Exhibit 99.2

 

 

Second Quarter 2014

 

Supplemental Operating and Financial Data

 

 

Miller Creek at Germantown

Memphis, TN

 

Trade Street Residential, Inc.

19950 W. Country Club Drive, Suite 800

Aventura, Florida 33180

786-248-5200

www.tradestreetresidential.com

 

  

Trade Street Residential, Inc.
Second Quarter 2014	Supplemental Financial Information

 

Table of Contents	Page
Earnings Release	3
Operating Results	8
Funds From Operations and Core Funds From Operations	9
Consolidated Balance Sheets	10
Operating Properties Table	11
Same Store Comparisons	12
Acquisitions and Dispositions / Land Investments	14
Debt Summary	16
Capitalized Cost Summary	17
Non-GAAP Financial Measures and Reconciliation	18
NOI Bridge	20

 

 

 

Trade Street RESIDENTIAL RELEASES Second Quarter 2014 Results

 

– Same Store Average Occupancy Increases to 96.2%

– Portfolio Average Rent Increases to $989 –

– Acquires New Luxury Community for $40.5 Million –

 

AVENTURA, FL, August 11, 2014 – Trade Street Residential, Inc. (NASDAQ: TSRE) (the “Company”), a vertically integrated and self-managed real estate investment trust ("REIT") focused on acquiring, owning, operating and managing high-quality, conveniently located, apartment communities in mid-sized cities and suburban submarkets of larger cities primarily in the southeastern United States and Texas, today announced consolidated results for the second quarter ended June 30, 2014.

 

Operational and Financial Highlights for Second Quarter 2014

 

·

Reported Core FFO of $2.2 million, or $0.06 per diluted share.

 

·

Same store net operating income, or same store NOI, increased 1.7% compared to the same period in the prior year. Over the same period, same store revenue increased 4.2% and same store expenses increased 7.2%. Excluding the benefit of a one-time property tax settlement received in the second quarter of 2013, same store NOI increased 5.5% and same store expenses increased 2.7% compared to the same period last year.

 

·

Same store average occupancy was 96.2% at quarter end, a gain of 60 basis points compared to the same period last year.

 

·

Same store average rent increased to $879 per unit, an increase of 3.0% compared to the same period last year. Average rent across the entire portfolio increased $41 to $989

 

·

Acquired luxury apartment community with 270 units for an aggregate investment of $40.5 million

 

“During the second quarter we continued to improve our operations and position our business for future growth opportunities,” stated Richard Ross, Chief Executive Officer of Trade Street Residential. “We achieved another quarter of solid growth in our average rents and occupancy, driving same store revenue growth of 4.2% and same store NOI growth of 5.5%, adjusting for the benefit of the property tax settlement received in the comparable quarter. As we move forward into the second half of 2014, we believe we can continue to produce strong results as many of our new communities experience year-two lease renewals, and we can capture improving efficiencies across our larger platform.”

 

  

 

Financial Results for the Three Months Ended June 30, 2014

 

Net loss attributable to common stockholders for the second quarter of 2014 was a net loss of ($4.0) million, essentially unchanged from the prior year period. The net loss for the second quarter of 2014 was primarily the result of higher revenues largely offset by higher general and administrative expenses, interest expense and depreciation and amortization. The net loss per basic and diluted share for the second quarter of 2014 was ($0.11), a change from net loss per share of ($0.51) in the prior year period, primarily as a result of the foregoing factors.

 

Funds from Operations, or FFO, for the second quarter of 2014 was a $1.6 million, or $0.04 per diluted share, as compared to a deficit of ($1.1) million, or ($0.13) per diluted share in the prior year period. The increase in FFO is largely the result of the addition of 10 new operating properties since the second quarter of 2013. Core FFO for the second quarter of 2014 was $2.2 million, or $0.06 per diluted share, as compared to a deficit of ($0.3) million, or ($0.03) per diluted share in the prior year period.

 

Portfolio Performance

 

Same store NOI for the second quarter of 2014 was $3.0 million, an increase of 1.7% as compared to the second quarter of the prior year, driven primarily by a 4.2% increase in same store revenue, partially offset by a 7.2% increase in same store property expenses. Same store property expenses included a one-time property tax settlement of $107,000 which was received in the second quarter of 2013. Excluding the benefit of this item, same store NOI increased 5.5% and same store property expenses increased 2.7% compared to the second quarter of 2013. The increase in same store revenue was primarily attributable to a 60 basis point increase in average occupancy to 96.2%, and a 3.0% increase in average rent to $879 per month. The increase in same store expenses was primarily attributable to increased property taxes, higher utility and turnover expense as well as weather related expenses incurred during the second quarter 2014.

 

On a sequential quarter basis, second quarter 2014 same store revenue increased 1.9% compared to the first quarter of 2014, while same store property expenses increased 1.2%, resulting in a same store NOI increase of 2.5%.

