BRT Apartments (BRT) 13 May 192019 Q1 Earnings call transcript

Thank you for standing by. This is the conference operator. Welcome to BRT Apartments Corp. Inaugural First Quarter 2019 Conference Call.

As a reminder, all participants are in listen-only mode and the conference is being recorded. will opportunity there ask presentation, the be to an questions. After to I Relations. conference would Instructions] turn now Investor [Operator Infurna, like the Evelyn over to go Please ahead.

you. the welcome Thank everyone, Conference Apartments Call. to day, Good BRT and

call President; Officer. for Zweier, and Senior Executive Chief Ryan the and have David Officer; President. will Available today Gould, Baltimore, questions, A. On President Jeffrey Kalish, Chief Financial also we George is Senior Vice Vice

www.brtapartments.com. being is webcast the call this at reminder, a As company's through website

release are later the for supplemental Investor company's and earnings XX-Q website. available Additionally, and review, be Relations BRT's company's today available the the information your the section will of on

Before we XXXX based on the everyone within meaning this begin, of assumptions management's the current that conference are expectations, Litigation remind and of that call Private beliefs. contains Act statements like I'd forward-looking Securities to Reform

expressed often expect, be believe, expectations or operations, forward-looking to, variations in These future. obligation income can are not does the a of but to, for such also statements expressions estimate, forward-looking are These for negatives should any are operations, discussion anticipate, conference could be forward-looking accordance of future identified guarantees affect words or reliance adjusted These and strategy as and not these and includes are law, required these This regarding undertake of to Except words. as BRT's Form of publicly any all similar any for, financial operating include, or net by as AFFO, or of the net company's should more a computed Forward-looking that statements and uncertainties not income, statements substitute funds and GAAP. intend other subject to those that limited factors non-GAAP with statements. XX-K on statements. review and non-GAAP recent assumptions other cause risks measures forward-looking are results on the filings measures undue any the and which SEC to to forward-looking not materially or not report encouraged from and place used call actual Listeners differ BRT and discussion most annual results could a risks, a in statements performance. supplement NOI, revise from of statements. and funds with update complete company's from FFO, by

that and For earnings the AFFO today. release a filed complete supplemental filed later were FFO, NOI, that XX-Q more company's of will discussion and yesterday and see be the

like on the to of the Jeff. President changed ahead, fiscal I XX. As would now company go December it a recently to call its turn Please Apartments Corp. ends and reminder, so over BRT CEO year that Gould, Jeff

conference Thanks, everyone. welcome I BRT's inaugural call. to everyone to would like quarterly

operators our and multifamily in consolidated properties we investments have in an currently can platforms ventures units. give believe best located properties. us. the our own properties for United with to in aggregate we of an ownership, development operation with XX,XXX that through and ownership expertise unconsolidated are states We of of We X acquiring most These select local properties model. small-cap is walk Texas. through of leverage interest XX the X property We Most strategy multifamily we is entities REIT X,XXX Southeast our we multifamily States a XX% with equity through efficient risk-adjusted contributed find stockholders. our their management the in in states an experience which thought that joint BRT the ventures for properties to units overview multifamily XX equity. properties to helpful are and Before of you be it XX% by financial generally joint focused would results, located primarily business of on aggregate in owned the

we background do may in This allowed to we multifamily highly not in the as achieve to equity us bridge able on waste that skilled been may resources were bidding asset valuable have to We not and efficiencies on multifamily Prior deals to lenders or this assets. class. money investing this become have model win. lent significant business, using we by frequently

Our approach our mitigating models this size, provide combination opportunity asset our is our helps we but space, in given multifamily other the believe right acquiring of unlike risk. leverage and approach us in while platform

portfolio the our to markets. of our walk are of through XXXX, Today, discuss on Moving first results to we the going quarter and the results. some

During was per are Texas. quarter ended as million per $X.XX $X.X of $X.X insurance quarter. a quarter was related non-controlling quarter or quarter in current X.X% in property the The $X.X $X.XX Net or on $XX.X increased an XXXX March interest. March before to increase XXXX, going $XX.X from quarter per quarter, $X.XX current the million or the of current the the expenses million to or diluted $XX.X by was million gain or the driving the to XXXX X.X% to XXXX current in per the per diluted from for of $X.X per Ranch XXXX XX, to share million in increased operating quarter, quarter diluted diluted quarter was of the includes and diluted versus as of $X.XX million XX, at the from the million million $XX.X without diluted XXXX share, to or quarter. XXXX $XX.X $X.XX or X%. share sales diluted net quarter the on per we XXXX $X.XX diluted NOI today's share. in of quarter in $XX.X $X.XX NOI quarter. quarter by compared million for our $X.XX to the $X.X $XX.X XXXX the to for the ended loss share. revenues million Rental current XXXX $XX.X $XXX,XXX per million X% an effect share includes and quarter share income loss discussion, million FFO per from per million XXXX, diluted share or giving the recovery $X.XX $XX or refer increase share $X.XX FFO diluted the non-controlling gain in versus $X.X million, giving to Cinco for effect Retreat for interest or AFFO share Katy, compared million property

