Company
Operations
Ø Total revenue (operating
and investment) was $202,922 for 4Q13
Ø Rental revenue
was $180K vs. $172K in 3Q13—steady
Ø Funds from
operations (FFO) was $43,426 during 4Q13
Ø Dividends from
securities portfolio in 4Q13 was $15,999
Ø Share price increased
$.60 to $12.92 per share
Ø Member shares
issued since inception: 192,833 (65 share members)
Revenue: M1’s fourth quarter
total revenue topped $200,000 for the first time in our company’s history,
coming in at $202,922, which
included rental income, dividend income, late fees, and other miscellaneous
income items. Rental revenue increased
slightly to $180,137 compared to $172,648 and $176,662 during the 3Q13 and 2Q13
respectively. Our new acquisition (Oxford Apartments) on April 1, 2013 and
efficient rental operations have contributed to this positive trend and
stability. Our securities portfolio generated $15,999 in dividends compared to $16,495 and $16,951 during 3Q13
and 2Q13 respectively. We expect
dividend income to remain level as we maintain our focus on reducing debt
instead of growing our securities portfolio.
Operating
expenses:
Our operating expenses for 4Q13 were $155,740
compared to $166,032 and $177,523 for 3Q13 and 2Q13 respectively. We will
continue to invest money to improve our properties; we invested $18,589 in
renovations, maintenance, and repairs during 4Q13. Our next two largest cash expenses
were utility expense ($13,214) and property insurance ($8,480). All operating
expenses were in line with our budget.
Funds
From Operations (FFO): M1’s
taxable loss for 4Q13 was $12,047; however by adding back depreciation
expense the company experienced a positive FFO of $43,426. Interest
expense for 4Q13 was $49,005. Our
average cost of capital increased to 4.75%.
Management will continue to seek opportunities to refinance and/or
pay-off liabilities in order to lower interest expense, allowing the company
to use those savings to further reduce debt.
Distributions: M1 paid its first distribution to share members in January 2013.
Distributions are based on FFO from the previous six months of
operations.
Distributions paid on January 31, 2013
were $.09 per share.
Distributions
paid on July 31, 2013 were $.12 per share or a 33.3% increase.
During July 1 – December 31, 2013, FFO was $93,039. M1 will distribute 30% of FFO, resulting in
a distribution of $27,912 or $.14 per share, or a 16.6% increase.
Balance
sheet: Cash, cash equivalents, and short-term
investments as of December 31, 2013 were $976,386. Our REIT portfolio accounts
for $958,394. Our long-term assets or property portfolio is valued at $5,635,000.
Total assets are $6,611,386. The
company’s total liabilities decreased to $4,119,738. Share members’ equity increased
to $2,491,648. During 4Q13, M1 issued 10,591 member shares.
Securities portfolio: As of December 31, 2013, M1’s securities portfolio
was valued at $958,394, approximately 14.49% of total assets. The portfolio is
comprised of real estate investment trusts allocating 9% in residential, 8%
in office and industrial, 5% in healthcare, 20% in mortgage, 41% in retail, 5%
in student housing, 4% in shopping centers, and 8% in Vanguard REIT. Our three largest holdings were in the
following REITs: Realty Income, National
Retail Properties, Inc. and Annaly Capital.
During 4Q13, we added to Boston Properties, Vanguard REIT, Home
Properties, and Realty. We eliminated
positions in Mack-Cali and Hovnanian.
We did not initiate any new positions. Our securities portfolio performance during the fourth quarter was -10.57%;
since inception our securities portfolio has returned -12.70%.
Property management: The economy in Joplin continues to improve
with the rebuilding of the city.
However, we have seen an increase in rental turnovers as construction
crews come to town and then depart within 6-12 months. The demand helps to keep the vacancies to a
minimum, but the transition of tenants does have a negative impact on our
rents collected per apartment. During
the 4Q we experienced a slight increase in rental income due to apartment
vacancies being filled. Our current occupancy rate is 96.2%.
Acquisition/Disposition: None
Guidance
for 2014: Last year we gradually increased our rental
income goal as we experienced a change in rental rates and as we increased
the size of our property portfolio.
Based on 2013 total income of $750,305 and planning minimum changes in
the size of our property portfolio we believe we can obtain $660,000 in
rental income and after adding in dividend income and investment operations
we can expect total revenue of $750,000 in 2014. We will budget our operating expenses to be
80% of our expected revenue as we execute our preventive maintenance
plans. We will continue to distribute
30% of our funds from operations to reward our share members.
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