Bluerock Residential Growth REIT (BRG) 6 Aug 192019 Q2 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to Bluerock Residential Growth REIT's Second Quarter 2019 Earnings Conference Call. All participants will be in listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded.

I would like to now introduce your host for today's call, Christopher Vohs, Chief Financial Officer of Bluerock Residential. Mr. ahead. go please Vohs,

The welcome Relations conference Residential to call. our bluerockresidential.com and we and on be quarter website our market REIT's XXXX issued at supplement. release press earnings This the earnings release to you, can Growth found Investor Bluerock under second open press tab. Thank morning prior

addition, anticipate filing we our week. In XX-Q later this

you conclusion may be any pleased the to we'll of remarks, have. questions our Following answer

they variety as defined Before of with may and results please contain from set actual Private we Litigation under uncertainties may and note call Securities those statements begin, forth the this XXXX. that forward-looking There of associated are such Reform Act in differ statements are forward-looking a risks statements.

in reconciliation assumptions and statements the earnings should release respect to risks uncertainties, as please use earnings and as the press respect For our refer you disclosure used issued we the SEC the a forward-looking this morning call, our these measures our non-GAAP uses we well guidance. earnings GAAP, of management to review in With to to discussion this non-GAAP filings. measures a with for supplement reasons these

the CEO to REIT, call I'll Kamfar, Chairman Ramin and And that, his remarks. with of turn Growth Residential Bluerock over for

Thank you, Chris, and good morning everyone.

Chris our some MacDonald, commentary. Ryan DiFranco, operational, sheets on from Chief detail. quarter Officer; Ryan Jim Operating and and highlights you of Officer; our several to members the markets transactional, key my Chief Jordan and will President Afterwards, Officer; with of Acquisitions strategic close guidance Operations. EVP with accomplishments and are provide addition me today balance and remarks including I Babb, focus In will our our and financial executive Ruddy, capital team Chief Investment Mike our

year we demonstrating the industry and value allocation across reported Building the quarter and NOI on what initiatives, we continuing million. quarter, highly achieving With the the multifamily knowledge our strategic portfolio including of economy assets price through on total end totaling last sale the accomplishments combined momentum $XXX NOI half of of fifth same-store growth We trends with an investment investing over growth, markets. expected creation The reinvestment. portfolio of X.X% the capital assets through same-store leading we four million continued we're prove of of operational our a growth industry from to sale second year. dispositions performance, quarter, asset leading to thesis each our quarter close strong executed renovations August. first revenue out the amenitized delivered growth a prior Subsequent be to X% accretive through $XXX accretive of the of in end, and will by in

rate per economic estimated estimates, is based $XXX a replacement executed cap of buyers’ on a sale reserve in-place the at of unit The of an our one and which quality reflection portfolio. tax the was X.X% year

stronger $XXX additional provide long-term value Ryan end of going his in one cap a approaching X% at remarks. quarter, the detail acquired rates year Additionally, growth million totaling to since assets four the in purchase you with we've first profile. is

year periods including as Moving $X.XX The net share which share for for GAAP items figures a expense with loss common, need the was the prior amortization $X.XX, on results, compared to share the and $X.XX and and quarter to depreciation prior a the included to respectively. of loss current for $X.XX quarter. non-cash we a per net quarter start of to year

strong along period, throughout in reflects investment the year. prior produced which the $XX.X revenue healthy $XX with our front, performance same-store the activity On second we XX% growth million from in to a the quarter year million significant

$XX.X margin from XX% year-over-year expansion. the quarter to to we revenue for X.X% the results, million in respectively period. and X% year our Moving NOI versus year level NOI prior basis strong a property grew grew and million prior very point property the the on quarter period, $XX.X XXX Same-store driving in partially

funds during non-operating up core FFO the quarter, year representative from the second a measure share, which operating share. at the the we $X.XX add of a versus our achieved and believe we back the XX% operations of performance. FFO most NAREIT'ed On $X.XX period of front, was simply is that's prior Core FFO non-cash with items

allocation basis which quarter, $X.X capital dividend quarter. a of $XX.XX XX% represents year coverage to to common share, discount ratio an NAV. our at payout the a to a Shifting We million now CFFO the also continued on repurchased of significant of versus our second year-over-year we declined prior that's with to average tooling estimate during in increase a XX% stock price

We continue up $X.X to period over asset the our were assets Gross quarter to for the grow base. year prior XX% from billion.