On achieving the roughly current front for investment value-add the approximately quarter, of properties, XXX return repositioned XX per average we and on on XX%. spending at unit units $X,XXX a

performance may supplemental in Overall, is the have we a reflected our program. value-add the return re-leased. our prior incurred on a As the portion very pleased where been we unit financial period, of are the in investment when cost information, report of with

to this growth be rent factor to over a our in term. to drive expect continue long strategy same-store We the ability and NOI

only Carolina, rate Kannapolis, mortgage in million, several in During the suburb a On $XX we North acquired current fulfillment center for property under a $XX.X mortgage in matures XXX-unit was an May with price community of year, interest X.XX% obtained construction with interest the rate Carolina X.XX%. a debt property is the is Charlotte, of $XX.X located, suburb purchase. matures in employers, Birmingham, multifamily major interest carries we connection XXXX. Health a quarter, Research XXXX The in million property of XXXX Campus. including of and Carolina The located North near debt well I-XX. XXX-unit The in $XX.X until per debt including assumed the miles Alabama. is North million connection Amazon XX million, The of an of the approximately acquisition. debt and X, acquired located The including near Charlotte, purchase Carolina, at from mortgage bears and Systems, mortgage

was South growth property units. $XX.X estate NOI quarter, earlier. tax a value by real markets reduction were from X,XXX purposes, Our properties unit X.X% grew for taxes. $XXX rate rental the Mississippi, quarter. generally driven by to up key by Same-store X.X%. Same-store that and expenses Carolina, $XXX increased reassessed by is by When which a at XX% appeal our for same-store year is in a rental higher increased a pool from X.X%; to quarter if from unit quarter same-store X.X% XX we current grew increased in Same-store in believe the the which growth the X.X% million. The estate rate obtainable. real led XXXX a Same-store increase we of from current totaling the comprise with revenue XXXX X.X% a

In Alabama by X.X%, addition, Ohio we and were X.X% able to X.X%, increase rental by by rates Indiana in X.X%. Florida by

region St. Our most challenging is Louis.

to We occupancy. drop anticipated are rents managing that down had stimulate have market some as we our this exposure growth not to in have and, cases, in the seen we

into of basis the facility Borrowing repaid refinancing from Alabama entered company property as an and Turning described March with up us interest generally the to bridge The of National of the interest as to cash or fund borrowed $XX matures an and or a with connection of annual carries I equivalents facility the Valley be earlier. a facility in that million use finished affiliate On over corporate $X with prime million on properties. We including property carried rate allows X, X.XX% net in $XXX.X under In we to We with $XX.X of the balance an of million that of the X%. Bank. acquisition points of May multifamily XXXX intend of rate the $XX the million, to and X% line the XXXX. cash to debt debt credit XX, quarter subordinated million transactions. and Birmingham, XX acquisitions will facility April, borrow rate sheet. sales

close annualized the stock Finally, the share, our which an to May dividend on based on Board yield your With is inaugural will of operator $XX.XX $X.XX over per joining XX, call. turn equivalent of Operator? X.X% as quarterly the of our March I on of X. price approved a for to us call for the of Thank today business questions. conference that, on you

[Operator Stevenson from question Instructions] first with Our comes Janney. Rob

of rates, valuation, there a we little Jeff, seen so? how year about side over bit be 'XX? acquisition et disposition out or you the and talk cetera, the pipeline in the over remainder just you have can about any the on cap last thinking changes And should quarter

talk Yes. Yes, to sure. Good to Rob. you,

the to of new continue The as at as of in business we dispose When have and the capability strong. buying, looking to pipeline acquire. assets been we other see know. assets X assets, very reselling has well as you So transactional we

can acquisitions. deals put As for money seeing Competition same flow. you so we're readily the good it's out we contracts new they're time, but know, deal And been at don't tighter, is at definitely look very solid. the we under unless

the deals. and back, very can accretive an pleased money comfortably new response our put fashion. in we're to get with partners money when So out the we we as of And if

guys year? run rate that rehabs you good Is a XXX the be thinking $X,XXX steady you for And summer months the the just we under should that a remainder in accelerate likely does Okay. for How unit that And do then about did number quarter. first sort the Or as of year? the of of increases? during the turn rehabs year? hold for

Yes.

