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Firm Capital American Realty Partners Corp (2)
Symbol C : FCA
Shares Issued 6,127,663
Close 2018-10-19 C$ 7.89
Recent Sedar Documents

Firm Capital American earns $1.68-million (U.S.) in Q3

2018-11-08 20:17 ET - News Release

Mr. Eli Dadouch reports

FIRM CAPITAL AMERICAN REALTY PARTNERS CORP. DELIVERS STRONG THIRD QUARTER AND YEAR TO DATE RESULTS

Firm Capital American Realty Partners Corp. has released its financial results for the three and nine months ended Sept. 30, 2018. Amounts are in U.S. dollars unless otherwise indicated.

Third quarter and year to date highlights:

  • For the three months ended Sept. 30, 2018, net income was approximately $1.7-million, a 19-per-cent increase in comparison with the $1.4-million net income reported for the three months ended June 30, 2018, and a significant increase over the $400,000 net loss reported for the three months ended Sept. 30, 2017. For the nine months ended Sept. 30, 2018, net income was approximately $3.3-million, a significant improvement over the $500,000 net loss reported for the nine months ended Sept. 30, 2017.
  • For the three months ended Sept. 30, 2018, basic net income was 28 cents per share, a 22-per-cent increase over the 23-cent net income per share reported for the three months ended June 30, 2018, and a significant increase over the seven-cent net loss per share reported for the three months ended Sept. 30, 2017. For the nine months ended Sept. 30, 2018, basic net income was 54 cents per share, a significant improvement over the 10-cent net loss per share for the nine months ended Sept. 30, 2017.
  • For the three months ended Sept. 30, 2018, diluted net income was 22 cents per share, a 22-per-cent increase over the 18 cents per share reported for the three months ended June 30, 2018, and a significant increase over the six-cent net loss per share reported for the three months ended Sept. 30, 2017. For the nine months ended Sept. 30, 2018, diluted net income was 41 cents per share, a significant improvement over the eight-cent net loss per share reported for the nine months ended Sept. 30, 2017.
  • For the three months ended Sept. 30, 2018, funds from operations were $160,000, a 21-per-cent increase over the $130,000 reported for the three months ended June 30, 2018, and a significant improvement over the $570,000 net loss reported for the three months ended Sept. 30, 2017. For the nine months ended Sept. 30, 2018, FFO was $600,000, a significant improvement over the $1.5-million net loss reported for the nine months ended Sept. 30, 2017.
  • For the three months ended Sept. 30, 2018, adjusted funds from operations were $230,000, a 40-per-cent increase over the $160,000 reported for the three months ended June 30, 2018, and a 75-per-cent increase over the $130,000 reported for the three months ended Sept. 30, 2017. For the nine months ended Sept. 30, 2018, AFFO was $700,000, which was a significant improvement over the $500,000 net loss reported for the nine months ended Sept. 30, 2017.
  • For the three months ended Sept. 30, 2018, FFO per share was three cents, a significant improvement over the two cents reported for the three months ended June 30, 2018, and the 11-cent loss per share reported for the three months ended Sept. 30, 2017. For the nine months ended Sept. 30, 2018, FFO per share was 10 cents, a significant improvement over the 33-cent loss reported for the nine months ended Sept. 30, 2017.
  • For the three months ended Sept. 30, 2018, AFFO per share was four cents, an increase over the three cents per share reported for the three months ended June 30, 2018, and the three months ended Sept. 30, 2017. For the nine months ended Sept. 30, 2018, AFFO per share was 12 cents, a significant improvement over the 11-cent net loss reported for the nine months ended Sept. 30, 2017.
  • The $8.31 net asset value (NAV) per share based on an international financial reporting standard book value of equity was approximately $50.9-million, a 3-per-cent increase over the $8.10 NAV per share as reported previously.
  • Results for the period ended Sept. 30, 2018, are found in the attached table.

