Three months ended June 30,

% change

Six months ended June 30,

% change

2021

2020

2021

2020

Revenues (in thousands)

$

118,706

$

122,980

(3.5)

%

$

234,406

$

253,862

(7.7)

%

Per share data:

Net income (loss) (1)

$

(0.64)

$

(1.06)

—

$

(1.38)

$

(5.47)

—

FFO (2)

$

0.23

$

(0.01)

—

$

0.39

$

(3.39)

—

Core FFO (2)

$

0.33

$

0.22

50.0

%

$

0.58

$

0.50

16.0

%

AFFO (2)

$

0.17

$

0.05

240.0

%

$

0.34

$

0.52

(34.6)

%

Dividends (3)

$

0.175

$

0.175

—

$

0.35

$

0.4375

(20.0)

%

(1)

Per weighted average share of Common Stock outstanding for the periods indicated.

(2)

FFO, Core FFO and AFFO results are presented per basic weighted average share of Common Stock and Class A Unit in our Operating Partnership outstanding for the periods indicated. See Reconciliations of FFO Attributable to Common Stockholders and Unitholders, Core FFO and AFFO to Net Income (Loss) Attributable to Common Stockholders and Definitions of Non-GAAP Measures.

(3)

Per share of Common Stock and Class A Unit outstanding.

Owned as of
June 30, 2021 (1)

Potential
additions from
real estate loan
investment
portfolio (2)

Potential total

Residential properties:

Properties

38

13

51

Units

11,393

3,566

14,959

Grocery-anchored shopping centers:

Properties

54

—

54

Gross leasable area (square feet)

6,208,278

—

6,208,278

Office buildings: (3)

Properties

9

1

10

Rentable square feet

3,169,000

195,000

3,364,000

Development properties

2

—

2

Rentable square feet

35,000

—

35,000

(1) One multifamily community, two grocery-anchored shopping centers and two office buildings are owned through consolidated joint ventures. One grocery-anchored shopping center is an investment in an unconsolidated joint venture.

(2) We evaluate each project individually and we make no assurance that we will acquire any of the underlying properties from our real estate loan investment portfolio.

(3) Five of our office properties and the real estate loan investment supporting the 8West office building were sold to Highwoods Realty Limited Partnership, an unrelated party, on July 29, 2021.

Cash Collections of Recurring Rental Revenues (1)

2020

2021

Unadjusted for
rent deferrals:

First
quarter

Second
quarter

Third
quarter

Fourth
quarter

First
quarter

Second
quarter

Multifamily

99.9

%

98.8

%

99.0

%

99.1

%

99.1

%

99.3

%

Office

99.9

%

98.1

%

99.7

%

99.7

%

99.8

%

99.7

%

Grocery-anchored retail (2)

99.6

%

91.9

%

96.1

%

97.8

%

98.7

%

98.9

%

Cash Collections of Recurring Rental Revenues (1)

2020

2021

Adjusted for
rent deferrals:

First
quarter

Second
quarter

Third
quarter

Fourth
quarter

First
quarter

Second
quarter

Multifamily

99.9

%

99.4

%

99.0

%

99.1

%

99.2

%

99.3

%

Office

99.9

%

99.9

%

100.0

%

99.7

%

99.9

%

99.9

%

Grocery-anchored retail (2)

99.6

%

97.0

%

97.9

%

98.7

%

98.7

%

98.9

%

(1)

Percent of revenue billed includes recurring charges for base rent, operating expense escalations, pet, garage, parking and storage rent, as well as receivables from U.S. Government tenants, from which collection is reasonably assured.

(2)

Includes an investment in an unconsolidated joint venture that is not prorated for our ownership percentage.

Occupancy and Percentages Leased

2020

2021

Adjusted for rent deferrals:

First
quarter

Second
quarter

Third
quarter

Fourth
quarter

First
quarter

Second
quarter

Occupancy:

Multifamily (stabilized) (1)

95.5

%

94.7

%

95.6

%

95.6

%

95.8

%

96.8

%

Percent leased: (2)

Office

96.7

%

96.2

%

95.5

%

94.7

%

91.0

%

90.9

%

Grocery-anchored retail (3)

92.6

%

92.7

%

92.5

%

91.0

%

90.8

%

91.1

%

(1)

For quarterly periods, calculated as the average of the number of occupied units on the 20th day of each of the trailing three months from the period end date.