 

For the six months ended June 30, 2014, same store revenue increased 5.5%, same store property expenses increased 7.3%, and same store NOI increased 3.9%, compared to the six months ended June 30, 2013. Excluding the benefit of the property tax settlement received in the second quarter of 2013 described above, same store property expenses increased 5.0% and same store NOI increased 5.9% compared to the six months ended June 30, 2013.

 

Transaction Activity

 

In April 2014, the Company closed on its previously announced acquisition of Waterstone at Big Creek, a newly-constructed 270-unit apartment community located in Alpharetta (Atlanta), Georgia, for approximately $40.5 million. The Company utilized cash on hand and borrowings under its revolving credit facility to fund the purchase. Upon completion of this acquisition, the Company owned 21 properties comprising 5,255 units and with a weighted average age of 10.8 years as of June 30, 2014.

 

  

 

Balance Sheet and Financing Activity

 

As of June 30, 2014, the Company had total debt outstanding of $350.0 million at a weighted average interest rate of 3.83% and a weighted average term-to-maturity of 7.40 years. Of the total debt outstanding, $298.0 million is fixed rate debt at a weighted average interest rate of 4.03% and a weighted average term-to-maturity of 8.25 years.

 

Dividend

 

On May 13, 2014, the Company’s Board of Directors declared a dividend of $0.095 per share and unit, payable to holders of record of common stock and common operating partnership units as of June 30, 2014, which was paid on July 15, 2014.

 

Conference Call and Webcast

 

The Company will host a webcast and conference call on Monday, August 11, 2014 at 11:00 a.m. Eastern Time to review second quarter results and discuss recent events. To participate in the call, please dial 877-705-6003 (domestic) or 201-493-6725 (international). The live webcast will be available at www.tradestreetresidential.com in the Investors section. A replay of the conference call will be available through September 11, 2014, by dialing 877-870-5176 (domestic) or 858-384-5517 (international) and entering the pass code13586617. Supplemental financial information is available in the Investor Relations section of the Company’s website under Financial Information.

 

About Trade Street Residential, Inc.

 

Trade Street Residential, Inc. is a vertically integrated and self-managed real estate investment trust focused on acquiring, owning, operating and managing conveniently located, garden-style and mid-rise apartment communities in mid-sized cities and suburban submarkets of larger cities primarily in the southeastern United States, including Texas.

 

Forward-Looking Statements

 

This press release contains forward-looking statements within the meaning of the federal securities laws, including statements related to the offering and the expected use of the net proceeds therefrom, which are based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. Forward looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," or "potential" or the negative of these words and phrases or similar words or phrases, which are predictions of or indicate future events or trends and which do not relate solely to historical matters. While forward-looking statements reflect the Company's good faith beliefs, assumptions and expectations, they are not guarantees of future performance. Furthermore, the Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes, except as may be required by law. For a further discussion of these and other factors that could impact the Company's future results, performance or transactions, see the section entitled "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2013, which the Company filed with the Securities and Exchange Commission on March 26, 2014.

 

  

 

Non-GAAP Financial Measures

 

As defined by the National Association of Real Estate Investment Trusts, FFO represents net income (loss) (computed in accordance with U.S. generally accepted accounting principles ("GAAP")), excluding gains (or losses) from sales of property and bargain purchase gains, plus real estate-related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect FFO on the same basis. The Company presents FFO attributable to common stockholders because management considers it to be an important supplemental measure of the Company’s operating performance, believes it assists in the comparison of the Company’s operating performance between periods to that of different REITs and believes it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their operating results. As such, the Company also excludes the impact of noncontrolling interests, only as they relate to operating partnership units, in the calculation. FFO is intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO excludes depreciation and amortization unique to real estate, gains and losses from property dispositions and extraordinary items, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities and interest costs, providing perspective not immediately apparent from net income. In October 2011, NAREIT communicated to its members that the exclusion of impairment write-downs of depreciable real estate is consistent with the definition of FFO and prior periods should be restated to be consistent with this guidance.

 

The Company also uses core funds from operations, or Core FFO, as an operating measure. Core FFO includes adjustments to exclude the impact of straight-line adjustments for ground leases, gains and losses from extinguishment of debt, transaction costs related to acquisitions and reorganization, management transition costs and certain other non-cash items. The Company believes that these adjustments are appropriate in determining Core FFO as they are not indicative of the operating performance of the Company’s assets. In addition, the Company believes that Core FFO is a useful supplemental measure for the investing community to use in comparing the Company to other REITs as most REITs provide some form of adjusted or modified FFO.

 

  

 

Management believes that net operating income (“NOI”) is a useful measure of our operating performance. We define NOI as total property revenues less total property operating expenses, excluding depreciation and amortization. Other REITs may use different methodologies for calculating NOI, and accordingly, our NOI may not be comparable to other REITs. We believe that this measure provides an operating perspective not immediately apparent from GAAP operating income or net income. We use NOI to evaluate our performance on a same store and non-same store basis. NOI allows us to evaluate the operating performance of our properties because it measures the core operations of property performance by excluding corporate level expenses and other items not related to property operating performance and captures trends in rental housing and property operating expenses.

