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Real Estate Investment Trust Berkshire
May 19, 2010: Berkshire Income Realty reported its results for the quarter ended March 31, 2010. Financial highlights for the three-month period ended March 31, 2010 include:
-The Company’s Funds from Operations (“FFO”), a non-GAAP financial measure, for the three months ended March 31, 2010 were $773,396, an increase of $641,573 or 486.7%, as compared to $131,823 for the comparable three-month period ended March 31, 2009. The increase was due to the growth in rental revenue during the period from newly acquired or developed properties as well as net gains in rental revenue from existing properties in the portfolio. Additionally, there were no costs in the current quarter ended March 31, 2010 that are comparable to transaction costs of $979,094 for the acquisition of a property recorded in the quarter ended March 31, 2009. The increases were partially offset by an increase of approximately $500,000 in the equity loss of the multifamily venture limited partnership recognized by the Company in the quarter ended March 31, 2010 as compared to the quarter ended March 31, 2009. Additional offsets included incremental interest expense of the new properties and increases in snow removal and related costs incurred in the Mid Atlantic region where unusual storm activity took place during the period ended March 31, 2010.
-For the three months ended March 31, 2010, Berkshire reported adjusted net income (loss), before depreciation (“Adjusted Net Income (Loss)”), a non-GAAP financial measure, of $420,868 as compared to Adjusted Net Income Loss of $(431,782) for the three months ended March 31, 2009. The increase in Adjusted Net Income (Loss) was primarily due to a reduction in general and administrative expenses as a result of the 2009 Glo Apartments (“GLO”) transaction costs partially offset by the increase in the equity loss recognized by the Company as mentioned previously.
-Adjusted net operating income, which excludes the GLO transaction costs previously mentioned (“Adjusted NOI”), for the three-month period ended March 31, 2010 was $8,876,286 as compared to $8,552,253 for the comparable period ended March 31, 2009, an increase of $324,033 or approximately 3.8%. The increase was due to growth in rental revenue from both existing properties in the portfolio as well as newly acquired or properties developed during the comparable periods. The Same Property portfolio, properties owned and placed in service prior to January 1, 2009 (“Same Property”), had total revenue increases of approximately 2.0% for the quarter ended March 31, 2010 as compared to the quarter ended March 31, 2009. These gains were partially offset by increases in Same Property operating expenses of approximately 2.0% of which the majority of the increase was due to snow removal and related costs incurred in the Mid Atlantic region where unusual storm activity took place during the period ended March 31, 2010.
-A presentation and reconciliation of net income (loss), the most directly comparable financial measure calculated and presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”), to FFO, Adjusted Net Income (Loss), and Adjusted NOI is set forth on pages 2 and 3 of this press release.
-Economic conditions in early 2010 exhibited signs of improvement over the challenging operating environment we experienced in 2009 from the prolonged recession. Despite the challenges, the Company continues to proactively emphasize strategies intended to maximize the financial results of the portfolio. The strategies have included implementation of property management efficiencies, physical asset improvements and turnover of assets for replacement with newer, higher quality properties in strong markets.
President and CFO David Quade comments: “2010 operating results to date are positive with both our Same Property portfolio revenue and net operating income increasing approximately 2% over the comparable quarter of 2009. Management’s continued focus on retaining tenants and maximizing occupancy levels at our properties has resulted in average occupancy of over 95% for the quarter. We are optimistic about the signs of improvement in the national economy and we believe the operating challenges the industry has faced over the past few years are beginning to abate. We will continue to manage our properties with a strong focus on maintaining occupancy levels and implementing rent increases in markets showing improving economic trends.”
Funds From Operations
The Company has adopted the revised definition of FFO adopted by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”). FFO falls within the definition of a “non-GAAP financial measure” as stated in Item 10(e) of Regulation S-K promulgated by the Securities and Exchange Commission (the “SEC”). Management considers FFO to be an appropriate measure of performance of an equity REIT. We calculate FFO by adjusting net income (loss) (computed in accordance with GAAP, including non-recurring items), for gains (or losses) from sales of properties, real estate related depreciation and amortization, and adjustment for unconsolidated partnerships and ventures. Management believes that in order to facilitate a clear understanding of the historical operating results of the Company, FFO should be considered in conjunction with net income (loss) as presented in the consolidated financial statements included elsewhere herein. Management considers FFO to be a useful measure for reviewing the comparative operating and financial performance of the Company because, by excluding gains and losses related to sales of previously depreciated operating real estate assets and excluding real estate asset depreciation and amortization (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO can help one compare the operating performance of a company’s real estate between periods or as compared to different companies.
The Company’s calculation of FFO may not be directly comparable to FFO reported by other REITs or similar real estate companies that have not adopted the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently. FFO is not a GAAP financial measure and should not be considered as an alternative to net income (loss), the most directly comparable financial measure of our performance calculated and presented in accordance with GAAP, as an indication of our performance. FFO does not represent cash generated from operating activities determined in accordance with GAAP and is not a measure of liquidity or an indicator of our ability to make cash distributions. We believe that to further understand our performance; FFO should be compared with our reported net loss and considered in addition to cash flows in accordance with GAAP, as presented in our consolidated financial statements.
FFO for the three months ended March 31, 2010 increased as compared to FFO for the three-month period ended March 31, 2009. The increase in FFO is due primarily to the transaction costs for the acquisition of GLO recorded in 2009 totaling $979,094, included in General and Administrative expense on the Consolidated Statement of Operations, for which there were no comparable costs in the current quarter ended March 31, 2010. The increase was partially offset by increases in operating costs related to snow removal, increased interest expense and the increase in equity loss of the multifamily venture limited partnership recognized in the current quarter ended March 31, 2010.
Other Non-GAAP Measures
The Company believes that the use of certain other non-GAAP measures for comparative presentation between reporting periods allows for more meaningful comparisons of the periods presented. Net income, prior to charges for depreciation (including depreciation reported as part of discontinued operations) and the gain on the sale of real estate assets or interests in real estate assets, allows for comparison of operating results absent the significant non-cash charge included in GAAP net income and eliminates the unusual activity related to the gain from the sale of the real estate assets in the current year results, which presents a more meaningful comparison to the prior year results. Additionally, the Company believes Adjusted NOI is a measure of operating results that is useful to investors to analyze the performance of a real estate company because it provides a direct measure of the operating results of the Company’s multifamily apartment communities.
The Company
The Company is a REIT whose objective is to acquire, operate, and rehabilitate multifamily apartment communities. The Company owns interests in twenty-six such multifamily apartment communities, of which six are located in the Baltimore/Washington, D.C. metropolitan area, five are located in Virginia, four are located in Houston, Texas, two are located in Dallas, Texas, two are located in the Chicago, Illinois area and one is located in each of Austin, Texas, Charlotte, North Carolina, Atlanta, Georgia, Sherwood, Oregon, Tampa, Florida, Philadelphia, Pennsylvania and Los Angeles, California.
SOURCE: Berkshire Income Realty, Inc.
This is a blog post for Real Estate Professionals, Investors, Landlord, Property Manager, and Property Management Companies. Berkshire Income Realty Announces Operating Results and Funds from Operations for the Quarter Ended March 31, 2010 is brought to you by SimplifyEm Pay Rent Online and Property Management SoftwareYou might also want to read:
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