Image source: The Motley Fool.
Bluerock Residential Growth REIT Inc (BRG)
Q3 2019 Earnings Call
Nov 5, 2019, 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 3rd Quarter 2019 Earnings Conference Call. [Operator Instructions]. I would now like to introduce your host for today's call, Christopher Vohs, Chief Financial Officer of Bluerock Residential. Mr Vohs, please go ahead.
Christopher J. Vohs -- Chief Financial Officer and Treasurer
Thank you and welcome to Bluerock Residential Growth REIT's third Quarter 2019 Earnings Conference Call. This morning, prior to market open we issued our press release and earnings supplement. The press release can be found on our website at Bluerockresidential.com under the Investor Relations tab. In addition, we anticipate filing our 10-Q later this week. Following the conclusions of our prepared remarks, we'll 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 reasons management uses these non-GAAP measures in the assumptions used with respect to our earnings guidance. And with that, I'll turn the call over to Ramin Kamfar, Chairman and CEO of Bluerock Residential Growth REIT for his remarks.
R. Ramin Kamfar -- Chief Executive Officer and Chairman of Board of Directors
Thank you, Chris and good morning everyone. In addition to Chris, with me today are several key members of our executive team including Jordan Ruddy, our President and Chief Operating Officer; Jim Babb, our Chief Investment Officer; Ryan McDonald, our Chief Acquisitions Officer; and Mike Difranco, our EVP of Operations.
I'm going to focus my remarks on key strategic accomplishments and financial highlights for the quarter and close with some capital markets commentary. Afterwards, Ryan will provide you operational transactional balance sheet and guidance detail. I'm pleased to report, we delivered another strong quarter at the operational level with sustained organic rent growth and value creation from our renovation platform while executing strategic asset recycling plan. Year-over-year same-store revenue and NOI growth was 4.3% further reinforcing our thesis of investing in highly amenitized multifamily assets in knowledge economy growth markets.
In terms of capital allocation, during the quarter we closed two portfolio dispositions consisting of seven assets for $369 million, delivering a substantial gain of $49 million. The sale of the seven assets were executed at an estimated in place economic cap rate of 4.7% which is a reflection of the high quality of our portfolio. During the quarter, we utilized proceeds to acquire two wholly-owned assets with substantially stronger longer-term growth profiles to invest in two preferred equity investments in operating communities with solid risk-adjusted returns and to fund our high return renovation program. Ryan will provide additional detail in his section.
Moving onto numbers, GAAP net income was $0.75 per common share for the quarter as compared to a net loss of $0.44 per share for the prior year quarter, the figures included non-cash expenses including depreciation and amortization of $0.77 and $0.60 per share for the current and prior year quarters respectively.
On the revenue front, we produced a healthy 12% growth in the third quarter to $53.5 million, up from $47.9 million in the prior-year period, which was driven by our significant investment activity year-to-date in addition to our strong same-store performance.
Moving on to property level results, we grew property NOI 16% to $28 million in the quarter, up from $24.2 million in the prior year period. Same-store revenue and NOI continue to remain solid, delivering 4.3% growth in both categories for the quarter compared to the prior year which compares favorably to REITs with similar quality portfolios.
On the funds from operations front, we believe core CFFO, which is our NAREIT FFO with the add-back of non-cash, non-operating items is the most representative measure of our operating performance. During the quarter, we achieved core FFO of $0.19 per share. This quarter's number was impacted by two items. First was our asset dispositions and the timeframe needed to subsequently reinvest the funds in the third and fourth quarters, in particular, since the funds were not available to pay down our line of credit in the interim, because they had to be segregated for 1031 purposes.
Second, we should note that our second quarter FFO benefited from the cadence of some controllable expenses which got pushed by a quarter and we are seeing the impact of the reversal of that expense timing this quarter. Year-to-date, CFFO was in line with our expectations at $0.61 per share. Our dividend coverage remains strong with payout ratios for the quarter and year-to-date of 86% and 80% respectively. We continue to grow our asset base, gross assets are up 11% for the quarter from the prior year period to over $2.1 billion and we expect this figure to continue to grow as we complete the reinvestment of the disposition proceeds.
