PR Newswire | Aug 5, 2021 08:38AM EDT

08/05 07:30 CDT

Bluerock Residential Growth REIT Announces Second Quarter 2021 Results- Quarterly Portfolio Lease Rate Growth of 10.3% -- July Portfolio Lease Rate Growth of 15.3% -- Same Store Rental Revenues Increased 6.4% - NEW YORK, Aug. 5, 2021

NEW YORK, Aug. 5, 2021 /PRNewswire/ -- Bluerock Residential Growth REIT, Inc. (NYSE American: BRG) ("the Company"), an owner of highly amenitized multifamily apartment communities, announced today its financial results for the quarter ended June 30, 2021.

"We are very pleased with our operating results led by rapid acceleration of rent growth throughout the quarter, demonstrating the high quality and favorable locations of our communities," said Ramin Kamfar, Company Chairman and CEO. "In addition, as anticipated in our 2021 guidance, our investment pace increased in the second quarter, including our first investments in single family homes. Our renovation pace also returned to pre-COVID levels, as we delivered almost 250 unit upgrades, with an average ROI of 24%. We are continuing to effectively source attractive investment opportunities and accretively put our capital to work."

Second Quarter Highlights

Financial Results

* Net loss attributable to common stockholders for the second quarter of 2021 was ($5.4) million or ($0.21) per diluted share, as compared to net income attributable to common stockholders of $15.1 million or $0.61 per diluted share in the prior year period. * Core funds from operations attributable to common stockholders and unit holders ("CFFO") was $6.0 million, or $0.16 per diluted share, compared to $5.1 million, or $0.15 per diluted share, in the prior year period. This year's results continue to be impacted by additional capital on the balance sheet.

Portfolio Performance

* Rental revenues grew 4.2% to $49.7 million from $47.7 million in the prior year period. * Property Net Operating Income ("NOI") increased 5.8% to $30.8 million from $29.1 million in the prior year period. * Same store revenues grew 6.4% and same store NOI increased 6.5%, as compared to the prior year period. * Blended lease rate growth was 10.3%, up 680 basis points on a sequential quarter-over-quarter basis. * June 2021 average lease growth accelerated to 12.0%, with renewals at 6.5% and new leases at 17.9%. Average lease growth accelerated to 15.3% in July. * Portfolio occupancy was 96.2% at June 30, 2021, up 90 basis points from the prior year. * Property operating margins improved 90 basis points to 62.0% compared to 61.1% in the prior year period. * Same store average rent increased 3.0% and same store average occupancy expanded 80 basis points, as compared to the prior year period.

Portfolio Activity

* Consolidated real estate investments, at cost, were approximately $2.2 billion. * Acquired three operating properties totaling 506 units for $118 million. * Sold two operating assets and two development properties for $174 million with net proceeds of $39 million. * Invested $26 million in preferred equity in three new stabilized properties, and funded $8 million for five existing preferred equity and mezzanine loan investments. Committed $32 million for three new preferred equity investments. * Increased renovation pace back to pre-COVID levels, completing 248 value-add unit upgrades during the quarter achieving an average 24.4% ROI through an average monthly rent premium of $144 per unit.

Balance Sheet and Market Activity

* $244.5 million of unrestricted cash and availability under revolving credit facilities and $1.4 billion of indebtedness outstanding as of June 30, 2021. * Paid quarterly dividend of $0.1625 in cash per share of common stock. * Raised a quarterly record of $119 million through the continuous registered Series T Preferred Stock offering with the issuance of 4.8 million shares at $25.00 per share. * Redeemed 80,316 shares of Series B Preferred Stock through the issuance of 8,262,685 shares of Class A common stock at an average price of $9.72 per share. * Repurchased 4,605,598 shares of Class A common stock during the quarter at an average price of $9.79 per share.

Included later in this release are definitions of NOI, CFFO and other Non-GAAP financial measures and reconciliations of such measures to their most comparable financial measures as calculated and presented under GAAP.

Second Quarter 2021 Financial Results

Net loss attributable to common stockholders for the second quarter of 2021 was ($5.4) million, compared to net income attributable to common stockholders of $15.1 million in the prior year period. Net income in 2021 was impacted by two asset sales generating $19 million in gain on sale of real estate investments compared to $58 million in the second quarter of 2020. Net (loss) income attributable to common stockholders included non-cash expenses of $22.4 million or $0.80 per share in the second quarter of 2021 compared to $19.0 million or $0.79 per share for the prior year period.

CFFO for the second quarter of 2021 was $6.0 million, or $0.16 per diluted share, compared to $5.1 million, or $0.15 per diluted share, in the prior year period. CFFO was positively impacted by an increase in property NOI of $1.7 million and a reduction in interest expense of $0.2 million. This was primarily offset by a year-over-year reduction of $0.2 million in interest income from mezzanine loan and ground lease investments, $0.5 million in preferred returns, and preferred stock dividend increase of $0.1 million.

