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Bluerock Residential Growth REIT Inc (NYSEMKT:BRG)
Q1 2020 Earnings Call
May 11, 2020, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, ladies and gentlemen, and welcome to Bluerock Residential Growth REIT's First Quarter 2020 Earnings Conference Call. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]. At this time, I'd like to introduce your host for today's call, Christopher Vohs, Chief Financial Officer of Bluerock Residential. Sir, please go ahead.

Christopher J. Vohs -- Chief Financial Officer and Treasurer

Thank you, and welcome to Bluerock Residential Growth REIT's first quarter 2020 earnings conference call. This morning, prior to market open, we issued our earnings press release and supplement. The press release can be found on our website at bluerockresidential.com under the Investors tab. In addition, we anticipate filing our 10-Q later today.

Following the conclusion of our remarks, we will be pleased to answer any questions you may have. Before we begin, please note that this call may contain forward-looking statements as they are defined under the Private Securities Litigation Reform Act of 1995. There are a variety of risks and uncertainties associated with forward-looking statements and actual results may differ from those set forth in such statements. For a discussion of these risks and uncertainties, you should review the forward-looking statements disclosure in the earnings press release we issued this morning as well as our SEC filings.

With respect to non-GAAP measures we use in this call, please refer to our earnings supplement for a reconciliation to GAAP and the reason management uses these non-GAAP measures and the assumptions used with respect to our earnings guidance.

And with that, I will turn the call over to Ramin Kamfar, Chairman and CEO of Bluerock Residential Growth REIT.

R. Ramin Kamfar -- Chief Executive Officer and Chairman of our Board of Directors

Thank you, Chris, and good morning everyone. And in addition to Chris, with me remotely today are several key members of our executive team including Jordan Ruddy, our President, and Chief Operating Officer; Ryan MacDonald, our Chief Acquisitions Officer; Jim Babb, our Chief Investment Officer; and Mike DiFranco, our Executive Vice President of Operations.

I'll focus my remarks on the COVID pandemic impacts, financial highlights, key strategic accomplishments, and some capital markets commentary. And afterwards, Ryan will provide you first quarter and April operational, transactional and balance sheet details. Before getting into our results with the outbreak of the COVID pandemic and its wide-reaching impacts across the country and the world, I want to express our sincere wishes that everyone is staying well and being healthy.

We at Bluerock have proactively took a defensive posture with regard to our team, our residents, and our portfolio early on, even prior to the release of federal social distancing guidelines and the issuance of shelter-in-place orders at the state and local level. At the beginning of March, we proactively set up COVID specific property guidelines and best practices across our on-site teams to prioritize and ensure the health and safety of our residents or employees and our partners. As part of our COVID mandate, we shut down all of our amenities, executed only essential maintenance, and moved to a fully virtual leasing environment, which was well supported by our pre-COVID technology build-outs.

We have taken a number of steps to provide assistance to our residents, including halting evictions for 60 days and temporarily suspending late fees. In terms of our employees, we are pleased to have been able to maintain employment and compensation levels, and I want to thank all of our team members for their dedication, flexibility, and tremendous hard work throughout this time. I would also point out that our asset management team has been very effective, very active, and effective in directing the on-site operating teams through the lockdown. We are now working with our operating partners to establish best practices for the reopening of the common areas of our properties and our on-site servicing and leasing as government guidelines permit, and as health and safety measures are implemented.

Moving on to our results, I'm pleased to report strong numbers. We started off the year with a solid quarter operationally. This was driven by solid organic rent growth and value creation from our renovation platform. We also executed our strategic capital recycling plans, realizing strong disposition values both before and after the outbreak of COVID in the United States. On the revenue front, we produced healthy 9% growth over the prior-year period with the first quarter at $56.2 million, driven by our significant investment activity during the prior 12 months in addition to our strong same-store performance.

On a GAAP basis, the net loss to common stockholders was $0.70 a share compared to a net loss of $0.53 a share for the prior-year quarter. The figures obviously include non-cash expenses which include depreciation and amortization of $0.88 per share and $0.74 per share for the current and prior year quarters respectively.

