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.

Securities for Services

Base Management Fee

As previously disclosed in the Current Report on Form 8-K of Bluerock Residential Growth REIT, Inc. (the “Company”) filed with the SEC on November 8, 2017, on April 2, 2014, the 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 entity then serving as the Company’s external manager, BRG Manager, LLC (the “Former Manager”), to which the Former Manager administered the business activities and day-to-day operations of the Company and the Operating Partnership. Under the Management Agreement, until such date as the Company was no longer externally managed, the Former Manager was entitled to the payment of a base management fee (the “Base Management Fee”) as compensation for advisory services and certain general management services rendered thereunder.

As also disclosed in the Company’s Current Report on Form 8-K filed with the SEC on November 6, 2017, on October 31, 2017 (the “Closing”), the Company consummated the internalization of its management (the “Internalization”). As a result of the Internalization, effective as of Closing, the Company is no longer externally managed. Under the Management Agreement, the Former Manager is entitled to a final pro-rated payment of the Base Management Fee for the 31-day period from October 1, 2017 through the Closing date of October 31, 2017. 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 of directors (the “Board”), and is calculated by the Former Manager as set forth in the Management Agreement, which calculation is subject to review by the Board.

On February 8, 2018, the Former Manager provided the Board with its calculation of the quarterly installment of the Base Management Fee for the 31-day period from October 1, 2017 through the Closing date of October 31, 2017. On February 13, 2018, the Board, including its independent directors, having reviewed such calculation, authorized and approved payment of the quarterly installment of the Base Management Fee for the 31-day period from October 1, 2017 through October 31, 2017 entirely in LTIP Units.

The Board, including its independent directors, further approved the issuance by the Operating Partnership to the Former Manager, on February 21, 2018 (the “Issuance Date”), of 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 Former Manager as $992,515), 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 American on the five business days prior to the Issuance Date (the “Former Manager LTIP Units”), in payment of the quarterly installment of the Base Management Fee.

On the Issuance Date, the Former Manager calculated, as set forth in the Management Agreement, that 128,398 Former Manager LTIP Units would be issued to the Former Manager in payment of the Base Management Fee, and the Operating Partnership issued 128,398 Former Manager LTIP Units to the Former Manager in payment thereof.

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

The Former Manager LTIP Units are 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 at the Company’s election. The Former Manager will be entitled to receive “distribution equivalents” with respect to the Former 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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