UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2017~~March 31, 2019

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to ______

Commission File Number 001-36369

BLUEROCK RESIDENTIAL GROWTH REIT, INC.

(Exact Name of Registrant as Specified in Its Charter)

Maryland		26-3136483
(State or other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

712 Fifth Avenue, 9th Floor, New York, NY		10019
(Address or Principal Executive Offices)		(Zip Code)

(212) 843-1601

(Registrant’s Telephone Number, Including Area Code)

~~None~~

~~(Former name, former address or former fiscal year, if changed since last report)~~Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.01 par value per share	BRG	NYSE American
8.250% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share	BRG-PrA	NYSE American
7.625% Series C Cumulative Redeemable Preferred Stock, $0.01 par value per share	BRG-PrC	NYSE American
7.125% Series D Cumulative Preferred Stock, $0.01 par value per share	BRG-PrD	NYSE American

Securities registered pursuant to Section 12(g) of the Exchange Act:

Title of each class

Series B Redeemable Preferred Stock, $0.01 par value per share

Warrants to Purchase Shares of Class A Common Stock, $0.01 par value per share

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesx No¨

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yesx No¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	¨		Accelerated Filer	x
Non-Accelerated Filer	¨	~~(Do not check if a smaller reporting company)~~
Smaller reporting company	¨x
Emerging growth company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes¨ Nox

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨

~~Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes~~¨ Nox

Number of shares outstanding of the registrant’s

classes of common stock, as of ~~November~~May 2, ~~2017:~~2019:

Class A Common Stock: ~~24,207,539~~22,458,473 shares

Class C Common Stock: 76,603 shares

BLUEROCK RESIDENTIAL GROWTH REIT, INC.

FORM 10-Q

~~September 30, 2017~~March 31, 2019

PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Consolidated Balance Sheets as of ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016 (audited)~~2018	3

	Consolidated Statements of Operations for the Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018	4

	Consolidated Statement of Stockholders’ Equity for the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2019 and 2018	5

	Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018	67

	Notes to Consolidated Financial Statements	78

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3226

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	4938

Item 4.	Controls and Procedures	4939

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	5040

Item 1A.	Risk Factors	5040

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5340

Item 3.	Defaults Upon Senior Securities	5340

Item 4.	Mine Safety Disclosures	5340

Item 5.	Other Information	5340

Item 6.	Exhibits	5441

SIGNATURES		5742

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

BLUEROCK RESIDENTIAL GROWTH REIT, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

March 31,
2019
December 31,
2018
ASSETS
Net Real Estate Investments
Land $ 200,114 $ 200,385
Buildings and improvements 1,548,167 1,546,244
Furniture, fixtures and equipment 58,422 55,050
Construction in progress 659 989
Total Gross Real Estate Investments 1,807,362 1,802,668
Accumulated depreciation (124,605 ) (108,911 )
Total Net Real Estate Investments 1,682,757 1,693,757
Cash and cash equivalents 24,337 24,775
Restricted cash 22,659 27,469
Notes and accrued interest receivable from related parties 174,068 164,084
Due from affiliates 3,123 2,854
Accounts receivable, prepaids and other assets 12,332 14,395
Preferred equity investments and investments in unconsolidated real estate joint ventures 93,728 89,033
In-place lease intangible assets, net 443 1,768
Total Assets $ 2,013,447 $ 2,018,135

LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY
Mortgages payable $ 1,204,905 $ 1,206,136
Revolving credit facilities 78,000 82,209
Accounts payable 1,215 1,486
Other accrued liabilities 25,444 31,690
Due to affiliates 798 726
Distributions payable 12,317 12,073
Total Liabilities 1,322,679 1,334,320
8.250% Series A Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share, 10,875,000 shares authorized; 5,721,460 shares issued and outstanding as of March 31, 2019 and December 31, 2018 139,698 139,545
6.000% Series B Redeemable Preferred Stock, liquidation preference $1,000 per share, 1,225,000 shares authorized; 349,423 and 306,009 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively 311,555 272,842
7.625% Series C Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share, 4,000,000 shares authorized; 2,323,750 shares issued and outstanding as of March 31, 2019 and December 31, 2018 56,545 56,485
Equity
Stockholders’ Equity
Preferred stock, $0.01 par value, 229,900,000 shares authorized; no shares issued and outstanding — —
7.125% Series D Cumulative Preferred Stock, liquidation preference $25.00 per share, 4,000,000 shares authorized; 2,850,602 shares issued and outstanding as of March 31, 2019 and December 31, 2018 68,705 68,705
Common stock - Class A, $0.01 par value, 747,509,582 shares authorized; 22,861,084 and 23,322,211 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively 228 233
Common stock - Class C, $0.01 par value, 76,603 shares authorized; 76,603 shares issued and outstanding as of March 31, 2019 and December 31, 2018 1 1
Additional paid-in-capital 300,407 307,938
Distributions in excess of cumulative earnings (234,363 ) (218,531 )
Total Stockholders’ Equity 134,978 158,346
Noncontrolling Interests
Operating partnership units 21,143 27,613
    Partially owned properties 26,849 28,984
Total Noncontrolling Interests 47,992 56,597
Total Equity 182,970 214,943
TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY $ 2,013,447 $ 2,018,135
See Notes to Consolidated Financial Statements
3
BLUEROCK RESIDENTIAL GROWTH REIT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except share and per share amounts)

(Unaudited)
September 30,
2017 December 31,
2016
ASSETS
Net Real Estate Investments
Land $ 157,420 $ 142,274
Buildings and improvements 1,015,262 848,445
Furniture, fixtures and equipment 32,991 27,617
Construction in progress 32,696 10,878
Total Gross Real Estate Investments 1,238,369 1,029,214
Accumulated depreciation (44,171 ) (42,137 )
Total Net Real Estate Investments 1,194,198 987,077
Cash and cash equivalents 134,632 82,047
Restricted cash 32,653 45,402
Notes and accrued interest receivable from related parties 56,771 21,267
Due from affiliates 1,756 948
Accounts receivable, prepaid and other assets 15,945 8,610
Preferred equity investments and investments in unconsolidated real estate joint ventures 94,912 91,132
In-place lease intangible assets, net 4,330 4,839
Total Assets $ 1,535,197 $ 1,241,322

LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY
Mortgages payable $ 847,162 $ 710,575
Accounts payable 3,158 1,669
Other accrued liabilities 25,159 13,431
Due to affiliates 3,269 2,409
Distributions payable 8,580 7,328
Total Liabilities 887,328 735,412
8.250% Series A Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share, 10,875,000 shares authorized, and 5,721,460 issued and outstanding as of September 30, 2017 and December 31, 2016 138,622 138,316
Series B Redeemable Preferred Stock, liquidation preference $1,000 per share, 225,000 shares authorized, 137,708 and 21,482 issued and outstanding as of September 30, 2017 and December 31, 2016, respectively 120,925 18,938
7.6250% Series C Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share, 4,000,000 shares authorized, 2,323,750 issued and outstanding as of September 30, 2017 and December 31, 2016 56,127 56,095
Equity
Stockholders’ Equity
Preferred stock, $0.01 par value, 230,900,000 shares authorized; none issued and outstanding — —
7.125% Series D Cumulative Preferred Stock, liquidation preference $25.00 per share, 4,000,000 shares authorized, 2,850,602 issued and outstanding as of September 30, 2017 and December 31, 2016 68,705 68,760
Common stock - Class A, $0.01 par value, 747,586,185 shares authorized; 24,193,109 and 19,567,506 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively 242 196
Additional paid-in-capital 329,219 257,403
Distributions in excess of cumulative earnings (106,838 ) (84,631 )
Total Stockholders’ Equity 291,328 241,728
Noncontrolling Interests
Operating partnership units 1,799 2,216
Partially owned properties 39,068 48,617
Total Noncontrolling Interests 40,867 50,833
Total Equity 332,195 292,561
TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY $ 1,535,197 $ 1,241,322
Three Months Ended
March 31,
2019 2018
Revenues
Rental and other property revenues $ 45,690 $ 36,675
Interest income from related parties 5,776 5,196
Total revenues 51,466 41,871
Expenses
Property operating 18,602 15,658
Property management fees 1,215 992
General and administrative 5,627 4,669
Acquisition and pursuit costs 58 43
Weather-related losses, net — 168
Depreciation and amortization 17,230 15,640
Total expenses 42,732 37,170
Operating income 8,734 4,701
Other income (expense)
Preferred returns on unconsolidated real estate joint ventures 2,289 2,461
Gain on sale of non-depreciable real estate investments
679 —
Interest expense, net (16,067 ) (10,117 )
Total other expense (13,099 ) (7,656 )
Net loss (4,365 ) (2,955 )
Preferred stock dividends (10,384 ) (8,248 )
Preferred stock accretion (1,887 ) (1,112 )
Net loss attributable to noncontrolling interests
Operating partnership units (4,051 ) (2,675 )
Partially owned properties (492 ) (215 )
Net loss attributable to noncontrolling interests (4,543 ) (2,890 )
Net loss attributable to common stockholders $ (12,093 ) $ (9,425 )

Net loss per common share - Basic $ (0.53 ) $ (0.40 )

Net loss per common share – Diluted $ (0.53 ) $ (0.40 )

Weighted average basic common shares outstanding 23,123,616 24,143,382
Weighted average diluted common shares outstanding 23,123,616 24,143,382

See Notes to Consolidated Financial Statements

3
~~BLUEROCK RESIDENTIAL GROWTH REIT, INC.~~
~~CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)~~
~~(In thousands, except share and per share amounts)~~
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Revenues
Net rental income $ 24,871 $ 18,572 $ 72,354 $ 52,013
Other property revenues 3,072 2,005 8,639 5,376
Interest income from related parties 2,120 — 5,741 —
Total revenues 30,063 20,577 86,734 57,389
Expenses
Property operating 11,969 7,896 33,935 22,592
Property management fees 781 595 2,250 1,659
General and administrative 1,103 1,177 4,249 4,155
Management fees 2,802 1,866 11,733 4,495
Acquisition and pursuit costs 15 689 3,215 2,143
Management internalization 826 — 1,647 —
Weather-related losses, net 678 — 678 —
Depreciation and amortization 11,763 7,166 33,094 22,465
Total expenses 29,937 19,389 90,801 57,509
Operating income (loss) 126 1,188 (4,067 ) (120 )
Other income (expense)
Other income — 26 17 26
Preferred returns and equity in income of unconsolidated real estate joint ventures 2,688 3,074 7,865 8,617
Gain on sale of real estate investments — 4,947 50,040 4,947
Gain on sale of real estate joint venture interest, net — — 10,238 —
Loss on early extinguishment of debt — (2,393 ) (1,639 ) (2,393 )
Interest expense, net (7,395 ) (5,274 ) (22,339 ) (14,091 )
Total other (expense) income (4,707 ) 380 44,182 (2,894 )
Net (loss) income (4,581 ) 1,568 40,115 (3,014 )
Preferred stock dividends (7,038 ) (3,940 ) (19,271 ) (8,391 )
Preferred stock accretion (905 ) (275 ) (1,889 ) (568 )
Net (loss) income attributable to noncontrolling interests
Operating partnership units (125 ) (37 ) 4 (173 )
Partially-owned properties (382 ) (59 ) 18,388 (73 )
Net (loss) income attributable to noncontrolling interests (507 ) (96 ) 18,392 (246 )
Net (loss) income attributable to common stockholders $ (12,017 ) $ (2,551 ) $ 563 $ (11,727 )

Net (loss) income per common share - Basic $ (0.45 ) $ (0.12 ) $ 0.02 $ (0.57 )

Net (loss) income per common share – Diluted $ (0.45 ) $ (0.12 ) $ 0.02 $ (0.57 )

Weighted average basic common shares outstanding 26,474,093 20,908,543 25,851,536 20,706,338
Weighted average diluted common shares outstanding 26,474,093 20,908,543 25,852,059 20,706,338
~~See Notes to Consolidated Financial Statements~~
4


BLUEROCK RESIDENTIAL GROWTH REIT, INC.
FOR THE ~~NINE~~THREE MONTHS ENDED ~~SEPTEMBER 30, 2017~~MARCH 31, 2019
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (Unaudited)
(In thousands, except share and per share amounts)
Class A Common Stock Class C Common Stock Series D Preferred Stock
Number of
Shares Par Value Number of
Shares Par Value Number of
Shares Value Additional
Paid-
in Capital Cumulative
Distributions Net loss (income)
to Common
Stockholders Noncontrolling
Interests Total Equity
Balance, January 1, 2019 23,322,211 $ 233 76,603 $ 1 2,850,602 $ 68,705 $ 307,938 $ (187,910 ) $ (30,621 ) $ 56,597 $ 214,943
��
Issuance of Class A common stock, net 764 - - - - - 7 - - - 7
Issuance of Class A common stock due to Series B warrant exercise 100 - - - - - 1 - - - 1
Repurchase of Class A common stock (505,797 ) (5 ) - - - - (5,058 ) - - - (5,063 )
Issuance of Long-Term Incentive Plan (“LTIP”) Units for director compensation - - - - - - - - - 247 247
Issuance of LTIP Units for compensation - - - - - - - - - 1,298 1,298
Issuance of LTIP Units for expense reimbursements - - - - - - - - - 392 392
Issuance of Series B warrants - - - - - - 835 - - - 835
Common stock distribution declared - - - - - - - (3,739 ) - - (3,739 )
Series A Preferred Stock distributions declared - - - - - - - (2,950 ) - - (2,950 )
Series A Preferred Stock accretion - - - - - - - (153 ) - - (153 )
Series B Preferred Stock distributions declared - - - - - - - (5,058 ) - - (5,058 )
Series B Preferred Stock accretion - - - - - - - (1,674 ) - - (1,674 )
Series C Preferred Stock distributions declared - - - - - - - (1,107 ) - - (1,107 )
Series C Preferred Stock accretion - - - - - - - (60 ) - - (60 )
Series D Preferred Stock distributions declared - - - - - - - (1,269 ) - - (1,269 )
Miscellaneous offering costs - - - - - - (222 ) - - - (222 )
Distributions to operating partnership noncontrolling interests - - - - - - - - - (1,421 ) (1,421 )
Distributions to partially owned noncontrolling interests - - - - - - - - - (233 ) (233 )
Redemption of Operating Partnership units - - - - - - (6 ) - - (5 ) (11 )
Redemption of Series B Preferred Stock and conversion into Class A common stock 43,806 - - - - - 457 - - - 457
Cash redemption of Series B Preferred Stock - - - - - - 5 - - - 5
Acquisition of noncontrolling interest - - - - - - (6,480 ) - - (1,410 ) (7,890 )
Adjustment for noncontrolling interest ownership in Operating Partnership - - - - - - 2,930 - (2,930 ) -
Net income (loss) - - - - - - - - 178 (4,543 ) (4,365 )

Balance, March 31, 2019 22,861,084 $ 228 76,603 $ 1 2,850,602 $ 68,705 $ 300,407 $ (203,920 ) $ (30,443 ) $ 47,992 $ 182,970
See Notes to Consolidated Financial Statements
5
BLUEROCK RESIDENTIAL GROWTH REIT, INC.
FOR THE THREE MONTHS ENDED MARCH 31, 2018
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (Unaudited)
(In thousands, except share and per share amounts)
Class A Common Stock Series D Preferred
Stock
Number of
Shares Par Value Number of
Shares Value Additional
Paid-
in Capital Cumulative
Distributions Net (loss) income
to Common
Stockholders Noncontrolling
Interests Total  Equity
Balance, January 1, 2017 19,567,506 $ 196 2,850,602 $ 68,760 $ 257,403 $ (70,807 ) $ (13,824 ) $ 50,833 $ 292,561

Issuance of Class A common stock, net 4,603,236 46 - - 57,313 - - - 57,359
Issuance costs for Series D preferred stock, net - - - (55 ) - - - - (55 )
Vesting of restricted stock compensation - - - - 9 - - - 9
Issuance of LTIP Units for director compensation - - - - 100 - - - 100
Issuance of LTIP Units for compensation - - - - 1,208 - - - 1,208
Issuance of Long-Term Incentive Plan ("LTIP") units - - - - 10,946 - - - 10,946
Series B warrants - - - - 2,048 - - - 2,048
Contributions from noncontrolling interests, nets - - - - - - - 10,738 10,738
Distributions declared - - - - - (22,770 ) - (241 ) (23,011 )
Series A Preferred Stock distributions declared - - - - - (8,850 ) - - (8,850 )
Series A Preferred Stock accretion - - - - - (479 ) - - (479 )
Series B Preferred Stock distributions declared - - - - - (3,290 ) - - (3,290 )
Series B Preferred Stock accretion - - - - - (1,232 ) - - (1,232 )
Series C Preferred Stock distributions declared - - - - - (3,322 ) - - (3,322 )
Series C Preferred Stock accretion - - - - - (178 ) - - (178 )
Series D Preferred Stock distributions declared - - - - - (3,809 ) - - (3,809 )
Distributions to noncontrolling interests - - - - - - - (29,706 ) (29,706 )
Redemption of operating partnership units - - - - (6 ) - - (13 ) (19 )
Redemption of Series B Redeemable Preferred Stock - - - - 31 - - - 31
Conversion of operating partnership units to Class A Common Stock 22,367 - - - 167 - - (167 ) -
Noncontrolling interest related to sale of Fox Hill - - - - - - - (136 ) (136 )
Deconsolidation of MDA Apartments - - - - - - - (8,833 ) (8,833 )
Net income - - - - - - 21,723 18,392 40,115

Balance, September 30, 2017 24,193,109 $ 242 2,850,602 $ 68,705 $ 329,219 $ (114,737 ) $ 7,899 $ 40,867 $ 332,195
Class A Common Stock Class C Common Stock Series D Preferred Stock
Number of
Shares Par Value Number of
Shares Par Value Number of
Shares Value Additional
Paid- in
Capital Cumulative
Distributions Net loss to
Common
Stockholders Noncontrolling
Interests Total Equity
Balance, January 1, 2018 24,218,359 $ 242 76,603 $ 1 2,850,602 $ 68,705 $ 318,170 $ (134,817 ) $ (29,469 ) $ 63,346 $ 286,178

Issuance of Class A common stock, net 665 - - - - - 6 - - - 6
Repurchase of Class A common stock (530,693 ) (5 ) - - (4,199 ) (4,204 )
Issuance of LTIP Units for director compensation - - - - - - - - - 190 190
Issuance of LTIP Units for compensation - - - - - - - - - 1,240 1,240
Issuance of LTIP Units - - - - - - - - - 993 993
Issuance of Series B warrants - - - - - - 228 - - - 228
Contributions from noncontrolling interests, net - - - - - - - - - 2,951 2,951
Common stock distribution declared adjustment - - - - - - - 79 - - 79
Series A Preferred Stock distributions declared - - - - - - - (2,950 ) - - (2,950 )
Series A Preferred Stock accretion - - - - - - - (138 ) - - (138 )
Series B Preferred Stock distributions declared - - - - - - - (2,921 ) - - (2,921 )
Series B Preferred Stock accretion - - - - - - - (920 ) - - (920 )
Series C Preferred Stock distributions declared - - - - - - - (1,107 ) - - (1,107 )
Series C Preferred Stock accretion - - - - - - - (54 ) - - (54 )
Series D Preferred Stock distributions declared - - - - - - - (1,270 ) - - (1,270 )
Distributions to operating partnership noncontrolling interests - - - - - - - - - (175 ) (175 )
Distributions to partially owned noncontrolling interests - - - - - - - - - (490 ) (490 )
Redemption of Series B Preferred Stock and conversion into Class A common stock 44,965 - - - - - 482 - - - 482
Cash redemption of Series B Preferred Stock - - - - - - 2 - - - 2
Adjustment for noncontrolling interest ownership in Operating Partnership - - - - - - 1,144 - (1,144 ) -
Net (loss) - - - - - - - - (65 ) (2,890 ) (2,955 )

Balance, March 31, 2018 23,733,296 $ 237 76,603 $ 1 2,850,602 $ 68,705 $ 315,833 $ (144,098 ) $ (29,534 ) $ 64,021 $ 275,165
See Notes to Consolidated Financial Statements
6
BLUEROCK RESIDENTIAL GROWTH REIT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
Three Months Ended
March 31,
2019 2018

Cash flows from operating activities
Net loss $ (4,365 ) $ (2,955 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 18,141 16,230
Amortization of fair value adjustments (108 ) (108 )
Preferred returns on unconsolidated real estate joint ventures (2,289 ) (2,461 )
Gain on sale of non-depreciable real estate investments (679 ) —
Fair value adjustment of interest rate caps 1,688 —
Distributions of income and preferred returns from preferred equity investments and unconsolidated real estate joint ventures 2,019 2,224
Share-based compensation attributable to equity incentive plan 1,545 1,430
Share-based compensation to former Manager - LTIP Units — 993
Share-based expense reimbursements to BRE – LTIP Units 392 —
Changes in operating assets and liabilities:
Due from affiliates, net (7 ) (1,891 )
Accounts receivable, prepaids and other assets (91 ) (3,975 )
Accounts payable and other accrued liabilities (5,380 ) (3,385 )
Net cash provided by operating activities 10,866 6,102

Cash flows from investing activities:
Acquisitions of real estate investments — (61,659 )
Capital expenditures (6,188 ) (4,160 )
Investment in notes receivable from related parties (9,906 ) (20,994 )
Proceeds from sale of real estate investments 952 —
Purchase of interests from noncontrolling interests (7,890 ) —
Investment in unconsolidated real estate joint venture interests (4,694 ) (164 )
Net cash used in investing activities (27,726 ) (86,977 )

Cash flows from financing activities:
Distributions to common stockholders (3,832 ) (2,348 )
Distributions to noncontrolling interests (1,533 ) (1,146 )
Distributions to preferred stockholders (10,168 ) (8,143 )
Contributions from noncontrolling interests — 2,951
Borrowings on mortgages payable — 40,000
Repayments on mortgages payable (1,637 ) (912 )
Proceeds from revolving credit facilities 20,500 47,995
Repayments on revolving credit facilities (24,707 ) (16,500 )
Payments of deferred financing fees (58 ) (1,012 )
Miscellaneous offering costs (222 ) —
Net proceeds from issuance of Class A common stock 8 6
Repurchase of Class A common stock (5,063 ) (4,204 )
Net proceeds from issuance of 6.0% Series B Redeemable Preferred Stock 37,580 16,288
Net proceeds from issuance of Warrants associated with the Series B Redeemable Preferred Stock 835 228
Payments to redeem 6.0% Series B Redeemable Preferred Stock (79 ) (33 )
Payments to redeem Operating Partnership Units (12 ) —
Net cash provided by financing activities 11,612 73,170

Net decrease in cash, cash equivalents and restricted cash $ (5,248 ) $ (7,705 )
Cash, cash equivalents and restricted cash, beginning of year 52,244 64,590
Cash, cash equivalents and restricted cash, end of period $ 46,996 $ 56,885

Supplemental disclosure of cash flow information
Cash paid for interest (net of interest capitalized) $ 13,606 $ 9,655

Supplemental disclosure of non-cash investing and financing activities
Distributions payable – declared and unpaid $ 12,317 $ 11,483
Capital expenditures held in accounts payable and other accrued liabilities $ (1,132 ) $ —

See Notes to Consolidated Financial Statements

57

BLUEROCK RESIDENTIAL GROWTH REIT, INC.
~~CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)~~
~~(In thousands, except share and per share amounts)~~
Nine Months Ended
September 30,
2017 2016

Cash flows from operating activities
Net income (loss) $ 40,115 $ (3,014 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 35,035 23,481
Amortization of fair value adjustments (227 ) (318 )
Preferred returns and equity in income of unconsolidated real estate joint ventures (7,865 ) (8,617 )
Gain on sale of real estate investments (50,040 ) (4,947 )
Gain on sale of real estate joint venture interest, net (10,238 ) —
Loss on early extinguishment of debt — (1,104 )
Distributions of income and preferred returns from preferred equity investments and unconsolidated real estate joint ventures 7,079 8,277
Share-based compensation attributable to directors' stock compensation plan 109 207
Share-based compensation to Manager - LTIP Units 12,154 5,898
Changes in operating assets and liabilities:
Due (from) to affiliates, net 170 707
Accounts receivable, prepaid and other assets (7,247 ) (3,570 )
Accounts payable and other accrued liabilities 14,216 7,260
Net cash provided by operating activities 33,261 24,260

Cash flows from investing activities:
Acquisitions of real estate investments (259,105 ) (178,382 )
Capital expenditures (33,525 ) (3,992 )
Investment in notes receivable from related parties (20,395 ) —
Proceeds from sale of real estate investments 71,945 36,675
Proceeds from sale of real estate joint venture interest 17,603 —
Deconsolidation of interest in MDA Apartments (16 ) —
Purchase of interests from noncontrolling interests (344 ) (3,148 )
Investment in unconsolidated real estate joint venture interests (18,448 ) (17,135 )
Decrease (increase) in restricted cash 12,285 (13,081 )
Net cash used in investing activities (230,000 ) (179,063 )

Cash flows from financing activities:
Distributions to common stockholders (22,235 ) (18,223 )
Distributions to noncontrolling interests (29,948 ) (2,844 )
Distributions to preferred stockholders (18,550 ) (5,647 )
Contributions from noncontrolling interests 10,738 4,142
Borrowings on mortgages payable 155,045 177,700
Repayments on mortgages payable (1,841 ) (68,141 )
Payments of deferred financing fees (3,685 ) (2,917 )
Net proceeds from issuance of common stock 57,359 38
Net proceeds from issuance of 8.250% Series A cumulative redeemable preferred stock (173 ) 68,503
Net proceeds from issuance of Series B Redeemable Preferred Stock 101,015 7,649
Net proceeds from issuance of Warrants underlying the Series B Redeemable Preferred Stock 2,048 144
Net proceeds from issuance of 7.625% Series C cumulative redeemable preferred stock (146 ) 56,019
Net proceeds from issuance of 7.125% Series D cumulative redeemable preferred stock (55 ) —
Payments to redeem Series B Redeemable Preferred Stock (229 ) —
Payments to redeem Operating Partnership Units (19 ) (59 )
Net cash provided by financing activities 249,324 216,364

Net increase in cash and cash equivalents $ 52,585 $ 61,561

Cash and cash equivalents at beginning of period $ 82,047 $ 68,960

Cash and cash equivalents at end of period $ 134,632 $ 130,521
Supplemental Disclosure of Cash Flow Information

Cash paid during the period for interest $ 20,474 $ 13,006
Conversion of preferred equity investment to note receivable $ (14,435 ) $ —
Distributions payable – declared and unpaid $ 8,580 $ 5,973
Mortgages assumed upon property acquisitions $ 146,377 $ 39,054
Mortgages assumed by buyer upon sale of real estate assets $ (41,419 ) $ —
Reduction of assets from deconsolidation $ 53,574 $ —
Reduction of mortgages payable from deconsolidation $ 36,854 $ —
Reduction of other liabilities from deconsolidation $ 1,002 $ —
Reduction of noncontrolling interests from deconsolidation $ 8,833 $ —
~~See Notes to Consolidated Financial Statements~~
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~~BLUEROCK RESIDENTIAL GROWTH REIT, INC.~~
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – Organization and Nature of Business

Bluerock Residential Growth REIT, Inc. (the “Company”) was incorporated as a Maryland corporation on July 25, 2008. The Company’s objective is to maximize long-term stockholder value by acquiring and developing well-located institutional-quality apartment properties in ~~demographically attractive~~knowledge economy growth markets across the United States. The Company seeks to maximize returns through investments where it believes it can drive substantial growth in its core funds from operations and net asset value primarily through ~~one or more of~~ its ~~Core-Plus,~~ Value-Add ~~Opportunistic~~ and Invest-to-Own investment strategies.

As of ~~September 30, 2017,~~March 31, 2019, the ~~Company's portfolio consisted~~Company held investments in forty-eight real estate properties, consisting of ~~interests in thirty-five properties (twenty-five~~thirty-three consolidated operating properties and ~~ten~~fifteen properties through preferred equity or mezzanine loan investments. Of the property interests held through preferred equity and mezzanine loan investments, five are under development, ~~properties).~~five are in lease-up and five properties are stabilized. The ~~Company’s thirty-five~~forty-eight properties contain an aggregate of ~~10,761~~14,717 units, comprised of ~~8,166~~11,286 consolidated operating units and ~~2,595~~3,431 units ~~under development.~~through preferred equity and mezzanine loan investments. As of ~~September 30, 2017, these properties, exclusive of development~~March 31, 2019, the Company’s consolidated operating properties were approximately 94% occupied.

The Company has elected to be treated, and currently qualifies, as a real estate investment trust (“REIT”), for federal income tax purposes. As a REIT, the Company generally is not subject to corporate-level income taxes. To maintain its REIT status, the Company is required, among other requirements, to distribute annually at least 90% of its “REIT taxable income,” as defined by the Internal Revenue Code of 1986, as amended (the “Code”), to the Company’s stockholders. If the Company fails to qualify as a REIT in any taxable year, it would be subject to federal income tax on its taxable income at regular corporate tax rates.

Note 2 – Basis of Presentation and Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

The Company operates as an umbrella partnership REIT in which Bluerock Residential Holdings, L.P. (its “Operating Partnership”), or the Operating Partnership’s wholly-owned subsidiaries, owns substantially all of the property interests acquired and investments made on the Company’s behalf. As of ~~September 30, 2017,~~March 31, 2019, limited partners other than the Company owned approximately ~~10.29%~~27.58% of the common units of the Operating Partnership ~~(1.01%~~(20.16% is held by holders of limited partnership interest in the Operating Partnership (“OP Units”) and ~~9.28%~~7.42% is held by holders of the Operating Partnership’s long-term incentive plan units (“LTIP Units”)).
~~Bluerock Real Estate, L.L.C.~~, a Delaware limited liability company, is referred to as Bluerock (“Bluerock”), and the Company’s external manager, BRG Manager, LLC, a Delaware limited liability company, is referred to as its Manager (“Manager”). Both Bluerock and the Manager are related parties with respect to the Company, butincluding 4.48% which are not ~~within the Company’s control and are not consolidated in the Company’s financial statements.~~vested at March 31, 2019).

Because the Company is the sole general partner of ~~its~~the Operating Partnership and has unilateral control over its management and major operating decisions (even if additional limited partners are admitted to the Operating Partnership), the accounts of the Operating Partnership are consolidated in its consolidated financial statements.

The Company also consolidates entities in which it controls more than 50% of the voting equity and in which control does not rest with other investors. Investments in real estate joint ventures ~~over~~in which the Company has the ability to exercise significant influence, but ~~for which it~~ does not have financial or operating control, are accounted for using the equity method of accounting. These entities are reflected on the Company’s consolidated financial statements as “Preferred equity investments and investments in unconsolidated real estate joint ventures.” All significant intercompany accounts and transactions have been eliminated in the consolidated financial statements. The Company will consider future ~~joint ventures~~investments for consolidation in accordance with the provisions required by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810: Consolidation.

~~Certain amounts~~In accordance with adoption of the lease accounting update issued in ~~prior periods, related~~July 2018, the Company reflects all income earned pursuant to tenant ~~reimbursements for utility expenses amounting to $1.0 million~~leases in a single line item, “Rental and ~~$2.7 million for the three months and nine months ended September 30, 2016, have been reclassified to~~ other property ~~revenues from property operating expenses,~~revenues”, in the 2019 consolidated statements of operations. SeeNew Accounting Pronouncements below. To facilitate comparability, the Company has reclassified lease and non-lease income for prior periods to conform to the current period presentation which includes tenant reimbursements for utility expenses amounting to $1.6 million and $4.6 million for the three months and nine months ended September 30, 2017. In addition, property management fees have been reclassified from property operating expenses.presentation.

Summary of Significant Accounting Policies
Preferred Equity Investments and Investments in Unconsolidated Real Estate Joint Ventures

The Company first analyzes ~~its investments in joint ventures~~an investment to determine if ~~the joint venture~~it is a variable interest entity (“VIE”) in accordance with Topic ASC 810 and, if so, whether the Company is the primary beneficiary requiring consolidation. A VIE is an entity that has (i) insufficient equity to permit it to finance its activities without additional subordinated financial support or (ii) equity holders that lack the characteristics of a controlling financial interest. VIEs are consolidated by the primary beneficiary, which is the entity that has both the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits from the entity that potentially could be significant to the entity. Variable interests in a VIE are contractual, ownership, or other financial interests in a VIE that change in value with changes in the fair value of the VIE’s net assets. The Company continuously re-assesses at each level of the ~~joint venture~~investment whether the entity is (i) a VIE, and (ii) if the Company is the primary beneficiary of the VIE. If it was determined that an entity in which the Company holds ~~a joint venture~~an interest qualified as a VIE and the Company was the primary beneficiary, the entity would be consolidated.

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If, after consideration of the VIE accounting literature, the Company has determined that an entity is not a VIE, the Company assesses the need for consolidation under all other provisions of ASC 810. These provisions provide for consolidation of majority-owned entities through a majority voting interest held by the Company providing ~~control, or through determination of control by virtue of the Company being the general partner in a limited partnership or the controlling member of a limited liability company.~~control.

In assessing whether the Company is in control of and requiring consolidation of the limited liability company and partnership venture structures, the Company evaluates the respective rights and privileges afforded each member or partner (collectively referred to as “member”). The Company’s member would not be deemed to control the entity if any of the other members have either (i) substantive kickout rights providing the ability to dissolve (liquidate) the entity or otherwise remove the managing member or general partner without cause or (ii) has substantive participating rights in the entity. Substantive participating rights (whether granted by contract or law) provide for the ability to effectively participate in significant decisions of the entity that would be expected to be made in the ordinary course of business.

If it has been determined that the Company does not have control, but does have the ability to exercise significant influence over the entity, the Company accounts for these unconsolidated investments under the equity method of accounting. The equity method of accounting requires these investments to be initially recorded at cost and subsequently increased (decreased) for the Company’s share of net income (loss), including eliminations for the Company’s share of intercompany transactions, and increased (decreased) for contributions (distributions). The Company’s proportionate share of the results of operations of these investments is reflected in the Company’s earnings or losses.
Fair Value Measurements
For financial assets and liabilities recorded at fair value on a recurring or non-recurring basis, fair value is the price the Company would expect to receive to sell an asset, or pay to transfer a liability, in an orderly transaction with a market participant at the measurement date under current market conditions. In the absence of such data, fair value is estimated using internal information consistent with what market participants would use in a hypothetical transaction.
In determining fair value, observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions; preference is given to observable inputs. In accordance with accounting principles generally accepted in the Unites States of America (“GAAP”) and as defined in ASC Topic 820, “Fair Value Measurement”, these two types of inputs create the following fair value hierarchy:
· Level 1: Quoted prices for identical instruments in active markets
· Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable
· Level 3: Significant inputs to the valuation model are unobservable
If the inputs used to measure the fair value fall within different levels of the hierarchy, the fair value is determined based upon the lowest level input that is significant to the fair value measurement. Whenever possible, the Company uses quoted market prices to determine fair value. In the absence of quoted market prices, the Company uses independent sources and data to determine fair value.
Financial Instrument Fair Value Disclosures

As of March 31, 2019 and December 31, 2018, the carrying values of cash and cash equivalents, accounts receivable, due to and due from affiliates, accounts payable, accrued liabilities, and distributions payable approximate their fair value based on their highly-liquid nature and/or short-term maturities. The carrying values of notes receivable from related parties approximate fair value because stated interest rate terms are consistent with interest rate terms on new deals with similar leverage and risk profiles. The fair values of notes receivable are classified in Level 3 of the fair value hierarchy due to the significant unobservable inputs that are utilized in their respective valuations.
Derivative Financial Instruments
The estimated fair values of derivative financial instruments are valued using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and volatility. The fair value of interest rate caps is determined using the market-standard methodology of discounting the future expected cash receipts which would occur if floating interest rates rise above the strike rate of the caps. The floating interest rates used in the calculation of projected receipts on the cap are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities. The inputs used in the valuation of interest rate caps fall within Level 2 of the fair value hierarchy.
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Interim Financial Information

The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with ~~accounting principles generally accepted in the United States of America (“GAAP”)~~GAAP for interim financial reporting, and the instructions to Form 10-Q and Article 10-1 of Regulation S-X. Accordingly, the financial statements for interim reporting do not include all of the information and notes or disclosures required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for a fair presentation have been included. Operating results for interim periods should not be considered indicative of the operating results for a full year.

The balance sheet at December 31, ~~2016~~2018 has been derived from the audited financial statements at that date, but does not include all of the information and disclosures required by GAAP for complete financial statements. ~~For further information, refer to~~It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in our audited consolidated financial statements for the year ended December 31, ~~2016~~2018 contained in the Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”) on February ~~22, 2017.~~
~~Summary of Significant Accounting Policies~~
Other than the adoption of accounting pronouncements as described below, there have been no significant changes to the Company’s accounting policies since it filed its audited consolidated financial statements in its Annual Report on Form 10-K for the year ended December 31, 2016.27, 2019.