Moving on to property level results. We grew property NOI 15% to $31.1 million in the quarter; same-store revenues and NOI growth reaccelerated in the quarter and came in at 3.1% and 2.6% respectively, compared to the prior-year period. On the funds from operations side, core FFO, which is NAREIT FFO with the add-back of certain non-cash, non-operating items grew 10% to $0.22 per share versus $0.20 per share for the prior-year period.

Our common dividend coverage remains strong with a CFFO payout ratio for the quarter at 74%. We continue to grow our asset base. Gross assets were up 23% for the quarter from the prior-year period to over $2.5 billion, which puts us at the larger end of our small-cap multifamily peers. We're also very active on the capital allocation front through April, completing transactions which were all in process prior to the onset of the pandemic.

We completed five dispositions totaling $272 million of which three closed in April for a total of $160 million. The dispositions were executed at cap rates averaging 4.3% and BRG realized a blended 16% IRR and 1.8 times multiple on invested capital while netting $96 million in proceeds.

During the quarter, we closed two acquisitions in Phoenix and Atlanta totaling $138 million in gross asset value. We also invested $22 million in preferred equity and mezzanine loans including two new operating preferred investments, one new ground lease investment and additional scheduled fundings and buyouts for eight development investments.

With respect to our value-add renovation program, we continue to achieve above-market results across the board, completing 120 units with an average ROI of 22%. We've assumed a more conservative posture in view of the COVID pandemic, and suspended most interior renovations at this point. We'll continue to obviously evaluate the program at both the market and property level, as we have more visibility on the emergence of economic recovery.

Shifting to capital markets, we raised $57 million of our Series T preferred during the quarter including $29 million in the month of March, which was a record monthly amount. Our post Q1 raise figures have been lower given the COVID impact on the public markets, but we have continued to raise our Series T at a run rate of just under $200 million annually, which will provide us great flexibility to review potential opportunities over time.

As we've noted before the Series T preferred provides a distinctive advantage for BRG, because it allows us to raise capital decoupled from the volatility of the common equity capital markets and with the flexibility to convert into common equity at our option at a future date at the future common stock price, in fact in the first quarter, we redeemed $17 million of our preferred at an average common equity price of $11.79 per share.

While our first quarter performance didn't incur significant impact from the COVID pandemic, we continue to closely monitor COVID's impact on our business, properties, tenants, and partners as obviously the full impact on our rental revenues and overall financial performance remains uncertain. As Ryan will detail, we've been encouraged by post quarter rent and occupancy information to date. We believe our Class A affordable rent strategy targeting the knowledge economy renter by choice positions us well with respect to the COVID pandemic in order to continue to deliver shareholder value.

First, we believe that our market and asset selection have positioned us well. We've assembled a well-located highly amenitized live/work/play portfolio in knowledge to economy growth markets targeting the highly compensated, highly educated worker, all of which had partially buffered us from the brunt of COVID-driven job losses in the downturn, and should allow us to reaccelerate rent growth more quickly on the other side as the economic recovery takes shape.

Second, we're able to generate accretive capital through issuance of our Series T Preferred, which gives us balance sheet flexibility and the potential to take advantage of opportunities that may arise over time. Third, we continue to proactively make prudent and accretive capital allocation decisions for the Company including dispositions at very attractive cap rates even post COVID that are well inside our market-implied and consensus third-party NAV cap rate estimates.

As we look ahead, we are confident and being well positioned to navigate through the challenges of COVID, and believe the quality of our portfolio and balance sheet flexibility sets us up to outperform. Further, we believe that over time, there could be potential for structural operating expense savings from the large shift to virtual that we've all experienced which would serve as an additional long-term catalyst for the business.

Finally, I'd like to again note that management is significantly aligned with shareholders and a number of our senior management have purchased equity in the open market in recent months. As a result of all of which management now owns approximately 29% of BRG's fully diluted equity.

With that, I'd like to turn the call over to Ryan.

Ryan S. MacDonald -- Chief Acquisitions Officer

Thank you, Ramin, and good morning, everyone. The operating portfolio started off the year with strong performance across the majority of our metros with a nine of 14 MSAs posting rental rate growth of 2.5% or better in the quarter. This was highlighted by continued outperformance in Atlanta and Austin and reacceleration in our Colorado property as supply moderates there.

