Bluerock Homes Trust Inc
For the period ended Sep 30, 2024. Filed Nov 14, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 14, 2024
BHM$7.26+3.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0001410578-24-001224
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-14.
0001410578-24-001981
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 115 previous paragraphs and 120 current paragraphs.
68 unchanged; 44 reworded; 8 added; 2 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 76 previous and 78 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (8)
Current report
Acquisition of Avenue at Timberlin Park
Current report
On July 31, 2024, we acquired a 200-unit single-family residential community located in Jacksonville, Florida known as Avenue at Timberlin Park. We have a full ownership interest in the community, and the purchase price of $33.8 million was funded with a $23.7 million senior loan secured by Avenue at Timberlin Park, along with cash of $12.9 million that we funded, inclusive of certain adjustments typical in such real estate transactions.
Current report
Sale of Navigator Villas
Current report
Prior to the sale of the property, and to effectuate a tax-deferred exchange under Section 1031 of the Code, we purchased our joint venture partner’s interest in Navigator Villas for $2.9 million, inclusive of estimated post-close adjustments. On August 7, 2024, we closed on the sale of Navigator Villas located in Pasco, Washington for a sale price of $36.4 million, subject to certain prorations and adjustments typical in such real estate transactions. After deductions for the payoff of existing mortgage indebtedness encumbering the property in the amount of $19.5 million, the purchase price of the joint venture partner’s interest, the payment of early extinguishment of debt costs, and closing costs and fees, the sale of Navigator Villas generated net proceeds of approximately $12.7 million and a gain on sale of approximately $10.0 million. We recorded a loss on extinguishment of debt of $0.1 million related to the sale.
Current report
Preferred Equity Investments
Current report
In November 2023, we announced the payment of additional contingent special daily dividends with respect to our Series A Preferred Stock. This dividend was aggregated with the regular monthly dividend so as to effect a dividend rate of two percent over the average 10-Year Daily Treasury Par Yield Curve Rate with a floor of 6% annually, calculated and paid monthly. Commencing in November 2023, the Series A Preferred Stock additional contingent special dividend was declared for each month for which the Board declared the regular monthly dividend of $0.125 per outstanding share of Series A Preferred Stock. In May 2024, we announced the payment of an enhanced special dividend replacing the additional contingent special daily dividend. The enhanced special dividend is aggregated with the regular monthly dividend so as to effect a dividend rate of the average one-month Term SOFR rate plus two percent, subject to a 6.5% minimum and an 8.5% maximum annual rate, calculated and paid monthly. Commencing in May 2024, the Series A Preferred enhanced special dividend was declared for each month for which the Board declared the regular monthly dividend of $0.125 per outstanding share of Series A Preferred Stock.
Current report
Weather-related losses amounted to $0.2 million for the three months ended September 30, 2024 as compared to zero for the same prior year period. The 2024 expense primarily relates to hurricane damage in Texas.
Current report
Weather-related losses amounted to $0.2 million for the nine months ended September 30, 2024 as compared to zero for the same prior year period. The 2024 expense primarily relates to hurricane damage in Texas.
Removed paragraphs (2)
Previous report
Peak Housing Interests
Previous report
The occupancy percentages of the Company’s preferred equity and loan investments at June 30, 2024 are as follows:
Reworded paragraphs (44)
Previous wording
As of June 30, 2024, we held twenty-one real estate investments, consisting of twelve consolidated investments and nine preferred equity and loan investments. The twenty-one investments represent an aggregate of 4,362 residential units, comprised of 2,732 consolidated units, of which 170 units are under development, and 1,630 units through preferred equity and loan investments. As of June 30, 2024, our consolidated operating investments were approximately 92.2% occupied; excluding units classified as held for sale and down/renovation units, our consolidated operating investments were approximately 95.4% occupied.
Current wording
As of September 30, 2024, we held twenty real estate investments, consisting of twelve consolidated investments and eight preferred equity and loan investments. The twenty investments represent an aggregate of 4,000 residential units, comprised of 2,742 consolidated units, of which 170 units are under development, and 1,258 units through preferred equity and loan investments, which includes planned units and those under development. As of September 30, 2024, our consolidated operating investments were approximately 90.5% occupied; excluding units classified as held for sale and down/renovation units, our consolidated operating investments were approximately 94.3% occupied.
