MINNEAPOLIS, Dec. 10, 2018 /PRNewswire/ -- IRET (NYSE: IRET)
announced today its second quarter fiscal 2019 financial and
operating results. Net income and Funds from Operations
("FFO") per share for the three and six months ended
October 31, 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
|
|
Six Months
Ended
|
|
|
October
31,
|
|
October
31,
|
Per
Share
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Net Income
(Loss)
|
|
$
|
(0.05)
|
|
|
$
|
0.05
|
|
|
$
|
(0.04)
|
|
|
$
|
(0.06)
|
|
FFO
|
|
$
|
0.09
|
|
|
$
|
0.07
|
|
|
$
|
0.17
|
|
|
$
|
0.17
|
|
Core FFO
|
|
$
|
0.09
|
|
|
$
|
0.10
|
|
|
$
|
0.17
|
|
|
$
|
0.20
|
|
|
|
Year-Over-Year
Comparison
|
|
Sequential
Comparison
|
|
YTD
Comparison
|
Multifamily
Same-Store Results
|
|
2Q19 vs.
2Q18
|
|
2Q19 vs.
1Q19
|
|
2Q19 vs.
2Q18
|
Revenues
|
|
3.6
|
%
|
|
1.3
|
%
|
|
3.3
|
%
|
Expenses
|
|
(2.4)
|
%
|
|
(0.1)
|
%
|
|
0.4
|
%
|
Net Operating Income
("NOI")
|
|
8.7
|
%
|
|
2.3
|
%
|
|
5.7
|
%
|
Multifamily
Same-Store Results
|
|
2Q19
|
|
1Q19
|
|
2Q18
|
Physical
Occupancy
|
|
95.4
|
%
|
|
94.0
|
%
|
|
95.3
|
%
|
Weighted Average
Occupancy
|
|
93.1
|
%
|
|
93.5
|
%
|
|
93.0
|
%
|
"We continue to execute our plan, and 8.7% same-store NOI growth
reflects the value of our operations focus and our drive to improve
our portfolio and markets," said Mark O.
Decker Jr., IRET's President and CEO.
Second Quarter Fiscal Year 2019 Highlights
- Same-store NOI grew by 8.7%, our fourth consecutive quarter of
year-over-year NOI growth. NOI expansion has been driven by revenue
growth and expense control initiatives;
- Same-store revenue increased year-over-year by 3.6%, driven by
growth in rental revenue;
- Same-store expenses decreased by 2.4% from the prior year due
to several cost containment initiatives undertaken by our
operations team and a reduction in insurance claim losses; and
- Continued the disposition of non-multifamily properties.
Dispositions
During the quarter, we sold one
commercial property and one parcel of land for a total sale price
of $3.1 million.
Subsequent to quarter-end, we disposed of our Minot Arrowhead
commercial property for a total sale price of $6.6 million. Following this sale, we have
only five remaining non-multifamily properties, representing less
than 2.0% of NOI, in our portfolio.
Balance Sheet
During the quarter, we amended our line
of credit to:
- increase the overall unsecured facility from $370 million to $395
million, reallocating the commitment for the revolving line
of credit to $250 million and the
remaining $145 million between two
term loans;
- extend the maturity of the revolving line of credit to
August 2022;
- extend the existing $70 million
unsecured term loan maturity to January
2024; and
- add a new $75 million, 7-year
unsecured term loan maturing in August
2025 that bears interest at a spread over LIBOR based on
IRET's overall leverage.
Under the amendment, the interest rate on the existing
facilities decreased by 25-35 basis points depending on IRET's
overall leverage. IRET also entered into a swap agreement for the
entire $75 million and full term of
the new unsecured 7-year term loan in its ongoing effort to reduce
floating interest rate exposure.
On September 10, 2018, we entered
into a swap agreement covering the extension of the $70 million term loan from January 2023 to
January 2024, resulting in both term
loans being covered by swap agreements for the duration of the
terms.