Portfoliowide, occupancy was 94.2%, which was 30 basis points higher compared to the prior year quarter. Occupancy held strong throughout April, finishing the month at 94.3% and availability, which is a leading indicator for occupancy is strong at 8.2%, which is approximately 50 basis points ahead of where we were last year at the same time.

Overall, same-store revenue increased 3.1% over the prior year period driven by a 2.9% increase in average rental rate and flat year-over-year occupancy. Rate growth was broad-based with 25 of the 27 properties in the same-store pool, recognizing year-over-year increases in average rental rates in the quarter. On a sequential basis, same-store rental rates increased 50 basis points, and revenue was up 1.1% over the prior quarter.

Moving on to rate growth, during the quarter, lease rate growth averaged 2.4% with renewals remaining strong at 3.8% and new lease rate growth slowing to 90 basis points. New lease rates were partially impacted by a seasonally weaker part of the calendar in the initial stages of the COVID pandemic in mid to late March.

Consistent with improving seasonality trends, we saw lease rate growth climb on a sequential month over month basis throughout the quarter and despite the COVID impact, March finished 80 basis points higher than January. In conjunction with the shelter-in-place requirements in our markets and our decision to move to a more defensive occupancy posture, April lease rate growth trended lower, averaging positive 10 basis points with renewals yielding positive 1.2% and new leases averaging negative 1.9%. Through the first week of May, new lease rate growth has trended back to positive territory, which has led to a blended lease rate for the week, 60 basis points higher than April.

I'd also like to note that while we were aggressive in pulling back renewal increases across the board in late March and throughout April, in response to the pandemic, we expect to be able to start to implement increases in July and August in certain assets that are outperforming today. Some of the markets include Atlanta, Austin, Colorado, and Phoenix among others.

For the month of April, we collected 97% of multifamily rent including payment plans of 1% which was in line with March pre-COVID collection metrics. These figures are generally in line with a normal environment where we typically close out the month with receivables around 2%, and worked the AR balance down to the next couple of months to approximately 50 basis points.

Moving on to May, we started off the month with a very strong collection profile having collected 92% of our rents through yesterday including 2% on payment plans which is approximately 1% ahead of April by the same day. During the month of April, we captured 88% of the prior year period's new lease volume, which was done solely with virtual leasing and no tours.

As reopening guidelines are implemented in our markets, we look forward to further supplementing virtual leasing with self-guided tours. Additionally for April, retention was up a very strong 500 basis points on a year-over-year basis, and we look forward to this elevated renewal trend to continue throughout the coming months.

On the expense front, year-over-year, same-store expenses increased 3.7% during the quarter, with taxes and insurance accounting for 3.4% of the increase. As we've communicated in the past, utilizing technology to drive both top-line revenue growth and controllable expense savings is a strategic area of focus for us. To that point, we are encouraged that some of the measures we are implementing should result in controllable expense savings with the majority of the future reduction coming in payroll.

We continue to be pleased with our value-add renovation program, which delivered healthy results in the quarter. During the quarter, we completed 120 unit renovations with an average ROI of 22%, and to date, we've completed approximately 2,800 unit renovations at an average cost of roughly $5,800 per unit yielding a 24% ROI.

As Ramin referenced earlier, we've halted the majority of our interior capital renovation work with the exception of one asset in Phoenix, Arizona. Once we resume renovation work, we estimate there are north of 4,600 units remaining to be renovated in the current portfolio with comparable economics, which would significantly be accretive to both CFFO and NAV.

In terms of capital allocation, during the quarter, and post quarter-end, we sold a combined five assets totaling $272 million in gross asset value, and the sales yielded BRG $96 million in net proceeds excluding partner buyout, of which $35 million was realized before quarter-end. The five dispositions were executed at an economic cap rate of 4.3% based on $400 per unit replacement reserves and the buyer's year one tax estimate.

The three dispositions post quarter-end, Enders Place in Orlando, Florida, Ashton Reserve in Charlotte, North Carolina, and Marquis at TPC, San Antonio, Texas were executed post-COVID at an average cap rate of 4.7%, which was in line with our portfolio sale last year and substantially below our consensus NAV cap rate estimate.

