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Reports Results for First Quarter 2022 By: Preferred Apartment Communities, Inc. via Business Wire May 09, 2022 at 16:24 PM EDT Total Revenues $104.9 million for Q1 2022; down 9.4% from Q1 2021 due primarily to absence of $18.7 million of office property revenues _____________ Net Loss per Share $(0.62) per share for Q1 2022; $0.11 per share improvement over Q1 2021 _____________ Core FFO per Share* $0.19 per share for Q1 2022 versus $0.25 per share for Q1 2021 _____________ AFFO per Share* $0.15 per share for Q1 2022 versus $0.18 per share for Q1 2021 _____________ Multifamily Same Store Results* Same-store rental and other property revenues increased 11.9% and same-store net operating income increased 15.9% for Q1 2022 versus Q1 2021 _____________ Two Real Estate Loans and One Preferred Equity Investment Closed During First Quarter 2022 Aggregate commitment amount of $48.1 million 780 multifamily units added to PAC's acquisition pipeline _____________ One Multifamily Community Acquired During First Quarter 2022 Lirio at Rafina, a 280-unit community located in Orlando, Florida _____________ PAC Enters Multifamily Development Space PAC to develop a 262-unit community in Wilmington, North Carolina, will invest $14.8 million in equity to capitalize the project _____________ PAC Enters into a Definitive Agreement with Blackstone Real Estate Income Trust, Inc. Cash transaction of $25 per share of Common Stock Closing expected during Q2 2022 *Core FFO and AFFO results are per weighted-average share and Class A OP Unit outstanding. Core FFO, AFFO and same-store net operating income are non-GAAP measures that are defined herein. Preferred Apartment Communities, Inc. (NYSE: APTS) ("we," "our," the "Company," "Preferred Apartment Communities" or "PAC") today reported results for the quarter ended March 31, 2022. Unless otherwise indicated, all per share results are reported based on the basic weighted average shares of our common stock, par value $0.01 per share ("Common Stock"), Class A Units ("Class A Units") of the Preferred Apartment Communities Operating Partnership (our "Operating Partnership") outstanding. See Definitions of Non-GAAP Measures. Conference Call As a result of our entering into a definitive merger agreement with affiliates of Blackstone Real Estate Income Trust, Inc. ("BREIT"), we will not have a conference call to discuss our first quarter ended 2022 earnings. For more details on the merger, see our 8-K filed on February 16, 2022. For Further Information Paul Cullen Executive Vice President-Investor Relations Chief Marketing Officer investorrelations@pacapts.com 770-818-4144 Operating Results Our operating results are presented below. Three months ended March 31, % change 2022 2021 Revenues (in thousands) $ 104,880 $ 115,700 (9.4 ) % Per share data: Net loss (1) $ (0.62 ) $ (0.73 ) — FFO (2) $ 0.05 $ 0.16 (68.8 ) % Core FFO (2) $ 0.19 $ 0.25 (24.0 ) % AFFO (2) $ 0.15 $ 0.18 (16.7 ) % Dividends (3) $ 0.175 $ 0.175 — (1) Per weighted average share of Common Stock outstanding for the periods indicated. (2) FFO, Core FFO and AFFO results are presented per basic weighted average share of Common Stock and Class A Unit in our Operating Partnership outstanding for the periods indicated. See Reconciliations of FFO Attributable to Common Stockholders and Unitholders, Core FFO and AFFO to Net Loss Attributable to Common Stockholders and Definitions of Non-GAAP Measures. (3) Per share of Common Stock and Class A Unit outstanding. Financial Our total revenues for the quarter ended March 31, 2022 decreased approximately $10.8 million, or 9.4%, to $104.9 million from the quarter ended March 31, 2021, due primarily to the absence of revenues from the eight office properties and one real estate loan investment that we sold during the third and fourth quarters of 2021. The disposed office properties contributed approximately $18.7 million, or 16.1% of our total revenues for the quarter ended March 31, 2021. Our net loss per share was $(0.62) and $(0.73) for the three-month periods ended March 31, 2022 and 2021, respectively. Funds From Operations, or FFO, was $0.05 and $0.16 per weighted average share of Common Stock and Class A Unit outstanding for the three months ended March 31, 2022 and 2021, respectively. The decline in FFO per share was driven by: * Lower operating results following the sale of our office properties of $(0.17) per share; * Lower cash dividend requirements on our preferred stock of $0.14 per share; * Lower revenues from our real estate loan portfolio of $(0.10) per share; * Merger-related costs incurred of $(0.09) per share; * Improved property operating performance, lower interest expense and other items of $0.06 per share; and * Deemed dividends due to calls and cash redemptions of our preferred stock of $0.05 per share. Our Core FFO per share decreased to $0.19 for the first quarter 2022 from $0.25 for the first quarter 2021, due to: * Lower operating results following the sale of our office properties of $(0.17) per share; * Lower cash dividend requirements on our preferred stock of $0.14 per share; * Lower revenues from our real estate loan portfolio of $(0.10) per share; and * Improved property operating performance, lower interest expense and other items of $0.06 per share. Our AFFO per share decreased to $0.15 for the first quarter 2022, from $0.18 for the first quarter 2021, due to: * Lower operating results following the sale of our office properties of $(0.17) per share; * Lower cash dividend requirements on our preferred stock of $0.14 per share; * Lower revenues from our real estate loan portfolio of $(0.10) per share; * Improved property operating performance, lower interest expense and other items of $0.06 per share; and * Lower recurring capital expenditures of $0.03 per share. Our Core FFO payout ratio to Common Stockholders and Unitholders was approximately 102.1% and our Core FFO payout ratio to our preferred stockholders was approximately 71.4% for the first quarter 2022. (A) Our AFFO payout ratio to Common Stockholders and Unitholders was approximately 126.9% and our AFFO payout ratio to our preferred stockholders was approximately 75.6% for the first quarter 2022. (A) We calculate the Core FFO and AFFO payout ratios to Common Stockholders as the ratio of Common Stock dividends and distributions to Core FFO and AFFO. We calculate the Core FFO and AFFO payout ratios to preferred stockholders as the ratio of preferred stock dividends to the sum of preferred stock dividends and Core FFO and AFFO. Since our operations resulted in a net loss from continuing operations for the periods presented, a payout ratio based on net loss is not calculable. See Definitions of Non-GAAP Measures. Operational Our multifamily communities' same-store rental and other property revenues increased 11.9%, same-store property operating expenses increased 6.3% and same-store net operating income increased 15.9% for the quarter ended March 31, 2022 versus 2021. Our same-store multifamily communities include 10,442 units, or 84.7% of our aggregate 12,322 units in our multifamily community portfolio. Our rental rates for our multifamily same-store properties for new and renewal leases increased 16.6% and 11.9%, respectively, and 14.1% blended for first quarter 2022 as compared to the expiring leases, excluding shorter-term leases of two months or less. Our rental rates for our multifamily same-store properties for new and renewal leases increased 15.7% and 11.9%, respectively, and 13.7% blended for April 2022 as compared to the expiring leases, excluding shorter-term leases of two months or less. As of March 31, 2022, the average age of our multifamily communities was approximately 6.6 years, which we believe is the youngest in the public multifamily REIT industry. As of March 31, 2022, all of our owned multifamily communities had achieved stabilization except for Lirio at Rafina, which was acquired during the first quarter 2022. We define stabilization as reaching 93% occupancy for all three months within a single quarter. The average physical occupancy of our same-store multifamily communities increased to 96.3% for the three-month period ended March 31, 2022 from 95.8% for the three-month period ended March 31, 2021 but was unchanged from the three-month period ended December 31, 2021. Financing and Capital Markets As of March 31, 2022, approximately 98.3% of our permanent property-level mortgage debt had fixed interest rates and approximately 0.9% had variable interest rates which are capped. We believe we are well protected against potential increases in market interest rates. Our overall weighted average interest rate for our mortgage debt portfolio was 3.37% for multifamily communities, 4.35% for our remaining office properties, 3.91% for grocery-anchored retail properties and 3.57% in the aggregate. During the first quarter 2022, we issued and sold an aggregate of 3,167 shares of preferred stock prior to February 10, 2022, when we ceased issuing new shares of preferred stock. We redeemed or called an aggregate of 21,189 shares of preferred stock, resulting in a net reduction of 18,022 outstanding shares of preferred stock, for a net cash outflow of approximately $17.7 million. During the first quarter 2022, warrants were exercised by the holders at a weighted average price of $19.68 per share and, as a result, we collected approximately $194.0 million from the issuance of an aggregate of 9,858,480 shares of Common Stock. We issued no shares of Common Stock under the 2019 ATM Offering during the first quarter 2022. At March 31, 2022, our leverage, as measured by the ratio of our debt to the undepreciated book value of our total assets, was approximately 55.8%. At March 31, 2022, we had no outstanding balance and $200.0 million available to be drawn on our revolving line of credit. Our outstanding shares of preferred stock have decreased since January 1, 2019, as summarized in the following chart: Shares of Preferred Stock 2019 2020 2021 First Quarter 2022 Issued 552,938 228,788 122,297 3,167 Redeemed by holders (68,512) (164,286) (100,946) (21,189) Called by PAC — (208,786) (320,746) — Net increase (decrease) 484,426 (144,284) (299,395) (18,022) Total outstanding at year end 2,136,257 1,991,973 1,692,578 1,674,556 Significant Transactions On February 10, 2022, we amended our real estate loan investment supporting The Platform, a 551-unit multifamily community located in San Jose, California. The maturity date of the instrument was extended to August 13, 2022 and a second extension option of December 31, 2022 was added. The all-in interest rate was reduced to 9.5% per annum beginning on the original maturity date of February 13, 2022 and increases in steps each three-month period up to 11.0% per annum on November 14, 2022. As of April 30, 2022, the property's physical occupancy was 92.6%. On February 11, 2022, we closed on a real estate loan investment of up to approximately $16.7 million supporting a 286-unit multifamily community in the Orlando, Florida MSA. On February 15, 2022, we refinanced our Chestnut Farm multifamily community with permanent mortgage financing in the amount of approximately $52.3 million, which bears interest at a rate of 3.25% and matures on March 1, 2032. As previously announced, on February 16, 2022, we entered into an agreement and plan of merger (the “Merger Agreement”) with Pike Parent LLC (“Parent”), Pike Merger Sub I LLC (“Merger Sub I”), Pike Merger Sub II LLC (“Merger Sub II”), Pike Merger Sub III LLC (“Merger Sub III” and, together with Parent, Merger Sub I and Merger Sub II, the “Parent Parties”), the Operating Partnership and PAC Operations, LLC (“Operations”). The Parent Parties are affiliates of BREIT, which is an affiliate of Blackstone Inc. Pursuant to the Merger Agreement, (i) Merger Sub II will merge with and into the Operating Partnership (the “Partnership Merger”) with the Operating Partnership being the surviving entity and immediately following the consummation of the Partnership Merger, (ii) Operations will merge with and into Merger Sub III (the “Operations Merger”) with Merger Sub III being the surviving entity and immediately following the Operations Merger, (iii) the Company will merge with and into Merger Sub I (the “Company Merger” and, together with the Partnership Merger and the Operations Merger, the “Mergers”) with Merger Sub I being the surviving entity. Pursuant to the Merger Agreement, (i) each share of Common Stock that is issued and outstanding immediately prior to the Mergers will be automatically cancelled and converted into the right to receive $25.00 in cash and (ii) each share of preferred stock that is issued and outstanding immediately prior to the Mergers will be automatically cancelled and converted into the right to receive $1,000 in cash, plus any accrued but unpaid dividends, if any, to and including the closing date of the Mergers. Notwithstanding the forgoing, any shares of Common Stock or preferred stock held by the Company or any subsidiary of the Company or by the Parent Parties or any of their respective subsidiaries, if any, will no longer be outstanding and will automatically be retired and will cease to exist, and no consideration will be paid in connection with the Mergers. The Mergers are subject to customary closing conditions, including approval by the Company’s common stockholders at a special meeting to be held on June 7, 2022. The Mergers are expected to close on the third business day after the conditions to closing are satisfied or waived, including approval of the Company’s stockholders of the Mergers. The Company can provide no assurances regarding whether the Mergers will close as expected during the second quarter of 2022, or at all. The board of directors of the Company has unanimously approved the Merger Agreement and has recommended approval of the Mergers by the Company’s common stockholders. On February 25, 2022, we closed on the acquisition of Lirio at Rafina, a 280-unit multifamily community located in the Orlando, Florida MSA. On February 28, 2022, we closed on a real estate loan investment of up to approximately $17.2 million supporting a 242-unit multifamily community in Naples, Florida. On March 2, 2022, we closed on a 65% interest in a $65.0 million joint venture project to develop The Helmsman, a 262-unit multifamily community to be located in Wilmington, North Carolina. This transaction represents our entry into the multifamily development space. On March 31, 2022, we closed on a preferred equity investment of up to approximately $14.3 million supporting The Shoals, a 252-unit multifamily community in Greenville, South Carolina. The investment will pay a fixed return of 12.0% per annum and has a term of 42 months, with a one-year extension option. Subsequent to Quarter End On April 5, 2022, we sold our Champions Village grocery-anchored shopping center in Houston, Texas for $45.0 million and recorded a gain on the sale of approximately $1.9 million. On April 20, 2022, we sold our Sweetgrass Corner grocery-anchored shopping center in Charleston, South Carolina for $17.0 million and recorded a gain on the sale of approximately $4.3 million. Between April 1, 2022 and April 30, 2022, the Company issued 1,451,700 shares of Common Stock at an average price of $19.70 per share from exercises of Warrants and collected approximately $28.6 million. On April 12, 2022, our Vintage Horizon West real estate loan investment was repaid in full. 2022 Guidance Due to the pending merger with affiliates of BREIT, we are not issuing guidance at this time with respect to our 2022 financial outlook. Real Estate Assets At March 31, 2022, our portfolio of owned real estate assets and potential additions from purchase options we held from our real estate loan investments (and one multifamily development project currently under construction) consisted of: Owned as of March 31, 2022 (1) Potential additions (2) Potential total Residential properties: Properties 42 12 54 Units 12,332 3,639 15,971 Development properties 1 ( 4) — 1 Units — 262 262 Grocery-anchored shopping centers: Properties 54 1 55 Gross leasable area (square feet) 6,210,778 85,500 ( 3) 6,296,278 Office buildings: Properties 2 — 2 Rentable square feet 1,072,000 — 1,072,000 Land 1 — 1 (1) One multifamily community and two grocery-anchored shopping centers are owned through consolidated joint ventures. One grocery-anchored shopping center is an investment in an unconsolidated joint venture. (2) We evaluate each project individually and we make no assurance that we will acquire any of the underlying properties from our real estate loan investment portfolio. (3) Estimated square footage of Nexton Shopping Center development. (4) The Helmsman, a 262-unit multifamily development, will consist of approximately 2,600 square feet of gross leasable area of ground floor retail space which is not included in the totals above for grocery-anchored shopping centers. Same-Store Financial Data The following charts present same-store operating results for the Company’s multifamily communities. We define our population of same-store multifamily communities as those that have achieved occupancy at or above 93% for all three months within a single quarter ("stabilized") before the beginning of the prior year and that have been owned for at least 15 full months as of the end of the first quarter of the current year, enabling comparisons of the current year quarterly and annual reporting periods to the prior year comparative periods. The Company excludes the operating results of properties for which construction of adjacent phases has commenced and properties which are undergoing significant capital projects, have sustained significant casualty losses, or are being held for sale as of the end of the reporting period. For the periods presented, same-store operating results consist of the operating results of our multifamily communities, comprising an aggregate 10,442 units, or 84.7% of our multifamily units. Same-store net operating income is a non-GAAP measure that is most directly comparable to net loss, as shown in the reconciliation below. See Definitions of Non-GAAP Measures. Reconciliation of Net Loss to Multifamily Communities' Same-Store Net Operating Income ("NOI") Three months ended: (in thousands) 3/31/2022 3/31/2021 Net loss $ (7,844 ) $ (2,709 ) Add: Equity stock compensation 1,223 574 Depreciation and amortization 38,161 45,827 Interest expense 23,160 26,991 General and administrative 7,842 7,539 Merger-related costs 4,913 — Loss from unconsolidated joint venture 108 194 Management Internalization 244 245 Allowance for expected credit losses 572 522 Less: Interest revenue on notes receivable 6,583 10,512 Interest revenue on related party notes receivable 197 405 Miscellaneous revenues 198 324 Gain on sale of real estate — 798 Loss on sale of land (22 ) — Loss on extinguishment of debt (363 ) — Property net operating income 61,786 67,144 Less: Non same-store property revenues (45,355 ) (57,498 ) Add: Non same-store property operating expenses 15,151 17,600 Same-store net operating income $ 31,582 $ 27,246 Multifamily Communities' Same-Store NOI Three months ended: (in thousands) 3/31/2022 3/31/2021 $ change % change Revenues: Rental and other property revenues $ 52,546 $ 46,961 $ 5,585 11.9 % Operating expenses: Property operating and maintenance 8,358 7,746 612 7.9 % Payroll 3,697 3,574 123 3.4 % Real estate taxes and insurance 8,909 8,395 514 6.1 % Total operating expenses 20,964 19,715 1,249 6.3 % Same-store net operating income $ 31,582 $ 27,246 $ 4,336 15.9 % Same-store average physical occupancy 96.3 % 95.8 % 0.5 % Corporate level expenses related to the management and operations of the multifamily portfolio are allocated on a per unit basis to property NOI and are included in Multifamily Same-Store NOI. Dividends Quarterly Dividends on Common Stock and Class A OP Units On February 24, 2022, our board of directors declared a quarterly dividend on our Common Stock of $0.175 per share, that was paid on April 14, 2022 to stockholders of record on March 15, 2022. In conjunction with the Common Stock dividend, our Operating Partnership declared a distribution on its Class A Units of $0.175 per unit for the first quarter 2022, which was paid on April 14, 2022 to all Class A Unit holders of record as of March 15, 2022. The Merger Agreement prohibits us from declaring additional dividends on our Common Stock prior to the closing of the Mergers. Monthly Dividends on Preferred Stock We declared monthly dividends of $5.00 per share on our Series A Preferred Stock, which totaled approximately $21.2 million for the first quarter 2022 and represents a 6% annual yield. We declared monthly dividends of $5.00 per share on our Series A1 Preferred Stock, which totaled approximately $3.7 million for the first quarter 2022 and also represents a 6% annual yield. We declared dividends totaling approximately $1.4 million on our Series M Preferred Stock, or mShares, for the first quarter 2022. The mShares have a dividend rate that escalates from 5.75% in year one of issuance to 7.50% in year eight and thereafter. We declared dividends totaling approximately $723,000 on our Series M1 Preferred Stock for the first quarter 2022. The Series M1 Preferred Stock has a dividend rate that escalates from 6.1% in year one of issuance to 7.1% in year ten and thereafter. Forward-Looking Statements “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: redemptions of Series A Preferred Stock, potential additions of properties from purchase options and rights of first offer from our real estate loan investments, development properties, goals and performance are, by definition, and certain other statements in this Earnings Release and Supplemental Financial Data Report may constitute, “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance, achievements or transactions to be materially different from the results, guidance, goals, performance, achievements or transactions expressed or implied by the forward-looking statements. These statements may be identified by the use of forward-looking terminology such as "may," "trend," "will," "expects," "plans," "estimates," "anticipates," "projects," "intends," "believes," "strategy," "goals," "objectives," "outlook" and similar expressions. These risks, uncertainties and contingencies include, but are not limited to, (a) the impact of the COVID-19 pandemic, including any variants, and related federal, state and local government actions on PAC’s business operations and the economic conditions in the markets in which PAC operates; (b) PAC’s ability to mitigate the impacts arising from COVID-19 or any variants thereof; (c) risks related to the proposed acquisition by BREIT, including the possibility that the consummation of the transaction could be delayed or not completed, and the effect of the announcement or pendency of the transaction on our business; (d) PAC's ability to make distributions to its stockholders in the future and (e) those disclosed in PAC's filings with the SEC. Factors that impact such forward-looking statements include, among others, our business and investment strategy; legislative or regulatory actions; the state of the U.S. economy generally or in specific geographic areas; economic trends and economic recoveries; changes in operating costs, including real estate taxes, utilities and insurance costs; our ability to obtain and maintain debt or equity financing; financing and advance rates for our target assets; our leverage level; changes in the values of our assets; the occurrence of natural or man-made disasters; availability of attractive investment opportunities in our target markets; our ability to maintain our qualification as a real estate investment trust, or REIT, for U.S. federal income tax purposes; availability of quality personnel; our understanding of our competition and market trends in our industry; and interest rates, real estate values, the debt securities markets and the general economy. Except as otherwise required by the federal securities laws, we assume no liability to update the information in this Earnings Release and Supplemental Financial Data Report. We refer you to the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2021 that was filed with the SEC on February 28, 2022, which includes a discussion of various factors that could adversely affect our financial results. Such risk factors and information may be updated or supplemented by our Form 10-K, Form 10-Q and Form 8-K filings and other documents filed from time to time with the SEC. COVID-19 Our percentages of rent collected remained stabilized at or near pre-pandemic levels during the first quarter 2022. While the impacts of COVID-19 and its variants are continuing, the effects on our operations have been manageable and we believe this condition will persist, barring a dramatic change in the trajectory of the pandemic. We are continuing to monitor the spread and impact of the variants of COVID-19 as well as vaccination rates in our markets. Preferred Apartment Communities, Inc. Condensed Consolidated Statements of Operations (Unaudited) Three months ended March 31, (In thousands, except per-share figures) 2022 2021 Revenues: Rental and other property revenues $ 97,902 $ 104,459 Interest income on loans and notes receivable 6,583 10,512 Interest income from related parties 197 405 Miscellaneous revenues 198 324 Total revenues 104,880 115,700 Operating expenses: Property operating and maintenance 14,863 15,249 Property salary and benefits 4,655 4,821 Property management costs 792 1,105 Real estate taxes and insurance 15,806 16,140 General and administrative 7,842 7,539 Merger-related costs 4,913 — Equity compensation to directors and executives 1,223 574 Depreciation and amortization 38,161 45,827 Allowance for expected credit losses 572 522 Management Internalization expense 244 245 Total operating expenses 89,071 92,022 Operating income before loss from unconsolidated joint venture and gain on sale of real estate 15,809 23,678 Loss from unconsolidated joint venture (108 ) (194 ) Gain on sale of real estate, net — 798 Operating income 15,701 24,282 Interest expense 23,160 26,991 Loss on extinguishment of debt (363 ) — Loss on sale of land (22 ) — Net loss (7,844 ) (2,709 ) Net loss attributable to non-controlling interests 30 62 Net loss attributable to the Company (7,814 ) (2,647 ) Dividends to preferred stockholders (27,033 ) (33,820 ) Dividends to holders of unvested restricted stock (137 ) (142 ) Net loss attributable to common stockholders $ (34,984 ) $ (36,609 ) Net loss per share of Common Stock available to common stockholders, basic and diluted $ (0.62 ) $ (0.73 ) Weighted average number of shares of Common Stock outstanding, basic and diluted 56,255 50,033 Reconciliation of FFO Attributable to Common Stockholders and Unitholders, Core FFO and AFFO to Net Loss Attributable to Common Stockholders Three months ended March 31, (In thousands, except per-share figures) 2022 2021 Net loss attributable to common stockholders (See note 1) $ (34,984 ) $ (36,609 ) Add: Depreciation of real estate assets 32,274 36,832 Amortization of acquired intangible assets and deferred leasing costs 5,620 8,710 Net loss attributable to Class A Unitholders (See note 2) (64 ) (33 ) Gain on sale of real estate — (798 ) FFO attributable to common stockholders and Unitholders 2,846 8,102 Acquisition and pursuit costs 100 4 Loan cost amortization on acquisition line of credit and loan coordination fees (See note 3) 301 424 Payment of costs related to property refinancing 363 — Internalization costs (See note 4) 244 245 Corporate governance and merger-related costs 5,291 — Deemed dividends for redemptions of and non-cash dividends on preferred stock, plus expenses incurred on calls of preferred stock (See note 5) 1,682 3,827 Expenses related to the COVID-19 global pandemic — 54 Core FFO attributable to common stockholders and Unitholders 10,827 12,656 Add: Non-cash equity compensation to directors and executives 1,223 574 Non-cash income for current expected credit losses (See note 12) 240 117 Amortization of loan closing costs (See note 6) 1,294 1,212 Depreciation/amortization of non-real estate assets 451 444 Net loan origination fees received (See note 7) 683 817 Deferred interest income received (See note 8) — 2,917 Amortization of lease inducements (See note 9) 447 448 Cash received in excess of (exceeded by) amortization of purchase option termination revenues (See note 10) — 250 Less: Non-cash loan interest income (See note 11) (2,027 ) (2,874 ) Cash paid for loan closing costs — (10 ) Amortization of acquired real estate intangible liabilities and straight-line rent adjustments (See note 13) (1,604 ) (3,315 ) Amortization of deferred revenues (See note 14) (940 ) (940 ) Normally recurring capital expenditures (See note 15) (1,883 ) (3,353 ) AFFO attributable to common stockholders and Unitholders $ 8,711 $ 8,943 Common Stock dividends and distributions to Unitholders declared: Common Stock dividends $ 10,976 $ 8,991 Distributions to Unitholders (See note 2) 82 96 Total $ 11,058 $ 9,087 Common Stock dividends and Unitholder distributions per share $ 0.175 $ 0.175 FFO per weighted average basic share of Common Stock and Unit outstanding $ 0.05 $ 0.16 Core FFO per weighted average basic share of Common Stock and Unit outstanding $ 0.19 $ 0.25 AFFO per weighted average basic share of Common Stock and Unit outstanding $ 0.15 $ 0.18 Weighted average shares of Common Stock and Units outstanding: Basic: Common Stock 56,255 50,033 Class A Units 468 610 Common Stock and Class A Units 56,723 50,643 Diluted Common Stock and Class A Units (See note 16) 62,457 50,971 Actual shares of Common Stock outstanding, including 782 and 809 unvested shares of restricted Common Stock at March 31, 2022 and 2021, respectively. 