Third Quarter 2015 Highlights – as compared to the third quarter of 2014:
- Net interest income after provision for loan losses increased 9% to $18.1 million
- Net income increased 7% to $14.3 million
- Earnings per share increased 7% to $0.47
- Net investments in notes receivable and loan participation interests increased 4% to $618.1 million
GRAPEVINE, Texas, Nov. 05, 2015 (GLOBE NEWSWIRE) — United Development Funding IV (“UDF IV” or the “Trust”) (NASDAQ:UDF) today reported net interest income after provision for loan losses for the quarter ended September 30, 2015 of $18.1 million, an increase of 9% as compared to $16.5 million for the quarter ended September 30, 2014. Net income for the third quarter of 2015 was $14.3 million, or $0.47 per share, an increase of 7% as compared to $13.4 million, or $0.44 per share, for the third quarter of 2014.
Net interest income after provision for loan losses for the nine months ended September 30, 2015 was $53.5 million, an increase of 8% as compared to $49.4 million for the same period of fiscal 2014. Net income for the nine months ended September 30, 2015 was $42.9 million, or $1.40 per share, an increase of 17% as compared to $36.6 million, or $1.16 per share, for the same period of fiscal 2014.
The nine months ended September 30, 2014 included approximately $5.1 million of costs associated with listing the Trust’s shares on NASDAQ and the related tender offer. The nine months ended September 30, 2014 also included a $3.2 million reduction in general and administrative expense – related parties from the reversal of an accrued liability for acquisition and origination fees that will no longer be paid to the Trust’s advisor.
The portfolio of notes receivable and loan participation interests, net of the provision for loan losses and unamortized commitment fees, increased 4% to $618.1 million (127 loans) at September 30, 2015 from $593.4 million (131 loans) at September 30, 2014. The net debt to total capitalization ratio (calculated as debt less cash, divided by debt less cash plus equity) at September 30, 2015 was 22.9%. The Trust’s target range for this ratio is 30% to 35%.
On October 1, 2015, the Trust announced that it would pay monthly distributions of $0.1367 per share on October 26, November 25 and December 28, 2015 to shareholders of record at the close of business on October 15, November 13 and December 15, 2015, respectively. The October monthly distribution was subsequently paid as announced.
The Trust’s board of trustees has authorized a special distribution of $0.055 per common share of beneficial interest payable on February 16, 2016 to shareholders of record as of the close of business on November 30, 2015.
The Trust expects to earn between $1.85 and $1.90 per share and to declare distributions of approximately $1.75 per share in fiscal 2015.
The Trust will host a conference call today (Thursday, November 5, 2015) at 11:00 a.m. Eastern Time (ET). The dial-in number is 1-866-312-7299, and the call will also be webcast from the Trust’s website at www.udfiv.com. A replay of the call will be available after 2:00 p.m. ET on November 5, 2015, at 1-877-344-7529, access code 10074028. The replay will also be available from the Trust’s website at www.udfiv.com through midnight ET on November 19, 2015.
Hollis M. Greenlaw, CEO and Chairman, said, “We are pleased to report another strong quarter, as our third quarter earnings of $0.47 per share demonstrate our consistent earnings performance. We are also pleased that our Board of Trustees authorized a special distribution of $0.055 per common share of beneficial interest payable on February 16, 2016 to shareholders of record as of the close of business on November 30, 2015. This special distribution is in addition to our monthly base distribution of $0.1367 per share, totaling $1.64 per share annually. We continue to expect to declare distributions of approximately $1.75 per share and to earn between $1.85 and $1.90 per share in fiscal 2015.”
About United Development Funding IV
United Development Funding IV is a publicly traded Maryland real estate investment trust listed on The NASDAQ Global Select Market. UDF IV was formed primarily to generate current interest income by investing in secured loans and producing profits from investments in residential real estate. Additional information about UDF IV can be found on its website at www.udfiv.com. UDF IV may disseminate important information regarding its operations, including financial information, through social media platforms such as Twitter, Facebook and LinkedIn.
Important Cautionary Note Regarding Forward-Looking Statements
This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may relate to anticipated financial performance, business prospects, market conditions and other matters. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995. All statements included in this press release that address activities, events or developments that we expect, believe or anticipate will exist or may occur in the future, are forward-looking statements. These forward-looking statements are based on management’s current intents, beliefs, expectations and assumptions and on information currently available to management that are subject to risks and uncertainties, many of which are outside of our control, and could cause future events or results to be materially different from those stated or implied in these forward-looking statements. Words such as “may,” “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “would,” “could,” “should” and variations of these words and similar expressions are intended to identify forward-looking statements.
