Exhibit 99.2

 

 

Fourth Quarter 2014

 

Supplemental Operating and Financial Data

 

 

The Aventine Greenville

Greenville, SC

 

Trade Street Residential, Inc.

19950 W. Country Club Drive, Suite 800

Aventura, Florida 33180

786-248-5200

www.tradestreetresidential.com

 

 

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

 

Table of Contents	Page
Earnings Release	3
Operating Results	9
Funds From Operations (“FFO”), Core FFO and Adjusted FFO	10
Consolidated Balance Sheets	11
Operating Properties Table	12
Same Store Comparisons	13
Acquisitions, Pipeline, Dispositions and Held for Sale	15
NOI, Average Occupancy and Average Monthly Rent Summary	16
Debt Summary	17
Capitalized Cost Summary	18
Non-GAAP Financial Measures and Reconciliation	19
NOI Bridge	21

 

 

 

 

 

Trade Street RESIDENTIAL RELEASES FOURTH QUARTER AND FULL YEAR 2014 RESULTS

 

– Same Store NOI Increases 14.2% for Fourth Quarter –

 

– Same Store Average Rent Increases 4.0% to $915 for Fourth Quarter –

 

– Reports Core FFO of $0.10 and AFFO of $0.08 Per Diluted Share for Fourth Quarter –

 

AVENTURA, FL, March 4, 2015 – 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 fourth quarter and full year ended December 31, 2014.

 

Operational and Financial Highlights for Fourth Quarter 2014

 

	·	Reported Core FFO of $4.0 million, or $0.10 per diluted share and Adjusted FFO, or AFFO, of $3.1 million, or $0.08 per diluted share.
	·	Same store net operating income, or same store NOI, increased 14.2% compared to the same period in the prior year. Over the same period, same store revenue increased 5.7% and same store expenses decreased 3.3%.
	·	Same store average occupancy was 96.6% at quarter end, a gain of 110 basis points compared to the same period last year. Stabilized non same store average occupancy was 95.2% at quarter end.
	·	Same store average rent was $915 per unit, an increase of 4.0% compared to the same period last year. Stabilized non same store average rent was $1,089 per unit at quarter end.
	·	On November 3, 2014, the Company announced that its Board of Directors initiated a comprehensive review of strategic alternatives, which continues to progress.

 

“Our strong operating momentum throughout the fourth quarter of 2014 continues to demonstrate the quality of our portfolio, and the focus of our operating team,” stated Richard Ross, Chief Executive Officer of Trade Street Residential. “During the quarter, we generated higher rental rates and further improved our occupancies while actively managing expenses to deliver solid year over year growth in our same-store NOI and FFO metrics. As we enter 2015, we expect to continue to produce strong results as we focus on growing rents and capture improving efficiencies across our expanded platform. Additionally, the previously announced review of strategic alternatives by our Board of Directors continues, underscoring the strong commitment by our entire organization to maximize value for shareholders.”

 

Financial Results for the Three Months Ended December 31, 2014

 

Net income attributable to common stockholders for the fourth quarter of 2014 was $0.5 million, or $0.01 per diluted share, as compared to a net loss of ($9.7) million, or ($0.87) per diluted share, in the prior year period. The increase in net income was primarily the result of higher revenues, lower general and administrative expenses and $1.1 million gain on the sale of the Company’s interest in The Estates at Perimeter joint venture versus a one-time charge of $11.8 million associated with an impairment on land holdings the prior year quarter.

 

 

 

Funds from Operations, or FFO, for the fourth quarter of 2014 was $2.1 million, or $0.05 per diluted share, as compared to a deficit of ($0.8) million, or ($0.06) per diluted share in the prior year period. The increase in FFO is largely the result of the addition of six new operating properties since the fourth quarter of 2013. Core FFO for the fourth quarter of 2014 was $4.0 million, or $0.10 per diluted share, as compared to a deficit of ($0.1) million, or ($0.01) per diluted share in the prior year period. Adjusted FFO, which additionally deducts capital expenditures, for the fourth quarter of 2014 was $3.1 million, or $0.08 per diluted share, as compared to a deficit of ($0.6) million, or ($0.04) per diluted share, in the prior year period.

 

Financial Results for the Full Year Ended December 31, 2014

 

Net loss attributable to common stockholders for the full year of 2014 was a net loss of ($27.8) million, or ($0.79) per diluted share, as compared to a net loss of ($5.6) million, or ($0.64) per diluted share, in the prior year. The change in net income was primarily attributable to higher revenue which was more than offset by higher property and other expenses, including $10.0 million of management transition expense. The net loss in the full year of 2013 also included a one-time bargain purchase gain of $6.9 million on acquired assets.