Use of Estimates

The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Other than the adoption of new accounting pronouncements as described below, there have been no significant changes to the Company’s accounting policies since it filed its audited consolidated financial statements in its Annual Report on Form 10-K for the year ended December 31, 2018.
New Accounting Pronouncements

In January 2017, the FASB issued ASU 2017-01, "Business Combinations; Clarifying the Definition of a Business" (“ASU 2017-01”). ASU 2017-01 modifies the requirements to meet the definition of a business under~~Accounting Standards Codification ("ASC")~~Topic 805, "Business Combinations." The amendments provide a screen to determine when a set of identifiable assets and liabilities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or group of similar identifiable assets, the set is not a business. The impact is expected to result in fewer transactions being accounted for as business combinations. The Company believes that this amendment will result in most of its real estate acquisitions being accounted for as asset acquisitions rather than business combinations. ASU 2017-01 is effective for the Company for annual and interim periods beginning after December 15, 2017 with early adoption permitted. The Company adopted this standard effective January 1, 2017. The impact to the Consolidated Financial Statements and related notes as a result of the adoption of this standard is primarily related to the difference in the accounting of acquisition costs. When accounting for these costs as a part of an asset acquisition, the Company is permitted to capitalize the costs. Upon the adoption of ASU 2017-01 the Company evaluates each acquisition of real estate or in-substance real estate to determine if the integrated set of assets and activities acquired meet the definition of a business and need to be accounted as a business combination. All acquisitions of real estate by the Company during 2017 to date do not meet the new definition of a business.
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~~In November~~June 2016, the FASB issued ASU No. 2016-18, "Statement of Cash Flows; Restricted Cash" (“ASU 2016-18”). This update requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The Company will adjust the consolidated statement of cash flows as required in conjunction with the adoption of ASU 2016-08 in 2018. ASU 2016-18 is effective for the Company for annual and interim periods beginning after December 15, 2017 with early adoption permitted.
In August 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). The ASU provides guidance on the treatment of cash receipts and cash payments for certain types of cash transactions, to eliminate diversity in practice in the presentation of the cash flow statement. For public business entities, the amendments in ASU 2016-15 are effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Earlier application was permitted. The Company will adjust the consolidated statement of cash flows as required in conjunction with the adoption of ASU 2016-15 in 2018.
In March 2016, the FASB issued ASU No. 2016-07, “Simplifying the Transition to the Equity Method of Accounting” (“ASU 2016-07”), which eliminates the requirement to retroactively adjust an investment, results of operations, and retained earnings when the investment qualifies for the use of the equity method as a result of an increase in the level of ownership interest or degree of influence. The new standard is effective for annual reporting periods beginning after December 15, 2016. ASU 2016-07 did not have a material impact on the Company’s financial statements when adopted.
~~In June 2016, the FASB updated ASC Topic 326 "Financial Instruments - Credit Losses" with~~ 2016-13 “Measurement of Credit Losses on Financial Instruments” (“ASU ~~2016-03”~~2016-13”). ASU 2016-13 ~~enhances~~will require more timely recognition of credit losses associated with financial assets. While current GAAP includes multiple credit impairment objectives for instruments, the ~~methodology~~previous objectives generally delayed recognition of ~~measuring~~the full amount of credit losses until the loss was probable of occurring. The amendments in ASU 2016-13, whose scope is asset-based and not restricted to financial institutions, eliminate the probable initial recognition threshold in current GAAP and, instead, reflect an entity’s current estimate of all expected credit ~~losses to include~~losses. The amendments in ASU 2016-13 broaden the information that the Company must consider in developing its expected credit loss estimate for assets measured either collectively or individually. The use of ~~forward-looking~~forecasted information ~~to better inform~~incorporates more timely information in the estimate of expected credit loss ~~estimates.~~that will be more useful to users of the financial statements. In November 2018, the FASB issued ASU No. 2018-19 “Codification Improvements to Topic 326, Financial Instruments-Credit Losses” (“ASU 2018-19”). ASU 2018-19 clarifies that operating lease receivables are excluded from the scope of ASU 2016-13 and instead, impairment of operating lease receivables is to be accounted for under ASC 842. ASU 2016-13 is effective for ~~annual periods (including~~fiscal years beginning after December 15, 2019, including interim periods within those ~~periods) beginning after December 15, 2019.~~ fiscal years.The Company is currently evaluating the guidance and ~~has not determined~~ the impact this standard may have on the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02 “Leases (Topic 842)” (“ASU 2016-02”). Under ASU 2016-02, an entity will be required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. ASU 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. For public companies, ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, ~~and requires a modified retrospective adoption,~~ with early adoption permitted. The Company ~~expects that, because of the ASU 2016-02’s emphasis on lessee accounting,~~adopted ASU 2016-02 ~~will~~as of January 1, 2019 and elected the package of practical expedients provided by the standard which includes: (i) an entity need not reassess whether any expired or existing contract is a lease or contains a lease, (ii) an entity need not reassess the lease classification of any expired or existing leases, and (iii) and entity need not reassess initial direct costs for any existing leases. The adoption of ASU 2016-02 did not have a material impact onto the Company’s accounting for leases. Consistent with present standards, the Company will continue to account for lease revenue on a straight-line basis. Also, consistent with the Company’s current practice, under ASU 2016-02 only initial direct costs that are incremental to the lessor will be capitalized.
consolidated financial statements. In ~~May 2014,~~July 2018, the FASB issued ASU No. ~~2014-09, “Revenue from Contracts~~2018-11, “Leases (Topic 842): Targeted Improvements” (“ASU 2018-11”). ASU 2018-11 provides lessors with ~~Customers (Topic 606)” (“ASU 2014-09”). Under~~a practical expedient to not separate lease and non-lease components if both: (i) the ~~new standard,~~timing and pattern of revenue recognition for the non-lease component and the related lease component are the same, and (ii) the combined single lease component would be classified as an operating lease. The Company adopted the practical expedient as of January 1, 2019 to account for lease and non-lease components as a single component in lease contracts where the Company is ~~recognized when persuasive evidence~~the lessor.
Lessor Accounting
The Company’s current portfolio is focused predominately on apartment properties whereby the Company generates rental revenue by leasing apartments to residents in its communities. As lease revenues for apartments fall under the scope of ~~an arrangement exists, delivery has occurred,~~Topic 842, such lease revenues are classified as operating leases with straight-line recognition over the fee is fixed or determinable, and collectability is probable. Revenue is generally recognized net of allowances. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers-Deferralterms of the ~~Effective Date which defers the effective date of the new revenue recognition standard until the first quarter of 2018. Therefore, ASU 2014-09 will become effective~~relevant lease agreement and inclusion within rental revenue. Resident leases are generally for one-year or month-to-month terms and are renewable by mutual agreement between the Company inand the first quarter of the fiscal year ending December 31, 2018. Early adoption is permitted, but not earlier than the first quarter of the fiscal year ending December 31, 2017. The ASU allows for either full retrospective or modified retrospective adoption. The Company has selected the modified retrospective approach. In April 2016, the FASB issued ASU No. 2016-10, “Revenue from Contracts with Customers” (Topic 606): Identifying Performance Obligations and Licensing, which adds guidance on identifying performance obligations within a contract. The majorityresident. Non-lease components of the Company’s ~~revenue is derived from rental income, which is scoped out from this standard~~apartment leases are combined with the related lease component and ~~will be~~ accounted for as a single lease component under ~~ASU 2016-02, Leases, discussed above.~~Topic 842. The Company’s other revenue streams, which are being evaluated under this ASU, include but are not limited to other property revenues and interest income from related parties determined not to be within the scopebalances of ~~ASU 2016-02, and gains and losses from~~net real estate ~~dispositions.~~investments and related depreciation on the Company’s consolidated financial statements relate to assets for which the Company is the lessor.
Lessee Accounting
The Company determines if an arrangement is a lease at inception. The Company is currently engaged in operating lease agreements that primarily relate to certain equipment leases. The Company determined that the lessee operating lease commitments have no material impact on its consolidated financial statements with the adoption of Topic 842. The Company will continue to assess any modification of existing lease agreements and execution of any new lease agreements for the potential requirement of recording a right-of-use-asset or liability in the future.
In August 2018, the FASB issued ASU No. 2018-15 "Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40)" (“ASU 2018-15”). ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). ASU 2018-15 is effective for annual periods (including interim periods within those periods) beginning after December 15, 2019, though early adoption, including adoption in interim periods, is permissible. The Company has elected early adoption and there has been no material impact ofto the ~~new standard and will adopt it as of January 1, 2018, however, the Company does expect additional disclosures that are required from the~~Company’s consolidated financial statements upon its adoption of ~~this standard.~~ASU 2018-15.

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In March 2016, the FASB issued ASU 2016-08, “Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net) (Topic 606)” (“ASU 2016-08”),which updates the new revenue standard by clarifying the principal versus agent implementation guidance, but does not change the core principle of the new standard. The updates to the principal versus agent guidance (1) require an entity to determine whether it is a principal or an agent for each distinct good or service (or a distinct bundle of goods or services) to be provided to the customer; (2) illustrate how an entity that is a principal might apply the control principle to goods, services, or rights to services, when another party is involved in providing goods or services to a customer; (3) clarify that the purpose of certain specific control indicators is to support or assist in the assessment of whether an entity controls a specified good or service before it is transferred to the customer, provide more specific guidance on how the indicators should be considered, and clarify that their relevance will vary depending on the facts and circumstances; and (4) revise existing examples and add two new ones to more clearly depict how the guidance should be applied. The effective date and transition requirements for ASU 2016-08 are the same as the effective date and transition requirements of Topic 606, Revenue from Contracts with Customers (see ASU 2014-09 above). The majority of the Company’s revenue is derived from rental income, which is scoped out from this standard and will be accounted for under ASU 2016-02, Leases, discussed above. The Company will continue to assess the impact of the new standard and will adopt it as of January 1, 2018, however, as noted above in Note 2, the Company has reclassified certain tenant reimbursements as other property revenues and does expect additional disclosures from the adoption of this standard.
In February 2017, the FASB issued ASU 2017-05 "Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20)" ("ASU 2017-05"). ASU 2017-05 clarifies that a financial asset is within the scope of Subtopic 610-20 if it meets the definition of an in substance nonfinancial asset. ASU 2017-05 also defines the term in substance nonfinancial asset. It is effective for annual periods beginning after December 15, 2017. The adoption of this standard is not anticipated to have a material impact on our consolidated financial statements.
Note 3 – Sale of Real Estate Asset ~~and Abandonment of Development Project~~

Sale of Wesley Village ~~Green Ann Arbor~~II

On ~~February 22, 2017,~~March 1, 2019, the Company closed on the sale of ~~the~~an undeveloped parcel of land known as Wesley Village ~~Green Ann Arbor property,~~II located in ~~Ann Arbor, Michigan.~~Charlotte, North Carolina. The ~~property~~parcel was sold for approximately ~~$71.4~~$1.0 million, subject to certain prorations and adjustments typical in such real estate transactions. After deduction for ~~the payoff of the existing mortgage indebtedness encumbering the Village Green Ann Arbor property in the amount of $41.4 million and payment of~~ closing costs and fees, ~~of $1.3 million,~~ the sale of the ~~property~~parcel generated net proceeds of approximately ~~$28.6~~$1.0 million, ~~and~~resulting in a gain on sale of approximately ~~$16.7 million, of which the Company’s pro rata share of proceeds was approximately $13.6 million and pro rata share of the gain was approximately $7.8~~$0.7 million.
~~Sale of Lansbrook Village~~
On April 26, 2017, the Company closed on the sale of Lansbrook Village, located in Palm Harbor, Florida. The 90% owned property was sold for approximately $82.4 million, subject to certain prorations and adjustments typical in such real estate transactions. After deduction for assumption of the existing mortgage indebtedness encumbering Lansbrook Village in the amount of $57.2 million and payment of closing costs and fees of $1.2 million, the sale of the property generated net proceeds of approximately $24.1 million and a gain on sale of approximately $22.8 million, of which the Company’s pro rata share of proceeds was approximately $19.1 million and pro rata share of the gain was approximately $16.1 million.
~~Sale of Fox Hill~~
On May 24, 2017, the Company closed on the sale of the Fox Hill property, located in Austin, Texas. The property was sold for approximately $46.5 million, subject to certain prorations and adjustments typical in such real estate transactions. After deduction for the payoff of the existing mortgage indebtedness encumbering the Fox Hill property in the amount of $26.7 million, the payment of a prepayment penalty on the mortgage of $1.6 million and payment of closing costs and fees of $0.5 million, the sale of the property generated net proceeds of approximately $19.2 million and a gain on sale of approximately $10.7 million, of which the Company’s pro rata share of proceeds was approximately $16.4 million and pro rata share of the gain was approximately $10.3 million.
~~Sale of MDA Apartments~~
On June 30, 2017, the Company closed on the sale of its interest in MDA Apartments, located in Chicago, Illinois. The Company’s 35% interest in the property was sold for approximately $18.3 million, subject to certain prorations and adjustments typical in such real estate transactions. After deduction for the payment of closing costs and fees of $0.7 million, the sale of the joint venture interest in the property generated net proceeds of approximately $17.6 million and gain on sale of $10.2 million, of which the Company’s pro rata share of proceeds was approximately $11.0 million and pro rata share of the gain was approximately $6.4 million.
~~Election to Abandon East San Marco Development~~
On November 24, 2015, the Company entered into a cost-sharing agreement to pursue the acquisition of a tract of real property located in Jacksonville, Florida for the development of a 266-unit, Class A multifamily apartment community with 44,276 square feet of retail space, or the East San Marco Property. In 2017 the Company elected to abandon pursuit of the development of the East San Marco Property due to significant cost escalations arising from scope changes imposed on the project after the start and from both general and market specific labor and material inflation, which negatively impacted the risk and return profile of the project. The Company recognized approximately $2.9 million of acquisition and pursuit costs during the nine months ended September 30, 2017 based on its investment in a controlling equity position in the East San Marco Property prior to abandonment.
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Note 4 – Investments in Real Estate

As of ~~September 30, 2017,~~March 31, 2019, the Company ~~was invested~~held investments in ~~twenty-five~~thirty-three consolidated operating ~~real estate~~ properties and ~~ten~~fifteen development properties ~~generally~~ through ~~joint ventures, including convertible~~ preferred equity ~~investments, and~~or mezzanine ~~loans.~~loan investments. The following tables provide summary information regarding ~~our~~the Company’s consolidated operating properties and ~~development~~preferred equity and mezzanine loan investments, which are either consolidated or ~~presented on~~accounted for under the equity method of accounting.

Consolidated Operating Properties
Multifamily Community Name/Location
Number of
Units

Year
Built/Renovated⁽¹⁾

Ownership
Interest

ARIUM at Palmer Ranch, Sarasota, FL 320 2016 95.0 %
ARIUM Grandewood, Orlando, FL 306 2005 95.0 %
ARIUM Gulfshore, Naples, FL 368 2016 95.0 %
ARIUM Palms, Orlando, FL 252 2008 95.0 %
ARIUM Pine Lakes, Port St. Lucie, FL 320 2003 85.0 %
ARIUM Westside, Atlanta, GA 336 2008 90.0 %
Ashton Reserve, Charlotte, NC 473 2015 100.0 %
Citrus Tower, Orlando, FL 336 2006 96.8 %
Enders Place at Baldwin Park, Orlando, FL 220 2003 89.5 %
James on South First, formerly Legacy at Southpark, Austin, TX 250 2016 90.0 %
Marquis at Crown Ridge, San Antonio, TX 352 2009 90.0 %
Marquis at Stone Oak, San Antonio, TX 335 2007 90.0 %
Marquis at The Cascades, Tyler, TX 582 2009 90.0 %
Marquis at TPC, San Antonio, TX 139 2008 90.0 %
Nevadan, Atlanta, GA 480 1990 90.0 %
Park & Kingston, Charlotte, NC 168 2015 96.0 %
Preston View, Morrisville, NC 382 2000 91.8 %
Roswell City Walk, Roswell, GA 320 2015 98.0 %
Sorrel, Frisco, TX 352 2015 95.0 %
Sovereign, Fort Worth, TX 322 2015 95.0 %
The Brodie, Austin, TX 324 2001 92.5 %
The Preserve at Henderson Beach, Destin, FL 340 2009 100.0 %
Villages at Cypress Creek, Houston, TX 384 2001 80.0 %
Wesley Village, Charlotte, NC 301 2010 91.8 %
Whetstone, Durham, NC 204 2015 ⁽²⁾
Total 8,166
Multifamily Community Name Location
Number of
Units
Date Built /
Renovated⁽¹⁾ Ownership
Interest
ARIUM at Palmer Ranch Sarasota, FL 320 2016 100.0 %
ARIUM Glenridge Atlanta, GA 480 1990 90.0 %
ARIUM Grandewood Orlando, FL 306 2005 100.0 %
ARIUM Gulfshore Naples, FL 368 2016 100.0 %
ARIUM Hunter’s Creek Orlando, FL 532 1999 100.0 %
ARIUM Metrowest Orlando, FL 510 2001 100.0 %
ARIUM Palms Orlando, FL 252 2008 100.0 %
ARIUM Pine Lakes Port St. Lucie, FL 320 2003 100.0 %
ARIUM Westside Atlanta, GA 336 2008 90.0 %
Ashford Belmar Lakewood, CO 512 1988/1993 85.0 %
Ashton Reserve Charlotte, NC 473 2015 100.0 %
Citrus Tower Orlando, FL 336 2006 96.8 %
Enders Place at Baldwin Park Orlando, FL 220 2003 92.0 %
James at South First Austin, TX 250 2016 90.0 %
Marquis at Crown Ridge San Antonio, TX 352 2009 90.0 %
Marquis at Stone Oak San Antonio, TX 335 2007 90.0 %
Marquis at The Cascades Tyler, TX 582 2009 90.0 %
Marquis at TPC San Antonio, TX 139 2008 90.0 %
Outlook at Greystone Birmingham, AL 300 2007 100.0 %
Park & Kingston Charlotte, NC 168 2015 100.0 %
Plantation Park Lake Jackson, TX 238 2016 80.0 %
Preston View Morrisville, NC 382 2000 100.0 %
Roswell City Walk Roswell, GA 320 2015 98.0 %
Sands Parc Daytona Beach, FL 264 2017 100.0 %
Sorrel Frisco, TX 352 2015 95.0 %
Sovereign Fort Worth, TX 322 2015 95.0 %
The Brodie Austin, TX 324 2001 92.5 %
The Links at Plum Creek Castle Rock, CO 264 2000 88.0 %
The Mills Greenville, SC 304 2013 100.0 %
The Preserve at Henderson Beach Destin, FL 340 2009 100.0 %
Veranda at Centerfield Houston, TX 400 1999 93.0 %
Villages of Cypress Creek Houston, TX 384 2001 80.0 %
Wesley Village Charlotte, NC 301 2010 100.0 %
Total 11,286

⁽¹⁾ Represents date of last significant renovation or year built if there were no renovations.
⁽²⁾ ~~Whetstone is currently a preferred equity investment providing a stated investment return.~~

Depreciation expense was ~~$8.9~~$15.8 million and ~~$5.9 million, and $24.5 million and $16.7~~$12.1 million for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 and ~~2016,~~2018, respectively.

Intangibles related to the Company’s consolidated investments in real estate consist of the value of in-place leases. In-place leases are amortized over the remaining term of the in-place leases, which is approximately six months. Amortization expense related to the in-place leases was ~~$2.9~~$1.5 million and ~~$1.3 million, and $8.6 million and $5.8~~$3.6 million for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 and ~~2016,~~2018, respectively.

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~~Development Properties~~Preferred Equity and Mezzanine Loan Investments

Multifamily Community ~~Name/Location~~Name
~~Planned~~
~~Number of~~
~~Units~~
Location
Actual /
~~Anticipated~~Planned
~~Initial~~
~~Occupancy~~Number of Units

~~Anticipated~~
~~Construction~~
~~Completion~~
Actual /
Estimated
Initial
Occupancy Actual /
Estimated
Construction
Completion
Whetstone Apartments Durham, NC 204 3Q 2014 3Q 2015
Alexan CityCentre Houston, TX 340 2Q 2017 4Q 2017
Helios Atlanta, GA 282 2Q 2017 4Q 2017
Alexan Southside Place Houston, TX 270 4Q 2017 1Q 2018
Leigh House ~~2Q 2018~~
~~Lake Boone Trail,~~ Raleigh, NC 245 3Q 2017 3Q 2018
Vickers ~~Village,~~ Historic Roswell Roswell, GA 79 2Q 2018 3Q 2018
Domain at The One Forty Garland, TX 299 2Q 2018 4Q 2018
Arlo Charlotte, NC 286 2Q 2018 1Q 2019
Novel Perimeter Atlanta, GA 320 3Q 2018 1Q 2019
Cade Boca Raton ~~4Q 2018~~
~~APOK Townhomes,~~ Boca Raton, FL 90 ~~3Q 2018~~ ~~1Q 2019~~
~~Crescent Perimeter, Atlanta, GA~~ ~~320~~ 4Q 2018 2Q 2019
~~Domain, Garland, TX~~ ~~299~~ ~~4Q 2018~~ ~~2Q 2019~~
~~West Morehead, Charlotte, NC~~ ~~286~~ ~~4Q 2018~~ ~~2Q 2019~~
Flagler Village Fort Lauderdale, FL ~~384~~385 2Q 2020 3Q ~~2019~~2020
North Creek Apartments Leander, TX 259 1Q 2020 3Q 2020
Riverside Apartments Austin, TX 222 3Q 2020 4Q 2020
Wayforth at Concord Concord, NC 150 2Q 2020 3Q 2021
The Park at Chapel Hill Chapel Hill, NC * * *
Total ~~2,595~~ 3,431
* The development is in the planning phase; project specifications are in process.

Note 5 – Acquisition of Real Estate

The following describes the Company’s significant acquisition activity during the ~~nine~~three months ended ~~September 30, 2017:~~March 31, 2019:

Acquisition of ~~Bell Preston View~~
~~On February 17, 2017, the Company, through subsidiaries of its Operating Partnership, acquired a 91.8% interest~~Additional Interests in a 382-unit apartment community located in Morrisville, North Carolina, known as Bell Preston View Apartments (“Preston View”) for approximately $59.5 million. The purchase price of $59.5 million was funded, in part, with a $41.1 million senior mortgage loan secured by the Preston View property.Properties

~~Acquisition of Wesley Village~~The Company acquired the noncontrolling partner’s interest in the following property (dollars in thousands):

On March 9, 2017, the Company, through subsidiaries of its Operating Partnership, acquired a 91.8% interest in a 301-unit apartment community and adjacent land located in Charlotte, North Carolina, known as Wesley Village Apartments (“Wesley Village”) for approximately $57.2 million. The purchase price for Wesley Village of approximately $57.2 million was funded, in part, with a $40.5 million senior mortgage loan secured by the Wesley Village property.
~~Acquisition of Texas Portfolio (“Texas Portfolio”)~~
Property Date Amount Previous Interest New Interest
ARIUM Pine Lakes January 29, 2019 $ 7,769 85.0 % 100.0 %

On June 9, 2017, the Company, through subsidiaries of its Operating Partnership, acquired a 90.0% interest in a portfolio of five apartment community properties containing 1,408-units, located in San Antonio and Tyler, Texas for approximately $188.9 million. The purchase price for the five-property portfolio was funded, in part, with the assumption of five senior mortgage loans of a total of approximately $146.4 million secured individually by each of the portfolio properties. The properties are Marquis at Crown Ridge, Marquis at Stone Oak and Marquis at TPC located in San Antonio, Texas, and Marquis at The Cascades I and II (considered one property subsequent to acquisition) located in Tyler, Texas.
~~Acquisition at Villages at Cypress Creek~~
On September 8, 2017, the Company, through subsidiaries of its Operating Partnership, acquired an 80.0% interest in a 384-unit apartment community located in Houston, Texas, known as Villages at Cypress Creek (“Villages at Cypress Creek”) for approximately $40.7 million. The purchase price for Villages at Cypress Creek of approximately $40.7 million was funded, in part, with a $26.2 million senior mortgage loan secured by the Villages at Cypress Creek property.
~~Acquisition of Citrus Tower~~
On September 28, 2017, the Company, through subsidiaries of its Operating Partnership, acquired a 96.8% interest in a 336-unit apartment community located in Orlando, Florida, known as Citrus Tower (“Citrus Tower”) for approximately $55.3 million. The purchase price for Citrus Tower of approximately $55.3 million was funded, in part, with a $41.4 million senior mortgage loan secured by the Citrus Tower property.
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~~Purchase Price Allocations~~
The acquisitions of Wesley Village, Preston View, the Texas Portfolio, Villages at Cypress Creek, and Citrus Tower have been accounted for as asset acquisitions. The purchase prices were allocated to the acquired assets and assumed liabilities based on their estimated fair values at the dates of acquisition.
~~The following table summarizes the assets acquired and liabilities assumed at the acquisition date (amounts in thousands):~~
Purchase Price Allocation
Land $ 40,473
Building 312,884
Building improvements 19,615
Land improvements 17,039
Furniture and fixtures 7,014
In-place leases 8,021
Other assets 666
Total assets acquired $ 405,712
Mortgages assumed $ 146,377
Total liabilities assumed $ 146,377
The pro-forma information presented below represents the change in consolidated revenue and earnings as if the Company's acquisitions of Wesley Village, Preston View, the Texas Portfolio, Villages at Cypress Creek, Citrus Tower and 2016 acquisitions, had occurred on January 1, 2016 (amounts in thousands, except per share amounts).
Nine Months Ended September 30, Nine Months Ended September 30,
2017 2016
As Reported Pro-Forma
Adjustments Pro-Forma As Reported Pro-Forma
Adjustments Pro-Forma

Revenues $ 86,734 $ 17,796 $ 104,530 $ 57,389 $ 52,256 $ 109,645
Net income (loss) $ 40,115 $ 10,128 $ 50,243 $ (3,014 ) $ (17,384 ) $ (20,398 )
Net income (loss) attributable to common stockholders $ 563 $ 9,220 $ 9,783 $ (11,727 ) $ (15,923 ) $ (27,650 )

Income (loss) per share, basic and diluted⁽¹⁾ $ 0.02 $ 0.38 $ (0.57 ) $ (1.34 )
⁽¹⁾ ~~Pro-forma earnings (loss) per share, both basic and diluted, are calculated based on the net earnings (loss) attributable to the Company.~~
Aggregate property level revenues and net loss for 2017 acquisitions of Wesley Village, Preston View, the Texas Portfolio, Villages at Cypress Creek, and Citrus Tower since the properties’ respective acquisition dates, that are reflected in the Company’s consolidated statement of operations for the nine months ended September 30, 2017 amounted to $12.4 million and $3.9 million, respectively.

Note 6 – Notes and Interest Receivable due from Related ~~Party~~Parties

Following is a summary of the ~~Notes~~notes and accrued interest receivable due from related parties as of ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016~~2018 (amounts in thousands):

Property September 30,
2017 December 31,
2016

APOK Townhomes $ 11,360 $ —
Domain 20,528 —
West Morehead 24,883 21,267
Total $ 56,771 $ 21,267
Property March 31,
2019 December 31,
2018
Arlo $ 24,893 $ 24,893
Cade Boca Raton 12,338 11,854
Domain at The One Forty 21,174 20,536
Flagler Village 75,436 75,436
Novel Perimeter 20,867 20,867
The Park at Chapel Hill 8,572 —
Vickers Historic Roswell 10,788 10,498
Total $ 174,068 $ 164,084

Following is a summary of the interest income from related parties for the three months ended March 31, 2019 and 2018 (amounts in thousands):

Three Months Ended
March 31,

Property 2019 2018
Arlo $ 909 $ 910
Cade Boca Raton 437 415
Domain at The One Forty 752 750
Flagler Village 2,373 1,996
Novel Perimeter 762 762
The Park at Chapel Hill 156 —
Vickers Historic Roswell 387 363
Total $ 5,776 $ 5,196
The occupancy percentages of the Company’s related parties at March 31, 2019 and December 31, 2018 are as follows:
Property March 31,
2019 December 31,
2018
Arlo 54 % 37 %
Cade Boca Raton 31 % 8 %
Domain at The One Forty 48 % 34 %
Flagler Village (1 ) (1 )
Novel Perimeter 40 % 22 %
The Park at Chapel Hill (2 ) —
Vickers Historic Roswell 46 % 41 %
⁽¹⁾ The development has not commenced lease-up.
⁽²⁾ The development is in the planning phase; project specifications are in process.
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~~The interest income from related parties for the three and nine months ended September 30, 2017 and 2016 are summarized below (amounts in thousands):~~
Three Months Ended
September 30, Nine Months Ended
September 30,
Property 2017 2016 2017 2016
APOK Townhomes $ 424 $ — $ 1,232 $ —
Domain 767 — 1,758 —
West Morehead 929 — 2,751 —
Interest income from related parties $ 2,120 $ — $ 5,741 $ —
~~West Morehead~~Cade Boca Raton Mezzanine Financing

On ~~December 29, 2016,~~March 11, 2019, the Company, through BRG ~~Morehead NC,~~Boca, LLC, ~~or BRG Morehead NC, an indirect subsidiary, provided a $21.3 million~~increased its mezzanine loan ~~or the BRG West Morehead Mezz Loan,~~commitment to BR ~~Morehead~~Boca JV Member, LLC ~~an affiliate~~(“BR Boca JV Member”) to $14.0 million, of which $12.2 million has been funded as of March 31, 2019. The increase in the ~~Manager, or BR Morehead JV Member. The BRG West Morehead Mezz Loan is secured by BR Morehead JV Member’s approximate 95.0% interest in a multi-tiered joint venture along with~~mezzanine loan will provide funding for additional capital calls, including amounts to be contributed on behalf of Bluerock Special Opportunity + Income Fund II, LLC (“Fund II”),. In exchange for increasing the mezzanine loan,the Company received an ~~affiliate of the Manager,~~additional 2.5 basis point discount purchase option and an affiliate of ArchCo Residential, or the West Morehead JV, which intends to develop an approximately 286-unit Class A apartment community located in Charlotte, North Carolina to be known as West Morehead. The BRG West Morehead Mezz Loan matures on the earlier of January 5, 2020, or the maturity date of the West Morehead Construction Loan, as defined below, as extended, and bears interest at a fixed rate of 15.0%. Regular monthly payments are interest-only during the initial term. The BRG West Morehead Mezz Loan can be prepaid without penalty. The Company has the right to exercise an option to purchase, at the greater of a 25 basis point discount to fair market value or 15% internal rate of return for Fund II, up to a 100% common membership interest in BR Morehead JV Member (the mezzanine borrower), which is 99.5% owned by Fund II and which currently holds an approximate 95.0% interest in the West Morehead JV and in the West Morehead property, subject to certain promote rights of our unaffiliated development partner.
~~On January 5, 2017, the Company increased the amount of the BRG West Morehead Mezz Loan to approximately $24.6 million.~~
In conjunction with the West Morehead development, on December 29, 2016, the West Morehead property owner, which is owned by an entity in which the Company owns an indirect interest, entered into a $34.5 million construction loan with an unaffiliated party, or the West Morehead Construction Loan, of which a de minimus amount is outstanding at September 30, 2017, and which is secured by the West Morehead property. The West Morehead Construction Loan matures on December 29, 2019, and contains two one-year extension options, subject to certain conditions including a debt service coverage, loan to value ratio and payment of an extension fee. The West Morehead Construction Loan bears interest on a floating basis on the amount drawn based on LIBOR plus 3.75%, subject to a minimum of 4.25%. Regular monthly payments are interest-only until September 2019, with further payments based on twenty-five-year amortization. The West Morehead Construction Loan can be prepaid without penalty.
In addition, on December 29, 2016, the West Morehead property owner, which is owned by an entity in which the Company owns an indirect interest, entered into a $7.3 million mezzanine loan with an unaffiliated party, of which $2.8 million is outstanding at September 30, 2017, and which is secured by membership interest in the joint venture developing the West Morehead property. The loan matures on December 29, 2019, and contains two one-year extension options, subject to certain conditions including a debt service coverage, loan to value ratio, extension of the West Morehead Construction Loan and payment of an extension fee. The loan bears interest on a fixed rate of 11.5%. Regular monthly payments are interest-only. The loan can be prepaid prior to maturity provided the lender receives a cumulative return of 30% of its loan amount including all principal and interest paid.
~~APOK Townhomes Mezzanine Financing~~
On January 6, 2017, the Company, through BRG Boca, LLC, or BRG Boca, an indirect subsidiary, provided a $11.2 million mezzanine loan, or the BRG Boca Mezz Loan, to BRG Boca JV Member, LLC, an affiliate of the Manager, or BR Boca JV Member. The BRG Boca Mezz Loan is secured by BR Boca JV Member’s approximate 90.0% interest in a multi-tiered joint venture along with Fund II, an affiliate of the Manager, and an affiliate of NCC Development Group, or the Boca JV, which intends to develop an approximately 90-unit Class A apartment community located in Boca Raton, Florida to be known as APOK Townhomes. The BRG Boca Mezz Loan matures on the earlier of January 6, 2020, or the maturity of the Boca Construction Loan, defined below, as extended, and bears interest at a fixed rate of 15.0%. Regular monthly payments are interest-only during the initial term. The BRG Boca Mezz Loan can be prepaid without penalty. The Company has the right to exercise an option to purchase, at the greater of a 2530.0 basis point discount to fair market value or 15% internal rate of return for Fund II, up to a 100% common membership interest in BR Boca JV Member (the mezzanine borrower), which is 99.5% owned by Fund II and which currently holds an approximate 90.0% interest in the Boca JV and in the Boca property, subject to certain promote rights of our unaffiliated development partner.
14
In conjunction with the APOK Townhomes development, on December 29, 2016, the APOK Townhomes property owner, which is owned by an entity in which the Company owns an indirect interest, entered into a $18.7 million construction loan with an unaffiliated party, the Boca Construction Loan, of which $2.7 million is outstanding at September 30, 2017, which is secured by the APOK Townhomes property. The loan matures on June 29, 2019, and contains two one-year extension option, subject to certain conditions including a debt service coverage, stabilized occupancy and payment of an extension fee. The loan requires interest-only payments at prime plus 0.625%, subject to a floor of 4.125%. The loan can be prepaid without penalty.Member.

Domain at The One Forty Mezzanine Financing

On March ~~3, 2017,~~11, 2019, the Company, through BRG Domain Phase 1, LLC, ~~or BRG Domain 1, an indirect subsidiary, provided a $20.3 million~~(i) increased its mezzanine loan ~~or the BRG Domain 1 Mezz Loan,~~commitment to BR Member Domain Phase 1, LLC (“BR Domain 1 JV Member”) to $24.5 million, of which $20.9 million has been funded as of March 31, 2019, and (ii) entered into an ~~affiliate~~amended operating agreement for BR Domain 1 JV Member with Fund II, which admits BRG Domain Phase 1 Profit Share, LLC (“BRG Domain 1 PS”), a wholly-owned subsidiary of the ~~Manager, or~~Company, as an additional member of BR Domain 1 JV Member. ~~The~~As part of the amended agreement, the Company agreed to (i) terminate its option to purchase up to a 100% common membership interest in BR Domain 1 JV Member, and (ii) reduce the current fixed rate of 15.0% per annum of the mezzanine loan as follows: (a) 5.5% per annum effective January 1, 2020 through the end of the calendar year 2020, (b) 4.0% per annum for the calendar year 2021, and (c) 3.0% per annum for the calendar year 2022 and thereafter. In exchange, Fund II agreed to grant BRG Domain 1 ~~Mezz~~PS a 50% participation in any profits achieved in a sale after repayment of the mezzanine loan and the Company and Fund II each receive full return of their respective capital contributions.
The Park at Chapel Hill Financing
On January 23, 2019, the Company, through BRG Chapel Hill Lender, LLC (“BRG Chapel Hill Lender”), an indirect subsidiary, provided a $7.8 million senior loan (the “BRG Chapel Hill Loan”) to BR Chapel Hill, LLC (“BR Chapel Hill”). BR Chapel Hill JV, LLC (“BR Chapel Hill JV”) owns a 100.0% interest in BR Chapel Hill and is a joint venture with common interests held by Bluerock Special Opportunity + Income Fund, LLC (“Fund I”), Fund II, and BR Chapel Hill Investment, LLC, all managed by affiliates of the former Manager. The BRG Chapel Hill Loan is secured by BR ~~Domain 1 JV Member’s approximate 95.0%~~Chapel Hill’s fee simple interest in ~~a multi-tiered joint venture along with Fund II, an affiliate of~~ the ~~Manager, and an affiliate of ArchCo Residential, or the Domain Phase 1 JV, which intends to develop an approximately 299-unit Class A apartment community located in Garland, Texas.~~Chapel Hill property. The BRG ~~Domain Phase 1 Mezz~~Chapel Hill Loan matures on ~~the earlier of March 3, 2020, or the maturity of the Domain 1 Construction Loan, defined below, as extended,~~January 23, 2021 and bears interest at a fixed rate of ~~15.0%~~10.0%. Regular monthly payments are interest-only during the initial term. The BRG ~~Domain 1 Mezz~~Chapel Hill Loan can be prepaid without penalty.
In conjunction with the BRG Chapel Hill Loan, on January 23, 2019, the Company, through BRG Chapel Hill Lender, provided a $0.8 million mezzanine loan to BR Chapel Hill JV, which is secured by the Chapel Hill property. The loan bears interest at a fixed rate of 10.0% per annum and matures on the earliest to occur of: (i) the latest to occur of (a) January 23, 2021, or (b) the applicable maturity date under any extension granted under any construction financing, (ii) the date of sale or transfer of property, and (iii) such earlier date, by declaration of acceleration or otherwise, on which the final payment of principal becomes due. The loan can be prepaid without penalty.
Vickers Historic Roswell Mezzanine Financing
On February 26, 2019, the Company, through BRG Vickers Roswell, LLC, increased its mezzanine loan commitment to BR Vickers Roswell JV Member, LLC (“BR Vickers JV Member”) to $11.8 million, of which $10.7 million has been funded as of March 31, 2019. The increase in the mezzanine loan will provide funding for additional capital calls, including amounts to be contributed on behalf of Bluerock Special Opportunity + Income Fund III, LLC (“Fund III”). In exchange for increasing the mezzanine loan,the Company received an additional 5.0 basis point discount purchase option and has the right to exercise an option to purchase, at the greater of a 2517.5 basis point discount to fair market value or 15% internal rate of return for Fund ~~II,~~III, up to a 100% common membership interest in BR ~~Domain 1~~Vickers JV Member (the mezzanine borrower), which is 99.5% owned by Fund II and which currently holds an approximate 95.0% interest in the Domain 1 JV and in the Domain 1 property, subject to certain promote rights of our unaffiliated development partner.Member.

In conjunction with the Domain 1 development, on March 3, 2017, the Domain 1 property owner, which is owned by an entity in which the Company owns an indirect interest, entered into a $30.3 million construction loan with an unaffiliated party, or the Domain 1 Construction Loan, of which none is outstanding at September 30, 2017, and which is secured by the Domain 1 property. The Domain 1 Construction Loan matures on March 3, 2020, and contains two one-year extension options, subject to certain conditions including construction completion, a debt service coverage, loan to value ratio and payment of an extension fee. The Domain 1 Construction Loan bears interest on a floating basis on the amount drawn based on LIBOR plus 3.25%. Regular monthly payments are interest-only until March 2020, with further payments based on thirty-year amortization. The Domain 1 Construction Loan can be prepaid without penalty.
14

In addition, on March 3, 2017, the Domain 1 property owner, which is owned by an entity in which the Company owns an indirect interest, entered into a $6.4 million mezzanine loan with an unaffiliated party, of which $2.5 million is outstanding at September 30, 2017, and which is secured by membership interest in the joint venture developing the Domain 1 property. The loan matures on March 3, 2020, and contains two one-year extension options, subject to certain conditions including a debt service coverage, loan to value ratio, extension of the Domain 1 Construction Loan and payment of an extension fee. The loan bears interest on a fixed rate of 12.5%, with 9.5% paid currently. Regular monthly payments are interest-only. The loan can be prepaid prior to maturity provided the lender receives a minimum profit and 1% exit fee.

Note 7 – Preferred Equity Investments and Investments in Unconsolidated Real Estate Joint Ventures

~~Following is a summary of the Company’s ownership interests in the investments reported under the equity method of accounting.~~ The carrying amount of the Company’s preferred equity investments and investments in unconsolidated real estate joint ventures as of ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016~~2018 is summarized in the table below (amounts in thousands):

Property September 30,
2017 December 31,
2016

Alexan CityCentre $ 9,258 $ 7,733
Alexan Southside Place 19,015 17,322
APOK Townhomes 7 7,569
Domain 12 5,249
Flagler Village 25,384 14,035
Helios 16,360 16,360
Lake Boone Trail 11,930 9,919
West Morehead 14 13
Whetstone 12,932 12,932
Total $ 94,912 $ 91,132
15
Property March 31,
2019 December 31,
2018

Alexan CityCentre $ 11,480 $ 11,205
Alexan Southside Place 24,041 22,801
Arlo 14 14
Cade Boca Raton 7 7
Domain at The One Forty 12 12
Flagler Village 44 44
Helios 19,189 19,189
Leigh House 14,174 13,319
North Creek Apartments 8,217 5,892
Novel Perimeter 12 12
Riverside Apartments 3,600 3,600
Vickers Historic Roswell 6 6
Wayforth at Concord — —
Whetstone Apartments 12,932 12,932
Total $ 93,728 $ 89,033

As of ~~September 30, 2017,~~March 31, 2019, the Company, through wholly-owned subsidiaries of the Operating Partnership, had outstanding equity investments in ~~nine multi-tiered~~fourteen joint ventures, each of which ~~were~~was created to develop a multifamily property. ~~In each case, a wholly-owned subsidiary~~
Eight of the ~~Operating Partnership made~~fourteen equity investments, Alexan CityCentre, Alexan Southside Place, Helios, Leigh House, North Creek Apartments, Riverside Apartments, Wayforth at Concord and Whetstone Apartments, are preferred investments, generate a preferred investment in a joint venture, except Flagler Village, Domain, West Morehead and APOK Townhomes, which are common interests, and West Morehead, APOK Townhomes and Domain, which are primarily mezzanine loan investments as discussed in Note 6. The common interests in these joint ventures, as well as preferred interests in some cases, are owned by affiliates of the Manager. In each case, the Company’s preferred investment in the joint venture generates astated preferred return ~~of 15%~~ on ~~its~~ outstanding capital contributions, and the Company is not allocated any of the income or ~~loss.~~loss in the joint ventures. The joint venture is the controlling member in an entity whose purpose is to develop a multifamily property. Each joint venture in which the Company owns a preferred interest is required to redeem the Company’s preferred membership interests plus any accrued but unpaid preferred return on the earlier of the date which is six months following the maturity of the related development’s construction loan, or any earlier acceleration or due date. Additionally, the Company has the right, in its sole discretion, to convert its preferred membership interest in each joint venture into a common membership interest for a period of six months from the date upon which 70% of the units in the related development have been leased.
~~The following provides additional information regarding the Company’s preferred equity and investments.~~

The preferred returns ~~and equity in income of~~on the Company’s unconsolidated real estate joint ventures for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018 are summarized below (amounts in thousands):

Three Months
Ended September 30, Nine Months Ended
September 30,
Property 2017 2016 2017 2016
Alexan CityCentre $ 385 $ 294 $ 1,010 $ 791
Alexan Southside Place 740 655 2,113 1,950
APOK Townhomes — 205 — 205
Domain — 145 141 422
EOS (3 ) 137 (25 ) 409
Flagler Village (1 ) (4 ) (5 ) (4 )
Helios 619 619 1,835 1,842
Lake Boone Trail 451 375 1,319 1,117
West Morehead — 141 — 435
Whetstone 497 507 1,477 1,450
Preferred returns and equity in income of unconsolidated joint venture $ 2,688 $ 3,074 $ 7,865 $ 8,617

Three Months Ended
March 31,

Property 2019 2018
Alexan CityCentre $ 485 $ 383
Alexan Southside Place 383 802
Helios 331 605
Leigh House 524 441
North Creek Apartments 222 —
Riverside Apartments 113 —
Wayforth at Concord — —
Whetstone Apartments 231 230
Preferred returns on unconsolidated joint ventures $ 2,289 $ 2,461
15
The occupancy percentages of the Company’s unconsolidated real estate joint ventures at March 31, 2019 and December 31, 2018 are as follows:
Property March 31,
2019 December 31,
2018
Alexan CityCentre 91 % 93 %
Alexan Southside Place 91 % 85 %
Helios 95 % 90 %
Leigh House 92 % 90 %
North Creek Apartments ⁽¹⁾ ⁽¹⁾
Riverside Apartments ⁽¹⁾ ⁽¹⁾
Wayforth at Concord ⁽¹⁾ ⁽¹⁾
Whetstone Apartments 98 % 97 %
⁽¹⁾ The development has not commenced lease-up.

