Our tailored approach to real estate reflects Monogram’s commitment to owning, operating, and developing luxury Class A multifamily properties with a significant presence in select coastal markets. Over the past year, we have made considerable progress on the completion and stabilization of our development program, while driving Same-Store growth in our stabilized portfolio and enhancing our balance sheet. As we close 2016 and look to 2017, our primary objectives remain the same: we seek to offer the best in luxury living for our residents while creating long-term value for our shareholders. |1| ANNUAL REPORT 2016 4 SHAREHOLDER LETTER 6 KEY ACCOMPLISHMENTS 7 FINANCIAL HIGHLIGHTS 9 STRATEGIC FOCUS 10 THE DEVELOPMENT PROGRAM 13 AN EVOLVING PORTFOLIO 16 TAILORED LIVING 24 APPENDIX 27 ANNUAL REPORT ON FORM 10-K MONOGRAM RESIDENTIAL TRUST |2| |3| ANNUAL REPORT 2016 A LETTER FROM THE CEO SH A R In 2016, we were pleased to add three new members EHO LD who have extensive industry experience to our Board ER LET of Directors. Ben Moreland is Executive Vice Chairman TER DEAR SHAREHOLDERS, of Crown Castle International Corp., a wireless 2016 was another strong year infrastructure REIT. For 23 years, Tim Pire served as for Monogram as we continued Managing Director at Heitman, a global real estate to execute on our strategy to investment firm, and now teaches at Marquette increase long-term shareholder University. Tammy Jones is President of Basis value. We continued to stabilize Investment Group, a multi-strategy commercial real our development portfolio, to estate finance platform in New York, and was recently drive growth in our Same-Store honored as one of the 25 most influential black portfolio, and to cultivate a women in business by Network Journal. best-in-class multifamily The Monogram luxury brand is well-posi- continue to dispose of non-core properties company. I am very tioned with favorable demographic trends to strategically harvest gains and redeploy in submarkets that offer strong opportu- capital into our core markets. Accordingly, fortunate to work with such nities for growth. Demand for apartments we expect to increase our investments in remains robust—a trend which we antici- our existing coastal markets where we can a dynamic and talented pate will continue—as we are experiencing scale our strong local teams and expertise, historically high absorption rates in many of and where low land availability and strong management team and our markets. Headwinds from new supply economic growth drivers create long-term persist, but we are seeing a significant stability in multifamily markets. staff. Their perseverance slowdown in new construction in many of our submarkets due to greater capital The Monogram team has a proven track and fortitude position controls limiting the availability of con- record of Value Creation, and we look struction financing. These capital barrier forward to another successful year ahead. Monogram to take limitations on new construction will improve the balance of demand and supply, which advantage of strong strengthens Monogram’s position to realize strong growth in future years. fundamentals to In 2017, Monogram will continue to capture outperform in the real substantial embedded growth and value within our portfolio. We expect to stabilize estate sector. all but one of our remaining development MARK T. ALFIERI - CEO properties by year end 2017. Consistent with our strategy since listing on the New York Stock Exchange (NYSE) in 2014, we will MONOGRAM RESIDENTIAL TRUST |4| |5| ANNUAL REPORT 2016 A LETTER FROM THE CEO SH A R In 2016, we were pleased to add three new members EHO LD who have extensive industry experience to our Board ER LET of Directors. Ben Moreland is Executive Vice Chairman TER DEAR SHAREHOLDERS, of Crown Castle International Corp., a wireless 2016 was another strong year infrastructure REIT. For 23 years, Tim Pire served as for Monogram as we continued Managing Director at Heitman, a global real estate to execute on our strategy to investment firm, and now teaches at Marquette increase long-term shareholder University. Tammy Jones is President of Basis value. We continued to stabilize Investment Group, a multi-strategy commercial real our development portfolio, to estate finance platform in New York, and was recently drive growth in our Same-Store honored as one of the 25 most influential black portfolio, and to cultivate a women in business by Network Journal. best-in-class multifamily The Monogram luxury brand is well-posi- continue to dispose of non-core properties company. I am very tioned with favorable demographic trends to strategically harvest gains and redeploy in submarkets that offer strong opportu- capital into our core markets. Accordingly, fortunate to work with such nities for growth. Demand for apartments we expect to increase our investments in remains robust—a trend which we antici- our existing coastal markets where we can a dynamic and talented pate will continue—as we are experiencing