63,711 50,904 Actual Class A Units outstanding at March 31, 2022 and 2021, respectively. 526 548 Total 64,237 51,452 See Notes to Reconciliation of FFO, Core FFO and AFFO to Net Loss Attributable to Common Stockholders. Notes to Reconciliations of FFO Attributable to Common Stockholders and Unitholders, Core FFO and AFFO to Net Loss Attributable to Common Stockholders 1) Rental and other property revenues and property operating expenses for the three months ended March 31, 2022 include activity for the properties acquired since March 31, 2021. 2) Non-controlling interests in our Operating Partnership consisted of a total of 526,128 Class A Units as of March 31, 2022. Included in this total are 419,228 Class A Units which were granted as partial consideration to the seller in conjunction with the seller's contribution to us on February 29, 2016 of the Wade Green grocery-anchored shopping center. The remaining Class A Units were awarded primarily to our key executive officers. The Class A Units are apportioned a percentage of our financial results as non-controlling interests. The weighted average ownership percentage of these holders of Class A Units was calculated to be 0.83% and 1.20% for the three-month periods ended March 31, 2022 and 2021, respectively. 3) We paid loan coordination fees to Preferred Apartment Advisors, LLC (our "Former Manager") to reflect the administrative effort involved in arranging debt financing for acquired properties prior to the Internalization Transaction (defined in note 4 below). The fees were calculated as 0.6% of the amount of any mortgage indebtedness on newly-acquired properties or refinancing and are amortized over the lives of the respective mortgage loans. This non-cash amortization expense is an addition to FFO in the calculation of Core FFO and AFFO. At March 31, 2022, aggregate unamortized loan coordination fees were approximately $7.4 million, which will be amortized over a weighted average remaining loan life of approximately 10.1 years. 4) This adjustment reflects the add-back of accretion of the discount on the deferred liability payable to the owners of the Former Manager and other professional fees related to the internalization of the functions performed by the Former Manager and Former Sub-Manager (the "Internalization Transaction"). 5) This additive adjustment removes the effect of deemed dividends that arise from cash calls and redemptions of preferred stock. For shares of preferred stock that are called by the Company or redeemed by the holder, the Company records a deemed dividend for the difference between the redemption of the share at its face value, net of any redemption discount, as compared to the carrying value of the share on the Company’s consolidated balance sheets. Also included in this adjustment is the adding back of expenses incurred related to effecting calls of preferred stock. 6) We incur loan closing costs on our existing mortgage loans, which are secured on a property-by-property basis by each of our acquired real estate assets, and also for occasional amendments to our syndicated revolving line of credit with Key Bank National Association, or our Revolving Line of Credit. These loan closing costs are also amortized over the lives of the respective loans and the Revolving Line of Credit, and this non-cash amortization expense is an addition to FFO in the calculation of AFFO. Neither we nor the Operating Partnership has any recourse liability in connection with any of the mortgage loans, nor do we have any cross-collateralization arrangements with respect to the assets securing the mortgage loans, other than security interests in 49% of the equity interests of the subsidiaries owning such assets, granted in connection with our Revolving Line of Credit, which provides for full recourse liability. At March 31, 2022, unamortized loan costs on all the Company's indebtedness were appro ximately $28.8 million, which will be amortized over a weighted average remaining loan life of approximately 7.8 years. 7) We receive loan origination fees in conjunction with the origination of certain real estate loan investments. The total fees received are additive adjustments to Core FFO in our calculation of AFFO. 8) Over the lives of certain loans, we accrue additional interest amounts that become due to us at the time of repayment of the loan or refinancing of the property, or when the property is sold. Once received from the borrower, the amount of additional accrued interest becomes an additive adjustment to Core FFO in our calculation of AFFO. 9) This adjustment removes the non-cash amortization of costs incurred to induce tenants to lease space in our office buildings and grocery-anchored shopping centers. 10) Occasionally we receive fees in exchange for the termination of our purchase options related to certain multifamily communities. These fees are recorded as revenue over the period beginning on the date of termination until the earlier of (i) the maturity of the real estate loan investment and (ii) the sale of the property. The receipt of the cash termination fees are an additive adjustment in our calculation of AFFO and the removal of non-cash revenue from the recognition of the termination fees are a reduction to Core FFO in our calculation of AFFO; both of these adjustments are presented in a single net number within this line. For periods in which recognized termination fee revenues exceeded the amount of cash received, a negative adjustment is shown to Core FFO in our calculation of AFFO; for periods in which cash received exceeded the amount of recognized termination fee revenues, an additive adjustment is shown to Core FFO in our calculation of AFFO. 11) Loan origination fees (described in note 7 above) are recognized as revenue over the lives of the applicable loans as adjustments of yield using the effective interest method. Similarly, the accrual of additional interest amounts (described in note 8 above) are recognized beginning from loan inception through the repayment of the loan or the refinancing or sale of the underlying property. This adjustment removes the effect of both these types of non-cash loan interest income from Core FFO in our calculation of AFFO. 12) Effective January 1, 2020, we adopted ASU 2016-03, which requires us to estimate the amount of future credit losses we expect to incur over the lives of our real estate loan investments at the inception of each loan. This loss reserve may be adjusted upward or downward over the lives of our loans and therefore the aggregate net adjustment for each period could be positive (removing the non-cash effect of a net increase in aggregate loss reserves) or negative (removing the non-cash effect of a net decrease in aggregate loss reserves) in these adjustments to Core FFO in calculating AFFO. 13) This adjustment reflects straight-line rent adjustments and the reversal of the non-cash amortization of below-market and above-market lease intangibles, which were recognized in conjunction with our acquisitions and which are amortized over the estimated average remaining lease terms from the acquisition date for multifamily communities and over the remaining lease terms for grocery-anchored shopping center assets and office buildings. At March 31, 2022, the balance of unamortized below-market lease intangibles was approximately $32.9 million, which will be recognized over a weighted average remaining lease period of approximately 8.2 years. 14) This adjustment removes the non-cash amortization of deferred revenue recorded by us in conjunction with Company-owned lessee-funded tenant improvements in our office buildings. 15) We deduct from Core FFO normally recurring capital expenditures that are necessary to maintain our assets’ revenue streams in the calculation of AFFO. This adjustment also deducts from Core FFO capitalized amounts for third party costs during the period to originate or renew leases in our grocery-anchored shopping centers and office buildings. This adjustment includes approximately $41,000 of recurring capitalized expenditures incurred at our corporate offices during the three-month period ended March 31, 2022. No adjustment is made in the calculation of AFFO for nonrecurring capital expenditures. See Capital Expenditures, Grocery-Anchored Shopping Center Portfolio, and Office Building Portfolio sections for definitions of these terms. 16) Since our AFFO results are positive for the periods reflected, we are presenting recalculated diluted weighted average shares of Common Stock and Class A Units for these periods for purposes of this table, which includes the dilutive effect of common stock equivalents from grants of the Class B Units, warrants included in units of Series A Preferred Stock issued, as well as annual grants of restricted Common Stock and restricted stock units. The weighted average shares of Common Stock outstanding presented on the Consolidated Statements of Operations are the same for basic and diluted for any period for which we recorded a net loss available to common stockholders. See Definitions of Non-GAAP Measures. Preferred Apartment Communities, Inc. Condensed Consolidated Balance Sheets (Unaudited) (In thousands, except per-share par values) March 31, 2022 December 31, 2021 Assets Real estate Land $ 553,900 $ 551,378 Building and improvements 2,745,749 2,671,535 Tenant improvements 119,989 119,331 Furniture, fixtures, and equipment 372,288 359,743 Construction in progress 11,723 5,151 Gross real estate 3,803,649 3,707,138 Less: accumulated depreciation (611,111 ) (578,496 ) Net real estate 3,192,538 3,128,642 Real estate loan investments, net 210,280 196,420 Total real estate and real estate loan investments, net 3,402,818 3,325,062 Cash and cash equivalents 117,221 30,205 Restricted cash 33,474 32,675 Note receivable from related party 8,875 9,011 Accrued interest receivable on real estate loans 18,569 17,038 Acquired intangible assets, net of amortization 55,432 59,622 Tenant lease inducements, net 15,976 16,420 Investment in unconsolidated joint venture 5,884 5,992 Tenant receivables and other assets 82,023 67,343 Total assets $ 3,740,272 $ 3,563,368 Liabilities and equity Liabilities Mortgage notes payable, net of deferred loan costs and mark-to-market adjustment $ 2,388,772 $ 2,343,364 Deferred revenues 34,612 35,523 Accounts payable and accrued expenses 35,046 36,517 Deferred liability to Former Manager 24,219 24,037 Contingent liability due to Former Manager 14,564 14,631 Accrued interest payable 6,990 7,086 Dividends and partnership distributions payable 21,509 19,912 Acquired below market lease intangibles, net of amortization 32,936 34,585 Prepaid rent, security deposits and other liabilities 27,004 25,679 Total liabilities 2,585,652 2,541,334 Commitments and contingencies Equity Stockholders' equity Series A Redeemable Preferred Stock, $0.01 par value per share; 3,050 shares authorized; 2,226 shares issued; 1,302 and 1,321 shares outstanding at March 31, 2022 and December 31, 2021, respectively 13 13 Series A1 Redeemable Preferred Stock, $0.01 par value per share; up to 1,000 shares authorized; 247 shares issued; 246 shares outstanding at March 31, 2022 and December 31, 2021, respectively 2 2 Series M Redeemable Preferred Stock, $0.01 par value per share; 500 shares authorized; 106 shares issued; 83 and 84 shares outstanding at March 31, 2022 and December 31, 2021, respectively 1 1 Series M1 Redeemable Preferred Stock, $0.01 par value per share; up to 1,000 shares authorized; 47 and 43 shares issued; 44 and 41 shares outstanding at March 31, 2022 and December 31, 2021, respectively — — Common Stock, $0.01 par value per share; 400,067 shares authorized; 62,929 and 52,975 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively 629 530 Additional paid-in capital 1,333,284 1,195,775 Accumulated (deficit) earnings (179,814 ) (172,000 ) Total stockholders' equity 1,154,115 1,024,321 Non-controlling interest 505 (2,287 ) Total equity 1,154,620 1,022,034 Total liabilities and equity $ 3,740,272 $ 3,563,368 Preferred Apartment Communities, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) Three-month periods ended March 31, 2022 2021 Operating activities: Net loss $ (7,844 ) $ (2,709 ) Reconciliation of net loss to net cash provided by (used in) operating activities: Depreciation and amortization expense 38,161 45,827 Amortization of above and below market leases (1,369 ) (1,399 ) Amortization of deferred revenues and other non-cash revenues (1,449 ) (1,195 ) Amortization of purchase option termination fees — (1,229 ) Amortization of equity compensation, lease incentives and other non-cash expenses 1,628 1,229 Deferred loan cost amortization 1,566 1,609 Non-cash accrued interest income on real estate loan investments (1,531 ) (2,822 ) Receipt of accrued interest income on real estate loan investments — 3,109 Gains on the sales of real estate, net — (798 ) Losses on the sales of land and other, net 22 — Loss from unconsolidated joint ventures 108 194 Cash received for purchase option terminations — 1,479 Loss on extinguishment of debt 363 — Increase in allowance for expected credit losses 572 522 Changes in operating assets and liabilities: Decrease (increase) in tenant receivables and other assets (3,445 ) 4,766 Decrease in accounts payable and accrued expenses (429 ) (2,787 ) Increase in accrued interest, prepaid rents and other liabilities 1,874 2,589 Net cash provided by operating activities 28,227 48,385 Investing activities: Investments in real estate loans, net of origination fees received (13,605 ) (18,840 ) Repayments of real estate loans — 17,925 Notes receivable repaid — 79 Acquisition of properties (90,203 ) (289 ) Disposition of properties and proceeds from land sales, net (260 ) 4,798 Investment into property development (2,718 ) — Capital improvements to real estate assets (4,875 ) (10,263 ) Net cash used in investing activities (111,661 ) (6,590 ) Financing activities: Proceeds from mortgage notes 106,310 2,152 Repayment of mortgage notes (61,745 ) (10,340 ) Payments for deposits and other mortgage loan costs (589 ) (285 ) Payments for debt prepayment and other debt extinguishment costs (324 ) — Proceeds from Revolving Line of Credit 185,000 105,000 Payments on Revolving Line of Credit (185,000 ) (87,000 ) Proceeds from sales of Preferred Stock, net of offering costs 2,800 34,109 Payments for redemptions and calls of Preferred Stock (19,162 ) (40,018 ) Proceeds from sale of Common Stock and warrant exercises 179,213 — Common Stock dividends paid (9,382 ) (8,829 ) Preferred Stock dividends and Class A Unit distributions paid (27,118 ) (33,840 ) Payments for deferred offering costs (1,143 ) (1,030 ) Contributions from non-controlling interests 2,625 — Distributions to non-controlling interests (236 ) (56 ) Net cash (used in) provided by financing activities 171,249 (40,137 ) Net increase in cash, cash equivalents and restricted cash 87,815 1,658 Cash, cash equivalents and restricted cash, beginning of year 62,880 75,716 Cash, cash equivalents and restricted cash, end of period $ 150,695 $ 77,374 Real Estate Loan Investments The following tables present details pertaining to our portfolio of fixed rate, interest-only real estate loan investments. Project/Property Location Maturity date Optional extension date Total loan commitments Carrying amount (1) as of Current / deferred interest % per annum March 31, 2022 December 31, 2021 Multifamily communities: (in thousands) The Platform San Jose, CA 8/13/2022 (2) $ 137,616 $ 137,616 $ 136,061 (2) Vintage Horizon West Orlando, FL 10/11/2022 10/11/2024 10,900 10,038 9,828 8.5 / 5.5 Nexton Charleston, SC 12/16/2022 N/A 6,265 6,265 6,265 (3) Vintage Jones Franklin Raleigh, NC 11/14/2023 5/14/2025 10,000 9,182 8,989 8.5 / 5.5 Solis Cumming Town Center Atlanta, GA 9/3/2024 9/3/2026 20,681 18,542 18,153 8.5 / 5.5 Hudson at Metro West Orlando, FL 9/1/2024 3/1/2026 16,791 14,176 13,873 8.5 / 4.5 Oxford Club Drive Atlanta, GA 2/11/2025 2/11/2027 23,150 7,513 5,551 8.5 / 4.5 Populus at Pooler Savannah, GA 5/27/2025 5/27/2026 15,907 7,030 2,104 8.5 / 4.25 Populus at Pooler Capital Savannah, GA 5/27/2025 5/27/2026 1,169 966 946 8.5 / 4.25 Menlo II Jacksonville, FL 4/14/2025 4/14/2027 16,610 6,470 4,500 8.5 / 3.5 Beaver Ruin Atlanta, GA 5/3/2025 11/3/2026 9,133 1,098 — 8.5 / 4.5 Prado Orlando, FL 8/11/2025 8/11/2027 16,650 1,661 — 8.5 / 3.5 Altis Naples, FL 2/27/2026 2/27/2028 17,151 — — 8.5 / 4.25 302,023 220,557 206,270 Preferred equity: (4) The Shoals Greenville, SC 3/31/2026 3/31/2027 14,284 — — 8.5 / 3.5 $ 316,307 220,557 206,270 Unamortized loan origination fees (1,942 ) (1,755 ) Allowances for expected credit losses and doubtful accounts (8,335 ) (8,095 ) Carrying amount $ 210,280 $ 196,420 (1) Carrying amounts presented per loan are amounts drawn. (2) Effective February 10, 2022, the Third Amendment to the loan agreement provided for extension options until August 13, 2022 and December 31, 2022. The interest rate was amended to 8.5% current interest and 1.0% deferred interest per annum until May 13, 2022, then 8.5% current interest and 1.5% deferred interest per annum until August 13, 2022. If the second extension option is exercised, the rate increases to 8.5% current interest and 2.0% deferred interest per annum until November 13, 2022, then 8.5% current interest and 2.5% deferred interest per annum until December 31, 2022. (3) Loan accrues interest at 11% per annum until June 16, 2022, then 13% per annum until December 16, 2022; all interest is paid monthly. (4) A fixed-return component of the capital stack in a multifamily community development project that is economically equivalent to our real estate loan investments, with features and terms as shown. We hold options or rights of first offer, but not obligations, to purchase some of the properties which are partially financed by our real estate loan investments. Option purchase prices are generally the market value of the property, as negotiated and agreed upon by the purchasing and selling parties and are derived utilizing market cap rates. As of March 31, 2022, potential property acquisitions and units from projects in our real estate loan investment portfolio consisted of: Total units upon Purchase option window Project/Property Location completion (1) Begin End Multifamily communities Hudson at Metro West Orlando, FL 320 S + 90 days (2) S + 150 days (2) Vintage Horizon West Orlando, FL 340 (10) (3) (3) Vintage Jones Franklin Raleigh, NC 277 (3) (3) Solis Cumming Town Center Atlanta, GA 320 (4) (4) Club Drive Atlanta, GA 352 (5) (5) Populus at Pooler Savannah, GA 316 (6) (6) Menlo II Jacksonville, FL 337 (7) (7) Beaver Ruin Atlanta, GA 246 S + 90 days (8) S + 150 days (8) One Nexton Charleston, SC 351 (9) (9) Prado Orlando, FL 286 S + 90 days S + 180 days Altis Naples, FL 242 S + 90 days (2) S + 150 days (2) The Shoals Greenville, SC 252 (4) (4) 3,639 (1) We evaluate each project individually and we make no assurance that we will acquire any of the underlying properties from our real estate loan investment portfolio. (2) The option period window begins and ends at the number of days indicated beyond the achievement of a 93% occupancy threshold by the underlying property. (3) The option period window begins on the later of one year following receipt of final certificate of occupancy or 90 days beyond the achievement of a 93% occupancy threshold by the underlying property and ends 60 days beyond the option period beginning date. (4) We hold a right of first offer on the property. (5) The option period window begins upon the property's achievement of an 85% occupancy threshold. If we are unable to reach an agreement on the property's market value, we have a right of first offer. (6) The option period window begins upon the property's achievement of an 80% occupancy threshold. If we are unable to reach an agreement on the property's market value, we have a right of first offer. (7) The option period window begins either by notice from the seller upon the property's achievement of a 70% occupancy threshold or by notice from the purchaser upon the property's achievement of a 93% occupancy threshold and expires 90 days beyond either event. If we are unable to reach an agreement on the property's market value, we have a right of first offer. (8) The option period window begins and ends at the number of days indicated beyond the achievement of an 85% occupancy threshold by the underlying property. If we are unable to reach an agreement on the property's market value, we have a right of first offer. (9) The underlying loan is a land acquisition bridge loan that is anticipated to be converted to a real estate loan investment in the future with a purchase option or right of first offer. (10) The purchase option was voided in conjunction with the repayment of the loan on April 12, 2022. Mortgage Indebtedness As of March 31, 2022, our mortgage note principal repayment obligations were: Period Future principal payments (in thousands) 2022 $ 54,993 2023 81,841 2024 300,318 2025 57,692 2026 339,105 2027 320,122 2028 252,544 2029 246,473 2030 357,317 2031 97,107 Thereafter 319,705 Totals $ 2,427,217 Multifamily Communities As of March 31, 2022, our multifamily community portfolio consisted of the following properties: Three months ended March 31, 2022 Property Location Number of units Average unit size (sq. ft.) Average physical occupancy Average rent per unit Same-Store Communities: Aldridge at Town Village Atlanta, GA 300 969 95.7 % $ 1,628 Green Park Atlanta, GA 310 985 97.1 % $ 1,657 Overton Rise Atlanta, GA 294 1,018 95.0 % $ 1,728 Summit Crossing I Atlanta, GA 345 1,034 97.1 % $ 1,435 Summit Crossing II Atlanta, GA 140 1,100 97.1 % $ 1,582 The Reserve at Summit Crossing Atlanta, GA 172 1,002 97.3 % $ 1,529 Avenues at Cypress Houston, TX 240 1,170 96.4 % $ 1,612 Avenues at Northpointe Houston, TX 280 1,167 94.2 % $ 1,540 Stone Creek Houston, TX 246 852 95.7 % $ 1,241 Aster at Lely Resort Naples, FL 308 1,071 96.4 % $ 1,724 Sorrel Jacksonville, FL 290 1,048 95.6 % $ 1,508 Lux at Sorrel Jacksonville, FL 265 1,025 96.4 % $ 1,557 Artisan at Viera Melbourne, FL 259 1,070 96.5 % $ 1,842 525 Avalon Park Orlando, FL 487 1,394 95.5 % $ 1,694 The Blake Orlando, FL 281 908 96.4 % $ 1,601 Citi Lakes Orlando, FL 346 984 97.4 % $ 1,594 Village at Baldwin Park Orlando, FL 528 1,069 96.7 % $ 1,880 Parkside at the Beach Panama City Beach, FL 288 1,041 98.8 % $ 1,563 Luxe at Lakewood Ranch Sarasota, FL 280 1,105 95.0 % $ 1,808 Venue at Lakewood Ranch Sarasota, FL 237 1,001 97.2 % $ 1,888 Crosstown Walk Tampa, FL 342 1,070 96.6 % $ 1,599 Overlook at Crosstown Walk Tampa, FL 180 986 97.6 % $ 1,641 Citrus Village Tampa, FL 296 980 97.1 % $ 1,579 Five Oaks at Westchase Tampa, FL 218 983 97.6 % $ 1,750 Horizon at Wiregrass Tampa, FL 392 973 96.9 % $ 1,755 Lodge at Hidden River Tampa, FL 300 980 96.7 % $ 1,623 Lenox Village Nashville, TN 273 906 96.8 % $ 1,431 Regent at Lenox Nashville, TN 18 1,072 100.0 % $ 1,481 Retreat at Lenox Nashville, TN 183 773 96.9 % $ 1,370 CityPark View Charlotte, NC 284 948 94.7 % $ 1,276 CityPark View South Charlotte, NC 200 1,005 95.2 % $ 1,394 Colony at Centerpointe Richmond, VA 255 1,149 97.5 % $ 1,571 Founders Village Williamsburg, VA 247 1,070 96.2 % $ 1,615 Retreat at Greystone Birmingham, AL 312 1,100 94.4 % $ 1,560 Vestavia Reserve Birmingham, AL 272 1,113 95.1 % $ 1,721 Adara Overland Park Kansas City, KS 260 1,116 96.4 % $ 1,427 Claiborne Crossing Louisville, KY 242 1,204 95.6 % $ 1,448 City Vista Pittsburgh, PA 272 1,023 94.5 % $ 1,541 Total/Average Same-Store Communities 10,442 96.3 % Stabilized Communities: The Menlo Jacksonville, FL 332 966 95.2 % $ 1,654 The Ellison Atlanta, GA 250 1,064 99.1 % $ 1,650 Chestnut Farm Charlotte, NC 256 995 98.6 % $ 1,642 Alleia at Presidio Fort Worth, TX 231 1,022 95.7 % $ 1,661 The Anson Nashville, TN 301 989 96.7 % $ 1,595 The Kingson Fredericksburg, VA 240 993 95.7 % $ 1,739 Total/Average Stabilized Communities 1,610 96.3 % Lirio at Rafina Orlando, FL 280 974 — — Total Multifamily Community Units 12,332 For the three-month period ended March 31, 2022, our average same-store multifamily communities' physical occupancy was 96.3%. We calculate average same-store physical occupancy for quarterly periods as the average of the number of occupied units on the 20th day of each of the trailing three months from the reporting period end date and that have been owned for at least 15 full months as of the end of the first quarter of each year. We exclude the operating results of properties for which construction of adjacent phases has commenced and properties which are undergoing significant capital projects, have sustained significant casualty losses, or are being marketed for sale as of the end of the reporting period. We believe "Same Property" information is useful as it allows both management and investors to gauge our management effectiveness via comparisons of financial and operational results between interim and annual periods for those subsets of multifamily communities owned for current and prior comparative periods. For the three-month period ended March 31, 2022, our average stabilized physical occupancy was 96.3%. We calculate average stabilized physical occupancy for quarterly periods as the average number of occupied units on the 20th day of each of the trailing three months from the reporting period end date. All of our multifamily communities were stabilized for the three-month period ended March 31, 2022 except Lirio at Rafina. For the three-month period ended March 31, 2022, our average stabilized economic occupancy was 96.1%. We define average economic occupancy as market rent reduced by vacancy