Firm Capital American Realty Partners Corp. Announces Improving First Quarter Results

TORONTO, May 30, 2017 /CNW/ - Firm Capital American Realty Partners Corp. ("the "Company"), (TSXV : FCA.U) is pleased to report its consolidated interim quarterly financial results for the three months ended March 31, 2017.

QUARTER AND YEAR-TO-DATE HIGHLIGHTS

  • For the quarter ended March 31, 2017, net loss was approximately $0.2 million, or a 28% improvement over the $0.3 million loss reported at December 31, 2016 and a 91% improvement over the $2.6 million loss reported at March 31, 2016;

  • For the three month period ended March 31, 2017, FFO was approximately a $0.6 million loss or a 77% improvement over the $2.6 million loss reported at March 31, 2016. AFFO was approximately a $0.4 million loss or a 59% improvement over the $1.1 million loss reported at March 31, 2016;

  • For the quarter ended March 31, 2017, Net loss per share was $0.05, which was a 58% and 96% improvement over the $0.13 and $1.31 net loss per share reported at December 31, 2016 and March 31, 2016, respectively;

  • For the three month period ended March 31, 2017, FFO per share was $(0.14) and AFFO per share was $(0.10). Both are an 89% and 81% improvement over the FFO and AFFO reported for the three month period ended March 31, 2016;

  • As at March 31, 2017, the Company had two asset portfolios:

  • Investment Portfolio: A portfolio of real estate investments with a fair value of approximately $52.8 million consisting of the following:

    • Multi-Family Investment Portfolio: Consisting of 66 mini-multi units located across three buildings in Florida and 311 multi-family apartment units located across three buildings in Florida (1 building) and Texas (two buildings) with a fair value of approximately $45.7 million; and

    • Joint Venture Investments: Consisting of two joint venture investments in eight multi-family buildings comprised of 127 residential units and two commercial units located in New York City and 115 residential units located in the Washington, DC area with a combined fair value of approximately $7.1 million;

  • Single Family Disposition Portfolio: Consisting of 293 homes comprised of 386 units located in Florida, Atlanta and New Jersey with a fair value of approximately $21.3 million;

  • Occupancy: Multi-Family Investment Portfolio occupancy was a strong 96.6%, which is a 160 basis point increase over the 95.0% reported on December 31, 2016. Joint Venture Investment occupancy was 90.5%;

  • Average Rents: Multi-Family Investment Portfolio average monthly rents largely unchanged at $1,019 per month; 

  • $6.5 Million in Senior Secured Note ("SSN") and New Jersey Secured Promissory Note ("NJPN") Repayments Reduced Original Balances By 84% and Generates $0.5 Million in Annual Interest Expense Savings: During the quarter, the Company repaid $3.2 million and $0.4 million of the SSN and NJPN, respectively. Subsequent to quarter end, the Company repaid an additional $2.6 million and $0.3 million of the SSN and NJPN, respectively. In total, the Company has repaid $6.5 million of the SSN and NJPN from the beginning of 2017 until today. As a result, the SSN and NJPN balances currently stand at approximately $2.3 million and $2.1 million, respectively, or 16% of the original balance. The repayments of the SSN and NJPN over this period will generate the Company approximately $0.5 million in annual interest expense savings; 

  • $5.8 Million in Single Family Home Dispositions: During the quarter, the Company closed sales on 63 single family home units for gross proceeds of approximately $3.5 million (net proceeds of approximately $2.9 million). Subsequent to quarter end, the Company closed sales on 34 single family homes comprised of 41 units for gross proceeds of approximately $2.3 million (net proceeds of approximately $2.1 million);

  • $4.4 Million in Conditional Single Family Home Sales Expected to Fully Repay SSN Balance During the Second Quarter of 2017: The Company has under contract 45 single family homes comprised of 77 units contracted for sale for gross proceeds of approximately $4.4 million. These conditional sales are expected to fully repay the remaining SSN balance during the second quarter of 2017. Once repaid, the Company will commence repayment of the $17.3 million convertible debentures from additional home sales not encumbered by either the NJPN or the $4.0 million Atlanta first mortgage;