Moving to capital markets, during the third quarter, we raised $61.5 million through sales of our Series B preferred stock. This is a record quarterly figure for us exceeding our prior high watermark by 20% and we expect a similar run rate for the fourth quarter. At the end of the year, we expect \ to stop selling the Series B and transition to a new series of preferred called the Series T for Tom [Phonetic] which retains the beneficial convertible features of the B with some minor alterations to its other terms. As we've noted before, the preferred provides a unique advantage for BRG because it allows us to raise capital to fund accretive external growth with the flexibility to convert into common equity at our option at a future date, and at the future common stock price.
Finally, as we look ahead, we believe we're uniquely positioned with multiple growth levers to continue delivering shareholder value. First, we believe our market and asset selection in terms of assembling the right well-located highly-amenitized live work play communities and the right knowledge economy growth markets will allow us to deliver strong organic growth as seen in our top quartile same-store revenue and NOI growth year-to-date.
Second, we continue to enhance solid organic growth through our value-add upgrade program which is delivering very attractive returns. From inception to-date, we have renovated approximately 2400 units with an average ROI of 25%. This provides us with a meaningful embedded growth opportunity. We have approximately 4300 units identified for future upgrades, which based on our experience to date could grow our NAV per share by $3.25 to $4.60 per share.
Third, we were able to fund accretive external growth through issuance of our unique preferred while sourcing attractive acquisitions with upside potential through our Bluerock network.
Fourth, we believe we've demonstrated an ability to make prudent and accretive dispositions and reinvestment capital allocation decisions for the Company, when appropriate.
And last but not least, based on analysis that we've seen, we believe we're getting close to market float number that would make us eligible for additional index inclusion, which was a significant driver of equity pricing for three of our small cap multifamily peers during the period, leading up to the index inclusion which happened over the last couple of years.
So as we look ahead, we are pleased to be delivering against our guidance, continuing to grow NAV and driving value for our shareholders of which management is the largest at approximately 28% ownership alongside investors and the underlying equity of BRG on a fully diluted basis. With that I'd like to turn the call over to Ryan.
Ryan S. MacDonald -- Chief Acquisitions Officer
Thank you and good morning everyone. The operating portfolio continued the positive momentum through the third quarter, posting strong gains across the majority of our assets. Eight of our 16 MSAs posted growth exceeding 4%, highlighted by multi-quarter outperformance in Orlando and continued topline acceleration in our Austin asset. Portfolio-wide, across BRG's assets, average occupancy was down slightly to 94.1% compared to the third quarter of last year at 94.5%. Overall, same-store revenue increased 4.3% over the prior year period, driven by a strong 5.1% increase in average rental rates and a 60 basis point decline in occupancy of a higher than normal comp of approximately 95% in the third quarter of 2018.
Of note, 24 of the 25 properties in the pool recognized year-over-year increases in average rental rates in the quarter and 16 of 25 properties yielded increases exceeding 4%. We continue to aggressively push rates this quarter. Lease rate growth averaged 4.3%, which was 40 basis points higher than the third quarter of last year. Renewals averaged 4.5% for the quarter, with new leases achieving growth of 4.1%.
On the expense front, year-over-year same-store expenses grew by 4.4% with insurance, seasonal turnover and repairs and maintenance accounting for the majority of the increase. On a year-to-date basis, expenses are up and more favorable at 1.8%. Same-store NOI for the quarter increased 4.3% on a year-over-year basis, which is in line with our expectations and as revenue comps become tougher in the back half of the year.
On a sequential basis, same-store revenue was up 90 basis points over the prior quarter. Average rental rates contributed a positive 100 basis points. Occupancy was up 10 basis points and other income growth was driven by a variety of fee income categories. We continue to be pleased with our value-add renovation program, which has delivered healthy results.
To date, through the third quarter of 2019, across the existing portfolio, we have completed approximately 2400 unit renovations at an average cost of roughly $5100 per unit. Our efforts have yielded monthly rental increases of $108 per unit, resulting in a weighted average ROI of 25%.
Accounting for the disposition and reinvestment, we estimate there are approximately 4300 units remaining to be renovated in the current portfolio with comparable economics, which would be accretive to both CFFO and NAV.
In terms of capital allocation, the sale of the seven assets allowed us to strategically recycle capital to assets in new markets with immediate value-add renovation opportunity.
