AMERICAN RESIDENTIAL PROPERTIES INC SCOTTSDALE, AZ, November 4, 2015 - American Residential Properties, Inc. (NYSE: ARPI) (the 'Company') today reported its results for the quarter ended September 30, 2015.
Third Quarter 2015 Highlights
Core FFO attributable to common stockholders of $4.5 million, or $0.14 per diluted share, a decrease of $0.9 million, or 16%, compared to the prior quarter.
FFO attributable to common stockholders of $3.2 million, or $0.10 per diluted share, a decrease of $1.4 million, or 31%, compared to the prior quarter.
Increased the leased rate on the total portfolio to 94.3%, up 0.7% from 93.6% as of Q2 of 2015.
Reached a leased rate of 94.4% on stabilized properties, up from 94.1% as of Q2 of 2015.
Achieved rent increases averaging 5.2% on renewals with an overall resident retention rate of 65%.
Increased rents on new leases by an average of 4.3% nationwide.
Increased revenue, excluding net gain on real estate sales, by 3.4% to $31.8 million compared to the prior quarter.
Net Operating Income of $16.2 million.
Declared Q3 dividend of $0.10 per common share.
'In the third quarter, we achieved a portfolio leased rate of 94.3% and produced rent growth of 5.2% on lease renewals, and 4.3% on new leases,' said Stephen G. Schmitz, Chairman and Chief Executive Officer of American Residential Properties. 'Our core FFO attributable to common stockholders, however, did not meet our expectations. While cost reduction initiatives are taking longer than anticipated to work their way through the system, we remain highly focused on our strategy to maximize the cash flow potential of our portfolio to deliver attractive returns to our shareholders.'
Total Revenue
Total revenue for the quarter ended September 30, 2015 decreased $0.1 million to $32.0 million, compared to $32.1 million for the quarter ended June 30, 2015, and increased $8.5 million compared to $23.5 million for the quarter ended September 30, 2014. The decrease in total revenue from the prior quarter is primarily attributable to a $1.1 million decrease in gain on sale of real estate offset by higher rental income generated from leasing an additional 49 homes.
Net Loss Attributable to Common Stockholders
Net loss attributable to common stockholders for the quarter ended September 30, 2015 increased $2.8 million to $(12.1) million, or $(0.38) per diluted share, compared to $(9.3) million, or $(0.29) per diluted share, for the quarter ended June 30, 2015, and increased $2.9 million compared to $(9.2) million, or $(0.28) per diluted share, for the quarter ended September 30, 2014.
FFO and Core FFO Attributable to Common Stockholders
Funds from operations ('FFO') attributable to common stockholders for the quarter ended September 30, 2015 decreased $1.4 million to $3.2 million, or $0.10 per diluted share, compared to $4.5 million, or $0.14 per diluted share, for the quarter ended June 30, 2015, and increased $0.2 million compared to $2.9 million, or $0.09 per diluted share, for the quarter ended September 30, 2014.
Core funds from operations ('Core FFO') attributable to common stockholders for the quarter ended September 30, 2015 decreased $0.9 million to $4.5 million, or $0.14 per diluted share, compared to $5.4 million, or $0.16 per diluted share, for the quarter ended June 30, 2015, and increased $0.7 million compared to $3.8 million, or $0.12 per diluted share, for the quarter ended September 30, 2014.
Portfolio Highlights
Real Estate Dispositions
From July 1, 2015 to September 30, 2015, the Company disposed of 9 non-core, single-family homes, of which 5 are in Arizona, 3 are in Colorado and 1 is in North Carolina for gross proceeds of $1.2 million and a net gain of $0.2 million recorded in interest and other income on the condensed consolidated statement of operations.
Portfolio
As of September 30, 2015, the Company owned 8,938 single-family homes in Arizona, California, Florida, Georgia, Illinois, Indiana, Nevada, North Carolina, Ohio, South Carolina, Tennessee and Texas for a total investment of approximately $1.34 billion. As of September 30, 2015, approximately 94.3% of the Company's portfolio was leased.
We incurred renovation costs on the Company's existing portfolio of $6.3 million.
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Operating Metrics
The following table summarizes the Company's portfolio and operating metrics:
September 30, | June 30, | March 31, | December 31, | September 30, | |
2015 | 2015 | 2015 | 2014 | 2014 | |
Total portfolio of single-family homes | |||||
Self-managed homes | 8,344 | 8,353 | 8,444 | 8,299 | 7,613 |
Self-managed % leased | 93.9 % | 93.2 % | 88.2 % | 79.3 % | 80.1 % |
Local operator homes | 594 | 594 | 594 | 594 | 610 |
Local operator % leased | 100.0 % | 100.0 % | 100.0 % | 100.0 % | 100.0 % |
Total Homes | 8,938 | 8,947 | 9,038 | 8,893 | 8,223 |
Total % Leased | 94.3% | 93.6% | 89.0% | 80.7% | 81.6% |
Portfolio of stabilized single-family homes (1) | |||||
Self-managed homes | 8,330 | 8,306 | 8,059 | 7,247 | 6,572 |
Self-managed % leased | 94.0 % | 93.7 % | 92.4 % | 90.8 % | 92.8 % |
Local operator homes | 594 | 594 | 594 | 594 | 610 |
Local operator % leased | 100.0 % | 100.0 % | 100.0 % | 100.0 % | 100.0 % |
Total Homes | 8,924 | 8,900 | 8,653 | 7,841 | 7,182 |
Total % Leased | 94.4% | 94.1% | 92.9% | 91.5% | 93.4% |
(1) Properties are considered stabilized when renovations have been completed and the properties have been leased or available for rent for a period of greater than 90 days. Properties with in-place leases at the date of acquisition are also considered stabilized even though these properties have not been renovated by us and may require future renovations to meet our standards.
