PR Newswire | Nov 9, 2020 05:29PM EST

11/09 16:27 CST

Preferred Apartment Communities, Inc. Reports Results for Third Quarter 2020 ATLANTA, Nov. 9, 2020

ATLANTA, Nov. 9, 2020/PRNewswire/ -- Preferred Apartment Communities, Inc. (NYSE: APTS) ("we," "our," the "Company," "Preferred Apartment Communities" or "PAC") today reported results for the quarter ended September 30, 2020. Unless otherwise indicated, all per share results are reported based on the basic weighted average shares of Common Stock and Class A Units ("Class A Units") of the Preferred Apartment Communities Operating Partnership (our "Operating Partnership") outstanding. See Definitions of Non-GAAP Measures.

Our operating results are presented below.

Three months ended Nine months ended September 30, September 30,

2020 2019 % change2020 2019 % change



Revenues (in thousands)$126,697$120,2035.4 %$381,076$345,56110.3 %



Per share data:

Net income (loss) ^(1) $(0.79) $(0.71) - $(6.21) $(2.02) -

FFO ^(2) $0.17 $0.31 (45.2)%$(3.17) $1.06 -

Core FFO ^(2) $0.26 $0.35 (25.7)%$0.77 $1.14 (32.5)%

AFFO ^(2) $0.07 $0.12 (41.7)%$0.58 $0.66 (12.1)%

Dividends ^(3) $0.1750 $0.2625 (33.3)%$0.6125 $0.785 (22.0)%



^(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.

"We are very pleased to report another quarter of operational outperformance across all of our product types, as our high quality, Sunbelt-focused portfolio of Class A multifamily, grocery-anchored retail and office, continued to be a market leader in the third quarter. Our collections of recurring rent were in excess of 99%, 96%, and 99% for our multi-housing, grocery anchored retail, and office portfolios, respectively, adjusted for deferrals. While we continue to navigate the short and long term economic and human impacts of the COVID-19 pandemic, we believe that our best-in- class asset management, combined with our suburban Sunbelt focus, and its associated broad positive economic drivers, provides stability for our portfolio, in the current environment and over the longer term.

Due to our operational success, we were able to focus our efforts on furthering key strategic goals for PAC, which includes closing the sale of our student housing assets for approximately $478 million. With our student housing rents and occupancy outperforming prior year, we were able to harvest meaningful capital for balance sheet enhancement and for investment in suburban, Sunbelt multifamily acquisitions. In September we also put two proposals to a common stockholder vote: the approval to give common stockholders the ability to amend the Company's bylaws and to reduce the Company's call option on its Series A Redeemable Preferred stock from 10 years to 5 years. Having recently extended the date for our stockholder meeting, we are very pleased with the significant support so far for these measures which we believe are both shareholder friendly and will allow us to better manage our balance sheet and cost structure. We believe all of these efforts should ultimately help drive long term earnings growth and value creation for our stockholders," stated Joel Murphy, Preferred Apartment Communities' President and Chief Executive Officer.

Financial

* Our net loss per share was $(0.79) and $(0.71) for the three-month periods ended September 30, 2020 and 2019, respectively. Funds From Operations, or FFO, for the three months ended September 30, 2020 was $0.17 per weighted average share of Common Stock and Class A Unit outstanding and reflects lower purchase option termination revenues, lower interest income, higher preferred dividends and a higher share count. Core FFO was $0.26 for the three months ended September 30, 2020 as compared to $0.35 for the three months ended September 30, 2019 and was similarly impacted by the items listed above. * Our FFO per share result increased to $0.17 for the third quarter 2020 from $(0.01) for the second quarter 2020; our Core FFO per share result increased to $0.26 for the third quarter 2020 from $0.22 for the second quarter 2020 and our AFFO per share result increased to $0.07 for the third quarter 2020 from $0.05 for the second quarter 2020. Core FFO increased 22.1% for the third quarter 2020 from the second quarter 2020. * Our Core FFO payout ratio to Common Stockholders and Unitholders was approximately 67.8% and our Core FFO payout ratio to our preferred stockholders was approximately 73.0%. (A) * Our AFFO payout ratio to Common Stockholders and Unitholders was approximately 95.1% for the trailing twelve months ended September 30, 2020. Our AFFO payout ratio to our preferred stockholders was approximately 90.9% for the third quarter 2020, 78.5% for the nine months ended September 30, 2020 and 75.1% for the trailing twelve months ended September 30, 2020.(A) Our AFFO payout ratios were negatively impacted by the reduced level of accrued interest received on our real estate loan investment portfolio and increased property insurance rates. We have approximately $24.8 million of accrued interest revenue on our real estate loan investment portfolio, which will positively impact AFFO when collected. * As of September 30, 2020, our total assets were approximately $4.7 billion. Our total assets at September 30, 2019 of approximately $5.3 billion included approximately $585.8 million of VIE mortgage pool assets attributable to other mortgage pool participants that were consolidated due to our investments in the Freddie Mac K Program. During the fourth quarter 2019 we sold our K Program investments, realizing an internal rate of return of approximately 18%. Excluding the consolidated VIE mortgage pool assets from the September 30, 2019 total, our total assets grew approximately $49.3 million.

(A) We calculate the Core FFO and AFFO payout ratios to Common Stockholders as the ratio of Common Stock dividends and distributions to Core FFO and AFFO. We calculate the Core FFO and AFFO payout ratios to preferred stockholders as the ratio of Preferred Stock dividends to the sum of Preferred Stock dividends and Core FFO and AFFO. Since our operations resulted in a net loss from continuing operations for the periods presented, a payout ratio based on net loss is not calculable. See Definitions of Non-GAAP Measures.

The following chart details monthly cash collections of rental revenues before and after the effect of rent deferrals across all our operating business lines as of November 9, 2020:



2020 Cash Collections of Recurring Rental Revenues ^(1)

Unadjusted for rent First April May June July August September October deferrals: quarter



Multifamily 99.9 % 98.8 % 98.8 % 98.8 % 98.8 % 99.0 % 99.0 % 98.5 %

Student housing 99.9 % 97.9 % 97.0 % 97.4 % 97.0 % 98.6 % 98.8 % 98.9 %

Office 99.8 % 98.8 % 97.3 % 97.8 % 98.9 % 99.7 % 99.9 % 99.8 %

Grocery-anchored retail ^(2) 99.4 % 91.5 % 89.7 % 91.5 % 94.1 % 95.0 % 96.4 % 95.6 %



2020 Cash Collections of Recurring Rental Revenues ^(1)

Adjusted for rent deferrals: First April May June July August September October quarter



Multifamily 99.9 % 99.7 % 99.5 % 98.9 % 98.9 % 99.0 % 99.0 % 98.5 %

Student housing 99.9 % 98.4 % 97.4 % 97.4 % 97.0 % 98.6 % 98.8 % 98.9 %

Office 99.8 % 99.7 % 99.8 % 99.9 % 99.8 % 99.7 % 99.9 % 99.8 %

Grocery-anchored retail ^(2) 99.5 % 96.8 % 95.2 % 95.7 % 96.7 % 96.0 % 97.0 % 96.5 %



^(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.

The following chart details monthly occupancy and percent leased rates across all our operating business lines:



2020 Monthly Occupancy and Percentages Leased

First April May June July August SeptemberOctober quarter



Occupancy:

Multifamily (stabilized) 95.5 %94.4 %94.4 %95.2 %95.1 %96.0 %95.6 %95.4 %

Student housing 96.1 %96.0 %95.8 %95.8 %95.9 %95.1 %95.3 %95.5 %

Percent leased:

Office 96.7 %95.9 %96.2 %96.2 %96.1 %95.9 %95.5 %95.4 %

Grocery-anchored retail ^(1) 92.6 %92.5 %92.5 %92.7 %92.8 %92.8 %92.5 %92.4 %



^(1) Includes an investment in an unconsolidated joint venture that is not prorated for our ownership percentage.

Operational

* Our average recurring rental revenue collections before and after any effect of rent deferrals for the third quarter 2020 were approximately 99.0% and 99.0% for multifamily communities, 99.5% and 99.8% for office properties and 95.2% and 96.5% for grocery-anchored retail properties, respectively. Rent deferments provided to our residents/tenants primarily related to a change of timing of rent payments with no significant changes to total payments or term. * As of September 30, 2020, we have deferred $1.5 million of retail recurring rental revenue, or approximately 3.1% cumulatively over the last two quarters. Including this deferred rent, we have accounted for 96.6% and 95.9% of third quarter and second quarter retail recurring rental revenue, respectively. In addition to the deferrals, we granted approximately $324,000 of Covid related rental abatements, or approximately 0.7% of retail recurring rental revenues cumulatively over the last two quarters. These rental abatements were generally accompanied by an increase in the tenant's lease term or the lease terms were amended to be more favorable to us. We have also reserved $928,000 or 3.4% of total retail revenues (inclusive of straight line rent) in the third quarter, increasing our total reserves to $2.5 million or 3.0% of total retail revenues year to date, which is 0.7% of total company and other property revenues. * On July 31, 2020, we received approximately $18.7 million in full satisfaction of the principal and all interest due on our Palisades real estate loan investment. Included in this total was the receipt of approximately $375,000 of deferred interest revenue on the loan, which was additive to AFFO for the quarter. * As of September 30, 2020, the average age of our multifamily communities was approximately 6.3 years, which is the youngest in the public multifamily REIT industry. * As of September 30, 2020, all of our owned multifamily communities had achieved stabilization, which we define as reaching 93% physical occupancy for three full months in a quarter.

Financing and Capital Markets

* On July 10, 2020, we closed on a refinancing of the mortgage on our Citrus Village multifamily community. The new instrument has a principal amount of $40.9 million, bears interest at a fixed rate of 2.95% per annum and matures on August 1, 2027. Monthly interest-only payments are due through August 31, 2022. * As of September 30, 2020, approximately 94.1% of our permanent property-level mortgage debt has fixed interest rates and approximately 4.2% has variable interest rates which are capped. We believe we are well protected against potential increases in market interest rates. Our overall weighted average interest rate for our mortgage debt portfolio was 3.68% for residential properties, 4.13% for office properties and 3.91% for grocery-anchored retail properties. * At September 30, 2020, our leverage, as measured by the ratio of our debt to the undepreciated book value of our total assets, was approximately 54.0%. * During the third quarter 2020, we issued and sold an aggregate of 34,603 shares of Series A1 Redeemable Preferred Stock, resulting in net proceeds of approximately $31.1 million after commissions and other fees. During the third quarter 2020, we issued and sold an aggregate of 7,862 shares of Series M1 Redeemable Preferred Stock, resulting in net proceeds of approximately $7.6 million after dealer manager fees. During the third quarter 2020, we issued approximately 617,000 shares of Common Stock through our ATM program, and collected net proceeds of approximately $4.5 million. * During the third quarter 2020, we issued a total of 42,465 shares of preferred stock and redeemed 37,391 shares of preferred stock for a net total of 5,074 shares issued.

Significant Transactions

* On July 15, 2020, we contributed our Neapolitan Way grocery-anchored shopping center into an unconsolidated 50/50 joint venture from which we collected approximately $19.2 million of proceeds and realized a gain on the transaction of approximately $3.3 million. Subsequently, the joint venture obtained a mortgage on the property, reducing our investment to approximately $6.9 million. We retain a 50% financial and voting interest in the property. * On September 3, 2020, we closed on a real estate loan investment of up to approximately $20.7 million to partially finance the development and construction of a 320-unit multifamily community to be located in suburban Atlanta, Georgia. The aggregate carrying amount of our real estate loan investment portfolio was approximately $309.6 million at September 30, 2020.