to that to more going on that. over detailed So to I'm turn a give Ryan answer you

many A lot Rob, turn. individual yes, guidance give we of so at level. on it we project to turnover property on units the don't and dependent plan how is

past don't been as we that but our pretty many been quarters, X% we've Given in in going have don't we're XXX again, range. been range, increases the the we've forward renewal to necessarily renovate, units couple know get we as back how to strong of getting project

as we as turnover had we sometimes So anticipate. haven't much

opportunities. and that drive these we're definitely it, And some transactions of we we've there's think And purchased, some recently that those will renovations definitely to units. new value-add a excited about of component

me. then And one last just Okay. for

NOI On or is that alter the materially you the anything that there same-store quarter of year, the ran anything else the X%, rate abnormal it sort comps same-store year-over-year run or it? first for of X.X% either would elevating 'XX, growth the reducing throughout remainder expectations for with

of for so Yes. in same-store increase. the expense taxes current I accounted the mean quarter, XX% or

that's tax prevalent and And having more taxes we're watching in basis. on said that we're best do appeal states obviously annual these something our cities, I increases. And fight an to So in it's to some monitoring We as carefully. earlier, taxes.

over, of mean was increase an repairs of turns I We and it. really little result us the an bit little of renovating units that's part saw a of rental the a good. allowed which that's rates, which maintenance, to So open turning bit question. and increase is and in

less impact on generally But on, give it's, speaking, tell taxes. would stores And that don't seasonal guess, yes. dependent actual guidance some is that has I I some fluctuation, you or but more on we same So it. there

The next Davidson. from question Lykins D.A. is Jim with

First, the a renovations. couple questions about

say much First, if per unit? and did this, you spent the missed you XXX but apologies I how for

approximately spent per We unit ROI $X,XXX Jim, is of about annual and estimate this Ryan. received an XX%.

guidance, Is stay us solid levels? know returns? that that, some there's any give give pretty And color through those be we may to you XXXX any returns. there you as Okay. how at can think on about go there slowing or reason those you I at to all don't but can guys think Is

Yes.

So reason on over we We've equity well with that seen the on continue. have any a renovation consistent done and number it. the of pretty return see last we not don't years, should program

Yes.

that, Just and to most of just what the anymore, money renovation see our there is we'll returns start to add typically not stop on do renovation We program. if our the we upfront. with fund we returns drop program are the

in make returns sense as the hold So range. a we distribution for that amenity or see might upgrades XX-plus could other if that's return the that where the it case, money they'll

minimum consistently solid results that. equity returns or we've return We've being reflect with been, obviously, XX% now. far on But more while than a been so those for like numbers quite and, seen pleased it's these

helpful. That's first, also, Okay. a rate for Birmingham, to acquisition And are you for provide the that? cap able in

Yes.

So other of return we $X,XXX to was hoping the said one program. We the and new opportunities. The acquisitions Alabama unit pleased the earlier, with do XX% in the about deal, the renovation. reserved I were Birmingham as it We're value-add north we on renovations. generally speaking, value-add, net to achieve a per the mentioned,

add Carolina cap X% property goes, As purchased the getting they value-add in, we but We to recently it rate, pretty far stabilized going plan X% at a value basically but value, bonus with component, again, significant, that's rate on North basis, was as well, program. is a as the buy the the cap weren't this there lower value-add on of rate do we well. about happened the completed already, cap what to The buying as typically that somewhere is there, on add. which a get with north which along we're value stabilized at had they as

most is for part already the work the complete. So

should flow. see we So that readily cash improving fairly

And have number of identified this at the renovations property? you

the Again, Carolina one amount and And the the from effectuated bought has without all the in one the debt. basically renovation is we complete. happen. been is This or entirely of of minimal Well, was work, going rent that's North none really, rent almost completed. bump is the to

do all, Alabama deal, On time. those most, units not the our over plan to if is

it's a good think we long-term... So

many Is How most? number... is a there What,

There's XXX units in the property.

be you'll And of most Okay. renovating those?

in Yes, as that over to hitting time. And obviously, we have portfolio other the units we're well. be going

is Some of Ryan remain to, assets do legacy of still our that some there's done. plan units, to that But alluded older, these be majority some properties yes. of the, work to a here, sort as are

renovated. units. the a Yes. At Alabama XXX to Jim, have XX just on so acquisition, been deal, XXX be already remaining there's point prior rented to that. there's

those worked rent in the can done Right. The there units nice the know and thing increases, we've achieve market. we we that XX is that from it's

to increases, we've we'd some the able us, guidance to to always do we good that's can the seen and and be here, confident for So we're work have we and once get very like ability indicator as bumps. to, it charge to the these directly, a

[Operator is B. Riley Instructions] Kucera FBR. from question And our Craig from next

of? out those possibly Just to on based bringing St. that you're assets Louis, recycling considering your market are and commentary on

Yes.