losses, expressed as a percentage. All of our multifamily properties are included in these calculations except for properties which are not yet stabilized, properties which are owned for less than the entire reporting period and properties which are undergoing significant capital projects, have sustained significant casualty losses or are adding additional phases. We also exclude properties which are currently being held for sale, of which we had none within the multifamily community portfolio at March 31, 2022. Average economic occupancy is useful both to management and investors as a gauge of our effectiveness in realizing the full revenue generating potential of our multifamily communities given market rents and occupancy rates. Capital Expenditures We regularly incur capital expenditures related to our owned multifamily communities. Capital expenditures may be nonrecurring and discretionary, as part of a strategic plan intended to increase a property’s value and corresponding revenue-generating ability, or may be normally recurring and necessary to maintain the income streams and present value of a property. Certain capital expenditures may be budgeted and reserved for upon acquiring a property as initial expenditures necessary to bring a property up to our standards or to add features or amenities that we believe make the property a compelling value to prospective residents in its individual market. These budgeted nonrecurring capital expenditures in connection with an acquisition are funded from the capital source(s) for the acquisition and are not dependent upon subsequent property operating cash flows for funding. For the three-month period ended March 31, 2022, our capital expenditures for multifamily communities consisted of: Capital Expenditures - Multifamily Communities Recurring Non-recurring Total (in thousands, except per-unit figures) Amount Per Unit Amount Per Unit Amount Per Unit Appliances $ 227 $ 18.53 $ — $ — $ 227 $ 18.53 Carpets 501 40.85 — — 501 40.85 Wood / vinyl flooring 30 2.47 121 9.83 151 12.30 Mini blinds and ceiling fans 36 2.95 — — 36 2.95 Fire safety — — 79 6.44 79 6.44 HVAC 128 10.44 — — 128 10.44 Computers, equipment, misc. 56 4.55 59 4.82 115 9.37 Elevators — — 20 1.60 20 1.60 Exterior painting and lighting — — 1,101 89.83 1,101 89.83 Leasing office and other common amenities — — 257 20.97 257 20.97 Major structural projects — — 551 44.97 551 44.97 Cabinets, countertops and unit upgrades — — 487 39.73 487 39.73 Landscaping and fencing — — 89 7.28 89 7.28 Parking lots and sidewalks — — 56 4.58 56 4.58 Signage and sanitation — — 11 0.87 11 0.87 Totals $ 978 $ 79.79 $ 2,831 $ 230.92 $ 3,809 $ 310.71 Grocery-Anchored Shopping Center Portfolio As of March 31, 2022, our grocery-anchored shopping center portfolio consisted of the following properties: Property name Location Year built GLA (1) Percent leased Grocery anchor tenant Castleberry-Southard Atlanta, GA 2006 80,018 100.0 % Publix Cherokee Plaza Atlanta, GA 1958 102,864 100.0 % Kroger Governors Towne Square Atlanta, GA 2004 68,658 100.0 % Publix Lakeland Plaza Atlanta, GA 1990 301,711 95.5 % Sprouts Powder Springs Atlanta, GA 1999 77,853 98.2 % Publix Rockbridge Village Atlanta, GA 2005 102,432 91.4 % Kroger Roswell Wieuca Shopping Center Atlanta, GA 2007 74,370 97.8 % The Fresh Market Royal Lakes Marketplace Atlanta, GA 2008 119,493 97.7 % Kroger Sandy Plains Exchange Atlanta, GA 1997 72,784 100.0 % Publix Summit Point Atlanta, GA 2004 111,970 89.2 % Publix Thompson Bridge Commons Atlanta, GA 2001 92,587 96.2 % Kroger Wade Green Village Atlanta, GA 1993 74,978 94.5 % Publix Woodmont Village Atlanta, GA 2002 85,639 100.0 % Kroger Woodstock Crossing Atlanta, GA 1994 66,122 98.5 % Kroger East Gate Shopping Center Augusta, GA 1995 75,716 93.7 % Publix Fury's Ferry Augusta, GA 1996 70,458 98.6 % Publix Parkway Centre Columbus, GA 1999 53,088 97.7 % Publix Greensboro Village Nashville, TN 2005 70,203 98.3 % Publix Spring Hill Plaza Nashville, TN 2005 66,693 100.0 % Publix Parkway Town Centre Nashville, TN 2005 65,587 100.0 % Publix The Market at Salem Cove Nashville, TN 2010 62,356 100.0 % Publix The Market at Victory Village Nashville, TN 2007 71,300 100.0 % Publix The Overlook at Hamilton Place Chattanooga, TN 1992 213,095 99.5 % The Fresh Market Shoppes of Parkland Miami-Ft. Lauderdale, FL 2000 145,720 98.6 % BJ's Wholesale Club Crossroads Market Naples, FL 1993 126,895 100.0 % Publix Neapolitan Way (2) Naples, FL 1985 137,580 97.5 % Publix Berry Town Center Orlando, FL 2003 99,441 89.9 % Publix Deltona Landings Orlando, FL 1999 59,966 94.8 % Publix University Palms Orlando, FL 1993 99,172 100.0 % Publix Disston Plaza Tampa-St Petersburg, FL 1954 129,150 96.6 % Publix Barclay Crossing Tampa, FL 1998 54,958 100.0 % Publix Polo Grounds Mall West Palm Beach, FL 1966 130,285 97.3 % Publix Kingwood Glen Houston, TX 1998 103,397 97.1 % Kroger Independence Square Dallas, TX 1977 140,218 92.6 % Tom Thumb Midway Market Dallas, TX 2002 85,599 94.9 % Kroger Oak Park Village San Antonio, TX 1970 64,855 100.0 % H.E.B. Irmo Station Columbia, SC 1980 99,384 89.0 % Kroger Rosewood Shopping Center Columbia, SC 2002 36,887 93.5 % Publix Anderson Central Greenville Spartanburg, SC 1999 223,211 95.6 % Walmart Fairview Market Greenville Spartanburg, SC 1998 46,303 100.0 % Aldi Brawley Commons Charlotte, NC 1997 122,028 98.6 % Publix West Town Market Charlotte, NC 2004 67,883 100.0 % Harris Teeter Heritage Station Raleigh, NC 2004 72,946 97.9 % Harris Teeter Maynard Crossing Raleigh, NC 1996 122,781 86.8 % Harris Teeter Wakefield Crossing Raleigh, NC 2001 75,927 98.2 % Food Lion Southgate Village Birmingham, AL 1988 75,092 96.8 % Publix Hollymead Town Center Charlottesville, VA 2005 158,807 90.5 % Harris Teeter Free State Shopping Center Washington, D.C. 1970 264,152 87.6 % Giant 4,922,612 96.0 % Redevelopment Properties: Champions Village Houston, TX 1973 383,346 64.9 % Randalls Sweetgrass Corner Charleston, SC 1999 89,124 32.9 % — Conway Plaza Orlando, FL 1966 117,705 80.6 % Publix Hanover Center (3) Wilmington, NC 1954 305,346 79.8 % Harris Teeter Gayton Crossing Richmond, VA 1983 160,816 (4) 74.2 % Kroger Fairfield Shopping Center (3) Virginia Beach, VA 1985 231,829 83.0 % Food Lion 1,288,166 72.1 % 6,210,778 91.0 % (1) Gross leasable area, or GLA, represents the total amount of property square footage that can be leased to tenants. (2) Investment in an unconsolidated joint venture that is not prorated for our ownership percentage. (3) Property is owned through a consolidated joint venture. (4) The GLA figure shown excludes the GLA of the Kroger store, which is owned by others. As of March 31, 2022, our grocery-anchored shopping center portfolio was 91.0% leased (96.0% excluding redevelopment properties). We define percent leased as the percentage of gross leasable area that is leased as of the period end date, including non-cancelable lease agreements that have been signed which have not yet commenced. This metric is used by management to gauge the extent to which our grocery-anchored shopping centers are delivering their total potential rental and other revenues. Details regarding lease expirations (assuming no exercises of tenant renewal options) within our grocery-anchored shoppng center portfolio as of March 31, 2022 were: Totals Number of leases Leased GLA Percent of leased GLA Month to month 22 65,031 1.2 % 2022 113 318,146 5.6 % 2023 147 614,369 10.9 % 2024 149 1,142,969 20.2 % 2025 133 943,070 16.7 % 2026 129 560,981 9.9 % 2027 91 462,094 8.2 % 2028 32 404,649 7.2 % 2029 30 249,842 4.4 % 2030 18 185,300 3.3 % 2031 24 259,613 4.6 % 2032 + 31 442,570 7.8 % Total 919 5,648,634 100.0 % Our grocery-anchored shopping center portfolio contained the following anchor tenants as of March 31, 2022: Tenant GLA Percent of total GLA Publix 1,179,030 19.0 % Kroger 581,593 9.4 % Harris Teeter 273,273 4.4 % Wal-Mart 183,211 2.9 % BJ's Wholesale Club 108,532 1.7 % Food Lion 76,523 1.2 % Giant 73,149 1.2 % Randall's 61,604 1.0 % H.E.B 54,844 0.9 % Tom Thumb 43,600 0.7 % The Fresh Market 43,321 0.7 % Sprouts 29,855 0.5 % Aldi 23,622 0.4 % Total 2,732,157 44.0 % Our Quarterly Report on Form 10-Q for the period ended March 31, 2022 will present income statements of New Market Properties, LLC within the Results of Operations section of Management's Discussion and Analysis of Financial Condition and Results of Operations. Second-generation capital expenditures within our grocery-anchored shopping center portfolio by property for the first quarter 2022 totaled approximately $713,000. Second-generation capital expenditures exclude those expenditures made in our grocery-anchored shopping center and office building portfolios (i) to lease space to "first generation" tenants (i.e. leasing capital for existing vacancies and known move-outs at the time of acquisition), (ii) to bring recently acquired properties up to our ownership standards, and (iii) for property redevelopments and repositioning. Office Building Portfolio As of March 31, 2022, our office building portfolio consisted of the following properties: Property Name Location GLA Percent leased Three Ravinia Atlanta, GA 814,000 93 % Westridge at La Cantera San Antonio, TX 258,000 100 % Total/Average 1,072,000 95 % As of March 31, 2022, our office building portfolio included the following significant tenants: Rentable square footage Percent of Annual Base Rent Annual Base Rent (in thousands) InterContinental Hotels Group 467,000 44.8 % $ 11,429 USAA 129,000 13.1 % 3,357 Vericast 129,000 12.2 % 3,102 Hapag Lloyd 127,000 17.5 % 4,455 Lease Query 53,000 3.8 % 968 Total 905,000 91.4 % $ 23,311 We define Annual Base Rent as the current monthly base rent annualized under the respective leases. As of March 31, 2022, the leased square footage of our office building portfolio expires according to the following schedule: Percent of Year of lease expiration Rented square rented feet square feet 2022 — — 2023 8,000 0.8 % 2024 5,000 0.5 % 2025 53,000 5.3 % 2026 — — 2027 329,000 33.0 % 2028 — — 2029 — — 2030 — — 2031 467,000 46.8 % 2032 + 136,000 13.6 % Total 998,000 100.0 % The Company recognized second-generation capital expenditures within its office building portfolio of approximately $151,000 during the first quarter 2022. Definitions of Non-GAAP Measures We disclose FFO, Core FFO, AFFO and NOI, each of which meets the definition of a “non-GAAP financial measure”, as set forth in Item 10(e) of Regulation S-K promulgated by the SEC. As a result we are required to include in this filing a statement of why the Company believes that presentation of these measures provides useful information to investors. The non-GAAP measures of FFO, Core FFO, AFFO and NOI should be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our performance, and we believe that to understand our performance further FFO, Core FFO, AFFO and NOI should be compared with our reported net income or net loss and considered in addition to cash flows in accordance with GAAP, as presented in our consolidated financial statements. FFO, Core FFO and AFFO are not considered measures of liquidity and are not alternatives to measures calculated under GAAP. Funds From Operations Attributable to Common Stockholders and Unitholders (“FFO”) FFO is one of the most commonly utilized Non-GAAP measures currently in practice. In its 2002 “White Paper on Funds From Operations,” which was restated in 2018, the National Association of Real Estate Investment Trusts, or NAREIT, standardized the definition of how net income/loss should be adjusted to arrive at FFO, in the interests of uniformity and comparability. We have adopted the NAREIT definition for computing FFO as a meaningful supplemental gauge of our operating results, and as is most often presented by other REIT industry participants. The NAREIT definition of FFO (and the one reported by the Company) is: Net income/loss, excluding: depreciation and amortization related to real estate; gains and losses from the sale of certain real estate assets; gains and losses from change in control; and impairment writedowns of certain real estate assets and investments in entities where the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. Not all companies necessarily utilize the standardized NAREIT definition of FFO, so caution should be taken in comparing our reported FFO results to those of other companies. Our FFO results are comparable to the FFO results of other companies that follow the NAREIT definition of FFO and report these figures on that basis. FFO is a non-GAAP measure that is reconciled to its most comparable GAAP measure, net income/loss available to common stockholders. Core Funds From Operations Attributable to Common Stockholders and Unitholders (“Core FFO”) We make adjustments to FFO to remove costs incurred and revenues recorded that are singular in nature and outside our normal operations and portray our primary operational results. We calculate Core FFO as: FFO, plus: acquisition and pursuit (dead deal) costs; loan cost amortization on acquisition line of credit and loan coordination fees; losses on debt extinguishments or refinancing costs; Internalization costs; Corporate governance and merger-related costs; expenses incurred on calls of preferred stock; deemed dividends for redemptions of and non-cash dividends on preferred stock; and expenses related to the COVID-19 global pandemic; Less: earnest money forfeitures by prospective asset purchasers. Core FFO figures reported by us may not be comparable to Core FFO figures reported by other companies. We utilize Core FFO as a supplemental measure of the operating performance of our portfolio of real estate assets. We believe Core FFO is useful to investors as a supplemental gauge of our operating performance and may be useful in comparing our operating performance with other real estate companies. Since our calculation of Core FFO removes costs incurred and revenues recorded that are often singular in nature and outside our normal operations, we believe it improves comparability to investors in assessing our core operating results across periods. Core FFO is a non-GAAP measure that is reconciled to its most comparable GAAP measure, net income/loss available to common stockholders. Adjusted Funds From Operations Attributable to Common Stockholders and Unitholders (“AFFO”) AFFO makes further adjustments to Core FFO results in order to arrive at a more refined measure of operating and financial performance. There is no industry standard definition of AFFO and practice is divergent across the industry. We calculate AFFO as: Core FFO, plus: non-cash equity compensation to directors and executives; non-cash (income) expense for current expected credit losses; amortization of loan closing costs; depreciation and amortization of non-real estate assets; net loan origination fees received; deferred interest income received; amortization of lease inducements; cash received in excess of (exceeded by) amortization of purchase option termination revenues; non-cash dividends on Series M1 Preferred Stock and mShares; and earnest money forfeiture from prospective asset purchaser; Less: non-cash loan interest income; cash paid for loan closing costs; amortization of straight-line rent adjustments and acquired real estate intangible assets and/or liabilities; amortization of deferred revenues; and normally-recurring capital expenditures and capitalized second generation leasing costs. AFFO figures reported by us may not be comparable to those AFFO figures reported by other companies. We utilize AFFO as another measure of the operating performance of our portfolio of real estate assets. We believe AFFO is useful to investors as a supplemental gauge of our operating performance and may be useful in comparing our operating performance with other real estate companies. Since our calculation of AFFO removes other significant non-cash charges and revenues and other costs which are not representative of our ongoing business operations, we believe it improves comparability to investors in assessing our core operating results across periods. AFFO is a non-GAAP measure that is reconciled to its most comparable GAAP measure, net income/loss available to common stockholders. FFO, Core FFO and AFFO are not considered measures of liquidity and are not alternatives to measures calculated under GAAP. Same-Store Net Operating Income (“NOI”) We use same-store NOI as an operational metric for our same-store multifamily communities, enabling comparisons of those properties’ operating results between the current reporting period and the prior year comparative period. We define our population of same-store multifamily communities as those that are stabilized and that have been owned for at least 15 full months as of the end of the first quarter of each year, and exclude the operating results of properties for which construction of adjacent phases has commenced and properties which are undergoing significant capital projects, have sustained significant casualty losses, or are being marketed for sale as of the end of the reporting period. We define NOI as rental and other property revenues, less total property and maintenance expenses, property management fees, real estate taxes, general and administrative expenses, and property insurance. We believe that NOI is an important supplemental measure of operating performance for REITs because it provides measures of core operations, rather than factoring in depreciation and amortization, financing costs, acquisition costs, and other corporate expenses. NOI is a widely utilized measure of comparative operating performance in the REIT industry, but is not a substitute for the most comparable GAAP-compliant measure, net income/loss. About Preferred Apartment Communities, Inc. Preferred Apartment Communities, Inc. (NYSE: APTS) is a real estate investment trust engaged primarily in the ownership and operation of Class A multifamily properties, with select investments in grocery-anchored shopping centers. Preferred Apartment Communities’ investment objective is to generate attractive, stable returns for stockholders by investing in income-producing properties and acquiring or originating real estate loans. As of March 31, 2022, the Company owned or was invested in 113 properties in 13 states, predominantly in the Southeast region of the United States. View source version on businesswire.com: https://www.businesswire.com/news/home/20220509005086/en/Contacts Paul Cullen Executive Vice President-Investor Relations Chief Marketing Officer investorrelations@pacapts.com 770-818-4144 Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Preferred Apartment Communities, Inc. Reports Results for First Quarter 2022 By: Preferred Apartment Communities, Inc. via Business Wire May 09, 2022 at 16:24 PM EDT Total Revenues $104.9 million for Q1 2022; down 9.4% from Q1 2021 due primarily to absence of $18.7 million of office property revenues _____________ Net Loss per Share $(0.62) per share for Q1 2022; $0.11 per share improvement over Q1 2021 _____________ Core FFO per Share* $0.19 per share for Q1 2022 versus $0.25 per share for Q1 2021 _____________ AFFO per Share* $0.15 per share for Q1 2022 versus $0.18 per share for Q1 2021 _____________ Multifamily Same Store Results* Same-store rental and other property revenues increased 11.9% and same-store net operating income increased 15.9% for Q1 2022 versus Q1 2021 _____________ Two Real Estate Loans and One Preferred Equity Investment Closed During First Quarter 2022 Aggregate commitment amount of $48.1 million 780 multifamily units added to PAC's acquisition pipeline _____________ One Multifamily Community Acquired During First Quarter 2022 Lirio at Rafina, a 280-unit community located in Orlando, Florida _____________ PAC Enters Multifamily Development Space PAC to develop a 262-unit community in Wilmington, North Carolina, will invest $14.8 million in equity to capitalize the project _____________ PAC Enters into a Definitive Agreement with Blackstone Real Estate Income Trust, Inc. Cash transaction of $25 per share of Common Stock Closing expected during Q2 2022 *Core FFO and AFFO results are per weighted-average share and Class A OP Unit outstanding. Core FFO, AFFO and same-store net operating income are non-GAAP measures that are defined herein. Preferred Apartment Communities, Inc. (NYSE: APTS) ("we," "our," the "Company," "Preferred Apartment Communities" or "PAC") today reported results for the quarter ended March 31, 2022. Unless otherwise indicated, all per share results are reported based on the basic weighted average shares of our common stock, par value $0.01 per share ("Common Stock"), Class A Units ("Class A Units") of the Preferred Apartment Communities Operating Partnership (our "Operating Partnership") outstanding. See Definitions of Non-GAAP Measures. Conference Call As a result of our entering into a definitive merger agreement with affiliates of Blackstone Real Estate Income Trust, Inc. ("BREIT"), we will not have a conference call to discuss our first quarter ended 2022 earnings. For more details on the merger, see our 8-K filed on February 16, 2022. For Further Information Paul Cullen Executive Vice President-Investor Relations Chief Marketing Officer investorrelations@pacapts.com 770-818-4144 Operating Results Our operating results are presented below. Three months ended March 31, % change 2022 2021 Revenues (in thousands) $ 104,880 $ 115,700 (9.4 ) % Per share data: Net loss (1) $ (0.62 ) $ (0.73 ) — FFO (2) $ 0.05 $ 0.16 (68.8 ) % Core FFO (2) $ 0.19 $ 0.25 (24.0 ) % AFFO (2) $ 0.15 $ 0.18 (16.7 ) % Dividends (3) $ 0.175 $ 0.175 — (1) Per weighted average share of Common Stock outstanding for the periods indicated. (2) FFO, Core FFO and AFFO results are presented per basic weighted average share of Common Stock and Class A Unit in our Operating Partnership outstanding for the periods indicated. See Reconciliations of FFO Attributable to Common Stockholders and Unitholders, Core FFO and AFFO to Net Loss Attributable to Common Stockholders and Definitions of Non-GAAP Measures. (3) Per share of Common Stock and Class A Unit outstanding. Financial Our total revenues for the quarter ended March 31, 2022 decreased approximately $10.8 million, or 9.4%, to $104.9 million from the quarter ended March 31, 2021, due primarily to the absence of revenues from the eight office properties and one real estate loan investment that we sold during the third and fourth quarters of 2021. The disposed office properties contributed approximately $18.7 million, or 16.1% of our total revenues for the quarter ended March 31, 2021. Our net loss per share was $(0.62) and $(0.73) for the three-month periods ended March 31, 2022 and 2021, respectively. Funds From Operations, or FFO, was $0.05 and $0.16 per weighted average share of Common Stock and Class A Unit outstanding for the three months ended March 31, 2022 and 2021, respectively. The decline in FFO per share was driven by: * Lower operating results following the sale of our office properties of $(0.17) per share; * Lower cash dividend requirements on our preferred stock of $0.14 per share; * Lower revenues from our real estate loan portfolio of $(0.10) per share; * Merger-related costs incurred of $(0.09) per share; * Improved property operating performance, lower interest expense and other items of $0.06 per share; and * Deemed dividends due to calls and cash redemptions of our preferred stock of $0.05 per share. Our Core FFO per share decreased to $0.19 for the first quarter 2022 from $0.25 for the first quarter 2021, due to: * Lower operating results following the sale of our office properties of $(0.17) per share; * Lower cash dividend requirements on our preferred stock of $0.14 per share; * Lower revenues from our real estate loan portfolio of $(0.10) per share; and * Improved property operating performance, lower interest expense and other items of $0.06 per share. Our AFFO per share decreased to $0.15 for the first quarter 2022, from $0.18 for the first quarter 2021, due to: * Lower operating results following the sale of our office properties of $(0.17) per share; * Lower cash dividend requirements on our preferred stock of $0.14 per share; * Lower revenues from our real estate loan portfolio of $(0.10) per share; * Improved property operating performance, lower interest expense and other items of $0.06 per share; and * Lower recurring capital expenditures of $0.03 per share. Our Core FFO payout ratio to Common Stockholders and Unitholders was approximately 102.1% and our Core FFO payout ratio to our preferred stockholders was approximately 71.4% for the first quarter 2022. (A) Our AFFO payout ratio to Common Stockholders and Unitholders was approximately 126.9% and our AFFO payout ratio to our preferred stockholders was approximately 75.6% for the first quarter 2022. (A) We calculate the Core FFO and AFFO payout ratios to Common Stockholders as the ratio of Common Stock dividends and distributions to Core FFO and AFFO. We calculate the Core FFO and AFFO payout ratios to preferred stockholders as the ratio of preferred stock dividends to the sum of preferred stock dividends and Core FFO and AFFO. Since our operations resulted in a net loss from continuing operations for the periods presented, a payout ratio based on net loss is not calculable. See Definitions of Non-GAAP Measures. Operational Our multifamily communities' same-store rental and other property revenues increased 11.9%, same-store property operating expenses increased 6.3% and same-store net operating income increased 15.9% for the quarter ended March 31, 2022 versus 2021. Our same-store multifamily communities include 10,442 units, or 84.7% of our aggregate 12,322 units in our multifamily community portfolio. Our rental rates for our multifamily same-store properties for new and renewal leases increased 16.6% and 11.9%, respectively, and 14.1% blended for first quarter 2022 as compared to the expiring leases, excluding shorter-term leases of two months or less. Our rental rates for our multifamily same-store properties for new and renewal leases increased 15.7% and 11.9%, respectively, and 13.7% blended for April 2022 as compared to the expiring leases, excluding shorter-term leases of two months or less. As of March 31, 2022, the average age of our multifamily communities was approximately 6.6 years, which we believe is the youngest in the public multifamily REIT industry. As of March 31, 2022, all of our owned multifamily communities had achieved stabilization except for Lirio at Rafina, which was acquired during the first quarter 2022. We define stabilization as reaching 93% occupancy for all three months within a single quarter. The average physical occupancy of our same-store multifamily communities increased to 96.3% for the three-month period ended March 31, 2022 from 95.8% for the three-month period ended March 31, 2021 but was unchanged from the three-month period ended December 31, 2021. Financing and Capital Markets As of March 31, 2022, approximately 98.3% of our permanent property-level mortgage debt had fixed interest rates and approximately 0.9% had variable interest rates which are capped. We believe we are well protected against potential increases in market interest rates. Our overall weighted average interest rate for our mortgage debt portfolio was 3.37% for multifamily communities, 4.35% for our remaining office properties, 3.91% for grocery-anchored retail properties and 3.57% in the aggregate. During the first quarter 2022, we issued and sold an aggregate of 3,167 shares of preferred stock prior to February 10, 2022, when we ceased issuing new shares of preferred stock. We redeemed or called an aggregate of 21,189 shares of preferred stock, resulting in a net reduction of 18,022 