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IRET Announces Fiscal Third Quarter 2018 Results

IRET Announces Fiscal Third Quarter 2018 Results

PR Newswire

MINOT, N.D., March 12, 2018 /PRNewswire/ — IRET (NYSE: IRET) announced today its fiscal third quarter 2018 financial and operating results. Net income and Funds from Operations (“FFO”) per share for the three and nine months ended January 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



Nine Months Ended



January 31,


January 31,

Per Share


2018


2017


2018


2017

Net Income


$

1.12



$

0.16



$

1.06



$

0.03


FFO


$

0.04



$

0.09



$

0.21



$

0.33


Core FFO


$

0.09



$

0.12



$

0.30



$

0.35




Quarterly

Comparison


Sequential

Comparison


YTD

Comparison

Multifamily Same-Store Results


3Q18 vs. 3Q17


3Q18 vs. 2Q18


3Q18 vs. 3Q17

Revenues


5.2

%


(0.1)

%


4.3

%

Expenses


4.5

%


(6.7)

%


11.3

%

Net Operating Income (“NOI”)


5.8

%


6.1

%


(1.2)

%

Multifamily Same-Store Results


3Q18


2Q18


3Q17

Physical Occupancy


95.2

%


95.2

%


92.3

%

Weighted Average Occupancy


94.0

%


93.1

%


91.4

%

“Today marks the moment IRET can be considered a multifamily real estate company,” said Mark O. Decker, Jr., IRET’s President and CEO. “With the previously-announced sales of our healthcare properties, apartment communities now comprise more than 90% of our portfolio, and with the pending acquisition in Denver, our redeployment is nearly finished. Our team completed the transformation we set out to achieve, and we can now focus the full attention of our organization on improving our operational performance and growing and refining our apartment portfolio.”

Third Quarter Fiscal Year 2018 Highlights

  • Substantially completed our transformation into a focused multifamily company by closing the sale of 27 of our 28 healthcare properties for an aggregate sale price of approximately $400.8 million. The final property remains under contract for sale pending the satisfaction of certain closing conditions. We used the proceeds from the sale of these assets to fund acquisitions and reduce debt.
  • Closed the acquisition of Dylan, a 274-home apartment community in Denver, Colorado, completing our inaugural investment in another top-25 MSA. Subsequent to quarter-end, we entered into a purchase agreement to acquire Westend, another Denver apartment community with 390 homes. Denver has a healthy and diverse economy and, together with Minneapolis-St. Paul, will be a key market in IRET’s push to achieve portfolio growth, geographic diversity, and operating efficiencies.
  • Achieved quarterly same-store NOI growth of 5.8% over the same period in the prior year, representing the first positive result in over two years. This performance was driven by revenue growth of 5.2%, due primarily to a 4.4% increase in occupancy, and expense growth of 4.5%. The reduction in expense growth this quarter compared to the 15.0% increase in first half of fiscal 2018 is due, in part, to a decrease in snow removal costs and a reduction in accruals related to self-funded healthcare costs.
  • Reduced debt from $928.0 million to $692.9 million during the quarter and have $116.8 million of restricted cash available to deploy toward future acquisitions.
  • Closed a $70 million unsecured term loan that expires in 2023 and executed a swap agreement to synthetically fix the interest rate for the full duration of the loan.

Acquisitions
We added one new property to our portfolio during the quarter:







(in thousands)



Property Name


Location


Total Units


Total Cost


% Occupied

as of 1/31/2018

Dylan


Denver, CO


274


$

90,600


81.4

%

Subsequent to quarter-end, we entered into a purchase agreement to acquire Westend, another Denver apartment community with 390 homes.

Dispositions
During the quarter, we sold 27 healthcare properties for $400.8 million, two other properties for $35.4 million, and two multifamily properties for $6.7 million.

Subsequent to quarter-end, we sold a commercial property and adjacent parcel of unimproved land in Bismarck, ND, for an aggregate sale price of $5.5 million.

Balance Sheet
At the end of the third quarter, we had $174.8 million of total liquidity on our balance sheet, including $152.2 million available on our corporate revolver.

During the quarter, we repurchased and retired approximately 152,000 common shares and redeemed approximately 450,000 Units for an aggregate cost of approximately $3.5 million, representing an average price of approximately $5.78 per share. We also closed on a $70 million unsecured term loan that matures in 2023 and executed a swap agreement to synthetically fix the interest rate for the full duration of the loan.

Quarterly Distributions
On March 5, 2018, IRET’s Board of Trustees declared a regular quarterly distribution of $0.07 per share/unit payable on April 2, 2018, to common shareholders and unitholders of record on March 15, 2018. This distribution will be the 188th 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 5.9% based on IRET’s closing share price as of March 9, 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 April 2, 2018, to holders of record on March 15, 2017. 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, March 13, 2018, at 10:00 AM ET


Replay available until March 27, 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

10117418

Supplemental Information
Supplemental Operating and Financial Data for the Quarter Ended January 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, which accompanies this earnings release.