Moving on to investments, during the quarter we completed two acquisitions totaling approximately $103 million in BRG investment and also made one preferred equity investment into two operating assets, totaling approximately $8 million in BRG equity, with an annual yield of 10% [Phonetic] and 1.5% [Phonetic]. The operating investments consisted of an acquisition of a 2013 built 254-unit apartment community in Phoenix, Arizona called Avenue 25 at a purchase price of $56 million and a 2019 built 356-unit apartment community in Atlanta, Georgia called Falls at Forsyth at a purchase price of $83 million. The assets were purchased at a combined stabilized cap rate of approximately 6%, which compares favorably to market cap rates in the 4.25% to 4.75% range. I'm pleased to report both assets are performing ahead of pro forma on an NOI basis and collections are within the top quartile of our portfolio.

Also during the quarter, we made our first ground lease investment into a new development project in Austin, Texas with an annual unlevered yield of 6%. BRG invested $3 million during the quarter and is projected to fund up to $15 million to the project throughout the year. Using the ground lease structure, we believe we will be able to generate attractive double-digit risk-adjusted ROIs at a position in the capital structure, ahead of the senior lender with each investment also providing potential future pipeline acquisition opportunities.

Turning to the balance sheet, during the quarter, BRG acquired $138 million of operating assets representing $103 million in BRG equity, and made investments totaling $22 million into new and existing preferred equity, mezzanine, and ground lease investments. Following the investments and dispositions made in the quarter, BRG's investment in preferred equity, mezzanine loans, and ground leases stands at $272 million which represents approximately 11% of our total asset base, and it's important to note, of the $272 million, north of 80% or $226 million is invested in operating assets, which obviously have a lower risk profile than development assets under construction.

During the quarter, we refinanced our senior line of credit and increased availability from $75 million to $100 million, and significantly reduced pricing. With the refinancing, we were able to add ground leases to our borrowing base, and reduced our spread on the facility at the top end of our range by over 80 basis points.

From a liquidity perspective, due to the uncertainties presented by the COVID pandemic, we took a number of measures to increase our liquidity. As of the end of the quarter, BRG had approximately $120 million available for investment through a combination of cash and availability on our revolving credit facilities. At the end of April, BRG had $124 million in cash plus $51 million in line of credit availability as needed, and we expect to continue to grow our capital base through our Series T preferred offering.

Although we intend to be prudent in our view of further COVID developments, we believe we have sufficient liquidity to meet our primary cash requirements through this uncertain period, as well as to invest in ongoing growth as conditions permit. Shifting to our previously announced 2020 earnings guidance. While we are encouraged by the initial trends of our portfolio following the outbreak of COVID-19, given the change in the current environment, versus the beginning of the year, and the inherent uncertainty around the full scale of the economic and social disruption caused by COVID-19, and its duration [Phonetic], we believe it's prudent to withdraw our full-year 2020 guidance, which was included in our February 13th, 2020 earnings release.

So to conclude, I want to reiterate that we are pleased with our first quarter and April operational performance, and continue to actively manage our portfolio and capital in view of the COVID pandemic. We believe the quality of our multifamily portfolio and investment strategy will continue to provide outperformance in all parts of the cycle.

And with that, we will open it up to Q&A. Operator?

Questions and Answers:

Operator

Ladies and gentlemen, at this point we will begin the question-and-answer session. [Operator Instructions]. And our first question today comes from Gaurav Mehta from National Securities. Please go ahead with your question.

Gaurav Mehta -- National Securities Corporation -- Analyst

Yeah. Thanks. Good morning. The first question on your preferred issuance. I was hoping if you could provide some more color on what kind of demand you're seeing for the paper and have you seen an increase in redemption request?