Previous wording
While inflationary pressures have shown signs of moderation, we continue to monitor increases in inflation and rising interest rates and resulting economic changes in credit and capital markets. Inflation and its related impacts, including increased prices for services and goods and higher interest rates and wages, and any policy interventions by the U.S. government, could negatively impact our residents’ ability to pay rents and our results of operations. Substantially all our leases are for a term of one year or less, which we believe mitigates our exposure to inflation, by permitting us to set rents commensurate with inflation (subject to rent regulations to the extent they apply and assuming our current or prospective residents will accept and can pay commensurate increased rents, of which there can be no assurance). Inflation could outpace any increases in rent and adversely affect us. We may not be able to mitigate the effects of inflation and related impacts, and the duration and extent of any prolonged periods of inflation, and any such related adverse effects on our results of operations and financial condition are unknown at this time. Inflation may also cause increased volatility in financial markets, which could affect our ability to access the capital markets or impact the cost or timing at which we are able to do so. Inflation may also increase the costs to complete our development projects, including costs of materials, labor and services from third-party contractors and suppliers. Higher construction costs could adversely impact our investments in real estate assets and our expected yields on development projects.
Current wording
While inflationary pressures have shown signs of moderation, including a 50-basis point reduction in interest rates by the Federal Reserve in September 2024, we continue to monitor inflation and interest rates and resulting economic changes in credit and capital markets. Inflation and its related impacts, including increased prices for services and goods and higher interest rates and wages, and any policy interventions by the U.S. government, could negatively impact our residents’ ability to pay rents and our results of operations. Substantially all our leases are for a term of one year or less, which we believe mitigates our exposure to inflation, by permitting us to set rents commensurate with inflation (subject to rent regulations to the extent they apply and assuming our current or prospective residents will accept and can pay commensurate increased rents, of which there can be no assurance). Inflation could outpace any increases in rent and adversely affect us. We may not be able to mitigate the effects of inflation and related impacts, and the duration and extent of any prolonged periods of inflation, and any such related adverse effects on our results of operations and financial condition are unknown at this time. Inflation may also cause increased volatility in financial markets, which could affect our ability to access the capital markets or impact the cost or timing at which we are able to do so. Inflation may also increase the costs to complete our development projects, including costs of materials, labor and services from third-party contractors and suppliers. Higher construction costs could adversely impact our investments in real estate assets and our expected yields on development projects.
Previous wording
Provided below is a summary of our investment activity during the six months ended June 30, 2024:
Current wording
Provided below is a summary of our investment activity during the nine months ended September 30, 2024:
Previous wording
On March 25, 2024, we, through a 95% owned joint venture entity, acquired a 294-unit single-family residential community located in Houston, Texas known as Villas at Huffmeister. The purchase price of $41.2 million was funded, in part, with a $24.3 million senior loan assumption secured by Villas at Huffmeister, along with cash of $17.4 million that we funded.
Current wording
On March 25, 2024, we, through a 95% owned joint venture entity, acquired a 294-unit single-family residential community located in Houston, Texas known as Villas at Huffmeister. The purchase price of $41.2 million was funded with a $24.3 million senior loan assumption secured by Villas at Huffmeister, along with cash of $18.1 million that we funded, inclusive of certain adjustments typical in such real estate transactions.
Previous wording
On June 27, 2024, we entered into a joint venture agreement with an unaffiliated third party (the “Indigo JV”) to develop approximately 82 build-for-rent, single-family residential units in Bluffton, South Carolina. We made a commitment to invest $5.3 million for preferred equity interests in the Indigo JV, of which $1.9 million had been funded as of June 30, 2024. We earn an accrued return on our outstanding capital contributions at a rate of 17.0% per annum compounded monthly, subject to a minimum return, with preferred return payments commencing in December 2025 contingent upon the property generating cash flows in excess of operating costs.
Current wording
On June 27, 2024, we entered into a joint venture agreement with an unaffiliated third party (the “Indigo JV”) to develop approximately 82 build-to-rent, single-family residential units in Bluffton, South Carolina. We made a commitment to invest $5.3 million for preferred equity interests in the Indigo JV, of which $3.0 million had been funded as of September 30, 2024. We earn an accrued return on our outstanding capital contributions at a rate of 17.0% per annum compounded monthly, subject to a minimum return, with preferred return payments commencing in December 2025 contingent upon the property generating cash flows in excess of operating costs.
Previous wording
We closed on the following sales: one unit in the ILE portfolio, two units in the Indy-Springfield portfolio, seven units in the Peak JV 2 portfolio, and twenty-seven units in the Peak JV 3 portfolio, pursuant to the terms and conditions of multiple separate purchase and sales agreements. The thirty-seven units were sold for an aggregate of approximately $6.5 million, subject to certain prorations and adjustments typical in such real estate transactions, and generated net proceeds of approximately $6.2 million and a gain on sales of approximately $0.7 million.
Current wording
We closed on the following sales: one unit in the ILE portfolio, seven units in the Indy-Springfield portfolio, nine units in the Peak JV 2 portfolio, and thirty-four units in the Peak JV 3 portfolio, pursuant to the terms and conditions of multiple separate purchase and sales agreements. The fifty-one units were sold for an aggregate of approximately $8.9 million, subject to certain prorations and adjustments typical in such real estate transactions, and generated net proceeds of approximately $8.4 million and a gain on sales of approximately $0.9 million.