Business Update Related to COVID-19

Since the onset of COVID-19, the Company has taken various actions in response to the pandemic, including offering extended rent deferral options and abatements in only very limited circumstances. While the effects and trends in the pandemic range from market to market, we continue to adjust our business operations to address the needs of our residents, tenants and associates on an asset by asset basis. Our property management and asset management teams continuously respond and adapt appropriately to any onsite, tenant and/or property management request, while following all applicable safety and social distancing guidelines as the situation continues to evolve and change. All of our multifamily communities, student housing properties, grocery-anchored shopping centers and office buildings have operated throughout the pandemic and in compliance with government-imposed COVID-19 guidelines and mandates. While we expect the impacts of COVID-19 generally to continue into 2021, the effects on our operations have been manageable and we believe this will continue barring a dramatic change in the trajectory of the pandemic.

Real Estate Assets

At September 30, 2020, our portfolio of owned real estate assets and potential additions from purchase options we held from our real estate loan investments consisted of:



Potential additions from Owned as of real estate loan September 30, Potential total 2020 ^(1) investment portfolio ^(2) (3)

Residential properties:

Properties 44 12 56

Units 12,936 3,315 16,251

Beds 6,095 543 6,638

Grocery-anchored shopping centers:

Properties 54 - 54

Gross leasable area (square feet) 6,208,278 - 6,208,278

Office buildings:

Properties 9 ^(4) 1 10

Rentable square feet 3,169,000 195,000 3,364,000





(1)One multifamily community, two student housing properties, 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)The Company has terminated various purchase option agreements in exchange for termination fees. These properties

are excluded from the potential additions from our real estate loan investment portfolio.

(4)^ Excludes our 251 Armour property, comprising 35,000 rentable square feet that is under development and our 4th and

Brevard land parcel that is slated for future development.

Same-Store Multifamily Communities Financial Data

The following chart presents same-store operating results for the Company's multifamily communities. We define our population of same-store multifamily communities as those that have achieved occupancy at or above 93% for all three consecutive months within a single quarter (stabilized) before the beginning of the prior year and that have been owned for at least 15 full months as of the end of the first quarter of the current year, enabling comparisons of the current year quarterly and annual reporting periods to the prior year comparative periods. The Company excludes the operating results of properties for which construction of adjacent phases has commenced and properties which are undergoing significant capital projects, have sustained significant casualty losses, or are being marketed for sale as of the end of the reporting period. For the periods presented, same-store operating results consist of the operating results of the following multifamily communities containing an aggregate 8,694 units, or 79.6% of our multifamily units:

Aster at Lely Resort Avenues at Cypress Avenues at Northpointe

Citi Lakes Lenox Village Retreat at Lenox Village

Overton Rise Sorrel Venue at Lakewood Ranch

Avenues at Creekside 525 Avalon Park Vineyards

Citrus Village Retreat at Greystone City Vista

Founders Village Luxe at Lakewood RanchAdara at Overland Park

Summit Crossing I Summit Crossing II Aldridge at Town Village

City Park View Crosstown Walk Claiborne Crossing

Reserve at Summit CrossingColony at CenterpointeLux at Sorrel

Green Park Vestavia Reserve

Same-store net operating income is a non-GAAP measure that is most directly comparable to net income (loss), as shown in the reconciliations below. See Definitions of Non-GAAP Measures.

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



Three months ended:

(in thousands) 9/30/2020 9/30/2019



Net loss $(3,602)$(2,137)

Add:

Equity stock compensation 582 305

Depreciation and amortization 51,794 46,239

Interest expense 29,879 28,799

Management fees - 8,611

Corporate G&A and other 7,898 1,364

Management Internalization 577 818

Provision for expected credit losses (152) -

Waived asset management and general and administrative expense fees - (3,081)

Less:

Interest revenue on notes receivable 10,649 12,608

Interest revenue on related party notes receivable 609 2,546

Miscellaneous revenues 608 -

Income from consolidated VIEs - 591

Loss from unconsolidated joint venture (120) -

Loss on extinguishment of debt (518) (15)

Gains on sale of real estate and land condemnation 3,310 -



Property net operating income 72,438 65,188

Less:

Non-same-store property revenues (77,447) (67,559)

Add:

Non-same-store property operating expenses 26,524 23,872



Same-store net operating income $21,515 $21,501

Multifamily Communities' Same Store Net Operating Income



Three months ended:

(in thousands) 9/30/2020 9/30/2019 $ change% change

Revenues:

Rental and other property revenues $37,383 $37,490 $(107)(0.3) %



Operating expenses:

Property operating and maintenance 6,733 7,167 (434) (6.1) %

Payroll 3,022 3,019 3 0.1 %

Real estate taxes and insurance 6,113 5,803 310 5.3 %

Total operating expenses 15,868 15,989 (121) (0.8) %



Same-store net operating income $21,515 $21,501 $14 0.1 %



Same-store average physical occupancy95.6 %95.6 %



Corporate level expenses related to the management and operations of the Multifamily and Student housing property portfolios 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)



Nine months ended:

(in thousands) 9/30/2020 9/30/2019



Net loss $(199,075)$(6,094)

Add:

Equity stock compensation 1,058 922

Depreciation and amortization 153,096 137,191

Interest expense 90,608 83,166

Management fees 3,099 24,649

Corporate G&A and other 23,109 4,171

Management Internalization 179,828 1,143

Provision for expected credit losses 5,463 -

Waived asset management and general and administrative expense fees (1,136) (8,505)

Less:

Interest revenue on notes receivable 34,495 35,989

Interest revenue on related party notes receivable 3,750 9,980

Miscellaneous revenues 4,560 1,023

Income from consolidated VIEs - 1,316

Loss from unconsolidated joint venture (120) -

Loss on extinguishment of debt (6,674) (84)

Gains on sale of real estate and land condemnation 3,789 751



Property net operating income 216,250 187,668

Less:

Non-same-store property revenues (226,417) (187,737)

Add:

Non-same-store property operating expenses 75,318 64,282



Same-store net operating income $65,151 $64,213

Multifamily Communities' Same Store Net Operating Income



Nine months ended:

(in thousands) 9/30/2020 9/30/2019 $ change% change

Revenues:

Rental and other property revenues$111,855$110,833$1,0220.9 %



Operating expenses:

Property operating and maintenance19,473 20,388 (915) (4.4) %

Payroll 8,817 8,711 106 1.2 %

Real estate taxes and insurance 18,414 17,521 893 5.1 %

Total operating expenses 46,704 46,620 84 0.2 %



Same-store net operating income $65,151 $64,213 $938 1.5 %



Corporate level expenses related to the management and operations of the Multifamily and Student housing property portfolios are allocated on a per unit basis to Property NOI and are included in Multifamily Same Store NOI.

Dividends

Quarterly Dividends on Common Stock and Class A OP Units

On August 6, 2020, we declared a quarterly dividend on our Common Stock of $0.175 per share for the third quarter 2020. The third quarter dividend was paid on October 15, 2020 to all stockholders of record on September 15, 2020. In conjunction with the Common Stock dividend, the Company's operating partnership declared a distribution on its Class A Units of $0.175 per unit for the third quarter 2020, which was paid on October 15, 2020 to all Class A Unit holders of record as of September 15, 2020.

Monthly Dividends on Preferred Stock

We declared monthly dividends of $5.00 per share on our Series A Redeemable Preferred Stock, which totaled approximately $33.0 million for the third quarter 2020 and represents a 6% annual yield. We declared monthly dividends of $5.00 per share on our Series A1 Redeemable Preferred Stock, which totaled approximately $1.2 million for the third quarter 2020 and also represents a 6% annual yield. We declared dividends totaling approximately $1.5 million on our Series M Redeemable Preferred Stock, or mShares, for the third quarter 2020. The mShares have a dividend rate that escalates from 5.75% in year one of issuance to 7.50% in year eight and thereafter. We declared dividends totaling approximately $157,000 on our Series M1 Redeemable Preferred Stock for the third quarter 2020. The Series M1 Redeemable Preferred Stock has a dividend rate that escalates from 6.1% in year one of issuance to 7.1% in year ten and thereafter.

Subsequent to Quarter End

Between October 1, 2020 and October 31, 2020, we issued 13,986 shares of Series A1 Preferred Stock and collected net proceeds of approximately $12.6 million after commissions and fees and we issued 2,914 shares of Series M1 Preferred Stock and collected net proceeds of approximately $2.8 million after commissions and fees. During the same period, we redeemed 23,468 shares of Series A Preferred Stock and 862 shares of Series M Preferred Stock, or mShares.

On November 3, 2020, we announced via a press release the closing on that day of the sale of student housing assets to an unrelated third party for a sales price of $478.7 million.

On November 9, 2020, the Company adjourned its Special Meeting of Stockholders to November 19, 2020 to provide stockholders with additional time to vote on Proposal 1 (Approval of the Articles of Amendment to the Company's charter to give bylaw access to stockholders) and Proposal 2 (Approval of the Articles of Amendment to the Company's charter to reduce the Company's call period on its Series A Redeemable Preferred Stock from 10 years to 5 years). The required vote to approve each Proposal is two-thirds of the Company's outstanding shares entitled to vote. As of November 5, 2020, approximately 65.4% of the Company's outstanding shares had been voted on Proposal 1 and Proposal 2 and, of these shares, approximately 97.9% and 95.7% had been voted in favor of Proposal 1 and Proposal 2, respectively.

On November 2, 2020, we closed on the acquisition of The Blake, a 281-unit multifamily community located in Orlando, Florida.

On November 5, 2020, our board of directors declared a quarterly dividend on our Common Stock of $0.175 per share, payable on January 15, 2021 to stockholders of record on December 15, 2020. Even though this dividend will be paid in 2021, if and to the extent this dividend is taxable, the Company intends for this dividend to be taxable in 2020.

Conference Call and Supplemental Data

We will hold our quarterly conference call on Tuesday, November 10, 2020 at 11:00 a.m. Eastern Time to discuss our third quarter 2020 results. To participate in the conference call, please dial in to the following:

Live Conference Call DetailsDomestic Dial-in Number: 1-877-883-0383International Dial-in Number: 1-412-902-6506Company: Preferred Apartment Communities, Inc.Date: Tuesday, November 10, 2020Time: 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time)Passcode: 2463393

The live broadcast of PAC's third quarter 2020 conference call will be available online on a listen-only basis at the company's website, www.pacapts.com, under "Investors" and then click on the "News and Events" heading. A replay of the call will be available from 3:00 PM Eastern Time on Tuesday, November 10, through 11:59 PM Eastern Time on Wednesday, December 9, 2020. The replay can be accessed by dialing 1-877-344-7529 or 1-412-317-0088 for international participants. The passcode for the replay is 10149020. A replay of the webcast will also be available on the Company's website for a limited time.

A replay of the call will be archived on PAC's' website under Investors/News and Events/Events.

2020 Guidance:

Net income (loss) per share -We are actively adding properties and real estate loan investments to our real estate portfolio and the specific timing of the closing of acquisitions is difficult to predict. Acquisition activity by its nature can cause material variation in our reported depreciation and amortization expense and interest income. Since net income (loss) per share is calculated net of depreciation and amortization expense, our net income (loss) results can fluctuate, possibly significantly, depending upon the timing of the closing of acquisitions. For this reason, we are unable to reasonably forecast this measure or provide a reconciliation of our projected FFO per share to this measure.

FFO per share-Due to the inherent uncertainty of the scope, duration and rapidly evolving nature of the economic and social disruption from the COVID-19 pandemic, we have withdrawn our guidance for 2020.

