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EX-31.2 - EXHIBIT 31.2 - PREFERRED APARTMENT COMMUNITIES INCexhibit31210q3q2016.htm
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EX-32.2 - EXHIBIT 32.2 - PREFERRED APARTMENT COMMUNITIES INCexhibit32210q3q2016.htm
EX-32.1 - EXHIBIT 32.1 - PREFERRED APARTMENT COMMUNITIES INCexhibit32110q3q2016.htm
EX-31.1 - EXHIBIT 31.1 - PREFERRED APARTMENT COMMUNITIES INCexhibit31110q3q2016.htm
EX-12.1 - STATEMENT OF RATIOS - PREFERRED APARTMENT COMMUNITIES INCexhibit1210q3q2016.htm
 


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 

FORM 10-Q
 

x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2016
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File No. 001-34995
 

Preferred Apartment Communities, Inc.
(Exact name of registrant as specified in its charter)
 

Maryland
27-1712193
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
3284 Northside Parkway NW, Suite 150, Atlanta, GA 30327
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (770) 818-4100
 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No   ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No   ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act).
Large accelerated filer  ¨            Accelerated filer  x            Non-accelerated filer  ¨            Smaller reporting company  ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No  x
The number of shares outstanding of the registrant’s Common Stock, as of October 28, 2016 was 24,697,128.




  
PART I - FINANCIAL INFORMATION
 
 
 
 
INDEX
 
 
 
 
 
 
 
Item 1.
Financial Statements
Page No. 
 
 
 
 
 
1

 
 
 
 
2

 
 
 
 
3

 
 
 
 
4

 
 
 
 
6

 
 
 
Item 2.
43

 
 
 
Item 3.
79

 
 
 
Item 4.
79

 
 
 
 
 
 
Item 1.
Legal Proceedings
80

 
 
 
Item 1A.
Risk Factors
80

 
 
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
81

 
 
 
Item 3.
Defaults Upon Senior Securities
81

 
 
 
Item 4.
Mine Safety Disclosures
81

 
 
 
Item 5.
Other Information
81

 
 
 
Item 6.
Exhibits
81

 
 
SIGNATURES
82

 
 
 
 
83






Preferred Apartment Communities, Inc.
Consolidated Balance Sheets
(Unaudited)
 
 
September 30, 2016
 
December 31, 2015
Assets
 
 
 
 
 
 
 
 
 
Real estate
 
 
 
 
Land
 
$
260,222,888

 
$
141,729,264

Building and improvements
 
1,333,186,314

 
733,417,442

Tenant improvements
 
14,132,772

 
5,781,199

Furniture, fixtures, and equipment
 
125,292,571

 
86,092,408

Construction in progress
 
2,879,528

 
609,400

Gross real estate
 
1,735,714,073

 
967,629,713

Less: accumulated depreciation
 
(87,020,014
)
 
(48,155,874
)
Net real estate
 
1,648,694,059

 
919,473,839

Property held for sale (net of accumulated depreciation of $0 and $5,838,792)

 
33,817,081

Real estate loans, net of deferred fee income
 
195,971,159

 
180,688,293

Real estate loans to related parties, net
 
109,436,327

 
57,313,465

Total real estate and real estate loans, net
 
1,954,101,545

 
1,191,292,678

 
 
 
 
 
Cash and cash equivalents
 
10,462,384

 
2,439,605

Restricted cash
 
32,948,161

 
12,539,440

Notes receivable
 
14,341,875

 
18,489,247

Note receivable and revolving line of credit due from related party
 
20,986,537

 
19,454,486

Accrued interest receivable on real estate loans
 
17,669,121

 
14,294,648

Acquired intangible assets, net of amortization of $39,979,097 and $27,032,157
 
49,825,572

 
19,381,473

Deferred loan costs for revolving line of credit, net of amortization of $268,801 and $791,002
 
1,738,508

 
488,770

Deferred offering costs
 
3,809,014

 
5,834,304

Tenant receivables (net of allowance of $466,122 and $434,773) and other assets
 
17,654,353

 
11,314,382

 
 
 
 
 
Total assets
 
$
2,123,537,070

 
$
1,295,529,033

 
 
 
 
 
Liabilities and equity
 

 
 
 
 
 
 
 
Liabilities
 
 
 
 
Mortgage notes payable, principal amount
 
$
1,183,335,433

 
$
668,836,291

Less: deferred loan costs, net of amortization of $4,390,077 and $2,021,696
 
(19,317,090
)
 
(8,099,517
)
Mortgage notes payable, net of unamortized deferred loan costs
 
1,164,018,343

 
660,736,774

Mortgage note held for sale
 

 
28,109,000

Revolving line of credit
 
82,000,000

 
34,500,000

Term note payable
11,000,000

 

Less: deferred loan costs, net of amortization
(67,032
)
 

Term note payable, net of unamortized deferred loan costs
10,932,968

 

Real estate loan participation obligation
 
19,638,232

 
13,544,160

Accounts payable and accrued expenses
 
25,309,813

 
12,644,818

Accrued interest payable
 
3,490,151

 
1,803,389

Dividends and partnership distributions payable
 
9,056,611

 
6,647,507

Acquired below market lease intangibles, net of amortization of $2,933,811 and $1,578,205
 
19,180,354

 
9,253,450

Security deposits and other liabilities
 
5,161,358

 
2,836,145

Total liabilities
 
1,338,787,830

 
770,075,243

 
 
 
 
 
Commitments and contingencies (Note 12)
 
 
 
 
 
 
 
 
 
Equity
 
 
 
 
 
 
 
 
 
Stockholders' equity
 
 
 
 
Series A Redeemable Preferred Stock, $0.01 par value per share; 1,050,000
 
 
 
   shares authorized; 809,460 and 486,182 shares issued; 802,032 and 482,964
 
 
 
shares outstanding at September 30, 2016 and December 31, 2015, respectively
8,020

 
4,830

Common Stock, $0.01 par value per share; 400,066,666 shares authorized; 24,658,034 and
 
 
 
  22,761,551 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively
246,580

 
227,616

Additional paid-in capital
802,559,257

 
536,450,877

Accumulated deficit
 
(19,384,106
)
 
(13,698,520
)
Total stockholders' equity
 
783,429,751

 
522,984,803

Non-controlling interest
 
1,319,489

 
2,468,987

Total equity
 
784,749,240

 
525,453,790

 
 