At the end of the second quarter, we had $195.3 million of total liquidity on our balance
sheet, including $176.5 million
available on our corporate revolver and $6.0
million on our operating line of credit.
Quarterly Distributions
On September 5, 2018, IRET's Board of Trustees
declared a regular quarterly distribution of $0.07 per share/unit payable on October 1, 2018, to common shareholders and
unitholders of record on September
17, 2018. This distribution was the 190th consecutive
quarterly distribution paid by IRET since the inception of our
dividends in 1971. It represents an annualized rate of $0.28 per share/unit.
On September 5, 2018, IRET's 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 October 1, 2018, to
holders of record on September 17, 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
|
Tuesday, December 11,
2018, at 10:00 AM ET
|
|
Replay available
until December 25, 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
|
10126592
|
Supplemental Information
Supplemental Operating and
Financial Data for the Quarter ended October 31, 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 that
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 October 31,
2018, we owned interests in 87 apartment communities
consisting of 13,702 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.
Words such as "expects," "anticipates," "intends," "plans,"
"believes," "seeks," "estimates," and variations of those words and
similar expressions are intended to identify forward-looking
statements. 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 our 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
|
CONTROLLING INTERESTS
TO FFO AND CORE FFO
|
|
|
|
(in thousands, except per share amounts)
|
Three Months Ended
October 31,
|
|
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
|
|
$
|
(4,558)
|
|
|
|
|
|
|
$
|
12,821
|
|
|
|
|
|
Less dividends to
preferred shareholders
|
|
(1,706)
|
|
|
|
|
|
|
(2,812)
|
|
|
|
|
|
Less redemption of
preferred shares
|
|
—
|
|
|
|
|
|
|
(3,649)
|
|
|
|
|
|
Net income (loss)
available to common shareholders
|
|
(6,264)
|
|
|
119,396
|
|
|
$
|
(0.05)
|
|
|
6,360
|
|
|
120,144
|
|
|
$
|
0.05
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling
interest – Operating Partnership
|
|
(722)
|
|
|
13,789
|
|
|
|
|
773
|
|
|
14,623
|
|
|
|
Depreciation and
amortization
|
|
18,446
|
|
|
|
|
|
|
19,894
|
|
|
|
|
|
Loss (gain) on
depreciable property sales attributable to controlling
interests
|
|
232
|
|
|
|
|
|
|
(17,562)
|
|
|
|
|
|
FFO applicable to
common shares and Units(1)
|
|
$
|
11,692
|
|
|
133,185
|
|
|
$
|
0.09
|
|
|
$
|
9,465
|
|
|
134,767
|
|
|
$
|
0.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to Core
FFO:
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on
extinguishment of debt
|
|
4
|
|
|
|
|
|
|
340
|
|
|
|
|
|
Redemption of
preferred shares
|
|
—
|
|
|
|
|
|
|
3,649
|
|
|
|
|
|
Transition and
severance costs
|
|
—
|
|
|
|
|
|
|
186
|
|
|
|
|
|
Core FFO
applicable to common shares and
Units(1)
|
|
$
|
11,696
|
|
|
133,185
|
|
|
$
|
0.09
|
|
|
$
|
13,640