The dispositions were executed at an economic cap rate of 4.7% based on $300 per unit replacement reserves and the buyers year one tax estimates and the proceeds were reinvested into assets with a year one economic cap rate of approximately 4.9%, a stronger growth profile and projected stabilized cap rates exceeding 6%.
By way of update, the four reinvestments completed in the second and third quarters are all ahead of budget and achieved lease rate growth between 5% and 9% in the third quarter. Lease rate growth accelerated throughout the quarter at each asset with September ranging from 6.4% to 12.5%.
Moving on to markets, we continue to like first ranked suburban locations that are more insulated from supply growth and favor Orlando, Atlanta, Nashville, Phoenix and Las Vegas while remaining cautious on in-town Charlotte and the Dallas MSA which continue to be impacted by new supply.
Turning to the balance sheet, we completed the sale of seven assets in the quarter in two separate transactions yielding approximately $115 million in BRG equity. The five asset portfolio yielded BRG $92 million in net proceeds, while the two assets, San Antonio disposition yielded BRG approximately $22 million. We completed two acquisitions during the quarter totaling $70 million in BRG investment and also made two preferred equity investments into operating assets totaling approximately $10 million in BRG equity. The preferred equity investments are projected to yield a current pay approaching 8% and total annual returns of approximately 10%. With significant common equity behind our capital and solid cash flow profiles, we view these investments as additional opportunities to deliver strong cash flow with solid risk-adjusted returns for our investors.
And lastly on the investment front, during the quarter, BRG invested approximately $13 million into existing development investments in our preferred equity and mezzanine program. As of September 30, the total BRG investment in development preferred equity and mezzanine loans stood at $286 million across 17 projects.
Finally on the balance sheet, as of the end of October, BRG has approximately $0107 million available for investment through a combination of cash and availability on our revolving credit facilities plus we continue to grow our capacity through our Series B and Series T preferred offerings. We have a robust pipeline of attractive investment opportunities that we are actively working to close prior to year end.
To conclude, I will note that our portfolio is performing well and as a result we are reaffirming our full year CFFO per share guidance of $0.81 to $0.84. Please refer to our earnings supplement for the assumptions used with respect to our revised CFFO guidance. And with that, we will open it up to Q&A. Operator?
Questions and Answers:
Operator
We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Gaurav Mehta with National Securities. Pardon me actually, our first question comes from Craig Kucera with B. Riley, FBR.
Craig Kucera -- B. Riley, FBR, Inc. -- Analyst
Hey, good morning guys. Just given that dispositions were a little elevated in the third quarter and sort of you've got a $107 million of availability right now. How should we think about fourth quarter acquisition volume?
Ryan S. MacDonald -- Chief Acquisitions Officer
Sure, Craig. This is Ryan. Good morning. I think at the beginning of the year we said we would be about $500 million to $700 million of acquisition volume for the year. I think we've done about $340 million to-date, we have a pretty robust pipeline and I think you'll see us be towards the top end of that range by the end of the year.
Craig Kucera -- B. Riley, FBR, Inc. -- Analyst
Got it. And as far as, Ramin, you made a comment about sort of the cadence of expenses affiliated with the dispositions impacting third quarter results and maybe reversing here in the fourth quarter. Can you elaborate a bit on what you mean by that?
R. Ramin Kamfar -- Chief Executive Officer and Chairman of Board of Directors
There were some controllable expenses that for timing issue has got pushed from Q2 to Q3. I think we mentioned that we didn't think that the Q2 run rate was necessarily indicative of go forward run rate, which is kind of -- which was obviously apparent if you looked at our whole year guidance, and I think you see, it just had to do with our R&M expenditures primarily and items that run through the income statement and at the property level. So, we saw some of that get pushed from Q2 to Q3 and we saw the impact. So it pushed up core FFO in Q2 and then it reversed itself in Q3.
Craig Kucera -- B. Riley, FBR, Inc. -- Analyst
I got it, okay. And with the Series, with the preferred, basically you'll stop selling here in the fourth quarter after maybe another $60 million or so. Are you anticipating somewhat of a slower roll-out or pace of the Series D next year or how should we think about the kind of uptake of that new product?