 
 
 
Total liabilities and equity
 
$
2,123,537,070

 
$
1,295,529,033


The accompanying notes are an integral part of these consolidated financial statements.
1




Preferred Apartment Communities, Inc.
Consolidated Statements of Operations
(Unaudited)
 
 
 
 
 
 
 
 
 
Three months ended September 30,
 
Nine months ended September 30,
 
2016
 
2015
 
2016
 
2015
Revenues:
 
 
 
 
 
 
 
Rental revenues
$
37,319,207

 
$
19,442,628

 
$
96,541,544

 
$
47,304,230

Other property revenues
5,221,887

 
2,558,185

 
13,290,330

 
6,685,752

Interest income on loans and notes receivable
7,194,742

 
5,909,907

 
20,984,625

 
16,367,864

Interest income from related parties
3,801,501

 
2,044,973

 
10,310,563

 
5,031,189

Total revenues
53,537,337

 
29,955,693

 
141,127,062

 
75,389,035

 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
Property operating and maintenance
5,504,848

 
3,097,080

 
13,883,133

 
7,722,017

Property salary and benefits reimbursement to related party
2,808,402

 
1,688,347

 
7,688,470

 
4,114,752

Property management fees (including $1,444,518, $751,817,
 
 
 
 
 
 
 
 $3,656,209, and $1,795,435 to related parties)
1,724,411

 
857,294

 
4,308,841

 
2,082,839

Real estate taxes
4,789,085

 
2,506,885

 
15,457,134

 
6,911,034

General and administrative
1,144,256

 
632,164

 
3,255,728

 
1,553,666

Equity compensation to directors, executives and consultants
638,414

 
593,417

 
1,867,706

 
1,761,268

Depreciation and amortization
21,664,363

 
10,536,486

 
54,981,064

 
26,409,763

Acquisition and pursuit costs (including $89,631, $63,486, $141,548
 
 
 
 
 
 
 
and $148,127 to related party)
1,036,171

 
1,783,708

 
6,179,442

 
2,876,642

Acquisition fees to related parties
321,366

 
1,541,250

 
706,422

 
3,400,021

Asset management fees to related party
3,759,084

 
1,908,742

 
9,484,161

 
4,830,588

Insurance, professional fees and other expenses
1,338,343

 
1,062,687

 
4,216,838

 
2,412,441

Total operating expenses
44,728,743

 
26,208,060

 
122,028,939

 
64,075,031

 
 
 
 
 
 
 
 
Contingent asset management and general and administrative expense fees
(736,960
)
 
(373,360
)
 
(1,458,245
)
 
(1,528,479
)
 
 
 
 
 
 
 
 
Net operating expenses
43,991,783

 
25,834,700

 
120,570,694

 
62,546,552

 
 
 
 
 
 
 
 
Operating income
9,545,554

 
4,120,993

 
20,556,368

 
12,842,483

Interest expense
12,234,174

 
5,818,760

 
30,688,505

 
14,884,343

 
 
 
 
 
 
 
 
Net loss before gain on sale of real estate
(2,688,620
)
 
(1,697,767
)
 
(10,132,137
)
 
(2,041,860
)
Gain on sale of real estate, net of disposition expenses

 

 
4,271,506

 

Net loss
(2,688,620
)
 
(1,697,767
)
 
(5,860,631
)
 
(2,041,860
)
 
 
 
 
 
 
 
 
Consolidated net loss attributable to non-controlling interests
86,484

 
15,289

 
175,045

 
20,712

 
 
 
 
 
 
 
 
Net loss attributable to the Company
(2,602,136
)
 
(1,682,478
)
 
(5,685,586
)
 
(2,021,148
)
 
 
 
 
 
 
 
 
Dividends declared to Series A preferred stockholders
(11,015,706
)
 
(5,114,126
)
 
(28,341,723
)
 
(12,377,580
)
Earnings attributable to unvested restricted stock
(6,159
)
 
(4,068
)
 
(12,434
)
 
(16,355
)
 
 
 
 
 
 
 
 
Net loss attributable to common stockholders
$
(13,624,001
)
 
$
(6,800,672
)
 
$
(34,039,743
)
 
$
(14,415,083
)
 
 
 
 
 
 
 
 
Net loss per share of Common Stock available to
 
 
 
 
 
 
 
common stockholders, basic and diluted
$
(0.56
)
 
$
(0.31
)
 
$
(1.45
)
 
$
(0.65
)
 
 
 
 
 
 
 
 
Dividends per share declared on Common Stock
$
0.2025

 
$
0.18

 
$
0.5975

 
$
0.535

 
 
 
 
 
 
 
 
Weighted average number of shares of Common Stock outstanding,
 
 
 
 
 
 
 
basic and diluted
24,340,791

 
22,292,217

 
23,552,951

 
22,109,036


The accompanying notes are an integral part of these consolidated financial statements.
2



Preferred Apartment Communities, Inc.
Consolidated Statements of Stockholders' Equity
For the nine months ended September 30, 2016 and 2015
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Series A Redeemable Preferred Stock
 
Common Stock
 
Additional Paid in Capital
 
Accumulated (Deficit)
 
Total Stockholders' Equity
 
Non-Controlling Interest
 
Total Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1, 2015
 
$
1,928

 
$
214,039

 
$
300,576,349

 
$
(11,297,852
)
 
$
289,494,464

 
$
2,087,410

 
$
291,581,874

Issuance of Units
 
1,936

 

 
193,447,355

 

 
193,449,291

 

 
193,449,291

Redemptions of Series A Preferred Stock
 
(23
)
 
599

 
(1,505,907
)
 

 
(1,505,331
)
 

 
(1,505,331
)
Issuance of Common Stock
 

 
5,479

 
5,487,829

 

 
5,493,308

 

 
5,493,308

Exercises of warrants
 

 
1,307

 
1,241,956

 

 
1,243,263

 

 
1,243,263

Syndication and offering costs
 

 

 
(22,027,008
)
 

 
(22,027,008
)
 

 
(22,027,008
)
Equity compensation to executives and directors
 

 
40

 
282,532

 

 
282,572

 

 
282,572

Vesting of restricted stock
 

 
468

 
(468
)
 

 

 

 