Moving to capital markets.

preferred the capital, raise the and of XX we work trading B as stock. our The grow We option because for of Series our NAV allows B second advantage Series REIT future raised discount. unique a preferred decoupled pricing. During it equity convert grow at it us sales and in to we quarter, accretively is cyclicality close accretively Series BRG the million record from our into it B through can common to equity grow

an the second Series for the rate reflective be B the quarterly of will of remainder baseline run year. We expect increased quarter raise that

we're we delivering levers continue Finally, as value. we look growth to uniquely shareholder ahead, with positioned multiple believe

communities highly organic knowledge market terms assets selection us in amenitized our industry allow NOI growth as seen the growth believe same-store economy assembling in we selection markets First, right of this quarter. in growth live/work/play deliver leading well terms of and our revenue and strong the will picking our to right located

able date, attractive to returns. units which continue an XX%. our being with through of average anticipate organic very program, growth X,XXX upgrade Second, inception enhance renovated the we to is approximately to we've From ROI delivering solid value-add

our grow which would dollars. NAV Our approximately alone per future by X,XXX is share several pipeline identified renovation units,

unique accretive sourcing through preferred and of with fund attractive through to B upside Series continue Network. acquisitions Bluerock through we our Third, external potential our issuance growth

on forward in future We them value quarters. creating robust a reporting and have for pipeline opportunities accretive to look

ability Finally, reinvestment and the to decisions make company we've an and when accretive for prudent disposition capital appropriate. allocation demonstrated

As we forward our we our management and to of NAV on approximately basis. delivering XX% of the a which guidance look for at in largest underlying is look shareholders BRG fully against growing diluted equity ahead, ownership the

I'd that, with turn to over Ryan. And like the call to Ryan?

X% of momentum reaccelerating morning MSAs our and The through highlighted top-line gains Ramin, based everyone. markets and outperformance portfolio across the performance top and Thank second broad our the be XX you, XX growth the sustained continued with our assets. positive quartile of in Georgia our to in Austin continues with operating posting quarter growth Florida by growth majority posting above The good asset. strong

across a quarter average increase and in X.X% Portfolio-wide second the last point second the XX Overall, period, quarter XX.X%. assets, basis rental Of rental same-store year-over-year at average XX increase to increases note pool properties over occupancy. driven occupancy the of XXXX strong average quarter of XX.X%, at a rates increased rates held compared basis. X.X% on flat of recognized a in a year in BRG’s in year in which prior XX robust revenue generally in was the by the the

momentum and rates a quarter. rates quarter. Lease continued new running and lease to X.X% and the growth and strong the renewals rate of renewals X.X% aggressively July X.X% into we averaged leases continued achieving rate X.X%. respectively new preliminary for X.X% with push for third We X.X% for are this blended leases

the offset with we increase accounting expense moderate the become by a growth On expect basis savings to are tougher the for increased the quarter normalizes while level as the half above of the a XX trend expense coming largest NOI in and on we points year. front, for and and revenue quarters, it same-store year-over-year taxes be expenses in X% back including projecting X% to of payroll from increased Same-store the by variety basis utilities. comps