Forward-looking statements that were true at the time made may ultimately prove to be incorrect or false. We caution you not to place undue reliance on forward-looking statements, which reflect our management’s view only as of the date of this press release. We undertake no obligation to update or revise any forward-looking statements made by us or on our behalf to reflect changed assumptions, the occurrence of unanticipated events or changes as a result of new information, future developments, subsequent events or circumstances or otherwise. Factors that could cause actual results to differ materially from any forward-looking statements include but are not limited to: changes in general economic conditions, the real estate market and the credit market; increases in development costs that may exceed estimates; development delays; increases in interest rates or decreases in residential lot take down or purchase rates; our borrowers’ inability to sell residential lots; potential need to fund development costs not completed by the initial borrower or other capital expenditures out of operating cash flows; economic fluctuations in Texas, where our investments are geographically concentrated; retention of our senior management team; changes in property taxes; legislative and regulatory changes, including changes to laws governing the taxation of REITs; the availability of capital and financing; restrictive covenants in our credit facilities; and our ability to remain qualified as a REIT.
These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, our Quarterly Reports on Form 10-Q and in subsequent filings with the U.S. Securities and Exchange Commission.
| UNITED DEVELOPMENT FUNDING IV | |||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||
| September 30, 2015 (Unaudited) |
December 31, 2014 | ||||||||
| Assets | |||||||||
| Cash and cash equivalents | $ | 18,979,309 | $ | 30,481,912 | |||||
| Restricted cash | 8,762,368 | 7,048,976 | |||||||
| Accrued interest receivable | 29,817,746 | 18,098,976 | |||||||
| Accrued receivable – related parties | 6,207,849 | 3,343,867 | |||||||
| Loan participation interest – related parties, net | 35,255,640 | 40,658,253 | |||||||
| Notes receivable, net | 513,177,132 | 508,435,988 | |||||||
| Notes receivable – related parties, net | 69,644,615 | 60,497,391 | |||||||
| Lot inventory | – | 10,621,316 | |||||||
| Other assets | 2,214,647 | 2,966,105 | |||||||
| Total assets | $ | 684,059,306 | $ | 682,152,784 | |||||
| Liabilities and Shareholders’ Equity | |||||||||
| Liabilities: | |||||||||
| Accrued liabilities | $ | 1,642,185 | $ | 5,518,861 | |||||
| Accrued liabilities – related parties | 1,352,357 | 1,228,028 | |||||||
| Distributions payable | – | 1,224,956 | |||||||
| Notes payable | 50,000,000 | 50,000,000 | |||||||
| Lines of credit | 120,906,488 | 120,238,340 | |||||||
| Total liabilities | 173,901,030 | 178,210,185 | |||||||
| Shareholders’ equity: | |||||||||
| Shares of beneficial interest; $.01 par value; 400,000,000 shares authorized; | |||||||||
| 32,699,815 shares issued and 30,669,362 shares outstanding at September 30, 2015, and | |||||||||
| 32,657,880 shares issued and 30,627,427 shares outstanding at December 31, 2014 | 326,998 | 326,578 | |||||||
| Additional paid-in-capital | 573,120,388 | 572,077,700 | |||||||
| Accumulated deficit | (21,887,324 | ) | (27,059,893 | ) | |||||
| Shareholders’ equity before treasury shares | 551,560,062 | 545,344,385 | |||||||
| Less: Treasury shares, 2,030,453 shares at September 30, 2015 and December 31, 2014, at cost | (41,401,786 | ) | (41,401,786 | ) | |||||
| Total shareholders’ equity | 510,158,276 | 503,942,599 | |||||||
| Total liabilities and shareholders’ equity | $ | 684,059,306 | $ | 682,152,784 | |||||
| UNITED DEVELOPMENT FUNDING IV | ||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||||
| (UNAUDITED) | ||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||||||
| Interest income: | ||||||||||||||||||||
| Interest income | $ | 17,196,861 | $ | 16,554,881 | $ | 50,895,925 | $ | 47,228,062 | ||||||||||||
| Interest income – related parties | 3,490,930 | 2,672,045 | 10,429,239 | 7,290,717 | ||||||||||||||||
| Total interest income | 20,687,791 | 19,226,926 | 61,325,164 | 54,518,779 | ||||||||||||||||
| Interest expense: | ||||||||||||||||||||
| Interest expense | 2,621,865 | 1,909,455 | 7,860,380 | 2,885,557 | ||||||||||||||||
| Net interest income | 18,065,926 | 17,317,471 | 53,464,784 | 51,633,222 | ||||||||||||||||
| Provision for loan losses | – | 773,820 | – | 2,214,607 | ||||||||||||||||