Total Portfolio Performance

$ In thousands, except average rental rates 2Q21 2Q20 Variance YTD21 YTD20 Variance

Total Revenues ^(1) $ 53,835 $ 53,033 1.5% $109,638 $ 109,274 0.3%

Property Operating Expenses $ 18,909 $ 18,571 1.8% $ 38,841 $ 37,870 2.6%

NOI $ 30,812 $ 29,124 5.8% $ 61,962 $ 60,177 3.0%

Operating Margin 62.0% 61.1% 90 bps 61.5% 61.4% 10 bps

Average Occupancy Percentage 95.8% 94.4% 140 bps 95.5% 94.3% 120 bps

Average Rental Rate $ 1,351 $ 1,330 1.6% $ 1,333 $ 1,330 0.2%

^(1) Including interest income from related parties

For the second quarter of 2021, property revenues increased by 4.2% compared to the same prior year period. Total portfolio NOI was $30.8 million, an increase of $1.7 million, or 5.8%, compared to the same period in the prior year. Property NOI margins were 62.0% for the quarter, compared to 61.1% in the prior year quarter.

Same Store Portfolio Performance

$ In thousands, except average rental rates 2Q21 2Q20 Variance YTD21 YTD20 Variance

Revenues $ 38,631 $ 36,306 6.4% $ 74,309 $ 71,345 4.2%

Property Operating Expenses $ 14,559 $ 13,700 6.3% $ 28,267 $ 26,814 5.4%

NOI $ 24,072 $ 22,606 6.5% $ 46,042 $ 44,531 3.4%

Operating Margin 62.3% 62.3% 0 bps 62.0% 62.4% (40) bps

Average Occupancy Percentage 95.7% 94.9% 80 bps 95.6% 94.5% 110 bps

Average Rental Rate $ 1,355 $ 1,315 3.0% $ 1,344 $ 1,318 2.0%

The Company's same store portfolio for the quarter ended June 30, 2021 included 25 properties. For the second quarter of 2021, same store NOI was $24.1 million, an increase of $1.5 million, or 6.5%, compared to the 2020 period. Same store property revenues grew by 6.4% compared to the 2020 period, primarily driven by an 80-basis point increase in occupancy and 3.0% increase in average rental rates; of the Company's 25 same store properties, 21 recognized rental rate increases and 18 recognized occupancy increases during the period. In addition, bad debt expense improved $0.7 million, while ancillary income, such as termination fees and late fees, increased $0.4 million.

Same store expenses increased 6.3%, or $0.9 million, partially due to non-controllable real estate tax increase of $0.2 million and insurance expense increase of $0.2 million due to industrywide multifamily insurance price increases. The remaining increase was due to a $0.3 million increase in discretionary seasonal maintenance as discretionary spending was limited in the prior year due to COVID-19 and an increase of $0.2 million in administrative and marketing expenses.

Renovation Activity

The Company completed 248 value-add unit upgrades during the second quarter of 2021 achieving an average 24.4% ROI through an average monthly rent premium of $144 per unit. Since inception, the Company has completed 3,275 value-add unit upgrades at an average cost of $6,065 per unit and achieved an average monthly rental rate increase of $119 per unit, equating to an average 23.6% ROI on all unit upgrades leased as of June 30, 2021. The Company has identified approximately 4,158 remaining units within the existing portfolio for value-add upgrades with similar projected economics to the completed renovations.

Portfolio Activity

The following activities were completed during the second quarter:

* On April 12, 2021, the Company made a $10.7 million preferred equity investment in the operating partnership of Peak Housing, a private REIT invested in a portfolio of 474 single-family homes located throughout Texas. * On April 14, 2021, the Company acquired a 95% interest in an 80-unit apartment community located in Olympia, Washington, known as Yauger Park. The total purchase price was $24.5 million. * On April 26, 2021, the Company sold Plantation Park for a gross sales price of $32 million and net proceeds to the Company of $2.7 million. * On June 4, 2021, the Company acquired an 83% interest in a 150-unit apartment community located in Concord, North Carolina known as Wayford at Concord. The total purchase price was $44 million. The Company's previous preferred investment of $7 million was redeemed in conjunction with the purchase. * On June 10, 2021, the Company sold The Reserve at Palmer Ranch for $58 million to the Strategic Portfolio partner for net proceeds to the Company of $16.6 million. With the addition of the property to the Strategic Portfolio, the Company made an $11 million preferred investment in the Strategic Portfolio. * On June 17, 2021, the Company acquired a 100% interest in a 276-unit apartment community located in Raleigh, North Carolina, known as Windsor Falls, for a total purchase price of $49 million. * Entered into three preferred equity commitments to invest $32 million in two multifamily and one single family home development projects located in Houston and Willow Park, Texas and Charlotte, North Carolina. * On June 25, 2021, the Company made a $4 million preferred equity investment in a stabilized asset with 372-units known as Deercross, located in Indianapolis, Indiana. * On June 29, 2021, Vickers Historic Roswell was sold and the Company's mezzanine loan and accrued interest of $12.9 million were paid off.