Conversion of Class A Units to Common Stock
 

 
1,080

 
717,583

 

 
718,663

 
(718,663
)
 

Current period amortization of Class B Units
 

 

 

 

 

 
1,478,696

 
1,478,696

Net loss
 

 

 

 
(2,021,148
)
 
(2,021,148
)
 
(20,712
)
 
(2,041,860
)
Reallocation adjustment to non-controlling interests
 

 

 
508,937

 

 
508,937

 
(508,937
)
 

Distributions to non-controlling interests
 

 

 

 

 

 
(149,307
)
 
(149,307
)
Dividends to series A preferred stockholders
 
 
 
 
 
 
 
 
 
 
 
 
 
 
($5.00 per share per month)
 

 

 
(12,377,579
)
 

 
(12,377,579
)
 

 
(12,377,579
)
Dividends to common stockholders ($0.535 per share)
 

 

 
(11,881,325
)
 

 
(11,881,325
)
 

 
(11,881,325
)
Balance at September 30, 2015
 
$
3,841

 
$
223,012

 
$
454,470,254

 
$
(13,319,000
)
 
$
441,378,107

 
$
2,168,487

 
$
443,546,594

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at January 1, 2016
 
$
4,830

 
$
227,616

 
$
536,450,877

 
$
(13,698,520
)
 
$
522,984,803

 
$
2,468,987

 
$
525,453,790

Issuance of Units
 
3,233

 

 
322,937,157

 

 
322,940,390

 

 
322,940,390

Redemptions of Series A Preferred Stock
 
(43
)
 
588

 
(3,020,673
)
 

 
(3,020,128
)
 

 
(3,020,128
)
Issuance of Common Stock
 

 
1,973


2,858,311



 
2,860,284

 

 
2,860,284

Exercises of warrants
 

 
15,163

 
16,181,146

 

 
16,196,309

 

 
16,196,309

Syndication and offering costs
 

 

 
(38,220,013
)
 

 
(38,220,013
)
 

 
(38,220,013
)
Equity compensation to executives, directors and consultants
 

 
56

 
352,472

 

 
352,528

 

 
352,528

Vesting of restricted stock
 

 
228

 
(228
)
 

 

 

 

Conversion of Class A Units to Common Stock
 

 
956

 
647,642

 

 
648,598

 
(648,598
)
 

Current period amortization of Class B Units
 

 

 

 

 

 
1,542,182

 
1,542,182

Net loss
 

 

 

 
(5,685,586
)
 
(5,685,586
)
 
(175,045
)
 
(5,860,631
)
Class A Units issued for property acquisition
 

 

 

 

 

 
5,072,659

 
5,072,659

Minority interest in joint venture
 

 

 

 

 

 
450,000

 
450,000

Reallocation adjustment to non-controlling interests
 

 

 
6,914,403

 

 
6,914,403

 
(6,914,403
)
 

Distributions to non-controlling interests
 

 

 

 

 

 
(476,293
)
 
(476,293
)
Dividends to series A preferred stockholders
 
 
 
 
 
 
 
 
 
 
 
 
 
 
($5.00 per share per month)
 

 

 
(28,341,723
)
 

 
(28,341,723
)
 

 
(28,341,723
)
Dividends to common stockholders ($0.5975 per share)
 

 

 
(14,200,114
)
 

 
(14,200,114
)
 

 
(14,200,114
)
Balance at September 30, 2016
 
$
8,020

 
$
246,580

 
$
802,559,257

 
$
(19,384,106
)
 
$
783,429,751

 
$
1,319,489

 
$
784,749,240


The accompanying notes are an integral part of these consolidated financial statements.
3



Preferred Apartment Communities, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
 
 
 
Nine months ended September 30,
 
 
2016
 
2015
Operating activities:
 
 
 
 
Net loss
 
$
(5,860,631
)
 
$
(2,041,860
)
Reconciliation of net loss to net cash provided by operating activities:
 
 
 
 
Depreciation expense
 
39,387,351

 
19,052,639

Amortization expense
 
15,593,713

 
7,357,124

Amortization of above and below market leases
 
(1,118,329
)
 
(566,260
)
Deferred fee income amortization
 
(725,913
)
 
(580,996
)
Deferred loan cost amortization
 
2,431,809

 
1,069,961

(Increase) in accrued interest income on real estate loans
 
(3,374,473
)
 
(3,188,828
)
Equity compensation to executives, directors and consultants
1,867,706

 
1,761,268

Gain on sale of real estate
 
(4,271,506
)
 

Other
 
56,582

 
(14,807
)
Changes in operating assets and liabilities:
 
 
 
 
(Increase) in tenant receivables and other assets
 
(1,230,183
)
 
(539,565
)
Increase in accounts payable and accrued expenses
 
8,843,052

 
5,069,158

Increase in accrued interest payable
 
1,740,420

 
427,750

Increase in prepaid rents
 
235,035

 
237,613

Increase in security deposits and other liabilities
 
282,738

 
144,931

Net cash provided by operating activities
 
53,857,371

 
28,188,128

 
 
 
 
 
Investing activities:
 
 
 
 
Investments in real estate loans
 
(123,427,150
)
 
(83,800,145
)
Repayments of real estate loans
 
36,672,482

 
18,772,024

Notes receivable issued
 
(8,730,166
)
 
(5,805,972
)
Notes receivable repaid
 
12,895,101

 
9,897,319

Note receivable issued to and draws on line of credit by related party
 
(25,821,121
)
 
(12,869,093
)
Repayments of line of credit by related party
 
23,791,676

 
8,514,582

Acquisition fees received on real estate loans
 
2,695,961

 
2,126,913

Acquisition fees paid on real estate loans
 
(1,374,828
)
 
(1,063,456
)
Acquisition fees paid to real estate loan participants
 

 
(24,665
)
Acquisition of properties
 
(740,597,973
)
 
(311,936,810
)
Disposition of properties
 
10,606,386

 

Additions to real estate assets - improvements
 
(7,613,065
)
 
(3,007,537
)
Proceeds from sale of fixed assets
10,000

 

Payment of deposits for property acquisitions
 
(3,128,370
)
 
(1,519,269
)
Decrease in restricted cash
 
(9,070,073
)
 
(4,998,076
)
Net cash used in investing activities
 
(833,091,140
)
 
(385,714,185
)
 