Summary combined financial information for the Company’s investments in unconsolidated real estate joint ventures as of ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016~~2018 and for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 and ~~2016,~~2018, is as ~~follows:~~follows (amounts in thousands):

September 30,
2017 December 31,
2016
March 31,
2019
December 31,
2018
Balance Sheets:
Real estate, net of depreciation $ 304,921 $ 197,742 $ 599,470 $ 577,624
Other assets 29,576 33,814 57,469 45,324
Total assets $ 334,497 $ 231,556 $ 656,939 $ 622,948

Mortgages payable $ 202,308 $ 97,598 $ 500,160 $ 480,903
Other liabilities 20,267 13,191 40,536 21,250
Total liabilities $ 222,575 $ 110,789 $ 540,696 $ 502,153
Members’ equity 111,922 120,767 116,243 120,795
Total liabilities and members’ equity $ 334,497 $ 231,556 $ 656,939 $ 622,948

16
Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Operating Statement:
Rental revenues $ 1,344 $ 1,841 $ 2,930 $ 4,608
Operating expenses (1,466 ) (885 ) (2,870 ) (2,577 )
(Loss) income before debt service, acquisition costs, and depreciation and amortization (122 ) 956 60 2,031
Interest expense, net (2,924 ) (344 ) (7,395 ) (999 )
Acquisition costs — (3 ) — (3 )
Depreciation and amortization (939 ) (771 ) (1,922 ) (2,296 )
Operating (loss) (3,985 ) (162 ) (9,257 ) (1,267 )
Net loss $ (3,985 ) $ (162 ) $ (9,257 ) $ (1,267 )
~~Alexan CityCentre Interests~~
On July 1, 2014, through BRG T&C BLVD Houston, LLC, a wholly-owned subsidiary of the Operating Partnership, the Company made a convertible preferred equity investment in a multi-tiered joint venture along with Bluerock Growth Fund, LLC (“BGF”), Fund II and Bluerock Special Opportunity + Income Fund III, LLC (“Fund III”), affiliates of the Manager, and an affiliate of Trammell Crow Residential, to develop a 340-unit Class A apartment community located in Houston, Texas, to be known as Alexan CityCentre. The Company has made a capital commitment of approximately $9.3 million to acquire 100% of the Class A preferred equity interests in BR T&C BLVD JV Member, LLC, all of which has been funded as of September 30, 2017 (of which $2.8 million earns a 20% return).
On June 7, 2016, the Alexan CityCentre property owner (the “Alexan borrower”), which is owned by an entity in which the Company owns an indirect interest, entered into a loan modification agreement to amend the terms of its construction loan financing the construction and development of the Alexan CityCentre property (the “Alexan Development”). The maximum principal amount available to the Alexan borrower under the terms of the modified loan is $55.1 million, of which approximately $48.8 million is outstanding at September 30, 2017. The maturity date is January 1, 2020, subject to a single one-year extension exercisable at the option of the Alexan borrower. The interest rate on the loan is a variable per annum rate equal to the prime rate plus 0.5%, or LIBOR plus 3.00%, at the Alexan borrower’s option. The loan requires monthly interest payments until the maturity date, after which $60,000 monthly payments of principal will be required in addition to payment of accrued interest during the maturity extension period. The Alexan borrower was required to initially fund approximately $2.6 million as an interest reserve and approximately $0.6 million as an operating deficit reserve. Certain unaffiliated third parties agreed to guaranty the completion of the development of the Alexan Development and provided partial guaranties of the Alexan borrower’s principal and interest obligations under the loan. The Alexan borrower is required to complete the Alexan Development by December 31, 2017 (without extension for any reason). To obtain the loan modification, the Alexan borrower was required to contribute additional equity for the Alexan Development in the amount of approximately $2.2 million to be applied to development costs, of which the Company funded approximately $0.7 million and Bluerock Growth Fund II, LLC (“BGF II”), an affiliate of the Manager, funded $1.3 million as Class B preferred interests earning a 20% preferred return.

Three Months Ended
March 31,

2019 2018
Operating Statement:
Rental revenues $ 7,800 $ 3,374
Operating expenses (5,134 ) (2,786 )
Income before debt service and depreciation and amortization 2,666 588
Interest expense, net (7,233 ) (1,552 )
Depreciation and amortization (3,987 ) (1,936 )
Net loss $ (8,554 ) $ (2,900 )

Alexan Southside Place Interests

On January 12, 2015, through BRG Southside, LLC, a wholly-owned subsidiary of its Operating Partnership, the Company made a convertible preferred equity investment in a multi-tiered joint venture, along with Fund II and Fund III, which are affiliates of the Manager, and an affiliate of Trammell Crow Residential, to develop an approximately 270-unit Class A apartment community located in Houston, Texas, to be known as Alexan Southside Place. Alexan Southside Place ~~will be~~is developed upon a tract of land ground leased from Prokop Industries BH, L.P., a Texas limited partnership, by BR Bellaire BLVD, LLC (“BR Bellaire BLVD”), as tenant under an 85-year ground lease. ~~The Company has made a capital commitment of $19.0 million to acquire 100% of the preferred equity interests in~~ BR ~~Southside Member, LLC, all of which has been funded~~Bellaire BLVD adopted ASU No. 2016-02 as of ~~September 30, 2017 (of which $1.7 million earns a 20% return).~~
In conjunction with the Alexan Southside development, on April 7, 2015, the Alexan Southside leasehold interest holder, which is owned by an entity in which the Company owns an indirect interest, entered into a $31.8 million construction loan, of which $19.4 million is outstanding at September 30, 2017, which is secured by the leasehold interest in the Alexan Southside Place property. The loan matures on April 7,January 1, 2019, and ~~contains~~as such, has recorded a ~~one-year extension option, subject to certain conditions including a debt service coverage, loan to value ratio~~right-of-use asset and ~~payment~~lease liability of an extension fee. The loan bears interest on a floating basis on the amount drawn based on the base rate plus 1.25% or LIBOR plus 2.25%. Regular monthly payments are interest-only during the initial term, with payments during the extension period based on a thirty-year amortization. The loan can be prepaid without penalty.$17.1 million as of March 31, 2019.

1716

~~APOK Townhomes Interests~~
On September 1, 2016, through BRG Boca, LLC, or BRG Boca, a wholly-owned subsidiary of its Operating Partnership, the Company made an investment in a multi-tiered joint venture, along with Fund II, an affiliate of the Manager, and NCC Development Group, or the Boca JV, to develop a 90-unit Class A apartment community located in Boca Raton, Florida to be known as APOK Townhomes. On January 6, 2017, (i) Fund II substantially redeemed the common equity investment held by BRG Boca in BR Boca JV Member for $7.3 million, (ii) BRG Boca maintained a 0.5% common interest in BR Boca JV Member, and (iii) the Company, through BRG Boca, provided a mezzanine loan in the amount of $11.2 million to BR Boca JV Member, or the BRG Boca Mezz Loan. See Note 6 for further details regarding APOK Townhomes and the BRG Boca Mezz Loan.
~~Domain Phase 1~~Leigh House Interests

~~On November 20, 2015, through~~The Company had the right, in its sole discretion, to convert its preferred membership interest into a ~~wholly-owned subsidiary~~common membership interest for a period of six months from the date upon which 70% of the ~~Operating Partnership, BRG Domain Phase 1, LLC, the Company made a convertible preferred equity investment~~units in ~~a multi-tiered joint venture along with Fund II, an affiliate of the Manager,~~Leigh House had been leased and ~~an affiliate of ArchCo Residential, to develop an approximately 299-unit, Class A, apartment community located in Garland, Texas.~~occupied. The property will be developed upon a tract of approximately 10 acres of land. On March 3, 2017, (i) Fund II substantially redeemed the preferred equity investment held by BRG Domain 1 in BR Domain 1 JV Member for $7.1 million, (ii) BRG Domain 1 maintained a 0.5% common interest in BR Domain 1 JV Member, and (iii) the Company, through BRG Domain 1, provided a mezzanine loan in the amount of $20.3 million to BR Domain 1 JV Member, or the BRG Domain 1 Mezz Loan. See Note 6 for further details regarding Domain Phase 1 and the BRG Domain 1 Mezz Loan.
~~Flagler Village Interests~~
On December 18, 2015, through BRG Flagler Village, LLC, a wholly-owned subsidiary of the Operating Partnership, BRG Flagler Village, LLC, the Company made an investment in a multi-tiered joint venture along with Fund II, an affiliate of the Manager, and an affiliate of ArchCo Residential, to develop an approximately 384-unit, Class A apartment community located in Fort Lauderdale, Florida. The Company has made a capital commitment of $49.9 million to acquire common interests in BR Flagler Village, LLC, of which $25.4 million has been funded at September 30, 2017.
~~Helios Interests~~
On May 29, 2015, through BRG Cheshire, LLC, a wholly-owned subsidiary of its Operating Partnership, the Company made a convertible preferred equity investment in a multi-tiered joint venture, along with Fund III and an affiliate of Catalyst Development Partners II, to develop a 282-unit Class A apartment community located in Atlanta, Georgia, to be known as Helios Apartments. The Company has made a capital commitment of $16.4 million to acquire 100% of the preferred equity interests in BR Cheshire Member, LLC, all of which has been funded as of September 30, 2017.
~~In conjunction with the Helios development, on December 16, 2015, the Helios property owner, which is owned by an entity in~~six-month period during which the Company ~~owns an indirect interest, entered into a $38.1 million construction loan which is secured by~~had the fee simple interest in the Helios property, of which approximately $32.8 million is outstanding at September 30, 2017. The loan matures on December 16, 2018, and contains two one-year extension options, subject to certain conditions including a debt service coverage, loan to value ratio and payment of an extension fee. The loan bears interest on a floating basis on the amount drawn based on one-month LIBOR plus 2.50%. Regular monthly payments are interest-only during the initial term, with payments during the extension period based on a thirty-year amortization. The loan can be prepaid without penalty.
~~Lake Boone Trail Interests~~
On December 18, 2015, through BRG Lake Boone, LLC, a wholly-owned subsidiary of the Operating Partnership, BRG Lake Boone, LLC, the Company made a convertible preferred equity investment in a multi-tiered joint venture along with Fund II, an affiliate of the Manager, and an affiliate of Tribridge Residential, LLC, to develop an approximately 245-unit, Class A apartment community located in Raleigh, North Carolina (“Lake Boone Trail”). The Company has made a capital commitment of $11.9 million to acquire 100% of the preferred equity interests in BR Lake Boone JV Member, LLC, all of which has been funded at September 30, 2017.
In conjunction with the Lake Boone Trail development, on June 23, 2016, the Lake Boone property owner, which is owned by an entity in which the Company owns an indirect interest, entered into a $25.2 million construction loan which is secured by the fee simple interest in the Lake Boone Trail property, of which $10.8 million is outstanding as of September 30, 2017. The loan matures on December 23, 2019, and contains one extension option for one year to five years, subject to certain conditions including construction completion, a debt service coverage, loan to value ratio and payment of an extension fee. The loan bears interest on a floating basis on the amount drawn based on one-month LIBOR plus 2.65%. Regular monthly payments are interest-only during the initial term, with payments during the extension period based on a thirty-year amortization. The loan can be prepaid without penalty.
18
~~West Morehead Interests~~
On January 6, 2016, through BRG Morehead NC, LLC, a wholly-owned subsidiary of the Operating Partnership, BRG Morehead NC, LLC, the Company made a convertible preferred equity investment in a multi-tiered joint venture along with Fund II, an affiliate of the Manager, and an affiliate of ArchCo Residential, to develop an approximately 286-unit Class A apartment community located in Charlotte, North Carolina to be known as West Morehead. The Company has a 0.5% common equity interest in BR Morehead JV Member, LLC, at September 30, 2017. See Note 6 for further details regarding West Morehead and the BRG West Morehead Mezz Loan.
~~Whetstone Interests~~
On May 20, 2015, through BRG Whetstone Durham, LLC, a wholly-owned subsidiary of its Operating Partnership, the Company made a convertible preferred equity investment in a multi-tiered joint venture, along with Fund III and an affiliate of TriBridge Residential, LLC, to acquire a 204-unit Class A apartment community located in Durham, North Carolina, to be known as Whetstone Apartments. The Company has made a capital commitment of $12.9 million to acquire 100% of the preferred equity interests in BR Whetstone Member, LLC, all of which has been funded as of September 30, 2017 (of which $0.7 million earns a 20% return). On October 2, 2016, the Company entered into an agreement that provided for an extended twelve-month period in which it had a right to convert ~~into common ownership.~~commenced on August 9, 2018, the date on which Leigh House achieved 70% leased and occupied units. The Company did not elect to convert into a common ~~ownership at October 2, 2017~~membership and ~~therefore,~~ its ~~preferred return would decrease~~option to ~~6.5%.~~ convert expired on February 9, 2019.
Whetstone Interests
Effective April 1, 2017, Whetstone Apartments ceased paying its preferred return on a current basis. The preferred return is being accrued, except for a $0.1 million payment received in March 2019. The accrued preferred return of ~~$1.0~~$2.3 million and $2.2 million as of March 31, 2019 and December 31, 2018, respectively, is ~~shown as a~~included in due from affiliates in the consolidated balance ~~sheet.~~sheets. The Company has evaluated the preferred equity investment and accrued preferred return and determined that the investment is ~~not impaired and will be~~ fully ~~recoverable in the future.~~recoverable.

On October 6, 2016, the Whetstone property owner, which is owned by an entity in which the Company owns an indirect interest, entered into a mortgage loan of approximately $26.5 million secured by the Whetstone Apartment property. The loan matures on November 1, 2023. The loan bears interest at a fixed rate of 3.81%. Regular monthly payments are interest-only until November 1, 2017, with monthly payments beginning December 1, 2017 based on thirty-year amortization. The loan may be prepaid with the greater of 1% prepayment fee or yield maintenance until October 31, 2021, and thereafter at par. The loan is nonrecourse to the Company and its joint venture partners with certain standard scope non-recourse carve-outs for certain deeds, acts or failures to act on the part of the Company and the joint venture partners.
~~KeyBank Land Loan~~Note 8 — Revolving credit facilities

The ~~KeyBank land loan, which had been reflected~~outstanding balances on the ~~unconsolidated entities financial statements, was paid off during the three months ended~~revolving credit facilities as of March 31, ~~2017.~~2019 and December 31, 2018, are as follows (amounts in thousands):
Revolving credit facilities March 31,
2019 December 31,
2018
Senior Credit Facility $ 67,000 $ 67,709
Amended Junior Credit Facility 11,000 14,500
Total $ 78,000 $ 82,209
Senior Credit Facility
On October 4, 2017, the Company, through its Operating Partnership, entered into a credit agreement (the “Senior Credit Facility”) with KeyBank National Association (“KeyBank”) and a syndicate of other lenders. The Senior Credit Facility provides for a loan commitment amount of $75 million, which commitment contains an accordion feature to a maximum commitment of up to $175 million.
The Senior Credit Facility matures on October 4, 2020 and contains a one-year extension option, subject to certain conditions and the payment of an extension fee. Borrowings under the Senior Credit Facility bear interest, at the Company’s option, at LIBOR plus 1.80% to 2.45%, or the base rate plus 0.80% to 1.45%, depending on the Company’s leverage ratio. The weighted average interest rate was 4.83% at March 31, 2019. The Company pays an unused fee at an annual rate of 0.20% to 0.25% of the unused portion of the Senior Credit Facility, depending on the amount of borrowings outstanding. The Senior Credit Facility contains certain financial and operating covenants, including a maximum leverage ratio, minimum liquidity, minimum debt service coverage ratio, and minimum tangible net worth. At March 31, 2019, the Company was in compliance with all covenants under the Senior Credit Facility. The Company has guaranteed the obligations under the Senior Credit Facility and provided certain properties as collateral.
Amended Junior Credit Facility
On March 20, 2018, the Company, through a subsidiary of its Operating Partnership, entered into a credit agreement (the “Junior Credit Facility”) with KeyBank and other lenders. The Junior Credit Facility provided for a maximum loan commitment amount of $50 million.
The Junior Credit Facility had a maturity date of March 20, 2019. Borrowings under the Junior Credit Facility bore interest, at the Company’s option, at LIBOR plus 4.0%, or the base rate plus 3.0%. The Company paid an unused fee at an annual rate of 0.35% to 0.40% of the unused portion of the Junior Credit Facility, depending on the amount of borrowings outstanding.
On December 21, 2018, the Company, through a subsidiary of its Operating Partnership, entered into an amended and restated, in its entirety, Junior Credit Facility (the “Amended Junior Credit Facility”). The Amended Junior Credit Facility provides for a revolving loan facility and a term loan facility with maximum commitment amounts of $50 million and $25 million, respectively. The revolving loan facility matures on December 21, 2019, with borrowings thereunder bearing interest, at the Company’s option, at LIBOR plus 3.5%, or the base rate plus 2.5%. The weighted average interest rate of the revolving loan facility was 5.99% at March 31, 2019. The Company pays an unused fee at an annual rate of 0.35% to 0.40% of the unused portion of the revolving loan facility, depending on the amount of borrowings outstanding. The term loan facility matures on September 30, 2019, whether the Company draws all or a portion of the maximum commitment amount of $25 million. The Amended Junior Credit Facility contains certain financial and operating covenants, including a maximum leverage ratio, minimum liquidity, minimum debt service coverage ratio, minimum tangible net worth and minimum equity raise and collateral values. As it matures in 2019, the Company is engaged in discussions to amend and extend the Amended Junior Credit Facility.
At March 31, 2019, the Company was in compliance with all covenants under the Amended Junior Credit Facility. The Company has guaranteed the obligations under the Amended Junior Credit Facility and has pledged certain assets as collateral.
The availability of borrowings under the revolving credit and term loan facilities at March 31, 2019 is based on the collateral and compliance with various ratios related to those assets and was approximately $54.4 million.

1917

Note 89 – Mortgages Payable

The following table summarizes certain information as of ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016,~~2018, with respect to the Company’s senior mortgage indebtedness (amounts in thousands):

Outstanding Principal As of September 30, 2017 Outstanding Principal As of March 31, 2019
Property September 30,
2017 December 31,
2016 Interest Rate Fixed/ Floating Maturity Date
March 31,
2019
December 31,
2018 Interest Rate
Interest-only
through date
Maturity Date
Fixed Rate:
ARIUM at Palmer Ranch $ 26,925 $ 26,925 3.40 % LIBOR + 2.17%⁽¹⁾ February 1, 2023 $ 41,348 $ 41,348 4.41 % May 2020 May 1, 2025
ARIUM Grandewood 34,294 34,294 3.05 % Floating⁽²⁾ December 1, 2024
ARIUM Gulfshore 32,626 32,626 3.40 % LIBOR + 2.17%⁽¹⁾ February 1, 2023
ARIUM Palms 24,999 24,999 3.45 % LIBOR + 2.22%⁽¹⁾ September 1, 2022
ARIUM Grandewood⁽¹⁾ 19,713 19,713 4.35 % July 2020 July 1, 2025
ARIUM Hunter’s Creek 72,294 72,294 3.65 % November 2019 November 1, 2024
ARIUM Metrowest 64,559 64,559 4.43 % May 2021 May 1, 2025
ARIUM Pine Lakes 26,950 26,950 3.95 % Fixed November 1, 2023 26,950 26,950 3.95 % Interest-only November 1, 2023
ARIUM Westside 52,150 52,150 3.68 % Fixed August 1, 2023 52,150 52,150 3.68 % August 2021 August 1, 2023
Ashford Belmar 100,675 100,675 4.53 % December 2022 December 1, 2025
Ashton Reserve I 31,528 31,900 4.67 % Fixed December 1, 2025 30,743 30,878 4.67 % ⁽²⁾ December 1, 2025
Citrus Tower 41,438 41,438 4.07 % October 2019 October 1, 2024
Enders Place at Baldwin Park⁽⁴⁾⁽³⁾ 23,699 23,822 4.30 % ⁽²⁾ November 1, 2022
James on South First 26,425 26,500 4.35 % ⁽²⁾ January 1, 2024
Outlook at Greystone 22,105 22,105 4.30 % June 2021 June 1, 2025
Park & Kingston⁽⁴⁾ 18,432 18,432 3.41 % Interest-only April 1, 2020
Plantation Park 26,625 26,625 4.64 % July 2024 July 1, 2028
Roswell City Walk 51,000 51,000 3.63 % December 2019 December 1, 2026
Sovereign 28,084 28,227 3.46 % ⁽²⁾ November 10, 2022
The Brodie 34,666 34,825 3.71 % ⁽²⁾ December 1, 2023
The Links at Plum Creek 40,000 40,000 4.31 % April 2020 October 1, 2025
The Mills 26,174 26,298 4.21 % ⁽²⁾ January 1, 2025
The Preserve at Henderson Beach 35,422 35,602 4.65 % ⁽²⁾ January 5, 2023
Villages of Cypress Creek 26,200 26,200 3.23 % October 2020 October 1, 2022⁽⁵⁾
Wesley Village 40,545 40,545 4.25 % April 2019 April 1, 2024
Total Fixed Rate 849,247 850,186

Floating Rate⁽⁶⁾:
ARIUM Glenridge 49,500 49,500 3.82 % September 2021 September 1, 2025
ARIUM Grandewood⁽¹⁾ 19,672 19,672 3.89 % July 2020 July 1, 2025
ARIUM Palms 30,320 30,320 3.89 % September 2020 September 1, 2025
Ashton Reserve II 15,270 15,270 3.85 % LIBOR + 2.62%⁽¹⁾ January 1, 2026 15,213 15,213 3.99 % August 2022 August 1, 2025
Citrus Tower 41,438 — 4.07 % Fixed October 1, 2024
Crescent Perimeter⁽³⁾ 1,920 — 4.23 % LIBOR + 3.00%⁽¹⁾ December 12, 2020
Enders Place at Baldwin Park⁽⁴⁾⁽³⁾ 24,401 24,732 4.30 % Fixed November 1, 2022
Fox Hill — 26,705
James on South First 26,500 26,500 4.35 % Fixed January 1, 2024
Lansbrook Village — 57,190
Marquis at Crown Ridge 29,362 — 2.84 % LIBOR + 1.61%⁽¹⁾ June 1, 2024 28,488 28,634 4.10 % ⁽²⁾ June 1, 2024⁽⁷⁾
Marquis at Stone Oak 43,125 — 2.84 % LIBOR + 1.61%⁽¹⁾ June 1, 2024 42,526 42,725 4.10 % ⁽²⁾ June 1, 2024⁽⁷⁾
Marquis at The Cascades I 33,207 — 2.84 % LIBOR + 1.61%⁽¹⁾ June 1, 2024 32,745 32,899 4.10 % ⁽²⁾ June 1, 2024⁽⁷⁾
Marquis at The Cascades II 23,175 — 2.84 % LIBOR + 1.61%⁽¹⁾ June 1, 2024 22,853 22,960 4.10 % ⁽²⁾ June 1, 2024⁽⁷⁾
Marquis at TPC 17,273 — 2.84 % LIBOR + 1.61%⁽¹⁾ June 1, 2024 16,736 16,826 4.10 % ⁽²⁾ June 1, 2024⁽⁷⁾
MDA Apartments — 37,124
Nevadan 48,431 48,431 3.71 % LIBOR + 2.48%⁽¹⁾ November 1, 2023
Park & Kingston⁽⁵⁾ 18,432 18,432 3.41 % Fixed April 1, 2020
Preston View 41,066 — 3.30 % LIBOR + 2.07%⁽¹⁾ March 1, 2024 41,657 41,657 3.99 % August 2022 August 1, 2025
Roswell City Walk 51,000 51,000 3.63 % Fixed December 1, 2026
Sorrel 38,684 38,684 3.52 % LIBOR + 2.29%⁽¹⁾ May 1, 2023 38,684 38,684 4.78 % November 2019 May 1, 2023
Sovereign 28,880 28,880 3.46 % Fixed November 10, 2022
The Brodie 34,825 34,825 3.71 % Fixed December 1, 2023
The Preserve at Henderson Beach 36,484 36,989 4.65 % Fixed January 5, 2023
Vickers Village⁽⁶⁾ 3,875 — 4.23 % LIBOR + 3.00%⁽⁶⁾ December 1, 2020
Village Green of Ann Arbor — 41,547
Villages at Cypress Creek 26,200 — 3.23 % Fixed October 1, 2022
Wesley Village 40,545 — 4.25 % Fixed April 1, 2024
Veranda at Centerfield 26,100 26,100 3.74 % July 2021 July 26, 2023⁽⁵⁾
Total Floating Rate 364,494 365,190
Total 853,565 716,153 1,213,741 1,215,376
Fair value adjustments 2,055 1,364 2,095 2,204
Deferred financing costs, net (8,458 ) (6,942 ) (10,931 ) (11,444 )
Total $ 847,162 $ 710,575 $ 1,204,905 $ 1,206,136

⁽¹⁾ ~~One month LIBOR as of September 30, 2017 was 1.23%.~~
⁽²⁾ ARIUM Grandewood ~~principal balance includes the initial advance of $29.44 million at~~has a fixed rate loan and a floating rate loan.
⁽²⁾ The loan requires monthly payments of ~~1.67% plus one month LIBOR~~principal and a $4.85 million supplemental loan at a floating rate of 2.74% plus one month LIBOR. At September 30, 2017, the interest rates on the initial advance and supplemental loan were 2.90% and 3.97%, respectively.interest.
⁽³⁾ ~~Construction loan of up to $44.7 million, with interest at a floating rate of 3.00% plus one month LIBOR.~~ The ~~loan has a one-year extension option subject to certain conditions.~~
⁽⁴⁾ ~~The Enders Place at Baldwin Park~~ principal balance includes a ~~$16.6~~$16.1 million loan at a fixed rate of 3.97% and a ~~$7.8~~$7.6 million supplemental loan at a fixed rate of 5.01%.
⁽⁵⁾⁽⁴⁾ The ~~Park & Kingston~~ principal balance includes a $15.3 million loan at a fixed rate of 3.21% and a $3.2 million supplemental loan at a fixed rate of 4.34%.
⁽⁵⁾The loan has two one-year extension options subject to certain conditions.
⁽⁶⁾ ~~Construction loan of up to $18.0 million, with~~All the Company’s floating rate mortgages bear interest at one-month LIBOR + margin. In March 2019, one-month LIBOR in effect was 2.49%. LIBOR rate is subject to a ~~floating~~ rate ~~of 3.00% plus one month LIBOR.~~cap. Please refer to Note 11 for further information.
⁽⁷⁾ The loan can be extended, subject to certain conditions, in connection with an election to convert to a fixed interest rate loan.

2018

Deferred financing costs

Costs incurred in obtaining long-term financing ~~reflected as a reduction of Mortgages Payable in the accompanying Consolidated Balance Sheets,~~ are amortized on a straight-line basis ~~which approximates the effective~~to interest ~~method,~~expense over the terms of the related ~~debt~~financing agreements, as ~~applicable.~~applicable, which approximates the effective interest method.
Loss on Extinguishment of Debt and Modification Costs
Upon repayment of or in conjunction with a material change (i.e. a 10% or greater difference in the cash flows between instruments) in the terms of an underlying debt agreement, the Company writes-off any unamortized deferred financing costs and fair market value adjustments related to the original debt that was extinguished. Prepayment penalties incurred on the early repayment of debt and costs incurred in a debt modification that are not capitalized are also included in loss on extinguishment of debt and debt modification costs on the consolidated statements of operations.

~~Preston View Mortgage Payable~~
On February 17, 2017, the Company, through an indirect subsidiary, entered into an approximately $41.1 million loan secured by Preston View. The loan matures March 1, 2024 and bears interest on a floating basis based on LIBOR plus 2.07%,Master Credit Facility with interest only payments until March 2019, and then monthly payments based on 30-year amortization. After March 31, 2018, the loan may be prepaid with a 1% prepayment fee through December 31, 2023, and thereafter at par.
~~Wesley Village Mortgage Payable~~Fannie Mae

On ~~March 9, 2017,~~April 30, 2018, the Company, through ~~an indirect subsidiary,~~certain subsidiaries of the Operating Partnership, entered into ~~an approximately $40.5 million loan~~a Master Credit Facility Agreement (the “Fannie Facility”), which was issued through Fannie Mae’s Multifamily Delegated Underwriting and Servicing Program. The Fannie Facility includes certain restrictive covenants, including indebtedness, liens, investments, mergers and asset sales, and distributions. The Fannie Facility also contains events of default, including payment defaults, covenant defaults, bankruptcy events, and change of control events. Each note under the Fannie Facility is cross-defaulted and cross-collateralized and the Company has guaranteed the obligations under the Fannie Facility. As of March 31, 2019, the mortgage loans secured by ~~Wesley Village.~~ ARIUM Grandewood, ARIUM Metrowest, Ashton Reserve II, Outlook at Greystone and Preston View were issued under the Fannie Facility.
The ~~loan matures April 1, 2024 and bears interest at a~~Company may request future fixed rate advances or floating rate advances under the Fannie Facility either by borrowing against the value of ~~4.25%, with interest only payments until April 2019,~~the mortgaged properties (based on the valuation methodology established in the Fannie Facility) or adding eligible properties to the collateral pool, subject to customary conditions, including satisfaction of minimum debt service coverage and ~~then fixed monthly payments based on 30-year amortization. After January 1, 2024,~~maximum loan-to-value tests. The proceeds of any future advances made under the ~~loan~~Fannie Facility may be ~~prepaid without prepayment fee or yield maintenance.~~
~~Marquis at Crown Ridge Mortgage Payable~~
~~On June 9, 2017,~~used, among other things, for the ~~Company, through an indirect subsidiary, assumed a loan with a principal balance~~acquisition and refinancing of ~~approximately $29.5 million secured by Marquis at Crown Ridge. The loan matures June 1, 2024, unless~~additional properties to be identified in the maturity date is extended in connection with an election to convert to a fixed interest rate loan. The loan bears interest at a floating basis based on LIBOR plus 1.61%, with fixed monthly payments based on 30-year amortization. After February 29, 2024, the loan may be prepaid without prepayment fee or yield maintenance.
~~Marquis at Stone Oak Mortgage Payable~~
On June 9, 2017, the Company, through an indirect subsidiary, assumed a loan with a principal balance of approximately $43.1 million secured by Marquis at Stone Oak. The loan matures June 1, 2024, unless the maturity date is extended in connection with an election to convert to a fixed interest rate loan. The loan bears interest at a floating basis based on LIBOR plus 1.61%, with interest only payments until June 2018, and then fixed monthly payments based on 30-year amortization. After February 29, 2024, the loan may be prepaid without prepayment fee or yield maintenance.
~~Marquis at The Cascades I Mortgage Payable~~
On June 9, 2017, the Company, through an indirect subsidiary, assumed a loan with a principal balance of approximately $33.2 million secured by Marquis at The Cascades I. The loan matures June 1, 2024, unless the maturity date is extended in connection with an election to convert to a fixed interest rate loan. The loan bears interest at a floating basis based on LIBOR plus 1.61%, with interest only payments until June 2018, and then fixed monthly payments based on 30-year amortization. After February 29, 2024, the loan may be prepaid without prepayment fee or yield maintenance.
~~Marquis at The Cascades II Mortgage Payable~~
On June 9, 2017, the Company, through an indirect subsidiary, assumed a loan with a principal balance of approximately $23.2 million secured by Marquis at The Cascades II. The loan matures June 1, 2024, unless the maturity date is extended in connection with an election to convert to a fixed interest rate loan. The loan bears interest at a floating basis based on LIBOR plus 1.61%, with interest only payments until June 2018, and then fixed monthly payments based on 30-year amortization. After February 29, 2024, the loan may be prepaid without prepayment fee or yield maintenance.
~~Marquis at TPC Mortgage Payable~~
On June 9, 2017, the Company, through an indirect subsidiary, assumed a loan with a principal balance of approximately $17.4 million secured by Marquis at TPC. The loan matures June 1, 2024, unless the maturity date is extended in connection with an election to convert to a fixed interest rate loan. The loan bears interest at a floating basis based on LIBOR plus 1.61%, with fixed monthly payments based on 30-year amortization. After February 29, 2024, the loan may be prepaid without prepayment fee or yield maintenance.
21
~~Villages at Cypress Creek~~
On September 8, 2017, the Company, through an indirect subsidiary, entered into an approximately $26.2 million loan secured by Villages at Cypress Creek. The loan matures October 1, 2022, with two-one year extensions subject to certain conditions, and bears interest at a fixed rate of 3.23%, with interest only payments until October l, 2020, and then fixed monthly payments based on 30-year amortization. After July 1, 2022, the loan may be prepaid without prepayment fee or yield maintenance.
~~Citrus Tower~~
On September 28, 2017, the Company, through an indirect subsidiary, entered into an approximately $41.4 million loan secured by Citrus Tower. The loan matures October 1, 2024, and bears interest at a fixed rate of 4.07%, with interest only payments until October l, 2019, and then fixed monthly payments based on 30-year amortization. After July 1, 2024, the loan may be prepaid without prepayment fee or yield maintenance.future.

Debt maturities

As of ~~September 30, 2017,~~March 31, 2019, contractual principal payments for the five subsequent years and thereafter are as follows (amounts in thousands):

Year Total Total
2017 (October 1-December 31) $ 738
2018 4,086
2019 7,652
2019 (April 1–December 31) $ 5,727
2020 35,227 30,729
2021 12,173 15,860
2022 91,409
2023 221,219
Thereafter 793,689 848,797
$ 853,565 $ 1,213,741
Add: Unamortized fair value debt adjustment 2,055 2,095
Subtract: Deferred financing costs, net (8,458 ) (10,931 )
Total $ 847,162 $ 1,204,905

The net book value of real estate assets providing collateral for these above borrowings, ~~were $1,194.2~~including the Senior Credit Facility, Amended Junior Credit Facility and Fannie Facility, was $1,682.6 million ~~and $987.1 million at September 30, 2017 and December~~as of March 31, ~~2016, respectively.~~2019.

The mortgage loans encumbering the Company’s properties are generally nonrecourse, subject to certain exceptions for which the Company would be liable for any resulting losses incurred by the lender.  These exceptions vary from loan to loan but generally include fraud or a material misrepresentation, misstatement or omission by the borrower, intentional or grossly negligent conduct by the borrower that harms the property or results in a loss to the lender, filing of a bankruptcy petition by the borrower, either directly or indirectly, and certain environmental liabilities.  In addition, upon the occurrence of certain events, such as fraud or filing of a bankruptcy petition by the borrower, the Company or our joint ventures would be liable for the entire outstanding balance of the loan, all interest accrued thereon and certain other costs, including penalties and expenses. The mortgage loans generally have a period where a prepayment fee or yield maintenance would be required.
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Note 910 – Fair Value of Financial Instruments

As of ~~September 30, 2017~~March 31, 2019 and December 31, 2016, the Company believes the carrying value of cash and cash equivalents, accounts receivable, due to and from affiliates, accounts payable, accrued liabilities, and distributions payable approximate their fair value2018, based ~~on their highly-liquid nature and/or short-term maturities. Based~~ on the discounted amount of future cash flows using rates currently available to the Company for similar liabilities, the fair value of the Company’s mortgages payable is estimated at ~~$856.0~~$1,219.1 million and ~~$714.8~~$1,205.0 million, ~~as of September 30, 2017 and December 31, 2016,~~ respectively, compared to the carrying amounts, before adjustments for deferred financing costs, net, of ~~$855.6~~$1,215.8 million and ~~$717.5~~$1,217.6 million, respectively. The fair value of mortgages payable is estimated based on the Company’s current interest rates (Level 3 inputs, as defined in ASC Topic 820, “Fair Value Measurement”) for similar types of borrowing arrangements.
Note 11 – Derivative Financial Instruments
Risk Management Objective of Using Derivatives
The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash payments principally related to the Company’s borrowings.
The Company’s objectives in using interest rate derivative financial instruments are to add stability to interest expense and to manage the Company’s exposure to interest rate movements. To accomplish these objectives, the Company primarily uses interest rate caps as part of its interest rate risk management strategy. Interest rate caps involve the receipt of variable-rate amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium.
The Company has not designated any of the interest rate derivatives as hedges. Although these derivative financial instruments were not designated or did not qualify for hedge accounting, the Company believes the derivative financial instruments are effective economic hedges against increases in interest rates. The Company does not use derivative financial instruments for trading or speculative purposes.
As of March 31, 2019, the Company had interest rate caps which effectively limit the Company’s exposure to interest rate risk by providing a ceiling on the underlying floating interest rate for $414.5 million of the Company’s floating rate debt.
The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of March 31, 2019 and December 31, 2018 and the effect of Company's derivative financial instruments on the consolidated statements of operations for the three months ended March 31, 2019 and 2018 (amounts in thousands):
Derivatives not
designated as
hedging instruments
under ASC 815-20
Balance Sheet Location
Fair values of derivative
instruments Location of Gain or (Loss)
Recognized in Income The Effect of Derivative
Instruments on the Statement
of Operations
March 31, December 31,
Three Months Ended
March 31,

2019 2018 2019 2018
Interest rate caps Accounts receivable, prepaids and other assets $ 908 $ 2,596 Interest Expense $ (1,688 ) $ —

Note 1012 – Related Party Transactions

~~Management~~Administrative Services Agreement

~~The~~In October 2017, the Company entered into an Administrative Services Agreement (the “Administrative Services Agreement”) with Bluerock Real Estate, LLC and its affiliate, Bluerock Real Estate Holdings, LLC (together “BRE”). Pursuant to the Administrative Services Agreement, BRE provides the Company with certain human resources, investor relations, marketing, legal and other administrative services (the “Services”) that facilitate a smooth transition in the Company’s management ~~agreement (the “Management Agreement”), with~~of its operations, enable the ~~Manager,~~Company to benefit from operational efficiencies created by access to such services, and give the Company time to develop such services in-house or to hire other third-party service providers for such services. The Services are provided on ~~April 2, 2014. The terms and conditions~~an at-cost basis, generally allocated based on the use of such Services for the benefit of the ~~Management~~Company’s business, and are invoiced on a quarterly basis. In addition, the Administrative Services Agreement ~~which became effective as~~permits, from time to time, certain employees of ~~April 2, 2014, are described below.~~the Company to provide or cause to be provided services to BRE, on an at-cost basis, generally allocated based on the use of such services for the benefit of the business of BRE, and otherwise subject to the terms of the Services provided by BRE to the Company under the Administrative Services Agreement. Payment by the Company of invoices and other amounts payable under the Administrative Services Agreement will be made in cash or, in the sole discretion of the Board, in the form of fully-vested LTIP Units.

