toll Free
Number
|
1-877-344-7529
|
International Toll
Free Number
|
1-412-902-4132
|
|
International Toll
Free Number
|
1-412-317-0088
|
Canada Toll Free
Number
|
1-855-669-9657
|
|
Canada Toll Free
Number
|
1-855-669-9658
|
|
|
|
Conference
Number
|
10120792
|
Supplemental Information
Supplemental Operating and
Financial Data for the Quarter Ended April 30, 2018
("Supplemental Information"), is available in the Investors section
on IRET's website at www.iretapartments.com or by calling Investor
Relations at 701-837-7104. Non-GAAP financial measures and
other capitalized terms, as used in this earnings release, are
defined and reconciled in the Supplemental Information, which
accompanies this earnings release.
About IRET
IRET is a real estate company focused on
the ownership, management, acquisition, redevelopment, and
development of apartment communities. As of April 30,
2018, IRET owned interests in 90 apartment communities
consisting of 14,176 apartment homes. IRET's common
shares and Series C preferred shares are publicly traded on the New
York Stock Exchange (NYSE symbols: IRET and IRET PRC,
respectively).
Forward Looking Statements
Certain statements in this
press release are based on our current expectations and
assumptions, and are "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of
1995. Forward-looking statements do not discuss historical
fact, but instead include statements related to expectations,
projections, intentions or other items related to the future.
Froward-looking statements are typically identified by the use of
terms such as "expects," "anticipates," "intends," "plans,"
"believes," "seeks," "estimates," and variations of those words and
similar expressions. These forward-looking statements involve
known and unknown risks, uncertainties and other factors that may
cause the actual results, performance, or achievements to be
materially different from the results of operations, financial
conditions, or plans expressed or implied by the forward-looking
statements. Although we believe the expectations reflected in
our forward-looking statements are based upon reasonable
assumptions, we can give no assurance that our expectations will be
achieved. Any statements contained herein that are not
statements of historical fact should be deemed forward-looking
statements. As a result, reliance should not be placed on
these forward-looking statements, as these statements are subject
to known and unknown risks, uncertainties, and other factors beyond
our control and could differ materially from our actual results and
performance. Such risks and uncertainties are detailed from
time to time in our filings with the SEC, including the
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Risk Factors" contained in our Annual
Report on Form 10-K for the fiscal year ended April 30, 2018, in subsequent quarterly reports
on Form 10-Q and in other public reports. We assume no
obligation to update or supplement forward-looking statements that
become untrue due to subsequent events.
IRET
|
RECONCILIATION OF NET
INCOME ATTRIBUTABLE TO
|
IRET TO FFO AND CORE
FFO
|
|
|
(in thousands, except per share amounts)
|
Three Months Ended
April 30,
|
2018
|
|
2017
|
|
Amount
|
|
Weighted Avg Shares and Units(1)
|
|
Per Share And Unit(2)
|
|
Amount
|
|
Weighted Avg Shares and Units(1)
|
|
|
Per Share And Unit(2)
|
Net income (loss)
attributable to controlling interests
|
$
|
(20,874)
|
|
|
|
|
|
|
$
|
30,280
|
|
|
|
|
|
|
Less dividends to
preferred shareholders
|
1,705
|
|
|
|
|
|
|
2,286
|
|
|
|
|
|
|
Less redemption of
preferred shares
|
—
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
Net income (loss)
available to common shareholders
|
(22,579)
|
|
|
119,588
|
|
|
$
|
(0.19)
|
|
|
27,994
|
|
|
121,155
|
|
|
|
$
|
0.23
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling
interest – Operating Partnership
|
(2,663)
|
|
|
14,115
|
|
|
|
|
3,656
|
|
|
15,797
|
|
|
|
|
Depreciation and
amortization
|
20,269
|
|
|
|
|
|
|
13,222
|
|
|
|
|
|
|
Impairment of real
estate investments
|
15,192
|
|
|
|
|
|
|
2,875
|
|
|
|
|
|
|
Gains on depreciable
property sales attributable to controlling interests
|
(2,210)
|
|
|
|
|
|
|
(37,517)
|
|
|
|
|
|
|
FFO applicable to
common shares and Units(1)
|
$
|
8,009
|
|
|
133,703
|
|
|
$
|
0.06
|
|
|
$
|
10,230
|
|
|
136,952
|
|
|
|
$
|
0.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to Core
FFO:
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease termination
fees
|
—
|
|
|
|
|
|
|
(3,244)
|
|
|
|
|
|
|
Development pursuit
and other write offs
|
|
|
|
|
|
|
3,224
|
|
|
|
|
|
|
Loss on
extinguishment of debt
|
122
|
|
|
|
|
|
|
2,910
|
|
|
|
|
|
|
Severance related
costs
|
301
|
|
|
|
|
|
|
2,612
|
|
|
|
|
|
|
Land
impairment
|
2,617
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
Redemption of
Preferred Shares
|
—
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
Core FFO
applicable to common shares and Units(1)
|
$
|
11,049
|
|
|
133,703
|
|
|
$
|
0.08
|
|
|
$
|
15,732
|
|
|
136,952
|
|
|
|
$
|
0.11
|
|
|
|
(1)
|
Units of the
Operating Partnership are exchangeable for cash or, at our
discretion, Common Shares on a one-for-one basis.