The Company completed the following activity subsequent to June 30, 2021:

* On July 7, 2021, the Company sold Park & Kingston and The District at Scottsdale for gross sales prices of $45 million and $151 million, respectively, with net proceeds to the Company of $24.7 million and $69.5 million, respectively. * In July 2021, the Company made $19 million of preferred equity investments and provided a bridge loan of $7 million for properties located in Corpus Christi and Dallas, Texas, and Dawsonville, Georgia. * Entered into two preferred equity commitments to invest $31 million in multifamily development projects located in San Antonio, Texas and Orange City, Florida.

Dividend

The Board of Directors has authorized, and the Company has declared, quarterly cash dividends as reflected in the following table.

Payable to Declaration Date stockholders Amount Date Paid or of record as of Payable

Class A Common Stock

March 12, 2021 March 25, 2021 $0.162500 April 5, 2021

June 11, 2021 June 25, 2021 $0.162500 July 2, 2021

Class C Common Stock

March 12, 2021 March 25, 2021 $0.162500 April 5, 2021

June 11, 2021 June 25, 2021 $0.162500 July 2, 2021

Series B Preferred Stock

January 13, 2021 March 25, 2021 $5.00 April 5, 2021

April 12, 2021 April 23, 2021 $5.00 May 5, 2021

April 12, 2021 May 25, 2021 $5.00 June 4, 2021

April 12, 2021 June 25, 2021 $5.00 July 2, 2021

Series C Preferred Stock

March 12, 2021 March 25, 2021 $0.4765625April 5, 2021

June 11, 2021 June 25, 2021 $0.4765625July 2, 2021

Series D Preferred Stock

March 12, 2021 March 25, 2021 $0.4453125April 5, 2021

June 11, 2021 June 25, 2021 $0.4453125July 2, 2021

Series T Preferred Stock ^ (1)

January 13, 2021 March 25, 2021 $0.128125 April 5, 2021

April 12, 2021 April 23, 2021 $0.128125 May 5, 2021

April 12, 2021 May 25, 2021 $0.128125 June 4, 2021

April 12, 2021 June 25, 2021 $0.128125 July 2, 2021



Shares of newly issued Series T Preferred Stock that are held only a ^ portion of the applicable monthly dividend period will receive a prorated (1)dividend based on the actual number of days in the applicable dividend period during which each such share of Series T Preferred Stock was outstanding.



2021 Guidance

The Company is reaffirming its prior 2021 CFFO guidance. Based on the Company's current outlook and market conditions, the Company anticipates 2021 CFFO in the range of $0.65 to $0.70 per share. For additional guidance details underlying earnings guidance, please see page 34 of Company's Second Quarter 2021 Earnings Supplement available under the Investors section on the Company's website (www.bluerockresidential.com).

Conference Call

All interested parties can listen to the live conference call at 11:00 AM ET on Thursday, August 5, 2021 by dialing +1 (866) 843-0890 within the U.S., or +1 (412) 317-6597, and requesting the "Bluerock Residential Conference."

For those who are not available to listen to the live call, the conference call will be available for replay on the Company's website two hours after the call concludes, and will remain available until September 5, 2021 at https://services.choruscall.com/mediaframe/webcast.html?webcastid=KjK0qgS7, as well as by dialing +1 (877) 344-7529 in the U.S., or +1 (412) 317-0088 internationally, and requesting conference number 10158807.

The full text of this Earnings Release and additional Supplemental Information is available in the Investors section on the Company's website at http://www.bluerockresidential.com.

AboutBluerockResidentialGrowthREIT,Inc.

Bluerock Residential Growth REIT, Inc. (NYSE American: BRG) is a real estate investment trust that focuses on developing and acquiring a diversified portfolio of primarily affordable Class A highly amenitized live/work/play apartment communities in demographically attractive knowledge economy growth markets to appeal to the renter by choice. The Company's objective is to generate value through off-market/relationship-based transactions and, at the asset level, through value add improvements to properties and operations. BRG has elected to be taxed as a real estate investment trust (REIT) for U.S. federal income tax purposes.

For more information, please visit the Company's website at www.bluerockresidential.com.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements are based upon the Company's present expectations, but these statements are not guaranteed to occur. Furthermore, the Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. Investors should not place undue reliance upon forward-looking statements. Although the Company believes that the expectations reflected in these forward-looking statements are based on reasonable assumptions, the Company's actual results and performance could differ materially from those set forth in these forward-looking statements due to numerous factors. Currently, one of the most significant factors is the potential adverse effect of the COVID-19 pandemic on the financial condition, results of operations, cash flows and performance of the Company and its tenants, partners and employees, as well as the real estate market and the global economy and financial markets. The extent to which COVID-19 impacts the Company and its tenants, partners and employees will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact (including governmental actions that may vary by jurisdiction, such as mandated business closing; stay-at-home orders; limits on group activity; and actions to protect residential tenants from eviction), and the direct and indirect economic effects of the pandemic and containment measures, including national and local employment rates and the corresponding impact on the Company's tenants' ability to pay their rent on time or at all, among others. For further discussion of the factors that could affect outcomes, please refer to the risk factors set forth in Item 1A of the Company's Annual Report on Form 10-K filed by the Company with the U.S. Securities and Exchange Commission ("SEC") on February 23, 2021, and subsequent filings by the Company with the SEC. We claim the safe harbor protection for forward looking statements contained in the Private Securities Litigation Reform Act of 1995.