(2)

Percent of total area leased as of the period end date.

(3)

Includes an investment in an unconsolidated joint venture that is not prorated for our ownership percentage.

Reconciliation of Net Income (Loss) to Multifamily Communities' Same-Store Net Operating Income ("NOI")

Three months ended:

(in thousands)

6/30/2021

6/30/2020

Net income (loss)

$

1,557

$

(15,950)

Add:

Equity stock compensation

925

246

Depreciation and amortization

44,732

51,793

Interest expense

27,296

31,136

Corporate G&A and other

7,696

7,827

(Income) loss from unconsolidated joint venture

175

—

Management Internalization

240

458

Allowance for expected credit losses

(845)

482

Less:

Interest revenue on notes receivable

12,814

10,407

Interest revenue on related party notes receivable

410

604

Miscellaneous revenues

321

395

Loss on extinguishment of debt

—

(6,156)

Property net operating income

68,231

70,742

Less:

Non same-store property revenues

(61,448)

(70,156)

Add:

Non same-store property operating expenses

18,579

23,242

Same-store net operating income

$

25,362

$

23,828

Multifamily Communities' Same-Store NOI

Three months ended:

(in thousands)

6/30/2021

6/30/2020

$ change

% change

Revenues:

Rental and other property revenues

$

43,712

$

41,418

$

2,294

5.5

%

Operating expenses:

Property operating and maintenance

7,587

6,996

591

8.4

%

Payroll

3,356

3,342

14

0.4

%

Real estate taxes and insurance

7,407

7,252

155

2.1

%

Total operating expenses

18,350

17,590

760

4.3

%

Same-store net operating income

$

25,362

$

23,828

$

1,534

6.4

%

Same-store average physical occupancy

96.9

%

94.7

%

Corporate level expenses related to the management and operations of the multifamily portfolio are allocated on a per unit basis to property NOI and are included in Multifamily Same-Store NOI.

Reconciliation of Net Income (Loss) to Multifamily Communities' Same-Store Net Operating Income ("NOI")

Six months ended:

(in thousands)

6/30/2021

6/30/2020

Net income (loss)

$

(1,152)

$

(195,473)

Add:

Equity stock compensation

1,499

476

Depreciation and amortization

90,559

101,302

Interest expense

54,287

60,729

Management fees

—

3,099

Corporate G&A and other

15,235

13,775

(Income) loss from unconsolidated joint venture

369

—

Management Internalization

485

179,251

Allowance for expected credit losses

(323)

5,615

Waived asset management and general and administrative expense fees

—

(1,136)

Less:

Interest revenue on notes receivable

23,326

23,846

Interest revenue on related party notes receivable

815

3,141

Miscellaneous revenues

645

3,435

Gain on sale of real estate, net

798

—

Gain on land sale

—

479

Loss on extinguishment of debt

—

(6,156)

Property net operating income

135,375

142,893

Less:

Non same-store property revenues

(123,273)

(139,770)

Add:

Non same-store property operating expenses

37,807

45,519

Same-store net operating income

$

49,909

$

48,642

Multifamily Communities' Same-Store NOI

Six months ended:

(in thousands)

6/30/2021

6/30/2020

$ change

% change

Revenues:

Rental and other property revenues

$

86,346

$

83,668

$

2,678

3.2

%

Operating expenses:

Property operating and maintenance

14,680

14,090

590

4.2

%

Payroll

6,620

6,461

159

2.5

%

Real estate taxes and insurance

15,137

14,475

662

4.6

%

Total operating expenses

36,437

35,026

1,411

4.0

%

Same-store net operating income

$

49,909

$

48,642

$

1,267

2.6

%

Corporate level expenses related to the management and operations of the multifamily portfolio are allocated on a per unit basis to property NOI and are included in Multifamily Same-Store NOI.