|
|
|
134,767
|
|
|
$
|
0.10
|
|
|
(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
|
CONTROLLING INTERESTS
TO FFO AND CORE FFO
|
|
|
|
(in thousands, except per share amounts)
|
Six Months Ended
October 31,
|
|
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
|
|
$
|
(1,642)
|
|
|
|
|
|
|
$
|
1,557
|
|
|
|
|
|
Less dividends to
preferred shareholders
|
|
(3,411)
|
|
|
|
|
|
|
(5,098)
|
|
|
|
|
|
Less redemption of
preferred shares
|
|
—
|
|
|
|
|
|
|
(3,649)
|
|
|
|
|
|
Net income (loss)
available to common shareholders
|
|
(5,053)
|
|
|
119,320
|
|
|
$
|
(0.04)
|
|
|
(7,190)
|
|
|
120,282
|
|
|
$
|
(0.06)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling
interest – Operating Partnership
|
|
(587)
|
|
|
13,924
|
|
|
|
|
(871)
|
|
|
14,912
|
|
|
|
Depreciation and
amortization
|
|
36,282
|
|
|
|
|
|
|
48,013
|
|
|
|
|
|
Impairment of real
estate investments attributable to controlling interests
|
|
—
|
|
|
|
|
|
|
256
|
|
|
|
|
|
Gain on depreciable
property sales attributable to controlling interests
|
|
(8,395)
|
|
|
|
|
|
|
(17,686)
|
|
|
|
|
|
FFO applicable to
common shares and Units(1)
|
|
$
|
22,247
|
|
|
133,244
|
|
|
$
|
0.17
|
|
|
$
|
22,522
|
|
|
135,194
|
|
|
$
|
0.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to Core
FFO:
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on
extinguishment of debt
|
|
556
|
|
|
|
|
|
|
539
|
|
|
|
|
|
Redemption of
Preferred Shares
|
|
—
|
|
|
|
|
|
|
3,649
|
|
|
|
|
|
Severance and
transition costs
|
|
510
|
|
|
|
|
|
|
650
|
|
|
|
|
|
Core FFO
applicable to common shares and Units(1)
|
|
$
|
23,313
|
|
|
133,244
|
|
|
$
|
0.17
|
|
|
$
|
27,360
|
|
|
135,194
|
|
|
$
|
0.20
|
|
|
(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
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
(in
thousands)
|
Three Months Ended
October 31, 2018
|
Multifamily
|
|
All Other
|
|
Total
|
Real estate
revenue
|
$
|
43,874
|
|
|
$
|
1,764
|
|
|
$
|
45,638
|
|
Real estate
expenses
|
18,768
|
|
|
568
|
|
|
19,336
|
|
Net operating
income
|
$
|
25,106
|
|
|
$
|
1,196
|
|
|
$
|
26,302
|
|
Property management
expenses
|
|
|
|
|
(1,319)
|
|
Casualty
loss
|
|
|
|
|
(225)
|
|
Depreciation and
amortization
|
|
|
|
|
(19,191)
|
|
General and
administrative expenses
|
|
|
|
|
(3,374)
|
|
Interest
expense
|
|
|
|
|
(7,997)
|
|
Loss on debt
extinguishment
|
|
|
|
|
(4)
|
|
Interest and other
income
|
|
|
|
|
429
|
|
Income (loss) before
gain on sale of real estate and other investments and income (loss)
from discontinued operations
|
|
|
|
|
(5,379)
|
|
Gain (loss) on sale
of real estate and other investments
|
|
|
|
|
(232)
|
|
Income (loss) from
continuing operations
|
|
|
|
|
(5,611)
|
|
Income (loss) from
discontinued operations
|
|
|
|
|
—
|
|
Net income
(loss)
|
|
|
|
|
$
|
(5,611)
|
|
|
|
|
(in
thousands)
|
Three Months Ended
October 31, 2017
|
Multifamily
|
|
All Other
|
|
Total
|
Real estate
revenue
|
$
|
37,457
|
|
|
$
|
4,409
|
|
|
$
|
41,866
|
|
Real estate
expenses
|
17,201
|
|
|
1,517
|
|
|
18,718
|
|
Net operating
income
|
$
|
20,256
|
|
|
$
|
2,892
|
|
|
$