 

FFO for the full year of 2014 was a deficit of ($4.6) million, or ($0.12) per diluted share, as compared to a deficit of ($5.8) million, or ($0.52) per diluted share in the prior year. Core FFO for the full year of 2014 was $10.7 million, or $0.28 per diluted share, as compared to a loss of ($0.8) million, or ($0.07) per diluted share in the prior year. Adjusted FFO for the full year of 2014 was $8.3 million, or $0.22 per diluted share, as compared to a deficit of ($2.5) million, or ($0.22) per diluted share, in the prior year.

 

Portfolio Performance

 

Same store NOI for the fourth quarter of 2014 was $3.0 million as compared to $2.7 million in the same period in the prior year. Same store NOI increased 14.2% compared to the fourth quarter of 2013, driven by a 5.7% increase in same store revenue and a 3.3% decrease in same store property expenses compared to the fourth quarter of 2013. The increase in same store revenue was primarily attributable to a 110 basis point increase in average occupancy to 96.6 %, and a 4.0% increase in average rent to $915 per month.

 

On a sequential quarter basis, fourth quarter 2014 same store revenue increased 1.6% compared to the third quarter of 2014, while same store property expenses decreased 0.6% resulting in a same store NOI increase of 3.4%.

 

For the full year of 2014, same store revenue increased 5.2%, same store property expenses increased 3.8%, and same store NOI increased 6.3%, compared to the full year of 2013.

 

 

 

Transaction Activity

 

In December 2014, the Company and its joint venture partner closed on the sale of The Estates at Perimeter, a non-core 240-unit apartment community located in Augusta, Georgia, for approximately $26.0 million. The Company owned a 50% interest in this apartment community through an unconsolidated joint venture and received gross proceeds of $3.4 million, based on the Company’s proportionate share of ownership interest in the joint venture. Upon completion of this transaction, the Company owned 19 properties comprising 4,889 units and with a weighted average age of 10.9 years as of December 31, 2014.

 

Redemption of Class A Preferred Stock

 

In October 2014, the Company redeemed all of the outstanding 309,130 Class A Preferred Stock of the Company. The Class A Preferred Stock, with a liquidation preference of $30.9 million, was redeemed on October 17, 2014 in exchange for four land parcels and approximately $5.0 million in cash. The cash portion of the consideration was funded with cash on hand.

 

Balance Sheet and Financing Activity

 

As of December 31, 2014, the Company had total debt outstanding of $344.8 million at a weighted average interest rate of 3.85% and a weighted average term-to-maturity of 6.98 years. Of the total debt outstanding, $297.8 million is fixed rate debt at a weighted average interest rate of 4.03% and a weighted average term-to-maturity of 7.75 years.

 

Strategic Alternatives Review

 

In November 2014, the Company’s Board of Directors announced a review of strategic alternatives to enhance stockholder value. Such review includes (among other alternatives): a sale, merger, acquisition or other form of business combination; sale or acquisition of assets; or a debt or equity recapitalization. The Company has not made a decision to pursue any specific strategic transaction or any other strategic alternative, and there is no set timetable for completion of this strategic review process. There can be no assurance that the exploration of strategic alternatives will result in the completion of any transaction or other alternative. The Board does not intend to disclose further developments regarding the evaluation of strategic alternatives until such time as the Board has determined the outcome of the process or otherwise has deemed that disclosure is appropriate.

 

The Company retained J.P. Morgan Securities LLC as its financial advisor and Morrison & Foerster LLP as its legal advisors to assist the Board in its evaluation of strategic alternatives.

 

 

 

 

Dividend

 

On December 15, 2014, Trade Street Residential’s Board of Directors announced a dividend of $0.095 per share and unit, payable to holders of record of common stock and common units of the operating partnership as of December 30, 2014, which was paid on January 15, 2015.

 

Conference Call and Webcast

 

The Company will host a webcast and conference call on Wednesday, March 4, 2015 at 11:00 a.m. Eastern Time to review fourth 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 April 4, 2015, by dialing 877-870-5176 (domestic) or 858-384-5517 (international) and entering the pass code 13600321. Supplemental financial information is available in the Investor Relations section of the Company’s website under Quarterly Results.

 

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 and 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, bargain purchase gains, and recognized impairment of real estate assets, 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. 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.

 

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 recapitalization, 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.