very use But is with see with. that's occupancy going that there, we we were, the and was lower in particular So to is than we basis. downtown with pleased We we And and the sale, with growth, value St. a rents. obviously, entire the the on outside able property of a operating any another really we're a we to basically we choose where our properties, renovations downtown rental achieve. a expenses, of surprised to is Other market. as been it consistent way and where recycle anticipated is of long-term property Louis, property, most that running are as been concern as that transient to keeping be that do much fact the less with trends minimal market performance a We're for as the look that market. those continuing downtowns We were period had don't have potential Louis we just, We that. used the we've growing have portfolio do down pleased, add. decrease and see have reality the deals something to downtown we see, or more or we the St. refinancing able that occupancy see time. and to not which were which our for capital a and the trending we that increase market were the specific, it we markets we we've originally viable concessed complete, and elsewhere we we plan milked property with also It's property. was do that just can at to on Those in property, in not well, in to start

we're we that somewhat don't getting In those get frankly, can younger, are get obviously, they're confident that properties, the time, are concerning. older, where over of and we So any portfolio. properties our think, those areas some

renovations of where well. as focus put are have So you there's properties the rental property And work in and examples on issues we we don't to and on that those growth. see

other So there to our portfolio, yes, properties on be likely and constantly will sales in focusing we're come. these current

and remain behest? acquisitions that's renovate that of think program, exclusive that or annual you pretty the the of the guidance units you know think achieve in the whether recent can through returns or total up decent you tallied value-add amount have sort And out Okay. inclusive said on you I give of you quarterly portfolio, you but don't

Yes.

said, you on as renovations want we the so don't as we to that don't plan the number of have, or amount additional we I a give don't So specific further guidance that, to give new to do. focus development pipeline But going that whole to is be of the And almost I minimized we've there's now can, we large a can those. completely. say the number comfortably really

income been from would give complete as We properties program, the of rent. as facts coming and just up. the to the of the and what as get complete we've But to are leased some actually bonus that renovation we you have rather being far as able development in come quarters now and

on it down, down? know post Okay. new aspect but I sort under is you're the that you of business sort development? the Do is currently developments? development, likely doing winding And winding Or this of that of you're what's just new anticipate

there's might be deal, it's a the deals mean chance plan the versus have a difficult a so now, I the being do deal, development we real returns by of gotten right but development and, just way risk. not to reason

we when So going bottom development back is, were originally, a return. the were years. to X.X% an some few building into these line deals, unleverage-type of going we Those

Now down to seeing we're roughly returns X%. unleverage probably

can buying balance of when you issues but opposed as it's to and nice renovations you returns the building brand-new always as those products, as component have to have know and numbers, new to and where So you It's without risk/reward the the an and those value-add taking where just levels development. new. risk budget do to become down appealing at exists not property light existing

but do to be a want deal, it's think not don't So XXX% minimal. plans. it's in it's to we our current absolutely going that I say won't I

more Got One for it. me.

on get Just leverage wanted your today. thoughts to

of balance time feeling And where leverage I bit of than do maybe sheet more you plan reduce little kind keep or levered on you it sort peers. just leverage today. of the guys thoughts constant is are a your relatively a to over on and lot your think

focus there's that understand the We question. on debt. Good been

So a were I XX%. answer XX% acquisitions or at is it few borrowing so, One ways. LTV XX% new can or our typically about to

that, good class, leverage at leverage a we higher new our stable to risk/reward about We based than So don't on think we not be concerned that's any think want acquisitions. those number a the of at, we're asset and numbers. fairly to

it's to to I value, debt the to our book As analysis look it high, at appears seen, based show you other does if it value, market relates your we've that it cap, debt we on relates concern research to but anything of that all. don't real think at think great be as and

stable we As our time, quite a on I an a fact, matter debt we're leveraged and annual appropriately. think basis. over But of we amortize bit think

that to So big that some it's on REIT but going obviously not But We're as not But level long and is sense target some I for think trying XX% just type of the returns think that's leverage us, what's boys, say we looking and shareholders. are it as that any does efficient of for the leveraged us we as far belief could focusing to term. XX%, we for XX% nor be at is helps. best a to is the good reduce extent. makes our something

This that for Mr. concludes remain allocated there any turn investors@brtapartments.com. remarks. back to the I'd to questions. conference over email closing please Gould were unanswered, questions any now the time for like If

Yes.

want So could of transparent and inaugural to us to joining all to our there of can be out just you really all We're for you. be and call. questions I ask on responsive be we your that you so trying thank

of to you reach the meet talking and to if next we wherever questions. any out us e-mail with please in you meet have look to any you happy with a further few forward to address, or happy again, might in our we're so person, the are be, And you We investors@brtapartments.com, call on number months. at it

you very much. So thank

participating. you Thank conference concludes This call. for today's

disconnect may You lines. your