Portfolio Summary

The following is a summary of our operating real estate and mezzanine/preferred/ground lease investments as of June 30, 2021:

Multifamily Community Name Location Number of Units Year Built/ Ownership Interest Average % Renovated ^(1) Rent ^(2) Occupied ^(3)

Consolidated Operating Properties:

ARIUM Glenridge Atlanta, GA 480 1990 90% $ 1,346 95.8%

ARIUM Westside Atlanta, GA 336 2008 90% 1,509 93.8%

Ashford Belmar Lakewood, CO 512 1988/1993 85% 1,691 96.9%

Avenue 25 Phoenix, AZ 254 2013 100% 1,286 94.1%

Burano Hunter's Creek, formerly ARIUM Hunter's Creek Orlando, FL 532 1999 100% 1,427 96.8%

Carrington at Perimeter Park Morrisville, NC 266 2007 100% 1,291 96.6%

Chattahoochee Ridge Atlanta, GA 358 1996 90% 1,413 96.6%

Chevy Chase Austin, TX 320 1971 92% 983 97.8%

Cielo on Gilbert Mesa, AZ 432 1985 90% 1,123 97.2%

Citrus Tower Orlando, FL 336 2006 97% 1,381 96.1%

Denim Scottsdale, AZ 645 1979 100% 1,288 95.7%

Elan Austin, TX 270 2007 100% 1,158 93.0%

Element Las Vegas, NV 200 1995 100% 1,306 97.0%

Falls at Forsyth Cumming, GA 356 2019 100% 1,439 97.8%

Gulfshore Apartment Homes Naples, FL 368 2016 100% 1,298 97.6%

Navigator Villas Pasco, WA 176 2013 90% 1,173 99.4%

Outlook at Greystone Birmingham, AL 300 2007 100% 1,118 95.3%

Park & Kingston Charlotte, NC 168 2015 100% 1,321 94.6%

Pine Lakes Preserve Port St. Lucie, FL 320 2003 100% 1,419 97.8%

Providence Trail Mount Juliet, TN 334 2007 100% 1,304 94.6%

Roswell City Walk Roswell, GA 320 2015 98% 1,625 97.8%

Sands Parc Daytona Beach, FL 264 2017 100% 1,370 96.6%

The Brodie Austin, TX 324 2001 100% 1,353 95.7%

The Debra Metrowest, formerly ARIUM Metrowest Orlando, FL 510 2001 100% 1,423 95.7%

The District at Scottsdale Scottsdale, AZ 332 2018 99% 1,826 94.0%

The Links at Plum Creek Castle Rock, CO 264 2000 88% 1,489 97.3%

The Mills Greenville, SC 304 2013 100% 1,061 97.0%

The Preserve at Henderson Beach Destin, FL 340 2009 100% 1,548 95.9%

The Sanctuary Las Vegas, NV 320 1988 100% 1,169 96.3%

Veranda at Centerfield Houston, TX 400 1999 93% 1,034 96.5%

Villages of Cypress Creek Houston, TX 384 2001 80% 1,203 94.5%

Wayford at Concord Concord, NC 150 2019 83% 1,830 95.3%

Wesley Village Charlotte, NC 301 2010 100% 1,400 96.0%

Windsor Falls Raleigh, NC 276 1994 100% 1,102 97.5%

Yauger Park Villas Olympia, WA 80 2010 95% 1,982 96.3%

Total/Average Consolidated Operating Properties 11,532 $ 1,350 ^(6) 96.2%

Mezzanine/Preferred/Ground Lease Investments:

Alexan CityCentre Houston, TX 340 $ 1,583

Avondale Hills Decatur, GA 240 1,538 ^(4)

Belmont Crossing Smyrna, GA 192 888

Deercross Indianapolis, IN 372 761

Deerwood Apartments Houston, TX 330 1,590 ^(4)

Domain at The One Forty Garland, TX 299 1,363

Encore Chandler Chandler, AZ 208 1,457 ^(4)

Georgetown Crossing Savannah, GA 168 1,036

Hunter's Pointe Pensacola, FL 204 992

Mira Vista Austin, TX 200 1,115

Motif Fort Lauderdale, FL 385 2,352 ^(4)