scale our strong local teams and expertise, historically high absorption rates in many of and where low land availability and strong management team and our markets. Headwinds from new supply economic growth drivers create long-term persist, but we are seeing a significant stability in multifamily markets. staff. Their perseverance slowdown in new construction in many of our submarkets due to greater capital The Monogram team has a proven track and fortitude position controls limiting the availability of con- record of Value Creation, and we look struction financing. These capital barrier forward to another successful year ahead. Monogram to take limitations on new construction will improve the balance of demand and supply, which advantage of strong strengthens Monogram’s position to realize strong growth in future years. fundamentals to In 2017, Monogram will continue to capture outperform in the real substantial embedded growth and value within our portfolio. We expect to stabilize estate sector. all but one of our remaining development MARK T. ALFIERI - CEO properties by year end 2017. Consistent with our strategy since listing on the New York Stock Exchange (NYSE) in 2014, we will MONOGRAM RESIDENTIAL TRUST |4| |5| ANNUAL REPORT 2016 KEY ACCOMPLISHMENTS FIN A N C IA L H IG DNEEAVRELINOGP MCEONMTP PLRETOIGORNAM SPTORRATTFEOGLIICO DRIESFPIONSEIMTEIONNTS & HLIGH T S We stabilized three development properties Monogram opportunistically sold two totaling 1,191 units in 2016 - SoMa in non-core properties in 2016. In the third Miami, FL, Verge in San Diego, CA, and quarter, we sold Renaissance and an adjacent 3.9% Cyan on Peachtree in Atlanta, GA. As a land parcel located in Concord, CA for a result, Monogram has now completed gross sales price of $65.4 million. The net and fully stabilized 11 development proceeds of this sale were used to pay down SS NOI GROWTH properties over the past three years, resulting debt. In the fourth quarter of 2016, in significant profit and Value Creation. All Monogram sold The Reserve at La Vista Figures shown represent Monogram’s Proportionate Share but one of the remaining six properties in our Walk, located in the non-core market of development program are expected to be Atlanta, GA, for a gross sales price of $57.2 completed and stabilized by the end of 2017. million. Subsequent to year end, Monogram 2016 13.9% sold Grand Reserve located in Dallas, TX SOLID OPERATING RESULTS for a gross sales price of $42.0 million. FINANCIAL TOTAL NOI GROWTH In 2016, we increased our proportionate The combined sales proceeds of The HIGHLIGHTS share of Same-Store Net Operating Income Reserve at La Vista Walk and Grand Reserve Figures shown represent Monogram’s Proportionate Share (NOI) by 3.9%. As of the fourth quarter enabled Monogram to redeploy capital 2016, Monogram’s Same-Store portfolio through a tax efficient exchange achieved monthly rental revenue of $1,882 transaction to acquire Desmond at Wilshire. per unit, which represents approximately a The Desmond is a recently completed, 1% increase over the same period last year. 175-unit property located a quarter-block off The Same-Store operating margins saw Wilshire Boulevard along the Miracle Mile in improvements on a year-over-year basis, Los Angeles. We expect Desmond to pro- ending 2016 at 65.1% as compared to duce stronger NOI growth and incremental 64.5% in 2015. Value Creation over the longer term. BALANCE SHEET PROGRESS Monogram continued its strategy to extend debt maturities, while seeking to reduce leverage over the longer term. During 2016, we successfully refinanced $167 million of maturing debt at a lower weighted 94.6% average interest rate. 1 Reduced net debt to Adjusted EBITDA 1 ACHIEVED OCCUPANCY to 8.5x at December 31, 2016, compared to 11.3x at December 31, 2015. $1,925 1 AVERAGE MONTHLY 1 Based on Total Stabilized Portfolio RENTAL REVENUE PER UNIT 1 See appendix for additional definitions and reconciliations. MONOGRAM RESIDENTIAL TRUST |6| |7| ANNUAL REPORT 2016 KEY ACCOMPLISHMENTS FIN A N C IA L H IG DNEEAVRELINOGP MCEONMTP PLRETOIGORNAM SPTORRATTFEOGLIICO DRIESFPIONSEIMTEIONNTS & HLIGH T S We stabilized three development properties Monogram opportunistically sold two totaling 1,191 units in 2016 - SoMa in non-core properties in 2016. In the third Miami, FL, Verge in San Diego, CA, and quarter, we sold Renaissance and an adjacent 3.9% Cyan on Peachtree in Atlanta, GA. As a land parcel located in Concord, CA for a result, Monogram has now completed gross sales price of $65.4 million. The net and fully stabilized 11 development proceeds of this sale were used to pay down SS NOI GROWTH properties over the past three years, resulting debt. In the fourth quarter of 2016, in significant profit and Value Creation. All Monogram sold The Reserve at La Vista Figures shown represent Monogram’s Proportionate Share but one of the remaining six properties in our Walk, located in the non-core market of development program are expected to be Atlanta, GA, for a gross sales