R. Ramin Kamfar -- Chief Executive Officer and Chairman of Board of Directors
It's always when you take -- yeah, yeah, yeah, the answer is yes. I don't have an exact number for you, but we will -- we will obviously give guidance to it as we get closer to the end of the year and get more clarity in terms of uptake. As you know, when we take a registration down and we up it and we've done it three times already, you have to go back and get selling agreements with all the firms that we sell through and that's about 70, 75 firms right now and that's a process and it just takes time. So I think we're heading, we're going to exceed our number -- our projected number for this year in terms of the preferred, it's getting very good--it's getting very good reception we're simplifying the structure a little bit by eliminating the warrant, which has complications all over.
But we think that this is going to have similar acceptance in the -- in the market and I think we're going to see the -- we're going to see the uptake being relatively quick, but I -- I would expect that there will be a slowdown in Q1 and Q2.
Craig Kucera -- B. Riley, FBR, Inc. -- Analyst
Got it. That makes sense. One more for me. I know you mentioned that you were -- you were cautious on sort of in-town Charlotte and the Dallas MSA, does that steer you towards maybe selling some assets out of those -- out of those markets or you're just less likely to put more money into those markets?
R. Ramin Kamfar -- Chief Executive Officer and Chairman of Board of Directors
Well, on Dallas, we did sell two deals as part of the portfolio. So I think, I don't think you'll see us invest significant sums of capital in Dallas certainly in the near future. I think Charlotte's a case-by-case basis. We like certain, I'll call it, pockets of in-town Charlotte but as a whole, you need to be cognizant of the supply that's going on in the South and we think overall on a long-term basis, Charlotte, has a lot of legs to it, but in the near-term, I think there is some challenges, but it may present some -- actually some opportunities for potential deals that may have concessions that we're able to pick off from developers. So I can't say that -- that we won't look at in-town Charlotte but -- but we're just a little bit more cautious than, i'll call it, a market play.
Craig Kucera -- B. Riley, FBR, Inc. -- Analyst
Okay, thanks guys.
R. Ramin Kamfar -- Chief Executive Officer and Chairman of Board of Directors
Thanks, Craig.
Operator
Our next question comes from Gaurav Mehta with National Securities.
Gaurav Mehta -- National Securities -- Analyst
Yeah, thanks, good morning. I wanted to follow up on your comment on the acquisition volume for fourth quarter. I think you mentioned you expect to be on the upper end of $500 million to $700 million range and you've done $320 million as of 3Q. So I was hoping if you could provide some color on first where you're seeing the opportunities. And then, second should we expect the funding of the additional $350 million to $400 million by like preferred stock and debt?
Ryan S. MacDonald -- Chief Acquisitions Officer
Sure, Gaurav. This is Ryan. I think right now we're tracking about six opportunities by year end, hoping to close about six opportunities. I think the markets are favoring, call it, more West Coast-driven markets that we've been executing on the beginning of this year, I think, Phoenix and Vegas were large investment markets first us this year. You may see us add to one of those markets in particular that we really like and scale. But I think on a funding side, we have a $107 million of capital available today through our Series B preferred and lines of credit. So if you lever them up about 50% to 65% it should get us the -- all the way there to the $350 million plus or minus that -- that's in the pipeline towards the end of the year.
Gaurav Mehta -- National Securities -- Analyst
Okay. And second question, could you tell us how much then renovations contribute to your same-store revenue number for the third quarter?
Ryan S. MacDonald -- Chief Acquisitions Officer
Sure. This quarter it was about 90 basis points. It's been about 80-100 on average. This quarter was 90.
Gaurav Mehta -- National Securities -- Analyst
Okay, thank you.
Operator
Our next question comes from Barry Oxford with DA Davidson. And again, I apologize, Barry, it looks like the line dropped. So if you could rejoin the queue. We'll take a question from Drew Babin with Baird.
Drew Babin -- Robert W. Baird -- Analyst
Hey, good morning.
R. Ramin Kamfar -- Chief Executive Officer and Chairman of Board of Directors
Good morning.
Drew Babin -- Robert W. Baird -- Analyst
A couple of the acquisitions you made are a little older and vintage than most of the properties that you've bought throughout the years. And I was just curious might the capex, kind of going into this maybe, exceed just doing kitchen baths kind of minor unit refreshes. Is there anything that needed to happen with the lobby or exterior just maybe a little more impactful and just larger in scope?