 

The Company defines same store communities as communities owned and stabilized for the entirety of both periods presented, excluding properties held for sale. Reconciliations of net income attributable to common stockholders to FFO, Core FFO, NOI, and same store NOI are included in the Supplemental Information posted on the Company’s website.

 

Investor Relations:

 

Stephen Swett 

786-248-6099
ir@trade-street.com

 

  

Trade Street Residential, Inc.
2nd Quarter 2014	Operating Results
(Unaudited)

 

		Three Months Ended June 30,								Six Months Ended June 30,
in thousands, except per share data		2014				2013				2014				2013
Property revenues
Rental revenue		$	13,233			$	5,849			$	23,499			$	10,696
Other property revenues			1,420				588				2,564				1,026
Total property revenues			14,653				6,437				26,063				11,722
Property expenses
Property operations and maintenance			4,279				2,083				7,649				3,719
Real estate taxes and insurance			2,310				856				4,241				1,651
Total property expenses			6,589				2,939				11,890				5,370
Other expenses
General and administrative			2,318				1,824				4,413				3,383
Management transition expenses			250				-				9,291				-
Interest expense			3,318				2,011				6,191				3,900
Depreciation and amortization			5,747				2,922				10,467				5,167
Development and pursuit costs			94				15				139				15
Acquisition costs			136				222				1,641				444
Amortization of deferred financing cost			236				348				552				719
Asset impairment losses			-				613				-				613
Loss on early extinguishment of debt			-				331				1,629				1,146
Total other expenses			12,099				8,286				34,323				15,387
Other income			1				22				44				44
Income from unconsolidated joint venture			10				18				1				55
LOSS FROM CONTINUING OPERATIONS			(4,024	)			(4,748	)			(20,105	)			(8,936	)
Income from operation of discontinued rental property, including gains/losses on disposals			-				289				-				1,776
NET LOSS			(4,024	)			(4,459	)			(20,105	)			(7,160	)
Loss allocated to noncontrolling interest holders			242				614				1,341				1,169
Dividends declared and accreted on preferred stock and units			(231	)			(219	)			(459	)			(473	)
Extinguishment of equity securities			-				-				-				11,716
Adjustments attributable to participating securities			14				30				30				(2,491	)
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS		$	(3,999	)		$	(4,034	)		$	(19,193	)		$	2,761
Earnings (loss) per common share - basic and diluted
Continuing operations		$	(0.11	)		$	(0.55	)		$	(0.56	)		$	0.16
Discontinued operations			-				0.04				-				0.28
Net earnings (loss) attributable to common stockholders		$	(0.11	)		$	(0.51	)		$	(0.56	)		$	0.44
Weighted average number of shares - basic and diluted			36,452				7,907				34,112				6,321
Dividends declared per common share		$	0.0950			$	0.1575			$	0.1900			$	0.2425

 

  

Trade Street Residential, Inc.
2nd Quarter 2014	Funds From Operations and Core Funds from Operations
(Unaudited)

 

		Three Months Ended June 30,								Six Months Ended June 30,
in thousands, except per share and property data amounts		2014				2013				2014				2013
Net income (loss) attributable to common stockholders		$	(3,999	)		$	(4,034	)		$	(19,193	)		$	2,761
Adjustments related to earnings per share computation (1)			(14	)			(30	)			(30	)			(9,225	)
Asset impairment losses			-				529				-				513
Real estate depreciation and amortization - continuing operations			5,484				2,520				9,963				4,323
Real estate depreciation and amortization - discontinued operations			-				148				-				368
Real estate depreciation and amortization - unconsolidated joint venture			94				89				187				165
Gain from sale of rental property			-				(302	)			-				(1,628	)
Funds from operations attributable to common stockholders (2)		$	1,565			$	(1,080	)		$	(9,073	)		$	(2,723	)
Management transition expenses			235				-				8,697				-
Acquisition costs			128				191				1,536				372
Loss on early extinguishment of debt			-				292				1,525				966
Non-cash straight-line adjustment for ground lease expenses			-				88				-				172
Non-cash stock awards			145				166				171				161
Non-cash accretion of preferred stock and units			154				154				307				339
Distributions due on Class B contingent units			-				(79	)			-				(157	)
Core funds from operations attributable to common stockholders (2)		$	2,227			$	(268	)		$	3,163			$	(870	)
Per share data
Funds from operations - diluted		$	0.04			$	(0.13	)		$	(0.26	)		$	(0.43	)
Core funds from operations - diluted		$	0.06			$	(0.03	)		$	0.09			$	(0.14	)
Weighted average common shares outstanding - diluted(3)(4)			36,656				8,059				34,316				6,397

 

1

See notes B and G to consolidated financial statements as filed in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2014.