outstanding shares of preferred stock, for a net cash outflow of approximately $17.7 million. During the first quarter 2022, warrants were exercised by the holders at a weighted average price of $19.68 per share and, as a result, we collected approximately $194.0 million from the issuance of an aggregate of 9,858,480 shares of Common Stock. We issued no shares of Common Stock under the 2019 ATM Offering during the first quarter 2022. At March 31, 2022, our leverage, as measured by the ratio of our debt to the undepreciated book value of our total assets, was approximately 55.8%. At March 31, 2022, we had no outstanding balance and $200.0 million available to be drawn on our revolving line of credit. Our outstanding shares of preferred stock have decreased since January 1, 2019, as summarized in the following chart: Shares of Preferred Stock 2019 2020 2021 First Quarter 2022 Issued 552,938 228,788 122,297 3,167 Redeemed by holders (68,512) (164,286) (100,946) (21,189) Called by PAC — (208,786) (320,746) — Net increase (decrease) 484,426 (144,284) (299,395) (18,022) Total outstanding at year end 2,136,257 1,991,973 1,692,578 1,674,556 Significant Transactions On February 10, 2022, we amended our real estate loan investment supporting The Platform, a 551-unit multifamily community located in San Jose, California. The maturity date of the instrument was extended to August 13, 2022 and a second extension option of December 31, 2022 was added. The all-in interest rate was reduced to 9.5% per annum beginning on the original maturity date of February 13, 2022 and increases in steps each three-month period up to 11.0% per annum on November 14, 2022. As of April 30, 2022, the property's physical occupancy was 92.6%. On February 11, 2022, we closed on a real estate loan investment of up to approximately $16.7 million supporting a 286-unit multifamily community in the Orlando, Florida MSA. On February 15, 2022, we refinanced our Chestnut Farm multifamily community with permanent mortgage financing in the amount of approximately $52.3 million, which bears interest at a rate of 3.25% and matures on March 1, 2032. As previously announced, on February 16, 2022, we entered into an agreement and plan of merger (the “Merger Agreement”) with Pike Parent LLC (“Parent”), Pike Merger Sub I LLC (“Merger Sub I”), Pike Merger Sub II LLC (“Merger Sub II”), Pike Merger Sub III LLC (“Merger Sub III” and, together with Parent, Merger Sub I and Merger Sub II, the “Parent Parties”), the Operating Partnership and PAC Operations, LLC (“Operations”). The Parent Parties are affiliates of BREIT, which is an affiliate of Blackstone Inc. Pursuant to the Merger Agreement, (i) Merger Sub II will merge with and into the Operating Partnership (the “Partnership Merger”) with the Operating Partnership being the surviving entity and immediately following the consummation of the Partnership Merger, (ii) Operations will merge with and into Merger Sub III (the “Operations Merger”) with Merger Sub III being the surviving entity and immediately following the Operations Merger, (iii) the Company will merge with and into Merger Sub I (the “Company Merger” and, together with the Partnership Merger and the Operations Merger, the “Mergers”) with Merger Sub I being the surviving entity. Pursuant to the Merger Agreement, (i) each share of Common Stock that is issued and outstanding immediately prior to the Mergers will be automatically cancelled and converted into the right to receive $25.00 in cash and (ii) each share of preferred stock that is issued and outstanding immediately prior to the Mergers will be automatically cancelled and converted into the right to receive $1,000 in cash, plus any accrued but unpaid dividends, if any, to and including the closing date of the Mergers. Notwithstanding the forgoing, any shares of Common Stock or preferred stock held by the Company or any subsidiary of the Company or by the Parent Parties or any of their respective subsidiaries, if any, will no longer be outstanding and will automatically be retired and will cease to exist, and no consideration will be paid in connection with the Mergers. The Mergers are subject to customary closing conditions, including approval by the Company’s common stockholders at a special meeting to be held on June 7, 2022. The Mergers are expected to close on the third business day after the conditions to closing are satisfied or waived, including approval of the Company’s stockholders of the Mergers. The Company can provide no assurances regarding whether the Mergers will close as expected during the second quarter of 2022, or at all. The board of directors of the Company has unanimously approved the Merger Agreement and has recommended approval of the Mergers by the Company’s common stockholders. On February 25, 2022, we closed on the acquisition of Lirio at Rafina, a 280-unit multifamily community located in the Orlando, Florida MSA. On February 28, 2022, we closed on a real estate loan investment of up to approximately $17.2 million supporting a 242-unit multifamily community in Naples, Florida. On March 2, 2022, we closed on a 65% interest in a $65.0 million joint venture project to develop The Helmsman, a 262-unit multifamily community to be located in Wilmington, North Carolina. This transaction represents our entry into the multifamily development space. On March 31, 2022, we closed on a preferred equity investment of up to approximately $14.3 million supporting The Shoals, a 252-unit multifamily community in Greenville, South Carolina. The investment will pay a fixed return of 12.0% per annum and has a term of 42 months, with a one-year extension option. Subsequent to Quarter End On April 5, 2022, we sold our Champions Village grocery-anchored shopping center in Houston, Texas for $45.0 million and recorded a gain on the sale of approximately $1.9 million. On April 20, 2022, we sold our Sweetgrass Corner grocery-anchored shopping center in Charleston, South Carolina for $17.0 million and recorded a gain on the sale of approximately $4.3 million. Between April 1, 2022 and April 30, 2022, the Company issued 1,451,700 shares of Common Stock at an average price of $19.70 per share from exercises of Warrants and collected approximately $28.6 million. On April 12, 2022, our Vintage Horizon West real estate loan investment was repaid in full. 2022 Guidance Due to the pending merger with affiliates of BREIT, we are not issuing guidance at this time with respect to our 2022 financial outlook. Real Estate Assets At March 31, 2022, our portfolio of owned real estate assets and potential additions from purchase options we held from our real estate loan investments (and one multifamily development project currently under construction) consisted of: Owned as of March 31, 2022 (1) Potential additions (2) Potential total Residential properties: Properties 42 12 54 Units 12,332 3,639 15,971 Development properties 1 ( 4) — 1 Units — 262 262 Grocery-anchored shopping centers: Properties 54 1 55 Gross leasable area (square feet) 6,210,778 85,500 ( 3) 6,296,278 Office buildings: Properties 2 — 2 Rentable square feet 1,072,000 — 1,072,000 Land 1 — 1 (1) One multifamily community and two grocery-anchored shopping centers are owned through consolidated joint ventures. One grocery-anchored shopping center is an investment in an unconsolidated joint venture. (2) We evaluate each project individually and we make no assurance that we will acquire any of the underlying properties from our real estate loan investment portfolio. (3) Estimated square footage of Nexton Shopping Center development. (4) The Helmsman, a 262-unit multifamily development, will consist of approximately 2,600 square feet of gross leasable area of ground floor retail space which is not included in the totals above for grocery-anchored shopping centers. Same-Store Financial Data The following charts present same-store operating results for the Company’s multifamily communities. We define our population of same-store multifamily communities as those that have achieved occupancy at or above 93% for all three months within a single quarter ("stabilized") before the beginning of the prior year and that have been owned for at least 15 full months as of the end of the first quarter of the current year, enabling comparisons of the current year quarterly and annual reporting periods to the prior year comparative periods. The Company excludes the operating results of properties for which construction of adjacent phases has commenced and properties which are undergoing significant capital projects, have sustained significant casualty losses, or are being held for sale as of the end of the reporting period. For the periods presented, same-store operating results consist of the operating results of our multifamily communities, comprising an aggregate 10,442 units, or 84.7% of our multifamily units. Same-store net operating income is a non-GAAP measure that is most directly comparable to net loss, as shown in the reconciliation below. See Definitions of Non-GAAP Measures. Reconciliation of Net Loss to Multifamily Communities' Same-Store Net Operating Income ("NOI") Three months ended: (in thousands) 3/31/2022 3/31/2021 Net loss $ (7,844 ) $ (2,709 ) Add: Equity stock compensation 1,223 574 Depreciation and amortization 38,161 45,827 Interest expense 23,160 26,991 General and administrative 7,842 7,539 Merger-related costs 4,913 — Loss from unconsolidated joint venture 108 194 Management Internalization 244 245 Allowance for expected credit losses 572 522 Less: Interest revenue on notes receivable 6,583 10,512 Interest revenue on related party notes receivable 197 405 Miscellaneous revenues 198 324 Gain on sale of real estate — 798 Loss on sale of land (22 ) — Loss on extinguishment of debt (363 ) — Property net operating income 61,786 67,144 Less: Non same-store property revenues (45,355 ) (57,498 ) Add: Non same-store property operating expenses 15,151 17,600 Same-store net operating income $ 31,582 $ 27,246 Multifamily Communities' Same-Store NOI Three months ended: (in thousands) 3/31/2022 3/31/2021 $ change % change Revenues: Rental and other property revenues $ 52,546 $ 46,961 $ 5,585 11.9 % Operating expenses: Property operating and maintenance 8,358 7,746 612 7.9 % Payroll 3,697 3,574 123 3.4 % Real estate taxes and insurance 8,909 8,395 514 6.1 % Total operating expenses 20,964 19,715 1,249 6.3 % Same-store net operating income $ 31,582 $ 27,246 $ 4,336 15.9 % Same-store average physical occupancy 96.3 % 95.8 % 0.5 % Corporate level expenses related to the management and operations of the multifamily portfolio are allocated on a per unit basis to property NOI and are included in Multifamily Same-Store NOI. Dividends Quarterly Dividends on Common Stock and Class A OP Units On February 24, 2022, our board of directors declared a quarterly dividend on our Common Stock of $0.175 per share, that was paid on April 14, 2022 to stockholders of record on March 15, 2022. In conjunction with the Common Stock dividend, our Operating Partnership declared a distribution on its Class A Units of $0.175 per unit for the first quarter 2022, which was paid on April 14, 2022 to all Class A Unit holders of record as of March 15, 2022. The Merger Agreement prohibits us from declaring additional dividends on our Common Stock prior to the closing of the Mergers. Monthly Dividends on Preferred Stock We declared monthly dividends of $5.00 per share on our Series A Preferred Stock, which totaled approximately $21.2 million for the first quarter 2022 and represents a 6% annual yield. We declared monthly dividends of $5.00 per share on our Series A1 Preferred Stock, which totaled approximately $3.7 million for the first quarter 2022 and also represents a 6% annual yield. We declared dividends totaling approximately $1.4 million on our Series M Preferred Stock, or mShares, for the first quarter 2022. The mShares have a dividend rate that escalates from 5.75% in year one of issuance to 7.50% in year eight and thereafter. We declared dividends totaling approximately $723,000 on our Series M1 Preferred Stock for the first quarter 2022. The Series M1 Preferred Stock has a dividend rate that escalates from 6.1% in year one of issuance to 7.1% in year ten and thereafter. Forward-Looking Statements “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: redemptions of Series A Preferred Stock, potential additions of properties from purchase options and rights of first offer from our real estate loan investments, development properties, goals and performance are, by definition, and certain other statements in this Earnings Release and Supplemental Financial Data Report may constitute, “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance, achievements or transactions to be materially different from the results, guidance, goals, performance, achievements or transactions expressed or implied by the forward-looking statements. These statements may be identified by the use of forward-looking terminology such as "may," "trend," "will," "expects," "plans," "estimates," "anticipates," "projects," "intends," "believes," "strategy," "goals," "objectives," "outlook" and similar expressions. These risks, uncertainties and contingencies include, but are not limited to, (a) the impact of the COVID-19 pandemic, including any variants, and related federal, state and local government actions on PAC’s business operations and the economic conditions in the markets in which PAC operates; (b) PAC’s ability to mitigate the impacts arising from COVID-19 or any variants thereof; (c) risks related to the proposed acquisition by BREIT, including the possibility that the consummation of the transaction could be delayed or not completed, and the effect of the announcement or pendency of the transaction on our business; (d) PAC's ability to make distributions to its stockholders in the future and (e) those disclosed in PAC's filings with the SEC. Factors that impact such forward-looking statements include, among others, our business and investment strategy; legislative or regulatory actions; the state of the U.S. economy generally or in specific geographic areas; economic trends and economic recoveries; changes in operating costs, including real estate taxes, utilities and insurance costs; our ability to obtain and maintain debt or equity financing; financing and advance rates for our target assets; our leverage level; changes in the values of our assets; the occurrence of natural or man-made disasters; availability of attractive investment opportunities in our target markets; our ability to maintain our qualification as a real estate investment trust, or REIT, for U.S. federal income tax purposes; availability of quality personnel; our understanding of our competition and market trends in our industry; and interest rates, real estate values, the debt securities markets and the general economy. Except as otherwise required by the federal securities laws, we assume no liability to update the information in this Earnings Release and Supplemental Financial Data Report. We refer you to the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2021 that was filed with the SEC on February 28, 2022, which includes a discussion of various factors that could adversely affect our financial results. Such risk factors and information may be updated or supplemented by our Form 10-K, Form 10-Q and Form 8-K filings and other documents filed from time to time with the SEC. COVID-19 Our percentages of rent collected remained stabilized at or near pre-pandemic levels during the first quarter 2022. While the impacts of COVID-19 and its variants are continuing, the effects on our operations have been manageable and we believe this condition will persist, barring a dramatic change in the trajectory of the pandemic. We are continuing to monitor the spread and impact of the variants of COVID-19 as well as vaccination rates in our markets. Preferred Apartment Communities, Inc. Condensed Consolidated Statements of Operations (Unaudited) Three months ended March 31, (In thousands, except per-share figures) 2022 2021 Revenues: Rental and other property revenues $ 97,902 $ 104,459 Interest income on loans and notes receivable 6,583 10,512 Interest income from related parties 197 405 Miscellaneous revenues 198 324 Total revenues 104,880 115,700 Operating expenses: Property operating and maintenance 14,863 15,249 Property salary and benefits 4,655 4,821 Property management costs 792 1,105 Real estate taxes and insurance 15,806 16,140 General and administrative 7,842 7,539 Merger-related costs 4,913 — Equity compensation to directors and executives 1,223 574 Depreciation and amortization 38,161 45,827 Allowance for expected credit losses 572 522 Management Internalization expense 244 245 Total operating expenses 89,071 92,022 Operating income before loss from unconsolidated joint venture and gain on sale of real estate 15,809 23,678 Loss from unconsolidated joint venture (108 ) (194 ) Gain on sale of real estate, net — 798 Operating income 15,701 24,282 Interest expense 23,160 26,991 Loss on extinguishment of debt (363 ) — Loss on sale of land (22 ) — Net loss (7,844 ) (2,709 ) Net loss attributable to non-controlling interests 30 62 Net loss attributable to the Company (7,814 ) (2,647 ) Dividends to preferred stockholders (27,033 ) (33,820 ) Dividends to holders of unvested restricted stock (137 ) (142 ) Net loss attributable to common stockholders $ (34,984 ) $ (36,609 ) Net loss per share of Common Stock available to common stockholders, basic and diluted $ (0.62 ) $ (0.73 ) Weighted average number of shares of Common Stock outstanding, basic and diluted 56,255 50,033 Reconciliation of FFO Attributable to Common Stockholders and Unitholders, Core FFO and AFFO to Net Loss Attributable to Common Stockholders Three months ended March 31, (In thousands, except per-share figures) 2022 2021 Net loss attributable to common stockholders (See note 1) $ (34,984 ) $ (36,609 ) Add: Depreciation of real estate assets 32,274 36,832 Amortization of acquired intangible assets and deferred leasing costs 5,620 8,710 Net loss attributable to Class A Unitholders (See note 2) (64 ) (33 ) Gain on sale of real estate — (798 ) FFO attributable to common stockholders and Unitholders 2,846 8,102 Acquisition and pursuit costs 100 4 Loan cost amortization on acquisition line of credit and loan coordination fees (See note 3) 301 424 Payment of costs related to property refinancing 363 — Internalization costs (See note 4) 244 245 Corporate governance and merger-related costs 5,291 — Deemed dividends for redemptions of and non-cash dividends on preferred stock, plus expenses incurred on calls of preferred stock (See note 5) 1,682 3,827 Expenses related to the COVID-19 global pandemic — 54 Core FFO attributable to common stockholders and Unitholders 10,827 12,656 Add: Non-cash equity compensation to directors and executives 1,223 574 Non-cash income for current expected credit losses (See note 12) 240 117 Amortization of loan closing costs (See note 6) 1,294 1,212 Depreciation/amortization of non-real estate assets 451 444 Net loan origination fees received (See note 7) 683 817 Deferred interest income received (See note 8) — 2,917 Amortization of lease inducements (See note 9) 447 448 Cash received in excess of (exceeded by) amortization of purchase option termination revenues (See note 10) — 250 Less: Non-cash loan interest income (See note 11) (2,027 ) (2,874 ) Cash paid for loan closing costs — (10 ) Amortization of acquired real estate intangible liabilities and straight-line rent adjustments (See note 13) (1,604 ) (3,315 ) Amortization of deferred revenues (See note 14) (940 ) (940 ) Normally recurring capital expenditures (See note 15) (1,883 ) (3,353 ) AFFO attributable to common stockholders and Unitholders $ 8,711 $ 8,943 Common Stock dividends and distributions to Unitholders declared: Common Stock dividends $ 10,976 $ 8,991 Distributions to Unitholders (See note 2) 82 96 Total $ 11,058 $ 9,087 Common Stock dividends and Unitholder distributions per share $ 0.175 $ 0.175 FFO per weighted average basic share of Common Stock and Unit outstanding $ 0.05 $ 0.16 Core FFO per weighted average basic share of Common Stock and Unit outstanding $ 0.19 $ 0.25 AFFO per weighted average basic share of Common Stock and Unit outstanding $ 0.15 $ 0.18 Weighted average shares of Common Stock and Units outstanding: Basic: Common Stock 56,255 50,033 Class A Units 468 610 Common Stock and Class A Units 56,723 50,643 Diluted Common Stock and Class A Units (See note 16) 62,457 50,971 Actual shares of Common Stock outstanding, including 782 and 809 unvested shares of restricted Common Stock at March 31, 2022 and 2021, respectively. 63,711 50,904 Actual Class A Units outstanding at March 31, 2022 and 2021, respectively. 526 548 Total 64,237 51,452 See Notes to Reconciliation of FFO, Core FFO and AFFO to Net Loss Attributable to Common Stockholders. Notes to Reconciliations of FFO Attributable to Common Stockholders and Unitholders, Core FFO and AFFO to Net Loss Attributable to Common Stockholders 1) Rental and other property revenues and property operating expenses for the three months ended March 31, 2022 include activity for the properties acquired since March 31, 2021. 2) Non-controlling interests in our Operating Partnership consisted of a total of 526,128 Class A Units as of March 31, 2022. Included in this total are 419,228 Class A Units which were granted as partial consideration to the seller in conjunction with the seller's contribution to us on February 29, 2016 of the Wade Green grocery-anchored shopping center. The remaining Class A Units were awarded primarily to our key executive officers. The Class A Units are apportioned a percentage of our financial results as non-controlling interests. The weighted average ownership percentage of these holders of Class A Units was calculated to be 0.83% and 1.20% for the three-month periods ended March 31, 2022 and 2021, respectively. 3) We paid loan coordination fees to Preferred Apartment Advisors, LLC (our "Former Manager") to reflect the administrative effort involved in arranging debt financing for acquired properties prior to the Internalization Transaction (defined in note 4 below). The fees were calculated as 0.6% of the amount of any mortgage indebtedness on newly-acquired properties or refinancing and are amortized over the lives of the respective mortgage loans. This non-cash amortization expense is an addition to FFO in the calculation of Core FFO and AFFO. At March 31, 2022, aggregate unamortized loan coordination fees were approximately $7.4 million, which will be amortized over a weighted average remaining loan life of approximately 10.1 years. 4) This adjustment reflects the add-back of accretion of the discount on the deferred liability payable to the owners of the Former Manager and other professional fees related to the internalization of the functions performed by the Former Manager and Former Sub-Manager (the "Internalization Transaction"). 5) This additive adjustment removes the effect of deemed dividends that arise from cash calls and redemptions of preferred stock. For shares of preferred stock that are called by the Company or redeemed by the holder, the Company records a deemed dividend for the difference between the redemption of the share at its face value, net of any redemption discount, as compared to the carrying value of the share on the Company’s consolidated balance sheets. Also included in this adjustment is the adding back of expenses incurred related to effecting calls of preferred stock. 6) We incur loan closing costs on our existing mortgage loans, which are secured on a property-by-property basis by each of our acquired real estate assets, and also for occasional amendments to our syndicated revolving line of credit with Key Bank National Association, or our Revolving Line of Credit. These loan closing costs are also amortized over the lives of the respective loans and the Revolving Line of Credit, and this non-cash amortization expense is an addition to FFO in the calculation of AFFO. Neither we nor the Operating Partnership has any recourse liability in connection with any of the mortgage loans, nor do we have any cross-collateralization arrangements with respect to the assets securing the mortgage loans, other than security interests in 49% of the equity interests of the subsidiaries owning such assets, granted in connection with our Revolving Line of Credit, which provides for full recourse liability. At March 31, 2022, unamortized loan costs on all the Company's indebtedness were appro ximately $28.8 million, which will be amortized over a weighted average remaining loan life of approximately 7.8 years. 7) We receive loan origination fees in conjunction with the origination of certain real estate loan investments. The total fees received are additive adjustments to Core FFO in our calculation of AFFO. 8) Over the lives of certain loans, we accrue additional interest amounts that become due to us at the time of repayment of the loan or refinancing of the property, or when the property is sold. Once received from the borrower, the amount of additional accrued interest becomes an additive adjustment to Core FFO in our calculation of AFFO. 9) This adjustment removes the non-cash amortization of costs incurred to induce tenants to lease space in our office buildings and grocery-anchored shopping centers. 10) Occasionally we receive fees in exchange for the termination of our purchase options related to certain multifamily communities. These fees are recorded as revenue over the period beginning on the date of termination until the earlier of (i) the maturity of the real estate loan investment and (ii) the sale of the property. The receipt of the cash termination fees are an additive adjustment in our calculation of AFFO and the removal of non-cash revenue from the recognition of the termination fees are a reduction to Core FFO in our calculation of AFFO; both of these adjustments are presented in a single net number within this line. For periods in which recognized termination fee revenues exceeded the amount of cash received, a negative adjustment is shown to Core FFO in our calculation of AFFO; for periods in which cash received exceeded the amount of recognized termination fee revenues, an additive adjustment is shown to Core FFO in our calculation of AFFO. 11) Loan origination fees (described in note 7 above) are recognized as revenue over the lives of the applicable loans as adjustments of yield using the effective interest method. Similarly, the accrual of additional interest amounts (described in note 8 above) are recognized beginning from loan inception through the repayment of the loan or the refinancing or sale of the underlying property. This adjustment removes the effect of both these types of non-cash loan interest income from Core FFO in our calculation of AFFO. 12) Effective January 1, 2020, we adopted ASU 2016-03, which requires us to estimate the amount of future credit losses we expect to incur over the lives of our real estate loan investments at the inception of each loan. This loss reserve may be adjusted upward or downward over the lives of our loans and therefore the aggregate net adjustment for each period could be positive (removing the non-cash effect of a net increase in aggregate loss reserves) or negative (removing the non-cash effect of a net decrease in aggregate loss reserves) in these adjustments to Core FFO in calculating AFFO. 13) This adjustment reflects straight-line rent adjustments and the reversal of the non-cash amortization of below-market and above-market lease intangibles, which were recognized in conjunction with our acquisitions and which are amortized over the estimated average remaining lease terms from the acquisition date for multifamily communities and over the remaining lease terms for grocery-anchored shopping center assets and office buildings. At March 31, 2022, the balance of unamortized below-market lease intangibles was approximately $32.9 million, which will be recognized over a weighted average remaining lease period of approximately 8.2 years. 