Silver Bay Realty Trust Corp. Reports Third Quarter 2013 Financial Results

Silver Bay Realty Trust Corp. (NYSE: SBY) or “Silver Bay,” or “the Company,” today announced its financial results for the quarter ended September 30, 2013.

Highlights
  • Total revenue increased 35% quarter-over-quarter to $14.5 million
  • Net operating income outpaced revenue growth, increasing 44% quarter-over-quarter to $4.5 million
  • Estimated net asset value appreciated 3% quarter-over-quarter to $19.50 per fully diluted share
  • Increased the number of leased properties by 911 or 25% quarter-over-quarter
  • Owned portfolio of 5,575 single-family properties, of which 4,521 properties were leased, resulting in an aggregate portfolio occupancy increase to 81% from 65% in the prior quarter
  • Occupancy for properties owned six months or longer increased to 89% from 87% quarter-over-quarter

“We achieved strong leasing momentum in the quarter,” said David N. Miller, Silver Bay’s President and Chief Executive Officer. “We are continuing to deliver attractive total returns to our stockholders. Our estimated net asset value is up, and the gains in occupancy and operating efficiency are steadily improving our cash flow performance.”

Financial Results

Silver Bay reported total revenue of $14.5 million for the third quarter of 2013, a 35% increase compared to total revenue of $10.7 million for the second quarter of 2013. This sequential quarter increase was primarily attributable to an additional 911 leased properties generating rental income during the quarter. Net loss attributable to common stockholders for the third quarter of 2013 was $6.4 million, or ($0.16) per common share, compared to net loss attributable to common stockholders for the second quarter of 2013 of $6.8 million, or ($0.18) per common share. Due to the formative stage of Silver Bay’s development, a significant number of the Company’s properties were in the initial renovation and leasing phases and therefore were not yet producing rental income.

The Company reported net operating income, or NOI, of $4.5 million for the third quarter of 2013, a 44% increase compared to NOI of $3.1 million for the second quarter of 2013. The sequential quarter increase was primarily attributed to an increase in portfolio occupancy. NOI is a non-GAAP financial measure. A reconciliation of net loss to NOI is included in the financial and operating tables accompanying this press release.

Portfolio Summary and Operating Metrics

Silver Bay owned a portfolio of 5,575 single-family properties as of September 30, 2013. The following table provides a summary of Silver Bay’s portfolio and operating metrics for the second and third quarter of 2013:
PORTFOLIO AND OPERATING SUMMARY
 
  As of September 30, 2013   As of June 30, 2013
Estimated net asset value per fully diluted share $19.50 $18.95
Book value per fully diluted share $17.16 $17.30
 
As of September 30, 2013 As of June 30, 2013
Occupancy Rate
Stabilized properties 95% 94%
Properties owned six months or longer 89% 87%
Aggregate portfolio 81% 65%
Average monthly rent on the aggregate portfolio $1,161 $1,148

Estimated Net Asset Value

Silver Bay reported an estimated net asset value, or Estimated NAV, per fully diluted share of $19.50 based on an estimated fair market value, or Estimated Portfolio Value, of the Company’s properties of $829.8 million as of September 30, 2013. The Company’s book value per fully diluted share was $17.16 as of September 30, 2013. The difference between Estimated NAV and book value per fully diluted share is attributable to multiple factors, including appreciation in the underlying assets of the Company’s portfolio of single-family properties, the Company’s purchasing of single-family properties at discounts to market prices, value created by renovations completed in excess of the cost of renovations, and the exclusion of accumulated depreciation in the calculation of the Company’s Estimated Portfolio Value.

The Estimated Portfolio Value of the Company’s properties is calculated by Silver Bay’s proprietary automated valuation model, or AVM, which estimates the value of the Company’s properties on an individual basis based on comparable sales in the residential real estate market, without reference to the intended use for the properties. Estimated NAV does not ascribe any value to in-place leases or to the portfolio as a whole (as compared to the sum of the values of the individual properties), nor does it consider cash flow or other yield metrics. Estimated NAV and Estimated Portfolio Value are non-GAAP financial measures. A reconciliation of book value to Estimated NAV is included in the financial and operating tables accompanying this press release.