 

2

See page 18 for the Company's definition of these non-GAAP measures. Individual line items included in the computations are net of noncontrolling interests and include results from discontinued operations where applicable. The three and six months ended June 30, 2013 amounts have been reclassified to conform to the current year presentation.

 

3

Includes non-vested portion of restricted stock awards.

 

4

The calculations of funds from operations and core funds from operations are reflected net of noncontrolling interests. Accordingly, noncontrolling interests represented by 2,344 Operating Partnership common units during the three and six months ended June 30, 2014 and 2013 are not included in the determination of diluted weighted-average common shares outstanding. If these calculations had considered noncontrolling interests and the 2,344 common units had been included as part of diluted weighted-average shares outstanding, there would have been no impact on the per share amounts of funds from operations or core funds from operations.

 

  

Trade Street Residential, Inc.
2nd Quarter 2014	Consolidated Balance Sheets
(Unaudited)

 

in thousands		June 30, 2014				December 31, 2013
ASSETS
Real estate assets
Land and improvements		$	88,494			$	58,560
Buildings and improvements			463,925				272,849
Furniture, fixtures, and equipment			15,595				9,016
			568,014				340,425
Less accumulated depreciation			(20,159	)			(14,369	)
Net investment in operating properties			547,855				326,056
Land held for future development (including $0 and $1,477 of consolidated variable interest entity, respectively)			12,961				31,963
Real estate assets held for sale			26,603				-
Net real estate assets			587,419				358,019
Investment in unconsolidated joint venture			2,321				2,421
Cash and cash equivalents (including $0 and $148 of consolidated variable interest entity, respectively)			10,665				9,037
Restricted cash and lender reserves			2,107				3,203
Deferred financing costs, net			5,143				3,022
Intangible assets, net			1,795				1,571
Prepaid expenses and other assets			5,850				10,363
Assets related to real estate assets held for sale			596				-
			28,477				29,617
TOTAL ASSETS		$	615,896			$	387,636
LIABILITIES
Indebtedness		$	349,966			$	249,584
Accrued interest payable			900				840
Accounts payable and accrued expenses			6,300				6,119
Dividends payable			3,790				1,247
Security deposits, deferred rent and other liabilities			1,906				1,443
Liabilities related to real estate assets held for sale			140				-
TOTAL LIABILITIES			363,002				259,233
Commitments & contingencies			-				-
STOCKHOLDERS' EQUITY
Class A preferred stock; $0.01 par value; 423 shares authorized, 309 shares issued and outstanding at June 30, 2014 and December 31, 2013			3				3
Common stock, $0.01 par value per share; 1,000,000 authorized; 36,739 and 4,717 shares issued and outstanding at June 30, 2014 and December 31, 2013, respectively			367				115
Additional paid-in capital			306,965				162,681
Accumulated deficit			(70,817	)			(52,053	)
TOTAL STOCKHOLDERS' EQUITY - TRADE STREET RESIDENTIAL, INC.			236,518				110,746
Noncontrolling interests			16,376				17,657
TOTAL STOCKHOLDERS' EQUITY			252,894				128,403
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	615,896			$	387,636

 

 

 

Trade Street Residential, Inc.
2nd Quarter 2014	Operating Properties Table
(Unaudited)

 

Property Name		Location		Year Built/ Renovated (1)		Date Acquired		Number of Units				Average Unit Size (Sq. Ft.)				Average Physical Occupancy (2)
The Pointe at Canyon Ridge		Sandy Springs, GA		1986/2007		09/18/08			494				920				94.7	%
Arbors River Oaks		Memphis, TN		1990/2010		06/09/10			191				1,136				96.9	%
The Estates at Perimeter (3)		Augusta, GA		2007		09/01/10			240				1,109				94.7	%
Lakeshore on the Hill		Chattanooga, TN		1969/2005		12/14/10			123				1,168				95.9	%
The Trails of Signal Mountain		Chattanooga, TN		1975		05/26/11			172				1,185				96.1	%
Post Oak (4)		Louisville, KY		1982/2005		07/28/11			126				881				97.2	%
Mercé Apartments		Addison, TX		1991/2007		10/31/11			114				653				96.0	%
Fox Trails		Plano, TX		1981		12/06/11			286				960				98.1	%
Millenia 700		Orlando, FL		2012		12/03/12			297				952				94.9	%
Westmont Commons		Asheville, NC		2003/2008		12/12/12			252				1,009				98.0	%
Bridge Pointe		Huntsville, AL		2002		03/04/13			178				1,047				96.9	%
St. James at Goose Creek		Goose Creek, SC		2009		05/16/13			244				976				98.1	%
Creekstone at RTP		Durham, NC		2013		05/17/13			256				1,043				96.1	%
Talison Row at Daniel Island		Charleston, SC		2013		08/26/13			274				989				92.5	%
Fountains Southend		Charlotte, NC		2013		09/24/13			208				844				99.4	%
The Estates at Wake Forest		Wake Forest, NC		2013		01/21/14			288				1,047				63.9	%
Miller Creek at Germantown		Memphis, TN		2012/2013		01/21/14			330				1,049				94.9	%
The Aventine Greenville		Greenville, SC		2013		02/06/14			346				961				83.8	%
Waterstone at Brier Creek		Raleigh, NC		2013/2014		03/10/14			232				1,137				55.0	%
Avenues at Craig Ranch		McKinney, TX		2013		03/18/14			334				1,006				82.3	%
Waterstone at Big Creek		Alpharetta, GA		2013		04/07/14			270				1,131				96.6	%
Total / Weighted average									5,255				1,010				90.8	%