AFFO, Core FFO and FFO are calculated after deductions for all preferred stock dividends. Reconciliations of net income (loss) attributable to common stockholders to FFO, Core FFO and AFFO for the three-month and nine-month periods ended September 30, 2020 and 2019 appear in the attached report, as well as on our website using the following link:

https://investors.pacapts.com/q3-2020-quarterly-supplemental-financial-data

Forward-Looking Statements

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Estimates of future earnings, guidance, goals and performance are, by definition, and certain other statements in this Earnings Release and Supplemental Financial Data Report may constitute, "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance, achievements or transactions to be materially different from the results, guidance, goals, performance, achievements or transactions expressed or implied by the forward-looking statements. These statements may be identified by the use of forward-looking terminology such as "may," "trend," "will," "expects," "plans," "estimates," "anticipates," "projects," "intends," "believes," "strategy," "goals," "objectives," "outlook" and similar expressions. These risks, uncertainties and contingencies include, but are not limited to, (a) the impact of the COVID-19 pandemic and related federal, state and local government actions on PAC's business operations and the economic conditions in the markets in which PAC operates; (b) PAC's ability to mitigate the impacts arising from COVID-19 and (c) those disclosed in PAC's filings with the SEC. Factors that impact such forward-looking statements include, among others, our business and investment strategy; legislative or regulatory actions; the state of the U.S. economy generally or in specific geographic areas; economic trends and economic recoveries; changes in operating costs, including real estate taxes, utilities and insurance costs; our ability to obtain and maintain debt or equity financing; financing and advance rates for our target assets; our leverage level; changes in the values of our assets; the occurrence of natural or man-made disasters; availability of attractive investment opportunities in our target markets; our ability to maintain our qualification as a real estate investment trust, or REIT, for U.S. federal income tax purposes; our ability to maintain our exemption from registration under the Investment Company Act of 1940, as amended; availability of quality personnel; our understanding of our competition and market trends in our industry; and interest rates, real estate values, the debt securities markets and the general economy.

Except as otherwise required by the federal securities laws, we assume no liability to update the information in this Earnings Release and Supplemental Financial Data Report.

We refer you to the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2019 that was filed with the SEC on March 3, 2020, which discuss various factors that could adversely affect our financial results. Such risk factors and information may be updated or supplemented by our Form 10-K, Form 10-Q and Form 8-K filings and other documents filed from time to time with the SEC.

Additional Information

The SEC has declared effective the registration statement filed by the Company for each of the offerings to which this communication may relate. Before you invest, you should read the final prospectus, and any prospectus supplements, forming a part of the registration statement and other documents the Company has filed with the SEC for more complete information about the Company and the offering to which this communication may relate. In particular, you should carefully read the risk factors described in the final prospectus and in any related prospectus supplement and in the documents incorporated by reference in the final prospectus and any related prospectus supplement to which this communication may relate. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, the Company or its dealer manager, Preferred Capital Securities, LLC, will arrange to send you a prospectus with respect to the Series A1/M1 Offering upon request by contacting John A. Isakson at (770) 818-4109, 3284 Northside Parkway NW, Suite 150, Atlanta, Georgia 30327.

The final prospectus for the Series A1/M1 Offering, dated October 22, 2019, can be accessed through the following link:

https://www.sec.gov/Archives/edgar/data/1481832/000148183219000097/a424b5-2019seriesamshares.htm

Preferred Apartment Communities, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)



Three months ended September 30,

(In thousands, except per-share figures) 2020 2019

Revenues:

Rental and other property revenues $114,831 $105,049

Interest income on loans and notes receivable 10,649 12,608

Interest income from related parties 609 2,546

Miscellaneous revenues 608 -



Total revenues 126,697 120,203



Operating expenses:

Property operating and maintenance 19,278 16,493

Property salary and benefits 6,054 5,360

Property management costs 983 3,534

Real estate taxes and insurance 16,078 14,474

General and administrative 7,898 1,364

Equity compensation to directors and executives 582 305

Depreciation and amortization 51,794 46,239

Asset management and general and administrative expense

fees to related party - 8,611

Provision for expected credit losses (152) -

Management internalization expense 577 818



Total operating expenses 103,092 97,198

Waived asset management and general and administrative

expense fees - (3,081)



Net operating expenses 103,092 94,117

Operating income before gain on sale of real estate and loss from

unconsolidated joint venture 23,605 26,086

Loss from unconsolidated joint venture (120) -

Gain on sale of real estate, net 3,261 -

Operating income 26,746 26,086



Interest expense 29,879 28,799

Change in fair value of net assets of consolidated

VIEs from mortgage-backed pools - 591

Loss on extinguishment of debt (518) (15)

Gain on land condemnation 49 -



Net loss (3,602) (2,137)

Consolidated net loss attributable to non-controlling interests 108 59



Net loss attributable to the Company (3,494) (2,078)



Dividends declared to preferred stockholders (35,909) (29,446)

Earnings attributable to unvested restricted stock (96) (5)



Net loss attributable to common stockholders $(39,499)$(31,529)



Net loss per share of Common Stock available to

common stockholders, basic and diluted $(0.79) $(0.71)



Weighted average number of shares of Common Stock outstanding,

basic and diluted 49,689 44,703

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 September 30,

(In thousands, except per-share figures) 2020 2019



Net loss attributable to common stockholders (See note 1) $(39,499) $(31,529)



Add: Depreciation of real estate assets 41,282 37,381

Amortization of acquired intangible assets and deferred leasing costs 9,978 8,386

Net loss attributable to Class A Unitholders (See note 2) (50) (59)

Gain on sale of real estate (3,261) -

FFO attributable to common stockholders and unitholders 8,450 14,179



Acquisition and pursuit costs 3 -

Loan cost amortization on acquisition term notes and loan coordination fees 505 511 (See note 3)

Payment of costs related to property refinancing 509 170

Internalization costs (See note 4) 577 818

Deemed dividends for redemptions of and non-cash dividends on preferred stock 3,061 152

Expenses incurred on the potential call of preferred stock (See note 5) 46 -

Expenses related to the COVID-19 global pandemic (See note 6) 138 -

Core FFO attributable to common stockholders and unitholders 13,289 15,830



Add: Non-cash equity compensation to directors and executives 582 305

Non-cash (income) expense for current expected credit losses (See note 7) (761) -

Amortization of loan closing costs (See note 8) 1,288 1,168

Depreciation/amortization of non-real estate assets 621 472

Net loan origination fees received (See note 9) 415 148

Deferred interest income received (See note 10) 375 -

Amortization of lease inducements (See note 11) 448 435

Less:Amortization of purchase option termination revenues in excess of cash received (421) (1,283) (See note 12)

Non-cash loan interest income (See note 10) (3,317) (3,763)

Cash received for sale of K Program securities in excess of noncash revenues - (281)

Cash paid for loan closing costs (106) (29)

Amortization of acquired real estate intangible liabilities and SLR (See note (4,887) (4,293) 13)

Amortization of deferred revenues (See note 14) (940) (940)

Normally recurring capital expenditures (See note 15) (2,983) (2,379)



AFFO attributable to common stockholders and Unitholders $3,603 $5,390



Common Stock dividends and distributions to Unitholders declared:

Common Stock dividends $8,780 $11,823

Distributions to Unitholders (See note 2) 226 225

Total $9,006 $12,048



Common Stock dividends and Unitholder distributions per share $0.1750 $0.2625



FFO per weighted average basic share of Common Stock and Unit outstanding $0.17 $0.31

Core FFO per weighted average basic share of Common Stock and Unit outstanding $0.26 $0.35

AFFO per weighted average basic share of Common Stock and Unit outstanding $0.07 $0.12



Weighted average shares of Common Stock and Units outstanding: ^(A)

Basic:

Common Stock 49,689 44,703

Class A Units 742 868

Common Stock and Class A Units 50,431 45,571



Diluted Common Stock and Class A Units ^(B) 50,433 45,768



Actual shares of Common Stock outstanding, including 548 and 20 unvested shares

of restricted Common Stock at September 30, 2020 and 2019, respectively. 50,449 45,355

Actual Class A Units outstanding at September 30, 2020 and 2019, respectively. 742 856

Total 51,191 46,211



(A) Units and Unitholders refer to Class A Units in our Operating Partnership (as defined in note 2), or Class A Units, and holders of Class A Units, respectively. Unitholders include recipients of awards of Class B Units in our Operating Partnership, or Class B Units, for annual service which became vested and earned and automatically converted to Class A Units. Unitholders also include the entity that contributed the Wade Green grocery-anchored shopping center. The Class A Units collectively represent an approximate 1.47% weighted average non-controlling interest in the Operating Partnership for the three-month period ended September 30, 2020.

(B) Since our AFFO results are positive for the periods reflected above, 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.



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)

Nine months ended September 30,

(In thousands, except per-share figures) 2020 2019



Net loss attributable to common stockholders (See note 1) $ (300,270) $ (88,497)



Add: Depreciation of real estate assets 122,053 109,408

Amortization of acquired intangible assets and deferred leasing costs 28,933 26,402

Net loss attributable to Class A Unitholders (See note 2) (3,393) (138)

Gain on sale of real estate (3,261) -

FFO attributable to common stockholders and unitholders (155,938) 47,175

Acquisition and pursuit costs 381 -

Loan cost amortization on acquisition term notes and loan coordination fees 1,711 1,491 (See note 3)

Payment of costs related to property refinancing 7,372 594

Internalization costs (See note 4) 179,828 1,143

Deemed dividends for redemptions of and non-cash dividends on preferred stock 6,377 371

Expenses incurred on the potential call of preferred stock (See note 5) 46 -

Expenses related to the COVID-19 global pandemic (See note 6) 586 -

Earnest money forfeited by prospective asset purchaser (2,750) -

Core FFO attributable to common stockholders and unitholders 37,613 50,774



Add: Non-cash equity compensation to directors and executives 1,058 922

Non-cash (income) expense for current expected credit losses (See note 7) 3,647 -

Amortization of loan closing costs (See note 8) 3,631 3,458

Depreciation/amortization of non-real estate assets 1,793 1,381

Net loan origination fees received (See note 9) 882 674

Deferred interest income received (See note 10) 8,652 5,078

Amortization of lease inducements (See note 11) 1,334 1,295

Amortization of purchase option termination revenues in excess of cash received (96) (2,370) (See note 12)

Non-operating miscellaneous revenues 2,750 -

Less:Non-cash loan interest income (See note 10) (9,445) (10,745)

Non-cash revenues from mortgage-backed securities - (696)

Cash paid for loan closing costs (106) (37)

Amortization of acquired real estate intangible liabilities and SLR (See note (13,684) (12,375) 13)

Amortization of deferred revenues (See note 14) (2,821) (2,821)

Normally recurring capital expenditures (See note 15) (6,525) (5,122)



AFFO attributable to common stockholders and Unitholders $ 28,683 $ 29,416



Common Stock dividends and distributions to Unitholders declared:

Common Stock dividends 29,895 34,599

Distributions to Unitholders (See note 2) 559 683

Total 30,454 35,282



Common Stock dividends and Unitholder distributions per share $ 0.6125 $ 0.785



FFO per weighted average basic share of Common Stock and Unit outstanding $ (3.17) $ 1.06

Core FFO per weighted average basic share of Common Stock and Unit outstanding $ 0.77 $ 1.14

AFFO per weighted average basic share of Common Stock and Unit outstanding $ 0.58 $ 0.66



Weighted average shares of Common Stock and Units outstanding: (A)

Basic:

Common Stock 48,351 43,703

Class A Units 776 875

Common Stock and Class A Units 49,127 44,578



Diluted Common Stock and Class A Units (B) 49,144 45,235



Actual shares of Common Stock outstanding, including 548 and 20 unvested shares

of restricted Common Stock at September 30, 2020 and 2019, respectively. 50,449 45,355

Actual Class A Units outstanding at September 30, 2020 and 2019, respectively. 742 856

Total 51,191 46,211



(A) Units and Unitholders refer to Class A Units in our Operating Partnership (as defined in note 2), or Class A Units, and holders of Class A Units, respectively. Unitholders include recipients of awards of Class B Units in our Operating Partnership, or Class B Units, for annual service which became vested and earned and automatically converted to Class A Units. Unitholders also include the entity that contributed the Wade Green grocery-anchored shopping center. The Class A Units collectively represent an approximate 1.58% weighted average non-controlling interest in the Operating Partnership for the nine-month period ended September 30, 2020.