Operating Metrics

Silver Bay reported an occupancy rate of 95% on properties that were stabilized as of September 30, 2013, which increased slightly from 94% in the prior quarter.

For properties that were owned for six months or longer, the Company reported an occupancy rate of 89% as of September 30, 2013, an increase of two percentage points compared to an occupancy rate of 87% as of June 30, 2013. Silver Bay reported an occupancy rate of 81% for the aggregate portfolio as of September 30, 2013, an increase of 16 percentage points compared to an occupancy rate of 65% on the aggregate portfolio as of June 30, 2013. The sequential quarter increases in the occupancy rates for properties owned for six months or longer and the aggregate portfolio are primarily attributable to renovation and leasing activity exceeding acquisition activity. The occupancy rate of the aggregate portfolio remains below the portfolio’s expected performance on a stabilized basis due to the number of properties still in the initial renovation and leasing phase. A summary of Silver Bay’s occupancy rates is included in the financial and operating tables accompanying this press release.

Silver Bay reported an average monthly rent for the aggregate portfolio of $1,161 for the third quarter of 2013, compared to an average monthly rent of $1,148 for the second quarter of 2013. The increase in average monthly rent on a sequential quarter basis was primarily due to changes in portfolio mix.

Dividend Declaration

The Company’s Board of Directors declared a quarterly dividend of $0.01 per diluted share of common stock for the quarter ended September 30, 2013. The dividend was paid October 11, 2013 to common stockholders of record at the close of business on October 1, 2013.

Financing and Liquidity

As of September 30, 2013, Silver Bay had $144.7 million outstanding on its $200.0 million revolving credit facility. The Company had $53.5 million in cash and cash equivalents, $22.7 million in escrow deposits and $55.3 million available under its $200.0 million revolving credit facility as of September 30, 2013.

Share Repurchase Plan

In July 2013, the Company's Board of Directors authorized the Company to repurchase up to 2,500,000 shares of its common stock through a share repurchase program. As of September 30, 2013, 500,000 shares had been repurchased by the Company under the program at an average price of $15.58 per common share.

Conference Call

Silver Bay will host a conference call on November 7, 2013 at 9:00 a.m. EST to discuss third quarter 2013 financial results and business highlights. To participate in the teleconference, please call toll-free (888) 317-6016 (or (412) 317-6016 for international callers and (855) 669-9657 for Canadian callers) approximately 10 minutes prior to the above start time. You may also listen to the teleconference live via the Internet on the Company's website at www.silverbayrealtytrustcorp.com in the Investor Relations section under the Events Calendar link. For those unable to attend, a telephone playback will be available beginning at 12:00 p.m. EST on November 7, 2013 through 9:00 a.m. EST on November 22, 2013. The playback can be accessed by calling (877) 344-7529 (or (412) 317-0088 for international callers and (855) 669-9658 for Canadian callers) and providing Conference Number 10035346. The call will also be archived on the Company's website in the Investor Relations section under the Events Calendar link.

Silver Bay Realty Trust Corp.

Silver Bay Realty Trust Corp. is a Maryland corporation focused on the acquisition, renovation, leasing and management of single-family properties for rental income and long-term capital appreciation. Silver Bay currently owns single-family properties in Arizona, California, Florida, Georgia, Nevada, North Carolina, Ohio and Texas. Silver Bay has elected to be taxed as a REIT for U.S. federal tax purposes.