 
 
 
 
Financing activities:
 
 
 
 
Proceeds from mortgage notes payable
 
479,494,000

 
204,555,500

Payments for mortgage notes payable
 
(7,748,011
)
 
(2,553,190
)
Payments for deposits and other mortgage loan costs
 
(15,400,974
)
 
(3,240,080
)
Proceeds from real estate loan participants
 
5,575,484

 
4,134,882

Proceeds from lines of credit
 
357,136,020

 
165,900,000

Payments on lines of credit
 
(309,636,020
)
 
(161,700,000
)
Proceeds from Term Loan
 
46,000,000

 
32,000,000

Repayment of the Term Loan
 
(35,000,000
)
 
(32,000,000
)
Proceeds from sales of Units, net of offering costs and redemptions
 
287,830,612

 
173,466,135

Proceeds from sales of Common Stock
 
2,810,156

 
5,381,848

Proceeds from exercises of warrants
 
19,831,294

 
1,236,437

Common Stock dividends paid
 
(13,523,075
)
 
(11,560,512
)
Series A Preferred Stock dividends paid
 
(26,735,870
)
 
(11,453,618
)
Distributions to non-controlling interests
 
(350,079
)
 
(124,905
)
Payments for deferred offering costs
 
(3,476,989
)
 
(1,582,886
)
Contribution from non-controlling interests
 
450,000

 

Net cash provided by financing activities
 
787,256,548

 
362,459,611

 
 
 
 
 
Net increase in cash and cash equivalents
 
8,022,779

 
4,933,554

Cash and cash equivalents, beginning of period
 
2,439,605

 
3,113,270

Cash and cash equivalents, end of period
 
$
10,462,384

 
$
8,046,824

 
 
 
 
 

The accompanying notes are an integral part of these consolidated financial statements.
4



 
 
 
 
 
Preferred Apartment Communities, Inc.
Consolidated Statements of Cash Flows - continued
(Unaudited)
 
 
 
 
 
Nine months ended September 30,
 
 
2016
 
2015
Supplemental cash flow information:
 
 
 
 
Cash paid for interest
 
$
26,569,933

 
$
13,386,632

 
 
 
 
 
Supplemental disclosure of non-cash activities:
 
 
 
 
Accrued capital expenditures
 
$
1,125,774

 
$
641,627

Writeoff of fully depreciated or amortized assets and liabilities
 
$
149,288

 
$
290,009

Writeoff of fully amortized deferred loan costs
 
$
826,359

 
$

Dividends payable - Common Stock
 
$
4,992,038

 
$
4,018,249

Dividends payable - Series A Preferred Stock
 
$
3,885,123

 
$
1,824,395

Partnership distributions payable to non-controlling interests
 
$
179,449

 
$
49,781

Accrued and payable deferred offering costs
 
$
690,643

 
$
665,756

Reclass of offering costs from deferred asset to equity
 
$
6,080,235

 
$
2,584,073

Bridge loans converted to mezzanine loans
 
$

 
$
29,158,371

Fair value of OP Units issued for property
 
$
5,072,659

 
$

Mezzanine loan balance applied to purchase of property
 
$
12,500,000

 
$
10,000,000

Fair value issuances of equity compensation
 
$
3,152,312

 
$
2,309,569

Offering cost reimbursement to related party
 
$
482,871

 
$
670,579

Assumed mortgage debt
 
$
43,103,275

 
$
41,625,000



The accompanying notes are an integral part of these consolidated financial statements.
5


Preferred Apartment Communities, Inc.
Notes to Consolidated Financial Statements
September 30, 2016



1.
Organization and Basis of Presentation

Preferred Apartment Communities, Inc. was formed as a Maryland corporation on September 18, 2009, and elected to be taxed as a real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended, or the Code, effective with its tax year ended December 31, 2011. Unless the context otherwise requires, references to the "Company", "we", "us", or "our" refer to Preferred Apartment Communities, Inc., together with its consolidated subsidiaries, including Preferred Apartment Communities Operating Partnership, L.P., or the Operating Partnership. The Company was formed primarily to acquire and operate multifamily properties in select targeted markets throughout the United States. As part of its business strategy, the Company may enter into forward purchase contracts or purchase options for to-be-built multifamily communities and may make real estate related loans, provide deposit arrangements, or provide performance assurances, as may be necessary or appropriate, in connection with the development of multifamily communities and other properties. As a secondary strategy, the Company also may acquire or originate senior mortgage loans, subordinate loans or real estate loans secured by interests in multifamily properties, membership or partnership interests in multifamily properties and other multifamily related assets and invest not more than 20% of its assets, subject to any temporary increase unanimously approved by its board of directors, in other real estate related investments such as grocery-anchored shopping centers, as determined by its Manager (as defined below) as appropriate for the Company. The Company is externally managed and advised by Preferred Apartment Advisors, LLC, or its Manager, a Delaware limited liability company and related party (see Note 7).

As of September 30, 2016, the Company had 24,658,034 shares of common stock, par value $0.01 per share, or Common Stock, issued and outstanding and was the approximate 96.5% owner of the Operating Partnership at that date. The number of partnership units not owned by the Company totaled 886,168 at September 30, 2016 and represented Class A OP Units of the Operating Partnership, or Class A OP Units. The Class A OP Units are convertible at any time at the option of the holder into the Company's choice of either cash or Common Stock. In the case of cash, the value is determined based upon the trailing 20-day volume weighted average price of the Company's Common Stock.

The Company controls the Operating Partnership through its sole general partner interest and conducts substantially all of its business through the Operating Partnership. The Company has determined the Operating Partnership is a variable interest entity, or VIE, of which the Company is the primary beneficiary. Substantially all of the Company's assets and liabilities are held by the Operating Partnership. New Market Properties, LLC, a wholly-owned subsidiary of the Operating Partnership, owns and conducts the business of the Company's grocery-anchored shopping centers.

Basis of Presentation

These unaudited consolidated financial statements include all of the accounts of the Company and the Operating Partnership presented in accordance with accounting principles generally accepted in the United States of America, or GAAP. All significant intercompany transactions have been eliminated in consolidation. Certain adjustments have been made consisting of normal recurring accruals, which, in the opinion of management, are necessary for the fair statement of the Company's financial condition. The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. The year end condensed balance sheet data was derived from audited financial statements, but does not include all the disclosures required by GAAP. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's 2015 Annual Report on Form 10-K filed with the Securities and Exchange Commission, or the SEC, on March 14, 2016.
    