 

The Company also uses adjusted funds from operations, or AFFO, as an operating measure, which is defined as FFO or, alternatively, Core FFO, depending on the existence of any non-cash, non-comparable items as described above, less recurring and non-recurring capital expenditures. The Company believes that AFFO is a relevant operating measure as it provides an indication as to whether a REIT can fund from its operating performance the capital expenditures necessary to maintain the condition of its operating real estate assets.

 

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

 

Media Contact:

Jason Chudoba, ICR for Trade Street

646-277-1249

Jason.Chudoba@icrinc.com

 

 

Trade Street Residential, Inc.
4th Quarter 2014	Operating Results
(Unaudited)

 

		Three Months Ended December 31,								Twelve Months Ended December 31,
in thousands, except per share data		2014				2013				2014				2013
Property revenues
Rental revenue		$	14,042			$	8,397			$	51,372			$	26,261
Other property revenues			1,456				811				5,495				2,696
Total property revenues			15,498				9,208				56,867				28,957
Property expenses
Property operations and maintenance			4,214				2,944				16,186				9,243
Real estate taxes and insurance			2,226				1,274				8,595				3,942
Total property expenses			6,440				4,218				24,781				13,185
Other expenses
General and administrative			1,747				2,188				8,103				8,683
Management transition expenses			730				-				10,021				-
Interest expense			3,370				2,837				12,942				8,947
Depreciation and amortization			3,861				3,439				19,250				11,918
Development and pursuit costs			13				164				369				180
Acquisition and recapitalization costs			1,034				3				2,675				919
Amortization of deferred financing cost			234				449				1,022				1,443
Loss on early extinguishment of debt			-				-				1,629				1,146
Total other expenses			10,989				9,080				56,011				33,236
Other income			-				18				45				88
Income from unconsolidated joint venture			85				25				106				67
Impairment associated with land holdings			-				(11,806	)			(7,962	)			(12,419	)
Gains on sales of real estate assets			1,066				-				1,419				-
Gain on bargain purchase			-				-				-				6,900
LOSS FROM CONTINUING OPERATIONS			(780	)			(15,853	)			(30,317	)			(22,828	)
Income from operation of discontinued rental property, including
gains/losses on disposals			-				4,576				-				6,272
NET LOSS			(780	)			(11,277	)			(30,317	)			(16,556	)
Loss allocated to noncontrolling interest			46				1,551				1,953				2,462
Dividends declared and accreted on preferred stock and units			-				(233	)			(693	)			(940	)
Dividends to restricted stockholders			-				(23	)			-				(52	)
Extinguishment of equity securities			1,216				-				1,216				11,716
Adjustments attributable to participating securities			-				250				44				(2,241	)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS		$	482			$	(9,732	)		$	(27,797	)		$	(5,611	)
Earnings (loss) per common share - basic and diluted
Continuing operations		$	0.01			$	(1.28	)		$	(0.79	)		$	(1.36	)
Discontinued operations			-				0.41				-				0.72
Net earnings (loss) attributable to common stockholders		$	0.01			$	(0.87	)		$	(0.79	)		$	(0.64	)
Weighted average number of shares - basic			36,500				11,226				35,325				8,762
Weighted average number of shares - diluted			38,844				11,226				35,325				8,762
Dividends declared per common share		$	0.095			$	0.095			$	0.380			$	0.433

 

 

Trade Street Residential, Inc.
4th Quarter 2014	Funds From Operations ("FFO"), Core FFO and Adjusted FFO
(Unaudited)

 