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The ~~Management~~initial term of the Administrative Services Agreement ~~requires~~was one year from the ~~Manager~~date of execution, subject to ~~manage~~ the Company’s ~~business affairs in conformity with~~right to renew for successive one-year terms upon sixty (60) days written notice prior to expiration. The initial term of the ~~investment guidelines and other policies that are approved and monitored~~Administrative Services Agreement expired on October 31, 2018. On August 6, 2018, the Company delivered written notice to BRE of the Company’s intention to renew the Administrative Services Agreement for an additional one-year term, to expire on October 31, 2019. The Administrative Services Agreement will automatically terminate (i) upon termination by the ~~Company’s board~~Company of ~~directors. The Manager acts under~~all Services, or (ii) in the ~~supervision and direction~~event of non-renewal by the Company. Any Company party will also be able to terminate the Administrative Services Agreement with respect to any individual Service upon written notice to the applicable BRE entity, in which case the specified Service will discontinue as of the ~~Board. Specifically,~~date stated in such notice, which date must be at least ninety (90) days from the ~~Manager~~date of such notice. Further, either BRE entity may terminate the Administrative Services Agreement at any time upon the occurrence of a “Change of Control Event” (as defined therein) upon at least one hundred eighty (180) days prior written notice to the Company.
Pursuant to the Administrative Services Agreement, BRE is responsible for ~~(1)~~ the ~~selection, purchase~~payment of all employee benefits and ~~sale of~~any other direct and indirect compensation for the Company’s investment portfolio, (2) the Company’s financing activities, and (3) providing the Company with advisory and management services. The Manager provides the Company with a management team, including a chief executive officer, president, chief accounting officer and chief operating officer, along with appropriate support personnel. None of the officers or employees of BRE (or their affiliates or permitted subcontractors) assigned to perform the ~~Manager are dedicated exclusively~~Services, as well as such employees’ worker’s compensation insurance, employment taxes, and other applicable employer liabilities relating to the Company. The Company is dependent on its Manager to provide these services that are essential to the Company. In the event that the Manager or its affiliates are unable to provide the respective services, the Company will be required to obtain such ~~services from other sources.~~employees.

~~The Company pays the Manager a base management fee in an amount equal to the sum of: (A) 0.25%~~Recorded as part of ~~the Company’s stockholders’ existing~~general and contributed equity prior to the IPO and in connection with our contribution transactions, per annum, calculated quarterly based on the Company’s stockholders’ existing and contributed equity for the most recently completed calendar quarter and payable in quarterly installments in arrears, and (B) 1.5%administrative expenses, payroll expense reimbursements of the equity per annum of the Company’s stockholders who purchase shares of the Company’s stock, calculated quarterly based on their equity for the most recently completed calendar quarter and payable in quarterly installments in arrears. The base management fee is payable independent of the performance of the Company’s investments. The Company amended the Management Agreement to provide that the base management fee can be payable in cash or LTIP Units, at the election of the Board. The number of LTIP Units issued for the base management fee or incentive fee will be based on the fees earned divided by the 5-day trailing average Class A common stock price prior to issuance. Base management fees of $7.8$0.03 million and ~~$4.3~~$0.11 million, ~~were expensed during the nine months ended September 30, 2017~~ and ~~2016, respectively.~~
~~Base management fees~~operating expense reimbursements of ~~$2.6~~$0.4 million and $0.4 million, were expensed during the three months ended ~~June 30, 2017,~~March 31, 2019 and were paid through the issuance of 221,481 LTIP Units on August 9, 2017. The base management fees of $2.8 million for the three months ended September 30, 2017 will be paid through the issuance of approximately 253,300 LTIP Units assuming the $11.06 closing share price for the Company’s Class A common stock on September 29, 2017. The actual number of LTIP Units to be issued in payment of the base management fees for the three months ended September 30, 2017 is subject to change based on the average closing share price of the Company’s Class A common stock on the five business days prior to the date of issuance.2018, respectively.

~~The Company also pays the Manager an incentive fee with respect~~Pursuant to each calendar quarter in arrears. The incentive fee is equal to the difference between (1) the product of (x) 20% and (y) the difference between (i) the Company’s adjusted funds from operations (“AFFO”), for the previous 12-month period, and (ii) the product of (A) the weighted average of the issue price of equity securities issued in the IPO and in future offerings and transactions, multiplied by the weighted average number of all shares of the Company’s Class A common stock outstanding on a fully-diluted basis (including any restricted stock units, any restricted shares of Class A common stock, LTIP Units, and other shares of common stock underlying awards granted under the Incentive Plans and OP Units) in the previous 12-month period, exclusive of equity securities issued prior to the IPO or in the contribution transactions, and (B) 8%, and (2) the sum of any incentive fee paid to the Manager with respect to the first three calendar quarters of such previous 12-month period; provided, however, that no incentive fee is payable with respect to any calendar quarter unless AFFO is greater than zero for the four most recently completed calendar quarters. One half of each quarterly installment of the incentive fee will be payable in LTIP Units, calculated pursuant to the formula above. The remainder of the incentive fee will be payable in cash or in LTIP Units, at the election of the Board, in each case calculated pursuant to the formula above. Incentive fees of $4.0 million and $0.2 million were expensed during the nine months ended September 30, 2017 and 2016, respectively. Incentive fees for the three months ended June 30, 2017 were paid through the issuance of 299,045 LTIP Units on August 9, 2017. There was no incentive fee during the three months ended September 30, 2017.
On July 2, 2015, the Company issued a grant of LTIP Units under the Amended 2014 Incentive Plans to the Manager. The equity grant consisted of 283,390 LTIP Units (the “2015 LTIP Units”). The 2015 LTIP Units vest ratably over a three-year period that began in July 2015, subject to certain terms and conditions, including early vesting upon an internalization of our external management functions. On August 3, 2016, the Company issued a grant of LTIP Units under the Amended 2014 Incentive Plans to the Manager. The equity grant consisted of 176,610 LTIP Units (the “2016 LTIP Units”). The 2016 LTIP Units vest ratably over a three-year period that began in August 2016, subject to certain terms and conditions, including early vesting upon an internalization of our external management functions. These LTIP Units may be convertible into OP Units under certain conditions and then may be settled in shares of the Company’s Class A common stock.
LTIP amortization of $0.1 million and $0.5 million, and $1.2 million and $2.0 million, for the three and nine months ended September 30, 2017 and 2016, respectively, was recorded as part of general and administrative expenses, related to the 2015 LTIP Units and the 2016 LTIP Units. The expense recognized during 2017 and 2016 was based on the Class A common stock closing price at the vesting date or the end of the period, as applicable.
The Company is also required to reimburse the Manager for certain expenses and pay all operating expenses, except those specifically required to be borne by the Manager under the Management Agreement. Reimbursements of $0.4 million and $0.2 million, and $1.4 million and $0.5 million were expensed during the three and nine months ended September 30, 2017 and 2016, respectively, and of which $0.3 million and $1.1 million for the three and nine months ended September 30, 2017 are recorded as part of general and administrative expenses. In addition, the Manager was reimbursed for offering costs in conjunction with the January 2017 Common Stock Offering of $0.03 million during the nine months ended September 30, 2017.
The initial term of the Management Agreement expired on April 2, 2017 (the third anniversary of the closing of the IPO), and automatically renewed for a one-year term expiring on April 2, 2018. The Management Agreement will automatically renew for a one-year term on each anniversary date thereafter unless previously terminated in accordance with the terms of the ~~Management Agreement.~~Administrative Services Agreement, summarized below are the related party amounts payable to BRE as of March 31, 2019 and December 31, 2018 (amounts in thousands):

23

March 31,
2019
December 31,
2018
Amounts Payable to BRE under the Administrative Services Agreement, net
Operating and direct expense reimbursements $ 681 $ 568
Offering expense reimbursements 117 158
Total amounts payable to BRE $ 798 $ 726

~~The Management Agreement may be terminated annually upon the affirmative vote~~As of ~~at least two-thirds of the Company’s independent directors, based upon (1) unsatisfactory performance that is materially detrimental to~~March 31, 2019 and December 31, 2018, the Company ~~or (2) the Company’s determination that the fees payable to the Manager are not fair, subject to the Manager’s right to prevent such termination~~had $3.1 million and $2.9 million, respectively, in receivables due to unfair fees by accepting a reduction of the fees agreed to by at least two-thirds of the Company’s independent directors. The Company must provide 180 days’ prior notice of any such termination. Unless terminatedfrom related parties other than from BRE, primarily for cause, as further described in the Management Agreement, the Manager will be paid a termination fee equal to three times the sum of the base management fee and incentive fee earned, in each case, by the Manager during the 12-month period immediately preceding such termination, calculated as of the end ofaccrued preferred returns on unconsolidated real estate investments for the most recently completed fiscal quarter before the date of termination. The Company may also terminate the Management Agreement at any time, including during the initial term, without the payment of any termination fee, for cause with 30 days’ prior written notice from the Board.
On August 4, 2017, we announced that we, our Manager and the Contributors had entered into definitive agreements, as amended, (the “Contribution Agreement”) providing for the acquisition (the “Internalization”) by the Company of a newly-formed entity that will own the assets that our Manager uses to operate the business of the Company. The consideration to be paid to the Contributors in connection with the Internalization is based on a formula agreed to at the time the parties originally entered into the Management Agreement in April 2014, in connection with the Company’s initial public offering, and is equal to three (3) times the sum of the base management fee and incentive fee, in each case earned by the Manager under the current Management Agreement between the Manager, the Company and the Operating Partnership (the “Management Agreement”) during the 12-month period ending on the last day of the month of the most recently completed fiscal quarter prior to closing, which was the three months ended September 30, 2017 (the “Consideration”).
The Consideration is to be paid in a combination of OP Units, shares of the Company’s common stock, newly reclassified as Class C common stock (“Class C Common Stock”), and a de minimis amount of cash, and otherwise on terms consistent with the Contribution Agreement. The number of shares of Class C Common Stock and the number of OP Units to be issued in the Internalization is based on a per share and per OP Unit price, which is based on the volume-weighted average price on the NYSE MKT of our Class A common stock for the twenty (20) trading days beginning on and including September 11, 2017 through and including October 6, 2017, per an amendment dated August 9, 2017 to the definitive agreement, which the Company determined to be $10.64.
Upon closing of the Internalization, the Company will become a self-managed real estate investment trust. The following key executives and officers of our Manager will assume the following titles and duties with the Company: Mr. R. Ramin Kamfar will serve as our Chairman and Chief Executive Officer; Mr. James G, Babb, III, will serve as our Chief Investment Officer; Mr. Ryan S. MacDonald will serve as our Chief Acquisitions Officer; Mr. Jordan B. Ruddy will serve as our Chief Operating Officer and President; Mr. Christopher J. Vohs will serve as our Chief Financial Officer and Treasurer; and Mr. Michael L. Konig will serve as our Chief Legal Officer and Secretary. Messrs. Kamfar, Babb, MacDonald, Ruddy and Vohs have entered into employment agreements with an indirect subsidiary of the Company, and Mr. Konig has likewise entered into a services agreement with that subsidiary through his wholly-owned law firm, Konig & Associates, LLC on substantially the same terms as the employment agreements. Each such agreement will become effective upon Closing, and will have an initial term through and including December 31, 2020. As such, following the Internalization, our senior management team will continue to oversee, manage and operate the Company, and we will no longer be externally managed by the Manager. As an internally managed company, we will no longer pay the Manager any fees or expense reimbursements arising from the Management Agreement.
A special committee comprised entirely of independent and disinterested members of our board of directors (the “Special Committee”), which retained independent legal and financial advisors, unanimously determined that the entry into the Contribution Agreement and the completion of the Internalization are in the best interests of the Company. Our board of directors, by unanimous vote, made a similar determination. The Internalization closed in the fourth quarter of 2017. See Note 13, Subsequent Events.
The Manager may retain, at its sole cost and expense, the services of such persons and firms as the Manager deems necessary in connection with our management and operations (including accountants, legal counsel and other professional service providers), provided that such expenses are in amounts no greater than those that would be payable to third-party professionals or consultants engaged to perform such services pursuant to agreements negotiated on an arm’s-length basis. The Company incurred $0.5 million for legal costs reimbursed to the Manager in conjunction with acquisition, disposition, financing and other transactions in the nine months ended September 30, 2017.recent month.

Selling Commissions and Dealer Manager Fees

In conjunction with the offering of the Series B Preferred Stock, the Company engaged a related party, as dealer manager, and pays up to 10% of the gross offering proceeds from the offering as selling commissions and dealer manager fees. The dealer manager ~~may re-allow~~re-allows the substantial majority of the selling commissions and dealer manager fees to participating broker-dealers and ~~is expected to incur~~incurs costs in excess of the 10%, which costs ~~will be~~are borne by the dealer ~~manager.~~manager without reimbursement by the Company. For the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2019 and 2018, the Company has incurred ~~approximately $8.2~~$3.1 million and ~~$3.5~~$1.3 million, and $1.3 million and $0.6 million, in selling commissions and dealer manager fees, respectively. In addition, ~~the Manager~~BRE was reimbursed for offering costs in conjunction with the Series B Preferred Offering of ~~$0.6~~$0.3 million and $0.3 million during the ~~nine~~three months ended ~~September 30, 2017, which~~March 31, 2019 and 2018, respectively. The selling commissions, dealer manager fees and reimbursements for offering costs were recorded as a reduction to the proceeds of the offering.
24
All of the Company’s executive officers, and some of its directors, are also executive officers, managers and/or holders of a direct or indirect controlling interest in the Manager and other Bluerock-affiliated entities. As a result, they owe fiduciary duties to each of these entities, their members, limited partners and investors, which fiduciary duties may from time to time conflict with the fiduciary duties that they owe to the Company and its stockholders.
Some of the material conflicts that the Manager or its affiliates face are: 1) the determination of whether an investment opportunity should be recommended to us or another Bluerock-sponsored program or Bluerock-advised investor; 2) the allocation of the time of key executive officers, directors, and other real estate professionals among the Company, other Bluerock-sponsored programs and Bluerock-advised investors, and the activities in which they are involved; and 3) the fees received by the Manager and its affiliates.
~~Pursuant to the terms of the Management Agreement, summarized below are the related party amounts payable to our Manager, as of September 30, 2017 and December 31, 2016 (in thousands):~~
September 30,
2017 December 31,
2016
Amounts Payable to the Manager under the Management Agreement
Base management fee $ 2,802 $ 2,015
Operating expense reimbursements and direct expense reimbursements 393 274
Offering expense reimbursements 74 120
Total amounts payable to Manager $ 3,269 $ 2,409
As of September 30, 2017 and December 31, 2016, the Company had $1.8 million and $0.9 million, respectively, in receivables due from related parties other than the Manager, primarily for accrued preferred returns on unconsolidated real estate investments for the most recent month.
~~Notes and Interest Receivable due from Related Party;~~ Preferred Equity Investments and Investments in Unconsolidated Real Estate Joint Ventures

The Company invests with related parties in various joint ventures in which the Company owns either preferred or common ~~interests,~~interests. Please refer to Note 7 and ~~makes~~the Company’s Form 10-K for the year ended December 31, 2018 for further information.
Notes and interest receivable from related parties
The Company provides mezzanine loans to ~~entities that are primarily owned by~~ related ~~parties.~~parties in conjunction with the developments of multifamily communities. Please refer to Notes 6 and 7 and the Company’s Form 10-K for the year ended December 31, 2018 for further information.

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Note 1113 – Stockholders’ Equity and Redeemable Preferred Stock

Net (Loss) Income ~~(Loss)~~ Per Common Share

Basic net ~~income (loss)~~loss per common share is computed by dividing net ~~income (loss)~~loss attributable to common stockholders, less dividends on ~~restricted stock~~LTIP Units expected to vest, ~~plus gains on redemptions on common stock,~~ by the weighted average number of common shares outstanding for the period. Diluted net ~~income (loss)~~loss per common share is computed by dividing net ~~income (loss)~~loss attributable to common stockholders by the sum of the weighted average number of common shares outstanding and any potential dilutive shares for the period. Net ~~income (loss)~~loss attributable to common stockholders is computed by adjusting net ~~income (loss)~~loss for the non-forfeitable dividends paid on non-vested ~~restricted stock.~~LTIP Units.

The Company considers the requirements of the two-class method when preparing earnings per share. The Company has two classes of common stock outstanding, Class A common stock, $0.01 par value per share, and Class C common stock, $0.01 par value per share. Earnings per share is not affected by the two-class method because the Company’s Class A and ~~B-3~~C common stock ~~and LTIP Units~~ participate in dividends on a one-for-one basis.
25

The following table reconciles the components of basic and diluted net loss per common share (amounts in thousands, except share and per share amounts):

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Net (loss) income attributable to common stockholders $ (12,017 ) $ (2,551 ) 563 $ (11,727 )
Dividends on restricted stock expected to vest — — — (4 )
Basic net (loss) income attributable to common stockholders $ (12,017 ) $ (2,551 ) $ 563 $ (11,731 )

Weighted average common shares outstanding⁽¹⁾ 26,474,093 20,908,543 25,851,536 20,706,338

Potential dilutive shares⁽²⁾ — — 523 —
Weighted average common shares outstanding and potential dilutive shares⁽¹⁾ 26,474,093 20,908,543 25,852,059 20,706,338

Net (loss) income per common share, basic $ (0.45 ) $ (0.12 ) $ 0.02 $ (0.57 )
Net (loss) income per common share, diluted $ (0.45 ) $ (0.12 ) $ 0.02 $ (0.57 )

Three Months Ended
March 31,

2019 2018
Net loss attributable to common stockholders $ (12,093 ) $ (9,425 )
Dividends on LTIP Units expected to vest (231 ) (172 )
Basic net loss attributable to common stockholders $ (12,324 ) $ (9,597 )

Weighted average common shares outstanding⁽¹⁾ 23,123,616 24,143,382

Potential dilutive shares⁽²⁾ — —
Weighted average common shares outstanding and potential dilutive shares⁽¹⁾ 23,123,616 24,143,382

Net loss per common share, basic $ (0.53 ) $ (0.40 )
Net loss per common share, diluted $ (0.53 ) $ (0.40 )

The effect of the conversion of OP Units is not reflected in the computation of basic and diluted earnings per share, as they are exchangeable for Class A common stock on a one-for-one basis. The income allocable to such ~~units~~OP Units is allocated on this same basis and reflected as noncontrolling interests in the accompanying consolidated financial statements. As such, the assumed conversion of these ~~units~~OP Units would have no net impact on the determination of diluted earnings per share.
⁽¹⁾ ~~For 2017, amounts~~Amounts relate to shares of the Company’s Class A and Class C common stock ~~and LTIP Units outstanding. For 2016, amounts relate to shares of Class A and B-3 common stock and LTIP Units~~ outstanding.
⁽²⁾ ~~Excludes 251~~Warrants outstanding from issuances in conjunction with the Company’s Series B Preferred Stock offerings that are potentially exercisable for 12,299 shares of Class A common stock ~~for~~are excluded from the ~~three months ended September 30, 2017, and 1,184 and 5,498~~diluted shares ~~of common stock, for the three and nine months ended September 30, 2016, respectively, related to non-vested restricted stock,~~calculation as the effect ~~would be anti-dilutive.~~is antidilutive in 2019.
~~Follow-On Equity Offerings~~
On January 17, 2017, the Company completed an underwritten offering (the “January 2017 Class A Common Stock Offering”) of 4,000,000 shares of its Class A common stock, par value $0.01 per share. The offer and sale of the shares were registered with the SEC pursuant to the January 2016 Shelf Registration Statement. The public offering price of $13.15 per share was announced on January 11, 2017. Net proceeds of the January 2017 Class A Common Stock Offering were approximately $49.8 million after deducting underwriting discounts and commissions and estimated offering costs. On January 24, 2017, the Company closed on the sale of 600,000 shares of Class A common stock for proceeds of approximately $7.5 million pursuant to the underwriters’ full exercise of the overallotment option.

Series B Redeemable Preferred Stock Offering

The Company issued ~~116,486~~43,955 shares of Series B Preferred Stock under a continuous registered offering with net proceeds of approximately ~~$104.8~~$39.6 million after commissions and dealer manager fees of approximately $4.4 million during the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2019. As of ~~September 30, 2017,~~March 31, 2019, the Company has sold ~~137,968~~352,233 shares of Series B Preferred Stock and ~~137,968~~352,233 Warrants to purchase ~~2,759,360~~7,044,660 shares of Class A common stock for net proceeds of approximately ~~$124.2~~$317.0 million after commissions and fees. During the three months ended March 31, 2019, 457 Series B Preferred shares were redeemed through the issuance of 43,806 Class A common shares and 84 Series B Preferred shares were redeemed for $78,650 in cash.
At-the-Market Offerings
On March 29, 2016, the Company, its Operating Partnership and its Manager entered into an At Market Issuance Sales Agreement (the “Series A Sales Agreement”) with FBR Capital Markets & Co. (“FBR”), and MLV & Co. LLC (“MLV”). Pursuant to the Series A Sales Agreement, FBR and MLV will act as distribution agents with respect to the offering and sale of up to $100,000,000 in shares of Series A Preferred Stock in “at the market offerings” as defined in Rule 415 under the Securities Act, including without limitation sales made directly on or through the NYSE MKT, or on any other existing trading market for Series A Preferred Stock or through a market maker (the “Series A ATM Offering”). Since March 31, 2016, the Company has sold 146,460 shares of Series A Preferred Stock for net proceeds of approximately $3.6 million after commissions in the ATM Offering. On April 8, 2016, the Company delivered notice to each of FBR and MLV, pursuant to the terms of the Series A Sales Agreement, to suspend all sales under the Series A ATM Offering. The Company terminated the Series A ATM Offering effective September 30, 2017.
26

On August 8, 2016, the Company, its Operating Partnership and its former Manager entered into an At Market Issuance Sales Agreement (the ~~“Class A~~“Original Sales Agreement”) with ~~FBR.~~FBR Capital Markets & Co. (“FBR”). Pursuant to the ~~Class A~~Original Sales Agreement, FBR ~~will act~~acted as distribution agent with respect to the offering and sale of up to $100,000,000 in shares of Class A common stock in “at the market offerings” as defined in Rule 415 under the Securities Act, including without limitation sales made directly on or through the NYSE ~~MKT,~~American, or on any other existing trading market for Class A common stock or through a market maker (the ~~“Class~~“Original Class A Common Stock ATM Offering”). The Company ~~has~~did not ~~commenced~~commence any sales through the Original Class A Common Stock ATM ~~Offering.~~Offering before it expired on January 29, 2019.

~~On September 14, 2016,~~
22
Class A Common Stock Repurchase Program
In February 2018, the Company ~~its Operating Partnership and its Manager entered into an At Market Issuance Sales Agreement (the “Series C Sales Agreement”) with FBR. Pursuant~~authorized a stock repurchase plan to ~~the Series C Sales Agreement, FBR will act as distribution agent with respect to the offering and sale of~~purchase up to ~~$36,000,000 in~~$25 million of the Company’s outstanding shares of Series C Preferred Stock in “at the market offerings” as defined in Rule 415 under the Securities Act, including without limitation sales made directly on or through the NYSE MKT, or on any other existing trading market for Series C Preferred Stock or throughClass A common stock over a ~~market maker (the “Series C ATM Offering”). Since September 14, 2016,~~period of one year pursuant to a stock repurchase plan. In December 2018, the Company ~~has sold 23,750~~renewed its stock repurchase plan for a period of one year. The repurchase plan can be discontinued at any time. The extent to which the Company repurchases shares of ~~Series C Preferred Stock~~its Class A common stock, and the timing of any such purchases, depends on a variety of factors including general business and market conditions and other corporate considerations. The Company purchased 505,797 shares of Class A common stock during the three months ended March 31, 2019 for ~~net proceeds~~a total purchase price of ~~approximately $0.6 million after commissions in the Series C ATM Offering. On September 27, 2016, the Company delivered notice to FBR, pursuant to the terms~~$5.1 million.
The following table is a summary of the ~~Series C Sales Agreement, to suspend all sales under~~Class A common stock repurchase activity during the ~~Series C ATM Offering. The Company terminated the Series C ATM Offering effective September 30, 2017.~~quarter ended March 31, 2019:
Period Total Number
of Shares
Purchased Weighted
Average Price
Paid Per Share Cumulative Number of
Shares Purchased as
Part of the Publicly
Announced Plan Maximum Dollar Value
of Shares that May Yet
Be Purchased Under
the Plan
First quarter 2019 505,797 $ 10.01 1,560,854 $ 10,919,065

Operating Partnership and Long-Term Incentive Plan Units

As of ~~September 30, 2017,~~March 31, 2019, limited partners other than the Company owned approximately ~~10.29%~~27.58% of the common units of the Operating Partnership ~~(273,688~~(6,385,713 OP Units, or ~~1.01%~~20.16%, is held by OP Unit holders, and ~~2,502,389~~2,351,386 LTIP Units, or ~~9.28%~~7.42%, is held by LTIP Unit ~~holders.)~~holders, including 4.48% which are not vested at March 31, 2019). Subject to certain restrictions set forth in the Operating Partnership’s Partnership Agreement, OP Units are exchangeable for Class A common stock on a one-for-one ~~basis. During the nine months ended September 30, 2017, 22,367 OP Units were converted into Class A common stock.~~
~~Equity Incentive Plans~~
On March 24, 2016, the Company granted a total of 7,500 shares of Class A common stock to its independent directors under the Amended 2014 Individuals Plan. The fair value of the grants was approximately $0.1 million and the shares vested immediately. On February 14, 2017, the Company granted a total of 7,500 LTIP Units to its independent directors under the Amended 2014 Individuals Plan. The fair value of the grants was approximately $0.1 million and the LTIP Units vested immediately.
~~A summary of the status of~~basis, or, at the Company’s ~~non-vested shares as of September 30, 2017 is as follows (amounts in thousands, except share amounts):~~
Non-Vested shares Shares Weighted average
grant-date fair value
Balance at January 1, 2017 659 $ 22.75
Granted — —
Vested (659 ) 22.75
Forfeited — —
Balance at September 30, 2017 — $ —
~~At September 30, 2017, there was no unrecognized compensation cost related to unvested restricted stock granted under the independent director compensation plan.~~
~~Equity Incentive Plans - LTIP Grants~~
On July 2, 2015, the Company issued a grant of LTIP Units under the Amended 2014 Incentive Plans to the Manager. The equity grant consisted of 283,390 LTIP Units (the “2015 LTIP Units”). The 2015 LTIP Units vest ratably over a three-year period that began in July 2015, subject to certain terms and conditions, including early vesting upon an internalization of our external management functions. On August 3, 2016, the Company issued a grant of LTIP Units under the Amended 2014 Incentive Plans to the Manager. The equity grant consisted of 176,610 LTIP Units (the “2016 LTIP Units”). The 2016 LTIP Units vest ratably over a three-year period that began in August 2016, subject to certain terms and conditions, including early vesting upon an internalization of our external management functions. Theseelection, redeemable for cash. LTIP Units may be convertible into OP Units under certain conditions and then may be settled in shares of the Company’s Class A common ~~stock.~~stock, or, at the Company’s election, cash.

Equity Incentive Plans – LTIP ~~amortization~~Unit Grants
On January 1, 2018, the Company granted certain equity grants of ~~$0.1 million and $0.5 million, and $1.2 million and $2.0 million, for~~LTIP Units of the ~~three and nine months ended September 30, 2017 and 2016, respectively, was recorded as part of general and administrative expenses, related~~Company’s operating partnership to various executive officers under the Second Amended 2014 Incentive Plans pursuant to the ~~2015~~executive officers’ employment and service agreements as time-based LTIP Units and ~~the 2016~~performance-based LTIP Units. All such grants of LTIP Units require continuous employment for vesting. Due to a limitation on the number of LTIP Units available for issuance under the Second Amended 2014 Incentive Plans, the long-term performance awards were, in aggregate, approximately 81,000 LTIP Units(the “Shortfall LTIP Units”)lower than those to which the recipients were entitled pursuant to the terms of their respective employment and service agreements, with the Company planning to issue the remaining LTIP Units at such time as such LTIP Units became available under the Incentive Plans. The ~~expense~~time-based LTIP Units were comprised of 770,854 LTIP Units that vest over approximately five years and 160,192 LTIP Units that vest over approximately three years. The performance-based LTIP Units were comprised of 125,165 LTIP Units (the “Initial Long-Term Performance Award”), which are subject to a three-year performance period, and will vest immediately upon successful achievement of performance-based conditions. Performance criteria are primarily based on a mixture of objective internal achievement goals and relative performance against its industry peers, with a minimum, threshold, and maximum performance standard for performance criteria. After the determination of the achievement of the performance criteria, any performance-based LTIP Units that were awarded but do not vest will be canceled.
In addition, on January 1, 2018, the Company granted 6,263 LTIP Units under the Second Amended 2014 Incentive Plans to each independent member of the Board in payment of the equity portion of their respective annual retainers. Such LTIP Units were fully vested upon issuance and the Company recognized ~~during 2017 and 2016 was~~expenseof $0.2 million immediately based on the fair value at the date of grant.
On September 28, 2018, the Company’s stockholders approved the amendment and restatement of each of the Second Amended 2014 Individuals Plan (the “Third Amended 2014 Individuals Plan”) and the Second Amended 2014 Entities Plan (the “Third Amended 2014 Entities Plan”, and together with the Third Amended 2014 Individuals Plan, the “Third Amended 2014 Incentive Plans,” and together with the Second Amended 2014 Incentive Plans, the “Incentive Plans”). The Third Amended 2014 Incentive Plans, which superseded and replaced in their entirety the Second Amended 2014 Incentive Plans, allow for the issuance of up to an aggregate of 2,250,000 additional shares of Class A common ~~stock closing price at~~stock. The Third Amended 2014 Incentive Plans provide for the ~~vesting date or the end~~grant of options to purchase shares of the ~~period, as applicable.~~Company’s common stock, stock awards, stock appreciation rights, performance units, incentive awards and other equity-based awards.

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On October 4, 2018, the Company granted an aggregate of 80,798 Shortfall LTIP Units to the executive officers pursuant to their employment and service agreements. The Shortfall LTIP Units vest over a period of three years from the date of grant of each Initial Long-Term Performance Award, followed by immediate vesting based on successful achievement of the performance conditions.
In addition, on October 4, 2018, the Company granted 3,165 LTIP Units pursuant to the Third Amended 2014 Incentive Plans to the newly appointed independent member of the Board in payment of the prorated portion of her annual retainer. Such LTIP Units were fully vested upon issuance and the Company recognized expense of $0.03 million immediately based on the fair value at the date of grant.
On January 1, 2019, the Company granted certain equity grants of LTIP Units to various executive officers under the Third Amended 2014 Incentive Plans pursuant to the executive officers' employment and service agreements as time-based LTIP Units and performance-based LTIP Units. All such LTIP grants require continuous employment for vesting. The time-based LTIP Units were comprised of 196,023 LTIP Units that vest over approximately three years. The performance-based LTIP Units were comprised of 294,031 LTIP Units, which are subject to a three-year performance period and will vest immediately upon successful achievement of performance-based conditions.
The Company recognizes compensation expense ratably over the requisite service periods for the time-based LTIP Units based on the fair value at the date of grant; thus, the Company recognized compensation expense of approximately $0.9 million and $1.1 million during the three months ended March 31, 2019 and 2018, respectively. The Company recognizes compensation expense based on the fair value at the date of grant and the probability of achievement of performance criteria over the performance period for the performance-based LTIP Units; thus, the Company recognized approximately $0.4 million and $0.1 million during the three months ended March 31, 2019 and 2018, respectively.
In addition, on January 1, 2019, the Company granted 6,836 LTIP Units pursuant to the Third Amended 2014 Incentive Plans to each independent member of the Board in payment of the equity portion of their respective annual retainers. Such LTIP Units were fully vested upon issuance and the Company recognized expense of $0.2 million immediately based on the fair value at the date of grant.
As of March 31, 2019, there was $9.4 million of total unrecognized compensation cost related to unvested LTIP Units granted under the Incentive Plans. The remaining cost is expected to be recognized over a period of 2.9 years.
Distributions
Declaration Date
Payable to stockholders
of record as of
Amount Date Paid
Class A common stock
October 4, 2016 December 23, 2016 $ 0.096667 January 5, 2017
January 6, 2017 January 25, 2017 $ 0.096666 February 3, 2017
January 6, 2017 February 24, 2017 $ 0.096667 March 3, 2017
January 6, 2017 March 24, 2017 $ 0.096667 April 5, 2017
April 7, 2017 April 25, 2017 $ 0.096666 May 5, 2017
April 7, 2017 May 25, 2017 $ 0.096667 June 5, 2017
April 7, 2017 June 23, 2017 $ 0.096667 July 5, 2017
July 10, 2017 July 25, 2017 $ 0.096666 August 4, 2017
August 9, 2017 August 25, 2017 $ 0.096667 September 5, 2017
August 9, 2017 September 25, 2017 $ 0.096667 October 5, 2017
Series A Preferred Stock
December 9, 2016 December 23, 2016 $ 0.515625 January 5, 2017
March 10, 2017 March 24, 2017 $ 0.515625 April 5, 2017
June 9, 2017 June 23, 2017 $ 0.515625 July 5, 2017
September 8, 2017 September 25, 2017 $ 0.515625 October 5, 2017
Series B Preferred Stock
October 4, 2016 December 23, 2016 $ 5.00 January 5, 2017
January 6, 2017 January 25, 2017 $ 5.00 February 3, 2017
January 6, 2017 February 24, 2017 $ 5.00 March 3, 2017
January 6, 2017 March 24, 2017 $ 5.00 April 5, 2017
April 7, 2017 April 25, 2017 $ 5.00 May 5, 2017
April 7, 2017 May 25, 2017 $ 5.00 June 5, 2017
April 7, 2017 June 23, 2017 $ 5.00 July 5, 2017
July 10, 2017 July 25, 2017 $ 5.00 August 4, 2017
July 10, 2017 August 25, 2017 $ 5.00 September 5, 2017
July 10, 2017 September 25, 2017 $ 5.00 October 5, 2017
Series C Preferred Stock
December 9, 2016 December 23, 2016 $ 0.4765625 January 5, 2017
March 10, 2017 March 24, 2017 $ 0.4765625 April 5, 2017
June 9, 2017 June 23, 2017 $ 0.4765625 July 5, 2017
September 8, 2017 September 25, 2017 $ 0.4765625 October 5, 2017
Series D Preferred Stock
December 9, 2016 December 23, 2016 $ 0.3859 January 5, 2017
March 10, 2017 March 24, 2017 $ 0.4453125 April 5, 2017
June 9, 2017 June 23, 2017 $ 0.4453125 July 5, 2017
September 8, 2017 September 25, 2017 $ 0.4453125 October 5, 2017
Declaration Date

Payable to stockholders
of record as of
Amount Date Paid or Payable
Class A Common Stock
December 7, 2018 December 24, 2018 $ 0.162500 January 4, 2019
March 8, 2019 March 25, 2019 $ 0.162500 April 5, 2019
Class C Common Stock
December 7, 2018 December 24, 2018 $ 0.162500 January 4, 2019
March 8, 2019 March 25, 2019 $ 0.162500 April 5, 2019
Series A Preferred Stock
December 7, 2018 December 24, 2018 $ 0.515625 January 4, 2019
March 8, 2019 March 25, 2019 $ 0.515625 April 5, 2019
Series B Preferred Stock
October 12, 2018 December 24, 2018 $ 5.00 January 4, 2019
January 11, 2019 January 25, 2019 $ 5.00 February 5, 2019
January 11, 2019 February 25, 2019 $ 5.00 March 5, 2019
January 11, 2019 March 25, 2019 $ 5.00 April 5, 2019
Series C Preferred Stock
December 7, 2018 December 24, 2018 $ 0.4765625 January 4, 2019
March 8, 2019 March 25, 2019 $ 0.4765625 April 5, 2019
Series D Preferred Stock
December 7, 2018 December 24, 2018 $ 0.4453125 January 4, 2019
March 8, 2019 March 25, 2019 $ 0.4453125 April 5, 2019

A portion of each dividend may constitute a return of capital for tax purposes. There is no assurance that the Company will continue to declare dividends or at this rate.
Holders of OP Units and LTIP Units are entitled to receive ~~"distribution equivalents"~~“distribution equivalents” at the same time as dividends are paid to holders of the Company's Class A common stock.

The Company has a dividend reinvestment plan that allows for participating stockholders to have their Class A common stock dividend distributions automatically invested in additional Class A common shares based on the average price of the Class A common shares on the investment date. The Company plans to issue Class A common shares to cover shares required for investment.
~~Announcement of Review of Class A Common Stock Dividend Policy~~
On August 4, 2017, the board of directors announced that it initiated, in conjunction with a financial advisor, a comprehensive review of the appropriate dividend policy for the Company's Class A Common Stock. The board's evaluation will consider factors including, but not limited to, achieving a sustainable dividend covered by current recurring AFFO (vs. pro forma AFFO), multifamily and small cap peer dividend rates, multifamily and small cap peer payout ratios, providing financial flexibility for the Company, and achieving an appropriate balance between the retention of capital to invest and grow net asset value, and the importance of current distributions. The board is expected to complete its review of the dividend policy for the Company's Class A Common Stock in the fourth quarter of 2017.

2824

Distributions declared and paid for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 were as follows (amounts in thousands):

Distributions Distributions
2017 Declared Paid
2019 Declared Paid
First Quarter
Class A Common Stock $ 7,014 $ 6,566 $ 3,727 $ 3,820
Class C Common Stock 12 12
Series A Preferred Stock 2,950 2,950 2,950 2,950
Series B Preferred Stock 525 395 5,058 4,842
Series C Preferred Stock 1,107 1,107 1,107 1,107
Series D Preferred Stock 1,269 1,100 1,269 1,269
OP Units 82 84 1,038 1,038
LTIP Units 496 480 383 262
Total first quarter 2017 $ 13,443 $ 12,682
Second Quarter
Class A Common Stock $ 7,016 $ 7,015
Series A Preferred Stock 2,950 2,950
Series B Preferred Stock 1,054 837
Series C Preferred Stock 1,108 1,107
Series D Preferred Stock 1,270 1,270
OP Units 80 80
LTIP Units 551 533
Total second quarter 2017 $ 14,029 $ 13,792
Third Quarter
Class A Common Stock 7,017 7,016
Series A Preferred Stock 2,950 2,950
Series B Preferred Stock 1,711 1,508
Series C Preferred Stock 1,107 1,107
Series D Preferred Stock 1,270 1,269
OP Units 79 80
LTIP Units 676 625
Total third quarter 2017 $ 14,810 $ 14,555
Total $ 42,282 $ 41,029
Total first quarter 2019 $ 15,544 $ 15,300

Note 1214 – Commitments and Contingencies

The Company is subject to various legal actions and claims arising in the ordinary course of business. Although the outcome of any legal matter cannot be predicted with certainty, management does not believe that any of these legal proceedings or matters will have a material adverse effect on the consolidated financial position or results of operations or liquidity of the Company.

Note 1315 – Subsequent Events

Declaration of Dividends

Declaration Date
Payable to stockholders
of record as of
Amount Payable Date
Class A common stock
October 13, 2017 October 25, 2017 $ 0.096666 November 3, 2017
October 13, 2017 November 24, 2017 $ 0.096667 December 5, 2017
October 13, 2017 December 22, 2017 $ 0.096667 January 5, 2018
Series B Preferred Stock
October 13, 2017 October 25, 2017 $ 5.00 November 3, 2017
October 13, 2017 November 24, 2017 $ 5.00 December 5, 2017
October 13, 2017 December 22, 2017 $ 5.00 January 5, 2018
Declaration Date

Payable to stockholders
of record as of
Amount
Payable Date
Series B Preferred Stock
April 12, 2019 April 25, 2019 $ 5.00 May 3, 2019
April 12, 2019 May 24, 2019 $ 5.00 June 5, 2019
April 12, 2019 June 25, 2019 $ 5.00 July 5, 2019

Holders of OP and LTIP Units are entitled to receive "distribution equivalents" at the same time as dividends are paid to holders of the Company's Class A common stock.
A portion of each dividend may constitute a return of capital for tax purposes. There is no assurance that the Company will continue to declare dividends or at this rate.