(B) Since our AFFO results are positive for the periods reflected above, 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.



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



Rental and other property revenues and property operating expenses for the three-month and nine-month periods ended September 30, 2020 include activity for the properties acquired during the period only from their respective dates 1) of acquisition. In addition, these periods include activity for the properties acquired since September 30, 2019. Rental and other property revenues and expenses for the three-month and nine-month periods ended September 30, 2019 include activity for the acquisitions made during that period only from their respective dates of acquisition.



Non-controlling interests in Preferred Apartment Communities Operating Partnership, L.P., or our Operating Partnership, consisted of a total of 742,413 Class A Units as of September 30, 2020. 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 2) 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 1.47% and 1.90% for the three-month periods ended September 30, 2020 and 2019, respectively.



We paid loan coordination fees to Preferred Apartment Advisors, LLC, or our Former Manager, to reflect the administrative effort involved in arranging debt financing for acquired properties prior to the Internalization. The fees were calculated as 0.6% of the amount of any mortgage indebtedness on newly-acquired 3) 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 September 30, 2020, aggregate unamortized loan coordination fees were approximately $12.8 million, which will be amortized over a weighted average remaining loan life of approximately 10.2 years.



This adjustment reflects the add-back of (i) consideration paid to the owners of the Former Manager and Former Sub-Manager, (ii) accretion of the discount on 4) 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.



This adjustment adds back expenses incurred by us to effect an amendment of the Company's charter necessary to allow us to redeem outstanding shares of our 5) Series A Preferred Stock beginning on the fifth anniversary of the date of issuance of the shares of Series A Preferred Stock, rather than the tenth anniversary.



This additive adjustment to FFO consists of one-time costs for signage, cleaning and supplies necessary to create and maintain work environments 6) 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.



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 7) 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 FFO in calculating Core FFO.



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. Effective April 13, 2018, the maximum borrowing capacity on the Revolving Line of Credit was increased from $150 million to $200 million. 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 8) 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 September 30, 2020, unamortized loan costs on all the Company's indebtedness were approximately $32.3 million, which will be amortized over a weighted average remaining loan life of approximately 8.9 years.



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 9) 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 (see note 10).



This adjustment reflects the receipt during the periods presented of additional 10)interest income (described in note 9 above) which was earned and accrued on various real estate loans prior to those periods and previously deducted in our calculation of AFFO.



This adjustment removes the non-cash amortization of costs incurred to induce 11)tenants to lease space in our office buildings and grocery-anchored shopping centers.



Effective March 6, 2020, our purchase option on the Falls at Forsyth multifamily community was extinguished in conjunction with the loan repayment; effective January 1, 2019, we terminated our purchase options on the Sanibel Straits, Newbergh, Wiregrass and Cameron Square multifamily communities and the Solis Kennesaw student housing property; on May 7, 2018, we terminated our purchase options on the Bishop Street multifamily community and the Haven Charlotte student housing property, both of which are (or were) partially supported by real estate loan investments held by us. In exchange, we arranged to receive termination fees aggregating approximately $17.2 million from the 12)developers, which are recorded as revenue over the period beginning on the date of election 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 all periods presented, we had recognized termination fee revenues in excess of cash received, resulting in the negative adjustments shown to Core FFO in our calculation of AFFO.



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 13)multifamily communities and over the remaining lease terms for grocery-anchored shopping center assets and office buildings. At September 30, 2020, the balance of unamortized below-market lease intangibles was approximately $54.5 million, which will be recognized over a weighted average remaining lease period of approximately 8.7 years.



This adjustment removes the non-cash amortization of deferred revenue recorded 14)by us in conjunction with Company-owned lessee-funded tenant improvements in our office buildings.



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 15)$28,000 and $100,000 of recurring capitalized expenditures incurred at our corporate offices during the three-month and nine-month periods ended September 30, 2020, respectively. No adjustment is made in the calculation of AFFO for nonrecurring capital expenditures. See Capital Expenditures, Grocery-Anchored Shopping Center Portfolio, and Office Buildings Portfolio sections for definitions of these terms.

See Definitions of Non-GAAP Measures.



Preferred Apartment Communities, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except per-share par values) September 30,December 31, 2020 2019

Assets

Real estate

Land $657,286 $635,757

Building and improvements 3,361,174 3,256,223

Tenant improvements 175,400 167,275

Furniture, fixtures, and equipment 357,010 323,381

Construction in progress 23,677 11,893

Gross real estate 4,574,547 4,394,529

Less: accumulated depreciation (542,161) (421,551)

Net real estate 4,032,386 3,972,978

Real estate loan investments, net 307,033 325,790

Real estate loan investments to related parties, net 2,568 23,692

Total real estate and real estate loan investments, net 4,341,987 4,322,460



Cash and cash equivalents 30,337 94,381

Restricted cash 65,690 42,872

Notes receivable 2,894 17,079

Note receivable and revolving lines of credit due from related parties 9,011 24,838

Accrued interest receivable on real estate loans 24,784 25,755

Acquired intangible assets, net of amortization 133,297 154,803

Deferred loan costs on Revolving Line of Credit, net of amortization 879 1,286

Deferred offering costs 4,721 2,147

Tenant lease inducements, net 18,655 19,607

Investment in unconsolidated joint venture 6,851 -

Tenant receivables and other assets 91,956 65,332

Total assets $4,731,062 $4,770,560



Liabilities and equity

Liabilities

Mortgage notes payable, net of deferred loan costs and mark-to-market $2,765,793 $2,567,022adjustment

Revolving line of credit 33,000 -

Term note payable, net of deferred loan costs - 69,489

Unearned purchase option termination fees 1,164 2,859

Deferred revenue 36,909 39,722

Accounts payable and accrued expenses 66,283 42,191

Deferred liability to Former Manager 23,373 -

Contingent liability due to Former Manager 14,867 -

Accrued interest payable 8,538 8,152

Dividends and partnership distributions payable 20,971 23,519

Acquired below market lease intangibles, net of amortization 54,483 62,611

Prepaid rent, security deposits and other liabilities 34,823 20,879

Total liabilities 3,060,204 2,836,444



Commitments and contingencies

Equity

Stockholders' equity

Series A Redeemable Preferred Stock, $0.01 par value per share; 3,050 shares authorized; 2,226 and 2,161 shares

issued; 1,991 and 2,028 shares outstanding at September 30, 2020 and December 20 20 31, 2019, respectively

Series A1 Redeemable Preferred Stock, $0.01 par value per share; up to 1,000 shares authorized;

103 and 5 shares issued and outstanding at September 30, 2020 and December 31, - - 2019, respectively

Series M Redeemable Preferred Stock, $0.01 par value per share; 500 shares authorized; 106 shares

issued; 91 and 103 shares outstanding at September 30, 2020 and December 31, 1 1 2019, respectively

Series M1 Redeemable Preferred Stock, $0.01 par value per share; up to 1,000 shares authorized;

13 and zero shares issued and outstanding at September 30, 2020 and December - - 31, 2019, respectively

Common Stock, $0.01 par value per share; 400,067 shares authorized; 49,901 and 46,443 shares issued

and outstanding at September 30, 2020 and December 31, 2019, respectively 499 464

Additional paid-in capital 1,882,149 1,938,057

Accumulated (deficit) earnings (210,218) (7,244)

Total stockholders' equity 1,672,451 1,931,298

Non-controlling interest (1,593) 2,818

Total equity 1,670,858 1,934,116



Total liabilities and equity $4,731,062 $4,770,560

Preferred Apartment Communities, Inc.

Consolidated Statements of Cash Flows

(Unaudited)



Nine-month periods ended September 30,

(In thousands) 2020 2019

Operating activities:

Net (loss) income $(199,075)$(6,094)

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

Depreciation and amortization expense 153,096 137,191

Amortization of above and below market leases (6,145) (4,525)

Deferred revenues and other noncash revenues amortization (3,710) (4,720)

Purchase option termination fee amortization (4,896) (6,900)

Amortization of equity compensation, lease incentives and other non-cash 3,027 2,414 expenses

Deferred loan cost amortization 5,177 4,752

Non-cash accrued interest income on real estate loan investments (9,208) (10,206)

Receipt of accrued interest income on real estate loans 10,179 2,318

Gains on sales of real estate loan investments, net - (751)

Gain on sale of real estate loan and land condemnation (3,789) -

Loss from unconsolidated joint ventures 120 -

Cash received for purchase option terminations 4,800 1,330

Loss on extinguishment of debt 6,674 84

Non-cash payment of interest on related party line of credit - (637)

Mortgage interest received from consolidated VIEs - (13,398)

Mortgage interest paid to other participants of consolidated VIEs - 13,398

Increase in provision for expected credit losses 5,463 -

Changes in operating assets and liabilities:

(Increase) in tenant receivables and other assets (15,769) (12,379)

(Increase) in tenant lease incentives (382) (570)

Increase in accounts payable and accrued expenses 46,821 22,399

Increase in deferred liability to Former Manager 22,851 -

Increase in contingent liability 15,013 -

Decrease in accrued interest, prepaid rents and other liabilities (249) 730

Net cash provided by (used in) operating activities 29,998 124,436



Investing activities:

Investments in real estate loans (42,193) (74,668)

Repayments of real estate loans 71,146 -

Notes receivable issued (793) (5,399)

Notes receivable repaid 15,012 2,169

Notes receivable issued and draws on lines of credit by related parties (9,624) (30,434)

Repayments of notes receivable and lines of credit by related parties 4,546 26,222

Sale of real estate loan investment - 747

Origination fees received on real estate loan investments 882 1,347

Origination fees paid to Former Manager on real estate loan investments - (674)

Purchases of mortgage backed securities (K program), net of acquisition costs - (18,656)

Mortgage principal received from consolidated VIEs - 5,024

Purchases of mortgage-backed securities - (12,278)

Proceeds from sales of mortgage-backed securities - 53,445

Acquisition of properties (185,970) (442,415)

Proceeds from sale of interest in unconsolidated joint venture 19,221 -

Return of capital from investment in unconsolidated joint venture 12,250 -

Proceeds from land condemnation 787 -

Receipt of insurance proceeds for capital improvements - 746

Additions to real estate assets - improvements (39,158) (34,251)

Investment in property development (50) -

Deposits paid on acquisitions (1,227) (952)

Net cash used in investing activities (155,171) (530,027)









Preferred Apartment Communities, Inc.