		Three Months Ended December 31,								Twelve Months Ended December 31,
in thousands, except per share data		2014				2013				2014				2013
Net income (loss) attributable to common stockholders		$	482			$	(9,732	)		$	(27,797	)		$	(5,611	)
Net loss allocated to noncontrolling interest			(46	)			(1,551	)			(1,953	)			(2,462	)
Adjustments related to earnings per share computation (1)			(1,216	)			(250	)			(1,260	)			(9,475	)
Impairment associated with land holdings			-				11,806				7,962				12,419
Real estate depreciation and amortization - continuing operations			3,935				3,527				19,589				12,006
Real estate depreciation and amortization - discontinued operations			-				36				-				476
Real estate depreciation and amortization - unconsolidated joint venture			-				107				302				396
Gain on bargain purchase			-				-				-				(6,900	)
Gains on sales of real estate assets (2)			(1,066	)			(4,739	)			(1,419	)			(6,685	)
Funds from operations (3)		$	2,089			$	(796	)		$	(4,576	)		$	(5,836	)
Management transition expenses			730				-				10,021				-
Acquisition and recapitalization costs			1,034				3				2,675				919
Loss on early extinguishment of debt			-				404				1,629				1,558
Non-cash straight-line adjustment for ground lease expenses			-				93				-				401
Non-cash stock awards			164				31				477				1,471
Non-cash accretion of preferred stock and units			-				156				462				651
Core funds from operations (3)		$	4,017			$	(109	)		$	10,688			$	(836	)
Recurring capital expenditures			(352	)			(190	)			(1,212	)			(729	)
Non-recurring capital expenditures			(516	)			(270	)			(1,204	)			(902	)
Adjusted funds from operations (3)		$	3,149			$	(569	)		$	8,272			$	(2,467	)
Per share data
Funds from operations - diluted		$	0.05			$	(0.06	)		$	(0.12	)		$	(0.52	)
Core funds from operations - diluted		$	0.10			$	(0.01	)		$	0.28			$	(0.07	)
Adjusted funds from operations - diluted		$	0.08			$	(0.04	)		$	0.22			$	(0.22	)
Weighted average common shares outstanding - diluted(4)			36,707				11,469				35,525				8,935
Weighted average common units outstanding - diluted			2,344				2,344				2,344				2,344
Weighted average common shares and common units outstanding - diluted(4)			39,051				13,813				37,869				11,279

 

 

1

See notes B, G, and M to consolidated financial statements as filed in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2014.

 

2

Includes gains from sales of real estate assets reflected as part of continued and discontinued operations in the Company's statements of operations.

 

3

See page 19 for the Company's definition of these non-GAAP measures.   Amounts reported for the three and twelve months ended December 31, 2013 have been reclassified to conform to the current year presentation and include results from discontinued operations where applicable.

 

4

Includes non-vested portion of restricted stock awards.

 

 

Trade Street Residential, Inc.
4th Quarter 2014	Consolidated Balance Sheets
(Unaudited)

 

in thousands		December 31, 2014				December 31, 2013
ASSETS
Real estate assets
Land and improvements		$	88,766			$	58,560
Buildings and improvements			464,002				272,849
Furniture, fixtures, and equipment			15,774				9,016
			568,542				340,425
Less accumulated depreciation			(27,475	)			(14,369	)
Net investment in operating properties			541,067				326,056
Land held for future development (including $0 and $1,477 of consolidated
variable interest entity, respectively)			-				31,963
Real estate assets held for sale			3,492				-
Net real estate assets			544,559				358,019
Investment in unconsolidated joint venture			-				2,421
Cash and cash equivalents (including $0 and $148 of consolidated variable
interest entity, respectively)			13,308				9,037
Restricted cash and lender reserves			2,590				3,203
Deferred financing costs, net			4,599				3,022
Intangible assets, net			588				1,571
Prepaid expenses and other assets			2,475				10,363
Assets related to real estate assets held for sale			549				-
			24,109				29,617
TOTAL ASSETS		$	568,668			$	387,636
LIABILITIES
Indebtedness		$	344,756			$	249,584
Accrued interest payable			887				840
Accounts payable and accrued expenses			7,531				6,119
Dividends payable			3,709				1,247
Security deposits, deferred rent and other liabilities			1,783				1,443
TOTAL LIABILITIES			358,666				259,233
Commitments & contingencies			-				-
STOCKHOLDERS' EQUITY
Class A preferred stock; $0.01 par value; 423 shares authorized, 0 and 309 shares
issued and outstanding at December 31, 2014 and 2013, respectively			-				3
Common stock, $0.01 par value per share; 1,000,000 authorized; 36,699 and 11,469
shares issued and outstanding at December 31, 2014 and 2013, respectively			367				115
Additional paid-in capital			274,733				162,681
Accumulated deficit			(80,417	)			(52,053	)
TOTAL STOCKHOLDERS' EQUITY - TRADE STREET RESIDENTIAL, INC.			194,683				110,746
Noncontrolling interest			15,319				17,657
TOTAL STOCKHOLDERS' EQUITY			210,002				128,403
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	568,668			$	387,636

 

 

 

