Delavaco Residential Properties Corp. Reports 2015 Results

*All amounts stated in USD, unless otherwise stated.

TORONTO, April 26, 2016 /CNW/ - Delavaco Residential Properties Corp. ("Delavaco" or the "Company") (TSXV: DVO.U) today announced its results for the fourth quarter and year ended December 31, 2015.

FINANCIAL HIGHLIGHTS

  • Funds From Operations ("FFO") for the quarter ended December 31, 2015 improved by $307,825 or 24% over the quarter ended September 30, 2015 and improved by $1,367,661 or 59% over the quarter ended December 31, 2014;
  • Adjusted Funds From Operations ("AFFO") for the quarter ended December 31, 2015 improved by $624,604 or 38% over the quarter ended September 30, 2015 and improved by $1,225,393 or 55% over the quarter ended December 31, 2014;
  • FFO per share for the quarter ended December 31, 2015 was $(0.02) per share, in line with September 30, 2015, but a 50% improvement over the $(0.04) per share reported at December 31, 2014;
  • AFFO per share for the quarter ended December 31, 2015 was $(0.02) per share, a 33% improvement over the $(0.03) per share reported as at September 30, 2015, and a 50% improvement over the $(0.04) per share reported at December 31, 2014;
  • FFO for the year ended December 31, 2015 improved by $1,819,092 or 23% over the year ended December 31, 2014;
  • AFFO for the year ended December 31, 2015 improved by $1,007,473 or 14% over the year ended December 31, 2014;
  • FFO per share for the year ended December 31, 2015 improved to $(0.11) per share, which is a 27% improvement over the $(0.15) per share reported at December 31, 2014; and
  • AFFO per share for the year ended December 31, 2015 improved to $(0.10) per share, which is a 23% improvement over the $(0.13) per share reported at December 31, 2014.

PORTFOLIO HIGHLIGHTS

  • Fair value of investment properties and assets held for sale as at December 31, 2015, was $81,020,716, of which $43,622,125 is the single-family portfolio and $37,398,591 is the multi-family portfolio;
  • Aggregate portfolio occupancy as at December 31, 2015, was 64%. Single-family portfolio occupancy was 49% while multi-family portfolio occupancy was 97%;
  • Average monthly rent for the aggregate portfolio was $949. Single-family average rent was $893 while average rent for the multi-family portfolio was $1,067; and
  • Sold 113 single-family units located in Florida for an aggregate sale price of approximately $7,366,329 for the year ended.

CORPORATE HIGHLIGHTS

  • On December 29, 2015, the Company announced a transformative rebranding and revised business strategy with Firm Capital Realty Partners Advisors Inc. and its affiliated and/or associated entities (collectively "Firm Capital"). This included a new asset management agreement with Firm Capital, a single family property disposition program, the restructuring of the Company's debt structure and following completion of a certain level of single family home sales and the achievement of specified debt repayment milestones, the rebranding of the Company as "Firm Capital American Realty Partners Corp.", along with a new independent board and new business focus. The Company is pleased to report that progress has been made on this transformation and further updates will be provided in due course; and
  • During the course of the year, the Company repaid $7.5 million of its senior secured debt facility.