Forward-Looking Statements

This press release includes “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Actual results may differ from expectations, estimates and projections and, consequently, readers should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “target,” “assume,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believe,” “predicts,” “potential,” “continue,” and similar expressions are intended to identify such forward-looking statements. These forward looking statements involve significant risks and uncertainties that could cause actual results to differ materially from expected results. Factors that could cause actual results to differ include: Silver Bay’s ability to execute share repurchases upon terms acceptable to the company; adverse economic or real estate developments in Silver Bay’s target markets; defaults on, early terminations of or non-renewal of leases by residents; difficulties in identifying properties to acquire and completing acquisitions; increased time and/or expense to gain possession and renovate properties; Silver Bay’s failure to successfully operate its properties; Silver Bay’s ability to obtain financing arrangements; Silver Bay’s failure to meet the conditions to draw under the credit facility; general volatility of the markets in which it participates; interest rates and the market value of Silver Bay’s target assets; the impact of changes in governmental regulations, tax law and rates, and similar matters.

Readers are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made. Silver Bay does not undertake or accept any obligation to release publicly any updates or revisions to any forward-looking statement to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based. Additional information concerning these and other risk factors is contained in Silver Bay’s most recent filings with the Securities and Exchange Commission. All subsequent written and oral forward looking statements concerning Silver Bay or matters attributable to Silver Bay or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above.

Non-GAAP Financial Measures

Estimated Portfolio and Estimated Net Asset Value

The Estimated Portfolio Value reflects the value of Silver Bay’s properties calculated by the Company’s proprietary AVM, less the Company’s estimate of the remaining cost to renovate such properties, or Estimated Renovation Reserve. The AVM estimates the value of the Company’s properties on an individual basis based on prior comparable sales in the residential real estate market, without reference to the intended use for the properties. These individual property values are then aggregated and reduced by the Estimated Renovation Reserve, which accounts for the AVM assumption that renovations for all properties have been completed, to derive the Estimated Portfolio Value of the Company’s properties. The difference between the Estimated Portfolio Value and net investments in real estate as of September 30, 2013 is attributable to multiple factors, including home price appreciation in Silver Bay markets, purchasing at discounts to market prices, value created by the Company’s renovations in excess of the cost of the renovations, and the exclusion of accumulated depreciation in the calculation of Estimated Portfolio Value.

Estimated NAV is intended to be an estimate of the value of all of the Company’s assets net of liabilities. To calculate Estimated NAV, the Company starts with its historical book value, subtracts its historical net investments in real estate and adds its Estimated Portfolio Value. For purposes of calculating Estimated Portfolio Value and estimated NAV, the Company does not deduct the estimated costs of selling the properties in the portfolio, including commissions and closing costs. Further, the Company ascribes no value to existing leases or to the portfolio as a whole (as compared to the sum of the values of the individual properties), nor does it consider cash flow or other yield metrics.

Estimated Portfolio Value and Estimated NAV are non-GAAP financial measures. Silver Bay provides the Estimated Portfolio Value and Estimated NAV as additional tools for investors seeking to value the Company. These metrics should be considered along with other available information in valuing and assessing Silver Bay, including the Company’s GAAP financial measures and other cash flow and yield metrics, and these metrics should not be viewed as a substitute for book value, net investments in real estate, equity, net income or cash flows from operations prepared in accordance with GAAP, or as a measure of the Company’s profitability or liquidity.

Net Operating Income

NOI is defined by the Company as total revenue less property operating and maintenance, real estate taxes, homeowners’ association fees and property management expenses. NOI excludes depreciation and amortization, advisory management fee, general and administrative expenses, interest expense and other expenses.

NOI should not be considered an alternative to net loss or net cash flows from operating activities, as determined in accordance with GAAP, as indications of Silver Bay’s performance or as measures of liquidity. Although the Company uses this non-GAAP measure for comparability in assessing its performance against other REITs, not all REITs compute the same non-GAAP measure. Accordingly, there can be no assurance that the Company’s basis for computing this non-GAAP measure is comparable with that of other REITs.