|
(2)
|
Net income
attributable to IRET is calculated on a per common share basis. FFO
is calculated on a per common share and Unit basis.
|
IRET
|
RECONCILIATION OF NET
INCOME ATTRIBUTABLE TO
|
IRET TO FFO AND CORE
FFO
|
|
|
(in thousands, except per share amounts)
|
Twelve Months
Ended April 30,
|
2018
|
|
2017
|
|
Amount
|
|
Weighted Avg Shares and Units(1)
|
|
Per Share And Unit(2)
|
|
Amount
|
|
Weighted Avg Shares and Units(1)
|
|
Per Share And Unit(2)
|
Net income
attributable to controlling interests
|
$
|
116,788
|
|
|
|
|
|
|
$
|
43,347
|
|
|
|
|
|
Less dividends to
preferred shareholders
|
(8,569)
|
|
|
|
|
|
|
(10,546)
|
|
|
|
|
|
Less redemption of
preferred shares
|
(3,657)
|
|
|
|
|
|
|
(1,435)
|
|
|
|
|
|
Net income available
to common shareholders
|
104,562
|
|
|
119,977
|
|
|
$
|
0.87
|
|
|
31,366
|
|
|
121,169
|
|
|
$
|
0.26
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling
interest – Operating Partnership
|
12,702
|
|
|
14,617
|
|
|
|
|
4,059
|
|
|
16,130
|
|
|
|
Depreciation and
amortization
|
87,299
|
|
|
|
|
|
|
52,564
|
|
|
|
|
|
Impairment of real
estate investments attributable to controlling interests
|
15,448
|
|
|
|
|
|
|
42,065
|
|
|
|
|
|
Gains on depreciable
property sales attributable to controlling interests
|
(183,687)
|
|
|
|
|
|
|
(74,847)
|
|
|
|
|
|
FFO applicable to
common shares and Units(1)
|
$
|
36,324
|
|
|
134,594
|
|
|
$
|
0.27
|
|
|
$
|
55,207
|
|
|
137,299
|
|
|
$
|
0.40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to Core
FFO:
|
|
|
|
|
|
|
|
|
|
|
|
Lease termination
fees
|
—
|
|
|
|
|
|
|
(3,251)
|
|
|
|
|
|
Development pursuit
and other write offs
|
—
|
|
|
|
|
|
|
3,224
|
|
|
|
|
|
Loss on
extinguishment of debt
|
7,448
|
|
|
|
|
|
|
4,889
|
|
|
|
|
|
Land
impairment
|
2,617
|
|
|
|
|
|
|
—
|
|
|
|
|
|
Redemption of
Preferred Shares
|
3,657
|
|
|
|
|
|
|
1,435
|
|
|
|
|
|
Severance and
transition costs
|
951
|
|
|
|
|
|
|
2,612
|
|
|
|
|
|
Core FFO
applicable to common shares and Units(1)
|
$
|
50,997
|
|
|
134,594
|
|
|
$
|
0.38
|
|
|
$
|
64,116
|
|
|
137,299
|
|
|
$
|
0.47
|
|
|
|
(1)
|
Units of the
Operating Partnership are exchangeable for cash or, at our
discretion, common shares on a one-for-one basis.
|
(2)
|
Net income
attributable to IRET is calculated on a per common share basis. FFO
is calculated on a per common share and Unit basis.