Preferred Apartment Communities, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

Three months ended June 30,

(In thousands, except per-share figures)

2021

2020

Revenues:

Rental and other property revenues

$

105,161

$

111,574

Interest income on loans and notes receivable

12,814

10,407

Interest income from related parties

410

604

Miscellaneous revenues

321

395

Total revenues

118,706

122,980

Operating expenses:

Property operating and maintenance

15,580

17,283

Property salary and benefits

4,914

5,720

Property management costs

927

1,042

Real estate taxes and insurance

15,509

16,787

General and administrative

7,696

7,827

Equity compensation to directors and executives

925

246

Depreciation and amortization

44,732

51,793

Allowance for expected credit losses

(845)

482

Management Internalization expense

240

458

Total operating expenses

89,678

101,638

Operating income before loss from unconsolidated joint venture

29,028

21,342

Loss from unconsolidated joint venture

(175)

—

Operating income

28,853

21,342

Interest expense

27,296

31,136

Loss on extinguishment of debt

—

(6,156)

Net income (loss)

1,557

(15,950)

Net (income) loss attributable to non-controlling interests

(3)

266

Net income (loss) attributable to the Company

1,554

(15,684)

Dividends declared to preferred stockholders

(33,983)

(35,624)

Earnings attributable to unvested restricted stock

(138)

(11)

Net loss attributable to common stockholders

$

(32,567)

$

(51,319)

Net loss per share of Common Stock available to

common stockholders, basic and diluted

$

(0.64)

$

(1.06)

Weighted average number of shares of Common Stock outstanding,

basic and diluted

50,518

48,220

Reconciliation of FFO Attributable to Common Stockholders and Unitholders, Core FFO and AFFO

to Net (Loss) Income Attributable to Common Stockholders (A)

Three months ended June 30,

(In thousands, except per-share figures)

2021

2020

Net loss attributable to common stockholders (See note 1)

$

(32,567)

$

(51,319)

Add:

Depreciation of real estate assets

35,977

40,996

Amortization of acquired intangible assets and deferred leasing costs

8,486

9,973

Net loss attributable to Class A Unitholders (See note 2)

16

(249)

FFO attributable to common stockholders and unitholders

11,912

(599)

Acquisition and pursuit costs

1

132

Loan cost amortization on acquisition term notes and loan coordination fees (See note 3)

482

528

Payment of costs related to property refinancing

118

6,863

Internalization costs (See note 4)

240

458

Deemed dividends for redemptions of and non-cash dividends on preferred stock

4,110

2,772

Expenses related to the COVID-19 global pandemic (See note 5)

27

419

Core FFO attributable to common stockholders and unitholders (A)

16,890

10,573

Add:

Non-cash equity compensation to directors and executives

925

246

Amortization of loan closing costs (See note 7)

1,245

1,177

Depreciation/amortization of non-real estate assets

447

616

Net loan origination fees received (See note 8)

386

200

Deferred interest income received (See note 9)

1,569

—

Amortization of lease inducements (See note 10)

452

447

Less:

Amortization of purchase option termination revenues in excess of cash received (See note 11)

(227)

(435)

Non-cash loan interest income (See note 9)

(2,909)

(3,109)

Non-cash (income) expense for current expected credit losses (See note 6)

(1,256)

(122)

Cash paid for loan closing costs

(1,881)

—

Amortization of acquired real estate intangible liabilities and SLR (See note 12)

(3,248)

(4,144)

Amortization of deferred revenues (See note 13)

(941)

(941)

Normally recurring capital expenditures (See note 14)

(2,977)

(2,124)

AFFO attributable to common stockholders and Unitholders

$

8,475

$

2,384

Common Stock dividends and distributions to Unitholders declared:

Common Stock dividends

$

9,259

$

8,624

Distributions to Unitholders (See note 2)

87

130

Total

$

9,346

$

8,754

Common Stock dividends and Unitholder distributions per share

$

0.175

$

0.175

FFO per weighted average basic share of Common Stock and Unit outstanding

$

0.23

$

(0.01)

Core FFO per weighted average basic share of Common Stock and Unit outstanding

$

0.33

$

0.22

AFFO per weighted average basic share of Common Stock and Unit outstanding

$

0.17

$

0.05

Weighted average shares of Common Stock and Units outstanding:

Basic:

Common Stock

50,518

48,220

Class A Units

535

759

Common Stock and Class A Units

51,053

48,979

Diluted Common Stock and Class A Units (See note 15)

51,579

48,980

Actual shares of Common Stock outstanding, including 704 and 548 unvested shares

of restricted Common Stock at June 30, 2021 and 2020, respectively.