Consolidated Statements of Cash Flows - continued

(Unaudited)



Nine-month periods ended September 30,

(In thousands) 2020 2019



Financing activities:

Proceeds from mortgage notes payable 377,749 329,905

Repayments of mortgage notes payable (173,409) (106,728)

Payments for deposits and other mortgage loan costs (10,911) (6,738)

Debt prepayment and other debt extinguishment costs (5,733) -

Payments to real estate loan participants - (5,223)

Proceeds from lines of credit 321,000 240,200

Payments on lines of credit (288,000) (247,200)

Repayment of Term Loan (70,000) -

Mortgage principal paid to other participants of consolidated VIEs - (5,024)

Proceeds from repurchase agreements - 4,857

Payments for repurchase agreements - (4,857)

Proceeds from sales of preferred stock and Units, net of offering costs and 159,096 380,016 redemptions

Proceeds from sales of Common Stock 4,522 -

Proceeds from exercises of Warrants 24 9,875

Payments for redemptions of preferred stock (82,003) (7,995)

Common Stock dividends paid (33,271) (33,617)

Preferred stock dividends and Class A Unit distributions paid (104,428) (81,025)

Payments for deferred offering costs (10,669) (3,386)

Contributions from non-controlling interests 99 2,050

Distributions to non-controlling interests (119) -

Net cash provided by financing activities 83,947 465,110



Net (decrease) increase in cash, cash equivalents and restricted cash (41,226) 59,519

Cash, cash equivalents and restricted cash, beginning of year 137,253 87,690

Cash, cash equivalents and restricted cash, end of period $96,027 $147,209

Real Estate Loan Investments



The following tables present details pertaining to our portfolio of fixed rate, interest-only real estate loan investments.



Optional Carrying amount ^(1) as of Current / Project/Property Location Maturity extension Total loan deferred date date commitments September 30,December 31,interest % 2020 2019 per annum



Residential Properties: (in thousands)

Palisades Northern VA 5/17/2021 N/A $- $- $17,250 ^(2)

Wiregrass Tampa, FL N/A N/A - - 14,976 -

Wiregrass Capital Tampa, FL N/A N/A - - 4,240 -

Berryessa San Jose, CA 2/13/2021 2/13/2023 137,616 123,533 115,819 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 4,736 4,440 8.5 / 4.5

Sanibel Straights Fort Myers, FL 2/3/2021 2/3/2022 9,416 9,416 8,846 8.5 / 5.5

Sanibel Straights Capital Fort Myers, FL 2/3/2021 2/3/2022 6,193 6,193 5,930 8.5 / 5.5

Falls at Forsyth Atlanta, GA N/A N/A - - 21,513 -

Newbergh Atlanta, GA 1/31/2021 1/31/2022 11,749 11,749 11,699 8.5 / 5.5

Newbergh Capital Atlanta, GA 1/31/2021 1/31/2022 6,176 6,176 5,653 8.5 / 5.5

V & Three Charlotte, NC 8/15/2021 8/15/2022 10,336 10,335 10,336 8.5 / 5

V & Three Capital Charlotte, NC 8/18/2021 8/18/2022 7,338 7,008 6,571 8.5 / 5

Cameron Square Alexandria, VA 10/11/2021 10/11/2023 21,340 19,887 18,582 8.5 / 3

Cameron Square Capital Alexandria, VA 10/11/2021 10/11/2023 8,850 8,783 8,235 8.5 / 3

Southpoint Fredericksburg, VA 2/28/2022 2/28/2024 7,348 7,348 7,348 8.5 / 4

Southpoint Capital Fredericksburg, VA 2/28/2022 2/28/2024 4,962 4,527 4,245 8.5 / 4

E-Town Jacksonville, FL 6/14/2022 6/14/2023 16,697 15,519 14,550 8.5 / 3.5

Vintage Destin, FL 3/24/2022 3/24/2024 10,763 9,529 8,932 8.5 / 4

Hidden River II Tampa, FL 10/11/2022 10/11/2024 4,462 4,462 3,012 8.5 / 3.5

Hidden River II Capital Tampa, FL 10/11/2022 10/11/2024 2,763 2,408 2,258 8.5 / 3.5

Kennesaw Crossing Atlanta, GA 9/1/2023 9/1/2024 14,810 12,746 7,616 8.5 / 5.5

Vintage Horizon West Orlando, FL 10/11/2022 10/11/2024 10,900 8,826 8,275 8.5 / 5.5

Chestnut Farms Charlotte, NC 2/28/2025 N/A 13,372 8,968 - 8.5 / 5.5

Vintage Jones Franklin Raleigh, NC 11/14/2023 5/14/2025 10,000 3,251 - 8.5 / 5.5

Solis Cumming Town Center Atlanta, GA 9/3/2024 9/3/2026 20,681 1,983 - 8.5 / 5.5

Haven 12 Starkville, MS 11/30/2020 N/A 6,116 6,116 6,116 8.5 / 0

Solis Kennesaw II Atlanta, GA 5/5/2022 5/5/2024 13,613 13,227 12,489 8.5 / 4



New Market Properties:

Dawson Marketplace Atlanta, GA N/A N/A - - 12,857 -



Office property:

8West Atlanta, GA 11/29/2022 11/29/2024 19,193 10,663 4,554 8.5 / 5



$386,593 323,629 352,582

Unamortized loan origination fees (1,567) (1,476)

Allowances for expected loan losses and doubtful accounts (12,461) (1,624)



Carrying amount $309,601 $349,482





^(1) Carrying amounts presented per loan are amounts drawn, exclusive of deferred fee revenue.

^(2) On July 31, 2020, we received approximately $18.7 million in full satisfaction of the principal and all interest due on the loan.

We hold options or rights of first offer, but not obligations, to purchase some of the properties which are partially financed by our real estate loan investments. Certain option purchase prices may be negotiated at the time of the loan closing and are to be calculated based upon market cap rates at the time of exercise of the purchase option, with discounts up to 15 basis points (if any), depending on the loan. As of September 30, 2020, potential property acquisitions and units from projects in our real estate loan investment portfolio consisted of:

Total units Purchase option window upon

Project/Property Location completion^ (1) Begin End



Residential properties:

V & Three Charlotte, NC 338 S + 90 days^ (2) S + 150 days^ (2)

The Anson Nashville, TN 301 S + 90 days^ (2) S + 150 days^ (2)

Southpoint Fredericksburg, VA 240 S + 90 days^ (2) S + 150 days^ (2)

E-Town Jacksonville, FL 332 S + 90 days^ (3) S + 150 days^ (3)

Vintage Destin, FL 282 ^(4) ^(4)

Hidden River II Tampa, FL 204 S + 90 days^ (2) S + 150 days^ (2)

Kennesaw Crossing Atlanta, GA 250 ^(5) ^(5)

Vintage Horizon West Orlando, FL 340 ^(4) ^(4)

Solis Chestnut Farm Charlotte, NC 256 ^(5) ^(5)

Vintage Jones Franklin Raleigh, NC 277 ^(4) ^(4)

Solis Kennesaw II Atlanta, GA 175 ^(6) ^(6)

Solis Cumming Town Center Atlanta, GA 320 ^(5) ^(5)



Office property:

8West Atlanta, GA ^(7) ^(7) ^(7)



3,315



^(1) 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.

^(2) The option period window begins and ends at the number of days indicated beyond the achievement of a 93% physical occupancy rate by the underlying property.

^(3) The option period window begins on the earlier of June 21, 2024 and the number of days indicated beyond the achievement of a 93% physical occupancy rate by the underlying property.

^(4) The option period window begins on the later of one year following receipt of final certificate of occupancy or 90 days beyond the achievement of a 93% physical occupancy rate by the underlying property and ends 60 days beyond the option period beginning date.

^(5) We hold a right of first offer on the property.

^(6) The option period begins on October 1 of the second academic year following project completion and ends on the following December 31. The developer may elect to expedite the option period to begin December 1, 2020 and end on December 31, 2020.

^(7) The project plans are for the construction of a class A office building consisting of approximately 195,000 rentable square feet; our purchase option window opens 90 days following the achievement of 90% lease commencement and ends on November 30, 2024 (subject to adjustment). Our purchase option is at the to-be-agreed-upon market value. In the event the property is sold to a third party, we would be due a fee based on a minimum multiple of 1.15 times the total commitment amount of the real estate loan investment, less the amounts actually paid by the borrower, up to and including payment of accrued interest and repayment of principal at the time of the sale.

Mortgage Indebtedness



The following table presents certain details regarding our mortgage notes payable:



Principal balance as of

Acquisition/ Basis point refinancing September 30,December 31,Maturity Interestspread over date 2020 2019 date rate 1 Month Interest only LIBOR through date ^(1)



Multifamily communities: (in thousands)

Summit Crossing 10/31/2017 $37,115 $37,651 11/1/2024 3.99 % Fixed rate N/A

Summit Crossing II 6/30/2020 20,700 13,221 7/1/2030 2.94 % 278 7/31/2022

Vineyards 9/26/2014 32,877 33,382 10/1/2021 3.68 % Fixed rate N/A

Avenues at Cypress 6/30/2020 28,366 20,704 7/1/2027 2.96 % Fixed rate 7/31/2022

Avenues at Northpointe 6/29/2020 33,546 26,313 7/1/2027 2.79 % Fixed rate 7/31/2022

Venue at Lakewood Ranch 6/30/2020 36,555 28,076 7/1/2030 2.99 % Fixed rate 7/31/2022

Aster at Lely Resort 6/29/2020 50,400 31,094 7/1/2030 2.95 % Fixed rate 7/31/2022

CityPark View 6/25/2020 29,000 20,089 7/1/2030 2.75 % Fixed rate 7/31/2023

Avenues at Creekside 7/31/2015 38,251 38,871 8/1/2024 1.76 % 160 N/A

Citi Lakes 7/29/2019 40,517 41,079 8/1/2029 3.66 % Fixed rate N/A

Stone Creek 6/22/2017 19,539 19,800 7/1/2052 3.22 % Fixed rate N/A

Lenox Village Town Center 2/28/2019 38,335 38,813 3/1/2029 4.34 % Fixed rate N/A

Retreat at Lenox 12/21/2015 16,844 17,114 1/1/2023 4.04 % Fixed rate N/A

Overton Rise 2/1/2016 37,818 38,428 8/1/2026 3.98 % Fixed rate N/A

Village at Baldwin Park 7/31/2020 69,881 70,607 1/1/2054 3.59 % Fixed rate N/A

Crosstown Walk 6/30/2020 46,500 30,246 7/1/2027 2.92 % Fixed rate 7/31/2022

525 Avalon Park 6/15/2017 63,580 64,519 7/1/2024 3.98 % Fixed rate N/A

City Vista 7/1/2016 33,126 33,674 7/1/2026 3.68 % Fixed rate N/A

Sorrel 8/24/2016 30,921 31,449 9/1/2023 3.44 % Fixed rate N/A

Citrus Village 7/10/2020 40,900 28,796 8/1/2027 2.95 % Fixed rate 8/31/2022

Retreat at Greystone 11/21/2017 33,597 34,053 12/1/2024 4.31 % Fixed rate N/A

Founders Village 3/31/2017 29,781 30,202 4/1/2027 4.31 % Fixed rate N/A

Claiborne Crossing 4/26/2017 25,615 25,948 6/1/2054 2.89 % Fixed rate N/A

Luxe at Lakewood Ranch 7/26/2017 37,112 37,662 8/1/2027 3.93 % Fixed rate N/A

Adara at Overland Park 9/27/2017 30,178 30,624 4/1/2028 3.90 % Fixed rate N/A

Aldridge at Town Village 10/31/2017 36,066 36,569 11/1/2024 4.19 % Fixed rate N/A

Reserve at Summit Crossing 9/29/2017 18,992 19,276 10/1/2024 3.87 % Fixed rate N/A

Overlook at Crosstown Walk 11/21/2017 21,144 21,450 12/1/2024 3.95 % Fixed rate N/A

Colony at Centerpointe 12/20/2017 31,616 32,120 10/1/2026 3.68 % Fixed rate N/A

Lux at Sorrel 1/9/2018 30,022 30,474 2/1/2030 3.91 % Fixed rate N/A

Green Park 2/28/2018 37,973 38,525 3/10/2028 4.09 % Fixed rate N/A

The Lodge at Hidden River 9/27/2018 40,384 40,903 10/1/2028 4.32 % Fixed rate N/A