6

Preferred Apartment Communities, Inc.
Notes to Consolidated Financial Statements – (continued)
September 30, 2016


2.
Summary of Significant Accounting Policies

Acquisitions and Impairments of Real Estate Assets

The Company records its initial investments in income-producing real estate at fair value at the acquisition date in accordance with ASC 805-10, Business Combinations, which requires that all consideration transferred be measured at its acquisition-date fair value. The aggregate purchase price of acquired properties is apportioned to the tangible and identifiable intangible assets and liabilities acquired at their estimated fair values. The value of acquired land, buildings and improvements is estimated by formal appraisals, observed comparable sales transactions, and information gathered during pre-acquisition due diligence activities and the valuation approach considers the value of the property as if it were vacant. The values of furniture, fixtures, and equipment are estimated by calculating their replacement cost and reducing that value by factors based upon estimates of their remaining useful lives. Intangible assets and liabilities for multifamily communities include the values of in-place leases and above-market or below-market leases. Additional intangible assets for retail properties also include costs to initiate leases such as commissions and legal costs.

In-place lease values for multifamily communities are estimated by calculating the estimated time to fill a hypothetically empty apartment complex to its stabilization level (estimated to be 92% occupancy) based on historical observed move-in rates for each property, and which approximate market rates. Carrying costs during these hypothetical expected lease-up periods are estimated, considering current market conditions and include real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates. The intangible assets are calculated by estimating the net cash flows of the in-place leases to be realized, as compared to the net cash flows that would have occurred had the property been vacant at the time of acquisition and subject to lease-up. The acquired in-place lease values are amortized to operating expense over the average remaining non-cancelable term of the respective in-place leases. The amounts of above-market or below-market lease values are developed by comparing the Company's estimate of the average market rent to the average contract rent of the leases in place at the property acquisition date. This ratio is applied on a lease by lease basis to derive a total asset or liability amount for the property. The above-market or below-market lease values are recorded as a reduction or increase, respectively, to rental revenue over the remaining average non-cancelable term of the respective leases, plus any below market probable renewal options.

The fair values of in-place leases for retail shopping centers and office buildings represent the value of direct costs associated with leasing, including opportunity costs associated with lost rentals that are avoided by acquiring in-place leases. Direct costs associated with obtaining a new tenant include commissions, legal and marketing costs, incentives such as tenant improvement allowances and other direct costs. Such direct costs are estimated based on our consideration of current market costs to execute a similar lease. The value of opportunity costs is estimated using the estimated market lease rates and the estimated absorption period of the space. These direct costs and opportunity costs are included in the accompanying consolidated balance sheets as acquired intangible assets and are amortized to expense over the remaining term of the respective leases. The fair values of above-market and below-market in-place leases for retail shopping centers and office buildings are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) our estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining term of the leases, taking into consideration the probability of renewals for any below-market leases. The capitalized above-market leases and in place leases are included in the acquired intangible assets line of the consolidated balance sheets. Both above-market and below-market lease values are amortized as adjustments to rental revenue over the remaining term of the respective leases for office buildings. The amortization period for retail shopping center leases is the remaining lease term plus any below market probable renewal options.

Estimating the fair values of the tangible and intangible assets requires us to estimate market lease rates, property operating expenses, carrying costs during lease-up periods, discount and capitalization rates, market absorption periods, and the number of years the property is held for investment. The use of unreasonable estimates would result in an incorrect assessment of our purchase price allocations, which would impact the amount of our reported net income. Acquired intangible assets and liabilities have no residual value.

The Company evaluates its tangible and identifiable intangible real estate assets for impairment when events such as declines in a property’s operating performance, deteriorating market conditions, or environmental or legal concerns bring recoverability of the carrying value of one or more assets into question. The total undiscounted cash flows of the asset group, including proceeds from disposition, are compared to the net book value of the asset group. If this test indicates that impairment exists, an impairment loss is recorded in earnings equal to the shortage of the book value to the discounted net cash flows of the asset group.

7

Preferred Apartment Communities, Inc.
Notes to Consolidated Financial Statements – (continued)
September 30, 2016



Loan Coordination Fees

Amendment Number One to the Fifth Amended and Restated Management Agreement, which was effective January 1, 2016, replaced the acquisition fees which were paid to the Manager upon the closing of the acquisition of a property with loan coordination fees, which are intended to reimburse the Manager for costs incurred related to negotiating and securing mortgage debt financing on acquired properties. Acquisition fees were recognized in full at the date of acquisition. In accordance with guidance provided by ASC 310-20-25, the portion of loan coordination fees to secure financing are recognized over the term of the associated loan using the effective interest method in cases where mortgage financing is obtained at the closing date of the property acquisition. The remaining portion of loan coordination fees are accounted for as acquisition costs and are expensed as incurred. If no debt financing is utilized in conjunction with a property acquisition, the loan coordination fee is recognized in full at the date of property acquisition in the acquisition fees to related parties line in the Consolidated Statements of Operations. If debt financing is obtained subsequent to the acquisition, any incremental deferred loan coordination fee earned is recognized over the term of the associated loan using the effective interest method.

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with guidance provided by ASC 505-50, Equity-Based Payments to Non-Employees and ASC 718, Stock Compensation. We calculate the fair value of equity compensation instruments at the date of grant based upon estimates of their expected term, the expected volatility of and dividend yield on our Common Stock over this expected term period and the market risk-free rate of return. We also estimate forfeitures of these instruments and accrue the compensation expense, net of estimated forfeitures, over the vesting period(s). We record the fair value of restricted stock awards based upon the closing stock price on the trading day immediately preceding the date of grant. For awards of equity compensation which have market performance vesting conditions in addition to multiple tranches of service period requirements, the Company utilizes the straight-line expense attribution method.

Non-controlling interests

As of each reporting date, the outstanding Class A Units in the Operating Partnership and the proportionate amount of amortized but unvested Class B Units in the Operating Partnership are apportioned a pro-rata amount of the Company's equity attributable to Common Stockholders and Unitholders according to the period-end percentage of Class A Units to shares of Common Stock issued and outstanding. This equity allocation is adjusted for periodic consolidated net income/loss attributable to non-controlling interests and periodic amortization of unvested Class B Unit awards.     