R. Ramin Kamfar -- Chief Executive Officer and Chairman of our Board of Directors

Hi Gaurav, it's Ramin. Well, we switched from the Series B at the end of the year to the Series T. Normally we see a significant drop-off, as you know the transition, and with that transition, you have to go back and sign all the selling agreements again. And so we saw a very, actually very quick pick up in terms of the Series T demand in the first quarter, as we noted March was a record month for us notwithstanding, not having signed all the selling agreements just yet at $29 million, obviously when the pandemic hit with the markets down 40% or whatever they were, the public markets that puts us in a significantly different investment climate.

But we're continuing, so we're lower than that. We've seen a drop-off from the record numbers in March, but we're still seeing very strong demand in terms of the Series T. And as we said, we're running at about a $200 million run rate, which is -- and we think that this is kind of the base from which we're going to continue to build, because we've got additional selling agreements that are coming online. And I think we in April witnessed the kind of the initial shock of the pandemic and the lockdowns and everything else and obviously, as you look at the public markets they've started to, they regained a significant part of the down lag.

Now we're going into this Phase II and Phase III of the lockdowns and then the unlock, and then dealing with chronic issues, etc, etc. But I think as things get closer, we will get past this shock and as things in the market get normalized we will go from there. But today our run rate is about to -- just under $200 million. We've seen a modest pickup in redemptions, not significantly. Redemptions generally are not a very significant number for us. Chris, do you have that number handy. If not send it to... [Speech Overlap]

Christopher J. Vohs -- Chief Financial Officer and Treasurer

Yeah, OK. Yeah.

R. Ramin Kamfar -- Chief Executive Officer and Chairman of our Board of Directors

Send it to me. Why don't we go onto the next question and then -- we'll pull the numbers and we'll give you an answer on this call, Gaurav.

Gaurav Mehta -- National Securities Corporation -- Analyst

Okay, that's fair. And I guess as you think about your $200 million run rate, how do you expect to deploy that capital in the current economic environment?

R. Ramin Kamfar -- Chief Executive Officer and Chairman of our Board of Directors

Well, that's a good question. I think we've got plenty of opportunities. We're past as I said, we're past this initial shock of the pandemic and the lockdowns and we're going to open the markets again. We don't know, no one really knows, I think, how that's going to play out. I think, multifamily in terms of real estate is a well-positioned asset class, just because it's an essential need as opposed to going to hotel or going to a shopping mall. So we're fortunate that way, and I think we're in a different position than 2008 in terms of lack of the significant overbuilding on the condo side, and the high -- extremely high leverage associated with those and the foreclosures that came with that. But I think as we -- as time goes on, you're going to see stress in the system and I think we're going to be -- we're in no hurry to deploy the capital today.

We're well-positioned in terms of our cash and we're building on that, and we have -- we're seeing plenty of opportunities today. And I think we're going to see continual, and that number is only going to go up for a period of time as we go through -- as we get from here to an economic recovery. So I think there'll be plenty of attractive opportunities for us given that we have access to capital.

Gaurav Mehta -- National Securities Corporation -- Analyst

Okay, thank you. That's all I had.

Operator

Our next question comes from Rob Stevenson from Janney. Please go ahead with your question.

Robert Stevenson -- Janny Montgomery Scott LLC -- Analyst

Good morning, guys. Ramin, just to follow-up on that, what are the plans at this point for the Series A preferred? Are you guys anticipating redeeming that with Series T or asset sales or leaving it in place?

R. Ramin Kamfar -- Chief Executive Officer and Chairman of our Board of Directors

Well, I think it's very expensive at 8.25%. We've looked at -- we were planning to redeem it. We would like to redeem it at some point in time and then it's going to depend on -- at that some point in time it becomes available for redemption later this year, I think we've got a couple of years to redeem it before the interest rate I think starts picking up. So we've got plenty of time on that, and that's one of the things that will be on the table. We're going to evaluate that versus other opportunities that we see in terms of the investment landscape, it's on the table.

Robert Stevenson -- Janny Montgomery Scott LLC -- Analyst

All right. And then, I guess the other question on -- revolving around the deployment of capital. Are you seeing much product, if any, in your markets that you would want to buy on the market today? Or did the market just come to a complete standstill with COVID and you're going to have to wait for things to reopen?