Vestavia Reserve 11/9/2018 36,671 37,130 12/1/2030 4.40 % Fixed rate N/A

CityPark View South 11/15/2018 23,479 23,767 6/1/2029 4.51 % Fixed rate N/A

Artisan at Viera 8/8/2019 39,287 39,824 9/1/2029 3.93 % Fixed rate N/A

Five Oaks at Westchase 10/17/2019 30,978 31,448 11/1/2031 3.27 % Fixed rate N/A

Horizon at Wiregrass Ranch 4/23/2020 51,636 - 5/1/2030 2.90 % Fixed rate N/A

Parkside at the Beach 4/30/2020 45,037 - 5/1/2030 2.95 % Fixed rate N/A



Total multifamily communities 1,344,339 1,173,901



Grocery-anchored shopping centers:

Spring Hill Plaza 9/17/2019 8,016 8,167 10/1/2031 3.72 % Fixed rate N/A

Parkway Town Centre 9/17/2019 7,917 8,067 10/1/2031 3.72 % Fixed rate N/A

Woodstock Crossing 8/8/2014 2,833 2,877 9/1/2021 4.71 % Fixed rate N/A

Deltona Landings 8/16/2019 6,178 6,289 9/1/2029 4.18 % Fixed rate N/A

Powder Springs 8/13/2019 7,800 7,951 9/1/2029 3.65 % Fixed rate ^(3)

Barclay Crossing 8/16/2019 6,124 6,233 9/1/2029 4.18 % Fixed rate N/A

Parkway Centre 8/16/2019 4,450 4,530 9/1/2029 4.18 % Fixed rate N/A

The Market at Salem Cove 10/6/2014 8,936 9,075 11/1/2024 4.21 % Fixed rate N/A

Independence Square 8/27/2015 11,253 11,455 9/1/2022 3.93 % Fixed rate N/A

Royal Lakes Marketplace 4/12/2019 9,403 9,572 5/1/2029 4.29 % Fixed rate N/A

The Overlook at Hamilton Place 12/22/2015 19,195 19,509 1/1/2026 4.19 % Fixed rate N/A

Summit Point 10/30/2015 11,213 11,494 11/1/2022 3.57 % Fixed rate N/A

East Gate Shopping Center 4/29/2016 5,158 5,277 5/1/2026 3.97 % Fixed rate N/A

Fury's Ferry 4/29/2016 5,959 6,096 5/1/2026 3.97 % Fixed rate N/A

Rosewood Shopping Center 4/29/2016 4,002 4,095 5/1/2026 3.97 % Fixed rate N/A

Southgate Village 4/29/2016 7,115 7,279 5/1/2026 3.97 % Fixed rate N/A

The Market at Victory Village 5/16/2016 8,792 8,911 9/11/2024 4.40 % Fixed rate N/A

Wade Green Village 4/7/2016 7,530 7,655 5/1/2026 4.00 % Fixed rate N/A

Lakeland Plaza 7/15/2016 26,842 27,459 8/1/2026 3.85 % Fixed rate N/A

University Palms 8/8/2016 12,129 12,421 9/1/2026 3.45 % Fixed rate N/A

Cherokee Plaza 4/12/2019 24,427 24,867 5/1/2027 4.28 % Fixed rate N/A

Sandy Plains Exchange 8/8/2016 8,473 8,676 9/1/2026 3.45 % Fixed rate N/A

Thompson Bridge Commons 8/8/2016 11,326 11,599 9/1/2026 3.45 % Fixed rate N/A

Heritage Station 8/8/2016 8,383 8,585 9/1/2026 3.45 % Fixed rate N/A

Oak Park Village 8/8/2016 8,651 8,859 9/1/2026 3.45 % Fixed rate N/A

Shoppes of Parkland 8/8/2016 15,489 15,702 9/1/2023 4.67 % Fixed rate N/A

Champions Village 10/18/2016 27,400 27,400 11/1/2021 3.25 % 300 ^(4)11/1/2021

Castleberry-Southard 4/21/2017 10,791 10,959 5/1/2027 3.99 % Fixed rate N/A

Rockbridge Village 6/6/2017 13,383 13,597 7/5/2027 3.73 % Fixed rate N/A

Irmo Station 7/26/2017 9,829 10,038 8/1/2030 3.94 % Fixed rate N/A

Maynard Crossing 8/25/2017 17,079 17,449 9/1/2032 3.74 % Fixed rate N/A

Woodmont Village 9/8/2017 8,153 8,320 10/1/2027 4.13 % Fixed rate N/A

West Town Market 9/22/2017 8,321 8,503 10/1/2025 3.65 % Fixed rate N/A

Crossroads Market 12/5/2017 17,746 18,112 1/1/2030 3.95 % Fixed rate N/A

Anderson Central 3/16/2018 11,320 11,539 4/1/2028 4.32 % Fixed rate N/A

Greensboro Village 5/22/2018 8,093 8,250 6/1/2028 4.20 % Fixed rate N/A

Governors Towne Square 5/22/2018 10,768 10,976 6/1/2028 4.20 % Fixed rate N/A

Conway Plaza 6/29/2018 9,419 9,549 7/5/2028 4.29 % Fixed rate N/A

Brawley Commons 7/6/2018 17,632 17,963 8/1/2028 4.36 % Fixed rate N/A

Hollymead Town Center 12/21/2018 26,296 26,758 1/1/2029 4.64 % Fixed rate N/A

Gayton Crossing 1/17/2019 17,379 17,679 2/1/2029 4.71 % Fixed rate N/A

Free State Shopping Center 5/28/2019 45,763 46,391 6/1/2029 3.99 % Fixed rate N/A

Polo Grounds Mall 6/12/2019 13,047 13,227 7/1/2034 3.93 % Fixed rate N/A

Disston Plaza 6/12/2019 17,661 17,905 7/1/2034 3.93 % Fixed rate N/A

Fairfield Shopping Center 8/16/2019 19,750 19,750 8/16/2026 2.21 % 205 8/16/2022

Berry Town Center 11/14/2019 11,852 12,025 12/1/2034 3.49 % Fixed rate N/A

Hanover Shopping Center 12/19/2019 31,417 32,000 12/19/20263.62 % Fixed rate N/A

Wakefield Crossing 1/29/2020 7,777 - 2/1/2032 3.66 % Fixed rate N/A



Total grocery-anchored shopping centers ^(5) 618,470 621,090



Student housing properties:

North by Northwest 6/1/2016 30,594 31,209 10/1/2022 4.02 % Fixed rate N/A

SoL 10/31/2018 35,238 35,656 11/1/2028 4.71 % Fixed rate N/A

Stadium Village 10/27/2017 44,561 45,228 11/1/2024 3.80 % Fixed rate N/A

Ursa 12/18/2017 - 31,400 1/5/2020 N/A N/A N/A

The Tradition 5/10/2018 30,000 30,000 6/6/2021 5.45 % 375 ^(6)6/6/2021

Knightshade 5/31/2018 47,125 47,125 9/1/2025 4.09 % Fixed rate 9/30/2020

The Bloc 6/27/2018 28,966 28,966 7/9/2021 5.25 % 355 ^(7)7/9/2021



Total student housing properties 216,484 249,584



Office buildings:

Brookwood Center 8/29/2016 30,124 30,716 9/10/2031 3.52 % Fixed rate N/A

Galleria 75 11/4/2016 5,184 5,340 7/1/2022 4.25 % Fixed rate N/A

Three Ravinia 12/30/2016 115,500 115,500 1/1/2042 4.46 % Fixed rate 1/31/2022

Westridge at La Cantera 11/13/2017 50,801 51,834 12/10/20284.10 % Fixed rate N/A

Armour Yards 1/29/2018 39,600 40,000 2/1/2028 4.10 % Fixed rate N/A

150 Fayetteville 7/31/2018 114,243 114,400 8/10/2028 4.27 % Fixed rate 9/9/2020

Capitol Towers 12/20/2018 123,252 124,814 1/10/2037 4.60 % Fixed rate N/A

CAPTRUST Tower 7/25/2019 82,650 82,650 8/1/2029 3.61 % Fixed rate 7/31/2029

Morrocroft Centre 3/19/2020 70,000 - 4/10/2033 3.40 % Fixed rate 4/10/2025

251 Armour Yards ^(8) 1/22/2020 3,522 - 1/22/2025 4.50 % Fixed rate 1/21/2023



Total office buildings 634,876 565,254

Grand total 2,814,169 2,609,829

Less: deferred loan costs (44,338) (38,185)

Less: below market debt adjustment (4,038) (4,622)

Mortgage notes, net $2,765,793 $2,567,022

Footnotes to Mortgage Notes Table



^(1) Following the indicated interest only period (where applicable), monthly payments of accrued interest and principal are based on a 25 to 35-year amortization period through the maturity date.

^(2) The mortgage instrument was assumed as part of the sales transaction; the 1 Month LIBOR index is capped at 5.0%, resulting in a cap on the combined rate of 6.6%.

^(3) The mortgage has interest-only payment terms for the periods of June 1, 2023 through May 1, 2024 and from June 1, 2028 through May 1, 2029.

^(4) The interest rate has a floor of 3.25%.

^(5) Excludes mortgage debt on the Neapolitan Way grocery-anchored shopping center, which is held in an unconsolidated joint venture.

^(6) The interest rate has a floor of 5.45%.

^(7) The interest rate has a floor of 5.25%.

^(8) A construction loan financing redevelopment of the property.

Multifamily Communities



As of September 30, 2020, our multifamily community portfolio consisted of the following properties:



Three months ended September 30, 2020

Average Number ofAverage unit Average rentProperty Location physical units size (sq. ft.) per unit occupancy



Same-Store Communities:

Aldridge at Town Village Atlanta, GA 300 969 96.1 % $1,409

Green Park Atlanta, GA 310 985 96.7 % $1,483

Overton Rise Atlanta, GA 294 1,018 97.6 % $1,593

Summit Crossing I Atlanta, GA 345 1,034 97.6 % $1,242

Summit Crossing II Atlanta, GA 140 1,100 97.9 % $1,337

The Reserve at Summit Crossing Atlanta, GA 172 1,002 95.5 % $1,374

Avenues at Cypress Houston, TX 240 1,170 95.8 % $1,454

Avenues at Northpointe Houston, TX 280 1,167 95.4 % $1,408

Vineyards Houston, TX 369 1,122 95.1 % $1,205

Avenues at Creekside San Antonio, TX 395 974 95.6 % $1,201

Aster at Lely Resort Naples, FL 308 1,071 94.0 % $1,438

Sorrel Jacksonville, FL 290 1,048 94.9 % $1,336

Lux at Sorrel Jacksonville, FL 265 1,025 95.1 % $1,394

525 Avalon Park Orlando, FL 487 1,394 94.4 % $1,512

Citi Lakes Orlando, FL 346 984 94.0 % $1,465

Luxe at Lakewood Ranch Sarasota, FL 280 1,105 96.0 % $1,492

Venue at Lakewood Ranch Sarasota, FL 237 1,001 92.3 % $1,536

Crosstown Walk Tampa, FL 342 1,070 96.0 % $1,334

Overlook at Crosstown Walk Tampa, FL 180 986 96.9 % $1,404

Citrus Village Tampa, FL 296 980 95.6 % $1,336

Lenox Village Nashville, TN 273 906 95.5 % $1,319

Regent at Lenox Nashville, TN 18 1,072 98.1 % $1,359

Retreat at Lenox Nashville, TN 183 773 96.0 % $1,254

CityPark View Charlotte, NC 284 948 96.0 % $1,169

CityPark View South Charlotte, NC 200 1,005 93.7 % $1,283

Colony at Centerpointe Richmond, VA 255 1,149 98.3 % $1,383

Founders Village Williamsburg, VA 247 1,070 96.1 % $1,397

Retreat at Greystone Birmingham, AL 312 1,100 97.0 % $1,356

Vestavia Reserve Birmingham, AL 272 1,113 97.1 % $1,561

Adara Overland Park Kansas City, KS 260 1,116 94.6 % $1,403

Claiborne Crossing Louisville, KY 242 1,204 97.1 % $1,342

City Vista Pittsburgh, PA 272 1,023 92.4 % $1,450



Total/Average Same-Store Communities 8,694 95.6 %



Stabilized Communities:

Stone Creek Houston, TX 246 852 94.4 % $1,203

Artisan at Viera Melbourne, FL 259 1,070 94.3 % $1,694

Village at Baldwin Park Orlando, FL 528 1,069 94.9 % $1,677

Parkside at the Beach Panama City Beach, FL288 1,041 95.5 % $1,398

Lodge at Hidden River Tampa, FL 300 980 95.4 % $1,387

Five Oaks at Westchase Tampa, FL 218 983 94.6 % $1,510

Wiregrass Ranch Tampa, FL 392 973 96.9 % $1,479



Total/Average Stabilized Communities 2,231 95.6 %



Total multifamily community units 10,925



For the three-month period ended September 30, 2020, our average same-store multifamily communities' physical occupancy was 95.6%. We calculate average same-store physical occupancy for quarterly periods as the average number of occupied units on the 20th day of each of the trailing three months from the reporting period end date and that have been owned for at least 15 full months as of the end of the first quarter of each year. We exclude the operating results of properties for which construction of adjacent phases has commenced, properties which are undergoing significant capital projects, have sustained significant casualty losses, or are being marketed for sale as of the end of the reporting period. We believe "Same Property" information is useful as it allows both management and investors to gauge our management effectiveness via comparisons of financial and operational results between interim and annual periods for those subsets of multifamily communities owned for current and prior comparative periods.

For the three-month period ended September 30, 2020, our average stabilized physical occupancy was 95.6%. We calculate average stabilized physical occupancy for quarterly periods as the average number of occupied units on the 20th day of each of the trailing three months from the reporting period end date.

For the three-month period ended September 30, 2020, our average economic occupancy was 95.4%. We define average economic occupancy as market rent reduced by vacancy losses, expressed as a percentage. All of our multifamily properties are included in these calculations except for properties which are not yet stabilized (which we define as properties having first achieved 93% physical occupancy for three full months in a quarter), properties which are owned for less than the entire reporting period and properties which are undergoing significant capital projects, have sustained significant casualty losses or are adding additional phases. We also exclude properties which are currently being marketed for sale, of which we had none at September 30, 2020. Average economic occupancy is useful both to management and investors as a gauge of our effectiveness in realizing the full revenue generating potential of our multifamily communities given market rents and occupancy rates.All of our multifamily communities were stabilized for the three-month period ended September 30, 2020.



Student Housing Properties

As of September 30, 2020, our student housing portfolio consisted of the following properties:



Three months ended September 30, 2020

Average Number Number Average unit Average rentProperty Location of of beds physical units size (sq. ft.) per bed occupancy

Student housing properties:

North by Northwest Tallahassee, FL 219 679 1,250 92.2 % $ 696

SoL ^ Tempe, AZ 224 639 1,296 99.3 % $ 740

Stadium Village ^(1) Atlanta, GA 198 792 1,466 93.0 % $ 721

Ursa ^(1) Waco, TX 250 840 1,634 98.6 % $ 600

The Tradition College Station, TX427 808 539 92.6 % $ 567

Knightshade Orlando, FL 221 894 2,036 95.8 % $ 787

The Bloc Lubbock, TX 140 556 1,394 93.5 % $ 523

Rush Charlotte, NC 332 887 1,224 97.7 % $ 765



Total/Average 2,011 6,095 95.4 % $ 681



^(1) The Company acquired and owns an approximate 99% equity interest in a joint venture which owns both Stadium Village and Ursa.

Capital Expenditures

We regularly incur capital expenditures related to our owned multifamily communities and student housing properties. Capital expenditures may be nonrecurring and discretionary, as part of a strategic plan intended to increase a property's value and corresponding revenue-generating ability, or may be normally recurring and necessary to maintain the income streams and present value of a property. Certain capital expenditures may be budgeted and reserved for upon acquiring a property as initial expenditures necessary to bring a property up to our standards or to add features or amenities that we believe make the property a compelling value to prospective residents in its individual market. These budgeted nonrecurring capital expenditures in connection with an acquisition are funded from the capital source(s) for the acquisition and are not dependent upon subsequent property operating cash flows for funding. Since the onset of COVID, all nonrecurring and discretionary capital expenditures have been reviewed individually and approved on as needed basis. There are regular recurring and life safety/operational capital expenditures which remain necessary for the continued normal operation of our properties. These have continued without interruption.

For the three-month period ended September 30, 2020, our capital expenditures for student housing properties consisted of:



Capital Expenditures - Multifamily Communities

Recurring Non-recurring Total

(in thousands, except per-unit figures) Amount Per Unit Amount Per Unit Amount Per Unit

Appliances $ 178 $16.28 $- $- $178 $16.28

Carpets 531 48.90 - - 531 48.90

Wood / vinyl flooring 42 3.94 125 11.51 167 15.45

Mini blinds and ceiling fans 72 6.66 - - 72 6.66

Fire safety - - 220 20.40 220 20.40

HVAC 254 23.49 - - 254 23.49

Computers, equipment, misc. 25 2.22 109 10.08 134 12.30

Elevators - - 25 2.24 25 2.24

Exterior painting - - 53 4.24 53 4.24

Leasing office and other common amenities 11 1.02 292 26.88 303 27.90

Major structural projects - - 1,073 99.80 1,073 99.80

Cabinets and countertop upgrades - - 416 38.66 416 38.66

Landscaping and fencing - - 15 1.09 15 1.09

Parking lot - - 36 3.32 36 3.32

Signage and sanitation - - 58 5.37 58 5.37

Totals $ 1,113 $102.51 $2,422 $223.59 $3,535 $326.10

For the three-month period ended September 30, 2020, our capital expenditures for student housing properties consisted of:



Capital Expenditures - Student Housing Properties

Recurring Non-recurring Total

(in thousands, except per-bed figures) Amount Per Bed Amount Per Bed Amount Per Bed

Appliances $ 49 $ 8.16 $ - $- $49 $8.16

Carpets 198 32.45 - - 198 32.45

Wood / vinyl flooring 9 1.50 - - 9 1.50

Mini blinds and ceiling fans 17 2.81 - - 17 2.81

Fire safety - - 41 6.76 41 6.76

HVAC 101 16.52 - - 101 16.52

Computers, equipment, misc. 42 6.94 58 9.54 100 16.48

Elevators - - - - - -

Exterior painting - - - - - -

Leasing office and other common amenities - - 46 7.68 46 7.68

Major structural projects - - 150 24.49 150 24.49

Cabinets and counter top upgrades - - 8 1.26 8 1.26

Landscaping and fencing - - - - - -

Parking lot - - 5 0.88 5 0.88

Signage and sanitation - - 14 2.17 14 2.17

Unit furniture 127 20.72 - - 127 20.72

Totals $ 543 $ 89.10 $ 322 $52.78 $865 $141.88

Grocery-Anchored Shopping Center Portfolio

As of September 30, 2020, our grocery-anchored shopping center portfolio consisted of the following properties:



PercentGrocery anchor Property name Location Year builtGLA ^(1) leased tenant



Castleberry-Southard Atlanta, GA 2006 80,018 100.0% Publix

Cherokee Plaza Atlanta, GA 1958 102,864 100.0%Kroger

Governors Towne Square Atlanta, GA 2004 68,658 95.9 % Publix

Lakeland Plaza Atlanta, GA 1990 301,711 95.3 %Sprouts

Powder Springs Atlanta, GA 1999 77,853 92.5 % Publix

Rockbridge Village Atlanta, GA 2005 102,432 84.4 % Kroger

Roswell Wieuca Shopping Center Atlanta, GA 2007 74,370 100.0% The Fresh Market

Royal Lakes Marketplace Atlanta, GA 2008 119,493 93.9 % Kroger

Sandy Plains Exchange Atlanta, GA 1997 72,784 93.8 %Publix

Summit Point Atlanta, GA 2004 111,970 88.2 % Publix

Thompson Bridge Commons Atlanta, GA 2001 92,587 97.5 %Kroger

Wade Green Village Atlanta, GA 1993 74,978 88.7 % Publix

Woodmont Village Atlanta, GA 2002 85,639 97.2 %Kroger

Woodstock Crossing Atlanta, GA 1994 66,122 100.0% Kroger

East Gate Shopping Center Augusta, GA 1995 75,716 92.2 % Publix

Fury's Ferry Augusta, GA 1996 70,458 98.0 % Publix

Parkway Centre Columbus, GA 1999 53,088 95.1 % Publix

Greensboro Village Nashville, TN 2005 70,203 98.3 % Publix

Spring Hill Plaza Nashville, TN 2005 66,693 100.0% Publix

Parkway Town Centre Nashville, TN 2005 65,587 100.0% Publix

The Market at Salem Cove Nashville, TN 2010 62,356 100.0% Publix

The Market at Victory Village Nashville, TN 2007 71,300 97.9 % Publix

The Overlook at Hamilton Place Chattanooga, TN 1992 213,095 99.3 % The Fresh Market

Shoppes of Parkland Miami-Ft. Lauderdale, FL 2000 145,720 100.0%BJ's Wholesale Club

Crossroads Market Naples, FL 1993 126,895 100.0%Publix

Neapolitan Way ^(5) Naples, FL 1985 137,580 90.6 %Publix

Berry Town Center Orlando, FL 2003 99,441 84.2 %Publix

Deltona Landings Orlando, FL 1999 59,966 98.4 % Publix

University Palms Orlando, FL 1993 99,172 98.9 %Publix

Disston Plaza Tampa-St. Petersburg, FL 1954 129,150 97.5 %Publix

Barclay Crossing Tampa, FL 1998 54,958 100.0% Publix

Polo Grounds Mall West Palm Beach, FL 1966 130,285 100.0%Publix

Kingwood Glen Houston, TX 1998 103,397 97.1 % Kroger

Independence Square Dallas, TX 1977 140,218 86.1 % Tom Thumb

Midway Market Dallas, TX 2002 85,599 90.3 %Kroger

Oak Park Village San Antonio, TX 1970 64,855 100.0%H.E.B.

Irmo Station Columbia, SC 1980 99,384 90.8 %Kroger

Rosewood Shopping Center Columbia, SC 2002 36,887 93.5 % Publix

Anderson Central Greenville Spartanburg, SC1999 223,211 93.3 % Walmart

Fairview Market Greenville Spartanburg, SC1998 46,303 97.0 %Aldi

Brawley Commons Charlotte, NC 1997 122,028 99.2 % Publix

West Town Market Charlotte, NC 2004 67,883 97.7 %Harris Teeter

Heritage Station Raleigh, NC 2004 72,946 100.0%Harris Teeter

Maynard Crossing Raleigh, NC 1996 122,781 92.7 %Harris Teeter

Wakefield Crossing Raleigh, NC 2001 75,927 98.2 %Food Lion

Southgate Village Birmingham, AL 1988 75,092 96.8 % Publix

Hollymead Town Center Charlottesville, VA 2005 158,807 92.8 %Harris Teeter

Free State Shopping Center Washington, DC 1970 264,152 97.3 %Giant



4,922,612 95.6 %

Redevelopment properties:

Champions Village Houston, TX 1973 383,346 78.8 %Randalls

Sweetgrass Corner Charleston, SC 1999 89,124 29.1 %(2)

Conway Plaza Orlando, FL 1966 117,705 83.4 %Publix

Hanover Center ^(4) Wilmington, NC 1954 305,346 93.5 %Harris Teeter

Gayton Crossing Richmond, VA 1983 158,316 ^ 78.7 %Kroger (3)

Fairfield Shopping Center ^(4)Virginia Beach, VA 1985 231,829 86.5 %Food Lion



1,285,666 80.6 %

Grand total/weighted average 6,208,278 92.5 %

^ Gross leasable area, or GLA, represents the total amount of property (1)square footage that can be leased to tenants.