price of $57.2 completed and stabilized by the end of 2017. million. Subsequent to year end, Monogram 2016 13.9% sold Grand Reserve located in Dallas, TX SOLID OPERATING RESULTS for a gross sales price of $42.0 million. FINANCIAL TOTAL NOI GROWTH In 2016, we increased our proportionate The combined sales proceeds of The HIGHLIGHTS share of Same-Store Net Operating Income Reserve at La Vista Walk and Grand Reserve Figures shown represent Monogram’s Proportionate Share (NOI) by 3.9%. As of the fourth quarter enabled Monogram to redeploy capital 2016, Monogram’s Same-Store portfolio through a tax efficient exchange achieved monthly rental revenue of $1,882 transaction to acquire Desmond at Wilshire. per unit, which represents approximately a The Desmond is a recently completed, 1% increase over the same period last year. 175-unit property located a quarter-block off The Same-Store operating margins saw Wilshire Boulevard along the Miracle Mile in improvements on a year-over-year basis, Los Angeles. We expect Desmond to pro- ending 2016 at 65.1% as compared to duce stronger NOI growth and incremental 64.5% in 2015. Value Creation over the longer term. BALANCE SHEET PROGRESS Monogram continued its strategy to extend debt maturities, while seeking to reduce leverage over the longer term. During 2016, we successfully refinanced $167 million of maturing debt at a lower weighted 94.6% average interest rate. 1 Reduced net debt to Adjusted EBITDA 1 ACHIEVED OCCUPANCY to 8.5x at December 31, 2016, compared to 11.3x at December 31, 2015. $1,925 1 AVERAGE MONTHLY 1 Based on Total Stabilized Portfolio RENTAL REVENUE PER UNIT 1 See appendix for additional definitions and reconciliations. MONOGRAM RESIDENTIAL TRUST |6| |7| ANNUAL REPORT 2016 ST R A T EG Following our stated roadmap, we will IC FO C U S continue to execute our strategy in 2017. As part of our “tailored living” brand and approach, we continue to work to exceed our residents’ expectations STRATEGIC for luxury living. Similarly, we take a FOCUS tailored approach to our investment SUBSTANTIAL COMPLETION COSTAL MARKET FOCUS OF DEVELOPMENT PROGRAM & PORTFOLIO REFINEMENT strategy and aim to craft a portfolio Our plan is to stabilize our four develop- Our portfolio strategy focuses on Class A ments in lease-up and deliver on our two multifamily properties in high-density urban that is positioned to perform throughout remaining development properties under and infill submarkets. We have a significant construction. We will continue to focus on presence in select coastal markets. We look realizing NOI growth in developments by for locations with high walkability within market cycles. By the end of 2017, we achieving stabilized occupancy. All but one vibrant transit-oriented areas, offering both of these six remaining properties in our retail and cultural amenities. Our properties development program are expected to are in affluent neighborhoods, where the expect Monogram’s collection of Class A stabilize by the end of 2017. high cost and inflexibility of single-family housing makes renting attractive. PRODUCE STRONG multifamily properties to better reflect OPERATING RESULTS We will continue to evaluate opportunities to sell non-core properties to harvest gains Our team continues to work to drive and redeploy capital to maximize long-term the vision we set out at the time of our Same-Store NOI growth through strong stockholder value. As such, we expect to property operations. Amidst the ongoing continue to refine our portfolio and challenge of new multifamily deliveries in increase our exposure in existing coastal NYSE listing, with a significant coastal our markets, we expect to focus on growing markets, where long-term growth rates are occupancy and driving rent growth through expected to exceed the national average lease renewals in order to achieve our and where we have opportunities to capture market focus and a substantially revenue goals for the year. As our portfolio operational efficiencies. revenues increase, we continue to manage controllable operating expenses prudently stabilized portfolio. and push to increase operating margins. MONOGRAM RESIDENTIAL TRUST |8| |9| ANNUAL REPORT 2016 ST R A T EG Following our stated roadmap, we will IC FO C U S continue to execute our strategy in 2017. As part of our “tailored living” brand and approach, we continue to work to exceed our residents’ expectations STRATEGIC for luxury living. Similarly, we take a FOCUS tailored approach to our investment SUBSTANTIAL COMPLETION COSTAL MARKET FOCUS OF DEVELOPMENT PROGRAM & PORTFOLIO REFINEMENT strategy and aim to craft a portfolio Our plan is to stabilize our four develop- Our portfolio strategy focuses on Class A ments in lease-up and deliver on our two multifamily properties in high-density urban that is positioned to perform throughout remaining development properties under and infill submarkets. We have a significant construction. We will continue to focus on presence in select coastal markets. We look realizing NOI