Previous wording
We (i) provided funding in the aggregate amount of $16.3 million for the Wayford at Pringle loan investment, with a remaining commitment of $13.8 million to be funded, and (ii) received paydowns on The Woods at Forest Hill loan investment in the aggregate amount of $7.3 million, which included principal investment of $7.1 million and accrued interest of $0.2 million, reducing the outstanding principal balance to $1.2 million at June 30, 2024.
Current wording
We (i) provided funding in the aggregate amount of $24.6 million for the Wayford at Pringle loan investment, with a remaining commitment of $5.5 million to be funded, and (ii) received a full pay off on The Woods at Forest Hill loan investment in the aggregate amount of $8.5 million, which included principal investment of $8.3 million and accrued interest of $0.2 million.
Previous wording
Our preferred equity investment in the operating partnership of Peak Housing REIT (the “Peak REIT OP”) was partially redeemed in the aggregate amount of $3.9 million, which included principal investment of $3.5 million and accrued preferred return of $0.4 million. At June 30, 2024, our remaining preferred equity investment in the Peak REIT OP was $7.1 million, with a remaining 349 units as collateral underlying our investment.
Current wording
Our remaining preferred equity investment in the operating partnership of Peak Housing REIT was fully redeemed in the aggregate amount of $11.2 million, which included our principal investment of $10.6 million and accrued preferred return of $0.6 million. In addition, our preferred equity investment in The Woods at Forest Hill was partially redeemed in the aggregate amount of $3.8 million, which included principal investment of $2.1 million, accrued preferred return of $1.1 million, and a minimum multiple payment of $0.6 million.
Previous wording
At June 30, 2024, we classified an aggregate of 391 units as held for sale in our consolidated balance sheets, and for the three and six months ended June 30, 2024, we recorded an impairment of $1.1 million and $1.2 million, respectively, related to held for sale units which is included in impairment and gain on sale of real estate investments, net in our consolidated statements of operations. The 391 units classified as held for sale are included in the following portfolios: 44 units of Indy-Springfield, 48 units of Peak JV 2, all 123 units of Peak JV 3, and all 176 units of Navigator Villas. These units were identified based on submarket analysis and individual unit-level operational review. Real estate assets classified as held for sale are reported at the lower of their carrying value or estimated fair value less costs to sell and are presented separately within operating real estate held for sale, net on our consolidated balance sheets.
Current wording
At September 30, 2024, we classified an aggregate of 207 units as held for sale in our consolidated balance sheets, and for the three and nine months ended September 30, 2024, we recorded an impairment of $0.9 million and $2.1 million, respectively, related to held for sale units which is included in gain on sale and impairment of real estate investments, net in our consolidated statements of operations. The 207 units classified as held for sale are included in the following portfolios: 4 units of ILE, 41 units of Indy-Springfield, 46 units of Peak JV 2, and all 116 units of Peak JV 3. These units were identified based on submarket analysis and individual unit-level operational review. Real estate assets classified as held for sale are reported at the lower of their carrying value or estimated fair value less costs to sell and are presented separately within operating real estate held for sale, net on our consolidated balance sheets.
Previous wording
During the six months ended June 30, 2024, we issued 1,761,120 shares of 6.0% Series A Redeemable Preferred Stock (the “Series A Preferred Stock”) at $25.00 per share (the “Stated Value”) under a continuous registered offering with net proceeds of approximately $38.8 million after (i) commissions, dealer manager fees and sales discounts of approximately $4.4 million, and (ii) costs related to establishing the offering of Series A Preferred Stock of approximately $0.8 million. As of June 30, 2024, we had issued a total of 2,197,795 shares of Series A Preferred Stock with total net proceeds of approximately $47.1 million after commissions, dealer manager fees, sales discounts and offering costs. During the six months ended June 30, 2024, we, at the request of holders, redeemed 1,000 shares of Series A Preferred Stock through the issuance of 1,346 shares of Class A common stock.
Current wording
During the nine months ended September 30, 2024, we issued 3,459,331 shares of 6.0% Series A Redeemable Preferred Stock (the “Series A Preferred Stock”) at $25.00 per share (the “Stated Value”) under a continuous registered offering with net proceeds of approximately $76.7 million after (i) commissions, dealer manager fees and sales discounts of approximately $8.7 million, and (ii) costs related to establishing the offering of Series A Preferred Stock of approximately $1.2 million. As of September 30, 2024, we had issued a total of 3,896,006 shares of Series A Preferred Stock with total net proceeds of approximately $85.0 million after commissions, dealer manager fees, sales discounts and offering costs. During the nine months ended September 30, 2024, we, at the request of holders, redeemed 6,560 shares of Series A Preferred Stock through the issuance of 9,103 shares of Class A common stock.