29
Distributions Paid

The following distributions were declared and/or paid to the Company's stockholders, as well as holders of OP and LTIP Units, subsequent to ~~September 30, 2017~~March 31, 2019 (amounts in thousands):

Shares Declaration
Date Record Date Date Paid Distributions
per Share Total
Distribution Declaration
Date Record Date Date Paid Distributions
per Share Total
Distribution
Class A Common Stock August 9, 2017 September 25, 2017 October 5, 2017 $ 0.096667 $ 2,339 March 8, 2019 March 25, 2019 April 5, 2019 $ 0.162500 $ 3,727
Class C Common Stock March 8, 2019 March 25, 2019 April 5, 2019 $ 0.162500 $ 12
Series A Preferred Stock September 8, 2017 September 25, 2017 October 5, 2017 $ 0.515625 $ 2,950 March 8, 2019 March 25, 2019 April 5, 2019 $ 0.515625 $ 2,950
Series B Preferred Stock July 10, 2017 September 25, 2017 October 5, 2017 $ 5.000000 $ 646 January 11, 2019 March 25, 2019 April 5, 2019 $ 5.000000 $ 1,747
Series C Preferred Stock September 8, 2017 September 25, 2017 October 5, 2017 $ 0.4765625 $ 1,107 March 8, 2019 March 25, 2019 April 5, 2019 $ 0.4765625 $ 1,107
Series D Preferred Stock September 8, 2017 September 25, 2017 October 5, 2017 $ 0.4453125 $ 1,269 March 8, 2019 March 25, 2019 April 5, 2019 $ 0.4453125 $ 1,269
OP Units August 9, 2017 September 25, 2017 October 5, 2017 $ 0.096667 $ 26 March 8, 2019 March 25, 2019 April 5, 2019 $ 0.162500 $ 1,038
LTIP Units August 9, 2017 September 25, 2017 October 5, 2017 $ 0.096667 $ 242 March 8, 2019 March 25, 2019 April 5, 2019 $ 0.162500 $ 309

Class A Common Stock October 13, 2017 October 25, 2017 November 3, 2017 $ 0.096666 $ 2,340
Series B Preferred Stock October 13, 2017 October 25, 2017 November 3, 2017 $ 5.000000 $ 718 April 12, 2019 April 25, 2019 May 3, 2019 $ 5.000000 $ 1,793
OP Units October 13, 2017 October 25, 2017 November 3, 2017 $ 0.096666 $ 240
LTIP Units October 13, 2017 October 25, 2017 November 3, 2017 $ 0.096666 $ 29
Total $ 11,906 $ 13,952

~~Management Internalization~~Alexan Southside Place Refinance
On ~~October 26, 2017, at~~April 12, 2019, the annual meeting of stockholders, the Company’s stockholders approved the issuance, pursuant to the Contribution Agreement, of (i) OP Units, and shares of the Company’s Class A Common Stock that may be issuedAlexan Southside Place owner, which is owned by an entity in the Company’s discretion upon redemption of such OP Units in certain circumstances, and (ii) shares of the Company’s Class C Common Stock, and shares of the Company’s Class A Common Stock that may be issued upon conversion of such shares of Class C Common Stock in certain circumstances; in each case, to the applicable contributor and its affiliates and related persons (each, a “Contributor”) in connection with the Internalization.
The Internalization transaction closed on October 31, 2017, and the following table shows the Internalization Consideration paid in aggregate to the Contributors based on the trailing twelve-month base management and incentive fees of $13,748,029.
Total Internalization Consideration $ 41,244,086

Allocation of Internalization Consideration:
Internalization expense reimbursement $ 450,000
Internalization Consideration paid in cash $ 40,794
Internalization Consideration paid in OP Units $ 39,938,226
Internalization Consideration paid in Class C common stock $ 815,066

Volume-Weighted Average Price (“VWAP”) $ 10.64

Number of OP Units Issued 3,753,593
Number of shares of Class C Common Stock Issued 76,603
~~Upon closing of the Internalization,~~which the Company became a self-managed real estate investment trust. The following key executives and officers of the Manager assumed the following titles and duties with the Company: Mr. R. Ramin Kamfar serves as Chairman and Chief Executive Officer; Mr. James G, Babb, III, serves as Chief Investment Officer; Mr. Ryan S. MacDonald serves as Chief Acquisitions Officer; Mr. Jordan B. Ruddy serves as Chief Operating Officer and President; Mr. Christopher J. Vohs serves as Chief Financial Officer and Treasurer; and Mr. Michael L. Konig serves as Chief Legal Officer and Secretary. Messrs. Kamfar, Babb, MacDonald, Ruddy and Vohs have entered into employment agreements withowns an indirect ~~subsidiary of the Company, and Mr. Konig has likewise~~interest, i) entered into a ~~services agreement~~$26.4 million senior mortgage loan, ii) entered into a $6.6 million mezzanine loan with an unaffiliated party, and iii) used the proceeds from the senior loan and mezzanine loan to pay off the previous construction loan of $31.8 million. The senior loan and mezzanine loan both provide for earnout advances of $2.4 million and $0.6 million, respectively, for total loan commitments of $28.8 million and $7.2 million, respectively. The earnout advances are subject to a minimum debt yield and certain other conditions. The loans bear interest at a floating basis of the greater of LIBOR plus 1.50% or 3.99% on the senior loan, and the greater of LIBOR plus 6.00% or 8.49% on the mezzanine loan. The senior loan and mezzanine loan both: i) have regular monthly payments that ~~subsidiary through his wholly-owned law firm, Konig & Associates, LLC on substantially~~are interest-only during the ~~same terms as the employment agreements. Each such agreement became effective upon Closing, and has an~~ initial term, ~~through~~ii) have initial maturity dates of May 9, 2022, iii) contain two one-year extension options, and ~~including December 31, 2020. As such, following~~iv) can be prepaid in whole prior to maturity provided the ~~Internalization,~~lender receives a stated spread maintenance premium.
Alexan CityCentre Refinance
On April 26, 2019, the ~~Company’s senior management team continues to oversee, manage and operate~~Alexan CityCentre owner, which is owned by an entity in which the Company owns an indirect interest, i) entered into a $46.0 million senior mortgage loan, ii) entered into a $11.5 million mezzanine loan with an unaffiliated party, and iii) used the proceeds from the senior loan and mezzanine loan to pay off the previous construction loan of $55.1 million. The senior loan and mezzanine loan both provide for earnout advances of $2.0 million and $0.5 million, respectively, for total loan commitments of $48.0 million and $12.0 million, respectively. The earnout advances are subject to a minimum debt yield and certain other conditions. The loans bear interest at a floating basis of the greater of LIBOR plus 1.50% or 3.99% on the senior loan, and the ~~Company is no longer externally managed by~~greater of LIBOR plus 6.00% or 8.49% on the ~~Manager. As an internally managed company,~~mezzanine loan. The senior loan and mezzanine loan both: i) have regular monthly payments that are interest-only during the ~~Company no longer pays our Manager any fees or expense reimbursements arising from~~initial term, ii) have initial maturity dates of May 9, 2022, iii) contain two one-year extension options, and iv) can be prepaid in whole prior to maturity provided the ~~Management Agreement.~~lender receives a stated spread maintenance premium.

3025

A special committee comprised entirely of independent and disinterested members of the Company’s board of directors (the “Special Committee”), which retained independent legal and financial advisors, unanimously determined that the entry into the Contribution Agreement and the completion of the Internalization are in the best interests of the Company. The Company’s board of directors, by unanimous vote, made a similar determination.
~~In conjunction with the Internalization, 212,203 outstanding LTIP Units issued as incentive equity to our Manager became vested in accordance with their original terms.~~
~~Second Amended 2014 Incentive Plans~~
On October 26, 2017, at the annual meeting of stockholders, the Company’s stockholders approved the Second Amended 2014 Incentive Plans which provides for an aggregate of 1,550,000 shares of Class A Common Stock available for grant, an increase of 1,075,000 shares.
~~Conversion of LTIP Units to OP Units~~
~~On October 1, 2017, holders of 2,206,033 LTIP Units converted their interests into OP Units.~~
~~Entry into Senior secured revolving credit facility with KeyBank National Association~~
On October 4, 2017, the Company, through its Operating Partnership, entered into a credit agreement (the “Senior Credit Facility”) with KeyBank National Association (“KeyBank”) and other lenders. The Senior Credit Facility provides for an initial loan commitment amount of $150 million, which commitment contains an accordion feature up to a maximum commitment of up to $250 million. The availability of borrowings will be based on the value of a pool of collateral properties and compliance with various ratios related to those assets.
The Senior Credit Facility matures on October 4, 2020, with a one-year extension option, subject to certain conditions and the payment of an extension fee. Borrowings under the Senior Credit Facility bear interest, at the Company’s option, at LIBOR plus 1.80% to 2.45%, or the base rate plus 0.80% to 1.45%, depending on the Company’s leverage ratio. The Company will pay an unused fee at an annual rate of 0.20% to 0.25% of the unused portion of the Senior Credit Facility, depending on the amount of borrowings outstanding. The Senior Credit Facility contains certain financial and operating covenants, including a maximum leverage ratio, minimum liquidity, minimum debt service coverage ratio, and minimum tangible net worth. The Company has guaranteed the obligations under the Senior Credit Facility.
~~Acquisition of Outlook at Greystone~~
On October 19, 2017, the Company, through subsidiaries of its Operating Partnership, acquired a 100.0% interest in a 300-unit apartment community located in Birmingham, Alabama, known as Outlook at Greystone (“Outlook at Greystone”) for approximately $36.3 million. The purchase price for Outlook at Greystone of approximately $36.3 million was funded, in part, with the Company’s Secured Credit Facility, secured by a mortgage by the Outlook at Greystone property.
~~Acquisition of ARIUM Hunter’s Creek and ARIUM Metrowest~~
On October 30, 2017, the Company, through subsidiaries of its Operating Partnership, acquired a 100.0% interest in two apartment communities located in Orlando, Florida. The properties are a 532-unit apartment community, known as ARIUM Hunter’s Creek, and a 510-unit apartment community known as ARIUM Metrowest.
The purchase price for ARIUM Hunter’s Creek of approximately $96.9 million was funded, in part, with a $72.3 million senior mortgage loan secured by the ARIUM Hunter’s Creek property and improvements (the “ARIUM Hunter’s Creek Loan”). The ARIUM Hunter’s Creek Loan matures November 1, 2024 and bears interest at a fixed rate of 3.65%. Regular monthly payments are interest-only until November 1, 2019, with payments based on thirty-year amortization thereafter. The Company provided standard scope non-recourse carveout guarantees in conjunction with the ARIUM Hunter’s Creek Loan.
~~The purchase price for ARIUM Metrowest of approximately $86.0 million was funded, in part, through borrowings under the Company’s Senior Credit Facility.~~
31

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements of Bluerock Residential Growth REIT, Inc., and the notes thereto. As used herein, the terms “we,” “our” and “us” refer to Bluerock Residential Growth REIT, Inc., a Maryland corporation, and, as required by context, Bluerock Residential Holdings, L.P., a Delaware limited partnership, which we refer to as our “Operating Partnership,” and to their subsidiaries. We refer to Bluerock Real Estate, L.L.C., a Delaware limited liability company, as “Bluerock”, and we refer to our former external manager, BRG Manager, LLC, a Delaware limited liability company, as our ~~“Manager.~~“former Manager.” Both Bluerock and our former Manager are affiliated with the Company.

Forward-Looking Statements

Statements included in this Quarterly Report on Form 10-Q that are not historical facts (including any statements concerning investment objectives, other plans and objectives of management for future operations or economic performance, or assumptions or forecasts related thereto) are “forward-looking statements,” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are only predictions. We caution that forward-looking statements are not guarantees. Actual events or our investments and results of operations could differ materially from those expressed or implied in any forward-looking statements. Forward-looking statements are typically identified by the use of terms such as “may,” “should,” “expect,” “could,” “intend,” “plan,” “anticipate,” “estimate,” “believe,” “continue,” “predict,” “potential” or the negative of such terms and other comparable terminology.

The forward-looking statements included herein are based upon our current expectations, plans, estimates, assumptions and beliefs that involve numerous risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward-looking statements. Factors that could have a material adverse effect on our operations and future prospects include, but are not limited to:

·• the factors included in this Quarterly Report on Form 10-Q, including those set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations”;
· ~~failure to plan and manage the Internalization and internalize the functions performed for us by our Manager effectively or efficiently;~~
· ~~the possibility that the anticipated benefits from the Internalization may not be realized or may take longer to realize than expected;~~
· ~~unexpected costs or unexpected liabilities that may arise from the transactions contemplated by the Contribution Agreement, whether or not completed;~~
· ~~The outcome of any legal proceedings that may be instituted against us or others following the announcement of the Internalization;~~
·• use of proceeds of the Company’s securities offerings;
·
• the competitive environment in which we operate;
·
• real estate risks, including fluctuations in real estate values and the general economic climate in local markets and competition for tenants in such markets;
·
• risks associated with geographic concentration of our investments;
·
• decreased rental rates or increasing vacancy rates;
·
• our ability to lease units in newly acquired or newly constructed apartment properties;
·
• potential defaults on or non-renewal of leases by tenants;
·
• creditworthiness of tenants;

·• our ability to obtain financing for and complete acquisitions under contract at the contemplated terms, or at all;
·
• development and acquisition risks, including rising and unanticipated costs and failure of such acquisitions and developments to perform in accordance with projections;
32
·• the timing of acquisitions and dispositions;
·
• the performance of our ~~Partner Network;~~network of leading regional apartment owner/operators with which we invest through controlling positions in joint ventures;
·
• potential natural disasters such as hurricanes, tornadoes and floods;
·
• national, international, regional and local economic conditions;

·26
• Board determination as to timing and payment of dividends, and our ability to pay future distributions at the dividend rates we have paid historically;
·
• the general level of interest rates;
·
• potential changes in the law or governmental regulations that affect us and interpretations of those laws and regulations, including changes in real estate and zoning or tax laws, and potential increases in real property tax rates;
·
• financing risks, including the risks that our cash flows from operations may be insufficient to meet required payments of principal and interest and we may be unable to refinance our existing debt upon maturity or obtain new financing on attractive terms or at all;
·
• lack of or insufficient amounts of insurance;
·
• our ability to maintain our qualification as a REIT;
·
• litigation, including costs associated with prosecuting or defending claims and any adverse outcomes; and
·
• possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently owned or previously owned by us or a subsidiary owned by us or acquired by us.

Any of the assumptions underlying forward-looking statements could be inaccurate. You are cautioned not to place undue reliance on any forward-looking statements included in this report. All forward-looking statements are made as of the date of this report and the risk that actual results will differ materially from the expectations expressed in this report will increase with the passage of time. Except as otherwise required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements after the date of this report, whether as a result of new information, future events, changed circumstances or any other reason. The forward-looking statements should be read in light of the risk factors set forth in Item 1A of our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February ~~22, 2017,~~27, 2019, and subsequent filings by us with the SEC, or (“Risk Factors”).

Overview

We were incorporated as a Maryland corporation on July 25, 2008. Our objective is to maximize long-term stockholder value by acquiring and developing well-located institutional-quality apartment properties in ~~demographically attractive~~knowledge economy growth markets across the United States. We seek to maximize returns through investments where we believe we can drive substantial growth in our ~~funds from operations, adjusted~~core funds from operations and net asset value primarily through ~~one or more of~~ our ~~Core-Plus,~~ Value-Add ~~Opportunistic~~ and Invest-to-Own investment strategies.

We conduct our operations through Bluerock Residential Holdings, L.P., our operating partnership (the “Operating Partnership”), of which we are the sole general partner. The consolidated financial statements include our accounts and those of the Operating Partnership and its subsidiaries.

As of ~~September 30, 2017,~~March 31, 2019, our portfolio consisted of ~~interests~~investments held in ~~thirty-five~~forty-eight real estate properties, ~~(twenty-five~~consisting of thirty-three consolidated operating properties and ~~ten~~fifteen properties through preferred equity and mezzanine loan investments. Of the property interests held through preferred equity and mezzanine loan investments, five are under development, ~~properties).~~five are in lease-up and five properties are stabilized. The ~~thirty-five~~forty-eight properties contain an aggregate of ~~10,761~~14,717 units, comprised of ~~8,166~~11,286 consolidated operating units and ~~2,595~~3,431 units ~~under development.~~through preferred equity and mezzanine loan investments. As of ~~September 30, 2017, these properties, exclusive of~~March 31, 2019, our ~~development~~consolidated operating properties were approximately 94% occupied.

We have elected to be taxed as a REIT under Sections 856 through 860 of the Code and have qualified as a REIT commencing with our taxable year ended December 31, 2010. In order to continue to qualify as a REIT, we must distribute to our stockholders each calendar year at least 90% of our taxable income (excluding net capital gains). If we qualify as a REIT for federal income tax purposes, we generally will not be subject to federal income tax on income that we distribute to our stockholders. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax on our taxable income at regular corporate rates and will not be permitted to qualify as a REIT for four years following the year in which our qualification is denied. Such an event could materially and adversely affect our net income and results of operations. We intend to continue to organize and operate in such a manner as to remain qualified as a REIT.

3327

~~Management Internalization~~
On October 26, 2017, at the annual meeting of stockholders, our stockholders approved the issuance, pursuant to the Contribution Agreement, of (i) OP Units, and shares of the our Class A Common Stock that may be issued in the our discretion upon redemption of such OP Units in certain circumstances, and (ii) shares of the our Class C Common Stock, and shares of the our Class A Common Stock that may be issued upon conversion of such shares of Class C Common Stock in certain circumstances; in each case, to the applicable contributor and its affiliates and related persons (each, a “Contributor”) in connection with the Internalization.
The Internalization transaction closed on October 31, 2017, and the following table shows the Internalization Consideration paid in aggregate to the Contributors based on the trailing twelve-month base management and incentive fees of $13,748,029.
Total Internalization Consideration $ 41,244,086

Allocation of Internalization Consideration:

Internalization expense reimbursement $ 450,000
Internalization Consideration paid in cash $ 40,794
Internalization Consideration paid in OP Units $ 39,938,226
Internalization Consideration paid in Class C common stock $ 815,066

Volume-Weighted Average Price (“VWAP”) $ 10.64

Number of OP Units Issued 3,753,593
Number of shares of Class C Common Stock Issued 76,603
Upon closing of the Internalization, we became a self-managed real estate investment trust. The following key executives and officers of our Manager assumed the following titles and duties with the Company: Mr. R. Ramin Kamfar serves as our Chairman and Chief Executive Officer; Mr. James G, Babb, III, serves as our Chief Investment Officer; Mr. Ryan S. MacDonald serves as our Chief Acquisitions Officer; Mr. Jordan B. Ruddy serves as our Chief Operating Officer and President; Mr. Christopher J. Vohs serves as our Chief Financial Officer and Treasurer; and Mr. Michael L. Konig serves as our Chief Legal Officer and Secretary. Messrs. Kamfar, Babb, MacDonald, Ruddy and Vohs have entered into employment agreements with an indirect subsidiary of the Company, and Mr. Konig has likewise entered into a services agreement with that subsidiary through his wholly-owned law firm, Konig & Associates, LLC on substantially the same terms as the employment agreements. Each such agreement became effective upon Closing, and has an initial term through and including December 31, 2020. As such, following the Internalization, our senior management team continues to oversee, manage and operate the Company, and we are no longer externally managed by the Manager. As an internally managed company, we no longer pay the Manager any fees or expense reimbursements arising from the Management Agreement.
A special committee comprised entirely of independent and disinterested members of our board of directors (the “Special Committee”), which retained independent legal and financial advisors, unanimously determined that the entry into the Contribution Agreement and the completion of the Internalization are in the best interests of the Company. Our board of directors, by unanimous vote, made a similar determination.
~~In conjunction with the Internalization, 212,203 outstanding LTIP Units issued as incentive equity to our Manager became vested in accordance with their original terms.~~
~~The following table reflects the impact of various LTIP Unit to OP Unit conversions and payment of Internalization Consideration subsequent to September 30, 2017:~~

Shares and units
outstanding
September 30, 2017

LTIP Unit Conversion
to OP Units⁽¹⁾

Internalization
Consideration in
shares and units⁽²⁾

Post Internalization
shares and units
outstanding
November 1, 2017⁽³⁾

Class A Common Stock 24,193,109 24,193,109
Class C Common Stock - 76,603 76,603
LTIP Units 2,502,389 (2,206,033 ) 296,356
Total share equivalents 26,695,498 (2,206,033 ) 76,603 24,566,068
OP Units 273,688 2,206,033 3,753,593 6,233,314
Total shares and OP Units 26,969,186 - 3,830,196 30,799,382
⁽¹⁾~~Reflects the impact of LTIP Unit conversions to OP Units which occurred on October 1, 2017.~~
⁽²⁾~~Reflects the impact of the Internalization Consideration which was issued on October 31, 2017~~
⁽³⁾Does not include any share activity not noted above and LTIP Units does not include the issuance of LTIPs for the base management fee for the three months ended September 30, 2017 which was estimated at 253,300 at September 30, 2017 based on the $11.06
~~Second Amended 2014 Incentive Plans~~
On October 26, 2017, at the annual meeting of stockholders, our stockholders approved the Second Amended 2014 Incentive Plans which provides for an aggregate of 1,550,000 shares of Class A Common Stock available for grant, an increase of 1,075,000 shares.
34
~~Recent~~Significant Developments

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2019, we acquired ~~eight~~an additional interest in one stabilized ~~properties, disposed of four properties,~~property and ~~converted two preferred equity investments into~~provided senior loan funds and mezzanine ~~financing arrangements~~loan funds in one development project as discussed below.

Acquisition of ~~Bell Preston View~~Additional Interest in ARIUM Pine Lakes

On ~~February 17, 2017,~~January 29, 2019, we, through subsidiaries of our Operating Partnership, ~~acquired a 91.8%~~purchased the non-controlling partner’s interest in ~~a 382-unit apartment community located in Morrisville, North Carolina, known as Bell Preston View Apartments (“Preston View”)~~ARIUM Pine Lakes for ~~approximately $59.5 million. The purchase price of $59.5~~$7.8 million, ~~was funded, in part, with a $41.1 million senior mortgage loan secured by Preston View.~~
~~Acquisition of Wesley Village~~
~~On March 9, 2017, we, through subsidiaries of its Operating Partnership, acquired a 91.8%~~increasing our interest in a 301-unit apartment community and adjacent land located in Charlotte, North Carolina, known as Wesley Village Apartments (“Wesley Village”) for approximately $57.2 million. The purchase price for Wesley Village of approximately $57.2 million was funded, in part, with a $40.5 million senior mortgage loan secured by Wesley Village.the property from 85.0% to 100.0%.

~~Acquisition of Texas Portfolio~~The Park at Chapel Hill Financing

On ~~June 9, 2017,~~January 23, 2019, we, through ~~subsidiaries of its Operating Partnership, acquired~~an indirect subsidiary, provided a ~~90.0%~~$7.8 million senior loan to BR Chapel Hill, LLC (“BR Chapel Hill”). BR Chapel Hill JV, LLC (“BR Chapel Hill JV”) owns a 100.0% interest in BR Chapel Hill and is a ~~portfolio~~joint venture with common interests held by Fund I, Fund II, and BR Chapel Hill Investment, LLC, all managed by affiliates of ~~five apartment community properties containing 1,408-units, located~~the former Manager. The senior loan is secured by BR Chapel Hill’s fee simple interest in ~~San Antonio and Tyler, Texas for approximately $188.9 million. The purchase price for~~ the ~~five-property portfolio was funded, in part,~~Chapel Hill property.
In conjunction with the ~~assumption of five~~ senior mortgage loans of a total of approximately $146.4 million secured individually by each of the portfolio properties. The properties are Marquis at Crown Ridge, Marquis at Stone Oak and Marquis at TPC located in San Antonio, Texas, and Marquis at The Cascades I and II (considered one property subsequent to acquisition) located in Tyler, Texas.
~~Acquisition of Villages at Cypress Creek~~
~~On September 8, 2017,~~loan, on January 23, 2019, we, through ~~subsidiaries of its Operating Partnership, acquired~~ an 80.0% interest in a 384-unit apartment community located in Houston, Texas, known as Villages at Cypress Creek (“Villages at Cypress Creek”) for approximately $40.7 million. The purchase price for Villages at Cypress Creek of approximately $40.7indirect subsidiary, provided an $0.8 million ~~was funded, in part, with a $26.2 million senior mortgage~~mezzanine loan to BR Chapel Hill JV, which is secured by the ~~Villages at Cypress Creek~~Chapel Hill property.
~~Acquisition of Citrus Tower~~
On September 28, 2017, we, through subsidiaries of its Operating Partnership, acquired a 96.8% interest in a 336-unit apartment community located in Orlando, Florida, known as Citrus Tower (“Citrus Tower”) for approximately $55.3 million. The purchase price for Citrus Tower of approximately $55.3 million was funded, in part, with a $41.4 million senior mortgage loan secured by the Citrus Tower property.
~~Sale of Village Green Ann Arbor~~
On February 22, 2017, we closed on the sale of the Village Green Ann Arbor property (“Village Green Ann Arbor”), located in Ann Arbor, Michigan. The property was sold for approximately $71.4 million, subject to certain prorations and adjustments typical in such real estate transactions. After deduction for the payoff of the existing mortgage indebtedness encumbering the Village Green Ann Arbor property in the amount of $41.4 million and payment of closing costs and fees of $1.3 million, the sale of the property generated net proceeds of approximately $28.6 million and a gain on sale of approximately $16.7 million, of which our pro rata share of proceeds was approximately $13.6 million and pro rata share of the gain was approximately $7.8 million.
~~Sale of Lansbrook Village~~
On April 26, 2017, we closed on the sale of Lansbrook Village, located in Palm Harbor, Florida. The 90% owned property was sold for approximately $82.4 million, subject to certain prorations and adjustments typical in such real estate transactions. After deduction for assumption of the existing mortgage indebtedness encumbering Lansbrook Village in the amount of $57.2 million and payment of closing costs and fees of $1.2 million, the sale of the property generated net proceeds of approximately $24.1 million and a gain on sale of approximately $22.8 million, of which our pro rata share of proceeds was approximately $19.1 million and pro rata share of the gain was approximately $16.1 million.
35
~~Sale of Fox Hill~~
On May 24, 2017, we closed on the sale of the Fox Hill property, located in Austin, Texas. The property was sold for approximately $46.5 million, subject to certain prorations and adjustments typical in such real estate transactions. After deduction for the payoff of the existing mortgage indebtedness encumbering the Fox Hill property in the amount of $26.7 million, the payment of a prepayment penalty on the mortgage of $1.6 million and payment of closing costs and fees of $0.5 million, the sale of the property generated net proceeds of approximately $19.2 million and a gain on sale of approximately $10.7 million, of which our pro rata share of proceeds was approximately $16.4 million and pro rata share of the gain was approximately $10.3 million.
~~Sale of MDA Apartments~~
On June 30, 2017, we closed on the sale of our interest in MDA Apartments, located in Chicago, Illinois. Our 35% interest in the property was sold for approximately $18.3 million, subject to certain prorations and adjustments typical in such real estate transactions. After deduction for the payment of closing costs and fees of $0.7 million, the sale of the joint venture interest in the property generated net proceeds of approximately $17.6 million and gain on sale of $10.2 million, of which our pro rata share of proceeds was approximately $11.0 million and pro rata share of the gain was approximately $6.4 million.
~~Notes and accrued interest receivable from related parties~~
During the nine months ended September 30, 2017, Bluerock Special Opportunity + Income Fund II, (“Fund II”) redeemed our preferred equity interests in APOK and Domain, we obtained 0.5% common interests in APOK and Domain, and we provided mezzanine loans to APOK of approximately $11.2 million and to Domain of approximately $20.3 million. In addition, we increased the mezzanine loan to West Morehead by $3.3 million, to approximately $24.6 million. See ~~Notes~~Note 6 ~~and 7~~ to the interim Consolidated Financial Statements for additional information.

Recent Stock Offerings

During the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 we continued to raise capital to finance our investment activities.

~~January 2017 Offering of Class A Common Stock~~
On January 17, 2017, we completed an underwritten offering (the “January 2017 Common Stock Offering”) of 4,000,000 shares of its Class A common stock, par value $0.01 per share. The offer and sale of the shares were registered with the SEC pursuant to the January 2016 Shelf Registration Statement. The public offering price of $13.15 per share was announced on January 11, 2017. Net proceeds of the January 2017 Common Stock Offering were approximately $49.8 million after deducting underwriting discounts and commissions and estimated offering costs. On January 24, 2017, we closed on the sale of 600,000 shares of Class A common stock for proceeds of approximately $7.5 million pursuant to the underwriters’ full exercise of the overallotment option.
Series B Preferred Stock

We issued ~~116,486~~43,955 shares of Series B Preferred Stock under a continuous registered offering with net proceeds of approximately ~~$104.8~~$39.6 million after commissions and dealer manager fees of approximately $4.4 million during the ~~nine~~three months ended September 30, 2017. As of September 30, 2017, the Company has sold 137,968 shares of Series B Preferred Stock and 137,968 Warrants to purchase 2,759,360 shares of Class A common stock for net proceeds of approximately $124.2 million after commissions and fees.March 31, 2019.
Our total stockholders’ equity ~~increased $49.6~~decreased $23.3 million from ~~$241.7~~$158.3 million as of December 31, ~~2016~~2018 to ~~$291.3~~$135.0 million as of ~~September 30, 2017.~~March 31, 2019. The ~~increase~~decrease in our total stockholders’ equity is primarily attributable to ~~our January 2017 Common Stock Offering of $57.3 million, our net income of $21.7 million, and equity compensation of $12.2 million, offset by~~ dividends declared of ~~$42.0~~$14.1 million, repurchase of Class A common stock of $5.1 million and acquisition of non-controlling interests of $6.5 million during the ~~nine~~three months ended ~~September 30, 2017.~~
March 31, 2019.
~~Election to Abandon East San Marco Development~~
On November 24, 2015, we entered into a cost-sharing agreement to pursue the acquisition of a tract of real property located in Jacksonville, Florida for the development of a 266-unit, Class A multifamily apartment community with 44,276 square feet of retail space, or the East San Marco Property. In 2017 we elected to abandon pursuit of the development of the East San Marco Property due to significant cost escalations arising from scope changes imposed on the project after the start and from both general and market specific labor and material inflation, which negatively impacted the risk and return profile of the project. The Company recognized approximately $2.9 million of acquisition and pursuit costs during the nine months ended September 30, 2017 based on its investment in a controlling equity position in the East San Marco Property prior to abandonment.
3628

Results of Operations

The following is a summary of our stabilized consolidated operating real estate investments as of ~~September 30, 2017:~~March 31, 2019:

Multifamily Community Name/Location
Number of
Units

Year
Built/Renovated⁽¹⁾

Ownership
Interest

Average
Rent⁽²⁾

%
Occupied⁽³⁾

ARIUM at Palmer Ranch, Sarasota, FL 320 2016 95.0 % $ 1,201 97 %
ARIUM Grandewood, Orlando, FL 306 2005 95.0 % 1,231 94 %
ARIUM Gulfshore, Naples, FL 368 2016 95.0 % 1,235 92 %
ARIUM Palms, Orlando, FL 252 2008 95.0 % 1,257 96 %
ARIUM Pine Lakes, Port St. Lucie, FL 320 2003 85.0 % 1,152 98 %
ARIUM Westside, Atlanta, GA 336 2008 90.0 % 1,466 97 %
Ashton Reserve, Charlotte, NC 473 2015 100.0 % 1,066 93 %
Citrus Tower, Orlando, FL 336 2006 96.8 % 1,227 92 %
Enders Place at Baldwin Park, Orlando, FL 220 2003 89.5 % 1,675 91 %
James on South First, formerly Legacy at Southpark, Austin, TX 250 2016 90.0 % 1,151 94 %
Marquis at Crown Ridge, San Antonio, TX 352 2009 90.0 % 960 94 %
Marquis at Stone Oak, San Antonio, TX 335 2007 90.0 % 1,387 92 %
Marquis at The Cascades, Tyler, TX 582 2009 90.0 % 1,105 92 %
Marquis at TPC, San Antonio, TX 139 2008 90.0 % 1,413 92 %
Nevadan, Atlanta, GA 480 1990 90.0 % 1,104 95 %
Park & Kingston, Charlotte, NC 168 2015 96.0 % 1,227 96 %
Preston View, Morrisville, NC 382 2000 91.8 % 1,005 96 %
Roswell City Walk, Roswell, GA 320 2015 98.0 % 1,496 97 %
Sorrel, Frisco, TX 352 2015 95.0 % 1,209 94 %
Sovereign, Fort Worth, TX 322 2015 95.0 % 1,243 95 %
The Brodie, Austin, TX 324 2001 92.5 % 1,111 95 %
The Preserve at Henderson Beach, Destin, FL 340 2009 100.0 % 1,359 94 %
Villages at Cypress Creek, Houston, TX 384 2001 80.0 % 1,046 93 %
Wesley Village, Charlotte, NC 301 2010 91.8 % 1,290 93 %
Whetstone, Durham, NC⁽⁴⁾ 204 2015 — 1,117 95 %
Total/Average 8,166 $ 1,214 94 %
Multifamily Community Name Location Number of
Units Date
Built/Renovated⁽¹⁾ Ownership
Interest Average
Rent⁽²⁾ %
Occupied⁽³⁾
ARIUM at Palmer Ranch Sarasota, FL 320 2016 100.0 % $ 1,311 97 %
ARIUM Glenridge Atlanta, GA 480 1990 90.0 % 1,215 95 %
ARIUM Grandewood Orlando, FL 306 2005 100.0 % 1,394 94 %
ARIUM Gulfshore Naples, FL 368 2016 100.0 % 1,325 95 %
ARIUM Hunter’s Creek Orlando, FL 532 1999 100.0 % 1,401 97 %
ARIUM Metrowest Orlando, FL 510 2001 100.0 % 1,382 94 %
ARIUM Palms Orlando, FL 252 2008 100.0 % 1,315 94 %
ARIUM Pine Lakes Port St. Lucie, FL 320 2003 100.0 % 1,287 94 %
ARIUM Westside Atlanta, GA 336 2008 90.0 % 1,532 94 %
Ashford Belmar Lakewood, CO 512 1988/1993 85.0 % 1,607 92 %
Ashton Reserve Charlotte, NC 473 2015 100.0 % 1,122 94 %
Citrus Towers Orlando, FL 336 2006 96.8 % 1,292 94 %
Enders Place at Baldwin Park Orlando, FL 220 2003 92.0 % 1,778 93 %
James on South First Austin, TX 250 2016 90.0 % 1,244 93 %
Marquis at Crown Ridge San Antonio, TX 352 2009 90.0 % 1,014 91 %
Marquis at Stone Oak San Antonio, TX 335 2007 90.0 % 1,444 95 %
Marquis at The Cascades Tyler, TX 582 2009 90.0 % 1,206 92 %
Marquis at TPC San Antonio, TX 139 2008 90.0 % 1,485 92 %
Outlook at Greystone Birmingham, AL 300 2007 100.0 % 954 94 %
Park & Kingston Charlotte, NC 168 2015 100.0 % 1,294 98 %
Plantation Park Lake Jackson, TX 238 2016 80.0 % 1,393 92 %
Preston View Morrisville, NC 382 2000 100.0 % 1,121 94 %
Roswell City Walk Roswell, GA 320 2015 98.0 % 1,526 98 %
Sands Parc Daytona Beach, FL 264 2017 100.0 % 1,354 97 %
Sorrel Frisco, TX 352 2015 95.0 % 1,279 85 %
Sovereign Fort Worth, TX 322 2015 95.0 % 1,365 93 %
The Brodie Austin, TX 324 2001 92.5 % 1,247 94 %
The Links at Plum Creek Castle Rock, CO 264 2000 88.0 % 1,411 94 %
The Mills Greenville, SC 304 2013 100.0 % 1,037 96 %
The Preserve at Henderson Beach Destin, FL 340 2009 100.0 % 1,412 97 %
Veranda at Centerfield Houston, TX 400 1999 93.0 % 947 90 %
Villages of Cypress Creek Houston, TX 384 2001 80.0 % 1,129 96 %
Wesley Village Charlotte, NC 301 2010 100.0 % 1,371 95 %
Total/Average 11,286 $ 1,299 94 %

⁽¹⁾ Represents date of last significant renovation or year built if there were no renovations.
⁽²⁾ Represents the average effective monthly rent per occupied unit for ~~all occupied units for~~ the three months ended ~~September 30, 2017.~~March 31, 2019. Total concessions for the three months ended ~~September 30, 2017~~March 31, 2019 amounted to approximately ~~$1.1~~$0.3 million.
⁽³⁾ Percent occupied is calculated as (i) the number of units occupied as of ~~September 30, 2017,~~March 31, 2019 divided by (ii) total number of units, expressed as a percentage.
⁽⁴⁾ ~~Whetstone is currently a preferred equity investment providing a stated investment return.~~

The following is a summary of our ~~development properties~~preferred equity and mezzanine loan investments as of ~~September 30, 2017:~~March 31, 2019:

Multifamily Community Name,
Location Number of
Units Total Estimated
Construction
Cost (in
millions) Cost to Date
(in millions) Estimated
Construction
Cost Per Unit Actual/
Anticipated
Initial
Occupancy Anticipated
Construction
Completion Pro
Forma
Average
Rent ⁽¹⁾
Alexan CityCentre, Houston, TX 340 $ 83.0 $ 79.9 $ 244,118 2Q17 4Q17 $ 2,144
Helios, Atlanta, GA 282 $ 50.9 $ 46.4 $ 180,496 2Q17 4Q17 $ 1,486
Alexan Southside Place, Houston, TX 270 $ 49.0 $ 40.6 $ 181,481 4Q17 2Q18 $ 2,012
Lake Boone Trail, Raleigh, NC 245 $ 40.2 $ 28.0 $ 164,082 3Q17 3Q18 $ 1,271
Vickers Village, Roswell, GA 79 $ 30.6 $ 18.2 $ 387,342 3Q18 4Q18 $ 3,176
APOK Townhomes, Boca Raton, FL 90 $ 28.9 $ 12.5 $ 321,111 3Q18 1Q19 $ 2,549
Crescent Perimeter, Atlanta, GA 320 $ 70.0 $ 29.0 $ 218,750 4Q18 2Q19 $ 1,749
Domain, Garland, TX 299 $ 52.6 $ 13.9 $ 175,920 4Q18 2Q19 $ 1,469
West Morehead, Charlotte, NC 286 $ 60.0 $ 22.1 $ 209,790 4Q18 2Q19 $ 1,507
Flagler Village, Fort Lauderdale, FL 384 $ 137.3 $ 28.6 $ 357,552 3Q19 3Q20 $ 2,358
Total 2,595 $ 1,858
Multifamily Community Name Location Actual/
Planned
Number
of Units Total Actual/
Estimated
Construction
Cost
(in millions) Cost to
Date
(in millions) Actual/
Estimated
Construction
Cost Per Unit Actual/
Estimated
Initial
Occupancy Actual/
Estimated
Construction
Completion Pro Forma
Average
Rent⁽¹⁾
Whetstone⁽²⁾ Durham, NC 204 $ 37.0 $ 37.0 $ 181,373 3Q14 3Q15 $ 1,278
Alexan CityCentre⁽²⁾ Houston, TX 340 83.5 80.7 245,588 2Q17 4Q17 1,733
Helios⁽²⁾ Atlanta, GA 282 51.8 50.7 183,688 2Q17 4Q17 1,436
Alexan Southside Place Houston, TX 270 49.4 47.0 182,963 4Q17 1Q18 2,012
Leigh House Raleigh, NC 245 40.2 39.3 164,082 3Q17 3Q18 1,271
Vickers Historic Roswell Roswell, GA 79 31.9 29.9 403,797 2Q18 3Q18 3,176
Domain at The One Forty Garland, TX 299 53.3 50.1 178,261 2Q18 4Q18 1,469
Arlo Charlotte, NC 286 60.0 58.0 209,790 2Q18 1Q19 1,507
Novel Perimeter Atlanta, GA 320 71.0 68.4 221,875 3Q18 1Q19 1,749
Cade Boca Raton Boca Raton, FL 90 30.1 28.4 334,444 4Q18 2Q19 2,549
Flagler Village Fort Lauderdale, FL 385 135.4 80.0 351,688 2Q20 3Q20 2,352
North Creek Apartments Leander, TX 259 44.0 8.9 169,884 1Q20 3Q20 1,358
Riverside Apartments Austin, TX 222 37.9 7.1 170,721 3Q20 4Q20 1,408
Wayforth at Concord Concord, NC 150 33.5 4.1 223,333 2Q20 3Q21 1,707
The Park at Chapel Hill Chapel Hill, NC * * * * * * *
     Total Average 3,431 $ 1,704

* The development is in the planning phase; project specifications are in process.
⁽¹⁾ Represents the average pro forma effective monthly rent per occupied unit for all expected occupied units upon stabilization.
⁽²⁾ Represents the average effective monthly rent per occupied unit for the three months ended March 31, 2019.