52,432

49,831

Actual Class A Units outstanding at June 30, 2021 and 2020, respectively.

497

742

Total

52,929

50,573

(A)

Our Core FFO result for the three-month period ended June 30, 2020 has been amended to reflect the movement of the adjustment for expense for current expected credit losses from an adjustment for Core FFO to an adjustment for AFFO.

See Notes to Reconciliation of FFO, Core FFO and AFFO to Net Income (Loss) Attributable to Common Stockholders.

Reconciliation of FFO Attributable to Common Stockholders and Unitholders, Core FFO and AFFO

to Net (Loss) Income Attributable to Common Stockholders (A)

Six months ended June 30,

(In thousands, except per-share figures)

2021

2020

Net loss attributable to common stockholders (See note 1)

$

(69,176)

$

(260,771)

Add:

Depreciation of real estate assets

72,809

80,771

Amortization of acquired intangible assets and deferred leasing costs

17,196

18,955

Gain on sale of real estate

(798)

—

Net loss attributable to Class A Unitholders (See note 2)

(17)

(3,343)

FFO attributable to common stockholders and unitholders

20,014

(164,388)

Acquisition and pursuit costs

5

378

Loan cost amortization on acquisition term notes and loan coordination fees (See note 3)

906

1,206

Payment of costs related to property refinancing

118

6,863

Internalization costs (See note 4)

485

179,251

Deemed dividends for redemptions of and non-cash dividends on preferred stock

7,937

3,316

Expenses related to the COVID-19 global pandemic (See note 5)

81

448

Earnest money forfeited by prospective asset purchaser

—

(2,750)

Core FFO attributable to common stockholders and unitholders (A)

29,546

24,324

Add:

Non-cash equity compensation to directors and executives

1,499

476

Amortization of loan closing costs (See note 7)

2,457

2,343

Depreciation/amortization of non-real estate assets

891

1,172

Net loan origination fees received (See note 8)

1,203

467

Deferred interest income received (See note 9)

4,486

8,277

Amortization of lease inducements (See note 10)

900

886

Earnest money forfeited by prospective asset purchaser

—

2,750

Cash received in excess of amortization of purchase option termination revenues (See note 11)

23

325

Less:

Non-cash loan interest income (See note 9)

(5,783)

(6,128)

Non-cash (income) expense for current expected credit losses (See note 6)

(1,139)

4,408

Cash paid for loan closing costs

(1,891)

—

Amortization of acquired real estate intangible liabilities and SLR (See note 12)

(6,563)

(8,797)

Amortization of deferred revenues (See note 13)

(1,881)

(1,881)

Normally recurring capital expenditures (See note 14)

(6,330)

(3,542)

AFFO attributable to common stockholders and Unitholders

$

17,418

$

25,080

Common Stock dividends and distributions to Unitholders declared:

Common Stock dividends

$

18,250

$

21,115

Distributions to Unitholders (See note 2)

183

333

Total

$

18,433

$

21,448

Common Stock dividends and Unitholder distributions per share

$

0.35

$

0.4375

FFO per weighted average basic share of Common Stock and Unit outstanding

$

0.39

$

(3.39)

Core FFO per weighted average basic share of Common Stock and Unit outstanding

$

0.58

$

0.50

AFFO per weighted average basic share of Common Stock and Unit outstanding

$

0.34

$

0.52

Weighted average shares of Common Stock and Units outstanding:

Basic:

Common Stock

50,277

47,674

Class A Units

572

793

Common Stock and Class A Units

50,849

48,467

Diluted Common Stock and Class A Units (See note 15)

51,271

48,474

Actual shares of Common Stock outstanding, including 704 and 548 unvested shares

of restricted Common Stock at June 30, 2021 and 2020, respectively.