                                            FINANCIAL HIGHLIGHTS
 
                                                  Three months ended                          Nine months ended      
                                 Sept. 30, 2018     June 30, 2018    Sept. 30, 2017    Sept. 30, 2018    Sept. 30, 2017

Net income/(loss)                    $1,681,890        $1,417,017         $(358,904)       $3,276,200         $(455,237)
FFO                                     161,460           132,966          (570,321)          625,464        (1,529,020)
AFFO                                    230,447           164,317           132,049           745,570          (531,583)
Adjusted FFO                            176,918           134,658            29,372           641,506          (925,324)
Adjusted AFFO                           230,447           164,317           249,993           745,570          (413,639)
Net income/(loss) per share                0.28              0.23             (0.07)             0.54             (0.10)
Diluted net income per share               0.22              0.18             (0.06)             0.41             (0.08)
FFO per share                              0.03              0.02             (0.11)             0.10             (0.33)
AFFO per share                             0.04              0.03              0.03              0.12             (0.11)
Adjusted FFO per share                     0.03              0.02              0.01              0.10             (0.20)
Adjusted AFFO per share                    0.04              0.03              0.05              0.12             (0.09)

  • Improved occupancy multifamily investment portfolio occupancy improved by 20 basis points to 96.8 per cent over the 96.6 per cent reported for the three months ended June 30, 2018. The joint venture investments occupancy improved by 110 basis points to 93.2 per cent over the 92.1 per cent reported for the three months ended June 30, 2018.
  • Improved average monthly rents: Multifamily investment portfolio average monthly rent improved by 1.0 per cent to $1,098 per unit over the $1,085 per unit reported for the three months ended June 30, 2018. Joint venture investments average monthly rent improved by 1 per cent to $971 per unit over the $962 per unit reported for the three months ended June 30, 2018.
  • Brentwood, Maryland JV refinancing, IFRS valuation and value-add activities: On Oct. 3, the company announced that the Brentwood, Md., joint venture undertook the following accretive activities:
  • New $10.3-million secured mortgage financing: entered into a $10.3-million, 4.81-per-cent secured first mortgage financing. The new mortgage has a 15-year term and includes an interest-only period of seven years and then a 30-year amortization thereafter. The net proceeds received from the new mortgage were used to refinance the two assumed mortgages and fully repay the preferred equity investment that was in place:
    • IFRS valuation increase: As part of the new mortgage, the Brentwood, Md., JV received an independent third party appraisal that appraises the value of the real estate investments at $13.7-million. As such, the Brentwood, Md., JV will have a total overall IFRS valuation increase of $3.4-million since acquisition. Given the 25-per-cent ownership interest in the Brentwood, Md., JV and including IFRS valuation increases taken to date, the company recorded an IFRS valuation increase of $300,000 in its equity investments.
    • 14 new apartment units expected to generate 100-per-cent return on cost: The Brentwood, Md., JV has also been approved to construct 14 additional apartment units on site for an expected cost of approximately $800,000 or $60,000 per apartment unit. Once leased, these apartment units are expected to increase in value to $120,000 per apartment unit, in line with the recent IFRS valuation increase as outlined above, generating an immediate 100-per-cent return on expected cost.
  • The accretion impact of the new mortgage and the IFRS valuation increase impacted third quarter 2018 earnings positively by approximately five cents per share. Once completed, the accretion impact of the 14 apartment units are expected to impact future earnings by an additional 14 cents per share annually.
  • 68 per cent of Atlanta single family home portfolio sold: Only 39 single family homes remain: The company has sold 81 of its 120 single family homes located in Atlanta, or approximately 68 per cent of the total portfolio, for gross proceeds of approximately $8.5-million ($7.9-million net of estimated closing costs). Of these sales, 52 have officially closed for gross proceeds of approximately $5.6-million ($5.2-million net of closing costs). The remaining 29 sales totalling gross proceeds of approximately $2.9-million ($2.7-million net of estimated closing costs) are expected to close during fourth quarter 2018. The remaining unsold 39 single family homes, which have a current list price of approximately $5.0-million ($4.8-million net of estimated closing costs) are anticipated to generate on closing net proceeds sufficient to fully repay the existingdebenture and provide the company with additional working capital.