Previous wording
Our total stockholders’ equity decreased $4.9 million from $147.4 million as of December 31, 2023 to $142.5 million as of June 30, 2024. The decrease in our total stockholders’ equity is primarily attributable to an adjustment of $2.3 million for noncontrolling interest ownership in the Operating Partnership, a net loss of $1.7 million, preferred dividends declared of $0.8 million, and preferred stock accretion of $0.2 million.
Current wording
Our total stockholders’ equity decreased $4.5 million from $147.4 million as of December 31, 2023 to $142.9 million as of September 30, 2024. The decrease in our total stockholders’ equity is primarily attributable to $2.2 million related to the acquisition of noncontrolling interests, preferred dividends declared of $2.2 million, and an adjustment of $0.9 million for noncontrolling interest ownership in the Operating Partnership, partially offset by net income of $0.7 million.
Previous wording
The following is a summary of our consolidated operational results for the three and six months ended June 30, 2024 and 2023 ($ in thousands, except average rental rates):
Current wording
The following is a summary of our consolidated operational results for the three and nine months ended September 30, 2024 and 2023 ($ in thousands, except average rental rates):
Previous wording
Rental and other property revenues increased $1.6 million, or 16%, to $11.9 million for the three months ended June 30, 2024 as compared to $10.3 million for the same prior year period. The increase was primarily due to: (i) acquisition of Villas at Huffmeister during the first quarter 2024 and (ii) operational improvements from our active management and organic market rent growth. The increase was partially offset by the sale of 90 homes in our portfolio since April 1, 2023.
Current wording
Rental and other property revenues increased $1.8 million, or 18%, to $12.0 million for the three months ended September 30, 2024 as compared to $10.2 million for the same prior year period. The increase was primarily due to: (i) the acquisition of 294 units at Villas at Huffmeister during the first quarter 2024 and 200 units at Avenue at Timberlin Park during the third quarter 2024, and (ii) rental rate improvements from our active management and organic market rent growth. The increase was partially offset by the sale of 176 units at Navigator Villas and 95 single family units in our portfolio since July 1, 2023.
Previous wording
Our average rent per occupied unit increased $59, or 3.8%, to $1,608 as compared to $1,549 during the prior year period. Average occupancy increased 20 basis points from 92.2% to 92.4% on a year over year basis.
Current wording
Our average rent per occupied unit increased $54, or 3.4%, to $1,635 as compared to $1,581 during the prior year period. Average occupancy decreased 20 basis points from 91.1% to 90.9% on a year over year basis.
Previous wording
Interest income from loan investments amounted to $0.6 million for the three months ended June 30, 2024 as compared to zero for the same prior year period due to three new loan investments since the fourth quarter 2023. We did not have any loan investments during the three months ended June 30, 2023.
Current wording
Interest income from loan investments amounted to $0.7 million for the three months ended September 30, 2024 as compared to zero for the same prior year period due to three new loan investments since the fourth quarter 2023. We did not have any loan investments during the three months ended September 30, 2023.
Previous wording
Property operating expensesincreased $1.4 million, or 30%, to $6.0 million for the three months ended June 30, 2024 as compared to $4.6 million for the same prior year period. The increase was primarily due to: (i) acquisition of Villas at Huffmeister during the first quarter 2024 and (ii) increase in expenses (primarily repairs and maintenance) incurred as part of our lease up stabilization strategy. The increase was partially offset by the sale of 90 homes in our portfolio since April 1, 2023. Property operating expenses consist of controllable (payroll, repairs and maintenance, turnover, administrative, advertising, and utilities) and non-controllable (real estate taxes and insurance) expenses. Controllable expenses were $3.2 million and $2.1 million, and non-controllable expenses were $2.8 million and $2.5 million, for the three months ended June 30, 2024 and 2023, respectively.
Current wording
Property operating expenses increased $1.3 million, or 25%, to $6.4 million for the three months ended September 30, 2024 as compared to $5.1 million for the same prior year period. The increase was primarily due to: (i) the acquisition of 294 units at Villas at Huffmeister during the first quarter 2024 and 200 units at Avenue at Timberlin Park during the third quarter 2024, and (ii) an increase in turnover expenses subsequent to initial renovation completed in previous years. The increase was partially offset by the sale of 176 units at Navigator Villas and 95 single-family units since July 1, 2023. Property operating expenses consist of controllable (payroll, repairs and maintenance, turnover, administrative, advertising, and utilities) and non-controllable (real estate taxes and insurance) expenses. Controllable expenses were $3.5 million and $2.6 million, and non-controllable expenses were $2.9 million and $2.5 million, for the three months ended September 30, 2024 and 2023, respectively.