14) This adjustment removes the non-cash amortization of deferred revenue recorded by us in conjunction with Company-owned lessee-funded tenant improvements in our office buildings. 15) We deduct from Core FFO normally recurring capital expenditures that are necessary to maintain our assets’ revenue streams in the calculation of AFFO. This adjustment also deducts from Core FFO capitalized amounts for third party costs during the period to originate or renew leases in our grocery-anchored shopping centers and office buildings. This adjustment includes approximately $41,000 of recurring capitalized expenditures incurred at our corporate offices during the three-month period ended March 31, 2022. No adjustment is made in the calculation of AFFO for nonrecurring capital expenditures. See Capital Expenditures, Grocery-Anchored Shopping Center Portfolio, and Office Building Portfolio sections for definitions of these terms. 16) Since our AFFO results are positive for the periods reflected, we are presenting recalculated diluted weighted average shares of Common Stock and Class A Units for these periods for purposes of this table, which includes the dilutive effect of common stock equivalents from grants of the Class B Units, warrants included in units of Series A Preferred Stock issued, as well as annual grants of restricted Common Stock and restricted stock units. The weighted average shares of Common Stock outstanding presented on the Consolidated Statements of Operations are the same for basic and diluted for any period for which we recorded a net loss available to common stockholders. See Definitions of Non-GAAP Measures. Preferred Apartment Communities, Inc. Condensed Consolidated Balance Sheets (Unaudited) (In thousands, except per-share par values) March 31, 2022 December 31, 2021 Assets Real estate Land $ 553,900 $ 551,378 Building and improvements 2,745,749 2,671,535 Tenant improvements 119,989 119,331 Furniture, fixtures, and equipment 372,288 359,743 Construction in progress 11,723 5,151 Gross real estate 3,803,649 3,707,138 Less: accumulated depreciation (611,111 ) (578,496 ) Net real estate 3,192,538 3,128,642 Real estate loan investments, net 210,280 196,420 Total real estate and real estate loan investments, net 3,402,818 3,325,062 Cash and cash equivalents 117,221 30,205 Restricted cash 33,474 32,675 Note receivable from related party 8,875 9,011 Accrued interest receivable on real estate loans 18,569 17,038 Acquired intangible assets, net of amortization 55,432 59,622 Tenant lease inducements, net 15,976 16,420 Investment in unconsolidated joint venture 5,884 5,992 Tenant receivables and other assets 82,023 67,343 Total assets $ 3,740,272 $ 3,563,368 Liabilities and equity Liabilities Mortgage notes payable, net of deferred loan costs and mark-to-market adjustment $ 2,388,772 $ 2,343,364 Deferred revenues 34,612 35,523 Accounts payable and accrued expenses 35,046 36,517 Deferred liability to Former Manager 24,219 24,037 Contingent liability due to Former Manager 14,564 14,631 Accrued interest payable 6,990 7,086 Dividends and partnership distributions payable 21,509 19,912 Acquired below market lease intangibles, net of amortization 32,936 34,585 Prepaid rent, security deposits and other liabilities 27,004 25,679 Total liabilities 2,585,652 2,541,334 Commitments and contingencies Equity Stockholders' equity Series A Redeemable Preferred Stock, $0.01 par value per share; 3,050 shares authorized; 2,226 shares issued; 1,302 and 1,321 shares outstanding at March 31, 2022 and December 31, 2021, respectively 13 13 Series A1 Redeemable Preferred Stock, $0.01 par value per share; up to 1,000 shares authorized; 247 shares issued; 246 shares outstanding at March 31, 2022 and December 31, 2021, respectively 2 2 Series M Redeemable Preferred Stock, $0.01 par value per share; 500 shares authorized; 106 shares issued; 83 and 84 shares outstanding at March 31, 2022 and December 31, 2021, respectively 1 1 Series M1 Redeemable Preferred Stock, $0.01 par value per share; up to 1,000 shares authorized; 47 and 43 shares issued; 44 and 41 shares outstanding at March 31, 2022 and December 31, 2021, respectively — — Common Stock, $0.01 par value per share; 400,067 shares authorized; 62,929 and 52,975 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively 629 530 Additional paid-in capital 1,333,284 1,195,775 Accumulated (deficit) earnings (179,814 ) (172,000 ) Total stockholders' equity 1,154,115 1,024,321 Non-controlling interest 505 (2,287 ) Total equity 1,154,620 1,022,034 Total liabilities and equity $ 3,740,272 $ 3,563,368 Preferred Apartment Communities, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) Three-month periods ended March 31, 2022 2021 Operating activities: Net loss $ (7,844 ) $ (2,709 ) Reconciliation of net loss to net cash provided by (used in) operating activities: Depreciation and amortization expense 38,161 45,827 Amortization of above and below market leases (1,369 ) (1,399 ) Amortization of deferred revenues and other non-cash revenues (1,449 ) (1,195 ) Amortization of purchase option termination fees — (1,229 ) Amortization of equity compensation, lease incentives and other non-cash expenses 1,628 1,229 Deferred loan cost amortization 1,566 1,609 Non-cash accrued interest income on real estate loan investments (1,531 ) (2,822 ) Receipt of accrued interest income on real estate loan investments — 3,109 Gains on the sales of real estate, net — (798 ) Losses on the sales of land and other, net 22 — Loss from unconsolidated joint ventures 108 194 Cash received for purchase option terminations — 1,479 Loss on extinguishment of debt 363 — Increase in allowance for expected credit losses 572 522 Changes in operating assets and liabilities: Decrease (increase) in tenant receivables and other assets (3,445 ) 4,766 Decrease in accounts payable and accrued expenses (429 ) (2,787 ) Increase in accrued interest, prepaid rents and other liabilities 1,874 2,589 Net cash provided by operating activities 28,227 48,385 Investing activities: Investments in real estate loans, net of origination fees received (13,605 ) (18,840 ) Repayments of real estate loans — 17,925 Notes receivable repaid — 79 Acquisition of properties (90,203 ) (289 ) Disposition of properties and proceeds from land sales, net (260 ) 4,798 Investment into property development (2,718 ) — Capital improvements to real estate assets (4,875 ) (10,263 ) Net cash used in investing activities (111,661 ) (6,590 ) Financing activities: Proceeds from mortgage notes 106,310 2,152 Repayment of mortgage notes (61,745 ) (10,340 ) Payments for deposits and other mortgage loan costs (589 ) (285 ) Payments for debt prepayment and other debt extinguishment costs (324 ) — Proceeds from Revolving Line of Credit 185,000 105,000 Payments on Revolving Line of Credit (185,000 ) (87,000 ) Proceeds from sales of Preferred Stock, net of offering costs 2,800 34,109 Payments for redemptions and calls of Preferred Stock (19,162 ) (40,018 ) Proceeds from sale of Common Stock and warrant exercises 179,213 — Common Stock dividends paid (9,382 ) (8,829 ) Preferred Stock dividends and Class A Unit distributions paid (27,118 ) (33,840 ) Payments for deferred offering costs (1,143 ) (1,030 ) Contributions from non-controlling interests 2,625 — Distributions to non-controlling interests (236 ) (56 ) Net cash (used in) provided by financing activities 171,249 (40,137 ) Net increase in cash, cash equivalents and restricted cash 87,815 1,658 Cash, cash equivalents and restricted cash, beginning of year 62,880 75,716 Cash, cash equivalents and restricted cash, end of period $ 150,695 $ 77,374 Real Estate Loan Investments The following tables present details pertaining to our portfolio of fixed rate, interest-only real estate loan investments. Project/Property Location Maturity date Optional extension date Total loan commitments Carrying amount (1) as of Current / deferred interest % per annum March 31, 2022 December 31, 2021 Multifamily communities: (in thousands) The Platform San Jose, CA 8/13/2022 (2) $ 137,616 $ 137,616 $ 136,061 (2) Vintage Horizon West Orlando, FL 10/11/2022 10/11/2024 10,900 10,038 9,828 8.5 / 5.5 Nexton Charleston, SC 12/16/2022 N/A 6,265 6,265 6,265 (3) Vintage Jones Franklin Raleigh, NC 11/14/2023 5/14/2025 10,000 9,182 8,989 8.5 / 5.5 Solis Cumming Town Center Atlanta, GA 9/3/2024 9/3/2026 20,681 18,542 18,153 8.5 / 5.5 Hudson at Metro West Orlando, FL 9/1/2024 3/1/2026 16,791 14,176 13,873 8.5 / 4.5 Oxford Club Drive Atlanta, GA 2/11/2025 2/11/2027 23,150 7,513 5,551 8.5 / 4.5 Populus at Pooler Savannah, GA 5/27/2025 5/27/2026 15,907 7,030 2,104 8.5 / 4.25 Populus at Pooler Capital Savannah, GA 5/27/2025 5/27/2026 1,169 966 946 8.5 / 4.25 Menlo II Jacksonville, FL 4/14/2025 4/14/2027 16,610 6,470 4,500 8.5 / 3.5 Beaver Ruin Atlanta, GA 5/3/2025 11/3/2026 9,133 1,098 — 8.5 / 4.5 Prado Orlando, FL 8/11/2025 8/11/2027 16,650 1,661 — 8.5 / 3.5 Altis Naples, FL 2/27/2026 2/27/2028 17,151 — — 8.5 / 4.25 302,023 220,557 206,270 Preferred equity: (4) The Shoals Greenville, SC 3/31/2026 3/31/2027 14,284 — — 8.5 / 3.5 $ 316,307 220,557 206,270 Unamortized loan origination fees (1,942 ) (1,755 ) Allowances for expected credit losses and doubtful accounts (8,335 ) (8,095 ) Carrying amount $ 210,280 $ 196,420 (1) Carrying amounts presented per loan are amounts drawn. (2) Effective February 10, 2022, the Third Amendment to the loan agreement provided for extension options until August 13, 2022 and December 31, 2022. The interest rate was amended to 8.5% current interest and 1.0% deferred interest per annum until May 13, 2022, then 8.5% current interest and 1.5% deferred interest per annum until August 13, 2022. If the second extension option is exercised, the rate increases to 8.5% current interest and 2.0% deferred interest per annum until November 13, 2022, then 8.5% current interest and 2.5% deferred interest per annum until December 31, 2022. (3) Loan accrues interest at 11% per annum until June 16, 2022, then 13% per annum until December 16, 2022; all interest is paid monthly. (4) A fixed-return component of the capital stack in a multifamily community development project that is economically equivalent to our real estate loan investments, with features and terms as shown. We hold options or rights of first offer, but not obligations, to purchase some of the properties which are partially financed by our real estate loan investments. Option purchase prices are generally the market value of the property, as negotiated and agreed upon by the purchasing and selling parties and are derived utilizing market cap rates. As of March 31, 2022, potential property acquisitions and units from projects in our real estate loan investment portfolio consisted of: Total units upon Purchase option window Project/Property Location completion (1) Begin End Multifamily communities Hudson at Metro West Orlando, FL 320 S + 90 days (2) S + 150 days (2) Vintage Horizon West Orlando, FL 340 (10) (3) (3) Vintage Jones Franklin Raleigh, NC 277 (3) (3) Solis Cumming Town Center Atlanta, GA 320 (4) (4) Club Drive Atlanta, GA 352 (5) (5) Populus at Pooler Savannah, GA 316 (6) (6) Menlo II Jacksonville, FL 337 (7) (7) Beaver Ruin Atlanta, GA 246 S + 90 days (8) S + 150 days (8) One Nexton Charleston, SC 351 (9) (9) Prado Orlando, FL 286 S + 90 days S + 180 days Altis Naples, FL 242 S + 90 days (2) S + 150 days (2) The Shoals Greenville, SC 252 (4) (4) 3,639 (1) We evaluate each project individually and we make no assurance that we will acquire any of the underlying properties from our real estate loan investment portfolio. (2) The option period window begins and ends at the number of days indicated beyond the achievement of a 93% occupancy threshold by the underlying property. (3) The option period window begins on the later of one year following receipt of final certificate of occupancy or 90 days beyond the achievement of a 93% occupancy threshold by the underlying property and ends 60 days beyond the option period beginning date. (4) We hold a right of first offer on the property. (5) The option period window begins upon the property's achievement of an 85% occupancy threshold. If we are unable to reach an agreement on the property's market value, we have a right of first offer. (6) The option period window begins upon the property's achievement of an 80% occupancy threshold. If we are unable to reach an agreement on the property's market value, we have a right of first offer. (7) The option period window begins either by notice from the seller upon the property's achievement of a 70% occupancy threshold or by notice from the purchaser upon the property's achievement of a 93% occupancy threshold and expires 90 days beyond either event. If we are unable to reach an agreement on the property's market value, we have a right of first offer. (8) The option period window begins and ends at the number of days indicated beyond the achievement of an 85% occupancy threshold by the underlying property. If we are unable to reach an agreement on the property's market value, we have a right of first offer. (9) The underlying loan is a land acquisition bridge loan that is anticipated to be converted to a real estate loan investment in the future with a purchase option or right of first offer. (10) The purchase option was voided in conjunction with the repayment of the loan on April 12, 2022. Mortgage Indebtedness As of March 31, 2022, our mortgage note principal repayment obligations were: Period Future principal payments (in thousands) 2022 $ 54,993 2023 81,841 2024 300,318 2025 57,692 2026 339,105 2027 320,122 2028 252,544 2029 246,473 2030 357,317 2031 97,107 Thereafter 319,705 Totals $ 2,427,217 Multifamily Communities As of March 31, 2022, our multifamily community portfolio consisted of the following properties: Three months ended March 31, 2022 Property Location Number of units Average unit size (sq. ft.) Average physical occupancy Average rent per unit Same-Store Communities: Aldridge at Town Village Atlanta, GA 300 969 95.7 % $ 1,628 Green Park Atlanta, GA 310 985 97.1 % $ 1,657 Overton Rise Atlanta, GA 294 1,018 95.0 % $ 1,728 Summit Crossing I Atlanta, GA 345 1,034 97.1 % $ 1,435 Summit Crossing II Atlanta, GA 140 1,100 97.1 % $ 1,582 The Reserve at Summit Crossing Atlanta, GA 172 1,002 97.3 % $ 1,529 Avenues at Cypress Houston, TX 240 1,170 96.4 % $ 1,612 Avenues at Northpointe Houston, TX 280 1,167 94.2 % $ 1,540 Stone Creek Houston, TX 246 852 95.7 % $ 1,241 Aster at Lely Resort Naples, FL 308 1,071 96.4 % $ 1,724 Sorrel Jacksonville, FL 290 1,048 95.6 % $ 1,508 Lux at Sorrel Jacksonville, FL 265 1,025 96.4 % $ 1,557 Artisan at Viera Melbourne, FL 259 1,070 96.5 % $ 1,842 525 Avalon Park Orlando, FL 487 1,394 95.5 % $ 1,694 The Blake Orlando, FL 281 908 96.4 % $ 1,601 Citi Lakes Orlando, FL 346 984 97.4 % $ 1,594 Village at Baldwin Park Orlando, FL 528 1,069 96.7 % $ 1,880 Parkside at the Beach Panama City Beach, FL 288 1,041 98.8 % $ 1,563 Luxe at Lakewood Ranch Sarasota, FL 280 1,105 95.0 % $ 1,808 Venue at Lakewood Ranch Sarasota, FL 237 1,001 97.2 % $ 1,888 Crosstown Walk Tampa, FL 342 1,070 96.6 % $ 1,599 Overlook at Crosstown Walk Tampa, FL 180 986 97.6 % $ 1,641 Citrus Village Tampa, FL 296 980 97.1 % $ 1,579 Five Oaks at Westchase Tampa, FL 218 983 97.6 % $ 1,750 Horizon at Wiregrass Tampa, FL 392 973 96.9 % $ 1,755 Lodge at Hidden River Tampa, FL 300 980 96.7 % $ 1,623 Lenox Village Nashville, TN 273 906 96.8 % $ 1,431 Regent at Lenox Nashville, TN 18 1,072 100.0 % $ 1,481 Retreat at Lenox Nashville, TN 183 773 96.9 % $ 1,370 CityPark View Charlotte, NC 284 948 94.7 % $ 1,276 CityPark View South Charlotte, NC 200 1,005 95.2 % $ 1,394 Colony at Centerpointe Richmond, VA 255 1,149 97.5 % $ 1,571 Founders Village Williamsburg, VA 247 1,070 96.2 % $ 1,615 Retreat at Greystone Birmingham, AL 312 1,100 94.4 % $ 1,560 Vestavia Reserve Birmingham, AL 272 1,113 95.1 % $ 1,721 Adara Overland Park Kansas City, KS 260 1,116 96.4 % $ 1,427 Claiborne Crossing Louisville, KY 242 1,204 95.6 % $ 1,448 City Vista Pittsburgh, PA 272 1,023 94.5 % $ 1,541 Total/Average Same-Store Communities 10,442 96.3 % Stabilized Communities: The Menlo Jacksonville, FL 332 966 95.2 % $ 1,654 The Ellison Atlanta, GA 250 1,064 99.1 % $ 1,650 Chestnut Farm Charlotte, NC 256 995 98.6 % $ 1,642 Alleia at Presidio Fort Worth, TX 231 1,022 95.7 % $ 1,661 The Anson Nashville, TN 301 989 96.7 % $ 1,595 The Kingson Fredericksburg, VA 240 993 95.7 % $ 1,739 Total/Average Stabilized Communities 1,610 96.3 % Lirio at Rafina Orlando, FL 280 974 — — Total Multifamily Community Units 12,332 For the three-month period ended March 31, 2022, our average same-store multifamily communities' physical occupancy was 96.3%. We calculate average same-store physical occupancy for quarterly periods as the average of the number of occupied units on the 20th day of each of the trailing three months from the reporting period end date and that have been owned for at least 15 full months as of the end of the first quarter of each year. We exclude the operating results of properties for which construction of adjacent phases has commenced and properties which are undergoing significant capital projects, have sustained significant casualty losses, or are being marketed for sale as of the end of the reporting period. We believe "Same Property" information is useful as it allows both management and investors to gauge our management effectiveness via comparisons of financial and operational results between interim and annual periods for those subsets of multifamily communities owned for current and prior comparative periods. For the three-month period ended March 31, 2022, our average stabilized physical occupancy was 96.3%. We calculate average stabilized physical occupancy for quarterly periods as the average number of occupied units on the 20th day of each of the trailing three months from the reporting period end date. All of our multifamily communities were stabilized for the three-month period ended March 31, 2022 except Lirio at Rafina. For the three-month period ended March 31, 2022, our average stabilized economic occupancy was 96.1%. We define average economic occupancy as market rent reduced by vacancy losses, expressed as a percentage. All of our multifamily properties are included in these calculations except for properties which are not yet stabilized, properties which are owned for less than the entire reporting period and properties which are undergoing significant capital projects, have sustained significant casualty losses or are adding additional phases. We also exclude properties which are currently being held for sale, of which we had none within the multifamily community portfolio at March 31, 2022. Average economic occupancy is useful both to management and investors as a gauge of our effectiveness in realizing the full revenue generating potential of our multifamily communities given market rents and occupancy rates. Capital Expenditures We regularly incur capital expenditures related to our owned multifamily communities. Capital expenditures may be nonrecurring and discretionary, as part of a strategic plan intended to increase a property’s value and corresponding revenue-generating ability, or may be normally recurring and necessary to maintain the income streams and present value of a property. Certain capital expenditures may be budgeted and reserved for upon acquiring a property as initial expenditures necessary to bring a property up to our standards or to add features or amenities that we believe make the property a compelling value to prospective residents in its individual market. These budgeted nonrecurring capital expenditures in connection with an acquisition are funded from the capital source(s) for the acquisition and are not dependent upon subsequent property operating cash flows for funding. For the three-month period ended March 31, 2022, our capital expenditures for multifamily communities consisted of: Capital Expenditures - Multifamily Communities Recurring Non-recurring Total (in thousands, except per-unit figures) Amount Per Unit Amount Per Unit Amount Per Unit Appliances $ 227 $ 18.53 $ — $ — $ 227 $ 18.53 Carpets 501 40.85 — — 501 40.85 Wood / vinyl flooring 30 2.47 121 9.83 151 12.30 Mini blinds and ceiling fans 36 2.95 — — 36 2.95 Fire safety — — 79 6.44 79 6.44 HVAC 128 10.44 — — 128 10.44 Computers, equipment, misc. 56 4.55 59 4.82 115 9.37 Elevators — — 20 1.60 20 1.60 Exterior painting and lighting — — 1,101 89.83 1,101 89.83 Leasing office and other common amenities — — 257 20.97 257 20.97 Major structural projects — — 551 44.97 551 44.97 Cabinets, countertops and unit upgrades — — 487 39.73 487 39.73 Landscaping and fencing — — 89 7.28 89 7.28 Parking lots and sidewalks — — 56 4.58 56 4.58 Signage and sanitation — — 11 0.87 11 0.87 Totals $ 978 $ 79.79 $ 2,831 $ 230.92 $ 3,809 $ 310.71 Grocery-Anchored Shopping Center Portfolio As of March 31, 2022, our grocery-anchored shopping center portfolio consisted of the following properties: Property name Location Year built GLA (1) Percent leased Grocery anchor tenant Castleberry-Southard Atlanta, GA 2006 80,018 100.0 % Publix Cherokee Plaza Atlanta, GA 1958 102,864 100.0 % Kroger Governors Towne Square Atlanta, GA 2004 68,658 100.0 % Publix Lakeland Plaza Atlanta, GA 1990 301,711 95.5 % Sprouts Powder Springs Atlanta, GA 1999 77,853 98.2 % Publix Rockbridge Village Atlanta, GA 2005 102,432 91.4 % Kroger Roswell Wieuca Shopping Center Atlanta, GA 2007 74,370 97.8 % The Fresh Market Royal Lakes Marketplace Atlanta, GA 2008 119,493 97.7 % Kroger Sandy Plains Exchange Atlanta, GA 1997 72,784 100.0 % Publix Summit Point Atlanta, GA 2004 111,970 89.2 % Publix Thompson Bridge Commons Atlanta, GA 2001 92,587 96.2 % Kroger Wade Green Village Atlanta, GA 1993 74,978 94.5 % Publix Woodmont Village Atlanta, GA 2002 85,639 100.0 % Kroger Woodstock Crossing Atlanta, GA 1994 66,122 98.5 % Kroger East Gate Shopping Center Augusta, GA 1995 75,716 93.7 % Publix Fury's Ferry Augusta, GA 1996 70,458 98.6 % Publix Parkway Centre Columbus, GA 1999 53,088 97.7 % Publix Greensboro Village Nashville, TN 2005 70,203 98.3 % Publix Spring Hill Plaza Nashville, TN 2005 66,693 100.0 % Publix Parkway Town Centre Nashville, TN 2005 65,587 100.0 % Publix The Market at Salem Cove Nashville, TN 2010 62,356 100.0 % Publix The Market at Victory Village Nashville, TN 2007 71,300 100.0 % Publix The Overlook at Hamilton Place Chattanooga, TN 1992 213,095 99.5 % The Fresh Market Shoppes of Parkland Miami-Ft. Lauderdale, FL 2000 145,720 98.6 % BJ's Wholesale Club Crossroads Market Naples, FL 1993 126,895 100.0 % Publix Neapolitan Way (2) Naples, FL 1985 137,580 97.5 % Publix Berry Town Center Orlando, FL 2003 99,441 89.9 % Publix Deltona Landings Orlando, FL 1999 59,966 94.8 % Publix University Palms Orlando, FL 1993 99,172 100.0 % Publix Disston Plaza Tampa-St Petersburg, FL 1954 129,150 96.6 % Publix Barclay Crossing Tampa, FL 1998 54,958 100.0 % Publix Polo Grounds Mall West Palm Beach, FL 1966 130,285 97.3 % Publix Kingwood Glen Houston, TX 1998 103,397 97.1 % Kroger Independence Square Dallas, TX 1977 140,218 92.6 % Tom Thumb Midway Market Dallas, TX 2002 85,599 94.9 % Kroger Oak Park Village San Antonio, TX 1970 64,855 100.0 % H.E.B. Irmo Station Columbia, SC 1980 99,384 89.0 % Kroger Rosewood Shopping Center Columbia, SC 2002 36,887 93.5 % Publix Anderson Central Greenville Spartanburg, SC 1999 223,211 95.6 % Walmart Fairview Market Greenville Spartanburg, SC 1998 46,303 100.0 % Aldi Brawley Commons Charlotte, NC 1997 122,028 98.6 % Publix West Town Market Charlotte, NC 2004 67,883 100.0 % Harris Teeter Heritage Station Raleigh, NC 2004 72,946 97.9 % Harris Teeter Maynard Crossing Raleigh, NC 1996 122,781 86.8 % Harris Teeter Wakefield Crossing Raleigh, NC 2001 75,927 98.2 % Food Lion Southgate Village Birmingham, AL 1988 75,092 96.8 % Publix Hollymead Town Center Charlottesville, VA 2005 158,807 90.5 % Harris Teeter Free State Shopping Center Washington, D.C. 1970 264,152 87.6 % Giant 4,922,612 96.0 % Redevelopment Properties: Champions Village Houston, TX 1973 383,346 64.9 % Randalls Sweetgrass Corner Charleston, SC 1999 89,124 32.9 % — Conway Plaza Orlando, FL 1966 117,705 80.6 % Publix Hanover Center (3) Wilmington, NC 1954 305,346 79.8 % Harris Teeter Gayton Crossing Richmond, VA 1983 160,816 (4) 74.2 % Kroger Fairfield Shopping Center (3) Virginia Beach, VA 1985 231,829 83.0 % Food Lion 1,288,166 72.1 % 6,210,778 91.0 % (1) Gross leasable area, or GLA, represents the total amount of property square footage that can be leased to tenants. (2) Investment in an unconsolidated joint venture that is not prorated for our ownership percentage. (3) Property is owned through a consolidated joint venture. (4) The GLA figure shown excludes the GLA of the Kroger store, which is owned by others. As of March 31, 2022, our grocery-anchored shopping center portfolio was 91.0% leased (96.0% excluding redevelopment properties). We define percent leased as the percentage of gross leasable area that is leased as of the period end date, including non-cancelable lease agreements that have been signed which have not yet commenced. This metric is used by management to gauge the extent to which our grocery-anchored shopping centers are delivering their total potential rental and other revenues. Details regarding lease expirations (assuming no exercises of tenant renewal options) within our grocery-anchored shoppng center portfolio as of March 31, 2022 were: Totals Number of leases Leased GLA Percent of leased GLA Month to month 22 65,031 1.2 % 2022 113 318,146 5.6 % 2023 147 614,369 10.9 % 2024 149 1,142,969 20.2 % 2025 133 943,070 16.7 % 2026 129 560,981 9.9 % 2027 91 462,094 8.2 % 2028 32 404,649 7.2 % 2029 30 249,842 4.4 % 2030 18 185,300 3.3 % 2031 24 259,613 4.6 % 2032 + 31 442,570 7.8 % Total 919 5,648,634 100.0 % Our grocery-anchored shopping center portfolio contained the following anchor tenants as of March 31, 2022: Tenant GLA Percent of total GLA Publix 1,179,030 19.0 % Kroger 581,593 9.4 % Harris Teeter 273,273 4.4 % Wal-Mart 183,211 2.9 % BJ's Wholesale Club 108,532 1.7 % Food Lion 76,523 1.2 % Giant 73,149 1.2 % Randall's 61,604 1.0 % H.E.B 54,844 0.9 % Tom Thumb 43,600 0.7 % The Fresh Market 43,321 0.7 % Sprouts 29,855 0.5 % Aldi 23,622 0.4 % Total 2,732,157 44.0 % Our Quarterly Report on Form 10-Q for the period ended March 31, 2022 will present income statements of New Market Properties, LLC within the Results of Operations section of Management's Discussion and Analysis of Financial Condition and Results of Operations. Second-generation capital expenditures within our grocery-anchored shopping center portfolio by property for the first quarter 2022 totaled approximately $713,000. Second-generation capital expenditures exclude those expenditures made in our grocery-anchored shopping center and office building portfolios (i) to lease space to "first generation" tenants (i.e. leasing capital for existing vacancies and known move-outs at the time of acquisition), (ii) to bring recently acquired properties up to our ownership standards, and (iii) for property redevelopments and repositioning. Office Building Portfolio As of March 31, 2022, our office building portfolio consisted of the following properties: Property Name Location GLA Percent leased Three Ravinia Atlanta, GA 814,000 93 % Westridge at La Cantera