Funds From Operations

Funds From Operations, or FFO, is a non-GAAP (in accordance with accounting principles generally accepted in the United States) financial measure that the Company believes, when considered with the financial statements determined in accordance with GAAP, is helpful to investors in understanding the Company’s performance because it captures features particular to real estate performance by recognizing that real estate generally appreciates over time or maintains residual value to a much greater extent than do other depreciable assets. The National Association of Real Estate Investment Trusts, or NAREIT, defines FFO as net income (loss), computed in accordance with GAAP, excluding gains (losses) from sales of, and impairment losses recognized with respect to, depreciable property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated on the same basis to determine FFO. The Company calculates FFO attributable to common stockholders (diluted) by subtracting, if dilutive, redemption or repurchase related preferred stock issuance costs and dividends on preferred stock and adding back dividends/distributions on dilutive preferred securities and premiums or discounts on preferred stock redemptions or repurchases.

FFO should not be considered an alternative to net income (loss) or net cash flows from operating activities, as determined in accordance with GAAP, as indications of the Company’s performance or as measures of liquidity. This non-GAAP measure is not necessarily indicative of cash available to fund future cash needs. In addition, although the Company uses this non-GAAP measure for comparability in assessing its performance against other REITs, not all REITs compute the same non-GAAP measure.

Additional Information

Stockholders of Silver Bay, and other interested persons, may find additional information regarding the Company at the SEC's Internet site at www.sec.gov or by directing requests to: Silver Bay Realty Trust Corp., Attn: Investor Relations, 601 Carlson Parkway, Suite 250, Minnetonka, MN 55305, telephone (952) 358-4400.

SILVER BAY REALTY TRUST CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)
   

September 30, 2013(unaudited)
December 31, 2012
Assets
Investments in real estate:
Land $ 135,510 $ 82,310
Building and improvements   616,868   338,252
752,378 420,562
Accumulated depreciation   (13,297)   (1,869)
Investments in real estate, net   739,081   418,693
 
Assets held for sale 7,450 -
Cash and cash equivalents 53,528 228,139
Escrow deposits 22,679 19,727
Resident security deposits 6,105 2,266
In-place lease and deferred lease costs, net 930 2,363
Deferred financing costs, net 3,485 -
Other assets   5,732   6,114
Total Assets $ 838,990 $ 677,302
 
Liabilities and Equity
Liabilities:
Revolving credit facility $ 144,734 $ -
Accounts payable and accrued property expenses 10,169 4,550
Resident prepaid rent and security deposits 7,389 2,713
Amounts due to the manager and affiliates 6,001 3,071
Amounts due previous owners   3,186   6,555
Total Liabilities   171,479   16,889
 
10% cumulative redeemable preferred stock, $.01 par;

50,000,000 authorized, 1,000 issued and outstanding
1,000 1,000
 
Equity:
Stockholders' Equity:
Common stock $.01 par; 450,000,000 shares

authorized; 38,812,821 and 37,328,213, respectively

shares issued and outstanding
387 372
Additional paid-in capital 692,205 664,146
Accumulated other comprehensive loss (243) -
Cumulative deficit   (26,328)   (5,609)
Total Stockholders' Equity 666,021 658,909
Noncontrolling interests - Operating Partnership   490   504
Total Equity   666,511   659,413
Total Liabilities and Equity $ 838,990 $ 677,302

SILVER BAY REALTY TRUST CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(UNAUDITED) (AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)

 
   
Three Months Ended

September 30,
Nine Months Ended

September 30,
Revenue:   2013     2012   2013     2012
Rental income $ 13,923   $ 726 $ 31,544   $ 811
Other income   563   20   1,340   22
Total revenue 14,486 746 32,884 833
 
Expenses:
Property operating and maintenance 4,280 638 8,624 774
Real estate taxes 1,761 406 4,893 526
Homeowners’ association fees 286 155 847 162
Property management 3,675 55 9,173 64
Depreciation and amortization 5,683 449 14,061 481
Advisory management fee - affiliates 2,166 610 7,596 804
General and administrative 1,866 103 5,343 296
Interest expense 989 - 1,147 -
Other   142   2   690   2
Total expenses   20,848   2,418   52,374   3,109
Net loss (6,362) (1,672) (19,490) (2,276)
 