Previous wording
General and administrative expenses amounted to $2.4 million for the three months ended June 30, 2024 as compared to $1.8 million for the same prior year period. Of the $2.4 million total expense for the three months ended June 30, 2024, $1.3 million related to direct costs incurred by us, while the remaining $1.1 million related to the operating expense reimbursement to our Manager, which includes rent, utilities, and IT expenses. The expense reimbursement to our Manager also included a $0.7 million reimbursement for accounting and legal services. Prior to the fourth quarter 2023, the Manager elected to not seek reimbursement for legal and accounting services during our first year of operations. For the second quarter 2024, we will pay the full operating expense reimbursement of $1.1 million to the Manager in cash; for the same prior year period, we paid the full operating expense reimbursement of $0.4 million to the Manager through the issuance of C-LTIP Units.
Current wording
General and administrative expenses amounted to $2.5 million for the three months ended September 30, 2024 as compared to $1.7 million for the same prior year period. Of the $2.5 million total expense for the three months ended September 30, 2024, $1.5 million related to direct costs incurred by us, while the remaining $1.0 million related to the operating expense reimbursement to our Manager, which includes rent, utilities, and IT expenses. The expense reimbursement to our Manager also included a $0.7 million reimbursement for accounting and legal services. Prior to the fourth quarter 2023, the Manager elected to not seek reimbursement for legal and accounting services during our first year of operations. For the third quarter 2024, we will pay the full operating expense reimbursement of $1.0 million to the Manager in cash; for the same prior year period, we paid the full operating expense reimbursement of $0.4 million to the Manager through the issuance of C-LTIP Units.
Previous wording
Management fees to related party amounted to $2.2 million for the three months ended June 30, 2024 as compared to $2.0 million for the same prior year period. The increase was due to an increase in equity primarily from our continuous registered offering of Series A Preferred Stock, which began in the third quarter of 2023. For the second quarter 2024, we will pay the base management fee of $2.2 million to the Manager as one half (50)% in C-LTIP Units and the remainder in cash; for the same prior year period, we paid the full base management fee of $2.0 million to the Manager through the issuance of C-LTIP Units.
Current wording
Management fees to related party amounted to $2.4 million for the three months ended September 30, 2024 as compared to $2.0 million for the same prior year period. The increase was due to an increase in equity primarily from our continuous registered offering of Series A Preferred Stock, which began in the third quarter of 2023. For the third quarter 2024, we will pay the base management fee of $2.4 million to the Manager as one half (50%) in C-LTIP Units and the remainder in cash; for the same prior year period, we paid the full base management fee of $2.0 million to the Manager through the issuance of C-LTIP Units.
Previous wording
Depreciation and amortization expenses were $4.8 million for the three months ended June 30, 2024 as compared to $4.0 million for the same prior year period, with the increase primarily attributable to the acquisition of Villas at Huffmeister during the first quarter 2024.
Current wording
Depreciation and amortization expenses were $4.9 million for the three months ended September 30, 2024 as compared to $4.1 million for the same prior year period, with the increase primarily attributable to the acquisition of Villas at Huffmeister during the first quarter 2024.
Previous wording
Other income and expense amounted to expense of $1.2 million for the three months ended June 30, 2024 as compared to income of $2.3 million for the same prior year period. This was due to a $2.2 million net increase in interest expense primarily attributable to an increase in the outstanding debt to $228.0 million at June 30, 2024 as compared to $167.5 million at June 30, 2023 and a decrease in the fair value of the interest rate caps and swaps, a $1.1 million impairment on real estate, a $0.3 million decrease in gain on sales of real estate investments, and $0.4 million in other expenses. These expense sources were partially offset by a $0.5 million increase in interest income from our short-term cash investments.
Current wording
Other income and expense amounted to income of $8.4 million for the three months ended September 30, 2024 as compared to income of $0.2 million for the same prior year period. This was due to a $10.3 million increase in gain on sales of real estate investments and a $0.6 million increase in interest income from our short-term cash investments. These income sources were partially offset by a $1.7 million net increase in interest expense primarily attributable to a decrease in the fair value of the interest rate caps and swaps and an increase in the outstanding debt to $231.8 million at September 30, 2024 as compared to $167.1 million at September 30, 2023 and a $1.0 million impairment on real estate.
Previous wording
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Current wording
Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
Previous wording
Rental and other property revenues increased $2.3 million, or 11%, to $22.7 million for the six months ended June 30, 2024 as compared to $20.4 million for the same prior year period. The increase was primarily due to: (i) acquisition of Villas at Huffmeister during the first quarter 2024 and (ii) operational improvements from our active management and organic market rent growth. The increase was partially offset by the sale of 90 homes in our portfolio since January 1, 2023.
