Item 1.01 Entry Into A Material Definitive Agreement
Amendment to Independent Trustee Common Share Plan
On March 25, 2021, the Board of Trustees approved an amendment to the Amended and Restated Sterling Real Estate Trust Independent Trustee Common Shares Plan. The amendment increases the number of common shares that may be issued under the Plan from 25,000 shares to 40,000 shares.
The description herein of the amendment to the Amended and Restated Sterling Real Estate Trust Independent Trustee Common Shares Plan is qualified in its entirety, and the terms therein are incorporated herein, by reference to the Amended and Restated Sterling Real Estate Trust Independent Trustee Common Shares Plan effective March 25, 2021 filed as Exhibit 10.01 hereto.
Extension and Amendment to Advisory Agreement
On March 25, 2021, Sterling Real Estate Trust (the “Company”) adopted its Tenth Amended and Restated Advisory Agreement with Sterling Management, LLC, the Company’s Advisor (the “Advisor”). The Tenth Amended and Restated Advisory Agreement, effective as of April 1, 2021, extends the term of the agreement for an additional year and includes terms and conditions that are substantially the same as the previous agreement. The new agreement does add more detailed provisions with respect to fees due for development projects.
The description herein of the Tenth Amended and Restated Advisory Agreement is qualified in its entirety, and the terms therein are incorporated herein, by reference to the Tenth Amended and Restated Advisory Agreement filed as Exhibit 10.2 hereto.
Item 4.01 Changes in Registrant’s Certifying Accountant
(a) As previously reported would occur in the Trust’s Form 8-K filed December 4, 2020, Baker Tilly US, LLP (BT) was dismissed as the Trust’s independent registered public accounting firm upon filing of the Trust’s Annual Report on Form 10-K for the year ended December 31, 2020, which occurred on March 31, 2021. BT’s engagement was complete at that time.
BT’s audit reports for the Trust’s consolidated financial statements for the fiscal years ended December 31, 2020 and 2019 did not contain an adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope, or accounting principles.
During the Trust’s fiscal years ended December 31, 2020 and 2019 and through the date of this Current Report on Form 8-K, there were no disagreements (as described in Item 304(a)(1)(iv) of Regulation S-K under the Securities Exchange Act of 1934 (“Regulation S-K”)) with BT on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of BT, would have caused BT to make reference to the subject matter of the disagreement in its report on the Company’s financial statements for such period, and, there were no “reportable events” (as that term is defined in Item 304(a)(1)(v) of Regulation S-K and the related instructions thereto) other than the material weakness identified during the audit for the year ended December 31, 2020 which was reported in the Trust’s Annual Report on Form 10-K for the year ended December 31, 2020.
The Trust provided BT with a copy of the disclosures made pursuant to this Item 4.01(a) prior to the filing of this Current Report on Form 8-K. The Trust requested that BT furnish to it a letter addressed to the Securities and Exchange Commission stating whether BT agrees with the statements made by the Trust in this Item 4.01(a) and, if not, stating the respects in which it does not agree. A copy of that letter, dated March 31, 2021 is filed as Exhibit 16.1 to this Current Report on Form 8-K.
(b) As reported in the Trust’s Form 8-K filed December 4, 2020, the Trust’s Audit Committee on November 30, 2020 appointed RSM US, LLP (RSM) as the Trust’s independent registered public accounting firm for the fiscal year ending December 31, 2021. The formal engagement of RSM was finalized upon RSM completing its client acceptance process and execution of an engagement letter. During the fiscal years ended December 31, 2020 and December 31, 2019, respectively and through the date of this Current Report on Form 8-K, neither the Trust nor anyone acting on its behalf