R. Ramin Kamfar -- Chief Executive Officer and Chairman of our Board of Directors

I think the markets are pretty much at a complete standstill today. Ryan can give you his point of view because he is closer to that than I am on a day-to-day basis. But our sense is the market is at a complete standstill because it's -- it's gone through the shock where everything is locked down, and people are going to try to figure out how do I even do unit tours, forget my third-parties in there, etc, etc, etc. So, and I think there is going to be an adjustment period between sellers that have pricing that they're looking backwards on pricing in terms of what they had in mind, what they have in mind, and buyers who are looking at forward pricing in a significant discount.

I know that we have three deals that we have signed up to sell that we closed in April, and we weren't going to -- we wanted the pricing that we have, and we're fortunate enough to have very attractive assets in very attractive markets, and we got our price, but I think that's going to -- not everyone is going to have the financial flexibility that we have, and the conservative positioning going into this. So I think that's my point of view. Ryan, feel free to add or subtract there.

Ryan S. MacDonald -- Chief Acquisitions Officer

No, I think that's spot on, Ramin. I think waiting for sellers to get a full understanding of kind of what the go-forward landscape is going to look like is something that will take time and if you go back to the GFC, in fact, using that as a proxy for a downturn, it took a good six months to 12 months to really shake loose opportunities. So we think there will be opportunity, especially coming into the end of the year and into next year, but it will take time for some visibility to shake out.

Robert Stevenson -- Janny Montgomery Scott LLC -- Analyst

Okay. And are you guys, I mean, what percentage of your assets have Fannie or Freddie financing on it? And are you seeing much in the way of the trade-off for the mortgage forbearance versus the eviction ban on assets in your market? And are you guys doing any of that?

Ryan S. MacDonald -- Chief Acquisitions Officer

The answer is north of 80% of our operating assets have agency financing on it. We are not seeing whether it's ourselves or any of the other large owners, many take advantage of the forbearance opportunities. People are collecting rent, I mean we collected effectively in line with where we were in past months, pre-COVID. I think the NMHC, and the other large owners are north of 90%. So people can pay their rents and are paying their rents. So we have not seen a usage of that system nearly as much as probably we would have predicted in mid-March when they came out with the plan.

With respect to our market, I think we're not seeing really any difference in evictions than we would pre-COVID. We're not seeing people again not pay rent. So we don't have necessarily situations where we've got mass evictions that we can't undertake because of the Fannie and Freddie guidelines.

Robert Stevenson -- Janny Montgomery Scott LLC -- Analyst

Okay. And then last one from me [Speech Overlap]

R. Ramin Kamfar -- Chief Executive Officer and Chairman of our Board of Directors

I think on the [Speech Overlap] sorry, on the Fannie, Freddie forbearance, I think it was a great thing for them to do, and we put a task force together when it came out to drill down into each property, map out if NOI will need forbearance. But as we looked at the numbers, and drilled down into each property we -- it was clear that we don't need it, and we're not going to take it. I'm sure there is someone out there -- there are people out there who are going to use it, given their leverage and their assets and their markets. But for our markets, for our tenants, for our quality product, we are not even close.

Robert Stevenson -- Janny Montgomery Scott LLC -- Analyst

Okay. And then last one from me, we've heard from some of the peer's different reasons for suspending redevelopment. I mean, from your standpoint what was the key item that sort of caused you guys to suspend it? Was it not likely to see the near-term returns, was it difficulty actually doing them in the current environment with lining up the contractors, etc. Was it the tenants not wanting the contractors in the buildings. When you guys boil it down. What was the sort of key reason why you guys decided to suspend the redevelopment program?

R. Ramin Kamfar -- Chief Executive Officer and Chairman of our Board of Directors

From our point of view, it was lack of visibility. I mean just because we've suspended it, and like I said, this thing is going to play out in phases. You've got the lockdown, with the massive unemployment, now the difference between this and GFC has a large part of that. It should hopefully be temporary, etc, etc, but I don't think we have any, as we said [Phonetic] and in the middle of March as we're looking at forbearance and everything else from a prudence point of view let's just spend it, and we'll take a look at it in 60 days, 90 days as we get more visibility.

Robert Stevenson -- Janny Montgomery Scott LLC -- Analyst

Okay.