 

		Three Months Ended				Six Months Ended
		June 30,				June 30,
Total operating properties (end of period)			21				21
Total operating apartment units (end of period)			5,255				5,255
Total operating apartment units - wholly owned, continuing operations (end of period)			5,015				5,015
Total operating apartment units (weighted average)			5,234				4,737
Total operating apartment units - wholly owned, continuing operations (weighted average)			4,994				4,497

 

1

The extent of the renovations included within the term “renovated” depends on the individual apartment community, but “renovated” generally refers to the replacement of siding, roof, wood, windows or boilers, updating of gutter systems, renovation of leasing centers and interior rehabilitation, including updated appliances, countertops, vinyl plank flooring, fixtures, fans and lighting, or some combination thereof.

 

2

Average physical occupancy represents the average occupancy for the three months ended June 30, 2014 of the total number of units occupied at each apartment community during the period divided by the total number of units at each apartment community, except for Waterstone at Big Creek, which was owned for all but six days in the second quarter.

 

3

We own a 50% interest in this apartment community through an unconsolidated joint venture.

4

Operating property classified as a component of real estate assets held for sale (and not reported under discontinued operations under ASC topic 360). The sale of this property closed on July 11, 2014

  

  

Trade Street Residential, Inc.
2nd Quarter 2014	Same Store NOI Comparisons(1)
(Unaudited)

 

		Year-to Date Comparisons
		Six Months Ended June 30,
in thousands, except property data amounts		2014				2013				% Change
Revenues		$	11,120			$	10,543				5.5	%
Expenses			5,151				4,799				7.3	%
Net operating income (NOI) (2)		$	5,969			$	5,744				3.9	%
Average physical occupancy (3)			95.9	%			94.6	%			1.4	%
Average monthly rental rate (4)		$	875			$	851				2.8	%

 

		Quarter to Quarter Comparisons
		Three Months Ended June 30,
		2014				2013				% Change
Revenues		$	5,613			$	5,388				4.2	%
Expenses			2,591				2,416				7.2	%
Net operating income (NOI) (2)		$	3,022			$	2,972				1.7	%
Average physical occupancy (3)			96.2	%			95.6	%			0.6	%
Average monthly rental rate (4)		$	879			$	853				3.0	%

 

		Sequential Quarter Comparisons
		Three Months Ended
		June 30, 2014				March 31, 2014				% Change
Revenues		$	5,613			$	5,507				1.9	%
Expenses			2,591				2,560				1.2	%
Net operating income (NOI) (2)		$	3,022			$	2,947				2.5	%
Average physical occupancy (3)			96.2	%			95.5	%			0.7	%
Average monthly rental rate (4)		$	879			$	871				0.9	%

 

1

We define “Same Store” as properties owned and stabilized since January 1, 2013 through June 30, 2014. For newly constructed or lease-up properties or properties undergoing significant redevelopment, we consider a property to be stabilized at the earlier of (i) attainment of 90% physical occupancy or (ii) the one-year anniversary of completion of development or redevelopment. No properties owned since January 1, 2013 were under construction or undergoing redevelopment and, as a result, no properties owned since January 1, 2013 were excluded from the same store portfolio. For the three months ended June 30, 2014, "Same Store" properties are comprised of: The Pointe at Canyon Ridge, Arbor River Oaks, Lakeshore on the Hill, The Trails of Signal Mountain, Post Oak, Mercé Apartments, Fox Trails, Millenia 700, and Westmont Commons.

 

2

See page 18 for the Company's definition of this non-GAAP measure and page 20 for a reconciliation of this non-GAAP measure to net income (loss) attributable to common stockholders.

 

3

Average physical occupancy for the periods presented represent the average of the total number of units occupied at each apartment community during the respective period divided by the total number of units at each apartment community.

 

4

Average rental rates for the periods presented are the Company’s market rents after “loss to lease” and concessions, but before vacancy, discounted employee units, model units, and bad debt for the respective periods.