Trade Street Residential, Inc.
4th 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)
(3)	The Pointe at Canyon Ridge		Sandy Springs, GA		1986/2007		09/18/08			494				920				96.7	%
	Arbors River Oaks		Memphis, TN		1990/2010		06/09/10			191				1,136				96.0	%
	Lakeshore on the Hill		Chattanooga, TN		1969/2005		12/14/10			123				1,168				96.6	%
	The Trails of Signal Mountain		Chattanooga, TN		1975		05/26/11			172				1,185				97.4	%
	Mercé Apartments		Addison, TX		1991/2007		10/31/11			114				653				94.2	%
	Fox Trails		Plano, TX		1981		12/06/11			286				960				96.9	%
	Millenia 700		Orlando, FL		2012		12/03/12			297				952				96.6	%
	Westmont Commons		Asheville, NC		2003&2008		12/12/12			252				1,009				97.3	%
	Bridge Pointe		Huntsville, AL		2002		03/04/13			178				1,047				98.2	%
	St. James at Goose Creek		Goose Creek, SC		2009		05/16/13			244				976				96.2	%
	Creekstone at RTP		Durham, NC		2013		05/17/13			256				1,043				94.4	%
	Talison Row at Daniel Island		Charleston, SC		2013		08/26/13			274				989				93.2	%
	Fountains Southend		Charlotte, NC		2013		09/24/13			208				844				97.5	%
	The Estates at Wake Forest		Wake Forest, NC		2013		01/21/14			288				1,047				92.7	%
	Miller Creek at Germantown		Memphis, TN		2012/2013		01/21/14			330				1,049				96.1	%
	The Aventine Greenville		Greenville, SC		2013		02/06/14			346				961				93.6	%
	Waterstone at Brier Creek		Raleigh, NC		2013/2014		03/10/14			232				1,137				93.8	%
	Avenues at Craig Ranch		McKinney, TX		2013		03/18/14			334				1,006				94.4	%
	Waterstone at Big Creek		Alpharetta, GA		2013		04/07/14			270				1,131				98.5	%
	Total / Weighted average									4,889				1,008				95.7	%

 

		Three Months Ended				Twelve Months Ended
		December 31,				December 31,
Total operating properties (end of period)			19				19
Total operating apartment units (end of period)			4,889				4,889
Total operating apartment units (weighted average)			4,889				4,632

 

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 for the three months ended December 31, 2014 represents the average occupancy 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.

 

3

On November 22, 2014, a 20-unit building at this community was destroyed by fire. The Company maintains insurance coverage on all of its properties and subsequently filed an insurance claim that is expected to cover the re-construction cost of this building, less the Company’s loss deductible, as well as loss of rents under a business interruption provision in the applicable insurance policy. Accordingly, for the period from the date of the fire through December 31, 2014, a recovery of lost rents relating to the 20 impacted units was recorded as additional rental income for this property. The Company anticipates that re-construction of this 20-unit building will be completed by the end of the second quarter of 2015.

 

 

Trade Street Residential, Inc.
4th Quarter 2014	Same Store NOI Comparisons(1)
(Unaudited)

 

		Year-to Date Comparisons
		Twelve Months Ended December 31,
in thousands, except per unit data		2014				2013				% Change
Revenues		$	21,436			$	20,386				5.2	%
Expenses			9,766				9,404				3.8	%
Net operating income (NOI) (2)		$	11,670			$	10,982				6.3	%
Average physical occupancy (3)			96.1	%			95.2	%			1.0	%
Average monthly rental rate (4)		$	896			$	867				3.3	%
		Quarter to Quarter Comparisons
		Three Months Ended December 31,
		2014				2013				% Change
Revenues		$	5,496			$	5,202				5.7	%
Expenses			2,461				2,544				(3.3	%)
Net operating income (NOI) (2)		$	3,035			$	2,658				14.2	%
Average physical occupancy (3)			96.6	%			95.5	%			1.2	%
Average monthly rental rate (4)		$	915			$	880				4.0	%
		Sequential Quarter Comparisons
		Three Months Ended
		December 31, 2014				September 30, 2014				% Change
Revenues		$	5,496			$	5,410				1.6	%
Expenses			2,461				2,475				(0.6	%)
Net operating income (NOI) (2)		$	3,035			$	2,935				3.4	%
Average physical occupancy (3)			96.6	%			96.1	%			0.5	%
Average monthly rental rate (4)		$	915			$	903				1.3	%

 

 

1

The Company defines “Same Store” as properties owned and stabilized since January 1, 2013 through December 31, 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 periods presented, "Same Store" properties are comprised of: The Pointe at Canyon Ridge, Arbor River Oaks, Lakeshore on the Hill, The Trails of Signal Mountain, Mercé Apartments, Fox Trails, Millenia 700, and Westmont Commons.