Current wording
Rental and other property revenues increased $4.1 million, or 13%, to $34.7 million for the nine months ended September 30, 2024 as compared to $30.6 million for the same prior year period. The increase was primarily due to: (i) the acquisition of 294 units at Villas at Huffmeister during the first quarter 2024 and 200 units at Avenue at Timberlin Park during the third quarter 2024, and (ii) rental rate improvements from our active management and organic market rent growth. The increase was partially offset by the sale of 176 units of Navigator Villas and 104 single-family units in our portfolio since January 1, 2023.
Previous wording
Our average rent per occupied unit increased $58, or 3.7%, to $1,615 as compared to $1,557 during the prior year period. Average occupancy increased 30 basis points from 92.0% to 92.3% on a year over year basis.
Current wording
Our average rent per occupied unit increased $57, or 3.7%, to $1,617 as compared to $1,560 during the prior year period. Average occupancy remained consistent at 91.9% on a year over year basis.
Previous wording
Interest income from loan investments amounted to $1.0 million for the six months ended June 30, 2024 as compared to zero for the same prior year period due to three new loan investments since the fourth quarter 2023. We did not have any loan investments during the six months ended June 30, 2023.
Current wording
Interest income from loan investments amounted to $1.7 million for the nine months ended September 30, 2024 as compared to zero for the same prior year period due to three new loan investments since the fourth quarter 2023. We did not have any loan investments during the nine months ended September 30, 2023.
Previous wording
Property operating expensesincreased $1.9 million, or 20%, to $11.0 million for the six months ended June 30, 2024 as compared to $9.1 million for the same prior year period. The increase was primarily due to: (i) acquisition of Villas at Huffmeister during the first quarter 2024 and (ii) increase in expenses (primarily repairs and maintenance) incurred as part of our lease up stabilization strategy. The increase was partially offset by the sale of 90 homes in our portfolio since January 1, 2023. Property operating expenses consist of controllable (payroll, repairs and maintenance, turnover, administrative, advertising, and utilities) and non-controllable (real estate taxes and insurance) expenses. Controllable expenses were $5.7 million and $4.2 million, and non-controllable expenses were $5.3 million and $4.9 million, for the six months ended June 30, 2024 and 2023, respectively.
Current wording
Property operating expensesincreased $3.2 million, or 23%, to $17.4 million for the nine months ended September 30, 2024 as compared to $14.2 million for the same prior year period. The increase was primarily due to: (i) the acquisition of 294 units at Villas at Huffmeister during the first quarter 2024 and 200 units at Avenue at Timberlin Park during the third quarter 2024, and (ii) an increase in turnover expenses subsequent to initial renovation completed in previous years. The increase was partially offset by the sale of 176 units at Navigator Villas and 104 single-family units since January 1, 2023. Property operating expenses consist of controllable (payroll, repairs and maintenance, turnover, administrative, advertising, and utilities) and non-controllable (real estate taxes and insurance) expenses. Controllable expenses were $9.2 million and $6.8 million, and non-controllable expenses were $8.2 million and $7.4 million, for the nine months ended September 30, 2024 and 2023, respectively.
Previous wording
Property management and asset management fee expenses were $2.3 million for the six months ended June 30, 2024 as compared to $2.2 million for the same prior year period. Property management fees are based on a stated percentage of property revenues and asset management fees are based on a stated percentage of capital contributions or assets under management, where applicable.
Current wording
Property management and asset management fee expenses were $3.5 million for the nine months ended September 30, 2024 as compared to $3.3 million for the same prior year period. Property management fees are based on a stated percentage of property revenues and asset management fees are based on a stated percentage of capital contributions or assets under management, where applicable.
Previous wording
General and administrative expenses amounted to $5.3 million for the six months ended June 30, 2024 as compared to $3.8 million for the same prior year period. Of the $5.3 million total expense for the six months ended June 30, 2024, $3.0 million related to direct costs incurred by us, while the remaining $2.3 million related to the operating expense reimbursement to our Manager, which includes rent, utilities, and IT expenses. The expense reimbursement to our Manager also included a $1.5 million reimbursement for accounting and legal services. Prior to the fourth quarter 2023, the Manager elected to not seek reimbursement for legal and accounting services during our first year of operations. Commencing with the operating expense reimbursement for the first quarter 2024, we paid, and expect to continue to pay, the operating expense reimbursement to the Manager entirely in cash; prior to the first quarter 2024, we paid the full operating expense reimbursement to the Manager through the issuance of C-LTIP Units.
Current wording
General and administrative expenses amounted to $7.8 million for the nine months ended September 30, 2024 as compared to $5.5 million for the same prior year period. Of the $7.8 million total expense for the nine months ended September 30, 2024, $4.5 million related to direct costs incurred by us, while the remaining $3.3 million related to the operating expense reimbursement to our Manager, which includes rent, utilities, and IT expenses. The expense reimbursement to our Manager also included a $2.2 million reimbursement for accounting and legal services. Prior to the fourth quarter 2023, the Manager elected to not seek reimbursement for legal and accounting services during our first year of operations. Commencing with the operating expense reimbursement for the first quarter 2024, we paid, and expect to continue to pay, the operating expense reimbursement to the Manager entirely in cash; prior to the first quarter 2024, we paid the full operating expense reimbursement to the Manager through the issuance of C-LTIP Units.