New Accounting Pronouncements    

In May 2014, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update 2014-09 ("ASU 2014-09"), Revenue from Contracts with Customers (Topic 606). ASU 2014-09 provides a single comprehensive revenue recognition model for contracts with customers (excluding certain contracts, such as lease contracts) to improve comparability within industries. ASU 2014-09 requires an entity to recognize revenue to reflect the transfer of goods or services to customers at an amount the entity expects to be paid in exchange for those goods and services and provide enhanced disclosures, all to provide more comprehensive guidance for transactions such as service revenue and contract modifications. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. ASU 2014-09 may be applied using either a full retrospective or a modified approach upon adoption. The Company is currently evaluating the impact this standard may have on its financial statements.

In August 2014, the FASB issued Accounting Standards Update 2014-15 ("ASU 2014-15"), Presentation of Financial Statements—Going Concern (Subtopic 205-40) Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. This new guidance establishes a requirement that management evaluate the entity's ability to continue as a going concern and requires certain disclosures should substantial doubt exist about the entity's future viability. ASU 2014-15 is effective on January 1, 2017 and the Company expects to adopt the new guidance on that date. The Company does not expected the adoption of ASU 2014-15 to materially impact its consolidated financial statements. 

In February 2015, the FASB issued Accounting Standards Update 2015-02 ("ASU 2015-02"), Consolidation (Topic 810): Amendments to the Consolidation Analysis. This new guidance specifically eliminates the presumption in the current voting model that a general partner controls a limited partnership or similar entity unless that presumption can be overcome. Generally, only a single limited partner that is able to exercise substantive kick-out rights will be required to consolidate the limited partnership.

8

Preferred Apartment Communities, Inc.
Notes to Consolidated Financial Statements – (continued)
September 30, 2016


ASU 2015-02 is effective on January 1, 2016 and early adoption is permitted, including adoption in an interim period. The new standard must be applied using a modified retrospective approach by recording a cumulative-effect adjustment to equity/capital as of the beginning of the period of adoption or retrospectively to each period presented. The Company's adoption of ASU 2015-02 had no impact on its consolidated financial statements.

In January 2016, the FASB issued Accounting Standards Update 2016-01 ("ASU 2016-01"), Financial Instruments—Overall (Subtopic 825-10): Recognition and measurement of Financial Assets and Liabilities. The new standard's applicable provisions to the Company include an elimination of the disclosure requirement of the significant inputs and assumptions underlying the fair value calculations of its financial instruments which are carried at amortized cost. The standard is effective on January 1, 2018, and early adoption is not permitted for the applicable provision. The Company does not expect the adoption of ASU 2016-01 to materially impact the Company’s consolidated financial statements. 

In February 2016, the FASB issued Accounting Standards Update 2016-02 ("ASU 2016-02"), Leases (ASC 842), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessees and lessors). The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. ASC 842 supersedes the previous leases standard, ASC 840 Leases. The standard is effective on January 1, 2019, with early adoption permitted. The Company is in the process of evaluating the impact of this new guidance but does not expected its adoption to materially impact the Company’s consolidated financial statements. 

In March 2016, the FASB issued Accounting Standards Update 2016-09 ("ASU 2016-09"), Compensation—Stock Compensation
(Topic 178): Improvements to Employee Share-Based Payment Accounting. The new standard's provisions applicable to the Company include allowing the entity to make an accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures of equity compensation awards when they occur. Previous guidance required entities to estimate the number of awards that are expected to vest. The standard is effective on January 1, 2017, and the Company adopted ASU 2016-09 on January 1, 2016 pursuant to the allowed early adoption provision. The Company does not expect the adoption of ASU 2016-09 to materially impact the Company’s consolidated financial statements. 

In June 2016, the FASB issued Accounting Standards Update 2016-13 ("ASU 2016-13"), Financial Instruments—Credit Losses
(Topic 326): Measurement of Credit Losses on Financial Instruments. The new standard requires financial instruments carried at amortized cost to be presented at the net amount expected to be collected, utilizing a valuation account which reflects the cumulative net adjustments from the gross amortized cost value. Under existing GAAP, entities would not record a valuation allowance until a loss was probable of occurring. The standard is effective for the Company on January 1, 2020. The Company is presently evaluating the impact the adoption of ASU 2016-13 will have on the Company’s consolidated financial statements. 

In August 2016, the FASB issued Accounting Standards Update 2016-15 ("ASU 2016-15"), Statement of Cash Flows—(Topic 326): Classification of Certain Cash Receipts and Cash Payments. The new standard clarifies or establishes guidance for the presentation of various cash transactions on the statement of cash flows. The portion of the guidance applicable to the Company's business activities include the requirement that cash payments for debt prepayment or debt extinguishment costs be presented as cash out flows for financing activities. The standard is effective for the Company on January 1, 2018. The Company does not expect the adoption of ASU 2016-15 to materially impact the Company’s consolidated financial statements. 


9

Preferred Apartment Communities, Inc.
Notes to Consolidated Financial Statements – (continued)
September 30, 2016


3. Real Estate Assets
The Company's real estate assets consisted of:
 
 
As of:
 
 
9/30/2016
 
12/31/2015
Multifamily communities (1)
 
25

 
19

Multifamily units
 
8,268

 
6,136

Retail shopping centers
 
30

 
14

Approximate square feet of retail gross leasable area (2)
 
2,913,000

 
1,279,000

Class A office building
 
1

 

 
 
 
 
 
(1) The acquired second phase of the Summit Crossing community is managed in combination with the initial phase of this community and the two are therefore considered a single property, as are the three assets that comprise the Lenox Portfolio. Includes one student housing community as of September 30, 2016.
(2) The Company also owns approximately 47,600 square feet of gross leasable area of ground floor retail space which is embedded within the Lenox Portfolio and not included in the totals above.