 

2

See page 19 for the Company's definition of this non-GAAP measure and page 21 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 monthly 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.
4th Quarter 2014	Same Store Operating Expense Comparisons
(Unaudited)

 

		Year-to Date Comparisons
		Twelve Months Ended December 31,
in thousands		2014				2013				$ Change				% Change				% of 2014 Actual
Property taxes		$	2,660			$	2,537			$	123				4.8	%			27.2	%
Salaries and benefits for on-site employees			2,570				2,535				35				1.4	%			26.3	%
Utilities			1,461				1,380				81				5.9	%			15.0	%
Repairs and maintenance			699				698				1				0.1	%			7.2	%
Make ready/turnover			574				492				82				16.7	%			5.9	%
Property insurance			483				484				(1	)			(0.2	%)			4.9	%
Other			1,319				1,278				41				3.2	%			13.5	%
Total same store		$	9,766			$	9,404			$	362				3.8	%			100.0	%
		Quarter to Quarter Comparisons
		Three Months Ended December 31,
		2014				2013				$ Change				% Change				% of 2014 Actual
Property taxes		$	687			$	752			$	(65	)			(8.6	%)			27.9	%
Salaries and benefits for on-site employees			619				607				12				2.0	%			25.1	%
Utilities			366				346				20				5.8	%			14.9	%
Repairs and maintenance			206				195				11				5.6	%			8.4	%
Make ready/turnover			167				143				24				16.8	%			6.8	%
Property insurance			109				124				(15	)			(12.1	%)			4.4	%
Other			307				377				(70	)			(18.6	%)			12.5	%
Total same store		$	2,461			$	2,544			$	(83	)			(3.3	%)			100.0	%
		Sequential Quarter Comparisons
		Three Months Ended
		December 31, 2014				September 30, 2014				$ Change				% Change				% of 2014 Actual
Property taxes		$	687			$	668			$	19				2.8	%			27.9	%
Salaries and benefits for on-site employees			619				652				(33	)			(5.1	%)			25.1	%
Utilities			366				380				(14	)			(3.7	%)			14.9	%
Repairs and maintenance			206				213				(7	)			(3.3	%)			8.4	%
Make Ready/turnover			167				156				11				7.1	%			6.8	%
Property insurance			109				103				6				5.8	%			4.4	%
Other			307				303				4				1.3	%			12.5	%
Total same store		$	2,461			$	2,475			$	(14	)			(0.6	%)			100.0	%

 

 

Trade Street Residential, Inc.
4th Quarter 2014	Acquisitions, Pipeline, Dispositions, and Held for Sale
(Unaudited)

 

in thousands, except unit data
Acquisitions:								Percent Leased at				Date		Gross				Debt Balance at
Property		Location		Units				December 31, 2014				Acquired		Purchase Price				December 31, 2014
The Estates at Wake Forest		Wake Forest, NC			288				94.8	%		1/21/2014		$	37,250			$	18,625
Miller Creek at Germantown		Memphis, TN			330				98.2	%		1/21/2014			43,750				26,250
The Aventine Greenville		Greenville, SC			346				98.6	%		2/6/2014			41,866				21,000
Waterstone at Brier Creek		Raleigh, NC			232				94.4	%		3/10/2014			32,682				16,250
Avenues at Craig Ranch		McKinney, TX			334				96.4	%		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 twelve months ended December 31					1,800									$	238,423			$	103,325

 

Acquisition pipeline:

Anticipated

Contract

Planned

Percent

Close

Purchase

Project

Location

Units

Leased

Date

Price

Waterstone at Big Creek, Phase II

Alpharetta, GA

100

-

1Q15

$

15,000

Total acquisition pipeline

100

-

$

15,000

 

Dispositions:								Date		Gross				Gain
Property		Location		Units				Sold		Sale Price				Realized
Post Oak		Louisville, KY			126			7/11/2014		$	8,000			$	353
The Estates at Perimeter (1)		Augusta, GA			240			12/10/2014			3,370				1,066
The Estates at Maitland (2)		Maitland, FL			-			10/17/2014			9,400				-
Millenia Phase II (2)		Orlando, FL			-			10/17/2014			6,250				-
Venetian (2)		Fort Myers, FL			-			10/17/2014			4,000				-
Sunnyside (2)		Panama City Beach, FL			-			10/17/2014			1,500				-
Total dispositions twelve months ended December 31					366					$	32,520			$	1,419

 

Land held for sale:												Carrying
				Planned								Value as of
Project		Location		Units				Acreage				December 31, 2014
Midlothian Town Center - East		Midlothian, VA			238				8.4			$	3,492
Total land held for sale					238				8.4			$	3,492

 

1

The Company owned a 50% interest in this apartment community through an unconsolidated joint venture.