Previous wording
Management fees to related party amounted to $4.2 million for the six months ended June 30, 2024 as compared to $3.9 million for the same prior year period. The increase was due to an increase in equity primarily from our continuous registered offering of Series A Preferred Stock, which began in the third quarter of 2023. Commencing with the base management fee for the first quarter 2024, we paid, and expect to continue to pay, the base management fee to the Manager as one half (50)% in C-LTIP Units and the remainder in cash; prior to the first quarter 2024, we paid the full base management fee to the Manager through the issuance of C-LTIP Units.
Current wording
Management fees to related party amounted to $6.6 million for the nine months ended September 30, 2024 as compared to $5.9 million for the same prior year period. The increase was due to an increase in equity primarily from our continuous registered offering of Series A Preferred Stock, which began in the third quarter of 2023. Commencing with the base management fee for the first quarter 2024, we paid, and expect to continue to pay, the base management fee to the Manager as one half (50%) in C-LTIP Units and the remainder in cash; prior to the first quarter 2024, we paid the full base management fee to the Manager through the issuance of C-LTIP Units.
Previous wording
Acquisition and other transaction costs amounted to zero for the six months ended June 30, 2024 as compared to $1.8 million for the same prior year period. Acquisition costs can vary greatly, and the costs incurred in any given period may be significantly different in future periods. The 2023 expense primarily relates to the transition of property management services for over 1,000 homes.
Current wording
Acquisition and other transaction costs amounted to zero for the nine months ended September 30, 2024 as compared to $1.8 million for the same prior year period. Acquisition costs can vary greatly, and the costs incurred in any given period may be significantly different in future periods. The 2023 expense primarily relates to the transition of property management services for over 1,000 homes.
Previous wording
Depreciation and amortization expenses were $8.8 million for the six months ended June 30, 2024 as compared to $8.0 million for the same prior year period, with the increase primarily attributable to the acquisition of Villas at Huffmeister during the first quarter 2024.
Current wording
Depreciation and amortization expenses were $13.7 million for the nine months ended September 30, 2024 as compared to $12.1 million for the same prior year period, with the increase primarily attributable to the acquisition of Villas at Huffmeister during the first quarter 2024.
Previous wording
Other income and expense amounted to expense of $0.4 million for the six months ended June 30, 2024 as compared to income of $1.9 million for the same prior year period. This was due to a $2.3 million net increase in interest expense primarily attributable to an increase in the outstanding debt to $228.0 million at June 30, 2024 as compared to $153.2 million at December 31, 2022 and a decrease in the fair value of the interest rate caps and swaps, a $1.2 million impairment on real estate, and $0.4 million in other expenses. These expense sources were partially offset by a $1.6 million increase in interest income from our short-term cash investments.
Current wording
Other income and expense amounted to income of $8.0 million for the nine months ended September 30, 2024 as compared to income of $2.1 million for the same prior year period. This was due to a $10.3 million increase in gain on sales of real estate investments and a $2.2 million increase in interest income from our short-term cash investments. These income sources were partially offset by a $4.1 million net increase in interest expense primarily attributable to a decrease in the fair value of the interest rate caps and swaps and an increase in the outstanding debt to $231.8 million at September 30, 2024 as compared to $153.2 million at December 31, 2022, a $2.2 million impairment on real estate, and a $0.3 million increase in provision for credit losses.
Previous wording
However, NOI should only be used as a supplemental measure of our financial performance. The following table reflects net loss attributable to common stockholders together with a reconciliation to NOI, as computed in accordance with GAAP, for the periods presented (amounts in thousands):
Current wording
However, NOI should only be used as a supplemental measure of our financial performance. The following table reflects net income (loss) attributable to common stockholders together with a reconciliation to NOI, as computed in accordance with GAAP, for the periods presented (amounts in thousands):
Previous wording
Our ability to access capital on favorable terms as well as to use cash from operations to continue to meet our short-term liquidity needs could be affected by various risks and uncertainties, including the risks detailed in Part I, Item 1A titled “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC on March 12, 2024. While consolidated occupancy excluding units classified as held for sale and down/renovation units remains strong at 95.4% as of June 30, 2024, in future periods we may experience reduced levels of tenant retention, and reduced foot traffic and lease applications from prospective tenants.
Current wording
Our ability to access capital on favorable terms as well as to use cash from operations to continue to meet our short-term liquidity needs could be affected by various risks and uncertainties, including the risks detailed in Part I, Item 1A titled “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC on March 12, 2024. While consolidated occupancy excluding units classified as held for sale and down/renovation units remains strong at 94.3% as of September 30, 2024, in future periods we may experience reduced levels of tenant retention, and reduced foot traffic and lease applications from prospective tenants.