52,432

49,831

Actual Class A Units outstanding at June 30, 2021 and 2020, respectively.

497

742

Total

52,929

50,573

(A)

Our Core FFO result for the three-month period ended June 30, 2020 has been amended to reflect the movement of the adjustment for expense for current expected credit losses from an adjustment for Core FFO to an adjustment for AFFO.

See Notes to Reconciliation of FFO, Core FFO and AFFO to Net Income (Loss) Attributable to Common Stockholders.

Notes to Reconciliations of FFO Attributable to Common Stockholders and Unitholders, Core FFO and AFFO to
Net Loss Attributable to Common Stockholders

1)

Rental and other property revenues and property operating expenses for the three months ended June 30, 2021 include activity for the properties acquired since June 30, 2020. Rental and other property revenues and expenses for the three-month and six-month periods ended June 30, 2020 include activity for the acquisitions made during that period only from their respective dates of acquisition.

2)

Non-controlling interests in our Operating Partnership, consisted of a total of 497,291 Class A Units as of June 30, 2021. Included in this total are 419,228 Class A Units which were granted as partial consideration to the seller in conjunction with the seller's contribution to us on February 29, 2016 of the Wade Green grocery-anchored shopping center. The remaining Class A units were awarded primarily to our key executive officers. The Class A Units are apportioned a percentage of our financial results as non-controlling interests. The weighted average ownership percentage of these holders of Class A Units was calculated to be 1.05% and 1.55% for the three-month periods ended June 30, 2021 and 2020, respectively.

3)

We paid loan coordination fees to Preferred Apartment Advisors, LLC, (our "Former Manager") to reflect the administrative effort involved in arranging debt financing for acquired properties prior to the Internalization Transaction. The fees were calculated as 0.6% of the amount of any mortgage indebtedness on newly-acquired properties or refinancing and are amortized over the lives of the respective mortgage loans. This non-cash amortization expense is an addition to FFO in the calculation of Core FFO and AFFO. At June 30, 2021, aggregate unamortized loan coordination fees were approximately $10.9 million, which will be amortized over a weighted average remaining loan life of approximately 10.2 years.

4)

This adjustment reflects the add-back of (i) consideration paid to the owners of the Former Manager and NMP Advisors, LLC (our "Former Sub-Manager"), (ii) accretion of the discount on the deferred liability payable to the owners of the Former Manager and (iii) due diligence and pursuit costs incurred by the Company related to the internalization of the functions performed by the Former Manager (the "Internalization Transaction").

5)

This additive adjustment to FFO consists of non-recurring costs for signage, cleaning and supplies necessary to create and maintain work environments necessary to adhere to CDC guidelines during the current COVID-19 pandemic. Since we do not expect to incur similar costs once the COVID-19 pandemic has subsided, we add these costs back to FFO in our calculation of Core FFO.

6)

Effective January 1, 2020, we adopted ASU 2016-03, which requires us to estimate the amount of future credit losses we expect to incur over the lives of our real estate loan investments at the inception of each loan. This loss reserve may be adjusted upward or downward over the lives of our loans and therefore the aggregate net adjustment for each period could be positive (removing the non-cash effect of a net increase in aggregate loss reserves) or negative (removing the non-cash effect of a net decrease in aggregate loss reserves) in these adjustments to Core FFO in calculating AFFO.

7)

We incur loan closing costs on our existing mortgage loans, which are secured on a property-by-property basis by each of our acquired real estate assets, and also for occasional amendments to our syndicated revolving line of credit with Key Bank National Association, or our Revolving Line of Credit. These loan closing costs are also amortized over the lives of the respective loans and the Revolving Line of Credit, and this non-cash amortization expense is an addition to FFO in the calculation of AFFO. Neither we nor the Operating Partnership have any recourse liability in connection with any of the mortgage loans, nor do we have any cross-collateralization arrangements with respect to the assets securing the mortgage loans, other than security interests in 49% of the equity interests of the subsidiaries owning such assets, granted in connection with our Revolving Line of Credit, which provides for full recourse liability. At June 30, 2021, unamortized loan costs on all the Company's indebtedness were approximately $30.9 million, which will be amortized over a weighted average remaining loan life of approximately 8.5 years.