On September 8, 2015, pursuant to a recommendation by the Company's investment committee, the Company took action to market for sale both phases of its Trail Creek multifamily community located in Hampton, Virginia. On February 24, 2016, the Company reclassified the following real estate assets and the mortgage note payable for Trail Creek from its held and used multifamily segment to property held for sale on its consolidated balance sheets. On May 19, 2016, the Company closed on the sale of Trail Creek to an unrelated third party. The purchaser will not be considered a related party to the Company on an ongoing basis by virtue of its acquisition of Trail Creek. The carrying values of the significant assets and liabilities of Trail Creek reclassified at December 31, 2015 and at the date of disposition were:
 
 
5/19/2016
 
12/31/2015
Real estate assets:
 
 
 
 
Land
 
$
4,200,000

 
$
4,200,000

Building and improvements
 
30,892,259

 
30,881,025

Furniture, fixtures and equipment
 
4,647,117

 
4,574,848

Accumulated depreciation
 
(6,034,171
)
 
(5,838,792
)
 
 
 
 
 
Property held for sale
 
$
33,705,205

 
$
33,817,081

 
 
 
 
 
Liabilities:
 
 
 
 
Mortgage note payable
 
$
28,109,000

 
$
28,109,000



10

Preferred Apartment Communities, Inc.
Notes to Consolidated Financial Statements – (continued)
September 30, 2016


The Company acquired the following multifamily communities during the nine months ended September 30, 2016 and 2015:
Acquisition date
 
Property
 
Location
 
Approximate purchase price (millions) (1)
 
Units
 
 
 
 
 
 
 
 
 
1/5/2016
 
Baldwin Park
 
Orlando, Florida
 
$
110.8

 
528

1/15/2016
 
Crosstown Walk
 
Tampa, Florida
 
$
45.8

 
342

2/1/2016
 
Overton Rise
 
Atlanta, Georgia
 
$
61.1

 
294

5/31/2016
 
Avalon Park
 
Orlando, Florida
 
$
92.5

 
487

6/1/2016
 
North by Northwest (2)
 
Tallahassee, Florida
 
$
46.1

 
219

7/1/2016
 
City Vista
 
Pittsburgh, Pennsylvania
 
(3 
) 
 
272

8/24/2016
 
Sorrel
 
Jacksonville, Florida
 
$
48.1

 
290

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,432

 
 
 
 
 
 
 
 
 
2/13/2015
 
Avenues at Cypress
 
Houston, Texas
 
(4) 

 
240

2/13/2015
 
Avenues at Northpointe
 
Houston, Texas
 
(4) 

 
280

5/21/2015
 
Venue at Lakewood Ranch
 
Sarasota, Florida
 
$
47.4

 
237

6/24/2015
 
Aster at Lely
 
Naples, Florida
 
$
52.5

 
308

6/30/2015
 
CityPark View
 
Charlotte, North Carolina
 
$
32.7

 
284

7/31/2015
 
Avenues at Creekside
 
San Antonio, Texas
 
$
56.2

 
395

9/3/2015
 
Citi Lakes
 
Orlando, Florida
 
$
63.4

 
346

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,090


(1) Purchase prices shown are exclusive of acquired escrows, security deposits, prepaids, and other miscellaneous assets and assumed liabilities.
(2) A 679-bed student housing community located adjacent to the campus of Florida State University in Tallahassee, Florida.
(3) The Company converted $12,500,000 of its City Vista real estate loan into an approximate 96% ownership interest in a joint venture which owns the underlying property.
(4) Avenues at Cypress and Avenues at Northpointe are referred to collectively as the Houston Portfolio, which was acquired for approximately $76.0 million.

The purchase prices approximated the fair value of the acquired assets and assumed liabilities. The Company allocated the purchase prices to the acquired assets and liabilities based upon their fair values, as shown in the following table. These purchase price allocations were based upon the Company's best estimates of the fair values of the acquired assets and liabilities, but are preliminary and are subject to refinement for a period of up to one year from the closing date of each transaction.

11

Preferred Apartment Communities, Inc.
Notes to Consolidated Financial Statements – (continued)
September 30, 2016


 
2016
 
North by Northwest
 
Avalon Park
 
Overton Rise
 
Baldwin Park
Land
$
8,281,054

 
$
7,410,048

 
$
8,511,370

 
$
17,402,882

Buildings and improvements
34,355,922

 
80,558,636

 
44,710,034

 
87,105,757

Furniture, fixtures and equipment
2,623,916

 
1,790,256

 
6,286,105

 
3,358,589

Lease intangibles
799,109

 
2,741,060

 
1,611,314

 
2,882,772

Prepaids & other assets
79,626

 
99,297

 
73,754

 
229,972

Escrows
1,026,419

 
3,477,157

 
354,640

 
2,555,753

Accrued taxes
(321,437
)
 
(394,731
)
 
(66,422
)
 
(17,421
)
Security deposits, prepaid rents, and other liabilities
(159,462
)
 
(207,623
)
 
(90,213
)
 
(226,160
)
 
 
 
 
 
 
 
 
Net assets acquired
$
46,685,147

 
$
95,474,100

 
$
61,390,582

 
$
113,292,144

 
 
 
 
 
 
 
 
Cash paid
$
12,831,872

 
$
30,474,100

 
$
20,090,582

 
$
35,492,144

Mortgage debt
33,853,275

 
65,000,000

 
41,300,000

 
77,800,000

 
 
 
 
 
 
 
 
Total consideration
$
46,685,147

 
$
95,474,100

 
$
61,390,582

 
$
113,292,144

 
 
 
 
 
 
 
 
Three months ended September 30, 2016:
 
 
 
 
 
 
 
Revenue
$
1,480,000

 
$
2,059,000

 
$
1,328,000

 
$
2,288,000

Net loss
$
(601,000
)
 
$
(1,094,000
)
 
$
(593,000
)
 
$
(1,442,000
)
 
 
 
 
 
 
 
 
Nine months ended September 30, 2016:
 
 
 
 
 
 
 
Revenue
$
1,950,000

 
$
2,723,000

 
$
3,631,000

 
$
7,044,000

Net loss
$
(608,000
)
 
$
(1,750,000
)
 
$
(1,425,000
)
 
$
(4,180,000
)
 
 
 
 
 
 
 
 
Cumulative acquisition costs incurred by the Company
$
402,000

 
$
1,314,000

 
$
116,000

 
$
1,847,000

Remaining amortization period of intangible
 
 
 
 
 
 
 
 assets and liabilities (months)
3

 
8

 
2

 
0



12

Preferred Apartment Communities, Inc.
Notes to Consolidated Financial Statements – (continued)
September 30, 2016