Net loss attributable to noncontrolling interests - OperatingPartnership
  5   -   14   -
Net loss attributable to controlling interests (6,357) - (19,476) -
Preferred stock distributions   (25)   -   (75)   -
Net loss attributable to common stockholders $ (6,382) $ - $ (19,551) $ -
 
Loss per share – basic and diluted(1):
Net loss attributable to common shares $ (0.16) $ - $ (0.50) $ -
Weighted average common shares outstanding   39,095,200   -   39,198,239   -
 
Comprehensive Loss:
Net loss $ (6,362) $ (1,672) $ (19,490) $ (2,276)
Other comprehensive loss:
Change in fair value of interest rate cap derivatives   (243)   -   (243)   -
Other comprehensive loss $ (243) $ - $ (243) $ -
Comprehensive loss (6,605) (1,672) (19,733) (2,276)

Less comprehensive loss attributable to noncontrollinginterests – Operating Partnership
  5   -   14   -
Comprehensive loss attributable to controlling interests $ (6,600) $ (1,672) $ (19,719) $ (2,276)
(1)   A total of 27,459 of common units were outstanding as of September 30, 2013 but have been excluded from the calculation of diluted EPS as their inclusion would not be dilutive.

SILVER BAY REALTY TRUST CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)
                         
Common Stock
Shares  

Par ValueAmount
 

AdditionalPaid-InCapital

AccumulatedOtherComprehensiveLoss
 

CumulativeDeficit
 

TotalStockholders'Equity
 

NoncontrollingInterests -OperatingPartnership
 

ParentEquity
 

TotalEquity
 
Balance at January 1, 2012 - $ - $ - $ - $ (89) $ - $ - $ 250 $ 161
Capital contributions - - - - - - - 226,000 226,000
Net loss - - - - (2,276) - - - (2,276)
Balance at September 30, 2012 - $ - $ - $ - $ (2,365) $ - $ - $ 226,250 $ 223,885
 
Balance at January 1, 2013 37,328,213 $ 372 $ 664,146 $ - $ (5,609) $ 658,909 $ 504 $ - $ 659,413
Net proceeds from sale of common stock 1,987,500 20 34,368 - - 34,388 - - 34,388
Non-cash equity awards (2,892) - 404 - - 404 - - 404
Repurchase of common stock (500,000) (5) (7,785) - - (7,790) - - (7,790)
Dividends declared - - - - (1,243) (1,243) - - (1,243)
Other - - 1,072 - - 1,072 - - 1,072
Net loss - - - - (19,476) (19,476) (14) - (19,490)
Other comprehensive loss - - - (243) - (243) - - (243)
Balance at September 30, 2013 38,812,821 $ 387 $ 692,205 $ (243) $ (26,328) $ 666,021 $ 490 $ - $ 666,511

SILVER BAY REALTY TRUST CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(AMOUNTS IN THOUSANDS)
 
Nine Months Ended

September 30,
Cash Flows From Operating Activities: 2013   2012
  Net loss $ (19,490) $ (2,276)
Adjustments to reconcile net loss to net cash used by operating activities:
  Depreciation and amortization 14,061 481
Non-cash stock compensation 746 -
Amortization of deferred financing costs 480 -
Other 333 -
Net change in assets and liabilities:
Increase in escrow reserves under the credit facility (12,645) -
Increase in escrow cash for operating activities (1,282) (8,319)
Increase in deferred lease fees and other assets (377) (601)
Increase in accounts payable, accrued property expenses, and prepaid rent 3,461 2,631
Increase in related party payables, net 855 1,193
Net cash used by operating activities (13,858) (6,891)
 