  • $4.1-million full repayment of the Atlanta mortgage: On Sept. 13, the company announced the refinancing of its $4.0-million first mortgage secured by 120 single family homes located in Atlanta, Ga., with a new one-year, $4.1-million first mortgage loan with a 6.5-per-cent annual interest rate, payable monthly and interest only, that was secured by 120 single family homes located in Atlanta, Ga. Due to a combination of working capital and single family home sales as outlined below, the company has fully repaid the Atlanta mortgage.
  • With $4.4-million in debt, repayments leave just $3.7-million of the convertible debentures or only 22 per cent of the original balance outstanding: During the quarter ended Sept. 30, 2018, the company repaid $1.3-million leaving a principal balance of approximately $6.8-million. Subsequent to the quarter ended Sept. 30, 2018, the company repaid an additional $3.1-million of the debentures, leaving an outstanding balance of approximately $3.7-million or only 22 per cent of the original balance.
  • Fifth consecutive paid dividend: On Oct. 15, 2018, dividends of 5.625 cents per common share were paid to shareholders of record on Sept. 28, 2018. This payment represented the fifth consecutive dividend payment for the company.
  • Dividend increase announced: On Oct. 23, 2018, the company announced that as a result of the disposition of its single family homes to date and ultimate debt repayment, combined with accretive acquisition activity, it will be implementing a 5-per-cent dividend increase to 23.6 cents per share per annum, effective January, 2019. This equates to a quarterly dividend of 5.9 cents per share. As a result, the company announced that it has declared and approved the following quarterly dividends:
    • 5.625 cents per share for shareholders of record on Dec. 31, 2018, payable on or about Jan. 15, 2019;
    • 5.9 cents per share for shareholders of record on March 29, 2019, payable on or about April 15, 2019.
  • New independent director: On Nov. 5, 2018, the company announced the appointment of Ojus Ajmera as an independent director of the company. Mr. Ajmera is the co-founder of FGF Brands. FGF is one of North America's largest and fastest-growing baking companies, focusing on providing baked goods to food service and retailers across North America. Mr. Ajmera has deep experience in real estate as he has transacted in approximately $500-million of real estate throughout North America. The appointment of Mr. Ajmera is subject to TSX Venture Exchange approval.
  • $25.9-million New York acquisition: On Nov. 5, 2018, the company announced that it had entered into a joint venture with SBT Property to acquire a 132-unit multifamily residential portfolio composed of three buildings located in New York. The Tinton portfolio, which is anticipated to close during the fourth quarter of 2018, will be acquired for approximately $25.9-million (including transaction costs), representing a 5.8-per-cent going-in capitalization rate or $223 per square foot.
  • The Tinton portfolio will be financed, in part, by three new secured first mortgages at a 4.4-per-cent interest rate for approximately $16.6-million. The terms of the financing include a two-year interest-only period, a 30-year amortization and a seven-year term. The remaining capital requirement of approximately $9.3-million will be financed through a combination of: (i) $5.6-million of preferred equity yielding 8.0 per cent held by the company; and (ii) $3.7-million of common equity held 50 per cent by the company and 50 per cent by SBT Property. The expected cash return on the company's investment in the preferred and common shares is expected to be approximately 8.6 per cent.
  • Non-brokered private placement: On Nov. 5, 2018, the company announced a non-brokered private placement to issue up to 850,000 common shares and warrants of the company for total proceeds of approximately $6.8-million. The non-brokered private placement, which is anticipated to close during the fourth quarter of 2018, has an offering price of $8.10 (U.S.) per unit. Each warrant will entitle the holder to purchase one common share of the company at any time commencing on the date of closing until the date that is two years from the date of issuance, at a price of $9.50 (U.S.) per common share.

For the complete financial statements, including management's discussion and analysis, please visit SEDAR or the company's website.

About Firm Capital American Realty Partners Corp.

Firm Capital American Realty Partners, focused on the United States, is a real estate investment entity that pursues real estate and debt investments through the following platforms:

  • Income-producing real estate investments: acquiring income-producing real estate assets in major cities across the United States; acquisitions are completed solely by the company or in joint venture partnership with local industry expert partners which retain property management responsibilities;
  • Mortgage debt investments: real estate debt and equity lending platform in major cities across the United States, focused on providing all forms of bridge mortgage loans and joint venture capital.

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