8)

We receive loan origination fees in conjunction with the origination of certain real estate loan investments. These fees are then recognized as revenue over the lives of the applicable loans as adjustments of yield using the effective interest method. The total fees received are additive adjustments in the calculation of AFFO. Correspondingly, the amortized non-cash income is a deduction in the calculation of AFFO. Over the lives of certain loans, we accrue additional interest amounts that become due to us at the time of repayment of the loan or refinancing of the property, or when the property is sold. This non-cash interest income is subtracted from Core FFO in our calculation of AFFO. The amount of additional accrued interest becomes an additive adjustment to FFO once received from the borrower.

9)

This adjustment reflects the receipt during the periods presented of additional interest income (described in note 8 above) which was earned and accrued on various real estate loans prior to those periods and previously deducted in our calculation of AFFO.

10)

This adjustment removes the non-cash amortization of costs incurred to induce tenants to lease space in our office buildings and grocery-anchored shopping centers.

11)

Occasionally we receive fees in exchange for the termination of our purchase options related to certain multifamily communities. These fees are recorded as revenue over the period beginning on the date of termination until the earlier of (i) the maturity of the real estate loan investment and (ii) the sale of the property. The receipt of the cash termination fees are an additive adjustment in our calculation of AFFO and the removal of non-cash revenue from the recognition of the termination fees are a reduction to Core FFO in our calculation of AFFO; both of these adjustments are presented in a single net number within this line. For periods in which recognized termination fee revenues exceeded the amount of cash received, a negative adjustment is shown to Core FFO in our calculation of AFFO; for periods in which cash received exceeded the amount of recognized termination fee revenues, an additive adjustment is shown to Core FFO in our calculation of AFFO.

12)

This adjustment reflects straight-line rent adjustments and the reversal of the non-cash amortization of below-market and above-market lease intangibles, which were recognized in conjunction with our acquisitions and which are amortized over the estimated average remaining lease terms from the acquisition date for multifamily communities and over the remaining lease terms for grocery-anchored shopping center assets and office buildings. At June 30, 2021, the balance of unamortized below-market lease intangibles was approximately $47.8 million, which will be recognized over a weighted average remaining lease period of approximately 8.4 years.

13)

This adjustment removes the non-cash amortization of deferred revenue recorded by us in conjunction with Company-owned lessee-funded tenant improvements in our office buildings.

14)

We deduct from Core FFO normally recurring capital expenditures that are necessary to maintain our assets’ revenue streams in the calculation of AFFO. This adjustment also deducts from Core FFO capitalized amounts for third party costs during the period to originate or renew leases in our grocery-anchored shopping centers and office buildings. This adjustment includes approximately $17,000 and $35,000 of recurring capitalized expenditures incurred at our corporate offices during the three-month and six-month periods ended June 30, 2021, respectively. No adjustment is made in the calculation of AFFO for nonrecurring capital expenditures. See Capital Expenditures, Grocery-Anchored Shopping Center Portfolio, and Office Building Portfolio sections for definitions of these terms.

15)

Since our AFFO results are positive for the periods reflected, we are presenting recalculated diluted weighted average shares of Common Stock and Class A Units for these periods for purposes of this table, which includes the dilutive effect of common stock equivalents from grants of the Class B Units, warrants included in units of Series A Preferred Stock issued, as well as annual grants of restricted Common Stock and restricted stock units. The weighted average shares of Common Stock outstanding presented on the Consolidated Statements of Operations are the same for basic and diluted for any period for which we recorded a net loss available to common stockholders.