San Antonio, TX 258,000 100 % Total/Average 1,072,000 95 % As of March 31, 2022, our office building portfolio included the following significant tenants: Rentable square footage Percent of Annual Base Rent Annual Base Rent (in thousands) InterContinental Hotels Group 467,000 44.8 % $ 11,429 USAA 129,000 13.1 % 3,357 Vericast 129,000 12.2 % 3,102 Hapag Lloyd 127,000 17.5 % 4,455 Lease Query 53,000 3.8 % 968 Total 905,000 91.4 % $ 23,311 We define Annual Base Rent as the current monthly base rent annualized under the respective leases. As of March 31, 2022, the leased square footage of our office building portfolio expires according to the following schedule: Percent of Year of lease expiration Rented square rented feet square feet 2022 — — 2023 8,000 0.8 % 2024 5,000 0.5 % 2025 53,000 5.3 % 2026 — — 2027 329,000 33.0 % 2028 — — 2029 — — 2030 — — 2031 467,000 46.8 % 2032 + 136,000 13.6 % Total 998,000 100.0 % The Company recognized second-generation capital expenditures within its office building portfolio of approximately $151,000 during the first quarter 2022. Definitions of Non-GAAP Measures We disclose FFO, Core FFO, AFFO and NOI, each of which meets the definition of a “non-GAAP financial measure”, as set forth in Item 10(e) of Regulation S-K promulgated by the SEC. As a result we are required to include in this filing a statement of why the Company believes that presentation of these measures provides useful information to investors. The non-GAAP measures of FFO, Core FFO, AFFO and NOI should be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our performance, and we believe that to understand our performance further FFO, Core FFO, AFFO and NOI should be compared with our reported net income or net loss and considered in addition to cash flows in accordance with GAAP, as presented in our consolidated financial statements. FFO, Core FFO and AFFO are not considered measures of liquidity and are not alternatives to measures calculated under GAAP. Funds From Operations Attributable to Common Stockholders and Unitholders (“FFO”) FFO is one of the most commonly utilized Non-GAAP measures currently in practice. In its 2002 “White Paper on Funds From Operations,” which was restated in 2018, the National Association of Real Estate Investment Trusts, or NAREIT, standardized the definition of how net income/loss should be adjusted to arrive at FFO, in the interests of uniformity and comparability. We have adopted the NAREIT definition for computing FFO as a meaningful supplemental gauge of our operating results, and as is most often presented by other REIT industry participants. The NAREIT definition of FFO (and the one reported by the Company) is: Net income/loss, excluding: depreciation and amortization related to real estate; gains and losses from the sale of certain real estate assets; gains and losses from change in control; and impairment writedowns of certain real estate assets and investments in entities where the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. Not all companies necessarily utilize the standardized NAREIT definition of FFO, so caution should be taken in comparing our reported FFO results to those of other companies. Our FFO results are comparable to the FFO results of other companies that follow the NAREIT definition of FFO and report these figures on that basis. FFO is a non-GAAP measure that is reconciled to its most comparable GAAP measure, net income/loss available to common stockholders. Core Funds From Operations Attributable to Common Stockholders and Unitholders (“Core FFO”) We make adjustments to FFO to remove costs incurred and revenues recorded that are singular in nature and outside our normal operations and portray our primary operational results. We calculate Core FFO as: FFO, plus: acquisition and pursuit (dead deal) costs; loan cost amortization on acquisition line of credit and loan coordination fees; losses on debt extinguishments or refinancing costs; Internalization costs; Corporate governance and merger-related costs; expenses incurred on calls of preferred stock; deemed dividends for redemptions of and non-cash dividends on preferred stock; and expenses related to the COVID-19 global pandemic; Less: earnest money forfeitures by prospective asset purchasers. Core FFO figures reported by us may not be comparable to Core FFO figures reported by other companies. We utilize Core FFO as a supplemental measure of the operating performance of our portfolio of real estate assets. We believe Core FFO is useful to investors as a supplemental gauge of our operating performance and may be useful in comparing our operating performance with other real estate companies. Since our calculation of Core FFO removes costs incurred and revenues recorded that are often singular in nature and outside our normal operations, we believe it improves comparability to investors in assessing our core operating results across periods. Core FFO is a non-GAAP measure that is reconciled to its most comparable GAAP measure, net income/loss available to common stockholders. Adjusted Funds From Operations Attributable to Common Stockholders and Unitholders (“AFFO”) AFFO makes further adjustments to Core FFO results in order to arrive at a more refined measure of operating and financial performance. There is no industry standard definition of AFFO and practice is divergent across the industry. We calculate AFFO as: Core FFO, plus: non-cash equity compensation to directors and executives; non-cash (income) expense for current expected credit losses; amortization of loan closing costs; depreciation and amortization of non-real estate assets; net loan origination fees received; deferred interest income received; amortization of lease inducements; cash received in excess of (exceeded by) amortization of purchase option termination revenues; non-cash dividends on Series M1 Preferred Stock and mShares; and earnest money forfeiture from prospective asset purchaser; Less: non-cash loan interest income; cash paid for loan closing costs; amortization of straight-line rent adjustments and acquired real estate intangible assets and/or liabilities; amortization of deferred revenues; and normally-recurring capital expenditures and capitalized second generation leasing costs. AFFO figures reported by us may not be comparable to those AFFO figures reported by other companies. We utilize AFFO as another measure of the operating performance of our portfolio of real estate assets. We believe AFFO is useful to investors as a supplemental gauge of our operating performance and may be useful in comparing our operating performance with other real estate companies. Since our calculation of AFFO removes other significant non-cash charges and revenues and other costs which are not representative of our ongoing business operations, we believe it improves comparability to investors in assessing our core operating results across periods. AFFO is a non-GAAP measure that is reconciled to its most comparable GAAP measure, net income/loss available to common stockholders. FFO, Core FFO and AFFO are not considered measures of liquidity and are not alternatives to measures calculated under GAAP. Same-Store Net Operating Income (“NOI”) We use same-store NOI as an operational metric for our same-store multifamily communities, enabling comparisons of those properties’ operating results between the current reporting period and the prior year comparative period. We define our population of same-store multifamily communities as those that are stabilized and that have been owned for at least 15 full months as of the end of the first quarter of each year, and exclude the operating results of properties for which construction of adjacent phases has commenced and properties which are undergoing significant capital projects, have sustained significant casualty losses, or are being marketed for sale as of the end of the reporting period. We define NOI as rental and other property revenues, less total property and maintenance expenses, property management fees, real estate taxes, general and administrative expenses, and property insurance. We believe that NOI is an important supplemental measure of operating performance for REITs because it provides measures of core operations, rather than factoring in depreciation and amortization, financing costs, acquisition costs, and other corporate expenses. NOI is a widely utilized measure of comparative operating performance in the REIT industry, but is not a substitute for the most comparable GAAP-compliant measure, net income/loss. About Preferred Apartment Communities, Inc. Preferred Apartment Communities, Inc. (NYSE: APTS) is a real estate investment trust engaged primarily in the ownership and operation of Class A multifamily properties, with select investments in grocery-anchored shopping centers. Preferred Apartment Communities’ investment objective is to generate attractive, stable returns for stockholders by investing in income-producing properties and acquiring or originating real estate loans. As of March 31, 2022, the Company owned or was invested in 113 properties in 13 states, predominantly in the Southeast region of the United States. View source version on businesswire.com: https://www.businesswire.com/news/home/20220509005086/en/Contacts Paul Cullen Executive Vice President-Investor Relations Chief Marketing Officer investorrelations@pacapts.com 770-818-4144
Total Revenues $104.9 million for Q1 2022; down 9.4% from Q1 2021 due primarily to absence of $18.7 million of office property revenues _____________ Net Loss per Share $(0.62) per share for Q1 2022; $0.11 per share improvement over Q1 2021 _____________ Core FFO per Share* $0.19 per share for Q1 2022 versus $0.25 per share for Q1 2021 _____________ AFFO per Share* $0.15 per share for Q1 2022 versus $0.18 per share for Q1 2021 _____________ Multifamily Same Store Results* Same-store rental and other property revenues increased 11.9% and same-store net operating income increased 15.9% for Q1 2022 versus Q1 2021 _____________ Two Real Estate Loans and One Preferred Equity Investment Closed During First Quarter 2022 Aggregate commitment amount of $48.1 million 780 multifamily units added to PAC's acquisition pipeline _____________ One Multifamily Community Acquired During First Quarter 2022 Lirio at Rafina, a 280-unit community located in Orlando, Florida _____________ PAC Enters Multifamily Development Space PAC to develop a 262-unit community in Wilmington, North Carolina, will invest $14.8 million in equity to capitalize the project _____________ PAC Enters into a Definitive Agreement with Blackstone Real Estate Income Trust, Inc. Cash transaction of $25 per share of Common Stock Closing expected during Q2 2022 *Core FFO and AFFO results are per weighted-average share and Class A OP Unit outstanding. Core FFO, AFFO and same-store net operating income are non-GAAP measures that are defined herein.
Preferred Apartment Communities, Inc. (NYSE: APTS) ("we," "our," the "Company," "Preferred Apartment Communities" or "PAC") today reported results for the quarter ended March 31, 2022. Unless otherwise indicated, all per share results are reported based on the basic weighted average shares of our common stock, par value $0.01 per share ("Common Stock"), Class A Units ("Class A Units") of the Preferred Apartment Communities Operating Partnership (our "Operating Partnership") outstanding. See Definitions of Non-GAAP Measures. Conference Call As a result of our entering into a definitive merger agreement with affiliates of Blackstone Real Estate Income Trust, Inc. ("BREIT"), we will not have a conference call to discuss our first quarter ended 2022 earnings. For more details on the merger, see our 8-K filed on February 16, 2022. For Further Information Paul Cullen Executive Vice President-Investor Relations Chief Marketing Officer investorrelations@pacapts.com 770-818-4144 Operating Results Our operating results are presented below. Three months ended March 31, % change 2022 2021 Revenues (in thousands) $ 104,880 $ 115,700 (9.4 ) % Per share data: Net loss (1) $ (0.62 ) $ (0.73 ) — FFO (2) $ 0.05 $ 0.16 (68.8 ) % Core FFO (2) $ 0.19 $ 0.25 (24.0 ) % AFFO (2) $ 0.15 $ 0.18 (16.7 ) % Dividends (3) $ 0.175 $ 0.175 — (1) Per weighted average share of Common Stock outstanding for the periods indicated. (2) FFO, Core FFO and AFFO results are presented per basic weighted average share of Common Stock and Class A Unit in our Operating Partnership outstanding for the periods indicated. See Reconciliations of FFO Attributable to Common Stockholders and Unitholders, Core FFO and AFFO to Net Loss Attributable to Common Stockholders and Definitions of Non-GAAP Measures. (3) Per share of Common Stock and Class A Unit outstanding. Financial Our total revenues for the quarter ended March 31, 2022 decreased approximately $10.8 million, or 9.4%, to $104.9 million from the quarter ended March 31, 2021, due primarily to the absence of revenues from the eight office properties and one real estate loan investment that we sold during the third and fourth quarters of 2021. The disposed office properties contributed approximately $18.7 million, or 16.1% of our total revenues for the quarter ended March 31, 2021. Our net loss per share was $(0.62) and $(0.73) for the three-month periods ended March 31, 2022 and 2021, respectively. Funds From Operations, or FFO, was $0.05 and $0.16 per weighted average share of Common Stock and Class A Unit outstanding for the three months ended March 31, 2022 and 2021, respectively. The decline in FFO per share was driven by: * Lower operating results following the sale of our office properties of $(0.17) per share; * Lower cash dividend requirements on our preferred stock of $0.14 per share; * Lower revenues from our real estate loan portfolio of $(0.10) per share; * Merger-related costs incurred of $(0.09) per share; * Improved property operating performance, lower interest expense and other items of $0.06 per share; and * Deemed dividends due to calls and cash redemptions of our preferred stock of $0.05 per share. Our Core FFO per share decreased to $0.19 for the first quarter 2022 from $0.25 for the first quarter 2021, due to: * Lower operating results following the sale of our office properties of $(0.17) per share; * Lower cash dividend requirements on our preferred stock of $0.14 per share; * Lower revenues from our real estate loan portfolio of $(0.10) per share; and * Improved property operating performance, lower interest expense and other items of $0.06 per share. Our AFFO per share decreased to $0.15 for the first quarter 2022, from $0.18 for the first quarter 2021, due to: * Lower operating results following the sale of our office properties of $(0.17) per share; * Lower cash dividend requirements on our preferred stock of $0.14 per share; * Lower revenues from our real estate loan portfolio of $(0.10) per share; * Improved property operating performance, lower interest expense and other items of $0.06 per share; and * Lower recurring capital expenditures of $0.03 per share. Our Core FFO payout ratio to Common Stockholders and Unitholders was approximately 102.1% and our Core FFO payout ratio to our preferred stockholders was approximately 71.4% for the first quarter 2022. (A) Our AFFO payout ratio to Common Stockholders and Unitholders was approximately 126.9% and our AFFO payout ratio to our preferred stockholders was approximately 75.6% for the first quarter 2022. (A) We calculate the Core FFO and AFFO payout ratios to Common Stockholders as the ratio of Common Stock dividends and distributions to Core FFO and AFFO. We calculate the Core FFO and AFFO payout ratios to preferred stockholders as the ratio of preferred stock dividends to the sum of preferred stock dividends and Core FFO and AFFO. Since our operations resulted in a net loss from continuing operations for the periods presented, a payout ratio based on net loss is not calculable. See Definitions of Non-GAAP Measures. Operational Our multifamily communities' same-store rental and other property revenues increased 11.9%, same-store property operating expenses increased 6.3% and same-store net operating income increased 15.9% for the quarter ended March 31, 2022 versus 2021. Our same-store multifamily communities include 10,442 units, or 84.7% of our aggregate 12,322 units in our multifamily community portfolio. Our rental rates for our multifamily same-store properties for new and renewal leases increased 16.6% and 11.9%, respectively, and 14.1% blended for first quarter 2022 as compared to the expiring leases, excluding shorter-term leases of two months or less. Our rental rates for our multifamily same-store properties for new and renewal leases increased 15.7% and 11.9%, respectively, and 13.7% blended for April 2022 as compared to the expiring leases, excluding shorter-term leases of two months or less. As of March 31, 2022, the average age of our multifamily communities was approximately 6.6 years, which we believe is the youngest in the public multifamily REIT industry. As of March 31, 2022, all of our owned multifamily communities had achieved stabilization except for Lirio at Rafina, which was acquired during the first quarter 2022. We define stabilization as reaching 93% occupancy for all three months within a single quarter. The average physical occupancy of our same-store multifamily communities increased to 96.3% for the three-month period ended March 31, 2022 from 95.8% for the three-month period ended March 31, 2021 but was unchanged from the three-month period ended December 31, 2021. Financing and Capital Markets As of March 31, 2022, approximately 98.3% of our permanent property-level mortgage debt had fixed interest rates and approximately 0.9% had variable interest rates which are capped. We believe we are well protected against potential increases in market interest rates. Our overall weighted average interest rate for our mortgage debt portfolio was 3.37% for multifamily communities, 4.35% for our remaining office properties, 3.91% for grocery-anchored retail properties and 3.57% in the aggregate. During the first quarter 2022, we issued and sold an aggregate of 3,167 shares of preferred stock prior to February 10, 2022, when we ceased issuing new shares of preferred stock. We redeemed or called an aggregate of 21,189 shares of preferred stock, resulting in a net reduction of 18,022 outstanding shares of preferred stock, for a net cash outflow of approximately $17.7 million. During the first quarter 2022, warrants were exercised by the holders at a weighted average price of $19.68 per share and, as a result, we collected approximately $194.0 million from the issuance of an aggregate of 9,858,480 shares of Common Stock. We issued no shares of Common Stock under the 2019 ATM Offering during the first quarter 2022. At March 31, 2022, our leverage, as measured by the ratio of our debt to the undepreciated book value of our total assets, was approximately 55.8%. At March 31, 2022, we had no outstanding balance and $200.0 million available to be drawn on our revolving line of credit. Our outstanding shares of preferred stock have decreased since January 1, 2019, as summarized in the following chart: Shares of Preferred Stock 2019 2020 2021 First Quarter 2022 Issued 552,938 228,788 122,297 3,167 Redeemed by holders (68,512) (164,286) (100,946) (21,189) Called by PAC — (208,786) (320,746) — Net increase (decrease) 484,426 (144,284) (299,395) (18,022) Total outstanding at year end 2,136,257 1,991,973 1,692,578 1,674,556 Significant Transactions On February 10, 2022, we amended our real estate loan investment supporting The Platform, a 551-unit multifamily community located in San Jose, California. The maturity date of the instrument was extended to August 13, 2022 and a second extension option of December 31, 2022 was added. The all-in interest rate was reduced to 9.5% per annum beginning on the original maturity date of February 13, 2022 and increases in steps each three-month period up to 11.0% per annum on November 14, 2022. As of April 30, 2022, the property's physical occupancy was 92.6%. On February 11, 2022, we closed on a real estate loan investment of up to approximately $16.7 million supporting a 286-unit multifamily community in the Orlando, Florida MSA. On February 15, 2022, we refinanced our Chestnut Farm multifamily community with permanent mortgage financing in the amount of approximately $52.3 million, which bears interest at a rate of 3.25% and matures on March 1, 2032. As previously announced, on February 16, 2022, we entered into an agreement and plan of merger (the “Merger Agreement”) with Pike Parent LLC (“Parent”), Pike Merger Sub I LLC (“Merger Sub I”), Pike Merger Sub II LLC (“Merger Sub II”), Pike Merger Sub III LLC (“Merger Sub III” and, together with Parent, Merger Sub I and Merger Sub II, the “Parent Parties”), the Operating Partnership and PAC Operations, LLC (“Operations”). The Parent Parties are affiliates of BREIT, which is an affiliate of Blackstone Inc. Pursuant to the Merger Agreement, (i) Merger Sub II will merge with and into the Operating Partnership (the “Partnership Merger”) with the Operating Partnership being the surviving entity and immediately following the consummation of the Partnership Merger, (ii) Operations will merge with and into Merger Sub III (the “Operations Merger”) with Merger Sub III being the surviving entity and immediately following the Operations Merger, (iii) the Company will merge with and into Merger Sub I (the “Company Merger” and, together with the Partnership Merger and the Operations Merger, the “Mergers”) with Merger Sub I being the surviving entity. Pursuant to the Merger Agreement, (i) each share of Common Stock that is issued and outstanding immediately prior to the Mergers will be automatically cancelled and converted into the right to receive $25.00 in cash and (ii) each share of preferred stock that is issued and outstanding immediately prior to the Mergers will be automatically cancelled and converted into the right to receive $1,000 in cash, plus any accrued but unpaid dividends, if any, to and including the closing date of the Mergers. Notwithstanding the forgoing, any shares of Common Stock or preferred stock held by the Company or any subsidiary of the Company or by the Parent Parties or any of their respective subsidiaries, if any, will no longer be outstanding and will automatically be retired and will cease to exist, and no consideration will be paid in connection with the Mergers. The Mergers are subject to customary closing conditions, including approval by the Company’s common stockholders at a special meeting to be held on June 7, 2022. The Mergers are expected to close on the third business day after the conditions to closing are satisfied or waived, including approval of the Company’s stockholders of the Mergers. The Company can provide no assurances regarding whether the Mergers will close as expected during the second quarter of 2022, or at all. The board of directors of the Company has unanimously approved the Merger Agreement and has recommended approval of the Mergers by the Company’s common stockholders. On February 25, 2022, we closed on the acquisition of Lirio at Rafina, a 280-unit multifamily community located in the Orlando, Florida MSA. On February 28, 2022, we closed on a real estate loan investment of up to approximately $17.2 million supporting a 242-unit multifamily community in Naples, Florida. On March 2, 2022, we closed on a 65% interest in a $65.0 million joint venture project to develop The Helmsman, a 262-unit multifamily community to be located in Wilmington, North Carolina. This transaction represents our entry into the multifamily development space. On March 31, 2022, we closed on a preferred equity investment of up to approximately $14.3 million supporting The Shoals, a 252-unit multifamily community in Greenville, South Carolina. The investment will pay a fixed return of 12.0% per annum and has a term of 42 months, with a one-year extension option. Subsequent to Quarter End On April 5, 2022, we sold our Champions Village grocery-anchored shopping center in Houston, Texas for $45.0 million and recorded a gain on the sale of approximately $1.9 million. On April 20, 2022, we sold our Sweetgrass Corner grocery-anchored shopping center in Charleston, South Carolina for $17.0 million and recorded a gain on the sale of approximately $4.3 million. Between April 1, 2022 and April 30, 2022, the Company issued 1,451,700 shares of Common Stock at an average price of $19.70 per share from exercises of Warrants and collected approximately $28.6 million. On April 12, 2022, our Vintage Horizon West real estate loan investment was repaid in full. 2022 Guidance Due to the pending merger with affiliates of BREIT, we are not issuing guidance at this time with respect to our 2022 financial outlook. Real Estate Assets At March 31, 2022, our portfolio of owned real estate assets and potential additions from purchase options we held from our real estate loan investments (and one multifamily development project currently under construction) consisted of: Owned as of March 31, 2022 (1) Potential additions (2) Potential total Residential properties: Properties 42 12 54 Units 12,332 3,639 15,971 Development properties 1 ( 4) — 1 Units — 262 262 Grocery-anchored shopping centers: Properties 54 1 55 Gross leasable area (square feet) 6,210,778 85,500 ( 3) 6,296,278 Office buildings: Properties 2 — 2 Rentable square feet 1,072,000 — 1,072,000 Land 1 — 1 (1) One multifamily community and two grocery-anchored shopping centers are owned through consolidated joint ventures. One grocery-anchored shopping center is an investment in an unconsolidated joint venture. (2) We evaluate each project individually and we make no assurance that we will acquire any of the underlying properties from our real estate loan investment portfolio. (3) Estimated square footage of Nexton Shopping Center development. (4) The Helmsman, a 262-unit multifamily development, will consist of approximately 2,600 square feet of gross leasable area of ground floor retail space which is not included in the totals above for grocery-anchored shopping centers. Same-Store Financial Data The following charts present same-store operating results for the Company’s multifamily communities. We define our population of same-store multifamily communities as those that have achieved occupancy at or above 93% for all three months within a single quarter ("stabilized") before the beginning of the prior year and that have been owned for at least 15 full months as of the end of the first quarter of the current year, enabling comparisons of the current year quarterly and annual reporting periods to the prior year comparative periods. The Company excludes the operating results of properties for which construction of adjacent phases has commenced and properties which are undergoing significant capital projects, have sustained significant casualty losses, or are being held for sale as of the end of the reporting period. For the periods presented, same-store operating results consist of the operating results of our multifamily communities, comprising an aggregate 10,442 units, or 84.7% of our multifamily units. Same-store net operating income is a non-GAAP measure that is most directly comparable to net loss, as shown in the reconciliation below. See Definitions of Non-GAAP Measures. Reconciliation of Net Loss to Multifamily Communities' Same-Store Net Operating Income ("NOI") Three months ended: (in thousands) 3/31/2022 3/31/2021 Net loss $ (7,844 ) $ (2,709 ) Add: Equity stock compensation 1,223 574 Depreciation and amortization 38,161 45,827 Interest expense 23,160 26,991 General and administrative 7,842 7,539 Merger-related costs 4,913 — Loss from unconsolidated joint venture 108 194 Management Internalization 244 245 Allowance for expected credit losses 572 522 Less: Interest revenue on notes receivable 6,583 10,512 Interest revenue on related party notes receivable 197 405 Miscellaneous revenues 198 324 Gain on sale of real estate — 798 Loss on sale of land (22 ) — Loss on extinguishment of debt (363 ) — Property net operating income 61,786 67,144 Less: Non same-store property revenues (45,355 ) (57,498 ) Add: Non same-store property operating expenses 15,151 17,600 Same-store net operating income $ 31,582 $ 27,246 Multifamily Communities' Same-Store NOI Three months ended: (in thousands) 3/31/2022 3/31/2021 $ change % change Revenues: Rental and other property revenues $ 52,546 $ 46,961 $ 5,585 11.9 % Operating expenses: Property operating and maintenance 8,358 7,746 612 7.9 % Payroll 3,697 3,574 123 3.4 % Real estate taxes and insurance 8,909 8,395 514 6.1 % Total operating expenses 20,964 19,715 1,249 6.3 % Same-store net operating income $ 31,582 $ 27,246 $ 4,336 15.9 % Same-store average physical occupancy 96.3 % 95.8 % 0.5 % Corporate level expenses related to the management and operations of the multifamily portfolio are allocated on a per unit basis to property NOI and are included in Multifamily Same-Store NOI. Dividends Quarterly Dividends on Common Stock and Class A OP Units On February 24, 2022, our board of directors declared a quarterly dividend on our Common Stock of $0.175 per share, that was paid on April 14, 2022 to stockholders of record on March 15, 2022. In conjunction with the Common Stock dividend, our Operating Partnership declared a distribution on its Class A Units of $0.175 per unit for the first quarter 2022, which was paid on April 14, 2022 to all Class A Unit holders of record as of March 15, 2022. The Merger Agreement prohibits us from declaring additional dividends on our Common Stock prior to the closing of the Mergers. Monthly Dividends on Preferred Stock We declared monthly dividends of $5.00 per share on our Series A Preferred Stock, which totaled approximately $21.2 million for the first quarter 2022 and represents a 6% annual yield. We declared monthly dividends of $5.00 per share on our Series A1 Preferred Stock, which totaled approximately $3.7 million for the first quarter 2022 and also represents a 6% annual yield. We declared dividends totaling approximately $1.4 million on our Series M Preferred Stock, or mShares, for the first quarter 2022. The mShares have a dividend rate that escalates from 5.75% in year one of issuance to 7.50% in year eight and thereafter. We declared dividends totaling approximately $723,000 on our Series M1 Preferred Stock for the first quarter 2022. The Series M1 Preferred Stock has a dividend rate that escalates from 6.1% in year one of issuance to 7.1% in year ten and thereafter. Forward-Looking Statements “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: redemptions of Series A Preferred Stock, potential additions of properties from purchase options and rights of first offer from our real estate loan investments, development properties, goals and performance are, by definition, and certain other statements in this Earnings Release and Supplemental Financial Data Report may constitute, “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance, achievements or transactions to be materially different from the results, guidance, goals, performance, achievements or transactions expressed or implied by the forward-looking statements. These statements may be identified by the use of forward-looking terminology such as "may," "trend," "will," "expects," "plans," "estimates," "anticipates," "projects," "intends," "believes," "strategy," "goals," "objectives," "outlook" and similar expressions. These risks, uncertainties and contingencies include, but are not limited to, (a) the impact of the COVID-19 pandemic, including any variants, and related federal, state and local government actions on PAC’s business operations and the economic conditions in the markets in which PAC operates; (b) PAC’s ability to mitigate the impacts arising from COVID-19 or any variants thereof; (c) risks related to the proposed acquisition by BREIT, including the possibility that the consummation of the transaction could be delayed or not completed, and the effect of the announcement or pendency of the transaction on our business; (d) PAC's ability to make distributions to its stockholders in the future and (e) those disclosed in PAC's filings with the SEC. Factors that impact such forward-looking statements include, among others, our business and investment strategy; legislative or regulatory actions; the state of the U.S. economy generally or in specific geographic areas; economic trends and economic recoveries; changes in operating costs, including real estate taxes, utilities and insurance costs; our ability to obtain and maintain debt or equity financing; financing and advance rates for our target assets; our leverage level; changes in the values of our assets; the occurrence of natural or man-made disasters; availability of attractive investment opportunities in our target markets; our ability to maintain our qualification as a real estate investment trust, or REIT, for U.S. federal income tax purposes; availability of quality personnel; our understanding of our competition and market trends in our industry; and interest rates, real estate values, the debt securities markets and the general economy. Except as otherwise required by the federal securities laws, we assume no liability to update the information in this Earnings Release and Supplemental Financial Data Report. We refer you to the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2021 that was filed with the SEC on February 28, 2022, which includes a discussion of various factors that could adversely affect our financial results. Such risk factors and information may be updated or supplemented by our Form 10-K, Form 10-Q and Form 8-K filings and other documents filed from time to time with the SEC. COVID-19 Our percentages of rent collected remained stabilized at or near pre-pandemic levels during the first quarter 2022. While the impacts of COVID-19 and its variants are continuing, the effects on our operations have been manageable and we believe this condition will persist, barring a dramatic change in the trajectory of the pandemic. We are continuing to monitor the spread and impact of the variants of COVID-19 as well as vaccination rates in our markets. Preferred Apartment Communities, Inc. Condensed Consolidated Statements of Operations (Unaudited) Three months ended March 31, (In thousands, except per-share figures) 2022 2021 Revenues: Rental and other property revenues $ 97,902 $ 104,459 Interest income on loans and notes receivable 6,583 10,512 Interest income from related parties 197 405 Miscellaneous revenues 198 324 Total revenues 104,880 115,700 Operating expenses: Property operating and maintenance 14,863 15,249 Property salary and benefits 4,655 4,821 Property management costs 792 1,105 Real estate taxes and insurance 15,806 16,140 General and administrative 7,842 7,539 Merger-related costs 4,913 — Equity compensation to directors and executives 1,223 574 Depreciation and amortization 38,161 45,827 Allowance for expected credit losses 572 522 Management Internalization expense 244 245 Total operating expenses 89,071 92,022 Operating income before loss from unconsolidated joint venture and gain on sale of real estate 15,809 23,678 Loss from unconsolidated joint venture (108 ) (194 ) Gain on sale of real estate, net — 798 Operating income 15,701 24,282 Interest expense 23,160 26,991 Loss on extinguishment of debt (363 ) — Loss on sale of land (22 ) — Net loss (7,844 ) (2,709 ) Net loss attributable to non-controlling interests 30 62 Net loss attributable to the Company (7,814 ) (2,647 ) Dividends to preferred stockholders (27,033 ) (33,820 ) Dividends to holders of unvested restricted stock (137 ) (142 ) Net loss attributable to common stockholders $ (34,984 ) $ (36,609 ) Net loss per share of Common Stock available to common stockholders, basic and diluted $ (0.62 ) $ (0.73 ) Weighted average number of shares of Common Stock outstanding, basic and diluted 56,255 50,033 Reconciliation of FFO Attributable to Common Stockholders and Unitholders, Core FFO and AFFO to Net Loss Attributable to Common Stockholders Three months ended March 31, (In thousands, except per-share figures) 2022 2021 Net loss attributable to common stockholders (See note 1) $ (34,984 ) $ (36,609 ) Add: Depreciation of real estate assets 32,274 36,832 Amortization of acquired intangible assets and deferred leasing costs 5,620 8,710 Net loss attributable to Class A Unitholders (See note 2) (64 ) (33 ) Gain on sale of real estate — (798 ) FFO attributable to common stockholders and Unitholders 2,846 8,102 Acquisition and pursuit costs 100 4 Loan cost amortization on acquisition line of credit and loan coordination fees (See note 3) 301 424 Payment of costs related to property refinancing 363 — Internalization costs (See note 4) 244 245 Corporate governance and merger-related costs 5,291 — Deemed dividends for redemptions of and non-cash dividends on preferred stock, plus expenses incurred on calls of preferred stock (See note 5) 1,682 3,827 Expenses related to the COVID-19 global pandemic — 54 Core FFO attributable to common stockholders and Unitholders 10,827 12,656 Add: Non-cash equity compensation to directors and executives 1,223 574 Non-cash income for current expected credit losses (See note 12) 240 117 Amortization of loan closing costs (See note 6) 1,294 1,212 Depreciation/amortization of non-real estate assets 451 444 Net loan origination fees received (See note 7) 683 817 Deferred interest income received (See note 8) — 2,917 Amortization of lease inducements (See note 9) 447 448 Cash received in excess of (exceeded by) amortization of purchase option termination revenues (See note 10) — 250 Less: Non-cash loan interest income (See note 11) (2,027 ) (2,874 ) Cash paid for loan closing costs — (10 ) Amortization of acquired real estate intangible liabilities and straight-line rent adjustments (See note 13) (1,604 ) (3,315 ) Amortization of deferred revenues (See note 14) (940 ) (940 ) Normally recurring capital expenditures (See note 15) (1,883 ) (3,353 ) AFFO attributable to common stockholders and Unitholders $ 8,711 $ 8,943 Common Stock dividends and distributions to Unitholders declared: Common Stock dividends $ 10,976 $ 8,991 Distributions to Unitholders (See note 2) 82 96 Total $ 11,058 $ 9,087 Common Stock dividends and Unitholder distributions per share $ 0.175 $ 0.175 FFO per weighted average basic share of Common Stock and Unit outstanding $ 0.05 $ 0.16 Core FFO per weighted average basic share of Common Stock and Unit outstanding $ 0.19 $ 0.25 AFFO per weighted average basic share of Common Stock and Unit outstanding $ 0.15 $ 0.18 Weighted average shares of Common Stock and Units outstanding: Basic: Common Stock 56,255 50,033 Class A Units 468 610 Common Stock and Class A Units 56,723 50,643 Diluted Common Stock and Class A Units (See note 16) 62,457 50,971 Actual shares of Common Stock outstanding, including 782 and 809 unvested shares of restricted Common Stock at March 31, 2022 and 2021, respectively. 63,711 50,904 Actual Class A Units outstanding at March 31, 2022 and 2021, respectively. 526 548 Total 64,237 51,452 See Notes to Reconciliation of FFO, Core FFO and AFFO to Net Loss Attributable to Common Stockholders. Notes to Reconciliations of FFO Attributable to Common Stockholders and Unitholders, Core FFO and AFFO to Net Loss Attributable to Common Stockholders 1) Rental and other property revenues and property operating expenses for the three months ended March 31, 2022 include activity for the properties acquired since March 31, 2021. 2) Non-controlling interests in our Operating Partnership consisted of a total of 526,128 Class A Units as of March 31, 2022. Included in this total are 419,228 Class A Units which were granted as partial consideration to the seller in conjunction with the seller's contribution to us on February 29, 2016 of the Wade Green grocery-anchored shopping center. The remaining Class A Units were awarded primarily to our key executive officers. The Class A Units are apportioned a percentage of our financial results as non-controlling interests. The weighted average ownership percentage of these holders of Class A Units was calculated to be 0.83% and 1.20% for the three-month periods ended March 31, 2022 and 2021, respectively. 3) We paid loan coordination fees to Preferred Apartment Advisors, LLC (our "Former Manager") to reflect the administrative effort involved in arranging debt financing for acquired properties prior to the Internalization Transaction (defined in note 4 below). The fees were calculated as 0.6% of the amount of any mortgage indebtedness on newly-acquired properties or refinancing and are amortized over the lives of the respective mortgage loans. This non-cash amortization expense is an addition to FFO in the calculation of Core FFO and AFFO. At March 31, 2022, aggregate unamortized loan coordination fees were approximately $7.4 million, which will be amortized over a weighted average remaining loan life of approximately 10.1 years. 4) This adjustment reflects the add-back of accretion of the discount on the deferred liability payable to the owners of the Former Manager and other professional fees related to the internalization of the functions performed by the Former Manager and Former Sub-Manager (the "Internalization Transaction"). 5) This additive adjustment removes the effect of deemed dividends that arise from cash calls and redemptions of preferred stock. For shares of preferred stock that are called by the Company or redeemed by the holder, the Company records a deemed dividend for the difference between the redemption of the share at its face value, net of any redemption discount, as compared to the carrying value of the share on the Company’s consolidated balance sheets. Also included in this adjustment is the adding back of expenses incurred related to effecting calls of preferred stock. 6) We incur loan closing costs on our existing mortgage loans, which are secured on a property-by-property basis by each of our acquired real estate assets, and also for occasional amendments to our syndicated revolving line of credit with Key Bank National Association, or our Revolving Line of Credit. These loan closing costs are also amortized over the lives of the respective loans and the Revolving Line of Credit, and this non-cash amortization expense is an addition to FFO in the calculation of AFFO. Neither we nor the Operating Partnership has any recourse liability in connection with any of the mortgage loans, nor do we have any cross-collateralization arrangements with respect to the assets securing the mortgage loans, other than security interests in 49% of the equity interests of the subsidiaries owning such assets, granted in connection with our Revolving Line of Credit, which provides for full recourse liability. At March 31, 2022, unamortized loan costs on all the Company's indebtedness were appro ximately $28.8 million, which will be amortized over a weighted average remaining loan life of approximately 7.8 years. 7) We receive loan origination fees in conjunction with the origination of certain real estate loan investments. The total fees received are additive adjustments to Core FFO in our calculation of AFFO. 8) Over the lives of certain loans, we accrue additional interest amounts that become due to us at the time of repayment of the loan or refinancing of the property, or when the property is sold. Once received from the borrower, the amount of additional accrued interest becomes an additive adjustment to Core FFO in our calculation of AFFO. 9) This adjustment removes the non-cash amortization of costs incurred to induce tenants to lease space in our office buildings and grocery-anchored shopping centers. 10) Occasionally we receive fees in exchange for the termination of our purchase options related to certain multifamily communities. These fees are recorded as revenue over the period beginning on the date of termination until the earlier of (i) the maturity of the real estate loan investment and (ii) the sale of the property. The receipt of the cash termination fees are an additive adjustment in our calculation of AFFO and the removal of non-cash revenue from the recognition of the termination fees are a reduction to Core FFO in our calculation of AFFO; both of these adjustments are presented in a single net number within this line. For periods in which recognized termination fee revenues exceeded the amount of cash received, a negative adjustment is shown to Core FFO in our calculation of AFFO; for periods in which cash received exceeded the amount of recognized termination fee revenues, an additive adjustment is shown to Core FFO in our calculation of AFFO. 11) Loan origination fees (described in note 7 above) are recognized as revenue over the lives of the applicable loans as adjustments of yield using the effective interest method. Similarly, the accrual of additional interest amounts (described in note 8 above) are recognized beginning from loan inception through the repayment of the loan or the refinancing or sale of the underlying property. This adjustment removes the effect of both these types of non-cash loan interest income from Core FFO in our calculation of AFFO. 12) Effective January 1, 2020, we adopted ASU 2016-03, which requires us to estimate the amount of future credit losses we expect to incur over the lives of our real estate loan investments at the inception of each loan. This loss reserve may be adjusted upward or downward over the lives of our loans and therefore the aggregate net adjustment for each period could be positive (removing the non-cash effect of a net increase in aggregate loss reserves) or negative (removing the non-cash effect of a net decrease in aggregate loss reserves) in these adjustments to Core FFO in calculating AFFO. 13) This adjustment reflects straight-line rent adjustments and the reversal of the non-cash amortization of below-market and above-market lease intangibles, which were recognized in conjunction with our acquisitions and which are amortized over the estimated average remaining lease terms from the acquisition date for multifamily communities and over the remaining lease terms for grocery-anchored shopping center assets and office buildings. At March 31, 2022, the balance of unamortized below-market lease intangibles was approximately $32.9 million, which will be recognized over a weighted average remaining lease period of approximately 8.2 years. 14) This adjustment removes the non-cash amortization of deferred revenue recorded by us in conjunction with Company-owned lessee-funded tenant improvements in our office buildings. 15) We deduct from Core FFO normally recurring capital expenditures that are necessary to maintain our assets’ revenue streams in the calculation of AFFO. This adjustment also deducts from Core FFO capitalized amounts for third party costs during the period to originate or renew leases in our grocery-anchored shopping centers and office buildings. This adjustment includes approximately $41,000 of recurring capitalized expenditures incurred at our corporate offices during the three-month period ended March 31, 2022. No adjustment is made in the calculation of AFFO for nonrecurring capital expenditures. See Capital Expenditures, Grocery-Anchored Shopping Center Portfolio, and Office Building Portfolio sections for definitions of these terms. 16) Since our AFFO results are positive for the periods reflected, we are presenting recalculated diluted weighted average shares of Common Stock and Class A Units for these periods for purposes of this table, which includes the dilutive effect of common stock equivalents from grants of the Class B Units, warrants included in units of Series A Preferred Stock issued, as well as annual grants of restricted Common Stock and restricted stock units. The weighted average shares of Common Stock outstanding presented on the Consolidated Statements of Operations are the same for basic and diluted for any period for which we recorded a net loss available to common stockholders. See Definitions of Non-GAAP Measures. Preferred Apartment Communities, Inc. Condensed Consolidated Balance Sheets (Unaudited) (In thousands, except per-share par values) March 31, 2022 December 31, 2021 Assets Real estate Land $ 553,900 $ 551,378 Building and improvements 2,745,749 2,671,535 Tenant improvements 119,989 119,331 Furniture, fixtures, and equipment 372,288 359,743 Construction in progress 11,723 5,151 Gross real estate 3,803,649 3,707,138 Less: accumulated depreciation (611,111 ) (578,496 ) Net real estate 3,192,538 3,128,642 Real estate loan investments, net 210,280 196,420 Total real estate and real estate loan investments, net 3,402,818 3,325,062 Cash and cash equivalents 117,221 30,205 Restricted cash 33,474 32,675 Note receivable from related party 8,875 9,011 Accrued interest receivable on real estate loans 18,569 17,038 Acquired intangible assets, net of amortization 55,432 59,622 Tenant lease inducements, net 15,976 16,420 Investment in unconsolidated joint venture 5,884 5,992 Tenant receivables and other assets 82,023 67,343 Total assets $ 3,740,272 $ 3,563,368 Liabilities and equity Liabilities Mortgage notes payable, net of deferred loan costs and mark-to-market adjustment $ 2,388,772 $ 2,343,364 Deferred revenues 34,612 35,523 Accounts payable and accrued expenses 35,046 36,517 Deferred liability to Former Manager 24,219 24,037 Contingent liability due to Former Manager 14,564 14,631 Accrued interest payable 6,990 7,086 Dividends and partnership distributions payable 21,509 19,912 Acquired below market lease intangibles, net of amortization 32,936 34,585 Prepaid rent, security deposits and other liabilities 27,004 25,679 Total liabilities 2,585,652 2,541,334 Commitments and contingencies Equity Stockholders' equity Series A Redeemable Preferred Stock, $0.01 par value per share; 3,050 shares authorized; 2,226 shares issued; 1,302 and 1,321 shares outstanding at March 31, 2022 and December 31, 2021, respectively 13 13 Series A1 Redeemable Preferred Stock, $0.01 par value per share; up to 1,000 shares authorized; 247 shares issued; 246 shares outstanding at March 31, 2022 and December 31, 2021, respectively 2 2 Series M Redeemable Preferred Stock, $0.01 par value per share; 500 shares authorized; 106 shares issued; 83 and 84 shares outstanding at March 31, 2022 and December 31, 2021, respectively 1 1 Series M1 Redeemable Preferred Stock, $0.01 par value per share; up to 1,000 shares authorized; 47 and 43 shares issued; 44 and 41 shares outstanding at March 31, 2022 and December 31, 2021, respectively — — Common Stock, $0.01 par value per share; 400,067 shares authorized; 62,929 and 52,975 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively 629 530 Additional paid-in capital 1,333,284 1,195,775 Accumulated (deficit) earnings (179,814 ) (172,000 ) Total stockholders' equity 1,154,115 1,024,321 Non-controlling interest 505 (2,287 ) Total equity 1,154,620 1,022,034 Total liabilities and equity $ 3,740,272 $ 3,563,368 Preferred Apartment Communities, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) Three-month periods ended March 31, 2022 2021 Operating activities: Net loss $ (7,844 ) $ (2,709 ) Reconciliation of net loss to net cash provided by (used in) operating activities: Depreciation and amortization expense 38,161 45,827 Amortization of above and below market leases (1,369 ) (1,399 ) Amortization of deferred revenues and other non-cash revenues (1,449 ) (1,195 ) Amortization of purchase option termination fees — (1,229 ) Amortization of equity compensation, lease incentives and other non-cash expenses 1,628 1,229 Deferred loan cost amortization 1,566 1,609 Non-cash accrued interest income on real estate loan investments (1,531 ) (2,822 ) Receipt of accrued interest income on real estate loan investments — 3,109 Gains on the sales of real estate, net — (798 ) Losses on the sales of land and other, net 22 — Loss from unconsolidated joint ventures 108 194 Cash received for purchase option terminations — 1,479 Loss on extinguishment of debt 363 — Increase in allowance for expected credit losses 572 522 Changes in operating assets and liabilities: Decrease (increase) in tenant receivables and other assets (3,445 ) 4,766 Decrease in accounts payable and accrued expenses (429 ) (2,787 ) Increase in accrued interest, prepaid rents and other liabilities 1,874 2,589 Net cash provided by operating activities 28,227 48,385 Investing activities: Investments in real estate loans, net of origination fees received (13,605 ) (18,840 ) Repayments of real estate loans — 17,925 Notes receivable repaid — 79 Acquisition of properties (90,203 ) (289 ) Disposition of properties and proceeds from land sales, net (260 ) 4,798 Investment into property development (2,718 ) — Capital improvements to real estate assets (4,875 ) (10,263 ) Net cash used in investing activities (111,661 ) (6,590 ) Financing activities: Proceeds from mortgage notes 106,310 2,152 Repayment of mortgage notes (61,745 ) (10,340 ) Payments for deposits and other mortgage loan costs (589 ) (285 ) Payments for debt prepayment and other debt extinguishment costs (324 ) — Proceeds from Revolving Line of Credit 185,000 105,000 Payments on Revolving Line of Credit (185,000 ) (87,000 ) Proceeds from sales of Preferred Stock, net of offering costs 2,800 34,109 Payments for redemptions and calls of Preferred Stock (19,162 ) (40,018 ) Proceeds from sale of Common Stock and warrant exercises 179,213 — Common Stock dividends paid (9,382 ) (8,829 ) Preferred Stock dividends and Class A Unit distributions paid (27,118 ) (33,840 ) Payments for deferred offering costs (1,143 ) (1,030 ) Contributions from non-controlling interests 2,625 — Distributions to non-controlling interests (236 ) (56 ) Net cash (used in) provided by financing activities 171,249 (40,137 ) Net increase in cash, cash equivalents and restricted cash 87,815 1,658 Cash, cash equivalents and restricted cash, beginning of year 62,880 75,716 Cash, cash equivalents and restricted cash, end of period $ 150,695 $ 77,374 Real Estate Loan Investments The following tables present details pertaining to our portfolio of fixed rate, interest-only real estate loan investments. Project/Property Location Maturity date Optional extension date Total loan commitments Carrying amount (1) as of Current / deferred interest % per annum March 31, 2022 December 31, 2021 Multifamily communities: (in thousands) The Platform San Jose, CA 8/13/2022 (2) $ 137,616 $ 137,616 $ 136,061 (2) Vintage Horizon West Orlando, FL 10/11/2022 10/11/2024 10,900 10,038 9,828 8.5 / 5.5 Nexton Charleston, SC 12/16/2022 N/A 6,265 6,265 6,265 (3) Vintage Jones Franklin Raleigh, NC 11/14/2023 5/14/2025 10,000 9,182 8,989 8.5 / 5.5 Solis Cumming Town Center Atlanta, GA 9/3/2024 9/3/2026 20,681 18,542 18,153 8.5 / 5.5 Hudson at Metro West Orlando, FL 9/1/2024 3/1/2026 16,791 14,176 13,873 8.5 / 4.5 Oxford Club Drive Atlanta, GA 2/11/2025 2/11/2027 23,150 7,513 5,551 8.5 / 4.5 Populus at Pooler Savannah, GA 5/27/2025 5/27/2026 15,907 7,030 2,104 8.5 / 4.25 Populus at Pooler Capital Savannah, GA 5/27/2025 5/27/2026 1,169 966 946 8.5 / 4.25 Menlo II Jacksonville, FL 4/14/2025 4/14/2027 16,610 6,470 4,500 8.5 / 3.5 Beaver Ruin Atlanta, GA 5/3/2025 11/3/2026 9,133 1,098 — 8.5 / 4.5 Prado Orlando, FL 8/11/2025 8/11/2027 16,650 1,661 — 8.5 / 3.5 Altis Naples, FL 2/27/2026 2/27/2028 17,151 — — 8.5 / 4.25 302,023 220,557 206,270 