Conference Call
The Company will host a conference call commencing at 12:00 p.m. Eastern Standard Time on Thursday, November 5, 2015, to discuss its financial results for the quarter ended September 30, 2015 and to provide a Company update. To participate in the event by telephone, please dial (800) 446-2782 approximately ten minutes prior to the start time (to allow time for registration) and use conference ID 40958079. International callers should dial (847) 413-3235 and enter the same conference ID number.
You may listen to the teleconference via live webcast on the Internet on the Company's website at www.amresprop.com in the Investor Relations section under the Calendar of Events link.
A replay of the conference call will be available for two weeks, beginning November 5, 2015 at 2:30 p.m. Eastern Standard Time, until November 19, 2015 at 11:59 p.m. Eastern Standard Time. To access the replay, dial (888) 843-7419 and use conference ID 40958079#. International callers should dial (630) 652-3042 and enter the same conference ID number.
FFO and Core FFO
FFO is a widely recognized measure of real estate investment trust ('REIT') performance. The Company calculates FFO as defined by the National Association of Real Estate Investment Trusts ('NAREIT'). FFO represents net income (loss) (as computed in accordance with U.S. generally accepted accounting principles ('GAAP')), excluding gains from dispositions of property, plus real estate-related depreciation and amortization (including capitalized leasing costs).
The Company also presents Core FFO, which is FFO excluding acquisition costs, severance costs and items that are non- recurring or not related to the Company's core business activities. FFO and Core FFO are supplemental non-GAAP financial measures. Management uses FFO and Core FFO as supplemental performance measures because FFO and Core FFO account for trends in occupancy rates, rental rates and operating costs. The Company also believes that, as widely recognized measures of the performance of REITs, FFO and Core FFO will be used by investors as a basis to compare the Company's operating performance with that of other REITs.
However, the utility of FFO and Core FFO is limited as the calculation of each of FFO and Core FFO excludes depreciation and amortization and does not capture capital expenditures and leasing commissions associated with maintaining the Company's properties and the changes in the value of the Company's properties due to use or market conditions, all of which have economic effects that could materially impact the Company's results of operation. Further, while the Company adheres to the NAREIT definition of FFO, its presentation of FFO is not necessarily comparable to other REITs who may not use the same
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definition. Core FFO and FFO should not be considered as substitutes for net income as an important indicator of the Company's operating performance, or as substitutes for cash flow as measures of liquidity or ability to pay dividends or make distributions.
Net Operating Income (NOI) and NOI Margin
Net Operating Income ('NOI') and NOI margin are supplemental non-GAAP financial measures. NOI excludes acquisition, depreciation and amortization, general, administrative and other and interest expenses. We consider NOI to be a meaningful financial measure because we believe it is helpful to investors in understanding operating performance and operating margin of our single-family rental properties. NOI should not be used as a substitute for net income (loss) or net cash flows from operating activities (as computed in accordance with GAAP).
The following is a reconciliation of NOI to net loss determined in accordance with GAAP:
2015 | 2014 | 2015 | 2014 | |
Loss from continuing operations before equity in net (loss) income of unconsolidated ventures | (12,372) | (9,243) | (33,001) | (24,633) |
Acquisition | - | 98 | 85 | 179 |
Depreciation and amortization | 16,171 | 12,576 | 47,064 | 32,960 |
General, administrative and other | 4,839 | 4,056 | 13,341 | 11,274 |
Interest | 7,725 | 5,961 | 22,677 | 15,060 |
Less: Gain on sale of assets | (198) | - | (1,565) | - |
NOI - Total revenue | $ 16,165 | $ 13,448 | $ 48,601 | $ 34,840 |
Local operator rental revenue | (1,348) | (1,273) | (4,014) | (3,951) |
Management services (related party) | - | (100) | (107) | (321) |
Interest and other | (660) | (1,034) | (3,337) | (3,603) |
Add: Gain on sale of assets | $ 198 | $ - | $ 1,565 | $ - |
NOI - Self-managed rental revenue | $ 14,355 | $ 11,041 | $ 42,708 | $ 26,965 |
American Residential Properties, Inc. is an internally managed real estate company, organized as a REIT for federal income tax purposes, that acquires, owns and manages single-family homes as rental properties in select communities nationwide. The Company's primary business strategy is to acquire, restore, lease and manage single-family homes as well-maintained investment properties to generate attractive, risk-adjusted returns over the long-term. With a vertically integrated real estate acquisition and management platform, incorporating disciplined acquisition criteria, extensive research, seasoned personnel and comprehensive operations, the Company is well-positioned to execute its strategy.
Additional information about American Residential Properties, Inc. can be found on the Company's website at www.amresprop.com.
Forward-Looking Statements
This press release contains statements that are 'forward-looking statements' within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, pursuant to the safe harbor provisions of the Private Securities Reform Act of 1995. Forward-looking statements are generally identifiable by use of forward-looking terminology such as 'may,' 'will,' 'should,' 'potential,' 'intend,' 'expect,' 'seek,' 'anticipate,' 'estimate,' 'approximately,' 'believe,' 'could,' 'project,' 'predict,' 'forecast,' 'continue,' 'plan' or other similar words or expressions. Forward-looking statements are based on certain assumptions and can include future expectations, future plans and strategies, financial and operating projections or other forward-looking information. Examples of forward- looking statements include descriptions of the potential to deliver attractive returns for our shareholders. These forward- looking statements are subject to various risks and uncertainties, not all of which are known to the Company and many of which are beyond the Company's control, which could cause actual results to differ materially from such statements. These risks and uncertainties include, but are not limited to, the state of the U.S. economy, supply and demand in the single-family rental industry and other factors as are described in greater detail in the Company's filings with the Securities and Exchange Commission.
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