3729

Three Months Ended ~~September 30, 2017~~March 31, 2019 Compared to Three Months Ended ~~September 30, 2016~~March 31, 2018

Revenue

~~Net rental income~~Rental and other property revenuesincreased ~~$6.3~~$9.0 million, or ~~34%~~25%, to ~~$24.9~~$45.7 million for the three months ended ~~September 30, 2017~~March 31, 2019 as compared to ~~$18.6~~$36.7 million for the same prior year period. ~~The acquisition of various interests in fifteen properties subsequent to September 30, 2016 increased net~~Net rental income ~~by $12.8~~increased $6.9 million ~~while~~from the ~~sales~~full period impact of five properties ~~including Lansbrook Village, MDA Apartments, Fox Hill, Springhouse at Newport News,~~acquired in 2018, and ~~Village Green Ann Arbor decreased net rental income by $6.6 million.~~
~~Other property revenue~~~~increased $1.1~~a $2.1 million ~~or 55%, to $3.1 million for the three months ended September 30, 2017 as compared to $2.0 million for the~~increase from same ~~prior year period. This increase was primarily due to the acquisition of interests in the properties noted above of $1.5 million offset by the sales noted above of $0.7 million.~~store properties.

Interest income from related parties increased ~~by $2.1~~$0.6 million, or 11%, to $5.8 million for the three months ended March 31, 2019 as compared to $5.2 million for the same prior year period due to ~~interest earned on~~increases in the average balance of mezzanine loans ~~made during the last three quarters.~~outstanding.

Expenses

Property operating expensesincreased ~~$4.1~~$2.9 million, or ~~52%~~19%, to ~~$12.0~~$18.6 million for the three months ended ~~September 30, 2017~~March 31, 2019 as compared to ~~$7.9~~$15.7 million for the same prior year period. ~~This~~Property operating expenses increased $2.7 million from the full period impact of five properties acquired in 2018 and a $0.2 million increase ~~was primarily due to the acquisition of interests in the properties noted above of $3.9 million, offset by sales the sales noted above of $2.0 million.~~from same store properties. Property NOI margins ~~decreased~~increased to ~~57.2%~~59.3% of total revenues for the three months ended ~~September 30, 2017~~March 31, 2019 from ~~61.6%~~57.3% in the prior year quarter. Property margins have been impacted by the sales of properties owned for longer time periods which were efficiently operated with assets purchased more recently that had not yet achieved the same level of operational efficiency. Property NOI margins are computed as total property revenues less property operating expenses, divided by total property revenues.

Property management fees ~~expenses~~expenseincreased $0.2 million, or ~~33%~~22%, to ~~$0.8~~$1.2 million for the three months ended ~~September 30, 2017~~March 31, 2019 as compared to ~~$0.6~~$1.0 million in the same prior year period. ~~This increase was primarily due to~~Property management fees increased $0.2 million from the ~~acquisition of interests in the properties noted above, offset by the~~full period impact of ~~the sales of~~five properties acquired in 2018, and a $0.1 million increase from same store properties.
General and administrative expenses~~decreased~~amounted to ~~$1.1~~$5.6 million for the three months ended ~~September 30, 2017~~March 31, 2019 as compared to ~~$1.2~~$4.7 million for the same prior year period. Excluding non-cash equity compensation expense of ~~$0.1~~$2.5 million and ~~$0.6~~$1.8 million for the three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016,~~2018, respectively, general and administrative expenses were ~~$1.0~~$3.2 million, or ~~3.2%~~6.1%, of revenues for the three months ended ~~September 30, 2017~~March 31, 2019, as compared to ~~$0.6~~$2.9 million, or ~~3.0%~~6.9%, of revenues, for the same prior year period.

~~Management fees~~Acquisition and pursuit costs~~increased~~amounted to ~~$2.8~~$0.06 million for the three months ended ~~September 30, 2017~~March 31, 2019 as compared to ~~$1.9~~$0.04 million for the same prior year period. ~~Base management fees of $2.8 million~~Acquisition and ~~$1.7 million were~~pursuit costs incurred in the three months ended ~~September 30, 2017 and 2016, respectively. Incentive management fees of $0.2 million~~March 31, 2019 were incurred in the three months ended September 30, 2016. Base management fees increased primarily due to an increase in equity as a result of the Follow-On Offerings. Management fees of $2.8 million for the quarter ended September 30, 2017 will be paid in LTIP Units in lieu of cash.
~~Acquisition and pursuit costs~~were minimal for the three months ended September 30, 2017 as compared to $0.7 million for the same prior year period. The Company adopted ASU 2017-01 which resulted in the capitalization of costs incurred in asset acquisitions purchased after the effective date of January 1, 2017.
~~Weather-related losses~~~~of $0.7 million were incurred in the three months ended September 30, 2017~~ related to ~~Hurricane Irma at six properties in Florida and three properties in Georgia.~~
~~Depreciation and amortization expenses~~~~were $11.8 million for~~ the ~~three months ended September 30, 2017 as compared to $7.2 million for the same prior year period. The increase is related to additional depreciation and amortization expense on the acquisition~~write-off of ~~the properties mentioned above of $7.4 million, offset by a decrease due to the sale of the five properties of $1.9 million.~~
~~Other Income and Expense~~
~~Other income and expenses~~amounted to expense of $4.7 million for the three months ended September 30, 2017 compared to income of $0.4 million for the same prior year period. This was primarily due to the gain on the sale of Springhouse at Newport News of $4.9 million and the loss on early extinguishment of debt of $2.4 million in the prior year quarter, offset by an increase in interest expense, net, of $2.1 million, as the result of the increase in mortgages payable resulting from the acquisition of interests in the properties mentioned above.
~~Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016~~
~~Revenue~~
~~Net rental income~~increased $20.4 million, or 39%, to $72.4 million for the nine months ended September 30, 2017 as compared to $52.0 million for the same prior year period. The acquisition of various interests in fifteen properties subsequent to September 30, 2016 increased net rental income by $28.2 million while the sales of five properties including Lansbrook Village, MDA Apartments, Fox Hill, Springhouse at Newport News, and Village Green Ann Arbor decreased net rental income by $12.7 million.
38
~~Other property revenue~~increased $3.2 million, or 59%, to $8.6 million for the nine months ended September 30, 2017 as compared to $5.4 million for the same prior year period. This increase was primarily due to the acquisition of interests in the properties noted above of $3.5 million offset by the sales noted above of $1.2 million.
~~Interest income from related parties~~ ~~increased by $5.7 million due to interest earned on the mezzanine loans made during the last three quarters.~~
~~Expenses~~
~~Property operating expenses~~increased $11.3 million, or 50%, to $33.9 million for the nine months ended September 30, 2017 as compared to $22.6 million for the same prior year period. This increase was primarily due to the acquisition of interests in the properties noted above of $8.9 million, offset by sales the sales noted above of $3.6 million. Property NOI margins decreased to 58.1% of total revenues for the nine months ended September 30, 2017 from 60.6% in the prior year quarter. Property margins have been impacted by the sales of properties owned for longer time periods which were efficiently operated with assets purchased more recently that had not yet achieved the same level of operational efficiency. Property NOI margins are computed as total property revenues less property operating expenses, divided by total property revenues.
~~Property management fees expenses~~ increased $0.6 million, or 35%, to $2.3 million for the nine months ended September 30, 2017 as compared to $1.7 million in the same prior year period. This increase was primarily due to the acquisition of interests in the properties noted above, offset by the impact of the sales of properties.
~~General and administrative expenses~~were flat at $4.2 million for the nine months ended September 30, 2017 versus the same amount for 2016. Excluding non-cash equity compensation expense of $1.3 million and $2.2 million for the nine months ended September 30, 2017 and 2016, respectively, general and administrative expenses were $2.9 million, or 3.4% of revenues for the nine months ended September 30, 2017 as compared to $2.0 million, or 3.4% of revenues, for the same prior year period.
~~Management fees~~increased to $11.7 million for the nine months ended September 30, 2017 as compared to $4.5 million for the same prior year period. Base management fees of $7.8 million and $4.3 million were incurred in the nine months ended September 30, 2017 and 2016, respectively. Incentive management fees of $4.0 million and $0.2 million were incurred in the nine months ended September 30, 2017 and 2016, respectively, primarily due to the realized gains on asset sales. Base management fees increased primarily due to an increase in equity as a result of the Follow-On Offerings. Management fees of $2.8 million for the quarter ended September 30, 2017 will be paid in LTIP Units in lieu of cash while base management fees of $8.9 million for the six months ended June 30, 2017 were paid through the issuance of 738,479 LTIP Units.
~~Acquisition and pursuit costs~~were $3.2 million for the nine months ended September 30, 2017 as compared to $2.1 million for the same prior year period. The Company adopted ASU 2017-01 which resulted in the capitalization of costs incurred in asset acquisitions purchased after the effective date of January 1, 2017. Substantially all the expenses for the nine months ended September 30, 2017 were due to the Company’s decision to abandon the proposed East San Marco Property development and write off the pre-acquisition costs ~~that had been incurred.~~from abandoned deals. Abandoned pursuit costs can vary greatly, and the costs incurred in any given period may be significantly different in future periods. ~~The costs during the prior year quarter were primarily due to the acquisition of ARIUM Gulfshore, ARIUM at Palmer Ranch, ARIUM Westside, and The Preserve at Henderson Beach.~~

Weather-related losses, net~~of $0.7 million~~ were not incurred infor the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019, compared to $0.2 million for the same prior year period that related to ~~Hurricane Irma~~freeze damages at ~~six properties in Florida and~~ three properties in ~~Georgia.~~North Carolina and one property in Texas.

Depreciation and amortization expenseswere ~~$33.1~~$17.2 million for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 as compared to ~~$22.5~~$15.6 million for the same prior year period. ~~The increase is related to additional depreciation~~Depreciation and amortization ~~expense on~~expenses increased $4.0 million from the ~~acquisition~~full period impact of ~~the~~five properties ~~mentioned above of $18.0 million,~~acquired in 2018, offset by a $2.4 million decrease ~~due to the sale of the five properties of $4.3 million.~~from same store properties.

Other Income and Expense

Other income and ~~expenses~~expenseamounted to ~~income~~expense of ~~$44.2~~$13.1 million for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 compared to expense of ~~$2.9~~$7.7 million for the same prior year period. ~~This was primarily~~Interest expense increased $6.0 million, or 59%, to $16.1 million for the three months ended March 31, 2019 as compared to $10.1 million for the same prior year period due to the increased number of properties and an increase in debt to fund the property acquisitions. This was partially offset by a gain on the sale of Wesley Village ~~Green~~II of ~~Ann Arbor, Fox Hill and Lansbrook Village of $50.0~~$0.7 million ~~and~~during the sale of the real estate joint venture interest of MDA Apartments of $10.2 million occurring in 2017, offset by the sale of the real estate joint venture interest of Springhouse of Newport News of $4.9 million in the prior year period, offset by an increase in interest expense, net, of $8.2 million, as the result of the increase in mortgages payable resulting from the acquisition of interests in the properties mentioned above.three months ended March 31, 2019.

3930

Property Operations

We define “same store” properties as those that we owned and operated for the entirety of both periods being compared, except for properties that are in the construction or lease-up phases, or properties that are undergoing development or significant redevelopment. We move properties previously excluded from our same store portfolio for these reasons into the same store designation once they have stabilized or the development or redevelopment is complete and such status has been reflected fully in all quarters during the applicable periods of comparison. For newly constructed or lease-up properties or properties undergoing significant redevelopment, we consider a property stabilized upon attainment of 90% physical ~~occupancy, subject to loss-to-lease, bad debt and rent concessions.~~occupancy.

For comparison of our three months ended ~~September 30, 2017~~March 31, 2019 and 2016, the same store properties included properties owned at July 1, 2016. Our same store properties for the period were Enders Place at Baldwin Park, ARIUM Grandewood, Park & Kingston, Ashton Reserve, ARIUM Palms, Sorrel, Sovereign, ARIUM Gulfshore, ARIUM at Palmer Ranch and The Preserve at Henderson Beach. For comparison of our nine months ended September 30, 2017 and 2016,2018, the same store properties included properties owned at January 1, ~~2016.~~2018. Our same store properties for the ~~period were Enders Place at Baldwin Park, ARIUM Grandewood, Park & Kingston, Ashton Reserve, ARIUM Palms, Sovereign, ARIUM Gulfshore,~~three months ended March 31, 2019 and ~~ARIUM at Palmer Ranch.~~
~~Because~~2018 consisted of ~~the limited number of same store~~28 properties, ~~as compared to the number of properties in our portfolio in 2017 and 2016, respectively, our same store performance measures may be of limited usefulness.~~representing 9,608 units.

The following table presents the same store and non-same store results from operations for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018 (dollars in thousands):
Three Months Ended
September 30, Change
2017 2016 $ %
Property Revenues
Same Store $ 11,956 $ 11,851 $ 105 0.9 %
Non-Same Store 15,987 8,726 7,261 83.2 %
Total property revenues 27,943 20,577 7,366 35.8 %

Property Expenses
Same Store 4,755 4,605 150 3.3 %
Non-Same Store 7,214 3,291 3,923 119.2 %
Total property expenses 11,969 7,896 4,073 51.6 %

Same Store NOI 7,201 7,246 (45 ) (0.6 )%
Non-Same Store NOI 8,773 5,435 3,338 61.4 %
Total NOI⁽¹⁾ $ 15,974 $ 12,681 $ 3,293 26.0 %

Nine Months Ended
September 30, Change Three Months Ended
March 31, Change
2017 2016 $ % 2019 2018 $ %
Property Revenues
Same Store $ 27,824 $ 26,845 $ 979 3.6 % $ 38,725 $ 36,612 $ 2,113 5.8 %
Non-Same Store 53,169 30,544 22,625 74.1 % 6,965 63 6,902 *
Total property revenues 80,993 57,389 23,604 41.1 % 45,690 36,675 9,015 24.6 %

Property Expenses
Same Store 10,952 10,664 288 2.7 % 15,854 15,628 226 1.4 %
Non-Same Store 22,983 11,928 11,055 92.7 % 2,748 30 2,718 *
Total property expenses 33,935 22,592 11,343 50.2 % 18,602 15,658 2,944 18.8 %

Same Store NOI 16,872 16,181 691 4.3 % 22,871 20,984 1,887 9.0 %
Non-Same Store NOI 30,186 18,616 11,570 62.2 % 4,217 33 4,184 *
Total NOI⁽¹⁾ $ 47,058 $ 34,797 $ 12,261 35.2 % $ 27,088 $ 21,017 $ 6,071 28.9 %

* Variance is not meaningful.
⁽¹⁾See “Net Operating Income” below for a reconciliation of Same Store NOI, Non-Same Store NOI and Total NOI to net income (loss) and a discussion of how management uses this non-GAAP financial measure.
40
Three Months Ended ~~September 30, 2017~~March 31, 2019 Compared to Three Months Ended ~~September 30, 2016~~March 31, 2018

Same store NOI for the three months ended ~~September 30, 2017 decreased 0.6%~~March 31, 2019 increased 9.0%, or ~~$0.05~~$1.89 million, compared to the ~~2016~~2018 period. There was a ~~0.9%~~5.8% increase in same store property revenues as compared to the ~~2016 period,~~2018 period. The increase was primarily attributable to a ~~1.6%~~5.3% increase in average rental ~~rates offset by a 66~~rates; twenty-seven of our twenty-eight same store properties recognized rental rate increases during the period. In addition, average occupancy increased 40 basis ~~point decrease in average occupancy.~~points to 93.9%. Same store expenses for the three months ended ~~September 30, 2017~~March 31, 2019 increased ~~3.3%~~1.4%, or $0.23 million, compared to ~~$4.8 million from $4.6 million for~~ the ~~2016~~2018 period. The ~~same store results were disproportionately impacted~~increase is primarily due to a $0.11 million increase in trash, cable and landscaping, $0.06 million of additional real estate taxes due to higher valuations by ~~performance from two assets~~municipalities, and $0.05 million increase in ~~the Dallas Fort Worth MSA, particularly our Frisco asset which continues to remain challenged from new supply.~~insurance.

Property revenues and property expenses for our non-same store properties increased significantly due to the properties acquired ~~during 2016 and 2017;~~subsequent to January 1, 2018; the ~~2017~~2019 non-same store property count was 14five compared to ~~8 properties~~one property for the ~~2016~~2018 period. The results of operations for ~~these~~acquired properties have been included in our consolidated statements of operations from the date of ~~acquisition.~~
~~Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016~~
~~Same store NOI for~~acquisition and the nine months ended September 30, 2017 increased by 4.3% to $16.9 million from $16.2 million for the 2016 period. There was a 3.6% increase in same store property revenues as compared to the 2016 period, primarily attributable to a 3.6% increase in average rental rates, offset by a 41 basis point decrease in average occupancy. Same store expenses for the nine months ended September 30, 2017 increased 2.7% to $11.0 million from $10.7 million for the 2016 period.
Property revenues and property expenses for our non-same store properties increased significantly due to the properties acquired during 2016 and 2017; the 2017 non-same store property count was 16 compared to 7 properties for the 2016 period. The results of operations for ~~these~~disposed properties have been ~~included in our~~excluded from the consolidated statements of operations ~~from~~since the date of ~~acquisition.~~disposition.

Net Operating Income

We believe that net operating income (“NOI”), is a useful measure of our operating performance. We define NOI as total property revenues less total property operating expenses, excluding depreciation and amortization and interest. Other REITs may use different methodologies for calculating NOI, and accordingly, our NOI may not be comparable to other REITs. NOI also is a computation made by analysts and investors to measure a real estate company's operating performance.

31
We believe that this measure provides an operating perspective not immediately apparent from GAAP operating income or net income. We use NOI to evaluate our performance on a same store and non-same store ~~basis because~~basis; NOI allows us to evaluate the operating performance of our properties because it measures the core operations of property performance by excluding corporate level expenses and other items not related to property operating performance and captures trends in rental housing and property operating expenses.

41
However, NOI should only be used as ~~an alternative~~a supplemental measure of our financial performance. The following table reflects net ~~income (loss)~~loss attributable to common ~~stockholders~~shares together with a reconciliation to NOI and to same store and non-same store contributions to consolidated NOI, as computed in accordance with GAAP for the periods presented (amounts in thousands):

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Net (loss) income attributable to common stockholders $ (12,017 ) $ (2,551 ) $ 563 $ (11,727 )
Add pro-rata share:
Depreciation and amortization 10,771 6,197 29,900 19,436
Amortization of non-cash interest expense 245 472 1,491 620
Property management fees 773 587 2,227 1,635
Management fees 2,773 1,839 11,609 4,430
Acquisition and pursuit costs 15 619 3,039 1,993
Loss on early extinguishment of debt - 2,269 1,534 2,269
Corporate operating expenses 1,091 1,169 4,203 4,101
Management internalization process expense 818 - 1,629 -
Weather-related losses, net 635 - 635 -
Preferred dividends 6,966 3,883 19,066 8,268
Preferred stock accretion 896 271 1,870 560
Less pro-rata share:
Other income - 26 16 26
Preferred returns and equity in income of unconsolidated real estate joint ventures 2,663 3,030 7,783 8,491
Interest income from related parties 2,099 - 5,680 -
Gain on sale of real estate joint venture interest, net - - 6,332 -
Gain on sale of real estate investments - 4,876 33,945 4,876
Pro-rata share of properties' income 8,204 6,823 24,010 18,192
Add:
Noncontrolling interest pro-rata share of property income 555 1,128 2,673 3,224
Total property income 8,759 7,951 26,683 21,416
Add:
Interest expense, net 7,215 4,730 20,375 13,381
Net operating income 15,974 12,681 47,058 34,797
Less:
Non-same store net operating income 8,773 5,435 30,186 18,616
Same store net operating income $ 7,201 $ 7,246 $ 16,872 $ 16,181
Three Months Ended
March 31,
2019 2018
Net loss attributable to common shares $ (12,093 ) $ (9,425 )
Add back: Net loss attributable to operating partnership units (4,051 ) (2,675 )
Net loss attributable to common shares and units (16,144 ) (12,100 )
Add common stockholders and operating partnership units pro-rata share of:
Depreciation and amortization 16,142 14,831
Non-real estate depreciation and amortization 86 64
Non-cash interest expense 775 461
Unrealized loss on derivatives 1,635 —
Property management fees 1,148 939
Acquisition and pursuit costs 58 43
Corporate operating expenses 5,554 4,669
Weather-related losses, net — 165
Preferred dividends 10,384 8,248
Preferred stock accretion 1,887 1,112
Less common stockholders and operating partnership units pro-rata share of:
Preferred returns on unconsolidated real estate joint ventures 2,289 2,461
Interest income from related parties 5,776 5,196
Gain on sale of non-depreciable real estate investments 679 —
Pro-rata share of properties’ income 12,781 10,775
Add:
Noncontrolling interest pro-rata share of partially owned property income 729 607
Total property income 13,510 11,382
Add:
Interest expense 13,578 9,635
Net operating income 27,088 21,017
Less:
Non-same store net operating income 4,217 33
Same store net operating income $ 22,871 $ 20,984

Liquidity and Capital Resources

Liquidity is a measure of our ability to meet potential cash requirements. Our primary short-term liquidity requirements relate to (a) our operating expenses and other general business needs, (b) distributions to our stockholders, (c) committed investments and capital requirements to fund development and renovations at existing properties, ~~and~~ (d) ongoing commitments to repay borrowings, including our credit facilities and our maturing short-term ~~debt.~~debt, and (e) Class A common stock repurchases under our stock repurchase program.

We believe the properties underlying ~~its~~our real estate investments are performing ~~well. We had a portfolio-wide debt service coverage ratio of 1.98x and~~well with an occupancy of 94%, exclusive of our development properties, at ~~September 30, 2017.~~
Subsequent to September 30, 2017, the Company, through its Operating Partnership, entered into a credit agreement (the “Senior Credit Facility”) with KeyBank National Association (“KeyBank”) and other lenders. The Senior Credit Facility provides for an initial loan commitment amount of $150 million, which commitment contains an accordion feature up to a maximum commitment of up to $250 million. The availability of borrowings will be based on the value of a pool of collateral properties and compliance with various ratios related to those assets. In addition, we have begun negotiating an additional bank credit facility pursuant to a non-binding term sheet, and we believe this facility will enable us to deploy our capital more efficiently and provide capital structure flexibility as we continue raising capital through our Series B continuous offering. No definitive agreements have been entered into and we provide no assurances that we will enter into this credit facility.March 31, 2019.

In general, we believe our available cash balances, the proceeds from ~~the~~our continuous offering of Series B ~~preferred stock continuous offering,~~Preferred Stock, the Senior and Amended Junior Credit Facilities, the Fannie Facility, other financing arrangements and cash flows from operations will be sufficient to fund our liquidity requirements with respect to our existing portfolio for the next 12 months. We expect that properties added to our portfolio with the proceeds from the ~~Follow-On Offerings, and the properties we expect to acquire with the proceeds from our~~continuous offering of Series B ~~preferred stock continuous offering~~Preferred Stock and from ~~our recent property sales,~~the credit facilities will have a ~~significant~~ positive impact on our future results of operations. In general, we expect that our results related to our portfolio will improve in future periods as a result of anticipated future investments in and acquisitions of real ~~estate, including our investments in development projects.~~estate.

4232

We believe we will be able to meet our primary liquidity requirements going forward through:

·• $~~134.6~~24.3 million in cash available at ~~September 30, 2017;~~March 31, 2019;
· p~~roceeds from borrowings under the Senior Credit Facility;~~
·• cash generated from operating activities; and
·
• our continuous Series B Preferred Stock Offering, proceeds from future borrowings and potential offerings, including potential offerings of common and preferred stock through underwritten offerings, ~~our continuous Series B Preferred Stock Offering and our ATM programs,~~ as well as issuances of units of limited partnership interest in our Operating Partnership, or OP Units.

Our primary long-term liquidity requirements relate to (a) costs for additional apartment community ~~investments;~~investments, (b) repayment of long-term ~~debt;~~debt and our credit facilities, (c) capital ~~expenditures; and~~expenditures, (d) cash redemption requirements related to our Series A Preferred Stock, Series B Preferred Stock and Series C Preferred ~~Stock.~~Stock, and (e) Class A common stock repurchases under our stock repurchase program.
In February 2018, we announced a stock repurchase program to purchase up to $25 million of our outstanding shares of Class A common stock over a period of one year. In December 2018, we renewed our stock repurchase plan for a period of one year. The repurchase plan can be discontinued at any time. We purchased 505,797 shares of Class A common stock during the three months ended March 31, 2019 for a total purchase price of $5.1 million.

We intend to finance our long-term liquidity requirements with net proceeds of additional issuances of common and preferred stock, including our Series B Preferred Stock, ~~the Senior Credit Facility,~~our credit facilities, as well as future borrowings. We entered into the Senior Credit Facility on October 4, 2017, and we believe this facility will enable us to deploy our capital more efficiently and provide capital structure flexibility as we grow our asset base. Our success in meeting these requirements will therefore depend upon our ability to access capital. Further, our ability to access equity capital is dependent upon, among other things, general market conditions for REITs and the capital markets generally, market perceptions about us and our asset class, and current trading prices of our securities.

We may also selectively sell assets at appropriate times, which would be expected to generate cash sources for both our short-term and long-term liquidity needs.

We may also meet our long-term liquidity needs through borrowings from a number of sources, either at the corporate or project level. We believe the Senior and Amended Junior Credit Facilities, as well as the Fannie Facility, will continue to enable us to deploy our capital more efficiently and provide capital structure flexibility as we grow our asset base. We expect the combination of these facilities to provide us flexibility by allowing us, among other things, to use borrowings under our Senior and Amended Junior Credit Facilities to acquire properties pending placement of permanent mortgage indebtedness, including under the Fannie Facility. In addition to restrictive covenants, these credit facilities contain material financial covenants. At March 31, 2019, we were in compliance with all covenants under our credit facilities. We will continue to monitor the debt markets, including Fannie Mae and Freddie Mac, and as market conditions permit, access borrowings that are advantageous to us.

We intend to continue to use prudent amounts of leverage in making our investments, which we define as having total indebtedness of approximately 65% of the fair market value of the properties in which we have ~~invested as determined by our Manager.~~invested. For purposes of calculating our leverage, we assume full consolidation of all our real estate investments, whether or not they would be consolidated under GAAP, include assets we have classified as held for sale, and include any joint venture level indebtedness in our total indebtedness. However, we are not subject to any limitations on the amount of leverage we may use, and accordingly, the amount of leverage we use may be significantly less or greater than we currently anticipate. We expect our leverage to decline commensurately as we execute our business plan to grow our net asset value.

If we are unable to obtain financing on favorable terms or at all, we would likely need to curtail our investment activities, including acquisitions and improvements to and developments of real properties, which could limit our growth prospects. This, in turn, could reduce cash available for distribution to our stockholders and may hinder our ability to raise capital by issuing more securities or borrowing more money. We also may be forced to dispose of assets at inopportune times ~~in order~~ to maintain our REIT qualification and Investment Company Act exemption.

We expect to maintain a distribution paid to our Series A Preferred Stock, our Series B Preferred Stock, our Series C Preferred Stock and our Series D Preferred Stock in accordance with the terms of those securities which require monthly or quarterly dividends depending on the series. On August 4, 2017, the board of directors announced that it initiated, in conjunction with a financial advisor, a comprehensive review of the appropriate dividend policy for the Company's Class A Common Stock. The board's evaluation will consider factors including, but not limited to, achieving a sustainable dividend covered by current recurring AFFO (vs. pro forma AFFO), multifamily and small cap peer dividend rates, multifamily and small cap peer payout ratios, providing financial flexibility for the Company, and achieving an appropriate balance between the retention of capital to invest and grow net asset value, and the importance of current distributions. The board is expected to complete its review of the dividend policy for the Company's Class A Common Stock in the fourth quarter of 2017. Currently, the Company maintains a distribution paid on a monthly basis to all of our Class A common stockholders at a quarterly rate of $0.29 per share. In August 2017, we announced that our Board is undertaking a review of our dividend policy, and that the 2018 annual dividend range for our Class A Common Stock would likely be between $0.65 and $0.75 per Class A common share. While our policy is generally to pay distributions from cash flow from operations, our distributions through ~~September 30, 2017~~March 31, 2019 have been paid from cash flow from operations, proceeds from our continuous ~~registered public~~Series B Preferred Stock offering, proceeds from ~~the IPO and Follow-On Offerings,~~underwritten securities offerings, and sales of assets and may in the future be paid from additional sources, such as from borrowings.

We have notes receivable to related parties in conjunction with development projects. The development projects are in various stages of completion and lease-up. The notes receivable provide a stated return and required repayment based on a fixed maturity date, generally in relation to the development’s construction loan maturity. If the development does not repay the notes receivable upon maturity, our income, FFO, CFFO and cash flows could be reduced below the stated returns currently being recognized if the development project does not produce sufficient cash flow to pay its operating expenses and debt service, or to refinance its debt obligations. In addition, we have, in certain cases, an option to purchase up to 100% of the common interest which holds an interest in the entity that owns the development project. If we were to convert into common ownership, our income, FFO, CFFO and cash flows would be reflective of our pro rata share of the property’s results, which could be a reduction from what our notes receivable currently generate.
4333

~~Since June 30, 2015,~~We have preferred membership interests in development projects in various stages of completion and lease-up. Our preferred investments are structured to provide a current preferred return during the development and lease-up phase. Each joint venture in which we ~~have paid~~own a preferred membership interest is required to redeem our ~~base management fees and incentive fees~~preferred membership interests, plus any accrued but unpaid preferred return, based on a fixed maturity date, generally in ~~LTIPs in lieu of cash. In conjunction with the internalization, we will no longer be responsible for paying the base management fee or incentive fee,~~relation to the ~~extent that we will~~development’s construction loan maturity. Upon redemption of the preferred membership interests, our income, FFO, CFFO and cash flows could be ~~paying additional general~~reduced below the preferred returns currently being recognized. Alternatively, if the joint ventures do not redeem our preferred membership interest when required, our income, FFO, CFFO and ~~administrative~~cash flows could be reduced if the development project does not produce sufficient cash flow to pays its operating expenses, ~~in replacement thereof, they will be paid in cash.~~debt service and preferred return obligations.

Off-Balance Sheet Arrangements

As of ~~September 30, 2017,~~March 31, 2019, we ~~did not~~ have ~~any~~ off-balance sheet arrangements that ~~have had or are reasonably likely to~~may have a material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital resources or capital expenditures. As of ~~September 30, 2017,~~March 31, 2019, we own interests in ~~nine~~fourteen joint ventures that are accounted for under the equity method as we exercise significant influence over, but do not control, the investee.

Cash Flows from Operating Activities

As of ~~September 30, 2017,~~March 31, 2019, we owned indirect equity interests in ~~thirty-five~~forty-eight real estate properties, ~~(twenty-five~~thirty-three consolidated operating properties and ~~ten development properties), twenty-six of which are consolidated for reporting purposes.~~fifteen through preferred equity and mezzanine loan investments. During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2019, net cash provided by operating activities was ~~$33.3~~$10.9 million. After the net ~~income~~loss of ~~$40.1~~$4.4 million was ~~reduced~~adjusted for ~~$21.1~~$18.8 million of non-cash items, net cash provided by operating activities consisted of the following:

·• ~~Distributions~~distributions and preferred returns from unconsolidated joint ventures of ~~7.1~~$2.0 million;
· ~~Increase~~
• a decrease in accounts payable and other accrued liabilities of ~~$14.2 million;~~$5.4 million, offset by:
· ~~Increase in payables due to affiliates of $0.2 million;~~
·• ~~and $7.2 million decrease~~an increase in accounts receivable, prepaid expenses and other ~~assets.~~assets of $0.1 million.

Cash Flows from Investing Activities

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2019, net cash used in investing activities was ~~$230.0~~$27.7 million, primarily due to the following:

·• $~~259.2~~14.6 million used in acquiring ~~consolidated real estate investments;~~
· ~~$38.8 million used in acquiring~~additional investments in unconsolidated joint ventures and notes receivable;
·
• $~~33.5~~6.2 million used on capital expenditures;
·
• $~~0.3~~7.9 million used ~~on purchases~~in purchase of interests from noncontrolling ~~interest;~~interests, partially offset by:
· ~~Partially offset by proceeds of sale of real estate assets of $71.9 million;~~
·•
$~~17.6~~1.0 million of proceeds from the sale of non-depreciable real estate ~~joint venture interest; and~~
investments.
· ~~$12.3 million decrease in restricted cash.~~

Cash Flows from Financing Activities

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2019, net cash provided by financing activities was ~~$249.3~~$11.6 million, primarily due to the following:

· ~~net borrowings of $155.0 million on mortgages payable;~~
·• net proceeds of ~~$57.4~~$20.5 million from borrowings on revolving credit facilities;
• net proceeds of $38.3 million from issuance of ~~common stock;~~
· ~~net borrowings of $63.5 million on mortgages payable;~~
· ~~net proceeds of $103.0 million from issuance~~Units of Series B ~~preferred units;~~Preferred Stock and associated Warrants;
· ~~$10.7 million of contributions from noncontrolling interests;~~
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·• partially offset by ~~$29.9~~$3.8 million paid in cash distributions to common stockholders;
• $1.5 million in distributions paid to our noncontrolling interests;
·
• $~~22.2~~10.2 million paid in cash distributions ~~paid to common stockholders;~~
· ~~$18.6 million paid in cash distributions paid~~ to preferred stockholders;
·
• $~~6.0 million paid in cash distributions paid to common stockholders;~~
· ~~$3.7 million payments of deferred financing costs; and~~
· ~~$6.0 million paid in cash distributions paid to common stockholders;~~
· ~~$1.8~~1.6 million of repayments of our mortgages ~~payable.~~payable;
• $0.1 million increase in deferred financing costs;
• $24.7 million in repayments on revolving credit facilities; and
• $5.1 million paid for the repurchase of Class A common stock.
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Capital Expenditures

The following table summarizes our total capital expenditures for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018 (amounts in thousands):

For the nine months ended September 30,
Three Months Ended
March 31,

2017 2016 2019 2018
New development $ 21,019 $ —
Redevelopment/renovations 10,178 2,540 $ 3,986 $ 3,128
Normally recurring capital expenditures 616 551
Routine capital expenditures 2,328 1,452 454 481
Total capital expenditures $ 33,525 $ 3,992 $ 5,056 $ 4,160

~~We define redevelopment~~Redevelopment and renovation costs asare non-recurring capital expenditures for significant projects that ~~upgrade units or common areas and projects that~~ are revenue enhancing ~~for the nine months ended September 30, 2017. We define routine~~through unit or common area upgrades, such as clubhouse renovations and kitchen remodels. Normally recurring capital expenditures are necessary non-revenue generating improvements that occur on a regular ongoing basis, such as carpet and appliances. Routine capital expenditures are necessary non-revenue generating improvements that extend the useful life of the property and that are ~~incurred at every property~~less frequent in nature, such as roof repairs and ~~exclude development, investment, revenue enhancing and non-recurring capital expenditures.~~asphalt resurfacing.

Funds from Operations and ~~Adjusted~~Core Funds from Operations ~~Attributable to Common Stockholders~~
We believe that funds from operations (“FFO”), as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), and core funds from operations (“CFFO”) are important non-GAAP supplemental measures of operating performance for a REIT.

~~Funds from operations~~FFO attributable to common ~~stockholders (“FFO”),~~shares and units is a non-GAAP financial measure that is widely recognized as a measure of REIT operating performance. We consider FFO to be an appropriate supplemental measure of our operating performance as it is based on a net income analysis of property portfolio performance that excludes non-cash items such as depreciation. The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, which implies that the value of real estate assets diminishes predictably over time. Since real estate values historically rise and fall with market conditions, presentations of operating results for a REIT, using historical accounting for depreciation, could be less informative. We define FFO, consistent with the ~~National Association of Real Estate Investment Trusts, or NAREIT's,~~NAREIT definition, as net income, computed in accordance with GAAP, excluding gains ~~(or losses) from~~or losses on sales of depreciable real estate property, plus depreciation and amortization of real estate assets, plus impairment write-downs of depreciable real estate, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect FFO on the same basis.

~~In addition~~CFFO makes certain adjustments to FFO, ~~we use adjusted funds from operations attributable to common stockholders (“AFFO”). AFFO is a computation made by analysts and investors to measure a real estate company's operating performance by~~ removing the effect of items that do not reflect ongoing property ~~operations. In computing AFFO, we further adjust FFO by adding back certain items that are not added to net income in NAREIT's definition of FFO,~~operations such as stock compensation expense, acquisition ~~and pursuit costs, equity based compensation~~ expenses, and any other non-recurring or non-cash expenses, which are costs that do not relate to the operating performance of our properties, and subtracting recurring capital expenditures (and when calculating the quarterly incentive fee payable to our Manager only, we further adjust FFO to include any realizedunrealized gains or losses on ~~our~~derivatives, losses on extinguishment of debt and debt modification costs (includes prepayment penalties incurred and the write-off of unamortized deferred financing costs and fair market value adjustments of assumed debt), non-cash interest, one-time weather-related costs, gains or losses on sales of non-depreciable real estate ~~investments).~~property, and preferred stock accretion. We believe that CFFO is helpful to investors as a supplemental performance measure because it excludes the effects of certain items which can create significant earnings volatility, but which do not directly relate to our core recurring property operations. As a result, we believe that CFFO can help facilitate comparisons of operating performance between periods and provides a more meaningful predictor of future earnings potential.
During the nine months ended September 30, 2017, we incurred $3.2 million of acquisition and pursuit expense and $3.7 million of disposition expense, of which $2.5 million and $3.1 million, respectively, was our pro rata share of the expense. We incurred $2.1 million of acquisition and pursuit expense and $0.4 million of disposition expense during the nine months ended September 30, 2016, of which $2.5 million was our pro-rata share of expense. The Company adopted ASU 2017-01 which resulted in the capitalization of costs incurred in asset acquisitions purchased after the effective date of January 1, 2017.

Our calculation of ~~AFFO~~CFFO differs from the methodology used for calculating ~~AFFO~~CFFO by certain other REITs and, accordingly, our ~~AFFO~~CFFO may not be comparable to ~~AFFO~~CFFO reported by other REITs. Our management utilizes FFO and ~~AFFO~~CFFO as measures of our operating performance after adjustment for certain non-cash items, such as depreciation and amortization expenses, and acquisition and pursuit costs that are required by GAAP to be expensed but may not necessarily be indicative of current operating performance and that may not accurately compare our operating performance between periods. Furthermore, although FFO ~~AFFO~~and CFFO and other supplemental performance measures are defined in various ways throughout the REIT industry, we also believe that FFO and ~~AFFO~~CFFO may provide us and our stockholders with an additional useful measure to compare our financial performance to certain other REITs. ~~We also use AFFO for purposes of determining the quarterly incentive fee, if any, payable to our Manager.~~
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Neither FFO nor ~~AFFO~~CFFO is equivalent to net income, including net income attributable to common stockholders, or cash generated from operating activities determined in accordance with GAAP. Furthermore, FFO and ~~AFFO~~CFFO do not represent amounts available for management's discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments or uncertainties. Neither FFO nor ~~AFFO~~CFFO should be considered as an alternative to net income, including net income attributable to common stockholders, as an indicator of our operating performance or as an alternative to cash flow from operating activities as a measure of our liquidity.

We have acquired ~~interests in thirteen additional~~four operating properties and ~~three development~~four properties held through preferred equity or mezzanine loan investments ~~and sold five properties~~ subsequent to ~~September 30, 2016.~~March 31, 2018. The results presented in the table below are not directly comparable and should not be considered an indication of our future operating performance.