On income a XX basis by fee Average of points, a strong declined X.X% same-store was up rates was year growth and contributed variety other positive rental a basis, occupancy points the basis sequential categories. XX over period. driven quarter-over-quarter prior income revenue

the continued renovations exceeding have a completed an per to month at with have unit resulting existing X,XXX monthly renovation portfolio, delivered the pleased XX%. and of To be across results. in We which quarter weighted cost XXXX, date unit value-add X,XXX increases $XXX rental ROI approximately we yielded second program, has per average through average our healthy of of

to units our Accounting X,XXX FFO for the comparable accretive NAV. are disposition which renovated and reinvestment, with we remaining economics, to and estimate the be would portfolio in there approximately be

renovation opportunity. and approximately portion quarter. exclude to five prior some into assets with profile respectively, growth the X.X% been an were new of of of basis which would is If brief disposition the migrate the a X.X% economic executed we and pending, disposition terms and in at line was to a by in X% accretively and to portfolio. have from capital a cap commentary, of of points XXX In positive of the with immediate us core sale same-store the five XX markets with year-one assets, BRG the value-add points portfolio reinvested rest assets and of the NOI stronger versus strategy economic still year cap was one revenue XX.X%, allowed rate growth assets, a at plus The allocation rate basis

time exited renovation an to on Phoenix, fit hiatus pipeline growth Las diminish. for average. a Additionally, within for brings Worth, our Vegas economy strategy. Phoenix entered knowledge projected the perspective, to portfolio property. assets well and market we we the allow Raleigh Vegas XX% From units Orlando two after and to our one Nashville Simultaneously, and operating approximately pipeline reinvestment investments reentered Nashville the three-year market the all Dallas-Fort approximately in to supply two extremely X,XXX Las and with first exceed ROI

has above-trend, becoming and characteristics have Florida. Orlando, markets whereas Phoenix foster are over profile growth three Vegas time. solid Las in-migration emerging which should similar very long-term Nashville All patterns, entertainment irreplaceable hubs, an technology to Both domestic

Net four the remaining the were equity. Since BRG on of asset BRG proceeds due purchase end of $XXX quarter, with with the billion Turning million sale equity value completed August. to were in The disposition of month and from BRG and $XX balance million at completed $XXX the in assets [ph] to purchase sheet. first approximately totaled million July. acquisitions purchased the four the fifth $XXX $XX in XXth. the BRG $XX in acquisitions assets million two of million June the another of Two approximately totaling in end totaling the

our Moving commitments. development to

million program. across in XX During $XXX $X investment projects. mezzanine loans quarter, the quarter, BRG total of at end million stood and and the equity the invested equity and mezzanine development the preferred our we preferred as of And

revolving credit BRG Finally, July, versus offering, a $XX our the of the availability the combination of on our Series accelerating plus available million is first and our preferred has continue facility, the end as half through cash balance B through investment approximately for of capacity year. we on of grow to sheet, which

primarily note a first our portfolio will performance I outperformance. as half that conclude, To exceeded broad-based our result operating expectations, of

full-year year, revised CFFO the narrowing As by guidance the a guidance. to last used comfortable result, refer range to share. earnings $X.XX midpoint we assumptions raising with CFFO per like respect supplement Please per share the our to for our of are our $X.XX to

it that, with open will Operator? up to And the Q&A. we

[Operator from first with ahead. Baird. Please question The Instructions] go Babin Drew comes

morning. good Hey

Good Drew. morning,

Question on the X Q July. from acquisitions and

expect that and yields, what's you would that. and value-add talked the kind on pretty also opportunity of impressive the together, yield of there ROIs initial building You the economic? it mentioned you X.X% stabilized Putting off about some

Sure this Ryan. Drew, is

on forma stabilized in three pro cap rate about a assumes Our a X.X% basis. year

kind are unique how to partners kind through Bluerock? came was it of of in the of network Or deals it Was And way Okay. and operators? it that sourced? those your

combination we relationships, was had It before sellers a went of direct them. the with of and we to one off-market transacted

that quietly executed Another was a we on. marketed opportunity

sourcing a opportunities. it different So was of combination

in Okay, can this Scottsdale us acquisitions the Vegas, that’s those helpful. acquisitions? you give on And the and the used rates for mortgages you July

in were X.X% range. Yes. They the

think back rates. I Vegas with to low and get But exact it's X.XX% deal. we you Las can X.Xs for the for Scottsdale