Ryan S. MacDonald -- Chief Acquisitions Officer

So it's suspended today, but that doesn't mean a quarter from now when we're talking, we're not busy doing it, but problem I guess is, we won't be doing it in all the properties we were, we will be doing it in some.

R. Ramin Kamfar -- Chief Executive Officer and Chairman of our Board of Directors

And it's no different than our renewal strategy which we effectively went flat in March, April and now we are revisiting it for July and August, where there is obviously isolated opportunities where we're seeing strength and we're going to take advantage of that.

Robert Stevenson -- Janny Montgomery Scott LLC -- Analyst

Okay, thanks, guys. Be well.

R. Ramin Kamfar -- Chief Executive Officer and Chairman of our Board of Directors

Thank you, Rob. So back to Gaurav on the question we pulled -- Chris pulled the numbers and quarter two to date, we've had $1.2 million in holder redemption. That's probably again, we probably get about that number for the fourth quarter. So they're running at, let's say, twice the normal pace. But, as you can see it's not a material amount given the amount of preferred that we had out there.

In general, the reps and the investors look at it as a pretty stable and a source of income that is -- that has stability and credit protection with a common underlying it and without the volatility that you see in the market. So we don't expect that to pick up materially from here.

Next, operator?

Operator

Our next question comes from Alex Kubicek from Baird. Please go ahead with your question.

Alex Kubicek -- Robert W. Baird & Co. -- Analyst

Good morning. Have there been any requests for forbearance or deferral in your guys mezzanine loan portfolio? Just looking for an update on how those assets have performed, especially those in lease-up under development? Just kind of curious what you guys have heard from your borrowers on that side?

Ryan S. MacDonald -- Chief Acquisitions Officer

Well, [Speech Overlap] couple of things there. Happy to take it. A couple of things. So the answer is no. We have not had any request for forbearance on our capital, everything is paying current. I think if you look at it, it's a function of a couple of different things. One is the quality of the assets that we invested in is one, and then two if you look at the leverage points, we're typically somewhere in the 85% to call it, high 80%s of the cost and so if you look at where our portfolio is today, we're talking 80% of this through construction at this point. And so there has been significant value created at each asset. And so from an LTV standpoint, we are significantly below that.

So we feel really comfortable, I mean as a data point we have a Fort Lauderdale development deal where we have a mezzanine loan investment and we did -- the deal did 12 leases last week. So we have another deal in Charlotte, North Carolina, where we're doing seven leases a week with 40% pre-leased effectively. It's just open. So we've had actually very, very strong performance on that part of the book.

Alex Kubicek -- Robert W. Baird & Co. -- Analyst

That's helpful color. And then just one more from me. Probably Ramin, best to hear from you. But now with the stock, today, well below [Technical Issues], just wondering how repurchasing stacks up against other investment opportunities out there? Just any color on your methodology on buybacks today would be appreciated.

R. Ramin Kamfar -- Chief Executive Officer and Chairman of our Board of Directors

I think -- Well, we haven't repurchased anything in the second quarter, if that's your question. It is on the table along with other opportunities. I think it's prudent to give it -- given that, so this is a different downturn than everything we've -- anyone on this call, I think has ever experienced, because it's not just an economic recession. There is a health crisis overlay on top of it. So while we think, and we have a point of view in terms of how it will play out, no one really knows.

So, and I think in that scenario, given that --given those lay of the land, I think it's our job to be prudent in exercising our duties to shareholders. So as the buyback, do we think the stock is very attractive at the price that it is today and very undervalued? Absolutely. Have we gone out as individuals to buy stock? Absolutely.

We -- even if you look at some of the compensation element, a significant part of our management team has agreed to take its compensation in an equity, and so on and so forth. So it's on the table, but I think from an institutional point of view, from the reach point of view, it's prudent to take a pause, before we -- and we have better visibility before we jump in, and that's why -- so it's no different than our investment process, where we've taken a pause in looking at the landscape of opportunities, same in terms of use of capital for upgrades or redemption of the Series A preferred stock buybacks there. Will we be in the market buying back stock, absolutely, at the right time. So that's something that we're going to be talking internally and to the Board about.