 

2

Undeveloped land investments exchanged in the redemption of Class A preferred stock on October 17, 2014.

 

 

Trade Street Residential, Inc.
4th Quarter 2014	NOI, Average Occupancy and Average Monthly Rent Summary
(Unaudited)

 

in thousands, except unit data
Multifamily communities as of December 31, 2014:
										NOI				Avg Physical				Avg Monthly
		Units				Communities				Quarter Ended				Occupancy (1)				Rent/Unit
Same Store Communities (2)			1,929				8			$	3,035				96.6	%		$	915
Stabilized non-same store communities (3)			2,960				11				6,053				95.2	%			1,089
Other (4)			-				-				(30	)			-				-
Total multifamily communities			4,889				19			$	9,058				95.7	%		$	1,020

 

1

Average physical occupancy for the three months ended December 31, 2014 represents the average occupancy 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.

 

2

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, Mercé Apartments, Park at Fox Trails, Estates at Millenia, and Westmont Commons.

 

3

Communities that were stabilized for the quarter ended December 31, 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, Waterstone at Big Creek, The Aventine Greenville, Avenues at Craig Ranch, Waterstone at Brier Creek, and The Estates at Wake Forest.

 

4

Includes one community sold during the quarter ended September 30, 2014.

 

 

Trade Street Residential, Inc.
4th Quarter 2014	Debt Summary
(Unaudited)

 

in thousands
Debt Maturities as of December 31, 2014:
as of December 31, 2014
		Scheduled Repayments												% of
Year		Amortization				Maturities				Total				Total
2015		$	1,210			$	-			$	1,210				0.4	%
2016			1,976				-				1,976				0.6	%
2017			3,409				53,260				56,669				16.4	%
2018			3,802				7,666				11,468				3.3	%
2019			4,307				-				4,307				1.2	%
Thereafter			15,897				253,229				269,126				78.1	%
Total		$	30,601			$	314,155			$	344,756				100.0	%

 

Floating vs. Fixed Rate Debt:										Weighted Average
		Balance at				% of				Interest				Years to
		December 31, 2014				Total				Rate				Maturity
Fixed rate debt		$	297,756				86.4	%			4.03	%			7.75
Floating rate debt			47,000				13.6	%			2.70	%			2.08
Total		$	344,756				100.0	%			3.85	%			6.98

 

 

Trade Street Residential, Inc.
4th Quarter 2014	Capitalized Costs Summary
(Unaudited)

 

		Three Months Ended December 31,																Twelve Months Ended December 31,
in thousands, except per unit data		2014								2013								2014								2013
		Total				Per Unit				Total				Per Unit				Total				Per Unit				Total				Per Unit
Recurring capital expenditures:
Flooring		$	229			$	47			$	153			$	47			$	747			$	161			$	523			$	196
Appliances & Fixtures			102				21				24				7				363				78				119				45
HVAC			10				2				11				3				70				15				57				22
Other			11				2				2				1				32				7				30				11
Total recurring capital expenditures		$	352			$	72			$	190			$	58			$	1,212			$	261			$	729			$	274
Non-recurring capital expenditures:
Building & Structures		$	9			$	2			$	21			$	7			$	76			$	16			$	452			$	170
Land Improvements			209				43				102				32				529				114				133				50
Furniture & Equipment			126				26				47				15				315				68				159				60
Other			172				35				100				31				284				61				158				59
Total non-recurring capital expenditures		$	516			$	106			$	270			$	85			$	1,204			$	259			$	902			$	339
Total recurring/non-recurring capital expenditures		$	868			$	178			$	460			$	143			$	2,416			$	520			$	1,631			$	613
Revenue generating capital expenditures:
Flooring		$	23			$	5			$	28			$	9			$	151			$	33			$	87			$	33
Resurfacing			22				5				6				2				63				14				22				8
Appliances & Fixtures			24				5				41				13				139				30				171				64
Other			14				3				25				8				69				15				89				33
Total revenue generating capital expenditures		$	83			$	18			$	100			$	32			$	422			$	92			$	369			$	138
Construction in process		$	-			$	-			$	-			$	-			$	374			$	-			$	-			$	-
Other			(45	)			-				(62	)			-				193				-				313				-
Total capital expenditures per cash flow statements		$	906			$	196			$	498			$	175			$	3,405			$	612			$	2,313			$	751
Weighted average units - continuing operations							4,889								3,215								4,632								2,666

 

 

Trade Street Residential, Inc.
4th 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, bargain purchase gains, and recognized impairment of real estate assets, 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 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 and 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. 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.