Okay. And me. more for

you the million that's $X.X of what the cadence for – talk gave CapEx. year? for, that number that's for of Can year-to-date the guidance recurring versus full-year think, about You been how I

Sure.

still We’re with comfortable that very number.

million I year-to-date. million think we've to $X.X been about $X.X

First quarter about was $XXX,XXX.

second the about was think $XXX,XXX. I quarter

will about million, think with out guidance. very our I us is feel line year which half the we the of to back $X.X in comfortable round

Great. you. thank That’s helpful all very

go Please The Merrill Instructions] question [Operator ahead. with Research. comes from Ross next Point Compass

Hi, thank morning. you and good

the of dispositions, one a had out at stands units. the lot opportunity And realize it a as is being Looking where that seen XXX of market Orlando. sort was you

you extent properties already what source But property. huge of that to already renovations had at maybe is a sold for about aggregate growth property not all I'm the the was and felt it curious of that done So what executed? that, in-unit the and was

felt executed, all. capital the you is Sure, program from Merrill, in do did very Ryan that correct. long-term. respect Orlando into have business indictment asset, it's view so move Orlando, are like, presented again. our an but where Phase overweight made a for And an it on did With That to to that, this we we plan market a feel We We good which in particular, to renovation that execute an recycle was is and not is other I asset, at on like asset particular, opportunity opportunities itself. sense that obviously – we it there, about. specific us on

it. why you. Appreciate thank Yes, I it. getting was That’s

comes ahead. question from with Barry Oxford Please D.A. Davidson. go next The

On looks number Great, a still guys there the bit interest there. you Can cap little talk dispositions, rate showing that's marketplace? of buyers up? that healthy kind your Are the about apartments in like out you thanks. very good it for strong seeing are pretty of

Absolutely. Barry, again. this Ryan, is

Yes.

institutions, the environment variety on side us a family of office a capital. for capital, sales regional very It's healthy across

when broadest drive can selling the reach an competitive. into side. to appropriately we're we the pricing disposition we're environment, very on so of there trying out capital So still obviously It's that amount

looking sourcing acquisitions rates. side the find of guys of the to you Then and kind gives the I off-market of cap angle. other trying guess, you probably some having are But reasonable from

need understanding we needed larger which strong and that it the process sell of through very would the we've stuff. quietly that because a got process. put on we the portfolio that. the strong portfolio always competitive at Barry, to. at this marketed portfolio we bid strategy, very put amount to on is get get at the get level could market But way dispo necessarily together we side, the and some we case, competitive the That's buying they to that and be institutions to of very size the out, with right. up like All a larger In capital break individually interested one-off a But to if to them – level won a bids executed assets,

quarter. partially very that We little head processes. don't side, buy like because We marketed X% an are reverse you exact the selling assets one strategy. and we're to – or is and market's other only in of getting a X%, it's know, that X.X% relationships effectively we're to or than reach we relationship XXX our the or to it's On buy much a in because or as in size a multiplier growing that seeing want we deep have year our partner bigger of – buying And we're we institution of our have find an broad off-market at how which strategy. at is either the that's and jambs people And broad competitive how we're are terms a that's and opportunity finding X% people And deep - reach and and X.X%. network, the seeing because are. our aren't a inefficient

Perfect. Perfect. How you with you to that guys having up the match that? do Are think XXXXs about dispositions?

We we'll – and on two. Berry. XXXX another forward XXXXs into into reverse you're two, actually We spot

execution. XXXX a was it So

that Obviously it. perfectly. guys, Right, right, makes sense. appreciate All

Thank you, Berry.

Thank you.

like over This to Kamfar question-and-answer to session. any closing turn remarks. back concludes for Ramin would our I the conference

everyone, continuing on forward Yes. thank the to to you in joining Thank Goodbye. to quarters. We report and you, our us today. for operator, you, upcoming progress look

attending has presentation. today's you conference for The Thank concluded. now

You now disconnect. may