Previous wording
At June 30, 2024, the aggregate amount of our contractual commitments to fund future cash obligations in certain of our loan, preferred equity and consolidated real estate investments was $17.4 million.
Current wording
As of September 30, 2024, we have contractual commitments to fund future cash obligations in certain of our loan and preferred equity investments in the aggregate of $7.8 million. In addition, we have made a commitment to fund the total estimated project costs of $56.9 million for the development of Abode Wendell Falls, a 170-unit build-to-rent development project in Wendell, North Carolina. As of September 30, 2024, the remaining estimated project costs to complete Abode Wendell Falls is $50.0 million.
Previous wording
As we did in the six months ended June 30, 2024, we may also selectively sell consolidated operating assets at appropriate times, which would be expected to generate cash sources for both our short-term and long-term liquidity needs.
Current wording
As we did in the nine months ended September 30, 2024, we may also selectively sell consolidated operating assets at appropriate times, which would be expected to generate cash sources for both our short-term and long-term liquidity needs.
Previous wording
We also have preferred equity interests in properties that are in various stages of development, in lease-up and operating, and our preferred equity investments are structured to provide a current and/or accrued preferred return during all phases. Each joint venture in which we own a preferred equity interest is required to redeem our preferred equity interests, plus any accrued preferred return, based on a fixed maturity date, generally in relation to the property’s construction loan or mortgage loan maturity. Upon redemption of the preferred equity interests, our income, FFO, CFFO and cash flows could be reduced below the preferred returns currently being recognized. Alternatively, if the joint ventures do not redeem our preferred equity interest when required, our income, FFO, CFFO and cash flows could be reduced if the development project does not produce sufficient cash flow to pays its operating expenses, debt service and preferred return obligations. As we evaluate our capital position and capital allocation strategy, we may consider alternative means of financing our development loan and preferred equity investment activities at the subsidiary level.
Current wording
We also have preferred equity interests in properties that are in various stages of development and in lease-up, and our preferred equity investments are structured to provide a current and/or accrued preferred return during all phases. Each joint venture in which we own a preferred equity interest is required to redeem our preferred equity interests, plus any accrued preferred return, based on a fixed maturity date, generally in relation to the property’s construction loan or mortgage loan maturity. Upon redemption of the preferred equity interests, our income, FFO, CFFO and cash flows could be reduced below the preferred returns currently being recognized. Alternatively, if the joint ventures do not redeem our preferred equity interest when required, our income, FFO, CFFO and cash flows could be reduced if the development project does not produce sufficient cash flow to pays its operating expenses, debt service and preferred return obligations. As we evaluate our capital position and capital allocation strategy, we may consider alternative means of financing our development loan and preferred equity investment activities at the subsidiary level.
Previous wording
As of June 30, 2024, we have off-balance sheet arrangements that may have a material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital resources or capital expenditures. At June 30, 2024, we own interests in seven joint ventures that are accounted for as held to maturity debt securities.
Current wording
As of September 30, 2024, we have off-balance sheet arrangements that may have a material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital resources or capital expenditures. At September 30, 2024, we own interests in six joint ventures that are accounted for as held to maturity debt securities.
Previous wording
As of June 30, 2024, we held twenty-one real estate investments, consisting of twelve consolidated investments and nine preferred equity and loan investments, with the twenty-one investments representing an aggregate of 4,362 residential units. During the six months ended June 30, 2024, net cash provided by operating activities was $2.4 million after net loss of $8.3 million was adjusted for the following:
Current wording
As of September 30, 2024, we held twenty real estate investments, consisting of twelve consolidated investments and eight preferred equity and loan investments, with the twenty investments representing an aggregate of 4,000 residential units. During the nine months ended September 30, 2024, net cash provided by operating activities was $4.1 million after net loss of $4.8 million was adjusted for the following:
Previous wording
During the six months ended June 30, 2024, net cash used in investing activities was $25.2 million, due to the following:
Current wording
During the nine months ended September 30, 2024, net cash used in investing activities was $22.4 million, primarily due to the following:
Previous wording
During the six months ended June 30, 2024, net cash provided by financing activities was $60.0 million, due to the following:
Current wording
During the nine months ended September 30, 2024, net cash provided by financing activities was $96.8 million, due to the following:
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Previous report — wording carried elsewhere
Acquisition and other transaction costs amounted to zero for the three months ended June 30, 2024 as compared to $0.3 million for the same prior year period. Acquisition costs can vary greatly, and the costs incurred in any given period may be significantly different in future periods. The 2023 expense primarily relates to the transition of property management services for over 1,000 homes.