growth in developments by for locations with high walkability within market cycles. By the end of 2017, we achieving stabilized occupancy. All but one vibrant transit-oriented areas, offering both of these six remaining properties in our retail and cultural amenities. Our properties development program are expected to are in affluent neighborhoods, where the expect Monogram’s collection of Class A stabilize by the end of 2017. high cost and inflexibility of single-family housing makes renting attractive. PRODUCE STRONG multifamily properties to better reflect OPERATING RESULTS We will continue to evaluate opportunities to sell non-core properties to harvest gains Our team continues to work to drive and redeploy capital to maximize long-term the vision we set out at the time of our Same-Store NOI growth through strong stockholder value. As such, we expect to property operations. Amidst the ongoing continue to refine our portfolio and challenge of new multifamily deliveries in increase our exposure in existing coastal NYSE listing, with a significant coastal our markets, we expect to focus on growing markets, where long-term growth rates are occupancy and driving rent growth through expected to exceed the national average lease renewals in order to achieve our and where we have opportunities to capture market focus and a substantially revenue goals for the year. As our portfolio operational efficiencies. revenues increase, we continue to manage controllable operating expenses prudently stabilized portfolio. and push to increase operating margins. MONOGRAM RESIDENTIAL TRUST |8| |9| ANNUAL REPORT 2016 THE DEVELOPMENT PROGRAM CONSTRUCTION LEASE-UP TH E D EV ELO SiSntcaeb Liliiszteedd 2012 2013 2014 2015 2016 2017 PMENT As we look forward in STABILIZATION There are six projects in PRO 2017, we expect to Since listing on the NYSE, lceoansset-ruupc toior nu ntodtearling 1,995 Allusion WHOesUt SUTnOivNer,s TitXy GRAM we stabilized 11 properties units. Monogram’s share Blue Sol continue to realize the out of the 17 originally in of estimated remaining COSTA MESA, CA the development program. development costs to 4110 Fairmount positive impact of our Monogram successfully complete the existing DALLAS, TX portfolio’s embedded tprraonjesictitos nferodm e alecahs oef- uthpe tsoe dtoetvaelslo $p8m6 emnitl lpiorno.g Arallm ArpeggioD VAicLtLoAryS P, aTrXk operating properties with but one of these projects growth and value as all results generally at or above are expected to be com- Muse MHuOseUuSmT ODiNst, rTicXt pro forma underwriting. pleted and stabilized by but one of our remaining We continue to prove our the end of 2017. Everly WAKEFIELD, MA team’s ability to create real development properties value by delivering attrac- Four of these properties Point 21 tive returns on cost. These are currently leasing and DENVER, CO is expected to stabilize. results include: are 59% occupied on a SEVEN weighted average basis. AUSTIN, TX Since the time of our NOI Yields at Stabilization Two projects, Lucé in NYSE listing, Monogram of approximately 7% 1 Hanudn Ctinagsptoiann B Deaeclrha,y C BAea ch CyaAnT oLnA PNeTacAh,t GreAe Returns on cost at average in Delray Beach, FL, are SoMa has made substantial spreads over market cap under construction. MIAMI, FL rates generally in excess of Verge progress on its 150-200 basis pts This program is approxi- SAN DIEGO, CA mately 82% complete cumulative development Total Value Creation of based on proportionate Developments over $150 million on these share of total Economic 2013 2014 2015 2016 2017 program, which is 11 stabilized properties 2 Costs incurred. In Lease-Up now 91% complete, CURRENT Potential Value Creation SAN FRANCISCOOl,u CmAe PROGRAM totals approximately $90 based on Monogram’s million for projects in Nouvelle Monogram’s remaining lease-up and under TYSONS CORNER, VA proportionate share of development program construction.3 Zinc consists of six projects out CAMBRIDGE, MA total Economic Costs. of the 17 in our program 1 P12r omjeocnttehds NofO NI OYiIe sludb aste Sqtuaebnilti ztaot siotanb iisl iczaaltciounla dteivdi daes d THE Alexan at the time of our NYSE bady dtoittioaln Ealc donefiomniticio Cnso.sts. See Appendix for DALLAS, TX listing. Our development 2 Represents estimates of current value less estimated program is designed to tportoapl oErctioonnoamtei cs hCaorest. Sfoere e Aacphp eonf dthixe fporrojects at our Under drive accretive growth and additional definitions. 2014 2015 2016 2017 2018 2019 enhance the portfolio. The 3 Pprootjeencttieadl Vfuatluuere C streabatiliiozne dre vparleusee lnetsss t thoet auln Edcisocnooumntice d Construction spread between projected Cadodsittsio fnoar lo duer fipnroitpioonrsti.onate share. See Appendix for stabilized yields and market Caspian Delray Beach cap rates drives growth in DELRAY BEACH, FL cash flows and Net Asset Lucé Value (NAV) over time. HUNTINGTON BEACH, CA MONOGRAM RESIDENTIAL TRUST |10| |11| ANNUAL REPORT 2016
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