Bluerock Residential Growth REIT, Inc. (NYSEMKT:BRG) Files An 8-K Entry into a Material Definitive AgreementITEM 1.01
Flagler Village Property
As previously disclosedin the Form 8-Kfiled with the Securities and Exchange Commission (the “SEC”) on December 24, 2015 by Bluerock Residential Growth REIT, Inc., a Maryland corporation (the “Company”), on December 18, 2015, the Company, through a wholly-owned subsidiary of our operating partnership, Bluerock Residential Holdings, L.P., a Delaware limited partnership (the “Operating Partnership”), made an initial investment to acquire an 89.5% common equity interest in BR Flagler JV Member, LLC, a Delaware limited liability company (“BR Flagler JV Member”). BR Flagler JV Member is a joint venture entity that owns a majority interest in BR ArchCo Flagler Village JV, LLC, a Delaware limited liability company (the “Flagler Village JV”), which owns, through wholly-owned subsidiaries, a 50% interest in an assemblage of land totaling 3.7 acres for development of a 6-story, 385-unit urban, wrap->
On December 29, 2017, 89.0% of the Company’s common equity interest in BR Flagler JV Member was redeemed in exchange for a mezzanine loan by the Company to BR Flagler JV Member in the original principal amount of approximately $53.6 million (the “Flagler Loan”), inclusive of approximately $27.3 million of incremental funding. Also on December 29, 2017, Fund II made an additional common equity investment in BR Flagler JV Member in the amount of approximately $2.8 million, and Bluerock Special Opportunity + Income Fund III, LLC, a Delaware limited liability company and an affiliate of the Company’s former external manager (“Fund III”), made a common equity investment in BR Flagler JV Member in the amount of approximately $409,000. As a result of these transactions, the Company now owns an indirect 0.5% common equity interest in BR Flagler JV Member, Fund II owns a 93.03% common equity interest in BR Flagler JV Member, and Fund III owns a 6.47% common equity interest in BR Flagler JV Member. The Company (through a wholly-owned subsidiary of our Operating Partnership), Fund II, and Fund III have entered into an amended and restated joint venture operating agreement for BR Flagler JV Member reflecting the structure described above and otherwise containing terms, conditions, and indemnities that are customary and standard for joint ventures in the real estate industry.
The Flagler Loan was made to a Loan and Security Agreement and a Secured Promissory Note, and is secured by a pledge of BR Flagler JV Member’s membership interest in the Flagler Village JV to a Control Agreement (the Secured Promissory Note, Loan and Security Agreement, and Control Agreement, collectively, the “Flagler Loan Documents”). The Flagler Loan has a five-year term and requires payment of interest on a current basis at the rate of fifteen percent (15%) per annum. Included in the amount of the Flagler Loan is an approximately three-year interest reserve. In addition, BR Flagler JV Member granted to the Company a right of first offer to purchase the Flagler Property or BR Flagler JV Member’s membership interests in the Flagler Village JV. to the Loan and Security Agreement, at any time until the earlier of (a) the closing of construction financing for the development of the Flagler Property, or (b) March 31, 2018, BR Flagler JV Member has the right to cause the Company to convert its rights under the Flagler Loan Documents into an approximately 89.5% common membership interest in BR Flagler JV Member.
Crescent Perimeter Property
On December 12, 2016, the Company, through a wholly-owned subsidiary of our Operating Partnership, made an initial investment to acquire a 99.9% common equity interest in BR Perimeter JV Member, LLC, a Delaware limited liability company (“BR Perimeter JV Member”). BR Perimeter JV Member is a joint venture entity that owns a majority interest in BR Crescent Perimeter Venture JV, LLC, a Delaware limited liability company (the “Crescent JV”), which is the sole member of BR Crescent Perimeter, LLC (“BR Crescent”), which owns, through a wholly-owned subsidiary, a 50% interest in a tract of real property located in Atlanta, Georgia for the development of a 320-unit, Class A apartment community to be known as Crescent Perimeter (the “Crescent Perimeter Property”). The remaining 0.1% common equity interest in BR Perimeter JV Member was owned by Fund III.
On December 29, 2017, 99.4% of the Company’s common equity interest in BR Perimeter JV Member was redeemed in exchange for a mezzanine loan by the Company to BR Perimeter JV Member in the original principal amount of approximately $20.6 million (the “Crescent Perimeter Loan”), inclusive of approximately $5.3 million of incremental funding. Also on December 29, 2017, Fund III made an additional common equity investment in BR Perimeter JV Member in the amount of approximately $2.4 million. As a result of these transactions, the Company now owns an indirect 0.5% common equity interest in BR Perimeter JV Member, and Fund III owns a 99.5% common equity interest in BR Perimeter JV Member. The Company (through a wholly-owned subsidiary of our Operating Partnership) and Fund III have entered into an amended and restated joint venture operating agreement for BR Perimeter JV Member reflecting the structure described above and otherwise containing terms, conditions, and indemnities that are customary and standard for joint ventures in the real estate industry.