Park on the Square Pensacola, FL 240 1,159

Peak Housing ^(5) Various, Texas 474 876

Reunion Apartments Orlando, FL 280 1,366 ^(4)

Sierra Terrace Atlanta, GA 135 1,274

Sierra Village Atlanta, GA 154 1,224

The Commons Jacksonville, FL 328 914

The Hartley at Blue Hill, formerly The Park at Chapel Hill Chapel Hill, NC 414 1,599 ^(4)

The Reserve at Palmer Ranch Sarasota, FL 320 1,417

The Riley Richardson, TX 262 1,455

Thornton Flats Austin, TX 104 1,576

Water's Edge Pensacola, FL 184 1,168

Wayford at Innovation Park Charlotte, NC 210 1,994 ^(4)

Willow Park ^(5) Willow Park, TX 46 2,362 ^(4)

Zoey Austin, TX 307 1,762 ^(4)

Total/Average Mezzanine/Preferred/Ground Lease Investments 6,396 $ 1,368 ^(7)

Total/Average Portfolio 17,928 $ 1,357 ^(8)

^(1) Represents date of last significant renovation or year built if no renovations.

^(2) Represents the average effective monthly rent per occupied unit for the three months ended June 30, 2021.

^(3) Percent occupied is calculated as (i) the number of units occupied as of June 30, 2021, divided by (ii) total number of units, expressed as a percentage.

^(4) Represents the average pro forma effective monthly rent per occupied unit for all expected units upon stabilization.

Peak Housing and Willow Park are preferred equity investments in portfolios of^(5) single-family residential homes. The actual/planned number of units shown represents the number of single-family residential homes within each portfolio.

^(6) The average effective monthly rent including sold properties was $1,351 for the three months ended June 30, 2021.

^(7) The average effective monthly rent including sold properties was $1,399 for the three months ended June 30, 2021.

^(8) The average effective monthly rent including sold properties was $1,368 for the three months ended June 30, 2021.

Consolidated Statement of OperationsFor the Three and Six Months Ended June 30, 2021 and 2020(Unaudited and dollars in thousands except for share and per share data)

Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020

Revenues

Rental and other $ 49,721 $ 47,695 $ 100,803 $ 98,047property revenues

Interest incomefrom mezzanine loan 4,114 5,338 8,835 11,227and ground leaseinvestments

Total revenues 53,835 53,033 109,638 109,274

Expenses

Property operating 18,909 18,571 38,841 37,870

Property management 1,247 1,194 2,528 2,488fees

General and 6,595 5,303 13,240 11,674administrative

Acquisition and 3 423 15 1,691pursuit costs

Weather-related - - 400 -losses, net

Depreciation and 19,926 20,067 40,250 40,990amortization

Total expenses 46,680 45,558 95,274 94,713

Operating income 7,155 7,475 14,364 14,561

Other income(expense)

Other income 57 19 209 59

Preferred returnson unconsolidated 2,329 2,834 4,616 5,249real estate jointventures

Provision for (26) - (567) -credit losses

Gain on sale ofreal estate 19,429 57,843 88,342 58,096investments

Loss onextinguishment of (647) (13,985) (3,687) (13,985)debt and debtmodification costs

Interest expense, (13,460) (13,859) (27,294) (28,774)net

Total other income 7,682 32,852 61,619 20,645

Net income 14,837 40,327 75,983 35,206

Preferred stock (14,367) (14,237) (28,984) (27,784)dividends

Preferred stock (7,290) (3,602) (14,312) (7,527)accretion

Net (loss) incomeattributable tononcontrollinginterests

Operating (1,978) 5,413 8,182 (409)Partnership units

Partially-owned 587 1,985 6,353 1,707properties

Net (loss) incomeattributable to (1,391) 7,398 14,535 1,298noncontrollinginterests

Net (loss) incomeattributable to $ (5,429) $ 15,090 $ 18,152 $ (1,403)common stockholders

Net (loss) incomeper common share - $ (0.21) $ 0.61 $ 0.68 $ (0.09)Basic

Net (loss) incomeper common share - $ (0.21) $ 0.61 $ 0.68 $ (0.09)Diluted

Weighted averagebasic common shares 28,129,862 24,307,147 25,623,537 24,197,479outstanding

Weighted averagediluted common 28,129,862 24,345,034 25,688,530 24,197,479shares outstanding

Consolidated Balance SheetsSecond Quarter 2021(Unaudited and dollars in thousands except for share and per share amounts)

June 30, December 31, 2021 2020

ASSETS

Net Real Estate Investments

Land $ 251,691 $ 279,481

Buildings and improvements 1,703,536 1,889,471

Furniture, fixtures and equipment 75,488 78,438

Total Gross Real Estate Investments 2,030,715 2,247,390

Accumulated depreciation (187,066) (186,426)