Preferred Apartment Communities, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

June 30, 2021

December 31, 2020

Assets

Real estate

Land

$

611,966

$

605,282

Building and improvements

3,092,932

3,034,727

Tenant improvements

189,413

184,288

Furniture, fixtures, and equipment

319,328

306,725

Construction in progress

10,980

12,269

Gross real estate

4,224,619

4,143,291

Less: accumulated depreciation

(582,583)

(509,547)

Net real estate

3,642,036

3,633,744

Real estate loan investments, net

269,862

279,895

Total real estate and real estate loan investments, net

3,911,898

3,913,639

Cash and cash equivalents

37,105

28,657

Restricted cash

53,679

47,059

Notes receivable

2,977

1,863

Note receivable and revolving line of credit due from related party

9,011

9,011

Accrued interest receivable on real estate loans

23,183

22,528

Acquired intangible assets, net of amortization

110,656

127,138

Tenant lease inducements, net

17,352

18,206

Investment in unconsolidated joint venture

6,288

6,657

Tenant receivables and other assets

98,050

106,321

Total assets

$

4,270,199

$

4,281,079

Liabilities and equity

Liabilities

Mortgage notes payable, net of deferred loan costs and mark-to-market adjustment

$

2,636,752

$

2,594,464

Revolving line of credit

56,500

22,000

Unearned purchase option termination fees

246

723

Deferred revenue

34,130

36,010

Accounts payable and accrued expenses

47,216

41,912

Deferred liability to Former Manager

23,675

23,335

Contingent liability due to Former Manager

14,725

14,814

Accrued interest payable

7,825

7,877

Dividends and partnership distributions payable

20,811

20,137

Acquired below market lease intangibles, net of amortization

47,820

51,934

Prepaid rent, security deposits and other liabilities

30,119

29,425

Total liabilities

2,919,819

2,842,631

Commitments and contingencies

Equity

Stockholders' equity

Series A Redeemable Preferred Stock, $0.01 par value per share; 3,050 shares authorized; 2,226 shares issued; 1,647 and 1,735 shares outstanding at June 30, 2021 and December 31, 2020, respectively

16

17

Series A1 Redeemable Preferred Stock, $0.01 par value per share; up to 1,000 shares authorized; 218 and 149 shares issued and 217 and 149 shares outstanding at June 30, 2021 and December 31, 2020, respectively

2

1

Series M Redeemable Preferred Stock, $0.01 par value per share; 500 shares authorized; 106 shares issued; 86 and 89 shares outstanding at June 30, 2021 and December 31, 2020, respectively

1

1

Series M1 Redeemable Preferred Stock, $0.01 par value per share; up to 1,000 shares authorized; 26 and 19 shares issued; 25 and 19 shares outstanding at June 30, 2021 and December 31, 2020, respectively

—

—

Common Stock, $0.01 par value per share; 400,067 shares authorized; 51,728 and 49,994 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively

517

500

Additional paid-in capital

1,543,665

1,631,646

Accumulated (deficit) earnings

(193,539)

(192,446)

Total stockholders' equity

1,350,662

1,439,719

Non-controlling interest

(282)

(1,271)

Total equity

1,350,380

1,438,448

Total liabilities and equity

$

4,270,199

$

4,281,079

Preferred Apartment Communities, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

Six months ended June 30,

(In thousands)

2021

2020

Operating activities:

Net loss

$

(1,152)

$

(195,473)

Reconciliation of net loss to net cash provided by (used in) operating activities:

Depreciation and amortization expense

90,559

101,302

Amortization of above and below market leases

(2,871)

(3,570)

Amortization of deferred revenues and other non-cash revenues

(2,545)

(2,482)

Amortization of purchase option termination fees

(4,440)

(4,475)

Amortization of equity compensation, lease incentives and other non-cash expenses

2,809

1,781

Deferred loan cost amortization

3,307

3,424

Non-cash accrued interest income on real estate loan investments

(5,585)

(6,156)

Receipt of accrued interest income on real estate loan investments

4,930

8,865

Gains on sale of real estate and land, net

(798)

(479)