 

  

Trade Street Residential, Inc.
2nd Quarter 2014	Same Store Operating Expense Comparisons
(Unaudited)

 

		Year-to Date Comparisons
		Six Months Ended June 30,
in thousands		2014				2013				$ Change				% Change				% of 2014 Actual
Property taxes		$	1,355			$	1,262			$	93				7.4	%			26.3	%
Salaries and benefits for on-site employees			1,409				1,383				26				1.9	%			27.4	%
Utilities			745				704				41				5.8	%			14.5	%
Repairs and maintenance			327				353				(26	)			(7.4	%)			6.3	%
Make ready/turnover			270				218				52				23.9	%			5.2	%
Property insurance			286				251				35				13.9	%			5.6	%
Other			759				628				131				20.9	%			14.7	%
Total same property		$	5,151			$	4,799			$	352				7.3	%			100.0	%

 

		Quarter to Quarter Comparisons
		Three Months Ended June 30,
		2014				2013				$ Change				% Change				% of 2014 Actual
Property taxes		$	657			$	602			$	55				9.1	%			25.4	%
Salaries and benefits for on-site employees			683				693				(10	)			(1.4	%)			26.4	%
Utilities			361				335				26				7.8	%			13.9	%
Repairs and maintenance			196				206				(10	)			(4.9	%)			7.5	%
Make ready/turnover			156				126				30				23.8	%			6.0	%
Property insurance			152				127				25				19.7	%			5.9	%
Other			386				327				59				18.0	%			14.9	%
Total same property		$	2,591			$	2,416			$	175				7.2	%			100.0	%

 

		Sequential Quarter Comparisons
		Three Months Ended
		June 30, 2014				March 31, 2014				$ Change				% Change				% of 2014 Actual
Property taxes		$	657			$	698			$	(41	)			(5.9	%)			25.4	%
Salaries and benefits for on-site employees			683				726				(43	)			(5.9	%)			26.4	%
Utilities			361				384				(23	)			(6.0	%)			13.9	%
Repairs and maintenance			196				131				65				49.6	%			7.6	%
Make Ready/turnover			156				114				42				36.8	%			6.0	%
Property insurance			152				134				18				13.4	%			5.9	%
Other			386				373				13				3.5	%			14.9	%
Total Same Property		$	2,591			$	2,560			$	31				1.2	%			100.0	%

 

  

Trade Street Residential, Inc.
2nd Quarter 2014	Acquisitions and Dispositions / Land Investments
(Unaudited)

 

in thousands, except property data amounts
Acquisitions:						Percent Leased at				Date		Gross				Debt Balance at
Property		Location		Units		June 30, 2014				Acquired		Purchase Price				June 30, 2014
The Estates at Wake Forest		Wake Forest, NC		288			79.8	%		1/21/2014		$	37,250			$	18,625
Miller Creek at Germantown		Memphis, TN		330			99.4	%		1/21/2014			43,750				26,250
The Aventine Greenville		Greenville, SC		346			98.0	%		2/6/2014			41,866				21,000
Waterstone at Brier Creek		Raleigh, NC		232			78.0	%		3/10/2014			32,682				16,250
Avenues at Craig Ranch		McKinney, TX		334			97.0	%		3/18/2014			42,375				21,200
Waterstone at Big Creek		Alpharetta, GA		270			99.6	%		4/7/2014			40,500				Line of Credit
Total acquisitions six months ended June 30				1,800								$	238,423			$	103,325

 

Land held for future development:												Carrying
				Planned								Value as of
Project		Location		Units				Acreage				June 30, 2014
Millenia Phase II		Orlando, FL			403				7.0			$	12,961
Total land held for future development					403				7.0			$	12,961

 

Land held for sale:												Carrying
				Planned								Value as of
Project		Location		Units				Acreage				June 30, 2014
The Estates at Maitland		Maitland, FL			416				6.1			$	9,000
Midlothian Town Center - East		Midlothian, VA			238				8.4				4,165
Venetian		Fort Myers, FL			436				23.0				4,360
Sunnyside		Panama City Beach, FL			212				22.0				1,600
Total land held for sale					1,302				59.5			$	19,125

 

  

Trade Street Residential, Inc.
2nd Quarter 2014	Acquisitions Pipeline and NOI Summary
(Unaudited)

 

in thousand, except property data amounts

 

 

Multifamily communities:
as of June 30, 2014
										NOI				Avg Monthly
		Units				Communities				Quarter Ended				Rental Rate
Same Store Communities (1)			2,055				9			$	3,022			$	879
Stabilized non-same store communities (2)			1,760				7				3,603				1,094
Lease-up communities (3)			1,200				4				1,439				1,026
Wholly-owned communities			5,015				20				8,064				990
Joint venture communities			240				1				205				969
Total multifamily communities			5,255				21			$	8,269			$	989

 

Acquisition pipeline:

Anticipated

Contract

Planned

Percent

Close

Purchase

Project

Location

Units

Leased (3)

Date

Price

Waterstone at Big Creek, Phase II

Alpharetta, GA

100

N/A

1Q15

$

15,000

Total acquisition pipeline

100

-

$

15,000

 

1

For 2014 "Same Store" properties are comprised of: The Pointe at Canyon Ridge, Arbor River Oaks, Lakeshore on the Hill, The Trails of Signal Mountain, Post Oak, Mercé Apartments, Fox Trails, Millenia 700, and Westmont Commons.