 
2016
 
Crosstown Walk
 
City Vista
 
Sorrel
Land
$
5,178,375

 
$
4,081,683

 
$
4,412,164

Buildings and improvements
33,605,831

 
36,084,007

 
35,512,257

Furniture, fixtures and equipment
5,726,583

 
5,402,228

 
6,705,040

Lease intangibles
1,323,511

 
2,100,866

 
1,495,539

Prepaids & other assets
125,706

 
167,797

 

Escrows
291,868

 
599,983

 
623,791

Accrued taxes
(25,983
)
 
(245,326
)
 
(437,510
)
Security deposits, prepaid rents, and other liabilities
(53,861
)
 
(141,238
)
 
(68,828
)
 
 
 
 
 
 
Net assets acquired
$
46,172,030

 
$
48,050,000

 
$
48,242,453

 
 
 
 
 
 
Cash paid
$
13,632,030

 

 
$
14,642,453

Real estate loan settled

 
12,500,000

 

Joint venture partner

 
(450,000
)
 

Mortgage debt
32,540,000

 
36,000,000

 
33,600,000

 
 
 
 
 
 
Total consideration
$
46,172,030

 
$
48,050,000

 
$
48,242,453

 
 
 
 
 
 
Three months ended September 30, 2016:
 
 
 
 
 
Revenue
$
1,286,000

 
$
1,202,000

 
$
478,000

Net loss
$
(461,000
)
 
$
(692,000
)
 
$
(294,000
)
 
 
 
 
 
 
Nine months ended September 30, 2016:
 
 
 
 
 
Revenue
$
3,625,000

 
$
1,202,000

 
$
478,000

Net loss
$
(1,429,000
)
 
$
(692,000
)
 
$
(294,000
)
 
 
 
 
 
 
Cumulative acquisition costs incurred by the Company
$
320,000

 
$
18,000

 
$
529,000

Remaining amortization period of intangible
 
 
 
 
 
 assets and liabilities (months)
1

 
7

 
11


13

Preferred Apartment Communities, Inc.
Notes to Consolidated Financial Statements – (continued)
September 30, 2016


 
2015
 
CityPark View
 
Aster at Lely
 
Venue at Lakewood Ranch
 
Houston Portfolio
Avenues at Creekside
 
Citi Lakes
Land
$
3,558,793

 
$
7,675,409

 
$
3,791,050

 
$
7,162,226

$
5,983,724

 
$
5,558,033

Buildings and improvements
23,797,764

 
37,661,901

 
37,574,391

 
54,217,075

42,050,104

 
49,416,492

Furniture, fixtures and equipment
4,562,148

 
6,132,384

 
5,375,690

 
13,078,872

6,939,014

 
7,411,367

Lease intangibles
737,790

 
1,030,306

 
669,369

 
1,571,827

1,227,158

 
964,108

Prepaids & other assets
99,124

 
106,717

 
80,201

 
150,326

89,582

 
40,032

Escrows
211,428

 

 
401,294

 
362,332

1,058,468

 
280,863

Accrued taxes
(105,756
)
 
(23,413
)
 
(216,252
)
 
(212,601
)
(440,660
)
 
(187,792
)
Security deposits, prepaid rents, and other liabilities
(40,152
)
 
(64,689
)
 
(35,157
)
 
(99,181
)
(218,438
)
 
(80,629
)
 
 
 
 
 
 
 
 
 
 
 
Net assets acquired
$
32,821,139

 
$
52,518,615

 
$
47,640,586

 
$
76,230,876

$
56,688,952

 
$
63,402,474

 
 
 
 
 
 
 
 
 
 
 
Cash paid
$
721,139

 
$
18,518,615

 
$
16,830,586

 
$
25,452,876

$
15,063,952

 
$
18,952,474

Real estate loan settled
10,000,000

 

 

 


 

Mortgage debt
22,100,000

 
34,000,000

 
30,810,000

 
50,778,000

41,625,000

 
44,450,000

 
 
 
 
 
 
 
 
 
 
 
Total consideration
$
32,821,139

 
$
52,518,615

 
$
47,640,586

 
$
76,230,876

$
56,688,952

 
$
63,402,474

 
 
 
 
 
 
 
 
 
 
 
Three months ended September 30, 2016:
 
 
 
 
 
 
 
 
 
 
Revenue
$
971,000

 
$
1,311,000

 
$
1,170,000

 
$
2,185,000

$
1,435,000

 
$
1,398,000

Net income (loss)
$
58,000

 
$
(1,000
)
 
$
123,000

 
$
(246,000
)
$
137,000

 
$
(143,000
)
 
 
 
 
 
 
 
 
 
 
 
Nine months ended September 30, 2016:
 
 
 
 
 
 
 
 
 
 
Revenue
$
2,797,000

 
$
3,954,000

 
$
3,499,000

 
$
6,526,000

$
4,223,000

 
$
4,126,000

Net income (loss)
$
61,000

 
$
(74,000
)
 
$
27,000

 
$
(864,000
)
$
(157,000
)
 
$
(1,213,000
)
 
 
 
 
 
 
 
 
 
 
 
Cumulative acquisition costs incurred by
 
 
 
 
 
 
 
 
 
 
the Company
$
276,000

 
$
438,000

 
$
889,000

 
$
1,142,000

$
852,000

 
$
1,620,000

Remaining amortization period of intangible
 
 
 
 
 
 
 
 
 
 
 assets and liabilities (months)
0

 
0

 
0

 
0

0

 
0


The Company acquired the following grocery-anchored shopping centers during the nine months ended September 30, 2016:
Acquisition date
 
Property
 
Location
 
Approximate purchase price (millions) (2)
 
Gross leasable area (square feet)
2/29/2016
 
Wade Green Village (1)
 
Atlanta, Georgia
 
$
11.0

 
74,978

4/29/2016
 
Anderson Central
 
Greenville-Anderson, South Carolina MSA
 
(3) 

 
223,211

4/29/2016
 
East Gate Shopping Center
 
Augusta, Georgia MSA
 
(3) 

 
75,716

4/29/2016
 
Fairview Market
 
Greenville, South Carolina
 
(3) 

 
53,888

4/29/2016
 
Fury's Ferry
 
Augusta, Georgia
 
(3) 

 
70,458

4/29/2016