| Net interest income after provision for loan losses | 18,065,926 | 16,543,651 | 53,464,784 | 49,418,615 | ||||||||||||||||
| Noninterest income: | ||||||||||||||||||||
| Commitment fee income | 390,065 | 754,067 | 1,477,212 | 2,275,605 | ||||||||||||||||
| Commitment fee income – related parties | 113,082 | 79,767 | 332,870 | 173,451 | ||||||||||||||||
| Lot inventory sales income | 6,107,131 | 2,976,000 | 10,621,316 | 6,864,137 | ||||||||||||||||
| Total noninterest income | 6,610,278 | 3,809,834 | 12,431,398 | 9,313,193 | ||||||||||||||||
| Noninterest expense: | ||||||||||||||||||||
| Management fees – related party | 2,392,690 | 2,325,276 | 7,479,095 | 7,629,346 | ||||||||||||||||
| Lot inventory sales cost | 6,107,131 | 2,976,000 | 10,621,316 | 6,864,137 | ||||||||||||||||
| Listing expenses | – | 77,028 | – | 5,115,229 | ||||||||||||||||
| General and administrative | 1,521,734 | 1,217,717 | 3,701,910 | 3,934,933 | ||||||||||||||||
| General and administrative – related parties | 340,673 | 382,431 | 1,218,328 | (1,376,394 | ) | |||||||||||||||
| Total noninterest expense | 10,362,228 | 6,978,452 | 23,020,649 | 22,167,251 | ||||||||||||||||
| Net income | $ | 14,313,976 | $ | 13,375,033 | $ | 42,875,533 | $ | 36,564,557 | ||||||||||||
| Net income per weighted average share outstanding | $ | 0.47 | $ | 0.44 | $ | 1.40 | $ | 1.16 | ||||||||||||
| Weighted average shares outstanding | 30,663,199 | 30,632,925 | 30,646,129 | 31,616,870 | ||||||||||||||||
| Distributions per weighted average share outstanding | $ | 0.41 | $ | 0.34 | $ | 1.23 | $ | 1.14 | ||||||||||||
| UNITED DEVELOPMENT FUNDING IV | ||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||
| (UNAUDITED) | ||||||||||
| Nine Months Ended September 30, | ||||||||||
| 2015 | 2014 | |||||||||
| Operating Activities | ||||||||||
| Net income | $ | 42,875,533 | $ | 36,564,557 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
| Provision for loan losses | – | 2,214,607 | ||||||||
| Amortization expense | 1,710,612 | 955,686 | ||||||||
| Share-based compensation | 483,838 | 557,531 | ||||||||
| Changes in assets and liabilities: | ||||||||||
| Accrued interest receivable | (11,513,703 | ) | (9,909,085 | ) | ||||||
| Accrued receivable – related parties | (3,183,764 | ) | 859,788 | |||||||
| Other assets | (959,154 | ) | (1,124,539 | ) | ||||||
| Accrued liabilities (including related parties) | (1,632,434 | ) | 711,314 | |||||||
| Net cash provided by operating activities | 27,780,928 | 30,829,859 | ||||||||
| Investing Activities | ||||||||||
| Investments in loan participation interest – related parties | (17,172,868 | ) | (16,212,677 | ) | ||||||
| Principal receipts from loan participation interest – related parties | 16,472,966 | 17,265,709 | ||||||||
| Investments in notes receivable | (107,374,139 | ) | (169,294,765 | ) | ||||||
| Principal receipts from notes receivable | 109,273,884 | 97,298,100 | ||||||||
| Investments in notes receivable – related parties | (16,454,016 | ) | (20,092,790 | ) | ||||||
| Principal receipts from notes receivable – related parties | 6,883,134 | 3,911,059 | ||||||||
| Investments in lot inventory | – | (9,786,217 | ) | |||||||
| Receipts from lot inventory | 8,501,402 | 5,497,128 | ||||||||
| Net cash provided by (used in) investing activities | 130,363 | (91,414,453 | ) | |||||||
| Financing Activities | ||||||||||
| Purchase of treasury shares | – | (37,058,319 | ) | |||||||
| Proceeds from borrowings on lines of credit | 27,466,230 | 85,992,416 | ||||||||
| Payments on lines of credit | (26,798,082 | ) | (9,162,986 | ) | ||||||
| Proceeds from notes payable | – | 35,000,000 | ||||||||
| Distributions, net of shareholders’ distribution reinvestment | (38,368,650 | ) | (29,968,122 | ) | ||||||
| Restricted cash | (1,713,392 | ) | (5,767,581 | ) | ||||||
| Net cash (used in) provided by financing activities | (39,413,894 | ) | 39,035,408 | |||||||
| Net decrease in cash and cash equivalents | (11,502,603 | ) | (21,549,186 | ) | ||||||
| Cash and cash equivalents at beginning of period | 30,481,912 | 33,565,191 | ||||||||
| Cash and cash equivalents at end of period | $ | 18,979,309 | $ | 12,016,005 | ||||||
| Supplemental Cash Flow Information: | ||||||||||
| Cash paid for interest | $ | 7,755,068 | $ | 2,450,728 | ||||||
| Supplemental Cash Flow Information – Non-Cash Investing & Financing Activity: | ||||||||||
| Shareholders’ distribution reinvestment | $ | 559,270 | $ | 8,703,842 | ||||||
| Assignment of loans | $ | 6,640,888 | $ | 8,342,680 | ||||||
| Lot inventory – earnest money | $ | 2,119,913 | $ | 1,064,274 | ||||||