Ryan S. MacDonald -- Chief Acquisitions Officer
Sure. Good morning Drew. So, on -- I'll segregate it, [Audio Gap] which is one of the larger acquisitions that we've done, it's effectively a main and main location old town, Scottsdale so older vintage but tremendous location. The amenities were actually redone by the prior owner. So there is not going to be significant capex opportunity there, it's going to be primarily interior unit renovations and we actually just started our first renovation there and saw significant bumps ahead of what we were underwriting. On the -- on the Las Vegas opportunity, again the -- the prior owners had executed on a amenity refresh as well. So it's just primarily in unit renovations. I think one of the reasons we quoted economic cap rate, which is inclusive of replacement reserves to make sure that you're getting an apples-to-apples comparison versus a newer belt deal so still closing in on a five cap year one with these assets but higher replacement reserves built into that number. So should feel comfortable that if they are adequately capitalized but they're really a function of location. I mean you can't replicate these locations. So we felt it was an interesting opportunity for us in both cases to go out and invest capital into a 100% locations in older assets with upside opportunity.
Drew Babin -- Robert W. Baird -- Analyst
Great. I appreciate the color there. And then I know Atlanta and Orlando are two markets that you're more excited about for next year. And I guess it would be helpful if you could talk about kind of on the demand side or the supply side, kind of what excites you about those markets and maybe just a little more color on the dynamics of those markets would help.
Ryan S. MacDonald -- Chief Acquisitions Officer
Sure. Orlando continues to be an exceptional job generate I think, again 3.7% year-over-year job but then we look at our portfolio and and we still see pretty positive trends across the board on new lease rate growth. So we're continuing to be excited about that market. On Atlanta, it's a submarket-to-submarket decision for us. I think historically we've seen substantial supply come in, in midtown and Buckhead and we've been -- we've stayed away from those sub-markets, which have been institutional heavy and have focused, I'll call it, on the first ring suburbs on the northern side and they performed very well for us. It's where the jobs are, you have a lot of technology, healthcare-driven jobs up in that northern corridor of Georgia 400 etc, that drive a lot of demand that way.
So I think if you see us continue to execute in Atlanta, it's going to be up in the northern suburbs where there is tremendous [Indecipherable] and a lack of supply that has insulated us from any potential rent pressure.
Drew Babin -- Robert W. Baird -- Analyst
Great. Appreciate the color on that. One more just on the capital allocation front. Obviously, your stock price could be anywhere next year, but I guess of the Series B preferred that are outstanding, can you quantify kind of the opportunity of what might be converted next year just based on kind of the timing lag from investment to when it's potentially convertible, kind of what does that look like?
R. Ramin Kamfar -- Chief Executive Officer and Chairman of Board of Directors
In terms of what is convertible or is that a question as to what is convertible, if that's the question, I think the number is a $185 million-ish at the end of Q4 for conversion. That number, obviously, goes up on a quarterly basis because it's a two-year low count so it'll be significantly higher than that by the -- by the end of the year. We should also -- we also -- that's just the Series B and then you've got the Series A, which is in there, which was our first kind of institutional preferred and it was expensive, at a 10 a quarter and that comes up for redemption on -- in October of next year and given the -- given that it's expensive, I think you should -- it's a good bet that you'll see us redeem that which would be accretive for us.
Drew Babin -- Robert W. Baird -- Analyst
Great. I appreciate all the color. That's all from me. Thank you.
R. Ramin Kamfar -- Chief Executive Officer and Chairman of Board of Directors
Thank you.
Operator
Our next question will be Barry Oxford with D.A. Davidson.
Barry Oxford -- D.A. Davidson. -- Analyst
Thanks guys. Getting back to the Series T, Ramin, will it run around the same rate as the B, but you won't have the warrants, so, therefore it's a better piece of paper or do you think you can do substantially better than what the Series B is running at?
R. Ramin Kamfar -- Chief Executive Officer and Chairman of Board of Directors
No, I think from an all-in cost, it's going to be -- it's going to be around -- it's the same price as Series -- as the Series B, there is the individual investor market where this -- where this stuff is sold as kind of a floor, if you want to access it and that's around 6-ish so, if you look at our Series B and you model what the warrant should be worth, we look at the warrant as about 40 basis points, if you run a Black Shoals or if you run Monte Carlo, etc, etc, really we've done all that.
