IRET Reports First Quarter 2020 Financial and Operating Results – Wire Real Estate

IRET Reports First Quarter 2020 Financial and Operating Results




May 23, 2020

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 IRET announced today its financial and operating results for the quarter ended March 31, 2020.  The tables below show Net Income (Loss), Funds from Operations (“FFO”), and Core FFO, all on a per share basis, for the three months ended March 31, 2020; Same-Store Revenues, Expenses, and Net Operating Income (“NOI”) over comparable periods; and Same-Store Weighted-Average Occupancy for the three months ended March 31, 2020, December 31, 2019, and March 31, 2019. We have also included certain operating results for the month ended April 30, 2020.

   

Three Months Ended March 31,

Per Share

 

2020

 

2019

Net Income (Loss) – diluted

 

$

(0.67)

   

$

(0.54)

 

FFO – diluted

 

$

0.66

   

$

0.77

 

Core FFO – diluted

 

$

0.90

   

$

0.77

 
   

Year-Over-Year

Comparison

 

Sequential

Comparison

Same-Store Results

 

1Q20 vs. 1Q19

 

1Q20 vs. 4Q19

Revenues

 

3.9

%

 

1.6

%

Expenses

 

4.0

%

 

5.7

%

NOI

 

3.8

%

 

(1.4)

%

   

Three months ended

Same-Store Results

 

March 31, 2020

 

December 31, 2019

 

March 31, 2019

Weighted Average Occupancy

 

95.4

%

 

94.0

%

 

95.6

%

                   

NOI, FFO, and Core FFO are non-GAAP financial measures.  For more information on their usage and presentation, and a reconciliation to the most directly comparable GAAP measures, refer to “Non-GAAP Financial Measures and Reconciliations” below.

First Quarter 2020 Highlights

  • Our Net Loss was $0.67 per diluted share for the first quarter of 2020, compared to a Net Loss of $0.54 per share for the same quarter in 2019;
  • Core FFO increased by 16.9%, to $0.90 per diluted share for the first quarter of 2020, compared to $0.77 per diluted share for the first quarter of 2019;
  • Same-store revenues increased by 3.9% for the first quarter of 2020 compared to the first quarter of 2019;
  • Same-store NOI increased by 3.8% for the first quarter of 2020 compared to the first quarter of 2019;
  • Same-store weighted average occupancy increased to 95.4% at March 31, 2020 from 94.0% at December 31, 2019;
  • We completed the acquisition of Ironwood Apartments, a 182-home apartment community located in New Hope, Minnesota, an inner-ring suburb of Minneapolis, Minnesota; and
  • We undertook efforts to minimize the impact of COVID-19 on our team, residents, and apartment communities, as described in greater detail under “COVID-19 Developments” below.

Acquisitions and Dispositions

During the first quarter, we acquired Ironwood Apartments, for an aggregate purchase price of $46.3 million, of which $28.6 million was paid in cash and $17.7 million from payoff of a note receivable. We did not have any dispositions during the first quarter of 2020.

Balance Sheet

At the end of the first quarter, we had $193.3 million of total liquidity on our balance sheet, including $167.0 million available under our line of credit.

2020 Financial Outlook

On March 27, 2020, we issued a press release, which was also filed on a Current Report on Form 8-K, indicating that, in light of the impact of the coronavirus (COVID-19) on our business and results of operations, we were withdrawing our 2020 Financial Outlook.  We will not be providing a 2020 Financial Outlook at this time.

Operations Update

Our operating results for the month ended April 30, 2020, included the following:

  • Total rental revenue for same-store communities for the month ended April 30, 2020 was unchanged from the same period of the prior year.
  • Physical occupancy for same-store communities as of April 30, 2020 was 95.5%, compared to 95.1% as of April 30, 2019 and 94.0% as of December 31, 2019.
  • Delinquencies as a percentage of total revenue at all communities for the month ended April 30, 2020 was 1.6%, compared to 0% for the month ended April 30, 2019 and 0.2% for the three months ended March 31, 2020.
  • We entered into 134 rent deferral agreements representing $156,000 in April 2020 rent charges at all communities. Under these agreements, residents experiencing financial hardship due to the effects of the COVID-19 pandemic have committed to payment plans for repayment of deferred amounts on or before October 31, 2020. As of April 30, 2020, approximately $93,000 remained outstanding under the repayment plans.

COVID-19 Developments

The effects of the COVID-19 pandemic, including the associated economic disruptions, has had a profound impact on our business since March 2020 as the pandemic spread to many of the communities in which we own properties. Our first priority continues to be the health and well-being of our residents, team members, and the communities we serve. We are working to care for our team members and modify our practices so that we can continue to service our communities while requiring social distancing and remote work arrangements where possible.

In order to minimize the impact of COVID-19 on our team, residents, and communities, we undertook the following measures in March 2020:

  • We enacted social distancing practices for our team and within our communities in order to do our part to stop the spread of COVID-19, including encouraging residents to use electronic or phone communication when contacting our staff;
  • We closed all common amenity spaces, including on-site fitness centers, community rooms, swimming pools, resident coffee services, and conference facilities, until further notice in an effort to support social distancing and comply with governmental regulations;
  • We enhanced cleaning and disinfecting protocols at our communities;
  • We announced that maintenance requests requiring unit entry would be completed for essential or emergency services only;
  • We closed our offices to the public, and our leasing is being done on-line and through virtual tours;
  • We extended April 2020 rent deadlines;
  • We waived all fees associated with credit card payments;
  • We suspended eviction filings in accordance with government regulations;
  • We started offering rental deferment payment plans to residents experiencing COVID-19-related financial hardship; and
  • We began offering flexible lease renewal terms.