Preferred equity: (4) The Shoals Greenville, SC 3/31/2026 3/31/2027 14,284 — — 8.5 / 3.5 $ 316,307 220,557 206,270 Unamortized loan origination fees (1,942 ) (1,755 ) Allowances for expected credit losses and doubtful accounts (8,335 ) (8,095 ) Carrying amount $ 210,280 $ 196,420 (1) Carrying amounts presented per loan are amounts drawn. (2) Effective February 10, 2022, the Third Amendment to the loan agreement provided for extension options until August 13, 2022 and December 31, 2022. The interest rate was amended to 8.5% current interest and 1.0% deferred interest per annum until May 13, 2022, then 8.5% current interest and 1.5% deferred interest per annum until August 13, 2022. If the second extension option is exercised, the rate increases to 8.5% current interest and 2.0% deferred interest per annum until November 13, 2022, then 8.5% current interest and 2.5% deferred interest per annum until December 31, 2022. (3) Loan accrues interest at 11% per annum until June 16, 2022, then 13% per annum until December 16, 2022; all interest is paid monthly. (4) A fixed-return component of the capital stack in a multifamily community development project that is economically equivalent to our real estate loan investments, with features and terms as shown. We hold options or rights of first offer, but not obligations, to purchase some of the properties which are partially financed by our real estate loan investments. Option purchase prices are generally the market value of the property, as negotiated and agreed upon by the purchasing and selling parties and are derived utilizing market cap rates. As of March 31, 2022, potential property acquisitions and units from projects in our real estate loan investment portfolio consisted of: Total units upon Purchase option window Project/Property Location completion (1) Begin End Multifamily communities Hudson at Metro West Orlando, FL 320 S + 90 days (2) S + 150 days (2) Vintage Horizon West Orlando, FL 340 (10) (3) (3) Vintage Jones Franklin Raleigh, NC 277 (3) (3) Solis Cumming Town Center Atlanta, GA 320 (4) (4) Club Drive Atlanta, GA 352 (5) (5) Populus at Pooler Savannah, GA 316 (6) (6) Menlo II Jacksonville, FL 337 (7) (7) Beaver Ruin Atlanta, GA 246 S + 90 days (8) S + 150 days (8) One Nexton Charleston, SC 351 (9) (9) Prado Orlando, FL 286 S + 90 days S + 180 days Altis Naples, FL 242 S + 90 days (2) S + 150 days (2) The Shoals Greenville, SC 252 (4) (4) 3,639 (1) We evaluate each project individually and we make no assurance that we will acquire any of the underlying properties from our real estate loan investment portfolio. (2) The option period window begins and ends at the number of days indicated beyond the achievement of a 93% occupancy threshold by the underlying property. (3) The option period window begins on the later of one year following receipt of final certificate of occupancy or 90 days beyond the achievement of a 93% occupancy threshold by the underlying property and ends 60 days beyond the option period beginning date. (4) We hold a right of first offer on the property. (5) The option period window begins upon the property's achievement of an 85% occupancy threshold. If we are unable to reach an agreement on the property's market value, we have a right of first offer. (6) The option period window begins upon the property's achievement of an 80% occupancy threshold. If we are unable to reach an agreement on the property's market value, we have a right of first offer. (7) The option period window begins either by notice from the seller upon the property's achievement of a 70% occupancy threshold or by notice from the purchaser upon the property's achievement of a 93% occupancy threshold and expires 90 days beyond either event. If we are unable to reach an agreement on the property's market value, we have a right of first offer. (8) The option period window begins and ends at the number of days indicated beyond the achievement of an 85% occupancy threshold by the underlying property. If we are unable to reach an agreement on the property's market value, we have a right of first offer. (9) The underlying loan is a land acquisition bridge loan that is anticipated to be converted to a real estate loan investment in the future with a purchase option or right of first offer. (10) The purchase option was voided in conjunction with the repayment of the loan on April 12, 2022. Mortgage Indebtedness As of March 31, 2022, our mortgage note principal repayment obligations were: Period Future principal payments (in thousands) 2022 $ 54,993 2023 81,841 2024 300,318 2025 57,692 2026 339,105 2027 320,122 2028 252,544 2029 246,473 2030 357,317 2031 97,107 Thereafter 319,705 Totals $ 2,427,217 Multifamily Communities As of March 31, 2022, our multifamily community portfolio consisted of the following properties: Three months ended March 31, 2022 Property Location Number of units Average unit size (sq. ft.) Average physical occupancy Average rent per unit Same-Store Communities: Aldridge at Town Village Atlanta, GA 300 969 95.7 % $ 1,628 Green Park Atlanta, GA 310 985 97.1 % $ 1,657 Overton Rise Atlanta, GA 294 1,018 95.0 % $ 1,728 Summit Crossing I Atlanta, GA 345 1,034 97.1 % $ 1,435 Summit Crossing II Atlanta, GA 140 1,100 97.1 % $ 1,582 The Reserve at Summit Crossing Atlanta, GA 172 1,002 97.3 % $ 1,529 Avenues at Cypress Houston, TX 240 1,170 96.4 % $ 1,612 Avenues at Northpointe Houston, TX 280 1,167 94.2 % $ 1,540 Stone Creek Houston, TX 246 852 95.7 % $ 1,241 Aster at Lely Resort Naples, FL 308 1,071 96.4 % $ 1,724 Sorrel Jacksonville, FL 290 1,048 95.6 % $ 1,508 Lux at Sorrel Jacksonville, FL 265 1,025 96.4 % $ 1,557 Artisan at Viera Melbourne, FL 259 1,070 96.5 % $ 1,842 525 Avalon Park Orlando, FL 487 1,394 95.5 % $ 1,694 The Blake Orlando, FL 281 908 96.4 % $ 1,601 Citi Lakes Orlando, FL 346 984 97.4 % $ 1,594 Village at Baldwin Park Orlando, FL 528 1,069 96.7 % $ 1,880 Parkside at the Beach Panama City Beach, FL 288 1,041 98.8 % $ 1,563 Luxe at Lakewood Ranch Sarasota, FL 280 1,105 95.0 % $ 1,808 Venue at Lakewood Ranch Sarasota, FL 237 1,001 97.2 % $ 1,888 Crosstown Walk Tampa, FL 342 1,070 96.6 % $ 1,599 Overlook at Crosstown Walk Tampa, FL 180 986 97.6 % $ 1,641 Citrus Village Tampa, FL 296 980 97.1 % $ 1,579 Five Oaks at Westchase Tampa, FL 218 983 97.6 % $ 1,750 Horizon at Wiregrass Tampa, FL 392 973 96.9 % $ 1,755 Lodge at Hidden River Tampa, FL 300 980 96.7 % $ 1,623 Lenox Village Nashville, TN 273 906 96.8 % $ 1,431 Regent at Lenox Nashville, TN 18 1,072 100.0 % $ 1,481 Retreat at Lenox Nashville, TN 183 773 96.9 % $ 1,370 CityPark View Charlotte, NC 284 948 94.7 % $ 1,276 CityPark View South Charlotte, NC 200 1,005 95.2 % $ 1,394 Colony at Centerpointe Richmond, VA 255 1,149 97.5 % $ 1,571 Founders Village Williamsburg, VA 247 1,070 96.2 % $ 1,615 Retreat at Greystone Birmingham, AL 312 1,100 94.4 % $ 1,560 Vestavia Reserve Birmingham, AL 272 1,113 95.1 % $ 1,721 Adara Overland Park Kansas City, KS 260 1,116 96.4 % $ 1,427 Claiborne Crossing Louisville, KY 242 1,204 95.6 % $ 1,448 City Vista Pittsburgh, PA 272 1,023 94.5 % $ 1,541 Total/Average Same-Store Communities 10,442 96.3 % Stabilized Communities: The Menlo Jacksonville, FL 332 966 95.2 % $ 1,654 The Ellison Atlanta, GA 250 1,064 99.1 % $ 1,650 Chestnut Farm Charlotte, NC 256 995 98.6 % $ 1,642 Alleia at Presidio Fort Worth, TX 231 1,022 95.7 % $ 1,661 The Anson Nashville, TN 301 989 96.7 % $ 1,595 The Kingson Fredericksburg, VA 240 993 95.7 % $ 1,739 Total/Average Stabilized Communities 1,610 96.3 % Lirio at Rafina Orlando, FL 280 974 — — Total Multifamily Community Units 12,332 For the three-month period ended March 31, 2022, our average same-store multifamily communities' physical occupancy was 96.3%. We calculate average same-store physical occupancy for quarterly periods as the average of the number of occupied units on the 20th day of each of the trailing three months from the reporting period end date and that have been owned for at least 15 full months as of the end of the first quarter of each year. We exclude the operating results of properties for which construction of adjacent phases has commenced and properties which are undergoing significant capital projects, have sustained significant casualty losses, or are being marketed for sale as of the end of the reporting period. We believe "Same Property" information is useful as it allows both management and investors to gauge our management effectiveness via comparisons of financial and operational results between interim and annual periods for those subsets of multifamily communities owned for current and prior comparative periods. For the three-month period ended March 31, 2022, our average stabilized physical occupancy was 96.3%. We calculate average stabilized physical occupancy for quarterly periods as the average number of occupied units on the 20th day of each of the trailing three months from the reporting period end date. All of our multifamily communities were stabilized for the three-month period ended March 31, 2022 except Lirio at Rafina. For the three-month period ended March 31, 2022, our average stabilized economic occupancy was 96.1%. We define average economic occupancy as market rent reduced by vacancy losses, expressed as a percentage. All of our multifamily properties are included in these calculations except for properties which are not yet stabilized, properties which are owned for less than the entire reporting period and properties which are undergoing significant capital projects, have sustained significant casualty losses or are adding additional phases. We also exclude properties which are currently being held for sale, of which we had none within the multifamily community portfolio at March 31, 2022. Average economic occupancy is useful both to management and investors as a gauge of our effectiveness in realizing the full revenue generating potential of our multifamily communities given market rents and occupancy rates. Capital Expenditures We regularly incur capital expenditures related to our owned multifamily communities. Capital expenditures may be nonrecurring and discretionary, as part of a strategic plan intended to increase a property’s value and corresponding revenue-generating ability, or may be normally recurring and necessary to maintain the income streams and present value of a property. Certain capital expenditures may be budgeted and reserved for upon acquiring a property as initial expenditures necessary to bring a property up to our standards or to add features or amenities that we believe make the property a compelling value to prospective residents in its individual market. These budgeted nonrecurring capital expenditures in connection with an acquisition are funded from the capital source(s) for the acquisition and are not dependent upon subsequent property operating cash flows for funding. For the three-month period ended March 31, 2022, our capital expenditures for multifamily communities consisted of: Capital Expenditures - Multifamily Communities Recurring Non-recurring Total (in thousands, except per-unit figures) Amount Per Unit Amount Per Unit Amount Per Unit Appliances $ 227 $ 18.53 $ — $ — $ 227 $ 18.53 Carpets 501 40.85 — — 501 40.85 Wood / vinyl flooring 30 2.47 121 9.83 151 12.30 Mini blinds and ceiling fans 36 2.95 — — 36 2.95 Fire safety — — 79 6.44 79 6.44 HVAC 128 10.44 — — 128 10.44 Computers, equipment, misc. 56 4.55 59 4.82 115 9.37 Elevators — — 20 1.60 20 1.60 Exterior painting and lighting — — 1,101 89.83 1,101 89.83 Leasing office and other common amenities — — 257 20.97 257 20.97 Major structural projects — — 551 44.97 551 44.97 Cabinets, countertops and unit upgrades — — 487 39.73 487 39.73 Landscaping and fencing — — 89 7.28 89 7.28 Parking lots and sidewalks — — 56 4.58 56 4.58 Signage and sanitation — — 11 0.87 11 0.87 Totals $ 978 $ 79.79 $ 2,831 $ 230.92 $ 3,809 $ 310.71 Grocery-Anchored Shopping Center Portfolio As of March 31, 2022, our grocery-anchored shopping center portfolio consisted of the following properties: Property name Location Year built GLA (1) Percent leased Grocery anchor tenant Castleberry-Southard Atlanta, GA 2006 80,018 100.0 % Publix Cherokee Plaza Atlanta, GA 1958 102,864 100.0 % Kroger Governors Towne Square Atlanta, GA 2004 68,658 100.0 % Publix Lakeland Plaza Atlanta, GA 1990 301,711 95.5 % Sprouts Powder Springs Atlanta, GA 1999 77,853 98.2 % Publix Rockbridge Village Atlanta, GA 2005 102,432 91.4 % Kroger Roswell Wieuca Shopping Center Atlanta, GA 2007 74,370 97.8 % The Fresh Market Royal Lakes Marketplace Atlanta, GA 2008 119,493 97.7 % Kroger Sandy Plains Exchange Atlanta, GA 1997 72,784 100.0 % Publix Summit Point Atlanta, GA 2004 111,970 89.2 % Publix Thompson Bridge Commons Atlanta, GA 2001 92,587 96.2 % Kroger Wade Green Village Atlanta, GA 1993 74,978 94.5 % Publix Woodmont Village Atlanta, GA 2002 85,639 100.0 % Kroger Woodstock Crossing Atlanta, GA 1994 66,122 98.5 % Kroger East Gate Shopping Center Augusta, GA 1995 75,716 93.7 % Publix Fury's Ferry Augusta, GA 1996 70,458 98.6 % Publix Parkway Centre Columbus, GA 1999 53,088 97.7 % Publix Greensboro Village Nashville, TN 2005 70,203 98.3 % Publix Spring Hill Plaza Nashville, TN 2005 66,693 100.0 % Publix Parkway Town Centre Nashville, TN 2005 65,587 100.0 % Publix The Market at Salem Cove Nashville, TN 2010 62,356 100.0 % Publix The Market at Victory Village Nashville, TN 2007 71,300 100.0 % Publix The Overlook at Hamilton Place Chattanooga, TN 1992 213,095 99.5 % The Fresh Market Shoppes of Parkland Miami-Ft. Lauderdale, FL 2000 145,720 98.6 % BJ's Wholesale Club Crossroads Market Naples, FL 1993 126,895 100.0 % Publix Neapolitan Way (2) Naples, FL 1985 137,580 97.5 % Publix Berry Town Center Orlando, FL 2003 99,441 89.9 % Publix Deltona Landings Orlando, FL 1999 59,966 94.8 % Publix University Palms Orlando, FL 1993 99,172 100.0 % Publix Disston Plaza Tampa-St Petersburg, FL 1954 129,150 96.6 % Publix Barclay Crossing Tampa, FL 1998 54,958 100.0 % Publix Polo Grounds Mall West Palm Beach, FL 1966 130,285 97.3 % Publix Kingwood Glen Houston, TX 1998 103,397 97.1 % Kroger Independence Square Dallas, TX 1977 140,218 92.6 % Tom Thumb Midway Market Dallas, TX 2002 85,599 94.9 % Kroger Oak Park Village San Antonio, TX 1970 64,855 100.0 % H.E.B. Irmo Station Columbia, SC 1980 99,384 89.0 % Kroger Rosewood Shopping Center Columbia, SC 2002 36,887 93.5 % Publix Anderson Central Greenville Spartanburg, SC 1999 223,211 95.6 % Walmart Fairview Market Greenville Spartanburg, SC 1998 46,303 100.0 % Aldi Brawley Commons Charlotte, NC 1997 122,028 98.6 % Publix West Town Market Charlotte, NC 2004 67,883 100.0 % Harris Teeter Heritage Station Raleigh, NC 2004 72,946 97.9 % Harris Teeter Maynard Crossing Raleigh, NC 1996 122,781 86.8 % Harris Teeter Wakefield Crossing Raleigh, NC 2001 75,927 98.2 % Food Lion Southgate Village Birmingham, AL 1988 75,092 96.8 % Publix Hollymead Town Center Charlottesville, VA 2005 158,807 90.5 % Harris Teeter Free State Shopping Center Washington, D.C. 1970 264,152 87.6 % Giant 4,922,612 96.0 % Redevelopment Properties: Champions Village Houston, TX 1973 383,346 64.9 % Randalls Sweetgrass Corner Charleston, SC 1999 89,124 32.9 % — Conway Plaza Orlando, FL 1966 117,705 80.6 % Publix Hanover Center (3) Wilmington, NC 1954 305,346 79.8 % Harris Teeter Gayton Crossing Richmond, VA 1983 160,816 (4) 74.2 % Kroger Fairfield Shopping Center (3) Virginia Beach, VA 1985 231,829 83.0 % Food Lion 1,288,166 72.1 % 6,210,778 91.0 % (1) Gross leasable area, or GLA, represents the total amount of property square footage that can be leased to tenants. (2) Investment in an unconsolidated joint venture that is not prorated for our ownership percentage. (3) Property is owned through a consolidated joint venture. (4) The GLA figure shown excludes the GLA of the Kroger store, which is owned by others. As of March 31, 2022, our grocery-anchored shopping center portfolio was 91.0% leased (96.0% excluding redevelopment properties). We define percent leased as the percentage of gross leasable area that is leased as of the period end date, including non-cancelable lease agreements that have been signed which have not yet commenced. This metric is used by management to gauge the extent to which our grocery-anchored shopping centers are delivering their total potential rental and other revenues. Details regarding lease expirations (assuming no exercises of tenant renewal options) within our grocery-anchored shoppng center portfolio as of March 31, 2022 were: Totals Number of leases Leased GLA Percent of leased GLA Month to month 22 65,031 1.2 % 2022 113 318,146 5.6 % 2023 147 614,369 10.9 % 2024 149 1,142,969 20.2 % 2025 133 943,070 16.7 % 2026 129 560,981 9.9 % 2027 91 462,094 8.2 % 2028 32 404,649 7.2 % 2029 30 249,842 4.4 % 2030 18 185,300 3.3 % 2031 24 259,613 4.6 % 2032 + 31 442,570 7.8 % Total 919 5,648,634 100.0 % Our grocery-anchored shopping center portfolio contained the following anchor tenants as of March 31, 2022: Tenant GLA Percent of total GLA Publix 1,179,030 19.0 % Kroger 581,593 9.4 % Harris Teeter 273,273 4.4 % Wal-Mart 183,211 2.9 % BJ's Wholesale Club 108,532 1.7 % Food Lion 76,523 1.2 % Giant 73,149 1.2 % Randall's 61,604 1.0 % H.E.B 54,844 0.9 % Tom Thumb 43,600 0.7 % The Fresh Market 43,321 0.7 % Sprouts 29,855 0.5 % Aldi 23,622 0.4 % Total 2,732,157 44.0 % Our Quarterly Report on Form 10-Q for the period ended March 31, 2022 will present income statements of New Market Properties, LLC within the Results of Operations section of Management's Discussion and Analysis of Financial Condition and Results of Operations. Second-generation capital expenditures within our grocery-anchored shopping center portfolio by property for the first quarter 2022 totaled approximately $713,000. Second-generation capital expenditures exclude those expenditures made in our grocery-anchored shopping center and office building portfolios (i) to lease space to "first generation" tenants (i.e. leasing capital for existing vacancies and known move-outs at the time of acquisition), (ii) to bring recently acquired properties up to our ownership standards, and (iii) for property redevelopments and repositioning. Office Building Portfolio As of March 31, 2022, our office building portfolio consisted of the following properties: Property Name Location GLA Percent leased Three Ravinia Atlanta, GA 814,000 93 % Westridge at La Cantera San Antonio, TX 258,000 100 % Total/Average 1,072,000 95 % As of March 31, 2022, our office building portfolio included the following significant tenants: Rentable square footage Percent of Annual Base Rent Annual Base Rent (in thousands) InterContinental Hotels Group 467,000 44.8 % $ 11,429 USAA 129,000 13.1 % 3,357 Vericast 129,000 12.2 % 3,102 Hapag Lloyd 127,000 17.5 % 4,455 Lease Query 53,000 3.8 % 968 Total 905,000 91.4 % $ 23,311 We define Annual Base Rent as the current monthly base rent annualized under the respective leases. As of March 31, 2022, the leased square footage of our office building portfolio expires according to the following schedule: Percent of Year of lease expiration Rented square rented feet square feet 2022 — — 2023 8,000 0.8 % 2024 5,000 0.5 % 2025 53,000 5.3 % 2026 — — 2027 329,000 33.0 % 2028 — — 2029 — — 2030 — — 2031 467,000 46.8 % 2032 + 136,000 13.6 % Total 998,000 100.0 % The Company recognized second-generation capital expenditures within its office building portfolio of approximately $151,000 during the first quarter 2022. Definitions of Non-GAAP Measures We disclose FFO, Core FFO, AFFO and NOI, each of which meets the definition of a “non-GAAP financial measure”, as set forth in Item 10(e) of Regulation S-K promulgated by the SEC. As a result we are required to include in this filing a statement of why the Company believes that presentation of these measures provides useful information to investors. The non-GAAP measures of FFO, Core FFO, AFFO and NOI should be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our performance, and we believe that to understand our performance further FFO, Core FFO, AFFO and NOI should be compared with our reported net income or net loss and considered in addition to cash flows in accordance with GAAP, as presented in our consolidated financial statements. FFO, Core FFO and AFFO are not considered measures of liquidity and are not alternatives to measures calculated under GAAP. Funds From Operations Attributable to Common Stockholders and Unitholders (“FFO”) FFO is one of the most commonly utilized Non-GAAP measures currently in practice. In its 2002 “White Paper on Funds From Operations,” which was restated in 2018, the National Association of Real Estate Investment Trusts, or NAREIT, standardized the definition of how net income/loss should be adjusted to arrive at FFO, in the interests of uniformity and comparability. We have adopted the NAREIT definition for computing FFO as a meaningful supplemental gauge of our operating results, and as is most often presented by other REIT industry participants. The NAREIT definition of FFO (and the one reported by the Company) is: Net income/loss, excluding: depreciation and amortization related to real estate; gains and losses from the sale of certain real estate assets; gains and losses from change in control; and impairment writedowns of certain real estate assets and investments in entities where the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. Not all companies necessarily utilize the standardized NAREIT definition of FFO, so caution should be taken in comparing our reported FFO results to those of other companies. Our FFO results are comparable to the FFO results of other companies that follow the NAREIT definition of FFO and report these figures on that basis. FFO is a non-GAAP measure that is reconciled to its most comparable GAAP measure, net income/loss available to common stockholders. Core Funds From Operations Attributable to Common Stockholders and Unitholders (“Core FFO”) We make adjustments to FFO to remove costs incurred and revenues recorded that are singular in nature and outside our normal operations and portray our primary operational results. We calculate Core FFO as: FFO, plus: acquisition and pursuit (dead deal) costs; loan cost amortization on acquisition line of credit and loan coordination fees; losses on debt extinguishments or refinancing costs; Internalization costs; Corporate governance and merger-related costs; expenses incurred on calls of preferred stock; deemed dividends for redemptions of and non-cash dividends on preferred stock; and expenses related to the COVID-19 global pandemic; Less: earnest money forfeitures by prospective asset purchasers. Core FFO figures reported by us may not be comparable to Core FFO figures reported by other companies. We utilize Core FFO as a supplemental measure of the operating performance of our portfolio of real estate assets. We believe Core FFO is useful to investors as a supplemental gauge of our operating performance and may be useful in comparing our operating performance with other real estate companies. Since our calculation of Core FFO removes costs incurred and revenues recorded that are often singular in nature and outside our normal operations, we believe it improves comparability to investors in assessing our core operating results across periods. Core FFO is a non-GAAP measure that is reconciled to its most comparable GAAP measure, net income/loss available to common stockholders. Adjusted Funds From Operations Attributable to Common Stockholders and Unitholders (“AFFO”) AFFO makes further adjustments to Core FFO results in order to arrive at a more refined measure of operating and financial performance. There is no industry standard definition of AFFO and practice is divergent across the industry. We calculate AFFO as: Core FFO, plus: non-cash equity compensation to directors and executives; non-cash (income) expense for current expected credit losses; amortization of loan closing costs; depreciation and amortization of non-real estate assets; net loan origination fees received; deferred interest income received; amortization of lease inducements; cash received in excess of (exceeded by) amortization of purchase option termination revenues; non-cash dividends on Series M1 Preferred Stock and mShares; and earnest money forfeiture from prospective asset purchaser; Less: non-cash loan interest income; cash paid for loan closing costs; amortization of straight-line rent adjustments and acquired real estate intangible assets and/or liabilities; amortization of deferred revenues; and normally-recurring capital expenditures and capitalized second generation leasing costs. AFFO figures reported by us may not be comparable to those AFFO figures reported by other companies. We utilize AFFO as another measure of the operating performance of our portfolio of real estate assets. We believe AFFO is useful to investors as a supplemental gauge of our operating performance and may be useful in comparing our operating performance with other real estate companies. Since our calculation of AFFO removes other significant non-cash charges and revenues and other costs which are not representative of our ongoing business operations, we believe it improves comparability to investors in assessing our core operating results across periods. AFFO is a non-GAAP measure that is reconciled to its most comparable GAAP measure, net income/loss available to common stockholders. FFO, Core FFO and AFFO are not considered measures of liquidity and are not alternatives to measures calculated under GAAP. Same-Store Net Operating Income (“NOI”) We use same-store NOI as an operational metric for our same-store multifamily communities, enabling comparisons of those properties’ operating results between the current reporting period and the prior year comparative period. We define our population of same-store multifamily communities as those that are stabilized and that have been owned for at least 15 full months as of the end of the first quarter of each year, and exclude the operating results of properties for which construction of adjacent phases has commenced and properties which are undergoing significant capital projects, have sustained significant casualty losses, or are being marketed for sale as of the end of the reporting period. We define NOI as rental and other property revenues, less total property and maintenance expenses, property management fees, real estate taxes, general and administrative expenses, and property insurance. We believe that NOI is an important supplemental measure of operating performance for REITs because it provides measures of core operations, rather than factoring in depreciation and amortization, financing costs, acquisition costs, and other corporate expenses. NOI is a widely utilized measure of comparative operating performance in the REIT industry, but is not a substitute for the most comparable GAAP-compliant measure, net income/loss. About Preferred Apartment Communities, Inc. Preferred Apartment Communities, Inc. (NYSE: APTS) is a real estate investment trust engaged primarily in the ownership and operation of Class A multifamily properties, with select investments in grocery-anchored shopping centers. Preferred Apartment Communities’ investment objective is to generate attractive, stable returns for stockholders by investing in income-producing properties and acquiring or originating real estate loans. As of March 31, 2022, the Company owned or was invested in 113 properties in 13 states, predominantly in the Southeast region of the United States. View source version on businesswire.com: https://www.businesswire.com/news/home/20220509005086/en/
Paul Cullen Executive Vice President-Investor Relations Chief Marketing Officer investorrelations@pacapts.com 770-818-4144