Total Net Operating Real Estate Investments 1,843,649 2,060,964

Operating real estate held for sale, net 144,878 36,213

Total Net Real Estate Investments 1,988,527 2,097,177

Cash and cash equivalents 136,766 83,868

Restricted cash 36,308 35,093

Notes and accrued interest receivable, net 165,654 157,734

Due from affiliates 667 339

Accounts receivable, prepaids and other assets, 40,783 29,502net

Preferred equity investments and investments in 86,328 83,485unconsolidated real estate joint ventures, net

In-place lease intangible assets, net 1,531 2,594

Non-real estate assets associated with operating 271 145real estate held for sale

Total Assets $ 2,456,835 $ 2,489,937

LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY

Mortgages payable $ 1,343,454 $ 1,490,932

Mortgages payable associated with operating real 93,137 38,773estate held for sale

Revolving credit facilities - 33,000

Accounts payable 1,972 1,317

Other accrued liabilities 34,677 31,025

Due to affiliates 635 618

Distributions payable 13,879 13,421

Liabilities associated with operating real estate 1,135 383held for sale

Total Liabilities 1,488,889 1,609,469

8.250% Series A Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share, 10,875,000 shares authorized; no shares and - 54,332 2,201,547 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

6.000% Series B Redeemable Preferred Stock, liquidation preference $1,000 per share, 1,225,000 shares authorized; 360,608 and 513,489 327,124 469,907 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

7.625% Series C Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share, 4,000,000 shares authorized; 2,295,845 shares 56,627 56,462 issued and outstanding as of June 30, 2021 and December 31, 2020

6.150% Series T Redeemable Preferred Stock, liquidation preference $25.00 per share, 32,000,000 shares authorized; 18,353,252 and 415,718 219,967 9,717,917 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

Equity

Stockholders' Equity

Preferred stock, $0.01 par value, 197,900,000shares authorized; no shares issued and - -outstanding

7.125% Series D Cumulative Preferred Stock,liquidation preference $25.00 per share, 4,000,000shares authorized; 2,774,338 shares issued and 66,867 66,867outstanding as of June 30, 2021 and December 31,2020

Common stock - Class A, $0.01 par value,747,509,582 shares authorized; 28,861,937 and 289 22022,020,950 shares issued and outstanding as ofJune 30, 2021 and December 31, 2020, respectively

Common stock - Class C, $0.01 par value, 76,603shares authorized; 76,603 shares issued and 1 1outstanding as of June 30, 2021 and December 31,2020

Additional paid-in-capital 362,507 304,710

Distributions in excess of cumulative earnings (303,960) (313,392)

Total Stockholders' Equity 125,704 58,406

Noncontrolling Interests

Operating Partnership units 18,751 (3,272)

Partially owned properties 24,022 24,666

Total Noncontrolling Interests 42,773 21,394

Total Equity 168,477 79,800

TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK AND $ 2,456,835 $ 2,489,937EQUITY

Non-GAAP Financial Measures

The foregoing supplemental financial data includes certain non-GAAP financial measures that we believe are helpful in understanding our business and performance, as further described below. Our definition and calculation of these non-GAAP financial measures may differ from those of other REITs, and may, therefore, not be comparable.

Funds from Operations and Core Funds from Operations

We believe that funds from operations ("FFO"), as defined by the National Association of Real Estate Investment Trusts ("NAREIT") and core funds from operations ("CFFO") are important non-GAAP supplemental measures of operating performance for a REIT.

FFO attributable to common stockholders and unit holders is a non-GAAP financial measure that is widely recognized as a measure of REIT operating performance. We consider FFO to be an appropriate supplemental measure of our operating performance as it is based on a net income analysis of property portfolio performance that excludes non-cash items such as depreciation. The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, which implies that the value of real estate assets diminishes predictably over time. Since real estate values historically rise and fall with market conditions, presentations of operating results for a REIT, using historical accounting for depreciation, could be less informative. We define FFO, consistent with the NAREIT definition, as net income (loss), computed in accordance with GAAP, excluding gains or losses on sales of depreciable real estate property, plus depreciation and amortization of real estate assets, plus impairment write-downs 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, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for notes receivable, unconsolidated partnerships and joint ventures will be calculated to reflect FFO on the same basis.

CFFO makes certain adjustments to FFO, removing the effect of items that do not reflect ongoing property operations such as acquisition expenses, non-cash interest, unrealized gains and losses on derivatives, losses on extinguishment of debt and debt modification costs (includes prepayment penalties incurred and the write-off of unamortized deferred financing costs and fair market value adjustments of assumed debt), one-time weather-related costs, stock compensation expense and preferred stock accretion. Commencing in 2020, we do not deduct the accrued portion of the preferred income on our preferred equity investments from FFO to determine CFFO as the income is deemed fully collectible. The accrued portion of the preferred income totaled $1.5 million and $2.7 million for the three and six months ended June 30, 2021, respectively. We believe that CFFO is helpful to investors as a supplemental performance measure because it excludes the effects of certain items which can create significant earnings volatility, but which do not directly relate to our core recurring property operations. As a result, we believe that CFFO can help facilitate comparisons of operating performance between periods and provides a more meaningful predictor of future earnings potential.