Loss from unconsolidated joint venture

369

—

Cash received for purchase option terminations

4,463

4,800

Loss on extinguishment of debt

—

6,156

(Decrease) increase in allowance for expected credit losses

(323)

5,615

Changes in operating assets and liabilities:

Decrease (increase) in tenant receivables and other assets

3,710

(12,112)

(Increase) in tenant lease incentives

(45)

(382)

Increase in accounts payable and accrued expenses

7,476

36,431

Increase in deferred liability to Former Manager

—

22,851

Increase in contingent liability

—

15,004

Increase (decrease) in accrued interest, prepaid rents and other liabilities

2,047

(2,234)

Net cash provided by (used in) operating activities

101,911

(21,134)

Investing activities:

Investments in real estate loans

(30,825)

(24,547)

Repayments of real estate loans

41,435

53,896

Notes receivable issued

(1,257)

(686)

Notes receivable repaid

143

10,041

Notes receivable issued to and draws on line of credit by related parties

—

(9,624)

Repayments of notes receivable and lines of credit by related parties

—

4,546

Origination fees received on real estate loan investments

1,203

467

Acquisition of properties

(66,772)

(185,970)

Disposition of properties

4,798

—

Proceeds from land sales

259

738

Investment in property development

—

(50)

Capital improvements to real estate assets

(18,278)

(26,422)

Deposits paid on acquisitions

(1,558)

(105)

Net cash used in investing activities

(70,852)

(177,716)

Preferred Apartment Communities, Inc.

Consolidated Statements of Cash Flows - continued

(Unaudited)

Six months ended June 30,

(In thousands)

2021

2020

Financing activities:

Proceeds from mortgage notes payable

60,293

336,849

Repayments of mortgage notes payable

(20,572)

(134,493)

Payments for deposits and other mortgage loan costs

(2,411)

(10,541)

Payments for mortgage prepayment costs

—

(5,919)

Proceeds from lines of credit

225,000

284,000

Payments on lines of credit

(190,500)

(191,500)

Repayment of Term Loan

—

(70,000)

Proceeds from sales of preferred stock and Units, net of offering costs and redemptions

68,283

120,497

Proceeds from exercises of Warrants

—

29

Payments for redemptions of preferred stock

(83,256)

(48,202)

Proceeds from sales of common stock

14,879

—

Common Stock dividends paid

(17,736)

(24,647)

Preferred stock dividends and Class A Unit distributions paid

(67,870)

(68,538)

Payments for deferred offering costs

(2,001)

(9,701)

(Distributions to) contributions from non-controlling interests

(100)

197

Net cash (used in) provided by financing activities

(15,991)

178,031

Net increase in cash, cash equivalents and restricted cash

15,068

(20,819)

Cash, cash equivalents and restricted cash, beginning of year

75,716

137,253

Cash, cash equivalents and restricted cash, end of period

$

90,784

$

116,434

Project/Property

Location

Maturity
date

Optional
extension
date

Total loan
commitments

Carrying amount (1) as of

Current /
deferred
interest %
per annum

June 30, 2021

December 31, 2020

Multifamily communities:

(in thousands)

Berryessa

San Jose, CA

2/13/2022

2/13/2023

$

137,616

$

132,103

$

126,237

8.5 / 3

The Anson

Nashville, TN

11/24/2021

11/24/2023

6,240

6,240

6,240

8.5 / 4.5

The Anson Capital

Nashville, TN

11/24/2021

11/24/2023

5,659

5,050

4,839

8.5 / 4.5

V & Three

Charlotte, NC

8/15/2021

8/15/2022

10,336

10,335

10,335

8.5 / 5

V & Three Capital

Charlotte, NC

8/18/2021

8/18/2022

7,338

7,338

7,162

8.5 / 5

Cameron Square

Alexandria, VA

10/11/2021

10/11/2023

21,340

21,298

20,874

8.5 / 3

Cameron Square Capital

Alexandria, VA

10/11/2021

10/11/2023

8,850

8,850

8,850

8.5 / 3

Southpoint

Fredericksburg, VA

2/28/2022

2/28/2024

7,348

7,348

7,348

8.5 / 4

Southpoint Capital