35
The table below presents our calculation of FFO and ~~AFFO~~CFFO for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018 (in ~~thousands)~~thousands, except per share amounts):

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Net (loss) income attributable to common stockholders $ (12,017 ) $ (2,551 ) $ 563 $ (11,727 )
Common stockholders pro-rata share of:
Real estate depreciation and amortization⁽¹⁾ 10,771 6,197 29,900 19,436
Gain on sale of real estate investments — (4,876 ) (33,945 ) (4,876 )
Gain on sale of real estate joint venture interests, net — — (6,332 ) —
FFO Attributable to Common Stockholders $ (1,246 ) $ (1,230 ) $ (9,814 ) $ 2,833
Common stockholders pro-rata share of:
Amortization of non-cash interest expense 245 472 1,491 620
Acquisition and pursuit costs 15 619 3,039 1,993
Management internalization process expense 818 — 1,629 —
Loss on early extinguishment of debt — 2,269 1,534 2,269
Weather-related losses, net 635 — 635 —
Non-recurring income — — (16 ) —
Non-cash preferred returns and equity in income of unconsolidated real estate joint ventures (493 ) — (980 ) —
Normally recurring capital expenditures⁽²⁾ (387 ) (239 ) (1,011 ) (656 )
Preferred stock accretion 896 271 1,870 560
Non-cash equity compensation 2,900 2,382 12,912 6,600
Non-recurring equity in income of unconsolidated joint ventures — (231 ) — (231 )
AFFO Attributable to Common Stockholders $ 3,383 $ 4,313 $ 11,289 $ 13,988
FFO Attributable to Common Stockholders per share $ (0.05 ) $ (0.06 ) $ (0.38 ) $ 0.14
AFFO Attributable to Common Stockholders per share $ 0.13 $ 0.21 $ 0.44 $ 0.68
Weighted average common shares outstanding 26,474,344 20,909,727 25,852,059 20,711,836
Three Months Ended
March 31,
2019 2018
Net loss attributable to common shares $ (12,093 ) $ (9,425 )
Add back: Net loss attributable to operating partnership units (4,051 ) (2,675 )
Net loss attributable to common shares and units (16,144 ) (12,100 )
Common stockholders and operating partnership units pro-rata share of:
Real estate depreciation and amortization⁽¹⁾ 16,142 14,831
FFO Attributable to Common Shares and Units (2 ) 2,731
Common stockholders and operating partnership units pro-rata share of:
Acquisition and pursuit costs 58 43
Non-cash interest expense 775 461
Unrealized loss on derivatives 1,635 —
Weather-related losses, net — 165
Non-real estate depreciation and amortization 86 64
Gain on sale of non-depreciable real estate investments (679 ) —
Shareholder activism 338 —
Non-cash preferred returns on unconsolidated real estate joint ventures (212 ) (231 )
Non-cash equity compensation 2,391 1,780
Preferred stock accretion 1,887 1,112
CFFO Attributable to Common Shares and Units $ 6,277 $ 6,125

Per Share and Unit Information:
FFO Attributable to Common Shares and Units - diluted $ (0.00 ) $ 0.09
CFFO Attributable to Common Shares and Units - diluted $ 0.20 $ 0.20

Weighted average common shares and units outstanding - diluted 30,885,006 30,995,775

⁽¹⁾The real estate depreciation and amortization amount includes our share of consolidated real estate-related depreciation and amortization of intangibles, less amounts attributable to noncontrolling interests, and our similar estimated share of unconsolidated depreciation and amortization, which is included in earnings of our unconsolidated real estate joint venture investments.
⁽¹⁾ The real estate depreciation and amortization amount includes our share of consolidated real estate-related depreciation and amortization of intangibles, less amounts attributable to noncontrolling interests for partially owned properties, and our similar estimated share of unconsolidated depreciation and amortization, which is included in earnings of our unconsolidated real estate joint venture investments.
⁽²⁾~~Normally recurring capital expenditures exclude development, investment, revenue enhancing and non-recurring capital expenditures.~~

Operating cash flow, FFO and ~~AFFO~~CFFO may also be used to fund all or a portion of certain capitalizable items that are excluded from FFO and ~~AFFO,~~CFFO, such as tenant improvements, building improvements and deferred leasing costs.

Presentation of this information is intended to assist the reader in comparing the sustainability of the operating performance of different REITs, although it should be noted that not all REITs calculate FFO or ~~AFFO~~CFFO the same way, so comparisons with other REITs may not be meaningful.  FFO or ~~AFFO~~CFFO should not be considered as an alternative to net income (loss), or as an indication of our liquidity, nor is either indicative of funds available to fund our cash needs, including our ability to make distributions.  Both FFO and ~~AFFO~~CFFO should be reviewed in connection with other GAAP measurements.

4636

Contractual Obligations

The following table summarizes our contractual obligations as of ~~September 30, 2017~~March 31, 2019 (in thousands) which consisted of mortgage notes secured by our ~~properties.~~properties and revolving credit facilities. At ~~September 30, 2017,~~March 31, 2019, our estimated future required payments on these obligations were:

Remainder of Remainder of
Total 2017 2018-2019 2020-2021 Thereafter Total 2019 2020-2021 2022-2023 Thereafter
Mortgages Payable (Principal) $ 853,565 $ 738 $ 11,738 $ 47,400 $ 793,689 $ 1,213,741 $ 5,727 $ 46,589 $ 312,628 $ 848,797
Estimated Interest Payments on Mortgage Notes Payable, Unsecured Term Loans and Senior Unsecured Notes 191,481 7,560 62,061 59,506 62,354
Revolving Credit Facilities 78,000 11,000 67,000 — —
Estimated Interest Payments on Mortgages Payable and Revolving Credit Facilities 282,479 40,843 100,870 88,827 51,939
Total $ 1,045,046 $ 8,298 $ 73,799 $ 106,906 $ 856,043 $ 1,574,220 $ 57,570 $ 214,459 $ 401,455 $ 900,736

Estimated interest payments are based on the stated rates for mortgage notes payable assuming the interest rate in effect for the most recent quarter remains in effect through the respective maturity dates.

Distributions

Declaration Date

Payable to stockholders
of record as of

Amount

Date Paid
Class A common stock
October 4, 2016 December 23, 2016 $ 0.096667 January 5, 2017
January 6, 2017 January 25, 2017 $ 0.096666 February 3, 2017
January 6, 2017 February 24, 2017 $ 0.096667 March 3, 2017
January 6, 2017 March 24, 2017 $ 0.096667 April 5, 2017
April 7, 2017 April 25, 2017 $ 0.096666 May 5, 2017
April 7, 2017 May 25, 2017 $ 0.096667 June 5, 2017
April 7, 2017 June 23, 2017 $ 0.096667 July 5, 2017
July 10, 2017 July 25, 2017 $ 0.096666 August 4, 2017
August 9, 2017 August 24, 2017 $ 0.096667 September 5, 2017
August 9, 2017 September 25, 2017 $ 0.096667 October 5, 2017
Series A Preferred Stock
December 9, 2016 December 23, 2016 $ 0.515625 January 5, 2017
March 10, 2017 March 24, 2017 $ 0.515625 April 5, 2017
June 9, 2017 June 23, 2017 $ 0.515625 July 5, 2017
September 8, 2017 September 25, 2017 $ 0.515625 October 5, 2017
Series B Preferred Stock
October 4, 2016 December 23, 2016 $ 5.00 January 5, 2017
January 6, 2017 January 25, 2017 $ 5.00 February 3, 2017
January 6, 2017 February 24, 2017 $ 5.00 March 3, 2017
January 6, 2017 March 24, 2017 $ 5.00 April 5, 2017
April 7, 2017 April 25, 2017 $ 5.00 May 5, 2017
April 7, 2017 May 25, 2017 $ 5.00 June 5, 2017
April 7, 2017 June 23, 2017 $ 5.00 July 5, 2017
July 10, 2017 July 25, 2017 $ 5.00 August 4, 2017
July 10, 2017 August 24, 2017 $ 5.00 September 5, 2017
July 10, 2017 September 25, 2017 $ 5.00 October 5, 2017
Series C Preferred Stock
December 9, 2016 December 23, 2016 $ 0.4765625 January 5, 2017
March 10, 2017 March 24, 2017 $ 0.4765625 April 5, 2017
June 9, 2017 June 23, 2017 $ 0.4765625 July 5, 2017
September 8, 2017 September 25, 2017 $ 0.4765625 October 5, 2017
Series D Preferred Stock
December 9, 2016 December 23, 2016 $ 0.3859 January 5, 2017
March 10, 2017 March 24, 2017 $ 0.4453125 April 5, 2017
June 9, 2017 June 23, 2017 $ 0.4453125 July 5, 2017
September 8, 2017 September 25, 2017 $ 0.4453125 October 5, 2017
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Declaration Date

Payable to stockholders
of record as of

Amount

Date Paid
Class A Common Stock
December 7, 2018 December 24, 2018 $ 0.162500 January 4, 2019
March 8, 2019 March 25, 2019 $ 0.162500 April 5, 2019
Class C Common Stock
December 7, 2018 December 24, 2018 $ 0.162500 January 4, 2019
March 8, 2019 March 25, 2019 $ 0.162500 April 5, 2019
Series A Preferred Stock
December 7, 2018 December 24, 2018 $ 0.515625 January 4, 2019
March 8, 2019 March 25, 2019 $ 0.515625 April 5, 2019
Series B Preferred Stock
October 12, 2018 December 24, 2018 $ 5.00 January 4, 2019
January 11, 2019 January 25, 2019 $ 5.00 February 5, 2019
January 11, 2019 February 25, 2019 $ 5.00 March 5, 2019
January 11, 2019 March 25, 2019 $ 5.00 April 5, 2019
Series C Preferred Stock
December 7, 2018 December 24, 2018 $ 0.4765625 January 4, 2019
March 8, 2019 March 25, 2019 $ 0.4765625 April 5, 2019
Series D Preferred Stock
December 7, 2018 December 24, 2018 $ 0.4453125 January 4, 2019
March 8, 2019 March 25, 2019 $ 0.4453125 April 5, 2019

A portion of each dividend may constitute a return of capital for tax purposes. There is no assurance that the Company will continue to declare dividends or at this rate.

Our Board will determine the amount of dividends to be paid to our stockholders. The Board’s determination will be based on a number of factors, including funds available from operations, our capital expenditure requirements and the annual distribution requirements necessary to maintain our REIT status under the Internal Revenue Code. As a result, our distribution rate and payment frequency may vary from time to time. However, to qualify as a REIT for tax purposes, we must make distributions equal to at least 90% of our “REIT taxable income” each year. ~~Especially during the early stages of our operations, we may declare distributions in excess of funds from operations.~~
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Distributions paid ~~for the nine months ended September 30, 2017 and 2016, respectively,~~ were funded from cash provided by operating activities except with respect to ~~$9.6~~$4.7 million and $5.5 million for the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2019 and 2018, respectively, which was funded from sales of real estate, borrowings, and/or proceeds from our equity offerings.

Nine Months Ended September 30,
2017 2016
(In thousands)
Cash provided by operating activities $ 33,261 $ 24,260

Cash distributions to preferred shareholders $ (18,550 ) $ (5,647 )
Cash distributions to common shareholders (22,235 ) (18,223 )
Cash distributions to noncontrolling interests, excluding $27.9 million from sale of real estate investments (2,031 ) (2,844 )
Total distributions (42,816 ) (26,714 )

(Shortfall) excess $ (9,555 ) $ (2,454 )

Proceeds from sale of joint venture interests $ 17,603 $ —
Proceeds from sale of real estate assets — $ 36,675
Proceeds from sale of real estate investments, net of noncontrolling distribution of $27.9 million $ 44,028 $ —

Three Months Ended
March 31,

2019 2018
(in thousands)

Cash provided by operating activities $ 10,866 $ 6,102

Cash distributions to preferred shareholders $ (10,168 ) $ (8,143 )
Cash distributions to common shareholders (3,832 ) (2,348 )
Cash distributions to noncontrolling interests (1,533 ) (1,146 )
Total distributions (15,533 ) (11,637 )

Shortfall $ (4,667 ) $ (5,535 )

Proceeds from sale of real estate investments $ 952 $ —

Significant Accounting Policies and Critical Accounting Estimates

Our significant accounting policies and critical accounting estimates are disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2018 and Note 2 “Basis of Presentation and Summary of Significant Accounting Policies” to the interim Consolidated Financial Statements.

Subsequent Events

Other than the items disclosed in Note ~~13,~~15, “Subsequent Events” to our interim Consolidated Financial Statements for the period ended ~~September 30, 2017,~~March 31, 2019, no material events have occurred that required recognition or disclosure in these financial statements. See Note 1315 to our interim Consolidated Financial Statements for discussion.
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Item 3.  Quantitative and Qualitative Disclosures about Market Risk

We are exposed to interest rate risk primarily through borrowing activities. There is inherent roll-over risk for borrowings as they mature and are renewed at current market rates. The extent of this risk is not quantifiable or predictable because of the variability of future interest rates and our future financing requirements. We are not subject to foreign exchange rates or commodity price risk, and all of our financial instruments were entered into for other than trading purposes.

Our interest rate risk is monitored using a variety of techniques. The table below presents the principal payments and the weighted average interest rates on outstanding debt, by year of expected maturity, to evaluate the expected cash flows and sensitivity to interest rate changes.

~~($ in thousands)~~
2017 2018 2019 2020 2021 Thereafter Total 2019 2020 2021 2022 2023 Thereafter Total
Mortgage Notes Payable $ 738 $ 4,086 $ 7,652 $ 35,227 $ 12,173 $ 793,689 $ 853,565 $ 5,727 $ 30,729 $ 15,860 $ 91,409 $ 221,219 $ 848,797 $ 1,213,741
Average Interest Rate 3.87 % 3.62 % 3.61 % 3.62 % 3.65 % 3.61 % 3.61 %
Weighted Average Interest Rate 4.15 % 3.68 % 4.07 % 3.72 % 4.08 % 4.16 % 4.10 %

Revolving Credit Facilities $ 11,000 $ 67,000 $ - $ - $ - $ - $ 78,000
Weighted Average Interest Rate 5.99 % 4.83 % - - - - 5.00 %

The fair value ~~(in thousands)~~of mortgages payable is estimated at ~~$856.0~~$1,219.1 million ~~for mortgages payable~~ as of ~~September 30, 2017.~~March 31, 2019.

The table above incorporates those exposures that exist as of ~~September 30, 2017;~~March 31, 2019; it does not consider those exposures or positions which could arise after that date. As a result, our ultimate realized gain or loss with respect to interest rate fluctuations will depend on the exposures that arise during the period and interest rates.

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As of ~~September 30, 2017,~~March 31, 2019, a 100 basis point increase or decrease in interest rates on the portion of our debt bearing interest at ~~variable~~floating rates would result in an increase ~~or decrease~~ in interest expense of approximately ~~$1.0 million~~$56,000 or decrease by $1,106,000, respectively, for the quarter ended ~~September 30, 2017.~~March 31, 2019.
As of March 31, 2019, we had twelve interest rate caps, which are not accounted for as hedges, that we primarily use as part of our interest rate risk management strategy. Our interest rate caps effectively limit our exposure to interest rate risk by providing a ceiling on the underlying floating interest rates of our tax-exempt floating rate debt.

Item 4.  Controls and Procedures

Disclosure Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) and Rule 15d-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), our management, including our Chief Executive Officer and Chief ~~Accounting~~Financial Officer, evaluated, as of ~~September 30, 2017,~~March 31, 2019, the effectiveness of our disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e) and Rule 15d-15(e). Based on that evaluation, our Chief Executive Officer and Chief ~~Accounting~~Financial Officer concluded that our disclosure controls and procedures were effective as of ~~September 30, 2017,~~March 31, 2019 to provide reasonable assurance that information required to be disclosed by us in this report filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the rules and forms of the Exchange Act and is accumulated and communicated to management, including the Chief Executive Officer and Chief ~~Accounting~~Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

We believe, however, that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls systems are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud or error, if any, within a company have been detected.

Changes in Internal Control over Financial Reporting

There has been no change in internal control over financial reporting that occurred during the three months ended ~~September 30, 2017~~March 31, 2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

Other than the following, there have been no material changes to our potential risks and uncertainties presented in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the twelve months ended December 31, ~~2016~~2018 filed with the SEC on February ~~22, 2017.~~27, 2019.

Your interests could be diluted by the incurrence of additional debt, the issuance of additional shares of preferred stock, including additional shares of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock (together the “Preferred Stock”) and by other transactions.

As of ~~September 30, 2017,~~March 31, 2019, our total ~~long-term~~ indebtedness was approximately ~~$853.6~~$1,292 million, and we may incur significant additional debt in the future. The Preferred Stock is subordinate to all of our existing and future debt and liabilities and those of our subsidiaries. Our future debt may include restrictions on our ability to pay dividends to preferred stockholders in the event of a default under the debt facilities or under other circumstances. Our charter currently authorizes the issuance of up to 250,000,000 shares of preferred stock in one or more classes or series, and as of March 31, 2019, the ~~date~~number of ~~this filing, we have issued~~preferred shares outstanding was as follows: 5,721,460 shares of Series A Preferred Stock, ~~(146,460 of which have been issued in the Series A ATM Offering), 151,610~~349,423 shares of Series B Preferred Stock, 2,323,750 shares of Series C Preferred Stock and 2,850,602 shares of Series D Preferred Stock. The issuance of additional preferred stock on parity with or senior to the Preferred Stock would dilute the interests of the holders of shares of Preferred Stock, and any issuance of preferred stock senior to the Preferred Stock or of additional indebtedness could affect our ability to pay dividends on, redeem or pay the liquidation preference on the Preferred Stock. We may issue preferred stock on parity with the Preferred Stock without the consent of the holders of the Preferred Stock. Other than the Asset Coverage Ratio, our letter agreement with Cetera Financial Group, Inc. pertaining to our Series B Preferred Stock that requires us to maintain a preferred dividend coverage ratio and the right of holders to cause us to redeem the Series A Preferred Stock and Series C Preferred Stock upon a Change of Control/Delisting, none of the provisions relating to the Preferred Stock relate to or limit our indebtedness or afford the holders of shares of Preferred Stock protection in the event of a highly leveraged or other transaction, including a merger or the sale, lease or conveyance of all or substantially all our assets or business, that might adversely affect the holders of shares of Preferred Stock.
~~Risks Relating to the Internalization Transaction~~
The Issuances of shares of our Class C Common Stock in connection with the Internalization, and the Issuances of shares of our Class A Common Stock upon redemption of OP Units and/or conversion of shares of our Class C Common Stock issued in connection with the Internalization, will have a dilutive effect and will reduce the voting power and relative percentage interests of current holders of our Class A Common Stockholders in our earnings and market value.
The issuance of 76,603 shares of our Class C Common Stock in connection with the Internalization will have a dilutive effect and will reduce the voting power and relative percentage interests of current Class A Common Stockholders in our earnings and market value.
Additionally, part of the Internalization Consideration consists of 3,753,593 OP Units, which may have a dilutive effect on the voting power and percentage interests of our current Class A Common Stockholders. Commencing on the one-year anniversary of the Closing, each OP Unit may be tendered for redemption, at the holder’s option and subject to the terms and conditions set forth in the limited partnership agreement of our Operating Partnership, for cash equal to the average closing price of Class A Common Stock for the ten (10) consecutive trading days immediately preceding the date we receive a notice of redemption, or, at our sole option, for shares of Class A Common Stock on a one-for-one basis, in lieu of cash. If the recipients of OP Units in the Internalization exercise their redemption rights and part or all of their outstanding OP Units are redeemed for shares of our Class A Common Stock, such redemption will have a dilutive effect on our common stock and reduce the relative percentage interests of existing common stockholders in our earnings, voting power and market value.
Future sales of our Class A Common Stock by the Contributors may adversely affect the market price of our Class A Common Stock. These sales also might make it more difficult for us to sell equity securities in the future at a time and price we deem appropriate. Upon consummation of the Internalization, our Operating Partnership will issue a number of OP Units to the Contributors as Internalization Consideration, which OP Units may be redeemed in shares of our Class A Common Stock rather than cash, at the Company’s option. In addition, shares of Class C Common Stock will be convertible, at the holder’s option (at any time and from time to time), into one (1) fully-paid and non-assessable share of our Class A Common Stock, and upon the occurrence of certain transfers of OP Units or shares of Class C Common Stock and similar events, will convert automatically into one (1) fully-paid and non-assessable share of our Class A Common Stock. Sales of a substantial number of shares of our Class A Common Stock by the Contributors, the perception or expectation that such sales may occur, or sales of shares of our Class A Common Stock to cover tax obligations (some of which may occur shortly after the closing of the Internalization), could have a material adverse effect on our business, financial condition, results of operations and the prevailing market price for shares of our Class A Common Stock.
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The Internalization was negotiated between the Special Committee, which is comprised solely of independent and disinterested members of our board of directors, the Manager, which is affiliated with certain of our officers and directors, and the Contributors, including R. Ramin Kamfar, our Chairman, President and Chief Executive Officer, Gary Kachadurian, one of our directors, and certain other officers.
The Internalization was negotiated with the Manager, which is affiliated with certain of our officers and directors, and the Contributors, including Messrs. Kamfar and Kachadurian, Michael L. Konig, our General Counsel and Secretary, and Christopher A. Vohs, our Chief Accounting Officer and Treasurer. As a result, those officers and directors may have different interests than the Company as a whole. This potential conflict would not exist in the case of a transaction negotiated with unaffiliated third parties. Moreover, if the Manager or any Contributor breaches any of the representations, warranties or covenants made by it in the Contribution Agreement, we may choose not to enforce, or to enforce less vigorously, our rights because of our desire to maintain our ongoing relationship with the Manager, the Contributors and the interests of certain of our directors and officers. Moreover, the representations, warranties, covenants and indemnities in the Contribution Agreement are subject to limitations and qualifiers, which may also limit our ability to enforce any remedy under the Contribution Agreement.
~~Certain of our directors and executive officers have interests in the Internalization that are different from, and may potentially conflict with, the interests of us and our stockholders.~~
Certain of our directors and executive officers have interests in the Internalization that may be different from, or in addition to, the interests of our stockholders generally and that may create potential conflicts of interest, including (i) the payment of Internalization Consideration in connection with the Internalization directly or indirectly to certain of these individuals, including Messrs. Kamfar, Kachadurian, and Konig, and the entry by the applicable individuals into arrangements relating to the payment of that consideration, and (ii) the entry by Bluerock REIT Operator, LLC, a wholly owned subsidiary of our Manager (“Manager Sub”), in its post-Closing capacity as an indirect subsidiary of the Company, into employment agreements with Messrs. Kamfar and Vohs as well as James Babb, Jordan Ruddy and Ryan MacDonald, who are executive officers and principals of our Manager, and into a services agreement with Mr. Konig through Konig & Associates, all of which will become effective upon consummation of the Internalization.
In addition, Mr. Kamfar owns a controlling interest in Bluerock Real Estate, L.L.C. (“BRRE”), the sole managing member of our Manager; Messrs. Babb, MacDonald, Ruddy, Vohs and Konig are also executive officers or principals of our Manager; and Mr. Kachadurian is Vice Chairman of the Manager. The respective roles of these individuals in the Manager may create additional conflicts of interest in respect of the Internalization and the related transactions.
~~Following the Internalization, Mr. Kamfar will control a significant number of votes in any matter presented to our Class A Common Stockholders for approval, including the election of directors.~~
Although, the 76,603 shares of Class C Common Stock issued in connection with the Internalization is not designed to provide for disproportionate voting rights, the issuance of the Class C Common Stock resulted in Mr. Kamfar controlling significant voting power in matters submitted to a vote of our Class A Common Stockholders as a result of his beneficial ownership of Class C Common Stock (which gives him voting power equal to the economic interest in the Company issued to BRRE in the form of OP Units as if all of those OP Units were redeemed for shares of Class A Common Stock), including the election of directors. Mr. Kamfar may have interests that differ from our other stockholders, including by reason of his direct or indirect interest in our Operating Partnership, and may accordingly vote in ways that may not be consistent with the interests of those other stockholders.
~~Our net income, FFO and AFFO may decrease in the near term as a result of the Internalization.~~
We will expense all cash and non-cash costs involved in the Internalization. As a result, our statement of operations and FFO will be negatively impacted, driven predominately by the non-cash charges related to the issuance of OP Units and shares of Class C Common Stock as Internalization Consideration and, to a lesser extent, other transaction-related costs. In addition, while we will no longer effectively bear the costs of the various fees and expense reimbursements previously paid to the Manager after we became internally managed pursuant to the Internalization, our expenses will include the compensation and benefits of our executive officers and the employees of Manager Sub, which will then be our indirect subsidiary, as well as overhead previously paid by the Manager or its affiliates in managing our business and operations. Furthermore, these employees and consultants of Manager Sub will be providing us services historically provided by the Manager. There are no assurances that, following the Internalization, these employees and consultants will be able or incentivized to provide services at the same level or for the same costs as were previously provided to us by the Manager, and there may be other unforeseen costs, expenses and difficulties associated with operating as an internally managed company. If the expenses we assume as a result of the Internalization are higher than the fees that we currently pay the Manager or otherwise higher than we anticipate, we may not realize the anticipated cost savings and other benefits from the Internalization and our net income, FFO and AFFO could decrease further, which could have a material adverse effect on our business, financial condition and results of operations.
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~~The Internalization may not be accretive to our stockholders.~~
The Internalization may not be accretive to our stockholders. While it is intended that the Internalization be accretive to our net income, earnings and AFFO, there can be no assurance that this will be the case, as, among other things, the expenses we assume as a result of the Internalization may be higher than we anticipate and we may not achieve our anticipated cost savings from the Internalization. The failure of the Internalization to be accretive to our stockholders could have a material adverse effect on our business, financial condition and results of operations.
~~We may not manage the Internalization effectively or realize its anticipated benefits.~~
We may not manage the Internalization effectively. The Internalization could be a time-consuming and costly process and we may encounter potential difficulties in the integration process including, among other things:
· the inability to successfully internalize corporate management in a manner that permits us to achieve the cost savings anticipated to result from the Internalization, which could result in the anticipated benefits of the Internalization not being realized in the timeframe currently anticipated or at all;
· ~~the risk of not realizing all of the anticipated operational efficiencies or other anticipated strategic and financial benefits of the Internalization within the expected timeframe or at all;~~
· ~~potential unknown liabilities and unforeseen increased expenses, delays or regulatory conditions associated with the Internalization; and~~
· ~~performance shortfalls as a result of the diversion of management’s attention caused by completing the Internalization and integrating the companies’ operations.~~
For all these reasons, you should be aware that it is possible that the Internalization process could result in the distraction of our management, the disruption of our ongoing business or inconsistencies in our operations, services, standards, controls, procedures and policies, any of which could adversely affect our ability to maintain relationships with employees or third-parties to achieve the anticipated benefits of the Internalization, or could otherwise adversely affect our business and financial results. Therefore, the failure to plan and manage the Internalization effectively could have a material adverse effect on our business, financial condition and results of operations.
We depend on our key executives and other employees of an affiliate of the Manager. There is no guarantee that such key executives and employees will remain employed or engaged by us for any specified period of time, and will not engage in competitive activities if they cease to be employed with or engaged by us.
We depend on the key executives and employees of an affiliate of the Manager. It is expected that, following the consummation of the Internalization, we will continue to substantially depend on the services of Messrs. Kamfar, Babb, MacDonald, Ruddy and Vohs, who have each entered into employment agreements with Manager Sub, which will then be an indirect subsidiary of the Company, and Mr. Konig, who has entered into a services agreement with Manager Sub through Konig & Associates on substantially the same terms as the employment agreements. Each such agreement will become effective upon Closing, and will have an initial term through and including December 31, 2020. These agreements have been structured to incentivize our executives to stay through the end of their initial terms and, subject to the Company’s approval, to extend the terms of service for successive one-year terms. Nevertheless, as is presently the case under the Management Agreement with the Manager, the departure or the loss of the services of any of these individuals, or other senior management personnel or employees, following the Internalization could have a material adverse effect on our business, financial condition, results of operations and ability to effectively operate our business.
Further, the employment and services agreements entered into by Manager Sub with each of Messrs. Kamfar, Babb, MacDonald, Ruddy, Vohs and Konig contain certain restrictions on these executives, including a restriction on engaging in activities that are deemed competitive to our business. Although we believe these covenants to be enforceable under current law in the states in which we do business, there can be no guarantee that if our executives were to breach these covenants and engage in competitive activities, a court of law would fully enforce these restrictions. If these executives were to terminate their employment or service relationship (as applicable) with Manager Sub and engage in competitive activities, such activities could have a material adverse effect on our business, financial condition and results of operations.
~~Mr. Kamfar and certain other executive officers and members of our senior management team will have competing demands on their time and attention.~~
Mr. Kamfar, who continues to serve as our Chief Executive Officer and as Chairman of our board of directors following the Internalization, and Messrs. Babb, Ruddy, MacDonald and Konig, will continue to have competing demands on their respective time and attention following the Internalization, principally with respect to the provision of services to certain outside entities affiliated with BRRE. Such competing demands are not expected to be different from those that presently exist, but there is no assurance those demands will not increase and may result in these individuals devoting time to such outside entities in a manner that could adversely affect our business. Under their respective employment or services agreements (as applicable), Mr. Kamfar and our other executive officers are permitted to devote time to certain outside activities, so long as those duties and activities do not unreasonably interfere with the performance of their respective duties to us.
52
~~We may be exposed to risks to which we have not historically been exposed, including liabilities with respect to the assets acquired from the Manager.~~
The Internalization will expose us to risks to which we have not historically been exposed. Pursuant to the Contribution Agreement, we will incur liabilities with respect to the assets acquired from the Manager and certain of its affiliates. In addition, our overhead will increase as a result of our becoming internally managed, as the responsibility for overhead relating to management of our business currently is borne by the Manager, and will become our responsibility following the Internalization. In addition, in our formerly externally-advised structure, we did not directly employ any employees. As a result of the Internalization, we indirectly, through Manager Sub, employ persons who are currently associated with the Manager or its affiliates. As their employer, we will indirectly, through Manager Sub, be subject to those potential liabilities that are commonly faced by employers, such as workers’ disability and compensation claims, potential labor disputes and other employee-related liabilities and grievances, and we will bear the costs of the establishment and maintenance of employee benefit plans, if established. Furthermore, these employees will be providing us services historically provided by the Manager, which will be provided with the support of the Administrative Services Agreement. There are no assurances that, following the Internalization, these employees of Manager Sub will be able to provide us with the same level of services as were previously provided to us by the Manager, and there may be other unforeseen costs, expenses and difficulties associated with operating as an internally managed company.
The representations, warranties, covenants and indemnities in the Contribution Agreement and related agreements are subject to limitations and qualifiers, which may limit our ability to enforce any remedy under these agreements.
The representations, warranties, covenants and indemnities in the Contribution Agreement, the related Administrative Services Agreement and other agreements related to the Internalization are subject to limitations and qualifiers, which may limit our ability to enforce any remedy under these agreements.  These include, without limitation, limitations on liability and materiality qualifiers on certain representations and covenants.
~~Conflicts of interest may exist or could arise in the future with our Operating Partnership and its limited partners, which may impede business decisions that could benefit our stockholders.~~
Following the implementation of our Company’s structure as a result of the Internalization, conflicts of interest may exist or could arise as a result of the relationships between us and our affiliates, on the one hand, and our Operating Partnership or any member thereof, on the other. Our directors and officers have duties to our Company and our stockholders under applicable Maryland law in connection with their management of our Company. At the same time, we, as general partner of our Operating Partnership, have fiduciary duties to our Operating Partnership and to its limited partners under Delaware law in connection with the management of our Operating Partnership. Our duties to our Operating Partnership and its limited partners as the general partner may come into conflict with the duties of our directors and officers to our Company and our stockholders. These conflicts may be resolved in a manner that is not in the best interest of our stockholders.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6.  Exhibits

~~2.1~~ Contribution and Sale Agreement, dated as of August 3, 2017, by and among Bluerock Residential Growth REIT, Inc., Bluerock Residential Holdings, L.P., and Bluerock TRS Holdings, LLC, BRG Manager, LLC, Bluerock REIT Operator, LLC, Bluerock Real Estate, L.L.C., Konig & Associates, LLC., Jenco Business Advisors, Inc., The Kachadurian Group LLC, James G. Babb, III, Jordan B. Ruddy, and Ryan S. MacDonald, incorporated herein by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed August 4, 2017
~~2.2~~ Amendment No. 1 to Contribution and Sale Agreement, dated as of August 9, 2017, by and among Bluerock Residential Growth REIT, Inc., Bluerock Residential Holdings, L.P., and Bluerock TRS Holdings, LLC, BRG Manager, LLC, Bluerock REIT Operator, LLC, Bluerock Real Estate, L.L.C., Konig & Associates, LLC., Jenco Business Advisors, Inc., The Kachadurian Group LLC, James G. Babb, III, Jordan B. Ruddy, and Ryan S. MacDonald, incorporated herein by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed August 15, 2017
~~3.1~~ ~~Articles Supplementary of the Company, dated July 20, 2017, incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed July 21, 2017~~
~~10.1~~ Amendment to Dealer Manager Agreement by and among Bluerock Residential Growth REIT, Inc., Bluerock Residential Holdings, L.P. and Bluerock Capital Markets, LLC, dated July 21, 2017, incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed July 21, 2017
~~10.2~~ Amendment to Amended and Restated Warrant Agreement by and between Bluerock Residential Growth REIT, Inc., Computershare Inc. and Computershare Trust Company N.A., dated July 21, 2017, incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed July 21, 2017
~~10.3~~ Seventh Amendment to Amended and Restated Agreement of Limited Partnership of Bluerock Residential Holdings, L.P., dated July 21, 2017, incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed July 21, 2017
~~10.4~~ Employment Agreement, dated as of August 3, 2017, by and between Bluerock Residential Growth REIT, Inc., Bluerock Residential Holdings, L.P., Bluerock REIT Operator, LLC, and R. Ramin Kamfar, incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed August 4, 2017
~~10.5~~ Employment Agreement, dated as of August 3, 2017, by and between Bluerock Residential Growth REIT, Inc., Bluerock Residential Holdings, L.P., Bluerock REIT Operator, LLC, and James G. Babb, III, incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed August 4, 2017
~~10.6~~ Employment Agreement, dated as of August 3, 2017, by and between Bluerock Residential Growth REIT, Inc., Bluerock Residential Holdings, L.P., Bluerock REIT Operator, LLC, and Ryan S. MacDonald, incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed August 4, 2017
~~10.7~~ Employment Agreement, dated as of August 3, 2017, by and between Bluerock Residential Growth REIT, Inc., Bluerock Residential Holdings, L.P., Bluerock REIT Operator, LLC, and Jordan B. Ruddy, incorporated herein by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed August 4, 2017
~~10.8~~ Employment Agreement, dated as of August 3, 2017, by and between Bluerock Residential Growth REIT, Inc., Bluerock Residential Holdings, L.P., Bluerock REIT Operator, LLC, and Christopher J. Vohs, incorporated herein by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed August 4, 2017
~~10.9~~ Services Agreement, dated as of August 3, 2017, by and between Bluerock Residential Growth REIT, Inc., Bluerock Residential Holdings, L.P., Bluerock REIT Operator, LLC, Konig & Associates, LLC and Michael L. Konig, incorporated herein by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed August 4, 2017
~~10.10~~ Purchase and Sale Agreement by and between Bluerock Real Estate, L.L.C., CH Realty VII – Carroll MF Orlando Hunter’s Creek, L.L.C., and CH Realty VII – Carroll MF Orlando Metrowest, L.L.C., dated as of September 7, 2017, incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed September 20, 2017
~~10.11~~ Assignment of Purchase and Sale Agreement by and between Bluerock Real Estate, L.L.C. and Bluerock Residential Growth REIT, Inc., through its direct and indirect subsidiaries, BR Hunters Creek, LLC and BR MetroWest, LLC, dated as of September 15, 2017, incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed September 20, 2017
~~10.12~~ Credit Agreement by and among Bluerock Residential Holdings, L.P. as Parent Borrower, the other borrowers from time to time party thereto, Bluerock Residential Growth REIT, Inc. as Guarantor, KeyBank National Association, and the other lenders party thereto, dated as of October 4, 2017, incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed October 11, 2017
54
~~10.13~~ Guaranty by Bluerock Residential Growth REIT, Inc. to and for the benefit of KeyBank National Association, dated as of October 4, 2017, incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed October 11, 2017
~~10.14~~ 50,000,000 Note by Bluerock Residential Holdings, L.P. to and for the benefit of KeyBank National Association, dated as of October 4, 2017, incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed October 11, 2017
~~10.15~~ $50,000,000 Note by Bluerock Residential Holdings, L.P. to and for the benefit of JPMorgan Chase Bank, N.A., dated as of October 4, 2017, incorporated herein by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed October 11, 2017
~~10.16~~ $50,000,000 Note by Bluerock Residential Holdings, L.P. to and for the benefit of Bank of America, N.A., dated as of October 4, 2017, incorporated herein by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed October 11, 2017
~~10.17~~ Subordination of Advisory Contract by Bluerock Residential Holdings, L.P. and Bluerock Residential Growth REIT, Inc. to and for the benefit of KeyBank National Association, dated as of October 4, 2017, incorporated herein by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed October 11, 2017
~~10.18~~ ~~Form of Second Amended and Restated 2014 Equity Incentive Plan for Individuals, incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed October 19, 2017~~
~~10.19~~ ~~Form of Second Amended and Restated 2014 Equity Incentive Plan for Entities, incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed October 19, 2017~~
~~10.20~~ ~~Second Amended and Restated 2014 Equity Incentive Plan for Individuals, incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed October 31, 2017~~
~~10.21~~ ~~Second Amended and Restated 2014 Equity Incentive Plan for Entities, incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed October 31, 2017~~
~~10.22~~ A&R Employment Agreement, dated as of August 3, 2017, by and between Bluerock Residential Growth REIT, Inc., Bluerock Residential Holdings, L.P., Bluerock REIT Operator, LLC, and R. Ramin Kamfar, incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed October 31, 2017
~~10.23~~ A&R Employment Agreement, dated as of August 3, 2017, by and between Bluerock Residential Growth REIT, Inc., Bluerock Residential Holdings, L.P., Bluerock REIT Operator, LLC, and James G. Babb, III, incorporated herein by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed October 31, 2017
~~10.24~~ A&R Employment Agreement, dated as of August 3, 2017, by and between Bluerock Residential Growth REIT, Inc., Bluerock Residential Holdings, L.P., Bluerock REIT Operator, LLC, and Ryan S. MacDonald, incorporated herein by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed October 31, 2017
~~10.25~~ A&R Employment Agreement, dated as of August 3, 2017, by and between Bluerock Residential Growth REIT, Inc., Bluerock Residential Holdings, L.P., Bluerock REIT Operator, LLC, and Jordan B. Ruddy, incorporated herein by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed October 31, 2017
~~10.26~~ A&R Employment Agreement, dated as of August 3, 2017, by and between Bluerock Residential Growth REIT, Inc., Bluerock Residential Holdings, L.P., Bluerock REIT Operator, LLC, and Christopher J. Vohs, incorporated herein by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K filed October 31, 2017
~~10.27~~ A&R Services Agreement, dated as of August 3, 2017, by and between Bluerock Residential Growth REIT, Inc., Bluerock Residential Holdings, L.P., Bluerock REIT Operator, LLC, Konig & Associates, LLC and Michael L. Konig, incorporated herein by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K filed October 31, 2017
~~23.1~~ ~~Consent of BDO USA, LLP, incorporated herein by reference to Exhibit 23.1 to the Company’s Current Report on Form 8-K/A filed August 9, 2017~~
31.1 Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2 Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1 Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002.