 

2

Communities that were stabilized for the quarter ended June 30, 2014, but do not meet the criteria for "Same Store" properties. These include: Bridge Pointe, St. James at Goose Creek, Creekstone at RTP, Fountains Southend, Talison Row at Daniel Island, Miller Creek at Germantown, and Waterstone at Big Creek.

 

3

The Estates at Wake Forest, The Aventine Greenville, Waterstone at Brier Creek, and Avenues at Craig Ranch are all currently in lease-up for the quarter ended June 30, 2014.

 

  

Trade Street Residential, Inc.
2nd Quarter 2014	Debt Summary
(Unaudited)

 

in thousands
Debt Maturities(1)
as of June 30, 2014
						Scheduled Repayments												% of
Year						Amortization				Maturities				Total				Total
Remainder of 2014						$	220			$	-			$	220				0.1	%
2015							1,210				-				1,210				0.3	%
2016							1,977				-				1,977				0.6	%
2017							3,410				58,256				61,666				17.6	%
2018							3,803				7,661				11,464				3.3	%
Thereafter							20,205				253,224				273,429				78.1	%
			Total			$	30,825			$	319,141			$	349,966				100.0	%

 

Floating vs. Fixed Rate Debt:(1)														Weighted Average
						Balance at				% of				Interest				Years to
						June 30, 2014				Total				Rate				Maturity
Fixed rate debt						$	297,966				85.1	%			4.03	%			8.25
Floating rate debt							52,000				14.9	%			2.69	%			2.58
			Total			$	349,966				100.0	%			3.83	%			7.40

 

Unconsolidated Debt:

Balance at

YTD

Interest

Property

June 30, 2014

Amortization

Rate

Maturity

The Estates at Perimeter(2)

$

17,447

$

154

4.245

%

9/1/2017

 

(1)

Wholly owned, continuing operations.

(2)

Reflects 100% of debt, JV interest is 50%.

 

  

Trade Street Residential, Inc.
2nd Quarter 2014	Capitalized Costs Summary
(Unaudited)

 

		Three Months Ended								Six Months Ended
in thousands, except number of units		June 30, 2014								June 30, 2014
		Total				Per Unit				Total				Per Unit
Recurring capital expenditures:
Flooring & Carpeting		$	167			$	33			$	296			$	66
Appliances			157				31				181				40
HVAC			24				5				30				7
Other			10				2				12				3
Total recurring capital expenditures		$	358			$	71			$	519			$	116
Non-recurring capital expenditures:
Plumbing		$	13			$	3			$	15			$	3
Rehab of Apartments			96				19				188				42
Furniture, Fixtures and Equipment			113				23				132				29
Other			285				57				362				80
Total non-recurring capital expenditures		$	507			$	102			$	697			$	154
Weighted average units - wholly owned, continuing operations							4,994								4,497

 

 

Trade Street Residential, Inc.
2nd Quarter 2014	Non-GAAP Financial Measures and Reconciliations
(Unaudited)

 

The supplemental financial data contained in this document contains certain non-GAAP financial measures management believes are useful in understanding our business and evaluating our performance. Our definitions and calculations of these non-GAAP financial measures may differ from those of other equity REITs, and thus may not be comparable to other REITs. The non-GAAP financial measures should not be considered as an alternative to net income as an indication of our operating performance, or to net cash provided by operating activities as a measure of our liquidity.

 

Funds from Operations ("FFO")

As defined by the National Association of Real Estate Investment Trusts, FFO represents net income (loss) (computed in accordance with U.S. generally accepted accounting principles ("GAAP")), excluding gains (or losses) from sales of property and bargain purchase gains, plus real estate-related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect FFO on the same basis. The Company presents FFO attributable to common stockholders because management considers it to be an important supplemental measure of the Company’s operating performance, believes it assists in the comparison of the Company’s operating performance between periods to that of different REITs and believes it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their operating results. As such, the Company also excludes the impact of noncontrolling interests, only as they relate to operating partnership units, in the calculation. FFO is intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO excludes depreciation and amortization unique to real estate, gains and losses from property dispositions and extraordinary items, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates, operating costs, development activities and interest costs, providing perspective not immediately apparent from net income. In October 2011, NAREIT communicated to its members that the exclusion of impairment write-downs of depreciable real estate is consistent with the definition of FFO and prior periods should be restated to be consistent with this guidance.

 

Core Funds from Operations ("Core FFO")

The Company also uses core funds from operations, or Core FFO, as an operating measure. Core FFO includes adjustments to exclude the impact of straight-line adjustments for ground leases, gains and losses from extinguishment of debt, transaction costs related to acquisitions and reorganization, management transition costs and certain other non-cash items. The Company believes that these adjustments are appropriate in determining Core FFO as they are not indicative of the operating performance of the Company’s assets. In addition, the Company believes that Core FFO is a useful supplemental measure for the investing community to use in comparing the Company to other REITs as most REITs provide some form of adjusted or modified FFO.

