REVIEW OF 2Q 2012 FINANCIAL RESULTS
Company Operations
Total revenue was $89,831, up 98% YOY
Rental revenue was $82.9 vs. $81.7 in 1Q12—COMPANY RECORD
FFO was $8,026 vs. ($13,130) in 2Q11
Dividends from securities portfolio was $4,472
Securities portfolio’s return was 3.72%
Assets increased $361,239 to $3,819,105
Liabilities increased $347,835 to $2,023,883
Share price decreased 1.79% to $12.08 per share
Member shares issued since inception: 148,612 (61 share members)
Revenue: M1’s second quarter rental revenue was $82,883 compared to $81,728 and $69,190 during the 1Q12 and 4Q11 respectively. The completion of Macomb renovations and fully leased available apartments in Joplin have both contributed to this positive trend. Our securities portfolio generated $4,472 in dividends compared to $4,480 during 1Q12. We expect dividend income to increase as we focus on growing our securities portfolio.
Operating expenses: Our operating expenses for 2Q were $81,804. During 2012 we will continue to invest money to improve our properties, thus maintaining our “pre-dividend” goal of reinvesting funds from operations (FFO) into property improvements. All operating expenses were in line with our budget. Depreciation accounted for $23,585 of operating expenses.
Funds From Operations (FFO): M1’s taxable net loss for 2Q was $63,848; however by backing out property depreciation and a one-time charge on the sale of 822/824 Grand St. the company experienced a positive FFO of $8,026. Interest expense for 2Q was $26,023. Our average cost of capital is 5.68%. Management will continue to refinance liabilities to lower interest expense, allowing the company to use those savings for property renovations.
Balance sheet: Cash, cash equivalents, and short-term investments as of June 30, 2012 were $669,105. Short-term investments account for $471,076. Property values increased $128,000 due to the completion of renovations. The company’s total liabilities are $2,023,883, an increase of $347,835 during the quarter due to renovation costs and one new mortgage. Share members’ equity increased $13,404 during 2Q to $1,795,222 reflecting increased assets and liabilities and member share purchases. During 2Q, M1 issued 3,740 member shares. The company did not purchase shares during the 2Q.
Property management: During the second quarter we focused on apartment renovations and routine maintenance. We completed renovations on 11 apartments located at 1505 Michigan Ave, Joplin. These are the last apartments that are in need of repair following the tornado from last May. In addition, we also completed three apartments at Highland Ave in Joplin. Upon completion of these 14 apartment renovations we are now done with our renovations. During the second half of 2012, we will turn our focus on routine maintenance and repair as well as exterior appearance improvement of our properties.
Acquisition/Sales: No property acquisitions during this quarter. We sold two single family homes (822 and 824 Grand Street) in Joplin, MO during the 2Q.
Guidance for 2012: M1’s 2012 revenue goal remains at $324,000. We have experienced a significant increase in our rental income due to improved tenant payment operations and apartment availability. We expect our rental income to continue to grow as we rent our newly renovated apartments and continue regularly scheduled annual rental rate increases. Operating expenses are budgeted to remain in line with our expected revenue as we execute our preventive maintenance plans. Beginning this quarter we will set aside a portion of our net income to be distributed to share members in the form of a distribution with the first payment on January 31, 2013.
No comments:
Post a Comment