Cash Flows From Investing Activities:
Purchase of investments in real estate (258,910) (178,775)
Capital improvements of investments in real estate (82,877) (12,590)
Decrease (increase) in escrow cash for investing activities 10,975 (556)
Proceeds from sale of investments in real estate 4,195 -
Other (252) -
Net cash used by investing activities (326,869) (191,921)
 
Cash Flows From Financing Activities:
Proceeds from issuance of common stock, net of offering costs 34,513 -
Proceeds from revolving credit facility 144,734 -
Deferred financing costs paid (3,965) -
Interest rate cap agreements (533) -
Repurchase of common stock (7,790) -
Dividends paid (843) -
Capital contribution of parent, net - 226,000
Net cash provided by financing activities 166,116 226,000
 
Net change in cash and cash equivalents (174,611) 27,188
Cash and cash equivalents at beginning of period 228,139 250
Cash and cash equivalents at end of period $ 53,528 $ 27,438
 
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,336 $ -
Board of directors stock compensation $ 125 $ -
 
Noncash investing and financing activities:
Common stock and unit dividends declared, but not paid $ (387) $ -
Advisory management fee – additional basis $ 1,071 $ -
Change in contingent consideration $ 222 $ -
Capital improvements in accounts payable $ 2,796 $ -
SILVER BAY REALTY TRUST CORP.
PORTFOLIO SUMMARY OF SINGLE-FAMILY PROPERTIES
 
The following table provides a summary of Silver Bay’s portfolio of single-family properties as of September 30, 2013.
               
Market

Number ofProperties(1)

AggregateCost Basis(2)(thousands)

Average CostBasis PerProperty(thousands)

AverageAge (in years)(3)

AverageSquareFootage

Number ofLeasedProperties

Number ofVacantProperties(4)

AverageMonthlyRent forLeasedProperties(5)
Phoenix 1,427 $ 198,839 $ 139 24.2 1,636 1,275 152 $ 1,033
Atlanta 969 117,487 121 16.8 2,023 746 223 1,193
Tampa 926 128,300 139 23.6 1,656 853 73 1,208
Northern CA(6) 384 71,665 187 44.4 1,401 356 28 1,488
Las Vegas 290 40,901 141 16.7 1,719 277 13 1,153
Columbus 284 25,204 89 35.6 1,417 98 186 979
Orlando 214 31,536 147 24.8 1,684 164 50 1,254
Tucson 208 16,898 81 39.9 1,330 195 13 828
Dallas 205 25,201 123 20.4 1,643 147 58 1,255
Southern CA(7) 156 23,218 149 43.0 1,346 141 15 1,146
Southeast FL(8) 154 29,668 193 33.7 1,708 69 85 1,787
Charlotte 130 16,783 129 11.8 1,980 103 27 1,170
Jacksonville 125 16,081 129 30.7 1,575 44 81 1,079
Houston 103 10,597 103 29.8 1,698 53 50 1,181
Totals 5,575 $ 752,378 $ 135 25.6 1,676 4,521 1,054 $ 1,161
(1)   Total properties exclude properties held for sale or sold by the Company’s taxable REIT subsidiary and any properties acquired in previous periods in sales that have been subsequently rescinded or vacated.
(2) Aggregate cost includes all capitalized costs, determined in accordance with U.S. generally accepted accounting principles, incurred through September 30, 2013 for the acquisition, stabilization, and significant post-stabilization renovation of properties, including land, building, possession costs and renovation costs. Aggregate cost does not include accumulated depreciation.
(3) As of September 30, 2013, approximately 19% of the properties in the aggregate portfolio were less than 10 years old, 26% were between 10 and 20 years old, 18% were between 20 and 30 years old, 17% were between 30 and 40 years old, 9% were between 40 and 50 years old and 11% were more than 50 years old.
(4) Total number of vacant properties includes properties in the process of stabilization as well as those available for lease.
(5) Average monthly rent for leased properties was calculated as the average of the contracted monthly rent for all leased properties as of September 30, 2013 and reflects rent concessions amortized over the life of the related lease.
(6) Northern California market currently consists of Contra Costa, Napa and Solano counties.
(7) Southern California market currently consists of Riverside and San Bernardino counties.
(8) Southeast Florida market currently consists of Miami-Dade, Broward and Palm Beach counties.
SILVER BAY REALTY TRUST CORP.
PORTFOLIO SUMMARY OF STABILIZED PROPERTIES AND
THOSE OWNED SIX MONTHS OR LONGER
 