So we're -- but it creates a tremendous level of complexity at every level, due diligence in terms of, at the BD[Phonetic] level at the Rep level, at the investor level and trying to explain it all throughout the sales process and then the platforms that they have to hold this for example, Schwab and Fidelity and American Trade, they don't want to deal with the complexity because each issuance we close every two years, it's a separate secure -- I'm sorry, every two weeks is -- is a separate -- it's two separate Q sales, one for the preferred, one for the warrant. So -- so we have people who want to participate in it, but won't because they can't handle all the complexity, so we did away with the warrant, we've bumped up the -- we've bumped up the yield slightly from 6 to 6.15[Phonetic] and then we have added a 20 basis point per year stock dividend, so that takes you -- it takes you up to 6.35[Phonetic] all-in assuming that it's sheltered, they're held out there for Five years and so that's the structure. We're still keeping the beneficial conversion and all the other reasons why it's a good security in terms of being able to grow accretively for BRG.
Barry Oxford -- D.A. Davidson. -- Analyst
Right. No, that sounds great. And then on the redemption in October. Will you just replace that piece with another preferred or do you plan to handle it differently or maybe we'll have to see where capital markets are at that particular time?
R. Ramin Kamfar -- Chief Executive Officer and Chairman of Board of Directors
Well, Barry that's a good question. You tell me where capital markets are. You tell me where -- hey, listen, our stock price has done well. I think over the last 12 months and year-to-date. I think we've got some additional levers to continue to for that outperformance versus our multifamily peers and the RMC in general to continue index inclusion on that, that I had put on the table.
We think we're close to it. So assuming that the conversion -- the issuance of common for us has always been at what level, Is it accretive, given where we are with respect to -- with respect to NAV, and I think we're much closer to it today than we were a year ago at this time. So and we're hoping that the outperformance continues and we can -- our goal is to grow common equity base and which would -- which would have multitude of benefits.
Barry Oxford -- D.A. Davidson. -- Analyst
Okay, that makes a lot of sense. Thanks.
R. Ramin Kamfar -- Chief Executive Officer and Chairman of Board of Directors
Thank you.
Operator
[Operator Instructions]. Our next question comes from Rob Stevenson with Janney .
Robert Stevenson -- Janney -- Analyst
Hi, good morning guys. The additional color on the Series T was helpful, thanks. A couple from me, the preferred equity investments in Austin, you guys said that it is an income producing assets and I think one of those is like circa late 70's and then the other one is a more recent one. What does the owner expect you to use your capital to do? Do these come with any type of purchase options or anything ?
Ryan S. MacDonald -- Chief Acquisitions Officer
They don't come with purchase options, Rob. It's a little bit different allocation of capital here, we're looking at them as more of a, call it, income generator than a total return generator. They are looking to improve the asset and generate a significant return so they view our cost of capital with their value-add strategy on the older -- on the older assets as a good cost of capital for them to generate significant total return. Whereas, we like the different profile return opportunity at a different part of the capital structure. So nothing more than that.
Robert Stevenson -- Janney -- Analyst
Okay.
R. Ramin Kamfar -- Chief Executive Officer and Chairman of Board of Directors
We like the asset. We like the -- hey,Rob, it's Ramin. We like the asset, we like the market. We may not like a vintage or we may not like the last dollar in, so we -- so this is a way for us to participate.
Robert Stevenson -- Janney -- Analyst
Okay. And then, is there anything abnormal going on with the Gulfshore asset in Naples, if I look at Page 8 of your supplemental, the September 30 occupancy was 86.4%. But on the Page 23 of the supplemental, the average occupancy during the quarter was like 91.1%. There was -- and there was also at Plantation Park a gap, but it wasn't quite as big.
Is there anything going on as to why the average, and I assume ending is the 86.4, were so different in the quarter?
Ryan S. MacDonald -- Chief Acquisitions Officer
Good question, Rob. So on Gulfshore we had an unexpected move out of corporate units, about 20 corporate units was capped our occupancy down. I will say that we're approaching 90%. So that asset, in particular, has a different seasonal profile than, I'd say, the traditional seasonal profile of multifamily assets across our portfolio, which you see like a better leasing profile in the summer months heading into early fall, whereas it's actually the better leasing profile here is in the winter months, just given the location, the asset in Southwest Florida.