 

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 recapitalization, management transition costs and certain other non-cash or non-comparable 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.  

 

Adjusted Funds from Operations (“AFFO”)

 

Management also uses Adjusted FFO or AFFO as an operating measure, which is defined as FFO or, alternatively, Core FFO, depending on the existence of any non-cash, non-comparable items as described above, less recurring and non-recurring capital expenditures. Management believes that AFFO is a relevant operating measure as it provides an indication as to whether a REIT can fund from its operating performance the capital expenditures necessary to maintain the condition of its operating real estate assets.

 

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, AFFO, 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.
4th Quarter 2014	NOI Bridge
(Unaudited)

 

		Three Months Ended December 31,								Twelve Months Ended December 31,
in thousands		2014				2013				2014				2013
Property Revenues (1)
Same Store (8 properties)		$	5,496			$	5,202			$	21,436			$	20,386
Non Same Store (11 properties)			10,011				3,712				34,797				7,406
Other (1 property)(2)			(9	)			294				634				1,165
Total property revenues		$	15,498			$	9,208			$	56,867			$	28,957
Property Expenses (1)
Same Store (8 properties)		$	2,461			$	2,544			$	9,766			$	9,404
Non Same Store (11 properties)			3,958				1,557				14,633				3,174
Other (1 property)(2)			21				117				382				607
Total property expenses		$	6,440			$	4,218			$	24,781			$	13,185
Net Operating Income (1)(3)
Same Store (8 properties)		$	3,035			$	2,658			$	11,670			$	10,982
Non Same Store (11 properties)			6,053				2,155				20,164				4,232
Other (1 property)(2)			(30	)			177				252				558
Total property net operating income		$	9,058			$	4,990			$	32,086			$	15,772
Reconciliation of NOI to GAAP Net Income (Loss)
Total property net operating income		$	9,058			$	4,990			$	32,086			$	15,772
Other income			-				18				45				88
Gain on sales of real estate assets			1,066				-				1,419				-
Gain on bargain purchase			-				-				-				6,900
Depreciation and amortization			(3,861	)			(3,439	)			(19,250	)			(11,918	)
Development and pursuit costs			(13	)			(164	)			(369	)			(180	)
Interest expense			(3,370	)			(2,837	)			(12,942	)			(8,947	)
Amortization of deferred financing cost			(234	)			(449	)			(1,022	)			(1,443	)
Loss on early extinguishment of debt			-				-				(1,629	)			(1,146	)
General and administrative			(1,747	)			(2,188	)			(8,103	)			(8,683	)
Management transition expenses			(730	)			-				(10,021	)			-
Impairment associated with land holdings			-				(11,806	)			(7,962	)			(12,419	)
Acquisition and recapitalization costs			(1,034	)			(3	)			(2,675	)			(919	)
Income from unconsolidated joint venture			85				25				106				67
Loss from continuing operations			(780	)			(15,853	)			(30,317	)			(22,828	)
Discontinued operations			-				4,576				-				6,272
Net loss			(780	)			(11,277	)			(30,317	)			(16,556	)
Loss allocated to noncontrolling interest			46				1,551				1,953				2,462
Adjustments related to earnings per share computation (4)			1,216				(6	)			567				8,483
Income (loss) attributable to common stockholders		$	482			$	(9,732	)		$	(27,797	)		$	(5,611	)
Income from Discontinued Operations
Property revenues			-				1,272				-				6,387
Property expenses			-				(743	)			-				(3,874	)
Property net operating income			-				529				-				2,513
Other expenses			-				(12	)			-				(46	)
Depreciation and amortization			-				(36	)			-				(476	)
Interest expense			-				(138	)			-				(1,534	)
Amortization of deferred financing costs			-				(10	)			-				(57	)
Loss on extinguishment of debt			-				(404	)			-				(412	)
Deferred portion of ground lease amortization			-				(93	)			-				(401	)
Gain on sale of discontinued operations			-				4,740				-				6,685
Income (loss) from discontinued operations		$	-			$	4,576			$	-			$	6,272

 

 

1

The Company defines “Same Store” as properties owned and stabilized since January 1, 2013 through December 31, 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

Includes one community sold during the quarter ended September 30, 2014.

 

3

See page 19 for the Company's definition of this non-GAAP measure.

 

4

See notes B and G to consolidated financial statements as filed in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2014.