The following table summarizes Silver Bay’s stabilized properties and those owned six months or longer as of September 30, 2013.
   
Stabilized Properties Properties Owned at Least Six Months
Market

Number ofStabilizedProperties
 

PropertiesLeased
 

PropertiesVacant
 

OccupancyRate
 

AverageMonthly Rent forLeased StabilizedProperties(1)

PropertiesOwned 6Months orLonger
 

PropertiesLeased
 

PropertiesVacant
 

OccupancyRate
 

AverageMonthlyRent forPropertiesOwned atLeast 6Months(2)
Phoenix 1,372 1,275 97 93% $ 1,033 1,274 1,171 103 92% $ 1,036
Atlanta 811 746 65 92% 1,193 773 688 85 89% 1,199
Tampa 870 853 17 98% 1,208 891 821 70 92% 1,211
Northern CA 373 356 17 95% 1,488 344 327 17 95% 1,486
Las Vegas 281 277 4 99% 1,153 277 268 9 97% 1,154
Columbus 107 98 9 92% 979 94 37 57 39% 1,080
Orlando 167 164 3 98% 1,254 132 127 5 96% 1,275
Tucson 202 195 7 97% 828 202 191 11 95% 828
Dallas 158 147 11 93% 1,255 98 80 18 82% 1,270
Southern CA 147 141 6 96% 1,146 156 141 15 90% 1,146
Southeast FL 74 69 5 93% 1,787 108 43 65 40% 1,743
Charlotte 110 103 7 94% 1,170 103 89 14 86% 1,185
Jacksonville 47 44 3 94% 1,079 51 22 29 43% 1,011
Houston 57 53 4 93% 1,181 33 22 11 67% 1,191
Totals 4,776 4,521 255 95% $ 1,161 4,536 4,027 509 89% $ 1,162
(1)   Average monthly rent for leased stabilized properties was calculated as the average of the contracted monthly rent for all stabilized leased properties as of September 30, 2013 and reflects rent concessions amortized over the life of the related lease.
(2) Average monthly rent for properties owned at least six months was calculated as the average of the contracted monthly rent for all properties owned at least six months as of September 30, 2013 and reflects rent concessions amortized over the life of the related lease.

SILVER BAY REALTY TRUST CORP. DEFINITIONS AND RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (AMOUNTS IN THOUSANDS EXCEPT SHARE DATA)

Estimated Portfolio and Estimated Net Asset Value

Estimated Portfolio Value and Estimated NAV are non-GAAP financial measures. Silver Bay provides the Estimated Portfolio Value and Estimated NAV, and believes such metrics are useful, as additional tools for investors seeking to value the Company. These metrics should be considered along with other available information in valuing and assessing Silver Bay, including the Company’s GAAP financial measures or other cash flow or yield metrics and should not be viewed as a substitute for book value, net investments in real estate, equity, net income or cash flows from operations prepared in accordance with GAAP, or as a measure of the Company’s profitability or liquidity.

A description of the Company’s AVM along with certain assumptions and limitations related to its AVM and its calculations of Estimated Portfolio Value and Estimated NAV can be found on the Company’s website at www.silverbayrealtytrustcorp.com in the Investor Relations section under the non-GAAP Reconciliations link.