55
99.1 Press Release dated ~~August 4, 2017,~~February 14, 2019, incorporated ~~herein~~ by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed ~~August 4, 2017~~February 14, 2019

99.2 ~~Presentation,~~Supplemental Financial Information, incorporated ~~herein~~ by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K filed ~~August 4, 2017~~February 14, 2019

99.3 ~~Press Release,~~Presentation dated ~~August 8, 2017,~~February 27, 2019, incorporated ~~herein~~ by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed ~~August 8, 2017~~February 27, 2019
~~99.4~~ ~~Supplemental Financial Information, incorporated herein by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K filed August 8, 2017~~
~~99.5~~ ~~Press Release, dated October 4, 2017, incorporated herein by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed October 4, 2017~~
~~99.6~~ ~~Supplement to Proxy Statement, dated October 19, 2017, incorporated herein by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed October 19, 2017~~

101.1 The following information from the Company’s quarterly report on Form 10-Q for the quarter ended ~~September 30, 2017,~~March 31, 2019, formatted in XBRL (eXtensible Business Reporting Language): (i) Balance Sheets; (ii) Statements of Operations; (iii) Statement of Stockholders’ Equity; (iv) Statements of Cash Flows.

5641

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

BLUEROCK RESIDENTIAL GROWTH REIT, INC.

DATE: ~~November 8, 2017~~May 9, 2019 /s/ R. Ramin Kamfar
R. Ramin Kamfar
Chief Executive Officer
(Principal Executive Officer)

DATE: ~~November 8, 2017~~May 9, 2019 /s/ Christopher J. Vohs
Christopher J. Vohs
Chief Financial Officer and Treasurer
(Principal Financial Officer, Principal Accounting Officer)

5742

	(Unaudited)
	March 31, 2019			December 31, 2018
ASSETS
Net Real Estate Investments
Land	$	200,114		$	200,385
Buildings and improvements		1,548,167			1,546,244
Furniture, fixtures and equipment		58,422			55,050
Construction in progress		659			989
Total Gross Real Estate Investments		1,807,362			1,802,668
Accumulated depreciation		(124,605	)		(108,911	)
Total Net Real Estate Investments		1,682,757			1,693,757
Cash and cash equivalents		24,337			24,775
Restricted cash		22,659			27,469
Notes and accrued interest receivable from related parties		174,068			164,084
Due from affiliates		3,123			2,854
Accounts receivable, prepaids and other assets		12,332			14,395
Preferred equity investments and investments in unconsolidated real estate joint ventures		93,728			89,033
In-place lease intangible assets, net		443			1,768
Total Assets	$	2,013,447		$	2,018,135

LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY
Mortgages payable	$	1,204,905		$	1,206,136
Revolving credit facilities		78,000			82,209
Accounts payable		1,215			1,486
Other accrued liabilities		25,444			31,690
Due to affiliates		798			726
Distributions payable		12,317			12,073
Total Liabilities		1,322,679			1,334,320
8.250% Series A Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share, 10,875,000 shares authorized; 5,721,460 shares issued and outstanding as of March 31, 2019 and December 31, 2018		139,698			139,545
6.000% Series B Redeemable Preferred Stock, liquidation preference $1,000 per share, 1,225,000 shares authorized; 349,423 and 306,009 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively		311,555			272,842
7.625% Series C Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share, 4,000,000 shares authorized; 2,323,750 shares issued and outstanding as of March 31, 2019 and December 31, 2018		56,545			56,485
Equity
Stockholders’ Equity
Preferred stock, $0.01 par value, 229,900,000 shares authorized; no shares issued and outstanding		—			—
7.125% Series D Cumulative Preferred Stock, liquidation preference $25.00 per share, 4,000,000 shares authorized; 2,850,602 shares issued and outstanding as of March 31, 2019 and December 31, 2018		68,705			68,705
Common stock - Class A, $0.01 par value, 747,509,582 shares authorized; 22,861,084 and 23,322,211 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively		228			233
Common stock - Class C, $0.01 par value, 76,603 shares authorized; 76,603 shares issued and outstanding as of March 31, 2019 and December 31, 2018		1			1
Additional paid-in-capital		300,407			307,938
Distributions in excess of cumulative earnings		(234,363	)		(218,531	)
Total Stockholders’ Equity		134,978			158,346
Noncontrolling Interests
Operating partnership units		21,143			27,613
Partially owned properties		26,849			28,984
Total Noncontrolling Interests		47,992			56,597
Total Equity		182,970			214,943
TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY	$	2,013,447		$	2,018,135

	(Unaudited)
	September 30, 2017			December 31, 2016
ASSETS
Net Real Estate Investments
Land	$	157,420		$	142,274
Buildings and improvements		1,015,262			848,445
Furniture, fixtures and equipment		32,991			27,617
Construction in progress		32,696			10,878
Total Gross Real Estate Investments		1,238,369			1,029,214
Accumulated depreciation		(44,171	)		(42,137	)
Total Net Real Estate Investments		1,194,198			987,077
Cash and cash equivalents		134,632			82,047
Restricted cash		32,653			45,402
Notes and accrued interest receivable from related parties		56,771			21,267
Due from affiliates		1,756			948
Accounts receivable, prepaid and other assets		15,945			8,610
Preferred equity investments and investments in unconsolidated real estate joint ventures		94,912			91,132
In-place lease intangible assets, net		4,330			4,839
Total Assets	$	1,535,197		$	1,241,322

LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY
Mortgages payable	$	847,162		$	710,575
Accounts payable		3,158			1,669
Other accrued liabilities		25,159			13,431
Due to affiliates		3,269			2,409
Distributions payable		8,580			7,328
Total Liabilities		887,328			735,412
8.250% Series A Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share, 10,875,000 shares authorized, and 5,721,460 issued and outstanding as of September 30, 2017 and December 31, 2016		138,622			138,316
Series B Redeemable Preferred Stock, liquidation preference $1,000 per share, 225,000 shares authorized, 137,708 and 21,482 issued and outstanding as of September 30, 2017 and December 31, 2016, respectively		120,925			18,938
7.6250% Series C Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share, 4,000,000 shares authorized, 2,323,750 issued and outstanding as of September 30, 2017 and December 31, 2016		56,127			56,095
Equity
Stockholders’ Equity
Preferred stock, $0.01 par value, 230,900,000 shares authorized; none issued and outstanding		—			—
7.125% Series D Cumulative Preferred Stock, liquidation preference $25.00 per share, 4,000,000 shares authorized, 2,850,602 issued and outstanding as of September 30, 2017 and December 31, 2016		68,705			68,760
Common stock - Class A, $0.01 par value, 747,586,185 shares authorized; 24,193,109 and 19,567,506 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively		242			196
Additional paid-in-capital		329,219			257,403
Distributions in excess of cumulative earnings		(106,838	)		(84,631	)
Total Stockholders’ Equity		291,328			241,728
Noncontrolling Interests
Operating partnership units		1,799			2,216
Partially owned properties		39,068			48,617
Total Noncontrolling Interests		40,867			50,833
Total Equity		332,195			292,561
TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY	$	1,535,197		$	1,241,322

	Three Months Ended
	March 31,
	2019			2018
Revenues
Rental and other property revenues	$	45,690		$	36,675
Interest income from related parties		5,776			5,196
Total revenues		51,466			41,871
Expenses
Property operating		18,602			15,658
Property management fees		1,215			992
General and administrative		5,627			4,669
Acquisition and pursuit costs		58			43
Weather-related losses, net		—			168
Depreciation and amortization		17,230			15,640
Total expenses		42,732			37,170
Operating income		8,734			4,701
Other income (expense)
Preferred returns on unconsolidated real estate joint ventures		2,289			2,461
Gain on sale of non-depreciable real estate investments		679			—
Interest expense, net		(16,067	)		(10,117	)
Total other expense		(13,099	)		(7,656	)
Net loss		(4,365	)		(2,955	)
Preferred stock dividends		(10,384	)		(8,248	)
Preferred stock accretion		(1,887	)		(1,112	)
Net loss attributable to noncontrolling interests
Operating partnership units		(4,051	)		(2,675	)
Partially owned properties		(492	)		(215	)
Net loss attributable to noncontrolling interests		(4,543	)		(2,890	)
Net loss attributable to common stockholders	$	(12,093	)	$	(9,425	)

Net loss per common share - Basic	$	(0.53	)	$	(0.40	)

Net loss per common share – Diluted	$	(0.53	)	$	(0.40	)

Weighted average basic common shares outstanding		23,123,616			24,143,382
Weighted average diluted common shares outstanding		23,123,616			24,143,382

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
Revenues
Net rental income	$	24,871		$	18,572		$	72,354		$	52,013
Other property revenues		3,072			2,005			8,639			5,376
Interest income from related parties		2,120			—			5,741			—
Total revenues		30,063			20,577			86,734			57,389
Expenses
Property operating		11,969			7,896			33,935			22,592
Property management fees		781			595			2,250			1,659
General and administrative		1,103			1,177			4,249			4,155
Management fees		2,802			1,866			11,733			4,495
Acquisition and pursuit costs		15			689			3,215			2,143
Management internalization		826			—			1,647			—
Weather-related losses, net		678			—			678			—
Depreciation and amortization		11,763			7,166			33,094			22,465
Total expenses		29,937			19,389			90,801			57,509
Operating income (loss)		126			1,188			(4,067	)		(120	)
Other income (expense)
Other income		—			26			17			26
Preferred returns and equity in income of unconsolidated real estate joint ventures		2,688			3,074			7,865			8,617
Gain on sale of real estate investments		—			4,947			50,040			4,947
Gain on sale of real estate joint venture interest, net		—			—			10,238			—
Loss on early extinguishment of debt		—			(2,393	)		(1,639	)		(2,393	)
Interest expense, net		(7,395	)		(5,274	)		(22,339	)		(14,091	)
Total other (expense) income		(4,707	)		380			44,182			(2,894	)
Net (loss) income		(4,581	)		1,568			40,115			(3,014	)
Preferred stock dividends		(7,038	)		(3,940	)		(19,271	)		(8,391	)
Preferred stock accretion		(905	)		(275	)		(1,889	)		(568	)
Net (loss) income attributable to noncontrolling interests
Operating partnership units		(125	)		(37	)		4			(173	)
Partially-owned properties		(382	)		(59	)		18,388			(73	)
Net (loss) income attributable to noncontrolling interests		(507	)		(96	)		18,392			(246	)
Net (loss) income attributable to common stockholders	$	(12,017	)	$	(2,551	)	$	563		$	(11,727	)

Net (loss) income per common share - Basic	$	(0.45	)	$	(0.12	)	$	0.02		$	(0.57	)

Net (loss) income per common share – Diluted	$	(0.45	)	$	(0.12	)	$	0.02		$	(0.57	)

Weighted average basic common shares outstanding		26,474,093			20,908,543			25,851,536			20,706,338
Weighted average diluted common shares outstanding		26,474,093			20,908,543			25,852,059			20,706,338

	Class A Common Stock						Class C Common Stock				Series D Preferred Stock
	Number of Shares			Par Value			Number of Shares		Par Value		Number of Shares		Value		Additional Paid- in Capital			Cumulative Distributions			Net loss (income) to Common Stockholders			Noncontrolling Interests			Total Equity
Balance, January 1, 2019		23,322,211		$	233			76,603	$	1		2,850,602	$	68,705	$	307,938		$	(187,910	)	$	(30,621	)	$	56,597		$	214,943
																				��
Issuance of Class A common stock, net		764			-			-		-		-		-		7			-			-			-			7
Issuance of Class A common stock due to Series B warrant exercise		100			-			-		-		-		-		1			-			-			-			1
Repurchase of Class A common stock		(505,797	)		(5	)		-		-		-		-		(5,058	)		-			-			-			(5,063	)
Issuance of Long-Term Incentive Plan (“LTIP”) Units for director compensation		-			-			-		-		-		-		-			-			-			247			247
Issuance of LTIP Units for compensation		-			-			-		-		-		-		-			-			-			1,298			1,298
Issuance of LTIP Units for expense reimbursements		-			-			-		-		-		-		-			-			-			392			392
Issuance of Series B warrants		-			-			-		-		-		-		835			-			-			-			835
Common stock distribution declared		-			-			-		-		-		-		-			(3,739	)		-			-			(3,739	)
Series A Preferred Stock distributions declared		-			-			-		-		-		-		-			(2,950	)		-			-			(2,950	)
Series A Preferred Stock accretion		-			-			-		-		-		-		-			(153	)		-			-			(153	)
Series B Preferred Stock distributions declared		-			-			-		-		-		-		-			(5,058	)		-			-			(5,058	)
Series B Preferred Stock accretion		-			-			-		-		-		-		-			(1,674	)		-			-			(1,674	)
Series C Preferred Stock distributions declared		-			-			-		-		-		-		-			(1,107	)		-			-			(1,107	)
Series C Preferred Stock accretion		-			-			-		-		-		-		-			(60	)		-			-			(60	)
Series D Preferred Stock distributions declared		-			-			-		-		-		-		-			(1,269	)		-			-			(1,269	)
Miscellaneous offering costs		-			-			-		-		-		-		(222	)		-			-			-			(222	)
Distributions to operating partnership noncontrolling interests		-			-			-		-		-		-		-			-			-			(1,421	)		(1,421	)
Distributions to partially owned noncontrolling interests		-			-			-		-		-		-		-			-			-			(233	)		(233	)
Redemption of Operating Partnership units		-			-			-		-		-		-		(6	)		-			-			(5	)		(11	)
Redemption of Series B Preferred Stock and conversion into Class A common stock		43,806			-			-		-		-		-		457			-			-			-			457
Cash redemption of Series B Preferred Stock		-			-			-		-		-		-		5			-			-			-			5
Acquisition of noncontrolling interest		-			-			-		-		-		-		(6,480	)		-			-			(1,410	)		(7,890	)
Adjustment for noncontrolling interest ownership in Operating Partnership		-			-			-		-		-		-		2,930			-						(2,930	)		-
Net income (loss)		-			-			-		-		-		-		-			-			178			(4,543	)		(4,365	)

Balance, March 31, 2019		22,861,084		$	228			76,603	$	1		2,850,602	$	68,705	$	300,407		$	(203,920	)	$	(30,443	)	$	47,992		$	182,970

	Class A Common Stock				Series D Preferred Stock
	Number of Shares		Par Value		Number of Shares		Value			Additional Paid- in Capital			Cumulative Distributions			Net (loss) income to Common Stockholders			Noncontrolling Interests			Total Equity
Balance, January 1, 2017		19,567,506	$	196		2,850,602	$	68,760		$	257,403		$	(70,807	)	$	(13,824	)	$	50,833		$	292,561

Issuance of Class A common stock, net		4,603,236		46		-		-			57,313			-			-			-			57,359
Issuance costs for Series D preferred stock, net		-		-		-		(55	)		-			-			-			-			(55	)
Vesting of restricted stock compensation		-		-		-		-			9			-			-			-			9
Issuance of LTIP Units for director compensation		-		-		-		-			100			-			-			-			100
Issuance of LTIP Units for compensation		-		-		-		-			1,208			-			-			-			1,208
Issuance of Long-Term Incentive Plan ("LTIP") units		-		-		-		-			10,946			-			-			-			10,946
Series B warrants		-		-		-		-			2,048			-			-			-			2,048
Contributions from noncontrolling interests, nets		-		-		-		-			-			-			-			10,738			10,738
Distributions declared		-		-		-		-			-			(22,770	)		-			(241	)		(23,011	)
Series A Preferred Stock distributions declared		-		-		-		-			-			(8,850	)		-			-			(8,850	)
Series A Preferred Stock accretion		-		-		-		-			-			(479	)		-			-			(479	)
Series B Preferred Stock distributions declared		-		-		-		-			-			(3,290	)		-			-			(3,290	)
Series B Preferred Stock accretion		-		-		-		-			-			(1,232	)		-			-			(1,232	)
Series C Preferred Stock distributions declared		-		-		-		-			-			(3,322	)		-			-			(3,322	)
Series C Preferred Stock accretion		-		-		-		-			-			(178	)		-			-			(178	)
Series D Preferred Stock distributions declared		-		-		-		-			-			(3,809	)		-			-			(3,809	)
Distributions to noncontrolling interests		-		-		-		-			-			-			-			(29,706	)		(29,706	)
Redemption of operating partnership units		-		-		-		-			(6	)		-			-			(13	)		(19	)
Redemption of Series B Redeemable Preferred Stock		-		-		-		-			31			-			-			-			31
Conversion of operating partnership units to Class A Common Stock		22,367		-		-		-			167			-			-			(167	)		-
Noncontrolling interest related to sale of Fox Hill		-		-		-		-			-			-			-			(136	)		(136	)
Deconsolidation of MDA Apartments		-		-		-		-			-			-			-			(8,833	)		(8,833	)
Net income		-		-		-		-			-			-			21,723			18,392			40,115

Balance, September 30, 2017		24,193,109	$	242		2,850,602	$	68,705		$	329,219		$	(114,737	)	$	7,899		$	40,867		$	332,195

·	Level 1:	Quoted prices for identical instruments in active markets
·	Level 2:	Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable
·	Level 3:	Significant inputs to the valuation model are unobservable

Multifamily Community Name/Location	Number of Units		Year Built/Renovated⁽¹⁾		Ownership Interest
ARIUM at Palmer Ranch, Sarasota, FL		320		2016		95.0	%
ARIUM Grandewood, Orlando, FL		306		2005		95.0	%
ARIUM Gulfshore, Naples, FL		368		2016		95.0	%
ARIUM Palms, Orlando, FL		252		2008		95.0	%
ARIUM Pine Lakes, Port St. Lucie, FL		320		2003		85.0	%
ARIUM Westside, Atlanta, GA		336		2008		90.0	%
Ashton Reserve, Charlotte, NC		473		2015		100.0	%
Citrus Tower, Orlando, FL		336		2006		96.8	%
Enders Place at Baldwin Park, Orlando, FL		220		2003		89.5	%
James on South First, formerly Legacy at Southpark, Austin, TX		250		2016		90.0	%
Marquis at Crown Ridge, San Antonio, TX		352		2009		90.0	%
Marquis at Stone Oak, San Antonio, TX		335		2007		90.0	%
Marquis at The Cascades, Tyler, TX		582		2009		90.0	%
Marquis at TPC, San Antonio, TX		139		2008		90.0	%
Nevadan, Atlanta, GA		480		1990		90.0	%
Park & Kingston, Charlotte, NC		168		2015		96.0	%
Preston View, Morrisville, NC		382		2000		91.8	%
Roswell City Walk, Roswell, GA		320		2015		98.0	%
Sorrel, Frisco, TX		352		2015		95.0	%
Sovereign, Fort Worth, TX		322		2015		95.0	%
The Brodie, Austin, TX		324		2001		92.5	%
The Preserve at Henderson Beach, Destin, FL		340		2009		100.0	%
Villages at Cypress Creek, Houston, TX		384		2001		80.0	%
Wesley Village, Charlotte, NC		301		2010		91.8	%
Whetstone, Durham, NC		204		2015			⁽²⁾
Total		8,166

Multifamily Community Name	Location	Number of Units		Date Built / Renovated⁽¹⁾		Ownership Interest
ARIUM at Palmer Ranch	Sarasota, FL		320		2016		100.0	%
ARIUM Glenridge	Atlanta, GA		480		1990		90.0	%
ARIUM Grandewood	Orlando, FL		306		2005		100.0	%
ARIUM Gulfshore	Naples, FL		368		2016		100.0	%
ARIUM Hunter’s Creek	Orlando, FL		532		1999		100.0	%
ARIUM Metrowest	Orlando, FL		510		2001		100.0	%
ARIUM Palms	Orlando, FL		252		2008		100.0	%
ARIUM Pine Lakes	Port St. Lucie, FL		320		2003		100.0	%
ARIUM Westside	Atlanta, GA		336		2008		90.0	%
Ashford Belmar	Lakewood, CO		512		1988/1993		85.0	%
Ashton Reserve	Charlotte, NC		473		2015		100.0	%
Citrus Tower	Orlando, FL		336		2006		96.8	%
Enders Place at Baldwin Park	Orlando, FL		220		2003		92.0	%
James at South First	Austin, TX		250		2016		90.0	%
Marquis at Crown Ridge	San Antonio, TX		352		2009		90.0	%
Marquis at Stone Oak	San Antonio, TX		335		2007		90.0	%
Marquis at The Cascades	Tyler, TX		582		2009		90.0	%
Marquis at TPC	San Antonio, TX		139		2008		90.0	%
Outlook at Greystone	Birmingham, AL		300		2007		100.0	%
Park & Kingston	Charlotte, NC		168		2015		100.0	%
Plantation Park	Lake Jackson, TX		238		2016		80.0	%
Preston View	Morrisville, NC		382		2000		100.0	%
Roswell City Walk	Roswell, GA		320		2015		98.0	%
Sands Parc	Daytona Beach, FL		264		2017		100.0	%
Sorrel	Frisco, TX		352		2015		95.0	%
Sovereign	Fort Worth, TX		322		2015		95.0	%
The Brodie	Austin, TX		324		2001		92.5	%
The Links at Plum Creek	Castle Rock, CO		264		2000		88.0	%
The Mills	Greenville, SC		304		2013		100.0	%
The Preserve at Henderson Beach	Destin, FL		340		2009		100.0	%
Veranda at Centerfield	Houston, TX		400		1999		93.0	%
Villages of Cypress Creek	Houston, TX		384		2001		80.0	%
Wesley Village	Charlotte, NC		301		2010		100.0	%
Total			11,286

Property		Date				Amount				Previous Interest				New Interest
ARIUM Pine Lakes			January 29, 2019			$	7,769				85.0	%			100.0	%

	Purchase Price Allocation
Land	$	40,473
Building		312,884
Building improvements		19,615
Land improvements		17,039
Furniture and fixtures		7,014
In-place leases		8,021
Other assets		666
Total assets acquired	$	405,712
Mortgages assumed	$	146,377
Total liabilities assumed	$	146,377

	Nine Months Ended September 30,						Nine Months Ended September 30,
	2017						2016
	As Reported		Pro-Forma Adjustments		Pro-Forma		As Reported			Pro-Forma Adjustments			Pro-Forma

Revenues	$	86,734	$	17,796	$	104,530	$	57,389		$	52,256		$	109,645
Net income (loss)	$	40,115	$	10,128	$	50,243	$	(3,014	)	$	(17,384	)	$	(20,398	)
Net income (loss) attributable to common stockholders	$	563	$	9,220	$	9,783	$	(11,727	)	$	(15,923	)	$	(27,650	)

Income (loss) per share, basic and diluted⁽¹⁾	$	0.02			$	0.38	$	(0.57	)				$	(1.34	)

	Three Months Ended March 31,
Property	2019		2018
Arlo	$	909	$	910
Cade Boca Raton		437		415
Domain at The One Forty		752		750
Flagler Village		2,373		1,996
Novel Perimeter		762		762
The Park at Chapel Hill		156		—
Vickers Historic Roswell		387		363
Total	$	5,776	$	5,196

	⁽¹⁾	The development has not commenced lease-up.
	⁽²⁾	The development is in the planning phase; project specifications are in process.

	Three Months Ended September 30,				Nine Months Ended September 30,
Property	2017		2016		2017		2016
APOK Townhomes	$	424	$	—	$	1,232	$	—
Domain		767		—		1,758		—
West Morehead		929		—		2,751		—
Interest income from related parties	$	2,120	$	—	$	5,741	$	—

	Three Months Ended September 30,						Nine Months Ended September 30,
Property	2017			2016			2017			2016
Alexan CityCentre	$	385		$	294		$	1,010		$	791
Alexan Southside Place		740			655			2,113			1,950
APOK Townhomes		—			205			—			205
Domain		—			145			141			422
EOS		(3	)		137			(25	)		409
Flagler Village		(1	)		(4	)		(5	)		(4	)
Helios		619			619			1,835			1,842
Lake Boone Trail		451			375			1,319			1,117
West Morehead		—			141			—			435
Whetstone		497			507			1,477			1,450
Preferred returns and equity in income of unconsolidated joint venture	$	2,688		$	3,074		$	7,865		$	8,617

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Operating Statement:
Rental revenues	$	1,344		$	1,841		$	2,930		$	4,608
Operating expenses		(1,466	)		(885	)		(2,870	)		(2,577	)
(Loss) income before debt service, acquisition costs, and depreciation and amortization		(122	)		956			60			2,031
Interest expense, net		(2,924	)		(344	)		(7,395	)		(999	)
Acquisition costs		—			(3	)		—			(3	)
Depreciation and amortization		(939	)		(771	)		(1,922	)		(2,296	)
Operating (loss)		(3,985	)		(162	)		(9,257	)		(1,267	)
Net loss	$	(3,985	)	$	(162	)	$	(9,257	)	$	(1,267	)

	Outstanding Principal						As of September 30, 2017					Outstanding Principal						As of March 31, 2019
Property	September 30, 2017			December 31, 2016			Interest Rate			Fixed/ Floating	Maturity Date	March 31, 2019			December 31, 2018			Interest Rate			Interest-only through date	Maturity Date
Fixed Rate:
ARIUM at Palmer Ranch	$	26,925		$	26,925			3.40	%	LIBOR + 2.17%⁽¹⁾	February 1, 2023	$	41,348		$	41,348			4.41	%	May 2020	May 1, 2025
ARIUM Grandewood		34,294			34,294			3.05	%	Floating⁽²⁾	December 1, 2024
ARIUM Gulfshore		32,626			32,626			3.40	%	LIBOR + 2.17%⁽¹⁾	February 1, 2023
ARIUM Palms		24,999			24,999			3.45	%	LIBOR + 2.22%⁽¹⁾	September 1, 2022
ARIUM Grandewood⁽¹⁾													19,713			19,713			4.35	%	July 2020	July 1, 2025
ARIUM Hunter’s Creek													72,294			72,294			3.65	%	November 2019	November 1, 2024
ARIUM Metrowest													64,559			64,559			4.43	%	May 2021	May 1, 2025
ARIUM Pine Lakes		26,950			26,950			3.95	%	Fixed	November 1, 2023		26,950			26,950			3.95	%	Interest-only	November 1, 2023
ARIUM Westside		52,150			52,150			3.68	%	Fixed	August 1, 2023		52,150			52,150			3.68	%	August 2021	August 1, 2023
Ashford Belmar													100,675			100,675			4.53	%	December 2022	December 1, 2025
Ashton Reserve I		31,528			31,900			4.67	%	Fixed	December 1, 2025		30,743			30,878			4.67	%	⁽²⁾	December 1, 2025
Citrus Tower													41,438			41,438			4.07	%	October 2019	October 1, 2024
Enders Place at Baldwin Park⁽⁴⁾⁽³⁾													23,699			23,822			4.30	%	⁽²⁾	November 1, 2022
James on South First													26,425			26,500			4.35	%	⁽²⁾	January 1, 2024
Outlook at Greystone													22,105			22,105			4.30	%	June 2021	June 1, 2025
Park & Kingston⁽⁴⁾													18,432			18,432			3.41	%	Interest-only	April 1, 2020
Plantation Park													26,625			26,625			4.64	%	July 2024	July 1, 2028
Roswell City Walk													51,000			51,000			3.63	%	December 2019	December 1, 2026
Sovereign													28,084			28,227			3.46	%	⁽²⁾	November 10, 2022
The Brodie													34,666			34,825			3.71	%	⁽²⁾	December 1, 2023
The Links at Plum Creek													40,000			40,000			4.31	%	April 2020	October 1, 2025
The Mills													26,174			26,298			4.21	%	⁽²⁾	January 1, 2025
The Preserve at Henderson Beach													35,422			35,602			4.65	%	⁽²⁾	January 5, 2023
Villages of Cypress Creek													26,200			26,200			3.23	%	October 2020	October 1, 2022⁽⁵⁾
Wesley Village													40,545			40,545			4.25	%	April 2019	April 1, 2024
Total Fixed Rate													849,247			850,186

Floating Rate⁽⁶⁾:
ARIUM Glenridge													49,500			49,500			3.82	%	September 2021	September 1, 2025
ARIUM Grandewood⁽¹⁾													19,672			19,672			3.89	%	July 2020	July 1, 2025
ARIUM Palms													30,320			30,320			3.89	%	September 2020	September 1, 2025
Ashton Reserve II		15,270			15,270			3.85	%	LIBOR + 2.62%⁽¹⁾	January 1, 2026		15,213			15,213			3.99	%	August 2022	August 1, 2025
Citrus Tower		41,438			—			4.07	%	Fixed	October 1, 2024
Crescent Perimeter⁽³⁾		1,920			—			4.23	%	LIBOR + 3.00%⁽¹⁾	December 12, 2020
Enders Place at Baldwin Park⁽⁴⁾⁽³⁾		24,401			24,732			4.30	%	Fixed	November 1, 2022
Fox Hill		—			26,705
James on South First		26,500			26,500			4.35	%	Fixed	January 1, 2024
Lansbrook Village		—			57,190
Marquis at Crown Ridge		29,362			—			2.84	%	LIBOR + 1.61%⁽¹⁾	June 1, 2024		28,488			28,634			4.10	%	⁽²⁾	June 1, 2024⁽⁷⁾
Marquis at Stone Oak		43,125			—			2.84	%	LIBOR + 1.61%⁽¹⁾	June 1, 2024		42,526			42,725			4.10	%	⁽²⁾	June 1, 2024⁽⁷⁾
Marquis at The Cascades I		33,207			—			2.84	%	LIBOR + 1.61%⁽¹⁾	June 1, 2024		32,745			32,899			4.10	%	⁽²⁾	June 1, 2024⁽⁷⁾
Marquis at The Cascades II		23,175			—			2.84	%	LIBOR + 1.61%⁽¹⁾	June 1, 2024		22,853			22,960			4.10	%	⁽²⁾	June 1, 2024⁽⁷⁾
Marquis at TPC		17,273			—			2.84	%	LIBOR + 1.61%⁽¹⁾	June 1, 2024		16,736			16,826			4.10	%	⁽²⁾	June 1, 2024⁽⁷⁾
MDA Apartments		—			37,124
Nevadan		48,431			48,431			3.71	%	LIBOR + 2.48%⁽¹⁾	November 1, 2023
Park & Kingston⁽⁵⁾		18,432			18,432			3.41	%	Fixed	April 1, 2020
Preston View		41,066			—			3.30	%	LIBOR + 2.07%⁽¹⁾	March 1, 2024		41,657			41,657			3.99	%	August 2022	August 1, 2025
Roswell City Walk		51,000			51,000			3.63	%	Fixed	December 1, 2026
Sorrel		38,684			38,684			3.52	%	LIBOR + 2.29%⁽¹⁾	May 1, 2023		38,684			38,684			4.78	%	November 2019	May 1, 2023
Sovereign		28,880			28,880			3.46	%	Fixed	November 10, 2022
The Brodie		34,825			34,825			3.71	%	Fixed	December 1, 2023
The Preserve at Henderson Beach		36,484			36,989			4.65	%	Fixed	January 5, 2023
Vickers Village⁽⁶⁾		3,875			—			4.23	%	LIBOR + 3.00%⁽⁶⁾	December 1, 2020
Village Green of Ann Arbor		—			41,547
Villages at Cypress Creek		26,200			—			3.23	%	Fixed	October 1, 2022
Wesley Village		40,545			—			4.25	%	Fixed	April 1, 2024
Veranda at Centerfield													26,100			26,100			3.74	%	July 2021	July 26, 2023⁽⁵⁾
Total Floating Rate													364,494			365,190
Total		853,565			716,153								1,213,741			1,215,376
Fair value adjustments		2,055			1,364								2,095			2,204
Deferred financing costs, net		(8,458	)		(6,942	)							(10,931	)		(11,444	)
Total	$	847,162		$	710,575							$	1,204,905		$	1,206,136

Year	Total			Total
2017 (October 1-December 31)	$	738
2018		4,086
2019		7,652
2019 (April 1–December 31)				$	5,727
2020		35,227			30,729
2021		12,173			15,860
2022					91,409
2023					221,219
Thereafter		793,689			848,797
	$	853,565		$	1,213,741
Add: Unamortized fair value debt adjustment		2,055			2,095
Subtract: Deferred financing costs, net		(8,458	)		(10,931	)
Total	$	847,162		$	1,204,905

Derivatives not designated as hedging instruments under ASC 815-20	Balance Sheet Location	Fair values of derivative instruments				Location of Gain or (Loss) Recognized in Income	The Effect of Derivative Instruments on the Statement of Operations
		March 31,		December 31,			Three Months Ended March 31,
		2019		2018			2019			2018
Interest rate caps	Accounts receivable, prepaids and other assets	$	908	$	2,596	Interest Expense	$	(1,688	)	$	—

	March 31, 2019		December 31, 2018
Amounts Payable to BRE under the Administrative Services Agreement, net
Operating and direct expense reimbursements	$	681	$	568
Offering expense reimbursements		117		158
Total amounts payable to BRE	$	798	$	726

	September 30, 2017		December 31, 2016
Amounts Payable to the Manager under the Management Agreement
Base management fee	$	2,802	$	2,015
Operating expense reimbursements and direct expense reimbursements		393		274
Offering expense reimbursements		74		120
Total amounts payable to Manager	$	3,269	$	2,409

Period		Total Number of Shares Purchased				Weighted Average Price Paid Per Share				Cumulative Number of Shares Purchased as Part of the Publicly Announced Plan				Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plan
First quarter 2019			505,797			$	10.01				1,560,854			$	10,919,065

Non-Vested shares	Shares			Weighted average grant-date fair value
Balance at January 1, 2017		659		$	22.75
Granted		—			—
Vested		(659	)		22.75
Forfeited		—			—
Balance at September 30, 2017		—		$	—

Declaration Date	Payable to stockholders of record as of	Amount		Date Paid
Class A common stock
October 4, 2016	December 23, 2016	$	0.096667	January 5, 2017
January 6, 2017	January 25, 2017	$	0.096666	February 3, 2017
January 6, 2017	February 24, 2017	$	0.096667	March 3, 2017
January 6, 2017	March 24, 2017	$	0.096667	April 5, 2017
April 7, 2017	April 25, 2017	$	0.096666	May 5, 2017
April 7, 2017	May 25, 2017	$	0.096667	June 5, 2017
April 7, 2017	June 23, 2017	$	0.096667	July 5, 2017
July 10, 2017	July 25, 2017	$	0.096666	August 4, 2017
August 9, 2017	August 25, 2017	$	0.096667	September 5, 2017
August 9, 2017	September 25, 2017	$	0.096667	October 5, 2017
Series A Preferred Stock
December 9, 2016	December 23, 2016	$	0.515625	January 5, 2017
March 10, 2017	March 24, 2017	$	0.515625	April 5, 2017
June 9, 2017	June 23, 2017	$	0.515625	July 5, 2017
September 8, 2017	September 25, 2017	$	0.515625	October 5, 2017
Series B Preferred Stock
October 4, 2016	December 23, 2016	$	5.00	January 5, 2017
January 6, 2017	January 25, 2017	$	5.00	February 3, 2017
January 6, 2017	February 24, 2017	$	5.00	March 3, 2017
January 6, 2017	March 24, 2017	$	5.00	April 5, 2017
April 7, 2017	April 25, 2017	$	5.00	May 5, 2017
April 7, 2017	May 25, 2017	$	5.00	June 5, 2017
April 7, 2017	June 23, 2017	$	5.00	July 5, 2017
July 10, 2017	July 25, 2017	$	5.00	August 4, 2017
July 10, 2017	August 25, 2017	$	5.00	September 5, 2017
July 10, 2017	September 25, 2017	$	5.00	October 5, 2017
Series C Preferred Stock
December 9, 2016	December 23, 2016	$	0.4765625	January 5, 2017
March 10, 2017	March 24, 2017	$	0.4765625	April 5, 2017
June 9, 2017	June 23, 2017	$	0.4765625	July 5, 2017
September 8, 2017	September 25, 2017	$	0.4765625	October 5, 2017
Series D Preferred Stock
December 9, 2016	December 23, 2016	$	0.3859	January 5, 2017
March 10, 2017	March 24, 2017	$	0.4453125	April 5, 2017
June 9, 2017	June 23, 2017	$	0.4453125	July 5, 2017
September 8, 2017	September 25, 2017	$	0.4453125	October 5, 2017

	Distributions				Distributions
2017	Declared		Paid
2019					Declared		Paid
First Quarter
Class A Common Stock	$	7,014	$	6,566	$	3,727	$	3,820
Class C Common Stock						12		12
Series A Preferred Stock		2,950		2,950		2,950		2,950
Series B Preferred Stock		525		395		5,058		4,842
Series C Preferred Stock		1,107		1,107		1,107		1,107
Series D Preferred Stock		1,269		1,100		1,269		1,269
OP Units		82		84		1,038		1,038
LTIP Units		496		480		383		262
Total first quarter 2017	$	13,443	$	12,682
Second Quarter
Class A Common Stock	$	7,016	$	7,015
Series A Preferred Stock		2,950		2,950
Series B Preferred Stock		1,054		837
Series C Preferred Stock		1,108		1,107
Series D Preferred Stock		1,270		1,270
OP Units		80		80
LTIP Units		551		533
Total second quarter 2017	$	14,029	$	13,792
Third Quarter
Class A Common Stock		7,017		7,016
Series A Preferred Stock		2,950		2,950
Series B Preferred Stock		1,711		1,508
Series C Preferred Stock		1,107		1,107
Series D Preferred Stock		1,270		1,269
OP Units		79		80
LTIP Units		676		625
Total third quarter 2017	$	14,810	$	14,555
Total	$	42,282	$	41,029
Total first quarter 2019					$	15,544	$	15,300

Shares	Declaration Date	Record Date	Date Paid	Distributions per Share		Total Distribution		Declaration Date	Record Date	Date Paid	Distributions per Share		Total Distribution
Class A Common Stock	August 9, 2017	September 25, 2017	October 5, 2017	$	0.096667	$	2,339	March 8, 2019	March 25, 2019	April 5, 2019	$	0.162500	$	3,727
Class C Common Stock								March 8, 2019	March 25, 2019	April 5, 2019	$	0.162500	$	12
Series A Preferred Stock	September 8, 2017	September 25, 2017	October 5, 2017	$	0.515625	$	2,950	March 8, 2019	March 25, 2019	April 5, 2019	$	0.515625	$	2,950
Series B Preferred Stock	July 10, 2017	September 25, 2017	October 5, 2017	$	5.000000	$	646	January 11, 2019	March 25, 2019	April 5, 2019	$	5.000000	$	1,747
Series C Preferred Stock	September 8, 2017	September 25, 2017	October 5, 2017	$	0.4765625	$	1,107	March 8, 2019	March 25, 2019	April 5, 2019	$	0.4765625	$	1,107
Series D Preferred Stock	September 8, 2017	September 25, 2017	October 5, 2017	$	0.4453125	$	1,269	March 8, 2019	March 25, 2019	April 5, 2019	$	0.4453125	$	1,269
OP Units	August 9, 2017	September 25, 2017	October 5, 2017	$	0.096667	$	26	March 8, 2019	March 25, 2019	April 5, 2019	$	0.162500	$	1,038
LTIP Units	August 9, 2017	September 25, 2017	October 5, 2017	$	0.096667	$	242	March 8, 2019	March 25, 2019	April 5, 2019	$	0.162500	$	309

Class A Common Stock	October 13, 2017	October 25, 2017	November 3, 2017	$	0.096666	$	2,340
Series B Preferred Stock	October 13, 2017	October 25, 2017	November 3, 2017	$	5.000000	$	718	April 12, 2019	April 25, 2019	May 3, 2019	$	5.000000	$	1,793
OP Units	October 13, 2017	October 25, 2017	November 3, 2017	$	0.096666	$	240
LTIP Units	October 13, 2017	October 25, 2017	November 3, 2017	$	0.096666	$	29
Total						$	11,906						$	13,952

Total Internalization Consideration	$	41,244,086

Allocation of Internalization Consideration:
Internalization expense reimbursement	$	450,000
Internalization Consideration paid in cash	$	40,794
Internalization Consideration paid in OP Units	$	39,938,226
Internalization Consideration paid in Class C common stock	$	815,066

Volume-Weighted Average Price (“VWAP”)	$	10.64

Number of OP Units Issued		3,753,593
Number of shares of Class C Common Stock Issued		76,603

	·
	•	real estate risks, including fluctuations in real estate values and the general economic climate in local markets and competition for tenants in such markets;

	·
	•	risks associated with geographic concentration of our investments;