Our calculation of CFFO differs from the methodology used for calculating CFFO by certain other REITs and, accordingly, our CFFO may not be comparable to CFFO reported by other REITs. Our management utilizes FFO and CFFO as measures of our operating performance after adjustment for certain non-cash items, such as depreciation and amortization expenses, and acquisition and pursuit costs that are required by GAAP to be expensed but may not necessarily be indicative of current operating performance and that may not accurately compare our operating performance between periods. Furthermore, although FFO and CFFO and other supplemental performance measures are defined in various ways throughout the REIT industry, we also believe that FFO and CFFO may provide us and our stockholders with an additional useful measure to compare our financial performance to certain other REITs.

Neither FFO nor CFFO is equivalent to net income (loss), including net income (loss) attributable to common stockholders, or cash generated from operating activities determined in accordance with GAAP. Furthermore, FFO and CFFO do not represent amounts available for management's discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments or uncertainties. Neither FFO nor CFFO should be considered as an alternative to net income (loss), including net income (loss) attributable to common stockholders, as an indicator of our operating performance or as an alternative to cash flow from operating activities as a measure of our liquidity.

We have acquired seven operating properties, made eight property investments through preferred equity or mezzanine loan investments, sold six operating properties and received payoffs of our mezzanine loan or preferred equity in seven investments subsequent to June 30, 2020. The results presented in the table below are not directly comparable and should not be considered an indication of our future operating performance.

The table below reconciles our calculations of FFO and CFFO to net income (loss), the most directly comparable GAAP financial measure, for the three and six months ended June 30, 2021 and 2020 (in thousands, except per share amounts):

Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020

Net (loss) incomeattributable to $ (5,429) $ 15,090 $ 18,152 $ (1,403)common stockholders

Add back: Net (loss)income attributable (1,978) 5,413 8,182 (409)to OperatingPartnership Units

Net (loss) incomeattributable to (7,407) 20,503 26,334 (1,812)common stockholdersand unit holders

Common stockholdersand OperatingPartnership Unitspro-rata share of:

Real estatedepreciation and 19,036 19,144 38,440 39,045amortization ^(1)

Provision for credit 26 - 567 -losses

Gain on sale of real (18,630) (55,250) (81,058) (55,360)estate investments

FFO Attributable toCommon Stockholders (6,975) (15,603) (15,717) (18,127)and Unit Holders

Common stockholdersand OperatingPartnership Unitspro-rata share of:

Acquisition and 3 423 15 1,691pursuit costs

Non-cash interest 549 747 1,154 1,592expense

Unrealized loss 20 (5) (11) (30)(gain) on derivatives

Loss onextinguishment of 609 13,590 3,173 13,590debt and debtmodification costs

Amortization ofdeferred interest 997 - 997 -income on mezzanineloan

Weather-related - - 360 -losses, net

Non-real estatedepreciation and 122 122 244 242amortization

Other (income) (49) 43 48 3expense, net

Non-cash equity 3,479 2,191 6,789 5,738compensation

Preferred stock 7,290 3,602 14,312 7,527accretion

CFFO Attributable toCommon Stockholders $ 6,045 $ 5,110 $ 11,364 $ 12,226and Unit Holders

Per Share and UnitInformation:

FFO Attributable to Common Stockholders $ (0.18) $ (0.47) $ (0.44) $ (0.55)and Unit Holders -diluted

CFFO Attributable to Common Stockholders $ 0.16 $ 0.15 $ 0.32 $ 0.37and Unit Holders -diluted

Weighted averagecommon shares and 38,443,171 33,075,598 35,883,631 32,936,762units outstanding -diluted

The real estate depreciation and amortization amount includes our share of consolidated real estate-related depreciation and amortization of^ intangibles, less amounts attributable to noncontrolling interests for(1) partially owned properties, and our similar estimated share of unconsolidated depreciation and amortization, which is included in earnings of our unconsolidated real estate joint venture investments.

Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate ("EBITDAre")

NAREIT defines earnings before interest, taxes, depreciation and amortization for real estate ("EBITDAre") (September 2017 White Paper) as net income (loss), computed in accordance with GAAP, before interest expense, income taxes, depreciation and amortization expense, and further adjusted for gains and losses from sales of depreciated operating properties, and impairment write-downs of depreciated operating properties.

We consider EBITDAre to be an appropriate supplemental measure of our performance because it eliminates depreciation, income taxes, interest and non-recurring items, which permits investors to view income from operations unobscured by non-cash items such as depreciation, amortization, the cost of debt or non-recurring items.

Adjusted EBITDAre represents EBITDAre further adjusted for non-comparable items and it is not intended to be a measure of free cash flow for our management's discretionary use, as it does not consider certain cash requirements such as income tax payments, debt service requirements, capital expenditures and other fixed charges.