The following is a reconciliation of the Company’s investments in real estate to Estimate Portfolio Value and book value to Estimated NAV:
  September 30, 2013
  Amount     Per Share(1)
Investments in real estate, gross $ 752,378 $ 19.37
Accumulated depreciation   (13,297)   (0.34)
Investments in real estate, net   739,081   19.03
Add: Increase in estimated fair market value of investments in real estate(2) 97,501 2.51
Less: Estimated Renovation Reserve(3)   (6,753)   (0.17)
Estimated Portfolio Value $ 829,829 $ 21.37
 
Book value(4) $ 666,511 $ 17.16
Less: Investments in real estate, net (739,081) (19.03)
Add: Estimated Portfolio Value   829,829   21.37
Estimated Net Asset Value $ 757,259 $ 19.50
(1)   Per share amounts are based upon common shares outstanding of 38,812,821 plus 27,459 of common units for a total of 38,840,280 fully diluted shares outstanding as of September 30, 2013.
(2) Difference between AVM derived value of the Company’s portfolio of properties of $836,582, which assumes all properties are fully renovated, and net investments in real estate.
(3) Estimated renovation reserve is calculated on properties in the portfolio that are not currently stabilized and for which the initial renovation has not been completed.
(4) Book value as defined by U.S. generally accepted accounting principles represents total assets less total liabilities and less preferred stock in mezzanine or total equity.

Net Operating Income

Net operating income, or NOI, is defined by the Company as total revenue less property operating and maintenance, real estate taxes, homeowners’ association fees and property management expenses. NOI excludes depreciation and amortization, advisory management fee, general and administrative expenses, interest expense and other expenses.

The Company considers NOI to be a meaningful financial measure, when considered with the financial statements determined in accordance with U.S. generally accepted accounting principles. The Company believes NOI is helpful to investors in understanding the core performance of the real estate operations of the Company.

The following is a reconciliation of the Company’s NOI to net loss as determined in accordance with GAAP:
 

Three Months EndedSeptember 30, 2013
 

Three Months EndedJune 30, 2013
Net loss $ (6,362) $ (6,746)
Depreciation and amortization 5,683 4,961
Advisory management fee 2,166 2,578
General and administrative 1,866 1,949
Other 142 217
Interest expense   989   158
Net operating income $ 4,484 $ 3,117

Funds From Operations

Funds From Operations, or FFO, is a non-GAAP (in accordance with accounting principles generally accepted in the United States) financial measure that the Company believes, when considered with the financial statements determined in accordance with GAAP, is helpful to investors in understanding the Company’s performance because it captures features particular to real estate performance by recognizing that real estate generally appreciates over time or maintains residual value to a much greater extent than do other depreciable assets. The National Association of Real Estate Investment Trusts, or NAREIT, defines FFO as net income (loss), computed in accordance with GAAP, excluding gains (losses) from sales of, and impairment losses recognized with respect to, depreciable property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated on the same basis to determine FFO. The Company calculates FFO attributable to common stockholders (diluted) by subtracting, if dilutive, redemption or repurchase related preferred stock issuance costs and dividends on preferred stock and adding back dividends/distributions on dilutive preferred securities and premiums or discounts on preferred stock redemptions or repurchases.

FFO should not be considered an alternative to net income (loss) or net cash flows from operating activities, as determined in accordance with GAAP, as indications of the Company’s performance or as measures of liquidity. This non-GAAP measure is not necessarily indicative of cash available to fund future cash needs. In addition, although the Company uses this non-GAAP measure for comparability in assessing its performance against other REITs, not all REITs compute the same non-GAAP measure.

The following is a reconciliation of the Company’s net loss as determined in accordance with GAAP and its calculation of FFO:
  Three Months Ended   Three Months Ended
September 30, 2013 June 30, 2013
Net loss attributable to common stockholders $ (6,382) $ (6,767)
Noncontrolling interests - Operating Partnership (5) (4)
Preferred distributions 25 25
Depreciation and amortization 5,683 4,961
Other 51 (49)
Funds from Operations $ (628) $ (1,834)

Copyright Business Wire 2010

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