|
IRET
|
RECONCILIATION OF NET
OPERATING INCOME TO THE
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
(in
thousands)
|
Three Months Ended
April 30, 2018
|
Multifamily
|
|
All Other
|
|
Total
|
Real estate
revenue
|
$
|
42,360
|
|
|
$
|
1,825
|
|
|
$
|
44,185
|
|
Real estate
expenses
|
18,164
|
|
|
570
|
|
|
18,734
|
|
Net operating
income
|
$
|
24,196
|
|
|
$
|
1,255
|
|
|
25,451
|
|
Property
management
|
|
|
|
|
(1,411)
|
|
Casualty
gain
|
|
|
|
|
155
|
|
Depreciation and
amortization
|
|
|
|
|
(21,072)
|
|
Impairment of real
estate investments
|
|
|
|
|
(17,809)
|
|
General and
administrative expenses
|
|
|
|
|
(4,093)
|
|
Acquisition and
investment related costs
|
|
|
|
|
(30)
|
|
Interest
expense
|
|
|
|
|
(8,302)
|
|
Loss on debt
extinguishment
|
|
|
|
|
(122)
|
|
Interest and other
income
|
|
|
|
|
592
|
|
Loss before gain on
sale of real estate and other investments and income from
discontinued operations
|
|
|
|
|
(26,641)
|
|
Gain on sale of real
estate and other investments
|
|
|
|
|
2,285
|
|
Loss from continuing
operations
|
|
|
|
|
(24,356)
|
|
Income from
discontinued operations
|
|
|
|
|
197
|
|
Net income
(loss)
|
|
|
|
|
$
|
(24,159)
|
|
IRET
|
RECONCILIATION OF NET
OPERATING INCOME TO THE
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
(in
thousands)
|
Three Months Ended
April 30, 2017
|
Multifamily
|
|
All Other
|
|
Total
|
Real estate
revenue
|
$
|
36,228
|
|
|
$
|
6,583
|
|
|
$
|
42,811
|
|
Real estate
expenses
|
15,720
|
|
|
722
|
|
|
16,442
|
|
Net operating
income
|
$
|
20,508
|
|
|
$
|
5,861
|
|
|
26,369
|
|
Property
management
|
|
|
|
|
(1,239)
|
|
Casualty
gain
|
|
|
|
|
51
|
|
Depreciation and
amortization
|
|
|
|
|
(11,060)
|
|
Impairment of real
estate investments
|
|
|
|
|
(2,875)
|
|
General and
administrative expenses
|
|
|
|
|
(4,728)
|
|
Acquisition and
investment related costs
|
|
|
|
|
(3,224)
|
|
Interest
expense
|
|
|
|
|
(8,281)
|
|
Loss on debt
extinguishment
|
|
|
|
|
(1,193)
|
|
Interest and other
income
|
|
|
|
|
461
|
|
Loss before gain on
sale of real estate and other investments and income from
discontinued operations
|
|
|
|
|
(5,719)
|
|
Gain on sale of real
estate and other investments
|
|
|
|
|
7,409
|
|
Income from
continuing operations
|
|
|
|
|
1,690
|
|
Income from
discontinued operations
|
|
|
|
|
31,950
|
|
Net income
(loss)
|
|
|
|
|
$
|
33,640
|
|
|
|
|
(in
thousands)
|
Twelve Months
Ended April 30, 2018
|
Multifamily
|
|
All Other
|
|
Total
|
Real estate
revenue
|
$
|
159,983
|
|
|
$
|
9,762
|
|
|
$
|
169,745
|
|
Real estate
expenses
|
70,460
|
|
|
2,574
|
|
|
73,034
|
|
Net operating
income
|
$
|
89,523
|
|
|
$
|
7,188
|
|
|
96,711
|
|
Property
management
|
|
|
|
|
(5,526)
|
|
Casualty
loss
|
|
|
|
|
(500)
|
|
Depreciation and
amortization
|
|
|
|
|
(82,070)
|
|
Impairment of real
estate investments
|
|
|
|
|
(18,065)
|
|
General and
administrative expenses
|
|
|
|
|
(14,203)
|
|
Acquisition and
investment related costs
|
|
|
|
|
(51)
|
|
Interest
expense
|
|
|
|
|
(34,178)
|
|
Loss on debt
extinguishment
|
|
|
|
|
(940)
|
|
Interest and other
income
|
|
|
|
|
1,508
|
|
Loss before gain on
sale of real estate and other investments and income from
discontinued operations
|
|
|
|
|
(57,314)
|
|
Gain on sale of real
estate and other investments
|
|
|
|
|
20,120
|
|
Loss from continuing
operations
|
|
|
|
|
(37,194)
|
|
Income from
discontinued operations
|
|
|
|
|
164,823
|
|
Net income
(loss)
|
|
|
|
|
$
|
127,629
|
|
|
|
|
(in
thousands)
|
Twelve Months
Ended April 30, 2017
|
Multifamily
|
|
All Other
|
|
Total
|
Real estate
revenue
|
$
|
142,214
|
|
|
$
|
17,890
|
|
|
$
|
160,104
|
|
Real estate
expenses
|
60,895
|
|
|
3,431
|
|
|
64,326
|
|
Net operating
income
|
$
|
81,319
|
|
|
$
|
14,459
|
|
|
95,778
|
|
Property
management
|
|
|
|
|
(5,046)
|
|
Casualty
loss
|
|
|
|
|
(414)
|
|
Depreciation and
amortization
|
|
|
|
|
(44,253)
|
|
Impairment of real
estate investments
|
|
|
|
|
(57,028)
|
|
General and
administrative expenses
|
|
|
|
|
(15,871)
|
|
Acquisition and
investment related costs
|
|
|
|
|
(3,276)
|
|
Interest
expense
|
|
|
|
|
(34,314)
|
|
Loss on debt
extinguishment
|
|
|
|
|
(1,651)
|
|
Interest and other
income
|
|
|
|
|
1,146,000
|
|
Loss before gain on
sale of real estate and other investments and income from
discontinued operations
|
|
|
|
|
(64,929)
|
|
Gain on sale of real
estate and other investments
|
|
|
|
|
18,701
|
|
Loss from continuing
operations
|
|
|
|
|
(46,228)
|
|
Income from
discontinued operations
|
|
|
|
|
76,753
|
|
Net income
(loss)
|
|
|
|
|
$
|
30,525
|
|
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SOURCE IRET