^ Bi-Lo (the former anchor tenant) had extended their term through April (2)30, 2019 and had no further right or option to extend their lease.

^ The GLA figure shown excludes the GLA of the Kroger store, which is owned(3)by others.

^ Property is owned through a consolidated joint venture. (4)

^ Investment in an unconsolidated joint venture that is not prorated for (5)our ownership percentage.

As of September 30, 2020, our grocery-anchored shopping center portfolio was 92.5% leased. We define percent leased as the percentage of gross leasable area that is leased, including non-cancelable lease agreements that have been signed which have not yet commenced. This metric is used by management to gauge the extent to which our grocery-anchored shopping centers are delivering their total potential rental and other revenues.

Details regarding lease expirations (assuming no exercises of tenant renewal options) within our grocery-anchored shopping center portfolio as of September 30, 2020 were:



Totals

Number of Leased Percent of leases GLA leased GLA



Month to 15 26,829 0.5 % month

2020 28 65,785 1.2 %

2021 163 543,700 9.5 %

2022 179 623,975 10.9 %

2023 141 675,024 11.8 %

2024 126 1,157,997 20.2 %

2025 115 961,966 16.8 %

2026 37 311,271 5.4 %

2027 29 204,881 3.6 %

2028 29 359,151 6.3 %

2029 25 151,566 2.6 %

2030 + 33 658,168 11.2 %



Total 920 5,740,313 5740313 100.0 %

The Company's grocery-anchored shopping center portfolio contained the following anchor tenants as of September 30, 2020:



Percent of Tenant GLA total GLA

Publix 1,179,030 19.0%

Kroger 581,593 9.4%

Harris Teeter 273,273 4.4%

Wal-Mart 183,211 3.0%

BJ's Wholesale Club 108,532 1.7%

Food Lion 76,523 1.2%

Giant 73,149 1.2%

Randall's 61,604 1.0%

H.E.B 54,844 0.9%

Tom Thumb 43,600 0.7%

The Fresh Market 43,321 0.7%

Sprouts 29,855 0.5%

Aldi 23,622 0.4%



Total 2,732,157 44.1%



The Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 will present income statements of New Market Properties, LLC within the Results of Operations section of Management's Discussion and Analysis of Financial Condition and Results of Operations.

Second-generation capital expenditures within our grocery-anchored shopping center portfolio by property for the third quarter 2020 totaled approximately $1.1 million. Second-generation capital expenditures exclude those expenditures made in our grocery-anchored shopping center and office building portfolios (i) to lease space to "first generation" tenants (i.e. leasing capital for existing vacancies and known move-outs at the time of acquisition), (ii) to bring recently acquired properties up to our ownership standards, and (iii) for property redevelopments and repositioning.

Office Building Portfolio



As of September 30, 2020, our office building portfolio consisted of the following properties:



Property Name Location GLA Percent leased

Three Ravinia Atlanta, GA 814,000 95 %

150 Fayetteville Raleigh, NC 560,000 91 %

Capitol Towers Charlotte, NC 479,000 98 %

CAPTRUST Tower Raleigh, NC 300,000 99 %

Westridge at La CanteraSan Antonio, TX 258,000 100 %

Morrocroft Centre Charlotte, NC 291,000 92 %

Armour Yards Atlanta, GA 187,000 91 %

Brookwood Center Birmingham, AL 169,000 100 %

Galleria 75 Atlanta, GA 111,000 97 %



Total/Average 3,169,000 96 %



The Company's office building portfolio includes the following significant tenants:



Rentable square Percent of Annual Base footage Annual BaseRent (in Rent thousands)

InterContinental Hotels Group520,000 14.2 %$12,276

Albemarle 162,000 6.7 %5,727

CapFinancial 105,000 4.3 %3,733

USAA 129,000 3.7 %3,196

Vericast 129,000 3.4 %2,953



Total 1,045,000 32.3 %$27,885

The Company defines Annual Base Rent as the current monthly base rent annualized under the respective leases.



The Company's leased square footage of its office building portfolio expires according to the following schedule:



Office building portfolio

Percent of

Year of lease Rented square rented expiration feet square feet

2020 48,000 1.6 %

2021 224,000 7.5 %

2022 112,000 3.7 %

2023 127,000 4.3 %

2024 268,000 9.0 %

2025 255,000 8.5 %

2026 266,000 8.9 %

2027 328,000 11.0 %

2028 239,000 8.0 %

2029 57,000 1.9 %

2030+ 1,064,000 35.6 %



Total 2,988,000 100.0 %

The Company recognized second-generation capital expenditures within its office building portfolio of approximately $211,000 during the third quarter 2020.

Definitions of Non-GAAP Measures

We disclose FFO, Core FFO, AFFO and NOI, each of which meet the definition of a "non-GAAP financial measure", as set forth in Item 10(e) of Regulation S-K promulgated by the SEC. As a result we are required to include in this filing a statement of why the Company believes that presentation of these measures provides useful information to investors. The non-GAAP measures of FFO, Core FFO, AFFO and NOI should be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our performance, and we believe that to understand our performance further FFO, Core FFO, AFFO and NOI should be compared with our reported net income or net loss and considered in addition to cash flows in accordance with GAAP, as presented in our consolidated financial statements. FFO, Core FFO and AFFO are not considered measures of liquidity and are not alternatives to measures calculated under GAAP.

Funds From Operations Attributable to Common Stockholders and Unitholders ("FFO")

FFO is one of the most commonly utilized Non-GAAP measures currently in practice. In its 2002 "White Paper on Funds From Operations," which was restated in 2018, the National Association of Real Estate Investment Trusts, or NAREIT, standardized the definition of how Net income/loss should be adjusted to arrive at FFO, in the interests of uniformity and comparability. We have adopted the NAREIT definition for computing FFO as a meaningful supplemental gauge of our operating results, and as is most often presented by other REIT industry participants.

The NAREIT definition of FFO (and the one reported by the Company) is:

Net income/loss, excluding:

* depreciation and amortization related to real estate; * gains and losses from the sale of certain real estate assets; * gains and losses from change in control and * impairment writedowns of certain real estate assets and investments in entities where the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity.

Not all companies necessarily utilize the standardized NAREIT definition of FFO, so caution should be taken in comparing the Company's reported FFO results to those of other companies. The Company's FFO results are comparable to the FFO results of other companies that follow the NAREIT definition of FFO and report these figures on that basis. FFO is a non-GAAP measure that is reconciled to its most comparable GAAP measure, net income/loss available to common stockholders.

Core Funds From Operations Attributable to Common Stockholders and Unitholders ("Core FFO")

The Company makes adjustments to FFO to remove costs incurred and revenues recorded that are singular in nature and outside the normal operations of the Company and portray its primary operational results. The Company calculates Core FFO as:

FFO, plus:

* acquisition and pursuit (dead deal) costs; * Loan cost amortization on acquisition term notes and loan coordination fees; * losses on debt extinguishments or refinancing costs; * internalization costs; * expenses incurred on the potential call of preferred stock; * deemed dividends for redemptions of and non-cash dividends on preferred stock; * Expenses related to the COVID-19 global pandemic; and

Less:

* earnest money forfeitures by prospective asset purchasers.

Core FFO figures reported by us may not be comparable to Core FFO figures reported by other companies. We utilize Core FFO as a supplemental measure of the operating performance of our portfolio of real estate assets. We believe Core FFO is useful to investors as a supplemental gauge of our operating performance and may be useful in comparing our operating performance with other real estate companies. Since our calculation of Core FFO removes costs incurred and revenues recorded that are often singular in nature and outside the normal operations of the Company, we believe it improves comparability to investors in assessing our core operating results across periods. Core FFO is a non-GAAP measure that is reconciled to its most comparable GAAP measure, net income/loss available to common stockholders.

Adjusted Funds From Operations Attributable to Common Stockholders and Unitholders ("AFFO")

AFFO makes further adjustments to Core FFO results in order to arrive at a more refined measure of operating and financial performance. There is no industry standard definition of AFFO and practice is divergent across the industry. The Company calculates AFFO as:

Core FFO, plus:

* non-cash equity compensation to directors and executives; * amortization of loan closing costs; * weather-related property operating losses; * amortization of loan coordination fees paid to the Manager; * depreciation and amortization of non-real estate assets; * non-cash (income) expense for current expected credit losses; * net loan origination fees received; * accrued interest income received; * cash received for purchase option terminations; * non-operating miscellaneous revenues; * non-cash dividends on Series M Preferred Stock and mShares; and * amortization of lease inducements;

Less:

* non-cash loan interest income; * cash paid for loan closing costs; * amortization of acquired real estate intangible liabilities; * amortization of straight line rent adjustments and deferred revenues; and * normally-recurring capital expenditures and capitalized second generation leasing costs.

AFFO figures reported by us may not be comparable to those AFFO figures reported by other companies. We utilize AFFO as another measure of the operating performance of our portfolio of real estate assets. We believe AFFO is useful to investors as a supplemental gauge of our operating performance and may be useful in comparing our operating performance with other real estate companies. Since our calculation of AFFO removes other significant non-cash charges and revenues and other costs which are not representative of our ongoing business operations, we believe it improves comparability to investors in assessing our core operating results across periods. AFFO is a non-GAAP measure that is reconciled to its most comparable GAAP measure, net income/loss available to common stockholders. FFO, Core FFO and AFFO are not considered measures of liquidity and are not alternatives to measures calculated under GAAP.

Multifamily Communities' Same-Store Net Operating Income ("NOI")

We use same store net operating income as an operational metric for our same-store communities, enabling comparisons of those properties' operating results between the current reporting period and the prior year comparative period. We define our population of same-store communities as those that are stabilized and that have been owned for at least 15 full months, as of the end of the first quarter of each year, and exclude the operating results of properties for which construction of adjacent phases has commenced, and properties which are undergoing significant capital projects, have sustained significant casualty losses, or are being marketed for sale as of the end of the reporting period. We define net operating income as rental and other property revenues, less total property and maintenance expenses, property management fees, real estate taxes, general and administrative expenses, and property insurance. We believe that net operating income is an important supplemental measure of operating performance for REITs because it provides measures of core operations, rather than factoring in depreciation and amortization, financing costs, acquisition costs, and other corporate expenses. Net operating income is a widely utilized measure of comparative operating performance in the REIT industry, but is not a substitute for the most comparable GAAP-compliant measure, net income/loss.

About Preferred Apartment Communities, Inc.

Preferred Apartment Communities, Inc. (NYSE: APTS) is a real estate investment trust engaged primarily in the ownership and operation of Class A multifamily properties, with select investments in grocery anchored shopping centers, Class A office buildings, and student housing properties. Preferred Apartment Communities' investment objective is to generate attractive, stable returns for stockholders by investing in income-producing properties and acquiring or originating real estate loans for multifamily properties. As of September 30, 2020, the Company owned or was invested in 125 properties in 15 states, predominantly in the Southeast region of the United States.

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