SUBSEQUENT EVENTS

  • From January 1, 2016, to April 18, 2016, Delavaco sold 42 single-family units located in Florida for an aggregate sale price of approximately $2.9 million. As such, as of April 18, 2016, the Company had 106 remaining homes in Florida to dispose, of which 30 properties are under contract for disposition that should generate proceeds of approximately $2.6 million. Subsequent to these home sales, the Company will be left with 76 homes to sell in Florida at which point it will turn its attention to the Atlanta portfolio and begin disposing of these assets;
  • On February 18, 2016, Delavaco completed a $2.5 million partial redemption of its original $25 million 7.50% secured notes, leaving $15.0 million in principal remaining;
  • On February 29, 2016, the Company, with the approval of the convertible debenture holders, agreed to convert 20% of the $21.6 million convertible debentures into common shares at a price of $0.51 per common share for a total of 8,411,764 common shares issued. This reduced the total amount payable under the convertible debentures to $17,310,000. The Company also amended the terms of the remaining convertible debenture such that the interest rate was reduced from 7% to 5.5% for a period of 12 months, following which the interest rate shall automatically revert back to 7% per annum. The maturity date of the convertible debentures was amended from July 31, 2018 to July 31, 2019;
  • On March 10, 2016, the TSX Venture Exchange ("TSXV") formally approved the appointment of Firm Capital as asset manager under the asset management agreement, the continuation of its previously announced single family property disposition program; and the adoption of new investment policies for the Company in line with its future anticipated areas of business; and
  • On April 26, 2016, the Company received conditional approval to reduce the repayments on its $15 million, 7.5% Senior Secured Notes ("SSN") from $2.5 million per repayment to $100,000. The approval is conditional on certain documentation being completed which is anticipated to occur no later than the first week of May, 2016. The Company currently has approximately $1.8 million held in escrow from Florida home sales that will be used to repay the SSN principal and accrued interest over the short term, thus bringing the SSN balance down to approximately $13.5 million.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: Certain information in this news release constitutes forward-looking statements under applicable securities law. Any statements that are contained in this news release that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements are often identified by terms such as "may", "should", "anticipate", "expect", "intend" and similar expressions. Forward-looking statements in this news release include, but are not limited to, statements regarding  the arrangements described above with Firm Capital, including the property management arrangements, Single Family Property Disposition Program and Debt Restructuring, which may not be completed within the estimated time frames specified above or at all. In the event that such steps are not completed to the satisfaction of Firm Capital,  the rebranding, Board restructuring and new business focus described above will likely be subject to amendment or may not proceed, which could have a material adverse effect upon the Company. Failure to complete the steps or any delays in their implementation may have a material adverse affect upon the business of the Company and its market value.. There is no assurance that the Company will be able to complete the disposition of the Single Property Disposition Portfolio at anticipated values or at all or that market conditions will support the debt and equity raises contemplated by the Company. Failure to achieve these objectives will have a material and adverse effect upon the ability of the Company to complete the announced terms of the Debt Restructuring. There is no assurance that the amounts owed by the Company's former CEO will be repaid in accordance with their terms or at all. There is no assurance that the implementation of the steps, even if completed as described above, will increase the market value of the Company's securities, which is subject to numerous factors beyond the Company's control.

Forward-looking statements necessarily involve known and unknown risks, including, without limitation, risks associated with general economic conditions; adverse factors affecting the U.S. real estate market generally or those specific markets in which the Company holds properties; volatility of real estate prices; inability to complete the Single Family Property Disposition Program or Debt Restructuring in a timely manner; inability to access sufficient capital from internal and external sources, and/or inability to access sufficient capital on favourable terms; industry and government regulation; changes in legislation, income tax and regulatory matters; the ability of Delavaco to implement its business strategies; competition; currency and interest rate fluctuations and other risks.

Readers are cautioned that the foregoing list is not exhaustive. Readers are further cautioned not to place undue reliance on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement.

Certain financial information presented in this press release reflect certain non-International Financial Reporting Standards ("IFRS") financial measures, which include NOI, FFO and AFFO. These measures are commonly used by real estate investment companies as useful metrics for measuring performance, however, they do not have standardized meaning prescribed by IFRS and are not necessarily comparable to similar measures presented by other real estate investment companies. Delavaco believes that FFO and AFFO are important measures of operating performance. The IFRS measurement most directly comparable to AFFO is net income. These terms are defined in Delavaco's Management Discussion and Analysis for the Quarter Ended December 31, 2015 filed on www.sedar.com.

Neither the Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Additional information about Delavaco Residential Properties Corp. is available at www.delavacoproperties.com or www.sedar.com.

SOURCE Delavaco Residential Properties Corp

For further information: Michael Galloro, Chief Financial Officer, michael@delavaco.com

RELATED LINKS
http://www.delavaco.com

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