|
23,148
|
|
Property management
expenses
|
|
|
|
|
(1,372)
|
|
Casualty
loss
|
|
|
|
|
(115)
|
|
Depreciation and
amortization
|
|
|
|
|
(17,270)
|
|
Loss on
impairment
|
|
|
|
|
—
|
|
General and
administrative expenses
|
|
|
|
|
(3,118)
|
|
Interest
expense
|
|
|
|
|
(8,509)
|
|
Loss on debt
extinguishment
|
|
|
|
|
(334)
|
|
Interest and other
income
|
|
|
|
|
255
|
|
Income (loss) before
gain on sale of real estate and other investments and income (loss)
from discontinued operations
|
|
|
|
|
(7,315)
|
|
Gain (loss) on sale
of real estate and other investments
|
|
|
|
|
5,324
|
|
Income (loss) from
continuing operations
|
|
|
|
|
(1,991)
|
|
Income (loss) from
discontinued operations
|
|
|
|
|
15,130
|
|
Net income
(loss)
|
|
|
|
|
$
|
13,139
|
|
IRET
|
RECONCILIATION OF NET
OPERATING INCOME TO THE
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
(in
thousands)
|
Six Months Ended
October 31, 2018
|
Multifamily
|
|
All Other
|
|
Total
|
Real estate
revenue
|
$
|
86,963
|
|
|
$
|
4,621
|
|
|
$
|
91,584
|
|
Real estate
expenses
|
37,254
|
|
|
1,611
|
|
|
38,865
|
|
Net operating
income
|
$
|
49,709
|
|
|
$
|
3,010
|
|
|
$
|
52,719
|
|
Property management
expenses
|
|
|
|
|
(2,686)
|
|
Casualty
loss
|
|
|
|
|
(450)
|
|
Depreciation and
amortization
|
|
|
|
|
(37,803)
|
|
General and
administrative expenses
|
|
|
|
|
(7,244)
|
|
Interest
expense
|
|
|
|
|
(16,382)
|
|
Loss on debt
extinguishment
|
|
|
|
|
(556)
|
|
Interest and other
income
|
|
|
|
|
945
|
|
Income (loss) before
gain on sale of real estate and other investments and income (loss)
from discontinued operations
|
|
|
|
|
(11,457)
|
|
Gain (loss) on sale
of real estate and other investments
|
|
|
|
|
8,992
|
|
Income (loss) from
continuing operations
|
|
|
|
|
(2,465)
|
|
Income (loss) from
discontinued operations
|
|
|
|
|
570
|
|
Net income
(loss)
|
|
|
|
|
$
|
(1,895)
|
|
|
|
|
(in
thousands)
|
Six Months Ended
October 31, 2017
|
Multifamily
|
|
All Other
|
|
Total
|
Real estate
revenue
|
$
|
73,455
|
|
|
$
|
9,389
|
|
|
$
|
82,844
|
|
Real estate
expenses
|
32,934
|
|
|
3,311
|
|
|
36,245
|
|
Net operating
income
|
$
|
40,521
|
|
|
$
|
6,078
|
|
|
$
|
46,599
|
|
Property management
expenses
|
|
|
|
|
(2,728)
|
|
Casualty
loss
|
|
|
|
|
(600)
|
|
Depreciation and
amortization
|
|
|
|
|
(42,608)
|
|
Impairment of real
estate investments
|
|
|
|
|
(256)
|
|
General and
administrative expenses
|
|
|
|
|
(7,120)
|
|
Interest
expense
|
|
|
|
|
(16,640)
|
|
Loss on debt
extinguishment
|
|
|
|
|
(533)
|
|
Interest and other
income
|
|
|
|
|
483
|
|
Income (loss) before
gain on sale of real estate and other investments and income (loss)
from discontinued operations
|
|
|
|
|
(23,403)
|
|
Gain (loss) on sale
of real estate and other investments
|
|
|
|
|
5,448
|
|
Income (loss) from
continuing operations
|
|
|
|
|
(17,955)
|
|
Income (loss) from
discontinued operations
|
|
|
|
|
17,815
|
|
Net income
(loss)
|
|
|
|
|
$
|
(140)
|
|
Investor Relations Contact:
Jonathan Bishop
701-837-7104
IR@iret.com
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SOURCE IRET