EBITDAre and Adjusted EBITDAre are not recognized measurements under GAAP. Because not all companies use identical calculations, our presentation of EBITDAre and Adjusted EBITDAre may not be comparable to similarly titled measures of other companies.

Below is a reconciliation of net (loss) income attributable to common stockholders to EBITDAre and Adjusted EBITDAre (unaudited and dollars in thousands).

Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020

Net (loss) incomeattributable to common $ (5,429) $ 15,090 $ 18,152 $ (1,403)stockholders

Net (loss) income attributable to (1,391) 7,398 14,535 1,298 noncontrolling interests

Preferred stock dividends 14,367 14,237 28,984 27,784

Preferred stock accretion 7,290 3,602 14,312 7,527

Interest expense, net 13,460 13,859 27,294 28,774

Real estate depreciation 19,879 20,020 40,157 40,899 and amortization

Provision for credit 26 - 567 - losses

Gain on sale of real (19,429) (57,843) (88,342) (58,096) estate investments

Loss on extinguishment of debt and debt modification 647 13,985 3,687 13,985 costs

EBITDAre $ 29,420 $ 30,348 $ 59,346 $ 60,768

Acquisition and pursuit 3 423 15 1,691 costs

Amortization of deferred interest income on 997 - 997 - mezzanine loan

Non-real estate depreciation and 122 122 244 242 amortization

Weather-related losses, - - 400 - net

Non-cash equity 3,479 2,191 6,789 5,738 compensation

Other (income) expense, (49) 43 48 3 net

Adjusted EBITDAre $ 33,972 $ 33,127 $ 67,839 $ 68,442

Same Store Properties

Same store properties are conventional multifamily residential apartments which were owned and operational for the entire periods presented, including each comparative period.

Property Net Operating Income ("Property NOI")

We believe that net operating income, or NOI, is a useful measure of our operating performance. We define NOI as total property revenues less total property operating expenses, excluding depreciation and amortization and interest. Other REITs may use different methodologies for calculating NOI, and accordingly, our NOI may not be comparable to other REITs. We believe that this measure provides an operating perspective not immediately apparent from GAAP operating income or net income. We use NOI to evaluate our performance on a same store and non-same store basis; NOI measures the core operations of property performance by excluding corporate level expenses and other items not related to property operating performance and captures trends in rental housing and property operating expenses. However, NOI should only be used as a supplemental measure of our financial performance.

The following table reflects net income (loss) attributable to common stockholders together with a reconciliation to NOI and to same store and non-same store contributions to consolidated NOI, as computed in accordance with GAAP for the periods presented (unaudited and amounts in thousands):

Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020

Net (loss) income attributable to $ (5,429) $ 15,090 $ 18,152 $ (1,403)common stockholders

Add back: Net (loss) income attributable to Operating (1,978) 5,413 8,182 (409) Partnership Units

Net (loss) income attributable tocommon stockholders and unit (7,407) 20,503 26,334 (1,812)holders

Add common stockholders andOperating Partnership Unitspro-rata share of:

Real estate depreciation and 19,036 19,144 38,440 39,045 amortization

Non-real estate depreciation 122 122 244 242 and amortization

Non-cash interest expense 549 747 1,154 1,592

Unrealized loss (gain) on 20 (5) (11) (30) derivatives

Loss on extinguishment of debt and debt modification 609 13,590 3,173 13,590 costs

Provision for credit losses 26 - 567 -

Property management fees 1,194 1,135 2,417 2,367

Acquisition and pursuit 3 423 15 1,691 costs

Corporate operating expenses 6,520 5,166 13,090 11,462

Weather-related losses, net - - 360 -

Preferred dividends 14,367 14,237 28,984 27,784

Preferred stock accretion 7,290 3,602 14,312 7,527

Less common stockholders andOperating Partnership Unitspro-rata share of:

Other income (expense), net 57 (43) 108 (3)

Preferred returns on unconsolidated real estate 2,329 2,834 4,616 5,408 joint ventures

Interest income from mezzanine loan and ground 4,114 5,338 8,835 11,227 lease investments

Gain on sale of real estate 18,630 55,250 81,058 55,360 investments

Pro-rata share of properties' 17,199 15,285 34,462 31,466income

Add:

Noncontrolling interest pro-rata share of partially 738 750 1,378 1,553 owned property income

Total property income 17,937 16,035 35,840 33,019

Add:

Interest expense 12,875 13,089 26,122 27,158

Net operating income 30,812 29,124 61,962 60,177

Less:

Non-same store net operating 6,740 6,518 15,920 15,646 income

Same store net operating income ^ $ 24,072 $ 22,606 $ 46,042 $ 44,531(1)

Same store portfolio for the three months ended June 30, 2021 consists of^ ^ 25 properties, which represent 8,882 units. Same store portfolio for the(1) six months ended June 30, 2021 consists of 24 properties, which represent 8,628 units.

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SOURCE Bluerock Residential Growth REIT, Inc.