COVID-19 will continue to have a significant impact on our business for the foreseeable future. Ongoing social distancing requirements and stay-at-home directives affect the daily lives of our employees and residents and impact our ability to show apartments homes to potential residents, while the ongoing loss of jobs and rising unemployment levels affect the ability of certain our of residents to pay rent on a timely basis.  Many experts predict that the outbreak will trigger, or has already triggered, a global recession.

The COVID-19 pandemic could have material and adverse effects on our financial condition, results of operations, and cash flows, including the following effects:

  • reduced economic activity and rising unemployment could severely impact our residents’ ability to pay rent on a timely basis; and residents may seek lease deferment payment plans or rent reductions, resulting in increases in uncollectible receivables and reductions in rental income, which could reduce NOI and cash flow;
  • the negative financial impact of the pandemic could impact our future compliance with financial covenants in our credit facility and other debt agreements;
  • weaker economic conditions could cause us to recognize impairment in value of our tangible or intangible assets; and
  • we may need to record loss contingencies and increased expenses related to our COVID-19 response.

The extent to which the COVID-19 pandemic impacts our operations and those of our residents will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity, and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others.

For a more detailed description of the risks and uncertainties affecting our business, see the risk factors presented in  our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as updated under Item 1A of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 (which was filed with the SEC on May 11, 2020), and in our subsequent current and periodic reports filed with the Securities and Exchange Commission at www.sec.gov.

Upcoming Events

On May 19, 2020, at 9:00 a.m. CDT, we will be holding our 2020 Annual Meeting of Shareholders, which will be our 50th Annual Meeting.  Due to the effects of COVID-19, this will be a virtual-only meeting.  To participate in and/or vote at the virtual Annual Meeting, shareholders should pre-register by 11:59 p.m. EDT on May 16, 2020 at http://viewproxy.com/iret/2020. Shareholders must enter the control number found in their proxy materials, either on the Notice of Internet Availability of Proxy Materials, the proxy card, or the voting instruction form. IRET urges shareholders to vote and submit proxies in advance of the Annual Meeting by one of the methods described in the proxy materials for the Annual Meeting. To participate in the Annual Meeting, shareholders will need the event passcode provided to them after they have successfully registered. The Annual Meeting will begin promptly at 9:00 a.m. CDT. We encourage shareholders to access the Annual Meeting prior to the start time. Online access will begin at 8:45 a.m. CDT.

Quarterly Distributions

Effective March 5, 2020, IRET’s Board of Trustees declared a regular quarterly distribution of $0.70 per share/unit, which was paid on April 9, 2020, to common shareholders and unitholders of record on March 31, 2020.  IRET has paid cash dividends to common shareholders and unitholders every quarter since its initial dividend payment in 1971.

Effective March 5, 2020, IRET’s Board of Trustees also declared a distribution of $0.4140625 per share on the 6.625% Series C Cumulative Redeemable Preferred Shares , which was paid on March 31, 2020, to holders of record on March 16, 2020.  Series C preferred share distributions are cumulative and payable quarterly in arrears at an annual rate of $1.65625 per share.

To maintain our qualification as a REIT, we must pay dividends to our shareholders aggregating annually at least 90% of our REIT taxable income, excluding net capital gains. Under a separate requirement, we must distribute 100% of net capital gains or pay a corporate level tax in lieu thereof. While we have historically satisfied this distribution requirement by making cash distributions to our shareholders, if our cash flow becomes restricted due to the economic disruption caused by COVID-19 or other factors, we may choose to satisfy this requirement by making distributions of other property, including our own common shares as allowed by the REIT rules.

Earnings Call

Live webcast and replay:  http://ir.iretapartments.com

     

Live Conference Call

 

Conference Call Replay

Tuesday, May 12, 2020, at 11:00 AM ET

 

Replay available until May 26, 2020

USA Toll Free Number

1-877-509-9785

 

USA Toll Free Number

1-877-344-7529

International Toll Free Number

1-412-902-4132

 

International Toll Free Number

1-412-317-0088

Canada Toll Free Number

1-855-669-9657

 

Canada Toll Free Number

1-855-669-9658

     

Conference Number

10142637

Supplemental Information

Supplemental Operating and Financial Data for the quarter ended March 31, 2020 included herein (“Supplemental Information”), is available in the Investors section on IRET’s website at www.iretapartments.com or by calling Investor Relations at 701-837-7104.

About IRET

IRET is a real estate company focused on the ownership, management, acquisition, redevelopment, and development of apartment communities.  As of March 31, 2020, we owned interests in 70 apartment communities consisting of 12,135 apartment homes.  IRET’s common shares and Series C preferred shares are publicly traded on the New York Stock Exchange (NYSE symbols: “IRET” and “IRET PC,” respectively).

Forward-Looking Statements

Certain statements in this press release and the accompanying Supplemental Operating and Financial Data are based on our current expectations and assumptions, and are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  These forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements to be materially different from the results of operations, financial conditions, or plans expressed or implied by the forward-looking statements.  Although we believe the expectations reflected in our forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be achieved.  Such risks, uncertainties, and other factors that might cause such differences include, but are not limited to those risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission, including the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” contained in our Annual Report on Form 10-K for the year ended December 31, 2019, in our subsequent quarterly reports on Form 10-Q, including the COVID-19 risk factors set forth in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, and in other public reports. We assume no obligation to update or supplement forward-looking statements that become untrue due to subsequent events.

Investor Relations Contact Information

Emily Miller
Investor Relations
Phone: 701-837-7104
E-mail: IR@iret.com

See Campaign: http://www.iretapartments.com
Contact Information:
Emily Miller Investor Relations Phone: 701-837-7104 E-mail: IR@iret.com

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