  • Single Family Home Inventory Held For Sale Update: The Company currently has 15 single family homes available for sale in Florida, 15 properties comprised of 67 units available for sale in New Jersey and 66 single family homes available for sale in Atlanta. With the exception of a 120 single family home rental portfolio located in Atlanta subject to a $4.0 million first mortgage, all of the remaining single family homes are currently listed for sale with various agents;

  • Executed on $1.0 Million Joint Venture Investment in the Washington, DC area: On January 18, 2017, the Company closed on a joint venture investment that consists of eight multi-family buildings comprised of 115 residential units located in the Washington, DC area with a local partner. The Portfolio presents significant repositioning and value enhancement opportunities. The purchase price for 100% of the investment was $9.8 million, representing a going-in 7.6% capitalization rate. The joint venture plans to refurbish the buildings, add units and apply more hands-on management in order to increase the net rental income over a seven year time horizon. The Company invested $1.0 million in a combination of preferred equity ($0.7 million) and common equity ($0.3 million), which represents a 25% ownership interest. The preferred equity has a fixed rate of return of 8% per annum. The investment was funded from proceeds received from the previously announced Rights Offering that closed during the fourth quarter of 2016;

  • Completion of Share Consolidation: On February 3, 2017, the Company completed the consolidation of its issued and outstanding common shares on the basis of one (1) post-consolidation common share for every 29.41 pre-consolidation common shares;

  • Announced Senior Management Changes Including New Chief Executive Officer and Director: On February 27, 2017, the Company announced the appointment of Kursat Kacira as President, Chief Executive Officer and a Director of the Company. Previously, on January 12, 2017, the Company announced the appointment of Sandy Poklar as Chief Financial Officer of the Company. Further, the Company announced that Jonathan Mair would be responsible for all mortgage debt underwriting and Michael Weitzner would be responsible for all real estate acquisitions and equity underwriting initiatives;

  • Promissory Note Revised Terms: On May 3, 2017, the Company signed a revised promissory note effective April 1, 2017 with the former CEO. The revised promissory note bears interest at 12.5% per annum, calculated and due monthly from April 1, 2017 through to the new maturity date of February 1, 2018; and

  • Closed $6.3 Million Public Offering of Common Shares and Warrants: On May 10, 2017, the Company announced an offering (the "Offering") of units (the "Offered Units") at a price of US$7.50 per Offered Unit (C$10.24 per Offered Unit). Each Offered Unit consisted of one common share and one warrant of the Company (an "Offered Warrant"). Each Offered Warrant entitles the holder to purchase one common share of the Company at an exercise price of US$8.50 for a period of 36 months from the closing date of May 29, 2017. Investors had the option of subscribing for the Offering in US or Canadian dollars. Net proceeds of the Offering will be used to fund prospective investments, debt repayment and for general corporate and working capital purposes. On May 29, 2017, the Company closed the Offering, raising approximately C$4.2 million and US$3.2 million, respectively, which in aggregate total gross proceeds of approximately $6.3 million.

For the complete financial statements including Management's Discussion & Analysis, please visit www.sedar.com or the Company's website at www.firmcapital.com

ABOUT FIRM CAPITAL AMERICAN REALTY PARTNERS CORP.
Firm Capital American Realty Partners Corp. (the "Company") focuses on capital partnership investing in U.S. income producing real estate and mortgage debt investments.

The Company is a US focused real estate investment entity that pursues real estate and debt investments with the following investment platforms:

  • Income Producing Real Estate Investments: Acquiring income producing real estate assets in major cities across the United States. Acquisitions are completed solely by the Company or in joint-venture partnerships with local industry expert partners who retain property management; and

  • Mortgage Debt Investments: Real estate debt and equity lending platform focused in major cities across the United States. Focused on providing all forms of bridge mortgage loans and joint venture capital.

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 Company's single family property disposition program and debt repayments, which may not be completed within the estimated time frames specified above or at all. Failure to complete the steps described above or any delays in their implementation may have a material adverse effect 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. There is no assurance that the implementation of the steps described above, 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 Company's 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 the Company 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. These terms are defined in The Company's Management Discussion and Analysis for the quarter and year ended December 31, 2016 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.

SOURCE Firm Capital American Realty Partners Corp.

For further information: Kursat Kacira, President & Chief Executive Officer, (416) 635-0221; Sandy Poklar, Chief Financial Officer, (416) 635-0221


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