The Crescent Perimeter Loan was made to a Loan and Security Agreement and a Secured Promissory Note, and is secured by a pledge of BR Perimeter JV Member’s membership interest in the Crescent JV to a Control Agreement. The Crescent Perimeter Loan has a four-year term and requires payment of interest on a current basis at the rate of fifteen percent (15%) per annum. Included in the amount of the Crescent Perimeter Loan is an approximately 2.5-year interest reserve.
Vickers Village Property
On December 20, 2016, the Company, through a wholly-owned subsidiary of our Operating Partnership, made an initial investment to acquire a 99.9% common equity interest in BR Vickers Roswell JV Member, LLC, a Delaware limited liability company (“BR Vickers Roswell JV Member”). BR Vickers Roswell JV Member is a joint venture entity that owns a majority interest in BR Vickers Roswell JV, LLC, a Delaware limited liability company (the “Vickers JV”), which is the sole member of BR Vickers Roswell, LLC (“BR Vickers”), which owns, through a wholly-owned subsidiary, a 50% interest in a tract of real property located in the Roswell submarket of Atlanta, Georgia for the development of a 79-unit, Class A apartment community to be known as Vickers Village (the “Vickers Village Property”). The remaining 0.1% common equity interest in BR Vickers Roswell JV Member was owned by Fund III.
On December 29, 2017, 99.4% of the Company’s common equity interest in BR Vickers Roswell JV Member was redeemed in exchange for a mezzanine loan by the Company to BR Vickers Roswell JV Member in the original principal amount of approximately $9.8 million (the “Vickers Loan”), inclusive of approximately $1.1 million of incremental funding. Also on December 29, 2017, Fund III made an additional common equity investment in BR Vickers Roswell JV Member in the amount of approximately $1.1 million. As a result of these transactions, the Company now owns an indirect 0.5% common equity interest in BR Vickers Roswell JV Member, and Fund III owns a 99.5% common equity interest in BR Vickers Roswell JV Member. The Company (through a wholly-owned subsidiary of our Operating Partnership) and Fund III have entered into an amended and restated joint venture operating agreement for BR Vickers Roswell JV Member reflecting the structure described above and otherwise containing terms, conditions, and indemnities that are customary and standard for joint ventures in the real estate industry.
The Vickers Loan was made to a Loan and Security Agreement and a Secured Promissory Note, and is secured by a pledge of BR Vickers Roswell JV Member’s membership interest in the Vickers JV to a Control Agreement. The Vickers Loan has a three-year term and requires payment of interest on a current basis at the rate of fifteen percent (15%) per annum. Included in the amount of the Vickers Loan is an approximately 1.5-year interest reserve.
The information included in Exhibit 99.1 (the “Tax Exhibit”) to this Current Report on Form8-Kprovides a summary of additional material federal income tax considerations relevant to an investment in securities of the Company. The information in the Tax Exhibit amends in part the discussion under the heading “Material Federal Income Tax Considerations” contained in or incorporated by reference into any registration statement and any accompanying prospectuses, and the discussion under the heading “Additional Material Federal Income Tax Considerations” contained in any prospectus supplement, filed by the Company under the Securities Act of 1933, as amended, prior to the date of this Current Report on Form8-K, and the Tax Exhibit shall be deemed incorporated by reference into each such registration statement, accompanying prospectus and prospectus supplement.
| ITEM 9.01 | FINANCIAL STATEMENTS AND EXHIBITS. |
(d)Exhibits.
Bluerock Residential Growth REIT, Inc. ExhibitEX-99.1 2 tv482829_ex99-1.htm EXHIBIT 99.1 Exhibit 99.1 ADDITIONAL MATERIAL FEDERAL INCOME TAX CONSIDERATIONS The following is a summary of additional material federal income tax considerations with respect to the purchase,…To view the full exhibit click here
About Bluerock Residential Growth REIT, Inc. (NYSEMKT:BRG)
Bluerock Residential Growth REIT, Inc. is a real estate investment trust. The Company’s business consists of investing in and operating multifamily communities. The Company operates through real estate assets segment. Its businesses are conducted through its operating partnership, Bluerock Residential Holdings, L.P. Its principal business objective is to generate risk-adjusted investment returns by assembling a portfolio of apartment properties located in growth markets and by implementing its investment strategies to achieve sustainable long-term growth in both its funds from operations and net asset value. The Company’s portfolio consists of interests in over 20 properties (over 10 operating and approximately six development properties). Its other acquired properties include Springhouse, North Park Towers, Alexan CityCentre, ARIUM Grandewood, Alexan Southside Place, Cheshire Bridge, Sovereign, Flagler Village and Lake Boone Trail.