About IRET
IRET is a real estate company focused on the ownership, management, acquisition, redevelopment, and development of multifamily apartment communities. As of January 31, 2018, IRET owned interests in 89 multifamily properties consisting of 13,786 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 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, 2017, 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 January 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 attributable to controlling interests


$

136,105







$

23,110






Less dividends to preferred shareholders


(1,766)







(2,503)






Less redemption of preferred shares


(8)







(1,435)






Net loss available to common shareholders


134,331



119,741



$

1.12



19,172



121,255



$

0.16


Adjustments:













Noncontrolling interest – Operating Partnership


16,236



14,434





2,525



16,120




Depreciation and amortization


19,017







12,933






Gains on depreciable property sales attributable to controlling interests


(163,791)







(21,972)






FFO applicable to Common Shares and Units(1)


$

5,793



134,175



$

0.04



$

12,658



137,375



$

0.09















Adjustments to Core FFO:













Lease termination fees








(7)






Loss on extinguishment of debt


6,787







1,907






Redemption of Preferred Shares


8







1,435






Core FFO applicable to common shares and Units(1)


$

12,588



134,175



$

0.09



$

15,993



137,375



$

0.12




(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)

Nine Months Ended January 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


$

137,662







$

13,067






Less dividends to preferred shareholders


(6,864)







(8,260)






Less redemption of preferred shares


(3,657)







(1,435)






Net income available to common shareholders


127,141



120,102



$

1.06



3,372



121,175



$

0.03


Adjustments:













Noncontrolling interest – Operating Partnership


15,365



14,768





403



16,229




Depreciation and amortization


67,030







39,341






Impairment of real estate investments attributable to controlling interests


256







39,190






Gains on depreciable property sales attributable to controlling interests


(181,477)







(37,330)






FFO applicable to Common Shares and Units(1)


$

28,315



134,870



$

0.21



$

44,976



137,404



$

0.33















Adjustments to Core FFO:













Lease termination fees








(7)






Loss on extinguishment of debt


7,326







1,979






Redemption of Preferred Shares


3,657







1,435






Severance and transition costs


650












Core FFO applicable to common shares and Units(1)


$

39,948



134,870



$

0.30



$

48,383



137,404



$

0.35




(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 January 31, 2018

Multifamily


All Other


Amounts Not
Allocated To
Segments(1)


Total

Real estate revenue

$

41,279



$

1,975



$



$

43,254


Real estate expenses

18,231



549



1,255



20,035


Net operating income (loss)

$

23,048



$

1,426



$

(1,255)



$

23,219


Depreciation and amortization







(18,390)


General and administrative expenses







(3,011)


Interest expense







(9,236)


Loss on debt extinguishment







(285)


Interest and other income







433


Loss before gain on sale of real estate and other investments and income from discontinued operations







(7,270)


Gain on sale of real estate and other investments







12,387


Income from continuing operations







5,117


Income from discontinued operations







146,811


Net income







$

151,928




(1)

Consists of offsite costs for property management and casualty-related amounts, which are excluded in our assessment of segment performance.


(in thousands)

Three Months Ended January 31, 2017

Multifamily


All Other


Amounts Not
Allocated To
Segments(1)


Total

Real estate revenue

$

36,171



$

4,057



$



$

40,228


Real estate expenses

16,336



1,000



1,283



18,619


Net operating income (loss)

$

19,835



$

3,057



$

(1,283)



$

21,609


Depreciation and amortization







(10,787)


General and administrative expenses







(4,172)


Interest expense







(8,832)


Loss on debt extinguishment







(458)


Interest and other income







427


Loss before gain on sale of real estate and other investments and income from discontinued operations







(2,213)


Gain on sale of real estate and other investments







2,437


Income from continuing operations







224


Income from discontinued operations







24,965


Net income







$

25,189




(1)

Consists of offsite costs for property management and casualty-related amounts, which are excluded in our assessment of segment performance.

IRET

RECONCILIATION OF NET OPERATING INCOME TO THE

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS



(in thousands)

Nine Months Ended January 31, 2018

Multifamily


All Other


Amounts Not
Allocated To
Segments(1)


Total

Real estate revenue

$

119,444



$

7,936



$



$

127,380


Real estate expenses

54,584



2,102



4,204



60,890


Net operating income (loss)

$

64,860



$

5,834



$

(4,204)



$

66,490


Depreciation and amortization







(60,998)


Impairment of real estate investments







(256)


General and administrative expenses







(10,131)


Interest expense







(25,876)


Loss on debt extinguishment







(818)


Interest and other income







916


Loss before gain on sale of real estate and other investments and income from discontinued operations







(30,673)


Gain on sale of real estate and other investments







17,835


Loss from continuing operations







(12,838)


Income from discontinued operations







164,626


Net income







$

151,788




(1)

Consists of offsite costs for property management and casualty-related amounts, which are excluded in our assessment of segment performance.


(in thousands)

Nine Months Ended January 31, 2017

Multifamily


All Other


Amounts Not
Allocated To
Segments(1)


Total

Real estate revenue

$

107,400



$

11,307



$



$

118,707


Real estate expenses

46,781



2,787



4,002



53,570


Net operating income (loss)

$

60,619



$

8,520



$

(4,002)



$

65,137


Depreciation and amortization







(33,193)


Impairment of real estate investments







(54,153)


General and administrative expenses







(11,195)


Interest expense







(26,033)


Loss on debt extinguishment







(458)


Interest and other income







685


Loss before gain on sale of real estate and other investments and income from discontinued operations







(59,210)


Gain on sale of real estate and other investments







11,292


Loss from continuing operations







(47,918)


Income from discontinued operations







44,803


Net loss







$

(3,115)




(1)

Consists of offsite costs for property management and casualty-related amounts, which are excluded in our assessment of segment performance.

Contact Information
Matthew Volpano
Senior Vice President – Capital Markets
Phone: 701-837-7104
E-mail: IR@iret.com

Cision View original content:http://www.prnewswire.com/news-releases/iret-announces-fiscal-third-quarter-2018-results-300612519.html

SOURCE IRET

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