Alex Kubicek -- Robert W. Baird & Co. -- Analyst

Thanks. That was really helpful.

R. Ramin Kamfar -- Chief Executive Officer and Chairman of our Board of Directors

Does that answer your question?

Alex Kubicek -- Robert W. Baird & Co. -- Analyst

Yeah, definitely. Thanks for the time.

R. Ramin Kamfar -- Chief Executive Officer and Chairman of our Board of Directors

Thank you, Alex.

Operator

[Operator Instructions]. And ladies and gentlemen we do have a question from Barry Oxford from DA Davidson. Please go ahead with your question.

Barry Oxford -- D.A. Davidson & Co. -- Analyst

Great, thanks, guys. Ramin, are you seeing opportunities, you said that the kind of a pause on the apartment as far as acquisitions. Is there more opportunity in the mezz or has that market kind of come to kind of a grinding halt at this particular point?

R. Ramin Kamfar -- Chief Executive Officer and Chairman of our Board of Directors

I think there may be some very interesting opportunities on the mezz preferred side, but I'll let, Ryan, is dealing with it on a day-to-day basis. So I'll let Ryan answer that.

Ryan S. MacDonald -- Chief Acquisitions Officer

No, no, that's exactly right, Ramin. I think there is opportunities certainly in the Mezz space today that we're looking at, and then obviously on the common side as well, but again, I think we're waiting probably the next couple of months to get better visibility on what the recovery is going to look like, but absolutely.

Barry Oxford -- D.A. Davidson & Co. -- Analyst

Ryan, have you seen the rate of return move on the mezz product?

Ryan S. MacDonald -- Chief Acquisitions Officer

The answer is yes, slightly, Barry, obviously the really strong projects are going to command more premium pricing and we typically invest in projects that we want to own long-term. So it's not just a mezzanine investment in the event that ultimately we do need to own it or we want to buy it out, but I think there's probably been a widening of a couple of hundred basis points in total return across the mezz and preferred space since the beginning of the year.

Barry Oxford -- D.A. Davidson & Co. -- Analyst

Okay, great. And then last question, 92% collections rate so far for the month of May. Very good. Great job. Is there a dispersion between markets or does that 92% give or take a couple of percentage points hold across all of your markets?

Ryan S. MacDonald -- Chief Acquisitions Officer

Well, the Orlando and Vegas are generally trailing, although Orlando has actually trended pretty well of late. If you take April 30th, as a good proxy, I think Orlando was about 93% collected, and Vegas where we only have two very, very small assets was 87% collected. That being said, post-quarter-end in Vegas, in particular, we've collected, an additional 500 basis points of AR.

So, while we saw probably delays and some of that is structural is nature. In Nevada, there's actually -- people tend to pay late because of the laws there, aren't as impactful to late payers. So we've seen Vegas in particular catch up significantly in May and late April relative to where it was at the month-end. Other than that, it's generally pretty well dispersed across the board.

Barry Oxford -- D.A. Davidson & Co. -- Analyst

Okay, great, thanks so much guys.

R. Ramin Kamfar -- Chief Executive Officer and Chairman of our Board of Directors

Thank you, Barry.

Barry Oxford -- D.A. Davidson & Co. -- Analyst

Yep.

Operator

And ladies and gentlemen, at this time, I would like to turn the conference call back over to management for any closing remarks.

R. Ramin Kamfar -- Chief Executive Officer and Chairman of our Board of Directors

Thank you, operator, and thank you, everyone, for joining us today. We look forward to continuing to report to you on our progress and be healthy and be safe. Good bye.

Operator

[Operator Closing Remarks].

Duration: 46 minutes

Call participants:

Christopher J. Vohs -- Chief Financial Officer and Treasurer

R. Ramin Kamfar -- Chief Executive Officer and Chairman of our Board of Directors

Ryan S. MacDonald -- Chief Acquisitions Officer

Gaurav Mehta -- National Securities Corporation -- Analyst

Robert Stevenson -- Janny Montgomery Scott LLC -- Analyst

Alex Kubicek -- Robert W. Baird & Co. -- Analyst

Barry Oxford -- D.A. Davidson & Co. -- Analyst

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