Bluerock Residential Growth REIT, Inc. (NYSEMKT:BRG) Files An 8-K Unregistered Sales of Equity Securities

Bluerock Residential Growth REIT, Inc. (NYSEMKT:BRG) Files An 8-K Unregistered Sales of Equity Securities
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES.

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Securities for Services

Base Management Fee and Incentive Fee

On April 2, 2014, Bluerock Residential Growth REIT, Inc. (“Company”) entered into a Management Agreement (as amended by that certain First Amendment to Management Agreement dated February 11, 2015, that certain Second Amendment to Management Agreement dated August 6, 2015, and that certain Third Amendment to Management Agreement dated November 10, 2015, the “Management Agreement”) with Bluerock Residential Holdings, L.P. (the “Operating Partnership”) and the Company’s manager, BRG Manager, LLC (the “Manager”), to which the Manager administers the business activities and day-to-day operations of the Company and the Operating Partnership. The Management Agreement provides for the payment of (i) a base management fee to the Manager (the “Base Management Fee”), and (ii) an incentive fee to the Manager (the “Incentive Fee”), in each case to compensate the Manager for advisory services and certain general management services rendered thereunder. to the terms of the Management Agreement, the Base Management Fee is payable in quarterly installments in cash or in units of the Operating Partnership’s long-term incentive plan (“LTIP Units”), at the election of the Board. Further to the terms of the Management Agreement, one half of each quarterly installment of the Incentive Fee is payable in LTIP Units, and the remaining half is payable in either cash or in LTIP Units, at the election of the Board. Both the Base Management Fee and the Incentive Fee are calculated by the Manager as set forth in the Management Agreement, which calculations are subject to review by the Company’s board of directors (the “Board”).

On August 2, 2017, the Manager provided the Board with its calculations of (i) the quarterly installment of the Base Management Fee, and (ii) the quarterly installment of the Incentive Fee, in each case for the three months ended June 30, 2017. The Board, including its independent directors, having reviewed such calculations, authorized and approved payment of (i) the quarterly installment of the Base Management Fee for the three months ended June 30, 2017 entirely in LTIP Units, and (ii) the quarterly installment of the Incentive Fee for the three months ended June 30, 2017 entirely in LTIP Units.

The Board, including its independent directors, further approved the issuance by the Operating Partnership to the Manager, on August 9, 2017 (five business days following August 2, 2017) (the “Issuance Date”), of (a) a number of LTIP Units equal to (i) the dollar amount of the portion of the quarterly installment of the Base Management Fee payable in such LTIP Units (calculated by the Manager as $2,622,332), divided by (ii) the average of the closing prices of the Company’s Class A common stock, $0.01 par value per share, on the NYSE MKT on the five business days prior to the Issuance Date (the “Base Management LTIP Units”), in payment of the quarterly installment of the Base Management Fee, and (b) a number of LTIP Units equal to (i) the dollar amount of the portion of the quarterly installment of the Incentive Fee payable in such LTIP Units (calculated by the Manager as $3,540,691), divided by (ii) the average of the closing prices of the Company’s Class A common stock, $0.01 par value per share, on the NYSE MKT on the five business days prior to the Issuance Date (the “Incentive Fee LTIP Units”), in payment of the Incentive Fee.

On the Issuance Date of August 9, 2017, the Manager calculated, as set forth in the Management Agreement, that (i) 221,481 Base Management LTIP Units would be issued to the Manager in payment of the Base Management Fee, and (ii) 299,045 Incentive Fee LTIP Units would be issued to the Manager in payment of the Incentive Fee, and the Operating Partnership issued an aggregate of 520,526 LTIP Units to the Manager in payment thereof (collectively, the “Manager LTIP Units”).

The Board authorized the Company, as the General Partner of the Operating Partnership, to cause the Operating Partnership to issue the Manager LTIP Units to the Manager in reliance upon exemptions from registration provided by Section 4(a)(2) of the Securities Act of 1933 and Regulation D. The Manager has a substantive, pre-existing relationship with the Company and is an “accredited investor” as defined in Regulation D.

The Manager LTIP Units shall be fully vested upon issuance, and may convert to OP Units upon reaching capital account equivalency with the OP Units held by the Company, and may then be settled in shares of the Company’s Class A common stock. The Manager will be entitled to receive “distribution equivalents” with respect to the Manager LTIP Units at the time distributions are paid to the holders of the Company’s Class A common stock.


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.

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