So we had an unexpected move out of corporate units of about, I think, 20-plus corporate units in August, September that brought that number down. Again, we've rectified it, we've backfilled it and we're approaching 90% again today and we expect that to stabilize kind of sometime towards the end of the fourth[Phonetic] quarter, end of the first quarter.
Robert Stevenson -- Janney -- Analyst
Okay. And it wasn't quite as big, but anything similar going on at Plantation Park because the ending occupancy being close to 200 basis points difference than the average?
Ryan S. MacDonald -- Chief Acquisitions Officer
Yeah, I think that one was more staff turnover driven and we've got that rectified. I think we're approaching low '90s today with a 60-day run rate and a little low, below 90s, I'll call it. So that asset is going to start -- is going to run in the low '90s versus the mid '90s, just given where the rent profile is relative to the comps and so I think we're pretty comfortable where it is today. Good question, though.
Robert Stevenson -- Janney -- Analyst
Okay. And then last one for me, I mean, Ramin, to Barry's question, I guess, it remains to be seen what the capital markets look like in October, but is your, sitting here today, is your expectation that you would take out the eight plus percent preferred with additional preferred or is there any reason to use disposition proceeds or even common to take that out as long as the issuance of Series T or some other Series of preferred would be equally sort of priced in that sort of 6, 6.15[Phonetic] range?
R. Ramin Kamfar -- Chief Executive Officer and Chairman of Board of Directors
Yes.Yeah, and also I think if the Series -- I think we're going to issue, again, we don't have final numbers. So my guess when we -- when we pencil it out is we're going to issue a similar amount of Series T next year that could -- comparable to what we're doing in terms of Series B this year. So I think we'll have plenty of -- plenty of opportunity to take that -- take the A25[Phonetic] out with -- with our 615[Phonetic] Series T. Now we would look at -- we would look at, we would obviously look and see where our common is, we would like to grow the common. And so it will have to be what's most accretive from balancing FFO and NAV for the investors and make the call at the time. I don't want to -- if I had my druthers, and the common was priced appropriately, we'd absolutely use common and grow our common base and put that -- put it away. But I don't want to lock ourselves. I don't want to lock the firm in by saying we're going to issue common to take that out, because that -- that impact -- that ties -- ties our hands and impacts our pricing, etc, etc. So we're going to do the best, we've got multiple levers, we could always sell an asset to pay down, that's always -- that's always an option.
I think the dispositions at four seven[Phonetic] show that we've got plenty of attractive assets. Okay, and by the way, these were assets that we were trading add up, because we were seeing assets with better -- better investment profiles. So they weren't -- we weren't selling our crown jewels, rather, It was the reverse. So we've got plenty of options. We're going to look at it as I think you've seen us in the last few years, we are going to be thoughtful and pick the -- in terms of picking the best -- best answer for investors of which we're obviously a big, big truck fit.
Robert Stevenson -- Janney -- Analyst
Okay, thanks guys. Appreciate it.
R. Ramin Kamfar -- Chief Executive Officer and Chairman of Board of Directors
Thank you.
Operator
This concludes our question-and-answer session. I would like to turn the conference back over to Ramin Kamfar for any closing remarks.
R. Ramin Kamfar -- Chief Executive Officer and Chairman of Board of Directors
Thank you, operator and thank you everyone for joining us today. We look forward to continuing to report on our progress to you in the coming quarters. Goodbye.
Operator
[Operator Closing Remarks]
Duration: 39 minutes
Call participants:
Christopher J. Vohs -- Chief Financial Officer and Treasurer
R. Ramin Kamfar -- Chief Executive Officer and Chairman of Board of Directors
Ryan S. MacDonald -- Chief Acquisitions Officer
Craig Kucera -- B. Riley, FBR, Inc. -- Analyst
Gaurav Mehta -- National Securities -- Analyst
Drew Babin -- Robert W. Baird -- Analyst
Barry Oxford -- D.A. Davidson. -- Analyst
Robert Stevenson -- Janney -- Analyst