 

Net Operating Income ("NOI")

Management believes that net operating income (“NOI”) is a useful measure of our operating performance. We define NOI as total property revenues less total property operating expenses, excluding depreciation and amortization. Other REITs may use different methodologies for calculating NOI, and accordingly, our NOI may not be comparable to other REITs. We believe that this measure provides an operating perspective not immediately apparent from GAAP operating income or net income. We use NOI to evaluate our performance on a same store and non-same store basis. NOI allows us to evaluate the operating performance of our properties because it measures the core operations of property performance by excluding corporate level expenses and other items not related to property operating performance and captures trends in rental housing and property operating expenses.

 

 

 

The Company defines same store communities as communities owned and stabilized for the entirety of both periods presented, excluding properties held for sale. Reconciliations of net income attributable to common stockholders to FFO, Core FFO, NOI, and same store NOI are included in the Supplemental Information posted on the Company’s website.

 

The following table reflects same store and non-same store contributions to consolidated NOI together with a reconciliation of NOI to net income (loss) attributable to common stockholders, as computed in accordance with GAAP:

 

 

Trade Street Residential, Inc.
2nd Quarter 2014	NOI Bridge
(Unaudited)

 

		Three Months Ended June 30,								Six Months Ended June 30,
in thousands		2014				2013				2014				2013
Property Revenues (1)
Same Store (9 properties)		$	5,613			$	5,388			$	11,120			$	10,543
Non Same Store (11 properties)			9,040				1,049				14,943				1,179
Total property revenues		$	14,653			$	6,437			$	26,063			$	11,722
Property Expenses (1)
Same Store (9 properties)		$	2,591			$	2,416			$	5,151			$	4,799
Non Same Store (11 properties)			3,998				523				6,739				571
Total property expenses		$	6,589			$	2,939			$	11,890			$	5,370
Net Operating Income (1)(2)
Same Store (9 properties)		$	3,022			$	2,972			$	5,968			$	5,744
Non Same Store (11 properties)			5,042				526				8,205				608
Total property net operating income		$	8,064			$	3,498			$	14,173			$	6,352
Reconciliation of NOI to GAAP Net Loss
Total property net operating income		$	8,064			$	3,498			$	14,173			$	6,352
Other income			1				22				44				44
Depreciation and amortization			(5,747	)			(2,922	)			(10,467	)			(5,167	)
Development and pursuit costs			(94	)			(15	)			(139	)			(15	)
Interest expense			(3,318	)			(2,011	)			(6,191	)			(3,900	)
Amortization of deferred financing cost			(236	)			(348	)			(552	)			(719	)
Loss on early extinguishment of debt			-				(331	)			(1,629	)			(1,146	)
General and administrative			(2,318	)			(1,824	)			(4,413	)			(3,383	)
Management transition expenses			(250	)			-				(9,291	)			-
Asset impairment losses			-				(613	)			-				(613	)
Acquisition costs			(136	)			(222	)			(1,641	)			(444	)
Income from unconsolidated joint venture			10				18				1				55
Loss from continuing operations			(4,024	)			(4,748	)			(20,105	)			(8,936	)
Discontinued operations			-				289				-				1,776
Net loss			(4,024	)			(4,459	)			(20,105	)			(7,160	)
Loss allocated to noncontrolling interests			242				614				1,341				1,169
Adjustments related to earnings per share computation (3)			(217	)			(189	)			(429	)			8,752
Income (loss) attributable to common stockholders		$	(3,999	)		$	(4,034	)		$	(19,193	)		$	2,761
Income from Discontinued Operations
Property revenues		$	-			$	1,683			$	-			$	3,790
Property expenses			-				(942	)			-				(2,074	)
Property net operating income			-				741				-				1,716
Other expenses			-				(22	)			-				(44	)
Depreciation and amortization			-				(172	)			-				(440	)
Interest expense			-				(498	)			-				(1,188	)
Amortization of deferred financing costs			-				-				-				-
Loss on extinguishment of debt			-				(8	)			-				(8	)
Deferred portion of ground lease amortization			-				(102	)			-				(206	)
Gain on sale of discontinued operations			-				350				-				1,946
Income (loss) from discontinued operations		$	-			$	289			$	-			$	1,776

  

1

The Company defines “Same Store” as properties owned and stabilized since January 1, 2013 through June 30, 2014 excluding properties held for sale. For newly constructed or lease-up properties or properties undergoing significant redevelopment, we consider a property to be stabilized at the earlier of (i) attainment of 90% physical occupancy or (ii) the one-year anniversary of completion of development or redevelopment. No properties owned since January 1, 2013 were under construction or undergoing redevelopment and, as a result, no properties owned since January 1, 2013 were excluded from the same store portfolio.

 

2

See page 18 for the Company's definition of this non-GAAP measure.

 

3

See notes B and G to consolidated financial statements as filed in our Quartely Report on Form 10-Q for the quarter ended March 31, 2014.